Yeah good points. Additionally, Vanguard is making money through securities lending which is also proportional and can offset much or all of the expense ratio.

Yeah good points. Additionally, Vanguard is making money through securities lending which is also proportional and can offset much or all of the expense ratio. "In 2012 securities lending enhanced annual fund returns by more than 1 basis point for over 60% of Vanguard's participating funds, by more than 5 basis points for nearly a third of funds, and by more than 10 basis points for over 15% of funds."