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SECURITIES AND EXCHANGE COMMISSION
FORM N-1A
REGISTRATION STATEMENT
(NO. 2-88373)
UNDER THE SECURITIES ACT OF 1933
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Pre-Effective Amendment No.
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Post-Effective Amendment No. 104
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and
REGISTRATION STATEMENT
(NO. 811-03919)
UNDER THE INVESTMENT COMPANY ACT OF 1940
(Exact Name of Registrant as Specified in Declaration of Trust)
P.O. Box 2600, Valley Forge, PA 19482
(Address of Principal Executive Office)
Registrant’s Telephone Number (610) 669-1000
Tonya T. Robinson, Esquire
P.O. Box 876
Valley Forge, PA 19482
It is proposed that this filing will become effective (check appropriate box)
☐
immediately upon filing pursuant to paragraph (b)
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on February 19, 2025, pursuant to paragraph (b)
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60 days after filing pursuant to paragraph (a)(1)
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on (date) pursuant to paragraph (a)(1)
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75 days after filing pursuant to paragraph (a)(2)
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on (date) pursuant to paragraph (a)(2) of rule 485 If appropriate, check the following box:
☐
This post-effective amendment designates a new effective date for a previously filed post-effective amendment.
Vanguard STAR Core-Plus Bond Fund
Vanguard STAR Core-Plus Bond Fund Institutional Shares (VCPSX)
This is the Fund’s initial prospectus, so it does not contain performance data.
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.
Fund Summary
The Fund seeks to provide total return while generating a moderate to high level of current income.
The following tables describe the fees and expenses you may pay if you buy, hold, and sell Institutional shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the tables and example below.
Shareholder Fees
(Fees paid directly from your investment)
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Sales Charge (Load) Imposed on Reinvested Dividends |
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Annual Fund Operating Expenses
(Expenses that you pay each year as a percentage of the value of your investment)
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Total Annual Fund Operating Expenses1
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The expense information shown in the table reflects estimated amounts for the current fiscal year.
Example
The following example is intended to help you compare the cost of investing in the Fund’s Institutional shares with the cost of investing in other funds. They illustrates the hypothetical expenses that you would incur over various periods if you were to invest $10,000 in the Fund’s shares. This example assumes that the shares provide a return of 5% each year and that total annual fund operating expenses remain as stated in the preceding table. You would incur these hypothetical expenses whether or not you were to sell your shares at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
This example does not include the brokerage commissions that you may pay to buy and sell shares of the Fund.
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in more taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the previous expense example, reduce the Fund’s performance. The Fund has no operating history and therefore has no portfolio turnover information.
Principal Investment Strategies
The Fund invests in fixed income securities of various maturities, yields, and qualities. Under normal circumstances, the Fund will invest at least 80% of its assets in bonds, which include fixed income securities such as corporate bonds; U.S. Treasury obligations and other U.S. government and agency securities; and asset-backed, mortgage-backed, and mortgage-related securities. In general, bonds purchased by the Fund will have a maturity of 90 days or more at the time of their issuance. The Fund may invest in fixed income securities of non-U.S. issuers, including emerging market countries.
The Fund’s dollar-weighted average maturity will normally range between 4 and 12 years, and may either be longer or shorter under certain market conditions, such as during periods of market stress, where there is significant change to market structure, or where prepayment of certain securities held by the fund (such as asset-backed, mortgage-backed or similar securities) varies from what is expected under normal market conditions.
The Fund can purchase bonds of any quality. High-quality fixed income securities are investment-grade securities that are rated the equivalent of A3 or better by Moody’s Ratings, or another independent rating agency or, if unrated, are determined to be of comparable quality by the Fund’s advisor. Medium-quality fixed income securities are investment-grade securities that are rated the equivalent of Baa1, Baa2, or Baa3 by Moody’s Ratings or another independent rating agency or, if unrated, are determined to be of comparable quality by the Fund’s advisor. Both high-quality and medium-quality fixed income securities are considered to be “investment-grade.” Lower quality fixed income securities—commonly known as “junk bonds”—are non-investment-grade securities that are rated the equivalent of Ba1 or lower by Moody’s Ratings or another independent rating agency or, if unrated, are determined to be of comparable quality by the Fund’s advisor. No more than 35% of the Fund’s assets may be invested in non-investment-grade fixed income securities, or junk bonds.
The Fund seeks to have a majority of its assets denominated in or hedged back to the U.S. dollar but has the ability to invest in bonds denominated in a foreign currency on an unhedged basis. The Fund may attempt to hedge some or all of its foreign currency exposure, primarily through the use of foreign currency exchange forward contracts, in an effort to manage the currency risk associated with investing in securities denominated in currencies other than the U.S. dollar.
In addition to foreign currency exchange forward contracts, the Fund may invest in other derivatives instruments, such as options, futures contracts, other swap agreements, or in to be announced (“TBA”) mortgage-backed securities. The fund may also take short positions in TBA securities.
An investment in the Fund could lose money over short or long periods of time. You should expect the Fund’s share price and total return to fluctuate within a wide range. The Fund is subject to the following risks, which could affect the Fund’s performance, and the level of risk may vary based on market conditions:
• Interest rate risk, which is the chance that bond prices overall will decline because of rising interest rates.
• Income risk, which is the chance that the Fund’s income will decline because of falling interest rates. A fund’s income declines when interest rates fall because the fund then must invest new cash flow and cash from maturing bonds in lower- yielding bonds. Income risk is generally high for short-term bond funds and moderate for intermediate-term bond funds, so investors should expect the Fund’s monthly income to fluctuate accordingly.
• Call risk, which is the chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupon rates or interest rates before their maturity dates. The Fund would then lose any price appreciation above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the Fund’s income. Such redemptions and subsequent reinvestments would also increase the Fund’s portfolio turnover rate.
• Prepayment risk, which is the chance that during periods of falling interest rates, homeowners will refinance their mortgages before their maturity dates, resulting in prepayment of mortgage-backed securities held by the Fund. The Fund would then lose any price appreciation above the mortgage’s principal and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the Fund’s income. Such prepayments and subsequent reinvestments would also increase the Fund’s portfolio turnover rate.
• Extension risk, which is the chance that during periods of rising interest rates, certain debt securities will be paid off substantially more slowly than originally anticipated, and the value of those securities may fall. For funds that invest in mortgage-backed securities, extension risk is the chance that during periods of rising interest rates, homeowners will repay their mortgages at slower rates.
• Credit risk, which is the chance that a bond issuer will fail to pay interest or principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline.
• Liquidity risk, which is the chance that the Fund may not be able to sell a security in a timely manner at a desired price.
• Emerging markets risk, which is the chance that the bonds of governments, government agencies, government-owned corporations, and foreign companies located in emerging market countries will be substantially more volatile, and substantially less liquid, than the bonds of governments, government agencies, government-owned corporations, and foreign companies located in more developed foreign markets because, among other factors, emerging market countries can have more variable economic performance; greater custodial and operational risks; less developed legal, tax, regulatory, financial reporting, accounting, and record keeping systems; and greater political, social, and economic instability than developed markets.
• Country/regional risk, which is the chance that world events—such as political upheaval, financial troubles, or natural disasters—will adversely affect the value and/or liquidity of securities issued by foreign governments, government agencies, government-owned corporations, and foreign companies. Because the Fund may invest in bonds of issuers located in any one country or region, the Fund’s performance may be hurt disproportionately by the poor performance of
its investments in that area. Country/regional risk is especially high in emerging market countries.
• Currency risk, which is the chance that the value of a foreign investment, measured in U.S. dollars, will decrease because of unfavorable changes in currency exchange rates. Currency risk is especially high in emerging markets.
• Currency hedging risk. The Fund has the ability to invest in foreign bonds which may or may not be denominated in or hedged back to U.S. dollars. The Fund will decline in value if it underhedges a currency that has weakened or overhedges a currency that has strengthened relative to the U.S. dollar. In addition, the Fund will incur expenses to hedge its foreign currency exposure. By entering into currency hedging transactions, the Fund may eliminate any chance to benefit from favorable fluctuations in relevant currency exchange rates.
• Manager risk, which is the chance that poor security selection will cause the Fund to underperform relevant benchmarks or other funds with a similar investment objective.
• Management of certain similar funds risk. The name, investment objective, principal investment strategies, and risks of the Fund are similar to another separate fund managed by the Fund’s portfolio managers. However, the investment results of the Fund may be higher or lower than, and there is no guarantee that the investment results of the Fund will be comparable to, that other fund.
• Derivatives risk. The Fund may invest in derivatives, which may involve risks different from, and possibly greater than, those of investments directly in the underlying securities or assets.
• TBA Securities risk. A TBA transaction represents an agreement to buy or sell mortgage-backed securities with agreed-upon characteristics for a fixed unit price at a future date, but does not specify the particular security to be delivered. TBA transactions involve the risk that the value of the mortgage-backed securities to be purchased declines prior to settlement date or the counterparty does not deliver the securities as promised.
• Counterparty risk, which is the chance that the counterparty to a derivatives contract, or other investment vehicle, with the Fund is unable or unwilling to meet its financial obligations.
Because of the speculative nature of junk bonds, you should carefully consider the risks associated with this this Fund before you purchase shares.
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
This is the Fund’s initial prospectus, so it does not contain performance data.
The Vanguard Group, Inc. (Vanguard)
Michael Chang, CFA, Senior Portfolio Manager and Principal of Vanguard. He has co-managed the Fund since its inception in 2025.
Arvind Narayanan, CFA, Senior Portfolio Manager and Principal of Vanguard. He has co-managed the Fund since its inception in 2025.
Brian W. Quigley, CFA, Portfolio Manager at Vanguard. He has co-managed the Fund since its inception in 2025.
Daniel Shaykevich, Senior Portfolio Manager and Principal of Vanguard. He has co-managed the Fund since its inception in 2025.
Purchase and Sale of Fund Shares
Shares of the Fund may be purchased only by clients of Vanguard, including investment companies registered under the Investment Company Act of 1940, as amended (the 1940 Act). The minimum investment amount is $5 million.
The Fund’s distributions may be taxable as ordinary income or capital gains. Additionally, the Fund may also make distributions that are treated as a return of capital. 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.
More on the Fund
This prospectus describes the principal risks you would face as a Fund shareholder. It is important to keep in mind one of the main principles of investing: generally, the higher the risk of losing money, the higher the potential reward. The reverse, also, is generally true: the lower the risk, the lower the potential reward. As you consider an investment in any mutual fund, you should take into account your personal tolerance for fluctuations in the securities markets. 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 mutual fund investors, we have provided Plain Talk® explanations along the way. Reading the prospectus will help you decide whether the Fund is the right investment for you. We suggest that you keep this prospectus for future reference.
A Similar But Distinct Vanguard Fund
The Fund offered by this prospectus should not be confused with Vanguard Core-Plus Bond Fund or Vanguard Core-Plus Bond ETF, separate Vanguard funds that share an investment objective, and similar principal investment strategies and risks. Differences in scale, certain investment processes, and underlying holdings are expected to produce different investment returns by the funds. To obtain a prospectus for Vanguard STAR Core-Plus Bond Fund, please call 800-662-7447.
This prospectus offers the Fund’s Institutional Shares, which may be purchased only by clients of Vanguard, including funds registered under the 1940 Act, that invest a minimum of $5 million.
Plain Talk About Fund Expenses |
All mutual funds have operating expenses. These expenses, which are
deducted from a fund’s gross income, are expressed as a percentage of the
net assets of the fund. Assuming that operating expenses remain as stated in
the Fees and Expenses section, Vanguard STAR Core-Plus Bond Fund’s
expense ratio would be 0.20%, or $2.00 per $1,000 of average net assets. |
Plain Talk About Costs of Investing |
Costs are an important consideration in choosing a mutual fund. That is
because you, as a shareholder, pay a proportionate share of the costs of
operating a fund and any transaction costs incurred when the fund buys or
sells securities. These costs can erode a substantial portion of the gross
income or the capital appreciation a fund achieves. Even seemingly small
differences in expenses can, over time, have a dramatic effect on a
fund’s performance. |
The following sections explain the principal investment strategies and policies that the Fund uses in pursuit of its investment objective. The Fund’s board of trustees, which oversees the Fund’s management, may change investment strategies or policies in the interest of shareholders without a shareholder vote, unless those strategies or policies are designated as fundamental. Note that the Fund’s investment objective is not fundamental and may be changed without a shareholder vote. The Fund may change its 80% policy only upon 60 days’ notice to shareholders.
The Fund invests mainly in bonds. As a result, it is subject to certain risks.
The Fund is subject to interest rate risk, which is the chance that bond prices will decline because of rising interest rates.
Although fixed income securities (commonly referred to as bonds) are often thought to be less risky than stocks, there have been periods when bond prices have fallen significantly because of rising interest rates. For instance, prices of long-term bonds fell by almost 48% between December 1976 and September 1981.
To illustrate the relationship between bond prices and interest rates, the following table shows the effect of a 1% and a 2% change (both up and down) in interest rates on the values of three noncallable bonds (i.e., bonds that cannot be redeemed by the issuer) of different maturities, each with a face value of $1,000.
How Interest Rate Changes Affect the Value of a $1,000 Bond1
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Intermediate-Term (10 years) |
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1 Assuming a 4% coupon rate.
These figures are for illustration only; you should not regard them as an indication of future performance of the bond market as a whole or the Fund in particular.
Plain Talk About Bonds and Interest Rates |
As a rule, when interest rates rise, bond prices fall. The opposite is also true:
bond prices go up when interest rates fall. Why do bond prices and interest
rates move in opposite directions? Let’s assume that you hold a bond
offering a 4% yield. A year later, interest rates are on the rise and bonds of
comparable quality and maturity are offered with a 5% yield. With
higher-yielding bonds available, you would have trouble selling your 4% bond
for the price you paid—you would probably have to lower your asking price.
On the other hand, if interest rates were falling and 3% bonds were being
offered, you should be able to sell your 4% bond for more than you paid. |
How mortgage-backed securities are different: In general, declining interest
rates will not lift the prices of mortgage-backed securities—such as those
guaranteed by the Government National Mortgage Association—as much as
the prices of comparable bonds. Why? Because when interest rates fall, the
bond market tends to discount the prices of mortgage-backed securities for
prepayment risk—the possibility that homeowners will refinance their
mortgages at lower rates and cause the bonds to be paid off prior to maturity.
In part to compensate for this prepayment possibility, mortgage-backed
securities tend to offer higher yields than other bonds of comparable credit
quality and maturity. In contrast, when interest rates rise, prepayments tend
to slow down, subjecting mortgage-backed securities to extension risk—the
possibility that homeowners will repay their mortgages at slower rates. This
will lengthen the duration or average life of mortgage-backed securities held
by a fund and delay the fund’s ability to reinvest proceeds at higher interest
rates, making the fund more sensitive to changes in interest rates. |
Changes in interest rates can affect bond income as well as bond prices.
The Fund is subject to income risk, which is the chance that the Fund’s income will decline because of falling interest rates. A fund’s income declines when interest rates fall because the fund then must invest new cash flow and cash from maturing bonds in lower-yielding bonds. Income risk is generally high for short-term bond funds and moderate for intermediate-term bond funds, so investors should expect the Fund’s monthly income to fluctuate accordingly.
Plain Talk About Bond Maturities |
A bond is issued with a specific maturity date—the date when the issuer must
pay back the bond’s principal (face value). Bond maturities range from less
than 1 year to more than 30 years. Typically, the longer a bond’s maturity, the
more price risk you, as a bond investor, will face as interest rates rise—but
also the higher the potential yield you could receive. Longer-term bonds are
generally more suitable for investors willing to take a greater risk of price
fluctuations to get higher and more stable interest income. Shorter-term bond
investors should be willing to accept lower yields and greater income
variability in return for less fluctuation in the value of their investment. The
stated maturity of a bond may differ from the effective maturity of a bond,
which takes into consideration that an action such as a call or refunding may
cause bonds to be repaid before their stated maturity dates. |
Although falling interest rates tend to strengthen bond prices, they can cause other problems for bond fund investors—bond calls and prepayments.
Plain Talk About Callable Bonds |
Although bonds are issued with clearly defined maturities, in some cases the
bond issuer has a right to call in (redeem) the bond earlier than its maturity
date. When a bond is called, the bondholder may have to replace it with
another bond with a lower yield than the original bond. One way for bond
investors to protect themselves against call risk is to purchase a bond early
in its lifetime, long before its call date. Another way is to buy bonds with lower
coupon rates or interest rates, which make them less likely to be called. |
The Fund is subject to call risk, which is the chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupon rates or interest rates before their maturity dates. The Fund would then lose any price appreciation above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the Fund’s income. Such redemptions and subsequent reinvestments would also increase the Fund’s portfolio turnover rate.
The Fund is subject to prepayment risk, which is the chance that during periods of falling interest rates, homeowners will refinance their mortgages before their maturity dates, resulting in prepayment of mortgage-backed securities held by the Fund. The Fund would then lose any price appreciation above the mortgage’s principal and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the Fund’s income. Such prepayments and subsequent reinvestments would also increase the Fund’s portfolio turnover rate.
The Fund is subject to extension risk, which is the chance that during periods of rising interest rates, certain debt securities will be paid off substantially more slowly than originally anticipated, and the value of those securities may fall. For funds that invest in mortgage-backed securities, extension risk is the chance that during periods of rising interest rates, homeowners will repay their mortgages at slower rates. This will lengthen the duration or average life of mortgage-backed securities held by the Fund and delay the Fund’s ability to reinvest proceeds at higher interest rates.
The Fund is subject to credit risk, which is the chance that a bond issuer will fail to pay interest or principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline.
Plain Talk About Credit Quality |
A bond’s credit quality rating is an assessment of the issuer’s ability to pay
interest on the bond and, ultimately, to repay the principal. The lower the
credit quality, the greater the perceived chance that the bond issuer will
default, or fail to meet its payment obligations. All things being equal, the
lower a bond’s credit quality, the higher its yield should be to compensate
investors for assuming additional risk. |
The majority of the Fund’s exposure to fixed income securities is expected to have credit quality that is investment-grade.
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Credit Ratings of the Fund’s Investments
(Percentage of Fund Assets Under Normal Circumstances) |
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Issued or Backed
by U.S. Gov’t. or
its Agencies and
Instrumentalities |
High or
Highest
Quality
(Non-Gov’t.) |
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Vanguard STAR Core-Plus
Bond Fund |
——————————At least 65%—————————— |
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The Fund may invest no more than 35% of its assets in non-investment-grade fixed income securities, or junk bonds. Non-investment-grade fixed income securities are those rated the equivalent of Moody’s Ratings Ba1 or below or, if unrated, are determined to be of comparable quality by the Fund’s advisor. These bonds carry a high degree of risk and are considered speculative by the major rating agencies.
Plain Talk About High-Yield Bonds |
High-yield bonds, or “junk bonds,” are issued by companies or other entities
whose ability to pay interest and principal on the debt in a timely manner is
considered questionable. Such bonds are rated “below investment-grade” by
independent rating agencies and are considered speculative. Because they
have greater credit risk than investment-grade bonds, similar maturity
high-yield bonds typically must pay more interest to attract investors. Some
high-yield bonds are issued by smaller, less-seasoned companies, while
others are issued as part of a corporate restructuring, such as an acquisition,
a merger, or a leveraged buyout. Some high-yield bonds were once rated as
investment-grade but have been downgraded to junk bond status because of
financial difficulties experienced by their issuers. Conversely, an issuer’s
improving financial condition may result in an upgrading of its junk bonds to
investment-grade status. |
To a limited extent, the Fund is subject to event risk, which is the chance that corporate fixed income securities held by the Fund may suffer a substantial decline in credit quality and market value because of a restructuring of the companies that issued the securities or because of other factors negatively affecting the issuers.
The Fund is subject to liquidity risk, which is the chance that the Fund may not be able to sell a security in a timely manner at a desired price.
Liquidity in the bond market may be challenged depending on overall economic conditions and credit tightening, as well as the willingness of market participants to buy and sell such securities. There may be little trading in the secondary market for particular bonds, loans and other debt securities, which may make them more difficult to value or sell.
Plain Talk About Types of Bonds |
Bonds are issued (sold) by many sources: Corporations issue corporate
bonds; the federal government issues U.S. Treasury bonds; agencies of the
federal government issue agency bonds; financial institutions issue
asset-backed bonds; and mortgage holders issue “mortgage-backed”
pass-through certificates. Each issuer is responsible for paying back the
bond’s initial value as well as for making periodic interest payments. Many
bonds issued by government agencies and entities are neither guaranteed
nor insured by the U.S. government. |
The Fund may invest in a variety of fixed income securities of issuers that are tied economically to emerging market countries. Emerging market bonds include sovereign debt securities, which include fixed income securities that are issued or guaranteed by foreign governments or their agencies, authorities, political subdivisions or instrumentalities, or other supranational agencies, as well as debt securities issued or guaranteed by foreign corporations and foreign financial institutions. Emerging market countries include countries whose economies or bond markets are less developed. This would include most countries except for Australia, Canada, Japan, New Zealand, the United States, the United Kingdom, and most European Union countries that use the Euro (Austria, Belgium, Croatia, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain). The advisor will consider, among other things, a country’s political and economic stability and the development of its financial and capital markets when determining what constitutes an emerging market country.
The Fund is subject to emerging markets risk, which is the chance that the bonds of governments, government agencies, government-owned corporations, and foreign companies located in emerging market countries will be substantially more volatile, and substantially less liquid, than bonds of governments, government agencies, government-owned corporations, and foreign companies located in more developed foreign markets because, among other factors, emerging market countries can have more variable economic performance; greater custodial and operational risks; less developed legal, tax, regulatory, financial reporting, accounting and record keeping systems; and greater political, social, and economic instability than developed markets.
The Fund is subject to country/regional risk, which is the chance that world events—such as political upheaval, financial troubles, or natural disasters— will adversely affect the value and/or liquidity of securities issued by foreign governments, government agencies, government-owned corporations, and foreign companies. Because the Fund may invest its assets in bonds of issuers located in any one country or region, the Fund’s performance may be hurt disproportionately by the poor performance of its investments in that area. Country/regional risk is especially high in emerging market countries.
Plain Talk About International Investing |
U.S. investors who invest in foreign securities will encounter risks not
typically associated with U.S. companies because foreign stock and bond
markets operate differently from the U.S. markets. For instance, foreign
companies and governments may not be subject to the same or similar
auditing, legal, tax, regulatory, financial reporting, accounting, and
recordkeeping standards and practices as U.S. companies and the U.S.
government, and their stocks and bonds may not be as liquid as those of
similar U.S. entities. In addition, foreign stock exchanges, brokers,
companies, bond markets, and dealers may be subject to different levels of
government supervision and regulation than their counterparts in the
United States. Further, the imposition of economic or other sanctions on the
United States by a foreign country, or on a foreign country or issuer by the
United States, could impair a fund’s ability to buy, sell, hold, receive, deliver,
or otherwise transact in certain investment securities or obtain exposure to
foreign securities and assets. These factors, among others, could negatively
affect the returns U.S. investors receive from foreign investments. |
While the Fund seeks to have a majority of its assets denominated in or hedged back to the U.S. dollar, it has the ability to invest in bonds denominated in a foreign currency on an unhedged basis. These bonds include sovereign debt securities, which include fixed income securities that are issued or guaranteed by
foreign sovereign governments or their agencies, authorities, political subdivisions or instrumentalities, or other supranational agencies, as well as debt securities issued or guaranteed by foreign corporations and foreign financial institutions.
The Fund may attempt to hedge some or all of its foreign currency exposure, primarily through the use of foreign currency exchange forward contracts. Such hedging is intended to reduce the currency risk associated with investment in bonds denominated in currencies other than the U.S. dollar. Local currency bonds are bonds denominated in the local currency of a non-U.S. country. To the extent that the Fund owns local currency bonds and hedges its foreign currency exposure, it is subject to currency hedging risk.
Currency risk can affect the credit risk of the Fund’s bonds because the issuer would have a large burden if its local currency weakens significantly compared with the U.S. dollar. If an issuer’s local currency declines relative to the U.S. dollar, it could negatively affect perceptions of the issuer’s ability to make payments, which could cause the issuer’s bonds to decline in value. Many issuers manage this risk by hedging currency exposure, and their effectiveness in doing so is reflected in their credit rating.
The Fund is subject to currency risk, which is the chance that the value of a foreign investment, measured in U.S. dollars, will decrease because of unfavorable changes in currency exchange rates. Currency risk is especially high in emerging markets.
The Fund is subject to currency hedging risk. The Fund has the ability to invest in foreign bonds which may or may not be denominated in or hedged back to U.S. dollars. The Fund will decline in value if it underhedges a currency that has weakened or overhedges a currency that has strengthened relative to the U.S. dollar. In addition, the Fund will incur expenses to hedge its foreign currency exposure. By entering into currency hedging transactions, the Fund may eliminate any chance to benefit from favorable fluctuations in relevant currency exchange rates.
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 the Fund’s investments and Fund performance.
Vanguard’s actively managed fixed income funds follow a portfolio manager-driven process that uses both top-down and bottom-up inputs. Portfolio managers are responsible for portfolio construction and strategy, leveraging the
top-down insights of Vanguard’s senior investment leaders and Vanguard’s Investment Strategy Group, the bottom-up insights of the sector teams, and the relative value views across fixed income sectors. Risk optimization measures are present throughout the investment process, and the Senior Investment Committee provides governance and oversight for the entire lineup. Securities are sold based on the advisor’s judgements about a security’s fundamentals, technical factors, valuation, and contribution to the overall portfolio.
The types of financial instruments that may be purchased by the Fund are identified and explained as follows:
• U.S. government and agency bonds represent loans by investors to the U.S. Treasury or a wide variety of government agencies and instrumentalities. Securities issued by most U.S. government entities are neither guaranteed by the U.S. Treasury nor backed by the full faith and credit of the U.S. government. These entities include, among others, the Federal Home Loan Banks (FHLBs), the Federal National Mortgage Association (FNMA), and the Federal Home Loan Mortgage Corporation (FHLMC). Securities issued by the U.S. Treasury and a small number of U.S. government agencies, such as the Government National Mortgage Association (GNMA), are backed by the full faith and credit of the U.S. government. The market values of U.S. government and agency securities and U.S. Treasury securities are subject to fluctuation.
• Corporate bonds are debt securities issued by businesses that want to borrow money for some purpose—often to develop a new product or service, to expand into a new market, or to buy another company. As with other types of bonds, the issuer promises to repay the principal on a specific date and to make interest payments in the meantime. The amount of interest offered depends both on market conditions and on the financial health of the corporation issuing the bonds; a company whose credit rating is not strong will have to offer a higher interest rate to obtain buyers for its bonds.
• Municipal bonds represent loans by an investor to state or local governments or to other governmental authorities.
• Mortgage-backed securities represent partial ownership interest in pools of commercial or residential mortgage loans made by financial institutions to finance a borrower’s real estate purchase. These loans are packaged by private or governmental issuers for sale to investors. As the underlying mortgage loans are paid by borrowers, the investors receive payments of interest and principal. To be announced (TBA) securities represent an agreement to buy or sell mortgage-backed securities with agreed-upon characteristics for a fixed unit price, with settlement on a scheduled future date beyond the typical settlement period for most other securities. The Fund may have short positions in TBAs. See also Other Investment Policies and Risks.
The Fund may also invest in mortgage-backed securities that are packaged by private corporations and are not guaranteed by the U.S. government.
The Fund may enter into mortgage-dollar-roll transactions. In a mortgage-dollar-roll transaction, a fund sells mortgage-backed securities to a dealer and simultaneously agrees to purchase similar securities in the future at a predetermined price. These transactions simulate an investment in mortgage-backed securities and have the potential to enhance a fund’s returns and reduce its administrative burdens, compared with holding mortgage-backed securities directly. These transactions may increase the fund’s portfolio turnover rate. Mortgage dollar rolls will be used only to the extent that they are consistent with the Fund’s investment objective and risk profile.
• Cash equivalent investments is a blanket term that describes a variety of short-term fixed income investments, including money market instruments, commercial paper, bank certificates of deposit, banker’s acceptances, and repurchase agreements. Repurchase agreements represent short-term (normally overnight) loans by a fund to banks or large securities dealers. Repurchase agreements can carry several risks. For instance, if the seller is unable to repurchase the securities as promised, a fund may experience a loss when trying to sell the securities to another buyer. Also, if the seller becomes insolvent, a bankruptcy court may determine that the securities do not belong to a fund and order that the securities be used to pay off the seller’s debts. The Fund’s advisor believes that these risks can be controlled through careful security selection and monitoring.
• Futures, options, and other derivatives are described in detail under Other Investment Policies and Risks.
• Asset-backed securities are bonds that represent partial ownership in pools of consumer or commercial loans—most often credit card, automobile, or trade receivables. Asset-backed securities, which can be types of corporate fixed income obligations, are issued by entities formed solely for that purpose, but their value ultimately depends on repayments by underlying borrowers. A primary risk of asset-backed securities is that their maturity is difficult to predict, being driven by borrowers’ prepayments.
• International dollar-denominated bonds are bonds denominated in U.S. dollars and issued by foreign governments and companies. To the extent that the Fund owns foreign bonds, it is subject to country risk, which is the chance that world events—such as political upheaval, financial troubles, or natural disasters—will adversely affect the value and/or liquidity of securities issued by companies in foreign countries. In addition, the prices of foreign bonds and the prices of U.S. bonds have, at times, moved in opposite directions. Because the bond’s value is designated in dollars rather than in the currency of the issuer’s country, the
investor is not exposed to currency risk; rather, the issuer assumes that risk, usually to attract U.S. investors. Although currency movements do not affect the value of international dollar-denominated bonds directly, they could affect the value indirectly by adversely affecting the issuer’s ability (or the market’s perception of the issuer’s ability) to pay interest or repay principal.
• Foreign currency bonds are bonds denominated in a foreign currency and issued by governments, government or supranational agencies, and companies of non-U.S. countries. The Fund will seek to have a majority of its assets either denominated in or hedged back to the U.S. dollar, but will also have the ability to invest in bonds denominated in a foreign currency on an unhedged basis. To the extent that the Fund’s investments in foreign currency bonds may or may not be hedged, the Fund is subject to currency risk and currency hedging risk.
• Preferred stocks distribute set dividends from the issuer. The preferred-stock holder’s claim on the issuer’s income and assets ranks before that of common-stock holders, but after that of bondholders.
• Convertible securities are bonds or preferred stocks that are convertible into, or exchangeable for, common stocks.
• Collateralized mortgage obligations (CMOs) are special bonds that are collateralized by mortgages or mortgage pass-through securities. Cash flow rights on underlying mortgages—the rights to receive principal and interest payments—are divided up and prioritized to create short-, intermediate-, and long-term bonds. CMOs rely on assumptions about the timing of cash flows on the underlying mortgages, including expected prepayment rates. The primary risk of a CMO is that these assumptions are wrong, which would either shorten or lengthen the bond’s maturity. The Fund will invest only in CMOs that are believed to be consistent with its maturity and credit-quality standards.
• Bank Loans are fixed or floating rate loans arranged through private negotiations between a company or a non-U.S. government and one or more financial institutions. Bank loans often involve borrowers who are less financially strong than companies with higher credit ratings and therefore may be more likely to encounter financial difficulties and be more vulnerable to adverse market events and negative sentiments. For this reason, bank loans will generally be rated below investment-grade and involve greater risks of default, downgrade, or price declines and are more volatile than investment-grade securities. A significant portion of floating rate investments may be “covenant lite” loans that may contain fewer or less restrictive constraints on the borrower or other borrower-friendly characteristics.
A fund may have difficulty disposing of bank loans because, in certain cases, the market for such instruments is not highly liquid. The lack of a highly liquid secondary market may have an adverse impact on the value of such instruments
and on a fund’s ability to dispose of the bank loan in response to a specific economic event, such as deterioration in the creditworthiness of the borrower, but there is no guarantee that an investment in these securities will result in a high rate of return. In addition, transactions in bank loans may take more than seven days to settle. As a result, the proceeds related to the sale of bank loans may not be available to make additional investments or to meet a fund’s redemption obligations until a substantial period after the sale of the loans. To the extent that extended settlement creates short-term liquidity needs, a fund has the ability to satisfy these needs in a number of different ways, for example, by holding additional cash, selling other investments (potentially at an inopportune time, which could result in losses to the fund), or other methods.
The Fund is subject to manager risk, which is the chance that poor security selection will cause the Fund to underperform relevant benchmarks or other funds with a similar investment objective.
The Fund is subject to management of certain similar funds risk. The name, investment objective, principal investment strategies, and risks of the Fund are similar to another separate fund managed by the Fund’s portfolio managers. However, the investment results of the Fund may be higher or lower than, and there is no guarantee that the investment results of the Fund will be comparable to, that other fund due to differences in scale, certain investment processes, and underlying holdings.
Plain Talk About U.S. Government-Sponsored Enterprises |
A variety of U.S. government-sponsored enterprises (GSEs), such as the
Federal Home Loan Mortgage Corporation (FHLMC), the Federal National
Mortgage Association (FNMA), and the Federal Home Loan Banks (FHLBs),
issue debt and mortgage-backed securities. Although GSEs may be chartered
or sponsored by acts of Congress, they are not funded by congressional
appropriations. In September of 2008, the U.S. Treasury placed FNMA and
FHLMC under conservatorship and appointed the Federal Housing Finance
Agency (FHFA) to manage their daily operations. In addition, the U.S. Treasury
entered into purchase agreements with FNMA and FHLMC to provide them
with capital in exchange for senior preferred stock. Generally, a GSE’s
securities are neither issued nor guaranteed by the U.S. Treasury and are not
backed by the full faith and credit of the U.S. government. In most cases, these
securities are supported only by the credit of the GSE, standing alone. In some
cases, a GSE’s securities may be supported by the ability of the GSE to
borrow from the U.S. Treasury or may be supported by the U.S. government in
some other way. Securities issued by the Government National Mortgage
Association (GNMA), however, are backed by the full faith and credit of the
U.S. government. |
Other Investment Policies and Risks
In addition to investing in bonds, the Fund may make other kinds of investments to achieve its investment objective.
The Fund may purchase nonpublic securities, generally referred to as 144A securities. The Fund may invest up to 15% of its net assets in illiquid securities. Illiquid securities are investments that the Fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. Restricted securities are a special type of illiquid security; these securities have not been publicly issued and legally can be resold only to qualified buyers. From time to time, the board of trustees may determine that particular restricted securities are not illiquid, and those securities may then be purchased by the Fund without limit. The Fund may also hold other types of securities, such as various types of warrants, including, but not limited to warrants linked to countries’ economic performance or commodity prices.
The Fund may invest in derivatives. In general, investments in derivatives may involve risks different from, and possibly greater than, those of investments directly in the underlying securities or assets.
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. The Fund may invest in derivatives only if the expected risks and rewards of the derivatives are consistent with the investment objective, policies, strategies, and risks of the Fund as disclosed in this prospectus. In particular, derivatives will be used only when they may help the advisor to accomplish one or more of the following:
• Invest in eligible asset classes with greater efficiency and lower cost than is possible through direct investment.
• Add value when these instruments are attractively priced.
• Adjust sensitivity to changes in interest rates.
• Adjust the overall credit risk of the portfolio or actively overweight or underweight credit risk to specific bond issuers.
• Hedge foreign currency exposure.
• Hedge foreign interest rate exposure.
The Fund’s derivative investments may include fixed income futures contracts; fixed income options, including options on swaps; currency swaps; foreign currency exchange forwards; interest rate swaps; total return swaps; credit default swaps; or other derivatives. Losses (or gains) involving futures contracts can sometimes be substantial—in part because a relatively small price movement in a futures contract may result in an immediate and substantial loss (or gain) for a fund. Similar risks exist for other types of derivatives. The Fund may also invest in U.S. Treasury futures for either cash management purposes or potentially to add value since they may be favorably priced.
The Fund may enter into a currency swap or foreign currency exchange forward to sell or buy an amount of foreign currency with which it does not have exposure.
The Fund may invest a small portion of its assets in shares of exchange-traded funds (ETFs). These ETFs typically provide returns similar to those of bonds. The Fund may purchase ETFs when doing so will reduce the Fund’s transaction costs, facilitate cash management, mitigate risk, or have the potential to add value because the instruments are favorably priced. Vanguard receives no additional revenue from Fund assets invested in ETF Shares of other Vanguard funds. Fund assets invested in ETF Shares of other Vanguard funds are excluded when allocating to the Fund its share of the costs of Vanguard’s operations.
The Fund is subject to counterparty risk, which is the chance that the counterparty to a derivatives contract, or other investment vehicle, with the Fund will be unable or unwilling to meet its financial obligations.
Plain Talk About Derivatives |
Derivatives can take many forms. Some forms of derivatives—such as
exchange-traded futures and options on securities, commodities, or
indexes—have been trading on regulated exchanges for decades. These
types of derivatives are standardized contracts that can easily be bought and
sold and whose market values are determined and published daily. On the
other hand, non-exchange-traded derivatives—such as certain swap
agreements—tend to be more specialized or complex and may be more
difficult to accurately value. |
The 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, the 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.
Methods used to meet redemption requests. Under normal circumstances, the Fund typically expects to meet redemptions with positive cash flows. When this is not an option, the Fund seeks to maintain its risk exposure by selling a cross section of the Fund’s holdings to meet redemptions, while also factoring in transaction costs. Additionally, the Fund may work with larger clients to implement their redemptions in a manner that is least disruptive to the portfolio; see “Potentially disruptive redemptions” under Redeeming Shares in the Investing With Vanguard section.
Under certain circumstances, including under stressed market conditions, there are additional tools that the Fund may use in order to meet redemptions, including advancing the settlement of market trades with counterparties to match investor redemption payments or delaying settlement of an investor’s transaction to match trade settlement within regulatory requirements. The Fund may also suspend payment of redemption proceeds for up to seven days; see “Emergency circumstances” under Redeeming Shares in the Investing With Vanguard section. Additionally under these unusual circumstances, the 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 fund or a share class of the 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. Actions taken by Vanguard could include, but are not limited to, changes to a fund’s advisor(s), changes to a fund’s portfolio manager(s), changes to the composition of a fund’s portfolio, and/or other product changes or launches that, for example, result in shareholders redeeming shares of one fund to purchase shares of another fund or investment vehicle. For a fund of funds, actions taken by Vanguard could include a withdrawal from an underlying fund or a change in the allocation to underlying funds. Events unrelated to actions taken by Vanguard could include shareholders selling out of a fund in response to market movements or regulatory changes.
A large redemption could adversely affect a fund’s liquidity and net asset value (NAV). For example, a large redemption could require a fund’s manager to sell portfolio holdings at unplanned or inopportune times. The manager’s sale of these holdings, which is a taxable event, could require the fund to distribute any corresponding capital gains or other taxable income to the fund’s remaining shareholders; see Dividends, Capital Gains, and Taxes for additional information. The increased trading activity could also increase underlying costs for the fund due to commissions paid by the fund. When large redemptions occur, the Vanguard funds reserve the right to pay all or part of the redemptions in-kind and/or delay payment of the redemption proceeds for up to seven calendar days; see “Potentially disruptive redemptions” under Redeeming Shares in the Investing With Vanguard section.
Temporary Investment Measures
The 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.
In addition, the Fund may take temporary defensive positions that are inconsistent with its normal investment policies and strategies—for instance, by allocating substantial assets to cash equivalent investments or other less volatile instruments— in response to adverse or unusual market, economic, political, or other conditions. In doing so, the Fund may succeed in avoiding losses but may otherwise fail to achieve its investment objective.
Frequent Trading and Market-Timing
Background. Some investors try to profit from strategies involving frequent trading of mutual fund shares, such as market-timing. For funds holding foreign securities, investors may try to take advantage of an anticipated difference between the price of the fund’s shares and price movements in overseas markets, a practice also known as time-zone arbitrage. Investors also may try to engage in frequent trading of funds holding investments such as small-cap stocks and high-yield bonds. As money is shifted into and out of a fund by a shareholder engaging in frequent trading, the fund incurs costs for buying and selling securities, resulting in increased brokerage and administrative costs. These costs are borne by all fund shareholders, including the long-term investors who do not generate the costs. In addition, frequent trading may interfere with an advisor’s ability to efficiently manage the fund.
Policies to address frequent trading. The Vanguard funds (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) do not knowingly accommodate frequent trading. The board of trustees of each Vanguard fund (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) has adopted policies and procedures reasonably designed to detect and discourage frequent trading and, in some cases, to compensate the fund for the costs associated with it. These policies and procedures do not apply to ETF Shares because frequent trading in ETF Shares generally does not disrupt portfolio management or otherwise harm fund shareholders. Although there is no assurance that Vanguard will be able to detect or prevent frequent trading or market-timing in all circumstances, the following policies have been adopted to address these issues:
• Each Vanguard fund reserves the right to reject any purchase request—including exchanges from other Vanguard funds—without notice and regardless of size. For example, a purchase request could be rejected because the investor has a history of frequent trading or if Vanguard determines that such purchase may negatively affect a fund’s operation or performance.
• Each Vanguard fund (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) generally prohibits, except as otherwise noted in the Investing With
Vanguard section, an investor’s purchases or exchanges into a fund account for 30 calendar days after the investor has redeemed or exchanged out of that fund account.
• Certain Vanguard funds charge shareholders purchase and/or redemption fees on transactions.
See the Investing With Vanguard section of this prospectus for further details on Vanguard’s transaction policies.
Each Vanguard fund (other than retail and government money market funds), in determining its net asset value, will use fair-value pricing when appropriate, as described in the Share Price section. Fair-value pricing may reduce or eliminate the profitability of certain frequent-trading strategies.
Do not invest with Vanguard if you are a market-timer.
Although the Fund generally seeks to invest for the long term, it may sell securities regardless of how long they have been held. 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 Fund has no operating history, and therefore has no portfolio turnover information.
The 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. |
The Vanguard Group, Inc., P.O. Box 2600, Valley Forge, PA 19482, which began operations in 1975, serves as advisor to the Fund through its Fixed Income Group. As of December 31, 2024, Vanguard served as advisor for approximately $8.6 trillion in assets. Vanguard provides investment advisory services to the Fund pursuant to the Funds’ Service Agreement and subject to the supervision and oversight of the trustees and officers of the Fund.
Although the Fund is managed solely by Vanguard, the Fund reserves the right to utilize a multimanager approach in the future. Under the terms of an SEC exemption, the Fund’s 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 the Fund’s advisory arrangements will be communicated to shareholders in writing. As the Fund’s sponsor and overall manager, Vanguard may provide investment advisory services to the 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 Fund has 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 Fund may rely on the new SEC relief.
For a discussion of why the board of trustees approved the Fund’s investment advisory arrangement, see the Fund’s first Financial Statements and Other Information following the Fund’s commencement of operations.
The managers primarily responsible for the day-to-day management of the Fund are:
Michael Chang, CFA, Senior Portfolio Manager and Principal of Vanguard. He has been with Vanguard since 2017, has worked in investment management since 2002, has managed investment portfolios since 2011, and has co-managed the Fund since its inception in 2025. Education: B. Com., University of British Columbia.
Arvind Narayanan, CFA, Senior Portfolio Manager and Principal of Vanguard. He has been with Vanguard since 2019, has worked in investment management since 2002, has managed investment portfolios since 2006, and has co-managed the Fund since its inception in 2025. Education: B.A., Goucher College; M.B.A., New York University.
Brian W. Quigley, CFA, Portfolio Manager at Vanguard. He has been with Vanguard since 2003, has worked in investment management since 2005, has managed investment portfolios since 2015, and has co-managed the Fund since its inception in 2025. Education: B.S., Lehigh University.
Daniel Shaykevich, Senior Portfolio Manager and Principal of Vanguard. He has worked in investment management since 2001, has managed investment portfolios since 2004, has been with Vanguard since 2013, and has co-managed the Fund since its inception in 2025. Education: B.S., Carnegie Mellon University.
The Fund’s Statement of Additional Information provides information about each portfolio manager’s compensation, other accounts under management, and ownership of shares of the Fund.
Dividends, Capital Gains, and Taxes
The Fund distributes to shareholders virtually all of its net income (interest 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, the Fund may also make distributions that are treated as a return of capital. Income dividends generally are declared monthly and distributed as soon as practicable thereafter; capital gains distributions, if any, generally occur annually in December and distributed as soon as practicable thereafter. In addition, the Fund may occasionally make one or more supplemental distribution at other times during the year.
Plain Talk About Distributions |
As a shareholder, you are entitled to your portion of a fund’s income from
interest as well as capital gains from the fund’s sale of investments. Income
consists of interest the fund earns from its 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. |
Investors in taxable accounts should be aware of the following basic federal income tax points:
• Distributions are taxable to you whether or not you reinvest these amounts in additional Fund shares.
• Distributions declared and recorded in December—if paid to you by the end of January—are taxable as if received in December.
• Any income dividend distribution or short-term capital gains distribution that you receive is taxable to you as ordinary income.
• Any distribution of net long-term capital gains is taxable to you as long-term capital gains, no matter how long you have owned shares in the Fund.
• Capital gains distributions can occur when the 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 the 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 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 or exchanging your Fund 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 Fund shares is a taxable event. This means that you may have a capital gain to report as income, or a capital loss to report as a deduction, when you complete your tax return.
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 Fund shares.
Income dividends and capital gains distributions that you receive, as well as your gains or losses from any sale of Fund shares, may be subject to state and local income taxes. Depending on your state’s rules, however, any dividends attributable to interest earned on direct obligations of the U.S. government may be exempt from state and local taxes. Vanguard will notify you each year how much, if any, of your dividends may qualify for this exemption.
This prospectus provides general tax information only. If you are investing through a tax-advantaged account, such as an IRA or an employee-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, also known as net asset value (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, of the Fund by the number of shares outstanding. On U.S. holidays or other days when the NYSE is closed, the NAV is not calculated, and the Fund does not sell or redeem shares. However, on those days the value of the 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).
Debt securities held by a Vanguard fund are valued based on information furnished by an independent pricing service or market quotations, and are 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.
The fund also may use fair-value pricing on bond market holidays when the fund is open for business (such as Columbus Day and Veterans Day). 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 the fund to calculate the NAV may differ from quoted or published prices for the same securities.
The 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 fund share prices are published daily on our website at vanguard.com/prices
Vanguard reserves the right, without notice, to increase or decrease the minimum amount required to open, convert shares to, or maintain a fund account or to add to an existing fund account.
Investment minimums may differ for certain categories of investors.
Account Minimums for Institutional Shares
Shares of the Fund may be purchased only by clients of Vanguard, including investment companies registered under the 1940 Act, subject to a $5 million account minimum.
Frequent-Trading Limitations
Because excessive transactions can disrupt management of a fund and increase the fund’s costs for all shareholders, the board of trustees of each Vanguard fund places certain limits on frequent trading in the funds. Each Vanguard fund (other than money market funds and short-term bond funds) limits an investor’s
purchases or exchanges into a fund account for 30 calendar days after the investor has redeemed or exchanged out of that fund account. ETF Shares are not subject to these frequent-trading limits.
For Vanguard Retirement Investment Program pooled plans, the limitations apply to exchanges made online or by telephone.
These frequent-trading limitations do not apply to the following:
• Certain transactions below dollar value or other thresholds specified by Vanguard.
• In-kind transfers to a shareholder’s donor advised fund managed by Vanguard Charitable.
• Purchases of shares with reinvested dividend or capital gains distributions.
• Transactions through Vanguard’s Automatic Investment Plan, Automatic Exchange Service, Direct Deposit Service, Automatic Withdrawal Plan, Required Minimum Distribution Service, Vanguard Small Business Online®, and certain transactions through intermediaries relating to systematic trades and required minimum distributions.
• Discretionary transactions through Vanguard Personal Advisor Services®, Vanguard Institutional Advisory Services®, Vanguard Digital Advisor™, and discretionary (advisor-directed) transactions through certain intermediaries.
• Redemptions of shares to pay fund or account fees.
• Redemptions of shares to remove excess shareholder contributions to certain types of retirement accounts (including, but not limited to, IRAs, certain individual 403(b)(7) Custodial Accounts, and Vanguard Individual 401(k) Plans).
• Transfers and reregistrations of shares within the same fund.
• Purchases of shares by asset transfer or direct rollover.
• Conversions of shares from one share class to another in the same fund.
• Checkwriting redemptions.
• Section 529 college savings plans.
• Certain approved institutional portfolios and asset allocation programs, as well as trades made by funds or trusts managed by Vanguard or its affiliates that invest in other Vanguard funds. (Please note that shareholders of Vanguard’s funds of funds are subject to the limitations.)
For participants in employer-sponsored defined contribution plans,* the frequent-trading limitations do not apply to:
• Purchases of shares with participant payroll or employer contributions or loan repayments.
• Purchases of shares with reinvested dividend or capital gains distributions.
• Distributions, loans, and in-service withdrawals from a plan.
• Redemptions of shares as part of a plan termination or at the direction of the plan.
• Transactions executed through the Vanguard Managed Account Program.
• Redemptions of shares to pay fund or account fees.
• Share or asset transfers or rollovers.
• Reregistrations of shares.
• Conversions of shares from one share class to another in the same fund.
• Exchange requests submitted by written request to Vanguard. (Exchange requests submitted by fax, if otherwise permitted, are subject to the limitations.)
*The following Vanguard fund accounts are also subject to the frequent-trading limitations: SEP-IRAs, SIMPLE IRAs, certain individual 403(b)(7) Custodial Accounts, and Vanguard Individual 401(k) Plans.
Shareholder Reports and Financial Statements
Additional information about the Fund’s investments and performance is
available in the Fund’s Annual and Semi-Annual Reports. The Fund’s Financial
Statements and Other Information is filed with the SEC on Form N-CSR and
available on our website.
Portfolio Holdings
Please consult the Fund’s Statement of Additional Information or our website for a description of the policies and procedures that govern disclosure of the Fund’s portfolio holdings.
Contacting Vanguard
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For the most complete source of Vanguard news
For fund, account, and service information
For most account transactions
For literature requests
24 hours a day, 7 days a week |
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Investor Information 800-662-7447
(Text telephone for people with
hearing impairment at 800-749-7273) |
For fund and service information
For literature requests |
Client Services 800-662-2739
(Text telephone for people with
hearing impairment at 800-749-7273) |
For account information
For most account transactions |
Participant Services 800-523-1188
(Text telephone for people with
hearing impairment at 800-749-7273) |
For information and services for participants in
employer-sponsored plans |
Institutional Division
888-809-8102 |
For information and services for large institutional
investors |
Financial Advisor and Intermediary
Sales Support 800-997-2798 |
For information and services for financial intermediaries
including financial advisors, broker-dealers, trust
institutions, and insurance companies |
Financial Advisory and Intermediary
Trading Support 800-669-0498 |
For account information and trading support for
financial intermediaries including financial advisors,
broker-dealers, trust institutions, and insurance
companies |
The Trust’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.
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Vanguard STAR Core-Plus
Bond Fund |
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CGS identifiers have been provided by CUSIP Global Services, managed on behalf of the American Bankers Association by FactSet Research Systems Inc., and are not for use or dissemination in a manner that would serve as a substitute for any CUSIP service. The CUSIP Database, © 2025 American Bankers Association. “CUSIP” is a registered trademark of the American Bankers Association.
CFA® is a registered trademark owned by CFA Institute.
Glossary of Investment Terms
Average Maturity. The average length of time until bonds held by a fund reach maturity and are repaid. In general, the longer the average maturity, the more a fund’s share price fluctuates in response to changes in market interest rates. In calculating average maturity, a fund uses a bond’s maturity or, if applicable, an earlier date on which the advisor believes it is likely that a maturity-shortening device (such as a call, put, refunding, prepayment, or redemption provision or an adjustable coupon rate) will cause the bond to be repaid.
Bond. A debt security issued by a corporation, a government, or a government agency in exchange for the money the bondholder lends it. In most instances, the issuer agrees to pay back the loan by a specific date and generally to make regular interest payments until that date.
Capital Gains Distributions. Payments to mutual fund shareholders of gains realized on securities that a fund has sold at a profit, minus any realized losses.
Corporate Bond. An IOU issued by a business that wants to borrow money. As with other types of bonds, the issuer promises to repay the borrowed money by a specific date and generally to make interest payments in the meantime.
Coupon Rate. The interest rate paid by the issuer of a debt security until its maturity. It is expressed as an annual percentage of the face value of the security.
Dividend Distributions. Payments to mutual fund shareholders of income from interest or dividends generated by a fund’s investments.
Expense Ratio. A fund’s total annual operating expenses expressed as a percentage of the fund’s average net assets. The expense ratio includes management and administrative expenses, but it does not include the transaction costs of buying and selling portfolio securities.
Face Value. The amount to be paid at a bond’s maturity; also known as the par value or principal.
Fixed Income Security. An investment, such as a bond, representing a debt that must be repaid by a specified date, and on which the borrower may pay a fixed, variable, or floating rate of interest.
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.
Investment-Grade Bond. A debt security whose credit quality is considered by independent bond rating agencies, or through independent analysis conducted by a fund’s advisor, to be sufficient to ensure timely payment of principal and interest under current economic circumstances. Debt securities rated in one of the four highest rating categories are considered investment-grade. Other debt securities may be considered by an advisor to be investment-grade.
Joint Committed Credit Facility. The 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 Fund’s board of trustees and renegotiation with the lender syndicate on an annual basis.
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.
Non-Investment-Grade Bond. A debt security whose credit quality is considered by independent bond rating agencies, or through independent analysis conducted by a fund’s advisor, to be below investment-grade. These high-risk corporate bonds have a credit quality rating equivalent to or below Moody’s Ratings Ba or S&P Global Ratings BB and are commonly referred to as “junk bonds.”
Principal. The face value of a debt instrument or the amount of money put into an investment.
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 mutual fund’s net asset value, assuming the reinvestment of all distributions of dividends and capital gains.
Volatility. The fluctuations in value of a mutual fund or other security. The greater a fund’s volatility, the wider the fluctuations in its returns.
Yield. Income (interest or dividends) earned by an investment, expressed as a percentage of the investment’s price.
Connect with Vanguard®˃ vanguard.com
For More Information
If you would like more information about Vanguard STAR Core-Plus Bond Fund, the following documents are available free upon request:
Annual/Semiannual Reports to Shareholders and Form N-CSR
Additional information about the Fund’s investments is available in the Fund’s annual and semiannual reports to shareholders and in Form N-CSR. In the annual report, you will find a discussion of the market conditions and investment strategies that significantly affected the Fund’s performance during its last fiscal year. In Form N-CSR, you will find the Fund’s annual and semiannual financial statements.
Statement of Additional Information (SAI)
The SAI provides more detailed information about the Fund 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 report, financial statements(once available), or the SAI, or to request additional information about the Fund or other Vanguard funds, please visit https://vgi.vg/fund-literature or contact us as follows:
If you are an individual investor:
Telephone: 800-662-7447
; Text telephone for people with hearing impairment: 800-749-7273
If you are a client of Vanguard’s Institutional Division:
The Vanguard Group
Institutional Investor Information Department
P.O. Box 2900
Valley Forge, PA 19482-2900
Telephone: 888-809-8102;
Text telephone for people with hearing impairment:
800-749-7273
If you are a current Vanguard shareholder and would like information about your account, account transactions, and/or account statements, please call:
Client Services Department
Telephone: 800-662-2739; Text telephone for people with hearing impairment: 800-749-7273
Information Provided by the SEC
Reports and other information about the Fund 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: publicinfo@sec.gov.
Fund’s Investment Company Act file number: 811-05628
© 2025 The Vanguard Group, Inc. All rights reserved.
Vanguard Marketing Corporation, Distributor.
P V043 022025
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information (SAI) is not a prospectus but should be read in conjunction with a Fund’s current prospectus (dated February 19, 2025). To obtain, without charge, a prospectus, when available the report to shareholders, or the Fund’s financial statements, please contact The Vanguard Group, Inc. (Vanguard).
Phone: Investor Information Department at 800-662-7447
Online: vanguard.com
Vanguard STAR Funds (the Trust) currently offers the following funds and share classes (identified by ticker symbol):
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Vanguard LifeStrategy® Conservative Growth
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Vanguard LifeStrategy Growth Fund3
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Vanguard LifeStrategy Income Fund3
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Vanguard LifeStrategy Moderate Growth
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Vanguard Total International Stock Index Fund |
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Vanguard STAR Core-Plus Bond Fund |
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1
Individually, a class; collectively, the classes.
2
Individually, a Fund; collectively, the Funds.
3
Individually, a LifeStrategy Fund; collectively, the LifeStrategy Funds.
This Statement of Additional Information relates only to Vanguard STAR Core-Plus Bond Fund (the Fund). A separate Statement of Additional Information dated February 27, 2024, which relates to the Trust’s other funds, can be obtained free of charge by contacting Vanguard.
The Trust has the ability to offer additional funds or classes of shares. There is no limit on the number of full and fractional shares that may be issued for a single fund or class of shares.
Throughout this document, any references to “class” apply only to the extent a Fund issues multiple classes.
The Trust was organized as a Pennsylvania business trust in 1983 and was reorganized as a Delaware statutory trust in 1998. The Trust is registered with the United States Securities and Exchange Commission (SEC) under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company. All Funds within the Trust are classified as diversified within the meaning of the 1940 Act.
Custodians. JPMorgan Chase Bank, N.A. 383 Madison Avenue, New York, NY 10179 serves as the Funds’ custodian. The custodian is responsible for maintaining the Fund’s assets, keeping all necessary accounts and records of Fund assets, and appointing any foreign subcustodians or foreign securities depositories.
Independent Registered Public Accounting Firm. PricewaterhouseCoopers LLP, Two Commerce Square, Suite 1800, 2001 Market Street, Philadelphia, PA 19103-7042, serves as the Fund’s independent registered public accounting firm. The independent registered public accounting firm audits the Fund’s annual financial statements and provides other related services.
Transfer and Dividend-Paying Agent. The Funds’ transfer agent and dividend-paying agent is Vanguard, P.O. Box 2600, Valley Forge, PA 19482.
Characteristics of the Fund’s Shares
Restrictions on Holding or Disposing of Shares. There are no restrictions on the right of shareholders to retain or dispose of the Fund’s shares, other than those described in the Fund’s current prospectus and elsewhere in this Statement of Additional Information. The Fund or class may be terminated by reorganization into another mutual fund or class or by liquidation and distribution of the assets of the Fund or class. Unless terminated by reorganization or liquidation, the Fund and share class will continue indefinitely.
Shareholder Liability. The Trust is organized under Delaware law, which provides that shareholders of a statutory trust are entitled to the same limitations of personal liability as shareholders of a corporation organized under Delaware law. This means that a shareholder of the Fund generally will not be personally liable for payment of the Fund’s debts. Some state courts, however, may not apply Delaware law on this point. We believe that the possibility of such a situation arising is remote.
Dividend Rights. The shareholders of each class of the Fund are entitled to receive any dividends or other distributions declared by the Fund for each such class. No shares of the Fund have priority or preference over any other shares of the Fund with respect to distributions. Distributions will be made from the assets of the Fund and will be paid ratably to all shareholders of a particular class according to the number of shares of the class held by shareholders on the record date. The amount of dividends per share may vary between separate share classes of the Fund based upon differences in the net asset values of the different classes and differences in the way that expenses are allocated between share classes pursuant to a multiple class plan approved by the Fund’s board of trustees.
Voting Rights. Shareholders are entitled to vote on a matter if (1) the matter concerns an amendment to the Declaration of Trust that would adversely affect to a material degree the rights and preferences of the shares of a Fund or any class; (2) the trustees determine that it is necessary or desirable to obtain a shareholder vote; (3) a merger or consolidation, share conversion, share exchange, or sale of assets is proposed and a shareholder vote is required by the 1940 Act to approve the transaction; or (4) a shareholder vote is required under the 1940 Act. The 1940 Act requires a shareholder vote under various circumstances, including to elect or remove trustees upon the written request of shareholders representing 10% or more of a Fund’s net assets, to change any fundamental policy of a Fund (please see Fundamental Policies), and to enter into certain merger transactions. Unless otherwise required by applicable law, shareholders of the Fund receive one vote for each dollar of net asset value owned on the record date and a fractional
vote for each fractional dollar of net asset value owned on the record date. However, only the shares of the Fund or the class affected by a particular matter are entitled to vote on that matter. In addition, each class has exclusive voting rights on any matter submitted to shareholders that relates solely to that class, and each class has separate voting rights on any matter submitted to shareholders in which the interests of one class differ from the interests of another. Voting rights are noncumulative and cannot be modified without a majority vote by the shareholders.
Liquidation Rights. In the event that the Fund is liquidated, shareholders will be entitled to receive a pro rata share of the Fund’s net assets. In the event that a class of shares is liquidated, shareholders of that class will be entitled to receive a pro rata share of the Fund’s net assets that are allocated to that class. Shareholders may receive cash, securities, or a combination of the two.
Preemptive Rights. There are no preemptive rights associated with the Fund’s shares.
Conversion Rights. There are no conversion rights associated with the Vanguard STAR Core-Plus Bond Fund.
Redemption Provisions. The Fund’s redemption provisions are described in its current prospectus and elsewhere in this Statement of Additional Information.
Sinking Fund Provisions. The Fund has no sinking fund provisions.
Calls or Assessment. The Fund’s shares, when issued, are fully paid and non-assessable.
Shareholder Rights. Any limitations on a shareholder’s right to bring an action 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 limitations. The Trust’s bylaws place limitations on the forum in which certain claims against or related to the Trust, a trustee, an officer, or other employee of the Trust may be heard. The Trust’s bylaws also provide that shareholders waive the right to trial by jury to the fullest extent permitted by law.
The Fund expects to qualify each year for treatment as a “regulated investment company” under Subchapter M of the Internal Revenue Code of 1986, as amended (the IRC). This special tax status means that the Fund will not be liable for federal tax on income and capital gains distributed to shareholders. In order to preserve its tax status, the Fund must comply with certain requirements relating to the source of its income and the diversification of its assets. If the Fund fails to meet these requirements in any taxable year, the Fund will, in some cases, be able to cure such failure, including by paying a fund-level tax, paying interest, making additional distributions, and/or disposing of certain assets. If the Fund is ineligible to or otherwise does not cure such failure for any year, it will be subject to tax on its taxable income at corporate rates, and all distributions from earnings and profits, including any distributions of net tax-exempt income and net long-term capital gains, will be taxable to shareholders as ordinary income. In addition, the Fund could be required to recognize unrealized gains, pay substantial taxes and interest, and make substantial distributions before regaining its tax status as a regulated investment company.
Dividends received and distributed by the Fund on shares of stock of domestic corporations (excluding Real Estate Investment Trusts (REITs)) and certain foreign corporations generally may be eligible to be reported by the Fund, and treated by individual shareholders, as “qualified dividend income” taxed at long-term capital gain rates instead of at higher ordinary income tax rates. Individuals must satisfy holding period and other requirements in order to be eligible for such treatment. Also, distributions attributable to income earned on a Fund’s securities lending transactions, including substitute dividend payments received by a Fund with respect to a security out on loan, will not be eligible for treatment as qualified dividend income.
Taxable ordinary dividends received and distributed by the Fund on its REIT holdings may be eligible to be reported by the Fund, and treated by individual shareholders, as “qualified REIT dividends” that are eligible for a 20% deduction on their federal income tax returns. Individuals must satisfy holding period and other requirements in order to be eligible for this deduction. Without further legislation, the deduction would sunset after 2025. Shareholders should consult their own tax professionals concerning their eligibility for this deduction.
Dividends received and distributed by the Fund on shares of stock of domestic corporations (excluding REITs) may be eligible for the dividends-received deduction applicable to corporate shareholders. Corporations must satisfy certain requirements in order to claim the deduction. Capital gains distributed by each Fund are not eligible for the dividends-received deduction.
The Fund may declare a capital gain dividend consisting of the excess (if any) of net realized long-term capital gains over net realized short-term capital losses. Net capital gains for a fiscal year are computed by taking into account any capital loss carryforwards of the Fund. Capital losses may be carried forward indefinitely and retain their character as either short-term or long-term.
The Fund is subject to the following fundamental investment policies, which cannot be changed in any material way without the approval of the holders of a majority of the Fund’s shares. For these purposes, a “majority” of shares means shares representing the lesser of (1) 67% or more of the Fund’s net assets voted, so long as shares representing more than 50% of the Fund’s net assets are present or represented by proxy or (2) more than 50% of the Fund’s net assets.
Borrowing. The Fund may borrow money only as permitted by the 1940 Act or other governing statute, by the Rules thereunder, or by the SEC or other regulatory agency with authority over the Fund.
Commodities. The Fund may invest in commodities only as permitted by the 1940 Act or other governing statute, by the Rules thereunder, or by the SEC or other regulatory agency with authority over the Fund.
Industry Concentration. The Fund will not concentrate its investments in the securities of issuers whose principal business activities are in the same industry or same group of industries.
Loans. The Fund may make loans to another person only as permitted by the 1940 Act or other governing statute, by the Rules thereunder, or by the SEC or other regulatory agency with authority over the Fund.
Real Estate. The Fund may not invest directly in real estate unless it is acquired as a result of ownership of securities or other instruments. This restriction shall not prevent the Fund from investing in securities or other instruments (1) issued by companies that invest, deal, or otherwise engage in transactions in real estate or (2) backed or secured by real estate or interests in real estate.
Senior Securities. The Fund may not issue senior securities except as permitted by the 1940 Act or other governing statute, by the Rules thereunder, or by the SEC or other regulatory agency with authority over the Fund.
Underwriting. The Fund may not act as an underwriter of another issuer’s securities, except to the extent that the Fund may be deemed to be an underwriter within the meaning of the Securities Act of 1933 (the 1933 Act), in connection with the purchase and sale of portfolio securities.
Compliance with the fundamental policies previously described is generally measured at the time the securities are purchased. Unless otherwise required by the 1940 Act (as is the case with borrowing), if a percentage restriction is adhered to at the time the investment is made, a later change in percentage resulting from a change in the market value of assets will not constitute a violation of such restriction. All fundamental policies must comply with applicable regulatory requirements. For more details, see Investment Strategies, Risks, and Nonfundamental Policies.
None of these policies prevents the Fund from having an ownership interest in Vanguard. As a part owner of Vanguard, the Fund may own securities issued by Vanguard, make loans to Vanguard, and contribute to Vanguard’s costs or other financial requirements. See Management of the Fund for more information.
Investment Strategies, Risks, and Nonfundamental Policies
Some of the investment strategies and policies described on the following pages and in the Fund’s prospectus set forth percentage limitations on the Fund’s investment in, or holdings of, certain securities or other assets. Unless otherwise required by law, compliance with these strategies and policies will be determined immediately after the acquisition of such securities or assets by the Fund. Subsequent changes in values, net assets, or other circumstances will not be considered when determining whether the investment complies with the Fund’s investment strategies and policies.
The following investment strategies, risks, and policies supplement the Fund’s investment strategies, risks, and policies set forth in the prospectus. With respect to the different investments discussed as follows, a Fund may acquire such investments to the extent consistent with its investment strategies and policies.
Asset-Backed Securities. Asset-backed securities represent a participation in, or are secured by and payable from, pools of underlying assets such as debt securities, bank loans, motor vehicle installment sales contracts, installment loan contracts, leases of various types of real and personal property, receivables from revolving credit (i.e., credit card)
agreements, and other categories of receivables. These underlying assets are securitized through the use of trusts and special purpose entities. Payment of interest and repayment of principal on asset-backed securities may be largely dependent upon the cash flows generated by the underlying assets backing the securities and, in certain cases, may be supported by letters of credit, surety bonds, or other credit enhancements. The rate of principal payments on asset-backed securities is related to the rate of principal payments, including prepayments, on the underlying assets. The credit quality of asset-backed securities depends primarily on the quality of the underlying assets, the level of credit support, if any, provided for the securities, and the credit quality of the credit-support provider, if any. The value of asset-backed securities may be affected by the various factors described above and other factors, such as changes in interest rates, the availability of information concerning the pool and its structure, the creditworthiness of the servicing agent for the pool, the originator of the underlying assets, or the entities providing the credit enhancement.
Asset-backed securities are often subject to more rapid repayment than their stated maturity date would indicate, as a result of the pass-through of prepayments of principal on the underlying assets. Prepayments of principal by borrowers or foreclosure or other enforcement action by creditors shortens the term of the underlying assets. The occurrence of prepayments is a function of several factors, such as the level of interest rates, the general economic conditions, the location and age of the underlying obligations, and other social and demographic conditions. A fund’s ability to maintain positions in asset-backed securities is affected by the reductions in the principal amount of the underlying assets because of prepayments. A fund’s ability to reinvest such prepayments of principal (as well as interest and other distributions and sale proceeds) at a comparable yield is subject to generally prevailing interest rates at that time. The value of asset-backed securities varies with changes in market interest rates generally and the differentials in yields among various kinds of U.S. government securities, mortgage-backed securities, and asset-backed securities. In periods of rising interest rates, the rate of prepayment tends to decrease, thereby lengthening the average life of the underlying securities. Conversely, in periods of falling interest rates, the rate of prepayment tends to increase, thereby shortening the average life of such assets. Because prepayments of principal generally occur when interest rates are declining, an investor, such as a fund, generally has to reinvest the proceeds of such prepayments at lower interest rates than those at which the assets were previously invested. Therefore, asset-backed securities have less potential for capital appreciation in periods of falling interest rates than other income-bearing securities of comparable maturity.
Because asset-backed securities generally do not have the benefit of a security interest in the underlying assets that is comparable to a mortgage, asset-backed securities present certain additional risks that are not present with mortgage-backed securities. For example, revolving credit receivables are generally unsecured and the debtors on such receivables are entitled to the protection of a number of state and federal consumer credit laws, many of which give debtors the right to set off certain amounts owed, thereby reducing the balance due. Automobile receivables generally are secured, but by automobiles rather than by real property. Most issuers of automobile receivables permit loan servicers to retain possession of the underlying assets. If the servicer of a pool of underlying assets sells them to another party, there is the risk that the purchaser could acquire an interest superior to that of holders of the asset-backed securities. In addition, because of the large number of vehicles involved in a typical issue of asset-backed securities and technical requirements under state law, the trustee for the holders of the automobile receivables may not have a proper security interest in the automobiles. Therefore, there is the possibility that recoveries on repossessed collateral may not be available to support payments on these securities. Asset-backed securities have been, and may continue to be, subject to greater liquidity risks when worldwide economic and liquidity conditions deteriorate. In addition, government actions and proposals that affect the terms of underlying home and consumer loans, thereby changing demand for products financed by those loans, as well as the inability of borrowers to refinance existing loans, have had and may continue to have a negative effect on the valuation and liquidity of asset-backed securities.
Bank Loans, Loan Interests, and Direct Debt Instruments. Loan interests and direct debt instruments are interests in amounts owed by a corporate, governmental, or other borrower to lenders or lending syndicates (in the case of loans and loan participations); to suppliers of goods or services (in the case of trade claims or other receivables); or to other parties. These investments involve a risk of loss in case of default, insolvency, or the bankruptcy of the borrower; may not be deemed to be securities under certain federal securities laws; and may offer less legal protection to the purchaser in the event of fraud or misrepresentation, or there may be a requirement that a purchaser supply additional cash to a borrower on demand.
Purchasers of loans and other forms of direct indebtedness depend primarily upon the creditworthiness of the borrower for payment of interest and repayment of principal. Direct debt instruments may not be rated by a rating agency. If scheduled interest or principal payments are not made, or are not made in a timely manner, the value of the instrument may be adversely affected. Loans that are fully secured provide more protections than unsecured loans in the event of failure to make scheduled interest or principal payments. However, there is no assurance that the liquidation of collateral from a secured loan would satisfy the borrower’s obligation or that the collateral could be liquidated. Indebtedness of
borrowers whose creditworthiness is poor involves substantially greater risks and may be highly speculative. Borrowers that are in bankruptcy or restructuring may never pay off their indebtedness, or they may pay only a small fraction of the amount owed. Direct indebtedness of countries, particularly developing countries, also involves a risk that the governmental entities responsible for the repayment of the debt may be unable, or unwilling, to pay interest and repay principal when due.
Corporate loans and other forms of direct corporate indebtedness in which a fund may invest generally are made to finance internal growth, mergers, acquisitions, stock repurchases, refinancing of existing debt, leveraged buyouts, and other corporate activities. A significant portion of the corporate indebtedness purchased by a fund may represent interests in loans or debt made to finance highly leveraged corporate acquisitions (known as “leveraged buyout” transactions), leveraged recapitalization loans, and other types of acquisition financing. Another portion may also represent loans incurred in restructuring or “work-out” scenarios, including super-priority debtor-in-possession facilities in bankruptcy and acquisition of assets out of bankruptcy. Loans in restructuring or work-out scenarios may be especially vulnerable to the inherent uncertainties in restructuring processes. In addition, the highly leveraged capital structure of the borrowers in any such transactions, whether in acquisition financing or restructuring, may make such loans especially vulnerable to adverse or unusual economic or market conditions.
Loans and other forms of direct indebtedness generally are subject to restrictions on transfer, and only limited opportunities may exist to sell them in secondary markets. As a result, a fund may be unable to sell loans and other forms of direct indebtedness at a time when it may otherwise be desirable to do so or may be able to sell them only at a price that is less than their fair value.
Investments in loans through direct assignment of a financial institution’s interests with respect to a loan may involve additional risks. For example, if a loan is foreclosed, the purchaser could become part owner of any collateral and would bear the costs and liabilities associated with owning and disposing of the collateral. In addition, it is at least conceivable that, under emerging legal theories of lender liability, a purchaser could be held liable as a co-lender. Direct debt instruments may also involve a risk of insolvency of the lending bank or other intermediary.
A loan is often administered by a bank or other financial institution that acts as agent for all holders. The agent administers the terms of the loan, as specified in the loan agreement. Unless the purchaser has direct recourse against the borrower, the purchaser may have to rely on the agent to apply appropriate credit remedies against a borrower under the terms of the loan or other indebtedness. If assets held by the agent for the benefit of a purchaser were determined to be subject to the claims of the agent’s general creditors, the purchaser might incur certain costs and delays in realizing payment on the loan or loan participation and could suffer a loss of principal and/or interest.
Direct indebtedness may include letters of credit, revolving credit facilities, or other standby financing commitments that obligate purchasers to make additional cash payments on demand. These commitments may have the effect of requiring a purchaser to increase its investment in a borrower when it would not otherwise have done so, even if the borrower’s condition makes it unlikely that the amount will ever be repaid.
A fund’s investment policies will govern the amount of total assets that it may invest in any one issuer or in issuers within the same industry. For purposes of these limitations, a fund generally will treat the borrower as the “issuer” of indebtedness held by the fund. In the case of loan participations in which a bank or other lending institution serves as financial intermediary between a fund and the borrower, if the participation does not shift to the fund the direct debtor-creditor relationship with the borrower, SEC interpretations require the fund, in some circumstances, to treat both the lending bank or other lending institution and the borrower as “issuers” for purposes of the fund’s investment policies. Treating a financial intermediary as an issuer of indebtedness may restrict a fund’s ability to invest in indebtedness related to a single financial intermediary, or a group of intermediaries engaged in the same industry, even if the underlying borrowers represent many different companies and industries.
Borrowing. A fund’s ability to borrow money is limited by its investment policies and limitations; by the 1940 Act; and by applicable exemptions, no-action letters, interpretations, and other pronouncements issued from time to time by the SEC and its staff or any other regulatory authority with jurisdiction. Under the 1940 Act, a fund is required to maintain continuous asset coverage (i.e., total assets including borrowings, less liabilities exclusive of borrowings) of 300% of the amount borrowed, with an exception for borrowings not in excess of 5% of the fund’s total assets (at the time of borrowing) made for temporary or emergency purposes. Any borrowings for temporary purposes in excess of 5% of the fund’s total assets must maintain continuous asset coverage. If the 300% asset coverage should decline as a result of market fluctuations or for other reasons, a fund may be required to sell some of its portfolio holdings within three days (excluding Sundays and holidays) to reduce the debt and restore the 300% asset coverage, even though it may be disadvantageous from an investment standpoint to sell securities at that time.
Borrowing will tend to exaggerate the effect on net asset value of any increase or decrease in the market value of a fund’s portfolio. Money borrowed will be subject to interest costs that may or may not be recovered by earnings on the securities purchased with the proceeds of such borrowing. A fund also may be required to maintain minimum average balances in connection with a borrowing or to pay a commitment or other fee to maintain a line of credit; either of these requirements would increase the cost of borrowing over the stated interest rate.
A borrowing transaction will not be considered to constitute the issuance, by a fund, of a “senior security,” as that term is defined in Section 18(g) of the 1940 Act, and therefore such transaction will not be subject to the 300% asset coverage requirement otherwise applicable to borrowings by a fund, if the fund complies with Rule 18f-4 under the 1940 Act.
Common Stock. Common stock represents an equity or ownership interest in an issuer. Common stock typically entitles the owner to vote on the election of directors and other important matters, as well as to receive dividends on such stock. In the event an issuer is liquidated or declares bankruptcy, the claims of owners of bonds, other debt holders, and owners of preferred stock take precedence over the claims of those who own common stock.
Convertible Securities. Convertible securities are hybrid securities that combine the investment characteristics of bonds and common stocks. Convertible securities typically consist of debt securities or preferred stock that may be converted (on a voluntary or mandatory basis) within a specified period of time (normally for the entire life of the security) into a certain amount of common stock or other equity security of the same or a different issuer at a predetermined price. Convertible securities also include debt securities with warrants or common stock attached and derivatives combining the features of debt securities and equity securities. Other convertible securities with features and risks not specifically referred to herein may become available in the future. Convertible securities involve risks similar to those of both fixed income and equity securities. In a corporation’s capital structure, convertible securities are senior to common stock but are usually subordinated to senior debt obligations of the issuer.
The market value of a convertible security is a function of its “investment value” and its “conversion value.” A security’s “investment value” represents the value of the security without its conversion feature (i.e., a nonconvertible debt security). The investment value may be determined by reference to its credit quality and the current value of its yield to maturity or probable call date. At any given time, investment value is dependent upon such factors as the general level of interest rates, the yield of similar nonconvertible securities, the financial strength of the issuer, and the seniority of the security in the issuer’s capital structure. A security’s “conversion value” is determined by multiplying the number of shares the holder is entitled to receive upon conversion or exchange by the current price of the underlying security. If the conversion value of a convertible security is significantly below its investment value, the convertible security will trade like nonconvertible debt or preferred stock and its market value will not be influenced greatly by fluctuations in the market price of the underlying security. In that circumstance, the convertible security takes on the characteristics of a bond, and its price moves in the opposite direction from interest rates. Conversely, if the conversion value of a convertible security is near or above its investment value, the market value of the convertible security will be more heavily influenced by fluctuations in the market price of the underlying security. In that case, the convertible security’s price may be as volatile as that of common stock. Because both interest rates and market movements can influence its value, a convertible security generally is not as sensitive to interest rates as a similar debt security, nor is it as sensitive to changes in share price as its underlying equity security. Convertible securities are often rated below investment-grade or are not rated, and they are generally subject to a high degree of credit risk.
Although all markets are prone to change over time, the generally high rate at which convertible securities are retired (through mandatory or scheduled conversions by issuers or through voluntary redemptions by holders) and replaced with newly issued convertible securities may cause the convertible securities market to change more rapidly than other markets. For example, a concentration of available convertible securities in a few economic sectors could elevate the sensitivity of the convertible securities market to the volatility of the equity markets and to the specific risks of those sectors. Moreover, convertible securities with innovative structures, such as mandatory-conversion securities and equity-linked securities, have increased the sensitivity of the convertible securities market to the volatility of the equity markets and to the special risks of those innovations, which may include risks different from, and possibly greater than, those associated with traditional convertible securities. A convertible security may be subject to redemption at the option of the issuer at a price set in the governing instrument of the convertible security. If a convertible security held by a fund is subject to such redemption option and is called for redemption, the fund must allow the issuer to redeem the security, convert it into the underlying common stock, or sell the security to a third party.
Cybersecurity Risks. A cybersecurity incident could subject the Vanguard funds, their advisors, and/or their third-party service providers to operational and financial risks. Cybersecurity incidents typically result from a deliberate attack, which could take multiple forms (e.g., phishing, malware, ransomware, or denial-of-service attacks), or wrongdoing by an authorized individual. In either case, sensitive assets, information, or data could fall into the hands of unauthorized
individuals and potentially cause operational disruption. To prevent or reduce the impact of a cybersecurity incident, Vanguard has implemented controls, such as technological safeguards and business continuity plans. Cybersecurity risks are also present for third-party service providers (such as investment advisors, transfer agents, and custodians) that support the Vanguard funds. Vanguard has processes for assessing the cybersecurity programs implemented by a fund’s third-party service providers. These processes help reduce the risk of potential incidents that could impact a Vanguard fund and/or its shareholders.
Despite the measures described above, a cybersecurity incident could still disrupt business operations, which could affect a fund and/or its shareholders. Examples of impacts which might occur as a result of a cybersecurity incident include: a fund being unable to calculate its net asset value (NAV) or process transactions, fund shareholders being unable to place transactions or otherwise conduct business with Vanguard, or a fund being unable to safeguard its data or the personal information of its shareholders.
Debt Securities. A debt security, sometimes called a fixed income security, consists of a certificate or other evidence of a debt (secured or unsecured) upon which the issuer of the debt security promises to pay the holder a fixed, variable, or floating rate of interest for a specified length of time and to repay the debt on the specified maturity date. Some debt securities, such as zero-coupon bonds, do not make regular interest payments but are issued at a discount to their principal or maturity value. Debt securities include a variety of fixed income obligations, including, but not limited to, corporate bonds, government securities, municipal securities, convertible securities, mortgage-backed securities, and asset-backed securities. Debt securities include investment-grade securities, non-investment-grade securities, and unrated securities. Debt securities are subject to a variety of risks, such as interest rate risk, income risk, call risk, prepayment risk, extension risk, inflation risk, credit risk, liquidity risk, and (in the case of foreign securities) country risk and currency risk. The reorganization of an issuer under the federal bankruptcy laws or an out-of-court restructuring of an issuer’s capital structure may result in the issuer’s debt securities being cancelled without repayment, repaid only in part, or repaid in part or in whole through an exchange thereof for any combination of cash, debt securities, convertible securities, equity securities, or other instruments or rights in respect to the same issuer or a related entity.
Debt Securities—Inflation-Indexed Securities. Inflation-indexed securities are debt securities, the principal value of which is periodically adjusted to reflect the rate of inflation as indicated by the Consumer Price Index (CPI). Inflation-indexed securities may be issued by the U.S. government, by agencies and instrumentalities of the U.S. government, and by corporations. Two structures are common. The U.S. Treasury and some other issuers use a structure that accrues inflation into the principal value of the bond. Most other issuers pay out the CPI accruals as part of a semiannual coupon payment.
The periodic adjustment of U.S. inflation-indexed securities is tied to the CPI, which is calculated monthly by the U.S. Bureau of Labor Statistics. The CPI is a measurement of changes in the cost of living, made up of components such as housing, food, transportation, and energy. Inflation-indexed securities issued by a foreign government are generally adjusted to reflect a comparable inflation index, calculated by that government. There can be no assurance that the CPI or any foreign inflation index will accurately measure the real rate of inflation in the prices of goods and services. Moreover, there can be no assurance that the rate of inflation in a foreign country will correlate to the rate of inflation in the United States.
Inflation—a general rise in prices of goods and services—erodes the purchasing power of an investor’s portfolio. For example, if an investment provides a “nominal” total return of 5% in a given year and inflation is 2% during that period, the inflation-adjusted, or real, return is 3%. Inflation, as measured by the CPI, has generally occurred during the past 50 years, so investors should be conscious of both the nominal and real returns of their investments. Investors in inflation-indexed securities funds who do not reinvest the portion of the income distribution that is attributable to inflation adjustments will not maintain the purchasing power of the investment over the long term. This is because interest earned depends on the amount of principal invested, and that principal will not grow with inflation if the investor fails to reinvest the principal adjustment paid out as part of a fund’s income distributions. Although inflation-indexed securities are expected to be protected from long-term inflationary trends, short-term increases in inflation may lead to a decline in value. If interest rates rise because of reasons other than inflation (e.g., changes in currency exchange rates), investors in these securities may not be protected to the extent that the increase is not reflected in the bond’s inflation measure.
If the periodic adjustment rate measuring inflation (i.e., the CPI) falls, the principal value of inflation-indexed securities will be adjusted downward, and consequently the interest payable on these securities (calculated with respect to a smaller principal amount) will be reduced. Repayment of the original bond principal upon maturity (as adjusted for
inflation) is guaranteed in the case of U.S. Treasury inflation-indexed securities, even during a period of deflation. However, the current market value of the inflation-indexed securities is not guaranteed and will fluctuate. Other inflation-indexed securities include inflation-related bonds, which may or may not provide a similar guarantee. If a guarantee of principal is not provided, the adjusted principal value of the bond repaid at maturity may be less than the original principal.
The value of inflation-indexed securities should change in response to changes in real interest rates. Real interest rates, in turn, are tied to the relationship between nominal interest rates and the rate of inflation. Therefore, if inflation were to rise at a faster rate than nominal interest rates, real interest rates might decline, leading to an increase in value of inflation-indexed securities. In contrast, if nominal interest rates were to increase at a faster rate than inflation, real interest rates might rise, leading to a decrease in value of inflation-indexed securities.
Coupon payments that a fund receives from inflation-indexed securities are included in the fund’s gross income for the period during which they accrue. Any increase in principal for an inflation-indexed security resulting from inflation adjustments is considered by Internal Revenue Service (IRS) regulations to be taxable income in the year it occurs. For direct holders of an inflation-indexed security, this means that taxes must be paid on principal adjustments, even though these amounts are not received until the bond matures. By contrast, a fund holding these securities distributes both interest income and the income attributable to principal adjustments each quarter in the form of cash or reinvested shares (which, like principal adjustments, are taxable to shareholders). It may be necessary for the fund to liquidate portfolio positions, including when it is not advantageous to do so, in order to make required distributions.
Debt Securities—Non-Investment-Grade Securities. Non-investment-grade securities, also referred to as “high-yield securities” or “junk bonds,” are debt securities that are rated lower than the four highest rating categories by a nationally recognized statistical rating organization (e.g., lower than Baa3/P-2 by Moody’s Ratings or below BBB-/A-2 by S&P Global Ratings) or, if unrated, are determined to be of comparable quality by the fund’s advisor. These securities are generally considered to be, on balance, predominantly speculative with respect to capacity to pay interest and repay principal in accordance with the terms of the obligation, and they will generally involve more credit risk than securities in the investment-grade categories. Non-investment-grade securities generally provide greater income and opportunity for capital appreciation than higher quality securities, but they also typically entail greater price volatility and principal and income risk.
Analysis of the creditworthiness of issuers of high-yield securities may be more complex than for issuers of investment-grade securities. Thus, reliance on credit ratings in making investment decisions entails greater risks for high-yield securities than for investment-grade securities. The success of a fund’s advisor in managing high-yield securities is more dependent upon its own credit analysis than is the case with investment-grade securities.
Some high-yield securities are issued by smaller, less-seasoned companies, while others are issued as part of a corporate restructuring such as an acquisition, a merger, or a leveraged buyout. Companies that issue high-yield securities are often highly leveraged and may not have more traditional methods of financing available to them. Therefore, the risk associated with acquiring the securities of such issuers generally is greater than is the case with investment-grade securities. Some high-yield securities were once rated as investment-grade but have been downgraded to junk bond status because of financial difficulties experienced by their issuers.
The market values of high-yield securities tend to reflect individual issuer developments to a greater extent than do investment-grade securities, which in general react to fluctuations in the general level of interest rates. High-yield securities also tend to be more sensitive to economic conditions than are investment-grade securities. An actual or anticipated economic downturn or sustained period of rising interest rates, for example, could cause a decline in junk bond prices because the advent of a recession could lessen the ability of a highly leveraged company to make principal and interest payments on its debt securities. If an issuer of high-yield securities defaults, in addition to risking payment of all or a portion of interest and principal, a fund investing in such securities may incur additional expenses to seek recovery.
The secondary market on which high-yield securities are traded may be less liquid than the market for investment-grade securities. Less liquidity in the secondary trading market could adversely affect the ability of a fund’s advisor to sell a high-yield security or the price at which a fund’s advisor could sell a high-yield security, and it could also adversely affect the daily net asset value of fund shares. When secondary markets for high-yield securities are less liquid than the market for investment-grade securities, it may be more difficult to value the securities because such valuation may require more research, and elements of judgment may play a greater role in the valuation of the securities.
Except as otherwise provided in a fund’s prospectus, if a credit rating agency changes the rating of a portfolio security held by a fund, the fund may retain the portfolio security if the advisor deems it in the best interests of shareholders.
Debt Securities—Structured and Indexed Securities. Structured securities (also called “structured notes”) and indexed securities are derivative debt securities, the interest rate or principal of which is determined by an unrelated indicator. Indexed securities include structured notes as well as securities other than debt securities. The value of the principal of and/or interest on structured and indexed securities is determined by reference to changes in the value of a specific asset, reference rate, or index (the reference) or the relative change in two or more references. The interest rate or the principal amount payable upon maturity or redemption may be increased or decreased, depending upon changes in the applicable reference. The terms of the structured and indexed securities may provide that, in certain circumstances, no principal is due at maturity and, therefore, may result in a loss of invested capital. Structured and indexed securities may be positively or negatively indexed, so that appreciation of the reference may produce an increase or a decrease in the interest rate or value of the security at maturity. In addition, changes in the interest rate or the value of the structured or indexed security at maturity may be calculated as a specified multiple of the change in the value of the reference; therefore, the value of such security may be very volatile. Structured and indexed securities may entail a greater degree of market risk than other types of debt securities because the investor bears the risk of the reference. Structured or indexed securities may also be more volatile, less liquid, and more difficult to accurately price than less complex securities or more traditional debt securities, which could lead to an overvaluation or an undervaluation of the securities.
Debt Securities—U.S. Government Securities. The term “U.S. government securities” refers to a variety of debt securities that are issued or guaranteed by the U.S. Treasury, by various agencies of the U.S. government, or by various instrumentalities that have been established or sponsored by the U.S. government. The term also refers to repurchase agreements collateralized by such securities.
U.S. Treasury securities are backed by the full faith and credit of the U.S. government, meaning that the U.S. government is required to repay the principal in the event of default. Other types of securities issued or guaranteed by federal agencies and U.S. government-sponsored instrumentalities may or may not be backed by the full faith and credit of the U.S. government. The U.S. government, however, does not guarantee the market price of any U.S. government securities. In the case of securities not backed by the full faith and credit of the U.S. government, the investor must look principally to the agency or instrumentality issuing or guaranteeing the obligation for ultimate repayment and may not be able to assert a claim against the United States itself in the event the agency or instrumentality does not meet its commitment.
Some of the U.S. government agencies that issue or guarantee securities include the Government National Mortgage Association, the Export-Import Bank of the United States, the Federal Housing Administration, the Maritime Administration, the Small Business Administration, and the Tennessee Valley Authority. An instrumentality of the U.S. government is a government agency organized under federal charter with government supervision. Instrumentalities issuing or guaranteeing securities include, among others, the Federal Deposit Insurance Corporation, the Federal Home Loan Banks, and the Federal National Mortgage Association. From time to time, uncertainty regarding the status of negotiations in the U.S. government to increase the statutory debt ceiling could increase the risk that the U.S. government may default on payments on certain U.S. government securities, cause the credit rating of the U.S. government to be downgraded, increase volatility in the stock and bond markets, result in higher interest rates, reduce prices of U.S. Treasury securities, and/or increase the costs of various kinds of debt. If a U.S. government-sponsored entity is negatively impacted by legislative or regulatory action, is unable to meet its obligations, or its creditworthiness declines, the performance of a fund that holds securities of the entity may be adversely impacted.
Debt Securities—Variable and Floating Rate Securities. Variable and floating rate securities are debt securities that provide for periodic adjustments in the interest rate paid on the security. Variable rate securities provide for a specified periodic adjustment in the interest rate, while floating rate securities have interest rates that change whenever there is a change in a designated benchmark or reference rate (such as the Secured Overnight Financing Rate (SOFR) or another reference rate) or the issuer’s credit quality. There is a risk that the current interest rate on variable and floating rate securities may not accurately reflect current market interest rates or adequately compensate the holder for the current creditworthiness of the issuer. Some variable or floating rate securities are structured with liquidity features such as (1) put options or tender options that permit holders (sometimes subject to conditions) to demand payment of the unpaid principal balance plus accrued interest from the issuers or certain financial intermediaries or (2) auction-rate features, remarketing provisions, or other maturity-shortening devices designed to enable the issuer to refinance or redeem outstanding debt securities (market-dependent liquidity features). Variable or floating rate securities that include market-dependent liquidity features may have greater liquidity risk than other securities. The greater liquidity risk may
exist, for example, because of the failure of a market-dependent liquidity feature to operate as intended (as a result of the issuer’s declining creditworthiness, adverse market conditions, or other factors) or the inability or unwillingness of a participating broker-dealer to make a secondary market for such securities. As a result, variable or floating rate securities that include market-dependent liquidity features may lose value, and the holders of such securities may be required to retain them until the later of the repurchase date, the resale date, or the date of maturity. A demand instrument with a demand notice exceeding seven days may be considered illiquid if there is no secondary market for such security.
Debt Securities—Zero-Coupon and Pay-in-Kind Securities. Zero-coupon and pay-in-kind securities are debt securities that do not make regular cash interest payments. Zero-coupon securities generally do not pay interest. Zero-coupon Treasury bonds are U.S. Treasury notes and bonds that have been stripped of their unmatured interest coupons, or the coupons themselves, and also receipts or certificates representing an interest in such stripped debt obligations and coupons. The timely payment of coupon interest and principal on these instruments remains guaranteed by the full faith and credit of the U.S. government. Pay-in-kind securities pay interest through the issuance of additional securities. These securities are generally issued at a discount to their principal or maturity value. Because such securities do not pay current cash income, the price of these securities can be volatile when interest rates fluctuate. Although these securities do not pay current cash income, federal income tax law requires the holders of zero-coupon and pay-in-kind securities to include in income each year the portion of the original issue discount and other noncash income on such securities accrued during that year. Each fund that holds such securities intends to pass along such interest as a component of the fund’s distributions of net investment income. It may be necessary for the fund to liquidate portfolio positions, including when it is not advantageous to do so, in order to make required distributions.
Depositary Receipts. Depositary receipts (also sold as participatory notes) are securities that evidence ownership interests in a security or a pool of securities that have been deposited with a “depository.” Depositary receipts may be sponsored or unsponsored and include American Depositary Receipts (ADRs), European Depositary Receipts (EDRs), and Global Depositary Receipts (GDRs). For ADRs, the depository is typically a U.S. financial institution, and the underlying securities are issued by a foreign issuer. For other depositary receipts, the depository may be a foreign or a U.S. entity, and the underlying securities may have a foreign or a U.S. issuer. Depositary receipts will not necessarily be denominated in the same currency as their underlying securities. Generally, ADRs are issued in registered form, denominated in U.S. dollars, and designed for use in the U.S. securities markets. Other depositary receipts, such as GDRs and EDRs, may be issued in bearer form and denominated in other currencies, and they are generally designed for use in securities markets outside the United States. Although the two types of depositary receipt facilities (sponsored and unsponsored) are similar, there are differences regarding a holder’s rights and obligations and the practices of market participants.
A depository may establish an unsponsored facility without participation by (or acquiescence of) the underlying issuer; typically, however, the depository requests a letter of nonobjection from the underlying issuer prior to establishing the facility. Holders of unsponsored depositary receipts generally bear all the costs of the facility. The depository usually charges fees upon the deposit and withdrawal of the underlying securities, the conversion of dividends into U.S. dollars or other currency, the disposition of noncash distributions, and the performance of other services. The depository of an unsponsored facility frequently is under no obligation to distribute shareholder communications received from the underlying issuer or to pass through voting rights to depositary receipt holders with respect to the underlying securities.
Sponsored depositary receipt facilities are created in generally the same manner as unsponsored facilities, except that sponsored depositary receipts are established jointly by a depository and the underlying issuer through a deposit agreement. The deposit agreement sets out the rights and responsibilities of the underlying issuer, the depository, and the depositary receipt holders. With sponsored facilities, the underlying issuer typically bears some of the costs of the depositary receipts (such as dividend payment fees of the depository), although most sponsored depositary receipt holders may bear costs such as deposit and withdrawal fees. Depositories of most sponsored depositary receipts agree to distribute notices of shareholder meetings, voting instructions, and other shareholder communications and information to the depositary receipt holders at the underlying issuer’s request.
For purposes of a fund’s investment policies, investments in depositary receipts will be deemed to be investments in the underlying securities. Thus, a depositary receipt representing ownership of common stock will be treated as common stock. Depositary receipts do not eliminate all of the risks associated with directly investing in the securities of foreign issuers.
Derivatives. A derivative is a financial instrument that has a value based on—or “derived from”—the values of other assets, reference rates, or indexes. Derivatives may relate to a wide variety of underlying references, such as commodities, stocks, bonds, interest rates, currency exchange rates, and related indexes. Derivatives include futures
contracts and options on futures contracts, certain forward-commitment transactions, options on securities, caps, floors, collars, swap agreements, and certain other financial instruments. Some derivatives, such as futures contracts and certain options, are traded on U.S. commodity and securities exchanges, while other derivatives, such as swap agreements, may be privately negotiated and entered into in the over-the-counter market (OTC Derivatives) or may be cleared through a clearinghouse (Cleared Derivatives) and traded on an exchange or swap execution facility. As a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), certain swap agreements, such as certain standardized credit default and interest rate swap agreements, must be cleared through a clearinghouse and traded on an exchange or swap execution facility. This could result in an increase in the overall costs of such transactions. While the intent of derivatives regulatory reform is to mitigate risks associated with derivatives markets, the regulations could, among other things, increase liquidity and decrease pricing for more standardized products while decreasing liquidity and increasing pricing for less standardized products. The risks associated with the use of derivatives are different from, and possibly greater than, the risks associated with investing directly in the securities or assets on which the derivatives are based.
Derivatives may be used for a variety of purposes, including—but not limited to—hedging, managing risk, seeking to stay fully invested, seeking to reduce transaction costs, seeking to simulate an investment in equity or debt securities or other investments, and seeking to add value by using derivatives to more efficiently implement portfolio positions when derivatives are favorably priced relative to equity or debt securities or other investments. Some investors may use derivatives primarily for speculative purposes while other uses of derivatives may not constitute speculation. There is no assurance that any derivatives strategy used by a fund’s advisor will succeed. The other parties to a fund’s OTC Derivatives contracts (usually referred to as “counterparties”) will not be considered the issuers thereof for purposes of certain provisions of the 1940 Act and the IRC, although such OTC Derivatives may qualify as securities or investments under such laws. A fund’s advisor(s), however, will monitor and adjust, as appropriate, the fund’s credit risk exposure to OTC Derivative counterparties.
Derivative products are highly specialized instruments that require investment techniques and risk analyses different from those associated with stocks, bonds, and other traditional investments. The use of a derivative requires an understanding not only of the underlying instrument but also of the derivative itself, without the benefit of observing the performance of the derivative under all possible market conditions.
When a fund enters into a Cleared Derivative, an initial margin deposit with a Futures Commission Merchant (FCM) is required. Initial margin deposits are typically calculated as an amount equal to the volatility in market value of a Cleared Derivative over a fixed period. If the value of the fund’s Cleared Derivatives declines, the fund will be required to make additional “variation margin” payments to the FCM to settle the change in value. If the value of the fund’s Cleared Derivatives increases, the FCM will be required to make additional “variation margin” payments to the fund to settle the change in value. This process is known as “marking-to-market” and is calculated on a daily basis.
For OTC Derivatives, a fund is subject to the risk that a loss may be sustained as a result of the insolvency or bankruptcy of the counterparty or the failure of the counterparty to make required payments or otherwise comply with the terms of the contract. Additionally, the use of credit derivatives can result in losses if a fund’s advisor does not correctly evaluate the creditworthiness of the issuer on which the credit derivative is based.
Derivatives may be subject to liquidity risk, which exists when a particular derivative is difficult to purchase or sell. If a derivative transaction is particularly large or if the relevant market is illiquid (as is the case with certain OTC Derivatives), it may not be possible to initiate a transaction or liquidate a position at an advantageous time or price.
Derivatives may be subject to pricing or “basis” risk, which exists when a particular derivative becomes extraordinarily expensive relative to historical prices or the prices of corresponding cash market instruments. Under certain market conditions, it may not be economically feasible to initiate a transaction or liquidate a position in time to avoid a loss or take advantage of an opportunity.
Because certain derivatives have a leverage component, adverse changes in the value or level of the underlying asset, reference rate, or index can result in a loss substantially greater than the amount invested in the derivative itself. Certain derivatives have the potential for unlimited loss, regardless of the size of the initial investment. A derivative transaction will not be considered to constitute the issuance, by a fund, of a “senior security,” as that term is defined in Section 18(g) of the 1940 Act, and therefore such transaction will not be subject to the 300% asset coverage requirement otherwise applicable to borrowings by a fund, if the fund complies with Rule 18f-4.
Like most other investments, derivative instruments are subject to the risk that the market value of the instrument will change in a way detrimental to a fund’s interest. A fund bears the risk that its advisor will incorrectly forecast future
market trends or the values of assets, reference rates, indexes, or other financial or economic factors in establishing derivative positions for the fund. If the advisor attempts to use a derivative as a hedge against, or as a substitute for, a portfolio investment, the fund will be exposed to the risk that the derivative will have or will develop imperfect or no correlation with the portfolio investment. This could cause substantial losses for the fund. Although hedging strategies involving derivative instruments can reduce the risk of loss, they can also reduce the opportunity for gain or even result in losses by offsetting favorable price movements in other fund investments. Many derivatives (in particular, OTC Derivatives) are complex and often valued subjectively. Improper valuations can result in increased cash payment requirements to counterparties or a loss of value to a fund.
On October 28, 2020, the Securities and Exchange Commission adopted new regulations governing the use of derivatives by registered investment companies (“Rule 18f-4”). The Funds were required to implement and comply with Rule 18f-4 by August 19, 2022. Rule 18f-4 imposes limits on the amount of derivatives a fund can enter into, eliminates the asset segregation framework currently used by funds to comply with Section 18 of the 1940 Act, as amended, treats derivatives as senior securities, and requires funds whose use of derivatives is more than a limited specified exposure amount to establish and maintain a comprehensive derivatives risk management program and appoint a derivatives risk manager.
Each Fund intends to comply with Rule 4.5 under the Commodity Exchange Act (CEA), under which a fund may be excluded from the definition of the term Commodity Pool Operator (CPO) if the fund meets certain conditions such as limiting its investments in certain CEA-regulated instruments (e.g., futures, options, or swaps) and complying with certain marketing restrictions. Accordingly, Vanguard is not subject to registration or regulation as a CPO with respect to each Fund under the CEA. Each Fund will only enter into futures contracts and futures options that are traded on a U.S. or foreign exchange, board of trade, or similar entity or that are quoted on an automated quotation system.
Environmental, Social, and Governance (ESG) Considerations. A Vanguard fund’s consideration of ESG risk factors is driven first and foremost by the investment objective and principal investment strategies disclosed in the fund’s prospectus. For Vanguard funds whose index providers or advisors select securities based on disclosed ESG criteria (ESG funds), the ESG fund’s prospectus provides information about the ESG fund’s use of ESG criteria and related ESG investing risks.
Unless specifically disclosed in a fund’s prospectus, Vanguard funds do not seek to implement specific ESG impacts or strategies. However, except with respect to Vanguard equity index funds, a Vanguard fund’s advisor may consider risk factors that could be categorized as “ESG” as a component of the fund’s investment process if the advisor deems such risk factors to be financially material, either quantitatively or qualitatively. For example, as determined by the fund’s advisor, certain ESG risk factors may be considered as a means to assess long-term risk to shareholder value (e.g., risk analysis, credit analysis, or investment opportunities) as the advisor deems appropriate. Consideration of ESG risk factors will vary depending on a fund’s particular investment strategies as disclosed in its prospectus. The weight given to specific risk factors may vary across types of investments, industries, regions, and issuers and may change over time. Consideration of certain ESG risk factors may affect a fund’s exposure to certain issuers or industries. For purposes of this disclosure, “ESG risk factors” refers to financially material risk factors that could be viewed as ESG-focused. However, there are significant differences in how such terms are interpreted across funds, advisors, index providers, and individuals. It is possible that an advisor will not identify or evaluate every ESG risk factor that an investor would expect to be identified or evaluated, or that the advisor may not categorize a specific risk factor as “ESG.” The advisor’s assessment of an issuer may differ from that of other funds or an investor’s assessment of such issuer. As a result, securities selected by the advisor may not reflect the beliefs and values of any particular investor.
An advisor may be dependent on the availability of timely, complete, and accurate ESG data being reported by issuers and/or third-party research providers to evaluate ESG risk factors. ESG risk factors are often not uniformly measured or defined, which could impact an advisor’s ability to assess an issuer. Where ESG risk factor analysis is used as one part of an overall investment process (as may be the case for some or all of the funds included in this Statement of Additional Information), such funds may still invest in securities of issuers that all market participants may not view as ESG-focused.
Proxy Voting and Engagement. Vanguard’s Investment Stewardship Team, on behalf of the Board of Trustees of each Vanguard-advised U.S. fund, administers proxy voting for the equity holdings of the Vanguard-advised funds. The Investment Stewardship Team may engage with issuers to better understand how they are addressing material risks, including material ESG risks. Specifically, the Investment Stewardship Team may engage with company leaders and directors to understand how they oversee, mitigate, and disclose material risks to shareholders. With respect to material
human-rights-related risks, where such matters are not addressed by applicable sanctions laws and regulations that restrict specific investments, the Investment Stewardship Team employs procedures to identify and monitor material human-rights-related risks to long-term shareholder returns at portfolio companies held by the Vanguard-advised funds and to understand how portfolio company boards are overseeing any such risks.
For funds advised by third-party advisory firms independent of Vanguard, such third-party advisory firms are responsible for administration of proxy voting and engagement with respect to the equity holdings they manage on behalf of the fund. A fund’s third-party advisor may consider various ESG risks to be material to companies and may have their own practices and policies related to engagement. For example, the advisor may consider environmental risks such as climate change to be a material risk to many companies and their shareholders’ long-term financial success. As a result, certain third-party advisors engage with particular issuers held by the fund(s) they manage to advocate for science-based targets to address long-term risk to shareholder value resulting from climate change as long as such targets are not contrary to the investment objective and strategy of such fund(s).
Regulatory Environment. The regulatory landscape for ESG investing is still developing, both within the United States and globally. As society’s focus on particular ESG issues, such as climate change, continues to evolve, the emphasis and direction of governmental policies are subject to change.
Exchange-Traded Funds. A fund may purchase shares of exchange-traded funds (ETFs). Typically, a fund would purchase ETF shares for the same reason it would purchase (and as an alternative to purchasing) futures contracts: to obtain exposure to all or a portion of the stock or bond market. ETF shares enjoy several advantages over futures. Depending on the market, the holding period, and other factors, ETF shares can be less costly and more tax-efficient than futures. In addition, ETF shares can be purchased for smaller sums, offer exposure to market sectors and styles for which there is no suitable or liquid futures contract, and do not involve leverage.
An investment in an ETF generally presents the same principal risks as an investment in a conventional fund (i.e., one that is not exchange-traded) that has the same investment objective, strategies, and policies. The price of an ETF can fluctuate within a wide range, and a fund could lose money investing in an ETF if the prices of the securities owned by the ETF go down. In addition, ETFs are subject to the following risks that do not apply to conventional funds: (1) the market price of an ETF’s shares may trade at a discount or a premium to their net asset value; (2) an active trading market for an ETF’s shares may not develop or be maintained; and (3) trading of an ETF’s shares 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 an ETF’s shares may also be halted if the shares are delisted from the exchange without first being listed on another exchange or if the listing exchange’s officials determine that such action is appropriate in the interest of a fair and orderly market or for the protection of investors.
Most ETFs are investment companies. Therefore, a fund’s purchases of ETF shares generally are subject to the limitations on, and the risks of, a fund’s investments in other investment companies, which are described under the heading “Other Investment Companies.”
Foreign Securities. Typically, foreign securities are considered to be equity or debt securities issued by entities organized, domiciled, or with a principal executive office outside the United States, such as foreign corporations and governments. Securities issued by certain companies organized outside the United States may not be deemed to be foreign securities if the company’s principal operations are conducted from the United States or when the company’s equity securities trade principally on a U.S. stock exchange. Foreign securities may trade in U.S. or foreign securities markets. A fund may make foreign investments either directly by purchasing foreign securities or indirectly by purchasing depositary receipts or depositary shares of similar instruments (depositary receipts) for foreign securities. Direct investments in foreign securities may be made either on foreign securities exchanges or in the over-the-counter (OTC) markets. Investing in foreign securities involves certain special risk considerations that are not typically associated with investing in securities of U.S. companies or governments.
Because foreign issuers are not generally subject to uniform accounting, auditing, and financial reporting standards and practices comparable to those applicable to U.S. issuers, there may be less publicly available information about certain foreign issuers than about U.S. issuers. Evidence of securities ownership may be uncertain in many foreign countries. As a result, there are risks that could result in a loss to the fund, including, but not limited to, the risk that a fund’s trade details could be incorrectly or fraudulently entered at the time of a transaction. Securities of foreign issuers are generally more volatile and less liquid than securities of comparable U.S. issuers, and foreign investments may be effected through structures that may be complex or confusing. In certain countries, there is less government supervision and regulation of stock exchanges, brokers, and listed companies than in the United States. The risk that securities traded
on foreign exchanges may be suspended, either by the issuers themselves, by an exchange, or by government authorities, is also heightened. In addition, with respect to certain foreign countries, there is the possibility of expropriation or confiscatory taxation, political or social instability, war, terrorism, nationalization, limitations on the removal of funds or other assets, or diplomatic developments that could affect U.S. investments in those countries. Additionally, the imposition of economic or other sanctions on the United States by a foreign country, or on a foreign country or issuer by the United States, could impair a fund’s ability to buy, sell, hold, receive, deliver, or otherwise transact in certain investment securities or obtain exposure to foreign securities and assets. This may negatively impact the value and/or liquidity of a fund’s investments and could impair a fund’s ability to meet its investment objective or invest in accordance with its investment strategy. Sanctions could also result in the devaluation of a country’s currency, a downgrade in the credit ratings of a country or issuers in a country, or a decline in the value and/or liquidity of securities of issuers in that country.
Although an advisor will endeavor to achieve the most favorable execution costs for a fund’s portfolio transactions in foreign securities under the circumstances, commissions and other transaction costs are generally higher than those on U.S. securities. In addition, it is expected that the custodian arrangement expenses for a fund that invests primarily in foreign securities will be somewhat greater than the expenses for a fund that invests primarily in domestic securities. Additionally, bankruptcy laws vary by jurisdiction and cash deposits may be subject to a custodian’s creditors. Certain foreign governments levy withholding or other taxes against dividend and interest income from, capital gains on the sale of, or transactions in foreign securities. Although in some countries a portion of these taxes is recoverable by the fund, the nonrecovered portion of foreign withholding taxes will reduce the income received from such securities.
The value of the foreign securities held by a fund that are not U.S. dollar-denominated may be significantly affected by changes in currency exchange rates. The U.S. dollar value of a foreign security generally decreases when the value of the U.S. dollar rises against the foreign currency in which the security is denominated, and it tends to increase when the value of the U.S. dollar falls against such currency (as discussed under the heading “Foreign Securities—Foreign Currency Transactions,” a fund may attempt to hedge its currency risks). In addition, the value of fund assets may be affected by losses and other expenses incurred from converting between various currencies in order to purchase and sell foreign securities, as well as by currency restrictions, exchange control regulations, currency devaluations, and political and economic developments.
Foreign Securities—Special Risks of Investing in China. Investing in companies or issuers economically tied to China involves a high degree of risk and special considerations not typically associated with investing in more developed economies or markets. Such risks may include but are not limited to: Chinese Government Risk, Sanctions/Geopolitical Risk, Emerging Market Risk, Chinese Renminbi Risk, Regulatory and Legal Framework Risk, and risks with accessing and investing in their equity and bond markets.
Chinese Government Risk. In China, there are no freely elected government officials and political opposition is largely suppressed. As a result, the Chinese government has an outsized impact on the Chinese market which is uncharacteristic when compared with developed nations. For example, the Chinese government has exercised authority over publicly traded Chinese companies in the past and may continue to do so. This authority can include, but is not limited to, dictating what types of products Chinese companies should produce and to whom such products can be sold, nationalizing assets, and pursuing regulatory enforcement in an unpredictable manner. The Chinese government could use this authority for a variety of reasons including targeting Chinese companies deemed to have violated Chinese interests or trying to reduce market volatility.
The nationalist focus of the Chinese government also can lead to the government making broad policy changes that deviate from what they have historically supported. The Chinese government has implemented several economic reforms since 1978. It is possible that these reforms may not be supported in the future and the government could return to a more centrally planned economy. Additional support to surrounding economies such as Hong Kong could be revoked, and foreign investment in China could be limited if not banned outright.
Sanctions/Geopolitical Risk. Investing in companies economically tied to China is subject to certain political risks. Following the establishment of the People’s Republic of China (PRC) by the Communist Party in 1949, the Chinese government renounced various debt obligations incurred by China’s predecessor governments, which obligations remain in default, and seized assets without compensation. There can be no assurance that the Chinese government will not take similar action in the future, resulting in a full or partial loss of Chinese holdings.
China has many ongoing disputes with Hong Kong, Taiwan, the Xinjiang region and the Uyghur population, and other neighboring areas. These disputes continue to escalate due to ongoing Chinese military exercises (such as land reclamation efforts in the South China Sea), Chinese policymaking, human rights violations assertions by the UN and other developed nations, and statements from high-ranking Chinese government officials. In addition, the Chinese government has been accused of participating in state-sponsored cyberattacks against other foreign countries and foreign companies.
The resulting political tensions, including with the United States, have had and may continue to have impacts on the Chinese economy and its ability to sell certain goods. Other countries, including the U.S., have imposed and may continue to impose sanctions, tariffs, and embargoes or blocking of certain goods produced in China to affect the Chinese economy. Countries have also raised concerns about Chinese companies’ compliance with their own laws which could result in the delisting of securities. Compliance with sanctions could lead to a large market selloff, which could result in significant losses to investments. While tariffs and embargoes are not direct sanctions, they can still negatively affect the Chinese economy and individual Chinese companies. Lastly, because of the economic and financial market dependence between China and the surrounding regions, any decrease in demand for goods from China or an economic downturn in China, could negatively affect the economies and financial markets of the surrounding regions.
Emerging Market Risk. China’s economy is classified as an emerging market. However, China’s economy is considered to be more reliant on exports than other emerging markets and therefore could be negatively affected by a downturn in its export business. Chinese exports could be negatively affected by the aforementioned sanctions and geopolitical risk or other restrictions such as trade tariffs, embargoes, or capital controls. Chinese exports could also be affected by increasing competition across Asia’s other emerging economies, higher rates of inflation, and/or the erratic nature of economic growth in China.
Regulatory and Legal Framework Risk. China’s ability to develop and sustain its legal, tax, regulatory, financial reporting, accounting, and recordkeeping systems could influence the course of foreign investment. Chinese companies are not subject to the same degree of regulation as those in the United States with respect to matters such as tender offer regulation, stockholder proxy requirements, and the requirements mandating timely and accurate disclosure of information. China lacks accounting, auditing, and financial reporting standards, and U.S. public accounting oversight boards are unable to inspect audit work papers and practices of registered accounting firms in China. Further complicating matters, some of China’s laws prohibit certain key information about their companies from being disclosed. As a result, obtaining the full financial picture of a publicly traded Chinese company may be more difficult than obtaining the full financial picture of a publicly traded U.S. company, making it harder to determine the true health of a company.
China’s legal framework may make it more difficult, if not impossible, to obtain or enforce a judgment compared to other countries. The Chinese regulatory framework is also less extensive and still developing regarding business entities and commercial transactions, which can make it challenging to navigate China’s markets. Chinese securities may be taxed differently than U.S. securities depending on the type of investment and the issuer.
Accessing and Investing in the Chinese Equity Market. China’s investment and banking systems are still developing, which subjects the settlement, clearing, and registration of securities transactions to additional risks and costs. Chinese companies can list their shares in a variety of ways, such as A shares, B shares, or H shares. These shares are traded on various exchanges, such as the Shanghai or Shenzhen exchange.
A-shares are generally bought through the Qualified Foreign Investor (QFI) program or Stock Connect. Trading through a license granted under the QFI regime is subject to policies and rules that are unique and evolving. In addition, QFI licenses can be revoked or restricted, preventing a fund from any future trading through the QFI regime. There are QFI custodial arrangements that can limit a fund’s ability to recover deposited cash if the QFI custodian becomes insolvent. Chinese regulators may impose fines or pursue other negative actions towards a QFI custodian if that custodian does not perform its required reporting obligations. Trades do not cross between the Shanghai and Shenzhen stock exchanges and a separate broker is assigned for each exchange. As a result, trades must be placed with separate brokers for different transaction sides, increasing complexity, potential for error, and costs.
Trading on Stock Connect is also subject to limitations such as daily quota limitations on purchases, limitations on transferability of shares, pre-delivery or pre-validation of cash or securities to or by a broker which may impact a fund’s ability to trade portfolio securities in a timely manner and can negatively affect a fund’s returns. Only certain A-shares are eligible to be accessed through Stock Connect and these securities could lose their eligibility at any time. Stock
Connect utilizes an omnibus clearing structure, and a fund’s shares will be registered in the custodian’s name on the Hong Kong Central Clearing and Settlement System. This may reduce a manager’s ability to effectively manage a fund’s holdings, including the potential enforcement of equity owner rights. B shares can only be traded by non-residents of the PRC or residents with an appropriate foreign currency account that meets certain requirements.
China’s foreign ownership limitations may result in limitations on investment or the return of profits if a fund purchases and sells shares of an issuer in which it owns 5% or more of the shares issued within a six-month period. It is unclear whether China will aggregate a fund’s holdings with other affiliated funds in determining the 5% ownership level. The restrictions on ownership and ability of Chinese regulatory authorities and Chinese issuers to suspend trading, their willingness to exercise this option in response to market volatility and other events, can negatively affect liquidity and volatility of the Chinese markets.
It is also possible to gain exposure to certain Chinese companies through legal structures known as Variable Interest Entities (VIEs). The VIE structure is designed to provide foreign investors with exposure to Chinese companies that operate in certain sectors in which China restricts and/or prohibits foreign investments, such as internet, media, education, and telecommunications. VIEs seek to establish claims to a China-based company’s profits and control of its assets through contractual arrangements. While VIEs are a longstanding industry practice, they are not formally recognized under Chinese law or approved by Chinese regulators. It is also uncertain whether Chinese officials or regulators will prohibit Chinese companies from accessing foreign investment through VIEs or remove VIEs’ ability to pass through economic and governance rights to foreign individuals and entities. The contractual arrangements with the VIE also may not be as effective in providing operational control as direct equity ownership. The Chinese equity owner(s) of a VIE could decide to breach the contractual arrangements and may have conflicting interests and fiduciary duties as compared to foreign investors in the shell company. Further, any breach or dispute under these contracts will likely fall under Chinese jurisdiction and law. Prohibitions of these structures by the Chinese government, or the inability to enforce such contracts through Chinese courts and/or arbitration bodies, would likely cause the VIE-structured holding(s) to suffer significant, detrimental, and possibly permanent loss, and in turn, adversely affect a fund’s returns and net asset value. Additionally, an investor’s rights may be limited with respect to the underlying Chinese operating company.
Accessing and Investing in the Chinese Bond Market. The People’s Bank of China has established a program that permits eligible foreign investors to invest directly in bonds traded on the Chinese Interbank Bond Market (CIBM). While the CIBM is relatively large and trading volumes are generally high, the market has similar risks as bond markets in other emerging market countries. A fund may invest in the bonds available on the CIBM through Bond Connect, which was established with the Hong Kong Monetary Authority as a way to permit overseas investors to trade in each other’s respective markets. Bond Connect provides a connection between mainland China- and Hong Kong-based financial institutions, permitting securities trading between the mainland China and Hong Kong markets electronically, thus eliminating the stricter restrictions that were present under previous access models.
Investing in securities traded on the CIBM through Bond Connect is subject to regulatory risks. The relevant rules, regulations, structure, terms, and a fund’s ability to access Bond Connect may be subject to change with minimal notice and any changes have the potential to be applied retroactively. For example, if Bond Connect is not operating or trading is otherwise suspended, a fund’s ability to trade bonds in a timely manner may be affected and there may be negative impacts on the fund. Additionally, market volatility and possible lack of liquidity due to low trading volume on the CIBM may result in significant fluctuations in the prices of certain bonds traded on the CIBM. The bid-ask spreads of the prices of such securities may be large, and a fund may therefore incur significant costs and may suffer losses when selling such investments. Further, the bonds traded on the CIBM may be difficult or impossible to sell, which may impact a fund’s ability to acquire or dispose of such securities at their expected prices.
Bonds issued by Chinese companies or the Chinese government may be dollar denominated. These dollar-denominated bonds carry some of the same risks as RMB-denominated bonds traded through Bond Connect, but generally benefit from reduced currency risk since a fund does not need to engage in currency trading to settle the trade.
Foreign Securities—Emerging Market Risk. Investing in emerging market countries involves certain risks not typically associated with investing in the United States, and it imposes risks greater than, or in addition to, risks of investing in more developed foreign countries. These risks may significantly affect the value of emerging market investments and include: (i) nationalization or expropriation of assets or confiscatory taxation; (ii) currency devaluations and other currency exchange rate fluctuations; (iii) greater social, economic, and political uncertainty and instability (including amplified risk of war and terrorism); (iv) more substantial government involvement in and control over the economy; (v) less government supervision and regulation of the securities markets and participants in those markets and possible
arbitrary and unpredictable enforcement of securities regulations and other laws, which may increase the risk of market manipulation; (vi) controls on foreign investment and limitations on repatriation of invested capital and on a fund’s ability to exchange local currencies for U.S. dollars; (vii) unavailability of currency-hedging techniques in certain emerging market countries; (viii) generally smaller, less seasoned, or newly organized companies; (ix) differences in, or lack of, corporate governance, accounting, auditing, recordkeeping, and financial reporting standards, which may result in unavailability of material information about issuers and impede evaluation of such issuers; (x) difficulty in obtaining and/or enforcing a judgment in a court outside the United States; and (xi) greater price volatility, substantially less liquidity, and significantly smaller market capitalization of securities markets. Also, any change in the leadership or politics of emerging market countries, or the countries that exercise a significant influence over those countries, may halt the expansion of or reverse the liberalization of foreign investment policies now occurring and adversely affect existing investment opportunities. Furthermore, high rates of inflation and rapid fluctuations in inflation rates have had, and may continue to have, negative effects on the economies and securities markets of certain emerging market countries. Custodial expenses and other investment-related costs are often more expensive in emerging market countries, which can reduce a fund’s income from investments in securities or debt instruments of emerging market country issuers. Additionally, information regarding companies located in emerging markets may be less available and less reliable, which can impede the ability to evaluate such companies. There may also be limited regulatory oversight of certain foreign subcustodians that hold foreign securities subject to the supervision of a fund’s primary U.S.-based custodian. A fund may be limited in its ability to recover assets if a foreign subcustodian becomes bankrupt or otherwise unable or unwilling to return assets to the fund, which may expose the fund to risk, especially in circumstances where the fund’s primary custodian may not be contractually obligated to make the fund whole for the particular loss.
Emerging market investments also carry the risk that strained international relations may give rise to retaliatory actions, including actions through financial markets such as purchase and ownership restrictions, sanctions, tariffs, seizure of assets, cyberattacks, and unpredictable enforcement of securities regulations and other laws. Such actual and/or threatened retaliatory actions may impact emerging market economies and issuers in which a fund invests. For example, in China, ownership of companies in certain sectors by foreign individuals and entities is prohibited.
Foreign Securities—Foreign Currency Transactions. The value in U.S. dollars of a fund’s non-dollar-denominated foreign securities may be affected favorably or unfavorably by changes in foreign currency exchange rates and exchange control regulations, and the fund may incur costs in connection with conversions between various currencies. To seek to minimize the impact of such factors on net asset values, a fund may engage in foreign currency transactions in connection with its investments in foreign securities. A fund will enter into foreign currency transactions only to attempt to “hedge” the currency risk associated with investing in foreign securities. Although such transactions tend to minimize the risk of loss that would result from a decline in the value of the hedged currency, they also may limit any potential gain that might result should the value of such currency increase.
Currency exchange transactions may be conducted either on a spot (i.e., cash) basis at the rate prevailing in the currency exchange market or through forward contracts to purchase or sell foreign currencies. A forward currency contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days from the date of the contract agreed upon by the parties, at a price set at the time of the contract. These contracts are entered into with large commercial banks or other currency traders who are participants in the interbank market. Currency exchange transactions also may be effected through the use of swap agreements or other derivatives.
Currency exchange transactions may be considered borrowings. A currency exchange transaction will not be considered to constitute the issuance, by a fund, of a “senior security,” as that term is defined in Section 18(g) of the 1940 Act, and therefore such transaction will not be subject to the 300% asset coverage requirement otherwise applicable to borrowings by a fund, if the fund complies with Rule 18f-4.
By entering into a forward contract for the purchase or sale of foreign currency involved in underlying security transactions, a fund may be able to protect itself against part or all of the possible loss between trade and settlement dates for that purchase or sale resulting from an adverse change in the relationship between the U.S. dollar and such foreign currency. This practice is sometimes referred to as “transaction hedging.” In addition, when the advisor reasonably believes that a particular foreign currency may suffer a substantial decline against the U.S. dollar, a fund may enter into a forward contract to sell an amount of foreign currency approximating the value of some or all of its portfolio securities denominated in such foreign currency. This practice is sometimes referred to as “portfolio hedging.” Similarly, when the advisor reasonably believes that the U.S. dollar may suffer a substantial decline against a foreign currency, a fund may enter into a forward contract to buy that foreign currency for a fixed dollar amount.
A fund may also attempt to hedge its foreign currency exchange rate risk by engaging in currency futures, options, and “cross-hedge” transactions. In cross-hedge transactions, a fund holding securities denominated in one foreign currency will enter into a forward currency contract to buy or sell a different foreign currency (one that the advisor reasonably believes generally tracks the currency being hedged with regard to price movements). The advisor may select the tracking (or substitute) currency rather than the currency in which the security is denominated for various reasons, including in order to take advantage of pricing or other opportunities presented by the tracking currency or to take advantage of a more liquid or more efficient market for the tracking currency. Such cross-hedges are expected to help protect a fund against an increase or decrease in the value of the U.S. dollar against certain foreign currencies.
A fund may hold a portion of its assets in bank deposits denominated in foreign currencies so as to facilitate investment in foreign securities as well as protect against currency fluctuations and the need to convert such assets into U.S. dollars (thereby also reducing transaction costs). To the extent these assets are converted back into U.S. dollars, the value of the assets so maintained will be affected favorably or unfavorably by changes in foreign currency exchange rates and exchange control regulations.
Forecasting the movement of the currency market is extremely difficult. Whether any hedging strategy will be successful is highly uncertain. Moreover, it is impossible to forecast with precision the market value of portfolio securities at the expiration of a forward currency contract. Accordingly, a fund may be required to buy or sell additional currency on the spot market (and bear the expense of such transaction) if its advisor’s predictions regarding the movement of foreign currency or securities markets prove inaccurate. In addition, the use of cross-hedging transactions may involve special risks and may leave a fund in a less advantageous position than if such a hedge had not been established. Because forward currency contracts are privately negotiated transactions, there can be no assurance that a fund will have flexibility to roll over a forward currency contract upon its expiration if it desires to do so. Additionally, there can be no assurance that the other party to the contract will perform its services thereunder.
Foreign Securities—Foreign Investment Companies. Some of the countries in which a fund may invest may not permit, or may place economic restrictions on, direct investment by outside investors. Fund investments in such countries may be permitted only through foreign government-approved or authorized investment vehicles, which may include other investment companies. Such investments may be made through registered or unregistered closed-end investment companies that invest in foreign securities. Investing through such vehicles may involve layered fees or expenses and may also be subject to the limitations on, and the risks of, a fund’s investments in other investment companies, which are described under the heading “Other Investment Companies.”
Futures Contracts and Options on Futures Contracts. Futures contracts and options on futures contracts are derivatives. A futures contract is a standardized agreement between two parties to buy or sell at a specific time in the future a specific quantity of a commodity at a specific price. The commodity may consist of an asset, a reference rate, or an index. A security futures contract relates to the sale of a specific quantity of shares of a single equity security or a narrow-based securities index. The value of a futures contract tends to increase and decrease in tandem with the value of the underlying commodity. The buyer of a futures contract enters into an agreement to purchase the underlying commodity on the settlement date and is said to be “long” the contract. The seller of a futures contract enters into an agreement to sell the underlying commodity on the settlement date and is said to be “short” the contract. The price at which a futures contract is entered into is established either in the electronic marketplace or by open outcry on the floor of an exchange between exchange members acting as traders or brokers. Open futures contracts can be liquidated or closed out by physical delivery of the underlying commodity or payment of the cash settlement amount on the settlement date, depending on the terms of the particular contract. Some financial futures contracts (such as security futures) provide for physical settlement at maturity. Other financial futures contracts (such as those relating to interest rates, foreign currencies, and broad-based securities indexes) generally provide for cash settlement at maturity. In the case of cash-settled futures contracts, the cash settlement amount is equal to the difference between the final settlement or market price for the relevant commodity on the last trading day of the contract and the price for the relevant commodity agreed upon at the outset of the contract. Most futures contracts, however, are not held until maturity but instead are “offset” before the settlement date through the establishment of an opposite and equal futures position.
The purchaser or seller of a futures contract is not required to deliver or pay for the underlying commodity unless the contract is held until the settlement date. However, both the purchaser and seller are required to deposit “initial margin” with a futures commission merchant (FCM) when the futures contract is entered into. Initial margin deposits are typically calculated as an amount equal to the volatility in market value of a contract over a fixed period. If the value of the fund’s position declines, the fund will be required to make additional “variation margin” payments to the FCM to settle the change in value. If the value of the fund’s position increases, the FCM will be required to make additional “variation
margin” payments to the fund to settle the change in value. This process is known as “marking-to-market” and is calculated on a daily basis. A futures transaction will not be considered to constitute the issuance, by a fund, of a “senior security,” as that term is defined in Section 18(g) of the 1940 Act, and therefore such transaction will not be subject to the 300% asset coverage requirement otherwise applicable to borrowings by a fund, if the fund complies with Rule 18f-4.
An option on a futures contract (or futures option) conveys the right, but not the obligation, to purchase (in the case of a call option) or sell (in the case of a put option) a specific futures contract at a specific price (called the “exercise” or “strike” price) any time before the option expires. The seller of an option is called an option writer. The purchase price of an option is called the premium. The potential loss to an option buyer is limited to the amount of the premium plus transaction costs. This will be the case, for example, if the option is held and not exercised prior to its expiration date. Generally, an option writer sells options with the goal of obtaining the premium paid by the option buyer. If an option sold by an option writer expires without being exercised, the writer retains the full amount of the premium. The option writer, however, has unlimited economic risk because its potential loss, except to the extent offset by the premium received when the option was written, is equal to the amount the option is “in-the-money” at the expiration date. A call option is in-the-money if the value of the underlying futures contract exceeds the exercise price of the option. A put option is in-the-money if the exercise price of the option exceeds the value of the underlying futures contract. Generally, any profit realized by an option buyer represents a loss for the option writer.
A fund that takes the position of a writer of a futures option is required to deposit and maintain initial and variation margin with respect to the option, as previously described in the case of futures contracts. A futures option transaction will not be considered to constitute the issuance, by a fund, of a “senior security,” as that term is defined in Section 18(g) of the 1940 Act, and therefore such transaction will not be subject to the 300% asset coverage requirement otherwise applicable to borrowings by a fund, if the fund complies with Rule 18f-4.
Futures Contracts and Options on Futures Contracts—Risks. The risk of loss in trading futures contracts and in writing futures options can be substantial because of the low margin deposits required, the extremely high degree of leverage involved in futures and options pricing, and the potential high volatility of the futures markets. As a result, a relatively small price movement in a futures position may result in immediate and substantial loss (or gain) for the investor. For example, if at the time of purchase, 10% of the value of the futures contract is deposited as margin, a subsequent 10% decrease in the value of the futures contract would result in a total loss of the margin deposit, before any deduction for the transaction costs, if the account were then closed out. A 15% decrease would result in a loss equal to 150% of the original margin deposit if the contract were closed out. Thus, a purchase or sale of a futures contract, and the writing of a futures option, may result in losses in excess of the amount invested in the position. In the event of adverse price movements, a fund would continue to be required to make daily cash payments to maintain its required margin. In such situations, if the fund has insufficient cash, it may have to sell portfolio securities to meet daily margin requirements at a time when it may be disadvantageous to do so. In addition, on the settlement date, a fund may be required to make delivery of the instruments underlying the futures positions it holds.
A fund could suffer losses if it is unable to close out a futures contract or a futures option because of an illiquid secondary market. Futures contracts and futures options may be closed out only on an exchange that provides a secondary market for such products. However, there can be no assurance that a liquid secondary market will exist for any particular futures product at any specific time. Thus, it may not be possible to close a futures or option position. Moreover, most futures exchanges limit the amount of fluctuation permitted in futures contract prices during a single trading day. The daily limit establishes the maximum amount that the price of a futures contract may vary either up or down from the previous day’s settlement price at the end of a trading session. Once the daily limit has been reached in a particular type of contract, no trades may be made on that day at a price beyond that limit. The daily limit governs only price movement during a particular trading day, and therefore does not limit potential losses because the limit may prevent the liquidation of unfavorable positions. Futures contract prices have occasionally moved to the daily limit for several consecutive trading days with little or no trading, thereby preventing prompt liquidation of future positions and subjecting some futures traders to substantial losses. The inability to close futures and options positions also could have an adverse impact on the ability to hedge a portfolio investment or to establish a substitute for a portfolio investment. U.S. Treasury futures are generally not subject to such daily limits.
A fund bears the risk that its advisor will incorrectly predict future market trends. If the advisor attempts to use a futures contract or a futures option as a hedge against, or as a substitute for, a portfolio investment, the fund will be exposed to
the risk that the futures position will have or will develop imperfect or no correlation with the portfolio investment. This could cause substantial losses for the fund. Although hedging strategies involving futures products can reduce the risk of loss, they can also reduce the opportunity for gain or even result in losses by offsetting favorable price movements in other fund investments.
A fund could lose margin payments it has deposited with its FCM if, for example, the FCM breaches its agreement with the fund or becomes insolvent or goes into bankruptcy. In that event, the fund may be entitled to return of margin owed to it only in proportion to the amount received by the FCM’s other customers, potentially resulting in losses to the fund.
Hybrid Instruments. A hybrid instrument, or hybrid, is an interest in an issuer that combines the characteristics of an equity security, a debt security, a commodity, and/or a derivative. A hybrid may have characteristics that, on the whole, more strongly suggest the existence of a bond, stock, or other traditional investment, but a hybrid may also have prominent features that are normally associated with a different type of investment. Moreover, hybrid instruments may be treated as a particular type of investment for one regulatory purpose (such as taxation) and may be simultaneously treated as a different type of investment for a different regulatory purpose (such as securities or commodity regulation). Hybrids can be used as an efficient means of pursuing a variety of investment goals, including increased total return, duration management, and currency hedging. Because hybrids combine features of two or more traditional investments and may involve the use of innovative structures, hybrids present risks that may be similar to, different from, or greater than those associated with traditional investments with similar characteristics.
Examples of hybrid instruments include convertible securities, which combine the investment characteristics of bonds and common stocks; perpetual bonds, which are structured like fixed income securities, have no maturity date, and may be characterized as debt or equity for certain regulatory purposes; contingent convertible securities, which are fixed income securities that, under certain circumstances, either convert into common stock of the issuer or undergo a principal write-down by a predetermined percentage if the issuer’s capital ratio falls below a predetermined trigger level; and trust-preferred securities, which are preferred stocks of a special-purpose trust that holds subordinated debt of the corporate parent. Another example of a hybrid is a commodity-linked bond, such as a bond issued by an oil company that pays a small base level of interest with additional interest that accrues in correlation to the extent to which oil prices exceed a certain predetermined level. Such a hybrid would be a combination of a bond and a call option on oil.
In the case of hybrids that are structured like fixed income securities (such as structured notes), the principal amount or the interest rate is generally tied (positively or negatively) to the price of some commodity, currency, securities index, interest rate, or other economic factor (each, a benchmark). For some hybrids, the principal amount payable at maturity or the interest rate may be increased or decreased, depending on changes in the value of the benchmark. Other hybrids do not bear interest or pay dividends. The value of a hybrid or its interest rate may be a multiple of a benchmark and, as a result, may be leveraged and move (up or down) more steeply and rapidly than the benchmark, thus magnifying movements within the benchmark. These benchmarks may be sensitive to economic and political events, such as commodity shortages and currency devaluations, which cannot be readily foreseen by the purchaser of a hybrid. Under certain conditions, the redemption value of a hybrid could be zero. Thus, an investment in a hybrid may entail significant market risks that are not associated with a similar investment in a traditional, U.S. dollar-denominated bond with a fixed principal amount that pays a fixed rate or floating rate of interest. The purchase of hybrids also exposes a fund to the credit risk of the issuer of the hybrids. Depending on the level of a fund’s investment in hybrids, these risks may cause significant fluctuations in the fund’s net asset value. Hybrid instruments may also carry liquidity risk since the instruments are often “customized” to meet the needs of an issuer or, sometimes, the portfolio needs of a particular investor, and therefore the number of investors that are willing and able to buy such instruments in the secondary market may be smaller than that for more traditional securities.
Certain issuers of hybrid instruments known as structured products may be deemed to be investment companies as defined in the 1940 Act. As a result, a fund’s investments in these products may be subject to the limitations described under the heading “Other Investment Companies.”
Interfund Borrowing and Lending. The SEC has granted an exemption permitting registered open-end Vanguard funds to participate in Vanguard’s interfund lending program. This program allows the Vanguard funds to borrow money from and lend money to each other for temporary or emergency purposes. The program is subject to a number of conditions, including, among other things, the requirements that (1) no fund may borrow or lend money through the program unless it receives a more favorable interest rate than is typically available from a bank for a comparable transaction, (2) no fund may lend money if the loan would cause its aggregate outstanding loans through the program to exceed 15% of its net assets at the time of the loan, and (3) a fund’s interfund loans to any one fund shall not exceed
5% of the lending fund’s net assets. In addition, a Vanguard fund may participate in the program only if and to the extent that such participation is consistent with the fund’s investment objective and investment policies. The boards of trustees of the Vanguard funds are responsible for overseeing the interfund lending program. Any delay in repayment to a lending fund could result in a lost investment opportunity or additional borrowing costs.
Investing for Control. Each Vanguard fund invests in securities and other instruments for the sole purpose of achieving a specific investment objective. As such, a Vanguard fund does not seek to acquire, individually or collectively with any other Vanguard fund, enough of a company’s outstanding voting stock to have control over management decisions. A Vanguard fund does not invest for the purpose of controlling a company’s management.
Legal and Regulatory Risk. Vanguard funds and their advisors are subject to an extensive and complex set of laws and regulations. These laws and regulations have evolved rapidly in recent years and likely will continue to evolve. Changes and additions to laws and regulations can result in unintended or unexpected impacts, including impacts to the value of a fund’s investments, a fund’s investment strategy, and/or a fund’s ability to manage tax consequences. In addition, complying with new or changing laws or regulations generally can be expected to increase operational costs, which can have a negative impact on fund performance.
Mortgage-Backed Securities. Mortgage-backed securities represent direct or indirect participation in, or are collateralized by and payable from, mortgage loans secured by real property or instruments derived from such loans and may be based on different types of mortgages, including those on residential properties or commercial real estate. Mortgage-backed securities include various types of securities, such as government stripped mortgage-backed securities, adjustable rate mortgage-backed securities, and collateralized mortgage obligations.
Generally, mortgage-backed securities represent partial interests in pools of mortgage loans assembled for sale to investors by various governmental agencies, such as the Government National Mortgage Association (GNMA); by government-related organizations, such as the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC); and by private issuers, such as commercial banks, savings and loan institutions, and mortgage bankers. The average maturity of pass-through pools of mortgage-backed securities in which a fund may invest varies with the maturities of the underlying mortgage instruments. In addition, a pool’s average maturity may be shortened by unscheduled payments on the underlying mortgages. Factors affecting mortgage prepayments include the level of interest rates, the general economic and social conditions, the location of the mortgaged property, and the age of the mortgage. Because prepayment rates of individual mortgage pools vary widely, the average life of a particular pool cannot be predicted accurately.
Mortgage-backed securities may be classified as private, government, or government-related, depending on the issuer or guarantor. Private mortgage-backed securities represent interest in pass-through pools consisting principally of conventional residential or commercial mortgage loans created by nongovernment issuers, such as commercial banks, savings and loan associations, and private mortgage insurance companies. Private mortgage-backed securities may not be readily marketable. In addition, mortgage-backed securities have been subject to greater liquidity risk when worldwide economic and liquidity conditions deteriorate. U.S. government mortgage-backed securities are backed by the full faith and credit of the U.S. government. GNMA, the principal U.S. guarantor of these securities, is a wholly owned U.S. government corporation within the Department of Housing and Urban Development. Government-related mortgage-backed securities are not backed by the full faith and credit of the U.S. government. Issuers include FNMA and FHLMC, which are congressionally chartered corporations. In September 2008, the U.S. Treasury placed FNMA and FHLMC under conservatorship and appointed the Federal Housing Finance Agency (FHFA) to manage their daily operations. In addition, the U.S. Treasury entered into purchase agreements with FNMA and FHLMC to provide them with capital in exchange for senior preferred stock. Pass-through securities issued by FNMA are guaranteed as to timely payment of principal and interest by FNMA. Participation certificates representing interests in mortgages from FHLMC’s national portfolio are guaranteed as to the timely payment of interest and principal by FHLMC. Private, government, or government-related entities may create mortgage loan pools offering pass-through investments in addition to those described above. The mortgages underlying these securities may be alternative mortgage instruments (i.e., mortgage instruments whose principal or interest payments may vary or whose terms to maturity may be shorter than customary).
Mortgage-backed securities are often subject to more rapid repayment than their stated maturity date would indicate as a result of the pass-through of prepayments of principal on the underlying loans. Prepayments of principal by mortgagors or mortgage foreclosures shorten the term of the mortgage pool underlying the mortgage-backed security. A fund’s ability to maintain positions in mortgage-backed securities is affected by the reductions in the principal amount of such securities resulting from prepayments. A fund’s ability to reinvest prepayments of principal at comparable yield is subject to generally prevailing interest rates at that time. The values of mortgage-backed securities vary with changes in market interest rates generally and the differentials in yields among various kinds of government securities,
mortgage-backed securities, and asset-backed securities. In periods of rising interest rates, the rate of prepayment tends to decrease, thereby lengthening the average life of a pool of mortgages supporting a mortgage-backed security. Conversely, in periods of falling interest rates, the rate of prepayment tends to increase, thereby shortening the average life of such a pool. Because prepayments of principal generally occur when interest rates are declining, an investor, such as a fund, generally has to reinvest the proceeds of such prepayments at lower interest rates than those at which its assets were previously invested. Therefore, mortgage-backed securities have less potential for capital appreciation in periods of falling interest rates than other income-bearing securities of comparable maturity.
Mortgage-Backed Securities—Adjustable Rate Mortgage-Backed Securities. Adjustable rate mortgage-backed securities (ARMBSs) have interest rates that reset at periodic intervals. Acquiring ARMBSs permits a fund to participate in increases in prevailing current interest rates through periodic adjustments in the coupons of mortgages underlying the pool on which ARMBSs are based. Such ARMBSs generally have higher current yield and lower price fluctuations than is the case with more traditional fixed income debt securities of comparable rating and maturity. However, because the interest rates on ARMBSs are reset only periodically, changes in market interest rates or in the issuer’s creditworthiness may affect their value. In addition, when prepayments of principal are made on the underlying mortgages during periods of rising interest rates, a fund can reinvest the proceeds of such prepayments at rates higher than those at which they were previously invested. Mortgages underlying most ARMBSs, however, have limits on the allowable annual or lifetime increases that can be made in the interest rate that the mortgagor pays. Therefore, if current interest rates rise above such limits over the period of the limitation, a fund holding an ARMBS does not benefit from further increases in interest rates. Moreover, when interest rates are in excess of coupon rates (i.e., the rates being paid by mortgagors) of the mortgages, ARMBSs behave more like fixed income securities and less like adjustable rate securities and are thus subject to the risks associated with fixed income securities. In addition, during periods of rising interest rates, increases in the coupon rate of adjustable rate mortgages generally lag current market interest rates slightly, thereby creating the potential for capital depreciation on such securities.
Mortgage-Backed Securities—Collateralized Mortgage Obligations. Collateralized mortgage obligations (CMOs) are mortgage-backed securities that are collateralized by whole loan mortgages or mortgage pass-through securities. The bonds issued in a CMO transaction are divided into groups, and each group of bonds is referred to as a “tranche.” Under the traditional CMO structure, the cash flows generated by the mortgages or mortgage pass-through securities in the collateral pool are used to first pay interest and then pay principal to the CMO bondholders. The bonds issued under a traditional CMO structure are retired sequentially as opposed to the pro-rata return of principal found in traditional pass-through obligations. Subject to the various provisions of individual CMO issues, the cash flow generated by the underlying collateral (to the extent it exceeds the amount required to pay the stated interest) is used to retire the bonds. Under a CMO structure, the repayment of principal among the different tranches is prioritized in accordance with the terms of the particular CMO issuance. The “fastest-pay” tranches of bonds, as specified in the prospectus for the issuance, would initially receive all principal payments. When those tranches of bonds are retired, the next tranche (or tranches) in the sequence, as specified in the prospectus, receives all of the principal payments until that tranche is retired. The sequential retirement of bond groups continues until the last tranche is retired. Accordingly, the CMO structure allows the issuer to use cash flows of long-maturity, monthly pay collateral to formulate securities with short, intermediate, and long final maturities and expected average lives and risk characteristics.
In recent years, new types of CMO tranches have evolved. These include floating rate CMOs, planned amortization classes, accrual bonds, and CMO residuals. These newer structures affect the amount and timing of principal and interest received by each tranche from the underlying collateral. Under certain of these new structures, given classes of CMOs have priority over others with respect to the receipt of prepayments on the mortgages. Therefore, depending on the type of CMOs in which a fund invests, the investment may be subject to a greater or lesser risk of prepayment than other types of mortgage-backed securities.
CMOs may include real estate mortgage investment conduits (REMICs). REMICs, which were authorized under the Tax Reform Act of 1986, are private entities formed for the purpose of holding a fixed pool of mortgages secured by an interest in real property. A REMIC is a CMO that qualifies for special tax treatment under the IRC and invests in certain mortgages principally secured by interests in real property. Investors may purchase beneficial interests in REMICs, which are known as “regular” interests, or “residual” interests. Guaranteed REMIC pass-through certificates (REMIC Certificates) issued by FNMA or FHLMC represent beneficial ownership interests in a REMIC trust consisting principally of mortgage loans or FNMA, FHLMC, or GNMA-guaranteed mortgage pass-through certificates. For FHLMC REMIC Certificates, FHLMC guarantees the timely payment of interest and also guarantees the payment of principal, as payments are required to be made on the underlying mortgage participation certificates. FNMA REMIC Certificates are issued and guaranteed as to timely distribution of principal and interest by FNMA.
The primary risk of CMOs is the uncertainty of the timing of cash flows that results from the rate of prepayments on the underlying mortgages serving as collateral and from the structure of the particular CMO transaction (i.e., the priority of the individual tranches). An increase or decrease in prepayment rates (resulting from a decrease or increase in mortgage interest rates) will affect the yield, the average life, and the price of CMOs. The prices of certain CMOs, depending on their structure and the rate of prepayments, can be volatile. Some CMOs may also not be as liquid as other securities.
Mortgage-Backed Securities—Hybrid ARMs. A hybrid adjustable rate mortgage (hybrid ARM) is a type of mortgage in which the interest rate is fixed for a specified period and then resets periodically, or floats, for the remaining mortgage term. Hybrid ARMs are usually referred to by their fixed and floating periods. For example, a 5/1 ARM refers to a mortgage with a 5-year fixed interest rate period, followed by a 1-year interest rate adjustment period. During the initial interest period (i.e., the initial five years for a 5/1 hybrid ARM), hybrid ARMs behave more like fixed income securities and are thus subject to the risks associated with fixed income securities. All hybrid ARMs have reset dates. A reset date is the date when a hybrid ARM changes from a fixed interest rate to a floating interest rate. At the reset date, a hybrid ARM can adjust by a maximum specified amount based on a margin over an identified index. Like ARMBSs, hybrid ARMs have periodic and lifetime limitations on the increases that can be made to the interest rates that mortgagors pay. Therefore, if during a floating rate period interest rates rise above the interest rate limits of the hybrid ARM, a fund holding the hybrid ARM does not benefit from further increases in interest rates.
Mortgage-Backed Securities—Mortgage Dollar Rolls. A mortgage dollar roll is a transaction in which a fund sells a mortgage-backed security to a dealer and simultaneously agrees to purchase a substantially similar security (but not the same security) in the future at a predetermined price on a predetermined date. A mortgage-dollar-roll program may be structured to simulate an investment in mortgage-backed securities at a potentially lower cost, or with potentially reduced administrative burdens, than directly holding mortgage-backed securities. For accounting purposes, each transaction in a mortgage dollar roll is viewed as a separate purchase and sale of a mortgage-backed security. These transactions may increase a fund’s portfolio turnover rate. The fund receives cash for a mortgage-backed security in the initial transaction and enters into an agreement that requires the fund to purchase a similar mortgage-backed security in the future.
The counterparty with which a fund enters into a mortgage-dollar-roll transaction is obligated to provide the fund with substantially similar securities to purchase as those originally sold by the fund. These securities generally must (1) be issued by the same agency and be part of the same program; (2) have similar original stated maturities; (3) have identical net coupon rates; and (4) satisfy “good delivery” requirements, meaning that the aggregate principal amounts of the securities delivered and received back must be within a certain percentage of the initial amount delivered. Mortgage dollar rolls will be used only if consistent with a fund’s investment objective and strategies and will not be used to change a fund’s risk profile.
Mortgage-Backed Securities—Stripped Mortgage-Backed Securities. Stripped mortgage-backed securities (SMBSs) are derivative multiclass mortgage-backed securities. SMBSs may be issued by agencies or instrumentalities of the U.S. government or by private originators of, or investors in, mortgage loans, including savings and loan associations, mortgage banks, commercial banks, investment banks, and special purpose entities formed or sponsored by any of the foregoing.
SMBSs are usually structured with two classes that receive different proportions of the interest and principal distributions on a pool of mortgage assets. A common type of SMBS will have one class receiving some of the interest and most of the principal from the mortgage assets, while the other class will receive most of the interest and the remainder of the principal. In the most extreme case, one class will receive all of the interest (the “IO” class), while the other class will receive all of the principal (the principal-only or “PO” class). The price and yield to maturity on an IO class are extremely sensitive to the rate of principal payments (including prepayments) on the related underlying mortgage assets, and a rapid rate of principal payments may have a material adverse effect on a fund’s yield to maturity from these securities. If the underlying mortgage assets experience greater than anticipated prepayments of principal, a fund may fail to recoup some or all of its initial investment in these securities, even if the security is in one of the highest rating categories.
Although SMBSs are purchased and sold by institutional investors through several investment banking firms acting as brokers or dealers, these securities were only recently developed. As a result, established trading markets have not yet developed, and accordingly, these securities may be deemed “illiquid” and thus subject to a fund’s limitations on investment in illiquid securities.
Municipal Bonds. Municipal bonds are debt obligations issued by states, municipalities, U.S. jurisdictions or territories, and other political subdivisions and by agencies, authorities, and instrumentalities of states and multistate agencies or authorities (collectively, municipalities). Typically, the interest payable on municipal bonds is, in the opinion of bond counsel to the issuer at the time of issuance, exempt from federal income tax.
Municipal bonds include securities from a variety of sectors, each of which has unique risks, and can be divided into government bonds (i.e., bonds issued to provide funding for governmental projects, such as public roads or schools) and conduit bonds (i.e., bonds issued to provide funding for a third-party permitted to use municipal bond proceeds, such as airports or hospitals). The Funds will not concentrate in any one industry or group of industries; tax-exempt securities issued by states, municipalities, and their political subdivisions are not considered to be part of an industry. However, if a municipal bond’s income is derived from a specific project, the securities will be considered to be from the industry of that project. Municipal bonds include, but are not limited to, general obligation bonds, limited obligation bonds, and revenue bonds, including industrial development bonds issued pursuant to federal tax law.
General obligation bonds are secured by the issuer’s pledge of its full faith, credit, and taxing power for the payment of principal and interest. Limited obligation bonds are payable only from the revenues derived from a particular facility or class of facilities or, in some cases, from the proceeds of a special excise or other specific revenue source. Revenue or special tax bonds are payable only from the revenues derived from a particular facility or class of facilities or, in some cases, from the proceeds of a special excise or other tax, but not from general tax revenues.
Revenue bonds involve the credit risk of the underlying project or enterprise (or its corporate user) rather than the credit risk of the issuing municipality. Under the IRC, certain limited obligation bonds are considered “private activity bonds,” and interest paid on such bonds is treated as an item of tax preference for purposes of calculating federal alternative minimum tax liability. Tax-exempt private activity bonds and industrial development bonds generally are also classified as revenue bonds and thus are not payable from the issuer’s general revenues. The credit and quality of private activity bonds and industrial development bonds are usually related to the credit of the corporate user of the facilities. Payment of interest on and repayment of principal of such bonds are the responsibility of the corporate user (and/or any guarantor). Some municipal bonds may be issued as variable or floating rate securities and may incorporate market-dependent liquidity features (see discussion of “Debt Securities—Variable and Floating Rate Securities”). A tax-exempt fund will generally invest only in securities deemed tax-exempt by a nationally recognized bond counsel, but there is no guarantee that the interest payments on municipal bonds will continue to be tax-exempt for the life of the bonds.
Some longer-term municipal bonds give the investor a “put option,” which is the right to sell the security back to the issuer at par (face value) prior to maturity, within a specified number of days following the investor’s request—usually one to seven days. This demand feature enhances a security’s liquidity by shortening its maturity and enables it to trade at a price equal to or very close to par. If a demand feature terminates prior to being exercised, a fund would hold the longer-term security, which could experience substantially more volatility. Municipal bonds that are issued as variable or floating rate securities incorporating market-dependent liquidity features may have greater liquidity risk than other municipal bonds (see discussion of “Debt Securities—Variable and Floating Rate Securities”).
Some municipal bonds feature credit enhancements, such as lines of credit, letters of credit, municipal bond insurance, and standby bond purchase agreements (SBPAs). SBPAs include lines of credit that are issued by a third party, usually a bank, to enhance liquidity and ensure repayment of principal and any accrued interest if the underlying municipal bond should default. Municipal bond insurance (which is usually purchased by the bond issuer from a private, nongovernmental insurance company) provides an unconditional and irrevocable guarantee that the insured bond’s principal and interest will be paid when due. Insurance does not guarantee the price of the bond or the share price of any fund. The credit quality of an insured bond reflects the higher of the credit quality of the insurer, based on its claims-paying ability, or the credit quality of the underlying bond issuer or obligor. The obligation of a municipal bond insurance company to pay a claim extends over the life of each insured bond. Although defaults on insured municipal bonds have been historically low and municipal bond insurers historically have met their claims, there is no assurance this will continue. A higher-than-expected default rate could strain the insurer’s loss reserves and adversely affect its ability to pay claims to bondholders. The number of municipal bond insurers is relatively small, and not all of them are assessed as high credit quality. An SBPA can include a liquidity facility that is provided to pay the purchase price of any bonds that cannot be remarketed. The obligation of the liquidity provider (usually a bank) is only to advance funds to purchase tendered bonds that cannot be remarketed and does not cover principal or interest under any other circumstances. The liquidity provider’s obligations under the SBPA are usually subject to numerous conditions, including the continued creditworthiness of the underlying borrower or bond issuer.
Municipal bonds also include tender option bonds, which are municipal derivatives created by dividing the income stream provided by an underlying security, such as municipal bonds or preferred shares issued by a tax-exempt bond fund, to create two securities issued by a special-purpose trust, one short-term and one long-term. The interest rate on the short-term component is periodically reset. The short-term component has negligible interest rate risk, while the long-term component has all of the risk of the underlying security. After income is paid on the short-term securities at current rates, the residual income goes to the long-term securities. Therefore, rising short-term interest rates result in lower income for the longer-term portion, and vice versa. The longer-term components can be very volatile and may be less liquid than other municipal bonds of comparable maturity. These securities have been developed in the secondary market to meet the demand for short-term, tax-exempt securities.
Municipal securities also include a variety of structures geared toward accommodating municipal-issuer short-term cash-flow requirements. These structures include, but are not limited to, general market notes, commercial paper, put bonds, and variable-rate demand obligations (VRDOs). VRDOs comprise a significant percentage of the outstanding debt in the short-term municipal market. VRDOs can be structured to provide a wide range of maturity options (1 day to over 360 days) to the underlying issuing entity and are typically issued at par. The longer the maturity option, the greater the degree of liquidity risk (the risk of not receiving an asking price of par or greater) and reinvestment risk (the risk that the proceeds from maturing bonds must be reinvested at a lower interest rate).
Although most municipal bonds are exempt from federal income tax, some are not. Taxable municipal bonds include Build America Bonds (BABs). The borrowing costs of BABs are subsidized by the federal government, but BABs are subject to state and federal income tax. BABs were created pursuant to the American Recovery and Reinvestment Act of 2009 (ARRA) to offer an alternative form of financing to state and local governments whose primary means for accessing the capital markets had been through the issuance of tax-exempt municipal bonds. BABs also include Recovery Zone Economic Development Bonds, which are subsidized more heavily by the federal government than other BABs and are designed to finance certain types of projects in distressed geographic areas.
Under ARRA, an issuer of a BAB is entitled to receive payments from the U.S. Treasury over the life of the BAB equal to 35% of the interest paid (or 45% of the interest paid in the case of a Recovery Zone Economic Development Bond). For example, if a state or local government were to issue a BAB at a taxable interest rate of 10% of the par value of the bond, the U.S. Treasury would make a payment directly to the issuing government of 35% of that interest (3.5% of the par value of the bond) or 45% of the interest (4.5% of the par value of the bond) in the case of a Recovery Zone Economic Development Bond. Thus, the state or local government’s net borrowing cost would be 6.5% or 5.5%, respectively, on BABs that pay 10% interest. In other cases, holders of a BAB receive a 35% or 45% tax credit, respectively. The BAB program expired on December 31, 2010. BABs outstanding prior to the expiration of the program continue to be eligible for the federal interest rate subsidy or tax credit, which continues for the life of the BABs; however, the federal interest rate subsidy or tax credit has been reduced by the government sequester. Additionally, bonds issued following expiration of the program are not eligible for federal payment or tax credit. In addition to BABs, a fund may invest in other municipal bonds that pay taxable interest.
The reorganization under the federal bankruptcy laws of an issuer of, or payment obligor with respect to, municipal bonds may result in the municipal bonds being canceled without repayment; repaid only in part; or repaid in part or whole through an exchange thereof for any combination of cash, municipal bonds, debt securities, convertible securities, equity securities, or other instruments or rights in respect to the same issuer or payment obligor or a related entity. Certain issuers are not eligible to file for bankruptcy.
Municipal Bonds—Risks. Municipal bonds are subject to credit risk. The yields of municipal bonds depend on, among other things, general money market conditions, conditions in the municipal bond market, size of a particular offering, maturity of the obligation, and credit quality of the issue. Consequently, municipal bonds with the same maturity, coupon, and credit quality may have different yields, while municipal bonds of the same maturity and coupon, but with different credit quality, may have the same yield. It is the responsibility of a fund’s investment management advisor to appraise independently the fundamental quality of bonds held by the fund. Information about the financial condition of an issuer of municipal bonds may not be as extensive as that which is made available by corporations whose securities are publicly traded. Obligations of issuers of municipal bonds are generally subject to the provisions of bankruptcy, insolvency, and other laws affecting the rights and remedies of creditors.
Congress, state legislatures, or other governing authorities may seek to extend the time for payment of principal or interest, or both, or to impose other constraints upon enforcement of such obligations. For example, from time to time, proposals have been introduced before Congress to restrict or eliminate the federal income tax exemption for interest on municipal bonds. Also, from time to time, proposals have been introduced before state and local legislatures to restrict
or eliminate the state and local income tax exemption for interest on municipal bonds. Similar proposals may be introduced in the future. If any such proposal were enacted, it might restrict or eliminate the ability of a fund to achieve its respective investment objective. In that event, the fund’s trustees and officers would reevaluate its investment objective and policies and consider recommending to its shareholders changes in such objective and policies.
There is also the possibility that, as a result of litigation or other conditions, the power or ability of issuers to meet their obligations for the payment of interest and principal on their municipal bonds may be materially affected or their obligations may be found to be invalid or unenforceable. Such litigation or conditions may, from time to time, have the effect of introducing uncertainties in the market for municipal bonds or certain segments thereof or of materially affecting the credit risk with respect to particular bonds. Adverse economic, business, legal, or political developments might affect all or a substantial portion of a fund’s municipal bonds in the same manner. For example, a state specific tax-exempt fund is subject to state-specific risk, which is the chance that the fund, because it invests primarily in securities issued by a particular state and its municipalities, is more vulnerable to unfavorable developments in that state than are funds that invest in municipal securities of many states. Unfavorable developments in any economic sector may have far-reaching ramifications on a state’s overall municipal market. In the event that a particular obligation held by a fund is assessed at a credit quality below the minimum investment level permitted by the investment policies of such fund, the fund’s investment advisor, pursuant to oversight from the trustees, will carefully assess the creditworthiness of the obligation to determine whether it continues to meet the policies and objective of the fund.
Municipal bonds are subject to interest rate risk, which is the chance that bond prices will decline over short or even long periods because of rising interest rates. Interest rate risk is higher for long-term bonds, whose prices are much more sensitive to interest rate changes than are the prices of shorter-term bonds. Generally, prices of longer-maturity issues tend to fluctuate more than prices of shorter-maturity issues. Prices and yields on municipal bonds are dependent on a variety of factors, such as the financial condition of the issuer, the general conditions of the municipal bond market, the size of a particular offering, the maturity of the obligation, and the rating of the issue. A number of these factors, including the ratings of particular issues, are subject to change from time to time.
Municipal bonds are subject to call risk, which is the chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupons or interest rates before their maturity dates. A fund would then lose any price appreciation above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the fund’s income. Some of these investments may generate taxable income, and thus a fund may need to distribute income subject to federal personal income tax or the alternative minimum tax. Call risk is generally high for long-term bonds. Conversely, municipal bonds are also subject to extension risk, which is the chance that during periods of rising interest rates, certain debt securities will be paid off substantially more slowly than originally anticipated, and the value of those securities may fall. Extension risk is generally high for long-term bonds.
Municipal bonds may be deemed to be illiquid as determined by or in accordance with methods adopted by a fund’s board of trustees. In determining the liquidity and appropriate valuation of a municipal bond, a fund’s advisor may consider the following factors relating to the security, among others: (1) the frequency of trades and quotes; (2) the number of dealers willing to purchase or sell the security; (3) the willingness of dealers to undertake to make a market; (4) the nature of the marketplace trades, including the time needed to dispose of the security, the method of soliciting offers, and the mechanics of transfer; and (5) the factors unique to a particular security, including general creditworthiness of the issuer and the likelihood that the marketability of the securities will be maintained throughout the time the security is held by the fund.
Options. An option is a derivative. An option on a security (or index) is a contract that gives the holder of the option, in return for the payment of a “premium,” the right, but not the obligation, to buy from (in the case of a call option) or sell to (in the case of a put option) the writer of the option the security underlying the option (or the cash value of the index) at a specified exercise price prior to the expiration date of the option. The writer of an option on a security has the obligation upon exercise of the option to deliver the underlying security upon payment of the exercise price (in the case of a call option) or to pay the exercise price upon delivery of the underlying security (in the case of a put option). The writer of an option on an index has the obligation upon exercise of the option to pay an amount equal to the cash value of the index minus the exercise price, multiplied by the specified multiplier for the index option. The multiplier for an index option determines the size of the investment position the option represents. Unlike exchange-traded options, which are standardized with respect to the underlying instrument, expiration date, contract size, and strike price, the
terms of over-the-counter (OTC) options (options not traded on exchanges) generally are established through negotiation with the other party to the option contract. Although this type of arrangement allows the purchaser or writer greater flexibility to tailor an option to its needs, OTC options generally involve credit risk to the counterparty, whereas for exchange-traded, centrally cleared options, credit risk is mutualized through the involvement of the applicable clearing house.
The buyer (or holder) of an option is said to be “long” the option, while the seller (or writer) of an option is said to be “short” the option. A call option grants to the holder the right to buy (and obligates the writer to sell) the underlying security at the strike price, which is the predetermined price at which the option may be exercised. A put option grants to the holder the right to sell (and obligates the writer to buy) the underlying security at the strike price. The purchase price of an option is called the “premium.” The potential loss to an option buyer is limited to the amount of the premium plus transaction costs. This will be the case if the option is held and not exercised prior to its expiration date. Generally, an option writer sells options with the goal of obtaining the premium paid by the option buyer, but that person could also seek to profit from an anticipated rise or decline in option prices. If an option sold by an option writer expires without being exercised, the writer retains the full amount of the premium. The option writer, however, has unlimited economic risk because its potential loss, except to the extent offset by the premium received when the option was written, is equal to the amount the option is “in-the-money” at the expiration date. A call option is in-the-money if the value of the underlying position exceeds the exercise price of the option. A put option is in-the-money if the exercise price of the option exceeds the value of the underlying position. Generally, any profit realized by an option buyer represents a loss for the option writer. The writing of an option will not be considered to constitute the issuance, by a fund, of a “senior security,” as that term is defined in Section 18(g) of the 1940 Act, and therefore such transaction will not be subject to the 300% asset coverage requirement otherwise applicable to borrowings by a fund, if the fund complies with Rule 18f-4.
If a trading market, in particular options, were to become unavailable, investors in those options (such as the funds) would be unable to close out their positions until trading resumes, and they may be faced with substantial losses if the value of the underlying instrument moves adversely during that time. Even if the market were to remain available, there may be times when options prices will not maintain their customary or anticipated relationships to the prices of the underlying instruments and related instruments. Lack of investor interest, changes in volatility, or other factors or conditions might adversely affect the liquidity, efficiency, continuity, or even the orderliness of the market for particular options.
A fund bears the risk that its advisor will not accurately predict future market trends. If the advisor attempts to use an option as a hedge against, or as a substitute for, a portfolio investment, the fund will be exposed to the risk that the option will have or will develop imperfect or no correlation with the portfolio investment, which could cause substantial losses for the fund. Although hedging strategies involving options can reduce the risk of loss, they can also reduce the opportunity for gain or even result in losses by offsetting favorable price movements in other fund investments. Many options, in particular OTC options, are complex and often valued based on subjective factors. Improper valuations can result in increased cash payment requirements to counterparties or a loss of value to a fund.
OTC Swap Agreements. An over-the-counter (OTC) swap agreement, which is a type of derivative, is an agreement between two parties (counterparties) to exchange payments at specified dates (periodic payment dates) on the basis of a specified amount (notional amount) with the payments calculated with reference to a specified asset, reference rate, or index.
Examples of OTC swap agreements include, but are not limited to, interest rate swaps, credit default swaps, equity swaps, commodity swaps, foreign currency swaps, index swaps, excess return swaps, and total return swaps. Most OTC swap agreements provide that when the periodic payment dates for both parties are the same, payments are netted and only the net amount is paid to the counterparty entitled to receive the net payment. Consequently, a fund’s current obligations (or rights) under an OTC swap agreement will generally be equal only to the net amount to be paid or received under the agreement, based on the relative values of the positions held by each counterparty. OTC swap agreements allow for a wide variety of transactions. For example, fixed rate payments may be exchanged for floating rate payments; U.S. dollar-denominated payments may be exchanged for payments denominated in a different currency; and payments tied to the price of one asset, reference rate, or index may be exchanged for payments tied to the price of another asset, reference rate, or index.
An OTC option on an OTC swap agreement, also called a “swaption,” is an option that gives the buyer the right, but not the obligation, to enter into a swap on a future date in exchange for paying a market-based “premium.” A receiver swaption gives the owner the right to receive the total return of a specified asset, reference rate, or index. A payer swaption gives the owner the right to pay the total return of a specified asset, reference rate, or index. Swaptions also include options that allow an existing swap to be terminated or extended by one of the counterparties.
The use of OTC swap agreements by a fund entails certain risks, which may be different from, or possibly greater than, the risks associated with investing directly in the securities and other investments that are the referenced asset for the swap agreement. OTC swaps are highly specialized instruments that require investment techniques, risk analyses, and tax planning different from those associated with stocks, bonds, and other traditional investments. The use of an OTC swap requires an understanding not only of the referenced asset, reference rate, or index but also of the swap itself, without the benefit of observing the performance of the swap under all possible market conditions.
OTC swap agreements may be subject to liquidity risk, which exists when a particular swap is difficult to purchase or sell. If an OTC swap transaction is particularly large or if the relevant market is illiquid (as is the case with many OTC swaps), it may not be possible to initiate a transaction or liquidate a position at an advantageous time or price, which may result in significant losses. In addition, OTC swap transactions may be subject to a fund’s limitation on investments in illiquid securities.
OTC swap agreements may be subject to pricing risk, which exists when a particular swap becomes extraordinarily expensive or inexpensive relative to historical prices or the prices of corresponding cash market instruments. Under certain market conditions, it may not be economically feasible to initiate a transaction or liquidate a position in time to avoid a loss or take advantage of an opportunity or to realize the intrinsic value of the OTC swap agreement.
Because certain OTC swap agreements have a leverage component, adverse changes in the value or level of the underlying asset, reference rate, or index can result in a loss substantially greater than the amount invested in the swap itself. Certain OTC swaps have the potential for unlimited loss, regardless of the size of the initial investment. A leveraged OTC swap transaction will not be considered to constitute the issuance, by a fund, of a “senior security,” as that term is defined in Section 18(g) of the 1940 Act, and therefore such transaction will not be subject to the 300% asset coverage requirement otherwise applicable to borrowings by a fund, if the fund complies with Rule 18f-4.
Like most other investments, OTC swap agreements are subject to the risk that the market value of the instrument will change in a way detrimental to a fund’s interest. A fund bears the risk that its advisor will not accurately forecast future market trends or the values of assets, reference rates, indexes, or other economic factors in establishing OTC swap positions for the fund. If the advisor attempts to use an OTC swap as a hedge against, or as a substitute for, a portfolio investment, the fund will be exposed to the risk that the OTC swap will have or will develop imperfect or no correlation with the portfolio investment. This could cause substantial losses for the fund. Although hedging strategies involving OTC swap instruments can reduce the risk of loss, they can also reduce the opportunity for gain or even result in losses by offsetting favorable price movements in other fund investments. Many OTC swaps are complex and often valued subjectively. Improper valuations can result in increased cash payment requirements to counterparties or a loss of value to a fund.
The use of an OTC swap agreement also involves the risk that a loss may be sustained as a result of the insolvency or bankruptcy of the counterparty or the failure of the counterparty to make required payments or otherwise comply with the terms of the agreement. Additionally, the use of credit default swaps can result in losses if a fund’s advisor does not correctly evaluate the creditworthiness of the issuer on which the credit swap is based.
Other Investment Companies. A fund may invest in other investment companies, including ETFs, non-exchange traded U.S. registered open-end investment companies (mutual funds), and closed-end investment companies, to the extent permitted by applicable law or SEC exemption. Under Section 12(d)(1) of the 1940 Act, a fund may invest up to 10% of its assets in shares of investment companies generally and up to 5% of its assets in any one investment company, as long as no investment represents more than 3% of the voting stock of an acquired investment company. In addition, no funds for which Vanguard acts as an advisor may, in the aggregate, own more than 10% of the voting stock of a closed-end investment company. 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. Rule 12d1-4 is also designed to limit the use of complex fund structures. Under Rule 12d1-4, an acquired fund is prohibited from purchasing or otherwise acquiring the securities of another investment company or private fund if, immediately after the purchase, the securities of investment companies and private funds owned by the acquired fund have an aggregate value in excess of 10% of the value of the acquired fund’s total assets, subject to certain limited
exceptions. Accordingly, to the extent a fund’s shares are sold to other investment companies in reliance on Rule 12d1-4, the acquired fund will be limited in the amount it could invest in other investment companies and private funds. If a fund invests in other investment companies, shareholders will bear not only their proportionate share of the fund’s expenses (including operating expenses and the fees of the advisor), but they also may indirectly bear similar expenses of the underlying investment companies. Certain investment companies, such as business development companies (BDCs), are more akin to operating companies and, as such, their expenses are not direct expenses paid by fund shareholders and are not used to calculate the fund’s net asset value. SEC rules nevertheless require that any expenses incurred by a BDC be included in a fund’s expense ratio as “Acquired Fund Fees and Expenses.” The expense ratio of a fund that holds a BDC will thus overstate what the fund actually spends on portfolio management, administrative services, and other shareholder services by an amount equal to these Acquired Fund Fees and Expenses. The Acquired Fund Fees and Expenses are not included in a fund’s financial statements, which provide a clearer picture of a fund’s actual operating expenses. Shareholders would also be exposed to the risks associated not only with the investments of the fund but also with the portfolio investments of the underlying investment companies. Certain types of investment companies, such as closed-end investment companies, issue a fixed number of shares that typically trade on a stock exchange or over-the-counter at a premium or discount to their net asset value. Others are continuously offered at net asset value but also may be traded on the secondary market.
A fund may be limited to purchasing a particular share class of other investment companies (underlying funds). In certain cases, an investor may be able to purchase lower-cost shares of such underlying funds separately, and therefore be able to construct, and maintain over time, a similar portfolio of investments while incurring lower overall expenses.
Ownership Limitations and Regulatory Relief. The more assets that Vanguard, its affiliates, and its external advisors manage, the more the Vanguard funds are or may be negatively impacted by ownership restrictions and limitations imposed by law, by regulation or regulators, or by issuers. Ownership restrictions and limitations can apply to certain industries (for example, banking, insurance, and utilities), certain issuers (who may, for example, have mechanisms such as poison pills in place to prevent takeovers), or certain transactions, and will also vary significantly in different contexts. A fund can be subject to more than one ownership limitation depending on its holdings, and each ownership limitation can impact multiple securities held by the fund.
Ownership limitations can restrict or impair a fund’s investment activities in a variety of ways. To meet the requirements of a limitation or restriction, a fund may be unable to purchase or directly hold a security the fund would otherwise purchase or hold if the limitation did not apply. For index funds, this means a fund may not be able to track its index as closely as it would if it was not subject to an ownership limitation because the fund cannot buy its desired amount of an impacted security. For actively managed funds, this means a fund may miss an opportunity to invest in an impacted security that the fund’s investment advisor otherwise would invest in if the fund were not subject to an ownership limitation. These types of restrictions could negatively impact a fund’s performance.
When a Vanguard fund is subject to an ownership limitation, Vanguard or the fund typically will seek permission to exceed the limitation. However, there is no guarantee that permission will be granted, or that, once granted, it will not be modified or revoked at a later date. If this happens, the fund could be required to sell or otherwise dispose of holdings in one or more issuers to comply with limitations. In order to obtain permission to exceed an ownership limitation, Vanguard may have to agree to certain conditions that will impact its ability to exercise rights on behalf of funds. For example, Vanguard may be required to agree to vote proxies in a certain way for any securities Vanguard funds hold that exceed a particular ownership limitation.
For situations in which Vanguard does not have or is unable to obtain permission to exceed ownership limitations, Vanguard, its affiliates, and its external advisors have adopted a policy designed to allocate ownership of impacted securities across Vanguard products in a way that Vanguard deems fair and equitable over time. This allocation policy could result in certain Vanguard products obtaining zero or reduced direct exposure to one or more impacted securities and/or indirect exposure to impacted securities. In order to obtain indirect exposure, funds may use derivatives (such as total return swaps) or invest in totally held subsidiaries that hold the impacted securities. Both of these ways of obtaining indirect exposure may be more costly than owning securities of the issuer directly. Depending on the circumstances, certain Vanguard funds may incur and bear the costs associated with transactions entered into for these purposes that other Vanguard funds do not incur and bear. In addition, Vanguard, its affiliates, and its external advisors are not able to guarantee that they will be able to obtain some or all of the derivatives that funds want in order to gain indirect exposure to an impacted security. This limited availability of derivatives may impact the ability of a fund to meet its investment objective or invest in accordance with its investment strategy, and/or have additional impacts to fund performance. Additionally, funds that use derivatives for indirect exposure are subject to derivatives-related risks.
Ownership limitations and the use of derivatives to address ownership limitations could result in unanticipated tax consequences to a fund that may affect the amount, timing, and character of distributions to shareholders. The taxation of derivatives can be complex and, depending upon the type and amount of derivatives employed by a fund, the tax consequences of using derivatives could be worse than the tax consequences that result from direct exposure to impacted securities.
Ownership limitations are highly complex. It is possible that, despite a fund’s intent to either comply with or be granted permission to exceed ownership limitations, it may inadvertently breach a limit.
Preferred Stock. Preferred stock represents an equity or ownership interest in an issuer. Preferred stock normally pays dividends at a specified rate and has precedence over common stock in the event the issuer is liquidated or declares bankruptcy. However, in the event an issuer is liquidated or declares bankruptcy, the claims of owners of bonds take precedence over the claims of those who own preferred and common stock. Preferred stock, unlike common stock, often has a stated dividend rate payable from the corporation’s earnings. Preferred stock dividends may be cumulative or noncumulative, participating, or auction rate. “Cumulative” dividend provisions require all or a portion of prior unpaid dividends to be paid before dividends can be paid to the issuer’s common stock. “Participating” preferred stock may be entitled to a dividend exceeding the stated dividend in certain cases. If interest rates rise, the fixed dividend on preferred stocks may be less attractive, causing the price of such stocks to decline. Preferred stock may have mandatory sinking fund provisions, as well as provisions allowing the stock to be called or redeemed, which can limit the benefit of a decline in interest rates. Preferred stock is subject to many of the risks to which common stock and debt securities are subject. In addition, preferred stock may be subject to more abrupt or erratic price movements than common stock or debt securities because preferred stock may trade with less frequency and in more limited volume.
Real Estate Investment Trusts (REITs). An equity REIT owns real estate properties directly and generates income from rental and lease payments. Equity REITs also have the potential to generate capital gains as properties are sold at a profit. A mortgage REIT makes construction, development, and long-term mortgage loans to commercial real estate developers and earns interest income on these loans. A hybrid REIT holds both properties and mortgages. To avoid taxation at the corporate level, REITs must distribute most of their earnings to shareholders.
Investments in REITs are subject to many of the same risks as direct investments in real estate. In general, real estate values can be affected by a variety of factors, including, but not limited to, supply and demand for properties, general or local economic conditions, and the strength of specific industries that rent properties. Ultimately, a REIT’s performance depends on the types and locations of the properties it owns and on how well the REIT manages its properties. For example, rental income could decline because of extended vacancies, increased competition from nearby properties, tenants’ failure to pay rent, regulatory limitations on rents, fluctuations in rental income, variations in market rental rates, or incompetent management. Property values could decrease because of overbuilding in the area, environmental liabilities, uninsured damages caused by natural disasters, a general decline in the neighborhood, losses because of casualty or condemnation, increases in property taxes, or changes in zoning laws.
The value of a REIT may also be affected by changes in interest rates. Rising interest rates generally increase the cost of financing for real estate projects, which could cause the value of an equity REIT to decline. During periods of declining interest rates, mortgagors may elect to prepay mortgages held by mortgage REITs, which could lower or diminish the yield on the REIT. REITs are also subject to heavy cash-flow dependency, default by borrowers, and changes in tax and regulatory requirements. In addition, a REIT may fail to meet the requirements for qualification and taxation as a REIT under the IRC and/or fail to maintain exemption from the 1940 Act.
Reliance on Service Providers, Data Providers, and Other Technology. Vanguard funds rely upon the performance of service providers to execute several key functions, which may include functions integral to a fund’s operations. Failure by any service provider to carry out its obligations to a fund could disrupt the business of the fund and could have an adverse effect on the fund’s performance. A fund’s service providers’ reliance on certain technology or information vendors (e.g., trading systems, investment analysis tools, benchmark analytics, and tax and accounting tools) could also adversely affect a fund and its shareholders. For example, a fund’s investment advisor may use models and/or data with respect to potential investments for the fund. When models or data prove to be incorrect or incomplete, any decisions made in reliance upon such models or data expose a fund to potential risks.
Repurchase Agreements. A repurchase agreement is an agreement under which a fund acquires a debt security (generally a security issued by the U.S. government or an agency thereof, a banker’s acceptance, or a certificate of deposit) from a bank, a broker, a dealer, or another counterparty that meets minimum credit requirements and simultaneously agrees to resell such security to the seller at an agreed-upon price and date (normally, the next business day). Because the security purchased constitutes collateral for the repurchase obligation, a repurchase agreement may
be considered a loan that is collateralized by the security purchased. The resale price reflects an agreed-upon interest rate effective for the period the instrument is held by a fund and is unrelated to the interest rate on the underlying instrument. In these transactions, the securities acquired by a fund (including accrued interest earned thereon) must have a total value in excess of the value of the repurchase agreement and be held by a custodian bank until repurchased. In addition, the investment advisor will monitor a fund’s repurchase agreement transactions generally and will evaluate the creditworthiness of any bank, broker, dealer, or other counterparty that meets minimum credit requirements to a repurchase agreement relating to a fund. The aggregate amount of any such agreements is not limited, except to the extent required by law.
The use of repurchase agreements involves certain risks. One risk is the seller’s ability to pay the agreed-upon repurchase price on the repurchase date. If the seller defaults, the fund may incur costs in disposing of the collateral, which would reduce the amount realized thereon. If the seller seeks relief under bankruptcy laws, the disposition of the collateral may be delayed or limited. For example, if the other party to the agreement becomes insolvent and subject to liquidation or reorganization under bankruptcy or other laws, a court may determine that the underlying security is collateral for a loan by the fund not within its control, and therefore the realization by the fund on such collateral may be automatically stayed. Finally, it is possible that the fund may not be able to substantiate its interest in the underlying security and may be deemed an unsecured creditor of the other party to the agreement.
Restricted and Illiquid Securities/Investments (including Private Placements). Illiquid securities/investments are investments that a fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. The SEC generally limits aggregate holdings of illiquid securities/investments by a mutual fund to 15% of its net assets (5% for money market funds). A fund may experience difficulty valuing and selling illiquid securities/investments and, in some cases, may be unable to value or sell certain illiquid securities for an indefinite period of time. Illiquid securities may include a wide variety of investments, such as (1) repurchase agreements maturing in more than seven days (unless the agreements have demand/redemption features), (2) OTC options contracts and certain other derivatives (including certain swap agreements), (3) fixed time deposits that are not subject to prepayment or do not provide for withdrawal penalties upon prepayment (other than overnight deposits), (4) certain loan interests and other direct debt instruments, (5) certain municipal lease obligations, (6) private equity investments, (7) commercial paper issued pursuant to Section 4(a)(2) of the 1933 Act, and (8) securities whose disposition is restricted under the federal securities laws. Illiquid securities/investments may include restricted, privately placed securities (such as private investments in public equity (PIPEs) or special purpose acquisition companies (SPACs)) that, under the federal securities laws, generally may be resold only to qualified institutional buyers. If a market develops for a restricted security held by a fund, it may be treated as a liquid security in accordance with guidelines approved by the board of trustees.
Reverse Repurchase Agreements. In a reverse repurchase agreement, a fund sells a security to another party, such as a bank or broker-dealer, in return for cash and agrees to repurchase that security at an agreed-upon price and time. Under a reverse repurchase agreement, the fund continues to receive any principal and interest payments on the underlying security during the term of the agreement. Reverse repurchase agreements involve the risk that the market value of securities retained by the fund may decline below the repurchase price of the securities sold by the fund that it is obligated to repurchase. In addition to the risk of such a loss, fees charged to the fund may exceed the return the fund earns from investing the proceeds received from the reverse repurchase agreement transaction. A reverse repurchase agreement may be considered a borrowing transaction for purposes of the 1940 Act. A reverse repurchase agreement transaction will not be considered to constitute the issuance, by a fund, of a “senior security,” as that term is defined in Section 18(g) of the 1940 Act, and therefore such transaction will not be subject to the 300% asset coverage requirement otherwise applicable to borrowings by a fund, if the fund complies with Rule 18f-4. A fund will enter into reverse repurchase agreements only with parties whose creditworthiness has been reviewed and found satisfactory by the advisor. If the buyer in a reverse repurchase agreement becomes insolvent or files for bankruptcy, a fund’s use of proceeds from the sale may be restricted while the other party or its trustee or receiver determines if it will honor the fund’s right to repurchase the securities. If the fund is unable to recover the securities it sold in a reverse repurchase agreement, it would realize a loss equal to the difference between the value of the securities and the payment it received for them.
Securities Lending. A fund may lend its securities to financial institutions (typically brokers, dealers, and banks) to generate income for the fund. There are certain risks associated with lending securities, including counterparty, credit, market, regulatory, and operational risks. Vanguard considers the creditworthiness of the borrower, among other factors, in making decisions with respect to the lending of securities, subject to oversight by the board of trustees. If the borrower defaults on its obligation to return the securities lent because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities lent or in gaining access to the collateral. These delays and
costs could be greater for certain types of foreign securities, as well as certain types of borrowers that are subject to global regulatory regimes. If a fund is not able to recover the securities lent, the fund may sell the collateral and purchase a replacement security in the market. Collateral investments are subject to market appreciation or depreciation. The value of the collateral could decrease below the value of the replacement investment by the time the replacement investment is purchased. Currently, a fund invests cash collateral into Vanguard Market Liquidity Fund, an affiliated money market fund that invests primarily in high-quality, short-term money market instruments.
The terms and the structure of the loan arrangements, as well as the aggregate amount of securities loans, must be consistent with the 1940 Act and the rules or interpretations of the SEC thereunder. These provisions limit the amount of securities a fund may lend to 33 1∕3% of the fund’s total assets and require that (1) the borrower pledge and maintain with the fund collateral consisting of cash, an irrevocable letter of credit, or securities issued or guaranteed by the U.S. government having at all times not less than 100% of the value of the securities lent; (2) the borrower add to such collateral whenever the price of the securities lent rises (i.e., the borrower “marks to market” on a daily basis); (3) the loan be made subject to termination by the fund at any time; and (4) the fund receives reasonable interest on the loan (which may include the fund investing any cash collateral in interest-bearing short-term investments), any distribution on the lent securities, and any increase in their market value. Loan arrangements made by a fund will comply with any other applicable regulatory requirements. At the present time, the SEC does not object if an investment company pays reasonable negotiated fees in connection with lent securities, so long as such fees are set forth in a written contract and approved by the investment company’s trustees. In addition, voting rights pass with the lent securities, but if a fund has knowledge that a material event will occur affecting securities on loan, and in respect to which the holder of the securities will be entitled to vote or consent, the lender must be entitled to call the loaned securities in time to vote or consent. A fund bears the risk that there may be a delay in the return of the securities, which may impair the fund’s ability to vote on such a matter. See Tax Status of the Fund for information about certain tax consequences related to a fund’s securities lending activities.
Pursuant to Vanguard’s securities lending policy, Vanguard’s fixed income and money market funds are not permitted to, and do not, lend their investment securities.
Tax Matters—Federal Tax Discussion. Discussion herein of U.S. federal income tax matters summarizes some of the important, generally applicable U.S. federal tax considerations relevant to investment in a fund based on the IRC, U.S. Treasury regulations, and other applicable authorities. These authorities are subject to change by legislative, administrative, or judicial action, possibly with retroactive effect. Each Fund has not requested and will not request an advance ruling from the Internal Revenue Service (IRS) as to the U.S. federal income tax matters discussed in this Statement of Additional Information. In some cases, a fund’s tax position may be uncertain under current tax law and an adverse determination or future guidance by the IRS with respect to such a position could adversely affect the fund and its shareholders, including the fund’s ability to continue to qualify as a regulated investment company or to continue to pursue its current investment strategy. A shareholder should consult their tax professional for information regarding the particular situation and the possible application of U.S. federal, state, local, foreign, and other taxes.
Tax Matters—Federal Tax Treatment of Derivatives, Hedging, and Related Transactions. A fund’s transactions in derivative instruments (including, but not limited to, options, futures, forward contracts, and swap agreements), as well as any of the fund’s hedging, short sale, securities loan, or similar transactions, may be subject to one or more special tax rules that accelerate income to the fund, defer losses to the fund, cause adjustments in the holding periods of the fund’s securities, convert long-term capital gains into short-term capital gains, or convert short-term capital losses into long-term capital losses. These rules could therefore affect the amount, timing, and character of distributions to shareholders.
Because these and other tax rules applicable to these types of transactions are in some cases uncertain under current law, an adverse determination or future guidance by the IRS with respect to these rules (which determination or guidance could be retroactive) may affect whether a fund has made sufficient distributions, and otherwise satisfied the relevant requirements, to maintain its qualification as a regulated investment company and avoid a fund-level tax.
Tax Matters—Federal Tax Treatment of Futures Contracts. For federal income tax purposes, a fund generally must recognize, as of the end of each taxable year, any net unrealized gains and losses on certain futures contracts, as well as any gains and losses actually realized during the year. In these cases, any gain or loss recognized with respect to a futures contract is considered to be 60% long-term capital gain or loss and 40% short-term capital gain or loss, without regard to the holding period of the contract. Gains and losses on certain other futures contracts (primarily non-U.S. futures contracts) are not recognized until the contracts are closed and are treated as long-term or short-term,
depending on the holding period of the contract. Sales of futures contracts that are intended to hedge against a change in the value of securities held by a fund may affect the holding period of such securities and, consequently, the nature of the gain or loss on such securities upon disposition. A fund may be required to defer the recognition of losses on one position, such as futures contracts, to the extent of any unrecognized gains on a related offsetting position held by the fund.
A fund will distribute to shareholders annually any net capital gains that have been recognized for federal income tax purposes on futures transactions. Such distributions will be combined with distributions of capital gains realized on the fund’s other investments, and shareholders will be advised on the nature of the distributions.
Tax Matters—Federal Tax Treatment of Non-U.S. Currency Transactions. Special rules generally govern the federal income tax treatment of a fund’s transactions in the following: non-U.S. currencies; non-U.S. currency-denominated debt obligations; and certain non-U.S. currency options, futures contracts, forward contracts, and similar instruments. Accordingly, if a fund engages in these types of transactions it may have ordinary income or loss to the extent that such income or loss results from fluctuations in the value of the non-U.S. currency concerned. Such ordinary income could accelerate fund distributions to shareholders and increase the distributions taxed to shareholders as ordinary income. Any ordinary loss so created will generally reduce ordinary income distributions and, in some cases, could require the recharacterization of prior ordinary income distributions. Net ordinary losses cannot be carried forward by the fund to offset income or gains realized in subsequent taxable years.
Any gain or loss attributable to the non-U.S. currency component of a transaction engaged in by a fund that is not subject to these special currency rules (such as foreign equity investments other than certain preferred stocks) will generally be treated as a capital gain or loss and will not be segregated from the gain or loss on the underlying transaction.
To the extent a fund engages in non-U.S. currency hedging, the fund may elect or be required to apply other rules that could affect the character, timing, or amount of the fund’s gains and losses. For more information, see “Tax Matters—Federal Tax Treatment of Derivatives, Hedging, and Related Transactions.”
Tax Matters—Foreign Tax Credit. Foreign governments may withhold taxes on dividends and interest paid with respect to foreign securities held by a fund. Foreign governments may also impose taxes on other payments or gains with respect to foreign securities. If, at the close of its fiscal year, more than 50% of a fund’s total assets are invested in securities of foreign issuers, the fund may elect to pass through to shareholders the ability to deduct or, if they meet certain holding period requirements, take a credit for foreign taxes paid by the fund. Similarly, if at the close of each quarter of a fund’s taxable year, at least 50% of its total assets consist of interests in other regulated investment companies, the fund is permitted to elect to pass through to its shareholders the foreign income taxes paid by the fund in connection with foreign securities held directly by the fund or held by a regulated investment company in which the fund invests that has elected to pass through such taxes to shareholders.
Tax Matters—Market Discount or Premium. The price of a bond purchased after its original issuance may reflect market discount or premium. Depending on the particular circumstances, market discount may affect the tax character and amount of income required to be recognized by a fund holding the bond. In determining whether a bond is purchased with market discount, certain de minimis rules apply. Premium is generally amortizable over the remaining term of the bond. Depending on the type of bond, premium may affect the amount of income required to be recognized by a fund holding the bond and the fund’s basis in the bond.
Tax Matters—Passive Foreign Investment Companies. Vanguard Total International Stock Index Fund may invest in passive foreign investment companies (PFICs). A foreign company is generally a PFIC if 75% or more of its gross income is passive or if 50% or more of its assets produce passive income. Capital gains on the sale of an interest in a PFIC will be deemed ordinary income regardless of how long the fund held it. Also, the fund may be subject to corporate income tax and an interest charge on certain dividends and capital gains earned in respect to PFIC interests, whether or not such amounts are distributed to shareholders. To avoid such tax and interest, the fund may elect to “mark to market” its PFIC interests, that is, to treat such interests as sold on the last day of the fund’s fiscal year, and to recognize any unrealized gains (or losses, to the extent of previously recognized gains) as ordinary income (or loss) each year. Distributions from a fund that are attributable to income or gains earned in respect to PFIC interests are characterized as ordinary income.
Tax Matters—Real Estate Mortgage Investment Conduits. If a fund invests directly or indirectly, including through a REIT or other pass-through entity, in residual interests in real estate mortgage investment conduits (REMICs) or equity interests in taxable mortgage pools (TMPs), a portion of the fund’s income that is attributable to a residual interest in a
REMIC or an equity interest in a TMP (such portion referred to in the IRC as an “excess inclusion”) will be subject to U.S. federal income tax in all events—including potentially at the fund level—under a notice issued by the IRS in October 2006 and U.S. Treasury regulations that have yet to be issued but may apply retroactively. This notice also provides, and the regulations are expected to provide, that excess inclusion income of a regulated investment company will be allocated to shareholders of the regulated investment company in proportion to the dividends received by such shareholders, with the same consequences as if the shareholders held the related interest directly. In general, excess inclusion income allocated to shareholders (1) cannot be offset by net operating losses (subject to a limited exception for certain thrift institutions); (2) will constitute unrelated business taxable income (UBTI) to entities (including a qualified pension plan, an individual retirement account, a 401(k) plan, a Keogh plan, or other tax-exempt entity) subject to tax on UBTI, thereby potentially requiring such an entity, which otherwise might not be required, to file a tax return and pay tax on such income; and (3) in the case of a non-U.S. investor, will not qualify for any reduction in U.S. federal withholding tax. A shareholder will be subject to U.S. federal income tax on such inclusions notwithstanding any exemption from such income tax otherwise available under the IRC. As a result, a fund investing in such interests may not be suitable for charitable remainder trusts. See “Tax Matters—Tax-Exempt Investors.”
Tax Matters—Tax Considerations for Non-U.S. Investors. U.S. withholding and estate taxes and certain U.S. tax reporting requirements may apply to any investments made by non-U.S. investors in Vanguard funds. Certain properly reported distributions of qualifying interest income or short-term capital gain made by a fund to its non-U.S. investors are exempt from U.S. withholding taxes, provided the investors furnish valid tax documentation (i.e., IRS Form W-8) certifying as to their non-U.S. status.
A fund is permitted, but is not required, to report any of its distributions as eligible for such relief, and some distributions (e.g., distributions of interest a fund receives from non-U.S. issuers) are not eligible for this relief. For some funds, Vanguard has chosen to report qualifying distributions and apply the withholding exemption to those distributions when made to non-U.S. shareholders who invest directly with Vanguard. For other funds, Vanguard may choose not to apply the withholding exemption to qualifying fund distributions made to direct shareholders, but may provide the reporting to such shareholders. In these cases, a shareholder may be able to reclaim such withholding tax directly from the IRS.
If shareholders hold fund shares (including ETF shares) through a broker or intermediary, their broker or intermediary may apply this relief to properly reported qualifying distributions made to shareholders with respect to those shares. If a shareholder’s broker or intermediary instead collects withholding tax where the fund has provided the proper reporting, the shareholder may be able to reclaim such withholding tax from the IRS. Please consult your broker or intermediary regarding the application of these rules.
This relief does not apply to any withholding required under the Foreign Account Tax Compliance Act (FATCA), which generally requires a fund to obtain information sufficient to identify the status of each of its shareholders. If a shareholder fails to provide this information or otherwise fails to comply with FATCA, a fund may be required to withhold under FATCA at a rate of 30% with respect to that shareholder on fund distributions. Please consult your tax advisor for more information about these rules.
Tax Matters—Tax-Exempt Investors. Income of a fund that would be UBTI if earned directly by a tax-exempt entity will not generally be attributed as UBTI to a tax-exempt shareholder of the fund. Notwithstanding this “blocking” effect, a tax-exempt shareholder could realize UBTI by virtue of its investment in a fund if shares in the fund constitute debt-financed property in the hands of the tax-exempt shareholder within the meaning of IRC Section 514(b).
A tax-exempt shareholder may also recognize UBTI if a fund recognizes “excess inclusion income” derived from direct or indirect investments in residual interests in REMICs or equity interests in TMPs. See “Tax Matters—Real Estate Mortgage Investment Conduits.”
In addition, special tax consequences apply to charitable remainder trusts that invest in a fund that invests directly or indirectly in residual interests in REMICs or equity interests in TMPs. Charitable remainder trusts and other tax-exempt investors are urged to consult their tax advisors concerning the consequences of investing in a fund.
Time Deposits. Time deposits are subject to the same risks that pertain to domestic issuers of money market instruments, most notably credit risk (and, to a lesser extent, income risk, market risk, and liquidity risk). Additionally, time deposits of foreign branches of U.S. banks and foreign branches of foreign banks may be subject to certain sovereign risks. One such risk is the possibility that a sovereign country might prevent capital, in the form of U.S. dollars, from flowing across its borders. Other risks include adverse political and economic developments, the extent
and quality of government regulation of financial markets and institutions, the imposition of foreign withholding taxes, and expropriation or nationalization of foreign issuers. However, time deposits of such issuers will undergo the same type of credit analysis as domestic issuers in which a Vanguard fund invests and will have at least the same financial strength as the domestic issuers approved for the fund.
Warrants. Warrants are instruments that give the holder the right, but not the obligation, to buy an equity security at a specific price for a specific period of time. Changes in the value of a warrant do not necessarily correspond to changes in the value of its underlying security. The price of a warrant may be more volatile than the price of its underlying security, and a warrant may offer greater potential for capital appreciation as well as capital loss. Warrants do not entitle a holder to dividends or voting rights with respect to the underlying security and do not represent any rights in the assets of the issuing company. A warrant ceases to have value if it is not exercised prior to its expiration date. These factors can make warrants more speculative than other types of investments. Other kinds of warrants exist, including, but not limited to, warrants linked to countries’ economic performance or to commodity prices such as oil prices. These warrants may be subject to risk from fluctuation of underlying assets or indexes, as well as credit risk that the issuer does not pay on the obligations and risk that the data used for warrant payment calculation does not accurately reflect the true underlying commodity price or economic performance.
When-Issued, Delayed-Delivery, and Forward-Commitment Transactions. When-issued, delayed-delivery, and forward-commitment transactions involve a commitment to purchase or sell specific securities at a predetermined price or yield in which payment and delivery take place after the customary settlement period for that type of security. Typically, no interest accrues to the purchaser until the security is delivered. When purchasing securities pursuant to one of these transactions, payment for the securities is not required until the delivery date. However, the purchaser assumes the rights and risks of ownership, including the risks of price and yield fluctuations and the risk that the security will not be issued as anticipated. When a fund has sold a security pursuant to one of these transactions, the fund does not participate in further gains or losses with respect to the security. If the other party to a delayed-delivery transaction fails to deliver or pay for the securities, the fund could miss a favorable price or yield opportunity or suffer a loss. A fund may renegotiate a when-issued or forward-commitment transaction and may sell the underlying securities before delivery, which may result in capital gains or losses for the fund. When-issued, delayed-delivery, and forward-commitment transactions will not be considered to constitute the issuance, by a fund, of a “senior security,” as that term is defined in Section 18(g) of the 1940 Act, and therefore such transaction will not be subject to the 300% asset coverage requirement otherwise applicable to borrowings by the fund, if the fund complies with Rule 18f-4.
Regulatory Restrictions in India. Shares of Vanguard Total International Stock Index Fund have not been, and will not be, registered under the laws of India and are not intended to benefit from any laws in India promulgated for the protection of shareholders. As a result of regulatory requirements in India, shares of the Fund shall not be knowingly offered to (directly or indirectly) or sold or delivered to (within India); transferred to or purchased by; or held by, for, on the account of, or for the benefit of (i) a “person resident in India” (as defined under applicable Indian law), (ii) an “overseas corporate body” or a “person of Indian origin” (as defined under applicable Indian law), or (iii) any other entity or person disqualified or otherwise prohibited from accessing the Indian securities market under applicable laws, as may be amended from time to time. Investors, prior to purchasing shares of the Fund, must satisfy themselves regarding compliance with these requirements.
Multiple-class funds do not have a single share price. Rather, each class has a share price, also known as net asset value (NAV), which 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, each Fund reserves the right to treat such day as a business day and calculate NAVs as of the close of regular trading on the Nasdaq (or another alternate exchange if the Nasdaq is unavailable, as determined at Vanguard’s discretion), generally 4 p.m., Eastern time. The NAV per share for Vanguard Total International Stock Index Fund is computed by dividing the total assets, minus liabilities, allocated to the share class by the number of Fund shares outstanding for that class. The NAV per share for each of the remaining Funds is computed by dividing the total assets, minus liabilities, of the Fund by the number of Fund shares outstanding. On U.S. holidays or other days when the NYSE is closed, the NAV is not calculated, and the Funds do not sell or redeem shares. 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).
The NYSE typically observes the following holidays: New Year’s Day; Martin Luther King, Jr., Day; Presidents’ Day (Washington’s Birthday); Good Friday; Memorial Day; Juneteenth National Independence Day; Independence Day; Labor Day; Thanksgiving Day; and Christmas Day. Although each Fund expects the same holidays to be observed in the future, the NYSE may modify its holiday schedule or hours of operation at any time.
Purchase and Redemption of Shares
The purchase price of shares of the Fund is the NAV per share next determined after the purchase request is received in good order, as defined in the Fund’s prospectus.
Exchange of Securities for Shares of a Fund. Shares of a Fund may be purchased “in kind” (i.e., in exchange for securities, rather than for cash) at the discretion of the Fund’s portfolio manager. Such securities must not be restricted as to transfer and must have a value that is readily ascertainable. Securities accepted by the Fund will be valued, as set forth in the Fund’s prospectus, as of the time of the next determination of NAV after such acceptance. All dividend, subscription, or other rights that are reflected in the market price of accepted securities at the time of valuation become the property of the Fund and must be delivered to the Fund by the investor upon receipt from the issuer. A gain or loss for federal income tax purposes, depending upon the cost of the securities tendered, would be realized by the investor upon the exchange. Investors interested in purchasing fund shares in kind should contact Vanguard.
The redemption price of shares of the Fund is the NAV per share next determined after the redemption request is received in good order, as defined in the Fund’s prospectus.
The Fund can postpone payment of redemption proceeds for up to seven calendar days. In addition, the Fund can suspend redemptions and/or postpone payments of redemption proceeds beyond seven calendar days (1) during any period that the NYSE is closed or trading on the NYSE is restricted as determined by the SEC; (2) during any period when an emergency exists, as defined by the SEC, as a result of which it is not reasonably practicable for the Fund to dispose of securities it owns or to fairly determine the value of its assets; or (3) for such other periods as the SEC may permit.
The Trust has filed a notice of election with the SEC to pay in cash all redemptions requested by any shareholder of record limited in amount during any 90-day period to the lesser of $250,000 or 1% of the net assets of a Fund at the beginning of such period.
If Vanguard determines that it would be detrimental to the best interests of the remaining shareholders of the Fund to make payment wholly or partly in cash, the Fund may pay the redemption price in whole or in part by a distribution in kind of readily marketable securities held by the Fund in lieu of cash in conformity with applicable rules of the SEC and in accordance with procedures adopted by the Fund’s board of trustees. Investors may incur brokerage charges on the sale of such securities received in payment of redemptions.
The Fund does not charge a redemption fee. Shares redeemed may be worth more or less than what was paid for them, depending on the market value of the securities held by the Fund.
Vanguard processes purchase and redemption requests through a pooled account. Pending investment direction or distribution of redemption proceeds, the assets in the pooled account are invested and any earnings (the “float”) are allocated proportionately among the Vanguard funds in order to offset fund expenses. Other than the float, Vanguard treats assets held in the pooled account as the assets of each shareholder making such purchase or redemption request.
Vanguard reserves the right, without notice, to (1) alter, add, or discontinue any conditions of purchase (including eligibility requirements), redemption, exchange, conversion, service, or privilege at any time and (2) alter, impose, discontinue, or waive any purchase fee, redemption fee, account service fee, or other fee charged to a shareholder or a group of shareholders. Changes may affect any or all investors. These actions will be taken when, at the sole discretion of Vanguard management, Vanguard believes they are in the best interest of a fund.
Account Restrictions
Vanguard reserves the right to: (1) redeem all or a portion of a fund/account to meet a legal obligation, including tax withholding, tax lien, garnishment order, or other obligation imposed on your account by a court or government agency; (2) redeem shares, close an account, or suspend account privileges, features, or options in the case of threatening conduct or activity; (3) redeem shares, close an account, or suspend account privileges, features, or options if Vanguard believes or suspects that not doing so could result in a suspicious, fraudulent, or illegal transaction; (4) place restrictions on the ability to redeem any or all shares in an account if it is required to do so by a court or government agency; (5) place restrictions on the ability to redeem any or all shares in an account if Vanguard believes that doing so will prevent fraud or financial exploitation or abuse, or will protect vulnerable investors; (6) freeze any account and/or suspend account services if Vanguard has received reasonable notice of a dispute regarding the assets in an account, including notice of a dispute between the registered or beneficial account owners; and (7) freeze any account and/or suspend account services upon initial notification to Vanguard of the death of an account owner.
Investing With Vanguard Through Other Firms
The Fund has authorized certain agents to accept on its behalf purchase and redemption orders, and those agents are authorized to designate other intermediaries to accept purchase and redemption orders on the Fund’s behalf (collectively, Authorized Agents). The Fund will be deemed to have received a purchase or redemption order when an Authorized Agent accepts the order in accordance with the Fund’s instructions. In most instances, a customer order that is properly transmitted to an Authorized Agent will be priced at the NAV per share next determined after the order is received by the Authorized Agent.
The Fund is part of the Vanguard group of investment companies, which consists of over 200 funds. The fund is a series of a Delaware statutory trust. The funds obtain virtually all of their corporate management, administrative, and distribution services through the trusts’ jointly owned subsidiary, Vanguard. Vanguard may contract with certain third-party service providers to assist Vanguard in providing certain administrative and/or accounting services with
respect to the funds, subject to Vanguard’s oversight. Vanguard also provides investment advisory services to certain Vanguard funds. All of these services are provided at Vanguard’s total cost of operations pursuant to the Fifth Amended and Restated Funds’ Service Agreement (the Agreement).
Vanguard was established and operates under the Agreement. Vanguard employs a supporting staff of management and administrative personnel needed to provide the requisite services to the funds and also furnishes the funds with necessary office space, furnishings, and equipment.
The funds’ officers are also employees of Vanguard.
Vanguard, Vanguard Marketing Corporation (VMC), the funds, and the funds’ advisors have adopted codes of ethics designed to prevent employees who may have access to nonpublic information about the trading activities of the funds (access persons) from profiting from that information. The codes of ethics permit access persons to invest in securities for their own accounts, including securities that may be held by a fund, but place substantive and procedural restrictions on the trading activities of access persons. For example, the codes of ethics require that access persons receive advance approval for most securities trades to ensure that there is no conflict with the trading activities of the funds.
As of the date of this SAI, Vanguard STAR Core-Plus Bond Fund had not commenced operations and therefore had not contributed capital to Vanguard.
Management. Corporate management and administrative services include (1) executive staff, (2) accounting and financial, (3) legal and regulatory, (4) shareholder account maintenance, (5) monitoring and control of custodian relationships, (6) shareholder reporting, (7) review and evaluation of advisory and other services provided to the funds by third parties, and (8) such other services necessary to operate the funds at the lowest reasonable cost in accordance with the Agreement.
Distribution. Vanguard Marketing Corporation, 100 Vanguard Boulevard, Malvern, PA 19355, a wholly owned subsidiary of Vanguard, is the principal underwriter for the funds and in that capacity performs and finances marketing, promotional, and distribution activities (collectively, marketing and distribution activities) that are primarily intended to
result in the sale of the funds’ shares. VMC offers shares of each fund for sale on a continuous basis and will use all reasonable efforts in connection with the distribution of shares of the funds. VMC performs marketing and distribution activities in accordance with the conditions of a 1981 SEC exemptive order that permits the Vanguard funds to internalize and jointly finance the marketing, promotion, and distribution of their shares. The funds’ trustees review and approve the marketing and distribution expenses incurred by the funds, including the nature and cost of the activities and the desirability of each fund’s continued participation in the joint arrangement.
To ensure that each fund’s participation in the joint arrangement falls within a reasonable range of fairness, each fund contributes to VMC’s marketing and distribution expenses in accordance with an SEC-approved formula. Under that formula, one half of the marketing and distribution expenses are allocated among the funds based upon their relative net assets. The remaining half of those expenses is allocated among the funds based upon each fund’s sales for the preceding 24 months relative to the total sales of the funds as a group, provided, however, that no fund’s aggregate quarterly rate of contribution for marketing and distribution expenses shall exceed 125% of the average marketing and distribution expense rate for Vanguard and that no fund shall incur annual marketing and distribution expenses in excess of 0.20% of its average month-end net assets. Each fund’s contribution to these marketing and distribution expenses helps to maintain and enhance the attractiveness and viability of the Vanguard complex as a whole, which benefits all of the funds and their shareholders.
VMC’s principal marketing and distribution expenses are for advertising, promotional materials, and marketing personnel. Other marketing and distribution activities of an administrative nature that VMC undertakes on behalf of the funds may include, but are not limited to:
■ Conducting or publishing Vanguard-generated research and analysis concerning the funds, other investments, the financial markets, or the economy.
■ Providing views, opinions, advice, or commentary concerning the funds, other investments, the financial markets, or the economy.
■ Providing analytical, statistical, performance, or other information concerning the funds, other investments, the financial markets, or the economy.
■ Providing administrative services in connection with investments in the funds or other investments, including, but not limited to, shareholder services, recordkeeping services, and educational services.
■ Providing products or services that assist investors or financial service providers (as defined below) in the investment decision-making process.
VMC performs most marketing and distribution activities itself. Some activities may be conducted by third parties pursuant to shared marketing arrangements under which VMC agrees to share the costs and performance of marketing and distribution activities in concert with a financial service provider. Financial service providers include, but are not limited to, investment advisors, broker-dealers, financial planners, financial consultants, banks, and insurance companies. Under these cost- and performance-sharing arrangements, VMC may pay or reimburse a financial service provider (or a third party it retains) for marketing and distribution activities that VMC would otherwise perform. VMC’s cost- and performance-sharing arrangements may be established in connection with Vanguard investment products or services offered or provided to or through the financial service providers.
VMC’s arrangements for shared marketing and distribution activities may vary among financial service providers, and its payments or reimbursements to financial service providers in connection with shared marketing and distribution activities may be significant. VMC, as a matter of policy, does not pay asset-based fees, sales-based fees, or account-based fees to financial service providers in connection with its marketing and distribution activities for the Vanguard funds. VMC does make fixed dollar payments to financial service providers when sponsoring, jointly sponsoring, financially supporting, or participating in conferences, programs, seminars, presentations, meetings, or other events involving fund shareholders, financial service providers, or others concerning the funds, other investments, the financial markets, or the economy, such as industry conferences, prospecting trips, due diligence visits, training or education meetings, and sales presentations. VMC also makes fixed dollar payments to financial service providers for data regarding funds, such as statistical information regarding sales of fund shares. In addition, VMC makes fixed dollar payments for expenses associated with financial service providers’ use of Vanguard’s funds including, but not limited to, the use of funds in model portfolios. These payments may be used for services including, but not limited to, technology support and development; platform support and development; due diligence related to products used on a platform; legal, regulatory, and compliance expenses related to a platform; and other platform-related services.
In connection with its marketing and distribution activities, VMC may give financial service providers (or their representatives) (1) promotional items of nominal value that display Vanguard’s logo, such as golf balls, shirts, towels,
pens, and mouse pads; (2) gifts that do not exceed $100 per person annually and are not preconditioned on achievement of a sales target; (3) an occasional meal, a ticket to a sporting event or the theater, or comparable entertainment that is neither so frequent nor so extensive as to raise any question of propriety and is not preconditioned on achievement of a sales target; and (4) reasonable travel and lodging accommodations to facilitate participation in marketing and distribution activities.
VMC policy prohibits marketing and distribution activities that are intended, designed, or likely to compromise suitability determinations by, or the fulfillment of any fiduciary duties or other obligations that apply to, financial service providers. Nonetheless, VMC’s marketing and distribution activities are primarily intended to result in the sale of the funds’ shares, and as such, its activities, including shared marketing and distribution activities and fixed dollar payments as described above, may influence applicable financial service providers (or their representatives) to recommend, promote, include, or invest in a Vanguard fund or share class. In addition, Vanguard or any of its subsidiaries may retain a financial service provider to provide consulting or other services, and that financial service provider also may provide services to investors. Investors should consider the possibility that any of these activities, relationships, or payments may influence a financial service provider’s (or its representatives’) decision to recommend, promote, include, or invest in a Vanguard fund or share class. Each financial service provider should consider its suitability determinations, fiduciary duties, and other legal obligations (or those of its representatives) in connection with any decision to consider, recommend, promote, include, or invest in a Vanguard fund or share class.
As of the date of this SAI, Vanguard STAR Core-Plus Bond Fund had not commenced operations and therefore had not incurred any annual shared fund operating expenses.
Each Vanguard fund is governed by the board of trustees of its trust and a single set of officers. Consistent with the board’s corporate governance principles, the trustees believe that their primary responsibility is oversight of the management of each fund for the benefit of its shareholders, not day-to-day management. The trustees set broad policies for the funds; select investment advisors; monitor fund operations, regulatory compliance, performance, and costs; nominate and select new trustees; and elect fund officers. Vanguard manages the day-to-day operations of the funds under the direction of the board of trustees.
The trustees play an active role, as a full board and at the committee level, in overseeing risk management for the funds. The trustees delegate the day-to-day risk management of the funds to various groups, including portfolio review, investment management, risk management, compliance, legal, fund accounting, and fund services and oversight. These groups provide the trustees with regular reports regarding investment, valuation, liquidity, and compliance, as well as the risks associated with each. The trustees also oversee risk management for the funds through regular interactions with the funds’ internal and external auditors.
The full board participates in the funds’ risk oversight, in part, through the Vanguard funds’ compliance program, which covers the following broad areas of compliance: investment and other operations; recordkeeping; valuation and pricing; communications and disclosure; reporting and accounting; oversight of service providers; fund governance; and codes of ethics, insider trading controls, and protection of nonpublic information. The program seeks to identify and assess risk through various methods, including through regular interdisciplinary communications between compliance professionals and business personnel who participate on a daily basis in risk management on behalf of the funds. The funds’ chief compliance officer regularly provides reports to the board in writing and in person.
The audit committee of the board, which is composed of F. Joseph Loughrey, Mark Loughridge, Sarah Bloom Raskin, and Peter F. Volanakis, each of whom is an independent trustee, oversees management of financial risks and controls. The audit committee serves as the channel of communication between the independent auditors of the funds and the board with respect to financial statements and financial reporting processes, systems of internal control, and the audit process. Vanguard’s head of internal audit reports directly to the audit committee and provides reports to the committee in writing and in person on a regular basis. Although the audit committee is responsible for overseeing the management of financial risks, the entire board is regularly informed of these risks through committee reports.
All of the trustees bring to each fund’s board a wealth of executive leadership experience derived from their service as executives (in many cases chief executive officers), board members, and leaders of diverse public operating companies, academic institutions, and other organizations. In determining whether an individual is qualified to serve as a trustee of the funds, the board considers a wide variety of information about the trustee, and multiple factors contribute to the board’s decision. Each trustee is determined to have the experience, skills, and attributes necessary to serve the funds and their shareholders because each trustee demonstrates an exceptional ability to consider complex business and
financial matters, evaluate the relative importance and priority of issues, make decisions, and contribute effectively to the deliberations of the board. The board also considers the individual experience of each trustee and determines that the trustee’s professional experience, education, and background contribute to the diversity of perspectives on the board. The business acumen, experience, and objective thinking of the trustees are considered invaluable assets for Vanguard management and, ultimately, the Vanguard funds’ shareholders. The specific roles and experience of each board member that factor into this determination are presented on the following pages. The mailing address of the trustees and officers is P.O. Box 876, Valley Forge, PA 19482.
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Position(s)
Held With Fund |
Vanguard
Funds’ Trustee/
Officer Since |
Principal Occupation(s)
During the Past Five Years,
Outside Directorships,
and Other Experience |
Number of
Vanguard Funds
Overseen by
Trustee/Officer |
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Head of global operations at Airbnb (2020–present).
Vice president of AppleCare (2012–2020). Member of
the boards of the University of California, Berkeley
School of Engineering, and Santa Clara University’s
School of Business. |
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Emerson U. Fullwood
(1948) |
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Executive chief staff and marketing officer for North
America and corporate vice president (retired 2008) of
Xerox Corporation (document management products
and services). Former president of the Worldwide
Channels Group, Latin America, and Worldwide
Customer Service and executive chief staff officer of
Developing Markets of Xerox. Executive in residence
and 2009–2010 Distinguished Minett Professor at the
Rochester Institute of Technology. Member of the
board of directors of the University of Rochester
Medical Center, the Monroe Community College
Foundation, the United Way of Rochester, North
Carolina A&T University, Roberts Wesleyan College,
and the Rochester Philharmonic Orchestra. Trustee of
the University of Rochester. |
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F. Joseph Loughrey
(1949) |
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President and chief operating officer (retired 2009)
and vice chairman of the board (2008–2009) of
Cummins Inc. (industrial machinery). Director of the V
Foundation. Member of the advisory council for the
College of Arts and Letters at the University of Notre
Dame. Chairman of the board of Saint Anselm
College. |
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Senior vice president and chief financial officer (retired
2013) of IBM (information technology services).
Fiduciary member of IBM’s Retirement Plan
Committee (2004–2013), senior vice president and
general manager (2002–2004) of IBM Global
Financing, and vice president and controller
(1998–2002) of IBM. Member of the Council on
Chicago Booth. |
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Co-founder and managing partner (2022–present) of
Grafton Street Partners (investment advisory firm).
Chief investment officer and vice president of the
University of Notre Dame (retired 2020). Chair of the
board of Catholic Investment Services, Inc.
(investment advisor). Member of the board of
superintendence of the Institute for the Works of
Religion. Member of the board of directors of Paxos
Trust Company (finance). |
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Position(s)
Held With Fund |
Vanguard
Funds’ Trustee/
Officer Since |
Principal Occupation(s)
During the Past Five Years,
Outside Directorships,
and Other Experience |
Number of
Vanguard Funds
Overseen by
Trustee/Officer |
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Charles P. McQuaid Distinguished Service Professor
of Finance (2023–present) at the University of
Chicago Booth School of Business; Charles P.
McQuaid Professor of Finance at the University of
Chicago Booth School of Business (2009–2023).
Managing director (2024–present) of Andersen
(professional services) and a member of the Advisory
Board of the Andersen Institute for Finance and
Economics. President of the European Finance
Association. Member of the board of the Fama-Miller
Center for Research in Finance. Research associate
at the National Bureau of Economic Research.
Member of Center for Research in Security Prices
(CRSP) Index Advisory Council and Advisory Board. |
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George Gund Professor of Finance and Banking,
Emeritus at the Harvard Business School (retired
2011). Chief investment officer and partner of
HighVista Strategies LLC (private investment firm).
Board member of RIT Capital Partners (investment
firm). |
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Sarah Bloom Raskin
(1961) |
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Deputy secretary (2014–2017) of the United States
Department of the Treasury. Governor (2010–2014) of
the Federal Reserve Board. Commissioner
(2007–2010) of financial regulation for the State of
Maryland. Colin W. Brown Distinguished Professor of
the Practice, Duke Law School (2021–present);
Rubenstein fellow, Duke University (2017–2020);
distinguished fellow of the Global Financial Markets
Center, Duke Law School (2020–2022); and senior
fellow, Duke Center on Risk (2020–present). Partner
of Kaya Partners (climate policy advisory services). |
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Senior operating partner (2023–present) of CVC
Capital (alternative investment manager). Chief
executive officer and president (2014–2022) and
member of the board of directors (2015–2022) of
Mars, Incorporated (multinational manufacturer).
Member of the board of directors of Marriott
International, Inc. Member of the board of the
Sustainable Markets Initiative (environmental
services) and chair of the Sustainable Markets
Initiative’s Agribusiness Task Force. |
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President of Morehouse College (2018–present).
Professor of Business Administration Emeritus at
Harvard University (2017–2018) and dean
(2011–2016) and professor of management at
Georgetown University, McDonough School of
Business (2016–2017). Director of DTE Energy
Company. Trustee of Commonfund. |
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Peter F. Volanakis
(1955) |
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President and chief operating officer (retired 2010) of
Corning Incorporated (communications equipment)
and director of Corning Incorporated (2000–2010) and
Dow Corning (2001–2010). Overseer of the Amos
Tuck School of Business Administration, Dartmouth
College (2001–2013). Member of the BMW Group
Mobility Council. |
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Position(s)
Held With Fund |
Vanguard
Funds’ Trustee/
Officer Since |
Principal Occupation(s)
During the Past Five Years,
Outside Directorships,
and Other Experience |
Number of
Vanguard Funds
Overseen by
Trustee/Officer |
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Principal of Vanguard. Chief compliance officer
(2022–present) of Vanguard and of each of the
investment companies served by Vanguard. Chief
compliance officer (2018–2022) and deputy chief
compliance officer (2017–2019) of State Street. |
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Christine Buchanan
(1970) |
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Principal of Vanguard. Chief financial officer
(2021–present) and treasurer (2017–2021) of each of
the investment companies served by Vanguard.
Partner (2005–2017) at KPMG (audit, tax, and
advisory services). |
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Vice president of each of the investment companies
served by Vanguard (July 2024–present). President
(February 2024–present) and director (July
2024–present) of Vanguard. Chief investment officer
(2017–present) of Vanguard. Principal (2014–present)
and head of the Fixed Income Group (2014–2017) of
Vanguard. Asia-Pacific chief investment officer
(2013–2014) and director of Vanguard Investments
Australia, Ltd. (2013–2014). Member of the Treasury
Borrowing Advisory Committee of the U.S.
Department of the Treasury. Member of the
investment advisory committee on Financial Markets
for the Federal Reserve Bank of New York. Vice
chairman of the board of the Children’s Hospital of
Philadelphia. |
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Investment
Stewardship
Officer |
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Principal of Vanguard. Investment stewardship officer
(2020–present) of each of the investment companies
served by Vanguard. Head of Investor Advocacy
(2020–present) and head of Marketing Strategy and
Planning (2017–2020) at Vanguard. Special Assistant
to the President of the United States (2015). |
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Treasurer (2022–present) of each of the investment
companies served by Vanguard. Fund transfer agent
controller (2019–2022) and director of Audit Services
(2017–2019) at Vanguard. Senior manager
(2015–2017) at PriceWaterhouseCoopers (audit and
assurance, consulting, and tax services). |
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Principal of Vanguard. Finance director
(2022–present) of each of the investment companies
served by Vanguard. Head of Enterprise Investment
Services (2020–present), Head of Retail Client
Services & Operations (2020–2022), and Head of
Retail Strategic Support (2018–2020) at Vanguard. |
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Chief Executive
Officer and
President |
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Chief executive officer and president of each of the
investment companies served by Vanguard (July
2024–present). Chief executive officer and director of
Vanguard (July 2024–present). Global head of
iShares and of index investing of BlackRock
(2019–2024) and member of iShares fund board
(2019–2024). Head of U.S. Wealth Advisory of
BlackRock (2015–2019). Member of investment
committee of Friends Seminary. Trustee of Graham
Windham (child-welfare organization). Member of the
international leadership council of the University of
Toronto. |
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Position(s)
Held With Fund |
Vanguard
Funds’ Trustee/
Officer Since |
Principal Occupation(s)
During the Past Five Years,
Outside Directorships,
and Other Experience |
Number of
Vanguard Funds
Overseen by
Trustee/Officer |
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General counsel of Vanguard (October
2024–present). Secretary (October 2024–present) of
Vanguard and of each of the investment companies
served by Vanguard. Managing director (October
2024–present) of Vanguard. General counsel
(2017–2024) and vice chair for Legal, Regulatory and
Compliance (2019–2024) at KPMG LLP. Member of
the board of the National Women’s Law Center and
the National Women’s Law Center Action Fund.
Member of the board of the Ethics Research Center.
Member of the board of visitors for the Duke
University Sanford School of Public Policy. Member of
the Advisory Council for the Diversity Lab. Member of
the Pro Bono Institute Corporate Pro Bono Advisory
Board. |
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Finance director (2017–present) and treasurer (2017)
of each of the investment companies served by
Vanguard. Managing director (2016–present) of
Vanguard. Chief financial officer (2016–present) of
Vanguard. Director (2016–present) of Vanguard
Marketing Corporation. Executive vice president and
chief financial officer (2006–2016) of MassMutual
Financial Group. |
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The trustees designate an independent chair of the board. The independent chair is a spokesperson and principal point of contact for the trustees and is responsible for coordinating the activities of the trustees, including calling regular executive sessions of the trustees; developing the agenda of each meeting together with the chief executive officer; and chairing the meetings of the trustees. The independent chair also chairs the meetings of the audit, compensation, nominating, and independent governance committees.
Board Committees: The Trust’s board has the following committees:
■ Audit Committee: This committee oversees the accounting and financial reporting policies, the systems of internal controls, and the independent audits of each fund. The following independent trustees serve as members of the committee: Mr. Loughrey, Mr. Loughridge, Ms. Raskin, and Mr. Volanakis.
■ Compensation Committee: This committee oversees the compensation programs established by each fund for the benefit of its trustees. The following independent trustees serve as members of the committee: Mr. Loughrey, Mr. Loughridge, Ms. Raskin, and Mr. Volanakis.
■ Independent Governance Committee: This committee assists the board in fulfilling its responsibilities and is empowered to exercise board powers in the intervals between board meetings unless such action is prohibited by applicable law or Trust bylaws. The following independent trustees serve as members of the committee: Mr. Loughrey, Mr. Loughridge, Ms. Raskin, and Mr. Volanakis.
■ Investment Committees: These committees assist the board in its oversight of investment advisors to the funds and in the review and evaluation of materials relating to the board’s consideration of investment advisory agreements with the funds. Mr. Loughrey, Mr. Loughridge, Ms. Raskin, and Mr. Volanakis.
■ Nominating Committee: This committee nominates candidates for election to the board of trustees of each fund. The committee also has the authority to recommend the removal of any trustee. The following independent trustees serve as members of the committee: Mr. Loughrey, Mr. Loughridge, Ms. Raskin, and Mr. Volanakis.
The Nominating Committee will consider shareholder recommendations for trustee nominees. Shareholders may send recommendations to Mr. Loughridge, chairman of the committee.
Trustees retire in accordance with the funds’ governing documents and policies, and typically by age 75.
Trustee Compensation
The same individuals serve as trustees of all Vanguard funds and each fund pays a proportionate share of the trustees’ compensation. Vanguard funds also employ their officers on a shared basis; however, officers are compensated by Vanguard, not the funds. The trustees and officers of Vanguard LifeStrategy Funds and Vanguard STAR Fund will receive no remuneration directly from the Funds. However, the Funds‘ underlying funds pay their proportionate share of the trustees’ compensation and the officers’ salaries and benefits.
Independent Trustees. The funds compensate their independent trustees (i.e., the ones who are not also officers of the funds) in two ways:
■ The independent trustees receive an annual fee for their service to the funds, which is subject to reduction based on absences from scheduled board meetings.
■ The independent trustees are reimbursed for the travel and other expenses that they incur in attending board meetings.
Compensation Table. The following table provides compensation details for each of the trustees. We list the amounts paid as compensation by the Vanguard Total International Stock Index Fund for each trustee. In addition, the table shows the total amount of compensation paid to each trustee by all Vanguard funds.
VANGUARD STAR CORE-PLUS BOND FUND
TRUSTEES’ COMPENSATION TABLE
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Aggregate
Compensation From
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Total Compensation
From All Vanguard
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1 As of the date of this SAI, Vanguard STAR Core-Plus Bond Fund had not commenced operations.
2 The amounts reported in this column reflect the total compensation paid to each trustee for his or her service as trustee of 212 Vanguard funds for the 2023 calendar year. During the 2024 calendar year, the following trustees elected to defer all or a portion of their compensation as follows: Ms. Bunch, $380,000; Mr. Perold, $365,000; Ms. Raskin, $195,000; Mr. Reid, $365,000; and Dr. Thomas, $182,500.
3 Ms. Mulligan resigned from the Funds’ board effective May 3, 2024.
4 Mr. Pastor became a member of the Funds’ board effective January 1, 2024.
All trustees allocate their investments among the various Vanguard funds based on their own investment needs. The following table shows each trustee’s ownership of shares of each Fund and of all Vanguard funds served by the trustee as of December 31, 2024. As of the date of this SAI, Vanguard STAR Core-Plus Bond Fund had not commenced operations.
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Dollar Range
of Fund Shares
Owned by Trustee |
Aggregate Dollar Range of
Vanguard Fund Shares
Owned by Trustee |
Vanguard STAR Core-Plus Bond Fund |
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Portfolio Holdings Disclosure Policies and Procedures
Vanguard and the boards of trustees of the Vanguard funds (the Boards) have adopted Portfolio Holdings Disclosure Policies and Procedures (Policies and Procedures) to govern the disclosure of the portfolio holdings of each Vanguard fund. Vanguard and the Boards considered each of the circumstances under which Vanguard fund portfolio holdings may be disclosed to different categories of persons under the Policies and Procedures. Vanguard and the Boards also considered actual and potential material conflicts that could arise in such circumstances between the interests of Vanguard fund shareholders, on the one hand, and those of the fund’s investment advisor, sub-advisor, distributor, or any affiliated person of the fund, its investment advisor, sub-advisor, or its distributor, on the other. After giving due consideration to such matters and after the exercise of their fiduciary duties and reasonable business judgment, Vanguard and the Boards determined that the Vanguard funds have a legitimate business purpose for disclosing portfolio holdings to the persons described in each of the circumstances set forth in the Policies and Procedures and that the Policies and Procedures are reasonably designed to ensure that disclosure of portfolio holdings and information about portfolio holdings is in the best interests of fund shareholders and appropriately addresses the potential for material conflicts of interest.
The Boards exercise continuing oversight of the disclosure of Vanguard fund portfolio holdings by (1) overseeing the implementation and enforcement of the Policies and Procedures, the Code of Ethical Conduct, and the Policies and Procedures Designed to Prevent the Misuse of Inside Information (collectively, the portfolio holdings governing policies) by the chief compliance officer of Vanguard and the Vanguard funds; (2) considering reports and recommendations by the chief compliance officer concerning any material compliance matters (as defined in Rule 38a-1 under the 1940 Act and Rule 206(4)-7 under the Investment Advisers Act of 1940) that may arise in connection with any portfolio holdings governing policies; and (3) considering whether to approve or ratify any amendment to any portfolio holdings governing policies.
Vanguard and the Boards reserve the right to amend the Policies and Procedures at any time and from time to time without prior notice at their sole discretion. For purposes of the Policies and Procedures, the term “portfolio holdings” means the equity and debt securities (e.g., stocks and bonds) held by a Vanguard fund and does not mean the cash equivalent investments, derivatives, and other investment positions (collectively, other investment positions) held by the fund.
Online Disclosure of Complete Portfolio Holdings
Each actively managed Vanguard fund, unless otherwise stated, generally will seek to disclose the fund’s complete portfolio holdings as of the end of the most recent calendar quarter online at vanguard.com, 30 calendar days after the end of the calendar quarter. Each Vanguard fund relying on Rule 6c-11 under the 1940 Act (e.g., standalone ETFs) generally will seek to disclose complete portfolio holdings, including other investment positions, at the beginning of each business day. These portfolio holdings, including other investment positions, will be disclosed online at vanguard.com. In accordance with Rule 2a-7 under the 1940 Act, each of the Vanguard money market funds will disclose the fund’s complete portfolio holdings as of the last business day of the prior month online at vanguard.com no later than the fifth
business day of the current month. The complete portfolio holdings information for money market funds will remain available online for at least six months after the initial posting. Each Vanguard index fund, other than those Vanguard index funds relying on Rule 6c-11, generally will seek to disclose the fund’s complete portfolio holdings as of the end of the most recent month online at vanguard.com, 15 calendar days after the end of the month.
Online disclosure of complete portfolio holdings is made to all categories of persons, including individual investors, institutional investors, intermediaries, third-party service providers, rating and ranking organizations, affiliated persons of a Vanguard fund, and all other persons. Vanguard will review complete portfolio holdings before disclosure is made and, except with respect to the complete portfolio holdings of the Vanguard money market funds, may withhold any portion of the fund’s complete portfolio holdings from disclosure when deemed to be in the best interests of the fund after consultation with a Vanguard fund’s investment advisor.
Disclosure of Complete Portfolio Holdings to Service Providers Subject to Confidentiality and Trading Restrictions
Vanguard, for legitimate business purposes, may disclose Vanguard fund complete portfolio holdings at times it deems necessary and appropriate to rating and ranking organizations; financial printers; proxy voting service providers; pricing information vendors; issuers of guaranteed investment contracts for stable value portfolios; third parties that deliver analytical, statistical, or consulting services; and other third parties that provide services (collectively, Service Providers) to Vanguard, Vanguard subsidiaries, and/or the Vanguard funds. Disclosure of complete portfolio holdings to a Service Provider is conditioned on the Service Provider being subject to a written agreement imposing a duty of confidentiality, including a duty not to trade on the basis of any material nonpublic information.
The frequency with which complete portfolio holdings may be disclosed to a Service Provider, and the length of the lag, if any, between the date of the information and the date on which the information is disclosed to the Service Provider, is determined based on the facts and circumstances, including, without limitation, the nature of the portfolio holdings information to be disclosed, the risk of harm to the funds and their shareholders, and the legitimate business purposes served by such disclosure. The frequency of disclosure to a Service Provider varies and may be as frequent as daily, with no lag. Disclosure of Vanguard fund complete portfolio holdings by Vanguard to a Service Provider must be authorized by a Vanguard fund officer or a Principal in Vanguard’s Portfolio Review Department or Office of the General Counsel. Any disclosure of Vanguard fund complete portfolio holdings to a Service Provider as previously described may also include a list of the other investment positions that make up the fund, such as cash equivalent investments and derivatives.
Currently, Vanguard fund complete portfolio holdings are disclosed to the following Service Providers as part of ongoing arrangements that serve legitimate business purposes: Abel/Noser Corporation; Advisor Software, Inc.; Alcom Printing Group Inc.; Apple Press, L.C.; Bloomberg L.P.; Brilliant Graphics, Inc.; Broadridge Financial Solutions, Inc.; Brown Brothers Harriman & Co.; Canon Business Process Services; Charles River Systems, Inc.; Confluence Technology Inc.; Eagle Investments; Equilend; FactSet Research Systems Inc.; Gresham Technologies, Plc.; Institutional Shareholder Services, Inc.; Intellicor, LLC; Investment Technology Group, Inc.; Lipper, Inc.; Markit WSO Corporation; McMunn Associates Inc.; Morningstar, Inc.; Phoenix Lithographing Corporation; Pirium Systems Inc.; Reuters America Inc.; R.R. Donnelley, Inc.; Schvey, Inc. d/b/a Axoni; State Street Bank and Trust Company; Stonewain Systems Inc.; and Trade Informatics LLC.
Disclosure of Complete Portfolio Holdings to Vanguard Affiliates and Certain Fiduciaries Subject to Confidentiality and Trading Restrictions
Vanguard fund complete portfolio holdings may be disclosed between and among the following persons (collectively, Affiliates and Fiduciaries) for legitimate business purposes within the scope of their official duties and responsibilities, subject to such persons’ continuing legal duty of confidentiality and legal duty not to trade on the basis of any material nonpublic information, as such duties are imposed under the Code of Ethical Conduct, the Policies and Procedures Designed to Prevent the Misuse of Inside Information, by agreement, or under applicable laws, rules, and regulations: (1) persons who are subject to the Code of Ethical Conduct or the Policies and Procedures Designed to Prevent the Misuse of Inside Information; (2) an investment advisor, sub-advisor, distributor, administrator, transfer agent, or custodian to a Vanguard fund; (3) an accounting firm, an auditing firm, or outside legal counsel retained by Vanguard, a Vanguard subsidiary, or a Vanguard fund; (4) an investment advisor to whom complete portfolio holdings are disclosed for due diligence purposes when the advisor is in merger or acquisition talks with a Vanguard fund’s current advisor; and (5) a newly hired investment advisor or sub-advisor to whom complete portfolio holdings are disclosed prior to the time it commences its duties.
The frequency with which complete portfolio holdings may be disclosed between and among Affiliates and Fiduciaries, and the length of the lag, if any, between the date of the information and the date on which the information is disclosed between and among the Affiliates and Fiduciaries, is determined by such Affiliates and Fiduciaries based on the facts and circumstances, including, without limitation, the nature of the portfolio holdings information to be disclosed, the risk of harm to the funds and their shareholders, and the legitimate business purposes served by such disclosure. The frequency of disclosure between and among Affiliates and Fiduciaries varies and may be as frequent as daily, with no lag. Any disclosure of Vanguard fund complete portfolio holdings to any Affiliates and Fiduciaries as previously described may also include a list of the other investment positions that make up the fund, such as cash equivalent investments and derivatives. Disclosure of Vanguard fund complete portfolio holdings or other investment positions by Vanguard, VMC, or a Vanguard fund to Affiliates and Fiduciaries must be authorized by a Vanguard fund officer or a Principal of Vanguard.
Currently, Vanguard discloses complete portfolio holdings to the following Affiliates and Fiduciaries as part of ongoing arrangements that serve legitimate business purposes: Vanguard and each investment advisor, sub-advisor, custodian, and independent registered public accounting firm identified in each fund’s Statement of Additional Information.
Disclosure of Portfolio Holdings to Trading Counterparties in the Normal Course of Managing a Fund’s Assets
An investment advisor, sub-advisor, administrator, or custodian for a Vanguard fund may, for legitimate business purposes within the scope of its official duties and responsibilities, disclose portfolio holdings (whether partial portfolio holdings or complete portfolio holdings) and other investment positions that make up the fund to any trading counterparty, including one or more broker-dealers or banks, during the course of, or in connection with, normal day-to-day securities and derivatives transactions with or through such trading counterparties subject to the counterparty’s legal obligation not to use or disclose material nonpublic information concerning the fund’s portfolio holdings, other investment positions, securities transactions, or derivatives transactions without the consent of the fund or its agents. The Vanguard funds have not given their consent to any such use or disclosure and no person or agent of Vanguard is authorized to give such consent except as approved in writing by the Boards of the Vanguard funds. Disclosure of portfolio holdings or other investment positions by Vanguard to trading counterparties must be authorized by a Vanguard fund officer or a Principal of Vanguard.
In addition to the disclosures described below to Authorized Participants, a Vanguard fund investment advisor or administrator may also disclose portfolio holdings information to other current or prospective fund shareholders in connection with the dissemination of information necessary for transactions in Creation Units (as defined below) or other large transactions with a Vanguard fund. Such shareholders are typically Authorized Participants or other financial institutions that have been authorized by VMC to purchase and redeem large blocks of shares, but may also include market makers and other institutional market participants and entities to whom a Vanguard fund advisor or administrator may provide information in connection with transactions in a Vanguard fund.
Disclosure of Nonmaterial Information
The Policies and Procedures permit Vanguard fund officers, Vanguard fund portfolio managers, and other Vanguard representatives (collectively, Approved Vanguard Representatives) to disclose any views, opinions, judgments, advice, or commentary, or any analytical, statistical, performance, or other information, in connection with or relating to a Vanguard fund or its portfolio holdings and/or other investment positions (collectively, commentary and analysis) or any changes in the portfolio holdings of a Vanguard fund that occurred after the end of the most recent calendar quarter (recent portfolio changes) to any person if (1) such disclosure serves a legitimate business purpose, (2) such disclosure does not effectively result in the disclosure of the complete portfolio holdings of any Vanguard fund (which can be disclosed only in accordance with the Policies and Procedures), and (3) such information does not constitute material nonpublic information. Disclosure of commentary and analysis or recent portfolio changes by Vanguard, VMC, or a Vanguard fund must be authorized by a Vanguard fund officer or a Principal of Vanguard.
An Approved Vanguard Representative must make a good faith determination whether the information constitutes material nonpublic information, which involves an assessment of the particular facts and circumstances. Vanguard believes that in most cases recent portfolio changes that involve a few or even several securities in a diversified portfolio or commentary and analysis would be immaterial and would not convey any advantage to a recipient in making an investment decision concerning a Vanguard fund. Nonexclusive examples of commentary and analysis about a Vanguard fund include (1) the allocation of the fund’s portfolio holdings and other investment positions among various asset classes, sectors, industries, and countries; (2) the characteristics of the stock and bond components of the fund’s
portfolio holdings and other investment positions; (3) the attribution of fund returns by asset class, sector, industry, and country; and (4) the volatility characteristics of the fund. Approved Vanguard Representatives may, at their sole discretion, deny any request for information made by any person, and may do so for any reason or for no reason. Approved Vanguard Representatives include, for purposes of the Policies and Procedures, persons employed by or associated with Vanguard or a subsidiary of Vanguard who have been authorized by Vanguard’s Portfolio Review Department to disclose recent portfolio changes and/or commentary and analysis in accordance with the Policies and Procedures.
Disclosure of Portfolio Holdings Related Information to the Issuer of a Security for Legitimate Business Purposes
Vanguard, at its sole discretion, may disclose portfolio holdings information concerning a security held by one or more Vanguard funds to the issuer of such security if the issuer presents, to the satisfaction of Vanguard’s Fund Services and Oversight unit, convincing evidence that the issuer has a legitimate business purpose for such information. Disclosure of this information to an issuer is conditioned on the issuer being subject to a written agreement imposing a duty of confidentiality, including a duty not to trade on the basis of any material nonpublic information. The frequency with which portfolio holdings information concerning a security may be disclosed to the issuer of such security, and the length of the lag, if any, between the date of the information and the date on which the information is disclosed to the issuer, is determined based on the facts and circumstances, including, without limitation, the nature of the portfolio holdings information to be disclosed, the risk of harm to the funds and their shareholders, and the legitimate business purposes served by such disclosure. The frequency of disclosure to an issuer cannot be determined in advance of a specific request and will vary based upon the particular facts and circumstances and the legitimate business purposes, but in unusual situations could be as frequent as daily, with no lag. Disclosure of portfolio holdings information concerning a security held by one or more Vanguard funds to the issuer of such security must be authorized by a Vanguard fund officer or a Principal in Vanguard’s Equity Investment Group, Portfolio Review Department, or Office of the General Counsel.
Disclosure of Portfolio Holdings as Required by Applicable Law
Vanguard fund portfolio holdings (whether partial portfolio holdings or complete portfolio holdings) and other investment positions that make up a fund shall be disclosed to any person as required by applicable laws, rules, and regulations. Examples of such required disclosure include, but are not limited to, disclosure of Vanguard fund portfolio holdings (1) in a filing or submission with the SEC or another regulatory body, (2) in connection with seeking recovery on defaulted bonds in a federal bankruptcy case, (3) in connection with a lawsuit, or (4) as required by court order. Disclosure of portfolio holdings or other investment positions by Vanguard, VMC, or a Vanguard fund as required by applicable laws, rules, and regulations must be authorized by a Vanguard fund officer or a Principal of Vanguard.
Prohibitions on Disclosure of Portfolio Holdings
No person is authorized to disclose Vanguard fund portfolio holdings or other investment positions (whether online at vanguard.com, in writing, by fax, by email, orally, or by other means) except in accordance with the Policies and Procedures. In addition, no person is authorized to make disclosure pursuant to the Policies and Procedures if such disclosure is otherwise unlawful under the antifraud provisions of the federal securities laws (as defined in Rule 38a-1 under the 1940 Act). Furthermore, Vanguard’s management, at its sole discretion, may determine not to disclose portfolio holdings or other investment positions that make up a Vanguard fund to any person who would otherwise be eligible to receive such information under the Policies and Procedures, or may determine to make such disclosures publicly as provided by the Policies and Procedures.
Prohibitions on Receipt of Compensation or Other Consideration
The Policies and Procedures prohibit a Vanguard fund, its investment advisor, and any other person or entity from paying or receiving any compensation or other consideration of any type for the purpose of obtaining disclosure of Vanguard fund portfolio holdings or other investment positions. “Consideration” includes any agreement to maintain assets in the fund or in other investment companies or accounts managed by the investment advisor or sub-advisor or by any affiliated person of the investment advisor or sub-advisor.
Investment Advisory and Other Services
Vanguard STAR Core-Plus Bond Fund receives all investment advisory services from Vanguard, through its Equity Income Group. These services are provided by an experienced investment advisory staff employed directly by Vanguard. The compensation and other expenses of the advisory staff are allocated among the funds utilizing these services.
As of the date of this SAI, Vanguard STAR Core-Plus Bond Fund has not commenced operations and therefore had not incurred any advisory expenses.
1. Other Accounts Managed
The following table provides information relating to the other accounts managed by the portfolio managers of the Fund as of December 31, 2024 (unless otherwise noted):
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No. of accounts
with performance-based
fees |
Total assets in
accounts with
performance-based
fees |
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Registered investment companies1
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Other pooled investment vehicles |
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Registered investment companies1
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Other pooled investment vehicles |
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Registered investment companies1
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Other pooled investment vehicles |
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Registered investment companies1
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Other pooled investment vehicles |
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1
As of the date of this SAI, Vanguard STAR Core-Plus Bond Fund had not commenced operations.
2. Material Conflicts of Interest
At Vanguard, individual portfolio managers may manage multiple accounts for multiple clients. In addition to mutual funds, these accounts may include separate accounts, collective trusts, or offshore funds. Managing multiple funds or accounts may give rise to potential conflicts of interest including, for example, conflicts among investment strategies and conflicts in the allocation of investment opportunities. Vanguard manages potential conflicts between funds or accounts through allocation policies and procedures, internal review processes, and oversight by trustees and independent third parties. Vanguard has developed trade allocation procedures and controls to ensure that no one client, regardless of type, is intentionally favored at the expense of another. Allocation policies are designed to address potential conflicts in situations in which two or more funds or accounts participate in investment decisions involving the same securities.
3. Description of Compensation
All Vanguard portfolio managers are Vanguard employees. This section describes the compensation of the Vanguard employees who manage Vanguard mutual funds. As of December 31, 2024, a Vanguard portfolio manager’s compensation generally consists of base salary, bonus, and payments under Vanguard’s long-term incentive compensation program. In addition, portfolio managers are eligible for the standard retirement benefits and health and welfare benefits available to all Vanguard employees. Also, certain portfolio managers may be eligible for additional retirement benefits under several supplemental retirement plans that Vanguard adopted in the 1980s to restore dollar-for-dollar the benefits of management employees that had been cut back solely as a result of tax law changes. These plans are structured to provide the same retirement benefits as the standard retirement plans.
In the case of portfolio managers responsible for managing multiple Vanguard funds or accounts, the method used to determine their compensation is the same for all funds and investment accounts. A portfolio manager’s base salary is
determined by the manager’s experience and performance in the role, taking into account the ongoing compensation benchmark analyses performed by Vanguard’s Human Resources Department. A portfolio manager’s base salary is generally a fixed amount that may change as a result of an annual review, upon assumption of new duties, or when a market adjustment of the position occurs.
A portfolio manager’s bonus is determined by a number of factors. The target bonus is expressed as a percentage of base salary. The actual bonus paid may be more or less than the target bonus, based on how well the manager satisfies the objectives previously described. The bonus is paid on an annual basis.
Under the long-term incentive compensation program, all full-time employees receive a payment from Vanguard’s long-term incentive compensation plan based on their years of service, job level, and, if applicable, management responsibilities. Each year, Vanguard’s independent directors determine the amount of the long-term incentive compensation award for that year based on the investment performance of the Vanguard funds relative to competitors and Vanguard’s operating efficiencies in providing services to the Vanguard funds.
4. Ownership of Securities
As of the date of this SAI, Vanguard STAR Core-Plus Bond Fund had not commenced operations, and therefore the portfolio managers did not own any shares of the Fund.
Portfolio Transactions
The advisor decides which securities to buy and sell on behalf of the Fund and then selects the brokers or dealers that will execute the trades on an agency basis or the dealers with whom the trades will be effected on a principal basis. For each trade, the advisor must select a broker-dealer that it believes will provide “best execution.” Best execution does not necessarily mean paying the lowest spread or commission rate available. In seeking best execution, the SEC has said that an advisor should consider the full range of a broker-dealer’s services. The factors considered by the advisor in seeking best execution include, but are not limited to, the broker-dealer’s execution capability, clearance and settlement services, commission rate, trading expertise, willingness and ability to commit capital, ability to provide anonymity, financial responsibility, reputation and integrity, responsiveness, access to underwritten offerings and secondary markets, and access to company management, as well as the value of any research provided by the broker-dealer. In assessing which broker-dealer can provide best execution for a particular trade, the advisor also may consider the timing and size of the order and available liquidity and current market conditions. Subject to applicable legal requirements, the advisor may select a broker based partly on brokerage or research services provided to the advisor and its clients, including the Fund. The advisor may cause the Fund to pay a higher commission than other brokers would charge if the advisor determines in good faith that the amount of the commission is reasonable in relation to the value of services provided. The advisor also may receive brokerage or research services from broker-dealers that are provided at no charge in recognition of the volume of trades directed to the broker. To the extent research services or products may be a factor in selecting brokers, services and products may include written research reports analyzing performance or securities, discussions with research analysts, meetings with corporate executives to obtain oral reports on company performance, market data, and other products and services that will assist the advisor in its investment decision-making process. The research services provided by brokers through which the Fund effects securities transactions may be used by the advisor in servicing all of its accounts, and some of the services may not be used by the advisor in connection with the Fund.
Some securities that are considered for investment by the Fund may also be appropriate for other Vanguard funds or for other clients served by the advisor. If any such brokerage commissions are paid, however, the advisor will evaluate their reasonableness by considering: (1) the historical commission rates; (2) the rates that other institutional investors are paying, based upon publicly available information; (3) the rates quoted by brokers and dealers; (4) the size of a particular transaction, in terms of the number of shares, the dollar amount, and the number of clients involved; (5) the complexity of a particular transaction in terms of both execution and settlement; (6) the level and type of business done with a particular firm over a period of time; and (7) the extent to which the broker or dealer has capital at risk in the transaction. If such securities are compatible with the investment policies of the Fund and one or more of the advisor’s other clients, and are considered for purchase or sale at or about the same time, then transactions in such securities may be aggregated by the advisor, and the purchased securities or sale proceeds may be allocated among the participating Vanguard funds and the other participating clients of the advisor in a manner deemed equitable by the advisor. Although there may be no specified formula for allocating such transactions, the allocation methods used, and the results of such allocations, will be subject to periodic review by the Fund’s board of trustees.
As of the date of this SAI, Vanguard STAR Core-Plus Bond Fund had not commenced operations, and therefore had not held securities of its “regular brokers or dealers,” as that term is defined in Rule 10b-1 of the 1940 Act.
Each Vanguard fund (other than fund of funds) advised by Vanguard retains the authority to vote proxies received with respect to the shares of equity securities held in a portfolio advised by Vanguard. The Board of Trustees of the Vanguard-advised funds (the Board) has adopted proxy voting procedures and guidelines to govern proxy voting for each portfolio retaining proxy voting authority, which are summarized in Appendix A.
Vanguard has entered into agreements with various state, federal, and non-U.S. regulators and with certain issuers that limit the amount of shares that the funds may vote at their discretion for particular securities. For these securities, the funds are able to vote a limited portion of the shares at their discretion. Any additional shares generally are voted in the same proportion as votes cast by the issuer’s entire shareholder base (i.e., mirror voted), or the fund is not permitted to vote such shares. Further, the Board has adopted policies that will result in certain funds mirror voting a higher proportion of the shares they own in a regulated issuer in order to permit certain other funds (generally advised by managers not affiliated with Vanguard) to mirror vote none, or a lower proportion, of their shares in such regulated issuer.
II. Securities Lending
There may be occasions when Vanguard needs to restrict lending of and/or recall securities that are out on loan in order to vote the full position at a shareholder meeting. For the funds managed by Vanguard, Vanguard has processes to monitor securities on loan and to evaluate any circumstances that may require it to restrict and/or attempt to recall the security based on the criteria set forth in Appendix A.
To obtain a free copy of a report that details how the funds voted the proxies relating to the portfolio securities held by the funds for the prior 12-month period ended June 30, log on to vanguard.com or visit the SEC’s website at sec.gov.
As of the date of this SAI, Vanguard STAR Core-Plus Bond Fund had not commenced operations, and therefore financial statements are not yet available for the Fund. For a more complete discussion of the Fund’s performance, please see the Fund’s annual report to shareholders, which, once available, may be obtained without charge.
Summary of the Vanguard-Advised Funds Proxy Voting Policy
The funds (other than fund of funds) for which Vanguard acts as investment advisor (Vanguard-advised funds) retain authority to vote proxies received for the shares of equity securities held in each fund. The Board of Trustees (the Board) for the Vanguard-advised funds has adopted proxy voting procedures and guidelines to govern proxy voting for each portfolio retaining proxy voting authority.
The Investment Stewardship Oversight Committee (the Committee), comprised primarily of fund officers and subject to the procedures described below, oversees the Vanguard-advised funds’ proxy voting. The Committee reports directly to the Board. Vanguard is subject to these procedures and the proxy voting policies to the extent that they call for Vanguard to administer the voting process and implement the resulting voting decisions, and for these purposes the voting policies have also been approved by the Board of Directors of Vanguard.
The voting principles and policies adopted by the Board provide a framework for assessing each proposal and seek to ensure that each vote is cast in the best interests of each fund. Under the voting policies, each proposal is evaluated on its merits, based on the particular facts and circumstances presented at the company in question. For more information on the funds’ proxy voting policies, please visit about.vanguard.com/investment-stewardship.
I. Investment Stewardship Team
The Investment Stewardship Team administers the day-to-day operation of the funds’ proxy voting process, overseen by the Committee. The Investment Stewardship Team performs the following functions: (1) managing and conducting due diligence of proxy voting vendors; (2) reconciling share positions; (3) analyzing proxy proposals using factors described in the voting policies; (4) determining and addressing potential or actual conflicts of interest that may be presented by a particular proxy; and (5) voting proxies. The Investment Stewardship Team also prepares periodic and special reports for the Board and proposes amendments to the procedures and voting policies.
II. Investment Stewardship Oversight Committee
The Board, including a majority of the independent trustees, appoints the members of the Committee (which is comprised primarily of fund officers). The Committee works with the Investment Stewardship Team to provide reports and other guidance to the Board regarding proxy voting by the funds. The Committee has an obligation to exercise its decision-making authority in accordance with the Board’s instructions as set forth in the funds’ proxy voting procedures and voting policies and subject to the fiduciary standards of good faith, fairness, and Vanguard’s Code of Ethical Conduct. The Committee may advise the Investment Stewardship Team on how to best apply the Board’s instructions as set forth in the voting policies or refer the matter to the Board, which has ultimate decision-making authority for the funds. The Board reviews the procedures and voting policies annually and modifies them from time to time upon the recommendation of the Committee and in consultation with the Investment Stewardship Team.
III. Proxy Voting Pillars
Vanguard’s investment stewardship activities are grounded in four pillars of corporate governance:
1) Board composition and effectiveness: Good governance begins with a company’s board of directors. Our primary focus is on understanding to what extent the individuals who serve as board members are appropriately independent, capable, and experienced.
2) Board oversight of strategy and risk: Boards should be meaningfully involved in the formation and oversight of strategy and have ongoing oversight of material risks to their company. We work to understand how boards of directors are involved in strategy formation, oversee company strategy, and identify and govern material risks to long-term shareholder returns.
3) Executive pay (compensation or remuneration): Sound, performance-linked compensation programs drive long-term investment returns. We look for companies to provide clear disclosure about their compensation practices, the board’s oversight of those practices, and how said practices are aligned with long-term shareholder returns.
4) Shareholder rights: We believe governance structures should allow shareholders to effectively exercise their foundational rights. Shareholder rights enable a company’s owners to use their voice and their vote—ideally, consistent with their economic exposure—to effect and approve changes in corporate governance practices.
IV. Evaluation of Proxies
For ease of reference, the procedures and guidelines often refer to all Vanguard-advised funds. However, the processes and practices seek to ensure that proxy voting decisions are suitable for individual funds. For most proxy proposals, particularly those involving routine corporate governance matters, the evaluation could result in the funds having a common interest in the matter and, accordingly, each fund casting votes in the same manner. In other cases, however, a fund may vote differently from other funds, depending upon the nature and objective of each fund, if doing so is in the best interest of the individual fund.
The voting policies do not permit the Board to delegate voting discretion to a third party that does not serve as a fiduciary for all Vanguard-advised funds. Because many factors bear on each decision, the voting policies incorporate factors that should be considered in each voting decision. A fund may refrain from voting some or all of its shares or vote in a particular way if doing so would be in the fund’s and its shareholders’ best interests. These circumstances may arise, for example, if the expected cost of voting exceeds the expected benefits of voting, if exercising the vote would result in the imposition of trading or other restrictions, or if a fund (or all Vanguard funds in the aggregate) were to own more than the permissible maximum percentage of a company’s stock (as determined by the company’s governing documents or by applicable law, regulation, or regulatory agreement), or if voting would present a potential conflict of interest.
In evaluating proxy proposals, the Investment Stewardship Team considers information from many sources, which could include, but is not limited to, the perspectives of the company management or shareholders presenting a proposal, independent proxy research services, or proprietary research. Additionally, data and recommendations from proxy advisors serve as one of many inputs into our research process. The Vanguard-advised funds may utilize automated voting for matters that are clearly addressed by the funds’ proxy voting procedures and guidelines.
While serving as a framework, the voting policies cannot contemplate all possible proposals with which a fund may be presented. In the absence of a specific guideline for a particular proposal (e.g., in the case of a transactional issue or contested proxy), the Investment Stewardship Team, under the supervision of the Committee, will evaluate the matter and cast the fund’s vote in a manner that is in the fund’s best interest, subject to the individual circumstances of the fund.
Vanguard takes seriously its commitment to avoid potential conflicts of interest. Vanguard funds invest in thousands of publicly listed companies worldwide. Those companies may include clients, potential clients, vendors, or competitors. Some companies may employ Vanguard trustees, former Vanguard executives, or family members of Vanguard personnel who have direct involvement in Vanguard’s Investment Stewardship program.
Vanguard’s approach to mitigating conflicts of interest begins with the funds’ proxy voting procedures. The procedures require that voting personnel act as fiduciaries and must conduct their activities at all times in accordance with the following standards: (i) fund shareholders’ interests come first; (ii) conflicts of interest must be avoided and mitigated to the extent possible; and (iii) compromising situations must be avoided.
We maintain an important separation between Vanguard’s Investment Stewardship Team and other groups within Vanguard that are responsible for sales, marketing, client service, and vendor/partner relationships. Proxy voting personnel are required to disclose potential conflicts of interest and must recuse themselves from all voting decisions and engagement activities in such instances. In certain circumstances, Vanguard may refrain from voting shares of a company, or may engage an independent third-party fiduciary to vote proxies.
Each externally managed fund has adopted the proxy voting guidelines of its advisor(s) and votes in accordance with the external advisors’ guidelines and procedures. Each advisor has its own procedures for managing conflicts of interest in the best interests of fund shareholders.
VI. Shareholder Proposals
Shareholder proposals are evaluated in the context of the general corporate governance principle that a company’s board has ultimate responsibility for providing effective ongoing oversight of relevant sector and company-specific risks, including risks related to environmental and social matters. Each proposal is evaluated on its merits and in the context of the particular facts and circumstances at the company in question and supported when there is a logically demonstrable linkage between the specific proposal and long-term shareholder value of the company. Some of the factors considered when evaluating shareholder proposals include the materiality of the risk addressed by the proposal, the quality of the current disclosures/business practices, and any progress by the company toward addressing and disclosing the relevant material risk.
VII. Voting in Markets Outside the United States
Corporate governance standards, disclosure requirements, and voting mechanics vary greatly among the markets outside the United States (U.S.) in which the funds may invest. Each fund’s votes will be used, where applicable, to support improvements in governance and disclosure by each fund’s portfolio companies. Matters presented by non-U.S. portfolio companies will be evaluated in the foregoing context, as well as in accordance with local market standards and best practices. Votes are cast for each fund in a manner philosophically consistent with the voting policies, taking into account differing practices by market.
In many other markets, voting proxies will result in a fund being prohibited from selling the shares for a period of time due to requirements known as “share-blocking” or reregistration. Generally, the value of voting is unlikely to outweigh the loss of liquidity imposed by these requirements on the funds. In such instances, the funds will generally abstain from voting.
The costs of voting (e.g., custodian fees, vote agency fees) in other markets may be substantially higher than for U.S. holdings. As such, the fund may limit its voting on foreign holdings in instances in which the issues presented are unlikely to have a material impact on shareholder value.
VIII. Voting Shares of a Company That Has an Ownership Limitation
Certain companies have provisions in their governing documents or other agreements that restrict stock ownership in excess of a specified limit. Typically, these ownership restrictions are included in the governing documents of real estate investment trusts but may be included in other companies’ governing documents. A company’s governing documents normally allow the company to grant a waiver of these ownership limits, which would allow a fund to exceed the stated ownership limit. Sometimes a company will grant a waiver without restriction. From time to time, a company may grant a waiver only if a fund (or funds) agrees to not vote the company’s shares in excess of the normal specified limit. In such a circumstance, a fund may refrain from voting shares if owning the shares beyond the company’s specified limit is in the best interests of the fund and its shareholders.
In addition, applicable law may require prior regulatory approval to permit ownership of certain regulated issuer’s voting securities above certain limits or may impose other restrictions on owners of more than a certain percentage of a regulated issuer’s voting shares. The Board has authorized the funds to vote shares above these limits in the same
proportion as votes cast by the issuer’s entire shareholder base (i.e., mirror vote), or to refrain from voting excess shares. Further, the Board has adopted policies that will result in certain funds mirror voting a higher proportion of the shares they own in a regulated issuer in order to permit certain other funds (generally advised by managers not affiliated with Vanguard) to mirror vote none, or a lower proportion of, their shares in such regulated issuer.
IX. Voting on a Fund’s Holdings of Other Vanguard Funds
Certain Vanguard funds (owner funds) may, from time to time, own shares of other Vanguard funds (underlying funds). If an underlying fund submits a matter to a vote of its shareholders, votes for and against such matters on behalf of the owner funds will be cast in the same proportion as the votes of the other shareholders in the underlying fund.
There may be occasions when Vanguard needs to restrict lending of and/or recall securities that are out on loan in order to vote in a shareholder meeting. Vanguard has processes to monitor securities on loan and to evaluate any circumstances that may require us to restrict and/or recall the stock. In making this decision, we consider:
■ The subject of the vote and whether, based on our knowledge and experience, we believe the topic is potentially material to the corporate governance and/or long-term performance of the company;
■ The funds’ individual and/or aggregate equity investment in a company, and whether we estimate that voting funds’ shares would affect the shareholder meeting outcome; and
■ The long-term impact to our fund shareholders, evaluating whether we believe the benefits of voting a company’s shares would outweigh the benefits of stock lending revenues in a particular instance.
PART C
VANGUARD STAR FUNDS
OTHER INFORMATION
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Instruments Defining Rights of Security Holders, reference is made to Articles III and V of the Registrant’s Amended
and Restated Agreement and Declaration of Trust, refer to Exhibit (a) above. |
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Investment Advisory Contracts, The Vanguard Group, Inc., provides investment advisory services to Vanguard
STAR Fund, Vanguard Total International Stock Index Fund, and Vanguard LifeStrategy Funds pursuant to the Fifth
Amended and Restated Funds’ Service Agreement, refer to Exhibit (h) below. |
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Underwriting Contracts, not applicable. |
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Bonus or Profit Sharing Contracts, reference is made to the section entitled “Management of the Funds” in Part B of
this Registration Statement. |
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incorporated by reference. |
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Legal Opinion, not applicable. |
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Other Opinions, Consent of Independent Registered Public Accounting Firm, not applicable. |
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Omitted Financial Statements, not applicable. |
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Initial Capital Agreements, not applicable. |
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Rule 12b-1 Plan, not applicable. |
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2024, is hereby incorporated by reference. |
Item 29. Persons Controlled by or under Common Control with Registrant
The Registrant’s organizational documents contain provisions indemnifying Trustees and officers against liability incurred in their official capacities. Article VII, Section 2 of the Amended and Restated Agreement and Declaration of Trust provides that the Registrant may indemnify and hold harmless each and every Trustee and officer from and against any and all claims, demands, costs, losses, expenses, and damages whatsoever arising out of or related to the performance of his or her duties as a Trustee or officer. Article VI of the By-Laws generally provides that the Registrant shall indemnify its Trustees and officers, and may indemnify its underwriter or affiliated persons, from any liability arising out of their past or present service in that capacity. Among other things, this provision excludes any liability arising by reason of willful misfeasance, bad faith, gross negligence, or the reckless disregard of the duties involved in the conduct of the Trustee’s or officer’s office with the Registrant. In addition, the Registrant maintains liability insurance policies which, under certain circumstances, provides coverage to Trustees and officers.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the Securities Act) may be permitted for directors, officers, or persons controlling the Registrant pursuant to the foregoing provisions, the Registrant has been
informed that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Item 31. Business and Other Connections of Investment Adviser
The Vanguard Group, Inc. (Vanguard), is an investment adviser registered under the Investment Advisers Act of 1940, as amended (the Advisers Act). The list required by this Item 31 of officers and directors of Vanguard, together with any information as to any business, profession, vocation, or employment of a substantial nature engaged in by such officers and directors during the past two years, is incorporated herein by reference from Form ADV filed by Vanguard pursuant to the Advisers Act (SEC File No. 801-11953).
Item 32. Principal Underwriters
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Vanguard Marketing Corporation, a wholly owned subsidiary of The Vanguard Group, Inc., is the principal
underwriter of each fund within the Vanguard group of investment companies, a family of over 200 funds. |
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The principal business address of each named director and officer of Vanguard Marketing Corporation is 100
Vanguard Boulevard, Malvern, PA 19355. |
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Positions and Office with Underwriter |
Positions and Office with Funds |
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President and Chief Executive Officer
Designee |
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General Counsel and Vice President |
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Anti-Money Laundering Officer |
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Chief Information Security Officer |
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Principal Financial Officer and Treasurer |
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Positions and Office with Underwriter |
Positions and Office with Funds |
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Chief Information Officer |
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Principal Operations Officer |
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Item 33. Location of Accounts and Records
The books, accounts, and other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940, as amended, and the rules promulgated thereunder will be maintained at the offices of the Registrant, the Registrant’s Transfer Agent, The Vanguard Group, Inc., 100 Vanguard Boulevard, Malvern, PA 19355; the Registrant’s Custodian, JP Morgan Chase Bank, 383 Madison Avenue, New York, NY 10179; and the Registrant’s investment advisor at the location identified in this Registration Statement.
Item 34. Management Services
Other than as set forth in the section entitled “Management of the Fund” in Part B of this Registration Statement, the Registrant is not a party to any management-related service contract.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant hereby certifies that it meets all requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Town of Valley Forge and the Commonwealth of Pennsylvania, on the 19th day of February, 2025.
Salim Ramji
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment to the Registration Statement has been signed below by the following persons in the capacities and on the date indicated:
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/s/ Salim Ramji*
Salim Ramji |
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/s/ Tara Bunch*
Tara Bunch |
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/s/ Emerson U. Fullwood*
Emerson U. Fullwood |
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/s/ F. Joseph Loughrey*
F. Joseph Loughrey |
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/s/ Mark Loughridge*
Mark Loughridge |
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/s/ Scott C. Malpass*
Scott C. Malpass |
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/s/ Lubos Pastor*
Lubos Pastor |
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/s/ André F. Perold*
André F. Perold |
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/s/ Sarah Bloom Raskin*
Sarah Bloom Raskin |
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/s/ Grant Reid*
Grant Reid |
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/s/ David Thomas*
David Thomas |
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/s/ Peter F. Volanakis*
Peter F. Volanakis |
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/s/ Christine Buchanan*
Christine Buchanan |
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*By: /s/ John E. Schadl
John E. Schadl, pursuant to a Power of Attorney filed on December 20, 2024 (see File Number 33-49023), and a Power of Attorney filed on July 25, 2024 (see File Number 33-48863), each Incorporated by Reference.
AMENDMENT NO. 5
TO AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
OF
VANGUARD STAR FUNDS
This Amendment No. 5 (the “Amendment”) to the Amended and Restated Agreement and Declaration of Trust of Vanguard STAR Funds (the “Trust”) amends, effective March 29, 2016, the Amended and Restated Agreement and Declaration of Trust of the Trust dated as of November 19, 2008, as amended (the “Agreement”).
By resolutions adopted at a meeting of the Trust’s Board of Trustees (the “Board”) on November 20, 2024, the Board approved this Amendment. Under Article VIII, Section 4 of the Agreement, this Amendment may be executed by a duly authorized officer of the Trust.
WHEREAS, the Trust desires to amend the Agreement to reflect the addition of Vanguard STAR Core-Plus Bond Fund a new series of the Trust;
NOW, THEREFORE, the Agreement is hereby amended as follows:
1.Schedule A of the Agreement is hereby amended and restated to read in its entirety as set forth on Exhibit 1 to this Amendment.
2.All references in the Agreement to the “Amended Declaration of Trust” or “Declaration of Trust” shall mean the Agreement as amended by this Amendment.
3.Except as specifically amended by this Amendment, the Agreement is hereby confirmed and remains in full force and effect.
IN WITNESS WHEREOF, the undersigned, a duly authorized officer of the Trust, has executed this Amendment as of December 17, 2024.
VANGUARD STAR FUNDS
/S/ John Schadl
(Original signature on Declaration of Trust)
John Schadl, Assistant Secretary
Vanguard Internal Use Only
EXHIBIT 1
TO AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
OF
VANGUARD STAR FUNDS
SCHEDULE A
VANGUARD STAR FUNDS
SERIES AND CLASSES OF THE TRUST
SERIES |
CLASSES |
Vanguard Developed Markets Index Fund Investor, Institutional, Institutional Plus |
Vanguard LifeStrategy Conservative Growth Fund |
Investor |
Vanguard LifeStrategy Growth Fund |
Investor |
Vanguard LifeStrategy Income Fund |
Investor |
Vanguard LifeStrategy Moderate Growth Fund |
Investor |
Vanguard STAR Fund |
Investor |
Vanguard Total International Stock Index Fund |
Investor, Admiral, Institutional, |
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Institutional Plus, ETF, Institutional |
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Select |
Vanguard STAR Core-Plus Bond Fund |
Institutional |
107932, v0.8
Vanguard Internal Use Only
AMENDMENT NO. 4
TO AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
OF
VANGUARD STAR FUNDS
This Amendment No. 4 (the “Amendment”) to the Amended and Restated Agreement and Declaration of Trust of Vanguard STAR Funds (the “Trust”) amends, effective March 29, 2016, the Amended and Restated Agreement and Declaration of Trust of the Trust dated as of November 19, 2008, as amended (the “Agreement”).
By resolutions adopted at a meeting of the Trust’s Board of Trustees (the “Board”) on December 16, 2015, the Board approved this Amendment. Under Article VIII, Section 4 of the Agreement, this Amendment may be executed by a duly authorized officer of the Trust.
WHEREAS, the Trust desires to amend the Agreement to reflect the addition of an Institutional Select share class of the Vanguard Total International Stock Index Fund, a series of the Trust;
NOW, THEREFORE, the Agreement is hereby amended as follows:
4.Schedule A of the Agreement is hereby amended and restated to read in its entirety as set forth on Exhibit 1 to this Amendment.
5.All references in the Agreement to the “Amended Declaration of Trust” or “Declaration of Trust” shall mean the Agreement as amended by this Amendment.
6.Except as specifically amended by this Amendment, the Agreement is hereby confirmed and remains in full force and effect.
IN WITNESS WHEREOF, the undersigned, a duly authorized officer of the Trust, has executed this Amendment as of October 27, 2022.
VANGUARD STAR FUNDS
/S/ Michael J. Drayo___________
(Original signature on Declaration of Trust)
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EXHIBIT 1
TO AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
OF
VANGUARD STAR FUNDS
SCHEDULE A
VANGUARD STAR FUNDS
SERIES AND CLASSES OF THE TRUST
SERIES |
CLASSES |
Vanguard Developed Markets Index Fund Investor, Institutional, Institutional Plus |
Vanguard LifeStrategy Conservative Growth Fund |
Investor |
Vanguard LifeStrategy Growth Fund |
Investor |
Vanguard LifeStrategy Income Fund |
Investor |
Vanguard LifeStrategy Moderate Growth Fund |
Investor |
Vanguard STAR Fund |
Investor |
Vanguard Total International Stock Index Fund |
Investor, Admiral, Institutional, |
|
Institutional Plus, ETF, Institutional |
|
Select |
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AMENDMENT NO. 4
TO AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
OF
VANGUARD STAR FUNDS
This Amendment No. 4 (the “Amendment”) to the Amended and Restated Agreement and Declaration of Trust of Vanguard STAR Funds (the “Trust”) amends, effective March 29, 2016, the Amended and Restated Agreement and Declaration of Trust of the Trust dated as of November 19, 2008, as amended (the “Agreement”).
By resolutions adopted at a meeting of the Trust’s Board of Trustees (the “Board”) on December 16, 2015, the Board approved this Amendment. Under Article VIII, Section 4 of the Agreement, this Amendment may be executed by a duly authorized officer of the Trust.
WHEREAS, the Trust desires to amend the Agreement to reflect the addition of an Institutional Select share class of the Vanguard Total International Stock Index Fund, a series of the Trust;
NOW, THEREFORE, the Agreement is hereby amended as follows:
1.Schedule A of the Agreement is hereby amended and restated to read in its entirety as set forth on Exhibit 1 to this Amendment.
2.All references in the Agreement to the “Amended Declaration of Trust” or “Declaration of Trust” shall mean the Agreement as amended by this Amendment.
3.Except as specifically amended by this Amendment, the Agreement is hereby confirmed and remains in full force and effect.
IN WITNESS WHEREOF, the undersigned, a duly authorized officer of the Trust, has executed this Amendment as of March ____, 2016.
VANGUARD STAR FUNDS
/S/ Laura Merianos _____________
(Original signature on Declaration of Trust)
Laura Merianos, Assistant Secretary
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EXHIBIT 1
TO AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
OF
VANGUARD STAR FUNDS
SCHEDULE A
VANGUARD STAR FUNDS
SERIES AND CLASSES OF THE TRUST
SERIES |
CLASSES |
Vanguard Developed Markets Index Fund Investor, Institutional, Institutional Plus |
Vanguard LifeStrategy Conservative Growth Fund |
Investor |
Vanguard LifeStrategy Growth Fund |
Investor |
Vanguard LifeStrategy Income Fund |
Investor |
Vanguard LifeStrategy Moderate Growth Fund |
Investor |
Vanguard STAR Fund |
Investor |
Vanguard Total International Stock Index Fund |
Investor, Admiral, Signal, Institutional, |
Institutional Plus, ETF, Institutional Select |
|
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AMENDMENT NO. 3
TO AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
OF
VANGUARD STAR FUNDS
This Amendment No. 3 (the “Amendment”) to the Amended and Restated Agreement and Declaration of Trust of Vanguard STAR Funds (the “Trust”) amends, effective September 23, 2010, the Amended and Restated Agreement and Declaration of Trust of the Trust dated as of November 19, 2008, as amended (the “Agreement”).
By resolutions adopted at a meeting of the Trust’s Board of Trustees (the “Board”) on September 23, 2010, the Board approved this Amendment. Under Article VIII, Section 4 of the Agreement, this Amendment may be executed by a duly authorized officer of the Trust.
WHEREAS, the Trust desires to amend the Agreement to reflect the addition of certain share classes to the Vanguard Developed Markets Index Fund, a series of the Trust, and Vanguard Total International Stock Index Fund, a series of the Trust;
NOW, THEREFORE, the Agreement is hereby amended as follows:
1.Schedule A of the Agreement is hereby amended and restated to read in its entirety as set forth on Exhibit 1 to this Amendment.
2.All references in the Agreement to the “Amended Declaration of Trust” or “Declaration of Trust” shall mean the Agreement as amended by this Amendment.
3.Except as specifically amended by this Amendment, the Agreement is hereby confirmed and remains in full force and effect.
IN WITNESS WHEREOF, the undersigned, a duly authorized officer of the Trust, has executed this Amendment as of November 24, 2010.
VANGUARD STAR FUNDS
/S/ Natalie Bej _____________
(Original signature on Declaration of Trust) Natalie Bej, Assistant Secretary
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EXHIBIT 1
TO AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
OF
VANGUARD STAR FUNDS
“SCHEDULE A
VANGUARD STAR FUNDS
SERIES AND CLASSES OF THE TRUST
SERIES |
CLASSES |
Vanguard Developed Markets Index Fund Investor, Institutional, Institutional Plus |
Vanguard LifeStrategy Conservative Growth Fund |
Investor |
Vanguard LifeStrategy Growth Fund |
Investor |
Vanguard LifeStrategy Income Fund |
Investor |
Vanguard LifeStrategy Moderate Growth Fund |
Investor |
Vanguard STAR Fund |
Investor |
Vanguard Total International Stock Index Fund |
Investor, Admiral, Signal, Institutional, |
Institutional Plus, ETF” |
|
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AMENDMENT NO. 2
TO AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
OF
VANGUARD STAR FUNDS
This Amendment No. 2 (the “Amendment”) to the Amended and Restated Agreement and Declaration of Trust of Vanguard STAR Funds (the “Trust”) amends, effective January 22, 2010, the Amended and Restated Agreement and Declaration of Trust of the Trust dated as of November 19, 2008, as amended (the “Agreement”).
By resolutions adopted at a meeting of the Trust’s Board of Trustees (the “Board”) on January 22, 2010, the Board approved this Amendment. Under Article VIII, Section 4 of the Agreement, this Amendment may be executed by a duly authorized officer of the Trust.
WHEREAS, the Trust desires to amend the Agreement to reflect the merger of Vanguard Institutional Developed Markets Index Fund into Vanguard Developed Markets Index Fund, each a series of the Trust;
NOW, THEREFORE, the Agreement is hereby amended as follows:
1.Schedule A of the Agreement is hereby amended and restated to read in its entirety as set forth on Exhibit 1 to this Amendment.
2.All references in the Agreement to the “Amended Declaration of Trust” or “Declaration of Trust” shall mean the Agreement as amended by this Amendment.
3.Except as specifically amended by this Amendment, the Agreement is hereby confirmed and remains in full force and effect.
IN WITNESS WHEREOF, the undersigned, a duly authorized officer of the Trust, has executed this Amendment as of November 24, 2010.
VANGUARD STAR FUNDS
/S/ Natalie Bej _____________
(Original signature on Declaration of Trust) Natalie Bej, Assistant Secretary
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EXHIBIT 1
TO AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
OF
VANGUARD STAR FUNDS
“SCHEDULE A
VANGUARD STAR FUNDS
SERIES AND CLASSES OF THE TRUST
SERIES |
CLASSES |
Vanguard Developed Markets Index Fund |
Investor, Institutional |
Vanguard LifeStrategy Conservative Growth Fund |
Investor |
Vanguard LifeStrategy Growth Fund |
Investor |
Vanguard LifeStrategy Income Fund |
Investor |
Vanguard LifeStrategy Moderate Growth Fund |
Investor |
Vanguard STAR Fund |
Investor |
Vanguard Total International Stock Index Fund |
Investor” |
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AMENDMENT NO. 1
TO AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
OF
VANGUARD STAR FUNDS
This Amendment No. 1 (the “Amendment”) to the Amended and Restated Agreement and Declaration of Trust of Vanguard STAR Funds (the “Trust”) amends, effective September 18, 2009, the Amended and Restated Agreement and Declaration of Trust of the Trust dated as of November 19, 2008, as amended (the “Agreement”).
By resolutions adopted at a meeting of the Trust’s Board of Trustees (the “Board”) on September 18, 2009, the Board approved this Amendment. Under Article VIII, Section 4 of the Agreement, this Amendment may be executed by a duly authorized officer of the Trust.
WHEREAS, the Trust desires to amend the Agreement to reflect the addition of an Institutional Share class to the Vanguard Developed Markets Index Fund, a series of the Trust;
NOW, THEREFORE, the Agreement is hereby amended as follows:
4.Schedule A of the Agreement is hereby amended and restated to read in its entirety as set forth on Exhibit 1 to this Amendment.
5.All references in the Agreement to the “Amended Declaration of Trust” or “Declaration of Trust” shall mean the Agreement as amended by this Amendment.
6.Except as specifically amended by this Amendment, the Agreement is hereby confirmed and remains in full force and effect.
IN WITNESS WHEREOF, the undersigned, a duly authorized officer of the Trust, has executed this Amendment as of September 18, 2009.
VANGUARD STAR FUNDS
/S/ Arthur S. Gabinet __________
(Original signature on Declaration of Trust) Arthur S. Gabinet, Assistant Secretary
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EXHIBIT 1
TO AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
OF
VANGUARD STAR FUNDS
“SCHEDULE A
VANGUARD STAR FUNDS
SERIES AND CLASSES OF THE TRUST
SERIES |
CLASSES |
Vanguard Developed Markets Index Fund |
Investor, Institutional |
Vanguard Institutional Developed Markets Index Fund |
Institutional |
Vanguard LifeStrategy Conservative Growth Fund |
Investor |
Vanguard LifeStrategy Growth Fund |
Investor |
Vanguard LifeStrategy Income Fund |
Investor |
Vanguard LifeStrategy Moderate Growth Fund |
Investor |
Vanguard STAR Fund |
Investor |
Vanguard Total International Stock Index Fund |
Investor” |
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AMENDEDAND RESTATED
AGREEMENT AND DECLARATION OF TRUST
OF
VANGUARD STAR FUNDS
WHEREAS, this AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST of Vanguard STAR Funds (the “Trust”) is made and entered into as of the date set forth below by the Trustees named hereunder for the purpose of continuing the Trust as a Delaware statutory trust in accordance with the provisions hereinafter set forth;
WHEREAS, the Trust was formed upon the filing of a certificate of trust in the Office of the Secretary of State of the State of Delaware on January 28, 1998 pursuant to a declaration of trust dated January 23, 1998 (the “Original Declaration of Trust”);
WHEREAS, the Original Declaration of Trust was amended on July 19, 2002 (as so amended, the “Amended Declaration of Trust”); and
WHEREAS, the Trustees consider it appropriate to amend and restate the Amended Declaration of Trust in accordance with the terms of the Amended Declaration of Trust and the Delaware Act.
NOW, THEREFORE, the Amended Declaration of Trust is hereby amended and
restated as follows and the Trustees do hereby declare that the Trustees will hold IN TRUST all cash, securities and other assets that the Trust now possesses or may hereafter acquire from time to time in any manner and manage and dispose of the same upon the following terms and conditions.
ARTICLE I.
Name and Definitions
Section 1. Name. The name of the Trust is “VANGUARD STAR FUNDS”
and the Trustees shall conduct the business of the Trust under that name or any other name as they may from time to time determine. If the Trustees determine to change the name of the Trust, they may adopt such other name for the Trust as they deem proper. Any name change shall become effective upon approval by the Trustees of such change and the filing of a certificate of amendment under the Delaware Act. Any such action shall have the status of an amendment to this Declaration of Trust.
Section 2. Definitions. Whenever used herein, unless otherwise required by the context or specifically provided:
(a)“Amended Declaration of Trust” shall have the meaning set forth in
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the recitals to this Declaration of Trust;
(b)“By-Laws” shall mean the By-Laws of the Trust as amended from
time to time;
(c)“Commission” shall have the respective meanings given it in Section 2(a)(7) and Section (2)(a)(29) of the 1940 Act;
(d)“Declaration of Trust” shall mean this Amended and Restated
Agreement and Declaration of Trust, as amended or restated from time to time;
(e)“Delaware Act” refers to Delaware Statutory Trust Act, 12 Del. C.
§3801 et. seq. (as amended and in effect from time to time);
(f)“Interested Person” shall have the meaning given it in Section 2(a)(19) of the 1940 Act;
(g)“Investment Adviser” or “Adviser” means a party furnishing services to the Trust pursuant to any contract described in Article IV, Section 6(a) hereof;
(h)“1940 Act” refers to the Investment Company Act of 1940 and the Rules and Regulations thereunder, all as amended from time to time. References herein to specific sections of the 1940 Act shall be deemed to include such Rules and Regulations as are applicable to such sections as determined by the Trustees or their designees;
(i)“Original Declaration of Trust” shall have the meaning set forth in the recitals to this Declaration of Trust;
(j)“Principal Underwriter” shall have the respective meanings given it in Section 2(a)(7) and Section (2)(a)(29) of the 1940 Act;
(k)“Prior Declaration of Trust” refers to the original Declaration of Trust and the Amended Declaration of Trust, each as from time to time in effect prior to the date hereof;
(l)“Person” means and includes individuals, corporations, partnerships, trusts, foundations, plans, associations, joint ventures, estates and other entities, whether or not legal entities, and governments and agencies and political subdivisions thereof, whether domestic or foreign;
(m)“Series” refers to each Series of Shares referenced in, or established under or in accordance with, the provisions of Article III.
(n)“Shareholder” means a record owner of outstanding Shares;
(o)“Shares” means the shares of beneficial interest into which the beneficial interest in the Trust shall be divided from time to time and includes fractions of Shares as well as whole Shares;
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(p)“Trust” shall have the meaning set forth in the recitals to this Declaration of Trust;
(q)“Trustees” or “Board of Trustees” refers to the persons who have signed
this Declaration of Trust and all other persons who were or may from time to time be duly elected or appointed to serve on the Board of Trustees in accordance with the provisions hereof or of the Prior Declaration of Trust, so long as they continue in office in accordance with the terms hereof and reference herein to a Trustee or the Trustees shall refer to such person or persons in their capacity as trustees hereunder; and
(r)“Trust Property” means any and all property, real or
personal, tangible or intangible, which is owned or held by or for the account of the Trust.
ARTICLE II.
Purpose of Trust
The purpose of the Trust is to conduct, operate and carry on the business of a management investment company registered under the 1940 Act through one or more Series investing primarily in securities.
ARTICLE III.
Shares
Section 1. Division of Beneficial Interest. The beneficial interest in the Trust shall at all times be divided into an unlimited number of Shares, with a par value of $ .001 per Share unless the Trustees shall designate another par value in connection with the issuance of Shares or with respect to outstanding Shares as provided in Section 5 of this Article III. The Trustees may authorize the division of Shares into separate Series and the division of Series into separate classes of Shares. The different Series shall be established and designated, and the variations in the relative rights and preferences as between the different Series shall be fixed and determined, by the Trustees. If no Series shall be established or if only one Series shall be established, the Shares shall have the rights and preferences provided for herein and in Article III, Section 6 hereof to the extent relevant and not otherwise provided for herein.
Subject to the provisions of Section 6 of this Article III, each Share shall have voting rights as provided in Article V hereof, and holders of the Shares of any Series shall be entitled to receive dividends, when, if and as declared with respect thereto in the manner provided in Article VI, Section 1 hereof. No Share shall have any priority or preference over any other Share of the same Series with respect to dividends or distributions of the Trust or otherwise. All dividends and distributions shall be made ratably among all Shareholders of a Series (or class) from the assets held with respect to such Series according to the number of Shares of such Series (or
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class) held of record by such Shareholders on the record date for any dividend or distribution. Shareholders shall have no preemptive or other right to subscribe to any additional Shares or other securities issued by the Trust or any Series. The Trustees may from time to time divide or combine the Shares of a Series into a greater or lesser number of Shares of such Series without thereby materially changing the proportionate beneficial interest of such Shares in the assets held with respect to that Series or materially affecting the rights of Shares of any other Series.
All references to Shares in this Declaration of Trust shall be deemed to be Shares of the Trust and of any or all Series or classes thereof, as the context may require. All provisions herein relating to the Trust shall apply equally to each Series of the Trust and each class thereof, except as the context otherwise requires.
All Shares issued hereunder, including Shares issued in connection with a dividend in Shares or a split or reverse split of Shares, shall be fully paid and non-assessable.
Section 2. Ownership of Shares. The ownership of Shares shall be recorded on the books of the Trust or a transfer or similar agent for the Trust, which books shall be maintained separately for the Shares of each Series (and class). No certificates evidencing the ownership of Shares shall be issued except as the Board of Trustees may otherwise determine from time to time. The Trustees may make such rules as they consider appropriate for the transfer of Shares of each Series (and class) and similar matters. The record books of the Trust as kept by the Trust or any transfer or similar agent, as the case may be, shall be conclusive as to the identity of the Shareholders of each Series (and class) and as to the number of Shares of each Series (and class) held from time to time by each Shareholder.
Section 3. Investments in the Trust. Investments may be accepted by the Trust from such Persons, at such times, on such terms, and for such consideration as the Trustees from time to time may authorize. Each investment shall be credited to the Shareholder’s account in the form of full and fractional Shares of the Trust, in such Series (or class) as the purchaser shall select, at the net asset value per Share next determined for such Series (or class) after receipt of the investment; provided, however, that the Trustees may, in their sole discretion, impose a sales charge or reimbursement fee upon investments in the Trust.
Section 4. Status of Shares and Limitation of Personal Liability. Shares shall be deemed to be personal property giving only the rights provided in this Declaration of Trust and the By-Laws of the Trust. Every Shareholder by virtue of having become a Shareholder shall be held to have expressly assented and agreed to the terms hereof. The death, incapacity, dissolution, termination or bankruptcy of a Shareholder during the existence of the Trust shall not operate to terminate the Trust, nor entitle the representative of any such Shareholder to an accounting or to take any action in court or elsewhere against the Trust or the Trustees, but shall entitle such representative only to the rights of such Shareholder under this Declaration of Trust. Ownership of Shares shall not entitle a Shareholder to any title in or to the whole or any part of the Trust Property or right to call for a partition or division of the same or for an accounting, nor shall the ownership of Shares constitute the Shareholders as partners or joint venturers. Neither the Trust nor the Trustees, nor any officer, employee nor agent of the Trust shall have any power
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to bind personally any Shareholder, or to call upon any Shareholder for the payment of any sum of money or assessment whatsoever other than such as the Shareholder may at any time agree to pay.
Section 5. Power of Board of Trustees to Change Provisions Relating to Shares. Notwithstanding any other provision of this Declaration of Trust to the contrary, and without limiting the power of the Board of Trustees to amend the Declaration of Trust as provided elsewhere herein, the Board of Trustees shall have the power to amend this Declaration of Trust, at any time and from time to time, in such manner as the Board of Trustees may determine in their sole discretion, without the need for Shareholder action, so as to add to, delete, replace or otherwise modify any provisions relating to the Shares contained in this Declaration of Trust, provided that before adopting any such amendment without Shareholder approval the Board of Trustees shall determine that it is consistent with the fair and equitable treatment of all Shareholders and that Shareholder approval is not required by the 1940 Act or other applicable federal law. If Shares have been issued, Shareholder approval shall be required to adopt any amendments to this Declaration of Trust which would adversely affect to a material degree the rights and preferences of the Shares of any Series (or class) or to increase or decrease the par value of the Shares of any Series (or class).
Section 6. Establishment and Designation of Shares. The Series and classes of Shares existing as of the date of this Declaration of Trust are those Series and classes that have been established under the Prior Declaration of Trust and not heretofore terminated which are indicated on Schedule A attached hereto and made a part hereof (“Schedule A”). The establishment of any additional Series (or class) of Shares shall be effective upon the adoption by the Trustees of a resolution that sets forth the designation of, or otherwise identifies, such Series (or class), whether directly in such resolution or by reference to, or approval of, another document that sets forth the designation of, or otherwise identifies, such Series (or class) including any registration statement of the Trust or such Series (or class), any amendment and/or restatement of this Declaration of Trust and/or Schedule A or as otherwise provided in such resolution. Upon the establishment of any additional Series (or class) of Shares or the termination of any existing Series (or class) of Shares, Schedule A shall be amended to reflect the addition or termination of such Series (or class) and any officer of the Trust is hereby authorized to make such amendment; provided that amendment of Schedule A shall not be a condition precedent to the establishment or termination of any Series (or class) in accordance with this Declaration of Trust. The relative rights and preferences of the Shares of the Trust and each Series and each class thereof shall be as set forth herein and as set forth in any registration statement relating thereto, unless otherwise provided in the resolution establishing such Series or class.
Shares of each Series (or class) established pursuant to this Section 6, unless otherwise provided in the resolution establishing such Series (or class) or in any registration statement relating thereto, shall have the following relative rights and preferences:
(a)Assets Held with Respect to a Particular Series. All consideration received by the Trust for the issue or sale of Shares of a Series, including dividends and distributions paid by, and
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reinvested in, such Series, together with all assets in which such consideration is invested or reinvested, all income, earnings, profits, and proceeds thereof from whatever source derived, including any proceeds derived from the sale, exchange or liquidation of such assets, and any funds or payments derived from any reinvestment of such proceeds in whatever form the same may be, shall irrevocably be held with respect to that Series for all purposes, and shall be so recorded upon the books of account of the Trust. Such consideration, assets, income, earnings, profits and proceeds thereof, from whatever source derived, including any proceeds derived from the sale, exchange or liquidation of such assets, and any funds or payments derived from any reinvestment of such proceeds, in whatever form the same may be, are herein referred to as ”assets held with respect to” that Series. In the event that there are any assets, income, earnings, profits and proceeds thereof, funds or payments that are not readily identifiable as assets held with respect to the Trust or any particular Series (collectively ”General Assets”), the Trustees shall allocate such General Assets to, between or among the Trust and/or any one or more of the Series in such manner and on such basis as the Trustees, in their sole discretion, deem fair and equitable, and any General Asset so allocated to a particular Series shall be held with respect to that Series. Each such allocation by the Trustees shall be conclusive and binding upon the Shareholders of all Series for all purposes in absence of manifest error.
(b)Liabilities Held with Respect to a Particular Series. The assets of the Trust held with respect to each Series shall be charged with the liabilities of the Trust with respect to such Series and all expenses, costs, charges and reserves attributable to such Series, and any general liabilities of the Trust that are not readily identifiable as being held in respect of a Series shall be allocated and charged by the Trustees to and among the Trust and/or any one or more Series in such manner and on such basis as the Trustees in their sole discretion deem fair and equitable. The liabilities, expenses, costs, charges, and reserves so charged to a Series are herein referred to as “liabilities held with respect to” that Series. Each allocation of liabilities, expenses, costs, charges and reserves by the Trustees shall be conclusive and binding upon the Shareholders of all Series for all purposes in absence of manifest error. All liabilities held with respect to a particular Series shall be enforceable against the assets held with respect to such Series only and not against the assets of the Trust generally or against the assets held with respect to any other Series and, except as otherwise provided in this Declaration of Trust, none of the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to the Trust generally or any other Series thereof shall be enforceable against the assets of such Series. As and to the extent provided in Section 3804(a) of the Delaware Act, separate and distinct records shall be maintained for each Series and the assets held with respect to each Series shall be held in such separate and distinct records (directly or indirectly, including through a nominee or otherwise) and accounted for in such separate and distinct records separately from the assets held with respect to all other Series and the General Assets of the Trust not allocated to such Series. Notice of this limitation on inter-Series liabilities shall be set forth in the certificate of trust of the Trust (whether originally or by amendment).
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(c)Dividends, Distributions, Redemptions, and Repurchases. No dividend or distribution including any distribution paid in connection with termination of the Trust or of any Series (or class) with respect to, or any redemption or repurchase of, the Shares of any Series (or class) shall be effected by the Trust other than from the assets held with respect to such Series, nor shall any Shareholder of any Series otherwise have any right or claim against the assets held with respect to any other Series except to the extent that such Shareholder has such a right or claim hereunder as a Shareholder of such other Series. The Trustees shall have full discretion to determine which items shall be treated as income and which items as capital; and each such determination and allocation shall be conclusive and binding upon the Shareholders in absence of manifest error.
(d)Voting. All Shares entitled to vote on a matter shall vote without differentiation between the separate Series on a one-vote-per-each dollar (and a fractional vote for each fractional dollar) of the net asset value of each Share (including fractional shares) basis; provided however, if a matter to be voted on affects only the interests of one or more but not all Series (or one or more but not all of a class of a Series), then only the Shareholders of such affected Series (or class) shall be entitled to vote on the matter.
(e)Equality. All the Shares of each Series shall represent an equal proportionate undivided interest in the assets held with respect to such Series (subject to the liabilities of such Series and such rights and preferences as may have been established and designated with respect to classes of Shares within such Series), and each Share of a Series shall be equal to each other Share of such Series.
(f)Fractions. Any fractional Share of a Series shall have proportionately all the rights and obligations of a whole share of such Series, including rights with respect to voting, receipt of dividends and distributions and redemption of Shares.
(g)Exchange Privilege. The Trustees shall have the authority to provide that the
Shareholders of any Series shall have the right to exchange such Shares for Shares of one or more other Series in accordance with such requirements and procedures as may be established by the Trustees.
(h)Combination of Series. The Trustees shall have the authority, without the approval of the Shareholders of any Series unless otherwise required by applicable federal law, to combine the assets and liabilities held with respect to any two or more Series into assets and liabilities held with respect to a single Series.
(i)Elimination of Series. At any time that there are no Shares outstanding of a Series (or class), the Trustees may abolish such Series (or class).
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ARTICLE IV.
The Board of Trustees
Section 1. Number, Election and Tenure. The number of Trustees constituting the Board of Trustees shall be fixed from time to time by a written instrument signed, or by resolution approved at a duly constituted meeting, by a majority of the Board of Trustees, provided, however, that the number of Trustees shall at all times be at least one (1). Subject to the requirements of Section 16(a) of the 1940 Act, the Board of Trustees, by action of a majority of the then Trustees at a duly constituted meeting, may fill vacancies in the Board of Trustees and remove Trustees with or without cause. Each Trustee shall serve during the continued lifetime of the Trust until he or she dies, resigns, is declared bankrupt or incompetent by a court of competent jurisdiction, or is removed. Any Trustee may resign at any time by written instrument signed by him and delivered to any officer of the Trust or to a meeting of the Trustees. Such resignation shall be effective upon receipt unless specified to be effective at some other time. Except to the extent expressly provided in a written agreement with the Trust, no Trustee resigning and no Trustee removed shall have any right to any compensation for any period following his or her resignation or removal, or any right to damages or other payment on account of such removal. Any Trustee may be removed at any meeting of Shareholders by a vote of two-thirds of the total combined net asset value of all Shares of the Trust issued and outstanding. A meeting of Shareholders for the purpose of electing or removing one or more Trustees may be called (i) by the Trustees upon their own vote, or (ii) upon the demand of Shareholders owning 10% or more of the Shares entitled to vote.
Section 2. Effect of Death, Resignation, etc. of a Trustee. The death, declination, resignation, retirement, removal, or incapacity of one or more Trustees, or all of them, shall not operate to annul the Trust or to revoke any existing agency created pursuant to the terms of this Declaration of Trust. Whenever a vacancy in the Board of Trustees shall occur, until such vacancy is filled as provided in Article IV, Section 1, the Trustees in office, regardless of their number, shall have all the powers granted to the Trustees and shall discharge all the duties imposed upon the Trustees by this Declaration of Trust.
Section 3. Powers. Subject to the provisions of this Declaration of Trust, the business of the Trust shall be managed by the Board of Trustees, and such Board of Trustees shall have all powers necessary or convenient to carry out that responsibility including the power to engage in transactions of all kinds on behalf of the Trust. Trustees, in all instances, shall act as principals and are and shall be free from the control of the Shareholders. The Trustees shall have full power and authority to do any and all acts and to make and execute any and all contracts, documents and instruments that they may consider desirable, necessary or appropriate in connection with the administration of the Trust. Without limiting the foregoing, the Trustees may: adopt, amend and repeal By-Laws not inconsistent with this Declaration of Trust providing for the regulation and management of the affairs of the Trust; elect and remove such officers and appoint and terminate such agents as they consider appropriate; appoint from their own number and establish and terminate one or more committees consisting of one or more Trustees who may exercise the powers and authority of the Board of Trustees to the extent that the Trustees
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determine; employ one or more custodians of the assets of the Trust and may authorize such custodians to employ subcustodians and to deposit all or any part of such assets in a system or systems for the central handling of securities or with a Federal Reserve Bank, retain a transfer agent or a shareholder servicing agent, or both; provide for the issuance and distribution of Shares by the Trust directly or through one or more Principal Underwriters or otherwise; redeem, repurchase and transfer Shares pursuant to applicable federal law; set record dates for the determination of Shareholders with respect to various matters; declare and pay dividends and distributions to Shareholders of each Series from the assets of such Series; establish from time to time, in accordance with the provisions of Article III, Section 6 hereof, any Series of Shares, each such Series to operate as a separate and distinct investment medium and with separately defined investment objectives and policies and distinct investment purpose; and in general delegate such authority as they consider desirable to any officer of the Trust, to any committee of the Trustees and to any agent or employee of the Trust or to any such custodian, transfer or shareholder servicing agent, Investment Adviser or Principal Underwriter. Any determination as to what is in the interests of the Trust made by the Trustees in good faith shall be conclusive. In construing the provisions of this Declaration of Trust, the presumption shall be in favor of a grant of power to the Trustees.
Without limiting the foregoing, the Trust shall have power and authority:
(a)To invest and reinvest cash and cash items, to hold cash uninvested, and to subscribe for, invest in, reinvest in, purchase or otherwise acquire, own, hold, pledge, sell, assign, transfer, exchange, distribute, write options on, lend or otherwise deal in or dispose of contracts for the future acquisition or delivery of all types of securities, futures contracts and options thereon, and forward currency contracts of every nature and kind, including all types of bonds, debentures, stocks, preferred stocks, negotiable or non-negotiable instruments, obligations, evidences of indebtedness, certificates of deposit or indebtedness, commercial paper, repurchase agreements, bankers’ acceptances, and other securities of any kind, issued, created, guaranteed, or sponsored by any and all Persons, including states, territories, and possessions of the United States and the District of Columbia and any political subdivision, agency, or instrumentality thereof, any foreign government or any political subdivision of the U.S. Government or any foreign government, or any international instrumentality or organization, or by any bank or savings institution, or by any corporation or organization organized under the laws of the United States or of any state, territory, or possession thereof, or by any corporation or organization organized under any foreign law, or in "when issued" contracts for any such securities, futures contracts and options thereon, and forward currency contracts, to change the investments of the assets of the Trust; and to exercise any and all rights, powers, and privileges of ownership or interest in respect of any and all such investments of every kind and description, including the right to consent and otherwise act with respect thereto, with power to designate one or more Persons, to exercise any of said rights, powers, and privileges in respect of any of said instruments;
(b)To sell, exchange, lend, pledge, mortgage, hypothecate, lease, or write options with respect to or otherwise deal in any property rights relating to any or all of the assets of the Trust or any Series;
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(c)To vote or give assent, or exercise any rights of ownership, with respect to stock or other securities or property; and to execute and deliver proxies or powers of attorney to such person or persons as the Trustees shall deem proper, granting to such person or persons such power and discretion with relation to securities or property as the Trustees shall deem proper;
(d)To exercise powers and right of subscription or otherwise which in any manner arise out of ownership of securities;
(e)To hold any security or property in a form not indicating that it is trust property, whether in bearer, unregistered or other negotiable form, or in its own name or in the name of a custodian or subcustodian or a nominee or nominees or otherwise or to authorize the custodian or a subcustodian or a nominee or nominees to deposit the same in a securities depository, subject in each case to the applicable provisions of the 1940 Act;
(f)To consent to, or participate in, any plan for the reorganization, consolidation or merger of any corporation or issuer of any security which is held in the Trust; to consent to any contract, lease, mortgage, purchase or sale of property by such corporation or issuer; and to pay calls or subscriptions with respect to any security held in the Trust;
(g)To join with other security holders in acting through a committee, depository, voting trustee or otherwise, and in that connection to deposit any security with, or transfer any security to, any such committee, depository or trustee, and to delegate to them such power and authority with relation to any security (whether or not so deposited or transferred) as the Trustees shall deem proper, and to agree to pay, and to pay, such portion of the expenses and compensation of such committee, depository or trustee as the Trustees shall deem proper;
(h)To litigate, compromise, arbitrate, settle or otherwise adjust claims in favor of or against the Trust or a Series, or any matter in controversy, including but not limited to claims for taxes;
(i)To enter into joint ventures, general or limited partnerships and any other combinations or associations;
(j)To borrow funds or other property in the name of the Trust or Series exclusively for Trust (or such Series) purposes;
(k)To endorse or guarantee the payment of any notes or other obligations of any Person; to make contracts of guaranty or suretyship, or otherwise assume liability for payment thereof;
(l)To purchase and pay for entirely out of Trust Property such insurance as the Trustees may deem necessary, desirable or appropriate for the conduct of the business, including insurance policies insuring the assets of the Trust or payment of distributions and principal on its portfolio investments, and insurance policies insuring the Shareholders, Trustees, officers, employees, agents, Investment Adviser, principal underwriters, or independent contractors of the Trust, individually against all claims and liabilities of every nature arising by reason of holding Shares, holding, being or having held any such office or position, or by reason of any action
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alleged to have been taken or omitted by any such Person as Trustee, officer, employee, agent, Investment Adviser, Principal Underwriter, or independent contractor, including any action taken or omitted that may be determined to constitute negligence, whether or not the Trust would have the power to indemnify such Person against liability;
(m)To adopt, establish and carry out pension, profit-sharing, share bonus, share purchase, savings, thrift and other retirement, incentive and benefit plans, trusts and provisions, including the purchasing of life insurance and annuity contracts as a means of providing such retirement and other benefits, for any or all of the Trustees, officers, employees and agents of the Trust; and
(n)Subject to the 1940 Act, to engage in any other lawful act or activity in which a statutory trust organized under the Delaware Act may engage.
The Trust shall not be limited to investing in obligations maturing before the possible termination of the Trust or one or more of its Series. The Trust shall not in any way be bound or limited by any present or future law or custom in regard to investment by fiduciaries. The Trust shall not be required to obtain any court order to deal with any assets of the Trust or take any other action hereunder.
Section 4. Payment of Expenses by the Trust. Subject to the provisions of Article III, Section 6(b), the Trustees are authorized to pay or cause to be paid out of the principal or income of the Trust or Series, or partly out of the principal and partly out of income, and to charge or allocate the same to, between or among such one or more of the Series that may be established or designated pursuant to Article III, Section 6, all expenses, fees, charges, taxes and liabilities incurred or arising in connection with the Trust or Series, or in connection with the management thereof, including, but not limited to, the Trustees’ compensation and such expenses and charges for the services of the Trust’s officers, employees, Investment Adviser, Principal Underwriter, auditors, counsel, custodian, transfer agent, Shareholder servicing agent, and such other agents or independent contractors and such other expenses and charges as the Trustees may deem necessary or proper to incur.
Section 5. Ownership of Assets of the Trust. Title to all of the assets of the Trust shall at all times be considered as vested in the Trust, except that the Trustees shall have power to cause legal title to any Trust Property to be held by or in the name of one or more of the Trustees, or in the name of the Trust, or in the name of any other Person as nominee, on such terms as the Trustees may determine. Upon the resignation, incompetency, bankruptcy, removal, or death of a Trustee he or she shall automatically cease to have any such title in any of the Trust Property, and the title of such Trustee in the Trust Property shall vest automatically in the remaining Trustees. Such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered. The Trustees may determine that the Trust or the Trustees, acting for and on behalf of the Trust, shall be deemed to hold beneficial ownership of any income earned on the securities owned by the Trust, whether domestic or foreign.
Section 6. Service Contracts.
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(a)The Trustees may, at any time and from time to time, contract for exclusive or nonexclusive advisory, management and/or administrative services for the Trust or for any Series with any Person; and any such contract may contain such other terms as the Trustees may determine, including authority for the Investment Adviser to determine from time to time without prior consultation with the Trustees what investments shall be purchased, held, sold or exchanged and what portion, if any, of the assets of the Trust shall be held uninvested and to make changes in the Trust’s investments, and such other responsibilities as may specifically be delegated to such Person.
(b)The Trustees may also, at any time and from time to time, contract with any Persons, appointing such Persons exclusive or nonexclusive distributor or Principal Underwriter for the Shares of one or more of the Series or other securities to be issued by the Trust. Every such contract may contain such other terms as the Trustees may determine.
(c)The Trustees are also empowered, at any time and from time to time, to contract with any Persons, appointing such Person(s) to serve as custodian(s), transfer agent and/or shareholder servicing agent for the Trust or one or more of its Series. Every such contract shall comply with such terms as may be required by the Trustees.
(d)The Trustees are further empowered, at any time and from time to time, to contract with any Persons to provide such other services to the Trust or one or more of the Series, as the Trustees determine to be in the best interests of the Trust and the applicable Series.
(e)The fact that:
(i)any of the Shareholders, Trustees, or officers of the Trust is a shareholder, director, officer, partner, trustee, employee, Investment Adviser, Principal Underwriter, distributor, or affiliate or agent of or for any Person with which an advisory, management or administration contract, or Principal Underwriter’s or distributor’s contract, or transfer, shareholder servicing or other type of service contract may be made, or that
(ii)any Person with which an advisory, management or administration contract or Principal Underwriter’s or distributor’s contract, or transfer, shareholder servicing or other type of service contract may be made also has an advisory, management or administration contract, or principal underwriter’s or distributor’s contract, or transfer, shareholder servicing or other service contract, or has other business or interests with any other Person,
shall not affect the validity of any such contract or disqualify any Shareholder, Trustee or officer of the Trust from voting upon or executing the same, or create any liability or accountability to the Trust or its Shareholders, provided approval of each such contract is made pursuant to the applicable requirements of the 1940 Act.
ARTICLE V.
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Shareholders’ Voting Powers and Meetings
Subject to the provisions of Article III, Sections 5 and 6(d), the Shareholders shall have right to vote only (i) for the election or removal of Trustees as provided in Article IV, Section 1, and (ii) with respect to such additional matters relating to the Trust as may be required by the applicable provisions of the 1940 Act, including Section 16(a) thereof, and (iii) on such other matters as the Trustees may consider necessary or desirable. Provisions relating to meetings, quorum, required vote, record date and other matters relating to Shareholder voting rights are as provided in the By-Laws.
ARTICLE VI.
Net Asset Value, Distributions, and Redemptions
Section 1. Determination of Net Asset Value, Net Income, and Distributions. Subject to Article III, Section 6 hereof, the Trustees, in their absolute discretion, may prescribe and shall set forth in the By-Laws or in a duly adopted resolution of the Trustees such bases and time for determining the per Share net asset value of the Shares of the Trust or any Series (or class) and the declaration and payment of dividends and distributions on the Shares of the Trust or any Series (or class), as they may deem necessary or desirable.
Section 2. Redemptions and Repurchases. The Trust shall purchase such Shares as are offered by any Shareholder for redemption, upon receipt by the Trust or a Person designated by the Trust that the Trust redeem such Shares or in accordance with such procedures for redemption as the Trustees may from time to time authorize; and the Trust will pay therefor the net asset value thereof, in accordance with the By-Laws and the applicable provisions of the 1940 Act. Payment for said Shares shall be made by the Trust to the Shareholder within seven days after the date on which the request for redemption is received in proper form. The obligation set forth in this Section 2 is subject to the provision that in the event that any time the New York Stock Exchange (the “Exchange”) is closed for other than weekends or holidays, or if permitted by the Rules of the Commission during periods when trading on the Exchange is restricted or during any emergency which makes it impracticable for the Trust to dispose of the investments of the applicable Series or to determine fairly the value of the net assets held with respect to such Series or during any other period permitted by order of the Commission for the protection of investors, such obligations may be suspended or postponed by the Trustees.
The redemption price may in any case or cases be paid in cash or wholly or partly in kind in accordance with Rule 18f-1 under the 1940 Act if the Trustees determine that such payment is advisable in the interest of the remaining Shareholders of the Series of which the Shares are being redeemed. Subject to the foregoing, the selection and quantity of securities or other property so paid or delivered as all or part of the redemption price shall be determined by or under authority of the Trustees. In no case shall the Trust be liable for any delay of any corporation or other Person in transferring securities selected for delivery as all or part of any payment in kind.
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Section 3. Redemptions at the Option of the Trust. The Trust shall have the right, at its option, upon 30 days notice to the affected Shareholder at any time to redeem Shares of any Shareholder at the net asset value thereof as described in Section 1 of this Article VI: (i) if at such time such Shareholder owns Shares of any Series having an aggregate net asset value of less than a minimum value determined from time to time by the Trustees; or (ii) to the extent that such Shareholder owns Shares of a Series equal to or in excess of a maximum percentage of the outstanding Shares of such Series determined from time to time by the Trustees; or (iii) to the extent that such Shareholder owns Shares equal to or in excess of a maximum percentage, determined from time to time by the Trustees, of the outstanding Shares of the Trust.
Section 4. Transfer of Shares. The Trust shall transfer shares held of record by any Person to any other Person upon receipt by the Trust or a Person designated by the Trust of a written request therefore in such form and pursuant to such procedures as may be approved by the Trustees.
ARTICLE VII.
Compensation and Limitation of Liability
Section 1. Compensation of Trustees. Any Trustee, whether or not he is a salaried officer or employee of the Trust, may be compensated for his services as Trustee or as a member of a committee of Trustees, or as chairman of a committee by fixed periodic payments or by fees for attendance at meetings, by both or otherwise, and in addition may be reimbursed for transportation and other expenses, all in such manner and amounts as the Board of Trustees may from time to time determine. Nothing herein shall in any way prevent the employment of any Trustee to provide advisory, management, legal, accounting, investment banking or other services to the Trust and to be specially compensated for such services by the Trust.
Section 2. Limitation of Liability and Indemnification. A Trustee, when acting in such capacity, shall not be personally liable to any Person, other than the Trust or a Shareholder to the extent provided in this Article VII, for any act, omission or obligation of the Trust, of such Trustee or of any other Trustee. The Trustees shall not be responsible or liable in any event for any neglect or wrong-doing of any officer, agent, employee, Investment Adviser or Principal Underwriter of the Trust, nor shall any Trustee be responsible for the act or omission of any other Trustee, and, subject to the provisions of the By-Laws, the Trust out of its assets may indemnify and hold harmless each and every Trustee and officer of the Trust from and against any and all claims, demands, costs, losses, expenses, and damages whatsoever arising out of or related to such Trustee’s or officer’s performance of his or her duties as a Trustee or officer of the Trust.
Every note, bond, contract, instrument, certificate or undertaking and every other act or thing whatsoever issued, executed or done by or on behalf of the Trust or the Trustees or any of them in connection with the Trust shall be conclusively deemed to have been issued, executed or done only in or with respect to their or his or her capacity as Trustees or Trustee, and such Trustees or Trustee shall not be personally liable thereon.
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Section 3. Trustee’s Good Faith Action, Expert Advice, No Bond or Surety. The exercise by the Trustees of their powers hereunder shall be binding upon everyone interested in or dealing with the Trust. A Trustee shall be liable to the Trust and to any Shareholder solely for his or her own willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office of Trustee, and shall not be liable for errors of judgment or mistakes of fact or law. The Trustees may take advice of counsel or other experts with respect to the meaning and operation of this Declaration of Trust, and shall be under no liability for any act or omission in accordance with such advice nor for failing to follow such advice. The Trustees shall not be required to give any bond as such, nor any surety if a bond is required.
Section 4. Insurance. The Trustees shall be entitled and empowered to the fullest extent permitted by law to purchase with Trust assets insurance for liability and for all expenses reasonably incurred or paid or expected to be paid by a Trustee or officer in connection with any claim, action, suit or proceeding in which he or she becomes involved by virtue of his or her capacity or former capacity with the Trust, whether or not the Trust would have the power to indemnify him or her against such liability under the provisions of this Article.
ARTICLE VIII.
Miscellaneous
Section 1. Liability of Third Persons Dealing with Trustees. No Person dealing with the Trustees shall be bound to make any inquiry concerning the validity of any transaction made or to be made by the Trustees or to see to the application of any payments made or property transferred to the Trust or upon its order.
Section 2. Termination of the Trust or Any Series. Unless terminated as provided herein, the Trust shall continue without limitation of time. The Trust may be dissolved at any time by the Trustees upon 60 days prior written notice to the Shareholders. Any Series of Shares may be dissolved at any time by the Trustees upon 60 days prior written notice to the Shareholders of such Series. Any action to dissolve the Trust shall be deemed to also be an action to dissolve each Series and each class thereof.
In accordance with Section 3808 of the Delaware Act, upon dissolution of the Trust or any Series, as the case may be, after paying or otherwise providing for all charges, taxes, expenses and liabilities held, severally, with respect to each Series or the applicable Series, as the case may be, whether due or accrued or anticipated as may be determined by the Trustees, the Trust shall, in accordance with such procedures as the Trustees consider appropriate, reduce the remaining assets held, severally, with respect to each Series or the applicable Series, as the case may be, to distributable form in cash or shares or other securities, and any combination thereof, and distribute the proceeds held with respect to each Series or the applicable Series, as the case may be, to the Shareholders of that Series, as a Series, ratably according to the number of Shares of that Series held by the several Shareholders on the date of termination.
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Section 3. Reorganization and Master/Feeder.
(a)Notwithstanding anything else herein, the Trustees may, without Shareholder approval unless such approval is required by the 1940 Act, (i) cause the Trust to convert or merge, reorganize or consolidate with or into one or more trusts, partnerships, limited liability companies, associations, corporations or other business entities (or a series of any of the foregoing to the extent permitted by law) (including trusts, partnerships, limited liability companies, associations, corporations or other business entities created by the Trustees to accomplish such conversion, merger, reorganization or consolidation) so long as the surviving or resulting entity is an open-end management investment company under the 1940 Act, or is a series thereof, to the extent permitted by law, and that, in the case of any trust, partnership, limited liability company, association, corporation or other business entity created by the Trustees to accomplish such conversion, merger, reorganization or consolidation, may succeed to or assume the Trust’s registration under the 1940 Act and that, in any case, is formed, organized or existing under the laws of the United States or of a state, commonwealth, possession or colony of the United States, (ii) cause the Shares to be exchanged under or pursuant to any state or federal statute to the extent permitted by law, (iii) cause the Trust to incorporate under the laws of a state, commonwealth, possession or colony of the United States (iv) sell or convey all or substantially all of the assets of the Trust or any Series or Class to another Series or Class of the Trust or to another trust, partnership, limited liability company, association, corporation or other business entity (or a series of any of the foregoing to the extent permitted by law) (including a trust, partnership, limited liability company, association, corporation or other business entity created by the Trustees to accomplish such sale and conveyance), organized under the laws of the United States or of any state, commonwealth, possession or colony of the United States so long as such trust, partnership, limited liability company, association, corporation or other business entity is an open-end management investment company under the 1940 Act and, in the case of any trust, partnership, limited liability company, association, corporation or other business entity created by the Trustees to accomplish such sale and conveyance, may succeed to or assume the Trust’s registration under the 1940 Act, for adequate consideration as determined by the Trustees which may include the assumption of all outstanding obligations, taxes and other liabilities, accrued or contingent of the Trust or any affected Series or Class, and which may include Shares of such other Series or Class of the Trust or shares of beneficial interest, stock or other ownership interest of such trust, partnership, limited liability company, association, corporation or other business entity (or series thereof) or (v) at any time sell or convert into money all or any part of the assets of the Trust or any Series or Class thereof. Any agreement of merger, reorganization, consolidation or conversion or exchange or certificate of merger, certificate of conversion or other applicable certificate may be signed by a majority of the Trustees and facsimile signatures conveyed by electronic or telecommunication means shall be valid.
(b)Pursuant to and in accordance with the provisions of Section 3815(f) of the Delaware Act, and notwithstanding anything to the contrary contained in this Declaration of Trust, an agreement of merger or consolidation approved by the Trustees in accordance with this Section 3 may effect any amendment to this Declaration of Trust or effect the adoption of a new governing
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instrument of the Trust if the Trust is the surviving or resulting entity in the merger or consolidation.
(c)Notwithstanding anything else herein, the Trustees may, without Shareholder approval unless such approval is required by the 1940 Act, invest all or a portion of the Trust Property of any Series, or dispose of all or a portion of the Trust Property of any Series, and invest the proceeds of such disposition in interests issued by one or more other investment companies registered under the 1940 Act. Any such other investment company may (but need not) be a trust (formed under the laws of the State of Delaware or any other state or jurisdiction) (or subtrust thereof) which is classified as a partnership for federal income tax purposes. Notwithstanding anything else herein, the Trustees may, without Shareholder approval unless such approval is required by the 1940 Act, cause a Series that is organized in the master/feeder fund structure to withdraw or redeem its Trust Property from the master fund and cause such Series to invest its Trust Property directly in securities and other financial instruments or in another master fund.
Section 4. Amendments. Subject to the provisions of Section 5 of Article III relating to the requirement of Shareholder approval for certain amendments to this Declaration of Trust or requirements for certain determinations by the Board of Trustees for certain amendments hereto without Shareholder approval and any requirements under the 1940 Act requiring Shareholder approval of an amendment to this Declaration of Trust, the Trustees may, without any Shareholder vote or approval, amend this Declaration of Trust by making an amendment to this Declaration of Trust (including Schedule A), an agreement supplemental hereto, or an amended and restated trust instrument. Unless otherwise provided by the Trustees, any such amendment will be effective (i) upon the adoption by a majority of the Trustees then holding office of a resolution specifying the amendment, supplemental agreement or amendment and restatement or (ii) upon the execution in writing of an instrument signed by a majority of the Trustees then holding office specifying the amendment, supplemental agreement or amended and restated trust instrument. A certification signed by an officer of the Trust setting forth an amendment to this Declaration of Trust and reciting that it was duly adopted by the Trustees as aforesaid, or a copy of the instrument referenced above executed by the Trustees as aforesaid, shall be conclusive evidence of such amendment when lodged among the records of the Trust. The certificate of trust of the Trust may be restated and/or amended by any Trustee as necessary or desirable to reflect any change in the information set forth therein, and any such restatement and/or amendment shall be effective immediately upon filing with the Office of the Secretary of State of the State of Delaware or upon such future date as may be stated therein.
Section 5. Filing of Copies, References, Headings. The original or a copy of this Declaration of Trust shall be kept at the office of the Trust where it may be inspected by any Shareholder. Anyone dealing with the Trust may rely on a certificate by an officer of the Trust as to any matters in connection with the Trust hereunder; and, with the same effect as if it were the original, may rely on a copy certified by an officer of the Trust to be a copy of this Declaration of Trust. In this Declaration of Trust, references to this Declaration of Trust, and all expressions like “herein,” “hereof” and “hereunder,” shall be deemed to refer to this Declaration of Trust. Headings are placed herein for convenience of reference only and shall not be taken as
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a part hereof or control or affect the meaning, construction or effect of this Declaration of Trust. Whenever the singular number is used herein, the same shall include the plural; and the neuter, masculine and feminine genders shall include each other, as applicable. This Declaration of Trust may be executed in any number of counterparts each of which shall be deemed an original but all of which together will constitute one and the same instrument. To the extent permitted by the 1940 Act, (i) any document, consent, instrument or notice referenced in or contemplated by this Declaration of Trust or the By-Laws that is to be executed by one or more Trustees may be executed by means of original, facsimile or electronic signature and (ii) any document, consent, instrument or notice referenced in or contemplated by this Declaration of Trust or the By-Laws that is to be delivered by one or more Trustees may be delivered by facsimile or electronic means (including e-mail), unless, in the case of either clause (i) or (ii), otherwise expressly provided herein or in the By-Laws or determined by the Trustees. The terms “include,” “includes” and “including” and any comparable terms shall be deemed to mean “including, without limitation.”
Section 6. Applicable Law. This Agreement and Declaration of Trust is created under and is to be governed by and construed and administered according to the laws of the State of Delaware and the Delaware Act. The Trust shall be a Delaware statutory trust pursuant to the Delaware Act, and without limiting the provisions hereof, the Trust may exercise all powers which are ordinarily exercised by such a statutory trust.
Section 7. Provisions in Conflict with Law or Regulations.
(a)The provisions of the Declaration of Trust are severable, and if the Trustees shall determine, with the advice of counsel, that any of such provisions is in conflict with the 1940 Act, the regulated investment company provisions of the Internal Revenue Code or with other applicable federal laws and regulations, the conflicting provision shall be deemed never to have constituted a part of the Declaration of Trust; provided, however, that such determination shall not affect any of the remaining provisions of the Declaration of Trust or render invalid or improper any action taken or omitted prior to such determination.
(b)If any provision of the Declaration of Trust shall be held invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall attach only to such provision in such jurisdiction and shall not in any manner affect such provision in any other jurisdiction or any other provision of the Declaration of Trust in any jurisdiction.
Section 8. Statutory Trust Only. It is the intention of the Trustees to create a statutory trust pursuant to the Delaware Act, and thereby to create only the relationship of trustee and beneficial owners within the meaning of such Act between the Trustees and each Shareholder. It is not the intention of the Trustees to create a general partnership, limited partnership, joint stock association, corporation, bailment, joint venture, or any form of legal relationship other than a statutory trust pursuant to the Delaware Act. Nothing in this Declaration of Trust shall be construed to make the Shareholders, either by themselves or with the Trustees, partners or members of a joint stock association.
Section 9. Use of the Name “The Vanguard Group, Inc.”. The name “The
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Vanguard Group, Inc.” and any variants thereof and all rights to the use of the name “The Vanguard Group, Inc.” or any variants thereof shall be the sole and exclusive property of The Vanguard Group, Inc. (“VGI”). VGI has permitted the use by the Trust of the identifying word “Vanguard” and the use of the name “Vanguard” as part of the name of the Trust and the name of any Series of Shares. Upon the Trust’s withdrawal from the Amended and Restated Funds’ Service Agreement among the Trust, the other investment companies within the Vanguard Group of Investment Companies and VGI, and upon the written request of VGI, the Trust and any Series of Shares thereof shall cease to use or in any way to refer to itself as related to “The Vanguard Group, Inc.” or any variant thereof.
Section 10. Derivative Actions. In addition to the requirements set forth in Section 3816 of the Delaware Act, a Shareholder may bring a derivative action on behalf of the Trust only if the following conditions are met:
(a)The Shareholder or Shareholders must make a pre- suit demand upon the Trustees to bring the subject action unless an effort to cause the Trustees to bring such an action is not likely to succeed. For purposes of this Section 10(a), a demand on the Trustees shall only be deemed not likely to succeed and therefore excused if a majority of the Board of Trustees, or a majority of any committee established to consider the merits of such action, is composed of Trustees who are not “independent trustees” (as that term is defined in the Delaware Act).
(b)Unless a demand is not required under paragraph (a)
of this Section 10, Shareholders eligible to bring such derivative action under the Delaware Act who collectively hold at least 10% of the outstanding Shares of the Trust, or who collectively hold at least 10% of the outstanding Shares of the Series or class to which such action relates, shall join in the request for the Trustees to commence such action; and
(c)Unless a demand is not required under paragraph (a)
of this Section 10, the Trustees must be afforded a reasonable amount of time to consider such Shareholder request and to investigate the basis of such claim. The Trustees shall be entitled to retain counsel or other advisors in considering the merits of the request and shall require an undertaking by the Shareholders making such request to reimburse the Trust for the expense of any such advisors in the event that the Trustees determine not to bring such action.
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SCHEDULE A
VANGUARD STAR FUNDS |
SERIES AND CLASSES OF THE TRUST |
SERIES |
CLASSES |
Vanguard Developed Markets Index Fund |
Investor |
Vanguard Institutional Developed Markets Index Fund |
Institutional |
Vanguard LifeStrategy Conservative Growth Fund |
Investor |
Vanguard LifeStrategy Growth Fund |
Investor |
Vanguard LifeStrategy Income Fund |
Investor |
Vanguard LifeStrategy Moderate Growth Fund |
Investor |
Vanguard STAR Fund |
Investor |
Vanguard Total International Stock Index Fund |
Investor |
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TABLE OF CONTENTS |
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Page |
ARTICLE I. Name and Definitions ................................................................................. |
1 |
Section 1. |
Name ................................................................................................ |
1 |
Section 2. |
Definitions........................................................................................ |
1 |
(a) |
Amended Declaration of Trust.................................................................. |
2 |
(b) |
By-Laws.................................................................................................... |
2 |
(c) |
Commission .............................................................................................. |
2 |
(d) |
Declaration of Trust .................................................................................. |
2 |
(e) |
Delaware Act ............................................................................................ |
2 |
(f) |
Interested Person....................................................................................... |
2 |
(g) |
Investment Adviser or Adviser ................................................................. |
2 |
(h) |
1940 Act.................................................................................................... |
2 |
(i) |
Original Declaration of Trust.................................................................... |
2 |
(j) |
Principal Underwriter................................................................................ |
2 |
(k) |
Prior Declaration of Trust ......................................................................... |
2 |
(l) |
Person........................................................................................................ |
2 |
(m) |
Series......................................................................................................... |
2 |
(n) |
Shareholder ............................................................................................... |
2 |
(o) |
Shares........................................................................................................ |
3 |
(p) |
Trust .......................................................................................................... |
3 |
(q) |
Trustees or Board of Trustees ................................................................... |
3 |
(r) |
Trust Property ........................................................................................... |
3 |
ARTICLE II. Purpose of Trust ........................................................................................ |
3 |
ARTICLE III. Shares ....................................................................................................... |
3 |
Section 1. |
Division of Beneficial Interest ......................................................... |
3 |
Section 2. |
Ownership of Shares ........................................................................ |
4 |
Section 3. |
Investments in the Trust................................................................... |
4 |
Section 4. |
Status of Shares and Limitation of Personal |
|
|
Liability.......................................................................................... |
4 |
Section 5. |
Power of Board of Trustees to Change |
|
|
Provisions Relating to Shares ........................................................ |
5 |
Section 6. |
Establishment and Designation of Shares........................................ |
5 |
(a) |
Assets Held with Respect to a Particular Series ....................................... |
6 |
(b)Liabilities Held with Respect to a
Particular Series ...................................................................................... |
6 |
(c)Dividends, Distributions, Redemptions, and
|
Repurchases ............................................................................................ |
7 |
(d) |
Voting ....................................................................................................... |
7 |
(e) |
Equality ..................................................................................................... |
7 |
(f) |
Fractions.................................................................................................... |
7 |
(g) |
Exchange Privilege ................................................................................... |
7 |
|
107932, v0.8 i |
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Vanguard Internal Use Only |
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(h) |
Combination of Series............................................................................... |
7 |
(i) |
Elimination of Series................................................................................. |
7 |
ARTICLE IV. The Board of Trustees.............................................................................. |
8 |
Section 1. |
|
Number, Election and Tenure .......................................................... |
8 |
Section 2. |
|
Effect of Death, Resignation, etc. |
|
|
|
of a Trustee .................................................................................... |
8 |
Section 3. |
|
Powers.............................................................................................. |
8 |
Section 4. |
|
Payment of Expenses by the Trust.................................................. |
11 |
Section 5. |
|
Ownership of Assets of the Trust.................................................... |
11 |
Section 6. |
|
Service Contracts ............................................................................ |
12 |
ARTICLE V. Shareholders’ Voting Powers and Meetings ............................................ |
13 |
ARTICLE VI. Net Asset Value, Distributions, and Redemptions ................................. |
13 |
Section 1. |
|
Determination of Net Asset Value, Net |
|
|
|
Income, and Distributions............................................................. |
13 |
Section 2. |
|
Redemptions and Repurchases ....................................................... |
13 |
Section 3. |
|
Redemptions at the Option of the Trust.......................................... |
14 |
Section 4. |
|
Transfer of Shares ........................................................................... |
14 |
ARTICLE VII. Compensation and Limitation of Liability ............................................ |
14 |
Section 1. |
|
Compensation of Trustees............................................................... |
14 |
Section 2. |
|
Limitation of Liability and Indemnification ................................... |
14 |
Section 3. |
|
Trustee’s Good Faith Action, Expert |
|
|
|
Advice, No Bond or Surety........................................................... |
15 |
Section 4. |
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Insurance ......................................................................................... |
15 |
ARTICLE VIII. Miscellaneous....................................................................................... |
15 |
Section 1. |
|
Liability of Third Persons Dealing |
|
|
|
with Trustees................................................................................. |
15 |
Section 2. |
|
Termination of the Trust or Any Series .......................................... |
15 |
Section 3. |
|
Reorganization and Master/Feeder ................................................. |
16 |
Section 4. |
|
Amendments ................................................................................... |
17 |
Section 5. |
|
Filing of Copies, References, Headings.......................................... |
18 |
Section 6. |
|
Applicable Law............................................................................... |
18 |
Section 7. |
|
Provisions in Conflict with Law or Regulations............................. |
18 |
Section 8. |
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Statutory Trust Only ....................................................................... |
19 |
Section 9. |
|
Use of the Name “The Vanguard Group, Inc.”............................... |
19 |
Section 10. |
Derivatives Actions......................................................................... |
19 |
107932, v0.8 ii
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AMENDED AND RESTATED
BY-LAWS
OF
VANGUARD STAR FUNDS
These Amended and Restated By-Laws (“By-Laws”) of Vanguard STAR Funds, a Delaware statutory trust, are subject to the Amended and Restated Declaration of Trust of the Trust dated as of November 19, 2008, as from time to time amended, supplemented or restated (the “Declaration of Trust”). In the event of any conflict between the provisions of these By-Laws and the provisions of the Declaration of Trust, the provisions of the Declaration of Trust will control. Capitalized terms used herein which are defined in the Declaration of Trust are used as therein defined.
ARTICLE I
Fiscal Year and Offices
Section 1. Fiscal Year. Unless otherwise provided by resolution of the Board of Trustees, the fiscal year of the Trust and each series shall begin on the 1st day of November and end on the last day of October. The Board of Trustees may provide for different fiscal years for the Trust and for each of its series.
Section 2. Delaware Office. The Board of Trustees shall establish a registered office in the State of Delaware and shall appoint as the Trust’s registered agent for service of process in the State of Delaware an individual resident of the State of Delaware or a Delaware corporation or a foreign corporation authorized to transact business in the State of Delaware; in each case the business office of such registered agent for service of process shall be identical with the registered Delaware office of the Trust.
Section 3. Principal Office. The principal office of the Trust shall be located at 100 Vanguard Boulevard, Malvern, Pennsylvania 19355, or such other locations the Trustees may from time to time determine.
Section 4. Other Offices. The Board of Trustees may at any time establish branch or subordinate offices at any place or places where the Trust intends to do business.
ARTICLE II
Meetings of Shareholders
Section 1. Place of Meeting. Meetings of the Shareholders for the election of Trustees or for any other purpose shall be held in such place (including that the meeting will be held by remote communication, as applicable) as shall be fixed by resolution of the Board of Trustees or determined by the Chair, chief executive officer or president and stated in the notice of the meeting.
Section 2. Annual Meetings. An annual meeting of the Shareholders will not be
held.
Section 3. Special Meetings. Special meetings of the Shareholders may be called at any time by the Chair, chief executive officer or president, or by the Board of Trustees. Except as required by the Investment Company Act of 1940, as amended (the “1940 Act”) and as provided herein, the Shareholders shall not be entitled to call, or to have the secretary call, special meetings of the Shareholders. Special meetings of the Shareholders shall be called by the secretary upon the request of the Shareholders owning Shares representing at least twenty percent of the total combined votes of all Shares of the Trust entitled to be cast at such meeting; provided that (a) such request shall state the purposes of such meeting and the matters proposed to be acted on, (b) the Shareholders requesting such meeting shall have paid to the Trust the reasonable estimated cost of preparing and mailing the notice thereof, which the secretary shall determine and specify to such Shareholders, and (c) the Shareholders requesting such meeting must provide ninety (90) days advance notice of business to be brought to a vote at a meeting of the Shareholders and for nomination of Trustees, unless such notice runs counter to the proxy rules under the Securities Exchange Act of 1934. No special meeting need be called upon the request of Shareholders entitled to cast less than a majority of all votes entitled to be cast at such meeting to consider any matter which is substantially the same as a matter voted on at any meeting of the Shareholders held during the preceding twelve months. The foregoing provisions of this Section 3 notwithstanding, a special meeting of Shareholders shall be called upon the request of the holders of at least ten percent of the votes entitled to be cast for the purpose of consideration of removal of a Trustee from office as provided in section 16(c) of the 1940 Act.
Section 4. Notice. Not more than one hundred and twenty (120), nor less than ten days before the date of every special meeting, the secretary shall cause to be delivered to each Shareholder entitled to vote at such meeting a written notice in accordance with Article IV, Section 1 of these By-Laws stating the time and place of the meeting (including that the meeting will be held by remote communication, as applicable) and shall state the purposes of the meeting and the matters to be acted on and the purposes of such special meeting and matters to be acted on shall be limited to those stated in such written notice. No notice need be given to any Shareholder who shall have failed to inform the Trust of his or her current address, to any Shareholder who attends such meeting in person or if a written waiver of notice, executed before or after the meeting by the Shareholder or his or her attorney thereunto authorized, is filed with the records of the meeting. In the absence of fraud, any irregularities in the notice of any meeting or the nonreceipt of any such notice by any of the Shareholders shall not invalidate any action otherwise properly taken at any such meeting.
Section 5. Record Date for Meetings. The Board of Trustees may fix in advance a date not more than one hundred and twenty (120), nor less than ten, days prior to the date of any special meeting of the Shareholders as a record date for the determination of the Shareholders entitled to receive notice of, and to vote at any meeting and any adjournment thereof; and in such case such Shareholders and only such Shareholders as shall be the Shareholders of record on the date so fixed shall be entitled to receive notice of and to vote at such meeting and any adjournment thereof as the case may be, notwithstanding any transfer of any Shares on the books of the Trust after any such record date fixed as aforesaid.
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Section 6. Quorum. Except as otherwise provided by the 1940 Act or in the Trust’s Declaration of Trust, at any meeting of the Shareholders, the presence in person or by proxy of the holders of record of Shares issued and outstanding and entitled to vote representing more than thirty-three and one-third percent (33 1/3%) of the total combined net asset value of all Shares of each series or class, or of the Trust, as applicable, issued and outstanding and entitled to vote shall constitute a quorum for the transaction of any business at the meeting with respect to such series or class or with respect to the entire Trust, respectively.
Section 7. Voting. Each Shareholder shall have one vote for each dollar (and a fractional vote for each fractional dollar) of the net asset value of each Share (including fractional Shares) held by such Shareholder on the record date set pursuant to Article II, Section 5 on each matter submitted to a vote at a meeting of the Shareholders. For purposes of this Section and Article II, Section 6, net asset value shall be determined pursuant to Article VIII, Section 3, of these By-Laws as of the record date for such meeting set pursuant to Article II, Section 5. There shall be no cumulative voting in the election of Trustees. At any meeting of the Shareholders, any Shareholder entitled to vote thereat may vote either in person or by written proxy signed by the Shareholder, provided that no proxy shall be voted at any meeting unless it shall have been placed on file with the secretary, or with such other officer or agent of the Trust as the secretary may direct, for verification prior to the time at which such vote shall be taken; provided, however, that notwithstanding any other provision of this Section to the contrary, the Trustees or any officer with responsibility for such matters may at any time adopt one or more electronic, telecommunication, telephonic, computerized or other alternatives to execution of a written instrument that will enable the Shareholders entitled to vote at any meeting to appoint a proxy to vote such Shareholders’ Shares at such meeting; provided, further, that, until the Trustees or such officer adopt such electronic, telecommunication, telephonic, computerized or other alternatives, no Shareholder may act to appoint a proxy to vote such holder’s Shares at a meeting by any such alternatives and if the Trustees or such officer do adopt such electronic, telecommunication, telephonic, computerized or other alternatives, then the Shareholders may only act in the manner prescribed by the Trustees. Proxies may be solicited in the name of one or more Trustees or one or more of the officers of the Trust. Only the Shareholders of record shall be entitled to vote. When any Share is held jointly by several persons, any one of them may vote at any meeting in person or by proxy in respect of such Share, but if more than one of them shall be present at such meeting in person or by proxy, and such joint owners or their proxies so present disagree as to any vote to be cast, such vote shall not be received in respect of such Share. Unless otherwise specifically limited by their terms, proxies shall entitle the holder thereof to vote at any postponement or adjournment of a meeting, including a meeting for which a new record date has been fixed. A proxy purporting to be executed by or on behalf of a Shareholder shall be deemed valid unless challenged at or prior to its exercise, and the burden of proving invalidity shall rest on the challenger. If the holder of any such Share is a minor or a person of unsound mind, and subject to guardianship or the legal control of any other person as regards the charge or management of such Share, he or she may vote by his or her guardian or such other person appointed or having such control, and such vote may be given in person or by proxy. Except as otherwise provided herein or in the Declaration of Trust or the Delaware Act, all matters relating to the giving, voting or validity of proxies shall be governed by the General Corporation Law of the State of Delaware relating to proxies, and judicial interpretations thereunder, as if the Trust were a Delaware corporation and the Shareholders were stockholders of a Delaware corporation.
3
At all meetings of the Shareholders, a quorum being present, the Trustees shall be elected by the vote of a plurality of the votes cast by the Shareholders present in person or by proxy and all other matters shall be decided by majority of the votes cast by the Shareholders present in person or by proxy; provided, that if the Declaration of Trust, these By-Laws or applicable federal law permits or requires that Shares be voted on any matter by individual series or classes, then a majority of the votes cast by the Shareholders of that series or class present in person or by proxy shall decide that matter insofar as that series or class is concerned; provided, further, that if the matter to be voted on is one for which by express provision of the 1940 Act or the Declaration of Trust, a different vote is required, then in such case such express provision shall control the decision of such matter. At all meetings of the Shareholders, unless the voting is conducted by inspectors, all questions relating to the qualification of voters and the validity of proxies and the acceptance or rejection of votes shall be decided by the chair of the meeting.
Section 8. Inspectors. At any election of Trustees, the Board of Trustees prior thereto may, or, if they have not so acted, the chair of the meeting may appoint one or more inspectors of election who shall first subscribe an oath of affirmation to execute faithfully the duties of inspectors at such election with strict impartiality and according to the best of their ability, and shall after the election make a certificate of the result of the vote taken.
Section 9. Abstentions and Broker Non-Votes. Shares that abstain with respect to one or more of any proposals presented for Shareholder approval and Shares held in a “street name” as to which the broker or nominee with respect thereto indicates on the proxy that it does not have discretionary authority to vote with respect to a particular proposal will be counted as present and outstanding and entitled to vote for purposes of determining whether a quorum is present at a meeting, but will not be counted as Shares voted (votes cast) with respect to such proposal or proposals. Shares represented by signed, dated proxy cards or voting instruction cards returned to the Trust without a choice indicated as to the applicable proposals will be voted as directed by the proxy holder or holders.
Section 10. Action Without Meeting. Any action to be taken by the Shareholders may be taken without a meeting if (a) all Shareholders entitled to vote on the matter consent to the action in writing, (b) all Shareholders entitled to notice of the meeting but not entitled to vote at it sign a written waiver of any right to dissent, and (c) the written consents are filed with the records of the meeting of the Shareholders. Such consent shall be treated for all purposes as a vote at a meeting.
Section 11. Meetings by Remote Communication. The Board of Trustees may, in their sole discretion, determine that any meeting of the Shareholders may be held solely or partially by means of remote communication. If authorized by the Board of Trustees, in their sole discretion, and subject to such guidelines and procedures as the Board of Trustees may adopt, the Shareholders and proxyholders not physically present at a meeting of the Shareholders may, by means of remote communication: (a) participate in a meeting of the Shareholders; and (b) be deemed present in person and vote at a meeting of the Shareholders whether such meeting is to be held at a designated place or solely by means of remote communication, provided that: (i) the Trust shall implement such measures as the Board of Trustees deem to be reasonable (A) to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a Shareholder or proxyholder; and (B) to provide such Shareholders and
4
proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the Shareholders; and (ii) if any Shareholder or proxyholder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the Trust. The Board of Trustees may, in their sole discretion, notify the Shareholders of any postponement, adjournment or a change of the place of a meeting of the Shareholders (including a change to hold the meeting solely by means of remote communication) by a document publicly filed by the Trust with the Securities and Exchange Commission without the requirement of any further notice hereunder.
Section 12. Postponement and Adjournment. Prior to the date upon which any meeting of the Shareholders is to be held, the Board of Trustees, chair of the meeting, chief executive officer or president may postpone such meeting one or more times for any reason by giving notice to each Shareholder entitled to vote at the meeting so postponed of the time and place (including that the meeting will be held by remote communication, as applicable) at which such meeting will be held. Such notice shall be given not fewer than two days (or such other number of days as the Board of Trustees shall determine in its sole discretion) before the date of such meeting and otherwise in accordance with Article IV, Section 1 of these By-Laws. Any Shareholders’ meeting may be adjourned by the Board of Trustees, chair of the meeting, chief executive officer or president one or more times for any reason, including the failure of a quorum to be present at the meeting with respect to any proposal or the failure of any proposal to receive sufficient votes for approval. No Shareholder vote shall be required for any adjournment. A Shareholders’ meeting may be adjourned by the Board of Trustees, chair of the meeting, chief executive officer or president as to one or more proposals regardless of whether action has been taken on other matters. No notice of adjournment of a meeting to another time or place need be given to the Shareholders if such time and place (including that the meeting will be held by remote communication, as applicable) are announced at the meeting at which the adjournment is taken or notice is given to persons present at the meeting. Any adjourned meeting may be held at such time and place (including that the meeting will be held by remote communication, as applicable) as determined by the Board of Trustees, chair of the meeting, chief executive officer or president in the Board of Trustees’ or such person’s sole discretion. Any business that might have been transacted at the original meeting may be transacted at any adjourned meeting. If, after a postponement or adjournment, a new record date is fixed for the postponed or adjourned meeting, the secretary shall give notice of the postponed or adjourned meeting to the Shareholders of record entitled to vote at such meeting. If a quorum is present with respect to any one or more proposals, the chair of the meeting may, but shall not be required to, cause a vote to be taken with respect to any such proposal or proposals which vote can be certified as final and effective notwithstanding the adjournment of the meeting with respect to any other proposal or proposals.
Section 13. Conduct of Meeting. The Board of Trustees shall be entitled to make such rules and regulations for the conduct of meetings of the Shareholders as they shall deem necessary, appropriate or convenient. Subject to such rules and regulations of the Trustees, if any, the chair of the meeting, the chief executive officer or the president shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chair, chief executive officer or president, are necessary, appropriate or convenient for the proper conduct of the meeting, including, without limitation, establishing: an agenda or order of business for the meeting; rules and procedures for maintaining order at the
5
meeting and the safety of those present; restrictions on entry to the meeting after the time fixed for the commencement thereof; limitations on the time allotted to questions or comments by participants; and regulation of the opening and closing of the polls for balloting on matters which are to be voted on by ballot. Unless and to the extent the Board of Trustees, chair of the meeting, chief executive officer or president determines otherwise, meetings of Shareholders shall not be held in accordance with the rules of parliamentary procedure.
Section 14. Chair. The Board of Trustees, the Executive Committee, the Chair, the chief executive officer or the president may appoint any person to act as chair of any meeting of the Shareholders. In the absence of any such appointment, the Chair, if any, shall act as the chair of the meeting at all meetings of the Shareholders, and in the Chair’s absence, the lead independent Trustee, if any, shall act as chair of the meeting and in the absence of the Chair and the lead independent Trustee, the chief executive officer, if any, shall act as chair of the meeting. In the absence of the Chair, the lead independent Trustee and the chief executive officer at a meeting of the Shareholders, the Trustees present, if any, at such meeting may elect a temporary chair of the meeting, who may, but need not, be one of themselves.
Section 15. Application of this Article. Meetings of the Shareholders shall consist of the Shareholders of any series or class thereof or of all Shareholders and this Article II shall be construed accordingly.
ARTICLE III
Trustees
Section 1. Place of Meeting. Meetings of the Board of Trustees, regular or special, may be held at any place as the Board may from time to time determine.
Section 2. Quorum. Except as otherwise provided herein, at all meetings of the Board of Trustees, one-third of the Trustees then in office shall constitute a quorum for the transaction of business provided that in no case may a quorum be fewer than two persons (unless there is only one Trustee then in office, in which case such Trustee shall constitute a quorum). The action of a majority of the Trustees present at any meeting at which a quorum is present shall be the action of the Board of Trustees unless the concurrence of a greater proportion is required for such action by the 1940 Act or the Declaration of Trust. If a quorum shall not be present at any meeting of Trustees, the Trustees present thereat may by a majority vote adjourn the meeting from time to time without notice other than announcement at the meeting, until a quorum shall be present.
Section 3. Regular Meetings. Regular meetings of the Board of Trustees may be held without additional notice at such time and place as shall from time to time be determined by the Board of Trustees provided that notice of any change in the time or place of such meetings shall be sent promptly to each Trustee not present at the meeting at which such change was made in the manner provided for notice of special meetings.
Section 4. Special Meetings. Special meetings of the Board of Trustees may be called by the Chair, the lead independent Trustee, if any, the chief executive officer or the
6
president, on one day’s notice, provided in accordance with Article IV herein, to each Trustee; special meetings shall be called by the Chair, the lead independent trustee, if any, the chief executive officer, the president or the secretary in like manner and on like notice on the written request of two Trustees.
Section 5. Remote Meeting; Proxies. Subject to any applicable requirements of the 1940 Act, (i) members of the Board of Trustees or a committee of the Board of Trustees may participate in a meeting by means of a conference telephone, videoconferencing system, or similar communications equipment if all persons participating in the meeting can hear each other at the same time, and participation by such means shall constitute presence in person at a meeting and (ii) at all meetings of the Trustees, every Trustee shall be entitled to vote by written proxy, provided that such proxy shall be delivered to the secretary or other person responsible for recording the proceedings of such meeting, either before or at the time of such meeting. To the extent permitted by the 1940 Act, a Trustee may provide any written proxy through facsimile, electronic mail or any other electronic means.
Section 6. Informal Actions. Except as otherwise provided under the 1940 Act, any action required or permitted to be taken at any meeting of the Board of Trustees or of any committee thereof may be taken without a meeting, if a written consent to such action is signed by a majority of the Trustees then in office or by a majority of the members of such committee, as the case may be (unless, in either case, the question is one for which by express provision of the 1940 Act or the Declaration of Trust, a different vote is required, in which case such express provision shall control the decision of such question). Except as otherwise provided under the 1940 Act, any such written consent may be given by facsimile, electronic mail or any other electronic means. Any such written consent shall be filed with the minutes of proceedings of the Board or committee, as applicable. Such written consents shall be treated for all purposes as a vote taken at a meeting of the Trustees. If any action is so taken by the Trustees by the written consent of fewer than all of the Trustees, notice of the taking of such action shall be furnished to each Trustee who did not execute such written consent, provided that the effectiveness of such action shall not be impaired by any delay or failure to furnish such notice.
Section 7. Executive Committee. The Board of Trustees may appoint from among its members an Executive Committee composed of two or more Trustees, and may delegate to such Executive Committee any or all of the powers of the Board of Trustees in the management of the business and affairs of the Trust.
Section 8. Committees. The Board of Trustees may appoint other committees, each consisting of one or more Trustees. Each such committee shall have such powers and perform such duties as may be assigned to it from time to time by the Board of Trustees, but shall not exercise any power that under the 1940 Act may lawfully be exercised only by the Board of Trustees or a committee thereof.
Section 9. Action of Committees. In the absence of an appropriate resolution of the Board of Trustees, each committee may adopt such rules and regulations governing its proceedings, quorum and manner of acting as it shall deem proper and desirable, provided that the quorum shall not be fewer than two Trustees, unless it is a committee of one in which case the quorum shall be one Trustee. The committees shall keep minutes of their proceedings and
7
shall report the same to the Board of Trustees at the meeting next succeeding. In the absence of any member of such committee, the members thereof present at any meeting, whether or not they constitute a quorum, may appoint a member of the Board of Trustees to act in the place of such absent member. To the fullest extent permitted by law, the Board of Trustees may delegate any matter for determination to a committee and such delegation shall be irrevocable if it states that it is irrevocable.
Section 10. Organization. The Board of Trustees shall choose a chair of the Board of Trustees (the “Chair”). The Chair of the Board of Trustees shall hold his or her post for such term and shall perform and execute such duties and administrative powers as the Board of Trustees shall prescribe from time to time. If the Chair is not an independent Trustee, the independent Trustees shall choose a lead independent Trustee. The lead independent Trustee shall hold his or her post for such term and shall perform and execute such duties as the Board of Trustees shall prescribe from time to time and as otherwise provided herein. Every meeting of the Board of Trustees shall be presided over by the Chair, if such person is present, and, if not, the lead independent Trustee, if any, if such person is present and, if not, the chief executive officer, or in the absence of the Chair, the lead independent Trustee and the chief executive officer, a chair chosen by a majority of the Trustees present.
Section 11. Other Executive Posts. The Board of Trustees from time to time may appoint such other Executive Posts as it shall deem advisable, who shall hold their posts for such terms and shall perform and execute such executive duties and administrative powers as the Board of Trustees shall from time to time prescribe.
ARTICLE IV
Notices
Section 1. Form. Subject to the 1940 Act, notices and all other communications to the Shareholders shall be (i) given either by hand delivery, telephone, overnight courier, facsimile, electronic mail or any other electronic means or by mail, postage prepaid or given as otherwise provided herein, and (ii) given or addressed to the Shareholder at the phone number, address, facsimile number, e-mail address or other contact information of that Shareholder appearing on the books of the Trust or its transfer agent or given as otherwise provided herein. Notices to Trustees shall be oral or by telephone or in writing delivered personally or mailed to the Trustees at their addresses appearing on the books of the Trust or by electronic transmission to an electronic mail address provided by the Trustee. Notice by mail shall be deemed to be given at the time when the same shall be mailed, notice by electronic transmission shall be deemed given at the time when sent, and notice by a document publicly filed by with the Securities and Exchange Commission shall be deemed given at the time the Trust files such document. Subject to the provisions of the 1940 Act, notice to Trustees need not state the purpose of a regular or special meeting.
Section 2. Waiver. Whenever any notice is permitted or required to be given by these By-Laws or the Declaration of Trust or the laws of the State of Delaware, a written waiver thereof provided or delivered to the Trust by mail, overnight courier, facsimile, electronic mail or any other electronic means by the person or persons entitled to said notice, whether before or
8
after the time such notice was to be given, shall be deemed equivalent to the giving of such notice to such person or persons.
ARTICLE V
Officers
Section 1. Executive Officers. The officers of the Trust shall be chosen by the Board of Trustees and shall include a chief executive officer, a president, a secretary and a treasurer. The Board of Trustees may, from time to time, elect or appoint a controller, one or more vice presidents, assistant secretaries, assistant treasurers, and assistant controllers. The same person may hold two or more offices, except that no person shall be both chief executive officer and vice president or president and vice president, and no officer shall execute, acknowledge or verify any instrument in more than one capacity, if such instrument is required by law, the Declaration of Trust or these By-Laws to be executed, acknowledged or verified by two or more officers. The officers shall perform all duties incident to their offices and such other duties as from time to time may be assigned to them respectively by the Board of Trustees or the chief executive officer.
Section 2. Election. The Board of Trustees shall choose a chief executive officer, a president, a secretary and a treasurer.
Section 3. Other Officers. The Board of Trustees from time to time may appoint such other officers and agents as it shall deem advisable, who shall hold their offices for such terms and shall exercise powers and perform such duties as shall be determined from time to time by the Board of Trustees. The Board of Trustees from time to time may delegate to one or more officers or agents the power to appoint any such subordinate officers or agents and to prescribe their respective rights, terms of office, authorities and duties.
Section 4. Compensation. The salaries or other compensation of all officers and agents of the Trust shall be fixed by the Board of Trustees, except that the Board of Trustees may delegate to any person or group of persons the power to fix the salary or other compensation of any subordinate officers or agents appointed pursuant to Article V, Section 3.
Section 5. Tenure. The officers of the Trust shall serve at the pleasure of the Board of Trustees. Any officer or agent may be removed by the affirmative vote of the Board of Trustees with or without cause whenever, in its judgment, the best interests of the Trust will be served thereby. In addition, any officer or agent appointed pursuant to Article V, Section 3 may be removed, either with or without cause, by any officer upon whom such power of removal shall have been conferred by the Board of Trustees. Any vacancy occurring in any office of the Trust by death, resignation, removal or otherwise shall be filled by the Board of Trustees, unless pursuant to Article V, Section 3 the power of appointment has been conferred by the Board of Trustees on any other officer.
Section 6. Chief Executive Officer. The chief executive officer shall see that all orders and resolutions of the Board of Trustees are carried into effect. The chief executive officer
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shall also be the chief administrative officer of the Trust and shall perform such other duties and have such other powers as the Board of Trustees may from time to time prescribe.
Section 7. President. The president shall perform all duties incident to the office of president, and such other duties as may from time to time be assigned by the Board of Trustees or the chief executive officer.
Section 8. Vice President. The vice presidents, in order of their seniority, shall, in the absence or disability of the chief executive officer and the president, perform the duties and exercise the powers of the chief executive officer and the president and shall perform such other duties as the Board of Trustees or the chief executive officer may from time to time prescribe.
Section 9. Secretary. The secretary shall attend all meetings of the Board of Trustees and all meetings of the Shareholders and record all the proceedings thereof and shall perform like duties for any committee when required. He or she shall give, or cause to be given, notice of meetings of the Shareholders and of the Board of Trustees, shall have charge of the records of the Trust, including the share books, and shall perform such other duties as may be prescribed by the Board of Trustees or chief executive officer, under whose supervision he or she shall be. He or she shall keep in safe custody the seal of the Trust and, when authorized by the Board of Trustees, shall affix and attest the same to any instrument requiring it. The Board of Trustees may give general authority to any other officer to affix the seal of the Trust and to attest the affixing by his or her signature.
Section 10. Assistant Secretaries. The assistant secretaries in order of their seniority, shall, in the absence or disability of the secretary, perform the duties and exercise the powers of the secretary and shall perform such other duties as the Board of Trustees or the chief executive officer shall prescribe.
Section 11. Treasurer. The treasurer, unless another officer has been so designated, shall be the chief financial officer of the Trust. He or she shall have general charge of the finances and books of account of the Trust. Except as otherwise provided by the Board of Trustees, he or she shall have general supervision of the funds and property of the Trust and of the performance by the custodian of its duties with respect thereto. He or she shall render to the Board of Trustees, whenever directed by the Board of Trustees, an account of the financial condition of the Trust and of all his or her transactions as treasurer. He or she shall cause to be prepared annually a full and correct statement of the affairs of the Trust, including a balance sheet and a statement of operations for the preceding fiscal year. He or she shall perform all of the acts incidental to the office of treasurer, subject to the control of the Board of Trustees or the chief executive officer.
Section 12. Assistant Treasurer. The assistant treasurer shall in the absence or disability of the treasurer, perform the duties and exercise the powers of the treasurer and shall perform such other duties as the Board of Trustees or the chief executive officer may from time to time prescribe.
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ARTICLE VI
Exculpation, Indemnification and Insurance
Section 1. Agents, Proceedings, Expenses, Disabling Conduct and Qualifying Trustee. For the purpose of this Article, “agent” means any person who is or was a Trustee or officer and any person who, while a Trustee or officer, is or was serving at the request of the Trust as a trustee, director, officer, partner, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise; “Trust” includes any domestic or foreign predecessor entity of the Trust in a merger, consolidation, or other transaction in which the predecessor’s existence ceased upon consummation of the transaction; “proceeding” means any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative; and “expenses” includes attorney’s fees and any expenses of establishing a right to indemnification or advancement under this Article; “disabling conduct” means willful misfeasance, bad faith, gross negligence, or the reckless disregard of the duties involved in the conduct of the person’s office with the Trust or applicable series; and “qualifying Trustee” means any Trustee who is not an interested person (as defined in the 1940 Act) of the Trust and is not a party to the proceeding.
Section 2. Exculpation, Good Faith Action, Expert Advice. A Trustee and an officer shall be liable to the Trust and to any Shareholder solely for his or her own willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office of Trustee or such officer, and shall not be liable for errors of judgment or mistakes of fact or law. The Trustees and officers may rely in good faith upon advice of counsel or other experts with respect to the meaning and operation of these Bylaws and their duties hereunder and to the Trust and the Shareholders, and shall be under no liability to the Trust or to any Shareholder for any act or omission in accordance with such advice; provided the Trustees and officers shall be under no liability to the Trust or to any Shareholder for failing to follow such advice. A Trustee and officer shall be fully protected in relying in good faith upon the records of the Trust and upon information, opinions, reports or statements presented by any Trustee, officer, employee or other agent of the Trust, or by any other person as to matters the Trustee or officer reasonably believes are within such other person’s professional or expert competence, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits or losses of the Trust or any series or class, or the value and amount of assets or reserves or contracts, agreements or other undertakings that would be sufficient to pay claims and obligations of the Trust or any series or class or to make reasonable provision to pay such claims and obligations, or any other facts pertinent to the existence and amount of assets from which distributions to Shareholders or creditors of the Trust might properly be paid. The appointment, designation or identification of a Trustee as chair of the Trustees, a member or chair of a committee of the Trustees, an expert on any topic or in any area (including an audit committee financial expert), or the lead independent Trustee, or any other special appointment, designation or identification of a Trustee, shall not impose on that person any standard of care or liability that is greater than that imposed on that person as a Trustee in the absence of the appointment, designation or identification, and no Trustee who has special skills or expertise, or is appointed, designated or identified as aforesaid, shall be held to a higher standard of care by virtue thereof. In addition, no appointment, designation or identification of a Trustee as aforesaid
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shall affect in any way that Trustee's rights or entitlement to indemnification or advancement of expenses.
Section 3. Indemnification. To the fullest extent permitted by law, but subject to Article VI, Section 4 below, the Trust (a) shall indemnify any person who was or is a party or is threatened to be made a party to, or involved as a witness in, any proceeding by reason of the fact that such person is or was an agent of the Trust, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with such proceeding and (b) may indemnify any person (in addition to an agent) who was or is a party or is threatened to be made a party to, or involved as a witness in, any proceeding by reason of the fact that such person is or was an employee, affiliate, adviser or similar person of the Trust (or an affiliate of the Trust), against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with such proceeding.
Section 4. Exclusion of Indemnification. No indemnification shall be provided hereunder to a person:
(a)who shall have been adjudicated by a court or body before which the proceeding was brought to be liable to the Trust or its Shareholders by reason of disabling conduct; or
(b)in the absence of an adjudication under (a) above, unless there has been a determination based upon at least a review of readily available facts (as opposed to a full trial-type inquiry) that such person did not engage in disabling conduct:
(A) by a court or body before which a proceeding was brought; (B) by at least a majority of qualifying Trustees; or (C) by written opinion of independent legal counsel.
Section 5. Successful Defense by Agent. To the extent that an agent of the Trust has been successful, on the merits or otherwise, in the defense of any proceeding referred to in Article VI, Section 3 before the court or other body before whom the proceeding was brought, the agent shall be indemnified against expenses actually and reasonably incurred by the agent in connection therewith, provided that, to the extent required by the 1940 Act, a majority of qualifying Trustees or independent legal counsel by written opinion also determines, in either case based upon a review of the readily available facts (as opposed to a full trial type inquiry), that the agent was not liable by reason of disabling conduct.
Section 6. Advance Payment of Indemnification Expenses. To the fullest extent permitted by law, the Trust shall advance to any person who was or is a party or is threatened to be made a party to, or is involved as a witness in, any proceeding by reason of the fact that such person is or was an agent the expenses actually and reasonably incurred by such person in connection with such proceeding in advance of its final disposition. To the fullest extent permitted by law, the Trust may advance to any person (in addition to an agent) who was or is a party or is threatened to be made a party to, or is involved as a witness in, any proceeding by reason of the fact that such person is or was an employee, affiliate, adviser or similar person of the Trust (or an affiliate of the Trust) the expenses actually and reasonably incurred by such person in connection with such proceeding in advance of its final disposition. Notwithstanding
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any provision to the contrary contained herein, the Trust shall not advance expenses to any person (including an agent) unless:
(a)the Trust has received an undertaking by or on behalf of such person that the amount of all expenses so advanced will be paid over by such person to the Trust unless it is ultimately determined that such person is entitled to indemnification for such expenses; and
(b)(i) such person shall have provided appropriate security for such undertaking; (ii) the Trust shall be insured against losses by reason of any lawful advance payments; or (iii) (1) the Trustees, by the vote of a majority of a quorum of qualifying Trustees, (2) independent legal counsel in a written opinion, or (3) a court or body before which the proceeding was brought pursuant to Section 12 of this Article, shall have determined, in any such case based upon a review of readily available facts (as opposed to a full trial-type inquiry), that there is reason to believe that such person ultimately will be found entitled to indemnification. Independent counsel retained for the purpose of rendering an opinion regarding advancement of expenses and/or a majority of a quorum of qualifying Trustees, may proceed under a rebuttable presumption that such person has not engaged in disabling conduct; provided that such person is not an Interested Person (or is an Interested Person solely by reason of being an officer).
Section 7. Advancement Not a Loan. The advancement of any expenses pursuant to this Article shall under no circumstances be considered a “loan” under the Sarbanes-Oxley Act of 2002, as amended from time to time, or for any other reason.
Section 8. Other Contractual Rights. Nothing contained in this Article shall affect any right to indemnification to which persons other than Trustees and officers of the Trust or any subsidiary hereof may be entitled by contract or otherwise.
Section 9. Insurance. Upon and in the event of a determination by the Board of Trustees of the Trust to purchase insurance, the Trust shall purchase and maintain insurance on behalf of any agent or employee of the Trust against any liability asserted against or incurred by the agent or employee in such capacity or arising out of the agent’s or employee’s status as such to the fullest extent permitted by law.
Section 10. Fiduciaries of Employee Benefit Plan. This Article does not apply to any proceeding against any Trustee, investment manager or other fiduciary of an employee benefit plan in that person’s capacity as such, even though that person may also be an agent of the Trust as defined in Article VI, Section 1. Nothing contained in this Article shall limit any right to indemnification to which such a Trustee, investment manager, or other fiduciary may be entitled by contract or otherwise which shall be enforceable to the extent permitted by applicable law other than this Article.
Section 11. Quorum and Applicability of Limitations. Notwithstanding anything to the contrary in these Bylaws, (i) for all purposes of this Article, a majority of the qualifying Trustees shall constitute a quorum unless there is only one qualifying Trustee, in which case such
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one qualifying Trustee shall constitute a quorum, and (ii) any limitation on indemnification or advancement in this Article (including any requirements to be entitled to receive indemnification or advancement) shall apply only to the extent required under the 1940 Act.
Section 12. Enforcement Action. An agent may commence a judicial proceeding to enforce his or her right to advancement or indemnification under this Article, including to seek a determination that the agent has not engaged in disabling conduct. The judicial proceeding with respect to a conduct determination shall be conducted as a de novo determination on the merits in all respects, and an agent shall not be prejudiced by an adverse determination by the Trust (whether by its trustees, or a committee thereof, or by independent legal counsel or otherwise) that the agent has engaged in disabling conduct. In the event that an agent is ultimately determined not to be entitled to such advancement or indemnification or if a final judicial determination is made that such action brought by the agent was frivolous or not made in good faith, as the case may be, then all amounts advanced under this Section 12 shall be repaid to the Trust.
Section 13. Repeal or Modification. Any repeal or modification of this Article, or adoption or modification of any other provision of the Bylaws or any provision of the Declaration of Trust inconsistent with this Article, shall be prospective only, to the extent that such repeal, or modification would, if applied retrospectively, adversely affect any limitation on the liability of any person or indemnification or advancement available to any person with respect to any act or omission that occurred prior to such repeal, modification or adoption.
ARTICLE VII
Shares of Beneficial Interest
Section 1. Share Ownership and Transfer of Shares. All Shares issued by the Trust shall be uncertificated, and any certificates previously issued with respect to any Shares that remain outstanding are deemed to be cancelled without any requirement for surrender to the Trust or any further action. The Board of Trustees, and any agent of the Trust including the transfer agent, may implement such rules and procedures as they consider appropriate for the transfer and exchange of Shares and similar matters. Notwithstanding anything to the contrary in these By-Laws, with respect to any outstanding Shares for which a certificate was previously issued that has been cancelled as provided in the preceding sentence (“Formerly Certificated Shares”), the Board of Trustees, and any agent of the Trust including the transfer agent, may implement such rules and procedures as they consider appropriate with respect to transfer, exchange and redemption, including that upon receipt of any request for transfer, exchange or redemption of Formerly Certificated Shares, the Trust or the transfer agent of the Trust may require (i) the surrender of the certificate or certificates representing such Formerly Certificated Shares, properly endorsed or accompanied by proper instruments of transfer, and (ii) if such certificate or certificates cannot be produced, that the Shareholder tender to the Trust (a) an affidavit that the certificate or certificates were lost, stolen or destroyed or other satisfactory evidence of such loss, theft, or destruction and (b) a bond with sufficient surety to indemnify the
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Trust against any loss or claim that may be made by reason of the certificate or certificates not being surrendered.
Section 2. Registered Shareholders. The Trust shall be entitled to recognize the exclusive right of a person registered on its books as the owner of Shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of Shares, and shall not be bound to recognize any equitable or other claim to or interest in such Shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by applicable law or the Declaration of Trust.
Section 3. Transfer Agents and Registrars. The Board of Trustees may, from time to time, appoint or remove transfer agents and or registrars of the Trust, and they may appoint the same person as both transfer agent and registrar.
Section 4. Share Ledger. The Trust shall maintain an original share ledger containing the names and addresses of all Shareholders and the number and series or class of Shares held by each Shareholder. Such share ledger may be in written form or any other form capable of being converted into written form within reasonable time for visual inspection.
ARTICLE VIII
General Provisions
Section 1. Custodianship. Except as otherwise provided by resolution of the Board of Trustees, the Trust shall place and at all times maintain in the custody of a custodian (including any sub-custodian for the custodian) all funds, securities and similar investments owned by the Trust. Subject to the approval of the Board of Trustees, the custodian may enter into arrangements with securities depositories, provided such arrangements comply with the provisions of the 1940 Act and the rules and regulations promulgated thereunder.
Section 2. Execution of Instruments. All deeds, documents, transfers, contracts, agreements and other instruments requiring execution by the Trust may be signed by the Chair or chief executive officer or president or a vice president or the treasurer or the secretary or any other duly authorized officer or agent of the Trust, which authority may be general or specific.
Section 3. Asset Value. Subject to Article VI, Section 1 of the Declaration of Trust, the net asset value per Share shall be determined separately as to each series or class of the Trust’s Shares, by dividing the sum of the total market value of the series’ or class’s investments and other assets, less any liabilities, by the total outstanding Shares of such series or class, subject to the 1940 Act and any other applicable Federal securities law or rule or regulation currently in effect.
Section 4. Jurisdiction and Waiver of Jury Trial. Unless the Trust consents in writing to the selection of an alternative forum, in accordance with Section 3804(e) of the Delaware Act, to the fullest extent permitted by law, the Court of Chancery of the State of Delaware to the extent there is subject matter jurisdiction in such court for the claims asserted or, if not, then the Superior Court of the State of Delaware shall be the sole and exclusive forum for:
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(a)any derivative suit, action or proceeding brought on behalf of the Trust,
(b)any suit, action or proceeding asserting a claim of breach of a fiduciary duty owed by any Trustee, officer or other employee of the Trust to the Trust, any series or class or the Trust’s Shareholders,
(c)any suit, action or proceeding asserting a claim arising pursuant to any provision of the Delaware Act,
(d)any suit, action or proceeding asserting a claim arising pursuant to or to interpret, apply, enforce or determine the validity of the Declaration of Trust or these By- Laws,
(e)any suit, action or proceeding arising pursuant to any provision of an agreement regarding the governance of the Trust or transfer of Shares of the Trust,
(f)any suit, action or proceeding asserting a claim governed by the internal affairs doctrine or
(g)any other claim of any nature against the Trust, any Trustee, or any officer or other employee of the Trust, whether arising under the Declaration of Trust, these By-Laws, the Delaware Act, or otherwise, including any claim seeking to enforce any provision of, or based on any matter arising out of, relating to, or in connection with, the Declaration of Trust, these By-Laws, the Trust, any Shares, or any class or series of Shares (each, a “Delaware Action”),
provided, however, that unless the Trust consents in writing to the selection of an
alternative forum, the Federal District Courts of the United States of America shall, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any cause or causes of action arising under the Securities Act of 1933, as amended or the 1940 Act (each, a “Federal Securities Action” and together with a Delaware Action, a “Covered Action”), and all Shareholders and all other Persons purchasing or otherwise acquiring, holding or claiming any interest in any Shares hereby irrevocably consent to the jurisdiction of such courts (and the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waive, to the fullest extent permitted by law, any objection they may make now or hereafter have to the laying of the venue of any such suit, action or proceeding in such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum,
and provided, however, that for claims that are required to be brought in federal court, the Federal District Courts of the United States shall be the sole and exclusive forum for such claims.
IN CONNECTION WITH ANY SUIT, ACTION, OR PROCEEDING BROUGHT IN ANY COURT, ALL SHAREHOLDERS AND ALL OTHER SUCH PERSONS HEREBY IRREVOCABLY WAIVE THE RIGHT TO A TRIAL BY JURY TO THE FULLEST EXTENT PERMITTED BY LAW.
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All Shareholders and all other such Persons agree that service of summons, complaint or other process in connection with any such suit, action or proceedings may be made by registered or certified mail or by overnight courier addressed to such Person at the address shown on the books and records of the Trust for such Person or at the address of the Person shown on the books and records of the Trust with respect to the Shares that such Person claims an interest in. Service of process in any such suit, action or proceeding against the Trust or any Trustee or officer of the Trust may be made at the address of the Trust’s registered agent in the State of Delaware. Any service so made shall be effective as if personally made in the State of Delaware. Any Shareholder and any other Person purchasing or otherwise acquiring, holding or claiming any interest in Shares shall be deemed to have notice of and consented to the provisions of this Section.
If any Covered Action is filed in a court other than the Court of Chancery of the State of Delaware or the Superior Court of the State of Delaware or the Federal District Courts of the United States of America, as applicable, as set forth above (a “Foreign Action”), in the name of any Shareholder or any other Person purchasing or otherwise acquiring, holding or claiming any interest in Shares, such Shareholder or other Person shall be deemed to have consented to (a) the personal jurisdiction of the Court of Chancery of the State of Delaware, the Superior Court of the State of Delaware or the Federal District Courts of the United States of America, as applicable, in connection with any action brought in any such courts to enforce the first paragraph of this Section (an “Enforcement Action”) and (b) having service of process made upon such Shareholder or other Person in any such Enforcement Action by service upon such Shareholder’s or other Person’s counsel in the Foreign Action as agent for such Shareholder or other Person.
ARTICLE IX
Amendments
The Board of Trustees, without a vote by the Shareholders, shall have the power to make, alter and repeal the By-Laws of the Trust.
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AMENDED AND RESTATED GLOBAL CUSTODY AGREEMENT
This Amended and Restated Agreement, dated August 14, 2017, is between JPMorgan Chase Bank, N.A. (“Bank”), a national banking association with a place of business at 383 Madison Avenue, New York, NY 10179; and each of the open-end management investment companies listed on Exhibit 1 of this Agreement, registered with the U.S. Securities and Exchange Commission under the Investment Company Act of 1940, as amended (the “1940 Act”), organized as Delaware statutory trusts (each a “Trust”), severally and for and on behalf of certain of their respective portfolios listed on Exhibit 1 (each a “Fund”), each Trust and their respective Funds with a place of business at P.O. Box 2600 Valley Forge, PA 19482. Each Trust for which Bank serves as custodian under this Agreement, shall individually be referred to as “Customer.”
1.INTENTION OF THE PARTIES; DEFINITIONS
1.1INTENTION OF THE PARTIES.
(a)This Agreement sets out the terms governing custodial, settlement and certain other associated services offered by Bank to Customer. Bank shall be responsible for the performance of only those duties that are set forth in this Agreement or expressly contained in Instructions that are consistent with the provisions of this Agreement and with Bank’s operations and procedures. Customer acknowledges that Bank is not providing any legal, tax or investment advice in providing the services hereunder.
(b)Investing in foreign markets may be a risky enterprise. The holding of Global Assets and cash in foreign jurisdictions may involve risks of loss or other special features. Bank shall not be liable for any loss that results from the general risks of investing or Country Risk.
1.2DEFINITIONS.
(a)As used herein, the following terms have the meaning hereinafter stated.
“ACCOUNT” has the meaning set forth in Section 2.1 of this Agreement.
“AFFILIATE” means an entity controlling, controlled by, or under common control with, Bank.
“AFFILIATED SUBCUSTODIAN” means a Subcustodian that is an Affiliate.
“APPLICABLE LAW” means any statute, whether national, state or local, applicable in the United States or any other country, the rules of the treaty establishing the European Community, other applicable treaties, any other law, rule, regulation or interpretation of any governmental entity, any applicable common law, and any decree, injunction, judgment, order, ruling, or writ of any governmental entity.
“AUTHORIZED PERSON” means any person (including an investment manager or other agent) who has been designated by written notice from Customer or its designated agent to act on behalf of Customer hereunder. Such persons shall continue to be Authorized Persons until such time as Bank receives Instructions from Customer or its designated agent that any such person is no longer an Authorized Person.
“BANK INDEMNITEES” means Bank, its Subcustodians, and their respective nominees, directors, officers and employees.
“BANK’S LONDON BRANCH” means the London branch office of Bank.
“CASH ACCOUNT” has the meaning set forth in Section 2.1(a)(ii).
“CORPORATE ACTION” means any subscription right, bonus issue, stock repurchase plan, redemption, exchange, calls, redemptions, tender offer, recapitalization, reorganization, conversions, consolidation, subdivision, takeover offer or similar matter with respect to a Financial Asset in the Securities Account that requires discretionary action by the holder, but does not include proxy voting.
“COUNTRY RISK” means the risk of investing or holding assets in a particular country or market, including, but not limited to, risks arising from: nationalization, expropriation or other governmental actions; the country’s financial infrastructure, including prevailing custody and settlement practices; laws applicable to the safekeeping and recovery of Financial Assets and cash held in custody; the regulation of the banking and securities industries, including changes in market rules; currency restrictions, devaluations or fluctuations; and market conditions affecting the orderly execution of securities transactions or the value of assets.
“CUSTOMER” means individually each Trust and their respective Funds as listed on Exhibit 1 hereto.
“ENTITLEMENT HOLDER” means the person named on the records of a Securities Intermediary as the person having a Securities Entitlement against the Securities Intermediary.
“FINANCIAL ASSET” means, as the context requires, either the asset itself or the means by which a person’s claim to it is evidenced, including a Security, a security certificate, or a Securities Entitlement. “Financial Asset” includes any Global Assets but does not include cash.
“FUND” means each portfolio of each Trust and listed on Exhibit 1 hereto.
“GLOBAL ASSET” means any “Financial Asset” (a) for which the principal trading market is located outside of the United States; (b) for which presentment for payment is to be made outside of the United States; or (c) which is acquired outside of the United States.
“INSTRUCTIONS” has the meaning set forth in Section 3.1 of this Agreement.
“LIABILITIES” means any liabilities, losses, claims, costs, damages, penalties, fines, obligations, or expenses of any kind whatsoever (including, without limitation, reasonable attorneys’, accountants’, consultants’ or experts’ fees and disbursements).
“SECURITIES” means stocks, bonds, rights, warrants and other negotiable and non-negotiable instruments, whether issued in certificated or uncertificated form, that are commonly traded or dealt in on securities exchanges or financial markets. “Securities” also means other obligations of an issuer, or shares, participations and interests in an issuer recognized in the country in which it is issued or dealt in as a medium for investment and any other property as may be acceptable to Bank for the Securities Account.
“SECURITIES ACCOUNT” means each Securities custody account on Bank’s records to which Financial Assets are or may be credited pursuant hereto.
“SECURITIES DEPOSITORY” has the meaning set forth in Section 5.1 of this Agreement.
“SECURITIES ENTITLEMENT” means the rights and property interest of an Entitlement Holder with respect to a Financial Asset as set forth in Part 5 of Article 8 of the Uniform Commercial Code of the State of New York, as the same may be amended from time to time.
“SECURITIES INTERMEDIARY” means Bank, a Subcustodian, a Securities Depository, and any other financial institution which in the ordinary course of business maintains custody accounts for others and acts in that capacity.
“SUBCUSTODIAN” has the meaning set forth in Section 5.1 and includes Affiliated Subcustodians.
“TRUST” means each open-end investment company organized as a Delaware business trust and listed on Exhibit 1 hereto.
(b)All terms in the singular shall have the same meaning in the plural unless the context otherwise provides and vice versa.
2.WHAT BANK IS REQUIRED TO DO
2.1Set Up Accounts.
(a)Bank shall establish and maintain the following accounts (“Accounts”):
(i)a Securities Account in the name of Customer on behalf of each Fund for Financial Assets, which may be received by Bank or its Subcustodian for the account of Customer, including as an Entitlement Holder; and
(ii)an account in the name of Customer (“Cash Account”) for any and all cash in any currency received by Bank or its Subcustodian for the account of Customer.
Notwithstanding paragraph (ii), cash held in respect of those markets where Customer is required to have a cash account in its own name held directly with the relevant Subcustodian shall be held in that manner and shall not be part of the Cash Account. Bank shall notify Customer prior to the establishment of such an account.
(b)At the request of Customer, additional Accounts may be opened in the future, which shall be subject to the terms of this Agreement.
(c)Except as precluded by Section 8-501(d) of the Uniform Commercial Code (“UCC”), Bank shall hold all Securities and other Financial Assets, other than cash, of a Fund that are delivered to it in a “securities account” with Bank for and in the name of such Fund and shall treat all such assets other than cash as “financial assets” as those terms are used in the UCC.
2.2Cash Account.
Except as otherwise provided in Instructions acceptable to Bank, all cash held in the Cash Account shall be deposited during the period it is credited to the Account in one or more deposit accounts at Bank or at Bank’s London Branch. Any cash so deposited with Bank’s London Branch shall be payable exclusively by Bank’s London Branch in the applicable currency, subject to compliance with any Applicable Law, including, without limitation, any restrictions on transactions in the applicable currency imposed by the country of the applicable currency.
2.3Segregation of Assets; Nominee Name.
(a)Bank shall identify in its records that Financial Assets credited to Customer’s Securities Account belong to Customer on behalf of the relevant Fund (except as otherwise may be agreed by Bank and Customer).
(b)To the extent permitted by Applicable Law or market practice, Bank shall require each Subcustodian to identify in its own records that Financial Assets credited to Customer’s Securities Account belong to customers of Bank, such that it is readily apparent that the Financial Assets do not belong to Bank or the Subcustodian.
(c)Bank is authorized, in its discretion, to hold in bearer form, such Financial Assets as are customarily held in bearer form or are delivered to Bank or its Subcustodian in bearer form; and to register in the name of the Customer, Bank, a Subcustodian, a Securities Depository, or their respective nominees, such Financial Assets as are customarily held in registered form. Customer authorizes Bank or its Subcustodian to hold Financial Assets in omnibus accounts and shall accept delivery of Financial Assets of the same class and denomination as those deposited with Bank or its Subcustodian.
(d)Upon receipt of Instruction, Bank shall establish and maintain a segregated account or accounts for and on behalf of each Fund for purposes of segregating cash, government securities, and other assets in connection with derivative transactions entered into by a Fund or options purchased, sold or written by the Fund.
2.4Settlement of Trades.
When Bank receives an Instruction directing settlement of a trade in Financial Assets that includes all information required by Bank, Bank shall use reasonable care to effect such settlement as instructed. Settlement of purchases and sales of Financial Assets shall be conducted in accordance with prevailing standards of the market in which the transaction occurs. The risk of loss shall be Customer’s whenever Bank delivers Financial Assets or payment in accordance with applicable market practice in advance of receipt or settlement of the expected consideration. In the case of the failure of Customer’s counterparty to deliver the expected consideration as agreed, Bank shall contact the counterparty to seek settlement and, if the settlement is not received, notify Customer, but Bank shall not be obligated to institute legal proceedings, file proof of claim in any insolvency proceeding, or take any similar action.
2.5Contractual Settlement Date Accounting.
(a)Bank shall effect book entries on a “contractual settlement date accounting” basis as described below with respect to the settlement of trades in those markets where Bank generally offers contractual settlement day accounting and shall notify Customer of these markets from time to time.
(i)Sales: On the settlement date for a sale, Bank shall credit the Cash Account with the sale proceeds of the sale and transfer the relevant Financial Assets to an account pending settlement of the trade if not already delivered.
(ii)Purchases: On the settlement date for the purchase (or earlier, if market practice requires delivery of the purchase price before the settlement date), Bank shall debit the Cash Account with the settlement monies and credit a separate account. Bank then shall post the Securities Account as awaiting receipt of the expected Financial Assets. Customer shall not be entitled to the delivery of Financial Assets that are awaiting receipt until Bank or a Subcustodian actually receives them.
Bank reserves the right to restrict in good faith the availability of contractual day settlement accounting for credit reasons. Bank, whenever reasonably possible, will notify Customer prior to imposing such restrictions.
(b)Bank may (in its discretion) upon at least 48 hours prior oral or written notification to Customer, reverse any debit or credit made pursuant to Section 2.5(a) prior to a transaction’s actual settlement, and Customer shall be responsible for any costs or liabilities resulting from such reversal. Customer acknowledges that the procedures described in this sub-section are of an administrative nature, and Bank does not undertake to make loans and/or Financial Assets available to Customer.
2.6Actual Settlement Date Accounting.
With respect to any sale or purchase transaction that is not posted to the Account on the contractual settlement date as referred to in Section 2.5, Bank shall post the transaction on the date on which the cash or Financial Assets received as consideration for the transaction is actually received by Bank.
2.7Income Collection; Autocredit.
(a)Bank shall credit the Cash Account with income and redemption proceeds on Financial Assets in accordance with the times notified by Bank from time to time on or after the anticipated payment date, net of any taxes that are withheld by Bank or any third party. Where no time is specified for a particular market, income and redemption proceeds from Financial Assets shall be credited only after actual receipt and reconciliation. Bank may reverse such credits upon at least 48 hours prior oral or written notification to Customer when Bank believes that the corresponding payment shall not be received by Bank within a reasonable period or such credit was incorrect.
(b)Bank shall make reasonable endeavors in its discretion to contact appropriate parties to collect unpaid interest, dividends or redemption proceeds, but neither Bank nor its Subcustodians shall be obliged to file any formal notice of default, institute legal proceedings, file proof of claim in any insolvency proceeding, or take any similar action.
2.8Fractions / Redemptions by Lot.
In the event that, as a result of holding Financial Assets in an omnibus account, the Customer receives fractional interests in Financial Assets arising out of a corporate action or class action litigation, Bank will credit the Customer with the amount of cash the Customer would have received, as reasonably determined by Bank, had the Financial Assets not been held in an omnibus account, and the Customer shall relinquish to Bank its interest in such fractional interests. If some, but not all, of an outstanding class of Financial Asset is called for redemption, Bank may allot the amount redeemed among the respective beneficial holders of such class of Financial Asset in any manner Bank reasonably deems to be fair and equitable. Bank will promptly notify Customer of any action taken pursuant to this section.
2.9Presentation of Coupons; Certain Other Ministerial Acts. Until Bank receives Instructions to the contrary, Bank shall:
(a)present all Financial Assets for which Bank has received notice of a call for redemption or that have otherwise matured, and all income and interest coupons and other income items that call for payment upon presentation;
(b)execute in the name of Customer such certificates as may be required to obtain payment in respect of Financial Assets; and
(c)exchange interim or temporary documents of title held in the Securities Account for definitive documents of title.
2.10Corporate Actions; Class Action Litigation.
(a)Bank will follow Corporate Actions through receipt of notices from issuers, from Subcustodians, Securities Depositories and notices published in industry publications and reported in reporting services. Bank will promptly notify Customer of any Corporate Action of which information is either (i) received by it or by a Subcustodian to the extent that Bank’s central corporate actions department has actual knowledge of the Corporate Action in time to notify its customers in a timely manner; or (ii) published via a formal notice in publications and reporting services routinely used by Bank for this purpose in time for Bank to notify its customers in a timely manner. Any notices received by Bank’s corporate actions department about U.S. settled securities class action litigation that requires action by affected owners of the underlying Financial Assets will be promptly provided to Customer if Bank, using reasonable care and diligence in the circumstances, identifies that Customer was a shareholder and held the relevant Financial Assets in custody with Bank at the relevant time. Bank will not make filings in the name of Customer in respect to such notifications except as otherwise agreed in writing between Customer and Bank.
(b)If an Authorized Person fails to provide Bank with timely Instructions with respect to any Corporate Action or class action, neither Bank nor its Subcustodians or their respective nominees will take any action in relation to that Corporate Action or class action, except as otherwise agreed in writing by Bank and Customer or as may be set forth by Bank as a default action in the notification it provides under Section 2.10(a) with respect to that Corporate Action or class action. If Customer provides Bank with Instructions with respect to any Corporate Action after the deadline set by Bank but before the deadline set by a Securities Depository, Bank shall use commercially reasonable efforts to act on such Instructions. If Bank fails to act on Instructions provided by Customer prior to the deadline set by Bank with respect to any Corporate Action, Bank will be liable for direct losses incurred by Customer.
2.11Proxy Voting.
(a)Bank shall provide Customer or its agent with details of Securities in the Account on a daily basis (“Daily Holdings Data”), and Bank or its agent shall act in accordance with Instructions from an Authorized Person in relation to matters Customer or its agent determine in their absolute discretion are to be voted upon at meetings of holders of Financial Assets, based upon such Daily Holdings Data (“the proxy voting service”). Neither Bank nor its agent shall be under any duty to provide Customer or its agent with information which it or they receive on matters to be voted upon at meetings of holders of Financial Assets.
(b)Bank or its agent shall act upon Instructions to vote, provided Instructions are received by Bank or its agent at its proxy voting department by the relevant deadline for such Instructions as determined by Bank or its agent. If Instructions are not received in a timely manner, neither Bank nor its agent shall be obligated to provide further notice to Customer.
(c)In markets where the proxy voting service is not available or where Bank has not received a duly completed enrollment form or other relevant documentation, Bank or its agent shall endeavor to act upon Instructions to vote on matters before meetings of holders of Financial Assets where it is reasonably
practicable for Bank or its agent (or its Subcustodians or nominees as the case may be) to do so and where such Instructions are received in time for Bank or its agent to take timely action.
(d)Customer acknowledges that the provision of the proxy voting service may be precluded or restricted under a variety of circumstances. These circumstances include, but are not limited to: (i) the Financial Assets being on loan or out for registration, (ii) the pendency of conversion or another corporate action, or (iii) Financial Assets being held at Customer’s request in a name not subject to the control of Bank or its Subcustodian, in a margin or collateral account at Bank or another bank or broker, or otherwise in a manner which affects voting, local market regulations or practices, or restrictions by the issuer. Additionally, in some markets, Bank may be required to vote all shares held for a particular issue for all of Bank’s customers in the same way. Bank or its agent shall inform Customer or its agent where this is the case.
(e)Notwithstanding the fact that Bank may act in a fiduciary capacity with respect to Customer under other agreements or otherwise hereunder, in performing the proxy voting service Bank shall be acting solely as the agent of Customer, and shall not exercise any discretion with regard to such proxy voting service or vote any proxy except when directed by an Authorized Person.
2.12Statements and Information Available On-Line.
(a)Bank will send, or make available on-line, to Customer, at times mutually agreed, a statement of account in Bank’s standard format for each Account maintained by Customer with Bank, identifying the Financial Assets and cash held in each Account. Bank also will provide to Customer, upon request, the capability to reformat the information contained in each statement of account. In addition, Bank will send, or make available on-line, to Customer an advice or notification of any transfers of cash or Financial Assets with respect to each Account. Bank will not be liable with respect to any matter set forth in those portions of any such statement of account or advice (or reasonably implied therefrom) to which Customer has not given Bank a written exception or objection within ninety days of receipt of such statement, provided such matter is not the result of Bank’s willful misconduct or bad faith.
(b)Prices and other information obtained from third parties which may be contained in any statement sent to Customer have been obtained from sources Bank believes to be reliable. Bank does not, however, make any representation as to the accuracy of such information or that the prices specified necessarily reflect the proceeds that would be received on a disposal of the relevant Financial Assets.
(c)Customer understands that records and reports, other than statements of account, that are available to it on-line on a real-time basis may not be accurate due to mis-postings, delays in updating Account records, and other causes. Bank will not be liable for any loss or damage arising out of the inaccuracy of any such records or reports that are accessed on-line on a real-time basis.
2.13Access to Bank’s Records.
(a)Bank shall create and maintain all records relating to its activities and obligations under this Agreement in such manner as will meet the obligations of Customer under the 1940 Act, with particular attention to Section 31 thereof and rules 31a-1 and 31a-2 thereunder. All such records shall be property of Customer. Bank will allow Customer’s duly authorized officers, employees, and agents, including Customer’s independent public accountants, and the employees and agents of the SEC access at all times during the regular business hours of Bank to such records. Except, in the case of access by the SEC as otherwise required by the SEC, such access will be subject to reasonable notice to Bank. Subject to restrictions under Applicable Law, Bank also will obtain an undertaking to permit Customer’s independent
public accountants reasonable access to the records of any Subcustodian of Securities held in the Securities Account as may be required in connection with such examination.
(b)In addition, Bank shall cooperate with and supply necessary information to any entity or entities appointed by the Customer to keep its books of account and/or compute its net asset value. Bank shall provide reports and other data as Customer may from time to time reasonably request to enable Customer to obtain, from year to year, favorable opinions from Customer’s independent accountants with respect to Bank’s activities hereunder in connection with (i) the preparation of any registration statement of Customer and any other reports required by a governmental agency or regulatory authority with jurisdiction over the Fund, and (ii) the fulfillment by Customer of any other requirements of a governmental agency or regulatory authority with jurisdiction over the Fund.
(c)Upon reasonable request of Customer, Bank shall provide Customer with a copy of Bank’s Service Organizational Control (SOC) 1 reports (or any successor reports) prepared in accordance with the requirements of AT-C section 320, Reporting on an Examination of Controls at a Service Organization Relevant to User Entities’ Internal Control Over Financial Reporting (or any successor attestation standard). In addition, from time to time as requested, Bank will furnish Customer a “gap” or “bridge” letter that will address any material changes that might have occurred in Customer’s controls covered in the SOC Report from the end of the SOC Report period through a specified requested date. Bank shall use commercially reasonable efforts to provide Customer with such reports as Customer may reasonably request or otherwise reasonably require to fulfill its duties under Rule 38a-l of the 1940 Act or similar legal and regulatory requirements. Upon reasonable request by Customer, Bank shall also provide to Customer customary sub- certifications in connection with Sarbanes-Oxley Act of 2002 certification requirements. Upon written request, Bank shall provide Customer with information about Bank’s processes for the management and monitoring of Subcustodians for safeguarding Financial Assets.
2.14Maintenance of Financial Assets at Bank and at Subcustodian Locations.
(a)Unless Instructions require another location acceptable to Bank, Global Assets shall be held in the country or jurisdiction in which their principal trading market is located, where such Global Assets may be presented for payment, where such Financial Assets were acquired, or where such Financial Assets are held. Bank reserves the right to refuse to accept delivery of Global Assets or cash in countries and jurisdictions other than those referred to in Schedule 1 to this Agreement, as in effect from time to time.
(b)Bank shall not be obliged to follow an Instruction to hold Financial Assets with, or have them registered or recorded in the name of, any person not chosen by Bank. However, if Customer does instruct Bank to hold Securities with or register or record Securities in the name of a person not chosen by Bank, the consequences of doing so are at Customer’s own risk and Bank shall not be liable therefor.
2.15Tax Reclaims.
Bank shall provide tax reclamation services as provided in Section 8.2.
2.16Foreign Exchange Transactions.
To facilitate the administration of Customer’s trading and investment activity, Bank may, but shall not be obliged to, enter into spot or forward foreign exchange contracts with Customer, or an Authorized Person, and may also provide foreign exchange contracts and facilities through its Affiliates or Subcustodians. Instructions, including standing instructions, may be issued with respect to such contracts, but Bank may establish rules or limitations concerning any foreign exchange facility made available. In all cases where Bank, its Affiliates or Subcustodians enter into a master foreign exchange contract that covers foreign
exchange transactions for the Accounts, the terms and conditions of that foreign exchange contract and, to the extent not inconsistent, this Agreement, shall apply to such transactions.
2.17Compliance with Securities and Exchange Commission (“SEC”) rule 17f-5 (“rule 17f-5”).
(a)Customer’s board of directors (or equivalent body) (hereinafter ‘Board’) hereby delegates to Bank, and, except as to the country or countries as to which Bank may, from time to time, advise Customer that it does not accept such delegation, Bank hereby accepts the delegation to it, of the obligation to perform as Customer’s ‘Foreign Custody Manager’ (as that term is defined in rule 17f-5(a)(3) as promulgated under the 1940 Act), including for the purposes of: (i) selecting Eligible Foreign Custodians (as that term is defined in rule 17f-5(a)(1), and as the same may be amended from time to time, or that have otherwise been exempted pursuant to an SEC exemptive order) to hold foreign Financial Assets and cash, (ii) evaluating the contractual arrangements with such Eligible Foreign Custodians (as set forth in rule 17f- 5(c)(2)), and (iii) monitoring such foreign custody arrangements (as set forth in rule 17f-5(c)(3)).
(b)In connection with the foregoing, Bank shall:
(i)provide written reports notifying Customer’s Board of the placement of Financial Assets and cash with particular Eligible Foreign Custodians and of any material change in the arrangements with such Eligible Foreign Custodians, with such reports to be provided to Customer’s Board at such times as the Board deems reasonable and appropriate based on the circumstances of Customer’s foreign custody arrangements (and until further notice from Customer such reports shall be provided not less than quarterly with respect to the placement of Financial Assets and cash with particular Eligible Foreign Custodians and with reasonable promptness upon the occurrence of any material change in the arrangements with such Eligible Foreign Custodians);
(ii)exercise such reasonable care, prudence and diligence in performing as Customer’s Foreign Custody Manager as a person having responsibility for the safekeeping of foreign Financial Assets and cash would exercise;
(iii)in selecting an Eligible Foreign Custodian, first have determined that foreign Financial Assets and cash placed and maintained in the safekeeping of such Eligible Foreign Custodian shall be subject to reasonable care, based on the standards applicable to custodians in the relevant market, after having considered all factors relevant to the safekeeping of such foreign Financial Assets and cash, including, without limitation, those factors set forth in rule 17f- 5(c)(1)(i)-(iv);
(iv)determine that the written contract with an Eligible Foreign Custodian requires that the Eligible Foreign Custodian shall provide reasonable care for foreign Financial Assets and cash based on the standards applicable to custodians in the relevant market, including, without limitation, those factors set forth in rule 17f-5(c)(2).
(v)have established a system to monitor the continued appropriateness of maintaining foreign Financial Assets and cash with particular Eligible Foreign Custodians and of the governing contractual arrangements; it being understood, however, that in the event that Bank shall have determined that the existing Eligible Foreign Custodian in a given country would no longer afford foreign Financial Assets and cash reasonable care and that no other Eligible Foreign Custodian in that country would afford reasonable care, Bank shall promptly so advise Customer and shall then act in accordance with the Instructions of Customer with respect to the disposition of the affected foreign Financial Assets and cash.
(c)Subject to (b)(i)-(v) above, Bank is hereby authorized to place and maintain foreign Financial Assets and cash on behalf of Customer with Eligible Foreign Custodians pursuant to a written contract deemed appropriate by Bank. Each such contract shall, except as set forth in the last paragraph of this subsection (c), include provisions that provide:
(i)For indemnification or insurance arrangements (or any combination of the foregoing) that will adequately protect Customer against the risk of loss of Financial Assets and cash held in accordance with such contract;
(ii)That Customer’s Financial Assets will not be subject to any right, charge, security interest, lien or claim of any kind in favor of the Eligible Foreign Custodian or its creditors, except a claim of payment for their safe custody or administration or, in the case of cash, liens or rights in favor of creditors of such Eligible Foreign Custodian arising under bankruptcy, insolvency or similar laws;
(iii)That beneficial ownership of Customer’s Assets will be freely transferable without the payment of money or value other than for safe custody or administration;
(iv)That adequate records will be maintained identifying Customer’s Assets as belonging to Customer or as being held by a third party for the benefit of Customer;
(v)That Customer’s independent public accountants will be given access to those records described in (iv) above or confirmation of the contents of those records; and
(vi)That Customer will receive sufficient and timely periodic reports with respect to the safekeeping of Customer’s Assets, including, but not limited to, notification of any transfer to or from Customer’s account or a third party account containing Assets held for the benefit of Customer.
Such contract may contain, in lieu of any or all of the provisions specified in this subsection (c), such other provisions that Bank determines will provide, in their entirety, the same or a greater level of care and protection for Customer’s Assets as the specified provisions, in their entirety.
(d)Except as expressly provided herein, Customer shall be solely responsible to assure that the maintenance of foreign Financial Assets and cash hereunder complies with the rules, regulations, interpretations and exemptive orders as promulgated by or under the authority of the SEC.
(e)Bank represents to Customer that it is a U.S. Bank as defined in rule 17f-5(a)(7). Customer represents to Bank that: (1) the foreign Financial Assets and cash being placed and maintained in Bank’s custody are subject to the 1940 Act, as the same may be amended from time to time; (2) its Board has determined that it is reasonable to rely on Bank to perform as Customer’s Foreign Custody Manager; and
(3)its Board or its investment adviser shall have determined that Customer may maintain foreign Financial Assets and cash in each country in which Customer’s Financial Assets and cash shall be held hereunder and determined to accept Country Risk. Nothing contained herein shall require Bank to make any selection or to engage in any monitoring on behalf of Customer that would entail consideration of Country Risk.
(f)Bank shall provide to Customer such information relating to Country Risk as is specified in Appendix 1 hereto. Customer hereby acknowledges that: (i) such information is solely designed to inform Customer of market conditions and procedures and is not intended as a recommendation to invest or not invest in particular markets; and (ii) Bank has gathered the information from sources it considers reliable,
but that Bank shall have no responsibility for inaccuracies or incomplete information, provided that Bank transmits the information using reasonable care.
2.18Compliance with SEC rule 17f-7 (“rule 17f-7”).
(a)Bank shall, for consideration by Customer, provide an analysis of the custody risks associated with maintaining Customer’s foreign Financial Assets with each Eligible Securities Depository used by Bank as of the date hereof (or, in the case of an Eligible Securities Depository not used by Bank as of the date hereof, prior to the initial placement of Customer’s foreign Financial Assets at such Depository) and at which any foreign Financial Assets of Customer are held or are expected to be held. The foregoing analysis will be provided to Customer at Bank’s Website. In connection with the foregoing, Customer shall notify Bank of any Eligible Securities Depositories at which it does not choose to have its foreign Financial Assets held. Bank shall monitor the custody risks associated with maintaining Customer’s Financial Assets at each such Eligible Securities Depository on a continuing basis and shall promptly notify Customer or its investment adviser of any material changes in such risks.
(b)Bank shall exercise reasonable care, prudence and diligence in performing the requirements set forth in Section 2.18(a) above.
(c)Based on the information available to it in the exercise of diligence, Bank shall determine the eligibility under rule 17f-7 of each depository before including it on Schedule 3 hereto and shall promptly advise Customer if any Eligible Securities Depository ceases to be eligible. (Eligible Securities Depositories used by Bank as of the date hereof are set forth in Schedule 3 hereto, and as the same may be amended on notice to Customer from time to time.)
2.19Service Level Agreement.
Subject to the terms and conditions of this Agreement, Bank agrees to perform the custody services provided for under this Agreement in a manner that meets or exceeds any service levels as may be agreed upon by the parties from time to time in a written document that is executed by both parties on or after the date of this Agreement, unless that written document specifically states that it is not contractually binding. For the avoidance of doubt, Bank’s Service Directory shall not be deemed to be such a written document.
3.INSTRUCTIONS
3.1Acting on Instructions; Unclear Instructions.
(a)Bank is authorized to act under this Agreement (or to refrain from taking action) in accordance with the instructions received by Bank, via telephone, telex, facsimile transmission, or other teleprocess or electronic instruction or trade information system acceptable to Bank (“Instructions”). Bank shall have no responsibility for the authenticity or propriety of any Instructions that Bank believes in good faith to have been given by Authorized Persons or which are transmitted with proper testing or authentication pursuant to terms and conditions that Bank may specify. Customer authorizes Bank to accept and act upon any Instructions received by it without inquiry. Customer shall indemnify the Bank Indemnitees against, and hold each of them harmless from, any Liabilities that may be imposed on, incurred by, or asserted against the Bank Indemnitees as a result of any action or omission taken in accordance with any Instructions or other directions upon which Bank is authorized to rely under the terms of this Agreement, provided that Bank shall not be indemnified against or held harmless from any Liabilities arising out of Bank’s negligence, bad faith, fraud, or willful misconduct.
(b)Unless otherwise expressly provided, all Instructions shall continue in full force and effect until canceled or superseded.
(c)Bank may (in its sole discretion and without affecting any part of this Section 3.1) seek clarification or confirmation of an Instruction from an Authorized Person and may decline to act upon an Instruction if it does not receive clarification or confirmation satisfactory to it. Bank shall not, except as provided in Section 7.1 hereof, be liable for any loss arising from any delay while it seeks such clarification or confirmation.
(d)In executing or paying a payment order Bank may rely upon the identifying number (e.g. Fedwire routing number or account) of any party as instructed in the payment order. Customer assumes full responsibility for any inconsistency within an Instruction between the name and identifying number of any party in payment orders issued to Bank in Customer’s name.
3.2Security Devices.
Either party may record any of their telephonic communications. Customer shall comply with any security procedures reasonably required by Bank from time to time with respect to verification of Instructions. Customer shall be responsible for safeguarding any test keys, identification codes or other security devices that Bank shall make available to Customer or any Authorized Person.
3.3Instructions; Contrary to Law/Market Practice.
Bank need not act upon Instructions which it reasonably believes to be contrary to law, regulation or market practice but shall be under no duty to investigate whether any Instructions comply with Applicable Law or market practice. Bank shall notify Customer as soon as reasonably practicable if it does not act upon Instructions under this Section.
3.4Cut-off Times.
Bank has established cut-off times for receipt of some categories of Instruction, which shall be made available to Customer. If Bank receives an Instruction after its established cut-off time, it shall attempt to act upon the Instruction on the day requested if Bank deems it practicable to do so or otherwise as soon as practicable on the next business day.
3.5Electronic Access.
Access by the Customer to certain systems, applications or products of Bank shall be governed by this Agreement and the terms and conditions set forth in Annex A Electronic Access.
4.FEES, EXPENSES AND OTHER AMOUNTS OWING TO BANK
4.1Fees and Expenses.
Customer shall pay Bank for its services hereunder the fees set forth in Schedule 2 hereto or such other amounts as may be agreed upon in writing from time to time.
4.2Overdrafts.
If a debit to any currency in the Cash Account results in a debit balance in that currency then Bank may, in its discretion, advance an amount equal to the overdraft and such an advance shall be deemed a loan to
Customer, payable on demand, bearing interest at the rate agreed by Customer and Bank for the Accounts from time to time, or, in the absence of such an agreement, at the rate charged by Bank from time to time, for overdrafts incurred by customers similar to Customer, from the date of such advance to the date of payment (both after as well as before judgment) and otherwise on the terms on which Bank makes similar advances available from time to time. Bank shall promptly notify Customer of such an advance. No prior action or course of dealing on Bank’s part with respect to the settlement of transactions on Customer’s behalf shall be asserted by Customer against Bank for Bank’s refusal to make advances to the Cash Account or to settle any transaction for which Customer does not have sufficient available funds in the applicable currency in the Account.
4.3Bank’s Right Over Securities; Set-off.
(a)Customer grants Bank a security interest in and a lien on the Financial Assets held in the Securities Account of a particular Fund as shall have a fair market value equal to the aggregate amount of all overdrafts of such Fund, together with accrued interest, as security for any and all amounts which are now or become owing to Bank with respect to that Fund under any provision of this Agreement, whether or not matured or contingent (“Indebtedness”). Such lien and security interest shall be effective only so long as such advance, overdraft, or accrued interest thereon remains outstanding and Bank shall have all the rights and remedies of a secured party under the New York Uniform Commercial Code in respect of the repayment of the advance, overdraft or accrued interest. In this regard, Bank shall be entitled to (i) without notice to Customer, withhold delivery of such Financial Assets, and (ii) with two business days’ prior notice to the Customer and an opportunity for the Customer to satisfy such Indebtedness to Bank, sell or otherwise realize any of such Financial Assets and to apply the proceeds and any other monies credited to the Cash Account in satisfaction of such Indebtedness solely to the extent of such Indebtedness, provided, however, that Bank shall only be obligated to provide the Customer with same-day prior notice if Bank, in its reasonable business judgment, determines that, due to market conditions or other special circumstances, a delay would be likely to materially prejudice its ability to recover the Indebtedness. During any such notice period, Bank will, at Customer’s request, consult with Customer regarding the selection of Financial Assets to be sold by Bank to satisfy the Indebtedness. For the avoidance of doubt, only advances made by Bank under Section 4.2 are “Indebtedness” subject to this Section 4.3. No other outstanding amounts payable by Customer to Bank (including, without limitation, amounts payable by Customer under Section 4.1) are “Indebtedness” subject to this Section 4.3.
(b)Bank shall be further entitled to set any such Indebtedness off against any cash or deposit account of the Fund that incurred the Indebtedness with Bank or any of its Affiliates of which the Fund is the beneficial owner, regardless of the currency involved; Bank shall provide prior notice to Customer of its intent to exercise its set off rights against any cash or deposit account of the Fund, which notice shall be provided at least on the same day as the set off is effected, provided however that no prior notice is required in cases where Bank, in its reasonable business judgment, determines that, due to market conditions or other special circumstances, the delay required in order to provide prior notice would be likely to materially prejudice its ability to recover the Indebtedness.
5.SUBCUSTODIANS, SECURITIES DEPOSITORIES, AND OTHER AGENTS
5.1Appointment of Subcustodians; Use of Securities Depositories.
(a)Bank is authorized under this Agreement to act through and hold Customer’s Global Assets with subcustodians, being at the date of this Agreement the entities listed in Schedule 1 and/or such other entities as Bank may appoint as subcustodians (“Subcustodians”). At the request of Customer, Bank may, but need not, add to Schedule 1 an Eligible Foreign Custodian where Bank has not acted as Foreign Custody Manager with respect to the selection thereof. Bank shall notify Customer in the event that it elects to add
any such entity. Bank shall use reasonable care, prudence and diligence in the selection and continued appointment of such Subcustodians. In addition, Bank and each Subcustodian may deposit Global Assets with, and hold Global Assets in, any securities depository, settlement system, dematerialized book entry system or similar system (together a “Securities Depository”) on such terms as such systems customarily operate and Customer shall provide Bank with such documentation or acknowledgements that Bank may require to hold the Global Assets in such systems.
(b)Any agreement Bank enters into with a Subcustodian for holding Bank’s customers’ assets shall provide that: (i) such assets shall not be subject to any right, charge, security interest, lien or claim of any kind in favor of such Subcustodian or its creditors, except a claim of payment for their safe custody or administration or, in the case of cash deposits, except for liens or rights in favor of creditors of the Subcustodian arising under bankruptcy, insolvency or similar laws; (ii) beneficial ownership of such assets shall be freely transferable without the payment of money or value other than for safe custody or administration; (iii) adequate records will be maintained identifying the assets as belonging to Customer or as being held by a third party for the benefit of Customer; (iv) Customer and Customer’s independent public accountants will be given reasonable access to those records or confirmation of the contents of those records; and (v) Customer will receive periodic reports with respect to the safekeeping of Customer’s assets, including, but not limited to, notification of any transfer to or from Customer’s account or a third party account containing assets held for the benefit of Customer. Where a Subcustodian deposits Securities with a Securities Depository, Bank shall cause the Subcustodian to identify on its records as belonging to Bank, as agent, the Securities shown on the Subcustodian’s account at such Securities Depository. The foregoing shall not apply to the extent of any special agreement or arrangement made by Customer with any particular Subcustodian.
(c)Bank shall have no responsibility for any act or omission by (or the insolvency of) any Securities Depository. In the event Customer incurs a loss due to the negligence, bad faith, willful misconduct, or insolvency of a Securities Depository, Bank shall make reasonable endeavors to seek recovery from the Securities Depository.
(d)The term Subcustodian as used herein shall mean the following:
(i)a “U.S. Bank” as such term is defined in rule 17f-5; and
(ii)an “Eligible Foreign Custodian” as such term is defined in rule 17f-5 and any other entity that shall have been so qualified by exemptive order, rule or other appropriate action of the SEC.
(iii)For purposes of clarity, it is agreed that as used in Section 5.2(a), the term Subcustodian shall not include any Eligible Foreign Custodian as to which Bank has not acted as Foreign Custody Manager.
(e)The term ‘securities depository’ as used herein when referring to a securities depository located outside the U.S. shall mean an “Eligible Securities Depository” as defined in rule 17f-7, or that has otherwise been made exempt pursuant to an SEC exemptive order.
(f)The term ‘securities depository’ as used herein when referring to a securities depository located in the U.S. shall mean a “Securities Depository” as defined in rule 17f-4.
5.2Liability for Subcustodians.
(a)Subject to the exculpation from consequential damages set forth in Section 7.1(b), Bank shall be liable for direct Liabilities incurred by Customer that result from: (i) the acts or omissions of any Subcustodian selected by Bank, whether domestic or foreign, to the same extent as if such act or omission was performed by Bank itself, taking into account the standards and market practice prevailing in the relevant market; or (ii) the insolvency of any Affiliated Subcustodian. Subject to the terms and conditions of this Agreement, including the exculpation from consequential damages set forth in Section 7.1(b), Bank shall take full responsibility for any Liabilities that result from or that are caused by the fraud, willful misconduct, or negligence of its Subcustodians or the insolvency of an Affiliated Subcustodian. In the event of any Liabilities suffered or incurred by Customer caused by or resulting from the acts or omissions of any Subcustodian for which Bank would otherwise be liable, Bank shall promptly reimburse Customer in the amount of any such Liabilities.
(b)Subject to Section 7.1(a) and Bank’s duty to use reasonable care, prudence and diligence in the monitoring of a Subcustodian’s financial condition as reflected in its published financial statements and other publicly available financial information concerning it, Bank shall not be responsible for the insolvency of any Subcustodian which is not a branch or an Affiliated Subcustodian.
(c)Bank reserves the right to add, replace or remove Subcustodians. Bank shall give Customer prompt notice of any such action, which shall be advance notice if practicable. Upon request by Customer, Bank shall identify the name, address and principal place of business of any Subcustodian and the name and address of the governmental agency or other regulatory authority that supervises or regulates such Subcustodian.
5.3Use of Agents.
(a)Bank may provide certain services under this Agreement through third parties. These third parties may be Affiliates. Except to the extent provided in Section 5.2 with respect to Subcustodians, Bank shall not be responsible for any loss as a result of a failure by any broker or any other third party that it selects and retains using reasonable care and without negligence to provide ancillary services, such as pricing, proxy voting, and corporate action services, that it does not customarily provide itself. Nevertheless, Bank shall be liable for the performance of any such service provider selected by Bank that is an Affiliate to the same extent as Bank would have been liable if it performed such services itself.
(b)Bank shall execute transactions involving Financial Assets of United States origin through a broker which is an Affiliate (i) in the case of the sale under Section 2.8 of a fractional interest or (ii) if an Authorized Person directs Bank to use the affiliated broker or otherwise requests that Bank select a broker for that transaction, unless, in either case, the Affiliate does not execute similar transactions in such Financial Assets. The affiliated broker may charge its customary commission (or retain its customary spread) with respect to either such transaction.
6.ADDITIONAL PROVISIONS RELATING TO CUSTOMER
6.1Representations of Customer and Bank.
(a)Customer represents and warrants to Bank that: (i) it has full authority and power, and has obtained all necessary authorizations and consents, to deposit and control the Financial Assets and cash in the Accounts, to use Bank as its custodian in accordance with the terms of this Agreement and to incur indebtedness, pledge Financial Assets as contemplated by Section 4.3, and enter into foreign exchange transactions; and (ii) this Agreement is its legal, valid and binding obligation, enforceable in accordance
with its terms and it has full power and authority to enter into and has taken all necessary corporate action to authorize the execution of this Agreement. Bank may rely upon the above or the certification of such other facts as may be required to administer Bank’s obligations hereunder.
(b)Bank represents and warrants to Customer that this Agreement is its legal, valid and binding obligation, enforceable in accordance with its terms and it has full power and authority to enter into and has taken all necessary corporate action to authorize the execution of this Agreement. Customer may rely upon the above or the certification of such other facts as may be required to administer Customer’s obligations hereunder.
6.2Customer to Provide Certain Information to Bank.
Upon request, Customer shall promptly provide to Bank such information about itself and its financial status as Bank may reasonably request, including Customer’s organizational documents and its current audited and unaudited financial statements.
6.3Customer is Liable to Bank Even if it is Acting for Another Person.
If Customer is acting as an agent for a disclosed or undisclosed principal in respect of any transaction, cash, or Financial Asset, Bank nevertheless shall treat Customer as its principal for all purposes under this Agreement. In this regard, Customer shall be liable to Bank as a principal in respect of any transactions relating to the Account. The foregoing shall not affect any rights Bank might have against Customer’s principal.
6.4Several Obligations of the Trusts and the Funds.
This Agreement is executed on behalf of the Board of Trustees of each Fund as Trustees and not individually and the obligations of this Agreement are not binding upon any of the Trustees or shareholders individually but are binding only upon the assets and property of each Fund severally and not jointly. With respect to any obligations of Customer arising out of this Agreement, Bank shall look for payment or satisfaction of any obligation solely to the assets of the Fund to which such obligation relates as though Bank had separately contracted by separate written instrument with respect to the Fund.
7.WHEN BANK IS LIABLE TO CUSTOMER
7.1Standard of Care; Liability.
(a)Notwithstanding any other provision of this Agreement, Bank shall exercise reasonable care, prudence and diligence in carrying out all of its duties and obligations under this Agreement (except to the extent Applicable Law provides for a higher standard of care, in which case such higher standard shall apply), and shall be liable to Customer for any and all Liabilities suffered or incurred by Customer resulting from the failure of Bank to exercise such reasonable care, prudence and diligence or resulting from Bank’s negligence, willful misconduct, or fraud and to the extent provided in Section 5.2(a). Unless otherwise specified or required by Applicable Law, Bank shall not be in violation of this Agreement with respect to any matter as to which it has satisfied the standard of care under this Agreement.
(b)Bank shall not be liable under any circumstances for any indirect, incidental, consequential or special damages (including, without limitation, lost profits) of any form incurred by any person, whether or not foreseeable and regardless of the type of action in which such a claim may be brought, with respect to the Accounts or Bank’s performance hereunder or Bank’s role as custodian.
(c)Subject to the limitations set forth in this Agreement, each Customer severally and not jointly shall indemnify the Bank Indemnitees against, and hold them harmless from, any Liabilities that may be imposed on, incurred by or asserted against any of the Bank Indemnitees in connection with or arising out of Bank’s performance under this Agreement, provided the Bank Indemnitees have not acted with negligence or bad faith or engaged in fraud or willful misconduct in connection with the Liabilities in question. Nevertheless, Customer shall not be obligated to indemnify any Bank Indemnitee under the preceding sentence with respect to any Liability for which Bank is liable under Section 5.2 of this Agreement. Bank shall use all commercially reasonable efforts to mitigate any Liability for which indemnity is sought hereunder (provided, however, that reasonable expenses incurred with respect to such mitigation shall be Liabilities subject to indemnification hereunder).
(d)Subject to any obligation Customer may have to indemnify Bank with respect to amounts claimed by third parties, Customer shall have no liability whatsoever for any consequential, special, indirect or speculative loss or damages (including, but not limited to, lost profits) suffered by Bank Indemnitees in connection with the transactions and services contemplated hereby and the relationship established hereby even if Customer has been advised as to the possibility of the same and regardless of the form of action.
(e)Without limiting Subsections 7.1 (a) or (b), Bank shall have no duty or responsibility to:
(i)question Instructions or make any suggestions to Customer or an Authorized Person regarding such Instructions, provided that Bank believes in good faith that such Instructions have been given by Authorized Persons or which are transmitted with proper testing or authentication pursuant to terms and conditions that Bank may specify; (ii) supervise or make recommendations with respect to investments or the retention of Financial Assets; (iii) advise Customer or an Authorized Person regarding any default in the payment of principal or income of any security other than as provided in Section 2.7(b) of this Agreement; (iv) except as otherwise expressly required herein, evaluate or report to Customer or an Authorized Person regarding the financial condition of any broker, agent or other party to which Bank is instructed to deliver Financial Assets or cash; or (v) except for trades settled at DTC where the broker provides DTC trade confirmation and Customer provides for Bank to receive the trade instruction, review or reconcile trade confirmations received from brokers (and Customer or its Authorized Persons issuing Instructions shall bear any responsibility to review such confirmations against Instructions issued to and statements issued by Bank).
(f)Bank shall indemnify the Customer from and against any and all Liabilities which may be imposed on, incurred by, or asserted against the Customer resulting directly either from Bank’s negligence, bad faith, fraud or willful misconduct in the performance of its obligations or duties hereunder, or from any act or omission by a Subcustodian in the performance of its subcustodial obligations or duties hereunder for which Bank is expressly liable under Section 5.2, taking into account the standards and market practice prevailing in the relevant market, provided that (i) in no event shall the Bank be obliged to indemnify Customer from against any Liability (or any claim for a Liability) to the extent such Liability is described in clause 7.1(b) this Agreement and (ii) the Customer shall use all commercially reasonable efforts to mitigate any Liability for which indemnity is sought hereunder (provided, however, that reasonable expenses incurred with respect to such mitigation shall be Liabilities subject to indemnification hereunder).
7.2Force Majeure.
So long as Bank maintains and updates its business continuation and disaster recovery procedures as set forth in Section 10.8, Bank shall have no liability for any damage, loss or expense of any nature that Customer may suffer or incur, caused by an act of God, fire, flood, civil or labor disturbance, war, act of any governmental authority or other act or threat of any authority (de jure or de facto), legal constraint, fraud or forgery (except by Bank or Bank Indemnitees), malfunction of equipment or software (except to the extent such malfunction is primarily attributable to Bank’s negligence, or willful misconduct in maintaining the equipment or software), failure of or the effect of rules or operations of any external funds
transfer system, inability to obtain or interruption of external communications facilities, or any cause beyond the reasonable control of Bank (including without limitation, the non-availability of appropriate foreign exchange). Bank shall endeavor to promptly notify Customer when it becomes aware of any situation outlined above, but shall not be liable for failure to do so. If Bank is prevented from carrying out its obligations under this Agreement for a period of thirty days, Customer may terminate the Agreement by giving Bank not less than thirty days’ notice, without prejudice to any of the rights of any party accrued prior to the date of termination.
7.3Bank May Consult With Counsel.
Bank shall be entitled to rely on, and may act upon the advice of professional advisers in relation to matters of law, regulation or market practice (which may be the professional advisers of Customer), and shall not be liable to Customer for any action reasonably taken or omitted pursuant to such advice; provided that Bank has selected and retained such professional advisers using reasonable care and acts reasonably in reliance on the advice.
7.4Bank Provides Diverse Financial Services and May Generate Profits as a Result.
Customer acknowledges that Bank or its Affiliates may have a material interest in transactions entered into by Customer with respect to the Account or that circumstances are such that Bank may have a potential conflict of duty or interest. For example, Bank or its Affiliates may act as a market maker in the Financial Assets to which Instructions relate, provide brokerage services to other customers, act as financial adviser to the issuer of such Financial Assets, act in the same transaction as agent for more than one customer, have a material interest in the issue of the Financial Assets, or earn profits from any of these activities. Customer acknowledges that Bank or its Affiliates may be in possession of information tending to show that the Instructions received may not be in the best interests of Customer. Bank is not under any duty to disclose any such information.
8.TAXATION
8.1Tax Obligations.
(a)Customer confirms that Bank is authorized to deduct from any cash received or credited to the Cash Account any taxes or levies required by any revenue or Governmental authority for whatever reason in respect of Customer’s Accounts.
(b)If Bank does not receive appropriate declarations, documentation and information then additional United Kingdom taxation shall be deducted from all income received in respect of the Financial Assets issued outside the United Kingdom (which shall for this purpose include United Kingdom Eurobonds) and any applicable United States tax (including, but not limited to, non-resident alien tax) shall be deducted from United States source income. Customer shall provide to Bank such certifications, documentation, and information as it may require in connection with taxation, and warrants that, when given, this information is true and correct in every respect, not misleading in any way, and contains all material information. Customer undertakes to notify Bank immediately if any information requires updating or correcting.
(c)Customer shall be responsible for the payment of all taxes relating to the Financial Assets in the Securities Account, and Customer shall pay, indemnify and hold Bank harmless from and against any and all liabilities, penalties, interest or additions to tax with respect to or resulting from, any delay in, or failure by, Bank (1) to pay, withhold or report any U.S. federal, state or local taxes or foreign taxes imposed on, or (2) to report interest, dividend or other income paid or credited to the Cash Account, whether
such failure or delay by Bank to pay, withhold or report tax or income is the result of (x) Customer’s failure to comply with the terms of this paragraph, or (y) Bank’s own acts or omissions; provided however, Customer shall not be liable to Bank for any penalty or additions to tax due as a result of Bank’s failure to pay or withhold tax or to report interest, dividend or other income paid or credited to the Cash Account solely as a result of Bank’s negligent acts or omissions.
8.2Tax Reclaims.
(a)Subject to the provisions of this Section, Bank shall apply for a reduction of withholding tax and any refund of any tax paid or tax credits in respect of income payments on Financial Assets credited to the Securities Account that Bank believes may be available.
(b)The provision of a tax reclamation service by Bank is conditional upon Bank receiving from Customer (i) a declaration of its identity and place of residence and (ii) certain other documentation (pro forma copies of which are available from Bank). If Financial Assets credited to the Account are beneficially owned by someone other than Customer, this information shall be necessary with respect to the beneficial owner. Customer acknowledges that Bank shall be unable to perform tax reclamation services unless it receives this information.
(c)Bank shall perform tax reclamation services only with respect to taxation levied by the revenue authorities of the countries advised to Customer from time to time and Bank may, by notification in writing, in its absolute discretion, supplement or amend the countries in which the tax reclamation services are offered. Other than as expressly provided in this Section 8.2, Bank shall have no responsibility with regard to Customer’s tax position or status in any jurisdiction.
(d)Customer confirms that Bank is authorized to disclose any information requested by any revenue authority or any governmental body in relation to the processing of any tax reclaim.
9.TERMINATION
(a)Either party may terminate this Agreement by an instrument in writing delivered or mailed, postage prepaid, to the other party, such termination to take effect not sooner than sixty days after the date of such delivery or mailing if termination is being sought by Customer, for itself or on behalf of a Fund, and not sooner than one hundred twenty days after the date of such delivery or mailing if termination is being sought by Bank. Termination of this Agreement with respect to any one particular Fund shall in no way affect the rights and duties under this Agreement with respect to any other Fund. If Customer gives notice of termination, it must provide full details of the persons to whom Bank must deliver Financial Assets and cash. If Bank gives notice of termination, then Customer must, within one hundred twenty days following receipt of the notice, notify Bank of details of its new custodian, failing which Bank may elect (at any time after one hundred twenty days following Customer’s receipt of the notice) either to retain the Financial Assets and cash until such details are given, continuing to charge fees due (in which case Bank’s sole obligation shall be for the safekeeping of the Financial Assets and cash), or deliver the Financial Assets and cash to Customer. Bank shall in any event be entitled to deduct any uncontested amounts owing to it prior to delivery of the Financial Assets and cash (and, accordingly, Bank shall be entitled to deduct cash from the Cash Account in satisfaction of uncontested amounts owing to it); provided, however, that Bank shall first provide Customer with a statement setting forth such amounts owing to it and provide Customer two days’ advance notice before effecting any such deduction, during which time Customer shall be entitled to determine the priority order in which such Financial Assets and cash are to be used to satisfy the outstanding uncontested amounts. Customer shall reimburse Bank promptly for all reasonable out-of- pocket expenses it incurs in delivering Financial Assets upon termination by Customer. Termination
pursuant to this Section shall not affect any of the liabilities either party owes to the other arising under this Agreement prior to such termination.
(b)In the event of any termination of the Agreement for any reason whatsoever, Bank shall, for a period of up to one hundred twenty days after termination of the Agreement, (i) continue to provide all or part of the services under the Agreement if requested by Customer, which services shall be subject to the terms and conditions of the Agreement during the transition period unless otherwise agreed to by the parties; (ii) provide to Customer or any successor custodian all assistance reasonably requested to enable Customer or the successor custodian to commence providing services similar to those under the Agreement; and (iii) subject to the same limitations in place during the term of the Agreement, provide Customer with access to all records in the possession of Bank relating to Customer. In connection with any termination of the Agreement for any reason whatsoever, the parties shall also promptly develop a transition plan setting forth a reasonable timetable for the transition of Financial Assets and cash to Customer or any successor custodian and describing the parties’ respective responsibilities for transitioning the services back to Customer or any successor custodian in an orderly and uninterrupted fashion. Customer will use all reasonable efforts to transition to a successor custodian as soon as possible following the effective date of termination.
10.MISCELLANEOUS
10.1Notices.
Notices (other than Instructions) shall be served by registered mail or hand delivery to the address of the respective parties as set out on the first page of this Agreement, unless notice of a new address is given to the other party in writing. Notice shall not be deemed to be given unless it has been received.
10.2Successors and Assigns.
This Agreement shall be binding on each of the parties’ successors and assigns, but the parties agree that neither party can assign its rights and obligations under this Agreement without the prior written consent of the other party, which consent shall not be unreasonably withheld.
10.3Interpretation.
Headings are for convenience only and are not intended to affect interpretation. References to sections are to sections of this Agreement and references to sub-sections and paragraphs are to sub-sections of the sections and paragraphs of the sub-sections in which they appear.
10.4Entire Agreement.
This Agreement amends and restates the Amended and Restated Global Custody Agreement dated as of June 25, 2001 between Customer and Bank (the “Prior Agreement”), and the terms of this Agreement replace the terms of the Prior Agreement effective as of the date of this Agreement. This Agreement, including any Schedules, Appendices, Annexes, Exhibits, and Riders (and any separate agreement which Bank and Customer may enter into with respect to the services provided under this Agreement), sets out the entire Agreement between the parties in connection with the subject matter, and, unless otherwise agreed to by the parties, this Agreement supersedes any other agreement, statement, or representation relating to the services provided under this Agreement, whether oral or written. Amendments must be in writing and signed by both parties. For clarity, however, the continuation of any other agreements that reference the Prior Agreement is not intended to be affected by the fact of the amendment and restatement of the Prior Agreement by this Agreement, and reference in such agreements to the Prior Agreement shall be considered
to be a reference to this Agreement effective as of the date of this Agreement (provided that matters relating to the time period prior to the date of this Agreement are governed by the terms of the Prior Agreement).
10.5Information Concerning Deposits at Bank.
(a)Under U.S. federal law, deposit accounts that the Customer maintains in Bank’s foreign branches (outside of the U.S.) are not insured by the Federal Deposit Insurance Corporation. In the event of Bank’s liquidation, foreign branch deposits have a lesser preference than U.S. deposits, and such foreign deposits are subject to cross-border risks.
(b)Bank’s London Branch is a participant in the UK Financial Services Compensation Scheme (the "FSCS"), and the following terms apply to the extent any amount standing to the credit of the Cash Account is deposited in one or more deposit accounts at Bank’s London Branch. The terms of the FSCS offer protection in connection with deposits to certain types of claimants to whom Bank’s London Branch provides services in the event that they suffer a financial loss as a direct consequence of Bank’s London Branch being unable to meet any of its obligations and, subject to the FSCS rules regarding eligible deposits, the Customer may have a right to claim compensation from the FSCS. Subject to the FSCS rules, the maximum compensation payable by the FSCS, as at the date of this Agreement, in relation to eligible deposits is £85,000.
(c)In the event that Bank incurs a loss attributable to Country Risk with respect to any cash balance it maintains on deposit at a Subcustodian or other correspondent bank in regard to its global custody or trust businesses in the country where the Subcustodian or other correspondent bank is located, Bank may set such loss off against Customer’s Cash Account to the extent that such loss is directly attributable to Customer’s investments in that market.
10.6Confidentiality.
The parties hereto agree that each shall treat confidentially the terms and conditions of this Agreement and all information provided by each party to the other regarding its business and operations. All confidential information provided by a party shall be used by the other party solely for the purpose of rendering or obtaining services pursuant to this Agreement, and except as may be required in carrying out this Agreement, shall not be disclosed to any third party without the prior consent of such providing party. The foregoing shall not be applicable to any information that is publicly available when provided or thereafter becomes publicly available other than through a breach of this provision, or that is required to be disclosed by or to any regulatory authority, any external or internal accountant, auditor or counsels of the parties, by judicial or administrative process or otherwise by Applicable Law, or to any disclosure made by a party if such party’s counsel has advised that such party could be liable under any Applicable Law or any judicial or administrative order or process for failure to make such disclosure.
10.7Data Privacy and Security.
Bank will implement and maintain a written information security program, in compliance with all federal, state and local laws and regulations (including any similar international laws) applicable to Bank, that contains reasonable and appropriate security measures designed to safeguard the personal information of the Funds’ shareholders, employees, trustees and/or officers that Bank or any Subcustodian receives, stores, maintains, processes, transmits or otherwise accesses in connection with the provision of services hereunder. In this regard, Bank will establish and maintain policies, procedures, and technical, physical, and administrative safeguards, designed to (i) ensure the security and confidentiality of all personal information and any other confidential information that Bank receives, stores, maintains, processes or otherwise accesses in connection with the provision of services hereunder, (ii) protect against any
reasonably foreseeable threats or hazards to the security or integrity of personal information or other confidential information, (iii) protect against unauthorized access to or use of personal information or other confidential information, (iv) maintain reasonable procedures to detect and respond to any internal or external security breaches, and (v) ensure appropriate disposal of personal information or other confidential information.
Bank will monitor and review its information security program and revise it, as necessary and in its sole discretion, to ensure it appropriately addresses any applicable legal and regulatory requirements. Bank shall periodically test and review its information security program.
Bank shall respond to Customer’s reasonable requests for information concerning Bank’s information security program and, upon request, Bank will provide a copy of its applicable policies and procedures, or in Bank’s discretion, summaries thereof, to Customer, to the extent Bank is able to do so without divulging information Bank reasonably believes to be proprietary or Bank confidential information. Upon reasonable request, Bank shall discuss with Customer the information security program of Bank. Bank also agrees, upon reasonable request, to complete any security questionnaire provided by Customer to the extent Bank is able to do so without divulging sensitive, proprietary, or Bank confidential information and return it in a commercially reasonable period of time (or provide an alternative response that reasonably addresses the points included in the questionnaire). Customer acknowledges that certain information provided by Bank, including internal policies and procedures, may be proprietary to Bank, and agrees to protect the confidentiality of all such materials it receives from Bank.
Bank agrees to resolve promptly any applicable control deficiencies that come to its attention that do not meet the standards established by federal and state privacy and data security laws, rules, regulations, and/or generally accepted industry standards related to Bank’s information security program.
Bank shall: (i) promptly notify Customer of any confirmed unauthorized access to personal information or other confidential information of Customer (“Breach of Security”); (ii) promptly furnish to Customer appropriate details of such Breach of Security and assist Customer in assessing the Breach of Security to the extent it is not privileged information or part of an investigation; (iii) reasonably cooperate with Customer in any litigation and investigation of third parties reasonably deemed necessary by Customer to protect its proprietary and other rights; (iv) use reasonable precautions to prevent a recurrence of a Breach of Security; and (v) take all reasonable and appropriate action to mitigate any potential harm related to a Breach of Security, including any reasonable steps requested by Customer that are practicable for Bank to implement. Nothing in the immediately preceding sentence shall obligate Bank to provide Customer with information regarding any of Bank’s other customers or clients that are affected by a Breach of Security, nor shall the immediately preceding sentence limit Bank’s ability to take any actions that Bank believes are appropriate to remediate any Breach of Security unless such actions would prejudice or otherwise limit Customer’s ability to bring its own claims or actions against third parties related to the Breach of Security. If Bank discovers or becomes aware of a suspected data or security breach that may involve an improper access, use, disclosure, or alteration of personal information or other confidential information of Customer, Bank shall, except to the extent prohibited by Applicable Law or directed otherwise by a governmental authority not to do so, promptly notify Customer that it is investigating a potential breach and keep Customer informed as reasonably practicable of material developments relating to the investigation until Bank either confirms that such a breach has occurred (in which case the first sentence of this paragraph will apply) or confirms that no data or security breach involving personal information or other confidential information of Customer has occurred.
For these purposes, “personal information” shall mean (i) an individual’s name (first initial and last name or first name and last name), address or telephone number plus (a) social security number, (b) driver’s license number, (c) state identification card number, (d) debit or credit card number, (e) financial account
number, (f) passport number, or (g) personal identification number or password that would permit access to a person’s account or (ii) any combination of the foregoing that would allow a person to log onto or access an individual’s account. This provision will survive termination or expiration of the Agreement for so long as Bank or any Subcustodian continues to possess or have access to personal information related to Customer. Notwithstanding the foregoing “personal information” shall not include information that is lawfully obtained from publicly available information, or from federal, state or local government records lawfully made available to the general public.
10.8Business Continuity and Disaster Recovery.
Bank shall maintain and update from time to time business continuation and disaster recovery procedures with respect to its global custody business, which are designed, in the event of a significant business disruption affecting Bank, to be sufficient to enable Bank to resume and continue to perform its duties and obligations under this Agreement without undue delay or disruption. Bank shall test the operability of such procedures at least annually. Bank shall enter into and shall maintain in effect at all times during the term of this Agreement reasonable provision for (i) periodic back-up of the computer files and data with respect to Customer and (ii) use of alternative electronic data processing equipment to provide services under this Agreement. Upon reasonable request, Bank shall discuss with Customer any business continuation and disaster recovery procedures of Bank. Bank represents that its business continuation and disaster recovery procedures are appropriate for its business as a global custodian to investment companies registered under the 1940 Act.
10.9Insurance.
Bank shall not be required to maintain any insurance coverage for the benefit of Customer.
10.10Governing Law and Jurisdiction, Certification of Residency.
This Agreement shall be construed, regulated, and administered under the laws of the United States or State of New York, as applicable, without regard to New York’s principles regarding conflict of laws. The United States District Court for the Southern District of New York shall have the sole and exclusive jurisdiction over any lawsuit or other judicial proceeding relating to or arising from this Agreement. If that court lacks federal subject matter jurisdiction, the Supreme Court of the State of New York, New York County shall have sole and exclusive jurisdiction. Either of these courts shall have proper venue for any such lawsuit or judicial proceeding, and the parties waive any objection to venue or their convenience as a forum. The parties agree to submit to the jurisdiction of any of the courts specified and to accept service of process to vest personal jurisdiction over them in any of these courts. The parties further hereby knowingly, voluntarily and intentionally waive, to the fullest extent permitted by Applicable Law, any right to a trial by jury with respect to any such lawsuit or judicial proceeding arising or relating to this Agreement or the transactions contemplated hereby. Customer certifies that it is a resident of the United States and shall notify Bank of any changes in residency. Bank may rely upon this certification or the certification of such other facts as may be required to administer Bank’s obligations hereunder. Customer shall indemnify Bank against all losses, liability, claims or demands arising directly or indirectly from any such certifications.
10.11Severability and Waiver.
(a)If one or more provisions of this Agreement are held invalid, illegal or unenforceable in any respect on the basis of any particular circumstances or in any jurisdiction, the validity, legality and enforceability of such provision or provisions under other circumstances or in other jurisdictions and of the remaining provisions shall not in any way be affected or impaired.
(b)Except as otherwise provided herein, no failure or delay on the part of either party in exercising any power or right hereunder operates as a waiver, nor does any single or partial exercise of any power or right preclude any other or further exercise, or the exercise of any other power or right. No waiver by a party of any provision of this Agreement, or waiver of any breach or default, is effective unless in writing and signed by the party against whom the waiver is to be enforced.
10.12Counterparts.
This Agreement may be executed in several counterparts, each of which shall be deemed to be an original and together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.
[Signature page to follow.]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
EACH OF THE OPEN-END MANAGEMENT INVESTMENT COMPANIES LISTED ON EXHIBIT 1 HERETO
By: |
/s/ Thomas J. Higgins |
|
|
|
Name: |
Thomas J. Higgins |
Title: |
Chief Financial Officer |
JPMORGAN CHASE BANK, N.A.
By: |
/s/ Teresa Heitsenrether |
Name: |
Teresa Heitsenrether |
Title: |
Managing Director |
EXHIBIT 1
Vanguard Admiral Funds
Vanguard S&P 500 Growth Index Fund
Vanguard S&P 500 Value Index Fund
Vanguard S&P Mid-Cap 400 Growth Index Fund Vanguard S&P Mid-Cap 400 Index Fund Vanguard S&P Mid-Cap 400 Value Index Fund Vanguard S&P Small-Cap 600 Growth Index Fund Vanguard S&P Small-Cap 600 Index Fund Vanguard S&P Small-Cap 600 Value Index Fund
Vanguard Bond Index Funds
Vanguard Inflation-Protected Securities Fund Vanguard Intermediate-Term Bond Index Fund Vanguard Long-Term Bond Index Fund Vanguard Short-Term Bond Index Fund Vanguard Total Bond Market Index Fund Vanguard Total Bond Market II Index Fund
Vanguard Chester Funds
Vanguard Institutional Target Retirement 2015 Fund Vanguard Institutional Target Retirement 2020 Fund Vanguard Institutional Target Retirement 2025 Fund Vanguard Institutional Target Retirement 2030 Fund Vanguard Institutional Target Retirement 2035 Fund Vanguard Institutional Target Retirement 2040 Fund Vanguard Institutional Target Retirement 2045 Fund Vanguard Institutional Target Retirement 2050 Fund Vanguard Institutional Target Retirement 2055 Fund Vanguard Institutional Target Retirement 2060 Fund Vanguard Institutional Target Retirement 2065 Fund Vanguard Institutional Target Retirement Income Fund Vanguard Target Retirement 2015 Fund
Vanguard Target Retirement 2020 Fund
Vanguard Target Retirement 2025 Fund
Vanguard Target Retirement 2030 Fund
Vanguard Target Retirement 2035 Fund
Vanguard Target Retirement 2040 Fund
Vanguard Target Retirement 2045 Fund
Vanguard Target Retirement 2050 Fund
Vanguard Target Retirement 2055 Fund
Vanguard Target Retirement 2060 Fund
Vanguard Target Retirement 2065 Fund Vanguard Target Retirement Income Fund
Vanguard CMT Funds
Vanguard Market Liquidity Fund
Vanguard Fixed Income Securities Funds
Vanguard GNMA Fund
Vanguard High-Yield Corporate Fund
Vanguard Long-Term Investment-Grade Fund
Vanguard REIT II Index Fund
Vanguard Ultra-Short-Term Bond Fund
Vanguard Index Funds
Vanguard Growth Index Fund
Vanguard Mid-Cap Growth Index Fund
Vanguard Mid-Cap Value Index Fund
Vanguard Small-Cap Index Fund
Vanguard Total Stock Market Index Fund
Vanguard Malvern Funds
Vanguard Short-Term Inflation-Protected Securities Index Fund
Vanguard Scottsdale Funds
Vanguard Intermediate-Term Corporate Bond Index Fund Vanguard Intermediate-Term Government Bond Index Fund Vanguard Long-Term Corporate Bond Index Fund Vanguard Long-Term Government Bond Index Fund Vanguard Mortgage-Backed Securities Index Fund Vanguard Short-Term Corporate Bond Index Fund Vanguard Short-Term Government Bond Index Fund
Vanguard Specialized Funds
Vanguard Dividend Appreciation Index Fund
Vanguard Health Care Fund
Vanguard Precious Metals and Mining Fund
Vanguard STAR Funds
Vanguard LifeStrategy Conservative Growth Fund
Vanguard LifeStrategy Growth Fund
Vanguard LifeStrategy Income Fund
Vanguard LifeStrategy Moderate Growth Fund
Vanguard Total International Stock Index Fund
Vanguard Tax-Managed Funds
Vanguard Tax-Managed Balanced Fund
Vanguard Valley Forge Funds
Vanguard Balanced Index Fund
Vanguard Variable Insurance Funds
Global Bond Index Portfolio
Total Bond Market Index Portfolio
Total International Stock Market Index Portfolio
Vanguard Wellesley Income Fund
Vanguard Wellesley Income Fund
Vanguard Wellington Fund
Vanguard Wellington Fund
Vanguard Whitehall Funds
Vanguard International Explorer Fund
Vanguard World Fund
Vanguard Extended Duration Treasury Index Fund
Vanguard Global Wellesley Income Fund
Vanguard Global Wellington Fund
Vanguard International Growth Fund
The terms and conditions as set forth in the Agreement (except for Sections 2.1 and 2.2) apply with respect to the Trusts and Funds listed below limited to their use of account number P 62749 in Vanguard Directly Managed Securities Lending transactions:
Vanguard Chester Funds
Vanguard PRIMECAP Fund
Vanguard Explorer Fund
Vanguard Explorer Fund
Vanguard Fenway Funds
Vanguard Equity Income Fund
Vanguard PRIMECAP Core Fund
Vanguard Horizon Funds
Vanguard Capital Opportunity Fund
Vanguard Global Equity Fund
Vanguard Strategic Equity Fund
Vanguard Strategic Small-Cap Equity Fund
Vanguard Index Funds
Vanguard 500 Index Fund
Vanguard Extended Market Index Fund
Vanguard Large-Cap Index Fund
Vanguard Mid-Cap Index Fund
Vanguard Small-Cap Growth Index Fund
Vanguard Small-Cap Value Index Fund
Vanguard Value Index Fund
Vanguard Institutional Index Funds
Vanguard Institutional Index Fund
Vanguard Institutional Total Stock Market Index Fund
Vanguard International Equity Index Funds
Vanguard Emerging Markets Stock Index Fund
Vanguard European Stock Index Fund
Vanguard FTSE All-World ex-US Index Fund
Vanguard FTSE All-World ex-US Small-Cap Index Fund
Vanguard Global ex-U.S. Real Estate Index Fund Vanguard Pacific Stock Index Fund Vanguard Total World Stock Index Fund
Vanguard Malvern Funds
Vanguard Capital Value Fund
Vanguard U.S. Value Fund
Vanguard Montgomery Funds
Vanguard Market Neutral Fund
Vanguard Morgan Growth Fund
Vanguard Morgan Growth Fund
Vanguard Quantitative Funds
Vanguard Growth and Income Fund
Vanguard Scottsdale Funds Vanguard Explorer Value Fund
Vanguard Russell 1000 Growth Index Fund Vanguard Russell 1000 Index Fund Vanguard Russell 1000 Value Index Fund Vanguard Russell 2000 Growth Index Fund Vanguard Russell 2000 Index Fund Vanguard Russell 2000 Value Index Fund Vanguard Russell 3000 Index Fund
Vanguard Specialized Funds
Vanguard Dividend Growth Fund
Vanguard Energy Fund
Vanguard REIT Index Fund
Vanguard Tax-Managed Funds
Vanguard Developed Markets Index Fund
Vanguard Trustees’ Equity Fund
Vanguard Emerging Markets Select Stock Fund
Vanguard International Value Fund
Vanguard Variable Insurance Funds
Balanced Portfolio
Capital Growth Portfolio
Diversified Value Portfolio
Equity Income Portfolio
Equity Index Portfolio
Growth Portfolio
International Portfolio
Mid-Cap Index Portfolio
REIT Index Portfolio
Small Company Growth Portfolio
Vanguard Whitehall Funds
Vanguard Global Minimum Volatility Fund
Vanguard High Dividend Yield Index Fund
Vanguard International Dividend Appreciation Index Fund
Vanguard International High Dividend Yield Index Fund
Vanguard Mid-Cap Growth Fund
Vanguard Selected Value Fund
Vanguard Windsor Funds
Vanguard Windsor Fund
Vanguard Windsor II Fund
Vanguard World Fund
Vanguard Consumer Discretionary Index Fund
Vanguard Consumer Staples Index Fund
Vanguard Energy Index Fund
Vanguard Financials Index Fund
Vanguard FTSE Social Index Fund
Vanguard Health Care Index Fund
Vanguard Industrials Index Fund
Vanguard Information Technology Index Fund
Vanguard Materials Index Fund
Vanguard Mega Cap Growth Index Fund
Vanguard Mega Cap Index Fund
Vanguard Mega Cap Value Index Fund
Vanguard Telecommunication Services Index Fund
Vanguard U.S. Growth Fund
Vanguard Utilities Index Fund
APPENDIX 1
Information Regarding Country Risk
1.To aid Customer in its determinations regarding Country Risk, Bank shall furnish annually and upon the initial placing of Financial Assets and cash into a country the following information (check items applicable):
A.Opinions of local counsel concerning:
_X_ i. Whether applicable foreign law would restrict the access afforded Customer’s independent public accountants to books and records kept by an eligible foreign custodian located in that country.
_X_ ii. Whether applicable foreign law would restrict the Customer’s ability to recover its Financial Assets and cash in the event of the bankruptcy of an Eligible Foreign Custodian located in that country.
_X_ iii. Whether applicable foreign law would restrict the Customer’s ability to recover Financial Assets that are lost while under the control of an Eligible Foreign Custodian located in the country.
B.Written information concerning:
_X_ |
i. The foreseeability of expropriation, nationalization, freezes, or confiscation of |
Customer’s Financial Assets. |
_X_ |
ii. Whether difficulties in converting Customer’s cash and cash equivalents to U.S. dollars |
are reasonably foreseeable.
C.A market report with respect to the following topics:
(i)securities regulatory environment, (ii) foreign ownership restrictions, (iii) foreign exchange, (iv) securities settlement and registration, (v) taxation, and (vi) depositories (including depository evaluation), if any.
2.To aid Customer in monitoring Country Risk, Bank shall furnish Customer the following additional information:
Market flashes, including with respect to changes in the information in market reports.
ANNEX A - Electronic Access
1.Bank may permit the Customer and its Authorized Persons to access certain electronic systems and applications (collectively, the “Products”) and to access or receive electronically Data (as defined below) in connection with the Agreement. Bank may, from time to time, introduce new features to the Products or otherwise modify or delete existing features of the Products in its sole discretion. Bank shall endeavor to give the Customer reasonable notice of its termination or suspension of access to the Products, including suspension or cancelation of any User Codes, but may do so immediately if Bank determines, in its sole discretion, that providing access to the Products would violate Applicable Law or that the security or integrity of the Products is known or reasonably suspected to be at risk. Access to the Products shall be subject to the Security Procedure.
2.In consideration of the fees paid by the Customer to Bank and subject to any applicable software license addendum in relation to Bank-owned or sublicensed software provided for a particular application and Applicable Law, Bank grants to the Customer a non-exclusive, non-transferable, limited and revocable license to use the Products and the information and data made available through the Products or transferred electronically (the “Data”) for the Customer’s internal business use only. The Customer may download the Data and print out hard copies for its reference, provided that it does not remove any copyright or other notices contained therein. The license granted herein will permit use by the Customer’s Authorized Person, provided that such use shall be in compliance with the Agreement, including this Annex. The Customer acknowledges that elements of the Data, including prices, Corporate Action information, and reference data, may have been licensed by Bank from third parties and that any use of such Data beyond that authorized by the foregoing license, may require the permission of one or more third parties in addition to Bank. Notwithstanding the foregoing, nothing in this Section 2, or elsewhere in this Annex, shall be deemed to give Bank or its licensors ownership of, or any rights in or to, any confidential information of the Customer, including as it may be accessible or receivable through the Products, and all rights in and to such information shall be retained exclusively by the Customer.
3.The Customer acknowledges that there are security, cyberfraud, corruption, transaction error and access availability risks associated with using open networks such as the internet, and the Customer hereby expressly assumes such risks; for clarity, however, the foregoing shall not relieve Bank of its obligation under the first sentence of Section 4 of this Annex. The Customer is solely responsible for obtaining, maintaining and operating all systems, software (including antivirus software, anti-spyware software, and other internet security software) and personnel necessary for the Customer to access and use the Products. All such software must be interoperable with Bank’s software. Each of the Customer and Bank shall be responsible for the proper functioning, maintenance and security of its own systems, services, software and other equipment.
4.In cases where Bank’s website is unexpectedly down or otherwise unavailable, Bank shall, absent a force majeure event, provide other appropriate means for the Customer or its Authorized Persons to instruct Bank or obtain reports from Bank. Provided that Bank complies with its obligation to provide such other appropriate means, Bank shall not be liable for any Liabilities arising out of the Customer’s inability to access or use the Products via Bank’s website in the absence of Bank’s gross negligence, fraud or willful misconduct.
5.Use of the Products may be monitored, tracked, and recorded. In using the Products, the Customer hereby expressly consents to such monitoring, tracking, and recording, and will ensure that all persons using the Products through or on behalf of Customer are advised of and have consented to this monitoring, tracking and recording, and Bank’s right to disclose data derived from such activity in accordance with the Agreement, including this Annex. Bank shall own all right, title and interest in the data reflecting Customer’s usage of the Products or Bank’s website (including, but not limited to, general usage
data and aggregated transaction data). For clarity, the foregoing shall not be deemed to give Bank ownership of, or any rights in or to, the Customer’s confidential information (whether or not in aggregated form), the use or disclosure of which shall at all times be subject to Section 10.6 of this Agreement other otherwise agreed to by the Parties.
6.The Customer shall not knowingly use the Products to transmit (i) any virus, worm, or destructive element or any programs or data that may be reasonably expected to interfere with or disrupt the Products or servers connected to the Products; (ii) material that violates the rights of another, including but not limited to the intellectual property rights of another; and (iii) “junk mail”, “spam”, “chain letters” or unsolicited mass distribution of e-mail.
7.The Customer shall promptly and accurately designate in writing to Bank the geographic location of its users upon written request. The Customer further represents and warrants to Bank that the Customer shall not access the Products from any jurisdiction which Bank informs the Customer or where the Customer has actual knowledge that the Products are not authorized for use due to local regulations or laws, including applicable software export rules and regulations. Prior to submitting any document which designates the persons authorized to act on the Customer’s behalf, the Customer shall obtain from each individual referred to in such document all necessary consents to enable Bank to process the data set out therein for the purposes of providing the Products.
8.Bank and Customer will be subject to and shall comply with all Applicable Law concerning restricting collection, use, disclosure, processing and free movement of the Data (collectively, the “Privacy Regulations”). The Privacy Regulations may include, as applicable, the Federal “Privacy of Consumer Financial Information” Regulation (12 CFR Part 40) and Interagency Guidelines Establishing Information Security Standards (App B to 12 CFR Part 30), as amended from time to time, issued pursuant to Section 504 of the Gramm-Leach-Bliley Act of 1999 (15 U.S.C. §6801, et seq.), the Health and Insurance Portability and Accountability Act of 1996 (42 U.S.C. §1320d), The Data Protection Act 1998 and Directive 95/46/EC, 2009/136/EC and 2002/58/EC of the European Parliament and of the Council, as amended from time to time, and applicable implementing legislation in connection with the protection of individuals with regard to processing of personal data and the free movement of such data.
9.The Customer shall be responsible for the compliance of its Authorized Persons with the terms of the Agreement, including this Annex.
SCHEDULE 1 – AGENT AND CASH NETWORK (CUSTODY & FUND SERVICES)
MARKET |
SUBCUSTODIAN |
CASH CORRESPONDENT BANK |
ARGENTINA |
HSBC Bank Argentina S.A. |
HSBC Bank Argentina S.A. |
|
Bouchard 680, 9th Floor |
Buenos Aires |
|
C1106ABJ Buenos Aires |
|
|
ARGENTINA |
|
AUSTRALIA |
JPMorgan Chase Bank, N.A.** |
Australia and New Zealand Banking |
|
Level 31, 101 Collins Street |
Group Ltd. |
|
Melbourne 3000 |
Melbourne |
|
AUSTRALIA |
|
AUSTRIA |
UniCredit Bank Austria AG |
J.P. Morgan AG** |
|
Julius Tandler Platz 3 |
Frankfurt am Main |
|
A 1090 Vienna |
|
|
AUSTRIA |
|
BAHRAIN |
HSBC Bank Middle East Limited |
HSBC Bank Middle East Limited |
|
Road No 2832 |
Al Seef |
|
Al Seef 428 |
|
|
BAHRAIN |
|
BANGLADESH |
Standard Chartered Bank |
Standard Chartered Bank |
|
Portlink Tower |
Dhaka |
|
Level 6, 67 Gulshan Avenue |
|
|
Gulshan |
|
|
Dhaka 1212 |
|
|
BANGLADESH |
|
BELGIUM |
BNP Paribas Securities Services S.C.A. |
J.P. Morgan A.G.** |
|
Central Plaza Building |
Frankfurt am Main |
|
Rue de Loxum, 25 |
|
|
7th Floor |
|
|
1000 Brussels |
|
|
BELGIUM |
|
BERMUDA |
HSBC Bank Bermuda Limited |
HSBC Bank Bermuda Limited |
|
6 Front Street |
Hamilton |
|
Hamilton HM 11 |
|
|
BERMUDA |
|
BOTSWANA |
Standard Chartered Bank Botswana Limited |
Standard Chartered Bank Botswana |
|
5th Floor, Standard House |
Limited |
|
P.O. Box 496 |
Gaborone |
|
Queens Road, The Mall |
|
|
Gaborone |
|
|
BOTSWANA |
|
BRAZIL |
J.P. Morgan S.A. DTVM** |
J.P. Morgan S.A. DTVM** |
|
Av. Brigadeiro Faria Lima, 3729, Floor 06 |
Sao Paulo |
|
Sao Paulo SP 04538 905 |
|
|
BRAZIL |
|
BULGARIA |
Citibank Europe plc |
ING Bank N.V. |
|
Serdika Offices |
Sofia |
|
10th Floor |
|
|
48 Sitnyakovo Blvd |
|
|
Sofia 1505 |
|
|
BULGARIA |
|
CANADA |
Canadian Imperial Bank of Commerce |
Royal Bank of Canada |
|
1 York Street, Suite 900 |
Toronto |
|
Toronto Ontario M5J 0B6 |
|
|
CANADA |
|
|
Royal Bank of Canada |
|
|
155 Wellington Street West, |
|
|
Toronto Ontario M5V 3L3 |
|
|
CANADA |
|
CHILE |
Banco Santander Chile |
Banco Santander Chile |
|
Bandera 140, Piso 4 |
Santiago |
|
Santiago |
|
|
CHILE |
|
CHINA A |
HSBC Bank (China) Company Limited |
HSBC Bank (China) Company Limited |
SHARE |
33/F, HSBC Building, Shanghai ifc |
Shanghai |
|
8 Century Avenue, Pudong |
|
|
Shanghai 200120 |
|
|
THE PEOPLE'S REPUBLIC OF CHINA |
|
CHINA B |
HSBC Bank (China) Company Limited |
JPMorgan Chase Bank, N.A.** |
SHARE |
33/F, HSBC Building, Shanghai ifc |
New York |
|
8 Century Avenue, Pudong |
|
|
Shanghai 200120 |
JPMorgan Chase Bank, N.A.** |
|
THE PEOPLE'S REPUBLIC OF CHINA |
Hong Kong |
CHINA |
JPMorgan Chase Bank, N.A.** |
JPMorgan Chase Bank, N.A.** |
CONNECT |
48th Floor, One Island East |
Hong Kong |
|
18 Westlands Road, Quarry Bay |
|
|
HONG KONG |
|
COLOMBIA |
Cititrust Colombia S.A. |
Cititrust Colombia S.A. |
|
Carrera 9 A # 99 02, 3rd floor |
Bogotá |
|
Bogota |
|
|
COLOMBIA |
|
*COSTA RICA* Banco BCT, S.A. |
Banco BCT, S.A. |
150 Metros Norte de la Catedral |
San Jose |
Metropolitana |
|
Edificio BCT |
|
San Jose |
|
COSTA RICA |
|
*RESTRICTED SERVICE ONLY. PLEASE CONTACT YOUR RELATIONSHIP MANAGER FOR FURTHER INFORMATION*
CROATIA |
Privredna banka Zagreb d.d. |
Zagrebacka banka d.d. |
|
Radnicka cesta 50 |
Zagreb |
|
10000 Zagreb |
|
|
CROATIA |
|
CYPRUS |
HSBC Bank plc |
J.P. Morgan AG** |
|
109 111, Messogian Ave. |
Frankfurt am Main |
|
115 26 Athens |
|
|
GREECE |
|
CZECH |
UniCredit Bank Czech Republic and |
Ceskoslovenska obchodni banka, a.s. |
REPUBLIC |
Slovakia, a.s. |
Prague |
|
BB Centrum FILADELFIE |
|
|
Zeletavska 1525 1 |
|
|
140 92 Prague 1 |
|
|
CZECH REPUBLIC |
|
DENMARK |
Nordea Bank AB (publ) |
Nordea Bank AB (publ) |
|
Christiansbro |
Copenhagen |
|
Strandgade 3 |
|
|
P.O. Box 850 |
|
|
DK 0900 Copenhagen |
|
|
DENMARK |
|
EGYPT |
Citibank, N.A. |
Citibank, N.A. |
|
4 Ahmed Pasha Street |
Cairo |
|
Garden City |
|
|
Cairo |
|
|
EGYPT |
|
ESTONIA |
Swedbank AS |
J.P. Morgan AG** |
|
Liivalaia 8 |
Frankfurt am Main |
|
15040 Tallinn |
|
|
ESTONIA |
|
FINLAND |
Nordea Bank AB (publ) |
J.P. Morgan AG** |
|
Aleksis Kiven katu 3 5 |
Frankfurt am Main |
|
FIN 00020 NORDEA Helsinki |
|
|
FINLAND |
|
FRANCE |
BNP Paribas Securities Services S.C.A. |
J.P. Morgan AG** |
|
3, rue d'Antin |
Frankfurt am Main |
|
75002 Paris |
|
|
FRANCE |
|
GERMANY |
Deutsche Bank AG |
J.P. Morgan AG** |
|
Alfred Herrhausen Allee 16 24 |
Frankfurt am Main |
|
D 65760 Eschborn |
|
|
GERMANY |
|
|
J.P. Morgan AG#** |
|
|
Taunustor 1 (TaunusTurm) |
|
|
60310 Frankfurt am Main |
|
|
GERMANY |
|
|
# Custodian for local German custody clients |
|
|
only. |
|
GHANA |
Standard Chartered Bank Ghana Limited |
Standard Chartered Bank Ghana Limited |
|
Accra High Street |
Accra |
|
P.O. Box 768 |
|
|
Accra |
|
|
GHANA |
|
GREECE |
HSBC Bank plc |
J.P. Morgan AG** |
|
Messogion 109 111 |
Frankfurt am Main |
|
11526 Athens |
|
|
GREECE |
|
HONG KONG |
JPMorgan Chase Bank, N.A.** |
JPMorgan Chase Bank, N.A.** |
|
48th Floor, One Island East |
Hong Kong |
|
18 Westlands Road, Quarry Bay |
|
|
HONG KONG |
|
HUNGARY |
Deutsche Bank AG |
ING Bank N.V. |
|
Hold utca 27 |
Budapest |
|
H 1054 Budapest |
|
|
HUNGARY |
|
*ICELAND* |
Islandsbanki hf. |
Islandsbanki hf. |
|
Kirkjusandur 2 |
Reykjavik |
|
IS 155 Reykjavik |
|
|
ICELAND |
|
*RESTRICTED SERVICE ONLY. PLEASE CONTACT YOUR RELATIONSHIP MANAGER FOR FURTHER INFORMATION*
INDIA |
JPMorgan Chase Bank, N.A.** |
JPMorgan Chase Bank, N.A.** |
|
6th Floor, Paradigm ‘B’ Wing |
Mumbai |
|
Mindspace, Malad (West) |
|
|
Mumbai 400 064 |
|
|
INDIA |
|
INDONESIA |
PT Bank HSBC Indonesia |
PT Bank HSBC Indonesia |
|
Menara Mulia 25th Floor |
Jakarta |
|
Jl. Jendral Gatot Subroto Kav. 9 11 |
|
|
Jakarta 12930 |
|
|
INDONESIA |
|
IRELAND |
JPMorgan Chase Bank, N.A.** |
J.P. Morgan AG** |
|
25 Bank Street, Canary Wharf |
Frankfurt am Main |
|
London E14 5JP |
|
|
UNITED KINGDOM |
|
ISRAEL |
Bank Leumi le Israel B.M. |
Bank Leumi le Israel B.M. |
|
35, Yehuda Halevi Street |
Tel Aviv |
|
65136 Tel Aviv |
|
|
ISRAEL |
|
ITALY |
BNP Paribas Securities Services S.C.A. |
J.P. Morgan AG** |
|
Piazza Lina Bo Bardi, 3 |
Frankfurt am Main |
|
20124 Milan |
|
|
ITALY |
|
JAPAN |
Mizuho Bank, Ltd. |
JPMorgan Chase Bank, N.A.** |
|
2 15 1, Konan |
Tokyo |
|
Minato ku |
|
|
Tokyo 108 6009 |
|
|
JAPAN |
|
|
The Bank of Tokyo Mitsubishi UFJ, Ltd. |
|
|
1 3 2 Nihombashi Hongoku cho |
|
|
Chuo ku |
|
|
Tokyo 103 0021 |
|
|
JAPAN |
|
JORDAN |
Standard Chartered Bank |
Standard Chartered Bank |
|
Shmeissani Branch |
Amman |
|
Al Thaqafa Street |
|
|
Building # 2 |
|
|
P.O. Box 926190 |
|
|
Amman |
|
|
JORDAN |
|
KAZAKHSTAN |
JSC Citibank Kazakhstan |
Subsidiary Bank Sberbank of Russia Joint |
|
Park Palace, Building A, Floor 2 |
Stock Company |
|
41 Kazybek Bi |
Almaty |
|
Almaty 050010 |
|
|
KAZAKHSTAN |
|
KENYA |
Standard Chartered Bank Kenya Limited |
Standard Chartered Bank Kenya Limited |
|
Chiromo |
Nairobi |
|
48 Westlands Road |
|
|
Nairobi 00100 |
|
|
KENYA |
|
KUWAIT |
HSBC Bank Middle East Limited |
HSBC Bank Middle East Limited |
|
Kuwait City, Sharq Area |
Safat |
|
Abdulaziz Al Sager Street |
|
|
Al Hamra Tower, 37F |
|
|
Safat 13017 |
|
|
KUWAIT |
|
LATVIA |
Swedbank AS |
J.P. Morgan AG** |
|
Balasta dambis 1a |
Frankfurt am Main |
|
Riga LV 1048 |
|
|
LATVIA |
|
LITHUANIA |
AB SEB Bankas |
J.P. Morgan AG** |
|
12 Gedimino pr. |
Frankfurt am Main |
|
LT 2600 Vilnius |
|
|
LITHUANIA |
|
LUXEMBOURG |
BNP Paribas Securities Services S.C.A. |
J.P. Morgan AG** |
|
33, Rue de Gasperich |
Frankfurt am Main |
|
L 5826 Hesperange |
|
|
LUXEMBOURG |
|
*MALAWI* |
Standard Bank Limited, Malawi |
Standard Bank Limited, Malawi |
|
1st Floor Kaomba House |
Blantyre |
|
Cnr Glyn Jones Road & Victoria Avenue |
|
|
Blantyre |
|
|
MALAWI |
|
*RESTRICTED SERVICE ONLY. PLEASE CONTACT YOUR RELATIONSHIP MANAGER FOR FURTHER INFORMATION*
MALAYSIA |
HSBC Bank Malaysia Berhad |
HSBC Bank Malaysia Berhad |
|
2 Leboh Ampang |
Kuala Lumpur |
|
12th Floor, South Tower |
|
|
50100 Kuala Lumpur |
|
|
MALAYSIA |
|
MAURITIUS |
The Hongkong and Shanghai Banking |
The Hongkong and Shanghai Banking |
|
Corporation Limited |
Corporation Limited |
|
HSBC Centre |
Ebene |
|
18 Cybercity |
|
|
Ebene |
|
|
MAURITIUS |
|
MEXICO |
Banco Nacional de Mexico, S.A. |
Banco Santander (Mexico), S.A. |
|
Act. Roberto Medellin No. 800 3er Piso |
Mexico, D.F. |
|
Norte |
|
|
Colonia Santa Fe |
|
|
01210 Mexico, D.F. |
|
|
MEXICO |
|
MOROCCO |
Société Générale Marocaine de Banques |
Attijariwafa Bank S.A. |
|
55 Boulevard Abdelmoumen |
Casablanca |
|
Casablanca 20100 |
|
|
MOROCCO |
|
NAMIBIA |
Standard Bank Namibia Limited |
The Standard Bank of South Africa |
|
2nd Floor, Town Square Building |
Limited |
|
Corner of Werner List and Post Street Mall |
Johannesburg |
|
P.O. Box 3327 |
|
|
Windhoek |
|
|
NAMIBIA |
|
NETHERLANDS |
BNP Paribas Securities Services S.C.A. |
J.P. Morgan AG** |
|
Herengracht 595 |
Frankfurt am Main |
|
1017 CE Amsterdam |
|
|
NETHERLANDS |
|
NEW ZEALAND |
JPMorgan Chase Bank, N.A.** |
Westpac Banking Corporation |
|
Level 13, 2 Hunter Street |
Wellington |
|
Wellington 6011 |
|
|
NEW ZEALAND |
|
NIGERIA |
Stanbic IBTC Bank Plc |
Stanbic IBTC Bank Plc |
|
Plot 1712 |
Lagos |
|
Idejo Street |
|
|
Victoria Island |
|
|
Lagos |
|
|
NIGERIA |
|
NORWAY |
Nordea Bank AB (publ) |
Nordea Bank AB (publ) |
|
Essendropsgate 7 |
Oslo |
|
P.O. Box 1166 |
|
|
NO 0107 Oslo |
|
|
NORWAY |
|
OMAN |
HSBC Bank Oman S.A.O.G. |
HSBC Bank Oman S.A.O.G. |
|
2nd Floor Al Khuwair |
Seeb |
|
P.O. Box 1727 PC 111 |
|
|
Seeb |
|
|
OMAN |
|
PAKISTAN |
Standard Chartered Bank (Pakistan) Limited |
Standard Chartered Bank (Pakistan) |
|
P.O. Box 4896 |
Limited |
|
Ismail Ibrahim Chundrigar Road |
Karachi |
|
Karachi 74000 |
|
|
PAKISTAN |
|
PERU |
Citibank del Perú S.A. |
Banco de Crédito del Perú |
|
Av. Canaval y Moreryra 480 Piso 3 |
Lima |
|
San Isidro |
|
|
Lima 27 |
|
|
PERU |
|
PHILIPPINES |
The Hongkong and Shanghai Banking |
The Hongkong and Shanghai Banking |
|
Corporation Limited |
Corporation Limited |
|
7/F HSBC Centre |
Taguig City |
|
3058 Fifth Avenue West |
|
|
Bonifacio Global City |
|
|
1634 Taguig City |
|
|
PHILIPPINES |
|
POLAND |
Bank Handlowy w. Warszawie S.A. |
mBank S.A. |
|
ul. Senatorska 16 |
Warsaw |
|
00 923 Warsaw |
|
|
POLAND |
|
PORTUGAL |
BNP Paribas Securities Services S.C.A. |
J.P. Morgan AG** |
|
Avenida D.João II, Lote 1.18.01, Bloco B, |
Frankfurt am Main |
|
7º andar |
|
|
1998 028 Lisbon |
|
|
PORTUGAL |
|
QATAR |
HSBC Bank Middle East Limited |
The Commercial Bank (P.Q.S.C.) |
|
2nd Floor, Ali Bin Ali Tower |
Doha |
|
Building 150 (Airport Road) |
|
|
P.O. Box 57 |
|
|
Doha |
|
|
QATAR |
|
ROMANIA |
Citibank Europe plc |
ING Bank N.V. |
|
145 Calea Victoriei |
Bucharest |
|
1st District |
|
|
010072 Bucharest |
|
|
ROMANIA |
|
RUSSIA |
J.P. Morgan Bank International (Limited |
JPMorgan Chase Bank, N.A.** |
|
Liability Company)** |
New York |
|
10, Butyrsky Val |
|
|
White Square Business Centre |
|
|
Floor 12 |
|
|
Moscow 125047 |
|
|
RUSSIA |
|
SAUDI ARABIA |
HSBC Saudi Arabia |
HSBC Saudi Arabia |
|
2/F HSBC Building |
Riyadh |
|
7267 Olaya Street North, Al Murooj |
|
|
Riyadh 12283 2255 |
|
|
SAUDI ARABIA |
|
SERBIA |
Unicredit Bank Srbija a.d. |
Unicredit Bank Srbija a.d. |
|
Rajiceva 27 29 |
Belgrade |
|
11000 Belgrade |
|
|
SERBIA |
|
SINGAPORE |
DBS Bank Ltd |
Oversea Chinese Banking Corporation |
|
10 Toh Guan Road |
Singapore |
|
DBS Asia Gateway, Level 04 11 (4B) |
|
|
608838 |
|
|
SINGAPORE |
|
SLOVAK |
UniCredit Bank Czech Republic and |
J.P. Morgan AG** |
REPUBLIC |
Slovakia, a.s. |
Frankfurt am Main |
|
Sancova 1/A |
|
|
SK 813 33 Bratislava |
|
|
SLOVAK REPUBLIC |
|
SLOVENIA |
UniCredit Banka Slovenija d.d. |
J.P. Morgan AG** |
|
Smartinska 140 |
Frankfurt am Main |
|
SI 1000 Ljubljana |
|
|
SLOVENIA |
|
SOUTH AFRICA |
FirstRand Bank Limited |
The Standard Bank of South Africa |
|
1 Mezzanine Floor, 3 First Place, Bank City |
Limited |
|
Cnr Simmonds and Jeppe Streets |
Johannesburg |
|
Johannesburg 2001 |
|
|
SOUTH AFRICA |
|
SOUTH KOREA |
Standard Chartered Bank Korea Limited |
Standard Chartered Bank Korea Limited |
|
47 Jongro, Jongro Gu |
Seoul |
|
Seoul 03160 |
|
|
SOUTH KOREA |
|
|
Kookmin Bank Co., Ltd. |
Kookmin Bank Co., Ltd. |
|
84, Namdaemun ro, Jung gu |
Seoul |
|
Seoul 100 845 |
|
|
SOUTH KOREA |
|
SPAIN |
Santander Securities Services, S.A. |
J.P. Morgan AG** |
|
Ciudad Grupo Santander |
Frankfurt am Main |
|
Avenida de Cantabria, s/n |
|
|
Edificio Ecinar, planta baja |
|
|
Boadilla del Monte |
|
|
28660 Madrid |
|
|
SPAIN |
|
SRI LANKA |
The Hongkong and Shanghai Banking |
The Hongkong and Shanghai Banking |
|
Corporation Limited |
Corporation Limited |
|
24 Sir Baron Jayatillaka Mawatha |
Colombo |
|
Colombo 1 |
|
|
SRI LANKA |
|
SWEDEN |
Nordea Bank AB (publ) |
Svenska Handelsbanken |
|
Hamngatan 10 |
Stockholm |
|
SE 105 71 Stockholm |
|
|
SWEDEN |
|
SWITZERLAND |
UBS Switzerland AG |
UBS Switzerland AG |
|
45 Bahnhofstrasse |
Zurich |
|
8021 Zurich |
|
|
SWITZERLAND |
|
TAIWAN |
JPMorgan Chase Bank, N.A.** |
JPMorgan Chase Bank, N.A.** |
|
8th Floor, Cathay Xin Yi Trading Building |
Taipei |
|
No. 108, Section 5, Xin Yi Road |
|
|
Taipei 11047 |
|
|
TAIWAN |
|
*TANZANIA* |
Stanbic Bank Tanzania Limited |
Stanbic Bank Tanzania Limited |
|
Stanbic Centre |
Dar es Salaam |
|
Corner Kinondoni and A.H. Mwinyi Roads |
|
|
P.O. Box 72648 |
|
|
Dar es Salaam |
|
|
TANZANIA |
|
*RESTRICTED SERVICE ONLY. PLEASE CONTACT YOUR RELATIONSHIP MANAGER FOR FURTHER INFORMATION*
THAILAND |
Standard Chartered Bank (Thai) Public |
Standard Chartered Bank (Thai) Public |
|
Company Limited |
Company Limited |
|
14th Floor, Zone B |
Bangkok |
|
Sathorn Nakorn Tower |
|
|
90 North Sathorn Road Bangrak |
|
|
Silom, Bangrak |
|
|
Bangkok 10500 |
|
|
THAILAND |
|
TRINIDAD AND |
Republic Bank Limited |
Republic Bank Limited |
TOBAGO |
9 17 Park Street |
Port of Spain |
|
Port of Spain |
|
|
TRINIDAD AND TOBAGO |
|
TUNISIA |
Banque Internationale Arabe de Tunisie, |
Banque Internationale Arabe de Tunisie, |
|
S.A. |
S.A. |
|
70 72 Avenue Habib Bourguiba |
Tunis |
|
P.O. Box 520 |
|
|
Tunis 1000 |
|
|
TUNISIA |
|
TURKEY |
Citibank A.S. |
JPMorgan Chase Bank, N.A.** |
|
Inkilap Mah., Yilmaz Plaza |
Istanbul |
|
O. Faik Atakan Caddesi No: 3 |
|
|
34768 Umraniye, Istanbul |
|
|
TURKEY |
|
UGANDA |
Standard Chartered Bank Uganda Limited |
Standard Chartered Bank Uganda Limited |
|
5 Speke Road |
Kampala |
|
P.O. Box 7111 |
|
|
Kampala |
|
|
UGANDA |
|
*UKRAINE* |
PJSC Citibank |
PJSC Citibank |
|
16 G Dilova Street |
Kiev |
|
03150 Kiev |
|
|
UKRAINE |
JPMorgan Chase Bank, N.A.** |
|
|
New York |
*RESTRICTED SERVICE ONLY. PLEASE CONTACT YOUR RELATIONSHIP MANAGER FOR FURTHER INFORMATION*
UNITED ARAB |
HSBC Bank Middle East Limited |
The National Bank of Abu Dhabi |
EMIRATES |
Emaar Square, Level 4, Building No. 5 |
Abu Dhabi |
ADX |
P.O. Box 502601 |
|
|
Dubai |
|
|
UNITED ARAB EMIRATES |
|
UNITED ARAB |
HSBC Bank Middle East Limited |
The National Bank of Abu Dhabi |
EMIRATES |
Emaar Square, Level 4, Building No. 5 |
Abu Dhabi |
DFM |
P.O. Box 502601 |
|
|
Dubai |
|
|
UNITED ARAB EMIRATES |
|
UNITED ARAB |
HSBC Bank Middle East Limited |
JPMorgan Chase Bank, N.A. ** |
EMIRATES |
Emaar Square, Level 4, Building No. 5 |
New York |
NASDAQ |
P.O. Box 502601 |
|
DUBAI |
Dubai |
|
|
UNITED ARAB EMIRATES |
|
UNITED |
JPMorgan Chase Bank, N.A.** |
JPMorgan Chase Bank, N.A.** |
KINGDOM |
25 Bank Street, Canary Wharf |
London |
|
London E14 5JP |
|
|
UNITED KINGDOM |
|
|
Deutsche Bank AG Depository and Clearing |
Varies by currency |
|
Centre |
|
|
10 Bishops Square |
|
|
London E1 6EG |
|
|
UNITED KINGDOM |
|
UNITED |
JPMorgan Chase Bank, N.A.** |
JPMorgan Chase Bank, N.A.** |
STATES |
4 New York Plaza |
New York |
|
New York NY 10004 |
|
|
UNITED STATES |
|
URUGUAY |
Banco Itaú Uruguay S.A. |
Banco Itaú Uruguay S.A. |
|
Zabala 1463 |
Montevideo |
|
11000 Montevideo |
|
|
URUGUAY |
|
VENEZUELA |
Citibank, N.A. |
Citibank, N.A. |
|
Avenida Casanova |
Caracas |
|
Centro Comercial El Recreo |
|
|
Torre Norte, Piso 19 |
|
|
Caracas 1050 |
|
|
VENEZUELA |
|
VIETNAM |
HSBC Bank (Vietnam) Ltd. |
HSBC Bank (Vietnam) Ltd. |
|
Centre Point |
Ho Chi Minh City |
|
106 Nguyen Van Troi Street |
|
|
Phu Nhuan District |
|
|
Ho Chi Minh City |
|
|
VIETNAM |
|
*WAEMU |
Standard Chartered Bank Côte d’Ivoire SA |
Standard Chartered Bank Côte d’Ivoire |
BENIN, |
23 Boulevard de la Republique 1 |
SA |
BURKINA |
01 B.P. 1141 |
Abidjan |
FASO, GUINEA |
Abidjan 17 |
|
BISSAU, IVORY |
IVORY COAST |
|
COAST, MALI, |
|
|
NIGER, |
|
|
SENEGAL, |
|
|
TOGO* |
|
|
*RESTRICTED SERVICE ONLY. PLEASE CONTACT YOUR RELATIONSHIP MANAGER FOR FURTHER INFORMATION*
ZAMBIA |
Standard Chartered Bank Zambia Plc |
Standard Chartered Bank Zambia Plc |
|
Standard Chartered House |
Lusaka |
|
Cairo Road |
|
|
P.O. Box 32238 |
|
|
Lusaka 10101 |
|
|
ZAMBIA |
|
*ZIMBABWE* |
Stanbic Bank Zimbabwe Limited |
Stanbic Bank Zimbabwe Limited |
|
Stanbic Centre, 3rd Floor |
Harare |
|
59 Samora Machel Avenue |
|
|
Harare |
|
|
ZIMBABWE |
|
*RESTRICTED SERVICE ONLY. PLEASE CONTACT YOUR RELATIONSHIP MANAGER FOR FURTHER INFORMATION*
** J.P. Morgan affiliate |
Correspondent banks are listed for information |
|
only. |
This document is for information only and its contents are subject to change. This document is intended neither to influence your investment decisions nor to amend or supplement any agreement governing your relations with J.P. Morgan. Neither this document nor any of its contents may be disclosed to any third party or used for any other purpose without the proper written consent of J.P. Morgan. J.P. Morgan has gathered the information from a source it considers reliable, however, it cannot be responsible for inaccuracies, incomplete information or updating of the information furnished hereby.
SCHEDULE 3 – SECURITIES DEPOSITORIES
Market |
Depository |
Instruments |
ARGENTINA |
CVSA |
Equity, Corporate Debt, Government Debt |
|
(Caja de Valores S.A.) |
|
AUSTRALIA |
ASX Settlement |
Equity |
|
(ASX Settlement Pty Limited) |
|
|
Austraclear |
Corporate Debt, Government Debt |
|
(Austraclear Limited) |
|
AUSTRIA |
OeKB CSD GmbH |
Equity, Corporate Debt, Government Debt |
|
(Oesterreichische Kontrollbank CSD |
|
|
GmbH) |
|
BAHRAIN |
CSD |
Equity, Corporate Debt |
|
(Bahrain Bourse - Clearing, Settlement |
|
|
and Central Depository) |
|
BANGLADESH |
BB |
Government Debt |
|
(Bangladesh Bank) |
|
|
CDBL |
Equity, Corporate Debt |
|
(Central Depository Bangladesh Limited) |
|
BELGIUM |
Euroclear Belgium |
Equity, Corporate Debt |
|
(Euroclear Belgium SA/NV) |
|
|
NBB |
Corporate Debt, Government Debt |
|
(The National Bank of Belgium) |
|
BERMUDA |
BSD |
Equity, Corporate Debt, Government Debt |
|
(Bermuda Stock Exchange - Bermuda |
|
|
Securities Depository) |
|
BOTSWANA |
BoB |
Government Debt |
|
(Bank of Botswana) |
|
|
CSDB |
Equity, Corporate Debt |
|
(Central Securities Depository of |
|
|
Botswana Ltd) |
|
BRAZIL |
BM&FBOVESPA |
Equity |
|
(B3 S.A. - BM&FBOVESPA) |
|
|
CETIP |
Corporate Debt |
|
(B3 S.A. - CETIP) |
|
|
SELIC |
Government Debt |
|
(Banco Central do Brasil - Sistema |
|
|
Especial de Liquidação e Custódia) |
|
BULGARIA |
CDAD |
Equity, Corporate Debt |
|
(Central Depository AD) |
|
|
BNB |
Government Debt |
|
(Bulgarian National Bank) |
|
CANADA |
CDS Clearing |
Equity, Corporate Debt, Government Debt |
|
(CDS Clearing and Depository Services |
|
|
Inc.) |
|
CHILE |
DCV |
Equity, Corporate Debt, Government Debt |
|
(Depósito Central de Valores S.A.) |
|
CHINA A-SHARE |
CSDCC |
Equity, Corporate Debt, Government Debt |
|
(China Securities Depository and Clearing |
|
|
Corporation Limited) |
|
|
SCH |
Short-term Corporate Debt |
|
(Shanghai Clearing House) |
|
|
CCDC |
Corporate Debt, Government Debt |
|
(China Central Depository & Clearing |
|
|
Co., Ltd.) |
|
CHINA B-SHARE |
CSDCC |
Equity |
|
(China Securities Depository and Clearing |
|
|
Corporation Limited) |
|
CHINA |
HKSCC - for China Connect |
Equity |
CONNECT |
(Hong Kong Securities Clearing Company |
|
|
Limited) |
|
COLOMBIA |
DCV |
Government Debt |
|
(Banco de la Républica de Colombia - |
|
|
Depósito Central de Valores) |
|
|
DECEVAL |
Equity, Corporate Debt, Government Debt |
|
(Depósito Centralizado de Valores de |
|
|
Colombia S.A.) |
|
COSTA RICA |
InterClear |
Equity, Corporate Debt, Government Debt |
|
(InterClear, S.A.) |
|
CROATIA |
SKDD |
Equity, Corporate Debt, Government Debt |
|
(Središnje klirinško depozitarno društvo |
|
|
d.d.) |
|
CYPRUS |
CDCR |
Equity, Corporate Debt, Government Debt |
|
(Cyprus Stock Exchange - Central |
|
|
Depository and Central Registry) |
|
CZECH |
CNB |
Short-Term Corporate Debt, Short-Term |
REPUBLIC |
(Ceská národní banka) |
Government Debt |
|
CDCP |
Equity, Long-Term Corporate Debt, Long- |
|
(Centrální depozitár cenných papíru, a.s.) |
Term Government Debt |
DENMARK |
VP |
Equity, Corporate Debt, Government Debt |
|
(VP Securities A/S) |
|
EGYPT |
MCDR |
Equity, Corporate Debt, Treasury Bonds |
|
(Misr for Central Clearing, Depository and |
|
|
Registry) |
|
|
CBE |
Treasury Bills |
|
(Central Bank of Egypt) |
|
ESTONIA |
ECSD |
Equity, Corporate Debt, Government Debt |
|
(Eesti Väärtpaberikeskus AS) |
|
FINLAND |
Euroclear Finland |
Equity, Corporate Debt, Government Debt |
|
(Euroclear Finland Oy) |
|
FRANCE |
Euroclear France |
Equity, Corporate Debt, Government Debt |
|
(Euroclear France SA) |
|
GERMANY |
CBF |
Equity, Corporate Debt, Government Debt |
|
(Clearstream Banking AG) |
|
GHANA |
CSD |
Equity, Corporate Debt, Government Debt |
|
(Central Securities Depository (GH) Ltd.) |
|
GREECE |
BoG |
Government Debt |
|
(Bank of Greece) |
|
|
ATHEXCSD |
Equity, Corporate Debt |
|
(Hellenic Central Securities Depository) |
|
HONG KONG |
HKSCC |
Equity, Corporate Debt, Government Debt |
|
(Hong Kong Securities Clearing Company |
|
|
Limited) |
|
|
CMU |
Corporate Debt, Government Debt |
|
(Hong Kong Monetary Authority - Central |
|
|
Moneymarkets Unit) |
|
HUNGARY |
KELER |
Equity, Corporate Debt, Government Debt |
|
(Központi Elszámolóház és Értéktár |
|
|
(Budapest) Zrt.) |
|
ICELAND |
Nasdaq CSD Iceland hf. |
Equity, Corporate Debt, Government Debt |
|
(Nasdaq verðbréfamiðstöð hf.) |
|
INDIA |
NSDL |
Equity, Corporate Debt |
|
(National Securities Depository Limited) |
|
|
CDSL |
Equity, Corporate Debt |
|
(Central Depository Services (India) |
|
|
Limited) |
|
|
RBI |
Government Debt |
|
(Reserve Bank of India) |
|
INDONESIA |
KSEI |
Equity, Corporate Debt, Government |
|
(PT Kustodian Sentral Efek Indonesia) |
Debt* |
|
BI |
(*acts as sub-registry) |
|
|
|
(Bank Indonesia) |
Government Debt |
INTERNATIONAL |
Euroclear Bank |
Internationally Traded Debt, Equity |
SECURITIES |
(Euroclear Bank SA/NV) |
|
MARKET |
CBL |
Internationally Traded Debt, Equity |
|
|
(Clearstream Banking S.A.) |
|
IRELAND |
EUI |
Equity, Corporate Debt |
|
(Euroclear U.K. & Ireland Limited) |
|
ISRAEL |
TASE-CH |
Equity, Corporate Debt, Government Debt |
|
(Tel-Aviv Stock Exchange Clearing |
|
|
House Ltd.) |
|
ITALY |
Monte Titoli |
Equity, Corporate Debt, Government Debt |
|
(Monte Titoli S.p.A.) |
|
JAPAN |
JASDEC |
Equity, Corporate Debt |
|
(Japan Securities Depository Center, |
|
|
Incorporated) |
|
|
BOJ |
Government Debt |
|
(Bank of Japan) |
|
JORDAN |
SDC |
Equity, Corporate Debt |
|
(Securities Depository Center) |
|
KAZAKHSTAN |
KACD |
Equity, Corporate Debt, Government Debt |
|
(Central Securities Depository Joint-Stock |
|
|
Company) |
|
KENYA |
CDS |
Government Debt |
|
(Central Bank of Kenya - Central |
|
|
Depository System) |
|
|
CDSC |
Equity, Corporate Debt |
|
(Central Depository and Settlement |
|
|
Corporation Limited) |
|
KUWAIT |
KCC |
Equity, Corporate Debt |
|
(The Kuwait Clearing Company K.S.C.) |
|
LATVIA |
LCD |
Equity, Corporate Debt, Government Debt |
|
(Latvian Central Depository) |
|
LITHUANIA |
CSDL |
Equity, Corporate Debt, Government Debt |
|
(Central Securities Depository of |
|
|
Lithuania) |
|
LUXEMBOURG |
CBL |
Equity, Corporate Debt, Government Debt |
|
(Clearstream Banking S.A.) |
|
MALAYSIA |
Bursa Depository |
Equity, Corporate Debt |
|
(Bursa Malaysia Depository Sdn Bhd) |
|
|
BNM |
Government Debt |
|
(Bank Negara Malaysia) |
|
MAURITIUS |
CDS |
Equity, Corporate Debt |
|
(Central Depository & Settlement Co. Ltd) |
|
|
BOM |
Government Debt |
|
(Bank of Mauritius) |
|
MEXICO |
Indeval |
Equity, Corporate Debt, Government Debt |
|
(S.D. Indeval S.A. de C.V.) |
|
MOROCCO |
Maroclear |
Equity, Corporate Debt, Government Debt |
|
(Maroclear) |
|
NETHERLANDS |
Euroclear Nederland |
Equity, Corporate Debt, Government Debt |
|
(Euroclear Nederland) |
|
NEW ZEALAND |
NZCSD |
Equity, Corporate Debt, Government Debt |
|
(New Zealand Central Securities |
|
|
Depository Limited) |
|
NIGERIA |
CSCS |
Equity, Corporate Debt |
|
(Central Securities Clearing System Plc) |
|
|
CBN |
Government Debt |
|
(Central Bank of Nigeria) |
|
NORWAY |
VPS |
Equity, Corporate Debt, Government Debt |
|
(Verdipapirsentralen ASA) |
|
OMAN |
MCD |
Equity, Corporate Debt, Government Debt |
|
(Muscat Clearing and Depository Co. |
|
|
(S.A.O.C)) |
|
PAKISTAN |
SBP |
Government Debt |
|
(State Bank of Pakistan) |
|
|
CDC |
Equity, Corporate Debt |
|
(Central Depository Company of Pakistan |
|
|
Limited) |
|
PERU |
CAVALI |
Equity, Corporate Debt, Government Debt |
|
(CAVALI S.A. I.C.L.V.) |
|
PHILIPPINES |
PDTC |
Equity, Corporate Debt |
|
(Philippine Depository and Trust |
|
|
Corporation) |
|
|
RoSS |
Government Debt |
|
(Bureau of Treasury - Registry of |
|
|
Scripless Securities) |
|
POLAND |
KDPW |
Equity, Corporate Debt, Long-Term |
|
(Krajowy Depozyt Papierów |
Government Debt |
|
Wartosciowych S.A.) |
|
|
RPW |
Short-Term Government Debt |
|
(National Bank of Poland - Registry of |
|
|
Securities) |
|
PORTUGAL |
INTERBOLSA |
Equity, Corporate Debt, Government Debt |
|
(Sociedade Gestora de Sistemas de |
|
|
Liquidação e de Sistemas Centralizados de |
|
|
Valores Mobiliários, S.A.) |
|
QATAR |
QCSD |
Equity, Government Debt |
|
(Qatar Central Securities Depository) |
|
ROMANIA |
CD S.A. |
Equity, Corporate Debt |
|
(Central Depository S.A.) |
|
|
NBR |
Government Debt |
|
(National Bank of Romania) |
|
RUSSIA |
NSD |
Equity, Corporate Debt, Government Debt |
|
(National Settlement Depository) |
|
SAUDI ARABIA |
SDCC |
Equity, Corporate Debt, Government Debt |
|
(Securities Depository Center Company) |
|
SERBIA |
CSD |
Equity, Corporate Debt, Government Debt |
|
(Central Securities Depository and |
|
|
Clearing House) |
|
SINGAPORE |
CDP |
Equity, Corporate Debt, Government |
|
(The Central Depository (Pte) Limited) |
Securities |
|
MAS |
Government Securities |
|
(Monetary Authority of Singapore) |
|
SLOVAK |
CDCP |
Equity, Corporate Debt, Government Debt |
REPUBLIC |
(Centrálny depozitár cenných papierov |
|
|
SR, a.s.) |
|
SLOVENIA |
KDD |
Equity, Corporate Debt, Government Debt |
|
(Centralna klirinško depotna družba d.d.) |
|
SOUTH AFRICA |
Strate |
Equity, Corporate Debt, Government Debt |
|
(Strate (Pty) Limited) |
|
SOUTH KOREA |
KSD |
Equity, Corporate Debt, Government Debt |
|
(Korea Securities Depository) |
|
SPAIN |
IBERCLEAR |
Equity, Corporate Debt, Government Debt |
|
(Sociedad de Sistemas) |
|
SRI LANKA |
CDS |
Equity, Corporate Debt |
|
(Central Depository Systems (Pvt.) Ltd.) |
|
|
LankaSecure |
Government Debt |
|
(Central Bank of Sri Lanka - |
|
|
LankaSecure) |
|
SWEDEN |
Euroclear Sweden |
Equity, Corporate Debt, Government Debt |
|
(Euroclear Sweden AB) |
|
SWITZERLAND |
SIS |
Equity, Corporate Debt, Government Debt |
|
(SIX SIS AG) |
|
TAIWAN |
TDCC |
Equity, Corporate Debt |
|
(Taiwan Depository and Clearing |
|
|
Corporation) |
|
|
CBC |
Government Debt |
|
(Central Bank of the Republic of China |
|
|
(Taiwan)) |
|
TANZANIA |
CDS |
Equity, Corporate Debt |
|
(Dar es Salaam Stock Exchange Central |
|
|
Depository System) |
|
THAILAND |
TSD |
Equity, Corporate Debt, Government Debt |
|
(Thailand Securities Depository Company |
|
|
Limited) |
|
TRINIDAD AND |
TTCD |
Equity, Corporate Debt, Government Debt |
TOBAGO |
(Trinidad and Tobago Central Depository |
|
|
Limited) |
|
TUNISIA |
Tunisie Clearing |
Equity, Corporate Debt, Government Debt |
|
(Tunisie Clearing) |
|
TURKEY |
CBRT |
Government Debt |
|
(Türkiye Cumhuriyet Merkez Bankasi |
|
|
A.S.) |
|
|
CRA |
Equity, Corporate Debt, Government Debt |
|
(Merkezi Kayit Kurulusu A.S.) |
|
UGANDA |
CSD |
Government Debt |
|
(Bank of Uganda - Central Securities |
|
|
Depository) |
|
|
SCD |
Equity, Corporate Debt |
|
(Uganda Securities Exchange - Securities |
|
|
Central Depository) |
|
UKRAINE |
NDU |
Equity, Corporate Debt |
|
(National Depository of Ukraine) |
|
UNITED ARAB |
ADX |
Equity, Corporate Debt, Government Debt |
EMIRATES - ADX |
(Abu Dhabi Securities Exchange) |
|
UNITED ARAB |
DFM |
Equity, Corporate Debt, Government Debt |
EMIRATES - DFM |
(Dubai Financial Market) |
|
UNITED ARAB |
NASDAQ Dubai |
Corporate Debt |
EMIRATES - |
(NASDAQ Dubai Limited) |
|
NASDAQ DUBAI |
|
|
UNITED |
EUI |
Equity, Corporate Debt, Government Debt |
KINGDOM |
(Euroclear U.K. & Ireland Limited) |
|
UNITED STATES |
FRB |
Government Debt, Mortgage Backed |
|
(Federal Reserve Bank) |
Securities |
|
DTC |
Equity, Corporate Debt |
|
(Depository Trust Company) |
|
URUGUAY |
BCU |
Government Debt |
|
(Banco Central del Uruguay) |
|
VENEZUELA |
CVV |
Equity, Corporate Debt |
|
(Caja Venezolana de Valores, S.A.) |
|
|
BCV |
Government Debt |
|
(Banco Central de Venezuela) |
|
VIETNAM |
VSD |
Equity, Corporate Debt, Government Debt |
|
(Vietnam Securities Depository) |
|
WAEMU - BENIN, |
DC/BR |
Equity, Corporate Debt, Government Debt |
BURKINA FASO, |
(Le Dépositaire Central / Banque de |
|
GUINEA-BISSAU, |
Règlement) |
|
IVORY COAST, |
|
|
MALI, NIGER, |
|
|
SENEGAL, TOGO |
|
|
ZAMBIA |
LuSE CSD |
Equity, Corporate Debt, Treasury Bonds |
|
(Lusaka Stock Exchange Central Shares |
|
|
Depository) |
|
|
BoZ |
Government Debt |
|
(Bank of Zambia) |
|
ZIMBABWE |
CDC |
Equity |
|
(Chengetedzai Depository Company |
|
|
Limited) |
|
This document is for information only and its contents are subject to change. This document is intended neither to influence your investment decisions nor to amend or supplement any agreement governing your relations with J.P. Morgan. Neither this document nor any of its contents may be disclosed to any third party or used for any other purpose without the proper written consent of J.P. Morgan. J.P. Morgan has gathered the information from a source it considers reliable, however, it cannot be responsible for inaccuracies, incomplete information or updating of the information furnished hereby.
EXHIBIT 1 – AMENDMENT #1
The following is an amendment ("Amendment") to the Global Custody Agreement dated August 14, 2017, as amended from time to time (the "Agreement"), by and between JPMorgan Chase Bank, N.A. ("Bank") and each open-end management investment company listed on Exhibit 1 thereto (each a "Trust," collectively "Customer"). This Amendment serves to update the names of the Trusts and certain of their portfolios (each a "Fund") listed on Exhibit 1. Bank and Customer hereby agree that all of the terms and conditions as set forth in the Agreement are hereby incorporated by reference with respect to the following Trusts and Funds listed below.
Vanguard Admiral Funds
Vanguard S&P 500 Growth Index Fund
Vanguard S&P 500 Value Index Fund
Vanguard S&P Mid-Cap 400 Growth Index Fund
Vanguard S&P Mid-Cap 400 Index Fund
Vanguard S&P Mid-Cap 400 Value Index Fund
Vanguard S&P Small-Cap 600 Growth Index Fund
Vanguard S&P Small-Cap 600 Index Fund
Vanguard S&P Small-Cap 600 Value Index Fund
Vanguard Bond Index Funds
Vanguard Inflation-Protected Securities Fund
Vanguard Intermediate-Term Bond Index Fund
Vanguard Long-Term Bond Index Fund
Vanguard Short-Term Bond Index Fund
Vanguard Total Bond Market Index Fund
Vanguard Total Bond Market II Index Fund
Vanguard Chester Funds
Vanguard Institutional Target Retirement 2015 Fund
Vanguard Institutional Target Retirement 2020 Fund
Vanguard Institutional Target Retirement 2025 Fund
Vanguard Institutional Target Retirement 2030 Fund
Vanguard Institutional Target Retirement 2035 Fund
Vanguard Institutional Target Retirement 2040 Fund
Vanguard Institutional Target Retirement 2045 Fund
Vanguard Institutional Target Retirement 2050 Fund
Vanguard Institutional Target Retirement 2055 Fund
Vanguard Institutional Target Retirement 2060 Fund
Vanguard Institutional Target Retirement 2065 Fund
Vanguard Institutional Target Retirement Income Fund
Vanguard Target Retirement 2015 Fund
Vanguard Target Retirement 2020 Fund
Vanguard Target Retirement 2025 Fund
Vanguard Target Retirement 2030 Fund
Vanguard Target Retirement 2035 Fund
Vanguard Target Retirement 2040 Fund
Vanguard Target Retirement 2045 Fund
Vanguard Target Retirement 2050 Fund
Vanguard Target Retirement 2055 Fund
Vanguard Target Retirement 2060 Fund
Vanguard Target Retirement 2065 Fund
Vanguard Target Retirement Income Fund
Vanguard CMT Funds
Vanguard Market Liquidity Fund
Vanguard Fixed Income Securities Funds
Vanguard GNMA Fund
Vanguard High-Yield Corporate Fund
Vanguard Long-Term Investment-Grade Fund
Vanguard REIT II Index Fund
Vanguard Ultra-Short-Term Bond Fund
Vanguard Index Funds
Vanguard Growth Index Fund
Vanguard Mid-Cap Growth Index Fund
Vanguard Mid-Cap Value Index Fund
Vanguard Small-Cap Index Fund
Vanguard Total Stock Market Index Fund
Vanguard Malvern Funds
Vanguard Short-Term Inflation-Protected Securities Index Fund
Vanguard Scottsdale Funds
Vanguard Intermediate-Term Corporate Bond Index Fund Vanguard Intermediate-Term Government Bond Index Fund Vanguard Long-Term Corporate Bond Index Fund Vanguard Long-Term Government Bond Index Fund Vanguard Mortgage-Backed Securities Index Fund Vanguard Short-Term Corporate Bond Index Fund Vanguard Short-Term Government Bond Index Fund Vanguard Total Corporate Bond ETF
Vanguard Specialized Funds
Vanguard Dividend Appreciation Index Fund
Vanguard Health Care Fund
Vanguard Precious Metals and Mining Fund
Vanguard STAR Funds
Vanguard LifeStrategy Conservative Growth Fund
Vanguard LifeStrategy Growth Fund
Vanguard LifeStrategy Income Fund
Vanguard LifeStrategy Moderate Growth Fund
Vanguard Total International Stock Index Fund
Vanguard Tax-Managed Funds
Vanguard Tax-Managed Balanced Fund
Vanguard Valley Forge Funds
Vanguard Balanced Index Fund
Vanguard Variable Insurance Funds
Global Bond Index Portfolio
Total Bond Market Index Portfolio
Total International Stock Market Index Portfolio
Vanguard Wellesley Income Fund
Vanguard Wellesley Income Fund
Vanguard Wellington Fund
Vanguard Wellington Fund
Vanguard Whitehall Funds
Vanguard International Explorer Fund
Vanguard World Fund
Vanguard Extended Duration Treasury Index Fund
Vanguard Global Wellesley Income Fund
Vanguard Global Wellington Fund
Vanguard International Growth Fund
The terms and conditions as set forth in the Agreement (except for Sections 2.1 and 2.2) apply with respect to the Trusts and Funds listed below limited to their use of account number P 62749 in Vanguard Directly Managed Securities Lending transactions:
Vanguard Chester Funds
Vanguard PRIMECAP Fund
Vanguard Explorer Fund
Vanguard Explorer Fund
Vanguard Fenway Funds
Vanguard Equity Income Fund
Vanguard PRIMECAP Core Fund
Vanguard Horizon Funds
Vanguard Capital Opportunity Fund
Vanguard Global Equity Fund
Vanguard Strategic Equity Fund
Vanguard Strategic Small-Cap Equity Fund
Vanguard Index Funds
Vanguard 500 Index Fund
Vanguard Extended Market Index Fund
Vanguard Large-Cap Index Fund
Vanguard Mid-Cap Index Fund
Vanguard Small-Cap Growth Index Fund
Vanguard Small-Cap Value Index Fund
Vanguard Value Index Fund
Vanguard Institutional Index Funds Vanguard Institutional Index Fund
Vanguard Institutional Total Stock Market Index Fund Vanguard International Equity Index Funds Vanguard Emerging Markets Stock Index Fund Vanguard European Stock Index Fund
Vanguard FTSE All-World ex-US Index Fund
Vanguard FTSE All-World ex-US Small-Cap Index Fund Vanguard Global ex-U.S. Real Estate Index Fund Vanguard Pacific Stock Index Fund
Vanguard Total World Stock Index Fund
Vanguard Malvern Funds
Vanguard Capital Value Fund
Vanguard U.S. Value Fund
Vanguard Montgomery Funds
Vanguard Market Neutral Fund
Vanguard Morgan Growth Fund
Vanguard Morgan Growth Fund
Vanguard Quantitative Funds
Vanguard Growth and Income Fund
Vanguard Scottsdale Funds Vanguard Explorer Value Fund
Vanguard Russell 1000 Growth Index Fund Vanguard Russell 1000 Index Fund Vanguard Russell 1000 Value Index Fund Vanguard Russell 2000 Growth Index Fund Vanguard Russell 2000 Index Fund Vanguard Russell 2000 Value Index Fund Vanguard Russell 3000 Index Fund
Vanguard Specialized Funds
Vanguard Dividend Growth Fund
Vanguard Energy Fund
Vanguard REIT Index Fund
Vanguard Tax-Managed Funds
Vanguard Developed Markets Index Fund
Vanguard Trustees' Equity Fund
Vanguard Emerging Markets Select Stock Fund
Vanguard International Value Fund
Vanguard Variable Insurance Funds
Balanced Portfolio
Capital Growth Portfolio
Diversified Value Portfolio
Equity Income Portfolio
Equity Index Portfolio
Growth Portfolio
International Portfolio
Mid-Cap Index Portfolio
REIT Index Portfolio
Small Company Growth Portfolio
Vanguard Whitehall Funds
Vanguard Global Minimum Volatility Fund
Vanguard High Dividend Yield Index Fund
Vanguard International Dividend Appreciation Index Fund
Vanguard International High Dividend Yield Index Fund
Vanguard Mid-Cap Growth Fund
Vanguard Selected Value Fund
Vanguard Windsor Funds
Vanguard Windsor Fund
Vanguard Windsor II Fund
Vanguard World Fund
Vanguard Consumer Discretionary Index Fund
Vanguard Consumer Staples Index Fund
Vanguard Energy Index Fund
Vanguard Financials Index Fund
Vanguard FTSE Social Index Fund
Vanguard Health Care Index Fund
Vanguard Industrials Index Fund
Vanguard Information Technology Index Fund
Vanguard Materials Index Fund
Vanguard Mega Cap Growth Index Fund
Vanguard Mega Cap Index Fund
Vanguard Mega Cap Value Index Fund
Vanguard Telecommunication Services Index Fund
Vanguard U.S. Growth Fund
Vanguard Utilities Index Fund
AGREED TO as of October 9, 2017 BY: |
|
JPMorgan Chase Bank, N.A. |
Each Fund Listed on Exhibit 1 |
By: /s/ Brian Eckert |
By: /s/ Thomas J. Higgins |
Name: Brian Eckert |
Name: Thomas J. Higgins |
Title: Executive Director |
Title: Chief Financial Officer |
EXHIBIT 1—Amendment 2
The following is an amendment, dated as of December 22, 2017 (“Amendment”), to the Amended and Restated Global Custody Agreement, dated August 14, 2017, as amended from time to time (the “Agreement”), by and between JPMorgan Chase Bank, N.A. (“Bank”) and each open-end management investment company listed on Exhibit 1 thereto (each, a “Trust”). This Amendment serves to update the names of the Trusts and certain of their portfolios (each, a “Fund”) listed on Exhibit 1. Bank and Customer hereby agree that all of the terms and conditions as set forth in the Agreement are hereby incorporated by reference with respect to the following Trusts and Funds listed below. Capitalized terms used but not defined in this Amendment have the meanings ascribed to them in the Agreement.
Vanguard Admiral Funds
Vanguard S&P 500 Growth Index Fund
Vanguard S&P 500 Value Index Fund
Vanguard S&P Mid-Cap 400 Growth Index Fund
Vanguard S&P Mid-Cap 400 Index Fund
Vanguard S&P Mid-Cap 400 Value Index Fund
Vanguard S&P Small-Cap 600 Growth Index Fund
Vanguard S&P Small-Cap 600 Index Fund
Vanguard S&P Small-Cap 600 Value Index Fund
Vanguard Bond Index Funds
Vanguard Inflation-Protected Securities Fund
Vanguard Intermediate-Term Bond Index Fund
Vanguard Long-Term Bond Index Fund
Vanguard Short-Term Bond Index Fund
Vanguard Total Bond Market Index Fund
Vanguard Total Bond Market II Index Fund
Vanguard Chester Funds
Vanguard Institutional Target Retirement 2015 Fund
Vanguard Institutional Target Retirement 2020 Fund
Vanguard Institutional Target Retirement 2025 Fund
Vanguard Institutional Target Retirement 2030 Fund
Vanguard Institutional Target Retirement 2035 Fund
Vanguard Institutional Target Retirement 2040 Fund
Vanguard Institutional Target Retirement 2045 Fund
Vanguard Institutional Target Retirement 2050 Fund
Vanguard Institutional Target Retirement 2055 Fund
Vanguard Institutional Target Retirement 2060 Fund
Vanguard Institutional Target Retirement 2065 Fund
Vanguard Institutional Target Retirement Income Fund
Vanguard Target Retirement 2015 Fund
Vanguard Target Retirement 2020 Fund
Vanguard Target Retirement 2025 Fund
Vanguard Target Retirement 2030 Fund
Vanguard Target Retirement 2035 Fund
Vanguard Target Retirement 2040 Fund
Vanguard Target Retirement 2045 Fund
Vanguard Target Retirement 2050 Fund
Vanguard Target Retirement 2055 Fund
Vanguard Target Retirement 2060 Fund
Vanguard Target Retirement 2065 Fund
Vanguard Target Retirement Income Fund
Vanguard Fixed Income Securities Funds
Vanguard GNMA Fund
Vanguard REIT II Index Fund
Vanguard Index Funds
Vanguard Extended Market Index Fund1
Vanguard Mid-Cap Growth Index Fund
Vanguard Mid-Cap Index Fund1
Vanguard Mid-Cap Value Index Fund
Vanguard Small-Cap Growth Index Fund1
Vanguard Small-Cap Index Fund
Vanguard Small-Cap Value Index Fund1
Vanguard Total Stock Market Index Fund
Vanguard International Equity Index Funds Vanguard Emerging Markets Stock Index Fund2
Vanguard Malvern Funds
Vanguard Core Bond Fund2
Vanguard Institutional Intermediate-Term Bond Fund2
Vanguard Institutional Short-Term Bond Fund2
Vanguard Scottsdale Funds
Vanguard Intermediate-Term Corporate Bond Index Fund Vanguard Intermediate-Term Treasury Index Fund Vanguard Long-Term Corporate Bond Index Fund Vanguard Long-Term Treasury Index Fund
Vanguard Mortgage-Backed Securities Index Fund Vanguard Short-Term Corporate Bond Index Fund Vanguard Short-Term Treasury Index Fund
Vanguard Total Corporate Bond ETF
Vanguard Specialized Funds
Vanguard Precious Metals and Mining Fund
Vanguard REIT Index Fund1
Vanguard STAR Funds
Vanguard LifeStrategy Conservative Growth Fund
Vanguard LifeStrategy Growth Fund
Vanguard LifeStrategy Income Fund
Vanguard LifeStrategy Moderate Growth Fund
Vanguard STAR Fund2
Vanguard Total International Stock Index Fund
Vanguard Tax-Managed Funds
Vanguard Tax-Managed Balanced Fund
Vanguard Tax-Managed Capital Appreciation Fund1
Vanguard Tax-Managed Small-Cap Fund1
Vanguard Trustees’ Equity Fund
Vanguard Diversified Equity Fund1
Vanguard International Value Fund2
Vanguard Valley Forge Funds
Vanguard Balanced Index Fund
Vanguard Managed Payout Fund1
Vanguard Variable Insurance Funds
Conservative Allocation Portfolio1
Equity Index Portfolio2
Global Bond Index Portfolio
Mid-Cap Index Portfolio2
Moderate Allocation Portfolio1
REIT Index Portfolio2
Total International Stock Market Index Portfolio
Total Stock Market Index Portfolio1
Vanguard Wellington Fund
Vanguard Wellington Fund
Vanguard Whitehall Funds
Vanguard High Dividend Yield Index Fund2
Vanguard International Explorer Fund
Vanguard World Fund
Vanguard Extended Duration Treasury Index Fund
Vanguard Global Wellesley Income Fund
Vanguard Global Wellington Fund
(Rest of page left intentionally blank)
1Effective on or about February 20, 2018, or as otherwise agreed by the parties.
2Effective on or about March 22, 2018, or as otherwise agreed by the parties.
Bank and each following Customer hereby agree that all of the terms and conditions as set forth in the Agreement except for Sections 2.1 and 2.2 are hereby incorporated by reference with respect to the Trusts and Funds listed below limited to their use of account number P 62749 in Vanguard Directly Managed Securities Lending transactions:
Vanguard Chester Funds
Vanguard PRIMECAP Fund
Vanguard Explorer Fund
Vanguard Explorer Fund
Vanguard Fenway Funds
Vanguard Equity Income Fund
Vanguard PRIMECAP Core Fund
Vanguard Horizon Funds
Vanguard Capital Opportunity Fund
Vanguard Global Equity Fund
Vanguard Strategic Equity Fund
Vanguard Strategic Small-Cap Equity Fund
Vanguard Index Funds
Vanguard Extended Market Index Fund
Vanguard 500 Index Fund
Vanguard Large-Cap Index Fund
Vanguard Mid-Cap Index Fund
Vanguard Small Cap Growth Index Fund
Vanguard Small Cap Value Index Fund
Vanguard Value Index Fund
Vanguard Institutional Index Funds
Vanguard Institutional Index Fund
Vanguard Institutional Total Stock Market Index Fund
Vanguard Malvern Funds
Vanguard Capital Value Fund
Vanguard U.S. Value Fund
Vanguard Morgan Growth Fund
Vanguard Morgan Growth Fund
Vanguard Quantitative Funds
Vanguard Growth and Income Fund
Vanguard Structured Broad Market Fund
Vanguard Structured Large-Cap Equity Fund
Vanguard Scottsdale Funds Vanguard Explorer Value Fund Vanguard Russell 1000 Index Fund Vanguard Russell 1000 Value Index Fund Vanguard Russell 1000 Growth Index Fund Vanguard Russell 2000 Index Fund Vanguard Russell 2000 Value Index Fund Vanguard Russell 2000 Growth Index Fund Vanguard Russell 3000 Index Fund
Vanguard Specialized Funds
Vanguard Dividend Growth Fund
Vanguard Energy Fund
Vanguard REIT Index Fund
Vanguard Trustees’ Equity Fund
Vanguard Emerging Markets Select Stock Fund
Vanguard International Value Fund
Vanguard Variable Insurance Funds
Vanguard Balanced Portfolio
Vanguard Capital Growth Portfolio
Vanguard Diversified Value Portfolio
Vanguard Equity Income Portfolio
Vanguard Equity Index Portfolio
Vanguard Growth Portfolio
Vanguard Mid-Cap Index Portfolio
Vanguard REIT Index Portfolio
Vanguard Small Company Growth Portfolio
Vanguard International Portfolio
Vanguard Whitehall Funds
Vanguard Global Minimum Volatility Fund
Vanguard High Dividend Yield Index Fund
Vanguard Mid-Cap Growth Fund
Vanguard Selected Value Fund
Vanguard Windsor Funds
Vanguard Windsor Fund
Vanguard Windsor II Fund
Vanguard World Fund
Vanguard Consumer Discretionary Index Fund
Vanguard Consumer Staples Index Fund
Vanguard Energy Index Fund
Vanguard FTSE Social Index Fund
Vanguard Financials Index Fund
Vanguard Health Care Index Fund
Vanguard Industrials Index Fund
Vanguard Information Technology Index Fund
Vanguard Materials Index Fund
Vanguard Mega Cap Index Fund
Vanguard Mega Cap Growth Index Fund
Vanguard Mega Cap Value Index Fund
Vanguard Telecommunications Services Index Fund
Vanguard U.S. Growth Fund
Vanguard Utilities Index Fund
(Rest of page left intentionally blank)
IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute and deliver this Amendment as of the date set forth above.
JPMORGAN CHASE BANK, N.A. |
EACH OF THE OPEN-END MANAGEMENT |
|
|
INVESTMENT COMPANIES LISTED ON EXHIBIT |
|
|
1 HERETO |
By: |
/s/ Brian Eckert |
By: |
/s/ Thomas J. Higgins |
Name: |
Brian Eckert |
Name: |
Thomas J. Higgins |
Title: |
Executive Director |
Title: |
Chief Financial Officer |
AMENDMENT TO AMENDED AND RESTATED GLOBAL CUSTODY AGREEMENT
The following is an amendment, dated July 3, 2018, (the “Amendment”) to the Amended and Restated Global Custody Agreement, dated August 14, 2017, as amended from time to time (the “Agreement”), by and between JPMorgan Chase Bank, N.A. (the “Bank”) and each open-end management investment company listed on Exhibit 1 thereto (each, a “Trust”). For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties, intending to be legally bound, agree as follows:
1.Information Concerning Deposits at Bank. Section 10.5(c) of the Agreement is hereby deleted in its entirety and replaced with the following:
(c) In the event that (i) Bank incurs a loss attributable to Country Risk with respect to any cash balance it maintains on deposit at a Subcustodian or other correspondent bank in regard to its global custody or trust businesses in the country where the Subcustodian or other correspondent bank is located or (ii) J.P. Morgan Bank International LLC incurs a loss attributable to Country Risk with respect to any cash balance it maintains on deposit at its correspondent bank in Russia in regard to its direct custody business, Bank may set such loss off against Customer’s Cash Account to the extent that such loss is directly attributable to Customer’s investments in that market.
2.Exhibit 1. Exhibit 1 to the Agreement is hereby deleted in its entirety and replaced with the following:
Vanguard Admiral Funds
Vanguard S&P 500 Growth Index Fund Vanguard S&P 500 Value Index Fund Vanguard S&P Mid-Cap 400 Growth Index Fund Vanguard S&P Mid-Cap 400 Index Fund Vanguard S&P Mid-Cap 400 Value Index Fund Vanguard S&P Small-Cap 600 Growth Index Fund Vanguard S&P Small-Cap 600 Index Fund Vanguard S&P Small-Cap 600 Value Index Fund
Vanguard Bond Index Funds
Vanguard Inflation-Protected Securities Fund Vanguard Intermediate-Term Bond Index Fund Vanguard Long-Term Bond Index Fund Vanguard Short-Term Bond Index Fund Vanguard Total Bond Market Index Fund Vanguard Total Bond Market II Index Fund
Vanguard Chester Funds
Vanguard Institutional Target Retirement 2015 Fund Vanguard Institutional Target Retirement 2020 Fund Vanguard Institutional Target Retirement 2025 Fund Vanguard Institutional Target Retirement 2030 Fund Vanguard Institutional Target Retirement 2035 Fund Vanguard Institutional Target Retirement 2040 Fund
Vanguard Institutional Target Retirement 2045 Fund Vanguard Institutional Target Retirement 2050 Fund Vanguard Institutional Target Retirement 2055 Fund Vanguard Institutional Target Retirement 2060 Fund Vanguard Institutional Target Retirement 2065 Fund Vanguard Institutional Target Retirement Income Fund Vanguard Target Retirement 2015 Fund
Vanguard Target Retirement 2020 Fund
Vanguard Target Retirement 2025 Fund
Vanguard Target Retirement 2030 Fund
Vanguard Target Retirement 2035 Fund
Vanguard Target Retirement 2040 Fund
Vanguard Target Retirement 2045 Fund
Vanguard Target Retirement 2050 Fund
Vanguard Target Retirement 2055 Fund
Vanguard Target Retirement 2060 Fund
Vanguard Target Retirement 2065 Fund
Vanguard Target Retirement Income Fund
Vanguard Fixed Income Securities Funds
Vanguard GNMA Fund
Vanguard REIT II Index Fund
Vanguard Index Funds
Vanguard Extended Market Index Fund
Vanguard Mid-Cap Growth Index Fund
Vanguard Mid-Cap Index Fund
Vanguard Mid-Cap Value Index Fund
Vanguard Small-Cap Growth Index Fund
Vanguard Small-Cap Index Fund
Vanguard Small-Cap Value Index Fund
Vanguard Total Stock Market Index Fund
Vanguard International Equity Index Funds Vanguard Emerging Markets Stock Index Fund
Vanguard Malvern Funds
Vanguard Core Bond Fund
Vanguard Institutional Intermediate-Term Bond Fund
Vanguard Institutional Short-Term Bond Fund
Vanguard Scottsdale Funds
Vanguard Intermediate-Term Corporate Bond Index Fund Vanguard Intermediate-Term Treasury Index Fund Vanguard Long-Term Corporate Bond Index Fund Vanguard Long-Term Treasury Index Fund
Vanguard Mortgage-Backed Securities Index Fund Vanguard Short-Term Corporate Bond Index Fund Vanguard Short-Term Treasury Index Fund
Vanguard Total Corporate Bond ETF
Vanguard Total World Bond ETF
Vanguard Specialized Funds
Vanguard Precious Metals and Mining Fund
Vanguard REIT Index Fund
Vanguard STAR Funds
Vanguard LifeStrategy Conservative Growth Fund
Vanguard LifeStrategy Growth Fund
Vanguard LifeStrategy Income Fund
Vanguard LifeStrategy Moderate Growth Fund
Vanguard STAR Fund
Vanguard Total International Stock Index Fund
Vanguard Tax-Managed Funds
Vanguard Tax-Managed Balanced Fund
Vanguard Tax-Managed Capital Appreciation Fund
Vanguard Tax-Managed Small-Cap Fund
Vanguard Trustees’ Equity Fund
Vanguard Diversified Equity Fund
Vanguard International Value Fund
Vanguard Valley Forge Funds
Vanguard Balanced Index Fund
Vanguard Managed Payout Fund
Vanguard Variable Insurance Funds
Conservative Allocation Portfolio
Equity Index Portfolio
Global Bond Index Portfolio
Mid-Cap Index Portfolio
Moderate Allocation Portfolio
REIT Index Portfolio
Total International Stock Market Index Portfolio
Total Stock Market Index Portfolio
Vanguard Wellington Fund
Vanguard Wellington Fund
Vanguard Whitehall Funds
Vanguard High Dividend Yield Index Fund
Vanguard International Explorer Fund
Vanguard World Fund
Vanguard Extended Duration Treasury Index Fund
Vanguard Global Wellesley Income Fund
Vanguard Global Wellington Fund
Vanguard ESG Stock ETF
Vanguard ESG International Stock ETF
Bank and each following Customer hereby agree that all of the terms and conditions as set forth in the Agreement except for Sections 2.1 and 2.2 are hereby incorporated by reference with respect to the Trusts and Funds listed below limited to their use of account number P 62749 in Vanguard Directly Managed Securities Lending transactions:
Vanguard Chester Funds
Vanguard PRIMECAP Fund
Vanguard Explorer Fund
Vanguard Explorer Fund
Vanguard Fenway Funds
Vanguard Equity Income Fund
Vanguard PRIMECAP Core Fund
Vanguard Horizon Funds
Vanguard Capital Opportunity Fund
Vanguard Global Equity Fund
Vanguard Strategic Equity Fund
Vanguard Strategic Small-Cap Equity Fund
Vanguard Index Funds
Vanguard Extended Market Index Fund
Vanguard 500 Index Fund
Vanguard Large-Cap Index Fund
Vanguard Mid-Cap Index Fund
Vanguard Small Cap Growth Index Fund
Vanguard Small Cap Value Index Fund
Vanguard Value Index Fund
Vanguard Institutional Index Funds
Vanguard Institutional Index Fund
Vanguard Institutional Total Stock Market Index Fund
Vanguard Malvern Funds
Vanguard Capital Value Fund
Vanguard U.S. Value Fund
Vanguard Morgan Growth Fund
Vanguard Morgan Growth Fund
Vanguard Quantitative Funds
Vanguard Growth and Income Fund
Vanguard Structured Broad Market Fund
Vanguard Structured Large-Cap Equity Fund
Vanguard Scottsdale Funds Vanguard Explorer Value Fund Vanguard Russell 1000 Index Fund Vanguard Russell 1000 Value Index Fund Vanguard Russell 1000 Growth Index Fund Vanguard Russell 2000 Index Fund Vanguard Russell 2000 Value Index Fund Vanguard Russell 2000 Growth Index Fund Vanguard Russell 3000 Index Fund
Vanguard Specialized Funds
Vanguard Dividend Growth Fund
Vanguard Energy Fund
Vanguard REIT Index Fund
Vanguard Trustees’ Equity Fund
Vanguard Emerging Markets Select Stock Fund
Vanguard International Value Fund
Vanguard Variable Insurance Funds
Vanguard Balanced Portfolio
Vanguard Capital Growth Portfolio
Vanguard Diversified Value Portfolio
Vanguard Equity Income Portfolio
Vanguard Equity Index Portfolio
Vanguard Growth Portfolio
Vanguard Mid-Cap Index Portfolio
Vanguard REIT Index Portfolio
Vanguard Small Company Growth Portfolio
Vanguard International Portfolio
Vanguard Whitehall Funds
Vanguard Global Minimum Volatility Fund
Vanguard High Dividend Yield Index Fund
Vanguard Mid-Cap Growth Fund
Vanguard Selected Value Fund
Vanguard Windsor Funds
Vanguard Windsor Fund
Vanguard Windsor II Fund
Vanguard World Fund
Vanguard Consumer Discretionary Index Fund
Vanguard Consumer Staples Index Fund
Vanguard Energy Index Fund
Vanguard FTSE Social Index Fund
Vanguard Financials Index Fund
Vanguard Health Care Index Fund
Vanguard Industrials Index Fund
Vanguard Information Technology Index Fund
Vanguard Materials Index Fund
Vanguard Mega Cap Index Fund
Vanguard Mega Cap Growth Index Fund
Vanguard Mega Cap Value Index Fund
Vanguard Telecommunications Services Index Fund
Vanguard U.S. Growth Fund
Vanguard Utilities Index Fund
3.Miscellaneous. Except as modified by this Amendment, the Agreement shall remain unmodified, in full force and effect and all terms and conditions of the Agreement are hereby incorporated into and made part of this Amendment as if fully set forth herein.
(Rest of page left intentionally blank)
IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute and deliver this Amendment as of the date set forth above.
JPMORGAN CHASE BANK, N.A. |
EACH OF THE OPEN-END MANAGEMENT |
|
|
INVESTMENT COMPANIES LISTED ON |
|
|
EXHIBIT 1 HERETO |
By: |
/s/ Brian Eckert |
By: |
/s/ Thomas J. Higgins |
Name: |
Brian Eckert |
Name: |
Thomas J. Higgins |
Title: |
Executive Director |
Title: |
Chief Financial Officer |
AMENDMENT TO AMENDED AND RESTATED GLOBAL CUSTODY AGREEMENT
The following is an amendment, dated October 2, 2018, (the “Amendment”) to the Amended and Restated Global Custody Agreement, dated August 14, 2017, as amended from time to time (the “Agreement”), by and between JPMorgan Chase Bank, N.A. (the “Bank”) and each open-end management investment company listed on Exhibit 1 thereto (each, a “Trust”). For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties, intending to be legally bound, agree as follows:
1.Exhibit 1. Exhibit 1 to the Agreement is hereby deleted in its entirety and replaced with the following:
Vanguard Admiral Funds
Vanguard S&P 500 Growth Index Fund Vanguard S&P 500 Value Index Fund Vanguard S&P Mid-Cap 400 Growth Index Fund Vanguard S&P Mid-Cap 400 Index Fund Vanguard S&P Mid-Cap 400 Value Index Fund Vanguard S&P Small-Cap 600 Growth Index Fund Vanguard S&P Small-Cap 600 Index Fund Vanguard S&P Small-Cap 600 Value Index Fund
Vanguard Bond Index Funds
Vanguard Inflation-Protected Securities Fund Vanguard Intermediate-Term Bond Index Fund Vanguard Long-Term Bond Index Fund Vanguard Short-Term Bond Index Fund Vanguard Total Bond Market Index Fund Vanguard Total Bond Market II Index Fund
Vanguard Charlotte Funds
Vanguard Global Credit Bond Fund
Vanguard Chester Funds
Vanguard Institutional Target Retirement 2015 Fund Vanguard Institutional Target Retirement 2020 Fund Vanguard Institutional Target Retirement 2025 Fund Vanguard Institutional Target Retirement 2030 Fund Vanguard Institutional Target Retirement 2035 Fund Vanguard Institutional Target Retirement 2040 Fund Vanguard Institutional Target Retirement 2045 Fund Vanguard Institutional Target Retirement 2050 Fund Vanguard Institutional Target Retirement 2055 Fund Vanguard Institutional Target Retirement 2060 Fund Vanguard Institutional Target Retirement 2065 Fund Vanguard Institutional Target Retirement Income Fund Vanguard Target Retirement 2015 Fund
Vanguard Target Retirement 2020 Fund
Vanguard Target Retirement 2025 Fund
Vanguard Target Retirement 2030 Fund
Vanguard Target Retirement 2035 Fund
Vanguard Target Retirement 2040 Fund
Vanguard Target Retirement 2045 Fund
Vanguard Target Retirement 2050 Fund
Vanguard Target Retirement 2055 Fund
Vanguard Target Retirement 2060 Fund
Vanguard Target Retirement 2065 Fund
Vanguard Target Retirement Income Fund
Vanguard Fixed Income Securities Funds
Vanguard GNMA Fund
Vanguard Real Estate II Index Fund
Vanguard Index Funds
Vanguard Extended Market Index Fund
Vanguard Mid-Cap Growth Index Fund
Vanguard Mid-Cap Index Fund
Vanguard Mid-Cap Value Index Fund
Vanguard Small-Cap Growth Index Fund
Vanguard Small-Cap Index Fund
Vanguard Small-Cap Value Index Fund
Vanguard Total Stock Market Index Fund
Vanguard International Equity Index Funds Vanguard Emerging Markets Stock Index Fund
Vanguard Malvern Funds
Vanguard Core Bond Fund
Vanguard Institutional Intermediate-Term Bond Fund
Vanguard Institutional Short-Term Bond Fund
Vanguard Scottsdale Funds
Vanguard Intermediate-Term Corporate Bond Index Fund Vanguard Intermediate-Term Treasury Index Fund Vanguard Long-Term Corporate Bond Index Fund Vanguard Long-Term Treasury Index Fund
Vanguard Mortgage-Backed Securities Index Fund Vanguard Short-Term Corporate Bond Index Fund Vanguard Short-Term Treasury Index Fund Vanguard Total Corporate Bond ETF Vanguard Total World Bond ETF
Vanguard Specialized Funds
Vanguard Global Capital Cycles Fund
Vanguard Real Estate Index Fund
Vanguard STAR Funds
Vanguard LifeStrategy Conservative Growth Fund
Vanguard LifeStrategy Growth Fund
Vanguard LifeStrategy Income Fund
Vanguard LifeStrategy Moderate Growth Fund
Vanguard STAR Fund
Vanguard Total International Stock Index Fund
Vanguard Tax-Managed Funds
Vanguard Tax-Managed Balanced Fund
Vanguard Tax-Managed Capital Appreciation Fund
Vanguard Tax-Managed Small-Cap Fund
Vanguard Trustees’ Equity Fund
Vanguard Diversified Equity Fund
Vanguard International Value Fund
Vanguard Valley Forge Funds
Vanguard Balanced Index Fund
Vanguard Managed Payout Fund
Vanguard Variable Insurance Funds
Conservative Allocation Portfolio
Equity Index Portfolio
Global Bond Index Portfolio
Mid-Cap Index Portfolio
Moderate Allocation Portfolio
REIT Index Portfolio
Total International Stock Market Index Portfolio
Total Stock Market Index Portfolio
Vanguard Wellington Fund
Vanguard Wellington Fund
Vanguard Whitehall Funds
Vanguard High Dividend Yield Index Fund
Vanguard International Explorer Fund
Vanguard World Fund
Vanguard Extended Duration Treasury Index Fund
Vanguard Global Wellesley Income Fund
Vanguard Global Wellington Fund
Vanguard ESG US Stock ETF
Vanguard ESG International Stock ETF
Bank and each following Customer hereby agree that all of the terms and conditions as set forth in the Agreement except for Sections 2.1 and 2.2 are hereby incorporated by reference with respect to the Trusts and Funds listed below limited to their use of account number P 62749 in Vanguard Directly Managed Securities Lending transactions:
Vanguard Chester Funds
Vanguard PRIMECAP Fund
Vanguard Explorer Fund
Vanguard Explorer Fund
Vanguard Fenway Funds
Vanguard Equity Income Fund
Vanguard PRIMECAP Core Fund
Vanguard Horizon Funds
Vanguard Capital Opportunity Fund
Vanguard Global Equity Fund
Vanguard Strategic Equity Fund
Vanguard Strategic Small-Cap Equity Fund
Vanguard Index Funds
Vanguard Extended Market Index Fund
Vanguard 500 Index Fund
Vanguard Large-Cap Index Fund
Vanguard Mid-Cap Index Fund
Vanguard Small Cap Growth Index Fund
Vanguard Small Cap Value Index Fund
Vanguard Value Index Fund
Vanguard Institutional Index Funds
Vanguard Institutional Index Fund
Vanguard Institutional Total Stock Market Index Fund
Vanguard Malvern Funds
Vanguard Capital Value Fund
Vanguard U.S. Value Fund
Vanguard Morgan Growth Fund
Vanguard Morgan Growth Fund
Vanguard Quantitative Funds
Vanguard Growth and Income Fund
Vanguard Structured Broad Market Fund
Vanguard Structured Large-Cap Equity Fund
Vanguard Scottsdale Funds Vanguard Explorer Value Fund Vanguard Russell 1000 Index Fund Vanguard Russell 1000 Value Index Fund Vanguard Russell 1000 Growth Index Fund Vanguard Russell 2000 Index Fund Vanguard Russell 2000 Value Index Fund Vanguard Russell 2000 Growth Index Fund
Vanguard Russell 3000 Index Fund
Vanguard Specialized Funds
Vanguard Dividend Growth Fund
Vanguard Energy Fund
Vanguard Real Estate Index Fund
Vanguard Trustees’ Equity Fund
Vanguard Emerging Markets Select Stock Fund
Vanguard International Value Fund
Vanguard Variable Insurance Funds
Vanguard Balanced Portfolio
Vanguard Capital Growth Portfolio
Vanguard Diversified Value Portfolio
Vanguard Equity Income Portfolio
Vanguard Equity Index Portfolio
Vanguard Growth Portfolio
Vanguard Mid-Cap Index Portfolio
Vanguard REIT Index Portfolio
Vanguard Small Company Growth Portfolio
Vanguard International Portfolio
Vanguard Whitehall Funds
Vanguard Global Minimum Volatility Fund
Vanguard High Dividend Yield Index Fund
Vanguard Mid-Cap Growth Fund
Vanguard Selected Value Fund
Vanguard Windsor Funds
Vanguard Windsor Fund
Vanguard Windsor II Fund
Vanguard World Fund
Vanguard Consumer Discretionary Index Fund
Vanguard Consumer Staples Index Fund
Vanguard Energy Index Fund
Vanguard FTSE Social Index Fund
Vanguard Financials Index Fund
Vanguard Health Care Index Fund
Vanguard Industrials Index Fund
Vanguard Information Technology Index Fund
Vanguard Materials Index Fund
Vanguard Mega Cap Index Fund
Vanguard Mega Cap Growth Index Fund
Vanguard Mega Cap Value Index Fund
Vanguard Communication Services Index Fund
Vanguard U.S. Growth Fund
Vanguard Utilities Index Fund
2.Miscellaneous. Except as modified by this Amendment, the Agreement shall remain unmodified, in full force and effect and all terms and conditions of the Agreement are hereby incorporated into and made part of this Amendment as if fully set forth herein.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute and deliver this Amendment as of the date set forth above.
JPMORGAN CHASE BANK, N.A. |
EACH OF THE OPEN-END MANAGEMENT |
|
|
INVESTMENT COMPANIES LISTED ON |
|
|
EXHIBIT 1 HERETO |
By: |
/s/ Alan Liang |
By: |
/s/ John Bendl |
Name: |
Alan Liang |
Name: |
John Bendl |
Title: |
Vice President |
Title: |
Chief Accounting Officer |
|
|
|
Controller |
AMENDMENT TO AMENDED AND RESTATED GLOBAL CUSTODY AGREEMENT
The following is an amendment, dated April 9, 2019, (the “Amendment”) to the Amended and Restated Global Custody Agreement, dated August 14, 2017, as amended from time to time (the “Agreement”), by and between JPMorgan Chase Bank, N.A. (the “Bank”) and each open-end management investment company listed on Exhibit 1 thereto (each, a “Trust”). For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties, intending to be legally bound, agree as follows:
1.Exhibit 1. Exhibit 1 to the Agreement is hereby deleted in its entirety and replaced with the following:
Vanguard Admiral Funds
Vanguard S&P 500 Growth Index Fund Vanguard S&P 500 Value Index Fund Vanguard S&P Mid-Cap 400 Growth Index Fund Vanguard S&P Mid-Cap 400 Index Fund Vanguard S&P Mid-Cap 400 Value Index Fund Vanguard S&P Small-Cap 600 Growth Index Fund Vanguard S&P Small-Cap 600 Index Fund Vanguard S&P Small-Cap 600 Value Index Fund
Vanguard Bond Index Funds
Vanguard Inflation-Protected Securities Fund Vanguard Intermediate-Term Bond Index Fund Vanguard Long-Term Bond Index Fund Vanguard Short-Term Bond Index Fund Vanguard Total Bond Market Index Fund Vanguard Total Bond Market II Index Fund
Vanguard Charlotte Funds
Vanguard Global Credit Bond Fund
Vanguard Chester Funds
Vanguard Institutional Target Retirement 2015 Fund Vanguard Institutional Target Retirement 2020 Fund Vanguard Institutional Target Retirement 2025 Fund Vanguard Institutional Target Retirement 2030 Fund Vanguard Institutional Target Retirement 2035 Fund Vanguard Institutional Target Retirement 2040 Fund Vanguard Institutional Target Retirement 2045 Fund Vanguard Institutional Target Retirement 2050 Fund Vanguard Institutional Target Retirement 2055 Fund Vanguard Institutional Target Retirement 2060 Fund Vanguard Institutional Target Retirement 2065 Fund Vanguard Institutional Target Retirement Income Fund Vanguard Target Retirement 2015 Fund
Vanguard Target Retirement 2020 Fund
Vanguard Target Retirement 2025 Fund
Vanguard Target Retirement 2030 Fund
Vanguard Target Retirement 2035 Fund
Vanguard Target Retirement 2040 Fund
Vanguard Target Retirement 2045 Fund
Vanguard Target Retirement 2050 Fund
Vanguard Target Retirement 2055 Fund
Vanguard Target Retirement 2060 Fund
Vanguard Target Retirement 2065 Fund
Vanguard Target Retirement Income Fund
Vanguard Fixed Income Securities Funds
Vanguard GNMA Fund
Vanguard Real Estate II Index Fund
Vanguard Index Funds
Vanguard Extended Market Index Fund
Vanguard Mid-Cap Growth Index Fund
Vanguard Mid-Cap Index Fund
Vanguard Mid-Cap Value Index Fund
Vanguard Small-Cap Growth Index Fund
Vanguard Small-Cap Index Fund
Vanguard Small-Cap Value Index Fund
Vanguard Total Stock Market Index Fund
Vanguard International Equity Index Funds Vanguard Emerging Markets Stock Index Fund
Vanguard Malvern Funds
Vanguard Core Bond Fund
Vanguard Institutional Intermediate-Term Bond Fund
Vanguard Institutional Short-Term Bond Fund
Vanguard Scottsdale Funds
Vanguard Intermediate-Term Corporate Bond Index Fund Vanguard Intermediate-Term Treasury Index Fund Vanguard Long-Term Corporate Bond Index Fund Vanguard Long-Term Treasury Index Fund
Vanguard Mortgage-Backed Securities Index Fund Vanguard Short-Term Corporate Bond Index Fund Vanguard Short-Term Treasury Index Fund Vanguard Total Corporate Bond ETF Vanguard Total World Bond ETF
Vanguard Specialized Funds
Vanguard Global Capital Cycles Fund
Vanguard Real Estate Index Fund
Vanguard Global ESG Select Stock Fund
Vanguard STAR Funds
Vanguard LifeStrategy Conservative Growth Fund
Vanguard LifeStrategy Growth Fund
Vanguard LifeStrategy Income Fund
Vanguard LifeStrategy Moderate Growth Fund
Vanguard STAR Fund
Vanguard Total International Stock Index Fund
Vanguard Tax-Managed Funds
Vanguard Tax-Managed Balanced Fund
Vanguard Tax-Managed Capital Appreciation Fund
Vanguard Tax-Managed Small-Cap Fund
Vanguard Trustees’ Equity Fund
Vanguard Diversified Equity Fund
Vanguard International Value Fund
Vanguard Valley Forge Funds
Vanguard Balanced Index Fund
Vanguard Managed Payout Fund
Vanguard Variable Insurance Funds
Conservative Allocation Portfolio
Equity Index Portfolio
Global Bond Index Portfolio
Mid-Cap Index Portfolio
Moderate Allocation Portfolio
REIT Index Portfolio
Total International Stock Market Index Portfolio
Total Stock Market Index Portfolio
Vanguard Wellington Fund
Vanguard Wellington Fund
Vanguard Whitehall Funds
Vanguard High Dividend Yield Index Fund
Vanguard International Explorer Fund
Vanguard World Fund
Vanguard Extended Duration Treasury Index Fund
Vanguard Global Wellesley Income Fund
Vanguard Global Wellington Fund
Vanguard ESG US Stock ETF
Vanguard ESG International Stock ETF
Bank and each following Customer hereby agree that all of the terms and conditions as set forth in the Agreement except for Sections 2.1 and 2.2 are hereby incorporated by reference with respect to the Trusts and Funds listed below limited to their use of account number P 62749 in Vanguard Directly Managed Securities Lending transactions:
Vanguard Chester Funds
Vanguard PRIMECAP Fund
Vanguard Explorer Fund
Vanguard Explorer Fund
Vanguard Fenway Funds
Vanguard Equity Income Fund
Vanguard PRIMECAP Core Fund
Vanguard Horizon Funds
Vanguard Capital Opportunity Fund
Vanguard Global Equity Fund
Vanguard Strategic Equity Fund
Vanguard Strategic Small-Cap Equity Fund
Vanguard Index Funds
Vanguard Extended Market Index Fund
Vanguard 500 Index Fund
Vanguard Large-Cap Index Fund
Vanguard Mid-Cap Index Fund
Vanguard Small Cap Growth Index Fund
Vanguard Small Cap Value Index Fund
Vanguard Value Index Fund
Vanguard Institutional Index Funds
Vanguard Institutional Index Fund
Vanguard Institutional Total Stock Market Index Fund
Vanguard Malvern Funds
Vanguard Capital Value Fund
Vanguard U.S. Value Fund
Vanguard Morgan Growth Fund
Vanguard Morgan Growth Fund
Vanguard Quantitative Funds
Vanguard Growth and Income Fund
Vanguard Structured Broad Market Fund
Vanguard Structured Large-Cap Equity Fund
Vanguard Scottsdale Funds
Vanguard Explorer Value Fund
Vanguard Russell 1000 Index Fund
Vanguard Russell 1000 Value Index Fund
Vanguard Russell 1000 Growth Index Fund
Vanguard Russell 2000 Index Fund
Vanguard Russell 2000 Value Index Fund
Vanguard Russell 2000 Growth Index Fund Vanguard Russell 3000 Index Fund
Vanguard Specialized Funds
Vanguard Dividend Growth Fund
Vanguard Energy Fund
Vanguard Real Estate Index Fund
Vanguard Trustees’ Equity Fund
Vanguard Emerging Markets Select Stock Fund
Vanguard International Value Fund
Vanguard Variable Insurance Funds
Vanguard Balanced Portfolio
Vanguard Capital Growth Portfolio
Vanguard Diversified Value Portfolio
Vanguard Equity Income Portfolio
Vanguard Equity Index Portfolio
Vanguard Growth Portfolio
Vanguard Mid-Cap Index Portfolio
Vanguard REIT Index Portfolio
Vanguard Small Company Growth Portfolio
Vanguard International Portfolio
Vanguard Whitehall Funds
Vanguard Global Minimum Volatility Fund
Vanguard High Dividend Yield Index Fund
Vanguard Mid-Cap Growth Fund
Vanguard Selected Value Fund
Vanguard Windsor Funds
Vanguard Windsor Fund
Vanguard Windsor II Fund
Vanguard World Fund
Vanguard Consumer Discretionary Index Fund
Vanguard Consumer Staples Index Fund
Vanguard Energy Index Fund
Vanguard FTSE Social Index Fund
Vanguard Financials Index Fund
Vanguard Health Care Index Fund
Vanguard Industrials Index Fund
Vanguard Information Technology Index Fund
Vanguard Materials Index Fund
Vanguard Mega Cap Index Fund
Vanguard Mega Cap Growth Index Fund
Vanguard Mega Cap Value Index Fund
Vanguard Communication Services Index Fund
Vanguard U.S. Growth Fund
Vanguard Utilities Index Fund
2.Miscellaneous. Except as modified by this Amendment, the Agreement shall remain unmodified, in full force and effect and all terms and conditions of the Agreement are hereby incorporated into and made part of this Amendment as if fully set forth herein.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute and deliver this Amendment as of the date set forth above.
JPMORGAN CHASE BANK, N.A. |
EACH OF THE OPEN-END MANAGEMENT |
|
|
INVESTMENT COMPANIES LISTED ON |
|
|
EXHIBIT 1 HERETO |
By: |
/s/ Carl Mehldau |
By: |
/s/ Thomas J. Higgins |
Name: |
Carl Mehldau |
Name: |
Thomas J. Higgins |
Title: |
Vice President |
Title: |
Chief Financial Officer |
AMENDMENT TO AMENDED AND RESTATED GLOBAL CUSTODY AGREEMENT
The following is an amendment, dated August 12, 2019, (the “Amendment”) to the Amended and Restated Global Custody Agreement, dated August 14, 2017, as amended from time to time (the “Agreement”), by and between JPMorgan Chase Bank, N.A. (the “Bank”) and each open-end management investment company listed on Exhibit 1 thereto (each, a “Trust”). For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties, intending to be legally bound, agree as follows:
1.Exhibit 1. Exhibit 1 to the Agreement is hereby deleted in its entirety and replaced with the following:
Vanguard Admiral Funds
Vanguard S&P 500 Growth Index Fund Vanguard S&P 500 Value Index Fund Vanguard S&P Mid-Cap 400 Growth Index Fund Vanguard S&P Mid-Cap 400 Index Fund Vanguard S&P Mid-Cap 400 Value Index Fund Vanguard S&P Small-Cap 600 Growth Index Fund Vanguard S&P Small-Cap 600 Index Fund Vanguard S&P Small-Cap 600 Value Index Fund
Vanguard Bond Index Funds
Vanguard Inflation-Protected Securities Fund Vanguard Intermediate-Term Bond Index Fund Vanguard Long-Term Bond Index Fund Vanguard Short-Term Bond Index Fund Vanguard Total Bond Market Index Fund Vanguard Total Bond Market II Index Fund
Vanguard Charlotte Funds
Vanguard Global Credit Bond Fund
Vanguard Chester Funds
Vanguard Institutional Target Retirement 2015 Fund Vanguard Institutional Target Retirement 2020 Fund Vanguard Institutional Target Retirement 2025 Fund Vanguard Institutional Target Retirement 2030 Fund Vanguard Institutional Target Retirement 2035 Fund Vanguard Institutional Target Retirement 2040 Fund Vanguard Institutional Target Retirement 2045 Fund Vanguard Institutional Target Retirement 2050 Fund Vanguard Institutional Target Retirement 2055 Fund Vanguard Institutional Target Retirement 2060 Fund Vanguard Institutional Target Retirement 2065 Fund Vanguard Institutional Target Retirement Income Fund Vanguard Target Retirement 2015 Fund
Vanguard Target Retirement 2020 Fund Vanguard Target Retirement 2025 Fund
Vanguard Target Retirement 2030 Fund
Vanguard Target Retirement 2035 Fund
Vanguard Target Retirement 2040 Fund
Vanguard Target Retirement 2045 Fund
Vanguard Target Retirement 2050 Fund
Vanguard Target Retirement 2055 Fund
Vanguard Target Retirement 2060 Fund
Vanguard Target Retirement 2065 Fund
Vanguard Target Retirement Income Fund
Vanguard Fixed Income Securities Funds
Vanguard GNMA Fund
Vanguard Real Estate II Index Fund
Vanguard Horizon Funds
Vanguard International Core Stock Fund
Vanguard Index Funds
Vanguard Extended Market Index Fund
Vanguard Mid-Cap Growth Index Fund
Vanguard Mid-Cap Index Fund
Vanguard Mid-Cap Value Index Fund
Vanguard Small-Cap Growth Index Fund
Vanguard Small-Cap Index Fund
Vanguard Small-Cap Value Index Fund
Vanguard Total Stock Market Index Fund
Vanguard International Equity Index Funds Vanguard Emerging Markets Stock Index Fund
Vanguard Malvern Funds
Vanguard Core Bond Fund
Vanguard Institutional Intermediate-Term Bond Fund
Vanguard Institutional Short-Term Bond Fund
Vanguard Scottsdale Funds
Vanguard Intermediate-Term Corporate Bond Index Fund Vanguard Intermediate-Term Treasury Index Fund Vanguard Long-Term Corporate Bond Index Fund Vanguard Long-Term Treasury Index Fund
Vanguard Mortgage-Backed Securities Index Fund Vanguard Short-Term Corporate Bond Index Fund Vanguard Short-Term Treasury Index Fund Vanguard Total Corporate Bond ETF Vanguard Total World Bond ETF
Vanguard Specialized Funds
Vanguard Global Capital Cycles Fund
Vanguard Real Estate Index Fund
Vanguard Global ESG Select Stock Fund
Vanguard STAR Funds
Vanguard LifeStrategy Conservative Growth Fund
Vanguard LifeStrategy Growth Fund
Vanguard LifeStrategy Income Fund
Vanguard LifeStrategy Moderate Growth Fund
Vanguard STAR Fund
Vanguard Total International Stock Index Fund
Vanguard Tax-Managed Funds
Vanguard Tax-Managed Balanced Fund
Vanguard Tax-Managed Capital Appreciation Fund
Vanguard Tax-Managed Small-Cap Fund
Vanguard Trustees’ Equity Fund
Vanguard Diversified Equity Fund
Vanguard International Value Fund
Vanguard Valley Forge Funds
Vanguard Balanced Index Fund
Vanguard Managed Payout Fund
Vanguard Variable Insurance Funds
Conservative Allocation Portfolio
Equity Index Portfolio
Global Bond Index Portfolio
Mid-Cap Index Portfolio
Moderate Allocation Portfolio
REIT Index Portfolio
Total International Stock Market Index Portfolio
Total Stock Market Index Portfolio
Vanguard Wellington Fund
Vanguard Wellington Fund
Vanguard Whitehall Funds
Vanguard High Dividend Yield Index Fund
Vanguard International Explorer Fund
Vanguard World Fund
Vanguard Extended Duration Treasury Index Fund
Vanguard Global Wellesley Income Fund
Vanguard Global Wellington Fund
Vanguard ESG US Stock ETF
Vanguard ESG International Stock ETF
Bank and each following Customer hereby agree that all of the terms and conditions as set forth in the Agreement except for Sections 2.1 and 2.2 are hereby incorporated by reference with
respect to the Trusts and Funds listed below limited to their use of account number P 62749 in Vanguard Directly Managed Securities Lending transactions:
Vanguard Chester Funds
Vanguard PRIMECAP Fund
Vanguard Explorer Fund
Vanguard Explorer Fund
Vanguard Fenway Funds
Vanguard Equity Income Fund
Vanguard PRIMECAP Core Fund
Vanguard Horizon Funds
Vanguard Capital Opportunity Fund
Vanguard Global Equity Fund
Vanguard Strategic Equity Fund
Vanguard Strategic Small-Cap Equity Fund
Vanguard Index Funds
Vanguard Extended Market Index Fund
Vanguard 500 Index Fund
Vanguard Large-Cap Index Fund
Vanguard Mid-Cap Index Fund
Vanguard Small Cap Growth Index Fund
Vanguard Small Cap Value Index Fund
Vanguard Value Index Fund
Vanguard Institutional Index Funds
Vanguard Institutional Index Fund
Vanguard Institutional Total Stock Market Index Fund
Vanguard Malvern Funds
Vanguard Capital Value Fund
Vanguard U.S. Value Fund
Vanguard Morgan Growth Fund
Vanguard Morgan Growth Fund
Vanguard Quantitative Funds
Vanguard Growth and Income Fund
Vanguard Structured Broad Market Fund
Vanguard Structured Large-Cap Equity Fund
Vanguard Scottsdale Funds
Vanguard Explorer Value Fund
Vanguard Russell 1000 Index Fund
Vanguard Russell 1000 Value Index Fund
Vanguard Russell 1000 Growth Index Fund
Vanguard Russell 2000 Index Fund Vanguard Russell 2000 Value Index Fund Vanguard Russell 2000 Growth Index Fund Vanguard Russell 3000 Index Fund
Vanguard Specialized Funds
Vanguard Dividend Growth Fund
Vanguard Energy Fund
Vanguard Real Estate Index Fund
Vanguard Trustees’ Equity Fund
Vanguard Emerging Markets Select Stock Fund
Vanguard International Value Fund
Vanguard Variable Insurance Funds
Vanguard Balanced Portfolio
Vanguard Capital Growth Portfolio
Vanguard Diversified Value Portfolio
Vanguard Equity Income Portfolio
Vanguard Equity Index Portfolio
Vanguard Growth Portfolio
Vanguard Mid-Cap Index Portfolio
Vanguard REIT Index Portfolio
Vanguard Small Company Growth Portfolio
Vanguard International Portfolio
Vanguard Whitehall Funds
Vanguard Global Minimum Volatility Fund
Vanguard High Dividend Yield Index Fund
Vanguard Mid-Cap Growth Fund
Vanguard Selected Value Fund
Vanguard Windsor Funds
Vanguard Windsor Fund
Vanguard Windsor II Fund
Vanguard World Fund
Vanguard Consumer Discretionary Index Fund
Vanguard Consumer Staples Index Fund
Vanguard Energy Index Fund
Vanguard FTSE Social Index Fund
Vanguard Financials Index Fund
Vanguard Health Care Index Fund
Vanguard Industrials Index Fund
Vanguard Information Technology Index Fund
Vanguard Materials Index Fund
Vanguard Mega Cap Index Fund
Vanguard Mega Cap Growth Index Fund
Vanguard Mega Cap Value Index Fund
Vanguard Communication Services Index Fund
Vanguard U.S. Growth Fund
Vanguard Utilities Index Fund
2.Miscellaneous. Except as modified by this Amendment, the Agreement shall remain unmodified, in full force and effect and all terms and conditions of the Agreement are hereby incorporated into and made part of this Amendment as if fully set forth herein.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute and deliver this Amendment as of the date set forth above.
JPMORGAN CHASE BANK, N.A. |
EACH OF THE OPEN-END MANAGEMENT |
|
|
INVESTMENT COMPANIES LISTED ON |
|
|
EXHIBIT 1 HERETO |
By: |
/s/ Carl Mehldau |
By: |
/s/ Peter C. Mahoney |
Name: |
Carl Mehldau |
Name: |
Peter C. Mahoney |
Title: |
Vice President |
Title: |
Controller |
AMENDMENT TO AMENDED AND RESTATED GLOBAL CUSTODY AGREEMENT
The following is an amendment, dated August 6, 2020, (the “Amendment”) to the Amended and Restated Global Custody Agreement, dated August 14, 2017, as amended from time to time (the “Agreement”), by and between JPMorgan Chase Bank, N.A. (the “Bank”) and each open-end management investment company listed on Exhibit 1 thereto (each, a “Trust”). For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties, intending to be legally bound, agree as follows:
1.Exhibit 1. Exhibit 1 to the Agreement is hereby deleted in its entirety and replaced with the following:
Vanguard Admiral Funds
Vanguard S&P 500 Growth Index Fund Vanguard S&P 500 Value Index Fund Vanguard S&P Mid-Cap 400 Growth Index Fund Vanguard S&P Mid-Cap 400 Index Fund Vanguard S&P Mid-Cap 400 Value Index Fund Vanguard S&P Small-Cap 600 Growth Index Fund Vanguard S&P Small-Cap 600 Index Fund Vanguard S&P Small-Cap 600 Value Index Fund
Vanguard Bond Index Funds
Vanguard Inflation-Protected Securities Fund Vanguard Intermediate-Term Bond Index Fund Vanguard Long-Term Bond Index Fund Vanguard Short-Term Bond Index Fund Vanguard Total Bond Market Index Fund Vanguard Total Bond Market II Index Fund
Vanguard Charlotte Funds
Vanguard Global Credit Bond Fund
Vanguard Chester Funds
Vanguard Institutional Target Retirement 2015 Fund Vanguard Institutional Target Retirement 2020 Fund Vanguard Institutional Target Retirement 2025 Fund Vanguard Institutional Target Retirement 2030 Fund Vanguard Institutional Target Retirement 2035 Fund Vanguard Institutional Target Retirement 2040 Fund Vanguard Institutional Target Retirement 2045 Fund Vanguard Institutional Target Retirement 2050 Fund Vanguard Institutional Target Retirement 2055 Fund Vanguard Institutional Target Retirement 2060 Fund Vanguard Institutional Target Retirement 2065 Fund Vanguard Institutional Target Retirement Income Fund Vanguard Target Retirement 2015 Fund
Vanguard Target Retirement 2020 Fund
Vanguard Target Retirement 2025 Fund
Vanguard Target Retirement 2030 Fund
Vanguard Target Retirement 2035 Fund
Vanguard Target Retirement 2040 Fund
Vanguard Target Retirement 2045 Fund
Vanguard Target Retirement 2050 Fund
Vanguard Target Retirement 2055 Fund
Vanguard Target Retirement 2060 Fund
Vanguard Target Retirement 2065 Fund
Vanguard Target Retirement Income Fund
Vanguard Fixed Income Securities Funds
Vanguard GNMA Fund
Vanguard Real Estate II Index Fund
Vanguard Horizon Funds
Vanguard International Core Stock Fund
Vanguard Index Funds
Vanguard Extended Market Index Fund
Vanguard Mid-Cap Growth Index Fund
Vanguard Mid-Cap Index Fund
Vanguard Mid-Cap Value Index Fund
Vanguard Small-Cap Growth Index Fund
Vanguard Small-Cap Index Fund
Vanguard Small-Cap Value Index Fund
Vanguard Total Stock Market Index Fund
Vanguard International Equity Index Funds Vanguard Emerging Markets Stock Index Fund
Vanguard Malvern Funds
Vanguard Core Bond Fund
Vanguard Institutional Intermediate-Term Bond Fund
Vanguard Institutional Short-Term Bond Fund
Vanguard Scottsdale Funds
Vanguard Intermediate-Term Corporate Bond Index Fund Vanguard Intermediate-Term Treasury Index Fund Vanguard Long-Term Corporate Bond Index Fund Vanguard Long-Term Treasury Index Fund
Vanguard Mortgage-Backed Securities Index Fund Vanguard Short-Term Corporate Bond Index Fund Vanguard Short-Term Treasury Index Fund Vanguard Total Corporate Bond ETF Vanguard Total World Bond ETF
Vanguard Specialized Funds
Vanguard Global Capital Cycles Fund
Vanguard Real Estate Index Fund
Vanguard Global ESG Select Stock Fund
Vanguard STAR Funds
Vanguard LifeStrategy Conservative Growth Fund
Vanguard LifeStrategy Growth Fund
Vanguard LifeStrategy Income Fund
Vanguard LifeStrategy Moderate Growth Fund
Vanguard STAR Fund
Vanguard Total International Stock Index Fund
Vanguard Tax-Managed Funds
Vanguard Tax-Managed Balanced Fund
Vanguard Tax-Managed Capital Appreciation Fund
Vanguard Tax-Managed Small-Cap Fund
Vanguard Trustees’ Equity Fund
Vanguard Diversified Equity Fund
Vanguard International Value Fund
Vanguard Valley Forge Funds
Vanguard Balanced Index Fund
Vanguard Managed Allocation Fund
Vanguard Variable Insurance Funds
Conservative Allocation Portfolio
Equity Index Portfolio
Global Bond Index Portfolio
Mid-Cap Index Portfolio
Moderate Allocation Portfolio
Real Estate Index Portfolio
Total International Stock Market Index Portfolio
Total Stock Market Index Portfolio
Vanguard Wellington Fund
Vanguard Wellington Fund
Vanguard Whitehall Funds
Vanguard High Dividend Yield Index Fund
Vanguard International Explorer Fund
Vanguard World Fund
Vanguard Extended Duration Treasury Index Fund
Vanguard Global Wellesley Income Fund
Vanguard Global Wellington Fund
Vanguard ESG U.S. Corporate Bond ETF
Vanguard ESG U.S. Stock ETF
Vanguard ESG International Stock ETF
Bank and each following Customer hereby agree that all of the terms and conditions as set forth in the Agreement except for Sections 2.1 and 2.2 are hereby incorporated by reference with respect to the Trusts and Funds listed below limited to their use of account number P 62749 in Vanguard Directly Managed Securities Lending transactions:
Vanguard Chester Funds
Vanguard PRIMECAP Fund
Vanguard Explorer Fund
Vanguard Explorer Fund
Vanguard Fenway Funds
Vanguard Equity Income Fund
Vanguard PRIMECAP Core Fund
Vanguard Horizon Funds
Vanguard Capital Opportunity Fund
Vanguard Global Equity Fund
Vanguard Strategic Equity Fund
Vanguard Strategic Small-Cap Equity Fund
Vanguard Index Funds
Vanguard Extended Market Index Fund
Vanguard 500 Index Fund
Vanguard Large-Cap Index Fund
Vanguard Mid-Cap Index Fund
Vanguard Small Cap Growth Index Fund
Vanguard Small Cap Value Index Fund
Vanguard Value Index Fund
Vanguard Institutional Index Funds
Vanguard Institutional Index Fund
Vanguard Institutional Total Stock Market Index Fund
Vanguard Malvern Funds
Vanguard U.S. Value Fund
Vanguard Quantitative Funds
Vanguard Growth and Income Fund
Vanguard Scottsdale Funds
Vanguard Explorer Value Fund
Vanguard Russell 1000 Index Fund
Vanguard Russell 1000 Value Index Fund
Vanguard Russell 1000 Growth Index Fund
Vanguard Russell 2000 Index Fund
Vanguard Russell 2000 Value Index Fund
Vanguard Russell 2000 Growth Index Fund
Vanguard Russell 3000 Index Fund
Vanguard Specialized Funds
Vanguard Dividend Growth Fund
Vanguard Energy Fund
Vanguard Real Estate Index Fund
Vanguard Trustees’ Equity Fund
Vanguard Emerging Markets Select Stock Fund
Vanguard International Value Fund
Vanguard Variable Insurance Funds
Vanguard Balanced Portfolio
Vanguard Capital Growth Portfolio
Vanguard Diversified Value Portfolio
Vanguard Equity Income Portfolio
Vanguard Equity Index Portfolio
Vanguard Growth Portfolio
Vanguard Mid-Cap Index Portfolio
Vanguard Real Estate Index Portfolio
Vanguard Small Company Growth Portfolio
Vanguard International Portfolio
Vanguard Whitehall Funds
Vanguard Global Minimum Volatility Fund
Vanguard High Dividend Yield Index Fund
Vanguard Mid-Cap Growth Fund
Vanguard Selected Value Fund
Vanguard Windsor Funds
Vanguard Windsor Fund
Vanguard Windsor II Fund
Vanguard World Fund
Vanguard Consumer Discretionary Index Fund
Vanguard Consumer Staples Index Fund
Vanguard Energy Index Fund
Vanguard FTSE Social Index Fund
Vanguard Financials Index Fund
Vanguard Health Care Index Fund
Vanguard Industrials Index Fund
Vanguard Information Technology Index Fund
Vanguard Materials Index Fund
Vanguard Mega Cap Index Fund
Vanguard Mega Cap Growth Index Fund
Vanguard Mega Cap Value Index Fund
Vanguard Communication Services Index Fund
Vanguard U.S. Growth Fund
Vanguard Utilities Index Fund
2.Miscellaneous. Except as modified by this Amendment, the Agreement shall remain unmodified, in full force and effect and all terms and conditions of the Agreement are hereby incorporated into and made part of this Amendment as if fully set forth herein.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute and deliver this Amendment as of the date set forth above.
JPMORGAN CHASE BANK, N.A. |
EACH OF THE OPEN-END MANAGEMENT |
|
|
INVESTMENT COMPANIES LISTED ON |
|
|
EXHIBIT 1 HERETO |
By: |
/s/ Carl Mehldau |
By: |
/s/ John Bendl |
Name: |
Carl Mehldau |
Name: |
John Bendl |
Title: |
Vice President |
Title: |
Chief Financial Officer |
THIRD AMENDMENT TO THE AMENDED AND RESTATED GLOBAL CUSTODY
AGREEMENT
This Amendment (this “Amendment”) to the AMENDED AND RESTATEDGLOBAL CUSTODY AGREEMENT, dated August 14, 2017, as amended or supplemented as of the date hereof (the “Agreement”), between JPMorgan Chase Bank, N.A. (“Bank”) and each open-ended management investment company listed on Exhibit 1 attached hereto (each,a “Trust”) is entered into and effective as of January 25, 2022 (the “Effective Date”).
W I T N E S S E T H:
WHEREAS, each Trust and Bank entered into the Agreement pursuant to which Bank provides custody and related services as more fully described therein; and
WHEREAS, the parties now wish to amend the Agreement as set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereby agree as follows:
1.Definitions. Terms defined in the Agreement shall, save to the extent that the context otherwise requires, bear the same respective meanings in this Amendment.
2.Amendments. The Agreement shall be amended as follows:
a.The current Exhibit 1 is hereby deleted in its entirely and replaced with the revised Exhibit 1 attached hereto.
b.Save as varied by this Amendment, the Agreement is confirmed and shall remain in full force and effect.
3.Representations. Each party represents to the other party that all representations contained in the Agreement are true and accurate as of the date of this Amendment, and that such representations are deemed to be given or repeated by each party, as the case may be, on the date of this Amendment.
4.Entire Agreement. This Amendment and the Agreement and any documents referred to in each of them, constitutes the whole agreement between the parties relating to their subject matter and supersedes and extinguishes any other drafts, agreements, undertakings, representations, warranties and arrangements of any nature, whether in writing or oral, relating to such subject matter. If any of the provisions of this Amendment are inconsistent with or in conflict with any of the provisions of theAgreement, then, to the extent of any such inconsistency or conflict, the provisions of this Amendment shall prevail.
5.Counterparts. This Amendment may be executed in several counterparts each of which will be deemed to be an original and together will constitute one and the same agreement.
6.Law and Jurisdiction. This Amendment shall be construed, regulated, and administered under the laws of the United States or State of New York, as applicable, without regard to New York’s principles regarding conflict of laws.
[remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day and year first above written.
EACH OF THE OPEN-END MANAGEMENT
INVESTMENT COMPANIES LISTED ON
SCHEDULE A HERETO
By: /s/Christine M. Buchanan
Name: Christine M. Buchanan
Title: Funds CFO
JPMORGAN CHASE BANK, N.A.
By: /s/Carl Mehldau
Name: Carl Mehldau
Title: Vice President
EXHIBIT 1
Vanguard Admiral Funds
Vanguard S&P 500 Growth Index Fund
Vanguard S&P 500 Value Index Fund Vanguard S&P Mid-Cap 400 Growth Index Fund Vanguard S&P Mid-Cap 400 Index Fund Vanguard S&P Mid-Cap 400 Value Index Fund Vanguard S&P Small-Cap 600 Growth Index Fund Vanguard S&P Small-Cap 600 Index Fund Vanguard S&P Small-Cap 600 Value Index Fund
Vanguard Bond Index Funds
Vanguard Inflation-Protected Securities Fund Vanguard Intermediate-Term Bond Index Fund Vanguard Long-Term Bond Index Fund Vanguard Short-Term Bond Index Fund Vanguard Total Bond Market Index Fund Vanguard Total Bond Market II Index Fund
Vanguard Charlotte Funds
Vanguard Global Credit Bond Fund
Vanguard Chester Funds
Vanguard Institutional Target Retirement 2015 Fund Vanguard Institutional Target Retirement 2020 Fund Vanguard Institutional Target Retirement 2025 Fund Vanguard Institutional Target Retirement 2030 Fund Vanguard Institutional Target Retirement 2035 Fund Vanguard Institutional Target Retirement 2040 Fund Vanguard Institutional Target Retirement 2045 Fund Vanguard Institutional Target Retirement 2050 Fund Vanguard Institutional Target Retirement 2055 Fund Vanguard Institutional Target Retirement 2060 Fund Vanguard Institutional Target Retirement 2065 Fund Vanguard Institutional Target Retirement Income Fund Vanguard Target Retirement 2015 Fund
Vanguard Target Retirement 2020 Fund
Vanguard Target Retirement 2025 Fund
Vanguard Target Retirement 2030 Fund
Vanguard Target Retirement 2035 Fund
Vanguard Target Retirement 2040 Fund
Vanguard Target Retirement 2045 Fund
Vanguard Target Retirement 2050 Fund
Vanguard Target Retirement 2055 Fund
Vanguard Target Retirement 2060 Fund
Vanguard Target Retirement 2065 Fund Vanguard Target Retirement Income Fund
Vanguard Fixed Income Securities Funds
Vanguard GNMA Fund
Vanguard Real Estate II Index Fund
Vanguard Horizon Funds
Vanguard International Core Stock Fund
Vanguard Index Funds
Vanguard Extended Market Index Fund
Vanguard Mid-Cap Growth Index Fund
Vanguard Mid-Cap Index Fund
Vanguard Mid-Cap Value Index Fund
Vanguard Small-Cap Growth Index Fund
Vanguard Small-Cap Index Fund
Vanguard Small-Cap Value Index Fund
Vanguard Total Stock Market Index Fund
Vanguard International Equity Index Funds Vanguard Emerging Markets Stock Index Fund
Vanguard Malvern Funds
Vanguard Core Bond Fund
Vanguard Institutional Intermediate-Term Bond Fund
Vanguard Institutional Short-Term Bond Fund
Vanguard Multi-Sector Income Bond Fund
Vanguard Core-Plus Bond Fund
Vanguard Scottsdale Funds
Vanguard Intermediate-Term Corporate Bond Index Fund Vanguard Intermediate-Term Treasury Index Fund Vanguard Long-Term Corporate Bond Index Fund Vanguard Long-Term Treasury Index Fund
Vanguard Mortgage-Backed Securities Index Fund Vanguard Short-Term Corporate Bond Index Fund Vanguard Short-Term Treasury Index Fund Vanguard Total Corporate Bond ETF
Vanguard Total World Bond ETF
Vanguard Specialized Funds
Vanguard Global Capital Cycles Fund
Vanguard Real Estate Index Fund
Vanguard Global ESG Select Stock Fund
Vanguard ST AR Funds
Vanguard LifeStrategy Conservative Growth Fund
Vanguard LifeStrategy Growth Fund
Vanguard LifeStrategy Income Fund
Vanguard LifeStrategy Moderate Growth Fund
Vanguard STAR Fund
Vanguard Total International Stock Index Fund
Vanguard Tax-Managed Funds
Vanguard Tax-Managed Balanced Fund
Vanguard Tax-Managed Capital Appreciation Fund
Vanguard Tax-Managed Small-Cap Fund
Vanguard Trustees' Equity Fund
Vanguard Diversified Equity Fund
Vanguard International Value Fund
Vanguard Valley Forge Funds
Vanguard Balanced Index Fund
Vanguard Managed Allocation Fund
Vanguard Variable Insurance Funds
Conservative Allocation Portfolio
Equity Index Portfolio
Global Bond Index Portfolio Mid-Cap Index Portfolio
Moderate Allocation Portfolio Real Estate Index Portfolio
Total International Stock Market Index Portfolio
Total Stock Market Index Portfolio
Vanguard Wellington Fund
Vanguard Wellington Fund
Vanguard Whitehall Funds
Vanguard High Dividend Yield Index Fund
Vanguard International Explorer Fund
Vanguard Advice Select International Growth Fund
Vanguard Advice Select Dividend Growth Fund
Vanguard Advice Select Global Value Fund
Vanguard China Select Stock Fund
Vanguard World Fund
Vanguard Extended Duration Treasury Index Fund
Vanguard Global Wellesley Income Fund
Vanguard Global Wellington Fund
Vanguard ESG U.S. Corporate Bond ETF
Vanguard ESG U.S. Stock ETF
Vanguard ESG International Stock ETF
Bank and each following Customer hereby agree that all of the terms and conditions as set forth in the Agreement except for Sections 2.1 and 2.2 are hereby incorporated by reference with respect to the Trusts and Funds listed below limited to their use of account number P 62749 in Vanguard Directly Managed Securities Lending transactions:
Vanguard Chester Funds
Vanguard PRIMECAP Fund
Vanguard Explorer Fund
Vanguard Explorer Fund
Vanguard Fenway Funds
Vanguard Equity Income Fund
Vanguard PRIMECAP Core Fund
Vanguard Horizon Funds
Vanguard Capital Opportunity Fund
Vanguard Global Equity Fund
Vanguard Strategic Equity Fund
Vanguard Strategic Small-Cap Equity Fund
Vanguard Index Funds
Vanguard Extended Market Index Fund
Vanguard 500 Index Fund
Vanguard Large-Cap Index Fund
Vanguard Mid-Cap Index Fund
Vanguard Small Cap Growth Index Fund
Vanguard Small Cap Value Index Fund
Vanguard Value Index Fund
Vanguard Institutional Index Funds
Vanguard Institutional Index Fund
Vanguard Institutional Total Stock Market Index Fund
Vanguard Quantitative Funds
Vanguard Growth and Income Fund
Vanguard Scottsdale Funds Vanguard Explorer Value Fund Vanguard Russell I 000 Index Fund Vanguard Russell 1000 Value Index Fund Vanguard Russell I 000 Growth Index Fund Vanguard Russell 2000 Index Fund Vanguard Russell 2000 Value Index Fund Vanguard Russell 2000 Growth Index Fund Vanguard Russell 3000 Index Fund
Vanguard Specialized Funds
Vanguard Dividend Growth Fund
Vanguard Energy Fund
Vanguard Real Estate Index Fund
Vanguard Trustees' Equity Fund
Vanguard Emerging Markets Select Stock Fund
Vanguard International Value Fund
Vanguard Variable Insurance Funds
Vanguard Balanced Portfolio
Vanguard Capital Growth Portfolio
Vanguard Diversified Value Portfolio
Vanguard Equity Income Portfolio
Vanguard Equity Index Portfolio
Vanguard Growth Portfolio
Vanguard Mid-Cap Index Portfolio
Vanguard Real Estate Index Portfolio
Vanguard Small Company Growth Portfolio
Vanguard International Portfolio
Vanguard Whitehall Funds
Vanguard Global Minimum Volatility Fund
Vanguard High Dividend Yield Index Fund
Vanguard Mid-Cap Growth Fund
Vanguard Selected Value Fund
Vanguard Advice Select International Growth Fund
Vanguard Advice Select Dividend Growth Fund
Vanguard Advice Select Global Value Fund
Vanguard China Select Stock Fund
Vanguard Windsor Funds
Vanguard Windsor Fund
Vanguard Windsor II
Fund
Vanguard World Fund
Vanguard Consumer Discretionary Index
Fund Vanguard Consumer Staples Index
Fund Vanguard Energy Index Fund
Vanguard FTSE Social Index
Fund Vanguard Financials
Index Fund Vanguard Health
Care Index Fund Vanguard
Industrials Index Fund
Vanguard Information Technology Index Fund
Vanguard Materials Index Fund
Vanguard Mega Cap Index Fund
Vanguard Mega Cap Growth Index
Fund Vanguard Mega Cap Value
Index Fund
FOURTH AMENDMENT TO THE AMENDED AND RESTATED GLOBAL
CUSTODYAGREEMENT
This Amendment (this “Amendment”) to the AMENDED AND RESTATEDGLOBAL CUSTODY AGREEMENT, dated August 14, 2017, as amended or supplementedas of the date hereof (the “Agreement”), between JPMorgan Chase Bank, N.A. (“Bank”) and each open-ended management investment company listed on Exhibit 1 attached hereto (each,a “Trust”) is entered into and effective as of March 25, 2022 (the “Effective Date”).
W I T N E S S E T H:
WHEREAS, each Trust and Bank entered into the Agreement pursuant to which Bank provides custody and related services as more fully described therein; and
WHEREAS, the parties now wish to amend the Agreement as set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereby agree as follows:
1.Definitions. Terms defined in the Agreement shall, save to the extent that the context otherwise requires, bear the same respective meanings in this Amendment.
2.Amendments. The Agreement shall be amended as follows:
a.The current Exhibit 1 is hereby deleted in its entirely and replaced with the revised Exhibit 1 attached hereto.
b.Save as varied by this Amendment, the Agreement is confirmed and shall remain in full force and effect.
3.Representations. Each party represents to the other party that all representations contained in the Agreement are true and accurate as of the date of this Amendment, and that such representations are deemed to be given or repeated by each party, as the case may be, on the date of this Amendment.
4.Entire Agreement. This Amendment and the Agreement and any documents referred to in each of them, constitutes the whole agreement between the parties relating to their subject matter and supersedes and extinguishes any other drafts, agreements, undertakings, representations, warranties and arrangements of any nature, whether in writing or oral, relating to such subject matter. If any of the provisions of this Amendment are inconsistent with or in conflict with any of the provisions of theAgreement, then, to the extent of any such inconsistency or conflict, the provisions of this Amendment shall prevail.
5.Counterparts. This Amendment may be executed in several counterparts each of which will be deemed to be an original and together will constitute one and the same agreement.
6.Law and Jurisdiction. This Amendment shall be construed, regulated, and administered under the laws of the United States or State of New York, as applicable, without regard to New York’s principles regarding conflict of laws.
[remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day and year first above written.
EACH OF THE OPEN-END MANAGEMENT
INVESTMENT COMPANIES LISTED ON
SCHEDULE A HERETO
By: /s/ Christine Buchanan
Name: Christine Buchanan
Title: Principal VGI, Funds CFO
JPMORGAN CHASE BANK, N.A.
By: /s/ Carl Mehldau
Name: Carl Mehldau
Title: Vice President
EXHIBIT 1
Vanguard Admiral Funds
Vanguard S&P 500 Growth Index Fund
Vanguard S&P 500 Value Index Fund
Vanguard S&P Mid-Cap 400 Growth Index Fund Vanguard S&P Mid-Cap 400 Index Fund Vanguard S&P Mid-Cap 400 Value Index Fund Vanguard S&P Small-Cap 600 Growth Index Fund Vanguard S&P Small-Cap 600 Index Fund Vanguard S&P Small-Cap 600 Value Index Fund
Vanguard Bond Index Funds
Vanguard Inflation-Protected Securities Fund Vanguard Intermediate-Term Bond Index Fund Vanguard Long-Term Bond Index Fund Vanguard Short-Term Bond Index Fund Vanguard Total Bond Market Index Fund Vanguard Total Bond Market II Index Fund
Vanguard Charlotte Funds
Vanguard Global Credit Bond Fund
Vanguard Chester Funds
Vanguard Target Retirement 2015 Fund
Vanguard Target Retirement 2020 Fund
Vanguard Target Retirement 2025 Fund
Vanguard Target Retirement 2030 Fund
Vanguard Target Retirement 2035 Fund
Vanguard Target Retirement 2040 Fund
Vanguard Target Retirement 2045 Fund
Vanguard Target Retirement 2050 Fund
Vanguard Target Retirement 2055 Fund
Vanguard Target Retirement 2060 Fund
Vanguard Target Retirement 2065 Fund
Vanguard Target Retirement Income Fund
Vanguard Target Retirement 2070 Fund
Vanguard Fixed Income Securities Funds
Vanguard GNMA Fund
Vanguard Real Estate II Index Fund
Vanguard Horizon Funds
Vanguard International Core Stock Fund
Vanguard Index Funds
Vanguard Extended Market Index Fund
Vanguard Mid-Cap Growth Index Fund
Vanguard Mid-Cap Index Fund
Vanguard Mid-Cap Value Index Fund
Vanguard Small-Cap Growth Index Fund
Vanguard Small-Cap Index Fund
Vanguard Small-Cap Value Index Fund
Vanguard Total Stock Market Index Fund
Vanguard International Equity Index Funds Vanguard Emerging Markets Stock Index Fund
Vanguard Malvern Funds
Vanguard Core Bond Fund
Vanguard Institutional Intermediate-Term Bond Fund
Vanguard Institutional Short-Term Bond Fund
Vanguard Multi-Sector Income Bond Fund
Vanguard Core-Plus Bond Fund
Vanguard Scottsdale Funds
Vanguard Intermediate-Term Corporate Bond Index Fund Vanguard Intermediate-Term Treasury Index Fund Vanguard Long-Term Corporate Bond Index Fund Vanguard Long-Term Treasury Index Fund Vanguard Mortgage-Backed Securities Index Fund Vanguard Short-Term Corporate Bond Index Fund Vanguard Short-Term Treasury Index Fund Vanguard Total Corporate Bond ETF
Vanguard Total World Bond ETF
Vanguard Specialized Funds
Vanguard Global Capital Cycles Fund
Vanguard Real Estate Index Fund
Vanguard Global ESG Select Stock Fund
Vanguard STAR Funds
Vanguard LifeStrategy Conservative Growth Fund
Vanguard LifeStrategy Growth Fund
Vanguard LifeStrategy Income Fund
Vanguard LifeStrategy Moderate Growth Fund
Vanguard STAR Fund
Vanguard Total International Stock Index Fund
Vanguard Tax-Managed Funds
Vanguard Tax-Managed Balanced Fund
Vanguard Tax-Managed Capital Appreciation Fund
Vanguard Tax-Managed Small-Cap Fund
Vanguard Trustees' Equity Fund
Vanguard Diversified Equity Fund
Vanguard International Value Fund
Vanguard Valley Forge Funds
Vanguard Balanced Index Fund
Vanguard Managed Allocation Fund
Vanguard Variable Insurance Funds
Conservative Allocation Portfolio
Equity Index Portfolio
Global Bond Index Portfolio Mid-Cap Index Portfolio
Moderate Allocation PortfolioReal Estate Index Portfolio
Total International Stock Market Index Portfolio
Total Stock Market Index Portfolio
Vanguard Wellington Fund
Vanguard Wellington Fund
Vanguard Whitehall Funds
Vanguard High Dividend Yield Index Fund
Vanguard International Explorer Fund
Vanguard Advice Select International Growth Fund
Vanguard Advice Select Dividend Growth Fund
Vanguard Advice Select Global Value Fund
Vanguard World Fund
Vanguard Extended Duration Treasury Index Fund
Vanguard Global Wellesley Income Fund
Vanguard Global Wellington Fund
Vanguard ESG U.S. Corporate Bond ETF
Vanguard ESG U.S. Stock ETF
Vanguard ESG International Stock ETF
Bank and each following Customer hereby agree that all of the terms and conditions as set forth in the Agreement except for Sections 2.1 and 2.2 are hereby incorporated by reference with respect to the Trusts and Funds listed below limited to their use of account number P 62749 in Vanguard Directly Managed Securities Lending transactions:
Vanguard Chester Funds
Vanguard PRIMECAP Fund
Vanguard Explorer Fund
Vanguard Explorer Fund
Vanguard Fenway Funds
Vanguard Equity Income Fund
Vanguard PRIMECAP Core Fund
Vanguard Horizon Funds
Vanguard Capital Opportunity Fund
Vanguard Global Equity Fund
Vanguard Strategic Equity Fund
Vanguard Strategic Small-Cap Equity Fund
Vanguard Index Funds
Vanguard Extended Market Index Fund
Vanguard 500 Index Fund
Vanguard Large-Cap Index Fund
Vanguard Mid-Cap Index Fund
Vanguard Small Cap Growth Index Fund
Vanguard Small Cap Value Index Fund
Vanguard Value Index Fund
Vanguard Institutional Index Funds
Vanguard Institutional Index Fund
Vanguard Institutional Total Stock Market Index Fund
Vanguard Quantitative Funds
Vanguard Growth and Income Fund
Vanguard Scottsdale Funds
Vanguard Explorer Value Fund
Vanguard Russell I 000 Index Fund
Vanguard Russell 1000 Value Index Fund
Vanguard Russell I 000 Growth Index Fund
Vanguard Russell 2000 Index Fund
Vanguard Russell 2000 Value Index Fund
Vanguard Russell 2000 Growth Index Fund
Vanguard Russell 3000 Index Fund
Vanguard Specialized Funds
Vanguard Dividend Growth Fund
Vanguard Energy Fund
Vanguard Real Estate Index Fund
Vanguard Trustees' Equity Fund
Vanguard Emerging Markets Select Stock Fund Vanguard International Value Fund
Vanguard Variable Insurance Funds
Vanguard Balanced Portfolio
Vanguard Capital Growth Portfolio
Vanguard Diversified Value Portfolio
Vanguard Equity Income Portfolio
Vanguard Equity Index Portfolio
Vanguard Growth Portfolio
Vanguard Mid-Cap Index Portfolio
Vanguard Real Estate Index Portfolio
Vanguard Small Company Growth Portfolio
Vanguard International Portfolio
Vanguard Whitehall Funds
Vanguard Global Minimum Volatility Fund
Vanguard High Dividend Yield Index Fund
Vanguard Mid-Cap Growth Fund
Vanguard Selected Value Fund
Vanguard Advice Select International Growth Fund
Vanguard Advice Select Dividend Growth Fund
Vanguard Advice Select Global Value Fund
Vanguard Windsor Funds
Vanguard Windsor Fund
Vanguard Windsor II Fund
Vanguard World Fund
Vanguard Consumer Discretionary Index Fund
Vanguard Consumer Staples Index Fund
Vanguard Energy Index Fund
Vanguard FTSE Social Index Fund
Vanguard Financials Index Fund
Vanguard Health Care Index Fund
Vanguard Industrials Index Fund
Vanguard Information Technology Index Fund
Vanguard Materials Index Fund
Vanguard Mega Cap Index Fund
Vanguard Mega Cap Growth Index Fund
Vanguard Mega Cap Value Index Fund
FIFTH AMENDMENT TO THE AMENDED AND RESTATED GLOBAL
CUSTODYAGREEMENT
This Fifth Amendment (this “Amendment”) to the AMENDED AND RESTATED GLOBAL CUSTODY AGREEMENT, dated August 14, 2017, as amended or supplementedas of the date hereof (the “Agreement”), between JPMorgan Chase Bank, N.A. (“Bank”) and each open-ended management investment company listed on Exhibit 1 attached hereto (each,a “Trust”) is entered into and effective as of October 3, 2022 (the “Effective Date”).
W I T N E S S E T H:
WHEREAS, each Trust and Bank entered into the Agreement pursuant to which Bank provides custody and related services as more fully described therein; and
WHEREAS, the parties now wish to amend the Agreement as set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereby agree as follows:
1.Definitions. Terms defined in the Agreement shall, save to the extent that the contextotherwise requires, bear the same respective meanings in this Amendment.
2.Amendments. The Agreement shall be amended as follows:
a.The current Exhibit 1 is hereby deleted in its entirely and replaced with the revisedExhibit 1 attached hereto.
b.Save as varied by this Amendment, the Agreement is confirmed and shall remainin full force and effect.
3.Representations. Each party represents to the other party that all representations contained in the Agreement are true and accurate as of the date of this Amendment, and that such representations are deemed to be given or repeated by each party, as the case may be, on the date of this Amendment.
4.Entire Agreement. This Amendment and the Agreement and any documents referred to in each of them, constitutes the whole agreement between the parties relating to their subject matter and supersedes and extinguishes any other drafts, agreements, undertakings, representations, warranties and arrangements of any nature, whether in writing or oral, relating to such subject matter. If any of the provisions of this Amendment are inconsistent with or in conflict with any of the provisions of theAgreement, then, to the extent of any such inconsistency or conflict, the provisions of this Amendment shall prevail.
5.Counterparts. This Amendment may be executed in several counterparts each of which will be deemed to be an original and together will constitute one and the same agreement.
6.Law and Jurisdiction. This Amendment shall be construed, regulated, and administered under the laws of the United States or State of New York, as applicable, without regard to New York’s principles regarding conflict of laws.
[remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day and yearfirst above written.
EACH OF THE OPEN-END MANAGEMENT
INVESTMENT COMPANIES LISTED ON
SCHEDULE A HERETO
By: /s/ Christine Buchanan
Name: Christine Buchanan
Title: Principal VGI, Funds CFO
Date: 10/19/22
JPMORGAN CHASE BANK, N.A.
By: /s/ Nicole Olech
Name: Nicole Olech
Title: Vice President
Date: October 20, 2022
EXHIBIT 1
Vanguard Admiral Funds
Vanguard S&P 500 Growth Index Fund
Vanguard S&P 500 Value Index Fund
Vanguard S&P Mid-Cap 400 Growth Index Fund Vanguard S&P Mid-Cap 400 Index Fund Vanguard S&P Mid-Cap 400 Value Index Fund Vanguard S&P Small-Cap 600 Growth Index Fund Vanguard S&P Small-Cap 600 Index Fund Vanguard S&P Small-Cap 600 Value Index Fund
Vanguard Bond Index Funds
Vanguard Inflation-Protected Securities Fund Vanguard Intermediate-Term Bond Index Fund Vanguard Long-Term Bond Index Fund Vanguard Short-Term Bond Index Fund Vanguard Total Bond Market Index Fund Vanguard Total Bond Market II Index Fund
Vanguard Charlotte Funds
Vanguard Global Credit Bond Fund
Vanguard Chester Funds
Vanguard Target Retirement 2020 Fund
Vanguard Target Retirement 2025 Fund
Vanguard Target Retirement 2030 Fund
Vanguard Target Retirement 2035 Fund
Vanguard Target Retirement 2040 Fund
Vanguard Target Retirement 2045 Fund
Vanguard Target Retirement 2050 Fund
Vanguard Target Retirement 2055 Fund
Vanguard Target Retirement 2060 Fund
Vanguard Target Retirement 2065 Fund
Vanguard Target Retirement 2070
Fund
Vanguard Target Retirement Income Fund
Vanguard Fixed Income Securities
FundsVanguard GNMA
Fund
Vanguard Real Estate II Index Fund
Vanguard Horizon Funds
Vanguard International Core Stock Fund
Vanguard Index Funds
Vanguard Extended Market Index Fund
Vanguard Mid-Cap Growth Index Fund
Vanguard Mid-Cap Index Fund
Vanguard Mid-Cap Value Index Fund
Vanguard Small-Cap Growth Index Fund
Vanguard Small-Cap Index Fund
Vanguard Small-Cap Value Index Fund
Vanguard Total Stock Market Index Fund
Vanguard International Equity Index Funds Vanguard Emerging Markets Stock Index Fund
Vanguard Malvern Funds
Vanguard Core Bond Fund
Vanguard Institutional Intermediate-Term Bond Fund
Vanguard Institutional Short-Term Bond Fund
Vanguard Multi-Sector Income Bond Fund
Vanguard Core-Plus Bond Fund
Vanguard Scottsdale Funds
Vanguard Intermediate-Term Corporate Bond Index Fund Vanguard Intermediate-Term Treasury Index Fund Vanguard Long-Term Corporate Bond Index Fund Vanguard Long-Term Treasury Index Fund Vanguard Mortgage-Backed Securities Index Fund Vanguard Short-Term Corporate Bond Index Fund Vanguard Short-Term Treasury Index Fund Vanguard Total Corporate Bond ETF
Vanguard Total World Bond ETF
Vanguard Specialized Funds
Vanguard Global Capital Cycles Fund
Vanguard Real Estate Index Fund
Vanguard Global ESG Select Stock Fund
Vanguard STAR Funds
Vanguard LifeStrategy Conservative Growth Fund
Vanguard LifeStrategy Growth Fund
Vanguard LifeStrategy Income Fund
Vanguard LifeStrategy Moderate Growth Fund
Vanguard STAR Fund
Vanguard Total International Stock Index Fund
Vanguard Tax-Managed Funds
Vanguard Tax-Managed Balanced Fund
Vanguard Tax-Managed Capital Appreciation
Fund
Vanguard Tax-Managed Small-Cap Fund
Vanguard Trustees' Equity Fund
Vanguard Diversified Equity
Fund
Vanguard International Value
Fund
Vanguard Valley Forge Funds
Vanguard Balanced Index Fund
Vanguard Managed Allocation
Fund
Vanguard Variable Insurance Funds
Conservative Allocation Portfolio
Equity Index Portfolio
Global Bond Index Portfolio Mid-Cap Index Portfolio
Moderate Allocation PortfolioReal Estate Index Portfolio
Total International Stock Market Index Portfolio
Total Stock Market Index Portfolio
Vanguard Wellington Fund
Vanguard Wellington
Fund
Vanguard Whitehall Funds
Vanguard High Dividend Yield Index Fund
Vanguard International Explorer Fund
Vanguard Advice Select International Growth Fund
Vanguard Advice Select Dividend Growth Fund
Vanguard Advice Select Global Value Fund
Vanguard World Fund
Vanguard Extended Duration Treasury Index Fund
Vanguard Global Wellesley Income Fund
Vanguard Global Wellington Fund
Vanguard ESG U.S. Corporate Bond ETF
Vanguard ESG U.S. Stock ETF
Vanguard ESG International Stock ETF
Bank and each following Customer hereby agree that all of the terms and conditions as set forth in theAgreement except for Sections 2.1 and 2.2 are hereby incorporated by reference with respect to the Trusts and Funds listed below limited to their use of account number P 62749 in Vanguard Directly Managed Securities Lending transactions:
Vanguard Chester Funds
Vanguard PRIMECAP Fund
Vanguard Explorer Fund
Vanguard Explorer Fund
Vanguard Fenway Funds
Vanguard Equity Income
Fund Vanguard PRIMECAP
Core Fund
Vanguard Horizon Funds
Vanguard Capital Opportunity
FundVanguard Global Equity
Fund
Vanguard Strategic Equity
Fund
Vanguard Strategic Small-Cap Equity Fund
Vanguard Index Funds
Vanguard Extended Market Index
FundVanguard 500 Index Fund
Vanguard Large-Cap Index Fund
Vanguard Mid-Cap Index Fund
Vanguard Small Cap Growth
Index FundVanguard Small Cap
Value Index Fund Vanguard
Value Index Fund
Vanguard Institutional Index
Funds
Vanguard Institutional Index
Fund
Vanguard Institutional Total Stock Market Index Fund
Vanguard Quantitative Funds
Vanguard Growth and Income Fund
Vanguard Scottsdale Funds Vanguard Explorer Value Fund Vanguard Russell 1000 Index Fund Vanguard Russell 1000 Value Index Fund Vanguard Russell 1000 Growth Index Fund Vanguard Russell 2000 Index Fund Vanguard Russell 2000 Value Index Fund Vanguard Russell 2000 Growth Index Fund Vanguard Russell 3000 Index Fund
Vanguard Specialized Funds
Vanguard Dividend Growth
FundVanguard Energy
Fund
Vanguard Real Estate Index
Fund
Vanguard Trustees' Equity Fund
Vanguard Emerging Markets Select Stock
Fund
Vanguard International Value Fund
Vanguard Variable Insurance Funds
Vanguard Balanced Portfolio
Vanguard Capital Growth Portfolio
Vanguard Diversified Value Portfolio
Vanguard Equity Income Portfolio
Vanguard Equity Index Portfolio
Vanguard Growth Portfolio
Vanguard Mid-Cap Index Portfolio
Vanguard Real Estate Index Portfolio
Vanguard Small Company Growth Portfolio
Vanguard International Portfolio
Vanguard Whitehall Funds
Vanguard Global Minimum Volatility Fund
Vanguard High Dividend Yield Index Fund
Vanguard Mid-Cap Growth Fund
Vanguard Selected Value Fund
Vanguard Advice Select International Growth Fund
Vanguard Advice Select Dividend Growth Fund
Vanguard Advice Select Global Value Fund
Vanguard Windsor Funds
Vanguard Windsor Fund
Vanguard Windsor II Fund
Vanguard World Fund
Vanguard Consumer Discretionary Index Fund
Vanguard Consumer Staples Index Fund
Vanguard Energy Index Fund
Vanguard FTSE Social Index Fund
Vanguard Financials Index Fund
Vanguard Health Care Index Fund
Vanguard Industrials Index Fund
Vanguard Information Technology Index Fund
Vanguard Materials Index Fund
Vanguard Mega Cap Index Fund
Vanguard Mega Cap Growth Index Fund
Vanguard Mega Cap Value Index Fund
SIXTH AMENDMENT TO THE AMENDED AND RESTATED GLOBAL CUSTODY
AGREEMENT
This Sixth Amendment (this “Amendment”) to the AMENDED AND RESTATED GLOBAL CUSTODY AGREEMENT, dated August 14, 2017, as amended or supplemented as of the date hereof (the “Agreement”), between JPMorgan Chase Bank, N.A. (“Bank”) and each open-ended management investment company listed on Exhibit 1 attached hereto (each, a “Trust”) is entered into and effective as of April 7, 2023 (the “Effective Date”).
W I T N E S S E T H:
WHEREAS, each Trust and Bank entered into the Agreement pursuant to which Bank provides custody and related services as more fully described therein; and
WHEREAS, the parties now wish to amend the Agreement as set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereby agree as follows:
1.Definitions. Terms defined in the Agreement shall, save to the extent that the context otherwise requires, bear the same respective meanings in this Amendment.
2.Amendments. The Agreement shall be amended as follows:
a.The current Exhibit 1 is hereby deleted in its entirely and replaced with the revised Exhibit 1 attached hereto.
b.Save as varied by this Amendment, the Agreement is confirmed and shall remain in full force and effect.
3.Representations. Each party represents to the other party that all representations contained in the Agreement are true and accurate as of the date of this Amendment, and that such representations are deemed to be given or repeated by each party, as the case may be, on the date of this Amendment.
4.Entire Agreement. This Amendment and the Agreement and any documents referred to in each of them, constitutes the whole agreement between the parties relating to their subject matter and supersedes and extinguishes any other drafts, agreements, undertakings, representations, warranties and arrangements of any nature, whether in writing or oral, relating to such subject matter. If any of the provisions of this Amendment are inconsistent with or in conflict with any of the provisions of the Agreement, then, to the extent of any such inconsistency or conflict, the provisions of this Amendment shall prevail.
5.Counterparts. This Amendment may be executed in several counterparts each of which will be deemed to be an original and together will constitute one and the same agreement.
6.Law and Jurisdiction. This Amendment shall be construed, regulated, and administered under the laws of the United States or State of New York, as applicable, without regard to New York’s principles regarding conflict of laws.
[remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day and year first above written.
EACH OF THE OPEN-END MANAGEMENT INVESTMENT COMPANIES LISTED ON SCHEDULE A HERETO
By: /s/ Christine M. Muchanan
Name: Christine Buchanan
Title: Chief Financial Officer – U.S. Funds
JPMORGAN CHASE BANK, N.A.
By: /s/ Carl Mehldau
Name: Carl Mehldau
Title: Executive Director
Date: May 11, 2023
EXHIBIT 1
Vanguard Admiral Funds
Vanguard S&P 500 Growth Index
FundVanguard S&P 500 Value
Index Fund
Vanguard S&P Mid-Cap 400 Growth Index
Fund Vanguard S&P Mid-Cap 400 Index
Fund
Vanguard S&P Mid-Cap 400 Value Index
Fund Vanguard S&P Small-Cap 600 Growth
Index FundVanguard S&P Small-Cap 600
Index Fund
Vanguard S&P Small-Cap 600 Value Index
Fund
Vanguard Bond Index Funds
Vanguard Inflation-Protected Securities
Fund Vanguard Intermediate-Term Bond
Index FundVanguard Long-Term Bond
Index Fund
Vanguard Short-Term Bond Index Fund
Vanguard Total Bond Market Index Fund
Vanguard Total Bond Market II Index
Fund
Vanguard Charlotte Funds
Vanguard Global Credit Bond Fund
Vanguard Chester Funds
Vanguard Target Retirement 2020 Fund
Vanguard Target Retirement 2025 Fund
Vanguard Target Retirement 2030 Fund
Vanguard Target Retirement 2035 Fund
Vanguard Target Retirement 2040 Fund
Vanguard Target Retirement 2045 Fund
Vanguard Target Retirement 2050 Fund
Vanguard Target Retirement 2055 Fund
Vanguard Target Retirement 2060 Fund
Vanguard Target Retirement 2065 Fund
Vanguard Target Retirement Income Fund
Vanguard Target Retirement 2070 Fund
Vanguard Fixed Income Securities Funds
Vanguard GNMA Fund
Vanguard Real Estate II Index Fund
Vanguard Horizon Funds
Vanguard International Core Stock Fund
Vanguard Index Funds
Vanguard Extended Market Index
Fund Vanguard Mid-Cap Growth
Index Fund Vanguard Mid-Cap
Index Fund
Vanguard Mid-Cap Value Index
Fund Vanguard Small-Cap Growth
Index FundVanguard Small-Cap
Index Fund
Vanguard Small-Cap Value Index Fund
Vanguard Total Stock Market Index Fund
Vanguard International Equity Index Funds Vanguard Emerging Markets Stock Index Fund
Vanguard Malvern Funds
Vanguard Core Bond Fund
Vanguard Institutional Intermediate-Term Bond Fund
Vanguard Institutional Short-Term Bond Fund
Vanguard Multi-Sector Income Bond Fund
Vanguard Core-Plus Bond Fund
Vanguard Scottsdale Funds
Vanguard Intermediate-Term Corporate Bond Index
Fund
Vanguard Intermediate-Term Treasury Index Fund
Vanguard Long-Term Corporate Bond Index Fund
Vanguard Long-Term Treasury Index Fund
Vanguard Mortgage-Backed Securities Index Fund
Vanguard Short-Term Corporate Bond Index Fund
Vanguard Short-Term Treasury Index Fund
Vanguard Total Corporate Bond ETF
Vanguard Total World Bond ETF
Vanguard Specialized Funds
Vanguard Global Capital Cycles
Fund Vanguard Real Estate Index
Fund
Vanguard Global ESG Select Stock Fund
Vanguard STAR Funds
Vanguard LifeStrategy Conservative Growth
FundVanguard LifeStrategy Growth Fund
Vanguard LifeStrategy Income Fund
Vanguard LifeStrategy Moderate Growth Fund
Vanguard STAR Fund
Vanguard Total International Stock Index Fund
Vanguard Tax-Managed Funds
Vanguard Tax-Managed Balanced Fund
Vanguard Tax-Managed Capital Appreciation
Fund
Vanguard Tax-Managed Small-Cap Fund
Vanguard Trustees' Equity Fund
Vanguard Diversified Equity Fund
Vanguard International Value Fund
Vanguard Valley Forge Funds
Vanguard Balanced Index Fund
Vanguard Managed Allocation Fund
Vanguard Variable Insurance Funds
Conservative Allocation
Portfolio
Equity Index Portfolio
Global Bond Index Portfolio
Mid-Cap Index Portfolio
Moderate Allocation Portfolio
Real Estate Index Portfolio
Total International Stock Market Index Portfolio
Total Stock Market Index Portfolio
Vanguard Wellington Fund
Vanguard Wellington
Fund
Vanguard Whitehall Funds
Vanguard High Dividend Yield Index Fund
Vanguard International Explorer Fund
Vanguard Advice Select International Growth
Fund
Vanguard Advice Select Dividend Growth Fund
Vanguard Advice Select Global Value Fund
Vanguard World Fund
Vanguard Extended Duration Treasury Index
FundVanguard Global Wellesley Income
Fund
Vanguard Global Wellington Fund
Vanguard ESG U.S. Corporate Bond
ETFVanguard ESG U.S. Stock ETF
Vanguard ESG International Stock
ETF
The Funds listed directly below have been added to Exhibit 1 in connection with the opening and maintenance of one or more custody accounts in the name of such Funds for the benefit of State Street Bank and Trust Company to hold financial assets and cash pursuant to the Account Control Agreement, dated April 7, 2023, among each open-end management investment company or series thereof registered with the U.S. Securities and Exchange Commission under the 1940 Act that is identified on Exhibit A attached thereto, as amended from time to time, severally and not jointly, State Street Bank and Trust Company and JPMorgan Chase Bank, N.A.
Vanguard Charlotte Funds
Vanguard Total International Bond Index Fund
Vanguard Total International Bond II Index Fund
Vanguard Fixed Income Securities Funds
Vanguard Short-Term Investment-Grade Fund
Bank and each following Customer hereby agree that all of the terms and conditions as set forth in theAgreement except for Sections 2.1 and 2.2 are hereby incorporated by reference with respect to the Trusts and Funds listed below limited to their use of account number P
62749 in Vanguard Directly Managed Securities Lending transactions:
Vanguard Chester Funds
Vanguard PRIMECAP Fund
Vanguard Explorer Fund
Vanguard Explorer Fund
Vanguard Fenway Funds
Vanguard Equity Income
Fund Vanguard PRIMECAP
Core Fund
Vanguard Horizon Funds
Vanguard Capital Opportunity
FundVanguard Global Equity
Fund
Vanguard Strategic Equity Fund
Vanguard Strategic Small-Cap Equity Fund
Vanguard Index Funds
Vanguard Extended Market Index
FundVanguard 500 Index Fund
Vanguard Large-Cap Index Fund
Vanguard Mid-Cap Index Fund
Vanguard Small Cap Growth Index
FundVanguard Small Cap Value
Index Fund Vanguard Value Index
Fund
Vanguard Institutional Index Funds
Vanguard Institutional Index
Fund
Vanguard Institutional Total Stock Market Index Fund
Vanguard Quantitative Funds
Vanguard Growth and Income Fund
Vanguard Scottsdale Funds
Vanguard Explorer Value Fund
Vanguard Russell 1000 Index Fund
Vanguard Russell 1000 Value Index
Fund Vanguard Russell 1000 Growth
Index FundVanguard Russell 2000
Index Fund
Vanguard Russell 2000 Value Index Fund
Vanguard Russell 2000 Growth Index Fund
Vanguard Russell 3000 Index Fund
Vanguard Specialized Funds
Vanguard Dividend Growth
FundVanguard Energy Fund
Vanguard Real Estate Index
Fund
Vanguard Trustees' Equity Fund
Vanguard Emerging Markets Select Stock
Fund
Vanguard International Value Fund
Vanguard Variable Insurance Funds
Vanguard Balanced Portfolio
Vanguard Capital Growth Portfolio
Vanguard Diversified Value Portfolio
Vanguard Equity Income Portfolio
Vanguard Equity Index Portfolio
Vanguard Growth Portfolio
Vanguard Mid-Cap Index Portfolio
Vanguard Real Estate Index Portfolio
Vanguard Small Company Growth Portfolio
Vanguard International Portfolio
Vanguard Whitehall Funds
Vanguard Global Minimum Volatility Fund
Vanguard High Dividend Yield Index Fund
Vanguard Mid-Cap Growth Fund
Vanguard Selected Value Fund
Vanguard Advice Select International Growth
Fund
Vanguard Advice Select Dividend Growth Fund
Vanguard Advice Select Global Value Fund
Vanguard Windsor Funds
Vanguard Windsor Fund
Vanguard Windsor II Fund
Vanguard World Fund
Vanguard Consumer Discretionary Index Fund
Vanguard Consumer Staples Index Fund
Vanguard Energy Index Fund
Vanguard FTSE Social Index Fund
Vanguard Financials Index Fund
Vanguard Health Care Index Fund
Vanguard Industrials Index Fund
Vanguard Information Technology Index
FundVanguard Materials Index Fund
Vanguard Mega Cap Index Fund
Vanguard Mega Cap Growth Index Fund
Vanguard Mega Cap Value Index Fund
SEVENTH AMENDMENT TO THE AMENDED AND RESTATED GLOBAL
CUSTODYAGREEMENT
This Seventh Amendment (this “Amendment”) to the AMENDED AND RESTATED GLOBAL CUSTODY AGREEMENT, dated August 14, 2017, as amended or supplemented as of the date hereof (the “Agreement”), between JPMorgan Chase Bank, N.A. (“Bank”) and each open-ended management investment company listed on Exhibit 1 attached hereto (each,
a“Trust”) is entered into and effective as of October 25, 2023 (the “Effective Date”).
W I T N E S S E T H:
WHEREAS, each Trust and Bank entered into the Agreement pursuant to which Bank provides custody and related services as more fully described therein; and
WHEREAS, the parties now wish to amend the Agreement as set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereby agree as follows:
7.Definitions. Terms defined in the Agreement shall, save to the extent that the context otherwise requires, bear the same respective meanings in this Amendment.
8.Amendments. The Agreement shall be amended as follows:
a.The current Exhibit 1 is hereby deleted in its entirely and replaced with the revised Exhibit 1 attached hereto.
b.Save as varied by this Amendment, the Agreement is confirmed and shall remain in full force and effect.
9.Representations. Each party represents to the other party that all representations contained in the Agreement are true and accurate as of the date of this Amendment, and that such representations are deemed to be given or repeated by each party, as the case may be, on the date of this Amendment.
10.Entire Agreement. This Amendment and the Agreement and any documents referred to in each of them, constitutes the whole agreement between the parties relating to their subject matter and supersedes and extinguishes any other drafts, agreements, undertakings, representations, warranties and arrangements of any nature, whether in writing or oral, relating to such subject matter. If any of the provisions of this Amendment are inconsistent with or in conflict with any of the provisions of theAgreement, then, to the extent of any such inconsistency or conflict, the provisions of this Amendment shall prevail.
11.Counterparts. This Amendment may be executed in several counterparts each of which will be deemed to be an original and together will constitute one and the same agreement.
12.Law and Jurisdiction. This Amendment shall be construed, regulated, and administered under the laws of the United States or State of New York, as applicable, without regard to New York’s principles regarding conflict of laws.
[remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day and yearfirst above written.
EACH OF THE OPEN-END MANAGEMENT
INVESTMENT COMPANIES LISTED ON SCHEDULE A
HERETO
By: /s/ Christine Buchanan
Name: Christine Buchanan
Title: Funds CFO
JPMORGAN CHASE BANK, N.A.
By: /s/Carl Mehldau
Name: Carl Mehldau
Title: Executive Director
Date: October 25, 2023
EXHIBIT 1
Vanguard Admiral Funds
Vanguard S&P 500 Growth Index Fund
Vanguard S&P 500 Value Index Fund
Vanguard S&P Mid-Cap 400 Growth Index Fund Vanguard S&P Mid-Cap 400 Index Fund Vanguard S&P Mid-Cap 400 Value Index Fund Vanguard S&P Small-Cap 600 Growth Index Fund Vanguard S&P Small-Cap 600 Index Fund Vanguard S&P Small-Cap 600 Value Index Fund
Vanguard Bond Index Funds
Vanguard Inflation-Protected Securities Fund Vanguard Intermediate-Term Bond Index Fund Vanguard Long-Term Bond Index Fund Vanguard Short-Term Bond Index Fund Vanguard Total Bond Market Index Fund Vanguard Total Bond Market II Index Fund
Vanguard Charlotte Funds
Vanguard Global Credit Bond Fund
Vanguard Chester Funds
Vanguard Target Retirement 2020 Fund
Vanguard Target Retirement 2025 Fund
Vanguard Target Retirement 2030 Fund
Vanguard Target Retirement 2035 Fund
Vanguard Target Retirement 2040 Fund
Vanguard Target Retirement 2045 Fund
Vanguard Target Retirement 2050 Fund
Vanguard Target Retirement 2055 Fund
Vanguard Target Retirement 2060 Fund
Vanguard Target Retirement 2065 Fund
Vanguard Target Retirement Income Fund
Vanguard Target Retirement 2070 Fund
Vanguard Fixed Income Securities Funds
Vanguard GNMA Fund
Vanguard Real Estate II Index Fund
Vanguard Horizon Funds
Vanguard International Core Stock Fund
Vanguard Index Funds
Vanguard Extended Market Index Fund
Vanguard Mid-Cap Growth Index Fund
Vanguard Mid-Cap Index Fund
Vanguard Mid-Cap Value Index Fund
Vanguard Small-Cap Growth Index Fund
Vanguard Small-Cap Index Fund
Vanguard Small-Cap Value Index Fund
Vanguard Total Stock Market Index Fund
Vanguard International Equity Index Funds Vanguard Emerging Markets Stock Index Fund
Vanguard Malvern Funds
Vanguard Core Bond Fund
Vanguard Institutional Intermediate-Term Bond Fund
Vanguard Institutional Short-Term Bond Fund
Vanguard Multi-Sector Income Bond Fund
Vanguard Core-Plus Bond Fund
Vanguard Core Bond ETF
Vanguard Core-Plus Bond ETF
Vanguard Scottsdale Funds
Vanguard Intermediate-Term Corporate Bond Index Fund Vanguard Intermediate-Term Treasury Index Fund Vanguard Long-Term Corporate Bond Index Fund Vanguard Long-Term Treasury Index Fund Vanguard Mortgage-Backed Securities Index Fund Vanguard Short-Term Corporate Bond Index Fund Vanguard Short-Term Treasury Index Fund Vanguard Total Corporate Bond ETF
Vanguard Total World Bond ETF
Vanguard Specialized Funds
Vanguard Global Capital Cycles Fund
Vanguard Real Estate Index Fund
Vanguard Global ESG Select Stock Fund
Vanguard STAR Funds
Vanguard LifeStrategy Conservative Growth Fund
Vanguard LifeStrategy Growth Fund
Vanguard LifeStrategy Income Fund
Vanguard LifeStrategy Moderate Growth Fund
Vanguard STAR Fund
Vanguard Total International Stock Index Fund
Vanguard Tax-Managed Funds
Vanguard Tax-Managed Balanced Fund
Vanguard Tax-Managed Capital Appreciation Fund
Vanguard Tax-Managed Small-Cap Fund
Vanguard Trustees' Equity Fund
Vanguard Diversified Equity Fund
Vanguard International Value Fund
Vanguard Valley Forge Funds
Vanguard Balanced Index Fund
Vanguard Variable Insurance Funds
Conservative Allocation Portfolio
Equity Index Portfolio
Global Bond Index Portfolio
Mid-Cap Index Portfolio
Moderate Allocation Portfolio
Real Estate Index Portfolio
Total International Stock Market Index Portfolio
Total Stock Market Index Portfolio
Vanguard Wellington Fund
Vanguard Wellington Fund
Vanguard Whitehall Funds
Vanguard High Dividend Yield Index Fund
Vanguard International Explorer Fund
Vanguard Advice Select International Growth Fund
Vanguard Advice Select Dividend Growth Fund
Vanguard Advice Select Global Value Fund
Vanguard World Fund
Vanguard Extended Duration Treasury Index Fund
Vanguard Global Wellesley Income Fund
Vanguard Global Wellington Fund
Vanguard ESG U.S. Corporate Bond ETF
Vanguard ESG U.S. Stock ETF
Vanguard ESG International Stock ETF
The Funds listed directly below have been added to Exhibit 1 in connection with the opening and maintenance of one or more custody accounts in the name of such Funds for the benefit of State Street Bank and Trust Company to hold financial assets and cash pursuant to the Account Control Agreement, dated April 7, 2023, among each open-end management investment company or series thereof registered with the U.S. Securities and Exchange Commission under the 1940 Act that is identified on Exhibit A attached thereto, as amended from time to time, severally and not jointly, State Street Bank and Trust Company and JPMorgan Chase Bank, N.A.
Vanguard Charlotte Funds
Vanguard Total International Bond Index Fund
Vanguard Total International Bond II Index Fund
Vanguard Fixed Income Securities Funds
Vanguard Short-Term Investment-Grade Fund
Bank and each following Customer hereby agree that all of the terms and conditions as set forth in theAgreement except for Sections 2.1 and 2.2 are hereby incorporated by reference with respect to the Trusts and Funds listed below limited to their use of account number P 62749 in Vanguard Directly Managed Securities Lending transactions:
Vanguard Chester Funds
Vanguard PRIMECAP Fund
Vanguard Explorer Fund
Vanguard Explorer Fund
Vanguard Fenway Funds
Vanguard Equity Income Fund
Vanguard PRIMECAP Core Fund
Vanguard Horizon Funds
Vanguard Capital Opportunity Fund
Vanguard Global Equity Fund
Vanguard Strategic Equity Fund
Vanguard Strategic Small-Cap Equity Fund
Vanguard Index Funds
Vanguard Extended Market Index Fund
Vanguard 500 Index Fund
Vanguard Large-Cap Index Fund
Vanguard Mid-Cap Index Fund
Vanguard Small Cap Growth Index Fund
Vanguard Small Cap Value Index Fund
Vanguard Value Index Fund
Vanguard Institutional Index Funds
Vanguard Institutional Index Fund
Vanguard Institutional Total Stock Market Index Fund
Vanguard Quantitative Funds
Vanguard Growth and Income Fund
Vanguard Scottsdale Funds
Vanguard Explorer Value Fund
Vanguard Russell 1000 Index Fund
Vanguard Russell 1000 Value Index Fund
Vanguard Russell 1000 Growth Index Fund
Vanguard Russell 2000 Index Fund
Vanguard Russell 2000 Value Index Fund
Vanguard Russell 2000 Growth Index Fund
Vanguard Russell 3000 Index Fund
Vanguard Specialized Funds
Vanguard Dividend Growth Fund
Vanguard Energy Fund
Vanguard Real Estate Index Fund
Vanguard Trustees' Equity Fund
Vanguard Emerging Markets Select Stock Fund
Vanguard International Value Fund
Vanguard Variable Insurance Funds
Vanguard Balanced Portfolio
Vanguard Capital Growth Portfolio
Vanguard Diversified Value Portfolio
Vanguard Equity Income Portfolio
Vanguard Equity Index Portfolio
Vanguard Growth Portfolio
Vanguard Mid-Cap Index Portfolio
Vanguard Real Estate Index Portfolio
Vanguard Small Company Growth Portfolio
Vanguard International Portfolio
Vanguard Whitehall Funds
Vanguard Global Minimum Volatility Fund
Vanguard High Dividend Yield Index Fund
Vanguard Mid-Cap Growth Fund
Vanguard Selected Value Fund
Vanguard Advice Select International Growth Fund
Vanguard Advice Select Dividend Growth Fund
Vanguard Advice Select Global Value Fund
Vanguard Windsor Funds
Vanguard Windsor Fund
Vanguard Windsor II Fund
Vanguard World Fund
Vanguard Consumer Discretionary Index Fund
Vanguard Consumer Staples Index Fund
Vanguard Energy Index Fund
Vanguard FTSE Social Index Fund
Vanguard Financials Index Fund Vanguard
Health Care Index FundVanguard
Industrials Index Fund
Vanguard Information Technology Index Fund
Vanguard Materials Index Fund
Vanguard Mega Cap Index Fund
Vanguard Mega Cap Growth Index FundVanguard
Mega Cap Value Index Fund
EIGHTH AMENDMENT TO THE AMENDED AND RESTATED GLOBAL
CUSTODYAGREEMENT
This Eighth Amendment (this “Amendment”) to the AMENDED AND RESTATED GLOBAL CUSTODY AGREEMENT, dated August 14, 2017, as amended or supplemented as of the date hereof (the “Agreement”), between JPMorgan Chase Bank, N.A. (“Bank”) and each open-ended management investment company listed on Exhibit 1 attached hereto (each,
a“Trust”) is entered into and effective as of _________, 2024 (the “Effective Date”).
W I T N E S S E T H:
WHEREAS, each Trust and Bank entered into the Agreement pursuant to which Bank provides custody and related services as more fully described therein; and
WHEREAS, the parties now wish to amend the Agreement as set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereby agree as follows:
1.Definitions. Terms defined in the Agreement shall, save to the extent that the context otherwise requires, bear the same respective meanings in this Amendment.
2.Amendments. The Agreement shall be amended as follows:
a.The current Exhibit 1 is hereby deleted in its entirely and replaced with the revised Exhibit 1 attached hereto.
b.Save as varied by this Amendment, the Agreement is confirmed and shall remain in full force and effect.
3.Representations. Each party represents to the other party that all representations contained in the Agreement are true and accurate as of the date of this Amendment, and that such representations are deemed to be given or repeated by each party, as the case may be, on the date of this Amendment.
4.Entire Agreement. This Amendment and the Agreement and any documents referred to in each of them, constitutes the whole agreement between the parties relating to their subject matter and supersedes and extinguishes any other drafts, agreements, undertakings, representations, warranties and arrangements of any nature, whether in writing or oral, relating to such subject matter. If any of the provisions of this Amendment are inconsistent with or in conflict with any of the provisions of theAgreement, then, to the extent of any such inconsistency or conflict, the provisions of this Amendment shall prevail.
5.Counterparts. This Amendment may be executed in several counterparts each of which will be deemed to be an original and together will constitute one and the same agreement.
6.Law and Jurisdiction. This Amendment shall be construed, regulated, and administered under the laws of the United States or State of New York, as applicable, without regard to New York’s principles regarding conflict of laws.
[remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day and year first above written.
EACH OF THE OPEN-END MANAGEMENT
INVESTMENT COMPANIES LISTED ON
SCHEDULE A HERETO
By: s/Christine Buchanan
Name: Christine Buchanan
Title: Funds CFO
JPMORGAN CHASE BANK, N.A.
By: s/Carl Mehldau
Name: Carl Mehldau
Title: Executive Director
Date: January 16, 2025
EXHIBIT 1
Vanguard Admiral Funds
Vanguard S&P 500 Growth Index Fund
Vanguard S&P 500 Value Index Fund
Vanguard S&P Mid-Cap 400 Growth Index Fund Vanguard S&P Mid-Cap 400 Index Fund Vanguard S&P Mid-Cap 400 Value Index Fund Vanguard S&P Small-Cap 600 Growth Index Fund Vanguard S&P Small-Cap 600 Index Fund Vanguard S&P Small-Cap 600 Value Index Fund
Vanguard Bond Index Funds
Vanguard Inflation-Protected Securities Fund Vanguard Intermediate-Term Bond Index Fund Vanguard Long-Term Bond Index Fund Vanguard Short-Term Bond Index Fund Vanguard Total Bond Market Index Fund Vanguard Total Bond Market II Index Fund
Vanguard Charlotte Funds
Vanguard Global Credit Bond Fund
Vanguard Chester Funds
Vanguard Target Retirement 2020 Fund
Vanguard Target Retirement 2025 Fund
Vanguard Target Retirement 2030 Fund
Vanguard Target Retirement 2035 Fund
Vanguard Target Retirement 2040 Fund
Vanguard Target Retirement 2045 Fund
Vanguard Target Retirement 2050 Fund
Vanguard Target Retirement 2055 Fund
Vanguard Target Retirement 2060 Fund
Vanguard Target Retirement 2065 Fund
Vanguard Target Retirement Income Fund
Vanguard Target Retirement 2070 Fund
Vanguard Fixed Income Securities Funds
Vanguard GNMA Fund
Vanguard Real Estate II Index Fund
Vanguard Horizon Funds
Vanguard International Core Stock Fund
Vanguard Index Funds
Vanguard Extended Market Index Fund
Vanguard Mid-Cap Growth Index Fund
Vanguard Mid-Cap Index Fund
Vanguard Mid-Cap Value Index Fund
Vanguard Small-Cap Growth Index Fund
Vanguard Small-Cap Index Fund
Vanguard Small-Cap Value Index Fund
Vanguard Total Stock Market Index Fund
Vanguard International Equity Index Funds Vanguard Emerging Markets Stock Index Fund
Vanguard Malvern Funds
Vanguard Core Bond Fund
Vanguard Institutional Intermediate-Term Bond Fund
Vanguard Institutional Short-Term Bond Fund
Vanguard Multi-Sector Income Bond Fund
Vanguard Core-Plus Bond Fund
Vanguard Core Bond ETF
Vanguard Core-Plus Bond ETF
Vanguard Scottsdale Funds
Vanguard Intermediate-Term Corporate Bond Index Fund Vanguard Intermediate-Term Treasury Index Fund Vanguard Long-Term Corporate Bond Index Fund Vanguard Long-Term Treasury Index Fund Vanguard Mortgage-Backed Securities Index Fund Vanguard Short-Term Corporate Bond Index Fund Vanguard Short-Term Treasury Index Fund Vanguard Total Corporate Bond ETF
Vanguard Total World Bond ETF
Vanguard Specialized Funds
Vanguard Global Capital Cycles Fund
Vanguard Real Estate Index Fund
Vanguard Global ESG Select Stock Fund
Vanguard STAR Funds
Vanguard LifeStrategy Conservative Growth Fund
Vanguard LifeStrategy Growth Fund
Vanguard LifeStrategy Income Fund
Vanguard LifeStrategy Moderate Growth Fund
Vanguard STAR Fund
Vanguard Total International Stock Index Fund
Vanguard STAR Core-Plus Bond Fund
Vanguard Tax-Managed Funds
Vanguard Tax-Managed Balanced Fund
Vanguard Tax-Managed Capital Appreciation Fund
Vanguard Tax-Managed Small-Cap Fund
Vanguard Trustees' Equity Fund
Vanguard Diversified Equity Fund
Vanguard International Value Fund
Vanguard Valley Forge Funds
Vanguard Balanced Index Fund
Vanguard Variable Insurance Funds
Conservative Allocation Portfolio
Equity Index Portfolio
Global Bond Index Portfolio
Mid-Cap Index Portfolio
Moderate Allocation Portfolio
Real Estate Index Portfolio
Total International Stock Market Index Portfolio
Total Stock Market Index Portfolio
Vanguard Wellington Fund
Vanguard Wellington Fund
Vanguard Whitehall Funds
Vanguard High Dividend Yield Index Fund
Vanguard International Explorer Fund
Vanguard Advice Select International Growth Fund
Vanguard Advice Select Dividend Growth Fund
Vanguard Advice Select Global Value Fund
Vanguard World Fund
Vanguard Extended Duration Treasury Index Fund
Vanguard Global Wellesley Income Fund
Vanguard Global Wellington Fund
Vanguard ESG U.S. Corporate Bond ETF
Vanguard ESG U.S. Stock ETF
Vanguard ESG International Stock ETF
The Funds listed directly below have been added to Exhibit 1 in connection with the opening and maintenance of one or more custody accounts in the name of such Funds for the benefit of State Street Bank and Trust Company to hold financial assets and cash pursuant to the Account Control Agreement, dated April 7, 2023, among each open-end management investment company or series thereof registered with the U.S. Securities and Exchange Commission under the 1940 Act that is identified on Exhibit A attached thereto, as amended from time to time, severally and not jointly, State Street Bank and Trust Company and JPMorgan Chase Bank, N.A.
Vanguard Charlotte Funds
Vanguard Total International Bond Index Fund
Vanguard Total International Bond II Index Fund
Vanguard Fixed Income Securities Funds
Vanguard Short-Term Investment-Grade Fund
Bank and each following Customer hereby agree that all of the terms and conditions as set forth in theAgreement except for Sections 2.1 and 2.2 are hereby incorporated by reference with respect to the Trusts and Funds listed below limited to their use of account number P 62749 in Vanguard Directly Managed Securities Lending transactions:
Vanguard Chester Funds
Vanguard PRIMECAP Fund
Vanguard Explorer Fund
Vanguard Explorer Fund
Vanguard Fenway Funds
Vanguard Equity Income Fund
Vanguard PRIMECAP Core Fund
Vanguard Horizon Funds
Vanguard Capital Opportunity Fund
Vanguard Global Equity Fund
Vanguard Strategic Equity Fund
Vanguard Strategic Small-Cap Equity Fund
Vanguard Index Funds
Vanguard Extended Market Index Fund
Vanguard 500 Index Fund
Vanguard Large-Cap Index Fund
Vanguard Mid-Cap Index Fund
Vanguard Small Cap Growth Index Fund
Vanguard Small Cap Value Index Fund
Vanguard Value Index Fund
Vanguard Institutional Index Funds
Vanguard Institutional Index Fund
Vanguard Institutional Total Stock Market Index Fund
Vanguard Quantitative Funds
Vanguard Growth and Income Fund
Vanguard Scottsdale Funds
Vanguard Explorer Value Fund
Vanguard Russell 1000 Index Fund
Vanguard Russell 1000 Value Index Fund
Vanguard Russell 1000 Growth Index Fund
Vanguard Russell 2000 Index Fund
Vanguard Russell 2000 Value Index Fund
Vanguard Russell 2000 Growth Index Fund
Vanguard Russell 3000 Index Fund
Vanguard Specialized Funds
Vanguard Dividend Growth Fund
Vanguard Energy Fund
Vanguard Real Estate Index Fund
Vanguard Trustees' Equity Fund
Vanguard Emerging Markets Select Stock Fund
Vanguard International Value Fund
Vanguard Variable Insurance Funds
Vanguard Balanced Portfolio
Vanguard Capital Growth Portfolio
Vanguard Diversified Value Portfolio
Vanguard Equity Income Portfolio
Vanguard Equity Index Portfolio
Vanguard Growth Portfolio
Vanguard Mid-Cap Index Portfolio
Vanguard Real Estate Index Portfolio
Vanguard Small Company Growth Portfolio
Vanguard International Portfolio
Vanguard Whitehall Funds
Vanguard Global Minimum Volatility Fund
Vanguard High Dividend Yield Index Fund
Vanguard Mid-Cap Growth Fund
Vanguard Selected Value Fund
Vanguard Advice Select International Growth Fund
Vanguard Advice Select Dividend Growth Fund
Vanguard Advice Select Global Value Fund
Vanguard Windsor Funds
Vanguard Windsor Fund
Vanguard Windsor II Fund
Vanguard World Fund
Vanguard Consumer Discretionary Index Fund
Vanguard Consumer Staples Index Fund
Vanguard Energy Index Fund
Vanguard FTSE Social Index Fund
Vanguard Financials Index Fund
Vanguard Health Care Index Fund
Vanguard Industrials Index Fund
Vanguard Information Technology Index Fund
Vanguard Materials Index Fund
Vanguard Mega Cap Index Fund
Vanguard Mega Cap Growth Index Fund
Vanguard Mega Cap Value Index Fund
VANGUARD FUNDS
MULTIPLE CLASS PLAN
I.INTRODUCTION
This Multiple Class Plan (the “Plan”) describes seven separate classes of shares that may be offered by investment company members of The Vanguard Group of Mutual Funds (collectively the “Funds,” individually a “Fund”). The Plan has been adopted pursuant to Rule 18f-3 under the Investment Company Act of 1940 (the “1940 Act”) to allow each Fund to offer multiple classes of shares in a manner permitted by Rule 18f-3, subject to the requirements imposed by the Rule. Each Fund may offer any one or more of the specified classes.
The Plan has been approved by the Board of Directors of The Vanguard Group, Inc. (“VGI”). In addition, the Plan has been adopted by a majority of the Board of Trustees of each Fund (“Fund Board”), including a majority of the Trustees who are not interested persons of each Fund. The classes of shares offered by each Fund are designated in Schedule A hereto, as such Schedule may be amended from time to time.
II.SHARE CLASSES
A Fund may offer any one or more of the following share classes:
Investor Shares
Admiral Shares
Institutional Shares
Institutional Plus Shares
Institutional Select Shares
ETF Shares
III.DISTRIBUTION, AVAILABILITY AND ELIGIBILITY
Distribution arrangements for all classes are described below. Distribution arrangements vary by VGI business line depending on the eligibility of the client segments to whom they market. Each Fund retains sole discretion in determining share class availability, and VGI retains discretion in determining whether Fund shares shall be offered either directly or through certain financial intermediaries, or on certain financial intermediary platforms. Eligibility requirements for purchasing shares of each class will differ, as follows:
A.Investor Shares
Investor Shares of actively-managed Funds generally will be available to investors who are not permitted to purchase other classes of shares, subject to the eligibility requirements specified in Schedule B hereto, as such Schedule may be amended from time to time. It is expected that the minimum investment amount for Investor Shares of actively-managed Funds will normally be lower than the amount required for any other class of shares of such Funds. Investor Shares of actively-managed Funds are typically distributed by all VGI business lines. Investor Shares of index Funds generally will be available to Funds that operate as a Fund-of- Funds and certain retirement plan clients receiving recordkeeping services from VGI.
1
B.Admiral Shares
Admiral Shares generally will be available to retail, institutional, and other investors who meet the eligibility requirements specified in Schedule B hereto, as such Schedule may be amended from time to time. These eligibility requirements may include, but are not limited to, the following factors: (i) the total amount invested in the Fund; or (ii) any other factors deemed appropriate by a Fund’s Board. Admiral Shares are typically distributed by all VGI business lines.
C.Institutional Shares
Institutional Shares generally will be available to institutional and other investors who meet the eligibility requirements specified in Schedule B hereto, as such Schedule may be amended from time to time. It is expected that the minimum investment amount per account for Institutional Shares will be substantially higher than the amounts required for Investor Shares or Admiral Shares. Institutional Shares are typically distributed by Vanguard’s financial advisory services and institutional business lines.
D.Institutional Plus Shares
Institutional Plus Shares generally will be available to institutional and other investors who meet the eligibility requirements specified in Schedule B hereto, as such Schedule may be amended from time to time. It is expected that the minimum investment amount for Institutional Plus Shares will be substantially higher than the amount required for Institutional Shares. Institutional Plus Shares are typically distributed by VGI’s financial advisory services and institutional business lines.
E.Institutional Select Shares
Institutional Select Shares generally will be available to institutional investors who meet the eligibility requirements specified in Schedule B hereto, as such Schedule may be amended from time to time. It is expected that the minimum investment amount for Institutional Select Shares will be the highest among all Fund share classes. Institutional Select Shares are typically distributed by VGI’s institutional business line.
F.ETF Shares
A Fund will sell ETF Shares to investors that are (or who purchase through) Authorized Participants and who generally pay for their ETF shares by depositing a prescribed basket consisting predominantly of securities with the Fund. An Authorized Participant is an institution, usually a broker-dealer, that is a participant in the Depository Trust Company (DTC) and that has executed a Participant Agreement with the Fund’s distributor. Additional eligibility requirements may be specified in Schedule B hereto, as such Schedule may be amended from time to time. Investors who are not Authorized Participants may buy and sell ETF shares through various exchanges and market centers. ETF Shares are typically distributed by all VGI business lines.
IV. SERVICE ARRANGEMENTS
Shareholders in all share classes will receive a range of shareholder services provided by VGI. These services may include transaction processing and shareholder recordkeeping, as well as the mailing of updated prospectuses, shareholder reports, tax statements, confirmation statements, quarterly portfolio summaries, and other items. Each share class will bear its proportionate share of VGI’s cost of
2
providing such services in accordance with Section VI of the Plan.
V.CONVERSION FEATURES
A. Self-Directed Conversions
1.Conversion into Investor Shares, Admiral Shares, Institutional Shares, Institutional Plus Shares, and Institutional Select Shares. Shareholders may conduct self-directed conversions from one share class into another share class of the same Fund for which they are eligible. Self-directed conversions may be initiated by the shareholder; however, depending upon the particular share class and the complexity of the shareholder’s accounts, such conversions may require the assistance of a VGI representative. Shareholders may convert from one share class into another share class provided that following the conversion the shareholder meets the then applicable eligibility requirements for the share class into which they are converting. Any such conversion will occur at the respective net asset values of the share classes next calculated after VGI’s receipt of the shareholder’s request in good order.
2.Conversion into ETF Shares. Except as otherwise provided, a shareholder may convert Investor Shares, Admiral Shares, or Institutional Shares into ETF Shares of the same Fund (if available), provided that: (i) the share class out of which the shareholder is converting and the ETF Shares declare and distribute dividends on the same schedule; (ii) the shares to be converted are not held through an employee benefit plan; and (iii) following the conversion, the shareholder will hold ETF Shares through a brokerage account. Any such conversion will occur at the respective net asset values of the share classes next calculated after VGI’s receipt of the shareholder’s request in good order. VGI or the Fund may charge an administrative fee to process conversion transactions.
B.Automatic Conversions
1.Automatic conversion into Admiral Shares. VGI may automatically convert Investor Shares into Admiral Shares of the same Fund (if available), provided that following the conversion the shareholder meets the eligibility requirements for Admiral Shares. Any such conversion will occur at the respective net asset values of the share classes next calculated after VGI’s conversion without the imposition of any charge. Such automatic conversions may occur on a periodic, or one-time basis. Automatic conversions may not apply to certain financial types of accounts (e.g., accounts held through certain intermediaries, or other accounts as may be excluded by VGI management).
2.Automatic conversion into Institutional Shares, Institutional Plus Shares, or Institutional Select Shares. VGI may conduct automatic conversions of any share class into either Institutional Shares, Institutional Plus Shares, or Institutional Select Shares in accordance with then-current eligibility requirements.
C.Involuntary Conversions and Cash Outs
3
1.Cash Outs. If a shareholder in any class of shares no longer meets the eligibility requirements for such shares, the Fund may, if permitted under applicable law, cash out the shareholder’s remaining account balance. Any such cash out will be preceded by written notice to the shareholder and will be subject to the Fund’s normal redemption fees, if any.
2.Conversion of Admiral Shares, Institutional Shares, Institutional Plus Shares, and Institutional Select Shares. If a shareholder no longer meets the eligibility requirements for the share class currently held, the Fund may convert the shareholder’s holdings into the share class for which such shareholder is eligible. Any such conversion will be preceded by written notice to the shareholder and will occur at the respective net asset values of the share classes without the imposition of any sales load, fee, or other charge.
3.Conversions of Transition Shares. When a Fund that issues Transition Shares has completed the relevant portfolio transition, the Fund will convert the Transition Shares to another share class of the same Fund as appropriate, based on the eligibility requirements of such class as specified in Schedule B hereto, as such Schedule may be amended from time to time.
VI. EXPENSE ALLOCATION AMONG CLASSES
A.Background
VGI is a jointly-owned subsidiary of the Funds. VGI provides the Funds virtually all of their corporate management, administrative, and distribution services. VGI also may provide investment advisory services to the Funds. All of these services are provided at VGI’s total cost of operations pursuant to the Fifth Amended and Restated Funds’ Service Agreement between VGI and the Funds (the “Agreement”) . VGI was established and operates pursuant to the Agreement, and pursuant to certain exemptive orders granted by the U.S. Securities and Exchange Commission (“Exemptive Orders”). VGI’s direct and indirect expenses of providing corporate management, administrative, and distribution services to the Funds are allocated among such Funds in accordance with methods specified in the Agreement or such other methods as may be approved by the Board of Directors of VGI (“VGI Board”) as permitted under the Agreement and by the Fund Board.1
B.Class Specific Expenses
1.Expenses for Account-Based Services. Expenses associated with VGI’s provision of account-based services to the Funds will be allocated among the share classes of each Fund on the basis of the amount incurred by each such class as follows:
1In accordance with the methods set out in the Agreement and VGI Board and Fund Board approved methods, the expenses that would otherwise have been allocated to each Fund that operates as a Fund-of-Funds are reallocated to the approved share class of the underlying Funds in the Fund-of-Funds’ portfolio on a pro rata basis based on the Fund-of-Fund’s relative net assets invested in the underlying Fund’s share class.
4
(a)Account maintenance expenses. Expenses associated with the maintenance of investor accounts will be proportionately allocated among each Fund’s share classes based upon a monthly determination of the costs to service each class of shares. Factors considered in this determination are (i) the percentage of total shareholder accounts represented by each class and (ii) the relative percentage of total net assets of each class.
(b)Expenses of special servicing arrangements. Expenses relating to any special servicing arrangements for a specific class will be proportionally allocated among each eligible Fund’s share classes primarily based on their percentage of total shareholder accounts receiving the special servicing arrangements.
(c)Literature production and mailing expenses. Expenses associated with shareholder reports, proxy materials, and other literature will be allocated among each Fund’s share classes based upon the number of such items produced and mailed for each class.
2.Other Class Specific Expenses. Expenses for the primary benefit of a particular share class will be allocated to that share class. Such expenses would include any legal fees attributable to a particular class.
C.Fund-Wide Expenses
1.Marketing and Distribution Expenses. Each share class will bear marketing and distribution expenses proportionate to the marketing and distribution expenses of the business lines that distribute that share class. Retail and institutional businesses expenses will be allocated based on the percentage of client accounts in each share class serviced by the respective business. Financial advisory service expenses will be apportioned based on the percentage of assets in each share class.
Expenses associated with each share class will be allocated only among the Funds that have such share class according to the “Vanguard Modified Formula,” with each share class or each Fund treated as if it were a separate Fund. The Vanguard Modified Formula is set forth in the Agreement and in certain of the SEC Exemptive Orders. This allocation has been deemed an appropriate allocation methodology by each Fund Board under paragraph (c)(1)(v) of Rule 18f-3 under the 1940 Act.
2.Asset Management Expenses. Expenses associated with management of a Fund’s assets (including all advisory, tax preparation, and custody fees) will be allocated among the Fund’s share classes on the basis of their relative net assets.
3.Other Fund Expenses. Any other Fund expenses not described
5
above will be allocated among the share classes on the basis of their relative net assets.
VII. ALLOCATION OF INCOME, GAINS, AND LOSSES
Income, gains, and losses will be allocated among each Fund’s share classes on the basis of their relative net assets. As a result of differences in allocated expenses, it is expected that the net income of, and dividends payable to, each class of shares will vary. Dividends and distributions paid to each class of shares will be calculated in the same manner, on the same day and at the same time (except as permitted by applicable exemptive relief).
VIII. VOTING AND OTHER RIGHTS
Each share class will have: (i) exclusive voting rights on any matter submitted to shareholders that relates solely to its service or distribution arrangements; and (ii) separate voting rights on any matter submitted to shareholders in which the interests of one class differ from the interests of the other class; and
(iii)in all other respects the same rights, obligations, and privileges as each other, except as described in the Plan.
IX. AMENDMENTS
All material amendments to the Plan must be approved by a majority of the Board of Trustees of each Fund, including a majority of the Trustees who are not interested persons of the Fund. In addition, any material amendment to the Plan must be approved by the Board of Directors of VGI.
Original Board Approval: July 21, 2000
Last Approved by Board: November 2024
6
SCHEDULE A to
VANGUARD FUNDS MULTIPLE CLASS PLAN
Note: Transition Shares, when offered by a Fund, are available for a limited period of time and are then converted into another share class. For this reason, Transition Shares are not shown on Schedule A.
Vanguard Fund |
Share Classes Authorized |
|
Vanguard Admiral Funds |
|
|
• |
Treasury Money Market Fund |
Investor |
• S&P 500 Value Index Fund |
Institutional, ETF |
• S&P 500 Growth Index Fund |
Institutional, ETF |
• S&P Mid-Cap 400 Index Fund |
Institutional, ETF |
• S&P Mid-Cap 400 Value Index Fund |
Institutional, ETF |
• S&P Mid-Cap 400 Growth Index Fund |
Institutional, ETF |
• S&P Small-Cap 600 Index Fund |
Institutional, ETF |
• S&P Small-Cap 600 Value Index Fund |
Institutional, ETF |
• |
|
|
|
Vanguard Bond Index Funds |
|
|
• Short-Term Bond Index Fund |
Investor, Admiral, Institutional, |
• |
|
Institutional Plus, ETF |
Intermediate-Term Bond Index Fund |
Investor, Admiral, Institutional, Institutional |
• Long-Term Bond Index Fund |
Plus, ETF |
Admiral, Institutional, Institutional Plus, |
• Total Bond Market Index Fund |
ETF |
Investor, Admiral, Institutional, Institutional |
• Total Bond Market II Index Fund |
Plus, Institutional Select, ETF |
Investor, Institutional |
• |
Inflation-Protected Securities Fund |
Investor, Admiral, Institutional |
• |
Ultra-Short Bond ETF |
ETF |
Vanguard California Tax-Free Funds |
|
|
• |
Municipal Money Market Fund |
Investor |
• |
Intermediate-Term Tax-Exempt Fund |
Investor, Admiral |
• |
Long-Term Tax-Exempt Fund |
Investor, Admiral |
• California Tax-Exempt Bond ETF |
ETF |
Vanguard Charlotte Funds |
|
|
• Total International Bond Index Fund |
Investor, Admiral, Institutional, |
• Global Credit Bond Fund |
ETF |
Investor, Admiral |
• Total International Bond II Index Fund |
Investor, Institutional |
1
Vanguard Fund |
Share Classes Authorized |
Vanguard Chester Funds |
|
• |
PRIMECAP Fund |
Investor, Admiral |
• Target Retirement Income Fund |
Investor |
• Target Retirement 2020 Fund |
Investor |
• Target Retirement 2025 Fund |
Investor |
• Target Retirement 2030 Fund |
Investor |
• Target Retirement 2035 Fund |
Investor |
• Target Retirement 2040 Fund |
Investor |
• Target Retirement 2045 Fund |
Investor |
• Target Retirement 2050 Fund |
Investor |
• Target Retirement 2055 Fund |
Investor |
• Target Retirement 2060 Fund |
Investor |
• Target Retirement 2065 Fund |
Investor |
• Target Retirement 2070 Fund |
Investor |
Vanguard Explorer Fund |
Investor, Admiral |
Vanguard Fenway Funds |
|
• |
Equity Income Fund |
Investor, Admiral |
• |
PRIMECAP Core Fund |
Investor |
Vanguard Fixed Income Securities Funds |
|
• |
Ultra-Short-Term Bond Fund |
Investor, Admiral |
• Real Estate II Index Fund |
Institutional Plus |
• |
Short-Term Treasury Fund |
Investor, Admiral |
• |
Short-Term Federal Fund |
Investor, Admiral |
• |
Short-Term Investment-Grade Fund |
Investor, Admiral, Institutional |
• |
Intermediate-Term Treasury Fund |
Investor, Admiral |
• |
Intermediate-Term Investment-Grade Fund |
Investor, Admiral |
• |
GNMA Fund |
Investor, Admiral |
• |
Long-Term Treasury Fund |
Investor, Admiral |
• |
Long-Term Investment-Grade Fund |
Investor, Admiral |
• |
High-Yield Corporate Fund |
Investor, Admiral |
Vanguard Horizon Funds |
|
• |
Capital Opportunity Fund |
Investor, Admiral |
• |
Global Equity Fund |
Investor |
• |
Strategic Equity Fund |
Investor |
• |
Strategic Small-Cap Equity Fund |
Investor |
• International Core Stock Fund |
Investor, Admiral |
2
Vanguard Fund |
Share Classes Authorized |
|
Vanguard Index Funds |
|
|
• |
500 Index Fund |
Investor, Admiral, Institutional Select, ETF |
• Extended Market Index Fund |
Investor, Admiral, Institutional, |
• |
|
Institutional Plus, Institutional Select, ETF |
Growth Index Fund |
Investor, Admiral, Institutional, ETF |
• |
Large-Cap Index Fund |
Investor, Admiral, Institutional, ETF |
• Mid-Cap Growth Index Fund |
Investor, Admiral, ETF |
• |
Mid-Cap Index Fund |
Investor, Admiral, Institutional, |
• Mid-Cap Value Index Fund |
Institutional Plus, ETF |
Investor, Admiral, ETF |
• Small-Cap Growth Index Fund |
Investor, Admiral, Institutional, ETF |
• |
Small-Cap Index Fund |
Investor, Admiral, Institutional, |
• Small-Cap Value Index Fund |
Institutional Plus, ETF |
Investor, Admiral, Institutional, ETF |
• Total Stock Market Index Fund |
Investor, Admiral, Institutional, Institutional |
• |
|
Plus, Institutional Select, ETF |
Value Index Fund |
Investor, Admiral, Institutional, ETF |
Vanguard Institutional Index Funds |
|
|
• |
Institutional Index Fund |
Institutional, Institutional Plus |
• Institutional Total Stock Market Index Fund |
Institutional, Institutional Plus |
• |
Ultra-Short Treasury ETF |
ETF |
• 0-3 Month Treasury Bill ETF |
ETF |
Vanguard International Equity Index Funds |
|
|
• Emerging Markets Stock Index Fund |
Investor, Admiral, Institutional, |
|
|
Institutional Plus |
• |
FTSE Emerging Markets ETF |
ETF |
European Stock Index Fund |
Investor, Admiral, Institutional, |
|
|
Institutional Plus |
|
FTSE Europe ETF |
ETF |
• FTSE All-World ex US Index Fund |
Admiral, Institutional, Institutional |
• Pacific Stock Index Fund |
Plus, ETF |
Investor, Admiral, Institutional |
|
FTSE Pacific ETF |
ETF |
• Total World Stock Index Fund |
Admiral, Institutional, ETF |
• FTSE All World ex-US Small-Cap Index Fund |
Admiral, Institutional, ETF |
• Global ex-U.S. Real Estate Index Fund |
Admiral, Institutional, ETF |
3
Vanguard Fund |
Share Classes Authorized |
Vanguard Malvern Funds
•Short-Term Inflation-Protected Securities
• |
Index Fund |
Investor, Admiral, Institutional, ETF |
Institutional Short-Term Bond Fund |
Institutional Plus |
• |
Institutional Intermediate-Term Bond Fund |
Institutional Plus |
• |
Core Bond Fund |
Investor, Admiral |
• Emerging Markets Bond Fund |
Investor, Admiral |
• |
Core-Plus Bond Fund |
Investor, Admiral |
• Multi-Sector Income Bond Fund |
Investor, Admiral |
• |
Core Bond ETF |
ETF |
• |
Core-Plus Bond ETF |
ETF |
Vanguard Massachusetts Tax-Exempt Funds |
|
• |
Massachusetts Tax-Exempt Fund |
Investor |
Vanguard Money Market Funds |
|
• Cash Reserves Federal Money Market Fund |
Admiral |
• |
Federal Money Market Fund |
Investor |
Vanguard Montgomery Funds |
|
• |
Market Neutral Fund |
Investor, Institutional |
Vanguard Municipal Bond Funds |
|
• |
Municipal Money Market Fund |
Investor |
• |
Ultra-Short-Term Tax-Exempt Fund |
Investor, Admiral |
• |
Limited-Term Tax-Exempt Fund |
Investor, Admiral |
• |
Intermediate-Term Tax-Exempt Fund |
Investor, Admiral |
• |
Long-Term Tax-Exempt Fund |
Investor, Admiral |
• |
High-Yield Tax-Exempt Fund |
Investor, Admiral |
• Tax-Exempt Bond Index Fund |
Admiral, ETF |
• Intermediate-Term Tax-Exempt Bond ETF |
ETF |
Vanguard New Jersey Tax-Free Funds |
|
• |
Long-Term Tax-Exempt Fund |
Investor, Admiral |
Vanguard New York Tax-Free Funds |
|
• |
Municipal Money Market Fund |
Investor |
• |
Long-Term Tax-Exempt Fund |
Investor, Admiral |
Vanguard Ohio Tax-Free Funds |
|
• |
Long-Term Tax-Exempt Fund |
Investor |
Vanguard Pennsylvania Tax-Free Funds |
|
• |
Long-Term Tax-Exempt Fund |
Investor, Admiral |
4
Vanguard Fund |
Share Classes Authorized |
Vanguard Quantitative Funds |
|
• Growth and Income Fund |
Investor, Admiral |
Vanguard Scottsdale Funds |
|
• Short-Term Treasury Index Fund |
Institutional, Admiral, ETF |
• |
Intermediate-Term Treasury Index Fund |
Institutional, Admiral, ETF |
• Long-Term Treasury Index Fund |
Institutional, Admiral, ETF |
• Short-Term Corporate Bond Index Fund |
Institutional, Admiral, ETF |
• Intermediate-Term Corporate Bond Index Fund |
Institutional, Admiral, ETF |
• Long-Term Corporate Bond Index Fund |
Institutional, Admiral, ETF |
• Mortgage-Backed Securities Index Fund |
Institutional, Admiral, ETF |
• |
Explorer Value Fund |
Investor |
• Russell 1000 Index Fund |
Institutional, ETF |
• Russell 1000 Value Index Fund |
Institutional, ETF |
• Russell 1000 Growth Index Fund |
Institutional, ETF |
• Russell 2000 Index Fund |
Institutional, ETF |
• Russell 2000 Value Index Fund |
Institutional, ETF |
• Russell 2000 Growth Index Fund |
Institutional, ETF |
• Russell 3000 Index Fund |
Institutional, ETF |
• Total Corporate Bond ETF |
ETF |
• Total World Bond ETF |
ETF |
Vanguard Specialized Funds |
|
• |
Energy Fund |
Investor, Admiral |
• Global Capital Cycles Fund |
Investor |
• |
Health Care Fund |
Investor, Admiral |
• |
Dividend Growth Fund |
Investor |
• Real Estate Index Fund |
Investor, Admiral, Institutional, ETF |
• Dividend Appreciation Index Fund |
Admiral, ETF |
• Global ESG Select Stock Fund |
Investor, Admiral |
Vanguard STAR Funds |
|
• |
LifeStrategy Conservative Growth Fund |
Investor |
• |
LifeStrategy Growth Fund |
Investor |
• |
LifeStrategy Income Fund |
Investor |
• |
LifeStrategy Moderate Growth Fund |
Investor |
• |
STAR Fund |
Investor |
• STAR Core-Plus Bond Fund |
Institutional |
• Total International Stock Index Fund |
Investor, Admiral, Institutional, |
|
|
Institutional Plus, Institutional Select, |
Vanguard Tax-Managed Funds |
ETF |
|
• |
Tax-Managed Balanced Fund |
Admiral |
• Tax-Managed Capital Appreciation Fund |
Admiral, Institutional |
• |
Developed Markets Index Fund |
Investor, Admiral, Institutional, |
|
|
Institutional Plus |
|
FTSE Developed Markets ETF |
ETF |
|
5 |
|
• Tax-Managed Small-Cap Fund |
Admiral, Institutional |
Vanguard Fund |
Share Classes Authorized |
Vanguard Trustees’ Equity Fund |
|
• |
International Value Fund |
Investor |
• |
Diversified Equity Fund |
Investor |
• Emerging Markets Select Stock Fund |
Investor |
• |
Commodity Strategy Fund |
Admiral |
• Global Environmental Opportunities Stock Fund |
Investor, Admiral |
Vanguard Valley Forge Funds |
|
• |
Balanced Index Fund |
Investor, Admiral, Institutional |
• Baillie Gifford Global Positive Impact Stock Fund |
Investor |
Vanguard Variable Insurance Funds |
|
• |
Balanced Portfolio |
Investor |
• |
Conservative Allocation Portfolio |
Investor |
• |
Diversified Value Portfolio |
Investor |
• |
Equity Income Portfolio |
Investor |
• |
Equity Index Portfolio |
Investor |
• |
Growth Portfolio |
Investor |
• |
Global Bond Index Portfolio |
Investor |
• Total Bond Market Index Portfolio |
Investor |
• |
High Yield Bond Portfolio |
Investor |
• |
International Portfolio |
Investor |
• |
Mid-Cap Index Portfolio |
Investor |
• |
Moderate Allocation Portfolio |
Investor |
• |
Money Market Portfolio |
Investor |
• Real Estate Index Portfolio |
Investor |
• |
Short-Term Investment Grade Portfolio |
Investor |
• |
Small Company Growth Portfolio |
Investor |
• |
Capital Growth Portfolio |
Investor |
• Total International Stock Market Index Portfolio |
Investor |
• Total Stock Market Index Portfolio |
Investor |
Vanguard Wellesley Income Fund |
Investor, Admiral |
Vanguard Wellington Fund |
|
• Short-Term Tax-Exempt Bond ETF |
ETF |
• U.S. Minimum Volatility ETF |
ETF |
• |
U.S. Momentum Factor ETF |
ETF |
• |
U.S. Multifactor ETF |
ETF |
• |
U.S. Multifactor Fund |
Admiral |
• |
U.S. Quality Factor ETF |
ETF |
• U.S. Value Factor ETF |
ETF |
• |
Wellington Fund |
Investor, Admiral |
7
Vanguard Fund |
Share Classes Authorized |
Vanguard Whitehall Funds |
|
• |
Selected Value Fund |
Investor |
• |
Mid-Cap Growth Fund |
Investor |
• |
International Explorer Fund |
Investor |
• High Dividend Yield Index Fund |
Admiral, ETF |
•Emerging Markets Government
• |
Bond Index Fund |
Admiral, Institutional, ETF |
Global Minimum Volatility Fund |
Investor, Admiral |
• International Dividend Appreciation Index Fund |
Admiral, ETF |
• International High Dividend Yield Index Fund |
Admiral, ETF |
• Advice Select International Growth Fund |
Admiral |
• Advice Select Global Value Fund |
Admiral |
• Advice Select Dividend Growth Fund |
Admiral |
• International Dividend Growth Fund |
Investor |
Vanguard Windsor Funds |
|
• |
Windsor Fund |
Investor, Admiral |
• |
Windsor II Fund |
Investor, Admiral |
Vanguard World Fund |
|
• Extended Duration Treasury Index Fund |
Institutional, Institutional Plus, ETF |
• FTSE Social Index Fund |
Admiral, Institutional |
• Global Wellesley Income Fund |
Investor, Admiral |
• |
Global Wellington Fund |
Investor, Admiral |
• |
International Growth Fund |
Investor, Admiral |
• Mega Cap Index Fund |
Institutional, ETF |
• Mega Cap Growth Index Fund |
Institutional, ETF |
• Mega Cap Value Index Fund |
Institutional, ETF |
• |
U.S. Growth Fund |
Investor, Admiral |
• Consumer Discretionary Index Fund |
Admiral, ETF |
• Consumer Staples Index Fund |
Admiral, ETF |
• |
Energy Index Fund |
Admiral, ETF |
• |
Financials Index Fund |
Admiral, ETF |
• Health Care Index Fund |
Admiral, ETF |
• |
Industrials Index Fund |
Admiral, ETF |
• |
Information Technology Index Fund |
Admiral, ETF |
• |
Materials Index Fund |
Admiral, ETF |
• Communication Services Index Fund |
Admiral, ETF |
• |
Utilities Index Fund |
Admiral, ETF |
• ESG U.S. Stock ETF |
ETF |
• |
ESG International Stock ETF |
ETF |
• ESG U.S. Corporate Bond ETF |
ETF |
Original Board Approval: July 21, 2000
Last Updated: February 19, 2025
8
SCHEDULE B
to
VANGUARD FUNDS MULTIPLE CLASS
PLAN
VGI has policies and procedures designed to ensure consistency and compliance with the offering of multiple classes of shares within this Multiple Class Plan’s eligibility requirements.2 These policies are reviewed and monitored on an ongoing basis in conjunction with VGI’s Compliance Department.
Investor Shares - Eligibility Requirements
Investor Shares generally require a minimum initial investment of $3,000. The minimum amount required to maintain eligibility for Investor Shares will generally be lower than the minimum initial investment amount and may be further adjusted by an amount determined in VGI’s sole discretion to account for market depreciation. Personal Investor advised clients, clients investing through financial intermediaries, and institutional clients may hold Investor Shares without restriction in Funds that do not offer Admiral Shares. Investor Shares of index Funds generally are available only to Funds that operate as a Fund-of- Funds and certain retirement plan clients receiving recordkeeping services from VGI. A Vanguard Fund may, from time to time, establish higher or lower minimum amounts for Investor Shares. Each Fund and VGI also reserve the right to establish higher or lower minimum amounts for certain investors or a group of investors.
Financial intermediaries that serve as mutual fund supermarkets may only invest in Investor Shares of Funds in which Investor Shares are available and may not invest in other share classes of such Funds.3 Mutual fund supermarket means a program or platform offered by a financial intermediary through which such intermediary’s retail clients may purchase and sell mutual funds offered by a variety of independent fund families on a self-directed basis without advice or recommendation from a financial advisor or broker. This definition may be changed or amended at any time and without prior notice as may be determined in the discretion of VGI management. Nothing in the definition of mutual fund supermarket should be construed to prohibit Vanguard Brokerage Services from offering the Funds’ other share classes to its eligible clients.
Admiral Shares – Eligibility Requirements
Admiral Shares generally are intended for clients who meet the required minimum initial investment of $3,000 for retail clients in index Funds and $50,000 for retail clients in actively-managed Funds. The minimum amount required to maintain eligibility for Admiral Shares will generally be lower than the minimum initial investment amount and may be further adjusted by an amount determined in VGI’s sole discretion to account for market depreciation. Personal Investor advised clients, clients investing through financial intermediaries and institutional clients may hold Admiral Shares of both index and actively- managed Funds without restriction. Funds may, from time to time, establish higher or lower minimum amounts for Admiral Shares, and each Fund and VGI reserve the right to establish higher or lower minimum amounts for certain investors or a group of investors. Admiral Share class eligibility also is subject to the following rule:
•Certain Retirement Plans – Admiral Shares of actively-managed Funds generally are not
2The eligibility of a Fund that operates as a Fund-of-Funds to invest in a particular share class of an underlying Fund is determined by VGI and the Fund Board.
3Admiral Shares of the Vanguard Cash Reserves Federal Money Market Fund are available to financial intermediaries that serve as mutual fund supermarkets.
9
available for SIMPLE IRAs and Vanguard Individual 401(k) Plans.4
•Mutual Fund Supermarkets – Admiral Shares are not available to mutual fund supermarkets, except where a Fund does not have Investor Shares.
Institutional Shares – Eligibility Requirements
Institutional Shares generally require a minimum initial investment of
$5,000,000. The minimum amount required to maintain eligibility for Institutional Shares will generally be lower than the minimum initial investment amount and may be further adjusted by an amount determined in VGI’s sole discretion to account for market depreciation. Each Fund and VGI also reserve the right to establish higher or lower minimum amounts for certain investors or a group of investors.
Institutional Share class eligibility also is subject to the following special rules:
•Retail clients. Retail clients may hold Institutional Shares by aggregating up to 3 accounts held by the same client (same tax I.D. number) in a single Fund. Single family offices serviced by the Retail Investor Group with $200 million or more in assets in the Funds through the Retail Investor Group may hold Institutional Shares by aggregating assets across all family members who are part of a single family office.
•Financial intermediary clients. Financial intermediaries generally may hold Institutional Shares for the benefit of their underlying clients provided that:
(1)each underlying investor individually meets the investment minimum amount described above;
and
(2)the financial intermediary agrees to monitor ongoing compliance of the underlying investor accounts with the investment minimum amount; or
(3)an arrangement is established between VGI and the financial intermediary to allow VGI to monitor compliance with the eligibility requirements.
Home office model portfolios offered on wealth management platforms administered by financial intermediaries5 may offer Institutional Shares, provided:
(1)the financial intermediary in aggregate at the firm level, excluding custody assets, has total assets of at least $25 billion invested in Vanguard; and
(2)the financial intermediary in aggregate at the firm level, excluding custody assets, meets the investment minimum of Institutional Shares for the Fund.
A home office model portfolio must meet the following criteria:
(1)the allocations and Funds used in the model portfolios on the platform are set and selected by the financial intermediary (i.e., the firm itself);
(2)the allocations and Funds used in the model portfolios on the platform are not subject to change by individual financial advisors; and
(3)an arrangement is established between VGI and the financial intermediary to allow VGI to monitor compliance with the eligibility requirements.
•Institutional clients. An institutional client may hold Institutional Shares if the total amount aggregated
4Admiral Share classes of all Funds are available to 403(b) plan participants in Vanguard’s Retail 403(b) business, which is serviced by The Newport Group. Admiral Share classes are also available to small business plans held through Ascensus. Admiral Shares of the Vanguard Cash Reserves Federal Money Market Fund are available to SIMPLE IRAs and Vanguard
Individual 401(k) Plans.
5 For purposes of this Schedule B, this is not intended to include robo advisors.
10
among all accounts held by such a client (including accounts held through financial intermediaries) and invested in the Fund is at least $5 million (or such higher minimum required by the individual Fund). Such an institutional client must disclose to VGI on behalf of its accounts the following: (1) that the client acts as a common-decision maker6 for each account; and (2) the total balance in each account in the Fund.
•Institutional clients with assets in certain Vanguard collective investment trusts and Funds. Institutional clients with assets in the following collective investment trusts and Funds may aggregate such assets with assets invested in the corresponding Funds listed below in the right column (“Corresponding Funds”) for purposes of meeting the investment minimum for Institutional Shares of the Corresponding Funds.
Trust/Fund |
Corresponding Fund |
Vanguard Institutional Total Stock |
Vanguard Total Stock Market Index |
Market Index Trust |
Fund |
Vanguard Institutional Total Stock |
Vanguard Institutional Total Stock |
Market Index Trust |
Market Index Fund |
Vanguard Institutional Total Bond |
Vanguard Total Bond Market Index |
Market Index Trust |
Fund |
Vanguard Institutional Total |
Vanguard Total International Stock |
International Stock Market Index Trust |
Market Index Fund |
Vanguard Institutional 500 Index Trust |
Vanguard Institutional Index Fund |
Vanguard Institutional 500 Index Trust |
Vanguard 500 Index Fund |
Vanguard Institutional Extended Market |
Vanguard Extended Market Index Fund |
Index Trust |
|
Vanguard Employee Benefit Index |
Vanguard Institutional Index Fund |
Fund |
|
Vanguard Employee Benefit Index |
Vanguard 500 Index Fund |
Fund |
|
Vanguard Russell 1000 Growth Index |
Vanguard Russell 1000 Growth Index |
Trust |
Fund |
Vanguard Russell 1000 Value Index |
Vanguard Russell 1000 Value Index |
Trust |
Fund |
Vanguard Russell 2000 Growth Index |
Vanguard Russell 2000 Growth Index |
Trust |
Fund |
Vanguard Russell 2000 Value Index |
Vanguard Russell 2000 Value Index |
Trust |
Fund |
•Investment by Vanguard Target Retirement Collective Trust. A Vanguard Target Retirement Trust that is a collective trust exempt from regulation under the Investment Company Act and that seeks to achieve its investment objective by investing in underlying Funds (a “TRT”) may hold Institutional Shares of an underlying Fund whether or not its investment meets the minimum investment threshold specified above.
•Accumulation Period . Accounts funded through regular contributions (e.g., employer sponsored participant contribution plans), whose assets are expected to quickly achieve eligibility levels, may
6For purposes of this Schedule B, a common-decision maker includes, but is not limited to, a corporate entity that controls multiple pools of assets invested in a Fund. For example, a corporate entity that acts as a plan sponsor for a retirement plan may have one or more investment committees or boards of trustees overseeing both the retirement plan account as well as other accounts invested in the Fund. In this case, the corporate entity would be considered a common-decision maker for each account where there is a common membership across each investment committee or governing body making investment decisions for each account. Common-decision makers do not include financial intermediaries.
11
qualify for Institutional Shares upon account creation, rather than undergoing the conversion process shortly after account set-up if VGI management determines that the account will become eligible for Institutional Shares within a limited period of time (generally 90 days). The accumulation period eligibility is subject to the discretion of VGI management.
Institutional Plus Shares - Eligibility Requirements
Institutional Plus Shares generally require a minimum initial investment of $100,000,000. The minimum amount required to maintain eligibility for Institutional Plus Shares will generally be lower than the minimum initial investment amount and may be further adjusted by an amount determined in VGI’s sole discretion to account for market depreciation. Each Fund and VGI also reserve the right to establish higher or lower minimum amounts for certain investors or a group of investors. Institutional Plus Share class eligibility also is subject to the following special rules:
•Retail clients. Retail clients may hold Institutional Plus Shares by aggregating up to 3 accounts held by the same client (same tax I.D. number) in a single Fund. For purposes of this rule, VGI management is authorized to permit aggregation of a greater number of accounts in the case of clients whose aggregate assets within the Funds are expected to generate substantial economies in the servicing of their accounts. Single family offices serviced by the Retail Investor Group with $200 million or more in assets in the Funds through the Retail Investor Group may hold Institutional Plus Shares by aggregating assets across all family members who are part of a single family office.
•Institutional clients. An institutional client may hold Institutional Plus Shares if the total amount aggregated among all accounts held by such client (including accounts held through financial intermediaries) and invested in the Fund is at least $100 million (or such higher or lower minimum required by the individual Fund). Such an institutional client must disclose to VGI on behalf of its accounts the following: (1) that the client acts as a common-decision maker for each account; and
(2) the total balance in each account held in the Fund.
•Institutional clients with assets in certain Vanguard collective investment trusts and Funds. Institutional clients with assets in the following collective investment trusts and Funds may aggregate such assets with assets invested in the corresponding Funds listed below in the right column (“Corresponding Funds”) for purposes of meeting the investment minimum for Institutional Plus Shares of the Corresponding Funds.
Trust/Fund |
Corresponding Fund |
Vanguard Institutional Total Stock |
Vanguard Total Stock Market Index |
Market Index Trust |
Fund |
Vanguard Institutional Total Stock |
Vanguard Institutional Total Stock |
Market Index Trust |
Market Index Fund |
Vanguard Institutional Total Bond |
Vanguard Total Bond Market Index |
Market Index Trust |
Fund |
Vanguard Institutional Total |
Vanguard Total International Stock |
International Stock Market Index Trust |
Market Index Fund |
Vanguard Institutional 500 Index Trust |
Vanguard Institutional Index Fund |
Vanguard Institutional 500 Index Trust |
Vanguard 500 Index Fund |
Vanguard Institutional Extended Market |
Vanguard Extended Market Index Fund |
Index Trust |
|
Vanguard Employee Benefit Index |
Vanguard Institutional Index Fund |
Fund |
|
12
Vanguard Employee Benefit Index |
Vanguard 500 Index Fund |
Fund |
|
Vanguard Russell 1000 Growth Index |
Vanguard Russell 1000 Growth Index |
Trust |
Fund |
Vanguard Russell 1000 Value Index |
Vanguard Russell 1000 Value Index |
Trust |
Fund |
Vanguard Russell 2000 Growth Index |
Vanguard Russell 2000 Growth Index |
Trust |
Fund |
Vanguard Russell 2000 Value Index |
Vanguard Russell 2000 Value Index |
Trust |
Fund |
•Financial intermediary clients. Financial intermediaries generally may hold Institutional Plus Shares for the benefit of their underlying clients provided that:
(1)each underlying investor individually meets the investment minimum amount described above;
and
(2)the financial intermediary agrees to monitor ongoing compliance of the underlying investor accounts with the investment minimum amount; or
(3)an arrangement is established between VGI and the financial intermediary to allow VGI to monitor compliance with the eligibility requirements.
Home office model portfolios offered on wealth management platforms administered by financial intermediaries may offer Institutional Plus Shares, provided:
(1)the financial intermediary in aggregate at the firm level, excluding custody assets, has total assets of at least $25 billion invested in Vanguard; and
(2)the financial intermediary in aggregate at the firm level, excluding custody assets, meets the investment minimum of Institutional Plus Shares for the Fund.
A home office model portfolio must meet the following criteria:
(1)the allocations and Funds used in the model portfolios on the platform are set and selected by the financial intermediary (i.e., the firm itself);
(2)the allocations and Funds used in the model portfolios on the platform are not subject to change by individual financial advisors; and
(3)an arrangement is established between VGI and the financial intermediary to allow VGI to monitor compliance with the eligibility requirements.
•Accumulation Period - Accounts funded through regular contributions (e.g., employer sponsored participant contribution plans), whose assets are expected to quickly achieve eligibility levels, may qualify for Institutional Plus Shares upon account creation, rather than undergoing the conversion process shortly after account set-up if VGI management determines that the account will become eligible for Institutional Plus Shares within a limited period of time (generally 90 days). The accumulation period eligibility is subject to the discretion of VGI management.
13
•Asset Allocation Models - Clients with defined asset allocation models whose assets meet eligibility requirements may qualify for Institutional Plus Shares if such models comply with policies and procedures that have been approved by VGI management.
Institutional Select Shares - Eligibility Requirements
Institutional Select Shares generally require a minimum initial investment of $3,000,000,000. The minimum amount required to maintain eligibility for Institutional Select Shares will generally be lower than the minimum initial investment amount and may be further adjusted by an amount determined in VGI’s sole discretion to account for market depreciation. Each Fund and VGI also reserve the right to establish higher or lower minimum amounts for certain investors or a group of investors. Institutional Select Share class eligibility also is subject to the following special rules:
•Institutional clients. An institutional client may hold Institutional Select Shares if the total amount aggregated among all accounts held by such client (including accounts held through financial intermediaries) and invested in the Fund is at least $3 billion (or such higher or lower minimum required by the individual Fund). Such an institutional client must disclose to VGI on behalf of its accounts the following: (1) the client acts as a common-decision maker for each account; and (2) the total balance in each account in the Fund.
•Financial intermediary clients. Financial intermediaries generally may hold Institutional Select Shares for the benefit of their underlying clients provided that:
(1)each underlying investor individually meets the investment minimum amount described above; and
(2)the financial intermediary agrees to monitor ongoing compliance of the underlying investor accounts with the investment minimum amount; or
(3)an arrangement is established between VGI and the financial intermediary to allow VGI to monitor compliance with the eligibility requirements.
•Accumulation Period - Accounts funded through regular contributions (e.g., employer sponsored participant contribution plans), whose assets are expected to quickly achieve eligibility levels, may qualify for Institutional Select Shares upon account creation, rather than undergoing the conversion process shortly after account set-up, if VGI management determines that the account will become eligible for Institutional Select Shares within a limited period of time (generally 90 days). The accumulation period eligibility is subject to the discretion of VGI management.
•Investment by VGI collective investment trusts with a similar mandate. A VGI collective investment trust exempt from regulation under the Investment Company Act and that seeks to achieve its investment objective by investing in an underlying Fund with an index-based mandate may hold Institutional Select Shares of an underlying Fund with a similar index-based mandate whether or not its investment meets the minimum investment threshold specified above.
ETF Shares – Eligibility Requirements
The eligibility requirements for ETF Shares will be set forth in the Fund’s registration statement. To be eligible to purchase ETF Shares directly from a Fund, an investor must be (or must purchase through) an Authorized Participant, as defined in Paragraph III.F of the Multiple Class Plan. Investors purchasing ETF Shares from a Fund must purchase a minimum number of shares, known as a Creation Unit. The number of ETF Shares in a Creation Unit may vary from Fund to Fund. The value of a Fund’s Creation Unit will vary with the net asset value of the Fund’s ETF Shares but is expected to be several million dollars. An eligible investor generally must purchase a Creation Unit by depositing a prescribed basket consisting predominantly of securities with the Fund.
Original Board Approval: July 21, 2000
Last Approved by Board: November 2024
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v3.25.0.1
| Label |
Element |
Value |
| Risk Return Abstract |
rr_RiskReturnAbstract |
|
|
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dei_EntityRegistrantName |
VANGUARD STAR FUNDS
|
|
| Prospectus Date |
rr_ProspectusDate |
Feb. 19, 2025
|
|
| ETF | Vanguard STAR Core-Plus Bond Fund |
|
|
|
| Risk Return Abstract |
rr_RiskReturnAbstract |
|
|
| Risk/Return [Heading] |
rr_RiskReturnHeading |
<span style="color:#000000;font-family:Arial;font-size:13pt;font-weight:bold;">Fund Summary</span>
|
|
| Objective [Heading] |
rr_ObjectiveHeading |
<span style="color:#000000;font-family:Arial;font-size:10pt;font-weight:bold;">Investment Objective</span>
|
|
| Objective, Primary [Text Block] |
rr_ObjectivePrimaryTextBlock |
The Fund seeks to provide total return while generating a moderate to high level of current income.
|
|
| Expense [Heading] |
rr_ExpenseHeading |
<span style="color:#000000;font-family:Arial;font-size:10pt;font-weight:bold;">Fees and Expenses</span>
|
|
| Expense Narrative [Text Block] |
rr_ExpenseNarrativeTextBlock |
The following tables describe the fees and expenses you may pay if you buy, hold, and sell Institutional shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the tables and example below.
|
|
| Shareholder Fees Caption [Text] |
rr_ShareholderFeesCaption |
<span style="color:#000000;font-family:Arial;font-size:8.5pt;font-weight:bold;">Shareholder Fees</span>
<br/><span style="color:#000000;font-family:Arial;font-size:8.5pt;">(Fees paid directly from your investment)</span>
|
|
| Operating Expenses Caption [Text] |
rr_OperatingExpensesCaption |
<span style="color:#000000;font-family:Arial;font-size:8.5pt;font-weight:bold;">Annual Fund Operating Expenses</span>
<br/><span style="color:#000000;font-family:Arial;font-size:8.5pt;">(Expenses that you pay each year as a percentage of the value of your investment)</span>
|
|
| Portfolio Turnover [Heading] |
rr_PortfolioTurnoverHeading |
<span style="color:#000000;font-family:Arial;font-size:9.5pt;">Portfolio Turnover</span>
|
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| Portfolio Turnover [Text Block] |
rr_PortfolioTurnoverTextBlock |
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in more taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the previous expense example, reduce the Fund’s performance. The Fund has no operating history and therefore has no portfolio turnover information.
|
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| Expense Example [Heading] |
rr_ExpenseExampleHeading |
<span style="color:#000000;font-family:Arial;font-size:9.5pt;">Example</span>
|
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| Expense Example Narrative [Text Block] |
rr_ExpenseExampleNarrativeTextBlock |
The following example is intended to help you compare the cost of investing in the Fund’s Institutional shares with the cost of investing in other funds. They illustrates the hypothetical expenses that you would incur over various periods if you were to invest $10,000 in the Fund’s shares. This example assumes that the shares provide a return of 5% each year and that total annual fund operating expenses remain as stated in the preceding table. You would incur these hypothetical expenses whether or not you were to sell your shares at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
|
|
| Expense Example Closing [Text Block] |
rr_ExpenseExampleClosingTextBlock |
This example does not include the brokerage commissions that you may pay to buy and sell shares of the Fund.
|
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| Strategy [Heading] |
rr_StrategyHeading |
<span style="color:#000000;font-family:Arial;font-size:10pt;font-weight:bold;">Principal Investment Strategies</span>
|
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| Strategy Narrative [Text Block] |
rr_StrategyNarrativeTextBlock |
The Fund invests in fixed income securities of various maturities, yields, and qualities. Under normal circumstances, the Fund will invest at least 80% of its assets in bonds, which include fixed income securities such as corporate bonds; U.S. Treasury obligations and other U.S. government and agency securities; and asset-backed, mortgage-backed, and mortgage-related securities. In general, bonds purchased by the Fund will have a maturity of 90 days or more at the time of their issuance. The Fund may invest in fixed income securities of non-U.S. issuers, including emerging market countries. The Fund’s dollar-weighted average maturity will normally range between 4 and 12 years, and may either be longer or shorter under certain market conditions, such as during periods of market stress, where there is significant change to market structure, or where prepayment of certain securities held by the fund (such as asset-backed, mortgage-backed or similar securities) varies from what is expected under normal market conditions.The Fund can purchase bonds of any quality. High-quality fixed income securities are investment-grade securities that are rated the equivalent of A3 or better by Moody’s Ratings, or another independent rating agency or, if unrated, are determined to be of comparable quality by the Fund’s advisor. Medium-quality fixed income securities are investment-grade securities that are rated the equivalent of Baa1, Baa2, or Baa3 by Moody’s Ratings or another independent rating agency or, if unrated, are determined to be of comparable quality by the Fund’s advisor. Both high-quality and medium-quality fixed income securities are considered to be “investment-grade.” Lower quality fixed income securities—commonly known as “junk bonds”—are non-investment-grade securities that are rated the equivalent of Ba1 or lower by Moody’s Ratings or another independent rating agency or, if unrated, are determined to be of comparable quality by the Fund’s advisor. No more than 35% of the Fund’s assets may be invested in non-investment-grade fixed income securities, or junk bonds. The Fund seeks to have a majority of its assets denominated in or hedged back to the U.S. dollar but has the ability to invest in bonds denominated in a foreign currency on an unhedged basis. The Fund may attempt to hedge some or all of its foreign currency exposure, primarily through the use of foreign currency exchange forward contracts, in an effort to manage the currency risk associated with investing in securities denominated in currencies other than the U.S. dollar.In addition to foreign currency exchange forward contracts, the Fund may invest in other derivatives instruments, such as options, futures contracts, other swap agreements, or in to be announced (“TBA”) mortgage-backed securities. The fund may also take short positions in TBA securities.
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| Risk [Heading] |
rr_RiskHeading |
<span style="color:#000000;font-family:Arial;font-size:10pt;font-weight:bold;">Principal Risks</span>
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| Risk [Text Block] |
rr_RiskTextBlock |
An investment in the Fund could lose money over short or long periods of time.You should expect the Fund’s share price and total return to fluctuate within a wide range. The Fund is subject to the following risks, which could affect the Fund’s performance, and the level of risk may vary based on market conditions:• Interest rate risk, which is the chance that bond prices overall will decline because of rising interest rates.• Income risk, which is the chance that the Fund’s income will decline because of falling interest rates. A fund’s income declines when interest rates fall because the fund then must invest new cash flow and cash from maturing bonds in lower- yielding bonds. Income risk is generally high for short-term bond funds and moderate for intermediate-term bond funds, so investors should expect the Fund’s monthly income to fluctuate accordingly.• Call risk, which is the chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupon rates or interest rates before their maturity dates. The Fund would then lose any price appreciation above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the Fund’s income. Such redemptions and subsequent reinvestments would also increase the Fund’s portfolio turnover rate.• Prepayment risk, which is the chance that during periods of falling interest rates, homeowners will refinance their mortgages before their maturity dates, resulting in prepayment of mortgage-backed securities held by the Fund. The Fund would then lose any price appreciation above the mortgage’s principal and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the Fund’s income. Such prepayments and subsequent reinvestments would also increase the Fund’s portfolio turnover rate.• Extension risk, which is the chance that during periods of rising interest rates, certain debt securities will be paid off substantially more slowly than originally anticipated, and the value of those securities may fall. For funds that invest in mortgage-backed securities, extension risk is the chance that during periods of rising interest rates, homeowners will repay their mortgages at slower rates.• Credit risk, which is the chance that a bond issuer will fail to pay interest or principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline.• Liquidity risk, which is the chance that the Fund may not be able to sell a security in a timely manner at a desired price.• Emerging markets risk, which is the chance that the bonds of governments, government agencies, government-owned corporations, and foreign companies located in emerging market countries will be substantially more volatile, and substantially less liquid, than the bonds of governments, government agencies, government-owned corporations, and foreign companies located in more developed foreign markets because, among other factors, emerging market countries can have more variable economic performance; greater custodial and operational risks; less developed legal, tax, regulatory, financial reporting, accounting, and record keeping systems; and greater political, social, and economic instability than developed markets.• Country/regional risk, which is the chance that world events—such as political upheaval, financial troubles, or natural disasters—will adversely affect the value and/or liquidity of securities issued by foreign governments, government agencies, government-owned corporations, and foreign companies. Because the Fund may invest in bonds of issuers located in any one country or region, the Fund’s performance may be hurt disproportionately by the poor performance of its investments in that area. Country/regional risk is especially high in emerging market countries.• Currency risk, which is the chance that the value of a foreign investment, measured in U.S. dollars, will decrease because of unfavorable changes in currency exchange rates. Currency risk is especially high in emerging markets.• Currency hedging risk. The Fund has the ability to invest in foreign bonds which may or may not be denominated in or hedged back to U.S. dollars. The Fund will decline in value if it underhedges a currency that has weakened or overhedges a currency that has strengthened relative to the U.S. dollar. In addition, the Fund will incur expenses to hedge its foreign currency exposure. By entering into currency hedging transactions, the Fund may eliminate any chance to benefit from favorable fluctuations in relevant currency exchange rates.• Manager risk, which is the chance that poor security selection will cause the Fund to underperform relevant benchmarks or other funds with a similar investment objective.• Management of certain similar funds risk. The name, investment objective, principal investment strategies, and risks of the Fund are similar to another separate fund managed by the Fund’s portfolio managers. However, the investment results of the Fund may be higher or lower than, and there is no guarantee that the investment results of the Fund will be comparable to, that other fund.• Derivatives risk. The Fund may invest in derivatives, which may involve risks different from, and possibly greater than, those of investments directly in the underlying securities or assets.• TBA Securities risk. A TBA transaction represents an agreement to buy or sell mortgage-backed securities with agreed-upon characteristics for a fixed unit price at a future date, but does not specify the particular security to be delivered. TBA transactions involve the risk that the value of the mortgage-backed securities to be purchased declines prior to settlement date or the counterparty does not deliver the securities as promised.• Counterparty risk, which is the chance that the counterparty to a derivatives contract, or other investment vehicle, with the Fund is unable or unwilling to meet its financial obligations.Because of the speculative nature of junk bonds, you should carefully consider the risks associated with this this Fund before you purchase shares.
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| Bar Chart and Performance Table [Heading] |
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<span style="color:#000000;font-family:Arial;font-size:10pt;font-weight:bold;">Annual Total Returns</span>
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| Performance Narrative [Text Block] |
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This is the Fund’s initial prospectus, so it does not contain performance data.
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| Performance One Year or Less [Text] |
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<span style="color:#000000;font-family:Arial;font-size:9.5pt;">This is the Fund’s initial prospectus, so it does not contain performance data.</span>
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| ETF | Vanguard STAR Core-Plus Bond Fund | Risk Lose Money [Member] |
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| Risk Return Abstract |
rr_RiskReturnAbstract |
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| Risk [Text Block] |
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An investment in the Fund could lose money over short or long periods of time.
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| ETF | Vanguard STAR Core-Plus Bond Fund | Risk Not Insured Depository Institution [Member] |
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| Risk Return Abstract |
rr_RiskReturnAbstract |
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| Risk [Text Block] |
rr_RiskTextBlock |
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
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| ETF | Vanguard STAR Core-Plus Bond Fund | Institutional Shares |
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| Risk Return Abstract |
rr_RiskReturnAbstract |
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| Purchase Fee |
rr_MaximumCumulativeSalesChargeOverOther |
none
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| Sales Charge (Load) Imposed on Purchases |
rr_MaximumSalesChargeImposedOnPurchasesOverOfferingPrice |
none
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| Sales Charge (Load) Imposed on Reinvested Dividends |
rr_MaximumSalesChargeOnReinvestedDividendsAndDistributionsOverOther |
none
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| Redemption Fee |
rr_RedemptionFeeOverRedemption |
none
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| Management Fees |
rr_ManagementFeesOverAssets |
0.17%
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| 12b-1 Distribution Fee |
rr_DistributionAndService12b1FeesOverAssets |
none
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| Other Expenses |
rr_OtherExpensesOverAssets |
0.03%
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| Total Annual Fund Operating Expenses |
rr_ExpensesOverAssets |
0.20%
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[1] |
| 1 Year |
rr_ExpenseExampleYear01 |
$ 20
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| 3 Years |
rr_ExpenseExampleYear03 |
$ 64
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| X |
- DefinitionThe exact name of the entity filing the report as specified in its charter, which is required by forms filed with the SEC. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
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- DefinitionDistribution [and/or Service] (12b-1) Fees" include all distribution or other expenses incurred during the most recent fiscal year under a plan adopted pursuant to rule 12b-1 [17 CFR 270.12b-1]. Under an appropriate caption or a subcaption of "Other Expenses," disclose the amount of any distribution or similar expenses deducted from the Fund's assets other than pursuant to a rule 12b-1 plan. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Form N-1A
-Section 3
-Subsection table
-Paragraph 1
-Subparagraph 9
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- DefinitionThe Example does not reflect sales charges (loads) on reinvested dividends [and other distributions]. If these sales charges (loads) were included, your costs would be higher. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Form N-1A
-Section 3
-Subsection instructions
-Paragraph 4
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-Publisher SEC
-Name Form N-1A
-Section 3
-Subsection instructions
-Paragraph 4
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- DefinitionThe Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Form N-1A
-Section 3
-Subsection example
-Paragraph 1
-Subparagraph 1
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| X |
- DefinitionThe Example assumes that you invest $10,000 in the Fund for the time periods indicated and then you redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return per year and that the Fund's operating expenses remained the same. Although your actual costs may be higher or lower. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Form N-1A
-Section 3
-Subsection instructions
-Paragraph 4
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| X |
- DefinitionThe Example assumes that you invest $10,000 in the Fund for the time periods indicated and then you redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return per year and that the Fund's operating expenses remained the same. Although your actual costs may be higher or lower. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Form N-1A
-Section 3
-Subsection example
-Paragraph 1
-Subparagraph 2
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| X |
- DefinitionRisk/Return Summary Fee Table Includes the following information, in plain English under rule 421(d) under the Securities Act, after Item 2 Fees and expenses of the Fund This table describes the fees and expenses that you may pay if you buy and hold shared of the Fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $[_____] in [name of fund family] funds. Shareholder Fees (fees paid directly from your investment) Example This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the time periods indicated and then you redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return per year and that the Fund's operating expenses remained the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be You would pay the following expenses if you did not redeem your shares The Example does not reflect sales charges (loads) on reinvested dividends [and other distributions]. If these sales charges (loads) were included, your costs would be higher. Portfolio Turnover The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover may indicate higher transaction costs. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was __% of the average value of its whole portfolio. Instructions. A.3.instructions.6 New Funds. For purposes of this Item, a "New Fund" is a Fund that does not include in Form N-1A financial statements reporting operating results or that includes financial statements for the Fund's initial fiscal year reporting operating results for a period of 6 months or less. The following Instructions apply to New Funds. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Form N-1A
-Section 3
-Subsection instructions
-Paragraph 1
-Subparagraph d
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| X |
- DefinitionThis table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the tables and examples below. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $[ ] in [name of fund family] funds. More information about these and other discounts is available from your financial intermediary and in [identify section heading and page number] of the Fund's prospectus and [identify section heading and page number] of the Fund's statement of additional information Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Form N-1A
-Section 3
-Subsection instructions
-Paragraph 1
-Subparagraph b
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| X |
- DefinitionTotal Annual Fund Operating Expenses. If the Fund is a Feeder Fund, reflect the aggregate expenses of the Feeder Fund and the Master Fund in a single fee table using the captions provided. In a footnote to the fee table, state that the table and Example reflect the expenses of both the Feeder and Master Funds. If the prospectus offers more than one Class of a Multiple Class Fund or more than one Feeder Fund that invests in the same Master Fund, provide a separate response for each Class or Feeder Fund. Base the percentages of "Annual Fund Operating Expenses" on amounts incurred during the Fund's most recent fiscal year, but include in expenses amounts that would have been incurred absent expense reimbursement or fee waiver arrangements. If the Fund has changed its fiscal year and, as a result, the most recent fiscal year is less than three months, use the fiscal year prior to the most recent fiscal year as the basis for determining "Annual Fund Operating Expenses." Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Form N-1A
-Section 3
-Subsection instructions
-Paragraph 3
-Subparagraph d
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| X |
- DefinitionManagement Fees include investment advisory fees (including any fees based on the Fund's performance), any other management fees payable to the investment adviser or its affiliates, and administrative fees payable to the investment adviser or its affiliates that are not included as "Other Expenses." Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Form N-1A
-Section 3
-Subsection instructions
-Paragraph 3
-Subparagraph a
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| X |
- DefinitionMaximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price). If a sales charge (load) is imposed on shares purchased with reinvested capital gains distributions or returns of capital, include the bracketed words in the third caption. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Form N-1A
-Section 3
-Subsection table
-Paragraph 1
-Subparagraph 1
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| X |
- DefinitionMaximum Deferred Sales Charge (Load) (as a percentage of ____) A.3.instructions.2.a.i "Maximum Deferred Sales Charge (Load)" includes the maximum total deferred sales charge (load) payable upon redemption, in installments, or both, expressed as a percentage of the amount or amounts stated in response to Item 7(a), except that, for a sales charge (load) based on net asset value at the time of purchase, show the sales charge (load) as a percentage of the offering price at the time of purchase. A Fund may include in a footnote to the table, if applicable, a tabular presentation showing the amount of deferred sales charges (loads) over time or a narrative explanation of the sales charges (loads) (e.g., __% in the first year after purchase, declining to __% in the __ year and eliminated thereafter). A.3.instructions.2.a.ii If more than one type of sales charge (load) is imposed (e.g., a deferred sales charge (load) and a front-end sales charge (load)), the first caption in the table should read "Maximum Sales Charge (Load)" and show the maximum cumulative percentage. Show the percentage amounts and the terms of each sales charge (load) comprising that figure on separate lines below. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Form N-1A
-Section 3
-Subsection table
-Paragraph 1
-Subparagraph 1
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| X |
- DefinitionMaximum Sales Charge (Load) Imposed on Reinvested Dividends[and other Distributions] (as a percentage of ____) Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Form N-1A
-Section 3
-Subsection table
-Paragraph 1
-Subparagraph 3
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| X |
- DefinitionInvestment Objectives/Goals. Disclose the Fund's investment objectives or goals. A Fund also may identify its type or category (e.g., that it is a Money Market Fund or a balanced fund). Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Form N-1A
-Section 2
-Subsection a
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| X |
- DefinitionInvestment Objectives/Goals. Disclose the Fund's investment objectives or goals. A Fund also may identify its type or category (e.g., that it is a Money Market Fund or a balanced fund). Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Form N-1A
-Section 2
-Subsection a
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| X |
- DefinitionAnnual Fund Operating Expenses (ongoing expenses that you pay each year as a percentage of the value of your investment) Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Form N-1A
-Section 3
-Subsection table
-Paragraph 1
-Subparagraph 7
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| X |
- Definition"Other Expenses" include all expenses not otherwise disclosed in the table that are deducted from the Fund's assets or charged to all shareholder accounts. The amount of expenses deducted from the Fund's assets are the amounts shown as expenses in the Fund's statement of operations (including increases resulting from complying with paragraph 2(g) of rule 6-07 of Regulation S-X [17 CFR 210.6-07]). "Other Expenses" do not include extraordinary expenses as determined under generally accepted accounting principles (see Accounting Principles Board Opinion No. 30). If extraordinary expenses were incurred that materially affected the Fund's "Other Expenses," disclose in a footnote to the table what "Other Expenses" would have been had the extraordinary expenses been included. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Form N-1A
-Section 3
-Subsection instructions
-Paragraph 3
-Subparagraph c
-Clause i
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| X |
- DefinitionRisk/Return Bar Chart and Table. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Form N-1A
-Section 4
-Subsection b
-Paragraph 2
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| X |
- DefinitionDisclose the portfolio turnover rate provided in response to Item 14(a) for the most recent fiscal year (or for such shorter period as the Fund has been in operation). Disclose the period for which the information is provided if less than a full fiscal year. A Fund that is a Money Market Fund may omit the portfolio turnover information required by this Item. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Form N-1A
-Section 3
-Subsection instructions
-Paragraph 5
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| X |
- DefinitionDisclose the portfolio turnover rate provided in response to Item 14(a) for the most recent fiscal year (or for such shorter period as the Fund has been in operation). Disclose the period for which the information is provided if less than a full fiscal year. A Fund that is a Money Market Fund may omit the portfolio turnover information required by this Item. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Form N-1A
-Section 3
-Subsection example
-Paragraph 3
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| X |
- DefinitionThe date of the prospectus. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Form N-1A
-Section 1
-Subsection a
-Paragraph 3
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| X |
- Definition"Redemption Fee" (as a percentage of amount redeemed, if applicable) If the Fund is an Exchange-Traded Fund and issues or redeems shares in creation units of not less than 25,000 shares each, exclude any fees charged for the purchase and redemption of the Fund's creation units. "Redemption Fee" includes a fee charged for any redemption of the Fund's shares, but does not include a deferred sales charge (load) imposed upon redemption. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Form N-1A
-Section 3
-Subsection instructions
-Paragraph 2
-Subparagraph b
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| X |
- DefinitionNarrative Risk Disclosure. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Form N-1A
-Section 4
-Subsection b
-Paragraph 1
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- References
+ Details
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| X |
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-Publisher SEC
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