Earlier this month, Vanguard Group declared a 2-for-1 split of Vanguard Emerging Markets (VWO), Vanguard Total Stock Market ETF (VTI) and Vanguard Extended Market ETF (VXF) to bring down their prices. (The record date was June 13, and the shares began trading at their split-adjusted price June 18.) Because splits can cause confusion for some investors, I'd like to explain how they work and how your holdings will be affected when a split occurs.

Most ETFs, like most stocks, trade for prices below $100 to attract individual investors. When they breach that barrier, they usually split. Before the recent Vanguard split, for instance, VWO traded above that price.

Among stock investors, a split is applauded as a sign of success, and novice investors are routinely suckered into buying ahead of splits because they think something magic is about to happen. In fact, it's simply an accounting mechanism. If a $100 stock splits 2-for-1, investors are left with twice as many shares, each worth half as much.

Warren Buffett has never split the shares of Berkshire Hathaway, and the A shares (BRK.A) have traded recently around $130,000. But under shareholder pressure, he did allow the creation of Class B shares (BRK.B), worth 1/30th of a Class A share. Even so, their recent price of more than $4,000 limits their popularity.

Some 58 ETFs, or 7.9% of the total outstanding, trade for more than $100. Except for bookkeeping purposes, however, the share price of an exchange-traded fund, as for a mutual fund, is immaterial. It's simply the value of its holdings divided by the number of shares outstanding.

But even mutual funds strive to keep their net asset value per share below $100. Only 0.3% of mutual funds have higher per-share prices, according to Morningstar.

Just remember to record the change in your files for any ETFs you own that split their shares, or you'll suffer a phantom loss that's bound to be upsetting.

Stocks Melt in Oil's Heat

The ETF 50 Index™, the industry's leading measure of ETF performance, tumbled 7.5% in June, its steepest decline since the benchmark was introduced in January, 2007. It brought returns for the average ETF investor down 9.5% in the first half of 2008.

With traders throwing oil on the inflation fire, financial assets are going up in flames. Wouldn't you know Congress is trying to crack down on commodities. They're the only thing making money.

The most widely owned ETF, SPDR S&P 500 (SPY), skidded 8.8% in June. It's two-times inverse leveraged twin, ProShares UltraShort S&P 500 (SDS), leaped 17.8%.

Domestic markets were dragged down by the financial sector, with SPDR S&P Financial Sector Index (XLF) down 18.7%. Commercial real estate stocks fell to their lowest level since April 2004, with iShares Cohen & Steers Realty Majors (ICF) off 11.8%.

Bonds as well as stocks declined, with iShares Lehman Aggregate Bond Index (AGG) down 0.5%. Treasury Inflation-Protected Securites, however, performed their role with iShares Lehman TIPS Bond (TIP) ahead 1.0%.

Foreign bourses fared even worse, with iShares MSCI EAFE Index (EFA) down 10.5% and iShares MSCI Emerging Markets Index (EEM) off 10.3%. The epicenter of the overseas damage was Europe , with iShares EMU (EZU), which tracks the euro region, tumbling 14.4%.

But China and its economic satellites fared little better. iShares FTSE/Xinhua China 25 Index (FXI) was down 14.0% and iShares Brazil off 10.0%.

Commodities, a traditional inflation haven, surged higher. PowerShares Commodity Index Tracking ETF (DBC) spurted 10.5%, and PowerShares DB Agriculture (DBA) shot up 15.2%.

The ETF 50 Index™ represents the price-only asset-weighted price performance of the 50 largest exchange-traded funds. The index consists of a broadly diversified universe of funds representing domestic and foreign stocks, bonds, commodities and real estate, and is a better indicator of actual investor returns than indices tied to particular markets.