Annual Report | October 31, 2018 |
Vanguard High Dividend Yield Index Fund |
Vanguard’s Principles for Investing Success
We want to give you the best chance of investment success. These principles, grounded in Vanguard’s research and experience, can put you on the right path.
Goals. Create clear, appropriate investment goals.
Balance. Develop a suitable asset allocation using broadly diversified funds. Cost. Minimize cost.
Discipline. Maintain perspective and long-term discipline.
A single theme unites these principles: Focus on the things you can control.
We believe there is no wiser course for any investor.
Contents | |
Your Fund’s Performance at a Glance. | 1 |
CEO’s Perspective. | 3 |
Fund Profile. | 5 |
Performance Summary. | 7 |
Financial Statements. | 9 |
Your Fund’s After-Tax Returns. | 27 |
About Your Fund’s Expenses. | 28 |
Glossary. | 30 |
Please note: The opinions expressed in this report are just that—informed opinions. They should not be considered promises or advice. Also, please keep in mind that the information and opinions cover the period through the date on the front of this report. Of course, the risks of investing in your fund are spelled out in the prospectus.
See the Glossary for definitions of investment terms used in this report.
Your Fund’s Performance at a Glance
• For the 12 months ended October 31, 2018, Vanguard High Dividend Yield Index Fund returned 3.96% for Investor Shares. That performance was in line with the 4.12% return of its benchmark after taking into account the costs of running the fund, and it was more than the 3.07% average return of its peers.
• Stocks rallied through early 2018 on robust global economic momentum, but the environment grew more challenging—especially in late winter and just before the close of the period—amid concerns that included flagging growth outside the United States, inflation at home, and flare-ups in trade tensions.
• U.S. companies that are committed to paying larger-than-average dividends underperformed the broad U.S. stock market.
• The fund posted positive results in six of its ten market sectors. Consumer services and health care stood out, with double-digit returns. Basic materials lagged the most.
Total Returns: Fiscal Year Ended October 31, 2018 | |
Total | |
Returns | |
Vanguard High Dividend Yield Index Fund | |
Investor Shares | 3.96% |
ETF Shares | |
Market Price | 4.00 |
Net Asset Value | 4.05 |
FTSE High Dividend Yield Index | 4.12 |
Equity Income Funds Average | 3.07 |
Equity Income Funds Average: Derived from data provided by Lipper, a Thomson Reuters Company.
The Vanguard ETF® Shares shown are traded on the NYSE Arca exchange and are available only through brokers. The table provides ETF returns based on both the NYSE Arca market price and the net asset value for a share. U.S. Pat. Nos. 6,879,964; 7,337,138; 7,720,749; 7,925,573; 8,090,646; and 8,417,623.
For the ETF Shares, the market price is determined by the midpoint of the bid-offer spread as of the closing time of the New York Stock Exchange (generally 4 p.m., Eastern time). The net asset value is also determined as of the NYSE closing time. For more information about how the ETF Shares' market prices have compared with their net asset value, visit vanguard.com, select your ETF, and then select the Price and Performance tab. The ETF premium/discount analysis there shows the percentages of days on which the ETF Shares' market price was above or below the NAV.
1
Total Returns: Ten Years Ended October 31, 2018 | |
Average | |
Annual Return | |
High Dividend Yield Index Fund Investor Shares | 12.12% |
FTSE High Dividend Yield Index | 12.32 |
Equity Income Funds Average | 10.47 |
Equity Income Funds Average: Derived from data provided by Lipper, a Thomson Reuters Company. |
The figures shown represent past performance, which is not a guarantee of future results. (Current performance may be lower or higher than the performance data cited. For performance data current to the most recent month-end, visit our website at vanguard.com/performance.) Note, too, that both investment returns and principal value can fluctuate widely, so an investor’s shares, when sold, could be worth more or less than their original cost.
Expense Ratios | |||
Your Fund Compared With Its Peer Group | |||
Investor | ETF | Peer Group | |
Shares | Shares | Average | |
High Dividend Yield Index Fund | 0.15% | 0.08% | 1.15% |
The fund expense ratios shown are from the prospectus dated February 22, 2018, and represent estimated costs for the current fiscal year. For the fiscal year ended October 31, 2018, the fund’s expense ratios were 0.14% for Investor Shares and 0.06% for ETF Shares. The peer-group expense ratio is derived from data provided by Lipper, a Thomson Reuters Company, and captures information through year-end 2017.
Peer group: Equity Income Funds.
2
CEO’s Perspective
Tim
Buckley
President and Chief Executive
Officer
Dear Shareholder,
Over the years, I’ve found that prudent investors exhibit a common trait: discipline. No matter how the markets move or what new investing fad hits the headlines, those who stay focused on their goals and tune out the noise are set up for long-term success.
The prime gateway to investing is saving, and you don’t usually become a saver without a healthy dose of discipline. Savers make the decision to sock away part of their income, which means spending less and delaying gratification, no matter how difficult that may be.
Of course, disciplined investing extends beyond diligent saving. The financial markets, in the short term especially, are unpredictable; I have yet to meet the investor who can time them perfectly. It takes discipline to resist the urge to go all-in when markets are frothy or to retreat when things look bleak.
Staying put with your investments is one strategy for handling volatility. Another, rebalancing, requires even more discipline because it means steering your money away from strong performers and toward poorer performers.
Patience—a form of discipline—is also the friend of long-term investors. Higher returns are the potential reward for weathering the market’s turbulence and uncertainty.
3
We have been enjoying one of the longest bull markets in history, but it won’t continue forever. Prepare yourself now for how you will react when volatility comes back. Don’t panic. Don’t chase returns or look for answers outside the asset classes you trust. And be sure to rebalance periodically, even when there’s turmoil.
Whether you’re a master of self-control, get a boost from technology, or work with a professional advisor, know that discipline is necessary to get the most out of your investment portfolio. And know that Vanguard is with you for the entire ride.
Thank you for your continued loyalty.
Sincerely,
Mortimer J.
Buckley
President and Chief Executive
Officer
November 16, 2018
Market Barometer | |||
Average Annual Total Returns | |||
Periods Ended October 31, 2018 | |||
One Year | Three Years | Five Years | |
Stocks | |||
Russell 1000 Index (Large-caps) | 6.98% | 11.31% | 11.05% |
Russell 2000 Index (Small-caps) | 1.85 | 10.68 | 8.01 |
Russell 3000 Index (Broad U.S. market) | 6.60 | 11.27 | 10.81 |
FTSE All-World ex US Index (International) | -7.99 | 4.57 | 2.01 |
Bonds | |||
Bloomberg Barclays U.S. Aggregate Bond Index | |||
(Broad taxable market) | -2.05% | 1.04% | 1.83% |
Bloomberg Barclays Municipal Bond Index | |||
(Broad tax-exempt market) | -0.51 | 1.90 | 3.25 |
FTSE Three-Month U. S. Treasury Bill Index | 1.67 | 0.86 | 0.52 |
CPI | |||
Consumer Price Index | 2.52% | 2.07% | 1.60% |
4
High Dividend Yield
Index Fund
Fund
Profile
As of October 31,
2018
Share-Class Characteristics | ||
Investor | ETF | |
Shares | Shares | |
Ticker Symbol | VHDYX | VYM |
Expense Ratio1 | 0.15% | 0.08% |
30-Day SEC Yield | 3.25% | 3.35% |
Portfolio Characteristics | |||
FTSE High | DJ | ||
Dividend | U.S. Total | ||
Yield | Market | ||
Fund | Index | FA Index | |
Number of Stocks | 402 | 398 | 3,806 |
Median Market | |||
Cap | $104.9B | $104.9B | $71.6B |
Price/Earnings | |||
Ratio | 15.3x | 15.4x | 18.5x |
Price/Book Ratio | 2.4x | 2.4x | 2.9x |
Return on Equity | 15.4% | 15.2% | 15.0% |
Earnings Growth | |||
Rate | 3.3% | 3.5% | 8.2% |
Dividend Yield | 3.2% | 3.2% | 1.8% |
Foreign Holdings | 0.0% | 0.0% | 0.0% |
Turnover Rate | 13% | — | — |
Short-Term | |||
Reserves | -0.2% | — | — |
Volatility Measures | ||
FTSE High | DJ | |
Dividend | U.S. Total | |
Yield | Market | |
Index | FA Index | |
R-Squared | 1.00 | 0.85 |
Beta | 1.00 | 0.76 |
These measures show the degree and timing of the fund’s fluctuations compared with the indexes over 36 months.
Sector Diversification (% of equity exposure) | |
Fund | |
Basic Materials | 3.7% |
Consumer Goods | 13.4 |
Consumer Services | 9.7 |
Financials | 15.7 |
Health Care | 13.8 |
Industrials | 11.2 |
Oil & Gas | 9.4 |
Technology | 10.6 |
Telecommunications | 4.9 |
Utilities | 7.6 |
Sector categories are based on the Industry Classification Benchmark (“ICB”), except for the “Other” category (if applicable), which includes securities that have not been provided an ICB classification as of the effective reporting period.
Ten Largest Holdings (% of total net assets) | ||
Johnson & Johnson | Pharmaceuticals | 3.8% |
JPMorgan Chase & Co. | Banks | 3.7 |
Exxon Mobil Corp. | Integrated Oil & Gas | 3.4 |
Pfizer Inc. | Pharmaceuticals | 2.5 |
Verizon Communications Fixed Line | ||
Inc. | Telecommunications | 2.4 |
Wells Fargo & Co. | Banks | 2.3 |
AT&T Inc. | Fixed Line | |
Telecommunications | 2.3 | |
Procter & Gamble Co. | Nondurable | |
Household Products | 2.2 | |
Intel Corp. | Semiconductors | 2.2 |
Cisco Systems Inc. | Telecommunications | |
Equipment | 2.2 | |
Top Ten | 27.0% |
The holdings listed exclude any temporary cash investments and equity index products.
1 The expense ratios shown are from the prospectus dated February 22, 2018, and represent estimated costs for the current fiscal year. For the fiscal year ended October 31, 2018, the expense ratios were 0.14% for Investor Shares and 0.06% for ETF Shares.
5
High Dividend Yield Index Fund
Investment Focus
6
High Dividend Yield Index Fund
Performance Summary
All of the returns in this report represent past performance, which is not a guarantee of future results that may be achieved by the fund. (Current performance may be lower or higher than the performance data cited. For performance data current to the most recent month-end, visit our website at vanguard.com/performance.) Note, too, that both investment returns and principal value can fluctuate widely, so an investor’s shares, when sold, could be worth more or less than their original cost. The returns shown do not reflect taxes that a shareholder would pay on fund distributions or on the sale of fund shares.
Cumulative
Performance: October 31, 2008, Through October 31, 2018
Initial Investment of $10,000
Average Annual Total Returns | ||||
Periods Ended October 31, 2018 | ||||
Final Value | ||||
One | Five | Ten | of a $10,000 | |
Year | Years | Years | Investment | |
High Dividend Yield Index Fund Investor | ||||
Shares | 3.96% | 9.94% | 12.12% | $31,394 |
FTSE High Dividend Yield Index | 4.12 | 10.10 | 12.32 | 31,947 |
Equity Income Funds Average | 3.07 | 7.40 | 10.47 | 27,073 |
Dow Jones U.S. Total Stock Market | ||||
Float Adjusted Index | 6.56 | 10.76 | 13.36 | 35,036 |
Equity Income Funds Average: Derived from data provided by Lipper, a Thomson Reuters Company.
See Financial Highlights for dividend and capital gains information.
7
High Dividend Yield Index Fund
Final Value | ||||
One | Five | Ten | of a $10,000 | |
Year | Years | Years | Investment | |
High Dividend Yield Index Fund ETF Shares | ||||
Net Asset Value | 4.05% | 10.02% | 12.22% | $31,685 |
FTSE High Dividend Yield Index | 4.12 | 10.10 | 12.32 | 31,947 |
Dow Jones U.S. Total Stock Market Float | ||||
Adjusted Index | 6.56 | 10.76 | 13.36 | 35,036 |
Cumulative Returns of ETF Shares: October 31, 2008, Through October 31, 2018 | |||
One | Five | Ten | |
Year | Years | Years | |
High Dividend Yield Index Fund ETF Shares Market | |||
Price | 4.00% | 60.99% | 215.86% |
High Dividend Yield Index Fund ETF Shares Net | |||
Asset Value | 4.05 | 61.18 | 216.85 |
FTSE High Dividend Yield Index | 4.12 | 61.76 | 219.47 |
Fiscal-Year Total Returns (%): October 31, 2008, Through October 31, 2018
Average Annual Total Returns: Periods Ended September 30, 2018
This table presents returns through the latest calendar quarter—rather than through the end of the fiscal period.
Securities and Exchange Commission rules require that we provide this information.
Inception | One | Five | Ten | |
Date | Year | Years | Years | |
Investor Shares | 11/16/2006 | 10.58% | 11.96% | 10.87% |
ETF Shares | 11/10/2006 | |||
Market Price | 10.70 | 12.04 | 10.94 | |
Net Asset Value | 10.67 | 12.04 | 10.97 |
8
High Dividend Yield Index
Fund
Financial
Statements
Statement of Net
Assets
As of October 31,
2018
The fund reports a complete list of its holdings in regulatory filings four times in each fiscal year, at the quarter-ends. For the second and fourth fiscal quarters, the lists appear in the fund’s semiannual and annual reports to shareholders. For the first and third fiscal quarters, the fund files the lists with the Securities and Exchange Commission on Form N-Q. Shareholders can look up the fund’s Forms N-Q on the SEC’s website at sec.gov.
Market | |||
Value• | |||
Shares | ($000) | ||
Common Stocks (99.7%)1 | |||
Basic Materials (3.6%) | |||
DowDuPont Inc. | 6,883,780 | 371,174 | |
Linde plc | 1,690,315 | 279,697 | |
Air Products & | |||
Chemicals Inc. | 649,765 | 100,291 | |
LyondellBasell Industries | |||
NV Class A | 951,442 | 84,935 | |
Nucor Corp. | 942,426 | 55,716 | |
International Paper Co. | 1,211,116 | 54,936 | |
CF Industries Holdings | |||
Inc. | 690,407 | 33,160 | |
RPM International Inc. | 388,743 | 23,779 | |
Reliance Steel & | |||
Aluminum Co. | 207,779 | 16,398 | |
Olin Corp. | 493,078 | 9,960 | |
Domtar Corp. | 184,282 | 8,534 | |
Scotts Miracle-Gro Co. | 118,548 | 7,912 | |
Commercial Metals Co. | 342,398 | 6,526 | |
Compass Minerals | |||
International Inc. | 100,304 | 4,866 | |
Schweitzer-Mauduit | |||
International Inc. | 89,688 | 2,863 | |
PH Glatfelter Co. | 126,719 | 2,268 | |
Schnitzer Steel | |||
Industries Inc. | 76,702 | 2,063 | |
Innophos Holdings Inc. | 57,021 | 1,671 | |
^ | Nexa Resources SA | 104,728 | 1,168 |
§,* | Ferroglobe R&W Trust | 166,085 | — |
1,067,917 | |||
Consumer Goods (13.4%) | |||
Procter & Gamble Co. | 7,385,086 | 654,909 | |
Coca-Cola Co. | 11,340,615 | 542,989 | |
PepsiCo Inc. | 4,199,925 | 471,988 | |
Philip Morris | |||
International Inc. | 4,605,171 | 405,577 | |
Altria Group Inc. | 5,613,278 | 365,088 | |
Colgate-Palmolive Co. | 2,525,965 | 150,421 |
General Motors Co. | 3,890,128 | 142,340 |
Ford Motor Co. | 11,658,996 | 111,343 |
Kimberly-Clark Corp. | 1,032,347 | 107,674 |
Kraft Heinz Co. | 1,785,925 | 98,172 |
VF Corp. | 958,253 | 79,420 |
Archer-Daniels-Midland | ||
Co. | 1,654,177 | 78,160 |
General Mills Inc. | 1,756,500 | 76,935 |
Clorox Co. | 380,176 | 56,437 |
Conagra Brands Inc. | 1,384,582 | 49,291 |
Kellogg Co. | 735,294 | 48,147 |
Hershey Co. | 415,530 | 44,524 |
Genuine Parts Co. | 423,410 | 41,460 |
Tapestry Inc. | 853,186 | 36,098 |
JM Smucker Co. | 325,793 | 35,290 |
Molson Coors Brewing | ||
Co. Class B | 513,867 | 32,887 |
Hasbro Inc. | 343,738 | 31,524 |
Bunge Ltd. | 416,779 | 25,757 |
Coca-Cola European | ||
Partners plc | 546,529 | 24,862 |
Garmin Ltd. | 337,170 | 22,307 |
Whirlpool Corp. | 193,889 | 21,281 |
Newell Brands Inc. | 1,337,886 | 21,246 |
Campbell Soup Co. | 525,039 | 19,642 |
Harley-Davidson Inc. | 497,349 | 19,009 |
Hanesbrands Inc. | 1,101,263 | 18,898 |
Polaris Industries Inc. | 173,616 | 15,448 |
Leggett & Platt Inc. | 390,361 | 14,174 |
Nu Skin Enterprises Inc. | ||
Class A | 162,748 | 11,428 |
Flowers Foods Inc. | 532,228 | 10,277 |
Coty Inc. Class A | 673,673 | 7,107 |
B&G Foods Inc. | 196,568 | 5,119 |
Universal Corp. | 73,050 | 4,957 |
HNI Corp. | 128,165 | 4,856 |
Steelcase Inc. Class A | 247,656 | 4,111 |
Vector Group Ltd. | 303,607 | 4,105 |
MDC Holdings Inc. | 145,151 | 4,079 |
9
High Dividend Yield Index Fund | ||
Market | ||
Value• | ||
Shares | ($000) | |
Nutrisystem Inc. | 88,746 | 3,156 |
Sturm Ruger & Co. Inc. | 49,044 | 2,913 |
Knoll Inc. | 141,991 | 2,819 |
Dean Foods Co. | 299,329 | 2,392 |
National Presto | ||
Industries Inc. | 14,650 | 1,826 |
Ethan Allen Interiors Inc. | 81,254 | 1,555 |
Tupperware Brands Corp. | 396 | 14 |
3,934,012 | ||
Consumer Services (9.6%) | ||
Comcast Corp. Class A | 13,545,432 | 516,623 |
Walmart Inc. | 4,229,903 | 424,175 |
McDonald’s Corp. | 2,302,429 | 407,300 |
CVS Health Corp. | 3,012,834 | 218,099 |
Walgreens Boots | ||
Alliance Inc. | 2,508,083 | 200,070 |
Target Corp. | 1,589,644 | 132,942 |
Delta Air Lines Inc. | 1,891,645 | 103,530 |
Sysco Corp. | 1,411,503 | 100,682 |
Carnival Corp. | 1,201,297 | 67,321 |
Las Vegas Sands Corp. | 1,058,133 | 53,997 |
Best Buy Co. Inc. | 716,235 | 50,251 |
Omnicom Group Inc. | 658,960 | 48,974 |
Darden Restaurants Inc. | 366,892 | 39,092 |
Kohl’s Corp. | 494,798 | 37,471 |
Viacom Inc. Class B | 1,046,139 | 33,456 |
Macy’s Inc. | 905,889 | 31,063 |
Interpublic Group of | ||
Cos. Inc. | 1,137,189 | 26,337 |
Nordstrom Inc. | 348,346 | 22,911 |
KAR Auction Services | ||
Inc. | 398,320 | 22,680 |
Nielsen Holdings plc | 717,599 | 18,643 |
Gap Inc. | 668,406 | 18,247 |
H&R Block Inc. | 608,494 | 16,149 |
Williams-Sonoma Inc. | 253,048 | 15,026 |
Wyndham Hotels & | ||
Resorts Inc. | 290,085 | 14,298 |
Cinemark Holdings Inc. | 316,936 | 13,175 |
L Brands Inc. | 379,353 | 12,299 |
Six Flags Entertainment | ||
Corp. | 211,578 | 11,396 |
American Eagle | ||
Outfitters Inc. | 475,675 | 10,969 |
Wyndham Destinations | ||
Inc. | 290,284 | 10,415 |
Signet Jewelers Ltd. | 182,801 | 10,246 |
Tribune Media Co. | ||
Class A | 259,622 | 9,868 |
Extended Stay America | ||
Inc. | 561,538 | 9,142 |
Cracker Barrel Old | ||
Country Store Inc. | 56,455 | 8,958 |
TEGNA Inc. | 634,703 | 7,324 |
John Wiley & Sons Inc. | ||
Class A | 130,371 | 7,071 |
Bed Bath & Beyond Inc. | 467,548 | 6,424 |
Sinclair Broadcast Group | ||
Inc. Class A | 212,665 | 6,091 |
Meredith Corp. | 115,969 | 5,979 |
Big Lots Inc. | 136,731 | 5,677 |
DSW Inc. Class A | 211,230 | 5,608 |
Brinker International Inc. | 129,287 | 5,605 |
International Game | ||
Technology plc | 292,111 | 5,419 |
Penske Automotive | ||
Group Inc. | 116,605 | 5,175 |
GameStop Corp. Class A | 341,130 | 4,980 |
Office Depot Inc. | 1,782,042 | 4,562 |
Sonic Corp. | 101,541 | 4,395 |
Abercrombie & Fitch Co. | 219,178 | 4,318 |
Dine Brands Global Inc. | 49,655 | 4,024 |
Guess? Inc. | 182,238 | 3,871 |
Tailored Brands Inc. | 165,531 | 3,478 |
Chico’s FAS Inc. | 443,627 | 3,403 |
Gannett Co. Inc. | 330,530 | 3,206 |
New Media Investment | ||
Group Inc. | 176,801 | 2,484 |
Buckle Inc. | 110,233 | 2,249 |
Copa Holdings SA Class A 30,109 | 2,181 | |
National CineMedia Inc. | 230,798 | 2,066 |
SpartanNash Co. | 107,301 | 1,915 |
Weis Markets Inc. | 27,451 | 1,267 |
Speedway Motorsports | ||
Inc. | 32,995 | 512 |
Barnes & Noble Inc. | 182 | 1 |
2,825,090 | ||
Financials (15.7%) | ||
JPMorgan Chase & Co. | 9,915,994 | 1,081,042 |
Wells Fargo & Co. | 12,870,704 | 685,108 |
US Bancorp | 4,557,980 | 238,246 |
CME Group Inc. | 1,006,821 | 184,490 |
PNC Financial Services | ||
Group Inc. | 1,375,389 | 176,724 |
Chubb Ltd. | 1,373,689 | 171,587 |
BlackRock Inc. | 365,005 | 150,170 |
Prudential Financial Inc. | 1,244,482 | 116,707 |
BB&T Corp. | 2,308,087 | 113,466 |
American International | ||
Group Inc. | 2,636,497 | 108,861 |
MetLife Inc. | 2,504,273 | 103,151 |
Travelers Cos. Inc. | 799,979 | 100,101 |
Aflac Inc. | 2,264,610 | 97,537 |
SunTrust Banks Inc. | 1,375,823 | 86,209 |
T. Rowe Price Group Inc. | 699,342 | 67,829 |
KeyCorp | 3,129,135 | 56,825 |
Regions Financial Corp. | 3,263,897 | 55,388 |
Ameriprise Financial Inc. | 419,914 | 53,430 |
10
High Dividend Yield Index Fund | ||
Market | ||
Value• | ||
Shares | ($000) | |
Fifth Third Bancorp | 1,978,386 | 53,397 |
Citizens Financial Group | ||
Inc. | 1,409,915 | 52,660 |
Huntington Bancshares | ||
Inc. | 3,243,346 | 46,477 |
Arthur J Gallagher & Co. | 534,105 | 39,529 |
Principal Financial Group | ||
Inc. | 837,608 | 39,426 |
Cincinnati Financial Corp. | 454,808 | 35,766 |
Franklin Resources Inc. | 914,822 | 27,902 |
Fidelity National Financial | ||
Inc. | 781,808 | 26,151 |
Invesco Ltd. | 1,201,024 | 26,074 |
Western Union Co. | 1,323,983 | 23,885 |
Unum Group | 613,500 | 22,245 |
American Financial | ||
Group Inc. | 212,565 | 21,263 |
Old Republic International | ||
Corp. | 838,281 | 18,484 |
People’s United Financial | ||
Inc. | 1,094,307 | 17,137 |
Cullen/Frost Bankers Inc. | 169,155 | 16,564 |
Popular Inc. | 298,211 | 15,510 |
First Horizon National | ||
Corp. | 958,460 | 15,470 |
Eaton Vance Corp. | 342,313 | 15,421 |
PacWest Bancorp | 363,362 | 14,760 |
Janus Henderson Group | ||
plc | 589,672 | 14,488 |
First American Financial | ||
Corp. | 321,623 | 14,258 |
Lazard Ltd. Class A | 344,060 | 13,673 |
Axis Capital Holdings Ltd. | 242,939 | 13,554 |
New York Community | ||
Bancorp Inc. | 1,409,265 | 13,501 |
Umpqua Holdings Corp. | 648,554 | 12,452 |
FNB Corp. | 954,297 | 11,289 |
Glacier Bancorp Inc. | 249,860 | 10,594 |
Hancock Whitney Corp. | 250,458 | 10,509 |
BankUnited Inc. | 307,748 | 10,186 |
Chemical Financial Corp. | 209,857 | 9,834 |
United Bankshares Inc. | 293,918 | 9,749 |
Bank of Hawaii Corp. | 123,341 | 9,675 |
Valley National Bancorp | 949,443 | 9,475 |
Navient Corp. | 774,917 | 8,974 |
Community Bank System | ||
Inc. | 147,718 | 8,625 |
Cathay General Bancorp | 227,556 | 8,572 |
RLI Corp. | 115,418 | 8,533 |
BGC Partners Inc. Class A | 799,674 | 8,469 |
Investors Bancorp Inc. | 726,796 | 8,126 |
Fulton Financial Corp. | 507,075 | 8,118 |
Columbia Banking | ||
System Inc. | 215,136 | 7,979 |
Old National Bancorp | 444,441 | 7,933 | |
First Hawaiian Inc. | 313,706 | 7,774 | |
First Financial Bancorp | 280,924 | 7,352 | |
CVB Financial Corp. | 329,138 | 7,192 | |
Legg Mason Inc. | 250,538 | 7,070 | |
Federated Investors Inc. | |||
Class B | 284,975 | 7,030 | |
Kennedy-Wilson | |||
Holdings Inc. | 369,890 | 7,020 | |
ProAssurance Corp. | 156,216 | 6,861 | |
Bank of NT Butterfield & | |||
Son Ltd. | 160,606 | 6,471 | |
WesBanco Inc. | 154,268 | 6,186 | |
Trustmark Corp. | 198,253 | 6,106 | |
Hope Bancorp Inc. | 366,346 | 5,305 | |
Moelis & Co. Class A | 131,118 | 5,292 | |
Horace Mann Educators | |||
Corp. | 121,487 | 4,772 | |
Mercury General Corp. | 80,097 | 4,751 | |
Capitol Federal Financial | |||
Inc. | 381,211 | 4,731 | |
AmTrust Financial | |||
Services Inc. | 328,027 | 4,704 | |
Northwest Bancshares | |||
Inc. | 282,709 | 4,563 | |
NBT Bancorp Inc. | 124,463 | 4,542 | |
Provident Financial | |||
Services Inc. | 183,524 | 4,478 | |
Westamerica | |||
Bancorporation | 76,331 | 4,443 | |
Waddell & Reed Financial | |||
Inc. Class A | 228,858 | 4,364 | |
HFF Inc. Class A | 111,101 | 4,083 | |
S&T Bancorp Inc. | 100,639 | 4,037 | |
* | Clearway Energy Inc. | 203,421 | 3,989 |
First Commonwealth | |||
Financial Corp. | 295,436 | 3,988 | |
Artisan Partners Asset | |||
Management Inc. | |||
Class A | 140,171 | 3,842 | |
Sandy Spring Bancorp Inc. | 102,869 | 3,657 | |
Brookline Bancorp Inc. | 234,326 | 3,632 | |
CNA Financial Corp. | 82,897 | 3,595 | |
Safety Insurance Group Inc. | 42,869 | 3,570 | |
Boston Private Financial | |||
Holdings Inc. | 242,535 | 3,274 | |
City Holding Co. | 43,925 | 3,241 | |
BrightSphere Investment | |||
Group plc | 237,947 | 2,713 | |
American National | |||
Insurance Co. | 21,704 | 2,675 | |
Cohen & Steers Inc. | 65,246 | 2,505 | |
Washington Trust | |||
Bancorp Inc. | 43,873 | 2,253 |
11
High Dividend Yield Index Fund | |||
Market | |||
Value• | |||
Shares | ($000) | ||
TFS Financial Corp. | 146,749 | 2,159 | |
Community Trust | |||
Bancorp Inc. | 45,819 | 2,085 | |
TrustCo Bank Corp. NY | 274,668 | 2,057 | |
FBL Financial Group Inc. | |||
Class A | 29,117 | 2,008 | |
* | Clearway Energy Inc. | ||
Class A | 103,400 | 2,008 | |
Flushing Financial Corp. | 80,841 | 1,834 | |
Oritani Financial Corp. | 123,389 | 1,803 | |
First Financial Corp. | 35,652 | 1,635 | |
Dime Community | |||
Bancshares Inc. | 95,324 | 1,537 | |
Republic Bancorp Inc. | |||
Class A | 28,929 | 1,298 | |
Maiden Holdings Ltd. | 9,951 | 35 | |
4,604,078 | |||
Health Care (13.7%) | |||
Johnson & Johnson | 7,960,119 | 1,114,337 | |
Pfizer Inc. | 17,202,163 | 740,725 | |
Merck & Co. Inc. | 7,892,244 | 580,948 | |
Amgen Inc. | 1,919,681 | 370,095 | |
AbbVie Inc. | 4,492,955 | 349,777 | |
Eli Lilly & Co. | 2,826,116 | 306,464 | |
Gilead Sciences Inc. | 3,837,174 | 261,619 | |
Bristol-Myers Squibb | |||
Co. | 4,848,634 | 245,050 | |
Cardinal Health Inc. | 920,396 | 46,572 | |
Patterson Cos. Inc. | 256,647 | 5,795 | |
Meridian Bioscience Inc. | 124,368 | 2,016 | |
Owens & Minor Inc. | 73,320 | 579 | |
4,023,977 | |||
Industrials (11.2%) | |||
Boeing Co. | 1,606,130 | 569,951 | |
3M Co. | 1,689,675 | 321,477 | |
General Electric Co. | 25,556,537 | 258,121 | |
United Parcel Service | |||
Inc. Class B | 2,047,210 | 218,110 | |
Lockheed Martin Corp. | 735,407 | 216,099 | |
Caterpillar Inc. | 1,721,012 | 208,793 | |
Automatic Data | |||
Processing Inc. | 1,305,650 | 188,118 | |
Norfolk Southern Corp. | 836,764 | 140,434 | |
Illinois Tool Works Inc. | 994,030 | 126,808 | |
Emerson Electric Co. | 1,859,924 | 126,252 | |
Waste Management Inc. | 1,277,667 | 114,313 | |
Eaton Corp. plc | 1,294,958 | 92,810 | |
Johnson Controls | |||
International plc | 2,738,258 | 87,542 | |
Paychex Inc. | 950,627 | 62,256 | |
Cummins Inc. | 452,335 | 61,830 | |
PACCAR Inc. | 1,016,954 | 58,180 | |
Republic Services Inc. | |||
Class A | 651,019 | 47,316 |
Fastenal Co. | 850,916 | 43,746 | |
CH Robinson Worldwide | |||
Inc. | 409,365 | 36,446 | |
WestRock Co. | 752,521 | 32,336 | |
Snap-on Inc. | 166,092 | 25,568 | |
Packaging Corp. of | |||
America | 276,761 | 25,409 | |
Xerox Corp. | 660,573 | 18,410 | |
Hubbell Inc. Class B | 161,697 | 16,445 | |
National Instruments | |||
Corp. | 327,390 | 16,032 | |
Sonoco Products Co. | 290,382 | 15,849 | |
MDU Resources Group | |||
Inc. | 574,316 | 14,335 | |
Watsco Inc. | 94,363 | 13,983 | |
Bemis Co. Inc. | 268,329 | 12,281 | |
MSC Industrial Direct Co. | |||
Inc. Class A | 132,816 | 10,766 | |
Ryder System Inc. | 155,756 | 8,615 | |
Kennametal Inc. | 238,931 | 8,470 | |
GATX Corp. | 110,908 | 8,310 | |
Timken Co. | 202,160 | 7,995 | |
ABM Industries Inc. | 195,074 | 5,998 | |
Brady Corp. Class A | 138,544 | 5,582 | |
Mobile Mini Inc. | 131,003 | 5,387 | |
Otter Tail Corp. | 115,666 | 5,213 | |
Covanta Holding Corp. | 346,480 | 5,090 | |
Triton International Ltd. | 157,168 | 5,056 | |
ManTech International | |||
Corp. Class A | 78,205 | 4,480 | |
Greenbrier Cos. Inc. | 93,405 | 4,432 | |
McGrath RentCorp | 70,219 | 3,749 | |
Greif Inc. Class A | 75,848 | 3,588 | |
Aircastle Ltd. | 164,239 | 3,191 | |
^ | Ship Finance International | ||
Ltd. | 243,779 | 3,047 | |
GasLog Ltd. | 121,631 | 2,489 | |
^ | Seaspan Corp. Class A | 266,457 | 2,382 |
H&E Equipment Services | |||
Inc. | 97,204 | 2,342 | |
AVX Corp. | 138,354 | 2,308 | |
Briggs & Stratton Corp. | 123,192 | 1,790 | |
Myers Industries Inc. | 103,573 | 1,643 | |
American Railcar | |||
Industries Inc. | 20,898 | 1,461 | |
Macquarie Infrastructure | |||
Corp. | 37,503 | 1,386 | |
LSC Communications Inc. | 139,037 | 1,311 | |
^ | Teekay Corp. | 197,740 | 1,311 |
3,286,642 | |||
Oil & Gas (9.4%) | |||
Exxon Mobil Corp. | 12,561,212 | 1,000,877 | |
Chevron Corp. | 5,647,566 | 630,551 | |
Schlumberger Ltd. | 4,109,468 | 210,857 |
12
High Dividend Yield Index Fund | |||
Market | |||
Value• | |||
Shares | ($000) | ||
Occidental Petroleum | |||
Corp. | 2,271,195 | 152,329 | |
Marathon Petroleum | |||
Corp. | 1,980,000 | 139,491 | |
Phillips 66 | 1,245,971 | 128,111 | |
Valero Energy Corp. | 1,275,761 | 116,209 | |
Kinder Morgan Inc. | 5,622,553 | 95,696 | |
Williams Cos. Inc. | 3,601,585 | 87,627 | |
ONEOK Inc. | 1,213,983 | 79,637 | |
Targa Resources Corp. | 657,951 | 33,996 | |
OGE Energy Corp. | 590,529 | 21,348 | |
Helmerich & Payne Inc. | 314,213 | 19,572 | |
Murphy Oil Corp. | 485,648 | 15,473 | |
PBF Energy Inc. Class A | 352,452 | 14,750 | |
Nabors Industries Ltd. | 1,038,737 | 5,163 | |
SemGroup Corp. Class A | 233,482 | 4,317 | |
Archrock Inc. | 373,418 | 3,831 | |
^ | CVR Energy Inc. | 45,563 | 1,959 |
2,761,794 | |||
Other (0.0%)2 | |||
§,* | A Schulman Inc. CVR | 77,422 | 148 |
Technology (10.6%) | |||
Intel Corp. | 13,686,524 | 641,624 | |
Cisco Systems Inc. | 13,958,271 | 638,591 | |
International Business | |||
Machines Corp. | 2,723,689 | 314,395 | |
Broadcom Inc. | 1,278,186 | 285,662 | |
QUALCOMM Inc. | 4,395,455 | 276,430 | |
Texas Instruments Inc. | 2,904,149 | 269,592 | |
HP Inc. | 4,776,894 | 115,314 | |
Analog Devices Inc. | 1,093,986 | 91,578 | |
Corning Inc. | 2,362,565 | 75,484 | |
Hewlett Packard | |||
Enterprise Co. | 4,484,257 | 68,385 | |
Xilinx Inc. | 754,291 | 64,394 | |
KLA-Tencor Corp. | 461,975 | 42,289 | |
Maxim Integrated | |||
Products Inc. | 824,035 | 41,218 | |
CA Inc. | 929,113 | 41,216 | |
Western Digital Corp. | 887,722 | 38,234 | |
Seagate Technology plc | 844,559 | 33,977 | |
Juniper Networks Inc. | 1,010,365 | 29,573 | |
Cypress Semiconductor | |||
Corp. | 1,062,603 | 13,750 | |
Cogent Communications | |||
Holdings Inc. | 123,234 | 6,406 | |
Pitney Bowes Inc. | 620,505 | 4,108 | |
TiVo Corp. | 356,595 | 3,923 | |
NIC Inc. | 188,150 | 2,504 | |
ADTRAN Inc. | 139,310 | 1,872 | |
Xperi Corp. | 142,610 | 1,854 | |
3,102,373 |
Telecommunications (4.9%) | ||
Verizon | ||
Communications Inc. | 12,264,929 | 700,205 |
AT&T Inc. | 21,551,621 | 661,203 |
CenturyLink Inc. | 2,832,316 | 58,459 |
Telephone & Data | ||
Systems Inc. | 288,711 | 8,901 |
Consolidated | ||
Communications | ||
Holdings Inc. | 142,427 | 1,783 |
Frontier Communications | ||
Corp. | 4 | — |
1,430,551 | ||
Utilities (7.6%) | ||
NextEra Energy Inc. | 1,396,033 | 240,816 |
Duke Energy Corp. | 2,113,675 | 174,653 |
Dominion Energy Inc. | 1,930,969 | 137,910 |
Southern Co. | 3,001,112 | 135,140 |
Exelon Corp. | 2,858,907 | 125,249 |
American Electric | ||
Power Co. Inc. | 1,461,816 | 107,239 |
Sempra Energy | 810,773 | 89,282 |
Public Service Enterprise | ||
Group Inc. | 1,494,530 | 79,853 |
Xcel Energy Inc. | 1,506,875 | 73,852 |
Consolidated Edison Inc. | 922,428 | 70,105 |
Edison International | 941,275 | 65,315 |
WEC Energy Group Inc. | 934,771 | 63,938 |
PPL Corp. | 2,074,932 | 63,078 |
DTE Energy Co. | 535,613 | 60,203 |
Eversource Energy | 937,925 | 59,333 |
FirstEnergy Corp. | 1,439,680 | 53,671 |
Ameren Corp. | 720,136 | 46,506 |
Entergy Corp. | 535,467 | 44,952 |
Evergy Inc. | 802,084 | 44,909 |
CMS Energy Corp. | 833,904 | 41,295 |
CenterPoint Energy Inc. | 1,452,746 | 39,239 |
Atmos Energy Corp. | 322,536 | 30,022 |
Alliant Energy Corp. | 685,490 | 29,462 |
AES Corp. | 1,957,096 | 28,534 |
NiSource Inc. | 1,073,237 | 27,217 |
Pinnacle West Capital | ||
Corp. | 330,586 | 27,191 |
UGI Corp. | 511,524 | 27,141 |
Vectren Corp. | 246,272 | 17,616 |
Aqua America Inc. | 527,172 | 17,149 |
SCANA Corp. | 421,907 | 16,897 |
IDACORP Inc. | 148,593 | 13,858 |
National Fuel Gas Co. | 236,065 | 12,816 |
ONE Gas Inc. | 153,443 | 12,108 |
Hawaiian Electric | ||
Industries Inc. | 321,607 | 11,996 |
13
High Dividend Yield Index Fund | |||
Market | |||
Value• | |||
Shares | ($000) | ||
Portland General Electric | |||
Co. | 263,259 | 11,868 | |
New Jersey Resources | |||
Corp. | 257,758 | 11,625 | |
ALLETE Inc. | 151,600 | 11,218 | |
Southwest Gas Holdings | |||
Inc. | 144,457 | 11,162 | |
Spire Inc. | 145,288 | 10,545 | |
Avista Corp. | 192,898 | 9,919 | |
Black Hills Corp. | 157,288 | 9,359 | |
PNM Resources Inc. | 234,303 | 9,000 | |
NorthWestern Corp. | 148,727 | 8,739 | |
Avangrid Inc. | 166,356 | 7,820 | |
South Jersey Industries | |||
Inc. | 253,400 | 7,485 | |
El Paso Electric Co. | 119,496 | 6,817 | |
Northwest Natural | |||
Holding Co. | 84,775 | 5,493 | |
Pattern Energy Group Inc. | |||
Class A | 266,544 | 4,777 | |
Atlantica Yield plc | 175,110 | 3,434 | |
2,217,806 | |||
Total Common Stocks | |||
(Cost $25,799,491) | 29,254,388 | ||
Temporary Cash Investments (0.1%)1 | |||
Money Market Fund (0.1%) | |||
3,4 | Vanguard Market | ||
Liquidity Fund, 2.308% | 279,805 | 27,981 | |
Face | |||
Amount | |||
($000) | |||
U. S. Government and Agency Obligations (0.0%) | |||
5 | United States Treasury | ||
Bill, 2.035%, 11/15/18 | 1,500 | 1,499 | |
5 | United States Treasury | ||
Bill, 2.059%, 11/29/18 | 1,000 | 998 | |
5 | United States Treasury | ||
Bill, 2.123%, 12/13/18 | 200 | 200 | |
5 | United States Treasury | ||
Bill, 2.365%, 3/21/19 | 200 | 198 | |
2,895 | |||
Total Temporary Cash Investments | |||
(Cost $30,876) | 30,876 | ||
Total Investments (99.8%) | |||
(Cost $25,830,367) | 29,285,264 |
Amount | |
($000) | |
Other Assets and Liabilities (0.2%) | |
Other Assets | |
Investment in Vanguard | 1,541 |
Receivables for Investment | |
Securities Sold | 1,525 |
Receivables for Accrued Income | 47,169 |
Receivables for Capital Shares Issued | 6,419 |
Variation Margin Receivable— | |
Futures Contracts | 719 |
Other Assets 5 | 531 |
Total Other Assets | 57,904 |
Liabilities | |
Payables for Investment Securities | |
Purchased | (36) |
Collateral for Securities on Loan | (2,674) |
Payables for Capital Shares Redeemed | (3,879) |
Payables to Vanguard | (5,641) |
Total Liabilities | (12,230) |
Net Assets (100%) | 29,330,938 |
At October 31, 2018, net assets consisted of: | |
Amount | |
($000) | |
Paid-in Capital | 26,303,805 |
Total Distributable Earnings (Loss) | 3,027,133 |
Net Assets | 29,330,938 |
Investor Shares—Net Assets | |
Applicable to 242,632,721 outstanding | |
$.001 par value shares of beneficial | |
interest (unlimited authorization) | 8,003,218 |
Net Asset Value Per Share— | |
Investor Shares | $32.98 |
14
High Dividend Yield Index Fund | |
Amount | |
($000) | |
ETF Shares—Net Assets | |
Applicable to 256,156,479 outstanding | |
$.001 par value shares of beneficial | |
interest (unlimited authorization) | 21,327,720 |
Net Asset Value Per Share— | |
ETF Shares | $83.26 |
• See Note A in Notes to Financial Statements.
^ Includes partial security positions on loan to
broker-dealers.
The total value of securities
on loan is $2,789,000.
§ Security value determined
using significant unobservable inputs.
*
Non-income-producing security.
1 The fund invests a portion of its cash reserves in
equity
markets through the use of index
futures contracts. After
giving effect to
futures investments, the fund’s effective
common stock and temporary cash investment positions
represent 100.0% and -0.2%, respectively, of net assets.
2 “Other” represents securities that are not classified by
the
fund’s benchmark index.
3 Affiliated money market fund
available only to Vanguard funds
and certain
trusts and accounts managed by Vanguard. Rate
shown is the 7-day yield.
4 Includes $2,674,000 of collateral received for securities on loan.
5 Securities with a value of
$2,895,000 and
cash of $478,000
have
been segregated as initial margin for
open futures contracts.
CVR—Contingent Value
Rights.
Derivative Financial Instruments Outstanding as of Period End | ||||
Futures Contracts | ||||
($000) | ||||
Value and | ||||
Number of | Unrealized | |||
Long (Short) | Notional | Appreciation | ||
Expiration | Contracts | Amount | (Depreciation) | |
Long Futures Contracts | ||||
E-mini S&P 500 Index | December 2018 | 557 | 75,504 | (4,942) |
See accompanying Notes, which are an integral part of the Financial Statements.
15
High Dividend Yield Index Fund | |
Statement of Operations | |
Year Ended | |
October 31, 2018 | |
($000) | |
Investment Income | |
Income | |
Dividends | 919,242 |
Interest1 | 821 |
Securities Lending—Net | 655 |
Total Income | 920,718 |
Expenses | |
The Vanguard Group—Note B | |
Investment Advisory Services | 3,332 |
Management and Administrative—Investor Shares | 8,813 |
Management and Administrative—ETF Shares | 8,361 |
Marketing and Distribution—Investor Shares | 1,398 |
Marketing and Distribution—ETF Shares | 976 |
Custodian Fees | 425 |
Auditing Fees | 34 |
Shareholders’ Reports and Proxy—Investor Shares | 99 |
Shareholders’ Reports and Proxy—ETF Shares | 540 |
Trustees’ Fees and Expenses | 19 |
Total Expenses | 23,997 |
Net Investment Income | 896,721 |
Realized Net Gain (Loss) | |
Investment Securities Sold1,2 | 2,076,282 |
Futures Contracts | 276 |
Realized Net Gain (Loss) | 2,076,558 |
Change in Unrealized Appreciation (Depreciation) | |
Investment Securities1 | (1,850,349) |
Futures Contracts | (6,785) |
Change in Unrealized Appreciation (Depreciation) | (1,857,134) |
Net Increase (Decrease) in Net Assets Resulting from Operations | 1,116,145 |
1 Interest income, realized net
gain (loss), and change in unrealized appreciation (depreciation) from an
affiliated company of the fund
were $709,000,
($8,000), and $4,000, respectively.
2 Includes
$2,313,174,000 of net gain (loss) resulting from in-kind redemptions; such gain
(loss) is not taxable to the fund.
See accompanying Notes, which are an integral part of the Financial Statements.
16
High Dividend Yield Index Fund | ||
Statement of Changes in Net Assets | ||
Year Ended October 31, | ||
2018 | 2017 | |
($000) | ($000) | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net Investment Income | 896,721 | 763,919 |
Realized Net Gain (Loss) | 2,076,558 | 853,945 |
Change in Unrealized Appreciation (Depreciation) | (1,857,134) | 2,723,767 |
Net Increase (Decrease) in Net Assets Resulting from Operations | 1,116,145 | 4,341,631 |
Distributions | ||
Net Investment Income | ||
Investor Shares | (235,382) | (210,236) |
ETF Shares | (640,458) | (567,866) |
Realized Capital Gain | ||
Investor Shares | — | — |
ETF Shares | — | — |
Total Distributions | (875,840) | (778,102) |
Capital Share Transactions | ||
Investor Shares | 350,836 | 718,901 |
ETF Shares | 1,139,552 | 1,941,695 |
Net Increase (Decrease) from Capital Share Transactions | 1,490,388 | 2,660,596 |
Total Increase (Decrease) | 1,730,693 | 6,224,125 |
Net Assets | ||
Beginning of Period | 27,600,245 | 21,376,120 |
End of Period | 29,330,938 | 27,600,245 |
See accompanying Notes, which are an integral part of the Financial Statements.
17
High Dividend Yield Index Fund | |||||
Financial Highlights | |||||
Investor Shares | |||||
For a Share Outstanding | Year Ended October 31, | ||||
Throughout Each Period | 2018 | 2017 | 2016 | 2015 | 2014 |
Net Asset Value, Beginning of Period | $32.67 | $28.20 | $26.89 | $26.98 | $23.83 |
Investment Operations | |||||
Net Investment Income | 1.0111 | .9271 | .854 | .815 | .727 |
Net Realized and Unrealized Gain (Loss) | |||||
on Investments | .284 | 4.472 | 1.286 | (.088) | 3.147 |
Total from Investment Operations | 1.295 | 5.399 | 2.140 | .727 | 3.874 |
Distributions | |||||
Dividends from Net Investment Income | (. 985) | (. 929) | (. 830) | (. 817) | (.724) |
Distributions from Realized Capital Gains | — | — | — | — | — |
Total Distributions | (. 985) | (. 929) | (. 830) | (. 817) | (.724) |
Net Asset Value, End of Period | $32.98 | $32.67 | $28.20 | $26.89 | $26.98 |
Total Return2 | 3.96% | 19.37% | 8.11% | 2.78% | 16.48% |
Ratios/Supplemental Data | |||||
Net Assets, End of Period (Millions) | $8,003 | $7,590 | $5,879 | $4,368 | $4,066 |
Ratio of Total Expenses to Average Net Assets | 0.14% | 0.15% | 0.15% | 0.16% | 0.18% |
Ratio of Net Investment Income to | |||||
Average Net Assets | 3.00% | 3.00% | 3.19% | 3.06% | 2.92% |
Portfolio Turnover Rate 3 | 13% | 9% | 7% | 11% | 12% |
1 Calculated based on average shares outstanding.
2 Total returns do not include account service fees that may
have applied in the periods shown. Fund prospectuses provide
information
about any applicable account
service fees.
3 Excludes the value of portfolio securities received or delivered as a
result of in-kind purchases or redemptions of the fund’s capital
shares, including ETF Creation Units.
See accompanying Notes, which are an integral part of the Financial Statements.
18
High Dividend Yield Index Fund | |||||
Financial Highlights | |||||
ETF Shares | |||||
For a Share Outstanding | Year Ended October 31, | ||||
Throughout Each Period | 2018 | 2017 | 2016 | 2015 | 2014 |
Net Asset Value, Beginning of Period | $82.46 | $71.19 | $67.88 | $68.11 | $60.16 |
Investment Operations | |||||
Net Investment Income | 2.6231 | 2.3941 | 2.203 | 2.104 | 1.885 |
Net Realized and Unrealized Gain (Loss) | |||||
on Investments | .731 | 11.301 | 3.245 | (.222) | 7.943 |
Total from Investment Operations | 3.354 | 13.695 | 5.448 | 1.882 | 9.828 |
Distributions | |||||
Dividends from Net Investment Income | (2.554) | (2.425) | (2.138) | (2.112) | (1.878) |
Distributions from Realized Capital Gains | — | — | — | — | — |
Total Distributions | (2.554) | (2.425) | (2.138) | (2.112) | (1.878) |
Net Asset Value, End of Period | $83.26 | $82.46 | $71.19 | $67.88 | $68.11 |
Total Return | 4.05% | 19.46% | 8.18% | 2.84% | 16.56% |
Ratios/Supplemental Data | |||||
Net Assets, End of Period (Millions) | $21,328 | $20,010 | $15,497 | $11,214 | $9,782 |
Ratio of Total Expenses to Average Net Assets | 0.06% | 0.08% | 0.08% | 0.09% | 0.10% |
Ratio of Net Investment Income to | |||||
Average Net Assets | 3.08% | 3.07% | 3.26% | 3.13% | 3.00% |
Portfolio Turnover Rate2 | 13% | 9% | 7% | 11% | 12% |
1 Calculated based on average shares outstanding.
2 Excludes the value of portfolio securities received or
delivered as a result of in-kind purchases or redemptions of the fund’s
capital
shares, including ETF Creation
Units.
See accompanying Notes, which are an integral part of the Financial Statements.
19
High Dividend Yield Index Fund
Notes to Financial Statements
Vanguard High Dividend Yield Index Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund offers two classes of shares: Investor Shares and ETF Shares. Investor Shares are available to any investor who meets the fund’s minimum purchase requirements. ETF Shares are listed for trading on NYSE Arca; they can be purchased and sold through a broker.
A. The following significant accounting policies conform to generally accepted accounting principles for U.S. investment companies. The fund consistently follows such policies in preparing its financial statements.
1. Security Valuation: Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which market quotations are not readily available, or whose values have been materially affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued by methods deemed by the board of trustees to represent fair value. Investments in Vanguard Market Liquidity Fund are valued at that fund’s net asset value. Temporary cash investments are valued using the latest bid prices or using valuations based on a matrix system (which considers such factors as security prices, yields, maturities, and ratings), both as furnished by independent pricing services.
2. Futures Contracts: The fund uses index futures contracts to a limited extent, with the objectives of maintaining full exposure to the stock market, maintaining liquidity, and minimizing transaction costs. The fund may purchase futures contracts to immediately invest incoming cash in the market, or sell futures in response to cash outflows, thereby simulating a fully invested position in the underlying index while maintaining a cash balance for liquidity. The primary risks associated with the use of futures contracts are imperfect correlation between changes in market values of stocks held by the fund and the prices of futures contracts, and the possibility of an illiquid market. Counterparty risk involving futures is mitigated because a regulated clearinghouse is the counterparty instead of the clearing broker. To further mitigate counterparty risk, the fund trades futures contracts on an exchange, monitors the financial strength of its clearing brokers and clearinghouse, and has entered into clearing agreements with its clearing brokers. The clearinghouse imposes initial margin requirements to secure the fund’s performance and requires daily settlement of variation margin representing changes in the market value of each contract. Any assets pledged as initial margin for open contracts are noted in the Statement of Net Assets.
Futures contracts are valued at their quoted daily settlement prices. The notional amounts of the contracts are not recorded in the Statement of Net Assets. Fluctuations in the value of the contracts are recorded in the Statement of Net Assets as an asset (liability) and in the Statement of Operations as unrealized appreciation (depreciation) until the contracts are closed, when they are recorded as realized futures gains (losses).
During the year ended October 31, 2018, the fund’s average investments in long and short futures contracts represented less than 1% and 0% of net assets, respectively, based on the average of the notional amounts at each quarter-end during the period.
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High Dividend Yield Index Fund
3. Federal Income Taxes: The fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income. Management has analyzed the fund’s tax positions taken for all open federal income tax years (October 31, 2015–2018), and has concluded that no provision for federal income tax is required in the fund’s financial statements.
4. Distributions: Distributions to shareholders are recorded on the ex-dividend date. Distributions are determined on a tax basis and may differ from net investment income and realized capital gains for financial reporting purposes.
5. Securities Lending: To earn additional income, the fund lends its securities to qualified institutional borrowers. Security loans are subject to termination by the fund at any time, and are required to be secured at all times by collateral in an amount at least equal to the market value of securities loaned. Daily market fluctuations could cause the value of loaned securities to be more or less than the value of the collateral received. When this occurs, the collateral is adjusted and settled before the opening of the market on the next business day. The fund further mitigates its counterparty risk by entering into securities lending transactions only with a diverse group of prequalified counterpar-ties, monitoring their financial strength, and entering into master securities lending agreements with its counterparties. The master securities lending agreements provide that, in the event of a counterparty’s default (including bankruptcy), the fund may terminate any loans with that borrower, determine the net amount owed, and sell or retain the collateral up to the net amount owed to the fund; however, such actions may be subject to legal proceedings. While collateral mitigates counterparty risk, in the event of a default, the fund may experience delays and costs in recovering the securities loaned. The fund invests cash collateral received in Vanguard Market Liquidity Fund, and records a liability in the Statement of Net Assets for the return of the collateral, during the period the securities are on loan. Securities lending income represents fees charged to borrowers plus income earned on invested cash collateral, less expenses associated with the loan. During the term of the loan, the fund is entitled to all distributions made on or in respect of the loaned securities.
6. Credit Facility: The fund and certain other funds managed by The Vanguard Group (“Vanguard”) participate in a $3.1 billion committed credit facility provided by a syndicate of lenders pursuant to a credit agreement that may be renewed annually; each fund is individually liable for its borrowings, if any, under the credit facility. Borrowings may be utilized for temporary and emergency purposes, and are subject to the fund’s regulatory and contractual borrowing restrictions. The participating funds are charged administrative fees and an annual commitment fee of 0.10% of the undrawn amount of the facility; these fees are allocated to the funds based on a method approved by the fund’s board of trustees and included in Management and Administrative expenses on the fund’s Statement of Operations. Any borrowings under this facility bear interest at a rate based upon the higher of the one-month London Interbank Offered Rate, federal funds effective rate, or overnight bank funding rate plus an agreed-upon spread.
The fund had no borrowings outstanding at October 31, 2018, or at any time during the period then ended.
7. Other: Dividend income is recorded on the ex-dividend date. Interest income includes income distributions received from Vanguard Market Liquidity Fund and is accrued daily. Premiums and discounts on debt securities purchased are amortized and accreted, respectively, to interest income
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High Dividend Yield Index Fund
over the lives of the respective securities. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment securities are those of the specific securities sold.
Each class of shares has equal rights as to assets and earnings, except that each class separately bears certain class-specific expenses related to maintenance of shareholder accounts (included in Management and Administrative expenses), shareholder reporting, and the proxy. Marketing and distribution expenses are allocated to each class of shares based on a method approved by the board of trustees. Income, other non-class-specific expenses, and gains and losses on investments are allocated to each class of shares based on its relative net assets.
B. In accordance with the terms of a Funds’ Service Agreement (the “FSA”) between Vanguard and the fund, Vanguard furnishes to the fund investment advisory, corporate management, administrative, marketing, and distribution services at Vanguard’s cost of operations (as defined by the FSA). These costs of operations are allocated to the fund based on methods and guidelines approved by the board of trustees. Vanguard does not require reimbursement in the current period for certain costs of operations (such as deferred compensation/benefits and risk/insurance costs); the fund’s liability for these costs of operations is included in Payables to Vanguard on the Statement of Net Assets. All other costs of operations payable to Vanguard are generally settled twice a month.
Upon the request of Vanguard, the fund may invest up to 0.40% of its net assets as capital in Vanguard. At October 31, 2018, the fund had contributed to Vanguard capital in the amount of $1,541,000, representing 0.01% of the fund’s net assets and 0.62% of Vanguard’s capitalization. The fund’s trustees and officers are also directors and employees, respectively, of Vanguard.
C. Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.
Level 1—Quoted prices in active markets for identical securities.
Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).
Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments). Any investments valued with significant unobservable inputs are noted on the Statement of Net Assets.
The following table summarizes the market value of the fund’s investments as of October 31, 2018, based on the inputs used to value them:
Level 1 | Level 2 | Level 3 | |
Investments | ($000) | ($000) | ($000) |
Common Stocks | 29,254,240 | — | 148 |
Temporary Cash Investments | 27,981 | 2,895 | — |
Futures Contracts—Assets1 | 719 | — | — |
Total | 29,282,940 | 2,895 | 148 |
1 Represents variation margin on the last day of the reporting period. |
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High Dividend Yield Index Fund
D. Permanent differences between book-basis and tax-basis components of net assets are reclassified among capital accounts in the financial statements to reflect their tax character. These reclassifications have no effect on net assets or net asset value per share. As of period end, the following permanent differences primarily attributable to the accounting for in-kind redemptions, the expiration of capital loss carryforwards, and passive foreign investment companies were reclassified to the following accounts:
Amount | |
($000) | |
Paid-in Capital | 2,294,859 |
Total Distributable Earnings (Loss) | (2,294,859) |
Temporary differences between book-basis and tax-basis components of total distributable earnings (loss) arise when certain items of income, gain, or loss are recognized in different periods for financial statement and tax purposes; these differences will reverse at some time in the future. The differences are primarily related to the tax deferral of losses on wash sales, the realization of unrealized gains or losses on certain futures contracts, and unrealized gains on passive foreign investment companies. As of period end, the tax-basis components of total distributable earnings (loss) are detailed in the table as follows:
Amount | |
($000) | |
Undistributed Ordinary Income | 76,039 |
Undistributed Long-Term Gains | — |
Capital Loss Carryforwards (Non-expiring) | (498,700) |
Net Unrealized Gains (Losses) | 3,454,559 |
As of October 31, 2018, gross unrealized appreciation and depreciation for investments and derivatives based on cost for U.S. federal income tax purposes were as follows:
Amount | |
($000) | |
Tax Cost | 25,830,705 |
Gross Unrealized Appreciation | 5,035,449 |
Gross Unrealized Depreciation | (1,580,890) |
Net Unrealized Appreciation (Depreciation) | 3,454,559 |
E. During the year ended October 31, 2018, the fund purchased $11,188,239,000 of investment securities and sold $9,678,196,000 of investment securities, other than temporary cash investments. Purchases and sales include $5,883,191,000 and $5,905,092,000, respectively, in connection with in-kind purchases and redemptions of the fund’s capital shares.
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High Dividend Yield Index Fund
The fund purchased securities from and sold securities to other Vanguard funds or accounts managed by Vanguard or its affiliates, in accordance with procedures adopted by the board of trustees in compliance with Rule 17a-7 of the Investment Company Act of 1940. For the year ended October 31, 2018, such purchases and sales were $413,865,000 and $774,645,000, respectively; these amounts are included in the purchases and sales of investment securities noted above.
F. Capital share transactions for each class of shares were:
Year Ended October 31, | ||||
2018 | 2017 | |||
Amount | Shares | Amount | Shares | |
($000) | (000) | ($000) | (000) | |
Investor Shares | ||||
Issued | 1,640,168 | 48,448 | 2,032,133 | 66,558 |
Issued in Lieu of Cash Distributions | 189,358 | 5,676 | 169,270 | 5,467 |
Redeemed | (1,478,690) | (43,829) | (1,482,502) | (48,193) |
Net Increase (Decrease)—Investor Shares | 350,836 | 10,295 | 718,901 | 23,832 |
ETF Shares | ||||
Issued | 7,116,592 | 83,559 | 4,601,220 | 59,187 |
Issued in Lieu of Cash Distributions | — | — | — | — |
Redeemed | (5,977,040) | (70,075) | (2,659,525) | (34,200) |
Net Increase (Decrease)—ETF Shares | 1,139,552 | 13,484 | 1,941,695 | 24,987 |
G. Management has determined that no events or transactions occurred subsequent to October 31, 2018, that would require recognition or disclosure in these financial statements.
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Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Vanguard Whitehall Funds and Shareholders of Vanguard High Dividend Yield Index Fund
Opinion on the Financial Statements
We have audited the accompanying statement of net assets of Vanguard High Dividend Yield Index Fund (one of the funds constituting Vanguard Whitehall Funds, referred to hereafter as the “Fund”) as of October 31, 2018, the related statement of operations for the year ended October 31, 2018, the statement of changes in net assets for each of the two years in the period ended October 31, 2018, including the related notes, and the financial highlights for each of the five years in the period ended October 31, 2018 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of October 31, 2018, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended October 31, 2018 and the financial highlights for each of the five years in the period ended October 31, 2018 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of October 31, 2018 by correspondence with the custodian and brokers and by agreement to the underlying ownership records of the transfer agent; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers
LLP
Philadelphia, Pennsylvania
December 13, 2018
We have served as the auditor of one or more investment companies in The Vanguard Group of Funds since 1975.
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Special 2018 tax information (unaudited) for Vanguard High Dividend Yield Index Fund
This information for the fiscal year ended October 31, 2018, is included pursuant to provisions of the Internal Revenue Code.
The fund distributed $875,840,000 of qualified dividend income to shareholders during the fiscal year.
For corporate shareholders, 99.2% of investment income (dividend income plus short-term gains, if any) qualifies for the dividends-received deduction.
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Your Fund’s After-Tax Returns
This table presents returns for your fund both before and after taxes. The after-tax returns are shown in two ways: (1) assuming that an investor owned the fund during the entire period and paid taxes on the fund’s distributions, and (2) assuming that an investor paid taxes on the fund’s distributions and sold all shares at the end of each period.
Calculations are based on the highest individual federal income tax and capital gains tax rates in effect at the times of the distributions and the hypothetical sales. State and local taxes were not considered. After-tax returns reflect any qualified dividend income, using actual prior-year figures and estimates for 2018. (In the example, returns after the sale of fund shares may be higher than those assuming no sale. This occurs when the sale would have produced a capital loss. The calculation assumes that the investor received a tax deduction for the loss.)
The table shows returns for Investor Shares only; returns for other share classes will differ. Please note that your actual after-tax returns will depend on your tax situation and may differ from those shown. Also note that if you own the fund in a tax-deferred account, such as an individual retirement account or a 401(k) plan, this information does not apply to you. Such accounts are not subject to current taxes.
Finally, keep in mind that a fund’s performance—whether before or after taxes—does not guarantee future results.
Average Annual Total Returns: High Dividend Yield Index Fund Investor Shares | |||
Periods Ended October 31, 2018 | |||
One | Five | Ten | |
Year | Years | Years | |
Returns Before Taxes | 3.96% | 9.94% | 12.12% |
Returns After Taxes on Distributions | 3.24 | 9.17 | 11.45 |
Returns After Taxes on Distributions and Sale of Fund Shares | 2.86 | 7.77 | 10.01 |
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About Your Fund’s Expenses
As a shareholder of the fund, you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross income, directly reduce the investment return of the fund.
A fund’s expenses are expressed as a percentage of its average net assets. This figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.
The accompanying table illustrates your fund’s costs in two ways:
• Based on actual fund return. This section helps you to estimate the actual expenses that you paid over the period. The ”Ending Account Value“ shown is derived from the fund‘s actual return, and the third column shows the dollar amount that would have been paid by an investor who started with $1,000 in the fund. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period.
To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your fund under the heading ”Expenses Paid During Period.“
• Based on hypothetical 5% yearly return. This section is intended to help you compare your fund‘s costs with those of other mutual funds. It assumes that the fund had a yearly return of 5% before expenses, but that the expense ratio is unchanged. In this case—because the return used is not the fund’s actual return—the results do not apply to your investment. The example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to calculate expenses based on a 5% return. You can assess your fund’s costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds.
Note that the expenses shown in the table are meant to highlight and help you compare ongoing costs only and do not reflect transaction costs incurred by the fund for buying and selling securities. Further, the expenses do not include any purchase, redemption, or account service fees described in the fund prospectus. If such fees were applied to your account, your costs would be higher. Your fund does not carry a “sales load.”
The calculations assume no shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.
You can find more information about the fund’s expenses, including annual expense ratios, in the Financial Statements section of this report. For additional information on operating expenses and other shareholder costs, please refer to your fund’s current prospectus.
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Six Months Ended October 31, 2018 | |||
Beginning | Ending | Expenses | |
Account Value | Account Value | Paid During | |
High Dividend Yield Index Fund | 4/30/2018 | 10/31/2018 | Period |
Based on Actual Fund Return | |||
Investor Shares | $1,000.00 | $1,023.24 | $0.66 |
ETF Shares | 1,000.00 | 1,023.78 | 0.20 |
Based on Hypothetical 5% Yearly Return | |||
Investor Shares | $1,000.00 | $1,024.55 | $0.66 |
ETF Shares | 1,000.00 | 1,025.00 | 0.20 |
The calculations are based on expenses incurred in the most recent six-month period. The fund’s annualized six-month expense ratios for that period are 0.13% for Investor Shares and 0.04% for ETF Shares. The dollar amounts shown as “Expenses Paid” are equal to the annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by the number of days in the most recent 12-month period (184/365).
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Glossary
30-Day SEC Yield. A fund’s 30-day SEC yield is derived using a formula specified by the U.S. Securities and Exchange Commission. Under the formula, data related to the fund’s security holdings in the previous 30 days are used to calculate the fund’s hypothetical net income for that period, which is then annualized and divided by the fund’s estimated average net assets over the calculation period. For the purposes of this calculation, a security’s income is based on its current market yield to maturity (for bonds), its actual income (for asset-backed securities), or its projected dividend yield (for stocks). Because the SEC yield represents hypothetical annualized income, it will differ—at times significantly—from the fund’s actual experience. As a result, the fund’s income distributions may be higher or lower than implied by the SEC yield.
Beta. A measure of the magnitude of a fund’s past share-price fluctuations in relation to the ups and downs of a given market index. The index is assigned a beta of 1.00. Compared with a given index, a fund with a beta of 1.20 typically would have seen its share price rise or fall by 12% when the index rose or fell by 10%. For this report, beta is based on returns over the past 36 months for both the fund and the index. Note that a fund’s beta should be reviewed in conjunction with its R-squared (see definition). The lower the R-squared, the less correlation there is between the fund and the index, and the less reliable beta is as an indicator of volatility.
Dividend Yield. Dividend income earned by stocks, expressed as a percentage of the aggregate market value (or of net asset value, for a fund). The yield is determined by dividing the amount of the annual dividends by the aggregate value (or net asset value) at the end of the period. For a fund, the dividend yield is based solely on stock holdings and does not include any income produced by other investments.
Earnings Growth Rate. The average annual rate of growth in earnings over the past five years for the stocks now in a fund.
Equity Exposure. A measure that reflects a fund’s investments in stocks and stock futures. Any holdings in short-term reserves are excluded.
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 does not include the transaction costs of buying and selling portfolio securities.
Foreign Holdings. The percentage of a fund represented by securities or depositary receipts of companies based outside the United States.
Inception Date. The date on which the assets of a fund (or one of its share classes) are first invested in accordance with the fund’s investment objective. For funds with a subscription period, the inception date is the day after that period ends. Investment performance is measured from the inception date.
Median Market Cap. 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.
Price/Book Ratio. The share price of a stock divided by its net worth, or book value, per share.
For a fund, the weighted average price/book ratio of the stocks it holds.
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Price/Earnings Ratio. The ratio of a stock’s current price to its per-share earnings over the past year. For a fund, the weighted average P/E of the stocks it holds. P/E is an indicator of market expectations about corporate prospects; the higher the P/E, the greater the expectations for a company’s future growth.
R-Squared. A measure of how much of a fund’s past returns can be explained by the returns from the market in general, as measured by a given index. If a fund’s total returns were precisely synchronized with an index’s returns, its R-squared would be 1.00. If the fund’s returns bore no relationship to the index’s returns, its R-squared would be 0. For this report, R-squared is based on returns over the past 36 months for both the fund and the index.
Return on Equity. The annual average rate of return generated by a company during the past five years for each dollar of shareholder’s equity (net income divided by shareholder’s equity). For a fund, the weighted average return on equity for the companies whose stocks it holds.
Short-Term Reserves. The percentage of a fund invested in highly liquid, short-term securities that can be readily converted to cash.
Turnover Rate. An indication of the fund’s trading activity. Funds with high turnover rates incur higher transaction costs and may be more likely to distribute capital gains (which may be taxable to investors). The turnover rate excludes in-kind transactions, which have minimal impact on costs.
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The People Who Govern Your Fund
The trustees of your mutual fund are there to see that the fund is operated and managed in your best interests since, as a shareholder, you are a part owner of the fund. Your fund’s trustees also serve on the board of directors of The Vanguard Group, Inc., which is owned by the Vanguard funds and provides services to them on an at-cost basis.
A majority of Vanguard’s board members are independent, meaning that they have no affiliation with Vanguard or the funds they oversee, apart from the sizable personal investments they have made as private individuals. The independent board members have distinguished backgrounds in business, academia, and public service. Each of the trustees and executive officers oversees 211 Vanguard funds.
Information for each trustee and executive officer of the fund appears below. The mailing address of the trustees and officers is P.O. Box 876, Valley Forge, PA 19482. More information about the trustees is in the Statement of Additional Information, which can be obtained, without charge, by contacting Vanguard at 800-662-7447, or online at vanguard.com.
Interested Trustees1
F. William McNabb III
Born in 1957. Trustee since July 2009. Principal occupation(s) during the past five years and other experience: chairman of the board (January 2010–present) of Vanguard and of each of the investment companies served by Vanguard, trustee (2009–present) of each of the investment companies served by Vanguard, and director (2008–present) of Vanguard. Chief executive officer and president (2008–2017) of Vanguard and each of the investment companies served by Vanguard, managing director (1995–2008) of Vanguard, and director (1997–2018) of Vanguard Marketing Corporation. Director (2018–present) of UnitedHealth Group.
Mortimer J. Buckley
Born in 1969. Trustee since January 2018. Principal occupation(s) during the past five years and other experience: chief executive officer (January 2018–present) of Vanguard; chief executive officer, president, and trustee (January 2018–present) of each of the investment companies served by Vanguard; president and director (2017–present) of Vanguard; and president (February 2018–present) of Vanguard Marketing Corporation. Chief investment officer (2013–2017), managing director (2002–2017), head of the Retail Investor Group (2006–2012), and chief information officer (2001–2006) of Vanguard. Chairman of the board (2011–2017) of the Children’s Hospital of Philadelphia.
Independent Trustees
Emerson U. Fullwood
Born in 1948. Trustee since January 2008. Principal occupation(s) during the past five years and other experience: executive chief staff and marketing officer for North America and corporate vice president (retired 2008) of Xerox Corporation (document management products and services). Former president of the Worldwide Channels Group, Latin America, and Worldwide Customer Service and executive chief staff officer of Developing Markets of Xerox. Executive in residence and 2009–2010 Distinguished Minett Professor at the Rochester Institute of Technology. Lead director of SPX FLOW, Inc. (multi-industry manufacturing). Director of the University of Rochester Medical Center, the Monroe Community College Foundation, the United Way of Rochester, North Carolina A&T University, and Roberts Wesleyan College. Trustee of the University of Rochester.
Amy Gutmann
Born in 1949. Trustee since June 2006. Principal occupation(s) during the past five years and other experience: president (2004–present) of the University of Pennsylvania. Christopher H. Browne Distinguished Professor of Political Science, School of Arts and Sciences, and professor of communication, Annenberg School for Communication, with secondary faculty appointments in the Department of Philosophy, School of Arts and Sciences, and at the Graduate School of Education, University of Pennsylvania. Trustee of the National Constitution Center.
1 Mr. McNabb and Mr. Buckley are considered “interested persons,” as defined in the Investment Company Act of 1940, because they are officers of the Vanguard funds.
JoAnn Heffernan Heisen
Born in 1950. Trustee since July 1998. Principal occupation(s) during the past five years and other experience: corporate vice president of Johnson & Johnson (pharmaceuticals/medical devices/consumer products) and member of its executive committee (1997–2008). Chief global diversity officer (retired 2008), vice president and chief information officer (1997–2006), controller (1995–1997), treasurer (1991–1995), and assistant treasurer (1989–1991) of Johnson & Johnson. Director of Skytop Lodge Corporation (hotels) and the Robert Wood Johnson Foundation. Member of the advisory board of the Institute for Women’s Leadership at Rutgers University.
F. Joseph Loughrey
Born in 1949. Trustee since October 2009. Principal occupation(s) during the past five years and other experience: president and chief operating officer (retired 2009) and vice chairman of the board (2008–2009) of Cummins Inc. (industrial machinery). Chairman of the board of Hillenbrand, Inc. (specialized consumer services), Oxfam America, and the Lumina Foundation for Education. Director of the V Foundation for Cancer Research. Member of the advisory council for the College of Arts and Letters and chair of the advisory board to the Kellogg Institute for International Studies, both at the University of Notre Dame.
Mark Loughridge
Born in 1953. Trustee since March 2012. Principal occupation(s) during the past five years and other experience: senior vice president and chief financial officer (retired 2013) of IBM (information technology services). Fiduciary member of IBM’s Retirement Plan Committee (2004–2013), senior vice president and general manager (2002–2004) of IBM Global Financing, vice president and controller (1998–2002) of IBM, and a variety of other prior management roles at IBM. Member of the Council on Chicago Booth.
Scott C. Malpass
Born in 1962. Trustee since March 2012. Principal occupation(s) during the past five years and other experience: chief investment officer (1989–present) and vice president (1996–present) of the University of Notre Dame. Assistant professor of finance at the Mendoza College of Business, University of Notre Dame, and member of the Notre Dame 403(b) Investment Committee. Chairman of the board of TIFF Advisory Services, Inc. Member of the board of Catholic Investment Services, Inc. (investment advisors), the board of advisors for Spruceview Capital Partners, and the board of superintendence of the Institute for the Works of Religion.
Deanna Mulligan
Born in 1963. Trustee since January 2018. Principal occupation(s) during the past five years and other experience: president (2010–present) and chief executive officer (2011–present) of The Guardian Life Insurance Company of America. Chief operating officer (2010–2011) and executive vice president (2008–2010) of Individual Life and Disability of The Guardian Life Insurance Company of America. Member of the board of The Guardian Life Insurance Company of America, the American Council of Life Insurers, the Partnership for New York City (business leadership), and the Committee Encouraging Corporate Philanthropy. Trustee of the Economic Club of New York and the Bruce Museum (arts and science). Member of the Advisory Council for the Stanford Graduate School of Business.
André F. Perold
Born in 1952. Trustee since December 2004. Principal occupation(s) during the past five years and other experience: George Gund Professor of Finance and Banking, Emeritus at the Harvard Business School (retired 2011). Chief investment officer and co-managing partner of HighVista Strategies LLC (private investment firm). Overseer of the Museum of Fine Arts Boston.
Sarah Bloom Raskin
Born in 1961. Trustee since January 2018. Principal occupation(s) during the past five years and other experience: deputy secretary (2014–2017) of the United States Department of the Treasury. Governor (2010–2014) of the Federal Reserve Board. Commissioner (2007–2010) of financial regulation for the State of Maryland. Member of the board of directors (2012–2014) of Neighborhood Reinvestment Corporation. Director of i(x) Investments, LLC.
Peter F. Volanakis
Born in 1955. Trustee since July 2009. Principal occupation(s) during the past five years and other experience: president and chief operating officer (retired 2010) of Corning Incorporated (communications equipment) and director of Corning Incorporated (2000–2010) and Dow Corning (2001–2010). Director (2012) of SPX Corporation (multi-industry manufacturing). Overseer of the Amos Tuck School of Business Administration, Dartmouth College (2001–2013). Chairman of the board of trustees of Colby-Sawyer College. Member of the Board of Hypertherm Inc. (industrial cutting systems, software, and consumables).
Executive Officers
Glenn Booraem
Born in 1967. Principal occupation(s) during the past five years and other experience: principal of Vanguard. Investment stewardship officer (2017–present), treasurer (2015–2017), controller (2010–2015), and assistant controller (2001–2010) of each of the investment companies served by Vanguard.
Christine M. Buchanan
Born in 1970. Principal occupation(s) during the past five years and other experience: principal of Vanguard and global head of Fund Administration at Vanguard. Treasurer (2017–present) of each of the investment companies served by Vanguard. Partner (2005–2017) at KPMG LLP (audit, tax, and advisory services).
Brian Dvorak
Born in 1973. Principal occupation(s) during the past five years and other experience: principal of Vanguard. Chief compliance officer (2017–present) of Vanguard and each of the investment companies served by Vanguard. Assistant vice president (2017–present) of Vanguard Marketing Corporation. Vice president and director of Enterprise Risk Management (2011–2013) at Oppenheimer Funds, Inc.
Thomas J. Higgins
Born in 1957. Principal occupation(s) during the past five years and other experience: principal of Vanguard. Chief financial officer (2008–present) and treasurer (1998–2008) of each of the investment companies served by Vanguard.
Peter Mahoney
Born in 1974. Principal occupation(s) during the past five years and other experience: principal of Vanguard. Controller (2015–present) of each of the investment companies served by Vanguard. Head of International Fund Services (2008–2014) at Vanguard.
Anne E. Robinson
Born in 1970. Principal occupation(s) during the past five years and other experience: general counsel (2016–present) of Vanguard. Secretary (2016–present) of Vanguard and of each of the investment companies served by Vanguard. Managing director (2016–present) of Vanguard. Director and senior vice president (2016–2018) of Vanguard Marketing Corporation. Managing director and general counsel of Global Cards and Consumer Services (2014–2016) at Citigroup. Counsel (2003–2014) at American Express.
Michael Rollings
Born in 1963. Principal occupation(s) during the past five years and other experience: finance director (2017–present) and treasurer (2017) of each of the investment companies served by Vanguard. Managing director (2016–present) of Vanguard. Chief financial officer (2016–present) of Vanguard. Director (2016–present) of Vanguard Marketing Corporation. Executive vice president and chief financial officer (2006–2016) of MassMutual Financial Group.
Vanguard Senior Management Team | |
Joseph Brennan | Chris D. McIsaac |
Mortimer J. Buckley | James M. Norris |
Gregory Davis | Thomas M. Rampulla |
John James | Karin A. Risi |
Martha G. King | Anne E. Robinson |
John T. Marcante | Michael Rollings |
Chairman Emeritus and Senior Advisor | |
John J. Brennan | |
Chairman, 1996–2009 | |
Chief Executive Officer and President, 1996–2008 | |
Founder | |
John C. Bogle | |
Chairman and Chief Executive Officer, 1974–1996 |
P.O. Box
2600 | |
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