This answer describes the lowered expense ratios of Vanguard admiral shares compared to Vanguard investor-class shares.
How do I tell from my statements that I am saving money through the lowered expense ratios? In my current Vanguard accounts I don't pay any fees explicitly (i.e. they are not itemized on my statements), and the share prices of investor and admiral shares track precisely.
Edit: Below is a direct quote of a response Vanguard sent to me. I believe they are claiming that higher net income may be paid out as dividends. However, they also say Net Asset Value (NAV) will be different, and as I stated, I've always seen the share price track precisely.
The lower expense ratios of Admiral(tm) Shares result in higher net income than that earned by comparable Investor Shares. In our stock and balanced funds, net income is reflected in the net asset value (NAV). Thus, over time, the NAV of a fund's Admiral Shares--which includes a greater amount of net income--will diverge from the NAV of the fund's Investor Shares. The higher net income of Admiral Shares may also be paid out periodically during the fund's normal dividend distributions.
At times, the NAVs of a fund's Admiral and Investor Shares may be the same one day, different the next, and then the same again the following day because of rounding differences. Regardless of share-price differences in the short run, however, a fund's lower-cost Admiral Shares are expected to provide a higher total return over time.
An account being converted to Admiral Shares may own fewer shares after the conversion, which could initially lead to a lower account balance. As the effects of Admiral Shares' lower expense ratios compound over time, however, we expect that the price of Admiral Shares will eventually be higher and should remain so. Ultimately, the Admiral Shares will earn higher income dividend distributions, resulting in a higher net total return.
For most of our bond funds, the higher net income of the Admiral Shares will be paid out monthly. Because the bond funds do not accrue income in the NAV as stock and balanced funds do, the NAVs of Admiral and Investor Shares of bond funds are expected to be identical.