Semiannual Report   |   July 31, 2021
Vanguard Dividend Appreciation Index Fund

Contents
About Your Fund’s Expenses

1
Financial Statements

4
Trustees Approve Advisory Arrangement

19
Liquidity Risk Management

21

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.
1

Six Months Ended July 31, 2021      
  Beginning
Account Value
1/31/2021
Ending
Account Value
7/31/2021
Expenses
Paid During
Period
Based on Actual Fund Return      
Dividend Appreciation Index Fund      
ETF Shares $1,000.00 $1,173.90 $0.32
Admiral™ Shares 1,000.00 1,173.80 0.43
Based on Hypothetical 5% Yearly Return      
ETF Shares $1,000.00 $1,024.50 $0.30
Admiral Shares 1,000.00 1,024.40 0.40
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 0.06% for ETF Shares and 0.08% for Admiral 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 (181/365).
2

Dividend Appreciation Index Fund
Fund Allocation
As of July 31, 2021
Basic Materials 3.0%
Consumer Discretionary 16.8
Consumer Staples 10.0
Financials 13.7
Health Care 15.1
Industrials 21.9
Technology 13.6
Telecommunications 2.2
Utilities 3.7
The table reflects the fund’s investments, except for short-term investments and derivatives. 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.
The fund may invest in derivatives (such as futures and swap contracts) for various reasons, including, but not limited to, attempting to remain fully invested and tracking its target index as closely as possible.
The Industry Classification Benchmark (“ICB”) is owned by FTSE. FTSE does not accept any liability to any person for any loss or damage arising out of any error or omission in the ICB.
3

Dividend Appreciation Index Fund
Financial Statements (unaudited)
Schedule of Investments
As of July 31, 2021
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at www.sec.gov.
    Shares Market
Value

($000)
Common Stocks (99.6%)
Basic Materials (3.0%)
  Air Products and Chemicals Inc.  1,357,865    395,179
  Ecolab Inc.  1,754,307    387,404
  International Flavors & Fragrances Inc.  1,526,096    229,891
  Fastenal Co.  3,527,572    193,205
  Nucor Corp.  1,827,491    190,096
  Albemarle Corp.    715,927    147,510
  Celanese Corp. Class A    699,676    108,989
  Avery Dennison Corp.    509,153    107,268
  Eastman Chemical Co.    833,324     93,932
  Westlake Chemical Corp.    783,362     64,956
  Reliance Steel & Aluminum Co.    391,108     61,463
  Scotts Miracle-Gro Co.    341,430     60,419
  Royal Gold Inc.    402,802     48,948
  Ashland Global Holdings Inc.    371,683     31,619
  Quaker Chemical Corp.    109,609     27,593
  Balchem Corp.    199,361     26,892
  Sensient Technologies Corp.    259,127     22,591
  Worthington Industries Inc.    319,022     20,408
  Stepan Co.    137,354     16,201
  Hawkins Inc.    128,376      4,661
       2,239,225
Consumer Discretionary (16.7%)
  Walmart Inc. 17,356,046  2,474,104
  Home Depot Inc.  6,603,998  2,167,366
  NIKE Inc. Class B  7,799,543  1,306,501
  Costco Wholesale Corp.  2,717,398  1,167,720
  McDonald's Corp.  4,573,424  1,110,016
  Starbucks Corp.  7,222,683    877,050
  Lowe's Cos. Inc.  4,495,337    866,207
  Target Corp.  3,072,175    801,991
  Activision Blizzard Inc.  4,753,963    397,526
  VF Corp.  2,401,765    192,622
  Best Buy Co. Inc.  1,587,753    178,384
  Tractor Supply Co.    713,227    129,044
  Pool Corp.    247,019    118,031
  Genuine Parts Co.    885,236    112,354
  Whirlpool Corp.    385,929     85,499
  Hasbro Inc.    841,911     83,720
  Williams-Sonoma Inc.    469,461     71,217
  Lithia Motors Inc. Class A    185,314     69,904
    Shares Market
Value

($000)
  Service Corp. International  1,038,911     64,922
  Gentex Corp.  1,494,501     50,858
  Polaris Inc.    379,981     49,804
  Churchill Downs Inc.    236,220     43,890
  Thor Industries Inc.    340,020     40,245
  Dillard's Inc. Class A    110,691     20,286
  John Wiley & Sons Inc. Class A    287,535     16,901
  Monro Inc.    205,222     11,903
  Matthews International Corp. Class A    192,131      6,648
      12,514,713
Consumer Staples (9.9%)
  Procter & Gamble Co. 15,104,454  2,148,307
  Coca-Cola Co. 26,437,006  1,507,702
  PepsiCo Inc.  8,462,547  1,328,197
  Colgate-Palmolive Co.  5,207,380    413,987
  Sysco Corp.  3,132,791    232,453
  Archer-Daniels-Midland Co.  3,426,177    204,611
  McKesson Corp.    976,877    199,117
  Hershey Co.    898,513    160,726
  Hormel Foods Corp.  3,311,258    153,576
  AmerisourceBergen Corp. Class A  1,256,205    153,471
  Kroger Co.  3,668,193    149,295
  Clorox Co.    771,993    139,646
  Brown-Forman Corp. Class B  1,896,668    134,512
  Church & Dwight Co. Inc.  1,501,662    130,014
  McCormick & Co. Inc.  1,530,456    128,818
  J M Smucker Co.    671,820     88,082
  Casey's General Stores Inc.    226,618     44,805
  Lancaster Colony Corp.    168,813     33,403
  WD-40 Co.     84,135     20,444
  J & J Snack Foods Corp.    115,996     19,067
  Nu Skin Enterprises Inc. Class A    312,014     16,752
  Tootsie Roll Industries Inc.    251,431      8,647
  Andersons Inc.    200,819      5,362
       7,420,994
Financials (13.7%)
  JPMorgan Chase & Co. 17,669,070  2,681,811
  BlackRock Inc.    936,294    811,926
  S&P Global Inc.  1,476,400    632,962
4

Dividend Appreciation Index Fund
    Shares Market
Value

($000)
  PNC Financial Services Group Inc.  2,602,881    474,792
  CME Group Inc.  2,202,556    467,228
  Chubb Ltd.  2,763,066    466,240
  Marsh & McLennan Cos. Inc.  3,117,822    459,006
  Moody's Corp.  1,147,974    431,638
  T Rowe Price Group Inc.  1,398,376    285,492
  Bank of New York Mellon Corp.  5,391,486    276,745
  Allstate Corp.  1,858,950    241,756
  Discover Financial Services  1,881,631    233,924
  Aflac Inc.  4,221,196    232,166
  Travelers Cos. Inc.  1,546,324    230,279
  State Street Corp.  2,161,189    188,326
  Ameriprise Financial Inc.    715,747    184,348
  Arthur J Gallagher & Co.  1,187,847    165,479
  Broadridge Financial Solutions Inc.    709,702    123,126
  Cincinnati Financial Corp.    988,207    116,490
  MarketAxess Holdings Inc.    233,676    111,036
  Raymond James Financial Inc.    843,993    109,280
  Brown & Brown Inc.  1,728,933     94,054
  FactSet Research Systems Inc.    232,786     83,170
  W R Berkley Corp.  1,086,982     79,534
  Cboe Global Markets Inc.    660,013     78,192
  American Financial Group Inc.    530,847     67,147
  Morningstar Inc.    262,655     66,355
  Globe Life Inc.    711,111     66,212
  Assurant Inc.    355,066     56,033
  SEI Investments Co.    879,546     53,476
  Erie Indemnity Co. Class A    282,833     52,293
  Commerce Bancshares Inc.    719,064     50,859
  RenaissanceRe Holdings Ltd.    311,310     47,534
  Reinsurance Group of America Inc.    416,873     45,931
  First Financial Bankshares Inc.    872,956     42,635
  Prosperity Bancshares Inc.    568,481     38,765
  BOK Financial Corp.    425,992     35,788
  Primerica Inc.    241,064     35,248
  Evercore Inc. Class A    257,532     34,046
  Hanover Insurance Group Inc.    223,131     30,323
  RLI Corp.    276,878     30,008
  UMB Financial Corp.    295,428     27,652
  Cohen & Steers Inc.    294,771     24,528
  Community Bank System Inc.    329,131     23,579
  Home BancShares Inc.  1,016,709     21,534
  American Equity Investment Life Holding Co.    563,135     18,071
  Atlantic Union Bankshares Corp.    482,734     17,123
  International Bancshares Corp.    387,030     15,125
  Independent Bank Corp.    202,415     14,307
  BancFirst Corp.    199,573     11,072
    Shares Market
Value

($000)
  Horace Mann Educators Corp.    257,278     10,242
  Westamerica BanCorp.    166,553      9,252
  1st Source Corp.    152,919      7,002
  Tompkins Financial Corp.     90,341      6,934
  Stock Yards Bancorp Inc.    141,771      6,754
  Horizon Bancorp Inc.    265,828      4,442
  Hingham Institution for Savings     14,137      4,227
  Cambridge Bancorp     42,959      3,676
  First Financial Corp.     82,817      3,317
      10,240,490
Health Care (15.1%)
  Johnson & Johnson 16,125,361  2,776,787
  UnitedHealth Group Inc.  5,820,595  2,399,366
  Abbott Laboratories 10,866,526  1,314,632
  Merck & Co. Inc. 15,521,577  1,193,144
  Medtronic plc  8,256,492  1,084,160
  Bristol-Myers Squibb Co. 13,744,093    932,812
  Stryker Corp.  2,307,754    625,263
  Becton Dickinson and Co.  1,782,497    455,874
  West Pharmaceutical Services Inc.    454,242    187,025
  STERIS plc    523,484    114,093
  Hill-Rom Holdings Inc.    407,609     56,437
  Chemed Corp.     98,322     46,803
  Perrigo Co. plc    836,588     40,181
  Ensign Group Inc.    335,526     28,543
  Healthcare Services Group Inc.    459,690     11,998
  National HealthCare Corp.     92,947      7,217
  Atrion Corp.     11,180      7,032
      11,281,367
Industrials (21.8%)
  Visa Inc. Class A  9,959,755  2,453,984
  Accenture plc Class A  4,055,776  1,288,439
  Honeywell International Inc.  4,267,580    997,717
  Union Pacific Corp.  4,108,925    898,868
  United Parcel Service Inc. Class B  4,413,905    844,645
  Raytheon Technologies Corp.  9,321,023    810,463
  Caterpillar Inc.  3,345,586    691,700
  Lockheed Martin Corp.  1,717,964    638,516
  Automatic Data Processing Inc.  2,625,229    550,327
  Sherwin-Williams Co.  1,649,262    479,985
  CSX Corp. 14,036,795    453,669
  Illinois Tool Works Inc.  1,941,408    440,059
  Eaton Corp. plc  2,442,991    386,115
  Emerson Electric Co.  3,682,405    371,518
  Northrop Grumman Corp.  1,023,107    371,408
  General Dynamics Corp.  1,756,893    344,404
  Trane Technologies plc  1,463,640    298,012
  L3Harris Technologies Inc.  1,288,059    292,054
  Cintas Corp.    644,506    254,051
  Paychex Inc.  2,210,944    251,650
  PPG Industries Inc.  1,451,681    237,379
  Rockwell Automation Inc.    712,206    218,946
  Cummins Inc.    905,024    210,056
  Stanley Black & Decker Inc.    986,171    194,325
  Dover Corp.    882,890    147,549
 
5

Dividend Appreciation Index Fund
    Shares Market
Value

($000)
  WW Grainger Inc.    321,062    142,738
  Expeditors International of Washington Inc.  1,037,696    133,084
  JB Hunt Transport Services Inc.    647,971    109,151
  IDEX Corp.    465,662    105,561
  Packaging Corp. of America    581,486     82,280
  Jack Henry & Associates Inc.    466,889     81,281
  Graco Inc.  1,035,083     80,819
  Nordson Corp.    356,449     80,604
  Lennox International Inc.    231,265     76,186
  Toro Co.    662,457     75,348
  CH Robinson Worldwide Inc.    821,065     73,214
  Snap-on Inc.    332,440     72,465
  RPM International Inc.    797,943     69,094
  Robert Half International Inc.    693,133     68,073
  Hubbell Inc. Class B    332,524     66,658
  Carlisle Cos. Inc.    326,476     66,026
  A O Smith Corp.    831,969     58,512
  ITT Inc.    529,678     51,861
  AptarGroup Inc.    398,905     51,427
  Lincoln Electric Holdings Inc.    368,798     51,421
  Donaldson Co. Inc.    775,746     51,347
  HEICO Corp.    332,913     45,026
  Littelfuse Inc.    150,267     39,969
  ManpowerGroup Inc.    336,782     39,936
  Sonoco Products Co.    617,937     39,418
  MSA Safety Inc.    239,184     39,341
  Regal Beloit Corp.    248,298     36,557
  Silgan Holdings Inc.    675,188     27,359
  Insperity Inc.    234,049     23,182
  Franklin Electric Co. Inc.    282,105     23,065
  Applied Industrial Technologies Inc.    239,414     21,475
  Hillenbrand Inc.    462,795     20,965
  HB Fuller Co.    318,355     20,572
  GATX Corp.    214,817     19,817
  ABM Industries Inc.    409,676     19,046
  Trinity Industries Inc.    678,907     18,405
  Badger Meter Inc.    178,797     18,064
  Brady Corp. Class A    296,909     16,235
  McGrath RentCorp    148,544     11,649
  Lindsay Corp.     67,199     10,798
  Tennant Co.    114,538      9,062
  Standex International Corp.     74,813      6,883
  Gorman-Rupp Co.    158,035      5,640
  Douglas Dynamics Inc.    138,288      5,518
  Cass Information Systems Inc.     87,154      3,843
      16,294,814
Technology (13.5%)
  Microsoft Corp. 11,190,923  3,188,406
  Oracle Corp. 18,058,826  1,573,646
  Broadcom Inc.  2,504,263  1,215,569
    Shares Market
Value

($000)
  Texas Instruments Inc.  5,645,045  1,076,059
  QUALCOMM Inc.  6,968,900  1,043,941
  Analog Devices Inc.  2,264,170    379,067
  KLA Corp.    945,215    329,086
  Roper Technologies Inc.    643,858    316,353
  TE Connectivity Ltd.  2,030,253    299,401
  Microchip Technology Inc.  1,650,774    236,259
  HP Inc.  7,649,478    220,841
  Corning Inc.  5,220,203    218,518
      10,097,146
Telecommunications (2.2%)
  Comcast Corp. Class A 28,041,262  1,649,668
Utilities (3.7%)
  NextEra Energy Inc. 12,021,606    936,483
  Waste Management Inc.  2,596,278    384,924
  Republic Services Inc. Class A  1,959,607    231,939
  Xcel Energy Inc.  3,295,732    224,934
  American Water Works Co. Inc.  1,111,934    189,151
  WEC Energy Group Inc.  1,937,173    182,365
  Eversource Energy  2,103,639    181,481
  CMS Energy Corp.  1,770,593    109,405
  Alliant Energy Corp.  1,531,864     89,660
  Atmos Energy Corp.    786,604     77,551
  Essential Utilities Inc.  1,511,132     74,227
  American States Water Co.    226,068     19,966
  California Water Service Group    308,272     19,323
  MGE Energy Inc.    221,601     17,312
  Chesapeake Utilities Corp.    107,555     13,400
  SJW Group    175,814     12,119
  Middlesex Water Co.    108,502     11,039
  York Water Co.     78,829      3,804
       2,779,083
Total Common Stocks (Cost $50,090,483) 74,517,500
Temporary Cash Investments (0.3%)
Money Market Fund (0.3%)
1 Vanguard Market Liquidity Fund, 0.064% (Cost $187,816)  1,878,156           187,815
Total Investments (99.9%) (Cost $50,278,299) 74,705,315
Other Assets and Liabilities— Net (0.1%) 94,905
Net Assets (100%) 74,800,220
Cost is in $000.
See Note A in Notes to Financial Statements.
1 Affiliated money market fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard. Rate shown is the 7-day yield.
 
6

Dividend Appreciation Index Fund

Derivative Financial Instruments Outstanding as of Period End

Futures Contracts
      ($000)
  Expiration Number of
Long (Short)
Contracts
Notional
Amount
Value and
Unrealized
Appreciation
(Depreciation)
Long Futures Contracts        
E-mini S&P 500 Index September 2021 617 135,416 2,876
    
Over-the-Counter Total Return Swaps
Reference Entity  Termination
Date
Counterparty Notional
Amount
($000)
Floating
Interest Rate
Received
(Paid)1
(%)
Value and
Unrealized
Appreciation
($000)
Value and
Unrealized
(Depreciation)
($000)
Kroger Co. 1/31/22 GSI 38,840 (0.089) 1,859
Visa Inc. Class A 8/31/21 BOANA 104,050 (0.001) 5,594
          7,453
1 Based on 1M USD London Interbank Offered Rate (LIBOR) as of the most recent payment date. Floating interest payment received/paid monthly.
  1M—1-month.
  BOANA—Bank of America, N.A.
  GSI—Goldman Sachs International.
At July 31, 2021, the counterparties had deposited in segregated accounts securities with a value of $7,873,000 in connection with open over-the-counter swap contracts.
See accompanying Notes, which are an integral part of the Financial Statements.
7

Dividend Appreciation Index Fund
Statement of Assets and Liabilities
As of July 31, 2021
($000s, except shares and per-share amounts) Amount
Assets  
Investments in Securities, at Value  
Unaffiliated Issuers (Cost $50,090,483) 74,517,500
Affiliated Issuers (Cost $187,816) 187,815
Total Investments in Securities 74,705,315
Investment in Vanguard 2,458
Cash 587
Cash Collateral Pledged—Futures Contracts 7,180
Receivables for Accrued Income 81,139
Receivables for Capital Shares Issued 5,738
Unrealized Appreciation—Over-the-Counter Swap Contracts 7,453
Total Assets 74,809,870
Liabilities  
Payables for Investment Securities Purchased 9
Payables for Capital Shares Redeemed 6,857
Payables to Vanguard 2,057
Variation Margin Payable—Futures Contracts 727
Total Liabilities 9,650
Net Assets 74,800,220
At July 31, 2021, net assets consisted of:  
   
Paid-in Capital 46,273,174
Total Distributable Earnings (Loss) 28,527,046
Net Assets 74,800,220
 
ETF Shares—Net Assets  
Applicable to 389,508,462 outstanding $.001 par value shares of
beneficial interest (unlimited authorization)
62,192,644
Net Asset Value Per Share—ETF Shares $159.67
 
Admiral Shares—Net Assets  
Applicable to 290,960,370 outstanding $.001 par value shares of
beneficial interest (unlimited authorization)
12,607,576
Net Asset Value Per Share—Admiral Shares $43.33
  
See accompanying Notes, which are an integral part of the Financial Statements.
8

Dividend Appreciation Index Fund
Statement of Operations
  Six Months Ended
July 31, 2021
  ($000)
Investment Income  
Income  
Dividends 630,975
Interest1 61
Securities Lending—Net 713
Total Income 631,749
Expenses  
The Vanguard Group—Note B  
Investment Advisory Services 1,262
Management and Administrative—ETF Shares 14,858
Management and Administrative—Admiral Shares 4,116
Marketing and Distribution—ETF Shares 882
Marketing and Distribution—Admiral Shares 275
Custodian Fees 50
Shareholders’ Reports—ETF Shares 404
Shareholders’ Reports—Admiral Shares 50
Trustees’ Fees and Expenses 17
Total Expenses 21,914
Net Investment Income 609,835
Realized Net Gain (Loss)  
Investment Securities Sold1,2 5,977,023
Futures Contracts 9,553
Swap Contracts 12,474
Realized Net Gain (Loss) 5,999,050
Change in Unrealized Appreciation (Depreciation)  
Investment Securities1 4,194,661
Futures Contracts 3,723
Swap Contracts 17,996
Change in Unrealized Appreciation (Depreciation) 4,216,380
Net Increase (Decrease) in Net Assets Resulting from Operations 10,825,265
1 Interest income, realized net gain (loss), and change in unrealized appreciation (depreciation) from an affiliated company of the fund were $60,000, $39,000, and ($39,000), respectively. Purchases and sales are for temporary cash investment purposes.
2 Includes $6,070,498,000 of net gain (loss) resulting from in-kind redemptions.
  
See accompanying Notes, which are an integral part of the Financial Statements.
9

Dividend Appreciation Index Fund
Statement of Changes in Net Assets
  Six Months Ended
July 31,
2021
  Year Ended
January 31,
2021
  ($000)   ($000)
Increase (Decrease) in Net Assets      
Operations      
Net Investment Income 609,835   1,011,553
Realized Net Gain (Loss) 5,999,050   53,156
Change in Unrealized Appreciation (Depreciation) 4,216,380   5,424,824
Net Increase (Decrease) in Net Assets Resulting from Operations 10,825,265   6,489,533
Distributions      
ETF Shares (454,931)   (843,074)
Admiral Shares (91,822)   (175,014)
Total Distributions (546,753)   (1,018,088)
Capital Share Transactions      
ETF Shares 1,837,031   4,985,503
Admiral Shares 158,005   (101,929)
Net Increase (Decrease) from Capital Share Transactions 1,995,036   4,883,574
Total Increase (Decrease) 12,273,548   10,355,019
Net Assets      
Beginning of Period 62,526,672   52,171,653
End of Period 74,800,220   62,526,672
  
See accompanying Notes, which are an integral part of the Financial Statements.
10

Dividend Appreciation Index Fund
Financial Highlights
ETF Shares            
For a Share Outstanding
Throughout Each Period 
Six Months
Ended
July 31,
2021
Year Ended January 31,
2021 2020 2019 2018 2017
Net Asset Value, Beginning of Period $137.11 $125.38 $104.09 $107.10 $86.66 $75.98
Investment Operations            
Net Investment Income 1.3201 2.2991 2.2141 2.0841 1.9511 1.810
Net Realized and Unrealized Gain (Loss) on Investments 22.428 11.728 21.210 (3.056) 20.408 10.696
Total from Investment Operations 23.748 14.027 23.424 (.972) 22.359 12.506
Distributions            
Dividends from Net Investment Income (1.188) (2.297) (2.134) (2.038) (1.919) (1.826)
Distributions from Realized Capital Gains
Total Distributions (1.188) (2.297) (2.134) (2.038) (1.919) (1.826)
Net Asset Value, End of Period $159.67 $137.11 $125.38 $104.09 $107.10 $86.66
Total Return 17.39% 11.44% 22.68% -0.87% 26.10% 16.59%
Ratios/Supplemental Data            
Net Assets, End of Period (Millions) $62,193 $51,842 $42,217 $30,969 $28,717 $22,698
Ratio of Total Expenses to Average Net Assets 0.06% 0.06% 0.06% 0.06% 0.08% 0.08%
Ratio of Net Investment Income to Average Net Assets 1.75% 1.84% 1.90% 2.01% 2.06% 2.20%
Portfolio Turnover Rate2 21% 25% 14% 16% 14% 19%
The expense ratio and net investment income ratio for the current period have been annualized.
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.
11

Dividend Appreciation Index Fund
Financial Highlights
Admiral Shares            
For a Share Outstanding
Throughout Each Period 
Six Months
Ended
July 31,
2021
Year Ended January 31,
2021 2020 2019 2018 2017
Net Asset Value, Beginning of Period $37.21 $34.03 $28.25 $29.07 $23.52 $20.62
Investment Operations            
Net Investment Income .3541 .6171 .5941 .5601 .5281 .492
Net Realized and Unrealized Gain (Loss) on Investments 6.085 3.179 5.757 (.830) 5.542 2.903
Total from Investment Operations 6.439 3.796 6.351 (.270) 6.070 3.395
Distributions            
Dividends from Net Investment Income (.319) (.616) (.571) (.550) (.520) (.495)
Distributions from Realized Capital Gains
Total Distributions (.319) (.616) (.571) (.550) (.520) (.495)
Net Asset Value, End of Period $43.33 $37.21 $34.03 $28.25 $29.07 $23.52
Total Return2 17.38% 11.44% 22.65% -0.89% 26.11% 16.58%
Ratios/Supplemental Data            
Net Assets, End of Period (Millions) $12,608 $10,685 $9,955 $6,755 $6,014 $4,294
Ratio of Total Expenses to Average Net Assets 0.08% 0.08% 0.08% 0.08% 0.08% 0.08%
Ratio of Net Investment Income to Average Net Assets 1.73% 1.82% 1.87% 1.99% 2.06% 2.20%
Portfolio Turnover Rate3 21% 25% 14% 16% 14% 19%
The expense ratio and net investment income ratio for the current period have been annualized.
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.
12

Dividend Appreciation Index Fund
Notes to Financial Statements
Vanguard Dividend Appreciation 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: ETF Shares and Admiral Shares. Each of the share classes has different eligibility and minimum purchase requirements, and is designed for different types of investors. ETF Shares are listed for trading on NYSE Arca, Inc. they can be purchased and sold through a broker.
Market disruptions associated with the COVID-19 pandemic have had a global impact, and uncertainty exists as to the long-term implications. Such disruptions can adversely affect assets of the fund and thus fund performance.
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 securities pledged as initial margin for open contracts are noted in the Schedule of Investments.
Futures contracts are valued at their quoted daily settlement prices. The notional amounts of the contracts are not recorded in the Statement of Assets and Liabilities. Fluctuations in the value of the contracts are recorded in the Statement of Assets and Liabilities 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 gains (losses) on futures contracts.
During the six months ended July 31, 2021, 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.
13

Dividend Appreciation Index Fund
3.  Swap Contracts: The fund has entered into equity swap contracts to earn the total return on selected reference stocks in the fund’s target index. Under the terms of the swaps, the fund receives the total return on the referenced stock (i.e., receiving the increase or paying the decrease in value of the selected reference stock and receiving the equivalent of any dividends in respect of the selected referenced stock) over a specified period of time, applied to a notional amount that represents the value of a designated number of shares of the selected reference stock at the beginning of the equity swap contract. The fund also pays a floating rate that is based on short-term interest rates, applied to the notional amount. At the same time, the fund generally invests an amount approximating the notional amount of the swap in high-quality temporary cash investments.
A risk associated with all types of swaps is the possibility that a counterparty may default on its obligation to pay net amounts due to the fund. The fund’s maximum amount subject to counterparty risk is the unrealized appreciation on the swap contract. The fund mitigates its counterparty risk by entering into swaps only with a diverse group of prequalified counterparties, monitoring their financial strength, entering into master netting arrangements with its counterparties, and requiring its counterparties to transfer collateral as security for their performance. In the absence of a default, the collateral pledged or received by the fund cannot be repledged, resold, or rehypothecated. In the event of a counterparty’s default (including bankruptcy), the fund may terminate any swap contracts with that counterparty, determine the net amount owed by either party in accordance with its master netting arrangements, and sell or retain any collateral held up to the net amount owed to the fund under the master netting arrangements. The swap contracts contain provisions whereby a counterparty may terminate open contracts if the fund’s net assets decline below a certain level, triggering a payment by the fund if the fund is in a net liability position at the time of the termination. The payment amount would be reduced by any collateral the fund has pledged. Any securities pledged as collateral for open contracts are noted in the Schedule of Investments. The value of collateral received or pledged is compared daily to the value of the swap contracts exposure with each counterparty, and any difference, if in excess of a specified minimum transfer amount, is adjusted and settled within two business days.
The notional amounts of swap contracts are not recorded in the Statement of Assets and Liabilities. Swaps are valued daily based on market quotations received from independent pricing services or recognized dealers and the change in value is recorded in the Statement of Assets and Liabilities as an asset (liability) and in the Statement of Operations as unrealized appreciation (depreciation) until periodic payments are made or the termination of the swap, at which time realized gain (loss) is recorded.
During the six months ended July 31, 2021, the fund’s average amounts of investments in total return swaps represented less than 1% of net assets, based on the average of notional amounts at each quarter-end during the period.
4. Federal Income Taxes: The fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income. The fund’s tax returns are open to examination by the relevant tax authorities until expiration of the applicable statute of limitations, which is generally three years after the filing of the tax return. Management has analyzed the fund’s tax positions taken for all open federal and state income tax years, and has concluded that no provision for income tax is required in the fund’s financial statements.
14

Dividend Appreciation Index Fund
5. Distributions: Distributions to shareholders are recorded on the ex-dividend date. Distributions are determined on a tax basis at the fiscal year-end and may differ from net investment income and realized capital gains for financial reporting purposes.
6. 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 counterparties, 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 Assets and Liabilities for the return of the collateral, during the period the securities are on loan. Collateral investments in Vanguard Market Liquidity Fund are subject to market appreciation or depreciation. 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.
7. Credit Facilities and Interfund Lending Program: The fund and certain other funds managed by The Vanguard Group ("Vanguard") participate in a $4.3 billion committed credit facility provided by a syndicate of lenders pursuant to a credit agreement and an uncommitted credit facility provided by Vanguard. Both facilities may be renewed annually. Each fund is individually liable for its borrowings, if any, under the credit facilities. Borrowings may be utilized for temporary or emergency purposes, subject to the fund’s regulatory and contractual borrowing restrictions. With respect to the committed credit facility, the participating funds are charged administrative fees and an annual commitment fee of 0.10% of the undrawn committed 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 either facility bear interest at a rate based upon the higher of the one-month London Interbank Offered Rate (or an acceptable alternate rate, if necessary), federal funds effective rate, or overnight bank funding rate plus an agreed-upon spread, except that borrowings under the uncommitted credit facility may bear interest based upon an alternate rate agreed to by the fund and Vanguard.
In accordance with an exemptive order (the “Order”) from the SEC, the fund may participate in a joint lending and borrowing program that allows registered open-end Vanguard funds to borrow money from and lend money to each other for temporary or emergency purposes (the “Interfund Lending Program”), subject to compliance with the terms and conditions of the Order, and to the extent permitted by the fund’s investment objective and investment policies. Interfund loans and borrowings normally extend overnight, but can have a maximum duration of seven days. Loans may be called on one business day’s notice. The interest rate to be charged is governed by the conditions of the Order and internal procedures adopted by the board of trustees. The board of trustees is responsible for overseeing the Interfund Lending Program.
15

Dividend Appreciation Index Fund
For the six months ended July 31, 2021, the fund did not utilize the credit facilities or the Interfund Lending Program.
8. Other: Dividend income is recorded on the ex-dividend date. Non-cash dividends included in income, if any, are recorded at the fair value of the securities received. Interest income includes income distributions received from Vanguard Market Liquidity Fund and is accrued daily. Premiums and discounts on debt securities are amortized and accreted, respectively, to interest income over the lives of the respective securities, except for premiums on certain callable debt securities that are amortized to the earliest call date. 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) and shareholder reporting. 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 and 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 July 31, 2021, the fund had contributed to Vanguard capital in the amount of $2,458,000, representing less than 0.01% of the fund’s net assets and 0.98% of Vanguard’s capital received pursuant to the FSA. 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 and derivatives. 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 and derivatives valued with significant unobservable inputs are noted on the Schedule of Investments.
16

Dividend Appreciation Index Fund
The following table summarizes the market value of the fund’s investments and derivatives as of July 31, 2021, based on the inputs used to value them:
  Level 1
($000)
Level 2
($000)
Level 3
($000)
Total
($000)
Investments        
Assets        
Common Stocks 74,517,500 74,517,500
Temporary Cash Investments 187,815 187,815
Total 74,705,315 74,705,315
Derivative Financial Instruments        
Assets        
Futures Contracts1 2,876 2,876
Swap Contracts 7,453 7,453
Total 2,876 7,453 10,329
1 Includes cumulative appreciation (depreciation) on futures contracts and centrally cleared swaps, if any, as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities.
D. As of July 31, 2021, 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 50,304,316
Gross Unrealized Appreciation 24,589,463
Gross Unrealized Depreciation (185,588)
Net Unrealized Appreciation (Depreciation) 24,403,875
The fund’s tax-basis capital gains and losses are determined only at the end of each fiscal year. For tax purposes, at January 31, 2021, the fund had available capital losses totaling $2,053,327,000 that may be carried forward indefinitely to offset future net capital gains. The fund will use these capital losses to offset net taxable capital gains, if any, realized during the year ending January 31, 2022; should the fund realize net capital losses for the year, the losses will be added to the loss carryforward balance above.
E. During the six months ended July 31, 2021, the fund purchased $30,284,807,000 of investment securities and sold $28,258,718,000 of investment securities, other than temporary cash investments. Purchases and sales include $14,558,735,000 and $13,678,795,000, respectively, in connection with in-kind purchases and redemptions of the fund's capital shares.
17

Dividend Appreciation Index Fund
F. Capital share transactions for each class of shares were:
    
  Six Months Ended
July 31, 2021
  Year Ended
January 31, 2021
  Amount
($000)
Shares
(000)
  Amount
($000)
Shares
(000)
ETF Shares          
Issued 15,572,843 106,406   8,074,533 67,477
Issued in Lieu of Cash Distributions  
Redeemed (13,735,812) (95,000)   (3,089,030) (26,075)
Net Increase (Decrease)—ETF Shares 1,837,031 11,406   4,985,503 41,402
Admiral Shares          
Issued 1,071,289 26,442   2,460,287 73,984
Issued in Lieu of Cash Distributions 78,576 1,968   150,122 4,627
Redeemed (991,860) (24,616)   (2,712,338) (84,013)
Net Increase (Decrease)—Admiral Shares 158,005 3,794   (101,929) (5,402)
G. In May 2021, the fund’s board of trustees approved the adoption of a new target benchmark index, S&P US Dividend Growers Index replacing NASDAQ U.S. Dividend Achievers Select Index, which was implemented in September 2021.
Management has determined that no other events or transactions occurred subsequent to July 31, 2021, that would require recognition or disclosure in these financial statements.
18

Trustees Approve Advisory Arrangement
The board of trustees of Vanguard Dividend Appreciation Index Fund has renewed the fund’s investment advisory arrangement with The Vanguard Group, Inc. (Vanguard), through its Equity Index Group. The board determined that continuing the fund’s internalized management structure was in the best interests of the fund and its shareholders.
The board based its decision upon an evaluation of the advisor’s investment staff, portfolio management process, and performance. This evaluation included information provided to the board by Vanguard’s Portfolio Review Department, which is responsible for fund and advisor oversight and product management. The Portfolio Review Department met regularly with the advisor and made monthly presentations to the board during the fiscal year that directed the board’s focus to relevant information and topics.
The board, or an investment committee made up of board members, also received information throughout the year during advisor presentations. For each advisor presentation, the board was provided with letters and reports that included information about, among other things, the advisory firm and the advisor’s assessment of the investment environment, portfolio performance, and portfolio characteristics.
In addition, the board received monthly reports, which included a Market and Economic Report, a Fund Dashboard Monthly Summary, and a Fund Performance Report.
Prior to their meeting, the trustees were provided with a memo and materials that summarized the information they received over the course of the year. They also considered the factors discussed below, among others. However, no single factor determined whether the board approved the arrangement. Rather, it was the totality of the circumstances that drove the board’s decision.
Nature, extent, and quality of services
The board reviewed the quality of the fund’s investment management services over both the short and long term and took into account the organizational depth and stability of the advisor. The board considered that Vanguard has been managing investments for more than four decades. The Equity Index Group adheres to a sound, disciplined investment management process; the team has considerable experience, stability, and depth.
The board concluded that Vanguard’s experience, stability, depth, and performance, among other factors, warranted continuation of the advisory arrangement.
Investment performance
The board considered the short- and long-term performance of the fund, including any periods of outperformance or underperformance compared with its target index and peer group. The board concluded that the performance was such that the advisory arrangement should continue.
Cost
The board concluded that the fund’s expense ratio was well below the average expense ratio charged by funds in its peer group and that the fund’s advisory expenses were also well below the peer-group average.
19

The board does not conduct a profitability analysis of Vanguard because of Vanguard’s unique structure. Unlike most other mutual fund management companies, Vanguard is owned by the funds it oversees.
The benefit of economies of scale
The board concluded that the fund’s arrangement with Vanguard ensures that the fund will realize economies of scale as it grows, with the cost to shareholders declining as fund assets increase.
The board will consider whether to renew the advisory arrangement again after a one-year period.
20

Liquidity Risk Management
Vanguard funds (except for the money market funds) have adopted and implemented a written liquidity risk management program (the “Program”) as required by Rule 22e-4 under the Investment Company Act of 1940. Rule 22e-4 requires that each fund adopt a program that is reasonably designed to assess and manage the fund’s liquidity risk, which is the risk that the fund could not meet redemption requests without significant dilution of remaining investors’ interests in the fund.
Assessment and management of a fund’s liquidity risk under the Program take into consideration certain factors, such as the fund’s investment strategy and the liquidity of its portfolio investments during normal and reasonably foreseeable stressed conditions, its short- and long-term cash-flow projections during both normal and reasonably foreseeable stressed conditions, and its cash and cash-equivalent holdings and access to other funding sources. As required by the rule, the Program includes policies and procedures for classification of fund portfolio holdings in four liquidity categories, maintaining certain levels of highly liquid investments, and limiting holdings of illiquid investments.
The board of trustees of Vanguard Specialized Funds approved the appointment of liquidity risk management program administrators responsible for administering Vanguard Dividend Appreciation Index Fund's Program and for carrying out the specific responsibilities set forth in the Program, including reporting to the board on at least an annual basis regarding the Program’s operation, its adequacy, and the effectiveness of its implementation for the past year (the “Program Administrator Report”). The board has reviewed the Program Administrator Report covering the period from January 1, 2020, through December 31, 2020 (the “Review Period”). The Program Administrator Report stated that during the Review Period the Program operated and was implemented effectively to manage the fund’s liquidity risk.
21

This page intentionally left blank.

Connect with Vanguard®>vanguard.com
Fund Information > 800-662-7447
Direct Investor Account Services > 800-662-2739
Institutional Investor Services > 800-523-1036
Text Telephone for People Who Are Deaf or Hard of Hearing > 800-749-7273
This material may be used in conjunction with the offering of shares of any Vanguard fund only if preceded or accompanied by the fund’s current prospectus.
You can obtain a free copy of Vanguard’s proxy voting guidelines by visiting vanguard.com/proxyreporting or by calling Vanguard at 800-662-2739. The guidelines are also available from the SEC’s website, www.sec.gov. In addition, you may obtain a free report on how your fund voted the proxies for securities it owned during the 12 months ended June 30. To get the report, visit either vanguard.com/proxyreporting or www.sec.gov.
You can review information about your fund on the SEC’s website, and you can receive copies of this information, for a fee, by sending a request via email addressed to publicinfo@sec.gov.
© 2021 The Vanguard Group, Inc.
All rights reserved.
U.S. Patent Nos. 6,879,964 and 7,720,749.
Vanguard Marketing Corporation, Distributor.
Q6022 092021