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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
(NO. 33-64845)
UNDER THE SECURITIES ACT OF 1933
☒
Pre-Effective Amendment No.
☐
Post-Effective Amendment No. 92
☒
and
REGISTRATION STATEMENT
(NO. 811-07443)
UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 94
☒
VANGUARD WHITEHALL 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 September 20, 2021, pursuant to paragraph (b)
☐
60 days after filing pursuant to paragraph (a)(1)
☐
on (date) 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 International Dividend Appreciation Index Fund
Prospectus
 September 20, 2021
Admiral™ Shares
Vanguard International Dividend Appreciation Index Fund Admiral Shares (VIAAX)
  
 This prospectus contains financial data for the Fund through the fiscal period ended April 30, 2021.
  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.
 
Contents
 
 
Fund Summary
Investment Objective
The Fund seeks to track the performance of a benchmark index that measures the investment return of non-U.S. companies that have a history of increasing dividends.
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
0.25%
Sales Charge (Load) Imposed on Reinvested Dividends
None
Redemption Fee
0.25%
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
0.18%
12b-1 Distribution Fee
None
Other Expenses
0.02%
Total Annual Fund Operating Expenses
0.20%
1
Examples
The following examples are intended to help you compare the cost of investing in the Fund’s 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. The first example assumes that the shares provide a return of 5% each year, that total annual fund operating expenses remain as stated in the preceding table, and that 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
$72
$118
$169
$319
You would pay the following expenses if you did not redeem your investment (the difference being that the Fund’s 0.25% redemption fee would not apply to any of the following periods, as it would to those in the preceding example):  
1 Year
3 Years
5 Years
10 Years
$45
$89
$137
$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 examples, reduce the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 17% of the average value of its portfolio.
Principal Investment Strategies
The Fund employs an indexing investment approach designed to track the performance of the S&P Global Ex-U.S. Dividend Growers Index, which focuses on common stocks of high-quality companies located in developed and emerging markets, excluding the United States, that have both the ability and the commitment to grow their dividends over time. The Fund attempts to replicate the target index by investing all, or substantially all, of its assets in the collection of securities that make up the Index, holding each stock in approximately the same proportion as its weighting in the Index.
2
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. The Fund’s investments in foreign stocks can be riskier than U.S. stock investments. Foreign stocks may be more volatile and less liquid than U.S. stocks. The prices of foreign stocks and the prices of U.S. stocks may move in opposite directions. In addition, the Fund’s target index may, at times, become focused in stocks of a particular market sector, which would subject the Fund to proportionately higher exposure to the risks of that sector.
•  Country/regional risk, which 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 or regions. Because the Fund may invest a large portion of its assets in securities of companies 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 markets.
•  Emerging markets risk, which is the chance that the stocks of companies located in emerging markets will be substantially more volatile, and substantially less liquid, than the stocks of companies located in more developed foreign markets because, among other factors, emerging markets can have greater custodial and operational risks; less developed legal, tax, regulatory, financial reporting, accounting, and recordkeeping systems; and greater political, social, and economic instability than developed markets.
•  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.
•  Investment style risk, which is the chance that returns from dividend-paying stocks will trail returns from global stock markets. Dividend-paying stocks tend to go through cycles of doing better—or worse—than the global markets in general. These periods have, in the past, lasted for as long as several years.
•  Asset concentration risk, which is the chance that, because the Fund’s target index (and therefore the Fund) tends to be heavily weighted in its ten largest holdings, the Fund’s performance may be hurt disproportionately by the poor performance of relatively few stocks.
3
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 (including annual fund operating expenses but excluding shareholder fees) has varied from one calendar year to another over the periods shown. If applicable shareholder fees were reflected, returns would be less than those shown in the bar chart. The table shows how the average annual total returns of the Admiral Shares (including annual fund operating expenses and any applicable shareholder fees) compare with those of the Fund's target index and other comparative indexes, which have investment characteristics similar to those of the Fund. Effective September 20, 2021, the Fund began tracking the S&P Global Ex-U.S. Dividend Growers Index as its target index. The Fund's board of trustees believes that the new index is well-aligned with the Fund's investment strategy. Because the S&P Global Ex-U.S. Dividend Growers Index has an inception date of June 1, 2021, performance information is not included. The Spliced S&P Global Ex-U.S. Dividend Growers Index reflects the performance of the NASDAQ International Dividend Achievers Select Index through September 19, 2021, and the S&P Global Ex-U.S. Dividend Growers Index thereafter. S&P Global Ex-U.S. Dividend Growers Index returns are adjusted for withholding taxes. 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.
Annual Total Returns — Vanguard International Dividend Appreciation Index Fund Admiral Shares1
 
1 The year-to-date return as of the most recent calendar quarter, which ended June 30, 2021, was 7.79%.
4
During the periods shown in the bar chart, the highest and lowest returns for a calendar quarter were:  
 
Total Return
Quarter
Highest
16.00%
June 30, 2020
Lowest
-18.84%
March 31, 2020
Average Annual Total Returns for Periods Ended December 31, 2020  
 
1 Year
Since
Fund
Inception
Fund
Inception
Date
Vanguard International Dividend Appreciation Index
Fund Admiral Shares
 
 
3/2/2016
Return Before Taxes
14.53%
11.74%
 
Return After Taxes on Distributions
14.16
11.31
 
Return After Taxes on Distributions and Sale of Fund Shares
8.84
9.28
 
NASDAQ International Dividend Achievers Select Index
(reflects no deduction for fees, expenses, or taxes)
15.35%
12.18%
 
Spliced S&P Global Ex-US Dividend Growers Index
(reflects no deduction for fees or expenses)
15.35
12.18
 
S&P Global Ex-US Dividend Growers Index
(reflects no deduction for fees or expenses)
—
—
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.
5
Investment Advisor
The Vanguard Group, Inc. (Vanguard)
Portfolio Managers
Scott E. Geiger, CFA, Portfolio Manager at Vanguard. He has co-managed the Fund since July 2021.
Michael Perre, Principal of Vanguard. He has co-managed the Fund since its inception in 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 982901, El Paso, TX 79998-2901), 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.
6
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 brokerage commissions and other transaction costs—to a minimum compared with actively managed funds.
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
This prospectus offers the Fund’s Admiral Shares. The Fund also issues ETF Shares (an exchange-traded class of shares), which are offered through a separate prospectus.
 
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 International Dividend
Appreciation Index Fund Admiral Shares’ expense ratio would be 0.20%, or
$2.00 per $1,000 of average net assets. The average expense ratio for
international equity income funds in 2019 was 1.08%, or $10.80 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 investment 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 the stocks that make up its target index. The Fund may change its 80% policy only upon 60 days‘ notice to shareholders.
Market Exposure
The Fund invests mainly in stocks of companies located in developed and emerging markets outside of the United States that have a record of increasing dividends over time. Stocks purchased by the Fund are expected to have increasing dividends over time and also to have the potential for long-term capital appreciation. The Fund may purchase stocks that have relatively low dividend yields if the company issuing the stock has increased dividends in recent years.
   
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’s investments in foreign stocks can be riskier than U.S. stock investments. Foreign stocks may be more volatile and less liquid than U.S. stocks. The prices of foreign stocks and the prices of U.S. stocks may move in opposite directions. In addition, the Fund’s target index may, at times, become focused in stocks of a particular market sector, which would subject the Fund to proportionately higher exposure to the risks of that sector.
9
   
The Fund is subject to country/regional risk and currency risk. Country/regional 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 or regions. Because the Fund may invest a large portion of its assets in securities of companies 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. 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. Country/regional risk and currency risk are especially high in emerging markets.
   
The Fund is subject to emerging markets risk, which is the chance that the stocks of companies located in emerging markets will be substantially more volatile, and substantially less liquid, than the stocks of companies located in more developed foreign markets because, among other factors, emerging markets can have greater custodial and operational risks; less developed legal, tax, regulatory, financial reporting, accounting, and recordkeeping systems; and greater political, social, and economic instability than developed markets. Additionally, information regarding companies located in emerging markets may be less available and less reliable, which can impede the ability to evaluate such companies.

 
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 investment style risk, which is the chance that returns from dividend-paying stocks will trail returns from global stock markets. Dividend-paying stocks tend to go through cycles of doing better—or worse—than the global markets in general. These periods have, in the past, lasted for as long as several years.
10
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 performance of a benchmark index that measures the investment return of non-U.S. companies that have a record of increasing dividends over time. The companies in which the Fund invests will be within the capitalization range of the companies included in the S&P Global Ex-U.S. Dividend Growers Index ($73 million to $452 billion as of March 31, 2021). In the future, the Index’s market capitalization range may be higher or lower, and the Fund’s investments may track another index. Such changes may occur at any time and without notice to Fund shareholders. As of August 30, 2021, the Index included 351 constituents.
 
The Fund uses the replication method of indexing, meaning that the Fund generally holds the same stocks as those in its target index, and in approximately the same proportions.
 
The Fund's index is rebalanced on an annual basis as a modified market-capitalization-weighted index. New securities are added to and removed from the index during the annual reconstitution in March. Additionally, at its discretion on a monthly basis, the index provider reviews the index constituents and may remove any securities that no longer qualify as of the first business day of the following month.
   
The Fund is subject to asset concentration risk, which is the chance that, because the Fund’s target index (and therefore the Fund) tends to be heavily weighted in its ten largest holdings, the Fund’s performance may be hurt disproportionately by the poor performance of relatively few stocks.
Depositary receipts. The Fund, in most cases, will obtain economic exposure to stocks of its target index (component securities) by investing directly in the component securities. However, the Fund reserves the right to obtain economic exposure to component securities indirectly by purchasing depositary receipts (also sold as participatory notes) of the component securities. Depositary receipts are securities that are listed on exchanges or quoted in over-the-counter markets in one country but represent shares of issuers domiciled in another country. Generally, the Fund will hold depositary receipts only when the advisor believes that the Fund would benefit from holding the depositary receipt, rather than the underlying component security. For example, the Fund might opt to hold depositary receipts if the foreign market in which a stock trades does not
11
provide adequate protection to the rights of foreign investors or if government regulators place restrictions on the free flow of capital or currency. The Fund treats depositary receipts that represent interests in component securities as component securities for purposes of any requirements related to the percentage of component securities held in the Fund’s portfolio.
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.
To track its target index as closely as possible, the Fund attempts to remain fully invested in stocks. To help stay fully invested and to reduce transaction costs, the Fund may invest, to a limited extent, in derivatives, including equity futures. The Fund may also use derivatives such as total return swaps to obtain exposure to a stock, a basket of stocks, or an index. 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, in order to maintain the same currency exposure as its index. 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. 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 use these contracts to gain currency exposure when investing in equity futures and to settle trades in a foreign currency.  
12
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 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.
13
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.
Purchase and Redemption Fees
The Fund charges a 0.25% fee on all purchases of its shares, including shares that you purchase by exchange from another Vanguard fund. In addition, the Fund charges a 0.25% fee on redemptions of its shares. The fee applies if you redeem shares by selling or by exchanging to another Vanguard fund or if Vanguard liquidates your Fund account because the balance falls below the account minimum for any reason, including market fluctuation.
 
Unlike a sales charge or a load paid to a broker or a fund management company, purchase and redemption fees are paid directly to the Fund to offset the costs of buying and selling securities.
 
See Investing With Vanguard for more information about fees.
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
14
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. 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. 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
15
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 Equity Index Group. As of October 31, 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 October 31, 2020, the advisory expenses represented an effective annual rate of 0.02% 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
16
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 April 30.
The managers primarily responsible for the day-to-day management of the Fund are:
Scott E. Geiger, CFA, Portfolio Manager at Vanguard. He has been with Vanguard since 2006, has worked in investment management since 2008, has managed investment portfolios since 2013, and has co-managed the Fund since July 2021. Education: B.S., Millersville University.
Michael Perre, Principal of Vanguard. He has been with Vanguard since 1990, has managed investment portfolios since 1999, and has co-managed the Fund since its inception in 2016. Education: B.A., Saint Joseph’s University; M.B.A., Villanova 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. From time to time, the Fund may also make distributions that are treated as a return of capital. Income dividends generally are distributed quarterly in March, June, September, and December;
17
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 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 distribution 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.
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• 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.
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.
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.  
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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 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.
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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. 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 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.
21
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.
22
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). For the fiscal period ended October 31, 2016, and for the fiscal years ended October 31, 2017, through October 31, 2020, 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. The information for the fiscal period ended April 30, 2021, has not been audited but is included in the Fund’s semiannual report dated April 30, 2021. You may obtain a free copy of a fund’s latest annual or semiannual report, which is available upon request.
23
Vanguard International Dividend Appreciation Index Fund Admiral Shares  
 
Nov. 1,
2020
to April 30,
2021
Year Ended October 31,
March 2,
20161 to
Oct. 31,
2016
For a Share Outstanding
Throughout Each Period
2020
2019
2018
2017
Net Asset Value, Beginning
of Period
$34.03
$33.42
$28.52
$31.24
$26.45
$25.00
Investment Operations
 
 
 
 
 
 
Net Investment Income2
0.234
0.453
30.686
0.576
0.573
0.285
Net Realized and Unrealized Gain
(Loss) on Investments4
7.048
0.765
4.679
)(2.727
4.720
1.352
Total from Investment Operations
7.282
1.218
5.365
)(2.151
5.293
1.637
Distributions
 
 
 
 
 
 
Dividends from Net Investment
Income
)(0.202
)(0.608
)(0.465
)(0.569
)(0.503
)(0.187
Distributions from Realized Capital
Gains
—
—
—
—
—
—
Total Distributions
)(0.202
)(0.608
)(0.465
)(0.569
)(0.503
)(0.187
Net Asset Value, End of
Period
$41.11
$34.03
$33.42
$28.52
$31.24
$26.45
Total Return5
621.43%
63.72%
618.96%
6-7.03%
620.18%
6.54%
Ratios/Supplemental Data
 
 
 
 
 
 
Net Assets, End of Period (Millions)
$293
$220
$218
$175
$152
$77
Ratio of Total Expenses to Average
Net Assets
0.19%
0.20%
0.20%
0.25%
0.25%
70.25%
Ratio of Net Investment
Income to Average Net Assets
1.18%
1.36%
32.24%
1.83%
1.96%
71.60%
Portfolio Turnover Rate8
41%
17%
42%
36%
9%
8%
The expense ratio and net investment income ratio for the current period have been annualized.
1
Inception.
2
Calculated based on average shares outstanding.
3
Net investment income per share and the ratio of net investment income to average net assets include $0.188 and 0.65%, respectively, resulting from a special dividend from Naspers Ltd. in September 2019.
4
Includes increases from purchase and redemption fees of $0.00 for 2021, $0.00 for 2020, $0.01 for 2019, $0.01 for 2018, and $0.02 for 2017.
5
Total returns do not include account service fees that may have been applied in the periods shown.
6
Total returns do not include transaction fees that may have been applied in the periods shown.
7
Annualized.
8
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.
24
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.
25
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 (Vanguard—515).
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.
26
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.
Purchase Fee
The Fund charges a purchase fee of 0.25% on all share purchases, including shares purchased by exchange from another Vanguard fund. The purchase fee is deducted from the amount of each new purchase and is paid directly to the Fund to offset the cost of buying securities.
27
Purchase fees will not apply to Vanguard fund account purchases in the following circumstances: (1) purchases of shares through reinvested dividends or capital gains distributions; (2) share transfers, rollovers, or reregistrations within the same fund; (3) conversions of shares from one share class to another in the same fund; (4) purchases in kind; and (5) share rollovers to an IRA within the same Vanguard fund for plans in which Vanguard serves as a recordkeeper.
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
If you convert from Admiral Shares to ETF Shares, the transaction will be based on the respective NAVs of the separate share classes on the trade date of the conversion.
28
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.
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.
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.
29
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 $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.
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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 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
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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.
Redemption Fee
The Fund charges a 0.25% redemption fee. The fee applies if you redeem shares by selling or by exchanging to another Vanguard fund or if Vanguard liquidates your Fund account because the balance falls below the account minimum for any reason, including market fluctuation. The fee is withheld from redemption proceeds and is paid directly to the Fund.
Redemption fees will not apply to Vanguard fund account redemptions in the following circumstances: (1) redemptions of shares to pay fund or account fees; redemptions of shares to revoke an IRA within the period of time set forth in the Vanguard Traditional IRA, SEP-IRA, and Roth IRA Disclosure Statement; redemptions of shares to remove excess shareholder contributions to certain types of retirement accounts (including, but not limited to, IRAs, certain Vanguard Individual 403(b)(7) Custodial Accounts, and Vanguard Individual 401(k) Plans); and redemptions from Section 529 college savings plans; (2) share transfers, rollovers, or reregistrations within the same fund; (3) conversions of shares from one share class to another in the same fund; (4) redemptions in kind; and (5) for a one-year period, share rollovers to an IRA held at Vanguard from a retirement plan for which Vanguard serves as a recordkeeper.*
 
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Also, participants in employer-sponsored defined contribution plans* will not incur redemption fees for the following: exchanges of shares purchased with participant payroll or employer contributions; exchanges of shares purchased with reinvested dividend or capital gains distributions; distributions, loans, and in-service withdrawals from a plan; redemptions or transfers of shares as part of a plan termination or at the direction of the plan; and direct rollovers into IRAs.
 
Participants will incur redemption fees if, after making an exchange, a transfer, or a rollover into a fund with a redemption fee, the participant makes a subsequent exchange out of that fund.
 
If Vanguard does not serve as recordkeeper for your plan, redemption fees may be applied differently. Please read your recordkeeper’s plan materials carefully to learn of any other rules or fees that may apply. Also see Frequent-Trading Limitations—Accounts Held by Intermediaries for information about the assessment of redemption fees by intermediaries.
 
*The following Vanguard fund accounts will be subject to redemption fees: SEP-IRAs, SIMPLE IRAs, certain Individual 403(b)(7) Custodial Accounts, Vanguard Retirement Investment Program pooled plans, and Vanguard Retirement Plans for which Vanguard Fiduciary Trust Company serves as trustee.
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
33
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.
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.
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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®.
• 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.
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• 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.
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
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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.
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.
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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).
• 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.
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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.
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
39
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.
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. Shares redeemed in accordance with this policy will be subject to applicable redemption fees.
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.
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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 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.
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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 International Dividend Appreciation Index Fund twice a year, in June and December. 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.
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• 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
The Fund’s Bylaws require, unless the Trust otherwise consents in writing, that the U.S. Federal District Courts be the sole and exclusive forum for the resolution of complaints under the Securities Act of 1933. This provision may limit a shareholder’s ability to bring a claim in a different forum and may result in increased shareholder costs in pursuing such a claim.  
 
Inception
Date
Newspaper
Abbreviation
Vanguard
Fund Number
CUSIP
Number
International Dividend
Appreciation Index Fund
 
 
 
 
Admiral Shares
3/2/2016
VanIntDvAlAdm
515
921946844
44
 
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.
“Dividend Achievers” is a trademark of The NASDAQ OMX Group, Inc. (collectively, with its affiliates, “NASDAQ OMX”) and has been licensed for use by The Vanguard Group, Inc. Vanguard mutual funds are not sponsored, endorsed, sold, or promoted by NASDAQ OMX and NASDAQ OMX makes no representation regarding the advisability of investing in the funds. NASDAQ OMX MAKES NO WARRANTIES AND BEARS NO LIABILITY WITH RESPECT TO THE VANGUARD MUTUAL FUNDS.
The “S&P Global Ex-U.S. Dividend Growers Index” (the “Index”) is a product of S&P Dow Jones Indices LLC, a division of S&P Global, or its affiliates (“SPDJI”), and has been licensed for use by Vanguard. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC, a division of S&P Global (“S&P”) and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). The trademarks have been licensed to SPDJI and have been sublicensed for use for certain purposes by Vanguard. Vanguard International Dividend Appreciation Index Fund is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, or any of their respective affiliates (collectively, “S&P Dow Jones Indices”). S&P Dow Jones Indices make no representation or warranty, express or implied, to the owners of Vanguard International Dividend Appreciation Index Fund or any member of the public regarding the advisability of investing in securities generally or in Vanguard International Dividend Appreciation Index Fund particularly or the ability of the S&P Global Ex-U.S. Dividend Growers Index to track general market performance. S&P Dow Jones Indices’ only relationship to Vanguard with respect to the S&P Global Ex-U.S. Dividend Growers Index is the licensing of the Index and certain trademarks, service marks and/or trade names of S&P Dow Jones Indices and/or its licensors. The S&P Global Ex-U.S. Dividend Growers Index is determined, composed and calculated by S&P Dow Jones Indices without regard to Vanguard or Vanguard International Dividend Appreciation Index Fund. S&P Dow Jones Indices have no obligation to take the needs of Vanguard or the owners of Vanguard International Dividend Appreciation Index Fund into consideration in determining, composing or calculating the S&P Global Ex-U.S. Dividend Growers Index. S&P Dow Jones Indices are not responsible for and have not participated in the determination of the prices, and amount of Vanguard International Dividend Appreciation Index Fund or the timing of the issuance or sale of Vanguard International Dividend Appreciation Index Fund or in the determination or calculation of the equation by which Vanguard International Dividend Appreciation Index Fund is to be converted into cash, surrendered or redeemed, as the case may be. S&P Dow Jones Indices have no obligation or liability in connection with the administration, marketing or trading of Vanguard International Dividend Appreciation Index Fund. There is no assurance that investment products based on the S&P Global Ex-U.S. Dividend Growers Index will accurately track index performance or provide positive investment returns. S&P Dow Jones Indices LLC is not an investment advisor. Inclusion of a security within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it considered to be investment advice.
 
S&P DOW JONES INDICES DOES NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE S&P GLOBAL EX-U.S. DIVIDEND GROWERS INDEX OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY VANGUARD, OWNERS OF VANGUARD INTERNATIONAL DIVIDEND APPRECIATION INDEX FUND, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDEX OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES BE LIABLE FOR
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ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND VANGUARD, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.
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Glossary of Investment Terms
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.
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.
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 (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.”
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.
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.
47
NASDAQ International Dividend Achievers Select Index. An index that focuses on high-quality companies located in developed and emerging markets, excluding the United States, that have both the ability and the commitment to increase their dividends 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.
Return of Capital. A return of capital occurs when a fund's distributions exceed its earnings in a fiscal year. A return of capital is a return of all or part of your original investment or amounts paid in excess of your original investment in a fund. In general, a 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 International Dividend Appreciation 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 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: 811-07443
© 2021 The Vanguard Group, Inc. All rights reserved.
Vanguard Marketing Corporation, Distributor.
P 2015 092021
 
Vanguard International Dividend Appreciation ETF
Prospectus
 September 20, 2021
Exchange-traded fund shares that are not individually redeemable and are listed on Nasdaq
Vanguard International Dividend Appreciation Index Fund ETF Shares (VIGI)
  
 This prospectus contains financial data for the Fund through the fiscal period ended April 30, 2021.
  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.
 
Contents
 
ETF Summary
Investment Objective
The Fund seeks to track the performance of a benchmark index that measures the investment return of non-U.S. companies that have a history of increasing dividends.
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*
Transaction Fee on Reinvested Dividends
None*
Transaction Fee on Conversion to ETF Shares
None*
*
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
0.18%
12b-1 Distribution Fee
None
Other Expenses
0.02%
Total Annual Fund Operating Expenses
0.20%
1
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
$20
$64
$113
$255
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 17% of the average value of its portfolio.
Principal Investment Strategies
The Fund employs an indexing investment approach designed to track the performance of the S&P Global Ex-U.S. Dividend Growers Index, which focuses on common stocks of high-quality companies located in developed and emerging markets, excluding the United States, that have both the ability and the commitment to grow their dividends over time. The Fund attempts to replicate the target index by investing all, or substantially all, of its assets in the collection of securities that make up the Index, holding each stock in approximately the same proportion as its weighting in the Index.
2
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. The Fund’s investments in foreign stocks can be riskier than U.S. stock investments. Foreign stocks may be more volatile and less liquid than U.S. stocks. The prices of foreign stocks and the prices of U.S. stocks may move in opposite directions. In addition, the Fund’s target index may, at times, become focused in stocks of a particular market sector, which would subject the Fund to proportionately higher exposure to the risks of that sector.
•  Country/regional risk, which 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 or regions. Because the Fund may invest a large portion of its assets in securities of companies 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 markets.
•  Emerging markets risk, which is the chance that the stocks of companies located in emerging markets will be substantially more volatile, and substantially less liquid, than the stocks of companies located in more developed foreign markets because, among other factors, emerging markets can have greater custodial and operational risks; less developed legal, tax, regulatory, financial reporting, accounting, and recordkeeping systems; and greater political, social, and economic instability than developed markets.
•  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.
•  Investment style risk, which is the chance that returns from dividend-paying stocks will trail returns from global stock markets. Dividend-paying stocks tend to go through cycles of doing better—or worse—than the global markets in general. These periods have, in the past, lasted for as long as several years.
•  Asset concentration risk, which is the chance that, because the Fund’s target index (and therefore the Fund) tends to be heavily weighted in its ten largest holdings, the Fund’s performance may be hurt disproportionately by the poor performance of relatively few stocks.
3
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 other comparative indexes, which have investment characteristics similar to those of the Fund. Effective September 20, 2021, the Fund began tracking the S&P Global Ex-U.S. Dividend Growers Index as its target index. The Fund's board of trustees believes that the new index is well-aligned with the Fund's investment strategy. Because the S&P Global Ex-U.S. Dividend Growers Index has an inception date of June 1, 2021, performance information is not included. The Spliced S&P Global Ex-U.S. Dividend Growers Index reflects the performance of the NASDAQ International Dividend Achievers Select Index through September 19, 2021, and the S&P Global Ex-U.S. Dividend Growers Index thereafter. S&P Global Ex-U.S. Dividend Growers Index returns are adjusted for withholding taxes. Keep in mind that the Fund's past performance (before and after taxes) does not
4
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.
Annual Total Returns — Vanguard International Dividend Appreciation Index Fund ETF Shares1
 
1 The year-to-date return as of the most recent calendar quarter, which ended June 30, 2021, was 7.79%.
During the periods shown in the bar chart, the highest and lowest returns for a calendar quarter were:  
 
Total Return
Quarter
Highest
15.98%
June 30, 2020
Lowest
-18.83%
March 31, 2020
5
Average Annual Total Returns for Periods Ended December 31, 2020  
 
1 Year
Since
Fund
Inception
Fund
Inception
Date
Vanguard International Dividend Appreciation Index
Fund ETF Shares
 
 
2/25/2016
Based on NAV
 
 
 
Return Before Taxes
15.11%
12.47%
 
Return After Taxes on Distributions
14.73
12.04
 
Return After Taxes on Distributions and Sale of
Fund Shares
9.19
9.89
 
Based on Market Price
 
 
 
Return Before Taxes
14.74
12.47
 
NASDAQ International Dividend Achievers Select
Index
(reflects no deduction for fees, expenses, or taxes)
15.35%
12.83%
 
Spliced S&P Global Ex-US Dividend Growers Index
(reflects no deduction for fees or expenses)
15.35
12.83
 
S&P Global Ex-US Dividend Growers Index
(reflects no deduction for fees or expenses)
—
—
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
Scott E. Geiger, CFA, Portfolio Manager at Vanguard. He has co-managed the Fund since July 2021.
Michael Perre, Principal of Vanguard. He has co-managed the Fund since its inception in 2016.
6
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 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.
7
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 International Dividend Appreciation ETF, a class of shares issued by Vanguard International Dividend Appreciation Index Fund. In addition to ETF Shares, the Fund offers one conventional (not exchange-traded) class 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.
8
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 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.
9
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 brokerage commissions and other transaction costs—to a minimum compared with actively managed funds.
10
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. A separate prospectus offers the Fund’s Admiral™ Shares, which generally have an investment minimum of $3,000.
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.
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.  
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 International Dividend Appreciation Index
Fund ETF Shares’ expense ratio would be 0.20%, or $2.00 per $1,000 of
average net assets. The average expense ratio for international equity income
funds in 2019 was 1.08%, or $10.80 per $1,000 of average net assets
(derived from data provided by Lipper, a Thomson Reuters Company, which
reports on the fund industry).
 
11
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 investment 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 the stocks that make up its target index. The Fund may change its 80% policy only upon 60 days' notice to shareholders.
Market Exposure
The Fund invests mainly in stocks of companies located in developed and emerging markets outside of the United States that have a record of increasing dividends over time. Stocks purchased by the Fund are expected to have increasing dividends over time and also to have the potential for long-term capital appreciation. The Fund may purchase stocks that have relatively low dividend yields if the company issuing the stock has increased dividends in recent years.
   
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‘s investments in foreign stocks can be riskier than U.S. stock investments. Foreign stocks may be more volatile and less liquid than U.S. stocks. The prices of foreign stocks and the prices of U.S. stocks may move in opposite directions. In addition, the Fund‘s target index may, at times, become focused in stocks of a particular market sector, which would subject the Fund to proportionately higher exposure to the risks of that sector.
12
   
The Fund is subject to country/regional risk and currency risk. Country/regional 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 or regions. Because the Fund may invest a large portion of its assets in securities of companies 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. 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. Country/regional risk and currency risk are especially high in emerging markets.
   
The Fund is subject to emerging markets risk, which is the chance that the stocks of companies located in emerging markets will be substantially more volatile, and substantially less liquid, than the stocks of companies located in more developed foreign markets because, among other factors, emerging markets can have greater custodial and operational risks; less developed legal, tax, regulatory, financial reporting, accounting, and recordkeeping systems; and greater political, social, and economic instability than developed markets. Additionally, information regarding companies located in emerging markets may be less available and less reliable, which can impede the ability to evaluate such companies.

 
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 investment style risk, which is the chance that returns from dividend-paying stocks will trail returns from global stock markets. Dividend-paying stocks tend to go through cycles of doing better—or worse— than the global markets in general. These periods have, in the past, lasted for as long as several years.
13
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 performance of a benchmark index that measures the investment return of non-U.S. companies that have a record of increasing dividends over time. The companies in which the Fund invests will be within the capitalization range of the companies included in the S&P Global Ex-U.S. Dividend Growers Index ($73 million to $452 billion as of March 31, 2021). In the future, the Index’s market capitalization range may be higher or lower, and the Fund’s investments may track another index. Such changes may occur at any time and without notice to Fund shareholders. As of August 30, 2021, the Index included 351 constituents.
 
The Fund uses the replication method of indexing, meaning that the Fund generally holds the same stocks as those in its target index, and in approximately the same proportions.
 
The Fund's index is rebalanced on an annual basis as a modified market-capitalization-weighted index. New securities are added to and removed from the index during the annual reconstitution in March. Additionally, at its discretion on a monthly basis, the index provider reviews the index constituents and may remove any securities that no longer qualify as of the first business day of the following month.
   
The Fund is subject to asset concentration risk, which is the chance that, because the Fund’s target index (and therefore the Fund) tends to be heavily weighted in its ten largest holdings, the Fund’s performance may be hurt disproportionately by the poor performance of relatively few stocks.
Depositary receipts. The Fund, in most cases, will obtain economic exposure to stocks of its target index (component securities) by investing directly in the component securities. However, the Fund reserves the right to obtain economic exposure to component securities indirectly by purchasing depositary receipts (also sold as participatory notes) of the component securities. Depositary receipts are securities that are listed on exchanges or quoted in over-the-counter markets in one country but represent shares of issuers domiciled in another country. Generally, the Fund will hold depositary receipts only when the advisor believes that the Fund would benefit from holding the depositary receipt, rather than the underlying component security. For example, the Fund might opt to hold depositary receipts if the foreign market in which a stock trades does not
14
provide adequate protection to the rights of foreign investors or if government regulators place restrictions on the free flow of capital or currency. The Fund treats depositary receipts that represent interests in component securities as component securities for purposes of any requirements related to the percentage of component securities held in the Fund’s portfolio.
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.
To track its target index as closely as possible, the Fund attempts to remain fully invested in stocks. To help stay fully invested and to reduce transaction costs, the Fund may invest, to a limited extent, in derivatives, including equity futures. The Fund may also use derivatives such as total return swaps to obtain exposure to a stock, a basket of stocks, or an index. 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, in order to maintain the same currency exposure as its index. 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. 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 use these contracts to gain currency exposure when investing in equity futures and to settle trades in a foreign currency.  
15
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
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.
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
16
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.
   
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.
17
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.
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
18
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 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
19
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. 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.  
20
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 Equity Index Group. As of October 31, 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 October 31, 2020, the advisory expenses represented an effective annual rate of 0.02% 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 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 April 30.
21
The managers primarily responsible for the day-to-day management of the Fund are:
Scott E. Geiger, CFA, Portfolio Manager at Vanguard. He has been with Vanguard since 2006, has worked in investment management since 2008, has managed investment portfolios since 2013, and has co-managed the Fund since July 2021. Education: B.S., Millersville University.
Michael Perre, Principal of Vanguard. He has been with Vanguard since 1990, has managed investment portfolios since 1999, and has co-managed the Fund since its inception in 2016. Education: B.A., Saint Joseph’s University; M.B.A., Villanova 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. From time to time, the Fund may also make distributions that are treated as a return of capital. Income dividends generally are distributed quarterly in March, June, September, and December; 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.  
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.
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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 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 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 dividend distribution or short-term capital gains distribution 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 ETF 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 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.
23
• 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.
Dividend distributions 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.
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.
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.,
24
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).
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.
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 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.
25
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's website will show the previous day's closing NAV and closing market price for the Fund's ETF Shares.
Additional Information
The Fund’s Bylaws require, unless the Trust otherwise consents in writing, that the U.S. Federal District Courts be the sole and exclusive forum for the resolution of complaints under the Securities Act of 1933. This provision may limit a shareholder’s ability to bring a claim in a different forum and may result in increased shareholder costs in pursuing such a claim.  
 
Inception
Date
Vanguard
Fund Number
CUSIP
Number
International Dividend Appreciation Index Fund
 
 
 
ETF Shares
2/25/2016
4415
921946810
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.
26
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). For the fiscal period ended October 31, 2016, and for the fiscal years ended October 31, 2017, through October 31, 2020, 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. The information for the fiscal period ended April 30, 2021, has not been audited but is included in the Fund’s semiannual report dated April 30, 2021. You may obtain a free copy of a fund’s latest annual or semiannual report, which is available upon request.
27
Vanguard International Dividend Appreciation Index Fund ETF Shares  
 
Nov. 1,
2020 to
April 30,
2021
Year Ended October 31,
Feb. 25,
20161 to
Oct. 31,
2016
For a Share Outstanding
Throughout Each Period
2020
2019
2018
2017
Net Asset Value, Beginning
of Period
$69.97
$68.72
$58.65
$64.25
$54.43
$50.00
Investment Operations
 
 
 
 
 
 
Net Investment Income2
0.492
0.958
31.452
1.196
1.179
0.662
Net Realized and Unrealized Gain
(Loss) on Investments4
14.454
1.551
9.578
)(5.623
9.715
4.154
Total from Investment Operations
14.946
2.509
11.030
)(4.427
10.894
4.816
Distributions
 
 
 
 
 
 
Dividends from Net Investment
Income
)(.416
)(1.259
)(0.960
)(1.173
)(1.074
)(0.386
Distributions from Realized Capital
Gains
—
—
—
—
—
—
Total Distributions
)(0.416
)(1.259
)(0.960
)(1.173
)(1.074
)(0.386
Net Asset Value, End of Period
$84.50
$69.97
$68.72
$58.65
$64.25
$54.43
Total Return
21.40%
3.73%
18.96%
7.04%–
20.19%
9.64%
Ratios/Supplemental Data
 
 
 
 
 
 
Net Assets, End of Period (Millions)
$3,505
$2,456
$1,305
$861
$634
$147
Ratio of Total Expenses to Average Net
Assets
0.19%
0.20%
0.20%
0.25%
0.25%
50.25%
Ratio of Net Investment Income to
Average Net Assets
1.21%
1.40%
32.24%
1.83%
1.96%
51.60%
Portfolio Turnover Rate6
41%
17%
42%
36%
9%
8%
The expense ratio and net investment income ratio for the current period have been annualized.
1
Inception.
2
Calculated based on average shares outstanding.
3
Net investment income per share and the ratio of net investment income to average net assets include $0.388 and 0.65%, respectively, resulting from a special dividend from Naspers Ltd. in September 2019.
4
Includes increases from purchase and redemption fees of $0.00 for 2021, $0.01 for 2020, $0.02 for 2019, $0.02 for 2018, and $0.04 for 2017.
5
Annualized.
6
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.
“Dividend Achievers” is a trademark of The NASDAQ OMX Group, Inc. (collectively, with its affiliates, “NASDAQ OMX”) and has been licensed for use by The Vanguard Group, Inc. Vanguard funds are not sponsored, endorsed, sold, or promoted by NASDAQ OMX and NASDAQ OMX makes no representation regarding the advisability of investing in the funds. NASDAQ OMX MAKES NO WARRANTIES AND BEARS NO LIABILITY WITH RESPECT TO THE VANGUARD FUNDS.
The “S&P Global Ex-U.S. Dividend Growers Index” (the “Index”) is a product of S&P Dow Jones Indices LLC, a division of S&P Global, or its affiliates (“SPDJI”), and has been licensed for use by Vanguard. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC, a division of S&P Global (“S&P”) and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). The trademarks have been licensed to SPDJI and have been sublicensed for use for certain purposes by Vanguard. Vanguard International Dividend Appreciation Index ETF is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, or any of their respective affiliates (collectively, “S&P Dow Jones Indices”). S&P Dow Jones Indices make no representation or warranty, express or implied, to the owners of Vanguard International Dividend Appreciation Index ETF or any member of the public regarding the advisability of investing in securities generally or in Vanguard International Dividend Appreciation Index ETF particularly or the ability of the S&P Global Ex-U.S. Dividend Growers Index to track general market performance. S&P Dow Jones Indices’ only relationship to Vanguard with respect to the S&P Global Ex-U.S. Dividend Growers Index is the licensing of the Index and certain trademarks, service marks and/or trade names of S&P Dow Jones Indices and/or its licensors. The S&P Global Ex-U.S. Dividend Growers Index is determined, composed and calculated by S&P Dow Jones Indices without regard to Vanguard or Vanguard International Dividend Appreciation Index ETF. S&P Dow Jones Indices have no obligation to take the needs of Vanguard or the owners of Vanguard International Dividend Appreciation Index ETF into consideration in determining, composing or calculating the S&P Global Ex-U.S. Dividend Growers Index. S&P Dow Jones Indices are not responsible for and have not participated in the determination of the prices, and amount of Vanguard International Dividend Appreciation Index ETF or the timing of the issuance or sale of Vanguard International Dividend Appreciation Index ETF or in the determination or calculation of the equation by which Vanguard International Dividend Appreciation Index ETF is to be converted into cash, surrendered or redeemed, as the case may be. S&P Dow Jones Indices have no obligation or liability in connection with the administration, marketing or trading of Vanguard International Dividend Appreciation Index ETF. There is no assurance that investment products based on the S&P Global Ex-U.S. Dividend Growers Index will accurately track index performance or provide positive investment returns. S&P Dow Jones Indices LLC is not an investment advisor. Inclusion of a security within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it considered to be investment advice.
 
S&P DOW JONES INDICES DOES NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE S&P GLOBAL EX-U.S. DIVIDEND GROWERS INDEX OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY VANGUARD, OWNERS OF VANGUARD INTERNTAIONAL DIVIDEND APPRECIATION INDEX ETF, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDEX OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND VANGUARD, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.
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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.
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.
Capital Gains Distributions. Payments to fund shareholders of gains realized on securities that a fund has sold at a profit, minus any realized losses.
Common Stock. A security representing ownership rights in a corporation.
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.
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.
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.”
30
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.
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.
NASDAQ International Dividend Achievers Select Index. An index that focuses on high-quality companies located in developed and emerging markets, excluding the United States, that have both the ability and the commitment to increase their dividends 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.
Return of Capital. A return of capital occurs when a fund's distributions exceed its earnings in a fiscal year. A return of capital is a return of all or part of your original investment or amounts paid in excess of your original investment in a fund. In general, a 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.
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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.
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For More Information
If you would like more information about Vanguard International Dividend Appreciation 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 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: 811-07443
© 2021 The Vanguard Group, Inc. All rights reserved.
U.S. Patent Nos. 6,879,964and 7,720,749
Vanguard Marketing Corporation, Distributor.
P 4415 092021
PART B
VANGUARD® WHITEHALL FUNDS
STATEMENT OF ADDITIONAL INFORMATION
September 20, 2021
This Statement of Additional Information is not a prospectus but should be read in conjunction with a Fund’s current prospectus (dated September 20, 2021). To obtain, without charge, a prospectus or the most recent Annual or Semiannual 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 Whitehall Funds (the Trust) currently offers the following funds and share classes (identified by ticker symbol):  
 
Share Classes1
Vanguard Fund2
Investor
Admiral
Institutional
Vanguard Selected Value Fund
VASVX
—
—
Vanguard International Explorer Fund
VINEX
—
—
Vanguard Mid-Cap Growth Fund
VMGRX
—
—
Vanguard High Dividend Yield Index Fund
—
VHYAX
—
Vanguard Emerging Markets Government Bond Index Fund
—
VGAVX
VGIVX
Vanguard Global Minimum Volatility Fund
VMVFX
VMNVX
—
Vanguard International Dividend Appreciation Index Fund
—
VIAAX
—
Vanguard International High Dividend Yield Index Fund
—
VIHAX
—
1
Individually, a class; collectively, the classes.
2
Individually, a Fund; collectively, the Funds.
3
Exchange: NYSE Arca.
4
Exchange: Nasdaq.
This Statement of Additional Information relates only to Vanguard International Dividend Appreciation Index Fund. A separate Statement of Additional Information dated February 26, 2021, which relates to the Trust's other funds, can be obtained free of charge by contacting Vanguard.
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.
B-1
Organization
The Trust was organized as a Maryland corporation in 1995 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 Whitehall Funds, Inc. 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 Government Bond Index Fund, are classified as diversified within the meaning of the 1940 Act. Vanguard Emerging Markets Government Bond Index Fund is classified as nondiversified within the meaning of the 1940 Act.
Service Providers
Custodians. The Bank of New York Mellon, 240 Greenwich Street, New York, NY 10286 (for Vanguard Global Minimum Volatility Fund, Vanguard International Dividend Appreciation Index Fund, and Vanguard International High Dividend Yield Index Fund); JPMorgan Chase Bank, N.A., 383 Madison Avenue, New York, NY 10179 (for Vanguard International Explorer Fund and Vanguard High Dividend Yield Index Fund); and State Street Bank and Trust Company, One Lincoln Street, Boston, MA 02111 (for Vanguard Selected Value Fund, Vanguard Mid-Cap Growth Fund, and Vanguard Emerging Markets Government Bond Index 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 Fund's 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 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
B-2
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. Fund shareholders may convert their shares into another class of shares of the same Fund upon satisfaction of any then-applicable eligibility requirements, as described in the Fund’s current prospectus. ETF Shares cannot be converted into conventional shares of a fund by a shareholder. For additional information about the conversion rights applicable to ETF Shares, please see Information About the ETF Share Class. There are no conversion rights associated with Vanguard Selected Value, Vanguard International Explorer, and Vanguard Mid-Cap Growth Funds.
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.
Shareholder Rights. Any limitations on a shareholder’s right to bring an action in federal court do not apply to claims arising under the federal securities laws to the extent that any such federal securities laws, rules, or regulations do not permit such limitations.
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 qualified dividend income.
Taxable ordinary dividends received and distributed by each Fund on its REIT holdings may be eligible to be reported by a 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 dividends-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. Capital losses may be carried forward indefinitely and retain their character as either short-term or long-term.
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. For Vanguard International Explorer Fund, Vanguard Mid-Cap Growth Fund, Vanguard Global Minimum Volatility Fund, and Vanguard High Dividend Yield Index Fund: Each Fund may not change its classification as a
“management company” or its subclassifications as an “open-end company” and as a “diversified company” as each such term is defined in the 1940 Act.

For Vanguard Selected Value Fund, Vanguard International Dividend Appreciation Index Fund, and Vanguard International High Dividend Yield Index Fund: With respect to 75% of its total assets, each 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. For Vanguard Selected Value Fund, Vanguard International Explorer Fund, Vanguard Global Minimum Volatility Fund, and Vanguard Mid-Cap Growth Fund: Each Fund will not concentrate its investments in the securities of issuers whose principal business activities are in the same industry or group of industries.
For Vanguard High Dividend Yield Index Fund, Vanguard Emerging Markets Government Bond Index Fund, Vanguard International Dividend Appreciation Index Fund, and Vanguard International High Dividend Yield Index Fund: Each Fund will not concentrate its investments in the securities of issuers whose principal business activities are in the same industry or group of industries, except as may be necessary to approximate the composition of its target index. 
Investment Objective. The investment objective of Vanguard Selected Value Fund may not be materially changed without a shareholder vote.
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 a 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.
B-4
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.
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.
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.
B-5
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 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
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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.
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 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
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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.
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
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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 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.
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 and 7,720,749.
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
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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, the imposition of economic or other sanctions on the United States by a foreign country, or 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 or obtain exposure to foreign securities and assets. This may negatively impact the value and/or liquidity of a fund’s investments and could impair a fund’s ability to meet its investment objective or invest in accordance with its investment strategy. Sanctions could also result in the devaluation of a country’s currency, a downgrade in the credit ratings of a country or issuers in a country, or a decline in the value and/or liquidity of securities of issuers in that country.
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 Qualified Foreign Investor (QFI) license or the China Stock Connect program. The developing state of the investment and banking systems of China subjects the settlement, 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 quota 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 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 QFI License. A fund may access securities of companies through the QFI program. Although the relevant QFI regulations have been revised to relax regulatory restrictions on the onshore capital management by QFI license holders (including removing investment quota limit and simplifying routine repatriation of invest proceeds), QFI policies and rules are unique and evolving, are still in the early stages and subject to uncertainties as to how they will be implemented in practice, and are subject to change and interpretation by PRC authorities. Any of the above could have potential adverse effects on a fund, including on a retroactive basis.  
 
With respect to the QFI custodial arrangements, to the extent a fund's cash is commingled with the assets of other clients of a Chinese custodian and the Chinese custodian becomes insolvent, the fund will not have any proprietary rights to cash deposited in the account, and the fund will become and unsecured creditor, ranking pari passu with all
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other unsecured creditors of the Chinese custodian. The Chinese custodian is required to perform certain regulatory and reporting obligations. If these reporting obligations are not met, PRC authorities may impose a fine or other sanctions, including the revocation of the QFI license, which could have a negative impact on a fund investing in China A-shares and could result in increased fund expenses.
 
Trades do not cross between the Shanghai and Shenzhen stock exchanges, and a separate broker is assigned for each exchange. If a fund rebalances across both exchanges, the fund must trade out of stocks listed on the exchange with a broker and trade into stocks on the other exchange with a separate broker. As a result, the fund may incur additional fees.
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—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 markets and participants in those markets and possible arbitrary and unpredictable enforcement of securities regulations and other laws, which may increase the risk of market manipulation; 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, corporate governance, accounting, auditing, recordkeeping, and financial reporting standards, which may result in unavailability of material information about issuers and impede evaluation of such 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. Additionally, information regarding companies located in emerging markets may be less available and less reliable, which can impede the ability to evaluate such companies. There may also be limited regulatory oversight of certain foreign subcustodians that hold foreign securities subject to the supervision of a fund's primary U.S.-based custodian. A fund may be limited in its ability to recover assets if a foreign subcustodian becomes bankrupt or otherwise unable or unwilling to return assets to the fund, which may expose the fund to risk, especially in circumstances where the fund's primary custodian may not be contractually obligated to make the fund whole for the particular loss.
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
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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.
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
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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.”
Foreign Securities—Russian Market Risk. There are significant risks inherent in investing in Russian securities. The underdeveloped state of Russia’s banking system subjects the settlement, clearing, and registration of securities transactions to significant risks. In March of 2013, the National Settlement Depository (NSD) began acting as a central depository for the majority of Russian equity securities; the NSD is now recognized as the Central Securities Depository in Russia.
For Russian issuers with fewer than 50 shareholders, ownership records are maintained only by registrars who are under contract with the issuers and are currently not settled with the NSD. Although a Russian subcustodian will maintain copies of the registrar’s records (Share Extracts) on its premises, such Share Extracts are not recorded with the NSD and may not be legally sufficient to establish ownership of securities. The registrars may not be independent from the issuer, are not necessarily subject to effective state supervision, and may not be licensed with any governmental entity. A fund will endeavor to ensure by itself or through a custodian or other agent that the fund’s interest continues to be appropriately recorded for Russian issuers with fewer than 50 shareholders by inspecting the share register and by obtaining extracts of share registers through regular confirmations. However, these extracts have no legal enforceability, and the possibility exists that a subsequent illegal amendment or other fraudulent act may deprive the fund of its ownership rights or may improperly dilute its interest. In addition, although applicable Russian regulations impose liability on registrars for losses resulting from their errors, a fund may find it difficult to enforce any rights it may have against the registrar or issuer of the securities in the event of loss of share registration.
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.
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.
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 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
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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.
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.
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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, 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
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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.
Real Estate Investment Trusts (REITs). An equity REIT owns real estate properties directly and generates income from rental and lease payments. Equity REITs also have the potential to generate capital gains as properties are sold at a profit. A mortgage REIT makes construction, development, and long-term mortgage loans to commercial real estate developers and earns interest income on these loans. A hybrid REIT holds both properties and mortgages. To avoid taxation at the corporate level, REITs must distribute most of their earnings to shareholders.
Investments in REITs are subject to many of the same risks as direct investments in real estate. In general, real estate values can be affected by a variety of factors, including, but not limited to, supply and demand for properties, general or local economic conditions, and the strength of specific industries that rent properties. Ultimately, a REIT’s performance depends on the types and locations of the properties it owns and on how well the REIT manages its properties. For example, rental income could decline because of extended vacancies, increased competition from nearby properties, tenants’ failure to pay rent, regulatory limitations on rents, fluctuations in rental income, variations in market rental rates, or incompetent management. Property values could decrease because of overbuilding in the area, environmental liabilities, uninsured damages caused by natural disasters, a general decline in the neighborhood, losses because of casualty or condemnation, increases in property taxes, or changes in zoning laws.
The value of a REIT may also be affected by changes in interest rates. Rising interest rates generally increase the cost of financing for real estate projects, which could cause the value of an equity REIT to decline. During periods of declining interest rates, mortgagors may elect to prepay mortgages held by mortgage REITs, which could lower or diminish the yield on the REIT. REITs are also subject to heavy cash-flow dependency, default by borrowers, and changes in tax and regulatory requirements. In addition, a REIT may fail to meet the requirements for qualification and taxation as a REIT under the IRC and/or fail to maintain exemption from the 1940 Act.
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.
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Restricted and Illiquid Securities/Investments. Illiquid securities/investments 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/investments 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/investments 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/investments may include restricted, privately placed securities that, under the federal securities laws, generally may be resold only to qualified institutional buyers. If a market develops for a restricted security held by a fund, it may be treated as a liquid security in accordance with guidelines approved by the board of trustees.
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
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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.
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.
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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.”
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—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
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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.
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
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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.”
Regulatory restrictions in India. Shares of Vanguard International Explorer Fund, Vanguard Global Minimum Volatility Fund, Vanguard International Dividend Appreciation Index Fund, and Vanguard International High Dividend Yield Index 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 each 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 each 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 Vanguard High Dividend Yield Index Fund, Vanguard Global Minimum Volatility Fund, Vanguard Emerging Markets Government Bond Index Fund, Vanguard International Dividend Appreciation Index Fund, and Vanguard International High Dividend Yield Index Fund is computed by dividing the total assets, minus liabilities, allocated to the share class by the number of Fund shares outstanding for that class. NAV per share for Vanguard Selected Value Fund, Vanguard International Explorer Fund, and Vanguard Mid-Cap Growth 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.


 

The Funds (other than Vanguard Emerging Markets Government Bond Index Fund, Vanguard International Dividend Appreciation Index Fund, and Vanguard International High Dividend Yield Index Fund) do not charge purchase fees. Vanguard Emerging Markets Government Bond Index Fund charges a 0.75% purchase fee, and Vanguard International Dividend Appreciation Index Fund and Vanguard International High Dividend Yield Index Fund each charge a 0.25% purchase fee. The purchase fee is paid to each Fund to reimburse it for the transaction costs incurred from purchasing securities. The fee is deducted from all purchases, including shares purchased by exchange from other Vanguard funds. Information regarding the application of purchase fees is described more fully in each 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,
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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.
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 Fund's board of trustees. Investors may incur brokerage charges on the sale of such securities received in payment of redemptions.
The Funds (other than Vanguard International Dividend Appreciation Index Fund and Vanguard International High Dividend Yield Index Fund) do not charge redemption fees. Vanguard International Dividend Appreciation Index Fund and Vanguard International High Dividend Yield Index Fund each charge a 0.25% redemption fee. The redemption fee is paid to each Fund to reimburse it for the transaction costs incurred from liquidating securities in order to meet fund redemptions. Information regarding the application of redemption fees is described more fully in each Fund’s prospectus. 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 Funds.
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
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fraud or financial exploitation or abuse, or will 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). The 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
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 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.

 

Pursuant to an agreement between Vanguard and JPMorgan Chase Bank, N.A. (JPMorgan), JPMorgan provides services for Vanguard High Dividend Yield Index Fund, and Vanguard International Explorer Fund. These services include, but are not limited to: (i) the calculation of such funds’ daily NAVs and (ii) the furnishing of financial reports. The fees paid to JPMorgan under this agreement are based on a combination of flat and asset based fees. As of the fiscal year ended October 31, 2020, JPMorgan had received fees from the Funds for administrative services rendered as follows: for Vanguard High Dividend Yield Index Fund, $11,333.27.  For Vanguard International Explorer Fund JPMorgan had not received any fees for services rendered as of the fiscal year ended October 31, 2020.

 

Pursuant to an agreement between Vanguard and State Street Bank and Trust Company (State Street), State Street provides services for Vanguard Global Minimum Volatility Fund, Vanguard International Dividend Appreciation Index Fund, Vanguard International High Dividend Yield Index Fund, Vanguard Mid-Cap Growth Fund, and Vanguard Selected Value Fund. These services include, but are not limited to: (i) the calculation of such funds’ daily NAVs and (ii) the furnishing of financial reports. The fees paid to State Street under this agreement are based on a combination of flat and asset based fees. As of the fiscal year ended October 31, 2020, State Street had received fees from the Funds for administrative services rendered as follows: for Vanguard Mid-Cap Growth Fund, $3,000; and for Vanguard Selected Value Fund, $3,000. For Vanguard Global Minimum Volatility Fund, Vanguard International Dividend Appreciation Index Fund, and Vanguard International High Dividend Yield Index Fund, State Street had not received any fees for services rendered as of the fiscal year ended October 31, 2020.
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.
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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 October 31, 2020, each Fund contributed capital to Vanguard as follows:  
Vanguard Fund
Capital
Contribution
to Vanguard
Percentage of
Fund’s Average
Net Assets
Percent of
Vanguard Funds’
Contribution
Vanguard Selected Value Fund
$ 212,000
Less than 0.01%
0.08%
Vanguard International Explorer Fund
$ 103,000
Less than 0.01%
0.04%
Vanguard Mid-Cap Growth Fund
$ 190,000
Less than 0.01%
0.08%
Vanguard High Dividend Yield Index Fund
$ 1,440,000
Less than 0.01%
0.58%
Vanguard Emerging Markets Government Bond Index Fund
$ 88,000
Less than 0.01%
0.04%
Vanguard Global Minimum Volatility Fund
$ 138,000
Less than 0.01%
0.06%
Vanguard International Dividend Appreciation Index Fund
$ 114,000
Less than 0.01%
0.05%
Vanguard International High Dividend Yield Index Fund
$ 68,000
Less than 0.01%
0.03%
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 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.
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■ 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 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.
B-27
As is the case with all mutual funds, transaction costs incurred by a Fund 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 October 31, 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 Emerging Markets Government Bond Index Fund
 
 
 
Management and Administrative Expenses
0.28%
0.23%
0.23%
Marketing and Distribution Expenses
0.01 
Less than 0.01 
0.01 
Vanguard Global Minimum Volatility Fund
 
 
 
Management and Administrative Expenses
0.14%
0.13%
0.13%
Marketing and Distribution Expenses
0.01 
0.01 
0.01 
Vanguard High Dividend Yield Index Fund
 
 
 
Management and Administrative Expenses
0.07%
0.06%
0.05%
Marketing and Distribution Expenses
0.01 
0.01 
Less than 0.01 
Vanguard International Dividend Appreciation Index Fund
 
 
 
Management and Administrative Expenses
0.21%
0.18%
0.18%
Marketing and Distribution Expenses
0.01 
0.01 
0.01 
Vanguard International Explorer Fund
 
 
 
Management and Administrative Expenses
0.15%
0.16%
0.15%
Marketing and Distribution Expenses
0.02 
0.01 
0.01 
Vanguard International High Dividend Yield Index Fund
 
 
 
Management and Administrative Expenses
0.28%
0.25%
0.23%
Marketing and Distribution Expenses
0.01 
0.01 
0.01 
Vanguard Mid-Cap Growth Fund
 
 
 
Management and Administrative Expenses
0.18%
0.18%
0.19%
Marketing and Distribution Expenses
0.02 
0.01 
0.01 
Vanguard Selected Value Fund
 
 
 
Management and Administrative Expenses
0.14%
0.15%
0.14%
Marketing and Distribution Expenses
0.02 
0.01 
0.01 
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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.
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.  
B-29
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.
212
1 Mr. Buckley is considered an “interested person” as defined in the 1940 Act because he is an officer of the Trust.
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.
212
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.
212
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.
212
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.
212
B-30
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
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.
212
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.
212
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.
212
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).
212
David Thomas
(1956)
Trustee
July 2021
President of Morehouse College (2018–present).
Professor of Business Administration Emeritus at
Harvard University (2017–2018) and Dean (2011–2016)
and Professor of Management at Georgetown
University, McDonough School of Business
(2016–2017). Director of DTE Energy Company
(2013–present). Trustee of Common Fund
(2019–present).
212
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.
212
B-31
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
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).
212
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).
212
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.
212
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).
212
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.
212
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.
212
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.
212
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.
212
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.
B-32
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 October 31, 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 October 31, 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 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 October 31, 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 October 31, 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-33
VANGUARD WHITEHALL 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
$ 4,945
—
—
$ 287,500
Amy Gutmann
4,945
—
—
287,500
F. Joseph Loughrey
5,289
—
—
307,500
Mark Loughridge
6,151
—
—
357,500
Scott C. Malpass
4,945
—
—
287,500
Deanna Mulligan
4,945
—
—
287,500
André F. Perold
4,945
—
—
287,500
Sarah Bloom Raskin
5,289
—
—
307,500
David Thomas4
—
—
—
—
Peter F. Volanakis
5,289
—
—
307,500
1
The amounts shown in this column are based on the Trust's fiscal year ended October 31, 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.
4
Mr. Thomas became a member of the Funds’ board effective July 22, 2021.
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. Mr. Thomas began service as a trustee effective July 22, 2021.
VANGUARD WHITEHALL FUNDS  
Vanguard Fund
Trustee
Dollar Range of
Fund Shares
Owned by Trustee
Aggregate Dollar Range
of Vanguard Fund Shares
Owned by Trustee
Vanguard Emerging Markets Government Bond 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
 
David Thomas
—
—
 
Peter F. Volanakis
—
Over $100,000
 
 
 
 
B-34
Vanguard Fund
Trustee
Dollar Range of
Fund Shares
Owned by Trustee
Aggregate Dollar Range
of Vanguard Fund Shares
Owned by Trustee
Vanguard Global Minimum Volatility 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
 
David Thomas
—
—
 
Peter F. Volanakis
—
Over $100,000
 
 
 
 
Vanguard High Dividend Yield Index Fund
Mortimer J. Buckley
—
Over $100,000
 
Emerson U. Fullwood
Over $100,000
Over $100,000
 
Amy Gutmann
—
Over $100,000
 
F. Joseph Loughrey
Over $100,000
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
 
David Thomas
—
—
 
Peter F. Volanakis
—
Over $100,000
 
 
 
 
Vanguard International Dividend Appreciation 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
 
David Thomas
—
—
 
Peter F. Volanakis
—
Over $100,000
 
 
 
 
Vanguard International Explorer 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
 
David Thomas
—
—
 
Peter F. Volanakis
—
Over $100,000
 
 
 
 
B-35
Vanguard Fund
Trustee
Dollar Range of
Fund Shares
Owned by Trustee
Aggregate Dollar Range
of Vanguard Fund Shares
Owned by Trustee
Vanguard International High Dividend Yield 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
 
David Thomas
—
—
 
Peter F. Volanakis
—
Over $100,000
 
 
 
 
Vanguard Mid-Cap Growth 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
 
David Thomas
—
—
 
Peter F. Volanakis
—
Over $100,000
 
 
 
 
Vanguard Selected 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
 
David Thomas
—
—
 
Peter F. Volanakis
—
Over $100,000
As of July 31, 2021, the trustees and officers of the funds owned, in the aggregate, less than 1% of each class of each fund’s outstanding shares.
B-36
As of January 31, 2021, 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 Emerging Markets Government Bond Index
Fund
Admiral Shares
CHARLES SCHWAB & CO INC SAN
FRANCISCO, CA
9.88%
 
Institutional Shares
NORTHERN TRUST COMPANY FBO
FLORIDA 529 SAVINGS PLAN – DV
CHICAGO, IL
44.40%
 
 
NORTHERN TRUST COMPANY FBO
THE SCHAEFFER REV FAMILY TRUST
CHICAGO, IL
24.93%
 
 
MAC & CO PITTSBURG, PA
30.65%
Vanguard Global Minimum Volatility Fund
Investor Shares
CHARLES SCHWAB & CO INC SAN
FRANCISCO, CA
6.98%
 
 
VANGUARD MANAGED ALLOCATION
FUND VALLEY FORGE, PA
9.71%
 
 
NATIONAL FINANCIAL SERVICES
CORPORATION JERSEY CITY, NJ
15.70%
 
Admiral Shares
CHARLES SCHWAB & CO INC SAN
FRANCISCO, CA
8.89%
 
 
MAC & CO PITTSBURG, PA
10.91%
 
 
MAC & CO PITTSBURG, PA
7.50%
 
 
NATIONAL FINANCIAL SERVICES
CORPORATION JERSEY CITY, NJ
8.34%
 
 
CAPINCO C/O US BANK NA
MILWAUKEE, WI
7.29%
Vanguard High Dividend Yield Index Fund
Admiral Shares
CHARLES SCHWAB & CO INC SAN
FRANCISCO, CA
6.00%
 
 
NATIONAL FINANCIAL SERVICES
CORPORATION JERSEY CITY, NJ
10.34%
Vanguard International Dividend Appreciation Index
Fund1
Admiral Shares
FCCI INSURANCE COMPANY
SARASOTA, FL
11.53%
Vanguard International Explorer Fund
Investor Shares
CHARLES SCHWAB & CO INC SAN
FRANCISCO, CA
9.17%
 
 
NORTHERN TRUST COMPANY FBO
NORTH DAKOTA STATE INVESTMENT
BOARD CHICAGO, IL
6.64%
Vanguard International High Dividend Yield Index Fund
Admiral Shares
BOK TTE COMMISIONERS LAND OFF
- QUALIFIED PLANS TULSA, OK
37.84%
 
 
FCCI INSURANCE COMPANY
SARASOTA, FL
8.15%
 
 
NATIONAL FINANCIAL SERVICES
CORPORATION JERSEY CITY, NJ
5.75%
Vanguard Mid-Cap Growth Fund
Investor Shares
FIDELITY INVESTMENTS
INSTITUTIONAL OPERATIONS CO INC
COVINGTON, KY
8.96%
 
 
NATIONAL FINANCIAL SERVICES
CORPORATION JERSEY CITY, NJ
8.45%
Vanguard Selected Value Fund
Investor Shares
CHARLES SCHWAB & CO INC SAN
FRANCISCO, CA
7.11%
 
 
NATIONAL FINANCIAL SERVICES
CORPORATION JERSEY CITY, NJ
5.17%
 
 
NATIONAL FINANCIAL SERVICES
CORPORATION JERSEY CITY, NJ
7.16%
1
As of August 31, 2021.
B-37
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 January 31, 2021, 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 Emerging Markets Government Bond ETF
Charles Schwab & Co., Inc.
20.01%
 
National Financial Services LLC
7.21%
 
State Street Bank and Trust Company
19.09%
 
TD Ameritrade Clearing, Inc.
5.04%
 
VANGUARD Marketing Corporation
6.47%
Vanguard High Dividend Yield ETF
Charles Schwab & Co., Inc.
14.06%
 
Merrill Lynch, Pierece, Fenner & Smith
5.44%
 
National Financial Services LLC
11.94%
 
TD Ameritrade Clearing, Inc.
7.63%
 
VANGUARD Marketing Corporation
11.16%
Vanguard International Dividend Appreciation ETF1
Charles Schwab & Co., Inc.
22.23%
 
Edward D. Jones & Co.
5.32%
 
Morgan Stanley DW Inc.
6.07%
 
VANGUARD Marketing Corporation
8.71%
 
Merrill Lynch, Pierce, Fenner & Smith
10.69%
 
National Financial Services LLC
11.27%
 
Pershing LLC
7.11%
Vanguard International High Dividend Yield ETF
Charles Schwab & Co., Inc.
27.04%
 
Morgan Stanley DW Inc.
5.09%
 
National Financial Services LLC
9.94%
 
TD Ameritrade Clearing, Inc.
6.23%
 
VANGUARD Marketing Corporation
10.03%
1
As of August 31, 2021.
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 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.
B-38
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. 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.
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.
B-39
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.; Charles River Systems, Inc.; FactSet Research Systems Inc.; Institutional Shareholder Services, Inc.; 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; Trade Informatics LLC; and Xerox.
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 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
B-40
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 Enterprise 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 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
B-41
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 Enterprise 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 Enterprise 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 Enterprise 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 Enterprise 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 Enterprise 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.
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
B-42
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
The Trust currently uses ten investment advisors:
■ Baillie Gifford Overseas Ltd. (Baillie Gifford) provides investment advisory services for a portion of Vanguard International Explorer Fund.
■ Cooke & Bieler, L.P. (Cooke & Bieler) provides investment advisory services for a portion of Vanguard Selected Value Fund.
■ Donald Smith & Co., Inc. (Donald Smith & Co.) provides investment advisory services for a portion of Vanguard Selected Value Fund.
■ Frontier Capital Management Co., LLC (Frontier Capital) provides investment advisory services for a portion of Vanguard Mid-Cap Growth Fund.
■ Pzena Investment Management, LLC (Pzena) provides investment advisory services for a portion of Vanguard Selected Value Fund.
■ Schroder Investment Management North America Inc. (Schroders) provides investment advisory services for a portion of Vanguard International Explorer Fund.
■ TimesSquare Capital Management, LLC (TimesSquare Capital) provides investment advisory services for a portion of Vanguard International Explorer Fund.
■ Victory Capital Management Inc. (Victory Capital), through its RS Investments franchise, provides investment advisory services for a portion of Vanguard Mid-Cap Growth Fund.
■ Wellington Management Company LLP (Wellington Management) provides investment advisory services for a portion of Vanguard International Explorer Fund and a portion of Vanguard Mid-Cap Growth Fund.
■ Vanguard provides investment advisory services to Vanguard High Dividend Yield Index Fund, Vanguard Emerging Markets Government Bond Index Fund, Vanguard Global Minimum Volatility Fund, Vanguard International Dividend Appreciation Index Fund, and Vanguard International High Dividend Yield Index Fund.
Chartwell Investment Partners, LLC, provided investment advisory services for a portion of Vanguard Mid-Cap Growth Fund from 2006 until December 2016. William Blair Investment Management, LLC provided investment advisory services for a portion of Vanguard Mid-Cap Growth Fund from 2006 until December 2018. Barrow, Hanley, Mewhinney & Strauss, LLC provided investment advisory services for a portion of Vanguard Selected Value Fund from 1996 until December 2019.
For funds that are advised by independent third-party advisory firms unaffiliated with Vanguard, the board of trustees of each fund hires investment advisory firms, not individual portfolio managers, to provide investment advisory services to such funds. Vanguard negotiates each advisory agreement, which contains advisory fee arrangements, on an arm’s length basis with the advisory firm. Each advisory agreement is reviewed annually by each fund’s board of trustees, taking into account numerous factors, which include, without limitation, the nature, extent, and quality of the services provided; investment performance; and the fair market value of the services provided. Each advisory agreement is between the Trust and the advisory firm, not between the Trust and the portfolio manager. The structure of the advisory fee paid to each unaffiliated investment advisory firm is described in the following sections. In addition, each firm has established policies and procedures designed to address the potential for conflicts of interest. Each firm’s compensation structure and management of potential conflicts of interest are summarized by the advisory firm in the following sections for the fiscal year ended October 31, 2020.
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A fund is a party to an investment advisory agreement with each of its independent third-party advisors whereby the advisor manages the investment and reinvestment of the portion of the fund’s assets that the fund’s board of trustees determines to assign to the advisor. In this capacity, each advisor continuously reviews, supervises, and administers the investment program for its portion of the fund’s assets. Hereafter, each portion is referred to as the advisor’s Portfolio. Each advisor discharges its responsibilities subject to the supervision and oversight of Vanguard’s Portfolio Review Department and the officers and trustees of the fund. Vanguard’s Portfolio Review Department is responsible for recommending changes in a fund’s advisory arrangements to the fund’s board of trustees, including changes in the amount of assets allocated to each advisor and recommendations to hire, terminate, or replace an advisor.
I. Vanguard Selected Value Fund
The Fund pays each of its investment advisors a base fee plus or minus a performance adjustment. The base fee, which is paid quarterly, is a percentage of average daily net assets managed by the advisor during the most recent fiscal quarter. The base fee has breakpoints, which means that the percentage declines as assets go up. The performance adjustment, also paid quarterly, is based on the cumulative total return of each advisor’s portion of the Fund relative to that of the Russell Midcap Value Index (for Cooke & Bieler and Pzena) or the MSCI US Investable Market 2500 Index (for Donald Smith & Co.) over the preceding 60-month period (a 36-month period for Pzena).
During the fiscal years ended October 31, 2018, 2019, and 2020, Vanguard Selected Value Fund incurred aggregate investment advisory fees of $22,497,000 (before a performance-based decrease of $1,582,000), $18,250,000 (before a performance-based decrease of $4,730,000), and $12,987,000 (before a performance-based decrease of $3,926,000), respectively.
A. Cooke & Bieler, L.P. (Cooke & Bieler)
Cooke & Bieler, founded in 1949, is an employee-owned partnership managing assets for institutional clients.
1. Other Accounts Managed
The following table provides information relating to the other accounts managed by the portfolio managers of the Fund as of the fiscal year ended October 31, 2020 (unless otherwise noted):

 
Portfolio Manager
 
No. of
accounts
Total assets
No. of accounts with
performance-based
fees
Total assets in
accounts with
performance-based
fees
Mehul Trivedi
Registered investment companies1
5
$ 6.2B
1
$ 5B
 
Other pooled investment vehicles
2
$ 420M
0
$ 0
 
Other accounts
115
$ 4B
13
$ 919M
William Weber
Registered investment companies1
4
$ 6.2B
1
$ 5B
 
Other pooled investment vehicles
2
$ 420M
0
$ 0
 
Other accounts
115
$ 4B
13
$ 919M
1 Includes Vanguard Selected Value Fund which held assets of $5 billion as of October 31, 2020.
2. Material Conflicts of Interest
The Portfolio Managers face inherent conflicts of interest in their day-to-day management of the Fund and other accounts because the Fund may have different investment objectives, strategies and risk profiles than the other accounts managed by the Portfolio Managers. For instance, to the extent that the Portfolio Managers manage accounts with different investment strategies than the Fund, they may from time to time be inclined to purchase securities, including initial public offerings, for one account but not for the Fund. Additionally, some of the accounts managed by the Portfolio Managers may have different fee structures, including performance fees, which are or have the potential to be higher or lower, in some cases significantly higher or lower, than the fees paid by the Fund. The differences in fee structures may provide an incentive to the Portfolio Managers to allocate more favorable trades to the higher-paying accounts.
To minimize the effects of these inherent conflicts of interest, the Advisor has adopted and implemented policies and procedures, including brokerage and trade allocation policies and procedures, that they believe address the potential conflicts associated with managing portfolios for multiple clients and are designed to ensure that all clients are treated
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fairly and equitably. Accordingly, security block purchases are allocated to all accounts with similar objectives in a fair and equitable manner. Furthermore, the Advisor has adopted a Code of Ethics under Rule17j-1 under the 1940 Act and Rule 204A-1 under the Investment Advisers Act of 1940 (the “Advisers Act”) to address potential conflicts associated with managing the Fund and any personal accounts the Portfolio Managers may maintain.
In the case of Cooke & Bieler, the Portfolio Managers manage accounts on a team basis so the Portfolio Managers may be subject to the potential conflicts of interests described above. Accordingly, performance and allocation of securities are closely monitored to ensure equal treatment and Cooke & Bieler has implemented policies and procedures to ensure that clients are treated fairly and that potential conflicts of interest are minimized.
3. Description of Compensation
Cooke & Bieler’s compensation structure seeks to reward Investment Team members equally for the success of their individual holdings as well as the success of the firm. Annual Investment Team compensation is composed of a base salary, an individual incentive bonus and distributions based on ownership in the partnership. Results vary by analyst and by year but compensation for a tenured member of the team is generally split 40% individual incentive bonus, 40% partnership distributions, and 20% base salary.

 

Salaries are fixed and generally even across the team. The bonus compensation each Investment Team member receives is based on performance that is tracked daily to the basis point and measured against the benchmark. To match incentives with our long-term investment horizon, investment results are calculated using a four-year rolling average. The years are time-weighted, with the trailing year weighted 40%, the prior year weighted 30%, and the two years prior to that weighted 20% and 10%, respectively. Bonuses typically range from one to four times base salary and are decided through an annual peer review process.
Partnership distributions vary with the success and profitability of the firm and ownership is spread broadly among key professionals.
Analyst performance is measured against the Russell Mid Cap Value Index. In order to match incentives with our long-term investment horizon, performance is measured by a 4-year rolling average. The years are time-weighted with the trailing year weighted 40%, the prior year 30%, and year 3 and 4, 20% and 10%, respectively.
Benefits are available to all key professionals.
4. Ownership of Securities
As of October 31, 2020, Mr. Trivedi and Mr. Weber did not own any shares of Vanguard Selected Value Fund.
B. Donald Smith & Co., Inc. (Donald Smith & Co.)
Donald Smith & Co., founded in 1975 as Home Portfolio Advisors and renamed Donald Smith & Co., Inc., in 1983, manages assets for institutional clients. The voting stock and management of Donald Smith & Co. are controlled by Co-CIOs — Richard L. Greenberg and Jon Hartsel.
1. Other Accounts Managed
The following table provides information relating to the other accounts managed by the portfolio managers of the Fund as of the fiscal year ended October 31, 2020 (unless otherwise noted):  
Portfolio Manager
 
No. of
accounts
Total assets
No. of accounts with
performance-based
fees
Total assets in
accounts with
performance-based
fees
Richard L. Greenberg
Registered investment companies1
1
$ 5B
1
$ 5B
 
Other pooled investment vehicles
2
$ 16M
0
$ 0
 
Other accounts
23
$ 982M
3
$ 160M
Jon Hartsel
Registered investment companies1
1
$ 5B
1
$ 5B
 
Other pooled investment vehicles
2
$ 16M
0
$ 0
 
Other accounts
23
$ 982M
3
$ 160M
1 Includes Vanguard Selected Value Fund which held assets of $5 billion as of October 31, 2020.
2. Material Conflicts of Interest
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Donald Smith & Co. is an independent investment advisor with no parent or subsidiary organizations.
Clients include mutual funds, public and corporate pension plans, endowments and foundations, and other separate accounts. Because the portfolio managers manage other accounts in addition to the Fund, conflicts of interest may arise in connection with the portfolio manager’s management of the Fund’s investment on the one hand and the investments of such other accounts on the other hand. Donald Smith & Co. has put in place systems, policies, and procedures, which have been designed to maintain fairness in portfolio management across all clients. Potential conflicts between the Fund and other types of accounts are managed in accordance with trade aggregation and allocation policies and procedures, internal review processes, and direct oversight by Richard L. Greenberg, CEO and Co-CIO. Investment personnel of the firm or its affiliates may be permitted to be commercially or professionally involved with an issuer of securities. Any potential conflicts of interest from such involvement would be monitored for compliance with the firm’s Code of Ethics.

 

3. Description of Compensation
Portfolio manager compensation at Donald Smith & Co., Inc. is comprised of 1) base salary, 2) discretionary bonus, 3) SEP IRA contribution, and 4) participation in the earnings of the company. Base salary is a fixed constant year over year. A bonus is discretionary. While there is no established formula, some variables to determine this include overall firm performance, each individual portfolio manager’s contribution to firm performance (performance of his own portfolio), and qualitative assessments of each portfolio manager’s capabilities. The SEP IRA contribution is the maximum % allowed by the IRS. Each portfolio manager receives a certain portion of the total earnings of the company based on his ownership percentage.
4. Ownership of Securities
As of October 31, 2020, Mr. Hartsel owned shares in the range of $50,001-$100,000 and Mr. Greenberg did not own any shares of Vanguard Selected Value Fund.
C. Pzena Investment Management, LLC (Pzena)
Pzena, based in New York, New York, was founded in 1995. In 2007, the firm completed an initial public offering, whereby the majority ownership of the firm was retained by the members of the Executive Committee and other employees.

 

1. Other Accounts Managed
The following table provides information relating to the other accounts managed by the portfolio managers of the Fund as of the fiscal year ended October 31, 2020 (unless otherwise noted):  
Portfolio Manager
 
No. of
accounts
Total assets
No. of accounts with
performance-based
fees
Total assets in
accounts with
performance-based
fees
Richard Pzena
Registered investment companies1
9
$ 11.9B
2
$ 9.7B
 
Other pooled investment vehicles
15
$ 338M
2
$ 113M
 
Other accounts
52
$ 894M
0
$ 0
John Flynn
Registered investment companies1
11
$ 12B
2
$ 9.9B
 
Other pooled investment vehicles
14
$ 273M
1
$ 4M
 
Other accounts
82
$ 2.1B
0
$ 0
Ben Silver
Registered investment companies1
11
$ 12B
2
$ 9.9B
 
Other pooled investment vehicles
32
$ 5.6B
4
$ 370M
 
Other accounts
98
$ 5.4B
0
$ 0
1 Includes Vanguard Selected Value Fund which held assets of $5 billion as of October 31, 2020.
2. Material Conflicts of Interest
In Pzena’s view, conflicts of interest may arise in managing the Fund’s portfolio investments, on the one hand, and the portfolios of Pzena’s other clients and/or accounts (together “Accounts”), on the other. Set forth below is a brief description of some of the material conflicts that may arise and Pzena’s policy or procedure for handling such conflicts.
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Although Pzena has designed such procedures to prevent and address conflicts, there is no guarantee that these procedures will detect every situation in which a conflict could arise.
The management of multiple Accounts inherently carries the risk that there may be competing interests for the portfolio management team’s time and attention. Pzena seeks to minimize this by using one investment approach (i.e., classic value investing) and by managing all Accounts on a strategy-specific basis.
If the portfolio management team identifies a limited investment opportunity that may be suitable for more than one Account, the Fund may not be able to take full advantage of that opportunity; however, Pzena has adopted procedures for allocating portfolio transactions across Accounts so that each Account is treated fairly. With respect to partial fills for an order, depending on the size of the execution, Pzena may choose to allocate the executed shares on a pro-rata basis or on a random basis. As with all trade allocations, each Account generally receives pro-rata allocations of any new issue or IPO security that is appropriate for its investment objective. Permissible reasons for excluding an Account from an otherwise acceptable IPO or new-issue investment include the Account having FINRA restricted person status, lack of available cash to make the purchase, a client-imposed trading prohibition on IPOs or on the business of the issuer, and brokerage restrictions.
With respect to securities transactions for the Accounts, Pzena determines which broker to use to execute each order, consistent with its duty to seek best execution. Pzena will bunch or aggregate like orders when it believes doing so will be beneficial to the Accounts. However, with respect to certain Accounts, Pzena may be limited by the client with respect to the selection of brokers or may be instructed to direct trades through a particular broker. In these cases, Pzena may place separate, nonsimultaneous transactions for the Fund and another Account, which may temporarily impact the market price of the security or the execution of the transaction to the detriment of one or the other.
Conflicts of interest may arise when members of the portfolio management team transact personally in securities investments made or to be made for the Fund or other Accounts. To address this, Pzena has adopted a written Code of Business Conduct and Ethics designed to prevent and detect personal trading activities that may interfere or conflict with client interests (including Fund shareholders’ interests) or its current investment strategy. The Code of Business Conduct and Ethics generally requires that most transactions in securities by Pzena’s Access Persons and certain related persons, whether or not such securities are purchased or sold on behalf of the Accounts, be cleared prior to execution by appropriate approving parties and compliance personnel. Securities transactions for Access Persons’ personal accounts also are subject to reporting requirements and annual and quarterly certification requirements. In addition, no Access Person shall be permitted to effect a short-term trade (i.e., to purchase and subsequently sell within 60 calendar days, or to sell and subsequently purchase within 60 calendar days) of non-exempt securities. Finally, orders for proprietary accounts (i.e., accounts of Pzena’s principals, affiliates, or employees or their immediate family that are managed by Pzena) are subject to written trade allocation procedures designed to ensure fair treatment of client accounts.
Pzena manages some Accounts under performance-based fee arrangements. Pzena recognizes that this type of incentive compensation creates the risk for potential conflicts of interest. This structure may create inherent pressure to allocate investments having a greater potential for higher returns to accounts of those clients paying a performance fee. To prevent conflicts of interest associated with managing accounts with different compensation structures, Pzena generally requires portfolio decisions to be made on a product-specific basis. Pzena also requires pre-allocation of all client orders based on specific fee-neutral criteria. Additionally, Pzena requires average pricing of all aggregated orders. Finally, Pzena has adopted a policy prohibiting portfolio managers (and all employees) from placing the investment interests of one client or a group of clients with the same investment objectives above the investment interests of any other client or group of clients with the same or similar investment objectives. These measures help Pzena mitigate some of the conflicts that its management of private investment companies would otherwise present. Investment personnel of the firm or its affiliates may be permitted to be commercially or professionally involved with an issuer of securities. Any potential conflicts of interest from such involvement would be monitored for compliance with the firm’s Code of Ethics.
3. Description of Compensation
Pzena’s compensation philosophy is to reward long-term superior performers with total compensation at or near the top quartile of the asset management industry. As with all investment professionals at Pzena, Mr. Flynn, Mr. Pzena, and Mr. Silver are compensated through a combination of a fixed base salary, performance bonus, and equity ownership, if appropriate, due to superior personal performance. The time frame Pzena examines for bonus compensation is annual. Base pay is set to be in line with industry averages, and when setting the level of discretionary bonuses, a blend of quantitative and qualitative measures are considered; however, bonuses are not based on Fund
B-47
performance or assets of the Fund. For investment professionals, Pzena examines such things as effort, efficiency, ability to focus on the correct issues, stock modeling ability, and ability to successfully interact with company management. However, Pzena always considers all of the contributions that an employee has made and is likely to make in the future. Pzena avoids a compensation model that is driven by individual security performance, as this can lead to short-term thinking which is contrary to the firm's value investment philosophy. Ownership is provided to individuals who have contributed meaningfully to the long-term success of the organization, and is the primary tool used by Pzena for attracting and retaining the best people. Employees invited into the partnership generally receive an initial share grant at no cost to them and are subsequently offered economically attractive opportunities to exchange cash compensation for additional shares. Equity ownership ties personnel to long-term performance as the value of their ownership stake depends on Pzena delivering superior long-term results to investors. Mr. Flynn, Mr. Pzena, and Mr. Silver are equity owners of Pzena.
4. Ownership of Securities
As of October 31, 2020, Mr. Pzena, Mr. Flynn, and Mr. Silver did not own any shares of Vanguard Selected Value Fund.
II. Vanguard International Explorer Fund
The Fund pays each of its investment advisors a base fee plus or minus a performance adjustment. The base fee, which is paid quarterly, is a percentage of average daily net assets managed by the advisor during the most recent fiscal quarter. The base fee has breakpoints, which means that the percentage declines as assets go up. The performance adjustment, also paid quarterly, is based on the cumulative total return of each advisor’s portion of the Fund relative to that of the S&P/Citigroup Extended Market Europe and Pacific (EM EPAC) for Schroders; S&P EPAC SmallCap Index for TimesSquare and Wellington; and MSCI All Country World Index (ACWI) ex US Small-Cap Index for Baillie Gifford according to advisory agreements over the preceding 36-month period.
During the fiscal years ended October 31, 2018, 2019, and 2020, Vanguard International Explorer Fund incurred aggregate investment advisory fees of approximately $9,450,000 (before a performance-based decrease of $296,000), $7,846,000 (before a performance-based decrease of $1,138,000), and $6,734,000 (before a performance-based decrease of $1,171,000) respectively.
A. Schroder Investment Management North America Inc. (Schroders)
Schroders is a wholly owned subsidiary of Schroder U.S. Holdings Inc., which currently engages through its subsidiary firms in the asset management business. Schroder U.S. Holdings Inc. is an indirect, wholly owned U.S. subsidiary of Schroders plc, a publicly owned holding company organized under the laws of England.
Sub-Advisor—Schroder Investment Management North America Limited. The Fund has entered into a sub-advisory agreement with Schroders and Schroder Investment Management North America Limited (Schroder Limited) pursuant to which Schroder Limited has primary responsibility for choosing investments for the Fund.
Under the terms of the sub-advisory agreement for the Fund, Schroders pays Schroder Limited a portion of the advisory fee actually paid to Schroders under its investment advisory agreement with the Fund.

 

1. Other Accounts Managed
The following table provides information relating to the other accounts managed by the portfolio manager of the Fund as of the fiscal year ended October 31, 2020 (unless otherwise noted).  
Portfolio Manager
 
No. of
accounts
Total assets
No. of accounts with
performance-based
fees
Total assets in
accounts with
performance-based
fees
Luke Biermann
Registered investment companies1
1
$ 2.3B
1
$ 2.3B
 
Other pooled investment vehicles
2
$ 416M
0
$ 0
 
Other accounts
0
$ 0
0
$ 0
1 Includes Vanguard International Explorer Fund which held assets of $2.3 billion as of October 31, 2020.
B-48
2. Material Conflicts of Interest
Whenever a portfolio manager of the Schroders Portfolio manages other accounts, potential conflicts of interest exist, including potential conflicts between the investment strategy of the Schroders Portfolio and the investment strategy of the other accounts. For example, in certain instances, a portfolio manager may take conflicting positions in a particular security for different accounts by selling a security for one account and continuing to hold it for another account. In addition, the fact that other accounts require the portfolio manager to devote less than all of his or her time to the Schroders Portfolio may be seen itself to constitute a conflict with the interest of the Schroders Portfolio.
A portfolio manager may also execute transactions for another fund or account at the direction of such fund or account that may adversely impact the value of securities held by the Schroders Portfolio. Securities selected for funds or accounts other than the Schroders Portfolio may outperform the securities selected for the Schroders Portfolio. Finally, if a portfolio manager identifies a limited investment opportunity that may be suitable for more than one fund or other account, the Schroders Portfolio may not be able to take full advantage of that opportunity because of an allocation of that opportunity across all eligible funds and accounts.  
At Schroders, individual portfolio managers may manage multiple accounts for multiple clients. In addition to mutual funds, these other accounts may include separate accounts, collective trusts, or offshore funds. Certain of these accounts may pay a performance fee, and portfolio managers may have an incentive to allocate investment to these accounts.
 Schroders manages potential conflicts between funds or with other types of accounts through allocation policies and procedures, internal review processes, and oversight by client directors. Schroders has developed trade allocation and client order priority systems 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.
The structure of a portfolio manager’s compensation may give rise to potential conflicts of interest. A portfolio manager’s base pay tends to increase with additional and more complex responsibilities that include increased assets under management, which indirectly links compensation to sales.
Schroders has adopted certain compliance procedures that are designed to address these, and other, types of conflicts. However, there is no guarantee that such procedures will detect each and every situation in which a conflict arises. Investment personnel of the firm or its affiliates may be permitted to be commercially or professionally involved with an issuer of securities. Any potential conflicts of interest from such involvement would be monitored for compliance with the firm’s Code of Ethics.
3. Description of Compensation
Schroders’ methodology for measuring and rewarding the contribution made by portfolio managers combines quantitative measures with qualitative measures. The Fund's portfolio managers are compensated for their services to the Fund and to other accounts they manage in a combination of base salary and annual discretionary bonus, as well as the standard retirement, health and welfare benefits available to all Schroder employees. Certain fund managers may also receive awards under a long-term incentive program. Base salary of Schroder employees is determined by reference to the level of responsibility inherent in the role and the experience of the incumbent, and is benchmarked annually against market data to ensure that Schroders is paying competitively. Schroders reviews base salaries annually, targeting increases at employees whose roles have increased in scope materially during the year and those whose salary is behind market rates. At more senior levels, base salaries tend to be adjusted less frequently as the emphasis is increasingly on the discretionary bonus.
Schroders believes that a discretionary incentive scheme approach is preferable to the use of formulaic arrangements to ensure that good conduct and behaviors in line with the Schroders values are rewarded, to avoid reinforcing or creating conflicts of interest and to encourage a one team attitude. Any discretionary bonus is determined by a number of factors. At a macro level the total amount available to spend is a function of the compensation to revenue ratio achieved by Schroders globally. Schroders then assesses the performance of the division and of a management team to determine the share of the aggregate bonus pool that is spent in each area. This focus on “team” maintains consistency and minimizes internal competition that may be detrimental to the interests of Schroders’ clients. For each team, Schroders assesses the performance of their funds relative to competitors and to relevant benchmarks (which may be internally- and/or externally-based and are considered over a range of performance periods, including over one and three year periods), the level of funds under management and the level of performance fees generated, if any. The portfolio managers’ compensation for other accounts they manage may be based upon such accounts’ performance.
B-49
Schroders also reviews “softer” factors such as leadership, contribution to other parts of the business, and adherence to our corporate values of excellence, integrity, teamwork, passion, and innovation. For those employees receiving significant bonuses, a part may be deferred in the form of Schroders plc stock and fund-based awards of notional cash investments in a range of Schroders funds.
These deferrals vest over a period of three years or more and seek to ensure that the interests of employees are aligned with those of clients and shareholders.
4. Ownership of Securities
As of October 31, 2020, Mr. Biermann did not own any shares of Vanguard International Explorer Fund.
B. TimesSquare Capital Management, LLC (TimesSquare Capital)
TimesSquare Capital, based in New York, New York, is a registered investment advisor that specializes in small- and mid-cap growth equities. TimesSquare Capital’s institutional partner, Affiliated Managers Group, Inc. (AMG), a publicly traded global asset management company, indirectly holds a majority equity interest in TimesSquare Capital, with the remaining portion owned by TimesSquare Capital principals.

 

1. Other Accounts Managed
The following table provides information relating to the other accounts managed by the portfolio manager of the Fund as of the fiscal year ended October 31, 2020 (unless otherwise noted):

 
Portfolio Manager
 
No. of
accounts
Total assets
No. of accounts with
performance-based
fees
Total assets in
accounts with
performance-based
fees
Magnus S. Larsson
Registered investment companies1
4
$ 3.2B
1
$ 2.3B
 
Other pooled investment vehicles
4
$ 335M
0
0
 
Other accounts
14
$ 1.5B
2
$ 296M
1 Includes Vanguard International Explorer Fund which held assets of $2.3 billion as of October 31, 2020.
2. Material Conflicts of Interest
TimesSquare Capital portfolio managers are often responsible for managing one or more mutual funds as well as other accounts, such as separate accounts, and other pooled investment vehicles, such as collective trust funds or unregistered hedge funds. A portfolio manager may manage other accounts which have materially higher fee arrangements than the Fund and may manage other accounts which have a performance-based fee. A portfolio manager also may make personal investments in accounts they manage or support. The side-by-side management of the Fund along with other accounts may raise potential conflicts of interest by incenting a portfolio manager to direct a disproportionate amount of: (1) their attention; (2) limited investment opportunities, such as less liquid securities or initial public offerings; and/or (3) desirable trade allocations, to such other accounts. In addition, to assist in the investment decision-making process for its clients, including the Fund, TimesSquare Capital may use brokerage commissions generated from securities transactions to obtain research and/or brokerage services from broker-dealers. Thus, TimesSquare Capital may have an incentive to select a broker that provides research through the use of brokerage, rather than paying for execution only. Certain other trading practices, such as cross-trading between the Fund and another account, also may raise conflict of interest issues. TimesSquare Capital has adopted a compliance program designed to address these, and other, types of reasonably foreseeable potential areas of conflict. TimesSquare Capital has designated a Chief Compliance Officer and provided the resources and support required to ensure that the compliance program remains effective. Investment personnel of the firm or its affiliates may be permitted to be commercially or professionally involved with an issuer of securities. Any potential conflicts of interest from such involvement would be monitored for compliance with the firm's Code of Ethics.
3. Description of Compensation
TimesSquare Capital’s compensation is comprised of the following three components: base salaries, an annual bonus plan, and significant equity in the firm. The program is tied exclusively to client investment performance and financial results of the firm and its investment business. Moreover, the program is based on a series of clear metrics with investment performance, relative to the appropriate comparative universe and benchmark. Studies of competitive investment management compensation practices and levels are routinely conducted to ensure that investment
B-50
professionals are competitively paid, and base salaries adjusted when performance, market data, career path progression, or position scope warrant an increase to encourage retention and development of top performers. For key investment decision-makers, variable performance-driven elements, such as the annual bonus and equity in the firm, comprise the substantial majority of total compensation. Bonuses for TimesSquare Capital portfolio managers are determined primarily by investment performance using both manager-relative and benchmark-relative measures over one and three year periods. Senior investment professionals receive significant equity ownership in the firm, subject to vesting and other restrictions. Once vested, certain components with vested value are not immediately accessible to further encourage retention. A majority of TimesSquare Capital investment professionals currently retain ownership in TimesSquare Capital, and newer members will be eligible for ownership as they gain tenure and add value to TimesSquare Capital's clients.
4. Ownership of Securities
As of October 31, 2020, Mr. Larsson did not own any shares of Vanguard International Explorer Fund.
C. Wellington Management Company LLP (Wellington Management)
Wellington Management is a Delaware limited liability partnership with principal offices at 280 Congress Street, Boston, MA 02210. Wellington Management is owned by the partners of Wellington Management Group LLP, a Massachusetts limited liability partnership. Wellington Management is a professional investment counseling firm that provides investment services to investment companies, employee benefit plans, endowments, foundations, and other institutions. Wellington Management and its predecessor organizations have provided investment advisory services for over 80 years.

 

1. Other Accounts Managed
The following table provides information relating to the other accounts managed by the portfolio manager of the Fund as of the fiscal year ended October 31, 2020 (unless otherwise noted).  
Portfolio Manager
 
No. of
accounts
Total assets
No. of accounts with
performance-based
fees
Total assets in
accounts with
performance-based
fees
Mary Pryshlak
Registered investment companies1
12
$ 10.4B
2
$ 3B
 
Other pooled investment vehicles
50
$ 18.7B
9
$ 6.1B
 
Other accounts
90
$ 33B
14
$ 5.9B
1 Includes Vanguard International Explorer Fund which held assets of $2.3 billion as of October 31, 2020.
2. Material Conflicts of Interest
Individual investment professionals at Wellington Management manage multiple accounts for multiple clients. These accounts may include mutual funds, separate accounts (assets managed on behalf of institutions, such as pension funds, insurance companies, foundations, or separately managed account programs sponsored by financial intermediaries), bank common trust accounts, and hedge funds. Each Wellington Management Portfolio’s or Fund’s manager listed in a prospectus who is primarily responsible for the day-to-day management of each Wellington Management Portfolio or Fund (Portfolio Manager) generally manages accounts in several different investment styles. These accounts may have investment objectives, strategies, time horizons, tax considerations, and risk profiles that differ from those of each Wellington Management Portfolio or Fund. A Portfolio Manager makes investment decisions for each account, including each Wellington Management Portfolio or Fund, based on the investment objectives, policies, practices, benchmarks, cash flows, tax, and other relevant investment considerations applicable to that account. Consequently, a Portfolio Manager may purchase or sell securities, including initial public offerings (IPOs), for one account and not another account, and the performance of securities purchased for one account may vary from the performance of securities purchased for other accounts. Alternatively, these accounts may be managed in a similar fashion to each Wellington Management Portfolio or Fund and thus the accounts may have similar—and in some cases nearly identical—objectives, strategies, and/or holdings to those of each Wellington Management Portfolio or Fund.
A Portfolio Manager or other investment professionals at Wellington Management may place transactions on behalf of other accounts that are directly or indirectly contrary to investment decisions made on behalf of each Wellington Management Portfolio or Fund, or make investment decisions that are similar to those made for each Wellington Management Portfolio or Fund, both of which have the potential to adversely impact each Wellington Management
B-51
Portfolio or Fund depending on market conditions. For example, an investment professional may purchase a security in one account while appropriately selling that same security in another account. Similarly, a Portfolio Manager may purchase the same security for a Wellington Management Portfolio or Fund and one or more other accounts at or about the same time. In those instances, the other accounts will have access to their respective holdings prior to the public disclosure of each Wellington Management Portfolio’s or Fund’s holdings. In addition, some of these accounts have fee structures, including performance fees, which are or have the potential to be higher, in some cases significantly higher, than the fees Wellington Management receives for managing each Wellington Management Portfolio or Fund. Mr. Manning and Ms. Pryshlak also manage accounts which pay performance allocations to Wellington Management or its affiliates. Because incentive payments paid by Wellington Management to each Portfolio Manager are tied to revenues earned by Wellington Management and, where noted, to the performance achieved by the manager in each account, the incentives associated with any given account may be significantly higher or lower than those associated with other accounts managed by a given Portfolio Manager. Finally, the Portfolio Manager may hold shares or investments in the other pooled investment vehicles and/or other accounts identified above.
Wellington Management’s goal is to meet its fiduciary obligation to treat all clients fairly and provide high-quality investment services to all of its clients. Wellington Management has adopted and implemented policies and procedures, including brokerage and trade allocation policies and procedures, which it believes address the conflicts associated with managing multiple accounts for multiple clients. In addition, Wellington Management monitors a variety of areas, including compliance with primary account guidelines, the allocation of IPOs, and compliance with the firm’s Code of Ethics, and places additional investment restrictions on investment professionals who manage hedge funds and certain other accounts. Furthermore, senior investment and business personnel at Wellington Management periodically review the performance of Wellington Management’s investment professionals. Although Wellington Management does not track the time an investment professional spends on a single account, Wellington Management does periodically assess whether an investment professional has adequate time and resources to effectively manage the investment professional’s various client mandates.
3. Description of Compensation
Wellington Management receives a fee based on the assets under management of the Wellington Management Portfolio or Fund as set forth in the Investment Advisory Agreement between Wellington Management and the Trust on behalf of the Fund. Wellington Management pays its investment professionals out of its total revenues, including the advisory fee earned with respect to the Wellington Management Portfolio or Fund. The following relates to the fiscal year ended October 31, 2020.
Wellington Management’s compensation structure is designed to attract and retain high-caliber investment professionals necessary to deliver high-quality investment management services to its clients. Wellington Management’s compensation of the Wellington Management Portfolio’s or Fund’s manager listed in the prospectus who is primarily responsible for the day-to-day management of the Wellington Management Portfolio or Fund includes a base salary. The base salary for the Portfolio Manager who is a partner (a “Partner”) of Wellington Management Group LLP, the ultimate holding company of Wellington Management, is generally a fixed amount that is determined by the managing partners of Wellington Management Group LLP.
The Portfolio Manager may also be eligible for bonus payments based on her overall contribution to Wellington Management’s business operations. Senior management at Wellington Management may reward individuals as it deems appropriate based on other factors. Each Partner is eligible to participate in a Partner-funded tax-qualified retirement plan, the contributions to which are made pursuant to an actuarial formula. Ms. Pryshlak is a Partner.
4. Ownership of Securities
As of October 31, 2020, Ms. Pryshlak did not own any shares of International Explorer Fund.
D. Baillie Gifford Overseas Ltd. (Baillie Gifford)
Baillie Gifford Overseas Ltd. is an investment advisory firm founded in 1983. Baillie Gifford is wholly owned by a Scottish investment company, Baillie Gifford & Co. Founded in 1908, Baillie Gifford & Co., which is one of the largest independently owned investment management firms in the United Kingdom, manages money primarily for institutional clients.
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1. Other Accounts Managed
The following table provides information relating to the other accounts managed by the portfolio managers of the Fund as of the fiscal year ended October 31, 2020 (unless otherwise noted).  
Portfolio Manager
 
No. of
accounts
Total assets
No. of accounts with
performance-based
fees
Total assets in
accounts with
performance-based
fees
Brian Lum
Registered investment companies1
5
$ 46B
3
$ 43B
 
Other pooled investment vehicles
5
$ 2.1B
1
$ 111M
 
Other accounts
34
$ 18.9B
0
$ 0
Stephen Vaughan
Registered investment companies1
2
$ 2.3B
1
$ 2.3B
 
Other pooled investment vehicles
1
$ 274M
0
$ 0
 
Other accounts
1
$ 651M
0
$ 0
1 Includes Vanguard International Explorer Fund which held assets of $2.3 billion as of October 31, 2020.
2. Material Conflicts of Interest
At Baillie Gifford, individual portfolio managers may manage multiple accounts for multiple clients. In addition to mutual funds, these other accounts may include separate accounts, collective investment schemes, or offshore funds. Baillie Gifford manages potential conflicts between funds or with other types of accounts by implementing effective organizational and administrative arrangements to ensure that reasonable steps are taken to prevent the conflict giving rise to a material risk of damage to the interests of clients.
One area where a conflict of interest potentially arises is in the placing of orders for multiple clients and subsequent allocation of trades. Unless client-specific circumstances dictate otherwise, investment teams normally implement transactions in individual stocks for all clients with similar mandates at the same time. This aggregation of individual transactions can, of course, operate to the advantage or disadvantage of the clients involved in the order. When receiving orders from investment managers, traders at Baillie Gifford will generally treat order priority on a “first come, first served” basis, and any exceptions to this are permitted only in accordance with established policies. Baillie Gifford has also developed trade allocation systems 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. Investment personnel of the firm or its affiliates may be permitted to be commercially or professionally involved with an issuer of securities. Any potential conflicts of interest from such involvement would be monitored for compliance with the firm’s Code of Ethics.
3. Description of Compensation
As employees of the firm, Mr. Lum and Mr. Vaughan receive compensation with three key elements: (1) base salary, (2) a company-wide all-staff bonus, and (3) a performance-related bonus referred to as the Investment Departments’ Incentive Bonus Scheme. The performance-related bonus is based 50% on individual performance and 50% on investment performance (determined on a pre-tax basis). Investment performance is calculated on a team basis and is measured over a five-year period against the relevant benchmark. In addition, Mr. Lum and Mr. Vaughan are required to defer 40% of their respective variable remunerations each year. Awards deferred will be held for a period of three years and will be invested in a range of funds managed by Baillie Gifford.
4. Ownership of Securities
As of October 31, 2020, Mr. Lum and Mr. Vaughan did not own any shares of Vanguard International Explorer Fund.
III. Vanguard Mid-Cap Growth Fund
The Fund pays each of its investment advisors a base fee plus or minus a performance adjustment. The base fee, which is paid quarterly, is a percentage of average daily net assets managed by the advisor during the most recent fiscal quarter. The base fee has breakpoints, which means that the percentage declines as assets go up. The performance adjustment, also paid quarterly, is based on the cumulative total return of each advisor’s portion of the Fund relative to that of the Russell Midcap Growth Index over the preceding 36-month period.
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During the fiscal years ended October 31, 2018, 2019, and 2020, Vanguard Mid-Cap Growth Fund incurred aggregate investment advisory fees of $8,715,000 (before a performance-based decrease of $1,759,000), $8,187,000 (before a performance-based decrease of $980,000), and $8,359,000 (before a performance-based decrease of $2,230,000), respectively.

 

A. Victory Capital Management Inc. (Victory Capital)
Victory Capital, based in San Antonio, Texas, is an indirect, wholly owned subsidiary of Victory Capital Holdings, Inc., a publicly traded Delaware corporation. Victory Capital is organized as a New York corporation and is a diversified global investment advisory firm comprised of numerous independent investment franchises. The RS Investments franchise is responsible for the day-to-day management of a portion of Vanguard Mid-Cap Growth Fund.
1. Other Accounts Managed
The following table provides information relating to the other accounts managed by the portfolio managers of the Fund as of the fiscal year ended October 31, 2020 (unless otherwise noted):

 
Portfolio Manager
 
No. of
accounts
Total assets
No. of accounts with
performance-based
fees
Total assets in
accounts with
performance-based
fees
Stephen Bishop
Registered investment companies1
18
$ 14.9B
5
$ 8.7B
 
Other pooled investment vehicles
7
$ 861M
1
$ 28M
 
Other accounts
3
$ 223M
1
$ 140M
Melissa
Chadwick-Dunne
Registered investment companies1
15
$ 13.3B
4
$ 7.4B
 
Other pooled investment vehicles
7
$ 861M
1
$ 28M
 
Other accounts
3
$ 233M
1
$ 140M
Christopher W. Clark
Registered investment companies1
18
$ 14.9B
5
$ 8.7B
 
Other pooled investment vehicles
8
$ 861M
2
$ 91M
 
Other accounts
3
$ 223M
1
$ 140M
D. Scott Tracy
Registered investment companies1
16
$ 13.3B
4
$ 7.4B
 
Other pooled investment vehicles
7
$ 861M
1
$ 28M
 
Other accounts
3
$ 233M
3
$ 140M
Paul Leung
Registered investment companies1
18
$ 14.9B
5
$ 8.7B
 
Other pooled investment vehicles
7
$ 861M
1
$ 28M
 
Other accounts
3
$ 233M
1
$ 140M
1 Includes Vanguard Mid-Cap Growth Fund which held assets of $4.4 billion as of October 31, 2020.
2. Material Conflicts of Interest
Victory Capital’s portfolio managers are often responsible for managing one or more mutual funds as well as other accounts, such as separate accounts, and other pooled investment vehicles, such as collective trust funds or unregistered hedge funds. A portfolio manager may manage other accounts that have materially higher fee arrangements than the Fund and may, in the future, manage accounts that have a performance-based fee. A portfolio manager also may make personal investments in accounts they manage or support. The side-by-side management of the Fund along with other accounts may raise potential conflicts of interest by incenting a portfolio manager to direct a disproportionate amount of: (1) their attention; (2) limited investment opportunities, such as less liquid securities or initial public offerings; and/or (3) desirable trade allocations, to such other accounts. In addition, to assist in the investment decision-making process for its clients, including the Fund, Victory Capital may use brokerage commissions generated from securities transactions to obtain research and/or brokerage services from broker-dealers. Thus, Victory Capital may have an incentive to select a broker that provides research through the use of brokerage, rather than paying for execution only. Certain other trading practices, such as cross-trading between the Fund and another account, also may raise conflict of interest issues. Victory Capital has adopted numerous compliance policies and procedures, including a Code of Ethics, and brokerage and trade allocation policies and procedures, which seek to address the conflicts associated with managing multiple accounts for multiple clients. In addition, Victory capital has a designated
B-54
Chief Compliance Officer (selected in accordance with the federal securities laws) and compliance staff whose activities are focused on monitoring the activities of Victory Capital’s investment franchises and employees in order to detect and address potential and actual conflicts of interest. However, there can be no assurance that Victory Capital’s compliance program will achieve its intended result.
3. Description of Compensation
Victory Capital has designed the structure of its portfolio managers’ compensation to (1) align portfolio managers’ interests with those of Victory Capital’s clients with an emphasis on long-term, risk-adjusted investment performance, (2) help Victory Capital attract and retain high-quality investment professionals, and (3) contribute to Victory Capital’s overall financial success. Each of the Victory Capital portfolio managers receives a base salary plus an annual incentive bonus for managing the Fund, separate accounts, other investment companies, pooled investment vehicles, and other accounts (including any accounts for which Victory Capital receives a performance fee) (together, “Accounts”). A portfolio manager’s base salary is dependent on the manager’s level of experience and expertise. Victory Capital monitors each manager’s base salary relative to salaries paid for similar positions with peer firms by reviewing data provided by various consultants that specialize in competitive salary information. Such data, however, is not considered to be a definitive benchmark.
Each of the portfolio management teams employed by Victory Capital (including RS Investments) may earn incentive compensation based on a percentage of Victory Capital’s revenue attributable to fees paid by Accounts managed by the team. The chief investment officer of each team, in coordination with Victory Capital, determines the allocation of the incentive compensation earned by the team among the team’s portfolio managers by establishing a “target” incentive for each portfolio manager based on the manager’s level of experience and expertise in the manager’s investment style. Individual performance is based on objectives established annually using performance metrics such as portfolio structure and positioning, research, stock selection, asset growth, client retention, presentation skills, marketing to prospective clients, and contribution to Victory Capital’s philosophy and values, such as leadership, risk management, and teamwork. The annual incentive bonus also factors in individual investment performance of each portfolio manager’s portfolio or Fund relative to a selected peer group(s). The overall performance results for a manager are based on the composite performance of all Accounts managed by that manager on a combination of one, three, and five year rolling performance periods as compared to the performance information of a peer group of similarly-managed competitors.
Victory Capital’s portfolio managers may participate in the equity ownership plan of Victory Capital’s parent company. There is an ongoing annual equity pool granted to certain employees based on their contribution to the firm. Eligibility for participation in these incentive programs depends on the manager’s performance and seniority.
4. Ownership of Securities
As of October 31, 2020, Mr. Bishop, Ms. Chadwick-Dunn, Mr. Clark, Mr. Leung, and Mr. Tracy did not own any shares of Vanguard Mid-Cap Growth Fund.
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B. Wellington Management Company LLP (Wellington Management)
Wellington Management is a Delaware limited liability partnership with principal offices at 280 Congress Street, Boston, MA 02210. Wellington Management is owned by the partners of Wellington Management Group LLP, a Massachusetts limited liability partnership. Wellington Management is a professional investment counseling firm that provides investment services to investment companies, employee benefit plans, endowments, foundations, and other institutions. Wellington Management and its predecessor organizations have provided investment advisory services for over 80 years.

 

1. Other Accounts Managed
The following table provides information relating to the other accounts managed by the portfolio manager of the Fund as of the fiscal year ended October 31, 2020 (unless otherwise noted).  
Portfolio Manager
 
No. of
accounts
Total assets
No. of accounts with
performance-based
fees
Total assets in
accounts with
performance-based
fees
Timothy Manning
Registered investment companies1
4
$ 5.5B
1
$ 4.4B
 
Other pooled investment vehicles
6
$ 214M
1
$ 10.4M
 
Other accounts
6
$ 960M
0
$ 0
1 Includes Vanguard Mid-Cap Growth Fund which held assets of $4.4 billion as of October 31, 2020.
2. Material Conflicts of Interest
Please refer to Wellington Management’s discussion beginning on page B-51.
3. Description of Compensation
Wellington Management receives a fee based on the assets under management of the Wellington Management Portfolio or Fund as set forth in the Investment Advisory Agreement between Wellington Management and the Trust on behalf of the Fund. Wellington Management pays its investment professionals out of its total revenues, including the advisory fee earned with respect to the Wellington Management Portfolio or Fund. The following relates to the fiscal year ended October 31, 2020.
Wellington Management’s compensation structure is designed to attract and retain high-caliber investment professionals necessary to deliver high-quality investment management services to its clients. Wellington Management’s compensation of the Wellington Management Portfolio’s or Fund’s manager listed in the prospectus who is primarily responsible for the day-to-day management of the Wellington Management Portfolio or Fund includes a base salary and incentive components. The base salary for the Portfolio Manager who is a partner (a “Partner”) of Wellington Management Group LLP, the ultimate holding company of Wellington Management, is generally a fixed amount that is determined by the managing partners of Wellington Management Group LLP.  The Portfolio Manager is eligible to receive an incentive payment based on the revenues earned by Wellington Management from the Wellington Management Portfolio and generally each other account managed by such Portfolio Manager. The Portfolio Manager’s incentive payment relating to the Wellington Management Portfolio is linked to the gross pre-tax performance of the Wellington Management Portfolio compared to the Russell Midcap Growth Index over one-, three-, and five-year periods, with an emphasis on five-year results. Wellington Management applies similar incentive compensation structures (although the benchmarks or peer groups, time periods, and rates may differ) to other accounts managed by the Portfolio Manager, including accounts with performance fees.
Portfolio-based incentives across all accounts managed by an investment professional can, and typically do, represent a significant portion of an investment professional’s overall compensation; incentive compensation varies significantly by individual and can vary significantly from year to year. The Portfolio Manager may also be eligible for bonus payments based on his overall contribution to Wellington Management’s business operations. Senior management at Wellington Management may reward individuals as it deems appropriate based on other factors. Each Partner is eligible to participate in a Partner-funded tax-qualified retirement plan, the contributions to which are made pursuant to an actuarial formula. Mr. Manning is a Partner.
B-56
4. Ownership of Securities
As of October 31, 2020, Mr. Manning did not own any shares of Vanguard Mid-Cap Growth Fund.
C. Frontier Capital Management Co., LLC (Frontier Capital)
Frontier Capital is a registered investment advisor founded in 1980. Affiliated Managers Group, Inc., a publicly traded asset management company with equity investments in a diverse group of investment management firms, indirectly owns a controlling interest in Frontier Capital.
1. Other Accounts Managed
The following table provides information relating to the other accounts managed by the portfolio managers of the Fund as of the fiscal year ended October 31, 2020 (unless otherwise noted):
 
Portfolio Manager
 
No. of
accounts
Total assets
No. of accounts with
performance-based
fees
Total assets in
accounts with
performance-based
fees
Christopher J. Scarpa
Registered investment companies1
3
$ 7.7B
1
$ 4.4B
 
Other pooled investment vehicles
1
$ 177M
0
$ 0
 
Other accounts
19
$ 895M
0
$ 0
Ravi Dabas
Registered investment companies1
3
$ 7.7B
1
$ 4.4B
 
Other pooled investment vehicles
1
$ 177M
0
$ 0
 
Other accounts
19
$ 895M
0
$ 0
1 Includes Vanguard Mid-Cap Growth Fund which held assets of $4.4 billion as of October 31, 2020.
2. Material Conflicts of Interest
In connection with its management of clients’ accounts, Frontier Capital is subject to a number of actual or apparent conflicts of interest. These conflicts may arise when a portfolio manager has day-to-day management responsibilities with respect to more than one fund or other account. A portfolio manager potentially could give favorable treatment to some accounts for a variety of reasons, including favoring larger accounts, accounts that have a different advisory fee arrangement (including any accounts that pay performance-based fees), or accounts in which the portfolio manager has a personal investment. In addition, conflicts may arise relating to the allocation of investments among accounts with similar investment objectives but managed by different portfolio managers.
Frontier Capital’s portfolio managers typically manage multiple accounts. Generally, however, accounts within a particular investment strategy (e.g., mid-cap growth) with similar objectives are managed similarly. Accordingly, portfolio holdings and industry and sector exposure tend to be similar across a group of accounts in the same strategy with similar objectives, which tend to minimize the potential for conflicts of interest.
Frontier Capital has adopted trade allocation and aggregation policies that seek to treat all clients fairly and equitably. These policies address the allocation of limited investment opportunities, such as IPOs, and the allocation of transactions and aggregations of orders across multiple accounts. Investment personnel of the firm or its affiliates may be permitted to be commercially or professionally involved with an issuer of securities. Any potential conflicts of interest from such involvement would be monitored for compliance with the firm’s Code of Ethics.
3. Description of Compensation
Frontier Capital’s portfolio manager compensation structure is designed to align the interests of portfolio managers with those of the shareholders whose assets they manage. Frontier Capital’s portfolio manager compensation program consists of a base salary, an annual bonus, and participation in company-funded retirement plans. In addition, all of Frontier Capital’s portfolio managers are partners at Frontier Capital, which entitles them to share in the firm’s profits and the long-term growth of the firm. The annual bonus is variable and based partially or primarily upon management-fee revenues generated from client accounts.
4. Ownership of Securities
As of October 31, 2020, Mr. Scarpa and Mr. Dabas did not own any shares of Vanguard Mid-Cap Growth Fund.
B-57
IV. Vanguard High Dividend Yield Index Fund, Vanguard Emerging Markets Government Bond Index Fund, Vanguard Global Minimum Volatility Fund, Vanguard International Dividend Appreciation Index Fund, and Vanguard International High Dividend Yield Index Fund
Vanguard provides investment advisory services to Vanguard High Dividend Yield Index Fund, Vanguard International Dividend Appreciation Index Fund, and Vanguard International High Dividend Yield Index Fund through its Equity Index Group, and to Vanguard Global Minimum Volatility Fund through its Quantitative Equity Group. Vanguard, through its Fixed Income Group, provides investment advisory services to Vanguard Emerging Markets Government Bond Index Fund. The compensation and other expenses of Vanguard’s advisory staff are allocated among the funds utilizing these services.

 

During the fiscal years ended October 31, 2018, 2019, and 2020, the Funds incurred the following approximate investment advisory expenses:  
Vanguard Fund
2018
2019
2020
Vanguard High Dividend Yield Index Fund
$ 3,332,000
$ 3,293,000
$ 2,529,000
Vanguard Emerging Markets Government Bond Index Fund
40,000
55,000
53,000
Vanguard Global Minimum Volatility Fund
1,254,000
1,665,000
1,191,000
Vanguard International Dividend Appreciation Index Fund
160,000
187,000
320,000
Vanguard International High Dividend Yield Index Fund
162,000
184,000
233,000
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 October 31, 2020 (unless otherwise noted):  
Portfolio Manager
 
No. of
accounts
Total assets
No. of accounts with
performance-based
fees
Total assets in
accounts with
performance-based
fees
Aaron Choi1
Registered investment companies2
1
$3B
0
$0
 
Other pooled investment vehicles
0
$0
0
$0
 
Other accounts
0
$0
0
$0
William Coleman
Registered investment companies3
54
$949B
0
$0
 
Other pooled investment vehicles
1
$8.1B
0
$0
 
Other accounts
0
$0
0
$0
Gerard C. O’Reilly
Registered investment companies3
18
$1.5B
0
$0
 
Other pooled investment vehicles
1
$355M
0
$0
 
Other accounts
0
$0
0
$0
Joshua C. Barrickman
Registered investment companies4
23
$959B
0
$0
 
Other pooled investment vehicles
0
$0
0
$0
 
Other accounts
0
$0
0
$0
Scott E. Geiger5
Registered investment companies6
3
$36B
0
$0
 
Other pooled investment vehicles
0
$0
0
$0
 
Other accounts
0
$0
0
$0
Antonio Picca
Registered investment companies7
8
$3.6B
0
$0
 
Other pooled investment vehicles
0
$0
0
$0
 
Other accounts
0
$0
0
$0
Michael Perre
Registered investment companies8
8
$590B
0
$0
 
Other pooled investment vehicles
0
$0
0
$0
 
Other accounts
0
$0
0
$ 0
1 Mr. Choi began co-managing Vanguard International High Dividend Yield Index Fund on July 19, 2021.
2 Information provided as of May 31, 2021, and includes Vanguard International High Dividend Yield Index Fund.
3 Includes Vanguard High Dividend Yield Index Fund which held assets of $34 billion as of October 31, 2020.
4 Includes Vanguard Emerging Markets Government Bond Index Fund which held assets of $2.1 billion as of October 31, 2020.
5 Mr. Geiger began co-managing Vanguard International Dividend Appreciation Index Fund on July 19, 2021.
B-58
6 Information provided as of May 31, 2021, and includes Vanguard International Dividend Appreciation Index Fund which held assets of $4 billion as of May 31, 2021.
7 Includes Vanguard Global Minimum Volatility Fund which held assets of $3.2 billion as of October 31, 2020.
8 Includes Vanguard International Dividend Appreciation Index Fund and Vanguard International High Dividend Yield Index Fund which collectively held assets of $4.3 billion as of October 31, 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 in which 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 October 31, 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 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 in response to a market adjustment of the position.
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 Global Minimum Volatility Fund, the performance factor depends on how successfully the portfolio manager meets or exceeds the performance expectations of the Fund and maintains the risk parameters of the Fund over a three-year period. For Vanguard High Dividend Yield Index Fund, Vanguard Emerging Markets Government Bond Index Fund, Vanguard International Dividend Appreciation Index Fund, and Vanguard International High Dividend Yield Index Fund, the performance factor depends on how closely the portfolio manager tracks the Fund’s benchmark index over a one-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 stated above. 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.
B-59
4. Ownership of Securities
As of October 31, 2020, Mr. Picca owned shares of Vanguard Global Minimum Volatility Fund within the $50,001-$100,000 range. As of the same date, Mr. Coleman, Mr. O'Reilly, Mr. Barrickman, and Mr. Perre did not own any shares of the Funds they managed.
 
As of May 31, 2021, neither Mr. Choi nor Mr. Geiger owned any shares of the Funds they managed.
Duration and Termination of Investment Advisory Agreements

The current investment advisory agreements with the unaffiliated advisors (other than Cooke & Bieler for Vanguard Selected Value Fund and Baillie Gifford for Vanguard International Explorer Fund) are renewable for successive one-year periods, only if (1) each renewal is approved by a vote of the Fund’s board of trustees, including the affirmative votes of a majority of the trustees who are not parties to the agreement or “interested persons” (as defined in the 1940 Act) of any such party, cast in person at a meeting called for the purpose of considering such approval, or (2) each renewal is specifically approved by a vote of a majority of the Fund’s outstanding voting securities. An agreement is automatically terminated if assigned, and may be terminated without penalty at any time either (1) by vote of the board of trustees of the Fund upon thirty (30) days’ written notice to the advisor (sixty (60) days’ written notice for Schroders), (2) by a vote of a majority of the Fund’s outstanding voting securities upon 30 days’ written notice to the advisor (60 days’ written notice for Schroders), or (3) by the advisor upon ninety (90) days’ written notice to the Fund.
Each initial investment advisory agreement with Cooke & Bieler and Baillie Gifford are binding for a two-year period. At the end of that time, each agreement will become renewable for successive one-year periods, subject to the above conditions.
Vanguard provides investment advisory services to Vanguard High Dividend Yield Index Fund, Vanguard Emerging Markets Government Bond Index Fund, Vanguard Global Minimum Volatility Fund, Vanguard International Dividend Appreciation Index Fund, and Vanguard International High Dividend Yield Index Fund 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 each Fund (other than Vanguard Emerging Markets Government Bond Index Fund) during the fiscal year ended October 31, 2020. Pursuant to Vanguard's securities lending policy, the Emerging Markets Government Bond Index Fund is not permitted to, and does not, lend its investment securities.  
Vanguard Fund
Securities Lending Activities
Vanguard Global Minimum Volatility Fund
 
Gross income from securities lending activities
$588,085
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
$1,541
Administrative fees not included in revenue split
$5,102
Indemnification fee not included in revenue split
$0
Rebate (paid to borrower)
$147,766
Other fees not included in revenue split (specify)
$0
Aggregate fees/compensation for securities lending activities
$154,409
Net income from securities lending activities
$433,676
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Vanguard Fund
Securities Lending Activities
Vanguard High Dividend Yield Index Fund
 
Gross income from securities lending activities
$463,266
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
$632
Administrative fees not included in revenue split
$4,328
Indemnification fee not included in revenue split
$0
Rebate (paid to borrower)
$6,765
Other fees not included in revenue split (specify)
$0
Aggregate fees/compensation for securities lending activities
$11,725
Net income from securities lending activities
$451,541
Vanguard International Dividend Appreciation Index Fund
 
Gross income from securities lending activities
$149,912
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
$469
Administrative fees not included in revenue split
$1,487
Indemnification fee not included in revenue split
$0
Rebate (paid to borrower)
$40,442
Other fees not included in revenue split (specify)
$0
Aggregate fees/compensation for securities lending activities
$42,398
Net income from securities lending activities
$107,514
Vanguard International Explorer Fund
 
Gross income from securities lending activities
$2,853,610
Fees paid to securities lending agent from a revenue split
$120,066
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
$3,588
Administrative fees not included in revenue split
$10,533
Indemnification fee not included in revenue split
$0
Rebate (paid to borrower)
$200,595
Other fees not included in revenue split (specify)
$0
Aggregate fees/compensation for securities lending activities
$334,782
Net income from securities lending activities
$2,518,828
Vanguard International High Dividend Yield Index Fund
 
Gross income from securities lending activities
$396,325
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
$965
Administrative fees not included in revenue split
$4,049
Indemnification fee not included in revenue split
$0
Rebate (paid to borrower)
$66,009
Other fees not included in revenue split (specify)
$0
Aggregate fees/compensation for securities lending activities
$71,023
Net income from securities lending activities
$325,302
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Vanguard Fund
Securities Lending Activities
Vanguard Mid Cap Growth Fund
 
Gross income from securities lending activities
$1,452,565
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
$2,288
Administrative fees not included in revenue split
$11,003
Indemnification fee not included in revenue split
$0
Rebate (paid to borrower)
$276,187
Other fees not included in revenue split (specify)
$0
Aggregate fees/compensation for securities lending activities
$289,478
Net income from securities lending activities
$1,163,087
Vanguard Selected Value Fund
 
Gross income from securities lending activities
$1,035,303
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
$737
Administrative fees not included in revenue split
$12,485
Indemnification fee not included in revenue split
$0
Rebate (paid to borrower)
$26,165
Other fees not included in revenue split (specify)
$0
Aggregate fees/compensation for securities lending activities
$39,387
Net income from securities lending activities
$995,916
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.
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The types of securities in which Vanguard Emerging Markets Government Bond Index Fund invests are generally purchased and sold in principal transactions, meaning that the Fund normally purchases securities directly from the issuer or a primary market-maker acting as principal for the securities on a net basis. Explicit brokerage commissions are not paid on these transactions, although purchases of new issues from underwriters of securities 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 will also be paid in connection with opening and closing out futures positions.
As previously explained, the types of securities that Vanguard Emerging Markets Government Bond Index Fund purchases 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 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 October 31, 2018, 2019, and 2020, the Funds paid the following approximate amounts in brokerage commissions. Brokerage commissions paid by the Fund may be substantially different from year to year for multiple reasons, such as cash flows or changes to the stocks that make up a fund’s target index.  
Vanguard Fund
2018
2019
2020
Vanguard Emerging Markets Government Bond Index Fund
$ 3,000
$ 5,000
$ 5,000
Vanguard Global Minimum Volatility Fund
291,000
733,000
736,000
Vanguard High Dividend Yield Index Fund
493,000
444,000
604,000
Vanguard International Dividend Appreciation Index Fund
150,000
222,000
249,000
Vanguard International Explorer Fund
2,743,000
1,687,000
2,297,000
Vanguard International High Dividend Yield Index Fund
105,000
116,000
217,000
Vanguard Mid-Cap Growth Fund
2,837,000
2,434,000
2,096,000
Vanguard Selected Value Fund
5,310,000
5,120,000
5,203,000
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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 advisors. If such securities are compatible with the investment policies of a Fund and one or more of an 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 Fund's 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 October 31, 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 Emerging Markets Government Bond Index
Fund
—
—
Vanguard Global Minimum Volatility Fund
—
—
Vanguard High Dividend Yield Index Fund
Citigroup Global Markets Inc.
$ 303,095,000
 
J.P. Morgan Securities Inc.
1,042,647,000
 
Jefferies LLC
15,494,000
 
Merrill Lynch, Pierce, Fenner & Smith Inc.
643,950,000
 
Morgan Stanley
225,255,000
 
National Financial Services LLC
30,076,000
 
Wells Fargo Securities, LLC
282,565,000
Vanguard International Dividend Appreciation Index Fund
MIZUHO SEC INC
454,000
Vanguard International Explorer Fund
Goldman, Sachs & Co.
3,900,000
Vanguard International High Dividend Yield Index Fund
BANCO SANTANDER BRASIL
405,000
 
MIZUHO SEC INC
5,878,000
 
SCOTIA CAPITAL USA INC
9,429,000
Vanguard Mid-Cap Growth Fund
—
—
Vanguard Selected Value Fund
Jefferies & Company, Inc.
45,773,000
Portfolio turnover for Vanguard Selected Value Fund. The Selected Value Fund’s portfolio turnover rate was 31% during its fiscal year ended October 31, 2019, and 85% during its fiscal year ended October 31, 2020. The higher portfolio turnover rate for the Fund in the fiscal year 2020 was due to a change in the Fund's advisory structure at the end of 2019.
Portfolio turnover for Vanguard International Explorer Fund. The International Explorer Fund's portfolio turnover rate was 35% during its fiscal year ended October 31, 2019, and 71% during its fiscal year ended October 31, 2020. The higher portfolio turnover rate for the Fund in the fiscal year 2020 was due in part to a change in the Fund's advisory structure in 2020.
Portfolio turnover for Vanguard Mid-Cap Growth Fund. The Mid-Cap Growth Fund’s portfolio turnover rate was 75% during its fiscal year ended October 31, 2018, and 111% during its fiscal year ended October 31, 2019. The higher portfolio turnover rate for the Fund in the fiscal year 2019 was due to increased trading activity in the Fund's portfolio as a result of a change in the Fund's advisory structure at the end of 2018. The Fund's portfolio turnover rate was 74% during its fiscal year ended October 31, 2020. The lower portfolio turnover rate for the Fund in the fiscal year 2020 was due to decreased trading activity since the Fund's fiscal year 2019.
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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. The Board of each Vanguard fund advised by a manager not affiliated with Vanguard has delegated the authority to vote proxies related to the portfolio securities held by each fund to its respective advisor(s). Each advisor will vote such proxies in accordance with its own proxy voting policies and procedures, which are summarized in Appendix B.
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. Additionally, Vanguard has processes in place for advisors unaffiliated with Vanguard who have been delegated authority to vote proxies on behalf of certain Vanguard funds to inform Vanguard of an upcoming vote the advisor deems to be material in accordance with such advisor’s proxy voting policies and procedures in order for Vanguard to instruct the recall of the security.
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 High Dividend Yield Index Fund, Vanguard Emerging Markets Government Bond Index Fund, Vanguard International Dividend Appreciation Index Fund, and Vanguard International High Dividend Yield Index Fund (the ETF Funds) each offer and issue an exchange-traded class of shares called ETF Shares. Each ETF Fund issues and redeems ETF Shares in large blocks, known as “Creation Units.”
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 Funds' 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.
Each 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). Each 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). The Deposit Securities and Redemption Securities may include American Depositary Receipts. 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. Each ETF Fund reserves the right to issue Creation Units for cash, rather than in kind. As of the date of this Statement of Additional Information, cash purchases and redemptions will be required for securities traded in Brazil, Chile, China, Colombia, Egypt, India, Kuwait, Malaysia, Pakistan, Peru, Qatar, Russia, Saudi Arabia, South Korea, Taiwan and UAE.
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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 each ETF Fund as calculated by an information provider. The ETF Funds are not involved with or responsible for the calculation or dissemination of the IOPVs, and they make 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 an 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 an 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.
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 an ETF Fund to ETF Shares:
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■ 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 an 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 Funds 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.
Each 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.
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 appropriate 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.
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The ETF Funds 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 Funds and discharging its responsibilities with respect thereto under applicable law. Under such circumstances, the ETF Funds 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 Funds make other arrangements with respect thereto satisfactory to the exchange.
Purchase and Issuance of ETF Shares in Creation Units
Except for conversions to ETF Shares from conventional shares,  the ETF Funds issue and sell ETF Shares only in Creation Units on a continuous basis through the Distributor, without a sales load, at their NAV next determined after receipt of an order in proper form on any business day. The ETF Funds do 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 an 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 an 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 an 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 each ETF Fund (subject to possible amendment or correction). Each Fund reserves the right to accept a nonconforming fund deposit.
The identity and number of shares of the Deposit Securities required for a fund deposit may change from one day to another to reflect rebalancing adjustments, corporate actions, or to respond to adjustments to the weighting or composition of the component securities of the relevant target index.
In addition, 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 appropriate ETF Fund, and the ETF Fund’s determination shall be final and binding.
Procedures for Purchasing Creation Units. An Authorized Participant may place an order to purchase Creation Units from Vanguard High Dividend Yield Index Fund either (1) through the Continuous Net Settlement (CNS) clearing processes of the NSCC as such processes have been enhanced to effect purchases of Creation Units, such processes
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being referred to herein as the Clearing Process, or (2) outside the Clearing Process. To purchase through the Clearing Process, an Authorized Participant must be a member of the NSCC that is eligible to use the CNS system. Purchases of Creation Units cleared through the Clearing Process will be subject to a lower transaction fee than those cleared outside the Clearing Process.
For all ETF Funds, 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 on the NYSE (Closing Time) (ordinarily 4 p.m., Eastern time) to receive that day‘s NAV. The date on which an order to purchase (or redeem) Creation Units is placed is referred to as the transmittal date. Authorized Participants must transmit orders using a transmission method acceptable to the Distributor pursuant to procedures set forth in the Participant Agreement.
Purchase orders effected outside the Clearing Process are likely to require transmittal by the Authorized Participant earlier on the transmittal date than orders effected using the Clearing Process. Those persons placing orders outside the Clearing Process should ascertain the deadlines applicable to the DTC and the Federal Reserve Bank wire system by contacting the operations department of the broker or depository institution effectuating such transfer of Deposit Securities and Cash Component.
For Vanguard Emerging Markets Government Bond Index Fund, Vanguard International Dividend Appreciation Index Fund, and Vanguard International High Dividend Yield Index Fund, the Distributor shall inform the ETF Fund’s custodian of the order. The custodian will then inform the appropriate foreign sub-custodians. Each sub-custodian shall maintain an account into which the Authorized Participant shall deliver, on behalf of itself or the party on whose behalf it is acting, the relevant Deposit Securities (or the cash value of all or part of such securities, in the case of a permitted or required cash purchase or cash-in-lieu amount), with any appropriate adjustments as advised by Vanguard. Deposit Securities must be delivered to an account maintained at the applicable local sub-custodians.
The Authorized Participant must also make available on or before the contractual settlement date, by means satisfactory to the ETF Fund, immediately available or same-day funds estimated by the ETF Fund to be sufficient to pay the Cash Component. Any excess funds will be returned following settlement of the issue of the Creation Unit.
Neither the Trust, the ETF Funds, 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 for Vanguard High Dividend Yield ETF
Purchase Orders Using the Clearing Process
For purchase orders placed through the Clearing Process, the Participant Agreement authorizes the Distributor to transmit through the transfer agent or index receipt agent to the NSCC, on behalf of an Authorized Participant, such trade instructions as are necessary to effect the Authorized Participant‘s purchase order. Pursuant to such trade instructions to the NSCC, the Authorized Participant agrees to deliver the requisite Deposit Securities and the Cash Component to the appropriate ETF Fund, together with such additional information as may be required by the Distributor.
An order to purchase Creation Units through the Clearing Process is deemed received on the transmittal date if (1) such order is received by the ETF Fund’s designated agent before Closing Time on such transmittal date and (2) all other procedures set forth in the Participant Agreement are properly followed. Such order will be effected based on the NAV of the ETF Fund next determined on that day. An order to purchase Creation Units through the Clearing Process made in proper form but received after Closing Time on the transmittal date will be deemed received on the next business day immediately following the transmittal date and will be effected at the NAV next determined on that day. The Deposit Securities and the Cash Component will be transferred by the second NSCC business day following the date on which the purchase request is deemed received.
Purchase Orders Outside the Clearing Process
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An Authorized Participant that wishes to place an order to purchase Creation Units outside the Clearing Process must state that it is not using the Clearing Process and that the purchase instead will be effected through a transfer of securities and cash directly through the DTC. An order to purchase Creation Units outside the Clearing Process is deemed received by the ETF Fund’s designated agent on the transmittal date if (1) such order is received by the Distributor before Closing Time on such transmittal date and (2) all other procedures set forth in the Participant Agreement are properly followed.
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. Alternatively, 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.
Placement of Purchase Orders for Vanguard International Dividend Appreciation ETF and Vanguard International High Dividend Yield ETF. An order to purchase Creation Units is deemed received on the transmittal date if (1) such order is received by the Distributor prior to Closing Time on such transmittal date, or an earlier cut-off time in the case of an ETF Fund that has established such a time and (2) all other procedures set forth in the Participant Agreement are properly followed.
Except as provided herein, a Creation Unit will not be issued until the transfer of good title to an ETF Fund of the Deposit Securities and the payment of the Cash Component have been completed. When each sub-custodian has confirmed to the custodian that the required securities included in the fund deposit have been delivered to the account of the relevant sub-custodian, and the Cash Component has been delivered to the custodian, the Distributor shall be notified of such delivery, and the ETF Fund will issue and cause the delivery of the Creation Unit.
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. Alternatively, 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.
Placement of Purchase Orders for Vanguard Emerging Markets Government Bond ETF. 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 is the date on which the trade actually takes place, or “T”; two business days after the trade 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. Each ETF Fund reserves the absolute right to reject a purchase order. By way of example, and not limitation, an 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 subcustodian, 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
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causing trading halts; systems failures involving computer or other information systems affecting the aforementioned parties as well as the DTC, the NSCC, or any other participant in the purchase process; and similar extraordinary events.
If a purchase order is rejected, the Distributor shall notify the Authorized Participant that submitted the order. The ETF Funds, the Trust, the transfer agent, the custodian, the subcustodian, 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. Each 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. For Vanguard High Dividend Yield Index Fund, an additional charge may be imposed for purchases of Creation Units effected outside the Clearing Process. When an 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.
Each 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 an 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 each 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. If an ETF Fund and a redeeming investor mutually agree, the Fund may provide the investor with a basket of Redemption Securities that differs from the composition of the redemption basket published through the NSCC.
Each 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 Funds, 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 for Vanguard High Dividend Yield ETF, Vanguard International Dividend Appreciation ETF, and Vanguard International High Dividend Yield ETF. Each ETF Fund may impose a transaction fee (payable to the Fund) to compensate the Fund for costs associated with the redemption of Creation Units. The amount of the fee, which may be changed by each ETF Fund from time to time at its sole
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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 for redemptions of Creation Units of Vanguard High Dividend Yield ETF effected outside the Clearing Process. When an ETF Fund permits (or requires) a redeeming investor to receive cash in lieu of one or more Redemption Securities, each ETF Fund may assess an 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, including any variable charges, on redemptions of Creation Units shall be 2% of the value of the Creation Units.
Each 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 Fund.
Transaction Fee on Redemptions of Creation Units for Vanguard Emerging Markets Government Bond ETF. The ETF Fund imposes a transaction fee (payable to the Fund) to compensate the 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. For Creation Unit redemptions, unlike purchases, the ETF Fund does not impose an additional charge on investors who receive cash in lieu of one or more Redemption Securities. 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 Fund.
Placement of Redemption Orders for Vanguard High Dividend Yield ETF
Redemption Orders Using the Clearing Process
An Authorized Participant may place an order to redeem Creation Units of the ETF Fund either (1) through the CNS clearing processes of the NSCC as such processes have been enhanced to effect redemptions of Creation Units, such processes being referred to herein as the Clearing Process, or (2) outside the Clearing Process. To redeem through the Clearing Process, an Authorized Participant must be a member of the NSCC that is eligible to use the CNS system. Redemptions of Creation Units cleared through the Clearing Process will be subject to a lower transaction fee than those cleared outside the Clearing Process.
An order to redeem Creation Units through the Clearing Process is deemed received on the transmittal date if (1) such order is received by the ETF Fund’s designated agent before Closing Time on such transmittal date and (2) all other procedures set forth in the Participant Agreement are properly followed. Such order will be effected based on the NAV of the ETF Fund next determined on that day. An order to redeem Creation Units through the Clearing Process made in proper form but received by the ETF Fund after Closing Time on the transmittal date will be deemed received on the next business day immediately following the transmittal date and will be effected at the NAV next determined on that day. The Redemption Securities and the Cash Redemption Amount will be transferred by the second NSCC business day following the date on which the redemption request is deemed received.
Redemption Orders Outside the Clearing Process
An Authorized Participant that wishes to place an order to redeem a Creation Unit outside the Clearing Process must state that it is not using the Clearing Process and that the redemption instead will be effected through a transfer of ETF Shares directly through the DTC. An order to redeem a Creation Unit of the ETF Fund outside the Clearing Process is deemed received on the transmittal date if (1) such order is received by the ETF Fund’s designated agent before Closing Time on such transmittal date and (2) all other procedures set forth in the Participant Agreement are properly followed.
If a redemption order in proper form is submitted to the transfer agent by an Authorized Participant prior to Closing Time on the transmittal date, then the value of the Redemption Securities and the Cash Redemption Amount will be determined by the ETF Fund on such transmittal date.
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After the transfer agent has deemed an order for redemption outside the Clearing Process received, the transfer agent will initiate procedures to transfer the Redemption Securities and the Cash Redemption Amount to the Authorized Participant on behalf of the redeeming Beneficial Owner by the second business day following the transmittal date on which such redemption order is deemed received by the transfer agent.
If on 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.
The ETF Fund reserves the right, at its sole discretion, to require or permit a redeeming investor to receive the redemption proceeds in cash. In such cases, the investor would receive a cash payment equal to the NAV of its ETF Shares based on the NAV of those shares next determined after the redemption request is received in proper form (minus a transaction fee, including a charge for cash redemptions, as previously discussed).
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.
Placement of Redemption Orders for Vanguard Emerging Markets Government Bond ETF, Vanguard International Dividend Appreciation ETF, and Vanguard International High Dividend Yield ETF. 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.
In connection with taking delivery of shares of Redemption Securities upon redemption of a Creation Unit, an Authorized Participant, or a Beneficial Owner redeeming through an Authorized Participant, must maintain appropriate security arrangements with a qualified broker-dealer, bank, or other custody provider in each jurisdiction in which any of the Redemption Securities are customarily traded, to which account such Deposit Securities will be delivered.
If appropriate arrangements to take delivery of the Redemption Securities in the applicable foreign jurisdictions, as required in the preceding paragraph, are not in place, or if it is not possible to effect deliveries of the Redemption Securities in such jurisdictions, the ETF Fund may at its discretion effect the redemption in cash. In such case, the investor will receive a cash payment equal to the NAV of the redeemed shares, based on the NAV next calculated after receipt of the redemption request in proper form (minus a transaction fee as specified previously, to offset the ETF Fund’s transaction costs associated with the disposition of Redemption Securities of the ETF Fund).
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Because the Redemption Securities of the ETF Fund may trade on the relevant exchange(s) on days that the exchange is closed, stockholders may not be able to redeem their shares of the ETF Fund, or to purchase or sell ETF Shares on the exchange, on days when the NAV of the ETF Fund could be significantly affected by events in the relevant foreign markets.
Suspension of Redemption Rights. The right of redemption may be suspended or the date of payment postponed with respect to an 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.
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.
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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.
ETF Shares: Foreign Market Information
The security settlement cycles and local market holiday schedules in foreign markets, as well as unscheduled foreign market closings, may result in the delivery of redemption proceeds (either in kind or in cash) more than seven days after receipt of a redemption request in proper form. Below are the dates of regular holidays affecting the relevant markets in which the ETF Funds invest and the dates on which, if a redemption request is submitted, the settlement period in a given market will exceed seven days. The proclamation of new holidays, the treatment by market participants of certain days as “informal holidays,” the elimination of existing holidays, or changes in local securities delivery practices could affect the information set forth herein at some time in the future.
Regular Holidays. The calendar year 2021 local market holidays are as follows:  
Country
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
Albania
1
 
15, 22
5
3, 13
 
20
 
6
 
29
8, 27
Argentina
1
15, 16
24
1, 2
24, 25
21
9
16
 
8, 11
22
8
Australia
1, 26
 
1, 8
2, 5, 6,
25, 26
3, 31
7, 14
 
2, 11
27
4, 23
2
24, 27,
28, 31
Austria
1, 6
 
 
2, 5
13, 24
3
 
 
 
26
1
8, 24,
31
Bahrain**
1
 
 
 
 
 
 
 
 
 
 
 
Bangladesh**
 
21
17, 29
14
10, 13,
26
 
1,
20-22
15, 19,
30
 
19
 
16
Belgium
1
 
 
2, 5
13, 14
 
21
 
 
 
1, 11
24, 31
Benin
1
 
 
5
10, 13,
24
 
20
 
 
19
1, 15
 
Bermuda
1
 
 
2
28
21
29, 30
 
6
 
11
27, 28
Bosnia and
Herzegovina, Fed. of
1
 
 
 
 
 
 
 
 
 
 
 
Botswana
1
 
 
2, 5
13
 
1, 19,
20
 
30
1
 
27
Brazil
1, 25
15-17
 
2, 21
 
3
9
 
7
12
2, 15
 
Bulgaria
1
 
3
2, 5,
30
3, 4, 6,
24
 
 
 
6, 22
 
 
24, 27,
28
Burkina Faso
1
 
 
5
10, 13,
24
 
20
 
 
19
1, 15
 
Canada
1, 4
15
 
2
24
24
1
2
6
11
11
24, 27,
28
China
1
11, 12,
15-17
 
5
3-5
14
 
 
20, 21
1, 4-7
 
 
China Connect - Bond
Connect
1
11, 12,
15-17
 
5
3-5
14
 
 
20, 21
1, 4-7
 
 
China Connect - Stock
Connect
1
11, 12,
15-17
 
1, 2, 5,
6
3-5,
18, 19
14, 30
1
 
17,
20-22
1, 4-7,
13, 14
 
24, 27
Colombia
1, 11
 
22
1, 2
17
7, 14
5, 20
16
 
18
1, 15
8, 24,
31
Costa Rica
1
 
 
1, 2
3
 
26
2
13
 
29
 
Croatia
1, 6
 
 
2, 5
 
3, 22
 
5
 
 
1, 18
24, 31
Cyprus
1, 6
 
15, 25
1, 2, 5,
30
3, 4
21
 
 
 
1, 28
 
24
Czech Republic
1
 
 
2, 5
 
 
5, 6
 
28
28
17
24, 31
Denmark
1
 
 
1, 2, 5,
30
13, 14,
24
 
 
 
 
 
 
24, 31
B-75
Country
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
Egypt**
7, 25
 
 
25
2, 3,
12, 13
30
1,
19-22
9
 
6, 18
 
 
Estonia
1
24
 
2, 5
13
23, 24
 
20
 
 
 
24, 31
Eswatini
1
 
 
2, 5,
19, 26
13
 
22
 
6
 
 
 
Finland
1, 6
 
 
2, 5
13
25
 
 
 
 
 
6, 24,
31
France
1
 
 
2, 5
 
 
 
 
 
 
 
24, 31
Georgia, Republic of
1, 4, 7,
19
 
3, 8
9, 30
3, 10,
12, 26
 
 
30
 
14
23
 
Germany
1
 
 
 
 
 
 
 
 
 
 
 
Ghana
1, 7
 
8
2, 5
3, 13
 
20
4
21
 
 
3,
27-28
Greece
1, 6
 
15, 25
2, 5,
30
3
21
 
 
 
28
 
24
Guinea-Bissau
1
 
 
5
10, 13,
24
 
20
 
 
19
1, 15
 
Hong Kong
1
11, 12,
15
 
2, 5, 6
19
14
1
 
22
1, 14
 
24, 27,
31
Hungary
1
 
15
2, 5
24
 
 
20
 
 
1
24, 31
Iceland
1
 
 
1, 2, 5,
22
13, 24
17
 
2
 
 
 
24, 31
India
26
19
11, 29
1, 2,
13, 14,
21
13, 26
 
21
16, 19
10
15, 19
4, 5,
19
 
Indonesia
1
12
11, 12
2
12-14,
17-19,
26
1
20
10, 17
 
19
 
24, 27,
31
Ireland
1
 
17
2, 5
3
7
 
2
 
25
 
24, 27,
28, 31
Israel**
 
 
28,
29-31
1, 2,
14, 15
16, 17
 
18
 
6, 7, 8,
15, 16,
20, 21,
22, 23,
26, 27,
28
 
 
 
Italy
1
 
 
2, 5
 
 
 
 
 
 
 
24, 31
Ivory Coast
1
 
 
5
10, 13,
24
 
20
 
 
19
1, 15
 
Japan
1, 11
11, 23
 
29
3-5
 
22, 23
9
20, 23
 
3, 23
31
Jordan**
1
 
 
 
12, 13,
25
 
19-22
9
 
18
 
 
Kazakhstan
1, 4, 7
 
8,
22-24
 
3, 7,
10
 
6, 21
30
 
 
 
1, 16,
17
Kenya
1
 
 
2, 5
 
1
 
 
 
11, 20
 
13, 27
Korea, Republic of
1
11, 12
1
 
5, 19
 
 
 
20-22
 
 
 
Kuwait**
3
 
 
 
 
 
 
 
 
 
 
 
Latvia
1
 
 
2, 5
3, 4,
13
23-25
 
 
 
 
18, 19
24, 31
Lithuania
1
16
11
2, 5
13
24
6
 
 
 
1, 2
24, 31
Luxembourg
1
 
 
2, 5
 
 
 
 
 
 
 
24, 31
Malawi
1, 15
 
3
2, 5
3, 13,
14
 
6
 
 
15
 
27
Malaysia
1, 28
1, 11,
12
 
29
12-14,
26, 31
7
20
10, 31
16
19
4
 
Mali
1
 
 
5
10, 13,
24
 
20
 
 
19
1, 15
 
Mauritius
1, 28
1, 12
11, 12
13
14
 
 
 
 
 
1, 2, 4
 
B-76
Country
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
Mexico
1
1
15
1, 2
 
 
 
 
16
 
2, 15
 
Morocco
1, 11
 
 
 
14
 
21, 30
20
 
20
18
 
Namibia
1
 
22
2, 5,
27
4, 13,
25
16
 
9, 26
24
 
 
10, 16,
27
Netherlands
1
 
 
2, 5
 
 
 
 
 
 
 
24, 31
New Zealand
1, 4
8
 
2, 5,
26
 
7
 
 
 
25
 
27, 28
Niger
1
 
 
5
10, 13,
24
 
20
 
 
19
1, 15
 
Nigeria
1
 
 
2, 5
13, 14
 
20, 21
 
 
1, 18
 
27
Norway
1
 
31
1, 2, 5
13, 17,
24
 
 
 
 
 
 
24, 31
Pakistan
1
5
23
12
13, 14
 
1, 20,
21
18, 19
 
19
 
 
Panama
1
15-17
 
2
 
 
 
 
 
 
3-5,
10, 29
8
Peru
1
 
31
2
 
29
28, 29
30
 
8
1
8
Philippines
1
12, 25
 
1, 2, 9
 
 
 
30
 
 
1, 2,
30
8, 24,
30, 31
Poland
1, 6
 
 
2, 5
3
3
 
 
 
 
1, 11
24, 31
Portugal
1
 
 
2, 5
 
 
 
 
 
 
 
24, 31
Qatar**
 
9
7
 
13
 
20-22
 
 
 
 
 
Romania
1
 
 
30
3
1, 21
 
 
 
 
30
1
Russia
1, 4-8,
7
22-23
8
 
3, 10
14
 
 
 
 
4-5
31
Saudi Arabia**
 
 
 
 
12-13
 
19-22
 
23
 
 
 
Senegal
1
 
 
5
10, 13,
24
 
20
 
 
19
1, 15
 
Serbia
1, 7, 8
 
 
 
 
 
 
 
 
 
 
 
Singapore
1
11, 12
 
2
13, 26
 
20
9
 
 
4
24, 31
Slovak Republic
1, 6
 
 
 
 
 
 
 
 
 
 
 
Slovenia
1
8
 
2, 5,
27
 
25
 
 
 
 
1
24, 31
South Africa
1
 
22
2, 5,
27
 
16
 
9
24
 
 
16, 27
Spain
1
 
 
2, 5
 
 
 
 
 
 
 
24, 31
Sri Lanka
1, 14,
28
4, 26
11
2, 13,
14, 26,
30
14, 26,
27
24
21, 23
 
20
19, 20
4, 18
24
Srpska, Republic of
1, 6, 7
 
 
 
 
 
 
 
 
 
 
 
Sweden
1, 5, 6
 
 
1, 2, 5,
30
12, 13
25
 
 
 
 
5
24, 31
Switzerland
1
 
 
2, 5
13, 24
 
 
 
 
 
 
24, 31
Taiwan
1
10-12,
15, 16
1
2, 5,
30
 
14
 
 
20, 21
11
 
31
Thailand
1
26
 
6,
13-15
3, 4,
26
3
26, 28
12
 
13, 25
 
6, 10,
31
Togo
1
 
 
5
10, 13,
24
 
20
 
 
19
1, 15
 
Tunisia
1, 14
 
 
9
11, 12,
13
 
20, 21
10, 13
 
15, 19
 
 
Turkey
1
 
 
23
12, 13,
14, 19
 
15, 19,
20-23
30
 
28, 29
 
 
Uganda
1, 26
16
8
2, 5
 
3, 9
 
 
 
 
 
 
Ukraine
1, 7, 8
 
8
 
3, 4,
10
21, 28
 
23, 24
 
14
 
27
B-77
Country
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
United Arab Emirates -
ADX**
 
 
 
 
13
 
19-21
9
 
18
 
1, 2
United Arab Emirates -
DFM**
 
 
 
 
13
 
19-21
9
 
18
 
1, 2
United Arab Emirates -
DIFC**
 
 
 
 
13
 
19-21
9
 
18
 
1, 2
United Kingdom
1
 
 
2, 5
3, 31
 
 
30
 
 
 
24, 27,
28, 31
United States
1, 18
15
 
2
31
 
5
 
6
11
11, 25,
26
24
Uruguay
1, 6
15, 16
 
1, 2,
19
17
 
 
25
 
11
2
 
Vietnam
1
10-12,
15, 16
 
21, 30
3
 
 
 
2, 3
 
 
 
Zambia
1
 
8, 12
2, 5
25
 
5, 6
2
 
18, 25
 
 
Zimbabwe
1
 
 
2, 5
25
 
 
9, 10
 
 
 
22
** Market is closed every Friday
Redemption. A redemption request submitted on the following dates in the following foreign markets in calendar year 2021 will result in a settlement period that exceeds seven calendar days.  
Argentina
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Australia
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Austria
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Bahrain
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
07/18/2021
07/25/2021
T+7
07/19/2021
07/26/2021
T+7
 
Bangladesh
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Belgium
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Bermuda
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Botswana
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
03/29/2021
04/06/2021
T+8
03/30/2021
04/07/2021
T+8
03/31/2021
04/08/2021
T+8
04/01/2021
04/09/2021
T+8
05/07/2021
05/14/2021
T+7
05/10/2021
05/17/2021
T+7
B-78
Botswana
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
05/11/2021
05/18/2021
T+7
05/12/2021
05/19/2021
T+7
06/25/2021
07/02/2021
T+7
06/28/2021
07/05/2021
T+7
06/29/2021
07/06/2021
T+7
06/30/2021
07/07/2021
T+7
07/13/2021
07/21/2021
T+8
07/14/2021
07/22/2021
T+8
07/15/2021
07/23/2021
T+8
07/16/2021
07/26/2021
T+10
09/24/2021
10/04/2021
T+10
09/27/2021
10/05/2021
T+8
09/28/2021
10/06/2021
T+8
09/29/2021
10/07/2021
T+8
12/21/2021
12/28/2021
T+7
12/22/2021
12/29/2021
T+7
12/23/2021
12/30/2021
T+7
12/24/2021
12/31/2021
T+7
 
Brazil
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
02/10/2021
02/17/2021
T+7
02/11/2021
02/18/2021
T+7
02/12/2021
02/19/2021
T+7
 
Bulgaria
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
04/28/2021
05/05/2021
T+7
04/29/2021
05/07/2021
T+8
12/22/2021
12/29/2021
T+7
12/23/2021
12/30/2021
T+7
 
Canada
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Chile
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
China A-Share
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
China B-Share
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
02/08/2021
02/18/2021
T+10
02/09/2021
02/19/2021
T+10
02/10/2021
02/22/2021
T+12
04/28/2021
05/06/2021
T+8
04/29/2021
05/07/2021
T+8
04/30/2021
05/10/2021
T+10
09/15/2021
09/22/2021
T+7
09/16/2021
09/23/2021
T+7
09/17/2021
09/24/2021
T+7
09/28/2021
10/08/2021
T+10
B-79
China B-Share
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
09/29/2021
10/11/2021
T+12
09/30/2021
10/12/2021
T+12
 
China Connect
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Colombia
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
03/29/2021
04/05/2021
T+7
03/30/2021
04/06/2021
T+7
03/31/2021
04/07/2021
T+7
 
Costa Rica
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Croatia
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Cyprus
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
03/30/2021
04/06/2021
T+7
03/31/2021
04/07/2021
T+7
04/28/2021
05/05/2021
T+7
04/29/2021
05/06/2021
T+7
 
Czech Republic
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Denmark
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
03/30/2021
04/06/2021
T+7
03/31/2021
04/07/2021
T+7
 
Egypt
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
07/15/2021
07/25/2021
T+10
07/18/2021
07/26/2021
T+8
 
Estonia
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Finland
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
France
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Germany
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
B-80
Ghana
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
03/30/2021
04/06/2021
T+7
03/31/2021
04/07/2021
T+7
04/01/2021
04/08/2021
T+7
12/22/2021
12/29/2021
T+7
12/23/2021
12/30/2021
T+7
12/24/2021
12/31/2021
T+7
 
Greece
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Hong Kong - Equity
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
02/09/2021
02/16/2021
T+7
02/10/2021
02/17/2021
T+7
03/31/2021
04/07/2021
T+7
04/01/2021
04/08/2021
T+7
 
Hong Kong - Corporate/Government Debt
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
02/08/2021
02/16/2021
T+8
02/09/2021
02/17/2021
T+8
02/10/2021
02/18/2021
T+8
03/30/2021
04/07/2021
T+8
03/31/2021
04/08/2021
T+8
04/01/2021
04/09/2021
T+8
12/21/2021
12/28/2021
T+7
12/22/2021
12/29/2021
T+7
12/23/2021
12/30/2021
T+7
 
Hungary
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Iceland
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
03/30/2021
04/06/2021
T+7
03/31/2021
04/07/2021
T+7
 
India
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Indonesia - Equity
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
05/10/2021
05/20/2021
T+10
05/11/2021
05/21/2021
T+10
 
Indonesia - Corporate/Government Debt
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
03/08/2021
03/15/2021
T+7
03/09/2021
03/16/2021
T+7
03/10/2021
03/17/2021
T+7
05/07/2021
05/20/2021
T+13
05/10/2021
05/21/2021
T+11
05/11/2021
05/24/2021
T+13
B-81
Indonesia - Corporate/Government Debt
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
12/21/2021
12/28/2021
T+7
12/22/2021
12/29/2021
T+7
12/23/2021
12/30/2021
T+7
 
Ireland
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Israel
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
03/24/2021
04/04/2021
T+11
03/25/2021
04/05/2021
T+11
09/02/2021
09/09/2021
T+7
09/05/2021
09/12/2021
T+7
09/14/2021
09/22/2021
T+8
 
Italy
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Japan - Equity
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
04/28/2021
05/06/2021
T+8
04/30/2021
05/07/2021
T+7
 
Japan - Corporate/Government Debt
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
04/27/2021
05/06/2021
T+9
04/28/2021
05/07/2021
T+9
04/30/2021
05/10/2021
T+10
07/19/2021
07/26/2021
T+7
07/20/2021
07/27/2021
T+7
07/21/2021
07/28/2021
T+7
09/17/2021
09/24/2021
T+7
 
Jordan
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
07/15/2021
07/25/2021
T+10
07/18/2021
07/26/2021
T+8
 
Kazakhstan
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
03/17/2021
03/25/2021
T+8
03/18/2021
03/26/2021
T+8
03/19/2021
03/29/2021
T+10
05/04/2021
05/11/2021
T+7
05/05/2021
05/12/2021
T+7
05/06/2021
05/13/2021
T+7
12/13/2021
12/20/2021
T+7
12/14/2021
12/21/2021
T+7
12/15/2021
12/22/2021
T+7
 
Kenya
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
03/30/2021
04/06/2021
T+7
03/31/2021
04/07/2021
T+7
B-82
Kenya
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
04/01/2021
04/08/2021
T+7
 
Kuwait
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
07/14/2021
07/25/2021
T+11
07/15/2021
07/26/2021
T+11
07/18/2021
07/27/2021
T+9
 
Latvia
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
06/21/2021
06/28/2021
T+7
06/22/2021
06/29/2021
T+7
 
Lithuania
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
03/30/2021
04/06/2021
T+7
03/31/2021
04/07/2021
T+7
04/01/2021
04/08/2021
T+7
10/27/2021
11/03/2021
T+7
10/28/2021
11/04/2021
T+7
10/29/2021
11/05/2021
T+7
 
Luxembourg
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Malawi
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
03/30/2021
04/06/2021
T+7
03/31/2021
04/07/2021
T+7
04/01/2021
04/08/2021
T+7
05/10/2021
05/17/2021
T+7
05/11/2021
05/18/2021
T+7
05/12/2021
05/19/2021
T+7
 
Malaysia
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Mauritius
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
01/26/2021
02/02/2021
T+7
01/27/2021
02/03/2021
T+7
03/08/2021
03/15/2021
T+7
03/09/2021
03/16/2021
T+7
03/10/2021
03/17/2021
T+7
10/27/2021
11/03/2021
T+7
10/28/2021
11/05/2021
T+8
10/29/2021
11/08/2021
T+10
 
Mexico
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Morocco
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
05/10/2021
05/17/2021
T+7
B-83
Morocco
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
05/11/2021
05/18/2021
T+7
05/12/2021
05/19/2021
T+7
07/16/2021
07/23/2021
T+7
07/19/2021
07/26/2021
T+7
07/20/2021
07/27/2021
T+7
10/14/2021
10/21/2021
T+7
10/15/2021
10/22/2021
T+7
10/18/2021
10/25/2021
T+7
 
Namibia
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
03/15/2021
03/23/2021
T+8
03/16/2021
03/24/2021
T+8
03/17/2021
03/25/2021
T+8
03/18/2021
03/26/2021
T+8
03/19/2021
03/29/2021
T+10
03/26/2021
04/06/2021
T+11
03/29/2021
04/07/2021
T+9
03/30/2021
04/08/2021
T+9
03/31/2021
04/09/2021
T+9
04/01/2021
04/12/2021
T+11
04/20/2021
04/28/2021
T+8
04/21/2021
04/29/2021
T+8
04/22/2021
04/30/2021
T+8
04/23/2021
05/03/2021
T+10
04/26/2021
05/05/2021
T+9
04/28/2021
05/06/2021
T+8
04/29/2021
05/07/2021
T+8
04/30/2021
05/10/2021
T+10
05/03/2021
05/11/2021
T+8
05/06/2021
05/14/2021
T+8
05/07/2021
05/17/2021
T+10
06/09/2021
06/17/2021
T+8
06/10/2021
06/18/2021
T+8
06/11/2021
06/21/2021
T+10
06/14/2021
06/22/2021
T+8
06/15/2021
06/23/2021
T+8
08/02/2021
08/10/2021
T+8
08/03/2021
08/11/2021
T+8
08/04/2021
08/12/2021
T+8
08/05/2021
08/13/2021
T+8
08/06/2021
08/16/2021
T+10
08/19/2021
08/27/2021
T+8
08/20/2021
08/30/2021
T+10
08/23/2021
08/31/2021
T+8
08/24/2021
09/01/2021
T+8
08/25/2021
09/02/2021
T+8
09/17/2021
09/27/2021
T+10
09/20/2021
09/28/2021
T+8
09/21/2021
09/29/2021
T+8
09/22/2021
09/30/2021
T+8
09/23/2021
10/01/2021
T+8
12/03/2021
12/13/2021
T+10
B-84
Namibia
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
12/06/2021
12/14/2021
T+8
12/07/2021
12/15/2021
T+8
12/08/2021
12/17/2021
T+9
12/09/2021
12/20/2021
T+11
12/13/2021
12/21/2021
T+8
12/14/2021
12/22/2021
T+8
12/15/2021
12/23/2021
T+8
12/20/2021
12/28/2021
T+8
12/21/2021
12/29/2021
T+8
12/22/2021
12/30/2021
T+8
12/23/2021
12/31/2021
T+8
12/24/2021
01/04/2022
T+11
12/28/2021
01/05/2022
T+8
12/29/2021
01/06/2022
T+8
12/30/2021
01/07/2022
T+8
12/31/2021
01/10/2022
T+10
 
Netherlands
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
New Zealand
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Nigeria
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
03/30/2021
04/06/2021
T+7
03/31/2021
04/07/2021
T+7
04/01/2021
04/08/2021
T+7
05/10/2021
05/17/2021
T+7
05/11/2021
05/18/2021
T+7
05/12/2021
05/19/2021
T+7
07/15/2021
07/22/2021
T+7
07/16/2021
07/23/2021
T+7
07/19/2021
07/26/2021
T+7
 
Norway
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
03/29/2021
04/06/2021
T+8
03/30/2021
04/07/2021
T+8
 
Oman
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
03/08/2021
03/15/2021
T+7
03/09/2021
03/16/2021
T+7
03/10/2021
03/17/2021
T+7
05/09/2021
05/16/2021
T+7
05/10/2021
05/17/2021
T+7
05/11/2021
05/18/2021
T+7
07/14/2021
07/25/2021
T+11
07/15/2021
07/26/2021
T+11
07/18/2021
07/27/2021
T+9
 
B-85
Pakistan
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
07/16/2021
07/26/2021
T+10
07/19/2021
07/27/2021
T+8
 
Panama
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
02/11/2021
02/18/2021
T+7
02/12/2021
02/19/2021
T+7
11/01/2021
11/08/2021
T+7
11/02/2021
11/09/2021
T+7
 
Peru
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Philippines
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
03/29/2021
04/05/2021
T+7
03/30/2021
04/06/2021
T+7
03/31/2021
04/07/2021
T+7
10/27/2021
11/03/2021
T+7
10/28/2021
11/04/2021
T+7
10/29/2021
11/05/2021
T+7
12/27/2021
01/04/2022
T+8
12/28/2021
01/05/2022
T+8
12/29/2021
01/06/2022
T+8
 
Poland
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Portugal
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Qatar
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
07/15/2021
07/25/2021
T+10
07/18/2021
07/26/2021
T+8
07/19/2021
07/27/2021
T+8
 
Romania
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Russia
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
02/17/2021
02/24/2021
T+7
02/18/2021
02/25/2021
T+7
02/19/2021
02/26/2021
T+7
11/01/2021
11/08/2021
T+7
11/02/2021
11/09/2021
T+7
11/03/2021
11/10/2021
T+7
12/28/2021
01/04/2022
T+7
12/29/2021
01/05/2022
T+7
12/30/2021
01/06/2022
T+7
 
B-86
Saudi Arabia
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
05/09/2021
05/19/2021
T+10
05/10/2021
05/20/2021
T+10
05/11/2021
05/23/2021
T+12
07/13/2021
07/25/2021
T+12
07/14/2021
07/26/2021
T+12
07/15/2021
07/27/2021
T+12
 
Serbia
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Singapore
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Slovak Republic
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Slovenia
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
South Africa
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
03/30/2021
04/06/2021
T+7
03/31/2021
04/07/2021
T+7
04/01/2021
04/08/2021
T+7
 
South Korea
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
09/16/2021
09/23/2021
T+7
09/17/2021
09/24/2021
T+7
 
Spain
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Sri Lanka
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
04/08/2021
04/15/2021
T+7
04/09/2021
04/16/2021
T+7
04/12/2021
04/19/2021
T+7
05/21/2021
05/28/2021
T+7
05/24/2021
05/31/2021
T+7
05/25/2021
06/01/2021
T+7
07/19/2021
07/26/2021
T+7
07/20/2021
07/27/2021
T+7
10/14/2021
10/21/2021
T+7
10/15/2021
10/22/2021
T+7
10/18/2021
10/25/2021
T+7
 
Sweden
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
03/30/2021
04/06/2021
T+7
03/31/2021
04/07/2021
T+7
 
B-87
Switzerland
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Taiwan
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
02/08/2021
02/17/2021
T+9
02/09/2021
02/18/2021
T+9
 
Tanzania
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
03/30/2021
04/06/2021
T+7
03/31/2021
04/08/2021
T+8
04/01/2021
04/09/2021
T+8
05/10/2021
05/17/2021
T+7
05/11/2021
05/18/2021
T+7
05/12/2021
05/19/2021
T+7
10/12/2021
10/19/2021
T+7
10/13/2021
10/20/2021
T+7
 
Thailand
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
04/09/2021
04/16/2021
T+7
04/12/2021
04/19/2021
T+7
 
Tunisia
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
05/10/2021
05/17/2021
T+7
05/11/2021
05/18/2021
T+7
05/12/2021
05/19/2021
T+7
07/15/2021
07/22/2021
T+7
07/16/2021
07/23/2021
T+7
07/19/2021
07/26/2021
T+7
10/13/2021
10/20/2021
T+7
10/14/2021
10/21/2021
T+7
 
Turkey
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
05/10/2021
05/17/2021
T+7
05/11/2021
05/18/2021
T+7
07/14/2021
07/26/2021
T+12
07/16/2021
07/27/2021
T+11
 
Uganda
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
01/11/2021
01/18/2021
T+7
01/12/2021
01/19/2021
T+7
01/13/2021
01/20/2021
T+7
03/30/2021
04/06/2021
T+7
03/31/2021
04/07/2021
T+7
04/01/2021
04/08/2021
T+7
 
Ukraine
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
01/04/2021
01/11/2021
T+7
01/05/2021
01/12/2021
T+7
01/06/2021
01/13/2021
T+7
04/28/2021
05/05/2021
T+7
B-88
Ukraine
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
04/29/2021
05/06/2021
T+7
04/30/2021
05/07/2021
T+7
08/18/2021
08/25/2021
T+7
08/19/2021
08/26/2021
T+7
08/20/2021
08/27/2021
T+7
10/11/2021
10/18/2021
T+7
10/12/2021
10/19/2021
T+7
10/13/2021
10/20/2021
T+7
 
United Arab Emirates
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
07/15/2021
07/25/2021
T+10
07/18/2021
07/26/2021
T+8
 
United Kingdom
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
United States
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Uruguay
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
No settlement cycles (>=): T+7
 
Vietnam
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
02/08/2021
02/17/2021
T+9
02/09/2021
02/18/2021
T+9
 
WAEMU
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
05/07/2021
05/14/2021
T+7
 
Zambia
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
03/30/2021
04/06/2021
T+7
03/31/2021
04/07/2021
T+7
04/01/2021
04/08/2021
T+7
06/30/2021
07/07/2021
T+7
07/01/2021
07/08/2021
T+7
07/02/2021
07/09/2021
T+7
 
Zimbabwe
 
 
Redemption Date
Redemption Settlement Date
Settlement Period
03/30/2021
04/06/2021
T+7
03/31/2021
04/07/2021
T+7
04/01/2021
04/08/2021
T+7
08/04/2021
08/11/2021
T+7
08/05/2021
08/12/2021
T+7
08/06/2021
08/13/2021
T+7
In 2021, the maximum number of calendar days necessary to satisfy a redemption request would be 13 days.
B-89
Financial Statements
Each Fund’s Financial Statements for the fiscal year ended October 31, 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. The unaudited Financial Statements for Vanguard International Dividend Appreciation Index Fund’s fiscal period ended April 30, 2021, are incorporated by reference into this Statement of Additional Information from the Fund’s Semiannual Report to Shareholders. 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.
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.
B-90
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.
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.
B-91
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.
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.
B-92
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.
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
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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.
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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Appendix B
Baillie Gifford Proxy Voting Guidelines
Baillie Gifford has adopted the Governance and Sustainability Principles and Guidelines (the Guidelines) to vote proxies related to securities held by the funds.
The Guidelines are developed and administered by the Governance & Sustainability Team of the Baillie Gifford Group. This Governance & Sustainability Team sits alongside the investment teams and is responsible for the voting of proxies. The head of this Governance & Sustainability Team jointly reports to an investment partner of Baillie Gifford & Co., the parent of Baillie Gifford Overseas Ltd., and to the senior investment committee of the Investment Management Group of the Baillie Gifford Group.
The Guidelines cover Baillie Gifford’s approach to governance and sustainability matters including the following areas:
— Board Effectiveness and Composition
— Capital Allocation
— Governance Processes and Disclosure
— Remuneration
— Sustainability
Baillie Gifford recognizes that given the range of markets in which the Funds invest, one set of standards is unlikely to be appropriate. The Guidelines consequently take an issues based approach covering standards from a global perspective.
Pragmatic & Flexible Approach
Baillie Gifford recognizes that companies within particular markets operate under significantly differing conditions. The Guidelines are intended to provide an insight into how Baillie Gifford approaches voting and engagement on behalf of clients with it important to note that Baillie Gifford assesses every company individually. With respect to voting, Baillie Gifford will evaluate proposals on a case-by-case basis, based on what it believes to be in the best long-term interests of the clients, rather than rigidly applying a policy.
In evaluating each proxy, the Governance & Sustainability Team follows the Guidelines, while also considering third party analysis, Baillie Gifford’s and its affiliates own research and discussions with company management.
The Governance & Sustainability Team oversees voting analysis and execution in conjunction with the investment managers. Baillie Gifford may elect not to vote on certain proxies. While Baillie Gifford endeavors to vote a fund’s shares in all markets, on occasion this may not be possible due to a practice known as share blocking, whereby voting shares would result in Baillie Gifford being prevented from trading for a certain period of time. When voting in these markets, Baillie Gifford assesses the benefits of voting clients’ shares against the relevant restrictions. Baillie Gifford may also not vote where it has sold out of a stock following the record date.
Conflicts of Interest
Baillie Gifford recognizes the importance of managing potential conflicts of interest that may exist when voting a proxy solicited by a company with whom the Baillie Gifford Group has a material business or personal relationship. The Governance & Sustainability Team of the Baillie Gifford Group is responsible for monitoring possible material conflicts of interest with respect to proxy voting.
For proxy votes that involve a potential conflict of interest that is not managed in line with the Conflicts of Interest policy, the Governance & Sustainability team report the conflict to the Investment Management Group (IMG) for discussion. The Governance & Sustainability team reports into the IMG which is comprised of several senior Baillie Gifford partners. These individuals review the voting rationale, consider whether business relationships between Baillie Gifford and the company have influenced the proposed vote and decide the course of action to be taken in the best interest of clients.
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COOKE & BIELER, L.P.
PROXY POLICY
Cooke & Bieler, L.P. has a fiduciary obligation to vote client proxies in the best interest of our clients – to protect and enhance the economic interests of the beneficial owner of the securities which are under our supervision. In determining how to vote on an issue, the firm will consider the opinion of management and the effect on the issuer's business practices as part of analyzing the effect on shareholder value. In addition, Cooke & Bieler will consider the voting recommendations of third parties, such as proxy services firms or other organizations or associations (e.g., the AFL-CIO, RMG or Glass Lewis), but these recommendations are not determinative. The firm will also consider the views of third parties when revising its proxy voting policies, procedures or guidelines.
Cooke & Bieler utilizes the services of an outside proxy firm, currently Broadridge, to act as agent for the proxy process and to maintain records of proxy votes for our clients. In addition, Glass Lewis provides the firm research on proxy votes. In the rare situation where a custodian does not have a relationship with Broadridge, we may use a different proxy voting vendor but continue to use Glass Lewis as the research provider. Proxy statements are thoroughly reviewed by the portfolio manager most familiar with the company to ensure that proxies are voted in the best interest of our clients. Cooke & Bieler defines the best interest of the client to mean the best economic interest of the shareholders of the company.
The following guidelines have been established to ensure voting which is consistent with our fiduciary responsibility. While we follow the guidelines listed below, each vote is ultimately cast on a case-by-case basis, taking into consideration all the relevant facts and circumstances at the time of the vote.
I. The Board of Directors
A. Voting on Director Nominees in Elections
Votes on director nominees are made on a case-by-case basis, examining the following factors:
• long-term corporate performance and stock price
• composition of board and key board committees
• nominee’s attendance at meetings
• track record
• if contested—background of proxy contest, qualifications of both slates of nominees, what they are offering and
likelihood objectives can be met
B. Separation of Chairman and CEO
We believe in most cases, an independent chairman is better suited to oversee the board and the company’s management, assess performance and ensure that shareholder interests are being served. However sometimes we believe that the individual is capable of fulfilling both roles especially when the company’s performance has been strong under the leadership of this individual. We vote case-by-case on shareholder proposals asking that the chairman and CEO positions be separated (independent chairman).
C. Majority of Independent Directors
We generally vote for shareholder proposals that request that the board be comprised of a majority of independent directors. We believe that a majority of independent directors helps to facilitate objective decision making and enhances accountability to shareholders.
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D. Stock Ownership Requirements
We typically vote against shareholder proposals requiring directors to own a minimum amount of company stock in order to qualify as a director, or to remain on the board. Requiring stock ownership may limit the number of persons qualified to be on the board. We believe a director can serve the company well regardless of the extent of his or her ownership.
E. Term of Office
We vote against shareholder proposals to limit the tenure of outside directors because this may result in prohibiting the service of directors who significantly contribute to the company’s success and represent shareholders’ interest effectively.
F. Director and Officer Indemnification and Liability Protection
Proposals concerning director and officer indemnification and liability protection are evaluated on a case-by-case basis.
We vote against proposals to limit or eliminate entirely director and officer liability for monetary damages for violating the duty of care.
We vote against indemnification proposals that would expand coverage beyond legal expenses to include acts, such as negligence, that are more serious violations of fiduciary obligations than mere carelessness.
We vote for only those proposals that provide such expanded coverage in cases when a director’s or officer’s legal defense was unsuccessful if: (1) the director was found to have acted in good faith and in a manner that he reasonably believed was in the best interests of the company; and (2) only if the director’s legal expenses would be covered.
G. Requiring Majority Voting for Election of Directors
We typically vote for requiring majority voting for election of directors.
II. Proxy Contests
A. Reimburse Proxy Solicitation Expenses
Decisions to provide full reimbursement for dissidents waging a proxy contest are made on a case-by-case basis. We believe reimbursement of solicitation expenses may encourage abuse by special interests at the expense of the majority of shareholders.
III. Auditors
A. Ratifying Auditors
We generally vote for ratifying auditors unless they have a financial interest in or association with the company, and are therefore not independent; or there is reason to believe that the independent auditor has rendered an opinion which is neither accurate nor indicative of the company’s financial position; or finally if non-audit service fees are excessive.
IV. Proxy Contest Defenses
A. Board Structure: Staggered vs. Annual Elections
We vote against proposals to classify the board.
We vote for proposals to repeal classified boards and to elect all directors annually.
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B. Cumulative Voting
We review on a case-by-case basis proposals to permit/eliminate cumulative voting. We weigh the positive of enhancing the ability of minority shareholders to concentrate support with the negative that this may be used destructively by a minority of shareholders with extreme points of view. We consider:
• Historical shareholder-friendliness of said corporation;
• Past dealings with minority shareholders;
• Conflicts of interest
C. Shareholder Ability to Call Special Meetings
We review on a case-by-case basis proposals to permit/eliminate shareholder’s ability to call special meetings. We consider how shareholder friendly the company is as we believe this right may be abused by special interests at the expense of the majority of shareholders.
V. Tender Offer Defenses
A. Poison Pills
We vote for shareholder proposals that ask a company to submit its poison pill for shareholder ratification.
We review on a case-by-case basis shareholder proposal to redeem or ratify a company’s poison pill. We consider the trigger, value of the NOLs, terms and conditions, and shareholder protection mechanisms.
B. Fair Price Provisions
We review on a case-by-case basis fair price proposals. We evaluate vote required to approve the proposed acquisition, the vote required to repeal the fair price provisions, and the mechanism for determining the fair price.
C. Supermajority Shareholder Vote Requirement
We vote against management proposals to require a supermajority shareholder vote.
We vote for shareholder proposals to lower supermajority shareholder vote requirements.
VI. Capital Structure
A. Common Stock Authorization
We review on a case-by-case basis proposals to increase the number of shares of common stock authorized for issue.
We will make an assessment regarding:
• the need for the increase;
• the percentage increase with respect to the existing authorization;
• voting rights of the stock;
• overall capitalization structures;
• board’s governance structure and practices;
• whether company is in danger of being de-listed or if going concern is an issue.
B. Stock Splits
We will vote for management proposals to implement a stock split.
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C. Reverse Stock Splits
We vote for management’s proposals to implement a reverse stock split. We will generally support a reverse stock split if management provides a reasonable justification for the split and if the reverse stock split would proportionately reduce number of authorized shares.
D. Preemptive Rights
We review on a case-by-case basis proposals to create or abolish preemptive rights. In evaluating proposals on preemptive rights, we look at the size of a company, the characteristics of its shareholder base, and the liquidity of the stock.
E. Share Repurchase Programs
We vote for management proposals to institute open-market share repurchase plans in which all shareholders may participate on equal terms.
F. Approve Distribution of Dividend
We typically vote for management proposals to distribute a dividend in which the financial stability of the company will not be affected.
VII. Compensation
We analyze executive and director compensation plans on a case-by-case basis. Viable compensation programs are designed to attract, retain and motivate talented executives and outside directors, but are also subject to abuse by entrenched managements. In evaluating a pay plan, we weigh the need to attract and retain qualified people against the implications for dilution and transfer of shareholder wealth.
A. Shareholder Proposals to Limit Executive and Directors Pay
We review all shareholder proposals that seek additional disclosure of executive and director pay information on a case-by-case basis.
We review on a case-by-case basis all other shareholder proposals that seek to limit executive and director pay.
B. Golden and Tin Parachutes
We vote for shareholder proposals to have golden and tin parachutes submitted for shareholder ratification.
We review on a case-by-case basis all proposals to ratify or cancel golden or tin parachutes.
C. Employee Stock Ownership Plan (ESOPs)
We vote review on a case-by-case basis proposals that request shareholder approval in order to implement an ESOP or to increase authorized shares for existing ESOPs.
D. 401(k) Employee Benefit Plans
We vote for proposals to implement a 401(k) savings plan for employees since this will help attract and retain quality personnel.
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E. Pay for Superior Performance
We vote for proposals that reward executives for performance. We typically consider the following factors:
• type of industry
• stage of business cycle
• appropriateness of current incentive programs
• performance of company with current incentive program
F. Restrictions on Golden Coffin Compensations
We vote for proposals calling companies to adopt policies that require obtaining shareholder approval for payments after the death of a senior executive.
We typically vote for proposals that reduce the use of golden coffin type payments.
G. Limit Supplemental Executive Retirement Plans (SERPs)
We generally vote for proposals that require putting extraordinary benefits contained in SERP agreements to shareholder vote.
We also generally vote for shareholder proposals requesting to limit extraordinary executive benefits provided under company’s SERP.
H. Advisory Vote on Executive Compensation
We generally vote for shareholder proposals that call for non-binding shareholder ratification of compensation of executive officers.
I. Stock Retention/Holding Period Requirements
We evaluate on a case by case basis shareholder proposals asking companies to adopt policies requiring executive officers to retain a certain percentage of shares acquired while employed at the company. We consider the following factors:
• actual officer stock ownership
• degree to which current requirements differ from proponent’s suggested holding period/retention ratio
• current and past problematic pay practices
J. Tax Gross-Up Proposals
We generally vote against proposals calling for companies to adopt a policy providing tax gross-up payments to executives.
K. Frequency of Advisory Votes on Executive Compensation
We generally vote for proposals modifying the frequency to annually for advisory votes on executive compensation.
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VIII. State of Incorporation
A. Voting on State Takeover Statutes
We review on a case-by-case basis proposals to opt out of state takeover statutes. We consider the following factors:
• the power the statute vests with the issuer’s board;
• the potential for the statute to empower the board to negotiate a better deal for shareholders;
• provisions incorporated.
B. Voting on Reincorporation Proposals
Proposals to change a company’s state of incorporation are examined on a case-by-case basis. A company may choose to reincorporate under the laws of a different state for many reasons, including:
• taxation;
• comparison of corporation laws of original state and destination state;
• the level of corporate experience of the state court;
• reason for reincorporation;
• comparison of company’s governance practices and provisions prior to and following reincorporation.
IX. Mergers and Corporate Restructurings
A. Mergers and Acquisitions
Votes on mergers and acquisitions are considered on a case-by-case basis, taking into account the following:
• anticipated financial and operating benefits;
• offer price (cost vs. premium);
• prospects of the combined companies;
• how the deal was negotiated; and
• changes in corporate governance and their impact on shareholder rights.
B. Corporate Restructuring
Votes on corporate restructuring proposals, including minority squeezeouts, leveraged buyout, spin-offs, liquidations and asset sales are considered on a case-by-case basis with the following considerations:
• dilution of existing shareholder’s position
• terms of the offer
• financial and control issues
• conflicts of interest
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C. Spin-offs
Votes on spin-offs are considered on a case-by-case basis depending on:
• tax and regulatory advantages
• planned use of sale proceeds
• market focus
• managerial incentives
• corporate governance changes
• capital structure changes
• conflicts of interest
X. Lobbying and Political Donations
Votes on lobbying and political donations are considered on a case-by-case basis depending on:
• the polity in question
• the expenses of the operation
• the possibility of corruption
• the type of business
XI. Social and Environmental Issues
We believe companies face real financial, regulatory and reputational risks from their environmental and social practices and thoughtful management of these issues is important for the creation of shareholder value over the long-term. We expect the managements and boards of the companies in which we invest to address these issues as part of their overall risk control and firm management responsibilities.
We will typically vote for disclosure reports that seek additional information that is not available elsewhere and that is not proprietary, particularly when it appears that companies have not adequately addressed shareholder’s social and environmental concerns. We will generally vote against proposals we deem duplicative, overly burdensome or unlikely to further the long-term economic interests of shareholders.
In determining our vote on shareholder social and environmental proposals, we also analyze the following factors:
• whether adoption of the proposal would have either a positive or negative impact on the company’s short-term or
long-term share value;
• whether the company has already responded in some appropriate manner to the request embodied in the proposal;
• whether the proposal itself is well framed and reasonable;
• whether implementation of the proposal would achieve the objectives sought in the proposal;
• what other companies have done in response to the issue;
• any recent related fines, controversies, or litigations.
XII. Conflicts of Interest
Conflicts between the firm and its clients on proxy-related issues are rare. If Cooke & Bieler, L.P. has a material conflict of interest, the following four-step process will be used to address the conflict. The first step is to identify those issuers where Cooke & Bieler has a significant business or personal/family relationship that could give rise to a conflict of interest. The second step is to identify those proxy proposals where the conflict of interest may be material. The third
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step is to identify whether Glass Lewis also has a conflict of interest. If Glass Lewis does not have a conflict of interest, we will vote according to Glass Lewis. If Glass Lewis does have a conflict of interest we will identify another unaffiliated third party to vote the proposals according to. The fourth step is to document the conflict of interest and the resolution of the conflict.
(1) Identifying Those Issuers with which Cooke & Bieler May Have a Conflict of Interest
Cooke & Bieler will identify issuers with which it may have a conflict of interest and maintain a list of such issuers.
a.) Significant Business Relationships – Cooke & Bieler will maintain a list of issuers with which we may have a significant business relationship, for example, where we also manage a pension plan whose management is soliciting proxies. For this purpose, a “significant business relationship” is one that: (1) represents 5% or $1,000,000 of Cooke & Bieler’s revenues for the most recent fiscal year, whichever is less, or is reasonably expected to represent this amount for the current fiscal year; or (2) may not directly involve revenue to Cooke & Bieler but is otherwise determined by us to be significant, for example:
• Cooke & Bieler has a significant relationship with a particular company which may create an incentive for Cooke & Bieler to vote in favor of management.
b.) Significant Personal/Family Relationships – Cooke & Bieler will identify issuers with which its employees who are involved in the proxy voting process may have a significant personal/family relationship. For this purpose, a “significant personal/family relationship” is one that would be reasonably likely to influence how Cooke & Bieler votes proxies. To identify any such relationships, we will obtain information on an annual basis about any significant personal/family relationship between any employees of Cooke & Bieler who is involved in the proxy voting process.
c.) Contact with Proxy Voting Employees – Cooke & Bieler will attempt to prevent employees who are not involved in the proxy voting process from trying to influence how Cooke & Bieler votes any proxy. If a person employed by Cooke & Bieler and not involved in the proxy voting process contacts anyone for the purpose of influencing how a proxy is voted, the member will immediately contact the Compliance Officer who will determine: (1) whether Cooke & Bieler should now treat the proxy in question as one involving a material conflict of interest; and (2) if so, anyone who was contacted should remove himself/herself from all further matters regarding the proxy.
d.) Duties of the Proxy Voting Employees – Cooke & Bieler has a duty to make reasonable investigation of information relating to conflicts of interest. Absent actual knowledge, we are not required to investigate possible conflicts involving Cooke & Bieler where the information is non-public or otherwise not readily available.
In connection with the consideration of any proxy voting matters under this policy, employees who vote proxies have a duty to disclose any material conflicts of interest of which the member has actual knowledge but which have not been identified pursuant to this policy.
(2) Identifying Those Proxy Proposals Where Cooke & Bieler’s Conflict is Material
If Cooke & Bieler receives a proxy relating to an issuer with which it has a conflict of interest (as determined above), Cooke & Bieler will then determine whether the conflict is “material” to any specific proposal included within the proxy. If not, then Cooke & Bieler can vote the proxy in accordance with its proxy voting procedures; if so, Cooke & Bieler will vote according to an independent third party, currently Glass Lewis, after confirming that they do not have a conflict of interest.
a.) Routine Proxy Proposals – Proxy proposals that are “routine” shall be presumed not to involve a material conflict of interest for Cooke & Bieler, unless they have actual knowledge that a routine proposal should be treated as material. For this purpose, “routine” proposals would typically include matters such as the selection of an accountant, uncontested election of directors, meeting formalities, and approval of an annual report/financial statements.
b.) Non-Routine Proxy Proposals – Proxy proposals that are “non-routine” shall be presumed to involve a material conflict of interest for Cooke & Bieler, unless the firm determines that Cooke & Bieler’s conflict is unrelated to the proposal in question. For this purpose, “non-routine” proposals would typically include any contested matter, including a contested election of directors, a merger or sale of substantial assets, a change in the articles of incorporation that materially affects the rights of shareholders, and compensation matters for management (e.g., stock option plans, retirement plans, profit sharing or other special remuneration plans).
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c.) Determining that a Non-Routine Proposal is Not Material – As discussed above, although non-routine proposals are presumed to involve a material conflict of interest, the firm may determine on a case-by-case basis that particular non-routine proposals do not involve a material conflict of interest. To make this determination, they must conclude that a proposal is not directly related to Cooke & Bieler’s conflict with the issuer. The firm shall record in writing the basis for any such determination.
(3) Determining How to Vote Proxies Involving a Material Conflict of Interest
For any proposal where Cooke & Bieler has a material conflict of interest, we will vote according to an independent third party, currently Glass Lewis, to vote the specific proposals that involve a conflict. If it is determined that the independent third party also has a conflict, we will identify another unaffiliated third party to vote the specific proposals.
These procedures are designed to ensure that all proxies are voted in the best interests of clients and not the product of the conflict.
(4) Proxy Voting Process
1. Broadridge will reroute proxy materials for our clients that were historically sent to custodian banks and incorporate that information onto the ProxyEdge system.
2. Broadridge will determine client accounts that receive ballots and match the ballots to the correct account.
3. The designated proxy person forwards all meeting material, including agenda items and Glass Lewis research as well as Taft Hartley research, to the responsible analyst for review.
4. Absent material conflicts, the responsible analyst will determine how the firm should vote the proxy in the best interest of our clients.
5. The designated proxy person will vote the proxy according to the analyst’s directions on a secure proprietary website, ProxyEdge.
6. If any physical ballots are received at our offices on behalf of our clients, these ballots will be forwarded to the designated proxy person and voted accordingly through www.proxyvote.com.
(5) Responsibilities
Broadridge is responsible for notifying Cooke & Bieler in advance of the meeting; providing the appropriate proxies to be voted; and for maintaining records of proxy statements received and votes cast.
The compliance officer is responsible for: maintaining the proxy policies and procedures; determining when a potential conflict of interest exists (see examples above); maintaining records of all communications received from clients requesting information on how their proxies were voted; and notifying clients how they can obtain voting records and policies and procedures.
The operations department is responsible for: determining which accounts Cooke & Bieler has proxy voting responsibilities for; obtaining the appropriate guidance from the portfolio manager on how to vote; and maintaining documents created that were material to the voting.
Donald Smith & Co., Inc.
Proxy Voting Policy & Procedures
I. ADOPTION OF NEW PROXY VOTING POLICY.
The Securities and Exchange Commission (SEC) adopted rule 206(4)-6 under the Investment Advisers Act of 1940, effective March 10, 2003. This new rule addresses an investment adviser’s fiduciary obligation to its clients when the adviser has authority to vote their proxies. The rule requires an investment adviser that exercises voting authority over client proxies to adopt policies and procedures reasonably designed to ensure that the adviser votes proxies in the best interest of clients, to disclose to clients information about these policies and procedures, and to disclose to clients how they may obtain information on how the adviser has voted their proxies. There are also amendments to Rule 204-2 under the Investment Advisers Act of 1940 that require advisers to maintain certain records relating to proxy voting.
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We are a Registered Investment Adviser (RIA) under the 1940 Act and are therefore subject to the above referenced rules promulgated by the SEC.
These written policies and procedures adopted July 1, 2003, and all amendments thereafter, are designed to ensure our compliance with these rules. Additionally, these policies and procedures are designed to enable us to vote in the best interests of our clients.
Our clients have full discretion over who votes proxies on behalf of their account(s). Presently, we vote proxies on behalf of the majority of our clients.
II. GENERAL VOTING POLICY.
As our primary goal is to maximize the value of our clients’ investment portfolios, we maintain a proxy voting policy that best serves the interest of our clients in their capacity as shareholders of a company. We believe this policy is in accordance with the SEC Guidelines that an investment adviser’s primary responsibility as a fiduciary is to vote in the best interest of its clients.
We normally vote in support of company management on “routine” proposals, but vote against proposals that we believe would negatively impact the long-term value of our clients’ share of a company. We vote against almost all proposals that would hinder the realization of maximum value for shareholders.
More specifically we vote for:
1. Confidential voting.
2. Shareholders must approve any poison pills or rights plan.
3. Shareholders’ right to exercise an annual non-binding approval vote on executive compensation.
4. Annual election of Directors and against staggered Boards.
5. Cumulative voting.
6. Maintaining liability of Directors for gross negligence and malfeasance.
7. Vote against large dilution of shareholders, except company specific exceptions.
8. To review carefully all mergers. We will specifically focus on mergers that dilute tangible book value and vote against those managements that engage in such acquisitive activity.
9. Proxy access for shareholders, or groups of shareholders, of significant size and length of ownership.
The examples above are provided to give a general indication on how we vote our proxies on certain issues. Thus, these examples do not address all potential voting issues or the intricacies that may surround individual proxy votes. Therefore, actual proxy votes may differ from the guidelines presented. In 2013 we initiated a subscription to ISS proxy research to aid in our research process and to use as a reference when casting our proxy votes.
III. DISCLOSURE.
This new proxy voting policy has been provided to all of our clients to satisfy certain disclosure rules imposed by Rule 206(4)-6. Additionally, any client can request and we would make available any and all details on specific proxy votes. They may contact us via any form of communication, oral or written.
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IV. CONFLICTS OF INTEREST.
We are very sensitive to conflicts of interest that could possibly arise in the proxy voting process. We remain committed to resolving any and all conflicts in the best interest of our clients. Accordingly, this proxy voting policy is adopted to serve the best interest of our clients and we will generally vote pursuant to this policy when conflicts arise.
Resolving Potential Conflicts of Interest:
Our compliance officer is responsible for identifying potential conflicts of interest in regard to the proxy voting process. Examples of potential conflicts of interest include:
• Adviser manages a pension plan, administers employee benefit plans or provides brokerage, underwriting, insurance, or banking services to a company whose manage- ment is soliciting proxies;
• Adviser has a material business relationship with a proponent of a proxy proposal and this business relationship may influence how the proxy vote is cast;
• Adviser or principals have a business or personal relationship with participants in a proxy contest, corporate directors or candidates for directorships.
In instances where a potential conflict of interest exists, the compliance officer will obtain client consent before voting. The compliance officer will provide the client with sufficient information regarding the shareholder vote and the adviser’s potential conflict so that the client can make an informed decision whether or not to consent.
V. RECORD KEEPING.
Our record keeping procedures ensure compliance with the amendments made to Rule 204-2 of the Investment Advisers Act of 1940. We retain all proxy statements received regarding client securities. We capture voting data for all clients, including a description of each proposal for which a vote was cast, identification of each proposal as either proposed by management or by shareholders, and related documents prepared by us that were material in making a decision how to vote or that memorializes the basis for that decision. Additionally, we also document all client requests for proxy voting information.
All of the above-mentioned data will be maintained in our office for a period of not less than 5 years from the end of the fiscal year during which the last entry was made or recorded.
Frontier Capital Management Company, LLC
Proxy Voting Statement and Guidelines
As an investment adviser and fiduciary of client assets, Frontier utilizes proxy voting policies and procedures intended to pursue its clients’ best interest by protecting the value of clients’ investments. Frontier recognizes that proxies have an economic value. In voting proxies, we seek to both maximize the long-term value of our clients’ assets and to cast votes that we believe to be fair and in the best interest of the affected client(s). Proxies are considered client assets and are managed with the same care, skill and diligence as all other client assets. These written proxy policies and procedures are designed to reasonably ensure that Frontier votes proxies in the best interest of clients for whom Frontier has voting authority.
Frontier’s authority to vote proxies does not extend to taking any legal action with regard to class action suits relating to securities purchased by Frontier for its clients. Frontier provides instructions to custodians and brokers regarding tender offers and rights offerings for securities in client accounts. However, Frontier does not provide legal advice to clients and, accordingly, does not determine whether a client should join, opt out of or otherwise submit a claim with respect to any legal proceedings, including bankruptcies or class actions, involving securities held or previously held by the client. Frontier generally does not have authority to submit claims or elections on behalf of clients in legal proceedings. Should a client, however, wish to retain legal counsel and/or take action regarding any class action suit proceeding, Frontier will provide the client or the client’s legal counsel with information that may be needed upon the client’s reasonable request.
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Arrangements with Outside Firms
Frontier has contracted with a third-party vendor (the “proxy vendor”) to provide vote recommendations according to a set of pre-determined proxy voting policy guidelines. Frontier has also contracted with the proxy vendor to act as agent for the proxy voting process and to maintain records on proxy voting for our clients. The vendor has represented to Frontier that it uses its best efforts to ensure that its proxy voting recommendations are in accordance with these policies as well as relevant requirements of the ERISA and the U.S. Department of Labor’s interpretations thereof.
There may be occasional circumstances in which Frontier exercises its voting discretion to deviate from the proxy vendor’s recommendation. Frontier’s action in these cases is described in the Conflicts of Interest section of these policies and procedures.
Proxy Voting Committee
Frontier has a Proxy Voting Committee (the “Committee”) that is responsible for deciding what is in the best interest of clients when determining how proxies are voted. The Committee is comprised of the Chief Compliance Officer (“CCO”), the Operations Manager, and one or more Portfolio Managers. The Committee performs the following tasks in satisfying its responsibility:
■ Reviews annually, and revises as necessary, this Proxy Voting Statement and Guidelines (the “Proxy Statement”);
■ Reviews annually all proxy votes taken to determine if those votes were consistent with the Proxy Statement, including any votes where Frontier determined it had a material conflict of interest;
■ Reviews annually the proxy vendor’s proxy voting policies to determine that they continue to be consistent with the Proxy Statement and reasonably designed to be in the best interests of Frontier’s clients; and
■ Reviews and approves as necessary any changes to the proxy vendor’s proxy voting policies.
Determination and Execution of Discretionary Authority
Except where the contract is silent, each client will designate in its investment management contract whether it would like to retain proxy voting authority or delegate that authority to Frontier. If a client contract is silent on whether the client delegates proxy voting authority to Frontier, Frontier will be implied to have proxy voting authority.
Frontier will not neglect its proxy voting responsibilities, but Frontier may abstain from voting if it deems that abstaining is in its Clients’ best interests. For example, Frontier may be unable to vote securities that have been lent by the custodian or may choose not to vote where doing so would prevent transacting in those securities for a certain period of time (referred to as “share blocking”).
Proxy Voting Process
Frontier’s Operations team (“Operations”) manages the proxy voting process. The proxy vendor provides an online portal that shows all ballots received, together with the company’s voting recommendation and the proxy vendor’s voting recommendation. Operations distributes this information, as well as any additional proxy soliciting materials (such as a company’s response to the proxy vendor’s recommendation) received by Frontier at least three days prior to the voting date, to an investment professional for deliberation. Prior to the voting date, Operations submits Frontier’s vote via the online portal, a record of which is maintained by the proxy vendor.
Investment professionals determine how Frontier votes client proxies. Absent specific client instructions, or in the event that no determination is made by the investment professional, Frontier generally votes client proxies according to recommendations made by the proxy vendor. Investment professionals wishing to deviate from these recommendations must provide the CCO with a written explanation of the reason for the deviation, and the CCO will consider potential conflicts of interest as described in greater detail below.
Any attempt to influence the proxy voting process by Issuers or others not identified in these policies and procedures must also be promptly reported to the CCO. Similarly, any Client’s attempt to influence proxy voting with respect to other Clients’ securities should be promptly reported to the CCO.
Conflicts of Interest
As noted, Frontier has adopted the proxy vendor’s proxy voting guidelines. The adoption of these proxy voting guidelines provides pre-determined policies for voting proxies and is thus designed to remove conflicts of interest.
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Examples of such conflicts are when we vote a proxy solicited by an issuer who is a client of ours or with whom we have another business or personal relationship that may affect how we vote on the issuer’s proxy. The intent of this policy is to remove any discretion that Frontier may have to interpret how to vote proxies in cases where Frontier has a material conflict of interest or the appearance of a material conflict of interest.
Although under normal circumstances Frontier is not expected to deviate from the proxy vendor’s recommendation, the CCO will monitor any situation where Frontier wishes to do so. In these situations, the CCO will consider whether Frontier has a material conflict of interest. If the CCO determines that a material conflict exists, Frontier will vote the proxy using either of the following two methods: (a) we will follow the recommendations of the proxy vendor; or (b) we will not take into consideration the relationship that gave rise to the conflict and will vote the proxy in the best interest of our clients. If the CCO determines that a material conflict does not exist, then we may vote the proxy in our discretion. The Committee reviews annually all votes cast where Frontier determined it had a material conflict of interest.
Proxy Vendor Oversight
Changes to Proxy Vendor Proxy Voting Policies and Guidelines
The proxy vendor notifies Frontier of any material changes to its proxy voting policies and guidelines. On an annual basis, the proxy vendor distributes its updated guidelines to Frontier.
New Account Setup
As part of the account setup process, Client Services will review a new investment advisory agreement to determine if Frontier has voting authority. If voting authority has been granted, Operations will provide the proxy vendor with the required instructions to set up the new account. On the following business day, Operations will review the proxy vendor’s systems to confirm the account was setup in accordance with Frontier’s instructions.
Account Reconciliations
On a periodic basis, the proxy vendor will provide Frontier with a list of Frontier clients for which the proxy vendor is voting. This is designed to ensure that the proxy vendor is voting for all clients for whom Frontier retains voting authority. In that regard, Frontier will conduct a periodic reconciliation between its records and the proxy vendor’s records.
Initial and Periodic Due Diligence of Proxy Vendors
When considering whether to retain or continue retaining Frontier’s proxy vendor to provide research or voting recommendations, Frontier will consider factors such as the following:
■ The proxy vendor’s capacity and competency to adequately analyze the matters for which the investment adviser is responsible for voting;
■ The adequacy and quality of the proxy vendor’s personnel, processes, and technology;
■ The adequacy of the proxy vendor’s process for seeking timely input from issuers and proxy vendor clients with respect to proxy voting policies, methodologies, and peer group constructions, including for “say-on-pay” votes;
■ The proxy vendor’s engagement with issuers, including the firm’s process for ensuring that it has complete and accurate information about the issuer and each particular matter, and the firm’s process, if any, for investment advisers to access the issuer’s views about the firm’s voting recommendations in a timely and efficient manner;
■ The adequacy of the proxy vendor’s disclosures regarding its sources of information and methodologies for formulating voting recommendations and, in making such recommendations;
■ The proxy vendor’s consideration of factors unique to a specific issuer or proposal when evaluating a matter subject to a shareholder vote;
■ The proxy vendor’s policies and procedures for identifying and addressing conflicts of interest;
■ The proxy vendor to update the investment adviser regarding business changes that may affect the proxy vendor’s capacity and competency to provide independent proxy voting advice or carry out voting instructions;
■ Whether the proxy vendor appropriately updates its methodologies, guidelines, and voting recommendations on an ongoing basis, including in response to feedback from issuers and their shareholders; and
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■ The proxy voting vendor’s policies and procedures to keep confidential Frontier’s non-public information, including Frontier’s intention to proxy votes.
Votes Cast Other than According to the Proxy Vendor’s Pre-Determined Policies
Frontier’s CCO, who is also the General Counsel, will periodically confirm that all documentation regarding any decisions to vote other than according to the proxy vendor’s pre-determined policies is accurate and complete.
Client Disclosure
Frontier includes a description of its policies and procedures regarding proxy voting and class actions in Part 2 of Form ADV, along with a statement that Clients can contact Frontier at 617-261-0777 to obtain a copy of these policies and procedures and information about how Frontier voted with respect to the Client’s securities. Any request for information about proxy voting or class actions should be promptly forwarded to the CCO, who will respond to any such requests.
Upon a client’s request, the proxy agent will provide Frontier with the following information:
■ the name of the issuer of the portfolio security
■ the ticker symbol of the security
■ the CUSIP of the security
■ the shareholder meeting date
■ a description of the matter voted on
■ whether the matter was proposed by the issuer or by a security holder
■ whether the account voted on the matter
■ how each proxy proposal was voted (e.g., for or against the proposal, abstain; for or withhold authority regarding election of directors)
■ whether the vote that was cast was for or against management’s recommendation
As a matter of policy, Frontier does not disclose to companies or clients how it expects to vote on upcoming proxies. Additionally, Frontier does not disclose the way it voted proxies to unaffiliated third parties without a legitimate need to know such information.
Recordkeeping
Frontier will maintain in an easily accessible place for a period of six years, the first two years in an appropriate Frontier office, the following documents (except documents maintained on Frontier’s behalf by the proxy agent as specifically noted below):
■ Frontier’s proxy voting policies and procedures and the proxy voting guidelines;
■ Proxy statements received regarding client securities, which Frontier may satisfy by relying on the proxy agent, on Frontier’s behalf, to retain a copy of each proxy statement;
■ Records of votes cast on behalf of its clients, which Frontier may satisfy by relying on the proxy agent to retain, on Frontier’s behalf, a record of the vote cast;
■ A copy of any document created by Frontier personnel that was material to making a decision on how to vote proxies on behalf of a client or that memorialized the basis for that decision; and
■ A copy of each written client request for information on how Frontier voted proxies on behalf of the client, and a copy of any written response by Frontier to any written or oral client request for information on how Frontier voted proxies on behalf of the requesting client.
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Pzena Investment Management, LLC Proxy Voting
INTRODUCTION
As a registered investment adviser and fiduciary, Pzena Investment Management, LLC (“PIM”) exercises our responsibility, where applicable, to vote in a manner that, in our judgement, is in the client’s best interest and will maximize shareholder value. The following policies and procedures have been established to ensure decision making consistent with PIM’s fiduciary responsibilities and applicable regulations under the Investment Company Act and Advisers Act.
GENERAL APPROACH
Each proxy that comes to PIM to be voted shall be evaluated in terms of what is in the best interest of our clients. We deem the best interest of clients to be that which maximizes shareholder value and yields the best economic results (e.g., higher stock prices, long-term financial health, and stability).
PIM’s standard Investment Advisory Agreement provides that until notified by the client to the contrary, PIM shall have the right to vote all proxies for securities held in that client’s account. Where PIM has voting responsibility on behalf of a client, and absent any client specific instructions, we generally follow the Voting Guidelines set forth below. These Guidelines, however, are not intended as rigid rules and do not cover all possible proxy topics. Each proxy issue will be considered individually and PIM reserves the right to evaluate each proxy vote on a case-by-case basis, as long as voting decisions reflect what is in the best interest of our clients.
In those instances where PIM does not have proxy voting responsibility, we shall forward any proxy materials to the client or to such other person as the client designates.
Proxy Voting Limitations
While PIM uses our best efforts to vote proxies, in certain circumstances it may be impractical or impossible to do so. Such instances include but are not limited to share blocking, securities lending, if PIM concludes that abstention is in our clients’ economic interests and/or the value of the portfolio holding is indeterminable or insignificant.
VOTING GUIDELINES
The following Voting Guidelines summarize PIM’s positions on various issues of concern to investors and give an indication of how portfolio securities generally will be voted. These Guidelines are not exhaustive and do not cover all potential voting issues or the intricacies that may surround individual proxy votes. Actual proxy votes may also differ from the Guidelines presented, as we will evaluate each individual proxy on its own merit.
It is also worth noting that PIM considers the reputation, experience and competence of a company’s management and board when it researches and evaluates the merits of investing in a particular security. In general, PIM has confidence in the abilities and motives of the board and management of the companies in which we invest.
1) ROUTINE BUSINESS
PIM will typically vote in accordance with the board and management on the items below and other routine issues when adequate information on the proposal is provided.
i. Change in date and place of annual meeting (if not associated with a takeover)
ii. Change in company name
iii. Approval of financial statements
iv. Reincorporation (unless to prevent takeover attempts)
v. Stock splits
vi. Amend bylaws/articles of association to bring in line with changes in local laws and regulations
PIM will oppose vague, overly broad, open-ended, or general “other business” proposals for which insufficient detail or explanation is provided or risks or consequences of a vote in favor cannot be ascertained.
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2) CAPITAL STRUCTURE
Stock Issuance
PIM will consider on a case-by-case basis all proposals to increase the issuance of common stock, considering company-specific factors that include, at a minimum:
i. Past board performance (use of authorized shares during the prior 3 years)
ii. Stated purpose for the increase
iii. Risks to shareholders of not approving the request
iv. Potential dilutive impact
PIM will generally vote for such proposals (without preemptive rights) up to a maximum of 20% more than currently issued capital over a specified period, while taking into account management’s prior use of these preemptive rights. PIM will, however, vote against such proposals if restrictions on discounts are inadequate and/or the limit on the number of times the mandate may be refreshed are not in line with local market practices.
3) AUDIT SERVICES
PIM is likely to support the approval of auditors unless,
i. Independence is compromised
ii. Non-audit (“other”) fees are greater than the sum of the audit fees1, audit-related fees2 and permissible tax fees3
iii. There is reason to believe the independent auditor has rendered an opinion which is neither accurate nor indicative of the company’s financial position
iv. Serious concerns about accounting practices are identified such as fraud, misapplication of Generally Accepted Accounting Principles (“GAAP”) and material weaknesses identified in Section 404 disclosures of the Sarbanes-Oxley Act of 2002
PIM will also apply a case-by-case assessment to shareholder proposals asking companies to prohibit their auditors from engaging in non-audit services (or capping the level of non-audit services), taking into account whether the non-audit fees are excessive (per the formula above) and whether the company has policies and procedures in place to limit non-audit services or otherwise prevent conflicts of interest.
4) COMPENSATION
PIM supports reasonable incentive programs designed to attract and retain key talent. PIM typically supports management’s discretion to set compensation for executive officers, so long as the plan aligns management and shareholder interests. PIM evaluates each plan in detail to assess whether the plan provides adequate incentive to reward long-term performance and the impact on shareholder value (e.g. dilution).
Say on Pay
PIM prefers a shareholder vote on compensation plans to provide a mechanism to register discontent with the plan itself or management team performance. As long as such proposals are non-binding and worded in a generic manner (unrestrictive to actual company plans), PIM will support them. In evaluating these proposals, PIM will generally consider, at minimum: company performance, pay practices relative to industry peers, potentially problematic pay practices and/or past unresponsive behavior.
Circumstances where PIM may oppose these proposals include:
i. Restricts the company’s ability to hire new, suitable management
ii. Restricts an otherwise responsible management team in some other way harmful to the company
Pay for Performance
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PIM generally will support plans under which 50% or more of the shares awarded to top executives are tied to performance goals. Maintaining appropriate pay-for-performance alignment means executive pay practices must be designed to attract, retain, and appropriately motivate the key employees who drive shareholder value creation over the long term. Our evaluation of this issue will take into consideration, among other factors, the link between pay and performance; the mix between fixed and variable pay; performance goals; equity-based plan costs; and dilution.
Incentive Options
PIM is generally supportive of incentive options that provide the appropriate degree of pay-for-performance alignment (as per the above) and are therefore in shareholder best interest. PIM will vote case-by-case depending on certain plan features and equity grant practices, where positive factors may counterbalance negative factors, and vice versa.
However, the following would generally cause PIM to vote against a management incentive arrangement:
i. The proposed plan is in excess of 10% of shares
ii. Company has issued 3% or more of outstanding shares in a single year in the recent past
iii. The new plan replaces an existing plan before the existing plan’s termination date and some other terms of the new plan are likely to be adverse to the maximization of investment returns
iv. The proposed plan resets options, or similarly compensates executives, for declines in a company’s stock price. This includes circumstances where a plan calls for exchanging a lower number of options with lower strike prices for an existing larger volume of options with high strike prices, even when the option valuations might be considered the same total value. However, this would not include instances where such a plan seeks to retain key executives who have been undercompensated in the past.
Golden Parachutes / Severance Agreements
PIM will vote on a case-by-case basis, considering at minimum existing change-in-control arrangements maintained with named executive officers and new or extended arrangements.
PIM will generally vote against such proposals if:
i. The proposed arrangement is excessive or not reasonable in light of similar arrangements for other executives in the company or in the company’s industry
ii. The proposed parachute or severance arrangement is considerably more financially attractive than continued employment. Although PIM will apply a case-by-case analysis of this issue, as a general rule, a proposed severance arrangement which is 3 or more times greater than the affected executive’s then current compensation shall be voted against
iii. The triggering mechanism in the proposed arrangement is solely within the recipient’s control (e.g., resignation).
Tax Deductibility
Votes to amend existing plans to increase shares reserved and to qualify for tax deductibility under the provisions of Section 162(m) should be considered on a case-by-case basis, considering the overall impact of the amendment(s).
Pay Peer Groups
PIM prefers that compensation peer groups are based on the industry not size, revenue or balance sheet.
5) BOARD
Director Elections
PIM generally will evaluate director nominees individually and as a group based on our assessment of record and reputation, business knowledge and background, shareholder value mindedness, accessibility, corporate governance abilities, time commitment, attention and awareness, independence, and character. PIM will apply a case-by-case approach to determine whether to vote for or against directors nominated by outside parties whose interests may conflict with our interests as shareholders, regardless of whether management agrees with the nomination.
Board Independence
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PIM generally will withhold votes from or vote against any insiders on audit, compensation or nominating committees, and from any insiders and affiliated outsiders on boards that are not at least majority independent. PIM also prefers companies to have compensation and audit committees composed of entirely independent directors.
PIM may vote in favor of any such directors in exceptional circumstances where the company has shown significant improvement.
Board Size
PIM believes there is no optimal size or composition that fits every company. However, PIM prefers that the number of directors cannot be altered significantly without shareholder approval; otherwise potentially allowing the size of the board to be use as an anti-takeover defense.
Board Tenure
PIM believes that any restrictions on a director's tenure, such as a mandatory retirement age or length of service limits, could harm shareholder interests by forcing experienced and knowledgeable directors off the board. However, PIM prefers that boards do not have more than 50% of members serving for longer than 10 years to avoid board entrenchment and ‘group-think’.
Chairman/CEO
PIM will evaluate and vote proposals to separate the Chairman and CEO positions in a company on a case-by-case basis based on our assessment of the strength of the company’s governing structure, the independence of the board and compliance with NYSE and NASDAQ listing requirements. When the positions of Chairman and CEO are combined, PIM prefers that the company has a lead independent director to provide some independent oversight.
Cumulative Voting
PIM will generally vote against proposals to establish cumulative voting, as this leads to misaligned voting and economic interest in a company. The one exception being PIM will vote for proposals for cumulative voting at controlled companies where insider voting power is > 50%.
Director Over-Boarding
PIM will vote such proposals on a case-by-case basis but prefers that directors do not sit on more than 3 additional boards. In evaluating these proposals PIM will consider, at minimum, management tenure, director business expertise and director performance.
Classified Boards
PIM generally opposes classified boards because this makes a change in board control more difficult and hence may reduce the accountability of the board to shareholders. However, these proposals will be evaluated on a case-by-case basis and will consider, at minimum, company and director performance.
Board Diversity
PIM is generally supportive of a diverse board (age, race, gender etc.) that is representative of its customers and stakeholders. That said, PIM does not believe in board quotas or any restrictions on director tenure that could harm shareholder interests by preventing qualified board candidates from being nominated or forcing experienced or knowledgeable directors off the board.
6) SHAREHOLDER RIGHTS
In general PIM does not support any proposals designed to limit shareholder rights; below we have outlined some of the issues we consider most important.
Special Meetings
PIM generally supports proposals enabling shareholders to call a special meeting of a company so long as at least a 15% threshold with a 1-year holding period is necessary for shareholders to do so. However, on a case-by-case basis, a 10% threshold may be deemed more appropriate should particular circumstances warrant; for example, in instances where executive compensation or governance has been an issue for a company.
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One Share, One Vote
PIM is generally opposed to proposals to create dual-class capitalization structures as these provide disparate voting rights to different groups of shareholders with similar economic investments. However, PIM will review proposals to eliminate a dual-class structure on a case-by-case basis, considering, at minimum, management’s prior record.
Supermajority
PIM does not support supermajority voting provisions with respect to corporate governance issues unless it would be in the best interest of shareholders. In general, vesting a minority with veto power over shareholder decisions could deter tender offers and hence adversely affect shareholder value.
Proxy Access
PIM will assess these proposals on a case-by-case basis but generally support proxy access proposals that include an ownership level and holding period of at least 3% for 3 years or 10% for 1 year.
7) SOCIAL/ENVIRONMENTAL
PIM will consider environmental and social proposals on their own merits and make a case-by-case assessment. PIM will consider supporting proposals that address material issues if the we believe they will protect and/or enhance the long-term value of the company.
8) ANTI-TAKEOVER
PIM generally supports anti-takeover measures that are in the best interest of shareholders and does not support anti-takeover measures such as poison pills that entrench management and/or thwart maximization of investment returns.
ROLES & RESPONSIBILITIES
Role of ISS
PIM has engaged Institutional Shareholder Services (“ISS”) to provide a proxy analysis with research and a vote recommendation for each shareholder meeting of the companies in our client portfolios. They also vote, record and generate a voting activity report for our clients and assist us with recordkeeping and the mechanics of voting. In no circumstance shall ISS have the authority to vote proxies except in accordance with standing or specific instructions given to it by PIM. PIM retains responsibility for instructing ISS how to vote, and we still apply our own Voting Guidelines as set forth herein. If PIM does not issue instructions for a particular vote, the default is for ISS to mark the ballots in accordance with these Voting Guidelines (when they specifically cover the item being voted on), and to refer all other items back to PIM for instruction (when there is no PIM policy covering the vote).
Where a new client has funded its account by delivering a portfolio of securities for PIM to liquidate and the record date to vote a proxy for one of those securities falls on a day when we are temporarily holding the position (because we were still executing or waiting for settlement), we will vote the shares. For these votes only, we will defer to ISS’ recommendations, since we will not have firsthand knowledge of the companies and cannot devote research time to them.
Role of Analyst
The analyst who is responsible for covering the company also votes the associated proxies since they have first-hand in-depth knowledge of the company. In evaluating proxy issues, the analyst will utilize a variety of sources to help come to a decision:
i. Information gathered through in-depth research and on-going company analyses performed by our investment team in making buy, sell and hold decisions for our client portfolios. This process includes regular external engagements with senior management of portfolio companies and internal discussions with Portfolio Managers (“PMs”) and the Chief Investment Officer (“CIO”), as needed.
ii. ISS reports to help identify and flag factual issues of relevance and importance.
iii. Information from other sources, including the management of a company presenting a proposal, shareholder groups, and other independent proxy research services.
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iv. Where applicable, any specific guidelines designated in writing by a client.
Proxy Voting Committee
To help make sure that PIM votes client proxies in accordance with our fiduciary obligation to maximize shareholder value, we have established a Proxy Voting Committee (“the Committee”) which is responsible for overseeing the Voting Guidelines. The Committee consists of representatives from Legal and Research, including our Chief Compliance Officer (“CCO”), Director of Research (“DOR”), and at least one PM (who represents the interests of all PIM’s portfolio managers and is responsible for obtaining and expressing their opinions at committee meetings). The Committee will meet at least once annually and as often as necessary to oversee our approach to proxy voting.
The DOR is responsible for monitoring the analyst’s compliance with the Voting Guidelines, the CCO is responsible for monitoring overall compliance with these procedures and an internally-designated “Proxy Coordinator” is responsible for day-to-day proxy voting activities.
CONFLICTS OF INTEREST
PIM is sensitive to conflicts of interest that may arise in the proxy voting process. PIM believes that application of the Voting Guidelines should, in most cases, adequately address any potential conflicts of interest. However, if an actual or potential conflict of interest has been identified, PIM has put in place a variety of different mitigation strategies as outlined below.
Role of ISS
In the following instances, PIM will have no discretion to vote any portion of the proxy, but will instead defer to the recommendations of ISS and will vote strictly according to those recommendations:
i. PIM manages any pension or other assets affiliated with a publicly traded company, and also holds that company’s or an affiliated company’s securities in one or more client portfolios.
ii. PIM has a client relationship with an individual who is a corporate director, or a candidate for a corporate directorship of a public company whose securities are in one or more client portfolios
iii. A PIM officer, director or employee, or an immediate family member thereof is a corporate director, or a candidate for a corporate directorship of a public company whose securities are in one or more client portfolios. For purposes hereof, an immediate family member shall be a spouse, child, parent, or sibling.
On an annual basis, we will review the conflicts policies and Code of Conduct that ISS posts on its website.
In the extraordinary event that it is determined – by unanimous vote of the DOR, the Chief Executive Officer (“CEO”), and the analyst covering a particular company – the ISS recommendation on a particular proposal is materially adverse to the best interest of the clients, then the following alternative conflict resolution procedures will be followed:
i. A designated member of PIM’s client service team will notify each client who holds the securities of the company soliciting the vote on such proposal, and for whom PIM has authority to vote proxies, and disclose all of the facts pertaining to the vote (including, PIM’s conflict of interest, the ISS recommendation, and PIM’s recommendation).
ii. The client then will be asked to direct PIM how to vote on the issue. If a client does not give any direction to PIM within 3 business days of delivery of such disclosure, PIM will be free to vote such client’s proxy in the manner it deems to be in the best interest of the client.
Other Situations
Client Conflict
Where PIM manages the assets of a proponent of a shareholder proposal for a company whose securities are in one or more client portfolios, the following guidance should be followed:
i. The identity of the proponent of a shareholder proposal shall not be given any substantive weight (either positive or negative) and shall not otherwise influence an analyst’s determination whether a vote for or against a proposal is in the best interest of our clients.
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ii. Where PIM determines that it is in the best interest of our clients to vote against that proposal, a designated member of PIM’s client service team will notify the client-proponent and give that client the option to direct PIM in writing to vote the client’s proxy differently than it is voting the proxies of our other clients.
iii. If the proponent of a shareholder proposal is a PIM client whose assets under management with PIM constitute 30% or more of PIM’s total assets under management, and PIM has determined that it is in the best interest of our clients to vote for that proposal, PIM will disclose its intention to vote for such proposal to each additional client who also holds the securities of the company soliciting the vote on such proposal and for whom PIM has authority to vote proxies. If a client does not object to the vote within 3 business days of delivery of such disclosure, PIM will be free to vote such client’s proxy as stated in such disclosure.
Analyst Conflict
If the analyst voting the proxy also beneficially owns shares of the company in his/her personal trading accounts, they must notify the Proxy Coordinator and the DOR must sign off on the analyst’s votes for that company. It is the responsibility of each analyst to disclose such personal interest and obtain such approval. Any other owner, partner, officer, director, or employee of the PIM who has a personal or financial interest in the outcome of the vote is prohibited from attempting to influence the proxy voting decision of PIM personnel responsible for voting client securities.
VOTING PROCEDURES
If an analyst desires to vote contrary to the Voting Guidelines set forth in this proxy voting policy or the written proxy voting policy designated by a specific client, the analyst will discuss the vote with the CIO, and/or DOR and/or a PM for the strategy in which the security is held. The CIO, DOR and/or the PM, shall, in turn, determine how to vote the proxy based on the analyst’s recommendation and the long-term economic impact such vote will have on the securities held in client accounts. If the CIO, DOR and/or the PM agree with the analyst’s recommendation and determine that a contrary vote is advisable the analyst will provide written documentation of the reasons for the vote.
Vote Processing
It is understood that PIM’s and ISS’ ability to commence voting proxies for new or transferred accounts is dependent upon the actions of custodian’s and banks in updating their records and forwarding proxies. PIM will not be liable for any action or inaction by any Custodian or bank with respect to proxy ballots and voting.
Client Communication
PIM will include a copy of these proxy voting policies and procedures, as they may be amended from time to time, in each new account pack sent to prospective clients. We also will update our ADV disclosures regarding these policies and procedures to reflect any material additions or other changes to them, as needed. Such ADV disclosures will include an explanation of how to request copies of these policies and procedures as well as any other disclosures required by Rule 206(4)-6 of the Advisers Act.
Return Proxies
The CCO or designee shall send or cause to be sent (or otherwise communicate) all votes to the company or companies soliciting the proxies within the applicable time period designated for return of such votes.
CORPORATE ACTIONS
PIM is responsible for monitoring both mandatory (e.g. calls, cash dividends, exchanges, mergers, spin-offs, stock dividends and stock splits) and voluntary (e.g. rights offerings, exchange offerings, and tender offers) corporate actions. Operations personnel will ensure that all corporate actions received are promptly reviewed and recorded in PIM’s portfolio accounting system, and properly executed by the custodian banks for all eligible portfolios. On a daily basis, a file of PIM’s security database is sent to a third-party service, Vantage, via an automated upload which then provides corporate action information for securities included in the file. This information is received and acted upon by the Operations personnel responsible for corporate action processing. In addition, PIM receives details on voluntary and mandatory corporate actions from the custodian banks via email or online system and all available data is used to properly understand each corporate event.
Voluntary Corporate Actions
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The Portfolio Management team is responsible for providing guidance to Operations on the course of action to be taken for each voluntary corporate action received. In some instances, the Portfolio Management team may maintain standing instructions on particular event types. As appropriate, Legal and Compliance may be consulted to determine whether certain clients may participate in certain corporate actions. Operations personnel will then notify each custodian bank, either through an online interface, via email, or with a signed faxed document of the election selected. Once all necessary information is received and the corporate action has been vetted, the event is processed in the portfolio accounting system and filed electronically. A log of holdings information related to the corporate action is maintained for each portfolio in order to confirm accuracy of processing.
CLASS ACTIONS
PIM shall not have any responsibility to initiate, consider or participate in any bankruptcy, class action or other litigation against or involving any issue of securities held in or formerly held in a client account or to advise or take any action on behalf of a client or former client with respect to any such actions or litigation.
RECORD KEEPING
PIM or ISS, on PIM’s behalf, maintains (i) copies of the proxy materials received by PIM for client securities; (ii) records of proxies that were not received and what actions were taken to obtain them; (iii) votes cast on behalf of clients by account; (iv) records of any correspondence made regarding specific proxies and the voting thereof; (v) client requests for proxy voting information (including reports to mutual fund clients for whom PIM has proxy voting authority containing information they need to satisfy their annual reporting obligations under Rule 30b-1-4 and to complete Form N-PX); (vi) documents prepared by PIM to inform and/or memorialize a voting decision, including these policies and procedures and any documentation related to a material conflict of interest; (vii) records of any deviations from broad Voting Guidelines. Such records will be maintained for a minimum of five years.
POLICY REVIEW
The Proxy Voting Committee reviews these Voting Guidelines and procedures at least annually and makes such changes as it deems appropriate, considering current trends and developments in corporate governance and related issues, as well as operational issues facing PIM.
1 Audit fees shall mean fees for statutory audits, comfort letters, attest services, consents, and review of filings with the SEC
2 Audit-related fees shall mean fees for employee benefit plan audits, due diligence related to M&A, audits in connection with acquisitions, internal control reviews, consultation on financial accounting and reporting standards
3 Tax fees shall mean fees for tax compliance (tax returns, claims for refunds and tax payment planning) and tax consultation and planning (assistance with tax audits and appeals, tax advice relating to M&A, employee benefit plans and requests for rulings or technical advice from taxing authorities)
Schroders Proxy Voting Policy Summary
Proxy Voting General Principles
Schroders will evaluate and usually vote for or against all proxy requests relating to securities held in any account managed by Schroders (unless this responsibility has been retained by the client).
Proxies will be treated and evaluated with the same attention and investment skill as the trading of securities in the accounts.
Proxies will be voted in a manner that is deemed most likely to protect and enhance the longer-term value of the security as an asset to the account.
Corporate Governance Committee
The Corporate Governance Committee for the Schroders Group consists of investment professionals and other officers and coordinates with Schroders to ensure compliance with this proxy voting policy. The Committee meets on a periodic basis to review proxies voted, policy guidelines and to examine any issues raised, including a review of any votes cast in connection with controversial issues.
The procedure for evaluating proxy requests is as follows:
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The Schroders’ Group Corporate Governance Team (the “Team”) provides an initial evaluation of the proxy request, seeks advice where necessary, especially from the U.S. small cap and mid cap product heads, and consults with portfolio managers who have invested in the company should a controversial issue arise.
When coordinating proxy-voting decisions, the Team generally adheres to the Group Environmental, Social & Governance Policy (the “Policy”), as revised from time to time. The Policy, which has been approved by the Corporate Governance Committee, sets forth Schroder Group positions on recurring issues and criteria for addressing non-recurring issues. The Corporate Governance Committee exercises oversight to assure that proxies are voted in accordance with the Policy and that any votes inconsistent with the Policy or against management are appropriately documented.
The Team uses Institutional Shareholder Services, Inc. (“ISS”) to assist in voting proxies. ISS provides proxy research, voting and vote-reporting services. ISS’s primary function is to apprise the Team of shareholder meeting dates of all securities holdings, translate proxy materials received from companies, provide associated research and provide considerations and recommendations for voting on particular proxy proposals. Although Schroders may consider ISS’s and others’ recommendations on proxy issues, Schroders bears ultimate responsibility for proxy voting decisions.
Schroders may also consider the recommendations and research of other providers, including the National Association of Pension Funds’ Voting Issues Service.
Conflicts
From time to time, proxy voting proposals may raise conflicts between the interests of Schroders’ clients and the interests of Schroders and/or its employees. Schroders has adopted this policy and procedures to ensure that decisions to vote the proxies are based on the clients’ best interests.
For example, conflicts of interest may arise when:
• Proxy votes regarding non-routine matters are solicited by an issuer that, directly or indirectly, has a client relationship with Schroders;
• A proponent of a proxy proposal has a client relationship with Schroders;
• A proponent of a proxy proposal has a business relationship with Schroders;
• Schroders has business relationships with participants in proxy contests, corporate directors or director candidates.
Schroders is responsible for identifying proxy voting proposals that may present a material conflict of interest. If Schroders receives a proxy relating to an issuer that raises a conflict of interest, the Team shall determine whether the conflict is “material” to any specific proposal included within the proxy. Schroders (or the Team on behalf of Schroders) will determine whether a proposal is material as follows:
• Routine Proxy Proposals: Proxy proposals that are “routine” shall be presumed not to involve a material conflict of interest unless Schroders has actual knowledge that a routine proposal should be treated as material. For this purpose, “routine” proposals would typically include matters such as uncontested election of directors, meeting formalities, and approval of an annual report/financial statements.
• Non-Routine Proxy Proposals: Proxy proposals that are “non-routine” will be presumed to involve a material conflict of interest, unless Schroders determines that neither Schroders nor its personnel have a conflict of interest or the conflict is unrelated to the proposal in question. For this purpose, “non -routine” proposals would typically include any contested matter, including a contested election of directors, a merger or sale of substantial assets, a change in the articles of incorporation that materially affects the rights of shareholders, and compensation matters for management (e.g., stock, option plans, retirement plans, profit-sharing or other special remuneration plans). If Schroders determines that there is, or may be perceived to be, a conflict of interest when voting a proxy, Schroders will address matters involving such conflicts of interest as follows:
A. If a proposal is addressed by the Policy, Schroders will vote in accordance with such Policy;
B. If Schroders believes it is in the best interests of clients to depart from the Policy, Schroders will be subject to the requirements of C or D below, as applicable;
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C. If the proxy proposal is (1) not addressed by the Policy or (2) requires a case-by-case determination, Schroders may vote such proxy as it determines to be in the best interest of clients, without taking any action described in D below, provided that such vote would be against Schroders’ own interest in the matter (i.e., against the perceived or actual conflict). The rationale of such vote will be memorialized in writing; and
D. If the proxy proposal is (1) not addressed by the Policy or (2) requires a case-by-case determination, and Schroders believes it should vote in a way that may also benefit, or be perceived to benefit, its own interest, then Schroders must take one of the following actions in voting such proxy: (a) vote in accordance with ISS’ recommendation; (b) in exceptional cases, inform the client(s) of the conflict of interest and obtain consent to vote the proxy as recommended by Schroders; or (c) obtain approval of the decision from the Chief Compliance Officer and the Chief Investment Officer (the rationale of such vote will be memorialized in writing). Where the director of a company is also a director of Schroders plc, Schroders will vote in accordance with ISS’ recommendation.
Voting Coverage
Schroders recognizes its responsibility to make considered use of voting rights. The overriding principle governing our approach to voting is to act in line with its fiduciary responsibilities in what we deem to be the interests of its clients.
Schroders normally hopes to support company management; however, it will withhold support or oppose management if it believes that it is in the best interests of its clients to do so.
Schroders votes on a variety of resolutions; however, the majority of resolutions target specific corporate governance issues which are required under local stock exchange listing requirements, including but not limited to: approval of directors, accepting reports and accounts, approval of incentive plans, capital allocation, reorganizations and mergers. Schroders does vote on both shareholder and management resolutions.
Schroders Corporate Governance specialists assess resolutions, applying its voting policy and guidelines (as outlined in its Environmental, Social and Governance Policy) to each agenda item. These specialists draw on external research, such as the Investment Association’s Institutional Voting Information Services, the Institutional Shareholder Services (ISS), and public reporting.
Schroders’ own research is also integral to our process and this will be conducted by both our investment and ESG analysts. Corporate Governance specialists will consult with the relevant analysts and portfolio managers to seek their view and better understand the corporate context. The final decision will reflect what investors and Corporate Governance specialists believe to be in the best long-term interest of their client. When voting, where there is insufficient information with which to make a voting decision Schroders may not vote.
In order to maintain the necessary flexibility to meet client needs, local offices of Schroders may determine a voting policy regarding the securities for which they are responsible, subject to agreement with clients as appropriate, and/or addressing local market issues. Both Japan and Australia have these.
Schroders UK Stewardship Code Statement outlines its approach in this area in more detail for all of its international holdings and is publicly available.
TimesSquare Capital Proxy Voting Policies and Procedures
Responsibility:
1. Chief Compliance Officer
2. Proxy Voting Committee
3. Analysts and Portfolio Managers
4. Third-Party Proxy Service Provider
Discussion:
1. Compliance identifies those clients for which TimesSquare Capital has been instructed to vote proxies. Each client typically identifies in their investment management contract whether they would like to retain proxy voting authority or delegate that authority to TimesSquare Capital. However, if requested, TimesSquare Capital will also honor a client’s written direction on voting proxies. As described below, TimesSquare Capital has developed pre-determined proxy
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voting guidelines that are executed by an independent, third-party proxy voting service. Certain clients direct TimesSquare Capital to vote proxies using pre-determined guidelines provided by organizations such as the AFL-CIO. TimesSquare Capital coordinates the use of such guidelines with its third-party proxy voting service.
2. TimesSquare Capital has a Proxy Voting Committee, which meets at least annually to review and consider the third-party voting service’s performance and review potential changes to TimesSquare Capital’s own policies. The Committee also meets on an as needed basis to review any material conflicts of interest or any special factors or circumstances that require the Committee’s review. The Committee will also periodically review a list of clients for which TimesSquare Capital is not responsible to vote. The Proxy Voting Committee is comprised of the Chief Executive Officer, the Senior Vice President of Operations, the Chief Compliance Officer and a Senior Investment Analyst.
3. As noted above, TimesSquare Capital has developed pre-determined proxy voting guidelines that are executed by an independent, third-party proxy voting service. The pre-determined guidelines are developed through consultation with the key proxy voting decision makers, that is, analysts and portfolio managers, and are reviewed and approved annually by the Proxy Voting Committee.
To address potential material conflicts of interest between the interests of TimesSquare Capital and its affiliates and the interests of TimesSquare Capital's clients, TimesSquare Capital adheres to pre-determined proxy voting guidelines that are approved by the Proxy Voting Committee. Proposals to vote in a manner inconsistent with the pre-determined guidelines must be approved by the Proxy Voting Committee. The Guidelines are available from the Chief Compliance Officer.
4. Proxy voting guidelines have been developed to protect/improve shareholder value through protection of shareholder rights, and prevention of excessive and unwarranted compensation for companies' directors, management, and employees.
5. Compliance is responsible for ensuring that all proxy ballots are voted, and are voted in accordance with policies and procedures described in this policy. The mechanics, administration, and record keeping of proxy voting are handled by an independent, third-party proxy voting service. All proxy materials are directed to an independent, third-party proxy voting service by the portfolios' custodians. The independent, third-party proxy voting service votes proxies in accordance with voting guidelines and instructions provided or used by TimesSquare Capital, reconciles all ballots held on record date to shares voted, and maintains records of, and upon request provides, quarterly or annual reports on how each portfolio has voted its proxies.
6. TimesSquare Capital will make reasonable efforts to vote client proxies in accordance with the Proxy Voting Committee’s recommendation. TimesSquare Capital will generally decline to vote a proxy if voting the proxy would cause a restriction to be placed on TimesSquare Capital’s ability to trade securities held in client accounts in “share blocking” countries. Accordingly, TimesSquare Capital may abstain from votes in a share blocking country in favor of preserving its ability to trade any particular security at any time. In addition, TimesSquare Capital may own Participation Notes (“P- notes”) which represent securities listed on the Indian stock market that are available to non-India based investors. Such securities do not have proxy voting rights as the underlying securities are held with the broker, not TimesSquare Capital. TimesSquare Capital will also be unable to vote proxies for any securities on loan in a client’s securities lending program.
7. Using voting guidelines provided by TimesSquare Capital, the independent, third-party proxy voting service alerts Compliance of proxy ballot issues for consideration on a case-by-case basis. After consulting with analysts and portfolio managers, Compliance presents voting recommendations on such ballots to the Proxy Voting Committee, which reviews and approves/disapproves recommendations.
8. Compliance is responsible for reporting exceptions and/or non-routine or new matters to the Proxy Voting Committee. Compliance also provides the Committee with reports that provide an overview of voting results.
9. In the case of sub-advised accounts, TimesSquare Capital shall, unless otherwise directed by the account, be responsible for voting proxies.
10. Oversight
On a periodic basis, TimesSquare Capital monitors the third-party voting service to ensure that it continues to vote according to its guidelines and continues to monitor for any potential material conflicts of interest. TimesSquare Capital will also periodically verify that the third-party voting service is voting for those clients for which TimesSquare Capital has communicated to the third-party voting service that it has voting authority.
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TimesSquare Capital will also periodically conduct due diligence over the third-party voting service’s operations, including evaluating any relationship the third-party voting service has with issuers, reviewing the third-party voting service’s conflict resolution procedures, and otherwise reviewing its practices to ensure the integrity of the Proxy Voting process, and to ensure that TimesSquare Capital has a thorough understanding of the third-party voting service’s business.
On a periodic basis, TimesSquare Capital will confirm that clients’ custodians are timely alerting the third-party voting service when accounts are set up at the custodian for the third-party voting service to begin voting TimesSquare Capital’s clients’ securities and that they are forwarding all proxy materials pertaining to the clients’ portfolios to the third-party voting service for execution.
11. Clients may obtain information about how TimesSquare Capital voted proxies for securities held in their account(s) by contacting TimesSquare Capital.
12. Upon request, TimesSquare Capital will provide its clients with a description of TimesSquare Capital’s proxy voting policy and procedures. In addition, TimesSquare Capital also discloses information regarding its proxy voting procedures in its Form ADV Part 2A.
Victory Capital’s Proxy Voting Policies and Procedures
To assist Victory Capital in making proxy-voting decisions, Victory Capital has adopted a Proxy Voting Policy (“Policy”) that establishes voting guidelines (“Proxy Voting Guidelines”) with respect to certain recurring issues. The Policy is reviewed on an annual basis by Victory Capital’s Proxy Committee (“Proxy Committee”) and revised when the Committee determines that a change is appropriate. The Board annually reviews the Trust’s Proxy Voting Policy and Victory Capital’s Policy and determines whether amendments are necessary or advisable.
Voting under Victory Capital’s Policy may be executed through administrative screening per established guidelines with oversight by the Proxy Committee or upon vote by a quorum of the Proxy Committee. Victory Capital delegates to Institutional Shareholder Services (“ISS”), an independent service provider, the non-discretionary administration of proxy voting for the Trust, subject to oversight by Victory Capital’s Proxy Committee. In no circumstances shall ISS have the authority to vote proxies except in accordance with standing or specific instructions given to it by Victory Capital.
Victory Capital votes proxies in the best interests of the Funds and their shareholders. This entails voting client proxies with the objective of increasing the long-term economic value of Fund assets. Victory Capital’s Proxy Committee determines how proxies are voted by following established guidelines, which are intended to assist in voting proxies and are not considered to be rigid rules. The Proxy Committee is directed to apply the guidelines as appropriate. On occasion, however, a contrary vote may be warranted when such action is in the best interests of the Funds or if required by the Board or the Funds’ Proxy Voting Policy. In such cases, Victory Capital may consider, among other things:
• the effect of the proposal on the underlying value of the securities
• the effect on marketability of the securities
• the effect of the proposal on future prospects of the issuer
• the composition and effectiveness of the issuer’s board of directors
• the issuer’s corporate governance practices
• the quality of communications from the issuer to its shareholders
Victory Capital may also take into account independent third-party, general industry guidance or other corporate governance review sources when making decisions. It may additionally seek guidance from other senior internal sources with special expertise on a given topic where it is appropriate. The investment team’s opinion concerning the management and prospects of the issuer may be taken into account in determining whether a vote for or against a proposal is in a Fund’s best interests. Insufficient information, onerous requests or vague, ambiguous wording may indicate that a vote against a proposal is appropriate, even when the general principal appears to be reasonable.
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The following examples illustrate Victory Capital’s policy with respect to some common proxy votes. This summary is not an exhaustive list of all the issues that may arise or of all matters addressed in the Guidelines, and whether Victory Capital supports or opposes a proposal will depend upon the specific facts and circumstances described in the proxy statement and other available information.
Directors
• Victory Capital generally supports the election of directors in uncontested elections, except when there are issues of accountability, responsiveness, composition, and/or independence.
• Victory Capital generally supports proposals for an independent chair taking into account factors such as the current board leadership structure, the company’s governance practices, and company performance.
• Victory Capital generally supports proxy access proposals that are in line with the market standards regarding the ownership threshold, ownership duration, aggregation provisions, cap on nominees, and do not contain any other unreasonably restrictive guidelines.
• Victory Capital reviews contested elections on a case-by-case basis taking into account such factors as the company performance, particularly the long-term performance relative to the industry; the management track record; the nominee qualifications and compensatory arrangements; the strategic plan of the dissident and its critique of the current management; the likelihood that the proposed goals and objectives can be achieved; the ownership stakes of the relevant parties; and any other context that is particular to the company and the nature of the election.
Capitalization & Restructuring
• Victory Capital generally supports capitalization proposals that facilitate a corporate transaction that is also being supported and for general corporate purposes so long as the increase is not excessive and there are no issues of superior voting rights, company performance, previous abuses of capital, or insufficient justification for the need for additional capital.
Mergers and Acquisitions
• Victory Capital reviews mergers and acquisitions on a case-by-case basis to balance the merits and drawbacks of the transaction and factors such as valuation, strategic rationale, negotiations and process, conflicts of interest, and the governance profile of the company post-transaction.
Compensation
• Victory Capital reviews all compensation proposals for pay-for-performance alignment, with emphasis on long-term shareholder value; arrangements that risk pay for failure; independence in the setting of compensation; inappropriate pay to non-executive directors, and the quality and rationale of the compensation disclosure.
• Victory Capital will generally vote FOR advisory votes on executive compensation (“say on pay”) unless there is a pay-for-performance misalignment; problematic pay practice or non-performance based element; incentive for excessive risk-taking, options backdating; or a lack of compensation committee communication and/or responsiveness to shareholder concerns.
• Victory Capital will vote case-by-case on equity based compensation plans taking into account factors such as the plan cost; the plan features; and the grant practices as well as any overriding factors that may have a significant negative impact on shareholder interests.
Social and Environmental Issues
• Victory Capital will vote case-by-case on topics such as consumer and product safety; environment and energy; labor standards and human rights; workplace and board diversity; and corporate and political issues, taking into account factors such as the implementation of the proposal is likely to enhance or protect shareholder value; whether the company has already responded in an appropriate and sufficient manner to the issue raised; whether the request is unduly burdensome; and whether the issue is more appropriately or effectively handled through legislation or other regulations.
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Victory Capital may also take into account independent third-party, general industry guidance or other corporate governance review sources when making decisions. It may additionally seek guidance from other senior internal sources with special expertise on a given topic where it is appropriate. The investment team’s opinion concerning the management and prospects of the issuer may be taken into account in determining whether a vote for or against a proposal is in a Fund’s best interests. Insufficient information, onerous requests or vague, ambiguous wording may indicate that a vote against a proposal is appropriate, even when the general principal appears to be reasonable.
Occasionally, conflicts of interest arise between Victory Capital’s interests and those of a Fund or another client. When this occurs, the Proxy Committee must document the nature of the conflict and vote the proxy in accordance with the Proxy Voting Guidelines unless such guidelines are judged by the Proxy Committee to be inapplicable to the proxy matter at issue. In the event that the Proxy Voting Guidelines are inapplicable or do not mitigate the conflict, Victory Capital will seek the opinion of Victory Capital’s Chief Compliance Officer or consult with an external independent adviser. In the case of a Proxy Committee member having a personal conflict of interest (e.g. a family member is on the board of the issuer), such member will abstain from voting. Finally, Victory Capital reports to the Board annually any proxy votes that took place involving a conflict, including the nature of the conflict and the basis or rationale for the voting decision made.
Wellington Management Global Proxy Policy and Procedures
Wellington Management has adopted and implemented policies and procedures that it believes are reasonably designed to ensure that proxies are voted in the best interests of clients for whom it exercises proxy-voting discretion.
Wellington Management’s Proxy Voting Guidelines (the “Guidelines”) set forth broad guidelines and positions on common proxy issues that Wellington Management uses in voting on proxies. In addition, Wellington Management also considers each proposal in the context of the issuer, industry and country or countries in which the issuer’s business is conducted. The Guidelines are not rigid rules and the merits of a particular proposal may cause Wellington Management to enter a vote that differs from the Guidelines. Wellington Management seeks to vote all proxies with the goal of increasing long-term client value and, while client investment strategies may differ, applying this common set of guidelines is consistent with the investment objective of achieving positive long-term investment performance for each client.
Statement of Policy
Wellington Management:
1) Votes client proxies for which clients have affirmatively delegated proxy-voting authority, in writing, unless it has arranged in advance with the client to limit the circumstances in which it would exercise voting authority or determines that it is in the best interest of one or more clients to refrain from voting a given proxy.
2) Votes all proxies in the best interests of the client for whom it is voting.
3) Identifies and resolves all material proxy-related conflicts of interest between the firm and its clients in the best interests of the client.
Responsibility and Oversight
The Investment Research Group (“Investment Research”) monitors regulatory requirements with respect to proxy voting and works with the firm’s Legal and Compliance Group and the Investment Stewardship Committee to develop practices that implement those requirements. Investment Research also acts as a resource for portfolio managers and research analysts on proxy matters as needed. Day-to-day administration of the proxy voting process is the responsibility of Investment Research. The Investment Stewardship Committee is responsible for oversight of the implementation of the Global Proxy Policy and Procedures, review and approval of the Guidelines, identification and resolution of conflicts of interest, and for providing advice and guidance on specific proxy votes for individual issuers. The Investment Stewardship Committee reviews the Global Proxy Policy and Procedures annually.
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Procedures
Use of Third-Party Voting Agent
Wellington Management uses the services of a third-party voting agent for research, voting recommendations, and to manage the administrative aspects of proxy voting. The voting agent processes proxies for client accounts, casts votes based on the Guidelines and maintains records of proxies voted. Wellington Management complements the research received by its primary voting agent with research from another voting agent.
Receipt of Proxy
If a client requests that Wellington Management votes proxies on its behalf, the client must instruct its custodian bank to deliver all relevant voting material to Wellington Management or its voting agent.
Reconciliation
Each public security proxy received by electronic means is matched to the securities eligible to be voted and a reminder is sent to any custodian or trustee that has not forwarded the proxies as due. This reconciliation is performed at the ballot level. Although proxies received for private securities, as well as those received in non- electronic format, are voted as received, Wellington Management is not able to reconcile these ballots, nor does it notify custodians of non-receipt.
Research
In addition to proprietary investment research undertaken by Wellington Management investment professionals, Investment Research conducts proxy research internally, and uses the resources of a number of external sources including third-party voting agents to keep abreast of developments in corporate governance and of current practices of specific companies.
Proxy Voting
Following the reconciliation process, each proxy is compared against the Guidelines, and handled as follows:
■ Generally, issues for which explicit proxy voting guidance is provided in the Guidelines (i.e., “For”, “Against”, “Abstain”) are voted in accordance with the Guidelines.
■ Issues identified as “case-by-case” in the Guidelines are further reviewed by Investment Research. In certain circumstances, further input is needed, so the issues are forwarded to the relevant research analyst and/or portfolio manager(s) for their input.
■ Absent a material conflict of interest, the portfolio manager has the authority to decide the final vote. Different portfolio managers holding the same securities may arrive at different voting conclusions for their clients' proxies.
Wellington Management reviews a subset of the voting record to ensure that proxies are voted in accordance with these Global Proxy Policy and Procedures and the Guidelines; and ensures that documentation and reports, for clients and for internal purposes, relating to the voting of proxies are promptly and properly prepared and disseminated.
Material Conflict of Interest Identification and Resolution Processes
Wellington Management’s broadly diversified client base and functional lines of responsibility serve to minimize the number of, but not prevent, material conflicts of interest it faces in voting proxies. Annually, the Investment Stewardship Committee sets standards for identifying material conflicts based on client, vendor, and lender relationships, and publishes those standards to individuals involved in the proxy voting process. In addition, the Investment Stewardship Committee encourages all personnel to contact Investment Research about apparent conflicts of interest, even if the apparent conflict does not meet the published materiality criteria. Apparent conflicts are reviewed by designated members of the Investment Stewardship Committee to determine if there is a conflict and if so whether the conflict is material.
If a proxy is identified as presenting a material conflict of interest, the matter must be reviewed by designated members of the Investment Stewardship Committee, who will resolve the conflict and direct the vote. In certain circumstances, the designated members may determine that the full Investment Stewardship Committee should convene.
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Other Considerations
In certain instances, Wellington Management may be unable to vote or may determine not to vote a proxy on behalf of one or more clients. While not exhaustive, the following are potential instances in which a proxy vote might not be entered.
Securities Lending
In general, Wellington Management does not know when securities have been lent out pursuant to a client’s securities lending program and are therefore unavailable to be voted. Efforts to recall loaned securities are not always effective, but, in rare circumstances, Wellington Management may determine voting would outweigh the benefit to the client resulting from use of securities for lending and recommend that a client attempt to have its custodian recall the security to permit voting of related proxies.
Share Blocking and Re-registration
Certain countries impose trading restrictions or requirements regarding re-registration of securities held in omnibus accounts in order for shareholders to vote a proxy. The potential impact of such requirements is evaluated when determining whether to vote such proxies.
Lack of Adequate Information, Untimely Receipt of Proxy Materials, or Excessive Costs
Wellington Management may abstain from voting a proxy when the proxy statement or other available information is inadequate to allow for an informed vote, when the proxy materials are not delivered in a timely fashion or when, in Wellington Management's judgment, the costs exceed the expected benefits to clients (such as when powers of attorney or consularization are required).
Additional Information
Wellington Management maintains records related to proxies pursuant to Rule 204-2 of the Investment Advisers Act of 1940 (the “Advisers Act”), the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and other applicable laws. In addition, Wellington Management discloses annually how it has exercised its voting rights for significant votes, as required by the EU Shareholder Rights Directive II (“SRD II”).
Wellington Management provides clients with a copy of its Global Proxy Policy and Procedures, including the Guidelines, upon written request. In addition, Wellington Management will provide specific client information relating to proxy voting to a client upon written request.
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SAI 934 092021
PART C
VANGUARD WHITEHALL FUNDS
OTHER INFORMATION
Item 28. Exhibits  
(a)
Amendment No. 81 dated February 27, 2019, is hereby incorporated by reference.
(b)
By-Laws, Amended and Restated By-Laws, filed with Post-Effective Amendment No. 89 dated February 26, 2021, is
hereby incorporated by reference.
(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 Donald Smith & Co., Inc., filed with Post-Effective Amendment No. 44 dated
February 27, 2012; for Schroder Investment Management North America Inc., filed with Post-Effective Amendment
No. 16 on June 27, 2002; for Pzena Investment Management, LLC, filed with Post-Effective Amendment No. 56 on
March 31, 2014; for Victory Capital Management Inc., filed with Post-Effective Amendment No. 70 dated
February 23, 2017; TimesSquare Capital Management, LLC, filed with Post-Effective Amendment No. 74 dated
Post-Effective Amendment No. 81 dated February 26, 2019; for Cooke & Bieler L.P., and Schroder Investment
Limited), filed with Post-Effective Amendment No. 85 dated February 27, 2020; and for Baillie Gifford Overseas Ltd.,
filed with Post-Effective No. 89 dated February 26, 2021, are hereby incorporated by reference. The Vanguard Group,
Inc., provides investment advisory services to Vanguard High Dividend Yield Index Fund, Vanguard Emerging
Markets Government Bond Index Fund, Vanguard Global Minimum Volatility Fund, Vanguard International High
Dividend Yield Index Fund, and Vanguard International Dividend Appreciation Index Fund 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 The Bank of New York Mellon, filed with Post-Effective Amendment No. 81 dated
February 27, 2019, is hereby incorporated by reference. For State Street Bank and Trust Company, filed with
Post-Effective No. 89 dated February 26, 2021, is hereby incorporated by reference. For JPMorgan Chase Bank, is
filed herewith.
(h)
Other Material Contracts, Fifth Amended and Restated Funds’ Service Agreement, filed with Post-Effective
Amendment No. 85 dated February 27, 2020, is hereby incorporated by reference. Form of Authorized Participant
Agreement, filed with Post-Effective Amendment No. 42 dated February 24, 2011, is hereby incorporated by
reference.
(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.
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(p)
Code of Ethics, for Cooke & Bieler, L.P., filed with Post-Effective Amendment No. 85 dated February 27, 2020; and
Amendment No. 89 dated February 26, 2021, are hereby incorporated by reference. For Donald Smith & Co., Inc., is
filed herewith.
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.
Item 31. Business and Other Connections of Investment Adviser
Cooke & Bieler, L.P., (Cooke & Bieler) 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 Cooke & Bieler, 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 Frontier pursuant to the Advisers Act (SEC File No. 801-60411).
Baillie Gifford Overseas Ltd. (Baillie Gifford) is an investment adviser registered under the Advisers Act. The list required by this Item 31 of officers and directors of Baillie Gifford, 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 Baillie Gifford pursuant to the Advisers Act (SEC File No. 801-21051).
Frontier Capital Management Co., LLC, (Frontier) 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 Frontier, 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 Frontier pursuant to the Advisers Act (SEC File No. 801-15724).
Schroder Investment Management North America Inc. (Schroders), is an investment adviser registered under the Advisers Act. The list required by this Item 31 of officers and directors of Schroders 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 Schroders pursuant to the Advisers Act (SEC File No. 801-15834).
Schroder Investment Management North America Limited (Schroder Limited), is an investment adviser registered under the Advisers Act. The list required by this Item 31 of officers and directors of Schroder Limited, 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 Schroder Limited pursuant to the Advisers Act (SEC File No. 801-37163).
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Donald Smith & Co., Inc. (Donald Smith & Co.), is an investment adviser registered under the Advisers Act. The list required by this Item 31 of officers and directors of Donald Smith & Co., 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 Donald Smith & Co. pursuant to the Advisers Act (SEC File No. 801-10798).
Pzena Investment Management, LLC (Pzena), is an investment adviser registered under the Advisers Act. The list required by this Item 31 of officers and directors of Pzena, 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 Pzena pursuant to the Advisers Act (SEC File No. 801-50838).
TimesSquare Capital Management, LLC (TimesSquare Capital), is an investment adviser registered under the Advisers Act. The list required by this Item 31 of officers and directors of TimesSquare Capital, 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 TimesSquare Capital pursuant to the Advisers Act (SEC File No. 801-63492).
Victory Capital Management Inc. (Victory Capital), is an investment adviser registered under the Advisers Act. The list required by this Item 31 of officers and directors of Victory Capital, 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 Victory Capital pursuant to the Advisers Act (SEC File No. 801-46878).
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 a 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 J. Benchener
Chairman, Vice President, and Chief Executive
Officer Designee
None
Karin A. Risi
Vice President
None
Thomas M. Rampulla
Vice President
None
Michael Rollings
Vice President
Finance Director
Caroline Cosby
Vice President, Assistant Secretary, and
General Counsel
None
Matthew C. Brancato
Vice President
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
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Name
Positions and Office with Underwriter
Positions and Office with Funds
Erica Green
Chief Compliance Officer
None
Sarah Green
Anti-Money Laundering Officer
None
John T. Marcante
Chief Information Officer
None
Jayesh Gopalji
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
Vice President
Chief Financial Officer
Barbara Bock
Controller
None
Jason Botzler
Vice President
None
John Cleborne
Vice President
None
James M. Delaplane Jr.
Vice President
None
Andrew Kadjeski
Vice President
None
Amy M. Laursen
Vice President
None
Michael V. Lucci
Vice President
None
Paul M. Jakubowski
Vice President
None
John James
Vice President
None
Douglas R. Mento
Vice President
None
Jodi Miller
Vice President
None
Jim O’Rourke
Vice President
None
David Petty
Vice President
None
Monica Verma
Vice President
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, State Street Bank and Trust Company, One Lincoln Street, Boston, MA 02111, The Bank of New York Mellon, 240 Greenwich Street, New York, NY 10286, and JPMorgan Chase Bank, 383 Madison Avenue, New York, NY 10179; 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.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant 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 20th day of September, 2021.
Vanguard Whitehall 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
September 20, 2021
/s/ Emerson U. Fullwood*

Emerson U. Fullwood
Trustee
September 20, 2021
/s/ Amy Gutmann*

Amy Gutmann
Trustee
September 20, 2021
/s/ Joseph Loughrey*

Joseph Loughrey
Trustee
September 20, 2021
/s/ Mark Loughridge*

Mark Loughridge
Trustee
September 20, 2021
/s/ Scott C. Malpass*

Scott C. Malpass
Trustee
September 20, 2021
/s/ Deanna Mulligan*

Deanna Mulligan
Trustee
September 20, 2021
/s/ André F. Perold*

André F. Perold
Trustee
September 20, 2021
/s/ Sarah Bloom Raskin*

Sarah Bloom Raskin
Trustee
September 20, 2021
/s/ David Thomas*

David Thomas
Trustee
September 20, 2021
/s/ Peter F. Volanakis*

Peter F. Volanakis
Trustee
September 20, 2021
/s/ John Bendl*

John Bendl
Chief Financial Officer
September 20, 2021
*By: /s/ Anne E. Robinson
Anne E. Robinson, pursuant to a Power of Attorney filed on July 29, 2021, (see File Number 33-23444); and a Power of Attorney filed on December 18, 2020 (see File Number 33-64845), Incorporated by Reference.

  

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  

  

  

  

  

  

  

  


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 Whitehall Funds of our report dated December 15, 2020, relating to the financial statements and financial highlights, which appear in Vanguard International Dividend Appreciation Index Fund's Annual Report on Form N-CSR for the year ended October 31, 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.

Philadelphia, Pennsylvania

September 16, 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

1

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

2

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

3

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

4

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.

1In 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.

5

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

6

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 20, 2020

7

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 Fund

Share Classes Authorized

 

Vanguard Admiral Funds

 

 

•

Treasury Money Market Fund

Investor

• S&P 500 Value Index Fund

Institutional, ETF

• S&P 500 Growth Index Fund

Institutional, ETF

• S&P MidCap 400 Index Fund

Institutional, ETF

• S&P MidCap 400 Value Index Fund

Institutional, ETF

•

S&P MidCap 400 Growth Index Fund

Institutional, ETF

• S&P SmallCap 600 Index Fund

Institutional, ETF

• S&P SmallCap 600 Value Index Fund

Institutional, ETF

• S&P SmallCap 600 Growth Index Fund

Institutional, ETF

Vanguard Bond Index Funds

 

 

•

Short-Term Bond Index Fund

Investor, Admiral, Institutional,

•

 

Institutional Plus, ETF

Intermediate-Term Bond Index Fund

Investor, Admiral, Institutional, Institutional

 

 

Plus, ETF

•

Long-Term Bond Index Fund

Admiral, Institutional, Institutional Plus,

 

 

ETF

• Total Bond Market Index Fund

Investor, Admiral, Institutional, Institutional

 

 

Plus, Institutional Select, ETF

• Total Bond Market II Index Fund

Investor, Institutional

•

Inflation-Protected Securities Fund

Investor, Admiral, Institutional

•

Ultra-Short Bond ETF

ETF

Vanguard California Tax-Free Funds

 

 

•

Municipal Money Market Fund

Investor

•

Intermediate-Term Tax-Exempt Fund

Investor, Admiral

•

Long-Term Tax-Exempt Fund

Investor, Admiral

Vanguard Charlotte Funds

 

 

•

Total International Bond Index Fund

Investor, Admiral, Institutional,

•

 

Institutional Select, ETF

Global Credit Bond Fund

Investor, Admiral

• Total International Bond II Index Fund

Investor, Admiral, Institutional

1

Vanguard Fund

Share Classes Authorized

Vanguard Chester Funds

 

•

PRIMECAP Fund

Investor, Admiral

• Target Retirement Income Fund

Investor

• Target Retirement 2010 Fund

Investor

• Target Retirement 2015 Fund

Investor

• Target Retirement 2020 Fund

Investor

• Target Retirement 2025 Fund

Investor

• Target Retirement 2030 Fund

Investor

• Target Retirement 2035 Fund

Investor

• Target Retirement 2040 Fund

Investor

• Target Retirement 2045 Fund

Investor

• Target Retirement 2050 Fund

Investor

• Target Retirement 2055 Fund

Investor

• Target Retirement 2060 Fund

Investor

• Target Retirement 2065 Fund

Investor

• Institutional Target Retirement Income Fund

Institutional

• Institutional Target Retirement 2010 Fund

Institutional

• Institutional Target Retirement 2015 Fund

Institutional

• Institutional Target Retirement 2020 Fund

Institutional

• Institutional Target Retirement 2025 Fund

Institutional

• Institutional Target Retirement 2030 Fund

Institutional

• Institutional Target Retirement 2035 Fund

Institutional

• Institutional Target Retirement 2040 Fund

Institutional

• Institutional Target Retirement 2045 Fund

Institutional

• Institutional Target Retirement 2050 Fund

Institutional

• Institutional Target Retirement 2055 Fund

Institutional

• Institutional Target Retirement 2060 Fund

Institutional

• Institutional Target Retirement 2065 Fund

Institutional

Vanguard Explorer Fund

Investor, Admiral

Vanguard Fenway Funds

 

•

Equity Income Fund

Investor, Admiral

•

Growth Equity Fund

Investor

•

PRIMECAP Core Fund

Investor

Vanguard Fixed Income Securities Funds

 

•

Ultra-Short-Term Bond Fund

Investor, Admiral

•

Real Estate II Index Fund

Institutional Plus

•

Short-Term Treasury Fund

Investor, Admiral

•

Short-Term Federal Fund

Investor, Admiral

•

Short-Term Investment-Grade Fund

Investor, Admiral, Institutional

•

Intermediate-Term Treasury Fund

Investor, Admiral

•

Intermediate-Term Investment-Grade Fund

Investor, Admiral

•

GNMA Fund

Investor, Admiral

2

Vanguard Fund

Share Classes Authorized

 

•

Long-Term Treasury Fund

Investor, Admiral

•

Long-Term Investment-Grade Fund

Investor, Admiral

•

High-Yield Corporate Fund

Investor, Admiral

Vanguard Horizon Funds

 

 

•

Capital Opportunity Fund

Investor, Admiral

•

Global Equity Fund

Investor

•

Strategic Equity Fund

Investor

• Strategic Small-Cap Equity Fund

Investor

•

International Core Stock Fund

Investor, Admiral

Vanguard Index Funds

 

 

•

500 Index Fund

Investor, Admiral, Institutional Select, ETF

•

Extended Market Index Fund

Investor, Admiral, Institutional,

•

 

Institutional Plus, Institutional Select, ETF

Growth Index Fund

Investor, Admiral, Institutional, ETF

•

Large-Cap Index Fund

Investor, Admiral, Institutional, ETF

• Mid-Cap Growth Index Fund

Investor, Admiral, ETF

•

Mid-Cap Index Fund

Investor, Admiral, Institutional,

 

 

Institutional Plus, ETF

•

Mid-Cap Value Index Fund

Investor, Admiral, ETF

• Small-Cap Growth Index Fund

Investor, Admiral, Institutional, ETF

•

Small-Cap Index Fund

Investor, Admiral, Institutional,

•

 

Institutional Plus, ETF

Small-Cap Value Index Fund

Investor, Admiral, Institutional, ETF

• Total Stock Market Index Fund

Investor, Admiral, Institutional, Institutional

•

 

Plus, Institutional Select, ETF

Value Index Fund

Investor, Admiral, Institutional, ETF

Vanguard Institutional Index Funds

 

 

•

Institutional Index Fund

Institutional, Institutional Plus

• Institutional Total Stock Market Index Fund

Institutional, Institutional Plus

Vanguard International Equity Index Funds

 

 

• Emerging Markets Stock Index Fund

Investor, Admiral, Institutional,

 

 

Institutional Plus

 

FTSE Emerging Markets ETF

ETF

•

European Stock Index Fund

Investor, Admiral, Institutional,

 

 

Institutional Plus

 

FTSE Europe ETF

ETF

• FTSE All-World ex US Index Fund

Admiral, Institutional, Institutional

 

 

Plus, ETF

• Pacific Stock Index Fund

Investor, Admiral, Institutional

 

FTSE Pacific ETF

ETF

• Total World Stock Index Fund

Admiral, Institutional, ETF

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

Admiral, Institutional, ETF

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

Admiral, Institutional, ETF

3

Vanguard Fund

Share Classes Authorized

Vanguard Malvern Funds

 

• Capital Value Fund

Investor

•Short-Term Inflation-Protected Securities

•

Index Fund

Investor, Admiral, Institutional, ETF

U.S. Value Fund

Investor

•

Institutional Short-Term Bond Fund

Institutional Plus

•

Institutional Intermediate-Term Bond Fund

Institutional Plus

•

Core Bond Fund

Investor, Admiral

•

Emerging Markets Bond Fund

Investor, Admiral

Vanguard Massachusetts Tax-Exempt Funds

 

•

Massachusetts Tax-Exempt Fund

Investor

Vanguard Money Market Funds

 

• Cash Reserves Federal Money Market Fund

Admiral

•

Federal Money Market Fund

Investor

Vanguard Montgomery Funds

 

•

Market Neutral Fund

Investor, Institutional

Vanguard Municipal Bond Funds

 

•

Municipal Money Market Fund

Investor

•

Short-Term Tax-Exempt Fund

Investor, Admiral

•

Limited-Term Tax-Exempt Fund

Investor, Admiral

•

Intermediate-Term Tax-Exempt Fund

Investor, Admiral

•

Long-Term Tax-Exempt Fund

Investor, Admiral

•

High-Yield Tax-Exempt Fund

Investor, Admiral

•

Tax-Exempt Bond Index Fund

Admiral, ETF

Vanguard New Jersey Tax-Free Funds

 

•

Municipal Money Market Fund

Investor

•

Long-Term Tax-Exempt Fund

Investor, Admiral

Vanguard New York Tax-Free Funds

 

•

Municipal Money Market Fund

Investor

•

Long-Term Tax-Exempt Fund

Investor, Admiral

Vanguard Ohio Tax-Free Funds

 

•

Long-Term Tax-Exempt Fund

Investor

Vanguard Pennsylvania Tax-Free Funds

 

•

Municipal Money Market Fund

Investor

•

Long-Term Tax-Exempt Fund

Investor, Admiral

4

Vanguard Fund

Share Classes Authorized

Vanguard Quantitative Funds

 

•

Growth and Income Fund

Investor, Admiral

Vanguard Scottsdale Funds

 

•

Short-Term Treasury Index Fund

Institutional, Admiral, ETF

• Intermediate-Term Treasury Index Fund

Institutional, Admiral, ETF

•

Long-Term Treasury Index Fund

Institutional, Admiral, ETF

• Short-Term Corporate Bond Index Fund

Institutional, Admiral, ETF

• Intermediate-Term Corporate Bond Index Fund

Institutional, Admiral, ETF

• Long-Term Corporate Bond Index Fund

Institutional, Admiral, ETF

•

Mortgage-Backed Securities Index Fund

Institutional, Admiral, ETF

•

Explorer Value Fund

Investor

• Russell 1000 Index Fund

Institutional, ETF

• Russell 1000 Value Index Fund

Institutional, ETF

• Russell 1000 Growth Index Fund

Institutional, ETF

• Russell 2000 Index Fund

Institutional, ETF

• Russell 2000 Value Index Fund

Institutional, ETF

• Russell 2000 Growth Index Fund

Institutional, ETF

• Russell 3000 Index Fund

Institutional, ETF

• Total Corporate Bond ETF

ETF

•

Total World Bond ETF

ETF

Vanguard Specialized Funds

 

•

Energy Fund

Investor, Admiral

• Global Capital Cycles Fund

Investor

•

Health Care Fund

Investor, Admiral

•

Dividend Growth Fund

Investor

•

Real Estate Index Fund

Investor, Admiral, Institutional, ETF

• Dividend Appreciation Index Fund

Admiral, ETF

•

Global ESG Select Stock Fund

Investor, Admiral

Vanguard STAR Funds

 

•

LifeStrategy Conservative Growth Fund

Investor

•

LifeStrategy Growth Fund

Investor

•

LifeStrategy Income Fund

Investor

•

LifeStrategy Moderate Growth Fund

Investor

•

STAR Fund

Investor

• Total International Stock Index Fund

Investor, Admiral, Institutional,

 

 

Institutional Plus, Institutional Select,

 

 

ETF

Vanguard Tax-Managed Funds

 

•

Tax-Managed Balanced Fund

Admiral

• Tax-Managed Capital Appreciation Fund

Admiral, Institutional

• Developed Markets Index Fund

Investor, Admiral, Institutional,

 

 

Institutional Plus

 

FTSE Developed Markets ETF

ETF

•

Tax-Managed Small-Cap Fund

Admiral, Institutional

 

5

 

Vanguard Fund

Share Classes Authorized

Vanguard Trustees' Equity Fund

 

•

International Value Fund

Investor

•

Diversified Equity Fund

Investor

• Emerging Markets Select Stock Fund

Investor

•

Alternative Strategies Fund

Investor

•

Commodity Strategy Fund

Admiral

Vanguard Valley Forge Funds

 

•

Balanced Index Fund

Investor, Admiral, Institutional

•

Managed Allocation Fund

Investor

Vanguard Variable Insurance Funds

 

•

Balanced Portfolio

Investor

•

Conservative Allocation Portfolio

Investor

•

Diversified Value Portfolio

Investor

•

Equity Income Portfolio

Investor

•

Equity Index Portfolio

Investor

•

Growth Portfolio

Investor

• Global Bond Index Portfolio

Investor

• Total Bond Market Index Portfolio

Investor

•

High Yield Bond Portfolio

Investor

•

International Portfolio

Investor

•

Mid-Cap Index Portfolio

Investor

•

Moderate Allocation Portfolio

Investor

•

Money Market Portfolio

Investor

•

Real Estate Index Portfolio

Investor

•

Short-Term Investment Grade Portfolio

Investor

•

Small Company Growth Portfolio

Investor

•

Capital Growth Portfolio

Investor

• Total International Stock Market Index Portfolio

Investor

•

Total Stock Market Index Portfolio

Investor

Vanguard Wellesley Income Fund

Investor, Admiral

Vanguard Wellington Fund

 

•

U.S. Liquidity Factor ETF

ETF

• U.S. Minimum Volatility ETF

ETF

•

U.S. Momentum Factor ETF

ETF

•

U.S. Multifactor ETF

ETF

•

U.S. Multifactor Fund

Admiral

•

U.S. Quality Factor ETF

ETF

•

U.S. Value Factor ETF

ETF

•

Wellington Fund

Investor, Admiral

6

Vanguard Fund

Share Classes Authorized

Vanguard Whitehall Funds

 

•

Selected Value Fund

Investor

•

Mid-Cap Growth Fund

Investor

•

International Explorer Fund

Investor

• High Dividend Yield Index Fund

Admiral, ETF

•Emerging Markets Government

 

Bond Index Fund

Admiral, Institutional, ETF

• Vanguard Global Minimum Volatility Fund

Investor, Admiral

• International Dividend Appreciation Index Fund

Admiral, ETF

• International High Dividend Yield Index Fund

Admiral, ETF

Vanguard Windsor Funds

 

•

Windsor Fund

Investor, Admiral

•

Windsor II Fund

Investor, Admiral

Vanguard World Fund

 

• Extended Duration Treasury Index Fund

Institutional, Institutional Plus, ETF

• FTSE Social Index Fund

Admiral, Institutional

• Global Wellesley Income Fund

Investor, Admiral

•

Global Wellington Fund

Investor, Admiral

•

International Growth Fund

Investor, Admiral

•

Mega Cap Index Fund

Institutional, ETF

• Mega Cap Growth Index Fund

Institutional, ETF

• Mega Cap Value Index Fund

Institutional, ETF

•

U.S. Growth Fund

Investor, Admiral

•

Consumer Discretionary Index Fund

Admiral, ETF

•

Consumer Staples Index Fund

Admiral, ETF

•

Energy Index Fund

Admiral, ETF

•

Financials Index Fund

Admiral, ETF

• Health Care Index Fund

Admiral, ETF

•

Industrials Index Fund

Admiral, ETF

•

Information Technology Index Fund

Admiral, ETF

•

Materials Index Fund

Admiral, ETF

• Communication Services Index Fund

Admiral, ETF

•

Utilities Index Fund

Admiral, ETF

• ESG U.S. Stock ETF

ETF

•

ESG International Stock ETF

ETF

•

ESG U.S. Corporate Bond ETF

ETF

Original Board Approval: July 21, 2000

Last Updated: April 5, 2021

7

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.

2The 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.

3Admiral Shares of the Vanguard Cash Reserves Federal Money Market Fund are available to financial intermediaries that serve as mutual fund supermarkets.

4Admiral 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.

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. Single family offices serviced by the Retail Investor Group with $200 million or more in assets in the Funds through the Retail Investor Group may hold Institutional Shares by aggregating assets across all family members who are part of a single family office.

•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:

(1)the financial intermediary in aggregate at the firm level, excluding custody assets, has total assets of at least $25 billion invested in Vanguard; and

(2)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:

(1)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);

(2)the allocations and Funds used in the model portfolios on the platform are not subject to change by individual financial advisors; and

(3)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

5For purposes of this Schedule B, this is not intended to include robo advisors.

6For 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.

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

Vanguard Total Stock Market Index

Market Index Trust

Fund

Vanguard Institutional Total Stock

Vanguard Institutional Total Stock

Market Index Trust

Market Index Fund

Vanguard Institutional Total Bond

Vanguard Total Bond Market Index

Market Index Trust

Fund

Vanguard Institutional Total

Vanguard Total International Stock

International Stock Market Index Trust

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

Vanguard Extended Market Index Fund

Index Trust

 

Vanguard Employee Benefit Index

Vanguard Institutional Index Fund

Fund

 

Vanguard Employee Benefit Index

Vanguard 500 Index Fund

Fund

 

Vanguard Russell 1000 Growth Index

Vanguard Russell 1000 Growth Index

Trust

Fund

Vanguard Russell 1000 Value Index

Vanguard Russell 1000 Value Index

Trust

Fund

Vanguard Russell 2000 Growth Index

Vanguard Russell 2000 Growth Index

Trust

Fund

Vanguard Russell 2000 Value Index

Vanguard Russell 2000 Value Index

Trust

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 ⎯ 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. Single family offices serviced by the Retail Investor Group with $200 million or more in assets in the Funds through the Retail Investor Group may hold Institutional Plus Shares by aggregating assets across all family members who are part of a single family office.

•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

Vanguard Total Stock Market Index

Market Index Trust

Fund

Vanguard Institutional Total Stock

Vanguard Institutional Total Stock

Market Index Trust

Market Index Fund

Vanguard Institutional Total Bond

Vanguard Total Bond Market Index

Market Index Trust

Fund

Vanguard Institutional Total

Vanguard Total International Stock

International Stock Market Index Trust

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

Vanguard Extended Market Index Fund

Index Trust

 

Vanguard Employee Benefit Index

Vanguard Institutional Index Fund

Fund

 

Vanguard Employee Benefit Index

Vanguard 500 Index Fund

Fund

 

Vanguard Russell 1000 Growth Index

Vanguard Russell 1000 Growth Index

Trust

Fund

Vanguard Russell 1000 Value Index

Vanguard Russell 1000 Value Index

Trust

Fund

 

 

Vanguard Russell 2000 Growth Index

Vanguard Russell 2000 Growth Index

Trust

Fund

Vanguard Russell 2000 Value Index

Vanguard Russell 2000 Value Index

Trust

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:

(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 intermediaries may offer Institutional Plus Shares, provided:

(1)the financial intermediary in aggregate at the firm level, excluding custody assets, has total assets of at least $25 billion invested in Vanguard; and

(2)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:

(1)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);

(2)the allocations and Funds used in the model portfolios on the platform are not subject to change by individual financial advisors; and

(3)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:

(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.

•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: March 19, 2021


SECTION E:

DONALD SMITH & CO., INC.

CODE OF ETHICS

Adopted January 1, 2005 Revised March 2011, September 2012, March 2013, November 2013, March 2017, November 2019

TABLE OF CONTENTS:

I.ADOPTION OF NEW CODE OF ETHICS POLICIES & PROCEDURES

II.STANDARDS OF CONDUCT AND COMPLIANCE WITH LAWS

III.DEFINITIONS

IV. EXEMPTED TRANSACTIONS

V.RESTRICTIONS AND PROCEDURES ON PERSONAL SECURITIES TRANSACTIONS

VI. COMPLIANCE PROCEDURES ON PERSONAL TRADING VII. REPORTING REQUIREMENTS

VIII. ADMINISTRATION OF THE CODE OF ETHICS

IX. ADVISER REVIEW AND ENFORCEMENT

X.RECORDKEEPING

XI. AMENDMENT TO FORM ADV PART II

XII. AMENDMENT TO RULE 17j-1

XIII. CLASSIFICATION OF EMPLOYEES

XIV. SANCTIONS

I.ADOPTION OF NEW CODE OF ETHICS POLICIES AND PROCEDURES

The Securities and Exchange Commission (SEC) adopted rule 204A-1 under the Investment Advisers Act of 1940, effective August 31, 2004. There are also amendments to rule 204-2 under the Advisers Act to reflect new rule 204A-1 and rule 17j-1 under the Investment Company Act of 1940. Part II of Form ADV is also amended. The compliance date of these new rules and rule amendments is February 1, 2005. The rule and rule amendments are designed to promote compliance with fiduciary standards by advisers and their personnel.

Rule 204A-1 requires registered investment advisers to adopt codes of ethics. The rule requires an adviser's code of ethics to set forth standards of conduct and require compliance with federal securities laws. Codes of ethics must also address personal trading: they must require advisers' personnel to report their personal securities holdings and transactions, including those in affiliated mutual funds, and must require personnel to obtain pre-approval of certain investments. The Commission has amended the Advisors Act recordkeeping rule to require advisers to keep copies of their codes of ethics and records relating to the code. The Commission has also amended the client disclosure requirements under Part II of Form ADV to require advisers to describe their codes of ethics to clients.

Rule 17j-1, under the Investment Company Act of 1940, requires each fund and its adviser to have a written code of ethics containing provisions reasonably necessary to prevent misconduct and to use reasonable diligence and institute procedures reasonably necessary to prevent violations of the code.

Additionally, Rule 17j-1 generally proscribes fraudulent or manipulative practices with respect to purchases or sales of securities held or to be acquired by investment companies, if affected by affiliated persons of such companies or of their investment advisers or principal underwriters. Rule 17j-1(a) sets forth the following general prohibitions:

It shall be unlawful for any affiliated person of or principal underwriter for a registered investment company, or any affiliated person of an investment adviser of or principal underwriter for a registered investment company in connection with the purchase or sale, directly or indirectly, by such person of a security held or to be acquired, as defined in the Rule, by such registered investment company to:

A.employ any device, scheme or artifice to defraud such registered investment company;

B.make to such registered investment company any untrue statement of material fact or omit to state to such registered investment company a

material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading;

C.engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any such registered investment company; or

D.engage in any manipulative practice with respect to such registered investment company.

Also, each employee has a duty to act in the best interest of the firm. In addition to the various laws and regulations covering our activities, it is clearly in our best interest as a professional investment advisory organization to avoid potential conflicts of interest or even the appearance of such conflict with respect to the conduct of our officers and employees. While it is not possible to anticipate all instances of potential conflict, the standard is clear.

As we are a Registered Investment Adviser, we are subject to rules and

regulations promulgated by the SEC. Thus, we are very diligent and thorough when it comes to monitoring our firm and our people. As we are a small boutique firm, the principals have continuous supervision at all levels. Richard L. Greenberg and Jonathan E. Hartsel oversee all investments. Ann Cianfrone is our Chief Compliance Officer.

These written policies and procedures adopted January 1, 2005, and revised March 2011, September 2012, March 2013, November 2013 and November 2019, are designed to ensure our compliance with these rules. Additionally, these policies and procedures are designed to enable us to act in the best interests of our clients. Donald Smith & Co., Inc. has a fiduciary duty to its clients which requires each employee to act solely for the benefit of our clients.

II.STANDARDS OF CONDUCT AND COMPLIANCE WITH LAWS

This Code of Ethics sets forth a standard of business conduct that we require of all supervised personnel. It sets ideals for ethical conduct premised on fundamental principles of openness, integrity, honesty and trust. It conveys the value we place on ethical conduct.

In light of our professional and legal responsibilities, we believe it is appropriate to restate and periodically distribute the firm's Code to all supervised employees. Our aim is to be as flexible as possible in our organization and our internal procedures, while simultaneously protecting our organization and our clients from the damage that could arise from a situation involving a real or apparent conflict of interest. As a general principle, it is imperative that those who work on behalf of the Adviser avoid any situation that might compromise, or call into question, their exercise of fully independent judgment in the interests of clients. If you have any doubt as to the propriety of any activity, you should consult the Chief Compliance Officer.

While it is not possible to specifically define and prescribe rules regarding all possible cases in which conflicts might arise, this Code is designed to set forth our policy regarding employee conduct in those situations in which conflicts are most likely to develop. As you consider the more detailed portions of the Code below, you should keep in mind the following fundamental fiduciary principles that govern personal investment activities:

AThe interests of our clients must come first. In any decision relating to your personal investments, you must scrupulously avoid serving your own interests ahead of those of our clients;

B.Personal investments should comport with both the letter and the spirit of this Code, and should avoid any actual or potential conflicts of interest;

C.Supervised persons should not take inappropriate advantage of their position; and

D.Supervised persons must comply with applicable federal securities laws. This Code does not attempt to identify all possible conflicts of interest, and literal compliance with each of its specific provisions will not shield supervised personnel from liability for personal trading or other conduct that violates a fiduciary duty to our clients.

III.DEFINITIONS

A."Adviser" means Donald Smith & Co., Inc.

B."Access Person" means any of the Adviser's supervised persons: (i) who has access to non-public information regarding any clients' purchase or sale of securities, or nonpublic information regarding the portfolio holdings of any reportable fund, or (ii) who is involved in making securities recommendations to clients, or who has access to such recommendations that are non-public.

C."Advisory Person" means (1) any employee of the adviser or of any company in a Control relationship to Donald Smith & Co., Inc., who in connection with his or her regular functions or duties, makes, participates in, or obtains information regarding the purchase or sale of a security by the Adviser, or whose functions relate to the making of any recommendations with respect to such purchases or sales; and (2) any natural person in a Control relationship, or deemed by the Review Officer to be in a control relationship, to Donald Smith & Co., Inc. who obtains information concerning the recommendations made to a client with regard to the purchase or sale of a covered security.

D.A security is "being considered for purchase or sale" when a recommendation to purchase or sell a security has been made and communicated and, with respect to the person making the recommendation, when such person seriously considers making such a recommendation.

E."Beneficial Ownership" shall be interpreted to include any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares a direct or indirect pecuniary interest in the security. As set forth in Rule 16a-1(a)(2) of the Securities Exchange Act of 1934, the term "pecuniary interest" in securities shall mean the opportunity, directly or indirectly, to profit or share in any profit derived from a transaction in the subject securities. An access person is presumed to be a beneficial owner of securities that are held by his or her immediate family members sharing the access person's household.

F."Control" shall have the same meaning as that set forth in Section 2(a)(9) of the Act.

G."Covered security" means a security as defined in Section 2(a) 136) of the Investment Company Act, except that it does not include: (i) Direct obligations of the Government of the United States; (ii) Bankers' acceptances, bank certificates of deposit, commercial paper and high- quality short-term debt instruments, including repurchase agreements; and (iii) Shares issued by open-end registered investment companies besides Exchange Traded Funds (ETFs) and reportable funds.

H."Investment company" means a company registered as such under the Investment Company Act and for which the Adviser is the investment adviser.

I."Investment Advisory Client" means any person for whom the Adviser provides discretionary advisory services.

J."Personal Securities Transactions" means transactions in Securities (i) for your own account, including IRAs, or (ii) for an account in which you have indirect beneficial ownership, unless you have no direct or indirect influence or control over the account. Accounts involving family (including husband, wife, minor children or other dependent relatives), or accounts in which you have a beneficial interest (such as a trust of which you are an income or principal beneficiary) are included within the meaning of "indirect beneficial interest."

K."Purchase or sale of a security" includes, among other things, the writing of an option to purchase or sell a security, the conversion of a convertible security, and the exercise of a warrant for the purchase of a security.

L."Review Officer" means the officer of the Adviser and/or the Distributor designated from time-to-time by Donald Smith & Co., Inc. to receive and review reports of purchases and sales by Access Persons. Currently, Ann Cianfrone, Chief Compliance Officer, is our designated Review Officer.

M."Reportable fund" means: (i) any fund for which the adviser serves as an investment adviser as defined in section 2(a)(20) of the Investment Company Act of 1940; or (ii) any fund whose investment adviser or principal underwriter controls the Adviser, is controlled by the Adviser, or is under common control with the Adviser. For purposes of this section, control has the same meaning as it does in section 2(a)(9) of the Investment Company Act.

N."Reportable security" means a security as defined in section 202(a)(18) of the Investment Advisers Act, except that it does not include: (i) direct obligations of the Government of the United States; (ii) bankers' acceptances, bank certificates of deposit, commercial paper and high quality short-term debt instruments, including repurchase agreements; (iii) shares issued by money market funds; (iv) shares issued by open-end funds other than reportable funds; and (v) shares issued by unit investment trusts that are invested exclusively in one or more open-end funds (besides ETFs), none of which are reportable funds.

O."Security held or to be acquired" by the Adviser means any Security which, within the most recent 3 business days, (i) is or has been held by such company or its adviser, or (ii) is being or has been considered by such company or its Adviser for purchase by such company or its adviser.

P."Supervised person" is any partner, officer, director (or other person occupying a similar status or performing similar functions), or employee of the Adviser, or other person who provides investment advice on behalf of the Adviser and is subject to the supervision and control of the Adviser.

IV. EXEMPTED TRANSACTIONS

The following transactions are exempt from the restrictions and procedures on personal securities transactions set forth in Section V.A.1 below:

A.Purchases or sales affected in any account over which the Access Person has no direct or indirect influence or Control;

B.Purchases or sales which are non-volitional on the part of the Access Person;

C.Purchases which are part of an automatic dividend reinvestment plan;

D.Purchases and sales for which the Review Officer has granted an exemption. The Review Officer may grant exemptions from the personal trading restrictions in this Code upon determining that the transaction for which an exemption is requested would not violate any policy embodied in this Code and that an exemption is appropriate to avoid an injustice to the employee in the particular factual situation presented. Factors to be considered may include: the size and holding period of the employee's position in the security, the market capitalization of the issuer, the liquidity of the security, the reason for the employee's requested transaction, the amount and timing of client trading in the same or a related security, and other relevant factors.

Any employee wishing an exemption should submit a verbal or written request to the Review Officer setting forth the pertinent facts and reasons why the employee believes that the exemption should be granted. Employees are cautioned that exemptions are intended to be exceptions, and repetitive exemptive applications by an employee will not be well received.

V.RESTRICTIONS AND PROCEDURES ON PERSONAL SECURITIES TRANSACTIONS

A.Prohibited Purchases and Sales - Except as otherwise provided in Section IV hereof:

1.No Access Person shall purchase or sell, directly or indirectly, any Security which he or she has, or by reason of such transaction acquires, any direct or indirect beneficial ownership and which he or she knows or should have known at the time of such purchase or sale:

(a)is being considered for purchase or sale by the Adviser,

(b)is a security held or to be acquired by the Advisor or is currently being purchased or sold by the Adviser (list maintained by Chief Compliance Officer),

(c)is on the "Restricted List"1 of issuers about which the Adviser has inside information (list maintained by the Chief Compliance Officer); or

1If a security is on the "Restricted List", all access persons are strictly prohibited from trading in that security for personal accounts or client accounts and are restricted from talking about the security outside of the firm.

(d)is on "Blackout Period" list when client securities trades are being placed or recommendations are being made.

2.No Access Person shall reveal to any other person (except in the normal course of his or her duties on behalf of the Adviser) any information regarding Securities transactions by the Adviser or consideration by the Adviser of any such Securities transaction.

3.No Access Person shall place good-until-cancelled orders for their personal securities transactions which involve securities that are also held by the Advisor's Investment Advisory Clients,

B.Gifts: No Access Person shall receive any gift or other thing of more than de minimis value ($100) from any person or entity that does business with or on behalf of the Adviser.

C.Other Conflicts of Interest: Access Persons should also be aware that areas other than personal securities transactions or gifts and sensitive payments may involve conflicts of interest. The following should be regarded as examples of situations involving real or potential conflicts rather than a complete list of situations to avoid.

1."Inside Information" - Specific reference is made to Donald Smith & Co., Inc.'s collective policy on the use of "inside information" which applies to Personal Securities Transactions as well as to client transactions.

2."Use of Information" - Information acquired in connection with employment by the organization may not be used in any way which might be contrary to or in competition with the interests of investment advisory clients.

3."Disclosure of Information" - Information regarding actual or contemplated investment decisions, research priorities or client interests should not be disclosed to persons outside of our organization and in no way can be used for personal gain.

4.Unless otherwise approved by Chief Compliance Officer, no access persons shall serve as a director of any publicly traded company.

5.All access persons are expected to adhere to our policies and procedures to prevent the misuse of material nonpublic information. See Section O of our Compliance Manual.

6.Market timing and "short swing" trading are prohibited.

7."Pay-to-Play" is strictly prohibited. All covered persons are required to obtain pre-approval from the Company's Compliance Department prior to making any Contribution of any value. Contribution is defined as any gift, subscription, loan, advance, or deposit of money or anything of value made for:

a.The purpose of influencing any election for federal, state or local office;

b.The payment of debt incurred in connection with any such election; or

c.Transition or inaugural expenses incurred by the successful candidate for state or local office.

Covered Persons must also receive pre-approval for all Contributions made by any member of their household.

8."Social Media" sites are prohibited for all business use. All access persons are expected to adhere to this rule and understand that personal "Social Media" sites are subject to monitoring and review by the Compliance Department.

VI. COMPLIANCE PROCEDURES ON PERSONAL TRADING

A.Preclearance: All Access Persons are required to "preclear" Personal Securities Transactions in covered securities prior to execution through the Review Officer. This includes bonds, stocks (including closed-end funds), ETFs, reportable funds, convertibles, preferreds, options on securities, warrants, rights, etc. for domestic and foreign Securities whether publicly traded or privately placed, not including the exceptions listed below. In addition, the Review Officer may require non-Access Persons to preclear Personal Securities Transactions as he or she may deem necessary and appropriate for compliance with this Code. Additionally, the Review Officer can withdraw the approval any time, given a rise in conflict of interest as a result of unexpected events taking place regarding the specific security or regarding any client. Only the Review Officer has the authority to approve pre-clearance. The Review Officer's trades will be pre-cleared by Richard L. Greenberg, Co-CIO.

The following Personal Securities Transactions shall be excepted from this preclearance requirement; please note, however, that these transactions must be reported even though they do not have to be precleared (see Section VII for reporting requirements):

1. purchases or sales of financial futures or options on futures;

2.purchases or sales of non-convertible debt securities or non- convertible preferred stocks;

3.purchases which are part of an automatic dividend reinvestment plan or automatic employee stock purchase plan; and

4.purchases or sales which are non-volitional on the part of the Access Person (e.g. gifts, or transactions which result from corporate action applicable to all similar Security holders, such as splits, tender offers, mergers, stock dividends, etc.).

B.Initial Public Offerings: No Access Person may acquire securities in an initial public offering without the prior written approval of the Review Officer.

C.Private Placements: No Access Person may acquire securities in a private placement without the prior written approval of the Review Officer.

D. Records of Securities Transactions: All Access Persons are to direct

their brokers to supply to the Review Officer, on a timely basis, duplicate copies of confirmations of all Personal Securities Transactions and copies of periodic statements for all Securities accounts.

E.Post-Trade Monitoring: The Review Officer shall review all Personal Securities Statements by Access Persons to ensure that no conflict exists with the Adviser's trades.

VII. REPORTING REQUIREMENTS

 

A.

Initial Holdings Report.

No later than 10 days after becoming an

 

Access Person, whether through outside hiring or internal transfer, every

 

Access Person shall report to the Review Officer the following information:

 

1.

The title and type of security, and as applicable the exchange ticker

 

 

symbol or CUSIP number, number of shares and principal amount

 

 

of each Reportable Security in which the Access Person had any

 

 

Beneficial Ownership when the person became an Access Person;

 

2.

The name of any broker, dealer or bank with whom the Access

 

 

Person maintained an account in which any securities were held for

 

 

the direct or indirect benefit of the Access Person as of the date the

 

 

person became an Access Person; and

 

3.

The date the report is submitted by the Access Person. This report

 

 

must be current as of a date not more than 45 days prior to the

 

 

individual becoming an access person.

4.Subsequently, all Access Persons must have duplicate monthly statements, including holdings and transactions, sent directly to the compliance department for all personal accounts.

B.Quarterly Transaction Reports. No later than 30 days after the end of each calendar quarter, every Access Person shall report to the Review Officer, the following information2:

1.With respect to any transaction during the quarter in any Reportable Security in which the Access Person had any direct or indirect Beneficial Ownership in the Reportable Security:

a.The date of the transaction, the title, and as applicable the exchange ticker symbol or CUSIP number, the interest rate and maturity date (if applicable), the number of shares and the principal amount of each Reportable Security involved;

b.The nature of the transaction (i.e., purchase, sale or other type of acquisition or disposition);

c.The price of the Security at which the transaction was effected;

d.The name of the broker, dealer or bank with or through which transaction was effected; and

e.The date that the report is submitted by the Access Person.

2.With respect to any account established by the Access Person in which any securities were held during the quarter for the direct or indirect benefit of the Access Person:

a.The name of the broker, dealer or bank with whom the Access Person established the account;

b.The date the account was established; and

c.The date the report is submitted by the Access Person.

C.Annual Certifications. Annually, every Access Person shall report and certify that he or she has (i) read and understands this Code and recognizes that he or she is subject to the Code and (ii) complied with all requirements of the Code to which he or she is subject and disclosed or reported all personal securities transactions required to be disclosed or reported pursuant to the requirements of the Code; and

2Access Persons who provide copies of duplicate confirmations and periodic statements pursuant to Section VII hereof need only certify the accuracy of the statements in writing in such report and that no other transactions were executed during the quarter.

D.Exceptions to Reporting Requirements. An Access Person need not make a report under this Section VII with respect to transactions effected for, and Securities held in, any account over which the person has no direct or indirect influence or control.

The reports required by this section may also contain a statement declaring that the reporting or recording of any transaction shall not be construed as an admission that the Access Person making the report has any direct or indirect Beneficial Ownership in the Security to which the reports relates.

VIII. ADMINISTRATION OF THE CODE OF ETHICS

This Code of Ethics booklet (and any amendments) is provided to each employee to remind them of their obligations under the code. Each employee is required to certify in writing that they have received a copy of, read and understood the code of ethics. We also require annual recertification that each employee has re-read, understands and has complied with the code.

IX. ADVISOR REVIEW AND ENFORCEMENT

Rule 204A-1 requires that advisors maintain and enforce their codes of ethics. Ann Cianfrone, Chief Compliance Officer has primary responsibility for enforcing our code of ethics. All personal securities reports of all access persons are periodically reviewed for assessments such as whether the access person is following all required internal procedures, assessment of whether the access person is trading for his own account in the same securities as he is trading for clients, assessment of any trading patterns that may indicate any abuse, such as market timing, etc.

X.RECORDKEEPING

Our recordkeeping procedures ensure compliance with the newly adopted rule 204A-1 and the amendments to rule 204-2 under the Investment Advisers Act of 1940.

We maintain copies of our Code of Ethics, records of violations of the code along with the actions taken as a result of the violations, and copies of all employees' written acknowledgement of receipt of the code.

A list of all access persons is maintained. Holdings reports and transactions reports of these access persons are maintained. All of the above documents will be and are maintained up to a period of five years.

XI. AMENDMENT TO FORM ADV PART II

These Code of Ethics policies and procedures are described via Part II of Form ADV to our current and prospective clients.

A full copy of our Code of Ethics is available to any client upon request.

XII. AMENDMENT TO RULE 17j-1

Our new Code of Ethics complies with the current amendments to Rule 17j-1.

Initial and quarterly holdings reports must be current as of a date no more than 45 days prior to an individual becoming an access person and are due within 10 days of becoming an access person.

Quarterly transactions reports are due no later than 30 days after close of quarter.

Additionally, quarterly transactions reports need not be submitted with respect to transactions effected pursuant to an automatic investment plan.

XIII. CLASSIFICATION OF EMPLOYEES

Unless otherwise determined, each employee shall be classified as an Access Person for the purposes of this Code. Notwithstanding the foregoing, an employee may seek a determination from the CEO of the Adviser that the employee is a Non-Access Person because of the limited nature of the employee's functions or duties. The CEO will make this determination on a case-by-case basis, and the employee will only be classified as a Non-Access Person if the CEO determines that the employee does not make, participate in, or obtain information regarding the purchases or sales of securities by the Adviser, and such employee's functions do not relate to the making of any recommendations with respect to such purchases or sales. Periodically thereafter, but no less frequently than annually, the CEO shall reevaluate the employee's Non-Access Person classification. The Review Officer shall maintain a record of all such determinations, and will communicate any changes in classification directly to the employee.

XIV SANCTIONS

Any and all violations of the Code of Ethics should be reported to the Chief Compliance Officer.

If the Chief Compliance Officer determines that an employee has committed a violation of the Code, the Chief Compliance Officer shall promptly notify the CEO of the Adviser who shall be responsible for determining whether it is appropriate to impose sanctions or take other actions against the employee. The CEO shall make such determination in light of all relevant facts and circumstances, including the nature and seriousness of the violation, the extent to which the violation reflects a willful disregard of the employee's responsibilities under the Code and the employee's past history of

compliance or non-compliance with the Code. Such sanctions or other actions may include, but are not limited to, one or more of the following:

•requiring the employee to refrain from personal trading for a period;

•disgorgement of any profits associated with transactions which constitute a violation of the Code, or restitution to an affected client or investment company;

•requiring the employee to reverse the trade(s) in question and forfeit any profit or absorb any loss derived therefrom;

•a letter of censure;

•a monetary fine levied at the employee;

•suspension of the employment of the employee;

•termination of the employment of the employee;

•civil referral to the SEC or other civil regulatory authority, if appropriate under the circumstances; or

•criminal referral, if appropriate under the circumstances.

The CEO shall have the sole authority to determine the sanction or other action, if any, to be imposed for any violation of the Code, including appropriate disposition of any monies forfeited pursuant to this provision. Prior to imposing sanctions or taking other actions against the employee, the CEO shall provide the employee with an opportunity to present information bearing on these matters.

Failure to comply with any sanctions, including the failure to abide by a directive to reverse a trade or refrain from further trading, may result in the imposition of additional sanctions. Unless, in the opinion of the CEO, there are extenuating circumstances, a repeat violation of the Code and any violation involving deception, dishonesty or a willful failure to comply, will result in one or more of the most severe sanctions, including the imposition of a monetary fine and/or the suspension or termination of employment.

If the employee committing the violation is the CEO of the Adviser, the Chief Compliance Officer shall make a determination with respect to sanctions or actions described above in place of the CEO.