Institutional Investment Guide. Second Quarter > June 30, 2012

Transcription

1 Institutional Investment Guide Q Second Quarter > June 30, 2012

2 Helping institutional clients meet their objectives through a broad range of leading investment management solutions and services. Rely on Vanguard an industry leader and a trusted name to deliver consistent long-term results Institutional investment expertise Outstanding long-term results > Contents More than 30 years ago, Vanguard was built on the principles of institutional investing: consistency; discipline; and a careful, long-range approach. Over time, we have cultivated a deep understanding of institutional investors needs. This experience has helped thousands of clients accomplish their goals clients who have come to rely on the partnerships they form with us. A name you know and trust Our clients come first in every aspect of our business. We provide candid counsel, striving to accurately identify client needs and match them with the best possible solution. Through our extensive research, we offer insightful commentary on topics important to institutional investors. But what our clients value most is our sterling reputation, earned over decades. Confident that Vanguard is a company they can depend upon, our clients and their participants have placed their trust in us along with more than $1 trillion in assets. Our consistent and disciplined investment philosophy permeates everything we do. We have a history of delivering low costs and exceptional service, which in turn provides the highest value to our clients. Clients also benefit from our economies of scale, an advantage stemming from our size and position as an industry leader, and from the perspective we have acquired through the diversity of our businesses. But don t just take our word for it. The proof is in the significant number of Vanguard investment products that consistently perform in the top quartile of their respective peer groups, according to Lipper. Investment categories and styles 2 Equity 6 and index-oriented 6 Actively managed 18 Balanced 24 Actively managed 24 and index-oriented 26 Life-cycle 26 Age-based 26 Risk-based 28 Fixed income 30 Taxable actively managed and index 30 Tax-exempt 36 Money market 38 Taxable and tax-exempt 38 Exchange-traded funds 40 After-tax returns for Vanguard 48 Tax-Managed Funds Connect with Vanguard > institutional.vanguard.com >

3 Investment categories and styles Equity Value Blend Growth Large Equity Income 500 FTSE Social High Dividend Yield Diversified Equity Growth Equity Mega Cap 300 Value Dividend Appreciation Growth Russell 1000 Value Dividend Growth Mega Cap 300 Growth Russell 1000 Value Trust** Employee Benefit ** Morgan Growth S&P 500 Value Growth and Income PRIMECAP* U.S. Value Institutional Russell 1000 Growth Value Institutional Total Stock Market Russell 1000 Growth Trust** Windsor Large-Cap S&P 500 Growth Windsor II Mega Cap 300 U.S. Growth PRIMECAP Core* Russell 1000 Russell 3000 Russell 3000 Trust** Structured Broad Market Structured Large-Cap Equity Tax-Managed Capital Appreciation Tax-Managed Growth and Income Total Stock Market Total Stock Market Trust** Medium Capital Value Extended Market Capital Opportunity* Mid-Cap Value Mid-Cap Mid-Cap Growth S&P Mid-Cap 400 Value S&P Mid-Cap 400 Mid-Cap Growth Selected Value Strategic Equity S&P Mid-Cap 400 Growth Small Explorer Value Russell 2000 Explorer Russell 2000 Value S&P Small-Cap 600 Russell 2000 Growth Russell 2000 Value Trust** Small-Cap Russell 2000 Growth Trust** S&P Small-Cap 600 Value Strategic Small-Cap Equity S&P Small-Cap 600 Growth Small-Cap Value Tax-Managed Small-Cap Small-Cap Growth International/global Emerging Markets Select Stock Developed Markets FTSE All-World ex-us Small-Cap International Value Emerging Markets Stock International Explorer European Stock International Growth European Stock Trust** FTSE All-World ex-us Global ex-u.s. Real Estate Global Equity Pacific Stock Pacific Stock Trust** Tax-Managed International Total International Stock Total World Stock Equity Sector/specialized Consumer Discretionary Health Care Precious Metals and Mining Balanced Consumer Staples Health Care REIT Convertible Securities Industrials Telecommunication Services Energy Information Technology Utilities Energy Financials Conservative Market Neutral Materials Moderate Actively managed Wellesley Income Managed Payout Distribution Focus and index-oriented Managed Payout Growth and Distribution Managed Payout Growth Focus STAR Wellington Balanced Tax-Managed Balanced Life-cycle Target Retirement Income Target Retirement 2015 Target Retirement 2010 Target Retirement 2020 LifeStrategy Conservative Growth Target Retirement 2025 LifeStrategy Income Target Retirement 2030 Target Retirement 2035 Target Retirement 2040 Target Retirement 2045 Target Retirement 2050 Target Retirement 2055 Target Retirement 2060 LifeStrategy Growth LifeStrategy Moderate Growth * Fund closed to new investor accounts, except for Flagship and Asset Management Services clients. The Admiral Treasury Money Market and Federal Money Market Funds are closed to all new investor accounts. ** Available as a commingled trust for qualified plans and certain governmental plans. 2 > Vanguard Institutional Investment Guide For more complete details on Vanguard institutional investment capabilities go to > institutional.vanguard.com > 3

4 Investment categories and styles Fixed income taxable Short Intermediate Long Treasury/agency/blend Short-Term Bond GNMA Extended Dun Treasury Investment-grade corporate Below-investment-grade Stable value Fixed income tax-exempt Short-Term Federal Inflation-Protected Securities Long-Term Bond Short-Term Government Bond Intermediate-Term Bond Long-Term Government Bond Short-Term Treasury Intermediate-Term Government Bond Long-Term Treasury Intermediate-Term Treasury Mortgage-Backed Securities Total Bond Market Short-Term Corporate Bond Intermediate-Term Corporate Bond Long-Term Corporate Bond Short-Term Investment-Grade Intermediate-Term Investment-Grade Long-Term Investment-Grade Retirement Savings Trust** High-Yield Corporate* Short Intermediate Long Federal Limited-Term Tax-Exempt Intermediate-Term Tax-Exempt Long-Term Tax-Exempt Short-Term Tax-Exempt State California Intermediate-Term Tax-Exempt California Long-Term Tax-Exempt Florida Focused Long-Term Tax-Exempt Massachusetts Tax-Exempt New Jersey Long-Term Tax-Exempt New York Long-Term Tax-Exempt Ohio Long-Term Tax-Exempt Pennsylvania Long-Term Tax-Exempt Below-investment-grade Money market taxable Money market tax-exempt High-Yield Tax-Exempt Admiral Treasury Money Market* Federal Money Market* Prime Money Market Exchange-traded funds Value Blend Growth Equity Large Mega Cap 300 Value ETF Large-Cap ETF Growth ETF Russell 1000 Value ETF Mega Cap 300 ETF Mega Cap 300 Growth ETF S&P 500 Value ETF Russell 1000 ETF Russell 1000 Growth ETF Value ETF Russell 3000 ETF S&P 500 Growth ETF S&P 500 ETF Total Stock Market ETF Medium Mid-Cap Value ETF Extended Market ETF Mid-Cap Growth ETF S&P Mid-Cap 400 Value ETF Mid-Cap ETF S&P Mid-Cap 400 Growth ETF S&P Mid-Cap 400 ETF Small Russell 2000 Value ETF Russell 2000 ETF Russell 2000 Growth ETF S&P Small-Cap 600 Value ETF S&P Small-Cap 600 ETF S&P Small-Cap 600 Growth ETF Small-Cap Value ETF Small-Cap ETF Small-Cap Growth ETF Specialty High Dividend Yield ETF International/ global Dividend Appreciation ETF FTSE All-World ex-us ETF Global ex-u.s. Real Estate ETF MSCI Emerging Markets ETF MSCI Europe ETF MSCI EAFE ETF MSCI Pacific ETF Total International Stock ETF Total World Stock ETF Sector Consumer Discretionary ETF Health Care ETF REIT ETF FTSE All-World ex-us Small-Cap ETF Consumer Staples ETF Industrials ETF Telecommunication Services ETF Energy ETF Information Technology ETF Utilities ETF Financials ETF Materials ETF Short Intermediate Long Fixed income Short-Term Bond ETF Intermediate-Term Bond ETF Extended Dun Treasury ETF Short-Term Corporate Bond ETF Intermediate-Term Corporate Bond ETF Long-Term Bond ETF Short-Term Government Bond ETF Intermediate-Term Government Bond ETF Long-Term Corporate Bond ETF Mortgage-Backed Securities ETF Total Bond Market ETF Long-Term Government Bond ETF Federal Tax-Exempt Money Market State California Tax-Exempt Money Market New York Tax-Exempt Money Market Pennsylvania Tax-Exempt Money Market New Jersey Tax-Exempt Money Market Ohio Tax-Exempt Money Market * Fund closed to new investor accounts, except for Flagship and Asset Management Services clients. The Admiral Treasury Money Market and Federal Money Market Funds are closed to all new investor accounts. ** Available as a commingled trust for qualified plans and certain governmental plans. 4 > Vanguard Institutional Investment Guide For more complete details on Vanguard institutional investment capabilities go to > institutional.vanguard.com > 5

5 Equity and index-oriented Equity Investment overview Returns (%) Volatility 2 Portfolio characteristics Name (number) Ticker Style Benchmark (%) 1 Fees n ($ millions) yield (%) Quarter 1Yr. 3Yr. 5Yr. 10Yr. date Beta R 2 stocks ($ billions) P/E P/B Return on equity (%) (%) 3 Domestic large-cap FTSE Social Growth FTSE4Good US Select x 1.9x Investor Shares (0213) VFTSX /31/2000 Institutional Shares (0223) VFTNX /14/2003 Growth Growth MSCI US Prime Market Growth x 3.7x Investor Shares (0009) VIGRX , /02/1992 Admiral Shares (0509) VIGAX , /13/2000 Institutional Shares (0868) VIGIX , /14/1998 Signal Shares6 (1347) VIGSX , /04/2007 Mega Cap 300 Growth Growth MSCI US Large Cap Growth x 3.7x Institutional Shares (0838) VMGAX /03/2008 Russell 1000 Growth Growth Russell 1000 Growth x 4.3x Institutional Shares (1850) VRGWX /06/2010 Russell 1000 Growth Trust l (0291) NA Growth Russell 1000 Growth R6 1, /30/ x 4.3x S&P 500 Growth Growth S&P 500 Growth x 3.6x Institutional Shares (1841) VSPGX /09/ Blend S&P x 2.2x Investor Shares (0040) VFINX , /31/1976 Admiral Shares (0540) VFIAX , /13/2000 Signal Shares6 (1340) VIFSX , /29/2006 Dividend Appreciation Blend Dividend Achievers Select x 3.0x Investor Shares (0602) VDAIX , /27/2006 Employee Benefit l (0528) NA Blend S&P 500 R6 8, /30/ x 2.2x Institutional Blend S&P x 2.2x Institutional Shares (0094) VINIX , /31/1990 Institutional Plus Shares (0854) VIIIX , /07/1997 Institutional Total Stock Market Blend MSCI US Broad Market , x 2.1x Institutional Shares (0870) VITNX , /31/2001 Institutional Plus Shares (0871) VITPX , /31/2001 Large-Cap Blend MSCI US Prime Market x 2.2x Investor Shares (0307) VLACX /30/2004 Admiral Shares (5307) VLCAX /02/2004 Institutional Shares (0807) VLISX /30/2005 Signal Shares6 (1343) VLCSX /30/2007 The performance data shown represent past performance. Past performance and especially short-term past performance is not a guarantee of future results. Investment returns and principal value will fluctuate, so an investor's shares, when sold, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data cited. For performance data current to the most recent month-end, visit vanguard.com/performance. Performance figures assume the reinvestment of dividends and capital gains distributions; the figures are pre-tax and net of expenses. Performance data for periods of less than one year do not reflect the deduction of purchase and redemption fees. Vanguard funds apply a $20 annual account service fee to all funds with balances below $10,000 in many types of accounts, which is not reflected in these figures. If these fees were included, the performance would be lower. All other performance data are adjusted for purchase and redemption fees, where applicable. All figures are for periods ended June 30, 2012, except where noted. Performance figures for periods of less than one year are cumulative returns. - returns are available for all Vanguard funds at vanguard.com/performance. For information on eligibility requirements for Admiral, Institutional, or Signal Shares, call Fee codes R1: 0.50% purchase fee and 0.50% redemption fee. R2: 0.25% purchase fee and 0.25% redemption fee. R3: 0.50% purchase fee. R4: 0.25% purchase fee. R5: 1% purchase fee. R6: Advisory fees are negotiated. Contact your Vanguard sales representative for price information. u Fund closed to new investor accounts, except for Flagship and Asset Management Services clients. l Available as a commingled trust for qualified plans and certain government plans. Gross performance results are presented before investment advisory fees but after all trading-related costs. 6 > Vanguard Institutional Investment Guide For more complete details on Vanguard institutional investment capabilities go to > institutional.vanguard.com Equity > 7

6 Equity and index-oriented Equity Investment overview Returns (%) Volatility 2 Portfolio characteristics Name (number) Ticker Style Benchmark Domestic large-cap Ticker Style Benchmark (%) 1 Fees n ($ millions) Ratio 5 Fees (millions) yield (%) yield Quarter 1Yr. 3Yr. 5Yr. 10Yr. date Beta R 2 stocks date Beta R 2 stocks ($ billions) (billions) P/E P/B Return on equity (%) Return on equity Mega Cap 300 Blend MSCI US Large Cap x 2.2x Institutional Shares (0828) VMCTX /22/2008 Russell 1000 Blend Russell x 2.2x Institutional Shares (1848) VRNIX /15/2010 Russell 3000 Blend Russell , x 2.1x Institutional Shares (1854) VRTTX /01/2010 Russell 3000 Trust l (0298) NA Blend Russell 3000 R /07/ , x 2.1x Tax-Managed Capital Appreciation* Blend Russell x 2.1x Admiral Shares (5102) VTCLX , /06/1994 Institutional Shares (0135) VTCIX /24/1999 Tax-Managed Growth and Income* Blend S&P x 2.2x Admiral Shares (5101) VTGLX , /06/1994 Institutional Shares (0136) VTMIX /04/1999 Total Stock Market Blend MSCI US Broad Market , x 2.1x Investor Shares (0085) VTSMX , /27/1992 Admiral Shares (0585) VTSAX , /13/2000 Institutional Shares (0855) VITSX , /07/1997 Signal Shares6 (1341) VTSSX , /01/2006 Total Stock Market Trust l (0125) NA Blend Dow Jones U.S. Total Stock Market Float R6 8, /30/ , x 2.1x Adjusted High Dividend Yield Value FTSE High Dividend Yield x 2.2x Investor Shares (0623) VHDYX , /16/2006 Mega Cap 300 Value Value MSCI US Large Cap Value x 1.6x Institutional Shares (0839) VMVLX /05/2008 Russell 1000 Value Value Russell 1000 Value x 1.4x Institutional Shares (1849) VRVIX /10/2010 Russell 1000 Value Trust l (0191) NA Value Russell 1000 Value R /30/ x 1.4x S&P 500 Value Value S&P 500 Value x 1.5x Institutional Shares (1840) VSPVX /09/2010 Value Value MSCI US Prime Market Value x 1.6x Investor Shares (0006) VIVAX , /02/1992 Admiral Shares (0506) VVIAX , /13/2000 Institutional Shares (0867) VIVIX , /02/1998 Signal Shares6 (1346) VVISX , /04/2007 Domestic mid-cap Mid-Cap Growth Growth MSCI US Mid Cap Growth x 3.4x Investor Shares (0832) VMGIX /24/2006 Admiral Shares (5832) VMGMX /27/2011 S&P Mid-Cap 400 Growth Growth S&P MidCap 400 Growth x 2.8x Institutional Shares (1843) VMFGX /28/2011 rate (%) 3 rate5 u Fund closed to new investor accounts, except for Flagship and Asset Management Services clients. l Available as a commingled trust for qualified plans and certain government plans. Gross performance results are presented before investment advisory fees but after all trading-related costs. 8 > Vanguard Institutional Investment Guide For more complete details on Vanguard institutional investment capabilities go to > institutional.vanguard.com Equity > 9

7 Equity and index-oriented Equity Investment overview Returns (%) Volatility 2 Portfolio characteristics Name (number) Ticker Style Benchmark Domestic mid-cap Ticker Style Benchmark (%) 1 Fees n ($ millions) Ratio 5 Fees (millions) yield (%) yield Quarter 1Yr. 3Yr. 5Yr. 10Yr. date Beta R 2 stocks date Beta R 2 stocks ($ billions) (billions) P/E P/B Return on equity (%) Return on equity Extended Market Blend S&P Completion , x 1.9x Investor Shares (0098) VEXMX , /21/1987 Admiral Shares (0598) VEXAX , /13/2000 Institutional Shares (0856) VIEIX , /07/1997 Institutional Plus Shares (1860) VEMPX , /14/2011 Signal Shares6 (1342) VEMSX , /01/2006 Mid-Cap Blend MSCI US Mid Cap x 2.1x Investor Shares (0859) VIMSX , /21/1998 Admiral Shares (5859) VIMAX , /12/2001 Institutional Shares (0864) VMCIX , /21/1998 Institutional Plus Shares (1859) VMCPX , /15/2010 Signal Shares6 (1344) VMISX , /30/2007 S&P Mid-Cap 400 Blend S&P MidCap x 1.9x Institutional Shares (1842) VSPMX /28/2011 Mid-Cap Value Value MSCI US Mid Cap Value x 1.5x Investor Shares (0835) VMVIX /24/2006 Admiral Shares (5835) VMVAX /27/2011 S&P Mid-Cap 400 Value Value S&P MidCap 400 Value x 1.5x Institutional Shares (1844) VMFVX /02/2010 Domestic small-cap Russell 2000 Growth Growth Russell 2000 Growth 1, x 3.3x Institutional Shares (1853) VRTGX /25/2011 Russell 2000 Growth Trust l (0296) NA Growth Russell 2000 Growth R /30/ , x 3.3x S&P Small-Cap 600 Growth Growth S&P SmallCap 600 Growth x 2.5x Institutional Shares (1847) VSGNX /09/2010 Small-Cap Growth Growth MSCI US Small Cap Growth x 2.9x Investor Shares (0861) VISGX , /21/1998 Admiral Shares (5861) VSGAX , /27/2011 Institutional Shares (0866) VSGIX , /24/2000 Russell 2000 Blend Russell , x 1.8x Institutional Shares (1851) VRTIX /22/2010 S&P Small-Cap 600 Blend S&P SmallCap x 1.8x Institutional Shares (1845) VSMSX /01/2011 Small-Cap Blend MSCI US Small Cap , x 1.8x Investor Shares (0048) NAESX , /03/1960 Admiral Shares (0548) VSMAX , /13/2000 Institutional Shares (0857) VSCIX , /07/1997 Institutional Plus Shares (1861) VSCPX , /17/2010 Signal Shares6 (1345) VSISX , /15/2006 Tax-Managed Small-Cap* Blend S&P SmallCap x 1.8x Admiral Shares (0116) VTMSX , /25/1999 Institutional Shares (0118) VTSIX /21/1999 rate (%) 3 rate5 u Fund closed to new investor accounts, except for Flagship and Asset Management Services clients. l Available as a commingled trust for qualified plans and certain government plans. Gross performance results are presented before investment advisory fees but after all trading-related costs. 10 > Vanguard Institutional Investment Guide For more complete details on Vanguard institutional investment capabilities go to > institutional.vanguard.com Equity > 11

8 Equity and index-oriented Equity Investment overview Returns (%) Volatility 2 Portfolio characteristics Name (number) Ticker Style Benchmark Domestic small-cap Ticker Style Benchmark (%) 1 Fees n ($ millions) Ratio 5 Fees (millions) yield (%) yield Quarter 1Yr. 3Yr. 5Yr. 10Yr. date Beta R 2 stocks date Beta R 2 stocks ($ billions) (billions) P/E P/B Return on equity (%) Return on equity Russell 2000 Value Value Russell 2000 Value 1, x 1.2x Institutional Shares (1852) VRTVX /22/2010 Russell 2000 Value Trust l (0295) NA Value Russell 2000 Value R /30/ , x 1.2x S&P Small-Cap 600 Value Value S&P SmallCap 600 Value x 1.4x Institutional Shares (1846) VSMVX /09/2010 Small-Cap Value Value MSCI US Small Cap Value , x 1.3x Investor Shares (0860) VISVX , /21/1998 Admiral Shares (5860) VSIAX , /27/2011 Institutional Shares (0865) VSIIX /07/1999 International/global FTSE All-World ex-us Small-Cap ** Growth FTSE Global Small Cap ex US Fee-adjusted , x 1.2x Investor Shares (1684) VFSVX 0.50 R /02/2009 Institutional Shares (0884) VFSNX 0.25 R /02/2009 Developed Markets Blend MSCI EAFE x 1.3x Investor Shares (0227) VDMIX , /08/2000 Admiral Shares (5227) VDMAX , /27/2011 Institutional Shares 7 (0885) VIDMX , /08/2000 Institutional Plus Shares (1862) VDMPX , /02/2010 Emerging Markets Stock Blend MSCI Emerging Markets x 1.7x Investor Shares (0533) VEIEX , /04/1994 Admiral Shares (5533) VEMAX , /23/2006 Institutional Shares (0239) VEMIX , /22/2000 Institutional Plus Shares (1865) VEMRX , /15/2010 Signal Shares6 (1354) VERSX /19/2007 European Stock Blend MSCI Europe x 1.4x Investor Shares (0079) VEURX /18/1990 Admiral Shares (0579) VEUSX , /13/2001 Institutional Shares (0235) VESIX /15/2000 Institutional Plus Shares (1863) VEUPX /13/2010 Signal Shares6 (1352) VESSX /06/2006 European Stock Trust l (0735) NA Blend MSCI Europe R /26/ x 1.4x FTSE All-World ex-us Blend FTSE All-World ex US , x 1.4x Investor Shares (0770) VFWIX /08/2007 Admiral Shares (0570) VFWAX , /27/2011 Institutional Shares (0881) VFWSX , /30/2007 Institutional Plus Shares (1866) VFWPX /16/2010 Global ex-u.s. Real Estate ** Blend S&P Global ex-u.s. Property Fee-adjusted x 1.0x Investor Shares (0738) VGXRX 0.50 R /01/2010 Institutional Shares (1858) VGRNX 0.30 R /19/2011 Signal Shares6 (1758) VGRLX 0.35 R /10/2011 rate (%) 3 rate5 u Fund closed to new investor accounts, except for Flagship and Asset Management Services clients. l Available as a commingled trust for qualified plans and certain government plans. Gross performance results are presented before investment advisory fees but after all trading-related costs. 12 > Vanguard Institutional Investment Guide For more complete details on Vanguard institutional investment capabilities go to > institutional.vanguard.com Equity > 13

9 Equity and index-oriented Equity Investment overview Returns (%) Volatility 2 Portfolio characteristics Name (number) Ticker Style Benchmark International/global Ticker Style Benchmark (%) 1 Fees n ($ millions) Ratio 5 Fees (millions) yield (%) yield Quarter 1Yr. 3Yr. 5Yr. 10Yr. date Beta R 2 stocks date Beta R 2 stocks ($ billions) (billions) P/E P/B Return on equity (%) Return on equity Pacific Stock Blend MSCI Pacific x 1.1x Investor Shares (0072) VPACX /18/1990 Admiral Shares (0572) VPADX , /13/2001 Institutional Shares (0237) VPKIX /15/2000 Institutional Plus Shares (1864) VPAPX /13/2010 Signal Shares6 (1353) VPASX /04/2007 Pacific Stock Trust l (0737) NA Blend MSCI Pacific R /26/ x 1.1x Tax-Managed International* Blend MSCI EAFE x 1.3x Admiral Shares (0127) VTMGX , /17/1999 Institutional Shares (0137) VTMNX /04/2001 Total International Stock Blend MSCI ACWI ex USA IMI , x 1.4x Investor Shares (0113) VGTSX , /29/1996 Admiral Shares (0569) VTIAX , /29/2010 Institutional Shares (1869) VTSNX , /29/2010 Institutional Plus Shares (1870) VTPSX , /30/2010 Signal Shares6 (1769) VTSGX , /30/2010 Total World Stock Blend FTSE Global All Cap , x 1.6x Investor Shares (0628) VTWSX /26/2008 Institutional Shares (0826) VTWIX /09/2008 Sector/specialized Consumer Discretionary MSCI US IMI Consumer Discretionary 25/ x 3.1x Admiral Shares (5483) VCDAX /14/2005 Consumer Staples MSCI US IMI Consumer Staples 25/ x 3.5x Admiral Shares (5484) VCSAX /30/2004 Energy MSCI US IMI Energy 25/ x 1.7x Admiral Shares (5480) VENAX /07/2004 Financials MSCI US IMI Financials 25/ x 1.1x Admiral Shares (5486) VFAIX /04/2004 Health Care MSCI US IMI Health Care 25/ x 2.8x Admiral Shares (5485) VHCIX /05/2004 Industrials MSCI US IMI Industrials 25/ x 2.5x Admiral Shares (5482) VINAX /08/2006 Information Technology MSCI US IMI Information Technology 25/ x 3.1x Admiral Shares (5487) VITAX /25/2004 Materials MSCI US IMI Materials 25/ x 2.3x Admiral Shares (5481) VMIAX /11/2004 rate (%) 3 rate5 u Fund closed to new investor accounts, except for Flagship and Asset Management Services clients. l Available as a commingled trust for qualified plans and certain government plans. Gross performance results are presented before investment advisory fees but after all trading-related costs. 14 > Vanguard Institutional Investment Guide For more complete details on Vanguard institutional investment capabilities go to > institutional.vanguard.com Equity > 15

10 Equity and index-oriented Equity Investment overview Returns (%) Volatility 2 Portfolio characteristics Name (number) Ticker Style Benchmark Sector/specialized Ticker Style Benchmark (%) 1 Fees n ($ millions) Ratio 5 Fees (millions) yield (%) yield Quarter 1Yr. 3Yr. 5Yr. 10Yr. date Beta R 2 stocks date Beta R 2 stocks ($ billions) (billions) P/E P/B Return on equity (%) Return on equity REIT MSCI US REIT x 2.3x Investor Shares (0123) VGSIX , /13/1996 Admiral Shares (5123) VGSLX , /12/2001 Institutional Shares (3123) VGSNX , /02/2003 Signal Shares6 (1355) VGRSX , /04/2007 Telecommunication Services MSCI US IMI Telecommunication Services 25/ x 2.1x Admiral Shares (5488) VTCAX /11/2005 Utilities MSCI US IMI Utilities 25/ x 1.6x Admiral Shares (5489) VUIAX /28/2004 rate (%) 3 rate5 u Fund closed to new investor accounts, except for Flagship and Asset Management Services clients. l Available as a commingled trust for qualified plans and certain government plans. Gross performance results are presented before investment advisory fees but after all trading-related costs. 16 > Vanguard Institutional Investment Guide For more complete details on Vanguard institutional investment capabilities go to > institutional.vanguard.com Equity > 17

11 Equity Actively managed Equity Investment overview Returns (%) Volatility 2 Portfolio characteristics Name (number) Ticker Style Manager Domestic large-cap Ticker Style Benchmark (%) 1 Fees n ($ millions) Ratio 5 Fees (millions) yield (%) yield Quarter 1Yr. 3Yr. 5Yr. 10Yr. date Beta R 2 stocks date Beta R 2 stocks ($ billions) (billions) P/E P/B Return on equity (%) Return on equity Growth Equity (0544) VGEQX Growth Baillie Gifford Overseas Ltd /11/ x 3.6x Jennison Associates LLC Morgan Growth Growth Frontier Capital Management Co., LLC x 3.5x Jennison Associates LLC Kalmar Investment Advisers Vanguard Equity Investment Group Wellington Management Company, LLP Investor Shares (0026) VMRGX , /31/1968 Admiral Shares (0526) VMRAX , /14/2001 PRIMECAP u Growth PRIMECAP Management Company x 2.8x Investor Shares (0059) VPMCX , /01/1984 Admiral Shares (0559) VPMAX , /12/2001 U.S. Growth Growth Delaware Management Company x 3.5x Wellington Management Company, LLP William Blair & Company, L.L.C. Investor Shares (0023) VWUSX , /06/1959 Admiral Shares (0523) VWUAX /13/2001 Diversified Equity (0608) VDEQX Blend Managers of the underlying funds , /10/ x 2.0x Dividend Growth (0057) VDIGX Blend Wellington Management Company, LLP , /15/ x 2.8x Growth and Income Blend D.E. Shaw Investment Management, L.L.C x 2.2x Los Angeles Capital Vanguard Equity Investment Group Investor Shares (0093) VQNPX , /10/1986 Admiral Shares (0593) VGIAX , /14/2001 PRIMECAP Coreu (1220) VPCCX Blend PRIMECAP Management Company , /09/ x 2.7x Structured Broad Market Blend Vanguard Equity Investment Group x 2.3x Institutional Shares (0882) VSBMX /30/2006 Institutional Plus Shares 9 (0883) VSBPX /03/2004 Structured Large-Cap Equity Blend Vanguard Equity Investment Group x 2.2x Institutional Shares (0872) VSLIX /16/2006 Institutional Plus Shares (0873) VSLPX /15/2006 Equity Income Value Vanguard Equity Investment Group x 2.1x Wellington Management Company, LLP Investor Shares (0065) VEIPX , /21/1988 Admiral Shares (0565) VEIRX , /13/2001 U.S. Value (0124) VUVLX Value Vanguard Equity Investment Group /29/ x 1.6x Windsor Value AllianceBernstein L.P x 1.6x Wellington Management Company, LLP Investor Shares (0022) VWNDX , /23/1958 Admiral Shares (5022) VWNEX , /12/2001 rate (%) 3 rate5 u Fund closed to new investor accounts, except for Flagship and Asset Management Services clients. l Available as a commingled trust for qualified plans and certain government plans. Gross performance results are presented before investment advisory fees but after all trading-related costs. 18 > Vanguard Institutional Investment Guide For more complete details on Vanguard institutional investment capabilities go to > institutional.vanguard.com Equity > 19

12 Equity Actively managed Equity Investment overview Returns (%) Volatility 2 Portfolio characteristics Name (number) Ticker Style Manager Domestic large-cap Ticker Style Benchmark (%) 1 Fees n ($ millions) Ratio 5 Fees (millions) yield (%) yield Quarter 1Yr. 3Yr. 5Yr. 10Yr. date Beta R 2 stocks date Beta R 2 stocks Windsor II Value Armstrong Shaw Associates Inc. Barrow, Hanley, Mewhinney & Strauss, LLC Hotchkis and Wiley Capital Management, LLC Lazard Asset Management LLC Sanders Capital, LLC Vanguard Equity Investment Group Investor Shares (0073) VWNFX , /24/1985 Admiral Shares (0573) VWNAX , /14/2001 Domestic mid-cap ($ billions) (billions) P/E P/B Return on equity (%) Return on equity rate (%) 3 rate x 1.8x Capital Opportunity u Growth PRIMECAP Management Company x 2.5x Investor Shares (0111) VHCOX , /14/1995 Admiral Shares (5111) VHCAX , /12/2001 Mid-Cap Growth (0301) VMGRX Growth Chartwell Investment Partners, L.P , /31/ x 3.2x William Blair & Company, L.L.C. Strategic Equity (0114) VSEQX Blend Vanguard Equity Investment Group , /14/ x 2.2x Capital Value (0328) VCVLX Value Wellington Management Company, LLP /17/ x 1.5x Selected Value (0934) VASVX Value Barrow, Hanley, Mewhinney & Strauss, LLC Donald Smith & Co., Inc , /15/ x 1.4x Domestic small-cap Explorer Growth Century Capital Management, LLC Chartwell Investment Partners, L.P. Granahan Investment Management, Inc. Kalmar Investment Advisers Vanguard Equity Investment Group Wellington Management Company, LLP x 2.4x Investor Shares (0024) VEXPX , /11/1967 Admiral Shares (5024) VEXRX , /12/2001 Strategic Small-Cap Equity (0615) VSTCX Blend Vanguard Equity Investment Group /24/ x 1.9x Explorer Value (1690) VEVFX Value Cardinal Capital Management, L.L.C. Frontier Capital Management Co., LLC Sterling Capital Management LLC /30/ x 1.4x International/global International Explorer (0126) VINEX Growth Schroder Investment Management North America Inc. Wellington Management Company, LLP , /04/ x 1.2x u Fund closed to new investor accounts, except for Flagship and Asset Management Services clients. l Available as a commingled trust for qualified plans and certain government plans. Gross performance results are presented before investment advisory fees but after all trading-related costs. 20 > Vanguard Institutional Investment Guide For more complete details on Vanguard institutional investment capabilities go to > institutional.vanguard.com Equity > 21

13 Equity Actively managed Equity Investment overview Returns (%) Volatility 2 Portfolio characteristics Name (number) Ticker Style Manager International/global Ticker Style Benchmark (%) 1 Fees n ($ millions) Ratio 5 Fees (millions) yield (%) yield Quarter 1Yr. 3Yr. 5Yr. 10Yr. date Beta R 2 stocks date Beta R 2 stocks ($ billions) (billions) P/E P/B Return on equity (%) Return on equity International Growth Growth Baillie Gifford Overseas Ltd. M&G Investment Management Limited Schroder Investment Management North America Inc x 1.8x Investor Shares (0081) VWIGX , /30/1981 Admiral Shares (0581) VWILX , /13/2001 Global Equity (0129) VHGEX Blend Acadian Asset Management LLC AllianceBernstein L.P. Baillie Gifford Overseas Ltd. Marathon Asset Management LLP , /14/ x 1.5x Emerging Markets Select Stock (0752) VMMSX Value M&G Investment Management Limited Oaktree Capital Management, L.P. Pzena Investment Management, LLC Wellington Management Company, LLP International Value (0046) VTRIX Value AllianceBernstein L.P. Edinburgh Partners Limited Hansberger Global Investors, Inc. Lazard Asset Management LLC Sector/specialized rate (%) /27/ x 1.5x , /16/ x 1.3x Convertible Securities (0082) VCVSX Oaktree Capital Management, L.P , /17/ Energy Vanguard Equity Investment Group x 1.4x Wellington Management Company, LLP Investor Shares (0051) VGENX , /23/1984 Admiral Shares (0551) VGELX , /12/2001 Health Care Wellington Management Company, LLP x 2.2x Investor Shares (0052) VGHCX , /23/1984 Admiral Shares (0552) VGHAX , /12/2001 Market Neutral 10 Vanguard Equity Investment Group Long Portfolio x 1.9x Short Portfolio x 1.8x Investor Shares (0634) VMNFX /11/1998 Institutional Shares (0734) VMNIX /19/1998 Precious Metals and Mining (0053) VGPMX M&G Investment Management Limited , /23/ x 1.7x rate5 u Fund closed to new investor accounts, except for Flagship and Asset Management Services clients. l Available as a commingled trust for qualified plans and certain government plans. Gross performance results are presented before investment advisory fees but after all trading-related costs. * See page 48 for tax-adjusted returns. ** Returns of one year and over are fee-adjusted. Admiral Shares only. Investor Shares not offered. For information on eligibility requirements, please call Fund of funds: Invests in the following Vanguard funds: Growth and Income, U.S. Growth, Windsor II, Morgan Growth, Windsor, Explorer, Capital Value, Mid-Cap Growth. Prior to December 6, 2002, the fund invested in income-producing stocks of utilities companies and was known as Vanguard Utilities Income Fund. The Convertible Securities Fund also holds bonds. For more information, visit institutional.vanguard.com. 22 > Vanguard Institutional Investment Guide For more complete details on Vanguard institutional investment capabilities go to > institutional.vanguard.com Equity > 23

14 Balanced Balanced Investment overview Product basics Returns (%) Volatility 2 Fund asset allocation Name (number) Ticker Allocation Manager Allocation to underlying funds (%) (%)1 Fees n ($ millions) yield (%) Quarter 1Yr. 3Yr. 5Yr. 10Yr. date Beta R 2 % of total net assets Actively managed Managed Payout Distribution Focus (1499) Managed Payout Growth and Distribution (1498) VPDFX Moderate Managers of the underlying funds Total Stock Market 28.2 Total Bond Market II 19.8 Market Neutral 19.5 Total International Stock 12.2 REIT 10.2 Commodities 10.1 VPGDX Moderate Managers of the underlying funds Total Stock Market 34.9 Total International Stock 15.3 Total Bond Market II 14.8 Market Neutral 14.7 REIT 10.2 Commodities 10.1 Managed Payout Growth Focus (1497) VPGFX Moderate Managers of the underlying funds Total Stock Market 45.8 Total International Stock 19.5 Commodities 10.2 REIT 10.1 Market Neutral 9.7 Total Bond Market II 4.7 STAR (0056) VGSTX Moderate Managers of the underlying funds Windsor II 14.4 Short-Term Investment-Grade 12.2 GNMA 12.2 Long-Term Investment-Grade 12.2 International Value 9.6 International Growth 9.5 Windsor 7.9 PRIMECAP 6.2 U.S. Growth 6.1 Morgan Growth 6.0 Explorer /02/ /02/ /02/ , /29/ Wellesley Income Conservative Wellington Management Company, LLP Investor Shares (0027) VWINX , /01/1970 Admiral Shares (0527) VWIAX , /14/2001 Wellington Moderate Wellington Management Company, LLP Investor Shares (0021) VWELX , /01/1929 Admiral Shares (0521) VWENX , /14/2001 Commodities Commodities Commodities u Fund closed to new investor accounts. l Available as a commingled trust for qualified plans and certain government plans. Gross performance results are presented before investment advisory fees but after all trading-related costs. 24 > Vanguard Institutional Investment Guide For more complete details on Vanguard institutional investment capabilities go to > institutional.vanguard.com Balanced > 25

15 Balanced Balanced Investment overview Product basics Returns (%) Volatility 2 Fund asset allocation Name (number) Ticker Allocation Manager Allocation to underlying funds (%) (%)1 Fees n ($ millions) yield (%) Quarter 1Yr. 3Yr. 5Yr. 10Yr. date Beta R 2 % of total net assets and index-oriented Balanced * Moderate Vanguard Equity Investment Group Investor Shares (0002) VBINX , /09/1992 Admiral Shares (0502) VBIAX , /13/2000 Institutional Shares (0869) VBAIX , /01/2000 Signal Shares6 (1348) VBASX , /01/2006 Tax-Managed Balanced** Moderate Vanguard Equity Investment Group Admiral Shares (0103) VTMFX /06/1994 Life-cycle/Age-based Target Retirement 2060 (1691) VTTSX Moderate Vanguard Equity Investment Group Total Stock Market 63.1 Total International Stock 27.0 Total Bond Market II /19/ Target Retirement 2055 (1487) VFFVX Moderate Vanguard Equity Investment Group Target Retirement 2050 (0699) VFIFX Moderate Vanguard Equity Investment Group Target Retirement 2045 (0306) VTIVX Moderate Vanguard Equity Investment Group Target Retirement 2040 (0696) VFORX Moderate Vanguard Equity Investment Group Target Retirement 2035 (0305) VTTHX Moderate Vanguard Equity Investment Group Target Retirement 2030 (0695) VTHRX Moderate Vanguard Equity Investment Group Target Retirement 2025 (0304) VTTVX Moderate Vanguard Equity Investment Group Target Retirement 2020 (0682) VTWNX Moderate Vanguard Equity Investment Group Total Stock Market 63.2 Total International Stock 26.9 Total Bond Market II 9.9 Total Stock Market 63.1 Total International Stock 27.0 Total Bond Market II 9.9 Total Stock Market 63.1 Total International Stock 27.0 Total Bond Market II 9.9 Total Stock Market 63.1 Total International Stock 27.0 Total Bond Market II 9.9 Total Stock Market 60.7 Total International Stock 26.0 Total Bond Market II 13.3 Total Stock Market 55.5 Total International Stock 23.8 Total Bond Market II 20.7 Total Stock Market 50.3 Total Bond Market II 28.1 Total International Stock 21.6 Total Stock Market 45.1 Total Bond Market II 35.5 Total International Stock /18/ , /07/ , /27/ , /07/ , /27/ , /07/ , /27/ , /07/ u Fund closed to new investor accounts. l Available as a commingled trust for qualified plans and certain government plans. Gross performance results are presented before investment advisory fees but after all trading-related costs. Note: Vanguard Target Retirement commingled trusts are available for large institutional mandates. Please contact your Vanguard representative for more information. 26 > Vanguard Institutional Investment Guide For more complete details on Vanguard institutional investment capabilities go to > institutional.vanguard.com Balanced > 27

16 Balanced Balanced Investment overview Product basics Returns (%) Volatility 2 Fund asset allocation Name (number) Ticker Allocation Manager Allocation to underlying funds (%) (%)1 Fees n ($ millions) yield (%) Quarter 1Yr. 3Yr. 5Yr. 10Yr. date Beta R 2 % of total net assets Life-cycle/Age-based Target Retirement 2015 (0303) VTXVX Moderate Vanguard Equity Investment Group Target Retirement 2010 (0681) VTENX Conservative Vanguard Equity Investment Group Target Retirement Income (0308) VTINX Conservative Vanguard Equity Investment Group Life-cycle/Risk-based LifeStrategy Growth (0122) VASGX Moderate Vanguard Equity Investment Group LifeStrategy Moderate Growth (0914) VSMGX Moderate Vanguard Equity Investment Group LifeStrategy Conservative Growth (0724) VSCGX Conservative Vanguard Equity Investment Group LifeStrategy Income (0723) VASIX Conservative Vanguard Equity Investment Group Total Stock Market 39.5 Total Bond Market II 39.5 Total International Stock 16.8 Inflation-Protected Securities 4.2 Total Bond Market II 41.2 Total Stock Market 31.4 Total International Stock 13.2 Inflation-Protected Securities 12.8 Prime Money Market 1.4 Total Bond Market II 44.8 Total Stock Market 21.4 Inflation-Protected Securities 19.7 Total International Stock 9.2 Prime Money Market 4.9 Total Stock Market 56.1 Total International Stock 24.1 Total Bond Market II 19.8 Total Stock Market 42.1 Total Bond Market II 39.7 Total International Stock 18.2 Total Bond Market II 59.7 Total Stock Market 28.1 Total International Stock 12.2 Total Bond Market II 79.9 Total Stock Market 14.0 Total International Stock , /27/ , /07/ , /27/ , /30/ , /30/ , /30/ , /30/ * Benchmark is weighted 60% MSCI US Broad Market and 40% Barclays U.S. Aggregate Float Adjusted. ** See page 48 for tax-adjusted returns. Admiral Shares only. Investor Shares not offered. You and your clients may qualify for Admiral Shares, which have lower expense s than Investor Shares. For information on eligibility requirements, please contact our sales desk at u Fund closed to new investor accounts. l Available as a commingled trust for qualified plans and certain government plans. Gross performance results are presented before investment advisory fees but after all trading-related costs. Note: Vanguard Target Retirement commingled trusts are available for large institutional mandates. Please contact your Vanguard representative for more information. 28 > Vanguard Institutional Investment Guide For more complete details on Vanguard institutional investment capabilities go to > institutional.vanguard.com Balanced > 29