Vanguard Russell
ETFs
Prospectus
December
20, 2024
Exchange-traded
fund shares that are not individually redeemable and are listed on
Nasdaq
Vanguard Russell 1000
Index Fund ETF Shares (VONE)
Vanguard Russell 1000 Value Index Fund ETF Shares (VONV)
Vanguard Russell 1000 Growth Index Fund ETF Shares (VONG)
Vanguard Russell 2000 Index Fund ETF Shares (VTWO)
Vanguard Russell 2000 Value Index Fund ETF Shares (VTWV)
Vanguard Russell 2000 Growth Index Fund ETF Shares (VTWG)
Vanguard Russell 3000 Index Fund ETF Shares (VTHR)
Vanguard Russell 1000 Value Index Fund ETF Shares (VONV)
Vanguard Russell 1000 Growth Index Fund ETF Shares (VONG)
Vanguard Russell 2000 Index Fund ETF Shares (VTWO)
Vanguard Russell 2000 Value Index Fund ETF Shares (VTWV)
Vanguard Russell 2000 Growth Index Fund ETF Shares (VTWG)
Vanguard Russell 3000 Index Fund ETF Shares (VTHR)
This prospectus
contains financial data for the Funds through the fiscal year ended August 31,
2024.
The
Securities and Exchange Commission (SEC) has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.
(Fees paid directly from your investment)
|
| |
|
Transaction
Fee on Purchases and Sales |
|
|
Transaction
Fee on Reinvested Dividends |
|
|
Transaction
Fee on Conversion to ETF Shares |
|
*
(Expenses that you pay each year as a percentage of the value of your investment)
|
| |
|
Management
Fees |
% |
|
12b-1
Distribution Fee |
|
|
Other
Expenses |
% |
|
Total Annual
Fund Operating Expenses |
%
|
1
|
1
Year |
3
Years |
5
Years |
10
Years |
|
$ |
$ |
$ |
$ |
The Fund employs an indexing
investment approach designed to track the performance of the Russell
1000® Index (the Index). The Index is
designed to measure the performance of large-capitalization stocks in the United
States. The Fund attempts to replicate the target index by investing all, or
substantially all, of its assets in the stocks that make up the Index, holding
each stock in approximately the same proportion as its weighting in the Index.
The Fund may become nondiversified, as defined under the Investment Company Act
of 1940, solely as a result of an index rebalance or market movement.
2
3
4
1
The year-to-date return as of the most recent calendar quarter, which ended on
September 30, 2024, was 21.12%.
|
|
Total
Return |
Quarter |
|
|
% |
|
|
|
-
% |
|
|
|
1
Year |
5
Years |
10
Years |
|
Vanguard
Russell 1000 Index Fund ETF Shares |
|
|
|
|
Based
on NAV |
|
|
|
|
Return Before
Taxes |
% |
% |
% |
|
Return After
Taxes on Distributions |
|
|
|
|
Return After
Taxes on Distributions and Sale of Fund Shares |
|
|
|
|
Based
on Market Price |
|
|
|
|
Return Before
Taxes |
|
|
|
|
Russell
1000 Index
(reflects no
deduction for fees, expenses, or taxes) |
% |
% |
% |
|
Dow
Jones U.S. Total Stock Market Float Adjusted Index
(reflects no
deduction for fees, expenses, or taxes) |
|
|
|
5
Investment
Advisor
The Vanguard Group,
Inc. (Vanguard)
Portfolio
Managers
Nick Birkett, CFA,
Portfolio Manager at Vanguard. He has co-managed the Fund since
2021.
Aurélie Denis, CFA, Portfolio
Manager at Vanguard. She has co-managed the Fund since 2023.
Purchase
and Sale of Fund Shares
ETF Shares may only
be bought and sold in the secondary market through a brokerage firm. The price
you pay or receive for ETF Shares will be the prevailing market price, which may
be more (premium) or less (discount) than the NAV of the shares. The brokerage
firm may charge you a commission to execute the transaction. Unless imposed by
your brokerage firm, there is no minimum dollar amount you must invest and no
minimum number of shares you must buy. ETF Shares of the Fund cannot be directly
purchased from or redeemed with the Fund, except by certain authorized
broker-dealers. These broker-dealers may purchase and redeem ETF Shares only in
large blocks (Creation Units), typically in exchange for baskets of securities.
An investor may incur costs
attributable to the difference between the highest price a buyer is willing to
pay to purchase ETF Shares (bid) and the lowest price a seller is willing to
accept for ETF Shares (ask) when buying or selling shares in the secondary
market (bid-ask spread). Recent information, including information on the Fund’s
NAV, market price, premiums and discounts, and bid-ask spreads, is available
online at vanguard.com.
Tax
Information
The Fund’s distributions may be
taxable as ordinary income or capital gains. If you are investing through a
tax-advantaged account, such as an IRA or an employer-sponsored retirement or
savings plan, special tax rules apply.You should consult your own tax advisor
with respect to any particular U.S. or non-U.S. tax consequences of your
investment in the Fund.
Payments
to Financial Intermediaries
The Fund and its
investment advisor do not pay financial intermediaries for sales of Fund shares.
6
(Fees paid directly from your investment)
|
| |
|
Transaction
Fee on Purchases and Sales |
|
|
Transaction
Fee on Reinvested Dividends |
|
|
Transaction
Fee on Conversion to ETF Shares |
|
*
(Expenses that you pay each year as a percentage of the value of your investment)
|
| |
|
Management
Fees |
% |
|
12b-1
Distribution Fee |
|
|
Other
Expenses |
% |
|
Total
Annual Fund Operating Expenses |
%
|
7
|
1
Year |
3
Years |
5
Years |
10
Years |
|
$ |
$ |
$ |
$ |
8
9
1
The year-to-date return as of the most recent calendar quarter, which ended on
September 30, 2024, was 16.64%.
|
|
Total
Return |
Quarter |
|
|
% |
|
|
|
-
% |
|
10
|
|
1
Year |
5
Years |
10
Years |
|
Vanguard
Russell 1000 Value Index Fund ETF Shares |
|
|
|
|
Based
on NAV |
|
|
|
|
Return Before
Taxes |
% |
% |
% |
|
Return After
Taxes on Distributions |
|
|
|
|
Return After
Taxes on Distributions and Sale of Fund Shares |
|
|
|
|
Based
on Market Price |
|
|
|
|
Return Before
Taxes |
|
|
|
|
Russell
1000 Value Index
(reflects no
deduction for fees, expenses, or taxes) |
% |
% |
% |
|
Dow
Jones U.S. Total Stock Market Float Adjusted Index
(reflects no
deduction for fees, expenses, or taxes) |
|
|
|
Investment
Advisor
The Vanguard Group,
Inc. (Vanguard)
Portfolio
Managers
Nick Birkett, CFA,
Portfolio Manager at Vanguard. He has co-managed the Fund since
2021.
Aurélie Denis, CFA, Portfolio
Manager at Vanguard. She has co-managed the Fund since 2023.
Purchase
and Sale of Fund Shares
ETF Shares may only
be bought and sold in the secondary market through a brokerage firm. The price
you pay or receive for ETF Shares will be the prevailing market price, which may
be more (premium) or less (discount) than the NAV of the shares. The brokerage
firm may charge you a commission to execute
11
the transaction.
Unless imposed by your brokerage firm, there is no minimum dollar amount you
must invest and no minimum number of shares you must buy. ETF Shares of the Fund
cannot be directly purchased from or redeemed with the Fund, except by certain
authorized broker-dealers. These broker-dealers may purchase and redeem ETF
Shares only in large blocks (Creation Units), typically in exchange for baskets
of securities.
An investor may incur costs
attributable to the difference between the highest price a buyer is willing to
pay to purchase ETF Shares (bid) and the lowest price a seller is willing to
accept for ETF Shares (ask) when buying or selling shares in the secondary
market (bid-ask spread). Recent information, including information on the Fund’s
NAV, market price, premiums and discounts, and bid-ask spreads, is available
online at vanguard.com.
12
Tax
Information
The Fund’s distributions may be
taxable as ordinary income or capital gains. If you are investing through a
tax-advantaged account, such as an IRA or an employer-sponsored retirement or
savings plan, special tax rules apply.You should consult your own tax advisor
with respect to any particular U.S. or non-U.S. tax consequences of your
investment in the Fund.
Payments
to Financial Intermediaries
The Fund and its
investment advisor do not pay financial intermediaries for sales of Fund shares.
13
(Fees paid directly from your investment)
|
| |
|
Transaction
Fee on Purchases and Sales |
|
|
Transaction
Fee on Reinvested Dividends |
|
|
Transaction
Fee on Conversion to ETF Shares |
|
*
(Expenses that you pay each year as a percentage of the value of your investment)
|
| |
|
Management
Fees |
% |
|
12b-1
Distribution Fee |
|
|
Other
Expenses |
% |
|
Total
Annual Fund Operating Expenses |
%
|
14
|
1
Year |
3
Years |
5
Years |
10
Years |
|
$ |
$ |
$ |
$ |
15
16
17
18
1
The year-to-date return as of the most recent calendar quarter, which ended on
September 30, 2024, was 24.47%.
|
|
Total
Return |
Quarter |
|
|
% |
|
|
|
-
% |
|
|
|
1
Year |
5
Years |
10
Years |
|
Vanguard
Russell 1000 Growth Index Fund ETF Shares |
|
|
|
|
Based
on NAV |
|
|
|
|
Return Before
Taxes |
% |
% |
% |
|
Return After
Taxes on Distributions |
|
|
|
|
Return After
Taxes on Distributions and Sale of Fund Shares |
|
|
|
|
Based
on Market Price |
|
|
|
|
Return Before
Taxes |
|
|
|
|
Russell
1000 Growth Index
(reflects no
deduction for fees, expenses, or taxes) |
% |
% |
% |
|
Dow
Jones U.S. Total Stock Market Float Adjusted Index
(reflects no
deduction for fees, expenses, or taxes) |
|
|
|
19
Investment
Advisor
The Vanguard Group,
Inc. (Vanguard)
Portfolio
Managers
Nick Birkett, CFA,
Portfolio Manager at Vanguard. He has co-managed the Fund since
2021.
Aurélie Denis, CFA, Portfolio
Manager at Vanguard. She has co-managed the Fund since 2023.
Purchase
and Sale of Fund Shares
ETF Shares may only
be bought and sold in the secondary market through a brokerage firm. The price
you pay or receive for ETF Shares will be the prevailing market price, which may
be more (premium) or less (discount) than the NAV of the shares. The brokerage
firm may charge you a commission to execute the transaction. Unless imposed by
your brokerage firm, there is no minimum dollar amount you must invest and no
minimum number of shares you must buy. ETF Shares of the Fund cannot be directly
purchased from or redeemed with the Fund, except by certain authorized
broker-dealers. These broker-dealers may purchase and redeem ETF Shares only in
large blocks (Creation Units), typically in exchange for baskets of securities.
An investor may incur costs
attributable to the difference between the highest price a buyer is willing to
pay to purchase ETF Shares (bid) and the lowest price a seller is willing to
accept for ETF Shares (ask) when buying or selling shares in the secondary
market (bid-ask spread). Recent information, including information on the Fund’s
NAV, market price, premiums and discounts, and bid-ask spreads, is available
online at vanguard.com.
Tax
Information
The Fund’s distributions may be
taxable as ordinary income or capital gains. If you are investing through a
tax-advantaged account, such as an IRA or an employer-sponsored retirement or
savings plan, special tax rules apply.You should consult your own tax advisor
with respect to any particular U.S. or non-U.S. tax consequences of your
investment in the Fund.
20
Payments
to Financial Intermediaries
The Fund and its
investment advisor do not pay financial intermediaries for sales of Fund shares.
21
(Fees paid directly from your investment)
|
| |
|
Transaction
Fee on Purchases and Sales |
|
|
Transaction
Fee on Reinvested Dividends |
|
|
Transaction
Fee on Conversion to ETF Shares |
|
*
(Expenses that you pay each year as a percentage of the value of your investment)
|
| |
|
Management
Fees |
% |
|
12b-1
Distribution Fee |
|
|
Other
Expenses |
% |
|
Total
Annual Fund Operating Expenses |
%
|
22
|
1
Year |
3
Years |
5
Years |
10
Years |
|
$ |
$ |
$ |
$ |
23
24
1
The year-to-date return as of the most recent calendar quarter, which ended on
September 30, 2024, was 11.19%.
|
|
Total
Return |
Quarter |
|
|
% |
|
|
|
-
% |
|
25
|
|
1
Year |
5
Years |
10
Years |
|
Vanguard
Russell 2000 Index Fund ETF Shares |
|
|
|
|
Based
on NAV |
|
|
|
|
Return Before
Taxes |
% |
% |
% |
|
Return After
Taxes on Distributions |
|
|
|
|
Return After
Taxes on Distributions and Sale of Fund Shares |
|
|
|
|
Based
on Market Price |
|
|
|
|
Return Before
Taxes |
|
|
|
|
Russell
2000 Index
(reflects no
deduction for fees, expenses, or taxes) |
% |
% |
% |
|
Dow
Jones U.S. Total Stock Market Float Adjusted Index
(reflects no
deduction for fees, expenses, or taxes) |
|
|
|
Investment
Advisor
The Vanguard Group,
Inc. (Vanguard)
Portfolio
Managers
Nick Birkett, CFA,
Portfolio Manager at Vanguard. He has co-managed the Fund since
2021.
Kenny Narzikul, CFA, Portfolio
Manager at Vanguard. He has co-managed the Fund since 2023.
Purchase
and Sale of Fund Shares
ETF Shares may only
be bought and sold in the secondary market through a brokerage firm. The price
you pay or receive for ETF Shares will be the prevailing market price, which may
be more (premium) or less (discount) than the NAV of the shares. The brokerage
firm may charge you a commission to execute
26
the transaction.
Unless imposed by your brokerage firm, there is no minimum dollar amount you
must invest and no minimum number of shares you must buy. ETF Shares of the Fund
cannot be directly purchased from or redeemed with the Fund, except by certain
authorized broker-dealers. These broker-dealers may purchase and redeem ETF
Shares only in large blocks (Creation Units), typically in exchange for baskets
of securities.
An investor may incur costs
attributable to the difference between the highest price a buyer is willing to
pay to purchase ETF Shares (bid) and the lowest price a seller is willing to
accept for ETF Shares (ask) when buying or selling shares in the secondary
market (bid-ask spread). Recent information, including information on the Fund’s
NAV, market price, premiums and discounts, and bid-ask spreads, is available
online at vanguard.com.
Tax
Information
The Fund’s distributions may be
taxable as ordinary income or capital gains. If you are investing through a
tax-advantaged account, such as an IRA or an employer-sponsored retirement or
savings plan, special tax rules apply.You should consult your own tax advisor
with respect to any particular U.S. or non-U.S. tax consequences of your
investment in the Fund.
Payments
to Financial Intermediaries
The Fund and its
investment advisor do not pay financial intermediaries for sales of Fund shares.
27
(Fees paid directly from your investment)
|
| |
|
Transaction
Fee on Purchases and Sales |
|
|
Transaction
Fee on Reinvested Dividends |
|
|
Transaction
Fee on Conversion to ETF Shares |
|
*
(Expenses that you pay each year as a percentage of the value of your investment)
|
| |
|
Management
Fees |
% |
|
12b-1
Distribution Fee |
|
|
Other
Expenses |
% |
|
Total Annual
Fund Operating Expenses |
%
|
28
|
1
Year |
3
Years |
5
Years |
10
Years |
|
$ |
$ |
$ |
$ |
29
30
1
The year-to-date return as of the most recent calendar quarter, which ended on
September 30, 2024, was 9.17%.
31
|
|
Total
Return |
Quarter |
|
|
% |
|
|
|
-
% |
|
|
|
1
Year |
5
Years |
10
Years |
|
Vanguard
Russell 2000 Value Index Fund ETF Shares |
|
|
|
|
Based
on NAV |
|
|
|
|
Return Before
Taxes |
% |
% |
% |
|
Return After
Taxes on Distributions |
|
|
|
|
Return After
Taxes on Distributions and Sale of Fund Shares |
|
|
|
|
Based
on Market Price |
|
|
|
|
Return Before
Taxes |
|
|
|
|
Russell
2000 Value Index
(reflects no
deduction for fees, expenses, or taxes) |
% |
% |
% |
|
Dow
Jones U.S. Total Stock Market Float Adjusted Index
(reflects no
deduction for fees, expenses, or taxes) |
|
|
|
Investment
Advisor
The Vanguard Group,
Inc. (Vanguard)
Portfolio
Managers
Nick Birkett, CFA,
Portfolio Manager at Vanguard. He has co-managed the Fund since
2021.
Kenny Narzikul, CFA, Portfolio
Manager at Vanguard. He has co-managed the Fund since 2023.
32
Purchase
and Sale of Fund Shares
ETF Shares may only
be bought and sold in the secondary market through a brokerage firm. The price
you pay or receive for ETF Shares will be the prevailing market price, which may
be more (premium) or less (discount) than the NAV of the shares. The brokerage
firm may charge you a commission to execute the transaction. Unless imposed by
your brokerage firm, there is no minimum dollar amount you must invest and no
minimum number of shares you must buy. ETF Shares of the Fund cannot be directly
purchased from or redeemed with the Fund, except by certain authorized
broker-dealers. These broker-dealers may purchase and redeem ETF Shares only in
large blocks (Creation Units), typically in exchange for baskets of securities.
An investor may incur costs
attributable to the difference between the highest price a buyer is willing to
pay to purchase ETF Shares (bid) and the lowest price a seller is willing to
accept for ETF Shares (ask) when buying or selling shares in the secondary
market (bid-ask spread). Recent information, including information on the Fund’s
NAV, market price, premiums and discounts, and bid-ask spreads, is available
online at vanguard.com.
Tax
Information
The Fund’s distributions may be
taxable as ordinary income or capital gains. If you are investing through a
tax-advantaged account, such as an IRA or an employer-sponsored retirement or
savings plan, special tax rules apply.You should consult your own tax advisor
with respect to any particular U.S. or non-U.S. tax consequences of your
investment in the Fund.
Payments
to Financial Intermediaries
The Fund and its
investment advisor do not pay financial intermediaries for sales of Fund shares.
33
(Fees paid directly from your investment)
|
| |
|
Transaction
Fee on Purchases and Sales |
|
|
Transaction
Fee on Reinvested Dividends |
|
|
Transaction
Fee on Conversion to ETF Shares |
|
*
(Expenses that you pay each year as a percentage of the value of your investment)
|
| |
|
Management
Fees |
% |
|
12b-1
Distribution Fee |
|
|
Other
Expenses |
% |
|
Total Annual
Fund Operating Expenses |
%
|
34
|
1
Year |
3
Years |
5
Years |
10
Years |
|
$ |
$ |
$ |
$ |
35
36
1
The year-to-date return as of the most recent calendar quarter, which ended on
September 30, 2024, was 13.26%.
37
|
|
Total
Return |
Quarter |
|
|
% |
|
|
|
-
% |
|
|
|
1
Year |
5
Years |
10
Years |
|
Vanguard
Russell 2000 Growth Index Fund ETF Shares |
|
|
|
|
Based
on NAV |
|
|
|
|
Return Before
Taxes |
% |
% |
% |
|
Return After
Taxes on Distributions |
|
|
|
|
Return After
Taxes on Distributions and Sale of Fund Shares |
|
|
|
|
Based
on Market Price |
|
|
|
|
Return Before
Taxes |
|
|
|
|
Russell
2000 Growth Index
(reflects no
deduction for fees, expenses, or taxes) |
% |
% |
% |
|
Dow
Jones U.S. Total Stock Market Float Adjusted Index
(reflects no
deduction for fees, expenses, or taxes) |
|
|
|
Investment
Advisor
The Vanguard Group,
Inc. (Vanguard)
Portfolio
Managers
Nick Birkett, CFA,
Portfolio Manager at Vanguard. He has co-managed the Fund since
2021.
Kenny Narzikul, CFA, Portfolio
Manager at Vanguard. He has co-managed the Fund since 2023.
38
Purchase
and Sale of Fund Shares
ETF Shares may only
be bought and sold in the secondary market through a brokerage firm. The price
you pay or receive for ETF Shares will be the prevailing market price, which may
be more (premium) or less (discount) than the NAV of the shares. The brokerage
firm may charge you a commission to execute the transaction. Unless imposed by
your brokerage firm, there is no minimum dollar amount you must invest and no
minimum number of shares you must buy. ETF Shares of the Fund cannot be directly
purchased from or redeemed with the Fund, except by certain authorized
broker-dealers. These broker-dealers may purchase and redeem ETF Shares only in
large blocks (Creation Units), typically in exchange for baskets of securities.
An investor may incur costs
attributable to the difference between the highest price a buyer is willing to
pay to purchase ETF Shares (bid) and the lowest price a seller is willing to
accept for ETF Shares (ask) when buying or selling shares in the secondary
market (bid-ask spread). Recent information, including information on the Fund’s
NAV, market price, premiums and discounts, and bid-ask spreads, is available
online at vanguard.com.
Tax
Information
The Fund’s distributions may be
taxable as ordinary income or capital gains. If you are investing through a
tax-advantaged account, such as an IRA or an employer-sponsored retirement or
savings plan, special tax rules apply.You should consult your own tax advisor
with respect to any particular U.S. or non-U.S. tax consequences of your
investment in the Fund.
Payments
to Financial Intermediaries
The Fund and its
investment advisor do not pay financial intermediaries for sales of Fund shares.
39
(Fees paid directly from your investment)
|
| |
|
Transaction
Fee on Purchases and Sales |
|
|
Transaction
Fee on Reinvested Dividends |
|
|
Transaction
Fee on Conversion to ETF Shares |
|
*
(Expenses that you pay each year as a percentage of the value of your investment)
|
| |
|
Management
Fees |
% |
|
12b-1
Distribution Fee |
|
|
Other
Expenses |
% |
|
Total Annual
Fund Operating Expenses |
%
|
40
|
1
Year |
3
Years |
5
Years |
10
Years |
|
$ |
$ |
$ |
$ |
The Fund employs an indexing
investment approach designed to track the performance of the Russell
3000® Index (the Index), which
represents approximately 98% of the U.S. equity market and comprises the 3,000
largest companies in the United States. The Fund attempts to replicate the
target index by investing all, or substantially all, of its assets in the stocks
that make up the Index, holding each stock in approximately the same proportion
as its weighting in the Index. The Fund may become nondiversified, as defined
under the Investment Company Act of 1940, solely as a result of an index
rebalance or market movement.
41
42
43
1
The year-to-date return as of the most recent calendar quarter, which ended on
September 30, 2024, was 20.54%.
|
|
Total
Return |
Quarter |
|
|
% |
|
|
|
-
% |
|
|
|
1
Year |
5
Years |
10
Years |
|
Vanguard
Russell 3000 Index Fund ETF Shares |
|
|
|
|
Based
on NAV |
|
|
|
|
Return Before
Taxes |
% |
% |
% |
|
Return After
Taxes on Distributions |
|
|
|
|
Return After
Taxes on Distributions and Sale of Fund Shares |
|
|
|
|
Based
on Market Price |
|
|
|
|
Return Before
Taxes |
|
|
|
|
Russell
3000 Index
(reflects no
deduction for fees, expenses, or taxes) |
% |
% |
% |
|
Dow
Jones U.S. Total Stock Market Float Adjusted Index
(reflects no
deduction for fees, expenses, or taxes) |
|
|
|
44
Investment
Advisor
The Vanguard Group,
Inc. (Vanguard)
Portfolio
Managers
Nick Birkett, CFA,
Portfolio Manager at Vanguard. He has co-managed the Fund since
2021.
Walter Nejman,
Portfolio Manager at Vanguard. He has co-managed the Fund since
2015.
Purchase
and Sale of Fund Shares
ETF Shares may only
be bought and sold in the secondary market through a brokerage firm. The price
you pay or receive for ETF Shares will be the prevailing market price, which may
be more (premium) or less (discount) than the NAV of the shares. The brokerage
firm may charge you a commission to execute the transaction. Unless imposed by
your brokerage firm, there is no minimum dollar amount you must invest and no
minimum number of shares you must buy. ETF Shares of the Fund cannot be directly
purchased from or redeemed with the Fund, except by certain authorized
broker-dealers. These broker-dealers may purchase and redeem ETF Shares only in
large blocks (Creation Units), typically in exchange for baskets of securities.
An investor may incur costs
attributable to the difference between the highest price a buyer is willing to
pay to purchase ETF Shares (bid) and the lowest price a seller is willing to
accept for ETF Shares (ask) when buying or selling shares in the secondary
market (bid-ask spread). Recent information, including information on the Fund’s
NAV, market price, premiums and discounts, and bid-ask spreads, is available
online at vanguard.com.
Tax
Information
The Fund’s distributions may be
taxable as ordinary income or capital gains. If you are investing through a
tax-advantaged account, such as an IRA or an employer-sponsored retirement or
savings plan, special tax rules apply.You should consult your own tax advisor
with respect to any particular U.S. or non-U.S. tax consequences of your
investment in the Fund.
45
Payments
to Financial Intermediaries
The Fund and its
investment advisor do not pay financial intermediaries for sales of Fund shares.
46
Investing
in Vanguard ETF®
Shares
What
Are Vanguard ETF Shares?
Vanguard ETF Shares
are an exchange-traded class of shares issued by certain Vanguard funds. ETF
Shares represent an interest in the portfolio of stocks or bonds held by the
issuing fund. The following ETF Shares are offered through this
prospectus:
|
Vanguard
Fund |
Vanguard
ETF Shares |
Seeks
to Track |
|
Vanguard
Russell 1000 Index Fund |
Russell
1000 ETF |
Large-cap
stocks |
|
Vanguard
Russell 1000 Value Index Fund |
Russell
1000 Value ETF |
Large-cap
value stocks |
|
Vanguard
Russell 1000 Growth Index
Fund |
Russell
1000 Growth ETF |
Large-cap
growth stocks |
|
Vanguard
Russell 2000 Index Fund |
Russell
2000 ETF |
Small-cap
stocks |
|
Vanguard
Russell 2000 Value Index Fund |
Russell
2000 Value ETF |
Small-cap
value stocks |
|
Vanguard
Russell 2000 Growth Index
Fund |
Russell
2000 Growth ETF |
Small-cap
growth stocks |
|
Vanguard
Russell 3000 Index Fund |
Russell
3000 ETF |
The
broad stock market |
In addition to ETF
Shares, each Fund offers one conventional (i.e., not exchange-traded) class of
shares. This prospectus, however, relates only to ETF Shares.
How
Are Vanguard ETF Shares Different From Conventional Mutual Fund
Shares?
Conventional mutual
fund shares can be directly purchased from and redeemed with the issuing fund
for cash at the net asset value (NAV), typically calculated once a day. ETF
Shares, by contrast, cannot be purchased directly from or redeemed directly with
the issuing fund by an individual investor. Rather, ETF Shares can only be
purchased or redeemed directly from the issuing fund by certain authorized
broker-dealers. These broker-dealers may purchase and redeem ETF Shares only in
large blocks (Creation Units), usually in exchange for baskets of securities and
not for cash (although some funds issue and redeem Creation Units in exchange
for cash or a combination of cash and securities).
An organized
secondary trading market is expected to exist for ETF Shares, unlike
conventional mutual fund shares, because ETF Shares are listed for trading on a
national securities exchange. Individual investors can purchase and sell ETF
Shares on the secondary market through a broker. Secondary-market transactions
occur not at NAV, but at market prices that are subject to change throughout the
day based on the supply of and demand for ETF Shares, changes in the prices of
the fund’s portfolio holdings, and other factors.
47
The market price of a fund’s ETF
Shares typically will differ somewhat from the NAV of those shares. The
difference between market price and NAV is expected to be small most of the
time, but in times of market disruption or extreme market volatility, the
difference may become significant.
How
Do I Buy and Sell Vanguard ETF Shares?
ETF Shares of the
Funds are listed for trading on Nasdaq. You can buy and sell ETF Shares on the
secondary market in the same way you buy and sell any other exchange-traded
security—through a broker. Your broker may charge a commission to execute a
transaction. You will also incur the cost of the “bid-ask spread,” which is the
difference between the highest price a buyer is willing to pay to purchase ETF
Shares (bid) and the lowest price a seller is willing to accept for ETF Shares
(ask) when buying or selling shares in the secondary market. Because
secondary-market transactions occur at market prices, you may pay more (premium)
or less (discount) than NAV when you buy ETF Shares and receive more or less
than NAV when you sell those shares. In times of severe market disruption, the
bid-ask spread and premiums/discounts can increase significantly. Unless imposed
by your broker, there is no minimum dollar amount you must invest and no minimum
number of ETF Shares you must buy.
Your ownership of
ETF Shares will be shown on the records of the broker through which you hold the
shares. Vanguard will not have any record of your ownership. Your account
information will be maintained by your broker, which will provide you with
account statements, confirmations of your purchases and sales of ETF Shares, and
tax information. Your broker also will be responsible for ensuring that you
receive income and capital gains distributions, as well as shareholder reports
and other communications from the fund whose ETF Shares you own. You will
receive other services (e.g., dividend reinvestment and average cost
information) only if your broker offers these services.
48
More
on the Funds and ETF Shares
This prospectus describes the
principal risks you would face as a Fund shareholder. It is important to keep in
mind one of the main principles of investing: generally, the higher the risk of
losing money, the higher the potential reward. The reverse, also, is generally
true: the lower the risk, the lower the potential reward. As you consider an
investment in any fund, you should take into account your personal tolerance for
fluctuations in the securities markets. Throughout the prospectus, this
symbol is used to mark detailed
information about some of the risks that you would confront as a Fund
shareholder. To highlight terms and concepts important to fund investors, we
have provided Plain Talk® explanations along the way.
Reading the prospectus will help you decide whether a Fund is the right
investment for you. We suggest that you keep this prospectus for future
reference.
symbol is used to mark detailed
information about some of the risks that you would confront as a Fund
shareholder. To highlight terms and concepts important to fund investors, we
have provided Plain Talk® explanations along the way.
Reading the prospectus will help you decide whether a Fund is the right
investment for you. We suggest that you keep this prospectus for future
reference.Share
Class Overview
This prospectus
offers the Funds’ ETF Shares, an exchange-traded class of shares. Separate
prospectuses offer the Funds’ Institutional Shares, which are generally for
investors who invest a minimum of $5 million.
Both share classes offered by a
Fund have the same investment objective, strategies, and policies. However,
because different share classes can have different expenses, their investment
returns may differ.
A
Note to Investors
Vanguard ETF Shares
can be purchased directly from the issuing Fund only by certain authorized
broker-dealers in exchange for a basket of securities (or, in some cases, for
cash or a combination of cash and securities). Individual investors generally
will not be able to purchase ETF Shares directly from a Fund. Instead, these
investors will purchase ETF Shares on the secondary market through a
broker.
|
Plain
Talk About Costs of Investing |
|
Costs
are an important consideration in choosing an ETF. That is because
you,
as a shareholder, pay a proportionate share of the costs of operating a
fund
and any transaction costs incurred when the fund buys or sells
securities.
These costs can erode a substantial portion of the gross income
or
the capital appreciation a fund achieves. Even seemingly small differences
in
expenses can, over time, have a dramatic effect on a fund’s
performance. |
The following sections explain the
principal investment strategies and policies that each Fund uses in pursuit of
its investment objective. The Funds’ board of trustees, which oversees each
Fund’s management, may change investment
49
strategies or policies in the
interest of shareholders without a shareholder vote, unless those strategies or
policies are designated as fundamental. Note that each Fund’s investment
objective is not fundamental and may be changed without a shareholder vote.
Under normal circumstances, each Fund will invest at least 80% of its assets in
the stocks that make up its target index. A Fund may change its 80% policy only
upon 60 days’ notice to shareholders.
Market
Exposure
Each
Fund is subject to stock market risk, which is the chance that stock prices
overall will decline. Stock markets tend to move in cycles, with periods of
rising prices and periods of falling prices. Excluding Vanguard Russell 3000
Index Fund (which seeks to track the broad stock market), each Fund’s target
index tracks a subset of the U.S. stock market, which could cause the Fund to
perform differently from the overall stock market. In addition, each Fund’s
target index may, at times, become focused in stocks of a particular market
sector, which would subject the Fund to proportionately higher exposure to the
risks of that sector.
Stocks of publicly traded companies
are often classified according to market capitalization, which is the market
value of a company’s outstanding shares. These classifications typically include
small-cap, mid-cap, and large-cap. It is important to understand that there are
no “official” definitions of small-, mid-, and large-cap, even among Vanguard
fund advisors, and that market capitalization ranges can change over time.
The asset-weighted median market
capitalization of each Fund’s stock holdings as of August 31, 2024,
was:
|
Vanguard
Fund |
Asset-Weighted
Median
Market
Capitalization |
|
Vanguard
Russell 1000 Index Fund |
$196
billion |
|
Vanguard
Russell 1000 Value Index Fund |
$92
billion |
|
Vanguard
Russell 1000 Growth Index
Fund |
$1.3
trillion |
|
Vanguard
Russell 2000 Index Fund |
$3.1
billion |
|
Vanguard
Russell 2000 Value Index Fund |
$2.5
billion |
|
Vanguard
Russell 2000 Growth Index
Fund |
$3.5
billion |
|
Vanguard
Russell 3000 Index Fund |
$179 billion
|
50
Each
Fund (other than Vanguard Russell 3000 Index Fund) is subject to investment
style risk, which is the chance that returns from the types of stocks in which
the Fund invests will trail returns from the overall stock market. Specific
types of stocks tend to go through cycles of doing better or worse than other
segments of the stock market or the stock market in general. These periods have,
in the past, lasted for as long as several years.
|
Plain
Talk About Growth Funds and Value Funds |
|
Growth
investing and value investing are two styles employed by stock-fund
managers.
Growth funds generally invest in stocks of companies believed to
have
above-average potential for growth in revenue, earnings, cash flow, or
other
similar criteria. These stocks typically have low dividend yields, if any,
and
above-average prices in relation to measures such as earnings and book
value.
Value funds typically invest in stocks whose prices are below average
in
relation to those measures; these stocks often have above-average
dividend
yields. Value stocks also may remain undervalued by the market for
long
periods of time. Growth and value stocks have historically produced
similar
long-term returns, though each category has periods when it
outperforms
the other. |
Market disruptions can adversely
affect local and global markets as well as normal market conditions and
operations. Any such disruptions could have an adverse impact on the value of a
Fund’s investments and Fund performance.
Security
Selection
Each Fund (other
than Vanguard Russell 3000 Index Fund) attempts to track the investment
performance of a benchmark index that measures the return of a particular market
segment. Vanguard Russell 3000 Index Fund attempts to track the investment
performance of a benchmark index that measures the return of the overall stock
market. Each Fund uses the replication
method
of indexing, meaning that each Fund generally holds the same stocks as its
target index and in approximately the same proportions.
51
Vanguard
Russell 1000 Growth Index Fund is subject to nondiversification risk. In order
to closely track the composition of the Fund’s target index, the Fund’s total
assets are invested in multiple issuers representing more than 5% of the Fund’s
total assets. As a result, the Fund may become nondiversified under the
Investment Company Act of 1940, although it continues to hold multiple stocks
across a number of sectors. The Fund’s performance may be hurt
disproportionately by the poor performance of relatively few stocks, or even a
single stock, and the Fund’s shares may experience significant fluctuations in
value.
Vanguard
Russell 1000 Growth Index Fund is subject to sector risk, which is the chance
that significant problems will affect a particular sector, or that returns from
that sector will trail returns from the overall stock market. Daily fluctuations
in specific market sectors are often more extreme or volatile than fluctuations
in the overall market. Because a significant portion of the Fund’s assets are
invested in the information technology sector, the Fund’s performance is
impacted by the general condition of that sector. Companies in the information
technology sector could be affected by, among other things, overall economic
conditions, short product cycles, rapid obsolescence of products, competition,
and government regulation. Sector risk is expected to be high for the
Fund.
Index investing
and risks. Each Fund
is an index fund. Index funds attempt to track—not outperform—the performance of
a specified market index (target index). An index is a group of securities whose
overall performance is used as a standard to measure the investment performance
of a particular market. Some indexes represent entire markets, such as the U.S.
stock market, while others cover a segment of a market, such as short-term
bonds. As an index fund, each Fund seeks to track the performance of its target
index regardless of how the target index is performing. The advisor’s use of an
indexing, or passive, approach to select and maintain investments for a Fund
means that the advisor will select securities based on their inclusion in the
target index and will not use strategies to reduce negative impacts to the Fund
during periods of market volatility. As a result, a Fund’s performance may be
lower than it would be if the Fund were actively managed.
One cannot invest directly in an
index. Instead, an index fund’s advisor will typically seek to hold all, or
substantially all, of the securities that make up the fund’s target index (often
referred to as “replicating” an index or a “full replication” approach) or a
representative sample of the securities that make up a fund’s target index
(often referred to as “sampling” an index).
Each
Fund is subject to index replicating risk, which is the change that each Fund
may be prevented from holding one or more securities in the same proportion as
in its target index.
52
As an index fund, each Fund is
subject to tracking error. It is important to understand that an index fund will
never perform exactly the same as its target index because, among other things,
an index fund will have operating expenses and transaction costs and its target
index will not. Beyond these inherent differences between the operation of an
index fund and the operation of its target index, there are a variety of other
factors that can cause or result in tracking error. These may include, but are
not limited to:
• Price differences between the
securities held by an index fund and those included in its target
index
• Cash flows into or out of an
index fund
• The size of an index
fund
• Compliance with new or existing
regulatory requirements
• Portfolio transactions carried
out by an index fund’s advisor to minimize the distribution of capital
gains
• Changes to the underlying
securities that make up an index fund’s target index
• Errors made by the index
provider
Tracking error risk may be
heightened during times of increased market volatility or under other unusual
market conditions. An index fund that samples its target index may be more
likely to experience tracking error than an index fund that replicates its
target index.
Each Fund is subject to risks
associated with the provider of its target index. The index provider determines
which securities to include in the target index and how the securities are
weighted. The index provider does not provide any warranty or accept any
liability with respect to the quality, accuracy, or completeness of the target
index or any data used to compile the target index. Under normal circumstances,
the index provider will rebalance (update) the target index on a regular
schedule. The index provider may rebalance the target index outside of the
regular schedule or delay or cancel a scheduled rebalance, which could result in
added costs for a Fund or cause a Fund to experience tracking error. The index
provider may make errors, and it is possible that such errors may not be
identified by the index provider for a period of time or at all. Any gains,
losses, or costs associated with or resulting from an error made by the index
provider will generally be borne by a Fund and, as a result, a Fund’s
shareholders. Vanguard does not provide any warranty or guarantee against errors
made by the index provider.
53
Ownership
Limitations
As the assets managed by Vanguard
and its external advisors continue to grow, the securities held by Vanguard
funds increasingly are impacted by ownership limitations. Ownership limitations
restrict the amount that funds can invest in certain securities, due to either
regulatory limits that apply to certain industries (for example, banking and
utilities) or mechanisms that some issuers have in place to deter takeover
attempts (for example, poison pills). These restrictions can have negative
impacts on funds, including the inability of an index fund to track its index,
the inability of a fund to meet its investment objectives, negative performance
impacts, and unanticipated tax consequences. The impact of a particular
ownership limitation on a Vanguard fund will vary based on several factors,
including, but not limited to, the industry to which the limitation applies, the
country or region of a particular issuer, and the regulatory body imposing the
limitation. In addition to the impacts of specific ownership limitations,
Vanguard is also subject to the risk of multiple ownership limitations applying
at one time, which could increase the likelihood of a fund experiencing the
negative impacts listed above. Vanguard attempts to mitigate the impacts of
ownership limitations on Vanguard funds through the various methods discussed
below in Methods to
Address Ownership Limits. However, it is possible that
these methods will be unsuccessful.
Impacts of
ownership limitations.
When an ownership
limitation applies, Vanguard may need to tell the
Vanguard funds how much of impacted securities each fund can buy and hold. When
this occurs, a Vanguard fund may not be able to buy additional securities or
continue to hold existing securities above its allocated amounts. For index funds, this can result in tracking
error if a fund cannot buy or hold the securities it needs in order to replicate
or sample its target index. For active funds, this can result in a fund’s
advisor not being able to take advantage of favorable opportunities to invest in
securities that are subject to limitations. For both index and active funds, the
inability to buy or hold securities could prevent a fund from being able to meet
its investment objective or invest in accordance with its investment strategy,
and/or could negatively impact the fund’s performance. In addition, the steps Vanguard and the Vanguard
funds take to address ownership limitations could result in additional costs
and/or unanticipated tax consequences to a fund that affect the amount, timing,
and character of distributions to the fund’s shareholders. The more assets Vanguard and
its third-party advisors
manage, the more likely it is that
ownership limitations could affect Vanguard funds negatively.
Methods to
address ownership limitations. Vanguard and Vanguard funds try to
manage the negative impacts that ownership limitations could have on the
Vanguard funds by seeking permission (relief) from regulators and/or issuers to
purchase or hold more securities than the amount allowed by ownership
54
limitations. However, it is not
always possible to secure relief, and there is an increasing amount of
uncertainty around how much ownership limitations relief regulators will grant
to asset managers like Vanguard. Given this uncertainty, there is no guarantee
that Vanguard or the Vanguard funds will be able to obtain additional relief
from ownership limitations in the future. In addition, the relief upon which
Vanguard and the Vanguard funds currently rely, which has allowed Vanguard to
exceed certain ownership limitations, could be reduced or revoked, forcing the
Vanguard funds to sell down one or more securities to comply with the ownership
limitations. If a fund has to sell securities, there could be negative impacts
to fund performance as well as unanticipated tax consequences that could impact
the amount, timing, and character of distributions to the fund’s
shareholders.
When a Vanguard fund cannot buy or
hold securities directly due to ownership limitations, the fund will typically
try to get indirect exposure to impacted securities. The fund does this so that
it can replicate as closely as possible the returns the fund would get if it
directly owned the impacted securities. Indirect exposure can be accomplished
through the use of derivatives, such as total return swaps, or by investing in
wholly owned subsidiaries that hold the impacted securities. Both of these
methods of obtaining indirect exposure increase fund costs, and, depending on
the extent to which these alternatives are used by a fund to avoid exceeding
ownership limits, the added costs could have a negative impact on the fund’s
performance. The risks of derivatives use are discussed elsewhere in the
prospectus.
Other
Investment Policies and Risks
Each Fund reserves the right to
substitute a different index for the index it currently tracks if the current
index is discontinued, if the Fund’s agreement with the provider of its target
index is terminated, or for any other reason determined in good faith by the
Fund’s board of trustees. In any such instance, the substitute index would
represent the same market segment as the current index.
Each Fund has the
ability to invest in foreign securities to the extent necessary to carry out its
investment strategy of holding all, or substantially all, of the stocks that
make up the index it tracks. It is not expected that any Fund will invest more
than 5% of its assets in foreign securities.
To track their target indexes as
closely as possible, the Funds attempt to remain fully invested in stocks. To
help stay fully invested and to reduce transaction costs, the Funds may invest,
to a limited extent, in derivatives, including equity futures. The Funds may
also use derivatives such as total return swaps to obtain exposure to a stock, a
basket of stocks, or an index. Derivatives may be used as an alternate means to
obtain economic exposure if the Fund is required to limit
55
its investment in a particular
issuer or industry. Generally speaking, a derivative is a financial contract
whose value is based on the value of a financial asset (such as a stock, a bond,
or a currency), a physical asset (such as gold, oil, or wheat), a market index,
or a reference rate. Investments in derivatives may subject the Funds to risks
different from, and possibly greater than, those of investments directly in the
underlying securities or assets. The Funds will not use derivatives for
speculation or for the purpose of leveraging (magnifying) investment
returns.
Cash
Management
Each Fund’s daily cash balance may
be invested in Vanguard Market Liquidity Fund, a government money market fund,
and/or Vanguard Municipal Low Duration Fund, a short-term municipal bond fund
(each, a CMT Fund). When investing in a CMT Fund, each Fund bears its
proportionate share of the expenses of the CMT Fund in which it invests.
Vanguard receives no additional revenue from Fund assets invested in a CMT
Fund.
Redemption
Requests
Methods
used to meet redemption requests. Redemptions of ETF
Shares are typically met through a combination of cash and securities held by
each Fund; see “How Are Vanguard ETF Shares Different From Conventional Mutual
Fund Shares?” If cash is used to meet redemptions, the Fund typically obtains
such cash through positive cash flows or the sale of Fund holdings consistent
with the Fund’s investment objective and strategy. Please consult the Funds'
Statement
of Additional Information for further
information on redemptions of ETF Shares.
Under certain circumstances,
including under stressed market conditions, a Fund may borrow money (subject to
certain regulatory conditions and if available under board-approved procedures)
through an interfund lending facility; through a bank line-of-credit, including
a joint committed credit facility; or through an uncommitted line-of-credit from
Vanguard in order to meet redemption requests.
Potential
redemption activity impacts. Vanguard funds can be negatively
impacted by certain large redemptions. These redemptions could occur due to a
single shareholder or multiple shareholders deciding to sell a large quantity of
shares of a Vanguard fund or a share class of a Vanguard fund. Large redemptions
can occur for many reasons, either as a result of actions taken by Vanguard or
its affiliates, or as a result of events unrelated to actions taken by Vanguard
or its affiliates. For example, actions taken by Vanguard could include changes
to a Vanguard fund’s advisor(s), portfolio manager(s), and/or the composition of
its portfolio. For a Vanguard fund of funds, this could involve a withdrawal
from an underlying Vanguard fund or a change in the allocation to the
56
underlying Vanguard funds. Events
unrelated to actions taken by Vanguard could include shareholders selling out of
a Vanguard fund in response to market movements or regulatory
changes.
A large redemption could adversely
affect a Vanguard fund’s liquidity and net asset value (NAV). For example, a
large redemption could require a Vanguard fund’s
advisor(s) to sell portfolio holdings at
unplanned or inopportune times. The advisor’s sale of these
holdings, which is a taxable
event, could require a Vanguard fund to
distribute any corresponding capital gains or other taxable income to the
Vanguard fund’s remaining shareholders; see
Dividends,
Capital Gains,
and Taxes
for
additional information. The increased trading activity
could also increase underlying costs for a Vanguard fund due to commissions paid
by the Vanguard fund.
Temporary
Investment Measures
Each Fund may temporarily depart
from its normal investment policies and strategies when the advisor believes
that doing so is in the Fund’s best interest, so long as the strategy or policy
employed is consistent with the Fund’s investment objective. For instance, the
Fund may invest beyond its normal limits in derivatives or exchange-traded funds
that are consistent with the Fund’s investment objective when those instruments
are more favorably priced or provide needed liquidity, as might be the case when
the Fund receives large cash flows that it cannot prudently invest immediately.
A Fund may also invest beyond its normal limits in derivatives as an alternate
means to obtain economic exposure if the Fund is required to limit its
investment in a particular issuer or industry.
Special
Risks of Exchange-Traded Shares
ETF
Shares are not individually redeemable. They
can be redeemed with the issuing Fund at NAV only by certain authorized
broker-dealers and only in large blocks known as Creation Units. Consequently,
if you want to liquidate some or all of your ETF Shares, you must sell them on
the secondary market at prevailing market prices.
57
The
market price of ETF Shares may differ from NAV. Although
it is expected that the market price of an ETF Share typically will approximate
its NAV, there may be times when the market price and the NAV differ
significantly. Thus, you may pay more (premium) or less (discount) than NAV when
you buy ETF Shares on the secondary market, and you may receive more or less
than NAV when you sell those shares. These discounts and premiums are likely to
be greatest during times of market disruption or extreme market
volatility.
Vanguard’s website
at vanguard.com shows the previous
day’s closing NAV and closing market price for each Fund’s ETF Shares. The
website also discloses, in the Premium/Discount Analysis section of the ETF
Shares’ Price & Performance page, how frequently each Fund’s ETF Shares
traded at a premium or discount to NAV (based on closing NAVs and market prices)
and the magnitudes of such premiums and discounts.
An
active trading market may not exist. Although
Vanguard ETF Shares are listed on a national securities exchange, it is possible
that an active trading market may not be maintained. Although this could happen
at any time, it is more likely to occur during times of severe market
disruption. If you attempt to sell your ETF Shares when an active trading market
is not functioning, you may have to sell at a significant discount to NAV. In
extreme cases, you may not be able to sell your shares at all.
Trading
may be halted. Trading
of Vanguard ETF Shares on an exchange may be halted by the activation of
individual or marketwide trading halts (which halt trading for a specific period
of time when the price of a particular security or overall market prices decline
by a specified percentage). Trading of ETF Shares may also be halted if (1) the
shares are delisted from the listing exchange without first being listed on
another exchange or (2) exchange officials determine that such action is
appropriate in the interest of a fair and orderly market or for the protection
of investors.
By
investing in the ETF Shares of a fund that also offers conventional mutual fund
shares, you could be subject to costs and/or tax impacts that you would not be
subject to if you invested in exchange-traded shares offered by a fund without a
conventional mutual fund share class. These costs include brokerage and other
transaction costs associated with the Fund buying and selling portfolio
securities in response to conventional mutual fund share class inflows and
outflows, cash drag as a result of the Fund holding the cash necessary to
satisfy conventional mutual fund share class transactions, and taxable capital
gains distributions if the Fund has to sell portfolio holdings at a gain in
order to satisfy mutual fund share class redemptions.
58
Conversion
Privilege
Owners of
conventional shares issued by a Fund may convert those shares to ETF Shares of
equivalent value of the same fund. Please note that investors who own
conventional shares through a 401(k) plan or other employer-sponsored retirement
or benefit plan generally may not convert those shares to ETF Shares and should
check with their plan sponsor or recordkeeper. ETF Shares, whether acquired
through a conversion or purchased on the secondary market, cannot be converted
to conventional shares by a shareholder. Also, ETF Shares of one fund cannot be
exchanged for ETF Shares of another fund.
You must hold ETF
Shares in a brokerage account. Thus, before converting conventional shares to
ETF Shares, you must have an existing, or open a new, brokerage account. This
account may be with Vanguard Brokerage Services® or with any other
brokerage firm. To initiate a conversion of conventional shares to ETF Shares,
please contact your broker.
Vanguard Brokerage
Services does not impose a fee on conversions from Vanguard conventional shares
to Vanguard ETF Shares. However, other brokerage firms may charge a fee to
process a conversion. Vanguard reserves the right, in the future, to impose a
transaction fee on conversions or to limit, temporarily suspend, or terminate
the conversion privilege.
Converting
conventional shares to ETF Shares is generally accomplished as follows. First,
after your broker notifies Vanguard of your request to convert, Vanguard will
transfer your conventional shares from your account to the broker’s omnibus
account with Vanguard (an account maintained by the broker on behalf of all its
customers who hold conventional Vanguard fund shares through the broker). After
the transfer, Vanguard’s records will reflect your broker, not you, as the owner
of the shares. Next, your broker will instruct Vanguard to convert the
appropriate number or dollar amount of conventional shares in its omnibus
account to ETF Shares of equivalent value, based on the respective NAVs of the
two share classes.
Your Fund’s
transfer agent will reflect ownership of all ETF Shares in the name of the
Depository Trust Company (DTC). The DTC will keep track of which ETF Shares
belong to your broker, and your broker, in turn, will keep track of which ETF
Shares belong to you.
Because the DTC is
unable to handle fractional shares, only whole shares can be converted. For
example, if you owned 300.25 conventional shares, and this was equivalent in
value to 90.75 ETF Shares, the DTC account would receive 90 ETF Shares.
Conventional shares with a value equal to 0.75 ETF Shares (in this example, that
would be 2.481 conventional shares) would remain in the broker’s omnibus account
with Vanguard. Your broker then could either (1) credit your
59
account with 0.75
ETF Shares or (2) redeem the 2.481 conventional shares for cash at NAV and
deliver that cash to your account. If your broker chose to redeem your
conventional shares, you would realize a gain or loss on the redemption that
must be reported on your tax return (unless you hold the shares in an IRA or
other tax-deferred account). Please consult your broker for information on how
it will handle the conversion process, including whether it will impose a fee to
process a conversion.
If you convert your
conventional shares to ETF Shares through Vanguard Brokerage Services,
all conventional
shares for which you request conversion will be converted to ETF Shares of
equivalent value. Because no fractional shares will have to be sold, the
transaction will not be taxable.
Here are some
important points to keep in mind when converting conventional shares of a
Vanguard fund to ETF Shares:
• The conversion
process can take anywhere from several days to several weeks, depending on your
broker. Vanguard generally will process conversion requests either on the day
they are received or on the next business day. Vanguard imposes conversion
blackout windows around the dates when a fund with ETF Shares declares
dividends. This is necessary to prevent a shareholder from collecting a dividend
from both the conventional share class currently held and also from the ETF
share class to which the shares will be converted.
• Until the
conversion process is complete, you will remain fully invested in a fund’s
conventional shares, and your investment will increase or decrease in value in
tandem with the NAV of those shares.
• The conversion
transaction is nontaxable except, if applicable, to the very limited extent
previously described.
A precautionary
note to investment companies: Each Fund’s ETF Shares are issued
by registered investment companies, and therefore the acquisition of such shares
by other investment companies and private funds is subject to the restrictions
of Section 12(d)(1) of the Investment Company Act of 1940 (the 1940 Act). SEC
Rule 12d1-4 under the 1940 Act permits registered investment companies to invest
in other registered investment companies beyond the limits in Section 12(d)(1),
subject to certain conditions, including that funds with different investment
advisors must enter into a fund of funds investment
agreement.
Shareholder
Rights
Each Fund’s Agreement and
Declaration of Trust, as amended, requires a shareholder bringing a derivative
action on behalf of Vanguard Scottsdale Funds (the Trust) that is subject to a
pre-suit demand to collectively hold at least 10% of
60
the outstanding shares of the Trust
or at least 10% of the outstanding shares of the series or class to which the
demand relates and to undertake to reimburse the Trust for the expense of any
counsel or advisors used when considering the merits of the demand in the event
that the board of trustees determines not to bring such action. In each case,
these requirements do not apply to claims arising under the federal securities
laws to the extent that any such federal securities laws, rules, or regulations
do not permit such application. Each Fund’s Bylaws also provide that
shareholders waive the right to trial by jury to the fullest extent permitted
by law.
Frequent
Trading and Market-Timing
Unlike frequent
trading of a Vanguard fund’s conventional (i.e., not exchange-traded) classes of
shares, frequent trading of ETF Shares does not disrupt portfolio management or
otherwise harm fund shareholders. The vast majority of trading in ETF Shares
occurs on the secondary market. Because these trades do not involve the issuing
fund, they do not harm the fund or its shareholders. Certain broker-dealers are
authorized to purchase and redeem ETF Shares directly with the issuing fund.
Because these trades typically are effected in kind (i.e., for securities and
not for cash), or are assessed a transaction fee when effected in cash, they do
not cause any of the harmful effects to the issuing fund (as previously noted)
that may result from frequent trading. For these reasons, the board of trustees
of each fund that issues ETF Shares has determined that it is not necessary to
adopt policies and procedures to detect and deter frequent trading and
market-timing of ETF Shares.
Portfolio
Holdings
Please consult the
Funds' Statement
of Additional Information or our website for
a description of the policies and procedures that govern disclosure of a Fund’s
portfolio holdings.
Turnover
Rate
Although the Funds
generally seek to invest for the long term, each Fund may sell securities
regardless of how long they have been held. Generally, an index fund sells
securities in response to redemption requests from shareholders of conventional
(i.e., not exchange-traded) shares or to changes in the composition of its
target index. Turnover rates for large-cap stock index funds tend to be low
because large-cap indexes typically do not change significantly from year to
year. Turnover rates for mid-cap and small-cap stock index funds tend to be
higher than those for large-cap stock index funds (although still relatively
low, compared with actively managed stock funds) because the indexes they track
are more likely to change as a result of companies merging, growing, or failing.
The Financial
Highlights section of this
prospectus shows historical turnover rates
61
for each Fund. A
turnover rate of 100%, for example, would mean that a Fund had sold and replaced
securities valued at 100% of its net assets within a one-year period. In
general, the greater the turnover rate, the greater the impact transaction costs
will have on a fund’s return. Also, funds with high turnover rates may be more
likely to generate capital gains, including short-term capital gains, that must
be distributed to shareholders and will be taxable to shareholders investing
through a taxable account.
The
Funds and Vanguard
Each Fund is a
member of The Vanguard Group, Inc. (Vanguard), a family of over 200 funds. All
of the funds that are members of Vanguard (other than funds of funds) share in
the expenses associated with administrative services and business operations,
such as personnel, office space, and equipment.
Vanguard Marketing
Corporation provides marketing services to the funds. Although fund shareholders
do not pay sales commissions or 12b-1 distribution fees, each fund (other than a
fund of funds) or each share class of a fund (in the case of a fund with
multiple share classes) pays its allocated share of the Vanguard funds’
marketing costs.
|
Plain
Talk About Vanguard’s Unique Corporate Structure |
|
Vanguard
is owned jointly by the funds it oversees and thus indirectly by the
shareholders
in those funds. Most other mutual funds are operated by
management
companies that are owned by third parties—either public or
private
stockholders—and not by the funds they
serve. |
Investment
Advisor
The Vanguard Group, Inc., P.O. Box
2600, Valley Forge, PA 19482, which began operations in 1975, serves as advisor
to the Funds through its Equity Index Group. As of August 31, 2024, Vanguard
served as advisor for approximately $8.3 trillion in assets. Vanguard provides
investment advisory services to the Funds pursuant to the Funds’ Service
Agreement and subject to the supervision and oversight of the trustees and
officers of the Funds.
For the fiscal year ended August
31, 2024, the advisory expenses represented an effective annual rate of less
than 0.01% of each Fund’s average net assets.
62
Under the terms of an SEC
exemption, the Funds’ board of trustees may, without prior approval from
shareholders, change the terms of an advisory agreement with a third-party
investment advisor or hire a new third-party investment advisor—either as a
replacement for an existing advisor or as an additional advisor. Any significant
change in a Fund’s advisory arrangements will be communicated to shareholders in
writing. As the Funds’ sponsor and overall manager, Vanguard may provide
investment advisory services to a Fund at any time. Vanguard may also recommend
to the board of trustees that an advisor be hired, terminated, or replaced or
that the terms of an existing advisory agreement be revised. The Funds have
filed an application seeking a similar SEC exemption with respect to investment
advisors that are wholly owned subsidiaries of Vanguard. If the exemption is
granted, the Funds may rely on the new SEC relief.
For a discussion of why the board
of trustees approved each Fund’s investment advisory arrangement, see the
Financial Statements and Other Information covering the fiscal year ended
August 31.
The managers
primarily responsible for the day-to-day management of the Funds
are:
Nick
Birkett, CFA,
Portfolio Manager at Vanguard. He has worked in investment management since
2005, has been with Vanguard since 2017, and has co-managed the Funds since
2021. Education: B.S., University of Bath.
Aurélie
Denis, CFA, Portfolio
Manager at Vanguard. She has been with Vanguard since 2016, has worked in
investment management since 2017, has managed investment portfolios since 2023,
and has co-managed Vanguard Russell 1000 Fund, Vanguard Russell 1000 Value Fund,
and Vanguard Russell 1000 Growth Fund since 2023. Education: B.S., Pennsylvania
State University.
Kenny Narzikul, CFA, Portfolio Manager at Vanguard. He has been with Vanguard since 2012, has worked in investment management since 2016, has managed investment portfolios since 2023, and has co-managed Vanguard Russell 2000 Fund, Vanguard Russell 2000 Value Fund, and Vanguard Russell 2000 Growth Fund since 2023. Education: B.B.A., James Madison University.
Walter Nejman, Portfolio Manager at Vanguard. He has been with Vanguard since 2005, has worked in investment management since 2008, and has co- managed Vanguard Russell 3000 Index Fund since 2015. Education: B.A., Arcadia University; M.B.A., Villanova University.
Kenny Narzikul, CFA, Portfolio Manager at Vanguard. He has been with Vanguard since 2012, has worked in investment management since 2016, has managed investment portfolios since 2023, and has co-managed Vanguard Russell 2000 Fund, Vanguard Russell 2000 Value Fund, and Vanguard Russell 2000 Growth Fund since 2023. Education: B.B.A., James Madison University.
Walter Nejman, Portfolio Manager at Vanguard. He has been with Vanguard since 2005, has worked in investment management since 2008, and has co- managed Vanguard Russell 3000 Index Fund since 2015. Education: B.A., Arcadia University; M.B.A., Villanova University.
63
The Funds'
Statement
of Additional Information provides
information about each portfolio manager’s compensation, other accounts under
management, and ownership of shares of the Funds.
Dividends,
Capital Gains, and Taxes
Fund
Distributions
Each Fund
distributes to shareholders virtually all of its net income (interest and
dividends, less expenses) as well as any net short-term or long-term capital
gains realized from the sale of its holdings. From time to time, each Fund may
also make distributions that are treated as a return of capital. Income
dividends generally are distributed quarterly in March, June, September, and
December; capital gains distributions, if any, generally occur annually in
December. In addition, each Fund may occasionally make a supplemental
distribution at some other time during the year.
|
Plain
Talk About Distributions |
|
As
a shareholder, you are entitled to your portion of a fund’s income from
interest
and dividends as well as capital gains from the fund’s sale of
investments.
Income consists of both the dividends that the fund earns from
any
stock holdings and the interest it receives from any money market and
bond
investments. Capital gains are realized whenever the fund sells
securities
for higher prices than it paid for them. These capital gains are
either
short-term or long-term, depending on whether the fund held the
securities
for one year or less or for more than one
year. |
Reinvestment
of Distributions
In order to reinvest dividend and
capital gains distributions, investors in a Fund’s ETF Shares must hold their
shares at a broker that offers a reinvestment service. This can be the broker’s
own service or a service made available by a third party, such as the broker’s
outside clearing firm or the DTC. If a reinvestment service is available,
distributions of income and capital gains can automatically be reinvested in
additional whole and fractional ETF Shares of the Fund. If a reinvestment
service is not available, investors will receive their distributions in cash. To
determine whether a reinvestment service is available and whether there is a
commission or other charge for using this service, consult your
broker.
As with all exchange-traded funds,
reinvestment of dividend and capital gains distributions in additional ETF
Shares will occur two business days or more after the ex-dividend date (the date
when a distribution of dividends or capital gains is
64
deducted from the
price of a Fund’s shares). The exact number of days depends on your broker.
During that time, the amount of your distribution will not be invested in the
Fund and therefore will not share in the Fund’s income, gains, and
losses.
Basic
Tax Points
Investors in
taxable accounts should be aware of the following basic federal income tax
points:
• Distributions are
taxable to you whether or not you reinvest these amounts in additional ETF
Shares.
• Distributions declared and
recorded in December—if paid to you by the end of January—are taxable as if
received in December.
• Any dividend
distribution or short-term capital gains distribution that you receive is
taxable to you as ordinary income. If you are an individual and meet certain
holding-period requirements with respect to your ETF Shares, you may be eligible
for reduced tax rates on “qualified dividend income,” if any, or a special tax
deduction on “qualified REIT dividends,” if any, distributed by the
Fund.
• Any distribution
of net long-term capital gains is taxable to you as long-term capital gains, no
matter how long you have owned ETF Shares.
• Capital gains distributions can
occur when a Fund sells assets at a gain. Capital gains distributions vary
from year to year as a result of the Fund’s investment activities and cash
flows, including those due to redemption activity by Fund shareholders.
• Capital gains distributions may
occur if Vanguard makes changes that would impact a Fund directly or indirectly,
including if Vanguard makes changes to the Fund’s portfolio or to any other
Vanguard fund or product that would involve the redemption of shares of the Fund
and the related sale of the Fund’s ETF Shares investments.
• Your cost basis in the Fund will
be decreased by the amount of any return of capital that you receive. This, in
turn, will affect the amount of any capital gain or loss that you realize when
selling your ETF shares.
• Return of capital
distributions generally are not taxable to you until your cost basis has been
reduced to zero. If your cost basis is at zero, return of capital distributions
will be treated as capital gains.
• A sale of ETF
Shares is a taxable event. This means that you may have a capital gain to report
as income, or a capital loss to report as a deduction, when you complete your
tax return.
65
Individuals,
trusts, and estates whose income exceeds certain threshold amounts are subject
to a 3.8% Medicare contribution tax on “net investment income.” Net investment
income takes into account distributions paid by the Fund and capital gains from
any sale of ETF Shares.
Dividend
distributions and capital gains distributions that you receive, as well as your
gains or losses from any sale of ETF Shares, may be subject to state and local
income taxes.
This prospectus
provides general tax information only. If you are investing through a
tax-advantaged account, such as an IRA or an employer-sponsored retirement or
savings plan, special tax rules apply. Please consult your tax advisor for
detailed information about any tax consequences for you.
Share
Price and Market Price
Share price, also known as NAV, is
typically calculated as of the close of regular trading on the New York Stock
Exchange (NYSE), generally 4 p.m., Eastern time, on each day that the NYSE is
open for business (a business day). In the rare event the NYSE experiences
unanticipated disruptions and is unavailable at the close of the trading day,
NAVs will be calculated as of the close of regular trading on the Nasdaq (or
another alternate exchange if the Nasdaq is unavailable, as determined at
Vanguard’s discretion), generally 4 p.m., Eastern time. Each share class has its
own NAV, which is computed by dividing the total assets, minus liabilities,
allocated to the share class by the number of Fund shares outstanding for that
class. On U.S. holidays or other days when the NYSE is closed, the NAV is not
calculated, and the Funds do not sell or redeem shares. However, on those days
the value of a Fund’s assets may be affected to the extent that the Fund holds
securities that change in value on those days (such as foreign securities that
trade on foreign markets that are open).
Remember: If you
buy or sell ETF Shares on the secondary market, you will pay or receive the
market price, which may be higher or lower than NAV. Your transaction will be
priced at NAV only if you purchase or redeem your ETF Shares in Creation Unit
blocks (an option available only to certain authorized broker-dealers) or if you
convert your conventional fund shares to ETF Shares.
Stocks held by a Vanguard fund are
valued at their market
value when reliable
market quotations are readily available from the principal exchange or market on
which they are traded. Such securities are generally valued at their official
closing price, the last reported sales price, or if there were no sales that
day, the mean between the closing bid and asking prices. Debt securities held by
a fund
66
are valued based on information
furnished by an independent pricing service or market priced at fair
value (the amount that
the owner might reasonably expect to receive upon the current sale of the
security).
The values of any
foreign securities held by a fund are converted into U.S. dollars using an
exchange rate obtained from an independent third party as of the close of
regular trading on the NYSE. The values of any mutual fund shares, including
institutional money market fund shares, held by a fund are based on the NAVs of
the shares. The values of any ETF shares or closed-end fund shares held by a
fund are based on the market value of the shares.
A fund also will use fair-value
pricing if the value of a security it holds has been materially affected by
events occurring before the fund’s pricing time but after the close of the
principal exchange or market on which the security is traded. This most commonly
occurs with foreign securities, which may trade on foreign exchanges that close
many hours before the fund’s pricing time. Intervening events might be
company-specific (e.g., earnings report, merger announcement) or
country-specific or regional/global (e.g., natural disaster, economic or
political news, interest rate change, act of terrorism). Intervening events
include price movements in U.S. markets that exceed a specified threshold or
that are otherwise deemed to affect the value of foreign securities.
Fair-value pricing may be used for
domestic securities—for example, if (1) trading in a security is halted and does
not resume before the fund’s pricing time or a security does not trade in the
course of a day and (2) the fund holds enough of the security that its price
could affect the NAV.
Fair-value prices
are determined by Vanguard according to procedures adopted by the board of
trustees. When fair-value pricing is employed, the prices of securities used by
a fund to calculate the NAV may differ from quoted or published prices for the
same securities.
Each Fund has
authorized certain financial intermediaries and their designees, and may, from
time to time, authorize certain funds of funds for which Vanguard serves as the
investment advisor (Vanguard Funds of Funds), to accept orders to buy or sell
fund shares on its behalf. The Fund will be deemed to receive an order when
accepted by the financial intermediary, its designee, or one of the Vanguard
Funds of Funds, and the order will receive the NAV next computed by the Fund
after such acceptance.
Vanguard’s website will show the previous day’s closing NAV and closing market price for each Fund’s ETF Shares.
Vanguard’s website will show the previous day’s closing NAV and closing market price for each Fund’s ETF Shares.
67
Additional
Information
Each Fund’s Bylaws designate
Delaware courts as the sole and exclusive forum for certain claims against or
related to the Trust, a trustee, an officer, or other employee of the Trust,
provided that, unless the Trust otherwise consents in writing, the U.S. Federal
District Courts be the sole and exclusive forum for the resolution of complaints
under the Securities Act of 1933 or the 1940 Act. These provisions may limit a
shareholder’s ability to bring a claim in a different forum and may result in
increased shareholder costs in pursuing such a claim.
|
Vanguard
Fund |
Inception
Date |
Vanguard
Fund
Number |
CUSIP
Number |
|
Vanguard
Russell 1000 Index Fund |
|
|
|
|
ETF
Shares |
9/20/2010 |
3348 |
92206C730 |
|
Vanguard
Russell 1000 Value Index Fund |
|
|
|
|
ETF
Shares |
9/20/2010 |
3349 |
92206C714 |
|
Vanguard
Russell 1000 Growth Index Fund |
|
|
|
|
ETF
Shares |
9/20/2010 |
3350 |
92206C680 |
|
Vanguard
Russell 2000 Index Fund |
|
|
|
|
ETF
Shares |
9/20/2010 |
3351 |
92206C664 |
|
Vanguard
Russell 2000 Value Index Fund |
|
|
|
|
ETF
Shares |
9/20/2010 |
3352 |
92206C649 |
|
Vanguard
Russell 2000 Growth Index Fund |
|
|
|
|
ETF
Shares |
9/20/2010 |
3353 |
92206C623 |
|
Vanguard
Russell 3000 Index Fund |
|
|
|
|
ETF
Shares |
9/20/2010 |
3354 |
92206C599 |
Certain affiliates
of the Fund and the advisor may purchase and resell ETF Shares pursuant to the
prospectus.
CGS identifiers have been provided by
CUSIP Global Services, managed on behalf of the American Bankers Association by
Standard & Poor’s Financial Services, LLC, and are not for use or
dissemination in a manner that would serve as a substitute for any CUSIP
service. The CUSIP Database, © 2024 American Bankers Association. “CUSIP” is a
registered trademark of the American Bankers Association.
68
Financial
Highlights
Financial highlights information is
intended to help you understand a fund’s performance for the past five years
(or, if shorter, its period of operations). Certain information reflects
financial results for a single fund share. Total return represents the rate that
an investor would have earned or lost each period on an investment in a fund or
share class (assuming reinvestment of all distributions). This information has
been obtained from the financial statements audited by PricewaterhouseCoopers
LLP, an independent registered public accounting firm, whose report, along with
fund financial statements, is included in a fund’s most recent annual Financial
Statements and Other Information. You may obtain a free copy of a fund’s latest
disclosure documents upon request.
Vanguard
Russell 1000 Index Fund ETF Shares
|
|
|
|
|
|
|
|
For a
Share Outstanding
Throughout
Each Period |
Year Ended August
31, | ||||
|
2024 |
2023 |
2022 |
2021 |
2020 | |
|
Net
Asset Value, Beginning of Period |
$204.87 |
$180.47 |
$210.32 |
$161.36 |
$134.37 |
|
Investment
Operations |
|
|
|
|
|
|
Net
Investment Income1 |
3.061 |
2.956 |
2.757 |
2.459 |
2.525 |
|
Net
Realized and Unrealized Gain (Loss) on
Investments |
50.824 |
24.306 |
(29.909) |
48.925 |
27.028 |
|
Total from
Investment Operations |
53.885 |
27.262 |
(27.152) |
51.384 |
29.553 |
|
Distributions |
|
|
|
|
|
|
Dividends
from Net Investment Income |
(3.195) |
(2.862) |
(2.698) |
(2.424) |
(2.563) |
|
Distributions
from Realized Capital Gains |
— |
— |
— |
— |
— |
|
Total
Distributions |
(3.195) |
(2.862) |
(2.698) |
(2.424) |
(2.563) |
|
Net
Asset Value, End of Period |
$255.56 |
$204.87 |
$180.47 |
$210.32 |
$161.36 |
|
Total
Return |
26.54% |
15.34% |
-13.02% |
32.14% |
22.39% |
|
Ratios/Supplemental
Data |
|
|
|
|
|
|
Net
Assets, End of Period (Millions) |
$5,047 |
$3,785 |
$2,721 |
$2,682 |
$1,678 |
|
Ratio of
Total Expenses to Average Net Assets |
0.08%2 |
0.08% |
0.08% |
0.08% |
0.08% |
|
Ratio of
Net Investment Income to Average Net
Assets |
1.36% |
1.59% |
1.39% |
1.34% |
1.79% |
|
Portfolio
Turnover Rate3 |
3% |
8% |
10% |
6% |
9% |
|
|
|
|
1 |
Calculated
based on average shares outstanding. |
|
2 |
The ratio of
expenses to average net assets for the period net of reduction from
custody fee
offset
arrangements was 0.08%. |
|
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. |
69
Vanguard
Russell 1000 Value Index Fund ETF Shares
|
|
|
|
|
|
|
|
For a
Share Outstanding
Throughout
Each Period |
Year Ended August
31, | ||||
|
2024 |
2023 |
2022 |
20211 |
20201 | |
|
Net
Asset Value, Beginning of Period |
$69.71 |
$65.70 |
$71.54 |
$53.52 |
$54.61 |
|
Investment
Operations |
|
|
|
|
|
|
Net
Investment Income2 |
1.615 |
1.523 |
1.415 |
1.282 |
1.408 |
|
Net
Realized and Unrealized Gain (Loss) on Investments |
12.848 |
3.964 |
(5.875) |
17.932 |
(1.056) |
|
Total from
Investment Operations |
14.463 |
5.487 |
(4.460) |
19.214 |
.352 |
|
Distributions |
|
|
|
|
|
|
Dividends
from Net Investment Income |
(1.573) |
(1.477) |
(1.380) |
(1.194) |
(1.442) |
|
Distributions
from Realized Capital Gains |
— |
— |
— |
— |
— |
|
Total
Distributions |
(1.573) |
(1.477) |
(1.380) |
(1.194) |
(1.442) |
|
Net
Asset Value, End of Period |
$82.60 |
$69.71 |
$65.70 |
$71.54 |
$53.52 |
|
Total
Return |
21.06% |
8.55% |
-6.32% |
36.32% |
0.75% |
|
Ratios/Supplemental
Data |
|
|
|
|
|
|
Net
Assets, End of Period (Millions) |
$9,349 |
$6,760 |
$5,980 |
$6,569 |
$2,646 |
|
Ratio of
Total Expenses to Average Net Assets |
0.08%3 |
0.08% |
0.08% |
0.08% |
0.08% |
|
Ratio of
Net Investment Income to Average Net Assets |
2.19% |
2.27% |
2.02% |
1.99% |
2.65% |
|
Portfolio
Turnover Rate4 |
17% |
15% |
14% |
19% |
24% |
|
|
|
|
1 |
Adjusted to
reflect a 2-for-1 share split effective at the beginning of trading on
April 20, 2021. |
|
2 |
Calculated
based on average shares outstanding. |
|
3 |
The ratio of
expenses to average net assets for the period net of reduction from
custody fee
offset
arrangements was 0.08%. |
|
4 |
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. |
70
Vanguard
Russell 1000 Growth Index Fund ETF Shares
|
|
|
|
|
|
|
|
For a
Share Outstanding
Throughout
Each Period |
Year Ended August
31, | ||||
|
2024 |
2023 |
2022 |
20211 |
20201 | |
|
Net
Asset Value, Beginning of Period |
$72.51 |
$60.05 |
$74.77 |
$58.66 |
$41.14 |
|
Investment
Operations |
|
|
|
|
|
|
Net
Investment Income2 |
.550 |
.578 |
.523 |
.460 |
.475 |
|
Net
Realized and Unrealized Gain (Loss) on Investments |
21.619 |
12.437 |
(14.754) |
16.099 |
17.530 |
|
Total from
Investment Operations |
22.169 |
13.015 |
(14.231) |
16.559 |
18.005 |
|
Distributions |
|
|
|
|
|
|
Dividends
from Net Investment Income |
(.589) |
(.555) |
(.489) |
(.449) |
(.485) |
|
Distributions
from Realized Capital Gains |
— |
— |
— |
— |
— |
|
Total
Distributions |
(.589) |
(.555) |
(.489) |
(.449) |
(.485) |
|
Net
Asset Value, End of Period |
$94.09 |
$72.51 |
$60.05 |
$74.77 |
$58.66 |
|
Total
Return |
30.70% |
21.87% |
-19.11% |
28.40% |
44.18% |
|
Ratios/Supplemental
Data |
|
|
|
|
|
|
Net
Assets, End of Period (Millions) |
$21,759 |
$13,652 |
$7,311 |
$7,455 |
$4,951 |
|
Ratio of
Total Expenses to Average Net Assets |
0.08%3 |
0.08% |
0.08% |
0.08% |
0.08% |
|
Ratio of
Net Investment Income to Average Net Assets |
0.66% |
0.92% |
0.77% |
0.72% |
1.04% |
|
Portfolio
Turnover Rate4 |
11% |
14% |
13% |
14% |
14% |
|
|
|
|
1 |
Adjusted to
reflect a 4-for-1 share split effective at the beginning of trading on
April 20, 2021. |
|
2 |
Calculated
based on average shares outstanding. |
|
3 |
The ratio of
expenses to average net assets for the period net of reduction from
custody fee
offset
arrangements was 0.08%. |
|
4 |
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. |
71
Vanguard
Russell 2000 Index Fund ETF Shares
|
|
|
|
|
|
|
|
For a
Share Outstanding
Throughout
Each Period |
Year Ended August
31, | ||||
|
2024 |
2023 |
2022 |
20211 |
20201 | |
|
Net
Asset Value, Beginning of Period |
$76.28 |
$74.02 |
$91.28 |
$62.69 |
$59.88 |
|
Investment
Operations |
|
|
|
|
|
|
Net
Investment Income2 |
1.147 |
1.207 |
1.030 |
.865 |
.810 |
|
Net
Realized and Unrealized Gain (Loss) on Investments |
12.798 |
2.207 |
(17.254) |
28.550 |
2.815 |
|
Total from
Investment Operations |
13.945 |
3.414 |
(16.224) |
29.415 |
3.625 |
|
Distributions |
|
|
|
|
|
|
Dividends
from Net Investment Income |
(1.195) |
(1.154) |
(1.036) |
(.825) |
(.815) |
|
Distributions
from Realized Capital Gains |
— |
— |
— |
— |
— |
|
Total
Distributions |
(1.195) |
(1.154) |
(1.036) |
(.825) |
(.815) |
|
Net
Asset Value, End of Period |
$89.03 |
$76.28 |
$74.02 |
$91.28 |
$62.69 |
|
Total
Return |
18.50% |
4.75% |
-17.88% |
47.15% |
6.12% |
|
Ratios/Supplemental
Data |
|
|
|
|
|
|
Net
Assets, End of Period (Millions) |
$10,229 |
$6,455 |
$5,255 |
$6,223 |
$1,802 |
|
Ratio of
Total Expenses to Average Net Assets |
0.10%3 |
0.10%3 |
0.10%3 |
0.10% |
0.10% |
|
Ratio of
Net Investment Income to Average Net Assets |
1.44% |
1.64% |
1.26% |
1.02% |
1.37% |
|
Portfolio
Turnover Rate4 |
12% |
15% |
19% |
23% |
19% |
|
|
|
|
1 |
Adjusted
to reflect a 2-for-1 share split effective at the beginning of trading on
April 20, 2021. |
|
2 |
Calculated
based on average shares outstanding. |
|
3 |
The
ratio of expenses to average net assets for the period net of reduction
from custody fee
offset
arrangements was 0.10%. |
|
4 |
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. |
72
Vanguard
Russell 2000 Value Index Fund ETF Shares
|
|
|
|
|
|
|
|
For a
Share Outstanding
Throughout
Each Period |
Year Ended August
31, | ||||
|
2024 |
2023 |
2022 |
2021 |
2020 | |
|
Net
Asset Value, Beginning of Period |
$126.66 |
$126.77 |
$143.88 |
$91.76 |
$99.51 |
|
Investment
Operations |
|
|
|
|
|
|
Net
Investment Income1 |
2.580 |
2.816 |
2.353 |
1.998 |
1.868 |
|
Net
Realized and Unrealized Gain (Loss) on
Investments |
21.306 |
(.234) |
(16.986) |
51.982 |
(7.771) |
|
Total from
Investment Operations |
23.886 |
2.582 |
(14.633) |
53.980 |
(5.903) |
|
Distributions |
|
|
|
|
|
|
Dividends
from Net Investment Income |
(2.726) |
(2.692) |
(2.477) |
(1.860) |
(1.847) |
|
Distributions
from Realized Capital Gains |
— |
— |
— |
— |
— |
|
Total
Distributions |
(2.726) |
(2.692) |
(2.477) |
(1.860) |
(1.847) |
|
Net
Asset Value, End of Period |
$147.82 |
$126.66 |
$126.77 |
$143.88 |
$91.76 |
|
Total
Return |
19.17% |
2.19% |
-10.28% |
59.34% |
-6.05% |
|
Ratios/Supplemental
Data |
|
|
|
|
|
|
Net
Assets, End of Period (Millions) |
$809 |
$788 |
$837 |
$1,036 |
$303 |
|
Ratio of
Total Expenses to Average Net Assets |
0.15% |
0.15%2 |
0.15% |
0.15% |
0.15% |
|
Ratio of
Net Investment Income to Average Net Assets |
1.97% |
2.27% |
1.71% |
1.52% |
1.99% |
|
Portfolio
Turnover Rate3 |
24% |
27% |
28% |
45% |
38% |
|
|
|
|
1 |
Calculated
based on average shares outstanding. |
|
2 |
The
ratio of expenses to average net assets for the period net of reduction
from custody fee
offset
arrangements was 0.15%. |
|
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. |
73
Vanguard
Russell 2000 Growth Index Fund ETF Shares
|
|
|
|
|
|
|
|
For a
Share Outstanding
Throughout
Each Period |
Year Ended August
31, | ||||
|
2024 |
2023 |
2022 |
2021 |
2020 | |
|
Net
Asset Value, Beginning of Period |
$175.15 |
$165.45 |
$222.64 |
$164.83 |
$141.63 |
|
Investment
Operations |
|
|
|
|
|
|
Net
Investment Income1 |
1.231 |
1.499 |
1.137 |
.839 |
1.097 |
|
Net
Realized and Unrealized Gain (Loss) on
Investments |
29.566 |
9.702 |
(57.266) |
57.852 |
23.237 |
|
Total from
Investment Operations |
30.797 |
11.201 |
(56.129) |
58.691 |
24.334 |
|
Distributions |
|
|
|
|
|
|
Dividends
from Net Investment Income |
(1.387) |
(1.501) |
(1.061) |
(.881) |
(1.134) |
|
Distributions
from Realized Capital Gains |
— |
— |
— |
— |
— |
|
Total
Distributions |
(1.387) |
(1.501) |
(1.061) |
(.881) |
(1.134) |
|
Net
Asset Value, End of Period |
$204.56 |
$175.15 |
$165.45 |
$222.64 |
$164.83 |
|
Total
Return |
17.69% |
6.87% |
-25.28% |
35.67% |
17.32% |
|
Ratios/Supplemental
Data |
|
|
|
|
|
|
Net
Assets, End of Period (Millions) |
$991 |
$784 |
$658 |
$735 |
$371 |
|
Ratio of
Total Expenses to Average Net Assets |
0.15%2 |
0.15%2 |
0.15% |
0.15% |
0.15% |
|
Ratio of
Net Investment Income to Average Net
Assets |
0.67% |
0.90% |
0.61% |
0.40% |
0.75% |
|
Portfolio
Turnover Rate3 |
29% |
32% |
33% |
47% |
38% |
|
|
|
|
1 |
Calculated
based on average shares outstanding. |
|
2 |
The
ratio of expenses to average net assets for the period net of reduction
from custody fee
offset
arrangements was 0.15%. |
|
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. |
74
Vanguard
Russell 3000 Index Fund ETF Shares
|
|
|
|
|
|
|
|
For a
Share Outstanding
Throughout
Each Period |
Year Ended August
31, | ||||
|
2024 |
2023 |
2022 |
2021 |
2020 | |
|
Net
Asset Value, Beginning of Period |
$200.77 |
$177.97 |
$208.13 |
$158.71 |
$133.26 |
|
Investment
Operations |
|
|
|
|
|
|
Net
Investment Income1 |
2.957 |
2.897 |
2.662 |
2.385 |
2.416 |
|
Net
Realized and Unrealized Gain (Loss) on
Investments |
48.893 |
22.832 |
(30.247) |
49.386 |
25.494 |
|
Total from
Investment Operations |
51.850 |
25.729 |
(27.585) |
51.771 |
27.910 |
|
Distributions |
|
|
|
|
|
|
Dividends
from Net Investment Income |
(3.080) |
(2.929) |
(2.575) |
(2.351) |
(2.460) |
|
Distributions
from Realized Capital Gains |
— |
— |
— |
— |
— |
|
Total
Distributions |
(3.080) |
(2.929) |
(2.575) |
(2.351) |
(2.460) |
|
Net
Asset Value, End of Period |
$249.54 |
$200.77 |
$177.97 |
$208.13 |
$158.71 |
|
Total
Return |
26.06% |
14.68% |
-13.36% |
32.90% |
21.31% |
|
Ratios/Supplemental
Data |
|
|
|
|
|
|
Net
Assets, End of Period (Millions) |
$2,577 |
$1,802 |
$1,219 |
$1,124 |
$710 |
|
Ratio of
Total Expenses to Average Net Assets |
0.10%2 |
0.10%2 |
0.10% |
0.10% |
0.10% |
|
Ratio of
Net Investment Income to Average Net
Assets |
1.34% |
1.58% |
1.36% |
1.31% |
1.74% |
|
Portfolio
Turnover Rate3 |
9% |
11% |
8% |
10% |
8% |
|
|
|
|
1 |
Calculated
based on average shares outstanding. |
|
2 |
The
ratio of expenses to average net assets for the period net of reduction
from custody fee
offset
arrangements was 0.10%. |
|
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. |
75
CFA® is a registered
trademark owned by CFA Institute.
The Products are not
sponsored, endorsed, sold or promoted by Frank Russell Company (“Russell”).
Russell makes no representation or warranty, express or implied, to the owners
of the Products or any member of the public regarding the advisability of
investing in securities generally or in the Products particularly or the ability
of the Russell 1000, Russell 1000 Value, Russell 1000 Growth, Russell 2000,
Russell 2000 Value, Russell 2000 Growth, and Russell 3000 Indexes to track
general stock market performance or a segment of the same. Russell’s publication
of the Russell 1000, Russell 1000 Value, Russell 1000 Growth, Russell 2000,
Russell 2000 Value, Russell 2000 Growth, and Russell 3000 Indexes in no way
suggests or implies an opinion by Russell as to the advisability of investment
in any or all of the securities upon which the Russell 1000, Russell 1000 Value,
Russell 1000 Growth, Russell 2000, Russell 2000 Value, Russell 2000 Growth, and
Russell 3000 Indexes are based. Russell’s only relationship to The Vanguard
Group, Inc. is the licensing of certain trademarks and trade names of Russell
and of the Russell 1000, Russell 1000 Value, Russell 1000 Growth, Russell 2000,
Russell 2000 Value, Russell 2000 Growth, and Russell 3000 Indexes which are
determined, composed and calculated by Russell without regard to The Vanguard
Group, Inc. or the Products. Russell is not responsible for and has not reviewed
the Products nor any associated literature or publications and Russell makes no
representation or warranty express or implied as to their accuracy or
completeness, or otherwise. Russell has no obligation or liability in connection
with the administration, marketing or trading of the Products.
Russell makes no
representation, warranty or guarantee as to the accuracy, completeness,
reliability or otherwise of the Russell Indexes or any data included in the
Russell Indexes. Russell does not guarantee the accuracy and/or the completeness
of the Russell 1000, Russell 1000 Value, Russell 1000 Growth, Russell 2000,
Russell 2000 Value, Russell 2000 Growth, and Russell 3000 Indexes or any data
included therein and Russell shall have no liability for any errors, omissions,
or interruptions therein. Russell makes no warranty, express or implied, as to
the use of or results to be obtained by The Vanguard Group, Inc., investors,
owners of the Products, or any other person or entity from the use of the
Russell 1000, Russell 1000 Value, Russell 1000 Growth, Russell 2000, Russell
2000 Value, Russell 2000 Growth, and Russell 3000 Indexes or any data included
therein. Russell makes no express or implied warranties, and expressly disclaims
all warranties of merchantability or fitness for a particular purpose or use
with respect to the Russell 1000, Russell 1000 Value, Russell 1000 Growth,
Russell 2000, Russell 2000 Value, Russell 2000 Growth, and Russell 3000 Indexes
or any data included therein. Without limiting any of the foregoing, in no event
shall Russell have any liability for any special, punitive, indirect, or
consequential damages (including lost profits), even if notified of the
possibility of such damages.
Russell reserves the
right, at any time and without notice, to alter, amend, terminate or in any way
change the Russell Indexes. Russell has no obligation to take the needs of any
particular fund or its participants or any other product or person into
consideration in determining, composing or calculating any of the Russell
Indexes.
76
Glossary
of Investment Terms
Authorized
Participant. Institutional
investors that are permitted to purchase Creation Units directly from, and
redeem Creation Units directly with, the issuing fund. To be an Authorized
Participant, an entity must be a participant in the Depository Trust Company and
must enter into an agreement with the fund’s Distributor.
Bid-Ask
Spread. The difference
between the highest price a buyer is willing to pay to purchase ETF Shares (bid)
and the lowest price a seller is willing to accept for ETF Shares (ask) when
buying or selling shares in the secondary market.
Capital
Gains Distributions. Payments to fund
shareholders of gains realized on securities that a fund has sold at a profit,
minus any realized losses.
Common
Stock.
A security representing ownership rights in a corporation.
Creation
Unit.
A large block of a specified number of ETF Shares. Certain broker-dealers known
as “Authorized Participants” may purchase and redeem ETF Shares from the issuing
fund in Creation Unit size blocks.
Dividend
Distributions.
Payments to fund shareholders of income from interest or dividends generated by
a fund’s investments.
Dow Jones U.S.
Total Stock Market Float Adjusted Index. An index designed to measure all
U.S. equity issues with readily available prices.
Ex-Dividend
Date.
The date when a distribution of dividends and/or capital gains is deducted from
the share price of a mutual fund, ETF, or stock. On the ex-dividend date, the
share price drops by the amount of the distribution per share (plus or minus any
market activity).
Expense
Ratio. A fund’s total
annual operating expenses expressed as a percentage of the fund’s average net
assets. The expense ratio includes management and administrative expenses, but
it does not include the transaction costs of buying and selling portfolio
securities.
Inception
Date. The date on
which the assets of a fund (or one of its share classes) are first invested in
accordance with the fund’s investment objective. For funds with a subscription
period, the inception date is the day after that period ends. Investment
performance is generally measured from the inception date.
77
Joint Committed
Credit Facility. Each
Fund participates, along with other funds managed by Vanguard, in a committed
credit facility provided by a syndicate of lenders pursuant to a credit
agreement that may be renewed annually; each Vanguard fund is individually
liable for its borrowings, if any, under the credit facility. The amount and
terms of the committed credit facility are subject to approval by the Funds’
board of trustees and renegotiation with the lender syndicate on an annual
basis.
Median Market
Capitalization. An
indicator of the size of companies in which a fund invests; the midpoint of
market capitalization (market price x shares outstanding) of a fund’s stocks,
weighted by the proportion of the fund’s assets invested in each stock. Stocks
representing half of the fund’s assets have market capitalizations above the
median, and the rest are below it.
Mutual
Fund.
An investment company that pools the money of many people and invests it in a
variety of securities in an effort to achieve a specific objective over
time.
New
York Stock Exchange (NYSE). A stock exchange
based in New York City that is open for regular trading on business days, Monday
through Friday, from 9:30 a.m. to 4 p.m., Eastern time.
Return of
Capital. A return of
capital occurs when a fund’s distributions exceed its earnings in a fiscal year.
A return of capital is a return of all or part of your original investment or
amounts paid in excess of your original investment in a fund. In general, a
return of capital reduces your cost basis in a fund’s shares and is not taxable
to you until your cost basis has been reduced to zero.
Securities. Stocks, bonds,
money market instruments, and other investments.
Total
Return. A percentage
change, over a specified time period, in a fund’s net asset value, assuming the
reinvestment of all distributions of dividends and capital
gains.
Volatility. The fluctuations in value of a
mutual fund or other security. The greater a fund’s volatility, the wider the
fluctuations in its returns.
Yield. Income (interest
or dividends) earned by an investment, expressed as a percentage of the
investment’s price.
78
Connect
with Vanguard®
˃
vanguard.com
For
More Information
If you would like
more information about Vanguard Russell ETFs, the following documents are
available free upon request:
Annual/Semiannual
Reports to
Shareholders and
Form
N-CSR
Additional information about the
Funds’ investments is available in the
Funds’ annual and semiannual reports to shareholders and in Form N-CSR. In the
annual reports, you will find a discussion of the market conditions and
investment strategies that significantly affected the Funds’ performance during
their last fiscal year. In Form N-CSR, you will find the Funds’ annual and
semiannual financial statements.
Statement
of Additional Information (SAI)
The SAI provides more detailed
information about the Funds’ ETF Shares and is incorporated by reference into
(and thus legally a part of) this prospectus.
To obtain a free copy of the latest
annual or semiannual reports, financial statements, or the SAI, or
to request additional information about Vanguard ETF Shares, please visit
https://vgi.vg/fund-literature or contact us as
follows:
Telephone:
866-499-8473; Text telephone for people with hearing impairment:
800-749-7273
Information
Provided by the SEC
Reports and other
information about the Funds are available in the EDGAR database on the SEC’s
website at sec.gov, or you can receive copies of this information, for a fee, by
electronic request at the following email address:
[email protected].
Funds’ Investment Company Act file
number: 811-07803
© 2024 The
Vanguard Group, Inc. All rights reserved.
Vanguard
Marketing Corporation, Distributor.
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122024