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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
(NO. 33-23444)
UNDER THE SECURITIES ACT OF 1933
☒
Pre-Effective Amendment No.
☐
Post-Effective Amendment No. 86
☒
and
REGISTRATION STATEMENT
(NO. 811-05628)
UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 88
☒
VANGUARD MALVERN FUNDS
(Exact Name of Registrant as Specified in Declaration of Trust)
P.O. Box 2600, Valley Forge, PA 19482
(Address of Principal Executive Office)
Registrant’s Telephone Number (610) 669-1000
Anne E. Robinson, Esquire
P.O. Box 876
Valley Forge, PA 19482
It is proposed that this filing will become effective (check appropriate box)
☐
immediately upon filing pursuant to paragraph (b)
☒
on January 31, 2021, pursuant to paragraph (b)
☐
60 days after filing pursuant to paragraph (a)(1
☐
75 days after filing pursuant to paragraph (a)(2)
☐
on (date) pursuant to paragraph (a)(2) of rule 485 If appropriate, check the following box:
☐
This post-effective amendment designates a new effective date for a previously filed post-effective amendment.
 
Vanguard Short-Term Inflation-Protected Securities Index Fund
Prospectus
 January 31, 2021
Institutional Shares
Vanguard Short-Term Inflation-Protected Securities Index Fund Institutional Shares (VTSPX)
 See the inside front cover for important information about access to your fund’s annual and semiannual shareholder reports.
 This prospectus contains financial data for the Fund through the fiscal year ended September 30, 2020.
  The Securities and Exchange Commission (SEC) has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is
a criminal offense.
Important information about access to shareholder reports
Beginning on January 1, 2021, as permitted by regulations adopted by the SEC, paper copies of your fund’s annual and semiannual shareholder reports will no longer be sent to you by mail, unless you specifically request them. Instead, you will be notified by mail each time a report is posted on the website and will be provided with a link to access the report.
If you have already elected to receive shareholder reports electronically, you will not be affected by this change and do not need to take any action. You may elect to receive shareholder reports and other communications from the fund electronically by contacting your financial intermediary (such as a broker-dealer or bank) or, if you invest directly with the fund, by calling Vanguard at one of the phone numbers on the back cover of this prospectus or by logging on to vanguard.com.
You may elect to receive paper copies of all future shareholder reports free of charge. If you invest through a financial intermediary, you can contact the intermediary to request that you continue to receive paper copies. If you invest directly with the fund, you can call Vanguard at one of the phone numbers on the back cover of this prospectus or log on to vanguard.com. Your election to receive paper copies will apply to all the funds you hold through an intermediary or directly with Vanguard.
Contents
 
 
Fund Summary
Investment Objective
The Fund seeks to track the performance of a benchmark index that measures the investment return of inflation-protected public obligations of the U.S. Treasury with remaining maturities of less than 5 years.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy, hold, and sell Institutional Shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
Shareholder Fees
(Fees paid directly from your investment)  
 
Sales Charge (Load) Imposed on Purchases
None
Purchase Fee
None
Sales Charge (Load) Imposed on Reinvested Dividends
None
Redemption Fee
None
Annual Fund Operating Expenses
(Expenses that you pay each year as a percentage of the value of your investment)  
 
Management Fees
0.04%
12b-1 Distribution Fee
None
Other Expenses
0.00%
Total Annual Fund Operating Expenses
0.04%
1
Example
The following example is intended to help you compare the cost of investing in the Fund's Institutional Shares with the cost of investing in other mutual funds. It illustrates the hypothetical expenses that you would incur over various periods if you were to invest $10,000 in the Fund's shares. This example assumes that the shares provide a return of 5% each year and that total annual fund operating expenses remain as stated in the preceding table. You would incur these hypothetical expenses whether or not you were to redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:  
1 Year
3 Years
5 Years
10 Years
$4
$13
$23
$51
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in more taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the previous expense example, reduce the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 37% of the average value of its portfolio.
Principal Investment Strategies
The Fund employs an indexing investment approach designed to track the performance of the Bloomberg Barclays U.S. Treasury Inflation-Protected Securities (TIPS) 0-5 Year Index. The Index is a market-capitalization-weighted index that includes all inflation-protected public obligations issued by the U.S. Treasury with remaining maturities of less than 5 years.
 
The Fund attempts to replicate the target index by investing all, or substantially all, of its assets in the securities that make up the Index, holding each security in approximately the same proportion as its weighting in the Index. The Fund maintains a dollar-weighted average maturity consistent with that of the Index. As of September 30, 2020, the dollar-weighted average maturity of the Index was 2.7 years.
2
Principal Risks
The Fund is designed for investors with a low tolerance for risk, but you could still lose money by investing in it. The Fund is subject to the following risks, which could affect the Fund's performance, and the level of risk may vary based on market conditions:
•  Income fluctuations . The Fund’s quarterly income distributions are likely to fluctuate considerably more than the income distributions of a typical bond fund. In fact, under certain conditions, the Fund may not have any income to distribute. Income fluctuations associated with changes in interest rates are expected to be low; however, income fluctuations associated with changes in inflation are expected to be high. Overall, investors can expect income fluctuations to be high for the Fund.
•  Real interest rate risk , which is the chance that the value of a bond will fluctuate because of a change in the level of real, or after inflation, interest rates. Although inflation-indexed bonds seek to provide inflation protection, their prices may decline when real interest rates rise and vice versa. Because the Index is a market-capitalization-weighted index that includes all inflation-protected public obligations issued by the U.S. Treasury with remaining maturities of less than 5 years, real interest rate risk is expected to be low for the Fund.
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Annual Total Returns
The following bar chart and table are intended to help you understand the risks of investing in the Fund. The bar chart shows how the performance of the Fund's Institutional Shares has varied from one calendar year to another over the periods shown. The table shows how the average annual total returns of the Institutional Shares compare with those of the Fund's target index and another comparative index, which have investment characteristics similar to those of the Fund. Keep in mind that the Fund's past performance (before and after taxes) does not indicate how the Fund will perform in the future. Updated performance information is available on our website at vanguard.com/performance or by calling Vanguard toll-free at 800-662-7447.
3
Annual Total Returns — Vanguard Short-Term Inflation-Protected Securities Index Fund Institutional Shares
 
During the periods shown in the bar chart, the highest and lowest returns for a calendar quarter were:  
 
Total Return
Quarter
Highest
2.61%
June 30, 2020
Lowest
-2.38%
June 30, 2013
Average Annual Total Returns for Periods Ended December 31, 2020  
 
1 Year
5 Years
Since
Inception
(Oct. 17,
2012)
Vanguard Short-Term Inflation-Protected Securities Index
Fund Institutional Shares
 
 
 
Return Before Taxes
4.99%
2.78%
1.40%
Return After Taxes on Distributions
4.47
2.11
0.94
Return After Taxes on Distributions and Sale of Fund Shares
2.95
1.84
0.87
Comparative Indexes
(reflect no deduction for fees, expenses, or taxes)
 
 
 
Bloomberg Barclays U.S. TIPS 0-5 Year Index
5.07%
2.82%
1.40%
Bloomberg Barclays U.S. Aggregate Bond Index
7.51
4.44
3.27
Actual after-tax returns depend on your tax situation and may differ from those shown in the preceding table. When after-tax returns are calculated, it is assumed that the shareholder was in the highest individual federal marginal income tax bracket at the time of each distribution of income or capital gains or upon redemption. State and local income taxes are not reflected in the calculations. Please note that after-tax returns are not relevant for a shareholder who holds fund shares in a tax-deferred account, such as an individual retirement account or a 401(k) plan. Also, figures captioned Return After Taxes on
4
Distributions and Sale of Fund Shares may be higher than other figures for the same period if a capital loss occurs upon redemption and results in an assumed tax deduction for the shareholder.
Investment Advisor
The Vanguard Group, Inc. (Vanguard)
Portfolio Manager
Joshua C. Barrickman, CFA, Principal of Vanguard and co-head of Vanguard’s Fixed Income Indexing Americas. He has managed the Fund since its inception in 2012.
Purchase and Sale of Fund Shares
You may purchase or redeem shares online through our website (vanguard.com), by mail (The Vanguard Group, P.O. Box 1110, Valley Forge, PA 19482-1110), or by telephone (800-662-2739). The minimum investment amount required to open and maintain a Fund account for Institutional Shares is $5 million. The minimum investment amount required to add to an existing Fund account is generally $1. If you are investing through an employer-sponsored retirement or savings plan, your plan administrator or your benefits office can provide you with detailed information on how you can invest through your plan.
Tax Information
The Fund’s distributions may be taxable as ordinary income or capital gain. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply.
Payments to Financial Intermediaries
The Fund and its investment advisor do not pay financial intermediaries for sales of Fund shares.
5
Investing in Index Funds
What Is Indexing?
Indexing is an investment strategy for tracking the performance of a specified market benchmark, or “index.” An index is a group of securities whose overall performance is used as a standard to measure the investment performance of a particular market. There are many types of indexes. Some represent entire markets—such as the U.S. stock market or the U.S. bond market. Other indexes cover market segments—such as small-capitalization stocks or short-term bonds. One cannot invest directly in an index.
The index sponsor determines the securities to include in the index and the weighting of each security in the index. Under normal circumstances, the index sponsor will rebalance an index on a regular schedule. An index sponsor may carry out additional ad hoc index rebalances or delay or cancel a scheduled rebalance. Generally, the index sponsor does not provide any warranty, or accept any liability, with respect to the quality, accuracy, or completeness of either the target index or its related data. Errors made by the index sponsor may occur from time to time and may not be identified by the index sponsor for a period of time or at all. Vanguard does not provide any warranty or guarantee against such errors. Therefore, the gains, losses, or costs associated with the index sponsor’s errors will generally be borne by the index fund and its shareholders.
An index fund seeks to hold all, or a representative sample, of the securities that make up its target index. Index funds attempt to mirror the performance of the target index, for better or worse. However, an index fund generally does not perform exactly like its target index. For example, index funds have operating expenses and transaction costs. Market indexes do not, and therefore they will usually have a slight performance advantage over funds that track them. The ability of an index fund to match its performance to that of its target index can also be impacted by, among other things, the timing and size of cash flows and the size of the fund. Market disruptions and regulatory restrictions could also have an adverse effect on a fund’s ability to adjust its exposure to the required levels in order to track the index.
Index funds typically have the following characteristics:
•  Variety of investments . Depending on a fund’s benchmark index, the fund may invest in the securities of a variety of companies, industries, and/or governments or government agencies.
•  Relative performance consistency . Because they seek to track market benchmarks, index funds usually do not perform dramatically better or worse than their benchmarks.
•  Low cost . Index funds are generally inexpensive to run compared with actively managed funds. They have low or no research costs and typically keep trading activity—and thus dealer markups and other transaction costs—to a minimum compared with actively managed funds.
6
More on the Fund
This prospectus describes the principal risks you would face as a Fund shareholder. It is important to keep in mind one of the main principles of investing: generally, the higher the risk of losing money, the higher the potential reward. The reverse, also, is generally true: the lower the risk, the lower the potential reward. As you consider an investment in any mutual fund, you should take into account your personal tolerance for fluctuations in the securities markets. Look for this     symbol throughout the prospectus. It is used to mark detailed information about the more significant risks that you would confront as a Fund shareholder. To highlight terms and concepts important to mutual fund investors, we have provided Plain Talk® explanations along the way. Reading the prospectus will help you decide whether the Fund is the right investment for you. We suggest that you keep this prospectus for future reference.
Share Class Overview
This prospectus offers the Fund's Institutional Shares, which are generally for investors who invest a minimum of $5 million. Separate prospectuses offer the Fund's Admiral™ Shares, which generally have an investment minimum of $3,000, and Investor Shares, which are generally available only to Vanguard funds that operate as funds of funds and to certain retirement plan clients that receive recordkeeping services from Vanguard. In addition, the Fund issues ETF Shares (an exchange-traded class of shares), which are also offered through a separate prospectus.
All share classes offered by the Fund have the same investment objective, strategies, and policies. However, different share classes have different expenses; as a result, their investment returns will differ.  
Plain Talk About Fund Expenses
All mutual funds have operating expenses. These expenses, which are
deducted from a fund’s gross income, are expressed as a percentage of the
net assets of the fund. Assuming that operating expenses remain as stated
in the Fees and Expenses section, Vanguard Short-Term Inflation-Protected
Securities Index Fund Institutional Shares' expense ratio would be 0.04%, or
$0.40 per $1,000 of average net assets. The average expense ratio for
inflation-protected bond funds in 2019 was 0.67%, or $6.70 per $1,000 of
average net assets (derived from data provided by Lipper, a Thomson
Reuters Company, which reports on the mutual fund industry).
 
7
Plain Talk About Costs of Investing
Costs are an important consideration in choosing a mutual fund. That is
because you, as a shareholder, pay a proportionate share of the costs of
operating a fund and any transaction costs incurred when the fund buys or
sells securities. These costs can erode a substantial portion of the gross
income or the capital appreciation a fund achieves. Even seemingly small
differences in expenses can, over time, have a dramatic effect on a
fund’s performance.
The following sections explain the principal investment strategies and policies that the Fund uses in pursuit of its objective. The Fund's board of trustees, which oversees the Fund's management, may change investment strategies or policies in the interest of shareholders without a shareholder vote, unless those strategies or policies are designated as fundamental. Note that the Fund’s investment objective is not fundamental and may be changed without a shareholder vote. Under normal circumstances, the Fund will invest at least 80% of its assets in inflation-indexed securities that make up its target index. The Fund may change its 80% policy only upon 60 days' notice to shareholders.
8
Market Exposure  
Plain Talk About Inflation-Indexed Securities
Unlike a conventional bond, whose issuer makes regular fixed interest
payments and repays the face value of the bond at maturity, an
inflation-indexed security (IIS) provides principal and interest payments that
are adjusted over time to reflect a rise (inflation) or a drop (deflation) in the
general price level for goods and services. This adjustment is a key feature,
given that inflation has typically occurred. However, there have been periods
of deflation, such as in 1954 when the Consumer Price Index (CPI) declined
by 0.7%. (Source: Bureau of Labor Statistics.) Importantly, in the event of
deflation, the U.S. Treasury has guaranteed that it will repay at least the face
value of an IIS issued by the U.S. government. However, if an IIS is
purchased by a fund at a premium, deflation could cause a fund to
experience a loss.
Inflation measurement and adjustment for an IIS have two important
features. There is a two-month lag between the time that inflation occurs in
the economy and when it is factored into IIS valuations. This is due to the
time required to measure and calculate the CPI and for the U.S. Treasury to
adjust the inflation accrual schedules for an IIS. For example, inflation that
occurs in January is calculated and announced during February and affects
IIS valuations throughout the month of March. In addition, the inflation index
used is the nonseasonally adjusted index. It differs from the CPI that is
reported by most news organizations, which is statistically smoothed to
overcome highs and lows observed at different points each year. The use of
the nonseasonally adjusted index can cause a fund’s income level to
fluctuate.
9
   
The Fund is subject to income fluctuations. The Fund’s quarterly income distributions are likely to fluctuate considerably more than the income distributions of a typical bond fund. In fact, under certain conditions, the Fund may not have any income to distribute. Income fluctuations associated with changes in interest rates are expected to be low; however, income fluctuations associated with changes in inflation are expected to be high. Overall, investors can expect income fluctuations to be high for the Fund.
Although fluctuations in quarterly income distributions are expected to be high, distributions should provide an income yield that adjusts with inflation. In periods of extreme deflation, the Fund may have no income to distribute. If prices throughout the economy decline, the principal and income of an IIS will decline and could result in losses for the Fund.
Changes in interest rates can affect bond income as well as bond prices.
   
The Fund is subject to real interest rate risk, which is the chance that the value of a bond will fluctuate because of a change in the level of real, or after inflation, interest rates. Although inflation-indexed bonds seek to provide inflation protection, their prices may decline when real interest rates rise and vice versa. Because the Index is a market-capitalization-weighted index that includes all inflation-protected public obligations issued by the U.S. Treasury with remaining maturities of less than 5 years, real interest rate risk is expected to be low for the Fund.  
Plain Talk About Real Returns
Inflation-indexed securities are designed to provide a “real rate of return”—a
return after adjusting for the impact of inflation. Inflation—a rise in the
general price level—erodes the purchasing power of an investor’s portfolio.
For example, if an investment provides a “nominal” total return of 5% in a
given year and inflation is 2% during that period, the inflation-adjusted, or
real, return is 3%. Investors should be conscious of both the nominal and the
real returns on their investments. Investors in inflation-indexed bond funds
who do not reinvest the portion of the income distribution that comes from
inflation adjustments will not maintain the purchasing power of the
investment over the long term. This is because interest earned depends on
the amount of principal invested, and that principal will not grow with
inflation if the investor does not reinvest the principal adjustment paid out as
part of a fund’s income distributions.
 
10
Plain Talk About Inflation-Indexed Securities and Interest Rates
Interest rates on conventional bonds have two primary components: a “real”
yield and an increment that reflects investor expectations of future inflation.
By contrast, interest rates on an IIS are adjusted for inflation and, therefore,
are not affected meaningfully by inflation expectations. This leaves only real
interest rates to influence the price of an IIS. A rise in real interest rates will
cause the price of an IIS to fall, while a decline in real interest rates will
boost the price of an IIS.
 
Plain Talk About Inflation-Indexed Securities and Taxes
Any increase in principal for an IIS resulting from inflation adjustments is
considered by the IRS to be taxable income in the year it occurs. For direct
holders of an IIS, this means that taxes must be paid on principal
adjustments, even though these amounts are not received until the bond
matures. By contrast, a mutual fund holding an IIS pays out (to shareholders)
both interest income and the income attributable to principal adjustments
each quarter in the form of cash or reinvested shares, and the shareholders
must pay taxes on the distributions.
Market disruptions can adversely affect local and global markets as well as normal market conditions and operations. Any such disruptions could have an adverse impact on the value of the Fund's investments and Fund performance.
Security Selection
The Fund attempts to track the investment performance of a benchmark index that measures the investment return of inflation-protected public obligations issued by the U.S. Treasury with remaining maturities of less than 5 years. The Fund uses the replication method of indexing, meaning that it generally holds the same securities as its target index and in approximately the same proportions.
Other Investment Policies and Risks
The Fund reserves the right to substitute a different index for the index it currently tracks if the current index is discontinued, if the Fund's agreement with the sponsor of its target index is terminated, or for any other reason determined in good faith by the Fund’s board of trustees. In any such instance, the substitute index would represent the same market segment as the current index.
11
The Fund may invest, to a limited extent, in derivatives. Generally speaking, a derivative is a financial contract whose value is based on the value of a financial asset (such as a stock, a bond, or a currency), a physical asset (such as gold, oil, or wheat), a market index, or a reference rate. Investments in derivatives may subject the Fund to risks different from, and possibly greater than, those of investments directly in the underlying securities or assets. The Fund will not use derivatives for speculation or for the purpose of leveraging (magnifying) investment returns.
The Fund may invest a small portion of its assets in fixed income futures, which are a type of derivative, and/or shares of exchange-traded funds (ETFs). These fixed income futures and ETFs typically provide returns similar to those of the bonds listed in the index, or in a subset of the index, the Fund seeks to track. The Fund may purchase futures or ETFs when doing so will reduce the Fund’s transaction costs, facilitate cash management, mitigate risk, or have the potential to add value because the instruments are favorably priced. Vanguard receives no additional revenue from Fund assets invested in ETF Shares of other Vanguard funds. Fund assets invested in ETF Shares are excluded when allocating to the Fund its share of the costs of Vanguard operations.
Cash Management
The Fund's daily cash balance may be invested in Vanguard Market Liquidity Fund and/or Vanguard Municipal Cash Management Fund (each, a CMT Fund), which are low-cost money market funds. When investing in a CMT Fund, the Fund bears its proportionate share of the expenses of the CMT Fund in which it invests. Vanguard receives no additional revenue from Fund assets invested in a CMT Fund.
Methods Used to Meet Redemption Requests
Under normal circumstances, the Fund typically expects to meet redemptions with positive cash flows. When this is not an option, the Fund seeks to maintain its risk exposure by selling a cross section of the Fund’s holdings to meet redemptions, while also factoring in transaction costs. Additionally, the Fund may work with larger clients to implement their redemptions in a manner that is least disruptive to the portfolio; see “Potentially disruptive redemptions” under Redeeming Shares in the Investing With Vanguard section.
Under certain circumstances, including under stressed market conditions, there are additional tools that the Fund may use in order to meet redemptions, including advancing the settlement of market trades with counterparties to match investor redemption payments or delaying settlement of an investor’s transaction to match trade settlement within regulatory requirements. The Fund may also suspend payment of redemption proceeds for up to seven days; see
12
“Emergency circumstances” under Redeeming Shares in the Investing With Vanguard section. Additionally under these unusual circumstances, the Fund may borrow money (subject to certain regulatory conditions and if available under board-approved procedures) through an interfund lending facility; through a bank line-of-credit, including a joint committed credit facility; or through an uncommitted line-of-credit from Vanguard in order to meet redemption requests.
Temporary Investment Measures
The Fund may temporarily depart from its normal investment policies and strategies when the advisor believes that doing so is in the Fund's best interest, so long as the strategy or policy employed is consistent with the Fund's investment objective. For instance, the Fund may invest beyond its normal limits in derivatives or exchange-traded funds that are consistent with the Fund's investment objective when those instruments are more favorably priced or provide needed liquidity, as might be the case when the Fund receives large cash flows that it cannot prudently invest immediately.
Frequent Trading or Market-Timing
Background. Some investors try to profit from strategies involving frequent trading of mutual fund shares, such as market-timing. For funds holding foreign securities, investors may try to take advantage of an anticipated difference between the price of the fund’s shares and price movements in overseas markets, a practice also known as time-zone arbitrage. Investors also may try to engage in frequent trading of funds holding investments such as small-cap stocks and high-yield bonds. As money is shifted into and out of a fund by a shareholder engaging in frequent trading, the fund incurs costs for buying and selling securities, resulting in increased brokerage and administrative costs. These costs are borne by all fund shareholders, including the long-term investors who do not generate the costs. In addition, frequent trading may interfere with an advisor’s ability to efficiently manage the fund.
Policies to address frequent trading. The Vanguard funds (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) do not knowingly accommodate frequent trading. The board of trustees of each Vanguard fund (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) has adopted policies and procedures reasonably designed to detect and discourage frequent trading and, in some cases, to compensate the fund for the costs associated with it. These policies and procedures do not apply to ETF Shares because frequent trading in ETF Shares generally does not disrupt portfolio management or otherwise harm fund
13
shareholders. Although there is no assurance that Vanguard will be able to detect or prevent frequent trading or market-timing in all circumstances, the following policies have been adopted to address these issues:
• Each Vanguard fund reserves the right to reject any purchase request—including exchanges from other Vanguard funds—without notice and regardless of size. For example, a purchase request could be rejected because the investor has a history of frequent trading or if Vanguard determines that such purchase may negatively affect a fund’s operation or performance.
• Each Vanguard fund (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) generally prohibits, except as otherwise noted in the Investing With Vanguard section, an investor’s purchases or exchanges into a fund account for 30 calendar days after the investor has redeemed or exchanged out of that fund account.
• Certain Vanguard funds charge shareholders purchase and/or redemption fees on transactions.
See the Investing With Vanguard section of this prospectus for further details on Vanguard’s transaction policies.
Each Vanguard fund (other than retail and government money market funds), in determining its net asset value, will use fair-value pricing when appropriate, as described in the Share Price section. Fair-value pricing may reduce or eliminate the profitability of certain frequent-trading strategies.
Do not invest with Vanguard if you are a market-timer.
Turnover Rate
Although the Fund generally seeks to invest for the long term, it may sell securities regardless of how long they have been held. Generally, an index fund sells securities in response to redemption requests from shareholders of conventional (not exchange-traded) shares or to changes in the composition of its target index or in an effort to manage the fund’s duration. The Financial Highlights section of this prospectus shows historical turnover rates for the Fund. A turnover rate of 100%, for example, would mean that the Fund had sold and replaced securities valued at 100% of its net assets within a one-year period. In general, the greater the turnover rate, the greater the impact transaction costs will have on a fund’s return. Also, funds with high turnover rates may be more likely to generate capital gains, including short-term capital gains, that must be distributed to shareholders and will be taxable to shareholders investing through a taxable account.
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The Fund and Vanguard
The Fund is a member of The Vanguard Group, a family of over 200 funds. All of the funds that are members of The Vanguard Group (other than funds of funds) share in the expenses associated with administrative services and business operations, such as personnel, office space, and equipment.
Vanguard Marketing Corporation provides marketing services to the funds. Although fund shareholders do not pay sales commissions or 12b-1 distribution fees, each fund (other than a fund of funds) or each share class of a fund (in the case of a fund with multiple share classes) pays its allocated share of the Vanguard funds’ marketing costs.  
Plain Talk About Vanguard’s Unique Corporate Structure
The Vanguard Group is owned jointly by the funds it oversees and thus
indirectly by the shareholders in those funds. Most other mutual funds are
operated by management companies that are owned by third parties—either
public or private stockholders—and not by the funds they serve.
Investment Advisor
The Vanguard Group, Inc., P.O. Box 2600, Valley Forge, PA 19482, which began operations in 1975, serves as advisor to the Fund through its Fixed Income Group. As of September 30, 2020, Vanguard served as advisor for approximately $5.2 trillion in assets. Vanguard provides investment advisory services to the Fund pursuant to the Funds’ Service Agreement and subject to the supervision and oversight of the trustees and officers of the Fund.
For the fiscal year ended September 30, 2020, the advisory expenses represented an effective annual rate of less than 0.01% of the Fund’s average net assets.
Under the terms of an SEC exemption, the Fund's board of trustees may, without prior approval from shareholders, change the terms of an advisory agreement with a third-party investment advisor or hire a new third-party investment advisor—either as a replacement for an existing advisor or as an additional advisor. Any significant change in the Fund’s advisory arrangements will be communicated to shareholders in writing. As the Fund's sponsor and overall manager, Vanguard may provide investment advisory services to the Fund at any time. Vanguard may also recommend to the board of trustees that an
15
advisor be hired, terminated, or replaced or that the terms of an existing advisory agreement be revised. The Fund has filed an application seeking a similar SEC exemption with respect to investment advisors that are wholly owned subsidiaries of Vanguard. If the exemption is granted, the Fund may rely on the new SEC relief.
For a discussion of why the board of trustees approved the Fund's investment advisory arrangement, see the most recent semiannual report to shareholders covering the fiscal period ended March 31.
The manager primarily responsible for the day-to-day management of the Fund is:
Joshua C. Barrickman, CFA, Principal of Vanguard and co-head of Vanguard’s Fixed Income Indexing Americas. He has been with Vanguard since 1998, has worked in investment management since 1999, has managed investment portfolios since 2005, and has managed the Fund since its inception in 2012. Education: B.S., Ohio Northern University; M.B.A., Lehigh University.
The Fund's Statement of Additional Information provides information about the portfolio manager’s compensation, other accounts under management, and ownership of shares of the Fund.
Dividends, Capital Gains, and Taxes
Fund Distributions
The Fund distributes to shareholders virtually all of its net income (interest less expenses) as well as any net short-term or long-term capital gains realized from the sale of its holdings. From time to time, the Fund may also make distributions that are treated as a return of capital. The Fund can declare and distribute income dividends quarterly in March, June, September, and December. The Fund may make a supplemental distribution at some other time during the year. However, the special tax treatment applicable to the Fund’s portfolio of inflation-indexed bonds increases the Fund’s risk of overdistributing income and paying a return of capital for a year. To minimize this overdistribution risk, the Fund may determine to pay distributions less frequently than quarterly in a year, and in some years, the Fund may not pay any income dividend. Capital gains distributions, if any, generally occur annually in December.
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You can receive distributions of income or capital gains in cash, or you can have them automatically reinvested in more shares of the Fund. However, if you are investing through an employer-sponsored retirement or savings plan, your distributions will be automatically reinvested in additional Fund shares.  
Plain Talk About Distributions
As a shareholder, you are entitled to your portion of a fund’s income from
interest as well as capital gains from the fund’s sale of investments. Income
consists of interest the fund earns from its money market and bond
investments. Capital gains are realized whenever the fund sells securities for
higher prices than it paid for them. These capital gains are either short-term
or long-term, depending on whether the fund held the securities for one year
or less or for more than one year.
 
Plain Talk About Return of Capital
Return of capital is the portion of a distribution representing the return of
your original investment in a fund. Return of capital reduces your cost basis
in the fund’s shares and is not taxable to you until your cost basis has been
reduced to zero. During periods of deflation, the fund’s inflation-indexed
bonds may experience a downward adjustment in their value. These
downward adjustments can partially or entirely offset, or more than offset,
the income earned on the bonds. Under certain circumstances, these
downward adjustments could require the fund to reclassify a portion of the
income dividends previously distributed to shareholders as return of capital.
To reduce the possibility of a reclassification, the fund may determine to pay
income dividends less frequently than quarterly in a year, and in some years,
the fund may not pay any income dividends.
Basic Tax Points
Investors in taxable accounts should be aware of the following basic federal income tax points:
• Distributions are taxable to you whether or not you reinvest these amounts in additional Fund shares.
• Distributions declared in December—if paid to you by the end of January—are taxable as if received in December.
• Any income dividend distribution or short-term capital gains distribution that you receive is taxable to you as ordinary income.
17
• Any distribution of net long-term capital gains is taxable to you as long-term capital gains, no matter how long you have owned shares in the Fund.
• Capital gains distributions may vary considerably from year to year as a result of the Fund's normal investment activities and cash flows.
• Your cost basis in the Fund will be decreased by the amount of any return of capital that you receive. This, in turn, will affect the amount of any capital gain or loss that you realize when selling or exchanging your Fund shares.
• Return of capital distributions generally are not taxable to you until your cost basis has been reduced to zero. If your cost basis is at zero, return of capital distributions will be treated as capital gains.
• A sale or exchange of Fund shares is a taxable event. This means that you may have a capital gain to report as income, or a capital loss to report as a deduction, when you complete your tax return.
• Any conversion between classes of shares of the same fund is a nontaxable event. By contrast, an exchange between classes of shares of different funds is a taxable event.
• Vanguard (or your intermediary) will send you a statement each year showing the tax status of all of your distributions.
Individuals, trusts, and estates whose income exceeds certain threshold amounts are subject to a 3.8% Medicare contribution tax on “net investment income.” Net investment income takes into account distributions paid by the Fund and capital gains from any sale or exchange of Fund shares.
Income dividends and capital gains distributions that you receive, as well as your gains or losses from any sale or exchange of Fund shares, may be subject to state and local income taxes. Depending on your state’s rules, however, any dividends attributable to interest earned on direct obligations of the U.S. government may be exempt from state and local taxes. Vanguard will notify you each year how much, if any, of your dividends may qualify for this exemption.
This prospectus provides general tax information only. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply. Please consult your tax advisor for detailed information about any tax consequences for you.  
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Plain Talk About Buying a Dividend
Unless you are a tax-exempt investor or investing through a tax-advantaged
account (such as an IRA or an employer-sponsored retirement or savings
plan), you should consider avoiding a purchase of fund shares shortly before
the fund makes a distribution, because doing so can cost you money in
taxes. This is known as “buying a dividend.” For example: On December 15,
you invest $5,000, buying 250 shares for $20 each. If the fund pays a
distribution of $1 per share on December 16, its share price will drop to $19
(not counting market change). You still have only $5,000 (250 shares x $19 =
$4,750 in share value, plus 250 shares x $1 = $250 in distributions), but you
owe tax on the $250 distribution you received—even if you reinvest it in
more shares. To avoid buying a dividend, check a fund’s distribution schedule
before you invest.
General Information
Backup withholding. By law, Vanguard must withhold 24% of any taxable distributions or redemptions from your account if you do not:
• Provide your correct taxpayer identification number.
• Certify that the taxpayer identification number is correct.
• Confirm that you are not subject to backup withholding.
Similarly, Vanguard (or your intermediary) must withhold taxes from your account if the IRS instructs us to do so.
Foreign investors. Vanguard funds offered for sale in the United States (Vanguard U.S. funds), including the Fund offered in this prospectus, are not widely available outside the United States. Non-U.S. investors should be aware that U.S. withholding and estate taxes and certain U.S. tax reporting requirements may apply to any investments in Vanguard U.S. funds. Foreign investors should visit the non-U.S. investors page on our website at vanguard.com for information on Vanguard’s non-U.S. products.
Invalid addresses. If an income dividend distribution or capital gains distribution check mailed to your address of record is returned as undeliverable, Vanguard will automatically reinvest the distribution and all future distributions until you provide us with a valid mailing address. Reinvestments will receive the net asset value calculated on the date of the reinvestment.
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Share Price
Share price, also known as net asset value (NAV), is calculated as of the close of regular trading on the New York Stock Exchange (NYSE), generally 4 p.m., Eastern time, on each day that the NYSE is open for business (a business day). In the rare event the NYSE experiences unanticipated disruptions and is unavailable at the close of the trading day, NAVs will be calculated as of the close of regular trading on the Nasdaq (or another alternate exchange if the Nasdaq is unavailable, as determined at Vanguard’s discretion), generally 4 p.m., Eastern time. Each share class has its own NAV, which is computed by dividing the total assets, minus liabilities, allocated to the share class by the number of Fund shares outstanding for that class. On U.S. holidays or other days when the NYSE is closed, the NAV is not calculated, and the Fund does not sell or redeem shares.
Debt securities held by a Vanguard fund are valued based on information furnished by an independent pricing service or market quotations. When a fund determines that pricing-service information or market quotations either are not readily available or do not accurately reflect the value of a security, the security is priced at its fair value (the amount that the owner might reasonably expect to receive upon the current sale of the security).
The values of any foreign securities held by a fund are converted into U.S. dollars using an exchange rate obtained from an independent third party as of the close of regular trading on the NYSE. The values of any mutual fund shares, including institutional money market fund shares, held by a fund are based on the NAVs of the shares. The values of any ETF shares or closed-end fund shares held by a fund are based on the market value of the shares.
A fund also may use fair-value pricing on bond market holidays when the fund is open for business (such as Columbus Day and Veterans Day). Fair-value prices are determined by Vanguard according to procedures adopted by the board of trustees. When fair-value pricing is employed, the prices of securities used by a fund to calculate the NAV may differ from quoted or published prices for the same securities.
Vanguard fund share prices are published daily on our website at vanguard.com/prices.
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Financial Highlights
Financial highlights information is intended to help you understand a fund’s performance for the past five years (or, if shorter, its period of operations). Certain information reflects financial results for a single fund share. Total return represents the rate that an investor would have earned or lost each period on an investment in a fund or share class (assuming reinvestment of all distributions). This information has been obtained from the financial statements audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, whose report, along with fund financial statements, is included in a fund’s most recent annual report to shareholders. You may obtain a free copy of a fund’s latest annual or semiannual report, which is available upon request.
Vanguard Short-Term Inflation-Protected Securities Index Fund Institutional Shares  
 
Year Ended September 30,
For a Share Outstanding Throughout Each Period
2020
2019
2018
2017
2016
Net Asset Value, Beginning of Period
$24.62
$24.27
$24.81
$24.90
$24.28
Investment Operations
 
 
 
 
 
Net Investment Income1
0.306
0.517
0.696
0.333
0.139
Net Realized and Unrealized Gain (Loss) on Investments
0.853
0.319
(0.449)
(0.225)
0.481
Total from Investment Operations
1.159
0.836
0.247
0.108
0.620
Distributions
 
 
 
 
 
Dividends from Net Investment Income
(0.319)
(0.486)
(0.787)
(0.198)
—
Distributions from Realized Capital Gains
—
—
—
—
—
Total Distributions
(0.319)
(0.486)
(0.787)
(0.198)
—
Net Asset Value, End of Period
$25.46
$24.62
$24.27
$24.81
$24.90
Total Return
4.73%
3.48%
1.02%
0.44%
2.55%
Ratios/Supplemental Data
 
 
 
 
 
Net Assets, End of Period (Millions)
$11,880
$9,967
$8,067
$6,986
$5,500
Ratio of Total Expenses to Average Net Assets
0.04%
0.04%
0.04%
0.04%
0.04%
Ratio of Net Investment Income to Average Net Assets
1.22%
2.08%
2.83%
1.37%
0.54%
Portfolio Turnover Rate2
37%
26%
25%
27%
28%
1
Calculated based on average shares outstanding.
2
Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund's capital shares, including ETF Creation Units.
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Investing With Vanguard
This section of the prospectus explains the basics of doing business with Vanguard. Vanguard fund shares can be held directly with Vanguard or indirectly through an intermediary, such as a bank, a broker, or an investment advisor. If you hold Vanguard fund shares directly with Vanguard, you should carefully read each topic within this section that pertains to your relationship with Vanguard. If you hold Vanguard fund shares indirectly through an intermediary (including shares held in a brokerage account through Vanguard Brokerage Services®), please see Investing With Vanguard Through Other Firms, and also refer to your account agreement with the intermediary for information about transacting in that account. If you hold Vanguard fund shares through an employer-sponsored retirement or savings plan, please see Employer-Sponsored Plans. Vanguard reserves the right to change the following policies without notice. Please call or check online for current information. See Contacting Vanguard.
For Vanguard fund shares held directly with Vanguard, each fund you hold in an account is a separate “fund account.” For example, if you hold three funds in a nonretirement account titled in your own name, two funds in a nonretirement account titled jointly with your spouse, and one fund in an individual retirement account, you have six fund accounts—and this is true even if you hold the same fund in multiple accounts. Note that each reference to “you” in this prospectus applies to any one or more registered account owners or persons authorized to transact on your account.
Purchasing Shares
Vanguard reserves the right, without notice, to increase or decrease the minimum amount required to open, convert shares to, or maintain a fund account or to add to an existing fund account.
Investment minimums may differ for certain categories of investors.
Account Minimums for Institutional Shares
To open and maintain an account. $5 million. If you request Institutional Shares when you open a new account but the investment amount does not meet the account minimum for Institutional Shares, your investment will be placed in another share class of the Fund, as appropriate.
 
Certain Vanguard institutional clients may meet the minimum investment amount by aggregating separate accounts within the same Fund. This aggregation policy does not apply to financial intermediaries.
 
Vanguard may charge additional recordkeeping fees for institutional clients
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whose accounts are recordkept by Vanguard. Please contact your Vanguard representative to determine whether additional recordkeeping fees apply to your account.
To add to an existing account. Generally $1.
How to Initiate a Purchase Request
Be sure to check Exchanging Shares, Frequent-Trading Limitations, and Other Rules You Should Know before placing your purchase request.
Online. You may open certain types of accounts, request a purchase of shares, and request an exchange through our website or our mobile application if your account is eligible and you are registered for online access.
By telephone. You may call Vanguard to begin the account registration process or request that the account-opening forms be sent to you. You may also call Vanguard to request a purchase of shares in your account or to request an exchange. See Contacting Vanguard.
By mail. You may send Vanguard your account registration form and check to open a new fund account. To add to an existing fund account, you may send your check with an Invest-by-Mail form (from a transaction confirmation or your account statement) or with a deposit slip (available online).
How to Pay for a Purchase
By electronic bank transfer. You may purchase shares of a Vanguard fund through an electronic transfer of money from a bank account. To establish the electronic bank transfer service on an account, you must designate the bank account online, complete a form, or fill out the appropriate section of your account registration form. After the service is set up on your account, you can purchase shares by electronic bank transfer on a regular schedule (Automatic Investment Plan), if eligible, or upon request. Your purchase request can be initiated online (if you are registered for online access), by telephone, or by mail.
By wire. Wiring instructions vary for different types of purchases. Please call Vanguard for instructions and policies on purchasing shares by wire. See Contacting Vanguard.
By check. You may make initial or additional purchases to your fund account by sending a check with a deposit slip or by utilizing our mobile application if your account is eligible and you are registered for online access. Also see How to Initiate a Purchase Request. Make your check payable to Vanguard and include the appropriate fund number (e.g., Vanguard—1867).
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By exchange. You may purchase shares of a Vanguard fund using the proceeds from the simultaneous redemption of shares of another Vanguard fund. You may initiate an exchange online (if you are registered for online access), by telephone, or by mail with an exchange form. See Exchanging Shares.
Trade Date
The trade date for any purchase request received in good order will depend on the day and time Vanguard receives your request, the manner in which you are paying, and the type of fund you are purchasing. Your purchase will be executed using the NAV as calculated on the trade date. NAVs are calculated only on days that the NYSE is open for trading (a business day). In the rare event the NYSE experiences unanticipated disruptions and is unavailable at the close of the trading day, NAVs will be calculated as of the close of regular trading on the Nasdaq (or another alternate exchange if the Nasdaq is unavailable, as determined at Vanguard’s discretion), generally 4 p.m., Eastern time. The time selected for NAV calculation in this rare event shall also serve as the conclusion of the trading day. See Share Price.
For purchases by check into all funds other than money market funds and for purchases by exchange, wire, or electronic bank transfer into all funds: If the purchase request is received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the trade date for the purchase will be the same day. If the purchase request is received on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the trade date for the purchase will be the next business day.
For purchases by check into money market funds: If the purchase request is received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the trade date for the purchase will be the next business day. If the purchase request is received on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the trade date for the purchase will be the second business day following the day Vanguard receives the purchase request. Because money market instruments must be purchased with federal funds and it takes a money market mutual fund one business day to convert check proceeds into federal funds, the trade date for the purchase will be one business day later than for other funds.
If your purchase request is not accurate and complete, it may be rejected. See Other Rules You Should Know—Good Order.
For further information about purchase transactions, consult our website at vanguard.com or see Contacting Vanguard.
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Other Purchase Rules You Should Know
Check purchases. All purchase checks must be written in U.S. dollars, be drawn on a U.S. bank, and be accompanied by good order instructions. Vanguard does not accept cash, traveler’s checks, starter checks, or money orders. In addition, Vanguard may refuse checks that are not made payable to Vanguard.
New accounts. We are required by law to obtain from you certain personal information that we will use to verify your identity. If you do not provide the information, we may not be able to open your account. If we are unable to verify your identity, Vanguard reserves the right, without notice, to close your account or take such other steps as we deem reasonable. Certain types of accounts may require additional documentation.
Refused or rejected purchase requests. Vanguard reserves the right to stop selling fund shares or to reject any purchase request at any time and without notice, including, but not limited to, purchases requested by exchange from another Vanguard fund. This also includes the right to reject any purchase request because the investor has a history of frequent trading or because the purchase may negatively affect a fund’s operation or performance.
Large purchases. Call Vanguard before attempting to invest a large dollar amount.
No cancellations. Vanguard will not accept your request to cancel any purchase request once processing has begun. Please be careful when placing a purchase request.
Converting Shares
When a conversion occurs, you receive shares of one class in place of shares of another class of the same fund. At the time of conversion, the dollar value of the “new” shares you receive equals the dollar value of the “old” shares that were converted. In other words, the conversion has no effect on the value of your investment in the fund at the time of the conversion. However, the number of shares you own after the conversion may be greater than or less than the number of shares you owned before the conversion, depending on the NAVs of the two share classes.
Vanguard will not accept your request to cancel any self-directed conversion request once processing has begun. Please be careful when placing a conversion request.
A conversion between share classes of the same fund is a nontaxable event.
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Trade Date
The trade date for any conversion request received in good order will depend on the day and time Vanguard receives your request. Your conversion will be executed using the NAVs of the different share classes on the trade date. NAVs are calculated only on days that the NYSE is open for trading (a business day). In the rare event the NYSE experiences unanticipated disruptions and is unavailable at the close of the trading day, NAVs will be calculated as of the close of regular trading on the Nasdaq (or another alternate exchange if the Nasdaq is unavailable, as determined at Vanguard’s discretion), generally 4 p.m., Eastern time. The time selected for NAV calculation in this rare event shall also serve as the conclusion of the trading day. See Share Price.
For a conversion request (other than a request to convert to ETF Shares) received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the trade date will be the same day. For a conversion request received on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the trade date will be the next business day. See Other Rules You Should Know.
Conversions to Institutional Shares
You are eligible for a self-directed conversion from another share class to Institutional Shares of the Fund, provided that your account meets all eligibility requirements. You may request a conversion through our website (if you are registered for online access), or you may contact Vanguard by telephone or by mail to request this transaction. Accounts that qualify for Institutional Shares will not be automatically converted.
Conversions to ETF Shares
Owners of conventional shares (i.e., not exchange-traded shares) issued by the Fund may convert those shares to ETF Shares of equivalent value of the same fund. Please note that investors who own conventional shares through a 401(k) plan or other employer-sponsored retirement or benefit plan generally may not convert those shares to ETF Shares and should check with their plan sponsor or recordkeeper. ETF Shares, whether acquired through a conversion or purchased on the secondary market, cannot be converted to conventional shares by a shareholder. Also, ETF Shares of one fund cannot be exchanged for ETF Shares of another fund.
ETF Shares must be held in a brokerage account. Thus, before converting conventional shares to ETF Shares, you must have an existing, or open a new, brokerage account. This account may be with Vanguard Brokerage Services or with any other brokerage firm.
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Vanguard Brokerage Services does not impose a fee on conversions from conventional shares to Vanguard ETF Shares. However, other brokerage firms may charge a fee to process a conversion. Vanguard reserves the right, in the future, to impose a transaction fee on conversions or to limit, temporarily suspend, or terminate the conversion privilege. For additional information on converting conventional shares to ETF Shares, please contact Vanguard to obtain a prospectus for ETF Shares. See Contacting Vanguard.
Mandatory Conversions to Another Share Class
If an account no longer meets the balance requirements for a share class, Vanguard may automatically convert the shares in the account to another share class, as appropriate. A decline in the account balance because of market movement may result in such a conversion. Vanguard will notify the investor in writing before any mandatory conversion occurs.
Redeeming Shares
How to Initiate a Redemption Request
Be sure to check Exchanging Shares, Frequent-Trading Limitations, and Other Rules You Should Know before placing your redemption request.
Online. You may request a redemption of shares or request an exchange through our website or our mobile application if your account is eligible and you are registered for online access.
By telephone. You may call Vanguard to request a redemption of shares or an exchange. See Contacting Vanguard.
By mail. You may send a form (available online) to Vanguard to redeem from a fund account or to make an exchange.
How to Receive Redemption Proceeds
By electronic bank transfer. You may have the proceeds of a fund redemption sent directly to a designated bank account. To establish the electronic bank transfer service on an account, you must designate a bank account online, complete a form, or fill out the appropriate section of your account registration form. After the service is set up on your account, you can redeem shares by electronic bank transfer on a regular schedule (Automatic Withdrawal Plan), if eligible, or upon request. Your redemption request can be initiated online (if you are registered for online access), by telephone, or by mail.
By wire. To receive your proceeds by wire, you may instruct Vanguard to wire your redemption proceeds ($100 minimum) to a previously designated bank
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account. To establish the wire redemption service, you generally must designate a bank account online, complete a form, or fill out the appropriate section of your account registration form.
Please note that Vanguard charges a $10 wire fee for outgoing wire redemptions. The fee is assessed in addition to, rather than being withheld from, redemption proceeds and is paid directly to the fund in which you invest. For example, if you redeem $100 via a wire, you will receive the full $100, and the $10 fee will be assessed to your fund account through an additional redemption of fund shares. If you redeem your entire fund account, your redemption proceeds will be reduced by the amount of the fee. The wire fee does not apply to accounts held by Flagship and Flagship Select clients; accounts held through intermediaries, including Vanguard Brokerage Services; or accounts held by institutional clients.
By exchange. You may have the proceeds of a Vanguard fund redemption invested directly in shares of another Vanguard fund. You may initiate an exchange online (if you are registered for online access), by telephone, or by mail. See Exchanging Shares.
By check. If you have not chosen another redemption method, Vanguard will mail you a redemption check, generally payable to all registered account owners, normally within two business days of your trade date, and generally to the address of record.
Trade Date
The trade date for any redemption request received in good order will depend on the day and time Vanguard receives your request and the manner in which you are redeeming. Your redemption will be executed using the NAV as calculated on the trade date. NAVs are calculated only on days that the NYSE is open for trading (a business day). In the rare event the NYSE experiences unanticipated disruptions and is unavailable at the close of the trading day, NAVs will be calculated as of the close of regular trading on the Nasdaq (or another alternate exchange if the Nasdaq is unavailable, as determined at Vanguard’s discretion), generally 4 p.m., Eastern time. The time selected for NAV calculation in this rare event shall also serve as the conclusion of the trading day. See Share Price.
For redemptions by check, exchange, or wire: If the redemption request is received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the trade date will be the same day. If the redemption request is received on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the trade date will be the next business day.
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• Note on timing of wire redemptions from money market funds: For telephone requests received by Vanguard on a business day before 10:45 a.m., Eastern time (2 p.m., Eastern time, for Vanguard Cash Reserves Federal Money Market Fund; 12:30 p.m., Eastern time, for Vanguard Federal Money Market Fund), the redemption proceeds generally will leave Vanguard by the close of business the same day. For telephone requests received by Vanguard on a business day after those cut-off times, or on a nonbusiness day, and for all requests other than by telephone, the redemption proceeds generally will leave Vanguard by the close of business on the next business day.
• Note on timing of wire redemptions from all other funds: For requests received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the redemption proceeds generally will leave Vanguard by the close of business on the next business day. For requests received by Vanguard on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the redemption proceeds generally will leave Vanguard by the close of business on the second business day after Vanguard receives the request.
For redemptions by electronic bank transfer: If the redemption request is received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the trade date will be the same day. If the redemption request is received on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the trade date will be the next business day.
If your redemption request is not accurate and complete, it may be rejected. If we are unable to send your redemption proceeds by wire or electronic bank transfer because the receiving institution rejects the transfer, Vanguard will make additional efforts to complete your transaction. If Vanguard is still unable to complete the transaction, we may send the proceeds of the redemption to you by check, generally payable to all registered account owners, or use your proceeds to purchase new shares of the fund from which you sold shares for the purpose of the wire or electronic bank transfer transaction. See Other Rules You Should Know—Good Order.
If your redemption request is received in good order, we typically expect that redemption proceeds will be paid by the Fund within one business day of the trade date; however, in certain circumstances, investors may experience a longer settlement period at the time of the transaction. For further information, see “Potentially disruptive redemptions” and “Emergency circumstances.”
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For further information about redemption transactions, consult our website at vanguard.com or see Contacting Vanguard.
Other Redemption Rules You Should Know
Documentation for certain accounts. Special documentation may be required to redeem from certain types of accounts, such as trust, corporate, nonprofit, or retirement accounts. Please call us before attempting to redeem from these types of accounts.
Potentially disruptive redemptions. Vanguard reserves the right to pay all or part of a redemption in kind—that is, in the form of securities—if we reasonably believe that a cash redemption would negatively affect the fund’s operation or performance or that the shareholder may be engaged in market-timing or frequent trading. Under these circumstances, Vanguard also reserves the right to delay payment of the redemption proceeds for up to seven calendar days. By calling us before you attempt to redeem a large dollar amount, you may avoid in-kind or delayed payment of your redemption. Please see Frequent-Trading Limitations for information about Vanguard’s policies to limit frequent trading.
Recently purchased shares. Although you can redeem shares at any time, proceeds may not be made available to you until the fund collects payment for your purchase. This may take up to seven calendar days for shares purchased by check or by electronic bank transfer. If you have written a check on a fund with checkwriting privileges, that check may be rejected if your fund account does not have a sufficient available balance.
Address change. If you change your address online or by telephone, there may be up to a 14-day restriction (starting on the business day after your address is changed) on your ability to request check redemptions online and by telephone. You can request a redemption in writing (using a form available online) at any time. Confirmations of address changes are sent to both the old and new addresses.
Payment to a different person or address. At your request, we can make your redemption check payable, or wire your redemption proceeds, to a different person or send it to a different address. However, this generally requires the written consent of all registered account owners and may require additional documentation, such as a signature guarantee or a notarized signature. You may obtain a signature guarantee from some commercial or savings banks, credit unions, trust companies, or member firms of a U.S. stock exchange.
No cancellations. Vanguard will not accept your request to cancel any redemption request once processing has begun. Please be careful when placing a redemption request.
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Emergency circumstances. Vanguard funds can postpone payment of redemption proceeds for up to seven calendar days. In addition, Vanguard funds can suspend redemptions and/or postpone payments of redemption proceeds beyond seven calendar days at times when the NYSE is closed or during emergency circumstances, as determined by the SEC.
Exchanging Shares
An exchange occurs when you use the proceeds from the redemption of shares of one Vanguard fund to simultaneously purchase shares of a different Vanguard fund. You can make exchange requests online (if you are registered for online access), by telephone, or by mail. See Purchasing Shares and Redeeming Shares.
If the NYSE is open for regular trading (generally until 4 p.m., Eastern time, on a business day) at the time an exchange request is received in good order, the trade date generally will be the same day. See Other Rules You Should Know—Good Order for additional information on all transaction requests.
Vanguard will not accept your request to cancel any exchange request once processing has begun. Please be careful when placing an exchange request.
Call Vanguard before attempting to exchange a large dollar amount. By calling us before you attempt to exchange a large dollar amount, you may avoid delayed or rejected transactions.
Please note that Vanguard reserves the right, without notice, to revise or terminate the exchange privilege, limit the amount of any exchange, or reject an exchange, at any time, for any reason. See Frequent-Trading Limitations for additional restrictions on exchanges.
Frequent-Trading Limitations
Because excessive transactions can disrupt management of a fund and increase the fund’s costs for all shareholders, the board of trustees of each Vanguard fund places certain limits on frequent trading in the funds. Each Vanguard fund (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) limits an investor’s purchases or exchanges into a fund account for 30 calendar days after the investor has redeemed or exchanged out of that fund account. ETF Shares are not subject to these frequent-trading limits.
For Vanguard Retirement Investment Program pooled plans, the limitations apply to exchanges made online or by telephone.
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These frequent-trading limitations do not apply to the following:
• Purchases of shares with reinvested dividend or capital gains distributions.
• Transactions through Vanguard’s Automatic Investment Plan, Automatic Exchange Service, Direct Deposit Service, Automatic Withdrawal Plan, Required Minimum Distribution Service, and Vanguard Small Business Online®.
• Discretionary transactions through Vanguard Personal Advisor Services®, Vanguard Institutional Advisory Services®, and Vanguard Digital Advisor™.
• Redemptions of shares to pay fund or account fees.
• Redemptions of shares to remove excess shareholder contributions to certain types of retirement accounts (including, but not limited to, IRAs and Vanguard Individual 401(k) Plans).
• Transfers and reregistrations of shares within the same fund.
• Purchases of shares by asset transfer or direct rollover.
• Conversions of shares from one share class to another in the same fund.
• Checkwriting redemptions.
• Section 529 college savings plans.
• Certain approved institutional portfolios and asset allocation programs, as well as trades made by funds or trusts managed by Vanguard or its affiliates that invest in other Vanguard funds. (Please note that shareholders of Vanguard’s funds of funds are subject to the limitations.)
For participants in employer-sponsored defined contribution plans,* the frequent-trading limitations do not apply to:
• Purchases of shares with participant payroll or employer contributions or loan repayments.
• Purchases of shares with reinvested dividend or capital gains distributions.
• Distributions, loans, and in-service withdrawals from a plan.
• Redemptions of shares as part of a plan termination or at the direction of the plan.
• Transactions executed through the Vanguard Managed Account Program.
• Redemptions of shares to pay fund or account fees.
• Share or asset transfers or rollovers.
• Reregistrations of shares.
• Conversions of shares from one share class to another in the same fund.
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• Exchange requests submitted by written request to Vanguard. (Exchange requests submitted by fax, if otherwise permitted, are subject to the limitations.)
* The following Vanguard fund accounts are subject to the frequent-trading limitations: SEP-IRAs, SIMPLE IRAs, certain Individual 403(b)(7) Custodial Accounts, and Vanguard Individual 401(k) Plans.
Accounts Held by Institutions (Other Than Defined Contribution Plans)
Vanguard will systematically monitor for frequent trading in institutional clients’ accounts. If we detect suspicious trading activity, we will investigate and take appropriate action, which may include applying to a client’s accounts the 30-day policy previously described, prohibiting a client’s purchases of fund shares, and/or revoking the client’s exchange privilege.
Accounts Held by Intermediaries
When intermediaries establish accounts in Vanguard funds for the benefit of their clients, we cannot always monitor the trading activity of the individual clients. However, we review trading activity at the intermediary (omnibus) level, and if we detect suspicious activity, we will investigate and take appropriate action. If necessary, Vanguard may prohibit additional purchases of fund shares by an intermediary, including for the benefit of certain of the intermediary’s clients. Intermediaries also may monitor their clients’ trading activities with respect to Vanguard funds.
For those Vanguard funds that charge purchase and/or redemption fees, intermediaries will be asked to assess these fees on client accounts and remit these fees to the funds. The application of purchase and redemption fees and frequent-trading limitations may vary among intermediaries. There are no assurances that Vanguard will successfully identify all intermediaries or that intermediaries will properly assess purchase and redemption fees or administer frequent-trading limitations. If you invest with Vanguard through an intermediary, please read that firm’s materials carefully to learn of any other rules or fees that may apply.
Other Rules You Should Know
Prospectus and Shareholder Report Mailings
When two or more shareholders have the same last name and address, just one summary prospectus (or prospectus) and/or shareholder report may be sent in an attempt to eliminate the unnecessary expense of duplicate mailings. You may request individual prospectuses and reports by contacting our Client Services Department in writing, by telephone, or online. See Contacting Vanguard.
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Vanguard.com
Registration. If you are a registered user of vanguard.com, you can review your account holdings; buy, sell, or exchange shares of most Vanguard funds; and perform most other transactions through our website. You must register for this service online.
Electronic delivery. Vanguard can deliver your account statements, transaction confirmations, prospectuses, certain tax forms, and shareholder reports electronically. If you are a registered user of vanguard.com, you can consent to the electronic delivery of these documents by logging on and changing your mailing preferences under “Account Maintenance.” You can revoke your electronic consent at any time through our website, and we will begin to send paper copies of these documents within 30 days of receiving your revocation.
Telephone Transactions
Automatic. When we set up your account, we will automatically enable you to do business with us by telephone, unless you instruct us otherwise in writing.
Tele-Account®. To obtain fund and account information through Vanguard’s automated telephone service, you must first establish a Personal Identification Number (PIN) by calling Tele-Account at 800-662-6273.
Proof of a caller’s authority. We reserve the right to refuse a telephone request if the caller is unable to provide the requested information or if we reasonably believe that the caller is not an individual authorized to act on the account. Before we allow a caller to act on an account, we may request the following information:
• Authorization to act on the account (as the account owner or by legal documentation or other means).
• Account registration and address.
• Fund name and account number, if applicable.
• Other information relating to the caller, the account owner, or the account.
Good Order
We reserve the right to reject any transaction instructions that are not in “good order.” Good order generally means that your instructions:
• Are provided by the person(s) authorized in accordance with Vanguard’s policies and procedures to access the account and request transactions.
• Include the fund name and account number.
• Include the amount of the transaction (stated in dollars, shares, or percentage).
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Written instructions also must generally be provided on a Vanguard form and include:
• Signature(s) and date from the authorized person(s).
• Signature guarantees or notarized signatures, if required for the type of transaction. (Call Vanguard for specific requirements.)
• Any supporting documentation that may be required.
Good order requirements may vary among types of accounts and transactions. For more information, consult our website at vanguard.com or see Contacting Vanguard.
Vanguard reserves the right, without notice, to revise the requirements for good order.
Future Trade-Date Requests
Vanguard does not accept requests to hold a purchase, conversion, redemption, or exchange transaction for a future date. All such requests will receive trade dates as previously described in Purchasing Shares, Converting Shares, Redeeming Shares, and Exchanging Shares. Vanguard reserves the right to return future-dated purchase checks.
Accounts With More Than One Owner
If an account has more than one owner or authorized person, Vanguard generally will accept instructions from any one owner or authorized person.
Responsibility for Fraud
You should take precautions to protect yourself from fraud. Keep your account-related information private, and review any account confirmations, statements, or other information that we provide to you as soon as you receive them. Let us know immediately if you discover unauthorized activity or see something on your account that you do not understand or that looks unusual.
Vanguard will not be responsible for losses that result from transactions by a person who we reasonably believe is authorized to act on your account.
Uncashed Checks
Please cash your distribution or redemption checks promptly. Vanguard will not pay interest on uncashed checks. Vanguard may be required to transfer assets related to uncashed checks to a state under the state’s abandoned property law.
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Dormant Accounts
If your account has no activity in it for a period of time, Vanguard may be required to transfer it to a state under the state’s abandoned property law, subject to potential federal or state withholding taxes.
Unusual Circumstances
If you experience difficulty contacting Vanguard online or by telephone, you can send us your transaction request on a Vanguard form by regular or express mail.
Investing With Vanguard Through Other Firms
You may purchase or sell shares of most Vanguard funds through a financial intermediary, such as a bank, a broker, or an investment advisor. Please consult your financial intermediary to determine which, if any, shares are available through that firm and to learn about other rules that may apply. Your financial intermediary can provide you with account information and any required tax forms. You may be required to pay a commission on purchases of mutual fund shares made through a financial intermediary.
Please see Frequent-Trading Limitations—Accounts Held by Intermediaries for information about the assessment of any purchase or redemption fees and the monitoring of frequent trading for accounts held by intermediaries.
Low-Balance Accounts
The Fund reserves the right to convert an investor’s Institutional Shares to another share class, as appropriate, if the fund account balance falls below the account minimum for any reason, including market fluctuation. Any such conversion will be preceded by written notice to the investor.
Right to Change Policies
In addition to the rights expressly stated elsewhere in this prospectus, Vanguard reserves the right, without notice, to (1) alter, add, or discontinue any conditions of purchase (including eligibility requirements), redemption, exchange, conversion, service, or privilege at any time and (2) alter, impose, discontinue, or waive any purchase fee, redemption fee, account service fee, or other fee charged to a shareholder or a group of shareholders. Changes may affect any or all investors. These actions will be taken when, at the sole discretion of Vanguard management, Vanguard believes they are in the best interest of a fund.
Account Restrictions
Vanguard reserves the right to: (1) redeem all or a portion of a fund/account to meet a legal obligation, including tax withholding, tax lien, garnishment order, or other obligation imposed on your account by a court or government agency; (2)
36
redeem shares, close an account, or suspend account privileges, features, or options in the case of threatening conduct or activity; (3) redeem shares, close an account, or suspend account privileges, features, or options if Vanguard believes or suspects that not doing so could result in a suspicious, fraudulent, or illegal transaction; (4) place restrictions on the ability to redeem any or all shares in an account if it is required to do so by a court or government agency; (5) place restrictions on the ability to redeem any or all shares in an account if Vanguard believes that doing so will prevent fraud, financial exploitation or abuse, or to protect vulnerable investors; (6) freeze any account and/or suspend account services if Vanguard has received reasonable notice of a dispute regarding the assets in an account, including notice of a dispute between the registered or beneficial account owners; and (7) freeze any account and/or suspend account services upon initial notification to Vanguard of the death of an account owner.
Share Classes
Vanguard reserves the right, without notice, to change the eligibility requirements of its share classes, including the types of clients who are eligible to purchase each share class.
Fund and Account Updates
Confirmation Statements
We will send (or provide through our website, whichever you prefer) a confirmation of your trade date and the amount of your transaction when you buy, sell, exchange, or convert shares. However, we will not send confirmations reflecting only checkwriting redemptions or the reinvestment of dividend or capital gains distributions. For any month in which you had a checkwriting redemption, a Checkwriting Activity Statement will be sent to you itemizing the checkwriting redemptions for that month. Promptly review each confirmation statement that we provide to you. It is important that you contact Vanguard immediately with any questions you may have about any transaction reflected on a confirmation statement, or Vanguard will consider the transaction properly processed.
Portfolio Summaries
We will send (or provide through our website, whichever you prefer) quarterly portfolio summaries to help you keep track of your accounts throughout the year. Each summary shows the market value of your account at the close of the statement period, as well as all distributions, purchases, redemptions, exchanges, transfers, and conversions for the current calendar quarter (or month). Promptly review each summary that we provide to you. It is important
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that you contact Vanguard immediately with any questions you may have about any transaction reflected on the summary, or Vanguard will consider the transaction properly processed.
Tax Information Statements
For most accounts, Vanguard (or your intermediary) is required to provide annual tax forms to assist you in preparing your income tax returns. These forms are generally available for each calendar year early in the following year. Registered users of vanguard.com can also view certain forms through our website. Vanguard (or your intermediary) may also provide you with additional tax-related documentation. For more information, consult our website at vanguard.com or see Contacting Vanguard.
Annual and Semiannual Reports
We will send (or provide through our website, whichever you prefer) reports about Vanguard Short-Term Inflation-Protected Securities Index Fund twice a year, in May and November. These reports include overviews of the financial markets and provide the following specific Fund information:
• Performance assessments and comparisons with industry benchmarks.
• Financial statements with listings of Fund holdings.
Portfolio Holdings
Please consult the Fund's Statement of Additional Information or our website for a description of the policies and procedures that govern disclosure of the Fund’s portfolio holdings.
Employer-Sponsored Plans
Your plan administrator or your employee benefits office can provide you with detailed information on how to participate in your plan and how to elect the Fund as an investment option.
• If you have any questions about the Fund or Vanguard, including those about the Fund’s investment objective, strategies, or risks, contact Vanguard Participant Services toll-free at 800-523-1188 or visit our website at vanguard.com.
• If you have questions about your account, contact your plan administrator or the organization that provides recordkeeping services for your plan.
• Be sure to carefully read each topic that pertains to your transactions with Vanguard.
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Vanguard reserves the right to change its policies without notice to shareholders.
Transactions
Processing times for your transaction requests may differ among recordkeepers or among transaction and funding types. Your plan’s recordkeeper (which may also be Vanguard) will determine the necessary processing time frames for your transaction requests prior to submission to the Fund. Consult your recordkeeper or plan administrator for more information.
If Vanguard is serving as your plan recordkeeper and if your transaction involves one or more investments with an early cut-off time for processing or another trading restriction, your entire transaction will be subject to the restriction when the trade date for your transaction is determined.
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Contacting Vanguard  
Web
 
Vanguard.com
For the most complete source of Vanguard news
For fund, account, and service information
For most account transactions
For literature requests
24 hours a day, 7 days a week
 
Phone
Vanguard Tele-Account®
800-662-6273
For automated fund and account information
Toll-free, 24 hours a day, 7 days a week
Investor Information 800-662-7447
(Text telephone for people with
hearing impairment at 800-749-7273)
For fund and service information
For literature requests
Client Services 800-662-2739
(Text telephone for people with
hearing impairment at 800-749-7273)
For account information
For most account transactions
Participant Services 800-523-1188
(Text telephone for people with
hearing impairment at 800-749-7273)
For information and services for participants in
employer-sponsored plans
Institutional Division
888-809-8102
For information and services for large institutional
investors
Financial Advisor and Intermediary
Sales Support 800-997-2798
For information and services for financial intermediaries
including financial advisors, broker-dealers, trust
institutions, and insurance companies
Financial Advisory and Intermediary
Trading Support 800-669-0498
For account information and trading support for
financial intermediaries including financial advisors,
broker-dealers, trust institutions, and insurance
companies
Additional Information  
 
Inception
Date
Newspaper
Abbreviation
Vanguard
Fund Number
CUSIP
Number
Short-Term Inflation-Protected
Securities Index Fund
 
 
 
 
Institutional Shares
10/17/2012
STIPSIxIns
1867
922020607
 
CGS identifiers have been provided by CUSIP Global Services, managed on behalf of the American Bankers Association by Standard & Poor’s Financial Services, LLC, and are not for use or dissemination in a manner that would serve as a substitute for any CUSIP service. The CUSIP Database, ©2021 American Bankers Association. “CUSIP” is a registered trademark of the American Bankers Association.
CFA® is a registered trademark owned by CFA Institute.
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BLOOMBERG is a trademark and service mark of Bloomberg Finance L.P. BARCLAYS is a trademark and service mark of Barclays Bank Plc, used under license. Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited (BISL) (collectively, Bloomberg), or Bloomberg’s licensors, own all proprietary rights in the Bloomberg Barclays U.S. TIPS 0-5 Year Index and the Bloomberg Barclay's U.S. Aggregate Bond Index (the Indices or Bloomberg Barclays Indices).
Neither Barclays Bank Plc, Barclays Capital Inc., or any affiliate (collectively Barclays) or Bloomberg is the issuer or producer of the Short-Term Inflation-Protected Securities Index Fund and neither Bloomberg nor Barclays has any responsibilities, obligations or duties to investors in the Short-Term Inflation-Protected Securities Index Fund. The Indices are licensed for use by The Vanguard Group, Inc. (Vanguard) as the sponsor of the Short-Term Inflation-Protected Securities Index Fund. Bloomberg and Barclays’ only relationship with Vanguard in respect to the Indices is the licensing of the Indices, which is determined, composed and calculated by BISL, or any successor thereto, without regard to the Issuer or the Short-Term Inflation-Protected Securities Index Fund or the owners of the Short-Term Inflation-Protected Securities Index Fund.
Additionally, Vanguard may for itself execute transaction(s) with Barclays in or relating to the Indices in connection with the Short-Term Inflation-Protected Securities Index Fund. Investors acquire the Short-Term Inflation-Protected Securities Index Fund from Vanguard and investors neither acquire any interest in the Indices nor enter into any relationship of any kind whatsoever with Bloomberg or Barclays upon making an investment in the Short-Term Inflation-Protected Securities Index Fund. The Short-Term Inflation-Protected Securities Index Fund is not sponsored, endorsed, sold or promoted by Bloomberg or Barclays. Neither Bloomberg nor Barclays makes any representation or warranty, express or implied regarding the advisability of investing in the Short-Term Inflation-Protected Securities Index Fund or the advisability of investing in securities generally or the ability of the Indices to track corresponding or relative market performance. Neither Bloomberg nor Barclays has passed on the legality or suitability of the Short-Term Inflation-Protected Securities Index Fund with respect to any person or entity. Neither Bloomberg nor Barclays is responsible for and has not participated in the determination of the timing of, prices at, or quantities of the Short-Term Inflation-Protected Securities Index Fund to be issued. Neither Bloomberg nor Barclays has any obligation to take the needs of the Issuer or the owners of the Short-Term Inflation-Protected Securities Index Fund or any other third party into consideration in determining, composing or calculating the Indices. Neither Bloomberg nor Barclays has any obligation or liability in connection with administration, marketing or trading of the Short-Term Inflation-Protected Securities Index Fund.
The licensing agreement between Bloomberg and Barclays is solely for the benefit of Bloomberg and Barclays and not for the benefit of the owners of the Short-Term Inflation-Protected Securities Index Fund, investors or other third parties. In addition, the licensing agreement between Vanguard and Bloomberg is solely for the benefit of Vanguard and Bloomberg and not for the benefit of the owners of the Short-Term Inflation-Protected Securities Index Fund, investors or other third parties.
NEITHER BLOOMBERG NOR BARCLAYS SHALL HAVE ANY LIABILITY TO THE ISSUER, INVESTORS OR TO OTHER THIRD PARTIES FOR THE QUALITY, ACCURACY AND/OR COMPLETENESS OF THE BLOOMBERG BARCLAYS INDICES OR ANY DATA INCLUDED THEREIN OR FOR INTERRUPTIONS IN THE DELIVERY OF THE BLOOMBERG BARCLAYS INDICES. NEITHER BLOOMBERG NOR BARCLAYS MAKES ANY WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE ISSUER, THE INVESTORS OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE BLOOMBERG BARCLAYS INDICES OR ANY DATA INCLUDED THEREIN. NEITHER BLOOMBERG NOR BARCLAYS MAKES ANY EXPRESS OR IMPLIED WARRANTIES, AND EACH HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE BLOOMBERG BARCLAYS INDICES OR ANY DATA INCLUDED THEREIN. BLOOMBERG RESERVES THE RIGHT TO CHANGE THE METHODS OF CALCULATION OR PUBLICATION, OR TO CEASE THE CALCULATION OR PUBLICATION OF THE BLOOMBERG BARCLAYS INDICES, AND NEITHER BLOOMBERG NOR BARCLAYS SHALL BE LIABLE FOR ANY MISCALCULATION OF OR ANY INCORRECT, DELAYED OR INTERRUPTED PUBLICATION WITH RESPECT TO THE BLOOMBERG BARCLAYS INDICES. NEITHER BLOOMBERG NOR BARCLAYS SHALL BE LIABLE FOR ANY DAMAGES, INCLUDING, WITHOUT LIMITATION, ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES, OR ANY LOST PROFITS AND EVEN IF ADVISED OF THE POSSIBILITY OF SUCH, RESULTING FROM THE USE OF THE BLOOMBERG BARCLAYS INDICES OR ANY DATA INCLUDED THEREIN OR WITH RESPECT TO THE SHORT-TERM INFLATION-PROTECTED SECURITIES INDEX FUND.
None of the information supplied by Bloomberg or Barclays and used in this publication may be reproduced in any manner without the prior written permission of both Bloomberg and Barclays Capital, the investment banking division of Barclays Bank Plc. Barclays Bank Plc is registered in England No. 1026167, registered office 1 Churchill Place London E14 5HP.
41
Glossary of Investment Terms
Average Maturity. The average length of time until bonds held by a fund reach maturity and are repaid. In general, the longer the average maturity, the more a fund's share price fluctuates in response to changes in market interest rates. In calculating average maturity, a fund uses a bond’s maturity or, if applicable, an earlier date on which the advisor believes it is likely that a maturity-shortening device (such as a call, put, refunding, prepayment, or redemption provision or an adjustable coupon rate) will cause the bond to be repaid.
Bloomberg Barclays U.S. Aggregate Bond Index. An index that is the broadest measure of the taxable U.S. bond market, including most Treasury, agency, corporate, mortgage-backed, asset-backed, and international dollar-denominated issues, all with investment-grade ratings (rated Baa3 or above by Moody's) and maturities of 1 year or more.
Bond. A debt security (IOU) issued by a corporation, a government, or a government agency in exchange for the money the bondholder lends it. In most instances, the issuer agrees to pay back the loan by a specific date and generally to make regular interest payments until that date.
Capital Gains Distributions. Payments to mutual fund shareholders of gains realized on securities that a fund has sold at a profit, minus any realized losses.
Coupon Rate. The interest rate paid by the issuer of a debt security until its maturity. It is expressed as an annual percentage of the face value of the security.
Dividend Distributions. Payments to mutual fund shareholders of income from interest or dividends generated by a fund's investments.
Expense Ratio. A fund's total annual operating expenses expressed as a percentage of the fund's average net assets. The expense ratio includes management and administrative expenses, but it does not include the transaction costs of buying and selling portfolio securities.
Face Value. The amount to be paid at a bond’s maturity; also known as the par value or principal.
Fixed Income Security. An investment, such as a bond, representing a debt that must be repaid by a specified date, and on which the borrower may pay a fixed, variable, or floating rate of interest.
42
Inception Date. The date on which the assets of a fund (or one of its share classes) are first invested in accordance with the fund's investment objective. For funds with a subscription period, the inception date is the day after that period ends. Investment performance is generally measured from the inception date.
Indexing. A low-cost investment strategy in which a mutual fund attempts to track—rather than outperform—a specified market benchmark, or “index.”
Inflation-Indexed Securities. Bonds issued by the U.S. government, government agencies, or corporations, whose principal and interest payments—unlike those of conventional bonds—are adjusted over time to reflect inflation.
Investment-Grade Bond. A debt security whose credit quality is considered by independent bond rating agencies, or through independent analysis conducted by a fund's advisor, to be sufficient to ensure timely payment of principal and interest under current economic circumstances. Debt securities rated in one of the four highest rating categories are considered investment-grade. Other debt securities may be considered by an advisor to be investment-grade.
Joint Committed Credit Facility. The Fund participates, along with other funds managed by Vanguard, in a committed credit facility provided by a syndicate of lenders pursuant to a credit agreement that may be renewed annually; each Vanguard fund is individually liable for its borrowings, if any, under the credit facility. The amount and terms of the committed credit facility are subject to approval by the Fund's board of trustees and renegotiation with the lender syndicate on an annual basis.
Mutual Fund. An investment company that pools the money of many people and invests it in a variety of securities in an effort to achieve a specific objective over time.
New York Stock Exchange (NYSE). A stock exchange based in New York City that is open for regular trading on business days, Monday through Friday, from 9:30 a.m. to 4 p.m., Eastern time.
Principal. The face value of a debt instrument or the amount of money put into an investment.
43
Return of Capital. A return of all or part of your original investment in a fund. In general, return of capital reduces your cost basis in a fund’s shares and is not taxable to you until your cost basis has been reduced to zero.
Securities. Stocks, bonds, money market instruments, and other investments.
Total Return. A percentage change, over a specified time period, in a mutual fund’s net asset value, assuming the reinvestment of all distributions of dividends and capital gains.
Volatility. The fluctuations in value of a mutual fund or other security. The greater a fund's volatility, the wider the fluctuations in its returns.
Yield. Income (interest or dividends) earned by an investment, expressed as a percentage of the investment’s price.
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Connect with Vanguard® > vanguard.com
For More Information
If you would like more information about Vanguard Short-Term Inflation-Protected Securities Index Fund, the following documents are available free upon request:
Annual/Semiannual Reports to Shareholders
Additional information about the Fund's investments is available in the Fund's annual and semiannual reports to shareholders. In the annual report, you will find a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.
Statement of Additional Information (SAI)
The SAI provides more detailed information about the Fund and is incorporated by reference into (and thus legally a part of) this prospectus.
To receive a free copy of the latest annual or semiannual report or the SAI, or to request additional information about the Fund or other Vanguard funds, please visit vanguard.com or contact us as follows:
If you are an individual investor:
Telephone: 800-662-7447; Text telephone for people with hearing impairment: 800-749-7273
If you are a client of Vanguard's Institutional Division:
Telephone: 888-809-8102; Text telephone for people
with hearing impairment: 800-749-7273
If you are a current Vanguard shareholder and would like information about your account, account transactions, and/or account statements, please call:
Client Services Department
Telephone: 800-662-2739; Text telephone for people with hearing impairment: 800-749-7273
Information Provided by the Securities and Exchange Commission (SEC)
Reports and other information about the Fund are available in the EDGAR database on the SEC’s website at www.sec.gov, or you can receive copies of this information, for a fee, by electronic request at the following email address: publicinfo@sec.gov.
Fund's Investment Company Act file number: 811-05628
© 2021 The Vanguard Group, Inc. All rights reserved.Vanguard Marketing Corporation, Distributor.I 1867 012021
 
Vanguard Short-Term Inflation-Protected Securities Index Fund
Prospectus
 January 31, 2021
Admiral™ Shares
Vanguard Short-Term Inflation-Protected Securities Index Fund Admiral Shares (VTAPX)
 See the inside front cover for important information about access to your fund’s annual and semiannual shareholder reports.
 This prospectus contains financial data for the Fund through the fiscal year ended September 30, 2020.
  The Securities and Exchange Commission (SEC) has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is
a criminal offense.
Important information about access to shareholder reports
Beginning on January 1, 2021, as permitted by regulations adopted by the SEC, paper copies of your fund’s annual and semiannual shareholder reports will no longer be sent to you by mail, unless you specifically request them. Instead, you will be notified by mail each time a report is posted on the website and will be provided with a link to access the report.
If you have already elected to receive shareholder reports electronically, you will not be affected by this change and do not need to take any action. You may elect to receive shareholder reports and other communications from the fund electronically by contacting your financial intermediary (such as a broker-dealer or bank) or, if you invest directly with the fund, by calling Vanguard at one of the phone numbers on the back cover of this prospectus or by logging on to vanguard.com.
You may elect to receive paper copies of all future shareholder reports free of charge. If you invest through a financial intermediary, you can contact the intermediary to request that you continue to receive paper copies. If you invest directly with the fund, you can call Vanguard at one of the phone numbers on the back cover of this prospectus or log on to vanguard.com. Your election to receive paper copies will apply to all the funds you hold through an intermediary or directly with Vanguard.
Contents
 
Fund Summary
Investment Objective
The Fund seeks to track the performance of a benchmark index that measures the investment return of inflation-protected public obligations of the U.S. Treasury with remaining maturities of less than 5 years.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy, hold, and sell Admiral Shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
Shareholder Fees
(Fees paid directly from your investment)  
 
Sales Charge (Load) Imposed on Purchases
None
Purchase Fee
None
Sales Charge (Load) Imposed on Reinvested Dividends
None
Redemption Fee
None
Account Service Fee Per Year
(for certain fund account balances below $10,000)
$20
Annual Fund Operating Expenses
(Expenses that you pay each year as a percentage of the value of your investment)  
 
Management Fees
0.05%
12b-1 Distribution Fee
None
Other Expenses
0.01%
Total Annual Fund Operating Expenses
0.06%
1
Example
The following example is intended to help you compare the cost of investing in the Fund's Admiral Shares with the cost of investing in other mutual funds. It illustrates the hypothetical expenses that you would incur over various periods if you were to invest $10,000 in the Fund's shares. This example assumes that the shares provide a return of 5% each year and that total annual fund operating expenses remain as stated in the preceding table. You would incur these hypothetical expenses whether or not you were to redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:  
1 Year
3 Years
5 Years
10 Years
$6
$19
$34
$77
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in more taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the previous expense example, reduce the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 37% of the average value of its portfolio.
Principal Investment Strategies
The Fund employs an indexing investment approach designed to track the performance of the Bloomberg Barclays U.S. Treasury Inflation-Protected Securities (TIPS) 0-5 Year Index. The Index is a market-capitalization-weighted index that includes all inflation-protected public obligations issued by the U.S. Treasury with remaining maturities of less than 5 years.
 
The Fund attempts to replicate the target index by investing all, or substantially all, of its assets in the securities that make up the Index, holding each security in approximately the same proportion as its weighting in the Index. The Fund maintains a dollar-weighted average maturity consistent with that of the Index. As of September 30, 2020, the dollar-weighted average maturity of the Index was 2.7 years.
2
Principal Risks
The Fund is designed for investors with a low tolerance for risk, but you could still lose money by investing in it. The Fund is subject to the following risks, which could affect the Fund's performance, and the level of risk may vary based on market conditions:
•  Income fluctuations . The Fund’s quarterly income distributions are likely to fluctuate considerably more than the income distributions of a typical bond fund. In fact, under certain conditions, the Fund may not have any income to distribute. Income fluctuations associated with changes in interest rates are expected to be low; however, income fluctuations associated with changes in inflation are expected to be high. Overall, investors can expect income fluctuations to be high for the Fund.
•  Real interest rate risk , which is the chance that the value of a bond will fluctuate because of a change in the level of real, or after inflation, interest rates. Although inflation-indexed bonds seek to provide inflation protection, their prices may decline when real interest rates rise and vice versa. Because the Index is a market-capitalization-weighted index that includes all inflation-protected public obligations issued by the U.S. Treasury with remaining maturities of less than 5 years, real interest rate risk is expected to be low for the Fund.
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Annual Total Returns
The following bar chart and table are intended to help you understand the risks of investing in the Fund. The bar chart shows how the performance of the Fund's Admiral Shares has varied from one calendar year to another over the periods shown. The table shows how the average annual total returns of the Admiral Shares compare with those of the Fund's target index and another comparative index, which have investment characteristics similar to those of the Fund. Keep in mind that the Fund's past performance (before and after taxes) does not indicate how the Fund will perform in the future. Updated performance information is available on our website at vanguard.com/performance or by calling Vanguard toll-free at 800-662-7447.
3
Annual Total Returns — Vanguard Short-Term Inflation-Protected Securities Index Fund Admiral Shares
 
During the periods shown in the bar chart, the highest and lowest returns for a calendar quarter were:  
 
Total Return
Quarter
Highest
2.61%
June 30, 2020
Lowest
-2.42%
June 30, 2013
Average Annual Total Returns for Periods Ended December 31, 2020  
 
1 Year
5 Years
Since
Inception
(Oct. 16,
2012)
Vanguard Short-Term Inflation-Protected Securities Index
Fund Admiral Shares
 
 
 
Return Before Taxes
4.97%
2.76%
1.37%
Return After Taxes on Distributions
4.46
2.09
0.92
Return After Taxes on Distributions and Sale of Fund Shares
2.94
1.82
0.85
Comparative Indexes
(reflect no deduction for fees, expenses, or taxes)
 
 
 
Bloomberg Barclays U.S. TIPS 0-5 Year Index
5.07%
2.82%
1.39%
Bloomberg Barclays U.S. Aggregate Bond Index
7.51
4.44
3.24
Actual after-tax returns depend on your tax situation and may differ from those shown in the preceding table. When after-tax returns are calculated, it is assumed that the shareholder was in the highest individual federal marginal income tax bracket at the time of each distribution of income or capital gains or upon redemption. State and local income taxes are not reflected in the calculations. Please note that after-tax returns are not relevant for a shareholder who holds fund shares in a tax-deferred account, such as an individual retirement account or a 401(k) plan. Also, figures captioned Return After Taxes on
4
Distributions and Sale of Fund Shares may be higher than other figures for the same period if a capital loss occurs upon redemption and results in an assumed tax deduction for the shareholder.
Investment Advisor
The Vanguard Group, Inc. (Vanguard)
Portfolio Manager
Joshua C. Barrickman, CFA, Principal of Vanguard and co-head of Vanguard’s Fixed Income Indexing Americas. He has managed the Fund since its inception in 2012.
Purchase and Sale of Fund Shares
You may purchase or redeem shares online through our website (vanguard.com), by mail (The Vanguard Group, P.O. Box 1110, Valley Forge, PA 19482-1110), or by telephone (800-662-2739). The minimum investment amount required to open and maintain a Fund account for Admiral Shares is $3,000. The minimum investment amount required to add to an existing Fund account is generally $1. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special eligibility rules that may apply to them regarding Admiral Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility. If you are investing through an employer-sponsored retirement or savings plan, your plan administrator or your benefits office can provide you with detailed information on how you can invest through your plan.
Tax Information
The Fund’s distributions may be taxable as ordinary income or capital gain. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply.
Payments to Financial Intermediaries
The Fund and its investment advisor do not pay financial intermediaries for sales of Fund shares.
5
Investing in Index Funds
What Is Indexing?
Indexing is an investment strategy for tracking the performance of a specified market benchmark, or “index.” An index is a group of securities whose overall performance is used as a standard to measure the investment performance of a particular market. There are many types of indexes. Some represent entire markets—such as the U.S. stock market or the U.S. bond market. Other indexes cover market segments—such as small-capitalization stocks or short-term bonds. One cannot invest directly in an index.
The index sponsor determines the securities to include in the index and the weighting of each security in the index. Under normal circumstances, the index sponsor will rebalance an index on a regular schedule. An index sponsor may carry out additional ad hoc index rebalances or delay or cancel a scheduled rebalance. Generally, the index sponsor does not provide any warranty, or accept any liability, with respect to the quality, accuracy, or completeness of either the target index or its related data. Errors made by the index sponsor may occur from time to time and may not be identified by the index sponsor for a period of time or at all. Vanguard does not provide any warranty or guarantee against such errors. Therefore, the gains, losses, or costs associated with the index sponsor’s errors will generally be borne by the index fund and its shareholders.
An index fund seeks to hold all, or a representative sample, of the securities that make up its target index. Index funds attempt to mirror the performance of the target index, for better or worse. However, an index fund generally does not perform exactly like its target index. For example, index funds have operating expenses and transaction costs. Market indexes do not, and therefore they will usually have a slight performance advantage over funds that track them. The ability of an index fund to match its performance to that of its target index can also be impacted by, among other things, the timing and size of cash flows and the size of the fund. Market disruptions and regulatory restrictions could also have an adverse effect on a fund’s ability to adjust its exposure to the required levels in order to track the index.
Index funds typically have the following characteristics:
•  Variety of investments . Depending on a fund’s benchmark index, the fund may invest in the securities of a variety of companies, industries, and/or governments or government agencies.
•  Relative performance consistency . Because they seek to track market benchmarks, index funds usually do not perform dramatically better or worse than their benchmarks.
•  Low cost . Index funds are generally inexpensive to run compared with actively managed funds. They have low or no research costs and typically keep trading activity—and thus dealer markups and other transaction costs—to a minimum compared with actively managed funds.
6
More on the Fund
This prospectus describes the principal risks you would face as a Fund shareholder. It is important to keep in mind one of the main principles of investing: generally, the higher the risk of losing money, the higher the potential reward. The reverse, also, is generally true: the lower the risk, the lower the potential reward. As you consider an investment in any mutual fund, you should take into account your personal tolerance for fluctuations in the securities markets. Look for this     symbol throughout the prospectus. It is used to mark detailed information about the more significant risks that you would confront as a Fund shareholder. To highlight terms and concepts important to mutual fund investors, we have provided Plain Talk® explanations along the way. Reading the prospectus will help you decide whether the Fund is the right investment for you. We suggest that you keep this prospectus for future reference.
Share Class Overview
This prospectus offers the Fund‘s Admiral Shares. Separate prospectuses offer the Fund‘s Investor Shares, which are generally available only to Vanguard funds that operate as funds of funds and to certain retirement plan clients that receive recordkeeping services from Vanguard, and Institutional Shares, which are generally for investors who invest a minimum of $5 million. In addition, the Fund issues ETF Shares (an exchange-traded class of shares), which are also offered through a separate prospectus.
All share classes offered by the Fund have the same investment objective, strategies, and policies. However, different share classes have different expenses; as a result, their investment returns will differ.  
Plain Talk About Fund Expenses
All mutual funds have operating expenses. These expenses, which are
deducted from a fund’s gross income, are expressed as a percentage of the
net assets of the fund. Assuming that operating expenses remain as stated
in the Fees and Expenses section, Vanguard Short-Term Inflation-Protected
Securities Index Fund Admiral Share's expense ratio would be 0.06%, or
$0.60 per $1,000 of average net assets. The average expense ratio for
inflation-protected bond funds in 2019 was 0.67%, or $6.70 per $1,000 of
average net assets (derived from data provided by Lipper, a Thomson
Reuters Company, which reports on the mutual fund industry).
 
7
Plain Talk About Costs of Investing
Costs are an important consideration in choosing a mutual fund. That is
because you, as a shareholder, pay a proportionate share of the costs of
operating a fund and any transaction costs incurred when the fund buys or
sells securities. These costs can erode a substantial portion of the gross
income or the capital appreciation a fund achieves. Even seemingly small
differences in expenses can, over time, have a dramatic effect on a
fund’s performance.
The following sections explain the principal investment strategies and policies that the Fund uses in pursuit of its objective. The Fund's board of trustees, which oversees the Fund's management, may change investment strategies or policies in the interest of shareholders without a shareholder vote, unless those strategies or policies are designated as fundamental. Note that the Fund’s investment objective is not fundamental and may be changed without a shareholder vote. Under normal circumstances, the Fund will invest at least 80% of its assets in inflation-indexed securities that make up its target index. The Fund may change its 80% policy only upon 60 days' notice to shareholders.
8
Market Exposure  
Plain Talk About Inflation-Indexed Securities
Unlike a conventional bond, whose issuer makes regular fixed interest
payments and repays the face value of the bond at maturity, an
inflation-indexed security (IIS) provides principal and interest payments that
are adjusted over time to reflect a rise (inflation) or a drop (deflation) in the
general price level for goods and services. This adjustment is a key feature,
given that inflation has typically occurred. However, there have been periods
of deflation, such as in 1954 when the Consumer Price Index (CPI) declined
by 0.7%. (Source: Bureau of Labor Statistics.) Importantly, in the event of
deflation, the U.S. Treasury has guaranteed that it will repay at least the face
value of an IIS issued by the U.S. government. However, if an IIS is
purchased by a fund at a premium, deflation could cause a fund to
experience a loss.
Inflation measurement and adjustment for an IIS have two important
features. There is a two-month lag between the time that inflation occurs in
the economy and when it is factored into IIS valuations. This is due to the
time required to measure and calculate the CPI and for the U.S. Treasury to
adjust the inflation accrual schedules for an IIS. For example, inflation that
occurs in January is calculated and announced during February and affects
IIS valuations throughout the month of March. In addition, the inflation index
used is the nonseasonally adjusted index. It differs from the CPI that is
reported by most news organizations, which is statistically smoothed to
overcome highs and lows observed at different points each year. The use of
the nonseasonally adjusted index can cause a fund’s income level to
fluctuate.
9
   
The Fund is subject to income fluctuations. The Fund’s quarterly income distributions are likely to fluctuate considerably more than the income distributions of a typical bond fund. In fact, under certain conditions, the Fund may not have any income to distribute. Income fluctuations associated with changes in interest rates are expected to be low; however, income fluctuations associated with changes in inflation are expected to be high. Overall, investors can expect income fluctuations to be high for the Fund.
Although fluctuations in quarterly income distributions are expected to be high, distributions should provide an income yield that adjusts with inflation. In periods of extreme deflation, the Fund may have no income to distribute. If prices throughout the economy decline, the principal and income of an IIS will decline and could result in losses for the Fund.
Changes in interest rates can affect bond income as well as bond prices.
   
The Fund is subject to real interest rate risk, which is the chance that the value of a bond will fluctuate because of a change in the level of real, or after inflation, interest rates. Although inflation-indexed bonds seek to provide inflation protection, their prices may decline when real interest rates rise and vice versa. Because the Index is a market-capitalization-weighted index that includes all inflation-protected public obligations issued by the U.S. Treasury with remaining maturities of less than 5 years, real interest rate risk is expected to be low for the Fund.  
Plain Talk About Real Returns
Inflation-indexed securities are designed to provide a “real rate of return”—a
return after adjusting for the impact of inflation. Inflation—a rise in the
general price level—erodes the purchasing power of an investor’s portfolio.
For example, if an investment provides a “nominal” total return of 5% in a
given year and inflation is 2% during that period, the inflation-adjusted, or
real, return is 3%. Investors should be conscious of both the nominal and the
real returns on their investments. Investors in inflation-indexed bond funds
who do not reinvest the portion of the income distribution that comes from
inflation adjustments will not maintain the purchasing power of the
investment over the long term. This is because interest earned depends on
the amount of principal invested, and that principal will not grow with
inflation if the investor does not reinvest the principal adjustment paid out as
part of a fund’s income distributions.
 
10
Plain Talk About Inflation-Indexed Securities and Interest Rates
Interest rates on conventional bonds have two primary components: a “real”
yield and an increment that reflects investor expectations of future inflation.
By contrast, interest rates on an IIS are adjusted for inflation and, therefore,
are not affected meaningfully by inflation expectations. This leaves only real
interest rates to influence the price of an IIS. A rise in real interest rates will
cause the price of an IIS to fall, while a decline in real interest rates will
boost the price of an IIS.
 
Plain Talk About Inflation-Indexed Securities and Taxes
Any increase in principal for an IIS resulting from inflation adjustments is
considered by the IRS to be taxable income in the year it occurs. For direct
holders of an IIS, this means that taxes must be paid on principal
adjustments, even though these amounts are not received until the bond
matures. By contrast, a mutual fund holding an IIS pays out (to shareholders)
both interest income and the income attributable to principal adjustments
each quarter in the form of cash or reinvested shares, and the shareholders
must pay taxes on the distributions.
Market disruptions can adversely affect local and global markets as well as normal market conditions and operations. Any such disruptions could have an adverse impact on the value of the Fund's investments and Fund performance.
Security Selection
The Fund attempts to track the investment performance of a benchmark index that measures the investment return of inflation-protected public obligations issued by the U.S. Treasury with remaining maturities of less than 5 years. The Fund uses the replication method of indexing, meaning that it generally holds the same securities as its target index and in approximately the same proportions.
Other Investment Policies and Risks
The Fund reserves the right to substitute a different index for the index it currently tracks if the current index is discontinued, if the Fund's agreement with the sponsor of its target index is terminated, or for any other reason determined in good faith by the Fund’s board of trustees. In any such instance, the substitute index would represent the same market segment as the current index.
11
The Fund may invest, to a limited extent, in derivatives. Generally speaking, a derivative is a financial contract whose value is based on the value of a financial asset (such as a stock, a bond, or a currency), a physical asset (such as gold, oil, or wheat), a market index, or a reference rate. Investments in derivatives may subject the Fund to risks different from, and possibly greater than, those of investments directly in the underlying securities or assets. The Fund will not use derivatives for speculation or for the purpose of leveraging (magnifying) investment returns.
The Fund may invest a small portion of its assets in fixed income futures, which are a type of derivative, and/or shares of exchange-traded funds (ETFs). These fixed income futures and ETFs typically provide returns similar to those of the bonds listed in the index, or in a subset of the index, the Fund seeks to track. The Fund may purchase futures or ETFs when doing so will reduce the Fund’s transaction costs, facilitate cash management, mitigate risk, or have the potential to add value because the instruments are favorably priced. Vanguard receives no additional revenue from Fund assets invested in ETF Shares of other Vanguard funds. Fund assets invested in ETF Shares are excluded when allocating to the Fund its share of the costs of Vanguard operations.
Cash Management
The Fund's daily cash balance may be invested in Vanguard Market Liquidity Fund and/or Vanguard Municipal Cash Management Fund (each, a CMT Fund), which are low-cost money market funds. When investing in a CMT Fund, the Fund bears its proportionate share of the expenses of the CMT Fund in which it invests. Vanguard receives no additional revenue from Fund assets invested in a CMT Fund.
Methods Used to Meet Redemption Requests
Under normal circumstances, the Fund typically expects to meet redemptions with positive cash flows. When this is not an option, the Fund seeks to maintain its risk exposure by selling a cross section of the Fund’s holdings to meet redemptions, while also factoring in transaction costs. Additionally, the Fund may work with larger clients to implement their redemptions in a manner that is least disruptive to the portfolio; see “Potentially disruptive redemptions” under Redeeming Shares in the Investing With Vanguard section.
Under certain circumstances, including under stressed market conditions, there are additional tools that the Fund may use in order to meet redemptions, including advancing the settlement of market trades with counterparties to match investor redemption payments or delaying settlement of an investor’s transaction to match trade settlement within regulatory requirements. The Fund may also suspend payment of redemption proceeds for up to seven days; see
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“Emergency circumstances” under Redeeming Shares in the Investing With Vanguard section. Additionally under these unusual circumstances, the Fund may borrow money (subject to certain regulatory conditions and if available under board-approved procedures) through an interfund lending facility; through a bank line-of-credit, including a joint committed credit facility; or through an uncommitted line-of-credit from Vanguard in order to meet redemption requests.
Temporary Investment Measures
The Fund may temporarily depart from its normal investment policies and strategies when the advisor believes that doing so is in the Fund's best interest, so long as the strategy or policy employed is consistent with the Fund's investment objective. For instance, the Fund may invest beyond its normal limits in derivatives or exchange-traded funds that are consistent with the Fund's investment objective when those instruments are more favorably priced or provide needed liquidity, as might be the case when the Fund receives large cash flows that it cannot prudently invest immediately.
Frequent Trading or Market-Timing
Background. Some investors try to profit from strategies involving frequent trading of mutual fund shares, such as market-timing. For funds holding foreign securities, investors may try to take advantage of an anticipated difference between the price of the fund’s shares and price movements in overseas markets, a practice also known as time-zone arbitrage. Investors also may try to engage in frequent trading of funds holding investments such as small-cap stocks and high-yield bonds. As money is shifted into and out of a fund by a shareholder engaging in frequent trading, the fund incurs costs for buying and selling securities, resulting in increased brokerage and administrative costs. These costs are borne by all fund shareholders, including the long-term investors who do not generate the costs. In addition, frequent trading may interfere with an advisor’s ability to efficiently manage the fund.
Policies to address frequent trading. The Vanguard funds (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) do not knowingly accommodate frequent trading. The board of trustees of each Vanguard fund (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) has adopted policies and procedures reasonably designed to detect and discourage frequent trading and, in some cases, to compensate the fund for the costs associated with it. These policies and procedures do not apply to ETF Shares because frequent trading in ETF Shares generally does not disrupt portfolio management or otherwise harm fund
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shareholders. Although there is no assurance that Vanguard will be able to detect or prevent frequent trading or market-timing in all circumstances, the following policies have been adopted to address these issues:
• Each Vanguard fund reserves the right to reject any purchase request—including exchanges from other Vanguard funds—without notice and regardless of size. For example, a purchase request could be rejected because the investor has a history of frequent trading or if Vanguard determines that such purchase may negatively affect a fund’s operation or performance.
• Each Vanguard fund (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) generally prohibits, except as otherwise noted in the Investing With Vanguard section, an investor’s purchases or exchanges into a fund account for 30 calendar days after the investor has redeemed or exchanged out of that fund account.
• Certain Vanguard funds charge shareholders purchase and/or redemption fees on transactions.
See the Investing With Vanguard section of this prospectus for further details on Vanguard’s transaction policies.
Each Vanguard fund (other than retail and government money market funds), in determining its net asset value, will use fair-value pricing when appropriate, as described in the Share Price section. Fair-value pricing may reduce or eliminate the profitability of certain frequent-trading strategies.
Do not invest with Vanguard if you are a market-timer.
Turnover Rate
Although the Fund generally seeks to invest for the long term, it may sell securities regardless of how long they have been held. Generally, an index fund sells securities in response to redemption requests from shareholders of conventional (not exchange-traded) shares or to changes in the composition of its target index or in an effort to manage the fund’s duration. The Financial Highlights section of this prospectus shows historical turnover rates for the Fund. A turnover rate of 100%, for example, would mean that the Fund had sold and replaced securities valued at 100% of its net assets within a one-year period. In general, the greater the turnover rate, the greater the impact transaction costs will have on a fund’s return. Also, funds with high turnover rates may be more likely to generate capital gains, including short-term capital gains, that must be distributed to shareholders and will be taxable to shareholders investing through a taxable account.
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The Fund and Vanguard
The Fund is a member of The Vanguard Group, a family of over 200 funds. All of the funds that are members of The Vanguard Group (other than funds of funds) share in the expenses associated with administrative services and business operations, such as personnel, office space, and equipment.
Vanguard Marketing Corporation provides marketing services to the funds. Although fund shareholders do not pay sales commissions or 12b-1 distribution fees, each fund (other than a fund of funds) or each share class of a fund (in the case of a fund with multiple share classes) pays its allocated share of the Vanguard funds’ marketing costs.  
Plain Talk About Vanguard’s Unique Corporate Structure
The Vanguard Group is owned jointly by the funds it oversees and thus
indirectly by the shareholders in those funds. Most other mutual funds are
operated by management companies that are owned by third parties—either
public or private stockholders—and not by the funds they serve.
Investment Advisor
The Vanguard Group, Inc., P.O. Box 2600, Valley Forge, PA 19482, which began operations in 1975, serves as advisor to the Fund through its Fixed Income Group. As of September 30, 2020, Vanguard served as advisor for approximately $5.2 trillion in assets. Vanguard provides investment advisory services to the Fund pursuant to the Funds’ Service Agreement and subject to the supervision and oversight of the trustees and officers of the Fund.
For the fiscal year ended September 30, 2020, the advisory expenses represented an effective annual rate of less than 0.01% of the Fund’s average net assets.
Under the terms of an SEC exemption, the Fund's board of trustees may, without prior approval from shareholders, change the terms of an advisory agreement with a third-party investment advisor or hire a new third-party investment advisor—either as a replacement for an existing advisor or as an additional advisor. Any significant change in the Fund’s advisory arrangements will be communicated to shareholders in writing. As the Fund's sponsor and overall manager, Vanguard may provide investment advisory services to the Fund at any time. Vanguard may also recommend to the board of trustees that an
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advisor be hired, terminated, or replaced or that the terms of an existing advisory agreement be revised. The Fund has filed an application seeking a similar SEC exemption with respect to investment advisors that are wholly owned subsidiaries of Vanguard. If the exemption is granted, the Fund may rely on the new SEC relief.
For a discussion of why the board of trustees approved the Fund's investment advisory arrangement, see the most recent semiannual report to shareholders covering the fiscal period ended March 31.
The manager primarily responsible for the day-to-day management of the Fund is:
Joshua C. Barrickman, CFA, Principal of Vanguard and co-head of Vanguard’s Fixed Income Indexing Americas. He has been with Vanguard since 1998, has worked in investment management since 1999, has managed investment portfolios since 2005, and has managed the Fund since its inception in 2012. Education: B.S., Ohio Northern University; M.B.A., Lehigh University.
The Fund's Statement of Additional Information provides information about the portfolio manager’s compensation, other accounts under management, and ownership of shares of the Fund.
Dividends, Capital Gains, and Taxes
Fund Distributions
The Fund distributes to shareholders virtually all of its net income (interest less expenses) as well as any net short-term or long-term capital gains realized from the sale of its holdings. From time to time, the Fund may also make distributions that are treated as a return of capital. The Fund can declare and distribute income dividends quarterly in March, June, September, and December. The Fund may make a supplemental distribution at some other time during the year. However, the special tax treatment applicable to the Fund’s portfolio of inflation-indexed bonds increases the Fund’s risk of overdistributing income and paying a return of capital for a year. To minimize this overdistribution risk, the Fund may determine to pay distributions less frequently than quarterly in a year, and in some years, the Fund may not pay any income dividend. Capital gains distributions, if any, generally occur annually in December.
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You can receive distributions of income or capital gains in cash, or you can have them automatically reinvested in more shares of the Fund. However, if you are investing through an employer-sponsored retirement or savings plan, your distributions will be automatically reinvested in additional Fund shares.  
Plain Talk About Distributions
As a shareholder, you are entitled to your portion of a fund’s income from
interest as well as capital gains from the fund’s sale of investments. Income
consists of interest the fund earns from its money market and bond
investments. Capital gains are realized whenever the fund sells securities for
higher prices than it paid for them. These capital gains are either short-term
or long-term, depending on whether the fund held the securities for one year
or less or for more than one year.
 
Plain Talk About Return of Capital
Return of capital is the portion of a distribution representing the return of
your original investment in a fund. Return of capital reduces your cost basis
in the fund’s shares and is not taxable to you until your cost basis has been
reduced to zero. During periods of deflation, the fund’s inflation-indexed
bonds may experience a downward adjustment in their value. These
downward adjustments can partially or entirely offset, or more than offset,
the income earned on the bonds. Under certain circumstances, these
downward adjustments could require the fund to reclassify a portion of the
income dividends previously distributed to shareholders as return of capital.
To reduce the possibility of a reclassification, the fund may determine to pay
income dividends less frequently than quarterly in a year and in some years,
the fund may not pay any income dividends.
Basic Tax Points
Investors in taxable accounts should be aware of the following basic federal income tax points:
• Distributions are taxable to you whether or not you reinvest these amounts in additional Fund shares.
• Distributions declared in December—if paid to you by the end of January—are taxable as if received in December.
• Any income dividend distribution or short-term capital gains distribution that you receive is taxable to you as ordinary income.
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• Any distribution of net long-term capital gains is taxable to you as long-term capital gains, no matter how long you have owned shares in the Fund.
• Capital gains distributions may vary considerably from year to year as a result of the Fund's normal investment activities and cash flows.
• Your cost basis in the Fund will be decreased by the amount of any return of capital that you receive. This, in turn, will affect the amount of any capital gain or loss that you realize when selling or exchanging your Fund shares.
• Return of capital distributions generally are not taxable to you until your cost basis has been reduced to zero. If your cost basis is at zero, return of capital distributions will be treated as capital gains.
• A sale or exchange of Fund shares is a taxable event. This means that you may have a capital gain to report as income, or a capital loss to report as a deduction, when you complete your tax return.
• Any conversion between classes of shares of the same fund is a nontaxable event. By contrast, an exchange between classes of shares of different funds is a taxable event.
• Vanguard (or your intermediary) will send you a statement each year showing the tax status of all of your distributions.
Individuals, trusts, and estates whose income exceeds certain threshold amounts are subject to a 3.8% Medicare contribution tax on “net investment income.” Net investment income takes into account distributions paid by the Fund and capital gains from any sale or exchange of Fund shares.
Income dividends and capital gains distributions that you receive, as well as your gains or losses from any sale or exchange of Fund shares, may be subject to state and local income taxes. Depending on your state’s rules, however, any dividends attributable to interest earned on direct obligations of the U.S. government may be exempt from state and local taxes. Vanguard will notify you each year how much, if any, of your dividends may qualify for this exemption.
This prospectus provides general tax information only. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply. Please consult your tax advisor for detailed information about any tax consequences for you.  
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Plain Talk About Buying a Dividend
Unless you are a tax-exempt investor or investing through a tax-advantaged
account (such as an IRA or an employer-sponsored retirement or savings
plan), you should consider avoiding a purchase of fund shares shortly before
the fund makes a distribution, because doing so can cost you money in
taxes. This is known as “buying a dividend.” For example: On December 15,
you invest $5,000, buying 250 shares for $20 each. If the fund pays a
distribution of $1 per share on December 16, its share price will drop to $19
(not counting market change). You still have only $5,000 (250 shares x $19 =
$4,750 in share value, plus 250 shares x $1 = $250 in distributions), but you
owe tax on the $250 distribution you received—even if you reinvest it in
more shares. To avoid buying a dividend, check a fund’s distribution schedule
before you invest.
General Information
Backup withholding. By law, Vanguard must withhold 24% of any taxable distributions or redemptions from your account if you do not:
• Provide your correct taxpayer identification number.
• Certify that the taxpayer identification number is correct.
• Confirm that you are not subject to backup withholding.
Similarly, Vanguard (or your intermediary) must withhold taxes from your account if the IRS instructs us to do so.
Foreign investors. Vanguard funds offered for sale in the United States (Vanguard U.S. funds), including the Fund offered in this prospectus, are not widely available outside the United States. Non-U.S. investors should be aware that U.S. withholding and estate taxes and certain U.S. tax reporting requirements may apply to any investments in Vanguard U.S. funds. Foreign investors should visit the non-U.S. investors page on our website at vanguard.com for information on Vanguard’s non-U.S. products.
Invalid addresses. If an income dividend distribution or capital gains distribution check mailed to your address of record is returned as undeliverable, Vanguard will automatically reinvest the distribution and all future distributions until you provide us with a valid mailing address. Reinvestments will receive the net asset value calculated on the date of the reinvestment.
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Share Price
Share price, also known as net asset value (NAV), is calculated as of the close of regular trading on the New York Stock Exchange (NYSE), generally 4 p.m., Eastern time, on each day that the NYSE is open for business (a business day). In the rare event the NYSE experiences unanticipated disruptions and is unavailable at the close of the trading day, NAVs will be calculated as of the close of regular trading on the Nasdaq (or another alternate exchange if the Nasdaq is unavailable, as determined at Vanguard’s discretion), generally 4 p.m., Eastern time. Each share class has its own NAV, which is computed by dividing the total assets, minus liabilities, allocated to the share class by the number of Fund shares outstanding for that class. On U.S. holidays or other days when the NYSE is closed, the NAV is not calculated, and the Fund does not sell or redeem shares.
Debt securities held by a Vanguard fund are valued based on information furnished by an independent pricing service or market quotations. When a fund determines that pricing-service information or market quotations either are not readily available or do not accurately reflect the value of a security, the security is priced at its fair value (the amount that the owner might reasonably expect to receive upon the current sale of the security).
The values of any foreign securities held by a fund are converted into U.S. dollars using an exchange rate obtained from an independent third party as of the close of regular trading on the NYSE. The values of any mutual fund shares, including institutional money market fund shares, held by a fund are based on the NAVs of the shares. The values of any ETF shares or closed-end fund shares held by a fund are based on the market value of the shares.
A fund also may use fair-value pricing on bond market holidays when the fund is open for business (such as Columbus Day and Veterans Day). Fair-value prices are determined by Vanguard according to procedures adopted by the board of trustees. When fair-value pricing is employed, the prices of securities used by a fund to calculate the NAV may differ from quoted or published prices for the same securities.
Vanguard fund share prices are published daily on our website at vanguard.com/prices.
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Financial Highlights
Financial highlights information is intended to help you understand a fund’s performance for the past five years (or, if shorter, its period of operations). Certain information reflects financial results for a single fund share. Total return represents the rate that an investor would have earned or lost each period on an investment in a fund or share class (assuming reinvestment of all distributions). This information has been obtained from the financial statements audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, whose report, along with fund financial statements, is included in a fund’s most recent annual report to shareholders. You may obtain a free copy of a fund’s latest annual or semiannual report, which is available upon request.
Vanguard Short-Term Inflation-Protected Securities Index Fund Admiral Shares  
 
Year Ended September 30,
For a Share Outstanding Throughout Each Period
2020
2019
2018
2017
2016
Net Asset Value, Beginning of Period
$24.60
$24.25
$24.79
$24.88
$24.27
Investment Operations
 
 
 
 
 
Net Investment Income1
0.294
0.500
0.692
0.338
0.149
Net Realized and Unrealized Gain (Loss) on Investments
0.860
0.332
(0.450)
(0.241)
0.461
Total from Investment Operations
1.154
0.832
0.242
0.097
0.610
Distributions
 
 
 
 
 
Dividends from Net Investment Income
(0.314)
(0.482)
(0.782)
(0.187)
—
Distributions from Realized Capital Gains
—
—
—
—
—
Total Distributions
(0.314)
(0.482)
(0.782)
(0.187)
—
Net Asset Value, End of Period
$25.44
$24.60
$24.25
$24.79
$24.88
Total Return2
4.72%
3.46%
1.00%
0.40%
2.51%
Ratios/Supplemental Data
 
 
 
 
 
Net Assets, End of Period (Millions)
$8,541
$7,333
$6,525
$5,078
$3,373
Ratio of Total Expenses to Average Net Assets
0.06%
0.06%
0.06%
0.06%
0.07%
Ratio of Net Investment Income to Average Net Assets
1.18%
2.06%
2.81%
1.35%
0.51%
Portfolio Turnover Rate3
37%
26%
25%
27%
28%
1
Calculated based on average shares outstanding.
2
Total returns do not include account service fees that may have applied in the periods shown.
3
Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund's capital shares, including ETF Creation Units.
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Investing With Vanguard
This section of the prospectus explains the basics of doing business with Vanguard. Vanguard fund shares can be held directly with Vanguard or indirectly through an intermediary, such as a bank, a broker, or an investment advisor. If you hold Vanguard fund shares directly with Vanguard, you should carefully read each topic within this section that pertains to your relationship with Vanguard. If you hold Vanguard fund shares indirectly through an intermediary (including shares held in a brokerage account through Vanguard Brokerage Services®), please see Investing With Vanguard Through Other Firms, and also refer to your account agreement with the intermediary for information about transacting in that account. If you hold Vanguard fund shares through an employer-sponsored retirement or savings plan, please see Employer-Sponsored Plans. Vanguard reserves the right to change the following policies without notice. Please call or check online for current information. See Contacting Vanguard.
For Vanguard fund shares held directly with Vanguard, each fund you hold in an account is a separate “fund account.” For example, if you hold three funds in a nonretirement account titled in your own name, two funds in a nonretirement account titled jointly with your spouse, and one fund in an individual retirement account, you have six fund accounts—and this is true even if you hold the same fund in multiple accounts. Note that each reference to “you” in this prospectus applies to any one or more registered account owners or persons authorized to transact on your account.
Purchasing Shares
Vanguard reserves the right, without notice, to increase or decrease the minimum amount required to open, convert shares to, or maintain a fund account or to add to an existing fund account.
Investment minimums may differ for certain categories of investors.
Account Minimums for Admiral Shares
To open and maintain an account. $3,000. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special eligibility rules that may apply to them regarding Admiral Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility.
To add to an existing account. Generally $1.
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How to Initiate a Purchase Request
Be sure to check Exchanging Shares, Frequent-Trading Limitations, and Other Rules You Should Know before placing your purchase request.
Online. You may open certain types of accounts, request a purchase of shares, and request an exchange through our website or our mobile application if your account is eligible and you are registered for online access.
By telephone. You may call Vanguard to begin the account registration process or request that the account-opening forms be sent to you. You may also call Vanguard to request a purchase of shares in your account or to request an exchange. See Contacting Vanguard.
By mail. You may send Vanguard your account registration form and check to open a new fund account. To add to an existing fund account, you may send your check with an Invest-by-Mail form (from a transaction confirmation or your account statement) or with a deposit slip (available online).
How to Pay for a Purchase
By electronic bank transfer. You may purchase shares of a Vanguard fund through an electronic transfer of money from a bank account. To establish the electronic bank transfer service on an account, you must designate the bank account online, complete a form, or fill out the appropriate section of your account registration form. After the service is set up on your account, you can purchase shares by electronic bank transfer on a regular schedule (Automatic Investment Plan), if eligible, or upon request. Your purchase request can be initiated online (if you are registered for online access), by telephone, or by mail.
By wire. Wiring instructions vary for different types of purchases. Please call Vanguard for instructions and policies on purchasing shares by wire. See Contacting Vanguard.
By check. You may make initial or additional purchases to your fund account by sending a check with a deposit slip or by utilizing our mobile application if your account is eligible and you are registered for online access. Also see How to Initiate a Purchase Request. Make your check payable to Vanguard and include the appropriate fund number (e.g., Vanguard—567).
By exchange. You may purchase shares of a Vanguard fund using the proceeds from the simultaneous redemption of shares of another Vanguard fund. You may initiate an exchange online (if you are registered for online access), by telephone, or by mail with an exchange form. See Exchanging Shares.
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Trade Date
The trade date for any purchase request received in good order will depend on the day and time Vanguard receives your request, the manner in which you are paying, and the type of fund you are purchasing. Your purchase will be executed using the NAV as calculated on the trade date. NAVs are calculated only on days that the NYSE is open for trading (a business day). In the rare event the NYSE experiences unanticipated disruptions and is unavailable at the close of the trading day, NAVs will be calculated as of the close of regular trading on the Nasdaq (or another alternate exchange if the Nasdaq is unavailable, as determined at Vanguard’s discretion), generally 4 p.m., Eastern time. The time selected for NAV calculation in this rare event shall also serve as the conclusion of the trading day. See Share Price.
For purchases by check into all funds other than money market funds and for purchases by exchange, wire, or electronic bank transfer into all funds: If the purchase request is received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the trade date for the purchase will be the same day. If the purchase request is received on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the trade date for the purchase will be the next business day.
For purchases by check into money market funds: If the purchase request is received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the trade date for the purchase will be the next business day. If the purchase request is received on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the trade date for the purchase will be the second business day following the day Vanguard receives the purchase request. Because money market instruments must be purchased with federal funds and it takes a money market mutual fund one business day to convert check proceeds into federal funds, the trade date for the purchase will be one business day later than for other funds.
If your purchase request is not accurate and complete, it may be rejected. See Other Rules You Should Know—Good Order.
For further information about purchase transactions, consult our website at vanguard.com or see Contacting Vanguard.
Other Purchase Rules You Should Know
Admiral Shares. Admiral Shares generally are not available for SIMPLE IRAs and Vanguard Individual 401(k) Plans.
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Check purchases. All purchase checks must be written in U.S. dollars, be drawn on a U.S. bank, and be accompanied by good order instructions. Vanguard does not accept cash, traveler’s checks, starter checks, or money orders. In addition, Vanguard may refuse checks that are not made payable to Vanguard.
New accounts. We are required by law to obtain from you certain personal information that we will use to verify your identity. If you do not provide the information, we may not be able to open your account. If we are unable to verify your identity, Vanguard reserves the right, without notice, to close your account or take such other steps as we deem reasonable. Certain types of accounts may require additional documentation.
Refused or rejected purchase requests. Vanguard reserves the right to stop selling fund shares or to reject any purchase request at any time and without notice, including, but not limited to, purchases requested by exchange from another Vanguard fund. This also includes the right to reject any purchase request because the investor has a history of frequent trading or because the purchase may negatively affect a fund’s operation or performance.
Large purchases. Call Vanguard before attempting to invest a large dollar amount.
No cancellations. Vanguard will not accept your request to cancel any purchase request once processing has begun. Please be careful when placing a purchase request.
Converting Shares
When a conversion occurs, you receive shares of one class in place of shares of another class of the same fund. At the time of conversion, the dollar value of the “new” shares you receive equals the dollar value of the “old” shares that were converted. In other words, the conversion has no effect on the value of your investment in the fund at the time of the conversion. However, the number of shares you own after the conversion may be greater than or less than the number of shares you owned before the conversion, depending on the NAVs of the two share classes.
Vanguard will not accept your request to cancel any self-directed conversion request once processing has begun. Please be careful when placing a conversion request.
A conversion between share classes of the same fund is a nontaxable event.
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Trade Date
The trade date for any conversion request received in good order will depend on the day and time Vanguard receives your request. Your conversion will be executed using the NAVs of the different share classes on the trade date. NAVs are calculated only on days that the NYSE is open for trading (a business day). In the rare event the NYSE experiences unanticipated disruptions and is unavailable at the close of the trading day, NAVs will be calculated as of the close of regular trading on the Nasdaq (or another alternate exchange if the Nasdaq is unavailable, as determined at Vanguard’s discretion), generally 4 p.m., Eastern time. The time selected for NAV calculation in this rare event shall also serve as the conclusion of the trading day. See Share Price.
For a conversion request (other than a request to convert to ETF Shares) received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the trade date will be the same day. For a conversion request received on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the trade date will be the next business day. See Other Rules You Should Know.
Conversions to Institutional Shares
You are eligible for a self-directed conversion from another share class to Institutional Shares of the Fund, provided that your account meets all eligibility requirements. You may request a conversion through our website (if you are registered for online access), or you may contact Vanguard by telephone or by mail to request this transaction. Accounts that qualify for Institutional Shares will not be automatically converted.
Conversions to ETF Shares
Owners of conventional shares (i.e., not exchange-traded shares) issued by the Fund may convert those shares to ETF Shares of equivalent value of the same fund. Please note that investors who own conventional shares through a 401(k) plan or other employer-sponsored retirement or benefit plan generally may not convert those shares to ETF Shares and should check with their plan sponsor or recordkeeper. ETF Shares, whether acquired through a conversion or purchased on the secondary market, cannot be converted to conventional shares by a shareholder. Also, ETF Shares of one fund cannot be exchanged for ETF Shares of another fund.
ETF Shares must be held in a brokerage account. Thus, before converting conventional shares to ETF Shares, you must have an existing, or open a new, brokerage account. This account may be with Vanguard Brokerage Services or with any other brokerage firm.
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Vanguard Brokerage Services does not impose a fee on conversions from conventional shares to Vanguard ETF Shares. However, other brokerage firms may charge a fee to process a conversion. Vanguard reserves the right, in the future, to impose a transaction fee on conversions or to limit, temporarily suspend, or terminate the conversion privilege. For additional information on converting conventional shares to ETF Shares, please contact Vanguard to obtain a prospectus for ETF Shares. See Contacting Vanguard.
Mandatory Conversions to Another Share Class
If an account no longer meets the balance requirements for a share class, Vanguard may automatically convert the shares in the account to another share class, as appropriate. A decline in the account balance because of market movement may result in such a conversion. Vanguard will notify the investor in writing before any mandatory conversion occurs.
Redeeming Shares
How to Initiate a Redemption Request
Be sure to check Exchanging Shares, Frequent-Trading Limitations, and Other Rules You Should Know before placing your redemption request.
Online. You may request a redemption of shares or request an exchange through our website or our mobile application if your account is eligible and you are registered for online access.
By telephone. You may call Vanguard to request a redemption of shares or an exchange. See Contacting Vanguard.
By mail. You may send a form (available online) to Vanguard to redeem from a fund account or to make an exchange.
How to Receive Redemption Proceeds
By electronic bank transfer. You may have the proceeds of a fund redemption sent directly to a designated bank account. To establish the electronic bank transfer service on an account, you must designate a bank account online, complete a form, or fill out the appropriate section of your account registration form. After the service is set up on your account, you can redeem shares by electronic bank transfer on a regular schedule (Automatic Withdrawal Plan), if eligible, or upon request. Your redemption request can be initiated online (if you are registered for online access), by telephone, or by mail.
By wire. To receive your proceeds by wire, you may instruct Vanguard to wire your redemption proceeds ($100 minimum) to a previously designated bank
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account. To establish the wire redemption service, you generally must designate a bank account online, complete a form, or fill out the appropriate section of your account registration form.
Please note that Vanguard charges a $10 wire fee for outgoing wire redemptions. The fee is assessed in addition to, rather than being withheld from, redemption proceeds and is paid directly to the fund in which you invest. For example, if you redeem $100 via a wire, you will receive the full $100, and the $10 fee will be assessed to your fund account through an additional redemption of fund shares. If you redeem your entire fund account, your redemption proceeds will be reduced by the amount of the fee. The wire fee does not apply to accounts held by Flagship and Flagship Select clients; accounts held through intermediaries, including Vanguard Brokerage Services; or accounts held by institutional clients.
By exchange. You may have the proceeds of a Vanguard fund redemption invested directly in shares of another Vanguard fund. You may initiate an exchange online (if you are registered for online access), by telephone, or by mail. See Exchanging Shares.
By check. If you have not chosen another redemption method, Vanguard will mail you a redemption check, generally payable to all registered account owners, normally within two business days of your trade date, and generally to the address of record.
Trade Date
The trade date for any redemption request received in good order will depend on the day and time Vanguard receives your request and the manner in which you are redeeming. Your redemption will be executed using the NAV as calculated on the trade date. NAVs are calculated only on days that the NYSE is open for trading (a business day). In the rare event the NYSE experiences unanticipated disruptions and is unavailable at the close of the trading day, NAVs will be calculated as of the close of regular trading on the Nasdaq (or another alternate exchange if the Nasdaq is unavailable, as determined at Vanguard’s discretion), generally 4 p.m., Eastern time. The time selected for NAV calculation in this rare event shall also serve as the conclusion of the trading day. See Share Price.
For redemptions by check, exchange, or wire: If the redemption request is received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the trade date will be the same day. If the redemption request is received on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the trade date will be the next business day.
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• Note on timing of wire redemptions from money market funds: For telephone requests received by Vanguard on a business day before 10:45 a.m., Eastern time (2 p.m., Eastern time, for Vanguard Cash Reserves Federal Money Market Fund; 12:30 p.m., Eastern time, for Vanguard Federal Money Market Fund), the redemption proceeds generally will leave Vanguard by the close of business the same day. For telephone requests received by Vanguard on a business day after those cut-off times, or on a nonbusiness day, and for all requests other than by telephone, the redemption proceeds generally will leave Vanguard by the close of business on the next business day.
• Note on timing of wire redemptions from all other funds: For requests received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the redemption proceeds generally will leave Vanguard by the close of business on the next business day. For requests received by Vanguard on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the redemption proceeds generally will leave Vanguard by the close of business on the second business day after Vanguard receives the request.
For redemptions by electronic bank transfer: If the redemption request is received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the trade date will be the same day. If the redemption request is received on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the trade date will be the next business day.
If your redemption request is not accurate and complete, it may be rejected. If we are unable to send your redemption proceeds by wire or electronic bank transfer because the receiving institution rejects the transfer, Vanguard will make additional efforts to complete your transaction. If Vanguard is still unable to complete the transaction, we may send the proceeds of the redemption to you by check, generally payable to all registered account owners, or use your proceeds to purchase new shares of the fund from which you sold shares for the purpose of the wire or electronic bank transfer transaction. See Other Rules You Should Know—Good Order.
If your redemption request is received in good order, we typically expect that redemption proceeds will be paid by the Fund within one business day of the trade date; however, in certain circumstances, investors may experience a longer settlement period at the time of the transaction. For further information, see “Potentially disruptive redemptions” and “Emergency circumstances.”
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For further information about redemption transactions, consult our website at vanguard.com or see Contacting Vanguard.
Other Redemption Rules You Should Know
Documentation for certain accounts. Special documentation may be required to redeem from certain types of accounts, such as trust, corporate, nonprofit, or retirement accounts. Please call us before attempting to redeem from these types of accounts.
Potentially disruptive redemptions. Vanguard reserves the right to pay all or part of a redemption in kind—that is, in the form of securities—if we reasonably believe that a cash redemption would negatively affect the fund’s operation or performance or that the shareholder may be engaged in market-timing or frequent trading. Under these circumstances, Vanguard also reserves the right to delay payment of the redemption proceeds for up to seven calendar days. By calling us before you attempt to redeem a large dollar amount, you may avoid in-kind or delayed payment of your redemption. Please see Frequent-Trading Limitations for information about Vanguard’s policies to limit frequent trading.
Recently purchased shares. Although you can redeem shares at any time, proceeds may not be made available to you until the fund collects payment for your purchase. This may take up to seven calendar days for shares purchased by check or by electronic bank transfer. If you have written a check on a fund with checkwriting privileges, that check may be rejected if your fund account does not have a sufficient available balance.
Address change. If you change your address online or by telephone, there may be up to a 14-day restriction (starting on the business day after your address is changed) on your ability to request check redemptions online and by telephone. You can request a redemption in writing (using a form available online) at any time. Confirmations of address changes are sent to both the old and new addresses.
Payment to a different person or address. At your request, we can make your redemption check payable, or wire your redemption proceeds, to a different person or send it to a different address. However, this generally requires the written consent of all registered account owners and may require additional documentation, such as a signature guarantee or a notarized signature. You may obtain a signature guarantee from some commercial or savings banks, credit unions, trust companies, or member firms of a U.S. stock exchange.
No cancellations. Vanguard will not accept your request to cancel any redemption request once processing has begun. Please be careful when placing a redemption request.
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Emergency circumstances. Vanguard funds can postpone payment of redemption proceeds for up to seven calendar days. In addition, Vanguard funds can suspend redemptions and/or postpone payments of redemption proceeds beyond seven calendar days at times when the NYSE is closed or during emergency circumstances, as determined by the SEC.
Exchanging Shares
An exchange occurs when you use the proceeds from the redemption of shares of one Vanguard fund to simultaneously purchase shares of a different Vanguard fund. You can make exchange requests online (if you are registered for online access), by telephone, or by mail. See Purchasing Shares and Redeeming Shares.
If the NYSE is open for regular trading (generally until 4 p.m., Eastern time, on a business day) at the time an exchange request is received in good order, the trade date generally will be the same day. See Other Rules You Should Know—Good Order for additional information on all transaction requests.
Vanguard will not accept your request to cancel any exchange request once processing has begun. Please be careful when placing an exchange request.
Call Vanguard before attempting to exchange a large dollar amount. By calling us before you attempt to exchange a large dollar amount, you may avoid delayed or rejected transactions.
Please note that Vanguard reserves the right, without notice, to revise or terminate the exchange privilege, limit the amount of any exchange, or reject an exchange, at any time, for any reason. See Frequent-Trading Limitations for additional restrictions on exchanges.
Frequent-Trading Limitations
Because excessive transactions can disrupt management of a fund and increase the fund’s costs for all shareholders, the board of trustees of each Vanguard fund places certain limits on frequent trading in the funds. Each Vanguard fund (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) limits an investor’s purchases or exchanges into a fund account for 30 calendar days after the investor has redeemed or exchanged out of that fund account. ETF Shares are not subject to these frequent-trading limits.
For Vanguard Retirement Investment Program pooled plans, the limitations apply to exchanges made online or by telephone.
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These frequent-trading limitations do not apply to the following:
• Purchases of shares with reinvested dividend or capital gains distributions.
• Transactions through Vanguard’s Automatic Investment Plan, Automatic Exchange Service, Direct Deposit Service, Automatic Withdrawal Plan, Required Minimum Distribution Service, and Vanguard Small Business Online®.
• Discretionary transactions through Vanguard Personal Advisor Services®, Vanguard Institutional Advisory Services®, and Vanguard Digital Advisor™.
• Redemptions of shares to pay fund or account fees.
• Redemptions of shares to remove excess shareholder contributions to certain types of retirement accounts (including, but not limited to, IRAs and Vanguard Individual 401(k) Plans).
• Transfers and reregistrations of shares within the same fund.
• Purchases of shares by asset transfer or direct rollover.
• Conversions of shares from one share class to another in the same fund.
• Checkwriting redemptions.
• Section 529 college savings plans.
• Certain approved institutional portfolios and asset allocation programs, as well as trades made by funds or trusts managed by Vanguard or its affiliates that invest in other Vanguard funds. (Please note that shareholders of Vanguard’s funds of funds are subject to the limitations.)
For participants in employer-sponsored defined contribution plans,* the frequent-trading limitations do not apply to:
• Purchases of shares with participant payroll or employer contributions or loan repayments.
• Purchases of shares with reinvested dividend or capital gains distributions.
• Distributions, loans, and in-service withdrawals from a plan.
• Redemptions of shares as part of a plan termination or at the direction of the plan.
• Transactions executed through the Vanguard Managed Account Program.
• Redemptions of shares to pay fund or account fees.
• Share or asset transfers or rollovers.
• Reregistrations of shares.
• Conversions of shares from one share class to another in the same fund.
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• Exchange requests submitted by written request to Vanguard. (Exchange requests submitted by fax, if otherwise permitted, are subject to the limitations.)
* The following Vanguard fund accounts are subject to the frequent-trading limitations: SEP-IRAs, SIMPLE IRAs, certain Individual 403(b)(7) Custodial Accounts, and Vanguard Individual 401(k) Plans.
Accounts Held by Institutions (Other Than Defined Contribution Plans)
Vanguard will systematically monitor for frequent trading in institutional clients’ accounts. If we detect suspicious trading activity, we will investigate and take appropriate action, which may include applying to a client’s accounts the 30-day policy previously described, prohibiting a client’s purchases of fund shares, and/or revoking the client’s exchange privilege.
Accounts Held by Intermediaries
When intermediaries establish accounts in Vanguard funds for the benefit of their clients, we cannot always monitor the trading activity of the individual clients. However, we review trading activity at the intermediary (omnibus) level, and if we detect suspicious activity, we will investigate and take appropriate action. If necessary, Vanguard may prohibit additional purchases of fund shares by an intermediary, including for the benefit of certain of the intermediary’s clients. Intermediaries also may monitor their clients’ trading activities with respect to Vanguard funds.
For those Vanguard funds that charge purchase and/or redemption fees, intermediaries will be asked to assess these fees on client accounts and remit these fees to the funds. The application of purchase and redemption fees and frequent-trading limitations may vary among intermediaries. There are no assurances that Vanguard will successfully identify all intermediaries or that intermediaries will properly assess purchase and redemption fees or administer frequent-trading limitations. If you invest with Vanguard through an intermediary, please read that firm’s materials carefully to learn of any other rules or fees that may apply.
Other Rules You Should Know
Prospectus and Shareholder Report Mailings
When two or more shareholders have the same last name and address, just one summary prospectus (or prospectus) and/or shareholder report may be sent in an attempt to eliminate the unnecessary expense of duplicate mailings. You may request individual prospectuses and reports by contacting our Client Services Department in writing, by telephone, or online. See Contacting Vanguard.
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Vanguard.com
Registration. If you are a registered user of vanguard.com, you can review your account holdings; buy, sell, or exchange shares of most Vanguard funds; and perform most other transactions through our website. You must register for this service online.
Electronic delivery. Vanguard can deliver your account statements, transaction confirmations, prospectuses, certain tax forms, and shareholder reports electronically. If you are a registered user of vanguard.com, you can consent to the electronic delivery of these documents by logging on and changing your mailing preferences under “Account Maintenance.” You can revoke your electronic consent at any time through our website, and we will begin to send paper copies of these documents within 30 days of receiving your revocation.
Telephone Transactions
Automatic. When we set up your account, we will automatically enable you to do business with us by telephone, unless you instruct us otherwise in writing.
Tele-Account®. To obtain fund and account information through Vanguard’s automated telephone service, you must first establish a Personal Identification Number (PIN) by calling Tele-Account at 800-662-6273.
Proof of a caller’s authority. We reserve the right to refuse a telephone request if the caller is unable to provide the requested information or if we reasonably believe that the caller is not an individual authorized to act on the account. Before we allow a caller to act on an account, we may request the following information:
• Authorization to act on the account (as the account owner or by legal documentation or other means).
• Account registration and address.
• Fund name and account number, if applicable.
• Other information relating to the caller, the account owner, or the account.
Good Order
We reserve the right to reject any transaction instructions that are not in “good order.” Good order generally means that your instructions:
• Are provided by the person(s) authorized in accordance with Vanguard’s policies and procedures to access the account and request transactions.
• Include the fund name and account number.
• Include the amount of the transaction (stated in dollars, shares, or percentage).
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Written instructions also must generally be provided on a Vanguard form and include:
• Signature(s) and date from the authorized person(s).
• Signature guarantees or notarized signatures, if required for the type of transaction. (Call Vanguard for specific requirements.)
• Any supporting documentation that may be required.
Good order requirements may vary among types of accounts and transactions. For more information, consult our website at vanguard.com or see Contacting Vanguard.
Vanguard reserves the right, without notice, to revise the requirements for good order.
Future Trade-Date Requests
Vanguard does not accept requests to hold a purchase, conversion, redemption, or exchange transaction for a future date. All such requests will receive trade dates as previously described in Purchasing Shares, Converting Shares, Redeeming Shares, and Exchanging Shares. Vanguard reserves the right to return future-dated purchase checks.
Accounts With More Than One Owner
If an account has more than one owner or authorized person, Vanguard generally will accept instructions from any one owner or authorized person.
Responsibility for Fraud
You should take precautions to protect yourself from fraud. Keep your account-related information private, and review any account confirmations, statements, or other information that we provide to you as soon as you receive them. Let us know immediately if you discover unauthorized activity or see something on your account that you do not understand or that looks unusual.
Vanguard will not be responsible for losses that result from transactions by a person who we reasonably believe is authorized to act on your account.
Uncashed Checks
Please cash your distribution or redemption checks promptly. Vanguard will not pay interest on uncashed checks. Vanguard may be required to transfer assets related to uncashed checks to a state under the state’s abandoned property law.
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Dormant Accounts
If your account has no activity in it for a period of time, Vanguard may be required to transfer it to a state under the state’s abandoned property law, subject to potential federal or state withholding taxes.
Unusual Circumstances
If you experience difficulty contacting Vanguard online or by telephone, you can send us your transaction request on a Vanguard form by regular or express mail.
Investing With Vanguard Through Other Firms
You may purchase or sell shares of most Vanguard funds through a financial intermediary, such as a bank, a broker, or an investment advisor. Please consult your financial intermediary to determine which, if any, shares are available through that firm and to learn about other rules that may apply. Your financial intermediary can provide you with account information and any required tax forms. You may be required to pay a commission on purchases of mutual fund shares made through a financial intermediary.
Please see Frequent-Trading Limitations—Accounts Held by Intermediaries for information about the assessment of any purchase or redemption fees and the monitoring of frequent trading for accounts held by intermediaries.
Account Service Fee
Vanguard may charge a $20 account service fee on fund accounts that have a balance below $10,000 for any reason, including market fluctuation. The account service fee may be applied to both retirement and nonretirement fund accounts and may be assessed on fund accounts in all Vanguard funds, regardless of the account minimum. The fee, which will be collected by redeeming fund shares in the amount of $20, will be deducted from fund accounts subject to the fee once per calendar year.
If you elect to receive your statements and other materials electronically (i.e., by e-delivery), the account service fee will not be charged, so long as your election remains in effect. You can make your e-delivery election on vanguard.com.
Beginning on January 1, 2021, you may elect to receive paper copies of shareholder reports free of charge as noted on the cover of this prospectus.
Certain account types have alternative fee structures, including SIMPLE IRAs, Vanguard Retirement Investment Program pooled plans, and Vanguard Individual 401(k) Plans.
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Low-Balance Accounts
The Fund reserves the right to liquidate a fund account whose balance falls below the account minimum for any reason, including market fluctuation. This liquidation policy applies to nonretirement fund accounts and accounts that are held through intermediaries. Any such liquidation will be preceded by written notice to the investor.
Right to Change Policies
In addition to the rights expressly stated elsewhere in this prospectus, Vanguard reserves the right, without notice, to (1) alter, add, or discontinue any conditions of purchase (including eligibility requirements), redemption, exchange, conversion, service, or privilege at any time and (2) alter, impose, discontinue, or waive any purchase fee, redemption fee, account service fee, or other fee charged to a shareholder or a group of shareholders. Changes may affect any or all investors. These actions will be taken when, at the sole discretion of Vanguard management, Vanguard believes they are in the best interest of a fund.
Account Restrictions
Vanguard reserves the right to: (1) redeem all or a portion of a fund/account to meet a legal obligation, including tax withholding, tax lien, garnishment order, or other obligation imposed on your account by a court or government agency; (2) redeem shares, close an account, or suspend account privileges, features, or options in the case of threatening conduct or activity; (3) redeem shares, close an account, or suspend account privileges, features, or options if Vanguard believes or suspects that not doing so could result in a suspicious, fraudulent, or illegal transaction; (4) place restrictions on the ability to redeem any or all shares in an account if it is required to do so by a court or government agency; (5) place restrictions on the ability to redeem any or all shares in an account if Vanguard believes that doing so will prevent fraud, financial exploitation or abuse, or to protect vulnerable investors; (6) freeze any account and/or suspend account services if Vanguard has received reasonable notice of a dispute regarding the assets in an account, including notice of a dispute between the registered or beneficial account owners; and (7) freeze any account and/or suspend account services upon initial notification to Vanguard of the death of an account owner.
Share Classes
Vanguard reserves the right, without notice, to change the eligibility requirements of its share classes, including the types of clients who are eligible to purchase each share class.
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Fund and Account Updates
Confirmation Statements
We will send (or provide through our website, whichever you prefer) a confirmation of your trade date and the amount of your transaction when you buy, sell, exchange, or convert shares. However, we will not send confirmations reflecting only checkwriting redemptions or the reinvestment of dividend or capital gains distributions. For any month in which you had a checkwriting redemption, a Checkwriting Activity Statement will be sent to you itemizing the checkwriting redemptions for that month. Promptly review each confirmation statement that we provide to you. It is important that you contact Vanguard immediately with any questions you may have about any transaction reflected on a confirmation statement, or Vanguard will consider the transaction properly processed.
Portfolio Summaries
We will send (or provide through our website, whichever you prefer) quarterly portfolio summaries to help you keep track of your accounts throughout the year. Each summary shows the market value of your account at the close of the statement period, as well as all distributions, purchases, redemptions, exchanges, transfers, and conversions for the current calendar quarter (or month). Promptly review each summary that we provide to you. It is important that you contact Vanguard immediately with any questions you may have about any transaction reflected on the summary, or Vanguard will consider the transaction properly processed.
Tax Information Statements
For most accounts, Vanguard (or your intermediary) is required to provide annual tax forms to assist you in preparing your income tax returns. These forms are generally available for each calendar year early in the following year. Registered users of vanguard.com can also view certain forms through our website. Vanguard (or your intermediary) may also provide you with additional tax-related documentation. For more information, consult our website at vanguard.com or see Contacting Vanguard.
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Annual and Semiannual Reports
We will send (or provide through our website, whichever you prefer) reports about Vanguard Short-Term Inflation-Protected Securities Index Fund twice a year, in May and November. These reports include overviews of the financial markets and provide the following specific Fund information:
• Performance assessments and comparisons with industry benchmarks.
• Financial statements with listings of Fund holdings.
Portfolio Holdings
Please consult the Fund's Statement of Additional Information or our website for a description of the policies and procedures that govern disclosure of the Fund’s portfolio holdings.
Employer-Sponsored Plans
Your plan administrator or your employee benefits office can provide you with detailed information on how to participate in your plan and how to elect the Fund as an investment option.
• If you have any questions about the Fund or Vanguard, including those about the Fund’s investment objective, strategies, or risks, contact Vanguard Participant Services toll-free at 800-523-1188 or visit our website at vanguard.com.
• If you have questions about your account, contact your plan administrator or the organization that provides recordkeeping services for your plan.
• Be sure to carefully read each topic that pertains to your transactions with Vanguard.
Vanguard reserves the right to change its policies without notice to shareholders.
Transactions
Processing times for your transaction requests may differ among recordkeepers or among transaction and funding types. Your plan’s recordkeeper (which may also be Vanguard) will determine the necessary processing time frames for your transaction requests prior to submission to the Fund. Consult your recordkeeper or plan administrator for more information.
If Vanguard is serving as your plan recordkeeper and if your transaction involves one or more investments with an early cut-off time for processing or another trading restriction, your entire transaction will be subject to the restriction when the trade date for your transaction is determined.
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Contacting Vanguard  
Web
 
Vanguard.com
For the most complete source of Vanguard news
For fund, account, and service information
For most account transactions
For literature requests
24 hours a day, 7 days a week
 
Phone
Vanguard Tele-Account®
800-662-6273
For automated fund and account information
Toll-free, 24 hours a day, 7 days a week
Investor Information 800-662-7447
(Text telephone for people with
hearing impairment at 800-749-7273)
For fund and service information
For literature requests
Client Services 800-662-2739
(Text telephone for people with
hearing impairment at 800-749-7273)
For account information
For most account transactions
Participant Services 800-523-1188
(Text telephone for people with
hearing impairment at 800-749-7273)
For information and services for participants in
employer-sponsored plans
Institutional Division
888-809-8102
For information and services for large institutional
investors
Financial Advisor and Intermediary
Sales Support 800-997-2798
For information and services for financial intermediaries
including financial advisors, broker-dealers, trust
institutions, and insurance companies
Financial Advisory and Intermediary
Trading Support 800-669-0498
For account information and trading support for
financial intermediaries including financial advisors,
broker-dealers, trust institutions, and insurance
companies
Additional Information  
 
Inception
Date
Newspaper
Abbreviation
Vanguard
Fund Number
CUSIP
Number
Short-Term Inflation-Protected
Securities Index Fund
 
 
 
 
Admiral Shares
10/16/2012
STIPSIxAdm
567
922020706
 
CGS identifiers have been provided by CUSIP Global Services, managed on behalf of the American Bankers Association by Standard & Poor’s Financial Services, LLC, and are not for use or dissemination in a manner that would serve as a substitute for any CUSIP service. The CUSIP Database, ©2021 American Bankers Association. “CUSIP” is a registered trademark of the American Bankers Association.
CFA® is a registered trademark owned by CFA Institute.
40
BLOOMBERG is a trademark and service mark of Bloomberg Finance L.P. BARCLAYS is a trademark and service mark of Barclays Bank Plc, used under license. Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited (BISL) (collectively, Bloomberg), or Bloomberg’s licensors, own all proprietary rights in the Bloomberg Barclays U.S. TIPS 0-5 Year Index and the Bloomberg Barclay's U.S. Aggregate Bond Index (the Indices or Bloomberg Barclays Indices).
Neither Barclays Bank Plc, Barclays Capital Inc., or any affiliate (collectively Barclays) or Bloomberg is the issuer or producer of the Short-Term Inflation-Protected Securities Index Fund and neither Bloomberg nor Barclays has any responsibilities, obligations or duties to investors in the Short-Term Inflation-Protected Securities Index Fund. The Indices are licensed for use by The Vanguard Group, Inc. (Vanguard) as the sponsor of the Short-Term Inflation-Protected Securities Index Fund. Bloomberg and Barclays’ only relationship with Vanguard in respect to the Indices is the licensing of the Indices, which is determined, composed and calculated by BISL, or any successor thereto, without regard to the Issuer or the Short-Term Inflation-Protected Securities Index Fund or the owners of the Short-Term Inflation-Protected Securities Index Fund.
Additionally, Vanguard may for itself execute transaction(s) with Barclays in or relating to the Indices in connection with the Short-Term Inflation-Protected Securities Index Fund. Investors acquire the Short-Term Inflation-Protected Securities Index Fund from Vanguard and investors neither acquire any interest in the Indices nor enter into any relationship of any kind whatsoever with Bloomberg or Barclays upon making an investment in the Short-Term Inflation-Protected Securities Index Fund. The Short-Term Inflation-Protected Securities Index Fund is not sponsored, endorsed, sold or promoted by Bloomberg or Barclays. Neither Bloomberg nor Barclays makes any representation or warranty, express or implied regarding the advisability of investing in the Short-Term Inflation-Protected Securities Index Fund or the advisability of investing in securities generally or the ability of the Indices to track corresponding or relative market performance. Neither Bloomberg nor Barclays has passed on the legality or suitability of the Short-Term Inflation-Protected Securities Index Fund with respect to any person or entity. Neither Bloomberg nor Barclays is responsible for and has not participated in the determination of the timing of, prices at, or quantities of the Short-Term Inflation-Protected Securities Index Fund to be issued. Neither Bloomberg nor Barclays has any obligation to take the needs of the Issuer or the owners of the Short-Term Inflation-Protected Securities Index Fund or any other third party into consideration in determining, composing or calculating the Indices. Neither Bloomberg nor Barclays has any obligation or liability in connection with administration, marketing or trading of the Short-Term Inflation-Protected Securities Index Fund.
The licensing agreement between Bloomberg and Barclays is solely for the benefit of Bloomberg and Barclays and not for the benefit of the owners of the Short-Term Inflation-Protected Securities Index Fund, investors or other third parties. In addition, the licensing agreement between Vanguard and Bloomberg is solely for the benefit of Vanguard and Bloomberg and not for the benefit of the owners of the Short-Term Inflation-Protected Securities Index Fund, investors or other third parties.
NEITHER BLOOMBERG NOR BARCLAYS SHALL HAVE ANY LIABILITY TO THE ISSUER, INVESTORS OR TO OTHER THIRD PARTIES FOR THE QUALITY, ACCURACY AND/OR COMPLETENESS OF THE BLOOMBERG BARCLAYS INDICES OR ANY DATA INCLUDED THEREIN OR FOR INTERRUPTIONS IN THE DELIVERY OF THE BLOOMBERG BARCLAYS INDICES. NEITHER BLOOMBERG NOR BARCLAYS MAKES ANY WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE ISSUER, THE INVESTORS OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE BLOOMBERG BARCLAYS INDICES OR ANY DATA INCLUDED THEREIN. NEITHER BLOOMBERG NOR BARCLAYS MAKES ANY EXPRESS OR IMPLIED WARRANTIES, AND EACH HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE BLOOMBERG BARCLAYS INDICES OR ANY DATA INCLUDED THEREIN. BLOOMBERG RESERVES THE RIGHT TO CHANGE THE METHODS OF CALCULATION OR PUBLICATION, OR TO CEASE THE CALCULATION OR PUBLICATION OF THE BLOOMBERG BARCLAYS INDICES, AND NEITHER BLOOMBERG NOR BARCLAYS SHALL BE LIABLE FOR ANY MISCALCULATION OF OR ANY INCORRECT, DELAYED OR INTERRUPTED PUBLICATION WITH RESPECT TO THE BLOOMBERG BARCLAYS INDICES. NEITHER BLOOMBERG NOR BARCLAYS SHALL BE LIABLE FOR ANY DAMAGES, INCLUDING, WITHOUT LIMITATION, ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES, OR ANY LOST PROFITS AND EVEN IF ADVISED OF THE POSSIBILITY OF SUCH, RESULTING FROM THE USE OF THE BLOOMBERG BARCLAYS INDICES OR ANY DATA INCLUDED THEREIN OR WITH RESPECT TO THE SHORT-TERM INFLATION-PROTECTED SECURITIES INDEX FUND.
None of the information supplied by Bloomberg or Barclays and used in this publication may be reproduced in any manner without the prior written permission of both Bloomberg and Barclays Capital, the investment banking division of Barclays Bank Plc. Barclays Bank Plc is registered in England No. 1026167, registered office 1 Churchill Place London E14 5HP.
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Glossary of Investment Terms
Average Maturity. The average length of time until bonds held by a fund reach maturity and are repaid. In general, the longer the average maturity, the more a fund's share price fluctuates in response to changes in market interest rates. In calculating average maturity, a fund uses a bond’s maturity or, if applicable, an earlier date on which the advisor believes it is likely that a maturity-shortening device (such as a call, put, refunding, prepayment, or redemption provision or an adjustable coupon rate) will cause the bond to be repaid.
Bloomberg Barclays U.S. Aggregate Bond Index. An index that is the broadest measure of the taxable U.S. bond market, including most Treasury, agency, corporate, mortgage-backed, asset-backed, and international dollar-denominated issues, all with investment-grade ratings (rated Baa3 or above by Moody's) and maturities of 1 year or more.
Bond. A debt security (IOU) issued by a corporation, a government, or a government agency in exchange for the money the bondholder lends it. In most instances, the issuer agrees to pay back the loan by a specific date and generally to make regular interest payments until that date.
Capital Gains Distributions. Payments to mutual fund shareholders of gains realized on securities that a fund has sold at a profit, minus any realized losses.
Coupon Rate. The interest rate paid by the issuer of a debt security until its maturity. It is expressed as an annual percentage of the face value of the security.
Dividend Distributions. Payments to mutual fund shareholders of income from interest or dividends generated by a fund's investments.
Expense Ratio. A fund's total annual operating expenses expressed as a percentage of the fund's average net assets. The expense ratio includes management and administrative expenses, but it does not include the transaction costs of buying and selling portfolio securities.
Face Value. The amount to be paid at a bond’s maturity; also known as the par value or principal.
Fixed Income Security. An investment, such as a bond, representing a debt that must be repaid by a specified date, and on which the borrower may pay a fixed, variable, or floating rate of interest.
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Inception Date. The date on which the assets of a fund (or one of its share classes) are first invested in accordance with the fund's investment objective. For funds with a subscription period, the inception date is the day after that period ends. Investment performance is generally measured from the inception date.
Indexing. A low-cost investment strategy in which a mutual fund attempts to track—rather than outperform—a specified market benchmark, or “index.”
Inflation-Indexed Securities. Bonds issued by the U.S. government, government agencies, or corporations, whose principal and interest payments—unlike those of conventional bonds—are adjusted over time to reflect inflation.
Investment-Grade Bond. A debt security whose credit quality is considered by independent bond rating agencies, or through independent analysis conducted by a fund's advisor, to be sufficient to ensure timely payment of principal and interest under current economic circumstances. Debt securities rated in one of the four highest rating categories are considered investment-grade. Other debt securities may be considered by an advisor to be investment-grade.
Joint Committed Credit Facility. The Fund participates, along with other funds managed by Vanguard, in a committed credit facility provided by a syndicate of lenders pursuant to a credit agreement that may be renewed annually; each Vanguard fund is individually liable for its borrowings, if any, under the credit facility. The amount and terms of the committed credit facility are subject to approval by the Fund's board of trustees and renegotiation with the lender syndicate on an annual basis.
Mutual Fund. An investment company that pools the money of many people and invests it in a variety of securities in an effort to achieve a specific objective over time.
New York Stock Exchange (NYSE). A stock exchange based in New York City that is open for regular trading on business days, Monday through Friday, from 9:30 a.m. to 4 p.m., Eastern time.
Principal. The face value of a debt instrument or the amount of money put into an investment.
43
Return of Capital. A return of all or part of your original investment in a fund. In general, reduces your cost basis in a fund’s shares and is not taxable to you until your cost basis has been reduced to zero.
Securities. Stocks, bonds, money market instruments, and other investments.
Total Return. A percentage change, over a specified time period, in a mutual fund’s net asset value, assuming the reinvestment of all distributions of dividends and capital gains.
Volatility. The fluctuations in value of a mutual fund or other security. The greater a fund's volatility, the wider the fluctuations in its returns.
Yield. Income (interest or dividends) earned by an investment, expressed as a percentage of the investment’s price.
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Connect with Vanguard® > vanguard.com
For More Information
If you would like more information about Vanguard Short-Term Inflation-Protected Securities Index Fund, the following documents are available free upon request:
Annual/Semiannual Reports to Shareholders
Additional information about the Fund's investments is available in the Fund's annual and semiannual reports to shareholders. In the annual report, you will find a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.
Statement of Additional Information (SAI)
The SAI provides more detailed information about the Fund and is incorporated by reference into (and thus legally a part of) this prospectus.
To receive a free copy of the latest annual or semiannual report or the SAI, or to request additional information about the Fund or other Vanguard funds, please visit vanguard.com or contact us as follows:
If you are an individual investor:
Telephone: 800-662-7447; Text telephone for people with hearing impairment: 800-749-7273
If you are a participant in an employer-sponsored plan:
Telephone: 800-523-1188; Text telephone for people
with hearing impairment: 800-749-7273
If you are a current Vanguard shareholder and would like information about your account, account transactions, and/or account statements, please call:
Client Services Department
Telephone: 800-662-2739; Text telephone for people with hearing impairment: 800-749-7273
Information Provided by the Securities and Exchange Commission (SEC)
Reports and other information about the Fund are available in the EDGAR database on the SEC’s website at www.sec.gov, or you can receive copies of this information, for a fee, by electronic request at the following email address: publicinfo@sec.gov.
Fund's Investment Company Act file number: 811-05628
© 2021 The Vanguard Group, Inc. All rights reserved.Vanguard Marketing Corporation, Distributor.P 0567 012021
 
Vanguard Short-Term Inflation-Protected Securities Index Fund
Prospectus
 January 31, 2021
Investor Shares
Vanguard Short-Term Inflation-Protected Securities Index Fund Investor Shares (VTIPX)
 See the inside front cover for important information about access to your fund’s annual and semiannual shareholder reports.
 This prospectus contains financial data for the Fund through the fiscal year ended September 30, 2020.
  The Securities and Exchange Commission (SEC) has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is
a criminal offense.
Important information about access to shareholder reports
Beginning on January 1, 2021, as permitted by regulations adopted by the SEC, paper copies of your fund’s annual and semiannual shareholder reports will no longer be sent to you by mail, unless you specifically request them. Instead, you will be notified by mail each time a report is posted on the website and will be provided with a link to access the report.
If you have already elected to receive shareholder reports electronically, you will not be affected by this change and do not need to take any action. You may elect to receive shareholder reports and other communications from the fund electronically by contacting your financial intermediary (such as a broker-dealer or bank) or, if you invest directly with the fund, by calling Vanguard at one of the phone numbers on the back cover of this prospectus or by logging on to vanguard.com.
You may elect to receive paper copies of all future shareholder reports free of charge. If you invest through a financial intermediary, you can contact the intermediary to request that you continue to receive paper copies. If you invest directly with the fund, you can call Vanguard at one of the phone numbers on the back cover of this prospectus or log on to vanguard.com. Your election to receive paper copies will apply to all the funds you hold through an intermediary or directly with Vanguard.
Contents
 
Fund Summary
Investment Objective
The Fund seeks to track the performance of a benchmark index that measures the investment return of inflation-protected public obligations of the U.S. Treasury with remaining maturities of less than 5 years.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy, hold, and sell Investor Shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
Shareholder Fees
(Fees paid directly from your investment)  
 
Sales Charge (Load) Imposed on Purchases
None
Purchase Fee
None
Sales Charge (Load) Imposed on Reinvested Dividends
None
Redemption Fee
None
Account Service Fee Per Year
(for certain fund account balances below $10,000)
$20
Annual Fund Operating Expenses
(Expenses that you pay each year as a percentage of the value of your investment)  
 
Management Fees
0.13%
12b-1 Distribution Fee
None
Other Expenses
0.01%
Total Annual Fund Operating Expenses
0.14%
1
Example
The following example is intended to help you compare the cost of investing in the Fund's Investor Shares with the cost of investing in other mutual funds. It illustrates the hypothetical expenses that you would incur over various periods if you were to invest $10,000 in the Fund's shares. This example assumes that the shares provide a return of 5% each year and that total annual fund operating expenses remain as stated in the preceding table. You would incur these hypothetical expenses whether or not you were to redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:  
1 Year
3 Years
5 Years
10 Years
$14
$45
$79
$179
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in more taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the previous expense example, reduce the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 37% of the average value of its portfolio.
Principal Investment Strategies
The Fund employs an indexing investment approach designed to track the performance of the Bloomberg Barclays U.S. Treasury Inflation-Protected Securities (TIPS) 0-5 Year Index. The Index is a market-capitalization-weighted index that includes all inflation-protected public obligations issued by the U.S. Treasury with remaining maturities of less than 5 years.
 
The Fund attempts to replicate the target index by investing all, or substantially all, of its assets in the securities that make up the Index, holding each security in approximately the same proportion as its weighting in the Index. The Fund maintains a dollar-weighted average maturity consistent with that of the Index. As of September 30, 2020, the dollar-weighted average maturity of the Index was 2.7 years.
2
Principal Risks
The Fund is designed for investors with a low tolerance for risk, but you could still lose money by investing in it. The Fund is subject to the following risks, which could affect the Fund's performance, and the level of risk may vary based on market conditions:
•  Income fluctuations . The Fund’s quarterly income distributions are likely to fluctuate considerably more than the income distributions of a typical bond fund. In fact, under certain conditions, the Fund may not have any income to distribute. Income fluctuations associated with changes in interest rates are expected to be low; however, income fluctuations associated with changes in inflation are expected to be high. Overall, investors can expect income fluctuations to be high for the Fund.
•  Real interest rate risk , which is the chance that the value of a bond will fluctuate because of a change in the level of real, or after inflation, interest rates. Although inflation-indexed bonds seek to provide inflation protection, their prices may decline when real interest rates rise and vice versa. Because the Index is a market-capitalization-weighted index that includes all inflation-protected public obligations issued by the U.S. Treasury with remaining maturities of less than 5 years, real interest rate risk is expected to be low for the Fund.
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Annual Total Returns
The following bar chart and table are intended to help you understand the risks of investing in the Fund. The bar chart shows how the performance of the Fund's Investor Shares has varied from one calendar year to another over the periods shown. The table shows how the average annual total returns of the Investor Shares compare with those of the Fund's target index and another comparative index, which have investment characteristics similar to those of the Fund. Keep in mind that the Fund's past performance (before and after taxes) does not indicate how the Fund will perform in the future. Updated performance information is available on our website at vanguard.com/performance or by calling Vanguard toll-free at 800-662-7447.
3
Annual Total Returns — Vanguard Short-Term Inflation-Protected Securities Index Fund Investor Shares
 
During the periods shown in the bar chart, the highest and lowest returns for a calendar quarter were:  
 
Total Return
Quarter
Highest
2.62%
June 30, 2020
Lowest
-2.42%
June 30, 2013
Average Annual Total Returns for Periods Ended December 31, 2020  
 
1 Year
5 Years
Since
Inception
(Oct. 16,
2012)
Vanguard Short-Term Inflation-Protected Securities Index
Fund Investor Shares
 
 
 
Return Before Taxes
4.85%
2.66%
1.28%
Return After Taxes on Distributions
4.38
2.04
0.86
Return After Taxes on Distributions and Sale of Fund Shares
2.87
1.77
0.80
Comparative Indexes
(reflect no deduction for fees, expenses, or taxes)
 
 
 
Bloomberg Barclays U.S. TIPS 0-5 Year Index
5.07%
2.82%
1.39%
Bloomberg Barclays U.S. Aggregate Bond Index
7.51
4.44
3.24
Actual after-tax returns depend on your tax situation and may differ from those shown in the preceding table. When after-tax returns are calculated, it is assumed that the shareholder was in the highest individual federal marginal income tax bracket at the time of each distribution of income or capital gains or upon redemption. State and local income taxes are not reflected in the calculations. Please note that after-tax returns are not relevant for a shareholder who holds fund shares in a tax-deferred account, such as an individual retirement account or a 401(k) plan. Also, figures captioned Return After Taxes on
4
Distributions and Sale of Fund Shares may be higher than other figures for the same period if a capital loss occurs upon redemption and results in an assumed tax deduction for the shareholder.
Investment Advisor
The Vanguard Group, Inc. (Vanguard)
Portfolio Manager
Joshua C. Barrickman, CFA, Principal of Vanguard and co-head of Vanguard’s Fixed Income Indexing Americas. He has managed the Fund since its inception in 2012.
Purchase and Sale of Fund Shares
You may purchase or redeem shares online through our website (vanguard.com), by mail (The Vanguard Group, P.O. Box 1110, Valley Forge, PA 19482-1110), or by telephone (800-662-2739). Investor Shares are generally available only to Vanguard funds that operate as funds of funds and to certain retirement plan clients that receive recordkeeping services from Vanguard. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special eligibility rules that may apply to them regarding Investor Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility. If you are investing through an employer-sponsored retirement or savings plan, your plan administrator or your benefits office can provide you with detailed information on how you can invest through your plan.
Tax Information
The Fund’s distributions may be taxable as ordinary income or capital gain. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply.
Payments to Financial Intermediaries
The Fund and its investment advisor do not pay financial intermediaries for sales of Fund shares.
5
Investing in Index Funds
What Is Indexing?
Indexing is an investment strategy for tracking the performance of a specified market benchmark, or “index.” An index is a group of securities whose overall performance is used as a standard to measure the investment performance of a particular market. There are many types of indexes. Some represent entire markets—such as the U.S. stock market or the U.S. bond market. Other indexes cover market segments—such as small-capitalization stocks or short-term bonds. One cannot invest directly in an index.
The index sponsor determines the securities to include in the index and the weighting of each security in the index. Under normal circumstances, the index sponsor will rebalance an index on a regular schedule. An index sponsor may carry out additional ad hoc index rebalances or delay or cancel a scheduled rebalance. Generally, the index sponsor does not provide any warranty, or accept any liability, with respect to the quality, accuracy, or completeness of either the target index or its related data. Errors made by the index sponsor may occur from time to time and may not be identified by the index sponsor for a period of time or at all. Vanguard does not provide any warranty or guarantee against such errors. Therefore, the gains, losses, or costs associated with the index sponsor’s errors will generally be borne by the index fund and its shareholders.
An index fund seeks to hold all, or a representative sample, of the securities that make up its target index. Index funds attempt to mirror the performance of the target index, for better or worse. However, an index fund generally does not perform exactly like its target index. For example, index funds have operating expenses and transaction costs. Market indexes do not, and therefore they will usually have a slight performance advantage over funds that track them. The ability of an index fund to match its performance to that of its target index can also be impacted by, among other things, the timing and size of cash flows and the size of the fund. Market disruptions and regulatory restrictions could also have an adverse effect on a fund’s ability to adjust its exposure to the required levels in order to track the index.
Index funds typically have the following characteristics:
•  Variety of investments . Depending on a fund’s benchmark index, the fund may invest in the securities of a variety of companies, industries, and/or governments or government agencies.
•  Relative performance consistency . Because they seek to track market benchmarks, index funds usually do not perform dramatically better or worse than their benchmarks.
•  Low cost . Index funds are generally inexpensive to run compared with actively managed funds. They have low or no research costs and typically keep trading activity—and thus dealer markups and other transaction costs—to a minimum compared with actively managed funds.
6
More on the Fund
This prospectus describes the principal risks you would face as a Fund shareholder. It is important to keep in mind one of the main principles of investing: generally, the higher the risk of losing money, the higher the potential reward. The reverse, also, is generally true: the lower the risk, the lower the potential reward. As you consider an investment in any mutual fund, you should take into account your personal tolerance for fluctuations in the securities markets. Look for this     symbol throughout the prospectus. It is used to mark detailed information about the more significant risks that you would confront as a Fund shareholder. To highlight terms and concepts important to mutual fund investors, we have provided Plain Talk® explanations along the way. Reading the prospectus will help you decide whether the Fund is the right investment for you. We suggest that you keep this prospectus for future reference.
Share Class Overview
This prospectus offers the Fund‘s Investor Shares. Separate prospectuses offer the Fund's Admiral™ Shares, which generally have an investment minimum of $3,000, and Institutional Shares, which are generally for investors who invest a minimum of $5 million. In addition, the Fund issues ETF Shares (an exchange-traded class of shares), which are also offered through a separate prospectus.
All share classes offered by the Fund have the same investment objective, strategies, and policies. However, different share classes have different expenses; as a result, their investment returns will differ.  
Plain Talk About Fund Expenses
All mutual funds have operating expenses. These expenses, which are
deducted from a fund’s gross income, are expressed as a percentage of the
net assets of the fund. Assuming that operating expenses remain as stated
in the Fees and Expenses section, Vanguard Short-Term Inflation-Protected
Securities Index Fund Investor Share's expense ratio would be 0.14%, or
$1.40 per $1,000 of average net assets. The average expense ratio for
inflation-protected bond funds in 2019 was 0.67%, or $6.70 per $1,000 of
average net assets (derived from data provided by Lipper, a Thomson
Reuters Company, which reports on the mutual fund industry).
 
7
Plain Talk About Costs of Investing
Costs are an important consideration in choosing a mutual fund. That is
because you, as a shareholder, pay a proportionate share of the costs of
operating a fund and any transaction costs incurred when the fund buys or
sells securities. These costs can erode a substantial portion of the gross
income or the capital appreciation a fund achieves. Even seemingly small
differences in expenses can, over time, have a dramatic effect on a
fund’s performance.
The following sections explain the principal investment strategies and policies that the Fund uses in pursuit of its objective. The Fund's board of trustees, which oversees the Fund's management, may change investment strategies or policies in the interest of shareholders without a shareholder vote, unless those strategies or policies are designated as fundamental. Note that the Fund’s investment objective is not fundamental and may be changed without a shareholder vote. Under normal circumstances, the Fund will invest at least 80% of its assets in inflation-indexed securities that make up its target index. The Fund may change its 80% policy only upon 60 days' notice to shareholders.
8
Market Exposure  
Plain Talk About Inflation-Indexed Securities
Unlike a conventional bond, whose issuer makes regular fixed interest
payments and repays the face value of the bond at maturity, an
inflation-indexed security (IIS) provides principal and interest payments that
are adjusted over time to reflect a rise (inflation) or a drop (deflation) in the
general price level for goods and services. This adjustment is a key feature,
given that inflation has typically occurred. However, there have been periods
of deflation, such as in 1954 when the Consumer Price Index (CPI) declined
by 0.7%. (Source: Bureau of Labor Statistics.) Importantly, in the event of
deflation, the U.S. Treasury has guaranteed that it will repay at least the face
value of an IIS issued by the U.S. government. However, if an IIS is
purchased by a fund at a premium, deflation could cause a fund to
experience a loss.
Inflation measurement and adjustment for an IIS have two important
features. There is a two-month lag between the time that inflation occurs in
the economy and when it is factored into IIS valuations. This is due to the
time required to measure and calculate the CPI and for the U.S. Treasury to
adjust the inflation accrual schedules for an IIS. For example, inflation that
occurs in January is calculated and announced during February and affects
IIS valuations throughout the month of March. In addition, the inflation index
used is the nonseasonally adjusted index. It differs from the CPI that is
reported by most news organizations, which is statistically smoothed to
overcome highs and lows observed at different points each year. The use of
the nonseasonally adjusted index can cause a fund’s income level to
fluctuate.
9
   
The Fund is subject to income fluctuations. The Fund’s quarterly income distributions are likely to fluctuate considerably more than the income distributions of a typical bond fund. In fact, under certain conditions, the Fund may not have any income to distribute. Income fluctuations associated with changes in interest rates are expected to be low; however, income fluctuations associated with changes in inflation are expected to be high. Overall, investors can expect income fluctuations to be high for the Fund.
Although fluctuations in quarterly income distributions are expected to be high, distributions should provide an income yield that adjusts with inflation. In periods of extreme deflation, the Fund may have no income to distribute. If prices throughout the economy decline, the principal and income of an IIS will decline and could result in losses for the Fund.
Changes in interest rates can affect bond income as well as bond prices.
   
The Fund is subject to real interest rate risk, which is the chance that the value of a bond will fluctuate because of a change in the level of real, or after inflation, interest rates. Although inflation-indexed bonds seek to provide inflation protection, their prices may decline when real interest rates rise and vice versa. Because the Index is a market-capitalization-weighted index that includes all inflation-protected public obligations issued by the U.S. Treasury with remaining maturities of less than 5 years, real interest rate risk is expected to be low for the Fund.  
Plain Talk About Real Returns
Inflation-indexed securities are designed to provide a “real rate of return”—a
return after adjusting for the impact of inflation. Inflation—a rise in the
general price level—erodes the purchasing power of an investor’s portfolio.
For example, if an investment provides a “nominal” total return of 5% in a
given year and inflation is 2% during that period, the inflation-adjusted, or
real, return is 3%. Investors should be conscious of both the nominal and the
real returns on their investments. Investors in inflation-indexed bond funds
who do not reinvest the portion of the income distribution that comes from
inflation adjustments will not maintain the purchasing power of the
investment over the long term. This is because interest earned depends on
the amount of principal invested, and that principal will not grow with
inflation if the investor does not reinvest the principal adjustment paid out as
part of a fund’s income distributions.
 
10
Plain Talk About Inflation-Indexed Securities and Interest Rates
Interest rates on conventional bonds have two primary components: a “real”
yield and an increment that reflects investor expectations of future inflation.
By contrast, interest rates on an IIS are adjusted for inflation and, therefore,
are not affected meaningfully by inflation expectations. This leaves only real
interest rates to influence the price of an IIS. A rise in real interest rates will
cause the price of an IIS to fall, while a decline in real interest rates will
boost the price of an IIS.
 
Plain Talk About Inflation-Indexed Securities and Taxes
Any increase in principal for an IIS resulting from inflation adjustments is
considered by the IRS to be taxable income in the year it occurs. For direct
holders of an IIS, this means that taxes must be paid on principal
adjustments, even though these amounts are not received until the bond
matures. By contrast, a mutual fund holding an IIS pays out (to shareholders)
both interest income and the income attributable to principal adjustments
each quarter in the form of cash or reinvested shares, and the shareholders
must pay taxes on the distributions.
Market disruptions can adversely affect local and global markets as well as normal market conditions and operations. Any such disruptions could have an adverse impact on the value of the Fund's investments and Fund performance.
Security Selection
The Fund attempts to track the investment performance of a benchmark index that measures the investment return of inflation-protected public obligations issued by the U.S. Treasury with remaining maturities of less than 5 years. The Fund uses the replication method of indexing, meaning that it generally holds the same securities as its target index and in approximately the same proportions.
Other Investment Policies and Risks
The Fund reserves the right to substitute a different index for the index it currently tracks if the current index is discontinued, if the Fund's agreement with the sponsor of its target index is terminated, or for any other reason determined in good faith by the Fund’s board of trustees. In any such instance, the substitute index would represent the same market segment as the current index.
11
The Fund may invest, to a limited extent, in derivatives. Generally speaking, a derivative is a financial contract whose value is based on the value of a financial asset (such as a stock, a bond, or a currency), a physical asset (such as gold, oil, or wheat), a market index, or a reference rate. Investments in derivatives may subject the Fund to risks different from, and possibly greater than, those of investments directly in the underlying securities or assets. The Fund will not use derivatives for speculation or for the purpose of leveraging (magnifying) investment returns.
The Fund may invest a small portion of its assets in fixed income futures, which are a type of derivative, and/or shares of exchange-traded funds (ETFs). These fixed income futures and ETFs typically provide returns similar to those of the bonds listed in the index, or in a subset of the index, the Fund seeks to track. The Fund may purchase futures or ETFs when doing so will reduce the Fund’s transaction costs, facilitate cash management, mitigate risk, or have the potential to add value because the instruments are favorably priced. Vanguard receives no additional revenue from Fund assets invested in ETF Shares of other Vanguard funds. Fund assets invested in ETF Shares are excluded when allocating to the Fund its share of the costs of Vanguard operations.
Cash Management
The Fund's daily cash balance may be invested in Vanguard Market Liquidity Fund and/or Vanguard Municipal Cash Management Fund (each, a CMT Fund), which are low-cost money market funds. When investing in a CMT Fund, the Fund bears its proportionate share of the expenses of the CMT Fund in which it invests. Vanguard receives no additional revenue from Fund assets invested in a CMT Fund.
Methods Used to Meet Redemption Requests
Under normal circumstances, the Fund typically expects to meet redemptions with positive cash flows. When this is not an option, the Fund seeks to maintain its risk exposure by selling a cross section of the Fund’s holdings to meet redemptions, while also factoring in transaction costs. Additionally, the Fund may work with larger clients to implement their redemptions in a manner that is least disruptive to the portfolio; see “Potentially disruptive redemptions” under Redeeming Shares in the Investing With Vanguard section.
Under certain circumstances, including under stressed market conditions, there are additional tools that the Fund may use in order to meet redemptions, including advancing the settlement of market trades with counterparties to match investor redemption payments or delaying settlement of an investor’s transaction to match trade settlement within regulatory requirements. The Fund may also suspend payment of redemption proceeds for up to seven days; see
12
“Emergency circumstances” under Redeeming Shares in the Investing With Vanguard section. Additionally under these unusual circumstances, the Fund may borrow money (subject to certain regulatory conditions and if available under board-approved procedures) through an interfund lending facility; through a bank line-of-credit, including a joint committed credit facility; or through an uncommitted line-of-credit from Vanguard in order to meet redemption requests.
Temporary Investment Measures
The Fund may temporarily depart from its normal investment policies and strategies when the advisor believes that doing so is in the Fund's best interest, so long as the strategy or policy employed is consistent with the Fund's investment objective. For instance, the Fund may invest beyond its normal limits in derivatives or exchange-traded funds that are consistent with the Fund's investment objective when those instruments are more favorably priced or provide needed liquidity, as might be the case when the Fund receives large cash flows that it cannot prudently invest immediately.
Frequent Trading or Market-Timing
Background. Some investors try to profit from strategies involving frequent trading of mutual fund shares, such as market-timing. For funds holding foreign securities, investors may try to take advantage of an anticipated difference between the price of the fund’s shares and price movements in overseas markets, a practice also known as time-zone arbitrage. Investors also may try to engage in frequent trading of funds holding investments such as small-cap stocks and high-yield bonds. As money is shifted into and out of a fund by a shareholder engaging in frequent trading, the fund incurs costs for buying and selling securities, resulting in increased brokerage and administrative costs. These costs are borne by all fund shareholders, including the long-term investors who do not generate the costs. In addition, frequent trading may interfere with an advisor’s ability to efficiently manage the fund.
Policies to address frequent trading. The Vanguard funds (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) do not knowingly accommodate frequent trading. The board of trustees of each Vanguard fund (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) has adopted policies and procedures reasonably designed to detect and discourage frequent trading and, in some cases, to compensate the fund for the costs associated with it. These policies and procedures do not apply to ETF Shares because frequent trading in ETF Shares generally does not disrupt portfolio management or otherwise harm fund
13
shareholders. Although there is no assurance that Vanguard will be able to detect or prevent frequent trading or market-timing in all circumstances, the following policies have been adopted to address these issues:
• Each Vanguard fund reserves the right to reject any purchase request—including exchanges from other Vanguard funds—without notice and regardless of size. For example, a purchase request could be rejected because the investor has a history of frequent trading or if Vanguard determines that such purchase may negatively affect a fund’s operation or performance.
• Each Vanguard fund (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) generally prohibits, except as otherwise noted in the Investing With Vanguard section, an investor’s purchases or exchanges into a fund account for 30 calendar days after the investor has redeemed or exchanged out of that fund account.
• Certain Vanguard funds charge shareholders purchase and/or redemption fees on transactions.
See the Investing With Vanguard section of this prospectus for further details on Vanguard’s transaction policies.
Each Vanguard fund (other than retail and government money market funds), in determining its net asset value, will use fair-value pricing when appropriate, as described in the Share Price section. Fair-value pricing may reduce or eliminate the profitability of certain frequent-trading strategies.
Do not invest with Vanguard if you are a market-timer.
Turnover Rate
Although the Fund generally seeks to invest for the long term, it may sell securities regardless of how long they have been held. Generally, an index fund sells securities in response to redemption requests from shareholders of conventional (not exchange-traded) shares or to changes in the composition of its target index or in an effort to manage the fund’s duration. The Financial Highlights section of this prospectus shows historical turnover rates for the Fund. A turnover rate of 100%, for example, would mean that the Fund had sold and replaced securities valued at 100% of its net assets within a one-year period. In general, the greater the turnover rate, the greater the impact transaction costs will have on a fund’s return. Also, funds with high turnover rates may be more likely to generate capital gains, including short-term capital gains, that must be distributed to shareholders and will be taxable to shareholders investing through a taxable account.
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The Fund and Vanguard
The Fund is a member of The Vanguard Group, a family of over 200 funds. All of the funds that are members of The Vanguard Group (other than funds of funds) share in the expenses associated with administrative services and business operations, such as personnel, office space, and equipment.
Vanguard Marketing Corporation provides marketing services to the funds. Although fund shareholders do not pay sales commissions or 12b-1 distribution fees, each fund (other than a fund of funds) or each share class of a fund (in the case of a fund with multiple share classes) pays its allocated share of the Vanguard funds’ marketing costs.  
Plain Talk About Vanguard’s Unique Corporate Structure
The Vanguard Group is owned jointly by the funds it oversees and thus
indirectly by the shareholders in those funds. Most other mutual funds are
operated by management companies that are owned by third parties—either
public or private stockholders—and not by the funds they serve.
Investment Advisor
The Vanguard Group, Inc., P.O. Box 2600, Valley Forge, PA 19482, which began operations in 1975, serves as advisor to the Fund through its Fixed Income Group. As of September 30, 2020, Vanguard served as advisor for approximately $5.2 trillion in assets. Vanguard provides investment advisory services to the Fund pursuant to the Funds’ Service Agreement and subject to the supervision and oversight of the trustees and officers of the Fund.
For the fiscal year ended September 30, 2020, the advisory expenses represented an effective annual rate of less than 0.01% of the Fund’s average net assets.
Under the terms of an SEC exemption, the Fund's board of trustees may, without prior approval from shareholders, change the terms of an advisory agreement with a third-party investment advisor or hire a new third-party investment advisor—either as a replacement for an existing advisor or as an additional advisor. Any significant change in the Fund’s advisory arrangements will be communicated to shareholders in writing. As the Fund's sponsor and overall manager, Vanguard may provide investment advisory services to the Fund at any time. Vanguard may also recommend to the board of trustees that an
15
advisor be hired, terminated, or replaced or that the terms of an existing advisory agreement be revised. The Fund has filed an application seeking a similar SEC exemption with respect to investment advisors that are wholly owned subsidiaries of Vanguard. If the exemption is granted, the Fund may rely on the new SEC relief.
For a discussion of why the board of trustees approved the Fund's investment advisory arrangement, see the most recent semiannual report to shareholders covering the fiscal period ended March 31.
The manager primarily responsible for the day-to-day management of the Fund is:
Joshua C. Barrickman, CFA, Principal of Vanguard and co-head of Vanguard’s Fixed Income Indexing Americas. He has been with Vanguard since 1998, has worked in investment management since 1999, has managed investment portfolios since 2005, and has managed the Fund since its inception in 2012. Education: B.S., Ohio Northern University; M.B.A., Lehigh University.
The Fund's Statement of Additional Information provides information about the portfolio manager’s compensation, other accounts under management, and ownership of shares of the Fund.
Dividends, Capital Gains, and Taxes
Fund Distributions
The Fund distributes to shareholders virtually all of its net income (interest less expenses) as well as any net short-term or long-term capital gains realized from the sale of its holdings. From time to time, the Fund may also make distributions that are treated as a return of capital. The Fund can declare and distribute income dividends quarterly in March, June, September, and December. The Fund may make a supplemental distribution at some other time during the year. However, the special tax treatment applicable to the Fund’s portfolio of inflation-indexed bonds increases the Fund’s risk of overdistributing income and paying a return of capital for a year. To minimize this overdistribution risk, the Fund may determine to pay distributions less frequently than quarterly in a year, and in some years, the Fund may not pay any income dividend. Capital gains distributions, if any, generally occur annually in December.
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You can receive distributions of income or capital gains in cash, or you can have them automatically reinvested in more shares of the Fund. However, if you are investing through an employer-sponsored retirement or savings plan, your distributions will be automatically reinvested in additional Fund shares.  
Plain Talk About Distributions
As a shareholder, you are entitled to your portion of a fund’s income from
interest as well as capital gains from the fund’s sale of investments. Income
consists of interest the fund earns from its money market and bond
investments. Capital gains are realized whenever the fund sells securities for
higher prices than it paid for them. These capital gains are either short-term
or long-term, depending on whether the fund held the securities for one year
or less or for more than one year.
 
Plain Talk About Return of Capital
Return of capital is the portion of a distribution representing the return of
your original investment in a fund. Return of capital reduces your cost basis
in the fund’s shares and is not taxable to you until your cost basis has been
reduced to zero. During periods of deflation, the fund’s inflation-indexed
bonds may experience a downward adjustment in their value. These
downward adjustments can partially or entirely offset, or more than offset,
the income earned on the bonds. Under certain circumstances, these
downward adjustments could require the fund to reclassify a portion of the
income dividends previously distributed to shareholders as return of capital.
To reduce the possibility of a reclassification, the fund may determine to pay
income dividends less frequently than quarterly in a year, and in some years,
the fund may not pay any income dividends.
Basic Tax Points
Investors in taxable accounts should be aware of the following basic federal income tax points:
• Distributions are taxable to you whether or not you reinvest these amounts in additional Fund shares.
• Distributions declared in December—if paid to you by the end of January—are taxable as if received in December.
• Any income dividend distribution or short-term capital gains distribution that you receive is taxable to you as ordinary income.
17
• Any distribution of net long-term capital gains is taxable to you as long-term capital gains, no matter how long you have owned shares in the Fund.
• Capital gains distributions may vary considerably from year to year as a result of the Fund's normal investment activities and cash flows.
• Your cost basis in the Fund will be decreased by the amount of any return of capital that you receive. This, in turn, will affect the amount of any capital gain or loss that you realize when selling or exchanging your Fund shares.
• Return of capital distributions generally are not taxable to you until your cost basis has been reduced to zero. If your cost basis is at zero, return of capital distributions will be treated as capital gains.
• A sale or exchange of Fund shares is a taxable event. This means that you may have a capital gain to report as income, or a capital loss to report as a deduction, when you complete your tax return.
• Any conversion between classes of shares of the same fund is a nontaxable event. By contrast, an exchange between classes of shares of different funds is a taxable event.
• Vanguard (or your intermediary) will send you a statement each year showing the tax status of all of your distributions.
Individuals, trusts, and estates whose income exceeds certain threshold amounts are subject to a 3.8% Medicare contribution tax on “net investment income.” Net investment income takes into account distributions paid by the Fund and capital gains from any sale or exchange of Fund shares.
Income dividends and capital gains distributions that you receive, as well as your gains or losses from any sale or exchange of Fund shares, may be subject to state and local income taxes. Depending on your state’s rules, however, any dividends attributable to interest earned on direct obligations of the U.S. government may be exempt from state and local taxes. Vanguard will notify you each year how much, if any, of your dividends may qualify for this exemption.
This prospectus provides general tax information only. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply. Please consult your tax advisor for detailed information about any tax consequences for you.  
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Plain Talk About Buying a Dividend
Unless you are a tax-exempt investor or investing through a tax-advantaged
account (such as an IRA or an employer-sponsored retirement or savings
plan), you should consider avoiding a purchase of fund shares shortly before
the fund makes a distribution, because doing so can cost you money in
taxes. This is known as “buying a dividend.” For example: On December 15,
you invest $5,000, buying 250 shares for $20 each. If the fund pays a
distribution of $1 per share on December 16, its share price will drop to $19
(not counting market change). You still have only $5,000 (250 shares x $19 =
$4,750 in share value, plus 250 shares x $1 = $250 in distributions), but you
owe tax on the $250 distribution you received—even if you reinvest it in
more shares. To avoid buying a dividend, check a fund’s distribution schedule
before you invest.
General Information
Backup withholding. By law, Vanguard must withhold 24% of any taxable distributions or redemptions from your account if you do not:
• Provide your correct taxpayer identification number.
• Certify that the taxpayer identification number is correct.
• Confirm that you are not subject to backup withholding.
Similarly, Vanguard (or your intermediary) must withhold taxes from your account if the IRS instructs us to do so.
Foreign investors. Vanguard funds offered for sale in the United States (Vanguard U.S. funds), including the Fund offered in this prospectus, are not widely available outside the United States. Non-U.S. investors should be aware that U.S. withholding and estate taxes and certain U.S. tax reporting requirements may apply to any investments in Vanguard U.S. funds. Foreign investors should visit the non-U.S. investors page on our website at vanguard.com for information on Vanguard’s non-U.S. products.
Invalid addresses. If an income dividend distribution or capital gains distribution check mailed to your address of record is returned as undeliverable, Vanguard will automatically reinvest the distribution and all future distributions until you provide us with a valid mailing address. Reinvestments will receive the net asset value calculated on the date of the reinvestment.
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Share Price
Share price, also known as net asset value (NAV), is calculated as of the close of regular trading on the New York Stock Exchange (NYSE), generally 4 p.m., Eastern time, on each day that the NYSE is open for business (a business day). In the rare event the NYSE experiences unanticipated disruptions and is unavailable at the close of the trading day, NAVs will be calculated as of the close of regular trading on the Nasdaq (or another alternate exchange if the Nasdaq is unavailable, as determined at Vanguard’s discretion), generally 4 p.m., Eastern time. Each share class has its own NAV, which is computed by dividing the total assets, minus liabilities, allocated to the share class by the number of Fund shares outstanding for that class. On U.S. holidays or other days when the NYSE is closed, the NAV is not calculated, and the Fund does not sell or redeem shares.
Debt securities held by a Vanguard fund are valued based on information furnished by an independent pricing service or market quotations. When a fund determines that pricing-service information or market quotations either are not readily available or do not accurately reflect the value of a security, the security is priced at its fair value (the amount that the owner might reasonably expect to receive upon the current sale of the security).
The values of any foreign securities held by a fund are converted into U.S. dollars using an exchange rate obtained from an independent third party as of the close of regular trading on the NYSE. The values of any mutual fund shares, including institutional money market fund shares, held by a fund are based on the NAVs of the shares. The values of any ETF shares or closed-end fund shares held by a fund are based on the market value of the shares.
A fund also may use fair-value pricing on bond market holidays when the fund is open for business (such as Columbus Day and Veterans Day). Fair-value prices are determined by Vanguard according to procedures adopted by the board of trustees. When fair-value pricing is employed, the prices of securities used by a fund to calculate the NAV may differ from quoted or published prices for the same securities.
Vanguard fund share prices are published daily on our website at vanguard.com/prices.
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Financial Highlights
Financial highlights information is intended to help you understand a fund’s performance for the past five years (or, if shorter, its period of operations). Certain information reflects financial results for a single fund share. Total return represents the rate that an investor would have earned or lost each period on an investment in a fund or share class (assuming reinvestment of all distributions). This information has been obtained from the financial statements audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, whose report, along with fund financial statements, is included in a fund’s most recent annual report to shareholders. You may obtain a free copy of a fund’s latest annual or semiannual report, which is available upon request.
Vanguard Short-Term Inflation-Protected Securities Index Fund Investor Shares  
 
Year Ended September 30,
For a Share Outstanding Throughout Each Period
2020
2019
2018
2017
2016
Net Asset Value, Beginning of Period
$24.57
$24.23
$24.77
$24.83
$24.23
Investment Operations
 
 
 
 
 
Net Investment Income1
0.272
0.483
0.669
0.312
0.080
Net Realized and Unrealized Gain (Loss) on Investments
0.862
0.324
(0.448)
(0.237)
0.520
Total from Investment Operations
1.134
0.807
0.221
0.075
0.600
Distributions
 
 
 
 
 
Dividends from Net Investment Income
(0.294)
(0.467)
(0.761)
(0.135)
—
Distributions from Realized Capital Gains
—
—
—
—
—
Total Distributions
(0.294)
(0.467)
(0.761)
(0.135)
—
Net Asset Value, End of Period
$25.41
$24.57
$24.23
$24.77
$24.83
Total Return2
4.64%
3.36%
0.91%
0.31%
2.48%
Ratios/Supplemental Data
 
 
 
 
 
Net Assets, End of Period (Millions)
$8,063
$7,014
$6,679
$5,904
$5,088
Ratio of Total Expenses to Average Net Assets
0.14%
0.14%
0.14%
0.15%
0.16%
Ratio of Net Investment Income to Average Net Assets
1.09%
1.98%
2.73%
1.26%
0.42%
Portfolio Turnover Rate3
37%
26%
25%
27%
28%
1
Calculated based on average shares outstanding.
2
Total returns do not include account service fees that may have applied in the periods shown.
3
Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund's capital shares, including ETF Creation Units.
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Investing With Vanguard
This section of the prospectus explains the basics of doing business with Vanguard. Vanguard fund shares can be held directly with Vanguard or indirectly through an intermediary, such as a bank, a broker, or an investment advisor. If you hold Vanguard fund shares directly with Vanguard, you should carefully read each topic within this section that pertains to your relationship with Vanguard. If you hold Vanguard fund shares indirectly through an intermediary (including shares held in a brokerage account through Vanguard Brokerage Services®), please see Investing With Vanguard Through Other Firms, and also refer to your account agreement with the intermediary for information about transacting in that account. If you hold Vanguard fund shares through an employer-sponsored retirement or savings plan, please see Employer-Sponsored Plans. Vanguard reserves the right to change the following policies without notice. Please call or check online for current information. See Contacting Vanguard.
For Vanguard fund shares held directly with Vanguard, each fund you hold in an account is a separate “fund account.” For example, if you hold three funds in a nonretirement account titled in your own name, two funds in a nonretirement account titled jointly with your spouse, and one fund in an individual retirement account, you have six fund accounts—and this is true even if you hold the same fund in multiple accounts. Note that each reference to “you” in this prospectus applies to any one or more registered account owners or persons authorized to transact on your account.
Purchasing Shares
Vanguard reserves the right, without notice, to increase or decrease the minimum amount required to open, convert shares to, or maintain a fund account or to add to an existing fund account.
Investment minimums may differ for certain categories of investors.
Account Minimums for Investor Shares
Investor Shares are generally available only to Vanguard funds that operate as funds of funds and to certain retirement plan clients that receive recordkeeping services from Vanguard.
How to Initiate a Purchase Request
Be sure to check Exchanging Shares, Frequent-Trading Limitations, and Other Rules You Should Know before placing your purchase request.
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Online. You may open certain types of accounts, request a purchase of shares, and request an exchange through our website or our mobile application if your account is eligible and you are registered for online access.
By telephone. You may call Vanguard to begin the account registration process or request that the account-opening forms be sent to you. You may also call Vanguard to request a purchase of shares in your account or to request an exchange. See Contacting Vanguard.
By mail. You may send Vanguard your account registration form and check to open a new fund account. To add to an existing fund account, you may send your check with an Invest-by-Mail form (from a transaction confirmation or your account statement) or with a deposit slip (available online).
How to Pay for a Purchase
By electronic bank transfer. You may purchase shares of a Vanguard fund through an electronic transfer of money from a bank account. To establish the electronic bank transfer service on an account, you must designate the bank account online, complete a form, or fill out the appropriate section of your account registration form. After the service is set up on your account, you can purchase shares by electronic bank transfer on a regular schedule (Automatic Investment Plan), if eligible, or upon request. Your purchase request can be initiated online (if you are registered for online access), by telephone, or by mail.
By wire. Wiring instructions vary for different types of purchases. Please call Vanguard for instructions and policies on purchasing shares by wire. See Contacting Vanguard.
By check. You may make initial or additional purchases to your fund account by sending a check with a deposit slip or by utilizing our mobile application if your account is eligible and you are registered for online access. Also see How to Initiate a Purchase Request. Make your check payable to Vanguard and include the appropriate fund number (e.g., Vanguard—1967).
By exchange. You may purchase shares of a Vanguard fund using the proceeds from the simultaneous redemption of shares of another Vanguard fund. You may initiate an exchange online (if you are registered for online access), by telephone, or by mail with an exchange form. See Exchanging Shares.
Trade Date
The trade date for any purchase request received in good order will depend on the day and time Vanguard receives your request, the manner in which you are paying, and the type of fund you are purchasing. Your purchase will be executed using the NAV as calculated on the trade date. NAVs are calculated only on days
23
that the NYSE is open for trading (a business day). In the rare event the NYSE experiences unanticipated disruptions and is unavailable at the close of the trading day, NAVs will be calculated as of the close of regular trading on the Nasdaq (or another alternate exchange if the Nasdaq is unavailable, as determined at Vanguard’s discretion), generally 4 p.m., Eastern time. The time selected for NAV calculation in this rare event shall also serve as the conclusion of the trading day. See Share Price.
For purchases by check into all funds other than money market funds and for purchases by exchange, wire, or electronic bank transfer into all funds: If the purchase request is received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the trade date for the purchase will be the same day. If the purchase request is received on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the trade date for the purchase will be the next business day.
For purchases by check into money market funds: If the purchase request is received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the trade date for the purchase will be the next business day. If the purchase request is received on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the trade date for the purchase will be the second business day following the day Vanguard receives the purchase request. Because money market instruments must be purchased with federal funds and it takes a money market mutual fund one business day to convert check proceeds into federal funds, the trade date for the purchase will be one business day later than for other funds.
If your purchase request is not accurate and complete, it may be rejected. See Other Rules You Should Know—Good Order.
For further information about purchase transactions, consult our website at vanguard.com or see Contacting Vanguard.
Other Purchase Rules You Should Know
Check purchases. All purchase checks must be written in U.S. dollars, be drawn on a U.S. bank, and be accompanied by good order instructions. Vanguard does not accept cash, traveler’s checks, starter checks, or money orders. In addition, Vanguard may refuse checks that are not made payable to Vanguard.
New accounts. We are required by law to obtain from you certain personal information that we will use to verify your identity. If you do not provide the information, we may not be able to open your account. If we are unable to verify
24
your identity, Vanguard reserves the right, without notice, to close your account or take such other steps as we deem reasonable. Certain types of accounts may require additional documentation.
Refused or rejected purchase requests. Vanguard reserves the right to stop selling fund shares or to reject any purchase request at any time and without notice, including, but not limited to, purchases requested by exchange from another Vanguard fund. This also includes the right to reject any purchase request because the investor has a history of frequent trading or because the purchase may negatively affect a fund’s operation or performance.
Large purchases. Call Vanguard before attempting to invest a large dollar amount.
No cancellations. Vanguard will not accept your request to cancel any purchase request once processing has begun. Please be careful when placing a purchase request.
Converting Shares
When a conversion occurs, you receive shares of one class in place of shares of another class of the same fund. At the time of conversion, the dollar value of the “new” shares you receive equals the dollar value of the “old” shares that were converted. In other words, the conversion has no effect on the value of your investment in the fund at the time of the conversion. However, the number of shares you own after the conversion may be greater than or less than the number of shares you owned before the conversion, depending on the NAVs of the two share classes.
Vanguard will not accept your request to cancel any self-directed conversion request once processing has begun. Please be careful when placing a conversion request.
A conversion between share classes of the same fund is a nontaxable event.
Trade Date
The trade date for any conversion request received in good order will depend on the day and time Vanguard receives your request. Your conversion will be executed using the NAVs of the different share classes on the trade date. NAVs are calculated only on days that the NYSE is open for trading (a business day). In the rare event the NYSE experiences unanticipated disruptions and is unavailable at the close of the trading day, NAVs will be calculated as of the close of regular trading on the Nasdaq (or another alternate exchange if the Nasdaq is
25
unavailable, as determined at Vanguard’s discretion), generally 4 p.m., Eastern time. The time selected for NAV calculation in this rare event shall also serve as the conclusion of the trading day. See Share Price.
For a conversion request (other than a request to convert to ETF Shares) received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the trade date will be the same day. For a conversion request received on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the trade date will be the next business day. See Other Rules You Should Know.
Conversions to Institutional Shares
You are eligible for a self-directed conversion from another share class to Institutional Shares of the Fund, provided that your account meets all eligibility requirements. You may request a conversion through our website (if you are registered for online access), or you may contact Vanguard by telephone or by mail to request this transaction. Accounts that qualify for Institutional Shares will not be automatically converted.
Conversions to ETF Shares
Owners of conventional shares (i.e., not exchange-traded shares) issued by the Fund may convert those shares to ETF Shares of equivalent value of the same fund. Please note that investors who own conventional shares through a 401(k) plan or other employer-sponsored retirement or benefit plan generally may not convert those shares to ETF Shares and should check with their plan sponsor or recordkeeper. ETF Shares, whether acquired through a conversion or purchased on the secondary market, cannot be converted to conventional shares by a shareholder. Also, ETF Shares of one fund cannot be exchanged for ETF Shares of another fund.
ETF Shares must be held in a brokerage account. Thus, before converting conventional shares to ETF Shares, you must have an existing, or open a new, brokerage account. This account may be with Vanguard Brokerage Services or with any other brokerage firm.
Vanguard Brokerage Services does not impose a fee on conversions from conventional shares to Vanguard ETF Shares. However, other brokerage firms may charge a fee to process a conversion. Vanguard reserves the right, in the future, to impose a transaction fee on conversions or to limit, temporarily suspend, or terminate the conversion privilege. For additional information on converting conventional shares to ETF Shares, please contact Vanguard to obtain a prospectus for ETF Shares. See Contacting Vanguard.
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Mandatory Conversions to Another Share Class
If an account no longer meets the balance requirements for a share class, Vanguard may automatically convert the shares in the account to another share class, as appropriate. A decline in the account balance because of market movement may result in such a conversion. Vanguard will notify the investor in writing before any mandatory conversion occurs.
Redeeming Shares
How to Initiate a Redemption Request
Be sure to check Exchanging Shares, Frequent-Trading Limitations, and Other Rules You Should Know before placing your redemption request.
Online. You may request a redemption of shares or request an exchange through our website or our mobile application if your account is eligible and you are registered for online access.
By telephone. You may call Vanguard to request a redemption of shares or an exchange. See Contacting Vanguard.
By mail. You may send a form (available online) to Vanguard to redeem from a fund account or to make an exchange.
How to Receive Redemption Proceeds
By electronic bank transfer. You may have the proceeds of a fund redemption sent directly to a designated bank account. To establish the electronic bank transfer service on an account, you must designate a bank account online, complete a form, or fill out the appropriate section of your account registration form. After the service is set up on your account, you can redeem shares by electronic bank transfer on a regular schedule (Automatic Withdrawal Plan), if eligible, or upon request. Your redemption request can be initiated online (if you are registered for online access), by telephone, or by mail.
By wire. To receive your proceeds by wire, you may instruct Vanguard to wire your redemption proceeds ($100 minimum) to a previously designated bank account. To establish the wire redemption service, you generally must designate a bank account online, complete a form, or fill out the appropriate section of your account registration form.
Please note that Vanguard charges a $10 wire fee for outgoing wire redemptions. The fee is assessed in addition to, rather than being withheld from, redemption proceeds and is paid directly to the fund in which you invest. For example, if you redeem $100 via a wire, you will receive the full $100, and the
27
$10 fee will be assessed to your fund account through an additional redemption of fund shares. If you redeem your entire fund account, your redemption proceeds will be reduced by the amount of the fee. The wire fee does not apply to accounts held by Flagship and Flagship Select clients; accounts held through intermediaries, including Vanguard Brokerage Services; or accounts held by institutional clients.
By exchange. You may have the proceeds of a Vanguard fund redemption invested directly in shares of another Vanguard fund. You may initiate an exchange online (if you are registered for online access), by telephone, or by mail. See Exchanging Shares.
By check. If you have not chosen another redemption method, Vanguard will mail you a redemption check, generally payable to all registered account owners, normally within two business days of your trade date, and generally to the address of record.
Trade Date
The trade date for any redemption request received in good order will depend on the day and time Vanguard receives your request and the manner in which you are redeeming. Your redemption will be executed using the NAV as calculated on the trade date. NAVs are calculated only on days that the NYSE is open for trading (a business day). In the rare event the NYSE experiences unanticipated disruptions and is unavailable at the close of the trading day, NAVs will be calculated as of the close of regular trading on the Nasdaq (or another alternate exchange if the Nasdaq is unavailable, as determined at Vanguard’s discretion), generally 4 p.m., Eastern time. The time selected for NAV calculation in this rare event shall also serve as the conclusion of the trading day. See Share Price.
For redemptions by check, exchange, or wire: If the redemption request is received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the trade date will be the same day. If the redemption request is received on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the trade date will be the next business day.
• Note on timing of wire redemptions from money market funds: For telephone requests received by Vanguard on a business day before 10:45 a.m., Eastern time (2 p.m., Eastern time, for Vanguard Cash Reserves Federal Money Market Fund; 12:30 p.m., Eastern time, for Vanguard Federal Money Market Fund), the redemption proceeds generally will leave Vanguard by the close of business the same day. For telephone requests received by Vanguard on a business day after those cut-off times, or on a nonbusiness day, and for all requests other than by telephone, the redemption proceeds
28
generally will leave Vanguard by the close of business on the next business day.
• Note on timing of wire redemptions from all other funds: For requests received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the redemption proceeds generally will leave Vanguard by the close of business on the next business day. For requests received by Vanguard on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the redemption proceeds generally will leave Vanguard by the close of business on the second business day after Vanguard receives the request.
For redemptions by electronic bank transfer: If the redemption request is received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the trade date will be the same day. If the redemption request is received on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the trade date will be the next business day.
If your redemption request is not accurate and complete, it may be rejected. If we are unable to send your redemption proceeds by wire or electronic bank transfer because the receiving institution rejects the transfer, Vanguard will make additional efforts to complete your transaction. If Vanguard is still unable to complete the transaction, we may send the proceeds of the redemption to you by check, generally payable to all registered account owners, or use your proceeds to purchase new shares of the fund from which you sold shares for the purpose of the wire or electronic bank transfer transaction. See Other Rules You Should Know—Good Order.
If your redemption request is received in good order, we typically expect that redemption proceeds will be paid by the Fund within one business day of the trade date; however, in certain circumstances, investors may experience a longer settlement period at the time of the transaction. For further information, see “Potentially disruptive redemptions” and “Emergency circumstances.”
For further information about redemption transactions, consult our website at vanguard.com or see Contacting Vanguard.
Other Redemption Rules You Should Know
Documentation for certain accounts. Special documentation may be required to redeem from certain types of accounts, such as trust, corporate, nonprofit, or retirement accounts. Please call us before attempting to redeem from these types of accounts.
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Potentially disruptive redemptions. Vanguard reserves the right to pay all or part of a redemption in kind—that is, in the form of securities—if we reasonably believe that a cash redemption would negatively affect the fund’s operation or performance or that the shareholder may be engaged in market-timing or frequent trading. Under these circumstances, Vanguard also reserves the right to delay payment of the redemption proceeds for up to seven calendar days. By calling us before you attempt to redeem a large dollar amount, you may avoid in-kind or delayed payment of your redemption. Please see Frequent-Trading Limitations for information about Vanguard’s policies to limit frequent trading.
Recently purchased shares. Although you can redeem shares at any time, proceeds may not be made available to you until the fund collects payment for your purchase. This may take up to seven calendar days for shares purchased by check or by electronic bank transfer. If you have written a check on a fund with checkwriting privileges, that check may be rejected if your fund account does not have a sufficient available balance.
Address change. If you change your address online or by telephone, there may be up to a 14-day restriction (starting on the business day after your address is changed) on your ability to request check redemptions online and by telephone. You can request a redemption in writing (using a form available online) at any time. Confirmations of address changes are sent to both the old and new addresses.
Payment to a different person or address. At your request, we can make your redemption check payable, or wire your redemption proceeds, to a different person or send it to a different address. However, this generally requires the written consent of all registered account owners and may require additional documentation, such as a signature guarantee or a notarized signature. You may obtain a signature guarantee from some commercial or savings banks, credit unions, trust companies, or member firms of a U.S. stock exchange.
No cancellations. Vanguard will not accept your request to cancel any redemption request once processing has begun. Please be careful when placing a redemption request.
Emergency circumstances. Vanguard funds can postpone payment of redemption proceeds for up to seven calendar days. In addition, Vanguard funds can suspend redemptions and/or postpone payments of redemption proceeds beyond seven calendar days at times when the NYSE is closed or during emergency circumstances, as determined by the SEC.
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Exchanging Shares
An exchange occurs when you use the proceeds from the redemption of shares of one Vanguard fund to simultaneously purchase shares of a different Vanguard fund. You can make exchange requests online (if you are registered for online access), by telephone, or by mail. See Purchasing Shares and Redeeming Shares.
If the NYSE is open for regular trading (generally until 4 p.m., Eastern time, on a business day) at the time an exchange request is received in good order, the trade date generally will be the same day. See Other Rules You Should Know—Good Order for additional information on all transaction requests.
Vanguard will not accept your request to cancel any exchange request once processing has begun. Please be careful when placing an exchange request.
Call Vanguard before attempting to exchange a large dollar amount. By calling us before you attempt to exchange a large dollar amount, you may avoid delayed or rejected transactions.
Please note that Vanguard reserves the right, without notice, to revise or terminate the exchange privilege, limit the amount of any exchange, or reject an exchange, at any time, for any reason. See Frequent-Trading Limitations for additional restrictions on exchanges.
Frequent-Trading Limitations
Because excessive transactions can disrupt management of a fund and increase the fund’s costs for all shareholders, the board of trustees of each Vanguard fund places certain limits on frequent trading in the funds. Each Vanguard fund (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) limits an investor’s purchases or exchanges into a fund account for 30 calendar days after the investor has redeemed or exchanged out of that fund account. ETF Shares are not subject to these frequent-trading limits.
For Vanguard Retirement Investment Program pooled plans, the limitations apply to exchanges made online or by telephone.
These frequent-trading limitations do not apply to the following:
• Purchases of shares with reinvested dividend or capital gains distributions.
• Transactions through Vanguard’s Automatic Investment Plan, Automatic Exchange Service, Direct Deposit Service, Automatic Withdrawal Plan, Required Minimum Distribution Service, and Vanguard Small Business Online®.
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• Discretionary transactions through Vanguard Personal Advisor Services®, Vanguard Institutional Advisory Services®, and Vanguard Digital Advisor™.
• Redemptions of shares to pay fund or account fees.
• Redemptions of shares to remove excess shareholder contributions to certain types of retirement accounts (including, but not limited to, IRAs and Vanguard Individual 401(k) Plans).
• Transfers and reregistrations of shares within the same fund.
• Purchases of shares by asset transfer or direct rollover.
• Conversions of shares from one share class to another in the same fund.
• Checkwriting redemptions.
• Section 529 college savings plans.
• Certain approved institutional portfolios and asset allocation programs, as well as trades made by funds or trusts managed by Vanguard or its affiliates that invest in other Vanguard funds. (Please note that shareholders of Vanguard’s funds of funds are subject to the limitations.)
For participants in employer-sponsored defined contribution plans,* the frequent-trading limitations do not apply to:
• Purchases of shares with participant payroll or employer contributions or loan repayments.
• Purchases of shares with reinvested dividend or capital gains distributions.
• Distributions, loans, and in-service withdrawals from a plan.
• Redemptions of shares as part of a plan termination or at the direction of the plan.
• Transactions executed through the Vanguard Managed Account Program.
• Redemptions of shares to pay fund or account fees.
• Share or asset transfers or rollovers.
• Reregistrations of shares.
• Conversions of shares from one share class to another in the same fund.
• Exchange requests submitted by written request to Vanguard. (Exchange requests submitted by fax, if otherwise permitted, are subject to the limitations.)
* The following Vanguard fund accounts are subject to the frequent-trading limitations: SEP-IRAs, SIMPLE IRAs, certain Individual 403(b)(7) Custodial Accounts, and Vanguard Individual 401(k) Plans.
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Accounts Held by Institutions (Other Than Defined Contribution Plans)
Vanguard will systematically monitor for frequent trading in institutional clients’ accounts. If we detect suspicious trading activity, we will investigate and take appropriate action, which may include applying to a client’s accounts the 30-day policy previously described, prohibiting a client’s purchases of fund shares, and/or revoking the client’s exchange privilege.
Accounts Held by Intermediaries
When intermediaries establish accounts in Vanguard funds for the benefit of their clients, we cannot always monitor the trading activity of the individual clients. However, we review trading activity at the intermediary (omnibus) level, and if we detect suspicious activity, we will investigate and take appropriate action. If necessary, Vanguard may prohibit additional purchases of fund shares by an intermediary, including for the benefit of certain of the intermediary’s clients. Intermediaries also may monitor their clients’ trading activities with respect to Vanguard funds.
For those Vanguard funds that charge purchase and/or redemption fees, intermediaries will be asked to assess these fees on client accounts and remit these fees to the funds. The application of purchase and redemption fees and frequent-trading limitations may vary among intermediaries. There are no assurances that Vanguard will successfully identify all intermediaries or that intermediaries will properly assess purchase and redemption fees or administer frequent-trading limitations. If you invest with Vanguard through an intermediary, please read that firm’s materials carefully to learn of any other rules or fees that may apply.
Other Rules You Should Know
Prospectus and Shareholder Report Mailings
When two or more shareholders have the same last name and address, just one summary prospectus (or prospectus) and/or shareholder report may be sent in an attempt to eliminate the unnecessary expense of duplicate mailings. You may request individual prospectuses and reports by contacting our Client Services Department in writing, by telephone, or online. See Contacting Vanguard.
Vanguard.com
Registration. If you are a registered user of vanguard.com, you can review your account holdings; buy, sell, or exchange shares of most Vanguard funds; and perform most other transactions through our website. You must register for this service online.
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Electronic delivery. Vanguard can deliver your account statements, transaction confirmations, prospectuses, certain tax forms, and shareholder reports electronically. If you are a registered user of vanguard.com, you can consent to the electronic delivery of these documents by logging on and changing your mailing preferences under “Account Maintenance.” You can revoke your electronic consent at any time through our website, and we will begin to send paper copies of these documents within 30 days of receiving your revocation.
Telephone Transactions
Automatic. When we set up your account, we will automatically enable you to do business with us by telephone, unless you instruct us otherwise in writing.
Tele-Account®. To obtain fund and account information through Vanguard’s automated telephone service, you must first establish a Personal Identification Number (PIN) by calling Tele-Account at 800-662-6273.
Proof of a caller’s authority. We reserve the right to refuse a telephone request if the caller is unable to provide the requested information or if we reasonably believe that the caller is not an individual authorized to act on the account. Before we allow a caller to act on an account, we may request the following information:
• Authorization to act on the account (as the account owner or by legal documentation or other means).
• Account registration and address.
• Fund name and account number, if applicable.
• Other information relating to the caller, the account owner, or the account.
Good Order
We reserve the right to reject any transaction instructions that are not in “good order.” Good order generally means that your instructions:
• Are provided by the person(s) authorized in accordance with Vanguard’s policies and procedures to access the account and request transactions.
• Include the fund name and account number.
• Include the amount of the transaction (stated in dollars, shares, or percentage).
Written instructions also must generally be provided on a Vanguard form and include:
• Signature(s) and date from the authorized person(s).
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• Signature guarantees or notarized signatures, if required for the type of transaction. (Call Vanguard for specific requirements.)
• Any supporting documentation that may be required.
Good order requirements may vary among types of accounts and transactions. For more information, consult our website at vanguard.com or see Contacting Vanguard.
Vanguard reserves the right, without notice, to revise the requirements for good order.
Future Trade-Date Requests
Vanguard does not accept requests to hold a purchase, conversion, redemption, or exchange transaction for a future date. All such requests will receive trade dates as previously described in Purchasing Shares, Converting Shares, Redeeming Shares, and Exchanging Shares. Vanguard reserves the right to return future-dated purchase checks.
Accounts With More Than One Owner
If an account has more than one owner or authorized person, Vanguard generally will accept instructions from any one owner or authorized person.
Responsibility for Fraud
You should take precautions to protect yourself from fraud. Keep your account-related information private, and review any account confirmations, statements, or other information that we provide to you as soon as you receive them. Let us know immediately if you discover unauthorized activity or see something on your account that you do not understand or that looks unusual.
Vanguard will not be responsible for losses that result from transactions by a person who we reasonably believe is authorized to act on your account.
Uncashed Checks
Please cash your distribution or redemption checks promptly. Vanguard will not pay interest on uncashed checks. Vanguard may be required to transfer assets related to uncashed checks to a state under the state’s abandoned property law.
Dormant Accounts
If your account has no activity in it for a period of time, Vanguard may be required to transfer it to a state under the state’s abandoned property law, subject to potential federal or state withholding taxes.
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Unusual Circumstances
If you experience difficulty contacting Vanguard online or by telephone, you can send us your transaction request on a Vanguard form by regular or express mail.
Investing With Vanguard Through Other Firms
You may purchase or sell shares of most Vanguard funds through a financial intermediary, such as a bank, a broker, or an investment advisor. Please consult your financial intermediary to determine which, if any, shares are available through that firm and to learn about other rules that may apply. Your financial intermediary can provide you with account information and any required tax forms. You may be required to pay a commission on purchases of mutual fund shares made through a financial intermediary.
Please see Frequent-Trading Limitations—Accounts Held by Intermediaries for information about the assessment of any purchase or redemption fees and the monitoring of frequent trading for accounts held by intermediaries.
Account Service Fee
Vanguard may charge a $20 account service fee on fund accounts that have a balance below $10,000 for any reason, including market fluctuation. The account service fee may be applied to both retirement and nonretirement fund accounts and may be assessed on fund accounts in all Vanguard funds, regardless of the account minimum. The fee, which will be collected by redeeming fund shares in the amount of $20, will be deducted from fund accounts subject to the fee once per calendar year.
If you elect to receive your statements and other materials electronically (i.e., by e-delivery), the account service fee will not be charged, so long as your election remains in effect. You can make your e-delivery election on vanguard.com.
Beginning on January 1, 2021, you may elect to receive paper copies of shareholder reports free of charge as noted on the cover of this prospectus.
Certain account types have alternative fee structures, including SIMPLE IRAs, Vanguard Retirement Investment Program pooled plans, and Vanguard Individual 401(k) Plans.
Low-Balance Accounts
The Fund reserves the right to liquidate a fund account whose balance falls below the account minimum for any reason, including market fluctuation. This liquidation policy applies to nonretirement fund accounts and accounts that are held through intermediaries. Any such liquidation will be preceded by written notice to the investor.
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Right to Change Policies
In addition to the rights expressly stated elsewhere in this prospectus, Vanguard reserves the right, without notice, to (1) alter, add, or discontinue any conditions of purchase (including eligibility requirements), redemption, exchange, conversion, service, or privilege at any time and (2) alter, impose, discontinue, or waive any purchase fee, redemption fee, account service fee, or other fee charged to a shareholder or a group of shareholders. Changes may affect any or all investors. These actions will be taken when, at the sole discretion of Vanguard management, Vanguard believes they are in the best interest of a fund.
Account Restrictions
Vanguard reserves the right to: (1) redeem all or a portion of a fund/account to meet a legal obligation, including tax withholding, tax lien, garnishment order, or other obligation imposed on your account by a court or government agency; (2) redeem shares, close an account, or suspend account privileges, features, or options in the case of threatening conduct or activity; (3) redeem shares, close an account, or suspend account privileges, features, or options if Vanguard believes or suspects that not doing so could result in a suspicious, fraudulent, or illegal transaction; (4) place restrictions on the ability to redeem any or all shares in an account if it is required to do so by a court or government agency; (5) place restrictions on the ability to redeem any or all shares in an account if Vanguard believes that doing so will prevent fraud, financial exploitation or abuse, or to protect vulnerable investors; (6) freeze any account and/or suspend account services if Vanguard has received reasonable notice of a dispute regarding the assets in an account, including notice of a dispute between the registered or beneficial account owners; and (7) freeze any account and/or suspend account services upon initial notification to Vanguard of the death of an account owner.
Share Classes
Vanguard reserves the right, without notice, to change the eligibility requirements of its share classes, including the types of clients who are eligible to purchase each share class.
Fund and Account Updates
Confirmation Statements
We will send (or provide through our website, whichever you prefer) a confirmation of your trade date and the amount of your transaction when you buy, sell, exchange, or convert shares. However, we will not send confirmations reflecting only checkwriting redemptions or the reinvestment of dividend or capital gains distributions. For any month in which you had a checkwriting
37
redemption, a Checkwriting Activity Statement will be sent to you itemizing the checkwriting redemptions for that month. Promptly review each confirmation statement that we provide to you. It is important that you contact Vanguard immediately with any questions you may have about any transaction reflected on a confirmation statement, or Vanguard will consider the transaction properly processed.
Portfolio Summaries
We will send (or provide through our website, whichever you prefer) quarterly portfolio summaries to help you keep track of your accounts throughout the year. Each summary shows the market value of your account at the close of the statement period, as well as all distributions, purchases, redemptions, exchanges, transfers, and conversions for the current calendar quarter (or month). Promptly review each summary that we provide to you. It is important that you contact Vanguard immediately with any questions you may have about any transaction reflected on the summary, or Vanguard will consider the transaction properly processed.
Tax Information Statements
For most accounts, Vanguard (or your intermediary) is required to provide annual tax forms to assist you in preparing your income tax returns. These forms are generally available for each calendar year early in the following year. Registered users of vanguard.com can also view certain forms through our website. Vanguard (or your intermediary) may also provide you with additional tax-related documentation. For more information, consult our website at vanguard.com or see Contacting Vanguard.
Annual and Semiannual Reports
We will send (or provide through our website, whichever you prefer) reports about Vanguard Short-Term Inflation-Protected Securities Index Fund twice a year, in May and November. These reports include overviews of the financial markets and provide the following specific Fund information:
• Performance assessments and comparisons with industry benchmarks.
• Financial statements with listings of Fund holdings.
Portfolio Holdings
Please consult the Fund's Statement of Additional Information or our website for a description of the policies and procedures that govern disclosure of the Fund’s portfolio holdings.
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Employer-Sponsored Plans
Your plan administrator or your employee benefits office can provide you with detailed information on how to participate in your plan and how to elect the Fund as an investment option.
• If you have any questions about the Fund or Vanguard, including those about the Fund’s investment objective, strategies, or risks, contact Vanguard Participant Services toll-free at 800-523-1188 or visit our website at vanguard.com.
• If you have questions about your account, contact your plan administrator or the organization that provides recordkeeping services for your plan.
• Be sure to carefully read each topic that pertains to your transactions with Vanguard.
Vanguard reserves the right to change its policies without notice to shareholders.
Transactions
Processing times for your transaction requests may differ among recordkeepers or among transaction and funding types. Your plan’s recordkeeper (which may also be Vanguard) will determine the necessary processing time frames for your transaction requests prior to submission to the Fund. Consult your recordkeeper or plan administrator for more information.
If Vanguard is serving as your plan recordkeeper and if your transaction involves one or more investments with an early cut-off time for processing or another trading restriction, your entire transaction will be subject to the restriction when the trade date for your transaction is determined.
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Contacting Vanguard  
Web
 
Vanguard.com
For the most complete source of Vanguard news
For fund, account, and service information
For most account transactions
For literature requests
24 hours a day, 7 days a week
 
Phone
Vanguard Tele-Account®
800-662-6273
For automated fund and account information
Toll-free, 24 hours a day, 7 days a week
Investor Information 800-662-7447
(Text telephone for people with
hearing impairment at 800-749-7273)
For fund and service information
For literature requests
Client Services 800-662-2739
(Text telephone for people with
hearing impairment at 800-749-7273)
For account information
For most account transactions
Participant Services 800-523-1188
(Text telephone for people with
hearing impairment at 800-749-7273)
For information and services for participants in
employer-sponsored plans
Institutional Division
888-809-8102
For information and services for large institutional
investors
Financial Advisor and Intermediary
Sales Support 800-997-2798
For information and services for financial intermediaries
including financial advisors, broker-dealers, trust
institutions, and insurance companies
Financial Advisory and Intermediary
Trading Support 800-669-0498
For account information and trading support for
financial intermediaries including financial advisors,
broker-dealers, trust institutions, and insurance
companies
Additional Information  
 
Inception
Date
Newspaper
Abbreviation
Vanguard
Fund Number
CUSIP
Number
Short-Term Inflation-Protected
Securities Index Fund
 
 
 
 
Investor Shares
10/16/2012
STIPSIxInv
1967
922020508
 
CGS identifiers have been provided by CUSIP Global Services, managed on behalf of the American Bankers Association by Standard & Poor’s Financial Services, LLC, and are not for use or dissemination in a manner that would serve as a substitute for any CUSIP service. The CUSIP Database, ©2021 American Bankers Association. “CUSIP” is a registered trademark of the American Bankers Association.
CFA® is a registered trademark owned by CFA Institute.
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BLOOMBERG is a trademark and service mark of Bloomberg Finance L.P. BARCLAYS is a trademark and service mark of Barclays Bank Plc, used under license. Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited (BISL) (collectively, Bloomberg), or Bloomberg’s licensors, own all proprietary rights in the Bloomberg Barclays U.S. TIPS 0-5 Year Index and the Bloomberg Barclay's U.S. Aggregate Bond Index (the Indices or Bloomberg Barclays Indices).
Neither Barclays Bank Plc, Barclays Capital Inc., or any affiliate (collectively Barclays) or Bloomberg is the issuer or producer of the Short-Term Inflation-Protected Securities Index Fund and neither Bloomberg nor Barclays has any responsibilities, obligations or duties to investors in the Short-Term Inflation-Protected Securities Index Fund. The Indices are licensed for use by The Vanguard Group, Inc. (Vanguard) as the sponsor of the Short-Term Inflation-Protected Securities Index Fund. Bloomberg and Barclays’ only relationship with Vanguard in respect to the Indices is the licensing of the Indices, which is determined, composed and calculated by BISL, or any successor thereto, without regard to the Issuer or the Short-Term Inflation-Protected Securities Index Fund or the owners of the Short-Term Inflation-Protected Securities Index Fund.
Additionally, Vanguard may for itself execute transaction(s) with Barclays in or relating to the Indices in connection with the Short-Term Inflation-Protected Securities Index Fund. Investors acquire the Short-Term Inflation-Protected Securities Index Fund from Vanguard and investors neither acquire any interest in the Indices nor enter into any relationship of any kind whatsoever with Bloomberg or Barclays upon making an investment in the Short-Term Inflation-Protected Securities Index Fund. The Short-Term Inflation-Protected Securities Index Fund is not sponsored, endorsed, sold or promoted by Bloomberg or Barclays. Neither Bloomberg nor Barclays makes any representation or warranty, express or implied regarding the advisability of investing in the Short-Term Inflation-Protected Securities Index Fund or the advisability of investing in securities generally or the ability of the Indices to track corresponding or relative market performance. Neither Bloomberg nor Barclays has passed on the legality or suitability of the Short-Term Inflation-Protected Securities Index Fund with respect to any person or entity. Neither Bloomberg nor Barclays is responsible for and has not participated in the determination of the timing of, prices at, or quantities of the Short-Term Inflation-Protected Securities Index Fund to be issued. Neither Bloomberg nor Barclays has any obligation to take the needs of the Issuer or the owners of the Short-Term Inflation-Protected Securities Index Fund or any other third party into consideration in determining, composing or calculating the Indices. Neither Bloomberg nor Barclays has any obligation or liability in connection with administration, marketing or trading of the Short-Term Inflation-Protected Securities Index Fund.
The licensing agreement between Bloomberg and Barclays is solely for the benefit of Bloomberg and Barclays and not for the benefit of the owners of the Short-Term Inflation-Protected Securities Index Fund, investors or other third parties. In addition, the licensing agreement between Vanguard and Bloomberg is solely for the benefit of Vanguard and Bloomberg and not for the benefit of the owners of the Short-Term Inflation-Protected Securities Index Fund, investors or other third parties.
NEITHER BLOOMBERG NOR BARCLAYS SHALL HAVE ANY LIABILITY TO THE ISSUER, INVESTORS OR TO OTHER THIRD PARTIES FOR THE QUALITY, ACCURACY AND/OR COMPLETENESS OF THE BLOOMBERG BARCLAYS INDICES OR ANY DATA INCLUDED THEREIN OR FOR INTERRUPTIONS IN THE DELIVERY OF THE BLOOMBERG BARCLAYS INDICES. NEITHER BLOOMBERG NOR BARCLAYS MAKES ANY WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE ISSUER, THE INVESTORS OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE BLOOMBERG BARCLAYS INDICES OR ANY DATA INCLUDED THEREIN. NEITHER BLOOMBERG NOR BARCLAYS MAKES ANY EXPRESS OR IMPLIED WARRANTIES, AND EACH HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE BLOOMBERG BARCLAYS INDICES OR ANY DATA INCLUDED THEREIN. BLOOMBERG RESERVES THE RIGHT TO CHANGE THE METHODS OF CALCULATION OR PUBLICATION, OR TO CEASE THE CALCULATION OR PUBLICATION OF THE BLOOMBERG BARCLAYS INDICES, AND NEITHER BLOOMBERG NOR BARCLAYS SHALL BE LIABLE FOR ANY MISCALCULATION OF OR ANY INCORRECT, DELAYED OR INTERRUPTED PUBLICATION WITH RESPECT TO THE BLOOMBERG BARCLAYS INDICES. NEITHER BLOOMBERG NOR BARCLAYS SHALL BE LIABLE FOR ANY DAMAGES, INCLUDING, WITHOUT LIMITATION, ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES, OR ANY LOST PROFITS AND EVEN IF ADVISED OF THE POSSIBILITY OF SUCH, RESULTING FROM THE USE OF THE BLOOMBERG BARCLAYS INDICES OR ANY DATA INCLUDED THEREIN OR WITH RESPECT TO THE SHORT-TERM INFLATION-PROTECTED SECURITIES INDEX FUND.
None of the information supplied by Bloomberg or Barclays and used in this publication may be reproduced in any manner without the prior written permission of both Bloomberg and Barclays Capital, the investment banking division of Barclays Bank Plc. Barclays Bank Plc is registered in England No. 1026167, registered office 1 Churchill Place London E14 5HP.
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Glossary of Investment Terms
Average Maturity. The average length of time until bonds held by a fund reach maturity and are repaid. In general, the longer the average maturity, the more a fund's share price fluctuates in response to changes in market interest rates. In calculating average maturity, a fund uses a bond’s maturity or, if applicable, an earlier date on which the advisor believes it is likely that a maturity-shortening device (such as a call, put, refunding, prepayment, or redemption provision or an adjustable coupon rate) will cause the bond to be repaid.
Bloomberg Barclays U.S. Aggregate Bond Index. An index that is the broadest measure of the taxable U.S. bond market, including most Treasury, agency, corporate, mortgage-backed, asset-backed, and international dollar-denominated issues, all with investment-grade ratings (rated Baa3 or above by Moody's) and maturities of 1 year or more.
Bond. A debt security (IOU) issued by a corporation, a government, or a government agency in exchange for the money the bondholder lends it. In most instances, the issuer agrees to pay back the loan by a specific date and generally to make regular interest payments until that date.
Capital Gains Distributions. Payments to mutual fund shareholders of gains realized on securities that a fund has sold at a profit, minus any realized losses.
Coupon Rate. The interest rate paid by the issuer of a debt security until its maturity. It is expressed as an annual percentage of the face value of the security.
Dividend Distributions. Payments to mutual fund shareholders of income from interest or dividends generated by a fund's investments.
Expense Ratio. A fund's total annual operating expenses expressed as a percentage of the fund's average net assets. The expense ratio includes management and administrative expenses, but it does not include the transaction costs of buying and selling portfolio securities.
Face Value. The amount to be paid at a bond’s maturity; also known as the par value or principal.
Fixed Income Security. An investment, such as a bond, representing a debt that must be repaid by a specified date, and on which the borrower may pay a fixed, variable, or floating rate of interest.
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Inception Date. The date on which the assets of a fund (or one of its share classes) are first invested in accordance with the fund's investment objective. For funds with a subscription period, the inception date is the day after that period ends. Investment performance is generally measured from the inception date.
Indexing. A low-cost investment strategy in which a mutual fund attempts to track—rather than outperform—a specified market benchmark, or “index.”
Inflation-Indexed Securities. Bonds issued by the U.S. government, government agencies, or corporations, whose principal and interest payments—unlike those of conventional bonds—are adjusted over time to reflect inflation.
Investment-Grade Bond. A debt security whose credit quality is considered by independent bond rating agencies, or through independent analysis conducted by a fund's advisor, to be sufficient to ensure timely payment of principal and interest under current economic circumstances. Debt securities rated in one of the four highest rating categories are considered investment-grade. Other debt securities may be considered by an advisor to be investment-grade.
Joint Committed Credit Facility. The Fund participates, along with other funds managed by Vanguard, in a committed credit facility provided by a syndicate of lenders pursuant to a credit agreement that may be renewed annually; each Vanguard fund is individually liable for its borrowings, if any, under the credit facility. The amount and terms of the committed credit facility are subject to approval by the Fund's board of trustees and renegotiation with the lender syndicate on an annual basis.
Mutual Fund. An investment company that pools the money of many people and invests it in a variety of securities in an effort to achieve a specific objective over time.
New York Stock Exchange (NYSE). A stock exchange based in New York City that is open for regular trading on business days, Monday through Friday, from 9:30 a.m. to 4 p.m., Eastern time.
Principal. The face value of a debt instrument or the amount of money put into an investment.
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Return of Capital. A return of all or part of your original investment in a fund. In general, return of capital reduces your cost basis in a fund’s shares and is not taxable to you until your cost basis has been reduced to zero.
Securities. Stocks, bonds, money market instruments, and other investments.
Total Return. A percentage change, over a specified time period, in a mutual fund’s net asset value, assuming the reinvestment of all distributions of dividends and capital gains.
Volatility. The fluctuations in value of a mutual fund or other security. The greater a fund's volatility, the wider the fluctuations in its returns.
Yield. Income (interest or dividends) earned by an investment, expressed as a percentage of the investment’s price.
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For More Information
If you would like more information about Vanguard Short-Term Inflation-Protected Securities Index Fund, the following documents are available free upon request:
Annual/Semiannual Reports to Shareholders
Additional information about the Fund's investments is available in the Fund's annual and semiannual reports to shareholders. In the annual report, you will find a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.
Statement of Additional Information (SAI)
The SAI provides more detailed information about the Fund and is incorporated by reference into (and thus legally a part of) this prospectus.
To receive a free copy of the latest annual or semiannual report or the SAI, or to request additional information about the Fund or other Vanguard funds, please visit vanguard.com or contact us as follows:
If you are an individual investor:
Telephone: 800-662-7447; Text telephone for people with hearing impairment: 800-749-7273
If you are a participant in an employer-sponsored plan:
Telephone: 800-523-1188; Text telephone for people
with hearing impairment: 800-749-7273
If you are a current Vanguard shareholder and would like information about your account, account transactions, and/or account statements, please call:
Client Services Department
Telephone: 800-662-2739; Text telephone for people with hearing impairment: 800-749-7273
Information Provided by the Securities and Exchange Commission (SEC)
Reports and other information about the Fund are available in the EDGAR database on the SEC’s website at www.sec.gov, or you can receive copies of this information, for a fee, by electronic request at the following email address: publicinfo@sec.gov.
Fund's Investment Company Act file number: 811-05628
© 2021 The Vanguard Group, Inc. All rights reserved.Vanguard Marketing Corporation, Distributor.P 1967 012021
 
Vanguard Short-Term Inflation-Protected Securities ETF
Prospectus
 January 31, 2021
Exchange-traded fund shares that are not individually redeemable and are listed on Nasdaq
Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP)
 See the inside front cover for important information about access to your fund’s annual and semiannual shareholder reports.
 This prospectus contains financial data for the Fund through the fiscal year ended September 30, 2020.
  The Securities and Exchange Commission (SEC) has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is
a criminal offense.
Important information about access to shareholder reports
Beginning on January 1, 2021, as permitted by regulations adopted by the SEC, paper copies of your fund’s annual and semiannual shareholder reports will no longer be sent to you by mail, unless you specifically request them. Instead, you will be notified by mail each time a report is posted on the website and will be provided with a link to access the report.
If you have already elected to receive shareholder reports electronically, you will not be affected by this change and do not need to take any action. You may elect to receive shareholder reports and other communications from the fund electronically by contacting your financial intermediary (such as a broker-dealer or bank) or, if you invest directly with the fund, by calling Vanguard at one of the phone numbers on the back cover of this prospectus or by logging on to vanguard.com.
You may elect to receive paper copies of all future shareholder reports free of charge. If you invest through a financial intermediary, you can contact the intermediary to request that you continue to receive paper copies. If you invest directly with the fund, you can call Vanguard at one of the phone numbers on the back cover of this prospectus or log on to vanguard.com. Your election to receive paper copies will apply to all the funds you hold through an intermediary or directly with Vanguard.
Contents
 
ETF Summary
Investment Objective
The Fund seeks to track the performance of a benchmark index that measures the investment return of inflation-protected public obligations of the U.S. Treasury with remaining maturities of less than 5 years.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy, hold, and sell ETF Shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
Shareholder Fees
(Fees paid directly from your investment)  
 
Transaction Fee on Purchases and Sales
None through Vanguard (Broker fees vary)
Transaction Fee on Reinvested Dividends
None through Vanguard (Broker fees vary)
Transaction Fee on Conversion to ETF Shares
None through Vanguard (Broker fees vary)
Annual Fund Operating Expenses
(Expenses that you pay each year as a percentage of the value of your investment)  
 
Management Fees
0.04%
12b-1 Distribution Fee
None
Other Expenses
0.01%
Total Annual Fund Operating Expenses
0.05%
Example
The following example is intended to help you compare the cost of investing in the Fund’s ETF Shares with the cost of investing in other funds. It illustrates the hypothetical expenses that you would incur over various periods if you were to invest $10,000 in the Fund's shares. This example assumes that the shares provide a return of 5% each year and that total annual fund operating expenses remain as stated in the preceding table. You would incur these hypothetical expenses whether or not you were to sell your shares at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:  
1 Year
3 Years
5 Years
10 Years
$5
$16
$28
$64
1
This example does not include the brokerage commissions that you may pay to buy and sell ETF Shares of the Fund.
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in more taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the previous expense example, reduce the Fund's performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 37% of the average value of its portfolio.
Principal Investment Strategies
The Fund employs an indexing investment approach designed to track the
performance of the Bloomberg Barclays U.S. Treasury Inflation-Protected Securities (TIPS) 0-5 Year Index. The Index is a market-capitalization-weighted index that includes all inflation-protected public obligations issued by the U.S. Treasury with remaining maturities of less than 5 years.
 
The Fund attempts to replicate the target index by investing all, or substantially all, of its assets in the securities that make up the Index, holding each security in approximately the same proportion as its weighting in the Index. The Fund maintains a dollar-weighted average maturity consistent with that of the Index. As of September 30, 2020, the dollar-weighted average maturity of the Index was 2.7 years.
Principal Risks
The Fund is designed for investors with a low tolerance for risk, but you could still lose money by investing in it. The Fund is subject to the following risks, which could affect the Fund's performance, and the level of risk may vary based on market conditions:
•  Income fluctuations . The Fund’s quarterly income distributions are likely to fluctuate considerably more than the income distributions of a typical bond fund. In fact, under certain conditions, the Fund may not have any income to distribute. Income fluctuations associated with changes in interest rates are expected to be low; however, income fluctuations associated with changes in inflation are expected to be high. Overall, investors can expect income fluctuations to be high for the Fund.
•  Real interest rate risk , which is the chance that the value of a bond will fluctuate because of a change in the level of real, or after inflation, interest rates.
2
Although inflation-indexed bonds seek to provide inflation protection, their prices may decline when real interest rates rise and vice versa. Because the Index is a market-capitalization-weighted index that includes all inflation-protected public obligations issued by the U.S. Treasury with remaining maturities of less than 5 years, real interest rate risk is expected to be low for the Fund.
Because ETF Shares are traded on an exchange, they are subject to additional risks:
• The Fund’s ETF Shares are listed for trading on Nasdaq and are bought and sold on the secondary market at market prices. Although it is expected that the market price of an ETF Share typically will approximate its net asset value (NAV), there may be times when the market price and the NAV differ significantly. Thus, you may pay more or less than NAV when you buy ETF Shares on the secondary market, and you may receive more or less than NAV when you sell those shares.
• Although the Fund’s ETF Shares are listed for trading on Nasdaq, it is possible that an active trading market may not be maintained.
• Trading of the Fund’s ETF Shares may be halted by the activation of individual or marketwide trading halts (which halt trading for a specific period of time when the price of a particular security or overall market prices decline by a specified percentage). Trading of the Fund’s ETF Shares may also be halted if (1) the shares are delisted from Nasdaq without first being listed on another exchange or (2) Nasdaq officials determine that such action is appropriate in the interest of a fair and orderly market or for the protection of investors.
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Annual Total Returns
The following bar chart and table are intended to help you understand the risks of investing in the Fund. The bar chart shows how the performance of the Fund‘s ETF Shares (based on NAV) has varied from one calendar year to another over the periods shown. The table shows how the average annual total returns of the ETF Shares compare with those of the Fund's target index and another comparative index, which have investment characteristics similar to those of the Fund. Keep in mind that the Fund's past performance (before and after taxes) does not indicate how the Fund will perform in the future. Updated performance information is available on our website at vanguard.com/performance or by calling Vanguard toll-free at 800-662-7447.
3
Annual Total Returns — Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares
 
During the periods shown in the bar chart, the highest and lowest returns for a calendar quarter were:  
 
Total Return
Quarter
Highest
2.62%
June 30, 2020
Lowest
-2.41%
June 30, 2013
Average Annual Total Returns for Periods Ended December 31, 2020  
 
1 Year
5 Years
Since
Inception
(Oct. 12,
2012)
Vanguard Short-Term Inflation-Protected Securities Index
Fund ETF Shares
 
 
 
Based on NAV
 
 
 
Return Before Taxes
4.97%
2.76%
1.37%
Return After Taxes on Distributions
4.46
2.09
0.92
Return After Taxes on Distributions and Sale of Fund Shares
2.94
1.82
0.85
Based on Market Price
 
 
 
Return Before Taxes
4.98
2.66
1.38
Comparative Indexes
(reflect no deduction for fees, expenses, or taxes)
 
 
 
Bloomberg Barclays U.S. TIPS 0-5 Year Index
5.07%
2.82%
1.39%
Bloomberg Barclays U.S. Aggregate Bond Index
7.51
4.44
3.22
Actual after-tax returns depend on your tax situation and may differ from those shown in the preceding table. When after-tax returns are calculated, it is assumed that the shareholder was in the highest individual federal marginal income tax bracket at the time of each distribution of income or capital gains or upon redemption. State and local income taxes are not reflected in the calculations. Please note that after-tax returns are not relevant for a shareholder who holds fund shares in a tax-deferred account, such as an individual retirement
4
account or a 401(k) plan. Also, figures captioned Return After Taxes on Distributions and Sale of Fund Shares may be higher than other figures for the same period if a capital loss occurs upon redemption and results in an assumed tax deduction for the shareholder.
Investment Advisor
The Vanguard Group, Inc. (Vanguard)
Portfolio Manager
Joshua C. Barrickman, CFA, Principal of Vanguard and co-head of Vanguard’s Fixed Income Indexing Americas. He has managed the Fund since its inception in 2012.
Purchase and Sale of Fund Shares
ETF Shares may only be bought and sold in the secondary market through a brokerage firm. The price you pay or receive for ETF Shares will be the prevailing market price, which may be more (premium) or less (discount) than the NAV of the shares. The brokerage firm may charge you a commission to execute the transaction. Unless imposed by your brokerage firm, there is no minimum dollar amount you must invest and no minimum number of shares you must buy. ETF Shares of the Fund cannot be directly purchased from or redeemed with the Fund, except by certain authorized broker-dealers. These broker-dealers may purchase and redeem ETF Shares only in large blocks (Creation Units), typically in exchange for baskets of securities.
 
An investor may incur costs attributable to the difference between the highest price a buyer is willing to pay to purchase ETF Shares (bid) and the lowest price a seller is willing to accept for ETF Shares (ask) when buying or selling shares in the secondary market (bid-ask spread). Recent information, including information on the Fund's NAV, market price, premiums and discounts, and bid-ask spreads, is available online at www.vanguard.com.
Tax Information
The Fund’s distributions may be taxable as ordinary income or capital gain. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan special tax rules apply.
Payments to Financial Intermediaries
The Fund and its investment advisor do not pay financial intermediaries for sales of Fund shares.
5
Investing in Vanguard ETF®Shares
What Are Vanguard ETF Shares?
Vanguard ETF Shares are an exchange-traded class of shares issued by certain Vanguard funds. ETF Shares represent an interest in the portfolio of stocks or bonds held by the issuing fund. This prospectus describes Vanguard Short-Term Inflation-Protected Securities ETF, a class of shares issued by Vanguard Short-Term Inflation-Protected Securities Index Fund. In addition to ETF Shares, the Fund offers three conventional (not exchange-traded) classes of shares. This prospectus, however, relates only to ETF Shares.
How Are Vanguard ETF Shares Different From Conventional Mutual Fund Shares?
Conventional mutual fund shares can be directly purchased from and redeemed with the issuing fund for cash at the net asset value (NAV), typically calculated once a day. ETF Shares, by contrast, cannot be purchased directly from or redeemed directly with the issuing fund by an individual investor. Rather, ETF Shares can only be purchased or redeemed directly from the issuing fund by certain authorized broker-dealers. These broker-dealers may purchase and redeem ETF Shares only in large blocks (Creation Units), usually in exchange for baskets of securities and not for cash (although some funds issue and redeem Creation Units in exchange for cash or a combination of cash and securities).
An organized secondary trading market is expected to exist for ETF Shares, unlike conventional mutual fund shares, because ETF Shares are listed for trading on a national securities exchange. Individual investors can purchase and sell ETF Shares on the secondary market through a broker. Secondary-market transactions occur not at NAV, but at market prices that are subject to change throughout the day based on the supply of and demand for ETF Shares, changes in the prices of the fund’s portfolio holdings, and other factors.
The market price of a fund's ETF Shares typically will differ somewhat from the NAV of those shares. The difference between market price and NAV is expected to be small most of the time, but in times of market disruption or extreme market volatility, the difference may become significant.
How Do I Buy and Sell Vanguard ETF Shares?
ETF Shares of the Fund are listed for trading on Nasdaq. You can buy and sell ETF Shares on the secondary market in the same way you buy and sell any other exchange-traded security—through a broker. Your broker may charge a commission to execute a transaction. You will also incur the cost of the “bid-ask spread,” which is the difference between the highest price a buyer is willing to pay to purchase ETF Shares (bid) and the lowest price a seller is willing to accept for ETF Shares (ask) when buying or selling shares in the secondary market. Because secondary-market transactions occur at market prices, you may pay
6
more (premium) or less (discount) than NAV when you buy ETF Shares and receive more or less than NAV when you sell those shares. In times of severe market disruption, the bid-ask spread and premiums/discounts can increase significantly. Unless imposed by your broker, there is no minimum dollar amount you must invest and no minimum number of ETF Shares you must buy.
Your ownership of ETF Shares will be shown on the records of the broker through which you hold the shares. Vanguard will not have any record of your ownership. Your account information will be maintained by your broker, which will provide you with account statements, confirmations of your purchases and sales of ETF Shares, and tax information. Your broker also will be responsible for ensuring that you receive income and capital gains distributions, as well as shareholder reports and other communications from the fund whose ETF Shares you own. You will receive other services (e.g., dividend reinvestment and average cost information) only if your broker offers these services.
7
Investing in Index Funds
What Is Indexing?
Indexing is an investment strategy for tracking the performance of a specified market benchmark, or “index.” An index is a group of securities whose overall performance is used as a standard to measure the investment performance of a particular market. There are many types of indexes. Some represent entire markets—such as the U.S. stock market or the U.S. bond market. Other indexes cover market segments—such as small-capitalization stocks or short-term bonds. One cannot invest directly in an index.
The index sponsor determines the securities to include in the index and the weighting of each security in the index. Under normal circumstances, the index sponsor will rebalance an index on a regular schedule. An index sponsor may carry out additional ad hoc index rebalances or delay or cancel a scheduled rebalance. Generally, the index sponsor does not provide any warranty, or accept any liability, with respect to the quality, accuracy, or completeness of either the target index or its related data. Errors made by the index sponsor may occur from time to time and may not be identified by the index sponsor for a period of time or at all. Vanguard does not provide any warranty or guarantee against such errors. Therefore, the gains, losses, or costs associated with the index sponsor’s errors will generally be borne by the index fund and its shareholders.
An index fund seeks to hold all, or a representative sample, of the securities that make up its target index. Index funds attempt to mirror the performance of the target index, for better or worse. However, an index fund generally does not perform exactly like its target index. For example, index funds have operating expenses and transaction costs. Market indexes do not, and therefore they will usually have a slight performance advantage over funds that track them. The ability of an index fund to match its performance to that of its target index can also be impacted by, among other things, the timing and size of cash flows and the size of the fund. Market disruptions and regulatory restrictions could also have an adverse effect on a fund’s ability to adjust its exposure to the required levels in order to track the index.
Index funds typically have the following characteristics:
•  Variety of investments . Depending on a fund’s benchmark index, the fund may invest in the securities of a variety of companies, industries, and/or governments or government agencies.
•  Relative performance consistency . Because they seek to track market benchmarks, index funds usually do not perform dramatically better or worse than their benchmarks.
•  Low cost . Index funds are generally inexpensive to run compared with actively managed funds. They have low or no research costs and typically keep trading activity—and thus dealer markups and other transaction costs—to a minimum compared with actively managed funds.
8
More on the Fund and ETF Shares
This prospectus describes the principal risks you would face as a Fund shareholder. It is important to keep in mind one of the main principles of investing: generally, the higher the risk of losing money, the higher the potential reward. The reverse, also, is generally true: the lower the risk, the lower the potential reward. As you consider an investment in any fund, you should take into account your personal tolerance for fluctuations in the securities markets. Look for this     symbol throughout the prospectus. It is used to mark detailed information about the more significant risks that you would confront as a Fund shareholder. To highlight terms and concepts important to fund investors, we have provided Plain Talk® explanations along the way. Reading the prospectus will help you decide whether the Fund is the right investment for you. We suggest that you keep this prospectus for future reference.
Share Class Overview
This prospectus offers the Fund‘s ETF Shares, an exchange-traded class of shares. Separate prospectuses offer the Fund's Admiral™ Shares, which generally have an investment minimum of $3,000, and Investor Shares, which are generally available only to Vanguard funds that operate as funds of funds and to certain retirement plan clients that receive recordkeeping services from Vanguard. In addition, another prospectus offers the Fund‘s Institutional Shares, which are generally for investors who invest a minimum of $5 million.
All share classes offered by the Fund have the same investment objective, strategies, and policies. However, different share classes have different expenses; as a result, their investment returns will differ.
A Note to Investors
Vanguard ETF Shares can be purchased directly from the issuing Fund only by certain authorized broker-dealers in exchange for a basket of securities (or, in some cases, for cash or a combination of cash and securities). Individual investors generally will not be able to purchase ETF Shares directly from the Fund. Instead, these investors will purchase ETF Shares on the secondary market through a broker.
9
 
Plain Talk About Fund Expenses
All funds have operating expenses. These expenses, which are deducted
from a fund’s gross income, are expressed as a percentage of the net assets
of the fund. Assuming that operating expenses remain as stated in the Fees
and Expenses section, Vanguard Short-Term Inflation-Protected Securities
Index Fund ETF Shares’ expense ratio would be 0.05%, or $0.50 per $1,000
of average net assets. The average expense ratio for inflation-protected bond
funds in 2019 was 0.67%, or $6.70 per $1,000 of average net assets
(derived from data provided by Lipper, a Thomson Reuters Company, which
reports on the fund industry).
 
Plain Talk About Costs of Investing
Costs are an important consideration in choosing an ETF. That is because
you, as a shareholder, pay a proportionate share of the costs of operating a
fund and any transaction costs incurred when the fund buys or sells
securities. These costs can erode a substantial portion of the gross income
or the capital appreciation a fund achieves. Even seemingly small differences
in expenses can, over time, have a dramatic effect on a fund’s performance.
The following sections explain the principal investment strategies and policies that the Fund uses in pursuit of its objective. The Fund's board of trustees, which oversees the Fund's management, may change investment strategies or policies in the interest of shareholders without a shareholder vote, unless those strategies or policies are designated as fundamental. Note that the Fund‘s investment objective is not fundamental and may be changed without a shareholder vote. Under normal circumstances, the Fund will invest at least 80% of its assets in inflation-indexed securities that make up its target index. The Fund may change its 80% policy only upon 60 days‘ notice to shareholders.
10
Market Exposure  
Plain Talk About Inflation-Indexed Securities
Unlike a conventional bond, whose issuer makes regular fixed interest
payments and repays the face value of the bond at maturity, an
inflation-indexed security (IIS) provides principal and interest payments that
are adjusted over time to reflect a rise (inflation) or a drop (deflation) in the
general price level for goods and services. This adjustment is a key feature,
given that inflation has typically occurred. However, there have been periods
of deflation, such as in 1954 when the Consumer Price Index (CPI) declined
by 0.7%. (Source: Bureau of Labor Statistics.) Importantly, in the event of
deflation, the U.S. Treasury has guaranteed that it will repay at least the face
value of an IIS issued by the U.S. government. However, if an IIS is
purchased by a fund at a premium, deflation could cause a fund to
experience a loss.
Inflation measurement and adjustment for an IIS have two important
features. There is a two-month lag between the time that inflation occurs in
the economy and when it is factored into IIS valuations. This is due to the
time required to measure and calculate the CPI and for the U.S. Treasury to
adjust the inflation accrual schedules for an IIS. For example, inflation that
occurs in January is calculated and announced during February and affects
IIS valuations throughout the month of March. In addition, the inflation index
used is the nonseasonally adjusted index. It differs from the CPI that is
reported by most news organizations, which is statistically smoothed to
overcome highs and lows observed at different points each year. The use of
the nonseasonally adjusted index can cause a fund’s income level to
fluctuate.
11
   
The Fund is subject to income fluctuations. The Fund’s quarterly income distributions are likely to fluctuate considerably more than the income distributions of a typical bond fund. In fact, under certain conditions, the Fund may not have any income to distribute. Income fluctuations associated with changes in interest rates are expected to be low; however, income fluctuations associated with changes in inflation are expected to be high. Overall, investors can expect income fluctuations to be high for the Fund.
Although fluctuations in quarterly income distributions are expected to be high, distributions should provide an income yield that adjusts with inflation. In periods of extreme deflation, the Fund may have no income to distribute. If prices throughout the economy decline, the principal and income of an IIS will decline and could result in losses for the Fund.
Changes in interest rates can affect bond income as well as bond prices.
   
The Fund is subject to real interest rate risk, which is the chance that the value of a bond will fluctuate because of a change in the level of real, or after inflation, interest rates. Although inflation-indexed bonds seek to provide inflation protection, their prices may decline when real interest rates rise and vice versa. Because the Index is a market-capitalization-weighted index that includes all inflation-protected public obligations issued by the U.S. Treasury with remaining maturities of less than 5 years, real interest rate risk is expected to be low for the Fund.  
Plain Talk About Real Returns
Inflation-indexed securities are designed to provide a “real rate of return”—a
return after adjusting for the impact of inflation. Inflation—a rise in the
general price level—erodes the purchasing power of an investor’s portfolio.
For example, if an investment provides a “nominal” total return of 5% in a
given year and inflation is 2% during that period, the inflation-adjusted, or
real, return is 3%. Investors should be conscious of both the nominal and the
real returns on their investments. Investors in inflation-indexed bond funds
who do not reinvest the portion of the income distribution that comes from
inflation adjustments will not maintain the purchasing power of the
investment over the long term. This is because interest earned depends on
the amount of principal invested, and that principal will not grow with
inflation if the investor does not reinvest the principal adjustment paid out as
part of a fund’s income distributions.
 
12
Plain Talk About Inflation-Indexed Securities and Interest Rates
Interest rates on conventional bonds have two primary components: a “real”
yield and an increment that reflects investor expectations of future inflation.
By contrast, interest rates on an IIS are adjusted for inflation and, therefore,
are not affected meaningfully by inflation expectations. This leaves only real
interest rates to influence the price of an IIS. A rise in real interest rates will
cause the price of an IIS to fall, while a decline in real interest rates will
boost the price of an IIS.
 
Plain Talk About Inflation-Indexed Securities and Taxes
Any increase in principal for an IIS resulting from inflation adjustments is
considered by the IRS to be taxable income in the year it occurs. For direct
holders of an IIS, this means that taxes must be paid on principal
adjustments, even though these amounts are not received until the bond
matures. By contrast, a mutual fund holding an IIS pays out (to shareholders)
both interest income and the income attributable to principal adjustments
each quarter in the form of cash or reinvested shares, and the shareholders
must pay taxes on the distributions.
Market disruptions can adversely affect local and global markets as well as normal market conditions and operations. Any such disruptions could have an adverse impact on the value of the Fund's investments and Fund performance.
Security Selection
The Fund attempts to track the investment performance of a benchmark index that measures the investment return of inflation-protected public obligations issued by the U.S. Treasury with remaining maturities of less than 5 years. The Fund uses the replication method of indexing, meaning that it generally holds the same securities as its target index and in approximately the same proportions.
Other Investment Policies and Risks
The Fund reserves the right to substitute a different index for the index it currently tracks if the current index is discontinued, if the Fund's agreement with the sponsor of its target index is terminated, or for any other reason determined in good faith by the Fund’s board of trustees. In any such instance, the substitute index would represent the same market segment as the current index.
13
The Fund may invest, to a limited extent, in derivatives. Generally speaking, a derivative is a financial contract whose value is based on the value of a financial asset (such as a stock, a bond, or a currency), a physical asset (such as gold, oil, or wheat), a market index, or a reference rate. Investments in derivatives may subject the Fund to risks different from, and possibly greater than, those of investments directly in the underlying securities or assets. The Fund will not use derivatives for speculation or for the purpose of leveraging (magnifying) investment returns.
The Fund may invest a small portion of its assets in fixed income futures, which are a type of derivative, and/or shares of exchange-traded funds (ETFs). These fixed income futures and ETFs typically provide returns similar to those of the bonds listed in the index, or in a subset of the index, the Fund seeks to track. The Fund may purchase futures or ETFs when doing so will reduce the Fund’s transaction costs, facilitate cash management, mitigate risk, or have the potential to add value because the instruments are favorably priced. Vanguard receives no additional revenue from Fund assets invested in ETF Shares of other Vanguard funds. Fund assets invested in ETF Shares are excluded when allocating to the Fund its share of the costs of Vanguard operations.
Cash Management
The Fund's daily cash balance may be invested in Vanguard Market Liquidity Fund and/or Vanguard Municipal Cash Management Fund (each, a CMT Fund), which are low-cost money market funds. When investing in a CMT Fund, the Fund bears its proportionate share of the expenses of the CMT Fund in which it invests. Vanguard receives no additional revenue from Fund assets invested in a CMT Fund.
Methods Used to Meet Redemption Requests
Redemptions of ETF Shares are typically met through a combination of cash and securities held by the Fund; see “How Are Vanguard ETF Shares Different From Conventional Mutual Fund Shares?” If cash is used to meet redemptions, the Fund typically obtains such cash through positive cash flows or the sale of Fund holdings consistent with the Fund’s investment objective and strategy. Please consult the Fund's Statement of Additional Information for further information on redemptions of ETF Shares.
Under certain circumstances, the Fund may borrow money (subject to certain regulatory conditions and if available under board-approved procedures) through an interfund lending facility; through a bank line-of-credit, including a joint committed credit facility; or through an uncommitted line-of-credit from Vanguard in order to meet redemption requests.
14
Temporary Investment Measures
The Fund may temporarily depart from its normal investment policies and strategies when the advisor believes that doing so is in the Fund's best interest, so long as the strategy or policy employed is consistent with the Fund's investment objective. For instance, the Fund may invest beyond its normal limits in derivatives or exchange-traded funds that are consistent with the Fund's investment objective when those instruments are more favorably priced or provide needed liquidity, as might be the case when the Fund receives large cash flows that it cannot prudently invest immediately.
Special Risks of Exchange-Traded Shares
   
ETF Shares are not individually redeemable. They can be redeemed with the issuing Fund at NAV only by certain authorized broker-dealers and only in large blocks known as Creation Units. Consequently, if you want to liquidate some or all of your ETF Shares, you must sell them on the secondary market at prevailing market prices.
   
The market price of ETF Shares may differ from NAV. Although it is expected that the market price of an ETF Share typically will approximate its NAV, there may be times when the market price and the NAV differ significantly. Thus, you may pay more (premium) or less (discount) than NAV when you buy ETF Shares on the secondary market, and you may receive more or less than NAV when you sell those shares. These discounts and premiums are likely to be greatest during times of market disruption or extreme market volatility.
Vanguard’s website at vanguard.com shows the previous day’s closing NAV and closing market price for the Fund's ETF Shares. The website also discloses, in the Premium/Discount Analysis section of the ETF Shares’ Price & Performance page, how frequently the Fund’s ETF Shares traded at a premium or discount to NAV (based on closing NAVs and market prices) and the magnitudes of such premiums and discounts.
   
An active trading market may not exist. Although Vanguard ETF Shares are listed on a national securities exchange, it is possible that an active trading market may not be maintained. Although this could happen at any time, it is more likely to occur during times of severe market disruption. If you attempt to sell your ETF Shares when an active trading market is not functioning, you may have to sell at a significant discount to NAV. In extreme cases, you may not be able to sell your shares at all.
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Trading may be halted. Trading of Vanguard ETF Shares on an exchange may be halted by the activation of individual or marketwide trading halts (which halt trading for a specific period of time when the price of a particular security or overall market prices decline by a specified percentage). Trading of ETF Shares may also be halted if (1) the shares are delisted from the listing exchange without first being listed on another exchange or (2) exchange officials determine that such action is appropriate in the interest of a fair and orderly market or for the protection of investors.
Conversion Privilege
Owners of conventional shares issued by the Fund may convert those shares to ETF Shares of equivalent value of the same fund. Please note that investors who own conventional shares through a 401(k) plan or other employer-sponsored retirement or benefit plan generally may not convert those shares to ETF Shares and should check with their plan sponsor or recordkeeper. ETF Shares, whether acquired through a conversion or purchased on the secondary market, cannot be converted to conventional shares by a shareholder. Also, ETF Shares of one fund cannot be exchanged for ETF Shares of another fund.
You must hold ETF Shares in a brokerage account. Thus, before converting conventional shares to ETF Shares, you must have an existing, or open a new, brokerage account. This account may be with Vanguard Brokerage Services® or with any other brokerage firm. To initiate a conversion of conventional shares to ETF Shares, please contact your broker.
Vanguard Brokerage Services does not impose a fee on conversions from Vanguard conventional shares to Vanguard ETF Shares. However, other brokerage firms may charge a fee to process a conversion. Vanguard reserves the right, in the future, to impose a transaction fee on conversions or to limit, temporarily suspend, or terminate the conversion privilege.
Converting conventional shares to ETF Shares is generally accomplished as follows. First, after your broker notifies Vanguard of your request to convert, Vanguard will transfer your conventional shares from your account to the broker’s omnibus account with Vanguard (an account maintained by the broker on behalf of all its customers who hold conventional Vanguard fund shares through the broker). After the transfer, Vanguard’s records will reflect your broker, not you, as the owner of the shares. Next, your broker will instruct Vanguard to convert the appropriate number or dollar amount of conventional shares in its omnibus account to ETF Shares of equivalent value, based on the respective NAVs of the two share classes.
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Your Fund’s transfer agent will reflect ownership of all ETF Shares in the name of the Depository Trust Company (DTC). The DTC will keep track of which ETF Shares belong to your broker, and your broker, in turn, will keep track of which ETF Shares belong to you.
Because the DTC is unable to handle fractional shares, only whole shares can be converted. For example, if you owned 300.25 conventional shares, and this was equivalent in value to 90.75 ETF Shares, the DTC account would receive 90 ETF Shares. Conventional shares with a value equal to 0.75 ETF Shares (in this example, that would be 2.481 conventional shares) would remain in the broker’s omnibus account with Vanguard. Your broker then could either (1) credit your account with 0.75 ETF Shares or (2) redeem the 2.481 conventional shares for cash at NAV and deliver that cash to your account. If your broker chose to redeem your conventional shares, you would realize a gain or loss on the redemption that must be reported on your tax return (unless you hold the shares in an IRA or other tax-deferred account). Please consult your broker for information on how it will handle the conversion process, including whether it will impose a fee to process a conversion.
If you convert your conventional shares to ETF Shares through Vanguard Brokerage Services, all conventional shares for which you request conversion will be converted to ETF Shares of equivalent value. Because no fractional shares will have to be sold, the transaction will not be taxable.
Here are some important points to keep in mind when converting conventional shares of a Vanguard fund to ETF Shares:
• The conversion process can take anywhere from several days to several weeks, depending on your broker. Vanguard generally will process conversion requests either on the day they are received or on the next business day. Vanguard imposes conversion blackout windows around the dates when a fund with ETF Shares declares dividends. This is necessary to prevent a shareholder from collecting a dividend from both the conventional share class currently held and also from the ETF share class to which the shares will be converted.
• Until the conversion process is complete, you will remain fully invested in a fund’s conventional shares, and your investment will increase or decrease in value in tandem with the NAV of those shares.
• The conversion transaction is nontaxable except, if applicable, to the very limited extent previously described.
A precautionary note to investment companies: Vanguard ETF Shares are issued by registered investment companies, and therefore the acquisition of such shares by other investment companies is subject to the restrictions of
17
Section 12(d)(1) of the Investment Company Act of 1940. Vanguard has obtained an SEC exemptive order that allows registered investment companies to invest in the issuing funds beyond the limits of Section 12(d)(1), subject to certain terms and conditions, including the requirement to enter into a participation agreement with Vanguard.
Frequent Trading and Market-Timing
Unlike frequent trading of a Vanguard fund’s conventional (i.e., not exchange-traded) classes of shares, frequent trading of ETF Shares does not disrupt portfolio management or otherwise harm fund shareholders. The vast majority of trading in ETF Shares occurs on the secondary market. Because these trades do not involve the issuing fund, they do not harm the fund or its shareholders. Certain broker-dealers are authorized to purchase and redeem ETF Shares directly with the issuing fund. Because these trades typically are effected in kind (i.e., for securities and not for cash), or are assessed a transaction fee when effected in cash, they do not cause any of the harmful effects to the issuing fund (as previously noted) that may result from frequent trading. For these reasons, the board of trustees of each fund that issues ETF Shares has determined that it is not necessary to adopt policies and procedures to detect and deter frequent trading and market-timing of ETF Shares.
Portfolio Holdings
Please consult the Fund's Statement of Additional Information or our website for a description of the policies and procedures that govern disclosure of the Fund’s portfolio holdings.
Turnover Rate
Although the Fund generally seeks to invest for the long term, it may sell securities regardless of how long they have been held. Generally, an index fund sells securities in response to redemption requests from shareholders of conventional (not exchange-traded) shares or to changes in the composition of its target index or in an effort to manage the fund’s duration. The Financial Highlights section of this prospectus shows historical turnover rates for the Fund. A turnover rate of 100%, for example, would mean that the Fund had sold and replaced securities valued at 100% of its net assets within a one-year period. In general, the greater the turnover rate, the greater the impact transaction costs will have on a fund’s return. Also, funds with high turnover rates may be more likely to generate capital gains, including short-term capital gains, that must be distributed to shareholders and will be taxable to shareholders investing through a taxable account.
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The Fund and Vanguard
The Fund is a member of The Vanguard Group, a family of over 200 funds. All of the funds that are members of The Vanguard Group (other than funds of funds) share in the expenses associated with administrative services and business operations, such as personnel, office space, and equipment.
Vanguard Marketing Corporation provides marketing services to the funds. Although fund shareholders do not pay sales commissions or 12b-1 distribution fees, each fund (other than a fund of funds) or each share class of a fund (in the case of a fund with multiple share classes) pays its allocated share of the Vanguard funds’ marketing costs.  
Plain Talk About Vanguard’s Unique Corporate Structure
The Vanguard Group is owned jointly by the funds it oversees and thus
indirectly by the shareholders in those funds. Most other mutual funds are
operated by management companies that are owned by third parties—either
public or private stockholders—and not by the funds they serve.
Investment Advisor
The Vanguard Group, Inc., P.O. Box 2600, Valley Forge, PA 19482, which began operations in 1975, serves as advisor to the Fund through its Fixed Income Group. As of September 30, 2020, Vanguard served as advisor for approximately $5.2 trillion in assets. Vanguard provides investment advisory services to the Fund pursuant to the Funds’ Service Agreement and subject to the supervision and oversight of the trustees and officers of the Fund.
For the fiscal year ended September 30, 2020, the advisory expenses represented an effective annual rate of less than 0.01% of the Fund’s average net assets.
Under the terms of an SEC exemption, the Fund's board of trustees may, without prior approval from shareholders, change the terms of an advisory agreement with a third-party investment advisor or hire a new third-party investment advisor—either as a replacement for an existing advisor or as an additional advisor. Any significant change in the Fund's advisory arrangements will be communicated to shareholders in writing. As the Fund's sponsor and overall manager, Vanguard may provide investment advisory services to the Fund at any time. Vanguard may also recommend to the board of trustees that an
19
advisor be hired, terminated, or replaced or that the terms of an existing advisory agreement be revised. The Fund has filed an application seeking a similar SEC exemption with respect to investment advisors that are wholly owned subsidiaries of Vanguard. If the exemption is granted, the Fund may rely on the new SEC relief.
For a discussion of why the board of trustees approved the Fund's investment advisory arrangement, see the most recent semiannual report to shareholders covering the fiscal period ended March 31.
The manager primarily responsible for the day-to-day management of the Fund is:
Joshua C. Barrickman, CFA, Principal of Vanguard and co-head of Vanguard’s Fixed Income Indexing Americas. He has been with Vanguard since 1998, has worked in investment management since 1999, has managed investment portfolios since 2005, and has managed the Fund since its inception in 2012. Education: B.S., Ohio Northern University; M.B.A., Lehigh University.
The Fund's Statement of Additional Information provides information about the portfolio manager’s compensation, other accounts under management, and ownership of shares of the Fund.
Dividends, Capital Gains, and Taxes
Fund Distributions
The Fund distributes to shareholders virtually all of its net income (interest less expenses) as well as any net short-term or long-term capital gains realized from the sale of its holdings. From time to time, the Fund may also make distributions that are treated as a return of capital. The Fund can declare and distribute income dividends quarterly in March, June, September, and December. The Fund may make a supplemental distribution at some other time during the year. However, the special tax treatment applicable to the Fund’s portfolio of inflation-indexed bonds increases the Fund’s risk of overdistributing income and paying a return of capital for a year. To minimize this overdistribution risk, the Fund may determine to pay distributions less frequently than quarterly in a year, and in some years, the Fund may not pay any income dividend. Capital gains distributions, if any, generally occur annually in December.  
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Plain Talk About Distributions
As a shareholder, you are entitled to your portion of a fund’s income from
interest as well as capital gains from the fund’s sale of investments. Income
consists of interest the fund earns from its money market and bond
investments. Capital gains are realized whenever the fund sells securities for
higher prices than it paid for them. These capital gains are either short-term
or long-term, depending on whether the fund held the securities for one year
or less or for more than one year.
 
Plain Talk About Return of Capital
Return of capital is the portion of a distribution representing the return of
your original investment in a fund. Return of capital reduces your cost basis
in the fund’s shares and is not taxable to you until your cost basis has been
reduced to zero. During periods of deflation, the fund’s inflation-indexed
bonds may experience a downward adjustment in their value. These
downward adjustments can partially or entirely offset, or more than offset,
the income earned on the bonds. Under certain circumstances, these
downward adjustments could require the fund to reclassify a portion of the
income dividends previously distributed to shareholders as return of capital.
To reduce the possibility of a reclassification, the fund may determine to pay
income dividends less frequently than quarterly in a year, and in some years,
the fund may not pay any income dividends.
Reinvestment of Distributions
In order to reinvest dividend and capital gains distributions, investors in the Fund's ETF Shares must hold their shares at a broker that offers a reinvestment service. This can be the broker’s own service or a service made available by a third party, such as the broker’s outside clearing firm or the Depository Trust Company (DTC). If a reinvestment service is available, distributions of income and capital gains can automatically be reinvested in additional whole and fractional ETF Shares of the Fund. If a reinvestment service is not available, investors will receive their distributions in cash. To determine whether a reinvestment service is available and whether there is a commission or other charge for using this service, consult your broker.
As with all exchange-traded funds, reinvestment of dividend and capital gains distributions in additional ETF Shares will occur four business days or more after the ex-dividend date (the date when a distribution of dividends or capital gains is
21
deducted from the price of the Fund’s shares). The exact number of days depends on your broker. During that time, the amount of your distribution will not be invested in the Fund and therefore will not share in the Fund’s income, gains, and losses.
Basic Tax Points
Investors in taxable accounts should be aware of the following basic federal income tax points:
• Distributions are taxable to you whether or not you reinvest these amounts in additional ETF Shares.
• Distributions declared in December—if paid to you by the end of January—are taxable as if received in December.
• Any income dividend distribution or short-term capital gains distribution that you receive is taxable to you as ordinary income.
• Any distribution of net long-term capital gains is taxable to you as long-term capital gains, no matter how long you have owned ETF Shares.
• Capital gains distributions may vary considerably from year to year as a result of the Fund's normal investment activities and cash flows.
• Your cost basis in the Fund will be decreased by the amount of any return of capital that you receive. This, in turn, will affect the amount of any capital gain or loss that you realize when selling your ETF Shares.
• Return of capital distributions generally are not taxable to you until your cost basis has been reduced to zero. If your cost basis is at zero, return of capital distributions will be treated as capital gains.
• A sale of ETF Shares is a taxable event. This means that you may have a capital gain to report as income, or a capital loss to report as a deduction, when you complete your tax return.
Individuals, trusts, and estates whose income exceeds certain threshold amounts are subject to a 3.8% Medicare contribution tax on “net investment income.” Net investment income takes into account distributions paid by the Fund and capital gains from any sale of ETF Shares.
Income dividends and capital gains distributions that you receive, as well as your gains or losses from any sale of ETF Shares, may be subject to state and local income taxes. Depending on your state’s rules, however, any dividends attributable to interest earned on direct obligations of the U.S. government may be exempt from state and local taxes. Vanguard will notify you each year how much, if any, of your dividends may qualify for this exemption.
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This prospectus provides general tax information only. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply. Please consult your tax advisor for detailed information about any tax consequences for you.
Share Price and Market Price
Share price, also known as net asset value (NAV), is calculated as of the close of regular trading on the New York Stock Exchange (NYSE), generally 4 p.m., Eastern time, on each day that the NYSE is open for business (a business day). In the rare event the NYSE experiences unanticipated disruptions and is unavailable at the close of the trading day, NAVs will be calculated as of the close of regular trading on the Nasdaq (or another alternate exchange if the Nasdaq is unavailable, as determined at Vanguard’s discretion), generally 4 p.m., Eastern time. Each share class has its own NAV, which is computed by dividing the total assets, minus liabilities, allocated to the share class by the number of Fund shares outstanding for that class. On U.S. holidays or other days when the NYSE is closed, the NAV is not calculated, and the Fund does not sell or redeem shares.
Remember: If you buy or sell ETF Shares on the secondary market, you will pay or receive the market price, which may be higher or lower than NAV. Your transaction will be priced at NAV only if you purchase or redeem your ETF Shares in Creation Unit blocks (an option available only to certain authorized broker-dealers) or if you convert your conventional fund shares to ETF Shares.
Debt securities held by a Vanguard fund are valued based on information furnished by an independent pricing service or market quotations. When a fund determines that pricing-service information or market quotations either are not readily available or do not accurately reflect the value of a security, the security is priced at its fair value (the amount that the owner might reasonably expect to receive upon the current sale of the security).
The values of any foreign securities held by a fund are converted into U.S. dollars using an exchange rate obtained from an independent third party as of the close of regular trading on the NYSE. The values of any mutual fund shares, including institutional money market fund shares, held by a fund are based on the NAVs of the shares. The values of any ETF shares or closed-end fund shares held by a fund are based on the market value of the shares.
A fund also may use fair-value pricing on bond market holidays when the fund is open for business (such as Columbus Day and Veterans Day). Fair-value prices are determined by Vanguard according to procedures adopted by the board of
23
trustees. When fair-value pricing is employed, the prices of securities used by a fund to calculate the NAV may differ from quoted or published prices for the same securities.
Vanguard’s website will show the previous day’s closing NAV and closing market price for the Fund’s ETF Shares.
Additional Information  
 
Inception
Date
Vanguard
Fund Number
CUSIP
Number
Short-Term Inflation-Protected Securities
Index Fund
 
 
 
ETF Shares
10/12/2012
3365
922020805
Certain affiliates of the Fund and the advisor may purchase and resell ETF Shares pursuant to the prospectus.
 
CGS identifiers have been provided by CUSIP Global Services, managed on behalf of the American Bankers Association by Standard & Poor’s Financial Services, LLC, and are not for use or dissemination in a manner that would serve as a substitute for any CUSIP service. The CUSIP Database, ©2021 American Bankers Association. “CUSIP” is a registered trademark of the American Bankers Association.
24
Financial Highlights
Financial highlights information is intended to help you understand a fund’s performance for the past five years (or, if shorter, its period of operations). Certain information reflects financial results for a single fund share. Total return represents the rate that an investor would have earned or lost each period on an investment in a fund or share class (assuming reinvestment of all distributions). This information has been obtained from the financial statements audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, whose report, along with fund financial statements, is included in a fund’s most recent annual report to shareholders. You may obtain a free copy of a fund’s latest annual or semiannual report, which is available upon request.
Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares  
 
Year Ended September 30,
For a Share Outstanding Throughout Each Period
2020
2019
2018
2017
2016
Net Asset Value, Beginning of Period
$49.03
$48.34
$49.41
$49.59
$48.36
Investment Operations
 
 
 
 
 
Net Investment Income1
0.634
1.003
1.358
0.671
0.251
Net Realized and Unrealized Gain (Loss) on Investments
1.677
0.652
(0.869)
(0.477)
0.979
Total from Investment Operations
2.311
1.655
0.489
0.194
1.230
Distributions
 
 
 
 
 
Dividends from Net Investment Income
(0.351)
(0.965)
(1.559)
(0.374)
—
Distributions from Realized Capital Gains
—
—
—
—
—
Total Distributions
(0.351)
(0.965)
(1.559)
(0.374)
—
Net Asset Value, End of Period
$50.99
$49.03
$48.34
$49.41
$49.59
Total Return
4.74%
3.46%
1.01%
0.40%
2.54%
Ratios/Supplemental Data
 
 
 
 
 
Net Assets, End of Period (Millions)
$9,217
$6,884
$5,453
$3,881
$2,478
Ratio of Total Expenses to Average Net Assets
0.05%
0.05%
0.06%
0.06%
0.07%
Ratio of Net Investment Income to Average Net Assets
1.27%
2.07%
2.81%
1.35%
0.51%
Portfolio Turnover Rate2
37%
26%
25%
27%
28%
1
Calculated based on average shares outstanding.
2
Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund's capital shares, including ETF Creation Units.
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 CFA® is a registered trademark owned by CFA Institute.
BLOOMBERG is a trademark and service mark of Bloomberg Finance L.P. BARCLAYS is a trademark and service mark of Barclays Bank Plc, used under license. Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited (BISL) (collectively, Bloomberg), or Bloomberg’s licensors, own all proprietary rights in the Bloomberg Barclays U.S. TIPS 0-5 Year Index and the Bloomberg Barclay's U.S. Aggregate Bond Index (the Indices or Bloomberg Barclays Indices).
Neither Barclays Bank Plc, Barclays Capital Inc., or any affiliate (collectively Barclays) or Bloomberg is the issuer or producer of the Short-Term Inflation-Protected Securities ETF and neither Bloomberg nor Barclays has any responsibilities, obligations or duties to investors in the Short-Term Inflation-Protected Securities ETF. The Indices are licensed for use by The Vanguard Group, Inc. (Vanguard) as the sponsor of the Short-Term Inflation-Protected Securities ETF. Bloomberg and Barclays’ only relationship with Vanguard in respect to the Indices is the licensing of the Indices, which is determined, composed and calculated by BISL, or any successor thereto, without regard to the Issuer or the Short-Term Inflation-Protected Securities ETF or the owners of the Short-Term Inflation-Protected Securities ETF.
Additionally, Vanguard may for itself execute transaction(s) with Barclays in or relating to the Indices in connection with the Short-Term Inflation-Protected Securities ETF. Investors acquire the Short-Term Inflation-Protected Securities ETF from Vanguard and investors neither acquire any interest in the Indices nor enter into any relationship of any kind whatsoever with Bloomberg or Barclays upon making an investment in the Short-Term Inflation-Protected Securities ETF. The Short-Term Inflation-Protected Securities ETF is not sponsored, endorsed, sold or promoted by Bloomberg or Barclays. Neither Bloomberg nor Barclays makes any representation or warranty, express or implied regarding the advisability of investing in the Short-Term Inflation-Protected Securities ETF or the advisability of investing in securities generally or the ability of the Indices to track corresponding or relative market performance. Neither Bloomberg nor Barclays has passed on the legality or suitability of the Short-Term Inflation-Protected Securities ETF with respect to any person or entity. Neither Bloomberg nor Barclays is responsible for and has not participated in the determination of the timing of, prices at, or quantities of the Short-Term Inflation-Protected Securities ETF to be issued. Neither Bloomberg nor Barclays has any obligation to take the needs of the Issuer or the owners of the Short-Term Inflation-Protected Securities ETF or any other third party into consideration in determining, composing or calculating the Indices. Neither Bloomberg nor Barclays has any obligation or liability in connection with administration, marketing or trading of the Short-Term Inflation-Protected Securities ETF.
The licensing agreement between Bloomberg and Barclays is solely for the benefit of Bloomberg and Barclays and not for the benefit of the owners of the Short-Term Inflation-Protected Securities ETF, investors or other third parties. In addition, the licensing agreement between Vanguard and Bloomberg is solely for the benefit of Vanguard and Bloomberg and not for the benefit of the owners of the Short-Term Inflation-Protected Securities ETF, investors or other third parties.
NEITHER BLOOMBERG NOR BARCLAYS SHALL HAVE ANY LIABILITY TO THE ISSUER, INVESTORS OR TO OTHER THIRD PARTIES FOR THE QUALITY, ACCURACY AND/OR COMPLETENESS OF THE BLOOMBERG BARCLAYS INDICES OR ANY DATA INCLUDED THEREIN OR FOR INTERRUPTIONS IN THE DELIVERY OF THE BLOOMBERG BARCLAYS INDICES. NEITHER BLOOMBERG NOR BARCLAYS MAKES ANY WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE ISSUER, THE INVESTORS OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE BLOOMBERG BARCLAYS INDICES OR ANY DATA INCLUDED THEREIN. NEITHER BLOOMBERG NOR BARCLAYS MAKES ANY EXPRESS OR IMPLIED WARRANTIES, AND EACH HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE BLOOMBERG BARCLAYS INDICES OR ANY DATA INCLUDED THEREIN. BLOOMBERG RESERVES THE RIGHT TO CHANGE THE METHODS OF CALCULATION OR PUBLICATION, OR TO CEASE THE CALCULATION OR PUBLICATION OF THE BLOOMBERG BARCLAYS INDICES, AND NEITHER BLOOMBERG NOR BARCLAYS SHALL BE LIABLE FOR ANY MISCALCULATION OF OR ANY INCORRECT, DELAYED OR INTERRUPTED PUBLICATION WITH RESPECT TO THE BLOOMBERG BARCLAYS INDICES. NEITHER BLOOMBERG NOR BARCLAYS SHALL BE LIABLE FOR ANY DAMAGES, INCLUDING, WITHOUT LIMITATION, ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES, OR ANY LOST PROFITS AND EVEN IF ADVISED OF THE POSSIBILITY OF SUCH, RESULTING FROM THE USE OF THE BLOOMBERG BARCLAYS INDICES OR ANY DATA INCLUDED THEREIN OR WITH RESPECT TO THE SHORT-TERM INFLATION-PROTECTED SECURITIES ETF.
None of the information supplied by Bloomberg or Barclays and used in this publication may be reproduced in any manner without the prior written permission of both Bloomberg and Barclays Capital, the investment banking division of Barclays Bank Plc. Barclays Bank Plc is registered in England No. 1026167, registered office 1 Churchill Place London E14 5HP.
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Glossary of Investment Terms
Authorized Participant. Institutional investors that are permitted to purchase Creation Units directly from, and redeem Creation Units directly with, the issuing fund. To be an Authorized Participant, an entity must be a participant in the Depository Trust Company and must enter into an agreement with the fund’s Distributor.
Average Maturity. The average length of time until bonds held by a fund reach maturity and are repaid. In general, the longer the average maturity, the more a fund's share price fluctuates in response to changes in market interest rates. In calculating average maturity, a fund uses a bond’s maturity or, if applicable, an earlier date on which the advisor believes it is likely that a maturity-shortening device (such as a call, put, refunding, prepayment, or redemption provision or an adjustable coupon rate) will cause the bond to be repaid.
Bid-Ask Spread. The difference between the highest price a buyer is willing to pay to purchase ETF Shares (bid) and the lowest price a seller is willing to accept for ETF Shares (ask) when buying or selling shares in the secondary market.
Bloomberg Barclays U.S. Aggregate Bond Index. An index that is the broadest measure of the taxable U.S. bond market, including most Treasury, agency, corporate, mortgage-backed, asset-backed, and international dollar-denominated issues, all with investment-grade ratings (rated Baa3 or above by Moody's) and maturities of 1 year or more.
Bond. A debt security (IOU) issued by a corporation, a government, or a government agency in exchange for the money the bondholder lends it. In most instances, the issuer agrees to pay back the loan by a specific date and generally to make regular interest payments until that date.
Capital Gains Distributions. Payments to fund shareholders of gains realized on securities that a fund has sold at a profit, minus any realized losses.
Coupon Rate. The interest rate paid by the issuer of a debt security until its maturity. It is expressed as an annual percentage of the face value of the security.
Creation Unit. A large block of a specified number of ETF Shares. Certain broker-dealers known as “Authorized Participants” may purchase and redeem ETF Shares from the issuing fund in Creation Unit size blocks.
Dividend Distributions. Payments to fund shareholders of income from interest or dividends generated by a fund's investments.
27
Ex-Dividend Date. The date when a distribution of dividends and/or capital gains is deducted from the share price of a mutual fund, ETF, or stock. On the ex-dividend date, the share price drops by the amount of the distribution per share (plus or minus any market activity).
Expense Ratio. A fund's total annual operating expenses expressed as a percentage of the fund's average net assets. The expense ratio includes management and administrative expenses, but it does not include the transaction costs of buying and selling portfolio securities.
Face Value. The amount to be paid at a bond’s maturity; also known as the par value or principal.
Fixed Income Security. An investment, such as a bond, representing a debt that must be repaid by a specified date, and on which the borrower may pay a fixed, variable, or floating rate of interest.
Inception Date. The date on which the assets of a fund (or one of its share classes) are first invested in accordance with the fund's investment objective. For funds with a subscription period, the inception date is the day after that period ends. Investment performance is generally measured from the inception date.
Indexing. A low-cost investment strategy in which a fund attempts to track—rather than outperform—a specified market benchmark, or “index.”
Inflation-Indexed Securities. Bonds issued by the U.S. government, government agencies, or corporations, whose principal and interest payments—unlike those of conventional bonds—are adjusted over time to reflect inflation.
Investment-Grade Bond. A debt security whose credit quality is considered by independent bond rating agencies, or through independent analysis conducted by a fund's advisor, to be sufficient to ensure timely payment of principal and interest under current economic circumstances. Debt securities rated in one of the four highest rating categories are considered investment-grade. Other debt securities may be considered by an advisor to be investment-grade.
Joint Committed Credit Facility. The Fund participates, along with other funds managed by Vanguard, in a committed credit facility provided by a syndicate of lenders pursuant to a credit agreement that may be renewed annually; each Vanguard fund is individually liable for its borrowings, if any, under the credit
28
facility. The amount and terms of the committed credit facility are subject to approval by the Fund's board of trustees and renegotiation with the lender syndicate on an annual basis.
Mutual Fund. An investment company that pools the money of many people and invests it in a variety of securities in an effort to achieve a specific objective over time.
New York Stock Exchange (NYSE). A stock exchange based in New York City that is open for regular trading on business days, Monday through Friday, from 9:30 a.m. to 4 p.m., Eastern time.
Principal. The face value of a debt instrument or the amount of money put into an investment.
Return of Capital. A return of all or part of your original investment in a fund. In general, return of capital reduces your cost basis in a fund’s shares and is not taxable to you until your cost basis has been reduced to zero.
Securities. Stocks, bonds, money market instruments, and other investments.
Total Return. A percentage change, over a specified time period, in a fund's net asset value, assuming the reinvestment of all distributions of dividends and capital gains.
Volatility. The fluctuations in value of a mutual fund or other security. The greater a fund's volatility, the wider the fluctuations in its returns.
Yield. Income (interest or dividends) earned by an investment, expressed as a percentage of the investment’s price.
   
Connect with Vanguard® > vanguard.com
For More Information
If you would like more information about Vanguard Short-Term Inflation-Protected Securities ETF, the following documents are available free upon request:
Annual/Semiannual Reports to Shareholders
Additional information about the Fund's investments is available in the Fund's annual and semiannual reports to shareholders. In the annual report, you will find a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.
Statement of Additional Information (SAI)
The SAI provides more detailed information about the Fund's ETF Shares and is incorporated by reference into (and thus legally a part of) this prospectus.
To receive a free copy of the latest annual or semiannual report or the SAI, or to request additional information about Vanguard ETF Shares, please visit vanguard.com or contact us as follows:
Telephone: 866-499-8473; Text telephone for people with hearing impairment: 800-749-7273
Information Provided by the Securities and Exchange Commission (SEC)
Reports and other information about the Fund are available in the EDGAR database on the SEC’s website at www.sec.gov, or you can receive copies of this information, for a fee, by electronic request at the following email address: publicinfo@sec.gov.
Fund's Investment Company Act file number: 811-05628
© 2021 The Vanguard Group, Inc. All rights reserved.U.S. Patent Nos. 6,879,964; 7,337,138; 7,720,749; 7,925,573; 8,090,646; and 8,417,623Vanguard Marketing Corporation, Distributor.P 3365 012021
 
Vanguard Institutional Bond Funds
Prospectus
 January 31, 2021
Institutional Plus Shares
Vanguard Institutional Short-Term Bond Fund Institutional Plus Shares (VISTX)
Vanguard Institutional Intermediate-Term Bond Fund Institutional Plus Shares (VIITX)
  
 This prospectus contains financial data for the Funds through the fiscal year ended September 30, 2020.
  The Securities and Exchange Commission (SEC) has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is
a criminal offense.
Vanguard Institutional Short-Term Bond Fund
Investment Objective
The Fund seeks to provide a high level of current income consistent with the
maintenance of principal and liquidity.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy, hold, and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
Shareholder Fees
(Fees paid directly from your investment)  
 
Sales Charge (Load) Imposed on Purchases
None
Purchase Fee
None
Sales Charge (Load) Imposed on Reinvested Dividends
None
Redemption Fee
None
Annual Fund Operating Expenses
(Expenses that you pay each year as a percentage of the value of your investment)  
 
Management Fees
0.02%
12b-1 Distribution Fee
None
Other Expenses
0.00%
Total Annual Fund Operating Expenses
0.02%
Example
The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. It illustrates the hypothetical expenses that you would incur over various periods if you were to invest $10,000 in the Fund's shares. This example assumes that the Fund provides a return of 5% each year and that total annual fund operating expenses remain as stated in the preceding table. You would incur these hypothetical expenses whether or not you were to redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:  
1 Year
3 Years
5 Years
10 Years
$2
$6
$11
$26
1
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in more taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the previous expense example, reduce the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 118% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests primarily in a diversified portfolio of short-term high-quality fixed income securities. High-quality fixed income securities are those rated the equivalent of A3 or better by Moody's Investors Service, Inc. (Moody's), or another independent rating agency or, if unrated, are determined to be of comparable quality by the Fund's advisor. (Investment-grade fixed income securities are those rated the equivalent of Baa3 and above by Moody's or another independent rating agency or, if unrated, are determined to be of comparable quality by the Fund's advisor.) The Fund is expected to maintain a dollar-weighted average maturity of 1 to 4 years. Under normal circumstances, the Fund will invest at least 80% of its assets in fixed income securities.
Principal Risks
The Fund is designed for investors with a low tolerance for risk, but you could still lose money by investing in it. The Fund is subject to the following risks, which could affect the Fund's performance, and the level of risk may vary based on market conditions:
•  Income risk , which is the chance that the Fund's income will decline because of falling interest rates. Income risk is generally high for short-term bond funds, so investors should expect the Fund’s monthly income to fluctuate.
•  Interest rate risk , which is the chance that bond prices overall will decline because of rising interest rates. Interest rate risk should be low for the Fund because it invests primarily in short-term bonds, whose prices are less sensitive to interest rate changes than are the prices of longer-term bonds.
•  Credit risk , which is the chance that a bond issuer will fail to pay interest or principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline. Credit risk is expected to be low for the Fund because it invests primarily in bonds that are considered high-quality.
•  Call risk , which is the chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupon rates
2
or interest rates before their maturity dates. The Fund would then lose any price appreciation above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the Fund's income. Such redemptions and subsequent reinvestments would also increase the Fund's portfolio turnover rate. Call risk is expected to be low for the Fund.
•  Extension risk , which is the chance that during periods of rising interest rates, certain debt securities will be paid off substantially more slowly than originally anticipated, and the value of those securities may fall. Extension risk is expected to be low for the Fund.
•  Liquidity risk , which is the chance that the Fund may not be able to sell a security in a timely manner at a desired price.
•  Manager risk , which is the chance that poor security selection will cause the Fund to underperform relevant benchmarks or other funds with a similar investment objective.
•  Derivatives risk . The Fund may invest in derivatives, which may involve risks different from, and possibly greater than, those of investments directly in the underlying securities or assets.
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Annual Total Returns
The Fund is the successor to VFTC Short-Term Bond Trust (the predecessor trust), a collective trust managed by Vanguard Fiduciary Trust Company, an affiliate of The Vanguard Group, Inc. The predecessor trust commenced operations on December 7, 2004. The predecessor trust transferred its assets to the Fund in connection with the Fund’s commencement of operations on or about June 19, 2015. The performance of the Fund includes the performance of the predecessor trust prior to the commencement of the Fund’s operations. The performance of the predecessor trust has not been adjusted to reflect the expenses of the Fund. If the performance of the predecessor trust was adjusted to reflect the expenses of the Fund, the predecessor trust’s performance would have been lower. The Fund is managed with the same investment objective, strategies, policies, and risks as the predecessor trust. The predecessor trust was not an investment company and, therefore, was not subject to certain investment restrictions imposed on investment companies by the Investment Company Act of 1940. If the predecessor trust had been an investment company, its performance may have been different. The after-tax returns reflected in the following table include those of the predecessor trust prior to the
3
commencement of the Fund’s operations. Unlike the Fund, the predecessor trust was not operated as a regulated investment company for U.S. federal income tax purposes, and thus was not required to make periodic distributions to its shareholders. If the predecessor trust had been operated as a regulated investment company, the after-tax returns for the periods prior to the Fund’s commencement of operations would have been different from the after-tax returns reflected in the table.
The following bar chart and table are intended to help you understand the risks of investing in the Fund. The bar chart shows how the performance of the Fund has varied from one calendar year to another over the periods shown. The table shows how the average annual total returns of the Fund compare with those of a relevant market index, and another comparative index, which have investment characteristics similar to those of the Fund. Keep in mind that the Fund's past performance (before and after taxes) does not indicate how the Fund will perform in the future. Current shareholders can obtain updated performance information by calling Vanguard toll-free at 800-662-7447 .
Annual Total Returns — Vanguard Institutional Short-Term Bond Fund Institutional Plus Shares
 
During the periods shown in the bar chart, the highest and lowest returns for a calendar quarter were:  
 
Total Return
Quarter
Highest
2.88%
June 30, 2020
Lowest
-0.37%
June 30, 2013
4
Average Annual Total Returns for Periods Ended December 31, 2020  
 
1 Year
5 Years
10 Years
Vanguard Institutional Short-Term Bond Fund
Institutional Plus Shares
 
 
 
Return Before Taxes
3.92%
2.60%
1.93%
Return After Taxes on Distributions
2.99
1.71
1.46
Return After Taxes on Distributions and Sale of Fund Shares
2.37
1.60
1.29
Comparative Indexes
(reflect no deduction for fees, expenses, or taxes)
 
 
 
Bloomberg Barclays U.S. 1-3 Years Government/Credit ex
Baa Index
3.30%
2.08%
1.49%
Bloomberg Barclays U.S. Aggregate Bond Index
7.51
4.44
3.84
Actual after-tax returns depend on your tax situation and may differ from those shown in the preceding table. When after-tax returns are calculated, it is assumed that the shareholder was in the highest individual federal marginal income tax bracket at the time of each distribution of income or capital gains or upon redemption. State and local income taxes are not reflected in the calculations. Please note that after-tax returns are not relevant for a shareholder who holds fund shares in a tax-deferred account, such as an individual retirement account or a 401(k) plan. Also, figures captioned Return After Taxes on Distributions and Sale of Fund Shares may be higher than other figures for the same period if a capital loss occurs upon redemption and results in an assumed tax deduction for the shareholder.
Investment Advisor
The Vanguard Group, Inc. (Vanguard)
Portfolio Managers
Arvind Narayanan, CFA, Portfolio Manager at Vanguard. He has co-managed the Fund since 2019.
Samuel C. Martinez, CFA, Portfolio Manager at Vanguard. He has co-managed the Fund since 2018.
Daniel Shaykevich, Principal of Vanguard. He has co-managed the Fund since 2018.
Purchase and Sale of Fund Shares
Shares of the Fund are available only to certain collective trusts and other accounts managed by Vanguard or its affiliates, as well as qualifying education savings plans. The minimum investment amount required to open and maintain a
5
Fund account for Institutional Plus Shares is $10 million. The minimum investment amount required to add to an existing Fund account is generally $1. Tax-advantaged education savings plans should contact Vanguard for special eligibility rules that may apply to them.
Tax Information
The Fund’s distributions may be taxable as ordinary income or capital gain. If you are investing through a tax-deferred retirement account, such as a qualified employer-sponsored plan, special tax rules apply.
Payments to Financial Intermediaries
The Fund and its investment advisor do not pay financial intermediaries for sales of Fund shares.
6
Vanguard Institutional Intermediate-Term Bond Fund
Investment Objective
The Fund seeks to provide a high level of current income consistent with the
maintenance of principal and liquidity.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy, hold, and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
Shareholder Fees
(Fees paid directly from your investment)  
 
Sales Charge (Load) Imposed on Purchases
None
Purchase Fee
None
Sales Charge (Load) Imposed on Reinvested Dividends
None
Redemption Fee
None
Annual Fund Operating Expenses
(Expenses that you pay each year as a percentage of the value of your investment)  
 
Management Fees
0.02%
12b-1 Distribution Fee
None
Other Expenses
0.00%
Total Annual Fund Operating Expenses
0.02%
Example
The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. It illustrates the hypothetical expenses that you would incur over various periods if you were to invest $10,000 in the Fund's shares. This example assumes that the Fund provides a return of 5% each year and that total annual fund operating expenses remain as stated in the preceding table. You would incur these hypothetical expenses whether or not you were to redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:  
1 Year
3 Years
5 Years
10 Years
$2
$6
$11
$26
7
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in more taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the previous expense example, reduce the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 347% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests primarily in a diversified portfolio of short- and intermediate-term high-quality fixed income securities. High-quality fixed income securities are those rated the equivalent of A3 or better by Moody's Investors Service, Inc. (Moody's), or another independent rating agency or, if unrated, are determined to be of comparable quality by the Fund's advisor. (Investment-grade fixed income securities are those rated the equivalent of Baa3 and above by Moody's or another independent rating agency or, if unrated, are determined to be of comparable quality by the Fund's advisor.) The Fund is expected to maintain a dollar-weighted average maturity of 3 to 10 years. Under normal circumstances, the Fund will invest at least 80% of its assets in fixed income securities.
Principal Risks
An investment in the Fund could lose money over short or long periods of time. You should expect the Fund's share price and total return to fluctuate within a wide range. The Fund is subject to the following risks, which could affect the Fund's performance, and the level of risk may vary based on market conditions:
•  Income risk , which is the chance that the Fund's income will decline because of falling interest rates. Income risk is generally moderate for intermediate-term bond funds, so investors should expect the Fund’s monthly income to fluctuate accordingly.
•  Interest rate risk , which is the chance that bond prices overall will decline because of rising interest rates. Interest rate risk should be moderate for the Fund because it invests primarily in short- and intermediate-term bonds, whose prices are less sensitive to interest rate changes than are the prices of long-term bonds.
•  Liquidity risk , which is the chance that the Fund may not be able to sell a security in a timely manner at a desired price.
•  Call risk , which is the chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupon rates
8
or interest rates before their maturity dates. The Fund would then lose any price appreciation above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the Fund’s income. Such redemptions and subsequent reinvestments would also increase the Fund’s portfolio turnover rate. This risk is expected to be moderate for the Fund.
•  Extension risk , which is the chance that during periods of rising interest rates, certain debt securities will be paid off substantially more slowly than originally anticipated, and the value of those securities may fall. Extension risk is expected to be moderate for the Fund.
•  Credit risk , which is the chance that a bond issuer will fail to pay interest or principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline. Credit risk is expected to be low for the Fund because it invests primarily in bonds that are considered high-quality.
•  Manager risk , which is the chance that poor security selection will cause the Fund to underperform relevant benchmarks or other funds with a similar investment objective.
•  Derivatives risk . The Fund may invest in derivatives, which may involve risks different from, and possibly greater than, those of investments directly in the underlying securities or assets.
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Annual Total Returns
The Fund is the successor to VFTC Intermediate-Term Bond Trust (the predecessor trust), a collective trust managed by Vanguard Fiduciary Trust Company, an affiliate of The Vanguard Group, Inc. The predecessor trust commenced operations on November 30, 1997. The predecessor trust transferred its assets to the Fund in connection with the Fund’s commencement of operations on or about June 19, 2015. The performance of the Fund includes the performance of the predecessor trust prior to the commencement of the Fund’s operations. The performance of the predecessor trust has not been adjusted to reflect the expenses of the Fund. If the performance of the predecessor trust was adjusted to reflect the expenses of the Fund, the predecessor trust’s performance would have been lower. The Fund is managed with the same investment objective, strategies, policies, and risks as the predecessor trust. The predecessor trust was not an investment company and, therefore, was not subject to certain investment restrictions imposed on
9
investment companies by the Investment Company Act of 1940. If the predecessor trust had been an investment company, its performance may have been different. The after-tax returns reflected in the following table include those of the predecessor trust prior to the commencement of the Fund’s operations. Unlike the Fund, the predecessor trust was not operated as a regulated investment company for U.S. federal income tax purposes, and thus was not required to make periodic distributions to its shareholders. If the predecessor trust had been operated as a regulated investment company, the after-tax returns for the periods prior to the Fund’s commencement of operations would have been different from the after-tax returns reflected in the table.
The following bar chart and table are intended to help you understand the risks of investing in the Fund. The bar chart shows how the performance of the Fund has varied from one calendar year to another over the periods shown. The table shows how the average annual total returns of the Fund compare with those of a relevant market index, and another comparative index, which have investment characteristics similar to those of the Fund. Keep in mind that the Fund's past performance (before and after taxes) does not indicate how the Fund will perform in the future. Current shareholders can obtain updated performance information by calling Vanguard toll-free at 800-662-7447 .
Annual Total Returns — Vanguard Institutional Intermediate-Term Bond Fund Institutional Plus Shares
 
During the periods shown in the bar chart, the highest and lowest returns for a calendar quarter were:  
 
Total Return
Quarter
Highest
2.62%
March 31, 2020
Lowest
-2.04%
December 31, 2016
10
Average Annual Total Returns for Periods Ended December 31, 2020  
 
1 Year
5 Years
10 Years
Vanguard Institutional Intermediate-Term Bond Fund
Institutional Plus Shares
 
 
 
Return Before Taxes
6.16%
3.47%
3.08%
Return After Taxes on Distributions
4.99
2.37
2.48
Return After Taxes on Distributions and Sale of Fund Shares
3.70
2.19
2.14
Comparative Indexes
(reflect no deduction for fees, expenses, or taxes)
 
 
 
Bloomberg Barclays U.S. Intermediate Aggregate ex
Baa Index
5.36%
3.20%
2.91%
Bloomberg Barclays U.S. Aggregate Bond Index
7.51
4.44
3.84
Actual after-tax returns depend on your tax situation and may differ from those shown in the preceding table. When after-tax returns are calculated, it is assumed that the shareholder was in the highest individual federal marginal income tax bracket at the time of each distribution of income or capital gains or upon redemption. State and local income taxes are not reflected in the calculations. Please note that after-tax returns are not relevant for a shareholder who holds fund shares in a tax-deferred account, such as an individual retirement account or a 401(k) plan. Also, figures captioned Return After Taxes on Distributions and Sale of Fund Shares may be higher than other figures for the same period if a capital loss occurs upon redemption and results in an assumed tax deduction for the shareholder.
Investment Advisor
The Vanguard Group, Inc. (Vanguard)
Portfolio Managers
Brian W. Quigley, CFA, Portfolio Manager at Vanguard. He has co-managed the Fund since its inception in 2015.
Arvind Narayanan, CFA, Portfolio Manager at Vanguard. He has co-managed the Fund since 2019.
Samuel C. Martinez, CFA, Portfolio Manager at Vanguard. He has co-managed the Fund since 2018.
Daniel Shaykevich, Principal of Vanguard. He has co-managed the Fund since 2018.
11
Purchase and Sale of Fund Shares
Shares of the Fund are available only to certain collective trusts and other accounts managed by Vanguard or its affiliates, as well as qualifying education savings plans. The minimum investment amount required to open and maintain a Fund account for Institutional Plus Shares is $10 million. The minimum investment amount required to add to an existing Fund account is generally $1. Tax-advantaged education savings plans should contact Vanguard for special eligibility rules that may apply to them.
Tax Information
The Fund’s distributions may be taxable as ordinary income or capital gain. If you are investing through a tax-deferred retirement account, such as a qualified employer-sponsored plan, special tax rules apply.
Payments to Financial Intermediaries
The Fund and its investment advisor do not pay financial intermediaries for sales of Fund shares.
12
More on the Funds
This prospectus describes the principal risks you would face as a Fund shareholder. It is important to keep in mind one of the main principles of investing: generally, the higher the risk of losing money, the higher the potential reward. The reverse, also, is generally true: the lower the risk, the lower the potential reward. As you consider an investment in any mutual fund, you should take into account your personal tolerance for fluctuations in the securities markets. Look for this     symbol throughout the prospectus. It is used to mark detailed information about the more significant risks that you would confront as a Fund shareholder. To highlight terms and concepts important to mutual fund investors, we have provided Plain Talk® explanations along the way. Reading the prospectus will help you decide whether a Fund is the right investment for you. We suggest that you keep this prospectus for future reference.  
Plain Talk About Costs of Investing
Costs are an important consideration in choosing a mutual fund. That is
because you, as a shareholder, pay a proportionate share of the costs of
operating a fund and any transaction costs incurred when the fund buys or
sells securities. These costs can erode a substantial portion of the gross
income or the capital appreciation a fund achieves. Even seemingly small
differences in expenses can, over time, have a dramatic effect on a
fund’s performance.
The following sections explain the principal investment strategies and policies that each Fund uses in pursuit of its objective. The Funds' board of trustees, which oversees each Fund's management, may change investment strategies or policies in the interest of shareholders without a shareholder vote, unless those strategies or policies are designated as fundamental. Note that each Fund’s investment objective is not fundamental and may be changed without a shareholder vote. However, each Fund‘s 80% investment policy may be changed only upon 60 days‘ notice to shareholders.
13
Market Exposure
   
Each Fund is subject to interest rate risk, which is the chance that bond prices will decline because of rising interest rates. Interest rate risk should be low for short-term bond funds and moderate for intermediate-term bond funds.
Although bonds are often thought to be less risky than stocks, there have been periods when bond prices have fallen significantly because of rising interest rates. For instance, prices of long-term bonds fell by almost 48% between December 1976 and September 1981.
To illustrate the relationship between bond prices and interest rates, the following table shows the effect of a 1% and a 2% change (both up and down) in interest rates on the values of three noncallable bonds (i.e., bonds that cannot be redeemed by the
issuer) of different maturities, each with a face value of $1,000.
How Interest Rate Changes Affect the Value of a $1,000 Bond1  
Type of Bond (Maturity)
After a 1%
Increase
After a 1%
Decrease
After a 2%
Increase
After a 2%
Decrease
Short-Term (2.5 years)
$ 977
$ 1,024
$ 954
$ 1,049
Intermediate-Term (10 years)
922
1,086
851
1,180
Long-Term (20 years)
874
1,150
769
1,328
1 Assuming a 4% coupon rate.
These figures are for illustration only; you should not regard them as an indication of future performance of the bond market as a whole or the Funds in particular.  
14
Plain Talk About Bonds and Interest Rates
As a rule, when interest rates rise, bond prices fall. The opposite is also true:
Bond prices go up when interest rates fall. Why do bond prices and interest
rates move in opposite directions? Let’s assume that you hold a bond
offering a 4% yield. A year later, interest rates are on the rise and bonds of
comparable quality and maturity are offered with a 5% yield. With
higher-yielding bonds available, you would have trouble selling your 4% bond
for the price you paid—you would probably have to lower your asking price.
On the other hand, if interest rates were falling and 3% bonds were being
offered, you should be able to sell your 4% bond for more than you paid.
How mortgage-backed securities are different: In general, declining interest
rates will not lift the prices of mortgage-backed securities—such as those
guaranteed by the Government National Mortgage Association—as much as
the prices of comparable bonds. Why? Because when interest rates fall, the
bond market tends to discount the prices of mortgage-backed securities for
prepayment risk—the possibility that homeowners will refinance their
mortgages at lower rates and cause the bonds to be paid off prior to
maturity. In part to compensate for this prepayment possibility,
mortgage-backed securities tend to offer higher yields than other bonds of
comparable credit quality and maturity. In contrast, when interest rates rise,
prepayments tend to slow down, subjecting mortgage-backed securities to
extension risk—the possibility that homeowners will repay their mortgages
at slower rates. This will lengthen the duration or average life of
mortgage-backed securities held by a fund and delay the fund’s ability to
reinvest proceeds at higher interest rates, making the fund more sensitive to
changes in interest rates.
Changes in interest rates can affect bond income as well as bond prices.
   
Each Fund is subject to income risk, which is the chance that the Fund's income will decline because of falling interest rates. A fund's income declines when interest rates fall because the fund then must invest new cash flow and cash from maturing bonds in lower-yielding bonds. Income risk is generally high for short-term bond funds and moderate for intermediate-term bond funds.  
15
Plain Talk About Bond Maturities
A bond is issued with a specific maturity date—the date when the issuer
must pay back the bond’s principal (face value). Bond maturities range from
less than 1 year to more than 30 years. Typically, the longer a bond’s maturity,
the more price risk you, as a bond investor, will face as interest rates
rise—but also the higher the potential yield you could receive. Longer-term
bonds are more suitable for investors willing to take a greater risk of price
fluctuations to get higher and more stable interest income. Shorter-term
bond investors should be willing to accept lower yields and greater income
variability in return for less fluctuation in the value of their investment. The
stated maturity of a bond may differ from the effective maturity of a bond,
which takes into consideration that an action such as a call or refunding may
cause bonds to be repaid before their stated maturity dates.
Although falling interest rates tend to strengthen bond prices, they can cause other problems for bond fund investors—bond calls and prepayments.
   
Each Fund is subject to call risk, which is the chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupon rates or interest rates before their maturity dates. The Fund would then lose any price appreciation above the bond's call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the Fund's income. Such redemptions and subsequent reinvestments would also increase the Fund's portfolio turnover rate. This risk is expected to be low for the Institutional Short-Term Bond Fund and moderate for the Institutional Intermediate-Term Bond Fund.  
Plain Talk About Callable Bonds
Although bonds are issued with clearly defined maturities, in some cases the
bond issuer has a right to call in (redeem) the bond earlier than its maturity
date. When a bond is called, the bondholder must replace it with another
bond that may have a lower yield than the original bond. One way for bond
investors to protect themselves against call risk is to purchase a bond early
in its lifetime, long before its call date. Another way is to buy bonds with
lower coupon rates or interest rates, which make them less likely to
be called.
16
   
Each Fund is subject to prepayment risk, which is the chance that during periods of falling interest rates, homeowners will refinance their mortgages before their maturity dates, resulting in prepayment of mortgage-backed securities held by the Fund. The Fund would then lose any price appreciation above the mortgage's principal and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the Fund's income. Such prepayments and subsequent reinvestments would also increase the Fund's portfolio turnover rate. Prepayment risk is expected to be low for the Institutional Short-Term Bond Fund and moderate for the Institutional Intermediate-Term Bond Fund.
   
Each Fund is subject to extension risk, which is the chance that during periods of rising interest rates, certain debt securities will be paid off substantially more slowly than originally anticipated, and the value of those securities may fall. Extension risk is expected to be low for the Institutional Short-Term Bond Fund and moderate for the Institutional Intermediate-Term Bond Fund.
For funds that invest in mortgage-backed securities, extension risk is the chance that during periods of rising interest rates, homeowners will repay their mortgages at slower rates. This will lengthen the duration or average life of mortgage-backed securities held by a fund and delay the fund's ability to reinvest proceeds at higher interest rates.
   
Each Fund is subject to credit risk, which is the chance that a bond issuer will fail to pay interest or principal in a timely manner or that negative perceptions of the issuer's ability to make such payments will cause the price of that bond to decline. Credit risk is expected to be low for the Funds because they invest primarily in bonds that are considered high-quality.  
Plain Talk About Credit Quality
A bond’s credit quality rating is an assessment of the issuer’s ability to pay
interest on the bond and, ultimately, to repay the principal. The lower the
credit quality, the greater the perceived chance that the bond issuer will
default, or fail to meet its payment obligations. All things being equal, the
lower a bond’s credit quality, the higher its yield should be to compensate
investors for assuming additional risk.
   
Each Fund is subject to liquidity risk, which is the chance that the Fund may not be able to sell a security in a timely manner at a desired price.
17
Corporate bonds are traded among dealers and brokers that connect buyers with sellers. Liquidity in the corporate bond market may be challenged depending on overall economic conditions and credit tightening. There may be little trading in the secondary market for particular bonds and other debt securities, which may make them more difficult to value or sell.
To a limited extent, the Funds are also exposed to event risk, which is the chance that corporate fixed income securities held by the Funds may suffer a substantial decline in credit quality and market value because of a restructuring of the companies that issued the securities or because of other factors negatively affecting issuers.  
Plain Talk About Types of Bonds
Bonds are issued (sold) by many sources: Corporations issue corporate
bonds; the federal government issues U.S. Treasury bonds; agencies of the
federal government issue agency bonds; financial institutions issue
asset-backed bonds; and mortgage holders issue “mortgage-backed”
pass-through certificates. Each issuer is responsible for paying back the
bond’s initial value as well as for making periodic interest payments. Many
bonds issued by government agencies and entities are neither guaranteed
nor insured by the U.S. government.
Market disruptions can adversely affect local and global markets as well as normal market conditions and operations. Any such disruptions could have an adverse impact on the value of a Fund's investments and Fund performance.
Security Selection
The types of financial instruments that may be purchased by the Funds are identified and explained as follows:
•  Corporate debt obligations —usually called bonds—represent loans by an investor to a corporation.
•  U.S. government and agency bonds represent loans by investors to the U.S. Treasury or a wide variety of government agencies and instrumentalities. Securities issued by most U.S. government entities are neither guaranteed by the U.S. Treasury nor backed by the full faith and credit of the U.S. government. These entities include, among others, the Federal Home Loan Banks (FHLBs), the Federal National Mortgage Association (FNMA), and the Federal Home Loan Mortgage Corporation (FHLMC). Securities issued by the U.S. Treasury and a small number of U.S. government agencies, such as the Government National Mortgage Association (GNMA), are backed by the full faith and credit of the U.S.
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government. The market values of U.S. government and agency securities and U.S. Treasury securities are subject to fluctuation.  
Plain Talk About U.S. Government-Sponsored Enterprises
A variety of U.S. government-sponsored enterprises (GSEs), such as the
Federal Home Loan Mortgage Corporation (FHLMC), the Federal National
Mortgage Association (FNMA), and the Federal Home Loan Banks (FHLBs),
issue debt and mortgage-backed securities. Although GSEs may be chartered
or sponsored by acts of Congress, they are not funded by congressional
appropriations. In September of 2008, the U.S. Treasury placed FNMA and
FHLMC under conservatorship and appointed the Federal Housing Finance
Agency (FHFA) to manage their daily operations. In addition, the U.S. Treasury
entered into purchase agreements with FNMA and FHLMC to provide them
with capital in exchange for senior preferred stock. Generally, a GSE’s
securities are neither issued nor guaranteed by the U.S. Treasury and are not
backed by the full faith and credit of the U.S. government. In most cases,
these securities are supported only by the credit of the GSE, standing alone. In
some cases, a GSE’s securities may be supported by the ability of the GSE to
borrow from the U.S. Treasury or may be supported by the U.S. government in
some other way. Securities issued by the Government National Mortgage
Association (GNMA), however, are backed by the full faith and credit of the
U.S. government.
•  Mortgage-backed securities represent partial ownership interest in pools of commercial or residential mortgage loans made by financial institutions to finance a borrower’s real estate purchase. These loans are packaged by private or governmental issuers for sale to investors. As the underlying mortgage loans are paid by borrowers, the investors receive payments of interest and principal. To be announced (TBA) securities represent an agreement to buy or sell mortgage-backed securities with agreed-upon characteristics for a fixed unit price, with settlement on a scheduled future date beyond the typical settlement period for most other securities.
•  Mortgage dollar rolls are transactions in which a fund sells mortgage-backed securities to a dealer and simultaneously agrees to purchase similar securities in the future at a predetermined price. These transactions simulate an investment in mortgage-backed securities and have the potential to enhance a fund’s returns and reduce its administrative burdens, compared with holding mortgage-backed securities directly. These transactions may increase a fund’s portfolio turnover rate. Mortgage dollar rolls will be used only if consistent with the fund's investment objective and risk profile.
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•  Cash equivalent investments is a blanket term that describes a variety of short-term fixed income investments, including money market instruments, commercial paper, bank certificates of deposit, banker’s acceptances, and repurchase agreements. Repurchase agreements represent short-term (normally overnight) loans by a fund to banks or large securities dealers. Repurchase agreements can carry several risks. For instance, if the seller is unable to repurchase the securities as promised, a fund may experience a loss when trying to sell the securities to another buyer. Also, if the seller becomes insolvent, a bankruptcy court may determine that the securities do not belong to a fund and order that the securities be used to pay off the seller’s debts. Each Fund's advisor believes that these risks can be controlled through careful security selection and monitoring.
•  Futures, options, and other derivatives are described in detail under Other Investment Policies and Risks.
•  Asset-backed securities are bonds that represent partial ownership in pools of consumer or commercial loans—most often credit card, automobile, or trade receivables. Asset-backed securities, which can be types of corporate fixed income obligations, are issued by entities formed solely for that purpose, but their value ultimately depends on repayments by underlying borrowers. A primary risk of asset-backed securities is that their maturity is difficult to predict, being driven by borrowers’ prepayments.
•  International dollar-denominated bonds are bonds denominated in U.S. dollars and issued by foreign governments and companies. To the extent that a Fund owns foreign bonds, it is subject to country risk, which is the chance that world events—such as political upheaval, financial troubles, or natural disasters—will adversely affect the value and/or liquidity of securities issued by companies in foreign countries. In addition, the prices of foreign bonds and the prices of U.S. bonds have, at times, moved in opposite directions. Because the bond’s value is designated in dollars rather than in the currency of the issuer’s country, the investor is not exposed to currency risk; rather, the issuer assumes that risk, usually to attract U.S. investors. Although currency movements do not affect the value of international dollar-denominated bonds directly, they could affect the value indirectly by adversely affecting the issuer’s ability (or the market’s perception of the issuer’s ability) to pay interest or repay principal.
•  Collateralized mortgage obligations (CMOs) are special bonds that are collateralized by mortgages or mortgage pass-through securities. Cash flow rights on underlying mortgages—the rights to receive principal and interest payments—are divided up and prioritized to create short-, intermediate-, and long-term bonds. CMOs rely on assumptions about the timing of cash flows on the underlying mortgages, including expected prepayment rates. The primary risk of a CMO is that these assumptions are wrong, which would either shorten
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or lengthen the bond’s maturity. Each Fund will invest only in CMOs that are believed to be consistent with its maturity and credit-quality standards.
   
Each Fund is subject to manager risk, which is the chance that poor security selection will cause the Fund to underperform relevant benchmarks or other funds with a similar investment objective.
Other Investment Policies and Risks
In addition to investing in bonds and other fixed income securities, each Fund may make other kinds of investments to achieve its objective.
Each Fund may invest up to 15% of its net assets in illiquid securities. Illiquid securities are investments that a fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. Restricted securities are a special type of illiquid security; these securities have not been publicly issued and legally can be resold only to qualified buyers. From time to time, the board of trustees may determine that particular securities are not illiquid, and those securities may then be purchased by a Fund without limit.
Each Fund may invest a small portion of its assets in fixed income futures, which are a type of derivative, and/or shares of exchange-traded funds (ETFs). These fixed income futures and ETFs typically provide returns similar to those of bonds. Each Fund may purchase futures or ETFs when doing so will reduce the Fund’s transaction costs, facilitate cash management, mitigate risk, or have the potential to add value because the instruments are favorably priced. Vanguard receives no additional revenue from Fund assets invested in ETF Shares of other Vanguard funds. Fund assets invested in ETF Shares are excluded when allocating to the Fund its share of the costs of Vanguard operations.
   
Each Fund may invest in derivatives. In general, investments in derivatives may involve risks different from, and possibly greater than, those of investments directly in the underlying securities or assets.
Generally speaking, a derivative is a financial contract whose value is based on the value of a financial asset (such as a stock, a bond, or a currency), a physical asset (such as gold, oil, or wheat), a market index, or a reference rate. A Fund may invest in derivatives only if the expected risks and rewards of the derivatives are consistent with the investment objective, policies, strategies, and risks of a Fund as disclosed in this prospectus. In particular, derivatives will be used only when they may help the advisor to accomplish one or more of the following:
• Invest in eligible asset classes with greater efficiency and lower cost than is possible through direct investment.
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• Add value when these instruments are attractively priced.
• Adjust sensitivity to changes in interest rates.
• Adjust the overall credit risk of the portfolio or actively overweight or underweight credit risk to specific bond issuers.
• Hedge foreign interest rate exposure.    The Funds' derivative investments may include fixed income futures contracts; fixed income options, including options on swaps; currency swaps; interest rate swaps; total return swaps; credit default swaps; or other derivatives. Losses (or gains) involving futures contracts can sometimes be substantial—in part because a relatively small price movement in a futures contract may result in an immediate and substantial loss (or gain) for a fund. Similar risks exist for other types of derivatives.  
Plain Talk About Derivatives
Derivatives can take many forms. Some forms of derivatives—such as
exchange-traded futures and options on securities, commodities, or
indexes—have been trading on regulated exchanges for decades. These
types of derivatives are standardized contracts that can easily be bought and
sold and whose market values are determined and published daily. On the
other hand, non-exchange-traded derivatives—such as certain swap
agreements—tend to be more specialized or complex and may be more
difficult to accurately value.
Cash Management
Each Fund's daily cash balance may be invested in Vanguard Market Liquidity Fund and/or Vanguard Municipal Cash Management Fund (each, a CMT Fund), which are low-cost money market funds. When investing in a CMT Fund, each Fund bears its proportionate share of the expenses of the CMT Fund in which it invests. Vanguard receives no additional revenue from Fund assets invested in a CMT Fund.
Methods Used to Meet Redemption Requests
Under normal circumstances, each Fund typically expects to meet redemptions with positive cash flows. When this is not an option, each Fund seeks to maintain its risk exposure by selling a cross section of the Fund’s holdings to meet redemptions, while also factoring in transaction costs. Additionally, since a Fund is only available for limited purchase by certain institutional accounts for which Vanguard or its affiliates has discretionary authority, the Fund’s portfolio
22
managers are typically aware of upcoming redemption requests. A Fund may work with larger clients to implement their redemptions in a manner that is least disruptive to the portfolio.
Under certain circumstances, including under stressed market conditions, there are additional tools that each Fund may use in order to meet redemptions, including advancing the settlement of market trades with counterparties to match investor redemption payments or delaying settlement of an investor’s transaction to match trade settlement within regulatory requirements. A Fund may also suspend payment of redemption proceeds for up to seven days. Additionally under these unusual circumstances, a Fund may borrow money (subject to certain regulatory conditions and if available under board-approved procedures) through an interfund lending facility; through a bank line-of-credit, including a joint committed credit facility; or through an uncommitted line-of-credit from Vanguard in order to meet redemption requests.
Temporary Investment Measures
Each Fund may temporarily depart from its normal investment policies and strategies when an advisor believes that doing so is in the Fund's best interest, so long as the strategy or policy employed is consistent with the Fund's investment objective. For instance, the Fund may invest beyond its normal limits in derivatives or exchange-traded funds that are consistent with the Fund's investment objective when those instruments are more favorably priced or provide needed liquidity, as might be the case when the Fund receives large cash flows that it cannot prudently invest immediately.
In addition, each Fund may take temporary defensive positions that are inconsistent with its normal investment policies and strategies—for instance, by allocating substantial assets to cash equivalent investments or other less volatile instruments— in response to adverse or unusual market, economic, political, or other conditions. In doing so, the Fund may succeed in avoiding losses but may otherwise fail to achieve its investment objective.
Frequent Trading or Market-Timing
Background. Some investors try to profit from strategies involving frequent trading of mutual fund shares, such as market-timing. For funds holding foreign securities, investors may try to take advantage of an anticipated difference between the price of the fund’s shares and price movements in overseas markets, a practice also known as time-zone arbitrage. Investors also may try to engage in frequent trading of funds holding investments such as small-cap stocks and high-yield bonds. As money is shifted into and out of a fund by a shareholder engaging in frequent trading, the fund incurs costs for buying and selling securities, resulting in increased brokerage and administrative costs.
23
These costs are borne by all fund shareholders, including the long-term investors who do not generate the costs. In addition, frequent trading may interfere with an advisor’s ability to efficiently manage the fund.
Policies to address frequent trading. The Vanguard funds (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) do not knowingly accommodate frequent trading. The board of trustees of each Vanguard fund (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) has adopted policies and procedures reasonably designed to detect and discourage frequent trading and, in some cases, to compensate the fund for the costs associated with it. These policies and procedures do not apply to ETF Shares because frequent trading in ETF Shares generally does not disrupt portfolio management or otherwise harm fund shareholders. Although there is no assurance that Vanguard will be able to detect or prevent frequent trading or market-timing in all circumstances, the following policies have been adopted to address these issues:
• Each Vanguard fund reserves the right to reject any purchase request—including exchanges from other Vanguard funds—without notice and regardless of size. For example, a purchase request could be rejected because the investor has a history of frequent trading or if Vanguard determines that such purchase may negatively affect a fund’s operation or performance.
• Each Vanguard fund (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) generally prohibits, except as otherwise noted in the Investing With Vanguard section, an investor’s purchases or exchanges into a fund account for 30 calendar days after the investor has redeemed or exchanged out of that fund account.
• Certain Vanguard funds charge shareholders purchase and/or redemption fees on transactions.
See the Investing With Vanguard section of this prospectus for further details on Vanguard’s transaction policies.
Each Vanguard fund (other than retail and government money market funds), in determining its net asset value, will use fair-value pricing when appropriate, as described in the Share Price section. Fair-value pricing may reduce or eliminate the profitability of certain frequent-trading strategies.
Do not invest with Vanguard if you are a market-timer.
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Turnover Rate
Although each Fund generally seeks to invest for the long term, each Fund may sell securities regardless of how long they have been held. The Financial Highlights section of this prospectus shows historical turnover rates for each Fund. A turnover rate of 100%, for example, would mean that a Fund had sold and replaced securities valued at 100% of its net assets within a one-year period. Shorter-term bonds will mature or be sold—and need to be replaced—more frequently than longer-term bonds. As a result, shorter-term bond funds tend to have higher turnover rates than longer-term bond funds. In general, the greater the turnover rate, the greater the impact transaction costs will have on a fund’s return. Also, funds with high turnover rates may be more likely to generate capital gains, including short-term capital gains, that must be distributed to shareholders and will be taxable to shareholders investing through a taxable account.
The Funds and Vanguard
Each Fund is a member of The Vanguard Group, a family of over 200 funds. All of the funds that are members of The Vanguard Group (other than funds of funds) share in the expenses associated with administrative services and business operations, such as personnel, office space, and equipment.
Vanguard Marketing Corporation provides marketing services to the funds. Although fund shareholders do not pay sales commissions or 12b-1 distribution fees, each fund (other than a fund of funds) or each share class of a fund (in the case of a fund with multiple share classes) pays its allocated share of the Vanguard funds’ marketing costs.  
Plain Talk About Vanguard’s Unique Corporate Structure
The Vanguard Group is owned jointly by the funds it oversees and thus
indirectly by the shareholders in those funds. Most other mutual funds are
operated by management companies that are owned by third parties—either
public or private stockholders—and not by the funds they serve.
Investment Advisor
The Vanguard Group, Inc., P.O. Box 2600, Valley Forge, PA 19482, which began operations in 1975, serves as advisor to the Funds through its Fixed Income Group. As of September 30, 2020, Vanguard served as advisor for approximately
25
$5.2 trillion in assets. Vanguard provides investment advisory services to the Funds pursuant to the Funds’ Service Agreement and subject to the supervision and oversight of the trustees and officers of the Funds.
For the fiscal year ended September 30, 2020, the advisory expenses represented an effective annual rate of less than 0.01% of each Fund’s average net assets.
Under the terms of an SEC exemption, the Funds' board of trustees may, without prior approval from shareholders, change the terms of an advisory agreement with a third-party investment advisor or hire a new third-party investment advisor—either as a replacement for an existing advisor or as an additional advisor. Any significant change in a Fund's advisory arrangements will be communicated to shareholders in writing. As the Funds' sponsor and overall manager, Vanguard may provide investment advisory services to a Fund at any time. Vanguard may also recommend to the board of trustees that an advisor be hired, terminated, or replaced or that the terms of an existing advisory agreement be revised. The Funds have filed an application seeking a similar SEC exemption with respect to investment advisors that are wholly owned subsidiaries of Vanguard. If the exemption is granted, the Funds may rely on the new SEC relief.
For a discussion of why the board of trustees approved each Fund's investment advisory arrangement, see the most recent semiannual report to shareholders covering the fiscal period ended March 31.
The managers primarily responsible for the day-to-day management of the Funds are:
Arvind Narayanan, CFA, Portfolio Manager at Vanguard. He has been with Vanguard since 2019, has worked in investment management since 2002, has managed investment portfolios since 2006, and has co-managed the Funds since 2019. Education: B.A., Goucher College; M.B.A., New York University.
Samuel C. Martinez, CFA, Portfolio Manager at Vanguard. He has been with Vanguard since 2007, has worked in investment management since 2010, has managed investment portfolios since 2014, and has co-managed the Funds since 2018. Education: B.S., Southern Utah University; M.B.A., The Wharton School of the University of Pennsylvania.
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Daniel Shaykevich, Principal of Vanguard. He has worked in investment management since 2001, has managed investment portfolios since 2004, has been with Vanguard since 2013, and has co-managed the Funds since 2018. Education: B.S., Carnegie Mellon University.
The Funds' Statement of Additional Information provides information about each portfolio manager’s compensation, other accounts under management, and ownership of shares of the Funds.
Dividends, Capital Gains, and Taxes
Fund Distributions
Each Fund distributes to shareholders virtually all of its net income (interest less expenses) as well as any net short-term or long-term capital gains realized from the sale of its holdings. Income dividends generally are declared and distributed monthly; and capital gains distributions, if any, generally occur annually in December. In addition, each Fund may occasionally make a supplemental distribution at some other time during the year. You can receive distributions of income or capital gains in cash, or you can have them automatically reinvested in more shares of the Fund.  
Plain Talk About Distributions
As a shareholder, you are entitled to your portion of a fund’s income from
interest as well as capital gains from the fund’s sale of investments. Income
consists of interest the fund earns from its money market and bond
investments. Capital gains are realized whenever the fund sells securities for
higher prices than it paid for them. These capital gains are either short-term
or long-term, depending on whether the fund held the securities for one year
or less or for more than one year.
Basic Tax Points
This prospectus provides general tax information only. Please consult your tax advisor for detailed information about any tax consequences for you.  Distributions from a Fund to tax-deferred or tax-advantaged plans are generally not taxable. If you are investing through such plans, the distribution is generally taxable as ordinary income. There are certain exceptions, such as distributions from a Roth 401(k) or education savings plan. Investors in taxable accounts should be aware of the following basic federal income tax points:
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• Distributions are taxable to you whether or not you reinvest these amounts in additional Fund shares.
• Distributions declared in December—if paid to you by the end of January—are taxable as if received in December.
• Any income dividend distribution or short-term capital gains distribution that you receive is taxable to you as ordinary income.
• Any distribution of net long-term capital gains is taxable to you as long-term capital gains, no matter how long you have owned shares in the Fund.
• Capital gains distributions may vary considerably from year to year as a result of the Funds' normal investment activities and cash flows.
• A sale or exchange of Fund shares is a taxable event. This means that you may have a capital gain to report as income, or a capital loss to report as a deduction, when you complete your tax return.
• Any conversion between classes of shares of the same fund is a nontaxable event. By contrast, an exchange between classes of shares of different funds is a taxable event.
Individuals, trusts, and estates whose income exceeds certain threshold amounts are subject to a 3.8% Medicare contribution tax on “net investment income.” Net investment income takes into account distributions paid by the Fund and capital gains from any sale or exchange of Fund shares.
Income dividends and capital gains distributions that you receive, as well as your gains or losses from any sale or exchange of Fund shares, may be subject to state and local income taxes. Depending on your state’s rules, however, any dividends attributable to interest earned on direct obligations of the U.S. government may be exempt from state and local taxes. Vanguard will annually provide information regarding how much, if any, of your dividends may qualify for this exemption.
General Information
Backup withholding. By law, Vanguard must withhold 24% of any taxable distributions or redemptions from your account if you do not:
• Provide your correct taxpayer identification number.
• Certify that the taxpayer identification number is correct.
• Confirm that you are not subject to backup withholding.
Similarly, Vanguard (or your intermediary) must withhold taxes from your account if the IRS instructs us to do so.
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Foreign investors. Vanguard funds offered for sale in the United States (Vanguard U.S. funds), including the Funds offered in this prospectus, are not widely available outside the United States. Non-U.S. investors should be aware that U.S. withholding and estate taxes and certain U.S. tax reporting requirements may apply to any investments in Vanguard U.S. funds.
Invalid addresses. If an income dividend distribution or capital gains distribution check mailed to your address of record is returned as undeliverable, Vanguard will automatically reinvest the distribution and all future distributions until you provide us with a valid mailing address. Reinvestments will receive the net asset value calculated on the date of the reinvestment.
Share Price
Share price, also known as net asset value (NAV), is calculated as of the close of regular trading on the New York Stock Exchange (NYSE), generally 4 p.m., Eastern time, on each day that the NYSE is open for business (a business day). In the rare event the NYSE experiences unanticipated disruptions and is unavailable at the close of the trading day, NAVs will be calculated as of the close of regular trading on the Nasdaq (or another alternate exchange if the Nasdaq is unavailable, as determined at Vanguard’s discretion), generally 4 p.m., Eastern time. Each share class has its own NAV, which is computed by dividing the total assets, minus liabilities, allocated to the share class by the number of Fund shares outstanding for that class. On U.S. holidays or other days when the NYSE is closed, the NAV is not calculated, and the Fund does not sell or redeem shares. However, on those days the value of the Fund’s assets may be affected to the extent that the Fund holds securities that change in value on those days (such as foreign securities that trade on foreign markets that are open).
Debt securities held by a Vanguard fund are valued based on information furnished by an independent pricing service or market quotations. When a fund determines that pricing-service information or market quotations either are not readily available or do not accurately reflect the value of a security, the security is priced at its fair value (the amount that the owner might reasonably expect to receive upon the current sale of the security).
The values of any foreign securities held by a fund are converted into U.S. dollars using an exchange rate obtained from an independent third party as of the close of regular trading on the NYSE. The values of any mutual fund shares, including institutional money market fund shares, held by a fund are based on the NAVs of the shares. The values of any ETF shares or closed-end fund shares held by a fund are based on the market value of the shares.
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A fund also may use fair-value pricing on bond market holidays when the fund is open for business (such as Columbus Day and Veterans Day). Fair-value prices are determined by Vanguard according to procedures adopted by the board of trustees. When fair-value pricing is employed, the prices of securities used by a fund to calculate the NAV may differ from quoted or published prices for the same securities.
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Financial Highlights
Financial highlights information is intended to help you understand a fund’s performance for the past five years (or, if shorter, its period of operations). Certain information reflects financial results for a single fund share. Total return represents the rate that an investor would have earned or lost each period on an investment in a fund or share class (assuming reinvestment of all distributions). This information has been obtained from the financial statements audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, whose report, along with fund financial statements, is included in a fund’s most recent annual report to shareholders. You may obtain a free copy of a fund’s latest annual or semiannual report, which is available upon request.
Vanguard Institutional Short-Term Bond Fund Institutional Plus Shares  
 
Year Ended September 30,
For a Share Outstanding Throughout Each Period
2020
2019
2018
2017
2016
Net Asset Value, Beginning of Period
$13.82
$13.55
$13.75
$13.84
$13.79
Investment Operations
 
 
 
 
 
Net Investment Income
0.3161
0.3731
0.2931
0.2211
0.188
Net Realized and Unrealized Gain (Loss) on Investments
0.244
0.271
(0.202)
(0.071)
0.052
Total from Investment Operations
0.560
0.644
0.091
0.150
0.240
Distributions
 
 
 
 
 
Dividends from Net Investment Income
(0.320)
(0.374)
(0.291)
(0.229)
(0.187)
Distributions from Realized Capital Gains
—
—
—
(0.011)
(0.003)
Total Distributions
(0.320)
(0.374)
(0.291)
(0.240)
(0.190)
Net Asset Value, End of Period
$14.06
$13.82
$13.55
$13.75
$13.84
Total Return
4.10%
4.81%
0.67%
1.10%
1.75%
Ratios/Supplemental Data
 
 
 
 
 
Net Assets, End of Period (Millions)
$8,256
$7,781
$7,796
$7,233
$10,397
Ratio of Total Expenses to Average Net Assets
0.02%
0.02%
0.02%
0.02%
0.02%
Ratio of Net Investment Income to Average Net Assets
2.27%
2.73%
2.15%
1.61%
1.37%
Portfolio Turnover Rate
118%
83%
118%2
66%
119%
1
Calculated based on average shares outstanding.
2
Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares.
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Vanguard Institutional Intermediate-Term Bond Fund Institutional Plus Shares  
 
Year Ended September 30,
For a Share Outstanding Throughout Each Period
2020
2019
2018
2017
2016
Net Asset Value, Beginning of Period
$23.43
$22.39
$23.12
$23.79
$23.46
Investment Operations
 
 
 
 
 
Net Investment Income
0.5171
0.6561
0.5611
0.4621
0.473
Net Realized and Unrealized Gain (Loss) on
Investments
0.880
1.034
(0.736)
(0.470)
0.383
Total from Investment Operations
1.397
1.690
(0.175)
(0.008)
0.856
Distributions
 
 
 
 
 
Dividends from Net Investment Income
(0.517)
(0.650)
(0.555)
(0.454)
(0.473)
Distributions from Realized Capital Gains
—
—
—
(0.208)
(0.053)
Total Distributions
(0.517)
(0.650)
(0.555)
(0.662)
(0.526)
Net Asset Value, End of Period
$24.31
$23.43
$22.39
$23.12
$23.79
Total Return
6.02%
7.66%
–0.75%
0.01%
3.70%
Ratios/Supplemental Data
 
 
 
 
 
Net Assets, End of Period (Millions)
$30,049
$21,906
$16,527
$14,106
$9,821
Ratio of Total Expenses to Average Net Assets
0.02%
0.02%
0.02%
0.02%
0.02%
Ratio of Net Investment Income to Average Net
Assets
2.16%
2.86%
2.48%
1.99%
2.02%
Portfolio Turnover Rate2
347%
323%
182%
253%
251%
1
Calculated based on average shares outstanding.
2
Includes 114%, 46%, 67%, 111%, and 67% attributable to mortgage-dollar-roll activity.
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Investing With Vanguard
Vanguard Institutional Short-Term Bond Fund and Vanguard Institutional Intermediate-Term Bond Fund have been established by Vanguard primarily as investment vehicles for certain collective trusts and other accounts managed by Vanguard or its affiliates, as well as qualifying education savings plans. The Funds are not available to other investors. Vanguard reserves the right to change the availability of the Funds at any time without prior notice to shareholders.
 The minimum investment amount required to open and maintain a Fund account for Institutional Plus Shares is $10 million. The minimum investment amount required to add to an existing Fund account is generally $1. Vanguard reserves the right, without notice, to increase or decrease the minimum amount required to open or maintain a fund account or to add to an existing fund account. Tax-advantaged education savings plans should contact Vanguard for special eligibility rules that may apply to them.
Transactions will be based on the next-determined net asset value (NAV) of the Fund’s Institutional Plus Shares after Vanguard receives the request (or, in the case of new contributions, the next-determined NAV after Vanguard receives the purchase request). If the request is received before the close of trading on the NYSE (generally 4 p.m., Eastern time), the investor will receive that day’s NAV and trade date. Transaction requests received after that time will receive a trade date of the first business day following the date of receipt. The trade date may vary, depending on the method of payment for the transaction. NAVs are calculated only on days that the NYSE is open for trading (a business day). In the rare event the NYSE experiences unanticipated disruptions and is unavailable at the close of the trading day, NAVs will be calculated as of the close of regular trading on the Nasdaq (or another alternate exchange if the Nasdaq is unavailable, as determined at Vanguard’s discretion), generally 4 p.m., Eastern time. The time selected for NAV calculation in this rare event shall also serve as the conclusion of the trading day.
If a redemption request is received in good order, Vanguard typically expects that redemption proceeds will be paid by the Funds within one business day of the trade date; however, in certain circumstances, investors may experience a longer settlement period at the time of the transaction.
Frequent-Trading Limitations
Because excessive transactions can disrupt management of a fund and increase the fund’s costs for all shareholders, the board of trustees of each Vanguard fund places certain limits on frequent trading in the funds. Each Vanguard fund (other than money market funds and short-term bond funds, but including Vanguard
33
Short-Term Inflation-Protected Securities Index Fund) limits an investor’s purchases or exchanges into a fund account for 30 calendar days after the investor has redeemed or exchanged out of that fund account. ETF Shares are not subject to these frequent-trading limits.
For Vanguard Retirement Investment Program pooled plans, the limitations apply to exchanges made online or by telephone.
These frequent-trading limitations do not apply to the following:
• Purchases of shares with reinvested dividend or capital gains distributions.
• Transactions through Vanguard’s Automatic Investment Plan, Automatic Exchange Service, Direct Deposit Service, Automatic Withdrawal Plan, Required Minimum Distribution Service, and Vanguard Small Business Online®.
• Discretionary transactions through Vanguard Personal Advisor Services®, Vanguard Institutional Advisory Services®, and Vanguard Digital Advisor™.
• Redemptions of shares to pay fund or account fees.
• Redemptions of shares to remove excess shareholder contributions to certain types of retirement accounts (including, but not limited to, IRAs and Vanguard Individual 401(k) Plans).
• Transfers and reregistrations of shares within the same fund.
• Purchases of shares by asset transfer or direct rollover.
• Conversions of shares from one share class to another in the same fund.
• Checkwriting redemptions.
• Section 529 college savings plans.
• Certain approved institutional portfolios and asset allocation programs, as well as trades made by funds or trusts managed by Vanguard or its affiliates that invest in other Vanguard funds. (Please note that shareholders of Vanguard’s funds of funds are subject to the limitations.)
For participants in employer-sponsored defined contribution plans,* the frequent-trading limitations do not apply to:
• Purchases of shares with participant payroll or employer contributions or loan repayments.
• Purchases of shares with reinvested dividend or capital gains distributions.
• Distributions, loans, and in-service withdrawals from a plan.
• Redemptions of shares as part of a plan termination or at the direction of the plan.
34
• Transactions executed through the Vanguard Managed Account Program.
• Redemptions of shares to pay fund or account fees.
• Share or asset transfers or rollovers.
• Reregistrations of shares.
• Conversions of shares from one share class to another in the same fund.
• Exchange requests submitted by written request to Vanguard. (Exchange requests submitted by fax, if otherwise permitted, are subject to the limitations.)
* The following Vanguard fund accounts are subject to the frequent-trading limitations: SEP-IRAs, SIMPLE IRAs, certain Individual 403(b)(7) Custodial Accounts, and Vanguard Individual 401(k) Plans.
Accounts Held by Institutions (Other Than Defined Contribution Plans)
Vanguard will systematically monitor for frequent trading in institutional clients’ accounts. If we detect suspicious trading activity, we will investigate and take appropriate action, which may include applying to a client’s accounts the 30-day policy previously described, prohibiting a client’s purchases of fund shares, and/or revoking the client’s exchange privilege.
Accounts Held by Intermediaries
When intermediaries establish accounts in Vanguard funds for the benefit of their clients, we cannot always monitor the trading activity of the individual clients. However, we review trading activity at the intermediary (omnibus) level, and if we detect suspicious activity, we will investigate and take appropriate action. If necessary, Vanguard may prohibit additional purchases of fund shares by an intermediary, including for the benefit of certain of the intermediary’s clients. Intermediaries also may monitor their clients’ trading activities with respect to Vanguard funds.
For those Vanguard funds that charge purchase and/or redemption fees, intermediaries will be asked to assess these fees on client accounts and remit these fees to the funds. The application of purchase and redemption fees and frequent-trading limitations may vary among intermediaries. There are no assurances that Vanguard will successfully identify all intermediaries or that intermediaries will properly assess purchase and redemption fees or administer frequent-trading limitations. If you invest with Vanguard through an intermediary, please read that firm’s materials carefully to learn of any other rules or fees that may apply.
35
Portfolio Holdings
Please consult the Funds' Statement of Additional Information for a description of the policies and procedures that govern disclosure of a Fund’s portfolio holdings.
Additional Information  
 
Inception
Date
Newspaper
Abbreviation
Vanguard
Fund Number
CUSIP
Number
Institutional Short-Term Bond
Fund
6/19/2015
VanInsShrtTBF
472
922020862
Institutional Intermediate-Term
Bond Fund
6/19/2015
VanInsIntTBF
465
922020854
 
CGS identifiers have been provided by CUSIP Global Services, managed on behalf of the American Bankers Association by Standard & Poor’s Financial Services, LLC, and are not for use or dissemination in a manner that would serve as a substitute for any CUSIP service. The CUSIP Database, ©2021 American Bankers Association. “CUSIP” is a registered trademark of the American Bankers Association.
36
CFA® is a registered trademark owned by CFA Institute.
BLOOMBERG is a trademark and service mark of Bloomberg Finance L.P. BARCLAYS is a trademark and service mark of Barclays Bank Plc, used under license. Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited (BISL) (collectively, Bloomberg), or Bloomberg’s licensors, own all proprietary rights in the Bloomberg Barclays U.S. 1-3 Years Government/Credit ex Baa Index, Bloomberg Barclays U.S. Intermediate Aggregate ex Baa Index and Bloomberg Barclays U.S. Aggregate Bond Index (the Indices or Bloomberg Barclays Indices).
Neither Barclays Bank Plc, Barclays Capital Inc., or any affiliate (collectively Barclays) or Bloomberg is the issuer or producer of the Institutional Bond Funds and neither Bloomberg nor Barclays has any responsibilities, obligations or duties to investors in the Institutional Bond Funds. The Indices are licensed for use by The Vanguard Group, Inc. (Vanguard) as the sponsor of the Institutional Bond Funds. Bloomberg and Barclays’ only relationship with Vanguard in respect to the Indices is the licensing of the Indices, which is determined, composed and calculated by BISL, or any successor thereto, without regard to the Issuer or the Institutional Bond Funds or the owners of the Institutional Bond Funds.
Additionally, Vanguard may for itself execute transaction(s) with Barclays in or relating to the Indices in connection with the Institutional Bond Funds. Investors acquire the Institutional Bond Funds from Vanguard and investors neither acquire any interest in the Indices nor enter into any relationship of any kind whatsoever with Bloomberg or Barclays upon making an investment in the Institutional Bond Funds. The Institutional Bond Funds are not sponsored, endorsed, sold or promoted by Bloomberg or Barclays. Neither Bloomberg nor Barclays makes any representation or warranty, express or implied regarding the advisability of investing in the Institutional Bond Funds or the advisability of investing in securities generally or the ability of the Indices to track corresponding or relative market performance. Neither Bloomberg nor Barclays has passed on the legality or suitability of the Institutional Bond Funds with respect to any person or entity. Neither Bloomberg nor Barclays is responsible for and has not participated in the determination of the timing of, prices at, or quantities of the Institutional Bond Funds to be issued. Neither Bloomberg nor Barclays has any obligation to take the needs of the Issuer or the owners of the Institutional Bond Funds or any other third party into consideration in determining, composing or calculating the Indices. Neither Bloomberg nor Barclays has any obligation or liability in connection with administration, marketing or trading of the Institutional Bond Funds.
The licensing agreement between Bloomberg and Barclays is solely for the benefit of Bloomberg and Barclays and not for the benefit of the owners of the Institutional Bond Funds, investors or other third parties. In addition, the licensing agreement between Vanguard and Bloomberg is solely for the benefit of Vanguard and Bloomberg and not for the benefit of the owners of the Institutional Bond Funds, investors or other third parties.
NEITHER BLOOMBERG NOR BARCLAYS SHALL HAVE ANY LIABILITY TO THE ISSUER, INVESTORS OR TO OTHER THIRD PARTIES FOR THE QUALITY, ACCURACY AND/OR COMPLETENESS OF THE BLOOMBERG BARCLAYS INDICES OR ANY DATA INCLUDED THEREIN OR FOR INTERRUPTIONS IN THE DELIVERY OF THE BLOOMBERG BARCLAYS INDICES. NEITHER BLOOMBERG NOR BARCLAYS MAKES ANY WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE ISSUER, THE INVESTORS OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE BLOOMBERG BARCLAYS INDICES OR ANY DATA INCLUDED THEREIN. NEITHER BLOOMBERG NOR BARCLAYS MAKES ANY EXPRESS OR IMPLIED WARRANTIES, AND EACH HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE BLOOMBERG BARCLAYS INDICES OR ANY DATA INCLUDED THEREIN. BLOOMBERG RESERVES THE RIGHT TO CHANGE THE METHODS OF CALCULATION OR PUBLICATION, OR TO CEASE THE CALCULATION OR PUBLICATION OF THE BLOOMBERG BARCLAYS INDICES, AND NEITHER BLOOMBERG NOR BARCLAYS SHALL BE LIABLE FOR ANY MISCALCULATION OF OR ANY INCORRECT, DELAYED OR INTERRUPTED PUBLICATION WITH RESPECT TO THE BLOOMBERG BARCLAYS INDICES. NEITHER BLOOMBERG NOR BARCLAYS SHALL BE LIABLE FOR ANY DAMAGES, INCLUDING, WITHOUT LIMITATION, ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES, OR ANY LOST PROFITS AND EVEN IF ADVISED OF THE POSSIBILITY OF SUCH, RESULTING FROM THE USE OF A BLOOMBERG BARCLAYS INDICES OR ANY DATA INCLUDED THEREIN OR WITH RESPECT TO THE INSTITUTIONAL BOND FUNDS.
None of the information supplied by Bloomberg or Barclays and used in this publication may be reproduced in any manner without the prior written permission of both Bloomberg and Barclays Capital, the investment banking division of Barclays Bank Plc. Barclays Bank Plc is registered in England No. 1026167, registered office 1 Churchill Place London E14 5HP.
37
Glossary of Investment Terms
Average Maturity. The average length of time until bonds held by a fund reach maturity and are repaid. In general, the longer the average maturity, the more a fund's share price fluctuates in response to changes in market interest rates. In calculating average maturity, a fund uses a bond’s maturity or, if applicable, an earlier date on which the advisor believes it is likely that a maturity-shortening device (such as a call, put, refunding, prepayment, or redemption provision or an adjustable coupon rate) will cause the bond to be repaid.
Bloomberg Barclays U.S. 1–3 Years Government/Credit ex Baa Index. An index that includes U.S. Treasury and agency obligations, as well as investment-grade corporate bonds, excluding issues rated Baa and below, all having maturities of 1 to 3 years.
Bloomberg Barclays U.S. Aggregate Bond Index. An index that is the broadest representation of the taxable U.S. bond market, including most U.S. Treasury, agency, corporate, mortgage-backed, asset-backed, and international dollar-denominated issues, all with investment-grade ratings (rated Baa3 or above by Moody’s) and maturities of 1 year or more.
Bloomberg Barclays U.S. Intermediate Aggregate ex Baa Index. An index that represents a portion of the investment-grade taxable U.S. bond market, including U.S. Treasury and agency obligations, as well as corporate, mortgage-backed, and asset-backed securities, excluding issues rated Baa and below, all with maturities of 1 to 10 years.
Bond. A debt security (IOU) issued by a corporation, a government, or a government agency in exchange for the money the bondholder lends it. In most instances, the issuer agrees to pay back the loan by a specific date and generally to make regular interest payments until that date.
Capital Gains Distributions. Payments to mutual fund shareholders of gains realized on securities that a fund has sold at a profit, minus any realized losses.
Cash Equivalent Investments. Cash deposits, short-term bank deposits, and money market instruments that include U.S. Treasury bills and notes, bank certificates of deposit (CDs), repurchase agreements, commercial paper, and banker’s acceptances.
Coupon Rate. The interest rate paid by the issuer of a debt security until its maturity. It is expressed as an annual percentage of the face value of the security.
38
Dividend Distributions. Payments to mutual fund shareholders of income from interest or dividends generated by a fund's investments.
Expense Ratio. A fund's total annual operating expenses expressed as a percentage of the fund's average net assets. The expense ratio includes management and administrative expenses, but it does not include the transaction costs of buying and selling portfolio securities.
Face Value. The amount to be paid at a bond’s maturity; also known as the par value or principal.
Fixed Income Security. An investment, such as a bond, representing a debt that must be repaid by a specified date, and on which the borrower must pay a fixed, variable, or floating rate of interest.
Inception Date. The date on which the assets of a fund (or one of its share classes) are first invested in accordance with the fund's investment objective. For funds with a subscription period, the inception date is the day after that period ends. Investment performance is generally measured from the inception date.
Investment-Grade Bond. A debt security whose credit quality is considered by independent bond rating agencies, or through independent analysis conducted by a fund's advisor, to be sufficient to ensure timely payment of principal and interest under current economic circumstances. Debt securities rated in one of the four highest rating categories are considered investment-grade. Other debt securities may be considered by an advisor to be investment-grade.
Joint Committed Credit Facility. Each Fund participates, along with other funds managed by Vanguard, in a committed credit facility provided by a syndicate of lenders pursuant to a credit agreement that may be renewed annually; each Vanguard fund is individually liable for its borrowings, if any, under the credit facility. The amount and terms of the committed credit facility are subject to approval by the Funds' board of trustees and renegotiation with the lender syndicate on an annual basis.
Mutual Fund. An investment company that pools the money of many people and invests it in a variety of securities in an effort to achieve a specific objective over time.
39
New York Stock Exchange (NYSE). A stock exchange based in New York City that is open for regular trading on business days, Monday through Friday, from 9:30 a.m. to 4 p.m., Eastern time.
Principal. The face value of a debt instrument or the amount of money put into an investment.
Securities. Stocks, bonds, money market instruments, and other investments.
Total Return. A percentage change, over a specified time period, in a mutual fund's net asset value, assuming the reinvestment of all distributions of dividends and capital gains.
Volatility. The fluctuations in value of a mutual fund or other security. The greater a fund's volatility, the wider the fluctuations in its returns.
Yield. Income (interest or dividends) earned by an investment, expressed as a percentage of the investment’s price.
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Connect with Vanguard® > vanguard.com
For More Information
If you would like more information about Vanguard Institutional Bond Funds, the following documents are available free upon request:
Annual/Semiannual Reports to Shareholders
Additional information about the Funds' investments is available in the Funds' annual and semiannual reports to shareholders. In the annual report, you will find a discussion of the market conditions and investment strategies that significantly affected the Funds' performance during their last fiscal year.
Statement of Additional Information (SAI)
The SAI provides more detailed information about the Funds and is incorporated by reference into (and thus legally a part of) this prospectus.
To receive a free copy of the latest annual or semiannual report or the SAI, or to request additional information about the Funds or other Vanguard funds, contact us as follows:
Telephone: 800-662-7447; Text telephone for people with hearing impairment: 800-749-7273
The Funds do not have an Internet website.
If you are a current Vanguard shareholder and would like information about your account, account transactions, and/or account statements, please call:
Client Services Department
Telephone: 800-662-2739; Text telephone for people with hearing impairment: 800-749-7273
Information Provided by the Securities and Exchange Commission (SEC)
Reports and other information about the Funds are available in the EDGAR database on the SEC’s website at www.sec.gov, or you can receive copies of this information, for a fee, by electronic request at the following email address: publicinfo@sec.gov.
Funds' Investment Company Act file number: 811-05628
© 2021 The Vanguard Group, Inc. All rights reserved.Vanguard Marketing Corporation, Distributor.I 472 012021
 
Vanguard Core Bond Fund
Prospectus
 January 31, 2021
Investor Shares & Admiral™ Shares
Vanguard Core Bond Fund Investor Shares (VCORX)
Vanguard Core Bond Fund Admiral Shares (VCOBX)
 See the inside front cover for important information about access to your fund’s annual and semiannual shareholder reports.
 This prospectus contains financial data for the Fund through the fiscal year ended September 30, 2020.
  The Securities and Exchange Commission (SEC) has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is
a criminal offense.
Important information about access to shareholder reports
Beginning on January 1, 2021, as permitted by regulations adopted by the SEC, paper copies of your fund’s annual and semiannual shareholder reports will no longer be sent to you by mail, unless you specifically request them. Instead, you will be notified by mail each time a report is posted on the website and will be provided with a link to access the report.
If you have already elected to receive shareholder reports electronically, you will not be affected by this change and do not need to take any action. You may elect to receive shareholder reports and other communications from the fund electronically by contacting your financial intermediary (such as a broker-dealer or bank) or, if you invest directly with the fund, by calling Vanguard at one of the phone numbers on the back cover of this prospectus or by logging on to vanguard.com.
You may elect to receive paper copies of all future shareholder reports free of charge. If you invest through a financial intermediary, you can contact the intermediary to request that you continue to receive paper copies. If you invest directly with the fund, you can call Vanguard at one of the phone numbers on the back cover of this prospectus or log on to vanguard.com. Your election to receive paper copies will apply to all the funds you hold through an intermediary or directly with Vanguard.
Contents
 
Fund Summary
Investment Objective
The Fund seeks to provide total return while generating a moderate level of current income.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy, hold, and sell Investor Shares or Admiral Shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
Shareholder Fees
(Fees paid directly from your investment)  
 
Investor Shares
Admiral Shares
Sales Charge (Load) Imposed on Purchases
None
None
Purchase Fee
None
None
Sales Charge (Load) Imposed on Reinvested Dividends
None
None
Redemption Fee
None
None
Account Service Fee Per Year
(for certain fund account balances below $10,000)
$20
$20
Annual Fund Operating Expenses
(Expenses that you pay each year as a percentage of the value of your investment)  
 
Investor Shares
Admiral Shares
Management Fees
0.23%
0.09%
12b-1 Distribution Fee
None
None
Other Expenses
0.02%
0.01%
Total Annual Fund Operating Expenses
0.25%
0.10%
1
Examples
The following examples are intended to help you compare the cost of investing in the Fund's Investor Shares or Admiral Shares with the cost of investing in other mutual funds. They illustrate the hypothetical expenses that you would incur over various periods if you were to invest $10,000 in the Fund's shares. These examples assume that the shares provide a return of 5% each year and that total annual fund operating expenses remain as stated in the preceding table. You would incur these hypothetical expenses whether or not you were to redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:  
 
1 Year
3 Years
5 Years
10 Years
Investor Shares
$26
$80
$141
$318
Admiral Shares
$10
$32
$56
$128
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in more taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the previous expense examples, reduce the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 383% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests in fixed income securities of various maturities, yields, and qualities. Under normal circumstances, the Fund will invest at least 80% of its assets in bonds, which include fixed income securities such as corporate bonds; U.S. Treasury obligations and other U.S. government and agency securities; and asset-backed, mortgage-backed, and mortgage-related securities. All bonds purchased by the Fund will have a maturity of 90 days or more at the time of their issuance. In addition, the Fund invests predominantly in U.S. dollar-denominated bonds, although these bonds may be issued by a foreign corporation or a U.S. affiliate of a foreign corporation, or a foreign government or its agencies and instrumentalities. The Fund may also invest up to 10% of its assets in non-U.S. dollar-denominated bonds.
 
The Fund's dollar-weighted average maturity will normally range between 4 and 12 years, and may either be longer or shorter under certain market conditions. Since the Fund will have holdings in asset-backed, mortgage-backed, and similar securities, the Fund's weighted average maturity may be approximate to the
2
weighted average maturity of the cash flows in the securities held by the Fund, given certain prepayment assumptions. This is also known as weighted average life.
 
The Fund can purchase bonds of any quality. High-quality fixed income securities are those rated the equivalent of A3 or better by Moody's Investors Service, Inc. (Moody's), or another independent rating agency or, if unrated, are determined to be of comparable quality by the Fund's advisor; medium-quality fixed income securities are those rated the equivalent of Baa1, Baa2, or Baa3 by Moody's or another independent rating agency or, if unrated, are determined to be of comparable quality by the Fund's advisor; and lower-range credit-quality ratings—commonly known as “junk bonds”—are those rated the equivalent of Ba1 or lower by Moody's or another independent rating agency or, if unrated, are determined to be of comparable quality by the Fund's advisor. No more than 5% of the Fund's assets may be invested in non-investment-grade fixed income securities, or junk bonds.
Principal Risks
An investment in the Fund could lose money over short or long periods of time. You should expect the Fund's share price and total return to fluctuate within a wide range. The Fund is subject to the following risks, which could affect the Fund's performance, and the level of risk may vary based on market conditions:
•  Interest rate risk , which is the chance that bond prices overall will decline because of rising interest rates.
•  Income risk , which is the chance that the Fund’s income will decline because of falling interest rates. Income risk is generally high for short-term bond funds and moderate for intermediate-term bond funds, so investors should expect the Fund’s monthly income to fluctuate accordingly.
•  Call risk , which is the chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupon rates or interest rates before their maturity dates. The Fund would then lose any price appreciation above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the Fund’s income. Such redemptions and subsequent reinvestments would also increase the Fund's portfolio turnover rate.
•  Prepayment risk , which is the chance that during periods of falling interest rates, homeowners will refinance their mortgages before their maturity dates, resulting in prepayment of mortgage-backed securities held by the Fund. The Fund would then lose any price appreciation above the mortgage’s principal and would be forced to reinvest the unanticipated proceeds at lower interest rates,
3
resulting in a decline in the Fund’s income. Such prepayments and subsequent reinvestments would also increase the Fund’s portfolio turnover rate.
•  Extension risk , which is the chance that during periods of rising interest rates, certain debt securities will be paid off substantially more slowly than originally anticipated, and the value of those securities may fall. For funds that invest in mortgage-backed securities, extension risk is the chance that during periods of rising interest rates, homeowners will repay their mortgages at slower rates.
•  Credit risk , which is the chance that a bond issuer will fail to pay interest or principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline.
•  Liquidity risk , which is the chance that the Fund may not be able to sell a security in a timely manner at a desired price.
•  Currency risk , which is the chance that the value of a foreign investment, measured in U.S. dollars, will decrease because of unfavorable changes in currency exchange rates.
•  Manager risk , which is the chance that poor security selection will cause the Fund to underperform relevant benchmarks or other funds with a similar investment objective.
•  Derivatives risk . The Fund may invest in derivatives, which may involve risks different from, and possibly greater than, those of investments directly in the underlying securities or assets.
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Annual Total Returns
The following bar chart and table are intended to help you understand the risks of investing in the Fund. The bar chart shows how the performance of the Fund's Investor Shares has varied from one calendar year to another over the periods shown. The table shows how the average annual total returns of the share classes presented compare with those of a relevant market index, which has investment characteristics similar to those of the Fund. Keep in mind that the Fund's past performance (before and after taxes) does not indicate how the Fund will perform in the future. Updated performance information is available on our website at vanguard.com/performance or by calling Vanguard toll-free at 800-662-7447.
4
Annual Total Returns — Vanguard Core Bond Fund Investor Shares
 
During the periods shown in the bar chart, the highest and lowest returns for a calendar quarter were:  
 
Total Return
Quarter
Highest
4.46%
June 30, 2020
Lowest
-1.65%
March 31, 2018
Average Annual Total Returns for Periods Ended December 31, 2020  
 
1 Year
Since
Inception
(Mar. 28,
2016)
Vanguard Core Bond Fund Investor Shares
 
 
Return Before Taxes
10.19%
4.68%
Return After Taxes on Distributions
8.90
3.49
Return After Taxes on Distributions and Sale of Fund Shares
6.05
3.06
Vanguard Core Bond Fund Admiral Shares
 
 
Return Before Taxes
10.40%
4.82%
Bloomberg Barclays U.S. Aggregate Float Adjusted Index
(reflects no deduction for fees, expenses, or taxes)
7.75%
4.20%
Actual after-tax returns depend on your tax situation and may differ from those shown in the preceding table. When after-tax returns are calculated, it is assumed that the shareholder was in the highest individual federal marginal income tax bracket at the time of each distribution of income or capital gains or upon redemption. State and local income taxes are not reflected in the calculations. Please note that after-tax returns are shown only for the Investor Shares and may differ for each share class. After-tax returns are not relevant for a shareholder who holds fund shares in a tax-deferred account, such as an individual retirement account or a 401(k) plan. Also, figures captioned Return After Taxes on Distributions and Sale of Fund Shares may be higher than other figures for the same period if a capital loss occurs upon redemption and results in an assumed tax deduction for the shareholder.
5
Investment Advisor
The Vanguard Group, Inc. (Vanguard)
Portfolio Managers
Brian W. Quigley, CFA, Portfolio Manager at Vanguard. He has co-managed the Fund since its inception in 2016.
Arvind Narayanan, CFA, Portfolio Manager at Vanguard. He has co-managed the Fund since 2019.
Samuel C. Martinez, CFA, Portfolio Manager at Vanguard. He has co-managed the Fund since 2018.
Daniel Shaykevich, Principal of Vanguard. He has co-managed the Fund since 2018.
Purchase and Sale of Fund Shares
You may purchase or redeem shares online through our website (vanguard.com), by mail (The Vanguard Group, P.O. Box 1110, Valley Forge, PA 19482-1110), or by telephone (800-662-2739). The minimum investment amount required to open and maintain a Fund account for Investor Shares or Admiral Shares is $3,000 or $50,000, respectively. The minimum investment amount required to add to an existing Fund account is generally $1. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special eligibility rules that may apply to them regarding Admiral Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility. If you are investing through an employer-sponsored retirement or savings plan, your plan administrator or your benefits office can provide you with detailed information on how you can invest through your plan.
Tax Information
The Fund’s distributions may be taxable as ordinary income or capital gain. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply.
Payments to Financial Intermediaries
The Fund and its investment advisor do not pay financial intermediaries for sales of Fund shares.
6
More on the Fund
This prospectus describes the principal risks you would face as a Fund shareholder. It is important to keep in mind one of the main principles of investing: generally, the higher the risk of losing money, the higher the potential reward. The reverse, also, is generally true: the lower the risk, the lower the potential reward. As you consider an investment in any mutual fund, you should take into account your personal tolerance for fluctuations in the securities markets. Look for this     symbol throughout the prospectus. It is used to mark detailed information about the more significant risks that you would confront as a Fund shareholder. To highlight terms and concepts important to mutual fund investors, we have provided Plain Talk® explanations along the way. Reading the prospectus will help you decide whether the Fund is the right investment for you. We suggest that you keep this prospectus for future reference.
Share Class Overview
The Fund offers two separate classes of shares: Investor Shares and Admiral Shares.
Both share classes offered by the Fund have the same investment objective, strategies, and policies. However, different share classes have different expenses; as a result, their investment returns will differ.  
Plain Talk About Fund Expenses
All mutual funds have operating expenses. These expenses, which are
deducted from a fund’s gross income, are expressed as a percentage of the
net assets of the fund. Assuming that operating expenses remain as stated
in the Fees and Expenses section, Vanguard Core Bond Fund’s expense
ratios would be as follows: for Investor Shares, 0.25%, or $2.50 per $1,000
of average net assets; for Admiral Shares, 0.10%, or $1.00 per $1,000 of
average net assets. The average expense ratio for core bond funds in 2019
was 0.69%, or $6.90 per $1,000 of average net assets (derived from data
provided by Lipper, a Thomson Reuters Company, which reports on the
mutual fund industry).
 
7
Plain Talk About Costs of Investing
Costs are an important consideration in choosing a mutual fund. That is
because you, as a shareholder, pay a proportionate share of the costs of
operating a fund and any transaction costs incurred when the fund buys or
sells securities. These costs can erode a substantial portion of the gross
income or the capital appreciation a fund achieves. Even seemingly small
differences in expenses can, over time, have a dramatic effect on a
fund’s performance.
The following sections explain the principal investment strategies and policies that the Fund uses in pursuit of its objective. The Fund's board of trustees, which oversees the Fund's management, may change investment strategies or policies in the interest of shareholders without a shareholder vote, unless those strategies or policies are designated as fundamental. Note that the Fund’s investment objective is not fundamental and may be changed without a shareholder vote. The Fund may change its 80% policy only upon 60 days‘ notice to shareholders.
Market Exposure
   
The Fund is subject to interest rate risk, which is the chance that bond prices overall will decline because of rising interest rates.
Although bonds are often thought to be less risky than stocks, there have been periods when bond prices have fallen significantly because of rising interest rates. For instance, prices of long-term bonds fell by almost 48% between December 1976 and September 1981.
To illustrate the relationship between bond prices and interest rates, the following table shows the effect of a 1% and a 2% change (both up and down) in interest rates on the values of three noncallable bonds (i.e., bonds that cannot be redeemed by the issuer) of different maturities, each with a face value of $1,000.
8
How Interest Rate Changes Affect the Value of a $1,000 Bond1  
Type of Bond (Maturity)
After a 1%
Increase
After a 1%
Decrease
After a 2%
Increase
After a 2%
Decrease
Short-Term (2.5 years)
$ 977
$ 1,024
$ 954
$ 1,049
Intermediate-Term (10 years)
922
1,086
851
1,180
Long-Term (20 years)
874
1,150
769
1,328
1 Assuming a 4% coupon rate.
These figures are for illustration only; you should not regard them as an indication of future performance of the bond market as a whole or the Fund in particular.  
9
Plain Talk About Bonds and Interest Rates
As a rule, when interest rates rise, bond prices fall. The opposite is also true:
Bond prices go up when interest rates fall. Why do bond prices and interest
rates move in opposite directions? Let’s assume that you hold a bond
offering a 4% yield. A year later, interest rates are on the rise and bonds of
comparable quality and maturity are offered with a 5% yield. With
higher-yielding bonds available, you would have trouble selling your 4% bond
for the price you paid—you would probably have to lower your asking price.
On the other hand, if interest rates were falling and 3% bonds were being
offered, you should be able to sell your 4% bond for more than you paid.
How mortgage-backed securities are different: In general, declining interest
rates will not lift the prices of mortgage-backed securities—such as those
guaranteed by the Government National Mortgage Association—as much as
the prices of comparable bonds. Why? Because when interest rates fall, the
bond market tends to discount the prices of mortgage-backed securities for
prepayment risk—the possibility that homeowners will refinance their
mortgages at lower rates and cause the bonds to be paid off prior to
maturity. In part to compensate for this prepayment possibility,
mortgage-backed securities tend to offer higher yields than other bonds of
comparable credit quality and maturity. In contrast, when interest rates rise,
prepayments tend to slow down, subjecting mortgage-backed securities to
extension risk—the possibility that homeowners will repay their mortgages
at slower rates. This will lengthen the duration or average life of
mortgage-backed securities held by a fund and delay the fund’s ability to
reinvest proceeds at higher interest rates, making the fund more sensitive to
changes in interest rates.
Changes in interest rates can affect bond income as well as bond prices.
   
The Fund is subject to income risk, which is the chance that the Fund's income will decline because of falling interest rates. A fund's income declines when interest rates fall because the fund then must invest new cash flow and cash from maturing bonds in lower-yielding bonds. Income risk is generally high for short-term bond funds and moderate for intermediate-term bond funds, so investors should expect the Fund's monthly income to fluctuate accordingly.  
10
Plain Talk About Bond Maturities
A bond is issued with a specific maturity date—the date when the issuer
must pay back the bond’s principal (face value). Bond maturities range from
less than 1 year to more than 30 years. Typically, the longer a bond’s maturity,
the more price risk you, as a bond investor, will face as interest rates
rise—but also the higher the potential yield you could receive. Longer-term
bonds are more suitable for investors willing to take a greater risk of price
fluctuations to get higher and more stable interest income. Shorter-term
bond investors should be willing to accept lower yields and greater income
variability in return for less fluctuation in the value of their investment. The
stated maturity of a bond may differ from the effective maturity of a bond,
which takes into consideration that an action such as a call or refunding may
cause bonds to be repaid before their stated maturity dates.
Although falling interest rates tend to strengthen bond prices, they can cause other problems for bond fund investors—bond calls and prepayments.  
Plain Talk About Callable Bonds
Although bonds are issued with clearly defined maturities, in some cases the
bond issuer has a right to call in (redeem) the bond earlier than its maturity
date. When a bond is called, the bondholder must replace it with another
bond that may have a lower yield than the original bond. One way for bond
investors to protect themselves against call risk is to purchase a bond early
in its lifetime, long before its call date. Another way is to buy bonds with
lower coupon rates or interest rates, which make them less likely to
be called.
   
The Fund is subject to call risk, which is the chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupon rates or interest rates before their maturity dates. The Fund would then lose any price appreciation above the bond's call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the Fund's income. Such redemptions and subsequent reinvestments would also increase the Fund's portfolio turnover rate.
11
   
The Fund is subject to prepayment risk, which is the chance that during periods of falling interest rates, homeowners will refinance their mortgages before their maturity dates, resulting in prepayment of mortgage-backed securities held by the Fund. The Fund would then lose any price appreciation above the mortgage's principal and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the Fund's income. Such prepayments and subsequent reinvestments would also increase the Fund's portfolio turnover rate.
   
The Fund is subject to extension risk, which is the chance that during periods of rising interest rates, certain debt securities will be paid off substantially more slowly than originally anticipated, and the value of those securities may fall. For funds that invest in mortgage-backed securities, extension risk is the chance that during periods of rising interest rates, homeowners will repay their mortgages at slower rates. This will lengthen the duration or average life of mortgage-backed securities held by the Fund and delay the Fund‘s ability to reinvest proceeds at higher interest rates.
   
The Fund is subject to credit risk, which is the chance that a bond issuer will fail to pay interest or principal in a timely manner or that negative perceptions of the issuer's ability to make such payments will cause the price of that bond to decline.  
Plain Talk About Credit Quality
A bond’s credit quality rating is an assessment of the issuer’s ability to pay
interest on the bond and, ultimately, to repay the principal. The lower the
credit quality, the greater the perceived chance that the bond issuer will
default, or fail to meet its payment obligations. All things being equal, the
lower a bond’s credit quality, the higher its yield should be to compensate
investors for assuming additional risk.
The Fund is expected to have credit quality that is either high or upper-medium.
12
 
 
Credit Ratings of the Fund’s Investments
(Percentage of Fund Assets Under Normal Circumstances)
Vanguard Fund
Issued or Backed
by U.S. Gov’t. or
its Agencies and
Instrumentalities
High or
Highest
Quality
(Non-Gov’t.)
Upper-
Medium
Quality
Medium
Quality
Non-
Investment-
Grade
Core Bond Fund
——————————At least 95%——————————
No more
than 5%
 
The Fund may invest no more than 5% of its assets in non-investment-grade fixed income securities. Non-investment-grade fixed income securities are those rated the equivalent of Moody’s Ba1 or below or, if unrated, are determined to be of comparable quality by the Fund’s advisor.
   
The Fund is subject to liquidity risk, which is the chance that the Fund may not be able to sell a security in a timely manner at a desired price.
There may be little trading in the secondary market for particular bonds, loans, and other debt securities, which may make them more difficult to value or sell.
To a limited extent, the Fund is subject to event risk, which is the chance that corporate fixed income securities held by the Fund may suffer a substantial decline in credit quality and market value because of a restructuring of the companies that issued the securities or because of other factors negatively affecting the issuers.
   
The Fund is subject to currency risk, which is the chance that the value of a foreign investment, measured in U.S. dollars, will decrease because of unfavorable changes in currency exchange rates.
The Fund may invest no more than 10% of its assets in non-U.S. dollar denominated bonds. These bonds include sovereign debt securities, which include fixed income securities that are issued or guaranteed by foreign sovereign governments or their agencies, authorities, political subdivisions or instrumentalities, or other supranational agencies, as well as debt securities issued or guaranteed by foreign corporations and foreign financial institutions. Currency risk can affect the credit risk of the Fund’s bonds because the issuer would have a large burden if its local currency weakens significantly compared with the U.S. dollar. If an issuer’s local currency declines relative to the U.S. dollar, it could negatively affect perceptions of the issuer’s ability to make
13
payments, which could cause the issuer’s bonds to decline in value. Many issuers manage this risk by hedging currency exposure, and their effectiveness in doing so is reflected in their credit rating.  
Plain Talk About Types of Bonds
Bonds are issued (sold) by many sources: Corporations issue corporate
bonds; the federal government issues U.S. Treasury bonds; agencies of the
federal government issue agency bonds; financial institutions issue
asset-backed bonds; and mortgage holders issue “mortgage-backed”
pass-through certificates. Each issuer is responsible for paying back the
bond’s initial value as well as for making periodic interest payments. Many
bonds issued by government agencies and entities are neither guaranteed
nor insured by the U.S. government.
Market disruptions can adversely affect local and global markets as well as normal market conditions and operations. Any such disruptions could have an adverse impact on the value of the Fund's investments and Fund performance.
Security Selection
Vanguard’s actively managed fixed income funds follow a portfolio manager-driven process that uses both top-down and bottom-up inputs. Portfolio managers are responsible for portfolio construction and strategy, leveraging the top-down insights of the Senior Investment Committee, the bottom-up insights of the sector teams, and the relative value views across fixed income sectors. Risk optimization measures are present throughout the investment process, and the Senior Investment Committee provides governance and oversight for the entire lineup.
 The types of financial instruments that may be purchased by the Fund are identified and explained as follows:
•  U.S. government and agency bonds represent loans by investors to the U.S. Treasury or a wide variety of government agencies and instrumentalities. Securities issued by most U.S. government entities are neither guaranteed by the U.S. Treasury nor backed by the full faith and credit of the U.S. government. These entities include, among others, the Federal Home Loan Banks (FHLBs), the Federal National Mortgage Association (FNMA), and the Federal Home Loan Mortgage Corporation (FHLMC). Securities issued by the U.S. Treasury and a small number of U.S. government agencies, such as the Government National Mortgage Association (GNMA), are backed by the full faith and credit of the U.S.
14
government. The market values of U.S. government and agency securities and U.S. Treasury securities are subject to fluctuation.
•  Corporate bonds are IOUs issued by businesses that want to borrow money for some purpose—often to develop a new product or service, to expand into a new market, or to buy another company. As with other types of bonds, the issuer promises to repay the principal on a specific date and to make interest payments in the meantime. The amount of interest offered depends both on market conditions and on the financial health of the corporation issuing the bonds; a company whose credit rating is not strong will have to offer a higher interest rate to obtain buyers for its bonds.
•  Municipal bonds represent loans by an investor to state or local governments or to other governmental authorities.
•  Mortgage-backed securities represent partial ownership interest in pools of commercial or residential mortgage loans made by financial institutions to finance a borrower’s real estate purchase. These loans are packaged by private or governmental issuers for sale to investors. As the underlying mortgage loans are paid by borrowers, the investors receive payments of interest and principal. To be announced (TBA) securities represent an agreement to buy or sell mortgage-backed securities with agreed-upon characteristics for a fixed unit price, with settlement on a scheduled future date beyond the typical settlement period for most other securities.
The Fund may also invest in mortgage-backed securities that are packaged by private corporations and are not guaranteed by the U.S. government.
The Fund may enter into mortgage-dollar-roll transactions. In a mortgage-dollar-roll transaction, a fund sells mortgage-backed securities to a dealer and simultaneously agrees to purchase similar securities in the future at a predetermined price. These transactions simulate an investment in mortgage-backed securities and have the potential to enhance a fund’s returns and reduce its administrative burdens, compared with holding mortgage-backed securities directly. These transactions may increase the fund’s portfolio turnover rate. Mortgage dollar rolls will be used only to the extent that they are consistent with the fund’s investment objective and risk profile.
•  Cash equivalent investments is a blanket term that describes a variety of short-term fixed income investments, including money market instruments, commercial paper, bank certificates of deposit, banker’s acceptances, and repurchase agreements. Repurchase agreements represent short-term (normally overnight) loans by a fund to banks or large securities dealers. Repurchase agreements can carry several risks. For instance, if the seller is unable to repurchase the securities as promised, a fund may experience a loss when
15
trying to sell the securities to another buyer. Also, if the seller becomes insolvent, a bankruptcy court may determine that the securities do not belong to a fund and order that the securities be used to pay off the seller’s debts. The Fund’s advisor believes that these risks can be controlled through careful security selection and monitoring.
•  Futures, options, and other derivatives are described in detail under Other Investment Policies and Risks.
•  Asset-backed securities are bonds that represent partial ownership in pools of consumer or commercial loans—most often credit card, automobile, or trade receivables. Asset-backed securities, which can be types of corporate fixed income obligations, are issued by entities formed solely for that purpose, but their value ultimately depends on repayments by underlying borrowers. A primary risk of asset-backed securities is that their maturity is difficult to predict, being driven by borrowers’ prepayments.
•  International dollar-denominated bonds are bonds denominated in U.S. dollars and issued by foreign governments and companies. To the extent that the Fund owns foreign bonds, it is subject to country risk, which is the chance that world events—such as political upheaval, financial troubles, or natural disasters—will adversely affect the value and/or liquidity of securities issued by companies in foreign countries. In addition, the prices of foreign bonds and the prices of U.S. bonds have, at times, moved in opposite directions. Because the bond’s value is designated in dollars rather than in the currency of the issuer’s country, the investor is not exposed to currency risk; rather, the issuer assumes that risk, usually to attract U.S. investors. Although currency movements do not affect the value of international dollar-denominated bonds directly, they could affect the value indirectly by adversely affecting the issuer’s ability (or the market’s perception of the issuer’s ability) to pay interest or repay principal.
•  Foreign currency bonds are bonds denominated in the local currency of a non-U.S. country and issued by foreign governments, government agencies, and companies. The fund will seek to have a majority of its assets either denominated in or hedged back to the U.S. dollar, but will also have the ability to invest in bonds denominated in a local currency on an unhedged basis. To the extent that a fund’s investments in foreign currency bonds are hedged, the fund is subject to currency hedging risk. Currency hedging risk is the chance that the currency hedging transactions entered into by the fund may not perfectly offset the fund’s foreign currency exposure.
•  Preferred stocks distribute set dividends from the issuer. The preferred-stock holder’s claim on the issuer’s income and assets ranks before that of common-stock holders, but after that of bondholders.
16
•  Convertible securities are bonds or preferred stocks that are convertible into, or exchangeable for, common stocks.
•  Collateralized mortgage obligations (CMOs) are special bonds that are collateralized by mortgages or mortgage pass-through securities. Cash flow rights on underlying mortgages—the rights to receive principal and interest payments—are divided up and prioritized to create short-, intermediate-, and long-term bonds. CMOs rely on assumptions about the timing of cash flows on the underlying mortgages, including expected prepayment rates. The primary risk of a CMO is that these assumptions are wrong, which would either shorten or lengthen the bond’s maturity. The Fund will invest only in CMOs that are believed to be consistent with its maturity and credit-quality standards.
   
The Fund is subject to manager risk, which is the chance that poor security selection will cause the Fund to underperform relevant benchmarks or other funds with a similar investment objective.  
Plain Talk About U.S. Government-Sponsored Enterprises
A variety of U.S. government-sponsored enterprises (GSEs), such as the
Federal Home Loan Mortgage Corporation (FHLMC), the Federal National
Mortgage Association (FNMA), and the Federal Home Loan Banks (FHLBs),
issue debt and mortgage-backed securities. Although GSEs may be chartered
or sponsored by acts of Congress, they are not funded by congressional
appropriations. In September of 2008, the U.S. Treasury placed FNMA and
FHLMC under conservatorship and appointed the Federal Housing Finance
Agency (FHFA) to manage their daily operations. In addition, the U.S. Treasury
entered into purchase agreements with FNMA and FHLMC to provide them
with capital in exchange for senior preferred stock. Generally, a GSE’s
securities are neither issued nor guaranteed by the U.S. Treasury and are not
backed by the full faith and credit of the U.S. government. In most cases,
these securities are supported only by the credit of the GSE, standing alone. In
some cases, a GSE’s securities may be supported by the ability of the GSE to
borrow from the U.S. Treasury or may be supported by the U.S. government in
some other way. Securities issued by the Government National Mortgage
Association (GNMA), however, are backed by the full faith and credit of the
U.S. government.
Other Investment Policies and Risks
In addition to investing in bonds, the Fund may make other kinds of investments to achieve its objective.
17
The Fund may purchase nonpublic securities, generally referred to as 144A securities. The Fund may invest up to 15% of its net assets in illiquid securities. Illiquid securities are investments that the Fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. Restricted securities are a special type of illiquid security; these securities have not been publicly issued and legally can be resold only to qualified buyers. From time to time, the board of trustees may determine that particular restricted securities are not illiquid, and those securities may then be purchased by the Fund without limit.
   
The Fund may invest in derivatives. In general, investments in derivatives may involve risks different from, and possibly greater than, those of investments directly in the underlying securities or assets.
Generally speaking, a derivative is a financial contract whose value is based on the value of a financial asset (such as a stock, a bond, or a currency), a physical asset (such as gold, oil, or wheat), a market index, or a reference rate. The Fund may invest in derivatives only if the expected risks and rewards of the derivatives are consistent with the investment objective, policies, strategies, and risks of the Fund as disclosed in this prospectus. In particular, derivatives will be used only when they may help the advisor to accomplish one or more of the following:
• Invest in eligible asset classes with greater efficiency and lower cost than is possible through direct investment.
• Add value when these instruments are attractively priced.
• Adjust sensitivity to changes in interest rates.
• Adjust the overall credit risk of the portfolio or actively overweight or underweight credit risk to specific bond issuers.
• Hedge foreign currency exposure.
• Hedge foreign interest rate exposure.
The Fund's derivative investments may include fixed income futures contracts; fixed income options, including options on swaps; currency swaps; foreign currency exchange forwards; interest rate swaps; total return swaps; credit default swaps; or other derivatives. Losses (or gains) involving futures contracts can sometimes be substantial—in part because a relatively small price movement in a futures contract may result in an immediate and substantial loss (or gain) for a fund. Similar risks exist for other types of derivatives. The Fund may also invest in U.S. Treasury futures for either cash management purposes or potentially to add value since they may be favorably priced.
18
The Fund may invest a small portion of its assets in shares of exchange-traded funds (ETFs). These ETFs typically provide returns similar to those of bonds. The Fund may purchase ETFs when doing so will reduce the Fund’s transaction costs, facilitate cash management, mitigate risk, or have the potential to add value because the instruments are favorably priced. Vanguard receives no additional revenue from Fund assets invested in ETF Shares of other Vanguard funds. Fund assets invested in ETF Shares are excluded when allocating to the Fund its share of the costs of Vanguard’s operations.  
Plain Talk About Derivatives
Derivatives can take many forms. Some forms of derivatives—such as
exchange-traded futures and options on securities, commodities, or
indexes—have been trading on regulated exchanges for decades. These
types of derivatives are standardized contracts that can easily be bought and
sold and whose market values are determined and published daily. On the
other hand, non-exchange-traded derivatives—such as certain swap
agreements—tend to be more specialized or complex and may be more
difficult to accurately value.
Cash Management
The Fund's daily cash balance may be invested in Vanguard Market Liquidity Fund and/or Vanguard Municipal Cash Management Fund (each, a CMT Fund), which are low-cost money market funds. When investing in a CMT Fund, the Fund bears its proportionate share of the expenses of the CMT Fund in which it invests. Vanguard receives no additional revenue from Fund assets invested in a CMT Fund.
Methods Used to Meet Redemption Requests
Under normal circumstances, the Fund typically expects to meet redemptions with positive cash flows. When this is not an option, the Fund seeks to maintain its risk exposure by selling a cross section of the Fund’s holdings to meet redemptions, while also factoring in transaction costs. Additionally, the Fund may work with larger clients to implement their redemptions in a manner that is least disruptive to the portfolio; see “Potentially disruptive redemptions” under Redeeming Shares in the Investing With Vanguard section.
Under certain circumstances, including under stressed market conditions, there are additional tools that the Fund may use in order to meet redemptions, including advancing the settlement of market trades with counterparties to match investor redemption payments or delaying settlement of an investor’s
19
transaction to match trade settlement within regulatory requirements. The Fund may also suspend payment of redemption proceeds for up to seven days; see “Emergency circumstances” under Redeeming Shares in the Investing With Vanguard section. Additionally under these unusual circumstances, the Fund may borrow money (subject to certain regulatory conditions and if available under board-approved procedures) through an interfund lending facility; through a bank line-of-credit, including a joint committed credit facility; or through an uncommitted line-of-credit from Vanguard in order to meet redemption requests.
Temporary Investment Measures
The Fund may temporarily depart from its normal investment policies and strategies when the advisor believes that doing so is in the Fund's best interest, so long as the strategy or policy employed is consistent with the Fund's investment objective. For instance, the Fund may invest beyond its normal limits in derivatives or exchange-traded funds that are consistent with the Fund's investment objective when those instruments are more favorably priced or provide needed liquidity, as might be the case when the Fund receives large cash flows that it cannot prudently invest immediately.
In addition, the Fund may take temporary defensive positions that are inconsistent with its normal investment policies and strategies—for instance, by allocating substantial assets to cash equivalent investments or other less volatile instruments— in response to adverse or unusual market, economic, political, or other conditions. In doing so, the Fund may succeed in avoiding losses but may otherwise fail to achieve its investment objective.
Frequent Trading or Market-Timing
Background. Some investors try to profit from strategies involving frequent trading of mutual fund shares, such as market-timing. For funds holding foreign securities, investors may try to take advantage of an anticipated difference between the price of the fund’s shares and price movements in overseas markets, a practice also known as time-zone arbitrage. Investors also may try to engage in frequent trading of funds holding investments such as small-cap stocks and high-yield bonds. As money is shifted into and out of a fund by a shareholder engaging in frequent trading, the fund incurs costs for buying and selling securities, resulting in increased brokerage and administrative costs. These costs are borne by all fund shareholders, including the long-term investors who do not generate the costs. In addition, frequent trading may interfere with an advisor’s ability to efficiently manage the fund.
Policies to address frequent trading. The Vanguard funds (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) do not knowingly accommodate
20
frequent trading. The board of trustees of each Vanguard fund (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) has adopted policies and procedures reasonably designed to detect and discourage frequent trading and, in some cases, to compensate the fund for the costs associated with it. These policies and procedures do not apply to ETF Shares because frequent trading in ETF Shares generally does not disrupt portfolio management or otherwise harm fund shareholders. Although there is no assurance that Vanguard will be able to detect or prevent frequent trading or market-timing in all circumstances, the following policies have been adopted to address these issues:
• Each Vanguard fund reserves the right to reject any purchase request—including exchanges from other Vanguard funds—without notice and regardless of size. For example, a purchase request could be rejected because the investor has a history of frequent trading or if Vanguard determines that such purchase may negatively affect a fund’s operation or performance.
• Each Vanguard fund (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) generally prohibits, except as otherwise noted in the Investing With Vanguard section, an investor’s purchases or exchanges into a fund account for 30 calendar days after the investor has redeemed or exchanged out of that fund account.
• Certain Vanguard funds charge shareholders purchase and/or redemption fees on transactions.
See the Investing With Vanguard section of this prospectus for further details on Vanguard’s transaction policies.
Each Vanguard fund (other than retail and government money market funds), in determining its net asset value, will use fair-value pricing when appropriate, as described in the Share Price section. Fair-value pricing may reduce or eliminate the profitability of certain frequent-trading strategies.
Do not invest with Vanguard if you are a market-timer.
Turnover Rate
Although the Fund generally seeks to invest for the long term, it may sell securities regardless of how long they have been held. The Financial Highlights section of this prospectus shows historical turnover rates for the Fund. A turnover rate of 100%, for example, would mean that the Fund had sold and replaced securities valued at 100% of its net assets within a one-year period. Shorter-term bonds will mature or be sold—and need to be replaced—more frequently than longer-term bonds. As a result, shorter-term bond funds tend to
21
have higher turnover rates than longer-term bond funds. In general, the greater the turnover rate, the greater the impact transaction costs will have on a fund’s return. Also, funds with high turnover rates may be more likely to generate capital gains, including short-term capital gains, that must be distributed to shareholders and will be taxable to shareholders investing through a taxable account.
The Fund and Vanguard
The Fund is a member of The Vanguard Group, a family of over 200 funds. All of the funds that are members of The Vanguard Group (other than funds of funds) share in the expenses associated with administrative services and business operations, such as personnel, office space, and equipment.
Vanguard Marketing Corporation provides marketing services to the funds. Although fund shareholders do not pay sales commissions or 12b-1 distribution fees, each fund (other than a fund of funds) or each share class of a fund (in the case of a fund with multiple share classes) pays its allocated share of the Vanguard funds’ marketing costs.  
Plain Talk About Vanguard’s Unique Corporate Structure
The Vanguard Group is owned jointly by the funds it oversees and thus
indirectly by the shareholders in those funds. Most other mutual funds are
operated by management companies that are owned by third parties—either
public or private stockholders—and not by the funds they serve.
Investment Advisor
The Vanguard Group, Inc., P.O. Box 2600, Valley Forge, PA 19482, which began operations in 1975, serves as advisor to the Fund through its Fixed Income Group. As of September 30, 2020, Vanguard served as advisor for approximately $5.2 trillion in assets. Vanguard provides investment advisory services to the Fund pursuant to the Funds’ Service Agreement and subject to the supervision and oversight of the trustees and officers of the Fund.
For the fiscal year ended September 30, 2020, the advisory expenses represented an effective annual rate of 0.01% of the Fund’s average net assets.
22
Although the Fund is managed solely by Vanguard, the Fund reserves the right to utilize a multimanager approach in the future. Under the terms of an SEC exemption, the Fund's board of trustees may, without prior approval from shareholders, change the terms of an advisory agreement with a third-party investment advisor or hire a new third-party investment advisor—either as a replacement for an existing advisor or as an additional advisor. Any significant change in the Fund’s advisory arrangements will be communicated to shareholders in writing. As the Fund's sponsor and overall manager, Vanguard may provide investment advisory services to the Fund at any time. Vanguard may also recommend to the board of trustees that an advisor be hired, terminated, or replaced or that the terms of an existing advisory agreement be revised. The Fund has filed an application seeking a similar SEC exemption with respect to investment advisors that are wholly owned subsidiaries of Vanguard. If the exemption is granted, the Fund may rely on the new SEC relief.
For a discussion of why the board of trustees approved the Fund's investment advisory arrangement, see the most recent semiannual report to shareholders covering the fiscal period ended March 31.
The managers primarily responsible for the day-to-day management of the Fund are:
Brian W. Quigley, CFA, Portfolio Manager at Vanguard. He has been with Vanguard since 2003, has worked in investment management since 2005, has managed investment portfolios since 2015, and has co-managed the Fund since its inception in 2016. Education: B.S., Lehigh University.
Arvind Narayanan, CFA, Portfolio Manager at Vanguard. He has been with Vanguard since 2019, has worked in investment management since 2002, has managed investment portfolios since 2006, and has co-managed the Fund since 2019. Education: B.A., Goucher College; M.B.A., New York University.
Samuel C. Martinez, CFA, Portfolio Manager at Vanguard. He has been with Vanguard since 2007, has worked in investment management since 2010, has managed investment portfolios since 2014, and has co-managed the Fund since 2018. Education: B.S., Southern Utah University; M.B.A., The Wharton School of the University of Pennsylvania.
Daniel Shaykevich, Principal of Vanguard. He has worked in investment management since 2001, has managed investment portfolios since 2004, has been with Vanguard since 2013, and has co-managed the Fund since 2018. Education: B.S., Carnegie Mellon University.
23
The Fund's Statement of Additional Information provides information about each portfolio manager’s compensation, other accounts under management, and ownership of shares of the Fund.
Dividends, Capital Gains, and Taxes
Fund Distributions
The Fund distributes to shareholders virtually all of its net income (interest less expenses) as well as any net short-term or long-term capital gains realized from the sale of its holdings. Income dividends generally are declared monthly and distributed monthly. Capital gains distributions, if any, generally occur annually in December. In addition, the Fund may occasionally make a supplemental distribution at some other time during the year.
You can receive distributions of income or capital gains in cash, or you can have them automatically reinvested in more shares of the Fund. However, if you are investing through an employer-sponsored retirement or savings plan, your distributions will be automatically reinvested in additional Fund shares.  
Plain Talk About Distributions
As a shareholder, you are entitled to your portion of a fund’s income from
interest as well as capital gains from the fund’s sale of investments. Income
consists of interest the fund earns from its money market and bond
investments. Capital gains are realized whenever the fund sells securities for
higher prices than it paid for them. These capital gains are either short-term
or long-term, depending on whether the fund held the securities for one year
or less or for more than one year.
Basic Tax Points
Investors in taxable accounts should be aware of the following basic federal income tax points:
• Distributions are taxable to you whether or not you reinvest these amounts in additional Fund shares.
• Distributions declared in December—if paid to you by the end of January—are taxable as if received in December.
• Any income dividend distribution or short-term capital gains distribution that you receive is taxable to you as ordinary income.
24
• Any distribution of net long-term capital gains is taxable to you as long-term capital gains, no matter how long you have owned shares in the Fund.
• Capital gains distributions may vary considerably from year to year as a result of the Fund's normal investment activities and cash flows.
• A sale or exchange of Fund shares is a taxable event. This means that you may have a capital gain to report as income, or a capital loss to report as a deduction, when you complete your tax return.
• Any conversion between classes of shares of the same fund is a nontaxable event. By contrast, an exchange between classes of shares of different funds is a taxable event.
• Vanguard (or your intermediary) will send you a statement each year showing the tax status of all of your distributions.
Individuals, trusts, and estates whose income exceeds certain threshold amounts are subject to a 3.8% Medicare contribution tax on “net investment income.” Net investment income takes into account distributions paid by the Fund and capital gains from any sale or exchange of Fund shares.
Income dividends and capital gains distributions that you receive, as well as your gains or losses from any sale or exchange of Fund shares, may be subject to state and local income taxes. Depending on your state’s rules, however, any dividends attributable to interest earned on direct obligations of the U.S. government may be exempt from state and local taxes. Vanguard will notify you each year how much, if any, of your dividends may qualify for this exemption.
This prospectus provides general tax information only. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply. Please consult your tax advisor for detailed information about any tax consequences for you.
General Information
Backup withholding. By law, Vanguard must withhold 24% of any taxable distributions or redemptions from your account if you do not:
• Provide your correct taxpayer identification number.
• Certify that the taxpayer identification number is correct.
• Confirm that you are not subject to backup withholding.
Similarly, Vanguard (or your intermediary) must withhold taxes from your account if the IRS instructs us to do so.
25
Foreign investors. Vanguard funds offered for sale in the United States (Vanguard U.S. funds), including the Fund offered in this prospectus, are not widely available outside the United States. Non-U.S. investors should be aware that U.S. withholding and estate taxes and certain U.S. tax reporting requirements may apply to any investments in Vanguard U.S. funds. Foreign investors should visit the non-U.S. investors page on our website at vanguard.com for information on Vanguard’s non-U.S. products.
Invalid addresses. If an income dividend distribution or capital gains distribution check mailed to your address of record is returned as undeliverable, Vanguard will automatically reinvest the distribution and all future distributions until you provide us with a valid mailing address. Reinvestments will receive the net asset value calculated on the date of the reinvestment.
Share Price
Share price, also known as net asset value (NAV), is calculated as of the close of regular trading on the New York Stock Exchange (NYSE), generally 4 p.m., Eastern time, on each day that the NYSE is open for business (a business day). In the rare event the NYSE experiences unanticipated disruptions and is unavailable at the close of the trading day, NAVs will be calculated as of the close of regular trading on the Nasdaq (or another alternate exchange if the Nasdaq is unavailable, as determined at Vanguard’s discretion), generally 4 p.m., Eastern time. Each share class has its own NAV, which is computed by dividing the total assets, minus liabilities, allocated to the share class by the number of Fund shares outstanding for that class. On U.S. holidays or other days when the NYSE is closed, the NAV is not calculated, and the Fund does not sell or redeem shares.
Debt securities held by a Vanguard fund are valued based on information furnished by an independent pricing service or market quotations. When a fund determines that pricing-service information or market quotations either are not readily available or do not accurately reflect the value of a security, the security is priced at its fair value (the amount that the owner might reasonably expect to receive upon the current sale of the security).
The values of any foreign securities held by a fund are converted into U.S. dollars using an exchange rate obtained from an independent third party as of the close of regular trading on the NYSE. The values of any mutual fund shares, including institutional money market fund shares, held by a fund are based on the NAVs of the shares. The values of any ETF shares or closed-end fund shares held by a fund are based on the market value of the shares.
26
A fund also may use fair-value pricing on bond market holidays when the fund is open for business (such as Columbus Day and Veterans Day). Fair-value prices are determined by Vanguard according to procedures adopted by the board of trustees. When fair-value pricing is employed, the prices of securities used by a fund to calculate the NAV may differ from quoted or published prices for the same securities.
Vanguard fund share prices are published daily on our website at vanguard.com/prices.
27
Financial Highlights
Financial highlights information is intended to help you understand a fund’s performance for the past five years (or, if shorter, its period of operations). Certain information reflects financial results for a single fund share. Total return represents the rate that an investor would have earned or lost each period on an investment in a fund or share class (assuming reinvestment of all distributions). This information has been obtained from the financial statements audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, whose report, along with fund financial statements, is included in a fund’s most recent annual report to shareholders. You may obtain a free copy of a fund’s latest annual or semiannual report, which is available upon request.
Vanguard Core Bond Fund Investor Shares  
 
Year Ended September 30,
March 10,
20161 to
Sept. 30,
2016
For a Share Outstanding Throughout Each Period
2020
2019
2018
2017
Net Asset Value, Beginning of Period
$10.24
$9.59
$10.00
$10.26
$10.00
Investment Operations
 
 
 
 
 
Net Investment Income
0.2092
0.3112
0.2692
0.2172
0.097
Net Realized and Unrealized Gain (Loss) on
Investments
0.697
0.645
(0.400)
(0.219)
0.259
Total from Investment Operations
0.906
0.956
(0.131)
(0.002)
0.356
Distributions
 
 
 
 
 
Dividends from Net Investment Income
(0.216)
(0.306)
(0.279)
(0.197)
(0.096)
Distributions from Realized Capital Gains
—
—
—
(0.061)
—
Total Distributions
(0.216)
(0.306)
(0.279)
(0.258)
(0.096)
Net Asset Value, End of Period
$10.93
$10.24
$9.59
$10.00
$10.26
Total Return3
8.95%
10.15%
–1.32%
0.03%
3.57%
Ratios/Supplemental Data
 
 
 
 
 
Net Assets, End of Period (Millions)
$236
$117
$80
$91
$65
Ratio of Total Expenses to Average Net Assets
0.25%
0.25%
0.25%
0.25%
0.25%5
Ratio of Net Investment Income to Average Net
Assets
1.96%
3.16%
2.76%
2.18%
2.00%5
Portfolio Turnover Rate4
383%
406%
263%
232%
229%
1
Subscription period for the fund was March 10, 2016, to March 24, 2016, during which time all assets were held in money market instruments. Performance measurement began March 28, 2016, the first business day after the subscription period, at a net asset value of $10.00.
2
Calculated based on average shares outstanding.
3
Total returns do not include account service fees that may have applied in the periods shown.
4
Includes 68%, 32%, 60%, 81%, and 58%, attributable to mortgage-dollar-roll activity.
5
Annualized.
28
Vanguard Core Bond Fund Admiral Shares  
 
Year Ended September 30,
March 10,
20161 to
Sept. 30,
2016
For a Share Outstanding Throughout Each Period
2020
2019
2018
2017
Net Asset Value, Beginning of Period
$20.48
$19.18
$20.00
$20.53
$20.00
Investment Operations
 
 
 
 
 
Net Investment Income
0.4362
0.6512
0.5632
0.4542
0.205
Net Realized and Unrealized Gain (Loss) on
Investments
1.407
1.290
(0.800)
(0.445)
0.528
Total from Investment Operations
1.843
1.941
(0.237)
0.009
0.733
Distributions
 
 
 
 
 
Dividends from Net Investment Income
(0.463)
(0.641)
(0.583)
(0.417)
(0.203)
Distributions from Realized Capital Gains
—
—
—
(0.122)
—
Total Distributions
(0.463)
(0.641)
(0.583)
(0.539)
(0.203)
Net Asset Value, End of Period
$21.86
$20.48
$19.18
$20.00
$20.53
Total Return3
9.11%
10.31%
–1.19%
0.10%
3.67%
Ratios/Supplemental Data
 
 
 
 
 
Net Assets, End of Period (Millions)
$3,212
$1,114
$905
$794
$578
Ratio of Total Expenses to Average Net Assets
0.10%
0.10%
0.13%
0.15%
0.15%5
Ratio of Net Investment Income to Average Net
Assets
2.04%
3.31%
2.88%
2.28%
2.10%5
Portfolio Turnover Rate4
383%
406%
263%
232%
229%
1
Subscription period for the fund was March 10, 2016, to March 24, 2016, during which time all assets were held in money market instruments. Performance measurement began March 28, 2016, the first business day after the subscription period, at a net asset value of $20.00.
2
Calculated based on average shares outstanding.
3
Total returns do not include account service fees that may have applied in the periods shown.
4
Includes 68%, 32%, 60%, 81%, and 58%, attributable to mortgage-dollar-roll activity.
5
Annualized.
29
Investing With Vanguard
This section of the prospectus explains the basics of doing business with Vanguard. Vanguard fund shares can be held directly with Vanguard or indirectly through an intermediary, such as a bank, a broker, or an investment advisor. If you hold Vanguard fund shares directly with Vanguard, you should carefully read each topic within this section that pertains to your relationship with Vanguard. If you hold Vanguard fund shares indirectly through an intermediary (including shares held in a brokerage account through Vanguard Brokerage Services®), please see Investing With Vanguard Through Other Firms, and also refer to your account agreement with the intermediary for information about transacting in that account. If you hold Vanguard fund shares through an employer-sponsored retirement or savings plan, please see Employer-Sponsored Plans. Vanguard reserves the right to change the following policies without notice. Please call or check online for current information. See Contacting Vanguard.
For Vanguard fund shares held directly with Vanguard, each fund you hold in an account is a separate “fund account.” For example, if you hold three funds in a nonretirement account titled in your own name, two funds in a nonretirement account titled jointly with your spouse, and one fund in an individual retirement account, you have six fund accounts—and this is true even if you hold the same fund in multiple accounts. Note that each reference to “you” in this prospectus applies to any one or more registered account owners or persons authorized to transact on your account.
Purchasing Shares
Vanguard reserves the right, without notice, to increase or decrease the minimum amount required to open, convert shares to, or maintain a fund account or to add to an existing fund account.
Investment minimums may differ for certain categories of investors.
Account Minimums for Investor Shares
To open and maintain an account. $3,000.
To add to an existing account. Generally $1.
Account Minimums for Admiral Shares
To open and maintain an account. $50,000. If you request Admiral Shares when you open a new account but the investment amount does not meet the account minimum for Admiral Shares, your investment will be placed in Investor Shares of the Fund. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special
30
eligibility rules that may apply to them regarding Admiral Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility.
To add to an existing account. Generally $1.
How to Initiate a Purchase Request
Be sure to check Exchanging Shares, Frequent-Trading Limitations, and Other Rules You Should Know before placing your purchase request.
Online. You may open certain types of accounts, request a purchase of shares, and request an exchange through our website or our mobile application if your account is eligible and you are registered for online access.
By telephone. You may call Vanguard to begin the account registration process or request that the account-opening forms be sent to you. You may also call Vanguard to request a purchase of shares in your account or to request an exchange. See Contacting Vanguard.
By mail. You may send Vanguard your account registration form and check to open a new fund account. To add to an existing fund account, you may send your check with an Invest-by-Mail form (from a transaction confirmation or your account statement) or with a deposit slip (available online).
How to Pay for a Purchase
By electronic bank transfer. You may purchase shares of a Vanguard fund through an electronic transfer of money from a bank account. To establish the electronic bank transfer service on an account, you must designate the bank account online, complete a form, or fill out the appropriate section of your account registration form. After the service is set up on your account, you can purchase shares by electronic bank transfer on a regular schedule (Automatic Investment Plan), if eligible, or upon request. Your purchase request can be initiated online (if you are registered for online access), by telephone, or by mail.
By wire. Wiring instructions vary for different types of purchases. Please call Vanguard for instructions and policies on purchasing shares by wire. See Contacting Vanguard.
By check. You may make initial or additional purchases to your fund account by sending a check with a deposit slip or by utilizing our mobile application if your account is eligible and you are registered for online access. Also see How to Initiate a Purchase Request. Make your check payable to Vanguard and include the appropriate fund number (e.g., Vanguard—xx). For a list of Fund numbers (for share classes in this prospectus), see Additional Information.
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By exchange. You may purchase shares of a Vanguard fund using the proceeds from the simultaneous redemption of shares of another Vanguard fund. You may initiate an exchange online (if you are registered for online access), by telephone, or by mail with an exchange form. See Exchanging Shares.
Trade Date
The trade date for any purchase request received in good order will depend on the day and time Vanguard receives your request, the manner in which you are paying, and the type of fund you are purchasing. Your purchase will be executed using the NAV as calculated on the trade date. NAVs are calculated only on days that the NYSE is open for trading (a business day). In the rare event the NYSE experiences unanticipated disruptions and is unavailable at the close of the trading day, NAVs will be calculated as of the close of regular trading on the Nasdaq (or another alternate exchange if the Nasdaq is unavailable, as determined at Vanguard’s discretion), generally 4 p.m., Eastern time. The time selected for NAV calculation in this rare event shall also serve as the conclusion of the trading day. See Share Price.
For purchases by check into all funds other than money market funds and for purchases by exchange, wire, or electronic bank transfer into all funds: If the purchase request is received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the trade date for the purchase will be the same day. If the purchase request is received on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the trade date for the purchase will be the next business day.
For purchases by check into money market funds: If the purchase request is received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the trade date for the purchase will be the next business day. If the purchase request is received on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the trade date for the purchase will be the second business day following the day Vanguard receives the purchase request. Because money market instruments must be purchased with federal funds and it takes a money market mutual fund one business day to convert check proceeds into federal funds, the trade date for the purchase will be one business day later than for other funds.
If your purchase request is not accurate and complete, it may be rejected. See Other Rules You Should Know—Good Order.
For further information about purchase transactions, consult our website at vanguard.com or see Contacting Vanguard.
32
Other Purchase Rules You Should Know
Admiral Shares. Admiral Shares generally are not available for SIMPLE IRAs and Vanguard Individual 401(k) Plans.
Check purchases. All purchase checks must be written in U.S. dollars, be drawn on a U.S. bank, and be accompanied by good order instructions. Vanguard does not accept cash, traveler’s checks, starter checks, or money orders. In addition, Vanguard may refuse checks that are not made payable to Vanguard.
New accounts. We are required by law to obtain from you certain personal information that we will use to verify your identity. If you do not provide the information, we may not be able to open your account. If we are unable to verify your identity, Vanguard reserves the right, without notice, to close your account or take such other steps as we deem reasonable. Certain types of accounts may require additional documentation.
Refused or rejected purchase requests. Vanguard reserves the right to stop selling fund shares or to reject any purchase request at any time and without notice, including, but not limited to, purchases requested by exchange from another Vanguard fund. This also includes the right to reject any purchase request because the investor has a history of frequent trading or because the purchase may negatively affect a fund’s operation or performance.
Large purchases. Call Vanguard before attempting to invest a large dollar amount.
No cancellations. Vanguard will not accept your request to cancel any purchase request once processing has begun. Please be careful when placing a purchase request.
Converting Shares
When a conversion occurs, you receive shares of one class in place of shares of another class of the same fund. At the time of conversion, the dollar value of the “new” shares you receive equals the dollar value of the “old” shares that were converted. In other words, the conversion has no effect on the value of your investment in the fund at the time of the conversion. However, the number of shares you own after the conversion may be greater than or less than the number of shares you owned before the conversion, depending on the NAVs of the two share classes.
Vanguard will not accept your request to cancel any self-directed conversion request once processing has begun. Please be careful when placing a conversion request.
33
A conversion between share classes of the same fund is a nontaxable event.
Trade Date
The trade date for any conversion request received in good order will depend on the day and time Vanguard receives your request. Your conversion will be executed using the NAVs of the different share classes on the trade date. NAVs are calculated only on days that the NYSE is open for trading (a business day). In the rare event the NYSE experiences unanticipated disruptions and is unavailable at the close of the trading day, NAVs will be calculated as of the close of regular trading on the Nasdaq (or another alternate exchange if the Nasdaq is unavailable, as determined at Vanguard’s discretion), generally 4 p.m., Eastern time. The time selected for NAV calculation in this rare event shall also serve as the conclusion of the trading day. See Share Price.
For a conversion request received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the trade date will be the same day. For a conversion request received on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the trade date will be the next business day. See Other Rules You Should Know.
Conversions From Investor Shares to Admiral Shares
Self-directed conversions. If your account balance in the Fund is at least $50,000, you may ask Vanguard to convert your Investor Shares to Admiral Shares. You may request a conversion through our website (if you are registered for online access), by telephone, or by mail. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special eligibility rules that may apply to them regarding Admiral Shares. See Contacting Vanguard. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility.
Automatic conversions. Vanguard conducts periodic reviews of account balances and may, if your account balance in the Fund exceeds $50,000, automatically convert your Investor Shares to Admiral Shares. You will be notified before an automatic conversion occurs and will have an opportunity to instruct Vanguard not to effect the conversion. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special eligibility rules that may apply to them regarding Admiral Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility.
34
Mandatory Conversions to Investor Shares
If an account no longer meets the balance requirements for Admiral Shares, Vanguard may automatically convert the shares in the account to Investor Shares. A decline in the account balance because of market movement may result in such a conversion. Vanguard will notify the investor in writing before any mandatory conversion occurs.
Redeeming Shares
How to Initiate a Redemption Request
Be sure to check Exchanging Shares, Frequent-Trading Limitations, and Other Rules You Should Know before placing your redemption request.
Online. You may request a redemption of shares or request an exchange through our website or our mobile application if your account is eligible and you are registered for online access.
By telephone. You may call Vanguard to request a redemption of shares or an exchange. See Contacting Vanguard.
By mail. You may send a form (available online) to Vanguard to redeem from a fund account or to make an exchange. By writing a check. If you have established the checkwriting service on your account, you can redeem shares by writing a check for $250 or more.
How to Receive Redemption Proceeds
By electronic bank transfer. You may have the proceeds of a fund redemption sent directly to a designated bank account. To establish the electronic bank transfer service on an account, you must designate a bank account online, complete a form, or fill out the appropriate section of your account registration form. After the service is set up on your account, you can redeem shares by electronic bank transfer on a regular schedule (Automatic Withdrawal Plan), if eligible, or upon request. Your redemption request can be initiated online (if you are registered for online access), by telephone, or by mail.
By wire. To receive your proceeds by wire, you may instruct Vanguard to wire your redemption proceeds ($100 minimum) to a previously designated bank account. To establish the wire redemption service, you generally must designate a bank account online, complete a form, or fill out the appropriate section of your account registration form.
35
Please note that Vanguard charges a $10 wire fee for outgoing wire redemptions. The fee is assessed in addition to, rather than being withheld from, redemption proceeds and is paid directly to the fund in which you invest. For example, if you redeem $100 via a wire, you will receive the full $100, and the $10 fee will be assessed to your fund account through an additional redemption of fund shares. If you redeem your entire fund account, your redemption proceeds will be reduced by the amount of the fee. The wire fee does not apply to accounts held by Flagship and Flagship Select clients; accounts held through intermediaries, including Vanguard Brokerage Services; or accounts held by institutional clients.
By exchange. You may have the proceeds of a Vanguard fund redemption invested directly in shares of another Vanguard fund. You may initiate an exchange online (if you are registered for online access), by telephone, or by mail. See Exchanging Shares.
By check. If you have not chosen another redemption method, Vanguard will mail you a redemption check, generally payable to all registered account owners, normally within two business days of your trade date, and generally to the address of record.
Trade Date
The trade date for any redemption request received in good order will depend on the day and time Vanguard receives your request and the manner in which you are redeeming. Your redemption will be executed using the NAV as calculated on the trade date. NAVs are calculated only on days that the NYSE is open for trading (a business day). In the rare event the NYSE experiences unanticipated disruptions and is unavailable at the close of the trading day, NAVs will be calculated as of the close of regular trading on the Nasdaq (or another alternate exchange if the Nasdaq is unavailable, as determined at Vanguard’s discretion), generally 4 p.m., Eastern time. The time selected for NAV calculation in this rare event shall also serve as the conclusion of the trading day. See Share Price.
For redemptions by check, exchange, or wire: If the redemption request is received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the trade date will be the same day. If the redemption request is received on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the trade date will be the next business day.
• Note on timing of wire redemptions from money market funds: For telephone requests received by Vanguard on a business day before 10:45 a.m., Eastern time (2 p.m., Eastern time, for Vanguard Cash Reserves Federal Money Market Fund; 12:30 p.m., Eastern time, for Vanguard Federal
36
Money Market Fund), the redemption proceeds generally will leave Vanguard by the close of business the same day. For telephone requests received by Vanguard on a business day after those cut-off times, or on a nonbusiness day, and for all requests other than by telephone, the redemption proceeds generally will leave Vanguard by the close of business on the next business day.
• Note on timing of wire redemptions from all other funds: For requests received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the redemption proceeds generally will leave Vanguard by the close of business on the next business day. For requests received by Vanguard on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the redemption proceeds generally will leave Vanguard by the close of business on the second business day after Vanguard receives the request.
For redemptions by electronic bank transfer: If the redemption request is received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the trade date will be the same day. If the redemption request is received on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the trade date will be the next business day.
If your redemption request is not accurate and complete, it may be rejected. If we are unable to send your redemption proceeds by wire or electronic bank transfer because the receiving institution rejects the transfer, Vanguard will make additional efforts to complete your transaction. If Vanguard is still unable to complete the transaction, we may send the proceeds of the redemption to you by check, generally payable to all registered account owners, or use your proceeds to purchase new shares of the fund from which you sold shares for the purpose of the wire or electronic bank transfer transaction. See Other Rules You Should Know—Good Order.
If your redemption request is received in good order, we typically expect that redemption proceeds will be paid by the Fund within one business day of the trade date; however, in certain circumstances, investors may experience a longer settlement period at the time of the transaction. For further information, see “Potentially disruptive redemptions” and “Emergency circumstances.”
For further information about redemption transactions, consult our website at vanguard.com or see Contacting Vanguard.
37
Other Redemption Rules You Should Know
Documentation for certain accounts. Special documentation may be required to redeem from certain types of accounts, such as trust, corporate, nonprofit, or retirement accounts. Please call us before attempting to redeem from these types of accounts.
Potentially disruptive redemptions. Vanguard reserves the right to pay all or part of a redemption in kind—that is, in the form of securities—if we reasonably believe that a cash redemption would negatively affect the fund’s operation or performance or that the shareholder may be engaged in market-timing or frequent trading. Under these circumstances, Vanguard also reserves the right to delay payment of the redemption proceeds for up to seven calendar days. By calling us before you attempt to redeem a large dollar amount, you may avoid in-kind or delayed payment of your redemption. Please see Frequent-Trading Limitations for information about Vanguard’s policies to limit frequent trading.
Recently purchased shares. Although you can redeem shares at any time, proceeds may not be made available to you until the fund collects payment for your purchase. This may take up to seven calendar days for shares purchased by check or by electronic bank transfer. If you have written a check on a fund in an account with checkwriting privileges, that check may be rejected if your fund account does not have a sufficient available balance.
Address change. If you change your address online or by telephone, there may be up to a 14-day restriction (starting on the business day after your address is changed) on your ability to request check redemptions online and by telephone. You can request a redemption in writing (using a form available online) at any time. Confirmations of address changes are sent to both the old and new addresses.
Payment to a different person or address. At your request, we can make your redemption check payable, or wire your redemption proceeds, to a different person or send it to a different address. However, this generally requires the written consent of all registered account owners and may require additional documentation, such as a signature guarantee or a notarized signature. You may obtain a signature guarantee from some commercial or savings banks, credit unions, trust companies, or member firms of a U.S. stock exchange.
No cancellations. Vanguard will not accept your request to cancel any redemption request once processing has begun. Please be careful when placing a redemption request.
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Emergency circumstances. Vanguard funds can postpone payment of redemption proceeds for up to seven calendar days. In addition, Vanguard funds can suspend redemptions and/or postpone payments of redemption proceeds beyond seven calendar days at times when the NYSE is closed or during emergency circumstances, as determined by the SEC.
Exchanging Shares
An exchange occurs when you use the proceeds from the redemption of shares of one Vanguard fund to simultaneously purchase shares of a different Vanguard fund. You can make exchange requests online (if you are registered for online access), by telephone, or by mail. See Purchasing Shares and Redeeming Shares.
If the NYSE is open for regular trading (generally until 4 p.m., Eastern time, on a business day) at the time an exchange request is received in good order, the trade date generally will be the same day. See Other Rules You Should Know—Good Order for additional information on all transaction requests.
Vanguard will not accept your request to cancel any exchange request once processing has begun. Please be careful when placing an exchange request.
Call Vanguard before attempting to exchange a large dollar amount. By calling us before you attempt to exchange a large dollar amount, you may avoid delayed or rejected transactions.
Please note that Vanguard reserves the right, without notice, to revise or terminate the exchange privilege, limit the amount of any exchange, or reject an exchange, at any time, for any reason. See Frequent-Trading Limitations for additional restrictions on exchanges.
Frequent-Trading Limitations
Because excessive transactions can disrupt management of a fund and increase the fund’s costs for all shareholders, the board of trustees of each Vanguard fund places certain limits on frequent trading in the funds. Each Vanguard fund (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) limits an investor’s purchases or exchanges into a fund account for 30 calendar days after the investor has redeemed or exchanged out of that fund account. ETF Shares are not subject to these frequent-trading limits.
For Vanguard Retirement Investment Program pooled plans, the limitations apply to exchanges made online or by telephone.
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These frequent-trading limitations do not apply to the following:
• Purchases of shares with reinvested dividend or capital gains distributions.
• Transactions through Vanguard’s Automatic Investment Plan, Automatic Exchange Service, Direct Deposit Service, Automatic Withdrawal Plan, Required Minimum Distribution Service, and Vanguard Small Business Online®.
• Discretionary transactions through Vanguard Personal Advisor Services®, Vanguard Institutional Advisory Services®, and Vanguard Digital Advisor™.
• Redemptions of shares to pay fund or account fees.
• Redemptions of shares to remove excess shareholder contributions to certain types of retirement accounts (including, but not limited to, IRAs and Vanguard Individual 401(k) Plans).
• Transfers and reregistrations of shares within the same fund.
• Purchases of shares by asset transfer or direct rollover.
• Conversions of shares from one share class to another in the same fund.
• Checkwriting redemptions.
• Section 529 college savings plans.
• Certain approved institutional portfolios and asset allocation programs, as well as trades made by funds or trusts managed by Vanguard or its affiliates that invest in other Vanguard funds. (Please note that shareholders of Vanguard’s funds of funds are subject to the limitations.)
For participants in employer-sponsored defined contribution plans,* the frequent-trading limitations do not apply to:
• Purchases of shares with participant payroll or employer contributions or loan repayments.
• Purchases of shares with reinvested dividend or capital gains distributions.
• Distributions, loans, and in-service withdrawals from a plan.
• Redemptions of shares as part of a plan termination or at the direction of the plan.
• Transactions executed through the Vanguard Managed Account Program.
• Redemptions of shares to pay fund or account fees.
• Share or asset transfers or rollovers.
• Reregistrations of shares.
• Conversions of shares from one share class to another in the same fund.
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• Exchange requests submitted by written request to Vanguard. (Exchange requests submitted by fax, if otherwise permitted, are subject to the limitations.)
* The following Vanguard fund accounts are subject to the frequent-trading limitations: SEP-IRAs, SIMPLE IRAs, certain Individual 403(b)(7) Custodial Accounts, and Vanguard Individual 401(k) Plans.
Accounts Held by Institutions (Other Than Defined Contribution Plans)
Vanguard will systematically monitor for frequent trading in institutional clients’ accounts. If we detect suspicious trading activity, we will investigate and take appropriate action, which may include applying to a client’s accounts the 30-day policy previously described, prohibiting a client’s purchases of fund shares, and/or revoking the client’s exchange privilege.
Accounts Held by Intermediaries
When intermediaries establish accounts in Vanguard funds for the benefit of their clients, we cannot always monitor the trading activity of the individual clients. However, we review trading activity at the intermediary (omnibus) level, and if we detect suspicious activity, we will investigate and take appropriate action. If necessary, Vanguard may prohibit additional purchases of fund shares by an intermediary, including for the benefit of certain of the intermediary’s clients. Intermediaries also may monitor their clients’ trading activities with respect to Vanguard funds.
For those Vanguard funds that charge purchase and/or redemption fees, intermediaries will be asked to assess these fees on client accounts and remit these fees to the funds. The application of purchase and redemption fees and frequent-trading limitations may vary among intermediaries. There are no assurances that Vanguard will successfully identify all intermediaries or that intermediaries will properly assess purchase and redemption fees or administer frequent-trading limitations. If you invest with Vanguard through an intermediary, please read that firm’s materials carefully to learn of any other rules or fees that may apply.
Other Rules You Should Know
Prospectus and Shareholder Report Mailings
When two or more shareholders have the same last name and address, just one summary prospectus (or prospectus) and/or shareholder report may be sent in an attempt to eliminate the unnecessary expense of duplicate mailings. You may request individual prospectuses and reports by contacting our Client Services Department in writing, by telephone, or online. See Contacting Vanguard.
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Vanguard.com
Registration. If you are a registered user of vanguard.com, you can review your account holdings; buy, sell, or exchange shares of most Vanguard funds; and perform most other transactions through our website. You must register for this service online.
Electronic delivery. Vanguard can deliver your account statements, transaction confirmations, prospectuses, certain tax forms, and shareholder reports electronically. If you are a registered user of vanguard.com, you can consent to the electronic delivery of these documents by logging on and changing your mailing preferences under “Account Maintenance.” You can revoke your electronic consent at any time through our website, and we will begin to send paper copies of these documents within 30 days of receiving your revocation.
Telephone Transactions
Automatic. When we set up your account, we will automatically enable you to do business with us by telephone, unless you instruct us otherwise in writing.
Tele-Account®. To obtain fund and account information through Vanguard’s automated telephone service, you must first establish a Personal Identification Number (PIN) by calling Tele-Account at 800-662-6273.
Proof of a caller’s authority. We reserve the right to refuse a telephone request if the caller is unable to provide the requested information or if we reasonably believe that the caller is not an individual authorized to act on the account. Before we allow a caller to act on an account, we may request the following information:
• Authorization to act on the account (as the account owner or by legal documentation or other means).
• Account registration and address.
• Fund name and account number, if applicable.
• Other information relating to the caller, the account owner, or the account.
Good Order
We reserve the right to reject any transaction instructions that are not in “good order.” Good order generally means that your instructions:
• Are provided by the person(s) authorized in accordance with Vanguard’s policies and procedures to access the account and request transactions.
• Include the fund name and account number.
• Include the amount of the transaction (stated in dollars, shares, or percentage).
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Written instructions also must generally be provided on a Vanguard form and include:
• Signature(s) and date from the authorized person(s).
• Signature guarantees or notarized signatures, if required for the type of transaction. (Call Vanguard for specific requirements.)
• Any supporting documentation that may be required.
Good order requirements may vary among types of accounts and transactions. For more information, consult our website at vanguard.com or see Contacting Vanguard.
Vanguard reserves the right, without notice, to revise the requirements for good order.
Future Trade-Date Requests
Vanguard does not accept requests to hold a purchase, conversion, redemption, or exchange transaction for a future date. All such requests will receive trade dates as previously described in Purchasing Shares, Converting Shares, Redeeming Shares, and Exchanging Shares. Vanguard reserves the right to return future-dated purchase checks.
Accounts With More Than One Owner
If an account has more than one owner or authorized person, Vanguard generally will accept instructions from any one owner or authorized person.
Responsibility for Fraud
You should take precautions to protect yourself from fraud. Keep your account-related information private, and review any account confirmations, statements, or other information that we provide to you as soon as you receive them. Let us know immediately if you discover unauthorized activity or see something on your account that you do not understand or that looks unusual.
Vanguard will not be responsible for losses that result from transactions by a person who we reasonably believe is authorized to act on your account.
Uncashed Checks
Please cash your distribution or redemption checks promptly. Vanguard will not pay interest on uncashed checks. Vanguard may be required to transfer assets related to uncashed checks to a state under the state’s abandoned property law.
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Dormant Accounts
If your account has no activity in it for a period of time, Vanguard may be required to transfer it to a state under the state’s abandoned property law, subject to potential federal or state withholding taxes.
Unusual Circumstances
If you experience difficulty contacting Vanguard online or by telephone, you can send us your transaction request on a Vanguard form by regular or express mail.
Investing With Vanguard Through Other Firms
You may purchase or sell shares of most Vanguard funds through a financial intermediary, such as a bank, a broker, or an investment advisor. Please consult your financial intermediary to determine which, if any, shares are available through that firm and to learn about other rules that may apply. Your financial intermediary can provide you with account information and any required tax forms. You may be required to pay a commission on purchases of mutual fund shares made through a financial intermediary.
Please see Frequent-Trading Limitations—Accounts Held by Intermediaries for information about the assessment of any purchase or redemption fees and the monitoring of frequent trading for accounts held by intermediaries.
Account Service Fee
Vanguard may charge a $20 account service fee on fund accounts that have a balance below $10,000 for any reason, including market fluctuation. The account service fee may be applied to both retirement and nonretirement fund accounts and may be assessed on fund accounts in all Vanguard funds, regardless of the account minimum. The fee, which will be collected by redeeming fund shares in the amount of $20, will be deducted from fund accounts subject to the fee once per calendar year.
If you elect to receive your statements and other materials electronically (i.e., by e-delivery), the account service fee will not be charged, so long as your election remains in effect. You can make your e-delivery election on vanguard.com.
Beginning on January 1, 2021, you may elect to receive paper copies of shareholder reports free of charge as noted on the cover of this prospectus.
Certain account types have alternative fee structures, including SIMPLE IRAs, Vanguard Retirement Investment Program pooled plans, and Vanguard Individual 401(k) Plans.
44
Low-Balance Accounts
The Fund reserves the right to liquidate a fund account whose balance falls below the account minimum for any reason, including market fluctuation. This liquidation policy applies to nonretirement fund accounts and accounts that are held through intermediaries. Any such liquidation will be preceded by written notice to the investor.
Right to Change Policies
In addition to the rights expressly stated elsewhere in this prospectus, Vanguard reserves the right, without notice, to (1) alter, add, or discontinue any conditions of purchase (including eligibility requirements), redemption, exchange, conversion, service, or privilege at any time and (2) alter, impose, discontinue, or waive any purchase fee, redemption fee, account service fee, or other fee charged to a shareholder or a group of shareholders. Changes may affect any or all investors. These actions will be taken when, at the sole discretion of Vanguard management, Vanguard believes they are in the best interest of a fund.
Account Restrictions
Vanguard reserves the right to: (1) redeem all or a portion of a fund/account to meet a legal obligation, including tax withholding, tax lien, garnishment order, or other obligation imposed on your account by a court or government agency; (2) redeem shares, close an account, or suspend account privileges, features, or options in the case of threatening conduct or activity; (3) redeem shares, close an account, or suspend account privileges, features, or options if Vanguard believes or suspects that not doing so could result in a suspicious, fraudulent, or illegal transaction; (4) place restrictions on the ability to redeem any or all shares in an account if it is required to do so by a court or government agency; (5) place restrictions on the ability to redeem any or all shares in an account if Vanguard believes that doing so will prevent fraud, financial exploitation or abuse, or to protect vulnerable investors; (6) freeze any account and/or suspend account services if Vanguard has received reasonable notice of a dispute regarding the assets in an account, including notice of a dispute between the registered or beneficial account owners; and (7) freeze any account and/or suspend account services upon initial notification to Vanguard of the death of an account owner.
Share Classes
Vanguard reserves the right, without notice, to change the eligibility requirements of its share classes, including the types of clients who are eligible to purchase each share class.
45
Fund and Account Updates
Confirmation Statements
We will send (or provide through our website, whichever you prefer) a confirmation of your trade date and the amount of your transaction when you buy, sell, exchange, or convert shares. However, we will not send confirmations reflecting only checkwriting redemptions or the reinvestment of dividend or capital gains distributions. For any month in which you had a checkwriting redemption, a Checkwriting Activity Statement will be sent to you itemizing the checkwriting redemptions for that month. Promptly review each confirmation statement that we provide to you. It is important that you contact Vanguard immediately with any questions you may have about any transaction reflected on a confirmation statement, or Vanguard will consider the transaction properly processed.
Portfolio Summaries
We will send (or provide through our website, whichever you prefer) quarterly portfolio summaries to help you keep track of your accounts throughout the year. Each summary shows the market value of your account at the close of the statement period, as well as all distributions, purchases, redemptions, exchanges, transfers, and conversions for the current calendar quarter (or month). Promptly review each summary that we provide to you. It is important that you contact Vanguard immediately with any questions you may have about any transaction reflected on the summary, or Vanguard will consider the transaction properly processed.
Tax Information Statements
For most accounts, Vanguard (or your intermediary) is required to provide annual tax forms to assist you in preparing your income tax returns. These forms are generally available for each calendar year early in the following year. Registered users of vanguard.com can also view certain forms through our website. Vanguard (or your intermediary) may also provide you with additional tax-related documentation. For more information, consult our website at vanguard.com or see Contacting Vanguard.
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Annual and Semiannual Reports
We will send (or provide through our website, whichever you prefer) reports about Vanguard Core Bond Fund twice a year, in May and November. These reports include overviews of the financial markets and provide the following specific Fund information:
• Performance assessments and comparisons with industry benchmarks.
• Reports from the advisor.
• Financial statements with listings of Fund holdings.
Portfolio Holdings
Please consult the Fund's Statement of Additional Information or our website for a description of the policies and procedures that govern disclosure of the Fund’s portfolio holdings.
Employer-Sponsored Plans
Your plan administrator or your employee benefits office can provide you with detailed information on how to participate in your plan and how to elect the Fund as an investment option.
• If you have any questions about the Fund or Vanguard, including those about the Fund’s investment objective, strategies, or risks, contact Vanguard Participant Services toll-free at 800-523-1188 or visit our website at vanguard.com.
• If you have questions about your account, contact your plan administrator or the organization that provides recordkeeping services for your plan.
• Be sure to carefully read each topic that pertains to your transactions with Vanguard.
Vanguard reserves the right to change its policies without notice to shareholders.
Transactions
Processing times for your transaction requests may differ among recordkeepers or among transaction and funding types. Your plan’s recordkeeper (which may also be Vanguard) will determine the necessary processing time frames for your transaction requests prior to submission to the Fund. Consult your recordkeeper or plan administrator for more information.
47
If Vanguard is serving as your plan recordkeeper and if your transaction involves one or more investments with an early cut-off time for processing or another trading restriction, your entire transaction will be subject to the restriction when the trade date for your transaction is determined.
48
Contacting Vanguard  
Web
 
Vanguard.com
For the most complete source of Vanguard news
For fund, account, and service information
For most account transactions
For literature requests
24 hours a day, 7 days a week
 
Phone
Vanguard Tele-Account®
800-662-6273
For automated fund and account information
Toll-free, 24 hours a day, 7 days a week
Investor Information 800-662-7447
(Text telephone for people with
hearing impairment at 800-749-7273)
For fund and service information
For literature requests
Client Services 800-662-2739
(Text telephone for people with
hearing impairment at 800-749-7273)
For account information
For most account transactions
Participant Services 800-523-1188
(Text telephone for people with
hearing impairment at 800-749-7273)
For information and services for participants in
employer-sponsored plans
Institutional Division
888-809-8102
For information and services for large institutional
investors
Financial Advisor and Intermediary
Sales Support 800-997-2798
For information and services for financial intermediaries
including financial advisors, broker-dealers, trust
institutions, and insurance companies
Financial Advisory and Intermediary
Trading Support 800-669-0498
For account information and trading support for
financial intermediaries including financial advisors,
broker-dealers, trust institutions, and insurance
companies
Additional Information  
 
Inception
Date
Newspaper
Abbreviation
Vanguard
Fund Number
CUSIP
Number
Core Bond Fund
Investor Shares
3/28/2016
CoreBdInv
1320
922020847
Admiral Shares
3/28/2016
CoreBdAdm
1520
922020839
 
CGS identifiers have been provided by CUSIP Global Services, managed on behalf of the American Bankers Association by Standard & Poor’s Financial Services, LLC, and are not for use or dissemination in a manner that would serve as a substitute for any CUSIP service. The CUSIP Database, ©2021 American Bankers Association. “CUSIP” is a registered trademark of the American Bankers Association.
49
CFA® is a registered trademark owned by CFA Institute.
BLOOMBERG is a trademark and service mark of Bloomberg Finance L.P. BARCLAYS is a trademark and service mark of Barclays Bank Plc, used under license. Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited (BISL) (collectively, Bloomberg), or Bloomberg’s licensors, own all proprietary rights in the Bloomberg Barclays U.S. Aggregate Float Adjusted Index (the Index or Bloomberg Barclays Index).
Neither Barclays Bank Plc, Barclays Capital Inc., or any affiliate (collectively Barclays) or Bloomberg is the issuer or producer of the Core Bond Fund and neither Bloomberg nor Barclays has any responsibilities, obligations or duties to investors in the Core Bond Fund. The Index is licensed for use by The Vanguard Group, Inc. (Vanguard) as the sponsor of the Core Bond Fund. Bloomberg and Barclays’ only relationship with Vanguard in respect of the Index is the licensing of the Index, which is determined, composed and calculated by BISL, or any successor thereto, without regard to the Issuer or the Core Bond Fund or the owners of the Core Bond Fund.
Additionally, Vanguard may for itself execute transaction(s) with Barclays in or relating to the Index in connection with the Core Bond Fund. Investors acquire the Core Bond Fund from Vanguard and investors neither acquire any interest in the Index nor enter into any relationship of any kind whatsoever with Bloomberg or Barclays upon making an investment in the Core Bond Fund. The Core Bond Fund is not sponsored, endorsed, sold or promoted by Bloomberg or Barclays. Neither Bloomberg nor Barclays makes any representation or warranty, express or implied regarding the advisability of investing in the Core Bond Fund or the advisability of investing in securities generally or the ability of the Index to track corresponding or relative market performance. Neither Bloomberg nor Barclays has passed on the legality or suitability of the Core Bond Fund with respect to any person or entity. Neither Bloomberg nor Barclays is responsible for and has not participated in the determination of the timing of, prices at, or quantities of the Core Bond Fund to be issued. Neither Bloomberg nor Barclays has any obligation to take the needs of the Issuer or the owners of the Core Bond Fund or any other third party into consideration in determining, composing or calculating the Index. Neither Bloomberg nor Barclays has any obligation or liability in connection with administration, marketing or trading of the Core Bond Fund.
The licensing agreement between Bloomberg and Barclays is solely for the benefit of Bloomberg and Barclays and not for the benefit of the owners of the Core Bond Fund, investors or other third parties. In addition, the licensing agreement between Vanguard and Bloomberg is solely for the benefit of Vanguard and Bloomberg and not for the benefit of the owners of the Core Bond Fund, investors or other third parties.
NEITHER BLOOMBERG NOR BARCLAYS SHALL HAVE ANY LIABILITY TO THE ISSUER, INVESTORS OR TO OTHER THIRD PARTIES FOR THE QUALITY, ACCURACY AND/OR COMPLETENESS OF THE BLOOMBERG BARCLAYS INDEX OR ANY DATA INCLUDED THEREIN OR FOR INTERRUPTIONS IN THE DELIVERY OF THE BLOOMBERG BARCLAYS INDEX. NEITHER BLOOMBERG NOR BARCLAYS MAKES ANY WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE ISSUER, THE INVESTORS OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE BLOOMBERG BARCLAYS INDEX OR ANY DATA INCLUDED THEREIN. NEITHER BLOOMBERG NOR BARCLAYS MAKES ANY EXPRESS OR IMPLIED WARRANTIES, AND EACH HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE BLOOMBERG BARCLAYS INDEX OR ANY DATA INCLUDED THEREIN. BLOOMBERG RESERVES THE RIGHT TO CHANGE THE METHODS OF CALCULATION OR PUBLICATION, OR TO CEASE THE CALCULATION OR PUBLICATION OF THE BLOOMBERG BARCLAYS INDEX, AND NEITHER BLOOMBERG NOR BARCLAYS SHALL BE LIABLE FOR ANY MISCALCULATION OF OR ANY INCORRECT, DELAYED OR INTERRUPTED PUBLICATION WITH RESPECT TO THE BLOOMBERG BARCLAYS INDEX. NEITHER BLOOMBERG NOR BARCLAYS SHALL BE LIABLE FOR ANY DAMAGES, INCLUDING, WITHOUT LIMITATION, ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES, OR ANY LOST PROFITS AND EVEN IF ADVISED OF THE POSSIBILITY OF SUCH, RESULTING FROM THE USE OF A BLOOMBERG BARCLAYS INDEX OR ANY DATA INCLUDED THEREIN OR WITH RESPECT TO THE CORE BOND FUND.
None of the information supplied by Bloomberg or Barclays and used in this publication may be reproduced in any manner without the prior written permission of both Bloomberg and Barclays Capital, the investment banking division of Barclays Bank Plc. Barclays Bank Plc is registered in England No. 1026167, registered office 1 Churchill Place London E14 5HP.
50
Glossary of Investment Terms
Average Maturity. The average length of time until bonds held by a fund reach maturity and are repaid. In general, the longer the average maturity, the more a fund's share price fluctuates in response to changes in market interest rates. In calculating average maturity, a fund uses a bond’s maturity or, if applicable, an earlier date on which the advisor believes it is likely that a maturity-shortening device (such as a call, put, refunding, prepayment, or redemption provision or an adjustable coupon rate) will cause the bond to be repaid.
Bloomberg Barclays U.S. Aggregate Float Adjusted Index. An index that is the broadest representation of the taxable U.S. bond market, including most U.S. Treasury, agency, corporate, mortgage-backed, asset-backed, and international dollar-denominated issues, all with investment-grade ratings and maturities of 1 year or more. This Index weights its constituent securities based on the value of the constituent securities that are available for public trading, rather than the value of all constituent securities.
Bond. A debt security (IOU) issued by a corporation, a government, or a government agency in exchange for the money the bondholder lends it. In most instances, the issuer agrees to pay back the loan by a specific date and generally to make regular interest payments until that date.
Capital Gains Distributions. Payments to mutual fund shareholders of gains realized on securities that a fund has sold at a profit, minus any realized losses.
Coupon Rate. The interest rate paid by the issuer of a debt security until its maturity. It is expressed as an annual percentage of the face value of the security.
Dividend Distributions. Payments to mutual fund shareholders of income from interest or dividends generated by a fund's investments.
Expense Ratio. A fund's total annual operating expenses expressed as a percentage of the fund's average net assets. The expense ratio includes management and administrative expenses, but it does not include the transaction costs of buying and selling portfolio securities.
Face Value. The amount to be paid at a bond’s maturity; also known as the par value or principal.
Fixed Income Security. An investment, such as a bond, representing a debt that must be repaid by a specified date, and on which the borrower may pay a fixed, variable, or floating rate of interest.
51
Inception Date. The date on which the assets of a fund (or one of its share classes) are first invested in accordance with the fund's investment objective. For funds with a subscription period, the inception date is the day after that period ends. Investment performance is generally measured from the inception date.
Investment-Grade Bond. A debt security whose credit quality is considered by independent bond rating agencies, or through independent analysis conducted by a fund's advisor, to be sufficient to ensure timely payment of principal and interest under current economic circumstances. Debt securities rated in one of the four highest rating categories are considered investment-grade. Other debt securities may be considered by an advisor to be investment-grade.
Joint Committed Credit Facility. The Fund participates, along with other funds managed by Vanguard, in a committed credit facility provided by a syndicate of lenders pursuant to a credit agreement that may be renewed annually; each Vanguard fund is individually liable for its borrowings, if any, under the credit facility. The amount and terms of the committed credit facility are subject to approval by the Fund's board of trustees and renegotiation with the lender syndicate on an annual basis.
Mutual Fund. An investment company that pools the money of many people and invests it in a variety of securities in an effort to achieve a specific objective over time.
New York Stock Exchange (NYSE). A stock exchange based in New York City that is open for regular trading on business days, Monday through Friday, from 9:30 a.m. to 4 p.m., Eastern time.
Principal. The face value of a debt instrument or the amount of money put into an investment.
Securities. Stocks, bonds, money market instruments, and other investments.
Total Return. A percentage change, over a specified time period, in a mutual fund’s net asset value, assuming the reinvestment of all distributions of dividends and capital gains.
Volatility. The fluctuations in value of a mutual fund or other security. The greater a fund's volatility, the wider the fluctuations in its returns.
52
Yield. Income (interest or dividends) earned by an investment, expressed as a percentage of the investment’s price.
   
Connect with Vanguard® > vanguard.com
For More Information
If you would like more information about Vanguard Core Bond Fund, the following documents are available free upon request:
Annual/Semiannual Reports to Shareholders
Additional information about the Fund's investments is available in the Fund's annual and semiannual reports to shareholders. In the annual report, you will find a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.
Statement of Additional Information (SAI)
The SAI provides more detailed information about the Fund and is incorporated by reference into (and thus legally a part of) this prospectus.
To receive a free copy of the latest annual or semiannual report or the SAI, or to request additional information about the Fund or other Vanguard funds, please visit vanguard.com or contact us as follows:
If you are an individual investor:
Telephone: 800-662-7447; Text telephone for people with hearing impairment: 800-749-7273
If you are a participant in an employer-sponsored plan:
Telephone: 800-523-1188; Text telephone for people
with hearing impairment: 800-749-7273
If you are a current Vanguard shareholder and would like information about your account, account transactions, and/or account statements, please call:
Client Services Department
Telephone: 800-662-2739; Text telephone for people with hearing impairment: 800-749-7273
Information Provided by the Securities and Exchange Commission (SEC)
Reports and other information about the Fund are available in the EDGAR database on the SEC’s website at www.sec.gov, or you can receive copies of this information, for a fee, by electronic request at the following email address: publicinfo@sec.gov.
Fund's Investment Company Act file number: 811-05628
© 2021 The Vanguard Group, Inc. All rights reserved.Vanguard Marketing Corporation, Distributor.P 1320 012021
 
Vanguard Emerging Markets Bond Fund
Prospectus
 January 31, 2021
Investor Shares & Admiral™ Shares
Vanguard Emerging Markets Bond Fund Investor Shares (VEMBX)
Vanguard Emerging Markets Bond Fund Admiral Shares (VEGBX)
 See the inside front cover for important information about access to your fund’s annual and semiannual shareholder reports.
 This prospectus contains financial data for the Fund through the fiscal year ended September 30, 2020.
  The Securities and Exchange Commission (SEC) has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is
a criminal offense.
Important information about access to shareholder reports
Beginning on January 1, 2021, as permitted by regulations adopted by the SEC, paper copies of your fund’s annual and semiannual shareholder reports will no longer be sent to you by mail, unless you specifically request them. Instead, you will be notified by mail each time a report is posted on the website and will be provided with a link to access the report.
If you have already elected to receive shareholder reports electronically, you will not be affected by this change and do not need to take any action. You may elect to receive shareholder reports and other communications from the fund electronically by contacting your financial intermediary (such as a broker-dealer or bank) or, if you invest directly with the fund, by calling Vanguard at one of the phone numbers on the back cover of this prospectus or by logging on to vanguard.com.
You may elect to receive paper copies of all future shareholder reports free of charge. If you invest through a financial intermediary, you can contact the intermediary to request that you continue to receive paper copies. If you invest directly with the fund, you can call Vanguard at one of the phone numbers on the back cover of this prospectus or log on to vanguard.com. Your election to receive paper copies will apply to all the funds you hold through an intermediary or directly with Vanguard.
Contents
 
Fund Summary
Investment Objective
The Fund seeks to provide total return while generating a moderate level of current income.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy, hold, and sell Investor Shares or Admiral Shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
Shareholder Fees
(Fees paid directly from your investment)  
 
Investor Shares
Admiral Shares
Sales Charge (Load) Imposed on Purchases
None
None
Purchase Fee
None
None
Sales Charge (Load) Imposed on Reinvested Dividends
None
None
Redemption Fee
None
None
Account Service Fee Per Year
(for certain fund account balances below $10,000)
$20
$20
Annual Fund Operating Expenses
(Expenses that you pay each year as a percentage of the value of your investment)  
 
Investor Shares
Admiral Shares
Management Fees
0.52%
0.43%
12b-1 Distribution Fee
None
None
Other Expenses
0.08%
0.02%
Total Annual Fund Operating Expenses
0.60%
0.45%
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Examples
The following examples are intended to help you compare the cost of investing in the Fund's Investor Shares or Admiral Shares with the cost of investing in other mutual funds. They illustrate the hypothetical expenses that you would incur over various periods if you were to invest $10,000 in the Fund's shares. These examples assume that the shares provide a return of 5% each year and that total annual fund operating expenses remain as stated in the preceding table. You would incur these hypothetical expenses whether or not you were to redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:  
 
1 Year
3 Years
5 Years
10 Years
Investor Shares
$61
$192
$335
$750
Admiral Shares
$46
$144
$252
$567
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in more taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the previous expense examples, reduce the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 266% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests in fixed income securities of various maturities, yields, and qualities. Under normal circumstances, the Fund will invest at least 80% of its assets in fixed income securities of issuers that are tied economically to emerging market countries. The Fund seeks to have a majority of its assets denominated in or hedged back to the U.S. dollar but has the ability to invest in bonds denominated in a local currency on an unhedged basis. Emerging market bonds include sovereign debt securities, which include fixed income securities that are issued or guaranteed by foreign governments or their agencies, authorities, political subdivisions or instrumentalities, or other supranational agencies, as well as debt securities issued or guaranteed by foreign corporations and foreign financial institutions. Emerging market countries include countries whose economies or bond markets are less developed, which includes most countries except for Australia, Canada, Japan, New Zealand, the United States, the United Kingdom, and most European Monetary Union countries.
 
The Fund may invest in emerging market bonds of any maturity or quality. The
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Fund may invest in bonds that have lower-range quality ratings (including those in default), which are those rated the equivalent of Ba1 or lower by Moody's Investors Service, Inc., or another independent rating agency, or if unrated, are determined to be of comparable quality by the Fund's advisor. These are commonly referred to as “junk bonds.”
 
The Fund is considered nondiversified and may invest a greater portion of its assets in fewer issuers. The Fund may invest a large percentage of its assets in issuers of a single country, a small number of countries, or a geographic region.
 
Although the Fund may use derivatives for any investment purpose, it expects to use derivatives predominantly to adjust interest rate or currency exposure; to adjust exposure to a particular market, segment of the market, or security; or as a substitute to direct investment.
Principal Risks
An investment in the Fund could lose money over short or long periods of time. You should expect the Fund's share price and total return to fluctuate within a wide range. The Fund is subject to the following risks, which could affect the Fund's performance, and the level of risk may vary based on market conditions:
•  Country/regional risk , which is the chance that world events—such as political upheaval, financial troubles, or natural disasters—will adversely affect the value and/or liquidity of securities issued by foreign governments, government agencies, government-owned corporations, and foreign companies. Because the Fund may invest a large portion of its assets in bonds of issuers located in any one country or region, the Fund's performance may be hurt disproportionately by the poor performance of its investments in that area. Country/regional risk is especially high in emerging market countries.
•  Emerging markets risk , which is the chance that the bonds of governments, government agencies, government-owned corporations, and foreign companies located in emerging market countries will be substantially more volatile, and substantially less liquid, than the bonds of governments, government agencies, government-owned corporations, and foreign companies located in more developed foreign markets because, among other factors, emerging market countries can have greater custodial and operational risks; less developed legal, tax, regulatory, and accounting systems; and greater political, social, and economic instability than developed markets. Emerging markets risk is especially high for the Fund.
•  Currency risk , which is the chance that the value of a foreign investment, measured in U.S. dollars, will decrease because of unfavorable changes in currency exchange rates. Currency risk is especially high in emerging markets.
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•  Nondiversification risk , which is the chance that the Fund’s performance may be hurt disproportionately by the poor performance of bonds issued by just a few issuers or even a single issuer. The Fund is considered nondiversified, which means that it may invest a greater percentage of its assets in bonds issued by a small number of issuers as compared with diversified mutual funds.
•  Credit risk , which is the chance that a bond issuer will fail to pay interest or principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline. Because the Fund invests in both investment-grade and below-investment-grade bonds (also known as high-yield or junk bonds), credit risk should be high for the Fund.
•  Liquidity risk , which is the chance that the Fund may not be able to sell a security in a timely manner at a desired price.
•  Derivatives risk, which is the chance that the use of derivatives—such as futures contracts, foreign currency exchange forward contracts, swap agreements, and options—can lead to losses because of adverse movements in the price or value of the underlying security, asset, index, or reference rate. The use of derivatives presents risks different from, and possibly greater than, the risks associated with investing directly in the underlying securities or assets. Also, a liquid market may not always exist for the Fund's derivative positions at times when the Fund might wish to terminate or sell. The use of a derivative subjects the investor to the risk of nonperformance by the counterparty (i.e., counterparty risk), potentially resulting in delayed or partial payment or even nonpayment of amounts due under the derivative contract.
•  Interest rate risk , which is the chance that bond prices overall will decline because of rising interest rates. Interest rate risk should be moderate for the Fund based on expected sensitivity of the portfolio to interest rate movement.
•  Income risk , which is the chance that the Fund’s income will decline because of falling interest rates. Income risk should be moderate for the Fund, so investors should expect the Fund's monthly income to fluctuate accordingly.
•  Call risk , which is the chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupon rates or interest rates before their maturity dates. The Fund would then lose any price appreciation above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the Fund’s income. Such redemptions and subsequent reinvestments would also increase the Fund’s portfolio turnover rate.
•  Manager risk , which is the chance that poor security selection will cause the Fund to underperform relevant benchmarks or other funds with a similar investment objective.
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A Note on Risk: Many investors invest in bonds and bond funds in an attempt to lower the overall risk of their portfolios. This strategy makes sense when the bonds owned are U.S. bonds because U.S. bond returns typically are not highly correlated with, and are far less volatile than, stock returns. The strategy is less likely to be effective, however, when the bonds owned are emerging market bonds. Returns of emerging market bonds, even dollar-denominated bonds like those owned by the Fund, can be quite volatile. The correlation between emerging market bond and stock returns (both U.S. and foreign) is often higher than the correlation between U.S. bond and stock returns. Consequently, if your goal is to lower risk and volatility, this Fund may not be an appropriate investment.
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Annual Total Returns
The following bar chart and table are intended to help you understand the risks of investing in the Fund. The bar chart shows how the performance of the Fund's Investor Shares has varied from one calendar year to another over the periods shown. The table shows how the average annual total returns of the share classes presented compare with those of a relevant market index, which has investment characteristics similar to those of the Fund. Keep in mind that the Fund's past performance (before and after taxes) does not indicate how the Fund will perform in the future. Updated performance information is available on our website at vanguard.com/performance or by calling Vanguard toll-free at 800-662-7447.
5
Annual Total Returns — Vanguard Emerging Markets Bond Fund Investor Shares
 
During the periods shown in the bar chart, the highest and lowest returns for a calendar quarter were:  
 
Total Return
Quarter
Highest
16.13%
June 30, 2020
Lowest
-10.30%
March 31, 2020
Average Annual Total Returns for Periods Ended December 31, 2020  
 
1 Year
Since
Inception
(Mar. 10,
2016)
Vanguard Emerging Markets Bond Fund Investor Shares
 
 
Return Before Taxes
14.98%
11.15%
Return After Taxes on Distributions
12.80
8.24
Return After Taxes on Distributions and Sale of Fund Shares
8.79
7.30
JP Morgan EMBI Global Diversified
(reflects no deduction for fees, expenses, or taxes)
5.26%
6.70%
 
 
1 Year
Since
Inception
(Dec. 6,
2017)
Vanguard Emerging Markets Bond Fund Admiral Shares
 
 
Return Before Taxes
15.17%
10.37%
JP Morgan EMBI Global Diversified
(reflects no deduction for fees, expenses, or taxes)
5.26%
5.06%
Actual after-tax returns depend on your tax situation and may differ from those shown in the preceding table. When after-tax returns are calculated, it is assumed that the shareholder was in the highest individual federal marginal income tax bracket at the time of each distribution of income or capital gains or upon redemption. State and local income taxes are not reflected in the calculations. Please note that after-tax returns are shown only for the Investor
6
Shares and may differ for each share class. After-tax returns are not relevant for a shareholder who holds fund shares in a tax-deferred account, such as an individual retirement account or a 401(k) plan. Also, figures captioned Return After Taxes on Distributions and Sale of Fund Shares may be higher than other figures for the same period if a capital loss occurs upon redemption and results in an assumed tax deduction for the shareholder.
Investment Advisor
The Vanguard Group, Inc. (Vanguard)
Portfolio Managers
Daniel Shaykevich, Principal of Vanguard. He has managed the Fund since its inception in 2016 (co-managed since 2019).
Mauro Favini, Portfolio Manager at Vanguard. He has co-managed the Fund since 2019.
Purchase and Sale of Fund Shares
You may purchase or redeem shares online through our website (vanguard.com), by mail (The Vanguard Group, P.O. Box 1110, Valley Forge, PA 19482-1110), or by telephone (800-662-2739). The minimum investment amount required to open and maintain a Fund account for Investor Shares or Admiral Shares is $3,000 or $50,000, respectively. The minimum investment amount required to add to an existing Fund account is generally $1. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special eligibility rules that may apply to them regarding Admiral Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility. If you are investing through an employer-sponsored retirement or savings plan, your plan administrator or your benefits office can provide you with detailed information on how you can invest through your plan.
Tax Information
The Fund’s distributions may be taxable as ordinary income or capital gain. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply.
Payments to Financial Intermediaries
The Fund and its investment advisor do not pay financial intermediaries for sales of Fund shares.
7
More on the Fund
This prospectus describes the principal risks you would face as a Fund shareholder. It is important to keep in mind one of the main principles of investing: generally, the higher the risk of losing money, the higher the potential reward. The reverse, also, is generally true: the lower the risk, the lower the potential reward. As you consider an investment in any mutual fund, you should take into account your personal tolerance for fluctuations in the securities markets. Look for this     symbol throughout the prospectus. It is used to mark detailed information about the more significant risks that you would confront as a Fund shareholder. To highlight terms and concepts important to mutual fund investors, we have provided Plain Talk® explanations along the way. Reading the prospectus will help you decide whether the Fund is the right investment for you. We suggest that you keep this prospectus for future reference.
Share Class Overview
The Fund offers two separate classes of shares: Investor Shares and Admiral Shares.
Both share classes offered by the Fund have the same investment objective, strategies, and policies. However, different share classes have different expenses; as a result, their investment returns will differ.  
Plain Talk About Fund Expenses
All mutual funds have operating expenses. These expenses, which are
deducted from a fund’s gross income, are expressed as a percentage of the
net assets of the fund. Assuming that operating expenses remain as stated
in the Fees and Expenses section, Vanguard Emerging Markets Bond Fund’s
expense ratios would be as follows: for Investor Shares, 0.60%, or $6.00 per
$1,000 of average net assets; for Admiral Shares, 0.45%, or $4.50 per
$1,000 of average net assets. The average expense ratio for emerging
markets hard currency debt funds in 2019 was 1.05%, or $10.50 per $1,000
of average net assets (derived from data provided by Lipper, a Thomson
Reuters Company, which reports on the mutual fund industry).
 
8
Plain Talk About Costs of Investing
Costs are an important consideration in choosing a mutual fund. That is
because you, as a shareholder, pay a proportionate share of the costs of
operating a fund and any transaction costs incurred when the fund buys or
sells securities. These costs can erode a substantial portion of the gross
income or the capital appreciation a fund achieves. Even seemingly small
differences in expenses can, over time, have a dramatic effect on a
fund’s performance.
The following sections explain the principal investment strategies and policies that the Fund uses in pursuit of its objective. The Fund's board of trustees, which oversees the Fund's management, may change investment strategies or policies in the interest of shareholders without a shareholder vote, unless those strategies or policies are designated as fundamental. Note that the Fund’s investment objective is not fundamental and may be changed without a shareholder vote. The Fund may change its 80% policy only upon 60 days‘ notice to shareholders.
Market Exposure
The Fund invests mainly in bonds of emerging market countries. As a result, it is subject to certain risks.
   
The Fund is subject to interest rate risk, which is the chance that bond prices overall will decline because of rising interest rates. Interest rate risk should be moderate for the Fund based on expected sensitivity of the portfolio to interest rate movement.
Although bonds are often thought to be less risky than stocks, there have been periods when bond prices have fallen significantly because of rising interest rates. For instance, prices of long-term U.S. bonds fell by almost 48% between December 1976 and September 1981. Note that over any particular time period, the prices of foreign bonds and U.S. bonds may increase or decrease by different amounts and, in some cases, may move in opposite directions.
To illustrate the relationship between bond prices and interest rates, the following table shows the effect of a 1% and a 2% change (both up and down) in interest rates on the values of three noncallable bonds (i.e., bonds that cannot be redeemed by the issuer) of different maturities, each with a face value of $1,000.
9
How Interest Rate Changes Affect the Value of a $1,000 Bond1  
Type of Bond (Maturity)
After a 1%
Increase
After a 1%
Decrease
After a 2%
Increase
After a 2%
Decrease
Short-Term (2.5 years)
$ 977
$ 1,024
$ 954
$ 1,049
Intermediate-Term (10 years)
922
1,086
851
1,180
Long-Term (20 years)
874
1,150
769
1,328
1 Assuming a 4% coupon rate.
These figures are for illustration only; you should not regard them as an indication of future performance of foreign bonds generally or the Fund in particular.  
Plain Talk About Bonds and Interest Rates
As a rule, when interest rates rise, bond prices fall. The opposite is also true:
Bond prices go up when interest rates fall. Why do bond prices and interest
rates move in opposite directions? Let’s assume that you hold a bond
offering a 4% yield. A year later, interest rates are on the rise and bonds of
comparable quality and maturity are offered with a 5% yield. With
higher-yielding bonds available, you would have trouble selling your 4% bond
for the price you paid—you would probably have to lower your asking price.
On the other hand, if interest rates were falling and 3% bonds were being
offered, you should be able to sell your 4% bond for more than you paid.
Changes in interest rates can affect bond income as well as bond prices.
   
The Fund is subject to income risk, which is the chance that the Fund’s income will decline because of falling interest rates. A fund’s income declines when interest rates fall because the fund then must invest new cash flow and cash from maturing bonds in lower-yielding bonds. Income risk should be moderate for the Fund, so investors should expect the Fund‘s monthly income to fluctuate accordingly.  
10
Plain Talk About Bond Maturities
A bond is issued with a specific maturity date—the date when the issuer
must pay back the bond’s principal (face value). Bond maturities range from
less than 1 year to more than 30 years. Typically, the longer a bond’s maturity,
the more price risk you, as a bond investor, will face as interest rates
rise—but also the higher the potential yield you could receive. Longer-term
bonds are more suitable for investors willing to take a greater risk of price
fluctuations to get higher and more stable interest income. Shorter-term
bond investors should be willing to accept lower yields and greater income
variability in return for less fluctuation in the value of their investment. The
stated maturity of a bond may differ from the effective maturity of a bond,
which takes into consideration that an action such as a call or refunding may
cause bonds to be repaid before their stated maturity dates.
Although falling interest rates tend to strengthen bond prices, they can cause other problems for bond fund investors—bond calls and prepayments.
   
The Fund is subject to call risk, which is the chance that during periods of low or falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupon rates or interest rates before their maturity dates. The Fund would then lose any price appreciation above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the Fund’s income. Such redemptions and subsequent reinvestments would also increase the Fund’s portfolio turnover rate.
   
The Fund is subject to credit risk, which is the chance that a bond issuer will fail to pay interest or principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline. Because the Fund invests in both investment-grade and below-investment-grade bonds (also known as high-yield or junk bonds), credit risk should be high for the Fund.  
11
Plain Talk About Credit Quality
A bond’s credit quality rating is an assessment of the issuer’s ability to pay
interest on the bond and, ultimately, to repay the principal. The lower the
credit quality, the greater the perceived chance that the bond issuer will
default, or fail to meet its payment obligations. All things being equal, the
lower a bond’s credit quality, the higher its yield should be to compensate
investors for assuming additional risk.
   
The Fund is subject to emerging markets risk, which is the chance that the bonds of governments, government agencies, government-owned corporations, and foreign companies located in emerging market countries will be substantially more volatile, and substantially less liquid, than bonds of governments, government agencies, government-owned corporations, and foreign companies located in more developed foreign markets because, among other factors, emerging market countries can have greater custodial and operational risks; less developed legal, tax, regulatory, and accounting systems; and greater political, social, and economic instability than developed markets. Emerging markets risk is especially high for the Fund.
   
The Fund is subject to currency risk, which is the chance that the value of a foreign investment, measured in U.S. dollars, will decrease because of unfavorable changes in currency exchange rates. Currency risk is especially high in emerging markets.
   
The Fund is subject to country/regional risk, which is the chance that world events—such as political upheaval, financial troubles, or natural disasters—will adversely affect the value and/or liquidity of securities issued by foreign governments, government agencies, government-owned corporations, and foreign companies. Because the Fund may invest a large portion of its assets in bonds of issuers located in any one country or region, the Fund's performance may be hurt disproportionately by the poor performance of its investments in that area. Country/regional risk is especially high in emerging market countries.  
12
Plain Talk About International Investing
U.S. investors who invest in foreign securities will encounter risks not
typically associated with U.S. companies because foreign stock and bond
markets operate differently from the U.S. markets. For instance, foreign
companies and governments may not be subject to the same or similar
accounting, auditing, legal, tax, and financial reporting standards and
practices as U.S. companies and the U.S. government, and their stocks and
bonds may not be as liquid as those of similar U.S. entities. In addition,
foreign stock exchanges, brokers, companies, bond markets, and dealers
may be subject to less government supervision and regulation than their
counterparts in the United States. These factors, among others, could
negatively affect the returns U.S. investors receive from foreign investments.
   
The Fund is subject to liquidity risk, which is the chance that the Fund may not be able to sell a security in a timely manner at a desired price.
   
The Fund is subject to nondiversification risk, which is the chance that the Fund's performance may be hurt disproportionately by the poor performance of bonds issued by just a few issuers or even a single issuer. The Fund is considered nondiversified, which means that it may invest a significant percentage of its assets in bonds issued by a small number of issuers as compared with diversified mutual funds.
Market disruptions can adversely affect local and global markets as well as normal market conditions and operations. Any such disruptions could have an adverse impact on the value of the Fund's investments and Fund performance.
Security Selection
Vanguard’s actively managed fixed income funds follow a portfolio manager-driven process that uses both top-down and bottom-up inputs. Portfolio managers are responsible for portfolio construction and strategy, leveraging the top-down insights of the Senior Investment Committee, the bottom-up insights of the sector teams, and the relative value views across fixed income sectors. Risk optimization measures are present throughout the investment process, and the Senior Investment Committee provides governance and oversight for the entire lineup.
Types of bonds. The Fund primarily invests in bonds issued by governments and government-related issuers in emerging market countries. The Fund also invests in corporate bonds in emerging market countries. These bonds predominantly
13
will either be denominated in or hedged back to the U.S. dollar. The Fund has the ability to invest in bonds that are denominated in the local currency or other currencies.
A “dollar-denominated” bond is a bond that is bought and sold in U.S. dollars. Because the dollar-denominated bonds are priced in dollars, rather than in the currency of the issuer’s country, a U.S. investor is not exposed to currency risk; rather, the issuer assumes this risk, usually to attract U.S. investors. The issuer’s assumption of currency risk can affect the credit risk of its bonds because the issuer would have a large burden if its local currency weakens significantly compared with the U.S. dollar. If an issuer’s local currency declines relative to the U.S. dollar, it could negatively affect perceptions of the issuer’s ability to make payments, which could cause the issuer’s bonds to decline in value. The issuer’s vulnerability to currency risk is often reflected in their credit rating.
Emerging market countries include countries whose economies or bond markets are less developed. The Fund’s advisor may consider emerging market countries to be those included in the Fund’s benchmark; countries classified as emerging economies by the International Monetary Fund; and other countries or markets with similar emerging characteristics. The advisor will consider, among other things, a country’s political and economic stability and the development of its financial and capital markets when determining what constitutes an emerging market country.
   
The Fund is subject to manager risk, which is the chance that poor security selection will cause the Fund to underperform relevant benchmarks or other funds with a similar investment objective.
Other Investment Policies and Risks
In addition to investing in bonds of emerging market countries, the Fund may make other kinds of investments to achieve its objective.
The Fund may invest up to 15% of its net assets in illiquid securities. Illiquid securities are investments that the Fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. Restricted securities are a special type of illiquid security; these securities have not been publicly issued and legally can be resold only to qualified buyers. From time to time, the board of trustees may determine that particular restricted securities are not illiquid, and those securities may then be purchased by the Fund without limit.
14
The Fund may enter into foreign currency exchange forward contracts, which are a type of derivative. A foreign currency exchange forward contract is an agreement to buy or sell a currency at a specific price on a specific date, usually 3 months or less in the future. In other words, the contract guarantees an exchange rate on a given date. Advisors of funds that invest in foreign securities can use these contracts to guard against unfavorable changes in currency exchange rates. These contracts, however, would not prevent the Fund's securities from falling in value as a result of risks other than unfavorable currency exchange movements.
   
The Fund is subject to derivatives risk, which is the chance that the use of derivatives—such as futures contracts, foreign currency exchange forward contracts, swap agreements, and options—can lead to losses because of adverse movements in the price or value of the underlying security, asset, index, or reference rate. The use of derivatives presents risks different from, and possibly greater than, the risks associated with investing directly in the underlying securities or assets. Also, a liquid market may not always exist for the Fund's derivative positions at times when the Fund might wish to terminate or sell. The use of a derivative subjects the investor to the risk of nonperformance by the counterparty (i.e., counterparty risk), potentially resulting in delayed or partial payment or even nonpayment of amounts due under the derivative contract.
Generally speaking, a derivative is a financial contract whose value is based on the value of a financial asset (such as a stock, a bond, or a currency), a physical asset (such as gold, oil, or wheat), a market index, or a reference rate. The Fund may invest in derivatives only if the expected risks and rewards of the derivatives are consistent with the investment objective, policies, strategies, and risks of the Fund as disclosed in this prospectus. In particular, derivatives will be used only when they may help the advisor to accomplish one or more of the following:
• Invest in eligible asset classes with greater efficiency and lower cost than is possible through direct investment.
• Add value when these instruments are attractively priced.
• Adjust the overall credit risk of the portfolio or actively overweight or underweight credit risk to specific bond issuers.
• Hedge or add foreign currency exposure.
• Hedge or add foreign interest rate exposure.
The Fund's derivative investments may include fixed income futures contracts; fixed income options, including options on swaps; currency swaps; foreign currency exchange forwards; interest rate swaps; total return swaps; credit
15
default swaps; or other derivatives. Losses (or gains) involving futures contracts can sometimes be substantial—in part because a relatively small price movement in a futures contract may result in an immediate and substantial loss (or gain) for a fund. Similar risks exist for other types of derivatives.  
Plain Talk About Derivatives
Derivatives can take many forms. Some forms of derivatives—such as
exchange-traded futures and options on securities, commodities, or
indexes—have been trading on regulated exchanges for decades. These
types of derivatives are standardized contracts that can easily be bought and
sold and whose market values are determined and published daily. On the
other hand, non-exchange-traded derivatives—such as certain swap
agreements and foreign currency exchange forward contracts—tend to be
more specialized or complex and may be more difficult to accurately value.
Cash Management
The Fund's daily cash balance may be invested in Vanguard Market Liquidity Fund and/or Vanguard Municipal Cash Management Fund (each, a CMT Fund), which are low-cost money market funds. When investing in a CMT Fund, the Fund bears its proportionate share of the expenses of the CMT Fund in which it invests. Vanguard receives no additional revenue from Fund assets invested in a CMT Fund.
Methods Used to Meet Redemption Requests
Under normal circumstances, the Fund typically expects to meet redemptions with positive cash flows. When this is not an option, the Fund seeks to maintain its risk exposure by selling a cross section of the Fund’s holdings to meet redemptions, while also factoring in transaction costs. Additionally, the Fund may work with larger clients to implement their redemptions in a manner that is least disruptive to the portfolio; see “Potentially disruptive redemptions” under Redeeming Shares in the Investing With Vanguard section.
Under certain circumstances, including under stressed market conditions, there are additional tools that the Fund may use in order to meet redemptions, including advancing the settlement of market trades with counterparties to match investor redemption payments or delaying settlement of an investor’s transaction to match trade settlement within regulatory requirements. The Fund may also suspend payment of redemption proceeds for up to seven days; see “Emergency circumstances” under Redeeming Shares in the Investing With Vanguard section. Additionally under these unusual circumstances, the Fund
16
may borrow money (subject to certain regulatory conditions and if available under board-approved procedures) through an interfund lending facility; through a bank line-of-credit, including a joint committed credit facility; or through an uncommitted line-of-credit from Vanguard in order to meet redemption requests.
Temporary Investment Measures
The Fund may temporarily depart from its normal investment policies and strategies when the advisor believes that doing so is in the Fund's best interest, so long as the strategy or policy employed is consistent with the Fund's investment objective. For instance, the Fund may invest beyond its normal limits in derivatives or exchange-traded funds that are consistent with the Fund's investment objective when those instruments are more favorably priced or provide needed liquidity, as might be the case when the Fund receives large cash flows that it cannot prudently invest immediately.
In addition, the Fund may take temporary defensive positions that are inconsistent with its normal investment policies and strategies—for instance, by allocating substantial assets to cash equivalent investments or other less volatile instruments— in response to adverse or unusual market, economic, political, or other conditions. In doing so, the Fund may succeed in avoiding losses but may otherwise fail to achieve its investment objective.
Frequent Trading or Market-Timing
Background. Some investors try to profit from strategies involving frequent trading of mutual fund shares, such as market-timing. For funds holding foreign securities, investors may try to take advantage of an anticipated difference between the price of the fund’s shares and price movements in overseas markets, a practice also known as time-zone arbitrage. Investors also may try to engage in frequent trading of funds holding investments such as small-cap stocks and high-yield bonds. As money is shifted into and out of a fund by a shareholder engaging in frequent trading, the fund incurs costs for buying and selling securities, resulting in increased brokerage and administrative costs. These costs are borne by all fund shareholders, including the long-term investors who do not generate the costs. In addition, frequent trading may interfere with an advisor’s ability to efficiently manage the fund.
Policies to address frequent trading. The Vanguard funds (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) do not knowingly accommodate frequent trading. The board of trustees of each Vanguard fund (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) has adopted policies and procedures reasonably designed to detect and discourage frequent trading and, in some
17
cases, to compensate the fund for the costs associated with it. These policies and procedures do not apply to ETF Shares because frequent trading in ETF Shares generally does not disrupt portfolio management or otherwise harm fund shareholders. Although there is no assurance that Vanguard will be able to detect or prevent frequent trading or market-timing in all circumstances, the following policies have been adopted to address these issues:
• Each Vanguard fund reserves the right to reject any purchase request—including exchanges from other Vanguard funds—without notice and regardless of size. For example, a purchase request could be rejected because the investor has a history of frequent trading or if Vanguard determines that such purchase may negatively affect a fund’s operation or performance.
• Each Vanguard fund (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) generally prohibits, except as otherwise noted in the Investing With Vanguard section, an investor’s purchases or exchanges into a fund account for 30 calendar days after the investor has redeemed or exchanged out of that fund account.
• Certain Vanguard funds charge shareholders purchase and/or redemption fees on transactions.
See the Investing With Vanguard section of this prospectus for further details on Vanguard’s transaction policies.
Each Vanguard fund (other than retail and government money market funds), in determining its net asset value, will use fair-value pricing when appropriate, as described in the Share Price section. Fair-value pricing may reduce or eliminate the profitability of certain frequent-trading strategies.
Do not invest with Vanguard if you are a market-timer.
Turnover Rate
Although the Fund generally seeks to invest for the long term, it may sell securities regardless of how long they have been held. The Financial Highlights section of this prospectus shows historical turnover rates for the Fund. A turnover rate of 100%, for example, would mean that the Fund had sold and replaced securities valued at 100% of its net assets within a one-year period. Shorter-term bonds will mature or be sold—and need to be replaced—more frequently than longer-term bonds. As a result, shorter-term bond funds tend to have higher turnover rates than longer-term bond funds. In general, the greater the turnover rate, the greater the impact transaction costs will have on a fund’s return. Also, funds with high turnover rates may be more likely to generate
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capital gains, including short-term capital gains, that must be distributed to shareholders and will be taxable to shareholders investing through a taxable account.
The Fund and Vanguard
The Fund is a member of The Vanguard Group, a family of over 200 funds. All of the funds that are members of The Vanguard Group (other than funds of funds) share in the expenses associated with administrative services and business operations, such as personnel, office space, and equipment.
Vanguard Marketing Corporation provides marketing services to the funds. Although fund shareholders do not pay sales commissions or 12b-1 distribution fees, each fund (other than a fund of funds) or each share class of a fund (in the case of a fund with multiple share classes) pays its allocated share of the Vanguard funds’ marketing costs.  
Plain Talk About Vanguard’s Unique Corporate Structure
The Vanguard Group is owned jointly by the funds it oversees and thus
indirectly by the shareholders in those funds. Most other mutual funds are
operated by management companies that are owned by third parties—either
public or private stockholders—and not by the funds they serve.
Investment Advisor
The Vanguard Group, Inc., P.O. Box 2600, Valley Forge, PA 19482, which began operations in 1975, serves as advisor to the Fund through its Fixed Income Group. As of September 30, 2020, Vanguard served as advisor for approximately $5.2 trillion in assets. Vanguard provides investment advisory services to the Fund pursuant to the Funds’ Service Agreement and subject to the supervision and oversight of the trustees and officers of the Fund.
For the fiscal year ended September 30, 2020, the advisory expenses represented an effective annual rate of 0.01% of the Fund’s average net assets.
Although the Fund is managed solely by Vanguard, the Fund reserves the right to utilize a multimanager approach in the future. Under the terms of an SEC exemption, the Fund's board of trustees may, without prior approval from shareholders, change the terms of an advisory agreement with a third-party
19
investment advisor or hire a new third-party investment advisor—either as a replacement for an existing advisor or as an additional advisor. Any significant change in the Fund’s advisory arrangements will be communicated to shareholders in writing. As the Fund's sponsor and overall manager, Vanguard may provide investment advisory services to the Fund at any time. Vanguard may also recommend to the board of trustees that an advisor be hired, terminated, or replaced or that the terms of an existing advisory agreement be revised. The Fund has filed an application seeking a similar SEC exemption with respect to investment advisors that are wholly owned subsidiaries of Vanguard. If the exemption is granted, the Fund may rely on the new SEC relief.
For a discussion of why the board of trustees approved the Fund's investment advisory arrangement, see the most recent semiannual report to shareholders covering the fiscal period ended March 31.
The managers primarily responsible for the day-to-day management of the Fund are:
Daniel Shaykevich, Principal of Vanguard. He has worked in investment management since 2001, has managed investment portfolios since 2004, has been with Vanguard since 2013, and has managed the Fund since its inception in 2016 (co-managed since 2019). Education: B.S., Carnegie Mellon University.
Mauro Favini, Portfolio Manager at Vanguard. He has worked in investment management since 2008, has managed investment portfolios since 2015, has been with Vanguard since 2017, and has co-managed the Fund since 2019. Education: B.A., City University of New York, Hunter College.
The Fund's Statement of Additional Information provides information about each portfolio manager’s compensation, other accounts under management, and ownership of shares of the Fund.
Dividends, Capital Gains, and Taxes
Fund Distributions
The Fund distributes to shareholders virtually all of its net income (interest less expenses) as well as any net short-term or long-term capital gains realized from the sale of its holdings. Income dividends generally are declared monthly and distributed monthly. Capital gains distributions, if any, generally occur annually in December. In addition, the Fund may occasionally make a supplemental distribution at some other time during the year.
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You can receive distributions of income or capital gains in cash, or you can have them automatically reinvested in more shares of the Fund. However, if you are investing through an employer-sponsored retirement or savings plan, your distributions will be automatically reinvested in additional Fund shares.  
Plain Talk About Distributions
As a shareholder, you are entitled to your portion of a fund’s income from
interest as well as capital gains from the fund’s sale of investments. Income
consists of interest the fund earns from its money market and bond
investments. Capital gains are realized whenever the fund sells securities for
higher prices than it paid for them. These capital gains are either short-term
or long-term, depending on whether the fund held the securities for one year
or less or for more than one year.
Basic Tax Points
Investors in taxable accounts should be aware of the following basic federal income tax points:
• Distributions are taxable to you whether or not you reinvest these amounts in additional Fund shares.
• Distributions declared in December—if paid to you by the end of January—are taxable as if received in December.
• Any income dividend distribution or short-term capital gains distribution that you receive is taxable to you as ordinary income.
• Any distribution of net long-term capital gains is taxable to you as long-term capital gains, no matter how long you have owned shares in the Fund.
• Capital gains distributions may vary considerably from year to year as a result of the Fund's normal investment activities and cash flows.
• A sale or exchange of Fund shares is a taxable event. This means that you may have a capital gain to report as income, or a capital loss to report as a deduction, when you complete your tax return.
• Any conversion between classes of shares of the same fund is a nontaxable event. By contrast, an exchange between classes of shares of different funds is a taxable event.
• Vanguard (or your intermediary) will send you a statement each year showing the tax status of all of your distributions.
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Individuals, trusts, and estates whose income exceeds certain threshold amounts are subject to a 3.8% Medicare contribution tax on “net investment income.” Net investment income takes into account distributions paid by the Fund and capital gains from any sale or exchange of Fund shares.
Income dividends and capital gains distributions that you receive, as well as your gains or losses from any sale or exchange of Fund shares, may be subject to state and local income taxes.
The Fund may be subject to foreign taxes or foreign tax withholding on dividends, interest, and some capital gains that it receives on foreign securities. If at the end of the taxable year more than 50% of the value of the Fund’s assets consists of securities of foreign corporations, and the Fund makes a special election, you will generally be required to include in your income, for U.S. federal income tax purposes, your share of the qualifying foreign income taxes paid by the Fund in respect of its foreign portfolio securities. There is no assurance that the Fund will make this election for a taxable year, even if it is eligible to do so. You may qualify for an offsetting credit or deduction under U.S. tax laws for any amount designated as your portion of the Fund’s foreign tax obligations, provided that you meet certain requirements. See your tax advisor or IRS publications for more information.
This prospectus provides general tax information only. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply. Please consult your tax advisor for detailed information about any tax consequences for you.
General Information
Backup withholding. By law, Vanguard must withhold 24% of any taxable distributions or redemptions from your account if you do not:
• Provide your correct taxpayer identification number.
• Certify that the taxpayer identification number is correct.
• Confirm that you are not subject to backup withholding.
Similarly, Vanguard (or your intermediary) must withhold taxes from your account if the IRS instructs us to do so.
Foreign investors. Vanguard funds offered for sale in the United States (Vanguard U.S. funds), including the Fund offered in this prospectus, are not widely available outside the United States. Non-U.S. investors should be aware that U.S. withholding and estate taxes and certain U.S. tax reporting
22
requirements may apply to any investments in Vanguard U.S. funds. Foreign investors should visit the non-U.S. investors page on our website at vanguard.com for information on Vanguard’s non-U.S. products.
Invalid addresses. If an income dividend distribution or capital gains distribution check mailed to your address of record is returned as undeliverable, Vanguard will automatically reinvest the distribution and all future distributions until you provide us with a valid mailing address. Reinvestments will receive the net asset value calculated on the date of the reinvestment.
Share Price
Share price, also known as net asset value (NAV), is calculated as of the close of regular trading on the New York Stock Exchange (NYSE), generally 4 p.m., Eastern time, on each day that the NYSE is open for business (a business day). In the rare event the NYSE experiences unanticipated disruptions and is unavailable at the close of the trading day, NAVs will be calculated as of the close of regular trading on the Nasdaq (or another alternate exchange if the Nasdaq is unavailable, as determined at Vanguard’s discretion), generally 4 p.m., Eastern time. Each share class has its own NAV, which is computed by dividing the total assets, minus liabilities, allocated to the share class by the number of Fund shares outstanding for that class. On U.S. holidays or other days when the NYSE is closed, the NAV is not calculated, and the Fund does not sell or redeem shares. However, on those days the value of the Fund’s assets may be affected to the extent that the Fund holds securities that change in value on those days (such as foreign securities that trade on foreign markets that are open).
Debt securities held by a Vanguard fund are valued based on information furnished by an independent pricing service or market quotations. When a fund determines that pricing-service information or market quotations either are not readily available or do not accurately reflect the value of a security, the security is priced at its fair value (the amount that the owner might reasonably expect to receive upon the current sale of the security).
The values of any foreign securities held by a fund are converted into U.S. dollars using an exchange rate obtained from an independent third party as of the close of regular trading on the NYSE. The values of any mutual fund shares, including institutional money market fund shares, held by a fund are based on the NAVs of the shares. The values of any ETF shares or closed-end fund shares held by a fund are based on the market value of the shares.
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A fund also will use fair-value pricing if the value of a security it holds has been materially affected by events occurring before the fund's pricing time but after the close of the principal exchange or market on which the security is traded. This most commonly occurs with foreign securities, which may trade on foreign exchanges or markets that close many hours before the fund's pricing time. Intervening events might be company-specific (e.g., earnings report, material credit events) or country-specific or regional/global (e.g., natural disaster, economic or political news, act of terrorism, interest rate change). Intervening events include price movements in U.S. markets that exceed a specified threshold or that are otherwise deemed to affect the value of foreign securities. A fund also may use fair-value pricing on bond market holidays when the fund is open for business (such as Columbus Day and Veterans Day). Fair-value prices are determined by Vanguard according to procedures adopted by the board of trustees. When fair-value pricing is employed, the prices of securities used by a fund to calculate the NAV may differ from quoted or published prices for the same securities.
Vanguard fund share prices are published daily on our website at vanguard.com/prices.
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Financial Highlights
Financial highlights information is intended to help you understand a fund’s performance for the past five years (or, if shorter, its period of operations). Certain information reflects financial results for a single fund share. Total return represents the rate that an investor would have earned or lost each period on an investment in a fund or share class (assuming reinvestment of all distributions). This information has been obtained from the financial statements audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, whose report, along with fund financial statements, is included in a fund’s most recent annual report to shareholders. You may obtain a free copy of a fund’s latest annual or semiannual report, which is available upon request.
Vanguard Emerging Markets Bond Fund Investor Shares  
 
Year Ended September 30,
March
10, 20161
to Sept.
30, 2016
For a Share Outstanding Throughout Each Period
2020
2019
2018
2017
Net Asset Value, Beginning of Period
$11.19
$10.36
$10.76
$11.07
$10.00
Investment Operations
 
 
 
 
 
Net Investment Income
0.4952
0.5242
0.4432
0.5042
0.286
Net Realized and Unrealized Gain (Loss) on
Investments
0.655
0.826
(0.193)
0.184
1.050
Total from Investment Operations
1.150
1.350
0.250
0.688
1.336
Distributions
 
 
 
 
 
Dividends from Net Investment Income
(0.400)
(0.520)
(0.439)
(0.514)
(0.266)
Distributions from Realized Capital Gains
(0.210)
—
(0.211)
(0.484)
—
Total Distributions
(0.610)
(0.520)
(0.650)
(0.998)
(0.266)
Net Asset Value, End of Period
$11.73
$11.19
$10.36
$10.76
$11.07
Total Return3
10.67%
13.40%
2.39%
7.01%
13.51%
Ratios/Supplemental Data
 
 
 
 
 
Net Assets, End of Period (Millions)
$129
$64
$25
$12
$11
Ratio of Total Expenses to Average Net Assets
0.60%
0.60%
0.60%
0.60%
0.60%4
Ratio of Net Investment Income to Average Net
Assets
4.40%
4.73%
4.29%
4.79%
4.85%4
Portfolio Turnover Rate
266%
272%
350%
261%
153%
1
Inception.
2
Calculated based on average shares outstanding.
3
Total returns do not include account service fees that may have applied in the periods shown.
4
Annualized.
25
Vanguard Emerging Markets Bond Fund Admiral Shares  
 
Year Ended September 30,
Dec. 6,
20171 to
Sept. 30,
2018
For a Share Outstanding Throughout Each Period
2020
2019
Net Asset Value, Beginning of Period
$26.03
$24.11
$24.80
Investment Operations
 
 
 
Net Investment Income2
1.192
1.228
0.875
Net Realized and Unrealized Gain (Loss) on Investments
1.535
1.940
(0.659)
Total from Investment Operations
2.727
3.168
0.216
Distributions
 
 
 
Dividends from Net Investment Income
(0.969)
(1.248)
(0.906)
Distributions from Realized Capital Gains
(0.488)
—
—
Total Distributions
(1.457)
(1.248)
(0.906)
Net Asset Value, End of Period
$27.30
$26.03
$24.11
Total Return3
10.89%
13.53%
0.92%
Ratios/Supplemental Data
 
 
 
Net Assets, End of Period (Millions)
$854
$306
$76
Ratio of Total Expenses to Average Net Assets
0.45%
0.45%
0.45%4
Ratio of Net Investment Income to Average Net Assets
4.54%
4.88%
4.44%4
Portfolio Turnover Rate
266%
272%
350%
1
Inception.
2
Calculated based on average shares outstanding.
3
Total returns do not include account service fees that may have applied in the periods shown.
4
Annualized.
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Investing With Vanguard
This section of the prospectus explains the basics of doing business with Vanguard. Vanguard fund shares can be held directly with Vanguard or indirectly through an intermediary, such as a bank, a broker, or an investment advisor. If you hold Vanguard fund shares directly with Vanguard, you should carefully read each topic within this section that pertains to your relationship with Vanguard. If you hold Vanguard fund shares indirectly through an intermediary (including shares held in a brokerage account through Vanguard Brokerage Services®), please see Investing With Vanguard Through Other Firms, and also refer to your account agreement with the intermediary for information about transacting in that account. If you hold Vanguard fund shares through an employer-sponsored retirement or savings plan, please see Employer-Sponsored Plans. Vanguard reserves the right to change the following policies without notice. Please call or check online for current information. See Contacting Vanguard.
For Vanguard fund shares held directly with Vanguard, each fund you hold in an account is a separate “fund account.” For example, if you hold three funds in a nonretirement account titled in your own name, two funds in a nonretirement account titled jointly with your spouse, and one fund in an individual retirement account, you have six fund accounts—and this is true even if you hold the same fund in multiple accounts. Note that each reference to “you” in this prospectus applies to any one or more registered account owners or persons authorized to transact on your account.
Purchasing Shares
Vanguard reserves the right, without notice, to increase or decrease the minimum amount required to open, convert shares to, or maintain a fund account or to add to an existing fund account.
Investment minimums may differ for certain categories of investors.
Account Minimums for Investor Shares
To open and maintain an account. $3,000.
To add to an existing account. Generally $1.
Account Minimums for Admiral Shares
To open and maintain an account. $50,000. If you request Admiral Shares when you open a new account but the investment amount does not meet the account minimum for Admiral Shares, your investment will be placed in Investor Shares of the Fund. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special
27
eligibility rules that may apply to them regarding Admiral Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility.
To add to an existing account. Generally $1.
How to Initiate a Purchase Request
Be sure to check Exchanging Shares, Frequent-Trading Limitations, and Other Rules You Should Know before placing your purchase request.
Online. You may open certain types of accounts, request a purchase of shares, and request an exchange through our website or our mobile application if your account is eligible and you are registered for online access.
By telephone. You may call Vanguard to begin the account registration process or request that the account-opening forms be sent to you. You may also call Vanguard to request a purchase of shares in your account or to request an exchange. See Contacting Vanguard.
By mail. You may send Vanguard your account registration form and check to open a new fund account. To add to an existing fund account, you may send your check with an Invest-by-Mail form (from a transaction confirmation or your account statement) or with a deposit slip (available online).
How to Pay for a Purchase
By electronic bank transfer. You may purchase shares of a Vanguard fund through an electronic transfer of money from a bank account. To establish the electronic bank transfer service on an account, you must designate the bank account online, complete a form, or fill out the appropriate section of your account registration form. After the service is set up on your account, you can purchase shares by electronic bank transfer on a regular schedule (Automatic Investment Plan), if eligible, or upon request. Your purchase request can be initiated online (if you are registered for online access), by telephone, or by mail.
By wire. Wiring instructions vary for different types of purchases. Please call Vanguard for instructions and policies on purchasing shares by wire. See Contacting Vanguard.
By check. You may make initial or additional purchases to your fund account by sending a check with a deposit slip or by utilizing our mobile application if your account is eligible and you are registered for online access. Also see How to Initiate a Purchase Request. Make your check payable to Vanguard and include the appropriate fund number (e.g., Vanguard—xx). For a list of Fund numbers (for share classes in this prospectus), see Additional Information.
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By exchange. You may purchase shares of a Vanguard fund using the proceeds from the simultaneous redemption of shares of another Vanguard fund. You may initiate an exchange online (if you are registered for online access), by telephone, or by mail with an exchange form. See Exchanging Shares.
Trade Date
The trade date for any purchase request received in good order will depend on the day and time Vanguard receives your request, the manner in which you are paying, and the type of fund you are purchasing. Your purchase will be executed using the NAV as calculated on the trade date. NAVs are calculated only on days that the NYSE is open for trading (a business day). In the rare event the NYSE experiences unanticipated disruptions and is unavailable at the close of the trading day, NAVs will be calculated as of the close of regular trading on the Nasdaq (or another alternate exchange if the Nasdaq is unavailable, as determined at Vanguard’s discretion), generally 4 p.m., Eastern time. The time selected for NAV calculation in this rare event shall also serve as the conclusion of the trading day. See Share Price.
For purchases by check into all funds other than money market funds and for purchases by exchange, wire, or electronic bank transfer into all funds: If the purchase request is received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the trade date for the purchase will be the same day. If the purchase request is received on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the trade date for the purchase will be the next business day.
For purchases by check into money market funds: If the purchase request is received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the trade date for the purchase will be the next business day. If the purchase request is received on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the trade date for the purchase will be the second business day following the day Vanguard receives the purchase request. Because money market instruments must be purchased with federal funds and it takes a money market mutual fund one business day to convert check proceeds into federal funds, the trade date for the purchase will be one business day later than for other funds.
If your purchase request is not accurate and complete, it may be rejected. See Other Rules You Should Know—Good Order.
For further information about purchase transactions, consult our website at vanguard.com or see Contacting Vanguard.
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Other Purchase Rules You Should Know
Admiral Shares. Admiral Shares generally are not available for SIMPLE IRAs and Vanguard Individual 401(k) Plans.
Check purchases. All purchase checks must be written in U.S. dollars, be drawn on a U.S. bank, and be accompanied by good order instructions. Vanguard does not accept cash, traveler’s checks, starter checks, or money orders. In addition, Vanguard may refuse checks that are not made payable to Vanguard.
New accounts. We are required by law to obtain from you certain personal information that we will use to verify your identity. If you do not provide the information, we may not be able to open your account. If we are unable to verify your identity, Vanguard reserves the right, without notice, to close your account or take such other steps as we deem reasonable. Certain types of accounts may require additional documentation.
Refused or rejected purchase requests. Vanguard reserves the right to stop selling fund shares or to reject any purchase request at any time and without notice, including, but not limited to, purchases requested by exchange from another Vanguard fund. This also includes the right to reject any purchase request because the investor has a history of frequent trading or because the purchase may negatively affect a fund’s operation or performance.
Large purchases. Call Vanguard before attempting to invest a large dollar amount.
No cancellations. Vanguard will not accept your request to cancel any purchase request once processing has begun. Please be careful when placing a purchase request.
Converting Shares
When a conversion occurs, you receive shares of one class in place of shares of another class of the same fund. At the time of conversion, the dollar value of the “new” shares you receive equals the dollar value of the “old” shares that were converted. In other words, the conversion has no effect on the value of your investment in the fund at the time of the conversion. However, the number of shares you own after the conversion may be greater than or less than the number of shares you owned before the conversion, depending on the NAVs of the two share classes.
Vanguard will not accept your request to cancel any self-directed conversion request once processing has begun. Please be careful when placing a conversion request.
30
A conversion between share classes of the same fund is a nontaxable event.
Trade Date
The trade date for any conversion request received in good order will depend on the day and time Vanguard receives your request. Your conversion will be executed using the NAVs of the different share classes on the trade date. NAVs are calculated only on days that the NYSE is open for trading (a business day). In the rare event the NYSE experiences unanticipated disruptions and is unavailable at the close of the trading day, NAVs will be calculated as of the close of regular trading on the Nasdaq (or another alternate exchange if the Nasdaq is unavailable, as determined at Vanguard’s discretion), generally 4 p.m., Eastern time. The time selected for NAV calculation in this rare event shall also serve as the conclusion of the trading day. See Share Price.
For a conversion request received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the trade date will be the same day. For a conversion request received on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the trade date will be the next business day. See Other Rules You Should Know.
Conversions From Investor Shares to Admiral Shares
Self-directed conversions. If your account balance in the Fund is at least $50,000, you may ask Vanguard to convert your Investor Shares to Admiral Shares. You may request a conversion through our website (if you are registered for online access), by telephone, or by mail. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special eligibility rules that may apply to them regarding Admiral Shares. See Contacting Vanguard. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility.
Automatic conversions. Vanguard conducts periodic reviews of account balances and may, if your account balance in the Fund exceeds $50,000, automatically convert your Investor Shares to Admiral Shares. You will be notified before an automatic conversion occurs and will have an opportunity to instruct Vanguard not to effect the conversion. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special eligibility rules that may apply to them regarding Admiral Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility.
31
Mandatory Conversions to Investor Shares
If an account no longer meets the balance requirements for Admiral Shares, Vanguard may automatically convert the shares in the account to Investor Shares. A decline in the account balance because of market movement may result in such a conversion. Vanguard will notify the investor in writing before any mandatory conversion occurs.
Redeeming Shares
How to Initiate a Redemption Request
Be sure to check Exchanging Shares, Frequent-Trading Limitations, and Other Rules You Should Know before placing your redemption request.
Online. You may request a redemption of shares or request an exchange through our website or our mobile application if your account is eligible and you are registered for online access.
By telephone. You may call Vanguard to request a redemption of shares or an exchange. See Contacting Vanguard.
By mail. You may send a form (available online) to Vanguard to redeem from a fund account or to make an exchange.
How to Receive Redemption Proceeds
By electronic bank transfer. You may have the proceeds of a fund redemption sent directly to a designated bank account. To establish the electronic bank transfer service on an account, you must designate a bank account online, complete a form, or fill out the appropriate section of your account registration form. After the service is set up on your account, you can redeem shares by electronic bank transfer on a regular schedule (Automatic Withdrawal Plan), if eligible, or upon request. Your redemption request can be initiated online (if you are registered for online access), by telephone, or by mail.
By wire. To receive your proceeds by wire, you may instruct Vanguard to wire your redemption proceeds ($100 minimum) to a previously designated bank account. To establish the wire redemption service, you generally must designate a bank account online, complete a form, or fill out the appropriate section of your account registration form.
Please note that Vanguard charges a $10 wire fee for outgoing wire redemptions. The fee is assessed in addition to, rather than being withheld from, redemption proceeds and is paid directly to the fund in which you invest. For example, if you redeem $100 via a wire, you will receive the full $100, and the
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$10 fee will be assessed to your fund account through an additional redemption of fund shares. If you redeem your entire fund account, your redemption proceeds will be reduced by the amount of the fee. The wire fee does not apply to accounts held by Flagship and Flagship Select clients; accounts held through intermediaries, including Vanguard Brokerage Services; or accounts held by institutional clients.
By exchange. You may have the proceeds of a Vanguard fund redemption invested directly in shares of another Vanguard fund. You may initiate an exchange online (if you are registered for online access), by telephone, or by mail. See Exchanging Shares.
By check. If you have not chosen another redemption method, Vanguard will mail you a redemption check, generally payable to all registered account owners, normally within two business days of your trade date, and generally to the address of record.
Trade Date
The trade date for any redemption request received in good order will depend on the day and time Vanguard receives your request and the manner in which you are redeeming. Your redemption will be executed using the NAV as calculated on the trade date. NAVs are calculated only on days that the NYSE is open for trading (a business day). In the rare event the NYSE experiences unanticipated disruptions and is unavailable at the close of the trading day, NAVs will be calculated as of the close of regular trading on the Nasdaq (or another alternate exchange if the Nasdaq is unavailable, as determined at Vanguard’s discretion), generally 4 p.m., Eastern time. The time selected for NAV calculation in this rare event shall also serve as the conclusion of the trading day. See Share Price.
For redemptions by check, exchange, or wire: If the redemption request is received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the trade date will be the same day. If the redemption request is received on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the trade date will be the next business day.
• Note on timing of wire redemptions from money market funds: For telephone requests received by Vanguard on a business day before 10:45 a.m., Eastern time (2 p.m., Eastern time, for Vanguard Cash Reserves Federal Money Market Fund; 12:30 p.m., Eastern time, for Vanguard Federal Money Market Fund), the redemption proceeds generally will leave Vanguard by the close of business the same day. For telephone requests received by Vanguard on a business day after those cut-off times, or on a nonbusiness day, and for all requests other than by telephone, the redemption proceeds
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generally will leave Vanguard by the close of business on the next business day.
• Note on timing of wire redemptions from all other funds: For requests received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the redemption proceeds generally will leave Vanguard by the close of business on the next business day. For requests received by Vanguard on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the redemption proceeds generally will leave Vanguard by the close of business on the second business day after Vanguard receives the request.
For redemptions by electronic bank transfer: If the redemption request is received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the trade date will be the same day. If the redemption request is received on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the trade date will be the next business day.
If your redemption request is not accurate and complete, it may be rejected. If we are unable to send your redemption proceeds by wire or electronic bank transfer because the receiving institution rejects the transfer, Vanguard will make additional efforts to complete your transaction. If Vanguard is still unable to complete the transaction, we may send the proceeds of the redemption to you by check, generally payable to all registered account owners, or use your proceeds to purchase new shares of the fund from which you sold shares for the purpose of the wire or electronic bank transfer transaction. See Other Rules You Should Know—Good Order.
If your redemption request is received in good order, we typically expect that redemption proceeds will be paid by the Fund within one business day of the trade date; however, in certain circumstances, investors may experience a longer settlement period at the time of the transaction. For further information, see “Potentially disruptive redemptions” and “Emergency circumstances.”
For further information about redemption transactions, consult our website at vanguard.com or see Contacting Vanguard.
Other Redemption Rules You Should Know
Documentation for certain accounts. Special documentation may be required to redeem from certain types of accounts, such as trust, corporate, nonprofit, or retirement accounts. Please call us before attempting to redeem from these types of accounts.
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Potentially disruptive redemptions. Vanguard reserves the right to pay all or part of a redemption in kind—that is, in the form of securities—if we reasonably believe that a cash redemption would negatively affect the fund’s operation or performance or that the shareholder may be engaged in market-timing or frequent trading. Under these circumstances, Vanguard also reserves the right to delay payment of the redemption proceeds for up to seven calendar days. By calling us before you attempt to redeem a large dollar amount, you may avoid in-kind or delayed payment of your redemption. Please see Frequent-Trading Limitations for information about Vanguard's policies to limit frequent trading.
Recently purchased shares. Although you can redeem shares at any time, proceeds may not be made available to you until the fund collects payment for your purchase. This may take up to seven calendar days for shares purchased by check or by electronic bank transfer. If you have written a check on a fund in an account with checkwriting privileges, that check may be rejected if your fund account does not have a sufficient available balance.
Address change. If you change your address online or by telephone, there may be up to a 14-day restriction (starting on the business day after your address is changed) on your ability to request check redemptions online and by telephone. You can request a redemption in writing (using a form available online) at any time. Confirmations of address changes are sent to both the old and new addresses.
Payment to a different person or address. At your request, we can make your redemption check payable, or wire your redemption proceeds, to a different person or send it to a different address. However, this generally requires the written consent of all registered account owners and may require additional documentation, such as a signature guarantee or a notarized signature. You may obtain a signature guarantee from some commercial or savings banks, credit unions, trust companies, or member firms of a U.S. stock exchange.
No cancellations. Vanguard will not accept your request to cancel any redemption request once processing has begun. Please be careful when placing a redemption request.
Emergency circumstances. Vanguard funds can postpone payment of redemption proceeds for up to seven calendar days. In addition, Vanguard funds can suspend redemptions and/or postpone payments of redemption proceeds beyond seven calendar days at times when the NYSE is closed or during emergency circumstances, as determined by the SEC.
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Exchanging Shares
An exchange occurs when you use the proceeds from the redemption of shares of one Vanguard fund to simultaneously purchase shares of a different Vanguard fund. You can make exchange requests online (if you are registered for online access), by telephone, or by mail. See Purchasing Shares and Redeeming Shares.
If the NYSE is open for regular trading (generally until 4 p.m., Eastern time, on a business day) at the time an exchange request is received in good order, the trade date generally will be the same day. See Other Rules You Should Know—Good Order for additional information on all transaction requests.
Vanguard will not accept your request to cancel any exchange request once processing has begun. Please be careful when placing an exchange request.
Call Vanguard before attempting to exchange a large dollar amount. By calling us before you attempt to exchange a large dollar amount, you may avoid delayed or rejected transactions.
Please note that Vanguard reserves the right, without notice, to revise or terminate the exchange privilege, limit the amount of any exchange, or reject an exchange, at any time, for any reason. See Frequent-Trading Limitations for additional restrictions on exchanges.
Frequent-Trading Limitations
Because excessive transactions can disrupt management of a fund and increase the fund’s costs for all shareholders, the board of trustees of each Vanguard fund places certain limits on frequent trading in the funds. Each Vanguard fund (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) limits an investor’s purchases or exchanges into a fund account for 30 calendar days after the investor has redeemed or exchanged out of that fund account. ETF Shares are not subject to these frequent-trading limits.
For Vanguard Retirement Investment Program pooled plans, the limitations apply to exchanges made online or by telephone.
These frequent-trading limitations do not apply to the following:
• Purchases of shares with reinvested dividend or capital gains distributions.
• Transactions through Vanguard’s Automatic Investment Plan, Automatic Exchange Service, Direct Deposit Service, Automatic Withdrawal Plan, Required Minimum Distribution Service, and Vanguard Small Business Online®.
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• Discretionary transactions through Vanguard Personal Advisor Services®, Vanguard Institutional Advisory Services®, and Vanguard Digital Advisor™.
• Redemptions of shares to pay fund or account fees.
• Redemptions of shares to remove excess shareholder contributions to certain types of retirement accounts (including, but not limited to, IRAs and Vanguard Individual 401(k) Plans).
• Transfers and reregistrations of shares within the same fund.
• Purchases of shares by asset transfer or direct rollover.
• Conversions of shares from one share class to another in the same fund.
• Checkwriting redemptions.
• Section 529 college savings plans.
• Certain approved institutional portfolios and asset allocation programs, as well as trades made by funds or trusts managed by Vanguard or its affiliates that invest in other Vanguard funds. (Please note that shareholders of Vanguard’s funds of funds are subject to the limitations.)
For participants in employer-sponsored defined contribution plans,* the frequent-trading limitations do not apply to:
• Purchases of shares with participant payroll or employer contributions or loan repayments.
• Purchases of shares with reinvested dividend or capital gains distributions.
• Distributions, loans, and in-service withdrawals from a plan.
• Redemptions of shares as part of a plan termination or at the direction of the plan.
• Transactions executed through the Vanguard Managed Account Program.
• Redemptions of shares to pay fund or account fees.
• Share or asset transfers or rollovers.
• Reregistrations of shares.
• Conversions of shares from one share class to another in the same fund.
• Exchange requests submitted by written request to Vanguard. (Exchange requests submitted by fax, if otherwise permitted, are subject to the limitations.)
* The following Vanguard fund accounts are subject to the frequent-trading limitations: SEP-IRAs, SIMPLE IRAs, certain Individual 403(b)(7) Custodial Accounts, and Vanguard Individual 401(k) Plans.
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Accounts Held by Institutions (Other Than Defined Contribution Plans)
Vanguard will systematically monitor for frequent trading in institutional clients’ accounts. If we detect suspicious trading activity, we will investigate and take appropriate action, which may include applying to a client’s accounts the 30-day policy previously described, prohibiting a client’s purchases of fund shares, and/or revoking the client’s exchange privilege.
Accounts Held by Intermediaries
When intermediaries establish accounts in Vanguard funds for the benefit of their clients, we cannot always monitor the trading activity of the individual clients. However, we review trading activity at the intermediary (omnibus) level, and if we detect suspicious activity, we will investigate and take appropriate action. If necessary, Vanguard may prohibit additional purchases of fund shares by an intermediary, including for the benefit of certain of the intermediary’s clients. Intermediaries also may monitor their clients’ trading activities with respect to Vanguard funds.
For those Vanguard funds that charge purchase and/or redemption fees, intermediaries will be asked to assess these fees on client accounts and remit these fees to the funds. The application of purchase and redemption fees and frequent-trading limitations may vary among intermediaries. There are no assurances that Vanguard will successfully identify all intermediaries or that intermediaries will properly assess purchase and redemption fees or administer frequent-trading limitations. If you invest with Vanguard through an intermediary, please read that firm’s materials carefully to learn of any other rules or fees that may apply.
Other Rules You Should Know
Prospectus and Shareholder Report Mailings
When two or more shareholders have the same last name and address, just one summary prospectus (or prospectus) and/or shareholder report may be sent in an attempt to eliminate the unnecessary expense of duplicate mailings. You may request individual prospectuses and reports by contacting our Client Services Department in writing, by telephone, or online. See Contacting Vanguard.
Vanguard.com
Registration. If you are a registered user of vanguard.com, you can review your account holdings; buy, sell, or exchange shares of most Vanguard funds; and perform most other transactions through our website. You must register for this service online.
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Electronic delivery. Vanguard can deliver your account statements, transaction confirmations, prospectuses, certain tax forms, and shareholder reports electronically. If you are a registered user of vanguard.com, you can consent to the electronic delivery of these documents by logging on and changing your mailing preferences under “Account Maintenance.” You can revoke your electronic consent at any time through our website, and we will begin to send paper copies of these documents within 30 days of receiving your revocation.
Telephone Transactions
Automatic. When we set up your account, we will automatically enable you to do business with us by telephone, unless you instruct us otherwise in writing.
Tele-Account®. To obtain fund and account information through Vanguard’s automated telephone service, you must first establish a Personal Identification Number (PIN) by calling Tele-Account at 800-662-6273.
Proof of a caller’s authority. We reserve the right to refuse a telephone request if the caller is unable to provide the requested information or if we reasonably believe that the caller is not an individual authorized to act on the account. Before we allow a caller to act on an account, we may request the following information:
• Authorization to act on the account (as the account owner or by legal documentation or other means).
• Account registration and address.
• Fund name and account number, if applicable.
• Other information relating to the caller, the account owner, or the account.
Good Order
We reserve the right to reject any transaction instructions that are not in “good order.” Good order generally means that your instructions:
• Are provided by the person(s) authorized in accordance with Vanguard’s policies and procedures to access the account and request transactions.
• Include the fund name and account number.
• Include the amount of the transaction (stated in dollars, shares, or percentage).
Written instructions also must generally be provided on a Vanguard form and include:
• Signature(s) and date from the authorized person(s).
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• Signature guarantees or notarized signatures, if required for the type of transaction. (Call Vanguard for specific requirements.)
• Any supporting documentation that may be required.
Good order requirements may vary among types of accounts and transactions. For more information, consult our website at vanguard.com or see Contacting Vanguard.
Vanguard reserves the right, without notice, to revise the requirements for good order.
Future Trade-Date Requests
Vanguard does not accept requests to hold a purchase, conversion, redemption, or exchange transaction for a future date. All such requests will receive trade dates as previously described in Purchasing Shares, Converting Shares, Redeeming Shares, and Exchanging Shares. Vanguard reserves the right to return future-dated purchase checks.
Accounts With More Than One Owner
If an account has more than one owner or authorized person, Vanguard generally will accept instructions from any one owner or authorized person.
Responsibility for Fraud
You should take precautions to protect yourself from fraud. Keep your account-related information private, and review any account confirmations, statements, or other information that we provide to you as soon as you receive them. Let us know immediately if you discover unauthorized activity or see something on your account that you do not understand or that looks unusual.
Vanguard will not be responsible for losses that result from transactions by a person who we reasonably believe is authorized to act on your account.
Uncashed Checks
Please cash your distribution or redemption checks promptly. Vanguard will not pay interest on uncashed checks. Vanguard may be required to transfer assets related to uncashed checks to a state under the state’s abandoned property law.
Dormant Accounts
If your account has no activity in it for a period of time, Vanguard may be required to transfer it to a state under the state’s abandoned property law, subject to potential federal or state withholding taxes.
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Unusual Circumstances
If you experience difficulty contacting Vanguard online or by telephone, you can send us your transaction request on a Vanguard form by regular or express mail.
Investing With Vanguard Through Other Firms
You may purchase or sell shares of most Vanguard funds through a financial intermediary, such as a bank, a broker, or an investment advisor. Please consult your financial intermediary to determine which, if any, shares are available through that firm and to learn about other rules that may apply. Your financial intermediary can provide you with account information and any required tax forms. You may be required to pay a commission on purchases of mutual fund shares made through a financial intermediary.
Please see Frequent-Trading Limitations—Accounts Held by Intermediaries for information about the assessment of any purchase or redemption fees and the monitoring of frequent trading for accounts held by intermediaries.
Account Service Fee
Vanguard may charge a $20 account service fee on fund accounts that have a balance below $10,000 for any reason, including market fluctuation. The account service fee may be applied to both retirement and nonretirement fund accounts and may be assessed on fund accounts in all Vanguard funds, regardless of the account minimum. The fee, which will be collected by redeeming fund shares in the amount of $20, will be deducted from fund accounts subject to the fee once per calendar year.
If you elect to receive your statements and other materials electronically (i.e., by e-delivery), the account service fee will not be charged, so long as your election remains in effect. You can make your e-delivery election on vanguard.com.
Beginning on January 1, 2021, you may elect to receive paper copies of shareholder reports free of charge as noted on the cover of this prospectus.
Certain account types have alternative fee structures, including SIMPLE IRAs, Vanguard Retirement Investment Program pooled plans, and Vanguard Individual 401(k) Plans.
Low-Balance Accounts
The Fund reserves the right to liquidate a fund account whose balance falls below the account minimum for any reason, including market fluctuation. This liquidation policy applies to nonretirement fund accounts and accounts that are held through intermediaries. Any such liquidation will be preceded by written notice to the investor.
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Right to Change Policies
In addition to the rights expressly stated elsewhere in this prospectus, Vanguard reserves the right, without notice, to (1) alter, add, or discontinue any conditions of purchase (including eligibility requirements), redemption, exchange, conversion, service, or privilege at any time and (2) alter, impose, discontinue, or waive any purchase fee, redemption fee, account service fee, or other fee charged to a shareholder or a group of shareholders. Changes may affect any or all investors. These actions will be taken when, at the sole discretion of Vanguard management, Vanguard believes they are in the best interest of a fund.
Account Restrictions
Vanguard reserves the right to: (1) redeem all or a portion of a fund/account to meet a legal obligation, including tax withholding, tax lien, garnishment order, or other obligation imposed on your account by a court or government agency; (2) redeem shares, close an account, or suspend account privileges, features, or options in the case of threatening conduct or activity; (3) redeem shares, close an account, or suspend account privileges, features, or options if Vanguard believes or suspects that not doing so could result in a suspicious, fraudulent, or illegal transaction; (4) place restrictions on the ability to redeem any or all shares in an account if it is required to do so by a court or government agency; (5) place restrictions on the ability to redeem any or all shares in an account if Vanguard believes that doing so will prevent fraud, financial exploitation or abuse, or to protect vulnerable investors; (6) freeze any account and/or suspend account services if Vanguard has received reasonable notice of a dispute regarding the assets in an account, including notice of a dispute between the registered or beneficial account owners; and (7) freeze any account and/or suspend account services upon initial notification to Vanguard of the death of an account owner.
Share Classes
Vanguard reserves the right, without notice, to change the eligibility requirements of its share classes, including the types of clients who are eligible to purchase each share class.
Fund and Account Updates
Confirmation Statements
We will send (or provide through our website, whichever you prefer) a confirmation of your trade date and the amount of your transaction when you buy, sell, exchange, or convert shares. However, we will not send confirmations reflecting only checkwriting redemptions or the reinvestment of dividend or capital gains distributions. For any month in which you had a checkwriting
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redemption, a Checkwriting Activity Statement will be sent to you itemizing the checkwriting redemptions for that month. Promptly review each confirmation statement that we provide to you. It is important that you contact Vanguard immediately with any questions you may have about any transaction reflected on a confirmation statement, or Vanguard will consider the transaction properly processed.
Portfolio Summaries
We will send (or provide through our website, whichever you prefer) quarterly portfolio summaries to help you keep track of your accounts throughout the year. Each summary shows the market value of your account at the close of the statement period, as well as all distributions, purchases, redemptions, exchanges, transfers, and conversions for the current calendar quarter (or month). Promptly review each summary that we provide to you. It is important that you contact Vanguard immediately with any questions you may have about any transaction reflected on the summary, or Vanguard will consider the transaction properly processed.
Tax Information Statements
For most accounts, Vanguard (or your intermediary) is required to provide annual tax forms to assist you in preparing your income tax returns. These forms are generally available for each calendar year early in the following year. Registered users of vanguard.com can also view certain forms through our website. Vanguard (or your intermediary) may also provide you with additional tax-related documentation. For more information, consult our website at vanguard.com or see Contacting Vanguard.
Annual and Semiannual Reports
We will send (or provide through our website, whichever you prefer) reports about Vanguard Emerging Markets Bond Fund twice a year, in May and November. These reports include overviews of the financial markets and provide the following specific Fund information:
• Performance assessments and comparisons with industry benchmarks.
• Reports from the advisor.
• Financial statements with listings of Fund holdings.
Portfolio Holdings
Please consult the Fund's Statement of Additional Information or our website for a description of the policies and procedures that govern disclosure of the Fund’s portfolio holdings.
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Employer-Sponsored Plans
Your plan administrator or your employee benefits office can provide you with detailed information on how to participate in your plan and how to elect the Fund as an investment option.
• If you have any questions about the Fund or Vanguard, including those about the Fund’s investment objective, strategies, or risks, contact Vanguard Participant Services toll-free at 800-523-1188 or visit our website at vanguard.com.
• If you have questions about your account, contact your plan administrator or the organization that provides recordkeeping services for your plan.
• Be sure to carefully read each topic that pertains to your transactions with Vanguard.
Vanguard reserves the right to change its policies without notice to shareholders.
Transactions
Processing times for your transaction requests may differ among recordkeepers or among transaction and funding types. Your plan’s recordkeeper (which may also be Vanguard) will determine the necessary processing time frames for your transaction requests prior to submission to the Fund. Consult your recordkeeper or plan administrator for more information.
If Vanguard is serving as your plan recordkeeper and if your transaction involves one or more investments with an early cut-off time for processing or another trading restriction, your entire transaction will be subject to the restriction when the trade date for your transaction is determined.
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Contacting Vanguard  
Web
 
Vanguard.com
For the most complete source of Vanguard news
For fund, account, and service information
For most account transactions
For literature requests
24 hours a day, 7 days a week
 
Phone
Vanguard Tele-Account®
800-662-6273
For automated fund and account information
Toll-free, 24 hours a day, 7 days a week
Investor Information 800-662-7447
(Text telephone for people with
hearing impairment at 800-749-7273)
For fund and service information
For literature requests
Client Services 800-662-2739
(Text telephone for people with
hearing impairment at 800-749-7273)
For account information
For most account transactions
Participant Services 800-523-1188
(Text telephone for people with
hearing impairment at 800-749-7273)
For information and services for participants in
employer-sponsored plans
Institutional Division
888-809-8102
For information and services for large institutional
investors
Financial Advisor and Intermediary
Sales Support 800-997-2798
For information and services for financial intermediaries
including financial advisors, broker-dealers, trust
institutions, and insurance companies
Financial Advisory and Intermediary
Trading Support 800-669-0498
For account information and trading support for
financial intermediaries including financial advisors,
broker-dealers, trust institutions, and insurance
companies
Additional Information  
 
Inception
Date
Newspaper
Abbreviation
Vanguard
Fund Number
CUSIP
Number
Emerging Markets Bond Fund
Investor Shares
3/10/2016
EmMktBdInv
1431
922020821
Admiral Shares
12/6/2017
EmMktBdAdm
1531
922020813
 
CGS identifiers have been provided by CUSIP Global Services, managed on behalf of the American Bankers Association by Standard & Poor’s Financial Services, LLC, and are not for use or dissemination in a manner that would serve as a substitute for any CUSIP service. The CUSIP Database, ©2021 American Bankers Association. “CUSIP” is a registered trademark of the American Bankers Association.
45
Glossary of Investment Terms
Average Maturity. The average length of time until bonds held by a fund reach maturity and are repaid. In general, the longer the average maturity, the more a fund's share price fluctuates in response to changes in market interest rates. In calculating average maturity, a fund uses a bond’s maturity or, if applicable, an earlier date on which the advisor believes it is likely that a maturity-shortening device (such as a call, put, refunding, prepayment, or redemption provision or an adjustable coupon rate) will cause the bond to be repaid.
Bond. A debt security (IOU) issued by a corporation, a government, or a government agency in exchange for the money the bondholder lends it. In most instances, the issuer agrees to pay back the loan by a specific date and generally to make regular interest payments until that date.
Capital Gains Distributions. Payments to mutual fund shareholders of gains realized on securities that a fund has sold at a profit, minus any realized losses.
Coupon Rate. The interest rate paid by the issuer of a debt security until its maturity. It is expressed as an annual percentage of the face value of the security.
Dividend Distributions. Payments to mutual fund shareholders of income from interest or dividends generated by a fund's investments.
Dollar-Denominated Bond. A bond that is bought and sold in exchange for U.S. dollars.
Expense Ratio. A fund's total annual operating expenses expressed as a percentage of the fund's average net assets. The expense ratio includes management and administrative expenses, but it does not include the transaction costs of buying and selling portfolio securities.
Face Value. The amount to be paid at a bond’s maturity; also known as the par value or principal.
Fixed Income Security. An investment, such as a bond, representing a debt that must be repaid by a specified date, and on which the borrower must pay a fixed, variable, or floating rate of interest.
Inception Date. The date on which the assets of a fund (or one of its share classes) are first invested in accordance with the fund's investment objective. For funds with a subscription period, the inception date is the day after that period ends. Investment performance is generally measured from the inception date.
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Investment-Grade Bond. A debt security whose credit quality is considered by independent bond rating agencies, or through independent analysis conducted by a fund's advisor, to be sufficient to ensure timely payment of principal and interest under current economic circumstances. Debt securities rated in one of the four highest rating categories are considered investment-grade. Other debt securities may be considered by an advisor to be investment-grade.
Joint Committed Credit Facility. The Fund participates, along with other funds managed by Vanguard, in a committed credit facility provided by a syndicate of lenders pursuant to a credit agreement that may be renewed annually; each Vanguard fund is individually liable for its borrowings, if any, under the credit facility. The amount and terms of the committed credit facility are subject to approval by the Fund's board of trustees and renegotiation with the lender syndicate on an annual basis.
JP Morgan EMBI Global Diversified. An index that includes U.S. dollar-denominated bonds issued by governments and government-owned entities domiciled in emerging market countries with a maturity greater than 1 year.
Mutual Fund. An investment company that pools the money of many people and invests it in a variety of securities in an effort to achieve a specific objective over time.
New York Stock Exchange (NYSE). A stock exchange based in New York City that is open for regular trading on business days, Monday through Friday, from 9:30 a.m. to 4 p.m., Eastern time.
Principal. The face value of a debt instrument or the amount of money put into an investment.
Securities. Stocks, bonds, money market instruments, and other investments.
Total Return. A percentage change, over a specified time period, in a mutual fund’s net asset value, assuming the reinvestment of all distributions of dividends and capital gains.
Volatility. The fluctuations in value of a mutual fund or other security. The greater a fund's volatility, the wider the fluctuations in its returns.
Yield. Income (interest or dividends) earned by an investment, expressed as a percentage of the investment’s price.
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Connect with Vanguard® > vanguard.com
For More Information
If you would like more information about Vanguard Emerging Markets Bond Fund, the following documents are available free upon request:
Annual/Semiannual Reports to Shareholders
Additional information about the Fund's investments is available in the Fund's annual and semiannual reports to shareholders. In the annual report, you will find a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.
Statement of Additional Information (SAI)
The SAI provides more detailed information about the Fund and is incorporated by reference into (and thus legally a part of) this prospectus.
To receive a free copy of the latest annual or semiannual report or the SAI, or to request additional information about the Fund or other Vanguard funds, please visit vanguard.com or contact us as follows:
If you are an individual investor:
Telephone: 800-662-7447; Text telephone for people with hearing impairment: 800-749-7273
If you are a participant in an employer-sponsored plan:
Telephone: 800-523-1188; Text telephone for people
with hearing impairment: 800-749-7273
If you are a current Vanguard shareholder and would like information about your account, account transactions, and/or account statements, please call:
Client Services Department
Telephone: 800-662-2739; Text telephone for people with hearing impairment: 800-749-7273
Information Provided by the Securities and Exchange Commission (SEC)
Reports and other information about the Fund are available in the EDGAR database on the SEC’s website at www.sec.gov, or you can receive copies of this information, for a fee, by electronic request at the following email address: publicinfo@sec.gov.
Fund's Investment Company Act file number: 811-05628
© 2021 The Vanguard Group, Inc. All rights reserved.Vanguard Marketing Corporation, Distributor.P 1431 012021
 
Vanguard U.S. Value Fund
Prospectus
 January 31, 2021
Investor Shares
Vanguard U.S. Value Fund Investor Shares (VUVLX)
 See the inside front cover for important information about access to your fund’s annual and semiannual shareholder reports.
 This prospectus contains financial data for the Fund through the fiscal year ended September 30, 2020.
  The Securities and Exchange Commission (SEC) has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is
a criminal offense.
Important information about access to shareholder reports
Beginning on January 1, 2021, as permitted by regulations adopted by the SEC, paper copies of your fund’s annual and semiannual shareholder reports will no longer be sent to you by mail, unless you specifically request them. Instead, you will be notified by mail each time a report is posted on the website and will be provided with a link to access the report.
If you have already elected to receive shareholder reports electronically, you will not be affected by this change and do not need to take any action. You may elect to receive shareholder reports and other communications from the fund electronically by contacting your financial intermediary (such as a broker-dealer or bank) or, if you invest directly with the fund, by calling Vanguard at one of the phone numbers on the back cover of this prospectus or by logging on to vanguard.com.
You may elect to receive paper copies of all future shareholder reports free of charge. If you invest through a financial intermediary, you can contact the intermediary to request that you continue to receive paper copies. If you invest directly with the fund, you can call Vanguard at one of the phone numbers on the back cover of this prospectus or log on to vanguard.com. Your election to receive paper copies will apply to all the funds you hold through an intermediary or directly with Vanguard.
Contents
 
Fund Summary
Investment Objective
The Fund seeks to provide long-term capital appreciation and income.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy, hold, and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
Shareholder Fees
(Fees paid directly from your investment)  
 
Sales Charge (Load) Imposed on Purchases
None
Purchase Fee
None
Sales Charge (Load) Imposed on Reinvested Dividends
None
Redemption Fee
None
Account Service Fee Per Year
(for certain fund account balances below $10,000)
$20
Annual Fund Operating Expenses
(Expenses that you pay each year as a percentage of the value of your investment)  
 
Management Fees
0.20%
12b-1 Distribution Fee
None
Other Expenses
0.02%
Total Annual Fund Operating Expenses
0.22%
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Example
The following example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. It illustrates the hypothetical expenses that you would incur over various periods if you were to invest $10,000 in the Fund's shares. This example assumes that the Fund provides a return of 5% each year and that total annual fund operating expenses remain as stated in the preceding table. You would incur these hypothetical expenses whether or not you were to redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:  
1 Year
3 Years
5 Years
10 Years
$23
$71
$124
$280
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in more taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the previous expense example, reduce the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 54% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests substantially all of its assets in U.S. common stocks, with a focus on value stocks—those that are generally out of favor with investors and that typically (but not always) have lower-than-average price/earnings (P/E) ratios. The advisor selects stocks of primarily large and mid-size companies by using a quantitative process to identify stocks that the advisor believes offer an appropriate balance between strong growth prospects and reasonable valuations relative to their industry peers.
Principal Risks
An investment in the Fund could lose money over short or long periods of time. You should expect the Fund's share price and total return to fluctuate within a wide range. The Fund is subject to the following risks, which could affect the Fund's performance:
•  Stock market risk , which is the chance that stock prices overall will decline. Stock markets tend to move in cycles, with periods of rising prices and periods of falling prices.
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•  Investment style risk , which is the chance that returns from the types of stocks in which the Fund invests will trail returns from the overall stock market. Small-, mid-, and large-cap stocks each tend to go through cycles of doing better—or worse—than other segments of the stock market or the stock market in general. These periods have, in the past, lasted for as long as several years. Historically, small- and mid-cap stocks have been more volatile in price than large-cap stocks. This volatility is due to several factors, including less certain growth and dividend-yield prospects.
•  Asset concentration risk , which is the chance that the Fund’s performance may be hurt disproportionately by the poor performance of relatively few stocks as compared with other mutual funds. The Fund tends to invest a high percentage of assets in its ten largest holdings. As a result, the volatility experienced by the Fund may be greater than the overall volatility of the stock market.
•  Manager risk , which is the chance that poor security selection will cause the Fund to underperform relevant benchmarks or other funds with a similar investment objective.
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Annual Total Returns
The following bar chart and table are intended to help you understand the risks of investing in the Fund. The bar chart shows how the performance of the Fund has varied from one calendar year to another over the periods shown. The table shows how the average annual total returns of the Fund compare with those of a relevant market index and a comparative index, which have investment characteristics similar to those of the Fund Keep in mind that the Fund's past performance (before and after taxes) does not indicate how the Fund will perform in the future. Updated performance information is available on our website at vanguard.com/performance or by calling Vanguard toll-free at 800-662-7447.
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Annual Total Returns — Vanguard U.S. Value Fund Investor Shares
 
During the periods shown in the bar chart, the highest and lowest returns for a calendar quarter were:  
 
Total Return
Quarter
Highest
16.41%
December 31, 2020
Lowest
-30.77%
March 31, 2020
Average Annual Total Returns for Periods Ended December 31, 2020  
 
1 Year
5 Years
10 Years
Vanguard U.S. Value Fund Investor Shares
 
 
 
Return Before Taxes
–3.14%
6.69%
9.89%
Return After Taxes on Distributions
–3.72
5.41
8.91
Return After Taxes on Distributions and Sale of Fund Shares
–1.46
5.10
8.02
Comparative Indexes
(reflect no deduction for fees, expenses, or taxes)
 
 
 
Russell 3000 Value Index
2.87%
9.74%
10.36%
Dow Jones U.S. Total Stock Market Float Adjusted Index
20.79
15.36
13.74
Actual after-tax returns depend on your tax situation and may differ from those shown in the preceding table. When after-tax returns are calculated, it is assumed that the shareholder was in the highest individual federal marginal income tax bracket at the time of each distribution of income or capital gains or upon redemption. State and local income taxes are not reflected in the calculations. Please note that after-tax returns are not relevant for a shareholder who holds fund shares in a tax-deferred account, such as an individual retirement account or a 401(k) plan. Also, figures captioned Return After Taxes on Distributions and Sale of Fund Shares may be higher than other figures for the same period if a capital loss occurs upon redemption and results in an assumed tax deduction for the shareholder.
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Investment Advisor
The Vanguard Group, Inc. (Vanguard)
Portfolio Managers
James P. Stetler, Senior Portfolio Manager at Vanguard. He has managed the Fund since 2008 (co-managed since 2012).
Binbin Guo, Ph.D., Principal of Vanguard and head of the Alpha Equity Investment team within Vanguard’s Quantitative Equity Group. He has co-managed the Fund since 2016.
Purchase and Sale of Fund Shares
You may purchase or redeem shares online through our website (vanguard.com), by mail (The Vanguard Group, P.O. Box 1110, Valley Forge, PA 19482-1110), or by telephone (800-662-2739). The minimum investment amount required to open and maintain a Fund account for Investor Shares is $3,000. The minimum investment amount required to add to an existing Fund account is generally $1. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special eligibility rules that may apply to them regarding Investor Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility. If you are investing through an employer-sponsored retirement or savings plan, your plan administrator or your benefits office can provide you with detailed information on how you can invest through your plan.
Tax Information
The Fund’s distributions may be taxable as ordinary income or capital gain. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply.
Payments to Financial Intermediaries
The Fund and its investment advisor do not pay financial intermediaries for sales of Fund shares.
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More on the Fund
This prospectus describes the principal risks you would face as a Fund shareholder. It is important to keep in mind one of the main principles of investing: generally, the higher the risk of losing money, the higher the potential reward. The reverse, also, is generally true: the lower the risk, the lower the potential reward. As you consider an investment in any mutual fund, you should take into account your personal tolerance for fluctuations in the securities markets. Look for this     symbol throughout the prospectus. It is used to mark detailed information about the more significant risks that you would confront as a Fund shareholder. To highlight terms and concepts important to mutual fund investors, we have provided Plain Talk® explanations along the way. Reading the prospectus will help you decide whether the Fund is the right investment for you. We suggest that you keep this prospectus for future reference.  
Plain Talk About Fund Expenses
All mutual funds have operating expenses. These expenses, which are
deducted from a fund’s gross income, are expressed as a percentage of the
net assets of the fund. Assuming that operating expenses remain as stated
in the Fees and Expenses section, Vanguard U.S. Value Fund’s expense ratio
would be 0.22%, or $2.20 per $1,000 of average net assets. The average
expense ratio for multi-cap value funds in 2019 was 0.99%, or $9.90 per
$1,000 of average net assets (derived from data provided by Lipper, a
Thomson Reuters Company, which reports on the mutual fund industry).
 
Plain Talk About Costs of Investing
Costs are an important consideration in choosing a mutual fund. That is
because you, as a shareholder, pay a proportionate share of the costs of
operating a fund and any transaction costs incurred when the fund buys or
sells securities. These costs can erode a substantial portion of the gross
income or the capital appreciation a fund achieves. Even seemingly small
differences in expenses can, over time, have a dramatic effect on a
fund’s performance.
The following sections explain the principal investment strategies and policies that the Fund uses in pursuit of its objective. The Fund's board of trustees, which oversees the Fund's management, may change investment strategies or policies in the interest of shareholders without a shareholder vote, unless those strategies or policies are designated as fundamental. Note that the Fund’s investment objective is not fundamental and may be changed without a
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shareholder vote. Under normal circumstances, the Fund will invest at least 80% of its assets in U.S. common stocks. The Fund‘s policy of investing at least 80% of its assets in U.S. common stocks may be changed only upon 60 days‘ notice to shareholders.
Market Exposure
The Fund invests mainly in common stocks of large and mid-size companies that offer favorable prospects for growth of earnings and reasonable valuations relative to their industry peers, but whose prices do not reflect these prospects.
   
The Fund is subject to stock market risk, which is the chance that stock prices overall will decline. Stock markets tend to move in cycles, with periods of rising prices and periods of falling prices.
   
The Fund is subject to investment style risk, which is the chance that returns from the types of stocks in which the Fund invests will trail returns from the overall stock market. Small-, mid-, and large-cap stocks each tend to go through cycles of doing better—or worse—than other segments of the stock market or the stock market in general. These periods have, in the past, lasted for as long as several years. Historically, small- and mid-cap stocks have been more volatile in price than large-cap stocks. This volatility is due to several factors, including less certain growth and dividend-yield prospects.
Stocks of publicly traded companies are often classified according to market capitalization, which is the market value of a company’s outstanding shares. These classifications typically include small-cap, mid-cap, and large-cap. It is important to understand that there are no “official” definitions of small-, mid-, and large-cap, even among Vanguard fund advisors, and that market capitalization ranges can change over time. The asset-weighted median market capitalization of the Fund’s stock holdings as of September 30, 2020, was $50.7 billion.
Security Selection
The Fund’s advisor employs an active investment management method, which means that securities are bought and sold according to the advisor’s evaluations of companies and their financial prospects, the prices of the securities, and the stock market and economy in general. The advisor will sell a security when it is no longer as attractive as an alternative investment.
Vanguard, the Fund’s investment advisor, constructs a diversified portfolio of domestic value stocks based on its assessment of the relative return potential of the securities. The advisor selects securities that it believes offer an appropriate balance between strong growth prospects and reasonable valuations relative to
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their industry peers. Vanguard manages the portfolio through the use of a quantitative process to evaluate all of the securities in the Fund’s benchmark, the Russell 3000 Value Index, while seeking to maintain a risk profile similar to that of the Index. This process was developed and managed by Vanguard’s Alpha Equity Investment team and is continually evolving. All potential enhancements to the process go through rigorous peer vetting and validation before being implemented. A team of portfolio managers utilizes the resulting process to determine which securities to buy and sell in the portfolio.  
Plain Talk About Growth Funds and Value Funds
Growth investing and value investing are two styles employed by stock-fund
managers. Growth funds generally invest in stocks of companies believed to
have above-average potential for growth in revenue, earnings, cash flow, or
other similar criteria. These stocks typically have low dividend yields, if any,
and above-average prices in relation to measures such as earnings and book
value. Value funds typically invest in stocks whose prices are below average
in relation to those measures; these stocks often have above-average
dividend yields. Value stocks also may remain undervalued by the market for
long periods of time. Growth and value stocks have historically produced
similar long-term returns, though each category has periods when it
outperforms the other.
   
Because the Fund tends to invest a high percentage of assets in its ten largest holdings, the Fund is subject to asset concentration risk, which is the chance that the Fund’s performance may be hurt disproportionately by the poor performance of relatively few stocks as compared with other mutual funds. As a result, the volatility experienced by the Fund may be greater than the overall volatility of the stock market.
   
The Fund is subject to manager risk, which is the chance that poor security selection will cause the Fund to underperform relevant benchmarks or other funds with a similar investment objective.
Other Investment Policies and Risks
In addition to investing in undervalued common stocks,, the Fund may make other kinds of investments to achieve its objective.
The Fund may invest up to 15% of its net assets in illiquid securities. Illiquid securities are investments that the Fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment.
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Restricted securities are a special type of illiquid security; these securities have not been publicly issued and legally can be resold only to qualified buyers.  
Although the Fund typically does not make significant investments in foreign securities, it reserves the right to invest up to 20% of its assets in foreign securities, which may include depositary receipts. Foreign securities may be traded on U.S. or foreign markets. To the extent that it owns foreign securities, the Fund is subject to country risk and currency risk. Country risk is the chance that world events --such as political upheaval, financial troubles, or natural disasters—will adversely affect the value of securities issued by companies in foreign countries. In addition, the prices of foreign stocks and the prices of U.S. stocks have, at times, moved in opposite directions. Currency risk is the chance that the value of a foreign investment, measured in U.S. dollars, will decrease because of unfavorable changes in currency exchange rates.
The Fund may invest, to a limited extent, in derivatives. Generally speaking, a derivative is a financial contract whose value is based on the value of a financial asset (such as a stock, a bond, or a currency), a physical asset (such as gold, oil, or wheat), a market index, or a reference rate. Investments in derivatives may subject the Fund to risks different from, and possibly greater than, those of investments directly in the underlying securities or assets. The Fund will not use derivatives for speculation or for the purpose of leveraging (magnifying) investment returns.
The Fund may enter into foreign currency exchange forward contracts, which are a type of derivative. A foreign currency exchange forward contract is an agreement to buy or sell a currency at a specific price on a specific date, usually 30, 60, or 90 days in the future. In other words, the contract guarantees an exchange rate on a given date. Advisors of funds that invest in foreign securities can use these contracts to guard against unfavorable changes in currency exchange rates. These contracts, however, would not prevent the Fund‘s securities from falling in value as a result of risks other than unfavorable currency exchange movements.
The Fund may invest a small portion of its assets in equity futures, which are a type of derivative, and/or shares of exchange-traded funds (ETFs). These equity futures and ETFs typically provide returns similar to those of common stocks. The Fund may purchase futures or ETFs when doing so will reduce the Fund’s transaction costs or provide flexibility for the Funds to seek better tax efficiency. Vanguard receives no additional revenue from Fund assets invested in ETF Shares of other Vanguard funds. Fund assets invested in ETF Shares are excluded when allocating to the Fund its share of the costs of Vanguard operations.
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Cash Management
The Fund's daily cash balance may be invested in Vanguard Market Liquidity Fund and/or Vanguard Municipal Cash Management Fund (each, a CMT Fund), which are low-cost money market funds. When investing in a CMT Fund, each Fund bears its proportionate share of the expenses of the CMT Fund in which it invests. Vanguard receives no additional revenue from Fund assets invested in a CMT Fund.
Methods Used to Meet Redemption Requests
Under normal circumstances, the Fund typically expects to meet redemptions with positive cash flows. When this is not an option, the Fund seeks to maintain its risk exposure by selling a cross section of the Fund’s holdings to meet redemptions, while also factoring in transaction costs. Additionally, the Fund may work with larger clients to implement their redemptions in a manner that is least disruptive to the portfolio; see “Potentially disruptive redemptions” under Redeeming Shares in the Investing With Vanguard section.
Under certain circumstances, including under stressed market conditions, there are additional tools that the Fund may use in order to meet redemptions, including advancing the settlement of market trades with counterparties to match investor redemption payments or delaying settlement of an investor’s transaction to match trade settlement within regulatory requirements. The Fund may also suspend payment of redemption proceeds for up to seven days; see “Emergency circumstances” under Redeeming Shares in the Investing With Vanguard section. Additionally under these unusual circumstances, the Fund may borrow money (subject to certain regulatory conditions and if available under board-approved procedures) through an interfund lending facility; through a bank line-of-credit, including a joint committed credit facility; or through an uncommitted line-of-credit from Vanguard in order to meet redemption requests.
Temporary Investment Measures
The Fund may temporarily depart from its normal investment policies and strategies when the advisor believes that doing so is in the Fund's best interest, so long as the strategy or policy employed is consistent with the Fund's investment objective. For instance, the Fund may invest beyond its normal limits in derivatives or exchange-traded funds that are consistent with the Fund's investment objective when those instruments are more favorably priced or provide needed liquidity, as might be the case if the Fund is transitioning assets from one advisor to another or receives large cash flows that it cannot prudently invest immediately.
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In addition, the Fund may take temporary defensive positions that are inconsistent with its normal investment policies and strategies—for instance, by allocating substantial assets to cash equivalent investments or other less volatile instruments— in response to adverse or unusual market, economic, political, or other conditions. In doing so, the Fund may succeed in avoiding losses but may otherwise fail to achieve its investment objective.
Frequent Trading or Market-Timing
Background. Some investors try to profit from strategies involving frequent trading of mutual fund shares, such as market-timing. For funds holding foreign securities, investors may try to take advantage of an anticipated difference between the price of the fund’s shares and price movements in overseas markets, a practice also known as time-zone arbitrage. Investors also may try to engage in frequent trading of funds holding investments such as small-cap stocks and high-yield bonds. As money is shifted into and out of a fund by a shareholder engaging in frequent trading, the fund incurs costs for buying and selling securities, resulting in increased brokerage and administrative costs. These costs are borne by all fund shareholders, including the long-term investors who do not generate the costs. In addition, frequent trading may interfere with an advisor’s ability to efficiently manage the fund.
Policies to address frequent trading. The Vanguard funds (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) do not knowingly accommodate frequent trading. The board of trustees of each Vanguard fund (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) has adopted policies and procedures reasonably designed to detect and discourage frequent trading and, in some cases, to compensate the fund for the costs associated with it. These policies and procedures do not apply to ETF Shares because frequent trading in ETF Shares generally does not disrupt portfolio management or otherwise harm fund shareholders. Although there is no assurance that Vanguard will be able to detect or prevent frequent trading or market-timing in all circumstances, the following policies have been adopted to address these issues:
• Each Vanguard fund reserves the right to reject any purchase request—including exchanges from other Vanguard funds—without notice and regardless of size. For example, a purchase request could be rejected because the investor has a history of frequent trading or if Vanguard determines that such purchase may negatively affect a fund’s operation or performance.
• Each Vanguard fund (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) generally prohibits, except as otherwise noted in the Investing With
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Vanguard section, an investor’s purchases or exchanges into a fund account for 30 calendar days after the investor has redeemed or exchanged out of that fund account.
• Certain Vanguard funds charge shareholders purchase and/or redemption fees on transactions.
See the Investing With Vanguard section of this prospectus for further details on Vanguard’s transaction policies.
Each Vanguard fund (other than retail and government money market funds), in determining its net asset value, will use fair-value pricing when appropriate, as described in the Share Price section. Fair-value pricing may reduce or eliminate the profitability of certain frequent-trading strategies.
Do not invest with Vanguard if you are a market-timer.
Turnover Rate
Although the Fund generally seeks to invest for the long term, it may sell securities regardless of how long they have been held. The Financial Highlights section of this prospectus shows historical turnover rates for the Fund. A turnover rate of 100%, for example, would mean that the Fund had sold and replaced securities valued at 100% of its net assets within a one-year period. In general, the greater the turnover rate, the greater the impact transaction costs will have on a fund’s return. Also, funds with high turnover rates may be more likely to generate capital gains, including short-term capital gains, that must be distributed to shareholders and will be taxable to shareholders investing through a taxable account.
The Fund and Vanguard
The Fund is a member of The Vanguard Group, a family of over 200 funds. All of the funds that are members of The Vanguard Group (other than funds of funds) share in the expenses associated with administrative services and business operations, such as personnel, office space, and equipment.
Vanguard Marketing Corporation provides marketing services to the funds. Although fund shareholders do not pay sales commissions or 12b-1 distribution fees, each fund (other than a fund of funds) or each share class of a fund (in the case of a fund with multiple share classes) pays its allocated share of the Vanguard funds’ marketing costs.  
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Plain Talk About Vanguard’s Unique Corporate Structure
The Vanguard Group is owned jointly by the funds it oversees and thus
indirectly by the shareholders in those funds. Most other mutual funds are
operated by management companies that are owned by third parties—either
public or private stockholders—and not by the funds they serve.
Investment Advisor
The Vanguard Group, Inc., P.O. Box 2600, Valley Forge, PA 19482, which began operations in 1975, serves as advisor to the Fund through its Quantitative Equity Group. As of September 30, 2020, Vanguard served as advisor for approximately $5.2 trillion in assets. Vanguard provides investment advisory services to the Fund pursuant to the Funds’ Service Agreement and subject to the supervision and oversight of the trustees and officers of the Fund.
For the fiscal year ended September 30, 2020, the advisory expenses represented an effective annual rate of less than 0.01% of the Fund’s average net assets.
Although the Fund is managed solely by Vanguard, the Fund reserves the right to utilize a multimanager approach in the future.Under the terms of an SEC exemption, the Fund's board of trustees may, without prior approval from shareholders, change the terms of an advisory agreement with a third-party investment advisor or hire a new third-party investment advisor—either as a replacement for an existing advisor or as an additional advisor. Any significant change in the Fund's advisory arrangements will be communicated to shareholders in writing. As the Funds' sponsor and overall manager, Vanguard may provide investment advisory services to the Fund at any time. Vanguard may also recommend to the board of trustees that an advisor be hired, terminated, or replaced or that the terms of an existing advisory agreement be revised. The Fund has filed an application seeking a similar SEC exemption with respect to investment advisors that are wholly owned subsidiaries of Vanguard. If the exemption is granted, the Fund may rely on the new SEC relief.
For a discussion of why the board of trustees approved the Fund's investment advisory arrangement, see the most recent semiannual report to shareholders covering the fiscal period ended March 31.
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The managers primarily responsible for the day-to-day management of the Fund are:
James P. Stetler, Senior Portfolio Manager at Vanguard. He has been with Vanguard since 1982, has worked in investment management since 1996, has managed investment portfolios since 2003, and has managed the Fund since 2008 (co-managed since 2012). Education: B.S., Susquehanna University; M.B.A., Saint Joseph’s University.
Binbin Guo, Ph.D., Principal of Vanguard and head of the Alpha Equity Investment team within Vanguard’s Quantitative Equity Group. He oversees the active quantitative equity funds and separately managed equity accounts. He has been with Vanguard since 2007 and has co-managed a portion of the Fund since 2016. Education: B.S. and M.S., Tsinghua University, China; Ph.D. and M.Phil., Yale University.
The Fund's Statement of Additional Information provides information about each portfolio manager’s compensation, other accounts under management, and ownership of shares of the Fund.
Dividends, Capital Gains, and Taxes
Fund Distributions
The Fund distributes to shareholders virtually all of its net income (interest and dividends, less expenses) as well as any net short-term or long-term capital gains realized from the sale of its holdings. Income and capital gains distributions, if any, generally occur annually in December. In addition, the Fund may occasionally make a supplemental distribution at some other time during the year.
You can receive distributions of income or capital gains in cash, or you can have them automatically reinvested in more shares of the Fund. However, if you are investing through an employer-sponsored retirement or savings plan, your distributions will be automatically reinvested in additional Fund shares.  
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Plain Talk About Distributions
As a shareholder, you are entitled to your portion of a fund’s income from
interest and dividends as well as capital gains from the fund’s sale of
investments. Income consists of both the dividends that the fund earns from
any stock holdings and the interest it receives from any money market and
bond investments. Capital gains are realized whenever the fund sells
securities for higher prices than it paid for them. These capital gains are
either short-term or long-term, depending on whether the fund held the
securities for one year or less or for more than one year.
Basic Tax Points
Investors in taxable accounts should be aware of the following basic federal income tax points:
• Distributions are taxable to you whether or not you reinvest these amounts in additional Fund shares.
• Distributions declared in December—if paid to you by the end of January—are taxable as if received in December.
• Any dividend distribution or short-term capital gains that you receive is taxable to you as ordinary income. If you are an individual and meet certain holding-period requirements with respect to your Fund shares, you may be eligible for reduced tax rates on “qualified dividend income,” if any, or a special tax deduction on “qualified REIT dividends,” if any, distributed by the Fund.
• Any distribution of net long-term capital gains is taxable to you as long-term capital gains, no matter how long you have owned shares in the Fund.
• Capital gains distributions may vary considerably from year to year as a result of the Fund's normal investment activities and cash flows.
• A sale or exchange of Fund shares is a taxable event. This means that you may have a capital gain to report as income, or a capital loss to report as a deduction, when you complete your tax return.
• Vanguard (or your intermediary) will send you a statement each year showing the tax status of all of your distributions.
Individuals, trusts, and estates whose income exceeds certain threshold amounts are subject to a 3.8% Medicare contribution tax on “net investment income.” Net investment income takes into account distributions paid by the Fund and capital gains from any sale or exchange of Fund shares.
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Dividend distributions and capital gains distributions that you receive, as well as your gains or losses from any sale or exchange of Fund shares, may be subject to state and local income taxes.
This prospectus provides general tax information only. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply. Please consult your tax advisor for detailed information about any tax consequences for you.  
Plain Talk About Buying a Dividend
Unless you are a tax-exempt investor or investing through a tax-advantaged
account (such as an IRA or an employer-sponsored retirement or savings
plan), you should consider avoiding a purchase of fund shares shortly before
the fund makes a distribution, because doing so can cost you money in
taxes. This is known as “buying a dividend.” For example: On December 15,
you invest $5,000, buying 250 shares for $20 each. If the fund pays a
distribution of $1 per share on December 16, its share price will drop to $19
(not counting market change). You still have only $5,000 (250 shares x $19 =
$4,750 in share value, plus 250 shares x $1 = $250 in distributions), but you
owe tax on the $250 distribution you received—even if you reinvest it in
more shares. To avoid buying a dividend, check a fund’s distribution schedule
before you invest.
General Information
Backup withholding. By law, Vanguard must withhold 24% of any taxable distributions or redemptions from your account if you do not:
• Provide your correct taxpayer identification number.
• Certify that the taxpayer identification number is correct.
• Confirm that you are not subject to backup withholding.
Similarly, Vanguard (or your intermediary) must withhold taxes from your account if the IRS instructs us to do so.
Foreign investors. Vanguard funds offered for sale in the United States (Vanguard U.S. funds), including the Fund offered in this prospectus, are not widely available outside the United States. Non-U.S. investors should be aware that U.S. withholding and estate taxes and certain U.S. tax reporting requirements may apply to any investments in Vanguard U.S. funds. Foreign investors should visit the non-U.S. investors page on our website at vanguard.com for information on Vanguard’s non-U.S. products.
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Invalid addresses. If a dividend distribution or capital gains distribution check mailed to your address of record is returned as undeliverable, Vanguard will automatically reinvest the distribution and all future distributions until you provide us with a valid mailing address. Reinvestments will receive the net asset value calculated on the date of the reinvestment.
Share Price
Share price, also known as net asset value (NAV), is calculated as of the close of regular trading on the New York Stock Exchange (NYSE), generally 4 p.m., Eastern time, on each day that the NYSE is open for business (a business day). In the rare event the NYSE experiences unanticipated disruptions and is unavailable at the close of the trading day, NAVs will be calculated as of the close of regular trading on the Nasdaq (or another alternate exchange if the Nasdaq is unavailable, as determined at Vanguard’s discretion), generally 4 p.m., Eastern time. The NAV per share is computed by dividing the total assets, minus liabilities, of the Fund by the number of Fund shares outstanding. On U.S. holidays or other days when the NYSE is closed, the NAV is not calculated, and the Fund does not sell or redeem shares. However, on those days the value of the Fund’s assets may be affected to the extent that the Fund holds securities that change in value on those days (such as foreign securities that trade on foreign markets that are open).
Stocks held by a Vanguard fund are valued at their market value when reliable market quotations are readily available from the principal exchange or market on which they are traded. Such securities are generally valued at their official closing price, the last reported sales price, or if there were no sales that day, the mean between the closing bid and asking prices. When a fund determines that market quotations either are not readily available or do not accurately reflect the value of a security, the security is priced at its fair value (the amount that the owner might reasonably expect to receive upon the current sale of the security).
The values of any foreign securities held by a fund are converted into U.S. dollars using an exchange rate obtained from an independent third party as of the close of regular trading on the NYSE. The values of any mutual fund shares, including institutional money market fund shares, held by a fund are based on the NAVs of the shares. The values of any ETF shares or closed-end fund shares held by a fund are based on the market value of the shares.
A fund also will use fair-value pricing if the value of a security it holds has been materially affected by events occurring before the fund's pricing time but after the close of the principal exchange or market on which the security is traded. This most commonly occurs with foreign securities, which may trade on foreign
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exchanges that close many hours before the fund's pricing time. Intervening events might be company-specific (e.g., earnings report, merger announcement) or country-specific or regional/global (e.g., natural disaster, economic or political news, act of terrorism, interest rate change). Intervening events include price movements in U.S. markets that exceed a specified threshold or that are otherwise deemed to affect the value of foreign securities.
Fair-value pricing may be used for domestic securities—for example, if (1) trading in a security is halted and does not resume before the fund's pricing time or a security does not trade in the course of a day and (2) the fund holds enough of the security that its price could affect the NAV.
Fair-value prices are determined by Vanguard according to procedures adopted by the board of trustees. When fair-value pricing is employed, the prices of securities used by a fund to calculate the NAV may differ from quoted or published prices for the same securities.
Vanguard fund share prices are published daily on our website at vanguard.com/prices.
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Financial Highlights
Financial highlights information is intended to help you understand a fund’s performance for the past five years (or, if shorter, its period of operations). Certain information reflects financial results for a single fund share. Total return represents the rate that an investor would have earned or lost each period on an investment in a fund or share class (assuming reinvestment of all distributions). This information has been obtained from the financial statements audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, whose report, along with fund financial statements, is included in a fund’s most recent annual report to shareholders. You may obtain a free copy of a fund’s latest annual or semiannual report, which is available upon request.
Vanguard U.S. Value Fund Investor Shares  
 
Year Ended September 30,
For a Share Outstanding Throughout Each Period
2020
2019
2018
2017
2016
Net Asset Value, Beginning of Period
$18.04
$20.03
$19.63
$17.25
$16.48
Investment Operations
 
 
 
 
 
Net Investment Income
0.3941
0.4321
0.3731
0.4371
0.440
Net Realized and Unrealized Gain (Loss) on
Investments
(2.275)
(1.176)
1.563
2.606
1.341
Total from Investment Operations
(1.881)
(0.744)
1.936
3.043
1.781
Distributions
 
 
 
 
 
Dividends from Net Investment Income
(0.431)
(0.389)
(0.382)
(0.386)
(0.358)
Distributions from Realized Capital Gains
(0.178)
(0.857)
(1.154)
(0.277)
(0.653)
Total Distributions
(0.609)
(1.246)
(1.536)
(0.663)
(1.011)
Net Asset Value, End of Period
$15.55
$18.04
$20.03
$19.63
$17.25
Total Return2
–10.97%
–2.98%
10.22%
17.87%
11.09%
Ratios/Supplemental Data
 
 
 
 
 
Net Assets, End of Period (Millions)
$1,022
$1,447
$1,692
$1,675
$1,374
Ratio of Total Expenses to Average Net Assets
0.22%
0.22%
0.22%
0.23%
0.23%
Ratio of Net Investment Income to Average Net
Assets
2.40%
2.43%
1.92%
2.36%
2.63%
Portfolio Turnover Rate
54%
61%
75%
95%
76%
1
Calculated based on average shares outstanding.
2
Total returns do not include account service fees that may have applied in the periods shown.
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Investing With Vanguard
This section of the prospectus explains the basics of doing business with Vanguard. Vanguard fund shares can be held directly with Vanguard or indirectly through an intermediary, such as a bank, a broker, or an investment advisor. If you hold Vanguard fund shares directly with Vanguard, you should carefully read each topic within this section that pertains to your relationship with Vanguard. If you hold Vanguard fund shares indirectly through an intermediary (including shares held in a brokerage account through Vanguard Brokerage Services®), please see Investing With Vanguard Through Other Firms, and also refer to your account agreement with the intermediary for information about transacting in that account. If you hold Vanguard fund shares through an employer-sponsored retirement or savings plan, please see Employer-Sponsored Plans. Vanguard reserves the right to change the following policies without notice. Please call or check online for current information. See Contacting Vanguard.
For Vanguard fund shares held directly with Vanguard, each fund you hold in an account is a separate “fund account.” For example, if you hold three funds in a nonretirement account titled in your own name, two funds in a nonretirement account titled jointly with your spouse, and one fund in an individual retirement account, you have six fund accounts—and this is true even if you hold the same fund in multiple accounts. Note that each reference to “you” in this prospectus applies to any one or more registered account owners or persons authorized to transact on your account.
Purchasing Shares
Vanguard reserves the right, without notice, to increase or decrease the minimum amount required to open or maintain a fund account or to add to an existing fund account.
Investment minimums may differ for certain categories of investors.
Account Minimums
To open and maintain an account. $3,000. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special eligibility rules that may apply to them regarding Investor Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility.
To add to an existing account. Generally $1.
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How to Initiate a Purchase Request
Be sure to check Exchanging Shares, Frequent-Trading Limitations, and Other Rules You Should Know before placing your purchase request.
Online. You may open certain types of accounts, request a purchase of shares, and request an exchange through our website or our mobile application if your account is eligible and you are registered for online access.
By telephone. You may call Vanguard to begin the account registration process or request that the account-opening forms be sent to you. You may also call Vanguard to request a purchase of shares in your account or to request an exchange. See Contacting Vanguard.
By mail. You may send Vanguard your account registration form and check to open a new fund account. To add to an existing fund account, you may send your check with an Invest-by-Mail form (from a transaction confirmation or your account statement) or with a deposit slip (available online).
How to Pay for a Purchase
By electronic bank transfer. You may purchase shares of a Vanguard fund through an electronic transfer of money from a bank account. To establish the electronic bank transfer service on an account, you must designate the bank account online, complete a form, or fill out the appropriate section of your account registration form. After the service is set up on your account, you can purchase shares by electronic bank transfer on a regular schedule (Automatic Investment Plan), if eligible, or upon request. Your purchase request can be initiated online (if you are registered for online access), by telephone, or by mail.
By wire. Wiring instructions vary for different types of purchases. Please call Vanguard for instructions and policies on purchasing shares by wire. See Contacting Vanguard.
By check. You may make initial or additional purchases to your fund account by sending a check with a deposit slip or by utilizing our mobile application if your account is eligible and you are registered for online access. Also see How to Initiate a Purchase Request. Make your check payable to Vanguard and include the appropriate fund number (124).
By exchange. You may purchase shares of a Vanguard fund using the proceeds from the simultaneous redemption of shares of another Vanguard fund. You may initiate an exchange online (if you are registered for online access), by telephone, or by mail with an exchange form. See Exchanging Shares.
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Trade Date
The trade date for any purchase request received in good order will depend on the day and time Vanguard receives your request, the manner in which you are paying, and the type of fund you are purchasing. Your purchase will be executed using the NAV as calculated on the trade date. NAVs are calculated only on days that the NYSE is open for trading (a business day). In the rare event the NYSE experiences unanticipated disruptions and is unavailable at the close of the trading day, NAVs will be calculated as of the close of regular trading on the Nasdaq (or another alternate exchange if the Nasdaq is unavailable, as determined at Vanguard’s discretion), generally 4 p.m., Eastern time. The time selected for NAV calculation in this rare event shall also serve as the conclusion of the trading day. See Share Price.
For purchases by check into all funds other than money market funds and for purchases by exchange, wire, or electronic bank transfer into all funds: If the purchase request is received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the trade date for the purchase will be the same day. If the purchase request is received on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the trade date for the purchase will be the next business day.
For purchases by check into money market funds: If the purchase request is received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the trade date for the purchase will be the next business day. If the purchase request is received on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the trade date for the purchase will be the second business day following the day Vanguard receives the purchase request. Because money market instruments must be purchased with federal funds and it takes a money market mutual fund one business day to convert check proceeds into federal funds, the trade date for the purchase will be one business day later than for other funds.
If your purchase request is not accurate and complete, it may be rejected. See Other Rules You Should Know—Good Order.
For further information about purchase transactions, consult our website at vanguard.com or see Contacting Vanguard.
Other Purchase Rules You Should Know
Check purchases. All purchase checks must be written in U.S. dollars, be drawn on a U.S. bank, and be accompanied by good order instructions. Vanguard does not accept cash, traveler’s checks, starter checks, or money orders. In addition, Vanguard may refuse checks that are not made payable to Vanguard.
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New accounts. We are required by law to obtain from you certain personal information that we will use to verify your identity. If you do not provide the information, we may not be able to open your account. If we are unable to verify your identity, Vanguard reserves the right, without notice, to close your account or take such other steps as we deem reasonable. Certain types of accounts may require additional documentation.
Refused or rejected purchase requests. Vanguard reserves the right to stop selling fund shares or to reject any purchase request at any time and without notice, including, but not limited to, purchases requested by exchange from another Vanguard fund. This also includes the right to reject any purchase request because the investor has a history of frequent trading or because the purchase may negatively affect a fund’s operation or performance.
Large purchases. Call Vanguard before attempting to invest a large dollar amount.
No cancellations. Vanguard will not accept your request to cancel any purchase request once processing has begun. Please be careful when placing a purchase request.
Redeeming Shares
How to Initiate a Redemption Request
Be sure to check Exchanging Shares, Frequent-Trading Limitations, and Other Rules You Should Know before placing your redemption request.
Online. You may request a redemption of shares or request an exchange through our website or our mobile application if your account is eligible and you are registered for online access.
By telephone. You may call Vanguard to request a redemption of shares or an exchange. See Contacting Vanguard.
By mail. You may send a form (available online) to Vanguard to redeem from a fund account or to make an exchange.
How to Receive Redemption Proceeds
By electronic bank transfer. You may have the proceeds of a fund redemption sent directly to a designated bank account. To establish the electronic bank transfer service on an account, you must designate a bank account online, complete a form, or fill out the appropriate section of your account registration form. After the service is set up on your account, you can redeem shares by
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electronic bank transfer on a regular schedule (Automatic Withdrawal Plan), if eligible, or upon request. Your redemption request can be initiated online (if you are registered for online access), by telephone, or by mail.
By wire. To receive your proceeds by wire, you may instruct Vanguard to wire your redemption proceeds ($100 minimum) to a previously designated bank account. To establish the wire redemption service, you generally must designate a bank account online, complete a form, or fill out the appropriate section of your account registration form.
Please note that Vanguard charges a $10 wire fee for outgoing wire redemptions. The fee is assessed in addition to, rather than being withheld from, redemption proceeds and is paid directly to the fund in which you invest. For example, if you redeem $100 via a wire, you will receive the full $100, and the $10 fee will be assessed to your fund account through an additional redemption of fund shares. If you redeem your entire fund account, your redemption proceeds will be reduced by the amount of the fee. The wire fee does not apply to accounts held by Flagship and Flagship Select clients; accounts held through intermediaries, including Vanguard Brokerage Services; or accounts held by institutional clients.
By exchange. You may have the proceeds of a Vanguard fund redemption invested directly in shares of another Vanguard fund. You may initiate an exchange online (if you are registered for online access), by telephone, or by mail. See Exchanging Shares.
By check. If you have not chosen another redemption method, Vanguard will mail you a redemption check, generally payable to all registered account owners, normally within two business days of your trade date, and generally to the address of record.
Trade Date
The trade date for any redemption request received in good order will depend on the day and time Vanguard receives your request and the manner in which you are redeeming. Your redemption will be executed using the NAV as calculated on the trade date. NAVs are calculated only on days that the NYSE is open for trading (a business day). In the rare event the NYSE experiences unanticipated disruptions and is unavailable at the close of the trading day, NAVs will be calculated as of the close of regular trading on the Nasdaq (or another alternate exchange if the Nasdaq is unavailable, as determined at Vanguard’s discretion), generally 4 p.m., Eastern time. The time selected for NAV calculation in this rare event shall also serve as the conclusion of the trading day. See Share Price.
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For redemptions by check, exchange, or wire: If the redemption request is received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the trade date will be the same day. If the redemption request is received on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the trade date will be the next business day.
• Note on timing of wire redemptions from money market funds: For telephone requests received by Vanguard on a business day before 10:45 a.m., Eastern time (2 p.m., Eastern time, for Vanguard Cash Reserves Federal Money Market Fund; 12:30 p.m., Eastern time, for Vanguard Federal Money Market Fund), the redemption proceeds generally will leave Vanguard by the close of business the same day. For telephone requests received by Vanguard on a business day after those cut-off times, or on a nonbusiness day, and for all requests other than by telephone, the redemption proceeds generally will leave Vanguard by the close of business on the next business day.
• Note on timing of wire redemptions from all other funds: For requests received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the redemption proceeds generally will leave Vanguard by the close of business on the next business day. For requests received by Vanguard on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the redemption proceeds generally will leave Vanguard by the close of business on the second business day after Vanguard receives the request.
For redemptions by electronic bank transfer: If the redemption request is received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the trade date will be the same day. If the redemption request is received on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the trade date will be the next business day.
If your redemption request is not accurate and complete, it may be rejected. If we are unable to send your redemption proceeds by wire or electronic bank transfer because the receiving institution rejects the transfer, Vanguard will make additional efforts to complete your transaction. If Vanguard is still unable to complete the transaction, we may send the proceeds of the redemption to you by check, generally payable to all registered account owners, or use your proceeds to purchase new shares of the fund from which you sold shares for the purpose of the wire or electronic bank transfer transaction. See Other Rules You Should Know—Good Order.
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If your redemption request is received in good order, we typically expect that redemption proceeds will be paid by the Fund within one business day of the trade date; however, in certain circumstances, investors may experience a longer settlement period at the time of the transaction. For further information, see “Potentially disruptive redemptions” and “Emergency circumstances.”
For further information about redemption transactions, consult our website at vanguard.com or see Contacting Vanguard.
Other Redemption Rules You Should Know
Documentation for certain accounts. Special documentation may be required to redeem from certain types of accounts, such as trust, corporate, nonprofit, or retirement accounts. Please call us before attempting to redeem from these types of accounts.
Potentially disruptive redemptions. Vanguard reserves the right to pay all or part of a redemption in kind—that is, in the form of securities—if we reasonably believe that a cash redemption would negatively affect the fund’s operation or performance or that the shareholder may be engaged in market-timing or frequent trading. Under these circumstances, Vanguard also reserves the right to delay payment of the redemption proceeds for up to seven calendar days. By calling us before you attempt to redeem a large dollar amount, you may avoid in-kind or delayed payment of your redemption. Please see Frequent-Trading Limitations for information about Vanguard’s policies to limit frequent trading.
Recently purchased shares. Although you can redeem shares at any time, proceeds may not be made available to you until the fund collects payment for your purchase. This may take up to seven calendar days for shares purchased by check or by electronic bank transfer. If you have written a check on a fund with checkwriting privileges, that check may be rejected if your fund account does not have a sufficient available balance.
Address change. If you change your address online or by telephone, there may be up to a 14-day restriction (starting on the business day after your address is changed) on your ability to request check redemptions online and by telephone. You can request a redemption in writing (using a form available online) at any time. Confirmations of address changes are sent to both the old and new addresses.
Payment to a different person or address. At your request, we can make your redemption check payable, or wire your redemption proceeds, to a different person or send it to a different address. However, this generally requires the written consent of all registered account owners and may require additional
26
documentation, such as a signature guarantee or a notarized signature. You may obtain a signature guarantee from some commercial or savings banks, credit unions, trust companies, or member firms of a U.S. stock exchange.
No cancellations. Vanguard will not accept your request to cancel any redemption request once processing has begun. Please be careful when placing a redemption request.
Emergency circumstances. Vanguard funds can postpone payment of redemption proceeds for up to seven calendar days. In addition, Vanguard funds can suspend redemptions and/or postpone payments of redemption proceeds beyond seven calendar days at times when the NYSE is closed or during emergency circumstances, as determined by the SEC.
Exchanging Shares
An exchange occurs when you use the proceeds from the redemption of shares of one Vanguard fund to simultaneously purchase shares of a different Vanguard fund. You can make exchange requests online (if you are registered for online access), by telephone, or by mail. See Purchasing Shares and Redeeming Shares.
If the NYSE is open for regular trading (generally until 4 p.m., Eastern time, on a business day) at the time an exchange request is received in good order, the trade date generally will be the same day. See Other Rules You Should Know—Good Order for additional information on all transaction requests.
Vanguard will not accept your request to cancel any exchange request once processing has begun. Please be careful when placing an exchange request.
Call Vanguard before attempting to exchange a large dollar amount. By calling us before you attempt to exchange a large dollar amount, you may avoid delayed or rejected transactions.
Please note that Vanguard reserves the right, without notice, to revise or terminate the exchange privilege, limit the amount of any exchange, or reject an exchange, at any time, for any reason. Please see Frequent-Trading Limitations for information about Vanguard’s policies to limit frequent trading.
Frequent-Trading Limitations
Because excessive transactions can disrupt management of a fund and increase the fund’s costs for all shareholders, the board of trustees of each Vanguard fund places certain limits on frequent trading in the funds. Each Vanguard fund (other
27
than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) limits an investor’s purchases or exchanges into a fund account for 30 calendar days after the investor has redeemed or exchanged out of that fund account. ETF Shares are not subject to these frequent-trading limits.
For Vanguard Retirement Investment Program pooled plans, the limitations apply to exchanges made online or by telephone.
These frequent-trading limitations do not apply to the following:
• Purchases of shares with reinvested dividend or capital gains distributions.
• Transactions through Vanguard’s Automatic Investment Plan, Automatic Exchange Service, Direct Deposit Service, Automatic Withdrawal Plan, Required Minimum Distribution Service, and Vanguard Small Business Online®.
• Discretionary transactions through Vanguard Personal Advisor Services®, Vanguard Institutional Advisory Services®, and Vanguard Digital Advisor™.
• Redemptions of shares to pay fund or account fees.
• Redemptions of shares to remove excess shareholder contributions to certain types of retirement accounts (including, but not limited to, IRAs and Vanguard Individual 401(k) Plans).
• Transfers and reregistrations of shares within the same fund.
• Purchases of shares by asset transfer or direct rollover.
• Conversions of shares from one share class to another in the same fund.
• Checkwriting redemptions.
• Section 529 college savings plans.
• Certain approved institutional portfolios and asset allocation programs, as well as trades made by funds or trusts managed by Vanguard or its affiliates that invest in other Vanguard funds. (Please note that shareholders of Vanguard’s funds of funds are subject to the limitations.)
For participants in employer-sponsored defined contribution plans,* the frequent-trading limitations do not apply to:
• Purchases of shares with participant payroll or employer contributions or loan repayments.
• Purchases of shares with reinvested dividend or capital gains distributions.
• Distributions, loans, and in-service withdrawals from a plan.
• Redemptions of shares as part of a plan termination or at the direction of the plan.
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• Transactions executed through the Vanguard Managed Account Program.
• Redemptions of shares to pay fund or account fees.
• Share or asset transfers or rollovers.
• Reregistrations of shares.
• Conversions of shares from one share class to another in the same fund.
• Exchange requests submitted by written request to Vanguard. (Exchange requests submitted by fax, if otherwise permitted, are subject to the limitations.)
* The following Vanguard fund accounts are subject to the frequent-trading limitations: SEP-IRAs, SIMPLE IRAs, certain Individual 403(b)(7) Custodial Accounts, and Vanguard Individual 401(k) Plans.
Accounts Held by Institutions (Other Than Defined Contribution Plans)
Vanguard will systematically monitor for frequent trading in institutional clients’ accounts. If we detect suspicious trading activity, we will investigate and take appropriate action, which may include applying to a client’s accounts the 30-day policy previously described, prohibiting a client’s purchases of fund shares, and/or revoking the client’s exchange privilege.
Accounts Held by Intermediaries
When intermediaries establish accounts in Vanguard funds for the benefit of their clients, we cannot always monitor the trading activity of the individual clients. However, we review trading activity at the intermediary (omnibus) level, and if we detect suspicious activity, we will investigate and take appropriate action. If necessary, Vanguard may prohibit additional purchases of fund shares by an intermediary, including for the benefit of certain of the intermediary’s clients. Intermediaries also may monitor their clients’ trading activities with respect to Vanguard funds.
For those Vanguard funds that charge purchase and/or redemption fees, intermediaries will be asked to assess these fees on client accounts and remit these fees to the funds. The application of purchase and redemption fees and frequent-trading limitations may vary among intermediaries. There are no assurances that Vanguard will successfully identify all intermediaries or that intermediaries will properly assess purchase and redemption fees or administer frequent-trading limitations. If you invest with Vanguard through an intermediary, please read that firm’s materials carefully to learn of any other rules or fees that may apply.
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Other Rules You Should Know
Prospectus and Shareholder Report Mailings
When two or more shareholders have the same last name and address, just one summary prospectus (or prospectus) and/or shareholder report may be sent in an attempt to eliminate the unnecessary expense of duplicate mailings. You may request individual prospectuses and reports by contacting our Client Services Department in writing, by telephone, or online. See Contacting Vanguard.
Vanguard.com
Registration. If you are a registered user of vanguard.com, you can review your account holdings; buy, sell, or exchange shares of most Vanguard funds; and perform most other transactions through our website. You must register for this service online.
Electronic delivery. Vanguard can deliver your account statements, transaction confirmations, prospectuses, certain tax forms, and shareholder reports electronically. If you are a registered user of vanguard.com, you can consent to the electronic delivery of these documents by logging on and changing your mailing preferences under “Account Maintenance.” You can revoke your electronic consent at any time through our website, and we will begin to send paper copies of these documents within 30 days of receiving your revocation.
Telephone Transactions
Automatic. When we set up your account, we will automatically enable you to do business with us by telephone, unless you instruct us otherwise in writing.
Tele-Account®. To obtain fund and account information through Vanguard’s automated telephone service, you must first establish a Personal Identification Number (PIN) by calling Tele-Account at 800-662-6273.
Proof of a caller’s authority. We reserve the right to refuse a telephone request if the caller is unable to provide the requested information or if we reasonably believe that the caller is not an individual authorized to act on the account. Before we allow a caller to act on an account, we may request the following information:
• Authorization to act on the account (as the account owner or by legal documentation or other means).
• Account registration and address.
• Fund name and account number, if applicable.
• Other information relating to the caller, the account owner, or the account.
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Good Order
We reserve the right to reject any transaction instructions that are not in “good order.” Good order generally means that your instructions:
• Are provided by the person(s) authorized in accordance with Vanguard’s policies and procedures to access the account and request transactions.
• Include the fund name and account number.
• Include the amount of the transaction (stated in dollars, shares, or percentage).
Written instructions also must generally be provided on a Vanguard form and include:
• Signature(s) and date from the authorized person(s).
• Signature guarantees or notarized signatures, if required for the type of transaction. (Call Vanguard for specific requirements.)
• Any supporting documentation that may be required.
Good order requirements may vary among types of accounts and transactions. For more information, consult our website at vanguard.com or see Contacting Vanguard.
Vanguard reserves the right, without notice, to revise the requirements for good order.
Future Trade-Date Requests
Vanguard does not accept requests to hold a purchase, redemption, or exchange transaction for a future date. All such requests will receive trade dates as previously described in Purchasing Shares, Redeeming Shares, and Exchanging Shares. Vanguard reserves the right to return future-dated purchase checks.
Accounts With More Than One Owner
If an account has more than one owner or authorized person, Vanguard generally will accept instructions from any one owner or authorized person.
Responsibility for Fraud
You should take precautions to protect yourself from fraud. Keep your account-related information private, and review any account confirmations, statements, or other information that we provide to you as soon as you receive them. Let us know immediately if you discover unauthorized activity or see something on your account that you do not understand or that looks unusual.
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Vanguard will not be responsible for losses that result from transactions by a person who we reasonably believe is authorized to act on your account.
Uncashed Checks
Please cash your distribution or redemption checks promptly. Vanguard will not pay interest on uncashed checks. Vanguard may be required to transfer assets related to uncashed checks to a state under the state’s abandoned property law.
Dormant Accounts
If your account has no activity in it for a period of time, Vanguard may be required to transfer it to a state under the state’s abandoned property law, subject to potential federal or state withholding taxes.
Unusual Circumstances
If you experience difficulty contacting Vanguard online or by telephone, you can send us your transaction request on a Vanguard form by regular or express mail.
Investing With Vanguard Through Other Firms
You may purchase or sell shares of most Vanguard funds through a financial intermediary, such as a bank, a broker, or an investment advisor. Please consult your financial intermediary to determine which, if any, shares are available through that firm and to learn about other rules that may apply. Your financial intermediary can provide you with account information and any required tax forms. You may be required to pay a commission on purchases of mutual fund shares made through a financial intermediary.
Please see Frequent-Trading Limitations—Accounts Held by Intermediaries for information about the assessment of any purchase or redemption fees and the monitoring of frequent trading for accounts held by intermediaries.
Account Service Fee
Vanguard may charge a $20 account service fee on fund accounts that have a balance below $10,000 for any reason, including market fluctuation. The account service fee may be applied to both retirement and nonretirement fund accounts and may be assessed on fund accounts in all Vanguard funds, regardless of the account minimum. The fee, which will be collected by redeeming fund shares in the amount of $20, will be deducted from fund accounts subject to the fee once per calendar year.
If you elect to receive your statements and other materials electronically (i.e., by e-delivery), the account service fee will not be charged, so long as your election remains in effect. You can make your e-delivery election on vanguard.com.
32
Beginning on January 1, 2021, you may elect to receive paper copies of shareholder reports free of charge as noted on the cover of this prospectus.
Certain account types have alternative fee structures, including SIMPLE IRAs, Vanguard Retirement Investment Program pooled plans, and Vanguard Individual 401(k) Plans.
Low-Balance Accounts
The Fund reserves the right to liquidate a fund account whose balance falls below the account minimum for any reason, including market fluctuation. This liquidation policy applies to nonretirement fund accounts and accounts that are held through intermediaries. Any such liquidation will be preceded by written notice to the investor.
Right to Change Policies
In addition to the rights expressly stated elsewhere in this prospectus, Vanguard reserves the right, without notice, to (1) alter, add, or discontinue any conditions of purchase (including eligibility requirements), redemption, exchange, service, or privilege at any time and (2) alter, impose, discontinue, or waive any purchase fee, redemption fee, account service fee, or other fee charged to a shareholder or a group of shareholders. Changes may affect any or all investors. These actions will be taken when, at the sole discretion of Vanguard management, Vanguard believes they are in the best interest of a fund.
Account Restrictions
Vanguard reserves the right to: (1) redeem all or a portion of a fund/account to meet a legal obligation, including tax withholding, tax lien, garnishment order, or other obligation imposed on your account by a court or government agency; (2) redeem shares, close an account, or suspend account privileges, features, or options in the case of threatening conduct or activity; (3) redeem shares, close an account, or suspend account privileges, features, or options if Vanguard believes or suspects that not doing so could result in a suspicious, fraudulent, or illegal transaction; (4) place restrictions on the ability to redeem any or all shares in an account if it is required to do so by a court or government agency; (5) place restrictions on the ability to redeem any or all shares in an account if Vanguard believes that doing so will prevent fraud, financial exploitation or abuse, or to protect vulnerable investors; (6) freeze any account and/or suspend account services if Vanguard has received reasonable notice of a dispute regarding the assets in an account, including notice of a dispute between the registered or beneficial account owners; and (7) freeze any account and/or suspend account services upon initial notification to Vanguard of the death of an account owner.
33
Fund and Account Updates
Confirmation Statements
We will send (or provide through our website, whichever you prefer) a confirmation of your trade date and the amount of your transaction when you buy, sell, or exchange shares. However, we will not send confirmations reflecting only checkwriting redemptions or the reinvestment of dividend or capital gains distributions. For any month in which you had a checkwriting redemption, a Checkwriting Activity Statement will be sent to you itemizing the checkwriting redemptions for that month. Promptly review each confirmation statement that we provide to you. It is important that you contact Vanguard immediately with any questions you may have about any transaction reflected on a confirmation statement, or Vanguard will consider the transaction properly processed.
Portfolio Summaries
We will send (or provide through our website, whichever you prefer) quarterly portfolio summaries to help you keep track of your accounts throughout the year. Each summary shows the market value of your account at the close of the statement period, as well as all distributions, purchases, redemptions, exchanges, and transfers for the current calendar quarter (or month). Promptly review each summary that we provide to you. It is important that you contact Vanguard immediately with any questions you may have about any transaction reflected on the summary, or Vanguard will consider the transaction properly processed.
Tax Information Statements
For most accounts, Vanguard (or your intermediary) is required to provide annual tax forms to assist you in preparing your income tax returns. These forms are generally available for each calendar year early in the following year. Registered users of vanguard.com can also view certain forms through our website. Vanguard (or your intermediary) may also provide you with additional tax-related documentation. For more information, consult our website at vanguard.com or see Contacting Vanguard.
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Annual and Semiannual Reports
We will send (or provide through our website, whichever you prefer) reports about Vanguard U.S. Value Fund twice a year, in May and November. These reports include overviews of the financial markets and provide the following specific Fund information:
• Performance assessments and comparisons with industry benchmarks.
• Reports from the advisor.
• Financial statements with listings of Fund holdings.
Portfolio Holdings
Please consult the Fund's Statement of Additional Information or our website for a description of the policies and procedures that govern disclosure of the Fund’s portfolio holdings.
Employer-Sponsored Plans
Your plan administrator or your employee benefits office can provide you with detailed information on how to participate in your plan and how to elect the Fund as an investment option.
• If you have any questions about the Fund or Vanguard, including those about the Fund’s investment objective, strategies, or risks, contact Vanguard Participant Services toll-free at 800-523-1188 or visit our website at vanguard.com.
• If you have questions about your account, contact your plan administrator or the organization that provides recordkeeping services for your plan.
• Be sure to carefully read each topic that pertains to your transactions with Vanguard.
Vanguard reserves the right to change its policies without notice to shareholders.
Transactions
Processing times for your transaction requests may differ among recordkeepers or among transaction and funding types. Your plan’s recordkeeper (which may also be Vanguard) will determine the necessary processing time frames for your transaction requests prior to submission to the Fund. Consult your recordkeeper or plan administrator for more information.
35
If Vanguard is serving as your plan recordkeeper and if your transaction involves one or more investments with an early cut-off time for processing or another trading restriction, your entire transaction will be subject to the restriction when the trade date for your transaction is determined.
36
Contacting Vanguard  
Web
 
Vanguard.com
For the most complete source of Vanguard news
For fund, account, and service information
For most account transactions
For literature requests
24 hours a day, 7 days a week
 
Phone
Vanguard Tele-Account®
800-662-6273
For automated fund and account information
Toll-free, 24 hours a day, 7 days a week
Investor Information 800-662-7447
(Text telephone for people with
hearing impairment at 800-749-7273)
For fund and service information
For literature requests
Client Services 800-662-2739
(Text telephone for people with
hearing impairment at 800-749-7273)
For account information
For most account transactions
Participant Services 800-523-1188
(Text telephone for people with
hearing impairment at 800-749-7273)
For information and services for participants in
employer-sponsored plans
Institutional Division
888-809-8102
For information and services for large institutional
investors
Financial Advisor and Intermediary
Sales Support 800-997-2798
For information and services for financial intermediaries
including financial advisors, broker-dealers, trust
institutions, and insurance companies
Financial Advisory and Intermediary
Trading Support 800-669-0498
For account information and trading support for
financial intermediaries including financial advisors,
broker-dealers, trust institutions, and insurance
companies
Additional Information  
 
Inception Date
Newspaper
Abbreviation
Vanguard
Fund Number
CUSIP
Number
U.S. Value Fund
6/29/2000
UsValue
124
922020201
 
CGS identifiers have been provided by CUSIP Global Services, managed on behalf of the American Bankers Association by Standard & Poor’s Financial Services, LLC, and are not for use or dissemination in a manner that would serve as a substitute for any CUSIP service. The CUSIP Database, ©2021 American Bankers Association. “CUSIP” is a registered trademark of the American Bankers Association.
37
Glossary of Investment Terms
Active Management. An investment approach that seeks to exceed the average returns of a particular financial market or market segment. In selecting securities to buy and sell, active managers may rely on, among other things, research, market forecasts, quantitative models, and their own judgment and experience.
Capital Gains Distributions. Payments to mutual fund shareholders of gains realized on securities that a fund has sold at a profit, minus any realized losses.
Cash Equivalent Investments. Cash deposits, short-term bank deposits, and money market instruments that include U.S. Treasury bills and notes, bank certificates of deposit (CDs), repurchase agreements, commercial paper, and banker’s acceptances.
Common Stock. A security representing ownership rights in a corporation.
Dividend Distributions. Payments to mutual fund shareholders of income from interest or dividends generated by a fund's investments.
Dow Jones U.S. Total Stock Market Float Adjusted Index. An index that represents the entire U.S. stock market and tracks more than 5,000 stocks, excluding shares of securities not available for public trading.
Expense Ratio. A fund's total annual operating expenses expressed as a percentage of the fund's average net assets. The expense ratio includes management and administrative expenses, but it does not include the transaction costs of buying and selling portfolio securities.
Inception Date. The date on which the assets of a fund are first invested in accordance with the fund's investment objective. For funds with a subscription period, the inception date is the day after that period ends. Investment performance is generally measured from the inception date.
Joint Committed Credit Facility. The Fund participates, along with other funds managed by Vanguard, in a committed credit facility provided by a syndicate of lenders pursuant to a credit agreement that may be renewed annually; each Vanguard fund is individually liable for its borrowings, if any, under the credit facility. The amount and terms of the committed credit facility are subject to approval by the Fund's board of trustees and renegotiation with the lender syndicate on an annual basis.
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Median Market Capitalization. An indicator of the size of companies in which a fund invests; the midpoint of market capitalization (market price x shares outstanding) of a fund's stocks, weighted by the proportion of the fund's assets invested in each stock. Stocks representing half of the fund's assets have market capitalizations above the median, and the rest are below it.
Mutual Fund. An investment company that pools the money of many people and invests it in a variety of securities in an effort to achieve a specific objective over time.
New York Stock Exchange (NYSE). A stock exchange based in New York City that is open for regular trading on business days, Monday through Friday, from 9:30 a.m. to 4 p.m., Eastern time.
Price/Earnings (P/E) Ratio. The current share price of a stock, divided by its per-share earnings (profits). A stock selling for $20, with earnings of $2 per share, has a price/earnings ratio of 10.
Quantitative Process. An assessment of specific measurable factors, such as cost of capital; value of assets; and projections of sales, costs, earnings, and profits. The use of a quantitative process provides a systematic approach to investment decisions and portfolios.
Russell 3000 Value Index. An index that measures the performance of those Russell 3000 companies with lower price/book ratios and lower predicted growth rates.
Securities. Stocks, bonds, money market instruments, and other investments.
Total Return. A percentage change, over a specified time period, in a mutual fund's net asset value, assuming the reinvestment of all distributions of dividends and capital gains.
Volatility. The fluctuations in value of a mutual fund or other security. The greater a fund's volatility, the wider the fluctuations in its returns.
Yield. Income (interest or dividends) earned by an investment, expressed as a percentage of the investment’s price.
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Connect with Vanguard® > vanguard.com
For More Information
If you would like more information about Vanguard U.S. Value Fund, the following documents are available free upon request:
Annual/Semiannual Reports to Shareholders
Additional information about the Fund's investments is available in the Fund's annual and semiannual reports to shareholders. In the annual report, you will find a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.
Statement of Additional Information (SAI)
The SAI provides more detailed information about the Fund and is incorporated by reference into (and thus legally a part of) this prospectus.
To receive a free copy of the latest annual or semiannual report or the SAI, or to request additional information about the Fund or other Vanguard funds, please visit vanguard.com or contact us as follows:
If you are an individual investor:
Telephone: 800-662-7447; Text telephone for people with hearing impairment: 800-749-7273
If you are a participant in an employer-sponsored plan:
Telephone: 800-523-1188; Text telephone for people
with hearing impairment: 800-749-7273
If you are a current Vanguard shareholder and would like information about your account, account transactions, and/or account statements, please call:
Client Services Department
Telephone: 800-662-2739; Text telephone for people with hearing impairment: 800-749-7273
Information Provided by the Securities and Exchange Commission (SEC)
Reports and other information about the Fund are available in the EDGAR database on the SEC’s website at www.sec.gov, or you can receive copies of this information, for a fee, by electronic request at the following email address: publicinfo@sec.gov.
Fund's Investment Company Act file number: 811-05628
© 2021 The Vanguard Group, Inc. All rights reserved.Vanguard Marketing Corporation, Distributor.P 124 012021
VANGUARD® MALVERN FUNDS
STATEMENT OF ADDITIONAL INFORMATION
January 31, 2021
This Statement of Additional Information is not a prospectus but should be read in conjunction with a Fund’s current prospectus (dated January 31, 2021). To obtain, without charge, a prospectus or the most recent Annual Report to Shareholders, which contains the Fund’s financial statements as hereby incorporated by reference, please contact The Vanguard Group, Inc. (Vanguard).
Phone: Investor Information Department at 800-662-7447
Online: vanguard.com
Description of the Trust
Vanguard Malvern Funds (the Trust) currently offers the following funds and share classes (identified by ticker symbol):  
 
 
Share Classes1
Vanguard Fund2
Investor
Admiral
Institutional
Institutional Plus
Vanguard U.S. Value Fund
VUVLX
—
—
—
Vanguard Short-Term Inflation-Protected Securities Index Fund
VTIPX
VTAPX
VTSPX
—
Vanguard Institutional Short-Term Bond Fund
—
—
—
VISTX
Vanguard Institutional Intermediate-Term Bond Fund
—
—
—
VIITX
Vanguard Core Bond Fund
VCORX
VCOBX
—
—
Vanguard Emerging Markets Bond Fund
VEMBX
VEGBX
—
—
1
Individually, a class; collectively, the classes.
2
Individually, a Fund; collectively, the Funds.
3
Exchange: Nasdaq.
B-1
The Trust has the ability to offer additional funds or classes of shares. There is no limit on the number of full and fractional shares that may be issued for a single fund or class of shares.
Throughout this document, any references to “class” apply only to the extent a Fund issues multiple classes.
Organization
The Trust was organized as a Maryland corporation in 1988 and was reorganized as a Delaware statutory trust in 1998. Prior to its reorganization as a Delaware statutory trust, the Trust was known as Vanguard Asset-Allocation Fund, Inc. The Trust changed its name to Vanguard Malvern Funds in 2000. The Trust is registered with the United States Securities and Exchange Commission (SEC) under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company. All Funds within the Trust, other than Vanguard Emerging Markets Bond Fund, are classified as diversified within the meaning of the 1940 Act. Vanguard Emerging Markets Bond Fund is classified as nondiversified within the meaning of the 1940 Act.
Service Providers
Custodians. JPMorgan Chase Bank, 383 Madison Avenue, New York, NY 10179 (for Vanguard Core Bond Fund, Vanguard Institutional Intermediate-Term Bond Fund, and Vanguard Institutional Short-Term Bond Fund), and State Street Bank and Trust Company, One Lincoln Street, Boston, MA 02111 (for Vanguard U.S. Value Fund, Vanguard Short-Term Inflation-Protected Securities Index Fund, and Vanguard Emerging Markets Bond Fund), serve as the Funds’ custodians. The custodians are responsible for maintaining the Funds' assets, keeping all necessary accounts and records of Fund assets, and appointing any foreign subcustodians or foreign securities depositories.
Independent Registered Public Accounting Firm. PricewaterhouseCoopers LLP, Two Commerce Square, Suite 1800, 2001 Market Street, Philadelphia, PA 19103-7042, serves as the Funds' independent registered public accounting firm. The independent registered public accounting firm audits the Funds' annual financial statements and provides other related services.
Transfer and Dividend-Paying Agent. The Funds‘ transfer agent and dividend-paying agent is Vanguard, P.O. Box 2600, Valley Forge, PA 19482.
Characteristics of the Funds' Shares
Restrictions on Holding or Disposing of Shares. There are no restrictions on the right of shareholders to retain or dispose of a Fund’s shares, other than those described in the Fund’s current prospectus and elsewhere in this Statement of Additional Information. Each Fund or class may be terminated by reorganization into another mutual fund or class or by liquidation and distribution of the assets of the Fund or class. Unless terminated by reorganization or liquidation, each Fund and share class will continue indefinitely.
Shareholder Liability. The Trust is organized under Delaware law, which provides that shareholders of a statutory trust are entitled to the same limitations of personal liability as shareholders of a corporation organized under Delaware law. This means that a shareholder of a Fund generally will not be personally liable for payment of the Fund’s debts. Some state courts, however, may not apply Delaware law on this point. We believe that the possibility of such a situation arising is remote.
Dividend Rights. The shareholders of each class of a Fund are entitled to receive any dividends or other distributions declared by the Fund for each such class. No shares of a Fund have priority or preference over any other shares of the Fund with respect to distributions. Distributions will be made from the assets of the Fund and will be paid ratably to all shareholders of a particular class according to the number of shares of the class held by shareholders on the record date. The amount of dividends per share may vary between separate share classes of the Fund based upon differences in the net asset values of the different classes and differences in the way that expenses are allocated between share classes pursuant to a multiple class plan approved by the Funds' board of trustees.
Voting Rights. Shareholders are entitled to vote on a matter if (1) the matter concerns an amendment to the Declaration of Trust that would adversely affect to a material degree the rights and preferences of the shares of a Fund or any class; (2) the trustees determine that it is necessary or desirable to obtain a shareholder vote; (3) a merger or consolidation, share conversion, share exchange, or sale of assets is proposed and a shareholder vote is required by the 1940 Act to approve the transaction; or (4) a shareholder vote is required under the 1940 Act. The 1940 Act requires a shareholder vote under various circumstances, including to elect or remove trustees upon the written request of
B-2
shareholders representing 10% or more of a Fund’s net assets, to change any fundamental policy of a Fund (please see Fundamental Policies), and to enter into certain merger transactions. Unless otherwise required by applicable law, shareholders of a Fund receive one vote for each dollar of net asset value owned on the record date and a fractional vote for each fractional dollar of net asset value owned on the record date. However, only the shares of the Fund or the class affected by a particular matter are entitled to vote on that matter. In addition, each class has exclusive voting rights on any matter submitted to shareholders that relates solely to that class, and each class has separate voting rights on any matter submitted to shareholders in which the interests of one class differ from the interests of another. Voting rights are noncumulative and cannot be modified without a majority vote by the shareholders.
Liquidation Rights. In the event that a Fund is liquidated, shareholders will be entitled to receive a pro rata share of the Fund’s net assets. In the event that a class of shares is liquidated, shareholders of that class will be entitled to receive a pro rata share of the Fund’s net assets that are allocated to that class. Shareholders may receive cash, securities, or a combination of the two.
Preemptive Rights. There are no preemptive rights associated with the Funds' shares.
Conversion Rights. Shareholders of Vanguard Short-Term Inflation-Protected Securities Index Fund, Vanguard Core Bond Fund, and Vanguard Emerging Markets Bond Fund may convert their shares to another class of shares of the same Fund upon the satisfaction of any then-applicable eligibility requirements, as described in the Fund’s current prospectus. Shareholders of Vanguard Core Bond Fund and Vanguard Emerging Markets Bond Fund may not convert into a Fund’s ETF Shares. ETF Shares cannot be converted into conventional shares of a Fund by a shareholder. There are no conversion rights associated with Vanguard U.S. Value Fund, Vanguard Institutional Short-Term Bond Fund, and Vanguard Institutional Intermediate-Term Bond Fund. For additional information about the conversion rights applicable to ETF Shares, please see Information About the ETF Share Class.
Redemption Provisions. Each Fund's redemption provisions are described in its current prospectus and elsewhere in this Statement of Additional Information.
Sinking Fund Provisions. The Funds have no sinking fund provisions.
Calls or Assessment. Each Fund's shares, when issued, are fully paid and non-assessable.
Tax Status of the Funds
Each Fund expects to qualify each year for treatment as a “regulated investment company” under Subchapter M of the Internal Revenue Code of 1986, as amended (the IRC). This special tax status means that the Fund will not be liable for federal tax on income and capital gains distributed to shareholders. In order to preserve its tax status, each Fund must comply with certain requirements relating to the source of its income and the diversification of its assets. If a Fund fails to meet these requirements in any taxable year, the Fund will, in some cases, be able to cure such failure, including by paying a fund-level tax, paying interest, making additional distributions, and/or disposing of certain assets. If the Fund is ineligible to or otherwise does not cure such failure for any year, it will be subject to tax on its taxable income at corporate rates, and all distributions from earnings and profits, including any distributions of net tax-exempt income and net long-term capital gains, will be taxable to shareholders as ordinary income. In addition, a Fund could be required to recognize unrealized gains, pay substantial taxes and interest, and make substantial distributions before regaining its tax status as a regulated investment company.
Dividends received and distributed by each Fund on shares of stock of domestic corporations (excluding Real Estate Investment Trusts (REITs)) and certain foreign corporations generally may be eligible to be reported by the Fund, and treated by individual shareholders, as “qualified dividend income” taxed at long-term capital gain rates instead of at higher ordinary income tax rates. Individuals must satisfy holding period and other requirements in order to be eligible for such treatment. Also, distributions attributable to income earned on a Fund's securities lending transactions, including substitute dividend payments received by a Fund with respect to a security out on loan, will not be eligible for treatment as a qualified dividend income.
Taxable ordinary dividends received and distributed by each Fund on its REIT holdings may be eligible to be reported by each Fund, and treated by individual shareholders, as “qualified REIT dividends” that are eligible for a 20% deduction on their federal income tax returns. Individuals must satisfy holding period and other requirements in order to be eligible for this deduction. Without further legislation, the deduction would sunset after 2025. Shareholders should consult their own tax professionals concerning their eligibility for this deduction.
B-3
Dividends received and distributed by each Fund on shares of stock of domestic corporations (excluding REITs) may be eligible for the dividends-received deduction  applicable to corporate shareholders. Corporations must satisfy certain requirements in order to claim the deduction. Also, distributions attributable to income earned on a Fund's securities lending transactions, including substitute dividend payments received by a Fund with respect to a security out on loan, will not be eligible for the dividend-received deduction.
Each Fund may declare a capital gain dividend consisting of the excess (if any) of net realized long-term capital gains over net realized short-term capital losses. Net capital gains for a fiscal year are computed by taking into account any capital loss carryforwards of the Fund. For Fund fiscal years beginning on or after December 22, 2010, capital losses may be carried forward indefinitely and retain their character as either short-term or long-term. Under prior law, net capital losses could be carried forward for eight tax years and were treated as short-term capital losses. A Fund is required to use capital losses arising in fiscal years beginning after December 22, 2010, before using capital losses arising in fiscal years beginning on or prior to December 22, 2010.
Fundamental Policies
Each Fund is subject to the following fundamental investment policies, which cannot be changed in any material way without the approval of the holders of a majority of the Fund’s shares. For these purposes, a “majority” of shares means shares representing the lesser of (1) 67% or more of the Fund's net assets voted, so long as shares representing more than 50% of the Fund’s net assets are present or represented by proxy or (2) more than 50% of the Fund's net assets.
Borrowing. Each Fund may borrow money only as permitted by the 1940 Act or other governing statute, by the Rules thereunder, or by the SEC or other regulatory agency with authority over the Fund.
Commodities. Each Fund may invest in commodities only as permitted by the 1940 Act or other governing statute, by the Rules thereunder, or by the SEC or other regulatory agency with authority over the Fund.
Diversification. With respect to 75% of its total assets, each Fund (except Vanguard Emerging Markets Bond Fund) may not (1) purchase more than 10% of the outstanding voting securities of any one issuer or (2) purchase securities of any issuer if, as a result, more than 5% of the Fund’s total assets would be invested in that issuer’s securities. This limitation does not apply to obligations of the U.S. government or its agencies or instrumentalities.
Industry Concentration. Each Fund (except Vanguard Short-Term Inflation-Protected Securities Index Fund) will not concentrate its investments in the securities of issuers whose principal business activities are in the same industry or group of industries.
Vanguard Short-Term Inflation-Protected Securities Index Fund will not concentrate its investments in the securities of issuers whose principal business activities are in the same industry, except as may be necessary to approximate the composition of its target index.
Loans. Each Fund may make loans to another person only as permitted by the 1940 Act or other governing statute, by the Rules thereunder, or by the SEC or other regulatory agency with authority over the Fund.
Real Estate. Each Fund may not invest directly in real estate unless it is acquired as a result of ownership of securities or other instruments. This restriction shall not prevent the Fund from investing in securities or other instruments (1) issued by companies that invest, deal, or otherwise engage in transactions in real estate or (2) backed or secured by real estate or interests in real estate.
Senior Securities. Each Fund may not issue senior securities except as permitted by the 1940 Act or other governing statute, by the Rules thereunder, or by the SEC or other regulatory agency with authority over the Fund.
Underwriting. Each Fund may not act as an underwriter of another issuer’s securities, except to the extent that the Fund may be deemed to be an underwriter within the meaning of the Securities Act of 1933 (the 1933 Act), in connection with the purchase and sale of portfolio securities.
Compliance with the fundamental policies previously described is generally measured at the time the securities are purchased. Unless otherwise required by the 1940 Act (as is the case with borrowing), if a percentage restriction is adhered to at the time the investment is made, a later change in percentage resulting from a change in the market value of assets will not constitute a violation of such restriction. All fundamental policies must comply with applicable regulatory requirements. For more details, see Investment Strategies, Risks, and Nonfundamental Policies.
B-4
None of these policies prevents the Funds from having an ownership interest in Vanguard. As a part owner of Vanguard, each Fund may own securities issued by Vanguard, make loans to Vanguard, and contribute to Vanguard’s costs or other financial requirements. See Management of the Funds for more information.
Investment Strategies, Risks, and Nonfundamental Policies
Some of the investment strategies and policies described on the following pages and in each Fund's prospectus set forth percentage limitations on a Fund's investment in, or holdings of, certain securities or other assets. Unless otherwise required by law, compliance with these strategies and policies will be determined immediately after the acquisition of such securities or assets by the Fund. Subsequent changes in values, net assets, or other circumstances will not be considered when determining whether the investment complies with the Fund's investment strategies and policies.
The following investment strategies, risks, and policies supplement each Fund's investment strategies, risks, and policies set forth in the prospectus. With respect to the different investments discussed as follows, a Fund may acquire such investments to the extent consistent with its investment strategies and policies.
Asset-Backed Securities. Asset-backed securities represent a participation in, or are secured by and payable from, pools of underlying assets such as debt securities, bank loans, motor vehicle installment sales contracts, installment loan contracts, leases of various types of real and personal property, receivables from revolving credit (i.e., credit card) agreements, and other categories of receivables. These underlying assets are securitized through the use of trusts and special purpose entities. Payment of interest and repayment of principal on asset-backed securities may be largely dependent upon the cash flows generated by the underlying assets backing the securities and, in certain cases, may be supported by letters of credit, surety bonds, or other credit enhancements. The rate of principal payments on asset-backed securities is related to the rate of principal payments, including prepayments, on the underlying assets. The credit quality of asset-backed securities depends primarily on the quality of the underlying assets, the level of credit support, if any, provided for the securities, and the credit quality of the credit-support provider, if any. The value of asset-backed securities may be affected by the various factors described above and other factors, such as changes in interest rates, the availability of information concerning the pool and its structure, the creditworthiness of the servicing agent for the pool, the originator of the underlying assets, or the entities providing the credit enhancement.
Asset-backed securities are often subject to more rapid repayment than their stated maturity date would indicate, as a result of the pass-through of prepayments of principal on the underlying assets. Prepayments of principal by borrowers or foreclosure or other enforcement action by creditors shortens the term of the underlying assets. The occurrence of prepayments is a function of several factors, such as the level of interest rates, the general economic conditions, the location and age of the underlying obligations, and other social and demographic conditions. A fund’s ability to maintain positions in asset-backed securities is affected by the reductions in the principal amount of the underlying assets because of prepayments. A fund’s ability to reinvest such prepayments of principal (as well as interest and other distributions and sale proceeds) at a comparable yield is subject to generally prevailing interest rates at that time. The value of asset-backed securities varies with changes in market interest rates generally and the differentials in yields among various kinds of U.S. government securities, mortgage-backed securities, and asset-backed securities. In periods of rising interest rates, the rate of prepayment tends to decrease, thereby lengthening the average life of the underlying securities. Conversely, in periods of falling interest rates, the rate of prepayment tends to increase, thereby shortening the average life of such assets. Because prepayments of principal generally occur when interest rates are declining, an investor, such as a fund, generally has to reinvest the proceeds of such prepayments at lower interest rates than those at which the assets were previously invested. Therefore, asset-backed securities have less potential for capital appreciation in periods of falling interest rates than other income-bearing securities of comparable maturity.
Because asset-backed securities generally do not have the benefit of a security interest in the underlying assets that is comparable to a mortgage, asset-backed securities present certain additional risks that are not present with mortgage-backed securities. For example, revolving credit receivables are generally unsecured and the debtors on such receivables are entitled to the protection of a number of state and federal consumer credit laws, many of which give debtors the right to set off certain amounts owed, thereby reducing the balance due. Automobile receivables generally are secured, but by automobiles rather than by real property. Most issuers of automobile receivables permit loan servicers to retain possession of the underlying assets. If the servicer of a pool of underlying assets sells them to another party, there is the risk that the purchaser could acquire an interest superior to that of holders of the asset-backed securities. In addition, because of the large number of vehicles involved in a typical issue of asset-backed securities and technical requirements under state law, the trustee for the holders of the automobile receivables may not have a proper security interest in the automobiles. Therefore, there is the possibility that recoveries on repossessed
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collateral may not be available to support payments on these securities. Asset-backed securities have been, and may continue to be, subject to greater liquidity risks when worldwide economic and liquidity conditions deteriorate. In addition, government actions and proposals that affect the terms of underlying home and consumer loans, thereby changing demand for products financed by those loans, as well as the inability of borrowers to refinance existing loans, have had and may continue to have a negative effect on the valuation and liquidity of asset-backed securities.
Borrowing. A fund’s ability to borrow money is limited by its investment policies and limitations; by the 1940 Act; and by applicable exemptions, no-action letters, interpretations, and other pronouncements issued from time to time by the SEC and its staff or any other regulatory authority with jurisdiction. Under the 1940 Act, a fund is required to maintain continuous asset coverage (i.e., total assets including borrowings, less liabilities exclusive of borrowings) of 300% of the amount borrowed, with an exception for borrowings not in excess of 5% of the fund’s total assets (at the time of borrowing) made for temporary or emergency purposes. Any borrowings for temporary purposes in excess of 5% of the fund’s total assets must maintain continuous asset coverage. If the 300% asset coverage should decline as a result of market fluctuations or for other reasons, a fund may be required to sell some of its portfolio holdings within three days (excluding Sundays and holidays) to reduce the debt and restore the 300% asset coverage, even though it may be disadvantageous from an investment standpoint to sell securities at that time.
Borrowing will tend to exaggerate the effect on net asset value of any increase or decrease in the market value of a fund’s portfolio. Money borrowed will be subject to interest costs that may or may not be recovered by earnings on the securities purchased with the proceeds of such borrowing. A fund also may be required to maintain minimum average balances in connection with a borrowing or to pay a commitment or other fee to maintain a line of credit; either of these requirements would increase the cost of borrowing over the stated interest rate.
The SEC takes the position that transactions that have a leveraging effect on the capital structure of a fund or are economically equivalent to borrowing can be viewed as constituting a form of borrowing by the fund for purposes of the 1940 Act. These transactions can include entering into reverse repurchase agreements; engaging in mortgage-dollar-roll transactions; selling securities short (other than short sales “against-the-box”); buying and selling certain derivatives (such as futures contracts); selling (or writing) put and call options; engaging in sale-buybacks; entering into firm-commitment and standby-commitment agreements; engaging in when-issued, delayed-delivery, or forward-commitment transactions; and participating in other similar trading practices. (Additional discussion about a number of these transactions can be found on the following pages.)
A borrowing transaction will not be considered to constitute the issuance, by a fund, of a “senior security,” as that term is defined in Section 18(g) of the 1940 Act, and therefore such transaction will not be subject to the 300% asset coverage requirement otherwise applicable to borrowings by a fund, if the fund maintains an offsetting financial position; segregates liquid assets (with such liquidity determined by the advisor in accordance with procedures established by the board of trustees) equal (as determined on a daily mark-to-market basis) in value to the fund’s potential economic exposure under the borrowing transaction; or otherwise “covers” the transaction in accordance with applicable SEC guidance (collectively, “covers” the transaction). A fund may have to buy or sell a security at a disadvantageous time or price in order to cover a borrowing transaction. In addition, segregated assets may not be available to satisfy redemptions or to fulfill other obligations.
Common Stock. Common stock represents an equity or ownership interest in an issuer. Common stock typically entitles the owner to vote on the election of directors and other important matters, as well as to receive dividends on such stock. In the event an issuer is liquidated or declares bankruptcy, the claims of owners of bonds, other debt holders, and owners of preferred stock take precedence over the claims of those who own common stock.
Convertible Securities. Convertible securities are hybrid securities that combine the investment characteristics of bonds and common stocks. Convertible securities typically consist of debt securities or preferred stock that may be converted (on a voluntary or mandatory basis) within a specified period of time (normally for the entire life of the security) into a certain amount of common stock or other equity security of the same or a different issuer at a predetermined price. Convertible securities also include debt securities with warrants or common stock attached and derivatives combining the features of debt securities and equity securities. Other convertible securities with features and risks not specifically referred to herein may become available in the future. Convertible securities involve risks similar to those of both fixed income and equity securities. In a corporation’s capital structure, convertible securities are senior to common stock but are usually subordinated to senior debt obligations of the issuer.
The market value of a convertible security is a function of its “investment value” and its “conversion value.” A security’s “investment value” represents the value of the security without its conversion feature (i.e., a nonconvertible debt security). The investment value may be determined by reference to its credit quality and the current value of its
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yield to maturity or probable call date. At any given time, investment value is dependent upon such factors as the general level of interest rates, the yield of similar nonconvertible securities, the financial strength of the issuer, and the seniority of the security in the issuer’s capital structure. A security’s “conversion value” is determined by multiplying the number of shares the holder is entitled to receive upon conversion or exchange by the current price of the underlying security. If the conversion value of a convertible security is significantly below its investment value, the convertible security will trade like nonconvertible debt or preferred stock and its market value will not be influenced greatly by fluctuations in the market price of the underlying security. In that circumstance, the convertible security takes on the characteristics of a bond, and its price moves in the opposite direction from interest rates. Conversely, if the conversion value of a convertible security is near or above its investment value, the market value of the convertible security will be more heavily influenced by fluctuations in the market price of the underlying security. In that case, the convertible security’s price may be as volatile as that of common stock. Because both interest rates and market movements can influence its value, a convertible security generally is not as sensitive to interest rates as a similar debt security, nor is it as sensitive to changes in share price as its underlying equity security. Convertible securities are often rated below investment-grade or are not rated, and they are generally subject to a high degree of credit risk.
Although all markets are prone to change over time, the generally high rate at which convertible securities are retired (through mandatory or scheduled conversions by issuers or through voluntary redemptions by holders) and replaced with newly issued convertible securities may cause the convertible securities market to change more rapidly than other markets. For example, a concentration of available convertible securities in a few economic sectors could elevate the sensitivity of the convertible securities market to the volatility of the equity markets and to the specific risks of those sectors. Moreover, convertible securities with innovative structures, such as mandatory-conversion securities and equity-linked securities, have increased the sensitivity of the convertible securities market to the volatility of the equity markets and to the special risks of those innovations, which may include risks different from, and possibly greater than, those associated with traditional convertible securities. A convertible security may be subject to redemption at the option of the issuer at a price set in the governing instrument of the convertible security. If a convertible security held by a fund is subject to such redemption option and is called for redemption, the fund must allow the issuer to redeem the security, convert it into the underlying common stock, or sell the security to a third party.
Cybersecurity Risks. The increased use of technology to conduct business could subject a fund and its third-party service providers (including, but not limited to, investment advisors, transfer agents, and custodians) to risks associated with cybersecurity. In general, a cybersecurity incident can occur as a result of a deliberate attack designed to gain unauthorized access to digital systems. If the attack is successful, an unauthorized person or persons could misappropriate assets or sensitive information, corrupt data, or cause operational disruption. A cybersecurity incident could also occur unintentionally if, for example, an authorized person inadvertently released proprietary or confidential information. Vanguard has developed robust technological safeguards and business continuity plans to prevent, or reduce the impact of, potential cybersecurity incidents. Additionally, Vanguard has a process for assessing the information security and/or cybersecurity programs implemented by a fund’s third-party service providers, which helps minimize the risk of potential incidents that could impact a Vanguard fund or its shareholders. Despite these measures, a cybersecurity incident still has the potential to disrupt business operations, which could negatively impact a fund and/or its shareholders. Some examples of negative impacts that could occur as a result of a cybersecurity incident include, but are not limited to, the following: a fund may be unable to calculate its net asset value (NAV), a fund’s shareholders may be unable to transact business, a fund may be unable to process transactions, or a fund may be unable to safeguard its data or the personal information of its shareholders.
Debt Securities. A debt security, sometimes called a fixed income security, consists of a certificate or other evidence of a debt (secured or unsecured) upon which the issuer of the debt security promises to pay the holder a fixed, variable, or floating rate of interest for a specified length of time and to repay the debt on the specified maturity date. Some debt securities, such as zero-coupon bonds, do not make regular interest payments but are issued at a discount to their principal or maturity value. Debt securities include a variety of fixed income obligations, including, but not limited to, corporate bonds, government securities, municipal securities, convertible securities, mortgage-backed securities, and asset-backed securities. Debt securities include investment-grade securities, non-investment-grade securities, and unrated securities. Debt securities are subject to a variety of risks, such as interest rate risk, income risk, call risk, prepayment risk, extension risk, inflation risk, credit risk, liquidity risk, coupon deferral risk, lower recovery value risk, and (in the case of foreign securities) country risk and currency risk. The reorganization of an issuer under the federal bankruptcy laws or an out-of-court restructuring of an issuer’s capital structure may result in the issuer’s debt securities being cancelled without repayment, repaid only in part, or repaid in part or in whole through an exchange thereof for any combination of cash, debt securities, convertible securities, equity securities, or other instruments or rights in respect to the same issuer or a related entity.
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Debt Securities—Bank Obligations. Time deposits are non-negotiable deposits maintained in a banking institution for a specified period of time at a stated interest rate. Certificates of deposit are negotiable short-term obligations of commercial banks. Variable rate certificates of deposit have an interest rate that is periodically adjusted prior to their stated maturity based upon a specified market rate. As a result of these adjustments, the interest rate on these obligations may be increased or decreased periodically. Frequently, dealers selling variable rate certificates of deposit to a fund will agree to repurchase such instruments, at the fund’s option, at par on or near the coupon dates. The dealers’ obligations to repurchase these instruments are subject to conditions imposed by various dealers; such conditions typically are the continued credit standing of the issuer and the existence of reasonably orderly market conditions. A fund is also able to sell variable rate certificates of deposit on the secondary market. Variable rate certificates of deposit normally carry a higher interest rate than comparable fixed-rate certificates of deposit. A banker’s acceptance is a time draft drawn on a commercial bank by a borrower usually in connection with an international commercial transaction (to finance the import, export, transfer, or storage of goods). The borrower is liable for payment, as is the bank, which unconditionally guarantees to pay the draft at its face amount on the maturity date. Most acceptances have maturities of 6 months or less and are traded in the secondary markets prior to maturity.
Debt Securities—Commercial Paper. Commercial paper refers to short-term, unsecured promissory notes issued by corporations to finance short-term credit needs. It is usually sold on a discount basis and has a maturity at the time of issuance not exceeding 9 months. High-quality commercial paper typically has the following characteristics: (1) liquidity ratios are adequate to meet cash requirements; (2) long-term senior debt is also high credit quality; (3) the issuer has access to at least two additional channels of borrowing; (4) basic earnings and cash flow have an upward trend with allowance made for unusual circumstances; (5) typically, the issuer’s industry is well established and the issuer has a strong position within the industry; and (6) the reliability and quality of management are unquestioned. In assessing the credit quality of commercial paper issuers, the following factors may be considered: (1) evaluation of the management of the issuer, (2) economic evaluation of the issuer’s industry or industries and the appraisal of speculative-type risks that may be inherent in certain areas, (3) evaluation of the issuer’s products in relation to competition and customer acceptance, (4) liquidity, (5) amount and quality of long-term debt, (6) trend of earnings over a period of ten years, (7) financial strength of a parent company and the relationships that exist with the issuer, and (8) recognition by the management of obligations that may be present or may arise as a result of public-interest questions and preparations to meet such obligations. The short-term nature of a commercial paper investment makes it less susceptible to interest rate risk than longer-term fixed income securities because interest rate risk typically increases as maturity lengths increase. Additionally, an issuer may expect to repay commercial paper obligations at maturity from the proceeds of the issuance of new commercial paper. As a result, investment in commercial paper is subject to the risk the issuer cannot issue enough new commercial paper to satisfy its outstanding commercial paper payment obligations, also known as rollover risk. Commercial paper may suffer from reduced liquidity due to certain circumstances, in particular, during stressed markets. In addition, as with all fixed income securities, an issuer may default on its commercial paper obligation.
Variable-amount master-demand notes are demand obligations that permit the investment of fluctuating amounts at varying market rates of interest pursuant to an arrangement between the issuer and a commercial bank acting as agent for the payees of such notes, whereby both parties have the right to vary the amount of the outstanding indebtedness on the notes. Because variable-amount master-demand notes are direct lending arrangements between a lender and a borrower, it is not generally contemplated that such instruments will be traded, and there is no secondary market for these notes, although they are redeemable (and thus immediately repayable by the borrower) at face value, plus accrued interest, at any time. In connection with a fund’s investment in variable-amount master-demand notes, Vanguard’s investment management staff will monitor, on an ongoing basis, the earning power, cash flow, and other liquidity ratios of the issuer, along with the borrower’s ability to pay principal and interest on demand.
Debt Securities—Foreign Debt Securities. Foreign debt securities are debt securities issued by entities organized, domiciled, or with a principal executive office outside the United States, such as foreign governments and corporations. Foreign debt securities may trade in U.S. or foreign markets. Investing in foreign debt securities involves certain special risk considerations that are not typically associated with investing in debt securities of U.S. issuers.
Debt Securities—Inflation-Indexed Securities. Inflation-indexed securities are debt securities, the principal value of which is periodically adjusted to reflect the rate of inflation as indicated by the Consumer Price Index (CPI). Inflation-indexed securities may be issued by the U.S. government, by agencies and instrumentalities of the U.S. government, and by corporations. Two structures are common. The U.S. Treasury and some other issuers use a structure that accrues inflation into the principal value of the bond. Most other issuers pay out the CPI accruals as part of a semiannual coupon payment.
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The periodic adjustment of U.S. inflation-indexed securities is tied to the CPI, which is calculated monthly by the U.S. Bureau of Labor Statistics. The CPI is a measurement of changes in the cost of living, made up of components such as housing, food, transportation, and energy. Inflation-indexed securities issued by a foreign government are generally adjusted to reflect a comparable inflation index, calculated by that government. There can be no assurance that the CPI or any foreign inflation index will accurately measure the real rate of inflation in the prices of goods and services. Moreover, there can be no assurance that the rate of inflation in a foreign country will correlate to the rate of inflation in the United States.
Inflation—a general rise in prices of goods and services—erodes the purchasing power of an investor’s portfolio. For example, if an investment provides a “nominal” total return of 5% in a given year and inflation is 2% during that period, the inflation-adjusted, or real, return is 3%. Inflation, as measured by the CPI, has generally occurred during the past 50 years, so investors should be conscious of both the nominal and real returns of their investments. Investors in inflation-indexed securities funds who do not reinvest the portion of the income distribution that is attributable to inflation adjustments will not maintain the purchasing power of the investment over the long term. This is because interest earned depends on the amount of principal invested, and that principal will not grow with inflation if the investor fails to reinvest the principal adjustment paid out as part of a fund’s income distributions. Although inflation-indexed securities are expected to be protected from long-term inflationary trends, short-term increases in inflation may lead to a decline in value. If interest rates rise because of reasons other than inflation (e.g., changes in currency exchange rates), investors in these securities may not be protected to the extent that the increase is not reflected in the bond’s inflation measure.
If the periodic adjustment rate measuring inflation (i.e., the CPI) falls, the principal value of inflation-indexed securities will be adjusted downward, and consequently the interest payable on these securities (calculated with respect to a smaller principal amount) will be reduced. Repayment of the original bond principal upon maturity (as adjusted for inflation) is guaranteed in the case of U.S. Treasury inflation-indexed securities, even during a period of deflation. However, the current market value of the inflation-indexed securities is not guaranteed and will fluctuate. Other inflation-indexed securities include inflation-related bonds, which may or may not provide a similar guarantee. If a guarantee of principal is not provided, the adjusted principal value of the bond repaid at maturity may be less than the original principal.
The value of inflation-indexed securities should change in response to changes in real interest rates. Real interest rates, in turn, are tied to the relationship between nominal interest rates and the rate of inflation. Therefore, if inflation were to rise at a faster rate than nominal interest rates, real interest rates might decline, leading to an increase in value of inflation-indexed securities. In contrast, if nominal interest rates were to increase at a faster rate than inflation, real interest rates might rise, leading to a decrease in value of inflation-indexed securities.
Coupon payments that a fund receives from inflation-indexed securities are included in the fund’s gross income for the period during which they accrue. Any increase in principal for an inflation-indexed security resulting from inflation adjustments is considered by Internal Revenue Service (IRS) regulations to be taxable income in the year it occurs. For direct holders of an inflation-indexed security, this means that taxes must be paid on principal adjustments, even though these amounts are not received until the bond matures. By contrast, a fund holding these securities distributes both interest income and the income attributable to principal adjustments each quarter in the form of cash or reinvested shares (which, like principal adjustments, are taxable to shareholders). It may be necessary for the fund to liquidate portfolio positions, including when it is not advantageous to do so, in order to make required distributions.
Debt Securities—Non-Investment-Grade Securities. Non-investment-grade securities, also referred to as “high-yield securities” or “junk bonds,” are debt securities that are rated lower than the four highest rating categories by a nationally recognized statistical rating organization (e.g., lower than Baa3/P-2 by Moody’s Investors Service, Inc. (Moody’s) or below BBB–/A-2 by Standard & Poor’s Financial Services LLC (Standard & Poor’s)) or, if unrated, are determined to be of comparable quality by the fund’s advisor. These securities are generally considered to be, on balance, predominantly speculative with respect to capacity to pay interest and repay principal in accordance with the terms of the obligation, and they will generally involve more credit risk than securities in the investment-grade categories. Non-investment-grade securities generally provide greater income and opportunity for capital appreciation than higher quality securities, but they also typically entail greater price volatility and principal and income risk.
Analysis of the creditworthiness of issuers of high-yield securities may be more complex than for issuers of investment-grade securities. Thus, reliance on credit ratings in making investment decisions entails greater risks for high-yield securities than for investment-grade securities. The success of a fund’s advisor in managing high-yield securities is more dependent upon its own credit analysis than is the case with investment-grade securities.
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Some high-yield securities are issued by smaller, less-seasoned companies, while others are issued as part of a corporate restructuring such as an acquisition, a merger, or a leveraged buyout. Companies that issue high-yield securities are often highly leveraged and may not have more traditional methods of financing available to them. Therefore, the risk associated with acquiring the securities of such issuers generally is greater than is the case with investment-grade securities. Some high-yield securities were once rated as investment-grade but have been downgraded to junk bond status because of financial difficulties experienced by their issuers.
The market values of high-yield securities tend to reflect individual issuer developments to a greater extent than do investment-grade securities, which in general react to fluctuations in the general level of interest rates. High-yield securities also tend to be more sensitive to economic conditions than are investment-grade securities. An actual or anticipated economic downturn or sustained period of rising interest rates, for example, could cause a decline in junk bond prices because the advent of a recession could lessen the ability of a highly leveraged company to make principal and interest payments on its debt securities. If an issuer of high-yield securities defaults, in addition to risking payment of all or a portion of interest and principal, a fund investing in such securities may incur additional expenses to seek recovery.
The secondary market on which high-yield securities are traded may be less liquid than the market for investment-grade securities. Less liquidity in the secondary trading market could adversely affect the ability of a fund’s advisor to sell a high-yield security or the price at which a fund’s advisor could sell a high-yield security, and it could also adversely affect the daily net asset value of fund shares. When secondary markets for high-yield securities are less liquid than the market for investment-grade securities, it may be more difficult to value the securities because such valuation may require more research, and elements of judgment may play a greater role in the valuation of the securities.
Except as otherwise provided in a fund’s prospectus, if a credit rating agency changes the rating of a portfolio security held by a fund, the fund may retain the portfolio security if the advisor deems it in the best interests of shareholders.
Debt Securities—Structured and Indexed Securities. Structured securities (also called “structured notes”) and indexed securities are derivative debt securities, the interest rate or principal of which is determined by an unrelated indicator. Indexed securities include structured notes as well as securities other than debt securities. The value of the principal of and/or interest on structured and indexed securities is determined by reference to changes in the value of a specific asset, reference rate, or index (the reference) or the relative change in two or more references. The interest rate or the principal amount payable upon maturity or redemption may be increased or decreased, depending upon changes in the applicable reference. The terms of the structured and indexed securities may provide that, in certain circumstances, no principal is due at maturity and, therefore, may result in a loss of invested capital. Structured and indexed securities may be positively or negatively indexed, so that appreciation of the reference may produce an increase or a decrease in the interest rate or value of the security at maturity. In addition, changes in the interest rate or the value of the structured or indexed security at maturity may be calculated as a specified multiple of the change in the value of the reference; therefore, the value of such security may be very volatile. Structured and indexed securities may entail a greater degree of market risk than other types of debt securities because the investor bears the risk of the reference. Structured or indexed securities may also be more volatile, less liquid, and more difficult to accurately price than less complex securities or more traditional debt securities, which could lead to an overvaluation or an undervaluation of the securities.
Debt Securities—U.S. Government Securities. The term “U.S. government securities” refers to a variety of debt securities that are issued or guaranteed by the U.S. Treasury, by various agencies of the U.S. government, or by various instrumentalities that have been established or sponsored by the U.S. government. The term also refers to repurchase agreements collateralized by such securities.
U.S. Treasury securities are backed by the full faith and credit of the U.S. government, meaning that the U.S. government is required to repay the principal in the event of default. Other types of securities issued or guaranteed by federal agencies and U.S. government-sponsored instrumentalities may or may not be backed by the full faith and credit of the U.S. government. The U.S. government, however, does not guarantee the market price of any U.S. government securities. In the case of securities not backed by the full faith and credit of the U.S. government, the investor must look principally to the agency or instrumentality issuing or guaranteeing the obligation for ultimate repayment and may not be able to assert a claim against the United States itself in the event the agency or instrumentality does not meet its commitment.
Some of the U.S. government agencies that issue or guarantee securities include the Government National Mortgage Association, the Export-Import Bank of the United States, the Federal Housing Administration, the Maritime
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Administration, the Small Business Administration, and the Tennessee Valley Authority. An instrumentality of the U.S. government is a government agency organized under federal charter with government supervision. Instrumentalities issuing or guaranteeing securities include, among others, the Federal Deposit Insurance Corporation, the Federal Home Loan Banks, and the Federal National Mortgage Association.
Debt Securities—Variable and Floating Rate Securities. Variable and floating rate securities are debt securities that provide for periodic adjustments in the interest rate paid on the security. Variable rate securities provide for a specified periodic adjustment in the interest rate, while floating rate securities have interest rates that change whenever there is a change in a designated benchmark or reference rate (such as the Secured Overnight Financing Rate (SOFR), or another reference rate) or the issuer’s credit quality. There is a risk that the current interest rate on variable and floating rate securities may not accurately reflect current market interest rates or adequately compensate the holder for the current creditworthiness of the issuer. Some variable or floating rate securities are structured with liquidity features such as (1) put options or tender options that permit holders (sometimes subject to conditions) to demand payment of the unpaid principal balance plus accrued interest from the issuers or certain financial intermediaries or (2) auction-rate features, remarketing provisions, or other maturity-shortening devices designed to enable the issuer to refinance or redeem outstanding debt securities (market-dependent liquidity features). Variable or floating rate securities that include market-dependent liquidity features may have greater liquidity risk than other securities. The greater liquidity risk may exist, for example, because of the failure of a market-dependent liquidity feature to operate as intended (as a result of the issuer’s declining creditworthiness, adverse market conditions, or other factors) or the inability or unwillingness of a participating broker-dealer to make a secondary market for such securities. As a result, variable or floating rate securities that include market-dependent liquidity features may lose value, and the holders of such securities may be required to retain them until the later of the repurchase date, the resale date, or the date of maturity. A demand instrument with a demand notice exceeding seven days may be considered illiquid if there is no secondary market for such security.
Debt Securities—Zero-Coupon and Pay-in-Kind Securities. Zero-coupon and pay-in-kind securities are debt securities that do not make regular cash interest payments. Zero-coupon securities generally do not pay interest. Zero-coupon Treasury bonds are U.S. Treasury notes and bonds that have been stripped of their unmatured interest coupons, or the coupons themselves, and also receipts or certificates representing an interest in such stripped debt obligations and coupons. The timely payment of coupon interest and principal on these instruments remains guaranteed by the full faith and credit of the U.S. government. Pay-in-kind securities pay interest through the issuance of additional securities. These securities are generally issued at a discount to their principal or maturity value. Because such securities do not pay current cash income, the price of these securities can be volatile when interest rates fluctuate. Although these securities do not pay current cash income, federal income tax law requires the holders of zero-coupon and pay-in-kind securities to include in income each year the portion of the original issue discount and other noncash income on such securities accrued during that year. Each fund that holds such securities intends to pass along such interest as a component of the fund’s distributions of net investment income. It may be necessary for the fund to liquidate portfolio positions, including when it is not advantageous to do so, in order to make required distributions.
Depositary Receipts. Depositary receipts (also sold as participatory notes) are securities that evidence ownership interests in a security or a pool of securities that have been deposited with a “depository.” Depositary receipts may be sponsored or unsponsored and include American Depositary Receipts (ADRs), European Depositary Receipts (EDRs), and Global Depositary Receipts (GDRs). For ADRs, the depository is typically a U.S. financial institution, and the underlying securities are issued by a foreign issuer. For other depositary receipts, the depository may be a foreign or a U.S. entity, and the underlying securities may have a foreign or a U.S. issuer. Depositary receipts will not necessarily be denominated in the same currency as their underlying securities. Generally, ADRs are issued in registered form, denominated in U.S. dollars, and designed for use in the U.S. securities markets. Other depositary receipts, such as GDRs and EDRs, may be issued in bearer form and denominated in other currencies, and they are generally designed for use in securities markets outside the United States. Although the two types of depositary receipt facilities (sponsored and unsponsored) are similar, there are differences regarding a holder’s rights and obligations and the practices of market participants.
A depository may establish an unsponsored facility without participation by (or acquiescence of) the underlying issuer; typically, however, the depository requests a letter of nonobjection from the underlying issuer prior to establishing the facility. Holders of unsponsored depositary receipts generally bear all the costs of the facility. The depository usually
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charges fees upon the deposit and withdrawal of the underlying securities, the conversion of dividends into U.S. dollars or other currency, the disposition of noncash distributions, and the performance of other services. The depository of an unsponsored facility frequently is under no obligation to distribute shareholder communications received from the underlying issuer or to pass through voting rights to depositary receipt holders with respect to the underlying securities.
Sponsored depositary receipt facilities are created in generally the same manner as unsponsored facilities, except that sponsored depositary receipts are established jointly by a depository and the underlying issuer through a deposit agreement. The deposit agreement sets out the rights and responsibilities of the underlying issuer, the depository, and the depositary receipt holders. With sponsored facilities, the underlying issuer typically bears some of the costs of the depositary receipts (such as dividend payment fees of the depository), although most sponsored depositary receipt holders may bear costs such as deposit and withdrawal fees. Depositories of most sponsored depositary receipts agree to distribute notices of shareholder meetings, voting instructions, and other shareholder communications and information to the depositary receipt holders at the underlying issuer’s request.
For purposes of a fund’s investment policies, investments in depositary receipts will be deemed to be investments in the underlying securities. Thus, a depositary receipt representing ownership of common stock will be treated as common stock. Depositary receipts do not eliminate all of the risks associated with directly investing in the securities of foreign issuers.
Derivatives. A derivative is a financial instrument that has a value based on—or “derived from”—the values of other assets, reference rates, or indexes. Derivatives may relate to a wide variety of underlying references, such as commodities, stocks, bonds, interest rates, currency exchange rates, and related indexes. Derivatives include futures contracts and options on futures contracts, certain forward-commitment transactions, options on securities, caps, floors, collars, swap agreements, and certain other financial instruments. Some derivatives, such as futures contracts and certain options, are traded on U.S. commodity and securities exchanges, while other derivatives, such as swap agreements, may be privately negotiated and entered into in the over-the-counter market (OTC Derivatives) or may be cleared through a clearinghouse (Cleared Derivatives) and traded on an exchange or swap execution facility. As a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), certain swap agreements, such as certain standardized credit default and interest rate swap agreements, must be cleared through a clearinghouse and traded on an exchange or swap execution facility. This could result in an increase in the overall costs of such transactions. While the intent of derivatives regulatory reform is to mitigate risks associated with derivatives markets, the regulations could, among other things, increase liquidity and decrease pricing for more standardized products while decreasing liquidity and increasing pricing for less standardized products. The risks associated with the use of derivatives are different from, and possibly greater than, the risks associated with investing directly in the securities or assets on which the derivatives are based.
Derivatives may be used for a variety of purposes, including—but not limited to—hedging, managing risk, seeking to stay fully invested, seeking to reduce transaction costs, seeking to simulate an investment in equity or debt securities or other investments, and seeking to add value by using derivatives to more efficiently implement portfolio positions when derivatives are favorably priced relative to equity or debt securities or other investments. Some investors may use derivatives primarily for speculative purposes while other uses of derivatives may not constitute speculation. There is no assurance that any derivatives strategy used by a fund’s advisor will succeed. The other parties to a fund’s OTC Derivatives contracts (usually referred to as “counterparties”) will not be considered the issuers thereof for purposes of certain provisions of the 1940 Act and the IRC, although such OTC Derivatives may qualify as securities or investments under such laws. A fund’s advisor(s), however, will monitor and adjust, as appropriate, the fund’s credit risk exposure to OTC Derivative counterparties.
Derivative products are highly specialized instruments that require investment techniques and risk analyses different from those associated with stocks, bonds, and other traditional investments. The use of a derivative requires an understanding not only of the underlying instrument but also of the derivative itself, without the benefit of observing the performance of the derivative under all possible market conditions.
When a fund enters into a Cleared Derivative, an initial margin deposit with a Futures Commission Merchant (FCM) is required. Initial margin deposits are typically calculated as an amount equal to the volatility in market value of a Cleared Derivative over a fixed period. If the value of the fund’s Cleared Derivatives declines, the fund will be required to make additional “variation margin” payments to the FCM to settle the change in value. If the value of the fund’s Cleared Derivatives increases, the FCM will be required to make additional “variation margin” payments to the fund to settle the change in value. This process is known as “marking-to-market” and is calculated on a daily basis.
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For OTC Derivatives, a fund is subject to the risk that a loss may be sustained as a result of the insolvency or bankruptcy of the counterparty or the failure of the counterparty to make required payments or otherwise comply with the terms of the contract. Additionally, the use of credit derivatives can result in losses if a fund’s advisor does not correctly evaluate the creditworthiness of the issuer on which the credit derivative is based.
Derivatives may be subject to liquidity risk, which exists when a particular derivative is difficult to purchase or sell. If a derivative transaction is particularly large or if the relevant market is illiquid (as is the case with certain OTC Derivatives), it may not be possible to initiate a transaction or liquidate a position at an advantageous time or price.
Derivatives may be subject to pricing or “basis” risk, which exists when a particular derivative becomes extraordinarily expensive relative to historical prices or the prices of corresponding cash market instruments. Under certain market conditions, it may not be economically feasible to initiate a transaction or liquidate a position in time to avoid a loss or take advantage of an opportunity.
Because certain derivatives have a leverage component, adverse changes in the value or level of the underlying asset, reference rate, or index can result in a loss substantially greater than the amount invested in the derivative itself. Certain derivatives have the potential for unlimited loss, regardless of the size of the initial investment. A derivative transaction will not be considered to constitute the issuance, by a fund, of a “senior security,” as that term is defined in Section 18(g) of the 1940 Act, and therefore such transaction will not be subject to the 300% asset coverage requirement otherwise applicable to borrowings by a fund, if the fund covers the transaction in accordance with the requirements described under the heading “Borrowing.”
Like most other investments, derivative instruments are subject to the risk that the market value of the instrument will change in a way detrimental to a fund’s interest. A fund bears the risk that its advisor will incorrectly forecast future market trends or the values of assets, reference rates, indexes, or other financial or economic factors in establishing derivative positions for the fund. If the advisor attempts to use a derivative as a hedge against, or as a substitute for, a portfolio investment, the fund will be exposed to the risk that the derivative will have or will develop imperfect or no correlation with the portfolio investment. This could cause substantial losses for the fund. Although hedging strategies involving derivative instruments can reduce the risk of loss, they can also reduce the opportunity for gain or even result in losses by offsetting favorable price movements in other fund investments. Many derivatives (in particular, OTC Derivatives) are complex and often valued subjectively. Improper valuations can result in increased cash payment requirements to counterparties or a loss of value to a fund.
Each Fund intends to comply with Rule 4.5 under the Commodity Exchange Act (CEA), under which a mutual fund may be excluded from the definition of the term Commodity Pool Operator (CPO) if the fund meets certain conditions such as limiting its investments in certain CEA-regulated instruments (e.g., futures, options, or swaps) and complying with certain marketing restrictions. Accordingly, Vanguard is not subject to registration or regulation as a CPO with respect to each Fund under the CEA. A Fund will only enter into futures contracts and futures options that are traded on a U.S. or foreign exchange, board of trade, or similar entity or that are quoted on an automated quotation system. 
Exchange-Traded Funds. A fund may purchase shares of exchange-traded funds (ETFs). Typically, a fund would purchase ETF shares for the same reason it would purchase (and as an alternative to purchasing) futures contracts: to obtain exposure to all or a portion of the stock or bond market. ETF shares enjoy several advantages over futures. Depending on the market, the holding period, and other factors, ETF shares can be less costly and more tax-efficient than futures. In addition, ETF shares can be purchased for smaller sums, offer exposure to market sectors and styles for which there is no suitable or liquid futures contract, and do not involve leverage.
An investment in an ETF generally presents the same principal risks as an investment in a conventional fund (i.e., one that is not exchange-traded) that has the same investment objective, strategies, and policies. The price of an ETF can fluctuate within a wide range, and a fund could lose money investing in an ETF if the prices of the securities owned by the ETF go down. In addition, ETFs are subject to the following risks that do not apply to conventional funds: (1) the market price of an ETF’s shares may trade at a discount or a premium to their net asset value; (2) an active trading market for an ETF’s shares may not develop or be maintained; and (3) trading of an ETF’s shares may be halted by the activation of individual or marketwide trading halts (which halt trading for a specific period of time when the price of a particular security or overall market prices decline by a specified percentage). Trading of an ETF’s shares may also be halted if the shares are delisted from the exchange without first being listed on another exchange or if the listing exchange’s officials determine that such action is appropriate in the interest of a fair and orderly market or for the protection of investors.
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Most ETFs are investment companies. Therefore, a fund’s purchases of ETF shares generally are subject to the limitations on, and the risks of, a fund’s investments in other investment companies, which are described under the heading “Other Investment Companies.”
Vanguard ETF®* Shares are exchange-traded shares that represent an interest in an investment portfolio held by Vanguard funds. A fund's investments in Vanguard ETF Shares are also generally subject to the descriptions, limitations, and risks described under the heading “Other Investment Companies,” except as provided by an exemption granted by the SEC that permits registered investment companies to invest in a Vanguard fund that issues ETF Shares beyond the limits of Section 12(d)(1) of the 1940 Act, subject to certain terms and conditions.
*U.S. Patent Nos. 6,879,964; 7,337,138; 7,720,749; 7,925,573; 8,090,646; and 8,417,623.
Foreign Securities. Typically, foreign securities are considered to be equity or debt securities issued by entities organized, domiciled, or with a principal executive office outside the United States, such as foreign corporations and governments. Securities issued by certain companies organized outside the United States may not be deemed to be foreign securities if the company’s principal operations are conducted from the United States or when the company’s equity securities trade principally on a U.S. stock exchange. Foreign securities may trade in U.S. or foreign securities markets. A fund may make foreign investments either directly by purchasing foreign securities or indirectly by purchasing depositary receipts or depositary shares of similar instruments (depositary receipts) for foreign securities. Direct investments in foreign securities may be made either on foreign securities exchanges or in the over-the-counter (OTC) markets. Investing in foreign securities involves certain special risk considerations that are not typically associated with investing in securities of U.S. companies or governments.
Because foreign issuers are not generally subject to uniform accounting, auditing, and financial reporting standards and practices comparable to those applicable to U.S. issuers, there may be less publicly available information about certain foreign issuers than about U.S. issuers. Evidence of securities ownership may be uncertain in many foreign countries. As a result, there are risks that could result in a loss to the fund, including, but not limited to, the risk that a fund’s trade details could be incorrectly or fraudulently entered at the time of a transaction. Securities of foreign issuers are generally more volatile and less liquid than securities of comparable U.S. issuers, and foreign investments may be effected through structures that may be complex or confusing. In certain countries, there is less government supervision and regulation of stock exchanges, brokers, and listed companies than in the United States. The risk that securities traded on foreign exchanges may be suspended, either by the issuers themselves, by an exchange, or by government authorities, is also heightened. In addition, with respect to certain foreign countries, there is the possibility of expropriation or confiscatory taxation, political or social instability, war, terrorism, nationalization, limitations on the removal of funds or other assets, or diplomatic developments that could affect U.S. investments in those countries. Additionally, economic or other sanctions imposed on the United States by a foreign country, or imposed on a foreign country or issuer by the United States, could impair a fund’s ability to buy, sell, hold, receive, deliver, or otherwise transact in certain investment securities. Sanctions could also affect the value and/or liquidity of a foreign security.
Although an advisor will endeavor to achieve the most favorable execution costs for a fund’s portfolio transactions in foreign securities under the circumstances, commissions and other transaction costs are generally higher than those on U.S. securities. In addition, it is expected that the custodian arrangement expenses for a fund that invests primarily in foreign securities will be somewhat greater than the expenses for a fund that invests primarily in domestic securities. Additionally, bankruptcy laws vary by jurisdiction and cash deposits may be subject to a custodian’s creditors. Certain foreign governments levy withholding or other taxes against dividend and interest income from, capital gains on the sale of, or transactions in foreign securities. Although in some countries a portion of these taxes is recoverable by the fund, the nonrecovered portion of foreign withholding taxes will reduce the income received from such securities.
The value of the foreign securities held by a fund that are not U.S. dollar-denominated may be significantly affected by changes in currency exchange rates. The U.S. dollar value of a foreign security generally decreases when the value of the U.S. dollar rises against the foreign currency in which the security is denominated, and it tends to increase when the value of the U.S. dollar falls against such currency (as discussed under the heading “Foreign Securities—Foreign Currency Transactions,” a fund may attempt to hedge its currency risks). In addition, the value of fund assets may be affected by losses and other expenses incurred from converting between various currencies in order to purchase and sell foreign securities, as well as by currency restrictions, exchange control regulations, currency devaluations, and political and economic developments.
Foreign Securities—China A-shares Risk. China A-shares (A-shares) are shares of mainland Chinese companies that are traded locally on the Shanghai and Shenzhen stock exchanges. A-shares investment by foreign investors are currently only available through the QFII/RQFII license or the China Stock Connect program. The developing state of the investment and banking systems of the People’s Republic of China (China, or the PRC) subjects the settlement,
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clearing, and registration of securities transactions to heightened risks. Additionally, there are foreign ownership limitations that may result in limitations on investment or the return of profits if a fund purchases and sells shares of an issuer in which it owns 5% or more of the shares issued within a six-month period. It is unclear if the 5% ownership will be determined by aggregating the holdings of a fund with affiliated funds.
Due to these restrictions, it is possible that the A-shares available to a fund as a foreign investor may not be sufficient to meet the fund’s investment needs. In this situation, a fund may seek an alternative method of economic exposure, such as by purchasing other classes of securities or depositary receipts or by utilizing derivatives. Any of these options could increase a fund’s index sampling risk (for index funds) or investment cost. Additionally, investing in A-shares generally increases emerging markets risk due in part to government and issuer market controls and the developing settlement and legal systems.
Investing in China A-shares through Stock Connect. The China Stock Connect program (Stock Connect) is a mutual market access program designed to, among other things, enable foreign investment in the PRC via brokers in Hong Kong. A QFII/RQFII license is not required to trade via Stock Connect. There are significant risks inherent in investing in A-shares through Stock Connect. Specifically, trading can be affected by a number of issues. Stock Connect can only operate when both PRC and Hong Kong markets are open for trading and when banking services are available in both markets on the corresponding settlement days. As such, if one or both markets are closed on a U.S. trading day, a fund may not be able to dispose of its shares in a timely manner, which could adversely affect the fund’s performance. Trading through Stock Connect may require pre-delivery or pre-validation of cash or securities to or by a broker. If the cash or securities are not in the broker’s possession before the market opens on the day of selling, the sell order will be rejected. This requirement may limit a fund’s ability to dispose of its A-shares purchased through Stock Connect in a timely manner.
Additionally, Stock Connect is subject to daily quota limitations on purchases into the PRC. Once the daily quota is reached, orders to purchase additional A-shares through Stock Connect will be rejected. In addition, a fund’s purchase of A-shares through Stock Connect may only be subsequently sold through Stock Connect and is not otherwise transferable. Stock Connect utilizes an omnibus clearing structure, and the fund’s shares will be registered in its custodian’s name on the Hong Kong Central Clearing and Settlement System. This may limit an advisor’s ability to effectively manage a fund’s holdings, including the potential enforcement of equity owner rights.
Foreign Securities—China Bonds Risk. Chinese RMB-denominated government and policy bank bonds (collectively referred to as “China Bonds”) are predominantly traded on the inter-bank bond market, which is regulated by the People’s Bank of China (PBoC). Bond Connect is a mutual market access scheme that allows investors from the mainland of the People’s Republic of China (also known as “China”) and overseas to trade in each other’s respective markets. It is to be one of the primary mechanisms for overseas investors to access China’s large domestic bond market alongside the China Interbank Bond Market (CIBM) Direct scheme. Bond Connect was set up by the PBoC and the Hong Kong Monetary Authority, establishing a connection between mainland China and Hong Kong based financial institutions. The creation of Bond Connect allows investors to trade between the mainland China and Hong Kong markets electronically, which eradicates the need for investor status and quotas that were required under previous access models. Investing in the People’s Republic of China inter-bank bond market via Bond Connect is subject to regulatory risk. The governing rules and regulations under this regime may be subject to change with minimal notice and have the potential to be applied retroactively. Any suspension imposed by the Chinese authorities on the People’s Republic of China inter-bank bond market or in relation to the Bond Connect scheme would adversely impact a fund’s ability to acquire or dispose of assets.
RMB is the only currency of the People’s Republic of China. While both onshore RMB (CNY) and offshore RMB (CNH) are the same currency, they are traded in different and separate markets. These markets operate separately and can be subject to different liquidity constraints and market forces, meaning their valuations can vary. As part of standard fund management practices, it will be necessary to hedge the foreign exchange (FX) exposure that arises from the inclusion of China Bonds into the base currency of a Fund. FX hedging utilizing CNY would match the currency of the index. Conversely, FX hedging utilizing CNH would introduce incremental FX risk arising from any divergence between CHN and CNY.
Foreign Securities—Emerging Market Risk. Investing in emerging market countries involves certain risks not typically associated with investing in the United States, and it imposes risks greater than, or in addition to, risks of investing in more developed foreign countries. These risks include, but are not limited to, the following: nationalization or expropriation of assets or confiscatory taxation; currency devaluations and other currency exchange rate fluctuations; greater social, economic, and political uncertainty and instability (including amplified risk of war and terrorism); more substantial government involvement in the economy; less government supervision and regulation of the securities
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markets and participants in those markets and possible arbitrary and unpredictable enforcement of securities regulations and other laws; controls on foreign investment and limitations on repatriation of invested capital and on the fund’s ability to exchange local currencies for U.S. dollars; unavailability of currency-hedging techniques in certain emerging market countries; generally smaller, less seasoned, or newly organized companies; differences in, or lack of, auditing and financial reporting standards, which may result in unavailability of material information about issuers; difficulty in obtaining and/or enforcing a judgment in a court outside the United States; and greater price volatility, substantially less liquidity, and significantly smaller market capitalization of securities markets. Also, any change in the leadership or politics of emerging market countries, or the countries that exercise a significant influence over those countries, may halt the expansion of or reverse the liberalization of foreign investment policies now occurring and adversely affect existing investment opportunities. Furthermore, high rates of inflation and rapid fluctuations in inflation rates have had, and may continue to have, negative effects on the economies and securities markets of certain emerging market countries. Custodial expenses and other investment-related costs are often more expensive in emerging market countries, which can reduce a fund’s income from investments in securities or debt instruments of emerging market country issuers.
Foreign Securities—Foreign Currency Transactions. The value in U.S. dollars of a fund’s non-dollar-denominated foreign securities may be affected favorably or unfavorably by changes in foreign currency exchange rates and exchange control regulations, and the fund may incur costs in connection with conversions between various currencies. To seek to minimize the impact of such factors on net asset values, a fund may engage in foreign currency transactions in connection with its investments in foreign securities. A fund will enter into foreign currency transactions only to attempt to “hedge” the currency risk associated with investing in foreign securities. Although such transactions tend to minimize the risk of loss that would result from a decline in the value of the hedged currency, they also may limit any potential gain that might result should the value of such currency increase.
Currency exchange transactions may be conducted either on a spot (i.e., cash) basis at the rate prevailing in the currency exchange market or through forward contracts to purchase or sell foreign currencies. A forward currency contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days from the date of the contract agreed upon by the parties, at a price set at the time of the contract. These contracts are entered into with large commercial banks or other currency traders who are participants in the interbank market. Currency exchange transactions also may be effected through the use of swap agreements or other derivatives.
Currency exchange transactions may be considered borrowings. A currency exchange transaction will not be considered to constitute the issuance, by a fund, of a “senior security,” as that term is defined in Section 18(g) of the 1940 Act, and therefore such transaction will not be subject to the 300% asset coverage requirement otherwise applicable to borrowings by a fund, if the fund covers the transaction in accordance with the requirements described under the heading “Borrowing.”
By entering into a forward contract for the purchase or sale of foreign currency involved in underlying security transactions, a fund may be able to protect itself against part or all of the possible loss between trade and settlement dates for that purchase or sale resulting from an adverse change in the relationship between the U.S. dollar and such foreign currency. This practice is sometimes referred to as “transaction hedging.” In addition, when the advisor reasonably believes that a particular foreign currency may suffer a substantial decline against the U.S. dollar, a fund may enter into a forward contract to sell an amount of foreign currency approximating the value of some or all of its portfolio securities denominated in such foreign currency. This practice is sometimes referred to as “portfolio hedging.” Similarly, when the advisor reasonably believes that the U.S. dollar may suffer a substantial decline against a foreign currency, a fund may enter into a forward contract to buy that foreign currency for a fixed dollar amount.
A fund may also attempt to hedge its foreign currency exchange rate risk by engaging in currency futures, options, and “cross-hedge” transactions. In cross-hedge transactions, a fund holding securities denominated in one foreign currency will enter into a forward currency contract to buy or sell a different foreign currency (one that the advisor reasonably believes generally tracks the currency being hedged with regard to price movements). The advisor may select the tracking (or substitute) currency rather than the currency in which the security is denominated for various reasons, including in order to take advantage of pricing or other opportunities presented by the tracking currency or to take advantage of a more liquid or more efficient market for the tracking currency. Such cross-hedges are expected to help protect a fund against an increase or decrease in the value of the U.S. dollar against certain foreign currencies.
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A fund may hold a portion of its assets in bank deposits denominated in foreign currencies so as to facilitate investment in foreign securities as well as protect against currency fluctuations and the need to convert such assets into U.S. dollars (thereby also reducing transaction costs). To the extent these assets are converted back into U.S. dollars, the value of the assets so maintained will be affected favorably or unfavorably by changes in foreign currency exchange rates and exchange control regulations.
Forecasting the movement of the currency market is extremely difficult. Whether any hedging strategy will be successful is highly uncertain. Moreover, it is impossible to forecast with precision the market value of portfolio securities at the expiration of a forward currency contract. Accordingly, a fund may be required to buy or sell additional currency on the spot market (and bear the expense of such transaction) if its advisor’s predictions regarding the movement of foreign currency or securities markets prove inaccurate. In addition, the use of cross-hedging transactions may involve special risks and may leave a fund in a less advantageous position than if such a hedge had not been established. Because forward currency contracts are privately negotiated transactions, there can be no assurance that a fund will have flexibility to roll over a forward currency contract upon its expiration if it desires to do so. Additionally, there can be no assurance that the other party to the contract will perform its services thereunder.
Foreign Securities—Foreign Investment Companies. Some of the countries in which a fund may invest may not permit, or may place economic restrictions on, direct investment by outside investors. Fund investments in such countries may be permitted only through foreign government-approved or authorized investment vehicles, which may include other investment companies. Such investments may be made through registered or unregistered closed-end investment companies that invest in foreign securities. Investing through such vehicles may involve layered fees or expenses and may also be subject to the limitations on, and the risks of, a fund’s investments in other investment companies, which are described under the heading “Other Investment Companies.”
Futures Contracts and Options on Futures Contracts. Futures contracts and options on futures contracts are derivatives. A futures contract is a standardized agreement between two parties to buy or sell at a specific time in the future a specific quantity of a commodity at a specific price. The commodity may consist of an asset, a reference rate, or an index. A security futures contract relates to the sale of a specific quantity of shares of a single equity security or a narrow-based securities index. The value of a futures contract tends to increase and decrease in tandem with the value of the underlying commodity. The buyer of a futures contract enters into an agreement to purchase the underlying commodity on the settlement date and is said to be “long” the contract. The seller of a futures contract enters into an agreement to sell the underlying commodity on the settlement date and is said to be “short” the contract. The price at which a futures contract is entered into is established either in the electronic marketplace or by open outcry on the floor of an exchange between exchange members acting as traders or brokers. Open futures contracts can be liquidated or closed out by physical delivery of the underlying commodity or payment of the cash settlement amount on the settlement date, depending on the terms of the particular contract. Some financial futures contracts (such as security futures) provide for physical settlement at maturity. Other financial futures contracts (such as those relating to interest rates, foreign currencies, and broad-based securities indexes) generally provide for cash settlement at maturity. In the case of cash-settled futures contracts, the cash settlement amount is equal to the difference between the final settlement or market price for the relevant commodity on the last trading day of the contract and the price for the relevant commodity agreed upon at the outset of the contract. Most futures contracts, however, are not held until maturity but instead are “offset” before the settlement date through the establishment of an opposite and equal futures position.
The purchaser or seller of a futures contract is not required to deliver or pay for the underlying commodity unless the contract is held until the settlement date. However, both the purchaser and seller are required to deposit “initial margin” with a futures commission merchant (FCM) when the futures contract is entered into. Initial margin deposits are typically calculated as an amount equal to the volatility in market value of a contract over a fixed period. If the value of the fund’s position declines, the fund will be required to make additional “variation margin” payments to the FCM to settle the change in value. If the value of the fund’s position increases, the FCM will be required to make additional “variation margin” payments to the fund to settle the change in value. This process is known as “marking-to-market” and is calculated on a daily basis. A futures transaction will not be considered to constitute the issuance, by a fund, of a “senior security,” as that term is defined in Section 18(g) of the 1940 Act, and therefore such transaction will not be subject to the 300% asset coverage requirement otherwise applicable to borrowings by a fund, if the fund covers the transaction in accordance with the requirements described under the heading “Borrowing.”
An option on a futures contract (or futures option) conveys the right, but not the obligation, to purchase (in the case of a call option) or sell (in the case of a put option) a specific futures contract at a specific price (called the “exercise” or “strike” price) any time before the option expires. The seller of an option is called an option writer. The purchase price
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of an option is called the premium. The potential loss to an option buyer is limited to the amount of the premium plus transaction costs. This will be the case, for example, if the option is held and not exercised prior to its expiration date. Generally, an option writer sells options with the goal of obtaining the premium paid by the option buyer. If an option sold by an option writer expires without being exercised, the writer retains the full amount of the premium. The option writer, however, has unlimited economic risk because its potential loss, except to the extent offset by the premium received when the option was written, is equal to the amount the option is “in-the-money” at the expiration date. A call option is in-the-money if the value of the underlying futures contract exceeds the exercise price of the option. A put option is in-the-money if the exercise price of the option exceeds the value of the underlying futures contract. Generally, any profit realized by an option buyer represents a loss for the option writer.
A fund that takes the position of a writer of a futures option is required to deposit and maintain initial and variation margin with respect to the option, as previously described in the case of futures contracts. A futures option transaction will not be considered to constitute the issuance, by a fund, of a “senior security,” as that term is defined in Section 18(g) of the 1940 Act, and therefore such transaction will not be subject to the 300% asset coverage requirement otherwise applicable to borrowings by a fund, if the fund covers the transaction in accordance with the requirements described under the heading “Borrowing.”
Futures Contracts and Options on Futures Contracts—Risks. The risk of loss in trading futures contracts and in writing futures options can be substantial because of the low margin deposits required, the extremely high degree of leverage involved in futures and options pricing, and the potential high volatility of the futures markets. As a result, a relatively small price movement in a futures position may result in immediate and substantial loss (or gain) for the investor. For example, if at the time of purchase, 10% of the value of the futures contract is deposited as margin, a subsequent 10% decrease in the value of the futures contract would result in a total loss of the margin deposit, before any deduction for the transaction costs, if the account were then closed out. A 15% decrease would result in a loss equal to 150% of the original margin deposit if the contract were closed out. Thus, a purchase or sale of a futures contract, and the writing of a futures option, may result in losses in excess of the amount invested in the position. In the event of adverse price movements, a fund would continue to be required to make daily cash payments to maintain its required margin. In such situations, if the fund has insufficient cash, it may have to sell portfolio securities to meet daily margin requirements (and segregation requirements, if applicable) at a time when it may be disadvantageous to do so. In addition, on the settlement date, a fund may be required to make delivery of the instruments underlying the futures positions it holds.
A fund could suffer losses if it is unable to close out a futures contract or a futures option because of an illiquid secondary market. Futures contracts and futures options may be closed out only on an exchange that provides a secondary market for such products. However, there can be no assurance that a liquid secondary market will exist for any particular futures product at any specific time. Thus, it may not be possible to close a futures or option position. Moreover, most futures exchanges limit the amount of fluctuation permitted in futures contract prices during a single trading day. The daily limit establishes the maximum amount that the price of a futures contract may vary either up or down from the previous day’s settlement price at the end of a trading session. Once the daily limit has been reached in a particular type of contract, no trades may be made on that day at a price beyond that limit. The daily limit governs only price movement during a particular trading day, and therefore does not limit potential losses because the limit may prevent the liquidation of unfavorable positions. Futures contract prices have occasionally moved to the daily limit for several consecutive trading days with little or no trading, thereby preventing prompt liquidation of future positions and subjecting some futures traders to substantial losses. The inability to close futures and options positions also could have an adverse impact on the ability to hedge a portfolio investment or to establish a substitute for a portfolio investment. U.S. Treasury futures are generally not subject to such daily limits.
A fund bears the risk that its advisor will incorrectly predict future market trends. If the advisor attempts to use a futures contract or a futures option as a hedge against, or as a substitute for, a portfolio investment, the fund will be exposed to the risk that the futures position will have or will develop imperfect or no correlation with the portfolio investment. This could cause substantial losses for the fund. Although hedging strategies involving futures products can reduce the risk of loss, they can also reduce the opportunity for gain or even result in losses by offsetting favorable price movements in other fund investments.
A fund could lose margin payments it has deposited with its FCM if, for example, the FCM breaches its agreement with the fund or becomes insolvent or goes into bankruptcy. In that event, the fund may be entitled to return of margin owed to it only in proportion to the amount received by the FCM’s other customers, potentially resulting in losses to the fund.
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Interfund Borrowing and Lending. The SEC has granted an exemption permitting registered open-end Vanguard funds to participate in Vanguard’s interfund lending program. This program allows the Vanguard funds to borrow money from and lend money to each other for temporary or emergency purposes. The program is subject to a number of conditions, including, among other things, the requirements that (1) no fund may borrow or lend money through the program unless it receives a more favorable interest rate than is typically available from a bank for a comparable transaction, (2) no fund may lend money if the loan would cause its aggregate outstanding loans through the program to exceed 15% of its net assets at the time of the loan, and (3) a fund’s interfund loans to any one fund shall not exceed 5% of the lending fund’s net assets. In addition, a Vanguard fund may participate in the program only if and to the extent that such participation is consistent with the fund’s investment objective and investment policies. The boards of trustees of the Vanguard funds are responsible for overseeing the interfund lending program. Any delay in repayment to a lending fund could result in a lost investment opportunity or additional borrowing costs.
Investing for Control. Each Vanguard fund invests in securities and other instruments for the sole purpose of achieving a specific investment objective. As such, a Vanguard fund does not seek to acquire, individually or collectively with any other Vanguard fund, enough of a company’s outstanding voting stock to have control over management decisions. A Vanguard fund does not invest for the purpose of controlling a company’s management.
Loan Interests and Direct Debt Instruments. Loan interests and direct debt instruments are interests in amounts owed by a corporate, governmental, or other borrower to lenders or lending syndicates (in the case of loans and loan participations); to suppliers of goods or services (in the case of trade claims or other receivables); or to other parties. These investments involve a risk of loss in case of default, insolvency, or the bankruptcy of the borrower, may not be deemed to be securities under certain federal securities laws and may offer less legal protection to the purchaser in the event of fraud or misrepresentation, or there may be a requirement that a purchaser supply additional cash to a borrower on demand.
Purchasers of loans and other forms of direct indebtedness depend primarily upon the creditworthiness of the borrower for payment of interest and repayment of principal. Direct debt instruments may not be rated by a rating agency. If scheduled interest or principal payments are not made, or are not made in a timely manner, the value of the instrument may be adversely affected. Loans that are fully secured provide more protections than unsecured loans in the event of failure to make scheduled interest or principal payments. However, there is no assurance that the liquidation of collateral from a secured loan would satisfy the borrower’s obligation or that the collateral could be liquidated. Indebtedness of borrowers whose creditworthiness is poor involves substantially greater risks and may be highly speculative. Borrowers that are in bankruptcy or restructuring may never pay off their indebtedness, or they may pay only a small fraction of the amount owed. Direct indebtedness of countries, particularly developing countries, also involves a risk that the governmental entities responsible for the repayment of the debt may be unable, or unwilling, to pay interest and repay principal when due.
Corporate loans and other forms of direct corporate indebtedness in which a fund may invest generally are made to finance internal growth, mergers, acquisitions, stock repurchases, refinancing of existing debt, leveraged buyouts, and other corporate activities. A significant portion of the corporate indebtedness purchased by a fund may represent interests in loans or debt made to finance highly leveraged corporate acquisitions (known as “leveraged buyout” transactions), leveraged recapitalization loans, and other types of acquisition financing. Another portion may also represent loans incurred in restructuring or “work-out” scenarios, including super-priority debtor-in-possession facilities in bankruptcy and acquisition of assets out of bankruptcy. Loans in restructuring or work-out scenarios may be especially vulnerable to the inherent uncertainties in restructuring processes. In addition, the highly leveraged capital structure of the borrowers in any such transactions, whether in acquisition financing or restructuring, may make such loans especially vulnerable to adverse or unusual economic or market conditions.
Loans and other forms of direct indebtedness generally are subject to restrictions on transfer, and only limited opportunities may exist to sell them in secondary markets. As a result, a fund may be unable to sell loans and other forms of direct indebtedness at a time when it may otherwise be desirable to do so or may be able to sell them only at a price that is less than their fair value.
Investments in loans through direct assignment of a financial institution’s interests with respect to a loan may involve additional risks. For example, if a loan is foreclosed, the purchaser could become part owner of any collateral and would bear the costs and liabilities associated with owning and disposing of the collateral. In addition, it is at least conceivable that, under emerging legal theories of lender liability, a purchaser could be held liable as a co-lender. Direct debt instruments may also involve a risk of insolvency of the lending bank or other intermediary.
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A loan is often administered by a bank or other financial institution that acts as agent for all holders. The agent administers the terms of the loan, as specified in the loan agreement. Unless the purchaser has direct recourse against the borrower, the purchaser may have to rely on the agent to apply appropriate credit remedies against a borrower under the terms of the loan or other indebtedness. If assets held by the agent for the benefit of a purchaser were determined to be subject to the claims of the agent’s general creditors, the purchaser might incur certain costs and delays in realizing payment on the loan or loan participation and could suffer a loss of principal and/or interest.
Direct indebtedness may include letters of credit, revolving credit facilities, or other standby financing commitments that obligate purchasers to make additional cash payments on demand. These commitments may have the effect of requiring a purchaser to increase its investment in a borrower when it would not otherwise have done so, even if the borrower’s condition makes it unlikely that the amount will ever be repaid.
A fund’s investment policies will govern the amount of total assets that it may invest in any one issuer or in issuers within the same industry. For purposes of these limitations, a fund generally will treat the borrower as the “issuer” of indebtedness held by the fund. In the case of loan participations in which a bank or other lending institution serves as financial intermediary between a fund and the borrower, if the participation does not shift to the fund the direct debtor-creditor relationship with the borrower, SEC interpretations require the fund, in some circumstances, to treat both the lending bank or other lending institution and the borrower as “issuers” for purposes of the fund’s investment policies. Treating a financial intermediary as an issuer of indebtedness may restrict a fund’s ability to invest in indebtedness related to a single financial intermediary, or a group of intermediaries engaged in the same industry, even if the underlying borrowers represent many different companies and industries.
Market Disruption. Significant market disruptions, such as those caused by pandemics, natural or environmental disasters, war, acts of terrorism, or other events, can adversely affect local and global markets and normal market operations. Market disruptions may exacerbate political, social, and economic risks discussed above and in a fund’s prospectus. Additionally, market disruptions may result in increased market volatility; regulatory trading halts; closure of domestic or foreign exchanges, markets, or governments; or market participants operating pursuant to business continuity plans for indeterminate periods of time. Such events can be highly disruptive to economies and markets and significantly impact individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of a fund’s investments and operation of a fund. These events could also result in the closure of businesses that are integral to a fund’s operations or otherwise disrupt the ability of employees of fund service providers to perform essential tasks on behalf of a fund.
Mortgage-Backed Securities. Mortgage-backed securities represent direct or indirect participation in, or are collateralized by and payable from, mortgage loans secured by real property or instruments derived from such loans and may be based on different types of mortgages, including those on residential properties or commercial real estate. Mortgage-backed securities include various types of securities, such as government stripped mortgage-backed securities, adjustable rate mortgage-backed securities, and collateralized mortgage obligations.
Generally, mortgage-backed securities represent partial interests in pools of mortgage loans assembled for sale to investors by various governmental agencies, such as the Government National Mortgage Association (GNMA); by government-related organizations, such as the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC); and by private issuers, such as commercial banks, savings and loan institutions, and mortgage bankers. The average maturity of pass-through pools of mortgage-backed securities in which a fund may invest varies with the maturities of the underlying mortgage instruments. In addition, a pool’s average maturity may be shortened by unscheduled payments on the underlying mortgages. Factors affecting mortgage prepayments include the level of interest rates, the general economic and social conditions, the location of the mortgaged property, and the age of the mortgage. Because prepayment rates of individual mortgage pools vary widely, the average life of a particular pool cannot be predicted accurately.
Mortgage-backed securities may be classified as private, government, or government-related, depending on the issuer or guarantor. Private mortgage-backed securities represent interest in pass-through pools consisting principally of conventional residential or commercial mortgage loans created by nongovernment issuers, such as commercial banks, savings and loan associations, and private mortgage insurance companies. Private mortgage-backed securities may not be readily marketable. In addition, mortgage-backed securities have been subject to greater liquidity risk when worldwide economic and liquidity conditions deteriorate. U.S. government mortgage-backed securities are backed by the full faith and credit of the U.S. government. GNMA, the principal U.S. guarantor of these securities, is a wholly owned U.S. government corporation within the Department of Housing and Urban Development. Government-related mortgage-backed securities are not backed by the full faith and credit of the U.S. government. Issuers include FNMA and FHLMC, which are congressionally chartered corporations. In September 2008, the U.S. Treasury placed FNMA
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and FHLMC under conservatorship and appointed the Federal Housing Finance Agency (FHFA) to manage their daily operations. In addition, the U.S. Treasury entered into purchase agreements with FNMA and FHLMC to provide them with capital in exchange for senior preferred stock. Pass-through securities issued by FNMA are guaranteed as to timely payment of principal and interest by FNMA. Participation certificates representing interests in mortgages from FHLMC’s national portfolio are guaranteed as to the timely payment of interest and principal by FHLMC. Private, government, or government-related entities may create mortgage loan pools offering pass-through investments in addition to those described above. The mortgages underlying these securities may be alternative mortgage instruments (i.e., mortgage instruments whose principal or interest payments may vary or whose terms to maturity may be shorter than customary).
Mortgage-backed securities are often subject to more rapid repayment than their stated maturity date would indicate as a result of the pass-through of prepayments of principal on the underlying loans. Prepayments of principal by mortgagors or mortgage foreclosures shorten the term of the mortgage pool underlying the mortgage-backed security. A fund’s ability to maintain positions in mortgage-backed securities is affected by the reductions in the principal amount of such securities resulting from prepayments. A fund’s ability to reinvest prepayments of principal at comparable yield is subject to generally prevailing interest rates at that time. The values of mortgage-backed securities vary with changes in market interest rates generally and the differentials in yields among various kinds of government securities, mortgage-backed securities, and asset-backed securities. In periods of rising interest rates, the rate of prepayment tends to decrease, thereby lengthening the average life of a pool of mortgages supporting a mortgage-backed security. Conversely, in periods of falling interest rates, the rate of prepayment tends to increase, thereby shortening the average life of such a pool. Because prepayments of principal generally occur when interest rates are declining, an investor, such as a fund, generally has to reinvest the proceeds of such prepayments at lower interest rates than those at which its assets were previously invested. Therefore, mortgage-backed securities have less potential for capital appreciation in periods of falling interest rates than other income-bearing securities of comparable maturity.
Mortgage-Backed Securities—Adjustable Rate Mortgage-Backed Securities. Adjustable rate mortgage-backed securities (ARMBSs) have interest rates that reset at periodic intervals. Acquiring ARMBSs permits a fund to participate in increases in prevailing current interest rates through periodic adjustments in the coupons of mortgages underlying the pool on which ARMBSs are based. Such ARMBSs generally have higher current yield and lower price fluctuations than is the case with more traditional fixed income debt securities of comparable rating and maturity. However, because the interest rates on ARMBSs are reset only periodically, changes in market interest rates or in the issuer’s creditworthiness may affect their value. In addition, when prepayments of principal are made on the underlying mortgages during periods of rising interest rates, a fund can reinvest the proceeds of such prepayments at rates higher than those at which they were previously invested. Mortgages underlying most ARMBSs, however, have limits on the allowable annual or lifetime increases that can be made in the interest rate that the mortgagor pays. Therefore, if current interest rates rise above such limits over the period of the limitation, a fund holding an ARMBS does not benefit from further increases in interest rates. Moreover, when interest rates are in excess of coupon rates (i.e., the rates being paid by mortgagors) of the mortgages, ARMBSs behave more like fixed income securities and less like adjustable rate securities and are thus subject to the risks associated with fixed income securities. In addition, during periods of rising interest rates, increases in the coupon rate of adjustable rate mortgages generally lag current market interest rates slightly, thereby creating the potential for capital depreciation on such securities.
Mortgage-Backed Securities—Collateralized Mortgage Obligations. Collateralized mortgage obligations (CMOs) are mortgage-backed securities that are collateralized by whole loan mortgages or mortgage pass-through securities. The bonds issued in a CMO transaction are divided into groups, and each group of bonds is referred to as a “tranche.” Under the traditional CMO structure, the cash flows generated by the mortgages or mortgage pass-through securities in the collateral pool are used to first pay interest and then pay principal to the CMO bondholders. The bonds issued under a traditional CMO structure are retired sequentially as opposed to the pro-rata return of principal found in traditional pass-through obligations. Subject to the various provisions of individual CMO issues, the cash flow generated by the underlying collateral (to the extent it exceeds the amount required to pay the stated interest) is used to retire the bonds. Under a CMO structure, the repayment of principal among the different tranches is prioritized in accordance with the terms of the particular CMO issuance. The “fastest-pay” tranches of bonds, as specified in the prospectus for the issuance, would initially receive all principal payments. When those tranches of bonds are retired, the next tranche (or tranches) in the sequence, as specified in the prospectus, receives all of the principal payments until that tranche is retired. The sequential retirement of bond groups continues until the last tranche is retired. Accordingly, the CMO structure allows the issuer to use cash flows of long-maturity, monthly pay collateral to formulate securities with short, intermediate, and long final maturities and expected average lives and risk characteristics.
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In recent years, new types of CMO tranches have evolved. These include floating rate CMOs, planned amortization classes, accrual bonds, and CMO residuals. These newer structures affect the amount and timing of principal and interest received by each tranche from the underlying collateral. Under certain of these new structures, given classes of CMOs have priority over others with respect to the receipt of prepayments on the mortgages. Therefore, depending on the type of CMOs in which a fund invests, the investment may be subject to a greater or lesser risk of prepayment than other types of mortgage-backed securities.
CMOs may include real estate mortgage investment conduits (REMICs). REMICs, which were authorized under the Tax Reform Act of 1986, are private entities formed for the purpose of holding a fixed pool of mortgages secured by an interest in real property. A REMIC is a CMO that qualifies for special tax treatment under the IRC and invests in certain mortgages principally secured by interests in real property. Investors may purchase beneficial interests in REMICs, which are known as “regular” interests, or “residual” interests. Guaranteed REMIC pass-through certificates (REMIC Certificates) issued by FNMA or FHLMC represent beneficial ownership interests in a REMIC trust consisting principally of mortgage loans or FNMA, FHLMC, or GNMA-guaranteed mortgage pass-through certificates. For FHLMC REMIC Certificates, FHLMC guarantees the timely payment of interest and also guarantees the payment of principal, as payments are required to be made on the underlying mortgage participation certificates. FNMA REMIC Certificates are issued and guaranteed as to timely distribution of principal and interest by FNMA.
The primary risk of CMOs is the uncertainty of the timing of cash flows that results from the rate of prepayments on the underlying mortgages serving as collateral and from the structure of the particular CMO transaction (i.e., the priority of the individual tranches). An increase or decrease in prepayment rates (resulting from a decrease or increase in mortgage interest rates) will affect the yield, the average life, and the price of CMOs. The prices of certain CMOs, depending on their structure and the rate of prepayments, can be volatile. Some CMOs may also not be as liquid as other securities.
Mortgage-Backed Securities—Hybrid ARMs. A hybrid adjustable rate mortgage (hybrid ARM) is a type of mortgage in which the interest rate is fixed for a specified period and then resets periodically, or floats, for the remaining mortgage term. Hybrid ARMs are usually referred to by their fixed and floating periods. For example, a 5/1 ARM refers to a mortgage with a 5-year fixed interest rate period, followed by a 1-year interest rate adjustment period. During the initial interest period (i.e., the initial five years for a 5/1 hybrid ARM), hybrid ARMs behave more like fixed income securities and are thus subject to the risks associated with fixed income securities. All hybrid ARMs have reset dates. A reset date is the date when a hybrid ARM changes from a fixed interest rate to a floating interest rate. At the reset date, a hybrid ARM can adjust by a maximum specified amount based on a margin over an identified index. Like ARMBSs, hybrid ARMs have periodic and lifetime limitations on the increases that can be made to the interest rates that mortgagors pay. Therefore, if during a floating rate period interest rates rise above the interest rate limits of the hybrid ARM, a fund holding the hybrid ARM does not benefit from further increases in interest rates.
Mortgage-Backed Securities—Mortgage Dollar Rolls. A mortgage dollar roll is a transaction in which a fund sells a mortgage-backed security to a dealer and simultaneously agrees to purchase a similar security (but not the same security) in the future at a predetermined price. A mortgage-dollar-roll program may be structured to simulate an investment in mortgage-backed securities at a potentially lower cost, or with potentially reduced administrative burdens, than directly holding mortgage-backed securities. For accounting purposes, each transaction in a mortgage dollar roll is viewed as a separate purchase and sale of a mortgage-backed security. These transactions may increase a fund’s portfolio turnover rate. The fund receives cash for a mortgage-backed security in the initial transaction and enters into an agreement that requires the fund to purchase a similar mortgage-backed security in the future.
The counterparty with which a fund enters into a mortgage-dollar-roll transaction is obligated to provide the fund with similar securities to purchase as those originally sold by the fund. These securities generally must (1) be issued by the same agency and be part of the same program; (2) have similar original stated maturities; (3) have identical net coupon rates; and (4) satisfy “good delivery” requirements, meaning that the aggregate principal amounts of the securities delivered and received back must be within a certain percentage of the initial amount delivered. Mortgage dollar rolls will be used only if consistent with a fund’s investment objective and strategies and will not be used to change a fund’s risk profile.
Mortgage-Backed Securities—Stripped Mortgage-Backed Securities. Stripped mortgage-backed securities (SMBSs) are derivative multiclass mortgage-backed securities. SMBSs may be issued by agencies or instrumentalities of the U.S. government or by private originators of, or investors in, mortgage loans, including savings and loan associations, mortgage banks, commercial banks, investment banks, and special purpose entities formed or sponsored by any of the foregoing.
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SMBSs are usually structured with two classes that receive different proportions of the interest and principal distributions on a pool of mortgage assets. A common type of SMBS will have one class receiving some of the interest and most of the principal from the mortgage assets, while the other class will receive most of the interest and the remainder of the principal. In the most extreme case, one class will receive all of the interest (the “IO” class), while the other class will receive all of the principal (the principal-only or “PO” class). The price and yield to maturity on an IO class are extremely sensitive to the rate of principal payments (including prepayments) on the related underlying mortgage assets, and a rapid rate of principal payments may have a material adverse effect on a fund’s yield to maturity from these securities. If the underlying mortgage assets experience greater than anticipated prepayments of principal, a fund may fail to recoup some or all of its initial investment in these securities, even if the security is in one of the highest rating categories.
Although SMBSs are purchased and sold by institutional investors through several investment banking firms acting as brokers or dealers, these securities were only recently developed. As a result, established trading markets have not yet developed, and accordingly, these securities may be deemed “illiquid” and thus subject to a fund’s limitations on investment in illiquid securities.
Mortgage-Backed Securities— To Be Announced (TBA) Securities. A TBA securities transaction, which is a type of forward-commitment transaction, represents an agreement to buy or sell mortgage-backed securities with agreed-upon characteristics for a fixed unit price, with settlement on a scheduled future date, typically within 30 calendar days of the trade date. With TBA transactions, the particular securities (i.e., specified mortgage pools) to be delivered or received are not identified at the trade date; however, securities delivered to a purchaser must meet specified criteria, including face value, coupon rate, and maturity, and be within industry-accepted “good delivery” standards. A fund may sell TBA securities to hedge its portfolio positions or to dispose of mortgage-backed securities it owns under delayed-delivery arrangements. Proceeds of TBA securities sold are not received until the contractual settlement date. For TBA purchases, a fund will maintain sufficient liquid assets (e.g., cash or marketable securities) until settlement date in an amount sufficient to meet the purchase price. Unsettled TBA securities are valued by an independent pricing service based on the characteristics of the securities to be delivered or received. A risk associated with TBA transactions is that at settlement, either the buyer fails to pay the agreed price for the securities or the seller fails to deliver the agreed securities. As the value of such unsettled TBA securities is assessed on a daily basis, parties mitigate such risk by, among other things, exchanging collateral as security for performance, performing a credit analysis of the counterparty, allocating transactions among numerous counterparties, and monitoring its exposure to each counterparty.
Options. An option is a derivative. An option on a security (or index) is a contract that gives the holder of the option, in return for the payment of a “premium,” the right, but not the obligation, to buy from (in the case of a call option) or sell to (in the case of a put option) the writer of the option the security underlying the option (or the cash value of the index) at a specified exercise price prior to the expiration date of the option. The writer of an option on a security has the obligation upon exercise of the option to deliver the underlying security upon payment of the exercise price (in the case of a call option) or to pay the exercise price upon delivery of the underlying security (in the case of a put option). The writer of an option on an index has the obligation upon exercise of the option to pay an amount equal to the cash value of the index minus the exercise price, multiplied by the specified multiplier for the index option. The multiplier for an index option determines the size of the investment position the option represents. Unlike exchange-traded options, which are standardized with respect to the underlying instrument, expiration date, contract size, and strike price, the terms of over-the-counter (OTC) options (options not traded on exchanges) generally are established through negotiation with the other party to the option contract. Although this type of arrangement allows the purchaser or writer greater flexibility to tailor an option to its needs, OTC options generally involve credit risk to the counterparty, whereas for exchange-traded, centrally cleared options, credit risk is mutualized through the involvement of the applicable clearing house.
The buyer (or holder) of an option is said to be “long” the option, while the seller (or writer) of an option is said to be “short” the option. A call option grants to the holder the right to buy (and obligates the writer to sell) the underlying security at the strike price, which is the predetermined price at which the option may be exercised. A put option grants to the holder the right to sell (and obligates the writer to buy) the underlying security at the strike price. The purchase price of an option is called the “premium.” The potential loss to an option buyer is limited to the amount of the premium plus transaction costs. This will be the case if the option is held and not exercised prior to its expiration date. Generally, an option writer sells options with the goal of obtaining the premium paid by the option buyer, but that person could also seek to profit from an anticipated rise or decline in option prices. If an option sold by an option writer expires without being exercised, the writer retains the full amount of the premium. The option writer, however, has unlimited economic risk because its potential loss, except to the extent offset by the premium received when the option was written, is equal to the amount the option is “in-the-money” at the expiration date. A call option is
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in-the-money if the value of the underlying position exceeds the exercise price of the option. A put option is in-the-money if the exercise price of the option exceeds the value of the underlying position. Generally, any profit realized by an option buyer represents a loss for the option writer. The writing of an option will not be considered to constitute the issuance, by a fund, of a “senior security,” as that term is defined in Section 18(g) of the 1940 Act, and therefore such transaction will not be subject to the 300% asset coverage requirement otherwise applicable to borrowings by a fund, if the fund covers the transaction in accordance with the requirements described under the heading “Borrowing.”
If a trading market, in particular options, were to become unavailable, investors in those options (such as the funds) would be unable to close out their positions until trading resumes, and they may be faced with substantial losses if the value of the underlying instrument moves adversely during that time. Even if the market were to remain available, there may be times when options prices will not maintain their customary or anticipated relationships to the prices of the underlying instruments and related instruments. Lack of investor interest, changes in volatility, or other factors or conditions might adversely affect the liquidity, efficiency, continuity, or even the orderliness of the market for particular options.
A fund bears the risk that its advisor will not accurately predict future market trends. If the advisor attempts to use an option as a hedge against, or as a substitute for, a portfolio investment, the fund will be exposed to the risk that the option will have or will develop imperfect or no correlation with the portfolio investment, which could cause substantial losses for the fund. Although hedging strategies involving options can reduce the risk of loss, they can also reduce the opportunity for gain or even result in losses by offsetting favorable price movements in other fund investments. Many options, in particular OTC options, are complex and often valued based on subjective factors. Improper valuations can result in increased cash payment requirements to counterparties or a loss of value to a fund.
OTC Swap Agreements. An over-the-counter (OTC) swap agreement, which is a type of derivative, is an agreement between two parties (counterparties) to exchange payments at specified dates (periodic payment dates) on the basis of a specified amount (notional amount) with the payments calculated with reference to a specified asset, reference rate, or index.
Examples of OTC swap agreements include, but are not limited to, interest rate swaps, credit default swaps, equity swaps, commodity swaps, foreign currency swaps, index swaps, excess return swaps, and total return swaps. Most OTC swap agreements provide that when the periodic payment dates for both parties are the same, payments are netted and only the net amount is paid to the counterparty entitled to receive the net payment. Consequently, a fund’s current obligations (or rights) under an OTC swap agreement will generally be equal only to the net amount to be paid or received under the agreement, based on the relative values of the positions held by each counterparty. OTC swap agreements allow for a wide variety of transactions. For example, fixed rate payments may be exchanged for floating rate payments; U.S. dollar-denominated payments may be exchanged for payments denominated in a different currency; and payments tied to the price of one asset, reference rate, or index may be exchanged for payments tied to the price of another asset, reference rate, or index.
An OTC option on an OTC swap agreement, also called a “swaption,” is an option that gives the buyer the right, but not the obligation, to enter into a swap on a future date in exchange for paying a market-based “premium.” A receiver swaption gives the owner the right to receive the total return of a specified asset, reference rate, or index. A payer swaption gives the owner the right to pay the total return of a specified asset, reference rate, or index. Swaptions also include options that allow an existing swap to be terminated or extended by one of the counterparties.
The use of OTC swap agreements by a fund entails certain risks, which may be different from, or possibly greater than, the risks associated with investing directly in the securities and other investments that are the referenced asset for the swap agreement. OTC swaps are highly specialized instruments that require investment techniques, risk analyses, and tax planning different from those associated with stocks, bonds, and other traditional investments. The use of an OTC swap requires an understanding not only of the referenced asset, reference rate, or index but also of the swap itself, without the benefit of observing the performance of the swap under all possible market conditions.
OTC swap agreements may be subject to liquidity risk, which exists when a particular swap is difficult to purchase or sell. If an OTC swap transaction is particularly large or if the relevant market is illiquid (as is the case with many OTC swaps), it may not be possible to initiate a transaction or liquidate a position at an advantageous time or price, which may result in significant losses. In addition, OTC swap transactions may be subject to a fund’s limitation on investments in illiquid securities.
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OTC swap agreements may be subject to pricing risk, which exists when a particular swap becomes extraordinarily expensive or inexpensive relative to historical prices or the prices of corresponding cash market instruments. Under certain market conditions, it may not be economically feasible to initiate a transaction or liquidate a position in time to avoid a loss or take advantage of an opportunity or to realize the intrinsic value of the OTC swap agreement.
Because certain OTC swap agreements have a leverage component, adverse changes in the value or level of the underlying asset, reference rate, or index can result in a loss substantially greater than the amount invested in the swap itself. Certain OTC swaps have the potential for unlimited loss, regardless of the size of the initial investment. A leveraged OTC swap transaction will not be considered to constitute the issuance, by a fund, of a “senior security,” as that term is defined in Section 18(g) of the 1940 Act, and therefore such transaction will not be subject to the 300% asset coverage requirement otherwise applicable to borrowings by a fund, if the fund covers the transaction in accordance with the requirements described under the heading “Borrowing.”
Like most other investments, OTC swap agreements are subject to the risk that the market value of the instrument will change in a way detrimental to a fund’s interest. A fund bears the risk that its advisor will not accurately forecast future market trends or the values of assets, reference rates, indexes, or other economic factors in establishing OTC swap positions for the fund. If the advisor attempts to use an OTC swap as a hedge against, or as a substitute for, a portfolio investment, the fund will be exposed to the risk that the OTC swap will have or will develop imperfect or no correlation with the portfolio investment. This could cause substantial losses for the fund. Although hedging strategies involving OTC swap instruments can reduce the risk of loss, they can also reduce the opportunity for gain or even result in losses by offsetting favorable price movements in other fund investments. Many OTC swaps are complex and often valued subjectively. Improper valuations can result in increased cash payment requirements to counterparties or a loss of value to a fund.
The use of an OTC swap agreement also involves the risk that a loss may be sustained as a result of the insolvency or bankruptcy of the counterparty or the failure of the counterparty to make required payments or otherwise comply with the terms of the agreement. Additionally, the use of credit default swaps can result in losses if a fund’s advisor does not correctly evaluate the creditworthiness of the issuer on which the credit swap is based.
Other Investment Companies. A fund may invest in other investment companies to the extent permitted by applicable law or SEC exemption. Under Section 12(d)(1) of the 1940 Act, a fund may invest up to 10% of its assets in shares of investment companies generally and up to 5% of its assets in any one investment company, as long as no investment represents more than 3% of the voting stock of an acquired investment company. In addition, no funds for which Vanguard acts as an advisor may, in the aggregate, own more than 10% of the voting stock of a closed-end investment company. The 1940 Act and related rules provide certain exemptions from these restrictions, for example, for funds that invest in other funds within the same group of investment companies. If a fund invests in other investment companies, shareholders will bear not only their proportionate share of the fund’s expenses (including operating expenses and the fees of the advisor), but they also may indirectly bear similar expenses of the underlying investment companies. Certain investment companies, such as business development companies (BDCs), are more akin to operating companies and, as such, their expenses are not direct expenses paid by fund shareholders and are not used to calculate the fund’s net asset value. SEC rules nevertheless require that any expenses incurred by a BDC be included in a fund’s expense ratio as “Acquired Fund Fees and Expenses.” The expense ratio of a fund that holds a BDC will thus overstate what the fund actually spends on portfolio management, administrative services, and other shareholder services by an amount equal to these Acquired Fund Fees and Expenses. The Acquired Fund Fees and Expenses are not included in a fund’s financial statements, which provide a clearer picture of a fund’s actual operating expenses. Shareholders would also be exposed to the risks associated not only with the investments of the fund but also with the portfolio investments of the underlying investment companies. Certain types of investment companies, such as closed-end investment companies, issue a fixed number of shares that typically trade on a stock exchange or over-the-counter at a premium or discount to their net asset value. Others are continuously offered at net asset value but also may be traded on the secondary market.
A fund may be limited to purchasing a particular share class of other investment companies (underlying funds). In certain cases, an investor may be able to purchase lower-cost shares of such underlying funds separately, and therefore be able to construct, and maintain over time, a similar portfolio of investments while incurring lower overall expenses.
Preferred Stock. Preferred stock represents an equity or ownership interest in an issuer. Preferred stock normally pays dividends at a specified rate and has precedence over common stock in the event the issuer is liquidated or declares bankruptcy. However, in the event an issuer is liquidated or declares bankruptcy, the claims of owners of bonds take precedence over the claims of those who own preferred and common stock. Preferred stock, unlike common stock,
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often has a stated dividend rate payable from the corporation’s earnings. Preferred stock dividends may be cumulative or noncumulative, participating, or auction rate. “Cumulative” dividend provisions require all or a portion of prior unpaid dividends to be paid before dividends can be paid to the issuer’s common stock. “Participating” preferred stock may be entitled to a dividend exceeding the stated dividend in certain cases. If interest rates rise, the fixed dividend on preferred stocks may be less attractive, causing the price of such stocks to decline. Preferred stock may have mandatory sinking fund provisions, as well as provisions allowing the stock to be called or redeemed, which can limit the benefit of a decline in interest rates. Preferred stock is subject to many of the risks to which common stock and debt securities are subject. In addition, preferred stock may be subject to more abrupt or erratic price movements than common stock or debt securities because preferred stock may trade with less frequency and in more limited volume.
Reliance on Service Providers, Data Providers, and Other Technology. Vanguard funds rely upon the performance of service providers to execute several key functions, which may include functions integral to a fund’s operations. Failure by any service provider to carry out its obligations to a fund could disrupt the business of the fund and could have an adverse effect on the fund’s performance. A fund’s service providers’ reliance on certain technology or information vendors (e.g., trading systems, investment analysis tools, benchmark analytics, and tax and accounting tools) could also adversely affect a fund and its shareholders. For example, a fund’s investment advisor may use models and/or data with respect to potential investments for the fund. When models or data prove to be incorrect or incomplete, any decisions made in reliance upon such models or data expose a fund to potential risks.
Repurchase Agreements. A repurchase agreement is an agreement under which a fund acquires a debt security (generally a security issued by the U.S. government or an agency thereof, a banker’s acceptance, or a certificate of deposit) from a bank, a broker, or a dealer and simultaneously agrees to resell such security to the seller at an agreed-upon price and date (normally, the next business day). Because the security purchased constitutes collateral for the repurchase obligation, a repurchase agreement may be considered a loan that is collateralized by the security purchased. The resale price reflects an agreed-upon interest rate effective for the period the instrument is held by a fund and is unrelated to the interest rate on the underlying instrument. In these transactions, the securities acquired by a fund (including accrued interest earned thereon) must have a total value in excess of the value of the repurchase agreement and be held by a custodian bank until repurchased. In addition, the investment advisor will monitor a fund’s repurchase agreement transactions generally and will evaluate the creditworthiness of any bank, broker, or dealer party to a repurchase agreement relating to a fund. The aggregate amount of any such agreements is not limited, except to the extent required by law.
The use of repurchase agreements involves certain risks. One risk is the seller’s ability to pay the agreed-upon repurchase price on the repurchase date. If the seller defaults, the fund may incur costs in disposing of the collateral, which would reduce the amount realized thereon. If the seller seeks relief under bankruptcy laws, the disposition of the collateral may be delayed or limited. For example, if the other party to the agreement becomes insolvent and subject to liquidation or reorganization under bankruptcy or other laws, a court may determine that the underlying security is collateral for a loan by the fund not within its control, and therefore the realization by the fund on such collateral may be automatically stayed. Finally, it is possible that the fund may not be able to substantiate its interest in the underlying security and may be deemed an unsecured creditor of the other party to the agreement.
Restricted and Illiquid Securities. Illiquid securities are investments that a fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. The SEC generally limits aggregate holdings of illiquid securities by a mutual fund to 15% of its net assets (5% for money market funds). A fund may experience difficulty valuing and selling illiquid securities and, in some cases, may be unable to value or sell certain illiquid securities for an indefinite period of time. Illiquid securities may include a wide variety of investments, such as (1) repurchase agreements maturing in more than seven days (unless the agreements have demand/redemption features), (2) OTC options contracts and certain other derivatives (including certain swap agreements), (3) fixed time deposits that are not subject to prepayment or do not provide for withdrawal penalties upon prepayment (other than overnight deposits), (4) certain loan interests and other direct debt instruments, (5) certain municipal lease obligations, (6) private equity investments, (7) commercial paper issued pursuant to Section 4(a)(2) of the 1933 Act, and (8) securities whose disposition is restricted under the federal securities laws. Illiquid securities may include restricted, privately placed securities that, under the federal securities laws, generally may be resold only to qualified institutional buyers. If a substantial market develops for a restricted security held by a fund, it may be treated as a liquid security in accordance with procedures and guidelines approved by the board of trustees. This generally includes securities that are unregistered, that can be sold to qualified institutional buyers in accordance with Rule 144A under the 1933 Act, or that are exempt from registration under the
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1933 Act, such as commercial paper. Although a fund’s advisor monitors the liquidity of restricted securities, the board of trustees oversees and retains ultimate responsibility for the advisor’s liquidity determinations. Several factors that the trustees consider in monitoring these decisions include the valuation of a security; the availability of qualified institutional buyers, brokers, and dealers that trade in the security; and the availability of information about the security’s issuer.
Reverse Repurchase Agreements. In a reverse repurchase agreement, a fund sells a security to another party, such as a bank or broker-dealer, in return for cash and agrees to repurchase that security at an agreed-upon price and time. Under a reverse repurchase agreement, the fund continues to receive any principal and interest payments on the underlying security during the term of the agreement. Reverse repurchase agreements involve the risk that the market value of securities retained by the fund may decline below the repurchase price of the securities sold by the fund that it is obligated to repurchase. In addition to the risk of such a loss, fees charged to the fund may exceed the return the fund earns from investing the proceeds received from the reverse repurchase agreement transaction. A reverse repurchase agreement may be considered a borrowing transaction for purposes of the 1940 Act. A reverse repurchase agreement transaction will not be considered to constitute the issuance, by a fund, of a “senior security,” as that term is defined in Section 18(g) of the 1940 Act, and therefore such transaction will not be subject to the 300% asset coverage requirement otherwise applicable to borrowings by a fund, if the fund covers the transaction in accordance with the requirements described under the heading “Borrowing.” A fund will enter into reverse repurchase agreements only with parties whose creditworthiness has been reviewed and found satisfactory by the advisor. If the buyer in a reverse repurchase agreement becomes insolvent or files for bankruptcy, a fund’s use of proceeds from the sale may be restricted while the other party or its trustee or receiver determines if it will honor the fund’s right to repurchase the securities. If the fund is unable to recover the securities it sold in a reverse repurchase agreement, it would realize a loss equal to the difference between the value of the securities and the payment it received for them.
Securities Lending. A fund may lend its securities to financial institutions (typically brokers, dealers, and banks) to generate income for the fund. There are certain risks associated with lending securities, including counterparty, credit, market, regulatory, and operational risks. The advisor considers the creditworthiness of the borrower, among other factors, in making decisions with respect to the lending of securities, subject to oversight by the board of trustees. If the borrower defaults on its obligation to return the securities lent because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities lent or in gaining access to the collateral. These delays and costs could be greater for certain types of foreign securities, as well as certain types of borrowers that are subject to global regulatory regimes. If a fund is not able to recover the securities lent, the fund may sell the collateral and purchase a replacement security in the market. Collateral investments are subject to market appreciation or depreciation. The value of the collateral could decrease below the value of the replacement investment by the time the replacement investment is purchased. Currently, a fund invests cash collateral into Vanguard Market Liquidity Fund, an affiliated money market fund that invests in high-quality, short-term money market instruments.
The terms and the structure of the loan arrangements, as well as the aggregate amount of securities loans, must be consistent with the 1940 Act and the rules or interpretations of the SEC thereunder. These provisions limit the amount of securities a fund may lend to 33⅓% of the fund’s total assets and require that (1) the borrower pledge and maintain with the fund collateral consisting of cash, an irrevocable letter of credit, or securities issued or guaranteed by the U.S. government having at all times not less than 100% of the value of the securities lent; (2) the borrower add to such collateral whenever the price of the securities lent rises (i.e., the borrower “marks to market” on a daily basis); (3) the loan be made subject to termination by the fund at any time; and (4) the fund receives reasonable interest on the loan (which may include the fund investing any cash collateral in interest-bearing short-term investments), any distribution on the lent securities, and any increase in their market value. Loan arrangements made by a fund will comply with any other applicable regulatory requirements. At the present time, the SEC does not object if an investment company pays reasonable negotiated fees in connection with lent securities, so long as such fees are set forth in a written contract and approved by the investment company’s trustees. In addition, voting rights pass with the lent securities, but if a fund has knowledge that a material event will occur affecting securities on loan, and in respect to which the holder of the securities will be entitled to vote or consent, the lender must be entitled to call the loaned securities in time to vote or consent. A fund bears the risk that there may be a delay in the return of the securities, which may impair the fund’s ability to vote on such a matter. See Tax Status of the Funds for information about certain tax consequences related to a fund’s securities lending activities.
Pursuant to Vanguard’s securities lending policy, Vanguard’s fixed income and money market funds are not permitted to, and do not, lend their investment securities.
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Tax Matters—Federal Tax Discussion. Discussion herein of U.S. federal income tax matters summarizes some of the important, generally applicable U.S. federal tax considerations relevant to investment in a fund based on the IRC, U.S. Treasury regulations, and other applicable authorities. These authorities are subject to change by legislative, administrative, or judicial action, possibly with retroactive effect. Each Fund has not requested and will not request an advance ruling from the Internal Revenue Service (IRS) as to the U.S. federal income tax matters discussed in this Statement of Additional Information. In some cases, a fund’s tax position may be uncertain under current tax law and an adverse determination or future guidance by the IRS with respect to such a position could adversely affect the fund and its shareholders, including the fund’s ability to continue to qualify as a regulated investment company or to continue to pursue its current investment strategy. A shareholder should consult his or her tax professional for information regarding the particular situation and the possible application of U.S. federal, state, local, foreign, and other taxes.
Tax Matters—Federal Tax Treatment of Derivatives, Hedging, and Related Transactions. A fund’s transactions in derivative instruments (including, but not limited to, options, futures, forward contracts, and swap agreements), as well as any of the fund’s hedging, short sale, securities loan, or similar transactions, may be subject to one or more special tax rules that accelerate income to the fund, defer losses to the fund, cause adjustments in the holding periods of the fund’s securities, convert long-term capital gains into short-term capital gains, or convert short-term capital losses into long-term capital losses. These rules could therefore affect the amount, timing, and character of distributions to shareholders.
Because these and other tax rules applicable to these types of transactions are in some cases uncertain under current law, an adverse determination or future guidance by the IRS with respect to these rules (which determination or guidance could be retroactive) may affect whether a fund has made sufficient distributions, and otherwise satisfied the relevant requirements, to maintain its qualification as a regulated investment company and avoid a fund-level tax.
Tax Matters—Federal Tax Treatment of Futures Contracts. For federal income tax purposes, a fund generally must recognize, as of the end of each taxable year, any net unrealized gains and losses on certain futures contracts, as well as any gains and losses actually realized during the year. In these cases, any gain or loss recognized with respect to a futures contract is considered to be 60% long-term capital gain or loss and 40% short-term capital gain or loss, without regard to the holding period of the contract. Gains and losses on certain other futures contracts (primarily non-U.S. futures contracts) are not recognized until the contracts are closed and are treated as long-term or short-term, depending on the holding period of the contract. Sales of futures contracts that are intended to hedge against a change in the value of securities held by a fund may affect the holding period of such securities and, consequently, the nature of the gain or loss on such securities upon disposition. A fund may be required to defer the recognition of losses on one position, such as futures contracts, to the extent of any unrecognized gains on a related offsetting position held by the fund.
A fund will distribute to shareholders annually any net capital gains that have been recognized for federal income tax purposes on futures transactions. Such distributions will be combined with distributions of capital gains realized on the fund’s other investments, and shareholders will be advised on the nature of the distributions.
Tax Matters—Federal Tax Treatment of Non-U.S. Currency Transactions. Special rules generally govern the federal income tax treatment of a fund’s transactions in the following: non-U.S. currencies; non-U.S. currency-denominated debt obligations; and certain non-U.S. currency options, futures contracts, forward contracts, and similar instruments. Accordingly, if a fund engages in these types of transactions it may have ordinary income or loss to the extent that such income or loss results from fluctuations in the value of the non-U.S. currency concerned. Such ordinary income could accelerate fund distributions to shareholders and increase the distributions taxed to shareholders as ordinary income. Any ordinary loss so created will generally reduce ordinary income distributions and, in some cases, could require the recharacterization of prior ordinary income distributions. Net ordinary losses cannot be carried forward by the fund to offset income or gains realized in subsequent taxable years.
Any gain or loss attributable to the non-U.S. currency component of a transaction engaged in by a fund that is not subject to these special currency rules (such as foreign equity investments other than certain preferred stocks) will generally be treated as a capital gain or loss and will not be segregated from the gain or loss on the underlying transaction.
To the extent a fund engages in non-U.S. currency hedging, the fund may elect or be required to apply other rules that could affect the character, timing, or amount of the fund’s gains and losses. For more information, see “Tax Matters—Federal Tax Treatment of Derivatives, Hedging, and Related Transactions.”
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Tax Matters—Foreign Tax Credit. Foreign governments may withhold taxes on dividends and interest paid with respect to foreign securities held by a fund. Foreign governments may also impose taxes on other payments or gains with respect to foreign securities. If, at the close of its fiscal year, more than 50% of a fund’s total assets are invested in securities of foreign issuers, the fund may elect to pass through to shareholders the ability to deduct or, if they meet certain holding period requirements, take a credit for foreign taxes paid by the fund. Similarly, if at the close of each quarter of a fund’s taxable year, at least 50% of its total assets consist of interests in other regulated investment companies, the fund is permitted to elect to pass through to its shareholders the foreign income taxes paid by the fund in connection with foreign securities held directly by the fund or held by a regulated investment company in which the fund invests that has elected to pass through such taxes to shareholders.
Tax Matters—Market Discount or Premium. The price of a bond purchased after its original issuance may reflect market discount or premium. Depending on the particular circumstances, market discount may affect the tax character and amount of income required to be recognized by a fund holding the bond. In determining whether a bond is purchased with market discount, certain de minimis rules apply. Premium is generally amortizable over the remaining term of the bond. Depending on the type of bond, premium may affect the amount of income required to be recognized by a fund holding the bond and the fund’s basis in the bond.
Tax Matters—Passive Foreign Investment Companies. To the extent that a fund invests in stock in a foreign company, such stock may constitute an equity investment in a passive foreign investment company (PFIC). A foreign company is generally a PFIC if 75% or more of its gross income is passive or if 50% or more of its assets produce passive income. Capital gains on the sale of an interest in a PFIC will be deemed ordinary income regardless of how long a fund held it. Also, a fund may be subject to corporate income tax and an interest charge on certain dividends and capital gains earned in respect to PFIC interests, whether or not such amounts are distributed to shareholders. To avoid such tax and interest, a fund may elect to “mark to market” its PFIC interests, that is, to treat such interests as sold on the last day of a fund’s fiscal year, and to recognize any unrealized gains (or losses, to the extent of previously recognized gains) as ordinary income (or loss) each year. Distributions from a fund that are attributable to income or gains earned in respect to PFIC interests are characterized as ordinary income.
Tax Matters—Real Estate Mortgage Investment Conduits. If a fund invests directly or indirectly, including through a REIT or other pass-through entity, in residual interests in real estate mortgage investment conduits (REMICs) or equity interests in taxable mortgage pools (TMPs), a portion of the fund’s income that is attributable to a residual interest in a REMIC or an equity interest in a TMP (such portion referred to in the IRC as an “excess inclusion”) will be subject to U.S. federal income tax in all events—including potentially at the fund level—under a notice issued by the IRS in October 2006 and U.S. Treasury regulations that have yet to be issued but may apply retroactively. This notice also provides, and the regulations are expected to provide, that excess inclusion income of a regulated investment company will be allocated to shareholders of the regulated investment company in proportion to the dividends received by such shareholders, with the same consequences as if the shareholders held the related interest directly. In general, excess inclusion income allocated to shareholders (1) cannot be offset by net operating losses (subject to a limited exception for certain thrift institutions); (2) will constitute unrelated business taxable income (UBTI) to entities (including a qualified pension plan, an individual retirement account, a 401(k) plan, a Keogh plan, or other tax-exempt entity) subject to tax on UBTI, thereby potentially requiring such an entity, which otherwise might not be required, to file a tax return and pay tax on such income; and (3) in the case of a non-U.S. investor, will not qualify for any reduction in U.S. federal withholding tax. A shareholder will be subject to U.S. federal income tax on such inclusions notwithstanding any exemption from such income tax otherwise available under the IRC. As a result, a fund investing in such interests may not be suitable for charitable remainder trusts. See “Tax Matters—Tax-Exempt Investors.”
Tax Matters—Tax Considerations for Non-U.S. Investors. U.S. withholding and estate taxes and certain U.S. tax reporting requirements may apply to any investments made by non-U.S. investors in Vanguard funds. Certain properly reported distributions of qualifying interest income or short-term capital gain made by a fund to its non-U.S. investors are exempt from U.S. withholding taxes, provided the investors furnish valid tax documentation (i.e., IRS Form W-8) certifying as to their non-U.S. status.
A fund is permitted, but is not required, to report any of its distributions as eligible for such relief, and some distributions (e.g., distributions of interest a fund receives from non-U.S. issuers) are not eligible for this relief. For some funds, Vanguard has chosen to report qualifying distributions and apply the withholding exemption to those distributions when made to non-U.S. shareholders who invest directly with Vanguard. For other funds, Vanguard may choose not to apply the withholding exemption to qualifying fund distributions made to direct shareholders, but may provide the reporting to such shareholders. In these cases, a shareholder may be able to reclaim such withholding tax directly from the IRS.
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If shareholders hold fund shares (including ETF shares) through a broker or intermediary, their broker or intermediary may apply this relief to properly reported qualifying distributions made to shareholders with respect to those shares. If a shareholder’s broker or intermediary instead collects withholding tax where the fund has provided the proper reporting, the shareholder may be able to reclaim such withholding tax from the IRS. Please consult your broker or intermediary regarding the application of these rules.
This relief does not apply to any withholding required under the Foreign Account Tax Compliance Act (FATCA), which generally requires a fund to obtain information sufficient to identify the status of each of its shareholders. If a shareholder fails to provide this information or otherwise fails to comply with FATCA, a fund may be required to withhold under FATCA at a rate of 30% with respect to that shareholder on fund distributions. Please consult your tax advisor for more information about these rules.
Tax Matters—Tax-Exempt Investors. Income of a fund that would be UBTI if earned directly by a tax-exempt entity will not generally be attributed as UBTI to a tax-exempt shareholder of the fund. Notwithstanding this “blocking” effect, a tax-exempt shareholder could realize UBTI by virtue of its investment in a fund if shares in the fund constitute debt-financed property in the hands of the tax-exempt shareholder within the meaning of IRC Section 514(b).
A tax-exempt shareholder may also recognize UBTI if a fund recognizes “excess inclusion income” derived from direct or indirect investments in residual interests in REMICs or equity interests in TMPs. See “Tax Matters—Real Estate Mortgage Investment Conduits.”
In addition, special tax consequences apply to charitable remainder trusts that invest in a fund that invests directly or indirectly in residual interests in REMICs or equity interests in TMPs. Charitable remainder trusts and other tax-exempt investors are urged to consult their tax advisors concerning the consequences of investing in a fund.
Time Deposits. Time deposits are subject to the same risks that pertain to domestic issuers of money market instruments, most notably credit risk (and, to a lesser extent, income risk, market risk, and liquidity risk). Additionally, time deposits of foreign branches of U.S. banks and foreign branches of foreign banks may be subject to certain sovereign risks. One such risk is the possibility that a sovereign country might prevent capital, in the form of U.S. dollars, from flowing across its borders. Other risks include adverse political and economic developments, the extent and quality of government regulation of financial markets and institutions, the imposition of foreign withholding taxes, and expropriation or nationalization of foreign issuers. However, time deposits of such issuers will undergo the same type of credit analysis as domestic issuers in which a Vanguard fund invests and will have at least the same financial strength as the domestic issuers approved for the fund.
Warrants. Warrants are instruments that give the holder the right, but not the obligation, to buy an equity security at a specific price for a specific period of time. Changes in the value of a warrant do not necessarily correspond to changes in the value of its underlying security. The price of a warrant may be more volatile than the price of its underlying security, and a warrant may offer greater potential for capital appreciation as well as capital loss. Warrants do not entitle a holder to dividends or voting rights with respect to the underlying security and do not represent any rights in the assets of the issuing company. A warrant ceases to have value if it is not exercised prior to its expiration date. These factors can make warrants more speculative than other types of investments.
When-Issued, Delayed-Delivery, and Forward-Commitment Transactions. When-issued, delayed-delivery, and forward-commitment transactions involve a commitment to purchase or sell specific securities at a predetermined price or yield in which payment and delivery take place after the customary settlement period for that type of security. Typically, no interest accrues to the purchaser until the security is delivered. When purchasing securities pursuant to one of these transactions, payment for the securities is not required until the delivery date. However, the purchaser assumes the rights and risks of ownership, including the risks of price and yield fluctuations and the risk that the security will not be issued as anticipated. When a fund has sold a security pursuant to one of these transactions, the fund does not participate in further gains or losses with respect to the security. If the other party to a delayed-delivery transaction fails to deliver or pay for the securities, the fund could miss a favorable price or yield opportunity or suffer a loss. A fund may renegotiate a when-issued or forward-commitment transaction and may sell the underlying securities before delivery, which may result in capital gains or losses for the fund. When-issued, delayed-delivery, and forward-commitment transactions will not be considered to constitute the issuance, by a fund, of a “senior security,” as that term is defined in Section 18(g) of the 1940 Act, and therefore such transaction will not be subject to the 300% asset coverage requirement otherwise applicable to borrowings by the fund, if the fund covers the transaction in accordance with the requirements described under the heading “Borrowing.”
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Regulatory restrictions in India. Shares of Vanguard Emerging Markets Bond Fund have not been, and will not be, registered under the laws of India and are not intended to benefit from any laws in India promulgated for the protection of shareholders. As a result of regulatory requirements in India, shares of the Fund shall not be knowingly offered to (directly or indirectly) or sold or delivered to (within India); transferred to or purchased by; or held by, for, on the account of, or for the benefit of (i) a “person resident in India” (as defined under applicable Indian law), (ii) an “overseas corporate body” or a “person of Indian origin” (as defined under applicable Indian law), or (iii) any other entity or person disqualified or otherwise prohibited from accessing the Indian securities market under applicable laws, as may be amended from time to time. Investors, prior to purchasing shares of the Fund, must satisfy themselves regarding compliance with these requirements.
Share Price
Multiple-class funds do not have a single share price. Rather, each class has a share price, called its Net Asset Value, or NAV, that is calculated as of the close of regular trading on the New York Stock Exchange (NYSE), generally 4 p.m., Eastern time, on each day that the NYSE is open for business (a business day). In the rare event the NYSE experiences unanticipated disruptions and is unavailable at the close of the trading day, each Fund reserves the right to treat such day as a business day and calculate NAVs as of the close of regular trading on the Nasdaq (or another alternate exchange if the Nasdaq is unavailable, as determined at Vanguard’s discretion), generally 4 p.m., Eastern time. The NAV per share for the Short-Term Inflation-Protected Securities Index Fund, Core Bond Fund, and Emerging Markets Bond Fund is computed by dividing the total assets, minus liabilities, allocated to each share class by the number of Fund shares outstanding for that class. NAV per share for the U.S. Value Fund, Institutional Short-Term Bond Fund, and Institutional Intermediate-Term Bond Fund is computed by dividing the total assets, minus liabilities, of the Fund by the number of Fund shares outstanding. On U.S. holidays or other days when the NYSE is closed, the NAV is not calculated, and the Funds do not sell or redeem shares. However, on those days the value of a Fund’s assets may be affected to the extent that the Fund holds securities that change in value on those days (such as foreign securities that trade on foreign markets that are open).
The NYSE typically observes the following holidays: New Year’s Day; Martin Luther King, Jr., Day; Presidents’ Day (Washington’s Birthday); Good Friday; Memorial Day; Independence Day; Labor Day; Thanksgiving Day; and Christmas Day. Although each Fund expects the same holidays to be observed in the future, the NYSE may modify its holiday schedule or hours of operation at any time.
Purchase and Redemption of Shares
Purchase of Shares  (Other than ETF Shares)
The purchase price of shares of each Fund is the NAV per share next determined after the purchase request is received in good order, as defined in the Fund's prospectus.
Exchange of Securities for Shares of a Fund. Shares of a Fund may be purchased “in kind” (i.e., in exchange for securities, rather than for cash) at the discretion of the Fund’s portfolio manager. Such securities must not be restricted as to transfer and must have a value that is readily ascertainable. Securities accepted by the Fund will be valued, as set forth in the Fund’s prospectus, as of the time of the next determination of NAV after such acceptance. All dividend, subscription, or other rights that are reflected in the market price of accepted securities at the time of valuation become the property of the Fund and must be delivered to the Fund by the investor upon receipt from the issuer. A gain or loss for federal income tax purposes, depending upon the cost of the securities tendered, would be realized by the investor upon the exchange. Investors interested in purchasing fund shares in kind should contact Vanguard.
Redemption of Shares  (Other than ETF Shares)
The redemption price of shares of each Fund is the NAV per share next determined after the redemption request is received in good order, as defined in the Fund’s prospectus.
Each Fund can postpone payment of redemption proceeds for up to seven calendar days. In addition, each Fund can suspend redemptions and/or postpone payments of redemption proceeds beyond seven calendar days (1) during any period that the NYSE is closed or trading on the NYSE is restricted as determined by the SEC; (2) during any period when an emergency exists, as defined by the SEC, as a result of which it is not reasonably practicable for the Fund to dispose of securities it owns or to fairly determine the value of its assets; or (3) for such other periods as the SEC may permit.
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The Trust has filed a notice of election with the SEC to pay in cash all redemptions requested by any shareholder of record limited in amount during any 90-day period to the lesser of $250,000 or 1% of the net assets of a Fund at the beginning of such period.
If Vanguard determines that it would be detrimental to the best interests of the remaining shareholders of a Fund to make payment wholly or partly in cash, the Fund may pay the redemption price in whole or in part by a distribution in kind of readily marketable securities held by the Fund in lieu of cash in conformity with applicable rules of the SEC and in accordance with procedures adopted by the Funds' board of trustees. Investors may incur brokerage charges on the sale of such securities received in payment of redemptions.
Each Fund does not charge a redemption fee. Shares redeemed may be worth more or less than what was paid for them, depending on the market value of the securities held by the Fund.
Vanguard processes purchase and redemption requests through a pooled account. Pending investment direction or distribution of redemption proceeds, the assets in the pooled account are invested and any earnings (the “float”) are allocated proportionately among the Vanguard funds in order to offset fund expenses. Other than the float, Vanguard treats assets held in the pooled account as the assets of each shareholder making such purchase or redemption request.
Right to Change Policies
Vanguard reserves the right, without notice, to (1) alter, add, or discontinue any conditions of purchase (including eligibility requirements), redemption, exchange, conversion, service, or privilege at any time and (2) alter, impose, discontinue, or waive any purchase fee, redemption fee, account service fee, or other fee charged to a shareholder or a group of shareholders. Changes may affect any or all investors. These actions will be taken when, at the sole discretion of Vanguard management, Vanguard believes they are in the best interest of a fund.
Account Restrictions
Vanguard reserves the right to: (1) redeem all or a portion of a fund/account to meet a legal obligation, including tax withholding, tax lien, garnishment order, or other obligation imposed on your account by a court or government agency; (2) redeem shares, close an account, or suspend account privileges, features, or options in the case of threatening conduct or activity; (3) redeem shares, close an account, or suspend account privileges, features, or options if Vanguard believes or suspects that not doing so could result in a suspicious, fraudulent, or illegal transaction; (4) place restrictions on the ability to redeem any or all shares in an account if it is required to do so by a court or government agency; (5) place restrictions on the ability to redeem any or all shares in an account if Vanguard believes that doing so will prevent fraud, financial exploitation or abuse, or to protect vulnerable investors; (6) freeze any account and/or suspend account services if Vanguard has received reasonable notice of a dispute regarding the assets in an account, including notice of a dispute between the registered or beneficial account owners; and (7) freeze any account and/or suspend account services upon initial notification to Vanguard of the death of an account owner.
Investing With Vanguard Through Other Firms
Each Fund has authorized certain agents to accept on its behalf purchase and redemption orders, and those agents are authorized to designate other intermediaries to accept purchase and redemption orders on the Fund’s behalf (collectively, Authorized Agents). A Fund will be deemed to have received a purchase or redemption order when an Authorized Agent accepts the order in accordance with the Fund’s instructions. In most instances, a customer order that is properly transmitted to an Authorized Agent will be priced at the NAV per share next determined after the order is received by the Authorized Agent.
Management of the Funds
Vanguard
Each Fund is part of the Vanguard group of investment companies, which consists of over 200 funds. Each fund is a series of a Delaware statutory trust. The funds obtain virtually all of their corporate management, administrative, and distribution services through the trusts’ jointly owned subsidiary, Vanguard. Vanguard may contract with certain
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third-party service providers to assist Vanguard in providing certain administrative and/or accounting services with
respect to the funds, subject to Vanguard’s oversight.  Vanguard also provides investment advisory services to certain Vanguard funds. All of these services are provided at Vanguard’s total cost of operations pursuant to the Fifth Amended and Restated Funds’ Service Agreement (the Agreement).
Vanguard employs a supporting staff of management and administrative personnel needed to provide the requisite services to the funds and also furnishes the funds with necessary office space, furnishings, and equipment. Each fund (other than a fund of funds) pays its share of Vanguard’s total expenses, which are allocated among the funds under methods approved by the board of trustees of each fund. In addition, each fund bears its own direct expenses, such as legal, auditing, and custodial fees.
The funds’ officers are also employees of Vanguard.
Vanguard, Vanguard Marketing Corporation (VMC), the funds, and the funds’ advisors have adopted codes of ethics designed to prevent employees who may have access to nonpublic information about the trading activities of the funds (access persons) from profiting from that information. The codes of ethics permit access persons to invest in securities for their own accounts, including securities that may be held by a fund, but place substantive and procedural restrictions on the trading activities of access persons. For example, the codes of ethics require that access persons receive advance approval for most securities trades to ensure that there is no conflict with the trading activities of the funds.
Vanguard was established and operates under the Agreement. The Agreement provides that each Vanguard fund may be called upon to invest up to 0.40% of its net assets in Vanguard. The amounts that each fund has invested are adjusted from time to time in order to maintain the proportionate relationship between each fund’s relative net assets and its contribution to Vanguard’s capital.
As of September 30, 2020, each Fund had contributed capital to Vanguard as follows:  
Vanguard Fund
Capital
Contribution
to Vanguard
Percentage of
Fund’s Average
Net Assets
Percent of
Vanguard Fund’s
Contribution
Vanguard U.S. Value Fund
$ 45,000
Less than 0.01%
0.02%
Vanguard Short-Term Inflation-Protected Securities Index Fund
$ 1,529,000
Less than 0.01%
0.61 
Vanguard Institutional Short-Term Bond Fund
$ 332,000
Less than 0.01%
0.13 
Vanguard Institutional Intermediate-Term Bond Fund
$ 1,223,000
Less than 0.01%
0.49 
Vanguard Core Bond Fund
$ 133,000
Less than 0.01%
0.05 
Vanguard Emerging Markets Bond Fund
$ 36,000
Less than 0.01%
0.01 
Management. Corporate management and administrative services include (1) executive staff, (2) accounting and financial, (3) legal and regulatory, (4) shareholder account maintenance, (5) monitoring and control of custodian relationships, (6) shareholder reporting, and (7) review and evaluation of advisory and other services provided to the funds by third parties.
Distribution. Vanguard Marketing Corporation, 100 Vanguard Boulevard, Malvern, PA 19355, a wholly owned subsidiary of Vanguard, is the principal underwriter for the funds and in that capacity performs and finances marketing, promotional, and distribution activities (collectively, marketing and distribution activities) that are primarily intended to result in the sale of the funds’ shares. VMC offers shares of each fund for sale on a continuous basis and will use all reasonable efforts in connection with the distribution of shares of the funds. VMC performs marketing and distribution activities in accordance with the conditions of a 1981 SEC exemptive order that permits the Vanguard funds to internalize and jointly finance the marketing, promotion, and distribution of their shares. The funds’ trustees review and approve the marketing and distribution expenses incurred by the funds, including the nature and cost of the activities and the desirability of each fund’s continued participation in the joint arrangement.
To ensure that each fund’s participation in the joint arrangement falls within a reasonable range of fairness, each fund contributes to VMC’s marketing and distribution expenses in accordance with an SEC-approved formula. Under that formula, one half of the marketing and distribution expenses are allocated among the funds based upon their relative net assets. The remaining half of those expenses is allocated among the funds based upon each fund’s sales for the preceding 24 months relative to the total sales of the funds as a group, provided, however, that no fund’s aggregate
B-33
quarterly rate of contribution for marketing and distribution expenses shall exceed 125% of the average marketing and distribution expense rate for Vanguard and that no fund shall incur annual marketing and distribution expenses in excess of 0.20% of its average month-end net assets. Each fund’s contribution to these marketing and distribution expenses helps to maintain and enhance the attractiveness and viability of the Vanguard complex as a whole, which benefits all of the funds and their shareholders.
VMC’s principal marketing and distribution expenses are for advertising, promotional materials, and marketing personnel. Other marketing and distribution activities of an administrative nature that VMC undertakes on behalf of the funds may include, but are not limited to:
■ Conducting or publishing Vanguard-generated research and analysis concerning the funds, other investments, the financial markets, or the economy.
■ Providing views, opinions, advice, or commentary concerning the funds, other investments, the financial markets, or the economy.
■ Providing analytical, statistical, performance, or other information concerning the funds, other investments, the financial markets, or the economy.
■ Providing administrative services in connection with investments in the funds or other investments, including, but not limited to, shareholder services, recordkeeping services, and educational services.
■ Providing products or services that assist investors or financial service providers (as defined below) in the investment decision-making process.
■ Providing promotional discounts, commission-free trading, fee waivers, and other benefits to clients of Vanguard Brokerage Services® who maintain qualifying investments in the funds.
VMC performs most marketing and distribution activities itself. Some activities may be conducted by third parties pursuant to shared marketing arrangements under which VMC agrees to share the costs and performance of marketing and distribution activities in concert with a financial service provider. Financial service providers include, but are not limited to, investment advisors, broker-dealers, financial planners, financial consultants, banks, and insurance companies. Under these cost- and performance-sharing arrangements, VMC may pay or reimburse a financial service provider (or a third party it retains) for marketing and distribution activities that VMC would otherwise perform. VMC’s cost- and performance-sharing arrangements may be established in connection with Vanguard investment products or services offered or provided to or through the financial service providers. VMC’s arrangements for shared marketing and distribution activities may vary among financial service providers, and its payments or reimbursements to financial service providers in connection with shared marketing and distribution activities may be significant.
VMC, as a matter of policy, does not pay asset-based fees, sales-based fees, or account-based fees to financial service providers in connection with its marketing and distribution activities for the Vanguard funds. VMC does make fixed dollar payments to financial service providers when sponsoring, jointly sponsoring, financially supporting, or participating in conferences, programs, seminars, presentations, meetings, or other events involving fund shareholders, financial service providers, or others concerning the funds, other investments, the financial markets, or the economy, such as industry conferences, prospecting trips, due diligence visits, training or education meetings, and sales presentations. VMC also makes fixed dollar payments to financial service providers for data regarding funds, such as statistical information regarding sales of fund shares. In addition, VMC makes one-time fixed dollar payments for setup expenses associated with financial service providers’ use of Vanguard’s model portfolios comprised of funds.
In connection with its marketing and distribution activities, VMC may give financial service providers (or their representatives) (1) promotional items of nominal value that display Vanguard’s logo, such as golf balls, shirts, towels, pens, and mouse pads; (2) gifts that do not exceed $100 per person annually and are not preconditioned on achievement of a sales target; (3) an occasional meal, a ticket to a sporting event or the theater, or comparable entertainment that is neither so frequent nor so extensive as to raise any question of propriety and is not preconditioned on achievement of a sales target; and (4) reasonable travel and lodging accommodations to facilitate participation in marketing and distribution activities.
VMC policy prohibits marketing and distribution activities that are intended, designed, or likely to compromise suitability determinations by, or the fulfillment of any fiduciary duties or other obligations that apply to, financial service providers. Nonetheless, VMC’s marketing and distribution activities are primarily intended to result in the sale of the funds’ shares, and as such, its activities, including shared marketing and distribution activities and fixed dollar payments as described above, may influence applicable financial service providers (or their representatives) to recommend, promote, include, or invest in a Vanguard fund or share class. In addition, Vanguard or any of its subsidiaries may retain a financial
B-34
service provider to provide consulting or other services, and that financial service provider also may provide services to investors. Investors should consider the possibility that any of these activities, relationships, or payments may influence a financial service provider’s (or its representatives’) decision to recommend, promote, include, or invest in a Vanguard fund or share class. Each financial service provider should consider its suitability determinations, fiduciary duties, and other legal obligations (or those of its representatives) in connection with any decision to consider, recommend, promote, include, or invest in a Vanguard fund or share class.
The following table describes the expenses of Vanguard and VMC that are incurred by the Funds. Amounts captioned “Management and Administrative Expenses” include a Fund's allocated share of expenses associated with the management, administrative, and transfer agency services Vanguard provides to the Vanguard funds. Amounts captioned “Marketing and Distribution Expenses” include a Fund's allocated share of expenses associated with the marketing and distribution activities that VMC conducts on behalf of the Vanguard funds.
As is the case with all mutual funds, transaction costs incurred by the Funds for buying and selling securities are not reflected in the table. Annual Shared Fund Operating Expenses are based on expenses incurred in the fiscal years ended September 30, 2018, 2019, and 2020, and are presented as a percentage of each Fund's average month-end net assets.  
Annual Shared Fund Operating Expenses
(Shared Expenses Deducted From Fund Assets)
Vanguard Fund
2018
2019
2020
Vanguard Core Bond Fund
 
 
 
Management and Administrative Expenses
0.12%
0.10%
0.10%
Marketing and Distribution Expenses
0.01 
0.01 
0.01 
Vanguard Emerging Markets Bond Fund
 
 
 
Management and Administrative Expenses
0.43%
0.43%
0.45%
Marketing and Distribution Expenses
Less than 0.01 
0.01 
0.01 
Vanguard Institutional Intermediate-Term Bond Fund
 
 
 
Management and Administrative Expenses
0.02%
0.02%
0.02%
Marketing and Distribution Expenses
Less than 0.01 
Less than 0.01 
Less than 0.01 
Vanguard Institutional Short-Term Bond Fund
 
 
 
Management and Administrative Expenses
0.02%
0.02%
0.02%
Marketing and Distribution Expenses
Less than 0.01 
Less than 0.01 
Less than 0.01 
Vanguard Short-Term Inflation-Protected Securities Index Fund
 
 
 
Management and Administrative Expenses
0.06%
0.06%
0.06%
Marketing and Distribution Expenses
0.01 
0.01 
0.01 
Vanguard U.S. Value Fund
 
 
 
Management and Administrative Expenses
0.20%
0.20%
0.20%
Marketing and Distribution Expenses
0.02 
0.01 
0.01 
Officers and Trustees
Each Vanguard fund is governed by the board of trustees of its trust and a single set of officers. Consistent with the board’s corporate governance principles, the trustees believe that their primary responsibility is oversight of the management of each fund for the benefit of its shareholders, not day-to-day management. The trustees set broad policies for the funds; select investment advisors; monitor fund operations, regulatory compliance, performance, and costs; nominate and select new trustees; and elect fund officers. Vanguard manages the day-to-day operations of the funds under the direction of the board of trustees.
The trustees play an active role, as a full board and at the committee level, in overseeing risk management for the funds. The trustees delegate the day-to-day risk management of the funds to various groups, including portfolio review, investment management, risk management, compliance, legal, fund accounting, and fund financial services. These groups provide the trustees with regular reports regarding investment, valuation, liquidity, and compliance, as well as the risks associated with each. The trustees also oversee risk management for the funds through regular interactions with the funds’ internal and external auditors.
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The full board participates in the funds’ risk oversight, in part, through the Vanguard funds’ compliance program, which covers the following broad areas of compliance: investment and other operations; recordkeeping; valuation and pricing; communications and disclosure; reporting and accounting; oversight of service providers; fund governance; and codes of ethics, insider trading controls, and protection of nonpublic information. The program seeks to identify and assess risk through various methods, including through regular interdisciplinary communications between compliance professionals and business personnel who participate on a daily basis in risk management on behalf of the funds. The funds’ chief compliance officer regularly provides reports to the board in writing and in person.
The audit committee of the board, which is composed of F. Joseph Loughrey, Mark Loughridge, Sarah Bloom Raskin, and Peter F. Volanakis, each of whom is an independent trustee, oversees management of financial risks and controls. The audit committee serves as the channel of communication between the independent auditors of the funds and the board with respect to financial statements and financial reporting processes, systems of internal control, and the audit process. Vanguard’s head of internal audit reports directly to the audit committee and provides reports to the committee in writing and in person on a regular basis. Although the audit committee is responsible for overseeing the management of financial risks, the entire board is regularly informed of these risks through committee reports.
All of the trustees bring to each fund’s board a wealth of executive leadership experience derived from their service as executives (in many cases chief executive officers), board members, and leaders of diverse public operating companies, academic institutions, and other organizations. In determining whether an individual is qualified to serve as a trustee of the funds, the board considers a wide variety of information about the trustee, and multiple factors contribute to the board’s decision. Each trustee is determined to have the experience, skills, and attributes necessary to serve the funds and their shareholders because each trustee demonstrates an exceptional ability to consider complex business and financial matters, evaluate the relative importance and priority of issues, make decisions, and contribute effectively to the deliberations of the board. The board also considers the individual experience of each trustee and determines that the trustee’s professional experience, education, and background contribute to the diversity of perspectives on the board. The business acumen, experience, and objective thinking of the trustees are considered invaluable assets for Vanguard management and, ultimately, the Vanguard funds’ shareholders. The specific roles and experience of each board member that factor into this determination are presented on the following pages. The mailing address of the trustees and officers is P.O. Box 876, Valley Forge, PA 19482.  
Name, Year of Birth
Position(s)
Held With
Funds
Vanguard
Funds’ Trustee/
Officer Since
Principal Occupation(s)
During the Past Five Years,
Outside Directorships,
and Other Experience
Number of
Vanguard Funds
Overseen by
Trustee/Officer
Interested Trustee1
 
 
 
 
Mortimer J. Buckley
(1969)
Chairman of the
Board, Chief
Executive
Officer, and
President
January 2018
Chairman of the board (2019–present) of Vanguard and
of each of the investment companies served by
Vanguard; chief executive officer (2018–present) of
Vanguard; chief executive officer, president, and
trustee (2018–present) of each of the investment
companies served by Vanguard; president and director
(2017–present) of Vanguard; and president
(2018–present) of Vanguard Marketing Corporation.
Chief investment officer (2013–2017), managing
director (2002–2017), head of the Retail Investor Group
(2006–2012), and chief information officer (2001–2006)
of Vanguard. Chairman of the board (2011–2017) and
trustee (2009–2017) of the Children’s Hospital of
Philadelphia; and trustee (2018–present) and vice chair
(2019–present) of The Shipley School.
211
1 Mr. Buckley is considered an “interested person” as defined in the 1940 Act because he is an officer of the Trust.
B-36
Name, Year of Birth
Position(s)
Held With
Funds
Vanguard
Funds’ Trustee/
Officer Since
Principal Occupation(s)
During the Past Five Years,
Outside Directorships,
and Other Experience
Number of
Vanguard Funds
Overseen by
Trustee/Officer
Independent Trustees
 
 
 
 
Emerson U. Fullwood
(1948)
Trustee
January 2008
Executive chief staff and marketing officer for North
America and corporate vice president (retired 2008) of
Xerox Corporation (document management products
and services). Former president of the Worldwide
Channels Group, Latin America, and Worldwide
Customer Service and executive chief staff officer of
Developing Markets of Xerox. Executive in residence
and 2009–2010 Distinguished Minett Professor at the
Rochester Institute of Technology. Director of SPX
FLOW, Inc. (multi-industry manufacturing). Director of
the University of Rochester Medical Center, the
Monroe Community College Foundation, the United
Way of Rochester, North Carolina A&T University, and
Roberts Wesleyan College. Trustee of the University of
Rochester.
211
Amy Gutmann
(1949)
Trustee
June 2006
President (2004–present) of the University of
Pennsylvania. Christopher H. Browne Distinguished
Professor of Political Science, School of Arts and
Sciences, and professor of communication, Annenberg
School for Communication, with secondary faculty
appointments in the Department of Philosophy, School
of Arts and Sciences, and at the Graduate School of
Education, University of Pennsylvania.
211
F. Joseph Loughrey
(1949)
Trustee
October 2009
President and chief operating officer (retired 2009) and
vice chairman of the board (2008–2009) of Cummins
Inc. (industrial machinery). Chairman of the board of
Hillenbrand, Inc. (specialized consumer services).
Director of the V Foundation. Member of the advisory
council for the College of Arts and Letters and chair of
the advisory board to the Kellogg Institute for
International Studies, both at the University of Notre
Dame. Chairman of the board of Saint Anselm College.
211
Mark Loughridge
(1953)
Lead
Independent
Trustee
March 2012
Senior vice president and chief financial officer (retired
2013) of IBM (information technology services).
Fiduciary member of IBM’s Retirement Plan
Committee (2004–2013), senior vice president and
general manager (2002–2004) of IBM Global Financing,
vice president and controller (1998–2002) of IBM, and
a variety of other prior management roles at IBM.
Member of the Council on Chicago Booth.
211
Scott C. Malpass
(1962)
Trustee
March 2012
Chief investment officer and vice president of the
University of Notre Dame (retired June 2020).
Assistant professor of finance at the Mendoza College
of Business, University of Notre Dame (retired June
2020), and member of the Notre Dame 403(b)
Investment Committee. Member of the board of
Catholic Investment Services, Inc. (investment
advisors) and the board of superintendence of the
Institute for the Works of Religion.
211
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Name, Year of Birth
Position(s)
Held With
Funds
Vanguard
Funds’ Trustee/
Officer Since
Principal Occupation(s)
During the Past Five Years,
Outside Directorships,
and Other Experience
Number of
Vanguard Funds
Overseen by
Trustee/Officer
Deanna Mulligan
(1963)
Trustee
January 2018
Board chair (2020), chief executive officer (2011–2020),
and president (2010–2019) of The Guardian Life
Insurance Company of America. Chief operating officer
(2010–2011) and executive vice president (2008–2010)
of Individual Life and Disability of The Guardian Life
Insurance Company of America. Member of the board
of the Economic Club of New York. Trustee of the
Partnership for New York City (business leadership),
the Chief Executives for Corporate Purpose, the New
York-Presbyterian Hospital, and the Bruce Museum
(arts and science). Member of the Advisory Council for
the Stanford Graduate School of Business.
211
André F. Perold
(1952)
Trustee
December 2004
George Gund Professor of Finance and Banking,
Emeritus at the Harvard Business School (retired
2011). Chief investment officer and co-managing
partner of HighVista Strategies LLC (private
investment firm). Board member (2018–present) of RIT
Capital Partners (investment firm); investment
committee member of Partners Health Care System.
211
Sarah Bloom Raskin
(1961)
Trustee
January 2018
Deputy secretary (2014–2017) of the United States
Department of the Treasury. Governor (2010–2014) of
the Federal Reserve Board. Commissioner
(2007–2010) of financial regulation for the State of
Maryland. Director (2017–present) of i(x) Investments,
LLC. Rubenstein Fellow (2017–2020) of Duke
University; trustee (2017–present) of Amherst College;
and member of Amherst College Investment
Committee (2019–present).
211
Peter F. Volanakis
(1955)
Trustee
July 2009
President and chief operating officer (retired 2010) of
Corning Incorporated (communications equipment)
and director of Corning Incorporated (2000–2010) and
Dow Corning (2001–2010). Director (2012) of SPX
Corporation (multi-industry manufacturing). Overseer
of the Amos Tuck School of Business Administration,
Dartmouth College (2001–2013). Chairman of the
board of trustees of Colby-Sawyer College. Member of
the BMW Group Mobility Council.
211
Executive Officers
 
 
 
 
John Bendl
(1970)
Chief Financial
Officer
October 2019
Principal of Vanguard. Chief financial officer
(2019–present) of each of the investment companies
served by Vanguard. Chief accounting officer, treasurer,
and controller of Vanguard (2017–present). Partner
(2003–2016) at KPMG (audit, tax, and advisory
services).
211
Christine M. Buchanan
(1970)
Treasurer
November 2017
Principal of Vanguard. Treasurer (2017–present) of each
of the investment companies served by Vanguard.
Partner (2005–2017) at KPMG (audit, tax, and advisory
services).
211
David Cermak
(1960)
Finance Director
October 2019
Principal of Vanguard. Finance director (2019–present)
of each of the investment companies served by
Vanguard. Managing director and head (2017–present)
of Vanguard Investments Singapore. Managing director
and head (2017–2019) of Vanguard Investments Hong
Kong. Representative director and head (2014–2017)
of Vanguard Investments Japan.
211
B-38
Name, Year of Birth
Position(s)
Held With
Funds
Vanguard
Funds’ Trustee/
Officer Since
Principal Occupation(s)
During the Past Five Years,
Outside Directorships,
and Other Experience
Number of
Vanguard Funds
Overseen by
Trustee/Officer
John Galloway
(1973)
Investment
Stewardship
Officer
September 2020
Principal of Vanguard. Investment stewardship officer
(September 2020–present) of each of the investment
companies served by Vanguard. Head of Investor
Advocacy (February 2020–present) and head of
Marketing Strategy and Planning (2017–2020) at
Vanguard. Deputy Assistant to the President of the
United States (2015).
211
Peter Mahoney
(1974)
Controller
May 2015
Principal of Vanguard. Controller (2015–present) of
each of the investment companies served by
Vanguard. Head of International Fund Services (2008–
2014) at Vanguard.
211
Anne E. Robinson
(1970)
Secretary
September 2016
General counsel (2016–present) of Vanguard.
Secretary (2016–present) of Vanguard and of each of
the investment companies served by Vanguard.
Managing director (2016–present) of Vanguard.
Managing director and general counsel of Global Cards
and Consumer Services (2014–2016) at Citigroup.
Counsel (2003–2014) at American Express.
211
Michael Rollings
(1963)
Finance Director
February 2017
Finance director (2017–present) and treasurer (2017)
of each of the investment companies served by
Vanguard. Managing director (2016–present) of
Vanguard. Chief financial officer (2016–present) of
Vanguard. Director (2016–present) of Vanguard
Marketing Corporation. Executive vice president and
chief financial officer (2006–2016) of MassMutual
Financial Group.
211
John E. Schadl
(1972)
Chief
Compliance
Officer
March 2019
Principal of Vanguard. Chief compliance officer
(2019–present) of Vanguard and of each of the
investment companies served by Vanguard. Assistant
vice president (2019–present) of Vanguard Marketing
Corporation.
211
All but one of the trustees are independent. The independent trustees designate a lead independent trustee. The lead independent trustee is a spokesperson and principal point of contact for the independent trustees and is responsible for coordinating the activities of the independent trustees, including calling regular executive sessions of the independent trustees; developing the agenda of each meeting together with the chairman; and chairing the meetings of the independent trustees. The lead independent trustee also chairs the meetings of the audit, compensation, and nominating committees. The board also has two investment committees, which consist of independent trustees and the sole interested trustee.
The independent trustees appoint the chairman of the board. The roles of chairman of the board and chief executive officer currently are held by the same person; as a result, the chairman of the board is an “interested” trustee. The independent trustees generally believe that the Vanguard funds’ chief executive officer is best qualified to serve as chairman and that fund shareholders benefit from this leadership structure through accountability and strong day-to-day leadership.
Board Committees: The Trust's board has the following committees:
■ Audit Committee: This committee oversees the accounting and financial reporting policies, the systems of internal controls, and the independent audits of each fund. The following independent trustees serve as members of the committee: Mr. Loughrey, Mr. Loughridge, Ms. Raskin, and Mr. Volanakis. The committee held six meetings during the Trust’s fiscal year ended September 30, 2020.
■ Compensation Committee: This committee oversees the compensation programs established by each fund for the benefit of its trustees. All independent trustees serve as members of the committee. The committee held one meeting during the Trust’s fiscal year ended September 30, 2020.
■ Investment Committees: These committees assist the board in its oversight of investment advisors to the funds and in the review and evaluation of materials relating to the board’s consideration of investment advisory agreements
B-39
with the funds. Each trustee serves on one of two investment committees. Each investment committee held four meetings during the Trust’s fiscal year ended September 30, 2020.
■ Nominating Committee: This committee nominates candidates for election to the board of trustees of each fund. The committee also has the authority to recommend the removal of any trustee. All independent trustees serve as members of the committee. The committee held one meeting during the Trust’s fiscal year ended September 30, 2020.
The Nominating Committee will consider shareholder recommendations for trustee nominees. Shareholders may send recommendations to Mr. Loughridge, chairman of the committee.
Trustee Compensation
The same individuals serve as trustees of all Vanguard funds and each fund pays a proportionate share of the trustees’ compensation. Vanguard funds also employ their officers on a shared basis; however, officers are compensated by Vanguard, not the funds.
Independent Trustees. The funds compensate their independent trustees (i.e., the ones who are not also officers of the funds) in three ways:
■ The independent trustees receive an annual fee for their service to the funds, which is subject to reduction based on absences from scheduled board meetings.
■ The independent trustees are reimbursed for the travel and other expenses that they incur in attending board meetings.
■ Upon retirement (after attaining age 65 and completing five years of service), the independent trustees who began their service prior to January 1, 2001, receive a retirement benefit under a separate account arrangement. As of January 1, 2001, the opening balance of each eligible trustee’s separate account was generally equal to the net present value of the benefits he or she had accrued under the trustees’ former retirement plan. Each eligible trustee’s separate account will be credited annually with interest at a rate of 7.5% until the trustee receives his or her final distribution. Those independent trustees who began their service on or after January 1, 2001, are not eligible to participate in the plan.
“Interested” Trustee. Mr. Buckley serves as a trustee, but is not paid in this capacity. He is, however, paid in his role as an officer of Vanguard.
Compensation Table. The following table provides compensation details for each of the trustees. We list the amounts paid as compensation and accrued as retirement benefits by the Funds for each trustee. In addition, the table shows the total amount of benefits that we expect each trustee to receive from all Vanguard funds upon retirement and the total amount of compensation paid to each trustee by all Vanguard funds.
B-40
VANGUARD MALVERN FUNDS
TRUSTEES’ COMPENSATION TABLE  
Trustee
Aggregate
Compensation From
the Funds1
Pension or Retirement
Benefits Accrued as Part of
the Funds’ Expenses1
Accrued Annual
Retirement Benefit at
January 1, 20212
Total Compensation
From All Vanguard
Funds Paid to Trustees3
Mortimer J. Buckley
—
—
—
—
Emerson U. Fullwood
$ 4,229
—
—
$ 287,500
Amy Gutmann
4,229
—
—
287,500
F. Joseph Loughrey
4,523
—
—
307,500
Mark Loughridge
5,260
—
—
357,500
Scott C. Malpass
4,229
—
—
287,500
Deanna Mulligan
4,229
—
—
287,500
André F. Perold
4,229
—
—
287,500
Sarah Bloom Raskin
4,523
—
—
307,500
Peter F. Volanakis
4,523
—
—
307,500
1
The amounts shown in this column are based on the Trust's fiscal year ended September 30, 2020. Each Fund within the Trust is responsible for a proportionate share of these amounts/
2
Each trustee is eligible to receive retirement benefits only after completing at least 5 years (60 consecutive months) of service as a trustee for the Vanguard funds. The annual retirement benefit will be paid in monthly installments, beginning with the month following the trustee’s retirement from service, and will cease after 10 years of payments (120 monthly installments). Trustees who began their service on or after January 1, 2001, are not eligible to participate in the retirement benefit plan.
3
The amounts reported in this column reflect the total compensation paid to each trustee for his or her service as trustee of 211 Vanguard funds for the 2020 calendar year.
Ownership of Fund Shares
All current trustees allocate their investments among the various Vanguard funds based on their own investment needs. The following table shows each trustee’s ownership of shares of each Fund and of all Vanguard funds served by the trustee as of December 31, 2020.
VANGUARD MALVERN FUNDS  
Vanguard Fund
Trustee
Dollar Range of
Fund Shares
Owned by Trustee
Aggregate Dollar Range
of Vanguard Fund Shares
Owned by Trustee
Vanguard Core Bond Fund
Mortimer J. Buckley
Over $100,000
Over $100,000
 
Emerson U. Fullwood
—
Over $100,000
 
Amy Gutmann
—
Over $100,000
 
F. Joseph Loughrey
—
Over $100,000
 
Mark Loughridge
—
Over $100,000
 
Scott C. Malpass
—
Over $100,000
 
Deanna Mulligan
—
Over $100,000
 
André F. Perold
—
Over $100,000
 
Sarah Bloom Raskin
—
Over $100,000
 
Peter F. Volanakis
Over $100,000
Over $100,000
 
 
 
 
B-41
Vanguard Fund
Trustee
Dollar Range of
Fund Shares
Owned by Trustee
Aggregate Dollar Range
of Vanguard Fund Shares
Owned by Trustee
Vanguard Emerging Markets Bond Fund
Mortimer J. Buckley
Over $100,000
Over $100,000
 
Emerson U. Fullwood
—
Over $100,000
 
Amy Gutmann
—
Over $100,000
 
F. Joseph Loughrey
—
Over $100,000
 
Mark Loughridge
—
Over $100,000
 
Scott C. Malpass
—
Over $100,000
 
Deanna Mulligan
—
Over $100,000
 
André F. Perold
—
Over $100,000
 
Sarah Bloom Raskin
—
Over $100,000
 
Peter F. Volanakis
Over $100,000
Over $100,000
 
 
 
 
Vanguard Institutional Intermediate-Term Bond Fund
Mortimer J. Buckley
—
Over $100,000
 
Emerson U. Fullwood
—
Over $100,000
 
Amy Gutmann
—
Over $100,000
 
F. Joseph Loughrey
—
Over $100,000
 
Mark Loughridge
—
Over $100,000
 
Scott C. Malpass
—
Over $100,000
 
Deanna Mulligan
—
Over $100,000
 
André F. Perold
—
Over $100,000
 
Sarah Bloom Raskin
—
Over $100,000
 
Peter F. Volanakis
—
Over $100,000
 
 
 
 
Vanguard Institutional Short-Term Bond Fund
Mortimer J. Buckley
—
Over $100,000
 
Emerson U. Fullwood
—
Over $100,000
 
Amy Gutmann
—
Over $100,000
 
F. Joseph Loughrey
—
Over $100,000
 
Mark Loughridge
—
Over $100,000
 
Scott C. Malpass
—
Over $100,000
 
Deanna Mulligan
—
Over $100,000
 
André F. Perold
—
Over $100,000
 
Sarah Bloom Raskin
—
Over $100,000
 
Peter F. Volanakis
—
Over $100,000
 
 
 
 
Vanguard Short-Term Inflation-Protected Securities Index Fund
Mortimer J. Buckley
—
Over $100,000
 
Emerson U. Fullwood
—
Over $100,000
 
Amy Gutmann
—
Over $100,000
 
F. Joseph Loughrey
—
Over $100,000
 
Mark Loughridge
—
Over $100,000
 
Scott C. Malpass
—
Over $100,000
 
Deanna Mulligan
—
Over $100,000
 
André F. Perold
—
Over $100,000
 
Sarah Bloom Raskin
—
Over $100,000
 
Peter F. Volanakis
—
Over $100,000
 
 
 
 
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Vanguard Fund
Trustee
Dollar Range of
Fund Shares
Owned by Trustee
Aggregate Dollar Range
of Vanguard Fund Shares
Owned by Trustee
Vanguard U.S. Value Fund
Mortimer J. Buckley
—
Over $100,000
 
Emerson U. Fullwood
—
Over $100,000
 
Amy Gutmann
—
Over $100,000
 
F. Joseph Loughrey
—
Over $100,000
 
Mark Loughridge
—
Over $100,000
 
Scott C. Malpass
—
Over $100,000
 
Deanna Mulligan
—
Over $100,000
 
André F. Perold
—
Over $100,000
 
Sarah Bloom Raskin
—
Over $100,000
 
Peter F. Volanakis
—
Over $100,000
As of December 31, 2020, the trustees and officers of the funds owned, in the aggregate, less than 1% of each class of each fund’s outstanding shares.
As of December 31, 2020, the following owned of record 5% or more of the outstanding shares of each class  (Other than ETF Shares):  
Vanguard Fund
Share Class
Owner and Address
Percentage
of Ownership
Vanguard Core Bond Fund
Admiral Shares
CHARLES SCHWAB & CO INC SAN
FRANCISCO, CA
14.51%
 
 
NATIONAL FINANCIAL SERVICES
CORPORATION JERSEY CITY, NJ
23.28%
 
Investor Shares
CHARLES SCHWAB & CO INC SAN
FRANCISCO, CA
18.84%
 
 
NATIONAL FINANCIAL SERVICES
CORPORATION JERSEY CITY, NJ
13.19%
Vanguard Emerging Markets Bond Fund
Admiral Shares
CHARLES SCHWAB & CO INC SAN
FRANCISCO, CA
39.42%
 
 
MAC & CO A/C 392539 PITTSBURGH,
PA
6.27%
 
 
NATIONAL FINANCIAL SERVICES
CORPORATION JERSEY CITY, NJ
6.33%
 
Investor Shares
CHARLES SCHWAB & CO INC SAN
FRANCISCO, CA
33.08%
 
 
VANGUARD MANAGED ALLOCATION
FUND VALLEY FORGE, PA
14.35%
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Vanguard Fund
Share Class
Owner and Address
Percentage
of Ownership
Vanguard Institutional Intermediate-Term Bond
Fund
Institutional Plus Shares
VANGUARD FIDUCIARY TRUST CO
CONTRACT# NYGA29700 VALLEY
FORGE, PA
5.89%
 
 
VANGUARD FIDUCIARY TRUST CO
CONTRACT # 1642894 VALLEY FORGE,
PA
5.02%
 
 
VANGUARD FIDUCIARY TRUST CO
CONTRACT #MGT9615A VALLEY
FORGE, PA
6.24%
 
 
VANGUARD FIDUCIARY TRUST CO
CONTRACT #NWLRST VALLEY FORGE,
PA
5.69%
 
 
VANGUARD FIDUCIARY TRUST CO
CONTRACT #SSB102023 VALLEY
FORGE, PA
6.59%
 
 
VANGUARD FIDUCIARY TRUST CO
CONTRACT PRU 62313 VALLEY
FORGE, PA
6.2%
 
 
VANGUARD FIDUCIARY TRUST CO
CONTRACT # MM30051 VALLEY
FORGE, PA
6.26%
 
 
VANGUARD FIDUCIARY TRUST CO
CONTRACT # MTL38042 VALLEY
FORGE, PA
5.56%
 
 
VANGUARD FIDUCIARY TRUST CO
CONTRACT # MDA01107 VALLEY
FORGE, PA
5.18%
 
 
VANGUARD FIDUCIARY TRUST CO
CONTRACT # PAC027822 VALLEY
FORGE, PA
5.48%
Vanguard Institutional Short-Term Bond Fund
Institutional Plus Shares
VANGUARD FIDUCIARY TRUST CO
CONTRACT # NYGA29700 VALLEY
FORGE, PA
5.79%
 
 
VANGUARD FIDUCIARY TRUST CO
CONTRACT # MGT9615A VALLEY
FORGE, PA
6.82%
 
 
VANGUARD FIDUCIARY TRUST CO
CONTRACT # NWLRST VALLEY
FORGE, PA
5.6%
 
 
VANGUARD FIDUCIARY TRUST CO
CONTRACT # SSB102023 VALLEY
FORGE, PA
6.58%
 
 
VANGUARD FIDUCIARY TRUST CO
CONTRACT # MM30051 VALLEY
FORGE, PA
7.52%
 
 
VANGUARD FIDUCIARY TRUST CO
CONTRACT # MTL38042 VALLEY
FORGE, PA
5.46%
 
 
VANGUARD FIDUCIARY TRUST CO
CONTRACT # MDA01107 VALLEY
FORGE, PA
5.03%
 
 
VANGUARD FIDUCIARY TRUST CO
CONTRACT # PAC027822 VALLEY
FORGE, PA
6.18%
 
 
VANGUARD FIDUCIARY TRUST CO
CONTRACT # PAC027822 VALLEY
FORGE, PA
7.23%
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Vanguard Fund
Share Class
Owner and Address
Percentage
of Ownership
Vanguard Short-Term Inflation-Protected Securities
Index Fund
Admiral Shares
VANGUARD TARGET RETIREMENT
2015 FUND VALLEY FORGE, PA
15.33%
 
 
VANGUARD TARGET RETIREMENT
2020 FUND VALLEY FORGE, PA
24.67%
 
 
VANGUARD TARGET RETIREMENT
INCOME FUND VALLEY FORGE, PA
13.68%
 
 
NATIONAL FINANCIAL SERVICES
CORPORATION JERSEY CITY, NJ
6.63%
 
Institutional Shares
VANGUARD TARGET RETIREMENT
2015 TRUST VALLEY FORGE, PA
14.76%
 
 
VANGUARD TARGET RETIREMENT
INCOME TRUST VALLEY FORGE, PA
16.44%
 
 
VANGUARD TARGET RETIREMENT
2020 TRUST VALLEY FORGE, PA
24.11%
 
Investor Shares
VANGUARD TARGET RETIREMENT
2015 FUND VALLEY FORGE, PA
26.99%
 
 
VANGUARD TARGET RETIREMENT
INCOME FUND VALLEY FORGE, PA
35.38%
 
 
VANGUARD TARGET RETIREMENT
2020 FUND VALLEY FORGE, PA
33%
Although the Funds do not have information concerning the beneficial ownership of shares held in the names of Depository Trust Company (DTC) participants, as of December 31, 2020, the name and percentage ownership of each DTC participant that owned of record 5% or more of the outstanding ETF Shares of the Fund were as follows:  
Vanguard Fund
Owner
Percentage
of Ownership
Vanguard Short-Term Inflation-Protected Securities ETF
Charles Schwab & Co., Inc.
14.67%
 
National Financial Services LLC
22.4%
 
Pershing LLC
11.73%
 
TD Ameritrade Clearing, Inc.
7.08%
Portfolio Holdings Disclosure Policies and Procedures
Introduction
Vanguard and the boards of trustees of the Vanguard funds (the Boards) have adopted Portfolio Holdings Disclosure Policies and Procedures (Policies and Procedures) to govern the disclosure of the portfolio holdings of each Vanguard fund. Vanguard and the Boards considered each of the circumstances under which Vanguard fund portfolio holdings may be disclosed to different categories of persons under the Policies and Procedures. Vanguard and the Boards also considered actual and potential material conflicts that could arise in such circumstances between the interests of Vanguard fund shareholders, on the one hand, and those of the fund’s investment advisor, distributor, or any affiliated person of the fund, its investment advisor, or its distributor, on the other. After giving due consideration to such matters and after the exercise of their fiduciary duties and reasonable business judgment, Vanguard and the Boards determined that the Vanguard funds have a legitimate business purpose for disclosing portfolio holdings to the persons described in each of the circumstances set forth in the Policies and Procedures and that the Policies and Procedures are reasonably designed to ensure that disclosure of portfolio holdings and information about portfolio holdings is in the best interests of fund shareholders and appropriately addresses the potential for material conflicts of interest.
The Boards exercise continuing oversight of the disclosure of Vanguard fund portfolio holdings by (1) overseeing the implementation and enforcement of the Policies and Procedures, the Code of Ethics, and the Policies and Procedures Designed to Prevent the Misuse of Inside Information (collectively, the portfolio holdings governing policies) by the
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chief compliance officer of Vanguard and the Vanguard funds; (2) considering reports and recommendations by the chief compliance officer concerning any material compliance matters (as defined in Rule 38a-1 under the 1940 Act and Rule 206(4)-7 under the Investment Advisers Act of 1940) that may arise in connection with any portfolio holdings governing policies; and (3) considering whether to approve or ratify any amendment to any portfolio holdings governing policies.
Vanguard and the Boards reserve the right to amend the Policies and Procedures at any time and from time to time without prior notice at their sole discretion. For purposes of the Policies and Procedures, the term “portfolio holdings” means the equity and debt securities (e.g., stocks and bonds) held by a Vanguard fund and does not mean the cash investments, derivatives, and other investment positions (collectively, other investment positions) held by the fund.
Online Disclosure of Ten Largest Stock Holdings
Each actively managed Vanguard fund generally will seek to disclose the fund’s ten largest stock portfolio holdings and the percentage of the fund’s total assets that each of these holdings represents as of the end of the most recent calendar quarter (quarter-end ten largest stock holdings with weightings) online at vanguard.com, in the “Portfolio” section of the fund’s Portfolio & Management page, 15 calendar days after the end of the calendar quarter. Each Vanguard index fund generally will seek to disclose the fund’s ten largest stock portfolio holdings and the percentage of the fund’s total assets that each of these holdings represents as of the end of the most recent month (month-end ten largest stock holdings with weightings) online at vanguard.com, in the “Portfolio” section of the fund’s Portfolio & Management page, 15 calendar days after the end of the month. In addition, Vanguard funds generally will seek to disclose the fund’s ten largest stock portfolio holdings and the aggregate percentage of the fund’s total assets (and, for balanced funds, the aggregate percentage of the fund’s equity securities) that these holdings represent as of the end of the most recent month (month-end ten largest stock holdings) online at vanguard.com, in the “Portfolio” section of the fund’s Portfolio & Management page, 10 business days after the end of the month. Together, the quarter-end and month-end ten largest stock holdings are referred to as the ten largest stock holdings. Online disclosure of the ten largest stock holdings is made to all categories of persons, including individual investors, institutional investors, intermediaries, third-party service providers, rating and ranking organizations, affiliated persons of a Vanguard fund, and all other persons.
Online Disclosure of Complete Portfolio Holdings
Each actively managed Vanguard fund, unless otherwise stated, generally will seek to disclose the fund’s complete portfolio holdings as of the end of the most recent calendar quarter online at vanguard.com, in the “Portfolio” section of the fund’s Portfolio & Management page, 30 calendar days after the end of the calendar quarter. Each Vanguard fund relying on Rule 6c-11 under the 1940 Act generally will seek to disclose complete portfolio holdings, including other investment positions, at the beginning of each business day. These portfolio holdings, including other investment positions, will be disclosed online at vanguard.com in the “Portfolio” section of the fund's Portfolio & Management page. In accordance with Rule 2a-7 under the 1940 Act, each of the Vanguard money market funds will disclose the fund’s complete portfolio holdings as of the last business day of the prior month online at vanguard.com, in the “Portfolio” section of the fund’s Portfolio & Management page, no later than the fifth business day of the current month. The complete portfolio holdings information for money market funds will remain available online for at least six months after the initial posting. Vanguard Market Neutral Fund and Vanguard Alternative Strategies Fund generally will seek to disclose the Fund’s complete portfolio holdings as of the end of the most recent calendar quarter online at vanguard.com, in the “Portfolio” section of the Fund’s Portfolio & Management page, 60 calendar days after the end of the calendar quarter.   Vanguard Institutional Short-Term Bond Fund and Vanguard Institutional Intermediate-Term Bond Fund generally will seek to make available their complete portfolio holdings upon request 30 calendar days after the end of the month.  Each Vanguard index fund, other than those Vanguard index funds relying on Rule 6c-11, generally will seek to disclose the fund’s complete portfolio holdings as of the end of the most recent month online at vanguard.com, in the “Portfolio” section of the fund’s Portfolio & Management page, 15 calendar days after the end of the month. Online disclosure of complete portfolio holdings is made to all categories of persons, including individual investors, institutional investors, intermediaries, third-party service providers, rating and ranking organizations, affiliated persons of a Vanguard fund, and all other persons. Vanguard will review complete portfolio holdings before disclosure is made and, except with respect to the complete portfolio holdings of the Vanguard money market funds, may withhold any portion of the fund’s complete portfolio holdings from disclosure when deemed to be in the best interests of the fund after consultation with a Vanguard fund’s investment advisor.
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Disclosure of Complete Portfolio Holdings to Service Providers Subject to Confidentiality and Trading Restrictions
Vanguard, for legitimate business purposes, may disclose Vanguard fund complete portfolio holdings at times it deems necessary and appropriate to rating and ranking organizations; financial printers; proxy voting service providers; pricing information vendors; issuers of guaranteed investment contracts for stable value portfolios; third parties that deliver analytical, statistical, or consulting services; and other third parties that provide services (collectively, Service Providers) to Vanguard, Vanguard subsidiaries, and/or the Vanguard funds. Disclosure of complete portfolio holdings to a Service Provider is conditioned on the Service Provider being subject to a written agreement imposing a duty of confidentiality, including a duty not to trade on the basis of any material nonpublic information.
The frequency with which complete portfolio holdings may be disclosed to a Service Provider, and the length of the lag, if any, between the date of the information and the date on which the information is disclosed to the Service Provider, is determined based on the facts and circumstances, including, without limitation, the nature of the portfolio holdings information to be disclosed, the risk of harm to the funds and their shareholders, and the legitimate business purposes served by such disclosure. The frequency of disclosure to a Service Provider varies and may be as frequent as daily, with no lag. Disclosure of Vanguard fund complete portfolio holdings by Vanguard to a Service Provider must be authorized by a Vanguard fund officer or a Principal in Vanguard’s Portfolio Review Department or Legal and Compliance Division. Any disclosure of Vanguard fund complete portfolio holdings to a Service Provider as previously described may also include a list of the other investment positions that make up the fund, such as cash investments and derivatives.
Currently, Vanguard discloses complete portfolio holdings to the following Service Providers as part of ongoing arrangements that serve legitimate business purposes: Abel/Noser Corporation; Advisor Software, Inc.; Alcom Printing Group, Inc.; Apple Press, L.C.; Bloomberg L.P.; Brilliant Graphics, Inc.; Broadridge Financial Solutions, Inc.; Brown Brothers Harriman & Co.; Canon Business Process Services; Charles River Systems, Inc.; FactSet Research Systems Inc.; Innovation Printing & Communications; Institutional Shareholder Services, Inc.; Intelligencer Printing Company; Investment Technology Group, Inc.; Lipper, Inc.; Markit WSO Corporation; McMunn Associates, Inc.; Reuters America Inc.; R.R. Donnelley, Inc.; State Street Bank and Trust Company; and Trade Informatics LLC. In addition, Vanguard Institutional Short-Term Bond Fund and Vanguard Institutional Intermediate-Term Bond Fund will disclose complete portfolio holdings to the following Service Providers as part of ongoing arrangements that serve legitimate business purposes:  American General Life Insurance Company; Bank of Tokyo Mitsubishi UFJ, Ltd.; JPMorgan Chase Bank, N.A.; Massachusetts Mutual Life Insurance Company; Prudential Insurance Company of America; Transamerica Premier Life Insurance Company; and United of Omaha Life Insurance Company.
Disclosure of Complete Portfolio Holdings to Vanguard Affiliates and Certain Fiduciaries Subject to Confidentiality and Trading Restrictions
Vanguard may disclose complete portfolio holdings between and among the following persons (collectively, Affiliates and Fiduciaries) for legitimate business purposes within the scope of their official duties and responsibilities, subject to such persons’ continuing legal duty of confidentiality and legal duty not to trade on the basis of any material nonpublic information, as such duties are imposed under the Code of Ethics, the Policies and Procedures Designed to Prevent the Misuse of Inside Information, by agreement, or under applicable laws, rules, and regulations: (1) persons who are subject to the Code of Ethics or the Policies and Procedures Designed to Prevent the Misuse of Inside Information; (2) an investment advisor, distributor, administrator, transfer agent, or custodian to a Vanguard fund; (3) an accounting firm, an auditing firm, or outside legal counsel retained by Vanguard, a Vanguard subsidiary, or a Vanguard fund; (4) an investment advisor to whom complete portfolio holdings are disclosed for due diligence purposes when the advisor is in merger or acquisition talks with a Vanguard fund’s current advisor; and (5) a newly hired investment advisor or sub-advisor to whom complete portfolio holdings are disclosed prior to the time it commences its duties.
The frequency with which complete portfolio holdings may be disclosed between and among Affiliates and Fiduciaries, and the length of the lag, if any, between the date of the information and the date on which the information is disclosed between and among the Affiliates and Fiduciaries, is determined by such Affiliates and Fiduciaries based on the facts and circumstances, including, without limitation, the nature of the portfolio holdings information to be disclosed, the risk of harm to the funds and their shareholders, and the legitimate business purposes served by such disclosure. The frequency of disclosure between and among Affiliates and Fiduciaries varies and may be as frequent as daily, with no
B-47
lag. Any disclosure of Vanguard fund complete portfolio holdings to any Affiliates and Fiduciaries as previously described may also include a list of the other investment positions that make up the fund, such as cash investments and derivatives. Disclosure of Vanguard fund complete portfolio holdings or other investment positions by Vanguard, VMC, or a Vanguard fund to Affiliates and Fiduciaries must be authorized by a Vanguard fund officer or a Principal of Vanguard.
Currently, Vanguard discloses complete portfolio holdings to the following Affiliates and Fiduciaries as part of ongoing arrangements that serve legitimate business purposes: Vanguard and each investment advisor, custodian, and independent registered public accounting firm identified in each fund’s Statement of Additional Information.
Disclosure of Portfolio Holdings to Broker-Dealers in the Normal Course of Managing a Fund’s Assets
An investment advisor, administrator, or custodian for a Vanguard fund may, for legitimate business purposes within the scope of its official duties and responsibilities, disclose portfolio holdings (whether partial portfolio holdings or complete portfolio holdings) and other investment positions that make up the fund to one or more broker-dealers during the course of, or in connection with, normal day-to-day securities and derivatives transactions with or through such broker-dealers subject to the broker-dealer’s legal obligation not to use or disclose material nonpublic information concerning the fund’s portfolio holdings, other investment positions, securities transactions, or derivatives transactions without the consent of the fund or its agents. The Vanguard funds have not given their consent to any such use or disclosure and no person or agent of Vanguard is authorized to give such consent except as approved in writing by the Boards of the Vanguard funds. Disclosure of portfolio holdings or other investment positions by Vanguard to broker-dealers must be authorized by a Vanguard fund officer or a Principal of Vanguard.
Disclosure of Nonmaterial Information
The Policies and Procedures permit Vanguard fund officers, Vanguard fund portfolio managers, and other Vanguard representatives (collectively, Approved Vanguard Representatives) to disclose any views, opinions, judgments, advice, or commentary, or any analytical, statistical, performance, or other information, in connection with or relating to a Vanguard fund or its portfolio holdings and/or other investment positions (collectively, commentary and analysis) or any changes in the portfolio holdings of a Vanguard fund that occurred after the end of the most recent calendar quarter (recent portfolio changes) to any person if (1) such disclosure serves a legitimate business purpose, (2) such disclosure does not effectively result in the disclosure of the complete portfolio holdings of any Vanguard fund (which can be disclosed only in accordance with the Policies and Procedures), and (3) such information does not constitute material nonpublic information. Disclosure of commentary and analysis or recent portfolio changes by Vanguard, VMC, or a Vanguard fund must be authorized by a Vanguard fund officer or a Principal of Vanguard.
An Approved Vanguard Representative must make a good faith determination whether the information constitutes material nonpublic information, which involves an assessment of the particular facts and circumstances. Vanguard believes that in most cases recent portfolio changes that involve a few or even several securities in a diversified portfolio or commentary and analysis would be immaterial and would not convey any advantage to a recipient in making an investment decision concerning a Vanguard fund. Nonexclusive examples of commentary and analysis about a Vanguard fund include (1) the allocation of the fund’s portfolio holdings and other investment positions among various asset classes, sectors, industries, and countries; (2) the characteristics of the stock and bond components of the fund’s portfolio holdings and other investment positions; (3) the attribution of fund returns by asset class, sector, industry, and country; and (4) the volatility characteristics of the fund. Approved Vanguard Representatives may, at their sole discretion, deny any request for information made by any person, and may do so for any reason or for no reason. Approved Vanguard Representatives include, for purposes of the Policies and Procedures, persons employed by or associated with Vanguard or a subsidiary of Vanguard who have been authorized by Vanguard’s Portfolio Review Department to disclose recent portfolio changes and/or commentary and analysis in accordance with the Policies and Procedures.
Disclosure of Portfolio Holdings, Including Other Investment Positions, in Accordance with Securities and Exchange Commission (SEC) Exemptive Orders and Rule 6c-11
Vanguard’s Fund Financial Services unit may disclose to the National Securities Clearing Corporation (NSCC), Authorized Participants, and other market makers the daily portfolio composition files (PCFs) that identify a basket of specified securities that may overlap with the actual or expected portfolio holdings of the Vanguard funds that offer a class of shares known as Vanguard ETF Shares (ETF Funds). Each Vanguard fund relying on Rule 6c-11 under the 1940 Act generally will seek to disclose complete portfolio holdings, including other investment positions, at the beginning of
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each business day. These portfolio holdings, including other investment positions, will be disclosed online at vanguard.com in the “Portfolio” section of a fund’s Portfolio & Management page. The disclosure of PCFs and portfolio holdings, including other investment positions, will be in accordance with the terms and conditions of related exemptive orders (Vanguard ETF Exemptive Orders) issued by the SEC or Rule 6c-11 under the 1940 Act, as described in this section.
Unlike the conventional classes of shares  issued by ETF Funds, the ETF Shares are listed for trading on a national securities exchange. Each ETF Fund issues and redeems ETF Shares in large blocks, known as “Creation Units.” To purchase or redeem a Creation Unit, an investor must be an “Authorized Participant” or the investor must purchase or redeem through a broker-dealer that is an Authorized Participant. An Authorized Participant is a participant in the Depository Trust Company (DTC) that has executed a “Participant Agreement” with VMC. Each ETF Fund issues Creation Units in exchange for a “portfolio deposit” consisting of a basket of specified securities (Deposit Securities) and a cash payment (Balancing Amount). Each ETF Fund also redeems Creation Units in kind; an investor who tenders a Creation Unit will receive, as redemption proceeds, a basket of specified securities together with a Balancing Amount.
In connection with the creation and redemption process, and in accordance with the terms and conditions of the Vanguard ETF Exemptive Orders, Vanguard makes available to the NSCC (a clearing agency registered with the SEC and affiliated with the DTC), for dissemination to NSCC participants on each business day prior to the opening of trading on the listing exchange, a PCF containing a list of the names and the required number of shares of each Deposit Security for each ETF Fund. In addition, the listing exchange disseminates (1) continuously throughout the trading day, through the facilities of the Consolidated Tape Association, the market value of an ETF Share; and (2) every 15 seconds throughout the trading day, a calculation of the estimated NAV of an ETF Share (expected to be accurate to within a few basis points). Comparing these two figures allows an investor to determine whether, and to what extent, ETF Shares are selling at a premium or at a discount to NAV. ETF Shares are listed on the exchange and traded on the secondary market in the same manner as other equity securities. The price of ETF Shares trading on the secondary market is based on a current bid/offer market.
In addition to making PCFs available to the NSCC, as previously described, Vanguard’s Fund Financial Services unit may disclose the PCF for any ETF Fund to any person, or online at vanguard.com to all categories of persons, if (1) such disclosure serves a legitimate business purpose and (2) such disclosure does not constitute material nonpublic information. Vanguard’s Fund Financial Services unit must make a good faith determination whether the PCF for any ETF Fund constitutes material nonpublic information, which involves an assessment of the particular facts and circumstances. Vanguard believes that in most cases the PCF for any ETF Fund would be immaterial and would not convey any advantage to the recipient in making an investment decision concerning the ETF Fund, if sufficient time has passed between the date of the PCF and the date on which the PCF is disclosed. Vanguard’s Fund Financial Services unit may, at its sole discretion, determine whether to deny any request for the PCF for any ETF Fund made by any person, and may do so for any reason or for no reason. Disclosure of a PCF must be authorized by a Vanguard fund officer or a Principal in Vanguard’s Fund Financial Services unit.
Disclosure of Portfolio Holdings Related Information to the Issuer of a Security for Legitimate Business Purposes
Vanguard, at its sole discretion, may disclose portfolio holdings information concerning a security held by one or more Vanguard funds to the issuer of such security if the issuer presents, to the satisfaction of Vanguard’s Fund Financial Services unit, convincing evidence that the issuer has a legitimate business purpose for such information. Disclosure of this information to an issuer is conditioned on the issuer being subject to a written agreement imposing a duty of confidentiality, including a duty not to trade on the basis of any material nonpublic information. The frequency with which portfolio holdings information concerning a security may be disclosed to the issuer of such security, and the length of the lag, if any, between the date of the information and the date on which the information is disclosed to the issuer, is determined based on the facts and circumstances, including, without limitation, the nature of the portfolio holdings information to be disclosed, the risk of harm to the funds and their shareholders, and the legitimate business purposes served by such disclosure. The frequency of disclosure to an issuer cannot be determined in advance of a specific request and will vary based upon the particular facts and circumstances and the legitimate business purposes, but in unusual situations could be as frequent as daily, with no lag. Disclosure of portfolio holdings information concerning a security held by one or more Vanguard funds to the issuer of such security must be authorized by a Vanguard fund officer or a Principal in Vanguard’s Portfolio Review Department or Legal and Compliance Division.
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Disclosure of Portfolio Holdings as Required by Applicable Law
Vanguard fund portfolio holdings (whether partial portfolio holdings or complete portfolio holdings) and other investment positions that make up a fund shall be disclosed to any person as required by applicable laws, rules, and regulations. Examples of such required disclosure include, but are not limited to, disclosure of Vanguard fund portfolio holdings (1) in a filing or submission with the SEC or another regulatory body, (2) in connection with seeking recovery on defaulted bonds in a federal bankruptcy case, (3) in connection with a lawsuit, or (4) as required by court order. Disclosure of portfolio holdings or other investment positions by Vanguard, VMC, or a Vanguard fund as required by applicable laws, rules, and regulations must be authorized by a Vanguard fund officer or a Principal of Vanguard.
Prohibitions on Disclosure of Portfolio Holdings
No person is authorized to disclose Vanguard fund portfolio holdings or other investment positions (whether online at vanguard.com, in writing, by fax, by email, orally, or by other means) except in accordance with the Policies and Procedures. In addition, no person is authorized to make disclosure pursuant to the Policies and Procedures if such disclosure is otherwise unlawful under the antifraud provisions of the federal securities laws (as defined in Rule 38a-1 under the 1940 Act). Furthermore, Vanguard’s management, at its sole discretion, may determine not to disclose portfolio holdings or other investment positions that make up a Vanguard fund to any person who would otherwise be eligible to receive such information under the Policies and Procedures, or may determine to make such disclosures publicly as provided by the Policies and Procedures.
Prohibitions on Receipt of Compensation or Other Consideration
The Policies and Procedures prohibit a Vanguard fund, its investment advisor, and any other person or entity from paying or receiving any compensation or other consideration of any type for the purpose of obtaining disclosure of Vanguard fund portfolio holdings or other investment positions. “Consideration” includes any agreement to maintain assets in the fund or in other investment companies or accounts managed by the investment advisor or by any affiliated person of the investment advisor.
Investment Advisory and Other Services
Vanguard, through its Quantitative Equity Group, provides investment advisory services to the Vanguard U.S. Value Fund. Vanguard, through its Fixed Income Group, provides investment advisory services to Vanguard Short-Term Inflation-Protected Securities Index Fund, Vanguard Institutional Short-Term Bond Fund, Vanguard Institutional Intermediate-Term Bond Fund, Vanguard Core Bond Fund, and Vanguard Emerging Markets Bond Fund. The compensation and other expenses of Vanguard's advisory staff are allocated among the funds utilizing these services.
During the fiscal years ended September 30, 2018, 2019, and 2020, the Funds incurred the following approximate investment advisory expenses:  
Vanguard Fund
2018
2019
2020
Vanguard U.S. Value Fund
$ 1,077,000
$ 1,213,000
$ 966,000
Vanguard Short-Term Inflation-Protected Securities Index Fund
764,000
1,022,000
957,000
Vanguard Institutional Short-Term Bond Fund
210,000
283,000
202,000
Vanguard Institutional Intermediate-Term Bond Fund
462,000
657,000
755,000
Vanguard Core Bond Fund
118,000
152,000
221,000
Vanguard Emerging Markets Bond Fund
2,000
23,000
67,000
1. Other Accounts Managed
The following table provides information relating to the other accounts managed by the portfolio managers of the Funds as of the fiscal year ended September 30, 2020 (unless otherwise noted).  
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Portfolio Manager
 
No. of
accounts
Total assets
No. of accounts with
performance-based
fees
Total assets in
accounts with
performance-based
fees
James P. Stetler
Registered investment companies1
13
$ 161B
0
$ 0
 
Other pooled investment vehicles
2
$ 57M
0
$ 0
 
Other accounts
0
$ 0
0
$ 0
Binbin Guo
Registered investment companies1
13
$ 161B
0
$ 0
 
Other pooled investment vehicles
2
$ 57M
0
$ 0
 
Other accounts
0
$ 0
0
$ 0
Joshua C. Barrickman
Registered investment companies2
23
$ 953B
0
$ 0
 
Other pooled investment vehicles
0
$ 0
0
$ 0
 
Other accounts
0
$ 0
0
$ 0
Brian W. Quigley
Registered investment companies3
4
$ 49B
0
$ 0
 
Other pooled investment vehicles
0
$ 0
0
$ 0
 
Other accounts
0
$ 0
0
$ 0
Samuel C. Martinez
Registered investment companies3
9
$ 180B
0
$ 0
 
Other pooled investment vehicles
0
$ 0
0
$ 0
 
Other accounts
0
$ 0
0
$ 0
Arvind Narayanan
Registered investment companies3
9
$ 180B
0
$ 0
 
Other pooled investment vehicles
0
$ 0
0
$ 0
 
Other accounts
0
$ 0
0
$ 0
Daniel Shaykevich
Registered investment companies4
10
$ 181B
0
$ 0
 
Other pooled investment vehicles
0
$ 0
0
$ 0
 
Other accounts
0
$ 0
0
$ 0
Mauro Favini
Registered investment companies5
1
$ 983M
0
$ 0
 
Other pooled investment vehicles
0
$ 0
0
$ 0
 
Other accounts
0
$ 0
0
$ 0
1 Includes Vanguard U.S. Value Fund which held assets of $1 billion as of September 30, 2020.
2 Includes Vanguard Short-Term Inflation-Protected Securities Index Fund which held assets of $38 billion as of September 30, 2020.
3 Includes Vanguard Institutional Short-Term Bond, Institutional Intermediate-Term Bond, and Core Bond Fund which collectively held assets of
$42 billion as of September 30, 2020.
4 Includes Vanguard Emerging Markets Bond, Institutional Intermediate-Term Bond, and Core Bond Fund which collectively held assets of $43 billion as of September 30, 2020.
5 Includes Vanguard Emerging Markets Bond Fund which held assets of $983 million as of September 30, 2020.
2. Material Conflicts of Interest
At Vanguard, individual portfolio managers may manage multiple accounts for multiple clients. In addition to mutual funds, these accounts may include separate accounts, collective trusts, and offshore funds. Managing multiple funds or accounts may give rise to potential conflicts of interest including, for example, conflicts among investment strategies and conflicts in the allocation of investment opportunities. Vanguard manages potential conflicts between funds or accounts through allocation policies and procedures, internal review processes, and oversight by trustees and independent third parties. Vanguard has developed trade allocation procedures and controls to ensure that no one client, regardless of type, is intentionally favored at the expense of another. Allocation policies are designed to address potential conflicts in situations where two or more funds or accounts participate in investment decisions involving the same securities.
3. Description of Compensation
All Vanguard portfolio managers are Vanguard employees. This section describes the compensation of the Vanguard employees who manage Vanguard mutual funds. As of September 30, 2020, a Vanguard portfolio manager’s compensation generally consists of base salary, bonus, and payments under Vanguard’s long-term incentive compensation program. In addition, portfolio managers are eligible for the standard retirement benefits and health and
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welfare benefits available to all Vanguard employees. Also, certain portfolio managers may be eligible for additional retirement benefits under several supplemental retirement plans that Vanguard adopted in the 1980s to restore dollar-for-dollar the benefits of management employees that had been cut back solely as a result of tax law changes. These plans are structured to provide the same retirement benefits as the standard retirement plans.
In the case of portfolio managers responsible for managing multiple Vanguard funds or accounts, the method used to determine their compensation is the same for all funds and investment accounts. A portfolio manager’s base salary is determined by the manager’s experience and performance in the role, taking into account the ongoing compensation benchmark analyses performed by Vanguard’s Human Resources Department. A portfolio manager’s base salary is generally a fixed amount that may change as a result of an annual review, upon assumption of new duties, or when a market adjustment of the position occurs.
A portfolio manager’s bonus is determined by a number of factors. One factor is gross, pre-tax performance of the fund relative to expectations for how the fund should have performed, given the fund’s investment objective, policies, strategies, and limitations, and the market environment during the measurement period. This performance factor is not based on the amount of assets held in any individual fund’s portfolio. For Vanguard U.S. Value Fund, the performance factor depends on how closely the portfolio manager tracks these expectations and maintains the risk parameters of the Fund over a three-year period. For Vanguard Short-Term Inflation-Protected Securities Index Fund, the performance factor depends on how closely the portfolio manager tracks the Fund's benchmark index over a one-year period. For Vanguard Institutional Short-Term Bond Fund, Vanguard Institutional Intermediate-Term Bond Fund, Vanguard Core Bond Fund, and Vanguard Emerging Markets Bond Fund, the performance factor depends on how successfully the portfolio managers outperform these expectations and maintain the risk parameters of a Fund over a three-year period. Additional factors include the portfolio manager’s contributions to the investment management functions within the sub-asset class, contributions to the development of other investment professionals and supporting staff, and overall contributions to strategic planning and decisions for the investment group. The target bonus is expressed as a percentage of base salary. The actual bonus paid may be more or less than the target bonus, based on how well the manager satisfies the objectives previously described. The bonus is paid on an annual basis.
Under the long-term incentive compensation program, all full-time employees receive a payment from Vanguard’s long-term incentive compensation plan based on their years of service, job level, and, if applicable, management responsibilities. Each year, Vanguard’s independent directors determine the amount of the long-term incentive compensation award for that year based on the investment performance of the Vanguard funds relative to competitors and Vanguard’s operating efficiencies in providing services to the Vanguard funds.
4. Ownership of Securities
As of September 30, 2020, Mr. Favini owned shares of Vanguard Emerging Markets Bond Fund in the 50,001–$100,000 range. Mr. Shaykevich owned shares of Vanguard Emerging Markets Bond Fund in the $100,001–$500,000 range. The other named portfolio managers did not own any shares of the Funds they managed.
Duration and Termination of Investment Advisory Agreements
Vanguard provides investment advisory services to the Funds pursuant to the terms of the Fifth Amended and Restated Funds’ Service Agreement. This Agreement will continue in full force and effect until terminated or amended by mutual agreement of the Vanguard funds and Vanguard.
Securities Lending
The following table describes the securities lending activities of U.S. Value Fund during the fiscal year ended September 30, 2020. Pursuant to Vanguard's securities lending policy, the Short-Term Inflation-Protected Securities Index Fund, Institutional Short-Term Bond Fund, Institutional Intermediate-Term Bond Fund, Core Bond, and Emerging Markets Bond Funds are not permitted to, and do not, lend their investment securities.  
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Vanguard Fund
Securities Lending Activities
Vanguard U.S. Value Fund
 
Gross income from securities lending activities
$719,061
Fees paid to securities lending agent from a revenue split
$0
Fees paid for any cash collateral management service (including fees deducted from a pooled cash
collateral reinvestment vehicle) that are not included in the revenue split
$547
Administrative fees not included in revenue split
$7,652
Indemnification fee not included in revenue split
$0
Rebate (paid to borrower)
$33,475
Other fees not included in revenue split (specify)
$0
Aggregate fees/compensation for securities lending activities
$41,674
Net income from securities lending activities
$677,387
The services provided by Brown Brothers Harriman & Co. and Vanguard, each acting separately as securities lending agents for certain Vanguard funds, include coordinating the selection of securities to be loaned to approved borrowers; negotiating the terms of the loan; monitoring the value of the securities loaned and corresponding collateral, marking to market daily; coordinating the investment of cash collateral in the funds’ approved cash collateral reinvestment vehicle; monitoring dividends and coordinating material proxy votes relating to loaned securities; and transferring, recalling, and arranging the return of loaned securities to the funds upon termination of the loan.
Portfolio Transactions
The advisor decides which securities to buy and sell on behalf of a Fund and then selects the brokers or dealers that will execute the trades on an agency basis or the dealers with whom the trades will be effected on a principal basis. For each trade, the advisor must select a broker-dealer that it believes will provide “best execution.” Best execution does not necessarily mean paying the lowest spread or commission rate available. In seeking best execution, the SEC has said that an advisor should consider the full range of a broker-dealer’s services. The factors considered by the advisor in seeking best execution include, but are not limited to, the broker-dealer’s execution capability, clearance and settlement services, commission rate, trading expertise, willingness and ability to commit capital, ability to provide anonymity, financial responsibility, reputation and integrity, responsiveness, access to underwritten offerings and secondary markets, and access to company management, as well as the value of any research provided by the broker-dealer. In assessing which broker-dealer can provide best execution for a particular trade, the advisor also may consider the timing and size of the order and available liquidity and current market conditions. Subject to applicable legal requirements, the advisor may select a broker based partly on brokerage or research services provided to the advisor and its clients, including the Funds. The advisor may cause a Fund to pay a higher commission than other brokers would charge if the advisor determines in good faith that the amount of the commission is reasonable in relation to the value of services provided. The advisor also may receive brokerage or research services from broker-dealers that are provided at no charge in recognition of the volume of trades directed to the broker. To the extent research services or products may be a factor in selecting brokers, services and products may include written research reports analyzing performance or securities, discussions with research analysts, meetings with corporate executives to obtain oral reports on company performance, market data, and other products and services that will assist the advisor in its investment decision-making process. The research services provided by brokers through which a Fund effects securities transactions may be used by the advisor in servicing all of its accounts, and some of the services may not be used by the advisor in connection with the Fund.
The types of securities in which Vanguard Short-Term Inflation-Protected Securities Index Fund, Vanguard Institutional Short-Term Bond Fund, and Vanguard Institutional Intermediate-Term Bond Fund invest are generally purchased and sold through principal transactions, meaning that the Funds normally purchase securities directly from the issuer or a primary market-maker acting as principal for the bonds on a net basis. Explicit brokerage commissions are not paid on these transactions, although purchases of new issues from underwriters of bonds typically include a commission or concession paid by the issuer to the underwriter, and purchases from dealers serving as market-makers typically include a dealer’s markup (i.e., a spread between the bid and the asked prices). Brokerage commissions are paid, however, in connection with opening and closing futures positions.
As previously explained, the types of securities that Vanguard Short-Term Inflation-Protected Securities Index Fund, Vanguard Institutional Short-Term Bond Fund, and Vanguard Institutional Intermediate-Term Bond Fund purchase do not normally involve the payment of explicit brokerage commissions. If any such brokerage commissions are paid, however, the advisor will evaluate their reasonableness by considering: (1) the historical commission rates; (2) the rates
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that other institutional investors are paying, based upon publicly available information; (3) the rates quoted by brokers and dealers; (4) the size of a particular transaction, in terms of the number of shares, the dollar amount, and the number of clients involved; (5) the complexity of a particular transaction in terms of both execution and settlement; (6) the level and type of business done with a particular firm over a period of time; and (7) the extent to which the broker or dealer has capital at risk in the transaction.
During the fiscal years ended September 30, 2018, 2019, and 2020, the Funds paid the following approximate amounts in brokerage commissions. Brokerage commissions may be substantially different from year to year for multiple reasons, such as cash flow or changes to the stocks that make up a fund's target index.  
Vanguard Fund
2018
2019
2020
Vanguard Core Bond Fund1
$ 75,000
$ 104,000
$ 172,000
Vanguard Emerging Markets Bond Fund2
1,000
5,000
10,000
Vanguard Institutional Intermediate-Term Bond Fund
439,000
571,000
771,000
Vanguard Institutional Short-Term Bond Fund
198,000
194,000
154,000
Vanguard Short-Term Inflation-Protected Securities Index Fund
78,000
116,000
106,000
Vanguard U.S. Value Fund3
156,000
235,000
166,000
1 During the periods shown, the increase in brokerage commissions paid by the Fund were attributed to an increase in trading of futures and other derivatives. The brokerage commissions paid by the Fund during the periods shown have increased with the growth of the Fund.
2 During the periods shown, the increase in brokerage commissions paid by the Fund were attributed to an increase in trading of futures and other derivatives. The brokerage commissions paid by the Fund during the periods shown have increased with the growth of the Fund.
3 The increase in the Fund's brokerage commissions from 2018 to 2019 was partially attributable to portfolio trading venue selection.
Some securities that are considered for investment by a Fund may also be appropriate for other Vanguard funds or for other clients served by the advisor. If such securities are compatible with the investment policies of a Fund and one or more of the advisor’s other clients, and are considered for purchase or sale at or about the same time, then transactions in such securities may be aggregated by the advisor, and the purchased securities or sale proceeds may be allocated among the participating Vanguard funds and the other participating clients of the advisor in a manner deemed equitable by the advisor. Although there may be no specified formula for allocating such transactions, the allocation methods used, and the results of such allocations, will be subject to periodic review by the Funds' board of trustees.
The ability of Vanguard and external advisors to purchase or dispose of certain fund investments, or to exercise rights on behalf of a Fund, may be restricted or impaired because of limitations imposed by law, regulation, or by certain regulators or issuers. As a result, Vanguard and external advisors on behalf of a Fund may be required to limit purchases, sell existing investments, or otherwise limit the exercise of shareholder rights by the Fund, including voting rights. These ownership restrictions and limitations can impact a Fund's performance. For index funds, this impact generally takes the form of tracking error, which can arise when a fund is not able to acquire its desired amount of a security. For actively managed funds, this impact can result, for example, in missed investment opportunities otherwise desired by a fund's investment advisor. If a Fund is required to limit its investment in a particular issuer, then the Fund may seek to obtain regulatory or corporate consents or ownership waivers. Other options a Fund may pursue include seeking to obtain economic exposure to that issuer through alternative means, such as through a derivative, which may be more costly than owning securities of the issuer directly, or through investment in a wholly-owned subsidiary.
As of September 30, 2020, each Fund held securities of its “regular brokers or dealers,” as that term is defined in Rule 10b-1 of the 1940 Act, as follows:  
Vanguard Fund
Regular Broker or Dealer (or Parent)
Aggregate Holdings
Vanguard Core Bond Fund
Barclays Capital Inc.
$ 12,050,000
 
BNP Paribas Securities Corp.
4,290,000
 
Citigroup Global Markets Inc.
13,548,000
 
Credit Suisse Securities (USA) LLC
4,325,000
 
Goldman, Sachs & Co.
6,992,000
 
J.P. Morgan Securities Inc.
33,290,000
 
Merrill Lynch, Pierce, Fenner & Smith Inc.
31,140,000
 
Morgan Stanley
16,939,000
 
Nomura Securities International Inc.
—
 
Wells Fargo Securities, LLC
28,920,000
Vanguard Emerging Markets Bond Fund
J.P. Morgan Securities Inc.
—
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Vanguard Fund
Regular Broker or Dealer (or Parent)
Aggregate Holdings
Vanguard Institutional Intermediate-Term Bond Fund
BNP Paribas Securities Corp.
19,546,000
 
Citigroup Global Markets Inc.
205,117,000
 
Credit Suisse Securities (USA) LLC
51,920,000
 
Goldman, Sachs & Co.
67,474,000
 
J.P. Morgan Securities Inc.
581,582,000
 
Merrill Lynch, Pierce, Fenner & Smith Inc.
604,770,000
 
Morgan Stanley
255,278,000
 
PNC Capital Markets, Inc.
91,222,000
 
Wells Fargo Securities, LLC
281,571,000
Vanguard Institutional Short-Term Bond Fund
Barclays Capital Inc.
3,051,000
 
Citigroup Global Markets Inc.
71,731,000
 
Goldman, Sachs & Co.
70,148,000
 
HSBC Securities (USA) Inc.
42,896,000
 
J.P. Morgan Securities Inc.
157,168,000
 
Merrill Lynch, Pierce, Fenner & Smith Inc.
216,874,000
 
Morgan Stanley
112,315,000
 
RBC Capital Markets
16,839,000
 
Wells Fargo Securities, LLC
122,929,000
Vanguard Short-Term Inflation-Protected Securities Index
Fund
—
—
Vanguard U.S. Value Fund
Morgan Stanley
10,093,000
Proxy Voting
I. Proxy Voting Policies
Each Vanguard fund advised by Vanguard retains the authority to vote proxies received with respect to the shares of equity securities held in a portfolio advised by Vanguard. The Board of Trustees of the Vanguard-advised funds (the Board) has adopted proxy voting procedures and guidelines to govern proxy voting for each portfolio retaining proxy voting authority, which are summarized in Appendix A.
Vanguard has entered into agreements with various state, federal, and non-U.S. regulators and with certain issuers that limit the amount of shares that the funds may vote at their discretion for particular securities. For these securities, the funds are able to vote a limited portion of the shares at their discretion. Any additional shares generally are voted in the same proportion as votes cast by the issuer’s entire shareholder base (i.e., mirror voted), or the fund is not permitted to vote such shares. Further, the Board has adopted policies that will result in certain funds mirror voting a higher proportion of the shares they own in a regulated issuer in order to permit certain other funds (generally advised by managers not affiliated with Vanguard) to mirror vote none, or a lower proportion, of their shares in such regulated issuer.
II. Securities Lending
There may be occasions when Vanguard needs to restrict lending of and/or recall securities that are out on loan in order to vote the full position at a shareholder meeting. For the funds managed by Vanguard, Vanguard has processes to monitor securities on loan and to evaluate any circumstances that may require it to restrict and/or attempt to recall the security based on the criteria set forth in Appendix A.
To obtain a free copy of a report that details how the funds voted the proxies relating to the portfolio securities held by the funds for the prior 12-month period ended June 30, log on to vanguard.com or visit the SEC’s website at www.sec.gov.
Information About the ETF Share Class
Vanguard Short-Term Inflation-Protected Securities Index Fund (the ETF Fund) offers and issues an exchange-traded class of shares called ETF Shares. The ETF Fund issues and redeems ETF Shares in large blocks, known as “Creation Units.”
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To purchase or redeem a Creation Unit, you must be an Authorized Participant or you must transact through a broker that is an Authorized Participant. An Authorized Participant is a participant in the Depository Trust Company (DTC) that has executed a Participant Agreement with Vanguard Marketing Corporation, the ETF Fund's Distributor (the Distributor). For a current list of Authorized Participants, contact the Distributor.
Investors that are not Authorized Participants must hold ETF Shares in a brokerage account. As with any stock traded on an exchange through a broker, purchases and sales of ETF Shares will be subject to usual and customary brokerage commissions.
The ETF Fund issues Creation Units in kind in exchange for a basket of securities that are part of—or soon to be part of—its target index (Deposit Securities). The ETF Fund also redeems Creation Units in kind; an investor who tenders a Creation Unit will receive, as redemption proceeds, a basket of securities that are part of the Fund’s portfolio holdings (Redemption Securities). As part of any creation or redemption transaction, the investor will either pay or receive some cash in addition to the securities, as described more fully on the following pages. The ETF Fund reserves the right to issue Creation Units for cash, rather than in kind.
Exchange Listing and Trading
The ETF Shares have been approved for listing on a national securities exchange and will trade on the exchange at market prices that may differ from net asset value (NAV). There can be no assurance that, in the future, ETF Shares will continue to meet all of the exchange’s listing requirements. The exchange will institute procedures to delist a Fund’s ETF Shares if the Fund’s ETF Shares do not continuously comply with the exchange’s listing rules. The exchange will also delist a Fund’s ETF Shares upon termination of the ETF Share class.
The exchange disseminates, through the facilities of the Consolidated Tape Association, an updated “indicative optimized portfolio value” (IOPV) for the ETF Fund as calculated by an information provider. The ETF Fund is not involved with or responsible for the calculation or dissemination of the IOPVs, and they makes no warranty as to the accuracy of the IOPVs. An IOPV for a Fund’s ETF Shares is disseminated every 15 seconds during regular exchange trading hours. An IOPV has a securities value component and a cash component. The IOPV is designed as an estimate of the ETF Fund’s NAV at a particular point in time, but it is only an estimate and should not be viewed as the actual NAV, which is calculated once each day.
Conversions and Exchanges
Owners of conventional shares (i.e., not exchange-traded shares) issued by the ETF Fund may convert those shares to ETF Shares of equivalent value of the same Fund. Please note that investors who own conventional shares through a 401(k) plan or other employer-sponsored retirement or benefit plan generally may not convert those shares to ETF Shares and should check with their plan sponsor or recordkeeper. ETF Shares, whether acquired through a conversion or purchased on the secondary market, cannot be converted to conventional shares by a shareholder. Also, ETF Shares of one fund cannot be exchanged for ETF Shares of another fund.
Investors that are not Authorized Participants must hold ETF Shares in a brokerage account. Thus, before converting conventional shares to ETF Shares, an investor must have an existing, or open a new, brokerage account. This account may be with Vanguard Brokerage Services or with any other brokerage firm. To initiate a conversion of conventional shares to ETF Shares, an investor must contact his or her broker.
Vanguard Brokerage Services does not impose a fee on conversions from Vanguard conventional shares to Vanguard ETF Shares. However, other brokerage firms may charge a fee to process a conversion. Vanguard reserves the right, in the future, to impose a transaction fee on conversions or to limit or terminate the conversion privilege.
Converting conventional shares to ETF Shares is generally accomplished as follows. First, after the broker notifies Vanguard of an investor‘s request to convert, Vanguard will transfer conventional shares from the investor‘s account with Vanguard to the broker‘s omnibus account with Vanguard (an account maintained by the broker on behalf of all its customers who hold conventional Vanguard fund shares through the broker). After the transfer, Vanguard’s records will reflect the broker, not the investor, as the owner of the shares. Next, the broker will instruct Vanguard to convert the appropriate number or dollar amount of conventional shares in its omnibus account to ETF Shares of equivalent value, based on the respective NAVs of the two share classes. The ETF Fund’s transfer agent will reflect ownership of all ETF Shares in the name of the DTC. The DTC will keep track of which ETF Shares belong to the broker, and the broker, in turn, will keep track of which ETF Shares belong to its customers.
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Because the DTC is unable to handle fractional shares, only whole shares can be converted. For example, if the investor owned 300.25 conventional shares, and this was equivalent in value to 90.75 ETF Shares, the DTC account would receive 90 ETF Shares. Conventional shares with a value equal to 0.75 ETF Shares (in this example, that would be 2.481 conventional shares) would remain in the broker‘s omnibus account with Vanguard. The broker then could either (1) take certain internal actions necessary to credit the investor‘s account with 0.75 ETF Shares or (2) redeem the 2.481 conventional shares for cash at NAV and deliver that cash to the investor’s account. If the broker chose to redeem the conventional shares, the investor would realize a gain or loss on the redemption that must be reported on his or her tax return (unless the shares are held in an IRA or other tax-deferred account). An investor should consult his or her broker for information on how the broker will handle the conversion process, including whether the broker will impose a fee to process a conversion.
The conversion process works differently for investors who opt to hold ETF Shares through an account at Vanguard Brokerage Services. Investors who convert their conventional shares to ETF Shares through Vanguard Brokerage Services will have all conventional shares for which they request conversion converted to the equivalent dollar value of ETF Shares. Because no fractional shares will have to be sold, the transaction will not be taxable.
Here are some important points to keep in mind when converting conventional shares of the ETF Fund to ETF Shares:
■ The conversion process can take anywhere from several days to several weeks, depending on the broker. Vanguard generally will process conversion requests either on the day they are received or on the next business day. Vanguard imposes conversion blackout windows around the dates when the ETF Fund declares dividends. This is necessary to prevent a shareholder from collecting a dividend from both the conventional share class currently held and also from the ETF share class to which the shares will be converted.
■ During the conversion process, an investor will remain fully invested in the Fund‘s conventional shares, and the investment will increase or decrease in value in tandem with the NAV of those shares.
■ The conversion transaction is nontaxable except, if applicable, to the very limited extent previously described.
■ During the conversion process, an investor will be able to liquidate all or part of an investment by instructing Vanguard or the broker (depending on whether the shares are held in the investor’s account or the broker‘s omnibus account) to redeem the conventional shares. After the conversion process is complete, an investor will be able to liquidate all or part of an investment by instructing the broker to sell the ETF Shares.
Book Entry Only System
ETF Shares issued by the Fund are registered in the name of the DTC or its nominee, Cede & Co., and are deposited with, or on behalf of, the DTC. The DTC is a limited-purpose trust company that was created to hold securities of its participants (DTC Participants) and to facilitate the clearance and settlement of transactions among them through electronic book-entry changes in their accounts, thereby eliminating the need for physical movement of securities certificates. DTC Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. The DTC is a subsidiary of the Depository Trust and Clearing Corporation (DTCC), which is owned by certain participants of the DTCC’s subsidiaries, including the DTC. Access to the DTC system is also available to others such as banks, brokers, dealers, and trust companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly (Indirect Participants).
Beneficial ownership of ETF Shares is limited to DTC Participants, Indirect Participants, and persons holding interests through DTC Participants and Indirect Participants. Ownership of beneficial interests in ETF Shares (owners of such beneficial interests are referred to herein as Beneficial Owners) is shown on, and the transfer of ownership is effected only through, records maintained by the DTC (with respect to DTC Participants) and on the records of DTC Participants (with respect to Indirect Participants and Beneficial Owners that are not DTC Participants). Beneficial Owners will receive from, or through, the DTC Participant a written confirmation relating to their purchase of ETF Shares. The laws of some jurisdictions may require that certain purchasers of securities take physical delivery of such securities. Such laws may impair the ability of certain investors to acquire beneficial interests in ETF Shares.
The ETF Fund recognizes the DTC or its nominee as the record owner of all ETF Shares for all purposes. Beneficial Owners of ETF Shares are not entitled to have ETF Shares registered in their names and will not receive or be entitled to physical delivery of share certificates. Each Beneficial Owner must rely on the procedures of the DTC and any DTC Participant and/or Indirect Participant through which such Beneficial Owner holds its interests to exercise any rights of a holder of ETF Shares.
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Conveyance of all notices, statements, and other communications to Beneficial Owners is effected as follows. The DTC will make available to each ETF Fund, upon request and for a fee, a listing of the ETF Shares of the Fund held by each DTC Participant. The ETF Fund shall obtain from each DTC Participant the number of Beneficial Owners holding ETF Shares, directly or indirectly, through the DTC Participant. The ETF Fund shall provide each DTC Participant with copies of such notice, statement, or other communication, in form, in number, and at such place as the DTC Participant may reasonably request, in order that these communications may be transmitted by the DTC Participant, directly or indirectly, to the Beneficial Owners. In addition, the ETF Fund shall pay to each DTC Participant a fair and reasonable amount as reimbursement for the expenses attendant to such transmittal, subject to applicable statutory and regulatory requirements.
Share distributions shall be made to the DTC or its nominee as the registered holder of all ETF Shares. The DTC or its nominee, upon receipt of any such distributions, shall immediately credit the DTC Participants’ accounts with payments in amounts proportionate to their respective beneficial interests in ETF Shares of the Fund as shown on the records of the DTC or its nominee. Payments by DTC Participants to Indirect Participants and Beneficial Owners of ETF Shares held through such DTC Participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in a “street name,” and will be the responsibility of such DTC Participants.
The ETF Fund have no responsibility or liability for any aspects of the records relating to or notices to Beneficial Owners; for payments made on account of beneficial ownership interests in such ETF Shares; for maintenance, supervision, or review of any records relating to such beneficial ownership interests; or for any other aspect of the relationship between the DTC and DTC Participants or the relationship between such DTC Participants and the Indirect Participants and Beneficial Owners owning through such DTC Participants.
The DTC may determine to discontinue providing its service with respect to ETF Shares at any time by giving reasonable notice to the ETF Fund and discharging its responsibilities with respect thereto under applicable law. Under such circumstances, the ETF Fund shall take action either to find a replacement for the DTC to perform its functions at a comparable cost or, if such replacement is unavailable, to issue and deliver printed certificates representing ownership of ETF Shares, unless the ETF Fund makes other arrangements with respect thereto satisfactory to the exchange.
Purchase and Issuance of ETF Shares in Creation Units
The ETF Fund issues and sells ETF Shares only in Creation Units on a continuous basis through the Distributor, without a sales load, at its NAV next determined after receipt of an order in proper form on any business day. The ETF Fund does not issue fractional Creation Units.
A business day is any day on which the NYSE is open for business. As of the date of this Statement of Additional Information, the NYSE observes the following U.S. holidays: New Year’s Day; Martin Luther King, Jr., Day; Presidents’ Day (Washington’s Birthday); Good Friday; Memorial Day (observed); Independence Day; Labor Day; Thanksgiving Day; and Christmas Day.
Fund Deposit. The consideration for purchase of a Creation Unit from the ETF  Fund generally consists of an in-kind deposit of a designated portfolio of securities (Deposit Securities) and an amount of cash (Cash Component) consisting of a purchase balancing amount and a transaction fee (both described in the following paragraphs). Together, the Deposit Securities and the Cash Component constitute the fund deposit.
The purchase balancing amount is an amount equal to the difference between the NAV of a Creation Unit and the market value of the Deposit Securities (Deposit Amount). It ensures that the NAV of a fund deposit (not including the transaction fee) is identical to the NAV of the Creation Unit it is used to purchase. If the purchase balancing amount is a positive number (i.e., the NAV per Creation Unit exceeds the market value of the Deposit Securities), then that amount will be paid by the purchaser to the ETF  Fund in cash. If the purchase balancing amount is a negative number (i.e., the NAV per Creation Unit is less than the market value of the Deposit Securities), then that amount will be paid by the ETF  Fund to the purchaser in cash (except as offset by the transaction fee).
Vanguard, through the National Securities Clearing Corporation (NSCC), makes available after the close of each business day a list of the names and the number of shares of each Deposit Security to be included in the next business day’s fund deposit for the ETF  Fund (subject to possible amendment or correction). The ETF Fund reserves the right to accept a nonconforming fund deposit.
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The identity and number of shares of the Deposit Securities required for a fund deposit may change from one day to another.
Each ETF Fund reserves the right to permit or require the substitution of an amount of cash—referred to as “cash in lieu”—to be added to the Cash Component to replace any Deposit Security. This might occur, for example, if a Deposit Security is not available in sufficient quantity for delivery, is not eligible for transfer through the applicable clearance and settlement system, or is not eligible for trading by an Authorized Participant or the investor for which an Authorized Participant is acting. Trading costs incurred by the ETF Fund in connection with the purchase of Deposit Securities with cash-in-lieu amounts will be an expense of the ETF Fund. However, Vanguard may adjust the transaction fee to protect existing shareholders from this expense.
All questions as to the number of shares of each security in the Deposit Securities and the validity, form, eligibility, and acceptance for deposit of any securities to be delivered shall be determined by the ETF  Fund, and the ETF  Fund’s determination shall be final and binding.
Procedures for Purchasing Creation Units. To initiate a purchase order for a Creation Unit, an Authorized Participant must submit an order in proper form to the Distributor and such order must be received by the Distributor prior to the closing time of regular trading of the NYSE (Closing Time) (ordinarily 4 p.m., Eastern time) to receive that day’s NAV. Authorized Participants must transmit orders using a transmission method acceptable to the Distributor pursuant to procedures set forth in the Participant Agreement.
Neither the Trust, the ETF  Fund, the Distributor, nor any affiliated party will be liable to an investor who is unable to submit a purchase order by Closing Time, even if the problem is the responsibility of one of those parties (e.g., the Distributor‘s phone or email systems were not operating properly).
If you are not an Authorized Participant, you must place your purchase order in an acceptable form with an Authorized Participant. The Authorized Participant may request that you make certain representations or enter into agreements with respect to the order (e.g., to provide for payments of cash when required).
Placement of Purchase Orders. An Authorized Participant must deliver the cash and government securities portion of a fund deposit through the Federal Reserve’s Fedwire System and the corporate securities portion of a fund deposit through the DTC. If a fund deposit is incomplete on the second business day after the trade date (the trade date, known as “T,” is the date on which the trade actually takes place; two business days after the trade date is known as “T+2”) because of the failed delivery of one or more of the Deposit Securities, the ETF Fund shall be entitled to cancel the purchase order.
The ETF  Fund may issue Creation Units in reliance on the Authorized Participant’s undertaking to deliver the missing Deposit Securities at a later date. Such undertaking shall be secured by the delivery and maintenance of cash collateral in an amount determined by the ETF  Fund in accordance with the terms of the Participant Agreement.
Rejection of Purchase Orders. The ETF Fund reserves the absolute right to reject a purchase order. By way of example, and not limitation, the ETF Fund will reject a purchase order if:
■ The order is not in proper form.
■ The Deposit Securities delivered are not the same (in name or amount) as the published basket.
■ Acceptance of the Deposit Securities would have certain adverse tax consequences to the ETF Fund.
■ Acceptance of the fund deposit would, in the opinion of counsel, be unlawful.
■ Acceptance of the fund deposit would otherwise, at the discretion of the ETF Fund or Vanguard, have an adverse effect on the Fund or any of its shareholders.
■ Circumstances outside the control of the ETF Fund, the Trust, the transfer agent, the custodian, the Distributor, and Vanguard make it for all practical purposes impossible to process the order. Examples include, but are not limited to, natural disasters, public service disruptions, or utility problems such as fires, floods, extreme weather conditions, and power outages resulting in telephone, telecopy, and computer failures; market conditions or activities causing trading halts; systems failures involving computer or other information systems affecting the aforementioned parties as well as the DTC, the NSCC,, the Federal Reserve, or any other participant in the purchase process; and similar extraordinary events.
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If a purchase order is rejected, the Distributor shall notify the Authorized Participant that submitted the order. The ETF Fund, the Trust, the transfer agent, the custodian, the Distributor, and Vanguard are under no duty, however, to give notification of any defects or irregularities in the delivery of a fund deposit, nor shall any of them incur any liability for the failure to give any such notification.
Transaction Fee on Purchases of Creation Units. The ETF  Fund may impose a transaction fee (payable to the Fund) to compensate the ETF  Fund for costs associated with the issuance of Creation Units. The amount of the fee, which may be changed by each ETF  Fund from time to time at its sole discretion, is made available daily to Authorized Participants, market makers, and other interested parties through Vanguard’s proprietary portal system. When the ETF Fund permits (or requires) a purchaser to substitute cash in lieu of depositing one or more Deposit Securities, the purchaser may be assessed an additional charge on the cash-in-lieu portion of the investment. The amount of this charge will be disclosed to investors before they place their orders. The amount will be determined by the ETF  Fund at its sole discretion. The maximum transaction fee on purchases of Creation Units, including any additional charges as described, shall be 2% of the value of the Creation Units.
The ETF  Fund reserves the right to not impose a transaction fee or to vary the amount of the transaction fee imposed, up to the maximum amount listed above. To the extent a creation transaction fee is not charged or does not cover the costs associated with the issuance of the Creation Units, certain costs may be borne by the ETF Fund.
Redemption of ETF Shares in Creation Units
To be eligible to place a redemption order, you must be an Authorized Participant. Investors that are not Authorized Participants must make appropriate arrangements with an Authorized Participant in order to redeem a Creation Unit.
ETF Shares may be redeemed only in Creation Units. Investors should expect to incur brokerage and other transaction costs in connection with assembling a sufficient number of ETF Shares to constitute a redeemable Creation Unit. There can be no assurance, however, that there will be sufficient liquidity in the public trading market at any time to permit assembly of a Creation Unit. Redemption requests received on a business day in good order will receive the NAV next determined after the request is made.
Unless cash redemptions are available or specified for the ETF Fund, an investor tendering a Creation Unit generally will receive redemption proceeds consisting of (1) a basket of Redemption Securities; plus (2) a redemption balancing amount in cash equal to the difference between (x) the NAV of the Creation Unit being redeemed, as next determined after receipt of a request in proper form, and (y) the value of the Redemption Securities; less (3) a transaction fee. If the Redemption Securities have a value greater than the NAV of a Creation Unit, the redeeming investor will pay the redemption balancing amount in cash to the ETF Fund, rather than receive such amount from the Fund.
Vanguard, through the NSCC, makes available after the close of each business day a list of the names and the number of shares of each Redemption Security to be included in the next business day’s redemption basket for the ETF Fund (subject to possible amendment or correction). The basket of Redemption Securities provided to an investor redeeming a Creation Unit may not be identical to the basket of Deposit Securities required of an investor purchasing a Creation Unit. An ETF Fund may provide a redeeming with a basket of Redemption Securities that differs from the composition of the redemption basket published through the NSCC.
The ETF Fund reserves the right to deliver cash in lieu of any Redemption Security for the same reason it might accept cash in lieu of a Deposit Security, as previously discussed, or if the ETF Fund could not lawfully deliver the security or could not do so without first registering such security under federal or state law.
Neither the Trust, the ETF Fund, the Distributor, nor any affiliated party will be liable to an investor who is unable to submit a redemption order by Closing Time, even if the problem is the responsibility of one of those parties (e.g., the Distributor's phone or email systems were not operating properly).
Transaction Fee on Redemptions of Creation Units. The ETF Fund may impose a transaction fee (payable to the Fund) to compensate the ETF Fund for costs associated with the redemption of Creation Units. The amount of the fee, which may be changed by the ETF Fund from time to time at its sole discretion, is made available daily to Authorized Participants, market makers, and other interested parties through Vanguard’s proprietary portal system. An additional charge may be imposed through Vanguard's proprietary portal system. When the ETF Fund permits (or requires) a redeeming investor to receive cash in lieu of one or more Redemption Securities, the ETF Fund may assess an
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additional variable charge on the cash portion of the redemption. The amount will vary as determined by the ETF Fund at its sole discretion and is made available daily to Authorized Participants, market makers, and other interested parties through Vanguard's proprietary portal system. The maximum transaction fee on redemptions of Creation Units shall be 2% of the value of the Creation Units.
The ETF Fund reserves the right to not impose a transaction fee or to vary the amount of the transaction fee imposed, up to the maximum amount listed above. To the extent a redemption transaction fee is not charged or does not cover the costs associated with the redemption of the Creation Units, certain costs may be borne by the ETF Fund.
Placement of Redemption Orders. To initiate a redemption order for a Creation Unit, an Authorized Participant must submit such order in proper form to the Distributor before Closing Time in order to receive that day’s NAV. Authorized Participants must transmit orders using a transmission method acceptable to the Distributor pursuant to procedures set forth in the Participant Agreement.
If on the settlement date (typically T+2) an Authorized Participant has failed to deliver all of the Vanguard ETF Shares it is seeking to redeem, the ETF  Fund shall be entitled to cancel the redemption order. Alternatively, the ETF  Fund may deliver to the Authorized Participant the full complement of Redemption Securities and cash in reliance on the Authorized Participant’s undertaking to deliver the missing ETF Shares at a later date. Such undertaking shall be secured by the Authorized Participant’s delivery and maintenance of cash collateral in accordance with collateral procedures that are part of the Participant Agreement. In all cases the ETF  Fund shall be entitled to charge the Authorized Participant for any costs (including investment losses, attorney’s fees, and interest) incurred by the ETF  Fund as a result of the late delivery or failure to deliver.
If an Authorized Participant, or a redeeming investor acting through an Authorized Participant, is subject to a legal restriction with respect to a particular security included in the basket of Redemption Securities, such investor may be paid an equivalent amount of cash in lieu of the security. In addition, the ETF  Fund reserves the right to redeem Creation Units partially for cash to the extent that the Fund could not lawfully deliver one or more Redemption Securities or could not do so without first registering such securities under federal or state law.
Suspension of Redemption Rights. The right of redemption may be suspended or the date of payment postponed with respect to the ETF  Fund (1) for any period during which the NYSE or listing exchange is closed (other than customary weekend and holiday closings), (2) for any period during which trading on the NYSE or listing exchange is suspended or restricted, (3) for any period during which an emergency exists as a result of which disposal of the Fund’s portfolio securities or determination of its NAV is not reasonably practicable, or (4) in such other circumstances as the SEC permits.
Precautionary Notes
A precautionary note to ETF investors: The DTC or its nominee will be the registered owner of all outstanding ETF Shares. Your ownership of ETF Shares will be shown on the records of the DTC and the DTC Participant broker through which you hold the shares. Vanguard will not have any record of your ownership. Your account information will be maintained by your broker, which will provide you with account statements, confirmations of your purchases and sales of ETF Shares, and tax information. Your broker also will be responsible for distributing income and capital gains distributions and for ensuring that you receive shareholder reports and other communications from the fund whose ETF Shares you own. You will receive other services (e.g., dividend reinvestment and average cost information) only if your broker offers these services.
You should also be aware that investments in ETF Shares may be subject to certain risks relating to having large shareholders. To the extent that a large number of the Fund's ETF Shares are held by a large shareholder (e.g., an institutional investor, an investment advisor or an affiliate of an investment advisor, an authorized participant, a lead market maker, or another entity), a large redemption by such a shareholder could result in an increase in the ETF's expense ratio, cause the ETF to incur higher transaction costs, cause the ETF to fail to comply with applicable listing standards of the listing exchange upon which it is listed, lead to the realization of taxable capital gains, or cause the remaining shareholders to receive distributions representing a disproportionate share of the ETF's ordinary income and long-term capital gains. In addition, transactions by large shareholders may account for a large percentage of the trading volume on an exchange and may, therefore, have a material upward or downward effect on the market price of the ETF Shares.
A precautionary note to purchasers of Creation Units: You should be aware of certain legal risks unique to investors purchasing Creation Units directly from the issuing fund.
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Because new ETF Shares may be issued on an ongoing basis, a “distribution” of ETF Shares could be occurring at any time. Certain activities that you perform as a dealer could, depending on the circumstances, result in your being deemed a participant in the distribution in a manner that could render you a statutory underwriter and subject you to the prospectus delivery and liability provisions of the Securities Act of 1933 (the 1933 Act). For example, you could be deemed a statutory underwriter if you purchase Creation Units from the issuing fund, break them down into the constituent ETF Shares, and sell those shares directly to customers or if you choose to couple the creation of a supply of new ETF Shares with an active selling effort involving solicitation of secondary market demand for ETF Shares. Whether a person is an underwriter depends upon all of the facts and circumstances pertaining to that person’s activities, and the examples mentioned here should not be considered a complete description of all the activities that could cause you to be deemed an underwriter.
Dealers who are not “underwriters” but are participating in a distribution (as opposed to engaging in ordinary secondary-market transactions), and thus dealing with ETF Shares as part of an “unsold allotment” within the meaning of Section 4(3)(C) of the 1933 Act, will be unable to take advantage of the prospectus delivery exemption provided by Section 4(3) of the 1933 Act.
A precautionary note to shareholders redeeming Creation Units: An Authorized Participant that is not a “qualified institutional buyer” as defined in Rule 144A under the 1933 Act will not be able to receive, as part of the redemption basket, restricted securities eligible for resale under Rule 144A.
A precautionary note to investment companies: Vanguard ETF Shares are issued by registered investment companies, and therefore the acquisition of such shares by other investment companies is subject to the restrictions of Section 12(d)(1) of the Investment Company Act of 1940. Vanguard has obtained an SEC exemptive order that allows registered investment companies to invest in the issuing funds beyond the limits of Section 12(d)(1), subject to certain terms and conditions, including the requirement to enter into a participation agreement with Vanguard.
Financial Statements
Each Fund’s Financial Statements for the fiscal year ended September 30, 2020, appearing in the Funds‘ 2020 Annual Reports to Shareholders, and the reports thereon of PricewaterhouseCoopers LLP, an independent registered public accounting firm, also appearing therein, are incorporated by reference into this Statement of Additional Information. For a more complete discussion of each Fund’s performance, please see the Funds‘ Annual and Semiannual Reports to Shareholders, which may be obtained without charge.
Description of Bond Ratings
Moody’s Rating Symbols
The following describe characteristics of the global long-term (original maturity of 1 year or more) bond ratings provided by Moody’s Investors Service, Inc. (Moody’s):
Aaa—Judged to be obligations of the highest quality, they are subject to the lowest level of credit risk.
Aa—Judged to be obligations of high quality, they are subject to very low credit risk. Together with the Aaa group, they make up what are generally known as high-grade bonds.
A—Judged to be upper-medium-grade obligations, they are subject to low credit risk.
Baa—Judged to be medium-grade obligations, subject to moderate credit risk, they may possess certain speculative characteristics.
Ba—Judged to be speculative obligations, they are subject to substantial credit risk.
B—Considered to be speculative obligations, they are subject to high credit risk.
Caa—Judged to be speculative obligations of poor standing, they are subject to very high credit risk.
Ca—Viewed as highly speculative obligations, they are likely in, or very near, default, with some prospect of recovery of principal and interest.
C—Viewed as the lowest rated obligations, they are typically in default, with little prospect for recovery of principal and interest.
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Moody’s also supplies numerical indicators (1, 2, and 3) to rating categories. The modifier 1 indicates that the security is in the higher end of its rating category, the modifier 2 indicates a mid-range ranking, and the modifier 3 indicates a ranking toward the lower end of the category.
The following describe characteristics of the global short-term (original maturity of 13 months or less) bond ratings provided by Moody’s. This ratings scale also applies to U.S. municipal tax-exempt commercial paper.
Prime-1 (P-1)—Judged to have a superior ability to repay short-term debt obligations.
Prime-2 (P-2)—Judged to have a strong ability to repay short-term debt obligations.
Prime-3 (P-3)—Judged to have an acceptable ability to repay short-term debt obligations.
Not Prime (NP)—Cannot be judged to be in any of the prime rating categories.
The following describe characteristics of the U.S. municipal short-term bond ratings provided by Moody’s:
Moody’s ratings for state and municipal notes and other short-term (up to 3 years) obligations are designated Municipal Investment Grade (MIG).
MIG 1—Indicates superior quality, enjoying the excellent protection of established cash flows, liquidity support, and broad-based access to the market for refinancing.
MIG 2—Indicates strong credit quality with ample margins of protection, although not as large as in the preceding group.
MIG 3—Indicates acceptable credit quality, with narrow liquidity and cash-flow protection and less well-established market access for refinancing.
SG—Indicates speculative credit quality with questionable margins of protection.
Standard and Poor’s Rating Symbols
The following describe characteristics of the long-term (original maturity of 1 year or more) bond ratings provided by Standard and Poor’s:
AAA—These are the highest rated obligations. The capacity to pay interest and repay principal is extremely strong.
AA—These also qualify as high-grade obligations. They have a very strong capacity to pay interest and repay principal, and they differ from AAA issues only in small degree.
A—These are regarded as upper-medium-grade obligations. They have a strong capacity to pay interest and repay principal although they are somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher-rated categories.
BBB—These are regarded as having an adequate capacity to pay interest and repay principal. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity in this regard. This group is the lowest that qualifies for commercial bank investment.
BB, B, CCC, CC, and C—These obligations range from speculative to significantly speculative with respect to the capacity to pay interest and repay principal. BB indicates the lowest degree of speculation and C the highest.
D—These obligations are in default, and payment of principal and/or interest is likely in arrears.
The ratings from AA to CCC may be modified by the addition of a plus (+) or minus (–) sign to show relative standing within the major rating categories.
The following describe characteristics of short-term (original maturity of 365 days or less) bond and commercial paper ratings designations provided by Standard and Poor’s:
A-1—These are the highest rated obligations. The capacity of the obligor to pay interest and repay principal is strong. The addition of a plus sign (+) would indicate a very strong capacity.
A-2—These obligations are somewhat susceptible to changing economic conditions. The obligor has a satisfactory capacity to pay interest and repay principal.
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A-3—These obligations are more susceptible to the adverse effects of changing economic conditions, which could lead to a weakened capacity to pay interest and repay principal.
B—These obligations are vulnerable to nonpayment and are significantly speculative, but the obligor currently has the capacity to meet its financial commitments.
C—These obligations are vulnerable to nonpayment, but the obligor must rely on favorable economic conditions to meet its financial commitment.
D—These obligations are in default, and payment of principal and/or interest is likely in arrears.
The following describe characteristics of U.S. municipal short-term (original maturity of 3 years or less) note ratings provided by Standard and Poor’s:
SP-1—This designation indicates a strong capacity to pay principal and interest.
SP-2—This designation indicates a satisfactory capacity to pay principal and interest.
SP-3—This designation indicates a speculative capacity to pay principal and interest.
Appendix A
Vanguard-Advised Funds Proxy Voting Policy
Each Vanguard fund advised by Vanguard retains authority to vote proxies received with respect to the shares of equity securities held in a portfolio advised by Vanguard. The Board of Trustees (the Board) for the Vanguard-advised funds has adopted proxy voting procedures and guidelines to govern proxy voting for each portfolio retaining proxy voting authority.
The Investment Stewardship Oversight Committee (the Committee), made up primarily of fund officers and subject to the procedures described below, oversees the Vanguard-advised funds' proxy voting. The Committee reports directly to the Board. Vanguard is subject to these procedures and the proxy voting guidelines to the extent that they call for Vanguard to administer the voting process and implement the resulting voting decisions, and for these purposes the guidelines have also been approved by the Board of Directors of Vanguard.
The voting principles and guidelines adopted by the Board provide a framework for assessing each proposal and seek to ensure that each vote is cast in the best interests of each fund. Under the guidelines, each proposal is evaluated on its merits, based on the particular facts and circumstances as presented. For more information on the funds' proxy voting guidelines, please visit about.vanguard.com/investment-stewardship.
I. Investment Stewardship Team
The Investment Stewardship Team administers the day-to-day operation of the funds' proxy voting process, overseen by the Committee. The Investment Stewardship Team performs the following functions: (1) managing and conducting due diligence of proxy voting vendors; (2) reconciling share positions; (3) analyzing proxy proposals using factors described in the guidelines; (4) determining and addressing potential or actual conflicts of interest that may be presented by a particular proxy; and (5) voting proxies. The Investment Stewardship Team also prepares periodic and special reports to the Board, and proposes amendments to the procedures and guidelines. In addition, at any time, the Board may elect to exercise its discretionary authority to vote proxies.
II. Investment Stewardship Oversight Committee
The Board, including a majority of the independent trustees, appoints the members of the Committee (which is comprised primarily of fund officers). The Committee works with the Investment Stewardship Team to provide reports and other guidance to the Board regarding proxy voting by the funds. The Committee has an obligation to exercise its decision-making authority in accordance with the Board’s instructions as set forth in the funds’ proxy voting procedures and guidelines and subject to the fiduciary standards of good faith, fairness, and Vanguard's Code of Ethics. The Committee may advise the Investment Stewardship Team on how to best apply the Board’s instructions as set forth in the guidelines or refer the matter to the Board, which has ultimate decision-making authority for the funds. The Board reviews the procedures and guidelines annually and modifies them from time to time upon the recommendation of the Committee and in consultation with the Investment Stewardship Team.
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III. Proxy Voting Principles
Vanguard's investment stewardship activities are grounded in four principles of good governance:
1) Board composition: We believe good governance begins with a great board of directors. Our primary interest is to ensure that the individuals who represent the interests of all shareholders are independent, committed, capable, and appropriately experienced.
2) Oversight of strategy and risk: We believe that boards are responsible for effective oversight of a company's long-term strategy and any relevant and material risks.
3) Executive compensation: We believe that performance-linked compensation (or remuneration) policies and practices are fundamental drivers of sustainable, long-term value.
4) Governance structures: We believe that companies should have in place governance structures to ensure that boards and management serve in the best interests of the shareholders they represent.
IV. Evaluation of Proxies
For ease of reference, the procedures and guidelines often refer to all funds. However, the processes and practices seek to ensure that proxy voting decisions are suitable for individual funds. For most proxy proposals, particularly those involving corporate governance, the evaluation could result in the funds having a common interest in the matter and, accordingly, each fund casting votes in the same manner. In other cases, however, a fund may vote differently from other funds if doing so is in the best interest of the individual fund.
The guidelines do not permit the Board to delegate voting discretion to a third party that does not serve as a fiduciary for the funds. Because many factors bear on each decision, the guidelines incorporate factors that should be considered in each voting decision. A fund may refrain from voting some or all of its shares or vote in a particular way if doing so would be in the fund's and its shareholders' best interests. These circumstances may arise, for example, if the expected cost of voting exceeds the expected benefits of voting, if exercising the vote would result in the imposition of trading or other restrictions, or if a fund (or all Vanguard funds in the aggregate) were to own more than the permissible maximum percentage of a company's stock (as determined by the company's governing documents or by applicable law, regulation, or regulatory agreement).
In evaluating proxy proposals, we consider information from many sources, which could include, but is not limited to, an investment advisor unaffiliated with Vanguard that has investment and proxy voting authority with respect to Vanguard funds that hold shares in the applicable company, the management or shareholders of a company presenting a proposal, and independent proxy research services. We will give substantial weight to the recommendations of the company's board, absent guidelines or other specific facts that would support a vote against management. Additionally, data and recommendations from proxy advisors serve as one of many inputs into our research process. The funds may utilize automated voting for matters that are clearly addressed by the fund's procedures and guidelines.
While serving as a framework, the guidelines cannot contemplate all possible proposals with which a fund may be presented. In the absence of a specific guideline for a particular proposal (e.g., in the case of a transactional issue or contested proxy), the Investment Stewardship Team, under the supervision of the Committee, will evaluate the matter and cast the fund's vote in a manner that is in the fund's best interest, subject to the individual circumstances of the fund.
V. Conflicts of Interest
Vanguard takes seriously its commitment to avoid potential conflicts of interest. Vanguard funds invest in thousands of publicly listed companies worldwide. Those companies may include clients, potential clients, vendors, or competitors. Some companies may employ Vanguard trustees, former Vanguard executives, or family members of Vanguard personnel who have direct involvement in Vanguard's Investment Stewardship program.
Vanguard's approach to mitigating conflicts of interest begins with the funds' proxy voting procedures. The procedures require that voting personnel act as fiduciaries, and must conduct their activities at all times in accordance with the following standards: (i) fund shareholders' interests come first; (ii) conflicts of interest must be avoided; (iii) and compromising situations must be avoided.
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We maintain an important separation between Vanguard's Investment Stewardship Team and other groups within Vanguard that are responsible for sales, marketing, client service, and vendor/partner relationships. Proxy voting personnel are required to disclose potential conflicts of interest, and must recuse themselves from all voting decisions and engagement activities in such instances. In certain circumstances, Vanguard may refrain from voting shares of a company, or may engage an independent third-party fiduciary to vote proxies.
Each externally managed fund has adopted the proxy voting guidelines of its advisor(s) and votes in accordance with the external advisors' guidelines and procedures. Each advisor has its own procedures for managing conflicts of interest in the best interests of fund shareholders.
VI. Environmental and Social Proposals
Proposals in this category, initiated primarily by shareholders, typically request that a company enhance its disclosure or amend certain business practices. These resolutions are evaluated in the context of the general corporate governance principle that a company's board has ultimate responsibility for providing effective ongoing oversight of relevant sector- and company-specific risks, including those related to environmental and social matters. Each proposal is evaluated on its merits and supported when there is a logically demonstrable linkage between the specific proposal and long-term shareholder value of the company. Some of the factors considered when evaluating these proposals include the materiality of the issue, the quality of the current disclosures/business practices, and any progress by the company toward the adoption of best practices and/or industry norms.
VII. Voting in Markets Outside the United States
Corporate governance standards, disclosure requirements, and voting mechanics vary greatly among the markets outside the United States in which the funds may invest. Each fund’s votes will be used, where applicable, to support improvements in governance and disclosure by each fund’s portfolio companies. Matters presented by non-U.S. portfolio companies will be evaluated in the foregoing context, as well as in accordance with local market standards and best practices. Votes are cast for each fund in a manner philosophically consistent with the guidelines, taking into account differing practices by market.
In many other markets, voting proxies will result in a fund being prohibited from selling the shares for a period of time due to requirements known as “share-blocking” or reregistration. Generally, the value of voting is unlikely to outweigh the loss of liquidity imposed by these requirements on the funds. In such instances, the funds will generally abstain from voting.
The costs of voting (e.g., custodian fees, vote agency fees) in other markets may be substantially higher than for U.S. holdings. As such, the fund may limit its voting on foreign holdings in instances in which the issues presented are unlikely to have a material impact on shareholder value.
VIII. Voting Shares of a Company Subject to an Ownership Limitation
Certain companies have provisions in their governing documents or other agreements that restrict stock ownership in excess of a specified limit. Typically, these ownership restrictions are included in the governing documents of real estate investment trusts, but may be included in other companies' governing documents. A company's governing documents normally allow the company to grant a waiver of these ownership limits, which would allow a fund to exceed the stated ownership limit. Sometimes a company will grant a waiver without restriction. From time to time, a company may grant a waiver only if a fund (or funds) agrees to not vote the company's shares in excess of the normal specified limit. In such a circumstance, a fund may refrain from voting shares if owning the shares beyond the company's specified limit is in the best interests of the fund and its shareholders.
In addition, applicable law may require prior regulatory approval to permit ownership of certain regulated issuers’ voting securities above certain limits or may impose other restrictions on owners of more than a certain percentage of a regulated issuer's voting shares. The Board has authorized the funds to vote shares above these limits in the same proportion as votes cast by the issuer's entire shareholder base (i.e., mirror vote), or to refrain from voting excess shares. Further, the Board has adopted policies that will result in certain funds mirror voting a higher proportion of the shares they own in a regulated issuer in order to permit certain other funds (generally advised by managers not affiliated with Vanguard) to mirror vote none, or a lower proportion, of their shares in such regulated issuer.
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IX. Voting on a Fund's Holdings of Other Vanguard Funds
Certain Vanguard funds (owner funds) may, from time to time, own shares of other Vanguard funds (underlying funds). If an underlying fund submits a matter to a vote of its shareholders, votes for and against such matters on behalf of the owner funds will be cast in the same proportion as the votes of the other shareholders in the underlying fund.
X. Securities Lending
There may be occasions when Vanguard needs to restrict lending of and/or recall securities that are out on loan in order to vote in a shareholder meeting. Vanguard has processes to monitor securities on loan and to evaluate any circumstances that may require us to restrict and/or recall the stock. In making this decision, we consider:
■ The subject of the vote and whether, based on our knowledge and experience, we believe the topic is potentially material to the corporate governance and/or long-term performance of the company;
■ The Vanguard funds' individual and/or aggregate equity investment in a company, and whether we estimate that voting Vanguard funds' shares would affect the shareholder meeting outcome; and
■ The long-term impact to our fund shareholders, evaluating whether we believe the benefits of voting a company's shares would outweigh the benefits of stock lending revenues in a particular instance.
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SAI 078 012021
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PART C
VANGUARD MALVERN FUNDS
OTHER INFORMATION
Item 28. Exhibits  
(a)
(b)
(c)
Instruments Defining Rights of Security Holders, reference is made to Articles III and V of the Registrant’s
Amended and Restated Agreement and Declaration of Trust, refer to Exhibit (a) above.
(d)
Investment Advisory Contracts, for the Vanguard Group, Inc., provides investment advisory services to the Funds
pursuant to the Fifth Amended and Restated Funds’ Service Agreement, refer to Exhibit (h) below.
(e)
Underwriting Contracts, not applicable.
(f)
Bonus or Profit Sharing Contracts, reference is made to the section entitled “Management of the Funds” in Part B
of this Registration Statement.
(g)
Custodian Agreements, for State Street Bank and Trust Company, filed with Post-Effective Amendment No. 84,
dated January 31, 2020, is hereby incorporated by reference. For JPMorgan Chase Bank, is filed herewith.
(h)
(i)
Legal Opinion, not applicable.
(j)
(k)
Omitted Financial Statements, not applicable.
(l)
Initial Capital Agreements, not applicable.
(m)
Rule 12b-1 Plan, not applicable.
(n)
Rule 18f-3 Plan, is filed herewith.
(o)
Reserved.
(p)
Item 29. Persons Controlled by or under Common Control with Registrant
None.
Item 30. Indemnification
The Registrant’s organizational documents contain provisions indemnifying Trustees and officers against liability incurred in their official capacities. Article VII, Section 2 of the Amended and Restated Agreement and Declaration of Trust provides that the Registrant may indemnify and hold harmless each and every Trustee and officer from and against any and all claims, demands, costs, losses, expenses, and damages whatsoever arising out of or related to the performance of his or her duties as a Trustee or officer. Article VI of the By-Laws generally provides that the Registrant shall indemnify its Trustees and officers from any liability arising out of their past or present service in that capacity. Among other things, this provision excludes any liability arising by reason of willful misfeasance, bad faith, gross negligence, or the reckless disregard of the duties involved in the conduct of the Trustee’s or officer’s office with the Registrant.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the Securities Act) may be permitted for directors, officers, or persons controlling the Registrant pursuant to the foregoing provisions, the Registrant has been informed that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
C-1
Item 31. Business and Other Connections of Investment Adviser
PRIMECAP Management Company (PRIMECAP) is an investment adviser registered under the Investment Advisers Act of 1940, as amended (the Advisers Act). The list required by this Item 31 of officers and directors of PRIMECAP, together with any information as to any business, profession, vocation, or employment of a substantial nature engaged in by such officers and directors during the past two years, is incorporated herein by reference from Form ADV filed by PRIMECAP pursuant to the Advisers Act (SEC File No. 801-19765).
Wellington Management Company LLP (Wellington Management) is an investment adviser registered under the Advisers Act. The list required by this Item 31 of officers and partners of Wellington Management, together with any information as to any business, profession, vocation, or employment of substantial nature engaged in by such officers and partners during the past two years, is incorporated herein by reference from Form ADV filed by Wellington Management pursuant to the Advisers Act (SEC File No. 801-15908).
The Vanguard Group, Inc. (Vanguard), is an investment adviser registered under the Investment Advisers Act of 1940, as amended (the Advisers Act). The list required by this Item 31 of officers and directors of Vanguard, together with any information as to any business, profession, vocation, or employment of a substantial nature engaged in by such officers and directors during the past two years, is incorporated herein by reference from Form ADV filed by Vanguard pursuant to the Advisers Act (SEC File No. 801- 11953).
Item 32. Principal Underwriters  
(a)
Vanguard Marketing Corporation, a wholly owned subsidiary of The Vanguard Group, Inc., is the principal underwriter
of each fund within the Vanguard group of investment companies, a family of over 200 funds.
(b)
The principal business address of each named director and officer of Vanguard Marketing Corporation is 100
Vanguard Boulevard, Malvern, PA 19355.
 
Name
Positions and Office with Underwriter
Positions and Office with Funds
Matthew Benchener
Chairman, Director, Principal, and Chief
Executive Officer Designee
None
Karin A. Risi
Director and Principal
None
Scott A. Conking
Director and Principal
None
Thomas M. Rampulla
Director and Principal
None
Michael Rollings
Director and Principal
Finance Director
Caroline Cosby
Director, Principal, General Counsel, and
Assistant Secretary
None
Matthew C. Brancato
Director and Principal
None
Mortimer J. Buckley
President
Chairman of the Board of Trustees, Chief
Executive Officer, and President
John E. Schadl
Assistant Vice President
Chief Compliance Officer
Beth Morales Singh
Secretary
None
Erica Green
Chief Compliance Officer
None
John T. Marcante
Chief Information Officer
None
Alonzo Ellis
Chief Information Security Officer
None
Salvatore L. Pantalone
Financial and Operations Principal and
Treasurer
None
Celeste Hagerty
Financial and Operations Principal
None
Danielle Corey
Annuity and Insurance Officer
None
Jeff Seglem
Annuity and Insurance Officer
None
John Bendl
Principal
Chief Financial Officer
Barbara Bock
Principal
None
C-2
Name
Positions and Office with Underwriter
Positions and Office with Funds
Saundra K. Cusumano
Principal
None
James M. Delaplane Jr.
Principal
None
Andrew Kadjeski
Principal
None
Michael V. Lucci
Principal
None
Brian P. McCarthy
Principal
None
Matthew P. McCarthy
Principal
None
Douglas R. Mento
Principal
None
Jim O’Rourke
Principal
None
David Petty
Principal
None
Monica Verma
Principal
None
 
(c)
Not applicable.
Item 33. Location of Accounts and Records
The books, accounts, and other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940, as amended, and the rules promulgated thereunder will be maintained at the offices of the Registrant, 100 Vanguard Boulevard, Malvern, PA 19355; the Registrant's Transfer Agent, The Vanguard Group, Inc., 100 Vanguard Boulevard, Malvern, PA 19355; the Registrant's Custodians, JP Morgan Chase Bank, 383 Madison Avenue, New York, NY 10179, and State Street Bank and Trust Company, One Lincoln Street, Boston, MA 02111 and the Registrant's investment advisors at their respective locations identified in this Registration Statement.
Item 34. Management Services
Other than as set forth in the section entitled “Management of the Funds” in Part B of this Registration Statement, the Registrant is not a party to any management-related service contract.
Item 35. Undertakings
Not applicable.
C-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant hereby certifies that it meets all requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Town of Valley Forge and the Commonwealth of Pennsylvania, on the 28th day of January, 2021.
VANGUARD MALVERN FUNDS
BY:
/s/ Mortimer J. Buckley*
Mortimer J. Buckley
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment to the Registration Statement has been signed below by the following persons in the capacities and on the date indicated:  
Signature
Title
Date
/s/ Mortimer J. Buckley*

Mortimer J. Buckley
Chairman and Chief Executive Officer
January 28, 2021
/s/ Emerson U. Fullwood*

Emerson U. Fullwood
Trustee
January 28, 2021
/s/ Amy Gutmann*

Amy Gutmann
Trustee
January 28, 2021
/s/ Joseph Loughrey*

Joseph Loughrey
Trustee
January 28, 2021
/s/ Mark Loughridge*

Mark Loughridge
Trustee
January 28, 2021
/s/ Scott C. Malpass*

Scott C. Malpass
Trustee
January 28, 2021
/s/ Deanna Mulligan*

Deanna Mulligan
Trustee
January 28, 2021
/s/ André F. Perold*

André F. Perold
Trustee
January 28, 2021
/s/ Sarah Bloom Raskin*

Sarah Bloom Raskin
Trustee
January 28, 2021
/s/ Peter F. Volanakis*

Peter F. Volanakis
Trustee
January 28, 2021
/s/ John Bendl*

John Bendl
Chief Financial Officer
January 28, 2021
*By: /s/ Anne E. Robinson
Anne E. Robinson, pursuant to a Power of Attorney filed on December 18, 2020 (see File Number 33-64845), Incorporated by Reference.

AMENDMENT NO. 7

TO AMENDED AND RESTATED

AGREEMENT AND DECLARATION OF TRUST

OF

VANGUARD MALVERN FUNDS

This Amendment No. 7 (the "Amendment") to the Amended and Restated Agreement and Declaration of Trust of Vanguard Malvern Funds (the "Trust") amends, the Amended and Restated Agreement and Declaration of Trust of the Trust dated as of November 19, 2008, as amended (the "Agreement").

By resolutions adopted at a meeting of the Trust's Board of Trustees (the "Board") on March 19, 2020, the Board approved this Amendment. Under Article VIII, Section 4 of the Agreement, this Amendment may be executed by a duly authorized officer of the Trust.

WHEREAS, the Trust desires to amend the Agreement to reflect the removal of the Investor share class to, Vanguard Capital Value Fund, a series of the Trust;

NOW, THEREFORE, the Agreement is hereby amended as follows:

1.Schedule A of the Agreement is hereby amended and restated to read in its entirety as set forth on Exhibit 1 to this Amendment.

2.All references in the Agreement to the "Amended Declaration of Trust" or "Declaration of Trust" shall mean the Agreement as amended by this Amendment.

3.Except as specifically amended by this Amendment, the Agreement is hereby confirmed and remains in full force and effect.

IN WITNESS WHEREOF, the undersigned, a duly authorized officer of the Trust, has executed this Amendment as of July , 2020.

VANGUARD MALVERN FUNDS

/S/ Laura Merianos _____________

(Original signature on Declaration of Trust)

Laura Merianos

Assistant Secretary

EXHIBIT 1

TO AMENDED AND RESTATED

AGREEMENT AND DECLARATION OF TRUST

OF

VANGUARD MALVERN FUNDS

SCHEDULE A

VANGUARD MALVERN FUNDS

SERIES AND CLASSES OF THE TRUST

SERIES

CLASSES

Vanguard Core Bond Fund

Investor, Admiral

Vanguard Emerging Markets Bond Fund

Investor, Admiral

Vanguard Institutional Intermediate-Term Bond Fund

Institutional Plus Shares

Vanguard Institutional Short-Term Bond Fund

Institutional Plus Shares

Vanguard Short-Term Inflation-Protected

Admiral, Institutional, ETF

Securities Index Fund

 

Vanguard U.S. Value Fund

Investor

AMENDMENT NO. 6

TO AMENDED AND RESTATED

AGREEMENT AND DECLARATION OF TRUST

OF

VANGUARD MALVERN FUNDS

This Amendment No. 6 (the "Amendment") to the Amended and Restated Agreement and Declaration of Trust of Vanguard Malvern Funds (the "Trust") amends, effective January 23, 2020, the Amended and Restated Agreement and Declaration of Trust of the Trust dated as of November 19, 2008, as amended (the "Agreement").

By resolutions adopted at a meeting of the Trust's Board of Trustees (the "Board") on October 29, 2018, the Board approved this Amendment. Under Article VIII, Section 4 of the Agreement, this Amendment may be executed by a duly authorized officer of the Trust.

WHEREAS, the Trust desires to amend the Agreement to reflect the removal of the Investor share class to, Vanguard Short-Term Inflation-Protected Securities Index Fund, a series of the Trust;

NOW, THEREFORE, the Agreement is hereby amended as follows:

4.Schedule A of the Agreement is hereby amended and restated to read in its entirety as set forth on Exhibit 1 to this Amendment.

5.All references in the Agreement to the "Amended Declaration of Trust" or "Declaration of Trust" shall mean the Agreement as amended by this Amendment.

6.Except as specifically amended by this Amendment, the Agreement is hereby confirmed and remains in full force and effect.

IN WITNESS WHEREOF, the undersigned, a duly authorized officer of the Trust, has executed this Amendment as of January 23, 2020.

VANGUARD MALVERN FUNDS

/S/ Laura Merianos _____________

(Original signature on Declaration of Trust)

Laura Merianos

Assistant Secretary

EXHIBIT 1

TO AMENDED AND RESTATED

AGREEMENT AND DECLARATION OF TRUST

OF

VANGUARD MALVERN FUNDS

SCHEDULE A

VANGUARD MALVERN FUNDS

SERIES AND CLASSES OF THE TRUST

SERIES

CLASSES

Vanguard Capital Value Fund

Investor

Vanguard Core Bond Fund

Investor, Admiral

Vanguard Emerging Markets Bond Fund

Investor, Admiral

Vanguard Institutional Intermediate-Term Bond Fund

Institutional Plus Shares

Vanguard Institutional Short-Term Bond Fund

Institutional Plus Shares

Vanguard Short-Term Inflation-Protected

Admiral, Institutional, ETF

Securities Index Fund

 

Vanguard U.S. Value Fund

Investor

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AMENDMENT NO. 5

TO AMENDED AND RESTATED

AGREEMENT AND DECLARATION OF TRUST

OF

VANGUARD MALVERN FUNDS

This Amendment No. 5 (the "Amendment") to the Amended and Restated Agreement and Declaration of Trust of Vanguard Malvern Funds (the "Trust") amends the Amended and Restated Agreement and Declaration of Trust of the Trust dated as of November 19, 2008, as amended (the "Agreement").

By resolutions adopted at a meeting of the Trust's Board of Trustees (the "Board") on November 19 & 20, 2015, the Board approved this Amendment. Under Article VIII, Section 4 of the Agreement, this Amendment may be executed by a duly authorized officer of the Trust.

WHEREAS, the Trust desires to amend the Agreement to reflect the addition of the following series: Vanguard Core Bond Fund and Vanguard Emerging Markets Bond Fund;

NOW, THEREFORE, the Agreement is hereby amended as follows:

7.Schedule A of the Agreement is hereby amended and restated to read in its entirety as set forth on Exhibit 1 to this Amendment.

8.All references in the Agreement to the "Amended Declaration of Trust" or "Declaration of Trust" shall mean the Agreement as amended by this Amendment.

9.Except as specifically amended by this Amendment, the Agreement is hereby confirmed and remains in full force and effect.

IN WITNESS WHEREOF, the undersigned, a duly authorized officer of the Trust, has executed this Amendment as of December 3, 2015.

VANGUARD MALVERN FUNDS

/S/ Heidi Stam___________

(Original signature on Declaration of Trust)

Heidi Stam

Secretary

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EXHIBIT 1

TO AMENDED AND RESTATED

AGREEMENT AND DECLARATION OF TRUST

OF

VANGUARD MALVERN FUNDS

SCHEDULE A

VANGUARD MALVERN FUNDS

SERIES AND CLASSES OF THE TRUST

SERIES

CLASSES

Vanguard Capital Value Fund

Investor

Vanguard Core Bond Fund

Investor, Admiral

Vanguard Emerging Markets Bond Fund

Investor, Admiral

Vanguard Institutional Intermediate-Term Bond Fund

Institutional Plus Shares

Vanguard Institutional Short-Term Bond Fund

Institutional Plus Shares

Vanguard Short-Term Inflation-Protected

Investor, Admiral, Institutional, ETF

Securities Index Fund

 

Vanguard U.S. Value Fund

Investor

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AMENDMENT NO. 4

TO AMENDED AND RESTATED

AGREEMENT AND DECLARATION OF TRUST

OF

VANGUARD MALVERN FUNDS

This Amendment No. 4 (the "Amendment") to the Amended and Restated Agreement and Declaration of Trust of Vanguard Malvern Funds (the "Trust") amends, effective June 16, 2015 the Amended and Restated Agreement and Declaration of Trust of the Trust dated as of November 19, 2008, as amended (the "Agreement").

By resolutions adopted at a meeting of the Trust's Board of Trustees (the "Board") on February 19 & 20, 2015, the Board approved this Amendment. Under Article VIII, Section 4 of the Agreement, this Amendment may be executed by a duly authorized officer of the Trust.

WHEREAS, the Trust desires to amend the Agreement to reflect the addition of the following series: Vanguard Institutional Intermediate-Term Bond Fund and Vanguard Institutional Short-Term Bond Fund;

NOW, THEREFORE, the Agreement is hereby amended as follows:

10.Schedule A of the Agreement is hereby amended and restated to read in its entirety as set forth on Exhibit 1 to this Amendment.

11.All references in the Agreement to the "Amended Declaration of Trust" or "Declaration of Trust" shall mean the Agreement as amended by this Amendment.

12.Except as specifically amended by this Amendment, the Agreement is hereby confirmed and remains in full force and effect.

IN WITNESS WHEREOF, the undersigned, a duly authorized officer of the Trust, has executed this Amendment as of May ___, 2015.

VANGUARD MALVERN FUNDS

/S/ James M. Delaplane, Jr.__________

(Original signature on Declaration of Trust)

James M. Delaplane, Jr.

Assistant Secretary

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EXHIBIT 1

TO AMENDED AND RESTATED

AGREEMENT AND DECLARATION OF TRUST

OF

VANGUARD MALVERN FUNDS

SCHEDULE A

VANGUARD MALVERN FUNDS

SERIES AND CLASSES OF THE TRUST

SERIES

CLASSES

Vanguard Capital Value Fund

Investor

Vanguard Institutional Intermediate-Term Bond Fund

Institutional Plus Shares

Vanguard Institutional Short-Term Bond Fund

Institutional Plus Shares

Vanguard Short-Term Inflation-Protected

Investor, Admiral, Institutional, ETF

Securities Index Fund

 

Vanguard TIPS Transition Fund

Investor, Institutional

Vanguard U.S. Value Fund

Investor

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AMENDMENT NO. 3

TO AMENDED AND RESTATED

AGREEMENT AND DECLARATION OF TRUST

OF

VANGUARD MALVERN FUNDS

This Amendment No. 3 (the "Amendment") to the Amended and Restated Agreement and Declaration of Trust of Vanguard Malvern Funds (the "Trust") amends, effective April 30, 2013 the Amended and Restated Agreement and Declaration of Trust of the Trust dated as of November 19, 2008, as amended (the "Agreement").

By resolutions adopted at a meeting of the Trust's Board of Trustees (the "Board") on December 21, 2012, the Board approved this Amendment. Under Article VIII, Section 4 of the Agreement, this Amendment may be executed by a duly authorized officer of the Trust.

WHEREAS, the Trust desires to amend the Agreement to reflect the addition of the following series: Vanguard TIPS Transition Fund;

NOW, THEREFORE, the Agreement is hereby amended as follows:

13.Schedule A of the Agreement is hereby amended and restated to read in its entirety as set forth on Exhibit 1 to this Amendment.

14.All references in the Agreement to the "Amended Declaration of Trust" or "Declaration of Trust" shall mean the Agreement as amended by this Amendment.

15.Except as specifically amended by this Amendment, the Agreement is hereby confirmed and remains in full force and effect.

IN WITNESS WHEREOF, the undersigned, a duly authorized officer of the Trust, has executed this Amendment as of April ___, 2013.

VANGUARD MALVERN FUNDS

By:

Name: Natalie Bej

Title: Assistant Secretary

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EXHIBIT 1

TO AMENDED AND RESTATED

AGREEMENT AND DECLARATION OF TRUST

OF

VANGUARD MALVERN FUNDS

SCHEDULE A

VANGUARD MALVERN FUNDS

SERIES AND CLASSES OF THE TRUST

SERIES

CLASSES

Vanguard Capital Value Fund

Investor

Vanguard Short-Term Inflation-Protected

Investor, Admiral, Institutional, ETF

Securities Index Fund

 

Vanguard TIPS Transition Fund

Investor, Institutional

Vanguard U.S. Value Fund

Investor

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AMENDMENT NO. 2

TO AMENDED AND RESTATED

AGREEMENT AND DECLARATION OF TRUST

OF

VANGUARD MALVERN FUNDS

This Amendment No. 2 (the "Amendment") to the Amended and Restated Agreement and Declaration of Trust of Vanguard Malvern Funds (the "Trust") amends, effective July 20, 2012 the Amended and Restated Agreement and Declaration of Trust of the Trust dated as of November 19, 2008, as amended (the "Agreement").

By resolutions adopted at a meeting of the Trust's Board of Trustees (the "Board") on July 20, 2012, the Board approved this Amendment. Under Article VIII, Section 4 of the Agreement, this Amendment may be executed by a duly authorized officer of the Trust.

WHEREAS, the Trust desires to amend the Agreement to reflect the addition of the following series: Vanguard Short-Term Inflation-Protected Securities Index Fund;

NOW, THEREFORE, the Agreement is hereby amended as follows:

16.Schedule A of the Agreement is hereby amended and restated to read in its entirety as set forth on Exhibit 1 to this Amendment.

17.All references in the Agreement to the "Amended Declaration of Trust" or "Declaration of Trust" shall mean the Agreement as amended by this Amendment.

18.Except as specifically amended by this Amendment, the Agreement is hereby confirmed and remains in full force and effect.

IN WITNESS WHEREOF, the undersigned, a duly authorized officer of the Trust, has executed this Amendment as of July 30, 2012.

VANGUARD MALVERN FUNDS

By:

Name: Heidi Stam

Title: Secretary

108656, v0.9 108656

EXHIBIT 1

TO AMENDED AND RESTATED

AGREEMENT AND DECLARATION OF TRUST

OF

VANGUARD MALVERN FUNDS

SCHEDULE A

VANGUARD MALVERN FUNDS

SERIES AND CLASSES OF THE TRUST

SERIES

CLASSES

Vanguard Capital Value Fund

Investor

Vanguard Short-Term Inflation-Protected

Investor, Admiral, Institutional, ETF

Securities Index Fund

 

Vanguard U.S. Value Fund

Investor

108656, v0.9 108656

AMENDMENT NO. 1

TO AMENDED AND RESTATED

AGREEMENT AND DECLARATION OF TRUST

OF

VANGUARD MALVERN FUNDS

This Amendment No. 1 (the "Amendment") to the Amended and Restated Agreement and Declaration of Trust of Vanguard Malvern Funds (the "Trust") amends, effective September 22, 2011 the Amended and Restated Agreement and Declaration of Trust of the Trust dated as of November 19, 2008, as amended (the "Agreement").

By resolutions adopted at a meeting of the Trust's Board of Trustees (the "Board") on September 22, 2011, the Board approved this Amendment. Under Article VIII, Section 4 of the Agreement, this Amendment may be executed by a duly authorized officer of the Trust.

WHEREAS, the Trust desires to amend the Agreement to reflect the merger of the Vanguard Asset Allocation Fund, a series of the Trust, into the Vanguard Balanced Index Fund, a series of the Vanguard Valley Forge Funds;

NOW, THEREFORE, the Agreement is hereby amended as follows:

19.Schedule A of the Agreement is hereby amended and restated to read in its entirety as set forth on Exhibit 1 to this Amendment.

20.All references in the Agreement to the "Amended Declaration of Trust" or "Declaration of Trust" shall mean the Agreement as amended by this Amendment.

21.Except as specifically amended by this Amendment, the Agreement is hereby confirmed and remains in full force and effect.

IN WITNESS WHEREOF, the undersigned, a duly authorized officer of the Trust, has executed this Amendment as of October 27, 2011.

VANGUARD MALVERN FUNDS

By:

Name: Natalie Bej

Title: Assistant Secretary

108656, v0.9 108656

108656, v0.9 108656

 

EXHIBIT 1

 

TO AMENDED AND RESTATED

AGREEMENT AND DECLARATION OF TRUST

 

OF

 

VANGUARD MALVERN FUNDS

 

"SCHEDULE A

 

VANGUARD MALVERN FUNDS

SERIES AND CLASSES OF THE TRUST

SERIES

CLASSES

Vanguard Capital Value Fund

Investor

Vanguard U.S. Value Fund

Investor"

108656, v0.9

AMENDED AND RESTATED

AGREEMENT AND DECLARATION OF TRUST

OF

VANGUARD MALVERN FUNDS

WHEREAS, this AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST of Vanguard Malvern Funds (the "Trust") is made and entered into as of the date set forth below by the Trustees named hereunder for the purpose of continuing the Trust as a Delaware statutory trust in accordance with the provisions hereinafter set forth;

WHEREAS, the Trust was formed upon the filing of a certificate of trust in the Office of the Secretary of State of the State of Delaware on January 28, 1998 pursuant to a declaration of trust dated January 23, 1998 (the "Original Declaration of Trust");

WHEREAS, the Original Declaration of Trust was amended on April 24, 2000 and further amended on July 19, 2002 (as so amended, the "Amended Declaration of Trust"); and

WHEREAS, the Trustees consider it appropriate to amend and restate the Amended Declaration of Trust in accordance with the terms of the Amended Declaration of Trust and the Delaware Act.

NOW, THEREFORE, the Amended Declaration of Trust is hereby amended and restated as follows and the Trustees do hereby declare that the Trustees will hold IN TRUST all cash, securities and other assets that the Trust now possesses or may hereafter acquire from time to time in any manner and manage and dispose of the same upon the following terms and conditions.

ARTICLE I.

Name and Definitions

Section 1. Name. The name of the Trust is "VANGUARD MALVERN FUNDS" and the Trustees shall conduct the business of the Trust under that name or any other name as they may from time to time determine. If the Trustees determine to change the name of the Trust, they may adopt such other name for the Trust as they deem proper. Any name change shall become effective upon approval by the Trustees of such change and the filing of a certificate of amendment under the Delaware Act. Any such action shall have the status of an amendment to this Declaration of Trust.

Section 2. Definitions. Whenever used herein, unless otherwise required by the context or specifically provided:

108656, v0.9 2

(a)"Amended Declaration of Trust" shall have the meaning set forth in the recitals to this Declaration of Trust;

(b)"By-Laws" shall mean the By-Laws of the Trust as amended from

time to time;

(c)"Commission" shall have the respective meanings given it in Section 2(a)(7) and Section (2)(a)(29) of the 1940 Act;

(d)"Declaration of Trust" shall mean this Amended and Restated

Agreement and Declaration of Trust, as amended or restated from time to time;

(e)"Delaware Act" refers to Delaware Statutory Trust Act, 12 Del. C.

§3801 et. seq. (as amended and in effect from time to time);

(f)"Interested Person" shall have the meaning given it in Section

2(a)(19) of the 1940 Act;

(g)"Investment Adviser" or "Adviser" means a party furnishing services to the Trust pursuant to any contract described in Article IV, Section 6(a) hereof;

(h)"1940 Act" refers to the Investment Company Act of 1940 and the Rules and Regulations thereunder, all as amended from time to time. References herein to specific sections of the 1940 Act shall be deemed to include such Rules and Regulations as are applicable to such sections as determined by the Trustees or their designees;

(i)"Original Declaration of Trust" shall have the meaning set forth in the recitals to this Declaration of Trust;

(j)"Principal Underwriter" shall have the respective meanings given it in Section 2(a)(7) and Section (2)(a)(29) of the 1940 Act;

(k)"Prior Declaration of Trust" refers to the original Declaration of Trust and the Amended Declaration of Trust, each as from time to time in effect prior to the date hereof;

(l)"Person" means and includes individuals, corporations, partnerships, trusts, foundations, plans, associations, joint ventures, estates and other entities, whether or not legal entities, and governments and agencies and political subdivisions thereof, whether domestic or foreign;

(m)"Series" refers to each Series of Shares referenced in, or

established under or in accordance with, the provisions of Article III.

108656, v0.9 3

(n)"Shareholder" means a record owner of outstanding Shares;

(o)"Shares" means the shares of beneficial interest into which the beneficial interest in the Trust shall be divided from time to time and includes fractions of Shares as well as whole Shares;

(p)"Trust" shall have the meaning set forth in the recitals to this

Declaration of Trust;

(q)"Trustees" or "Board of Trustees" refers to the persons who have signed this Declaration of Trust and all other persons who were or may from time to time be duly elected or appointed to serve on the Board of Trustees in accordance with the provisions hereof or of the Prior Declaration of Trust, so long as they continue in office in accordance with the terms hereof and reference herein to a Trustee or the Trustees shall refer to such person or persons in their capacity as trustees hereunder; and

(r)"Trust Property" means any and all property, real or personal,

tangible or intangible, which is owned or held by or for the account of the Trust.

ARTICLE II.

Purpose of Trust

The purpose of the Trust is to conduct, operate and carry on the business of a management investment company registered under the 1940 Act through one or more Series investing primarily in securities.

ARTICLE III.

Shares

Section 1. Division of Beneficial Interest. The beneficial interest in the Trust shall at all times be divided into an unlimited number of Shares, with a par value of $ .001 per Share unless the Trustees shall designate another par value in connection with the issuance of Shares or with respect to outstanding Shares as provided in Section 5 of this Article III. The Trustees may authorize the division of Shares into separate Series and the division of Series into separate classes of Shares. The different Series shall be established and designated, and the variations in the relative rights and preferences as between the different Series shall be fixed and determined, by the Trustees. If no Series shall be established or if only one Series shall be established, the Shares shall have the rights and preferences provided for herein and in Article III, Section 6 hereof to the extent relevant and not otherwise provided for herein.

Subject to the provisions of Section 6 of this Article III, each Share shall have voting rights as provided in Article V hereof, and holders of the Shares of any Series shall be

108656, v0.9 4

entitled to receive dividends, when, if and as declared with respect thereto in the manner provided in Article VI, Section 1 hereof. No Share shall have any priority or preference over any other Share of the same Series with respect to dividends or distributions of the Trust or otherwise. All dividends and distributions shall be made ratably among all Shareholders of a Series (or class) from the assets held with respect to such Series according to the number of Shares of such Series (or class) held of record by such Shareholders on the record date for any dividend or distribution. Shareholders shall have no preemptive or other right to subscribe to any additional Shares or other securities issued by the Trust or any Series. The Trustees may from time to time divide or combine the Shares of a Series into a greater or lesser number of Shares of such Series without thereby materially changing the proportionate beneficial interest of such Shares in the assets held with respect to that Series or materially affecting the rights of Shares of any other Series.

All references to Shares in this Declaration of Trust shall be deemed to be Shares of the Trust and of any or all Series or classes thereof, as the context may require. All provisions herein relating to the Trust shall apply equally to each Series of the Trust and each class thereof, except as the context otherwise requires.

All Shares issued hereunder, including Shares issued in connection with a dividend in Shares or a split or reverse split of Shares, shall be fully paid and non-assessable.

Section 2. Ownership of Shares. The ownership of Shares shall be recorded on the books of the Trust or a transfer or similar agent for the Trust, which books shall be maintained separately for the Shares of each Series (and class). No certificates evidencing the ownership of Shares shall be issued except as the Board of Trustees may otherwise determine from time to time. The Trustees may make such rules as they consider appropriate for the transfer of Shares of each Series (and class) and similar matters. The record books of the Trust as kept by the Trust or any transfer or similar agent, as the case may be, shall be conclusive as to the identity of the Shareholders of each Series (and class) and as to the number of Shares of each Series (and class) held from time to time by each Shareholder.

Section 3. Investments in the Trust. Investments may be accepted by the Trust from such Persons, at such times, on such terms, and for such consideration as the Trustees from time to time may authorize. Each investment shall be credited to the Shareholder's account in the form of full and fractional Shares of the Trust, in such Series (or class) as the purchaser shall select, at the net asset value per Share next determined for such Series (or class) after receipt of the investment; provided, however, that the Trustees may, in their sole discretion, impose a sales charge or reimbursement fee upon investments in the Trust.

Section 4. Status of Shares and Limitation of Personal Liability. Shares shall be deemed to be personal property giving only the rights provided in this Declaration of Trust and the By-Laws of the Trust. Every Shareholder by virtue of having become a Shareholder shall be held to have expressly assented and agreed to the terms hereof. The death, incapacity, dissolution, termination or bankruptcy of a Shareholder during the existence of the Trust shall

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not operate to terminate the Trust, nor entitle the representative of any such Shareholder to an accounting or to take any action in court or elsewhere against the Trust or the Trustees, but shall entitle such representative only to the rights of such Shareholder under this Declaration of Trust. Ownership of Shares shall not entitle a Shareholder to any title in or to the whole or any part of the Trust Property or right to call for a partition or division of the same or for an accounting, nor shall the ownership of Shares constitute the Shareholders as partners or joint venturers. Neither the Trust nor the Trustees, nor any officer, employee nor agent of the Trust shall have any power to bind personally any Shareholder, or to call upon any Shareholder for the payment of any sum of money or assessment whatsoever other than such as the Shareholder may at any time agree to pay.

Section 5. Power of Board of Trustees to Change Provisions Relating to Shares. Notwithstanding any other provision of this Declaration of Trust to the contrary, and without limiting the power of the Board of Trustees to amend the Declaration of Trust as provided elsewhere herein, the Board of Trustees shall have the power to amend this Declaration of Trust, at any time and from time to time, in such manner as the Board of Trustees may determine in their sole discretion, without the need for Shareholder action, so as to add to, delete, replace or otherwise modify any provisions relating to the Shares contained in this Declaration of Trust, provided that before adopting any such amendment without Shareholder approval the Board of Trustees shall determine that it is consistent with the fair and equitable treatment of all Shareholders and that Shareholder approval is not required by the 1940 Act or other applicable federal law. If Shares have been issued, Shareholder approval shall be required to adopt any amendments to this Declaration of Trust which would adversely affect to a material degree the rights and preferences of the Shares of any Series (or class) or to increase or decrease the par value of the Shares of any Series (or class).

Section 6. Establishment and Designation of Shares. The Series and classes of Shares existing as of the date of this Declaration of Trust are those Series and classes that have been established under the Prior Declaration of Trust and not heretofore terminated which are indicated on Schedule A attached hereto and made a part hereof ("Schedule A"). The establishment of any additional Series (or class) of Shares shall be effective upon the adoption by the Trustees of a resolution that sets forth the designation of, or otherwise identifies, such Series (or class), whether directly in such resolution or by reference to, or approval of, another document that sets forth the designation of, or otherwise identifies, such Series (or class) including any registration statement of the Trust or such Series (or class), any amendment and/or restatement of this Declaration of Trust and/or Schedule A or as otherwise provided in such resolution. Upon the establishment of any additional Series (or class) of Shares or the termination of any existing Series (or class) of Shares, Schedule A shall be amended to reflect the addition or termination of such Series (or class) and any officer of the Trust is hereby authorized to make such amendment; provided that amendment of Schedule A shall not be a condition precedent to the establishment or termination of any Series (or class) in accordance with this Declaration of Trust. The relative rights and preferences of the Shares of the Trust and each Series and each class thereof shall be as set forth herein and as set forth in any registration statement relating thereto, unless otherwise provided in the resolution establishing such Series or

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class.

Shares of each Series (or class) established pursuant to this Section 6, unless otherwise provided in the resolution establishing such Series (or class) or in any registration statement relating thereto, shall have the following relative rights and preferences:

(a)Assets Held with Respect to a Particular Series. All consideration received by the Trust for the issue or sale of Shares of a Series, including dividends and distributions paid by, and reinvested in, such Series, together with all assets in which such consideration is invested or reinvested, all income, earnings, profits, and proceeds thereof from whatever source derived, including any proceeds derived from the sale, exchange or liquidation of such assets, and any funds or payments derived from any reinvestment of such proceeds in whatever form the same may be, shall irrevocably be held with respect to that Series for all purposes, and shall be so recorded upon the books of account of the Trust. Such consideration, assets, income, earnings, profits and proceeds thereof, from whatever source derived, including any proceeds derived from the sale, exchange or liquidation of such assets, and any funds or payments derived from any reinvestment of such proceeds, in whatever form the same may be, are herein referred to as "assets held with respect to" that Series. In the event that there are any assets, income, earnings, profits and proceeds thereof, funds or payments that are not readily identifiable as assets held with respect to the Trust or any particular Series (collectively "General Assets"), the Trustees shall allocate such General Assets to, between or among the Trust and/or any one or more of the Series in such manner and on such basis as the Trustees, in their sole discretion, deem fair and equitable, and any General Asset so allocated to a particular Series shall be held with respect to that Series. Each such allocation by the Trustees shall be conclusive and binding upon the Shareholders of all Series for all purposes in absence of manifest error.

(b)Liabilities Held with Respect to a Particular Series. The assets of the Trust held with respect to each Series shall be charged with the liabilities of the Trust with respect to such Series and all expenses, costs, charges and reserves attributable to such Series, and any general liabilities of the Trust that are not readily identifiable as being held in respect of a Series shall be allocated and charged by the Trustees to and among the Trust and/or any one or more Series in such manner and on such basis as the Trustees in their sole discretion deem fair and equitable. The liabilities, expenses, costs, charges, and reserves so charged to a Series are herein referred to as "liabilities held with respect to" that Series. Each allocation of liabilities, expenses, costs, charges and reserves by the Trustees shall be conclusive and binding upon the Shareholders of all Series for all purposes in absence of manifest error. All liabilities held with respect to a particular Series shall be enforceable against the assets held with respect to such Series only and not against the assets of the Trust generally or against the assets held with respect to any other Series and, except as otherwise provided in this Declaration of Trust, none of the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to the Trust generally or any other Series thereof shall be enforceable against the assets of such Series. As and to the extent provided in Section 3804(a) of the Delaware Act, separate and distinct records shall be maintained for each Series and the assets held with respect to each Series shall be held in such separate and distinct records (directly or indirectly, including through a

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nominee or otherwise) and accounted for in such separate and distinct records separately from the assets held with respect to all other Series and the General Assets of the Trust not allocated to such Series. Notice of this limitation on inter-Series liabilities shall be set forth in the certificate of trust of the Trust (whether originally or by amendment).

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(c)Dividends, Distributions, Redemptions, and Repurchases. No dividend or distribution including any distribution paid in connection with termination of the Trust or of any Series (or class) with respect to, or any redemption or repurchase of, the Shares of any Series (or class) shall be effected by the Trust other than from the assets held with respect to such Series, nor shall any Shareholder of any Series otherwise have any right or claim against the assets held with respect to any other Series except to the extent that such Shareholder has such a right or claim hereunder as a Shareholder of such other Series. The Trustees shall have full discretion to determine which items shall be treated as income and which items as capital; and each such determination and allocation shall be conclusive and binding upon the Shareholders in absence of manifest error.

(d)Voting. All Shares entitled to vote on a matter shall vote without differentiation between the separate Series on a one-vote-per-each dollar (and a fractional vote for each fractional dollar) of the net asset value of each Share (including fractional shares) basis; provided however, if a matter to be voted on affects only the interests of one or more but not all Series (or one or more but not all of a class of a Series), then only the Shareholders of such affected Series (or class) shall be entitled to vote on the matter.

(e)Equality. All the Shares of each Series shall represent an equal proportionate undivided interest in the assets held with respect to such Series (subject to the liabilities of such Series and such rights and preferences as may have been established and designated with respect to classes of Shares within such Series), and each Share of a Series shall be equal to each other Share of such Series.

(f)Fractions. Any fractional Share of a Series shall have proportionately all the rights and obligations of a whole share of such Series, including rights with respect to voting, receipt of dividends and distributions and redemption of Shares.

(g)Exchange Privilege. The Trustees shall have the authority to provide that the Shareholders of any Series shall have the right to exchange such Shares for Shares of one or more other Series in accordance with such requirements and procedures as may be established by the Trustees.

(h)Combination of Series. The Trustees shall have the authority, without the approval of the Shareholders of any Series unless otherwise required by applicable federal law, to combine the assets and liabilities held with respect to any two or more Series into assets and liabilities held with respect to a single Series.

(i)Elimination of Series. At any time that there are no Shares

outstanding of a Series (or class), the Trustees may abolish such Series (or class).

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ARTICLE IV.

The Board of Trustees

Section 1. Number, Election and Tenure. The number of Trustees constituting the Board of Trustees shall be fixed from time to time by a written instrument signed, or by resolution approved at a duly constituted meeting, by a majority of the Board of Trustees, provided, however, that the number of Trustees shall at all times be at least one (1). Subject to the requirements of Section 16(a) of the 1940 Act, the Board of Trustees, by action of a majority of the then Trustees at a duly constituted meeting, may fill vacancies in the Board of Trustees and remove Trustees with or without cause. Each Trustee shall serve during the continued lifetime of the Trust until he or she dies, resigns, is declared bankrupt or incompetent by a court of competent jurisdiction, or is removed. Any Trustee may resign at any time by written instrument signed by him and delivered to any officer of the Trust or to a meeting of the Trustees. Such resignation shall be effective upon receipt unless specified to be effective at some other time. Except to the extent expressly provided in a written agreement with the Trust, no Trustee resigning and no Trustee removed shall have any right to any compensation for any period following his or her resignation or removal, or any right to damages or other payment on account of such removal. Any Trustee may be removed at any meeting of Shareholders by a vote of two-thirds of the total combined net asset value of all Shares of the Trust issued and outstanding. A meeting of Shareholders for the purpose of electing or removing one or more Trustees may be called (i) by the Trustees upon their own vote, or (ii) upon the demand of Shareholders owning 10% or more of the Shares entitled to vote.

Section 2. Effect of Death, Resignation, etc. of a Trustee. The death, declination, resignation, retirement, removal, or incapacity of one or more Trustees, or all of them, shall not operate to annul the Trust or to revoke any existing agency created pursuant to the terms of this Declaration of Trust. Whenever a vacancy in the Board of Trustees shall occur, until such vacancy is filled as provided in Article IV, Section 1, the Trustees in office, regardless of their number, shall have all the powers granted to the Trustees and shall discharge all the duties imposed upon the Trustees by this Declaration of Trust.

Section 3. Powers. Subject to the provisions of this Declaration of Trust, the business of the Trust shall be managed by the Board of Trustees, and such Board of Trustees shall have all powers necessary or convenient to carry out that responsibility including the power to engage in transactions of all kinds on behalf of the Trust. Trustees, in all instances, shall act as principals and are and shall be free from the control of the Shareholders. The Trustees shall have full power and authority to do any and all acts and to make and execute any and all contracts, documents and instruments that they may consider desirable, necessary or appropriate in connection with the administration of the Trust. Without limiting the foregoing, the Trustees may: adopt, amend and repeal By-Laws not inconsistent with this Declaration of Trust providing for the regulation and management of the affairs of the Trust; elect and remove such officers and appoint and terminate such agents as they consider appropriate; appoint from their own number and establish and terminate one or more committees consisting of one or more Trustees who may

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exercise the powers and authority of the Board of Trustees to the extent that the Trustees determine; employ one or more custodians of the assets of the Trust and may authorize such custodians to employ subcustodians and to deposit all or any part of such assets in a system or systems for the central handling of securities or with a Federal Reserve Bank, retain a transfer agent or a shareholder servicing agent, or both; provide for the issuance and distribution of Shares by the Trust directly or through one or more Principal Underwriters or otherwise; redeem, repurchase and transfer Shares pursuant to applicable federal law; set record dates for the determination of Shareholders with respect to various matters; declare and pay dividends and distributions to Shareholders of each Series from the assets of such Series; establish from time to time, in accordance with the provisions of Article III, Section 6 hereof, any Series of Shares, each such Series to operate as a separate and distinct investment medium and with separately defined investment objectives and policies and distinct investment purpose; and in general delegate such authority as they consider desirable to any officer of the Trust, to any committee of the Trustees and to any agent or employee of the Trust or to any such custodian, transfer or shareholder servicing agent, Investment Adviser or Principal Underwriter. Any determination as to what is in the interests of the Trust made by the Trustees in good faith shall be conclusive. In construing the provisions of this Declaration of Trust, the presumption shall be in favor of a grant of power to the Trustees.

Without limiting the foregoing, the Trust shall have power and authority:

(a)To invest and reinvest cash and cash items, to hold cash uninvested, and to subscribe for, invest in, reinvest in, purchase or otherwise acquire, own, hold, pledge, sell, assign, transfer, exchange, distribute, write options on, lend or otherwise deal in or dispose of contracts for the future acquisition or delivery of all types of securities, futures contracts and options thereon, and forward currency contracts of every nature and kind, including all types of bonds, debentures, stocks, preferred stocks, negotiable or non-negotiable instruments, obligations, evidences of indebtedness, certificates of deposit or indebtedness, commercial paper, repurchase agreements, bankers' acceptances, and other securities of any kind, issued, created, guaranteed, or sponsored by any and all Persons, including states, territories, and possessions of the United States and the District of Columbia and any political subdivision, agency, or instrumentality thereof, any foreign government or any political subdivision of the U.S. Government or any foreign government, or any international instrumentality or organization, or by any bank or savings institution, or by any corporation or organization organized under the laws of the United States or of any state, territory, or possession thereof, or by any corporation or organization organized under any foreign law, or in "when issued" contracts for any such securities, futures contracts and options thereon, and forward currency contracts, to change the investments of the assets of the Trust; and to exercise any and all rights, powers, and privileges of ownership or interest in respect of any and all such investments of every kind and description, including the right to consent and otherwise act with respect thereto, with power to designate one or more Persons, to exercise any of said rights, powers, and privileges in respect of any of said instruments;

(b)To sell, exchange, lend, pledge, mortgage, hypothecate, lease, or 108656, v0.9 11

write options with respect to or otherwise deal in any property rights relating to any or all of the assets of the Trust or any Series;

(c)To vote or give assent, or exercise any rights of ownership, with respect to stock or other securities or property; and to execute and deliver proxies or powers of attorney to such person or persons as the Trustees shall deem proper, granting to such person or persons such power and discretion with relation to securities or property as the Trustees shall deem proper;

(d)To exercise powers and right of subscription or otherwise which in any manner arise out of ownership of securities;

(e)To hold any security or property in a form not indicating that it is trust property, whether in bearer, unregistered or other negotiable form, or in its own name or in the name of a custodian or subcustodian or a nominee or nominees or otherwise or to authorize the custodian or a subcustodian or a nominee or nominees to deposit the same in a securities depository, subject in each case to the applicable provisions of the 1940 Act;

(f)To consent to, or participate in, any plan for the reorganization, consolidation or merger of any corporation or issuer of any security which is held in the Trust; to consent to any contract, lease, mortgage, purchase or sale of property by such corporation or issuer; and to pay calls or subscriptions with respect to any security held in the Trust;

(g)To join with other security holders in acting through a committee, depository, voting trustee or otherwise, and in that connection to deposit any security with, or transfer any security to, any such committee, depository or trustee, and to delegate to them such power and authority with relation to any security (whether or not so deposited or transferred) as the Trustees shall deem proper, and to agree to pay, and to pay, such portion of the expenses and compensation of such committee, depository or trustee as the Trustees shall deem proper;

(h)To litigate, compromise, arbitrate, settle or otherwise adjust claims in favor of or against the Trust or a Series, or any matter in controversy, including but not limited to claims for taxes;

(i)To enter into joint ventures, general or limited partnerships and any other combinations or associations;

(j)To borrow funds or other property in the name of the Trust or Series exclusively for Trust (or such Series) purposes;

(k)To endorse or guarantee the payment of any notes or other obligations of any Person; to make contracts of guaranty or suretyship, or otherwise assume liability for payment thereof;

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(l)To purchase and pay for entirely out of Trust Property such insurance as the Trustees may deem necessary, desirable or appropriate for the conduct of the business, including insurance policies insuring the assets of the Trust or payment of distributions and principal on its portfolio investments, and insurance policies insuring the Shareholders, Trustees, officers, employees, agents, Investment Adviser, principal underwriters, or independent contractors of the Trust, individually against all claims and liabilities of every nature arising by reason of holding Shares, holding, being or having held any such office or position, or by reason of any action alleged to have been taken or omitted by any such Person as Trustee, officer, employee, agent, Investment Adviser, Principal Underwriter, or independent contractor, including any action taken or omitted that may be determined to constitute negligence, whether or not the Trust would have the power to indemnify such Person against liability;

(m)To adopt, establish and carry out pension, profit-sharing, share bonus, share purchase, savings, thrift and other retirement, incentive and benefit plans, trusts and provisions, including the purchasing of life insurance and annuity contracts as a means of providing such retirement and other benefits, for any or all of the Trustees, officers, employees and agents of the Trust; and

(n)Subject to the 1940 Act, to engage in any other lawful act or

activity in which a statutory trust organized under the Delaware Act may engage.

The Trust shall not be limited to investing in obligations maturing before the possible termination of the Trust or one or more of its Series. The Trust shall not in any way be bound or limited by any present or future law or custom in regard to investment by fiduciaries. The Trust shall not be required to obtain any court order to deal with any assets of the Trust or take any other action hereunder.

Section 4. Payment of Expenses by the Trust. Subject to the provisions of Article III, Section 6(b), the Trustees are authorized to pay or cause to be paid out of the principal or income of the Trust or Series, or partly out of the principal and partly out of income, and to charge or allocate the same to, between or among such one or more of the Series that may be established or designated pursuant to Article III, Section 6, all expenses, fees, charges, taxes and liabilities incurred or arising in connection with the Trust or Series, or in connection with the management thereof, including, but not limited to, the Trustees' compensation and such expenses and charges for the services of the Trust's officers, employees, Investment Adviser, Principal Underwriter, auditors, counsel, custodian, transfer agent, Shareholder servicing agent, and such other agents or independent contractors and such other expenses and charges as the Trustees may deem necessary or proper to incur.

Section 5. Ownership of Assets of the Trust. Title to all of the assets of the Trust shall at all times be considered as vested in the Trust, except that the Trustees shall have power to cause legal title to any Trust Property to be held by or in the name of one or more of the Trustees, or in the name of the Trust, or in the name of any other Person as nominee, on such terms as the Trustees may determine. Upon the resignation, incompetency, bankruptcy, removal,

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or death of a Trustee he or she shall automatically cease to have any such title in any of the Trust Property, and the title of such Trustee in the Trust Property shall vest automatically in the remaining Trustees. Such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered. The Trustees may determine that the Trust or the Trustees, acting for and on behalf of the Trust, shall be deemed to hold beneficial ownership of any income earned on the securities owned by the Trust, whether domestic or foreign.

Section 6. Service Contracts.

(a)The Trustees may, at any time and from time to time, contract for exclusive or nonexclusive advisory, management and/or administrative services for the Trust or for any Series with any Person; and any such contract may contain such other terms as the Trustees may determine, including authority for the Investment Adviser to determine from time to time without prior consultation with the Trustees what investments shall be purchased, held, sold or exchanged and what portion, if any, of the assets of the Trust shall be held uninvested and to make changes in the Trust's investments, and such other responsibilities as may specifically be delegated to such Person.

(b)The Trustees may also, at any time and from time to time, contract with any Persons, appointing such Persons exclusive or nonexclusive distributor or Principal Underwriter for the Shares of one or more of the Series or other securities to be issued by the Trust. Every such contract may contain such other terms as the Trustees may determine.

(c)The Trustees are also empowered, at any time and from time to time, to contract with any Persons, appointing such Person(s) to serve as custodian(s), transfer agent and/or shareholder servicing agent for the Trust or one or more of its Series. Every such contract shall comply with such terms as may be required by the Trustees.

(d)The Trustees are further empowered, at any time and from time to time, to contract with any Persons to provide such other services to the Trust or one or more of the Series, as the Trustees determine to be in the best interests of the Trust and the applicable Series.

(e)The fact that:

(i)any of the Shareholders, Trustees, or officers of the Trust is a shareholder, director, officer, partner, trustee, employee, Investment Adviser, Principal Underwriter, distributor, or affiliate or agent of or for any Person with which an advisory, management or administration contract, or Principal Underwriter's or distributor's contract, or transfer, shareholder servicing or other type of service contract may be made, or that

(ii)any Person with which an advisory, management or 108656, v0.9 14

administration contract or Principal Underwriter's or distributor's contract, or transfer, shareholder servicing or other type of service contract may be made also has an advisory, management or administration contract, or principal underwriter's or distributor's contract, or transfer, shareholder servicing or other service contract, or has other business or interests with any other Person,

shall not affect the validity of any such contract or disqualify any Shareholder, Trustee or officer of the Trust from voting upon or executing the same, or create any liability or accountability to the Trust or its Shareholders, provided approval of each such contract is made pursuant to the applicable requirements of the 1940 Act.

ARTICLE V.

Shareholders' Voting Powers and Meetings

Subject to the provisions of Article III, Sections 5 and 6(d), the Shareholders shall have right to vote only (i) for the election or removal of Trustees as provided in Article IV, Section 1, and (ii) with respect to such additional matters relating to the Trust as may be required by the applicable provisions of the 1940 Act, including Section 16(a) thereof, and (iii) on such other matters as the Trustees may consider necessary or desirable. Provisions relating to meetings, quorum, required vote, record date and other matters relating to Shareholder voting rights are as provided in the By-Laws.

ARTICLE VI.

Net Asset Value, Distributions, and Redemptions

Section 1. Determination of Net Asset Value, Net Income, and Distributions. Subject to Article III, Section 6 hereof, the Trustees, in their absolute discretion, may prescribe and shall set forth in the By-Laws or in a duly adopted resolution of the Trustees such bases and time for determining the per Share net asset value of the Shares of the Trust or any Series (or class) and the declaration and payment of dividends and distributions on the Shares of the Trust or any Series (or class), as they may deem necessary or desirable.

Section 2. Redemptions and Repurchases. The Trust shall purchase such Shares as are offered by any Shareholder for redemption, upon receipt by the Trust or a Person designated by the Trust that the Trust redeem such Shares or in accordance with such procedures for redemption as the Trustees may from time to time authorize; and the Trust will pay therefor the net asset value thereof, in accordance with the By-Laws and the applicable provisions of the 1940 Act. Payment for said Shares shall be made by the Trust to the Shareholder within seven days after the date on which the request for redemption is received in proper form. The obligation set forth in this Section 2 is subject to the provision that in the event that any time the New York Stock Exchange (the "Exchange") is closed for other than weekends or holidays, or if permitted by the Rules of the Commission during periods when trading on the Exchange is

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restricted or during any emergency which makes it impracticable for the Trust to dispose of the investments of the applicable Series or to determine fairly the value of the net assets held with respect to such Series or during any other period permitted by order of the Commission for the protection of investors, such obligations may be suspended or postponed by the Trustees.

The redemption price may in any case or cases be paid in cash or wholly or partly in kind in accordance with Rule 18f-1 under the 1940 Act if the Trustees determine that such payment is advisable in the interest of the remaining Shareholders of the Series of which the Shares are being redeemed. Subject to the foregoing, the selection and quantity of securities or other property so paid or delivered as all or part of the redemption price shall be determined by or under authority of the Trustees. In no case shall the Trust be liable for any delay of any corporation or other Person in transferring securities selected for delivery as all or part of any payment in kind.

Section 3. Redemptions at the Option of the Trust. The Trust shall have the right, at its option, upon 30 days notice to the affected Shareholder at any time to redeem Shares of any Shareholder at the net asset value thereof as described in Section 1 of this Article VI: (i) if at such time such Shareholder owns Shares of any Series having an aggregate net asset value of less than a minimum value determined from time to time by the Trustees; or (ii) to the extent that such Shareholder owns Shares of a Series equal to or in excess of a maximum percentage of the outstanding Shares of such Series determined from time to time by the Trustees; or (iii) to the extent that such Shareholder owns Shares equal to or in excess of a maximum percentage, determined from time to time by the Trustees, of the outstanding Shares of the Trust.

Section 4. Transfer of Shares. The Trust shall transfer shares held of record by any Person to any other Person upon receipt by the Trust or a Person designated by the Trust of a written request therefore in such form and pursuant to such procedures as may be approved by the Trustees.

ARTICLE VII.

Compensation and Limitation of Liability

Section 1. Compensation of Trustees. Any Trustee, whether or not he is a salaried officer or employee of the Trust, may be compensated for his services as Trustee or as a member of a committee of Trustees, or as chairman of a committee by fixed periodic payments or by fees for attendance at meetings, by both or otherwise, and in addition may be reimbursed for transportation and other expenses, all in such manner and amounts as the Board of Trustees may from time to time determine. Nothing herein shall in any way prevent the employment of any Trustee to provide advisory, management, legal, accounting, investment banking or other services to the Trust and to be specially compensated for such services by the Trust.

Section 2. Limitation of Liability and Indemnification. A Trustee, when acting in such capacity, shall not be personally liable to any Person, other than the Trust or a

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Shareholder to the extent provided in this Article VII, for any act, omission or obligation of the Trust, of such Trustee or of any other Trustee. The Trustees shall not be responsible or liable in any event for any neglect or wrong-doing of any officer, agent, employee, Investment Adviser or Principal Underwriter of the Trust, nor shall any Trustee be responsible for the act or omission of any other Trustee, and, subject to the provisions of the By-Laws, the Trust out of its assets may indemnify and hold harmless each and every Trustee and officer of the Trust from and against any and all claims, demands, costs, losses, expenses, and damages whatsoever arising out of or related to such Trustee's or officer's performance of his or her duties as a Trustee or officer of the Trust.

Every note, bond, contract, instrument, certificate or undertaking and every other act or thing whatsoever issued, executed or done by or on behalf of the Trust or the Trustees or any of them in connection with the Trust shall be conclusively deemed to have been issued, executed or done only in or with respect to their or his or her capacity as Trustees or Trustee, and such Trustees or Trustee shall not be personally liable thereon.

Section 3. Trustee's Good Faith Action, Expert Advice, No Bond or Surety. The exercise by the Trustees of their powers hereunder shall be binding upon everyone interested in or dealing with the Trust. A Trustee shall be liable to the Trust and to any Shareholder solely for his or her own willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office of Trustee, and shall not be liable for errors of judgment or mistakes of fact or law. The Trustees may take advice of counsel or other experts with respect to the meaning and operation of this Declaration of Trust, and shall be under no liability for any act or omission in accordance with such advice nor for failing to follow such advice. The Trustees shall not be required to give any bond as such, nor any surety if a bond is required.

Section 4. Insurance. The Trustees shall be entitled and empowered to the fullest extent permitted by law to purchase with Trust assets insurance for liability and for all expenses reasonably incurred or paid or expected to be paid by a Trustee or officer in connection with any claim, action, suit or proceeding in which he or she becomes involved by virtue of his or her capacity or former capacity with the Trust, whether or not the Trust would have the power to indemnify him or her against such liability under the provisions of this Article.

ARTICLE VIII.

Miscellaneous

Section 1. Liability of Third Persons Dealing with Trustees. No Person dealing with the Trustees shall be bound to make any inquiry concerning the validity of any transaction made or to be made by the Trustees or to see to the application of any payments made or property transferred to the Trust or upon its order.

Section 2. Termination of the Trust or Any Series. Unless terminated as

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provided herein, the Trust shall continue without limitation of time. The Trust may be dissolved at any time by the Trustees upon 60 days prior written notice to the Shareholders. Any Series of Shares may be dissolved at any time by the Trustees upon 60 days prior written notice to the Shareholders of such Series. Any action to dissolve the Trust shall be deemed to also be an action to dissolve each Series and each class thereof.

In accordance with Section 3808 of the Delaware Act, upon dissolution of the Trust or any Series, as the case may be, after paying or otherwise providing for all charges, taxes, expenses and liabilities held, severally, with respect to each Series or the applicable Series, as the case may be, whether due or accrued or anticipated as may be determined by the Trustees, the Trust shall, in accordance with such procedures as the Trustees consider appropriate, reduce the remaining assets held, severally, with respect to each Series or the applicable Series, as the case may be, to distributable form in cash or shares or other securities, and any combination thereof, and distribute the proceeds held with respect to each Series or the applicable Series, as the case may be, to the Shareholders of that Series, as a Series, ratably according to the number of Shares of that Series held by the several Shareholders on the date of termination.

Section 3. Reorganization and Master/Feeder.

(a)Notwithstanding anything else herein, the Trustees may, without Shareholder approval unless such approval is required by the 1940 Act, (i) cause the Trust to convert or merge, reorganize or consolidate with or into one or more trusts, partnerships, limited liability companies, associations, corporations or other business entities (or a series of any of the foregoing to the extent permitted by law) (including trusts, partnerships, limited liability companies, associations, corporations or other business entities created by the Trustees to accomplish such conversion, merger, reorganization or consolidation) so long as the surviving or resulting entity is an open-end management investment company under the 1940 Act, or is a series thereof, to the extent permitted by law, and that, in the case of any trust, partnership, limited liability company, association, corporation or other business entity created by the Trustees to accomplish such conversion, merger, reorganization or consolidation, may succeed to or assume the Trust's registration under the 1940 Act and that, in any case, is formed, organized or existing under the laws of the United States or of a state, commonwealth, possession or colony of the United States, (ii) cause the Shares to be exchanged under or pursuant to any state or federal statute to the extent permitted by law, (iii) cause the Trust to incorporate under the laws of a state, commonwealth, possession or colony of the United States (iv) sell or convey all or substantially all of the assets of the Trust or any Series or Class to another Series or Class of the Trust or to another trust, partnership, limited liability company, association, corporation or other business entity (or a series of any of the foregoing to the extent permitted by law) (including a trust, partnership, limited liability company, association, corporation or other business entity created by the Trustees to accomplish such sale and conveyance), organized under the laws of the United States or of any state, commonwealth, possession or colony of the United States so long as such trust, partnership, limited liability company, association, corporation or other business entity is an open-end management investment company under the 1940 Act and, in the case of any trust, partnership, limited liability company, association, corporation or other

108656, v0.9 18

business entity created by the Trustees to accomplish such sale and conveyance, may succeed to or assume the Trust's registration under the 1940 Act, for adequate consideration as determined by the Trustees which may include the assumption of all outstanding obligations, taxes and other liabilities, accrued or contingent of the Trust or any affected Series or Class, and which may include Shares of such other Series or Class of the Trust or shares of beneficial interest, stock or other ownership interest of such trust, partnership, limited liability company, association, corporation or other business entity (or series thereof) or (v) at any time sell or convert into money all or any part of the assets of the Trust or any Series or Class thereof. Any agreement of merger, reorganization, consolidation or conversion or exchange or certificate of merger, certificate of conversion or other applicable certificate may be signed by a majority of the Trustees and facsimile signatures conveyed by electronic or telecommunication means shall be valid.

(b)Pursuant to and in accordance with the provisions of Section 3815(f) of the Delaware Act, and notwithstanding anything to the contrary contained in this Declaration of Trust, an agreement of merger or consolidation approved by the Trustees in accordance with this Section 3 may effect any amendment to this Declaration of Trust or effect the adoption of a new governing instrument of the Trust if the Trust is the surviving or resulting entity in the merger or consolidation.

(c)Notwithstanding anything else herein, the Trustees may, without Shareholder approval unless such approval is required by the 1940 Act, invest all or a portion of the Trust Property of any Series, or dispose of all or a portion of the Trust Property of any Series, and invest the proceeds of such disposition in interests issued by one or more other investment companies registered under the 1940 Act. Any such other investment company may (but need not) be a trust (formed under the laws of the State of Delaware or any other state or jurisdiction) (or subtrust thereof) which is classified as a partnership for federal income tax purposes. Notwithstanding anything else herein, the Trustees may, without Shareholder approval unless such approval is required by the 1940 Act, cause a Series that is organized in the master/feeder fund structure to withdraw or redeem its Trust Property from the master fund and cause such Series to invest its Trust Property directly in securities and other financial instruments or in another master fund.

Section 4. Amendments. Subject to the provisions of Section 5 of Article III relating to the requirement of Shareholder approval for certain amendments to this Declaration of Trust or requirements for certain determinations by the Board of Trustees for certain amendments hereto without Shareholder approval and any requirements under the 1940 Act requiring Shareholder approval of an amendment to this Declaration of Trust, the Trustees may, without any Shareholder vote or approval, amend this Declaration of Trust by making an amendment to this Declaration of Trust (including Schedule A), an agreement supplemental hereto, or an amended and restated trust instrument. Unless otherwise provided by the Trustees, any such amendment will be effective (i) upon the adoption by a majority of the Trustees then holding office of a resolution specifying the amendment, supplemental agreement or amendment and restatement or (ii) upon the execution in writing of an instrument signed by a majority of the

108656, v0.9 19

Trustees then holding office specifying the amendment, supplemental agreement or amended and restated trust instrument. A certification signed by an officer of the Trust setting forth an amendment to this Declaration of Trust and reciting that it was duly adopted by the Trustees as aforesaid, or a copy of the instrument referenced above executed by the Trustees as aforesaid, shall be conclusive evidence of such amendment when lodged among the records of the Trust. The certificate of trust of the Trust may be restated and/or amended by any Trustee as necessary or desirable to reflect any change in the information set forth therein, and any such restatement and/or amendment shall be effective immediately upon filing with the Office of the Secretary of State of the State of Delaware or upon such future date as may be stated therein.

Section 5. Filing of Copies, References, Headings. The original or a copy of this Declaration of Trust shall be kept at the office of the Trust where it may be inspected by any Shareholder. Anyone dealing with the Trust may rely on a certificate by an officer of the Trust as to any matters in connection with the Trust hereunder; and, with the same effect as if it were the original, may rely on a copy certified by an officer of the Trust to be a copy of this Declaration of Trust. In this Declaration of Trust, references to this Declaration of Trust, and all expressions like "herein," "hereof" and "hereunder," shall be deemed to refer to this Declaration of Trust. Headings are placed herein for convenience of reference only and shall not be taken as a part hereof or control or affect the meaning, construction or effect of this Declaration of Trust. Whenever the singular number is used herein, the same shall include the plural; and the neuter, masculine and feminine genders shall include each other, as applicable. This Declaration of Trust may be executed in any number of counterparts each of which shall be deemed an original but all of which together will constitute one and the same instrument. To the extent permitted by the 1940 Act, (i) any document, consent, instrument or notice referenced in or contemplated by this Declaration of Trust or the By-Laws that is to be executed by one or more Trustees may be executed by means of original, facsimile or electronic signature and (ii) any document, consent, instrument or notice referenced in or contemplated by this Declaration of Trust or the By-Laws that is to be delivered by one or more Trustees may be delivered by facsimile or electronic means (including e-mail), unless, in the case of either clause (i) or (ii), otherwise expressly provided herein or in the By-Laws or determined by the Trustees. The terms "include," "includes" and "including" and any comparable terms shall be deemed to mean "including, without limitation."

Section 6. Applicable Law. This Agreement and Declaration of Trust is created under and is to be governed by and construed and administered according to the laws of the State of Delaware and the Delaware Act. The Trust shall be a Delaware statutory trust pursuant to the Delaware Act, and without limiting the provisions hereof, the Trust may exercise all powers which are ordinarily exercised by such a statutory trust.

108656, v0.9 20

Section 7. Provisions in Conflict with Law or Regulations.

(a)The provisions of the Declaration of Trust are severable, and if the Trustees shall determine, with the advice of counsel, that any of such provisions is in conflict with the 1940 Act, the regulated investment company provisions of the Internal Revenue Code or with other applicable federal laws and regulations, the conflicting provision shall be deemed never to have constituted a part of the Declaration of Trust; provided, however, that such determination shall not affect any of the remaining provisions of the Declaration of Trust or render invalid or improper any action taken or omitted prior to such determination.

(b)If any provision of the Declaration of Trust shall be held invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall attach only to such provision in such jurisdiction and shall not in any manner affect such provision in any other jurisdiction or any other provision of the Declaration of Trust in any jurisdiction.

Section 8. Statutory Trust Only. It is the intention of the Trustees to create a statutory trust pursuant to the Delaware Act, and thereby to create only the relationship of trustee and beneficial owners within the meaning of such Act between the Trustees and each Shareholder. It is not the intention of the Trustees to create a general partnership, limited partnership, joint stock association, corporation, bailment, joint venture, or any form of legal relationship other than a statutory trust pursuant to the Delaware Act. Nothing in this Declaration of Trust shall be construed to make the Shareholders, either by themselves or with the Trustees, partners or members of a joint stock association.

Section 9. Use of the Name "The Vanguard Group, Inc.". The name "The Vanguard Group, Inc." and any variants thereof and all rights to the use of the name "The Vanguard Group, Inc." or any variants thereof shall be the sole and exclusive property of The Vanguard Group, Inc. ("VGI"). VGI has permitted the use by the Trust of the identifying word "Vanguard" and the use of the name "Vanguard" as part of the name of the Trust and the name of any Series of Shares. Upon the Trust's withdrawal from the Amended and Restated Funds' Service Agreement among the Trust, the other investment companies within the Vanguard Group of Investment Companies and VGI, and upon the written request of VGI, the Trust and any Series of Shares thereof shall cease to use or in any way to refer to itself as related to "The Vanguard Group, Inc." or any variant thereof.

Section 10. Derivative Actions. In addition to the requirements set forth in Section 3816 of the Delaware Act, a Shareholder may bring a derivative action on behalf of the Trust only if the following conditions are met:

(a)The Shareholder or Shareholders must make a pre-suit demand upon the Trustees to bring the subject action unless an effort to cause the Trustees to bring such an action is not likely to succeed. For purposes of this Section 10(a), a demand on the Trustees shall only be deemed not likely to succeed and therefore excused if a majority of the Board of Trustees, or a majority of any committee established to consider the merits of such action, is

108656, v0.9 21

composed of Trustees who are not "independent trustees" (as that term is defined in the Delaware Act).

(b)Unless a demand is not required under paragraph (a) of this Section 10, Shareholders eligible to bring such derivative action under the Delaware Act who collectively hold at least 10% of the outstanding Shares of the Trust, or who collectively hold at least 10% of the outstanding Shares of the Series or class to which such action relates, shall join in the request for the Trustees to commence such action; and

(c)Unless a demand is not required under paragraph (a) of this Section 10, the Trustees must be afforded a reasonable amount of time to consider such Shareholder request and to investigate the basis of such claim. The Trustees shall be entitled to retain counsel or other advisors in considering the merits of the request and shall require an undertaking by the Shareholders making such request to reimburse the Trust for the expense of any such advisors in the event that the Trustees determine not to bring such action.

108656, v0.9 22

SCHEDULE A

VANGUARD MALVERN FUNDS

SERIES AND CLASSES OF THE TRUST

SERIES

CLASSES

Vanguard Asset Allocation Fund

Investor, Admiral

Vanguard Capital Value Fund

Investor

Vanguard U.S. Value Fund

Investor

108656, v0.9

 

TABLE OF CONTENTS

 

 

 

Page

ARTICLE I. Name and Definitions.................................................................................................

1

Section 1.

Name ................................................................................................................

1

Section 2.

Definitions........................................................................................................

1

(a)

Amended Declaration of Trust..................................................................................

2

(b)

By-Laws....................................................................................................................

2

(c)

Commission ..............................................................................................................

2

(d)

Declaration of Trust ..................................................................................................

2

(e)

Delaware Act ............................................................................................................

2

(f)

Interested Person.......................................................................................................

2

(g)

Investment Adviser or Adviser .................................................................................

2

(h)

1940 Act....................................................................................................................

2

(i)

Original Declaration of Trust....................................................................................

2

(j)

Principal Underwriter................................................................................................

2

(k)

Prior Declaration of Trust .........................................................................................

2

(l)

Person........................................................................................................................

2

(m)

Series.........................................................................................................................

2

(n)

Shareholder ...............................................................................................................

2

(o)

Shares........................................................................................................................

3

(p)

Trust ..........................................................................................................................

3

(q)

Trustees or Board of Trustees ...................................................................................

3

(r)

Trust Property ...........................................................................................................

3

ARTICLE II. Purpose of Trust ........................................................................................................

3

ARTICLE III. Shares .......................................................................................................................

3

Section 1.

Division of Beneficial Interest .........................................................................

3

Section 2.

Ownership of Shares ........................................................................................

4

Section 3.

Investments in the Trust...................................................................................

4

Section 4.

Status of Shares and Limitation of Personal

 

 

Liability..........................................................................................................

4

Section 5.

Power of Board of Trustees to Change

 

 

Provisions Relating to Shares ........................................................................

5

Section 6.

Establishment and Designation of Shares........................................................

5

(a)

Assets Held with Respect to a Particular Series .......................................................

6

(b)Liabilities Held with Respect to a

Particular Series ......................................................................................................

6

(c)Dividends, Distributions, Redemptions, and

 

Repurchases ............................................................................................................

7

(d)

Voting .......................................................................................................................

7

(e)

Equality.....................................................................................................................

7

(f)

Fractions....................................................................................................................

7

(g)

Exchange Privilege ...................................................................................................

7

 

 

108656, v0.9 i

(h)

Combination of Series...............................................................................................

7

(i)

Elimination of Series.................................................................................................

7

ARTICLE IV. The Board of Trustees..............................................................................................

8

Section 1.

 

Number, Election and Tenure ..........................................................................

8

Section 2.

 

Effect of Death, Resignation, etc.

 

 

 

of a Trustee ....................................................................................................

8

Section 3.

 

Powers..............................................................................................................

8

Section 4.

 

Payment of Expenses by the Trust..................................................................

11

Section 5.

 

Ownership of Assets of the Trust....................................................................

11

Section 6.

 

Service Contracts ............................................................................................

12

ARTICLE V. Shareholders' Voting Powers and Meetings ............................................................

13

ARTICLE VI. Net Asset Value, Distributions, and Redemptions .................................................

13

Section 1.

 

Determination of Net Asset Value, Net

 

 

 

Income, and Distributions.............................................................................

13

Section 2.

 

Redemptions and Repurchases .......................................................................

13

Section 3.

 

Redemptions at the Option of the Trust..........................................................

14

Section 4.

 

Transfer of Shares ...........................................................................................

14

ARTICLE VII. Compensation and Limitation of Liability ............................................................

14

Section 1.

 

Compensation of Trustees...............................................................................

14

Section 2.

 

Limitation of Liability and Indemnification ...................................................

14

Section 3.

 

Trustee's Good Faith Action, Expert

 

 

 

Advice, No Bond or Surety...........................................................................

15

Section 4.

 

Insurance .........................................................................................................

15

ARTICLE VIII. Miscellaneous.......................................................................................................

15

Section 1.

 

Liability of Third Persons Dealing

 

 

 

with Trustees.................................................................................................

15

Section 2.

 

Termination of the Trust or Any Series ..........................................................

15

Section 3.

 

Reorganization and Master/Feeder .................................................................

16

Section 4.

 

Amendments ...................................................................................................

17

Section 5.

 

Filing of Copies, References, Headings..........................................................

18

Section 6.

 

Applicable Law...............................................................................................

18

Section 7.

 

Provisions in Conflict with Law or Regulations.............................................

18

Section 8.

 

Statutory Trust Only .......................................................................................

19

Section 9.

 

Use of the Name "The Vanguard Group, Inc."...............................................

19

Section 10.

Derivatives Actions.........................................................................................

19

108656, v0.9 ii


AMENDED AND RESTATED

BY-LAWS

OF

VANGUARD MALVERN FUNDS

These By-Laws of Vanguard Malvern Funds, a Delaware statutory trust, are subject to the Amended and Restated Declaration of Trust of the Trust dated as of November 19, 2008, as from time to time amended, supplemented or restated (the "Declaration of Trust"). In the event of any conflict between the provisions of these By- Laws and the provisions of the Declaration of Trust, the provisions of the Declaration of Trust will control. Capitalized terms used herein which are defined in the Declaration of Trust are used as therein defined.

ARTICLE I

Fiscal Year and Offices

Section 1. Fiscal Year. Unless otherwise provided by resolution of the Board of Trustees, the fiscal year of the Trust shall begin on the 1st day of October and end on the last day of September.

Section 2. Delaware Office. The Board of Trustees shall establish a registered office in the State of Delaware and shall appoint as the Trust's registered agent for service of process in the State of Delaware an individual resident of the State of Delaware or a Delaware corporation or a foreign corporation authorized to transact business in the State of Delaware; in each case the business office of such registered agent for service of process shall be identical with the registered Delaware office of the Trust.

Section 3. Principal Office. The principal office of the Trust shall be located at 100 Vanguard Boulevard, Malvern, Pennsylvania 19355, or such other location s the Trustees may from time to time determine.

Section 4. Other Offices. The Board of Trustees may at any time establish branch or subordinate offices at any place or places where the Trust intends to do business.

ARTICLE II

Meetings of Shareholders

Section 1. Place of Meeting. Meetings of the Shareholders for the election of Trustees or for any other purpose shall be held in such place (including that

the meeting will be held by remote communication, as applicable) as shall be fixed by resolution of the Board of Trustees and stated in the notice of the meeting.

Section 2. Annual Meetings. An annual meeting of Shareholders will not be held unless the 1940 Act requires the election of Trustees to be acted upon.

Section 3. Special Meetings. Special meetings of the Shareholders may be called at any time by the chairman, or president, or by the Board of Trustees, and shall be called by the secretary upon written request of the holders of Shares entitled to cast not less than twenty percent of all the votes entitled to be cast at such meeting provided that

(a)such request shall state the purposes of such meeting and the matters proposed to be acted on, (b) the Shareholders requesting such meeting shall have paid to the Trust the reasonable estimated cost of preparing and mailing the notice thereof, which the secretary shall determine and specify to such Shareholders, and (c) the Shareholders requesting such meeting must provide ninety (90) days advance notice of business to be brought to a vote at a shareholder meeting and for nomination of directors, unless such notice runs counter to the proxy rules under the Securities Exchange Act of 1934. No special meeting need be called upon the request of Shareholders entitled to cast less than a majority of all votes entitled to be cast at such meeting to consider any matter which is substantially the same as a matter voted on at any meeting of the Shareholders held during the preceding twelve months. The foregoing provisions of this Section 3 notwithstanding a special meeting of Shareholders shall be called upon the request of the holders of at least ten percent of the votes entitled to be cast for the purpose of consideration removal of a Trustee from office as provided in section 16(c) of the 1940 Act.

Section 4. Notice. Not less than ten, nor more than one hundred (100) days before the date of every annual or special meeting, the secretary shall cause to be delivered to each Shareholder entitled to vote at such meeting a written notice in accordance with Article IV, Section 1 of these By-Laws stating the time and place of the meeting (including that the meeting will be held by remote communication, as applicable) and, in the case of a special meeting of Shareholders, shall state the purposes of the meeting and the matters to be acted on and the purposes of such special meeting and matters to be acted on shall be limited to those stated in such written notice. Notice of adjournment of a Shareholders meeting to another time or place (including that the meeting will be held by remote communication, as applicable) need not be given, if such time and place are announced at the meeting. No notice need be given to any Shareholder who shall have failed to inform the Trust of his or her current address or if a written waiver of notice, executed before or after the meeting by the Shareholder or his or her attorney thereunto authorized, is filed with the records of the meeting.

Section 5. Record Date for Meetings. The Board of Trustees may fix in advance a date not more than one hundred (100), nor less than ten, days prior to the date of any annual or special meeting of the Shareholders as a record date for the determination of the Shareholders entitled to receive notice of, and to vote at any meeting and any adjournment thereof; and in such case such Shareholders and only such

2

Shareholders as shall be Shareholders of record on the date so fixed shall be entitled to receive notice of and to vote at such meeting and any adjournment thereof as the case may be, notwithstanding any transfer of any stock on the books of the Trust after any such record date fixed as aforesaid.

Section 6. Quorum. Except as otherwise provided by the 1940 Act or in the Trust's Declaration of Trust, at any meeting of Shareholders, the presence in person or by proxy of the holders of record of Shares issued and outstanding and entitled to vote representing more than thirty-three and one-third percent (33 1/3%) of the total combined net asset value of all Shares issued and outstanding and entitled to vote shall constitute a quorum for the transaction of any business at the meeting.

If, however, a quorum shall not be present or represented at any meeting of the Shareholders, either the chairman of the meeting (without a Shareholder vote) or the holders of a majority of the votes present or in person or by proxy shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. The Shareholders of record entitled to vote at a Shareholders' meeting that has been postponed or reconvened after one or more adjournments shall be deemed to be the Shareholders on the original record date, unless the Trustees have fixed a new record date.

Section 7. Voting. Each Shareholder shall have one vote for each dollar (and a fractional vote for each fractional dollar) of the net asset value of each share (including fractional Shares) held by such Shareholder on the record date set pursuant to Section 5 on each matter submitted to a vote at a meeting of Shareholders. For purposes of this section and Section 6 of this Article II, net asset value shall be determined pursuant to Section 3, Article VIII of these By-Laws as of the record date for such meeting set pursuant to Section 5. There shall be no cumulative voting in the election of Trustees. At any meeting of Shareholders, any Shareholder entitled to vote thereat may vote either in person or by written proxy signed by the Shareholder, provided that no proxy shall be voted at any meeting unless it shall have been placed on file with the secretary, or with such other officer or agent of the Trust as the secretary may direct, for verification prior to the time at which such vote shall be taken; provided, however, that notwithstanding any other provision of this Section 7 to the contrary, the Trustees or any officer of the Trust with responsibility for such matters may at any time adopt one or more electronic, telecommunication, telephonic, computerized or other alternatives to execution of a written instrument that will enable Shareholders entitled to vote at any meeting to appoint a proxy to vote such Shareholders' Shares at such meeting; provided, further, that, until the Trustees or such officer adopt such electronic, telecommunication, telephonic, computerized or other alternatives, no Shareholder may act to appoint a proxy to vote such holder's Shares at a meeting by any such alternatives and if the Trustees or such officer do adopt such electronic, telecommunication, telephonic, computerized or other alternatives, then Shareholders may only act in the manner prescribed by the

3

Trustees. Proxies may be solicited in the name of one or more Trustees or one or more of the officers of the Trust. Only Shareholders of record shall be entitled to vote. When any share is held jointly by several persons, any one of them may vote at any meeting in person or by proxy in respect of such share, but if more than one of them shall be present at such meeting in person or by proxy, and such joint owners or their proxies so present disagree as to any vote to be cast, such vote shall not be received in respect of such share. Unless otherwise specifically limited by their terms, proxies shall entitle the holder thereof to vote at any adjournment of a meeting. A proxy purporting to be executed by or on behalf of a Shareholder shall be deemed valid unless challenged at or prior to its exercise, and the burden of proving invalidity shall rest on the challenger. If the holder of any such share is a minor or a person of unsound mind, and subject to guardianship or the legal control of any other person as regards the charge or management of such share, he or she may vote by his or her guardian or such other person appointed or having such control, and such vote may be given in person or by proxy. Except as otherwise provided herein or in the Declaration of Trust or the Delaware Act, all matters relating to the giving, voting or validity of proxies shall be governed by the General Corporation Law of the State of Delaware relating to proxies, and judicial interpretations thereunder, as if the Trust were a Delaware corporation and the Shareholders were Shareholders of a Delaware corporation.

At all meetings of the Shareholders, a quorum being present, the Trustees shall be elected by the vote of a plurality of the votes cast by Shareholders present in person or by proxy and all other matters shall be decided by majority of the votes cast by Shareholders present in person or by proxy, unless the question is one for which by express provision of the 1940 Act or the Declaration of Trust, a different vote is required, in which case such express provision shall control the decision of such question. There shall be no cumulative voting for Trustees. At all meetings of Shareholders, unless the voting is conducted by inspectors, all questions relating to the qualification of voters and the validity of proxies and the acceptance or rejection of votes shall be decided by the Chairman of the meeting.

Section 8. Inspectors. At any election of Trustees, the Board of Trustees prior thereto may, or, if they have not so acted, the chairman of the meeting may appoint one or more inspectors of election who shall first subscribe an oath of affirmation to execute faithfully the duties of inspectors at such election with strict impartiality and according to the best of their ability, and shall after the election make a certificate of the result of the vote taken.

Section 9. Stock Ledger and List of Shareholders. It shall be the duty of the secretary or assistant secretary of the Trust to cause an original or duplicate share ledger to be maintained at the office of the Trust's transfer agent. Such share ledger may be in written form or any other form capable of being converted into written form within a reasonable time for visual inspection.

Section 10. Action Without Meeting. Any action to be taken by Shareholders may be taken without a meeting if (a) all Shareholders entitled to vote on

4

the matter consent to the action in writing, (b) all Shareholders entitled to notice of the meeting but not entitled to vote at it sign a written waiver of any right to dissent, and (c) the written consents are filed with the records of the meeting of Shareholders. Such consent shall be treated for all purposes as a vote at a meeting.

Section 11. Meetings by Remote Communication. The Board of Trustees may, in their sole discretion, determine that any meeting of Shareholders (whether annual or special) may be held solely by means of remote communication. If authorized by the Board of Trustees, in their sole discretion, and subject to such guidelines and procedures as the Board of Trustees may adopt, Shareholders and proxyholders not physically present at a meeting of Shareholders may, by means of remote communication: (a) participate in a meeting of Shareholders; and (b) be deemed present in person and vote at a meeting of Shareholders whether such meeting is to be held at a designated place or solely by means of remote communication, provided that: (i) the Trust shall implement such measures as the Board of Trustees deem to be reasonable

(A)to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a Shareholder or proxyholder; and (B) to provide such Shareholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the Shareholders; and (ii) if any Shareholder or proxyholder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the Trust. The Board of Trustees may, in their sole discretion, notify Shareholders of any postponement, adjournment or a change of the place of a meeting of Shareholders (including a change to hold the meeting solely by means of remote communication) by a document publicly filed by the Trust with the Securities and Exchange Commission without the requirement of any further notice hereunder.

ARTICLE III

Trustees

Section 1. Place of Meeting. Meetings of the Board of Trustees, regular or special, may be held at any place as the Board may from time to time determine.

Section 2. Quorum. At all meetings of the Board of Trustees, one-third of the Trustees then in office shall constitute a quorum for the transaction of business provided that in no case may a quorum be fewer than two persons (unless there is only one Trustee then in office, in which case such Trustee shall constitute a quorum). The action of a majority of the Trustees present at any meeting at which a quorum is present shall be the action of the Board of Trustees unless the concurrence of a greater proportion is required for such action by the 1940 Act or the Declaration of Trust. If a quorum shall not be present at any meeting of Trustees, the Trustees present thereat may by a majority vote adjourn the meeting from time to time without notice other than announcement at the meeting, until a quorum shall be present.

Section 3. Regular Meetings. Regular meetings of the Board of Trustees

5

may be held without additional notice at such time and place as shall from time to time be determined by the Board of Trustees provided that notice of any change in the time or place of such meetings shall be sent promptly to each Trustee not present at the meeting at which such change was made in the manner provided for notice of special meetings.

Section 4. Special Meetings. Special meetings of the Board of Trustees may be called by the chairman or president on one day's notice to each Trustee; special meetings shall be called by the chairman or president or secretary in like manner and on like notice on the written request of two Trustees.

Section 5. Telephone Meeting. Members of the Board of Trustees or a committee of the Board of Trustees may participate in a meeting by means of a conference telephone or similar communications equipment if all persons participating in the meeting can hear each other at the same time.

Section 6. Informal Actions. Any action required or permitted to be taken at any meeting of the Board of Trustees or of any committee thereof may be taken without a meeting, if a written consent to such action is signed by a majority of the Trustees then in office or by a majority of the members of such committee, as the case may be (unless, in either case, the question is one for which by express provision of the 1940 Act or the Declaration of Trust, a different vote is required, in which case such express provision shall control the decision of such question). Any such written consent shall be filed with the minutes of proceedings of the Board or committee, as applicable.

Section 7. Committees. The Board of Trustees may appoint from among its members an Executive Committee and other committees composed of two or more Trustees, and may delegate to such committees any or all of the powers of the Board of Trustees in the management of the business and affairs of the Trust.

Section 8. Action of Committees. In the absence of an appropriate resolution of the Board of Trustees, each committee may adopt such rules and regulations governing its proceedings, quorum and manner of acting as it shall deem proper and desirable, provided that the quorum shall not be fewer than two Trustees. The committees shall keep minutes of their proceedings and shall report the same to the Board of Trustees at the meeting next succeeding, and any action by the committee shall be subject to revision and alteration by the Board of Trustees, provided that no rights of third persons shall be affected by any such revision or alteration. In the absence of any member of such committee, the members thereof present at any meeting, whether or not they constitute a quorum, may appoint a member of the Board of Trustees to act in the place of such absent member.

Section 9. Election of Chairman. The Board of Trustees shall choose a Chairman. The Chairman of the Board of Trustees shall hold his post for such term and shall perform and execute such duties and administrative powers as the Board of Trustees shall prescribe from time to time.

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Section 10. Other Executive Posts. The Board of Trustees from time to time may appoint such other Executive Posts as it shall deem advisable, who shall hold their posts for such terms and shall perform and execute such executive duties and administrative powers as the Board of Trustees shall from time to time prescribe.

ARTICLE IV

Notices

Section 1. Form. Subject to the 1940 Act, notices and all other communications to Shareholders shall be in writing and delivered personally, or sent by electronic transmission to an electronic mail address provided by the Shareholder or mailed to the Shareholders at their addresses appearing on the books of the Trust or given as otherwise provided herein. Notices to Trustees shall be oral or by telephone or in writing delivered personally or mailed to the Trustees at their addresses appearing on the books of the Trust or by electronic transmission to an electronic mail address provided by the Trustee. Notice by mail shall be deemed to be given at the time when the same shall be mailed, notice by electronic transmission shall be deemed given at the time when sent, and notice by a document publicly filed by with the Securities and Exchange Commission shall be deemed given at the time the Trust files such document. Subject to the provisions of the 1940 Act, notice to Trustees need not state the purpose of a regular or special meeting.

Section 2. Waiver. Whenever any notice of the time, place or purpose of any meeting of Shareholders, Trustees or a committee is required to be given under the provisions of the Declaration of Trust or these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to such notice and filed with the records of the meeting, whether before or after the holding thereof, or actual attendance at the meeting of Shareholders in person or by proxy, or at the meeting of Trustees or a committee in person, shall be deemed equivalent to the giving of such notice to such persons.

ARTICLE V

Officers

Section 1. Executive Officers. The officers of the Trust shall be chosen by the Board of Trustees and shall include a president, a secretary and a treasurer. The Board of Trustees may, from time to time, elect or appoint a controller, one or more vice presidents, assistant secretaries, assistant treasurers, and assistant controllers. The same person may hold two or more offices, except that no person shall be both president and vice president and no officer shall execute, acknowledge or verify any instrument in more than one capacity, if such instrument is required by law, the Declaration of Trust or these By-Laws to be executed, acknowledged or verified by two or more officers.

Section 2. Election. The Board of Trustees shall choose a president, a

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secretary and a treasurer.

Section 3. Other Officers. The Board of Trustees from time to time may appoint such other officers and agents as it shall deem advisable, who shall hold their offices for such terms and shall exercise powers and perform such duties as shall be determined from time to time by the Board of Trustees. The Board of Trustees from time to time may delegate to one or more officers or agents the power to appoint any such subordinate officers or agents and to prescribe their respective rights, terms of office, authorities and duties.

Section 4. Compensation. The salaries or other compensation of all officers and agents of the Trust shall be fixed by the Board of Trustees, except that the Board of Trustees may delegate to any person or group of persons the power to fix the salary or other compensation of any subordinate officers or agents appointed pursuant to Section 3 of this Article V.

Section 5. Tenure. The officers of the Trust shall serve at the pleasure of the Board of Trustees. Any officer or agent may be removed by the affirmative vote of the Board of Trustees with or without cause whenever, in its judgment, the best interests of the Trust will be served thereby. In addition, any officer or agent appointed pursuant to Section 3 may be removed, either with or without cause, by any officer upon whom such power of removal shall have been conferred by the Board of Trustees. Any vacancy occurring in any office of the Trust by death, resignation, removal or otherwise shall be filled by the Board of Trustees, unless pursuant to Section 3 the power of appointment has been conferred by the Board of Trustees on any other officer.

Section 6. President and Chief Executive Officer. The president shall be the chief executive officer of the Trust, unless the Board of Trustees designates the chairman as chief executive officer. The chief executive officer shall see that all orders and resolutions of the Board of Trustees are carried into effect. The chief executive officer shall also be the chief administrative officer of the Trust and shall perform such other duties and have such other powers as the Board of Trustees may from time to time prescribe.

Section 7. Vice President. The vice presidents, in order of their seniority, shall, in the absence or disability of the chief executive officer, perform the duties and exercise the powers of the chief executive officer and shall perform such other duties as the Board of Trustees or the chief executive officer may from time to time prescribe.

Section 8. Secretary. The secretary shall attend all meetings of the Board of Trustees and all meetings of the Shareholders and record all the proceedings thereof and shall perform like duties for any committee when required. He shall give, or cause to be given, notice of meetings of the Shareholders and of the Board of Trustees, shall have charge of the records of the Trust, including the stock books, and shall perform such other duties as may be prescribed by the Board of Trustees or chief executive

8

officer, under whose supervision he shall be. He shall keep in safe custody the seal of the Trust and, when authorized by the Board of Trustees, shall affix and attest the same to any instrument requiring it. The Board of Trustees may give general authority to any other officer to affix the seal of the Trust and to attest the affixing by his signature.

Section 9. Assistant Secretaries. The assistant secretaries in order of their seniority, shall, in the absence or disability of the secretary, perform the duties and exercise the powers of the secretary and shall perform such other duties as the Board of Trustees or the chief executive officer shall prescribe.

Section 10. Treasurer. The treasurer, unless another officer has been so designated, shall be the chief financial officer of the Trust. He shall have general charge of the finances and books of account of the Trust. Except as otherwise provided by the Board of Trustees, he shall have general supervision of the funds and property of the Trust and of the performance by the custodian of its duties with respect thereto. He shall render to the Board of Trustees, whenever directed by the Board of Trustees, an account of the financial condition of the Trust and of all his transactions as treasurer. He shall cause to be prepared annually a full and correct statement of the affairs of the Trust, including a balance sheet and a statement of operations for the preceding fiscal year. He shall perform all of the acts incidental to the office of treasurer, subject to the control of the Board of Trustees or the chief executive officer.

Section 11. Assistant Treasurer. The assistant treasurer shall in the absence or disability of the treasurer, perform the duties and exercise the powers of the treasurer and shall perform such other duties as the Board of Trustees or the chief executive officer may from time to time prescribe.

ARTICLE VI

Indemnification and Insurance

Section 1. Agents, Proceedings and Expenses. For the purpose of this Article, "agent" means any person who is or was a Trustee or officer of this Trust and any person who, while a Trustee or officer of this Trust, is or was serving at the request of this Trust as a Trustee, director, officer, partner, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise; "Trust" includes any domestic or foreign predecessor entity of this Trust in a merger, consolidation, or other transaction in which the predecessor's existence ceased upon consummation of the transaction; "proceeding" means any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative; and "expenses" includes without limitation attorney's fees and any expenses of establishing a right to indemnification under this Article.

Section 2. Actions Other Than by Trust. This Trust shall indemnify any person who was or is a party or is threatened to be made a party to any proceeding (other than an action by or in the right of this Trust) by reason of the fact that such person

9

is or was an agent of this Trust, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with such proceeding, if it is determined that person acted in good faith and reasonably believed: (a) in the case of conduct in his official capacity as an agent of the Trust, that his conduct was in the Trust's best interests and (b) in all other cases, that his conduct was at least not opposed to the Trust's best interests and (c) in the case of a criminal proceeding, that he had no reasonable cause to believe the conduct of that person was unlawful. The termination of any proceeding by judgment, order or settlement shall not of itself create a presumption that the person did not meet the requisite standard of conduct set forth in this Section. The termination of any proceeding by conviction, or a plea of nolo contendere or its equivalent, or an entry of an order of probation prior to judgment, creates a rebuttable presumption that the person did not meet the requisite standard of conduct set forth in this Section.

Section 3. Actions by the Trust. This Trust shall indemnify any person who was or is a party or is threatened to be made a party to any proceeding by or in the right of this Trust to procure a judgment in its favor by reason of the fact that that person is or was an agent of this Trust, against expenses actually and reasonably incurred by that person in connection with the defense or settlement of that action if that person acted in good faith, in a manner that person believed to be in the best interests of this Trust and with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances.

Section 4. Exclusion of Indemnification. Notwithstanding any provision to the contrary contained herein, there shall be no right to indemnification for any liability arising by reason of willful misfeasance, bad faith, gross negligence, or the reckless disregard of the duties involved in the conduct of the agent's office with this Trust.

No indemnification shall be made under Sections 2 or 3 of this Article:

(a)In respect of any proceeding as to which that person shall have been adjudged to be liable on the basis that personal benefit was improperly received by him, whether or not the benefit resulted from an action taken in the person's official capacity; or

(b)In respect of any proceeding as to which that person shall have been adjudged to be liable in the performance of that person's duty to this Trust, unless and only to the extent that the court in which that action was brought shall determine upon application that in view of all the relevant circumstances of the case, that person is fairly and reasonably entitled to indemnity for the expenses which the court shall determine; however, in such case, indemnification with respect to any proceeding by or in the right of the Trust or in which liability shall have been adjudged by reason of the disabling conduct set forth in the preceding paragraph shall be limited to

10

expenses; or

(c)Of amounts paid in settling or otherwise disposing of a proceeding, with or without court approval, or of expenses incurred in defending a proceeding which is settled or otherwise disposed of without court approval, unless the required approval set forth in Section 6 of this Article is obtained.

Section 5. Successful Defense by Agent. To the extent that an agent of this Trust has been successful, on the merits or otherwise, in the defense of any proceeding referred to in Sections 2 or 3 of this Article before the court or other body before whom the proceeding was brought, the agent shall be indemnified against expenses actually and reasonably incurred by the agent in connection therewith, provided that the Board of Trustees, including a majority who are disinterested, non-party Trustees, also determines that based upon a review of the facts, the agent was not liable by reason of the disabling conduct referred to in Section 4 of this Article.

Section 6. Required Approval. Except as provided in Section 5 of this Article, any indemnification under this Article shall be made by this Trust only if authorized in the specific case on a determination that indemnification of the agent is proper in the circumstances because the agent has met the applicable standard of conduct set forth in Sections 2 or 3 of this Article and is not prohibited from indemnification because of the disabling conduct set forth in Section 4 of this Article, by:

(a)A majority vote of a quorum consisting of Trustees who are not parties to the proceeding and are not interested persons of the Trust (as defined in the 1940 Act);

(b)A written opinion by an independent legal counsel; or

(c)The Shareholders; however, Shares held by agents who are parties to the proceeding may not be voted on the subject matter under this Sub-Section.

Section 7. Advance of Expenses. Expenses incurred in defending any proceeding may be advanced by this Trust before the final disposition of the proceeding if (a) receipt of a written affirmation by the agent of his good faith belief that he has met the standard of conduct necessary for indemnification under this Article and a written undertaking by or on behalf of the agent, such undertaking being an unlimited general obligation to repay the amount of the advance if it is ultimately determined that he has not met those requirements, and (b) a determination that the facts then known to those making the determination would not preclude indemnification under this Article. Determinations and authorizations of payments under this Section must be made in the manner specified in Section 6 of this Article for determining that the indemnification is permissible.

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Section 8. Other Contractual Rights. Nothing contained in this Article shall affect any right to indemnification to which persons other than Trustees and officers of this Trust or any subsidiary hereof may be entitled by contract or otherwise.

Section 9. Limitations. No indemnification or advance shall be made under this Article, except as provided in Sections 5 or 6 in any circumstances where it appears:

(a)That it would be inconsistent with a provision of the Agreement and Declaration of Trust of the Trust, a resolution of the Shareholders, or an agreement in effect at the time of accrual of the alleged cause of action asserted in the proceeding in which the expenses were incurred or other amounts were paid which prohibits or otherwise limits indemnification; or

(b)That it would be inconsistent with any condition expressly imposed by a court in approving a settlement.

Section 10. Insurance. Upon and in the event of a determination by the Board of Trustees of this Trust to purchase such insurance, this Trust shall purchase and maintain insurance on behalf of any agent or employee of this Trust against any liability asserted against or incurred by the agent or employee in such capacity or arising out of the agent's or employee's status as such to the fullest extent permitted by law.

Section 11. Fiduciaries of Employee Benefit Plan. This Article does not apply to any proceeding against any Trustee, investment manager or other fiduciary of an employee benefit plan in that person's capacity as such, even though that person may also be an agent of this Trust as defined in Section 1 of this Article. Nothing contained in this Article shall limit any right to indemnification to which such a Trustee, investment manager, or other fiduciary may be entitled by contract or otherwise which shall be enforceable to the extent permitted by applicable law other than this Article.

ARTICLE VII

Shares of Beneficial Interest

Section 1. Certificates. A certificate or certificates representing and certifying the series or class and the full, but not fractional, number of Shares of beneficial interest owned by each Shareholder in the Trust shall not be issued except as the Board of Trustees may otherwise determine from time to time. Any such certificate issued shall be signed by facsimile signature or otherwise by the chairman or president or a vice president and counter-signed by the secretary or an assistant secretary or the treasurer or an assistant treasurer.

Section 2. Signature. In case any officer who has signed any certificate ceases to be an officer of the Trust before the certificate is issued, the certificate may

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nevertheless be issued by the Trust with the same effect as if the officer had not ceased to be such officer as of the date of its issue.

Section 3. Recording and Transfer Without Certificates. The Trust shall have the full power to participate in any program approved by the Board of Trustees providing for the recording and transfer of ownership of the Trust's Shares by electronic or other means without the issuance of certificates.

Section 4. Lost Certificates. The Board of Trustees may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Trust alleged to have been stolen, lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to have been stolen, lost or destroyed, or upon other satisfactory evidence of such theft, loss or destruction and may in its discretion and as a condition precedent to the issuance thereof, require the owner of such stolen, lost or destroyed certificate or certificates, or his legal representative, to give the Trust a bond with sufficient surety, to the Trust to indemnify it against any loss or claim that may be made by reason of the issuance of a new certificate.

Section 5. Transfer of Shares. Transfers of Shares of beneficial interest of the Trust shall be made on the books of the Trust by the holder of record thereof (in person or by his attorney thereunto duly authorized by a power of attorney duly executed in writing and filed with the secretary of the Trust) (i) if a certificate or certificates have been issued, upon the surrender of the certificate or certificates, properly endorsed or accompanied by proper instruments of transfer, representing such Shares, or (ii) as otherwise prescribed by the Board of Trustees. Every certificate exchanged, surrendered for redemption or otherwise returned to the Trust shall be marked "Canceled" with the date of cancellation.

Section 6. Registered Shareholders. The Trust shall be entitled to recognize the exclusive right of a person registered on its books as the owner of Shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of Shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or Shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by applicable law or the Declaration of Trust.

Section 7. Transfer Agents and Registrars. The Board of Trustees may, from time to time, appoint or remove transfer agents and or registrars of the Trust, and they may appoint the same person as both transfer agent and registrar. Upon any such appointment being made, all certificates representing Shares of beneficial interest thereafter issued shall be countersigned by such transfer agent and shall not be valid unless so countersigned.

Section 8. Stock Ledger. The Trust shall maintain an original stock ledger containing the names and addresses of all Shareholders and the number and series or class of Shares held by each Shareholder. Such stock ledger may be in written form or

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any other form capable of being converted into written form within reasonable time for visual inspection.

ARTICLE VIII

General Provisions

Section 1. Custodianship. Except as otherwise provided by resolution of the Board of Trustees, the Trust shall place and at all times maintain in the custody of a custodian (including any sub-custodian for the custodian) all funds, securities and similar investments owned by the Trust. Subject to the approval of the Board of Trustees, the custodian may enter into arrangements with securities depositories, provided such arrangements comply with the provisions of the 1940 Act and the rules and regulations promulgated thereunder.

Section 2. Execution of Instruments. All deeds, documents, transfers, contracts, agreements and other instruments requiring execution by the Trust may be signed by the chairman or president or a vice president or the treasurer or the secretary or any other duly authorized officer or agent of the Trust, which authority may be general or specific.

Section 3. Net Asset Value. Subject to Section 1 of Article VI of the Declaration of Trust, the net asset value per Share shall be determined separately as to each series or class of the Trust's Shares, by dividing the sum of the total market value of the series' or class's investments and other assets, less any liabilities, by the total outstanding Shares of such series or class, subject to the 1940 Act and any other applicable Federal securities law or rule or regulation currently in effect.

Section 4. Forum for Actions Under the Securities Act of 1933, as

amended. Unless the Trust consents in writing to the selection of an alternative forum, the Federal District Courts of the United States of America shall, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended. Any person or entity purchasing or otherwise acquiring Shares or holding any interest in Shares shall be deemed to have notice of and consented to the provisions of this Section.

ARTICLE IX

Amendments

The Board of Trustees, without a vote by the Shareholders, shall have the power to make, alter and repeal the By-Laws of the Trust.

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amended and restated GLOBAL CUSTODY AGREEMENT 

This Amended and Restated Agreement, dated August 14, 2017, is between JPMorgan Chase Bank, N.A. (“Bank”), a national banking association with a place of business at 383 Madison Avenue, New York, NY 10179; and each of the open-end management investment companies listed on Exhibit 1 of this Agreement, registered with the U.S. Securities and Exchange Commission under the Investment Company Act of 1940, as amended (the “1940 Act”), organized as Delaware statutory trusts (each a “Trust”), severally and for and on behalf of certain of their respective portfolios listed on Exhibit 1 (each a “Fund”), each Trust and their respective Funds with a place of business at P.O. Box 2600 Valley Forge, PA 19482. Each Trust for which Bank serves as custodian under this Agreement, shall individually be referred to as “Customer.”  

1.

INTENTION OF THE PARTIES; DEFINITIONS 

1.1

INTENTION OF THE PARTIES. 

(a)

This Agreement sets out the terms governing custodial, settlement and certain other associated services offered by Bank to Customer. Bank shall be responsible for the performance of only those duties that are set forth in this Agreement or expressly contained in Instructions that are consistent with the provisions of this Agreement and with Bank’s operations and procedures. Customer acknowledges that Bank is not providing any legal, tax or investment advice in providing the services hereunder. 

(b)

Investing in foreign markets may be a risky enterprise. The holding of Global Assets and cash in foreign jurisdictions may involve risks of loss or other special features. Bank shall not be liable for any loss that results from the general risks of investing or Country Risk. 

1.2

DEFINITIONS. 

(a)

As used herein, the following terms have the meaning hereinafter stated. 

“ACCOUNT” has the meaning set forth in Section 2.1 of this Agreement. 

“AFFILIATE” means an entity controlling, controlled by, or under common control with, Bank. 

“AFFILIATED SUBCUSTODIAN” means a Subcustodian that is an Affiliate. 

“APPLICABLE LAW” means any statute, whether national, state or local, applicable in the United States or any other country, the rules of the treaty establishing the European Community, other applicable treaties, any other law, rule, regulation or interpretation of any governmental entity, any applicable common law, and any decree, injunction, judgment, order, ruling, or writ of any governmental entity. 

“AUTHORIZED PERSON” means any person (including an investment manager or other agent) who has been designated by written notice from Customer or its designated agent to act on behalf of Customer hereunder. Such persons shall continue to be Authorized Persons until such time as Bank receives Instructions from Customer or its designated agent that any such person is no longer an Authorized Person. 

“BANK INDEMNITEES” means Bank, its Subcustodians, and their respective nominees, directors, officers and employees. 

“BANK’S LONDON BRANCH” means the London branch office of Bank. 

“CASH ACCOUNT” has the meaning set forth in Section 2.1(a)(ii). 

“CORPORATE ACTION” means any subscription right, bonus issue, stock repurchase plan, redemption, exchange, calls, redemptions, tender offer, recapitalization, reorganization, conversions, consolidation, subdivision, takeover offer or similar matter with respect to a Financial Asset in the Securities Account that requires discretionary action by the holder, but does not include proxy voting. 

“COUNTRY RISK” means the risk of investing or holding assets in a particular country or market, including, but not limited to, risks arising from: nationalization, expropriation or other governmental actions; the country’s financial infrastructure, including prevailing custody and settlement practices; laws applicable to the safekeeping and recovery of Financial Assets and cash held in custody; the regulation of the banking and securities industries, including changes in market rules; currency restrictions, devaluations or fluctuations; and market conditions affecting the orderly execution of securities transactions or the value of assets. 

“CUSTOMER” means individually each Trust and their respective Funds as listed on Exhibit 1 hereto. 

“ENTITLEMENT HOLDER” means the person named on the records of a Securities Intermediary as the person having a Securities Entitlement against the Securities Intermediary. 

“FINANCIAL ASSET” means, as the context requires, either the asset itself or the means by which a person’s claim to it is evidenced, including a Security, a security certificate, or a Securities Entitlement. “Financial Asset” includes any Global Assets but does not include cash. 

“FUND” means each portfolio of each Trust and listed on Exhibit 1 hereto. 

“GLOBAL ASSET” means any “Financial Asset” (a) for which the principal trading market is located outside of the United States; (b) for which presentment for payment is to be made outside of the United States; or (c) which is acquired outside of the United States. 

“INSTRUCTIONS” has the meaning set forth in Section 3.1 of this Agreement. 

“LIABILITIES” means any liabilities, losses, claims, costs, damages, penalties, fines, obligations, or expenses of any kind whatsoever (including, without limitation, reasonable attorneys’, accountants’, consultants’ or experts’ fees and disbursements). 

“SECURITIES” means stocks, bonds, rights, warrants and other negotiable and non-negotiable instruments, whether issued in certificated or uncertificated form, that are commonly traded or dealt in on securities exchanges or financial markets. “Securities” also means other obligations of an issuer, or shares, participations and interests in an issuer recognized in the country in which it is issued or dealt in as a medium for investment and any other property as may be acceptable to Bank for the Securities Account. 

“SECURITIES ACCOUNT” means each Securities custody account on Bank’s records to which Financial Assets are or may be credited pursuant hereto. 

“SECURITIES DEPOSITORY” has the meaning set forth in Section 5.1 of this Agreement. 

“SECURITIES ENTITLEMENT” means the rights and property interest of an Entitlement Holder with respect to a Financial Asset as set forth in Part 5 of Article 8 of the Uniform Commercial Code of the State of New York, as the same may be amended from time to time. 

“SECURITIES INTERMEDIARY” means Bank, a Subcustodian, a Securities Depository, and any other financial institution which in the ordinary course of business maintains custody accounts for others and acts in that capacity. 

“SUBCUSTODIAN” has the meaning set forth in Section 5.1 and includes Affiliated Subcustodians. 

“TRUST” means each open-end investment company organized as a Delaware business trust and listed on Exhibit 1 hereto. 

(b)

All terms in the singular shall have the same meaning in the plural unless the context otherwise provides and vice versa. 

2.

WHAT BANK IS REQUIRED TO DO 

2.1

Set Up Accounts. 

(a)

Bank shall establish and maintain the following accounts (“Accounts”): 

(i)

a Securities Account in the name of Customer on behalf of each Fund for Financial Assets, which may be received by Bank or its Subcustodian for the account of Customer, including as an Entitlement Holder; and 

(ii)

an account in the name of Customer (“Cash Account”) for any and all cash in any currency received by Bank or its Subcustodian for the account of Customer. 

Notwithstanding paragraph (ii), cash held in respect of those markets where Customer is required to have a cash account in its own name held directly with the relevant Subcustodian shall be held in that manner and shall not be part of the Cash Account. Bank shall notify Customer prior to the establishment of such an account. 

(b)

At the request of Customer, additional Accounts may be opened in the future, which shall be subject to the terms of this Agreement. 

(c)

Except as precluded by Section 8-501(d) of the Uniform Commercial Code (“UCC”), Bank shall hold all Securities and other Financial Assets, other than cash, of a Fund that are delivered to it in a “securities account” with Bank for and in the name of such Fund and shall treat all such assets other than cash as “financial assets” as those terms are used in the UCC.  

2.2

Cash Account. 

Except as otherwise provided in Instructions acceptable to Bank, all cash held in the Cash Account shall be deposited during the period it is credited to the Account in one or more deposit accounts at Bank or at Bank’s London Branch. Any cash so deposited with Bank’s London Branch shall be payable exclusively by Bank’s London Branch in the applicable currency, subject to compliance with any Applicable Law, including, without limitation, any restrictions on transactions in the applicable currency imposed by the country of the applicable currency. 

2.3

Segregation of Assets; Nominee Name. 

(a)

Bank shall identify in its records that Financial Assets credited to Customer’s Securities Account belong to Customer on behalf of the relevant Fund (except as otherwise may be agreed by Bank and Customer). 

(b)

To the extent permitted by Applicable Law or market practice, Bank shall require each Subcustodian to identify in its own records that Financial Assets credited to Customer’s Securities Account belong to customers of Bank, such that it is readily apparent that the Financial Assets do not belong to Bank or the Subcustodian. 

(c)

Bank is authorized, in its discretion, to hold in bearer form, such Financial Assets as are customarily held in bearer form or are delivered to Bank or its Subcustodian in bearer form; and to register in the name of the Customer, Bank, a Subcustodian, a Securities Depository, or their respective nominees, such Financial Assets as are customarily held in registered form. Customer authorizes Bank or its Subcustodian to hold Financial Assets in omnibus accounts and shall accept delivery of Financial Assets of the same class and denomination as those deposited with Bank or its Subcustodian. 

(d)

Upon receipt of Instruction, Bank shall establish and maintain a segregated account or accounts for and on behalf of each Fund for purposes of segregating cash, government securities, and other assets in connection with derivative transactions entered into by a Fund or options purchased, sold or written by the Fund. 

2.4

Settlement of Trades. 

When Bank receives an Instruction directing settlement of a trade in Financial Assets that includes all information required by Bank, Bank shall use reasonable care to effect such settlement as instructed. Settlement of purchases and sales of Financial Assets shall be conducted in accordance with prevailing standards of the market in which the transaction occurs. The risk of loss shall be Customer’s whenever Bank delivers Financial Assets or payment in accordance with applicable market practice in advance of receipt or settlement of the expected consideration. In the case of the failure of Customer’s counterparty to deliver the expected consideration as agreed, Bank shall contact the counterparty to seek settlement and, if the settlement is not received, notify Customer, but Bank shall not be obligated to institute legal proceedings, file proof of claim in any insolvency proceeding, or take any similar action. 

2.5

Contractual Settlement Date Accounting. 

(a)

Bank shall effect book entries on a “contractual settlement date accounting” basis as described below with respect to the settlement of trades in those markets where Bank generally offers contractual settlement day accounting and shall notify Customer of these markets from time to time. 

(i)

Sales: On the settlement date for a sale, Bank shall credit the Cash Account with the sale proceeds of the sale and transfer the relevant Financial Assets to an account pending settlement of the trade if not already delivered. 

(ii)

Purchases: On the settlement date for the purchase (or earlier, if market practice requires delivery of the purchase price before the settlement date), Bank shall debit the Cash Account with the settlement monies and credit a separate account. Bank then shall post the Securities Account as awaiting receipt of the expected Financial Assets. Customer shall not be entitled to the delivery of Financial Assets that are awaiting receipt until Bank or a Subcustodian actually receives them. 

Bank reserves the right to restrict in good faith the availability of contractual day settlement accounting for credit reasons. Bank, whenever reasonably possible, will notify Customer prior to imposing such restrictions.  

(b)

Bank may (in its discretion) upon at least 48 hours prior oral or written notification to Customer, reverse any debit or credit made pursuant to Section 2.5(a) prior to a transaction’s actual settlement, and Customer shall be responsible for any costs or liabilities resulting from such reversal. Customer acknowledges that the procedures described in this sub-section are of an administrative nature, and Bank does not undertake to make loans and/or Financial Assets available to Customer. 

2.6

Actual Settlement Date Accounting. 

With respect to any sale or purchase transaction that is not posted to the Account on the contractual settlement date as referred to in Section 2.5, Bank shall post the transaction on the date on which the cash or Financial Assets received as consideration for the transaction is actually received by Bank. 

2.7

Income Collection; Autocredit. 

(a)

Bank shall credit the Cash Account with income and redemption proceeds on Financial Assets in accordance with the times notified by Bank from time to time on or after the anticipated payment date, net of any taxes that are withheld by Bank or any third party. Where no time is specified for a particular market, income and redemption proceeds from Financial Assets shall be credited only after actual receipt and reconciliation. Bank may reverse such credits upon at least 48 hours prior oral or written notification to Customer when Bank believes that the corresponding payment shall not be received by Bank within a reasonable period or such credit was incorrect. 

(b)

Bank shall make reasonable endeavors in its discretion to contact appropriate parties to collect unpaid interest, dividends or redemption proceeds, but neither Bank nor its Subcustodians shall be obliged to file any formal notice of default, institute legal proceedings, file proof of claim in any insolvency proceeding, or take any similar action. 

2.8

Fractions / Redemptions by Lot. 

In the event that, as a result of holding Financial Assets in an omnibus account, the Customer receives fractional interests in Financial Assets arising out of a corporate action or class action litigation, Bank will credit the Customer with the amount of cash the Customer would have received, as reasonably determined by Bank, had the Financial Assets not been held in an omnibus account, and the Customer shall relinquish to Bank its interest in such fractional interests. If some, but not all, of an outstanding class of Financial Asset is called for redemption, Bank may allot the amount redeemed among the respective beneficial holders of such class of Financial Asset in any manner Bank reasonably deems to be fair and equitable. Bank will promptly notify Customer of any action taken pursuant to this section.  

2.9

Presentation of Coupons; Certain Other Ministerial Acts. 

Until Bank receives Instructions to the contrary, Bank shall: 

(a)

present all Financial Assets for which Bank has received notice of a call for redemption or that have otherwise matured, and all income and interest coupons and other income items that call for payment upon presentation; 

(b)

execute in the name of Customer such certificates as may be required to obtain payment in respect of Financial Assets; and 

(c)

exchange interim or temporary documents of title held in the Securities Account for definitive documents of title. 

2.10

Corporate Actions; Class Action Litigation. 

(a)

Bank will follow Corporate Actions through receipt of notices from issuers, from Subcustodians, Securities Depositories and notices published in industry publications and reported in reporting services. Bank will promptly notify Customer of any Corporate Action of which information is either (i) received by it or by a Subcustodian to the extent that Bank’s central corporate actions department has actual knowledge of the Corporate Action in time to notify its customers in a timely manner; or (ii) published via a formal notice in publications and reporting services routinely used by Bank for this purpose in time for Bank to notify its customers in a timely manner. Any notices received by Bank’s corporate actions department about U.S. settled securities class action litigation that requires action by affected owners of the underlying Financial Assets will be promptly provided to Customer if Bank, using reasonable care and diligence in the circumstances, identifies that Customer was a shareholder and held the relevant Financial Assets in custody with Bank at the relevant time. Bank will not make filings in the name of Customer in respect to such notifications except as otherwise agreed in writing between Customer and Bank.  

(b)

If an Authorized Person fails to provide Bank with timely Instructions with respect to any Corporate Action or class action, neither Bank nor its Subcustodians or their respective nominees will take any action in relation to that Corporate Action or class action, except as otherwise agreed in writing by Bank and Customer or as may be set forth by Bank as a default action in the notification it provides under Section 2.10(a) with respect to that Corporate Action or class action. If Customer provides Bank with Instructions with respect to any Corporate Action after the deadline set by Bank but before the deadline set by a Securities Depository, Bank shall use commercially reasonable efforts to act on such Instructions. If Bank fails to act on Instructions provided by Customer prior to the deadline set by Bank with respect to any Corporate Action, Bank will be liable for direct losses incurred by Customer.  

2.11

Proxy Voting. 

(a)

Bank shall provide Customer or its agent with details of Securities in the Account on a daily basis (“Daily Holdings Data”), and Bank or its agent shall act in accordance with Instructions from an Authorized Person in relation to matters Customer or its agent determine in their absolute discretion are to be voted upon at meetings of holders of Financial Assets, based upon such Daily Holdings Data (“the proxy voting service”). Neither Bank nor its agent shall be under any duty to provide Customer or its agent with information which it or they receive on matters to be voted upon at meetings of holders of Financial Assets. 

(b)

Bank or its agent shall act upon Instructions to vote, provided Instructions are received by Bank or its agent at its proxy voting department by the relevant deadline for such Instructions as determined by Bank or its agent. If Instructions are not received in a timely manner, neither Bank nor its agent shall be obligated to provide further notice to Customer. 

(c)

In markets where the proxy voting service is not available or where Bank has not received a duly completed enrollment form or other relevant documentation, Bank or its agent shall endeavor to act upon Instructions to vote on matters before meetings of holders of Financial Assets where it is reasonably

practicable for Bank or its agent (or its Subcustodians or nominees as the case may be) to do so and where such Instructions are received in time for Bank or its agent to take timely action. 

(d)

Customer acknowledges that the provision of the proxy voting service may be precluded or restricted under a variety of circumstances. These circumstances include, but are not limited to: (i) the Financial Assets being on loan or out for registration, (ii) the pendency of conversion or another corporate action, or (iii) Financial Assets being held at Customer’s request in a name not subject to the control of Bank or its Subcustodian, in a margin or collateral account at Bank or another bank or broker, or otherwise in a manner which affects voting, local market regulations or practices, or restrictions by the issuer. Additionally, in some markets, Bank may be required to vote all shares held for a particular issue for all of Bank’s customers in the same way. Bank or its agent shall inform Customer or its agent where this is the case. 

(e)

Notwithstanding the fact that Bank may act in a fiduciary capacity with respect to Customer under other agreements or otherwise hereunder, in performing the proxy voting service Bank shall be acting solely as the agent of Customer, and shall not exercise any discretion with regard to such proxy voting service or vote any proxy except when directed by an Authorized Person. 

2.12

Statements and Information Available On-Line. 

(a)

Bank will send, or make available on-line, to Customer, at times mutually agreed, a statement of account in Bank’s standard format for each Account maintained by Customer with Bank, identifying the Financial Assets and cash held in each Account. Bank also will provide to Customer, upon request, the capability to reformat the information contained in each statement of account. In addition, Bank will send, or make available on-line, to Customer an advice or notification of any transfers of cash or Financial Assets with respect to each Account. Bank will not be liable with respect to any matter set forth in those portions of any such statement of account or advice (or reasonably implied therefrom) to which Customer has not given Bank a written exception or objection within ninety days of receipt of such statement, provided such matter is not the result of Bank’s willful misconduct or bad faith. 

(b)

Prices and other information obtained from third parties which may be contained in any statement sent to Customer have been obtained from sources Bank believes to be reliable. Bank does not, however, make any representation as to the accuracy of such information or that the prices specified necessarily reflect the proceeds that would be received on a disposal of the relevant Financial Assets. 

(c)

Customer understands that records and reports, other than statements of account, that are available to it on-line on a real-time basis may not be accurate due to mis-postings, delays in updating Account records, and other causes. Bank will not be liable for any loss or damage arising out of the inaccuracy of any such records or reports that are accessed on-line on a real-time basis. 

2.13

Access to Bank’s Records. 

(a)

Bank shall create and maintain all records relating to its activities and obligations under this Agreement in such manner as will meet the obligations of Customer under the 1940 Act, with particular attention to Section 31 thereof and rules 31a-1 and 31a-2 thereunder. All such records shall be property of Customer. Bank will allow Customer’s duly authorized officers, employees, and agents, including Customer’s independent public accountants, and the employees and agents of the SEC access at all times during the regular business hours of Bank to such records. Except, in the case of access by the SEC as otherwise required by the SEC, such access will be subject to reasonable notice to Bank.  Subject to restrictions under Applicable Law, Bank also will obtain an undertaking to permit Customer’s independent public accountants reasonable access to the records of any Subcustodian of Securities held in the Securities Account as may be required in connection with such examination. 

(b)

In addition, Bank shall cooperate with and supply necessary information to any entity or entities appointed by the Customer to keep its books of account and/or compute its net asset value. Bank shall provide reports and other data as Customer may from time to time reasonably request to enable Customer to obtain, from year to year, favorable opinions from Customer’s independent accountants with respect to Bank’s activities hereunder in connection with (i) the preparation of any registration statement of Customer and any other reports required by a governmental agency or regulatory authority with jurisdiction over the Fund, and (ii) the fulfillment by Customer of any other requirements of a governmental agency or regulatory authority with jurisdiction over the Fund. 

(c)

Upon reasonable request of Customer, Bank shall provide Customer with a copy of Bank’s Service Organizational Control (SOC) 1 reports (or any successor reports) prepared in accordance with the requirements of AT-C section 320, Reporting on an Examination of Controls at a Service Organization Relevant to User Entities’ Internal Control Over Financial Reporting (or any successor attestation standard). In addition, from time to time as requested, Bank will furnish Customer a “gap” or “bridge” letter that will address any material changes that might have occurred in Customer’s controls covered in the SOC Report from the end of the SOC Report period through a specified requested date. Bank shall use commercially reasonable efforts to provide Customer with such reports as Customer may reasonably request or otherwise reasonably require to fulfill its duties under Rule 38a-l of the 1940 Act or similar legal and regulatory requirements. Upon reasonable request by Customer, Bank shall also provide to Customer customary sub-certifications in connection with Sarbanes-Oxley Act of 2002 certification requirements. Upon written request, Bank shall provide Customer with information about Bank’s processes for the management and monitoring of Subcustodians for safeguarding Financial Assets. 

2.14

Maintenance of Financial Assets at Bank and at Subcustodian Locations. 

(a)

Unless Instructions require another location acceptable to Bank, Global Assets shall be held in the country or jurisdiction in which their principal trading market is located, where such Global Assets may be presented for payment, where such Financial Assets were acquired, or where such Financial Assets are held. Bank reserves the right to refuse to accept delivery of Global Assets or cash in countries and jurisdictions other than those referred to in Schedule 1 to this Agreement, as in effect from time to time. 

(b)

Bank shall not be obliged to follow an Instruction to hold Financial Assets with, or have them registered or recorded in the name of, any person not chosen by Bank. However, if Customer does instruct Bank to hold Securities with or register or record Securities in the name of a person not chosen by Bank, the consequences of doing so are at Customer’s own risk and Bank shall not be liable therefor. 

2.15

Tax Reclaims. 

Bank shall provide tax reclamation services as provided in Section 8.2. 

2.16

Foreign Exchange Transactions. 

To facilitate the administration of Customer’s trading and investment activity, Bank may, but shall not be obliged to, enter into spot or forward foreign exchange contracts with Customer, or an Authorized Person, and may also provide foreign exchange contracts and facilities through its Affiliates or Subcustodians. Instructions, including standing instructions, may be issued with respect to such contracts, but Bank may establish rules or limitations concerning any foreign exchange facility made available. In all cases where Bank, its Affiliates or Subcustodians enter into a master foreign exchange contract that covers foreign exchange transactions for the Accounts, the terms and conditions of that foreign exchange contract and, to the extent not inconsistent, this Agreement, shall apply to such transactions. 

2.17

Compliance with Securities and Exchange Commission (“SEC”) rule 17f-5 (“rule 17f-5”). 

(a)

Customer’s board of directors (or equivalent body) (hereinafter ‘Board’) hereby delegates to Bank, and, except as to the country or countries as to which Bank may, from time to time, advise Customer that it does not accept such delegation, Bank hereby accepts the delegation to it, of the obligation to perform as Customer’s ‘Foreign Custody Manager’ (as that term is defined in rule 17f-5(a)(3) as promulgated under the 1940 Act), including for the purposes of: (i) selecting Eligible Foreign Custodians (as that term is defined in rule 17f-5(a)(1), and as the same may be amended from time to time, or that have otherwise been exempted pursuant to an SEC exemptive order) to hold foreign Financial Assets and cash, (ii) evaluating the contractual arrangements with such Eligible Foreign Custodians (as set forth in rule 17f-5(c)(2)), and (iii) monitoring such foreign custody arrangements (as set forth in rule 17f-5(c)(3)). 

(b)

In connection with the foregoing, Bank shall: 

(i)

provide written reports notifying Customer’s Board of the placement of Financial Assets and cash with particular Eligible Foreign Custodians and of any material change in the arrangements with such Eligible Foreign Custodians, with such reports to be provided to Customer’s Board at such times as the Board deems reasonable and appropriate based on the circumstances of Customer’s foreign custody arrangements (and until further notice from Customer such reports shall be provided not less than quarterly with respect to the placement of Financial Assets and cash with particular Eligible Foreign Custodians and with reasonable promptness upon the occurrence of any material change in the arrangements with such Eligible Foreign Custodians); 

(ii)

exercise such reasonable care, prudence and diligence in performing as Customer’s Foreign Custody Manager as a person having responsibility for the safekeeping of foreign Financial Assets and cash would exercise; 

(iii)

in selecting an Eligible Foreign Custodian, first have determined that foreign Financial Assets and cash placed and maintained in the safekeeping of such Eligible Foreign Custodian shall be subject to reasonable care, based on the standards applicable to custodians in the relevant market, after having considered all factors relevant to the safekeeping of such foreign Financial Assets and cash, including, without limitation, those factors set forth in rule 17f-5(c)(1)(i)-(iv); 

(iv)

determine that the written contract with an Eligible Foreign Custodian requires that the Eligible Foreign Custodian shall provide reasonable care for foreign Financial Assets and cash based on the standards applicable to custodians in the relevant market, including, without limitation, those factors set forth in rule 17f-5(c)(2). 

(v)

have established a system to monitor the continued appropriateness of maintaining foreign Financial Assets and cash with particular Eligible Foreign Custodians and of the governing contractual arrangements; it being understood, however, that in the event that Bank shall have determined that the existing Eligible Foreign Custodian in a given country would no longer afford foreign Financial Assets and cash reasonable care and that no other Eligible Foreign Custodian in that country would afford reasonable care, Bank shall promptly so advise Customer and shall then act in accordance with the Instructions of Customer with respect to the disposition of the affected foreign Financial Assets and cash. 

(c)

Subject to (b)(i)-(v) above, Bank is hereby authorized to place and maintain foreign Financial Assets and cash on behalf of Customer with Eligible Foreign Custodians pursuant to a written contract deemed appropriate by Bank. Each such contract shall, except as set forth in the last paragraph of this subsection (c), include provisions that provide: 

(i)

For indemnification or insurance arrangements (or any combination of the foregoing) that will adequately protect Customer against the risk of loss of Financial Assets and cash held in accordance with such contract; 

(ii)

That Customer’s Financial Assets will not be subject to any right, charge, security interest, lien or claim of any kind in favor of the Eligible Foreign Custodian or its creditors, except a claim of payment for their safe custody or administration or, in the case of cash, liens or rights in favor of creditors of such Eligible Foreign Custodian arising under bankruptcy, insolvency or similar laws; 

(iii)

That beneficial ownership of Customer’s Assets will be freely transferable without the payment of money or value other than for safe custody or administration; 

(iv)

That adequate records will be maintained identifying Customer’s Assets as belonging to Customer or as being held by a third party for the benefit of Customer; 

(v)

That Customer’s independent public accountants will be given access to those records described in (iv) above or confirmation of the contents of those records; and 

(vi)

That Customer will receive sufficient and timely periodic reports with respect to the safekeeping of Customer’s Assets, including, but not limited to, notification of any transfer to or from Customer’s account or a third party account containing Assets held for the benefit of Customer. 

Such contract may contain, in lieu of any or all of the provisions specified in this subsection (c), such other provisions that Bank determines will provide, in their entirety, the same or a greater level of care and protection for Customer’s Assets as the specified provisions, in their entirety. 

(d)

Except as expressly provided herein, Customer shall be solely responsible to assure that the maintenance of foreign Financial Assets and cash hereunder complies with the rules, regulations, interpretations and exemptive orders as promulgated by or under the authority of the SEC. 

(e)

Bank represents to Customer that it is a U.S. Bank as defined in rule 17f-5(a)(7). Customer represents to Bank that: (1) the foreign Financial Assets and cash being placed and maintained in Bank’s custody are subject to the 1940 Act, as the same may be amended from time to time; (2) its Board has determined that it is reasonable to rely on Bank to perform as Customer’s Foreign Custody Manager; and (3) its Board or its investment adviser shall have determined that Customer may maintain foreign Financial Assets and cash in each country in which Customer’s Financial Assets and cash shall be held hereunder and determined to accept Country Risk. Nothing contained herein shall require Bank to make any selection or to engage in any monitoring on behalf of Customer that would entail consideration of Country Risk. 

(f)

Bank shall provide to Customer such information relating to Country Risk as is specified in Appendix 1 hereto. Customer hereby acknowledges that: (i) such information is solely designed to inform Customer of market conditions and procedures and is not intended as a recommendation to invest or not invest in particular markets; and (ii) Bank has gathered the information from sources it considers reliable, but that Bank shall have no responsibility for inaccuracies or incomplete information, provided that Bank transmits the information using reasonable care. 

2.18

Compliance with SEC rule 17f-7 (“rule 17f-7”). 

(a)

Bank shall, for consideration by Customer, provide an analysis of the custody risks associated with maintaining Customer’s foreign Financial Assets with each Eligible Securities Depository used by Bank as of the date hereof (or, in the case of an Eligible Securities Depository not used by Bank as of the date hereof, prior to the initial placement of Customer’s foreign Financial Assets at such Depository) and at which any foreign Financial Assets of Customer are held or are expected to be held. The foregoing analysis will be provided to Customer at Bank’s Website. In connection with the foregoing, Customer shall notify Bank of any Eligible Securities Depositories at which it does not choose to have its foreign Financial Assets held. Bank shall monitor the custody risks associated with maintaining Customer’s Financial Assets at each such Eligible Securities Depository on a continuing basis and shall promptly notify Customer or its investment adviser of any material changes in such risks. 

(b)

Bank shall exercise reasonable care, prudence and diligence in performing the requirements set forth in Section 2.18(a) above. 

(c)

Based on the information available to it in the exercise of diligence, Bank shall determine the eligibility under rule 17f-7 of each depository before including it on Schedule 3 hereto and shall promptly advise Customer if any Eligible Securities Depository ceases to be eligible. (Eligible Securities Depositories used by Bank as of the date hereof are set forth in Schedule 3 hereto, and as the same may be amended on notice to Customer from time to time.) 

2.19

Service Level Agreement. 

Subject to the terms and conditions of this Agreement, Bank agrees to perform the custody services provided for under this Agreement in a manner that meets or exceeds any service levels as may be agreed upon by the parties from time to time in a written document that is executed by both parties on or after the date of this Agreement, unless that written document specifically states that it is not contractually binding.  For the avoidance of doubt, Bank’s Service Directory shall not be deemed to be such a written document.  

3.

INSTRUCTIONS 

3.1

Acting on Instructions; Unclear Instructions. 

(a)

Bank is authorized to act under this Agreement (or to refrain from taking action) in accordance with the instructions received by Bank, via telephone, telex, facsimile transmission, or other teleprocess or electronic instruction or trade information system acceptable to Bank (“Instructions”). Bank shall have no responsibility for the authenticity or propriety of any Instructions that Bank believes in good faith to have been given by Authorized Persons or which are transmitted with proper testing or authentication pursuant to terms and conditions that Bank may specify. Customer authorizes Bank to accept and act upon any Instructions received by it without inquiry. Customer shall indemnify the Bank Indemnitees against, and hold each of them harmless from, any Liabilities that may be imposed on, incurred by, or asserted against the Bank Indemnitees as a result of any action or omission taken in accordance with any Instructions or other directions upon which Bank is authorized to rely under the terms of this Agreement, provided that Bank shall not be indemnified against or held harmless from any Liabilities arising out of Bank’s negligence, bad faith, fraud, or willful misconduct. 

(b)

Unless otherwise expressly provided, all Instructions shall continue in full force and effect until canceled or superseded. 

(c)

Bank may (in its sole discretion and without affecting any part of this Section 3.1) seek clarification or confirmation of an Instruction from an Authorized Person and may decline to act upon an Instruction if it does not receive clarification or confirmation satisfactory to it. Bank shall not, except as provided in Section 7.1 hereof, be liable for any loss arising from any delay while it seeks such clarification or confirmation. 

(d)

In executing or paying a payment order Bank may rely upon the identifying number (e.g. Fedwire routing number or account) of any party as instructed in the payment order. Customer assumes full responsibility for any inconsistency within an Instruction between the name and identifying number of any party in payment orders issued to Bank in Customer’s name. 

3.2

Security Devices. 

Either party may record any of their telephonic communications. Customer shall comply with any security procedures reasonably required by Bank from time to time with respect to verification of Instructions. Customer shall be responsible for safeguarding any test keys, identification codes or other security devices that Bank shall make available to Customer or any Authorized Person.  

3.3

Instructions; Contrary to Law/Market Practice. 

Bank need not act upon Instructions which it reasonably believes to be contrary to law, regulation or market practice but shall be under no duty to investigate whether any Instructions comply with Applicable Law or market practice. Bank shall notify Customer as soon as reasonably practicable if it does not act upon Instructions under this Section. 

3.4

Cut-off Times. 

Bank has established cut-off times for receipt of some categories of Instruction, which shall be made available to Customer. If Bank receives an Instruction after its established cut-off time, it shall attempt to act upon the Instruction on the day requested if Bank deems it practicable to do so or otherwise as soon as practicable on the next business day. 

3.5

Electronic Access.  

Access by the Customer to certain systems, applications or products of Bank shall be governed by this Agreement and the terms and conditions set forth in Annex A Electronic Access.   

4.

FEES, EXPENSES AND OTHER AMOUNTS OWING TO BANK 

4.1

Fees and Expenses. 

Customer shall pay Bank for its services hereunder the fees set forth in Schedule 2 hereto or such other amounts as may be agreed upon in writing from time to time. 

4.2

Overdrafts. 

If a debit to any currency in the Cash Account results in a debit balance in that currency then Bank may, in its discretion, advance an amount equal to the overdraft and such an advance shall be deemed a loan to Customer, payable on demand, bearing interest at the rate agreed by Customer and Bank for the Accounts from time to time, or, in the absence of such an agreement, at the rate charged by Bank from time to time, for overdrafts incurred by customers similar to Customer, from the date of such advance to the date of payment (both after as well as before judgment) and otherwise on the terms on which Bank makes similar advances available from time to time. Bank shall promptly notify Customer of such an advance. No prior action or course of dealing on Bank’s part with respect to the settlement of transactions on Customer’s behalf shall be asserted by Customer against Bank for Bank’s refusal to make advances to the Cash Account or to settle any transaction for which Customer does not have sufficient available funds in the applicable currency in the Account. 

4.3

Bank’s Right Over Securities; Set-off. 

(a)

Customer grants Bank a security interest in and a lien on the Financial Assets held in the Securities Account of a particular Fund as shall have a fair market value equal to the aggregate amount of all overdrafts of such Fund, together with accrued interest, as security for any and all amounts which are now or become owing to Bank with respect to that Fund under any provision of this Agreement, whether or not matured or contingent (“Indebtedness”). Such lien and security interest shall be effective only so long as such advance, overdraft, or accrued interest thereon remains outstanding and Bank shall have all the rights and remedies of a secured party under the New York Uniform Commercial Code in respect of the repayment of the advance, overdraft or accrued interest. In this regard, Bank shall be entitled to (i) without notice to Customer, withhold delivery of such Financial Assets, and (ii) with two business days’ prior notice to the Customer and an opportunity for the Customer to satisfy such Indebtedness to Bank, sell or otherwise realize any of such Financial Assets and to apply the proceeds and any other monies credited to the Cash Account in satisfaction of such Indebtedness solely to the extent of such Indebtedness, provided, however, that Bank shall only be obligated to provide the Customer with same-day prior notice if Bank, in its reasonable business judgment, determines that, due to market conditions or other special circumstances, a delay would be likely to materially prejudice its ability to recover the Indebtedness.  During any such notice period, Bank will, at Customer’s request, consult with Customer regarding the selection of Financial Assets to be sold by Bank to satisfy the Indebtedness. For the avoidance of doubt, only advances made by Bank under Section 4.2 are “Indebtedness” subject to this Section 4.3. No other outstanding amounts payable by Customer to Bank (including, without limitation, amounts payable by Customer under Section 4.1) are “Indebtedness” subject to this Section 4.3. 

(b)

Bank shall be further entitled to set any such Indebtedness off against any cash or deposit account of the Fund that incurred the Indebtedness with Bank or any of its Affiliates of which the Fund is the beneficial owner, regardless of the currency involved; Bank shall provide prior notice to Customer of its intent to exercise its set off rights against any cash or deposit account of the Fund, which notice shall be provided at least on the same day as the set off is effected, provided however that no prior notice is required in cases where Bank, in its reasonable business judgment, determines that, due to market conditions or other special circumstances, the delay required in order to provide prior notice would be likely to materially prejudice its ability to recover the Indebtedness. 

5.

SUBCUSTODIANS, SECURITIES DEPOSITORIES, AND OTHER AGENTS 

5.1

Appointment of Subcustodians; Use of Securities Depositories. 

(a)

Bank is authorized under this Agreement to act through and hold Customer’s Global Assets with subcustodians, being at the date of this Agreement the entities listed in Schedule 1 and/or such other entities as Bank may appoint as subcustodians (“Subcustodians”). At the request of Customer, Bank may, but need not, add to Schedule 1 an Eligible Foreign Custodian where Bank has not acted as Foreign Custody Manager with respect to the selection thereof. Bank shall notify Customer in the event that it elects to add any such entity. Bank shall use reasonable care, prudence and diligence in the selection and continued appointment of such Subcustodians. In addition, Bank and each Subcustodian may deposit Global Assets with, and hold Global Assets in, any securities depository, settlement system, dematerialized book entry system or similar system (together a “Securities Depository”) on such terms as such systems customarily operate and Customer shall provide Bank with such documentation or acknowledgements that Bank may require to hold the Global Assets in such systems. 

(b)

Any agreement Bank enters into with a Subcustodian for holding Bank’s customers’ assets shall provide that: (i) such assets shall not be subject to any right, charge, security interest, lien or claim of any kind in favor of such Subcustodian or its creditors, except a claim of payment for their safe custody or administration or, in the case of cash deposits, except for liens or rights in favor of creditors of the Subcustodian arising under bankruptcy, insolvency or similar laws; (ii) beneficial ownership of such assets shall be freely transferable without the payment of money or value other than for safe custody or administration; (iii) adequate records will be maintained identifying the assets as belonging to Customer or as being held by a third party for the benefit of Customer; (iv) Customer and Customer’s independent public accountants will be given reasonable access to those records or confirmation of the contents of those records; and (v) Customer will receive periodic reports with respect to the safekeeping of Customer’s assets, including, but not limited to, notification of any transfer to or from Customer’s account or a third party account containing assets held for the benefit of Customer. Where a Subcustodian deposits Securities with a Securities Depository, Bank shall cause the Subcustodian to identify on its records as belonging to Bank, as agent, the Securities shown on the Subcustodian’s account at such Securities Depository. The foregoing shall not apply to the extent of any special agreement or arrangement made by Customer with any particular Subcustodian. 

(c)

Bank shall have no responsibility for any act or omission by (or the insolvency of) any Securities Depository. In the event Customer incurs a loss due to the negligence, bad faith, willful misconduct, or insolvency of a Securities Depository, Bank shall make reasonable endeavors to seek recovery from the Securities Depository. 

(d)

The term Subcustodian as used herein shall mean the following: 

(i)

a “U.S. Bank” as such term is defined in rule 17f-5; and 

(ii)

an “Eligible Foreign Custodian” as such term is defined in rule 17f-5 and any other entity that shall have been so qualified by exemptive order, rule or other appropriate action of the SEC. 

(iii)

For purposes of clarity, it is agreed that as used in Section 5.2(a), the term Subcustodian shall not include any Eligible Foreign Custodian as to which Bank has not acted as Foreign Custody Manager. 

(e)

The term ‘securities depository’ as used herein when referring to a securities depository located outside the U.S. shall mean an “Eligible Securities Depository” as defined in rule 17f-7, or that has otherwise been made exempt pursuant to an SEC exemptive order. 

(f)

The term ‘securities depository’ as used herein when referring to a securities depository located in the U.S. shall mean a “Securities Depository” as defined in rule 17f-4. 

5.2

Liability for Subcustodians. 

(a)

Subject to the exculpation from consequential damages set forth in Section 7.1(b), Bank shall be liable for direct Liabilities incurred by Customer that result from: (i) the acts or omissions of any Subcustodian selected by Bank, whether domestic or foreign, to the same extent as if such act or omission was performed by Bank itself, taking into account the standards and market practice prevailing in the relevant market; or (ii) the insolvency of any Affiliated Subcustodian. Subject to the terms and conditions of this Agreement, including the exculpation from consequential damages set forth in Section 7.1(b), Bank shall take full responsibility for any Liabilities that result from or that are caused by the fraud, willful misconduct, or negligence of its Subcustodians or the insolvency of an Affiliated Subcustodian. In the event of any Liabilities suffered or incurred by Customer caused by or resulting from the acts or omissions of any Subcustodian for which Bank would otherwise be liable, Bank shall promptly reimburse Customer in the amount of any such Liabilities.   

(b)

Subject to Section 7.1(a) and Bank’s duty to use reasonable care, prudence and diligence in the monitoring of a Subcustodian’s financial condition as reflected in its published financial statements and other publicly available financial information concerning it, Bank shall not be responsible for the insolvency of any Subcustodian which is not a branch or an Affiliated Subcustodian. 

(c)

Bank reserves the right to add, replace or remove Subcustodians. Bank shall give Customer prompt notice of any such action, which shall be advance notice if practicable. Upon request by Customer, Bank shall identify the name, address and principal place of business of any Subcustodian and the name and address of the governmental agency or other regulatory authority that supervises or regulates such Subcustodian. 

5.3

Use of Agents. 

(a)

Bank may provide certain services under this Agreement through third parties. These third parties may be Affiliates. Except to the extent provided in Section 5.2 with respect to Subcustodians, Bank shall not be responsible for any loss as a result of a failure by any broker or any other third party that it selects and retains using reasonable care and without negligence to provide ancillary services, such as pricing, proxy voting, and corporate action services, that it does not customarily provide itself. Nevertheless, Bank shall be liable for the performance of any such service provider selected by Bank that is an Affiliate to the same extent as Bank would have been liable if it performed such services itself. 

(b)

Bank shall execute transactions involving Financial Assets of United States origin through a broker which is an Affiliate (i) in the case of the sale under Section 2.8 of a fractional interest or (ii) if an Authorized Person directs Bank to use the affiliated broker or otherwise requests that Bank select a broker for that transaction, unless, in either case, the Affiliate does not execute similar transactions in such Financial Assets. The affiliated broker may charge its customary commission (or retain its customary spread) with respect to either such transaction. 

6.

ADDITIONAL PROVISIONS RELATING TO CUSTOMER 

6.1

Representations of Customer and Bank. 

(a)

Customer represents and warrants to Bank that: (i) it has full authority and power, and has obtained all necessary authorizations and consents, to deposit and control the Financial Assets and cash in the Accounts, to use Bank as its custodian in accordance with the terms of this Agreement and to incur indebtedness, pledge Financial Assets as contemplated by Section 4.3, and enter into foreign exchange transactions; and (ii) this Agreement is its legal, valid and binding obligation, enforceable in accordance with its terms and it has full power and authority to enter into and has taken all necessary corporate action to authorize the execution of this Agreement. Bank may rely upon the above or the certification of such other facts as may be required to administer Bank’s obligations hereunder. 

(b)

Bank represents and warrants to Customer that this Agreement is its legal, valid and binding obligation, enforceable in accordance with its terms and it has full power and authority to enter into and has taken all necessary corporate action to authorize the execution of this Agreement. Customer may rely upon the above or the certification of such other facts as may be required to administer Customer’s obligations hereunder. 

6.2

Customer to Provide Certain Information to Bank. 

Upon request, Customer shall promptly provide to Bank such information about itself and its financial status as Bank may reasonably request, including Customer’s organizational documents and its current audited and unaudited financial statements. 

6.3

Customer is Liable to Bank Even if it is Acting for Another Person. 

If Customer is acting as an agent for a disclosed or undisclosed principal in respect of any transaction, cash, or Financial Asset, Bank nevertheless shall treat Customer as its principal for all purposes under this Agreement. In this regard, Customer shall be liable to Bank as a principal in respect of any transactions relating to the Account. The foregoing shall not affect any rights Bank might have against Customer’s principal. 

6.4

Several Obligations of the Trusts and the Funds. 

This Agreement is executed on behalf of the Board of Trustees of each Fund as Trustees and not individually and the obligations of this Agreement are not binding upon any of the Trustees or shareholders individually but are binding only upon the assets and property of each Fund severally and not jointly. With respect to any obligations of Customer arising out of this Agreement, Bank shall look for payment or satisfaction of any obligation solely to the assets of the Fund to which such obligation relates as though Bank had separately contracted by separate written instrument with respect to the Fund. 

7.

WHEN BANK IS LIABLE TO CUSTOMER 

7.1

Standard of Care; Liability. 

(a)

Notwithstanding any other provision of this Agreement, Bank shall exercise reasonable care, prudence and diligence in carrying out all of its duties and obligations under this Agreement (except to the extent Applicable Law provides for a higher standard of care, in which case such higher standard shall apply), and shall be liable to Customer for any and all Liabilities suffered or incurred by Customer resulting from the failure of Bank to exercise such reasonable care, prudence and diligence or resulting from Bank’s negligence, willful misconduct, or fraud and to the extent provided in Section 5.2(a). Unless otherwise specified or required by Applicable Law, Bank shall not be in violation of this Agreement with respect to any matter as to which it has satisfied the standard of care under this Agreement.  

(b)

Bank shall not be liable under any circumstances for any indirect, incidental, consequential or special damages (including, without limitation, lost profits) of any form incurred by any person, whether or not foreseeable and regardless of the type of action in which such a claim may be brought, with respect to the Accounts or Bank’s performance hereunder or Bank’s role as custodian.  

(c)

Subject to the limitations set forth in this Agreement, each Customer severally and not jointly shall indemnify the Bank Indemnitees against, and hold them harmless from, any Liabilities that may be imposed on, incurred by or asserted against any of the Bank Indemnitees in connection with or arising out of Bank’s performance under this Agreement, provided the Bank Indemnitees have not acted with negligence or bad faith or engaged in fraud or willful misconduct in connection with the Liabilities in question. Nevertheless, Customer shall not be obligated to indemnify any Bank Indemnitee under the preceding sentence with respect to any Liability for which Bank is liable under Section 5.2 of this Agreement. Bank shall use all commercially reasonable efforts to mitigate any Liability for which indemnity is sought hereunder (provided, however, that reasonable expenses incurred with respect to such mitigation shall be Liabilities subject to indemnification hereunder).  

(d)

Subject to any obligation Customer may have to indemnify Bank with respect to amounts claimed by third parties, Customer shall have no liability whatsoever for any consequential, special, indirect or speculative loss or damages (including, but not limited to, lost profits) suffered by Bank Indemnitees in connection with the transactions and services contemplated hereby and the relationship established hereby even if Customer has been advised as to the possibility of the same and regardless of the form of action. 

(e)

Without limiting Subsections 7.1 (a) or (b), Bank shall have no duty or responsibility to: (i) question Instructions or make any suggestions to Customer or an Authorized Person regarding such Instructions, provided that Bank believes in good faith that such Instructions have been given by Authorized Persons or which are transmitted with proper testing or authentication pursuant to terms and conditions that Bank may specify; (ii) supervise or make recommendations with respect to investments or the retention of Financial Assets; (iii) advise Customer or an Authorized Person regarding any default in the payment of principal or income of any security other than as provided in Section 2.7(b) of this Agreement; (iv) except as otherwise expressly required herein, evaluate or report to Customer or an Authorized Person regarding the financial condition of any broker, agent or other party to which Bank is instructed to deliver Financial Assets or cash; or (v) except for trades settled at DTC where the broker provides DTC trade confirmation and Customer provides for Bank to receive the trade instruction, review or reconcile trade confirmations received from brokers (and Customer or its Authorized Persons issuing Instructions shall bear any responsibility to review such confirmations against Instructions issued to and statements issued by Bank). 

(f)Bank shall indemnify the Customer from and against any and all Liabilities which may be imposed on, incurred by, or asserted against the Customer resulting directly either from Bank’s negligence, bad faith, fraud or willful misconduct in the performance of its obligations or duties hereunder, or from any act or omission by a Subcustodian in the performance of its subcustodial obligations or duties hereunder for which Bank is expressly liable under Section 5.2, taking into account the standards and market practice prevailing in the relevant market, provided that (i) in no event shall the Bank be obliged to indemnify Customer from against any Liability (or any claim for a Liability) to the extent such Liability is described in clause 7.1(b) this Agreement and (ii) the Customer shall use all commercially reasonable efforts to mitigate any Liability for which indemnity is sought hereunder (provided, however, that reasonable expenses incurred with respect to such mitigation shall be Liabilities subject to indemnification hereunder). 

7.2

Force Majeure. 

So long as Bank maintains and updates its business continuation and disaster recovery procedures as set forth in Section 10.8, Bank shall have no liability for any damage, loss or expense of any nature that Customer may suffer or incur, caused by an act of God, fire, flood, civil or labor disturbance, war, act of any governmental authority or other act or threat of any authority (de jure or de facto), legal constraint, fraud or forgery (except by Bank or Bank Indemnitees), malfunction of equipment or software (except to the extent such malfunction is primarily attributable to Bank’s negligence, or willful misconduct in maintaining the equipment or software), failure of or the effect of rules or operations of any external funds transfer system, inability to obtain or interruption of external communications facilities, or any cause beyond the reasonable control of Bank (including without limitation, the non-availability of appropriate foreign exchange). Bank shall endeavor to promptly notify Customer when it becomes aware of any situation outlined above, but shall not be liable for failure to do so. If Bank is prevented from carrying out its obligations under this Agreement for a period of thirty days, Customer may terminate the Agreement by giving Bank not less than thirty days’ notice, without prejudice to any of the rights of any party accrued prior to the date of termination. 

7.3

Bank May Consult With Counsel. 

Bank shall be entitled to rely on, and may act upon the advice of professional advisers in relation to matters of law, regulation or market practice (which may be the professional advisers of Customer), and shall not be liable to Customer for any action reasonably taken or omitted pursuant to such advice; provided that Bank has selected and retained such professional advisers using reasonable care and acts reasonably in reliance on the advice. 

7.4

Bank Provides Diverse Financial Services and May Generate Profits as a Result. 

Customer acknowledges that Bank or its Affiliates may have a material interest in transactions entered into by Customer with respect to the Account or that circumstances are such that Bank may have a potential conflict of duty or interest. For example, Bank or its Affiliates may act as a market maker in the Financial Assets to which Instructions relate, provide brokerage services to other customers, act as financial adviser to the issuer of such Financial Assets, act in the same transaction as agent for more than one customer, have a material interest in the issue of the Financial Assets, or earn profits from any of these activities. Customer acknowledges that Bank or its Affiliates may be in possession of information tending to show that the Instructions received may not be in the best interests of Customer. Bank is not under any duty to disclose any such information. 

8.

TAXATION 

8.1

Tax Obligations. 

(a)

Customer confirms that Bank is authorized to deduct from any cash received or credited to the Cash Account any taxes or levies required by any revenue or Governmental authority for whatever reason in respect of Customer’s Accounts. 

(b)

If Bank does not receive appropriate declarations, documentation and information then additional United Kingdom taxation shall be deducted from all income received in respect of the Financial Assets issued outside the United Kingdom (which shall for this purpose include United Kingdom Eurobonds) and any applicable United States tax (including, but not limited to, non-resident alien tax) shall be deducted from United States source income. Customer shall provide to Bank such certifications, documentation, and information as it may require in connection with taxation, and warrants that, when given, this information is true and correct in every respect, not misleading in any way, and contains all material information. Customer undertakes to notify Bank immediately if any information requires updating or correcting. 

(c)

Customer shall be responsible for the payment of all taxes relating to the Financial Assets in the Securities Account, and Customer shall pay, indemnify and hold Bank harmless from and against any and all liabilities, penalties, interest or additions to tax with respect to or resulting from, any delay in, or failure by, Bank (1) to pay, withhold or report any U.S. federal, state or local taxes or foreign taxes imposed on, or (2) to report interest, dividend or other income paid or credited to the Cash Account, whether such failure or delay by Bank to pay, withhold or report tax or income is the result of (x) Customer’s failure to comply with the terms of this paragraph, or (y) Bank’s own acts or omissions; provided however, Customer shall not be liable to Bank for any penalty or additions to tax due as a result of Bank’s failure to pay or withhold tax or to report interest, dividend or other income paid or credited to the Cash Account solely as a result of Bank’s negligent acts or omissions. 

8.2

Tax Reclaims. 

(a)

Subject to the provisions of this Section, Bank shall apply for a reduction of withholding tax and any refund of any tax paid or tax credits in respect of income payments on Financial Assets credited to the Securities Account that Bank believes may be available. 

(b)

The provision of a tax reclamation service by Bank is conditional upon Bank receiving from Customer (i) a declaration of its identity and place of residence and (ii) certain other documentation (pro forma copies of which are available from Bank). If Financial Assets credited to the Account are beneficially owned by someone other than Customer, this information shall be necessary with respect to the beneficial owner. Customer acknowledges that Bank shall be unable to perform tax reclamation services unless it receives this information. 

(c)

Bank shall perform tax reclamation services only with respect to taxation levied by the revenue authorities of the countries advised to Customer from time to time and Bank may, by notification in writing, in its absolute discretion, supplement or amend the countries in which the tax reclamation services are offered. Other than as expressly provided in this Section 8.2, Bank shall have no responsibility with regard to Customer’s tax position or status in any jurisdiction. 

(d)

Customer confirms that Bank is authorized to disclose any information requested by any revenue authority or any governmental body in relation to the processing of any tax reclaim. 

9.

TERMINATION 

(a)

Either party may terminate this Agreement by an instrument in writing delivered or mailed, postage prepaid, to the other party, such termination to take effect not sooner than sixty days after the date of such delivery or mailing if termination is being sought by Customer, for itself or on behalf of a Fund, and not sooner than one hundred twenty days after the date of such delivery or mailing if termination is being sought by Bank. Termination of this Agreement with respect to any one particular Fund shall in no way affect the rights and duties under this Agreement with respect to any other Fund. If Customer gives notice of termination, it must provide full details of the persons to whom Bank must deliver Financial Assets and cash. If Bank gives notice of termination, then Customer must, within one hundred twenty days following receipt of the notice, notify Bank of details of its new custodian, failing which Bank may elect (at any time after one hundred twenty days following Customer’s receipt of the notice) either to retain the Financial Assets and cash until such details are given, continuing to charge fees due (in which case Bank’s sole obligation shall be for the safekeeping of the Financial Assets and cash), or deliver the Financial Assets and cash to Customer. Bank shall in any event be entitled to deduct any uncontested amounts owing to it prior to delivery of the Financial Assets and cash (and, accordingly, Bank shall be entitled to deduct cash from the Cash Account in satisfaction of uncontested amounts owing to it); provided, however, that Bank shall first provide Customer with a statement setting forth such amounts owing to it and provide Customer two days’ advance notice before effecting any such deduction, during which time Customer shall be entitled to determine the priority order in which such Financial Assets and cash are to be used to satisfy the outstanding uncontested amounts. Customer shall reimburse Bank promptly for all reasonable out-of-pocket expenses it incurs in delivering Financial Assets upon termination by Customer. Termination pursuant to this Section shall not affect any of the liabilities either party owes to the other arising under this Agreement prior to such termination. 

(b)

In the event of any termination of the Agreement for any reason whatsoever, Bank shall, for a period of up to one hundred twenty days after termination of the Agreement, (i) continue to provide all or part of the services under the Agreement if requested by Customer, which services shall be subject to the terms and conditions of the Agreement during the transition period unless otherwise agreed to by the parties; (ii) provide to Customer or any successor custodian all assistance reasonably requested to enable Customer or the successor custodian to commence providing services similar to those under the Agreement; and (iii) subject to the same limitations in place during the term of the Agreement, provide Customer with access to all records in the possession of Bank relating to Customer. In connection with any termination of the Agreement for any reason whatsoever, the parties shall also promptly develop a transition plan setting forth a reasonable timetable for the transition of Financial Assets and cash to Customer or any successor custodian and describing the parties’ respective responsibilities for transitioning the services back to Customer or any successor custodian in an orderly and uninterrupted fashion. Customer will use all reasonable efforts to transition to a successor custodian as soon as possible following the effective date of termination. 

10.

MISCELLANEOUS 

10.1

Notices. 

Notices (other than Instructions) shall be served by registered mail or hand delivery to the address of the respective parties as set out on the first page of this Agreement, unless notice of a new address is given to the other party in writing. Notice shall not be deemed to be given unless it has been received. 

10.2

Successors and Assigns. 

This Agreement shall be binding on each of the parties’ successors and assigns, but the parties agree that neither party can assign its rights and obligations under this Agreement without the prior written consent of the other party, which consent shall not be unreasonably withheld. 

10.3

Interpretation. 

Headings are for convenience only and are not intended to affect interpretation. References to sections are to sections of this Agreement and references to sub-sections and paragraphs are to sub-sections of the sections and paragraphs of the sub-sections in which they appear. 

10.4

Entire Agreement. 

This Agreement amends and restates the Amended and Restated Global Custody Agreement dated as of June 25, 2001 between Customer and Bank (the “Prior Agreement”), and the terms of this Agreement replace the terms of the Prior Agreement effective as of the date of this Agreement. This Agreement, including any Schedules, Appendices, Annexes, Exhibits, and Riders (and any separate agreement which Bank and Customer may enter into with respect to the services provided under this Agreement), sets out the entire Agreement between the parties in connection with the subject matter, and, unless otherwise agreed to by the parties, this Agreement supersedes any other agreement, statement, or representation relating to the services provided under this Agreement, whether oral or written. Amendments must be in writing and signed by both parties. For clarity, however, the continuation of any other agreements that reference the Prior Agreement is not intended to be affected by the fact of the amendment and restatement of the Prior Agreement by this Agreement, and reference in such agreements to the Prior Agreement shall be considered to be a reference to this Agreement effective as of the date of this Agreement (provided that matters relating to the time period prior to the date of this Agreement are governed by the terms of the Prior Agreement). 

10.5

Information Concerning Deposits at Bank. 

(a)

Under U.S. federal law, deposit accounts that the Customer maintains in Bank’s foreign branches (outside of the U.S.) are not insured by the Federal Deposit Insurance Corporation.  In the event of Bank’s liquidation, foreign branch deposits have a lesser preference than U.S. deposits, and such foreign deposits are subject to cross-border risks. 

(b)

Bank’s London Branch is a participant in the UK Financial Services Compensation Scheme (the "FSCS"), and the following terms apply to the extent any amount standing to the credit of the Cash Account is deposited in one or more deposit accounts at Bank’s London Branch.  The terms of the FSCS offer protection in connection with deposits to certain types of claimants to whom Bank’s London Branch provides services in the event that they suffer a financial loss as a direct consequence of Bank’s London Branch being unable to meet any of its obligations and, subject to the FSCS rules regarding eligible deposits, the Customer may have a right to claim compensation from the FSCS.  Subject to the FSCS rules, the maximum compensation payable by the FSCS, as at the date of this Agreement, in relation to eligible deposits is £85,000. 

(c)

In the event that Bank incurs a loss attributable to Country Risk with respect to any cash balance it maintains on deposit at a Subcustodian or other correspondent bank in regard to its global custody or trust businesses in the country where the Subcustodian or other correspondent bank is located, Bank may set such loss off against Customer’s Cash Account to the extent that such loss is directly attributable to Customer’s investments in that market. 

10.6

Confidentiality. 

The parties hereto agree that each shall treat confidentially the terms and conditions of this Agreement and all information provided by each party to the other regarding its business and operations. All confidential information provided by a party shall be used by the other party solely for the purpose of rendering or obtaining services pursuant to this Agreement, and except as may be required in carrying out this Agreement, shall not be disclosed to any third party without the prior consent of such providing party. The foregoing shall not be applicable to any information that is publicly available when provided or thereafter becomes publicly available other than through a breach of this provision, or that is required to be disclosed by or to any regulatory authority, any external or internal accountant, auditor or counsels of the parties, by judicial or administrative process or otherwise by Applicable Law, or to any disclosure made by a party if such party’s counsel has advised that such party could be liable under any Applicable Law or any judicial or administrative order or process for failure to make such disclosure. 

10.7

Data Privacy and Security. 

Bank will implement and maintain a written information security program, in compliance with all federal, state and local laws and regulations (including any similar international laws) applicable to Bank, that contains reasonable and appropriate security measures designed to safeguard the personal information of the Funds’ shareholders, employees, trustees and/or officers that Bank or any Subcustodian receives, stores, maintains, processes, transmits or otherwise accesses in connection with the provision of services hereunder. In this regard, Bank will establish and maintain policies, procedures, and technical, physical, and administrative safeguards, designed to (i) ensure the security and confidentiality of all personal information and any other confidential information that Bank receives, stores, maintains, processes or otherwise accesses in connection with the provision of services hereunder, (ii) protect against any reasonably foreseeable threats or hazards to the security or integrity of personal information or other confidential information, (iii) protect against unauthorized access to or use of personal information or other confidential information, (iv) maintain reasonable procedures to detect and respond to any internal or external security breaches, and (v) ensure appropriate disposal of personal information or other confidential information.  

Bank will monitor and review its information security program and revise it, as necessary and in its sole discretion, to ensure it appropriately addresses any applicable legal and regulatory requirements. Bank shall periodically test and review its information security program.  

Bank shall respond to Customer’s reasonable requests for information concerning Bank’s information security program and, upon request, Bank will provide a copy of its applicable policies and procedures, or in Bank’s discretion, summaries thereof, to Customer, to the extent Bank is able to do so without divulging information Bank reasonably believes to be proprietary or Bank confidential information. Upon reasonable request, Bank shall discuss with Customer the information security program of Bank. Bank also agrees, upon reasonable request, to complete any security questionnaire provided by Customer to the extent Bank is able to do so without divulging sensitive, proprietary, or Bank confidential information and return it in a commercially reasonable period of time (or provide an alternative response that reasonably addresses the points included in the questionnaire). Customer acknowledges that certain information provided by Bank, including internal policies and procedures, may be proprietary to Bank, and agrees to protect the confidentiality of all such materials it receives from Bank.  

Bank agrees to resolve promptly any applicable control deficiencies that come to its attention that do not meet the standards established by federal and state privacy and data security laws, rules, regulations, and/or generally accepted industry standards related to Bank’s information security program. 

Bank shall: (i) promptly notify Customer of any confirmed unauthorized access to personal information or other confidential information of Customer (“Breach of Security”); (ii) promptly furnish to Customer appropriate details of such Breach of Security and assist Customer in assessing the Breach of Security to the extent it is not privileged information or part of an investigation; (iii) reasonably cooperate with Customer in any litigation and investigation of third parties reasonably deemed necessary by Customer to protect its proprietary and other rights; (iv) use reasonable precautions to prevent a recurrence of a Breach of Security; and (v) take all reasonable and appropriate action to mitigate any potential harm related to a Breach of Security, including any reasonable steps requested by Customer that are practicable for Bank to implement. Nothing in the immediately preceding sentence shall obligate Bank to provide Customer with information regarding any of Bank’s other customers or clients that are affected by a Breach of Security, nor shall the immediately preceding sentence limit Bank’s ability to take any actions that Bank believes are appropriate to remediate any Breach of Security unless such actions would prejudice or otherwise limit Customer’s ability to bring its own claims or actions against third parties related to the Breach of Security. If Bank discovers or becomes aware of a suspected data or security breach that may involve an improper access, use, disclosure, or alteration of personal information or other confidential information of Customer, Bank shall, except to the extent prohibited by Applicable Law or directed otherwise by a governmental authority not to do so, promptly notify Customer that it is investigating a potential breach and keep Customer informed as reasonably practicable of material developments relating to the investigation until Bank either confirms that such a breach has occurred (in which case the first sentence of this paragraph will apply) or confirms that no data or security breach involving personal information or other confidential information of Customer has occurred. 

For these purposes, “personal information” shall mean (i) an individual’s name (first initial and last name or first name and last name), address or telephone number plus (a) social security number, (b) driver’s license number, (c) state identification card number, (d) debit or credit card number, (e) financial account number, (f) passport number, or (g) personal identification number or password that would permit access to a person’s account or (ii) any combination of the foregoing that would allow a person to log onto or access an individual’s account. This provision will survive termination or expiration of the Agreement for so long as Bank or any Subcustodian continues to possess or have access to personal information related to Customer. Notwithstanding the foregoing “personal information” shall not include information that is lawfully obtained from publicly available information, or from federal, state or local government records lawfully made available to the general public. 

10.8

Business Continuity and Disaster Recovery. 

Bank shall maintain and update from time to time business continuation and disaster recovery procedures with respect to its global custody business, which are designed, in the event of a significant business disruption affecting Bank, to be sufficient to enable Bank to resume and continue to perform its duties and obligations under this Agreement without undue delay or disruption. Bank shall test the operability of such procedures at least annually. Bank shall enter into and shall maintain in effect at all times during the term of this Agreement reasonable provision for (i) periodic back-up of the computer files and data with respect to Customer and (ii) use of alternative electronic data processing equipment to provide services under this Agreement. Upon reasonable request, Bank shall discuss with Customer any business continuation and disaster recovery procedures of Bank. Bank represents that its business continuation and disaster recovery procedures are appropriate for its business as a global custodian to investment companies registered under the 1940 Act. 

10.9

Insurance. 

Bank shall not be required to maintain any insurance coverage for the benefit of Customer. 

10.10

Governing Law and Jurisdiction, Certification of Residency. 

This Agreement shall be construed, regulated, and administered under the laws of the United States or State of New York, as applicable, without regard to New York’s principles regarding conflict of laws. The United States District Court for the Southern District of New York shall have the sole and exclusive jurisdiction over any lawsuit or other judicial proceeding relating to or arising from this Agreement. If that court lacks federal subject matter jurisdiction, the Supreme Court of the State of New York, New York County shall have sole and exclusive jurisdiction. Either of these courts shall have proper venue for any such lawsuit or judicial proceeding, and the parties waive any objection to venue or their convenience as a forum. The parties agree to submit to the jurisdiction of any of the courts specified and to accept service of process to vest personal jurisdiction over them in any of these courts. The parties further hereby knowingly, voluntarily and intentionally waive, to the fullest extent permitted by Applicable Law, any right to a trial by jury with respect to any such lawsuit or judicial proceeding arising or relating to this Agreement or the transactions contemplated hereby. Customer certifies that it is a resident of the United States and shall notify Bank of any changes in residency. Bank may rely upon this certification or the certification of such other facts as may be required to administer Bank’s obligations hereunder. Customer shall indemnify Bank against all losses, liability, claims or demands arising directly or indirectly from any such certifications. 

10.11

Severability and Waiver. 

(a)

If one or more provisions of this Agreement are held invalid, illegal or unenforceable in any respect on the basis of any particular circumstances or in any jurisdiction, the validity, legality and enforceability of such provision or provisions under other circumstances or in other jurisdictions and of the remaining provisions shall not in any way be affected or impaired. 

(b)

Except as otherwise provided herein, no failure or delay on the part of either party in exercising any power or right hereunder operates as a waiver, nor does any single or partial exercise of any power or right preclude any other or further exercise, or the exercise of any other power or right. No waiver by a party of any provision of this Agreement, or waiver of any breach or default, is effective unless in writing and signed by the party against whom the waiver is to be enforced. 

10.12

Counterparts. 

This Agreement may be executed in several counterparts, each of which shall be deemed to be an original and together shall constitute one and the same agreement. 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. 

[Signature page to follow.] 

  

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. 

  

EACH OF THE OPEN-END MANAGEMENT INVESTMENT COMPANIES LISTED ON EXHIBIT 1 HERETO 

By:  

/s/ Thomas J. Higgins 

  

Name: 

  

Thomas J. Higgins 

  

Title: 

  

Chief Financial Officer 

JPMORGAN CHASE BANK, N.A. 

By: 

/s/ Teresa Heitsenrether 

  

Name: 

  

Teresa Heitsenrether 

  

Title: 

  

Managing Director 

  

  

  

  

  

  

  

  

  

  

  

  

 

EXHIBIT 1 

  

Vanguard Admiral Funds 

Vanguard S&P 500 Growth Index Fund 

Vanguard S&P 500 Value Index Fund 

Vanguard S&P Mid-Cap 400 Growth Index Fund 

Vanguard S&P Mid-Cap 400 Index Fund 

Vanguard S&P Mid-Cap 400 Value Index Fund 

Vanguard S&P Small-Cap 600 Growth Index Fund 

Vanguard S&P Small-Cap 600 Index Fund 

Vanguard S&P Small-Cap 600 Value Index Fund 

  

Vanguard Bond Index Funds 

Vanguard Inflation-Protected Securities Fund  

Vanguard Intermediate-Term Bond Index Fund 

Vanguard Long-Term Bond Index Fund 

Vanguard Short-Term Bond Index Fund 

Vanguard Total Bond Market Index Fund 

Vanguard Total Bond Market II Index Fund 

  

Vanguard Chester Funds 

Vanguard Institutional Target Retirement 2015 Fund 

Vanguard Institutional Target Retirement 2020 Fund 

Vanguard Institutional Target Retirement 2025 Fund 

Vanguard Institutional Target Retirement 2030 Fund 

Vanguard Institutional Target Retirement 2035 Fund 

Vanguard Institutional Target Retirement 2040 Fund 

Vanguard Institutional Target Retirement 2045 Fund 

Vanguard Institutional Target Retirement 2050 Fund 

Vanguard Institutional Target Retirement 2055 Fund 

Vanguard Institutional Target Retirement 2060 Fund 

Vanguard Institutional Target Retirement 2065 Fund 

Vanguard Institutional Target Retirement Income Fund 

Vanguard Target Retirement 2015 Fund 

Vanguard Target Retirement 2020 Fund 

Vanguard Target Retirement 2025 Fund 

Vanguard Target Retirement 2030 Fund 

Vanguard Target Retirement 2035 Fund 

Vanguard Target Retirement 2040 Fund 

Vanguard Target Retirement 2045 Fund 

Vanguard Target Retirement 2050 Fund 

Vanguard Target Retirement 2055 Fund 

Vanguard Target Retirement 2060 Fund 

Vanguard Target Retirement 2065 Fund 

Vanguard Target Retirement Income Fund 

  

Vanguard CMT Funds 

Vanguard Market Liquidity Fund 

  

Vanguard Fixed Income Securities Funds 

Vanguard GNMA Fund 

Vanguard High-Yield Corporate Fund 

Vanguard Long-Term Investment-Grade Fund 

Vanguard REIT II Index Fund 

Vanguard Ultra-Short-Term Bond Fund 

  

Vanguard Index Funds 

Vanguard Growth Index Fund 

Vanguard Mid-Cap Growth Index Fund 

Vanguard Mid-Cap Value Index Fund 

Vanguard Small-Cap Index Fund 

Vanguard Total Stock Market Index Fund 

  

Vanguard Malvern Funds 

Vanguard Short-Term Inflation-Protected Securities Index Fund 

  

Vanguard Scottsdale Funds 

Vanguard Intermediate-Term Corporate Bond Index Fund 

Vanguard Intermediate-Term Government Bond Index Fund 

Vanguard Long-Term Corporate Bond Index Fund 

Vanguard Long-Term Government Bond Index Fund 

Vanguard Mortgage-Backed Securities Index Fund 

Vanguard Short-Term Corporate Bond Index Fund 

Vanguard Short-Term Government Bond Index Fund 

  

Vanguard Specialized Funds  

Vanguard Dividend Appreciation Index Fund 

Vanguard Health Care Fund 

Vanguard Precious Metals and Mining Fund 

  

Vanguard STAR Funds 

Vanguard LifeStrategy Conservative Growth Fund 

Vanguard LifeStrategy Growth Fund 

Vanguard LifeStrategy Income Fund 

Vanguard LifeStrategy Moderate Growth Fund 

Vanguard Total International Stock Index Fund 

  

Vanguard Tax-Managed Funds 

Vanguard Tax-Managed Balanced Fund 

  

Vanguard Valley Forge Funds 

Vanguard Balanced Index Fund 

  

Vanguard Variable Insurance Funds 

Global Bond Index Portfolio 

Total Bond Market Index Portfolio 

Total International Stock Market Index Portfolio 

  

Vanguard Wellesley Income Fund 

Vanguard Wellesley Income Fund 

  

  

Vanguard Wellington Fund 

Vanguard Wellington Fund 

  

Vanguard Whitehall Funds 

Vanguard International Explorer Fund 

  

Vanguard World Fund 

Vanguard Extended Duration Treasury Index Fund 

Vanguard Global Wellesley Income Fund 

Vanguard Global Wellington Fund 

Vanguard International Growth Fund 

  

  

The terms and conditions as set forth in the Agreement (except for Sections 2.1 and 2.2) apply with respect to the Trusts and Funds listed below limited to their use of account number P 62749 in Vanguard Directly Managed Securities Lending transactions: 

  

Vanguard Chester Funds 

Vanguard PRIMECAP Fund 

  

Vanguard Explorer Fund 

Vanguard Explorer Fund 

  

Vanguard Fenway Funds 

Vanguard Equity Income Fund 

Vanguard PRIMECAP Core Fund 

  

Vanguard Horizon Funds 

Vanguard Capital Opportunity Fund 

Vanguard Global Equity Fund 

Vanguard Strategic Equity Fund 

Vanguard Strategic Small-Cap Equity Fund 

  

Vanguard Index Funds 

Vanguard 500 Index Fund 

Vanguard Extended Market Index Fund 

Vanguard Large-Cap Index Fund 

Vanguard Mid-Cap Index Fund 

Vanguard Small-Cap Growth Index Fund 

Vanguard Small-Cap Value Index Fund 

Vanguard Value Index Fund 

  

Vanguard Institutional Index Funds 

Vanguard Institutional Index Fund 

Vanguard Institutional Total Stock Market Index Fund 

  

Vanguard International Equity Index Funds 

Vanguard Emerging Markets Stock Index Fund 

Vanguard European Stock Index Fund 

Vanguard FTSE All-World ex-US Index Fund 

Vanguard FTSE All-World ex-US Small-Cap Index Fund 

Vanguard Global ex-U.S. Real Estate Index Fund 

Vanguard Pacific Stock Index Fund 

Vanguard Total World Stock Index Fund 

  

Vanguard Malvern Funds 

Vanguard Capital Value Fund 

Vanguard U.S. Value Fund 

  

Vanguard Montgomery Funds 

Vanguard Market Neutral Fund 

  

Vanguard Morgan Growth Fund 

Vanguard Morgan Growth Fund 

  

Vanguard Quantitative Funds 

Vanguard Growth and Income Fund 

  

Vanguard Scottsdale Funds 

Vanguard Explorer Value Fund 

Vanguard Russell 1000 Growth Index Fund 

Vanguard Russell 1000 Index Fund 

Vanguard Russell 1000 Value Index Fund  

Vanguard Russell 2000 Growth Index Fund 

Vanguard Russell 2000 Index Fund 

Vanguard Russell 2000 Value Index Fund 

Vanguard Russell 3000 Index Fund 

  

Vanguard Specialized Funds 

Vanguard Dividend Growth Fund 

Vanguard Energy Fund  

Vanguard REIT Index Fund 

  

Vanguard Tax-Managed Funds 

Vanguard Developed Markets Index Fund 

  

Vanguard Trustees’ Equity Fund 

Vanguard Emerging Markets Select Stock Fund 

Vanguard International Value Fund 

  

Vanguard Variable Insurance Funds 

Balanced Portfolio 

Capital Growth Portfolio 

Diversified Value Portfolio 

Equity Income Portfolio 

Equity Index Portfolio 

Growth Portfolio 

International Portfolio 

Mid-Cap Index Portfolio 

REIT Index Portfolio 

Small Company Growth Portfolio 

  

Vanguard Whitehall Funds 

Vanguard Global Minimum Volatility Fund 

Vanguard High Dividend Yield Index Fund 

Vanguard International Dividend Appreciation Index Fund 

Vanguard International High Dividend Yield Index Fund 

Vanguard Mid-Cap Growth Fund 

Vanguard Selected Value Fund 

  

Vanguard Windsor Funds 

Vanguard Windsor Fund 

Vanguard Windsor II Fund 

  

Vanguard World Fund 

Vanguard Consumer Discretionary Index Fund 

Vanguard Consumer Staples Index Fund 

Vanguard Energy Index Fund 

Vanguard Financials Index Fund 

Vanguard FTSE Social Index Fund 

Vanguard Health Care Index Fund 

Vanguard Industrials Index Fund 

Vanguard Information Technology Index Fund 

Vanguard Materials Index Fund 

Vanguard Mega Cap Growth Index Fund 

Vanguard Mega Cap Index Fund 

Vanguard Mega Cap Value Index Fund 

Vanguard Telecommunication Services Index Fund 

Vanguard U.S. Growth Fund  

Vanguard Utilities Index Fund 

  

 

APPENDIX 1 

Information Regarding Country Risk 

1.To aid Customer in its determinations regarding Country Risk, Bank shall furnish annually and upon the initial placing of Financial Assets and cash into a country the following information (check items applicable): 

A.Opinions of local counsel concerning: 

_X_i. Whether applicable foreign law would restrict the access afforded Customer’s independent public accountants to books and records kept by an eligible foreign custodian located in that country. 

_X_ii. Whether applicable foreign law would restrict the Customer’s ability to recover its Financial Assets and cash in the event of the bankruptcy of an Eligible Foreign Custodian located in that country. 

_X_iii. Whether applicable foreign law would restrict the Customer’s ability to recover Financial Assets that are lost while under the control of an Eligible Foreign Custodian located in the country. 

B.Written information concerning: 

_X_i. The foreseeability of expropriation, nationalization, freezes, or confiscation of Customer’s Financial Assets. 

_X_ii. Whether difficulties in converting Customer’s cash and cash equivalents to U.S. dollars are reasonably foreseeable. 

C.A market report with respect to the following topics: 

(i) securities regulatory environment, (ii) foreign ownership restrictions, (iii) foreign exchange, (iv) securities settlement and registration, (v) taxation, and (vi) depositories (including depository evaluation), if any. 

2.To aid Customer in monitoring Country Risk, Bank shall furnish Customer the following additional information: 

Market flashes, including with respect to changes in the information in market reports. 

  

  

ANNEX A - Electronic Access 

1.Bank may permit the Customer and its Authorized Persons to access certain electronic systems and applications (collectively, the “Products”) and to access or receive electronically Data (as defined below) in connection with the Agreement.  Bank may, from time to time, introduce new features to the Products or otherwise modify or delete existing features of the Products in its sole discretion.  Bank shall endeavor to give the Customer reasonable notice of its termination or suspension of access to the Products, including suspension or cancelation of any User Codes, but may do so immediately if Bank determines, in its sole discretion, that providing access to the Products would violate Applicable Law or that the security or integrity of the Products is known or reasonably suspected to be at risk.  Access to the Products shall be subject to the Security Procedure.  

2.In consideration of the fees paid by the Customer to Bank and subject to any applicable software license addendum in relation to Bank-owned or sublicensed software provided for a particular application and Applicable Law, Bank grants to the Customer a non-exclusive, non-transferable, limited and revocable license to use the Products and the information and data made available through the Products or transferred electronically (the “Data”) for the Customer’s internal business use only.  The Customer may download the Data and print out hard copies for its reference, provided that it does not remove any copyright or other notices contained therein.  The license granted herein will permit use by the Customer’s Authorized Person, provided that such use shall be in compliance with the Agreement, including this Annex.  The Customer acknowledges that elements of the Data, including prices, Corporate Action information, and reference data, may have been licensed by Bank from third parties and that any use of such Data beyond that authorized by the foregoing license, may require the permission of one or more third parties in addition to Bank. Notwithstanding the foregoing, nothing in this Section 2, or elsewhere in this Annex, shall be deemed to give Bank or its licensors ownership of, or any rights in or to, any confidential information of the Customer, including as it may be accessible or receivable through the Products, and all rights in and to such information shall be retained exclusively by the Customer. 

3.The Customer acknowledges that there are security, cyberfraud, corruption, transaction error and access availability risks associated with using open networks such as the internet, and the Customer hereby expressly assumes such risks; for clarity, however, the foregoing shall not relieve Bank of its obligation under the first sentence of Section 4 of this Annex. The Customer is solely responsible for obtaining, maintaining and operating all systems, software (including antivirus software, anti-spyware software, and other internet security software) and personnel necessary for the Customer to access and use the Products. All such software must be interoperable with Bank’s software.  Each of the Customer and Bank shall be responsible for the proper functioning, maintenance and security of its own systems, services, software and other equipment. 

4.In cases where Bank’s website is unexpectedly down or otherwise unavailable, Bank shall, absent a force majeure event, provide other appropriate means for the Customer or its Authorized Persons to instruct Bank or obtain reports from Bank. Provided that Bank complies with its obligation to provide such other appropriate means, Bank shall not be liable for any Liabilities arising out of the Customer’s inability to access or use the Products via Bank’s website in the absence of Bank’s gross negligence, fraud or willful misconduct.  

5.Use of the Products may be monitored, tracked, and recorded.  In using the Products, the Customer hereby expressly consents to such monitoring, tracking, and recording, and will ensure that all persons using the Products through or on behalf of Customer are advised of and have consented to this monitoring, tracking and recording, and Bank’s right to disclose data derived from such activity in accordance with the Agreement, including this Annex. Bank shall own all right, title and interest in the data reflecting Customer’s usage of the Products or Bank’s website (including, but not limited to, general usage

data and aggregated transaction data). For clarity, the foregoing shall not be deemed to give Bank ownership of, or any rights in or to, the Customer’s confidential information (whether or not in aggregated form), the use or disclosure of which shall at all times be subject to Section 10.6 of this Agreement other otherwise agreed to by the Parties. 

6.The Customer shall not knowingly use the Products to transmit (i) any virus, worm, or destructive element or any programs or data that may be reasonably expected to interfere with or disrupt the Products or servers connected to the Products; (ii) material that violates the rights of another, including but not limited to the intellectual property rights of another; and (iii) “junk mail”, “spam”, “chain letters” or unsolicited mass distribution of e-mail. 

7.The Customer shall promptly and accurately designate in writing to Bank the geographic location of its users upon written request.  The Customer further represents and warrants to Bank that the Customer shall not access the Products from any jurisdiction which Bank informs the Customer or where the Customer has actual knowledge that the Products are not authorized for use due to local regulations or laws, including applicable software export rules and regulations.  Prior to submitting any document which designates the persons authorized to act on the Customer’s behalf, the Customer shall obtain from each individual referred to in such document all necessary consents to enable Bank to process the data set out therein for the purposes of providing the Products. 

8.Bank and Customer will be subject to and shall comply with all Applicable Law concerning restricting collection, use, disclosure, processing and free movement of the Data (collectively, the “Privacy Regulations”).  The Privacy Regulations may include, as applicable, the Federal “Privacy of Consumer Financial Information” Regulation (12 CFR Part 40) and Interagency Guidelines Establishing Information Security Standards (App B to 12 CFR Part 30), as amended from time to time, issued pursuant to Section 504 of the Gramm-Leach-Bliley Act of 1999 (15 U.S.C. §6801, et seq.), the Health and Insurance Portability and Accountability Act of 1996 (42 U.S.C. §1320d), The Data Protection Act 1998 and Directive 95/46/EC, 2009/136/EC and 2002/58/EC of the European Parliament and of the Council, as amended from time to time, and applicable implementing legislation in connection with  the protection of individuals with regard to processing of personal data and the free movement of such data. 

9.The Customer shall be responsible for the compliance of its Authorized Persons with the terms of the Agreement, including this Annex. 

  

  

SCHEDULE 1 – AGENT AND CASH NETWORK (CUSTODY & FUND SERVICES)  

MARKET 

SUBCUSTODIAN 

CASH CORRESPONDENT BANK 

ARGENTINA 

HSBC Bank Argentina S.A.
Bouchard 680, 9th Floor
C1106ABJ Buenos Aires
ARGENTINA 

HSBC Bank Argentina S.A.
Buenos Aires 

AUSTRALIA 

JPMorgan Chase Bank, N.A.**
Level 31, 101 Collins Street
Melbourne 3000
AUSTRALIA 

Australia and New Zealand Banking Group Ltd.
Melbourne 

AUSTRIA 

UniCredit Bank Austria AG
Julius Tandler Platz   3
A 1090 Vienna
AUSTRIA 

J.P. Morgan AG**
Frankfurt am Main 

BAHRAIN 

HSBC Bank Middle East Limited
Road No 2832
Al Seef 428
BAHRAIN 

HSBC Bank Middle East Limited
Al Seef 

BANGLADESH 

Standard Chartered Bank
Portlink Tower
Level 6, 67 Gulshan Avenue
Gulshan
Dhaka  1212
BANGLADESH 

Standard Chartered Bank
Dhaka 

BELGIUM 

BNP Paribas Securities Services S.C.A.
Central Plaza Building
Rue de Loxum, 25
7th Floor
1000 Brussels
BELGIUM 

J.P. Morgan A.G.**
Frankfurt am Main 

BERMUDA 

HSBC Bank Bermuda Limited
6 Front Street
Hamilton HM 11
BERMUDA 

HSBC Bank Bermuda Limited
Hamilton 

BOTSWANA 

Standard Chartered Bank Botswana Limited
5th Floor, Standard House
P.O. Box 496
Queens Road, The Mall
Gaborone
BOTSWANA 

Standard Chartered Bank Botswana Limited
Gaborone 

BRAZIL 

J.P. Morgan S.A. DTVM**
Av. Brigadeiro Faria Lima, 3729, Floor 06
Sao Paulo SP 04538 905
BRAZIL 

J.P. Morgan S.A. DTVM**
Sao Paulo 

BULGARIA 

Citibank Europe plc
Serdika Offices
10th Floor
48 Sitnyakovo Blvd
Sofia 1505
BULGARIA 

ING Bank N.V.
Sofia 

CANADA 

Canadian Imperial Bank of Commerce
1 York Street, Suite 900
Toronto Ontario M5J 0B6
CANADA

Royal Bank of Canada
155 Wellington Street West,
Toronto Ontario M5V 3L3
CANADA 

Royal Bank of Canada
Toronto 

CHILE 

Banco Santander Chile
Bandera 140, Piso 4
Santiago
CHILE 

Banco Santander Chile
Santiago 

CHINA A SHARE 

HSBC Bank (China) Company Limited
33/F, HSBC Building, Shanghai ifc
8 Century Avenue, Pudong
Shanghai 200120
THE PEOPLE'S REPUBLIC OF CHINA 

HSBC Bank (China) Company Limited
Shanghai 

CHINA B SHARE 

HSBC Bank (China) Company Limited
33/F, HSBC Building, Shanghai ifc
8 Century Avenue, Pudong
Shanghai 200120
THE PEOPLE'S REPUBLIC OF CHINA 

JPMorgan Chase Bank, N.A.**
New York

JPMorgan Chase Bank, N.A.**
Hong Kong 

CHINA CONNECT 

JPMorgan Chase Bank, N.A.**
48th Floor, One Island East
18 Westlands Road, Quarry Bay
HONG KONG 

JPMorgan Chase Bank, N.A.**
Hong Kong 

COLOMBIA 

Cititrust Colombia S.A.
Carrera 9 A #  99 02, 3rd floor
Bogota
COLOMBIA 

Cititrust Colombia S.A.
Bogotá 

*COSTA RICA* 

Banco BCT, S.A.
150 Metros Norte de la Catedral Metropolitana
Edificio BCT
San Jose
COSTA RICA 

Banco BCT, S.A.
San Jose 

*RESTRICTED SERVICE ONLY.  PLEASE CONTACT YOUR RELATIONSHIP MANAGER FOR FURTHER INFORMATION* 

CROATIA 

Privredna banka Zagreb d.d.
Radnicka cesta 50
10000 Zagreb
CROATIA 

Zagrebacka banka d.d.
Zagreb 

CYPRUS 

HSBC Bank plc
109 111, Messogian Ave.
115 26 Athens
GREECE 

J.P. Morgan AG**
Frankfurt am Main 

CZECH REPUBLIC 

UniCredit Bank Czech Republic and Slovakia, a.s.
BB Centrum   FILADELFIE
Zeletavska 1525 1
140 92 Prague 1
CZECH REPUBLIC 

Ceskoslovenska obchodni banka, a.s.
Prague 

DENMARK 

Nordea Bank AB (publ)
Christiansbro
Strandgade 3
P.O. Box 850
DK 0900 Copenhagen
DENMARK 

Nordea Bank AB (publ)
Copenhagen 

EGYPT 

Citibank, N.A.
4 Ahmed Pasha Street
Garden City
Cairo
EGYPT 

Citibank, N.A.
Cairo 

ESTONIA 

Swedbank AS
Liivalaia 8
15040 Tallinn
ESTONIA 

J.P. Morgan AG**
Frankfurt am Main 

FINLAND 

Nordea Bank AB (publ)
Aleksis Kiven katu 3 5
FIN 00020 NORDEA Helsinki
FINLAND 

J.P. Morgan AG**
Frankfurt am Main 

FRANCE 

BNP Paribas Securities Services S.C.A.
3, rue d'Antin
75002 Paris
FRANCE 

J.P. Morgan AG**
Frankfurt am Main 

GERMANY 

Deutsche Bank AG
Alfred Herrhausen Allee 16 24
D 65760 Eschborn
GERMANY

J.P. Morgan AG#**
Taunustor 1 (TaunusTurm)
60310 Frankfurt am Main
GERMANY
# Custodian for local German custody clients only. 

J.P. Morgan AG**
Frankfurt am Main 

GHANA 

Standard Chartered Bank Ghana Limited
Accra High Street
P.O. Box 768
Accra
GHANA 

Standard Chartered Bank Ghana Limited
Accra 

GREECE 

HSBC Bank plc
Messogion 109 111
11526 Athens
GREECE 

J.P. Morgan AG**
Frankfurt am Main 

HONG KONG 

JPMorgan Chase Bank, N.A.**
48th Floor, One Island East
18 Westlands Road, Quarry Bay
HONG KONG 

JPMorgan Chase Bank, N.A.**
Hong Kong 

HUNGARY 

Deutsche Bank AG
Hold utca 27
H 1054 Budapest
HUNGARY 

ING Bank N.V.
Budapest 

*ICELAND* 

Islandsbanki hf.
Kirkjusandur 2
IS 155 Reykjavik
ICELAND 

Islandsbanki hf.
Reykjavik 

*RESTRICTED SERVICE ONLY.  PLEASE CONTACT YOUR RELATIONSHIP MANAGER FOR FURTHER INFORMATION* 

INDIA 

JPMorgan Chase Bank, N.A.**
6th Floor, Paradigm ‘B’ Wing
Mindspace, Malad (West)
Mumbai 400 064
INDIA 

JPMorgan Chase Bank, N.A.**
Mumbai 

INDONESIA 

PT Bank HSBC Indonesia
Menara Mulia 25th Floor
Jl. Jendral Gatot Subroto Kav. 9 11
Jakarta 12930
INDONESIA 

PT Bank HSBC Indonesia
Jakarta 

IRELAND 

JPMorgan Chase Bank, N.A.**
25 Bank Street, Canary Wharf
London E14 5JP
UNITED KINGDOM 

J.P. Morgan AG**
Frankfurt am Main 

ISRAEL 

Bank Leumi le Israel B.M.
35, Yehuda Halevi Street
65136 Tel Aviv
ISRAEL 

Bank Leumi le Israel B.M.
Tel Aviv 

ITALY 

BNP Paribas Securities Services S.C.A.
Piazza Lina Bo Bardi, 3
20124 Milan
ITALY 

J.P. Morgan AG**
Frankfurt am Main 

JAPAN 

Mizuho Bank, Ltd.
2 15 1, Konan
Minato ku
Tokyo 108 6009
JAPAN

The Bank of Tokyo Mitsubishi UFJ, Ltd.
1 3 2 Nihombashi Hongoku cho
Chuo ku
Tokyo 103 0021
JAPAN 

JPMorgan Chase Bank, N.A.**
Tokyo 

JORDAN 

Standard Chartered Bank
Shmeissani Branch
Al Thaqafa Street
Building # 2
P.O. Box 926190
Amman
JORDAN 

Standard Chartered Bank
Amman 

KAZAKHSTAN 

JSC Citibank Kazakhstan
Park Palace, Building A, Floor 2
41 Kazybek Bi
Almaty 050010
KAZAKHSTAN 

Subsidiary Bank Sberbank of Russia Joint Stock Company
Almaty 

KENYA 

Standard Chartered Bank Kenya Limited
Chiromo
48 Westlands Road
Nairobi 00100
KENYA 

Standard Chartered Bank Kenya Limited
Nairobi 

KUWAIT 

HSBC Bank Middle East Limited
Kuwait City, Sharq Area
Abdulaziz Al Sager Street
Al Hamra Tower, 37F
Safat 13017
KUWAIT 

HSBC Bank Middle East Limited
Safat 

LATVIA 

Swedbank AS
Balasta dambis 1a
Riga LV 1048
LATVIA 

J.P. Morgan AG**
Frankfurt am Main 

LITHUANIA 

AB SEB Bankas
12 Gedimino pr.
LT 2600 Vilnius
LITHUANIA 

J.P. Morgan AG**
Frankfurt am Main 

LUXEMBOURG 

BNP Paribas Securities Services S.C.A.
33, Rue de Gasperich
L 5826 Hesperange
LUXEMBOURG 

J.P. Morgan AG**
Frankfurt am Main 

*MALAWI* 

Standard Bank Limited, Malawi
1st Floor Kaomba House
Cnr Glyn Jones Road & Victoria Avenue
Blantyre
MALAWI 

Standard Bank Limited, Malawi
Blantyre 

*RESTRICTED SERVICE ONLY.  PLEASE CONTACT YOUR RELATIONSHIP MANAGER FOR FURTHER INFORMATION* 

MALAYSIA 

HSBC Bank Malaysia Berhad
2 Leboh Ampang
12th Floor, South Tower
50100 Kuala Lumpur
MALAYSIA 

HSBC Bank Malaysia Berhad
Kuala Lumpur 

MAURITIUS 

The Hongkong and Shanghai Banking Corporation Limited
HSBC Centre
18 Cybercity
Ebene
MAURITIUS 

The Hongkong and Shanghai Banking Corporation Limited
Ebene 

MEXICO 

Banco Nacional de Mexico, S.A.
Act. Roberto Medellin No. 800 3er Piso Norte
Colonia Santa Fe
01210 Mexico, D.F.
MEXICO 

Banco Santander (Mexico), S.A.
Mexico, D.F. 

MOROCCO 

Société Générale Marocaine de Banques
55 Boulevard Abdelmoumen
Casablanca 20100
MOROCCO 

Attijariwafa Bank S.A.
Casablanca 

NAMIBIA 

Standard Bank Namibia Limited
2nd Floor, Town Square Building
Corner of Werner List and Post Street Mall
P.O. Box 3327
Windhoek
NAMIBIA 

The Standard Bank of South Africa Limited
Johannesburg 

NETHERLANDS 

BNP Paribas Securities Services S.C.A.
Herengracht 595
1017 CE Amsterdam
NETHERLANDS 

J.P. Morgan AG**
Frankfurt am Main 

NEW ZEALAND 

JPMorgan Chase Bank, N.A.**
Level 13, 2 Hunter Street
Wellington 6011
NEW ZEALAND 

Westpac Banking Corporation
Wellington 

NIGERIA 

Stanbic IBTC Bank Plc
Plot 1712
Idejo Street
Victoria Island
Lagos
NIGERIA 

Stanbic IBTC Bank Plc
Lagos 

NORWAY 

Nordea Bank AB (publ)
Essendropsgate 7
P.O. Box 1166
NO 0107 Oslo
NORWAY 

Nordea Bank AB (publ)
Oslo 

OMAN 

HSBC Bank Oman S.A.O.G.
2nd Floor Al Khuwair
P.O. Box 1727 PC 111
Seeb
OMAN 

HSBC Bank Oman S.A.O.G.
Seeb 

PAKISTAN 

Standard Chartered Bank (Pakistan) Limited
P.O. Box 4896
Ismail Ibrahim Chundrigar Road
Karachi 74000
PAKISTAN 

Standard Chartered Bank (Pakistan) Limited
Karachi 

PERU 

Citibank del Perú S.A.
Av. Canaval y Moreryra 480 Piso 3
San Isidro
Lima 27
PERU 

Banco de Crédito del Perú
Lima 

PHILIPPINES 

The Hongkong and Shanghai Banking Corporation Limited
7/F HSBC Centre
3058 Fifth Avenue West
Bonifacio Global City
1634 Taguig City
PHILIPPINES 

The Hongkong and Shanghai Banking Corporation Limited
Taguig City 

POLAND 

Bank Handlowy w. Warszawie S.A.
ul. Senatorska 16
00 923 Warsaw
POLAND 

mBank S.A.
Warsaw 

PORTUGAL 

BNP Paribas Securities Services S.C.A.
Avenida D.João II, Lote 1.18.01, Bloco B,
7º andar
1998 028 Lisbon
PORTUGAL 

J.P. Morgan AG**
Frankfurt am Main 

QATAR 

HSBC Bank Middle East Limited
2nd Floor, Ali Bin Ali Tower
Building 150 (Airport Road)
P.O. Box 57
Doha
QATAR 

The Commercial Bank (P.Q.S.C.)
Doha 

ROMANIA 

Citibank Europe plc
145 Calea Victoriei
1st District
010072 Bucharest
ROMANIA 

ING Bank N.V.
Bucharest 

RUSSIA 

J.P. Morgan Bank International (Limited Liability Company)**
10, Butyrsky Val
White Square Business Centre
Floor 12
Moscow 125047
RUSSIA 

JPMorgan Chase Bank, N.A.**
New York 

SAUDI ARABIA 

HSBC Saudi Arabia
2/F HSBC Building
7267 Olaya Street North, Al Murooj
Riyadh 12283 2255
SAUDI ARABIA 

HSBC Saudi Arabia
Riyadh 

SERBIA 

Unicredit Bank Srbija a.d.
Rajiceva 27 29
11000 Belgrade
SERBIA 

Unicredit Bank Srbija a.d.
Belgrade 

SINGAPORE 

DBS Bank Ltd
10 Toh Guan Road
DBS Asia Gateway, Level 04 11 (4B)
608838
SINGAPORE 

Oversea Chinese Banking Corporation
Singapore 

SLOVAK REPUBLIC 

UniCredit Bank Czech Republic and Slovakia, a.s.
Sancova 1/A
SK 813 33 Bratislava
SLOVAK REPUBLIC 

J.P. Morgan AG**
Frankfurt am Main 

SLOVENIA 

UniCredit Banka Slovenija d.d.
Smartinska 140
SI 1000 Ljubljana
SLOVENIA 

J.P. Morgan AG**
Frankfurt am Main 

SOUTH AFRICA 

FirstRand Bank Limited
1 Mezzanine Floor, 3 First Place, Bank City
Cnr Simmonds and Jeppe Streets
Johannesburg 2001
SOUTH AFRICA 

The Standard Bank of South Africa Limited
Johannesburg 

SOUTH KOREA 

Standard Chartered Bank Korea Limited
47 Jongro, Jongro Gu
Seoul 03160
SOUTH KOREA

Kookmin Bank Co., Ltd.
84, Namdaemun ro, Jung gu
Seoul 100 845
SOUTH KOREA 

Standard Chartered Bank Korea Limited
Seoul



Kookmin Bank Co., Ltd.
Seoul 

SPAIN 

Santander Securities Services, S.A.
Ciudad Grupo Santander
Avenida de Cantabria, s/n
Edificio Ecinar, planta baja
Boadilla del Monte
28660 Madrid
SPAIN 

J.P. Morgan AG**
Frankfurt am Main 

SRI LANKA 

The Hongkong and Shanghai Banking Corporation Limited
24 Sir Baron Jayatillaka Mawatha
Colombo 1
SRI LANKA 

The Hongkong and Shanghai Banking Corporation Limited
Colombo 

SWEDEN 

Nordea Bank AB (publ)
Hamngatan 10
SE 105 71 Stockholm
SWEDEN 

Svenska Handelsbanken
Stockholm 

SWITZERLAND 

UBS Switzerland AG
45 Bahnhofstrasse
8021 Zurich
SWITZERLAND 

UBS Switzerland AG
Zurich 

TAIWAN 

JPMorgan Chase Bank, N.A.**
8th Floor, Cathay Xin Yi Trading Building
No. 108, Section 5, Xin Yi Road
Taipei 11047
TAIWAN 

JPMorgan Chase Bank, N.A.**
Taipei 

*TANZANIA* 

Stanbic Bank Tanzania Limited
Stanbic Centre
Corner Kinondoni and A.H. Mwinyi Roads
P.O. Box 72648
Dar es Salaam
TANZANIA 

Stanbic Bank Tanzania Limited
Dar es Salaam 

*RESTRICTED SERVICE ONLY.  PLEASE CONTACT YOUR RELATIONSHIP MANAGER FOR FURTHER INFORMATION* 

THAILAND 

Standard Chartered Bank (Thai) Public Company Limited
14th Floor, Zone B
Sathorn Nakorn Tower
90 North Sathorn Road Bangrak
Silom, Bangrak
Bangkok 10500
THAILAND 

Standard Chartered Bank (Thai) Public Company Limited
Bangkok 

TRINIDAD AND TOBAGO 

Republic Bank Limited
9 17 Park Street
Port of Spain
TRINIDAD AND TOBAGO 

Republic Bank Limited
Port of Spain 

TUNISIA 

Banque Internationale Arabe de Tunisie, S.A.
70 72 Avenue Habib Bourguiba
P.O. Box 520
Tunis 1000
TUNISIA 

Banque Internationale Arabe de Tunisie, S.A.
Tunis 

TURKEY 

Citibank A.S.
Inkilap Mah., Yilmaz Plaza
O. Faik Atakan Caddesi No: 3
34768 Umraniye, Istanbul
TURKEY 

JPMorgan Chase Bank, N.A.**
Istanbul 

UGANDA 

Standard Chartered Bank Uganda Limited
5 Speke Road
P.O. Box 7111
Kampala
UGANDA 

Standard Chartered Bank Uganda Limited
Kampala 

*UKRAINE* 

PJSC Citibank
16 G Dilova Street
03150 Kiev
UKRAINE 

PJSC Citibank
Kiev

JPMorgan Chase Bank, N.A.**
New York 

*RESTRICTED SERVICE ONLY.  PLEASE CONTACT YOUR RELATIONSHIP MANAGER FOR FURTHER INFORMATION* 

UNITED ARAB EMIRATES   ADX 

HSBC Bank Middle East Limited
Emaar Square, Level 4, Building No. 5
P.O. Box 502601
Dubai
UNITED ARAB EMIRATES 

The National Bank of Abu Dhabi
Abu Dhabi 

UNITED ARAB EMIRATES   DFM 

HSBC Bank Middle East Limited
Emaar Square, Level 4, Building No. 5
P.O. Box 502601
Dubai
UNITED ARAB EMIRATES 

The National Bank of Abu Dhabi
Abu Dhabi 

UNITED ARAB EMIRATES   NASDAQ DUBAI 

HSBC Bank Middle East Limited
Emaar Square, Level 4, Building No. 5
P.O. Box 502601
Dubai
UNITED ARAB EMIRATES 

JPMorgan Chase Bank, N.A. **
New York 

UNITED KINGDOM 

JPMorgan Chase Bank, N.A.**
25 Bank Street, Canary Wharf
London E14 5JP
UNITED KINGDOM

Deutsche Bank AG Depository and Clearing Centre
10 Bishops Square
London E1 6EG
UNITED KINGDOM 

JPMorgan Chase Bank, N.A.**
London



Varies by currency 

UNITED STATES 

JPMorgan Chase Bank, N.A.**
4 New York Plaza
New York NY 10004
UNITED STATES 

JPMorgan Chase Bank, N.A.**
New York 

URUGUAY 

Banco Itaú Uruguay S.A.
Zabala 1463
11000 Montevideo
URUGUAY 

Banco Itaú Uruguay S.A.
Montevideo 

VENEZUELA 

Citibank, N.A.
Avenida Casanova
Centro Comercial El Recreo
Torre Norte, Piso 19
Caracas 1050
VENEZUELA 

Citibank, N.A.
Caracas 

VIETNAM 

HSBC Bank (Vietnam) Ltd.
Centre Point
106 Nguyen Van Troi Street
Phu Nhuan District
Ho Chi Minh City
VIETNAM 

HSBC Bank (Vietnam) Ltd.
Ho Chi Minh City 

*WAEMU BENIN, BURKINA FASO, GUINEA BISSAU, IVORY COAST, MALI, NIGER, SENEGAL, TOGO* 

Standard Chartered Bank Côte d’Ivoire SA
23 Boulevard de la Republique 1
01 B.P. 1141
Abidjan 17
IVORY COAST 

Standard Chartered Bank Côte d’Ivoire SA
Abidjan 

*RESTRICTED SERVICE ONLY.  PLEASE CONTACT YOUR RELATIONSHIP MANAGER FOR FURTHER INFORMATION* 

ZAMBIA 

Standard Chartered Bank Zambia Plc
Standard Chartered House
Cairo Road
P.O. Box 32238
Lusaka 10101
ZAMBIA 

Standard Chartered Bank Zambia Plc
Lusaka 

*ZIMBABWE* 

Stanbic Bank Zimbabwe Limited
Stanbic Centre, 3rd Floor
59 Samora Machel Avenue
Harare
ZIMBABWE 

Stanbic Bank Zimbabwe Limited
Harare 

*RESTRICTED SERVICE ONLY.  PLEASE CONTACT YOUR RELATIONSHIP MANAGER FOR FURTHER INFORMATION* 

  

  

  

** J.P. Morgan affiliate 

Correspondent banks are listed for information only. 

  

  

  

This document is for information only and its contents are subject to change.  This document is intended neither to influence your investment decisions nor to amend or supplement any agreement governing your relations with J.P. Morgan. Neither this document nor any of its contents may be disclosed to any third party or used for any other purpose without the proper written consent of J.P. Morgan.  J.P. Morgan has gathered the information from a source it considers reliable, however, it cannot be responsible for inaccuracies, incomplete information or updating of the information furnished hereby. 

  

  

SCHEDULE 3 – SECURITIES DEPOSITORIES 

Market 

Depository 

Instruments 

ARGENTINA 

CVSA
(Caja de Valores S.A.) 

Equity, Corporate Debt, Government Debt 

AUSTRALIA 

ASX Settlement
(ASX Settlement Pty Limited)

Austraclear
(Austraclear Limited) 

Equity


Corporate Debt, Government Debt 

AUSTRIA 

OeKB CSD GmbH
(Oesterreichische Kontrollbank CSD GmbH) 

Equity, Corporate Debt, Government Debt 

BAHRAIN 

CSD
(Bahrain Bourse - Clearing, Settlement and Central Depository) 

Equity, Corporate Debt 

BANGLADESH 

BB
(Bangladesh Bank)

CDBL
(Central Depository Bangladesh Limited) 

Government Debt


Equity, Corporate Debt 

BELGIUM 

Euroclear Belgium
(Euroclear Belgium SA/NV)

NBB
(The National Bank of Belgium) 

Equity, Corporate Debt


Corporate Debt, Government Debt 

BERMUDA 

BSD
(Bermuda Stock Exchange - Bermuda Securities Depository) 

Equity, Corporate Debt, Government Debt 

BOTSWANA 

BoB
(Bank of Botswana)

CSDB
(Central Securities Depository of Botswana Ltd) 

Government Debt


Equity, Corporate Debt 

BRAZIL 

BM&FBOVESPA
(B3 S.A. -  BM&FBOVESPA)

CETIP
(B3 S.A. - CETIP)

SELIC
(Banco Central do Brasil - Sistema Especial de Liquidação e Custódia) 

Equity


Corporate Debt


Government Debt 

BULGARIA 

CDAD
(Central Depository AD)

BNB
(Bulgarian National Bank) 

Equity, Corporate Debt


Government Debt 

CANADA 

CDS Clearing
(CDS Clearing and Depository Services Inc.) 

Equity, Corporate Debt, Government Debt 

CHILE 

DCV
(Depósito Central de Valores S.A.) 

Equity, Corporate Debt, Government Debt 

CHINA A-SHARE 

CSDCC
(China Securities Depository and Clearing Corporation Limited)

SCH
(Shanghai Clearing House)

CCDC
(China Central Depository & Clearing Co., Ltd.) 

Equity, Corporate Debt, Government Debt



Short-term Corporate Debt


Corporate Debt, Government Debt 

CHINA B-SHARE 

CSDCC
(China Securities Depository and Clearing Corporation Limited) 

Equity 

CHINA CONNECT 

HKSCC - for China Connect
(Hong Kong Securities Clearing Company Limited) 

Equity 

COLOMBIA 

DCV
(Banco de la Républica de Colombia - Depósito Central de Valores)

DECEVAL
(Depósito Centralizado de Valores de Colombia S.A.) 

Government Debt



Equity, Corporate Debt, Government Debt 

COSTA RICA 

InterClear
(InterClear, S.A.) 

Equity, Corporate Debt, Government Debt 

CROATIA 

SKDD
(Središnje klirinško depozitarno društvo d.d.) 

Equity, Corporate Debt, Government Debt 

CYPRUS 

CDCR
(Cyprus Stock Exchange - Central Depository and Central Registry) 

Equity, Corporate Debt, Government Debt 

CZECH REPUBLIC 

CNB
(Ceská národní banka)

CDCP
(Centrální depozitár cenných papíru, a.s.) 

Short-Term Corporate Debt, Short-Term Government Debt

Equity, Long-Term Corporate Debt, Long-Term Government Debt 

DENMARK 

VP
(VP Securities A/S) 

Equity, Corporate Debt, Government Debt 

EGYPT 

MCDR
(Misr for Central Clearing, Depository and Registry)

CBE
(Central Bank of Egypt) 

Equity, Corporate Debt, Treasury Bonds



Treasury Bills 

ESTONIA 

ECSD
(Eesti Väärtpaberikeskus AS) 

Equity, Corporate Debt, Government Debt 

FINLAND 

Euroclear Finland
(Euroclear Finland Oy) 

Equity, Corporate Debt, Government Debt 

FRANCE 

Euroclear France
(Euroclear France SA) 

Equity, Corporate Debt, Government Debt 

GERMANY 

CBF
(Clearstream Banking AG) 

Equity, Corporate Debt, Government Debt 

GHANA 

CSD
(Central Securities Depository (GH) Ltd.) 

Equity, Corporate Debt, Government Debt 

GREECE 

BoG
(Bank of Greece)

ATHEXCSD
(Hellenic Central Securities Depository) 

Government Debt


Equity, Corporate Debt 

HONG KONG 

HKSCC
(Hong Kong Securities Clearing Company Limited)

CMU
(Hong Kong Monetary Authority - Central Moneymarkets Unit) 

Equity, Corporate Debt, Government Debt



Corporate Debt, Government Debt 

HUNGARY 

KELER
(Központi Elszámolóház és Értéktár (Budapest) Zrt.) 

Equity, Corporate Debt, Government Debt 

ICELAND 

Nasdaq CSD Iceland hf.
(Nasdaq verðbréfamiðstöð hf.) 

Equity, Corporate Debt, Government Debt 

INDIA 

NSDL
(National Securities Depository Limited)

CDSL
(Central Depository Services (India) Limited)

RBI
(Reserve Bank of India) 

Equity, Corporate Debt


Equity, Corporate Debt



Government Debt 

INDONESIA 

KSEI
(PT Kustodian Sentral Efek Indonesia)

BI
(Bank Indonesia) 

Equity, Corporate Debt, Government Debt*
(*acts as sub-registry)

Government Debt 

INTERNATIONAL SECURITIES MARKET 

Euroclear Bank
(Euroclear Bank SA/NV)

CBL
(Clearstream Banking S.A.) 

Internationally Traded Debt, Equity


Internationally Traded Debt, Equity 

IRELAND 

EUI
(Euroclear U.K. & Ireland Limited) 

Equity, Corporate Debt 

ISRAEL 

TASE-CH
(Tel-Aviv Stock Exchange Clearing House Ltd.) 

Equity, Corporate Debt, Government Debt 

ITALY 

Monte Titoli
(Monte Titoli S.p.A.) 

Equity, Corporate Debt, Government Debt 

JAPAN 

JASDEC
(Japan Securities Depository Center, Incorporated)

BOJ
(Bank of Japan) 

Equity, Corporate Debt



Government Debt 

JORDAN 

SDC
(Securities Depository Center) 

Equity, Corporate Debt 

KAZAKHSTAN 

KACD
(Central Securities Depository Joint-Stock Company) 

Equity, Corporate Debt, Government Debt 

KENYA 

CDS
(Central Bank of Kenya - Central Depository System)

CDSC
(Central Depository and Settlement Corporation Limited) 

Government Debt



Equity, Corporate Debt 

KUWAIT 

KCC
(The Kuwait Clearing Company K.S.C.) 

Equity, Corporate Debt 

LATVIA 

LCD
(Latvian Central Depository) 

Equity, Corporate Debt, Government Debt 

LITHUANIA 

CSDL
(Central Securities Depository of Lithuania) 

Equity, Corporate Debt, Government Debt 

LUXEMBOURG 

CBL
(Clearstream Banking S.A.) 

Equity, Corporate Debt, Government Debt 

MALAYSIA 

Bursa Depository
(Bursa Malaysia Depository Sdn Bhd)

BNM
(Bank Negara Malaysia) 

Equity, Corporate Debt


Government Debt 

MAURITIUS 

CDS
(Central Depository & Settlement Co. Ltd)

BOM
(Bank of Mauritius) 

Equity, Corporate Debt


Government Debt 

MEXICO 

Indeval
(S.D. Indeval S.A. de C.V.) 

Equity, Corporate Debt, Government Debt 

MOROCCO 

Maroclear
(Maroclear) 

Equity, Corporate Debt, Government Debt 

NETHERLANDS 

Euroclear Nederland
(Euroclear Nederland) 

Equity, Corporate Debt, Government Debt 

NEW ZEALAND 

NZCSD
(New Zealand Central Securities Depository Limited) 

Equity, Corporate Debt, Government Debt 

NIGERIA 

CSCS
(Central Securities Clearing System Plc)

CBN
(Central Bank of Nigeria) 

Equity, Corporate Debt


Government Debt 

NORWAY 

VPS
(Verdipapirsentralen ASA) 

Equity, Corporate Debt, Government Debt 

OMAN 

MCD
(Muscat Clearing and Depository Co. (S.A.O.C)) 

Equity, Corporate Debt, Government Debt 

PAKISTAN 

SBP
(State Bank of Pakistan)

CDC
(Central Depository Company of Pakistan Limited) 

Government Debt


Equity, Corporate Debt 

PERU 

CAVALI
(CAVALI S.A. I.C.L.V.) 

Equity, Corporate Debt, Government Debt 

PHILIPPINES 

PDTC
(Philippine Depository and Trust Corporation)

RoSS
(Bureau of Treasury - Registry of Scripless Securities) 

Equity, Corporate Debt



Government Debt 

POLAND 

KDPW
(Krajowy Depozyt Papierów Wartosciowych S.A.)

RPW
(National Bank of Poland - Registry of Securities) 

Equity, Corporate Debt, Long-Term Government Debt


Short-Term Government Debt 

PORTUGAL 

INTERBOLSA
(Sociedade Gestora de Sistemas de Liquidação e de Sistemas Centralizados de Valores Mobiliários, S.A.) 

Equity, Corporate Debt, Government Debt 

QATAR 

QCSD
(Qatar Central Securities Depository) 

Equity, Government Debt 

ROMANIA 

CD S.A.
(Central Depository S.A.)

NBR
(National Bank of Romania) 

Equity, Corporate Debt


Government Debt 

RUSSIA 

NSD
(National Settlement Depository) 

Equity, Corporate Debt, Government Debt 

SAUDI ARABIA 

SDCC
(Securities Depository Center Company) 

Equity, Corporate Debt, Government Debt 

SERBIA 

CSD
(Central Securities Depository and Clearing House) 

Equity, Corporate Debt, Government Debt 

SINGAPORE 

CDP
(The Central Depository (Pte) Limited)

MAS
(Monetary Authority of Singapore) 

Equity, Corporate Debt, Government Securities

Government Securities 

SLOVAK REPUBLIC 

CDCP
(Centrálny depozitár cenných papierov SR, a.s.) 

Equity, Corporate Debt, Government Debt 

SLOVENIA 

KDD
(Centralna klirinško depotna družba d.d.) 

Equity, Corporate Debt, Government Debt 

SOUTH AFRICA 

Strate
(Strate (Pty) Limited) 

Equity, Corporate Debt, Government Debt 

SOUTH KOREA 

KSD
(Korea Securities Depository) 

Equity, Corporate Debt, Government Debt 

SPAIN 

IBERCLEAR
(Sociedad de Sistemas) 

Equity, Corporate Debt, Government Debt 

SRI LANKA 

CDS
(Central Depository Systems (Pvt.) Ltd.)

LankaSecure
(Central Bank of Sri Lanka - LankaSecure) 

Equity, Corporate Debt


Government Debt 

SWEDEN 

Euroclear Sweden
(Euroclear Sweden AB) 

Equity, Corporate Debt, Government Debt 

SWITZERLAND 

SIS
(SIX SIS AG) 

Equity, Corporate Debt, Government Debt 

TAIWAN 

TDCC
(Taiwan Depository and Clearing Corporation)

CBC
(Central Bank of the Republic of China (Taiwan)) 

Equity, Corporate Debt



Government Debt 

TANZANIA 

CDS
(Dar es Salaam Stock Exchange Central Depository System) 

Equity, Corporate Debt 

THAILAND 

TSD
(Thailand Securities Depository Company Limited) 

Equity, Corporate Debt, Government Debt 

TRINIDAD AND TOBAGO 

TTCD
(Trinidad and Tobago Central Depository Limited) 

Equity, Corporate Debt, Government Debt 

TUNISIA 

Tunisie Clearing
(Tunisie Clearing) 

Equity, Corporate Debt, Government Debt 

TURKEY 

CBRT
(Türkiye Cumhuriyet Merkez Bankasi A.S.)

CRA
(Merkezi Kayit Kurulusu A.S.) 

Government Debt



Equity, Corporate Debt, Government Debt 

UGANDA 

CSD
(Bank of Uganda - Central Securities Depository)

SCD
(Uganda Securities Exchange - Securities Central Depository) 

Government Debt



Equity, Corporate Debt 

UKRAINE 

NDU
(National Depository of Ukraine) 

Equity, Corporate Debt 

UNITED ARAB EMIRATES - ADX 

ADX
(Abu Dhabi Securities Exchange) 

Equity, Corporate Debt, Government Debt 

UNITED ARAB EMIRATES - DFM 

DFM
(Dubai Financial Market) 

Equity, Corporate Debt, Government Debt 

UNITED ARAB EMIRATES - NASDAQ DUBAI 

NASDAQ Dubai
(NASDAQ Dubai Limited) 

Corporate Debt 

UNITED KINGDOM 

EUI
(Euroclear U.K. & Ireland Limited) 

Equity, Corporate Debt, Government Debt 

UNITED STATES 

FRB
(Federal Reserve Bank)

DTC
(Depository Trust Company) 

Government Debt, Mortgage Backed Securities

Equity, Corporate Debt 

URUGUAY 

BCU
(Banco Central del Uruguay) 

Government Debt 

VENEZUELA 

CVV
(Caja Venezolana de Valores, S.A.)

BCV
(Banco Central de Venezuela) 

Equity, Corporate Debt


Government Debt 

VIETNAM 

VSD
(Vietnam Securities Depository) 

Equity, Corporate Debt, Government Debt 

WAEMU - BENIN, BURKINA FASO, GUINEA-BISSAU, IVORY COAST, MALI, NIGER, SENEGAL, TOGO 

DC/BR
(Le Dépositaire Central / Banque de Règlement) 

Equity, Corporate Debt, Government Debt 

ZAMBIA 

LuSE CSD
(Lusaka Stock Exchange Central Shares Depository)

BoZ
(Bank of Zambia) 

Equity, Corporate Debt, Treasury Bonds



Government Debt 

ZIMBABWE 

CDC
(Chengetedzai Depository Company Limited) 

Equity 

  

  

  

  

  

  

This document is for information only and its contents are subject to change.  This document is intended neither to influence your investment decisions nor to amend or supplement any agreement governing your relations with J.P. Morgan. Neither this document nor any of its contents may be disclosed to any third party or used for any other purpose without the proper written consent of J.P. Morgan.  J.P. Morgan has gathered the information from a source it considers reliable, however, it cannot be responsible for inaccuracies, incomplete information or updating of the information furnished hereby. 

  

  

  

  

 

EXHIBIT 1—Amendment 2 

  

The following is an amendment, dated as of December 22, 2017 (“Amendment”), to the Amended and Restated Global Custody Agreement, dated August 14, 2017, as amended from time to time (the “Agreement”), by and between JPMorgan Chase Bank, N.A. (“Bank”) and each open-end management investment company listed on Exhibit 1 thereto (each, a “Trust”).  This Amendment serves to update the names of the Trusts and certain of their portfolios (each, a “Fund”) listed on Exhibit 1.  Bank and Customer hereby agree that all of the terms and conditions as set forth in the Agreement are hereby incorporated by reference with respect to the following Trusts and Funds listed below.  Capitalized terms used but not defined in this Amendment have the meanings ascribed to them in the Agreement.  

  

Vanguard Admiral Funds 

Vanguard S&P 500 Growth Index Fund 

Vanguard S&P 500 Value Index Fund 

Vanguard S&P Mid-Cap 400 Growth Index Fund 

Vanguard S&P Mid-Cap 400 Index Fund 

Vanguard S&P Mid-Cap 400 Value Index Fund 

Vanguard S&P Small-Cap 600 Growth Index Fund 

Vanguard S&P Small-Cap 600 Index Fund 

Vanguard S&P Small-Cap 600 Value Index Fund 

  

Vanguard Bond Index Funds 

Vanguard Inflation-Protected Securities Fund  

Vanguard Intermediate-Term Bond Index Fund 

Vanguard Long-Term Bond Index Fund 

Vanguard Short-Term Bond Index Fund 

Vanguard Total Bond Market Index Fund 

Vanguard Total Bond Market II Index Fund 

  

Vanguard Chester Funds 

Vanguard Institutional Target Retirement 2015 Fund 

Vanguard Institutional Target Retirement 2020 Fund 

Vanguard Institutional Target Retirement 2025 Fund 

Vanguard Institutional Target Retirement 2030 Fund 

Vanguard Institutional Target Retirement 2035 Fund 

Vanguard Institutional Target Retirement 2040 Fund 

Vanguard Institutional Target Retirement 2045 Fund 

Vanguard Institutional Target Retirement 2050 Fund 

Vanguard Institutional Target Retirement 2055 Fund 

Vanguard Institutional Target Retirement 2060 Fund 

Vanguard Institutional Target Retirement 2065 Fund 

Vanguard Institutional Target Retirement Income Fund 

Vanguard Target Retirement 2015 Fund 

Vanguard Target Retirement 2020 Fund 

Vanguard Target Retirement 2025 Fund 

Vanguard Target Retirement 2030 Fund 

Vanguard Target Retirement 2035 Fund 

Vanguard Target Retirement 2040 Fund 

Vanguard Target Retirement 2045 Fund 

Vanguard Target Retirement 2050 Fund 

Vanguard Target Retirement 2055 Fund 

Vanguard Target Retirement 2060 Fund 

Vanguard Target Retirement 2065 Fund 

Vanguard Target Retirement Income Fund 

  

Vanguard Fixed Income Securities Funds 

Vanguard GNMA Fund 

Vanguard REIT II Index Fund 

  

Vanguard Index Funds 

Vanguard Extended Market Index Fund 

Vanguard Mid-Cap Growth Index Fund 

Vanguard Mid-Cap Index Fund 

Vanguard Mid-Cap Value Index Fund 

Vanguard Small-Cap Growth Index Fund 

Vanguard Small-Cap Index Fund 

Vanguard Small-Cap Value Index Fund 

Vanguard Total Stock Market Index Fund 

  

Vanguard International Equity Index Funds 

Vanguard Emerging Markets Stock Index Fund 

  

Vanguard Malvern Funds 

Vanguard Core Bond Fund 

Vanguard Institutional Intermediate-Term Bond Fund 

Vanguard Institutional Short-Term Bond Fund 

  

Vanguard Scottsdale Funds 

Vanguard Intermediate-Term Corporate Bond Index Fund 

Vanguard Intermediate-Term Treasury Index Fund 

Vanguard Long-Term Corporate Bond Index Fund 

Vanguard Long-Term Treasury Index Fund 

Vanguard Mortgage-Backed Securities Index Fund 

Vanguard Short-Term Corporate Bond Index Fund 

Vanguard Short-Term Treasury Index Fund 

Vanguard Total Corporate Bond ETF 

  

Vanguard Specialized Funds  

Vanguard Precious Metals and Mining Fund 

Vanguard REIT Index Fund 

  

Vanguard STAR Funds 

Vanguard LifeStrategy Conservative Growth Fund 

Vanguard LifeStrategy Growth Fund 

Vanguard LifeStrategy Income Fund 

Vanguard LifeStrategy Moderate Growth Fund 

Vanguard STAR Fund 

Vanguard Total International Stock Index Fund 

  

Vanguard Tax-Managed Funds 

Vanguard Tax-Managed Balanced Fund 

Vanguard Tax-Managed Capital Appreciation Fund 

Vanguard Tax-Managed Small-Cap Fund 

  

Vanguard Trustees’ Equity Fund 

Vanguard Diversified Equity Fund 

Vanguard International Value Fund 

  

Vanguard Valley Forge Funds 

Vanguard Balanced Index Fund 

Vanguard Managed Payout Fund 

  

Vanguard Variable Insurance Funds 

Conservative Allocation Portfolio 

Equity Index Portfolio 

Global Bond Index Portfolio 

Mid-Cap Index Portfolio 

Moderate Allocation Portfolio 

REIT Index Portfolio 

Total International Stock Market Index Portfolio 

Total Stock Market Index Portfolio 

  

Vanguard Wellington Fund 

Vanguard Wellington Fund 

  

Vanguard Whitehall Funds 

Vanguard High Dividend Yield Index Fund 

Vanguard International Explorer Fund 

  

Vanguard World Fund 

Vanguard Extended Duration Treasury Index Fund 

Vanguard Global Wellesley Income Fund 

Vanguard Global Wellington Fund 

  

  

  

  

  

(Rest of page left intentionally blank) 

  

  

  

  

  

  

 

Bank and each following Customer hereby agree that all of the terms and conditions as set forth in the Agreement except for Sections 2.1 and 2.2 are hereby incorporated by reference with respect to the Trusts and Funds listed below limited to their use of account number P 62749 in Vanguard Directly Managed Securities Lending transactions: 

  

Vanguard Chester Funds 

Vanguard PRIMECAP Fund 

  

Vanguard Explorer Fund 

Vanguard Explorer Fund 

  

Vanguard Fenway Funds 

Vanguard Equity Income Fund 

Vanguard PRIMECAP Core Fund 

  

Vanguard Horizon Funds 

Vanguard Capital Opportunity Fund 

Vanguard Global Equity Fund 

Vanguard Strategic Equity Fund 

Vanguard Strategic Small-Cap Equity Fund 

  

Vanguard Index Funds 

Vanguard Extended Market Index Fund 

Vanguard 500 Index Fund 

Vanguard Large-Cap Index Fund 

Vanguard Mid-Cap Index Fund 

Vanguard Small Cap Growth Index Fund 

Vanguard Small Cap Value Index Fund 

Vanguard Value Index Fund 

  

Vanguard Institutional Index Funds 

Vanguard Institutional Index Fund 

Vanguard Institutional Total Stock Market Index Fund 

  

Vanguard Malvern Funds 

Vanguard Capital Value Fund 

Vanguard U.S. Value Fund 

  

Vanguard Morgan Growth Fund 

Vanguard Morgan Growth Fund 

  

Vanguard Quantitative Funds 

Vanguard Growth and Income Fund 

Vanguard Structured Broad Market Fund 

Vanguard Structured Large-Cap Equity Fund 

  

  

Vanguard Scottsdale Funds 

Vanguard Explorer Value Fund 

Vanguard Russell 1000 Index Fund 

Vanguard Russell 1000 Value Index Fund 

Vanguard Russell 1000 Growth Index Fund 

Vanguard Russell 2000 Index Fund 

Vanguard Russell 2000 Value Index Fund 

Vanguard Russell 2000 Growth Index Fund 

Vanguard Russell 3000 Index Fund 

  

Vanguard Specialized Funds  

Vanguard Dividend Growth Fund 

Vanguard Energy Fund 

Vanguard REIT Index Fund 

  

Vanguard Trustees’ Equity Fund 

Vanguard Emerging Markets Select Stock Fund 

Vanguard International Value Fund 

  

Vanguard Variable Insurance Funds 

Vanguard Balanced Portfolio 

Vanguard Capital Growth Portfolio 

Vanguard Diversified Value Portfolio 

Vanguard Equity Income Portfolio 

Vanguard Equity Index Portfolio 

Vanguard Growth Portfolio 

Vanguard Mid-Cap Index Portfolio 

Vanguard REIT Index Portfolio 

Vanguard Small Company Growth Portfolio 

Vanguard International Portfolio 

  

Vanguard Whitehall Funds 

Vanguard Global Minimum Volatility Fund 

Vanguard High Dividend Yield Index Fund 

Vanguard Mid-Cap Growth Fund 

Vanguard Selected Value Fund 

  

Vanguard Windsor Funds 

Vanguard Windsor Fund 

Vanguard Windsor II Fund 

  

  

  

  

  

  

Vanguard World Fund 

Vanguard Consumer Discretionary Index Fund 

Vanguard Consumer Staples Index Fund 

Vanguard Energy Index Fund 

Vanguard FTSE Social Index Fund 

Vanguard Financials Index Fund 

Vanguard Health Care Index Fund 

Vanguard Industrials Index Fund 

Vanguard Information Technology Index Fund 

Vanguard Materials Index Fund 

Vanguard Mega Cap Index Fund 

Vanguard Mega Cap Growth Index Fund 

Vanguard Mega Cap Value Index Fund 

Vanguard Telecommunications Services Index Fund 

Vanguard U.S. Growth Fund 

Vanguard Utilities Index Fund 

  

  

  

  

  

  

  

  

  

  

(Rest of page left intentionally blank) 

  

 

IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute and deliver this Amendment as of the date set forth above.  

  

  

JPMORGAN CHASE BANK, N.A. 

  

EACH OF THE OPEN-END MANAGEMENT INVESTMENT COMPANIES LISTED ON EXHIBIT 1 HERETO 

  

  

  

  

  

/s/ Thomas J. Higgins 

By: 

  

By:  

  

  

  

  

  

Name: 

  

  

Name: 

Thomas J. Higgins 

  

  

  

  

  

Title: 

  

  

Title: 

Chief Financial Officer 

  

  

  

 

AMENDMENT TO AMENDED AND RESTATED GLOBAL CUSTODY AGREEMENT 

  

The following is an amendment, dated July __, 2018, (the “Amendment”) to the Amended and Restated Global Custody Agreement, dated August 14, 2017, as amended from time to time (the “Agreement”), by and between JPMorgan Chase Bank, N.A. (the “Bank”) and each open-end management investment company listed on Exhibit 1 thereto (each, a “Trust”).  For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties, intending to be legally bound, agree as follows: 

  

1.

Information Concerning Deposits at Bank.  Section 10.5(c) of the Agreement is hereby deleted in its entirety and replaced with the following: 

  

(c) In the event that (i) Bank incurs a loss attributable to Country Risk with respect to any cash balance it maintains on deposit at a Subcustodian or other correspondent bank in regard to its global custody or trust businesses in the country where the Subcustodian or other correspondent bank is located or (ii) J.P. Morgan Bank International LLC incurs a loss attributable to Country Risk with respect to any cash balance it maintains on deposit at its correspondent bank in Russia in regard to its direct custody business, Bank may set such loss off against Customer’s Cash Account to the extent that such loss is directly attributable to Customer’s investments in that market. 

  

2.

Exhibit 1.  Exhibit 1 to the Agreement is hereby deleted in its entirety and replaced with the following: 

  

Vanguard Admiral Funds 

Vanguard S&P 500 Growth Index Fund 

Vanguard S&P 500 Value Index Fund 

Vanguard S&P Mid-Cap 400 Growth Index Fund 

Vanguard S&P Mid-Cap 400 Index Fund 

Vanguard S&P Mid-Cap 400 Value Index Fund 

Vanguard S&P Small-Cap 600 Growth Index Fund 

Vanguard S&P Small-Cap 600 Index Fund 

Vanguard S&P Small-Cap 600 Value Index Fund 

  

Vanguard Bond Index Funds 

Vanguard Inflation-Protected Securities Fund  

Vanguard Intermediate-Term Bond Index Fund 

Vanguard Long-Term Bond Index Fund 

Vanguard Short-Term Bond Index Fund 

Vanguard Total Bond Market Index Fund 

Vanguard Total Bond Market II Index Fund 

  

Vanguard Chester Funds 

Vanguard Institutional Target Retirement 2015 Fund 

Vanguard Institutional Target Retirement 2020 Fund 

Vanguard Institutional Target Retirement 2025 Fund 

Vanguard Institutional Target Retirement 2030 Fund 

Vanguard Institutional Target Retirement 2035 Fund 

Vanguard Institutional Target Retirement 2040 Fund 

Vanguard Institutional Target Retirement 2045 Fund 

Vanguard Institutional Target Retirement 2050 Fund 

Vanguard Institutional Target Retirement 2055 Fund 

Vanguard Institutional Target Retirement 2060 Fund 

Vanguard Institutional Target Retirement 2065 Fund 

Vanguard Institutional Target Retirement Income Fund 

Vanguard Target Retirement 2015 Fund 

Vanguard Target Retirement 2020 Fund 

Vanguard Target Retirement 2025 Fund 

Vanguard Target Retirement 2030 Fund 

Vanguard Target Retirement 2035 Fund 

Vanguard Target Retirement 2040 Fund 

Vanguard Target Retirement 2045 Fund 

Vanguard Target Retirement 2050 Fund 

Vanguard Target Retirement 2055 Fund 

Vanguard Target Retirement 2060 Fund 

Vanguard Target Retirement 2065 Fund 

Vanguard Target Retirement Income Fund 

  

Vanguard Fixed Income Securities Funds 

Vanguard GNMA Fund 

Vanguard REIT II Index Fund 

  

Vanguard Index Funds 

Vanguard Extended Market Index Fund 

Vanguard Mid-Cap Growth Index Fund 

Vanguard Mid-Cap Index Fund 

Vanguard Mid-Cap Value Index Fund 

Vanguard Small-Cap Growth Index Fund 

Vanguard Small-Cap Index Fund 

Vanguard Small-Cap Value Index Fund 

Vanguard Total Stock Market Index Fund 

  

Vanguard International Equity Index Funds 

Vanguard Emerging Markets Stock Index Fund 

  

Vanguard Malvern Funds 

Vanguard Core Bond Fund 

Vanguard Institutional Intermediate-Term Bond Fund 

Vanguard Institutional Short-Term Bond Fund 

  

Vanguard Scottsdale Funds 

Vanguard Intermediate-Term Corporate Bond Index Fund 

Vanguard Intermediate-Term Treasury Index Fund 

Vanguard Long-Term Corporate Bond Index Fund 

Vanguard Long-Term Treasury Index Fund 

Vanguard Mortgage-Backed Securities Index Fund 

Vanguard Short-Term Corporate Bond Index Fund 

Vanguard Short-Term Treasury Index Fund 

Vanguard Total Corporate Bond ETF 

Vanguard Total World Bond ETF 

  

Vanguard Specialized Funds  

Vanguard Precious Metals and Mining Fund 

Vanguard REIT Index Fund 

  

Vanguard STAR Funds 

Vanguard LifeStrategy Conservative Growth Fund 

Vanguard LifeStrategy Growth Fund 

Vanguard LifeStrategy Income Fund 

Vanguard LifeStrategy Moderate Growth Fund 

Vanguard STAR Fund 

Vanguard Total International Stock Index Fund 

  

Vanguard Tax-Managed Funds 

Vanguard Tax-Managed Balanced Fund 

Vanguard Tax-Managed Capital Appreciation Fund 

Vanguard Tax-Managed Small-Cap Fund 

  

Vanguard Trustees’ Equity Fund 

Vanguard Diversified Equity Fund 

Vanguard International Value Fund 

  

Vanguard Valley Forge Funds 

Vanguard Balanced Index Fund 

Vanguard Managed Payout Fund 

  

Vanguard Variable Insurance Funds 

Conservative Allocation Portfolio 

Equity Index Portfolio 

Global Bond Index Portfolio 

Mid-Cap Index Portfolio 

Moderate Allocation Portfolio 

REIT Index Portfolio 

Total International Stock Market Index Portfolio 

Total Stock Market Index Portfolio 

  

Vanguard Wellington Fund 

Vanguard Wellington Fund 

  

Vanguard Whitehall Funds 

Vanguard High Dividend Yield Index Fund 

Vanguard International Explorer Fund 

  

Vanguard World Fund 

Vanguard Extended Duration Treasury Index Fund 

Vanguard Global Wellesley Income Fund 

Vanguard Global Wellington Fund 

Vanguard ESG Stock ETF 

Vanguard ESG International Stock ETF 

  

Bank and each following Customer hereby agree that all of the terms and conditions as set forth in the Agreement except for Sections 2.1 and 2.2 are hereby incorporated by reference with respect to the Trusts and Funds listed below limited to their use of account number P 62749 in Vanguard Directly Managed Securities Lending transactions: 

  

Vanguard Chester Funds 

Vanguard PRIMECAP Fund 

  

Vanguard Explorer Fund 

Vanguard Explorer Fund 

  

Vanguard Fenway Funds 

Vanguard Equity Income Fund 

Vanguard PRIMECAP Core Fund 

  

Vanguard Horizon Funds 

Vanguard Capital Opportunity Fund 

Vanguard Global Equity Fund 

Vanguard Strategic Equity Fund 

Vanguard Strategic Small-Cap Equity Fund 

  

Vanguard Index Funds 

Vanguard Extended Market Index Fund 

Vanguard 500 Index Fund 

Vanguard Large-Cap Index Fund 

Vanguard Mid-Cap Index Fund 

Vanguard Small Cap Growth Index Fund 

Vanguard Small Cap Value Index Fund 

Vanguard Value Index Fund 

  

Vanguard Institutional Index Funds 

Vanguard Institutional Index Fund 

Vanguard Institutional Total Stock Market Index Fund 

  

Vanguard Malvern Funds 

Vanguard Capital Value Fund 

Vanguard U.S. Value Fund 

  

Vanguard Morgan Growth Fund 

Vanguard Morgan Growth Fund 

  

Vanguard Quantitative Funds 

Vanguard Growth and Income Fund 

Vanguard Structured Broad Market Fund 

Vanguard Structured Large-Cap Equity Fund 

  

Vanguard Scottsdale Funds 

Vanguard Explorer Value Fund 

Vanguard Russell 1000 Index Fund 

Vanguard Russell 1000 Value Index Fund 

Vanguard Russell 1000 Growth Index Fund 

Vanguard Russell 2000 Index Fund 

Vanguard Russell 2000 Value Index Fund 

Vanguard Russell 2000 Growth Index Fund 

Vanguard Russell 3000 Index Fund 

  

Vanguard Specialized Funds  

Vanguard Dividend Growth Fund 

Vanguard Energy Fund 

Vanguard REIT Index Fund 

  

Vanguard Trustees’ Equity Fund 

Vanguard Emerging Markets Select Stock Fund 

Vanguard International Value Fund 

  

Vanguard Variable Insurance Funds 

Vanguard Balanced Portfolio 

Vanguard Capital Growth Portfolio 

Vanguard Diversified Value Portfolio 

Vanguard Equity Income Portfolio 

Vanguard Equity Index Portfolio 

Vanguard Growth Portfolio 

Vanguard Mid-Cap Index Portfolio 

Vanguard REIT Index Portfolio 

Vanguard Small Company Growth Portfolio 

Vanguard International Portfolio 

  

Vanguard Whitehall Funds 

Vanguard Global Minimum Volatility Fund 

Vanguard High Dividend Yield Index Fund 

Vanguard Mid-Cap Growth Fund 

Vanguard Selected Value Fund 

  

Vanguard Windsor Funds 

Vanguard Windsor Fund 

Vanguard Windsor II Fund 

  

Vanguard World Fund 

Vanguard Consumer Discretionary Index Fund 

Vanguard Consumer Staples Index Fund 

Vanguard Energy Index Fund 

Vanguard FTSE Social Index Fund 

Vanguard Financials Index Fund 

Vanguard Health Care Index Fund 

Vanguard Industrials Index Fund 

Vanguard Information Technology Index Fund 

Vanguard Materials Index Fund 

Vanguard Mega Cap Index Fund 

Vanguard Mega Cap Growth Index Fund 

Vanguard Mega Cap Value Index Fund 

Vanguard Telecommunications Services Index Fund 

Vanguard U.S. Growth Fund 

Vanguard Utilities Index Fund 

  

3.

Miscellaneous.  Except as modified by this Amendment, the Agreement shall remain unmodified, in full force and effect and all terms and conditions of the Agreement are hereby incorporated into and made part of this Amendment as if fully set forth herein.   

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

(Rest of page left intentionally blank) 

  

 

IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute and deliver this Amendment as of the date set forth above.  

  

  

JPMORGAN CHASE BANK, N.A. 

  

EACH OF THE OPEN-END MANAGEMENT INVESTMENT COMPANIES LISTED ON EXHIBIT 1 HERETO 

  

  

/s/ Brian Eckert 

  

  

  

/s/ Thomas J. Higgins 

By: 

  

By: 

  

  

  

  

  

Name: 

Brian Eckert 

  

Name: 

Thomas J. Higgins 

  

  

  

  

  

Title: 

Executive Director 

  

Title: 

Chief Financial Officer 

  

  

  

 

AMENDMENT TO AMENDED AND RESTATED GLOBAL CUSTODY AGREEMENT 

  

The following is an amendment, dated October _2_, 2018, (the “Amendment”) to the Amended and Restated Global Custody Agreement, dated August 14, 2017, as amended from time to time (the “Agreement”), by and between JPMorgan Chase Bank, N.A. (the “Bank”) and each open-end management investment company listed on Exhibit 1 thereto (each, a “Trust”).  For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties, intending to be legally bound, agree as follows: 

  

  

1.

Exhibit 1.  Exhibit 1 to the Agreement is hereby deleted in its entirety and replaced with the following: 

  

Vanguard Admiral Funds 

Vanguard S&P 500 Growth Index Fund 

Vanguard S&P 500 Value Index Fund 

Vanguard S&P Mid-Cap 400 Growth Index Fund 

Vanguard S&P Mid-Cap 400 Index Fund 

Vanguard S&P Mid-Cap 400 Value Index Fund 

Vanguard S&P Small-Cap 600 Growth Index Fund 

Vanguard S&P Small-Cap 600 Index Fund 

Vanguard S&P Small-Cap 600 Value Index Fund 

  

Vanguard Bond Index Funds 

Vanguard Inflation-Protected Securities Fund  

Vanguard Intermediate-Term Bond Index Fund 

Vanguard Long-Term Bond Index Fund 

Vanguard Short-Term Bond Index Fund 

Vanguard Total Bond Market Index Fund 

Vanguard Total Bond Market II Index Fund 

  

Vanguard Charlotte Funds 

Vanguard Global Credit Bond Fund 

  

Vanguard Chester Funds 

Vanguard Institutional Target Retirement 2015 Fund 

Vanguard Institutional Target Retirement 2020 Fund 

Vanguard Institutional Target Retirement 2025 Fund 

Vanguard Institutional Target Retirement 2030 Fund 

Vanguard Institutional Target Retirement 2035 Fund 

Vanguard Institutional Target Retirement 2040 Fund 

Vanguard Institutional Target Retirement 2045 Fund 

Vanguard Institutional Target Retirement 2050 Fund 

Vanguard Institutional Target Retirement 2055 Fund 

Vanguard Institutional Target Retirement 2060 Fund 

Vanguard Institutional Target Retirement 2065 Fund 

Vanguard Institutional Target Retirement Income Fund 

Vanguard Target Retirement 2015 Fund 

Vanguard Target Retirement 2020 Fund 

Vanguard Target Retirement 2025 Fund 

Vanguard Target Retirement 2030 Fund 

Vanguard Target Retirement 2035 Fund 

Vanguard Target Retirement 2040 Fund 

Vanguard Target Retirement 2045 Fund 

Vanguard Target Retirement 2050 Fund 

Vanguard Target Retirement 2055 Fund 

Vanguard Target Retirement 2060 Fund 

Vanguard Target Retirement 2065 Fund 

Vanguard Target Retirement Income Fund 

  

Vanguard Fixed Income Securities Funds 

Vanguard GNMA Fund 

Vanguard Real Estate II Index Fund 

  

Vanguard Index Funds 

Vanguard Extended Market Index Fund 

Vanguard Mid-Cap Growth Index Fund 

Vanguard Mid-Cap Index Fund 

Vanguard Mid-Cap Value Index Fund 

Vanguard Small-Cap Growth Index Fund 

Vanguard Small-Cap Index Fund 

Vanguard Small-Cap Value Index Fund 

Vanguard Total Stock Market Index Fund 

  

Vanguard International Equity Index Funds 

Vanguard Emerging Markets Stock Index Fund 

  

Vanguard Malvern Funds 

Vanguard Core Bond Fund 

Vanguard Institutional Intermediate-Term Bond Fund 

Vanguard Institutional Short-Term Bond Fund 

  

Vanguard Scottsdale Funds 

Vanguard Intermediate-Term Corporate Bond Index Fund 

Vanguard Intermediate-Term Treasury Index Fund 

Vanguard Long-Term Corporate Bond Index Fund 

Vanguard Long-Term Treasury Index Fund 

Vanguard Mortgage-Backed Securities Index Fund 

Vanguard Short-Term Corporate Bond Index Fund 

Vanguard Short-Term Treasury Index Fund 

Vanguard Total Corporate Bond ETF 

Vanguard Total World Bond ETF 

  

Vanguard Specialized Funds  

Vanguard Global Capital Cycles Fund 

Vanguard Real Estate Index Fund 

  

Vanguard STAR Funds 

Vanguard LifeStrategy Conservative Growth Fund 

Vanguard LifeStrategy Growth Fund 

Vanguard LifeStrategy Income Fund 

Vanguard LifeStrategy Moderate Growth Fund 

Vanguard STAR Fund 

Vanguard Total International Stock Index Fund 

  

Vanguard Tax-Managed Funds 

Vanguard Tax-Managed Balanced Fund 

Vanguard Tax-Managed Capital Appreciation Fund 

Vanguard Tax-Managed Small-Cap Fund 

  

Vanguard Trustees’ Equity Fund 

Vanguard Diversified Equity Fund 

Vanguard International Value Fund 

  

Vanguard Valley Forge Funds 

Vanguard Balanced Index Fund 

Vanguard Managed Payout Fund 

  

Vanguard Variable Insurance Funds 

Conservative Allocation Portfolio 

Equity Index Portfolio 

Global Bond Index Portfolio 

Mid-Cap Index Portfolio 

Moderate Allocation Portfolio 

REIT Index Portfolio 

Total International Stock Market Index Portfolio 

Total Stock Market Index Portfolio 

  

Vanguard Wellington Fund 

Vanguard Wellington Fund 

  

Vanguard Whitehall Funds 

Vanguard High Dividend Yield Index Fund 

Vanguard International Explorer Fund 

  

Vanguard World Fund 

Vanguard Extended Duration Treasury Index Fund 

Vanguard Global Wellesley Income Fund 

Vanguard Global Wellington Fund 

Vanguard ESG US Stock ETF 

Vanguard ESG International Stock ETF 

  

Bank and each following Customer hereby agree that all of the terms and conditions as set forth in the Agreement except for Sections 2.1 and 2.2 are hereby incorporated by reference with respect to the Trusts and Funds listed below limited to their use of account number P 62749 in Vanguard Directly Managed Securities Lending transactions: 

  

Vanguard Chester Funds 

Vanguard PRIMECAP Fund 

  

Vanguard Explorer Fund 

Vanguard Explorer Fund 

  

Vanguard Fenway Funds 

Vanguard Equity Income Fund 

Vanguard PRIMECAP Core Fund 

  

Vanguard Horizon Funds 

Vanguard Capital Opportunity Fund 

Vanguard Global Equity Fund 

Vanguard Strategic Equity Fund 

Vanguard Strategic Small-Cap Equity Fund 

  

Vanguard Index Funds 

Vanguard Extended Market Index Fund 

Vanguard 500 Index Fund 

Vanguard Large-Cap Index Fund 

Vanguard Mid-Cap Index Fund 

Vanguard Small Cap Growth Index Fund 

Vanguard Small Cap Value Index Fund 

Vanguard Value Index Fund 

  

Vanguard Institutional Index Funds 

Vanguard Institutional Index Fund 

Vanguard Institutional Total Stock Market Index Fund 

  

Vanguard Malvern Funds 

Vanguard Capital Value Fund 

Vanguard U.S. Value Fund 

  

Vanguard Morgan Growth Fund 

Vanguard Morgan Growth Fund 

  

Vanguard Quantitative Funds 

Vanguard Growth and Income Fund 

Vanguard Structured Broad Market Fund 

Vanguard Structured Large-Cap Equity Fund 

  

Vanguard Scottsdale Funds 

Vanguard Explorer Value Fund 

Vanguard Russell 1000 Index Fund 

Vanguard Russell 1000 Value Index Fund 

Vanguard Russell 1000 Growth Index Fund 

Vanguard Russell 2000 Index Fund 

Vanguard Russell 2000 Value Index Fund 

Vanguard Russell 2000 Growth Index Fund 

Vanguard Russell 3000 Index Fund 

  

Vanguard Specialized Funds  

Vanguard Dividend Growth Fund 

Vanguard Energy Fund 

Vanguard Real Estate Index Fund 

  

Vanguard Trustees’ Equity Fund 

Vanguard Emerging Markets Select Stock Fund 

Vanguard International Value Fund 

  

Vanguard Variable Insurance Funds 

Vanguard Balanced Portfolio 

Vanguard Capital Growth Portfolio 

Vanguard Diversified Value Portfolio 

Vanguard Equity Income Portfolio 

Vanguard Equity Index Portfolio 

Vanguard Growth Portfolio 

Vanguard Mid-Cap Index Portfolio 

Vanguard REIT Index Portfolio 

Vanguard Small Company Growth Portfolio 

Vanguard International Portfolio 

  

Vanguard Whitehall Funds 

Vanguard Global Minimum Volatility Fund 

Vanguard High Dividend Yield Index Fund 

Vanguard Mid-Cap Growth Fund 

Vanguard Selected Value Fund 

  

Vanguard Windsor Funds 

Vanguard Windsor Fund 

Vanguard Windsor II Fund 

  

Vanguard World Fund 

Vanguard Consumer Discretionary Index Fund 

Vanguard Consumer Staples Index Fund 

Vanguard Energy Index Fund 

Vanguard FTSE Social Index Fund 

Vanguard Financials Index Fund 

Vanguard Health Care Index Fund 

Vanguard Industrials Index Fund 

Vanguard Information Technology Index Fund 

Vanguard Materials Index Fund 

Vanguard Mega Cap Index Fund 

Vanguard Mega Cap Growth Index Fund 

Vanguard Mega Cap Value Index Fund 

Vanguard Communication Services Index Fund 

Vanguard U.S. Growth Fund 

Vanguard Utilities Index Fund 

  

2.

Miscellaneous.  Except as modified by this Amendment, the Agreement shall remain unmodified, in full force and effect and all terms and conditions of the Agreement are hereby incorporated into and made part of this Amendment as if fully set forth herein.   

  

IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute and deliver this Amendment as of the date set forth above.  

  

  

JPMORGAN CHASE BANK, N.A. 

  

EACH OF THE OPEN-END MANAGEMENT INVESTMENT COMPANIES LISTED ON EXHIBIT 1 HERETO 

  

  

/s/ Alan Liang 

  

  

  

/s/ John Bendl 

By:                      

  

By: 

  

  

  

  

  

Name: 

Alan Liang 

  

Name: 

John Bendl  

  

  

  

  

  

Title: 

Vice President 

  

Title: 

Chief Accounting Officer 

Controller  

  

  

  

 

AMENDMENT TO AMENDED AND RESTATED GLOBAL CUSTODY AGREEMENT 

  

The following is an amendment, dated April _9_, 2019, (the “Amendment”) to the Amended and Restated Global Custody Agreement, dated August 14, 2017, as amended from time to time (the “Agreement”), by and between JPMorgan Chase Bank, N.A. (the “Bank”) and each open-end management investment company listed on Exhibit 1 thereto (each, a “Trust”).  For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties, intending to be legally bound, agree as follows: 

  

  

3.

Exhibit 1.  Exhibit 1 to the Agreement is hereby deleted in its entirety and replaced with the following: 

  

Vanguard Admiral Funds 

Vanguard S&P 500 Growth Index Fund 

Vanguard S&P 500 Value Index Fund 

Vanguard S&P Mid-Cap 400 Growth Index Fund 

Vanguard S&P Mid-Cap 400 Index Fund 

Vanguard S&P Mid-Cap 400 Value Index Fund 

Vanguard S&P Small-Cap 600 Growth Index Fund 

Vanguard S&P Small-Cap 600 Index Fund 

Vanguard S&P Small-Cap 600 Value Index Fund 

  

Vanguard Bond Index Funds 

Vanguard Inflation-Protected Securities Fund  

Vanguard Intermediate-Term Bond Index Fund 

Vanguard Long-Term Bond Index Fund 

Vanguard Short-Term Bond Index Fund 

Vanguard Total Bond Market Index Fund 

Vanguard Total Bond Market II Index Fund 

  

Vanguard Charlotte Funds 

Vanguard Global Credit Bond Fund 

  

Vanguard Chester Funds 

Vanguard Institutional Target Retirement 2015 Fund 

Vanguard Institutional Target Retirement 2020 Fund 

Vanguard Institutional Target Retirement 2025 Fund 

Vanguard Institutional Target Retirement 2030 Fund 

Vanguard Institutional Target Retirement 2035 Fund 

Vanguard Institutional Target Retirement 2040 Fund 

Vanguard Institutional Target Retirement 2045 Fund 

Vanguard Institutional Target Retirement 2050 Fund 

Vanguard Institutional Target Retirement 2055 Fund 

Vanguard Institutional Target Retirement 2060 Fund 

Vanguard Institutional Target Retirement 2065 Fund 

Vanguard Institutional Target Retirement Income Fund 

Vanguard Target Retirement 2015 Fund 

Vanguard Target Retirement 2020 Fund 

Vanguard Target Retirement 2025 Fund 

Vanguard Target Retirement 2030 Fund 

Vanguard Target Retirement 2035 Fund 

Vanguard Target Retirement 2040 Fund 

Vanguard Target Retirement 2045 Fund 

Vanguard Target Retirement 2050 Fund 

Vanguard Target Retirement 2055 Fund 

Vanguard Target Retirement 2060 Fund 

Vanguard Target Retirement 2065 Fund 

Vanguard Target Retirement Income Fund 

  

Vanguard Fixed Income Securities Funds 

Vanguard GNMA Fund 

Vanguard Real Estate II Index Fund 

  

Vanguard Index Funds 

Vanguard Extended Market Index Fund 

Vanguard Mid-Cap Growth Index Fund 

Vanguard Mid-Cap Index Fund 

Vanguard Mid-Cap Value Index Fund 

Vanguard Small-Cap Growth Index Fund 

Vanguard Small-Cap Index Fund 

Vanguard Small-Cap Value Index Fund 

Vanguard Total Stock Market Index Fund 

  

Vanguard International Equity Index Funds 

Vanguard Emerging Markets Stock Index Fund 

  

Vanguard Malvern Funds 

Vanguard Core Bond Fund 

Vanguard Institutional Intermediate-Term Bond Fund 

Vanguard Institutional Short-Term Bond Fund 

  

Vanguard Scottsdale Funds 

Vanguard Intermediate-Term Corporate Bond Index Fund 

Vanguard Intermediate-Term Treasury Index Fund 

Vanguard Long-Term Corporate Bond Index Fund 

Vanguard Long-Term Treasury Index Fund 

Vanguard Mortgage-Backed Securities Index Fund 

Vanguard Short-Term Corporate Bond Index Fund 

Vanguard Short-Term Treasury Index Fund 

Vanguard Total Corporate Bond ETF 

Vanguard Total World Bond ETF 

  

Vanguard Specialized Funds  

Vanguard Global Capital Cycles Fund 

Vanguard Real Estate Index Fund 

Vanguard Global ESG Select Stock Fund  

  

Vanguard STAR Funds 

Vanguard LifeStrategy Conservative Growth Fund 

Vanguard LifeStrategy Growth Fund 

Vanguard LifeStrategy Income Fund 

Vanguard LifeStrategy Moderate Growth Fund 

Vanguard STAR Fund 

Vanguard Total International Stock Index Fund 

  

Vanguard Tax-Managed Funds 

Vanguard Tax-Managed Balanced Fund 

Vanguard Tax-Managed Capital Appreciation Fund 

Vanguard Tax-Managed Small-Cap Fund 

  

Vanguard Trustees’ Equity Fund 

Vanguard Diversified Equity Fund 

Vanguard International Value Fund 

  

Vanguard Valley Forge Funds 

Vanguard Balanced Index Fund 

Vanguard Managed Payout Fund 

  

Vanguard Variable Insurance Funds 

Conservative Allocation Portfolio 

Equity Index Portfolio 

Global Bond Index Portfolio 

Mid-Cap Index Portfolio 

Moderate Allocation Portfolio 

REIT Index Portfolio 

Total International Stock Market Index Portfolio 

Total Stock Market Index Portfolio 

  

Vanguard Wellington Fund 

Vanguard Wellington Fund 

  

Vanguard Whitehall Funds 

Vanguard High Dividend Yield Index Fund 

Vanguard International Explorer Fund 

  

Vanguard World Fund 

Vanguard Extended Duration Treasury Index Fund 

Vanguard Global Wellesley Income Fund 

Vanguard Global Wellington Fund 

Vanguard ESG US Stock ETF 

Vanguard ESG International Stock ETF 

  

Bank and each following Customer hereby agree that all of the terms and conditions as set forth in the Agreement except for Sections 2.1 and 2.2 are hereby incorporated by reference with respect to the Trusts and Funds listed below limited to their use of account number P 62749 in Vanguard Directly Managed Securities Lending transactions: 

  

Vanguard Chester Funds 

Vanguard PRIMECAP Fund 

  

Vanguard Explorer Fund 

Vanguard Explorer Fund 

  

Vanguard Fenway Funds 

Vanguard Equity Income Fund 

Vanguard PRIMECAP Core Fund 

  

Vanguard Horizon Funds 

Vanguard Capital Opportunity Fund 

Vanguard Global Equity Fund 

Vanguard Strategic Equity Fund 

Vanguard Strategic Small-Cap Equity Fund 

  

Vanguard Index Funds 

Vanguard Extended Market Index Fund 

Vanguard 500 Index Fund 

Vanguard Large-Cap Index Fund 

Vanguard Mid-Cap Index Fund 

Vanguard Small Cap Growth Index Fund 

Vanguard Small Cap Value Index Fund 

Vanguard Value Index Fund 

  

Vanguard Institutional Index Funds 

Vanguard Institutional Index Fund 

Vanguard Institutional Total Stock Market Index Fund 

  

Vanguard Malvern Funds 

Vanguard Capital Value Fund 

Vanguard U.S. Value Fund 

  

Vanguard Morgan Growth Fund 

Vanguard Morgan Growth Fund 

  

Vanguard Quantitative Funds 

Vanguard Growth and Income Fund 

Vanguard Structured Broad Market Fund 

Vanguard Structured Large-Cap Equity Fund 

  

Vanguard Scottsdale Funds 

Vanguard Explorer Value Fund 

Vanguard Russell 1000 Index Fund 

Vanguard Russell 1000 Value Index Fund 

Vanguard Russell 1000 Growth Index Fund 

Vanguard Russell 2000 Index Fund 

Vanguard Russell 2000 Value Index Fund 

Vanguard Russell 2000 Growth Index Fund 

Vanguard Russell 3000 Index Fund 

  

Vanguard Specialized Funds  

Vanguard Dividend Growth Fund 

Vanguard Energy Fund 

Vanguard Real Estate Index Fund 

  

Vanguard Trustees’ Equity Fund 

Vanguard Emerging Markets Select Stock Fund 

Vanguard International Value Fund 

  

Vanguard Variable Insurance Funds 

Vanguard Balanced Portfolio 

Vanguard Capital Growth Portfolio 

Vanguard Diversified Value Portfolio 

Vanguard Equity Income Portfolio 

Vanguard Equity Index Portfolio 

Vanguard Growth Portfolio 

Vanguard Mid-Cap Index Portfolio 

Vanguard REIT Index Portfolio 

Vanguard Small Company Growth Portfolio 

Vanguard International Portfolio 

  

Vanguard Whitehall Funds 

Vanguard Global Minimum Volatility Fund 

Vanguard High Dividend Yield Index Fund 

Vanguard Mid-Cap Growth Fund 

Vanguard Selected Value Fund 

  

Vanguard Windsor Funds 

Vanguard Windsor Fund 

Vanguard Windsor II Fund 

  

Vanguard World Fund 

Vanguard Consumer Discretionary Index Fund 

Vanguard Consumer Staples Index Fund 

Vanguard Energy Index Fund 

Vanguard FTSE Social Index Fund 

Vanguard Financials Index Fund 

Vanguard Health Care Index Fund 

Vanguard Industrials Index Fund 

Vanguard Information Technology Index Fund 

Vanguard Materials Index Fund 

Vanguard Mega Cap Index Fund 

Vanguard Mega Cap Growth Index Fund 

Vanguard Mega Cap Value Index Fund 

Vanguard Communication Services Index Fund 

Vanguard U.S. Growth Fund 

Vanguard Utilities Index Fund 

  

4.

Miscellaneous.  Except as modified by this Amendment, the Agreement shall remain unmodified, in full force and effect and all terms and conditions of the Agreement are hereby incorporated into and made part of this Amendment as if fully set forth herein.   

  

IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute and deliver this Amendment as of the date set forth above.  

  

  

JPMORGAN CHASE BANK, N.A. 

  

EACH OF THE OPEN-END MANAGEMENT INVESTMENT COMPANIES LISTED ON EXHIBIT 1 HERETO 

  

  

/s/ Carl Mehldau 

  

  

  

/s/ Thomas J. Higgins 

By: 

  

By: 

  

  

  

  

  

Name: 

Carl Mehldau 

  

Name: 

Thomas J. Higgins 

  

  

  

  

  

Title: 

Vice President 

  

Title: 

Chief Financial Officer 

  

  

  

  

 

AMENDMENT TO AMENDED AND RESTATED GLOBAL CUSTODY AGREEMENT 

  

The following is an amendment, dated August _12_, 2019, (the “Amendment”) to the Amended and Restated Global Custody Agreement, dated August 14, 2017, as amended from time to time (the “Agreement”), by and between JPMorgan Chase Bank, N.A. (the “Bank”) and each open-end management investment company listed on Exhibit 1 thereto (each, a “Trust”).  For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties, intending to be legally bound, agree as follows: 

  

  

5.

Exhibit 1.  Exhibit 1 to the Agreement is hereby deleted in its entirety and replaced with the following: 

  

Vanguard Admiral Funds 

Vanguard S&P 500 Growth Index Fund 

Vanguard S&P 500 Value Index Fund 

Vanguard S&P Mid-Cap 400 Growth Index Fund 

Vanguard S&P Mid-Cap 400 Index Fund 

Vanguard S&P Mid-Cap 400 Value Index Fund 

Vanguard S&P Small-Cap 600 Growth Index Fund 

Vanguard S&P Small-Cap 600 Index Fund 

Vanguard S&P Small-Cap 600 Value Index Fund 

  

Vanguard Bond Index Funds 

Vanguard Inflation-Protected Securities Fund  

Vanguard Intermediate-Term Bond Index Fund 

Vanguard Long-Term Bond Index Fund 

Vanguard Short-Term Bond Index Fund 

Vanguard Total Bond Market Index Fund 

Vanguard Total Bond Market II Index Fund 

  

Vanguard Charlotte Funds 

Vanguard Global Credit Bond Fund 

  

Vanguard Chester Funds 

Vanguard Institutional Target Retirement 2015 Fund 

Vanguard Institutional Target Retirement 2020 Fund 

Vanguard Institutional Target Retirement 2025 Fund 

Vanguard Institutional Target Retirement 2030 Fund 

Vanguard Institutional Target Retirement 2035 Fund 

Vanguard Institutional Target Retirement 2040 Fund 

Vanguard Institutional Target Retirement 2045 Fund 

Vanguard Institutional Target Retirement 2050 Fund 

Vanguard Institutional Target Retirement 2055 Fund 

Vanguard Institutional Target Retirement 2060 Fund 

Vanguard Institutional Target Retirement 2065 Fund 

Vanguard Institutional Target Retirement Income Fund 

Vanguard Target Retirement 2015 Fund 

Vanguard Target Retirement 2020 Fund 

Vanguard Target Retirement 2025 Fund 

Vanguard Target Retirement 2030 Fund 

Vanguard Target Retirement 2035 Fund 

Vanguard Target Retirement 2040 Fund 

Vanguard Target Retirement 2045 Fund 

Vanguard Target Retirement 2050 Fund 

Vanguard Target Retirement 2055 Fund 

Vanguard Target Retirement 2060 Fund 

Vanguard Target Retirement 2065 Fund 

Vanguard Target Retirement Income Fund 

  

Vanguard Fixed Income Securities Funds 

Vanguard GNMA Fund 

Vanguard Real Estate II Index Fund 

  

Vanguard Horizon Funds 

Vanguard International Core Stock Fund 

  

Vanguard Index Funds 

Vanguard Extended Market Index Fund 

Vanguard Mid-Cap Growth Index Fund 

Vanguard Mid-Cap Index Fund 

Vanguard Mid-Cap Value Index Fund 

Vanguard Small-Cap Growth Index Fund 

Vanguard Small-Cap Index Fund 

Vanguard Small-Cap Value Index Fund 

Vanguard Total Stock Market Index Fund 

  

Vanguard International Equity Index Funds 

Vanguard Emerging Markets Stock Index Fund 

  

Vanguard Malvern Funds 

Vanguard Core Bond Fund 

Vanguard Institutional Intermediate-Term Bond Fund 

Vanguard Institutional Short-Term Bond Fund 

  

Vanguard Scottsdale Funds 

Vanguard Intermediate-Term Corporate Bond Index Fund 

Vanguard Intermediate-Term Treasury Index Fund 

Vanguard Long-Term Corporate Bond Index Fund 

Vanguard Long-Term Treasury Index Fund 

Vanguard Mortgage-Backed Securities Index Fund 

Vanguard Short-Term Corporate Bond Index Fund 

Vanguard Short-Term Treasury Index Fund 

Vanguard Total Corporate Bond ETF 

Vanguard Total World Bond ETF 

  

Vanguard Specialized Funds  

Vanguard Global Capital Cycles Fund 

Vanguard Real Estate Index Fund 

Vanguard Global ESG Select Stock Fund  

  

Vanguard STAR Funds 

Vanguard LifeStrategy Conservative Growth Fund 

Vanguard LifeStrategy Growth Fund 

Vanguard LifeStrategy Income Fund 

Vanguard LifeStrategy Moderate Growth Fund 

Vanguard STAR Fund 

Vanguard Total International Stock Index Fund 

  

Vanguard Tax-Managed Funds 

Vanguard Tax-Managed Balanced Fund 

Vanguard Tax-Managed Capital Appreciation Fund 

Vanguard Tax-Managed Small-Cap Fund 

  

Vanguard Trustees’ Equity Fund 

Vanguard Diversified Equity Fund 

Vanguard International Value Fund 

  

Vanguard Valley Forge Funds 

Vanguard Balanced Index Fund 

Vanguard Managed Payout Fund 

  

Vanguard Variable Insurance Funds 

Conservative Allocation Portfolio 

Equity Index Portfolio 

Global Bond Index Portfolio 

Mid-Cap Index Portfolio 

Moderate Allocation Portfolio 

REIT Index Portfolio 

Total International Stock Market Index Portfolio 

Total Stock Market Index Portfolio 

  

Vanguard Wellington Fund 

Vanguard Wellington Fund 

  

Vanguard Whitehall Funds 

Vanguard High Dividend Yield Index Fund 

Vanguard International Explorer Fund 

  

Vanguard World Fund 

Vanguard Extended Duration Treasury Index Fund 

Vanguard Global Wellesley Income Fund 

Vanguard Global Wellington Fund 

Vanguard ESG US Stock ETF 

Vanguard ESG International Stock ETF 

  

Bank and each following Customer hereby agree that all of the terms and conditions as set forth in the Agreement except for Sections 2.1 and 2.2 are hereby incorporated by reference with respect to the Trusts and Funds listed below limited to their use of account number P 62749 in Vanguard Directly Managed Securities Lending transactions: 

  

Vanguard Chester Funds 

Vanguard PRIMECAP Fund 

  

Vanguard Explorer Fund 

Vanguard Explorer Fund 

  

Vanguard Fenway Funds 

Vanguard Equity Income Fund 

Vanguard PRIMECAP Core Fund 

  

Vanguard Horizon Funds 

Vanguard Capital Opportunity Fund 

Vanguard Global Equity Fund 

Vanguard Strategic Equity Fund 

Vanguard Strategic Small-Cap Equity Fund 

  

Vanguard Index Funds 

Vanguard Extended Market Index Fund 

Vanguard 500 Index Fund 

Vanguard Large-Cap Index Fund 

Vanguard Mid-Cap Index Fund 

Vanguard Small Cap Growth Index Fund 

Vanguard Small Cap Value Index Fund 

Vanguard Value Index Fund 

  

Vanguard Institutional Index Funds 

Vanguard Institutional Index Fund 

Vanguard Institutional Total Stock Market Index Fund 

  

Vanguard Malvern Funds 

Vanguard Capital Value Fund 

Vanguard U.S. Value Fund 

  

Vanguard Morgan Growth Fund 

Vanguard Morgan Growth Fund 

  

Vanguard Quantitative Funds 

Vanguard Growth and Income Fund 

Vanguard Structured Broad Market Fund 

Vanguard Structured Large-Cap Equity Fund 

  

Vanguard Scottsdale Funds 

Vanguard Explorer Value Fund 

Vanguard Russell 1000 Index Fund 

Vanguard Russell 1000 Value Index Fund 

Vanguard Russell 1000 Growth Index Fund 

Vanguard Russell 2000 Index Fund 

Vanguard Russell 2000 Value Index Fund 

Vanguard Russell 2000 Growth Index Fund 

Vanguard Russell 3000 Index Fund 

  

Vanguard Specialized Funds  

Vanguard Dividend Growth Fund 

Vanguard Energy Fund 

Vanguard Real Estate Index Fund 

  

Vanguard Trustees’ Equity Fund 

Vanguard Emerging Markets Select Stock Fund 

Vanguard International Value Fund 

  

Vanguard Variable Insurance Funds 

Vanguard Balanced Portfolio 

Vanguard Capital Growth Portfolio 

Vanguard Diversified Value Portfolio 

Vanguard Equity Income Portfolio 

Vanguard Equity Index Portfolio 

Vanguard Growth Portfolio 

Vanguard Mid-Cap Index Portfolio 

Vanguard REIT Index Portfolio 

Vanguard Small Company Growth Portfolio 

Vanguard International Portfolio 

  

Vanguard Whitehall Funds 

Vanguard Global Minimum Volatility Fund 

Vanguard High Dividend Yield Index Fund 

Vanguard Mid-Cap Growth Fund 

Vanguard Selected Value Fund 

  

Vanguard Windsor Funds 

Vanguard Windsor Fund 

Vanguard Windsor II Fund 

  

Vanguard World Fund 

Vanguard Consumer Discretionary Index Fund 

Vanguard Consumer Staples Index Fund 

Vanguard Energy Index Fund 

Vanguard FTSE Social Index Fund 

Vanguard Financials Index Fund 

Vanguard Health Care Index Fund 

Vanguard Industrials Index Fund 

Vanguard Information Technology Index Fund 

Vanguard Materials Index Fund 

Vanguard Mega Cap Index Fund 

Vanguard Mega Cap Growth Index Fund 

Vanguard Mega Cap Value Index Fund 

Vanguard Communication Services Index Fund 

Vanguard U.S. Growth Fund 

Vanguard Utilities Index Fund 

  

6.

Miscellaneous.  Except as modified by this Amendment, the Agreement shall remain unmodified, in full force and effect and all terms and conditions of the Agreement are hereby incorporated into and made part of this Amendment as if fully set forth herein.   

  

IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute and deliver this Amendment as of the date set forth above.  

  

  

JPMORGAN CHASE BANK, N.A. 

  

EACH OF THE OPEN-END MANAGEMENT INVESTMENT COMPANIES LISTED ON EXHIBIT 1 HERETO 

  

  

/s/ Carl Mehldau 

  

  

  

/s/ Peter C. Mahoney 

By: 

  

By: 

  

  

  

  

  

Name: 

Carl Mehldau 

  

Name: 

Peter C. Mahoney 

  

  

  

  

  

Title: 

Vice President 

  

Title: 

Controller  

  

  

  

 

AMENDMENT TO AMENDED AND RESTATED GLOBAL CUSTODY AGREEMENT 

  

The following is an amendment, dated August 6, 2020, (the “Amendment”) to the Amended and Restated Global Custody Agreement, dated August 14, 2017, as amended from time to time (the “Agreement”), by and between JPMorgan Chase Bank, N.A. (the “Bank”) and each open-end management investment company listed on Exhibit 1 thereto (each, a “Trust”). For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties, intending to be legally bound, agree as follows: 

  

  

7.

Exhibit 1.  Exhibit 1 to the Agreement is hereby deleted in its entirety and replaced with the following: 

  

Vanguard Admiral Funds 

Vanguard S&P 500 Growth Index Fund 

Vanguard S&P 500 Value Index Fund 

Vanguard S&P Mid-Cap 400 Growth Index Fund 

Vanguard S&P Mid-Cap 400 Index Fund 

Vanguard S&P Mid-Cap 400 Value Index Fund 

Vanguard S&P Small-Cap 600 Growth Index Fund 

Vanguard S&P Small-Cap 600 Index Fund 

Vanguard S&P Small-Cap 600 Value Index Fund 

  

Vanguard Bond Index Funds 

Vanguard Inflation-Protected Securities Fund  

Vanguard Intermediate-Term Bond Index Fund 

Vanguard Long-Term Bond Index Fund 

Vanguard Short-Term Bond Index Fund 

Vanguard Total Bond Market Index Fund 

Vanguard Total Bond Market II Index Fund 

  

Vanguard Charlotte Funds 

Vanguard Global Credit Bond Fund 

  

Vanguard Chester Funds 

Vanguard Institutional Target Retirement 2015 Fund 

Vanguard Institutional Target Retirement 2020 Fund 

Vanguard Institutional Target Retirement 2025 Fund 

Vanguard Institutional Target Retirement 2030 Fund 

Vanguard Institutional Target Retirement 2035 Fund 

Vanguard Institutional Target Retirement 2040 Fund 

Vanguard Institutional Target Retirement 2045 Fund 

Vanguard Institutional Target Retirement 2050 Fund 

Vanguard Institutional Target Retirement 2055 Fund 

Vanguard Institutional Target Retirement 2060 Fund 

Vanguard Institutional Target Retirement 2065 Fund 

Vanguard Institutional Target Retirement Income Fund 

Vanguard Target Retirement 2015 Fund 

Vanguard Target Retirement 2020 Fund 

Vanguard Target Retirement 2025 Fund 

Vanguard Target Retirement 2030 Fund 

Vanguard Target Retirement 2035 Fund 

Vanguard Target Retirement 2040 Fund 

Vanguard Target Retirement 2045 Fund 

Vanguard Target Retirement 2050 Fund 

Vanguard Target Retirement 2055 Fund 

Vanguard Target Retirement 2060 Fund 

Vanguard Target Retirement 2065 Fund 

Vanguard Target Retirement Income Fund 

  

Vanguard Fixed Income Securities Funds 

Vanguard GNMA Fund 

Vanguard Real Estate II Index Fund 

  

Vanguard Horizon Funds 

Vanguard International Core Stock Fund 

  

Vanguard Index Funds 

Vanguard Extended Market Index Fund 

Vanguard Mid-Cap Growth Index Fund 

Vanguard Mid-Cap Index Fund 

Vanguard Mid-Cap Value Index Fund 

Vanguard Small-Cap Growth Index Fund 

Vanguard Small-Cap Index Fund 

Vanguard Small-Cap Value Index Fund 

Vanguard Total Stock Market Index Fund 

  

Vanguard International Equity Index Funds 

Vanguard Emerging Markets Stock Index Fund 

  

Vanguard Malvern Funds 

Vanguard Core Bond Fund 

Vanguard Institutional Intermediate-Term Bond Fund 

Vanguard Institutional Short-Term Bond Fund 

  

Vanguard Scottsdale Funds 

Vanguard Intermediate-Term Corporate Bond Index Fund 

Vanguard Intermediate-Term Treasury Index Fund 

Vanguard Long-Term Corporate Bond Index Fund 

Vanguard Long-Term Treasury Index Fund 

Vanguard Mortgage-Backed Securities Index Fund 

Vanguard Short-Term Corporate Bond Index Fund 

Vanguard Short-Term Treasury Index Fund 

Vanguard Total Corporate Bond ETF 

Vanguard Total World Bond ETF 

  

Vanguard Specialized Funds  

Vanguard Global Capital Cycles Fund 

Vanguard Real Estate Index Fund 

Vanguard Global ESG Select Stock Fund  

  

Vanguard STAR Funds 

Vanguard LifeStrategy Conservative Growth Fund 

Vanguard LifeStrategy Growth Fund 

Vanguard LifeStrategy Income Fund 

Vanguard LifeStrategy Moderate Growth Fund 

Vanguard STAR Fund 

Vanguard Total International Stock Index Fund 

  

Vanguard Tax-Managed Funds 

Vanguard Tax-Managed Balanced Fund 

Vanguard Tax-Managed Capital Appreciation Fund 

Vanguard Tax-Managed Small-Cap Fund 

  

Vanguard Trustees’ Equity Fund 

Vanguard Diversified Equity Fund 

Vanguard International Value Fund 

  

Vanguard Valley Forge Funds 

Vanguard Balanced Index Fund 

Vanguard Managed Allocation Fund 

  

Vanguard Variable Insurance Funds 

Conservative Allocation Portfolio 

Equity Index Portfolio 

Global Bond Index Portfolio 

Mid-Cap Index Portfolio 

Moderate Allocation Portfolio 

Real Estate Index Portfolio 

Total International Stock Market Index Portfolio 

Total Stock Market Index Portfolio 

  

Vanguard Wellington Fund 

Vanguard Wellington Fund 

  

Vanguard Whitehall Funds 

Vanguard High Dividend Yield Index Fund 

Vanguard International Explorer Fund 

  

Vanguard World Fund 

Vanguard Extended Duration Treasury Index Fund 

Vanguard Global Wellesley Income Fund 

Vanguard Global Wellington Fund 

Vanguard ESG U.S. Corporate Bond ETF 

Vanguard ESG U.S. Stock ETF 

Vanguard ESG International Stock ETF 

  

Bank and each following Customer hereby agree that all of the terms and conditions as set forth in the Agreement except for Sections 2.1 and 2.2 are hereby incorporated by reference with respect to the Trusts and Funds listed below limited to their use of account number P 62749 in Vanguard Directly Managed Securities Lending transactions: 

  

Vanguard Chester Funds 

Vanguard PRIMECAP Fund 

  

Vanguard Explorer Fund 

Vanguard Explorer Fund 

  

Vanguard Fenway Funds 

Vanguard Equity Income Fund 

Vanguard PRIMECAP Core Fund 

  

Vanguard Horizon Funds 

Vanguard Capital Opportunity Fund 

Vanguard Global Equity Fund 

Vanguard Strategic Equity Fund 

Vanguard Strategic Small-Cap Equity Fund 

  

Vanguard Index Funds 

Vanguard Extended Market Index Fund 

Vanguard 500 Index Fund 

Vanguard Large-Cap Index Fund 

Vanguard Mid-Cap Index Fund 

Vanguard Small Cap Growth Index Fund 

Vanguard Small Cap Value Index Fund 

Vanguard Value Index Fund 

  

Vanguard Institutional Index Funds 

Vanguard Institutional Index Fund 

Vanguard Institutional Total Stock Market Index Fund 

  

Vanguard Malvern Funds 

Vanguard U.S. Value Fund 

  

Vanguard Quantitative Funds 

Vanguard Growth and Income Fund 

  

Vanguard Scottsdale Funds 

Vanguard Explorer Value Fund 

Vanguard Russell 1000 Index Fund 

Vanguard Russell 1000 Value Index Fund 

Vanguard Russell 1000 Growth Index Fund 

Vanguard Russell 2000 Index Fund 

Vanguard Russell 2000 Value Index Fund 

Vanguard Russell 2000 Growth Index Fund 

Vanguard Russell 3000 Index Fund 

  

Vanguard Specialized Funds  

Vanguard Dividend Growth Fund 

Vanguard Energy Fund 

Vanguard Real Estate Index Fund 

  

Vanguard Trustees’ Equity Fund 

Vanguard Emerging Markets Select Stock Fund 

Vanguard International Value Fund 

  

Vanguard Variable Insurance Funds 

Vanguard Balanced Portfolio 

Vanguard Capital Growth Portfolio 

Vanguard Diversified Value Portfolio 

Vanguard Equity Income Portfolio 

Vanguard Equity Index Portfolio 

Vanguard Growth Portfolio 

Vanguard Mid-Cap Index Portfolio 

Vanguard Real Estate Index Portfolio 

Vanguard Small Company Growth Portfolio 

Vanguard International Portfolio 

  

Vanguard Whitehall Funds 

Vanguard Global Minimum Volatility Fund 

Vanguard High Dividend Yield Index Fund 

Vanguard Mid-Cap Growth Fund 

Vanguard Selected Value Fund 

  

Vanguard Windsor Funds 

Vanguard Windsor Fund 

Vanguard Windsor II Fund 

  

Vanguard World Fund 

Vanguard Consumer Discretionary Index Fund 

Vanguard Consumer Staples Index Fund 

Vanguard Energy Index Fund 

Vanguard FTSE Social Index Fund 

Vanguard Financials Index Fund 

Vanguard Health Care Index Fund 

Vanguard Industrials Index Fund 

Vanguard Information Technology Index Fund 

Vanguard Materials Index Fund 

Vanguard Mega Cap Index Fund 

Vanguard Mega Cap Growth Index Fund 

Vanguard Mega Cap Value Index Fund 

Vanguard Communication Services Index Fund 

Vanguard U.S. Growth Fund 

Vanguard Utilities Index Fund 

  

8.

Miscellaneous.  Except as modified by this Amendment, the Agreement shall remain unmodified, in full force and effect and all terms and conditions of the Agreement are hereby incorporated into and made part of this Amendment as if fully set forth herein.   

  

IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute and deliver this Amendment as of the date set forth above.  

  

  

JPMORGAN CHASE BANK, N.A. 

  

EACH OF THE OPEN-END MANAGEMENT INVESTMENT COMPANIES LISTED ON EXHIBIT 1 HERETO 

  

By:  

/s/ Carl Mehldau 

  

By:        

/s/ John Bendl 

  

  

  

  

  

Name: 

Carl Mehldau 

  

Name: 

John Bendl 

  

  

  

  

  

Title: 

Vice President 

  

Title: 

Chief Financial Officer  

  

  

  

  

  

  

  


AMENDED AND RESTATED

BY-LAWS

OF

VANGUARD MALVERN FUNDS

These By-Laws of Vanguard Malvern Funds, a Delaware statutory trust, are subject to the Amended and Restated Declaration of Trust of the Trust dated as of November 19, 2008, as from time to time amended, supplemented or restated (the "Declaration of Trust"). In the event of any conflict between the provisions of these By- Laws and the provisions of the Declaration of Trust, the provisions of the Declaration of Trust will control. Capitalized terms used herein which are defined in the Declaration of Trust are used as therein defined.

ARTICLE I

Fiscal Year and Offices

Section 1. Fiscal Year. Unless otherwise provided by resolution of the Board of Trustees, the fiscal year of the Trust shall begin on the 1st day of October and end on the last day of September.

Section 2. Delaware Office. The Board of Trustees shall establish a registered office in the State of Delaware and shall appoint as the Trust's registered agent for service of process in the State of Delaware an individual resident of the State of Delaware or a Delaware corporation or a foreign corporation authorized to transact business in the State of Delaware; in each case the business office of such registered agent for service of process shall be identical with the registered Delaware office of the Trust.

Section 3. Principal Office. The principal office of the Trust shall be located at 100 Vanguard Boulevard, Malvern, Pennsylvania 19355, or such other location s the Trustees may from time to time determine.

Section 4. Other Offices. The Board of Trustees may at any time establish branch or subordinate offices at any place or places where the Trust intends to do business.

ARTICLE II

Meetings of Shareholders

Section 1. Place of Meeting. Meetings of the Shareholders for the election of Trustees or for any other purpose shall be held in such place (including that

the meeting will be held by remote communication, as applicable) as shall be fixed by resolution of the Board of Trustees and stated in the notice of the meeting.

Section 2. Annual Meetings. An annual meeting of Shareholders will not be held unless the 1940 Act requires the election of Trustees to be acted upon.

Section 3. Special Meetings. Special meetings of the Shareholders may be called at any time by the chairman, or president, or by the Board of Trustees, and shall be called by the secretary upon written request of the holders of Shares entitled to cast not less than twenty percent of all the votes entitled to be cast at such meeting provided that

(a)such request shall state the purposes of such meeting and the matters proposed to be acted on, (b) the Shareholders requesting such meeting shall have paid to the Trust the reasonable estimated cost of preparing and mailing the notice thereof, which the secretary shall determine and specify to such Shareholders, and (c) the Shareholders requesting such meeting must provide ninety (90) days advance notice of business to be brought to a vote at a shareholder meeting and for nomination of directors, unless such notice runs counter to the proxy rules under the Securities Exchange Act of 1934. No special meeting need be called upon the request of Shareholders entitled to cast less than a majority of all votes entitled to be cast at such meeting to consider any matter which is substantially the same as a matter voted on at any meeting of the Shareholders held during the preceding twelve months. The foregoing provisions of this Section 3 notwithstanding a special meeting of Shareholders shall be called upon the request of the holders of at least ten percent of the votes entitled to be cast for the purpose of consideration removal of a Trustee from office as provided in section 16(c) of the 1940 Act.

Section 4. Notice. Not less than ten, nor more than one hundred (100) days before the date of every annual or special meeting, the secretary shall cause to be delivered to each Shareholder entitled to vote at such meeting a written notice in accordance with Article IV, Section 1 of these By-Laws stating the time and place of the meeting (including that the meeting will be held by remote communication, as applicable) and, in the case of a special meeting of Shareholders, shall state the purposes of the meeting and the matters to be acted on and the purposes of such special meeting and matters to be acted on shall be limited to those stated in such written notice. Notice of adjournment of a Shareholders meeting to another time or place (including that the meeting will be held by remote communication, as applicable) need not be given, if such time and place are announced at the meeting. No notice need be given to any Shareholder who shall have failed to inform the Trust of his or her current address or if a written waiver of notice, executed before or after the meeting by the Shareholder or his or her attorney thereunto authorized, is filed with the records of the meeting.

Section 5. Record Date for Meetings. The Board of Trustees may fix in advance a date not more than one hundred (100), nor less than ten, days prior to the date of any annual or special meeting of the Shareholders as a record date for the determination of the Shareholders entitled to receive notice of, and to vote at any meeting and any adjournment thereof; and in such case such Shareholders and only such

2

Shareholders as shall be Shareholders of record on the date so fixed shall be entitled to receive notice of and to vote at such meeting and any adjournment thereof as the case may be, notwithstanding any transfer of any stock on the books of the Trust after any such record date fixed as aforesaid.

Section 6. Quorum. Except as otherwise provided by the 1940 Act or in the Trust's Declaration of Trust, at any meeting of Shareholders, the presence in person or by proxy of the holders of record of Shares issued and outstanding and entitled to vote representing more than thirty-three and one-third percent (33 1/3%) of the total combined net asset value of all Shares issued and outstanding and entitled to vote shall constitute a quorum for the transaction of any business at the meeting.

If, however, a quorum shall not be present or represented at any meeting of the Shareholders, either the chairman of the meeting (without a Shareholder vote) or the holders of a majority of the votes present or in person or by proxy shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. The Shareholders of record entitled to vote at a Shareholders' meeting that has been postponed or reconvened after one or more adjournments shall be deemed to be the Shareholders on the original record date, unless the Trustees have fixed a new record date.

Section 7. Voting. Each Shareholder shall have one vote for each dollar (and a fractional vote for each fractional dollar) of the net asset value of each share (including fractional Shares) held by such Shareholder on the record date set pursuant to Section 5 on each matter submitted to a vote at a meeting of Shareholders. For purposes of this section and Section 6 of this Article II, net asset value shall be determined pursuant to Section 3, Article VIII of these By-Laws as of the record date for such meeting set pursuant to Section 5. There shall be no cumulative voting in the election of Trustees. At any meeting of Shareholders, any Shareholder entitled to vote thereat may vote either in person or by written proxy signed by the Shareholder, provided that no proxy shall be voted at any meeting unless it shall have been placed on file with the secretary, or with such other officer or agent of the Trust as the secretary may direct, for verification prior to the time at which such vote shall be taken; provided, however, that notwithstanding any other provision of this Section 7 to the contrary, the Trustees or any officer of the Trust with responsibility for such matters may at any time adopt one or more electronic, telecommunication, telephonic, computerized or other alternatives to execution of a written instrument that will enable Shareholders entitled to vote at any meeting to appoint a proxy to vote such Shareholders' Shares at such meeting; provided, further, that, until the Trustees or such officer adopt such electronic, telecommunication, telephonic, computerized or other alternatives, no Shareholder may act to appoint a proxy to vote such holder's Shares at a meeting by any such alternatives and if the Trustees or such officer do adopt such electronic, telecommunication, telephonic, computerized or other alternatives, then Shareholders may only act in the manner prescribed by the

3

Trustees. Proxies may be solicited in the name of one or more Trustees or one or more of the officers of the Trust. Only Shareholders of record shall be entitled to vote. When any share is held jointly by several persons, any one of them may vote at any meeting in person or by proxy in respect of such share, but if more than one of them shall be present at such meeting in person or by proxy, and such joint owners or their proxies so present disagree as to any vote to be cast, such vote shall not be received in respect of such share. Unless otherwise specifically limited by their terms, proxies shall entitle the holder thereof to vote at any adjournment of a meeting. A proxy purporting to be executed by or on behalf of a Shareholder shall be deemed valid unless challenged at or prior to its exercise, and the burden of proving invalidity shall rest on the challenger. If the holder of any such share is a minor or a person of unsound mind, and subject to guardianship or the legal control of any other person as regards the charge or management of such share, he or she may vote by his or her guardian or such other person appointed or having such control, and such vote may be given in person or by proxy. Except as otherwise provided herein or in the Declaration of Trust or the Delaware Act, all matters relating to the giving, voting or validity of proxies shall be governed by the General Corporation Law of the State of Delaware relating to proxies, and judicial interpretations thereunder, as if the Trust were a Delaware corporation and the Shareholders were Shareholders of a Delaware corporation.

At all meetings of the Shareholders, a quorum being present, the Trustees shall be elected by the vote of a plurality of the votes cast by Shareholders present in person or by proxy and all other matters shall be decided by majority of the votes cast by Shareholders present in person or by proxy, unless the question is one for which by express provision of the 1940 Act or the Declaration of Trust, a different vote is required, in which case such express provision shall control the decision of such question. There shall be no cumulative voting for Trustees. At all meetings of Shareholders, unless the voting is conducted by inspectors, all questions relating to the qualification of voters and the validity of proxies and the acceptance or rejection of votes shall be decided by the Chairman of the meeting.

Section 8. Inspectors. At any election of Trustees, the Board of Trustees prior thereto may, or, if they have not so acted, the chairman of the meeting may appoint one or more inspectors of election who shall first subscribe an oath of affirmation to execute faithfully the duties of inspectors at such election with strict impartiality and according to the best of their ability, and shall after the election make a certificate of the result of the vote taken.

Section 9. Stock Ledger and List of Shareholders. It shall be the duty of the secretary or assistant secretary of the Trust to cause an original or duplicate share ledger to be maintained at the office of the Trust's transfer agent. Such share ledger may be in written form or any other form capable of being converted into written form within a reasonable time for visual inspection.

Section 10. Action Without Meeting. Any action to be taken by Shareholders may be taken without a meeting if (a) all Shareholders entitled to vote on

4

the matter consent to the action in writing, (b) all Shareholders entitled to notice of the meeting but not entitled to vote at it sign a written waiver of any right to dissent, and (c) the written consents are filed with the records of the meeting of Shareholders. Such consent shall be treated for all purposes as a vote at a meeting.

Section 11. Meetings by Remote Communication. The Board of Trustees may, in their sole discretion, determine that any meeting of Shareholders (whether annual or special) may be held solely by means of remote communication. If authorized by the Board of Trustees, in their sole discretion, and subject to such guidelines and procedures as the Board of Trustees may adopt, Shareholders and proxyholders not physically present at a meeting of Shareholders may, by means of remote communication: (a) participate in a meeting of Shareholders; and (b) be deemed present in person and vote at a meeting of Shareholders whether such meeting is to be held at a designated place or solely by means of remote communication, provided that: (i) the Trust shall implement such measures as the Board of Trustees deem to be reasonable

(A)to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a Shareholder or proxyholder; and (B) to provide such Shareholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the Shareholders; and (ii) if any Shareholder or proxyholder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the Trust. The Board of Trustees may, in their sole discretion, notify Shareholders of any postponement, adjournment or a change of the place of a meeting of Shareholders (including a change to hold the meeting solely by means of remote communication) by a document publicly filed by the Trust with the Securities and Exchange Commission without the requirement of any further notice hereunder.

ARTICLE III

Trustees

Section 1. Place of Meeting. Meetings of the Board of Trustees, regular or special, may be held at any place as the Board may from time to time determine.

Section 2. Quorum. At all meetings of the Board of Trustees, one-third of the Trustees then in office shall constitute a quorum for the transaction of business provided that in no case may a quorum be fewer than two persons (unless there is only one Trustee then in office, in which case such Trustee shall constitute a quorum). The action of a majority of the Trustees present at any meeting at which a quorum is present shall be the action of the Board of Trustees unless the concurrence of a greater proportion is required for such action by the 1940 Act or the Declaration of Trust. If a quorum shall not be present at any meeting of Trustees, the Trustees present thereat may by a majority vote adjourn the meeting from time to time without notice other than announcement at the meeting, until a quorum shall be present.

Section 3. Regular Meetings. Regular meetings of the Board of Trustees

5

may be held without additional notice at such time and place as shall from time to time be determined by the Board of Trustees provided that notice of any change in the time or place of such meetings shall be sent promptly to each Trustee not present at the meeting at which such change was made in the manner provided for notice of special meetings.

Section 4. Special Meetings. Special meetings of the Board of Trustees may be called by the chairman or president on one day's notice to each Trustee; special meetings shall be called by the chairman or president or secretary in like manner and on like notice on the written request of two Trustees.

Section 5. Telephone Meeting. Members of the Board of Trustees or a committee of the Board of Trustees may participate in a meeting by means of a conference telephone or similar communications equipment if all persons participating in the meeting can hear each other at the same time.

Section 6. Informal Actions. Any action required or permitted to be taken at any meeting of the Board of Trustees or of any committee thereof may be taken without a meeting, if a written consent to such action is signed by a majority of the Trustees then in office or by a majority of the members of such committee, as the case may be (unless, in either case, the question is one for which by express provision of the 1940 Act or the Declaration of Trust, a different vote is required, in which case such express provision shall control the decision of such question). Any such written consent shall be filed with the minutes of proceedings of the Board or committee, as applicable.

Section 7. Committees. The Board of Trustees may appoint from among its members an Executive Committee and other committees composed of two or more Trustees, and may delegate to such committees any or all of the powers of the Board of Trustees in the management of the business and affairs of the Trust.

Section 8. Action of Committees. In the absence of an appropriate resolution of the Board of Trustees, each committee may adopt such rules and regulations governing its proceedings, quorum and manner of acting as it shall deem proper and desirable, provided that the quorum shall not be fewer than two Trustees. The committees shall keep minutes of their proceedings and shall report the same to the Board of Trustees at the meeting next succeeding, and any action by the committee shall be subject to revision and alteration by the Board of Trustees, provided that no rights of third persons shall be affected by any such revision or alteration. In the absence of any member of such committee, the members thereof present at any meeting, whether or not they constitute a quorum, may appoint a member of the Board of Trustees to act in the place of such absent member.

Section 9. Election of Chairman. The Board of Trustees shall choose a Chairman. The Chairman of the Board of Trustees shall hold his post for such term and shall perform and execute such duties and administrative powers as the Board of Trustees shall prescribe from time to time.

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Section 10. Other Executive Posts. The Board of Trustees from time to time may appoint such other Executive Posts as it shall deem advisable, who shall hold their posts for such terms and shall perform and execute such executive duties and administrative powers as the Board of Trustees shall from time to time prescribe.

ARTICLE IV

Notices

Section 1. Form. Subject to the 1940 Act, notices and all other communications to Shareholders shall be in writing and delivered personally, or sent by electronic transmission to an electronic mail address provided by the Shareholder or mailed to the Shareholders at their addresses appearing on the books of the Trust or given as otherwise provided herein. Notices to Trustees shall be oral or by telephone or in writing delivered personally or mailed to the Trustees at their addresses appearing on the books of the Trust or by electronic transmission to an electronic mail address provided by the Trustee. Notice by mail shall be deemed to be given at the time when the same shall be mailed, notice by electronic transmission shall be deemed given at the time when sent, and notice by a document publicly filed by with the Securities and Exchange Commission shall be deemed given at the time the Trust files such document. Subject to the provisions of the 1940 Act, notice to Trustees need not state the purpose of a regular or special meeting.

Section 2. Waiver. Whenever any notice of the time, place or purpose of any meeting of Shareholders, Trustees or a committee is required to be given under the provisions of the Declaration of Trust or these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to such notice and filed with the records of the meeting, whether before or after the holding thereof, or actual attendance at the meeting of Shareholders in person or by proxy, or at the meeting of Trustees or a committee in person, shall be deemed equivalent to the giving of such notice to such persons.

ARTICLE V

Officers

Section 1. Executive Officers. The officers of the Trust shall be chosen by the Board of Trustees and shall include a president, a secretary and a treasurer. The Board of Trustees may, from time to time, elect or appoint a controller, one or more vice presidents, assistant secretaries, assistant treasurers, and assistant controllers. The same person may hold two or more offices, except that no person shall be both president and vice president and no officer shall execute, acknowledge or verify any instrument in more than one capacity, if such instrument is required by law, the Declaration of Trust or these By-Laws to be executed, acknowledged or verified by two or more officers.

Section 2. Election. The Board of Trustees shall choose a president, a

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secretary and a treasurer.

Section 3. Other Officers. The Board of Trustees from time to time may appoint such other officers and agents as it shall deem advisable, who shall hold their offices for such terms and shall exercise powers and perform such duties as shall be determined from time to time by the Board of Trustees. The Board of Trustees from time to time may delegate to one or more officers or agents the power to appoint any such subordinate officers or agents and to prescribe their respective rights, terms of office, authorities and duties.

Section 4. Compensation. The salaries or other compensation of all officers and agents of the Trust shall be fixed by the Board of Trustees, except that the Board of Trustees may delegate to any person or group of persons the power to fix the salary or other compensation of any subordinate officers or agents appointed pursuant to Section 3 of this Article V.

Section 5. Tenure. The officers of the Trust shall serve at the pleasure of the Board of Trustees. Any officer or agent may be removed by the affirmative vote of the Board of Trustees with or without cause whenever, in its judgment, the best interests of the Trust will be served thereby. In addition, any officer or agent appointed pursuant to Section 3 may be removed, either with or without cause, by any officer upon whom such power of removal shall have been conferred by the Board of Trustees. Any vacancy occurring in any office of the Trust by death, resignation, removal or otherwise shall be filled by the Board of Trustees, unless pursuant to Section 3 the power of appointment has been conferred by the Board of Trustees on any other officer.

Section 6. President and Chief Executive Officer. The president shall be the chief executive officer of the Trust, unless the Board of Trustees designates the chairman as chief executive officer. The chief executive officer shall see that all orders and resolutions of the Board of Trustees are carried into effect. The chief executive officer shall also be the chief administrative officer of the Trust and shall perform such other duties and have such other powers as the Board of Trustees may from time to time prescribe.

Section 7. Vice President. The vice presidents, in order of their seniority, shall, in the absence or disability of the chief executive officer, perform the duties and exercise the powers of the chief executive officer and shall perform such other duties as the Board of Trustees or the chief executive officer may from time to time prescribe.

Section 8. Secretary. The secretary shall attend all meetings of the Board of Trustees and all meetings of the Shareholders and record all the proceedings thereof and shall perform like duties for any committee when required. He shall give, or cause to be given, notice of meetings of the Shareholders and of the Board of Trustees, shall have charge of the records of the Trust, including the stock books, and shall perform such other duties as may be prescribed by the Board of Trustees or chief executive

8

officer, under whose supervision he shall be. He shall keep in safe custody the seal of the Trust and, when authorized by the Board of Trustees, shall affix and attest the same to any instrument requiring it. The Board of Trustees may give general authority to any other officer to affix the seal of the Trust and to attest the affixing by his signature.

Section 9. Assistant Secretaries. The assistant secretaries in order of their seniority, shall, in the absence or disability of the secretary, perform the duties and exercise the powers of the secretary and shall perform such other duties as the Board of Trustees or the chief executive officer shall prescribe.

Section 10. Treasurer. The treasurer, unless another officer has been so designated, shall be the chief financial officer of the Trust. He shall have general charge of the finances and books of account of the Trust. Except as otherwise provided by the Board of Trustees, he shall have general supervision of the funds and property of the Trust and of the performance by the custodian of its duties with respect thereto. He shall render to the Board of Trustees, whenever directed by the Board of Trustees, an account of the financial condition of the Trust and of all his transactions as treasurer. He shall cause to be prepared annually a full and correct statement of the affairs of the Trust, including a balance sheet and a statement of operations for the preceding fiscal year. He shall perform all of the acts incidental to the office of treasurer, subject to the control of the Board of Trustees or the chief executive officer.

Section 11. Assistant Treasurer. The assistant treasurer shall in the absence or disability of the treasurer, perform the duties and exercise the powers of the treasurer and shall perform such other duties as the Board of Trustees or the chief executive officer may from time to time prescribe.

ARTICLE VI

Indemnification and Insurance

Section 1. Agents, Proceedings and Expenses. For the purpose of this Article, "agent" means any person who is or was a Trustee or officer of this Trust and any person who, while a Trustee or officer of this Trust, is or was serving at the request of this Trust as a Trustee, director, officer, partner, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise; "Trust" includes any domestic or foreign predecessor entity of this Trust in a merger, consolidation, or other transaction in which the predecessor's existence ceased upon consummation of the transaction; "proceeding" means any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative; and "expenses" includes without limitation attorney's fees and any expenses of establishing a right to indemnification under this Article.

Section 2. Actions Other Than by Trust. This Trust shall indemnify any person who was or is a party or is threatened to be made a party to any proceeding (other than an action by or in the right of this Trust) by reason of the fact that such person

9

is or was an agent of this Trust, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with such proceeding, if it is determined that person acted in good faith and reasonably believed: (a) in the case of conduct in his official capacity as an agent of the Trust, that his conduct was in the Trust's best interests and (b) in all other cases, that his conduct was at least not opposed to the Trust's best interests and (c) in the case of a criminal proceeding, that he had no reasonable cause to believe the conduct of that person was unlawful. The termination of any proceeding by judgment, order or settlement shall not of itself create a presumption that the person did not meet the requisite standard of conduct set forth in this Section. The termination of any proceeding by conviction, or a plea of nolo contendere or its equivalent, or an entry of an order of probation prior to judgment, creates a rebuttable presumption that the person did not meet the requisite standard of conduct set forth in this Section.

Section 3. Actions by the Trust. This Trust shall indemnify any person who was or is a party or is threatened to be made a party to any proceeding by or in the right of this Trust to procure a judgment in its favor by reason of the fact that that person is or was an agent of this Trust, against expenses actually and reasonably incurred by that person in connection with the defense or settlement of that action if that person acted in good faith, in a manner that person believed to be in the best interests of this Trust and with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances.

Section 4. Exclusion of Indemnification. Notwithstanding any provision to the contrary contained herein, there shall be no right to indemnification for any liability arising by reason of willful misfeasance, bad faith, gross negligence, or the reckless disregard of the duties involved in the conduct of the agent's office with this Trust.

No indemnification shall be made under Sections 2 or 3 of this Article:

(a)In respect of any proceeding as to which that person shall have been adjudged to be liable on the basis that personal benefit was improperly received by him, whether or not the benefit resulted from an action taken in the person's official capacity; or

(b)In respect of any proceeding as to which that person shall have been adjudged to be liable in the performance of that person's duty to this Trust, unless and only to the extent that the court in which that action was brought shall determine upon application that in view of all the relevant circumstances of the case, that person is fairly and reasonably entitled to indemnity for the expenses which the court shall determine; however, in such case, indemnification with respect to any proceeding by or in the right of the Trust or in which liability shall have been adjudged by reason of the disabling conduct set forth in the preceding paragraph shall be limited to

10

expenses; or

(c)Of amounts paid in settling or otherwise disposing of a proceeding, with or without court approval, or of expenses incurred in defending a proceeding which is settled or otherwise disposed of without court approval, unless the required approval set forth in Section 6 of this Article is obtained.

Section 5. Successful Defense by Agent. To the extent that an agent of this Trust has been successful, on the merits or otherwise, in the defense of any proceeding referred to in Sections 2 or 3 of this Article before the court or other body before whom the proceeding was brought, the agent shall be indemnified against expenses actually and reasonably incurred by the agent in connection therewith, provided that the Board of Trustees, including a majority who are disinterested, non-party Trustees, also determines that based upon a review of the facts, the agent was not liable by reason of the disabling conduct referred to in Section 4 of this Article.

Section 6. Required Approval. Except as provided in Section 5 of this Article, any indemnification under this Article shall be made by this Trust only if authorized in the specific case on a determination that indemnification of the agent is proper in the circumstances because the agent has met the applicable standard of conduct set forth in Sections 2 or 3 of this Article and is not prohibited from indemnification because of the disabling conduct set forth in Section 4 of this Article, by:

(a)A majority vote of a quorum consisting of Trustees who are not parties to the proceeding and are not interested persons of the Trust (as defined in the 1940 Act);

(b)A written opinion by an independent legal counsel; or

(c)The Shareholders; however, Shares held by agents who are parties to the proceeding may not be voted on the subject matter under this Sub-Section.

Section 7. Advance of Expenses. Expenses incurred in defending any proceeding may be advanced by this Trust before the final disposition of the proceeding if (a) receipt of a written affirmation by the agent of his good faith belief that he has met the standard of conduct necessary for indemnification under this Article and a written undertaking by or on behalf of the agent, such undertaking being an unlimited general obligation to repay the amount of the advance if it is ultimately determined that he has not met those requirements, and (b) a determination that the facts then known to those making the determination would not preclude indemnification under this Article. Determinations and authorizations of payments under this Section must be made in the manner specified in Section 6 of this Article for determining that the indemnification is permissible.

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Section 8. Other Contractual Rights. Nothing contained in this Article shall affect any right to indemnification to which persons other than Trustees and officers of this Trust or any subsidiary hereof may be entitled by contract or otherwise.

Section 9. Limitations. No indemnification or advance shall be made under this Article, except as provided in Sections 5 or 6 in any circumstances where it appears:

(a)That it would be inconsistent with a provision of the Agreement and Declaration of Trust of the Trust, a resolution of the Shareholders, or an agreement in effect at the time of accrual of the alleged cause of action asserted in the proceeding in which the expenses were incurred or other amounts were paid which prohibits or otherwise limits indemnification; or

(b)That it would be inconsistent with any condition expressly imposed by a court in approving a settlement.

Section 10. Insurance. Upon and in the event of a determination by the Board of Trustees of this Trust to purchase such insurance, this Trust shall purchase and maintain insurance on behalf of any agent or employee of this Trust against any liability asserted against or incurred by the agent or employee in such capacity or arising out of the agent's or employee's status as such to the fullest extent permitted by law.

Section 11. Fiduciaries of Employee Benefit Plan. This Article does not apply to any proceeding against any Trustee, investment manager or other fiduciary of an employee benefit plan in that person's capacity as such, even though that person may also be an agent of this Trust as defined in Section 1 of this Article. Nothing contained in this Article shall limit any right to indemnification to which such a Trustee, investment manager, or other fiduciary may be entitled by contract or otherwise which shall be enforceable to the extent permitted by applicable law other than this Article.

ARTICLE VII

Shares of Beneficial Interest

Section 1. Certificates. A certificate or certificates representing and certifying the series or class and the full, but not fractional, number of Shares of beneficial interest owned by each Shareholder in the Trust shall not be issued except as the Board of Trustees may otherwise determine from time to time. Any such certificate issued shall be signed by facsimile signature or otherwise by the chairman or president or a vice president and counter-signed by the secretary or an assistant secretary or the treasurer or an assistant treasurer.

Section 2. Signature. In case any officer who has signed any certificate ceases to be an officer of the Trust before the certificate is issued, the certificate may

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nevertheless be issued by the Trust with the same effect as if the officer had not ceased to be such officer as of the date of its issue.

Section 3. Recording and Transfer Without Certificates. The Trust shall have the full power to participate in any program approved by the Board of Trustees providing for the recording and transfer of ownership of the Trust's Shares by electronic or other means without the issuance of certificates.

Section 4. Lost Certificates. The Board of Trustees may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Trust alleged to have been stolen, lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to have been stolen, lost or destroyed, or upon other satisfactory evidence of such theft, loss or destruction and may in its discretion and as a condition precedent to the issuance thereof, require the owner of such stolen, lost or destroyed certificate or certificates, or his legal representative, to give the Trust a bond with sufficient surety, to the Trust to indemnify it against any loss or claim that may be made by reason of the issuance of a new certificate.

Section 5. Transfer of Shares. Transfers of Shares of beneficial interest of the Trust shall be made on the books of the Trust by the holder of record thereof (in person or by his attorney thereunto duly authorized by a power of attorney duly executed in writing and filed with the secretary of the Trust) (i) if a certificate or certificates have been issued, upon the surrender of the certificate or certificates, properly endorsed or accompanied by proper instruments of transfer, representing such Shares, or (ii) as otherwise prescribed by the Board of Trustees. Every certificate exchanged, surrendered for redemption or otherwise returned to the Trust shall be marked "Canceled" with the date of cancellation.

Section 6. Registered Shareholders. The Trust shall be entitled to recognize the exclusive right of a person registered on its books as the owner of Shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of Shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or Shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by applicable law or the Declaration of Trust.

Section 7. Transfer Agents and Registrars. The Board of Trustees may, from time to time, appoint or remove transfer agents and or registrars of the Trust, and they may appoint the same person as both transfer agent and registrar. Upon any such appointment being made, all certificates representing Shares of beneficial interest thereafter issued shall be countersigned by such transfer agent and shall not be valid unless so countersigned.

Section 8. Stock Ledger. The Trust shall maintain an original stock ledger containing the names and addresses of all Shareholders and the number and series or class of Shares held by each Shareholder. Such stock ledger may be in written form or

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any other form capable of being converted into written form within reasonable time for visual inspection.

ARTICLE VIII

General Provisions

Section 1. Custodianship. Except as otherwise provided by resolution of the Board of Trustees, the Trust shall place and at all times maintain in the custody of a custodian (including any sub-custodian for the custodian) all funds, securities and similar investments owned by the Trust. Subject to the approval of the Board of Trustees, the custodian may enter into arrangements with securities depositories, provided such arrangements comply with the provisions of the 1940 Act and the rules and regulations promulgated thereunder.

Section 2. Execution of Instruments. All deeds, documents, transfers, contracts, agreements and other instruments requiring execution by the Trust may be signed by the chairman or president or a vice president or the treasurer or the secretary or any other duly authorized officer or agent of the Trust, which authority may be general or specific.

Section 3. Net Asset Value. Subject to Section 1 of Article VI of the Declaration of Trust, the net asset value per Share shall be determined separately as to each series or class of the Trust's Shares, by dividing the sum of the total market value of the series' or class's investments and other assets, less any liabilities, by the total outstanding Shares of such series or class, subject to the 1940 Act and any other applicable Federal securities law or rule or regulation currently in effect.

Section 4. Forum for Actions Under the Securities Act of 1933, as

amended. Unless the Trust consents in writing to the selection of an alternative forum, the Federal District Courts of the United States of America shall, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended. Any person or entity purchasing or otherwise acquiring Shares or holding any interest in Shares shall be deemed to have notice of and consented to the provisions of this Section.

ARTICLE IX

Amendments

The Board of Trustees, without a vote by the Shareholders, shall have the power to make, alter and repeal the By-Laws of the Trust.

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amended and restated GLOBAL CUSTODY AGREEMENT 

This Amended and Restated Agreement, dated August 14, 2017, is between JPMorgan Chase Bank, N.A. (“Bank”), a national banking association with a place of business at 383 Madison Avenue, New York, NY 10179; and each of the open-end management investment companies listed on Exhibit 1 of this Agreement, registered with the U.S. Securities and Exchange Commission under the Investment Company Act of 1940, as amended (the “1940 Act”), organized as Delaware statutory trusts (each a “Trust”), severally and for and on behalf of certain of their respective portfolios listed on Exhibit 1 (each a “Fund”), each Trust and their respective Funds with a place of business at P.O. Box 2600 Valley Forge, PA 19482. Each Trust for which Bank serves as custodian under this Agreement, shall individually be referred to as “Customer.”  

1.

INTENTION OF THE PARTIES; DEFINITIONS 

1.1

INTENTION OF THE PARTIES. 

(a)

This Agreement sets out the terms governing custodial, settlement and certain other associated services offered by Bank to Customer. Bank shall be responsible for the performance of only those duties that are set forth in this Agreement or expressly contained in Instructions that are consistent with the provisions of this Agreement and with Bank’s operations and procedures. Customer acknowledges that Bank is not providing any legal, tax or investment advice in providing the services hereunder. 

(b)

Investing in foreign markets may be a risky enterprise. The holding of Global Assets and cash in foreign jurisdictions may involve risks of loss or other special features. Bank shall not be liable for any loss that results from the general risks of investing or Country Risk. 

1.2

DEFINITIONS. 

(a)

As used herein, the following terms have the meaning hereinafter stated. 

“ACCOUNT” has the meaning set forth in Section 2.1 of this Agreement. 

“AFFILIATE” means an entity controlling, controlled by, or under common control with, Bank. 

“AFFILIATED SUBCUSTODIAN” means a Subcustodian that is an Affiliate. 

“APPLICABLE LAW” means any statute, whether national, state or local, applicable in the United States or any other country, the rules of the treaty establishing the European Community, other applicable treaties, any other law, rule, regulation or interpretation of any governmental entity, any applicable common law, and any decree, injunction, judgment, order, ruling, or writ of any governmental entity. 

“AUTHORIZED PERSON” means any person (including an investment manager or other agent) who has been designated by written notice from Customer or its designated agent to act on behalf of Customer hereunder. Such persons shall continue to be Authorized Persons until such time as Bank receives Instructions from Customer or its designated agent that any such person is no longer an Authorized Person. 

“BANK INDEMNITEES” means Bank, its Subcustodians, and their respective nominees, directors, officers and employees. 

“BANK’S LONDON BRANCH” means the London branch office of Bank. 

“CASH ACCOUNT” has the meaning set forth in Section 2.1(a)(ii). 

“CORPORATE ACTION” means any subscription right, bonus issue, stock repurchase plan, redemption, exchange, calls, redemptions, tender offer, recapitalization, reorganization, conversions, consolidation, subdivision, takeover offer or similar matter with respect to a Financial Asset in the Securities Account that requires discretionary action by the holder, but does not include proxy voting. 

“COUNTRY RISK” means the risk of investing or holding assets in a particular country or market, including, but not limited to, risks arising from: nationalization, expropriation or other governmental actions; the country’s financial infrastructure, including prevailing custody and settlement practices; laws applicable to the safekeeping and recovery of Financial Assets and cash held in custody; the regulation of the banking and securities industries, including changes in market rules; currency restrictions, devaluations or fluctuations; and market conditions affecting the orderly execution of securities transactions or the value of assets. 

“CUSTOMER” means individually each Trust and their respective Funds as listed on Exhibit 1 hereto. 

“ENTITLEMENT HOLDER” means the person named on the records of a Securities Intermediary as the person having a Securities Entitlement against the Securities Intermediary. 

“FINANCIAL ASSET” means, as the context requires, either the asset itself or the means by which a person’s claim to it is evidenced, including a Security, a security certificate, or a Securities Entitlement. “Financial Asset” includes any Global Assets but does not include cash. 

“FUND” means each portfolio of each Trust and listed on Exhibit 1 hereto. 

“GLOBAL ASSET” means any “Financial Asset” (a) for which the principal trading market is located outside of the United States; (b) for which presentment for payment is to be made outside of the United States; or (c) which is acquired outside of the United States. 

“INSTRUCTIONS” has the meaning set forth in Section 3.1 of this Agreement. 

“LIABILITIES” means any liabilities, losses, claims, costs, damages, penalties, fines, obligations, or expenses of any kind whatsoever (including, without limitation, reasonable attorneys’, accountants’, consultants’ or experts’ fees and disbursements). 

“SECURITIES” means stocks, bonds, rights, warrants and other negotiable and non-negotiable instruments, whether issued in certificated or uncertificated form, that are commonly traded or dealt in on securities exchanges or financial markets. “Securities” also means other obligations of an issuer, or shares, participations and interests in an issuer recognized in the country in which it is issued or dealt in as a medium for investment and any other property as may be acceptable to Bank for the Securities Account. 

“SECURITIES ACCOUNT” means each Securities custody account on Bank’s records to which Financial Assets are or may be credited pursuant hereto. 

“SECURITIES DEPOSITORY” has the meaning set forth in Section 5.1 of this Agreement. 

“SECURITIES ENTITLEMENT” means the rights and property interest of an Entitlement Holder with respect to a Financial Asset as set forth in Part 5 of Article 8 of the Uniform Commercial Code of the State of New York, as the same may be amended from time to time. 

“SECURITIES INTERMEDIARY” means Bank, a Subcustodian, a Securities Depository, and any other financial institution which in the ordinary course of business maintains custody accounts for others and acts in that capacity. 

“SUBCUSTODIAN” has the meaning set forth in Section 5.1 and includes Affiliated Subcustodians. 

“TRUST” means each open-end investment company organized as a Delaware business trust and listed on Exhibit 1 hereto. 

(b)

All terms in the singular shall have the same meaning in the plural unless the context otherwise provides and vice versa. 

2.

WHAT BANK IS REQUIRED TO DO 

2.1

Set Up Accounts. 

(a)

Bank shall establish and maintain the following accounts (“Accounts”): 

(i)

a Securities Account in the name of Customer on behalf of each Fund for Financial Assets, which may be received by Bank or its Subcustodian for the account of Customer, including as an Entitlement Holder; and 

(ii)

an account in the name of Customer (“Cash Account”) for any and all cash in any currency received by Bank or its Subcustodian for the account of Customer. 

Notwithstanding paragraph (ii), cash held in respect of those markets where Customer is required to have a cash account in its own name held directly with the relevant Subcustodian shall be held in that manner and shall not be part of the Cash Account. Bank shall notify Customer prior to the establishment of such an account. 

(b)

At the request of Customer, additional Accounts may be opened in the future, which shall be subject to the terms of this Agreement. 

(c)

Except as precluded by Section 8-501(d) of the Uniform Commercial Code (“UCC”), Bank shall hold all Securities and other Financial Assets, other than cash, of a Fund that are delivered to it in a “securities account” with Bank for and in the name of such Fund and shall treat all such assets other than cash as “financial assets” as those terms are used in the UCC.  

2.2

Cash Account. 

Except as otherwise provided in Instructions acceptable to Bank, all cash held in the Cash Account shall be deposited during the period it is credited to the Account in one or more deposit accounts at Bank or at Bank’s London Branch. Any cash so deposited with Bank’s London Branch shall be payable exclusively by Bank’s London Branch in the applicable currency, subject to compliance with any Applicable Law, including, without limitation, any restrictions on transactions in the applicable currency imposed by the country of the applicable currency. 

2.3

Segregation of Assets; Nominee Name. 

(a)

Bank shall identify in its records that Financial Assets credited to Customer’s Securities Account belong to Customer on behalf of the relevant Fund (except as otherwise may be agreed by Bank and Customer). 

(b)

To the extent permitted by Applicable Law or market practice, Bank shall require each Subcustodian to identify in its own records that Financial Assets credited to Customer’s Securities Account belong to customers of Bank, such that it is readily apparent that the Financial Assets do not belong to Bank or the Subcustodian. 

(c)

Bank is authorized, in its discretion, to hold in bearer form, such Financial Assets as are customarily held in bearer form or are delivered to Bank or its Subcustodian in bearer form; and to register in the name of the Customer, Bank, a Subcustodian, a Securities Depository, or their respective nominees, such Financial Assets as are customarily held in registered form. Customer authorizes Bank or its Subcustodian to hold Financial Assets in omnibus accounts and shall accept delivery of Financial Assets of the same class and denomination as those deposited with Bank or its Subcustodian. 

(d)

Upon receipt of Instruction, Bank shall establish and maintain a segregated account or accounts for and on behalf of each Fund for purposes of segregating cash, government securities, and other assets in connection with derivative transactions entered into by a Fund or options purchased, sold or written by the Fund. 

2.4

Settlement of Trades. 

When Bank receives an Instruction directing settlement of a trade in Financial Assets that includes all information required by Bank, Bank shall use reasonable care to effect such settlement as instructed. Settlement of purchases and sales of Financial Assets shall be conducted in accordance with prevailing standards of the market in which the transaction occurs. The risk of loss shall be Customer’s whenever Bank delivers Financial Assets or payment in accordance with applicable market practice in advance of receipt or settlement of the expected consideration. In the case of the failure of Customer’s counterparty to deliver the expected consideration as agreed, Bank shall contact the counterparty to seek settlement and, if the settlement is not received, notify Customer, but Bank shall not be obligated to institute legal proceedings, file proof of claim in any insolvency proceeding, or take any similar action. 

2.5

Contractual Settlement Date Accounting. 

(a)

Bank shall effect book entries on a “contractual settlement date accounting” basis as described below with respect to the settlement of trades in those markets where Bank generally offers contractual settlement day accounting and shall notify Customer of these markets from time to time. 

(i)

Sales: On the settlement date for a sale, Bank shall credit the Cash Account with the sale proceeds of the sale and transfer the relevant Financial Assets to an account pending settlement of the trade if not already delivered. 

(ii)

Purchases: On the settlement date for the purchase (or earlier, if market practice requires delivery of the purchase price before the settlement date), Bank shall debit the Cash Account with the settlement monies and credit a separate account. Bank then shall post the Securities Account as awaiting receipt of the expected Financial Assets. Customer shall not be entitled to the delivery of Financial Assets that are awaiting receipt until Bank or a Subcustodian actually receives them. 

Bank reserves the right to restrict in good faith the availability of contractual day settlement accounting for credit reasons. Bank, whenever reasonably possible, will notify Customer prior to imposing such restrictions.  

(b)

Bank may (in its discretion) upon at least 48 hours prior oral or written notification to Customer, reverse any debit or credit made pursuant to Section 2.5(a) prior to a transaction’s actual settlement, and Customer shall be responsible for any costs or liabilities resulting from such reversal. Customer acknowledges that the procedures described in this sub-section are of an administrative nature, and Bank does not undertake to make loans and/or Financial Assets available to Customer. 

2.6

Actual Settlement Date Accounting. 

With respect to any sale or purchase transaction that is not posted to the Account on the contractual settlement date as referred to in Section 2.5, Bank shall post the transaction on the date on which the cash or Financial Assets received as consideration for the transaction is actually received by Bank. 

2.7

Income Collection; Autocredit. 

(a)

Bank shall credit the Cash Account with income and redemption proceeds on Financial Assets in accordance with the times notified by Bank from time to time on or after the anticipated payment date, net of any taxes that are withheld by Bank or any third party. Where no time is specified for a particular market, income and redemption proceeds from Financial Assets shall be credited only after actual receipt and reconciliation. Bank may reverse such credits upon at least 48 hours prior oral or written notification to Customer when Bank believes that the corresponding payment shall not be received by Bank within a reasonable period or such credit was incorrect. 

(b)

Bank shall make reasonable endeavors in its discretion to contact appropriate parties to collect unpaid interest, dividends or redemption proceeds, but neither Bank nor its Subcustodians shall be obliged to file any formal notice of default, institute legal proceedings, file proof of claim in any insolvency proceeding, or take any similar action. 

2.8

Fractions / Redemptions by Lot. 

In the event that, as a result of holding Financial Assets in an omnibus account, the Customer receives fractional interests in Financial Assets arising out of a corporate action or class action litigation, Bank will credit the Customer with the amount of cash the Customer would have received, as reasonably determined by Bank, had the Financial Assets not been held in an omnibus account, and the Customer shall relinquish to Bank its interest in such fractional interests. If some, but not all, of an outstanding class of Financial Asset is called for redemption, Bank may allot the amount redeemed among the respective beneficial holders of such class of Financial Asset in any manner Bank reasonably deems to be fair and equitable. Bank will promptly notify Customer of any action taken pursuant to this section.  

2.9

Presentation of Coupons; Certain Other Ministerial Acts. 

Until Bank receives Instructions to the contrary, Bank shall: 

(a)

present all Financial Assets for which Bank has received notice of a call for redemption or that have otherwise matured, and all income and interest coupons and other income items that call for payment upon presentation; 

(b)

execute in the name of Customer such certificates as may be required to obtain payment in respect of Financial Assets; and 

(c)

exchange interim or temporary documents of title held in the Securities Account for definitive documents of title. 

2.10

Corporate Actions; Class Action Litigation. 

(a)

Bank will follow Corporate Actions through receipt of notices from issuers, from Subcustodians, Securities Depositories and notices published in industry publications and reported in reporting services. Bank will promptly notify Customer of any Corporate Action of which information is either (i) received by it or by a Subcustodian to the extent that Bank’s central corporate actions department has actual knowledge of the Corporate Action in time to notify its customers in a timely manner; or (ii) published via a formal notice in publications and reporting services routinely used by Bank for this purpose in time for Bank to notify its customers in a timely manner. Any notices received by Bank’s corporate actions department about U.S. settled securities class action litigation that requires action by affected owners of the underlying Financial Assets will be promptly provided to Customer if Bank, using reasonable care and diligence in the circumstances, identifies that Customer was a shareholder and held the relevant Financial Assets in custody with Bank at the relevant time. Bank will not make filings in the name of Customer in respect to such notifications except as otherwise agreed in writing between Customer and Bank.  

(b)

If an Authorized Person fails to provide Bank with timely Instructions with respect to any Corporate Action or class action, neither Bank nor its Subcustodians or their respective nominees will take any action in relation to that Corporate Action or class action, except as otherwise agreed in writing by Bank and Customer or as may be set forth by Bank as a default action in the notification it provides under Section 2.10(a) with respect to that Corporate Action or class action. If Customer provides Bank with Instructions with respect to any Corporate Action after the deadline set by Bank but before the deadline set by a Securities Depository, Bank shall use commercially reasonable efforts to act on such Instructions. If Bank fails to act on Instructions provided by Customer prior to the deadline set by Bank with respect to any Corporate Action, Bank will be liable for direct losses incurred by Customer.  

2.11

Proxy Voting. 

(a)

Bank shall provide Customer or its agent with details of Securities in the Account on a daily basis (“Daily Holdings Data”), and Bank or its agent shall act in accordance with Instructions from an Authorized Person in relation to matters Customer or its agent determine in their absolute discretion are to be voted upon at meetings of holders of Financial Assets, based upon such Daily Holdings Data (“the proxy voting service”). Neither Bank nor its agent shall be under any duty to provide Customer or its agent with information which it or they receive on matters to be voted upon at meetings of holders of Financial Assets. 

(b)

Bank or its agent shall act upon Instructions to vote, provided Instructions are received by Bank or its agent at its proxy voting department by the relevant deadline for such Instructions as determined by Bank or its agent. If Instructions are not received in a timely manner, neither Bank nor its agent shall be obligated to provide further notice to Customer. 

(c)

In markets where the proxy voting service is not available or where Bank has not received a duly completed enrollment form or other relevant documentation, Bank or its agent shall endeavor to act upon Instructions to vote on matters before meetings of holders of Financial Assets where it is reasonably

practicable for Bank or its agent (or its Subcustodians or nominees as the case may be) to do so and where such Instructions are received in time for Bank or its agent to take timely action. 

(d)

Customer acknowledges that the provision of the proxy voting service may be precluded or restricted under a variety of circumstances. These circumstances include, but are not limited to: (i) the Financial Assets being on loan or out for registration, (ii) the pendency of conversion or another corporate action, or (iii) Financial Assets being held at Customer’s request in a name not subject to the control of Bank or its Subcustodian, in a margin or collateral account at Bank or another bank or broker, or otherwise in a manner which affects voting, local market regulations or practices, or restrictions by the issuer. Additionally, in some markets, Bank may be required to vote all shares held for a particular issue for all of Bank’s customers in the same way. Bank or its agent shall inform Customer or its agent where this is the case. 

(e)

Notwithstanding the fact that Bank may act in a fiduciary capacity with respect to Customer under other agreements or otherwise hereunder, in performing the proxy voting service Bank shall be acting solely as the agent of Customer, and shall not exercise any discretion with regard to such proxy voting service or vote any proxy except when directed by an Authorized Person. 

2.12

Statements and Information Available On-Line. 

(a)

Bank will send, or make available on-line, to Customer, at times mutually agreed, a statement of account in Bank’s standard format for each Account maintained by Customer with Bank, identifying the Financial Assets and cash held in each Account. Bank also will provide to Customer, upon request, the capability to reformat the information contained in each statement of account. In addition, Bank will send, or make available on-line, to Customer an advice or notification of any transfers of cash or Financial Assets with respect to each Account. Bank will not be liable with respect to any matter set forth in those portions of any such statement of account or advice (or reasonably implied therefrom) to which Customer has not given Bank a written exception or objection within ninety days of receipt of such statement, provided such matter is not the result of Bank’s willful misconduct or bad faith. 

(b)

Prices and other information obtained from third parties which may be contained in any statement sent to Customer have been obtained from sources Bank believes to be reliable. Bank does not, however, make any representation as to the accuracy of such information or that the prices specified necessarily reflect the proceeds that would be received on a disposal of the relevant Financial Assets. 

(c)

Customer understands that records and reports, other than statements of account, that are available to it on-line on a real-time basis may not be accurate due to mis-postings, delays in updating Account records, and other causes. Bank will not be liable for any loss or damage arising out of the inaccuracy of any such records or reports that are accessed on-line on a real-time basis. 

2.13

Access to Bank’s Records. 

(a)

Bank shall create and maintain all records relating to its activities and obligations under this Agreement in such manner as will meet the obligations of Customer under the 1940 Act, with particular attention to Section 31 thereof and rules 31a-1 and 31a-2 thereunder. All such records shall be property of Customer. Bank will allow Customer’s duly authorized officers, employees, and agents, including Customer’s independent public accountants, and the employees and agents of the SEC access at all times during the regular business hours of Bank to such records. Except, in the case of access by the SEC as otherwise required by the SEC, such access will be subject to reasonable notice to Bank.  Subject to restrictions under Applicable Law, Bank also will obtain an undertaking to permit Customer’s independent public accountants reasonable access to the records of any Subcustodian of Securities held in the Securities Account as may be required in connection with such examination. 

(b)

In addition, Bank shall cooperate with and supply necessary information to any entity or entities appointed by the Customer to keep its books of account and/or compute its net asset value. Bank shall provide reports and other data as Customer may from time to time reasonably request to enable Customer to obtain, from year to year, favorable opinions from Customer’s independent accountants with respect to Bank’s activities hereunder in connection with (i) the preparation of any registration statement of Customer and any other reports required by a governmental agency or regulatory authority with jurisdiction over the Fund, and (ii) the fulfillment by Customer of any other requirements of a governmental agency or regulatory authority with jurisdiction over the Fund. 

(c)

Upon reasonable request of Customer, Bank shall provide Customer with a copy of Bank’s Service Organizational Control (SOC) 1 reports (or any successor reports) prepared in accordance with the requirements of AT-C section 320, Reporting on an Examination of Controls at a Service Organization Relevant to User Entities’ Internal Control Over Financial Reporting (or any successor attestation standard). In addition, from time to time as requested, Bank will furnish Customer a “gap” or “bridge” letter that will address any material changes that might have occurred in Customer’s controls covered in the SOC Report from the end of the SOC Report period through a specified requested date. Bank shall use commercially reasonable efforts to provide Customer with such reports as Customer may reasonably request or otherwise reasonably require to fulfill its duties under Rule 38a-l of the 1940 Act or similar legal and regulatory requirements. Upon reasonable request by Customer, Bank shall also provide to Customer customary sub-certifications in connection with Sarbanes-Oxley Act of 2002 certification requirements. Upon written request, Bank shall provide Customer with information about Bank’s processes for the management and monitoring of Subcustodians for safeguarding Financial Assets. 

2.14

Maintenance of Financial Assets at Bank and at Subcustodian Locations. 

(a)

Unless Instructions require another location acceptable to Bank, Global Assets shall be held in the country or jurisdiction in which their principal trading market is located, where such Global Assets may be presented for payment, where such Financial Assets were acquired, or where such Financial Assets are held. Bank reserves the right to refuse to accept delivery of Global Assets or cash in countries and jurisdictions other than those referred to in Schedule 1 to this Agreement, as in effect from time to time. 

(b)

Bank shall not be obliged to follow an Instruction to hold Financial Assets with, or have them registered or recorded in the name of, any person not chosen by Bank. However, if Customer does instruct Bank to hold Securities with or register or record Securities in the name of a person not chosen by Bank, the consequences of doing so are at Customer’s own risk and Bank shall not be liable therefor. 

2.15

Tax Reclaims. 

Bank shall provide tax reclamation services as provided in Section 8.2. 

2.16

Foreign Exchange Transactions. 

To facilitate the administration of Customer’s trading and investment activity, Bank may, but shall not be obliged to, enter into spot or forward foreign exchange contracts with Customer, or an Authorized Person, and may also provide foreign exchange contracts and facilities through its Affiliates or Subcustodians. Instructions, including standing instructions, may be issued with respect to such contracts, but Bank may establish rules or limitations concerning any foreign exchange facility made available. In all cases where Bank, its Affiliates or Subcustodians enter into a master foreign exchange contract that covers foreign exchange transactions for the Accounts, the terms and conditions of that foreign exchange contract and, to the extent not inconsistent, this Agreement, shall apply to such transactions. 

2.17

Compliance with Securities and Exchange Commission (“SEC”) rule 17f-5 (“rule 17f-5”). 

(a)

Customer’s board of directors (or equivalent body) (hereinafter ‘Board’) hereby delegates to Bank, and, except as to the country or countries as to which Bank may, from time to time, advise Customer that it does not accept such delegation, Bank hereby accepts the delegation to it, of the obligation to perform as Customer’s ‘Foreign Custody Manager’ (as that term is defined in rule 17f-5(a)(3) as promulgated under the 1940 Act), including for the purposes of: (i) selecting Eligible Foreign Custodians (as that term is defined in rule 17f-5(a)(1), and as the same may be amended from time to time, or that have otherwise been exempted pursuant to an SEC exemptive order) to hold foreign Financial Assets and cash, (ii) evaluating the contractual arrangements with such Eligible Foreign Custodians (as set forth in rule 17f-5(c)(2)), and (iii) monitoring such foreign custody arrangements (as set forth in rule 17f-5(c)(3)). 

(b)

In connection with the foregoing, Bank shall: 

(i)

provide written reports notifying Customer’s Board of the placement of Financial Assets and cash with particular Eligible Foreign Custodians and of any material change in the arrangements with such Eligible Foreign Custodians, with such reports to be provided to Customer’s Board at such times as the Board deems reasonable and appropriate based on the circumstances of Customer’s foreign custody arrangements (and until further notice from Customer such reports shall be provided not less than quarterly with respect to the placement of Financial Assets and cash with particular Eligible Foreign Custodians and with reasonable promptness upon the occurrence of any material change in the arrangements with such Eligible Foreign Custodians); 

(ii)

exercise such reasonable care, prudence and diligence in performing as Customer’s Foreign Custody Manager as a person having responsibility for the safekeeping of foreign Financial Assets and cash would exercise; 

(iii)

in selecting an Eligible Foreign Custodian, first have determined that foreign Financial Assets and cash placed and maintained in the safekeeping of such Eligible Foreign Custodian shall be subject to reasonable care, based on the standards applicable to custodians in the relevant market, after having considered all factors relevant to the safekeeping of such foreign Financial Assets and cash, including, without limitation, those factors set forth in rule 17f-5(c)(1)(i)-(iv); 

(iv)

determine that the written contract with an Eligible Foreign Custodian requires that the Eligible Foreign Custodian shall provide reasonable care for foreign Financial Assets and cash based on the standards applicable to custodians in the relevant market, including, without limitation, those factors set forth in rule 17f-5(c)(2). 

(v)

have established a system to monitor the continued appropriateness of maintaining foreign Financial Assets and cash with particular Eligible Foreign Custodians and of the governing contractual arrangements; it being understood, however, that in the event that Bank shall have determined that the existing Eligible Foreign Custodian in a given country would no longer afford foreign Financial Assets and cash reasonable care and that no other Eligible Foreign Custodian in that country would afford reasonable care, Bank shall promptly so advise Customer and shall then act in accordance with the Instructions of Customer with respect to the disposition of the affected foreign Financial Assets and cash. 

(c)

Subject to (b)(i)-(v) above, Bank is hereby authorized to place and maintain foreign Financial Assets and cash on behalf of Customer with Eligible Foreign Custodians pursuant to a written contract deemed appropriate by Bank. Each such contract shall, except as set forth in the last paragraph of this subsection (c), include provisions that provide: 

(i)

For indemnification or insurance arrangements (or any combination of the foregoing) that will adequately protect Customer against the risk of loss of Financial Assets and cash held in accordance with such contract; 

(ii)

That Customer’s Financial Assets will not be subject to any right, charge, security interest, lien or claim of any kind in favor of the Eligible Foreign Custodian or its creditors, except a claim of payment for their safe custody or administration or, in the case of cash, liens or rights in favor of creditors of such Eligible Foreign Custodian arising under bankruptcy, insolvency or similar laws; 

(iii)

That beneficial ownership of Customer’s Assets will be freely transferable without the payment of money or value other than for safe custody or administration; 

(iv)

That adequate records will be maintained identifying Customer’s Assets as belonging to Customer or as being held by a third party for the benefit of Customer; 

(v)

That Customer’s independent public accountants will be given access to those records described in (iv) above or confirmation of the contents of those records; and 

(vi)

That Customer will receive sufficient and timely periodic reports with respect to the safekeeping of Customer’s Assets, including, but not limited to, notification of any transfer to or from Customer’s account or a third party account containing Assets held for the benefit of Customer. 

Such contract may contain, in lieu of any or all of the provisions specified in this subsection (c), such other provisions that Bank determines will provide, in their entirety, the same or a greater level of care and protection for Customer’s Assets as the specified provisions, in their entirety. 

(d)

Except as expressly provided herein, Customer shall be solely responsible to assure that the maintenance of foreign Financial Assets and cash hereunder complies with the rules, regulations, interpretations and exemptive orders as promulgated by or under the authority of the SEC. 

(e)

Bank represents to Customer that it is a U.S. Bank as defined in rule 17f-5(a)(7). Customer represents to Bank that: (1) the foreign Financial Assets and cash being placed and maintained in Bank’s custody are subject to the 1940 Act, as the same may be amended from time to time; (2) its Board has determined that it is reasonable to rely on Bank to perform as Customer’s Foreign Custody Manager; and (3) its Board or its investment adviser shall have determined that Customer may maintain foreign Financial Assets and cash in each country in which Customer’s Financial Assets and cash shall be held hereunder and determined to accept Country Risk. Nothing contained herein shall require Bank to make any selection or to engage in any monitoring on behalf of Customer that would entail consideration of Country Risk. 

(f)

Bank shall provide to Customer such information relating to Country Risk as is specified in Appendix 1 hereto. Customer hereby acknowledges that: (i) such information is solely designed to inform Customer of market conditions and procedures and is not intended as a recommendation to invest or not invest in particular markets; and (ii) Bank has gathered the information from sources it considers reliable, but that Bank shall have no responsibility for inaccuracies or incomplete information, provided that Bank transmits the information using reasonable care. 

2.18

Compliance with SEC rule 17f-7 (“rule 17f-7”). 

(a)

Bank shall, for consideration by Customer, provide an analysis of the custody risks associated with maintaining Customer’s foreign Financial Assets with each Eligible Securities Depository used by Bank as of the date hereof (or, in the case of an Eligible Securities Depository not used by Bank as of the date hereof, prior to the initial placement of Customer’s foreign Financial Assets at such Depository) and at which any foreign Financial Assets of Customer are held or are expected to be held. The foregoing analysis will be provided to Customer at Bank’s Website. In connection with the foregoing, Customer shall notify Bank of any Eligible Securities Depositories at which it does not choose to have its foreign Financial Assets held. Bank shall monitor the custody risks associated with maintaining Customer’s Financial Assets at each such Eligible Securities Depository on a continuing basis and shall promptly notify Customer or its investment adviser of any material changes in such risks. 

(b)

Bank shall exercise reasonable care, prudence and diligence in performing the requirements set forth in Section 2.18(a) above. 

(c)

Based on the information available to it in the exercise of diligence, Bank shall determine the eligibility under rule 17f-7 of each depository before including it on Schedule 3 hereto and shall promptly advise Customer if any Eligible Securities Depository ceases to be eligible. (Eligible Securities Depositories used by Bank as of the date hereof are set forth in Schedule 3 hereto, and as the same may be amended on notice to Customer from time to time.) 

2.19

Service Level Agreement. 

Subject to the terms and conditions of this Agreement, Bank agrees to perform the custody services provided for under this Agreement in a manner that meets or exceeds any service levels as may be agreed upon by the parties from time to time in a written document that is executed by both parties on or after the date of this Agreement, unless that written document specifically states that it is not contractually binding.  For the avoidance of doubt, Bank’s Service Directory shall not be deemed to be such a written document.  

3.

INSTRUCTIONS 

3.1

Acting on Instructions; Unclear Instructions. 

(a)

Bank is authorized to act under this Agreement (or to refrain from taking action) in accordance with the instructions received by Bank, via telephone, telex, facsimile transmission, or other teleprocess or electronic instruction or trade information system acceptable to Bank (“Instructions”). Bank shall have no responsibility for the authenticity or propriety of any Instructions that Bank believes in good faith to have been given by Authorized Persons or which are transmitted with proper testing or authentication pursuant to terms and conditions that Bank may specify. Customer authorizes Bank to accept and act upon any Instructions received by it without inquiry. Customer shall indemnify the Bank Indemnitees against, and hold each of them harmless from, any Liabilities that may be imposed on, incurred by, or asserted against the Bank Indemnitees as a result of any action or omission taken in accordance with any Instructions or other directions upon which Bank is authorized to rely under the terms of this Agreement, provided that Bank shall not be indemnified against or held harmless from any Liabilities arising out of Bank’s negligence, bad faith, fraud, or willful misconduct. 

(b)

Unless otherwise expressly provided, all Instructions shall continue in full force and effect until canceled or superseded. 

(c)

Bank may (in its sole discretion and without affecting any part of this Section 3.1) seek clarification or confirmation of an Instruction from an Authorized Person and may decline to act upon an Instruction if it does not receive clarification or confirmation satisfactory to it. Bank shall not, except as provided in Section 7.1 hereof, be liable for any loss arising from any delay while it seeks such clarification or confirmation. 

(d)

In executing or paying a payment order Bank may rely upon the identifying number (e.g. Fedwire routing number or account) of any party as instructed in the payment order. Customer assumes full responsibility for any inconsistency within an Instruction between the name and identifying number of any party in payment orders issued to Bank in Customer’s name. 

3.2

Security Devices. 

Either party may record any of their telephonic communications. Customer shall comply with any security procedures reasonably required by Bank from time to time with respect to verification of Instructions. Customer shall be responsible for safeguarding any test keys, identification codes or other security devices that Bank shall make available to Customer or any Authorized Person.  

3.3

Instructions; Contrary to Law/Market Practice. 

Bank need not act upon Instructions which it reasonably believes to be contrary to law, regulation or market practice but shall be under no duty to investigate whether any Instructions comply with Applicable Law or market practice. Bank shall notify Customer as soon as reasonably practicable if it does not act upon Instructions under this Section. 

3.4

Cut-off Times. 

Bank has established cut-off times for receipt of some categories of Instruction, which shall be made available to Customer. If Bank receives an Instruction after its established cut-off time, it shall attempt to act upon the Instruction on the day requested if Bank deems it practicable to do so or otherwise as soon as practicable on the next business day. 

3.5

Electronic Access.  

Access by the Customer to certain systems, applications or products of Bank shall be governed by this Agreement and the terms and conditions set forth in Annex A Electronic Access.   

4.

FEES, EXPENSES AND OTHER AMOUNTS OWING TO BANK 

4.1

Fees and Expenses. 

Customer shall pay Bank for its services hereunder the fees set forth in Schedule 2 hereto or such other amounts as may be agreed upon in writing from time to time. 

4.2

Overdrafts. 

If a debit to any currency in the Cash Account results in a debit balance in that currency then Bank may, in its discretion, advance an amount equal to the overdraft and such an advance shall be deemed a loan to Customer, payable on demand, bearing interest at the rate agreed by Customer and Bank for the Accounts from time to time, or, in the absence of such an agreement, at the rate charged by Bank from time to time, for overdrafts incurred by customers similar to Customer, from the date of such advance to the date of payment (both after as well as before judgment) and otherwise on the terms on which Bank makes similar advances available from time to time. Bank shall promptly notify Customer of such an advance. No prior action or course of dealing on Bank’s part with respect to the settlement of transactions on Customer’s behalf shall be asserted by Customer against Bank for Bank’s refusal to make advances to the Cash Account or to settle any transaction for which Customer does not have sufficient available funds in the applicable currency in the Account. 

4.3

Bank’s Right Over Securities; Set-off. 

(a)

Customer grants Bank a security interest in and a lien on the Financial Assets held in the Securities Account of a particular Fund as shall have a fair market value equal to the aggregate amount of all overdrafts of such Fund, together with accrued interest, as security for any and all amounts which are now or become owing to Bank with respect to that Fund under any provision of this Agreement, whether or not matured or contingent (“Indebtedness”). Such lien and security interest shall be effective only so long as such advance, overdraft, or accrued interest thereon remains outstanding and Bank shall have all the rights and remedies of a secured party under the New York Uniform Commercial Code in respect of the repayment of the advance, overdraft or accrued interest. In this regard, Bank shall be entitled to (i) without notice to Customer, withhold delivery of such Financial Assets, and (ii) with two business days’ prior notice to the Customer and an opportunity for the Customer to satisfy such Indebtedness to Bank, sell or otherwise realize any of such Financial Assets and to apply the proceeds and any other monies credited to the Cash Account in satisfaction of such Indebtedness solely to the extent of such Indebtedness, provided, however, that Bank shall only be obligated to provide the Customer with same-day prior notice if Bank, in its reasonable business judgment, determines that, due to market conditions or other special circumstances, a delay would be likely to materially prejudice its ability to recover the Indebtedness.  During any such notice period, Bank will, at Customer’s request, consult with Customer regarding the selection of Financial Assets to be sold by Bank to satisfy the Indebtedness. For the avoidance of doubt, only advances made by Bank under Section 4.2 are “Indebtedness” subject to this Section 4.3. No other outstanding amounts payable by Customer to Bank (including, without limitation, amounts payable by Customer under Section 4.1) are “Indebtedness” subject to this Section 4.3. 

(b)

Bank shall be further entitled to set any such Indebtedness off against any cash or deposit account of the Fund that incurred the Indebtedness with Bank or any of its Affiliates of which the Fund is the beneficial owner, regardless of the currency involved; Bank shall provide prior notice to Customer of its intent to exercise its set off rights against any cash or deposit account of the Fund, which notice shall be provided at least on the same day as the set off is effected, provided however that no prior notice is required in cases where Bank, in its reasonable business judgment, determines that, due to market conditions or other special circumstances, the delay required in order to provide prior notice would be likely to materially prejudice its ability to recover the Indebtedness. 

5.

SUBCUSTODIANS, SECURITIES DEPOSITORIES, AND OTHER AGENTS 

5.1

Appointment of Subcustodians; Use of Securities Depositories. 

(a)

Bank is authorized under this Agreement to act through and hold Customer’s Global Assets with subcustodians, being at the date of this Agreement the entities listed in Schedule 1 and/or such other entities as Bank may appoint as subcustodians (“Subcustodians”). At the request of Customer, Bank may, but need not, add to Schedule 1 an Eligible Foreign Custodian where Bank has not acted as Foreign Custody Manager with respect to the selection thereof. Bank shall notify Customer in the event that it elects to add any such entity. Bank shall use reasonable care, prudence and diligence in the selection and continued appointment of such Subcustodians. In addition, Bank and each Subcustodian may deposit Global Assets with, and hold Global Assets in, any securities depository, settlement system, dematerialized book entry system or similar system (together a “Securities Depository”) on such terms as such systems customarily operate and Customer shall provide Bank with such documentation or acknowledgements that Bank may require to hold the Global Assets in such systems. 

(b)

Any agreement Bank enters into with a Subcustodian for holding Bank’s customers’ assets shall provide that: (i) such assets shall not be subject to any right, charge, security interest, lien or claim of any kind in favor of such Subcustodian or its creditors, except a claim of payment for their safe custody or administration or, in the case of cash deposits, except for liens or rights in favor of creditors of the Subcustodian arising under bankruptcy, insolvency or similar laws; (ii) beneficial ownership of such assets shall be freely transferable without the payment of money or value other than for safe custody or administration; (iii) adequate records will be maintained identifying the assets as belonging to Customer or as being held by a third party for the benefit of Customer; (iv) Customer and Customer’s independent public accountants will be given reasonable access to those records or confirmation of the contents of those records; and (v) Customer will receive periodic reports with respect to the safekeeping of Customer’s assets, including, but not limited to, notification of any transfer to or from Customer’s account or a third party account containing assets held for the benefit of Customer. Where a Subcustodian deposits Securities with a Securities Depository, Bank shall cause the Subcustodian to identify on its records as belonging to Bank, as agent, the Securities shown on the Subcustodian’s account at such Securities Depository. The foregoing shall not apply to the extent of any special agreement or arrangement made by Customer with any particular Subcustodian. 

(c)

Bank shall have no responsibility for any act or omission by (or the insolvency of) any Securities Depository. In the event Customer incurs a loss due to the negligence, bad faith, willful misconduct, or insolvency of a Securities Depository, Bank shall make reasonable endeavors to seek recovery from the Securities Depository. 

(d)

The term Subcustodian as used herein shall mean the following: 

(i)

a “U.S. Bank” as such term is defined in rule 17f-5; and 

(ii)

an “Eligible Foreign Custodian” as such term is defined in rule 17f-5 and any other entity that shall have been so qualified by exemptive order, rule or other appropriate action of the SEC. 

(iii)

For purposes of clarity, it is agreed that as used in Section 5.2(a), the term Subcustodian shall not include any Eligible Foreign Custodian as to which Bank has not acted as Foreign Custody Manager. 

(e)

The term ‘securities depository’ as used herein when referring to a securities depository located outside the U.S. shall mean an “Eligible Securities Depository” as defined in rule 17f-7, or that has otherwise been made exempt pursuant to an SEC exemptive order. 

(f)

The term ‘securities depository’ as used herein when referring to a securities depository located in the U.S. shall mean a “Securities Depository” as defined in rule 17f-4. 

5.2

Liability for Subcustodians. 

(a)

Subject to the exculpation from consequential damages set forth in Section 7.1(b), Bank shall be liable for direct Liabilities incurred by Customer that result from: (i) the acts or omissions of any Subcustodian selected by Bank, whether domestic or foreign, to the same extent as if such act or omission was performed by Bank itself, taking into account the standards and market practice prevailing in the relevant market; or (ii) the insolvency of any Affiliated Subcustodian. Subject to the terms and conditions of this Agreement, including the exculpation from consequential damages set forth in Section 7.1(b), Bank shall take full responsibility for any Liabilities that result from or that are caused by the fraud, willful misconduct, or negligence of its Subcustodians or the insolvency of an Affiliated Subcustodian. In the event of any Liabilities suffered or incurred by Customer caused by or resulting from the acts or omissions of any Subcustodian for which Bank would otherwise be liable, Bank shall promptly reimburse Customer in the amount of any such Liabilities.   

(b)

Subject to Section 7.1(a) and Bank’s duty to use reasonable care, prudence and diligence in the monitoring of a Subcustodian’s financial condition as reflected in its published financial statements and other publicly available financial information concerning it, Bank shall not be responsible for the insolvency of any Subcustodian which is not a branch or an Affiliated Subcustodian. 

(c)

Bank reserves the right to add, replace or remove Subcustodians. Bank shall give Customer prompt notice of any such action, which shall be advance notice if practicable. Upon request by Customer, Bank shall identify the name, address and principal place of business of any Subcustodian and the name and address of the governmental agency or other regulatory authority that supervises or regulates such Subcustodian. 

5.3

Use of Agents. 

(a)

Bank may provide certain services under this Agreement through third parties. These third parties may be Affiliates. Except to the extent provided in Section 5.2 with respect to Subcustodians, Bank shall not be responsible for any loss as a result of a failure by any broker or any other third party that it selects and retains using reasonable care and without negligence to provide ancillary services, such as pricing, proxy voting, and corporate action services, that it does not customarily provide itself. Nevertheless, Bank shall be liable for the performance of any such service provider selected by Bank that is an Affiliate to the same extent as Bank would have been liable if it performed such services itself. 

(b)

Bank shall execute transactions involving Financial Assets of United States origin through a broker which is an Affiliate (i) in the case of the sale under Section 2.8 of a fractional interest or (ii) if an Authorized Person directs Bank to use the affiliated broker or otherwise requests that Bank select a broker for that transaction, unless, in either case, the Affiliate does not execute similar transactions in such Financial Assets. The affiliated broker may charge its customary commission (or retain its customary spread) with respect to either such transaction. 

6.

ADDITIONAL PROVISIONS RELATING TO CUSTOMER 

6.1

Representations of Customer and Bank. 

(a)

Customer represents and warrants to Bank that: (i) it has full authority and power, and has obtained all necessary authorizations and consents, to deposit and control the Financial Assets and cash in the Accounts, to use Bank as its custodian in accordance with the terms of this Agreement and to incur indebtedness, pledge Financial Assets as contemplated by Section 4.3, and enter into foreign exchange transactions; and (ii) this Agreement is its legal, valid and binding obligation, enforceable in accordance with its terms and it has full power and authority to enter into and has taken all necessary corporate action to authorize the execution of this Agreement. Bank may rely upon the above or the certification of such other facts as may be required to administer Bank’s obligations hereunder. 

(b)

Bank represents and warrants to Customer that this Agreement is its legal, valid and binding obligation, enforceable in accordance with its terms and it has full power and authority to enter into and has taken all necessary corporate action to authorize the execution of this Agreement. Customer may rely upon the above or the certification of such other facts as may be required to administer Customer’s obligations hereunder. 

6.2

Customer to Provide Certain Information to Bank. 

Upon request, Customer shall promptly provide to Bank such information about itself and its financial status as Bank may reasonably request, including Customer’s organizational documents and its current audited and unaudited financial statements. 

6.3

Customer is Liable to Bank Even if it is Acting for Another Person. 

If Customer is acting as an agent for a disclosed or undisclosed principal in respect of any transaction, cash, or Financial Asset, Bank nevertheless shall treat Customer as its principal for all purposes under this Agreement. In this regard, Customer shall be liable to Bank as a principal in respect of any transactions relating to the Account. The foregoing shall not affect any rights Bank might have against Customer’s principal. 

6.4

Several Obligations of the Trusts and the Funds. 

This Agreement is executed on behalf of the Board of Trustees of each Fund as Trustees and not individually and the obligations of this Agreement are not binding upon any of the Trustees or shareholders individually but are binding only upon the assets and property of each Fund severally and not jointly. With respect to any obligations of Customer arising out of this Agreement, Bank shall look for payment or satisfaction of any obligation solely to the assets of the Fund to which such obligation relates as though Bank had separately contracted by separate written instrument with respect to the Fund. 

7.

WHEN BANK IS LIABLE TO CUSTOMER 

7.1

Standard of Care; Liability. 

(a)

Notwithstanding any other provision of this Agreement, Bank shall exercise reasonable care, prudence and diligence in carrying out all of its duties and obligations under this Agreement (except to the extent Applicable Law provides for a higher standard of care, in which case such higher standard shall apply), and shall be liable to Customer for any and all Liabilities suffered or incurred by Customer resulting from the failure of Bank to exercise such reasonable care, prudence and diligence or resulting from Bank’s negligence, willful misconduct, or fraud and to the extent provided in Section 5.2(a). Unless otherwise specified or required by Applicable Law, Bank shall not be in violation of this Agreement with respect to any matter as to which it has satisfied the standard of care under this Agreement.  

(b)

Bank shall not be liable under any circumstances for any indirect, incidental, consequential or special damages (including, without limitation, lost profits) of any form incurred by any person, whether or not foreseeable and regardless of the type of action in which such a claim may be brought, with respect to the Accounts or Bank’s performance hereunder or Bank’s role as custodian.  

(c)

Subject to the limitations set forth in this Agreement, each Customer severally and not jointly shall indemnify the Bank Indemnitees against, and hold them harmless from, any Liabilities that may be imposed on, incurred by or asserted against any of the Bank Indemnitees in connection with or arising out of Bank’s performance under this Agreement, provided the Bank Indemnitees have not acted with negligence or bad faith or engaged in fraud or willful misconduct in connection with the Liabilities in question. Nevertheless, Customer shall not be obligated to indemnify any Bank Indemnitee under the preceding sentence with respect to any Liability for which Bank is liable under Section 5.2 of this Agreement. Bank shall use all commercially reasonable efforts to mitigate any Liability for which indemnity is sought hereunder (provided, however, that reasonable expenses incurred with respect to such mitigation shall be Liabilities subject to indemnification hereunder).  

(d)

Subject to any obligation Customer may have to indemnify Bank with respect to amounts claimed by third parties, Customer shall have no liability whatsoever for any consequential, special, indirect or speculative loss or damages (including, but not limited to, lost profits) suffered by Bank Indemnitees in connection with the transactions and services contemplated hereby and the relationship established hereby even if Customer has been advised as to the possibility of the same and regardless of the form of action. 

(e)

Without limiting Subsections 7.1 (a) or (b), Bank shall have no duty or responsibility to: (i) question Instructions or make any suggestions to Customer or an Authorized Person regarding such Instructions, provided that Bank believes in good faith that such Instructions have been given by Authorized Persons or which are transmitted with proper testing or authentication pursuant to terms and conditions that Bank may specify; (ii) supervise or make recommendations with respect to investments or the retention of Financial Assets; (iii) advise Customer or an Authorized Person regarding any default in the payment of principal or income of any security other than as provided in Section 2.7(b) of this Agreement; (iv) except as otherwise expressly required herein, evaluate or report to Customer or an Authorized Person regarding the financial condition of any broker, agent or other party to which Bank is instructed to deliver Financial Assets or cash; or (v) except for trades settled at DTC where the broker provides DTC trade confirmation and Customer provides for Bank to receive the trade instruction, review or reconcile trade confirmations received from brokers (and Customer or its Authorized Persons issuing Instructions shall bear any responsibility to review such confirmations against Instructions issued to and statements issued by Bank). 

(f)Bank shall indemnify the Customer from and against any and all Liabilities which may be imposed on, incurred by, or asserted against the Customer resulting directly either from Bank’s negligence, bad faith, fraud or willful misconduct in the performance of its obligations or duties hereunder, or from any act or omission by a Subcustodian in the performance of its subcustodial obligations or duties hereunder for which Bank is expressly liable under Section 5.2, taking into account the standards and market practice prevailing in the relevant market, provided that (i) in no event shall the Bank be obliged to indemnify Customer from against any Liability (or any claim for a Liability) to the extent such Liability is described in clause 7.1(b) this Agreement and (ii) the Customer shall use all commercially reasonable efforts to mitigate any Liability for which indemnity is sought hereunder (provided, however, that reasonable expenses incurred with respect to such mitigation shall be Liabilities subject to indemnification hereunder). 

7.2

Force Majeure. 

So long as Bank maintains and updates its business continuation and disaster recovery procedures as set forth in Section 10.8, Bank shall have no liability for any damage, loss or expense of any nature that Customer may suffer or incur, caused by an act of God, fire, flood, civil or labor disturbance, war, act of any governmental authority or other act or threat of any authority (de jure or de facto), legal constraint, fraud or forgery (except by Bank or Bank Indemnitees), malfunction of equipment or software (except to the extent such malfunction is primarily attributable to Bank’s negligence, or willful misconduct in maintaining the equipment or software), failure of or the effect of rules or operations of any external funds transfer system, inability to obtain or interruption of external communications facilities, or any cause beyond the reasonable control of Bank (including without limitation, the non-availability of appropriate foreign exchange). Bank shall endeavor to promptly notify Customer when it becomes aware of any situation outlined above, but shall not be liable for failure to do so. If Bank is prevented from carrying out its obligations under this Agreement for a period of thirty days, Customer may terminate the Agreement by giving Bank not less than thirty days’ notice, without prejudice to any of the rights of any party accrued prior to the date of termination. 

7.3

Bank May Consult With Counsel. 

Bank shall be entitled to rely on, and may act upon the advice of professional advisers in relation to matters of law, regulation or market practice (which may be the professional advisers of Customer), and shall not be liable to Customer for any action reasonably taken or omitted pursuant to such advice; provided that Bank has selected and retained such professional advisers using reasonable care and acts reasonably in reliance on the advice. 

7.4

Bank Provides Diverse Financial Services and May Generate Profits as a Result. 

Customer acknowledges that Bank or its Affiliates may have a material interest in transactions entered into by Customer with respect to the Account or that circumstances are such that Bank may have a potential conflict of duty or interest. For example, Bank or its Affiliates may act as a market maker in the Financial Assets to which Instructions relate, provide brokerage services to other customers, act as financial adviser to the issuer of such Financial Assets, act in the same transaction as agent for more than one customer, have a material interest in the issue of the Financial Assets, or earn profits from any of these activities. Customer acknowledges that Bank or its Affiliates may be in possession of information tending to show that the Instructions received may not be in the best interests of Customer. Bank is not under any duty to disclose any such information. 

8.

TAXATION 

8.1

Tax Obligations. 

(a)

Customer confirms that Bank is authorized to deduct from any cash received or credited to the Cash Account any taxes or levies required by any revenue or Governmental authority for whatever reason in respect of Customer’s Accounts. 

(b)

If Bank does not receive appropriate declarations, documentation and information then additional United Kingdom taxation shall be deducted from all income received in respect of the Financial Assets issued outside the United Kingdom (which shall for this purpose include United Kingdom Eurobonds) and any applicable United States tax (including, but not limited to, non-resident alien tax) shall be deducted from United States source income. Customer shall provide to Bank such certifications, documentation, and information as it may require in connection with taxation, and warrants that, when given, this information is true and correct in every respect, not misleading in any way, and contains all material information. Customer undertakes to notify Bank immediately if any information requires updating or correcting. 

(c)

Customer shall be responsible for the payment of all taxes relating to the Financial Assets in the Securities Account, and Customer shall pay, indemnify and hold Bank harmless from and against any and all liabilities, penalties, interest or additions to tax with respect to or resulting from, any delay in, or failure by, Bank (1) to pay, withhold or report any U.S. federal, state or local taxes or foreign taxes imposed on, or (2) to report interest, dividend or other income paid or credited to the Cash Account, whether such failure or delay by Bank to pay, withhold or report tax or income is the result of (x) Customer’s failure to comply with the terms of this paragraph, or (y) Bank’s own acts or omissions; provided however, Customer shall not be liable to Bank for any penalty or additions to tax due as a result of Bank’s failure to pay or withhold tax or to report interest, dividend or other income paid or credited to the Cash Account solely as a result of Bank’s negligent acts or omissions. 

8.2

Tax Reclaims. 

(a)

Subject to the provisions of this Section, Bank shall apply for a reduction of withholding tax and any refund of any tax paid or tax credits in respect of income payments on Financial Assets credited to the Securities Account that Bank believes may be available. 

(b)

The provision of a tax reclamation service by Bank is conditional upon Bank receiving from Customer (i) a declaration of its identity and place of residence and (ii) certain other documentation (pro forma copies of which are available from Bank). If Financial Assets credited to the Account are beneficially owned by someone other than Customer, this information shall be necessary with respect to the beneficial owner. Customer acknowledges that Bank shall be unable to perform tax reclamation services unless it receives this information. 

(c)

Bank shall perform tax reclamation services only with respect to taxation levied by the revenue authorities of the countries advised to Customer from time to time and Bank may, by notification in writing, in its absolute discretion, supplement or amend the countries in which the tax reclamation services are offered. Other than as expressly provided in this Section 8.2, Bank shall have no responsibility with regard to Customer’s tax position or status in any jurisdiction. 

(d)

Customer confirms that Bank is authorized to disclose any information requested by any revenue authority or any governmental body in relation to the processing of any tax reclaim. 

9.

TERMINATION 

(a)

Either party may terminate this Agreement by an instrument in writing delivered or mailed, postage prepaid, to the other party, such termination to take effect not sooner than sixty days after the date of such delivery or mailing if termination is being sought by Customer, for itself or on behalf of a Fund, and not sooner than one hundred twenty days after the date of such delivery or mailing if termination is being sought by Bank. Termination of this Agreement with respect to any one particular Fund shall in no way affect the rights and duties under this Agreement with respect to any other Fund. If Customer gives notice of termination, it must provide full details of the persons to whom Bank must deliver Financial Assets and cash. If Bank gives notice of termination, then Customer must, within one hundred twenty days following receipt of the notice, notify Bank of details of its new custodian, failing which Bank may elect (at any time after one hundred twenty days following Customer’s receipt of the notice) either to retain the Financial Assets and cash until such details are given, continuing to charge fees due (in which case Bank’s sole obligation shall be for the safekeeping of the Financial Assets and cash), or deliver the Financial Assets and cash to Customer. Bank shall in any event be entitled to deduct any uncontested amounts owing to it prior to delivery of the Financial Assets and cash (and, accordingly, Bank shall be entitled to deduct cash from the Cash Account in satisfaction of uncontested amounts owing to it); provided, however, that Bank shall first provide Customer with a statement setting forth such amounts owing to it and provide Customer two days’ advance notice before effecting any such deduction, during which time Customer shall be entitled to determine the priority order in which such Financial Assets and cash are to be used to satisfy the outstanding uncontested amounts. Customer shall reimburse Bank promptly for all reasonable out-of-pocket expenses it incurs in delivering Financial Assets upon termination by Customer. Termination pursuant to this Section shall not affect any of the liabilities either party owes to the other arising under this Agreement prior to such termination. 

(b)

In the event of any termination of the Agreement for any reason whatsoever, Bank shall, for a period of up to one hundred twenty days after termination of the Agreement, (i) continue to provide all or part of the services under the Agreement if requested by Customer, which services shall be subject to the terms and conditions of the Agreement during the transition period unless otherwise agreed to by the parties; (ii) provide to Customer or any successor custodian all assistance reasonably requested to enable Customer or the successor custodian to commence providing services similar to those under the Agreement; and (iii) subject to the same limitations in place during the term of the Agreement, provide Customer with access to all records in the possession of Bank relating to Customer. In connection with any termination of the Agreement for any reason whatsoever, the parties shall also promptly develop a transition plan setting forth a reasonable timetable for the transition of Financial Assets and cash to Customer or any successor custodian and describing the parties’ respective responsibilities for transitioning the services back to Customer or any successor custodian in an orderly and uninterrupted fashion. Customer will use all reasonable efforts to transition to a successor custodian as soon as possible following the effective date of termination. 

10.

MISCELLANEOUS 

10.1

Notices. 

Notices (other than Instructions) shall be served by registered mail or hand delivery to the address of the respective parties as set out on the first page of this Agreement, unless notice of a new address is given to the other party in writing. Notice shall not be deemed to be given unless it has been received. 

10.2

Successors and Assigns. 

This Agreement shall be binding on each of the parties’ successors and assigns, but the parties agree that neither party can assign its rights and obligations under this Agreement without the prior written consent of the other party, which consent shall not be unreasonably withheld. 

10.3

Interpretation. 

Headings are for convenience only and are not intended to affect interpretation. References to sections are to sections of this Agreement and references to sub-sections and paragraphs are to sub-sections of the sections and paragraphs of the sub-sections in which they appear. 

10.4

Entire Agreement. 

This Agreement amends and restates the Amended and Restated Global Custody Agreement dated as of June 25, 2001 between Customer and Bank (the “Prior Agreement”), and the terms of this Agreement replace the terms of the Prior Agreement effective as of the date of this Agreement. This Agreement, including any Schedules, Appendices, Annexes, Exhibits, and Riders (and any separate agreement which Bank and Customer may enter into with respect to the services provided under this Agreement), sets out the entire Agreement between the parties in connection with the subject matter, and, unless otherwise agreed to by the parties, this Agreement supersedes any other agreement, statement, or representation relating to the services provided under this Agreement, whether oral or written. Amendments must be in writing and signed by both parties. For clarity, however, the continuation of any other agreements that reference the Prior Agreement is not intended to be affected by the fact of the amendment and restatement of the Prior Agreement by this Agreement, and reference in such agreements to the Prior Agreement shall be considered to be a reference to this Agreement effective as of the date of this Agreement (provided that matters relating to the time period prior to the date of this Agreement are governed by the terms of the Prior Agreement). 

10.5

Information Concerning Deposits at Bank. 

(a)

Under U.S. federal law, deposit accounts that the Customer maintains in Bank’s foreign branches (outside of the U.S.) are not insured by the Federal Deposit Insurance Corporation.  In the event of Bank’s liquidation, foreign branch deposits have a lesser preference than U.S. deposits, and such foreign deposits are subject to cross-border risks. 

(b)

Bank’s London Branch is a participant in the UK Financial Services Compensation Scheme (the "FSCS"), and the following terms apply to the extent any amount standing to the credit of the Cash Account is deposited in one or more deposit accounts at Bank’s London Branch.  The terms of the FSCS offer protection in connection with deposits to certain types of claimants to whom Bank’s London Branch provides services in the event that they suffer a financial loss as a direct consequence of Bank’s London Branch being unable to meet any of its obligations and, subject to the FSCS rules regarding eligible deposits, the Customer may have a right to claim compensation from the FSCS.  Subject to the FSCS rules, the maximum compensation payable by the FSCS, as at the date of this Agreement, in relation to eligible deposits is £85,000. 

(c)

In the event that Bank incurs a loss attributable to Country Risk with respect to any cash balance it maintains on deposit at a Subcustodian or other correspondent bank in regard to its global custody or trust businesses in the country where the Subcustodian or other correspondent bank is located, Bank may set such loss off against Customer’s Cash Account to the extent that such loss is directly attributable to Customer’s investments in that market. 

10.6

Confidentiality. 

The parties hereto agree that each shall treat confidentially the terms and conditions of this Agreement and all information provided by each party to the other regarding its business and operations. All confidential information provided by a party shall be used by the other party solely for the purpose of rendering or obtaining services pursuant to this Agreement, and except as may be required in carrying out this Agreement, shall not be disclosed to any third party without the prior consent of such providing party. The foregoing shall not be applicable to any information that is publicly available when provided or thereafter becomes publicly available other than through a breach of this provision, or that is required to be disclosed by or to any regulatory authority, any external or internal accountant, auditor or counsels of the parties, by judicial or administrative process or otherwise by Applicable Law, or to any disclosure made by a party if such party’s counsel has advised that such party could be liable under any Applicable Law or any judicial or administrative order or process for failure to make such disclosure. 

10.7

Data Privacy and Security. 

Bank will implement and maintain a written information security program, in compliance with all federal, state and local laws and regulations (including any similar international laws) applicable to Bank, that contains reasonable and appropriate security measures designed to safeguard the personal information of the Funds’ shareholders, employees, trustees and/or officers that Bank or any Subcustodian receives, stores, maintains, processes, transmits or otherwise accesses in connection with the provision of services hereunder. In this regard, Bank will establish and maintain policies, procedures, and technical, physical, and administrative safeguards, designed to (i) ensure the security and confidentiality of all personal information and any other confidential information that Bank receives, stores, maintains, processes or otherwise accesses in connection with the provision of services hereunder, (ii) protect against any reasonably foreseeable threats or hazards to the security or integrity of personal information or other confidential information, (iii) protect against unauthorized access to or use of personal information or other confidential information, (iv) maintain reasonable procedures to detect and respond to any internal or external security breaches, and (v) ensure appropriate disposal of personal information or other confidential information.  

Bank will monitor and review its information security program and revise it, as necessary and in its sole discretion, to ensure it appropriately addresses any applicable legal and regulatory requirements. Bank shall periodically test and review its information security program.  

Bank shall respond to Customer’s reasonable requests for information concerning Bank’s information security program and, upon request, Bank will provide a copy of its applicable policies and procedures, or in Bank’s discretion, summaries thereof, to Customer, to the extent Bank is able to do so without divulging information Bank reasonably believes to be proprietary or Bank confidential information. Upon reasonable request, Bank shall discuss with Customer the information security program of Bank. Bank also agrees, upon reasonable request, to complete any security questionnaire provided by Customer to the extent Bank is able to do so without divulging sensitive, proprietary, or Bank confidential information and return it in a commercially reasonable period of time (or provide an alternative response that reasonably addresses the points included in the questionnaire). Customer acknowledges that certain information provided by Bank, including internal policies and procedures, may be proprietary to Bank, and agrees to protect the confidentiality of all such materials it receives from Bank.  

Bank agrees to resolve promptly any applicable control deficiencies that come to its attention that do not meet the standards established by federal and state privacy and data security laws, rules, regulations, and/or generally accepted industry standards related to Bank’s information security program. 

Bank shall: (i) promptly notify Customer of any confirmed unauthorized access to personal information or other confidential information of Customer (“Breach of Security”); (ii) promptly furnish to Customer appropriate details of such Breach of Security and assist Customer in assessing the Breach of Security to the extent it is not privileged information or part of an investigation; (iii) reasonably cooperate with Customer in any litigation and investigation of third parties reasonably deemed necessary by Customer to protect its proprietary and other rights; (iv) use reasonable precautions to prevent a recurrence of a Breach of Security; and (v) take all reasonable and appropriate action to mitigate any potential harm related to a Breach of Security, including any reasonable steps requested by Customer that are practicable for Bank to implement. Nothing in the immediately preceding sentence shall obligate Bank to provide Customer with information regarding any of Bank’s other customers or clients that are affected by a Breach of Security, nor shall the immediately preceding sentence limit Bank’s ability to take any actions that Bank believes are appropriate to remediate any Breach of Security unless such actions would prejudice or otherwise limit Customer’s ability to bring its own claims or actions against third parties related to the Breach of Security. If Bank discovers or becomes aware of a suspected data or security breach that may involve an improper access, use, disclosure, or alteration of personal information or other confidential information of Customer, Bank shall, except to the extent prohibited by Applicable Law or directed otherwise by a governmental authority not to do so, promptly notify Customer that it is investigating a potential breach and keep Customer informed as reasonably practicable of material developments relating to the investigation until Bank either confirms that such a breach has occurred (in which case the first sentence of this paragraph will apply) or confirms that no data or security breach involving personal information or other confidential information of Customer has occurred. 

For these purposes, “personal information” shall mean (i) an individual’s name (first initial and last name or first name and last name), address or telephone number plus (a) social security number, (b) driver’s license number, (c) state identification card number, (d) debit or credit card number, (e) financial account number, (f) passport number, or (g) personal identification number or password that would permit access to a person’s account or (ii) any combination of the foregoing that would allow a person to log onto or access an individual’s account. This provision will survive termination or expiration of the Agreement for so long as Bank or any Subcustodian continues to possess or have access to personal information related to Customer. Notwithstanding the foregoing “personal information” shall not include information that is lawfully obtained from publicly available information, or from federal, state or local government records lawfully made available to the general public. 

10.8

Business Continuity and Disaster Recovery. 

Bank shall maintain and update from time to time business continuation and disaster recovery procedures with respect to its global custody business, which are designed, in the event of a significant business disruption affecting Bank, to be sufficient to enable Bank to resume and continue to perform its duties and obligations under this Agreement without undue delay or disruption. Bank shall test the operability of such procedures at least annually. Bank shall enter into and shall maintain in effect at all times during the term of this Agreement reasonable provision for (i) periodic back-up of the computer files and data with respect to Customer and (ii) use of alternative electronic data processing equipment to provide services under this Agreement. Upon reasonable request, Bank shall discuss with Customer any business continuation and disaster recovery procedures of Bank. Bank represents that its business continuation and disaster recovery procedures are appropriate for its business as a global custodian to investment companies registered under the 1940 Act. 

10.9

Insurance. 

Bank shall not be required to maintain any insurance coverage for the benefit of Customer. 

10.10

Governing Law and Jurisdiction, Certification of Residency. 

This Agreement shall be construed, regulated, and administered under the laws of the United States or State of New York, as applicable, without regard to New York’s principles regarding conflict of laws. The United States District Court for the Southern District of New York shall have the sole and exclusive jurisdiction over any lawsuit or other judicial proceeding relating to or arising from this Agreement. If that court lacks federal subject matter jurisdiction, the Supreme Court of the State of New York, New York County shall have sole and exclusive jurisdiction. Either of these courts shall have proper venue for any such lawsuit or judicial proceeding, and the parties waive any objection to venue or their convenience as a forum. The parties agree to submit to the jurisdiction of any of the courts specified and to accept service of process to vest personal jurisdiction over them in any of these courts. The parties further hereby knowingly, voluntarily and intentionally waive, to the fullest extent permitted by Applicable Law, any right to a trial by jury with respect to any such lawsuit or judicial proceeding arising or relating to this Agreement or the transactions contemplated hereby. Customer certifies that it is a resident of the United States and shall notify Bank of any changes in residency. Bank may rely upon this certification or the certification of such other facts as may be required to administer Bank’s obligations hereunder. Customer shall indemnify Bank against all losses, liability, claims or demands arising directly or indirectly from any such certifications. 

10.11

Severability and Waiver. 

(a)

If one or more provisions of this Agreement are held invalid, illegal or unenforceable in any respect on the basis of any particular circumstances or in any jurisdiction, the validity, legality and enforceability of such provision or provisions under other circumstances or in other jurisdictions and of the remaining provisions shall not in any way be affected or impaired. 

(b)

Except as otherwise provided herein, no failure or delay on the part of either party in exercising any power or right hereunder operates as a waiver, nor does any single or partial exercise of any power or right preclude any other or further exercise, or the exercise of any other power or right. No waiver by a party of any provision of this Agreement, or waiver of any breach or default, is effective unless in writing and signed by the party against whom the waiver is to be enforced. 

10.12

Counterparts. 

This Agreement may be executed in several counterparts, each of which shall be deemed to be an original and together shall constitute one and the same agreement. 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. 

[Signature page to follow.] 

  

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. 

  

EACH OF THE OPEN-END MANAGEMENT INVESTMENT COMPANIES LISTED ON EXHIBIT 1 HERETO 

By:  

/s/ Thomas J. Higgins 

  

Name: 

  

Thomas J. Higgins 

  

Title: 

  

Chief Financial Officer 

JPMORGAN CHASE BANK, N.A. 

By: 

/s/ Teresa Heitsenrether 

  

Name: 

  

Teresa Heitsenrether 

  

Title: 

  

Managing Director 

  

  

  

  

  

  

  

  

  

  

  

  

 

EXHIBIT 1 

  

Vanguard Admiral Funds 

Vanguard S&P 500 Growth Index Fund 

Vanguard S&P 500 Value Index Fund 

Vanguard S&P Mid-Cap 400 Growth Index Fund 

Vanguard S&P Mid-Cap 400 Index Fund 

Vanguard S&P Mid-Cap 400 Value Index Fund 

Vanguard S&P Small-Cap 600 Growth Index Fund 

Vanguard S&P Small-Cap 600 Index Fund 

Vanguard S&P Small-Cap 600 Value Index Fund 

  

Vanguard Bond Index Funds 

Vanguard Inflation-Protected Securities Fund  

Vanguard Intermediate-Term Bond Index Fund 

Vanguard Long-Term Bond Index Fund 

Vanguard Short-Term Bond Index Fund 

Vanguard Total Bond Market Index Fund 

Vanguard Total Bond Market II Index Fund 

  

Vanguard Chester Funds 

Vanguard Institutional Target Retirement 2015 Fund 

Vanguard Institutional Target Retirement 2020 Fund 

Vanguard Institutional Target Retirement 2025 Fund 

Vanguard Institutional Target Retirement 2030 Fund 

Vanguard Institutional Target Retirement 2035 Fund 

Vanguard Institutional Target Retirement 2040 Fund 

Vanguard Institutional Target Retirement 2045 Fund 

Vanguard Institutional Target Retirement 2050 Fund 

Vanguard Institutional Target Retirement 2055 Fund 

Vanguard Institutional Target Retirement 2060 Fund 

Vanguard Institutional Target Retirement 2065 Fund 

Vanguard Institutional Target Retirement Income Fund 

Vanguard Target Retirement 2015 Fund 

Vanguard Target Retirement 2020 Fund 

Vanguard Target Retirement 2025 Fund 

Vanguard Target Retirement 2030 Fund 

Vanguard Target Retirement 2035 Fund 

Vanguard Target Retirement 2040 Fund 

Vanguard Target Retirement 2045 Fund 

Vanguard Target Retirement 2050 Fund 

Vanguard Target Retirement 2055 Fund 

Vanguard Target Retirement 2060 Fund 

Vanguard Target Retirement 2065 Fund 

Vanguard Target Retirement Income Fund 

  

Vanguard CMT Funds 

Vanguard Market Liquidity Fund 

  

Vanguard Fixed Income Securities Funds 

Vanguard GNMA Fund 

Vanguard High-Yield Corporate Fund 

Vanguard Long-Term Investment-Grade Fund 

Vanguard REIT II Index Fund 

Vanguard Ultra-Short-Term Bond Fund 

  

Vanguard Index Funds 

Vanguard Growth Index Fund 

Vanguard Mid-Cap Growth Index Fund 

Vanguard Mid-Cap Value Index Fund 

Vanguard Small-Cap Index Fund 

Vanguard Total Stock Market Index Fund 

  

Vanguard Malvern Funds 

Vanguard Short-Term Inflation-Protected Securities Index Fund 

  

Vanguard Scottsdale Funds 

Vanguard Intermediate-Term Corporate Bond Index Fund 

Vanguard Intermediate-Term Government Bond Index Fund 

Vanguard Long-Term Corporate Bond Index Fund 

Vanguard Long-Term Government Bond Index Fund 

Vanguard Mortgage-Backed Securities Index Fund 

Vanguard Short-Term Corporate Bond Index Fund 

Vanguard Short-Term Government Bond Index Fund 

  

Vanguard Specialized Funds  

Vanguard Dividend Appreciation Index Fund 

Vanguard Health Care Fund 

Vanguard Precious Metals and Mining Fund 

  

Vanguard STAR Funds 

Vanguard LifeStrategy Conservative Growth Fund 

Vanguard LifeStrategy Growth Fund 

Vanguard LifeStrategy Income Fund 

Vanguard LifeStrategy Moderate Growth Fund 

Vanguard Total International Stock Index Fund 

  

Vanguard Tax-Managed Funds 

Vanguard Tax-Managed Balanced Fund 

  

Vanguard Valley Forge Funds 

Vanguard Balanced Index Fund 

  

Vanguard Variable Insurance Funds 

Global Bond Index Portfolio 

Total Bond Market Index Portfolio 

Total International Stock Market Index Portfolio 

  

Vanguard Wellesley Income Fund 

Vanguard Wellesley Income Fund 

  

  

Vanguard Wellington Fund 

Vanguard Wellington Fund 

  

Vanguard Whitehall Funds 

Vanguard International Explorer Fund 

  

Vanguard World Fund 

Vanguard Extended Duration Treasury Index Fund 

Vanguard Global Wellesley Income Fund 

Vanguard Global Wellington Fund 

Vanguard International Growth Fund 

  

  

The terms and conditions as set forth in the Agreement (except for Sections 2.1 and 2.2) apply with respect to the Trusts and Funds listed below limited to their use of account number P 62749 in Vanguard Directly Managed Securities Lending transactions: 

  

Vanguard Chester Funds 

Vanguard PRIMECAP Fund 

  

Vanguard Explorer Fund 

Vanguard Explorer Fund 

  

Vanguard Fenway Funds 

Vanguard Equity Income Fund 

Vanguard PRIMECAP Core Fund 

  

Vanguard Horizon Funds 

Vanguard Capital Opportunity Fund 

Vanguard Global Equity Fund 

Vanguard Strategic Equity Fund 

Vanguard Strategic Small-Cap Equity Fund 

  

Vanguard Index Funds 

Vanguard 500 Index Fund 

Vanguard Extended Market Index Fund 

Vanguard Large-Cap Index Fund 

Vanguard Mid-Cap Index Fund 

Vanguard Small-Cap Growth Index Fund 

Vanguard Small-Cap Value Index Fund 

Vanguard Value Index Fund 

  

Vanguard Institutional Index Funds 

Vanguard Institutional Index Fund 

Vanguard Institutional Total Stock Market Index Fund 

  

Vanguard International Equity Index Funds 

Vanguard Emerging Markets Stock Index Fund 

Vanguard European Stock Index Fund 

Vanguard FTSE All-World ex-US Index Fund 

Vanguard FTSE All-World ex-US Small-Cap Index Fund 

Vanguard Global ex-U.S. Real Estate Index Fund 

Vanguard Pacific Stock Index Fund 

Vanguard Total World Stock Index Fund 

  

Vanguard Malvern Funds 

Vanguard Capital Value Fund 

Vanguard U.S. Value Fund 

  

Vanguard Montgomery Funds 

Vanguard Market Neutral Fund 

  

Vanguard Morgan Growth Fund 

Vanguard Morgan Growth Fund 

  

Vanguard Quantitative Funds 

Vanguard Growth and Income Fund 

  

Vanguard Scottsdale Funds 

Vanguard Explorer Value Fund 

Vanguard Russell 1000 Growth Index Fund 

Vanguard Russell 1000 Index Fund 

Vanguard Russell 1000 Value Index Fund  

Vanguard Russell 2000 Growth Index Fund 

Vanguard Russell 2000 Index Fund 

Vanguard Russell 2000 Value Index Fund 

Vanguard Russell 3000 Index Fund 

  

Vanguard Specialized Funds 

Vanguard Dividend Growth Fund 

Vanguard Energy Fund  

Vanguard REIT Index Fund 

  

Vanguard Tax-Managed Funds 

Vanguard Developed Markets Index Fund 

  

Vanguard Trustees’ Equity Fund 

Vanguard Emerging Markets Select Stock Fund 

Vanguard International Value Fund 

  

Vanguard Variable Insurance Funds 

Balanced Portfolio 

Capital Growth Portfolio 

Diversified Value Portfolio 

Equity Income Portfolio 

Equity Index Portfolio 

Growth Portfolio 

International Portfolio 

Mid-Cap Index Portfolio 

REIT Index Portfolio 

Small Company Growth Portfolio 

  

Vanguard Whitehall Funds 

Vanguard Global Minimum Volatility Fund 

Vanguard High Dividend Yield Index Fund 

Vanguard International Dividend Appreciation Index Fund 

Vanguard International High Dividend Yield Index Fund 

Vanguard Mid-Cap Growth Fund 

Vanguard Selected Value Fund 

  

Vanguard Windsor Funds 

Vanguard Windsor Fund 

Vanguard Windsor II Fund 

  

Vanguard World Fund 

Vanguard Consumer Discretionary Index Fund 

Vanguard Consumer Staples Index Fund 

Vanguard Energy Index Fund 

Vanguard Financials Index Fund 

Vanguard FTSE Social Index Fund 

Vanguard Health Care Index Fund 

Vanguard Industrials Index Fund 

Vanguard Information Technology Index Fund 

Vanguard Materials Index Fund 

Vanguard Mega Cap Growth Index Fund 

Vanguard Mega Cap Index Fund 

Vanguard Mega Cap Value Index Fund 

Vanguard Telecommunication Services Index Fund 

Vanguard U.S. Growth Fund  

Vanguard Utilities Index Fund 

  

 

APPENDIX 1 

Information Regarding Country Risk 

1.To aid Customer in its determinations regarding Country Risk, Bank shall furnish annually and upon the initial placing of Financial Assets and cash into a country the following information (check items applicable): 

A.Opinions of local counsel concerning: 

_X_i. Whether applicable foreign law would restrict the access afforded Customer’s independent public accountants to books and records kept by an eligible foreign custodian located in that country. 

_X_ii. Whether applicable foreign law would restrict the Customer’s ability to recover its Financial Assets and cash in the event of the bankruptcy of an Eligible Foreign Custodian located in that country. 

_X_iii. Whether applicable foreign law would restrict the Customer’s ability to recover Financial Assets that are lost while under the control of an Eligible Foreign Custodian located in the country. 

B.Written information concerning: 

_X_i. The foreseeability of expropriation, nationalization, freezes, or confiscation of Customer’s Financial Assets. 

_X_ii. Whether difficulties in converting Customer’s cash and cash equivalents to U.S. dollars are reasonably foreseeable. 

C.A market report with respect to the following topics: 

(i) securities regulatory environment, (ii) foreign ownership restrictions, (iii) foreign exchange, (iv) securities settlement and registration, (v) taxation, and (vi) depositories (including depository evaluation), if any. 

2.To aid Customer in monitoring Country Risk, Bank shall furnish Customer the following additional information: 

Market flashes, including with respect to changes in the information in market reports. 

  

  

ANNEX A - Electronic Access 

1.Bank may permit the Customer and its Authorized Persons to access certain electronic systems and applications (collectively, the “Products”) and to access or receive electronically Data (as defined below) in connection with the Agreement.  Bank may, from time to time, introduce new features to the Products or otherwise modify or delete existing features of the Products in its sole discretion.  Bank shall endeavor to give the Customer reasonable notice of its termination or suspension of access to the Products, including suspension or cancelation of any User Codes, but may do so immediately if Bank determines, in its sole discretion, that providing access to the Products would violate Applicable Law or that the security or integrity of the Products is known or reasonably suspected to be at risk.  Access to the Products shall be subject to the Security Procedure.  

2.In consideration of the fees paid by the Customer to Bank and subject to any applicable software license addendum in relation to Bank-owned or sublicensed software provided for a particular application and Applicable Law, Bank grants to the Customer a non-exclusive, non-transferable, limited and revocable license to use the Products and the information and data made available through the Products or transferred electronically (the “Data”) for the Customer’s internal business use only.  The Customer may download the Data and print out hard copies for its reference, provided that it does not remove any copyright or other notices contained therein.  The license granted herein will permit use by the Customer’s Authorized Person, provided that such use shall be in compliance with the Agreement, including this Annex.  The Customer acknowledges that elements of the Data, including prices, Corporate Action information, and reference data, may have been licensed by Bank from third parties and that any use of such Data beyond that authorized by the foregoing license, may require the permission of one or more third parties in addition to Bank. Notwithstanding the foregoing, nothing in this Section 2, or elsewhere in this Annex, shall be deemed to give Bank or its licensors ownership of, or any rights in or to, any confidential information of the Customer, including as it may be accessible or receivable through the Products, and all rights in and to such information shall be retained exclusively by the Customer. 

3.The Customer acknowledges that there are security, cyberfraud, corruption, transaction error and access availability risks associated with using open networks such as the internet, and the Customer hereby expressly assumes such risks; for clarity, however, the foregoing shall not relieve Bank of its obligation under the first sentence of Section 4 of this Annex. The Customer is solely responsible for obtaining, maintaining and operating all systems, software (including antivirus software, anti-spyware software, and other internet security software) and personnel necessary for the Customer to access and use the Products. All such software must be interoperable with Bank’s software.  Each of the Customer and Bank shall be responsible for the proper functioning, maintenance and security of its own systems, services, software and other equipment. 

4.In cases where Bank’s website is unexpectedly down or otherwise unavailable, Bank shall, absent a force majeure event, provide other appropriate means for the Customer or its Authorized Persons to instruct Bank or obtain reports from Bank. Provided that Bank complies with its obligation to provide such other appropriate means, Bank shall not be liable for any Liabilities arising out of the Customer’s inability to access or use the Products via Bank’s website in the absence of Bank’s gross negligence, fraud or willful misconduct.  

5.Use of the Products may be monitored, tracked, and recorded.  In using the Products, the Customer hereby expressly consents to such monitoring, tracking, and recording, and will ensure that all persons using the Products through or on behalf of Customer are advised of and have consented to this monitoring, tracking and recording, and Bank’s right to disclose data derived from such activity in accordance with the Agreement, including this Annex. Bank shall own all right, title and interest in the data reflecting Customer’s usage of the Products or Bank’s website (including, but not limited to, general usage

data and aggregated transaction data). For clarity, the foregoing shall not be deemed to give Bank ownership of, or any rights in or to, the Customer’s confidential information (whether or not in aggregated form), the use or disclosure of which shall at all times be subject to Section 10.6 of this Agreement other otherwise agreed to by the Parties. 

6.The Customer shall not knowingly use the Products to transmit (i) any virus, worm, or destructive element or any programs or data that may be reasonably expected to interfere with or disrupt the Products or servers connected to the Products; (ii) material that violates the rights of another, including but not limited to the intellectual property rights of another; and (iii) “junk mail”, “spam”, “chain letters” or unsolicited mass distribution of e-mail. 

7.The Customer shall promptly and accurately designate in writing to Bank the geographic location of its users upon written request.  The Customer further represents and warrants to Bank that the Customer shall not access the Products from any jurisdiction which Bank informs the Customer or where the Customer has actual knowledge that the Products are not authorized for use due to local regulations or laws, including applicable software export rules and regulations.  Prior to submitting any document which designates the persons authorized to act on the Customer’s behalf, the Customer shall obtain from each individual referred to in such document all necessary consents to enable Bank to process the data set out therein for the purposes of providing the Products. 

8.Bank and Customer will be subject to and shall comply with all Applicable Law concerning restricting collection, use, disclosure, processing and free movement of the Data (collectively, the “Privacy Regulations”).  The Privacy Regulations may include, as applicable, the Federal “Privacy of Consumer Financial Information” Regulation (12 CFR Part 40) and Interagency Guidelines Establishing Information Security Standards (App B to 12 CFR Part 30), as amended from time to time, issued pursuant to Section 504 of the Gramm-Leach-Bliley Act of 1999 (15 U.S.C. §6801, et seq.), the Health and Insurance Portability and Accountability Act of 1996 (42 U.S.C. §1320d), The Data Protection Act 1998 and Directive 95/46/EC, 2009/136/EC and 2002/58/EC of the European Parliament and of the Council, as amended from time to time, and applicable implementing legislation in connection with  the protection of individuals with regard to processing of personal data and the free movement of such data. 

9.The Customer shall be responsible for the compliance of its Authorized Persons with the terms of the Agreement, including this Annex. 

  

  

SCHEDULE 1 – AGENT AND CASH NETWORK (CUSTODY & FUND SERVICES)  

MARKET 

SUBCUSTODIAN 

CASH CORRESPONDENT BANK 

ARGENTINA 

HSBC Bank Argentina S.A.
Bouchard 680, 9th Floor
C1106ABJ Buenos Aires
ARGENTINA 

HSBC Bank Argentina S.A.
Buenos Aires 

AUSTRALIA 

JPMorgan Chase Bank, N.A.**
Level 31, 101 Collins Street
Melbourne 3000
AUSTRALIA 

Australia and New Zealand Banking Group Ltd.
Melbourne 

AUSTRIA 

UniCredit Bank Austria AG
Julius Tandler Platz   3
A 1090 Vienna
AUSTRIA 

J.P. Morgan AG**
Frankfurt am Main 

BAHRAIN 

HSBC Bank Middle East Limited
Road No 2832
Al Seef 428
BAHRAIN 

HSBC Bank Middle East Limited
Al Seef 

BANGLADESH 

Standard Chartered Bank
Portlink Tower
Level 6, 67 Gulshan Avenue
Gulshan
Dhaka  1212
BANGLADESH 

Standard Chartered Bank
Dhaka 

BELGIUM 

BNP Paribas Securities Services S.C.A.
Central Plaza Building
Rue de Loxum, 25
7th Floor
1000 Brussels
BELGIUM 

J.P. Morgan A.G.**
Frankfurt am Main 

BERMUDA 

HSBC Bank Bermuda Limited
6 Front Street
Hamilton HM 11
BERMUDA 

HSBC Bank Bermuda Limited
Hamilton 

BOTSWANA 

Standard Chartered Bank Botswana Limited
5th Floor, Standard House
P.O. Box 496
Queens Road, The Mall
Gaborone
BOTSWANA 

Standard Chartered Bank Botswana Limited
Gaborone 

BRAZIL 

J.P. Morgan S.A. DTVM**
Av. Brigadeiro Faria Lima, 3729, Floor 06
Sao Paulo SP 04538 905
BRAZIL 

J.P. Morgan S.A. DTVM**
Sao Paulo 

BULGARIA 

Citibank Europe plc
Serdika Offices
10th Floor
48 Sitnyakovo Blvd
Sofia 1505
BULGARIA 

ING Bank N.V.
Sofia 

CANADA 

Canadian Imperial Bank of Commerce
1 York Street, Suite 900
Toronto Ontario M5J 0B6
CANADA

Royal Bank of Canada
155 Wellington Street West,
Toronto Ontario M5V 3L3
CANADA 

Royal Bank of Canada
Toronto 

CHILE 

Banco Santander Chile
Bandera 140, Piso 4
Santiago
CHILE 

Banco Santander Chile
Santiago 

CHINA A SHARE 

HSBC Bank (China) Company Limited
33/F, HSBC Building, Shanghai ifc
8 Century Avenue, Pudong
Shanghai 200120
THE PEOPLE'S REPUBLIC OF CHINA 

HSBC Bank (China) Company Limited
Shanghai 

CHINA B SHARE 

HSBC Bank (China) Company Limited
33/F, HSBC Building, Shanghai ifc
8 Century Avenue, Pudong
Shanghai 200120
THE PEOPLE'S REPUBLIC OF CHINA 

JPMorgan Chase Bank, N.A.**
New York

JPMorgan Chase Bank, N.A.**
Hong Kong 

CHINA CONNECT 

JPMorgan Chase Bank, N.A.**
48th Floor, One Island East
18 Westlands Road, Quarry Bay
HONG KONG 

JPMorgan Chase Bank, N.A.**
Hong Kong 

COLOMBIA 

Cititrust Colombia S.A.
Carrera 9 A #  99 02, 3rd floor
Bogota
COLOMBIA 

Cititrust Colombia S.A.
Bogotá 

*COSTA RICA* 

Banco BCT, S.A.
150 Metros Norte de la Catedral Metropolitana
Edificio BCT
San Jose
COSTA RICA 

Banco BCT, S.A.
San Jose 

*RESTRICTED SERVICE ONLY.  PLEASE CONTACT YOUR RELATIONSHIP MANAGER FOR FURTHER INFORMATION* 

CROATIA 

Privredna banka Zagreb d.d.
Radnicka cesta 50
10000 Zagreb
CROATIA 

Zagrebacka banka d.d.
Zagreb 

CYPRUS 

HSBC Bank plc
109 111, Messogian Ave.
115 26 Athens
GREECE 

J.P. Morgan AG**
Frankfurt am Main 

CZECH REPUBLIC 

UniCredit Bank Czech Republic and Slovakia, a.s.
BB Centrum   FILADELFIE
Zeletavska 1525 1
140 92 Prague 1
CZECH REPUBLIC 

Ceskoslovenska obchodni banka, a.s.
Prague 

DENMARK 

Nordea Bank AB (publ)
Christiansbro
Strandgade 3
P.O. Box 850
DK 0900 Copenhagen
DENMARK 

Nordea Bank AB (publ)
Copenhagen 

EGYPT 

Citibank, N.A.
4 Ahmed Pasha Street
Garden City
Cairo
EGYPT 

Citibank, N.A.
Cairo 

ESTONIA 

Swedbank AS
Liivalaia 8
15040 Tallinn
ESTONIA 

J.P. Morgan AG**
Frankfurt am Main 

FINLAND 

Nordea Bank AB (publ)
Aleksis Kiven katu 3 5
FIN 00020 NORDEA Helsinki
FINLAND 

J.P. Morgan AG**
Frankfurt am Main 

FRANCE 

BNP Paribas Securities Services S.C.A.
3, rue d'Antin
75002 Paris
FRANCE 

J.P. Morgan AG**
Frankfurt am Main 

GERMANY 

Deutsche Bank AG
Alfred Herrhausen Allee 16 24
D 65760 Eschborn
GERMANY

J.P. Morgan AG#**
Taunustor 1 (TaunusTurm)
60310 Frankfurt am Main
GERMANY
# Custodian for local German custody clients only. 

J.P. Morgan AG**
Frankfurt am Main 

GHANA 

Standard Chartered Bank Ghana Limited
Accra High Street
P.O. Box 768
Accra
GHANA 

Standard Chartered Bank Ghana Limited
Accra 

GREECE 

HSBC Bank plc
Messogion 109 111
11526 Athens
GREECE 

J.P. Morgan AG**
Frankfurt am Main 

HONG KONG 

JPMorgan Chase Bank, N.A.**
48th Floor, One Island East
18 Westlands Road, Quarry Bay
HONG KONG 

JPMorgan Chase Bank, N.A.**
Hong Kong 

HUNGARY 

Deutsche Bank AG
Hold utca 27
H 1054 Budapest
HUNGARY 

ING Bank N.V.
Budapest 

*ICELAND* 

Islandsbanki hf.
Kirkjusandur 2
IS 155 Reykjavik
ICELAND 

Islandsbanki hf.
Reykjavik 

*RESTRICTED SERVICE ONLY.  PLEASE CONTACT YOUR RELATIONSHIP MANAGER FOR FURTHER INFORMATION* 

INDIA 

JPMorgan Chase Bank, N.A.**
6th Floor, Paradigm ‘B’ Wing
Mindspace, Malad (West)
Mumbai 400 064
INDIA 

JPMorgan Chase Bank, N.A.**
Mumbai 

INDONESIA 

PT Bank HSBC Indonesia
Menara Mulia 25th Floor
Jl. Jendral Gatot Subroto Kav. 9 11
Jakarta 12930
INDONESIA 

PT Bank HSBC Indonesia
Jakarta 

IRELAND 

JPMorgan Chase Bank, N.A.**
25 Bank Street, Canary Wharf
London E14 5JP
UNITED KINGDOM 

J.P. Morgan AG**
Frankfurt am Main 

ISRAEL 

Bank Leumi le Israel B.M.
35, Yehuda Halevi Street
65136 Tel Aviv
ISRAEL 

Bank Leumi le Israel B.M.
Tel Aviv 

ITALY 

BNP Paribas Securities Services S.C.A.
Piazza Lina Bo Bardi, 3
20124 Milan
ITALY 

J.P. Morgan AG**
Frankfurt am Main 

JAPAN 

Mizuho Bank, Ltd.
2 15 1, Konan
Minato ku
Tokyo 108 6009
JAPAN

The Bank of Tokyo Mitsubishi UFJ, Ltd.
1 3 2 Nihombashi Hongoku cho
Chuo ku
Tokyo 103 0021
JAPAN 

JPMorgan Chase Bank, N.A.**
Tokyo 

JORDAN 

Standard Chartered Bank
Shmeissani Branch
Al Thaqafa Street
Building # 2
P.O. Box 926190
Amman
JORDAN 

Standard Chartered Bank
Amman 

KAZAKHSTAN 

JSC Citibank Kazakhstan
Park Palace, Building A, Floor 2
41 Kazybek Bi
Almaty 050010
KAZAKHSTAN 

Subsidiary Bank Sberbank of Russia Joint Stock Company
Almaty 

KENYA 

Standard Chartered Bank Kenya Limited
Chiromo
48 Westlands Road
Nairobi 00100
KENYA 

Standard Chartered Bank Kenya Limited
Nairobi 

KUWAIT 

HSBC Bank Middle East Limited
Kuwait City, Sharq Area
Abdulaziz Al Sager Street
Al Hamra Tower, 37F
Safat 13017
KUWAIT 

HSBC Bank Middle East Limited
Safat 

LATVIA 

Swedbank AS
Balasta dambis 1a
Riga LV 1048
LATVIA 

J.P. Morgan AG**
Frankfurt am Main 

LITHUANIA 

AB SEB Bankas
12 Gedimino pr.
LT 2600 Vilnius
LITHUANIA 

J.P. Morgan AG**
Frankfurt am Main 

LUXEMBOURG 

BNP Paribas Securities Services S.C.A.
33, Rue de Gasperich
L 5826 Hesperange
LUXEMBOURG 

J.P. Morgan AG**
Frankfurt am Main 

*MALAWI* 

Standard Bank Limited, Malawi
1st Floor Kaomba House
Cnr Glyn Jones Road & Victoria Avenue
Blantyre
MALAWI 

Standard Bank Limited, Malawi
Blantyre 

*RESTRICTED SERVICE ONLY.  PLEASE CONTACT YOUR RELATIONSHIP MANAGER FOR FURTHER INFORMATION* 

MALAYSIA 

HSBC Bank Malaysia Berhad
2 Leboh Ampang
12th Floor, South Tower
50100 Kuala Lumpur
MALAYSIA 

HSBC Bank Malaysia Berhad
Kuala Lumpur 

MAURITIUS 

The Hongkong and Shanghai Banking Corporation Limited
HSBC Centre
18 Cybercity
Ebene
MAURITIUS 

The Hongkong and Shanghai Banking Corporation Limited
Ebene 

MEXICO 

Banco Nacional de Mexico, S.A.
Act. Roberto Medellin No. 800 3er Piso Norte
Colonia Santa Fe
01210 Mexico, D.F.
MEXICO 

Banco Santander (Mexico), S.A.
Mexico, D.F. 

MOROCCO 

Société Générale Marocaine de Banques
55 Boulevard Abdelmoumen
Casablanca 20100
MOROCCO 

Attijariwafa Bank S.A.
Casablanca 

NAMIBIA 

Standard Bank Namibia Limited
2nd Floor, Town Square Building
Corner of Werner List and Post Street Mall
P.O. Box 3327
Windhoek
NAMIBIA 

The Standard Bank of South Africa Limited
Johannesburg 

NETHERLANDS 

BNP Paribas Securities Services S.C.A.
Herengracht 595
1017 CE Amsterdam
NETHERLANDS 

J.P. Morgan AG**
Frankfurt am Main 

NEW ZEALAND 

JPMorgan Chase Bank, N.A.**
Level 13, 2 Hunter Street
Wellington 6011
NEW ZEALAND 

Westpac Banking Corporation
Wellington 

NIGERIA 

Stanbic IBTC Bank Plc
Plot 1712
Idejo Street
Victoria Island
Lagos
NIGERIA 

Stanbic IBTC Bank Plc
Lagos 

NORWAY 

Nordea Bank AB (publ)
Essendropsgate 7
P.O. Box 1166
NO 0107 Oslo
NORWAY 

Nordea Bank AB (publ)
Oslo 

OMAN 

HSBC Bank Oman S.A.O.G.
2nd Floor Al Khuwair
P.O. Box 1727 PC 111
Seeb
OMAN 

HSBC Bank Oman S.A.O.G.
Seeb 

PAKISTAN 

Standard Chartered Bank (Pakistan) Limited
P.O. Box 4896
Ismail Ibrahim Chundrigar Road
Karachi 74000
PAKISTAN 

Standard Chartered Bank (Pakistan) Limited
Karachi 

PERU 

Citibank del Perú S.A.
Av. Canaval y Moreryra 480 Piso 3
San Isidro
Lima 27
PERU 

Banco de Crédito del Perú
Lima 

PHILIPPINES 

The Hongkong and Shanghai Banking Corporation Limited
7/F HSBC Centre
3058 Fifth Avenue West
Bonifacio Global City
1634 Taguig City
PHILIPPINES 

The Hongkong and Shanghai Banking Corporation Limited
Taguig City 

POLAND 

Bank Handlowy w. Warszawie S.A.
ul. Senatorska 16
00 923 Warsaw
POLAND 

mBank S.A.
Warsaw 

PORTUGAL 

BNP Paribas Securities Services S.C.A.
Avenida D.João II, Lote 1.18.01, Bloco B,
7º andar
1998 028 Lisbon
PORTUGAL 

J.P. Morgan AG**
Frankfurt am Main 

QATAR 

HSBC Bank Middle East Limited
2nd Floor, Ali Bin Ali Tower
Building 150 (Airport Road)
P.O. Box 57
Doha
QATAR 

The Commercial Bank (P.Q.S.C.)
Doha 

ROMANIA 

Citibank Europe plc
145 Calea Victoriei
1st District
010072 Bucharest
ROMANIA 

ING Bank N.V.
Bucharest 

RUSSIA 

J.P. Morgan Bank International (Limited Liability Company)**
10, Butyrsky Val
White Square Business Centre
Floor 12
Moscow 125047
RUSSIA 

JPMorgan Chase Bank, N.A.**
New York 

SAUDI ARABIA 

HSBC Saudi Arabia
2/F HSBC Building
7267 Olaya Street North, Al Murooj
Riyadh 12283 2255
SAUDI ARABIA 

HSBC Saudi Arabia
Riyadh 

SERBIA 

Unicredit Bank Srbija a.d.
Rajiceva 27 29
11000 Belgrade
SERBIA 

Unicredit Bank Srbija a.d.
Belgrade 

SINGAPORE 

DBS Bank Ltd
10 Toh Guan Road
DBS Asia Gateway, Level 04 11 (4B)
608838
SINGAPORE 

Oversea Chinese Banking Corporation
Singapore 

SLOVAK REPUBLIC 

UniCredit Bank Czech Republic and Slovakia, a.s.
Sancova 1/A
SK 813 33 Bratislava
SLOVAK REPUBLIC 

J.P. Morgan AG**
Frankfurt am Main 

SLOVENIA 

UniCredit Banka Slovenija d.d.
Smartinska 140
SI 1000 Ljubljana
SLOVENIA 

J.P. Morgan AG**
Frankfurt am Main 

SOUTH AFRICA 

FirstRand Bank Limited
1 Mezzanine Floor, 3 First Place, Bank City
Cnr Simmonds and Jeppe Streets
Johannesburg 2001
SOUTH AFRICA 

The Standard Bank of South Africa Limited
Johannesburg 

SOUTH KOREA 

Standard Chartered Bank Korea Limited
47 Jongro, Jongro Gu
Seoul 03160
SOUTH KOREA

Kookmin Bank Co., Ltd.
84, Namdaemun ro, Jung gu
Seoul 100 845
SOUTH KOREA 

Standard Chartered Bank Korea Limited
Seoul



Kookmin Bank Co., Ltd.
Seoul 

SPAIN 

Santander Securities Services, S.A.
Ciudad Grupo Santander
Avenida de Cantabria, s/n
Edificio Ecinar, planta baja
Boadilla del Monte
28660 Madrid
SPAIN 

J.P. Morgan AG**
Frankfurt am Main 

SRI LANKA 

The Hongkong and Shanghai Banking Corporation Limited
24 Sir Baron Jayatillaka Mawatha
Colombo 1
SRI LANKA 

The Hongkong and Shanghai Banking Corporation Limited
Colombo 

SWEDEN 

Nordea Bank AB (publ)
Hamngatan 10
SE 105 71 Stockholm
SWEDEN 

Svenska Handelsbanken
Stockholm 

SWITZERLAND 

UBS Switzerland AG
45 Bahnhofstrasse
8021 Zurich
SWITZERLAND 

UBS Switzerland AG
Zurich 

TAIWAN 

JPMorgan Chase Bank, N.A.**
8th Floor, Cathay Xin Yi Trading Building
No. 108, Section 5, Xin Yi Road
Taipei 11047
TAIWAN 

JPMorgan Chase Bank, N.A.**
Taipei 

*TANZANIA* 

Stanbic Bank Tanzania Limited
Stanbic Centre
Corner Kinondoni and A.H. Mwinyi Roads
P.O. Box 72648
Dar es Salaam
TANZANIA 

Stanbic Bank Tanzania Limited
Dar es Salaam 

*RESTRICTED SERVICE ONLY.  PLEASE CONTACT YOUR RELATIONSHIP MANAGER FOR FURTHER INFORMATION* 

THAILAND 

Standard Chartered Bank (Thai) Public Company Limited
14th Floor, Zone B
Sathorn Nakorn Tower
90 North Sathorn Road Bangrak
Silom, Bangrak
Bangkok 10500
THAILAND 

Standard Chartered Bank (Thai) Public Company Limited
Bangkok 

TRINIDAD AND TOBAGO 

Republic Bank Limited
9 17 Park Street
Port of Spain
TRINIDAD AND TOBAGO 

Republic Bank Limited
Port of Spain 

TUNISIA 

Banque Internationale Arabe de Tunisie, S.A.
70 72 Avenue Habib Bourguiba
P.O. Box 520
Tunis 1000
TUNISIA 

Banque Internationale Arabe de Tunisie, S.A.
Tunis 

TURKEY 

Citibank A.S.
Inkilap Mah., Yilmaz Plaza
O. Faik Atakan Caddesi No: 3
34768 Umraniye, Istanbul
TURKEY 

JPMorgan Chase Bank, N.A.**
Istanbul 

UGANDA 

Standard Chartered Bank Uganda Limited
5 Speke Road
P.O. Box 7111
Kampala
UGANDA 

Standard Chartered Bank Uganda Limited
Kampala 

*UKRAINE* 

PJSC Citibank
16 G Dilova Street
03150 Kiev
UKRAINE 

PJSC Citibank
Kiev

JPMorgan Chase Bank, N.A.**
New York 

*RESTRICTED SERVICE ONLY.  PLEASE CONTACT YOUR RELATIONSHIP MANAGER FOR FURTHER INFORMATION* 

UNITED ARAB EMIRATES   ADX 

HSBC Bank Middle East Limited
Emaar Square, Level 4, Building No. 5
P.O. Box 502601
Dubai
UNITED ARAB EMIRATES 

The National Bank of Abu Dhabi
Abu Dhabi 

UNITED ARAB EMIRATES   DFM 

HSBC Bank Middle East Limited
Emaar Square, Level 4, Building No. 5
P.O. Box 502601
Dubai
UNITED ARAB EMIRATES 

The National Bank of Abu Dhabi
Abu Dhabi 

UNITED ARAB EMIRATES   NASDAQ DUBAI 

HSBC Bank Middle East Limited
Emaar Square, Level 4, Building No. 5
P.O. Box 502601
Dubai
UNITED ARAB EMIRATES 

JPMorgan Chase Bank, N.A. **
New York 

UNITED KINGDOM 

JPMorgan Chase Bank, N.A.**
25 Bank Street, Canary Wharf
London E14 5JP
UNITED KINGDOM

Deutsche Bank AG Depository and Clearing Centre
10 Bishops Square
London E1 6EG
UNITED KINGDOM 

JPMorgan Chase Bank, N.A.**
London



Varies by currency 

UNITED STATES 

JPMorgan Chase Bank, N.A.**
4 New York Plaza
New York NY 10004
UNITED STATES 

JPMorgan Chase Bank, N.A.**
New York 

URUGUAY 

Banco Itaú Uruguay S.A.
Zabala 1463
11000 Montevideo
URUGUAY 

Banco Itaú Uruguay S.A.
Montevideo 

VENEZUELA 

Citibank, N.A.
Avenida Casanova
Centro Comercial El Recreo
Torre Norte, Piso 19
Caracas 1050
VENEZUELA 

Citibank, N.A.
Caracas 

VIETNAM 

HSBC Bank (Vietnam) Ltd.
Centre Point
106 Nguyen Van Troi Street
Phu Nhuan District
Ho Chi Minh City
VIETNAM 

HSBC Bank (Vietnam) Ltd.
Ho Chi Minh City 

*WAEMU BENIN, BURKINA FASO, GUINEA BISSAU, IVORY COAST, MALI, NIGER, SENEGAL, TOGO* 

Standard Chartered Bank Côte d’Ivoire SA
23 Boulevard de la Republique 1
01 B.P. 1141
Abidjan 17
IVORY COAST 

Standard Chartered Bank Côte d’Ivoire SA
Abidjan 

*RESTRICTED SERVICE ONLY.  PLEASE CONTACT YOUR RELATIONSHIP MANAGER FOR FURTHER INFORMATION* 

ZAMBIA 

Standard Chartered Bank Zambia Plc
Standard Chartered House
Cairo Road
P.O. Box 32238
Lusaka 10101
ZAMBIA 

Standard Chartered Bank Zambia Plc
Lusaka 

*ZIMBABWE* 

Stanbic Bank Zimbabwe Limited
Stanbic Centre, 3rd Floor
59 Samora Machel Avenue
Harare
ZIMBABWE 

Stanbic Bank Zimbabwe Limited
Harare 

*RESTRICTED SERVICE ONLY.  PLEASE CONTACT YOUR RELATIONSHIP MANAGER FOR FURTHER INFORMATION* 

  

  

  

** J.P. Morgan affiliate 

Correspondent banks are listed for information only. 

  

  

  

This document is for information only and its contents are subject to change.  This document is intended neither to influence your investment decisions nor to amend or supplement any agreement governing your relations with J.P. Morgan. Neither this document nor any of its contents may be disclosed to any third party or used for any other purpose without the proper written consent of J.P. Morgan.  J.P. Morgan has gathered the information from a source it considers reliable, however, it cannot be responsible for inaccuracies, incomplete information or updating of the information furnished hereby. 

  

  

SCHEDULE 3 – SECURITIES DEPOSITORIES 

Market 

Depository 

Instruments 

ARGENTINA 

CVSA
(Caja de Valores S.A.) 

Equity, Corporate Debt, Government Debt 

AUSTRALIA 

ASX Settlement
(ASX Settlement Pty Limited)

Austraclear
(Austraclear Limited) 

Equity


Corporate Debt, Government Debt 

AUSTRIA 

OeKB CSD GmbH
(Oesterreichische Kontrollbank CSD GmbH) 

Equity, Corporate Debt, Government Debt 

BAHRAIN 

CSD
(Bahrain Bourse - Clearing, Settlement and Central Depository) 

Equity, Corporate Debt 

BANGLADESH 

BB
(Bangladesh Bank)

CDBL
(Central Depository Bangladesh Limited) 

Government Debt


Equity, Corporate Debt 

BELGIUM 

Euroclear Belgium
(Euroclear Belgium SA/NV)

NBB
(The National Bank of Belgium) 

Equity, Corporate Debt


Corporate Debt, Government Debt 

BERMUDA 

BSD
(Bermuda Stock Exchange - Bermuda Securities Depository) 

Equity, Corporate Debt, Government Debt 

BOTSWANA 

BoB
(Bank of Botswana)

CSDB
(Central Securities Depository of Botswana Ltd) 

Government Debt


Equity, Corporate Debt 

BRAZIL 

BM&FBOVESPA
(B3 S.A. -  BM&FBOVESPA)

CETIP
(B3 S.A. - CETIP)

SELIC
(Banco Central do Brasil - Sistema Especial de Liquidação e Custódia) 

Equity


Corporate Debt


Government Debt 

BULGARIA 

CDAD
(Central Depository AD)

BNB
(Bulgarian National Bank) 

Equity, Corporate Debt


Government Debt 

CANADA 

CDS Clearing
(CDS Clearing and Depository Services Inc.) 

Equity, Corporate Debt, Government Debt 

CHILE 

DCV
(Depósito Central de Valores S.A.) 

Equity, Corporate Debt, Government Debt 

CHINA A-SHARE 

CSDCC
(China Securities Depository and Clearing Corporation Limited)

SCH
(Shanghai Clearing House)

CCDC
(China Central Depository & Clearing Co., Ltd.) 

Equity, Corporate Debt, Government Debt



Short-term Corporate Debt


Corporate Debt, Government Debt 

CHINA B-SHARE 

CSDCC
(China Securities Depository and Clearing Corporation Limited) 

Equity 

CHINA CONNECT 

HKSCC - for China Connect
(Hong Kong Securities Clearing Company Limited) 

Equity 

COLOMBIA 

DCV
(Banco de la Républica de Colombia - Depósito Central de Valores)

DECEVAL
(Depósito Centralizado de Valores de Colombia S.A.) 

Government Debt



Equity, Corporate Debt, Government Debt 

COSTA RICA 

InterClear
(InterClear, S.A.) 

Equity, Corporate Debt, Government Debt 

CROATIA 

SKDD
(Središnje klirinško depozitarno društvo d.d.) 

Equity, Corporate Debt, Government Debt 

CYPRUS 

CDCR
(Cyprus Stock Exchange - Central Depository and Central Registry) 

Equity, Corporate Debt, Government Debt 

CZECH REPUBLIC 

CNB
(Ceská národní banka)

CDCP
(Centrální depozitár cenných papíru, a.s.) 

Short-Term Corporate Debt, Short-Term Government Debt

Equity, Long-Term Corporate Debt, Long-Term Government Debt 

DENMARK 

VP
(VP Securities A/S) 

Equity, Corporate Debt, Government Debt 

EGYPT 

MCDR
(Misr for Central Clearing, Depository and Registry)

CBE
(Central Bank of Egypt) 

Equity, Corporate Debt, Treasury Bonds



Treasury Bills 

ESTONIA 

ECSD
(Eesti Väärtpaberikeskus AS) 

Equity, Corporate Debt, Government Debt 

FINLAND 

Euroclear Finland
(Euroclear Finland Oy) 

Equity, Corporate Debt, Government Debt 

FRANCE 

Euroclear France
(Euroclear France SA) 

Equity, Corporate Debt, Government Debt 

GERMANY 

CBF
(Clearstream Banking AG) 

Equity, Corporate Debt, Government Debt 

GHANA 

CSD
(Central Securities Depository (GH) Ltd.) 

Equity, Corporate Debt, Government Debt 

GREECE 

BoG
(Bank of Greece)

ATHEXCSD
(Hellenic Central Securities Depository) 

Government Debt


Equity, Corporate Debt 

HONG KONG 

HKSCC
(Hong Kong Securities Clearing Company Limited)

CMU
(Hong Kong Monetary Authority - Central Moneymarkets Unit) 

Equity, Corporate Debt, Government Debt



Corporate Debt, Government Debt 

HUNGARY 

KELER
(Központi Elszámolóház és Értéktár (Budapest) Zrt.) 

Equity, Corporate Debt, Government Debt 

ICELAND 

Nasdaq CSD Iceland hf.
(Nasdaq verðbréfamiðstöð hf.) 

Equity, Corporate Debt, Government Debt 

INDIA 

NSDL
(National Securities Depository Limited)

CDSL
(Central Depository Services (India) Limited)

RBI
(Reserve Bank of India) 

Equity, Corporate Debt


Equity, Corporate Debt



Government Debt 

INDONESIA 

KSEI
(PT Kustodian Sentral Efek Indonesia)

BI
(Bank Indonesia) 

Equity, Corporate Debt, Government Debt*
(*acts as sub-registry)

Government Debt 

INTERNATIONAL SECURITIES MARKET 

Euroclear Bank
(Euroclear Bank SA/NV)

CBL
(Clearstream Banking S.A.) 

Internationally Traded Debt, Equity


Internationally Traded Debt, Equity 

IRELAND 

EUI
(Euroclear U.K. & Ireland Limited) 

Equity, Corporate Debt 

ISRAEL 

TASE-CH
(Tel-Aviv Stock Exchange Clearing House Ltd.) 

Equity, Corporate Debt, Government Debt 

ITALY 

Monte Titoli
(Monte Titoli S.p.A.) 

Equity, Corporate Debt, Government Debt 

JAPAN 

JASDEC
(Japan Securities Depository Center, Incorporated)

BOJ
(Bank of Japan) 

Equity, Corporate Debt



Government Debt 

JORDAN 

SDC
(Securities Depository Center) 

Equity, Corporate Debt 

KAZAKHSTAN 

KACD
(Central Securities Depository Joint-Stock Company) 

Equity, Corporate Debt, Government Debt 

KENYA 

CDS
(Central Bank of Kenya - Central Depository System)

CDSC
(Central Depository and Settlement Corporation Limited) 

Government Debt



Equity, Corporate Debt 

KUWAIT 

KCC
(The Kuwait Clearing Company K.S.C.) 

Equity, Corporate Debt 

LATVIA 

LCD
(Latvian Central Depository) 

Equity, Corporate Debt, Government Debt 

LITHUANIA 

CSDL
(Central Securities Depository of Lithuania) 

Equity, Corporate Debt, Government Debt 

LUXEMBOURG 

CBL
(Clearstream Banking S.A.) 

Equity, Corporate Debt, Government Debt 

MALAYSIA 

Bursa Depository
(Bursa Malaysia Depository Sdn Bhd)

BNM
(Bank Negara Malaysia) 

Equity, Corporate Debt


Government Debt 

MAURITIUS 

CDS
(Central Depository & Settlement Co. Ltd)

BOM
(Bank of Mauritius) 

Equity, Corporate Debt


Government Debt 

MEXICO 

Indeval
(S.D. Indeval S.A. de C.V.) 

Equity, Corporate Debt, Government Debt 

MOROCCO 

Maroclear
(Maroclear) 

Equity, Corporate Debt, Government Debt 

NETHERLANDS 

Euroclear Nederland
(Euroclear Nederland) 

Equity, Corporate Debt, Government Debt 

NEW ZEALAND 

NZCSD
(New Zealand Central Securities Depository Limited) 

Equity, Corporate Debt, Government Debt 

NIGERIA 

CSCS
(Central Securities Clearing System Plc)

CBN
(Central Bank of Nigeria) 

Equity, Corporate Debt


Government Debt 

NORWAY 

VPS
(Verdipapirsentralen ASA) 

Equity, Corporate Debt, Government Debt 

OMAN 

MCD
(Muscat Clearing and Depository Co. (S.A.O.C)) 

Equity, Corporate Debt, Government Debt 

PAKISTAN 

SBP
(State Bank of Pakistan)

CDC
(Central Depository Company of Pakistan Limited) 

Government Debt


Equity, Corporate Debt 

PERU 

CAVALI
(CAVALI S.A. I.C.L.V.) 

Equity, Corporate Debt, Government Debt 

PHILIPPINES 

PDTC
(Philippine Depository and Trust Corporation)

RoSS
(Bureau of Treasury - Registry of Scripless Securities) 

Equity, Corporate Debt



Government Debt 

POLAND 

KDPW
(Krajowy Depozyt Papierów Wartosciowych S.A.)

RPW
(National Bank of Poland - Registry of Securities) 

Equity, Corporate Debt, Long-Term Government Debt


Short-Term Government Debt 

PORTUGAL 

INTERBOLSA
(Sociedade Gestora de Sistemas de Liquidação e de Sistemas Centralizados de Valores Mobiliários, S.A.) 

Equity, Corporate Debt, Government Debt 

QATAR 

QCSD
(Qatar Central Securities Depository) 

Equity, Government Debt 

ROMANIA 

CD S.A.
(Central Depository S.A.)

NBR
(National Bank of Romania) 

Equity, Corporate Debt


Government Debt 

RUSSIA 

NSD
(National Settlement Depository) 

Equity, Corporate Debt, Government Debt 

SAUDI ARABIA 

SDCC
(Securities Depository Center Company) 

Equity, Corporate Debt, Government Debt 

SERBIA 

CSD
(Central Securities Depository and Clearing House) 

Equity, Corporate Debt, Government Debt 

SINGAPORE 

CDP
(The Central Depository (Pte) Limited)

MAS
(Monetary Authority of Singapore) 

Equity, Corporate Debt, Government Securities

Government Securities 

SLOVAK REPUBLIC 

CDCP
(Centrálny depozitár cenných papierov SR, a.s.) 

Equity, Corporate Debt, Government Debt 

SLOVENIA 

KDD
(Centralna klirinško depotna družba d.d.) 

Equity, Corporate Debt, Government Debt 

SOUTH AFRICA 

Strate
(Strate (Pty) Limited) 

Equity, Corporate Debt, Government Debt 

SOUTH KOREA 

KSD
(Korea Securities Depository) 

Equity, Corporate Debt, Government Debt 

SPAIN 

IBERCLEAR
(Sociedad de Sistemas) 

Equity, Corporate Debt, Government Debt 

SRI LANKA 

CDS
(Central Depository Systems (Pvt.) Ltd.)

LankaSecure
(Central Bank of Sri Lanka - LankaSecure) 

Equity, Corporate Debt


Government Debt 

SWEDEN 

Euroclear Sweden
(Euroclear Sweden AB) 

Equity, Corporate Debt, Government Debt 

SWITZERLAND 

SIS
(SIX SIS AG) 

Equity, Corporate Debt, Government Debt 

TAIWAN 

TDCC
(Taiwan Depository and Clearing Corporation)

CBC
(Central Bank of the Republic of China (Taiwan)) 

Equity, Corporate Debt



Government Debt 

TANZANIA 

CDS
(Dar es Salaam Stock Exchange Central Depository System) 

Equity, Corporate Debt 

THAILAND 

TSD
(Thailand Securities Depository Company Limited) 

Equity, Corporate Debt, Government Debt 

TRINIDAD AND TOBAGO 

TTCD
(Trinidad and Tobago Central Depository Limited) 

Equity, Corporate Debt, Government Debt 

TUNISIA 

Tunisie Clearing
(Tunisie Clearing) 

Equity, Corporate Debt, Government Debt 

TURKEY 

CBRT
(Türkiye Cumhuriyet Merkez Bankasi A.S.)

CRA
(Merkezi Kayit Kurulusu A.S.) 

Government Debt



Equity, Corporate Debt, Government Debt 

UGANDA 

CSD
(Bank of Uganda - Central Securities Depository)

SCD
(Uganda Securities Exchange - Securities Central Depository) 

Government Debt



Equity, Corporate Debt 

UKRAINE 

NDU
(National Depository of Ukraine) 

Equity, Corporate Debt 

UNITED ARAB EMIRATES - ADX 

ADX
(Abu Dhabi Securities Exchange) 

Equity, Corporate Debt, Government Debt 

UNITED ARAB EMIRATES - DFM 

DFM
(Dubai Financial Market) 

Equity, Corporate Debt, Government Debt 

UNITED ARAB EMIRATES - NASDAQ DUBAI 

NASDAQ Dubai
(NASDAQ Dubai Limited) 

Corporate Debt 

UNITED KINGDOM 

EUI
(Euroclear U.K. & Ireland Limited) 

Equity, Corporate Debt, Government Debt 

UNITED STATES 

FRB
(Federal Reserve Bank)

DTC
(Depository Trust Company) 

Government Debt, Mortgage Backed Securities

Equity, Corporate Debt 

URUGUAY 

BCU
(Banco Central del Uruguay) 

Government Debt 

VENEZUELA 

CVV
(Caja Venezolana de Valores, S.A.)

BCV
(Banco Central de Venezuela) 

Equity, Corporate Debt


Government Debt 

VIETNAM 

VSD
(Vietnam Securities Depository) 

Equity, Corporate Debt, Government Debt 

WAEMU - BENIN, BURKINA FASO, GUINEA-BISSAU, IVORY COAST, MALI, NIGER, SENEGAL, TOGO 

DC/BR
(Le Dépositaire Central / Banque de Règlement) 

Equity, Corporate Debt, Government Debt 

ZAMBIA 

LuSE CSD
(Lusaka Stock Exchange Central Shares Depository)

BoZ
(Bank of Zambia) 

Equity, Corporate Debt, Treasury Bonds



Government Debt 

ZIMBABWE 

CDC
(Chengetedzai Depository Company Limited) 

Equity 

  

  

  

  

  

  

This document is for information only and its contents are subject to change.  This document is intended neither to influence your investment decisions nor to amend or supplement any agreement governing your relations with J.P. Morgan. Neither this document nor any of its contents may be disclosed to any third party or used for any other purpose without the proper written consent of J.P. Morgan.  J.P. Morgan has gathered the information from a source it considers reliable, however, it cannot be responsible for inaccuracies, incomplete information or updating of the information furnished hereby. 

  

  

  

  

 

EXHIBIT 1—Amendment 2 

  

The following is an amendment, dated as of December 22, 2017 (“Amendment”), to the Amended and Restated Global Custody Agreement, dated August 14, 2017, as amended from time to time (the “Agreement”), by and between JPMorgan Chase Bank, N.A. (“Bank”) and each open-end management investment company listed on Exhibit 1 thereto (each, a “Trust”).  This Amendment serves to update the names of the Trusts and certain of their portfolios (each, a “Fund”) listed on Exhibit 1.  Bank and Customer hereby agree that all of the terms and conditions as set forth in the Agreement are hereby incorporated by reference with respect to the following Trusts and Funds listed below.  Capitalized terms used but not defined in this Amendment have the meanings ascribed to them in the Agreement.  

  

Vanguard Admiral Funds 

Vanguard S&P 500 Growth Index Fund 

Vanguard S&P 500 Value Index Fund 

Vanguard S&P Mid-Cap 400 Growth Index Fund 

Vanguard S&P Mid-Cap 400 Index Fund 

Vanguard S&P Mid-Cap 400 Value Index Fund 

Vanguard S&P Small-Cap 600 Growth Index Fund 

Vanguard S&P Small-Cap 600 Index Fund 

Vanguard S&P Small-Cap 600 Value Index Fund 

  

Vanguard Bond Index Funds 

Vanguard Inflation-Protected Securities Fund  

Vanguard Intermediate-Term Bond Index Fund 

Vanguard Long-Term Bond Index Fund 

Vanguard Short-Term Bond Index Fund 

Vanguard Total Bond Market Index Fund 

Vanguard Total Bond Market II Index Fund 

  

Vanguard Chester Funds 

Vanguard Institutional Target Retirement 2015 Fund 

Vanguard Institutional Target Retirement 2020 Fund 

Vanguard Institutional Target Retirement 2025 Fund 

Vanguard Institutional Target Retirement 2030 Fund 

Vanguard Institutional Target Retirement 2035 Fund 

Vanguard Institutional Target Retirement 2040 Fund 

Vanguard Institutional Target Retirement 2045 Fund 

Vanguard Institutional Target Retirement 2050 Fund 

Vanguard Institutional Target Retirement 2055 Fund 

Vanguard Institutional Target Retirement 2060 Fund 

Vanguard Institutional Target Retirement 2065 Fund 

Vanguard Institutional Target Retirement Income Fund 

Vanguard Target Retirement 2015 Fund 

Vanguard Target Retirement 2020 Fund 

Vanguard Target Retirement 2025 Fund 

Vanguard Target Retirement 2030 Fund 

Vanguard Target Retirement 2035 Fund 

Vanguard Target Retirement 2040 Fund 

Vanguard Target Retirement 2045 Fund 

Vanguard Target Retirement 2050 Fund 

Vanguard Target Retirement 2055 Fund 

Vanguard Target Retirement 2060 Fund 

Vanguard Target Retirement 2065 Fund 

Vanguard Target Retirement Income Fund 

  

Vanguard Fixed Income Securities Funds 

Vanguard GNMA Fund 

Vanguard REIT II Index Fund 

  

Vanguard Index Funds 

Vanguard Extended Market Index Fund 

Vanguard Mid-Cap Growth Index Fund 

Vanguard Mid-Cap Index Fund 

Vanguard Mid-Cap Value Index Fund 

Vanguard Small-Cap Growth Index Fund 

Vanguard Small-Cap Index Fund 

Vanguard Small-Cap Value Index Fund 

Vanguard Total Stock Market Index Fund 

  

Vanguard International Equity Index Funds 

Vanguard Emerging Markets Stock Index Fund 

  

Vanguard Malvern Funds 

Vanguard Core Bond Fund 

Vanguard Institutional Intermediate-Term Bond Fund 

Vanguard Institutional Short-Term Bond Fund 

  

Vanguard Scottsdale Funds 

Vanguard Intermediate-Term Corporate Bond Index Fund 

Vanguard Intermediate-Term Treasury Index Fund 

Vanguard Long-Term Corporate Bond Index Fund 

Vanguard Long-Term Treasury Index Fund 

Vanguard Mortgage-Backed Securities Index Fund 

Vanguard Short-Term Corporate Bond Index Fund 

Vanguard Short-Term Treasury Index Fund 

Vanguard Total Corporate Bond ETF 

  

Vanguard Specialized Funds  

Vanguard Precious Metals and Mining Fund 

Vanguard REIT Index Fund 

  

Vanguard STAR Funds 

Vanguard LifeStrategy Conservative Growth Fund 

Vanguard LifeStrategy Growth Fund 

Vanguard LifeStrategy Income Fund 

Vanguard LifeStrategy Moderate Growth Fund 

Vanguard STAR Fund 

Vanguard Total International Stock Index Fund 

  

Vanguard Tax-Managed Funds 

Vanguard Tax-Managed Balanced Fund 

Vanguard Tax-Managed Capital Appreciation Fund 

Vanguard Tax-Managed Small-Cap Fund 

  

Vanguard Trustees’ Equity Fund 

Vanguard Diversified Equity Fund 

Vanguard International Value Fund 

  

Vanguard Valley Forge Funds 

Vanguard Balanced Index Fund 

Vanguard Managed Payout Fund 

  

Vanguard Variable Insurance Funds 

Conservative Allocation Portfolio 

Equity Index Portfolio 

Global Bond Index Portfolio 

Mid-Cap Index Portfolio 

Moderate Allocation Portfolio 

REIT Index Portfolio 

Total International Stock Market Index Portfolio 

Total Stock Market Index Portfolio 

  

Vanguard Wellington Fund 

Vanguard Wellington Fund 

  

Vanguard Whitehall Funds 

Vanguard High Dividend Yield Index Fund 

Vanguard International Explorer Fund 

  

Vanguard World Fund 

Vanguard Extended Duration Treasury Index Fund 

Vanguard Global Wellesley Income Fund 

Vanguard Global Wellington Fund 

  

  

  

  

  

(Rest of page left intentionally blank) 

  

  

  

  

  

  

 

Bank and each following Customer hereby agree that all of the terms and conditions as set forth in the Agreement except for Sections 2.1 and 2.2 are hereby incorporated by reference with respect to the Trusts and Funds listed below limited to their use of account number P 62749 in Vanguard Directly Managed Securities Lending transactions: 

  

Vanguard Chester Funds 

Vanguard PRIMECAP Fund 

  

Vanguard Explorer Fund 

Vanguard Explorer Fund 

  

Vanguard Fenway Funds 

Vanguard Equity Income Fund 

Vanguard PRIMECAP Core Fund 

  

Vanguard Horizon Funds 

Vanguard Capital Opportunity Fund 

Vanguard Global Equity Fund 

Vanguard Strategic Equity Fund 

Vanguard Strategic Small-Cap Equity Fund 

  

Vanguard Index Funds 

Vanguard Extended Market Index Fund 

Vanguard 500 Index Fund 

Vanguard Large-Cap Index Fund 

Vanguard Mid-Cap Index Fund 

Vanguard Small Cap Growth Index Fund 

Vanguard Small Cap Value Index Fund 

Vanguard Value Index Fund 

  

Vanguard Institutional Index Funds 

Vanguard Institutional Index Fund 

Vanguard Institutional Total Stock Market Index Fund 

  

Vanguard Malvern Funds 

Vanguard Capital Value Fund 

Vanguard U.S. Value Fund 

  

Vanguard Morgan Growth Fund 

Vanguard Morgan Growth Fund 

  

Vanguard Quantitative Funds 

Vanguard Growth and Income Fund 

Vanguard Structured Broad Market Fund 

Vanguard Structured Large-Cap Equity Fund 

  

  

Vanguard Scottsdale Funds 

Vanguard Explorer Value Fund 

Vanguard Russell 1000 Index Fund 

Vanguard Russell 1000 Value Index Fund 

Vanguard Russell 1000 Growth Index Fund 

Vanguard Russell 2000 Index Fund 

Vanguard Russell 2000 Value Index Fund 

Vanguard Russell 2000 Growth Index Fund 

Vanguard Russell 3000 Index Fund 

  

Vanguard Specialized Funds  

Vanguard Dividend Growth Fund 

Vanguard Energy Fund 

Vanguard REIT Index Fund 

  

Vanguard Trustees’ Equity Fund 

Vanguard Emerging Markets Select Stock Fund 

Vanguard International Value Fund 

  

Vanguard Variable Insurance Funds 

Vanguard Balanced Portfolio 

Vanguard Capital Growth Portfolio 

Vanguard Diversified Value Portfolio 

Vanguard Equity Income Portfolio 

Vanguard Equity Index Portfolio 

Vanguard Growth Portfolio 

Vanguard Mid-Cap Index Portfolio 

Vanguard REIT Index Portfolio 

Vanguard Small Company Growth Portfolio 

Vanguard International Portfolio 

  

Vanguard Whitehall Funds 

Vanguard Global Minimum Volatility Fund 

Vanguard High Dividend Yield Index Fund 

Vanguard Mid-Cap Growth Fund 

Vanguard Selected Value Fund 

  

Vanguard Windsor Funds 

Vanguard Windsor Fund 

Vanguard Windsor II Fund 

  

  

  

  

  

  

Vanguard World Fund 

Vanguard Consumer Discretionary Index Fund 

Vanguard Consumer Staples Index Fund 

Vanguard Energy Index Fund 

Vanguard FTSE Social Index Fund 

Vanguard Financials Index Fund 

Vanguard Health Care Index Fund 

Vanguard Industrials Index Fund 

Vanguard Information Technology Index Fund 

Vanguard Materials Index Fund 

Vanguard Mega Cap Index Fund 

Vanguard Mega Cap Growth Index Fund 

Vanguard Mega Cap Value Index Fund 

Vanguard Telecommunications Services Index Fund 

Vanguard U.S. Growth Fund 

Vanguard Utilities Index Fund 

  

  

  

  

  

  

  

  

  

  

(Rest of page left intentionally blank) 

  

 

IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute and deliver this Amendment as of the date set forth above.  

  

  

JPMORGAN CHASE BANK, N.A. 

  

EACH OF THE OPEN-END MANAGEMENT INVESTMENT COMPANIES LISTED ON EXHIBIT 1 HERETO 

  

  

  

  

  

/s/ Thomas J. Higgins 

By: 

  

By:  

  

  

  

  

  

Name: 

  

  

Name: 

Thomas J. Higgins 

  

  

  

  

  

Title: 

  

  

Title: 

Chief Financial Officer 

  

  

  

 

AMENDMENT TO AMENDED AND RESTATED GLOBAL CUSTODY AGREEMENT 

  

The following is an amendment, dated July __, 2018, (the “Amendment”) to the Amended and Restated Global Custody Agreement, dated August 14, 2017, as amended from time to time (the “Agreement”), by and between JPMorgan Chase Bank, N.A. (the “Bank”) and each open-end management investment company listed on Exhibit 1 thereto (each, a “Trust”).  For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties, intending to be legally bound, agree as follows: 

  

1.

Information Concerning Deposits at Bank.  Section 10.5(c) of the Agreement is hereby deleted in its entirety and replaced with the following: 

  

(c) In the event that (i) Bank incurs a loss attributable to Country Risk with respect to any cash balance it maintains on deposit at a Subcustodian or other correspondent bank in regard to its global custody or trust businesses in the country where the Subcustodian or other correspondent bank is located or (ii) J.P. Morgan Bank International LLC incurs a loss attributable to Country Risk with respect to any cash balance it maintains on deposit at its correspondent bank in Russia in regard to its direct custody business, Bank may set such loss off against Customer’s Cash Account to the extent that such loss is directly attributable to Customer’s investments in that market. 

  

2.

Exhibit 1.  Exhibit 1 to the Agreement is hereby deleted in its entirety and replaced with the following: 

  

Vanguard Admiral Funds 

Vanguard S&P 500 Growth Index Fund 

Vanguard S&P 500 Value Index Fund 

Vanguard S&P Mid-Cap 400 Growth Index Fund 

Vanguard S&P Mid-Cap 400 Index Fund 

Vanguard S&P Mid-Cap 400 Value Index Fund 

Vanguard S&P Small-Cap 600 Growth Index Fund 

Vanguard S&P Small-Cap 600 Index Fund 

Vanguard S&P Small-Cap 600 Value Index Fund 

  

Vanguard Bond Index Funds 

Vanguard Inflation-Protected Securities Fund  

Vanguard Intermediate-Term Bond Index Fund 

Vanguard Long-Term Bond Index Fund 

Vanguard Short-Term Bond Index Fund 

Vanguard Total Bond Market Index Fund 

Vanguard Total Bond Market II Index Fund 

  

Vanguard Chester Funds 

Vanguard Institutional Target Retirement 2015 Fund 

Vanguard Institutional Target Retirement 2020 Fund 

Vanguard Institutional Target Retirement 2025 Fund 

Vanguard Institutional Target Retirement 2030 Fund 

Vanguard Institutional Target Retirement 2035 Fund 

Vanguard Institutional Target Retirement 2040 Fund 

Vanguard Institutional Target Retirement 2045 Fund 

Vanguard Institutional Target Retirement 2050 Fund 

Vanguard Institutional Target Retirement 2055 Fund 

Vanguard Institutional Target Retirement 2060 Fund 

Vanguard Institutional Target Retirement 2065 Fund 

Vanguard Institutional Target Retirement Income Fund 

Vanguard Target Retirement 2015 Fund 

Vanguard Target Retirement 2020 Fund 

Vanguard Target Retirement 2025 Fund 

Vanguard Target Retirement 2030 Fund 

Vanguard Target Retirement 2035 Fund 

Vanguard Target Retirement 2040 Fund 

Vanguard Target Retirement 2045 Fund 

Vanguard Target Retirement 2050 Fund 

Vanguard Target Retirement 2055 Fund 

Vanguard Target Retirement 2060 Fund 

Vanguard Target Retirement 2065 Fund 

Vanguard Target Retirement Income Fund 

  

Vanguard Fixed Income Securities Funds 

Vanguard GNMA Fund 

Vanguard REIT II Index Fund 

  

Vanguard Index Funds 

Vanguard Extended Market Index Fund 

Vanguard Mid-Cap Growth Index Fund 

Vanguard Mid-Cap Index Fund 

Vanguard Mid-Cap Value Index Fund 

Vanguard Small-Cap Growth Index Fund 

Vanguard Small-Cap Index Fund 

Vanguard Small-Cap Value Index Fund 

Vanguard Total Stock Market Index Fund 

  

Vanguard International Equity Index Funds 

Vanguard Emerging Markets Stock Index Fund 

  

Vanguard Malvern Funds 

Vanguard Core Bond Fund 

Vanguard Institutional Intermediate-Term Bond Fund 

Vanguard Institutional Short-Term Bond Fund 

  

Vanguard Scottsdale Funds 

Vanguard Intermediate-Term Corporate Bond Index Fund 

Vanguard Intermediate-Term Treasury Index Fund 

Vanguard Long-Term Corporate Bond Index Fund 

Vanguard Long-Term Treasury Index Fund 

Vanguard Mortgage-Backed Securities Index Fund 

Vanguard Short-Term Corporate Bond Index Fund 

Vanguard Short-Term Treasury Index Fund 

Vanguard Total Corporate Bond ETF 

Vanguard Total World Bond ETF 

  

Vanguard Specialized Funds  

Vanguard Precious Metals and Mining Fund 

Vanguard REIT Index Fund 

  

Vanguard STAR Funds 

Vanguard LifeStrategy Conservative Growth Fund 

Vanguard LifeStrategy Growth Fund 

Vanguard LifeStrategy Income Fund 

Vanguard LifeStrategy Moderate Growth Fund 

Vanguard STAR Fund 

Vanguard Total International Stock Index Fund 

  

Vanguard Tax-Managed Funds 

Vanguard Tax-Managed Balanced Fund 

Vanguard Tax-Managed Capital Appreciation Fund 

Vanguard Tax-Managed Small-Cap Fund 

  

Vanguard Trustees’ Equity Fund 

Vanguard Diversified Equity Fund 

Vanguard International Value Fund 

  

Vanguard Valley Forge Funds 

Vanguard Balanced Index Fund 

Vanguard Managed Payout Fund 

  

Vanguard Variable Insurance Funds 

Conservative Allocation Portfolio 

Equity Index Portfolio 

Global Bond Index Portfolio 

Mid-Cap Index Portfolio 

Moderate Allocation Portfolio 

REIT Index Portfolio 

Total International Stock Market Index Portfolio 

Total Stock Market Index Portfolio 

  

Vanguard Wellington Fund 

Vanguard Wellington Fund 

  

Vanguard Whitehall Funds 

Vanguard High Dividend Yield Index Fund 

Vanguard International Explorer Fund 

  

Vanguard World Fund 

Vanguard Extended Duration Treasury Index Fund 

Vanguard Global Wellesley Income Fund 

Vanguard Global Wellington Fund 

Vanguard ESG Stock ETF 

Vanguard ESG International Stock ETF 

  

Bank and each following Customer hereby agree that all of the terms and conditions as set forth in the Agreement except for Sections 2.1 and 2.2 are hereby incorporated by reference with respect to the Trusts and Funds listed below limited to their use of account number P 62749 in Vanguard Directly Managed Securities Lending transactions: 

  

Vanguard Chester Funds 

Vanguard PRIMECAP Fund 

  

Vanguard Explorer Fund 

Vanguard Explorer Fund 

  

Vanguard Fenway Funds 

Vanguard Equity Income Fund 

Vanguard PRIMECAP Core Fund 

  

Vanguard Horizon Funds 

Vanguard Capital Opportunity Fund 

Vanguard Global Equity Fund 

Vanguard Strategic Equity Fund 

Vanguard Strategic Small-Cap Equity Fund 

  

Vanguard Index Funds 

Vanguard Extended Market Index Fund 

Vanguard 500 Index Fund 

Vanguard Large-Cap Index Fund 

Vanguard Mid-Cap Index Fund 

Vanguard Small Cap Growth Index Fund 

Vanguard Small Cap Value Index Fund 

Vanguard Value Index Fund 

  

Vanguard Institutional Index Funds 

Vanguard Institutional Index Fund 

Vanguard Institutional Total Stock Market Index Fund 

  

Vanguard Malvern Funds 

Vanguard Capital Value Fund 

Vanguard U.S. Value Fund 

  

Vanguard Morgan Growth Fund 

Vanguard Morgan Growth Fund 

  

Vanguard Quantitative Funds 

Vanguard Growth and Income Fund 

Vanguard Structured Broad Market Fund 

Vanguard Structured Large-Cap Equity Fund 

  

Vanguard Scottsdale Funds 

Vanguard Explorer Value Fund 

Vanguard Russell 1000 Index Fund 

Vanguard Russell 1000 Value Index Fund 

Vanguard Russell 1000 Growth Index Fund 

Vanguard Russell 2000 Index Fund 

Vanguard Russell 2000 Value Index Fund 

Vanguard Russell 2000 Growth Index Fund 

Vanguard Russell 3000 Index Fund 

  

Vanguard Specialized Funds  

Vanguard Dividend Growth Fund 

Vanguard Energy Fund 

Vanguard REIT Index Fund 

  

Vanguard Trustees’ Equity Fund 

Vanguard Emerging Markets Select Stock Fund 

Vanguard International Value Fund 

  

Vanguard Variable Insurance Funds 

Vanguard Balanced Portfolio 

Vanguard Capital Growth Portfolio 

Vanguard Diversified Value Portfolio 

Vanguard Equity Income Portfolio 

Vanguard Equity Index Portfolio 

Vanguard Growth Portfolio 

Vanguard Mid-Cap Index Portfolio 

Vanguard REIT Index Portfolio 

Vanguard Small Company Growth Portfolio 

Vanguard International Portfolio 

  

Vanguard Whitehall Funds 

Vanguard Global Minimum Volatility Fund 

Vanguard High Dividend Yield Index Fund 

Vanguard Mid-Cap Growth Fund 

Vanguard Selected Value Fund 

  

Vanguard Windsor Funds 

Vanguard Windsor Fund 

Vanguard Windsor II Fund 

  

Vanguard World Fund 

Vanguard Consumer Discretionary Index Fund 

Vanguard Consumer Staples Index Fund 

Vanguard Energy Index Fund 

Vanguard FTSE Social Index Fund 

Vanguard Financials Index Fund 

Vanguard Health Care Index Fund 

Vanguard Industrials Index Fund 

Vanguard Information Technology Index Fund 

Vanguard Materials Index Fund 

Vanguard Mega Cap Index Fund 

Vanguard Mega Cap Growth Index Fund 

Vanguard Mega Cap Value Index Fund 

Vanguard Telecommunications Services Index Fund 

Vanguard U.S. Growth Fund 

Vanguard Utilities Index Fund 

  

3.

Miscellaneous.  Except as modified by this Amendment, the Agreement shall remain unmodified, in full force and effect and all terms and conditions of the Agreement are hereby incorporated into and made part of this Amendment as if fully set forth herein.   

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

(Rest of page left intentionally blank) 

  

 

IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute and deliver this Amendment as of the date set forth above.  

  

  

JPMORGAN CHASE BANK, N.A. 

  

EACH OF THE OPEN-END MANAGEMENT INVESTMENT COMPANIES LISTED ON EXHIBIT 1 HERETO 

  

  

/s/ Brian Eckert 

  

  

  

/s/ Thomas J. Higgins 

By: 

  

By: 

  

  

  

  

  

Name: 

Brian Eckert 

  

Name: 

Thomas J. Higgins 

  

  

  

  

  

Title: 

Executive Director 

  

Title: 

Chief Financial Officer 

  

  

  

 

AMENDMENT TO AMENDED AND RESTATED GLOBAL CUSTODY AGREEMENT 

  

The following is an amendment, dated October _2_, 2018, (the “Amendment”) to the Amended and Restated Global Custody Agreement, dated August 14, 2017, as amended from time to time (the “Agreement”), by and between JPMorgan Chase Bank, N.A. (the “Bank”) and each open-end management investment company listed on Exhibit 1 thereto (each, a “Trust”).  For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties, intending to be legally bound, agree as follows: 

  

  

1.

Exhibit 1.  Exhibit 1 to the Agreement is hereby deleted in its entirety and replaced with the following: 

  

Vanguard Admiral Funds 

Vanguard S&P 500 Growth Index Fund 

Vanguard S&P 500 Value Index Fund 

Vanguard S&P Mid-Cap 400 Growth Index Fund 

Vanguard S&P Mid-Cap 400 Index Fund 

Vanguard S&P Mid-Cap 400 Value Index Fund 

Vanguard S&P Small-Cap 600 Growth Index Fund 

Vanguard S&P Small-Cap 600 Index Fund 

Vanguard S&P Small-Cap 600 Value Index Fund 

  

Vanguard Bond Index Funds 

Vanguard Inflation-Protected Securities Fund  

Vanguard Intermediate-Term Bond Index Fund 

Vanguard Long-Term Bond Index Fund 

Vanguard Short-Term Bond Index Fund 

Vanguard Total Bond Market Index Fund 

Vanguard Total Bond Market II Index Fund 

  

Vanguard Charlotte Funds 

Vanguard Global Credit Bond Fund 

  

Vanguard Chester Funds 

Vanguard Institutional Target Retirement 2015 Fund 

Vanguard Institutional Target Retirement 2020 Fund 

Vanguard Institutional Target Retirement 2025 Fund 

Vanguard Institutional Target Retirement 2030 Fund 

Vanguard Institutional Target Retirement 2035 Fund 

Vanguard Institutional Target Retirement 2040 Fund 

Vanguard Institutional Target Retirement 2045 Fund 

Vanguard Institutional Target Retirement 2050 Fund 

Vanguard Institutional Target Retirement 2055 Fund 

Vanguard Institutional Target Retirement 2060 Fund 

Vanguard Institutional Target Retirement 2065 Fund 

Vanguard Institutional Target Retirement Income Fund 

Vanguard Target Retirement 2015 Fund 

Vanguard Target Retirement 2020 Fund 

Vanguard Target Retirement 2025 Fund 

Vanguard Target Retirement 2030 Fund 

Vanguard Target Retirement 2035 Fund 

Vanguard Target Retirement 2040 Fund 

Vanguard Target Retirement 2045 Fund 

Vanguard Target Retirement 2050 Fund 

Vanguard Target Retirement 2055 Fund 

Vanguard Target Retirement 2060 Fund 

Vanguard Target Retirement 2065 Fund 

Vanguard Target Retirement Income Fund 

  

Vanguard Fixed Income Securities Funds 

Vanguard GNMA Fund 

Vanguard Real Estate II Index Fund 

  

Vanguard Index Funds 

Vanguard Extended Market Index Fund 

Vanguard Mid-Cap Growth Index Fund 

Vanguard Mid-Cap Index Fund 

Vanguard Mid-Cap Value Index Fund 

Vanguard Small-Cap Growth Index Fund 

Vanguard Small-Cap Index Fund 

Vanguard Small-Cap Value Index Fund 

Vanguard Total Stock Market Index Fund 

  

Vanguard International Equity Index Funds 

Vanguard Emerging Markets Stock Index Fund 

  

Vanguard Malvern Funds 

Vanguard Core Bond Fund 

Vanguard Institutional Intermediate-Term Bond Fund 

Vanguard Institutional Short-Term Bond Fund 

  

Vanguard Scottsdale Funds 

Vanguard Intermediate-Term Corporate Bond Index Fund 

Vanguard Intermediate-Term Treasury Index Fund 

Vanguard Long-Term Corporate Bond Index Fund 

Vanguard Long-Term Treasury Index Fund 

Vanguard Mortgage-Backed Securities Index Fund 

Vanguard Short-Term Corporate Bond Index Fund 

Vanguard Short-Term Treasury Index Fund 

Vanguard Total Corporate Bond ETF 

Vanguard Total World Bond ETF 

  

Vanguard Specialized Funds  

Vanguard Global Capital Cycles Fund 

Vanguard Real Estate Index Fund 

  

Vanguard STAR Funds 

Vanguard LifeStrategy Conservative Growth Fund 

Vanguard LifeStrategy Growth Fund 

Vanguard LifeStrategy Income Fund 

Vanguard LifeStrategy Moderate Growth Fund 

Vanguard STAR Fund 

Vanguard Total International Stock Index Fund 

  

Vanguard Tax-Managed Funds 

Vanguard Tax-Managed Balanced Fund 

Vanguard Tax-Managed Capital Appreciation Fund 

Vanguard Tax-Managed Small-Cap Fund 

  

Vanguard Trustees’ Equity Fund 

Vanguard Diversified Equity Fund 

Vanguard International Value Fund 

  

Vanguard Valley Forge Funds 

Vanguard Balanced Index Fund 

Vanguard Managed Payout Fund 

  

Vanguard Variable Insurance Funds 

Conservative Allocation Portfolio 

Equity Index Portfolio 

Global Bond Index Portfolio 

Mid-Cap Index Portfolio 

Moderate Allocation Portfolio 

REIT Index Portfolio 

Total International Stock Market Index Portfolio 

Total Stock Market Index Portfolio 

  

Vanguard Wellington Fund 

Vanguard Wellington Fund 

  

Vanguard Whitehall Funds 

Vanguard High Dividend Yield Index Fund 

Vanguard International Explorer Fund 

  

Vanguard World Fund 

Vanguard Extended Duration Treasury Index Fund 

Vanguard Global Wellesley Income Fund 

Vanguard Global Wellington Fund 

Vanguard ESG US Stock ETF 

Vanguard ESG International Stock ETF 

  

Bank and each following Customer hereby agree that all of the terms and conditions as set forth in the Agreement except for Sections 2.1 and 2.2 are hereby incorporated by reference with respect to the Trusts and Funds listed below limited to their use of account number P 62749 in Vanguard Directly Managed Securities Lending transactions: 

  

Vanguard Chester Funds 

Vanguard PRIMECAP Fund 

  

Vanguard Explorer Fund 

Vanguard Explorer Fund 

  

Vanguard Fenway Funds 

Vanguard Equity Income Fund 

Vanguard PRIMECAP Core Fund 

  

Vanguard Horizon Funds 

Vanguard Capital Opportunity Fund 

Vanguard Global Equity Fund 

Vanguard Strategic Equity Fund 

Vanguard Strategic Small-Cap Equity Fund 

  

Vanguard Index Funds 

Vanguard Extended Market Index Fund 

Vanguard 500 Index Fund 

Vanguard Large-Cap Index Fund 

Vanguard Mid-Cap Index Fund 

Vanguard Small Cap Growth Index Fund 

Vanguard Small Cap Value Index Fund 

Vanguard Value Index Fund 

  

Vanguard Institutional Index Funds 

Vanguard Institutional Index Fund 

Vanguard Institutional Total Stock Market Index Fund 

  

Vanguard Malvern Funds 

Vanguard Capital Value Fund 

Vanguard U.S. Value Fund 

  

Vanguard Morgan Growth Fund 

Vanguard Morgan Growth Fund 

  

Vanguard Quantitative Funds 

Vanguard Growth and Income Fund 

Vanguard Structured Broad Market Fund 

Vanguard Structured Large-Cap Equity Fund 

  

Vanguard Scottsdale Funds 

Vanguard Explorer Value Fund 

Vanguard Russell 1000 Index Fund 

Vanguard Russell 1000 Value Index Fund 

Vanguard Russell 1000 Growth Index Fund 

Vanguard Russell 2000 Index Fund 

Vanguard Russell 2000 Value Index Fund 

Vanguard Russell 2000 Growth Index Fund 

Vanguard Russell 3000 Index Fund 

  

Vanguard Specialized Funds  

Vanguard Dividend Growth Fund 

Vanguard Energy Fund 

Vanguard Real Estate Index Fund 

  

Vanguard Trustees’ Equity Fund 

Vanguard Emerging Markets Select Stock Fund 

Vanguard International Value Fund 

  

Vanguard Variable Insurance Funds 

Vanguard Balanced Portfolio 

Vanguard Capital Growth Portfolio 

Vanguard Diversified Value Portfolio 

Vanguard Equity Income Portfolio 

Vanguard Equity Index Portfolio 

Vanguard Growth Portfolio 

Vanguard Mid-Cap Index Portfolio 

Vanguard REIT Index Portfolio 

Vanguard Small Company Growth Portfolio 

Vanguard International Portfolio 

  

Vanguard Whitehall Funds 

Vanguard Global Minimum Volatility Fund 

Vanguard High Dividend Yield Index Fund 

Vanguard Mid-Cap Growth Fund 

Vanguard Selected Value Fund 

  

Vanguard Windsor Funds 

Vanguard Windsor Fund 

Vanguard Windsor II Fund 

  

Vanguard World Fund 

Vanguard Consumer Discretionary Index Fund 

Vanguard Consumer Staples Index Fund 

Vanguard Energy Index Fund 

Vanguard FTSE Social Index Fund 

Vanguard Financials Index Fund 

Vanguard Health Care Index Fund 

Vanguard Industrials Index Fund 

Vanguard Information Technology Index Fund 

Vanguard Materials Index Fund 

Vanguard Mega Cap Index Fund 

Vanguard Mega Cap Growth Index Fund 

Vanguard Mega Cap Value Index Fund 

Vanguard Communication Services Index Fund 

Vanguard U.S. Growth Fund 

Vanguard Utilities Index Fund 

  

2.

Miscellaneous.  Except as modified by this Amendment, the Agreement shall remain unmodified, in full force and effect and all terms and conditions of the Agreement are hereby incorporated into and made part of this Amendment as if fully set forth herein.   

  

IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute and deliver this Amendment as of the date set forth above.  

  

  

JPMORGAN CHASE BANK, N.A. 

  

EACH OF THE OPEN-END MANAGEMENT INVESTMENT COMPANIES LISTED ON EXHIBIT 1 HERETO 

  

  

/s/ Alan Liang 

  

  

  

/s/ John Bendl 

By:                      

  

By: 

  

  

  

  

  

Name: 

Alan Liang 

  

Name: 

John Bendl  

  

  

  

  

  

Title: 

Vice President 

  

Title: 

Chief Accounting Officer 

Controller  

  

  

  

 

AMENDMENT TO AMENDED AND RESTATED GLOBAL CUSTODY AGREEMENT 

  

The following is an amendment, dated April _9_, 2019, (the “Amendment”) to the Amended and Restated Global Custody Agreement, dated August 14, 2017, as amended from time to time (the “Agreement”), by and between JPMorgan Chase Bank, N.A. (the “Bank”) and each open-end management investment company listed on Exhibit 1 thereto (each, a “Trust”).  For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties, intending to be legally bound, agree as follows: 

  

  

3.

Exhibit 1.  Exhibit 1 to the Agreement is hereby deleted in its entirety and replaced with the following: 

  

Vanguard Admiral Funds 

Vanguard S&P 500 Growth Index Fund 

Vanguard S&P 500 Value Index Fund 

Vanguard S&P Mid-Cap 400 Growth Index Fund 

Vanguard S&P Mid-Cap 400 Index Fund 

Vanguard S&P Mid-Cap 400 Value Index Fund 

Vanguard S&P Small-Cap 600 Growth Index Fund 

Vanguard S&P Small-Cap 600 Index Fund 

Vanguard S&P Small-Cap 600 Value Index Fund 

  

Vanguard Bond Index Funds 

Vanguard Inflation-Protected Securities Fund  

Vanguard Intermediate-Term Bond Index Fund 

Vanguard Long-Term Bond Index Fund 

Vanguard Short-Term Bond Index Fund 

Vanguard Total Bond Market Index Fund 

Vanguard Total Bond Market II Index Fund 

  

Vanguard Charlotte Funds 

Vanguard Global Credit Bond Fund 

  

Vanguard Chester Funds 

Vanguard Institutional Target Retirement 2015 Fund 

Vanguard Institutional Target Retirement 2020 Fund 

Vanguard Institutional Target Retirement 2025 Fund 

Vanguard Institutional Target Retirement 2030 Fund 

Vanguard Institutional Target Retirement 2035 Fund 

Vanguard Institutional Target Retirement 2040 Fund 

Vanguard Institutional Target Retirement 2045 Fund 

Vanguard Institutional Target Retirement 2050 Fund 

Vanguard Institutional Target Retirement 2055 Fund 

Vanguard Institutional Target Retirement 2060 Fund 

Vanguard Institutional Target Retirement 2065 Fund 

Vanguard Institutional Target Retirement Income Fund 

Vanguard Target Retirement 2015 Fund 

Vanguard Target Retirement 2020 Fund 

Vanguard Target Retirement 2025 Fund 

Vanguard Target Retirement 2030 Fund 

Vanguard Target Retirement 2035 Fund 

Vanguard Target Retirement 2040 Fund 

Vanguard Target Retirement 2045 Fund 

Vanguard Target Retirement 2050 Fund 

Vanguard Target Retirement 2055 Fund 

Vanguard Target Retirement 2060 Fund 

Vanguard Target Retirement 2065 Fund 

Vanguard Target Retirement Income Fund 

  

Vanguard Fixed Income Securities Funds 

Vanguard GNMA Fund 

Vanguard Real Estate II Index Fund 

  

Vanguard Index Funds 

Vanguard Extended Market Index Fund 

Vanguard Mid-Cap Growth Index Fund 

Vanguard Mid-Cap Index Fund 

Vanguard Mid-Cap Value Index Fund 

Vanguard Small-Cap Growth Index Fund 

Vanguard Small-Cap Index Fund 

Vanguard Small-Cap Value Index Fund 

Vanguard Total Stock Market Index Fund 

  

Vanguard International Equity Index Funds 

Vanguard Emerging Markets Stock Index Fund 

  

Vanguard Malvern Funds 

Vanguard Core Bond Fund 

Vanguard Institutional Intermediate-Term Bond Fund 

Vanguard Institutional Short-Term Bond Fund 

  

Vanguard Scottsdale Funds 

Vanguard Intermediate-Term Corporate Bond Index Fund 

Vanguard Intermediate-Term Treasury Index Fund 

Vanguard Long-Term Corporate Bond Index Fund 

Vanguard Long-Term Treasury Index Fund 

Vanguard Mortgage-Backed Securities Index Fund 

Vanguard Short-Term Corporate Bond Index Fund 

Vanguard Short-Term Treasury Index Fund 

Vanguard Total Corporate Bond ETF 

Vanguard Total World Bond ETF 

  

Vanguard Specialized Funds  

Vanguard Global Capital Cycles Fund 

Vanguard Real Estate Index Fund 

Vanguard Global ESG Select Stock Fund  

  

Vanguard STAR Funds 

Vanguard LifeStrategy Conservative Growth Fund 

Vanguard LifeStrategy Growth Fund 

Vanguard LifeStrategy Income Fund 

Vanguard LifeStrategy Moderate Growth Fund 

Vanguard STAR Fund 

Vanguard Total International Stock Index Fund 

  

Vanguard Tax-Managed Funds 

Vanguard Tax-Managed Balanced Fund 

Vanguard Tax-Managed Capital Appreciation Fund 

Vanguard Tax-Managed Small-Cap Fund 

  

Vanguard Trustees’ Equity Fund 

Vanguard Diversified Equity Fund 

Vanguard International Value Fund 

  

Vanguard Valley Forge Funds 

Vanguard Balanced Index Fund 

Vanguard Managed Payout Fund 

  

Vanguard Variable Insurance Funds 

Conservative Allocation Portfolio 

Equity Index Portfolio 

Global Bond Index Portfolio 

Mid-Cap Index Portfolio 

Moderate Allocation Portfolio 

REIT Index Portfolio 

Total International Stock Market Index Portfolio 

Total Stock Market Index Portfolio 

  

Vanguard Wellington Fund 

Vanguard Wellington Fund 

  

Vanguard Whitehall Funds 

Vanguard High Dividend Yield Index Fund 

Vanguard International Explorer Fund 

  

Vanguard World Fund 

Vanguard Extended Duration Treasury Index Fund 

Vanguard Global Wellesley Income Fund 

Vanguard Global Wellington Fund 

Vanguard ESG US Stock ETF 

Vanguard ESG International Stock ETF 

  

Bank and each following Customer hereby agree that all of the terms and conditions as set forth in the Agreement except for Sections 2.1 and 2.2 are hereby incorporated by reference with respect to the Trusts and Funds listed below limited to their use of account number P 62749 in Vanguard Directly Managed Securities Lending transactions: 

  

Vanguard Chester Funds 

Vanguard PRIMECAP Fund 

  

Vanguard Explorer Fund 

Vanguard Explorer Fund 

  

Vanguard Fenway Funds 

Vanguard Equity Income Fund 

Vanguard PRIMECAP Core Fund 

  

Vanguard Horizon Funds 

Vanguard Capital Opportunity Fund 

Vanguard Global Equity Fund 

Vanguard Strategic Equity Fund 

Vanguard Strategic Small-Cap Equity Fund 

  

Vanguard Index Funds 

Vanguard Extended Market Index Fund 

Vanguard 500 Index Fund 

Vanguard Large-Cap Index Fund 

Vanguard Mid-Cap Index Fund 

Vanguard Small Cap Growth Index Fund 

Vanguard Small Cap Value Index Fund 

Vanguard Value Index Fund 

  

Vanguard Institutional Index Funds 

Vanguard Institutional Index Fund 

Vanguard Institutional Total Stock Market Index Fund 

  

Vanguard Malvern Funds 

Vanguard Capital Value Fund 

Vanguard U.S. Value Fund 

  

Vanguard Morgan Growth Fund 

Vanguard Morgan Growth Fund 

  

Vanguard Quantitative Funds 

Vanguard Growth and Income Fund 

Vanguard Structured Broad Market Fund 

Vanguard Structured Large-Cap Equity Fund 

  

Vanguard Scottsdale Funds 

Vanguard Explorer Value Fund 

Vanguard Russell 1000 Index Fund 

Vanguard Russell 1000 Value Index Fund 

Vanguard Russell 1000 Growth Index Fund 

Vanguard Russell 2000 Index Fund 

Vanguard Russell 2000 Value Index Fund 

Vanguard Russell 2000 Growth Index Fund 

Vanguard Russell 3000 Index Fund 

  

Vanguard Specialized Funds  

Vanguard Dividend Growth Fund 

Vanguard Energy Fund 

Vanguard Real Estate Index Fund 

  

Vanguard Trustees’ Equity Fund 

Vanguard Emerging Markets Select Stock Fund 

Vanguard International Value Fund 

  

Vanguard Variable Insurance Funds 

Vanguard Balanced Portfolio 

Vanguard Capital Growth Portfolio 

Vanguard Diversified Value Portfolio 

Vanguard Equity Income Portfolio 

Vanguard Equity Index Portfolio 

Vanguard Growth Portfolio 

Vanguard Mid-Cap Index Portfolio 

Vanguard REIT Index Portfolio 

Vanguard Small Company Growth Portfolio 

Vanguard International Portfolio 

  

Vanguard Whitehall Funds 

Vanguard Global Minimum Volatility Fund 

Vanguard High Dividend Yield Index Fund 

Vanguard Mid-Cap Growth Fund 

Vanguard Selected Value Fund 

  

Vanguard Windsor Funds 

Vanguard Windsor Fund 

Vanguard Windsor II Fund 

  

Vanguard World Fund 

Vanguard Consumer Discretionary Index Fund 

Vanguard Consumer Staples Index Fund 

Vanguard Energy Index Fund 

Vanguard FTSE Social Index Fund 

Vanguard Financials Index Fund 

Vanguard Health Care Index Fund 

Vanguard Industrials Index Fund 

Vanguard Information Technology Index Fund 

Vanguard Materials Index Fund 

Vanguard Mega Cap Index Fund 

Vanguard Mega Cap Growth Index Fund 

Vanguard Mega Cap Value Index Fund 

Vanguard Communication Services Index Fund 

Vanguard U.S. Growth Fund 

Vanguard Utilities Index Fund 

  

4.

Miscellaneous.  Except as modified by this Amendment, the Agreement shall remain unmodified, in full force and effect and all terms and conditions of the Agreement are hereby incorporated into and made part of this Amendment as if fully set forth herein.   

  

IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute and deliver this Amendment as of the date set forth above.  

  

  

JPMORGAN CHASE BANK, N.A. 

  

EACH OF THE OPEN-END MANAGEMENT INVESTMENT COMPANIES LISTED ON EXHIBIT 1 HERETO 

  

  

/s/ Carl Mehldau 

  

  

  

/s/ Thomas J. Higgins 

By: 

  

By: 

  

  

  

  

  

Name: 

Carl Mehldau 

  

Name: 

Thomas J. Higgins 

  

  

  

  

  

Title: 

Vice President 

  

Title: 

Chief Financial Officer 

  

  

  

  

 

AMENDMENT TO AMENDED AND RESTATED GLOBAL CUSTODY AGREEMENT 

  

The following is an amendment, dated August _12_, 2019, (the “Amendment”) to the Amended and Restated Global Custody Agreement, dated August 14, 2017, as amended from time to time (the “Agreement”), by and between JPMorgan Chase Bank, N.A. (the “Bank”) and each open-end management investment company listed on Exhibit 1 thereto (each, a “Trust”).  For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties, intending to be legally bound, agree as follows: 

  

  

5.

Exhibit 1.  Exhibit 1 to the Agreement is hereby deleted in its entirety and replaced with the following: 

  

Vanguard Admiral Funds 

Vanguard S&P 500 Growth Index Fund 

Vanguard S&P 500 Value Index Fund 

Vanguard S&P Mid-Cap 400 Growth Index Fund 

Vanguard S&P Mid-Cap 400 Index Fund 

Vanguard S&P Mid-Cap 400 Value Index Fund 

Vanguard S&P Small-Cap 600 Growth Index Fund 

Vanguard S&P Small-Cap 600 Index Fund 

Vanguard S&P Small-Cap 600 Value Index Fund 

  

Vanguard Bond Index Funds 

Vanguard Inflation-Protected Securities Fund  

Vanguard Intermediate-Term Bond Index Fund 

Vanguard Long-Term Bond Index Fund 

Vanguard Short-Term Bond Index Fund 

Vanguard Total Bond Market Index Fund 

Vanguard Total Bond Market II Index Fund 

  

Vanguard Charlotte Funds 

Vanguard Global Credit Bond Fund 

  

Vanguard Chester Funds 

Vanguard Institutional Target Retirement 2015 Fund 

Vanguard Institutional Target Retirement 2020 Fund 

Vanguard Institutional Target Retirement 2025 Fund 

Vanguard Institutional Target Retirement 2030 Fund 

Vanguard Institutional Target Retirement 2035 Fund 

Vanguard Institutional Target Retirement 2040 Fund 

Vanguard Institutional Target Retirement 2045 Fund 

Vanguard Institutional Target Retirement 2050 Fund 

Vanguard Institutional Target Retirement 2055 Fund 

Vanguard Institutional Target Retirement 2060 Fund 

Vanguard Institutional Target Retirement 2065 Fund 

Vanguard Institutional Target Retirement Income Fund 

Vanguard Target Retirement 2015 Fund 

Vanguard Target Retirement 2020 Fund 

Vanguard Target Retirement 2025 Fund 

Vanguard Target Retirement 2030 Fund 

Vanguard Target Retirement 2035 Fund 

Vanguard Target Retirement 2040 Fund 

Vanguard Target Retirement 2045 Fund 

Vanguard Target Retirement 2050 Fund 

Vanguard Target Retirement 2055 Fund 

Vanguard Target Retirement 2060 Fund 

Vanguard Target Retirement 2065 Fund 

Vanguard Target Retirement Income Fund 

  

Vanguard Fixed Income Securities Funds 

Vanguard GNMA Fund 

Vanguard Real Estate II Index Fund 

  

Vanguard Horizon Funds 

Vanguard International Core Stock Fund 

  

Vanguard Index Funds 

Vanguard Extended Market Index Fund 

Vanguard Mid-Cap Growth Index Fund 

Vanguard Mid-Cap Index Fund 

Vanguard Mid-Cap Value Index Fund 

Vanguard Small-Cap Growth Index Fund 

Vanguard Small-Cap Index Fund 

Vanguard Small-Cap Value Index Fund 

Vanguard Total Stock Market Index Fund 

  

Vanguard International Equity Index Funds 

Vanguard Emerging Markets Stock Index Fund 

  

Vanguard Malvern Funds 

Vanguard Core Bond Fund 

Vanguard Institutional Intermediate-Term Bond Fund 

Vanguard Institutional Short-Term Bond Fund 

  

Vanguard Scottsdale Funds 

Vanguard Intermediate-Term Corporate Bond Index Fund 

Vanguard Intermediate-Term Treasury Index Fund 

Vanguard Long-Term Corporate Bond Index Fund 

Vanguard Long-Term Treasury Index Fund 

Vanguard Mortgage-Backed Securities Index Fund 

Vanguard Short-Term Corporate Bond Index Fund 

Vanguard Short-Term Treasury Index Fund 

Vanguard Total Corporate Bond ETF 

Vanguard Total World Bond ETF 

  

Vanguard Specialized Funds  

Vanguard Global Capital Cycles Fund 

Vanguard Real Estate Index Fund 

Vanguard Global ESG Select Stock Fund  

  

Vanguard STAR Funds 

Vanguard LifeStrategy Conservative Growth Fund 

Vanguard LifeStrategy Growth Fund 

Vanguard LifeStrategy Income Fund 

Vanguard LifeStrategy Moderate Growth Fund 

Vanguard STAR Fund 

Vanguard Total International Stock Index Fund 

  

Vanguard Tax-Managed Funds 

Vanguard Tax-Managed Balanced Fund 

Vanguard Tax-Managed Capital Appreciation Fund 

Vanguard Tax-Managed Small-Cap Fund 

  

Vanguard Trustees’ Equity Fund 

Vanguard Diversified Equity Fund 

Vanguard International Value Fund 

  

Vanguard Valley Forge Funds 

Vanguard Balanced Index Fund 

Vanguard Managed Payout Fund 

  

Vanguard Variable Insurance Funds 

Conservative Allocation Portfolio 

Equity Index Portfolio 

Global Bond Index Portfolio 

Mid-Cap Index Portfolio 

Moderate Allocation Portfolio 

REIT Index Portfolio 

Total International Stock Market Index Portfolio 

Total Stock Market Index Portfolio 

  

Vanguard Wellington Fund 

Vanguard Wellington Fund 

  

Vanguard Whitehall Funds 

Vanguard High Dividend Yield Index Fund 

Vanguard International Explorer Fund 

  

Vanguard World Fund 

Vanguard Extended Duration Treasury Index Fund 

Vanguard Global Wellesley Income Fund 

Vanguard Global Wellington Fund 

Vanguard ESG US Stock ETF 

Vanguard ESG International Stock ETF 

  

Bank and each following Customer hereby agree that all of the terms and conditions as set forth in the Agreement except for Sections 2.1 and 2.2 are hereby incorporated by reference with respect to the Trusts and Funds listed below limited to their use of account number P 62749 in Vanguard Directly Managed Securities Lending transactions: 

  

Vanguard Chester Funds 

Vanguard PRIMECAP Fund 

  

Vanguard Explorer Fund 

Vanguard Explorer Fund 

  

Vanguard Fenway Funds 

Vanguard Equity Income Fund 

Vanguard PRIMECAP Core Fund 

  

Vanguard Horizon Funds 

Vanguard Capital Opportunity Fund 

Vanguard Global Equity Fund 

Vanguard Strategic Equity Fund 

Vanguard Strategic Small-Cap Equity Fund 

  

Vanguard Index Funds 

Vanguard Extended Market Index Fund 

Vanguard 500 Index Fund 

Vanguard Large-Cap Index Fund 

Vanguard Mid-Cap Index Fund 

Vanguard Small Cap Growth Index Fund 

Vanguard Small Cap Value Index Fund 

Vanguard Value Index Fund 

  

Vanguard Institutional Index Funds 

Vanguard Institutional Index Fund 

Vanguard Institutional Total Stock Market Index Fund 

  

Vanguard Malvern Funds 

Vanguard Capital Value Fund 

Vanguard U.S. Value Fund 

  

Vanguard Morgan Growth Fund 

Vanguard Morgan Growth Fund 

  

Vanguard Quantitative Funds 

Vanguard Growth and Income Fund 

Vanguard Structured Broad Market Fund 

Vanguard Structured Large-Cap Equity Fund 

  

Vanguard Scottsdale Funds 

Vanguard Explorer Value Fund 

Vanguard Russell 1000 Index Fund 

Vanguard Russell 1000 Value Index Fund 

Vanguard Russell 1000 Growth Index Fund 

Vanguard Russell 2000 Index Fund 

Vanguard Russell 2000 Value Index Fund 

Vanguard Russell 2000 Growth Index Fund 

Vanguard Russell 3000 Index Fund 

  

Vanguard Specialized Funds  

Vanguard Dividend Growth Fund 

Vanguard Energy Fund 

Vanguard Real Estate Index Fund 

  

Vanguard Trustees’ Equity Fund 

Vanguard Emerging Markets Select Stock Fund 

Vanguard International Value Fund 

  

Vanguard Variable Insurance Funds 

Vanguard Balanced Portfolio 

Vanguard Capital Growth Portfolio 

Vanguard Diversified Value Portfolio 

Vanguard Equity Income Portfolio 

Vanguard Equity Index Portfolio 

Vanguard Growth Portfolio 

Vanguard Mid-Cap Index Portfolio 

Vanguard REIT Index Portfolio 

Vanguard Small Company Growth Portfolio 

Vanguard International Portfolio 

  

Vanguard Whitehall Funds 

Vanguard Global Minimum Volatility Fund 

Vanguard High Dividend Yield Index Fund 

Vanguard Mid-Cap Growth Fund 

Vanguard Selected Value Fund 

  

Vanguard Windsor Funds 

Vanguard Windsor Fund 

Vanguard Windsor II Fund 

  

Vanguard World Fund 

Vanguard Consumer Discretionary Index Fund 

Vanguard Consumer Staples Index Fund 

Vanguard Energy Index Fund 

Vanguard FTSE Social Index Fund 

Vanguard Financials Index Fund 

Vanguard Health Care Index Fund 

Vanguard Industrials Index Fund 

Vanguard Information Technology Index Fund 

Vanguard Materials Index Fund 

Vanguard Mega Cap Index Fund 

Vanguard Mega Cap Growth Index Fund 

Vanguard Mega Cap Value Index Fund 

Vanguard Communication Services Index Fund 

Vanguard U.S. Growth Fund 

Vanguard Utilities Index Fund 

  

6.

Miscellaneous.  Except as modified by this Amendment, the Agreement shall remain unmodified, in full force and effect and all terms and conditions of the Agreement are hereby incorporated into and made part of this Amendment as if fully set forth herein.   

  

IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute and deliver this Amendment as of the date set forth above.  

  

  

JPMORGAN CHASE BANK, N.A. 

  

EACH OF THE OPEN-END MANAGEMENT INVESTMENT COMPANIES LISTED ON EXHIBIT 1 HERETO 

  

  

/s/ Carl Mehldau 

  

  

  

/s/ Peter C. Mahoney 

By: 

  

By: 

  

  

  

  

  

Name: 

Carl Mehldau 

  

Name: 

Peter C. Mahoney 

  

  

  

  

  

Title: 

Vice President 

  

Title: 

Controller  

  

  

  

 

AMENDMENT TO AMENDED AND RESTATED GLOBAL CUSTODY AGREEMENT 

  

The following is an amendment, dated August 6, 2020, (the “Amendment”) to the Amended and Restated Global Custody Agreement, dated August 14, 2017, as amended from time to time (the “Agreement”), by and between JPMorgan Chase Bank, N.A. (the “Bank”) and each open-end management investment company listed on Exhibit 1 thereto (each, a “Trust”). For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties, intending to be legally bound, agree as follows: 

  

  

7.

Exhibit 1.  Exhibit 1 to the Agreement is hereby deleted in its entirety and replaced with the following: 

  

Vanguard Admiral Funds 

Vanguard S&P 500 Growth Index Fund 

Vanguard S&P 500 Value Index Fund 

Vanguard S&P Mid-Cap 400 Growth Index Fund 

Vanguard S&P Mid-Cap 400 Index Fund 

Vanguard S&P Mid-Cap 400 Value Index Fund 

Vanguard S&P Small-Cap 600 Growth Index Fund 

Vanguard S&P Small-Cap 600 Index Fund 

Vanguard S&P Small-Cap 600 Value Index Fund 

  

Vanguard Bond Index Funds 

Vanguard Inflation-Protected Securities Fund  

Vanguard Intermediate-Term Bond Index Fund 

Vanguard Long-Term Bond Index Fund 

Vanguard Short-Term Bond Index Fund 

Vanguard Total Bond Market Index Fund 

Vanguard Total Bond Market II Index Fund 

  

Vanguard Charlotte Funds 

Vanguard Global Credit Bond Fund 

  

Vanguard Chester Funds 

Vanguard Institutional Target Retirement 2015 Fund 

Vanguard Institutional Target Retirement 2020 Fund 

Vanguard Institutional Target Retirement 2025 Fund 

Vanguard Institutional Target Retirement 2030 Fund 

Vanguard Institutional Target Retirement 2035 Fund 

Vanguard Institutional Target Retirement 2040 Fund 

Vanguard Institutional Target Retirement 2045 Fund 

Vanguard Institutional Target Retirement 2050 Fund 

Vanguard Institutional Target Retirement 2055 Fund 

Vanguard Institutional Target Retirement 2060 Fund 

Vanguard Institutional Target Retirement 2065 Fund 

Vanguard Institutional Target Retirement Income Fund 

Vanguard Target Retirement 2015 Fund 

Vanguard Target Retirement 2020 Fund 

Vanguard Target Retirement 2025 Fund 

Vanguard Target Retirement 2030 Fund 

Vanguard Target Retirement 2035 Fund 

Vanguard Target Retirement 2040 Fund 

Vanguard Target Retirement 2045 Fund 

Vanguard Target Retirement 2050 Fund 

Vanguard Target Retirement 2055 Fund 

Vanguard Target Retirement 2060 Fund 

Vanguard Target Retirement 2065 Fund 

Vanguard Target Retirement Income Fund 

  

Vanguard Fixed Income Securities Funds 

Vanguard GNMA Fund 

Vanguard Real Estate II Index Fund 

  

Vanguard Horizon Funds 

Vanguard International Core Stock Fund 

  

Vanguard Index Funds 

Vanguard Extended Market Index Fund 

Vanguard Mid-Cap Growth Index Fund 

Vanguard Mid-Cap Index Fund 

Vanguard Mid-Cap Value Index Fund 

Vanguard Small-Cap Growth Index Fund 

Vanguard Small-Cap Index Fund 

Vanguard Small-Cap Value Index Fund 

Vanguard Total Stock Market Index Fund 

  

Vanguard International Equity Index Funds 

Vanguard Emerging Markets Stock Index Fund 

  

Vanguard Malvern Funds 

Vanguard Core Bond Fund 

Vanguard Institutional Intermediate-Term Bond Fund 

Vanguard Institutional Short-Term Bond Fund 

  

Vanguard Scottsdale Funds 

Vanguard Intermediate-Term Corporate Bond Index Fund 

Vanguard Intermediate-Term Treasury Index Fund 

Vanguard Long-Term Corporate Bond Index Fund 

Vanguard Long-Term Treasury Index Fund 

Vanguard Mortgage-Backed Securities Index Fund 

Vanguard Short-Term Corporate Bond Index Fund 

Vanguard Short-Term Treasury Index Fund 

Vanguard Total Corporate Bond ETF 

Vanguard Total World Bond ETF 

  

Vanguard Specialized Funds  

Vanguard Global Capital Cycles Fund 

Vanguard Real Estate Index Fund 

Vanguard Global ESG Select Stock Fund  

  

Vanguard STAR Funds 

Vanguard LifeStrategy Conservative Growth Fund 

Vanguard LifeStrategy Growth Fund 

Vanguard LifeStrategy Income Fund 

Vanguard LifeStrategy Moderate Growth Fund 

Vanguard STAR Fund 

Vanguard Total International Stock Index Fund 

  

Vanguard Tax-Managed Funds 

Vanguard Tax-Managed Balanced Fund 

Vanguard Tax-Managed Capital Appreciation Fund 

Vanguard Tax-Managed Small-Cap Fund 

  

Vanguard Trustees’ Equity Fund 

Vanguard Diversified Equity Fund 

Vanguard International Value Fund 

  

Vanguard Valley Forge Funds 

Vanguard Balanced Index Fund 

Vanguard Managed Allocation Fund 

  

Vanguard Variable Insurance Funds 

Conservative Allocation Portfolio 

Equity Index Portfolio 

Global Bond Index Portfolio 

Mid-Cap Index Portfolio 

Moderate Allocation Portfolio 

Real Estate Index Portfolio 

Total International Stock Market Index Portfolio 

Total Stock Market Index Portfolio 

  

Vanguard Wellington Fund 

Vanguard Wellington Fund 

  

Vanguard Whitehall Funds 

Vanguard High Dividend Yield Index Fund 

Vanguard International Explorer Fund 

  

Vanguard World Fund 

Vanguard Extended Duration Treasury Index Fund 

Vanguard Global Wellesley Income Fund 

Vanguard Global Wellington Fund 

Vanguard ESG U.S. Corporate Bond ETF 

Vanguard ESG U.S. Stock ETF 

Vanguard ESG International Stock ETF 

  

Bank and each following Customer hereby agree that all of the terms and conditions as set forth in the Agreement except for Sections 2.1 and 2.2 are hereby incorporated by reference with respect to the Trusts and Funds listed below limited to their use of account number P 62749 in Vanguard Directly Managed Securities Lending transactions: 

  

Vanguard Chester Funds 

Vanguard PRIMECAP Fund 

  

Vanguard Explorer Fund 

Vanguard Explorer Fund 

  

Vanguard Fenway Funds 

Vanguard Equity Income Fund 

Vanguard PRIMECAP Core Fund 

  

Vanguard Horizon Funds 

Vanguard Capital Opportunity Fund 

Vanguard Global Equity Fund 

Vanguard Strategic Equity Fund 

Vanguard Strategic Small-Cap Equity Fund 

  

Vanguard Index Funds 

Vanguard Extended Market Index Fund 

Vanguard 500 Index Fund 

Vanguard Large-Cap Index Fund 

Vanguard Mid-Cap Index Fund 

Vanguard Small Cap Growth Index Fund 

Vanguard Small Cap Value Index Fund 

Vanguard Value Index Fund 

  

Vanguard Institutional Index Funds 

Vanguard Institutional Index Fund 

Vanguard Institutional Total Stock Market Index Fund 

  

Vanguard Malvern Funds 

Vanguard U.S. Value Fund 

  

Vanguard Quantitative Funds 

Vanguard Growth and Income Fund 

  

Vanguard Scottsdale Funds 

Vanguard Explorer Value Fund 

Vanguard Russell 1000 Index Fund 

Vanguard Russell 1000 Value Index Fund 

Vanguard Russell 1000 Growth Index Fund 

Vanguard Russell 2000 Index Fund 

Vanguard Russell 2000 Value Index Fund 

Vanguard Russell 2000 Growth Index Fund 

Vanguard Russell 3000 Index Fund 

  

Vanguard Specialized Funds  

Vanguard Dividend Growth Fund 

Vanguard Energy Fund 

Vanguard Real Estate Index Fund 

  

Vanguard Trustees’ Equity Fund 

Vanguard Emerging Markets Select Stock Fund 

Vanguard International Value Fund 

  

Vanguard Variable Insurance Funds 

Vanguard Balanced Portfolio 

Vanguard Capital Growth Portfolio 

Vanguard Diversified Value Portfolio 

Vanguard Equity Income Portfolio 

Vanguard Equity Index Portfolio 

Vanguard Growth Portfolio 

Vanguard Mid-Cap Index Portfolio 

Vanguard Real Estate Index Portfolio 

Vanguard Small Company Growth Portfolio 

Vanguard International Portfolio 

  

Vanguard Whitehall Funds 

Vanguard Global Minimum Volatility Fund 

Vanguard High Dividend Yield Index Fund 

Vanguard Mid-Cap Growth Fund 

Vanguard Selected Value Fund 

  

Vanguard Windsor Funds 

Vanguard Windsor Fund 

Vanguard Windsor II Fund 

  

Vanguard World Fund 

Vanguard Consumer Discretionary Index Fund 

Vanguard Consumer Staples Index Fund 

Vanguard Energy Index Fund 

Vanguard FTSE Social Index Fund 

Vanguard Financials Index Fund 

Vanguard Health Care Index Fund 

Vanguard Industrials Index Fund 

Vanguard Information Technology Index Fund 

Vanguard Materials Index Fund 

Vanguard Mega Cap Index Fund 

Vanguard Mega Cap Growth Index Fund 

Vanguard Mega Cap Value Index Fund 

Vanguard Communication Services Index Fund 

Vanguard U.S. Growth Fund 

Vanguard Utilities Index Fund 

  

8.

Miscellaneous.  Except as modified by this Amendment, the Agreement shall remain unmodified, in full force and effect and all terms and conditions of the Agreement are hereby incorporated into and made part of this Amendment as if fully set forth herein.   

  

IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute and deliver this Amendment as of the date set forth above.  

  

  

JPMORGAN CHASE BANK, N.A. 

  

EACH OF THE OPEN-END MANAGEMENT INVESTMENT COMPANIES LISTED ON EXHIBIT 1 HERETO 

  

By:  

/s/ Carl Mehldau 

  

By:        

/s/ John Bendl 

  

  

  

  

  

Name: 

Carl Mehldau 

  

Name: 

John Bendl 

  

  

  

  

  

Title: 

Vice President 

  

Title: 

Chief Financial Officer  

  

  

  

  

  

  

  


FIFTH AMENDED AND RESTATED FUNDS’ SERVICE AGREEMENT 

  

This Fifth Amended and Restated Funds’ Service Agreement, made as of the 8th day of June, 2009 (the “Agreement”), between and among the investment companies registered under the Investment Company Act of 1940 (“1940 Act”), whose names are set forth on the signature page of this Agreement, which together with any additional investment companies which may become a party to this Agreement pursuant to Section 5.4 and 5.5 are collectively called the “Funds”; and The Vanguard Group, Inc., a Pennsylvania corporation (“Service Company”). 

Whereas, each of the Funds has heretofore determined (as evidenced by, among many documents, prior versions* of this Agreement (the “Prior Agreements”), and by prospectuses and proxy statements of the Funds related thereto): (i) to manage and perform the corporate management, administrative and share distribution functions required for its continued operation, (ii) to create a structure which enhances the independence of the Funds from the providers of external services, (iii) to share, on an equitable and fair basis, with all of the other Funds the expenses of establishing the means to accomplish these objectives at the lowest reasonable cost; and 

Whereas, each of the Funds:  (i) has heretofore determined that these objectives can best be accomplished by establishing a company: (a) to be wholly-owned by the Funds; (b) to provide corporate management, administrative, and distribution services, and upon the reasonable request of any Fund to provide other service to such Fund at cost; (c) to employ the executive, managerial, administrative, secretarial and clerical personnel necessary or appropriate to perform such services; and (d) to acquire such assets and to obtain such facilities and equipment as are necessary or appropriate to carry out such services, and to make those assets available to the Funds; and (ii) since May 1, 1975 (or the commencement of its operations after this date) has utilized Service Company, pursuant to the provisions of the Prior Agreements; and 

Whereas, each of the Funds has further heretofore recognized that it may, from time to time, be in the best interests of the Funds (i) for Service Company to provide similar services to investment companies other than the Funds, (ii) for the Funds to organize, from time to time, new investment companies which are intended to become parties to this Agreement; and, (iii) for Service Company to engage in business activities (directly or through subsidiaries), supportive of the Funds’ operations as investment companies; and 

Whereas, each of the Funds desires to enter into a completely integrated Fifth Amended and Restated Funds’ Service Agreement with the other Funds to (i) set forth the current terms and provisions of the relationships which the Funds have determined to establish; and (ii) make non-substantive amendments to the Amended and Restated Funds’ Service Agreement, including correcting the names of the Funds set forth on the signature page of this Agreement. 

Now, Therefore, each Fund agrees with each and all of the other Funds, and with Service Company, as follows:  

  

  

  

I.

CAPITALIZATION AND ASSETS OF SERVICE COMPANY 

  

1

Capital and Assets.  To provide the Service Company with the cash and with the office space, facilities and equipment necessary for it to discharge its responsibilities hereunder, each Fund agrees: 

A

To make cash investments in the Service Company as provided in Sections 1.2, 1.3 and 1.4. 

B

To assign and transfer to Service Company on and after May 1, 1975 any and all right, title and interest which the Funds may have in any office facilities and equipment necessary for it to discharge its responsibilities and in any other assets which Service Company may develop or acquire, subject only to the rights reserved in Section 1.6 (concerning certain major assets).  Section 5.2 (concerning rights upon withdrawal) and Section 5.3 (concerning rights upon termination) of the Agreement. 

2

Cash Investments in Service Company.To provide Service Company with such cash as may be necessary or appropriate from time to time to accomplish the purposes of the Funds and to discharge its responsibilities hereunder, each Fund agrees to purchase, for cash, shares of common stock of Service Company (“Shares”) or such other securities of Service Company (hereafter referred to as “other securities”) upon the favorable vote of the holders of a majority of the Shares adopting a resolution setting forth the terms and provisions of the purchase.  Provided, however, that: 

A

Without the consent of all of the Funds, the date for the purchase of Shares or other securities shall not be less than 15 days following the date on which the resolution is approved by the shareholders. 

B

The cash purchase price to be paid by any Fund for the Shares or other securities, expressed as a percentage of the total purchase price for the additional securities to be paid by all of the Funds shall not exceed the percentage which the then current net assets of the Fund bears to the aggregate current net assets of all of the Funds as of the most recent month-end preceding the purchase date. 

3

Periodic Adjustments of Cash Investments.  To maintain and re-establish periodically a fair and proportionate ratio of cash investments by each Fund in the Service Company as compared to its then current net assets, each Fund agrees to purchase from one or more of the other Funds, or to sell one or more of the Funds, sufficient Shares or other securities to re-establish the ratio. 

A

Such purchases and sales shall be made (1) as of the last business day of any month upon the addition or withdrawal of any Fund as a party to this Agreement, provided that if the addition or withdrawal of a Fund creates no material disparity in the ratios (as determined by the Service Company’s Board of Directors), and no Fund requests that an adjustment be made, the adjustment may be deferred until the close of the Service Company’s fiscal year; (2) in connection with additional investments pursuant to Section 1.2; and (3) annually as of the close of the Service Company’s fiscal year, on a date fixed by Service Company’s Board of Directors within 90 days after the close of the fiscal year unless there is no material disparity in the ratios (as determined by the Service Company’s Board of Directors) and no Fund requests that an adjustment be made. 

B

The cash purchases and sale price of the Share or other securities shall be for each Fund (1) in the case of Shares, the fair market value of Shares determined in accord with generally accepted accounting principles and procedures established by the Board of Directors of Service Company; and (2) in the case of debt securities, the face value thereof. 

C

Unless specifically required by applicable law, the issuance and transfer of Shares or other securities of Service Company, and the cash investments of the Funds in Service Company, may be evidenced by proper records of Service Company; and no certificates need be issued. 

1.4 Limitation Upon Funds’ Obligations to Make Cash Investments or Purchases.  Notwithstanding the provisions of Sections 1.1, 1.2 and 1.3 above, no Fund shall be obligated to purchase Shares or other securities of Service Company if, as a result of such purchase the Fund would thereby have invested in cash a total of more than 0.40% of its then current net assets in Shares or other securities of Service Company. 

1.5 Restrictions on Transfer of Shares or Other Securities.    Each Fund agrees that it will not, without the written consent of all other parties to this Agreement, transfer or dispose of or encumber any of its Shares or other securities of Service Company except as provided in this Agreement, and that, if issued, each certificate for Shares or other securities of Service Company will be stamped with a legend referring to this restriction. 

1.6 Assets of Service Company.The Funds agree that Service Company may acquire, by purchase or lease, office space, furniture, equipment, supplies, files, records, computer hardware and software, and other assets necessary or appropriate for the discharge of the Service Company’s responsibilities hereunder.  Each of the Funds hereby assigns and transfers to Service Company, any and all right, title and interest that it may have or hereafter acquire in any such assets, subject to the rights of each Fund (A) to receive the then fair value of such assets upon the purchase or sale of Shares pursuant to this Agreement, (B) to the continued use of such assets in the administration of the business affairs of a Fund so long as the Fund remains a party to this Agreement. 

1.7 Borrowing by Service Company.    The Funds agree that Service Company may borrow money, and may issue a note or other security in connection with such borrowing, as long as such borrowing, is in connection with the discharge of Service Company’s responsibilities hereunder and is undertaken in accord with procedures approved by the Service Company’s Board of Directors. 

  

II

SERVICES TO BE OBTAINED INDEPENDENTLY BY EACH FUND 

  

1

Services and Expenses. Each Fund shall, at its own expense, obtain from Service Company or an outside vendor (as that Fund’s Board of Trustees shall determine): 

A

Services of an independent public accountant. 

B

Services of outside legal counsel. 

C

Transfer agency services, including “shareholder services.” 

D

Custodian, registrar and dividend disbursing services. 

E

Brokerage fees, commissions and transfer taxes in connection with the purchase and sale of securities for its investment portfolio. 

F

Investment advisory services. 

G

Taxes and other fees applicable to its operations. 

H

Costs incident to its annual or special meetings of shareholders, including but not limited to legal and accounting fees, and the preparations, printing and mailing of proxy materials. 

I

Trustees’ fees. 

J

Costs incurred in the continued maintenance of its corporate existence, including reports to shareholders and government agencies, and the expenses, if any, attributable to the registration of the Fund’s shares with Federal and state regulatory authorities. 

K

And, in general and except as provided in Section 3.2(B), any other costs directly attributable to and identified with a particular Fund or Funds rather than all Funds which are parties to this Agreement. 

2.2 Disbursement of Payment for These Services.   Notwithstanding the provisions of Section 2.1 above, Service Company may, as agent for any Fund, disburse to third parties payments for any of the foregoing services or expenses.  Each Fund shall reimburse Service Company promptly for such disbursements made on behalf of the Fund. 

  

III

SERVICES PROVIDED BY AND EXPENSES OF SERVICE COMPANY 

  

1

Services to be Provided to Funds.  Service Company shall with respect to each Fund, subject to the direction and control of the Board of Trustees and officers of the Fund: 

A

Manage, administer and/or conduct the general business activities of the Fund. 

B

Provide the personnel and obtain the office space, facilities and equipment necessary to perform such general business activities under the direction of the Funds’ executive officers (who may also be officers of Service Company) who will have the full responsibility for the general management of these functions. 

C

Establish wholly-owned subsidiaries, and supervise the management and operations of such subsidiaries, as are necessary or appropriate to carry on or support the business activities of the Fund; and authorize such subsidiaries to perform such other functions for the Fund, including organizing new investment companies which are intended to become parties to this Agreement pursuant to Section 5.4 or Section 5.5, as Service Company’s Board of Directors shall determine.   

No provisions hereof shall prohibit the Service Company from performing such additional services to the Fund as the Fund’s Board of Trustees may appropriately request and which two-thirds of the shareholders of the Service Company shall approve. 

3.2 Expenses of Operation of Service Company.  Each of the Funds agrees to pay to the Service Company, within 10 days after the last business day of each month or at such other time as agreed to by the Fund and the Service Company, the Fund’s portion of the actual costs of operation of Service Company for each monthly period, or for such other period as is agreed upon, during which the Fund is a party to this Agreement. 

A.  Corporate Management and Administrative Expenses. A Fund’s portion of the cost of operation of Service Company shall mean its share of the direct and indirect expenses of Service Company’s providing corporate management and administrative services, including distribution services of an administrative nature, as allocated among the Funds with Allocation of indirect costs based on one or more of the following methods of allocation: 

(1

Net Assets:  The proportionate allocation of expenses based upon the value of each Fund’s net assets, computed as a percentage of the value of total net assets of all Funds receiving services from Service Company, determined at the end of the last preceding monthly period. 

(2

Personnel Time:  The proportionate allocation of expenses based upon a summary by each Fund of the time spent by each employee who works directly on the affairs of one or more of the Funds, computed as a percentage of the total time spent by such employee on the affairs of all of the Funds. 

(3

Shareholder Accounts:  The proportionate allocation of expenses based upon the number of each Fund’s shareholder accounts and transaction activity in those accounts, measured over a period of time, relative to the total number of shareholder accounts and transaction activity in those accounts for all Funds receiving number of portfolio transactions for all Funds receiving services from the Service Company during such period. 

(4

Such other methods of allocation as may be approved by the Board of Directors of the Service Company based upon its determination that the allocation method is fair to each Fund in view of (i) the nature, amount and purpose of the expenditure, (ii) the benefits, if any, to be derived directly by each Fund relative to the benefits derived by other Funds, (iii) the need or desirability for the Funds as a group to provide competitive investment programs and services at competitive prices for the group to survive and grow, (iv) the benefits which each Fund derives by being a member of a strong Fund group, and (v) such other factors as the Board considers relevant to the specific expenditure and allocation. 

B

Distribution Expenses. Each of the Funds expressly agrees to pay to Service Company, as requested, the Fund’s portion of the actual cost of distributing shares of the Funds, which shall mean its share of all of the direct and indirect expenses of a marketing and promotional nature including, but not limited to, advertising, sales literature, and sales personnel, as well as expenditures on behalf of any newly organized registered investment company which is to become a party of this Agreement pursuant to Section 5.4. The cost of distributing shares of the Funds shall not include distribution-related expenses of an administrative nature, which shall be allocated among the Funds pursuant to Section 3.2(A). Distribution expenses of a marketing and promotional nature shall be allocated among the Funds in the manner approved by the Securities and Exchange Commission in Investment Company Act Release No. 11645 (Feb. 25, 1981): 

(1

50% of these expenses will be allocated based upon each Fund’s average month-end assets during the preceding quarter relative to the average month-end assets during the preceding quarter of the Funds as a group. 

(2

50% of these expenses will be allocated initially among the Funds based upon each Fund’s sales for the 24 months ended with the last day of the preceding quarter relative to the sales of the Funds as a group for the same period. (Shares issued pursuant to a reorganization shall be excluded from the sales of a Fund and the Funds as a group.) 

(3

Provided, however, that no Fund’s aggregate quarterly contribution for distribution expenses, expressed as a percentage of its assets, shall exceed 125% of the average expenses for the Funds as a Group, expressed as a percentage of the total assets of the Funds. Expenses not charged to a particular Fund(s) because of this 125% limitation shall be reallocated to other Funds on iterative basis; and that no Fund’s annual expenses for distribution shall exceed 0.2% of its average month-end net assets.  

  

IV

CONCERNING THE SERVICE COMPANY 

  

1

Name.   Each Fund acknowledge and agrees: 

A

That the name “The Vanguard Group, Inc.”, and any variants thereof used to identify (1) the Funds as a group, (2) any Fund as a member of a group being served by Service Company, or (3) any other person as being served or related to Service Company (whether now in existence or hereafter created), shall be the sole and exclusive property of Service Company, its affiliates, and its successors. 

B

That Service Company shall have the sole and exclusive right to permit the use of said name or variants thereof so long as this Agreement or any amendments thereto are effective. 

C

That upon its withdrawal from this Agreement and upon the written request of Service Company, the Fund shall cease to use, or in any way to refer to itself as related to, “The Vanguard Group, Inc.” or any variant thereof. 

The foregoing agreements on the part of each Fund are hereby made binding upon it, its trustees, officers, shareholders and creditors and all other persons claiming under or through it. 

2

Services to Others.  The Service Company may render services to any person other than the Funds so long as: 

A

The services to be rendered to the Funds hereunder are not impaired thereby. 

B

The terms and provisions upon which the services are to be rendered have been approved by the holders of a majority of the Shares. 

C

The services rendered for compensation and, to the extent achievable, for the purpose of gaining a profit thereon. 

D

Any income earned and fees received by Service Company shall be used to reduce the total costs and expenses of Service Company. 

3

Books, Records, and Audits of Service Company.  The Service Company, and any subsidiary established pursuant to Section 3.1(C), shall maintain complete, accurate, and current books, records, and financial statements concerning its activities. To the extent appropriate, it will preserve said records in the manner and for the periods prescribed by law. Financial records and statements shall be kept in accord with generally accepted accounting principles and shall be audited at least annually by independent public accountants (who may also be accountants for any of the Funds). Within 120 days after the close of Service Company’s fiscal year, it shall deliver to each Fund a copy of its audited financial statements for that year and the accountants report thereon. Service Company, on behalf of itself and any subsidiary, acknowledges that all of the records they shall prepare and maintain pursuant to this Agreement shall be the property of the Funds and that upon a request of any Fund they shall make the Fund’s records available to it, along with such other information and data as are reasonably requested by the Fund, for inspection, audit or copying, or turn said records over to the Fund. 

3

Indemnification. 

A

Each Fund (herein the “Indemnitor”) agrees to indemnify, hold harmless, and reimburse (herein “indemnify”) every other Fund, Service Company and/or any subsidiary of Service Company (herein the “Indemnitee”): 

(1

which Indemnitee (a) was or is a party to, or is threatened to be made a party to, any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative (herein a “suit”), or (b) incurs an actual economic loss or expense (herein a “loss”). 

(2

if: (a) such suit or loss arises from an action or failure to act, event, occurrence, transaction, or other analogous happening (herein an “event”) under circumstances in which the Indemnitee is involved in a suit or incurs a loss. 

(i

as a result substantially of, or attributable primarily to, its being a party to this Agreement, or to its indirect participation in transactions contemplated by this Agreement; and  

(ii

where the suit or loss arises primarily and substantially from an event related primarily and substantially to the business and/or operations of the Indemnitor; and 

(b

an independent third party, who may but need not be legal counsel for the Funds, advises the Funds in writing (i) that the condition set forth in “(1)” and “(2)(a)” have occurred and (ii) that the Indemnitee is without significant fault or responsibility for the suit or loss as measured by the comparative conduct of the Indemnitor and Indemnitee and by the purposes sought to be accomplished by this Agreement. 

B

The financial obligations of the Indemnitor under this Section shall be limited to: 

(1

In the case of a suit, to expenses (including attorneys’ fees), actually incurred by the Indemnitee. The termination of any suit by judgment, order, settlement, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the Indemnitee is not entitled to be indemnified hereunder. 

(2) In the case of an event, to losses and/or expenses (including attorney’s fees) actually incurred by the Indemnitee. 

The Indemnitee shall not be liable financially hereunder for lost profits in the case of either a suit or loss. 

C

Expenses incurred in defending a suit or resolving an event may be paid by the prospective Indemnitor in advance of the final disposition of such suit or event if authorized by the Board of Trustees of the prospective Indemnitor in the specific case upon receipt of an undertaking by or on behalf of the prospective indemnitee to repay such amount unless it shall ultimately be determined that the Indemnitee is entitled to be indemnified by the Indemnitor as provided in this Section. 

C

The indemnification provided by this section shall not be deemed exclusive of any other rights to which the Indemnitee may be entitled under any agreement or otherwise. 

 

V

TERM OF AGREEMENT 

  

1

Effective Period.This Agreement shall become effective on the date first written above, and shall continue in full force and effect as to all parties hereto until terminated or amended by mutual agreement of all parties hereto.  The withdrawal pursuant to Section 5.2(A) or 5.2(B) of one or more of the Funds from this agreement shall not affect the continuance of this Agreement except as to the parties withdrawing. 

2

Withdrawal from Agreement. 

A

Any Fund may elect to withdraw from this Agreement effective at the end of any monthly period by giving at least 90 days’ prior written notice to each of the parties to this Agreement.  Upon the written demand of all other Funds which are parties to this Agreement a Fund shall withdraw, and in the event of its failure to do so shall be deemed to have withdrawn, from this Agreement; such demand shall specify the date of withdrawal which shall be at the end of any monthly period at least 90 days from the time of service of such demand. 

B

In the event of the withdrawal of any Fund from this Agreement, all its rights and obligations, except for lease commitments, under this Agreement (except such rights or obligations as have accrued prior to the date of withdrawal) shall terminate as of the date of the withdrawal.  The withdrawing Fund shall surrender its Shares to Service Company, and (1) shall be entitled to receive from Service Company an amount equal to the excess of the fair value of (i) its Shares of other securities Service Company as of the date of its withdrawal less (ii) its proportionate interest in any liabilities of Service Company, including when appropriate any commitments of Service Company and unexpired leases at the date of withdrawal; (2) shall be obligated to pay Service Company an amount equal to the excess of (ii) over (i).  Such amount to be received from or paid to Service Company shall be determined by the favorable vote of the holders of a majority of the Shares whose determination shall be conclusive upon the Funds.  Any amount found payable by the Service Company to the withdrawing Fund shall be recoverable by Service Company from the Funds remaining under this Agreement in accordance with the provisions of Section 1.2, 1.3 and 1.4 hereof. 

3

Termination by Mutual Consent.  In the event that all Funds withdraw from this Agreement without entering into a comparable successor agreement, each Fund shall surrender its Shares to Service Company and after payment by Service Company of all its liabilities, including the settlement of unexpired lease obligations, shall: 

A

Receive from Service Company in cash an amount equal to its proportionate share of the actual value of all assets of the Service Company which can be reduced readily to cash. 

B

Negotiate in good faith with the other Funds provision for the equitable use and/or disposition of assets of the Service Company which are not readily reducible to cash. 

4

Additional Parties to Agreement. Upon the favorable vote of two-thirds of the shareholders and of the holders of two-thirds of the Shares of the Service Company, any investment company registered under the Investment Company Act of 1940 may become a party to this Agreement and share as a Fund in all of the rights, duties and liabilities hereunder by

adopting, executing and delivering to the Service Company and the Funds a signed copy of this Agreement which shall evidence that investment company’s agreement to assume the duties and obligations of a Fund hereunder.  Upon the delivery of a signed copy of this Agreement, the new Fund shall be subject to all provisions of this Agreement and become a holder of Shares by adjustment in cash investments among the Funds pursuant to Section 1.3.  No person shall become a holder of shares without becoming a party to this Agreement. 

5

Fund of Funds Parties to Agreement. A “Fund of Funds” shall mean a registered investment company or series of a Fund which is managed and administered by Service Company and which invests substantially all of its assets in shares of two or more Funds (or series thereof). 

A.  Upon the favorable vote of two-thirds of the shareholders and of the holders of two-thirds of the Shares of the Service Company, a Fund of Funds organized as a separate registered investment company may become a party to this Agreement and share as a Fund in all of the rights, duties and liabilities hereunder by adopting, executing and delivering to the Service Company and the Funds a signed copy of this Agreement which shall evidence that investment company’s agreement to assume the duties and obligations of a Fund hereunder, except as provided in the following paragraph B. 

B.  A Fund of Funds:  (1) shall not be obligated or permitted to make a capital contribution or to acquire Shares pursuant to Section I except to the extent that the Fund of Funds’ assets are not invested in shares of the Funds; (2) shall not be allocated or obligated to pay any portion of the expenses of Service Company pursuant to Section 3.2 except as determined by the Board of Directors of Service Company pursuant to Section 3.2(A)(4); and (3) may have the expenses the Fund of Funds would otherwise bear pursuant to Section 2.1 reduced or eliminated by the savings which accrue to the benefit of the Funds. 

C.  Upon the delivery of a signed copy of this Agreement, the Fund of Funds shall be subject to all the provisions of this Agreement except as provided herein.  

  

VI

GENERAL 

  

1

Definition of Certain Terms.  As used in this Agreement, the terms set forth below shall mean: 

A

“Fair Value of Shares” shall mean the proportionate interest, as represented by the ratio of the number of Shares owned by a Fund to the number of Shares issued and outstanding, in all assets of the Service Company less all liabilities of the Service Company on the date fair value is to be determined.  Assets shall be valued at fair market value.  In case of any dispute as to the proportionate interest of any Fund or as to the fair value of the Shares, the issue shall be determined by the favorable vote of the holders of a majority of the Shares, whose determination shall be conclusive upon the Fund. 

A

“Person” shall mean a natural person, a corporation, a partnership, an association, a joint-stock company, a trust, a fund or any organized group of persons whether incorporated or not. 

2

Assignment.  This Agreement shall bind and inure to the benefit of the parties thereto, their respective successors and assigns. 

2

Captions.The captions in this Agreement are included for convenience of reference only and in no way define any of the provisions hereof or otherwise affect their construction or effect. 

3

Amendment. Unless prohibited by applicable laws, regulations or orders of regulatory authorities and except as set forth below, this Agreement may be amended at any time and in one or more respects upon the favorable vote of the holders of a majority of the Shares (except that the vote required in Sections 3.1 and 5.4 may be amended only by the favorable votes of the number of holders or Shares specified therein) and without the further approval or vote of shareholders of any of the Funds; provided, however, that Section 1.4 (limiting cash investments by the Funds in Service Company) may not be amended unless and exemptive order permitting such amendment is obtained from the U.S. Securities and Exchange Commission. 

4

Severability.  If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. 

In Witness Whereof, each of the parties hereto has caused the Agreement to be signed and its corporate seal to be hereto affixed by its proper officers thereunto duly authorized, all as of the date and year first above written. 

  

  

  

  

  

  

The Vanguard Group, Inc. 

  

  

Attest:/s/ Anne RobinsonBY: /s/ Mortimer J. Buckley 

Anne Robinson Mortimer J. Buckley 

Secretary

      Chief Executive Officer  

  

The Vanguard Group of Investment Companies:    

  

Vanguard Admiral FundsVanguard Bond Index Funds 

Vanguard California Tax-Free Funds Vanguard Charlotte Funds 

Vanguard Chester FundsVanguard Explorer Fund 

Vanguard Fenway Funds Vanguard Fixed Income Securities Funds
Vanguard Horizon FundsVanguard Index Funds
Vanguard International Equity Index FundsVanguard Institutional Index Funds 

Vanguard Malvern FundsVanguard Massachusetts Tax-Exempt Funds 

Vanguard Money Market ReservesVanguard Montgomery Funds 

Vanguard Municipal Bond FundsVanguard New Jersey Tax-Free Funds Vanguard New York Tax-Free FundsVanguard Ohio Tax-Free Funds 

Vanguard Pennsylvania Tax-Free FundsVanguard Quantitative Funds 

Vanguard Scottsdale Funds2Vanguard Specialized Funds            Vanguard STAR FundsVanguard Tax-Managed Funds 

Vanguard Trustees’ Equity FundVanguard Valley Forge Funds 

Vanguard Variable Insurance Funds Vanguard Wellesley Income Fund 

Vanguard Wellington FundVanguard Whitehall Funds 

Vanguard Windsor FundsVanguard World Fund 

  

  

  

Attest:/s/ Anne RobinsonBY: /s/ Mortimer J. Buckley 

Anne RobinsonMortimer J. Buckley 

Secretary

            President and Chief Executive Officer  

  

  

  

Signature page revised as of February 4, 2020. 

 

* Funds’ Service Agreement dated May 1, 1975; an Amended and Restated Funds’ Service Agreement dated October 1, 1977; an Amended and Restated Funds’ Service Agreement dated May 10, 1993, an Amended and Restated Funds’ Service Agreement dated January 1, 1996, and an Amended and Restated Funds’ Service Agreement dated June 15, 2001 as therefore amended.

 

11 

Formerly Vanguard Treasury Fund 

646121    


  

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 

  

  

We hereby consent to the incorporation by reference in this Registration Statement on Form N-1A of Vanguard Malvern Funds of our report dated November 12, 2020, relating to the financial statements and financial highlights, which appears in Vanguard U.S. Value Fund’s Annual Report on Form N-CSR for the year ended September 30, 2020, and of our reports dated November 17, 2020, relating to the financial statements and financial highlights, which appear in Vanguard Short-Term Inflation-Protected Securities Index Fund, Vanguard Institutional Short-Term Bond Fund, Vanguard Institutional Intermediate-Term Bond Fund, Vanguard Core Bond Fund and Vanguard Emerging Markets Bond Fund’s Annual Reports on Form N-CSR for the year ended September 30, 2020. We also consent to the references to us under the headings “Financial Statements”, “Service Providers—Independent Registered Public Accounting Firm” and “Financial Highlights” in such Registration Statement.  

  

  

  

  

/s/PricewaterhouseCoopers LLP 

Philadelphia, Pennsylvania
January 27, 2021 

  

  


VANGUARD FUNDS MULTIPLE CLASS PLAN 

  

  

I.

INTRODUCTION 

  

This Multiple Class Plan (the “Plan”) describes seven separate classes of shares that may be offered by investment company members of The Vanguard Group of Mutual Funds (collectively the “Funds,” individually a “Fund”). The Plan has been adopted pursuant to Rule 18f-3 under the Investment Company Act of 1940 (the “1940 Act”) to allow each Fund to offer multiple classes of shares in a manner permitted by Rule 18f-3, subject to the requirements imposed by the Rule. Each Fund may offer any one or more of the specified classes. 

  

The Plan has been approved by the Board of Directors of The Vanguard Group, Inc. (“VGI”). In addition, the Plan has been adopted by a majority of the Board of Trustees of each Fund (“Fund Board”), including a majority of the Trustees who are not interested persons of each Fund. The classes of shares offered by each Fund are designated in Schedule A hereto, as such Schedule may be amended from time to time. 

  

  

II.

SHARE CLASSES 

  

A Fund may offer any one or more of the following share classes: 

  

Investor Shares  

Admiral Shares  

Institutional Shares Institutional Plus Shares 

Institutional Select Shares ETF Shares 

Transition Shares 

  

  

III.

DISTRIBUTION, AVAILABILITY AND ELIGIBILITY 

  

Distribution arrangements for all classes are described below. Distribution arrangements vary by VGI business line depending on the eligibility of the client segments to whom they market. Each Fund retains sole discretion in determining share class availability, and VGI retains discretion in determining whether Fund shares shall be offered either directly or through certain financial intermediaries, or on certain financial intermediary platforms. Eligibility requirements for purchasing shares of each class will differ, as follows: 

  

A.

Investor Shares 

  

Investor Shares of actively-managed Funds generally will be available to investors who are not permitted to purchase other classes of shares, subject to the eligibility requirements specified in Schedule B hereto, as such Schedule may be amended from time to time.  It is expected that the minimum investment amount for Investor Shares of actively-managed Funds will normally be lower than the amount required for any other class of shares of such Funds. Investor Shares of actively-managed Funds are typically distributed by all VGI business lines.  Investor Shares of index Funds generally will be available to Funds that operate as a Fund-of-Funds and certain retirement plan clients receiving recordkeeping services from VGI. 

  

B.

Admiral Shares 

  

Admiral Shares generally will be available to retail, institutional, and other investors who meet the eligibility requirements specified in Schedule B hereto, as such Schedule may be amended from time to time. These eligibility requirements may include, but are not limited to the following factors: (i) the total amount invested in the Fund; or (ii) any other factors deemed appropriate by a Fund’s Board. Admiral Shares are typically distributed by all VGI business lines. 

  

C.

Institutional Shares 

  

Institutional Shares generally will be available to institutional and other investors who meet the eligibility requirements specified in Schedule B hereto, as such Schedule may be amended from time to time. It is expected that the minimum investment amount per account for Institutional Shares will be substantially higher than the amounts required for Investor Shares or Admiral Shares. Institutional Shares are typically distributed by Vanguard’s financial advisory services and institutional business lines. 

  

D.

Institutional Plus Shares 

  

Institutional Plus Shares generally will be available to institutional and other investors who meet the eligibility requirements specified in Schedule B hereto, as such Schedule may be amended from time to time.  It is expected that the minimum investment amount for Institutional Plus Shares will be substantially higher than the amount required for Institutional Shares. Institutional Plus Shares are typically distributed by VGI’s financial advisory services and institutional business lines. 

  

E.

Institutional Select Shares 

  

Institutional Select Shares generally will be available to institutional investors who meet the eligibility requirements specified in Schedule B hereto, as such Schedule may be amended from time to time. It is expected that the minimum investment amount for Institutional Select Shares will be the highest among all Fund share classes. Institutional Select Shares are typically distributed by VGI’s institutional business line. 

  

F.

ETF Shares 

  

A Fund will sell ETF Shares to investors that are (or who purchase through) Authorized Participants, and who generally pay for their ETF shares by depositing a prescribed basket consisting predominantly of securities with the Fund. An Authorized Participant is an institution, usually a broker-dealer, that is a participant in the Depository Trust Company (DTC) and that has executed a Participant Agreement with the Fund’s distributor. Additional eligibility requirements may be specified in Schedule B hereto, as such Schedule may be amended from time to time. Investors who are not Authorized Participants may buy and sell ETF shares through various exchanges and market centers. ETF Shares are typically distributed by all VGI business lines. 

  

G.

Transition Shares 

  

Transition Shares generally will be available solely to Funds that operate as Funds-of-Funds and meet the eligibility requirements specified in Schedule B hereto, as such Schedule may be amended from time to time. Transition Shares are only internally distributed. 

  

  

IV.

SERVICE ARRANGEMENTS 

  

Shareholders in all share classes will receive a range of shareholder services provided by VGI. These services may include transaction processing and shareholder recordkeeping, as well as the mailing of updated prospectuses, shareholder reports, tax statements, confirmation statements, quarterly portfolio summaries, and other items. Each share class will bear its proportionate share of VGI’s cost of providing such services in accordance with Section VI of the Plan. 

  

  

V.

CONVERSION FEATURES 

  

A.

Self-Directed Conversions 

  

1.

Conversion into Investor Shares, Admiral Shares, Institutional Shares Institutional Plus Shares, and Institutional Select Shares.

Shareholders may conduct self-directed conversions from one share class into another share class of the same Fund for which they are eligible. Self-directed conversions may be initiated by the shareholder; however, depending upon the particular share class and the complexity of the shareholder’s accounts, such conversions may require the assistance of a VGI representative. Shareholders may convert from one share class into another share class provided that following the conversion the shareholder meets the then applicable eligibility requirements for the share class into which they are converting. Any such conversion will occur at the respective net asset values of the share classes next calculated after VGI’s receipt of the shareholder’s request in good order. 

  

2.

Conversion into ETF Shares. Except as otherwise provided, a shareholder may convert Investor Shares, Admiral Shares, or Institutional Shares into ETF Shares of the same Fund (if available), provided that: (i) the share class out of which the shareholder is converting and the ETF Shares declare and distribute dividends on the same schedule; (ii) the shares to be converted are not held through an employee benefit plan; and (iii) following the conversion, the shareholder will hold ETF Shares through a brokerage account. Any such conversion will occur at the respective net asset values of the share classes next calculated after VGI’s receipt of the shareholder’s request in good order. VGI or the Fund may charge an administrative fee to process conversion transactions. 

  

B.

Automatic Conversions 

  

1.

Automatic conversion into Admiral Shares. VGI may automatically convert Investor Shares into Admiral Shares of the same Fund (if available), provided that following the conversion the shareholder meets the eligibility requirements for Admiral Shares. Any such conversion will occur at the respective net asset values of the share classes next calculated after VGI’s conversion without the imposition of any charge. Such automatic conversions may occur on a periodic, or one-time basis. Automatic conversions may not apply to certain financial types of accounts (e.g., accounts held through certain intermediaries, or other accounts as may be excluded by VGI management). 

  

2.

Automatic conversion into Institutional Shares, Institutional Plus Shares, or Institutional Select Shares. VGI may conduct automatic conversions of any share class into either Institutional Shares, Institutional Plus Shares, or Institutional Select Shares in accordance with then-current eligibility requirements. 

  

C.

Involuntary Conversions and Cash Outs 

  

1.

Cash Outs. If a shareholder in any class of shares no longer meets the eligibility requirements for such shares, the Fund may, if permitted under applicable law, cash out the shareholder’s remaining account balance. Any such cash out will be preceded by written notice to the shareholder and will be subject to the Fund’s normal redemption fees, if any. 

  

2.

Conversion of Admiral Shares, Institutional Shares, and Institutional Plus Shares. If a shareholder no longer meets the eligibility requirements for the share class currently held, the Fund may convert the shareholder’s holdings into the share class for which such shareholder is eligible. Any such conversion will be preceded by written notice to the shareholder, and will occur at the respective net asset values of the share classes without the imposition of any sales load, fee, or other charge. 

  

3.

Conversions of Transition Shares. When a Fund that issues Transition Shares has completed the relevant portfolio transition, the Fund will convert the Transition Shares to another share class of the same Fund as appropriate, based on the eligibility requirements of such class as specified in Schedule B hereto, as such Schedule may be amended from time to time. 

  

  

VI.

EXPENSE ALLOCATION AMONG CLASSES 

  

A.

Background 

  

VGI is a jointly-owned subsidiary of the Funds. VGI provides the Funds, on an at-cost basis, virtually all of their corporate management, administrative and distribution services.  VGI also may provide investment advisory services on an 

at-cost basis to the Funds. VGI was established and operates pursuant to a Funds’ Service Agreement between itself and the Funds (the “Agreement”), and pursuant to certain exemptive orders granted by the U.S. Securities and Exchange Commission (“Exemptive Orders”). VGI’s direct and indirect expenses of providing corporate management, administrative and distribution services to the Funds are allocated among such Funds in accordance with methods specified in the Agreement or such other methods as may be approved by the Board of Directors of VGI (“VGI Board”) as permitted under the Agreement and by the Fund Board.1  

  

B.

Class Specific Expenses 

  

1.

Expenses for Account-Based Services. Expenses associated with VGI’s provision of account-based services to the Funds will be allocated among the share classes of each Fund on the basis of the amount incurred by each such class as follows: 

  

(a)

Account maintenance expenses.   Expenses associated with the maintenance of investor accounts will be proportionately allocated among each Fund’s share classes based upon a monthly determination of the costs to service each class of shares. Factors considered in this determination are (i) the percentage of total shareholder accounts represented by each class; and (ii) the percentage of total account transactions performed by VGI for each class. 

  

(b)

Expenses of special servicing arrangements. Expenses relating to any special servicing arrangements for a specific class will be proportionally allocated among each eligible Fund’s share classes primarily based on their percentage of total shareholder accounts receiving the special servicing arrangements. 

  

(c)

Literature production and mailing expenses. Expenses associated with shareholder reports, proxy materials and other literature will be allocated among each Fund’s share classes based upon the number of such items produced and mailed for each class. 

  

2.

Other Class Specific Expenses. Expenses for the primary benefit of a particular share class will be allocated to that share class. Such expenses would include any legal fees attributable to a particular class. 

  

C.

Fund-Wide Expenses 

  

1.

Marketing and Distribution Expenses. Each share class will bear marketing and distribution expenses proportionate to the marketing and distribution expenses of the business lines that distribute that share class. Retail and institutional businesses expenses will be allocated based on the percentage of client accounts in each share class serviced by the respective business. Financial advisory service expenses will be apportioned based on the percentage of assets in each share class. 

  

Expenses associated with each share class will be allocated only among the Funds that have such share class according to the “Vanguard Modified Formula,” with each share class or each Fund treated as if it were a separate Fund. The Vanguard Modified Formula is set forth in the Agreement and in certain of the SEC Exemptive Orders. This allocation has been deemed an appropriate allocation methodology by each Fund Board under paragraph (c)(1)(v) of Rule 18f-3 under the 1940 Act. 

  

2.

Asset Management Expenses.

Expenses associated with management of a Fund’s assets (including all advisory, tax preparation and custody fees) will be allocated among the Fund’s share classes on the basis of their relative net assets. 

  

3.

Other Fund Expenses. Any other Fund expenses not described above will be allocated among the share classes on the basis of their relative net assets. 

  

  

VII.

ALLOCATION OF INCOME, GAINS AND LOSSES 

  

Income, gains and losses will be allocated among each Fund’s share classes on the basis of their relative net assets. As a result of differences in allocated expenses, it is expected that the net income of, and dividends payable to, each class of shares will vary. Dividends and distributions paid to each class of shares will be calculated in the same manner, on the same day and at the same time. 

  

  

VIII.

VOTING AND OTHER RIGHTS 

  

Each share class will have: (i) exclusive voting rights on any matter submitted to shareholders that relates solely to its service or distribution arrangements; and (ii) separate voting rights on any matter submitted to shareholders in which the interests of one class differ from the interests of the other class; and (iii) in all other respects the same rights, obligations and privileges as each other, except as described in the Plan. 

  

IX.

AMENDMENTS 

  

All material amendments to the Plan must be approved by a majority of the Board of Trustees of each Fund, including a majority of the Trustees who are not interested persons of the Fund. In addition, any material amendment to the Plan must be approved by the Board of Directors of VGI. 

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Original Board Approval: July 21, 2000  

Last Approved by Board: November 22, 2019     

  

SCHEDULE A 

to 

VANGUARD FUNDS MULTIPLE CLASS PLAN 

  

Note: Transition Shares, when offered by a Fund, are available for a limited period of time and are then converted into another share class. For this reason, Transition Shares are not shown on Schedule A. 

  

Vanguard FundShare Classes Authorized 

  

Vanguard Admiral Funds 

·

Treasury Money Market FundInvestor 

·

S&P 500 Value Index FundInstitutional, ETF 

·

S&P 500 Growth Index FundInstitutional, ETF 

·

S&P MidCap 400 Index FundInstitutional, ETF 

·

S&P MidCap 400 Value Index FundInstitutional, ETF 

·

S&P MidCap 400 Growth Index FundInstitutional, ETF 

·

S&P SmallCap 600 Index FundInstitutional, ETF 

·

S&P SmallCap 600 Value Index FundInstitutional, ETF 

·

S&P SmallCap 600 Growth Index FundInstitutional, ETF 

  

Vanguard Bond Index Funds 

·

Short-Term Bond Index FundInvestor, Admiral, Institutional, Institutional Plus, ETF 

·

Intermediate-Term Bond Index FundInvestor, Admiral, Institutional, Institutional 

Plus, ETF 

·

Long-Term Bond Index FundAdmiral, Institutional, Institutional Plus, ETF 

·

Total Bond Market Index FundInvestor, Admiral, Institutional, Institutional Plus, Institutional Select, ETF 

·

Total Bond Market II Index FundInvestor, Institutional 

·

Inflation-Protected Securities FundInvestor, Admiral, Institutional 

  

Vanguard California Tax-Free Funds 

·

Municipal Money Market FundInvestor 

·

Intermediate-Term Tax-Exempt FundInvestor, Admiral 

·

Long-Term Tax-Exempt FundInvestor, Admiral 

  

Vanguard Charlotte Funds 

·

Total International Bond Index FundInvestor, Admiral, Institutional, 

Institutional Select, ETF 

·

Global Credit Bond FundInvestor, Admiral 

  

Vanguard Fund

Share Classes Authorized 

  

Vanguard Chester Funds 

·

PRIMECAP FundInvestor, Admiral 

·

Target Retirement Income FundInvestor 

·

Target Retirement 2010 FundInvestor 

·

Target Retirement 2015 FundInvestor 

·

Target Retirement 2020 FundInvestor 

·

Target Retirement 2025 FundInvestor 

·

Target Retirement 2030 FundInvestor 

·

Target Retirement 2035 FundInvestor 

·

Target Retirement 2040 FundInvestor 

·

Target Retirement 2045 FundInvestor 

·

Target Retirement 2050 FundInvestor 

·

Target Retirement 2055 FundInvestor 

·

Target Retirement 2060 FundInvestor 

·

Target Retirement 2065 FundInvestor 

·

Institutional Target Retirement Income FundInstitutional 

·

Institutional Target Retirement 2010 FundInstitutional 

·

Institutional Target Retirement 2015 FundInstitutional 

·

Institutional Target Retirement 2020 FundInstitutional 

·

Institutional Target Retirement 2025 FundInstitutional 

·

Institutional Target Retirement 2030 FundInstitutional 

·

Institutional Target Retirement 2035 FundInstitutional 

·

Institutional Target Retirement 2040 FundInstitutional 

·

Institutional Target Retirement 2045 FundInstitutional 

·

Institutional Target Retirement 2050 FundInstitutional 

·

Institutional Target Retirement 2055 FundInstitutional 

·

Institutional Target Retirement 2060 FundInstitutional 

·

Institutional Target Retirement 2065 FundInstitutional 

  

Vanguard Explorer Fund

Investor, Admiral 

  

Vanguard Fenway Funds 

·

Equity Income FundInvestor, Admiral 

·

Growth Equity FundInvestor 

·

PRIMECAP Core FundInvestor 

  

Vanguard Fixed Income Securities Funds 

·

Ultra-Short-Term Bond FundInvestor, Admiral 

·

Real Estate II Index FundInstitutional Plus 

·

Short-Term Treasury FundInvestor, Admiral 

·

Short-Term Federal FundInvestor, Admiral 

·

Short-Term Investment-Grade FundInvestor, Admiral, Institutional 

·

Intermediate-Term Treasury FundInvestor, Admiral 

·

Intermediate-Term Investment-Grade FundInvestor, Admiral 

·

GNMA FundInvestor, Admiral 

  

Vanguard Fund

Share Classes Authorized 

  

·

Long-Term Treasury FundInvestor, Admiral 

·

Long-Term Investment-Grade FundInvestor, Admiral 

·

High-Yield Corporate FundInvestor, Admiral 

  

Vanguard Horizon Funds 

·

Capital Opportunity FundInvestor, Admiral 

·

Global Equity FundInvestor 

·

Strategic Equity FundInvestor 

·

Strategic Small-Cap Equity FundInvestor 

·

International Core Stock FundInvestor, Admiral 

  

Vanguard Index Funds 

·

500 Index FundInvestor, Admiral, Institutional Select, ETF 

·

Extended Market Index FundInvestor, Admiral, Institutional, Institutional Plus, Institutional Select, ETF 

·

Growth Index FundInvestor, Admiral, Institutional, ETF 

·

Large-Cap Index FundInvestor, Admiral, Institutional, ETF 

·

Mid-Cap Growth Index FundInvestor, Admiral, ETF 

·

Mid-Cap Index FundInvestor, Admiral, Institutional, Institutional Plus, ETF 

·

Mid-Cap Value Index FundInvestor, Admiral, ETF 

·

Small-Cap Growth Index FundInvestor, Admiral, Institutional, ETF 

·

Small-Cap Index FundInvestor, Admiral, Institutional, Institutional Plus, ETF 

·

Small-Cap Value Index FundInvestor, Admiral, Institutional, ETF 

·

Total Stock Market Index FundInvestor, Admiral, Institutional, Institutional Plus, Institutional Select, ETF 

·

Value Index FundInvestor, Admiral, Institutional, ETF 

  

Vanguard Institutional Index Funds 

·

Institutional Index FundInstitutional, Institutional Plus 

·

Institutional Total Stock Market Index FundInstitutional, Institutional Plus 

  

Vanguard International Equity Index Funds 

·

Emerging Markets Stock Index FundInvestor, Admiral, Institutional, 

Institutional Plus 

FTSE Emerging Markets ETF

ETF 

·

European Stock Index FundInvestor, Admiral, Institutional, Institutional Plus 

FTSE Europe ETF

ETF 

·

FTSE All-World ex US Index FundAdmiral, Institutional, Institutional 

Plus, ETF 

·

Pacific Stock Index FundInvestor, Admiral, Institutional 

FTSE Pacific ETF

ETF 

·

Total World Stock Index FundAdmiral, Institutional, ETF 

·

FTSE All World ex-US Small-Cap Index FundAdmiral, Institutional, ETF 

·

Global ex-U.S. Real Estate Index FundAdmiral, Institutional, ETF 

  

Vanguard Fund

Share Classes Authorized 

  

Vanguard Malvern Funds 

·

Capital Value FundInvestor 

·

Short-Term Inflation-Protected Securities 

Index Fund

Investor, Admiral, Institutional, ETF 

·

U.S. Value FundInvestor 

·

Institutional Short-Term Bond FundInstitutional Plus 

·

Institutional Intermediate-Term Bond FundInstitutional Plus 

·

Core Bond FundInvestor, Admiral 

·

Emerging Markets Bond FundInvestor, Admiral 

  

Vanguard Massachusetts Tax-Exempt Funds 

·

Massachusetts Tax-Exempt FundInvestor 

  

Vanguard Money Market Funds 

·

Cash Reserves Federal Money Market FundAdmiral 

·

Federal Money Market FundInvestor 

  

Vanguard Montgomery Funds 

·

Market Neutral FundInvestor, Institutional 

  

Vanguard Municipal Bond Funds 

·

Municipal Money Market FundInvestor 

·

Short-Term Tax-Exempt FundInvestor, Admiral 

·

Limited-Term Tax-Exempt FundInvestor, Admiral 

·

Intermediate-Term Tax-Exempt FundInvestor, Admiral 

·

Long-Term Tax-Exempt FundInvestor, Admiral 

·

High-Yield Tax-Exempt FundInvestor, Admiral 

·

Tax-Exempt Bond Index FundAdmiral, ETF 

  

Vanguard New Jersey Tax-Free Funds 

·

Municipal Money Market FundInvestor 

·

Long-Term Tax-Exempt FundInvestor, Admiral 

  

Vanguard New York Tax-Free Funds 

·

Municipal Money Market FundInvestor 

·

Long-Term Tax-Exempt FundInvestor, Admiral 

  

Vanguard Ohio Tax-Free Funds 

·

Long-Term Tax-Exempt FundInvestor 

  

Vanguard Pennsylvania Tax-Free Funds 

·

Municipal Money Market FundInvestor 

·

Long-Term Tax-Exempt FundInvestor, Admiral 

  

Vanguard Fund

Share Classes Authorized 

  

Vanguard Quantitative Funds 

·

Growth and Income FundInvestor, Admiral 

  

Vanguard Scottsdale Funds 

·

Short-Term Treasury Index FundInstitutional, Admiral, ETF 

·

Intermediate-Term Treasury Index FundInstitutional, Admiral, ETF 

·

Long-Term Treasury Index FundInstitutional, Admiral, ETF 

·

Short-Term Corporate Bond Index FundInstitutional, Admiral, ETF 

·

Intermediate-Term Corporate Bond Index FundInstitutional, Admiral, ETF 

·

Long-Term Corporate Bond Index FundInstitutional, Admiral, ETF 

·

Mortgage-Backed Securities Index FundInstitutional, Admiral, ETF 

·

Explorer Value FundInvestor 

·

Russell 1000 Index FundInstitutional, ETF 

·

Russell 1000 Value Index FundInstitutional, ETF 

·

Russell 1000 Growth Index FundInstitutional, ETF 

·

Russell 2000 Index FundInstitutional, ETF 

·

Russell 2000 Value Index FundInstitutional, ETF 

·

Russell 2000 Growth Index FundInstitutional, ETF 

·

Russell 3000 Index FundInstitutional, ETF 

·

Total Corporate Bond ETFETF 

·

Total World Bond ETFETF 

  

Vanguard Specialized Funds 

·

Energy FundInvestor, Admiral 

·

Global Capital Cycles FundInvestor 

·

Health Care FundInvestor, Admiral 

·

Dividend Growth FundInvestor 

·

Real Estate Index FundInvestor, Admiral, Institutional, ETF 

·

Dividend Appreciation Index FundAdmiral, ETF 

·

Global ESG Select Stock FundInvestor, Admiral 

  

Vanguard STAR Funds 

·

LifeStrategy Conservative Growth FundInvestor 

·

LifeStrategy Growth FundInvestor 

·

LifeStrategy Income FundInvestor 

·

LifeStrategy Moderate Growth FundInvestor 

·

STAR FundInvestor 

·

Total International Stock Index FundInvestor, Admiral, Institutional, 

Institutional Plus, Institutional Select, ETF 

Vanguard Tax-Managed Funds 

·

Tax-Managed Balanced FundAdmiral 

·

Tax-Managed Capital Appreciation FundAdmiral, Institutional 

·

Developed Markets Index FundInvestor, Admiral, Institutional, Institutional Plus 

FTSE Developed Markets ETF

ETF 

·

Tax-Managed Small-Cap FundAdmiral, Institutional 

  

Vanguard Fund

Share Classes Authorized 

  

Vanguard Trustees’ Equity Fund 

·

International Value FundInvestor 

·

Diversified Equity FundInvestor 

·

Emerging Markets Select Stock FundInvestor 

·

Alternative Strategies FundInvestor 

·

Commodity Strategy FundAdmiral 

  

Vanguard Valley Forge Funds 

·

Balanced Index FundInvestor, Admiral, Institutional 

·

Managed Allocation FundInvestor 

  

Vanguard Variable Insurance Funds 

·

Balanced PortfolioInvestor 

·

Conservative Allocation PortfolioInvestor 

·

Diversified Value PortfolioInvestor 

·

Equity Income PortfolioInvestor 

·

Equity Index PortfolioInvestor 

·

Growth PortfolioInvestor 

·

Global Bond Index PortfolioInvestor 

·

Total Bond Market Index PortfolioInvestor 

·

High Yield Bond PortfolioInvestor 

·

International PortfolioInvestor 

·

Mid-Cap Index PortfolioInvestor 

·

Moderate Allocation PortfolioInvestor 

·

Money Market PortfolioInvestor 

·

Real Estate Index PortfolioInvestor 

·

Short-Term Investment Grade PortfolioInvestor 

·

Small Company Growth PortfolioInvestor 

·

Capital Growth PortfolioInvestor 

·

Total International Stock Market Index PortfolioInvestor 

·

Total Stock Market Index PortfolioInvestor 

  

Vanguard Wellesley Income Fund

Investor, Admiral 

  

Vanguard Wellington Fund 

·

U.S. Liquidity Factor ETFETF 

·

U.S. Minimum Volatility ETFETF 

·

U.S. Momentum Factor ETFETF 

·

U.S. Multifactor ETFETF 

·

U.S. Multifactor FundAdmiral 

·

U.S. Quality Factor ETFETF 

·

U.S. Value Factor ETFETF 

·

Wellington FundInvestor, Admiral 

  

Vanguard Fund

Share Classes Authorized 

  

Vanguard Whitehall Funds 

·

Selected Value FundInvestor 

·

Mid-Cap Growth FundInvestor 

·

International Explorer FundInvestor 

·

High Dividend Yield Index FundAdmiral, ETF 

·

Emerging Markets Government 

Bond Index Fund

Admiral, Institutional, ETF 

·

Vanguard Global Minimum Volatility FundInvestor, Admiral 

·

International Dividend Appreciation Index FundAdmiral, ETF 

·

International High Dividend Yield Index FundAdmiral, ETF 

  

Vanguard Windsor Funds 

·

Windsor FundInvestor, Admiral 

·

Windsor II FundInvestor, Admiral 

  

Vanguard World Fund 

·

Extended Duration Treasury Index FundInstitutional, Institutional Plus, ETF 

·

FTSE Social Index FundAdmiral, Institutional 

·

Global Wellesley Income FundInvestor, Admiral 

·

Global Wellington FundInvestor, Admiral 

·

International Growth FundInvestor, Admiral 

·

Mega Cap Index FundInstitutional, ETF 

·

Mega Cap Growth Index FundInstitutional, ETF 

·

Mega Cap Value Index FundInstitutional, ETF 

·

U.S. Growth FundInvestor, Admiral 

·

Consumer Discretionary Index FundAdmiral, ETF 

·

Consumer Staples Index FundAdmiral, ETF 

·

Energy Index FundAdmiral, ETF 

·

Financials Index FundAdmiral, ETF 

·

Health Care Index FundAdmiral, ETF 

·

Industrials Index FundAdmiral, ETF 

·

Information Technology Index FundAdmiral, ETF 

·

Materials Index FundAdmiral, ETF 

·

Communication Services Index FundAdmiral, ETF 

·

Utilities Index FundAdmiral, ETF 

·

ESG U.S. Stock ETFETF 

·

ESG International Stock ETFETF 

·

ESG U.S. Corporate Bond ETFETF 

  

  

  

  

  

  

  

Original Board Approval: July 21, 2000 

Last Updated: September 17, 2020 

  

SCHEDULE B 

to 

VANGUARD FUNDS MULTIPLE CLASS PLAN 

  

  

VGI has policies and procedures designed to ensure consistency and compliance with the offering of multiple classes of shares within this Multiple Class Plan’s eligibility requirements.2 These policies are reviewed and monitored on an ongoing basis in conjunction with VGI’s Compliance Department. 

  

Investor Shares - Eligibility Requirements 

  

Investor Shares generally require a minimum initial investment and ongoing account balance of $3,000 ($50,000 for Vanguard Treasury Money Market Fund). Personal Advisor Services clients, clients investing through financial intermediaries, and institutional clients may hold Investor Shares without restriction in Funds that do not offer Admiral Shares. Investor Shares of index Funds generally are available only to Funds that operate as a Fund-of-Funds and certain retirement plan clients receiving recordkeeping services from VGI. A Vanguard Fund may, from time to time, establish higher or lower minimum amounts for Investor Shares. Each Fund and VGI also reserve the right to establish higher or lower minimum amounts for certain investors or a group of investors. 

  

Financial intermediaries that serve as mutual fund supermarkets may only invest in Investor Shares of Funds in which Investor Shares are available and may not invest in other share classes of such Funds.3 Mutual fund supermarket means a program or platform offered by a financial intermediary through which such intermediary’s retail clients may purchase and sell mutual funds offered by a variety of independent fund families on a self-directed basis without advice or recommendation from a financial advisor or broker. This definition may be changed or amended at any time and without prior notice as may be determined in the discretion of VGI management. Nothing in the definition of mutual fund supermarket should be construed to prohibit Vanguard Brokerage Services from offering the Funds’ other share classes to its eligible clients. 

  

Admiral Shares – Eligibility Requirements 

  

Admiral Shares generally are intended for clients who meet the required minimum initial investment and ongoing account balance of $3,000 for retail clients in index Funds and $50,000 for retail clients in actively-managed Funds. Personal Advisor Services clients, clients investing through financial intermediaries and institutional clients may hold Admiral Shares of both index and actively-managed Funds without restriction.  Funds may, from time to time, establish higher or lower minimum amounts for Admiral Shares, and each Fund and VGI reserve the right to establish higher or lower minimum amounts for certain investors or a group of investors.  Admiral Share class eligibility also is subject to the following rule: 

  

·

Certain Retirement Plans – Admiral Shares of actively-managed Funds generally are not available for SIMPLE IRAs and Vanguard Individual 401(k) Plans.4  

·

Mutual Fund Supermarkets – Admiral Shares are not available to mutual fund supermarkets, except where a Fund does not have Investor Shares. 

  

  

  

  

  

  

Institutional Shares – Eligibility Requirements 

  

Institutional Shares generally require a minimum initial investment and ongoing account balance of 

$5,000,000. However, each Fund and VGI also reserve the right to establish higher or lower minimum amounts for certain investors or a group of investors. 

  

Institutional Share class eligibility also is subject to the following special rules: 

  

·

Retail clients. Retail clients may hold Institutional Shares by aggregating up to 3 accounts held by the same client (same tax I.D. number) in a single Fund. 

  

·

Financial intermediary clients. Financial intermediaries generally may hold Institutional Shares for the benefit of their underlying clients provided that: 

  

(1)

each underlying investor individually meets the investment minimum amount described above; and 

(2)

the financial intermediary agrees to monitor ongoing compliance of the underlying investor accounts with the investment minimum amount; or 

 

(3)

an arrangement is established between VGI and the financial intermediary to allow VGI to monitor compliance with the eligibility requirements. 

 

  

Home office model portfolios offered on wealth management platforms administered by financial intermediaries5 may offer Institutional Shares, provided: 

  

(4)

the financial intermediary in aggregate at the firm level, excluding custody assets, has total assets of at least $25 billion invested in Vanguard; and 

 

(5)

the financial intermediary in aggregate at the firm level, excluding custody assets, meets the investment minimum of Institutional Shares for the Fund. 

 

  

A home office model portfolio must meet the following criteria: 

  

(6)

the allocations and Funds used in the model portfolios on the platform are set and selected by the financial intermediary (i.e., the firm itself); 

 

(7)

the allocations and Funds used in the model portfolios on the platform are not subject to change by individual financial advisors; and 

 

(8)

an arrangement is established between VGI and the financial intermediary to allow VGI to monitor compliance with the eligibility requirements. 

 

  

·

Institutional clients. An institutional client may hold Institutional Shares if the total amount aggregated among all accounts held by such a client (including accounts held through financial intermediaries) and invested in the Fund is at least $5 million (or such higher minimum required by the individual Fund). Such an institutional client must disclose to VGI on behalf of its accounts the following: (1) that the client acts as a common-decision maker6 for each account; and (2) the total balance in each account in the Fund. 

  

·

Institutional clients with assets in certain Vanguard collective investment trusts and Funds. Institutional clients with assets in the following collective investment trusts and Funds may aggregate such assets with assets invested in the corresponding Funds listed below in the right column (“Corresponding Funds”) for purposes of meeting the investment minimum for Institutional Shares of the Corresponding Funds. 

  

Trust/Fund 

Corresponding Fund 

Vanguard Institutional Total Stock Market Index Trust 

Vanguard Total Stock Market Index Fund 

Vanguard Institutional Total Stock Market Index Trust 

Vanguard Institutional Total Stock Market Index Fund 

Vanguard Institutional Total Bond Market Index Trust 

Vanguard Total Bond Market Index Fund 

Vanguard Institutional Total International Stock Market Index Trust 

Vanguard Total International Stock Market Index Fund 

Vanguard Institutional 500 Index Trust 

Vanguard Institutional Index Fund 

Vanguard Institutional 500 Index Trust 

Vanguard 500 Index Fund 

Vanguard Institutional Extended Market Index Trust 

Vanguard Extended Market Index Fund 

Vanguard Employee Benefit Index Fund 

Vanguard Institutional Index Fund 

Vanguard Employee Benefit Index Fund 

Vanguard 500 Index Fund 

Vanguard Russell 1000 Growth Index Trust 

Vanguard Russell 1000 Growth Index Fund 

Vanguard Russell 1000 Value Index Trust 

Vanguard Russell 1000 Value Index Fund 

Vanguard Russell 2000 Growth Index Trust 

Vanguard Russell 2000 Growth Index Fund 

Vanguard Russell 2000 Value Index Trust 

Vanguard Russell 2000 Value Index Fund 

Vanguard Target Retirement Trust 

Vanguard Institutional Target Retirement Fund (full suite) 

  

·

Investment by Vanguard Target Retirement Collective Trust. A Vanguard Target Retirement Trust that is a collective trust exempt from regulation under the Investment Company Act and that seeks to achieve its investment objective by investing in underlying Funds (a “TRT”) may hold Institutional Shares of an underlying Fund whether or not its investment meets the minimum investment threshold specified above. 

  

·

Accumulation Period ¾ Accounts funded through regular contributions (e.g., employer sponsored participant contribution plans), whose assets are expected to quickly achieve eligibility levels, may qualify for Institutional Shares upon account creation, rather than undergoing the conversion process shortly after account set-up if VGI management determines that the account will become eligible for Institutional Shares within a limited period of time (generally 90 days). The accumulation period eligibility is subject to the discretion of VGI management. 

  

  

  

  

Institutional Plus Shares - Eligibility Requirements 

  

Institutional Plus Shares generally require a minimum initial investment and ongoing account balance of 

$100,000,000. However, each Fund and VGI also reserve the right to establish higher or lower minimum amounts for certain investors or a group of investors. Institutional Plus Share class eligibility also is subject to the following special rules: 

  

·

Retail clients. Retail clients may hold Institutional Plus Shares by aggregating up to 3 accounts held by the same client (same tax I.D. number) in a single Fund. For purposes of this rule, VGI management is authorized to permit aggregation of a greater number of accounts in the case of clients whose aggregate assets within the Funds are expected to generate substantial economies in the servicing of their accounts. 

  

·

Institutional clients. An institutional client may hold Institutional Plus Shares if the total amount aggregated among all accounts held by such client (including accounts held through financial intermediaries) and invested in the Fund is at least $100 million (or such higher or lower minimum required by the individual Fund). Such an institutional client must disclose to VGI on behalf of its accounts the following:  (1) that the client acts as a common-decision maker for each account; and 

(2) the total balance in each account held in the Fund. 

  

·

Institutional clients with assets in certain Vanguard collective investment trusts and Funds. Institutional clients with assets in the following collective investment trusts and Funds may aggregate such assets with assets invested in the corresponding Funds listed below in the right column (“Corresponding Funds”) for purposes of meeting the investment minimum for Institutional Plus Shares of the Corresponding Funds. 

  

Trust/Fund 

Corresponding Fund 

Vanguard Institutional Total Stock Market Index Trust 

Vanguard Total Stock Market Index Fund 

Vanguard Institutional Total Stock Market Index Trust 

Vanguard Institutional Total Stock Market Index Fund 

Vanguard Institutional Total Bond Market Index Trust 

Vanguard Total Bond Market Index Fund 

Vanguard Institutional Total International Stock Market Index Trust 

Vanguard Total International Stock Market Index Fund 

Vanguard Institutional 500 Index Trust 

Vanguard Institutional Index Fund 

Vanguard Institutional 500 Index Trust 

Vanguard 500 Index Fund 

Vanguard Institutional Extended Market Index Trust 

Vanguard Extended Market Index Fund 

Vanguard Employee Benefit Index Fund 

Vanguard Institutional Index Fund 

  

Vanguard Employee Benefit Index 

Fund 

Vanguard 500 Index Fund 

Vanguard Russell 1000 Growth Index 

Trust 

Vanguard Russell 1000 Growth Index 

Fund 

Vanguard Russell 1000 Value Index 

Trust 

Vanguard Russell 1000 Value Index 

Fund 

Vanguard Russell 2000 Growth Index 

Trust 

Vanguard Russell 2000 Growth Index 

Fund 

Vanguard Russell 2000 Value Index 

Trust 

Vanguard Russell 2000 Value Index 

Fund 

Vanguard Target Retirement Trust 

Vanguard Institutional Target 

Retirement Fund (full suite) 

  

·

Financial intermediary clients. Financial intermediaries generally may hold Institutional Plus Shares for the benefit of their underlying clients provided that: 

  

(9)

each underlying investor individually meets the investment minimum amount described above; and 

(10)

the financial intermediary agrees to monitor ongoing compliance of the underlying investor accounts with the investment minimum amount; or 

 

(11)

an arrangement is established between VGI and the financial intermediary to allow VGI to monitor compliance with the eligibility requirements. 

 

  

Home office model portfolios offered on wealth management platforms administered by financial intermediaries may offer Institutional Plus Shares, provided: 

  

(12)

the financial intermediary in aggregate at the firm level, excluding custody assets, has total assets of at least $25 billion invested in Vanguard; and 

 

(13)

the financial intermediary in aggregate at the firm level, excluding custody assets, meets the investment minimum of Institutional Plus Shares for the Fund. 

 

  

A home office model portfolio must meet the following criteria: 

  

(14)

the allocations and Funds used in the model portfolios on the platform are set and selected by the financial intermediary (i.e., the firm itself); 

 

(15)

the allocations and Funds used in the model portfolios on the platform are not subject to change by individual financial advisors; and 

 

(16)

an arrangement is established between VGI and the financial intermediary to allow VGI to monitor compliance with the eligibility requirements. 

 

  

·

Accumulation Period

- Accounts funded through regular contributions (e.g., employer sponsored participant contribution plans), whose assets are expected to quickly achieve eligibility levels, may qualify for Institutional Plus Shares upon account creation, rather than undergoing the conversion process shortly after account set-up if VGI management determines that the account will become eligible for Institutional Plus Shares within a limited period of time (generally 90 days). The accumulation period eligibility is subject to the discretion of VGI management. 

  

·

Asset Allocation Models - Clients with defined asset allocation models whose assets meet eligibility requirements may qualify for Institutional Plus Shares if such models comply with policies and procedures that have been approved by VGI management. 

  

Institutional Select Shares - Eligibility Requirements 

  

Institutional Select Shares generally require a minimum initial investment and ongoing account balance of $3,000,000,000. However, each Fund and VGI also reserve the right to establish higher or lower minimum amounts for certain investors or a group of investors. Institutional Select Share class eligibility also is subject to the following special rules: 

  

·

Institutional clients. An institutional client may hold Institutional Select Shares if the total amount aggregated among all accounts held by such client (including accounts held through financial intermediaries) and invested in the Fund is at least $3 billion (or such higher or lower minimum required by the individual Fund). Such an institutional client must disclose to VGI on behalf of its accounts the following: (1) the client acts as a common-decision maker for each account; and (2) the total balance in each account in the Fund. 

  

·

Financial intermediary clients. Financial intermediaries generally may hold Institutional Select Shares for the benefit of their underlying clients provided that: 

  

(17)

each underlying investor individually meets the investment minimum amount described above; and 

(18)

the financial intermediary agrees to monitor ongoing compliance of the underlying investor accounts with the investment minimum amount; or 

 

(19)

an arrangement is established between VGI and the financial intermediary to allow VGI to monitor compliance with the eligibility requirements. 

 

  

·

Accumulation Period - Accounts funded through regular contributions (e.g. employer sponsored participant contribution plans), whose assets are expected to quickly achieve eligibility levels, may qualify for Institutional Select Shares upon account creation, rather than undergoing the conversion process shortly after account set-up, if VGI management determines that the account will become eligible for Institutional Select Shares within a limited period of time (generally 90 days). The accumulation period eligibility is subject to the discretion of VGI management. 

  

·

Investment by VGI collective investment trusts with a similar mandate. A VGI collective investment trust exempt from regulation under the Investment Company Act and that seeks to achieve its investment objective by investing in an underlying Fund with an index-based

mandate may hold Institutional Select Shares of an underlying Fund with a similar index-based mandate whether or not its investment meets the minimum investment threshold specified above. 

  

ETF Shares – Eligibility Requirements 

  

The eligibility requirements for ETF Shares will be set forth in the Fund’s registration statement. To be eligible to purchase ETF Shares directly from a Fund, an investor must be (or must purchase through) an Authorized Participant, as defined in Paragraph III.F of the Multiple Class Plan. Investors purchasing ETF Shares from a Fund must purchase a minimum number of shares, known as a Creation Unit. The number of ETF Shares in a Creation Unit may vary from Fund to Fund, and will be set forth in the relevant Fund’s prospectus. The value of a Fund’s Creation Unit will vary with the net asset value of the 

  

Fund’s ETF Shares, but is expected to be several million dollars. An eligible investor generally must purchase a Creation Unit by depositing a prescribed basket consisting predominantly of securities with the Fund. 

  

Transition Shares – Eligibility Requirements 

  

Transition Shares will be offered only to Funds that operate as a Fund-of-Funds and only by an underlying Fund (i) that is receiving assets in kind from one or more Funds and (ii) that will “transition” those in-kind assets by selling some or all of them and using the proceeds to purchase different assets. 

There is no minimum investment amount for Transition Shares. 

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Original Board Approval: July 21, 2000 

Last Approved by Board: July 24, 2020 

  

 

11

In accordance with the methods set out in the Agreement and VGI Board and Fund Board approved methods, the expenses that would otherwise have been allocated to each Fund that operates as a Fund-of-Funds are reallocated to the approved share class of the underlying Funds in the Fund-of-Funds’ portfolio on a pro rata basis based on the Fund-of-Fund’s relative net assets invested in the underlying Fund’s share class. 

  

22 

The eligibility of a Fund that operates as a Fund-of-Funds to invest in a particular share class of an underlying Fund is determined by VGI and the Fund Board. 

33 

Admiral Shares of the Vanguard Cash Reserves Federal Money Market Fund are available to financial intermediaries that serve as mutual fund supermarkets. 

44 

Admiral Share classes of all Funds are available to 403(b) plan participants in Vanguard’s Retail 403(b) business, which is serviced by The Newport Group.  Admiral Shares of the Vanguard Cash Reserves Federal Money Market Fund are available to SIMPLE IRAs and Vanguard Individual 401(k) Plans. 

55 

For purposes of this Schedule B, this is not intended to include robo advisors. 

66 

For purposes of this Schedule B, a common-decision maker includes, but is not limited to, a corporate entity that controls multiple pools of assets invested in a Fund.  For example, a corporate entity that acts as a plan sponsor for a retirement plan may have one or more investment committees or boards of trustees overseeing both the retirement plan account as well as other accounts invested in the Fund.  In this case, the corporate entity would be considered a common-decision maker for each account where there is a common membership across each investment committee or governing body making investment decisions for each account.  Common-decision makers do not include financial intermediaries. 

1 


Code of Ethics

Do the right thing

October, 2020

Table of Contents

 

Message from our CEO

 

The Code of Ethics at a Glance...........................................................................................................................

2

Section 1. Background.........................................................................................................................................

4

Section 2. Standards of Conduct.........................................................................................................................

4

2.1. Conflicts of Interest

 

(a)When can conflicts of interest arise?

(b)What types of conflicts of interest must I avoid?

(c)Which conflicts of interest do I need to disclose?

(d)When and how do I disclose conflicts of interest?

Section 3. Outside Business Activities ...............................................................................................................

8

3.1 Outside Business Activity Requirements

 

(a)Am I prohibited from engaging in any outside business activities?

(b)Am I required to obtain preclearance for any outside business activities?

(c)What outside business activities do not require preclearance?

(d)When and how do I preclear an outside business activity?

Section 4. Gift and Entertainment Policy............................................................................................................

10

Section 5.

Anti-Bribery Policy ............................................................................................................................

10

Section 6.

Antitrust and Competition Policy ......................................................................................................

12

Section 7. Duty of Confidentiality.......................................................................................................................

12

Section 8. Personal Trading and Reporting Requirements .................................................................................

14

8.1General Trading Prohibitions and Reporting Requirements

(a) What are the general trading prohibitions?

(b) Am I required to maintain Securities in a brokerage account at Vanguard?

(c) What am I required to report?

8.2 Additional Trading and Reporting Requirements for Investment Persons ..................................................

15

(a)Which Securities trades am I required to preclear?

(b)How do I obtain preclearance?

(c)How long is my preclearance approval valid?

(d)Am I required to obtain preclearance before investing in a Private Placement?

(e)Are there Securities transactions that I do not need to preclear?

(f)Am I subject to restrictions on my personal trading in Covered Securities?

(g)Am I prohibited from engaging in certain Securities transactions?

(h)What happens if I make a "short-term trade" in a Vanguard Fund?

(i)Are there any additional reporting requirements that apply to me?

Table of Contents (continued)

 

8.3 Additional Trading Prohibitions and Reporting Requirements for Fund Access Persons ...........................

20

(a) Which Securities trades am I required to preclear?

 

(b) How do I obtain preclearance?

 

(c) How long is my preclearance approval valid?

 

(d) Am I required to obtain preclearance before investing in a Private Placement?

 

(e) Are there Securities transactions that I do not need to preclear?

 

(f) Am I subject to restrictions on my personal trading in Covered Securities?

 

(g) Am I prohibited from engaging in any Securities transactions?

 

(h) What happens if I make a "short-term trade" in a Vanguard Fund?

 

(i) Are there any additional reporting requirements that apply to me?

 

8.4 Additional Trading Prohibitions and Reporting Requirements for VAI Access Persons ..............................

24

(a) Am I required to preclear Security trades?

 

(b) Am I required to obtain preclearance before investing in a Private Placement?

 

(c) Am I prohibited from engaging in any Securities transactions?

 

(d) What happens if I make a "short-term trade" in a Vanguard Fund?

 

(e) Are there any additional reporting requirements that apply to me?

 

8.5 Additional Trading Prohibitions for Non-U.S. Crew Members ...................................................................

26

(a)What are the additional trading prohibitions?

(b)What are the Vanguard Fund reporting requirements in Australia?

(c)What are the additional trading restrictions for Japan?

(d)What additional information is required to be reported for accounts where I have Investment Discretion?

Section 9. Certification Requirements..............................................................................................................

28

9.1What am I required to certify initially?

9.2What am I required to certify annually?

Section 10. Penalties and Sanctions..................................................................................................................

28

10.1How are violations administered by Compliance?

10.2How is an appropriate sanction determined?

10.3How is the materiality of a violation determined?

10.4What are my obligations to report a violation?

Section 11. Waivers............................................................................................................................................

29

Appendix A. Definitions.....................................................................................................................................

31

Appendix B. Independent Directors and Trustees.............................................................................................

36

Excellence

Integrity

Responsibility

Do the right thing

At Vanguard, the trust of our clients is our greatest asset. And that trust can only be preserved if each one of us does the right thing on behalf of Vanguard and our clients.

Our Code of Ethics is built on our commitment to maintaining the highest standards of ethical behavior and fiduciary responsibility. Our actions, decisions, and interests should never compete with the interests of Vanguard or our clients.

All crew members are responsible for understanding and complying with our Code of Ethics. Please know and follow the policies that apply to you, and be accountable for your actions. If you are a manager, help your crew to understand and comply with the Code of Ethics through your words and your actions.

Use the Code of Ethics as your guide when faced with challenging decisions or circumstances. But remember, the Code of Ethics is a document. It cannot anticipate every situation. Ultimately, we rely on your sense of personal integrity to protect and enhance Vanguard's reputation. Never underestimate the importance of your own ethical conduct in our mission to treat investors fairly and give them the best chance to succeed.

Mortimer J. Buckley

President and Chief Executive Officer

The Code of Ethics at a Glance

Below are some of the general requirements of the Code of Ethics which may impact you the most. These descriptions are for guidance only. Please consult the applicable provisions of the Code of Ethics for detailed requirements.

1. Clients' Interests Come First

You must serve the interests of Vanguard Clients ahead of your own personal interests.

2. Conflicts of Interest

Your actions, decisions, and interests should not compete or conflict with Vanguard

or Vanguard Clients' interests. You must report any potential conflicts of interest to Compliance.

3. Business Activities Outside of Vanguard

You may engage in outside business activities that do not conflict with Vanguard's interests; however, you must obtain approval from Compliance for certain outside business activities.

4. Gifts and Entertainment

When doing business with Vanguard Clients, vendors, potential Vanguard Clients, and others, you must abide by limitations on giving and receiving gifts and business entertainment. Under the Gift and Entertainment Policy, you must report certain gifts and entertainment to Compliance.

6. Antitrust and Competition

You are prohibited from engaging in activity that could have an anticompetitive effect on the price of goods, services, securities,

or other trading conditions in the global marketplace in which we operate.

7. Insider Trading

You are prohibited from buying or selling any Security while in the possession of material nonpublic information about the issuer of the Security.

8. Personal Trading Activities

You are required to abide by the Code of Ethics requirements related to holding, reporting, and trading Securities for personal benefit. Personal trading restrictions and reporting requirements vary depending on the rules of the country you are working in and whether you are an Access Person or a Non-Access Person.

9. Certification Requirements

On an annual basis, you must acknowledge that you understand the Code of Ethics and will comply with its provisions.

5. Anti-Bribery

You are prohibited from engaging or participating in any form of bribery or corruption.

2

Clients' Interests Come First

You must serve the interests of Vanguard Clients ahead of your own personal interests.

Section 1. Background

The Code of Ethics ("Code") has been approved and adopted by the board of directors of The Vanguard Group, Inc. ("Vanguard"), the boards of trustees of each of the Vanguard Funds, and the boards of directors of each of Vanguard's Affiliates, as applicable. Unless stated otherwise, the Code applies to all Crew Members and Contingent Workers. The Code also contains provisions applicable to Independent Directors and Trustees (Appendix B).

Section 2. Standards of Conduct

Vanguard consistently seeks to earn and maintain the trust and loyalty of our clients by adhering to the highest standards of ethical behavior and fiduciary responsibility. You must adhere at all times to the spirit, and not just the letter, of the Code. Any transaction or activity that violates any of the standards of conduct described below is prohibited, regardless of whether it meets technical rules found elsewhere in the Code. Accordingly, you must conduct yourself in accordance with applicable law and regulations, and the following standards of conduct:

•Always put Vanguard clients' interests first. You must at all times place the interests of Vanguard clients first. In particular, you must avoid serving your own personal interests ahead of the interests of Vanguard clients.

•Avoid conflicts of interest. Your actions, decisions, and interests cannot compete or conflict with Vanguard's interests or the interests of Vanguard clients. You must ensure that you do not have a conflict with your duties for Vanguard and that you do not use Vanguard's name, property, facilities, confidential information, relationships, or other assets for personal benefit or for outside work or other endeavors. Vanguard Affiliates or your specific department may have additional policies regarding conflicts of interest that you must also follow.

•Be candid and clear with clients and provide them with accurate information. To serve our clients well and continue to earn their trust, you must always be truthful and candid with them.

Doing so is both legally required and the proper, ethical thing to do. When providing information or disclosure to clients or the public, you must follow Vanguard policy and procedure, and

the information must be full, fair, timely, and accurate and not potentially misleading. If you have any questions on this topic, seek advice from your manager, the Compliance Department, or the OGC.

•Comply with applicable laws, rules, regulations, and policies. Financial services is a complex and highly regulated business and, as a result, Vanguard and its business lines are subject to various laws, rules, and regulations, including securities, banking, tax, and other federal, state, local, and international laws. We serve our clients best when we understand and comply with the rules. Therefore, you are responsible for reviewing this Policy and the other policies that apply to us and our business lines, and you are also responsible for knowing

– and complying with – the laws, rules, and regulations that apply to your role and the area or department in which you work. Vanguard offers formal and informal procedures, training, and other resources to help you understand the applicable laws, rules, regulations and policies, and you are expected to familiarize yourself with them and complete any required training. When in doubt about applicable laws, rules, regulations, or policies, seek advice from your manager, the Compliance Department, or the OGC.

•Protect against fraud. As set forth more fully in Vanguard's Global Internal and Occupational Fraud Policy and Vanguard's Global External Fraud Policy, we are committed to protecting Vanguard and our clients against fraud, misappropriation, and similar threats, whether internal or external. You must be vigilant in helping to prevent, detect, and manage fraud risk of all types.

To familiarize yourself with examples of fraud schemes, both internal and external, please refer to the Global Fraud Prevention page on CrewNet. If you discover or suspect fraudulent activity, please immediately contact the Global Fraud Prevention Team.

•Speak up. Vanguard encourages an environment of open and honest communication, and we have many ways for you to raise concerns about

4

Conflicts of Interest

Your actions, decisions, and interests should not compete or conflict with Vanguard or Vanguard Clients' interests. You must report any potential conflicts of interest to Compliance.

any issue, including business practices or ethical matters, even if you aren't sure whether or not the issue is problematic. We encourage you to help protect our clients, crew, and Vanguard

by reporting potential concerns related to this Code of Ethics, financial or business integrity, information security and privacy, workplace practices, and alleged violations of policy or regulation. Vanguard has contracted with a third party to offer the Anonymous Reporting Hotline, a toll-free, 24-hour telephone number and secure website to anonymously report any such concerns without fear of retaliation. As always, you can also voice concerns to your manager or to Crew Relations.

2.1 Conflicts of Interest

A conflict of interest is defined as any situation where financial or other personal factors can compromise independence, objectivity, or professional judgment. A conflict of interest exists when these factors compete, or give the appearance of competing, with your duty to serve the interests of Vanguard and Vanguard Clients.

2.1(a) When can conflicts of interest arise?

Even the perception of a conflict could negatively affect Vanguard and harm our reputation. It's important to understand the following conflict situations:

•Actual conflict of interest. A situation where your personal interests directly conflict with your duties, responsibilities, or the terms of your assignment at Vanguard.

•Perceived conflict of interest. A situation where it appears that your personal interests inappropriately influence the performance of your duties, responsibilities, or the terms of your assignment at Vanguard − whether founded or not.

•Potential conflict of interest. A situation that could arise in the future where your personal interests would affect your duties, responsibilities, or the terms of your assignment at Vanguard.

Depending on your role or the terms of your assignment at Vanguard, the potential for conflict may also arise where an Immediate Family Member is employed by, or associated with, a company with which Vanguard has or is looking to establish a relationship.

Example:Your spouse is employed as a trader at a brokerage firm that executes Vanguard Fund trades − if you are a phone associate, a conflict may not exist; however, if you hold a position in the Investment Management Group or Fund Financial Services, a potential conflict may exist.

2.1(b) What types of conflicts of interest must I avoid?

You need to avoid situations where a conflict of interest could arise, including:

•Any business interest that competes, directly or indirectly, with the interests of Vanguard or Vanguard Clients while working on Vanguard matters.

•Any situation where you would benefit, directly or indirectly, from Vanguard's dealings with others.

2.1(c) Which conflicts of interest do I need to disclose?

You are required to disclose the following information:

•Any situation that may present the potential for a conflict of interest with Vanguard's business or the interests of Vanguard Clients.

•Any employment arrangements or positions (e.g., board member) of an Immediate Family Member that may present the potential for conflict with Vanguard and its activities (e.g., relationships with potential or existing vendors or financial institutions, including banks, with whom Vanguard conducts business).

2.1(d) When and how do I disclose conflicts of interest?

Report any conflicts – whether actual, perceived, or potential – to Compliance as soon as they arise.

6

Business Activities

Outside of Vanguard

You may engage in outside business activities that do not conflict with Vanguard's interests; however, you must obtain approval from Compliance for certain outside business activities.

Gifts and Entertainment

When doing business with Vanguard Clients, vendors, potential Vanguard Clients, and others, you must abide by limitations on giving and receiving gifts and business entertainment. Under the Gift and Entertainment Policy, you must report certain gifts and entertainment to Compliance.

Anti-Bribery

You are prohibited from engaging or participating in any form of bribery or corruption.

Contact Compliance if you encounter a conflict that is not explicitly addressed by our policies, or is potentially significant to a business area or across divisions.

Certain Vanguard Affiliates or departments may have additional policies regarding conflicts of interest. Crew Members and Contingent Workers in those departments must also follow those policies. If in doubt about whether you are subject to additional departmental or Vanguard Affiliate policies, please check with your Vanguard manager or Compliance.

Contingent Workers must also consult with their employer if an actual, perceived, or potential conflict arises.

MCO Resource – To disclose conflicts of interest, complete a Conflicts of Interest Disclosure Form via MCO.

Section 3. Outside Business Activities

You are permitted to engage in certain outside business activities (permanent, part-time, or one-time assignment) during your personal time. However, those activities must not adversely affect Vanguard or present a conflict of interest. Your job at Vanguard must come first over other business opportunities, nonprofit activities, or a second job. Be mindful of conflicts, obtain any necessary approvals, and be aware that you may be required to discontinue an activity if a conflict exists.

While Contingent Workers are exempt from the requirements of Section 3, those Contingent Workers who hold a FINRA license are required to comply with the FINRA Licensing Policy on CrewNet.

In addition to the requirements and restrictions in this section, the following supplemental policies may apply to Crew Members:

•Senior Executive Covered Activity Policy (officers and Crew Members in roles designated as M6/P6/S6 or higher).

•Managing Director Outside Business Activity Policy.

If there is a conflict between a requirement in the Code and a more restrictive requirement in one of these supplemental policies, the more restrictive requirement outlined in the Senior Executive Covered Activity Policy or the Managing Director Outside Business Activity Policy will govern.

Web Resource – If you are FINRA licensed, you are also required to comply with the FINRA Licensing Policy on CrewNet.

3.1 Outside Business Activity Requirements

3.1(a) Am I prohibited from engaging in any outside business activities?

Yes. The following activities are generally prohibited:

•Holding a second job with any company or organization whose activities could create a conflict of interest with your employment at Vanguard. This includes, but is not limited to, selling Securities, term insurance, or fixed or variable annuities; providing investment advice or financial planning or registering as an independent investment advisor; or engaging in any business activity similar to your job at Vanguard.

•Working, including serving as a director, officer, or in an advisory capacity, for any business or enterprise that competes with Vanguard.

•Working for any organization that could benefit from your knowledge of confidential Vanguard information, such as new Vanguard products, services, or technology.

•Serving on the board of a publicly traded company (or on the board of a company reasonably expected to become a public company).

•Using Vanguard time, equipment, services, or property or enlisting Crew Members for the benefit of the outside business activity.

•Allowing your activities, or the time you spend on them, to interfere with the performance of your job.

•Accepting a business opportunity from someone who does, or seeks to do, business with

8

Vanguard if the person made the offer because of your position at Vanguard.

•Selling interests, soliciting investors or referring participants to a Private Securities Transaction.

•Certain elected or appointed political positions.

3.1(b) Am I required to obtain preclearance for any outside business activities?

Yes. You are required to obtain prior written approval for the following outside business activities:

•Compensated positions held outside of Vanguard, including positions with a nonprofit or charitable organization.

•All entrepreneurial activities, including home and family businesses and independent consulting.

•Volunteer positions that involve reviewing, recommending or approving Securities for an organization. This includes, but is not limited to, serving on the finance or investment committee of a nonprofit organization, or serving as treasurer for a homeowners association or on a school board.

•Any activity where your role is similar or closely related to your responsibilities at Vanguard.

•Any government position, whether paid or unpaid, elected or appointed (e.g., an elected official or member, director, officer, or employee of a government agency, authority, advisory board or other board, such as a public school or library board).

•Any official position with any federal, state, or local government authority, or service as a board member or in any representative capacity for any civic, public interest, or regional business interest organization. Example: You are the executive director of a local chamber of commerce or on the board of a wildlife protection organization.

•Any board position, whether compensated or non-compensated, including advisory positions. This includes, but is not limited to, positions on boards of nonprofit organizations, charitable foundations, universities, hospitals, and civic, religious, or fraternal organizations.

•Any position on a panel or committee of an index provider.

•Acting as a real estate agent or conducting any mortgage related activities.

•Any teaching positions where the subject matter relates to Vanguard business that is not in the course of your duties for Vanguard.

•Crypto Mining for Digital Currencies, Digital Utility Tokens, or Digital Security Tokens.

•Engaging in an equity or a debt-based Crowdfunding project or venture.

3.1(c) What outside business activities do not require preclearance?

You are not required to obtain written approval for the following activities:

•Compensated positions in a retail business − for example, positions in retail or department stores or in the food service industry.

•Ownership of a second home, rental property, or investment property, provided that the property does not do business with Vanguard.

•Selling items on online auction sites, so long as it is not operated as a business.

•Unpaid positions with holding companies, trusts, or non-operating entities that hold your or your family's real estate or other Investments, provided the Securities would not otherwise require approval if held directly.

3.1(d) When and how do I preclear an outside business activity?

Other than those outside business activities described in Section 3.1(c), you are required to obtain approval for outside business activities:

•If you are already participating in an activity upon joining Vanguard.

•Before accepting any new activity.

•If there are any changes to a previously reported activity.

In certain situations, you may receive a follow-up form from Compliance requiring you to obtain approval from a Vanguard Officer or Managing Director.

9

Note: Vanguard Officers may not accept or participate in any outside business activities unless they have received written approval from a Vanguard Managing Director or the Chief Executive Officer in addition to receiving written approval from Compliance.

MCO Resource – To seek approval, you must complete the Outside Business Activities Form via MCO.

Section 4. Gift and Entertainment Policy

You are subject to Vanguard's Gift and Entertainment Policy, which is considered an integral part of the Code. There are restrictions on the extent to which gifts or entertainment may be received from or provided to any third party.

Web Resource – Refer to the Gift and Entertainment Policy on the Code of Ethics Resource page on CrewNet for information and guidelines.

Section 5. Anti-Bribery Policy

You are subject to Vanguard's Anti-Bribery Policy, which prohibits bribery and corruption in all forms. You must not offer, give, or receive anything of value for the purpose of improperly obtaining business, retaining business or securing an improper advantage for Vanguard.

Web Resource – Refer to the Anti-Bribery Policy on the Code of Ethics Resource page on CrewNet for information and guidelines.

10

Antitrust and Competition

You are prohibited from engaging in activity that could have an anticompetitive effect on the price of goods, services, securities, or other trading conditions in the global marketplace in which we operate.

Section 6. Antitrust and

Competition Policy

You are subject to Vanguard's Antitrust and Competition Policy, which prohibits you from engaging in activity that could have an anticompetitive effect on the price of goods, services and/or securities or other trading conditions in the global marketplace in which we operate.

Web Resource – Refer to the Antitrust and Competition Policy on the Code of Ethics Resource page on CrewNet for information and guidelines.

Section 7. Duty of Confidentiality

You must keep confidential any nonpublic information you may have obtained while working at Vanguard or while on assignment at Vanguard. This information includes, but is not limited to information about:

•The Vanguard Funds (e.g., recent or impending Securities transactions, activities of the funds' advisors, offerings of new funds, changes

to fund minimums or other provisions in the prospectus, or closings of funds).

•Current or prospective Vanguard Clients (e.g., their personal information, Investments, or account transactions).

•Other Crew Members, Contingent Workers, or Independent Directors and Trustees (e.g., their pay, benefits, position level, and performance ratings).

•Vanguard business activities (e.g., new services, products, technology, or business initiatives).

You must not disclose confidential information to any other person unless it is necessary for the performance of your duties for Vanguard, there is a business purpose for doing so, and such disclosure is authorized by Vanguard.

Contingent Workers may also be subject to a non-disclosure agreement and/or a service or supply agreement with specific confidentiality

provisions. In addition to the requirements of the Code, you must act at all times in accordance with the specific confidentiality provisions in such agreements. Contact your employer for more information.

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Insider Trading

You are prohibited from buying or selling any Security while in the possession of material nonpublic information about the issuer of the Security.

Section 8. Personal Trading

Activities

You must avoid taking personal advantage of your knowledge of Securities activity in Vanguard Funds or Vanguard Client accounts. The Code includes specific restrictions on personal investing, but cannot anticipate every fact pattern or situation. You should adhere at all times to the spirit, and not just the letter, of the Code. There are additional trading prohibitions and reporting requirements if you are designated as either an Investment Person (Section 8.2), Fund Access Person (Section 8.3), or VAI Access Person (Section 8.4).

Regardless of your designation, Compliance has the authority, with appropriate notice to you, to apply any or all of the trading restrictions within the Code.

8.1GeneralTrading Prohibitions and Reporting Requirements

The requirements of this Section 8.1(a) apply to all persons subject to the Code. The requirements of Section 8.1(c) apply to all Crew Members and Contingent Workers deemed Associated Persons.

8.1(a) What are the general trading prohibitions?

•Engaging in conduct that is deceitful, fraudulent, or manipulative, or that involves false or misleading statements, in connection with the purchase or sale of a Security by a Vanguard Fund or Vanguard Client account.

•Intentionally, recklessly, or negligently circulating false information or rumors that may affect

the securities markets or may be perceived as market manipulation.

•Trading on knowledge of Vanguard Fund activities. Taking personal advantage of knowledge of recent, impending, or planned Securities activities of the Vanguard Funds or their investment advisors. You are prohibited from purchasing or selling - directly or indirectly - any Security or Related Security when you know that the Security is being purchased or sold, or considered for purchase or sale, by a Vanguard Fund (with the exception of an index fund).

These prohibitions apply to all Securities in which you have acquired or will acquire Beneficial Ownership.

•Vanguard InsiderTrading Policies. You are subject to the Insider Trading Policy and/or any similar policy of the Vanguard Affiliate for which you work. Each of these policies are considered an integral part of the Code. Each policy prohibits you from buying or selling any Security while in possession of material, nonpublic information about the issuer of the Security. The policies prohibit you from communicating any nonpublic information about any Security or issuer of Securities to third parties.

•Vanguard FundTrading. When purchasing, exchanging, or redeeming shares of a Vanguard Fund, you and your Immediate Family Members must adhere to the policies and standards

set forth in the fund's prospectus, or offering document, including policies on market-timing and frequent trading.

•Initial Coin Offerings. You are prohibited from participating in an Initial Coin Offering.

Web Resource – Refer to your local Insider Trading Policy on the Code of Ethics Resource page on CrewNet for further information.

8.1(b) Am I required to maintain Securities in a brokerage account at Vanguard?

U.S. Crew Members: Yes. You and your Immediate Family Members are required to maintain all Reportable Securities within a Vanguard Brokerage Account. You may hold Vanguard Funds, other than Vanguard ETFs, outside of Vanguard. Employer- sponsored retirement accounts (e.g., 401(k) and 403(b)), 529 Plans, and Compliance-approved accounts are exempt from this requirement (e.g., Managed Account). Vanguard ETFs must be held within a Vanguard Brokerage Account.

Non-U.S. Crew Members: No. You and your Immediate Family Members are not required to maintain Reportable Securities within a Vanguard Brokerage Account.

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U.S. and Non-U.S. Contingent Workers: No. You and your Immediate Family Members are not required to maintain Reportable Securities within a Vanguard Brokerage Account.

Web Resource – Refer to the U.S. Crew - Securities to be Held at Vanguard document, which can be accessed from the Code of Ethics Resource page on CrewNet.

8.1(c) What am I required to report?

The requirements of this Section apply to all Crew Members and Contingent Workers deemed Associated Persons.

Initial Holdings Report – Within ten calendar days of joining Vanguard, you must disclose all Covered Accounts and all Reportable Securities held by you or an Immediate Family Member. This includes Brokerage Accounts held at Vanguard, as well as those held at another financial institution. This information must be current as of 45 calendar days before joining Vanguard.

MCO Resource – You will receive an Initial Certification to complete which will include a section to disclose Covered Accounts and all Reportable Securities via MCO.

In addition, you must notify Compliance if you or an Immediate Family Member has subsequently opened, or intends to open, a Covered Account with a financial institution (e.g., broker, dealer, advisor, or any other professional money manager), has acquired holdings in Reportable Securities,

or if a preexisting Covered Account (including a Vanguard Brokerage Account) becomes associated with you (such as through marriage or inheritance).

MCO Resource – Disclose new Covered Accounts and Reportable Securities via MCO.

Quick Guide: Refer to the Trading and Reporting Requirements for Non-Access Persons document, which can be accessed from the Code of Ethics Resource page on CrewNet.

Duplicate statements and transaction confirmations – You must disclose transactions in Reportable Securities made by you and your Immediate Family Members. For any disclosed Vanguard Brokerage Accounts, Compliance will receive transaction confirmations automatically. For each approved Covered Account and any holdings of Reportable Securities held outside of Vanguard, it is your responsibility to ensure duplicate statements and transaction confirmations are delivered to Compliance. If the sponsor of your Covered Account is not able to send statements and daily transaction confirmations (electronic or paper) directly to Vanguard, you will be required to submit copies through MCO immediately after you receive them, unless you receive an exemption from this requirement from Compliance. You do not need to report an account or submit transaction confirmations or statements if the account does not have the ability to hold Securities (e.g., a traditional checking account).

Contingent Workers deemed Associated Persons are required to comply with and are subject to the Securities Account Reporting Obligations on CrewNet.

8.2AdditionalTrading and Reporting Requirements for Investment Persons

The requirements of this Section 8.2 are in addition to the requirements of Section 8.1 and apply to all transactions or holdings in which an Investment Person has, or will acquire, Beneficial Ownership of Securities. To see if you are designated as an Investment Person, reference the Investment Persons Departments list on CrewNet. Note: this designation could apply to Crew Members or Contingent Workers.

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8.2(a) Which Securities trades am I required to preclear?

You must obtain, for yourself and on behalf of your Immediate Family Members, preclearance for any transaction in a Covered Security and in a Vanguard ETF.

By seeking preclearance, you will be deemed to be advising Compliance that you:

•Do not possess any material, nonpublic information relating to the security.

•Do not use knowledge of any proposed trade or investment program relating to the Vanguard Funds for personal benefit.

•Believe the proposed trade is available to any market participant on the same terms.

Non-U.S. Investment Persons may be subject to additional restrictions. See Section 8.5.

Quick Guide: Refer to the Trading and Reporting Requirements for Investment Persons document, which can be accessed from the Code of Ethics Resource page on CrewNet.

8.2(b) How do I obtain preclearance?

You must receive preclearance through the MCO system or from an authorized member of Compliance. Transactions in Covered Securities and Vanguard ETFs may not be executed before you receive approval.

Same day limit orders are permitted; however, good 'til canceled orders (such as limit orders that stay open over the course of multiple trading days until a security reaches a specified market price) are not permitted.

Attempting to gain approval after the transaction has occurred is not permitted. Completing a personal trade before receiving approval or after the approval window expires constitutes a violation

of the Code. See Section 10 for more information regarding the sanctions that may be imposed as a result of a violation.

MCO Resource – Preclearance must be obtained via MCO. Once the required information is submitted, your preclearance request will be approved or denied immediately.

8.2(c) How long is my preclearance approval valid?

U.S.: Preclearance approval will expire at the end of the trading day on which it is issued (e.g., if you receive approval for a trade on Monday,

it is effective until the market closes on that Monday). Preclearance for limit orders is good for transactions on the same day that approval is granted only. If you receive approval for a limit order, it must be executed or expire at the close of regular trading on the same business day for which approval was granted. If you wish to execute the limit order after the close of regular trading on the day you received approval, you must submit a new preclearance request for the day you wish to execute the trade.

Non-U.S.: If you receive approval, transactions must be executed no later than the end of trading on the next business day after the preclearance is granted. If the transaction is not placed within that time, you must submit a new request for approval before placing the transaction. If you preclear a limit order, that limit order must either be executed or expire at the end of the next business day. If you want to execute the order after the next business day period expires, you must resubmit your preclearance request.

8.2(d) Am I required to obtain preclearance before investing in a Private Placement?

Yes. You cannot invest in securities offered to potential investors in a Private Placement or other limited investment offering without first obtaining preclearance from Compliance. You must provide documentation describing the investment (e.g., offering memorandum, subscription documents, etc.) so as to enable Compliance to conduct a thorough review of the investment. Approval

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Personal Trading Activities

You are required to abide by the Code of Ethics requirements related to holding, reporting, and trading Securities for personal benefit. Personal trading restrictions and reporting requirements vary depending on the rules of the country you are working in and whether you are an Access Person or a Non-Access Person.

may be granted after a review of the facts and circumstances, including whether:

•An investment in the securities is likely to result in future conflicts with Vanguard Client accounts.

•You are being offered the opportunity due to your employment at, or association with, Vanguard.

If you receive approval to purchase Securities in a Private Placement, you must inform Compliance if that Security goes to public offer or is pending listing on an exchange.

MCO Resource – To seek preclearance of a Private Placement, complete the Outside Business Activities Form via MCO.

8.2(e) Are there Securities transactions that I do not need to preclear?

Yes. You are not required to obtain preclearance for the following:

•Purchases or sales of Vanguard Funds. Note: The purchase or sale of Vanguard ETFs require preclearance.

•Purchases or sales where the person requesting preclearance has no direct or indirect influence or control over the Covered Security (e.g., you have a trust in your name but you are not the trustee who places the transaction, provided you have granted Investment Discretion to the trustee and there has been no prior communication between you and the trustee regarding the transaction).

•Corporate actions in Covered Securities such as stock dividends, stock splits, mergers, consolidations, spin-offs, or other similar corporate reorganizations or distributions.

•Purchases or sales made as a part of an Automatic Investment Program.

•Purchases made upon the exercise of Rights by an issuer in proportion to all holders of a class of its Securities, to the extent such Rights were acquired for such issuer.

•Acquisitions of Covered Securities through gifts or bequests.

8.2(f) Am I subject to restrictions on my personal trading in Covered Securities?

Yes. You may be subject to certain restrictions if you purchase or sell a Covered Security within seven days before or after a Vanguard Fund purchases or sells the same Covered Security or a Related Security (the "blackout period").

If you purchase a Covered Security within seven days before a Vanguard Fund purchases the same Covered Security or a Related Security, you may be required to hold the Covered Security for 6 months before being permitted to sell the Covered Security for a profit.

If you sell a Covered Security within seven days before a Vanguard Fund sells the same Covered Security or a Related Security, you may be required to disgorge any profits earned from your sale of the Covered Security (exclusive of commissions) at a price higher than what the Vanguard Fund received for selling the Covered Security or a Related Security.

In general, you will not receive preclearance to purchase a Covered Security within seven days after a Vanguard Fund trades the same Covered Security or a Related Security. If you execute the transaction without receiving preclearance, you will have violated this Code and must immediately sell the Covered Security and disgorge all profits received from the sale to Vanguard (exclusive of commissions).

In general, you will not receive preclearance to sell a Covered Security within seven days after a Vanguard Fund trades the same Covered Security or a Related Security. If you execute the transaction without receiving preclearance, you will have violated the Code and must disgorge the difference (exclusive of commissions) between the sale price you received and the Vanguard Fund's sale price (as long as your sales price is higher), multiplied by the number of shares you sold.

In addition to these restrictions, local law may dictate the extent to which any gains must be relinquished.

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Quick Guide: For example on the above trade scenarios, refer to Code of Ethics Q&A, which can be accessed from the Code of Ethics Resource page on CrewNet.

Compliance may exempt from these restrictions trades during blackout periods that coincide with trading by certain Vanguard Funds (e.g., index funds).

Compliance may waive the blackout period as it applies to the sale of a Covered Security if the Chief Compliance Officer determines its application creates a significant hardship to you (e.g., you need cash for a home purchase or to cover a major medical expense) and, in the opinion of the Chief Compliance Officer, satisfies the requirements for a waiver in Section 11.

Web Resource – Refer to the Hardship Waiver Request Form on the Code of Ethics Resource page on CrewNet.

Quick Guide: Refer to the Trading and Reporting Requirements for Investment Persons document, which can be accessed from the Code of Ethics Resource page on CrewNet.

8.2(g) Am I prohibited from engaging in certain Securities transactions?

Yes. You are prohibited from engaging in the following Securities transactions:

•Futures and Options. You are prohibited from entering into, acquiring, or selling any Futures contract (including single stock futures) or any

Option on any Covered Security (including Options on ETFs).

•Initial Public Offerings and Secondary Offerings. You are prohibited from acquiring Securities in an Initial Public Offering or Secondary Offering.

•Short-Selling. You are prohibited from selling short any Security that you do not own or from otherwise engaging in Short-Selling activities.

•Short-TermTrading. You are prohibited from purchasing and then selling any Covered Security or a Vanguard ETF at a profit, as well as selling and then repurchasing a Covered Security or a Vanguard ETF at a lower price within 60 calendar days. Gains are calculated based on last in, first out method for purposes of this restriction. If you realize profits on short-term trades, you will be required to relinquish the profits. In addition, the trade will be recorded as a violation of the Code.

•Spread Bets. You are prohibited from participating in Spread Betting on Securities, indexes, interest rates, currencies, or commodities.

8.2(h) What happens if I make a "short-term trade" in a Vanguard Fund?

Compliance will monitor trading in Vanguard Funds, other than Vanguard ETFs, and will review situations where Vanguard Fund shares are redeemed within 30 calendar days of purchase (a "short-term trade"). You may be required to relinquish any profit made on a short-term trade and will be subject to disciplinary action if Compliance determines the short-term trade was detrimental to a Vanguard Fund or a Vanguard Client or that there is a history of frequent trading by you or your Immediate Family Members. For purposes of this paragraph:

•A redemption includes a redemption by any means, including an exchange out of a Vanguard Fund.

•This policy does not cover purchases and redemptions/sales (i) into or out of Vanguard money market funds, Vanguard short-term bond funds, or (ii) through an Automatic Investment Program.

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Quick Guide: Refer to the Trading and Reporting Requirements for Investment Persons, which can be accessed from the Code of Ethics Resource page on CrewNet.

MCO Resource – Verify and disclose all Covered Accounts and holdings in Reportable Securities via MCO

8.3AdditionalTrading Prohibitions and Reporting Requirements for Fund Access Persons

The requirements of this Section 8.3 are in addition to the requirements of Section 8.1 and apply to all transactions or holdings in which a Fund Access Person has, or will acquire, Beneficial Ownership of Securities. To see if you are designated as a Fund Access Person, reference the Fund Access Persons Departments list on CrewNet. Note: this designation could apply to Crew Members or Contingent Workers.

8.3(a) Which Securities trades am I required to preclear?

You must obtain, for yourself and on behalf of your Immediate Family Members, preclearance for any transaction in a Covered Security.

By seeking preclearance, you will be deemed to be advising Compliance that you:

•Do not possess any material, nonpublic information relating to the security.

•Do not use knowledge of any proposed trade or investment program relating to the Vanguard Funds for personal benefit.

•Believe the proposed trade is available to any market participant on the same terms.

Non-U.S. Fund Access Persons may be subject to additional restrictions. See Section 8.5(a).

Quick Guide: Refer to the Trading and Reporting Requirements for Fund Access Persons document, which can be accessed from the Code of Ethics Resource page on CrewNet.

8.3(b) How do I obtain preclearance?

You must receive preclearance through the MCO system or by contacting Compliance. Transactions in Covered Securities may not be executed before you receive approval.

Same day limit orders are permitted; however, good 'til canceled orders (such as limit orders that stay open over the course of multiple trading days until a security reaches a specified market price) are not permitted.

Attempting to gain approval after the transaction has occurred is not permitted. Completing a personal trade before receiving approval or after the approval window expires constitutes a violation of the Code. See Section 10 for more information regarding the sanctions that may be imposed as a result of a violation.

MCO Resource – Preclearance must be obtained via MCO. Once the required information is submitted, your preclearance request will be approved or denied immediately.

8.3(c) How long is my preclearance approval valid?

U.S.: Preclearance approval will expire at the end of the trading day on which it is issued (e.g., if you receive approval for a trade on Monday,

it is effective until the market closes on that Monday). Preclearance for limit orders is good for transactions on the same day that approval is granted only. If you receive approval for a limit

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order, it must be executed or expire at the close of regular trading on the same business day for which approval was granted. If you wish to execute the limit order after the close of regular trading on the day you received approval, you must submit a new preclearance request for the day you wish to execute the trade.

Non-U.S.: If you receive approval, transactions must be executed no later than the end of trading on the next business day after the preclearance is granted. If the transaction is not placed within that time, you must submit a new request for approval before placing the transaction. If you preclear a limit order, that limit order must either be executed or expire at the end of the next business day. If you want to execute the order after the next business day period expires, you must resubmit your preclearance request.

8.3(d) Am I required to obtain preclearance before investing in a Private Placement?

Yes. You cannot invest in securities offered to potential investors in a Private Placement or other limited investment offering without first obtaining preclearance from Compliance. You must provide documentation describing the investment (e.g., offering memorandum, subscription documents, etc.) so as to enable Compliance to conduct a thorough review of the investment. Approval may be granted after a review of the facts and circumstances, including whether:

•An investment in the securities is likely to result in future conflicts with Vanguard Client accounts.

•You are being offered the opportunity due to your employment at, or association with, Vanguard.

If you receive approval to purchase Securities in a Private Placement, you must inform Compliance if that Security goes to public offer or is pending listing on an exchange.

MCO Resource – To seek preclearance of a Private Placement, complete the Outside Business Activities Form via MCO.

8.3(e) Are there Securities transactions that I do not need to preclear?

Yes. You are not required to obtain preclearance for the following:

•Purchases or sales of Vanguard Funds.

•Purchases or sales where the person requesting preclearance has no direct or indirect influence or control over the account (e.g., you have a trust in your name but you are not the trustee who places the transaction, provided you have granted Investment Discretion to the trustee and there has been no prior communication between you and the trustee regarding the transaction).

•Corporate actions in Covered Securities such as stock dividends, stock splits, mergers, consolidations, spin-offs, or other similar corporate reorganizations or distributions.

•Purchases or sales made as a part of an Automatic Investment Program.

•Purchases made upon the exercise of Rights by an issuer in proportion to all holders of a class of its Securities, to the extent, such Rights were acquired for such issuer.

•Acquisitions of Covered Securities through gifts or bequests.

8.3(f) Am I subject to restrictions on my personal trading in Covered Securities?

Yes. You may be subject to certain restrictions if you purchase or sell a Covered Security within seven days before or after a Vanguard Fund purchases or sells the same Covered Security or a Related Security (the "blackout period").

If you purchase a Covered Security within seven days before a Vanguard Fund purchases the same Covered Security or a Related Security, you may be required to hold the Covered Security for 6 months before being permitted to sell the Covered Security for a profit.

If you sell a Covered Security within seven days before a Vanguard Fund sells the same Covered Security or a Related Security, you may be required to disgorge any profits earned from your sale of the

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Covered Security (exclusive of commissions) at a price higher than what the Vanguard Fund received for selling the Covered Security or a Related Security.

In general, you will not receive preclearance to purchase a Covered Security within seven days after a Vanguard Fund trades the same Covered Security or a Related Security. If you execute the transaction without receiving preclearance, you will have violated this Code and must immediately sell the Covered Security and disgorge all profits received from the sale to Vanguard (exclusive of commissions).

In general, you will not receive preclearance to sell a Covered Security within seven days after a Vanguard Fund trades the same Covered Security or a Related Security. If you execute the transaction without receiving preclearance, you will have violated the Code and must disgorge the difference (exclusive of commissions) between the sale price you received and the Vanguard Fund's sale price (as long as your sales price is higher), multiplied by the number of shares you sold.

Quick Guide: For example on the above trade scenarios, refer to Code of Ethics Q&A, which can be accessed from the Code of Ethics Resource page on CrewNet.

In addition to these restrictions, local law may dictate the extent to which any gains must be relinquished.

Compliance may exempt from these restrictions certain trades during blackout periods that coincide with trading by certain Vanguard Funds (e.g., index funds).

The blackout period will not apply to a Fund Access Person's sale of any stock for which the market capitalization exceeds US$5 billion, provided that

the total value of any sales of the Security by the Fund Access Person do not exceed US$10,000 in any 30-day rolling period. Sales of securities with market capitalizations below US$5 billion, or that exceed US$10,000 in any 30-day rolling period, will continue to be subject to the blackout periods unless Compliance grants a waiver.

Compliance may waive the blackout period as it applies to the sale of a Covered Security if the Chief Compliance Officer determines its application creates a significant hardship to you (e.g., you need cash for a home purchase or to cover a major medical expense) and, in the opinion of the Chief Compliance Officer, satisfies the requirements for a waiver in Section 11.

Web Resource – Refer to the Hardship Waiver Request Form on the Code of Ethics Resource page on CrewNet.

8.3(g) Am I prohibited from engaging in any Securities transactions?

Yes. You are prohibited from engaging in the following Securities transactions:

•Futures and Options. You are prohibited from entering into, acquiring, or selling any Futures contract (including single stock futures) or any Option on any Security (including Options on ETFs).

•Initial Public Offerings and Secondary Offerings. You are prohibited from acquiring Securities in an Initial Public Offering or Secondary Offering.

•Short-Selling. You are prohibited from selling short any Security that you do not own or from otherwise engaging in Short-Selling activities.

•Short-TermTrading. You are prohibited from purchasing and then selling any Covered Security at a profit, as well as selling and then repurchasing a Covered Security at a lower price within 60 calendar days. Gains are calculated based on last in, first out method for purposes of this restriction. If you realize profits on short-term trades, you will be

22

required to relinquish the profits. In addition, the trade will be recorded as a violation of the Code. Example: You are not permitted to sell a security at $12 that you purchased within the prior 60 days for $10. Similarly, you are not permitted to purchase a security at $10 that you sold within the prior 60 days for $12.

•Spread Bets. You are prohibited from participating in Spread Betting on Securities, indexes, interest rates, currencies, or commodities.

8.3(h) What happens if I make a "short-term trade" in a Vanguard Fund?

Compliance will monitor trading in Vanguard Funds, other than Vanguard ETFs, and will review situations where Vanguard Fund shares are redeemed within 30 calendar days of purchase (a "short-term trade"). You may be required

to relinquish any profit made on a short-term trade and will be subject to disciplinary action if Compliance determines the short-term trade was detrimental to a Vanguard Fund or a Vanguard Client or that there is a history of frequent trading by you or your Immediate Family Members. For purposes of this paragraph:

•A redemption includes a redemption by any means, including an exchange out of a Vanguard Fund.

•This policy does not cover purchases and redemptions/sales (i) into or out of Vanguard money market funds, Vanguard short-term bond funds, or (ii) through an Automatic Investment Program.

Nothing in this section is intended to replace, nullify, or modify any requirements imposed by a Vanguard Fund.

Note: This section applies to transactions in Vanguard Funds other than Vanguard ETFs (e.g., Vanguard mutual funds).

8.3(i) Are there any additional reporting requirements that apply to me?

In addition to the standard reporting requirements set forth in Section 8.1(c), you must also disclose the following:

•Covered Accounts where you exercise Investment Discretion.

•Accounts, 529 college savings plans and annuity or insurance products holding Vanguard Funds.

The information must be updated in MCO no later than ten calendar days after you become a Fund Access Person or joining Vanguard.

QuarterlyTransactions Report – Within 30 days of quarter end, you must certify that all transactions effected in Covered Securities during the quarter have been recorded accurately in MCO. If there are no transactions in Covered Securities the report should state "None." You will not be required

to certify if Compliance receives automated or duplicate confirmations and statements. Note: Compliance receives duplicate confirms and statements for all Vanguard accounts.

Annual Holdings Report – Within 30 calendar days of receipt, you must certify that all Covered Accounts and Reportable Securities are recorded accurately in MCO.

If you are an Investment Person of Vanguard Investments Hong Kong, Limited (VIHK), the holdings disclosure requirement is semi-annual, including the provision of statements.

Quick Guide: Refer to the Trading and Reporting Requirements for Fund Access Persons, which can be accessed from the Code of Ethics Resource page on CrewNet.

MCO Resource – Verify and disclose all Covered Accounts and holdings in Reportable Securities via MCO.

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8.4AdditionalTrading Prohibitions and Reporting Requirements for VAI Access Persons

The requirements of this Section 8.4 are in addition to the requirements of Section 8.1 and apply to all transactions or holdings in which a VAI Access Person has, or will acquire, Beneficial Ownership of Securities. To see if you are designated as a VAI Access Person, reference the VAI Access Person Departments list on CrewNet. Note: this designation could apply to Crew Members or Contingent Workers.

8.4(a) Am I required to preclear Security trades?

No. You are not required to preclear transactions in Covered Securities for you and your Immediate Family members.

Quick Guide: Refer to the Trading and Reporting Requirements for VAI Access Persons, which can be accessed from the Code of Ethics Resource page on CrewNet.

8.4(b) Am I required to obtain preclearance before investing in a Private Placement?

Yes. You cannot invest in securities offered to potential investors in a Private Placement or other limited investment offering without first obtaining preclearance from Compliance. You must provide documentation describing the investment (e.g., offering memorandum, subscription documents, etc.) so as to enable Compliance to conduct a thorough review of the investment. Approval may be granted after a review of the facts and circumstances, including whether:

•An investment in the securities is likely to result in future conflicts with Vanguard Client accounts.

•You are being offered the opportunity due to your employment at, or association with, Vanguard.

If you receive approval to purchase Securities in a Private Placement, you must inform Compliance if that Security goes to public offer or is pending listing on an exchange.

MCO Resource – To seek preclearance of a Private Placement complete the Outside Business Activities Form via MCO.

8.4(c) Am I prohibited from engaging in any Securities transactions?

Yes. You are subject to the following restrictions with respect to any transaction in which you will acquire any direct or indirect Beneficial Ownership:

•Initial Public Offerings and Secondary Offerings. You are prohibited from acquiring Securities in an Initial Public Offering or Secondary Offering.

•Short-Selling. You are prohibited from selling short any Security that you do not own or from otherwise engaging in Short-Selling activities.

•Short-TermTrading. You are prohibited from purchasing and then selling any Covered Security at a profit, as well as selling and then repurchasing a Covered Security at a lower price within 60 calendar days. A last-in-first-out accounting methodology will be applied to a series of Security purchases when applying this holding rule. If you realize profits on short- term trades, you will be required to relinquish the profits to The Vanguard Group Foundation (exclusive of commissions). In addition, the trade will be recorded as a violation of the Code.

•Short-term trading on options. You may hold options on a Covered Security until you exercise the options or the options expire. However, you may not otherwise close any open positions within 60 calendar days. If you realize profits on such short-term trades, you must relinquish such profits to The Vanguard Group Foundation (exclusive of commissions). For example:

you would not be permitted to sell a Covered Security at $12 that you purchased within the prior 60 days for $10. Similarly, you would not be permitted to purchase a Covered Security at $10 that you had sold within the prior 60 days

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for $12. Note: These types of transactions can have unintended consequences. For example, your call option could be assigned, causing the underlying Security to be called away within sixty (60) calendar days following the purchase of the Covered Security and will be recorded as a violation of the Code.

8.4(d) What happens if I make a "short-term trade" in a Vanguard Fund?

Compliance will monitor trading in Vanguard Funds, other than Vanguard ETFs, and will review situations where Vanguard Fund shares are redeemed within 30 calendar days of purchase (a "short-term trade"). You may be required to relinquish any profit made on a short-term trade and will be subject to disciplinary action if Compliance determines the short-term trade was detrimental to a Vanguard Fund or a Vanguard Client or that there is a history of frequent trading by the you or your Immediate Family Members. For purposes of this paragraph:

•A redemption includes a redemption by any means, including an exchange out of a Vanguard Fund.

•This policy does not cover purchases and redemptions/sales (i) into or out of Vanguard money market funds, Vanguard short-term bond funds, or (ii) through an Automatic Investment Program.

Nothing in this section is intended to replace, nullify, or modify any requirements imposed by a Vanguard Fund.

Note:This section applies to transactions in Vanguard Funds other than Vanguard ETFs (e.g., Vanguard mutual funds).

8.4(e) Are there any additional reporting requirements that apply to me?

In addition to the standard reporting requirements set forth in Section 8.1(c), you must also disclose the following:

•Covered Accounts where you exercise Investment Discretion.

•Accounts, 529 college savings plans and annuity or insurance products holding Vanguard Funds.

The information must be updated in MCO no later than ten calendar days after you become a VAI Access Person or joining Vanguard.

QuarterlyTransactions Report – Within 30 days

of quarter end, you must certify that all transactions effected in Covered Securities during the quarter have been recorded accurately in MCO. If there are no transactions in Covered Securities the report should state "None." You will not be required to certify if Compliance receives automated or duplicate confirmations and statements. Note: Compliance receives duplicate confirms and statements for all Vanguard accounts.

Annual Holdings Report – Within 30 calendar days of receipt, you must certify that all Covered Accounts and Reportable Securities are recorded accurately in MCO.

Quick Guide: Refer to the Trading and Reporting Requirements for VAI Access Persons, which can be accessed from the Code of Ethics Resource page on CrewNet.

MCO Resource - Verify and disclose all Covered Accounts and holdings in Reportable Securities via MCO.

25

8.5AdditionalTrading Prohibitions for Non-U.S. Crew Members

The requirements of this Section 8.5 are in addition to the requirements of Section 8.1 as well as the requirements of Section 8.2, 8.3, or 8.4, as applicable.

8.5(a) What are the additional trading prohibitions?

There are additional trading requirements and restrictions for Crew Members in Australia as well as for Crew Members and Contingent Workers in Japan.

8.5(b) What are the Vanguard Fund reporting requirements in Australia?

You and your Immediate Family Members will be required to disclose Vanguard Fund accounts in MCO but are not required to report transactions in Vanguard Funds to the local Compliance Department. For monitoring purposes, the local Compliance Department will access their records via the transfer agency system maintained at VIA, as required.

Note:Trades in Vanguard ETFs are required to be reported, as these records are not held by VIA.

8.5(c) What are the additional trading restrictions for Japan?

Crew Members and Contingent Workers including their Immediate Family Members are prohibited from activities including, but not limited to engaging in margin transactions, Securities-related derivatives transactions, and specified OTC derivatives transactions on their own account.

8.5(d) What additional information is required to be reported for accounts with third party Investment Discretion?

If you or your Immediate Family Member have an arrangement in place with a third party to manage Securities on a discretionary basis, you must provide a copy of the Discretionary Agreement

Approval request to Compliance in advance of effecting any transactions subject to the agreement.

Web Resource – Request and complete a Discretionary Agreement Approval Request Form.

26

Certification Requirements

On an annual basis, you must acknowledge that you understand the Code of Ethics and will comply with its provisions.

Section 9. Certification

Requirements

9.1 What am I required to certify initially?

Initial Certification – Within 10 calendar days after joining Vanguard, you must certify to Compliance that you have read, understand, and will comply with all applicable requirements of the Code and Code-related policies.

9.2 What am I required to certify annually?

Annual Certification – Within 30 calendar days of receipt, you must certify that you have read, understand, and have and will continue to comply with all applicable requirements of the Code and Code-related policies.

Section 10. Penalties and Sanctions

Any violations and potential violations of the Code will be investigated by Compliance or, if necessary, the Global Code of Ethics Committee. Once it has been determined that there was a violation, you will be subject to sanctions, as described below. Compliance will utilize a rolling 24-month period when evaluating whether to sanction a violation. The terms of the Disciplinary Action Policy will also apply.

For violations involving a Contingent Worker, Compliance will consult with a local Human Resource contact (outside the U.S.) or Crew Relations Specialist (inside the U.S.) and the appropriate employer regarding disciplinary action.

10.1How are violations administered by Compliance?

The sanctions program for non-material violations of the Code (e.g., late certification submissions, missed preclearance of a Covered Security, late in providing account confirms/statements, failure to observe the holding period requirements, etc.) and material violations will generally operate as follows:

The process for addressing non-material and material violations will include the following:

•First non-material violation in a rolling 24-month period - Letter of Education. Compliance will send the applicable Crew Member, his or her direct manager, and Human Resources or Crew Relations a summary of the violation.

•Second non-material violation in a rolling 24-month period - Letter of Caution. Compliance will send a letter of caution to the Crew Member and his or her direct manager for both parties to sign and return to Compliance. Compliance will have the direct manager add a first written warning to Workday. Compliance also will notify the Chief Compliance Officer, the Crew Member's direct officer, and Human Resources or Crew Relations.

•Third non-material violation in a rolling 24-month period - Letter of Violation. Compliance will report the violation to the Global Code of Ethics Committee, which will impose an appropriate sanction (e.g., final written warning) if warranted.

•Material violation. Compliance will report the material violation to the Global Code of Ethics Committee, which will impose an appropriate sanction (e.g., final written warning, termination, etc.) in its discretion.

Prior to imposing a sanction or violation for any second, third, or material violation for crew or contingent workers outside the U.S., Compliance will engage Human Resources to ensure that local employment policies/procedures have been appropriately considered.

10.2How is an appropriate sanction determined?

In addition to the foregoing, Compliance may,

as authorized by the Chief Compliance Officer and in consultation with the appropriate local Human Resource contact (outside the U.S.) or Crew Relations Specialist (inside the U.S.), impose sanctions for violations of the Code that are

28

considered to be necessary and appropriate under the circumstances and in the best interests of Vanguard and Vanguard Clients.

As mentioned above, certain violations will be reported to the Global Code of Ethics Committee, which will impose sanctions in its discretion. These sanctions, subject to local laws, may include, but are not limited to, one or more of the following: personal trading suspension, profit disgorgement, negative adjustment to performance review and compensation, final written warning, termination of employment or referral to civil or criminal authorities, or any other sanction as may be determined by the Global Code of Ethics Committee in its discretion.

10.3How is the materiality of a violation determined?

Compliance and/or the Committee will consider a variety of factors including, but not limited to, whether there was a violation of law, the frequency of violations, the monetary value of the violation in question, violations that impact a Vanguard Client, or violations that are egregious, malicious, or repetitive in nature.

10.4What are my obligations to report a violation?

You are required to immediately report a violation of the Code to the local Compliance Department once you become aware of a violation.

Section 11. Waivers

The Chief Compliance Officer may grant exceptions to this Code, including preclearance, other trading restrictions, and certain reporting requirements on a case-by-case basis if it is determined that (1) the proposed conduct involves no opportunity for abuse, (2) the proposed conduct does not conflict with Vanguard's interests, and (3) not granting an exception would result in an unfair or unjust outcome.

The Chief Compliance Officer may waive the applicability of the Code for a Contingent

Worker if the Code's requirements are covered through the applicable service provider's contract with Vanguard.

29

Nothing in this section is intended to replace, nullify, or modify any requirements imposed by a Vanguard Fund.

Note:AppendicesThis s ction appl es to transactions in Vanguard Funds other than Vanguard ETFs

(e.g., Vanguard mutual funds). As noted above, Investment Persons are prohibited from purchasing and then selling any Vanguard ETF at a profit, as well

asAppendixselling a d then repurchasing a Vanguard ETF at a lower rice within 60Acalendar. days

Definitions

8.2(i) Are there any additional reporting requirements that apply to me?

InAppendixaddition to the standardB. reporting requirements

set forth in Section 8.1(c), you must also disclose

Independent Directors and Trustees

the following:

•Covered Accounts where you exercise Investment Discretion.

•Accounts, 529 college savings plans and annuity or insurance products holding Vanguard Funds.

The information must be updated in MCO no later than ten calendar days after you become an Investment Person or joining Vanguard.

QuarterlyTransactions Report – Within 30 days of quarter end, you must certify that all transactions effected in Covered Securities during the quarter have been recorded accurately in MCO. If there are no transactions in Covered Securities the report should state "None." You will not be required

to certify if Compliance receives automated or duplicate confirmations and statements. Note: Compliance receives duplicate confirms and statements for all Vanguard accounts.

Annual Holdings Report – Within 30 calendar days of receipt, you must certify that all Covered Accounts and Reportable Securities are recorded accurately in MCO.

If you are an Investment Person of Vanguard Investments Hong Kong, Limited (VIHK), the holdings disclosure requirement is semi-annual, including the provision of statements.

MCO Resource – Verify and disclose all Covered Accounts and holdings in Reportable Securities via MCO.

30

Appendix A. Definitions

The following definitions apply throughout the Code.

Term

Definition

 

 

Access Person

Any person designated as an Investment Person, Fund Access Person, or VAI Access Person.

 

 

American Depository

A receipt that represents a specific number of shares of a foreign-based corporation held by a

Receipts (ADRs)

U.S. bank and entitles the holder to all dividends and capital gains. Through ADRs, investors can

 

gain exposure to securities of foreign-based companies while investing in the U.S. instead of in

 

foreign markets.

 

 

Associated Persons

Any person who conducts securities business on behalf of the Vanguard Marketing Corporation

 

(VMC). This includes all FINRA-licensed Contingent Workers, as well as non-licensed Contingent

 

Workers who perform certain operational and administrative functions for VMC.

 

 

Automatic Investment

A program in which regular periodic purchases (or withdrawals) are made automatically in (or

Program

from) Investment accounts, according to a predetermined schedule and allocation. An Automatic

 

Investment Program includes a dividend reinvestment plan.

 

 

Bankers' Acceptance

A time draft drawn on a commercial bank by a borrower usually in connection with an

 

international commercial transaction. Bankers' acceptances are usually guaranteed by the bank.

 

 

Beneficial Ownership

The opportunity to directly or indirectly—through any contract, arrangement, understanding,

 

relationship, or otherwise—share at any time in any economic interest or profit derived from an

 

ownership of or a transaction in a Security. You are deemed to have Beneficial Ownership in the

 

following:

 

• Any Security owned individually by you.

 

• Any Security owned by an Immediate Family Member.

 

• Any Security owned in joint tenancy, as tenants in common, or in other joint ownership

 

arrangements.

 

• Any Security in which an Immediate Family Member has Beneficial Ownership if the Security

 

is held in a Covered Account over which you have decision making authority (for example,

 

you act as a trustee, executor, or guardian or you provide Investment advice).

 

• Your interest as a general partner or manager/member in Securities held by a general or

 

limited partnership or limited liability company.

 

• Your interest as a member of an investment club or an organization that is formed for the

 

purpose of investing in a pool of monies or Securities.

 

• Your ownership of Securities as a trustee of a trust in which either you or an Immediate

 

Family Member has a vested interest in the principal or income of the trust or your

 

ownership of a vested interest in a trust.

 

• Securities owned by a corporation which is directly or indirectly controlled by, or under

 

common control with, such person.

 

 

Bond

A debt obligation issued by a corporation, government, or government agency that entails

 

repayment of the principal amount of the obligation at a future date, usually with interest.

 

 

Bribery

The act of making an illegal payment from one party to another, usually in return for a legal or

 

financial favor.

 

 

Brokerage Account

Any account where you can transact in Securities, including Automatic Investment Programs,

 

employee stock purchase programs, and employee stock option programs.

 

 

Certificate of Deposit

An insured, interest-bearing deposit at a bank that requires the depositor to keep the money

(CD)

invested for a specified period.

 

 

Closed-End Fund

A fund that offers a fixed number of shares. The fixed number of shares outstanding are offered

 

during an initial subscription period, similar to an initial public offering. After the subscription

 

period is closed, the shares are traded on an exchange between investors, like a stock.

 

 

Commercial Paper

A promissory note issued by a company in need of short-term financing.

 

 

31

Contingent Workers

A Contingent Worker is a broad term that refers to any person providing services to Vanguard

 

who Vanguard has not designated as a Crew Member.

 

Contingent Workers generally include individuals performing services for or on behalf of Vanguard

 

through staffing firms, consulting firms, service providers, and as independent contractors, other

 

than those who work for an independent organization with expertise in a specific function that is

 

peripheral to Vanguard's core business (e.g., security, landscaping, and food services).

 

Note: Compliance may waive the applicability of the Code for a Contingent Worker if Compliance

 

deems the Code's requirements are covered through their service provider's contract with

 

Vanguard.

 

 

Contract for Difference

A contract between two parties, typically described as buyer and seller, stipulating that the seller

(CFD)

will pay the difference between the current value of an asset and its value at contract time. (If the

 

difference is negative, then the buyer pays instead of the seller.)

 

 

Corporate Action

A corporate action is any activity by an issuer that can change its shareholders' ownership.

 

Examples include mergers, stock splits, dividends, Rights issues, etc.

 

 

Covered Account

A Vanguard Fund account, a Brokerage Account, and any other type of account that holds, or is

 

capable of holding, Reportable Securities.

 

 

Covered Security

Any Security, other than (i) Direct Obligations of a Government; (ii) Bankers' Acceptances,

 

Certificates of Deposit (CD), Commercial Paper, and High-Quality Short-Term Debt Instruments,

 

including Repurchase Agreements; (iii) shares issued by Open-End Funds (although for

 

European subsidiaries, this is limited to UCITS schemes, a non-UCITS retail scheme, or another

 

fund subject to supervision under the law of an European Economic Area (EEA) state which is an

 

index fund or which requires an equivalent level of risk spreading in their assets); (iv) life policies;

 

(v) exchange-traded funds and exchange-traded notes, and (vi) Digital Security Tokens.

 

 

Crew Member

All employees, officers, directors, and trustees of Vanguard or a Vanguard Fund.

 

 

Crowdfunding

The use of small amounts of capital from a large number of individuals to finance a new business

 

venture. This is an evolving method of raising capital, typically done through the Internet.

 

 

Crypto Mining

The act of running or facilitating any computational process for purposes of receiving

 

compensation in the form of a Digital Currency, Digital Utility Token, or Digital Security Token.

 

Crypto Mining may be done either directly or indirectly. Indirect Crypto Mining involves any

 

investment or participation in a venture that engages in direct Crypto Mining.

 

 

Debenture

An unsecured debt obligation backed only by the general credit of the borrower.

 

 

Direct Obligations of a

A debt that is backed by the full taxing power of any government. These Securities are generally

Government

considered to be of the very highest quality.

 

 

Digital Currency

A digital asset that: (1) serves solely as a store of value, a medium of exchange, or a unit of

 

account; (2) is not issued or guaranteed by any jurisdiction, central bank, or public authority,; (3)

 

relies on algorithmic techniques to regulate the generation of new units of the digital asset; and

 

(4) has transactions involving the digital asset recorded on a decentralized network or distributed

 

ledger (e.g., blockchain). A Digital Currency is distinguishable from a Digital Security Token or a

 

Digital Utility Token.

 

 

Digital UtilityToken

A digital asset that (1) provides access to a particular network, product, or service; (2) derives its

 

value primarily from providing access to a particular network, product, or service; and (3) does not

 

function as a Digital Currency or Digital Security Token.

 

 

Digital SecurityToken

Any digital asset that is not a Digital Currency or Digital Utility Token. In general, a Digital Security

 

Token may: (1) derive its value primarily from, or represent an interest in a separate asset or pool

 

of assets; or (2) represent an interest an enterprise or venture. A Digital Security Token may

 

provide owners or holders with voting rights, rights to distributions, or other rights associated

 

with ownership. Digital Security Tokens are generally held for speculative investment purposes

 

and not to provide holders with access to a particular network, product, or service. Digital

 

Security Tokens, like other investments, are generally not used as a medium of exchange.

 

Note: Whether or not an asset is a Digital Security Token depends on specific facts and

 

circumstances. Merely referring to an asset as a Digital Currency or Digital Utility Token does not

 

prevent the asset from being a Digital Security Token. Furthermore, an asset may be a Digital

 

Security Token even if it has some purported utility. Please contact Compliance if you have any

 

questions regarding whether an asset is a Digital Security Token

 

 

32

Evidence of Indebtedness

Written agreements for enforceable obligations to pay money.

 

 

Exchange-Traded Fund

An investment with characteristics of both mutual funds and individual stocks. Many ETFs

(ETF)

track an index, a commodity, or a basket of assets. Unlike mutual funds, ETFs can be traded

 

throughout the day. ETFs often have lower expense ratios but must be purchased and sold

 

through a broker, which means you may incur commissions.

 

 

Exchange-Traded Note

A senior, unsecured, unsubordinated debt Security issued by a financial institution, whose returns

(ETN)

are based on the performance of an underlying index and backed only by the credit of the issuer.

 

ETNs have a maturity date, but typically pay no periodic coupon interest and offer no principal

 

protection. At maturity an ETN investor receives a cash payment linked to the performance of the

 

corresponding index, less fees.

 

 

Fund Access Person

Any officer (other than officers designated as an Investment Person), director, or trustee of

 

Vanguard or a Vanguard Fund, excluding Independent Directors and Trustees; or anyone who has

 

access to nonpublic information regarding a Vanguard Fund's impending purchases or sales of

 

Securities, or nonpublic information regarding the portfolio holdings of any Vanguard Fund. For

 

anyone not an officer, Compliance designates Fund Access Persons individually or by department

 

number. For a list of Fund Access Person departments, please see the Fund Access Person

 

Departments list on CrewNet.

 

 

Futures/Futures Contract

A contract to buy or sell specific amounts of a commodity or financial instrument (such as grain,

 

a currency, including foreign currencies and Digital Currencies (e.g., Bitcoin), or an index) for an

 

agreed-upon price at a certain time in the future. Sometimes the arrangements in a contract

 

prescribe that settlements are made through cash payments, rather than the delivery of physical

 

goods or Securities; this is called Contract for Difference.

 

 

High-Quality Short-Term

An instrument that has a maturity at issuance of less than 366 days and is rated in one of the

Debt Instrument

two highest ratings categories by a nationally recognized statistical rating organization, or an

 

instrument that is unrated but determined by Vanguard to be of comparable quality.

 

 

Immediate Family

Your spouse, domestic partner (an unrelated adult with whom you share your home and

Members

contribute to each other's support), and minor children

 

 

Initial Coin Offering (ICO)

An initial offer or sale of a Digital Security Token.

 

Note: Whether or not an offering is an ICO depends on specific facts and circumstances.

 

Please contact Compliance before participating in an initial offering of a Digital Currency or

 

Digital Utility Token.

 

 

Initial Public Offering

A corporation's first offering of common stock to the public.

(IPO)

 

 

 

Independent Directors

Any director or trustee who is not an "interested person" of a Vanguard Fund within the meaning

andTrustees

of Section 2(a)(19) of the Investment Company Act of 1940.

 

 

Investment

A monetary asset purchased with the idea that the asset will provide income in the future or

 

appreciate and be sold at a higher price.

 

 

Investment Contract

Any contract, transaction, or scheme whereby a person invests money in a common enterprise

 

and is led to expect profits solely from the efforts of the promoter or third party.

 

 

Investment Discretion

The authority an individual may exercise, with respect to investment control or trading discretion,

 

on another person's account (e.g., executor, trustee, power of attorney).

 

 

Investment Person

Anyone who, in connection with his or her regular functions or duties, makes or participates in

 

making any recommendations regarding the purchase or sale of Securities by a Vanguard Fund;

 

and anyone designated by Compliance including, but not limited to, those who obtain nonpublic

 

information concerning recommendations made to a Vanguard Fund. Compliance will designate

 

Investment Persons individually or by department number. For a list of Investment Persons

 

departments, please see the Investment Persons Departments list on CrewNet.

 

 

Managed Account

A Managed Account is an investment account that is owned by an investor and overseen by a

 

hired professional money manager. The investor has no trading discretion on the account.

 

 

Managed Services

A Contingent Worker who provides services to Vanguard and who is employed by an independent

Workers

organization with expertise in a specific function that is peripheral to Vanguard's core business

 

(e.g., security, landscaping, and food services).

 

 

33

Money Market Fund

A type of mutual fund that invests in short-term debt securities with the purpose of providing

 

liquidity and interest at a low risk to shareholders. Money market funds generally seek to

 

maintain a stable net asset value of $1.00 per share.

 

 

MyComplianceOffice

MyComplianceOffice (MCO) is a third-party web based application that allows Crew and

(MCO)

Contingent Workers to report and update certain information, as required by the Code.

 

 

Non-Access Person

Anyone who has not been designated as either an Investment Person, a Fund Access Person,

 

or a Vanguard Advisers, Inc. Access Person.

 

 

Note

A financial security that generally has a longer term than a bill, but a shorter term than a Bond.

 

However, the duration of a note can vary significantly and may not always fall neatly into this

 

categorization. Notes are similar to Bonds in that they are sold at, above, or below face (par)

 

value; make regular interest payments; and have a specified term until maturity.

 

 

Open-End Fund

A mutual fund that has an unlimited number of shares available for purchase.

 

 

Option

The right, but not the obligation, to buy (for a call option) or sell (for a put option) a specific

 

amount of a given stock, commodity, currency, including foreign currencies and Digital Currencies

 

(e.g., Bitcoin), index, or debt, at a specified price (the strike price) during a specified period or on

 

one particular date.

 

 

Private Placement

A Security that is not registered or required to be registered under the U.S. federal securities

 

laws. Private Placements are generally sold to a relatively small number of select investors (as

 

opposed to a public issue, in which Securities are made available for sale on the open market) in

 

order to raise capital. Private Placements may include, among others, interests in hedge funds

 

(including limited partnership interests) and shares of private companies. Investors in Private

 

Placements are usually banks, mutual funds, insurance companies, pension funds, edge funds,

 

and high net worth individuals. Private Placements are typically held or maintained outside of

 

Vanguard.

 

 

Private Securities

The acquisition, purchase, sale, or disposition of a Private Placement.

Transaction

 

 

 

Real Estate Investment

A publicly traded company that invests in real estate and distributes almost all of its taxable

Trust (REIT)

income to shareholders. REITs often specialize in a particular kind of property. They can, for

 

example, invest in real estate such as office buildings, shopping centers, or hotels; purchase real

 

estate (an equity REIT); and provide loans to building developers (a mortgage REIT). REITs offer

 

the opportunity for smaller investors to invest in real estate.

 

 

Related Security

Any Security or instrument that provides economic exposure to the same company or entity—

 

provided, however, that equity instruments will generally not be considered related to fixed

 

income instruments (other than convertible Bonds) and vice versa. For example, all of the

 

following instruments would be related to the common Stock of Company X: Options, Futures,

 

Rights, and Warrants on Company X common Stock; preferred Stock issued by Company X; and

 

Bonds convertible into Company X common Stock. Similarly, different Bonds issued by Company

 

X would be related to one another.

 

 

Reportable Securities

Any Covered Security (as defined above), ETFs, ETNs, and Digital Security Tokens.

 

 

Repurchase Agreement

An arrangement by which the seller of an asset agrees, at the time of the sale, to buy back the

 

asset at a specific price and, typically, on a given date (normally the next day).

 

 

Rights

A Security giving stockholders entitlement to purchase new shares issued by the corporation

 

issuer at a predetermined price (normally at a discount to the current market price) in proportion

 

to the number of shares already owned. Rights are issued only for a short period of time, after

 

which they expire.

 

 

Security

Any Stock, Bond, money market instrument, Note, evidence of indebtedness, Debenture,

 

Warrant, Option, Right, Investment Contract, ETF, ETN, or any other Investment or interest

 

commonly known as a Security.

 

 

Secondary Offering

The sale of new or closely held shares by a company that has already made an Initial Public

 

Offering.

 

 

34

Short-Selling

The sale of a Security that the investor does not own to take advantage of an anticipated decline

 

in the price of the Security. To sell short, the investor must borrow the Security from a broker to

 

make delivery to the buyer.

 

 

Spread-Betting

A way of trading that enables you to profit from movements in a wide range of markets from

 

Shares to currencies, including foreign currencies and Digital Currencies (e.g., Bitcoin),

 

commodities, and interest rates. Spread betting allows you to trade on whether the price quoted

 

for these financial instruments will go up or down.

 

 

Stock

A Security that represents part ownership, or equity, in a corporation. Each share of stock is a

 

proportional stake in the corporation's assets and profits, some of which could be paid out as

 

dividends.

 

 

Undertakings ForThe

A regulatory framework of the European Commission that creates a harmonized regime

Collective Investment Of

throughout Europe for the management and sale of mutual funds. UCITS funds can be

Transferable Securities

registered in Europe and sold to investors worldwide using unified regulatory and investor

(UCITS)

protection requirements.

 

 

Unit InvestmentTrust

An SEC-registered Investment company that purchases a fixed, unmanaged portfolio of

(UIT)

income-producing Securities and then sells shares in the trust to investors, usually in units

 

of at least $1,000.

 

 

Vanguard

The Vanguard Group, Inc. (VGI) and any Vanguard Affiliate.

 

 

Vanguard Advisers, Inc.

Any VAI officer, as well as anyone who is involved in making Securities recommendations to VAI

(VAI) Access Person

clients, or has significant levels of interaction or dealings with VAI clients for the purposes of

 

providing VAI services to clients. Compliance will designate VAI Access Persons individually or

 

by department number. For a list of VAI Access Person departments, please see the VAI Access

 

Person Departments list on CrewNet.

 

 

Vanguard Affiliates

Any direct or indirect subsidiary of VGI.

 

 

Vanguard Clients

The clients of VGI, or any of the International Subsidiaries, and investors in the Vanguard Funds,

 

including the Vanguard Funds themselves.

 

 

Vanguard ETFs

Exchange-traded funds (ETFs) sponsored or managed by Vanguard. Vanguard ETFs issue shares

 

that can be bought or sold throughout the day in the secondary market at a market-determined

 

price. A Vanguard ETF may operate as a share class of a Vanguard Fund or as a standalone

 

investment pool.

 

 

Vanguard Funds

Vanguard mutual funds, Vanguard ETFs, and any other accounts sponsored or managed by

 

Vanguard. This includes, but is not limited to, separately managed accounts and collective trusts.

 

 

Vanguard Officers

Those Vanguard Crew Members at a Principal level position or higher.

 

 

Warrant

An entitlement to purchase a certain amount of common Stock at a set price (usually higher than

 

the current price) during an extended period of time. Usually issued with a fixed-income security

 

to enhance its marketability, a Warrant can be transferred, traded, or exercised by the holder.

35

Appendix B. Independent Directors and Trustees

Independent Directors and Trustees are required to report Securities transactions to Compliance only when a transaction is completed within 15 days of a security being purchased or sold by a Vanguard Fund and the Independent Director/Trustee had knowledge (or should have had knowledge) of the transaction.

Additionally, the following Sections of the Code are applicable to Independent Directors and Trustees:

Sections

Section 2 Standards of Conduct (excludes the reporting requirements for conflicts of interest) Section 5 Anti-Bribery Policy

Section 6 Antitrust and Competition Policy Section 7 Duty of Confidentiality

Section 8 Personal Trading Activities 8.1(a) (excludes bullet 6)

36

Do the right thing

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