| Vanguard Target Retirement Funds | |
| Prospectus | |
| January 28, 2019 | |
| Investor Shares | |
| Vanguard Target Retirement Income Fund Investor Shares (VTINX) | |
| Vanguard Target Retirement 2015 Fund Investor Shares | (VTXVX) |
| Vanguard Target Retirement 2020 Fund Investor Shares | (VTWNX) |
| Vanguard Target Retirement 2025 Fund Investor Shares | (VTTVX) |
| Vanguard Target Retirement 2030 Fund Investor Shares | (VTHRX) |
| Vanguard Target Retirement 2035 Fund Investor Shares | (VTTHX) |
| Vanguard Target Retirement 2040 Fund Investor Shares | (VFORX) |
| Vanguard Target Retirement 2045 Fund Investor Shares | (VTIVX) |
| Vanguard Target Retirement 2050 Fund Investor Shares | (VFIFX) |
| Vanguard Target Retirement 2055 Fund Investor Shares | (VFFVX) |
| Vanguard Target Retirement 2060 Fund Investor Shares | (VTTSX) |
| Vanguard Target Retirement 2065 Fund Investor Shares | (VLXVX) |
| This prospectus contains financial data for the Funds through the fiscal year ended September 30, 2018. | |
| 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 | |||
| Vanguard Fund Summaries | More on the Funds | 75 | |
| Target Retirement Income Fund | 1 | The Funds and Vanguard | 86 |
| Target Retirement 2015 Fund | 7 | Investment Advisor | 87 |
| Target Retirement 2020 Fund | 13 | Dividends, Capital Gains, and Taxes | 88 |
| Target Retirement 2025 Fund | 19 | Share Price | 90 |
| Target Retirement 2030 Fund | 25 | Financial Highlights | 91 |
| Target Retirement 2035 Fund | 31 | Investing With Vanguard | 103 |
| Target Retirement 2040 Fund | 37 | Purchasing Shares | 103 |
| Target Retirement 2045 Fund | 43 | Redeeming Shares | 106 |
| Target Retirement 2050 Fund | 49 | Exchanging Shares | 110 |
| Target Retirement 2055 Fund | 55 | Frequent-Trading Limitations | 110 |
| Target Retirement 2060 Fund | 61 | Other Rules You Should Know | 112 |
| Target Retirement 2065 Fund | 67 | Fund and Account Updates | 117 |
| Investing in Vanguard Target Retirement | |||
| Funds | 73 | Employer-Sponsored Plans | 118 |
| Contacting Vanguard | 119 | ||
| Additional Information | 120 | ||
| Glossary of Investment Terms | 123 | ||
Vanguard Target Retirement Income Fund
Investment Objective
The Fund seeks to provide current income and some capital appreciation.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and hold shares of the Fund.
| Shareholder Fees | |
| (Fees paid directly from your investment) | |
| Sales Charge (Load) Imposed on Purchases | None |
| Purchase Fee | None |
| Sales Charge (Load) Imposed on Reinvested Dividends | None |
| Redemption Fee | None |
| Account Service Fee (for certain fund account balances below $10,000) | $20/year |
| Annual Fund Operating Expenses | |
| (Expenses that you pay each year as a percentage of the value of your investment) | |
| Management Fees | None |
| 12b-1 Distribution Fee | None |
| Other Expenses | None |
| Acquired Fund Fees and Expenses | 0.12% |
| Total Annual Fund Operating Expenses | 0.12% |
1
Example
The following example is intended to help you compare the cost of investing in the Fund (based on the fees and expenses of the acquired funds) with the cost of investing in other mutual funds. It illustrates the hypothetical expenses that you would incur over various periods if you were to invest $10,000 in the Fund’s shares. This example assumes that the Fund provides a return of 5% each year and that total annual fund operating expenses of the Fund and its underlying funds remain as stated in the preceding table. You would incur these hypothetical expenses whether or not you were to redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
| 1 Year | 3 Years | 5 Years | 10 Years |
| $12 | $39 | $68 | $154 |
Portfolio Turnover
The Fund may pay transaction costs, such as purchase fees, 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 6% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests in other Vanguard mutual funds (underlying funds) according to an asset allocation strategy designed for investors currently in retirement. As of September 30, 2018, the Fund’s asset allocation among the underlying funds was as follows:
| • | Vanguard Total Bond Market II Index Fund | 37.3% |
| • | Vanguard Total Stock Market Index Fund | 18.1% |
| • | Vanguard Short-Term Inflation-Protected Securities Index Fund | 16.8% |
| • | Vanguard Total International Bond Index Fund | 15.9% |
| • | Vanguard Total International Stock Index Fund | 11.9% |
At any given time, the Fund’s asset allocation may be affected by a variety of factors, such as whether the underlying funds are accepting additional investments.
2
The Fund’s indirect bond holdings are a diversified mix of short-, intermediate-, and long-term U.S. government, U.S. agency, and investment-grade U.S. corporate bonds; inflation-protected public obligations issued by the U.S. Treasury; mortgage-backed and asset-backed securities; and government, agency, corporate, and securitized investment-grade foreign bonds issued in currencies other than the U.S. dollar (but hedged by Vanguard to minimize foreign currency exposure).
The Fund’s indirect stock holdings are a diversified mix of U.S. and foreign large-, mid-, and small-capitalization stocks.
Principal Risks
The Fund is subject to the risks associated with the stock and bond markets, any of which could cause an investor to lose money. An investment in the Fund is not guaranteed. An investor may experience losses. There is no guarantee that the Fund will provide adequate income through retirement. Because bonds and short-term investments are typically less volatile than stocks and because the Fund invests most of its assets in bonds and short-term investments, the Fund’s overall level of risk is expected to be low to moderate.
• With approximately 70% of its assets allocated to bonds, the Fund is proportionately subject to the following bond risks: interest rate risk, which is the chance that bond prices will decline because of rising interest rates; income risk, which is the chance that an underlying fund’s income will decline because of falling interest rates; credit risk, which is the chance that a bond issuer will fail to pay interest or principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline, thus reducing the underlying fund’s return; and call risk, which is the chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupon rates or interest rates before their maturity dates. An underlying fund would then lose any price appreciation above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the underlying fund’s income. The Fund is also subject to the following risks associated with investments in currency-hedged foreign bonds: country/regional risk, which is the chance that world events—such as political upheaval, financial troubles, or natural disasters—will adversely affect the value and/or liquidity of securities issued by foreign governments, government agencies, or companies; and currency hedging risk, which is the chance that the currency hedging transactions entered into by the underlying international bond fund may not perfectly offset the fund’s foreign currency exposure.
• With approximately 30% of its assets allocated to stocks, the Fund is proportionately subject to stock market risk, which is the chance that stock prices overall will decline. Stock markets tend to move in cycles, with periods of rising prices and periods of falling prices. The Fund is also subject to the following risks associated
3
with investments in foreign stocks: 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 companies in any one country or region; and 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. Country/regional risk and currency risk are especially high in emerging markets.
• The Fund is also subject to asset allocation risk, which is the chance that the selection of underlying funds, and the allocation of assets to them, will cause the Fund to underperform other funds with a similar investment objective.
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Annual Total Returns
The following bar chart and table are intended to help you understand the risks of investing in the Fund. The bar chart shows how the performance of the Fund has varied from one calendar year to another over the periods shown. The table shows how the average annual total returns of the Fund compare with those of relevant market indexes and a composite bond/stock index, which have investment characteristics similar to those of the Fund. Keep in mind that the Fund’s past performance (before and after taxes) does not indicate how the Fund will perform in the future. Updated performance information is available on our website at vanguard.com/performance or by calling Vanguard toll-free at 800-662-7447.
Annual Total Returns — Vanguard Target Retirement Income Fund Investor Shares
During the periods shown in the bar chart, the highest return for a calendar quarter was 7.44% (quarter ended September 30, 2009), and the lowest return for a quarter was –3.20% (quarter ended December 31, 2018).
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| Average Annual Total Returns for Periods Ended December 31, 2018 | |||
| 1 Year | 5 Years | 10 Years | |
| Vanguard Target Retirement Income Fund Investor Shares | |||
| Return Before Taxes | –1.99% | 3.35% | 5.92% |
| Return After Taxes on Distributions | –3.24 | 2.35 | 4.97 |
| Return After Taxes on Distributions and Sale of Fund Shares | –0.81 | 2.27 | 4.42 |
| Comparative Indexes | |||
| (reflect no deduction for fees, expenses, or taxes) | |||
| Bloomberg Barclays U.S. Aggregate Bond Index | 0.01% | 2.52% | 3.48% |
| MSCI US Broad Market Index | –5.28 | 7.94 | 13.28 |
| Target Income Composite Index | –1.98 | 3.51 | 6.05 |
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
William Coleman, CFA, Portfolio Manager at Vanguard. He has co-managed the Fund since 2013.
Walter Nejman, Portfolio Manager at Vanguard. He has co-managed the Fund since 2013.
5
Purchase and Sale of Fund Shares
You may purchase or redeem shares online through our website (vanguard.com), by mail (The Vanguard Group, P.O. Box 1110, Valley Forge, PA 19482-1110), or by telephone (800-662-2739). The minimum investment amount required to open and maintain a Fund account for Investor Shares is $1,000. The minimum investment amount required to add to an existing Fund account is generally $1. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special eligibility rules that may apply to them regarding Investor Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility. If you are investing through an employer-sponsored retirement or savings plan, your plan administrator or your benefits office can provide you with detailed information on how you can invest through your plan.
Tax Information
The Fund’s distributions may be taxable as ordinary income or capital gain. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply.
Payments to Financial Intermediaries
The Fund and its investment advisor do not pay financial intermediaries for sales of Fund shares.
6
Vanguard Target Retirement 2015 Fund
Investment Objective
The Fund seeks to provide capital appreciation and current income consistent with its current asset allocation.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and hold shares of the Fund.
| Shareholder Fees | |
| (Fees paid directly from your investment) | |
| Sales Charge (Load) Imposed on Purchases | None |
| Purchase Fee | None |
| Sales Charge (Load) Imposed on Reinvested Dividends | None |
| Redemption Fee | None |
| Account Service Fee (for certain fund account balances below $10,000) | $20/year |
| Annual Fund Operating Expenses | |
| (Expenses that you pay each year as a percentage of the value of your investment) | |
| Management Fees | None |
| 12b-1 Distribution Fee | None |
| Other Expenses | None |
| Acquired Fund Fees and Expenses | 0.13% |
| Total Annual Fund Operating Expenses | 0.13% |
7
Example
The following example is intended to help you compare the cost of investing in the Fund (based on the fees and expenses of the acquired funds) with the cost of investing in other mutual funds. It illustrates the hypothetical expenses that you would incur over various periods if you were to invest $10,000 in the Fund’s shares. This example assumes that the Fund provides a return of 5% each year and that total annual fund operating expenses of the Fund and its underlying funds remain as stated in the preceding table. You would incur these hypothetical expenses whether or not you were to redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
| 1 Year | 3 Years | 5 Years | 10 Years |
| $13 | $42 | $73 | $166 |
Portfolio Turnover
The Fund may pay transaction costs, such as purchase fees, 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 7% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests in other Vanguard mutual funds (underlying funds) according to an asset allocation strategy designed for investors planning to retire and leave the workforce in or within a few years of 2015 (the target year). The Fund is designed for an investor who plans to withdraw the value of an account in the Fund over a period of many years after the target year. The Fund’s asset allocation will become more conservative over time, meaning that the percentage of assets allocated to stocks will decrease while the percentage of assets allocated to bonds and other fixed income investments will increase. Within seven years after 2015, the Fund’s asset allocation should become similar to that of the Target Retirement Income Fund. As of September 30, 2018, the Fund’s asset allocation among the underlying funds was as follows:
| • | Vanguard Total Bond Market II Index Fund | 33.1% |
| • | Vanguard Total Stock Market Index Fund | 24.4% |
| • | Vanguard Total International Stock Index Fund | 16.2% |
| • | Vanguard Total International Bond Index Fund | 14.1% |
| • | Vanguard Short-Term Inflation-Protected Securities Index Fund | 12.2% |
8
At any given time, the Fund’s asset allocation may be affected by a variety of factors, such as whether the underlying funds are accepting additional investments.
The Fund’s indirect bond holdings are a diversified mix of short-, intermediate-, and long-term U.S. government, U.S. agency, and investment-grade U.S. corporate bonds; inflation-protected public obligations issued by the U.S. Treasury; mortgage-backed and asset-backed securities; and government, agency, corporate, and securitized investment-grade foreign bonds issued in currencies other than the U.S. dollar (but hedged by Vanguard to minimize foreign currency exposure).
The Fund’s indirect stock holdings are a diversified mix of U.S. and foreign large-, mid-, and small-capitalization stocks.
Principal Risks
The Fund is subject to the risks associated with the stock and bond markets, any of which could cause an investor to lose money. An investment in the Fund is not guaranteed. An investor may experience losses, including losses near, at, or after the target year. There is no guarantee that the Fund will provide adequate income at or after the target year. Because fixed income securities such as bonds are typically less volatile than stocks and because the Fund currently invests a significant portion of its assets in fixed income securities, the Fund’s overall level of risk is expected to be lower than that of funds investing entirely in stocks.
• With approximately 59% of its assets allocated to bonds, the Fund is proportionately subject to the following bond risks: interest rate risk, which is the chance that bond prices will decline because of rising interest rates; income risk, which is the chance that an underlying fund’s income will decline because of falling interest rates; credit risk, which is the chance that a bond issuer will fail to pay interest or principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline, thus reducing the underlying fund’s return; and call risk, which is the chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupon rates or interest rates before their maturity dates. An underlying fund would then lose any price appreciation above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the underlying fund’s income. The Fund is also subject to the following risks associated with investments in currency-hedged foreign bonds: country/regional risk, which is the chance that world events—such as political upheaval, financial troubles, or natural disasters—will adversely affect the value and/or liquidity of securities issued by foreign governments, government agencies, or companies; and currency hedging risk, which is the chance that the currency hedging transactions entered into by the underlying international bond fund may not perfectly offset the fund’s foreign currency exposure.
9
• With approximately 41% of its assets allocated to stocks, the Fund is proportionately subject to stock market risk, which is the chance that stock prices overall will decline. Stock markets tend to move in cycles, with periods of rising prices and periods of falling prices. The Fund is also subject to the following risks associated with investments in foreign stocks: 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 companies in any one country or region; and 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. Country/regional risk and currency risk are especially high in emerging markets.
• The Fund is also subject to asset allocation risk, which is the chance that the selection of underlying funds, and the allocation of assets to them, will cause the Fund to underperform other funds with a similar investment objective.
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Annual Total Returns
The following bar chart and table are intended to help you understand the risks of investing in the Fund. The bar chart shows how the performance of the Fund has varied from one calendar year to another over the periods shown. The table shows how the average annual total returns of the Fund compare with those of relevant market indexes and a composite bond/stock index, which have investment characteristics similar to those of the Fund. Keep in mind that the Fund’s past performance (before and after taxes) does not indicate how the Fund will perform in the future. Updated performance information is available on our website at vanguard.com/performance or by calling Vanguard toll-free at 800-662-7447.
Annual Total Returns — Vanguard Target Retirement 2015 Fund Investor Shares
During the periods shown in the bar chart, the highest return for a calendar quarter was 12.21% (quarter ended June 30, 2009), and the lowest return for a quarter was –8.24% (quarter ended September 30, 2011).
10
| Average Annual Total Returns for Periods Ended December 31, 2018 | |||
| 1 Year | 5 Years | 10 Years | |
| Vanguard Target Retirement 2015 Fund Investor Shares | |||
| Return Before Taxes | –2.97% | 4.03% | 7.84% |
| Return After Taxes on Distributions | –4.81 | 2.54 | 6.72 |
| Return After Taxes on Distributions and Sale of Fund Shares | –0.90 | 2.85 | 6.12 |
| Comparative Indexes | |||
| (reflect no deduction for fees, expenses, or taxes) | |||
| Bloomberg Barclays U.S. Aggregate Bond Index | 0.01% | 2.52% | 3.48% |
| MSCI US Broad Market Index | –5.28 | 7.94 | 13.28 |
| Target 2015 Composite Index | –2.88 | 4.21 | 7.95 |
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
William Coleman, CFA, Portfolio Manager at Vanguard. He has co-managed the Fund since 2013.
Walter Nejman, Portfolio Manager at Vanguard. He has co-managed the Fund since 2013.
11
Purchase and Sale of Fund Shares
You may purchase or redeem shares online through our website (vanguard.com), by mail (The Vanguard Group, P.O. Box 1110, Valley Forge, PA 19482-1110), or by telephone (800-662-2739). The minimum investment amount required to open and maintain a Fund account for Investor Shares is $1,000. The minimum investment amount required to add to an existing Fund account is generally $1. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special eligibility rules that may apply to them regarding Investor Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility. If you are investing through an employer-sponsored retirement or savings plan, your plan administrator or your benefits office can provide you with detailed information on how you can invest through your plan.
Tax Information
The Fund’s distributions may be taxable as ordinary income or capital gain. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply.
Payments to Financial Intermediaries
The Fund and its investment advisor do not pay financial intermediaries for sales of Fund shares.
12
Vanguard Target Retirement 2020 Fund
Investment Objective
The Fund seeks to provide capital appreciation and current income consistent with its current asset allocation.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and hold shares of the Fund.
| Shareholder Fees | |
| (Fees paid directly from your investment) | |
| Sales Charge (Load) Imposed on Purchases | None |
| Purchase Fee | None |
| Sales Charge (Load) Imposed on Reinvested Dividends | None |
| Redemption Fee | None |
| Account Service Fee (for certain fund account balances below $10,000) | $20/year |
| Annual Fund Operating Expenses | |
| (Expenses that you pay each year as a percentage of the value of your investment) | |
| Management Fees | None |
| 12b-1 Distribution Fee | None |
| Other Expenses | None |
| Acquired Fund Fees and Expenses | 0.13% |
| Total Annual Fund Operating Expenses | 0.13% |
13
Example
The following example is intended to help you compare the cost of investing in the Fund (based on the fees and expenses of the acquired funds) with the cost of investing in other mutual funds. It illustrates the hypothetical expenses that you would incur over various periods if you were to invest $10,000 in the Fund’s shares. This example assumes that the Fund provides a return of 5% each year and that total annual fund operating expenses of the Fund and its underlying funds remain as stated in the preceding table. You would incur these hypothetical expenses whether or not you were to redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
| 1 Year | 3 Years | 5 Years | 10 Years |
| $13 | $42 | $73 | $166 |
Portfolio Turnover
The Fund may pay transaction costs, such as purchase fees, 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 10% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests in other Vanguard mutual funds (underlying funds) according to an asset allocation strategy designed for investors planning to retire and leave the workforce in or within a few years of 2020 (the target year). The Fund is designed for an investor who plans to withdraw the value of an account in the Fund over a period of many years after the target year. The Fund’s asset allocation will become more conservative over time, meaning that the percentage of assets allocated to stocks will decrease while the percentage of assets allocated to bonds and other fixed income investments will increase. Within seven years after 2020, the Fund’s asset allocation should become similar to that of the Target Retirement Income Fund. As of September 30, 2018, the Fund’s asset allocation among the underlying funds was as follows:
| • | Vanguard Total Stock Market Index Fund | 32.2% |
| • | Vanguard Total Bond Market II Index Fund | 28.9% |
| • | Vanguard Total International Stock Index Fund | 21.3% |
| • | Vanguard Total International Bond Index Fund | 12.2% |
| • | Vanguard Short-Term Inflation-Protected Securities Index Fund | 5.4% |
14
At any given time, the Fund’s asset allocation may be affected by a variety of factors, such as whether the underlying funds are accepting additional investments.
The Fund’s indirect stock holdings are a diversified mix of U.S. and foreign large-, mid-, and small-capitalization stocks.
The Fund’s indirect bond holdings are a diversified mix of short-, intermediate-, and long-term U.S. government, U.S. agency, and investment-grade U.S. corporate bonds; inflation-protected public obligations issued by the U.S. Treasury; mortgage-backed and asset-backed securities; and government, agency, corporate, and securitized investment-grade foreign bonds issued in currencies other than the U.S. dollar (but hedged by Vanguard to minimize foreign currency exposure).
Principal Risks
The Fund is subject to the risks associated with the stock and bond markets, any of which could cause an investor to lose money. An investment in the Fund is not guaranteed. An investor may experience losses, including losses near, at, or after the target year. There is no guarantee that the Fund will provide adequate income at or after the target year. Because stocks are typically more volatile than bonds and because the Fund currently invests most of its assets in stocks, the Fund’s overall level of risk should be higher than that of funds that invest the majority of their assets in bonds; however, the level of risk is expected to be lower than that of funds investing entirely in stocks.
• With approximately 53.5% of its assets allocated to stocks, the Fund is proportionately subject to stock market risk, which is the chance that stock prices overall will decline. Stock markets tend to move in cycles, with periods of rising prices and periods of falling prices. The Fund is also subject to the following risks associated with investments in foreign stocks: 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 companies in any one country or region; and 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. Country/regional risk and currency risk are especially high in emerging markets.
• With approximately 46.5% of its assets allocated to bonds, the Fund is proportionately subject to the following bond risks: interest rate risk, which is the chance that bond prices will decline because of rising interest rates; income risk, which is the chance that an underlying fund’s income will decline because of falling interest rates; credit risk, which is the chance that a bond issuer will fail to pay interest or principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline, thus reducing the underlying fund’s return; and call risk, which is the chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher
15
coupon rates or interest rates before their maturity dates. An underlying fund would then lose any price appreciation above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the underlying fund’s income. The Fund is also subject to the following risks associated with investments in currency-hedged foreign bonds: country/regional risk, which is the chance that world events—such as political upheaval, financial troubles, or natural disasters—will adversely affect the value and/or liquidity of securities issued by foreign governments, government agencies, or companies; and currency hedging risk, which is the chance that the currency hedging transactions entered into by the underlying international bond fund may not perfectly offset the fund’s foreign currency exposure.
• The Fund is also subject to asset allocation risk, which is the chance that the selection of underlying funds, and the allocation of assets to them, will cause the Fund to underperform other funds with a similar investment objective.
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Annual Total Returns
The following bar chart and table are intended to help you understand the risks of investing in the Fund. The bar chart shows how the performance of the Fund has varied from one calendar year to another over the periods shown. The table shows how the average annual total returns of the Fund compare with those of relevant market indexes and a composite stock/bond index, which have investment characteristics similar to those of the Fund. Keep in mind that the Fund’s past performance (before and after taxes) does not indicate how the Fund will perform in the future. Updated performance information is available on our website at vanguard.com/performance or by calling Vanguard toll-free at 800-662-7447.
Annual Total Returns — Vanguard Target Retirement 2020 Fund Investor Shares
During the periods shown in the bar chart, the highest return for a calendar quarter was 13.49% (quarter ended June 30, 2009), and the lowest return for a quarter was –9.94% (quarter ended September 30, 2011).
16
| Average Annual Total Returns for Periods Ended December 31, 2018 | |||
| 1 Year | 5 Years | 10 Years | |
| Vanguard Target Retirement 2020 Fund Investor Shares | |||
| Return Before Taxes | –4.24% | 4.44% | 8.53% |
| Return After Taxes on Distributions | –5.52 | 3.45 | 7.71 |
| Return After Taxes on Distributions and Sale of Fund Shares | –1.95 | 3.21 | 6.75 |
| Comparative Indexes | |||
| (reflect no deduction for fees, expenses, or taxes) | |||
| MSCI US Broad Market Index | –5.28% | 7.94% | 13.28% |
| Bloomberg Barclays U.S. Aggregate Bond Index | 0.01 | 2.52 | 3.48 |
| Target 2020 Composite Index | –4.13 | 4.65 | 8.75 |
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
William Coleman, CFA, Portfolio Manager at Vanguard. He has co-managed the Fund since 2013.
Walter Nejman, Portfolio Manager at Vanguard. He has co-managed the Fund since 2013.
17
Purchase and Sale of Fund Shares
You may purchase or redeem shares online through our website (vanguard.com), by mail (The Vanguard Group, P.O. Box 1110, Valley Forge, PA 19482-1110), or by telephone (800-662-2739). The minimum investment amount required to open and maintain a Fund account for Investor Shares is $1,000. The minimum investment amount required to add to an existing Fund account is generally $1. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special eligibility rules that may apply to them regarding Investor Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility. If you are investing through an employer-sponsored retirement or savings plan, your plan administrator or your benefits office can provide you with detailed information on how you can invest through your plan.
Tax Information
The Fund’s distributions may be taxable as ordinary income or capital gain. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply.
Payments to Financial Intermediaries
The Fund and its investment advisor do not pay financial intermediaries for sales of Fund shares.
18
Vanguard Target Retirement 2025 Fund
Investment Objective
The Fund seeks to provide capital appreciation and current income consistent with its current asset allocation.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and hold shares of the Fund.
| Shareholder Fees | |
| (Fees paid directly from your investment) | |
| Sales Charge (Load) Imposed on Purchases | None |
| Purchase Fee | None |
| Sales Charge (Load) Imposed on Reinvested Dividends | None |
| Redemption Fee | None |
| Account Service Fee (for certain fund account balances below $10,000) | $20/year |
| Annual Fund Operating Expenses | |
| (Expenses that you pay each year as a percentage of the value of your investment) | |
| Management Fees | None |
| 12b-1 Distribution Fee | None |
| Other Expenses | None |
| Acquired Fund Fees and Expenses | 0.13% |
| Total Annual Fund Operating Expenses | 0.13% |
19
Example
The following example is intended to help you compare the cost of investing in the Fund (based on the fees and expenses of the acquired funds) with the cost of investing in other mutual funds. It illustrates the hypothetical expenses that you would incur over various periods if you were to invest $10,000 in the Fund’s shares. This example assumes that the Fund provides a return of 5% each year and that total annual fund operating expenses of the Fund and its underlying funds remain as stated in the preceding table. You would incur these hypothetical expenses whether or not you were to redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
| 1 Year | 3 Years | 5 Years | 10 Years |
| $13 | $42 | $73 | $166 |
Portfolio Turnover
The Fund may pay transaction costs, such as purchase fees, 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 8% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests in other Vanguard mutual funds (underlying funds) according to an asset allocation strategy designed for investors planning to retire and leave the workforce in or within a few years of 2025 (the target year). The Fund is designed for an investor who plans to withdraw the value of an account in the Fund over a period of many years after the target year. The Fund’s asset allocation will become more conservative over time, meaning that the percentage of assets allocated to stocks will decrease while the percentage of assets allocated to bonds and other fixed income investments will increase. Within seven years after 2025, the Fund’s asset allocation should become similar to that of the Target Retirement Income Fund. As of September 30, 2018, the Fund’s asset allocation among the underlying funds was as follows:
| • | Vanguard Total Stock Market Index Fund | 38.0% |
| • | Vanguard Total Bond Market II Index Fund | 26.2% |
| • | Vanguard Total International Stock Index Fund | 24.9% |
| • | Vanguard Total International Bond Index Fund | 10.9% |
20
At any given time, the Fund’s asset allocation may be affected by a variety of factors, such as whether the underlying funds are accepting additional investments.
The Fund’s indirect stock holdings are a diversified mix of U.S. and foreign large-, mid-, and small-capitalization stocks.
The Fund’s indirect bond holdings are a diversified mix of short-, intermediate-, and long-term U.S. government, U.S. agency, and investment-grade U.S. corporate bonds; mortgage-backed and asset-backed securities; and government, agency, corporate, and securitized investment-grade foreign bonds issued in currencies other than the U.S. dollar (but hedged by Vanguard to minimize foreign currency exposure).
Principal Risks
The Fund is subject to the risks associated with the stock and bond markets, any of which could cause an investor to lose money. An investment in the Fund is not guaranteed. An investor may experience losses, including losses near, at, or after the target year. There is no guarantee that the Fund will provide adequate income at or after the target year. Because stocks are typically more volatile than bonds and because the Fund currently invests most of its assets in stocks, the Fund’s overall level of risk should be higher than that of funds that invest the majority of their assets in bonds; however, the level of risk is expected to be lower than that of funds investing entirely in stocks.
• With approximately 63% of its assets allocated to stocks, the Fund is proportionately subject to stock market risk, which is the chance that stock prices overall will decline. Stock markets tend to move in cycles, with periods of rising prices and periods of falling prices. The Fund is also subject to the following risks associated with investments in foreign stocks: 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 companies in any one country or region; and 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. Country/regional risk and currency risk are especially high in emerging markets.
• With approximately 37% of its assets allocated to bonds, the Fund is proportionately subject to the following bond risks: interest rate risk, which is the chance that bond prices will decline because of rising interest rates; income risk, which is the chance that an underlying fund’s income will decline because of falling interest rates; credit risk, which is the chance that a bond issuer will fail to pay interest or principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline, thus reducing the underlying fund’s return; and call risk, which is the chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupon rates or interest rates before their maturity dates. An underlying fund would then lose any price appreciation
21
above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the underlying fund’s income. The Fund is also subject to the following risks associated with investments in currency-hedged foreign bonds: country/regional risk, which is the chance that world events—such as political upheaval, financial troubles, or natural disasters—will adversely affect the value and/or liquidity of securities issued by foreign governments, government agencies, or companies; and currency hedging risk, which is the chance that the currency hedging transactions entered into by the underlying international bond fund may not perfectly offset the fund’s foreign currency exposure.
• The Fund is also subject to asset allocation risk, which is the chance that the selection of underlying funds, and the allocation of assets to them, will cause the Fund to underperform other funds with a similar investment objective.
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Annual Total Returns
The following bar chart and table are intended to help you understand the risks of investing in the Fund. The bar chart shows how the performance of the Fund has varied from one calendar year to another over the periods shown. The table shows how the average annual total returns of the Fund compare with those of relevant market indexes and a composite stock/bond index, which have investment characteristics similar to those of the Fund. Keep in mind that the Fund’s past performance (before and after taxes) does not indicate how the Fund will perform in the future. Updated performance information is available on our website at vanguard.com/performance or by calling Vanguard toll-free at 800-662-7447.
Annual Total Returns — Vanguard Target Retirement 2025 Fund Investor Shares
During the periods shown in the bar chart, the highest return for a calendar quarter was 14.84% (quarter ended June 30, 2009), and the lowest return for a quarter was –11.49% (quarter ended September 30, 2011).
22
| Average Annual Total Returns for Periods Ended December 31, 2018 | |||
| 1 Year | 5 Years | 10 Years | |
| Vanguard Target Retirement 2025 Fund Investor Shares | |||
| Return Before Taxes | –5.15% | 4.66% | 9.06% |
| Return After Taxes on Distributions | –6.03 | 3.74 | 8.29 |
| Return After Taxes on Distributions and Sale of Fund Shares | –2.75 | 3.40 | 7.23 |
| Comparative Indexes | |||
| (reflect no deduction for fees, expenses, or taxes) | |||
| MSCI US Broad Market Index | –5.28% | 7.94% | 13.28% |
| Bloomberg Barclays U.S. Aggregate Bond Index | 0.01 | 2.52 | 3.48 |
| Target 2025 Composite Index | –5.01 | 4.87 | 9.29 |
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
William Coleman, CFA, Portfolio Manager at Vanguard. He has co-managed the Fund since 2013.
Walter Nejman, Portfolio Manager at Vanguard. He has co-managed the Fund since 2013.
23
Purchase and Sale of Fund Shares
You may purchase or redeem shares online through our website (vanguard.com), by mail (The Vanguard Group, P.O. Box 1110, Valley Forge, PA 19482-1110), or by telephone (800-662-2739). The minimum investment amount required to open and maintain a Fund account for Investor Shares is $1,000. The minimum investment amount required to add to an existing Fund account is generally $1. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special eligibility rules that may apply to them regarding Investor Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility. If you are investing through an employer-sponsored retirement or savings plan, your plan administrator or your benefits office can provide you with detailed information on how you can invest through your plan.
Tax Information
The Fund’s distributions may be taxable as ordinary income or capital gain. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply.
Payments to Financial Intermediaries
The Fund and its investment advisor do not pay financial intermediaries for sales of Fund shares.
24
Vanguard Target Retirement 2030 Fund
Investment Objective
The Fund seeks to provide capital appreciation and current income consistent with its current asset allocation.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and hold shares of the Fund.
| Shareholder Fees | |
| (Fees paid directly from your investment) | |
| Sales Charge (Load) Imposed on Purchases | None |
| Purchase Fee | None |
| Sales Charge (Load) Imposed on Reinvested Dividends | None |
| Redemption Fee | None |
| Account Service Fee (for certain fund account balances below $10,000) | $20/year |
| Annual Fund Operating Expenses | |
| (Expenses that you pay each year as a percentage of the value of your investment) | |
| Management Fees | None |
| 12b-1 Distribution Fee | None |
| Other Expenses | None |
| Acquired Fund Fees and Expenses | 0.14% |
| Total Annual Fund Operating Expenses | 0.14% |
25
Example
The following example is intended to help you compare the cost of investing in the Fund (based on the fees and expenses of the acquired funds) with the cost of investing in other mutual funds. It illustrates the hypothetical expenses that you would incur over various periods if you were to invest $10,000 in the Fund’s shares. This example assumes that the Fund provides a return of 5% each year and that total annual fund operating expenses of the Fund and its underlying funds remain as stated in the preceding table. You would incur these hypothetical expenses whether or not you were to redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
| 1 Year | 3 Years | 5 Years | 10 Years |
| $14 | $45 | $79 | $179 |
Portfolio Turnover
The Fund may pay transaction costs, such as purchase fees, 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 9% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests in other Vanguard mutual funds (underlying funds) according to an asset allocation strategy designed for investors planning to retire and leave the workforce in or within a few years of 2030 (the target year). The Fund is designed for an investor who plans to withdraw the value of an account in the Fund over a period of many years after the target year. The Fund’s asset allocation will become more conservative over time, meaning that the percentage of assets allocated to stocks will decrease while the percentage of assets allocated to bonds and other fixed income investments will increase. Within seven years after 2030, the Fund’s asset allocation should become similar to that of the Target Retirement Income Fund. As of September 30, 2018, the Fund’s asset allocation among the underlying funds was as follows:
| Vanguard Total Stock Market Index Fund | 42.2% |
| Vanguard Total International Stock Index Fund | 28.0% |
| Vanguard Total Bond Market II Index Fund | 21.1% |
| Vanguard Total International Bond Index Fund | 8.7% |
26
At any given time, the Fund’s asset allocation may be affected by a variety of factors, such as whether the underlying funds are accepting additional investments.
The Fund’s indirect stock holdings are a diversified mix of U.S. and foreign large-, mid-, and small-capitalization stocks.
The Fund’s indirect bond holdings are a diversified mix of short-, intermediate-, and long-term U.S. government, U.S. agency, and investment-grade U.S. corporate bonds; mortgage-backed and asset-backed securities; and government, agency, corporate, and securitized investment-grade foreign bonds issued in currencies other than the U.S. dollar (but hedged by Vanguard to minimize foreign currency exposure).
Principal Risks
The Fund is subject to the risks associated with the stock and bond markets, any of which could cause an investor to lose money. An investment in the Fund is not guaranteed. An investor may experience losses, including losses near, at, or after the target year. There is no guarantee that the Fund will provide adequate income at or after the target year. Because stocks are typically more volatile than bonds and because the Fund currently invests most of its assets in stocks, the Fund’s overall level of risk should be higher than that of funds that invest the majority of their assets in bonds; however, the level of risk is expected to be lower than that of funds investing entirely in stocks.
• With approximately 70% of its assets allocated to stocks, the Fund is proportionately subject to stock market risk, which is the chance that stock prices overall will decline. Stock markets tend to move in cycles, with periods of rising prices and periods of falling prices. The Fund is also subject to the following risks associated with investments in foreign stocks: 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 companies in any one country or region; and 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. Country/regional risk and currency risk are especially high in emerging markets.
• With approximately 30% of its assets allocated to bonds, the Fund is proportionately subject to the following bond risks: interest rate risk, which is the chance that bond prices will decline because of rising interest rates; income risk, which is the chance that an underlying fund’s income will decline because of falling interest rates; credit risk, which is the chance that a bond issuer will fail to pay interest or principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline, thus reducing the underlying fund’s return; and call risk, which is the chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupon rates or interest rates before their maturity dates. An underlying fund would then lose any price appreciation
27
above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the underlying fund’s income. The Fund is also subject to the following risks associated with investments in currency-hedged foreign bonds: country/regional risk, which is the chance that world events—such as political upheaval, financial troubles, or natural disasters—will adversely affect the value and/or liquidity of securities issued by foreign governments, government agencies, or companies; and currency hedging risk, which is the chance that the currency hedging transactions entered into by the underlying international bond fund may not perfectly offset the fund’s foreign currency exposure.
• The Fund is also subject to asset allocation risk, which is the chance that the selection of underlying funds, and the allocation of assets to them, will cause the Fund to underperform other funds with a similar investment objective.
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Annual Total Returns
The following bar chart and table are intended to help you understand the risks of investing in the Fund. The bar chart shows how the performance of the Fund has varied from one calendar year to another over the periods shown. The table shows how the average annual total returns of the Fund compare with those of relevant market indexes and a composite stock/bond index, which have investment characteristics similar to those of the Fund. Keep in mind that the Fund’s past performance (before and after taxes) does not indicate how the Fund will perform in the future. Updated performance information is available on our website at vanguard.com/performance or by calling Vanguard toll-free at 800-662-7447.
Annual Total Returns — Vanguard Target Retirement 2030 Fund Investor Shares
During the periods shown in the bar chart, the highest return for a calendar quarter was 16.23% (quarter ended June 30, 2009), and the lowest return for a quarter was –13.04% (quarter ended September 30, 2011).
28
| Average Annual Total Returns for Periods Ended December 31, 2018 | |||
| 1 Year | 5 Years | 10 Years | |
| Vanguard Target Retirement 2030 Fund Investor Shares | |||
| Return Before Taxes | –5.86% | 4.82% | 9.57% |
| Return After Taxes on Distributions | –6.61 | 4.05 | 8.91 |
| Return After Taxes on Distributions and Sale of Fund Shares | –3.20 | 3.57 | 7.71 |
| Comparative Indexes | |||
| (reflect no deduction for fees, expenses, or taxes) | |||
| MSCI US Broad Market Index | –5.28% | 7.94% | 13.28% |
| Bloomberg Barclays U.S. Aggregate Bond Index | 0.01 | 2.52 | 3.48 |
| Target 2030 Composite Index | –5.74 | 5.04 | 9.81 |
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
William Coleman, CFA, Portfolio Manager at Vanguard. He has co-managed the Fund since 2013.
Walter Nejman, Portfolio Manager at Vanguard. He has co-managed the Fund since 2013.
29
Purchase and Sale of Fund Shares
You may purchase or redeem shares online through our website (vanguard.com), by mail (The Vanguard Group, P.O. Box 1110, Valley Forge, PA 19482-1110), or by telephone (800-662-2739). The minimum investment amount required to open and maintain a Fund account for Investor Shares is $1,000. The minimum investment amount required to add to an existing Fund account is generally $1. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special eligibility rules that may apply to them regarding Investor Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility. If you are investing through an employer-sponsored retirement or savings plan, your plan administrator or your benefits office can provide you with detailed information on how you can invest through your plan.
Tax Information
The Fund’s distributions may be taxable as ordinary income or capital gain. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply.
Payments to Financial Intermediaries
The Fund and its investment advisor do not pay financial intermediaries for sales of Fund shares.
30
Vanguard Target Retirement 2035 Fund
Investment Objective
The Fund seeks to provide capital appreciation and current income consistent with its current asset allocation.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and hold shares of the Fund.
| Shareholder Fees | |
| (Fees paid directly from your investment) | |
| Sales Charge (Load) Imposed on Purchases | None |
| Purchase Fee | None |
| Sales Charge (Load) Imposed on Reinvested Dividends | None |
| Redemption Fee | None |
| Account Service Fee (for certain fund account balances below $10,000) | $20/year |
| Annual Fund Operating Expenses | |
| (Expenses that you pay each year as a percentage of the value of your investment) | |
| Management Fees | None |
| 12b-1 Distribution Fee | None |
| Other Expenses | None |
| Acquired Fund Fees and Expenses | 0.14% |
| Total Annual Fund Operating Expenses | 0.14% |
31
Example
The following example is intended to help you compare the cost of investing in the Fund (based on the fees and expenses of the acquired funds) with the cost of investing in other mutual funds. It illustrates the hypothetical expenses that you would incur over various periods if you were to invest $10,000 in the Fund’s shares. This example assumes that the Fund provides a return of 5% each year and that total annual fund operating expenses of the Fund and its underlying funds remain as stated in the preceding table. You would incur these hypothetical expenses whether or not you were to redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
| 1 Year | 3 Years | 5 Years | 10 Years |
| $14 | $45 | $79 | $179 |
Portfolio Turnover
The Fund may pay transaction costs, such as purchase fees, 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 8% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests in other Vanguard mutual funds (underlying funds) according to an asset allocation strategy designed for investors planning to retire and leave the workforce in or within a few years of 2035 (the target year). The Fund is designed for an investor who plans to withdraw the value of an account in the Fund over a period of many years after the target year. The Fund’s asset allocation will become more conservative over time, meaning that the percentage of assets allocated to stocks will decrease while the percentage of assets allocated to bonds and other fixed income investments will increase. Within seven years after 2035, the Fund’s asset allocation should become similar to that of the Target Retirement Income Fund. As of September 30, 2018, the Fund’s asset allocation among the underlying funds was as follows:
| • | Vanguard Total Stock Market Index Fund | 46.8% |
| • | Vanguard Total International Stock Index Fund | 30.9% |
| • | Vanguard Total Bond Market II Index Fund | 15.8% |
| • | Vanguard Total International Bond Index Fund | 6.5% |
32
At any given time, the Fund’s asset allocation may be affected by a variety of factors, such as whether the underlying funds are accepting additional investments.
The Fund’s indirect stock holdings are a diversified mix of U.S. and foreign large-, mid-, and small-capitalization stocks.
The Fund’s indirect bond holdings are a diversified mix of short-, intermediate-, and long-term U.S. government, U.S. agency, and investment-grade U.S. corporate bonds; mortgage-backed and asset-backed securities; and government, agency, corporate, and securitized investment-grade foreign bonds issued in currencies other than the U.S. dollar (but hedged by Vanguard to minimize foreign currency exposure).
Principal Risks
The Fund is subject to the risks associated with the stock and bond markets, any of which could cause an investor to lose money. An investment in the Fund is not guaranteed. An investor may experience losses, including losses near, at, or after the target year. There is no guarantee that the Fund will provide adequate income at or after the target year. Because stocks are typically more volatile than bonds and because the Fund currently invests most of its assets in stocks, the Fund’s overall level of risk should be higher than that of funds that invest the majority of their assets in bonds; however, the level of risk is expected to be lower than that of funds investing entirely in stocks.
• With approximately 78% of its assets allocated to stocks, the Fund is proportionately subject to stock market risk, which is the chance that stock prices overall will decline. Stock markets tend to move in cycles, with periods of rising prices and periods of falling prices. The Fund is also subject to the following risks associated with investments in foreign stocks: 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 companies in any one country or region; and 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. Country/regional risk and currency risk are especially high in emerging markets.
• With approximately 22% of its assets allocated to bonds, the Fund is proportionately subject to the following bond risks: interest rate risk, which is the chance that bond prices will decline because of rising interest rates; income risk, which is the chance that an underlying fund’s income will decline because of falling interest rates; credit risk, which is the chance that a bond issuer will fail to pay interest or principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline, thus reducing the underlying fund’s return; and call risk, which is the chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupon rates or interest rates before their maturity dates. An underlying fund would then lose any price appreciation
33
above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the underlying fund’s income. The Fund is also subject to the following risks associated with investments in currency-hedged foreign bonds: country/regional risk, which is the chance that world events—such as political upheaval, financial troubles, or natural disasters—will adversely affect the value and/or liquidity of securities issued by foreign governments, government agencies, or companies; and currency hedging risk, which is the chance that the currency hedging transactions entered into by the underlying international bond fund may not perfectly offset the fund’s foreign currency exposure.
• The Fund is also subject to asset allocation risk, which is the chance that the selection of underlying funds, and the allocation of assets to them, will cause the Fund to underperform other funds with a similar investment objective.
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Annual Total Returns
The following bar chart and table are intended to help you understand the risks of investing in the Fund. The bar chart shows how the performance of the Fund has varied from one calendar year to another over the periods shown. The table shows how the average annual total returns of the Fund compare with those of relevant market indexes and a composite stock/bond index, which have investment characteristics similar to those of the Fund. Keep in mind that the Fund’s past performance (before and after taxes) does not indicate how the Fund will perform in the future. Updated performance information is available on our website at vanguard.com/performance or by calling Vanguard toll-free at 800-662-7447.
Annual Total Returns — Vanguard Target Retirement 2035 Fund Investor Shares
During the periods shown in the bar chart, the highest return for a calendar quarter was 17.27% (quarter ended June 30, 2009), and the lowest return for a quarter was –14.59% (quarter ended September 30, 2011).
34
| Average Annual Total Returns for Periods Ended December 31, 2018 | |||
| 1 Year | 5 Years | 10 Years | |
| Vanguard Target Retirement 2035 Fund Investor Shares | |||
| Return Before Taxes | –6.58% | 4.99% | 10.04% |
| Return After Taxes on Distributions | –7.29 | 4.18 | 9.38 |
| Return After Taxes on Distributions and Sale of Fund Shares | –3.60 | 3.72 | 8.15 |
| Comparative Indexes | |||
| (reflect no deduction for fees, expenses, or taxes) | |||
| MSCI US Broad Market Index | –5.28% | 7.94% | 13.28% |
| Bloomberg Barclays U.S. Aggregate Bond Index | 0.01 | 2.52 | 3.48 |
| Target 2035 Composite Index | –6.48 | 5.21 | 10.29 |
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
William Coleman, CFA, Portfolio Manager at Vanguard. He has co-managed the Fund since 2013.
Walter Nejman, Portfolio Manager at Vanguard. He has co-managed the Fund since 2013.
35
Purchase and Sale of Fund Shares
You may purchase or redeem shares online through our website (vanguard.com), by mail (The Vanguard Group, P.O. Box 1110, Valley Forge, PA 19482-1110), or by telephone (800-662-2739). The minimum investment amount required to open and maintain a Fund account for Investor Shares is $1,000. The minimum investment amount required to add to an existing Fund account is generally $1. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special eligibility rules that may apply to them regarding Investor Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility. If you are investing through an employer-sponsored retirement or savings plan, your plan administrator or your benefits office can provide you with detailed information on how you can invest through your plan.
Tax Information
The Fund’s distributions may be taxable as ordinary income or capital gain. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply.
Payments to Financial Intermediaries
The Fund and its investment advisor do not pay financial intermediaries for sales of Fund shares.
36
Vanguard Target Retirement 2040 Fund
Investment Objective
The Fund seeks to provide capital appreciation and current income consistent with its current asset allocation.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and hold shares of the Fund.
| Shareholder Fees | |
| (Fees paid directly from your investment) | |
| Sales Charge (Load) Imposed on Purchases | None |
| Purchase Fee | None |
| Sales Charge (Load) Imposed on Reinvested Dividends | None |
| Redemption Fee | None |
| Account Service Fee (for certain fund account balances below $10,000) | $20/year |
| Annual Fund Operating Expenses | |
| (Expenses that you pay each year as a percentage of the value of your investment) | |
| Management Fees | None |
| 12b-1 Distribution Fee | None |
| Other Expenses | None |
| Acquired Fund Fees and Expenses | 0.14% |
| Total Annual Fund Operating Expenses | 0.14% |
37
Example
The following example is intended to help you compare the cost of investing in the Fund (based on the fees and expenses of the acquired funds) with the cost of investing in other mutual funds. It illustrates the hypothetical expenses that you would incur over various periods if you were to invest $10,000 in the Fund’s shares. This example assumes that the Fund provides a return of 5% each year and that total annual fund operating expenses of the Fund and its underlying funds remain as stated in the preceding table. You would incur these hypothetical expenses whether or not you were to redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
| 1 Year | 3 Years | 5 Years | 10 Years |
| $14 | $45 | $79 | $179 |
Portfolio Turnover
The Fund may pay transaction costs, such as purchase fees, 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 8% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests in other Vanguard mutual funds (underlying funds) according to an asset allocation strategy designed for investors planning to retire and leave the workforce in or within a few years of 2040 (the target year). The Fund is designed for an investor who plans to withdraw the value of an account in the Fund over a period of many years after the target year. The Fund’s asset allocation will become more conservative over time, meaning that the percentage of assets allocated to stocks will decrease while the percentage of assets allocated to bonds and other fixed income investments will increase. Within seven years after 2040, the Fund’s asset allocation should become similar to that of the Target Retirement Income Fund. As of September 30, 2018, the Fund’s asset allocation among the underlying funds was as follows:
| • | Vanguard Total Stock Market Index Fund | 51.1% |
| • | Vanguard Total International Stock Index Fund | 33.9% |
| • | Vanguard Total Bond Market II Index Fund | 10.7% |
| • | Vanguard Total International Bond Index Fund | 4.3% |
38
At any given time, the Fund’s asset allocation may be affected by a variety of factors, such as whether the underlying funds are accepting additional investments.
The Fund’s indirect stock holdings are a diversified mix of U.S. and foreign large-, mid-, and small-capitalization stocks.
The Fund’s indirect bond holdings are a diversified mix of short-, intermediate-, and long-term U.S. government, U.S. agency, and investment-grade U.S. corporate bonds; mortgage-backed and asset-backed securities; and government, agency, corporate, and securitized investment-grade foreign bonds issued in currencies other than the U.S. dollar (but hedged by Vanguard to minimize foreign currency exposure).
Principal Risks
The Fund is subject to the risks associated with the stock and bond markets, any of which could cause an investor to lose money. An investment in the Fund is not guaranteed. An investor may experience losses, including losses near, at, or after the target year. There is no guarantee that the Fund will provide adequate income at or after the target year. Because stocks are typically more volatile than bonds and because the Fund currently invests most of its assets in stocks, the Fund’s overall level of risk should be higher than that of funds that invest the majority of their assets in bonds; however, the level of risk is expected to be lower than that of funds investing entirely in stocks.
• With approximately 85% of its assets allocated to stocks, the Fund is proportionately subject to stock market risk, which is the chance that stock prices overall will decline. Stock markets tend to move in cycles, with periods of rising prices and periods of falling prices. The Fund is also subject to the following risks associated with investments in foreign stocks: 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 companies in any one country or region; and 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. Country/regional risk and currency risk are especially high in emerging markets.
• With approximately 15% of its assets allocated to bonds, the Fund is proportionately subject to the following bond risks: interest rate risk, which is the chance that bond prices will decline because of rising interest rates; income risk, which is the chance that an underlying fund’s income will decline because of falling interest rates; credit risk, which is the chance that a bond issuer will fail to pay interest or principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline, thus reducing the underlying fund’s return; and call risk, which is the chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupon rates or interest rates before their maturity dates. An underlying fund would then lose any price appreciation
39
above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the underlying fund’s income. The Fund is also subject to the following risks associated with investments in currency-hedged foreign bonds: country/regional risk, which is the chance that world events—such as political upheaval, financial troubles, or natural disasters—will adversely affect the value and/or liquidity of securities issued by foreign governments, government agencies, or companies; and currency hedging risk, which is the chance that the currency hedging transactions entered into by the underlying international bond fund may not perfectly offset the fund’s foreign currency exposure.
• The Fund is also subject to asset allocation risk, which is the chance that the selection of underlying funds, and the allocation of assets to them, will cause the Fund to underperform other funds with a similar investment objective.
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Annual Total Returns
The following bar chart and table are intended to help you understand the risks of investing in the Fund. The bar chart shows how the performance of the Fund has varied from one calendar year to another over the periods shown. The table shows how the average annual total returns of the Fund compare with those of relevant market indexes and a composite stock/bond index, which have investment characteristics similar to those of the Fund. Keep in mind that the Fund’s past performance (before and after taxes) does not indicate how the Fund will perform in the future. Updated performance information is available on our website at vanguard.com/performance or by calling Vanguard toll-free at 800-662-7447.
Annual Total Returns — Vanguard Target Retirement 2040 Fund Investor Shares
During the periods shown in the bar chart, the highest return for a calendar quarter was 17.13% (quarter ended June 30, 2009), and the lowest return for a quarter was –14.93% (quarter ended September 30, 2011).
40
| Average Annual Total Returns for Periods Ended December 31, 2018 | |||
| 1 Year | 5 Years | 10 Years | |
| Vanguard Target Retirement 2040 Fund Investor Shares | |||
| Return Before Taxes | –7.32% | 5.10% | 10.26% |
| Return After Taxes on Distributions | –7.97 | 4.44 | 9.68 |
| Return After Taxes on Distributions and Sale of Fund Shares | –4.03 | 3.85 | 8.37 |
| Comparative Indexes | |||
| (reflect no deduction for fees, expenses, or taxes) | |||
| MSCI US Broad Market Index | –5.28% | 7.94% | 13.28% |
| Bloomberg Barclays U.S. Aggregate Bond Index | 0.01 | 2.52 | 3.48 |
| Target 2040 Composite Index | –7.23 | 5.36 | 10.53 |
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
William Coleman, CFA, Portfolio Manager at Vanguard. He has co-managed the Fund since 2013.
Walter Nejman, Portfolio Manager at Vanguard. He has co-managed the Fund since 2013.
41
Purchase and Sale of Fund Shares
You may purchase or redeem shares online through our website (vanguard.com), by mail (The Vanguard Group, P.O. Box 1110, Valley Forge, PA 19482-1110), or by telephone (800-662-2739). The minimum investment amount required to open and maintain a Fund account for Investor Shares is $1,000. The minimum investment amount required to add to an existing Fund account is generally $1. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special eligibility rules that may apply to them regarding Investor Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility. If you are investing through an employer-sponsored retirement or savings plan, your plan administrator or your benefits office can provide you with detailed information on how you can invest through your plan.
Tax Information
The Fund’s distributions may be taxable as ordinary income or capital gain. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply.
Payments to Financial Intermediaries
The Fund and its investment advisor do not pay financial intermediaries for sales of Fund shares.
42
Vanguard Target Retirement 2045 Fund
Investment Objective
The Fund seeks to provide capital appreciation and current income consistent with its current asset allocation.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and hold shares of the Fund.
| Shareholder Fees | |
| (Fees paid directly from your investment) | |
| Sales Charge (Load) Imposed on Purchases | None |
| Purchase Fee | None |
| Sales Charge (Load) Imposed on Reinvested Dividends | None |
| Redemption Fee | None |
| Account Service Fee (for certain fund account balances below $10,000) | $20/year |
| Annual Fund Operating Expenses | |
| (Expenses that you pay each year as a percentage of the value of your investment) | |
| Management Fees | None |
| 12b-1 Distribution Fee | None |
| Other Expenses | None |
| Acquired Fund Fees and Expenses | 0.15% |
| Total Annual Fund Operating Expenses | 0.15% |
43
Example
The following example is intended to help you compare the cost of investing in the Fund (based on the fees and expenses of the acquired funds) with the cost of investing in other mutual funds. It illustrates the hypothetical expenses that you would incur over various periods if you were to invest $10,000 in the Fund’s shares. This example assumes that the Fund provides a return of 5% each year and that total annual fund operating expenses of the Fund and its underlying funds remain as stated in the preceding table. You would incur these hypothetical expenses whether or not you were to redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
| 1 Year | 3 Years | 5 Years | 10 Years |
| $15 | $48 | $85 | $192 |
Portfolio Turnover
The Fund may pay transaction costs, such as purchase fees, 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 7% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests in other Vanguard mutual funds (underlying funds) according to an asset allocation strategy designed for investors planning to retire and leave the workforce in or within a few years of 2045 (the target year). The Fund is designed for an investor who plans to withdraw the value of an account in the Fund over a period of many years after the target year. The Fund’s asset allocation will become more conservative over time, meaning that the percentage of assets allocated to stocks will decrease while the percentage of assets allocated to bonds and other fixed income investments will increase. Within seven years after 2045, the Fund’s asset allocation should become similar to that of the Target Retirement Income Fund. As of September 30, 2018, the Fund’s asset allocation among the underlying funds was as follows:
| • | Vanguard Total Stock Market Index Fund | 54.1% |
| • | Vanguard Total International Stock Index Fund | 35.9% |
| • | Vanguard Total Bond Market II Index Fund | 7.1% |
| • | Vanguard Total International Bond Index Fund | 2.9% |
44
At any given time, the Fund’s asset allocation may be affected by a variety of factors, such as whether the underlying funds are accepting additional investments.
The Fund’s indirect stock holdings are a diversified mix of U.S. and foreign large-, mid-, and small-capitalization stocks.
The Fund’s indirect bond holdings are a diversified mix of short-, intermediate-, and long-term U.S. government, U.S. agency, and investment-grade U.S. corporate bonds; mortgage-backed and asset-backed securities; and government, agency, corporate, and securitized investment-grade foreign bonds issued in currencies other than the U.S. dollar (but hedged by Vanguard to minimize foreign currency exposure).
Principal Risks
The Fund is subject to the risks associated with the stock and bond markets, any of which could cause an investor to lose money. An investment in the Fund is not guaranteed. An investor may experience losses, including losses near, at, or after the target year. There is no guarantee that the Fund will provide adequate income at or after the target year. Because stocks are typically more volatile than bonds and because the Fund currently invests most of its assets in stocks, the Fund’s overall level of risk should be higher than that of funds that invest the majority of their assets in bonds; however, the level of risk is expected to be lower than that of funds investing entirely in stocks.
• With approximately 90% of its assets allocated to stocks, the Fund is proportionately subject to stock market risk, which is the chance that stock prices overall will decline. Stock markets tend to move in cycles, with periods of rising prices and periods of falling prices. The Fund is also subject to the following risks associated with investments in foreign stocks: 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 companies in any one country or region; and 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. Country/regional risk and currency risk are especially high in emerging markets.
• With approximately 10% of its assets allocated to bonds, the Fund is proportionately subject to the following bond risks: interest rate risk, which is the chance that bond prices will decline because of rising interest rates; income risk, which is the chance that an underlying fund’s income will decline because of falling interest rates; credit risk, which is the chance that a bond issuer will fail to pay interest or principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline, thus reducing the underlying fund’s return; and call risk, which is the chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupon rates or interest rates before their maturity dates. An underlying fund would then lose any price appreciation
45
above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the underlying fund’s income. The Fund is also subject to the following risks associated with investments in currency-hedged foreign bonds: country/regional risk, which is the chance that world events—such as political upheaval, financial troubles, or natural disasters—will adversely affect the value and/or liquidity of securities issued by foreign governments, government agencies, or companies; and currency hedging risk, which is the chance that the currency hedging transactions entered into by the underlying international bond fund may not perfectly offset the fund’s foreign currency exposure.
• The Fund is also subject to asset allocation risk, which is the chance that the selection of underlying funds, and the allocation of assets to them, will cause the Fund to underperform other funds with a similar investment objective.
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Annual Total Returns
The following bar chart and table are intended to help you understand the risks of investing in the Fund. The bar chart shows how the performance of the Fund has varied from one calendar year to another over the periods shown. The table shows how the average annual total returns of the Fund compare with those of relevant market indexes and a composite stock/bond index, which have investment characteristics similar to those of the Fund. Keep in mind that the Fund’s past performance (before and after taxes) does not indicate how the Fund will perform in the future. Updated performance information is available on our website at vanguard.com/performance or by calling Vanguard toll-free at 800-662-7447.
Annual Total Returns — Vanguard Target Retirement 2045 Fund Investor Shares
During the periods shown in the bar chart, the highest return for a calendar quarter was 17.15% (quarter ended June 30, 2009), and the lowest return for a quarter was –14.91% (quarter ended September 30, 2011).
46
| Average Annual Total Returns for Periods Ended December 31, 2018 | |||
| 1 Year | 5 Years | 10 Years | |
| Vanguard Target Retirement 2045 Fund Investor Shares | |||
| Return Before Taxes | –7.90% | 5.13% | 10.26% |
| Return After Taxes on Distributions | –8.50 | 4.46 | 9.66 |
| Return After Taxes on Distributions and Sale of Fund Shares | –4.35 | 3.89 | 8.38 |
| Comparative Indexes | |||
| (reflect no deduction for fees, expenses, or taxes) | |||
| MSCI US Broad Market Index | –5.28% | 7.94% | 13.28% |
| Bloomberg Barclays U.S. Aggregate Bond Index | 0.01 | 2.52 | 3.48 |
| Target 2045 Composite Index | –7.77 | 5.39 | 10.54 |
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
William Coleman, CFA, Portfolio Manager at Vanguard. He has co-managed the Fund since 2013.
Walter Nejman, Portfolio Manager at Vanguard. He has co-managed the Fund since 2013.
47
Purchase and Sale of Fund Shares
You may purchase or redeem shares online through our website (vanguard.com), by mail (The Vanguard Group, P.O. Box 1110, Valley Forge, PA 19482-1110), or by telephone (800-662-2739). The minimum investment amount required to open and maintain a Fund account for Investor Shares is $1,000. The minimum investment amount required to add to an existing Fund account is generally $1. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special eligibility rules that may apply to them regarding Investor Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility. If you are investing through an employer-sponsored retirement or savings plan, your plan administrator or your benefits office can provide you with detailed information on how you can invest through your plan.
Tax Information
The Fund’s distributions may be taxable as ordinary income or capital gain. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply.
Payments to Financial Intermediaries
The Fund and its investment advisor do not pay financial intermediaries for sales of Fund shares.
48
Vanguard Target Retirement 2050 Fund
Investment Objective
The Fund seeks to provide capital appreciation and current income consistent with its current asset allocation.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and hold shares of the Fund.
| Shareholder Fees | |
| (Fees paid directly from your investment) | |
| Sales Charge (Load) Imposed on Purchases | None |
| Purchase Fee | None |
| Sales Charge (Load) Imposed on Reinvested Dividends | None |
| Redemption Fee | None |
| Account Service Fee (for certain fund account balances below $10,000) | $20/year |
| Annual Fund Operating Expenses | |
| (Expenses that you pay each year as a percentage of the value of your investment) | |
| Management Fees | None |
| 12b-1 Distribution Fee | None |
| Other Expenses | None |
| Acquired Fund Fees and Expenses | 0.15% |
| Total Annual Fund Operating Expenses | 0.15% |
49
Example
The following example is intended to help you compare the cost of investing in the Fund (based on the fees and expenses of the acquired funds) with the cost of investing in other mutual funds. It illustrates the hypothetical expenses that you would incur over various periods if you were to invest $10,000 in the Fund’s shares. This example assumes that the Fund provides a return of 5% each year and that total annual fund operating expenses of the Fund and its underlying funds remain as stated in the preceding table. You would incur these hypothetical expenses whether or not you were to redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
| 1 Year | 3 Years | 5 Years | 10 Years |
| $15 | $48 | $85 | $192 |
Portfolio Turnover
The Fund may pay transaction costs, such as purchase fees, 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 7% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests in other Vanguard mutual funds (underlying funds) according to an asset allocation strategy designed for investors planning to retire and leave the workforce in or within a few years of 2050 (the target year). The Fund is designed for an investor who plans to withdraw the value of an account in the Fund over a period of many years after the target year. The Fund’s asset allocation will become more conservative over time, meaning that the percentage of assets allocated to stocks will decrease while the percentage of assets allocated to bonds and other fixed income investments will increase. Within seven years after 2050, the Fund’s asset allocation should become similar to that of the Target Retirement Income Fund. As of September 30, 2018, the Fund’s asset allocation among the underlying funds was as follows:
| • | Vanguard Total Stock Market Index Fund | 54.0% |
| • | Vanguard Total International Stock Index Fund | 36.0% |
| • | Vanguard Total Bond Market II Index Fund | 7.1% |
| • | Vanguard Total International Bond Index Fund | 2.9% |
50
At any given time, the Fund’s asset allocation may be affected by a variety of factors, such as whether the underlying funds are accepting additional investments.
The Fund’s indirect stock holdings are a diversified mix of U.S. and foreign large-, mid-, and small-capitalization stocks.
The Fund’s indirect bond holdings are a diversified mix of short-, intermediate-, and long-term U.S. government, U.S. agency, and investment-grade U.S. corporate bonds; mortgage-backed and asset-backed securities; and government, agency, corporate, and securitized investment-grade foreign bonds issued in currencies other than the U.S. dollar (but hedged by Vanguard to minimize foreign currency exposure).
Principal Risks
The Fund is subject to the risks associated with the stock and bond markets, any of which could cause an investor to lose money. An investment in the Fund is not guaranteed. An investor may experience losses, including losses near, at, or after the target year. There is no guarantee that the Fund will provide adequate income at or after the target year. Because stocks are typically more volatile than bonds and because the Fund currently invests most of its assets in stocks, the Fund’s overall level of risk should be higher than that of funds that invest the majority of their assets in bonds; however, the level of risk is expected to be lower than that of funds investing entirely in stocks.
• With approximately 90% of its assets allocated to stocks, the Fund is proportionately subject to stock market risk, which is the chance that stock prices overall will decline. Stock markets tend to move in cycles, with periods of rising prices and periods of falling prices. The Fund is also subject to the following risks associated with investments in foreign stocks: 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 companies in a particular country or region; and 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. Country/regional risk and currency risk are especially high in emerging markets.
• With approximately 10% of its assets allocated to bonds, the Fund is proportionately subject to the following bond risks: interest rate risk, which is the chance that bond prices will decline because of rising interest rates; income risk, which is the chance that an underlying fund’s income will decline because of falling interest rates; credit risk, which is the chance that a bond issuer will fail to pay interest or principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline, thus reducing the underlying fund’s return; and call risk, which is the chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupon rates or interest rates before their maturity dates. An underlying fund would then lose any price appreciation
51
above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the underlying fund’s income. The Fund is also subject to the following risks associated with investments in currency-hedged foreign bonds: country/regional risk, which is the chance that world events—such as political upheaval, financial troubles, or natural disasters—will adversely affect the value and/or liquidity of securities issued by foreign governments, government agencies, or companies; and currency hedging risk, which is the chance that the currency hedging transactions entered into by the underlying international bond fund may not perfectly offset the fund’s foreign currency exposure.
• The Fund is also subject to asset allocation risk, which is the chance that the selection of underlying funds, and the allocation of assets to them, will cause the Fund to underperform other funds with a similar investment objective.
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Annual Total Returns
The following bar chart and table are intended to help you understand the risks of investing in the Fund. The bar chart shows how the performance of the Fund has varied from one calendar year to another over the periods shown. The table shows how the average annual total returns of the Fund compare with those of relevant market indexes and a composite stock/bond index, which have investment characteristics similar to those of the Fund. Keep in mind that the Fund’s past performance (before and after taxes) does not indicate how the Fund will perform in the future. Updated performance information is available on our website at vanguard.com/performance or by calling Vanguard toll-free at 800-662-7447.
Annual Total Returns — Vanguard Target Retirement 2050 Fund Investor Shares
During the periods shown in the bar chart, the highest return for a calendar quarter was 17.23% (quarter ended June 30, 2009), and the lowest return for a quarter was –14.91% (quarter ended September 30, 2011).
52
| Average Annual Total Returns for Periods Ended December 31, 2018 | |||
| 1 Year | 5 Years | 10 Years | |
| Vanguard Target Retirement 2050 Fund Investor Shares | |||
| Return Before Taxes | –7.90% | 5.12% | 10.27% |
| Return After Taxes on Distributions | –8.49 | 4.52 | 9.70 |
| Return After Taxes on Distributions and Sale of Fund Shares | –4.34 | 3.89 | 8.38 |
| Comparative Indexes | |||
| (reflect no deduction for fees, expenses, or taxes) | |||
| MSCI US Broad Market Index | –5.28% | 7.94% | 13.28% |
| Bloomberg Barclays U.S. Aggregate Bond Index | 0.01 | 2.52 | 3.48 |
| Target 2050 Composite Index | –7.77 | 5.39 | 10.54 |
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
William Coleman, CFA, Portfolio Manager at Vanguard. He has co-managed the Fund since 2013.
Walter Nejman, Portfolio Manager at Vanguard. He has co-managed the Fund since 2013.
53
Purchase and Sale of Fund Shares
You may purchase or redeem shares online through our website (vanguard.com), by mail (The Vanguard Group, P.O. Box 1110, Valley Forge, PA 19482-1110), or by telephone (800-662-2739). The minimum investment amount required to open and maintain a Fund account for Investor Shares is $1,000. The minimum investment amount required to add to an existing Fund account is generally $1. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special eligibility rules that may apply to them regarding Investor Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility. If you are investing through an employer-sponsored retirement or savings plan, your plan administrator or your benefits office can provide you with detailed information on how you can invest through your plan.
Tax Information
The Fund’s distributions may be taxable as ordinary income or capital gain. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply.
Payments to Financial Intermediaries
The Fund and its investment advisor do not pay financial intermediaries for sales of Fund shares.
54
Vanguard Target Retirement 2055 Fund
Investment Objective
The Fund seeks to provide capital appreciation and current income consistent with its current asset allocation.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and hold shares of the Fund.
| Shareholder Fees | |
| (Fees paid directly from your investment) | |
| Sales Charge (Load) Imposed on Purchases | None |
| Purchase Fee | None |
| Sales Charge (Load) Imposed on Reinvested Dividends | None |
| Redemption Fee | None |
| Account Service Fee (for certain fund account balances below $10,000) | $20/year |
| Annual Fund Operating Expenses | |
| (Expenses that you pay each year as a percentage of the value of your investment) | |
| Management Fees | None |
| 12b-1 Distribution Fee | None |
| Other Expenses | None |
| Acquired Fund Fees and Expenses | 0.15% |
| Total Annual Fund Operating Expenses | 0.15% |
55
Example
The following example is intended to help you compare the cost of investing in the Fund (based on the fees and expenses of the acquired funds) with the cost of investing in other mutual funds. It illustrates the hypothetical expenses that you would incur over various periods if you were to invest $10,000 in the Fund’s shares. This example assumes that the Fund provides a return of 5% each year and that total annual fund operating expenses of the Fund and its underlying funds remain as stated in the preceding table. You would incur these hypothetical expenses whether or not you were to redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
| 1 Year | 3 Years | 5 Years | 10 Years |
| $15 | $48 | $85 | $192 |
Portfolio Turnover
The Fund may pay transaction costs, such as purchase fees, 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 5% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests in other Vanguard mutual funds (underlying funds) according to an asset allocation strategy designed for investors planning to retire and leave the workforce in or within a few years of 2055 (the target year). The Fund is designed for an investor who plans to withdraw the value of an account in the Fund over a period of many years after the target year. The Fund’s asset allocation will become more conservative over time, meaning that the percentage of assets allocated to stocks will decrease while the percentage of assets allocated to bonds and other fixed income investments will increase. Within seven years after 2055, the Fund’s asset allocation should become similar to that of the Target Retirement Income Fund. As of September 30, 2018, the Fund’s asset allocation among the underlying funds was as follows:
| • | Vanguard Total Stock Market Index Fund | 54.0% |
| • | Vanguard Total International Stock Index Fund | 36.0% |
| • | Vanguard Total Bond Market II Index Fund | 7.1% |
| • | Vanguard Total International Bond Index Fund | 2.9% |
56
At any given time, the Fund’s asset allocation may be affected by a variety of factors, such as whether the underlying funds are accepting additional investments.
The Fund’s indirect stock holdings are a diversified mix of U.S. and foreign large-, mid-, and small-capitalization stocks.
The Fund’s indirect bond holdings are a diversified mix of short-, intermediate-, and long-term U.S. government, U.S. agency, and investment-grade U.S. corporate bonds; mortgage-backed and asset-backed securities; and government, agency, corporate, and securitized investment-grade foreign bonds issued in currencies other than the U.S. dollar (but hedged by Vanguard to minimize foreign currency exposure).
Principal Risks
The Fund is subject to the risks associated with the stock and bond markets, any of which could cause an investor to lose money. An investment in the Fund is not guaranteed. An investor may experience losses, including losses near, at, or after the target year. There is no guarantee that the Fund will provide adequate income at or after the target year. Because stocks are typically more volatile than bonds and because the Fund currently invests most of its assets in stocks, the Fund’s overall level of risk should be higher than that of funds that invest the majority of their assets in bonds; however, the level of risk is expected to be lower than that of funds investing entirely in stocks.
• With approximately 90% of its assets allocated to stocks, the Fund is proportionately subject to stock market risk, which is the chance that stock prices overall will decline. Stock markets tend to move in cycles, with periods of rising prices and periods of falling prices. The Fund is also subject to the following risks associated with investments in foreign stocks: 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 companies in a particular country or region; and 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. Country/regional risk and currency risk are especially high in emerging markets.
• With approximately 10% of its assets allocated to bonds, the Fund is proportionately subject to the following bond risks: interest rate risk, which is the chance that bond prices will decline because of rising interest rates; income risk, which is the chance that an underlying fund’s income will decline because of falling interest rates; credit risk, which is the chance that a bond issuer will fail to pay interest or principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline, thus reducing the underlying fund’s return; and call risk, which is the chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupon rates or interest rates before their maturity dates. An underlying fund would then lose any price appreciation
57
above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the underlying fund’s income. The Fund is also subject to the following risks associated with investments in currency-hedged foreign bonds: country/regional risk, which is the chance that world events—such as political upheaval, financial troubles, or natural disasters—will adversely affect the value and/or liquidity of securities issued by foreign governments, government agencies, or companies; and currency hedging risk, which is the chance that the currency hedging transactions entered into by the underlying international bond fund may not perfectly offset the fund’s foreign currency exposure.
• The Fund is also subject to asset allocation risk, which is the chance that the selection of underlying funds, and the allocation of assets to them, will cause the Fund to underperform other funds with a similar investment objective.
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Annual Total Returns
The following bar chart and table are intended to help you understand the risks of investing in the Fund. The bar chart shows how the performance of the Fund has varied from one calendar year to another over the periods shown. The table shows how the average annual total returns of the Fund compare with those of relevant market indexes and a composite stock/bond index, which have investment characteristics similar to those of the Fund. Keep in mind that the Fund’s past performance (before and after taxes) does not indicate how the Fund will perform in the future. Updated performance information is available on our website at vanguard.com/performance or by calling Vanguard toll-free at 800-662-7447.
Annual Total Returns — Vanguard Target Retirement 2055 Fund Investor Shares
During the periods shown in the bar chart, the highest return for a calendar quarter was 11.30% (quarter ended March 31, 2012), and the lowest return for a quarter was –14.79% (quarter ended September 30, 2011).
58
| Average Annual Total Returns for Periods Ended December 31, 2018 | |||
| Since | |||
| Inception | |||
| (Aug. 18, | |||
| 1 Year | 5 Years | 2010) | |
| Vanguard Target Retirement 2055 Fund Investor Shares | |||
| Return Before Taxes | –7.89% | 5.10% | 9.09% |
| Return After Taxes on Distributions | –8.43 | 4.56 | 8.58 |
| Return After Taxes on Distributions and Sale of Fund Shares | –4.35 | 3.89 | 7.29 |
| Comparative Indexes | |||
| (reflect no deduction for fees, expenses, or taxes) | |||
| MSCI US Broad Market Index | –5.28% | 7.94% | 12.63% |
| Bloomberg Barclays U.S. Aggregate Bond Index | 0.01 | 2.52 | 2.59 |
| Target 2055 Composite Index | –7.77 | 5.39 | 9.33 |
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
William Coleman, CFA, Portfolio Manager at Vanguard. He has co-managed the Fund since 2013.
Walter Nejman, Portfolio Manager at Vanguard. He has co-managed the Fund since 2013.
59
Purchase and Sale of Fund Shares
You may purchase or redeem shares online through our website (vanguard.com), by mail (The Vanguard Group, P.O. Box 1110, Valley Forge, PA 19482-1110), or by telephone (800-662-2739). The minimum investment amount required to open and maintain a Fund account for Investor Shares is $1,000. The minimum investment amount required to add to an existing Fund account is generally $1. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special eligibility rules that may apply to them regarding Investor Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility. If you are investing through an employer-sponsored retirement or savings plan, your plan administrator or your benefits office can provide you with detailed information on how you can invest through your plan.
Tax Information
The Fund’s distributions may be taxable as ordinary income or capital gain. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply.
Payments to Financial Intermediaries
The Fund and its investment advisor do not pay financial intermediaries for sales of Fund shares.
60
Vanguard Target Retirement 2060 Fund
Investment Objective
The Fund seeks to provide capital appreciation and current income consistent with its current asset allocation.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and hold shares of the Fund.
| Shareholder Fees | |
| (Fees paid directly from your investment) | |
| Sales Charge (Load) Imposed on Purchases | None |
| Purchase Fee | None |
| Sales Charge (Load) Imposed on Reinvested Dividends | None |
| Redemption Fee | None |
| Account Service Fee (for certain fund account balances below $10,000) | $20/year |
| Annual Fund Operating Expenses | |
| (Expenses that you pay each year as a percentage of the value of your investment) | |
| Management Fees | None |
| 12b-1 Distribution Fee | None |
| Other Expenses | None |
| Acquired Fund Fees and Expenses | 0.15% |
| Total Annual Fund Operating Expenses | 0.15% |
61
Example
The following example is intended to help you compare the cost of investing in the Fund (based on the fees and expenses of the acquired funds) with the cost of investing in other mutual funds. It illustrates the hypothetical expenses that you would incur over various periods if you were to invest $10,000 in the Fund’s shares. This example assumes that the Fund provides a return of 5% each year and that total annual fund operating expenses of the Fund and its underlying funds remain as stated in the preceding table. You would incur these hypothetical expenses whether or not you were to redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
| 1 Year | 3 Years | 5 Years | 10 Years |
| $15 | $48 | $85 | $192 |
Portfolio Turnover
The Fund may pay transaction costs, such as purchase fees, 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 3% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests in other Vanguard mutual funds (underlying funds) according to an asset allocation strategy designed for investors planning to retire and leave the workforce in or within a few years of 2060 (the target year). The Fund is designed for an investor who plans to withdraw the value of an account in the Fund over a period of many years after the target year. The Fund’s asset allocation will become more conservative over time, meaning that the percentage of assets allocated to stocks will decrease while the percentage of assets allocated to bonds and other fixed income investments will increase. Within seven years after 2060, the Fund’s asset allocation should become similar to that of the Target Retirement Income Fund. As of September 30, 2018, the Fund’s asset allocation among the underlying funds was as follows:
| • | Vanguard Total Stock Market Index Fund | 54.1% |
| • | Vanguard Total International Stock Index Fund | 35.9% |
| • | Vanguard Total Bond Market II Index Fund | 7.1% |
| • | Vanguard Total International Bond Index Fund | 2.9% |
62
At any given time, the Fund’s asset allocation may be affected by a variety of factors, such as whether the underlying funds are accepting additional investments.
The Fund’s indirect stock holdings are a diversified mix of U.S. and foreign large-, mid-, and small-capitalization stocks.
The Fund’s indirect bond holdings are a diversified mix of short-, intermediate-, and long-term U.S. government, U.S. agency, and investment-grade U.S. corporate bonds; mortgage-backed and asset-backed securities; and government, agency, corporate, and securitized investment-grade foreign bonds issued in currencies other than the U.S. dollar (but hedged by Vanguard to minimize foreign currency exposure).
Principal Risks
The Fund is subject to the risks associated with the stock and bond markets, any of which could cause an investor to lose money. An investment in the Fund is not guaranteed. An investor may experience losses, including losses near, at, or after the target year. There is no guarantee that the Fund will provide adequate income at or after the target year. Because stocks are typically more volatile than bonds and because the Fund currently invests most of its assets in stocks, the Fund’s overall level of risk should be higher than that of funds that invest the majority of their assets in bonds; however, the level of risk is expected to be lower than that of funds investing entirely in stocks.
• With approximately 90% of its assets allocated to stocks, the Fund is proportionately subject to stock market risk, which is the chance that stock prices overall will decline. Stock markets tend to move in cycles, with periods of rising prices and periods of falling prices. The Fund is also subject to the following risks associated with investments in foreign stocks: 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 companies in a particular country or region; and 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. Country/regional risk and currency risk are especially high in emerging markets.
• With approximately 10% of its assets allocated to bonds, the Fund is proportionately subject to the following bond risks: interest rate risk, which is the chance that bond prices will decline because of rising interest rates; income risk, which is the chance that an underlying fund’s income will decline because of falling interest rates; credit risk, which is the chance that a bond issuer will fail to pay interest or principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline, thus reducing the underlying fund’s return; and call risk, which is the chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupon rates or interest rates before their maturity dates. An underlying fund would then lose any price appreciation
63
above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the underlying fund’s income. The Fund is also subject to the following risks associated with investments in currency-hedged foreign bonds: country/regional risk, which is the chance that world events—such as political upheaval, financial troubles, or natural disasters—will adversely affect the value and/or liquidity of securities issued by foreign governments, government agencies, or companies; and currency hedging risk, which is the chance that the currency hedging transactions entered into by the underlying international bond fund may not perfectly offset the fund’s foreign currency exposure.
• The Fund is also subject to asset allocation risk, which is the chance that the selection of underlying funds, and the allocation of assets to them, will cause the Fund to underperform other funds with a similar investment objective.
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Annual Total Returns
The following bar chart and table are intended to help you understand the risks of investing in the Fund. The bar chart shows how the performance of the Fund has varied from one calendar year to another over the periods shown. The table shows how the average annual total returns of the Fund compare with those of relevant market indexes and a composite stock/bond index, which have investment characteristics similar to those of the Fund. Keep in mind that the Fund’s past performance (before and after taxes) does not indicate how the Fund will perform in the future. Updated performance information is available on our website at vanguard.com/performance or by calling Vanguard toll-free at 800-662-7447.
Annual Total Returns — Vanguard Target Retirement 2060 Fund Investor Shares
During the periods shown in the bar chart, the highest return for a calendar quarter was 7.61% (quarter ended March 31, 2013), and the lowest return for a quarter was –11.77% (quarter ended December 31, 2018).
64
| Average Annual Total Returns for Periods Ended December 31, 2018 | |||
| Since | |||
| Inception | |||
| (Jan. 19, | |||
| 1 Year | 5 Years | 2012) | |
| Vanguard Target Retirement 2060 Fund Investor Shares | |||
| Return Before Taxes | –7.87% | 5.10% | 8.52% |
| Return After Taxes on Distributions | –8.40 | 4.57 | 8.02 |
| Return After Taxes on Distributions and Sale of Fund Shares | –4.34 | 3.89 | 6.74 |
| Comparative Indexes | |||
| (reflect no deduction for fees, expenses, or taxes) | |||
| MSCI US Broad Market Index | –5.28% | 7.94% | 11.81% |
| Bloomberg Barclays U.S. Aggregate Bond Index | 0.01 | 2.52 | 2.10 |
| Target 2060 Composite Index | –7.77 | 5.39 | 8.78 |
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
William Coleman, CFA, Portfolio Manager at Vanguard. He has co-managed the Fund since 2013.
Walter Nejman, Portfolio Manager at Vanguard. He has co-managed the Fund since 2013.
65
Purchase and Sale of Fund Shares
You may purchase or redeem shares online through our website (vanguard.com), by mail (The Vanguard Group, P.O. Box 1110, Valley Forge, PA 19482-1110), or by telephone (800-662-2739). The minimum investment amount required to open and maintain a Fund account for Investor Shares is $1,000. The minimum investment amount required to add to an existing Fund account is generally $1. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special eligibility rules that may apply to them regarding Investor Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility. If you are investing through an employer-sponsored retirement or savings plan, your plan administrator or your benefits office can provide you with detailed information on how you can invest through your plan.
Tax Information
The Fund’s distributions may be taxable as ordinary income or capital gain. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply.
Payments to Financial Intermediaries
The Fund and its investment advisor do not pay financial intermediaries for sales of Fund shares.
66
Vanguard Target Retirement 2065 Fund
Investment Objective
The Fund seeks to provide capital appreciation and current income consistent with its current asset allocation.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and hold shares of the Fund.
| Shareholder Fees | |
| (Fees paid directly from your investment) | |
| Sales Charge (Load) Imposed on Purchases | None |
| Purchase Fee | None |
| Sales Charge (Load) Imposed on Reinvested Dividends | None |
| Redemption Fee | None |
| Account Service Fee (for certain fund account balances below $10,000) | $20/year |
| Annual Fund Operating Expenses | |
| (Expenses that you pay each year as a percentage of the value of your investment) | |
| Management Fees | None |
| 12b-1 Distribution Fee | None |
| Other Expenses | None |
| Acquired Fund Fees and Expenses | 0.15% |
| Total Annual Fund Operating Expenses | 0.15% |
67
Example
The following example is intended to help you compare the cost of investing in the Fund (based on the fees and expenses of the acquired funds) with the cost of investing in other mutual funds. It illustrates the hypothetical expenses that you would incur over various periods if you were to invest $10,000 in the Fund’s shares. This example assumes that the Fund provides a return of 5% each year and that total annual fund operating expenses of the Fund and its underlying funds remain as stated in the preceding table. You would incur these hypothetical expenses whether or not you were to redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
| 1 Year | 3 Years | 5 Years | 10 Years |
| $15 | $48 | $85 | $192 |
Portfolio Turnover
The Fund may pay transaction costs, such as purchase fees, 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 1% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests in other Vanguard mutual funds (underlying funds) according to an asset allocation strategy designed for investors planning to retire and leave the workforce in or within a few years of 2065 (the target year). The Fund is designed for an investor who plans to withdraw the value of an account in the Fund over a period of many years after the target year. The Fund’s asset allocation will become more conservative over time, meaning that the percentage of assets allocated to stocks will decrease while the percentage of assets allocated to bonds and other fixed income investments will increase. Within seven years after 2065, the Fund’s asset allocation should become similar to that of the Target Retirement Income Fund. As of September 30, 2018, the Fund’s asset allocation among the underlying funds is as follows:
| • | Vanguard Total Stock Market Index Fund | 54.2% |
| • | Vanguard Total International Stock Index Fund | 35.8% |
| • | Vanguard Total Bond Market II Index Fund | 7.0% |
| • | Vanguard Total International Bond Index Fund | 3.0% |
68
At any given time, the Fund’s asset allocation may be affected by a variety of factors, such as whether the underlying funds are accepting additional investments.
The Fund’s indirect stock holdings are a diversified mix of U.S. and foreign large-, mid-, and small-capitalization stocks.
The Fund’s indirect bond holdings are a diversified mix of short-, intermediate-, and long-term U.S. government, U.S. agency, and investment-grade U.S. corporate bonds; mortgage-backed and asset-backed securities; and government, agency, corporate, and securitized investment-grade foreign bonds issued in currencies other than the U.S. dollar (but hedged by Vanguard to minimize foreign currency exposure).
Principal Risks
The Fund is subject to the risks associated with the stock and bond markets, any of which could cause an investor to lose money. An investment in the Fund is not guaranteed. An investor may experience losses, including losses near, at, or after the target year. There is no guarantee that the Fund will provide adequate income at or after the target year. Because stocks are typically more volatile than bonds and because the Fund currently invests most of its assets in stocks, the Fund’s overall level of risk should be higher than that of funds that invest the majority of their assets in bonds; however, the level of risk is expected to be lower than that of funds investing entirely in stocks.
• With approximately 90% of its assets allocated to stocks, the Fund is proportionately subject to stock market risk, which is the chance that stock prices overall will decline. Stock markets tend to move in cycles, with periods of rising prices and periods of falling prices. The Fund is also subject to the following risks associated with investments in foreign stocks: 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 companies in a particular country or region; and 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. Country/regional risk and currency risk are especially high in emerging markets.
• With approximately 10% of its assets allocated to bonds, the Fund is proportionately subject to the following bond risks: interest rate risk, which is the chance that bond prices will decline because of rising interest rates; income risk, which is the chance that an underlying fund’s income will decline because of falling interest rates; credit risk, which is the chance that a bond issuer will fail to pay interest or principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline, thus reducing the underlying fund’s return; and call risk, which is the chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupon rates or interest rates before their maturity dates. An underlying fund would then lose any price appreciation
69
above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the underlying fund’s income. The Fund is also subject to the following risks associated with investments in currency-hedged foreign bonds: country/regional risk, which is the chance that world events—such as political upheaval, financial troubles, or natural disasters—will adversely affect the value and/or liquidity of securities issued by foreign governments, government agencies, or companies; and currency hedging risk, which is the chance that the currency hedging transactions entered into by the underlying international bond fund may not perfectly offset the fund’s foreign currency exposure.
• The Fund is also subject to asset allocation risk, which is the chance that the selection of underlying funds, and the allocation of assets to them, will cause the Fund to underperform other funds with a similar investment objective.
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Annual Total Returns
The following bar chart and table are intended to help you understand the risks of investing in the Fund. The bar chart shows the performance of the Fund in its first full calendar year. The table shows how the average annual total returns of the Fund compare with those of relevant market indexes and a composite stock/bond index, which have investment characteristics similar to those of the Fund. Keep in mind that the Fund’s past performance (before and after taxes) does not indicate how the Fund will perform in the future. Updated performance information is available on our website at vanguard.com/performance or by calling Vanguard toll-free at 800-662-7447.
Annual Total Returns — Vanguard Target Retirement 2065 Fund Investor Shares
During the periods shown in the bar chart, the highest return for a calendar quarter was 3.95% (quarter ended September 30, 2018), and the lowest return for a quarter was –11.77% (quarter ended December 31, 2018).
70
| Average Annual Total Returns for Periods Ended December 31, 2018 | ||
| Since | ||
| Inception | ||
| (Jul. 12, | ||
| 1 Year | 2017) | |
| Vanguard Target Retirement 2065 Fund Investor Shares | ||
| Return Before Taxes | –7.95% | 0.45% |
| Return After Taxes on Distributions | –8.37 | –0.03 |
| Return After Taxes on Distributions and Sale of Fund Shares | –4.45 | 0.30 |
| Comparative Indexes | ||
| (reflect no deduction for fees, expenses, or taxes) | ||
| MSCI US Broad Market Index | –5.28% | 2.98% |
| Bloomberg Barclays U.S. Aggregate Bond Index | 0.01 | 0.81 |
| Target Retirement 2065 Composite Index | –7.77 | 0.65 |
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
William Coleman, CFA, Portfolio Manager at Vanguard. He has co-managed the Fund since its inception in 2017.
Walter Nejman, Portfolio Manager at Vanguard. He has co-managed the Fund since its inception in 2017.
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Purchase and Sale of Fund Shares
You may purchase or redeem shares online through our website (vanguard.com), by mail (The Vanguard Group, P.O. Box 1110, Valley Forge, PA 19482-1110), or by telephone (800-662-2739). The minimum investment amount required to open and maintain a Fund account for Investor Shares is $1,000. The minimum investment amount required to add to an existing Fund account is generally $1. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special eligibility rules that may apply to them regarding Investor Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility. If you are investing through an employer-sponsored retirement or savings plan, your plan administrator or your benefits office can provide you with detailed information on how you can invest through your plan.
Tax Information
The Fund’s distributions may be taxable as ordinary income or capital gain. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply.
Payments to Financial Intermediaries
The Fund and its investment advisor do not pay financial intermediaries for sales of Fund shares.
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Investing in Vanguard Target Retirement Funds
This prospectus provides information about Vanguard Target Retirement Funds, a group of mutual funds that separately invest in up to five other Vanguard stock and bond mutual funds (underlying funds). Because the Funds invest in other funds, rather than in individual securities, each Fund is considered a fund of funds.
Each Target Retirement Fund is designed to provide an investment portfolio for investors who would rather use asset allocations developed by Vanguard than try to build their own retirement investment portfolios. The Funds are constructed based on our investment experience that, over the long term, stocks generally provide greater growth opportunities and greater risk than bonds, and bonds generally provide more income and lower volatility than stocks. The year in each Fund name (other than the Target Retirement Income Fund) refers to the approximate year (the target date) when an investor in the Fund would retire and leave the workforce. The year-specific Target Retirement Funds strive to produce more income and lower volatility as the target year approaches.
The Target Retirement Funds do not provide guaranteed income or payouts, nor can they ensure that you will have assets in your account sufficient to cover your retirement expenses or that you will have enough saved to be able to retire in the target year identified in the fund name. That will depend on various factors, including the amount of money you have invested in your Target Retirement Fund, the length of time you have held your investment, the returns of the markets over time, the amount you spend in retirement, and your other assets and income sources.
Once you determine your expected retirement year, you can consider choosing a Target Retirement Fund close to that date. As the target year approaches, the year-specific Target Retirement Funds’ asset allocations begin to shift their emphasis away from stocks and toward bond investments to help provide more income and help reduce volatility. The Target Retirement Income Fund is intended for investors currently in retirement, and its asset allocation is expected to remain stable over time. Because we anticipate that you will live for many years after you retire, the Target Retirement Funds will continue to have significant investments in stocks even as you approach, and then begin, retirement.
The asset allocations Vanguard has selected for the Target Retirement Funds are based on our investment experience and are geared to the average investor. If you wish to take on less (or more) risk, you can do so by selecting Target Retirement Funds with target dates earlier (or later) than your expected retirement date.
Vanguard may change the selection of underlying funds or the allocation of assets to the underlying funds at any time without prior notice to shareholders.
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A Similar But Distinct Group of Vanguard Funds
The Funds offered by this prospectus should not be confused with Vanguard Institutional Target Retirement Funds, a separate group of Vanguard funds of funds that is generally for investors who invest a minimum of $100 million. To obtain a prospectus for Vanguard Institutional Target Retirement Funds, please call 800-662-7447 (if you are an individual investor) or 888-809-8102 (if you are a client of Vanguard’s Institutional Division).
| Plain Talk About Funds of Funds |
| The term fund of funds is used to describe a mutual fund that pursues its |
| objective by investing in other mutual funds. A fund of funds may charge for its |
| own direct expenses, in addition to bearing a proportionate share of the expenses |
| charged by the underlying funds in which it invests. A fund of funds is best suited |
| for long-term investors. |
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More on the Funds
This prospectus describes the principal risks you would face as a Fund shareholder. It is important to keep in mind one of the main principles of investing: generally, the higher the risk of losing money, the higher the potential reward. The reverse, also, is generally true: the lower the risk, the lower the potential reward. As you consider an investment in any mutual fund, you should take into account your personal tolerance for fluctuations in the securities markets. Look for this symbol throughout the prospectus. It is used to mark detailed information about the more significant risks that you would confront as a Fund shareholder. To highlight terms and concepts important to mutual fund investors, we have provided Plain Talk® explanations along the way. Reading the prospectus will help you decide whether a Fund is the right investment for you. We suggest that you keep this prospectus for future reference.
| Plain Talk About Costs of Investing |
| Costs are an important consideration in choosing a mutual fund. That is because |
| you, as a shareholder, pay a proportionate share of the costs of operating a fund |
| and any transaction costs incurred when the fund buys or sells securities. These |
| costs can erode a substantial portion of the gross income or the capital |
| appreciation a fund achieves. Even seemingly small differences in expenses can, |
| over time, have a dramatic effect on a fund‘s performance. |
The following sections explain the principal investment strategies and policies that each Fund uses in pursuit of its objective. The Funds‘ board of trustees, which oversees each Fund’s management, may change investment strategies or policies in the interest of shareholders without a shareholder vote, unless those strategies or policies are designated as fundamental. As funds of funds, the Target Retirement Funds achieve their investment objectives by investing in other Vanguard mutual funds. Through its investments in the underlying funds, each Target Retirement Fund indirectly owns a diversified portfolio of stocks and bonds.
Asset Allocation Framework
Asset allocation—that is, dividing your investment among stocks, bonds, and short-term investments—is one of the most critical decisions you can make as an investor. It is also important to recognize that the asset allocation strategy you use today may not be appropriate as you move closer to retirement. The Target Retirement Funds are designed to provide you with a single Fund with an asset allocation that changes over time and becomes more conservative as you approach retirement, meaning that the percentage of assets allocated to stocks will decrease while the percentage of assets allocated to bonds and other fixed income investments will increase.
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The following table shows the targeted asset allocation for each Fund. As of September 30, 2018, each Fund held Investor Shares of each underlying Vanguard fund. Share class changes may be made without prior notice to shareholders.
| Target Retirement Fund | ||||||
| Underlying Vanguard Fund | Income | 2015 | 2020 | 2025 | 2030 | 2035 |
| Total Stock Market Index | 18.1% | 24.4% | 32.2% | 38.0% | 42.2% | 46.8% |
| Total International Stock Index | 11.9 | 16.2 | 21.3 | 24.9 | 28.0 | 30.9 |
| Total Bond Market II Index | 37.3 | 33.1 | 28.9 | 26.2 | 21.1 | 15.8 |
| Total International Bond Index | 15.9 | 14.1 | 12.2 | 10.9 | 8.7 | 6.5 |
| Short-Term Inflation-Protected | ||||||
| Securities Index | 16.8 | 12.2 | 5.4 | 0.0 | 0.0 | 0.0 |
| Target Retirement Fund | ||||||
| Underlying Vanguard Fund | 2040 | 2045 | 2050 | 2055 | 2060 | 2065 |
| Total Stock Market Index | 51.1% | 54.1% | 54.0% | 54.0% | 54.1% | 54.2% |
| Total International Stock Index | 33.9 | 35.9 | 36.0 | 36.0 | 35.9 | 35.8 |
| Total Bond Market II Index | 10.7 | 7.1 | 7.1 | 7.1 | 7.1 | 7.0 |
| Total International Bond Index | 4.3 | 2.9 | 2.9 | 2.9 | 2.9 | 3.0 |
The Funds’ advisor allocates each Fund’s assets among the underlying funds based on its investment objective and policies. The asset allocation for each Fund (other than the Target Retirement Income Fund) will change over time as the date indicated in the Fund’s name draws closer. Once a Fund’s asset allocation is similar to that of the Target Retirement Income Fund, the Fund’s board of trustees may approve combining the Fund with the Target Retirement Income Fund. The board will grant such approval if it determines the combination to be in the best interest of Fund shareholders. Once such a combination occurs, shareholders will own shares of the Target Retirement Income Fund. Shareholders will be notified prior to such a combination. We expect these combinations to occur within seven years after the year indicated in the Fund’s name.
The following chart shows how we expect the asset allocations for the Funds to change over time. The actual asset allocations may differ from this chart.
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| An example of how fund asset allocations change over time | ||||
| 100% | ||||
| 50% | ||||
| Years To Retirement Years After Retirement | ||||
| 0% | ||||
| 50 | 25 | 0 | –25 | |
| 50 Years Before | 25 Years Before | At | 25 Years After | |
| Retirement | Retirement | Retirement | Retirement | |
| Stocks | 90% | 90% | 50% | 30% |
| Fixed Income | 10% | 10% | 50% | 70% |
The Funds’ investments in the underlying funds may be affected by a variety of factors. For example, an underlying fund may stop accepting or may limit additional investments, forcing the Target Retirement Funds to invest in a different underlying fund.
Stocks
By owning shares of other Vanguard mutual funds, each Target Retirement Fund indirectly invests, to varying degrees, in U.S. stocks, with an emphasis on large-cap stocks. To a lesser extent, each Fund also invests in funds that own mid- and small-cap U.S. stocks, as well as foreign stocks, including emerging markets.
Each 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.
Historically, mid- and small-cap stocks have been more volatile than—and at times have performed quite differently from—large-cap stocks. This volatility is due to several factors, including the fact that smaller companies often have fewer customers and financial resources than larger firms. These characteristics can make mid-size and small companies more sensitive to economic conditions, leading to less certain growth and dividend prospects.
As of September 30, 2018, the stocks in the underlying domestic equity fund (Vanguard Total Stock Market Index Fund) had an asset-weighted median market capitalization exceeding $73.8 billion. The stocks in the underlying international equity fund (Vanguard Total International Stock Index Fund) had an asset-weighted median market capitalization exceeding $26.5 billion.
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By owning shares of Vanguard Total International Stock Index Fund, each Fund is subject to country/regional risk and currency risk.
Each 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 each Fund may invest a portion of its assets in securities located in any one country or region, the Fund’s performance may be hurt disproportionately by the poor performance of its investment 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.
| 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. |
Bonds
By owning shares of Vanguard Total Bond Market II Index Fund, each Target Retirement Fund indirectly invests, to varying degrees, in government and corporate bonds, as well as in mortgage-backed and asset-backed securities. Through their investments in Vanguard Short-Term Inflation-Protected Securities Index Fund, the Target Retirement Income, Target Retirement 2015, and Target Retirement 2020 Funds also invest in inflation-protected bonds.
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| Plain Talk About Inflation-Indexed Securities |
| Unlike a conventional bond, whose issuer makes regular fixed interest payments |
| and repays the face value of the bond at maturity, an inflation-indexed security |
| (IIS) provides principal and interest payments that are adjusted over time to reflect |
| a rise (inflation) or a drop (deflation) in the general price level for goods and |
| services. This adjustment is a key feature, given that inflation has typically |
| occurred. However, there have been periods of deflation, such as in 1954 when |
| the Consumer Price Index (CPI) declined by 0.7%. (Source: Bureau of Labor |
| Statistics.) Importantly, in the event of deflation, the U.S. Treasury has guaranteed |
| that it will repay at least the face value of an IIS issued by the U.S. government. |
| However, if an IIS is purchased by a fund at a premium, deflation could cause a |
| fund to experience a loss. |
| Inflation measurement and adjustment for an IIS have two important features. |
| There is a two-month lag between the time that inflation occurs in the economy |
| and when it is factored into IIS valuations. This is due to the time required to |
| measure and calculate the CPI and for the U.S. Treasury to adjust the inflation |
| accrual schedules for an IIS. For example, inflation that occurs in January is |
| calculated and announced during February and affects IIS valuations throughout |
| the month of March. In addition, the inflation index used is the nonseasonally |
| adjusted index. It differs from the CPI that is reported by most news |
| organizations, which is statistically smoothed to overcome highs and lows |
| observed at different points each year. The use of the nonseasonally adjusted |
| index can cause a fund’s income level to fluctuate. |
Each Fund is subject to interest rate risk, which is the chance that bond prices will decline because of rising interest rates.
Although bonds are often thought to be less risky than stocks, there have been periods when bond prices have fallen significantly because of rising interest rates.
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| Plain Talk About Bonds and Interest Rates |
| As a rule, when interest rates rise, bond prices fall. The opposite is also true: |
| Bond prices go up when interest rates fall. Why do bond prices and interest rates |
| move in opposite directions? Let’s assume that you hold a bond offering a 4% |
| yield. A year later, interest rates are on the rise and bonds of comparable quality |
| and maturity are offered with a 5% yield. With higher-yielding bonds available, |
| you would have trouble selling your 4% bond for the price you paid—you would |
| probably have to lower your asking price. On the other hand, if interest rates were |
| falling and 3% bonds were being offered, you should be able to sell your 4% |
| bond for more than you paid. |
| How mortgage-backed securities are different: In general, declining interest rates |
| will not lift the prices of mortgage-backed securities—such as those guaranteed |
| by the Government National Mortgage Association—as much as the prices of |
| comparable bonds. Why? Because when interest rates fall, the bond market |
| tends to discount the prices of mortgage-backed securities for prepayment risk— |
| the possibility that homeowners will refinance their mortgages at lower rates and |
| cause the bonds to be paid off prior to maturity. In part to compensate for this |
| prepayment possibility, mortgage-backed securities tend to offer higher yields |
| than other bonds of comparable credit quality and maturity. In contrast, when |
| interest rates rise, prepayments tend to slow down, subjecting mortgage-backed |
| securities to extension risk—the possibility that homeowners will repay their |
| mortgages at slower rates. This will lengthen the duration or average life of |
| mortgage-backed securities held by a fund and delay the fund’s ability to reinvest |
| proceeds at higher interest rates, making the fund more sensitive to changes in |
| interest rates. |
| Plain Talk About Inflation-Indexed Securities and Interest Rates |
| Interest rates on conventional bonds have two primary components: a “real” |
| yield and an increment that reflects investor expectations of future inflation. By |
| contrast, interest rates on an IIS are adjusted for inflation and, therefore, are not |
| affected meaningfully by inflation expectations. This leaves only real rates to |
| influence the price of an IIS. A rise in real rates will cause the price of an IIS to |
| fall, while a decline in real rates will boost the price of an IIS. |
Changes in interest rates can affect bond income as well as bond prices.
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Each Fund is subject to income risk, which is the chance that an underlying fund’s income will decline because of falling interest rates. A fund holding bonds will experience a decline in income when interest rates fall because the fund then must invest new cash flow and cash from maturing bonds in lower-yielding bonds.
The Target Retirement Income, Target Retirement 2015, and Target Retirement 2020 Funds are also subject to income fluctuations through their investments in Vanguard Short-Term Inflation-Protected Securities Index Fund. The quarterly income distributions of Vanguard Short-Term Inflation-Protected Securities Index Fund are likely to fluctuate considerably more than income distributions of a typical bond fund because of changes in inflation.
Each Fund is subject to call risk, which is the chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupon rates or interest rates before their maturity dates. An underlying fund would then lose any price appreciation above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the underlying fund’s income.
For mortgage-backed securities, the risk that borrowers (e.g., homeowners) may refinance their mortgages at lower interest rates is known as prepayment risk.
Because Vanguard Total Bond Market II Index Fund invests only a portion of its assets in callable bonds and mortgage-backed securities, call/prepayment risk for each Target Retirement Fund should be low to moderate.
Each Fund is subject to credit risk, which is the chance that the issuer of a security will fail to pay interest or principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that security to decline, thus reducing the underlying fund’s return.
The credit quality of the bonds held by the underlying funds is expected to be very high, and thus credit risk for each Fund should be low.
To a limited extent, the Funds are also indirectly exposed to event risk, which is the chance that corporate fixed income securities held by the underlying funds will suffer a substantial decline in credit quality and market value because of a corporate restructuring.
By owning shares of Vanguard Total International Bond Index Fund, each Target Retirement Fund is subject to risks associated with investments in currency-hedged foreign bonds.
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Each Fund is subject to country/regional risk and currency hedging risk. Country/regional risk is the chance that world events—such as political upheaval, financial troubles, or natural disasters—will adversely affect the value and/or liquidity of securities issued by foreign governments, government agencies, or companies. Currency hedging risk is the chance that the currency hedging transactions entered into by the underlying international bond fund may not perfectly offset the fund’s foreign currency exposure.
Security Selection
Each Fund seeks to achieve its objective by investing in up to five underlying Vanguard funds, which are briefly described in the following paragraphs.
• Vanguard Total Stock Market Index Fund seeks to track the performance of the CRSP US Total Market Index, which represents approximately 100% of the investable U.S. stock market and includes large-, mid-, small-, and micro-cap stocks regularly traded on the New York Stock Exchange and Nasdaq. The fund invests by sampling the Index, meaning that it holds a broadly diversified collection of securities that, in the aggregate, approximates the full Index in terms of key characteristics.
• Vanguard Total International Stock Index Fund seeks to track the performance of the FTSE Global All Cap ex US Index, a float-adjusted market-capitalization-weighted index designed to measure equity market performance of companies located in developed and emerging markets, excluding the United States. The Index includes approximately 6,024 stocks of companies located in 47 markets. The Index is most heavily weighted in Japan, the United Kingdom, France, Canada, China, and Germany.
• Vanguard Total Bond Market II Index Fund seeks to track the performance of the Bloomberg Barclays U.S. Aggregate Float Adjusted Index by investing in a representative sample of bonds included in the Index. The Index represents a wide spectrum of public, investment-grade, taxable, fixed income securities in the United States—including government, corporate, and international dollar-denominated bonds, as well as mortgage-backed and asset-backed securities—all with maturities of more than 1 year. The fund maintains a dollar-weighted average maturity consistent with that of the Index, which generally ranges between 5 and 10 years.
• Vanguard Total International Bond Index Fund seeks to track the performance of the Bloomberg Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index (USD Hedged) by investing in a representative sample of securities included in the Index. The Index provides a broad-based measure of the global, investment-grade, fixed-rate debt markets. The Index includes government, government agency, corporate, and securitized non-U.S. investment-grade fixed income investments, all issued in currencies other than the U.S. dollar and with maturities of more than 1 year. The fund maintains a dollar-weighted average maturity consistent with that of the Index, which generally ranges between 5 and 10 years. To minimize the currency risk associated
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with investment in bonds denominated in currencies other than the U.S. dollar, the fund will attempt to hedge its foreign currency exposure.
• Vanguard Short-Term Inflation-Protected Securities Index Fund seeks to track the performance of the Bloomberg Barclays U.S. Treasury Inflation-Protected Securities (TIPS) 0–5 Year Index, a market-capitalization-weighted index that includes all inflation-protected public obligations issued by the U.S. Treasury with remaining maturities of less than 5 years. The fund maintains a dollar-weighted average maturity consistent with that of the Index, which generally does not exceed 3 years.
Each Target Retirement Fund is subject to asset allocation risk, which is the chance that the selection of underlying funds, and the allocation of assets to them, will cause the Fund to underperform other funds with a similar investment objective.
Other Investment Policies and Risks
Each underlying fund may invest, to a limited extent, in derivatives. Generally speaking, a derivative is a financial contract whose value is based on the value of a financial asset (such as a stock, a bond, or a currency), a physical asset (such as gold, oil, or wheat), a market index, or a reference rate. Investments in derivatives may subject the funds to risks different from, and possibly greater than, those of investments directly in the underlying securities or assets. The underlying funds will not use derivatives for speculation or for the purpose of leveraging (magnifying) investment returns.
Cash Management
Each Fund‘s daily cash balance may be invested in Vanguard Market Liquidity Fund and/or Vanguard Municipal Cash Management Fund (each, a CMT Fund), which are low-cost money market funds. When investing in a CMT Fund, each Fund bears its proportionate share of the expenses of the CMT Fund in which it invests. Vanguard receives no additional revenue from Fund assets invested in a CMT Fund.
To put cash flow to work as soon as possible, and thereby capture as much of the market’s return as possible, each Fund reserves the right to invest in shares of Vanguard Total Stock Market ETF, Vanguard Total International Stock ETF, Vanguard Total Bond Market ETF, Vanguard Short-Term Inflation-Protected Securities ETF, and Vanguard Total International Bond ETF, as applicable (each provides returns similar to the returns of its corresponding market segment). The Funds’ advisor may purchase ETF Shares when large cash inflows come into a Fund too late in the day to invest the cash, on a same-day basis, in shares of the underlying Vanguard funds that serve as the Fund’s primary investments. These cash-flow situations will arise infrequently, and the period of holding the ETF Shares will be short—in most cases, one day. (Vanguard does not receive duplicate management fees when Fund assets are invested in ETF Shares.)
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Methods Used to Meet Redemption Requests
Under normal circumstances, each Fund typically expects to meet redemptions with positive cash flows. When this is not an option, each Fund seeks to maintain its risk exposure by selling a cross section of the Fund’s holdings to meet redemptions, while also factoring in transaction costs. Additionally, a 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 each Fund may use in order to meet redemptions, including advancing the settlement of market trades with counterparties to match investor redemption payments or delaying settlement of an investor’s transaction to match trade settlement within regulatory requirements. A Fund may also suspend payment of redemption proceeds for up to seven days; see “Emergency circumstances” under Redeeming Shares in the Investing With Vanguard section. Additionally under these unusual circumstances, a Fund may borrow money (subject to certain regulatory conditions and if available under board-approved procedures) through an interfund lending facility or through a bank line-of-credit, including a joint committed credit facility, in order to meet redemption requests.
Frequent Trading or Market-Timing
Background. Some investors try to profit from strategies involving frequent trading of mutual fund shares, such as market-timing. For funds holding foreign securities, investors may try to take advantage of an anticipated difference between the price of the fund’s shares and price movements in overseas markets, a practice also known as time-zone arbitrage. Investors also may try to engage in frequent trading of funds holding investments such as small-cap stocks and high-yield bonds. As money is shifted into and out of a fund by a shareholder engaging in frequent trading, the fund incurs costs for buying and selling securities, resulting in increased brokerage and administrative costs. These costs are borne by all fund shareholders, including the long-term investors who do not generate the costs. In addition, frequent trading may interfere with an advisor’s ability to efficiently manage the fund.
Policies to address frequent trading. The Vanguard funds (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) do not knowingly accommodate frequent trading. The board of trustees of each Vanguard fund (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) has adopted policies and procedures reasonably designed to detect and discourage frequent trading and, in some cases, to compensate the fund for the costs associated with it. These policies and procedures do not apply to ETF Shares because frequent trading in ETF Shares generally does not disrupt portfolio management or
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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 each Fund generally seeks to invest for the long term, a Fund may sell shares of the underlying funds regardless of how long they have been held. The Financial Highlights section of this prospectus shows historical turnover rates for each Fund. A turnover rate of 100%, for example, would mean that a Fund had sold and replaced shares of the underlying funds valued at 100% of its net assets within a one-year period.
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The Funds and Vanguard
Each Fund is a member of The Vanguard Group, a family of over 200 funds holding assets of approximately $4.9 trillion. 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.
According to an agreement applicable to the Target Retirement Funds and Vanguard, the Funds’ direct expenses will be offset by Vanguard for (1) the Funds’ contributions to the costs of operating the underlying Vanguard funds in which the Target Retirement Funds invest and (2) certain savings in administrative and marketing costs that Vanguard expects to derive from the Funds’ operation.
The Funds’ board of trustees believes that the offsets should be sufficient to cover most, if not all, of the direct expenses incurred by the Funds. As a result, each Fund is expected to operate at a very low or zero direct expense ratio. In fact, since their inceptions, the Funds have incurred no direct net expenses. Although the Target Retirement Funds are not expected to incur any net expenses directly, the Funds’ shareholders indirectly bear the expenses of the underlying Vanguard funds.
| 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. |
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Investment Advisor
The Vanguard Group, Inc., P.O. Box 2600, Valley Forge, PA 19482, which began operations in 1975, serves as advisor to the Funds through its Equity Index Group. Vanguard also serves as investment advisor for each of the underlying funds. As of September 30, 2018, Vanguard served as advisor for approximately $4.3 trillion in assets. Vanguard provides investment advisory services to the Funds pursuant to the Funds’ Service Agreement and subject to the supervision and oversight of the trustees and officers of the Funds.
For a discussion of why the board of trustees approved each Fund’s investment advisory arrangement, see the most recent semiannual reports to shareholders covering the fiscal period ended March 31.
The managers primarily responsible for the day-to-day management of the Funds are:
William Coleman, CFA, Portfolio Manager at Vanguard. He has worked in investment management since joining Vanguard in 2006, has co-managed the Target Retirement 2065 Fund since its inception in 2017, and has co-managed the rest of the Target Retirement Funds since 2013. Education: B.S., King’s College; M.S., Saint Joseph’s University.
Walter Nejman, Portfolio Manager at Vanguard. He has been with Vanguard since 2005, has worked in investment management since 2008, has co-managed the Target Retirement 2065 Fund since its inception in 2017, and has co-managed the rest of the Target Retirement Funds since 2013. Education: B.A., Arcadia University; M.B.A., Villanova University.
The Statement of Additional Information provides information about each portfolio manager’s compensation, other accounts under management, and ownership of shares of the Funds.
Under the terms of an SEC exemption (except with respect to Vanguard Target Retirement 2055 Fund), the Funds’ board of trustees may, without prior approval from shareholders, change the terms of an advisory agreement with a third-party investment advisor or hire a new third-party investment advisor—either as a replacement for an existing advisor or as an additional advisor. Any significant change in a Fund’s advisory arrangements will be communicated to shareholders in writing. As the Funds’ sponsor and overall manager, Vanguard may provide investment advisory services to a Fund at any time. Vanguard may also recommend to the board of trustees that an advisor be hired, terminated, or replaced or that the terms of an existing advisory agreement be revised. The Funds have filed an application seeking a similar SEC exemption with respect to investment advisors that are wholly owned subsidiaries of Vanguard. If the exemption is granted, the Funds (other than Vanguard Target Retirement 2055 Fund) may rely on the new SEC relief.
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Dividends, Capital Gains, and Taxes
Fund Distributions
Each Fund distributes to shareholders virtually all of its net income as well as any net short-term or long-term capital gains realized from the sale of its holdings or received as capital gains distributions from the underlying funds. Income dividends for the Target Retirement Income Fund generally are distributed quarterly in March, June, September, and December; income dividends for the other Target Retirement Funds generally are distributed annually in December. Capital gains distributions, if any, generally occur annually in December. In addition, each Fund may occasionally make a supplemental distribution at some other time during the year.
You can receive distributions of income or capital gains in cash, or you can have them automatically reinvested in more shares of the Fund. However, if you are investing through an employer-sponsored retirement or savings plan, your distributions will be automatically reinvested in additional Fund shares.
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, 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 Funds‘ normal investment activities and cash flows.
• A sale or exchange of Fund shares is a taxable event. This means that you may have a capital gain to report as income, or a capital loss to report as a deduction, when you
complete your tax return.
• 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
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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.
This prospectus provides general tax information only. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply. Please consult your tax advisor for detailed information about any tax consequences for you.
| Plain Talk About Buying a Dividend |
| Unless you are a tax-exempt investor or investing through a tax-advantaged |
| account (such as an IRA or an employer-sponsored retirement or savings plan), |
| you should consider avoiding a purchase of fund shares shortly before the fund |
| makes a distribution, because doing so can cost you money in taxes. This is |
| known as “buying a dividend.” For example: On December 15, you invest $5,000, |
| buying 250 shares for $20 each. If the fund pays a distribution of $1 per share on |
| December 16, its share price will drop to $19 (not counting market change). You |
| still have only $5,000 (250 shares x $19 = $4,750 in share value, plus 250 shares |
| x $1 = $250 in distributions), but you owe tax on the $250 distribution you |
| received—even if you reinvest it in more shares. To avoid buying a dividend, check |
| a fund’s distribution schedule before you invest. |
General Information
Backup withholding. By law, Vanguard must withhold 24% of any taxable distributions or redemptions from your account if you do not:
• Provide your correct taxpayer identification number.
• Certify that the taxpayer identification number is correct.
• Confirm that you are not subject to backup withholding.
Similarly, Vanguard (or your intermediary) must withhold taxes from your account if the IRS instructs us to do so.
Foreign investors. Vanguard funds offered for sale in the United States (Vanguard U.S. funds), including the Funds offered in this prospectus, are not widely available outside the United States. Non-U.S. investors should be aware that U.S. withholding and estate taxes and certain U.S. tax reporting requirements may apply to any investments in Vanguard U.S. funds. Foreign investors should visit the Non-U.S. investors page on our website at vanguard.com for information on Vanguard’s non-U.S. products.
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Invalid addresses. If a dividend distribution or capital gains distribution check mailed to your address of record is returned as undeliverable, Vanguard will automatically reinvest the distribution and all future distributions until you provide us with a valid mailing address. Reinvestments will receive the net asset value calculated on the date of the reinvestment.
Share Price
Share price, also known as net asset value (NAV), is calculated each business day as of the close of regular trading on the New York Stock Exchange (NYSE), generally 4 p.m., Eastern time. In the rare event the NYSE experiences unanticipated disruptions and is unavailable at the close of the trading day, NAVs will be calculated as of the close of regular trading on the Nasdaq (or another alternate exchange if the Nasdaq is unavailable, as determined at Vanguard’s discretion), generally 4 p.m., Eastern time. The NAV per share is computed by dividing the total assets, minus liabilities, of a 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. The underlying Vanguard funds in which the Funds invest also do not calculate their NAV on days when the NYSE is closed, but the value of their assets may be affected to the extent that they hold securities that change in value on those days (such as foreign securities that trade on foreign markets that are open).
Each Fund’s NAV is calculated based upon the values of the underlying mutual funds in which the Fund invests. 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 held by a Fund are based on the market value of the shares. The prospectuses for the underlying funds explain the circumstances under which those funds will use fair-value pricing and the effects of doing so.
Vanguard fund share prices are published daily on our website at vanguard.com/prices.
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Financial Highlights
The following financial highlights tables are intended to help you understand each Fund’s financial performance for the periods shown, and certain information reflects financial results for a single Fund share. The total returns in each table represent the rate that an investor would have earned or lost each period on an investment in the Fund (assuming reinvestment of all distributions). This information has been obtained from the financial statements audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, whose reports—along with each Fund’s financial statements—are included in the Funds‘ most recent annual reports to shareholders. You may obtain a free copy of the latest annual or semiannual reports by visiting vanguard.com or by contacting Vanguard by telephone or mail.
| Target Retirement Income Fund | |||||
| Year Ended September 30, | |||||
| For a Share Outstanding Throughout Each Period | 2018 | 2017 | 2016 | 2015 | 2014 |
| Net Asset Value, Beginning of Period | $13.46 | $13.08 | $12.59 | $12.84 | $12.46 |
| Investment Operations | |||||
| Net Investment Income | .3341 | .2501 | .229 | .238 | .220 |
| Capital Gain Distributions Received | .0011 | .0041 | .007 | .015 | .002 |
| Net Realized and Unrealized Gain (Loss) | |||||
| on Investments | .107 | .422 | .692 | (.225) | .572 |
| Total from Investment Operations | .442 | .676 | .928 | .028 | .794 |
| Distributions | |||||
| Dividends from Net Investment Income | (.327) | (.254) | (.227) | (.236) | (.218) |
| Distributions from Realized Capital Gains | (.055) | (.042) | (.211) | (.042) | (.196) |
| Total Distributions | (.382) | (.296) | (.438) | (.278) | (.414) |
| Net Asset Value, End of Period | $13.52 | $13.46 | $13.08 | $12.59 | $12.84 |
| Total Return2 | 3.31% | 5.26% | 7.54% | 0.18% | 6.47% |
| Ratios/Supplemental Data | |||||
| Net Assets, End of Period (Millions) | $16,613 | $16,645 | $10,790 | $10,633 | $11,215 |
| Ratio of Total Expenses to | |||||
| Average Net Assets | — | — | — | — | — |
| Acquired Fund Fees and Expenses | 0.12% | 0.13% | 0.13% | 0.14% | 0.16% |
| Ratio of Net Investment Income to | |||||
| Average Net Assets | 2.47% | 1.90% | 1.78% | 1.83% | 1.74% |
| Portfolio Turnover Rate | 6% | 8% | 11% | 14% | 6% |
| 1 Calculated based on average shares outstanding. | |||||
| 2 Total returns do not include account service fees that may have applied in the periods shown. | |||||
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| Target Retirement 2015 Fund | |||||
| Year Ended September 30, | |||||
| For a Share Outstanding Throughout Each Period | 2018 | 2017 | 2016 | 2015 | 2014 |
| Net Asset Value, Beginning of Period | $15.75 | $15.19 | $14.90 | $15.44 | $14.49 |
| Investment Operations | |||||
| Net Investment Income | .3711 | .3051 | .311 | .327 | .300 |
| Capital Gain Distributions Received | .0011 | .0051 | .007 | .018 | .002 |
| Net Realized and Unrealized Gain (Loss) | |||||
| on Investments | .328 | .846 | .968 | (.433) | .996 |
| Total from Investment Operations | .700 | 1.156 | 1.286 | (.088) | 1.298 |
| Distributions | |||||
| Dividends from Net Investment Income | (.318) | (.289) | (.299) | (.284) | (.261) |
| Distributions from Realized Capital Gains | (.532) | (.307) | (.697) | (.168) | (.087) |
| Total Distributions | (.850) | (.596) | (.996) | (.452) | (.348) |
| Net Asset Value, End of Period | $15.60 | $15.75 | $15.19 | $14.90 | $15.44 |
| Total Return2 | 4.54% | 7.95% | 9.03% | –0.66% | 9.07% |
| Ratios/Supplemental Data | |||||
| Net Assets, End of Period (Millions) | $16,410 | $17,250 | $17,479 | $18,858 | $21,741 |
| Ratio of Total Expenses to | |||||
| Average Net Assets | — | — | — | — | — |
| Acquired Fund Fees and Expenses | 0.13% | 0.13% | 0.14% | 0.14% | 0.16% |
| Ratio of Net Investment Income to | |||||
| Average Net Assets | 2.39% | 2.02% | 1.96% | 1.95% | 1.99% |
| Portfolio Turnover Rate | 7% | 7% | 9% | 16% | 10% |
| 1 Calculated based on average shares outstanding. | |||||
| 2 Total returns do not include account service fees that may have applied in the periods shown. | |||||
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| Target Retirement 2020 Fund | |||||
| Year Ended September 30, | |||||
| For a Share Outstanding Throughout Each Period | 2018 | 2017 | 2016 | 2015 | 2014 |
| Net Asset Value, Beginning of Period | $31.19 | $29.09 | $27.52 | $28.40 | $26.26 |
| Investment Operations | |||||
| Net Investment Income | .7291 | .6361 | .619 | .622 | .577 |
| Capital Gain Distributions Received | .0021 | .0081 | .012 | .026 | .004 |
| Net Realized and Unrealized Gain (Loss) | |||||
| on Investments | 1.079 | 2.231 | 2.065 | (.946) | 2.054 |
| Total from Investment Operations | 1.810 | 2.875 | 2.696 | (.298) | 2.635 |
| Distributions | |||||
| Dividends from Net Investment Income | (.631) | (.562) | (.591) | (.541) | (.484) |
| Distributions from Realized Capital Gains | (.229) | (.213) | (.535) | (.041) | (.011) |
| Total Distributions | (.860) | (.775) | (1.126) | (.582) | (.495) |
| Net Asset Value, End of Period | $32.14 | $31.19 | $29.09 | $27.52 | $28.40 |
| Total Return2 | 5.87% | 10.17% | 10.05% | –1.13% | 10.13% |
| Ratios/Supplemental Data | |||||
| Net Assets, End of Period (Millions) | $33,114 | $31,263 | $27,542 | $26,693 | $27,488 |
| Ratio of Total Expenses to Average | |||||
| Net Assets | — | — | — | — | — |
| Acquired Fund Fees and Expenses | 0.13% | 0.13% | 0.14% | 0.14% | 0.16% |
| Ratio of Net Investment Income to | |||||
| Average Net Assets | 2.30% | 2.15% | 2.14% | 2.07% | 2.14% |
| Portfolio Turnover Rate | 10% | 9% | 15% | 25% | 7% |
| 1 Calculated based on average shares outstanding. | |||||
| 2 Total returns do not include account service fees that may have applied in the periods shown. | |||||
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| Target Retirement 2025 Fund | |||||
| Year Ended September 30, | |||||
| For a Share Outstanding Throughout Each Period | 2018 | 2017 | 2016 | 2015 | 2014 |
| Net Asset Value, Beginning of Period | $18.25 | $16.77 | $15.90 | $16.50 | $15.18 |
| Investment Operations | |||||
| Net Investment Income | .4191 | .3801 | .362 | .364 | .350 |
| Capital Gain Distributions Received | .0011 | .0041 | .006 | .012 | .002 |
| Net Realized and Unrealized Gain (Loss) | |||||
| on Investments | .807 | 1.534 | 1.280 | (.624) | 1.272 |
| Total from Investment Operations | 1.227 | 1.918 | 1.648 | (.248) | 1.624 |
| Distributions | |||||
| Dividends from Net Investment Income | (.369) | (.327) | (.342) | (.322) | (.287) |
| Distributions from Realized Capital Gains | (.088) | (.111) | (.436) | (.030) | (.017) |
| Total Distributions | (.457) | (.438) | (.778) | (.352) | (.304) |
| Net Asset Value, End of Period | $19.02 | $18.25 | $16.77 | $15.90 | $16.50 |
| Total Return2 | 6.79% | 11.74% | 10.67% | –1.60% | 10.80% |
| Ratios/Supplemental Data | |||||
| Net Assets, End of Period (Millions) | $41,860 | $37,111 | $31,706 | $30,048 | $31,428 |
| Ratio of Total Expenses to | |||||
| Average Net Assets | — | — | — | — | — |
| Acquired Fund Fees and Expenses | 0.13% | 0.14% | 0.14% | 0.15% | 0.17% |
| Ratio of Net Investment Income to | |||||
| Average Net Assets | 2.24% | 2.21% | 2.18% | 2.07% | 2.15% |
| Portfolio Turnover Rate | 8% | 10% | 15% | 24% | 7% |
| 1 Calculated based on average shares outstanding. | |||||
| 2 Total returns do not include account service fees that may have applied in the periods shown. | |||||
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| Target Retirement 2030 Fund | |||||
| Year Ended September 30, | |||||
| For a Share Outstanding Throughout Each Period | 2018 | 2017 | 2016 | 2015 | 2014 |
| Net Asset Value, Beginning of Period | $32.93 | $29.77 | $27.77 | $28.95 | $26.46 |
| Investment Operations | |||||
| Net Investment Income | .7541 | .6831 | .634 | .633 | .613 |
| Capital Gain Distributions Received | .0011 | .0061 | .008 | .016 | .002 |
| Net Realized and Unrealized Gain (Loss) | |||||
| on Investments | 1.744 | 3.167 | 2.390 | (1.242) | 2.402 |
| Total from Investment Operations | 2.499 | 3.856 | 3.032 | (.593) | 3.017 |
| Distributions | |||||
| Dividends from Net Investment Income | (.670) | (.576) | (.597) | (.558) | (.491) |
| Distributions from Realized Capital Gains | (.019) | (.120) | (.435) | (.029) | (.036) |
| Total Distributions | (.689) | (.696) | (1.032) | (.587) | (.527) |
| Net Asset Value, End of Period | $34.74 | $32.93 | $29.77 | $27.77 | $28.95 |
| Total Return2 | 7.65% | 13.25% | 11.15% | –2.16% | 11.51% |
| Ratios/Supplemental Data | |||||
| Net Assets, End of Period (Millions) | $35,913 | $30,877 | $24,966 | $22,684 | $23,085 |
| Ratio of Total Expenses to Average | |||||
| Net Assets | — | — | — | — | — |
| Acquired Fund Fees and Expenses | 0.14% | 0.14% | 0.15% | 0.15% | 0.17% |
| Ratio of Net Investment Income to | |||||
| Average Net Assets | 2.22% | 2.21% | 2.20% | 2.08% | 2.16% |
| Portfolio Turnover Rate | 9% | 9% | 16% | 24% | 7% |
| 1 Calculated based on average shares outstanding. | |||||
| 2 Total returns do not include account service fees that may have applied in the periods shown. | |||||
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| Target Retirement 2035 Fund | |||||
| Year Ended September 30, | |||||
| For a Share Outstanding Throughout Each Period | 2018 | 2017 | 2016 | 2015 | 2014 |
| Net Asset Value, Beginning of Period | $20.20 | $18.09 | $16.95 | $17.79 | $16.16 |
| Investment Operations | |||||
| Net Investment Income | .4591 | .4181 | .393 | .391 | .359 |
| Capital Gain Distributions Received | .0011 | .0031 | .003 | .007 | .001 |
| Net Realized and Unrealized Gain (Loss) | |||||
| on Investments | 1.243 | 2.180 | 1.530 | (.865) | 1.594 |
| Total from Investment Operations | 1.703 | 2.601 | 1.926 | (.467) | 1.954 |
| Distributions | |||||
| Dividends from Net Investment Income | (.410) | (.356) | (.371) | (.368) | (.324) |
| Distributions from Realized Capital Gains | (.033) | (.135) | (.415) | (.005) | — |
| Total Distributions | (.443) | (.491) | (.786) | (.373) | (.324) |
| Net Asset Value, End of Period | $21.46 | $20.20 | $18.09 | $16.95 | $17.79 |
| Total Return2 | 8.51% | 14.76% | 11.64% | –2.75% | 12.20% |
| Ratios/Supplemental Data | |||||
| Net Assets, End of Period (Millions) | $34,522 | $29,798 | $24,531 | $22,800 | $23,826 |
| Ratio of Total Expenses to | |||||
| Average Net Assets | — | — | — | — | — |
| Acquired Fund Fees and Expenses | 0.14% | 0.14% | 0.15% | 0.15% | 0.18% |
| Ratio of Net Investment Income to | |||||
| Average Net Assets | 2.19% | 2.22% | 2.21% | 2.07% | 2.17% |
| Portfolio Turnover Rate | 8% | 9% | 14% | 23% | 6% |
| 1 Calculated based on average shares outstanding. | |||||
| 2 Total returns do not include account service fees that may have applied in the periods shown. | |||||
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| Target Retirement 2040 Fund | |||||
| Year Ended September 30, | |||||
| For a Share Outstanding Throughout Each Period | 2018 | 2017 | 2016 | 2015 | 2014 |
| Net Asset Value, Beginning of Period | $34.73 | $30.59 | $28.09 | $29.66 | $26.80 |
| Investment Operations | |||||
| Net Investment Income | .7861 | .7181 | .660 | .648 | .593 |
| Capital Gain Distributions Received | .0011 | .0031 | .003 | .007 | .001 |
| Net Realized and Unrealized Gain (Loss) on | |||||
| Investments | 2.441 | 4.143 | 2.687 | (1.634) | 2.773 |
| Total from Investment Operations | 3.228 | 4.864 | 3.350 | (.979) | 3.367 |
| Distributions | |||||
| Dividends from Net Investment Income | (.684) | (.599) | (.615) | (.574) | (.500) |
| Distributions from Realized Capital Gains | (.014) | (.125) | (.235) | (.017) | (.007) |
| Total Distributions | (.698) | (.724) | (.850) | (.591) | (.507) |
| Net Asset Value, End of Period | $37.26 | $34.73 | $30.59 | $28.09 | $29.66 |
| Total Return2 | 9.37% | 16.26% | 12.11% | –3.43% | 12.66% |
| Ratios/Supplemental Data | |||||
| Net Assets, End of Period (Millions) | $26,445 | $22,324 | $17,371 | $15,724 | $15,912 |
| Ratio of Total Expenses to Average | |||||
| Net Assets | — | — | — | — | — |
| Acquired Fund Fees and Expenses | 0.14% | 0.15% | 0.16% | 0.16% | 0.18% |
| Ratio of Net Investment Income to | |||||
| Average Net Assets | 2.17% | 2.23% | 2.23% | 2.09% | 2.18% |
| Portfolio Turnover Rate | 8% | 8% | 16% | 21% | 6% |
| 1 Calculated based on average shares outstanding. | |||||
| 2 Total returns do not include account service fees that may have applied in the periods shown. | |||||
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| Target Retirement 2045 Fund | |||||
| Year Ended September 30, | |||||
| For a Share Outstanding Throughout Each Period | 2018 | 2017 | 2016 | 2015 | 2014 |
| Net Asset Value, Beginning of Period | $21.80 | $19.12 | $17.60 | $18.61 | $16.82 |
| Investment Operations | |||||
| Net Investment Income | .4921 | .4501 | .411 | .406 | .376 |
| Capital Gain Distributions Received | — | .0011 | .002 | .004 | .001 |
| Net Realized and Unrealized Gain (Loss) | |||||
| on Investments | 1.636 | 2.696 | 1.692 | (1.034) | 1.747 |
| Total from Investment Operations | 2.128 | 3.147 | 2.105 | (.624) | 2.124 |
| Distributions | |||||
| Dividends from Net Investment Income | (.428) | (.375) | (.386) | (.383) | (.334) |
| Distributions from Realized Capital Gains | (.010) | (.092) | (.199) | (.003) | — |
| Total Distributions | (.438) | (.467) | (.585) | (.386) | (.334) |
| Net Asset Value, End of Period | $23.49 | $21.80 | $19.12 | $17.60 | $18.61 |
| Total Return2 | 9.85% | 16.84% | 12.16% | –3.49% | 12.73% |
| Ratios/Supplemental Data | |||||
| Net Assets, End of Period (Millions) | $24,330 | $20,413 | $15,987 | $14,283 | $14,491 |
| Ratio of Total Expenses to | |||||
| Average Net Assets | — | — | — | — | — |
| Acquired Fund Fees and Expenses | 0.15% | 0.15% | 0.16% | 0.16% | 0.18% |
| Ratio of Net Investment Income to | |||||
| Average Net Assets | 2.16% | 2.23% | 2.43% | 2.10% | 2.17% |
| Portfolio Turnover Rate | 7% | 8% | 13% | 20% | 7% |
| 1 Calculated based on average shares outstanding. | |||||
| 2 Total returns do not include account service fees that may have applied in the periods shown. | |||||
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| Target Retirement 2050 Fund | |||||
| Year Ended September 30, | |||||
| For a Share Outstanding Throughout Each Period | 2018 | 2017 | 2016 | 2015 | 2014 |
| Net Asset Value, Beginning of Period | $35.07 | $30.63 | $27.95 | $29.53 | $26.69 |
| Investment Operations | |||||
| Net Investment Income | .7941 | .7271 | .636 | .623 | .586 |
| Capital Gain Distributions Received | .0011 | .0021 | .003 | .006 | .001 |
| Net Realized and Unrealized Gain (Loss) | |||||
| on Investments | 2.629 | 4.332 | 2.714 | (1.609) | 2.771 |
| Total from Investment Operations | 3.424 | 5.061 | 3.353 | (.980) | 3.358 |
| Distributions | |||||
| Dividends from Net Investment Income | (.684) | (.587) | (.585) | (.596) | (.518) |
| Distributions from Realized Capital Gains | (.010) | (.034) | (.088) | (.004) | — |
| Total Distributions | (.694) | (.621) | (.673) | (.600) | (.518) |
| Net Asset Value, End of Period | $37.80 | $35.07 | $30.63 | $27.95 | $29.53 |
| Total Return2 | 9.84% | 16.84% | 12.14% | –3.46% | 12.69% |
| Ratios/Supplemental Data | |||||
| Net Assets, End of Period (Millions) | $16,804 | $13,407 | $9,634 | $7,893 | $7,389 |
| Ratio of Total Expenses to Average | |||||
| Net Assets | — | — | — | — | — |
| Acquired Fund Fees and Expenses | 0.15% | 0.15% | 0.16% | 0.16% | 0.18% |
| Ratio of Net Investment Income to | |||||
| Average Net Assets | 2.16% | 2.24% | 2.24% | 2.11% | 2.19% |
| Portfolio Turnover Rate | 7% | 6% | 12% | 18% | 7% |
| 1 Calculated based on average shares outstanding. | |||||
| 2 Total returns do not include account service fees that may have applied in the periods shown. | |||||
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| Target Retirement 2055 Fund | |||||
| Year Ended September 30, | |||||
| For a Share Outstanding Throughout Each Period | 2018 | 2017 | 2016 | 2015 | 2014 |
| Net Asset Value, Beginning of Period | $37.98 | $33.15 | $30.14 | $31.80 | $28.67 |
| Investment Operations | |||||
| Net Investment Income | .8681 | .7961 | .642 | .631 | .577 |
| Capital Gain Distributions Received | .0011 | .0021 | .003 | .005 | .001 |
| Net Realized and Unrealized Gain (Loss) | |||||
| on Investments | 2.819 | 4.688 | 2.974 | (1.736) | 3.033 |
| Total from Investment Operations | 3.688 | 5.486 | 3.619 | (1.100) | 3.611 |
| Distributions | |||||
| Dividends from Net Investment Income | (.718) | (.654) | (.593) | (.554) | (.477) |
| Distributions from Realized Capital Gains | — | (.002) | (.016) | (.006) | (.004) |
| Total Distributions | (.718) | (.656) | (.609) | (.560) | (.481) |
| Net Asset Value, End of Period | $40.95 | $37.98 | $33.15 | $30.14 | $31.80 |
| Total Return2 | 9.79% | 16.86% | 12.13% | –3.58% | 12.69% |
| Ratios/Supplemental Data | |||||
| Net Assets, End of Period (Millions) | $8,011 | $5,600 | $3,399 | $2,279 | $1,670 |
| Ratio of Total Expenses to Average Net Assets | — | — | — | — | — |
| Acquired Fund Fees and Expenses | 0.15% | 0.15% | 0.16% | 0.16% | 0.18% |
| Ratio of Net Investment Income to Average | |||||
| Net Assets | 2.18% | 2.26% | 2.27% | 2.17% | 2.22% |
| Portfolio Turnover Rate | 5% | 5% | 8% | 18% | 7% |
| 1 Calculated based on average shares outstanding. | |||||
| 2 Total returns do not include account service fees that may have applied in the periods shown. | |||||
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| Target Retirement 2060 Fund | |||||
| Year Ended September 30, | |||||
| For a Share Outstanding Throughout Each Period | 2018 | 2017 | 2016 | 2015 | 2014 |
| Net Asset Value, Beginning of Period | $33.51 | $29.25 | $26.58 | $28.03 | $25.21 |
| Investment Operations | |||||
| Net Investment Income | .7681 | .7081 | .555 | .540 | .6151 |
| Capital Gain Distributions Received | — | .0021 | .003 | .004 | .0011 |
| Net Realized and Unrealized Gain (Loss) | |||||
| on Investments | 2.495 | 4.126 | 2.635 | (1.523) | 2.572 |
| Total from Investment Operations | 3.263 | 4.836 | 3.193 | (.979) | 3.188 |
| Distributions | |||||
| Dividends from Net Investment Income | (.613) | (.574) | (.503) | (.464) | (.367) |
| Distributions from Realized Capital Gains | — | (.002) | (.020) | (.007) | (.001) |
| Total Distributions | (.613) | (.576) | (.523) | (.471) | (.368) |
| Net Asset Value, End of Period | $36.16 | $33.51 | $29.25 | $26.58 | $28.03 |
| Total Return2 | 9.81% | 16.84% | 12.13% | –3.61% | 12.72% |
| Ratios/Supplemental Data | |||||
| Net Assets, End of Period (Millions) | $3,240 | $2,081 | $1,143 | $733 | $485 |
| Ratio of Total Expenses to Average Net Assets | — | — | — | — | — |
| Acquired Fund Fees and Expenses | 0.15% | 0.15% | 0.16% | 0.16% | 0.18% |
| Ratio of Net Investment Income to | |||||
| Average Net Assets | 2.19% | 2.28% | 2.28% | 2.19% | 2.25% |
| Portfolio Turnover Rate | 3% | 4% | 6% | 21% | 11% |
| 1 Calculated based on average shares outstanding. | |||||
| 2 Total returns do not include account service fees that may have applied in the periods shown. | |||||
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| Target Retirement 2065 Fund | ||
| Year | July 12, | |
| Ended | 20171 to | |
| Sept. 30, | Sept. 30, | |
| For a Share Outstanding Throughout Each Period | 2018 | 2017 |
| Net Asset Value, Beginning of Period | $20.79 | $20.00 |
| Investment Operations | ||
| Net Investment Income2 | .524 | .150 |
| Capital Gain Distributions Received2 | — | — |
| Net Realized and Unrealized Gain (Loss) | ||
| on Investments | 1.496 | .640 |
| Total from Investment Operations | 2.020 | .790 |
| Distributions | ||
| Dividends from Net Investment Income | (.170) | — |
| Distributions from Realized Capital Gains | — | — |
| Total Distributions | (.170) | — |
| Net Asset Value, End of Period | $22.64 | $20.79 |
| Total Return3 | 9.75% | 3.95% |
| Ratios/Supplemental Data | ||
| Net Assets, End of Period (Millions) | $202 | $19 |
| Ratio of Total Expenses to Average Net Assets | — | — |
| Acquired Fund Fees and Expenses | 0.15% | 0.15%4 |
| Ratio of Net Investment Income to | ||
| Average Net Assets | 2.37% | 3.30%4 |
| Portfolio Turnover Rate | 1% | 29% |
| 1 Inception. | ||
| 2 Calculated based on average shares outstanding. | ||
| 3 Total returns do not include account service fees that may have applied in the periods shown. | ||
| 4 Annualized. |
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Investing With Vanguard
This section of the prospectus explains the basics of doing business with Vanguard. Vanguard fund shares can be held directly with Vanguard or indirectly through an intermediary, such as a bank, a broker, or an investment advisor. If you hold Vanguard fund shares directly with Vanguard, you should carefully read each topic within this section that pertains to your relationship with Vanguard. If you hold Vanguard fund shares indirectly through an intermediary (including shares held in a brokerage account through Vanguard Brokerage Services®), please see Investing With Vanguard Through Other Firms, and also refer to your account agreement with the intermediary for information about transacting in that account. If you hold Vanguard fund shares through an employer-sponsored retirement or savings plan, please see Employer-Sponsored Plans. Vanguard reserves the right to change the following policies without notice. Please call or check online for current information. See Contacting Vanguard.
For Vanguard fund shares held directly with Vanguard, each fund you hold in an account is a separate “fund account.” For example, if you hold three funds in a nonretirement account titled in your own name, two funds in a nonretirement account titled jointly with your spouse, and one fund in an individual retirement account, you have six fund accounts—and this is true even if you hold the same fund in multiple accounts. Note that each reference to “you” in this prospectus applies to any one or more registered account owners or persons authorized to transact on your account.
Purchasing Shares
Vanguard reserves the right, without notice, to increase or decrease the minimum amount required to open or maintain a fund account or to add to an existing fund account.
Investment minimums may differ for certain categories of investors.
Account Minimums
To open and maintain an account. $1,000. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special eligibility rules that may apply to them regarding Investor Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility.
To add to an existing account. Generally $1.
How to Initiate a Purchase Request
Be sure to check Exchanging Shares, Frequent-Trading Limitations, and Other Rules You Should Know before placing your purchase request.
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Online. You may open certain types of accounts, request a purchase of shares, and request an exchange through our website or our mobile application if 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). For a list of Vanguard addresses, see Contacting Vanguard.
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) 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 you are registered for online access. Also see How to Initiate a Purchase Request. Make your check payable to Vanguard and include the appropriate fund number (e.g., Vanguard—xx). For a list of Fund numbers (for Funds in this prospectus), see Additional Information.
By exchange. You may purchase shares of a Vanguard fund using the proceeds from the simultaneous redemption of shares of another Vanguard fund. You may initiate an exchange online (if you are registered for online access), by telephone, or by mail with an exchange form. See Exchanging Shares.
Trade Date
The trade date for any purchase request received in good order will depend on the day and time Vanguard receives your request, the manner in which you are paying, and the type of fund you are purchasing. Your purchase will be executed using the NAV as
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calculated on the trade date. NAVs are calculated only on days that the NYSE is open for trading (a business day).
For purchases by check into all funds other than money market funds and for purchases by exchange, wire, or electronic bank transfer (not using an Automatic Investment Plan) 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.
For purchases by electronic bank transfer using an Automatic Investment Plan: Your trade date generally will be the date you selected for withdrawal of funds from your designated bank account. Your bank account generally will be debited on the business day after your trade date. If the date you selected for withdrawal of funds from your bank account falls on a weekend, holiday, or other nonbusiness day, your trade date generally will be the previous business day. For retirement accounts, if the date you selected for withdrawal of funds from your designated bank account falls on the last business day of the year, your trade date will be the first business day of the following year. Please note that if you select the first of the month for automated withdrawals from your designated bank account, trades designated for January 1 will receive the next business day’s trade date.
If your purchase request is not accurate and complete, it may be rejected. See Other Rules You Should Know—Good Order.
For further information about purchase transactions, consult our website at vanguard.com or see Contacting Vanguard.
Other Purchase Rules You Should Know
Check purchases. All purchase checks must be written in U.S. dollars and must be drawn on a U.S. bank and be accompanied by good order instructions. Vanguard does
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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.
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 you are registered for online access.
By telephone. You may call Vanguard to request a redemption of shares or an exchange. See Contacting Vanguard.
By mail. You may send a form (available online) to Vanguard to redeem from a fund account or to make an exchange. See Contacting Vanguard.
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) or upon request. Your redemption request can be initiated online (if you are registered for online access), by telephone, or by mail.
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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 with an additional redemption of fund shares. If you redeem your entire fund account, your redemption proceeds will be reduced by the amount of the fee. The wire fee does not apply to accounts held by Flagship and Flagship Select clients; accounts held through intermediaries, including Vanguard Brokerage Services; or accounts held by institutional clients.
By exchange. You may have the proceeds of a Vanguard fund redemption invested directly in shares of another Vanguard fund. You may initiate an exchange online (if you are registered for online access), by telephone, or by mail. See Exchanging Shares.
By check. If you have not chosen another redemption method, Vanguard will mail you a redemption check, generally payable to all registered account owners, normally within two business days of your trade date, and generally to the address of record.
Trade Date
The trade date for any redemption request received in good order will depend on the day and time Vanguard receives your request and the manner in which you are redeeming. Your redemption will be executed using the NAV as calculated on the trade date. NAVs are calculated only on days that the NYSE is open for trading (a business day).
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 Prime 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
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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 using an Automatic Withdrawal Plan: Your trade date generally will be the date you selected for withdrawal of funds (redemption of shares) from your Vanguard account. Proceeds of redeemed shares generally will be credited to your designated bank account two business days after your trade date. If the date you selected for withdrawal of funds from your Vanguard account falls on a weekend, holiday, or other nonbusiness day, your trade date generally will be the previous business day. For retirement accounts, if the date you selected for withdrawal of funds from your Vanguard account falls on the last day of the year and if that date is a holiday, your trade date will be the first business day of the following year. Please note that if you designate the first of the month for automated withdrawals, trades designated for January 1 will receive the next business day’s trade date.
For redemptions by electronic bank transfer not using an Automatic Withdrawal Plan: If the redemption request is received by Vanguard on a business day before the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the trade date will be the same day. If the redemption request is received on a business day after the close of regular trading on the NYSE, or on a nonbusiness day, the trade date will be the next business day.
If your redemption request is not accurate and complete, it may be rejected. If we are unable to send your redemption proceeds by wire or electronic bank transfer because the receiving institution rejects the transfer, Vanguard will make additional efforts to complete your transaction. If Vanguard is still unable to complete the transaction, we may send the proceeds of the redemption to you by check, generally payable to all registered account owners, or use your proceeds to purchase new shares of the fund from which you sold shares for the purpose of the wire or electronic bank transfer transaction. See Other Rules You Should Know—Good Order.
If your redemption request is received in good order, we typically expect that redemption proceeds will be paid by a Fund within one business day of the trade date; however, in certain circumstances, investors may experience a longer
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settlement period at the time of the transaction. For further information, see “Potentially disruptive redemptions” and “Emergency circumstances.”
For further information about redemption transactions, consult our website at vanguard.com or see Contacting Vanguard.
Other Redemption Rules You Should Know
Documentation for certain accounts. Special documentation may be required to redeem from certain types of accounts, such as trust, corporate, nonprofit, or retirement accounts. Please call us before attempting to redeem from these types of accounts.
Potentially disruptive redemptions. Vanguard reserves the right to pay all or part of a redemption in kind—that is, in the form of securities—if we reasonably believe that a cash redemption would negatively affect the fund’s operation or performance or that the shareholder may be engaged in market-timing or frequent trading. Under these circumstances, Vanguard also reserves the right to delay payment of the redemption proceeds for up to seven calendar days. By calling us before you attempt to redeem a large dollar amount, you may avoid in-kind or delayed payment of your redemption. Please see Frequent-Trading Limitations for information about Vanguard’s policies to limit frequent trading.
Recently purchased shares. Although you can redeem shares at any time, proceeds may not be made available to you until the fund collects payment for your purchase. This may take up to seven calendar days for shares purchased by check or by electronic bank transfer. If you have written a check on a fund with checkwriting privileges, that check may be rejected if your fund account does not have a sufficient available balance.
Address change. If you change your address online or by telephone, there may be up to a 15-day restriction on your ability to request check redemptions online and by telephone. You can request a redemption in writing (using a form available online) at any time. Confirmations of address changes are sent to both the old and new addresses.
Payment to a different person or address. At your request, we can make your redemption check payable, or wire your redemption proceeds, to a different person or send it to a different address. However, this generally requires the written consent of all registered account owners and may require additional documentation, such as a signature guarantee or a notarized signature. You may obtain a signature guarantee from some commercial or savings banks, credit unions, trust companies, or member firms of a U.S. stock exchange.
No cancellations. Vanguard will not accept your request to cancel any redemption request once processing has begun. Please be careful when placing a redemption request.
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Emergency circumstances. Vanguard funds can postpone payment of redemption proceeds for up to seven calendar days. In addition, Vanguard funds can suspend redemptions and/or postpone payments of redemption proceeds beyond seven calendar days at times when the NYSE is closed or during emergency circumstances, as determined by the SEC.
Exchanging Shares
An exchange occurs when you use the proceeds from the redemption of shares of one Vanguard fund to simultaneously purchase shares of a different Vanguard fund. You can make exchange requests online (if you are registered for online access), by telephone, or by mail. See Purchasing Shares and Redeeming Shares.
If the NYSE is open for regular trading (generally until 4 p.m., Eastern time, on a business day) at the time an exchange request is received in good order, the trade date generally will be the same day. See Other Rules You Should Know—Good Order for additional information on all transaction requests.
Vanguard will not accept your request to cancel any exchange request once processing has begun. Please be careful when placing an exchange request.
Call Vanguard before attempting to exchange a large dollar amount. By calling us before you attempt to exchange a large dollar amount, you may avoid delayed or rejected transactions.
Please note that Vanguard reserves the right, without notice, to revise or terminate the exchange privilege, limit the amount of any exchange, or reject an exchange, at any time, for any reason. See Frequent-Trading Limitations for additional restrictions on exchanges.
Frequent-Trading Limitations
Because excessive transactions can disrupt management of a fund and increase the fund’s costs for all shareholders, the board of trustees of each Vanguard fund places certain limits on frequent trading in the funds. Each Vanguard fund (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) limits an investor’s purchases or exchanges into a fund account for 30 calendar days after the investor has redeemed or exchanged out of that fund account. ETF Shares are not subject to these frequent-trading limits.
For Vanguard Retirement Investment Program pooled plans, the limitations apply to exchanges made online or by telephone.
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These frequent-trading limitations do not apply to the following:
• Purchases of shares with reinvested dividend or capital gains distributions.
• Transactions through Vanguard’s Automatic Investment Plan, Automatic Exchange
Service, Direct Deposit Service, Automatic Withdrawal Plan, Required Minimum Distribution Service, and Vanguard Small Business Online®.
• Discretionary transactions through Vanguard Asset Management Services™, Vanguard Personal Advisor Services®, and Vanguard Institutional Advisory Services®.
• 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, certain Individual 403(b)(7) Custodial Accounts, and Vanguard Individual 401(k) Plans).
• Transfers and reregistrations of shares within the same fund.
• Purchases of shares by asset transfer or direct rollover.
• Conversions of shares from one share class to another in the same fund.
• Checkwriting redemptions.
• Section 529 college savings plans.
• Certain approved institutional portfolios and asset allocation programs, as well as
trades made by funds or trusts managed by Vanguard or its affiliates that invest in other Vanguard funds. (Please note that shareholders of Vanguard’s funds of funds are subject to the limitations.)
For participants in employer-sponsored defined contribution plans,* the frequent-trading limitations do not apply to:
• Purchases of shares with participant payroll or employer contributions or loan repayments.
• Purchases of shares with reinvested dividend or capital gains distributions.
• Distributions, loans, and in-service withdrawals from a plan.
• Redemptions of shares as part of a plan termination or at the direction of the plan.
• Transactions executed through the Vanguard Managed Account Program.
• Redemptions of shares to pay fund or account fees.
• Share or asset transfers or rollovers.
• Reregistrations of shares.
• Conversions of shares from one share class to another in the same fund.
• Exchange requests submitted by written request to Vanguard. (Exchange requests
submitted by fax, if otherwise permitted, are subject to the limitations.)
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* The following Vanguard fund accounts are subject to the frequent-trading limitations: SEP-IRAs, SIMPLE IRAs, certain Individual 403(b)(7) Custodial Accounts, and Vanguard Individual 401(k) Plans.
Accounts Held by Institutions (Other Than Defined Contribution Plans)
Vanguard will systematically monitor for frequent trading in institutional clients’ accounts. If we detect suspicious trading activity, we will investigate and take appropriate action, which may include applying to a client’s accounts the 30-day policy previously described, prohibiting a client’s purchases of fund shares, and/or revoking the client’s exchange privilege.
Accounts Held by Intermediaries
When intermediaries establish accounts in Vanguard funds for the benefit of their clients, we cannot always monitor the trading activity of the individual clients. However, we review trading activity at the intermediary (omnibus) level, and if we detect suspicious activity, we will investigate and take appropriate action. If necessary, Vanguard may prohibit additional purchases of fund shares by an intermediary, including for the benefit of certain of the intermediary’s clients. Intermediaries also may monitor their clients’ trading activities with respect to Vanguard funds.
For those Vanguard funds that charge purchase and/or redemption fees, intermediaries will be asked to assess these fees on client accounts and remit these fees to the funds. The application of purchase and redemption fees and frequent-trading limitations may vary among intermediaries. There are no assurances that Vanguard will successfully identify all intermediaries or that intermediaries will properly assess purchase and redemption fees or administer frequent-trading limitations. If you invest with Vanguard through an intermediary, please read that firm’s materials carefully to learn of any other rules or fees that may apply.
Other Rules You Should Know
Prospectus and Shareholder Report Mailings
When two or more shareholders have the same last name and address, just one summary prospectus (or prospectus) and/or shareholder report may be sent in an attempt to eliminate the unnecessary expense of duplicate mailings. You may request individual prospectuses and reports by contacting our Client Services Department in writing, by telephone, or online. See Contacting Vanguard.
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Vanguard.com
Registration. If you are a registered user of vanguard.com, you can review your account holdings; buy, sell, or exchange shares of most Vanguard funds; and perform most other transactions through our website. You must register for this service online.
Electronic delivery. Vanguard can deliver your account statements, transaction confirmations, prospectuses, certain tax forms, and shareholder reports electronically. If you are a registered user of vanguard.com, you can consent to the electronic delivery of these documents by logging on and changing your mailing preferences under “Account Maintenance.” You can revoke your electronic consent at any time through our website, and we will begin to send paper copies of these documents within 30 days of receiving your revocation.
Telephone Transactions
Automatic. When we set up your account, we will automatically enable you to do business with us by telephone, unless you instruct us otherwise in writing.
Tele-Account®. To obtain fund and account information through Vanguard’s automated telephone service, you must first establish a Personal Identification Number (PIN) by calling Tele-Account at 800-662-6273.
Proof of a caller’s authority. We reserve the right to refuse a telephone request if the caller is unable to provide the requested information or if we reasonably believe that the caller is not an individual authorized to act on the account. Before we allow a caller to act on an account, we may request the following information:
• Authorization to act on the account (as the account owner or by legal documentation or other means).
• Account registration and address.
• Fund name and account number, if applicable.
• Other information relating to the caller, the account owner, or the account.
Good Order
We reserve the right to reject any transaction instructions that are not in “good order.” Good order generally means that your instructions:
• Are provided by the person(s) authorized in accordance with Vanguard’s policies and procedures to access the account and request transactions.
• Include the fund name and account number.
• Include the amount of the transaction (stated in dollars, shares, or percentage).
Written instructions also must generally be provided on a Vanguard form and include:
• Signature(s) and date from the authorized person(s).
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• Signature guarantees or notarized signatures, if required for the type of transaction.
(Call Vanguard for specific requirements.)
• Any supporting documentation that may be required.
Good order requirements may vary among types of accounts and transactions. For more information, consult our website at vanguard.com or see Contacting Vanguard.
Vanguard reserves the right, without notice, to revise the requirements for good order.
Future Trade-Date Requests
Vanguard does not accept requests to hold a purchase, redemption, or exchange transaction for a future date. All such requests will receive trade dates as previously described in Purchasing Shares, Redeeming Shares, and Exchanging Shares. Vanguard reserves the right to return future-dated purchase checks.
Accounts With More Than One Owner
If an account has more than one owner or authorized person, Vanguard generally will accept instructions from any one owner or authorized person.
Responsibility for Fraud
Vanguard will not be responsible for any account losses because of fraud if we reasonably believe that the person transacting business on an account is authorized to do so. Please take precautions to protect yourself from fraud. Keep your account information private, and immediately review any account statements or other information that we provide to you. It is important that you contact Vanguard immediately about any transactions or changes to your account that you believe to be unauthorized.
Uncashed Checks
Please cash your distribution or redemption checks promptly. Vanguard will not pay interest on uncashed checks. Vanguard may be required to transfer assets related to uncashed checks to a state under the state’s abandoned property law.
Dormant Accounts
If your account has no activity in it for a period of time, Vanguard may be required to transfer it to a state under the state’s abandoned property law, subject to potential federal or state withholding taxes.
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Unusual Circumstances
If you experience difficulty contacting Vanguard online or by telephone, you can send us your transaction request on a Vanguard form by regular or express mail. See Contacting Vanguard for addresses.
Investing With Vanguard Through Other Firms
You may purchase or sell shares of most Vanguard funds through a financial intermediary, such as a bank, a broker, or an investment advisor. Please consult your financial intermediary to determine which, if any, shares are available through that firm and to learn about other rules that may apply. Your financial intermediary can provide you with account information and any required tax forms. You may be required to pay a commission on purchases of mutual fund shares made through a financial intermediary.
Please see Frequent-Trading Limitations—Accounts Held by Intermediaries for information about the assessment of any purchase or redemption fees and the monitoring of frequent trading for accounts held by intermediaries.
Account Service Fee
Vanguard charges 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 applies to both retirement and nonretirement fund accounts and will 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 a fund account only once per calendar year.
If you register on vanguard.com and elect to receive electronic delivery of statements, reports, and other materials for all of your fund accounts, the account service fee for balances below $10,000 will not be charged, so long as that election remains in effect.
The account service fee also does not apply to the following:
• Money market sweep accounts owned in connection with a Vanguard Brokerage Services account.*
• Accounts held through intermediaries.*
• Accounts held by institutional clients.
• Accounts held by Voyager, Voyager Select, Flagship, and Flagship Select clients.
Eligibility is based on total household assets held at Vanguard, with a minimum of $50,000 to qualify for Vanguard Voyager Services®, $500,000 for Vanguard Voyager Select Services®, $1 million for Vanguard Flagship Services®, and $5 million for Vanguard Flagship Select Services®. Vanguard determines eligibility by aggregating assets of all qualifying accounts held by the investor and immediate family members who reside at the same address. Aggregate assets include investments in Vanguard
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mutual funds, Vanguard ETFs®, certain annuities through Vanguard, the Vanguard 529 Plan, and certain small-business accounts. Assets in employer-sponsored retirement plans for which Vanguard provides recordkeeping services may be included in determining eligibility if the investor also has a personal account holding Vanguard mutual funds. Note that assets held in a Vanguard Brokerage Services account (other than Vanguard funds, including Vanguard ETFs) are not included when determining a household’s eligibility.
• Participant accounts in employer-sponsored defined contribution plans.** Please consult your enrollment materials for the rules that apply to your account.
• Section 529 college savings plans.
* Please note that intermediaries, including Vanguard Brokerage Services, may charge a separate fee.
** The following Vanguard fund accounts have alternative fee structures: SIMPLE
IRAs, certain Individual 403(b)(7) Custodial Accounts, Vanguard Retirement Investment Program pooled plans, and Vanguard Individual 401(k) Plans.
Low-Balance Accounts
Each Fund reserves the right to liquidate a fund account whose balance falls below the account minimum for any reason, including market fluctuation. This liquidation policy applies to nonretirement fund accounts and accounts that are held through intermediaries. Any such liquidation will be preceded by written notice to the investor.
Right to Change Policies
In addition to the rights expressly stated elsewhere in this prospectus, Vanguard reserves the right, without notice, to (1) alter, add, or discontinue any conditions of purchase (including eligibility requirements), redemption, exchange, service, or privilege at any time; (2) accept initial purchases by telephone; (3) 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, or if Vanguard reasonably believes a fraudulent transaction may occur or has occurred; (4) temporarily freeze any account and/or suspend account services upon initial notification to Vanguard of the death of the shareholder until Vanguard receives required documentation in good order; (5) alter, impose, discontinue, or waive any purchase fee, redemption fee, account service fee, or other fees charged to a shareholder or a group of shareholders; and (6) redeem an account or suspend account privileges, without the owner’s permission to do so, in cases of threatening conduct or activity Vanguard believes to be suspicious, fraudulent, or illegal. Changes may affect any or all investors. These actions will be taken when, at the sole discretion of Vanguard management, Vanguard reasonably believes they are in the best interest of a fund.
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Fund and Account
Updates
Confirmation Statements
We will send (or provide through our website, whichever you prefer) a confirmation of your trade date and the amount of your transaction when you buy, sell, or exchange shares. However, we will not send confirmations reflecting only checkwriting redemptions or the reinvestment of dividend or capital gains distributions. For any month in which you had a checkwriting redemption, a Checkwriting Activity Statement will be sent to you itemizing the checkwriting redemptions for that month. Promptly review each confirmation statement that we provide to you. It is important that you contact Vanguard immediately with any questions you may have about any transaction reflected on a confirmation statement, or Vanguard will consider the transaction properly processed.
Portfolio Summaries
We will send (or provide through our website, whichever you prefer) quarterly portfolio summaries to help you keep track of your accounts throughout the year. Each summary shows the market value of your account at the close of the statement period, as well as all distributions, purchases, redemptions, exchanges, and transfers for the current calendar quarter (or month). Promptly review each summary that we provide to you. It is important that you contact Vanguard immediately with any questions you may have about any transaction reflected on the summary, or Vanguard will consider the transaction properly processed.
Tax Information Statements
For most accounts, Vanguard (or your intermediary) is required to provide annual tax forms to assist you in preparing your income tax returns. These forms are generally available for each calendar year early in the following year. Registered users of vanguard.com can also view certain forms through our website. Vanguard (or your intermediary) may also provide you with additional tax-related documentation. For more information, consult our website at vanguard.com or see Contacting Vanguard.
Annual and Semiannual Reports
We will send (or provide through our website, whichever you prefer) reports about Vanguard Target Retirement Funds twice a year, in May and November. These reports include overviews of the financial markets and provide the following specific Fund information:
• Performance assessments and comparisons with industry benchmarks.
• Financial statements with listings of Fund holdings.
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Portfolio Holdings
Please consult the Funds‘ Statement of Additional Information or our website for a description of the policies and procedures that govern disclosure of a 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 a Fund as an investment option.
• If you have any questions about a Fund or Vanguard, including those about a Fund’s investment objective, strategies, or risks, contact Vanguard Participant Services toll-free at 800-523-1188 or visit our website at vanguard.com.
• If you have questions about your account, contact your plan administrator or the organization that provides recordkeeping services for your plan.
• Be sure to carefully read each topic that pertains to your transactions with Vanguard.
Vanguard reserves the right to change its policies without notice to shareholders.
Transactions
Processing times for your transaction requests may differ among recordkeepers or among transaction and funding types. Your plan’s recordkeeper (which may also be Vanguard) will determine the necessary processing time frames for your transaction requests prior to submission to a 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 | For fund and service information |
| (Text telephone for people with hearing | For literature requests |
| impairment at 800-749-7273) | |
| Client Services 800-662-2739 | For account information |
| (Text telephone for people with hearing | For most account transactions |
| impairment at 800-749-7273) | |
| Participant Services 800-523-1188 | For information and services for participants in employer- |
| (Text telephone for people with hearing | sponsored plans |
| impairment at 800-749-7273) | |
| Institutional Division | For information and services for large institutional investors |
| 888-809-8102 | |
| Financial Advisor and Intermediary | For information and services for financial intermediaries |
| Sales Support 800-997-2798 | including financial advisors, broker-dealers, trust institutions, |
| and insurance companies | |
| Financial Advisory and Intermediary | For account information and trading support for financial |
| Trading Support 800-669-0498 | intermediaries including financial advisors, broker-dealers, |
| trust institutions, and insurance companies | |
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Vanguard Addresses
Please be sure to use the correct address and the correct form. Use of an incorrect address or form could delay the processing of your transaction.
| Regular Mail (Individuals) | The Vanguard Group | |||
| P.O. Box 1110 | ||||
| Valley Forge, PA 19482-1110 | ||||
| Regular Mail (Institutions, Intermediaries, and The Vanguard Group | ||||
| Employer-Sponsored Plan Participants) | P.O. Box 2900 | |||
| Valley Forge, PA 19482-2900 | ||||
| Registered, Express, or Overnight Mail | The Vanguard Group | |||
| 455 Devon Park Drive | ||||
| Wayne, PA 19087-1815 | ||||
| Additional Information | ||||
| Inception | Newspaper | Vanguard | CUSIP | |
| Date | Abbreviation | Fund Number | Number | |
| Target Retirement Income Fund | 10/27/2003 | TgtRetInc | 308 | 92202E102 |
| Target Retirement 2015 Fund | 10/27/2003 | TgtRe2015 | 303 | 92202E300 |
| Target Retirement 2020 Fund | 6/7/2006 | TgtRe2020 | 682 | 92202E805 |
| Target Retirement 2025 Fund | 10/27/2003 | TgtRe2025 | 304 | 92202E409 |
| Target Retirement 2030 Fund | 6/7/2006 | TgtRe2030 | 695 | 92202E888 |
| Target Retirement 2035 Fund | 10/27/2003 | TgtRe2035 | 305 | 92202E508 |
| Target Retirement 2040 Fund | 6/7/2006 | TgtRe2040 | 696 | 92202E870 |
| Target Retirement 2045 Fund | 10/27/2003 | TgtRe2045 | 306 | 92202E607 |
| Target Retirement 2050 Fund | 6/7/2006 | TgtRe2050 | 699 | 92202E862 |
| Target Retirement 2055 Fund | 8/18/2010 | TgtRet2055 | 1487 | 92202E847 |
| Target Retirement 2060 Fund | 1/19/2012 | TgtRe2060 | 1691 | 92202E839 |
| Target Retirement 2065 Fund | 7/12/2017 | Van2065TRF | 1791 | 92202E680 |
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CFA® is a registered trademark owned by CFA Institute.
Vanguard funds are not sponsored, endorsed, sold, or promoted by the University of Chicago or its Center for Research in Security Prices, and neither the University of Chicago nor its Center for Research in Security Prices makes any representation regarding the advisability of investing in the funds.
London Stock Exchange Group companies include FTSE International Limited ("FTSE"), Frank Russell Company ("Russell"), MTS Next Limited ("MTS"), and FTSE TMX Global Debt Capital Markets Inc. ("FTSE TMX"). All rights reserved. "FTSE®", "Russell®", "MTS®", "FTSE TMX®" and "FTSE Russell" and other service marks and trademarks related to the FTSE or Russell indexes are trademarks of the London Stock Exchange Group companies and are used by FTSE, MTS, FTSE TMX and Russell under licence. All information is provided for information purposes only. Every effort is made to ensure that all information given in this publication is accurate, but no responsibility or liability can be accepted by the London Stock Exchange Group companies nor its licensors for any errors or for any loss from use of this publication. Neither the London Stock Exchange Group companies nor any of their licensors make any claim, prediction, warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the Indices or the fitness or suitability of the Indices for any particular purpose to which they might be put. The London Stock Exchange Group companies do not provide investment advice and nothing in this document should be taken as constituting financial or investment advice. The London Stock Exchange Group companies make no representation regarding the advisability of investing in any asset. A decision to invest in any such asset should not be made in reliance on any information herein. Indexes cannot be invested in directly. Inclusion of an asset in an index is not a recommendation to buy, sell or hold that asset. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional. No part of this information may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission of the London Stock Exchange Group companies. Distribution of the London Stock Exchange Group companies' index values and the use of their indexes to create financial products require a licence with FTSE, FTSE TMX, MTS and/or Russell and/or its licensors.
BLOOMBERG is a trademark and service mark of Bloomberg Finance L.P. BARCLAYS is a trademark and service mark of Barclays Bank Plc, used under license. Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited
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(BISL) (collectively, Bloomberg), or Bloomberg’s licensors, own all proprietary rights in the Bloomberg Barclays U.S. Aggregate Bond Index, Bloomberg Barclays U.S. Aggregate Float Adjusted Index, Bloomberg Barclays U.S. Treasury Inflation Protected Securities Index, Bloomberg Barclays U.S. Treasury Inflation-Protected Securities (TIPS) 0-5 Year Index, and the Bloomberg Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index (USD Hedged) (the Indices or Bloomberg Barclays Indices).
Neither Barclays Bank Plc, Barclays Capital Inc., or any affiliate (collectively Barclays) or Bloomberg is the issuer or producer of the Target Retirement Funds (including the Total Bond Market II Index Fund, the Total International Bond Index Fund, and the Short-Term Inflation-Protected Securities Index Fund) and neither Bloomberg nor Barclays has any responsibilities, obligations or duties to investors in the Target Retirement Funds. The Indices are licensed for use by The Vanguard Group, Inc. (Vanguard) as the sponsor of the Target Retirement Funds. Bloomberg and Barclays’ only relationship with Vanguard in respect to the Indices is the licensing of the Indices, which is determined, composed and calculated by BISL, or any successor thereto, without regard to the Issuer or the Target Retirement Funds or the owners of the Target Retirement Funds.
Additionally, Vanguard may for itself execute transaction(s) with Barclays in or relating to the Indices in connection with the Target Retirement Funds. Investors acquire the Target Retirement Funds from Vanguard and investors neither acquire any interest in the Indices nor enter into any relationship of any kind whatsoever with Bloomberg or Barclays upon making an investment in the Target Retirement Funds. The Target Retirement Funds are not sponsored, endorsed, sold or promoted by Bloomberg or Barclays. Neither Bloomberg nor Barclays makes any representation or warranty, express or implied regarding the advisability of investing in the Target Retirement Funds or the advisability of investing in securities generally or the ability of the Indices to track corresponding or relative market performance. Neither Bloomberg nor Barclays has passed on the legality or suitability of the Target Retirement Funds with respect to any person or entity. Neither Bloomberg nor Barclays is responsible for and has not participated in the determination of the timing of, prices at, or quantities of the Target Retirement Funds to be issued. Neither Bloomberg nor Barclays has any obligation to take the needs of the Issuer or the owners of the Target Retirement Funds or any other third party into consideration in determining, composing or calculating the Indices. Neither Bloomberg nor Barclays has any obligation or liability in connection with administration, marketing or trading of the Target Retirement Funds.
The licensing agreement between Bloomberg and Barclays is solely for the benefit of Bloomberg and Barclays and not for the benefit of the owners of the Target Retirement Funds, investors or other third parties. In addition, the licensing agreement between Vanguard and Bloomberg is solely for the benefit of Vanguard and Bloomberg and not for the benefit of the owners of the Target Retirement Funds, investors or other third parties.
NEITHER BLOOMBERG NOR BARCLAYS SHALL HAVE ANY LIABILITY TO THE ISSUER, INVESTORS OR TO OTHER THIRD PARTIES FOR THE QUALITY, ACCURACY AND/OR COMPLETENESS OF THE BLOOMBERG BARCLAYS INDICES OR ANY DATA INCLUDED THEREIN OR FOR INTERRUPTIONS IN THE DELIVERY OF THE BLOOMBERG BARCLAYS INDICES. NEITHER BLOOMBERG NOR BARCLAYS MAKES ANY WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE ISSUER, THE INVESTORS OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE BLOOMBERG BARCLAYS INDICES OR ANY DATA INCLUDED THEREIN. NEITHER BLOOMBERG NOR BARCLAYS MAKES ANY EXPRESS OR IMPLIED WARRANTIES, AND EACH HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO BLOOMBERG BARCLAYS INDICES OR ANY DATA INCLUDED THEREIN. BLOOMBERG RESERVES THE RIGHT TO CHANGE THE METHODS OF CALCULATION OR PUBLICATION, OR TO CEASE THE CALCULATION OR PUBLICATION OF THE BLOOMBERG BARCLAYS INDICES, AND NEITHER BLOOMBERG NOR BARCLAYS SHALL BE LIABLE FOR ANY MISCALCULATION OF OR ANY INCORRECT, DELAYED OR INTERRUPTED PUBLICATION WITH RESPECT TO ANY OF THE BLOOMBERG BARCLAYS INDICES. NEITHER BLOOMBERG NOR BARCLAYS SHALL BE LIABLE FOR ANY DAMAGES, INCLUDING, WITHOUT LIMITATION, ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES, OR ANY LOST PROFITS AND EVEN IF ADVISED OF THE POSSIBILITY OF SUCH, RESULTING FROM THE USE OF BLOOMBERG BARCLAYS INDICES OR ANY DATA INCLUDED THEREIN OR WITH RESPECT TO THE TARGET RETIREMENT FUNDS.
None of the information supplied by Bloomberg or Barclays and used in this publication may be reproduced in any manner without the prior written permission of both Bloomberg and Barclays Capital, the investment banking division of Barclays Bank Plc. Barclays Bank Plc is registered in England No. 1026167. Registered office 1 Churchill Place London E14 5HP.
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Glossary of Investment Terms
Acquired Fund. Any mutual fund, business development company, closed-end investment company, or other pooled investment vehicle whose shares are owned by a fund.
Active Management. An investment approach that seeks to exceed the average returns of a particular financial market or market segment. In selecting securities to buy and sell, active managers may rely on, among other things, research, market forecasts, quantitative models, and their own judgment and experience.
Bloomberg Barclays U.S. Aggregate Bond Index. An index that is the broadest representation of the taxable U.S. bond market, including most U.S. Treasury, agency, corporate, mortgage-backed, asset-backed, and international dollar-denominated issues, all with investment-grade ratings (rated Baa3 or above by Moody’s) and maturities of 1 year or more.
Bond. A debt security (IOU) issued by a corporation, a government, or a government agency in exchange for the money the bondholder lends it. In most instances, the issuer agrees to pay back the loan by a specific date and generally to make regular interest payments until that date.
Capital Gains Distributions. Payments to mutual fund shareholders of gains realized on securities that a fund has sold at a profit, minus any realized losses.
Common Stock. A security representing ownership rights in a corporation.
Coupon Rate. The interest rate paid by the issuer of a debt security until its maturity. It is expressed as an annual percentage of the face value of the security.
Dividend Distributions. Payments to mutual fund shareholders of income from interest or dividends generated by a fund’s investments.
Expense Ratio. A fund’s total annual operating expenses expressed as a percentage of the fund’s average net assets. The expense ratio includes management and administrative expenses, but it does not include the transaction costs of buying and selling portfolio securities.
Face Value. The amount to be paid at a bond’s maturity; also known as the par value or principal.
Fixed Income Security. An investment, such as a bond, representing a debt that must be repaid by a specified date, and on which the borrower must pay a fixed, variable, or floating rate of interest.
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Float-Adjusted Index. An index that weights its constituent securities based on the value of the constituent securities that are available for public trading, rather than the value of all constituent securities. Some portion of an issuer’s securities may be unavailable for public trading because, for example, those securities are owned by company insiders on a restricted basis or by a government agency. By excluding unavailable securities, float-adjusted indexes can produce a more accurate picture of the returns actually experienced by investors in the measured market.
Fund of Funds. A mutual fund that pursues its objective by investing in other mutual funds.
Inception Date. The date on which the assets of a fund are first invested in accordance with the fund’s investment objective. For funds with a subscription period, the inception date is the day after that period ends. Investment performance is generally measured from the inception date.
Indexing. A low-cost investment strategy in which a mutual fund attempts to track—rather than outperform—a specified market benchmark, or “index.”
Investment-Grade Bond. A debt security whose credit quality is considered by independent bond rating agencies, or through independent analysis conducted by a fund’s advisor, to be sufficient to ensure timely payment of principal and interest under current economic circumstances. Debt securities rated in one of the four highest rating categories are considered investment-grade. Other debt securities may be considered by an advisor to be investment-grade.
Joint Committed Credit Facility. Each Fund participates, along with other funds managed by Vanguard, in a committed credit facility provided by a syndicate of lenders pursuant to a credit agreement that may be renewed annually; each Vanguard fund is individually liable for its borrowings, if any, under the credit facility. The amount and terms of the committed credit facility are subject to approval by the Funds‘ board of trustees and renegotiation with the lender syndicate on an annual basis.
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.
MSCI US Broad Market Index. An index that tracks virtually all stocks that trade in the U.S. stock market.
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.
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New York Stock Exchange (NYSE). A stock exchange based in New York City that is open for regular trading on business days, Monday through Friday, from 9:30 a.m. to 4 p.m., Eastern time.
Principal. The face value of a debt instrument or the amount of money put into an investment.
Target Income Composite Index. Index derived by applying the Target Retirement Income Fund’s target asset allocation to the results of the following benchmarks: for international stocks of developed markets, the MSCI EAFE Index through December 15, 2010; the MSCI ACWI ex USA IMI Index through June 2, 2013; and the FTSE Global All Cap ex US Index thereafter; for emerging markets stocks, the Select Emerging Markets Index through August 23, 2006; the MSCI Emerging Markets Index through December 15, 2010; the MSCI ACWI ex USA IMI Index through June 2, 2013; and the FTSE Global All Cap ex US Index thereafter; for U.S. bonds, the Bloomberg Barclays U.S. Aggregate Bond Index through December 31, 2009, and the Bloomberg Barclays U.S. Aggregate Float Adjusted Index thereafter, as well as the Bloomberg Barclays U.S. Treasury Inflation Protected Securities Index through June 2, 2013, and the Bloomberg Barclays U.S. Treasury Inflation-Protected Securities (TIPS) 0-5 Year Index thereafter; for short-term reserves, the Citigroup Three-Month Treasury Bill Index through June 2, 2013; for international bonds, the Bloomberg Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index beginning June 3, 2013; and for U.S. stocks, the Dow Jones U.S. Total Stock Market Index (formerly known as the Dow Jones Wilshire 5000 Index) through April 22, 2005; the MSCI US Broad Market Index through June 2, 2013; and the CRSP US Total Market Index thereafter. International stock benchmark returns are adjusted for withholding taxes.
Target 2015 Composite Index. An index derived by applying the Target Retirement 2015 Fund’s target asset allocation to the results of the following benchmarks: for international stocks of developed markets, the MSCI EAFE Index through December 15, 2010; the MSCI ACWI ex USA IMI Index through June 2, 2013; and the FTSE Global All Cap ex US Index thereafter; for emerging markets stocks, the Select Emerging Markets Index through August 23, 2006; the MSCI Emerging Markets Index through December 15, 2010; the MSCI ACWI ex USA IMI Index through June 2, 2013; and the FTSE Global All Cap ex US Index thereafter; for U.S. bonds, the Bloomberg Barclays U.S. Aggregate Bond Index through December 31, 2009, and the Bloomberg Barclays U.S. Aggregate Float Adjusted Index thereafter, as well as the Bloomberg Barclays U.S. Treasury Inflation Protected Securities Index through June 2, 2013, and the Bloomberg Barclays U.S. Treasury Inflation-Protected Securities (TIPS) 0-5 Year Index thereafter; for international bonds, the Bloomberg Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index beginning June 3, 2013; and for U.S. stocks, the Dow Jones U.S. Total Stock Market Index (formerly known as the Dow Jones Wilshire 5000 Index) through April 22, 2005; the MSCI US Broad Market Index through June 2,
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2013; and the CRSP US Total Market Index thereafter. International stock benchmark returns are adjusted for withholding taxes.
Target 2020, 2030, 2040, and 2050 Composite Indexes. Indexes derived by applying the applicable Target Retirement Fund’s target asset allocation to the results of the following benchmarks: for international stocks of developed markets, the MSCI EAFE Index through December 15, 2010; the MSCI ACWI ex USA IMI Index through June 2, 2013; and the FTSE Global All Cap ex US Index thereafter; for emerging markets stocks, the Select Emerging Markets Index through August 23, 2006; the MSCI Emerging Markets Index through December 15, 2010; the MSCI ACWI ex USA IMI Index through June 2, 2013; and the FTSE Global All Cap ex US Index thereafter; for U.S. bonds, the Bloomberg Barclays U.S. Aggregate Bond Index through December 31, 2009, and the Bloomberg Barclays U.S. Aggregate Float Adjusted Index thereafter; for international bonds, the Bloomberg Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index beginning June 3, 2013; and for U.S. stocks, the MSCI US Broad Market Index through June 2, 2013, and the CRSP US Total Market Index thereafter. International stock benchmark returns are adjusted for withholding taxes.
Target 2025, 2035, and 2045 Composite Indexes. Indexes derived by applying the applicable Target Retirement Fund’s target asset allocation to the results of the following benchmarks: for international stocks of developed markets, the MSCI EAFE Index through December 15, 2010; the MSCI ACWI ex USA IMI Index through June 2, 2013; and the FTSE Global All Cap ex US Index thereafter; for emerging markets stocks, the Select Emerging Markets Index through August 23, 2006; the MSCI Emerging Markets Index through December 15, 2010; the MSCI ACWI ex USA IMI Index through June 2, 2013; and the FTSE Global All Cap ex US Index thereafter; for U.S. bonds, the Bloomberg Barclays U.S. Aggregate Bond Index through December 31, 2009, and the Bloomberg Barclays U.S. Aggregate Float Adjusted Index thereafter; for international bonds, the Bloomberg Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index beginning June 3, 2013; and for U.S. stocks, the Dow Jones U.S. Total Stock Market Index (formerly known as the Dow Jones Wilshire 5000 Index) through April 22, 2005; the MSCI US Broad Market Index through June 2, 2013; and the CRSP US Total Market Index thereafter. International stock benchmark returns are adjusted for withholding taxes.
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Target 2055 Composite Index. An index derived by applying the Target Retirement 2055 Fund’s target asset allocation to the results of the following benchmarks: for international stocks of developed markets, the MSCI EAFE Index through December 15, 2010; the MSCI ACWI ex USA IMI Index through June 2, 2013; and the FTSE Global All Cap ex US Index thereafter; for emerging markets stocks, the MSCI Emerging Markets Index through December 15, 2010; the MSCI ACWI ex USA IMI Index through June 2, 2013; and the FTSE Global All Cap ex US Index thereafter; for U.S. bonds, the Bloomberg Barclays U.S. Aggregate Float Adjusted Index; for international bonds, the Bloomberg Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index beginning June 3, 2013; and for U.S. stocks, the MSCI US Broad Market Index through June 2, 2013, and the CRSP US Total Market Index thereafter. International stock benchmark returns are adjusted for withholding taxes.
Target 2060 Composite Index. An index derived by applying the Target Retirement 2060 Fund’s target asset allocation to the results of the following benchmarks: for international stocks of developed markets, the MSCI ACWI ex USA IMI Index through June 2, 2013, and the FTSE Global All Cap ex US Index thereafter; for emerging markets stocks, the MSCI ACWI ex USA IMI Index through June 2, 2013, and the FTSE Global All Cap ex US Index thereafter; for U.S. bonds, the Bloomberg Barclays U.S. Aggregate Float Adjusted Index; for international bonds, the Bloomberg Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index beginning June 3, 2013; and for U.S. stocks, the MSCI US Broad Market Index through June 2, 2013, and the CRSP US Total Market Index thereafter. International stock benchmark returns are adjusted for withholding taxes.
Target 2065 Composite Index. An index derived by applying the Target Retirement 2065 Fund’s target asset allocation to the results of the following benchmarks: FTSE Global All Cap ex US Index for international stocks; the Bloomberg Barclays U.S. Aggregate Float Adjusted Index for U.S. bonds and the Bloomberg Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index for international bonds; and the CRSP US Total Stock Market Index for U.S. stocks. International stock benchmark returns are adjusted for withholding taxes.
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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| P.O. Box 2600 | |
| Valley Forge, PA 19482-2600 | |
| Connect with Vanguard® > vanguard.com | |
| For More Information | If you are a participant in an employer-sponsored plan: |
| If you would like more information about Vanguard | The Vanguard Group |
| Target Retirement Funds, the following documents are | Participant Services |
| available free upon request: | P.O. Box 2900 |
| Valley Forge, PA 19482-2900 | |
| Annual/Semiannual Reports to Shareholders | Telephone: 800-523-1188; Text telephone for people |
| Additional information about the Funds’ investments is | with hearing impairment: 800-749-7273 |
| available in the Funds’ annual and semiannual reports | |
| to shareholders. In the annual reports, you will find a | If you are a current Vanguard shareholder and would |
| discussion of the market conditions and investment | like information about your account, account |
| strategies that significantly affected the Funds’ | transactions, and/or account statements, please call: |
| performance during their last fiscal year. | Client Services Department |
| Statement of Additional Information (SAI) | Telephone: 800-662-2739; Text telephone for people |
| The SAI provides more detailed information about | with hearing impairment: 800-749-7273 |
| the Funds and is incorporated by reference into (and | Information Provided by the Securities and |
| thus legally a part of) this prospectus. | Exchange Commission (SEC) |
| To receive a free copy of the latest annual or semiannual | You can review and copy information about the Funds |
| reports or the SAI, or to request additional information | (including the SAI) at the SEC’s Public Reference Room |
| about the Funds or other Vanguard funds, please visit | in Washington, DC. To find out more about this public |
| vanguard.com or contact us as follows: | service, call the SEC at 202-551-8090. Reports and |
| other information about the Funds are also available in | |
| If you are an individual investor: | the EDGAR database on the SEC’s website at |
| The Vanguard Group | www.sec.gov, or you can receive copies of this |
| Investor Information Department | information, for a fee, by electronic request at the |
| P.O. Box 2600 | following email address: [email protected], or by |
| Valley Forge, PA 19482-2600 | writing the Public Reference Section, Securities and |
| Telephone: 800-662-7447; Text telephone for people | Exchange Commission, Washington, DC 20549-1520. |
| with hearing impairment: 800-749-7273 | |
| Funds’ Investment Company Act file number: 811-04098 | |
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