Semiannual
Report | July
31, 2021
Vanguard
Real Estate Index Funds
| Vanguard Real Estate Index Fund |
| Vanguard Real Estate II Index Fund |
About Your
Fund’s Expenses
As
a shareholder of the fund, you incur ongoing costs, which include costs for
portfolio management, administrative services, and shareholder reports (like
this one), among others. Operating expenses, which are deducted from a fund’s
gross income, directly reduce the investment return of the fund.
A
fund‘s expenses are expressed as a percentage of its average net assets. This
figure is known as the expense ratio. The following examples are intended to
help you understand the ongoing costs (in dollars) of investing in your fund and
to compare these costs with those of other mutual funds. The examples are based
on an investment of $1,000 made at the beginning of the period shown and held
for the entire period.
The
accompanying table illustrates your fund’s costs in two ways:
| • | Based on actual fund return. This section helps you to estimate the actual expenses that you paid over the period. The ”Ending Account Value“ shown is derived from the fund’s actual return, and the third column shows the dollar amount that would have been paid by an investor who started with $1,000 in the fund. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period. |
To
do so, simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
given for your fund under the heading ”Expenses Paid During Period.“
| • | Based on hypothetical 5% yearly return. This section is intended to help you compare your fund‘s costs with those of other mutual funds. It assumes that the fund had a yearly return of 5% before expenses, but that the expense ratio is unchanged. In this case—because the return used is not the fund’s actual return—the results do not apply to your investment. The example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to calculate expenses based on a 5% return. You can assess your fund’s costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds. |
Note
that the expenses shown in the table are meant to highlight and help you compare
ongoing costs only and do not reflect
transaction costs incurred by the fund for buying and selling securities.
Further, the expenses do not include any purchase, redemption, or account
service fees described in the fund prospectus. If such fees were applied to your
account, your costs would be higher. Your fund does not carry a “sales
load.”
The
calculations assume no shares were bought or sold during the period. Your actual
costs may have been higher or lower, depending on the amount of your investment
and the timing of any purchases or redemptions.
You
can find more information about the fund’s expenses, including annual expense
ratios, in the Financial Statements section of this report. For additional
information on operating expenses and other shareholder costs, please refer to
your fund’s current prospectus.
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| Six Months Ended July 31, 2021 | |||
| Beginning Account Value 1/31/2021 |
Ending Account Value 7/31/2021 |
Expenses Paid During Period | |
| Based on Actual Fund Return | |||
| Real Estate Index Fund | |||
| Investor Shares | $1,000.00 | $1,266.60 | $1.46 |
| ETF Shares | 1,000.00 | 1,267.50 | 0.67 |
| AdmiralTM Shares | 1,000.00 | 1,267.70 | 0.67 |
| Institutional Shares | 1,000.00 | 1,267.50 | 0.56 |
| Real Estate II Index Fund | $1,000.00 | $1,268.10 | $0.45 |
| Based on Hypothetical 5% Yearly Return | |||
| Real Estate Index Fund | |||
| Investor Shares | $1,000.00 | $1,023.51 | $1.30 |
| ETF Shares | 1,000.00 | 1,024.20 | 0.60 |
| Admiral Shares | 1,000.00 | 1,024.20 | 0.60 |
| Institutional Shares | 1,000.00 | 1,024.30 | 0.50 |
| Real Estate II Index Fund | $1,000.00 | $1,024.40 | $0.40 |
The
calculations are based on expenses incurred in the most recent six-month period.
The funds’ annualized six-month expense ratios for that period are: for the Real
Estate Index Fund, 0.26% for Investor Shares, 0.12% for ETF Shares, 0.12% for
Admiral Shares, and 0.10% for Institutional Shares; and for the Real Estate II
Index Fund, 0.08%. The dollar amounts shown as “Expenses Paid” are equal to the
annualized expense ratio multiplied by the average account value over the
period, multiplied by the number of days in the most recent six-month period,
then divided by the number of days in the most recent 12-month period
(181/365).
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Real
Estate Index Fund
Fund
Allocation
As
of July 31, 2021
| Diversified Real Estate Activities | 0.2% |
| Diversified REITs | 3.9 |
| Health Care REITs | 8.4 |
| Hotel & Resort REITs | 2.9 |
| Industrial REITs | 11.0 |
| Office REITs | 7.1 |
| Real Estate Development | 0.3 |
| Real Estate Operating Companies | 0.2 |
| Real Estate Services | 4.0 |
| Residential REITs | 14.9 |
| Retail REITs | 9.6 |
| Specialized REITs | 37.5 |
The
table reflects the fund’s investments, except for short-term investments and
derivatives. Sector categories are based on the Global Industry Classification
Standard (“GICS”), except for the “Other” category (if applicable), which
includes securities that have not been provided a GICS classification as of the
effective reporting period.
The
fund may invest in derivatives (such as futures and swap contracts) for various
reasons, including, but not limited to, attempting to remain fully invested and
tracking its target index as closely as possible.
The
Global Industry Classification Standard (“GICS”) was developed by and is the
exclusive property and a service mark of MSCI Inc. (“MSCI”) and Standard and
Poor’s, a division of McGraw-Hill Companies, Inc. (“S&P”), and is licensed
for use by Vanguard. Neither MSCI, S&P nor any third party involved in
making or compiling the GICS or any GICS classification makes any express or
implied warranties or representations with respect to such standard or
classification (or the results to be obtained by the use thereof), and all such
parties hereby expressly disclaim all warranties of originality, accuracy,
completeness, merchantability or fitness for a particular purpose with respect
to any such standard or classification. Without limiting any of the foregoing,
in no event shall MSCI, S&P, any of its affiliates or any third party
involved in making or compiling the GICS or any GICS classification have any
liability for any direct, indirect, special, punitive, consequential or any
other damages (including lost profits) even if notified of the possibility of
such damages.
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Real
Estate Index Fund
Financial
Statements (unaudited)
Schedule
of Investments
As
of July 31, 2021
The
fund files its complete schedule of portfolio holdings with the Securities and
Exchange Commission (SEC) for the first and third quarters of each fiscal year
as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are
available on the SEC’s website at www.sec.gov.
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