The mutual fund giants’ dueling means lower costs and more investment options for you.

They’re at it again: Fidelity and Vanguard are fighting it out for index-fund dollars. As usual, it’s about lower fees and more offerings.

SEE ALSO: Our Guide to Mutual Funds

A week after Fidelity’s announcement, Vanguard added Admiral share classes to six of its Investor-class index funds — two international and four domestic stock portfolios. The net effect is lower fees: Vanguard’s Admiral shares require a higher minimum ($10,000) than its Investor class funds ($3,000), but the Admiral shares charge less. The annual expense ratio for the Admiral shares of Vanguard Mid-Cap Growth (symbol VMGMX ), for instance, is 0.10%; the Investor shares (VMGIX ) of the same fund cost 0.26%. Says Vanguard’s senior investment strategist, Joel M. Dickson: “Minimizing costs over the long run is a great way to build wealth.” (For more on Vanguard, see Vanguard’s Fad-Free, Low-Fee Approach and FUND WATCH: Our 7 Favorite Actively-Managed Vanguard Funds .)

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Fidelity’s move makes it a one-stop shop for financial advisers and retirement-plan managers — at least that’s the intention. “We just wanted to make sure we had a complete lineup for plan managers to choose Fidelity,” says John McNichols, senior vice-president of investment product management at Fidelity. “These are products that plan participants wanted.”

The Boston-based company dominates the U.S. retirement scene. According to Plan Sponsor magazine, Fidelity is the top 401(k) manager in the country, with $821 billion in assets. It leads by a hefty margin: Aon Hewitt and Vanguard, the next two biggest players in the field, have $262 billion and $234 billion in assets, respectively.

But Vanguard is the king of indexing, with $900 billion in 80 index funds (many of which have multiple share classes). Vanguard, based in Malvern, Pa. says it runs its funds at cost. Over time, expense ratios can shrink as assets grow. Vanguard Developed Markets Index fund, for instance, charged 0.34% in 2004, when it held just a bit more than $1.1 billion in assets. Now, at three times the size, the annual fee is 0.22%.

The popularity of exchange-traded funds, which track indexes or baskets of assets and are known to charge low expense ratios, has put pressure on index versions of regular mutual funds to be lower-cost, says Dickson. More than one-fourth of the money in stock funds now resides in ETFs, according to Vanguard. One of the draws is low expense ratios: Exchange-traded funds charge an average of 0.60% a year in fees. By contrast, index mutual funds charge an average of 0.75%.

Still, sometimes business needs trump low fees. Fidelity recently announced that its “voluntary” fee of 0.10% for the investor share class of Spartan International Index Fund (FSIIX ) would end next February and that the expense ratio, as a result, would rise to 0.20%. The decision came after the company “closely examined the costs of managing Spartan International Fund,” says Fidelity spokeswoman Sophie Launay. She adds that the higher expense ratio will still be competitive. Well, kind of: The annual fee for the Admiral share class of Vanguard Developed Markets Index Fund (VDMAX ), which, like Spartan International, requires a $10,000 minimum investment and tracks the MSCI EAFE index, is 0.12%.