UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT
OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-07443
| Name of Registrant: | Vanguard Whitehall Funds |
| Address of Registrant: | P.O. Box 2600 |
| Valley Forge, PA 19482 |
| Name and address of agent for service: | Anne E. Robinson, Esquire |
| P.O. Box 876 | |
| Valley Forge, PA 19482 |
Registrant’s telephone number, including area code: (610) 669-1000
Date of fiscal year end: October 31
Date of reporting period: November 1, 2022—April 30, 2023
Item 1: Reports to Shareholders
Semiannual Report | April 30, 2023
Vanguard Selected
Value Fund
Contents
About Your Fund’s Expenses | 1 |
Financial Statements | 4 |
Trustees Approve Advisory Arrangements | 16 |
Liquidity Risk Management | 18 |
About Your Fund’s Expenses
As a shareholder of the fund,
you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross
income, directly reduce the investment return of the fund.
A fund’s expenses are
expressed as a percentage of its average net assets. This figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your fund and
to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.
The accompanying table
illustrates your fund’s costs in two ways:
| • | Based on actual fund return. This section helps you to estimate the actual expenses that you paid over the period. The ”Ending Account Value“ shown is derived from the fund‘s actual return, and the third column shows the dollar amount that would have been paid by an investor who started with $1,000 in the fund. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period. |
To do so, simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your fund under the heading ”Expenses Paid During Period.“
| • | Based on hypothetical 5% yearly return. This section is intended to help you compare your fund‘s costs with those of other mutual funds. It assumes that the fund had a yearly return of 5% before expenses, but that the expense ratio is unchanged. In this case—because the return used is not the fund’s actual return—the results do not apply to your investment. The example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to calculate expenses based on a 5% return. You can assess your fund’s costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds. |
Note that the expenses shown
in the table are meant to highlight and help you compare ongoing costs only and do not reflect transaction costs incurred by the fund for buying and selling securities. Further, the expenses do not include any purchase, redemption, or
account service fees described in the fund prospectus. If such fees were applied to your account, your costs would be higher. Your fund does not carry a “sales load.”
The calculations assume no
shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.
You can find more information
about the fund’s expenses, including annual expense ratios, in the Financial Statements section of this report. For additional information on operating expenses and other shareholder costs, please refer to your
fund’s current prospectus.
1
| Six Months Ended April 30, 2023 | |||
| Selected Value Fund | Beginning Account Value 10/31/2022 | Ending Account Value 4/30/2023 | Expenses Paid During Period |
| Based on Actual Fund Return | $1,000.00 | $1,083.80 | $2.22 |
| Based on Hypothetical 5% Yearly Return | 1,000.00 | 1,022.66 | 2.16 |
The calculations are
based on expenses incurred in the most recent six-month period. The fund’s annualized six-month expense ratio for that period is 0.43%. The dollar amounts shown as “Expenses Paid” are equal to the
annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by the number of days in the most recent 12-month
period (181/365).
2
Selected Value Fund
Fund Allocation
As of April 30, 2023
| Communication Services | 1.7% |
| Consumer Discretionary | 17.1 |
| Consumer Staples | 0.9 |
| Energy | 3.7 |
| Financials | 26.2 |
| Health Care | 8.3 |
| Industrials | 20.0 |
| Information Technology | 9.9 |
| Materials | 7.3 |
| Real Estate | 2.7 |
| Utilities | 2.2 |
The table reflects the fund’s
investments, except for short-term investments and derivatives. Sector categories are based on the Global Industry Classification Standard (“GICS”), except for the “Other” category (if
applicable), which includes securities that have not been provided a GICS classification as of the effective reporting period.
Global Industry
Classification Standard (“GICS”) was developed by and is the exclusive property and a service mark of MSCI Inc. (“MSCI”) and Standard and Poor’s, a division of McGraw-Hill Companies, Inc.
(“S&P”), and is licensed for use by Vanguard. Neither MSCI, S&P nor any third party involved in making or compiling the GICS or any GICS classification makes any express or implied warranties or
representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness,
merchantability or fitness for a particular purpose with respect to any such standard or classification. Without limiting any of the foregoing, in no event shall MSCI, S&P, any of its affiliates or any third party
involved in making or compiling the GICS or any GICS classification have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the
possibility of such damages.
3
Selected Value Fund
Financial Statements (unaudited)
Schedule of Investments
As of April 30, 2023
The fund files its complete
schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports
are available on the SEC’s website at www.sec.gov.
4
Selected Value Fund
5
Selected Value Fund
Derivative Financial
Instruments Outstanding as of Period End
| Futures Contracts | ||||
| ($000) | ||||
| Expiration | Number of Long (Short) Contracts | Notional Amount | Value and Unrealized Appreciation (Depreciation) | |
| Long Futures Contracts | ||||
| E-mini S&P 500 Index | June 2023 | 421 | 88,168 | 6,089 |
See accompanying
Notes, which are an integral part of the Financial Statements.
6
Selected Value Fund
Statement of Assets and Liabilities
As of April 30, 2023
| ($000s, except shares, footnotes, and per-share amounts) | Amount |
| Assets | |
| Investments in Securities, at Value1 | |
| Unaffiliated Issuers (Cost $5,030,745) | 5,695,995 |
| Affiliated Issuers (Cost $341,238) | 341,286 |
| Total Investments in Securities | 6,037,281 |
| Investment in Vanguard | 214 |
| Cash | 1,900 |
| Cash Collateral Pledged—Futures Contracts | 4,864 |
| Foreign Currency, at Value (Cost $26) | 24 |
| Receivables for Investment Securities Sold | 2,694 |
| Receivables for Accrued Income | 4,130 |
| Receivables for Capital Shares Issued | 3,007 |
| Variation Margin Receivable—Futures Contracts | 884 |
| Total Assets | 6,054,998 |
| Liabilities | |
| Payables for Investment Securities Purchased | 19,704 |
| Collateral for Securities on Loan | 16,885 |
| Payables to Investment Advisor | 4,043 |
| Payables for Capital Shares Redeemed | 3,000 |
| Payables to Vanguard | 393 |
| Total Liabilities | 44,025 |
| Net Assets | 6,010,973 |
| 1 Includes $16,209,000 of securities on loan. | |
| At April 30, 2023, net assets consisted of: | |
| Paid-in Capital | 5,181,226 |
| Total Distributable Earnings (Loss) | 829,747 |
| Net Assets | 6,010,973 |
| Net Assets | |
| Applicable to 228,000,169 outstanding $.001 par value shares of beneficial interest (unlimited authorization) | 6,010,973 |
| Net Asset Value Per Share | $26.36 |
See accompanying
Notes, which are an integral part of the Financial Statements.
7
Selected Value Fund
Statement of Operations
| Six Months Ended April 30, 2023 | |
| ($000) | |
| Investment Income | |
| Income | |
| Dividends1 | 62,093 |
| Interest2 | 6,731 |
| Securities Lending—Net | 38 |
| Total Income | 68,862 |
| Expenses | |
| Investment Advisory Fees—Note B | |
| Basic Fee | 6,602 |
| Performance Adjustment | 1,315 |
| The Vanguard Group—Note C | |
| Management and Administrative | 4,542 |
| Marketing and Distribution | 143 |
| Custodian Fees | 12 |
| Shareholders’ Reports | 63 |
| Trustees’ Fees and Expenses | 1 |
| Other Expenses | 8 |
| Total Expenses | 12,686 |
| Expenses Paid Indirectly | (33) |
| Net Expenses | 12,653 |
| Net Investment Income | 56,209 |
| Realized Net Gain (Loss) | |
| Investment Securities Sold2 | 131,130 |
| Futures Contracts | 3,558 |
| Foreign Currencies | (1) |
| Realized Net Gain (Loss) | 134,687 |
| Change in Unrealized Appreciation (Depreciation) | |
| Investment Securities2 | 277,754 |
| Futures Contracts | 6,677 |
| Change in Unrealized Appreciation (Depreciation) | 284,431 |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 475,327 |
| 1 | Dividends are net of foreign withholding taxes of $749,000. |
| 2 | Interest income, realized net gain (loss), capital gain distributions received, and change in unrealized appreciation (depreciation) from an affiliated company of the fund were $6,600,000, $21,000, $1,000, and $11,000, respectively. Purchases and sales are for temporary cash investment purposes. |
See accompanying
Notes, which are an integral part of the Financial Statements.
8
Selected Value Fund
Statement of Changes in Net Assets
| Six Months Ended April 30, 2023 | Year Ended October 31, 2022 | ||
| ($000) | ($000) | ||
| Increase (Decrease) in Net Assets | |||
| Operations | |||
| Net Investment Income | 56,209 | 90,259 | |
| Realized Net Gain (Loss) | 134,687 | 642,180 | |
| Change in Unrealized Appreciation (Depreciation) | 284,431 | (1,212,783) | |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 475,327 | (480,344) | |
| Distributions | |||
| Total Distributions | (683,854) | (497,527) | |
| Capital Share Transactions | |||
| Issued | 293,119 | 573,444 | |
| Issued in Lieu of Cash Distributions | 618,158 | 454,963 | |
| Redeemed | (478,717) | (1,063,876) | |
| Net Increase (Decrease) from Capital Share Transactions | 432,560 | (35,469) | |
| Total Increase (Decrease) | 224,033 | (1,013,340) | |
| Net Assets | |||
| Beginning of Period | 5,786,940 | 6,800,280 | |
| End of Period | 6,010,973 | 5,786,940 | |
See accompanying
Notes, which are an integral part of the Financial Statements.
9
Selected Value Fund
Financial Highlights
| For a Share Outstanding Throughout Each Period | Six Months Ended April 30, 2023 | Year Ended October 31, | ||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||
| Net Asset Value, Beginning of Period | $27.62 | $32.26 | $22.78 | $27.59 | $27.38 | $33.15 |
| Investment Operations | ||||||
| Net Investment Income1 | .251 | .417 | .389 | .368 | .493 | .493 |
| Net Realized and Unrealized Gain (Loss) on Investments | 1.790 | (2.674) | 11.737 | (3.163) | 2.392 | (3.153) |
| Total from Investment Operations | 2.041 | (2.257) | 12.126 | (2.795) | 2.885 | (2.660) |
| Distributions | ||||||
| Dividends from Net Investment Income | (.440) | (.393) | (.360) | (.450) | (.506) | (.423) |
| Distributions from Realized Capital Gains | (2.861) | (1.990) | (2.286) | (1.565) | (2.169) | (2.687) |
| Total Distributions | (3.301) | (2.383) | (2.646) | (2.015) | (2.675) | (3.110) |
| Net Asset Value, End of Period | $26.36 | $27.62 | $32.26 | $22.78 | $27.59 | $27.38 |
| Total Return2 | 8.38% | -7.29% | 56.30% | -11.25% | 12.51% | -9.15% |
| Ratios/Supplemental Data | ||||||
| Net Assets, End of Period (Millions) | $6,011 | $5,787 | $6,800 | $5,009 | $7,892 | $8,811 |
| Ratio of Total Expenses to Average Net Assets3 | 0.43%4 | 0.38%4 | 0.32% | 0.31% | 0.33% | 0.36% |
| Ratio of Net Investment Income to Average Net Assets | 1.80% | 1.43% | 1.30% | 1.58% | 1.89% | 1.61% |
| Portfolio Turnover Rate | 14% | 26% | 30% | 85% | 31% | 31% |
| The expense ratio and net investment income ratio for the current period have been annualized. | ||||||
| 1 | Calculated based on average shares outstanding. |
| 2 | Total returns do not include account service fees that may have applied in the periods shown. Fund prospectuses provide information about any applicable account service fees. |
| 3 | Includes performance-based investment advisory fee increases (decreases) of 0.04%, 0.00%, (0.05%), (0.06%), (0.06%), and (0.02%). |
| 4 | The ratio of expenses to average net assets for the period net of reduction from broker commission abatement arrangements was 0.43% and 0.38%, respectively. |
See accompanying
Notes, which are an integral part of the Financial Statements.
10
Selected Value Fund
Notes to Financial Statements
Vanguard Selected Value Fund
is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund.
| A. | The following significant accounting policies conform to generally accepted accounting principles for U.S. investment companies. The fund consistently follows such policies in preparing its financial statements. |
1. Security Valuation:
Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official
closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which
market quotations are not readily available, or whose values have been affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued by
methods deemed by the valuation designee to represent fair value and subject to oversight by the board of trustees. These procedures include obtaining quotations from an independent pricing service, monitoring
news to identify significant market- or security-specific events, and evaluating changes in the values of foreign market proxies (for example, ADRs, futures contracts, or exchange-traded funds), between the time the
foreign markets close and the fund’s pricing time. When fair-value pricing is employed, the prices of securities used by a fund to calculate its net asset value may differ from quoted or published prices for the
same securities. Investments in Vanguard Market Liquidity Fund are valued at that fund's net asset value. Temporary cash investments are valued using the latest bid prices or using valuations based on a matrix system
(which considers such factors as security prices, yields, maturities, and ratings), both as furnished by independent pricing services.
2. Foreign Currency:
Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates obtained from an independent third party as of the fund’s pricing time on the
valuation date. Realized gains (losses) and unrealized appreciation (depreciation) on investment securities include the effects of changes in exchange rates since the securities were purchased, combined with the
effects of changes in security prices. Fluctuations in the value of other assets and liabilities resulting from changes in exchange rates are recorded as unrealized foreign currency gains (losses) until the assets or
liabilities are settled in cash, at which time they are recorded as realized foreign currency gains (losses).
3. Futures Contracts:
The fund uses index futures contracts to a limited extent, with the objective of maintaining full exposure to the stock market while maintaining liquidity. The fund may purchase or sell futures contracts to achieve a
desired level of investment, whether to accommodate portfolio turnover or cash flows from capital share transactions. The primary risks associated with the use of futures contracts are imperfect correlation between
changes in market values of stocks held by the fund and the prices of futures contracts, and the possibility of an illiquid market. Counterparty risk involving futures is mitigated because a regulated clearinghouse is
the counterparty instead of the clearing broker. To further mitigate counterparty risk, the fund trades futures contracts on an exchange, monitors the financial strength of its clearing brokers and clearinghouse, and
has entered into clearing agreements with its clearing brokers. The clearinghouse imposes initial margin requirements to secure the fund’s performance and requires daily settlement of variation margin
representing changes in the market value of each contract. Any securities pledged as initial margin for open contracts are noted in the Schedule of Investments.
Futures contracts are valued
at their quoted daily settlement prices. The notional amounts of the contracts are not recorded in the Statement of Assets and Liabilities. Fluctuations in the value of
11
Selected Value Fund
the contracts are recorded in the Statement
of Assets and Liabilities as an asset (liability) and in the Statement of Operations as unrealized appreciation (depreciation) until the contracts are closed, when they are recorded as realized gains (losses) on
futures contracts.
During the six months ended
April 30, 2023, the fund’s average investments in long and short futures contracts represented 2% and 0% of net assets, respectively, based on the average of the notional amounts at each quarter-end during the
period.
4. Federal Income Taxes:
The fund intends to continue to qualify as a regulated investment company and distribute virtually all of its taxable income. The fund’s tax returns are open to examination by the relevant tax authorities until
expiration of the applicable statute of limitations, which is generally three years after the filing of the tax return. Management has analyzed the fund’s tax positions taken for all open federal and state
income tax years, and has concluded that no provision for income tax is required in the fund’s financial statements.
5. Distributions:
Distributions to shareholders are recorded on the ex-dividend date. Distributions are determined on a tax basis at the fiscal year-end and may differ from net investment income and realized capital gains for financial
reporting purposes.
6. Securities Lending:
To earn additional income, the fund lends its securities to qualified institutional borrowers. Security loans are subject to termination by the fund at any time, and are required to be secured at all times by
collateral in an amount at least equal to the market value of securities loaned. Daily market fluctuations could cause the value of loaned securities to be more or less than the value of the collateral received. When
this occurs, the collateral is adjusted and settled before the opening of the market on the next business day. The fund further mitigates its counterparty risk by entering into securities lending transactions only
with a diverse group of prequalified counterparties, monitoring their financial strength, and entering into master securities lending agreements with its counterparties. The master securities lending agreements
provide that, in the event of a counterparty’s default (including bankruptcy), the fund may terminate any loans with that borrower, determine the net amount owed, and sell or retain the collateral up to the net
amount owed to the fund; however, such actions may be subject to legal proceedings. While collateral mitigates counterparty risk, in the event of a default, the fund may experience delays and costs in recovering the
securities loaned. The fund invests cash collateral received in Vanguard Market Liquidity Fund, and records a liability in the Statement of Assets and Liabilities for the return of the collateral, during the period
the securities are on loan. Collateral investments in Vanguard Market Liquidity Fund are subject to market appreciation or depreciation. Securities lending income represents fees charged to borrowers plus income
earned on invested cash collateral, less expenses associated with the loan. During the term of the loan, the fund is entitled to all distributions made on or in respect of the loaned securities.
7. Credit Facilities and
Interfund Lending Program: The fund and certain other funds managed by The Vanguard Group ("Vanguard") participate in a $4.3 billion committed credit facility provided by a syndicate of lenders pursuant to a credit
agreement and an uncommitted credit facility provided by Vanguard. Both facilities may be renewed annually. Each fund is individually liable for its borrowings, if any, under the credit facilities. Borrowings may be
utilized for temporary or emergency purposes and are subject to the fund’s regulatory and contractual borrowing restrictions. With respect to the committed credit facility, the participating funds are charged
administrative fees and an annual commitment fee of 0.10% of the undrawn committed amount of the facility, which are allocated to the funds based on a method approved by the fund’s board of trustees and included
in Management and Administrative expenses on the fund’s Statement of
12
Selected Value Fund
Operations. Any borrowings under either
facility bear interest at an agreed-upon spread plus the higher of the federal funds effective rate, the overnight bank funding rate, or the Daily Simple Secured Overnight Financing Rate inclusive of an additional
agreed-upon spread. However, borrowings under the uncommitted credit facility may bear interest based upon an alternate rate agreed to by the fund and Vanguard.
In accordance with an
exemptive order (the “Order”) from the SEC, the fund may participate in a joint lending and borrowing program that allows registered open-end Vanguard funds to borrow money from and lend money to each
other for temporary or emergency purposes (the “Interfund Lending Program”), subject to compliance with the terms and conditions of the Order, and to the extent permitted by the fund’s investment
objective and investment policies. Interfund loans and borrowings normally extend overnight but can have a maximum duration of seven days. Loans may be called on one business day’s notice. The interest rate to
be charged is governed by the conditions of the Order and internal procedures adopted by the board of trustees. The board of trustees is responsible for overseeing the Interfund Lending Program.
For the six months ended April
30, 2023, the fund did not utilize the credit facilities or the Interfund Lending Program.
8. Other: Dividend
income is recorded on the ex-dividend date. Non-cash dividends included in income, if any, are recorded at the fair value of the securities received. Interest income includes income distributions received from
Vanguard Market Liquidity Fund and is accrued daily. Premiums and discounts on debt securities are amortized and accreted, respectively, to interest income over the lives of the respective securities, except for
premiums on certain callable debt securities that are amortized to the earliest call date. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains
(losses) on the sale of investment securities are those of the specific securities sold.
| B. | The investment advisory firms Cooke & Bieler, LP, Pzena Investment Management, LLC, and Donald Smith & Co., Inc., each provide investment advisory services to a portion of the fund for a fee calculated at an annual percentage rate of average net assets managed by the advisor. The basic fee of Cooke & Bieler, LP, is subject to quarterly adjustments based on performance relative to the Russell Midcap Value Index since January 31, 2020. The basic fee of Pzena Investment Management, LLC, is subject to quarterly adjustments based on performance relative to the Russell Midcap Value Index for the preceding three years. The basic fee of Donald Smith & Co., Inc., is subject to quarterly adjustments based on performance relative to the MSCI Investable Market 2500 Index for the preceding five years. |
Vanguard manages the cash
reserves of the fund as described below.
For the six months ended April
30, 2023, the aggregate investment advisory fee paid to all advisors represented an effective annual basic rate of 0.22% of the fund’s average net assets, before a net increase of $1,315,000 (0.04%) based on
performance.
| C. | In accordance with the terms of a Funds' Service Agreement (the “FSA”) between Vanguard and the fund, Vanguard furnishes to the fund corporate management, administrative, marketing, distribution and cash management services at Vanguard’s cost of operations (as defined by the FSA). These costs of operations are allocated to the fund based on methods and guidelines approved by the board of trustees and are generally settled twice a month. |
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Selected Value Fund
Upon the request of Vanguard,
the fund may invest up to 0.40% of its net assets as capital in Vanguard. At April 30, 2023, the fund had contributed to Vanguard capital in the amount of $214,000, representing less than 0.01% of the fund’s net
assets and 0.09% of Vanguard’s capital received pursuant to the FSA. The fund’s trustees and officers are also directors and employees, respectively, of Vanguard.
| D. | The fund has asked its investment advisors to direct certain security trades, subject to obtaining the best price and execution, to brokers who have agreed to rebate to the fund part of the commissions generated. Such rebates are used solely to reduce the fund’s management and administrative expenses. For the six months ended April 30, 2023, these arrangements reduced the fund’s expenses by $33,000 (an annual rate of less than 0.01% of average net assets). |
| E. | Various inputs may be used to determine the value of the fund’s investments and derivatives. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities. |
Level 1—Quoted prices in active markets for identical securities.
Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).
Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments). Any investments and derivatives valued with significant
unobservable inputs are noted on the Schedule of Investments.
At April 30, 2023, 100% of the
market value of the fund’s investments and derivatives was determined based on Level 1 inputs.
| F. | As of April 30, 2023, gross unrealized appreciation and depreciation for investments and derivatives based on cost for U.S. federal income tax purposes were as follows: |
| Amount ($000) | |
| Tax Cost | 5,376,076 |
| Gross Unrealized Appreciation | 1,125,361 |
| Gross Unrealized Depreciation | (458,067) |
| Net Unrealized Appreciation (Depreciation) | 667,294 |
| G. | During the six months ended April 30, 2023, the fund purchased $795,828,000 of investment securities and sold $998,155,000 of investment securities, other than temporary cash investments. |
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Selected Value Fund
| H. | Capital shares issued and redeemed were: |
| Six Months Ended April 30, 2023 | Year Ended October 31, 2022 | ||
| Shares (000) | Shares (000) | ||
| Issued | 11,020 | 19,356 | |
| Issued in Lieu of Cash Distributions | 25,397 | 15,825 | |
| Redeemed | (17,965) | (36,410) | |
| Net Increase (Decrease) in Shares Outstanding | 18,452 | (1,229) |
| I. | Significant market disruptions, such as those caused by pandemics (e.g., COVID-19 pandemic), natural or environmental disasters, war (e.g., Russia’s invasion of Ukraine), acts of terrorism, or other events, can adversely affect local and global markets and normal market operations. Any such disruptions could have an adverse impact on the value of the fund’s investments and fund performance. |
To the extent the fund’s
investment portfolio reflects concentration in a particular market, industry, sector, country or asset class, the fund may be adversely affected by the performance of these concentrations and may be subject to
increased price volatility and other risks.
The use of derivatives may
expose the fund to various risks. Derivatives can be highly volatile, and any initial investment is generally small relative to the notional amount so that transactions may be leveraged in terms of market exposure. A
relatively small market movement may have a potentially larger impact on derivatives than on standard securities. Leveraged derivatives positions can, therefore, increase volatility. Additional information regarding
the fund's use of derivative(s) and the specific risks associated is described under significant accounting policies.
| J. | Management has determined that no events or transactions occurred subsequent to April 30, 2023, that would require recognition or disclosure in these financial statements. |
15
Trustees Approve Advisory Arrangements
The board of trustees of
Vanguard Selected Value Fund has renewed the fund’s investment advisory arrangements with Pzena Investment Management, LLC (Pzena), Cooke & Bieler, L.P. (C&B), and Donald Smith & Co., Inc. (Donald
Smith & Co.). The board determined that renewing the fund’s advisory arrangements was in the best interests of the fund and its shareholders.
The board based its decisions
upon an evaluation of each advisor’s investment staff, portfolio management process, and performance. This evaluation included information provided to the board by Vanguard’s Portfolio Review Department,
which is responsible for fund and advisor oversight and product management. The Portfolio Review Department met regularly with the advisors and made presentations to the board during the fiscal year that directed the
board’s focus to relevant information and topics.
The board, or an investment
committee made up of board members, also received information throughout the year during advisor presentations. For each advisor presentation, the board was provided with letters and reports that included information
about, among other things, the advisory firm and the advisor’s assessment of the investment environment, portfolio performance, and portfolio characteristics.
In addition, the board
received periodic reports throughout the year, which included information about the fund’s performance relative to its peers and benchmark, as applicable, and updates, as needed, on the Portfolio Review
Department’s ongoing assessment of the advisor.
Prior to their meeting, the
trustees were provided with a memo and materials that summarized the information they received over the course of the year. They also considered the factors discussed below, among others. However, no single factor
determined whether the board approved the arrangements. Rather, it was the totality of the circumstances that drove the board’s decisions.
Nature, extent, and quality of
services
The board reviewed the quality of the
fund’s investment management services provided by Pzena, C&B, and Donald Smith & Co. over both the short and long term and took into account the organizational depth and stability of each advisor. The
board considered the following:
Pzena. Founded in 1995, Pzena is a global investment management firm that employs a classic value investment approach. Pzena seeks to buy good businesses at low prices, focusing exclusively on
companies that are underperforming their historically demonstrated earnings power. Pzena’s research team conducts intensive fundamental research, buying companies only when the problems are judged to be
temporary, management has a viable strategy to generate earnings recovery, and much of the downside risk is believed to already be factored into the share price. Pzena has managed a portion of the fund since
2014.
C&B. Founded in 1949, C&B is an independently owned investment boutique with assets across six domestic value strategies. The portfolio management team comprises eight analysts/portfolio
managers that cover the entire market-cap spectrum and specialize in particular sectors. The team has employed the same research-driven, bottom-up, quality value approach for more than six decades, seeking to invest
in high-quality companies trading at attractive valuations. While the
16
team is highly collaborative, the
analysts/portfolio managers retain individual decision-making authority across each of the portfolios and coverage for their respective sectors, resulting in a structure that contains elements of a multi-counselor
approach. C&B has managed a portion of the fund since 2019.
Donald Smith & Co. Founded in 1983, Donald Smith & Co. is a deep-value-oriented firm that manages large-, mid-, and small-capitalization value portfolios. Donald Smith & Co. employs a strictly
bottom-up approach, focusing on companies in the bottom decile of price-to-tangible-book value in the benchmark. The advisor uses fundamental analysis to invest in those companies that it considers to be inexpensive
relative to their estimate of normalized earnings power and to have solid balance sheets and asset quality. Donald Smith & Co. has managed a portion of the fund since 2005.
The board concluded that each
advisor’s experience, stability, depth, and performance, among other factors, warranted continuation of the advisory arrangements.
Investment performance
The board considered the short- and long-term
performance, as applicable, of Pzena’s, C&B’s, and Donald Smith & Co.’s subportfolios, including any periods of outperformance or underperformance compared with a relevant benchmark index and
peer group. The board concluded that the performance was such that the advisory arrangements should continue.
Cost
The board concluded that the fund’s
expense ratio was below the average expense ratio charged by funds in its peer group and that Pzena’s, C&B’s, and Donald Smith & Co.’s advisory fee rates were also below the peer-group
average.
The board did not consider the
profitability of Pzena, C&B, or Donald Smith & Co. in determining whether to approve the advisory fees, because the firms are independent of Vanguard and the advisory fees are the result of arm’s-length
negotiations.
The benefit of economies of
scale
The board concluded that the fund’s
shareholders benefit from economies of scale because of breakpoints in the advisory fee schedules for Pzena, C&B, and Donald Smith & Co. The breakpoints reduce the effective rate of the fees as the
fund’s assets managed by each advisor increase.
The board will consider
whether to renew the advisory arrangements again after a one-year period.
17
Liquidity Risk Management
Vanguard funds (except for the
money market funds) have adopted and implemented a written liquidity risk management program (the “Program”) as required by Rule 22e-4 under the Investment Company Act of 1940. Rule 22e-4 requires that
each fund adopt a program that is reasonably designed to assess and manage the fund’s liquidity risk, which is the risk that the fund could not meet redemption requests without significant dilution of remaining
investors’ interests in the fund.
Assessment and management of a
fund’s liquidity risk under the Program take into consideration certain factors, such as the fund’s investment strategy and the liquidity of its portfolio investments during normal and reasonably
foreseeable stressed conditions, its short- and long-term cash-flow projections during both normal and reasonably foreseeable stressed conditions, and its cash and cash-equivalent holdings and access to other funding
sources. As required by the rule, the Program includes policies and procedures for classification of fund portfolio holdings in four liquidity categories, maintaining certain levels of highly liquid investments, and
limiting holdings of illiquid investments.
The board of trustees of
Vanguard Whitehall Funds approved the appointment of liquidity risk management program administrators responsible for administering Vanguard Selected Value Fund’s Program and for carrying out the specific
responsibilities set forth in the Program, including reporting to the board on at least an annual basis regarding the Program’s operation, its adequacy, and the effectiveness of its implementation for the past
year (the “Program Administrator Report”). The board has reviewed the Program Administrator Report covering the period from January 1, 2022, through December 31, 2022 (the “Review Period”). The
Program Administrator Report stated that during the Review Period the Program operated and was implemented effectively to manage the fund’s liquidity risk.
18
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Connect with
Vanguard®>vanguard.com
Semiannual Report | April 30, 2023
Vanguard Mid-Cap
Growth Fund
Contents
About Your Fund’s Expenses | 1 |
Financial Statements | 4 |
Trustees Approve Advisory Arrangements | 15 |
Liquidity Risk Management | 18 |
About Your Fund’s Expenses
As a shareholder of the fund,
you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross
income, directly reduce the investment return of the fund.
A fund’s expenses are
expressed as a percentage of its average net assets. This figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your fund and
to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.
The accompanying table
illustrates your fund’s costs in two ways:
| • | Based on actual fund return. This section helps you to estimate the actual expenses that you paid over the period. The ”Ending Account Value“ shown is derived from the fund‘s actual return, and the third column shows the dollar amount that would have been paid by an investor who started with $1,000 in the fund. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period. |
To do so, simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your fund under the heading ”Expenses Paid During Period.“
| • | Based on hypothetical 5% yearly return. This section is intended to help you compare your fund‘s costs with those of other mutual funds. It assumes that the fund had a yearly return of 5% before expenses, but that the expense ratio is unchanged. In this case—because the return used is not the fund’s actual return—the results do not apply to your investment. The example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to calculate expenses based on a 5% return. You can assess your fund’s costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds. |
Note that the expenses shown
in the table are meant to highlight and help you compare ongoing costs only and do not reflect transaction costs incurred by the fund for buying and selling securities. Further, the expenses do not include any purchase, redemption, or
account service fees described in the fund prospectus. If such fees were applied to your account, your costs would be higher. Your fund does not carry a “sales load.”
The calculations assume no
shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.
You can find more information
about the fund’s expenses, including annual expense ratios, in the Financial Statements section of this report. For additional information on operating expenses and other shareholder costs, please refer to your
fund’s current prospectus.
1
| Six Months Ended April 30, 2023 | |||
| Mid-Cap Growth Fund | Beginning Account Value 10/31/2022 | Ending Account Value 4/30/2023 | Expenses Paid During Period |
| Based on Actual Fund Return | $1,000.00 | $1,052.70 | $1.93 |
| Based on Hypothetical 5% Yearly Return | 1,000.00 | 1,022.91 | 1.91 |
The calculations are
based on expenses incurred in the most recent six-month period. The fund’s annualized six-month expense ratio for that period is 0.38%. The dollar amounts shown as “Expenses Paid” are equal to the
annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by the number of days in the most recent 12-month
period (181/365).
2
Mid-Cap Growth Fund
Fund Allocation
As of April 30, 2023
| Communication Services | 4.9% |
| Consumer Discretionary | 14.4 |
| Consumer Staples | 2.7 |
| Energy | 3.5 |
| Financials | 8.9 |
| Health Care | 22.7 |
| Industrials | 17.4 |
| Information Technology | 23.7 |
| Materials | 1.8 |
The table reflects the fund’s
investments, except for short-term investments and derivatives. Sector categories are based on the Global Industry Classification Standard (“GICS”), except for the “Other” category (if
applicable), which includes securities that have not been provided a GICS classification as of the effective reporting period.
Global Industry
Classification Standard (“GICS”) was developed by and is the exclusive property and a service mark of MSCI Inc. (“MSCI”) and Standard and Poor’s, a division of McGraw-Hill Companies, Inc.
(“S&P”), and is licensed for use by Vanguard. Neither MSCI, S&P nor any third party involved in making or compiling the GICS or any GICS classification makes any express or implied warranties or
representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness,
merchantability or fitness for a particular purpose with respect to any such standard or classification. Without limiting any of the foregoing, in no event shall MSCI, S&P, any of its affiliates or any third party
involved in making or compiling the GICS or any GICS classification have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the
possibility of such damages.
3
Mid-Cap Growth Fund
Financial Statements (unaudited)
Schedule of Investments
As of April 30, 2023
The fund files its complete
schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports
are available on the SEC’s website at www.sec.gov.
4
Mid-Cap Growth Fund
Derivative
Financial Instruments Outstanding as of Period End
| Futures Contracts | ||||
| ($000) | ||||
| Expiration | Number of Long (Short) Contracts | Notional Amount | Value and Unrealized Appreciation (Depreciation) | |
| Long Futures Contracts | ||||
| E-mini S&P 500 Index | June 2023 | 356 | 74,555 | 5,051 |
See
accompanying Notes, which are an integral part of the Financial Statements.
5
Mid-Cap Growth Fund
Statement of Assets and Liabilities
As of April 30, 2023
| ($000s, except shares, footnotes, and per-share amounts) | Amount |
| Assets | |
| Investments in Securities, at Value1 | |
| Unaffiliated Issuers (Cost $2,580,444) | 2,837,918 |
| Affiliated Issuers (Cost $127,126) | 127,130 |
| Total Investments in Securities | 2,965,048 |
| Investment in Vanguard | 109 |
| Cash Collateral Pledged—Futures Contracts | 4,158 |
| Receivables for Investment Securities Sold | 31,633 |
| Receivables for Accrued Income | 871 |
| Receivables for Capital Shares Issued | 682 |
| Variation Margin Receivable—Futures Contracts | 645 |
| Total Assets | 3,003,146 |
| Liabilities | |
| Due to Custodian | 495 |
| Payables for Investment Securities Purchased | 17,582 |
| Collateral for Securities on Loan | 7,237 |
| Payables to Investment Advisor | 1,486 |
| Payables for Capital Shares Redeemed | 2,772 |
| Payables to Vanguard | 246 |
| Other Liabilities | 9 |
| Total Liabilities | 29,827 |
| Net Assets | 2,973,319 |
| 1 Includes $7,005,000 of securities on loan. | |
| At April 30, 2023, net assets consisted of: | |
| Paid-in Capital | 3,091,367 |
| Total Distributable Earnings (Loss) | (118,048) |
| Net Assets | 2,973,319 |
| Net Assets | |
| Applicable to 147,197,079 outstanding $.001 par value shares of beneficial interest (unlimited authorization) | 2,973,319 |
| Net Asset Value Per Share | $20.20 |
See accompanying
Notes, which are an integral part of the Financial Statements.
6
Mid-Cap Growth Fund
Statement of Operations
| Six Months Ended April 30, 2023 | |
| ($000) | |
| Investment Income | |
| Income | |
| Dividends1 | 8,698 |
| Interest2 | 2,487 |
| Securities Lending—Net | 5 |
| Total Income | 11,190 |
| Expenses | |
| Investment Advisory Fees—Note B | |
| Basic Fee | 2,901 |
| Performance Adjustment | (283) |
| The Vanguard Group—Note C | |
| Management and Administrative | 2,812 |
| Marketing and Distribution | 71 |
| Custodian Fees | 13 |
| Shareholders’ Reports | 44 |
| Trustees’ Fees and Expenses | 1 |
| Other Expenses | 7 |
| Total Expenses | 5,566 |
| Expenses Paid Indirectly | (68) |
| Net Expenses | 5,498 |
| Net Investment Income | 5,692 |
| Realized Net Gain (Loss) | |
| Investment Securities Sold2 | (90,765) |
| Futures Contracts | (3,404) |
| Realized Net Gain (Loss) | (94,169) |
| Change in Unrealized Appreciation (Depreciation) | |
| Investment Securities2 | 231,853 |
| Futures Contracts | 5,216 |
| Change in Unrealized Appreciation (Depreciation) | 237,069 |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 148,592 |
| 1 | Dividends are net of foreign withholding taxes of $17,000. |
| 2 | Interest income, realized net gain (loss), capital gain distributions received, and change in unrealized appreciation (depreciation) from an affiliated company of the fund were $2,395,000, $22,000, less than $1,000, and ($8,000), respectively. Purchases and sales are for temporary cash investment purposes. |
See accompanying
Notes, which are an integral part of the Financial Statements.
7
Mid-Cap Growth Fund
Statement of Changes in Net Assets
| Six Months Ended April 30, 2023 | Year Ended October 31, 2022 | ||
| ($000) | ($000) | ||
| Increase (Decrease) in Net Assets | |||
| Operations | |||
| Net Investment Income | 5,692 | 5,048 | |
| Realized Net Gain (Loss) | (94,169) | (233,506) | |
| Change in Unrealized Appreciation (Depreciation) | 237,069 | (1,361,894) | |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 148,592 | (1,590,352) | |
| Distributions | |||
| Total Distributions | (7,421) | (1,251,685) | |
| Capital Share Transactions | |||
| Issued | 155,391 | 449,924 | |
| Issued in Lieu of Cash Distributions | 7,034 | 1,179,383 | |
| Redeemed | (286,229) | (1,121,695) | |
| Net Increase (Decrease) from Capital Share Transactions | (123,804) | 507,612 | |
| Total Increase (Decrease) | 17,367 | (2,334,425) | |
| Net Assets | |||
| Beginning of Period | 2,955,952 | 5,290,377 | |
| End of Period | 2,973,319 | 2,955,952 | |
See accompanying
Notes, which are an integral part of the Financial Statements.
8
Mid-Cap Growth Fund
Financial Highlights
| For a Share Outstanding Throughout Each Period | Six Months Ended April 30, 2023 | Year Ended October 31, | ||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||
| Net Asset Value, Beginning of Period | $19.24 | $38.72 | $29.89 | $27.93 | $28.08 | $26.51 |
| Investment Operations | ||||||
| Net Investment Income (Loss)1 | .038 | .031 | (.013) | .068 | .074 | .114 |
| Net Realized and Unrealized Gain (Loss) on Investments | .971 | (10.190) | 10.957 | 4.680 | 3.027 | 2.379 |
| Total from Investment Operations | 1.009 | (10.159) | 10.944 | 4.748 | 3.101 | 2.493 |
| Distributions | ||||||
| Dividends from Net Investment Income | (.049) | (.005) | (.051) | (.067) | (.099) | (.095) |
| Distributions from Realized Capital Gains | — | (9.316) | (2.063) | (2.721) | (3.152) | (.828) |
| Total Distributions | (.049) | (9.321) | (2.114) | (2.788) | (3.251) | (.923) |
| Net Asset Value, End of Period | $20.20 | $19.24 | $38.72 | $29.89 | $27.93 | $28.08 |
| Total Return2 | 5.27% | -32.22% | 37.68% | 18.33% | 13.56% | 9.61% |
| Ratios/Supplemental Data | ||||||
| Net Assets, End of Period (Millions) | $2,973 | $2,956 | $5,290 | $4,414 | $4,536 | $4,161 |
| Ratio of Total Expenses to Average Net Assets3 | 0.38%4 | 0.35%4 | 0.33% | 0.34% | 0.36% | 0.36% |
| Ratio of Net Investment Income (Loss) to Average Net Assets | 0.36% | 0.14% | (0.04)% | 0.25% | 0.27% | 0.40% |
| Portfolio Turnover Rate | 44% | 71% | 98% | 74% | 111% | 75% |
| The expense ratio and net investment income ratio for the current period have been annualized. | ||||||
| 1 | Calculated based on average shares outstanding. |
| 2 | Total returns do not include account service fees that may have applied in the periods shown. Fund prospectuses provide information about any applicable account service fees. |
| 3 | Includes performance-based investment advisory fee increases (decreases) of (0.02%), (0.05%), (0.06%), (0.05%), (0.02%), and (0.04%). |
| 4 | The ratio of expenses to average net assets for the period net of reduction from broker commission abatement arrangements was 0.38% and 0.35%, respectively. |
See accompanying
Notes, which are an integral part of the Financial Statements.
9
Mid-Cap Growth Fund
Notes to Financial Statements
Vanguard Mid-Cap Growth Fund
is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund.
| A. | The following significant accounting policies conform to generally accepted accounting principles for U.S. investment companies. The fund consistently follows such policies in preparing its financial statements. |
1. Security Valuation:
Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official
closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which
market quotations are not readily available, or whose values have been affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued by
methods deemed by the valuation designee to represent fair value and subject to oversight by the board of trustees. Investments in Vanguard Market Liquidity Fund are valued at that fund's net asset value.
2. Foreign Currency:
Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates obtained from an independent third party as of the fund’s pricing time on the
valuation date. Realized gains (losses) and unrealized appreciation (depreciation) on investment securities include the effects of changes in exchange rates since the securities were purchased, combined with the
effects of changes in security prices. Fluctuations in the value of other assets and liabilities resulting from changes in exchange rates are recorded as unrealized foreign currency gains (losses) until the assets or
liabilities are settled in cash, at which time they are recorded as realized foreign currency gains (losses).
3. Futures Contracts:
The fund uses index futures contracts to a limited extent, with the objective of maintaining full exposure to the stock market while maintaining liquidity. The fund may purchase or sell futures contracts to achieve a
desired level of investment, whether to accommodate portfolio turnover or cash flows from capital share transactions. The primary risks associated with the use of futures contracts are imperfect correlation between
changes in market values of stocks held by the fund and the prices of futures contracts, and the possibility of an illiquid market. Counterparty risk involving futures is mitigated because a regulated clearinghouse is
the counterparty instead of the clearing broker. To further mitigate counterparty risk, the fund trades futures contracts on an exchange, monitors the financial strength of its clearing brokers and clearinghouse, and
has entered into clearing agreements with its clearing brokers. The clearinghouse imposes initial margin requirements to secure the fund’s performance and requires daily settlement of variation margin
representing changes in the market value of each contract. Any securities pledged as initial margin for open contracts are noted in the Schedule of Investments.
Futures contracts are valued
at their quoted daily settlement prices. The notional amounts of the contracts are not recorded in the Statement of Assets and Liabilities. Fluctuations in the value of the contracts are recorded in the Statement of
Assets and Liabilities as an asset (liability) and in the Statement of Operations as unrealized appreciation (depreciation) until the contracts are closed, when they are recorded as realized gains (losses) on futures
contracts.
During the six months ended
April 30, 2023, the fund’s average investments in long and short futures contracts represented 2% and 0% of net assets, respectively, based on the average of the notional amounts at each quarter-end during the
period.
10
Mid-Cap Growth Fund
4. Federal Income Taxes:
The fund intends to continue to qualify as a regulated investment company and distribute virtually all of its taxable income. The fund’s tax returns are open to examination by the relevant tax authorities until
expiration of the applicable statute of limitations, which is generally three years after the filing of the tax return. Management has analyzed the fund’s tax positions taken for all open federal and state
income tax years, and has concluded that no provision for income tax is required in the fund’s financial statements.
5. Distributions:
Distributions to shareholders are recorded on the ex-dividend date. Distributions are determined on a tax basis at the fiscal year-end and may differ from net investment income and realized capital gains for financial
reporting purposes.
6. Securities Lending:
To earn additional income, the fund lends its securities to qualified institutional borrowers. Security loans are subject to termination by the fund at any time, and are required to be secured at all times by
collateral in an amount at least equal to the market value of securities loaned. Daily market fluctuations could cause the value of loaned securities to be more or less than the value of the collateral received. When
this occurs, the collateral is adjusted and settled before the opening of the market on the next business day. The fund further mitigates its counterparty risk by entering into securities lending transactions only
with a diverse group of prequalified counterparties, monitoring their financial strength, and entering into master securities lending agreements with its counterparties. The master securities lending agreements
provide that, in the event of a counterparty’s default (including bankruptcy), the fund may terminate any loans with that borrower, determine the net amount owed, and sell or retain the collateral up to the net
amount owed to the fund; however, such actions may be subject to legal proceedings. While collateral mitigates counterparty risk, in the event of a default, the fund may experience delays and costs in recovering the
securities loaned. The fund invests cash collateral received in Vanguard Market Liquidity Fund, and records a liability in the Statement of Assets and Liabilities for the return of the collateral, during the period
the securities are on loan. Collateral investments in Vanguard Market Liquidity Fund are subject to market appreciation or depreciation. Securities lending income represents fees charged to borrowers plus income
earned on invested cash collateral, less expenses associated with the loan. During the term of the loan, the fund is entitled to all distributions made on or in respect of the loaned securities.
7. Credit Facilities and
Interfund Lending Program: The fund and certain other funds managed by The Vanguard Group ("Vanguard") participate in a $4.3 billion committed credit facility provided by a syndicate of lenders pursuant to a credit
agreement and an uncommitted credit facility provided by Vanguard. Both facilities may be renewed annually. Each fund is individually liable for its borrowings, if any, under the credit facilities. Borrowings may be
utilized for temporary or emergency purposes and are subject to the fund’s regulatory and contractual borrowing restrictions. With respect to the committed credit facility, the participating funds are charged
administrative fees and an annual commitment fee of 0.10% of the undrawn committed amount of the facility, which are allocated to the funds based on a method approved by the fund’s board of trustees and included
in Management and Administrative expenses on the fund’s Statement of Operations. Any borrowings under either facility bear interest at an agreed-upon spread plus the higher of the federal funds effective rate,
the overnight bank funding rate, or the Daily Simple Secured Overnight Financing Rate inclusive of an additional agreed-upon spread. However, borrowings under the uncommitted credit facility may bear interest based
upon an alternate rate agreed to by the fund and Vanguard.
In accordance with an
exemptive order (the “Order”) from the SEC, the fund may participate in a joint lending and borrowing program that allows registered open-end Vanguard funds to borrow
11
Mid-Cap Growth Fund
money from and lend money to each other for
temporary or emergency purposes (the “Interfund Lending Program”), subject to compliance with the terms and conditions of the Order, and to the extent permitted by the fund’s investment objective and
investment policies. Interfund loans and borrowings normally extend overnight but can have a maximum duration of seven days. Loans may be called on one business day’s notice. The interest rate to be charged is
governed by the conditions of the Order and internal procedures adopted by the board of trustees. The board of trustees is responsible for overseeing the Interfund Lending Program.
For the six months ended April
30, 2023, the fund did not utilize the credit facilities or the Interfund Lending Program.
8. Other: Dividend
income is recorded on the ex-dividend date. Non-cash dividends included in income, if any, are recorded at the fair value of the securities received. Interest income includes income distributions received from
Vanguard Market Liquidity Fund and is accrued daily. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment
securities are those of the specific securities sold.
| B. | The investment advisory firms Frontier Capital Management Co., LLC, and Wellington Management Company llp each provide investment advisory services to a portion of the fund for a fee calculated at an annual percentage rate of average net assets managed by the advisor. The basic fees of Frontier Capital Management Co., LLC, and Wellington Management Company llp are subject to quarterly adjustments based on performance relative to the Russell Midcap Growth Index for the preceding three years. Until December 2022, a portion of the fund was managed by Victory Capital Management Inc., through its RS Investments franchise. The basic fee paid to Victory Capital Management Inc. was subject to quarterly adjustments based on performance relative to the Russell Midcap Growth Index for the preceding three years. |
Vanguard manages the cash
reserves of the fund as described below.
For the six months
ended April 30, 2023, the aggregate investment advisory fee paid to all advisors represented an effective annual basic rate of 0.20% of the fund’s average net assets, before a net decrease of $283,000
(0.02%) based on performance.
| C. | In accordance with the terms of a Funds' Service Agreement (the “FSA”) between Vanguard and the fund, Vanguard furnishes to the fund corporate management, administrative, marketing, distribution and cash management services at Vanguard’s cost of operations (as defined by the FSA). These costs of operations are allocated to the fund based on methods and guidelines approved by the board of trustees and are generally settled twice a month. |
Upon the request of Vanguard,
the fund may invest up to 0.40% of its net assets as capital in Vanguard. At April 30, 2023, the fund had contributed to Vanguard capital in the amount of $109,000, representing less than 0.01% of the fund’s net
assets and 0.04% of Vanguard’s capital received pursuant to the FSA. The fund’s trustees and officers are also directors and employees, respectively, of Vanguard.
| D. | The fund has asked its investment advisors to direct certain security trades, subject to obtaining the best price and execution, to brokers who have agreed to rebate to the fund part of the commissions generated. Such rebates are used solely to reduce the fund’s management and administrative expenses. For the six months ended April 30, 2023, these arrangements reduced the fund’s expenses by $68,000 (an annual rate of less than 0.01% of average net assets). |
12
Mid-Cap Growth Fund
| E. | Various inputs may be used to determine the value of the fund’s investments and derivatives. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities. |
Level 1—Quoted prices in active markets for identical securities.
Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).
Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments). Any investments and derivatives valued with significant
unobservable inputs are noted on the Schedule of Investments.
At April 30, 2023, 100% of the
market value of the fund’s investments and derivatives was determined based on Level 1 inputs.
| F. | As of April 30, 2023, gross unrealized appreciation and depreciation for investments and derivatives based on cost for U.S. federal income tax purposes were as follows: |
| Amount ($000) | |
| Tax Cost | 2,766,399 |
| Gross Unrealized Appreciation | 444,333 |
| Gross Unrealized Depreciation | (240,633) |
| Net Unrealized Appreciation (Depreciation) | 203,700 |
| G. | During the six months ended April 30, 2023, the fund purchased $1,267,366,000 of investment securities and sold $1,387,079,000 of investment securities, other than temporary cash investments. |
| H. | Capital shares issued and redeemed were: |
| Six Months Ended April 30, 2023 | Year Ended October 31, 2022 | ||
| Shares (000) | Shares (000) | ||
| Issued | 7,721 | 18,174 | |
| Issued in Lieu of Cash Distributions | 376 | 46,070 | |
| Redeemed | (14,498) | (47,262) | |
| Net Increase (Decrease) in Shares Outstanding | (6,401) | 16,982 |
| I. | Significant market disruptions, such as those caused by pandemics (e.g., COVID-19 pandemic), natural or environmental disasters, war (e.g., Russia’s invasion of Ukraine), acts of terrorism, or other events, can adversely affect local and global markets and normal market operations. Any such disruptions could have an adverse impact on the value of the fund’s investments and fund performance. |
13
Mid-Cap Growth Fund
To the extent the fund’s
investment portfolio reflects concentration in a particular market, industry, sector, country or asset class, the fund may be adversely affected by the performance of these concentrations and may be subject to
increased price volatility and other risks.
The use of derivatives may
expose the fund to various risks. Derivatives can be highly volatile, and any initial investment is generally small relative to the notional amount so that transactions may be leveraged in terms of market exposure. A
relatively small market movement may have a potentially larger impact on derivatives than on standard securities. Leveraged derivatives positions can, therefore, increase volatility. Additional information regarding
the fund's use of derivative(s) and the specific risks associated is described under significant accounting policies.
| J. | Management has determined that no events or transactions occurred subsequent to April 30, 2023, that would require recognition or disclosure in these financial statements. |
14
Trustees Approve Advisory Arrangements
At its December 2022
meeting, the board of trustees of Vanguard Mid-Cap Growth Fund renewed the fund’s investment advisory arrangements with Frontier Capital Management Co., LLC (Frontier Capital), Victory Capital Management Inc.
(Victory Capital), and Wellington Management Company LLP (Wellington Management). The board determined that renewing the fund’s advisory arrangements was in the best interests of the fund and its
shareholders.
Subsequently, the board
approved restructuring the fund’s investment team by removing Victory Capital as an investment advisor to the fund. The board determined that Victory Capital’s termination was in the best interests of the
fund and its shareholders. Frontier Capital and Wellington Management continue to serve as advisors to the fund.
The board based its decisions
upon an evaluation of each advisor’s investment staff, portfolio management process, and performance. This evaluation included information provided to the board by Vanguard’s Portfolio Review Department,
which is responsible for fund and advisor oversight and product management. The Portfolio Review Department met regularly with the advisors and made presentations to the board during the fiscal year that directed the
board’s focus to relevant information and topics.
The board, or an investment
committee made up of board members, also received information throughout the year during advisor presentations. For each advisor presentation, the board was provided with letters and reports that included information
about, among other things, the advisory firm and the advisor’s assessment of the investment environment, portfolio performance, and portfolio characteristics.
In addition, the board
received periodic reports throughout the year, which included information about the fund’s performance relative to its peers and benchmark, as applicable, and updates, as needed, on the Portfolio Review
Department’s ongoing assessment of the advisor.
Prior to their meeting, the
trustees were provided with a memo and materials that summarized the information they received over the course of the year. They also considered the factors discussed below, among others. However, no single factor
determined whether the board approved the arrangements. Rather, it was the totality of the circumstances that drove the board’s decisions.
Nature, extent, and quality of
services
The board reviewed the quality of the
fund’s investment management services over both the short and long term, and took into account the organizational depth and stability of each advisor. The board considered the following:
Frontier Capital. Frontier Capital, a Boston-based investment management firm founded in 1980, is an affiliate of Affiliated Managers Group, Inc. Frontier Capital employs a fundamental, bottom-up, and
research-intensive investment approach to select mid-capitalization growth stocks. Frontier Capital seeks companies with above-average mid-cap growth prospects and competitive advantages that will allow them to earn
superior rates of return on capital over a business cycle. The approach attempts to balance growth prospects with reasonable valuation and is long-term in
15
nature; investment time frames are typically
three to five years. Frontier Capital has managed a portion of the fund since 2018.
Victory Capital. Victory Capital, a wholly owned subsidiary of Victory Capital Holdings, Inc., is a multi-boutique investment firm comprised of multiple investment teams, referred to as investment
franchises, each of which utilizes an independent approach to investing. RS Investments, founded in 1986, is the franchise responsible for the day-to-day management of a portion of the Mid-Cap Growth Fund. RS
Investments utilizes fundamental research to identify companies with sustainable growth trajectories. Risk management is integrated into the team’s process to mitigate the negative impact of any single position.
Victory Capital, through its RS Investments franchise, has managed a portion of the fund since 2016.
Wellington Management. Wellington Management, founded in 1928, is among the nation’s oldest and most respected institutional managers. Wellington Management uses traditional methods of stock
selection—fundamental research and analysis—to identify companies that it believes have above-average growth prospects. Wellington Management believes there is a short-term bias in equity markets that
rewards near-term cyclical growth and creates opportunity for long-term growth. The team focuses on sustainable earnings power and develops bottom-up valuations based on return on investment capital forecasts,
price-to-sales, and quantitative risk factors. Wellington Management seeks to control risk by emphasizing larger positions in established growth stocks and holding smaller positions in emerging names. Wellington
Management has managed a portion of the fund since 2018.
The board concluded that each
advisor’s experience, stability, depth, and performance, among other factors, warranted continuation of the advisory arrangements.
Investment performance
The board considered the short-term,
long-term, and since-inception performance, as applicable, of each advisor’s subportfolio, including any periods of outperformance or underperformance compared with a relevant benchmark index and peer group. The
board concluded that the performance was such that the advisory arrangements should continue.
Cost
The board concluded that the fund’s
expense ratio was below the average expense ratio charged by funds in its peer group and that the fund’s advisory fee rates were also below the peer-group average.
The board did not consider the
profitability of Frontier Capital, Victory Capital, or Wellington Management in determining whether to approve the advisory fees, because the firms are independent of Vanguard and the advisory fees are the result of
arm’s-length negotiations.
The benefit of economies of
scale
The board concluded that the fund’s
shareholders benefit from economies of scale because of breakpoints in the advisory fee schedules for Frontier Capital, Victory Capital, and Wellington Management. The breakpoints reduce the effective rate of the fees
as the fund’s assets managed by each advisor increase.
16
The board will consider
whether to renew the advisory arrangements with Frontier Capital and Wellington Management again after a one-year period.
17
Liquidity Risk Management
Vanguard funds (except for the
money market funds) have adopted and implemented a written liquidity risk management program (the “Program”) as required by Rule 22e-4 under the Investment Company Act of 1940. Rule 22e-4 requires that
each fund adopt a program that is reasonably designed to assess and manage the fund’s liquidity risk, which is the risk that the fund could not meet redemption requests without significant dilution of remaining
investors’ interests in the fund.
Assessment and management of a
fund’s liquidity risk under the Program take into consideration certain factors, such as the fund’s investment strategy and the liquidity of its portfolio investments during normal and reasonably
foreseeable stressed conditions, its short- and long-term cash-flow projections during both normal and reasonably foreseeable stressed conditions, and its cash and cash-equivalent holdings and access to other funding
sources. As required by the rule, the Program includes policies and procedures for classification of fund portfolio holdings in four liquidity categories, maintaining certain levels of highly liquid investments, and
limiting holdings of illiquid investments.
The board of trustees of
Vanguard Whitehall Funds approved the appointment of liquidity risk management program administrators responsible for administering Vanguard Mid-Cap Growth Fund's Program and for carrying out the specific
responsibilities set forth in the Program, including reporting to the board on at least an annual basis regarding the Program’s operation, its adequacy, and the effectiveness of its implementation for the past
year (the “Program Administrator Report”). The board has reviewed the Program Administrator Report covering the period from January 1, 2022, through December 31, 2022 (the “Review Period”). The
Program Administrator Report stated that during the Review Period the Program operated and was implemented effectively to manage the fund’s liquidity risk.
18
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Connect with
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Semiannual Report | April 30, 2023
Vanguard
International Explorer™ Fund
About Your Fund’s Expenses
As a shareholder of the fund,
you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross
income, directly reduce the investment return of the fund.
A fund‘s expenses are
expressed as a percentage of its average net assets. This figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your fund and
to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.
The accompanying table
illustrates your fund’s costs in two ways:
| • | Based on actual fund return. This section helps you to estimate the actual expenses that you paid over the period. The ”Ending Account Value“ shown is derived from the fund’s actual return, and the third column shows the dollar amount that would have been paid by an investor who started with $1,000 in the fund. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period. |
To do so, simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your fund under the heading ”Expenses Paid During Period.“
| • | Based on hypothetical 5% yearly return. This section is intended to help you compare your fund‘s costs with those of other mutual funds. It assumes that the fund had a yearly return of 5% before expenses, but that the expense ratio is unchanged. In this case—because the return used is not the fund’s actual return—the results do not apply to your investment. The example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to calculate expenses based on a 5% return. You can assess your fund’s costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds. |
Note that the expenses shown
in the table are meant to highlight and help you compare ongoing costs only and do not reflect transaction costs incurred by the fund for buying and selling securities. Further, the expenses do not include any purchase, redemption, or
account service fees described in the fund prospectus. If such fees were applied to your account, your costs would be higher. Your fund does not carry a “sales load.”
The calculations assume no
shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.
You can find more information
about the fund’s expenses, including annual expense ratios, in the Financial Statements section of this report. For additional information on operating expenses and other shareholder costs, please refer to your
fund’s current prospectus.
1
| Six Months Ended April 30, 2023 | |||
| International Explorer Fund | Beginning Account Value 10/31/2022 | Ending Account Value 4/30/2023 | Expenses Paid During Period |
| Based on Actual Fund Return | $1,000.00 | $1,225.20 | $2.70 |
| Based on Hypothetical 5% Yearly Return | 1,000.00 | 1,022.37 | 2.46 |
The calculations are
based on expenses incurred in the most recent six-month period. The fund's annualized six-month expense ratio for that period is 0.49%. The dollar amounts shown as ”Expenses Paid” are equal to the
annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by the number of days in the most recent 12-month
period (181/365).
2
International Explorer Fund
Fund Allocation
As of April 30, 2023
| Japan | 27.8% |
| United Kingdom | 16.8 |
| Germany | 5.5 |
| Sweden | 5.1 |
| Taiwan | 4.9 |
| Switzerland | 4.7 |
| Australia | 4.4 |
| Italy | 4.3 |
| Belgium | 3.0 |
| Canada | 2.9 |
| France | 2.7 |
| Hong Kong | 2.0 |
| Netherlands | 1.9 |
| India | 1.7 |
| Brazil | 1.3 |
| Singapore | 1.1 |
| Austria | 1.0 |
| South Korea | 1.0 |
| Israel | 1.0 |
| Ireland | 1.0 |
| Denmark | 1.0 |
| Other | 4.9 |
The table reflects the fund’s
investments, except for short-term investments and derivatives.
3
International Explorer Fund
Financial Statements (unaudited)
Schedule of Investments
As of April 30, 2023
The fund files its complete
schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports
are available on the SEC’s website at www.sec.gov.
4
International Explorer Fund
Derivative
Financial Instruments Outstanding as of Period End
| Futures Contracts | ||||
| ($000) | ||||
| Expiration | Number of Long (Short) Contracts | Notional Amount | Value and Unrealized Appreciation (Depreciation) | |
| Long Futures Contracts | ||||
| MSCI EAFE Index | June 2023 | 223 | 23,968 | 453 |
| MSCI Emerging Market Index | June 2023 | 180 | 8,858 | (89) |
| 364 | ||||
See accompanying Notes,
which are an integral part of the Financial Statements.
10
International Explorer Fund
Statement of Assets and Liabilities
As of April 30, 2023
| ($000s, except shares, footnotes, and per-share amounts) | Amount |
| Assets | |
| Investments in Securities, at Value1 | |
| Unaffiliated Issuers (Cost $1,367,801) | 1,509,330 |
| Affiliated Issuers (Cost $70,897) | 70,908 |
| Total Investments in Securities | 1,580,238 |
| Investment in Vanguard | 56 |
| Foreign Currency, at Value (Cost $1,435) | 1,435 |
| Cash Collateral Pledged—Futures Contracts | 990 |
| Receivables for Investment Securities Sold | 10,598 |
| Receivables for Accrued Income | 13,442 |
| Receivables for Capital Shares Issued | 254 |
| Variation Margin Receivable—Futures Contracts | 22 |
| Total Assets | 1,607,035 |
| Liabilities | |
| Due to Custodian | 4,623 |
| Payables for Investment Securities Purchased | 5,932 |
| Collateral for Securities on Loan | 26,678 |
| Payables for Capital Shares Redeemed | 732 |
| Payables to Investment Advisor | 1,133 |
| Payables to Vanguard | 453 |
| Total Liabilities | 39,551 |
| Net Assets | 1,567,484 |
| 1 Includes $23,862,000 of securities on loan. | |
| At April 30, 2023, net assets consisted of: | |
| Paid-in Capital | 1,574,660 |
| Total Distributable Earnings (Loss) | (7,176) |
| Net Assets | 1,567,484 |
| Net Assets | |
| Applicable to 93,839,888 outstanding $.001 par value shares of beneficial interest (unlimited authorization) | 1,567,484 |
| Net Asset Value Per Share | $16.70 |
See accompanying Notes, which are an
integral part of the Financial Statements.
11
International Explorer Fund
Statement of Operations
| Six Months Ended April 30, 2023 | |
| ($000) | |
| Investment Income | |
| Income | |
| Dividends1 | 15,204 |
| Interest2 | 1,046 |
| Securities Lending—Net | 1,102 |
| Total Income | 17,352 |
| Expenses | |
| Investment Advisory Fees—Note B | |
| Basic Fee | 2,215 |
| Performance Adjustment | 30 |
| The Vanguard Group—Note C | |
| Management and Administrative | 1,213 |
| Marketing and Distribution | 39 |
| Custodian Fees | 105 |
| Shareholders’ Reports | 40 |
| Trustees’ Fees and Expenses | — |
| Other Expenses | 190 |
| Total Expenses | 3,832 |
| Net Investment Income | 13,520 |
| Realized Net Gain (Loss) | |
| Investment Securities Sold2 | (13,886) |
| Futures Contracts | 2,980 |
| Foreign Currencies | 156 |
| Realized Net Gain (Loss) | (10,750) |
| Change in Unrealized Appreciation (Depreciation) | |
| Investment Securities2 | 311,707 |
| Futures Contracts | (607) |
| Foreign Currencies | 658 |
| Change in Unrealized Appreciation (Depreciation) | 311,758 |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 314,528 |
| 1 | Dividends include foreign tax reclaims of $1,329,000 and are net of foreign withholding taxes of $2,062,000. |
| 2 | Interest income, realized net gain (loss), capital gain distributions received, and change in unrealized appreciation (depreciation) from an affiliated company of the fund were $859,000, $8,000, less than $1,000, and ($5,000), respectively. Purchases and sales are for temporary cash investment purposes. |
See accompanying Notes, which are an
integral part of the Financial Statements.
12
International Explorer Fund
Statement of Changes in Net Assets
| Six Months Ended April 30, 2023 | Year Ended October 31, 2022 | ||
| ($000) | ($000) | ||
| Increase (Decrease) in Net Assets | |||
| Operations | |||
| Net Investment Income | 13,520 | 39,758 | |
| Realized Net Gain (Loss) | (10,750) | (140,633) | |
| Change in Unrealized Appreciation (Depreciation) | 311,758 | (835,825) | |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 314,528 | (936,700) | |
| Distributions | |||
| Total Distributions | (26,822) | (121,682) | |
| Capital Share Transactions | |||
| Issued | 83,357 | 212,144 | |
| Issued in Lieu of Cash Distributions | 21,893 | 102,893 | |
| Redeemed | (272,346) | (624,760) | |
| Net Increase (Decrease) from Capital Share Transactions | (167,096) | (309,723) | |
| Total Increase (Decrease) | 120,610 | (1,368,105) | |
| Net Assets | |||
| Beginning of Period | 1,446,874 | 2,814,979 | |
| End of Period | 1,567,484 | 1,446,874 | |
See accompanying Notes, which are an
integral part of the Financial Statements.
13
International Explorer Fund
Financial Highlights
| For a Share Outstanding Throughout Each Period | Six Months Ended April 30, 2023 | Year Ended October 31, | ||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||
| Net Asset Value, Beginning of Period | $13.87 | $22.70 | $16.90 | $17.22 | $17.86 | $21.87 |
| Investment Operations | ||||||
| Net Investment Income1 | .137 | .337 | .280 | .211 | .379 | .369 |
| Net Realized and Unrealized Gain (Loss) on Investments | 2.957 | (8.145) | 5.736 | (.081) | .300 | (3.032) |
| Total from Investment Operations | 3.094 | (7.808) | 6.016 | .130 | .679 | (2.663) |
| Distributions | ||||||
| Dividends from Net Investment Income | (.264) | (.487) | (.216) | (.450) | (.289) | (.447) |
| Distributions from Realized Capital Gains | — | (.535) | — | — | (1.030) | (.900) |
| Total Distributions | (.264) | (1.022) | (.216) | (.450) | (1.319) | (1.347) |
| Net Asset Value, End of Period | $16.70 | $13.87 | $22.70 | $16.90 | $17.22 | $17.86 |
| Total Return2 | 22.52% | -35.83% | 35.79% | 0.62% | 4.85% | -13.08% |
| Ratios/Supplemental Data | ||||||
| Net Assets, End of Period (Millions) | $1,567 | $1,447 | $2,815 | $2,329 | $3,163 | $3,649 |
| Ratio of Total Expenses to Average Net Assets3 | 0.49% | 0.41%4 | 0.40% | 0.39% | 0.39% | 0.39% |
| Ratio of Net Investment Income to Average Net Assets | 1.73% | 1.94% | 1.30% | 1.29% | 2.28% | 1.75% |
| Portfolio Turnover Rate | 22% | 60% | 51% | 71% | 35% | 40% |
| The expense ratio and net investment income ratio for the current period have been annualized. | ||||||
| 1 | Calculated based on average shares outstanding. |
| 2 | Total returns do not include account service fees that may have applied in the periods shown. Fund prospectuses provide information about any applicable account service fees. |
| 3 | Includes performance-based investment advisory fee increases (decreases) of 0.00%, (0.06%), (0.05%), (0.04%), (0.03%), and (0.01%). |
| 4 | The ratio of expenses to average net assets for the period net of reduction from broker commission abatement arrangements was 0.41%. |
See accompanying Notes, which are an
integral part of the Financial Statements.
14
International Explorer Fund
Notes to Financial Statements
Vanguard International
Explorer Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund.
A. The following significant accounting policies conform to generally accepted accounting principles for U.S. investment companies. The fund consistently follows such policies in preparing its
financial statements.
1. Security Valuation:
Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official
closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which
market quotations are not readily available, or whose values have been affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued by
methods deemed by the valuation designee to represent fair value and subject to oversight by the board of trustees. These procedures include obtaining quotations from an independent pricing service, monitoring news to
identify significant market- or security-specific events, and evaluating changes in the values of foreign market proxies (for example, ADRs, futures contracts, or exchange-traded funds), between the time the foreign
markets close and the fund’s pricing time. When fair-value pricing is employed, the prices of securities used by a fund to calculate its net asset value may differ from quoted or published prices for the same
securities. Investments in Vanguard Market Liquidity Fund are valued at that fund's net asset value.
2. Foreign Currency:
Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates obtained from an independent third party as of the fund’s pricing time on the
valuation date. Realized gains (losses) and unrealized appreciation (depreciation) on investment securities include the effects of changes in exchange rates since the securities were purchased, combined with the
effects of changes in security prices. Fluctuations in the value of other assets and liabilities resulting from changes in exchange rates are recorded as unrealized foreign currency gains (losses) until the assets or
liabilities are settled in cash, at which time they are recorded as realized foreign currency gains (losses).
3. Repurchase
Agreements: The fund enters into repurchase agreements with institutional counterparties. Securities pledged as collateral to the fund under repurchase agreements are held by a custodian bank until the agreements
mature, and in the absence of a default, such collateral cannot be repledged, resold, or rehypothecated. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and
principal. The fund further mitigates its counterparty risk by entering into repurchase agreements only with a diverse group of prequalified counterparties, monitoring their financial strength, and entering into
master repurchase agreements with its counterparties. The master repurchase agreements provide that, in the event of a counterparty's default (including bankruptcy), the fund may terminate any repurchase agreements
with that counterparty, determine the net amount owed, and sell or retain the collateral up to the net amount owed to the fund. Such action may be subject to legal proceedings, which may delay or limit the disposition
of collateral.
4. Futures Contracts:
The fund uses index futures contracts to a limited extent, with the objective of maintaining full exposure to the stock market while maintaining liquidity. The fund may purchase or sell futures contracts to achieve a
desired level of investment, whether to accommodate portfolio turnover or cash flows from capital share transactions. The primary risks associated with the use of futures contracts are imperfect correlation between
changes in market values of stocks
15
International Explorer Fund
held by the fund and the prices of futures
contracts, and the possibility of an illiquid market. Counterparty risk involving futures is mitigated because a regulated clearinghouse is the counterparty instead of the clearing broker. To further mitigate
counterparty risk, the fund trades futures contracts on an exchange, monitors the financial strength of its clearing brokers and clearinghouse, and has entered into clearing agreements with its clearing brokers. The
clearinghouse imposes initial margin requirements to secure the fund’s performance and requires daily settlement of variation margin representing changes in the market value of each contract. Any securities
pledged as initial margin for open contracts are noted in the Schedule of Investments.
Futures contracts are valued
at their quoted daily settlement prices. The notional amounts of the contracts are not recorded in the Statement of Assets and Liabilities. Fluctuations in the value of the contracts are recorded in the Statement of
Assets and Liabilities as an asset (liability) and in the Statement of Operations as unrealized appreciation (depreciation) until the contracts are closed, when they are recorded as realized gains (losses) on futures
contracts.
During the six months ended
April 30, 2023, the fund’s average investments in long and short futures contracts represented 2% and 0% of net assets, respectively, based on the average of the notional amounts at each quarter-end during the
period.
5. Federal Income Taxes:
The fund intends to continue to qualify as a regulated investment company and distribute virtually all of its taxable income. The fund’s tax returns are open to examination by the relevant tax authorities until
expiration of the applicable statute of limitations, which is generally three years after the filing of the tax return. Management has analyzed the fund’s tax positions taken for all open federal and state
income tax years, and has concluded that no provision for income tax is required in the fund’s financial statements.
6. Distributions:
Distributions to shareholders are recorded on the ex-dividend date. Distributions are determined on a tax basis at the fiscal year-end and may differ from net investment income and realized capital gains for financial
reporting purposes.
7. Securities Lending:
To earn additional income, the fund lends its securities to qualified institutional borrowers. Security loans are subject to termination by the fund at any time, and are required to be secured at all times by
collateral in an amount at least equal to the market value of securities loaned. Daily market fluctuations could cause the value of loaned securities to be more or less than the value of the collateral received. When
this occurs, the collateral is adjusted and settled before the opening of the market on the next business day. The fund further mitigates its counterparty risk by entering into securities lending transactions only
with a diverse group of prequalified counterparties, monitoring their financial strength, and entering into master securities lending agreements with its counterparties. The master securities lending agreements
provide that, in the event of a counterparty’s default (including bankruptcy), the fund may terminate any loans with that borrower, determine the net amount owed, and sell or retain the collateral up to the net
amount owed to the fund; however, such actions may be subject to legal proceedings. While collateral mitigates counterparty risk, in the event of a default, the fund may experience delays and costs in recovering the
securities loaned. The fund invests cash collateral received in Vanguard Market Liquidity Fund, and records a liability in the Statement of Assets and Liabilities for the return of the collateral, during the period
the securities are on loan. Collateral investments in Vanguard Market Liquidity Fund are subject to market appreciation or depreciation. Securities lending income represents fees charged to borrowers plus income
earned on invested cash collateral, less expenses associated with the loan. During the term of the loan, the fund is entitled to all distributions made on or in respect of the loaned securities.
16
International Explorer Fund
8. Credit Facilities and
Interfund Lending Program: The fund and certain other funds managed by The Vanguard Group ("Vanguard") participate in a $4.3 billion committed credit facility provided by a syndicate of lenders pursuant to a credit
agreement and an uncommitted credit facility provided by Vanguard. Both facilities may be renewed annually. Each fund is individually liable for its borrowings, if any, under the credit facilities. Borrowings may be
utilized for temporary or emergency purposes and are subject to the fund’s regulatory and contractual borrowing restrictions. With respect to the committed credit facility, the participating funds are charged
administrative fees and an annual commitment fee of 0.10% of the undrawn committed amount of the facility, which are allocated to the funds based on a method approved by the fund’s board of trustees and included
in Management and Administrative expenses on the fund’s Statement of Operations. Any borrowings under either facility bear interest at an agreed-upon spread plus the higher of the federal funds effective rate,
the overnight bank funding rate, or the Daily Simple Secured Overnight Financing Rate inclusive of an additional agreed-upon spread. However, borrowings under the uncommitted credit facility may bear interest based
upon an alternate rate agreed to by the fund and Vanguard.
In accordance with an
exemptive order (the “Order”) from the SEC, the fund may participate in a joint lending and borrowing program that allows registered open-end Vanguard funds to borrow money from and lend money to each
other for temporary or emergency purposes (the “Interfund Lending Program”), subject to compliance with the terms and conditions of the Order, and to the extent permitted by the fund’s investment
objective and investment policies. Interfund loans and borrowings normally extend overnight but can have a maximum duration of seven days. Loans may be called on one business day’s notice. The interest rate to
be charged is governed by the conditions of the Order and internal procedures adopted by the board of trustees. The board of trustees is responsible for overseeing the Interfund Lending Program.
For the six months ended April
30, 2023, the fund did not utilize the credit facilities or the Interfund Lending Program.
9. Other: Dividend
income is recorded on the ex-dividend date. Non-cash dividends included in income, if any, are recorded at the fair value of the securities received. Interest income includes income distributions received from
Vanguard Market Liquidity Fund and is accrued daily. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment
securities are those of the specific securities sold.
Taxes on foreign dividends and
capital gains have been provided for in accordance with the fund’s understanding of the applicable countries’ tax rules and rates. Deferred foreign capital gains tax, if any, is accrued daily based upon
net unrealized gains. The fund has filed tax reclaims for previously withheld taxes on dividends earned in certain European Union countries. These filings are subject to various administrative and judicial proceedings
within these countries. Amounts related to these reclaims are recorded when there are no significant uncertainties as to the ultimate resolution of proceedings, the likelihood of receipt of these reclaims, and
the potential timing of payment. Such tax reclaims and related professional fees, if any, are included in dividend income and other expenses, respectively.
B. The investment advisory firms Wellington Management Company llp, Schroder Investment Management North America Inc., and Baillie Gifford Overseas Ltd. each provide investment advisory services to a portion of the fund for a fee calculated
at an annual percentage rate of average net assets managed by the advisor. The basic fees of Wellington Management Company llp and Schroder Investment Management North America Inc. are subject to quarterly
17
International Explorer Fund
adjustments based on performance
relative to the benchmark for the preceding three years; prior to October 9, 2022, the benchmark was S&P EPAC SmallCap Index and thereafter the new benchmark is MSCI EAFE Small Cap Index. The benchmark change will
be fully phased in by October 2025. The basic fee of Baillie Gifford Overseas Ltd. is subject to quarterly adjustments based on performance relative to the MSCI All Country World Index ex US Small-Cap
Index since October 31, 2020. Until September 2022, a portion of the fund was managed by TimesSquare Capital Management, LLC. The basic fee paid to TimesSquare Capital Management, LLC, was subject to
quarterly adjustments based on performance relative to the S&P EPAC SmallCap Index for the preceding three years.
Vanguard manages the cash
reserves of the fund as described below.
For the six months ended April
30, 2023, the aggregate investment advisory fee paid to all advisors represented an effective annual basic rate of 0.28% of the fund’s average net assets, before a net increase of $30,000 (0.00%) based on
performance.
C. In accordance with the terms of a Funds’ Service Agreement (the “FSA”) between Vanguard and the fund, Vanguard furnishes to the fund corporate management, administrative,
marketing, distribution, and cash management services at Vanguard’s cost of operations (as defined by the FSA). These costs of operations are allocated to the fund based on methods and guidelines approved by the
board of trustees and are generally settled twice a month.
Upon the request of Vanguard,
the fund may invest up to 0.40% of its net assets as capital in Vanguard. At April 30, 2023, the fund had contributed to Vanguard capital in the amount of $56,000, representing less than 0.01% of the fund’s net
assets and 0.02% of Vanguard’s capital received pursuant to the FSA. The fund’s trustees and officers are also directors and employees, respectively, of Vanguard.
D. Various inputs may be used to determine the value of the fund’s investments and derivatives. These inputs are summarized in three broad levels for financial statement purposes. The
inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.
Level 1—Quoted prices in active markets for identical securities.
Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).
Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments). Any investments and derivatives valued with significant
unobservable inputs are noted on the Schedule of Investments.
The following table summarizes
the market value of the fund's investments and derivatives as of April 30, 2023, based on the inputs used to value them:
| Level 1 ($000) | Level 2 ($000) | Level 3 ($000) | Total ($000) | |
| Investments | ||||
| Assets | ||||
| Common Stocks | 111,772 | 1,390,975 | 1,183 | 1,503,930 |
| Temporary Cash Investments | 70,908 | 5,400 | — | 76,308 |
| Total | 182,680 | 1,396,375 | 1,183 | 1,580,238 |
18
International Explorer Fund
| Level 1 ($000) | Level 2 ($000) | Level 3 ($000) | Total ($000) | |
| Derivative Financial Instruments | ||||
| Assets | ||||
| Futures Contracts1 | 453 | — | — | 453 |
| Liabilities | ||||
| Futures Contracts1 | 89 | — | — | 89 |
| 1 | Includes cumulative appreciation (depreciation) on futures contracts and centrally cleared swaps, if any, as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities. |
E. As of April 30, 2023, gross unrealized appreciation and depreciation for investments and derivatives based on cost for U.S. federal income tax purposes were as follows:
| Amount ($000) | |
| Tax Cost | 1,456,854 |
| Gross Unrealized Appreciation | 306,332 |
| Gross Unrealized Depreciation | (182,584) |
| Net Unrealized Appreciation (Depreciation) | 123,748 |
The fund’s tax-basis
capital gains and losses are determined only at the end of each fiscal year. For tax purposes, at October 31, 2022, the fund had available capital losses totaling $122,835,000 that may be carried forward indefinitely
to offset future net capital gains. The fund will use these capital losses to offset net taxable capital gains, if any, realized during the year ending October 31, 2023; should the fund realize net capital losses for
the year, the losses will be added to the loss carryforward balance above.
F. During the six months ended April 30, 2023, the fund purchased $329,306,000 of investment securities and sold $515,983,000 of investment securities, other than temporary cash
investments.
The fund purchased securities
from and sold securities to other funds or accounts managed by its investment advisors or their affiliates, in accordance with procedures adopted by the board of trustees in compliance with Rule 17a-7 of the
Investment Company Act of 1940. For the six months ended April 30, 2023, such purchases were $70,000 and sales were $115,000, resulting in net realized loss of $65,000; these amounts, other than temporary cash
investments, are included in the purchases and sales of investment securities noted above.
19
International Explorer Fund
G. Capital shares issued and redeemed were:
| Six Months Ended April 30, 2023 | Year Ended October 31, 2022 | ||
| Shares (000) | Shares (000) | ||
| Issued | 5,253 | 12,320 | |
| Issued in Lieu of Cash Distributions | 1,457 | 5,056 | |
| Redeemed | (17,213) | (37,018) | |
| Net Increase (Decrease) in Shares Outstanding | (10,503) | (19,642) |
H. Significant market disruptions, such as those caused by pandemics (e.g., COVID-19 pandemic), natural or environmental disasters, war (e.g., Russia’s invasion of Ukraine), acts
of terrorism, or other events, can adversely affect local and global markets and normal market operations. Any such disruptions could have an adverse impact on the value of the fund's investments and fund
performance.
To the extent the fund’s
investment portfolio reflects concentration in a particular market, industry, sector, country or asset class, the fund may be adversely affected by the performance of these concentrations and may be subject to
increased price volatility and other risks.
The use of derivatives may
expose the fund to various risks. Derivatives can be highly volatile, and any initial investment is generally small relative to the notional amount so that transactions may be leveraged in terms of market exposure. A
relatively small market movement may have a potentially larger impact on derivatives than on standard securities. Leveraged derivatives positions can, therefore, increase volatility. Additional information regarding
the fund's use of derivative(s) and the specific risks associated is described under significant accounting policies.
I. Management has determined that no events or transactions occurred subsequent to April 30, 2023, that would require recognition or disclosure in these financial statements.
20
Liquidity Risk Management
Vanguard funds (except for the
money market funds) have adopted and implemented a written liquidity risk management program (the “Program”) as required by Rule 22e-4 under the Investment Company Act of 1940. Rule 22e-4 requires that
each fund adopt a program that is reasonably designed to assess and manage the fund’s liquidity risk, which is the risk that the fund could not meet redemption requests without significant dilution of remaining
investors’ interests in the fund.
Assessment and management of a
fund’s liquidity risk under the Program take into consideration certain factors, such as the fund’s investment strategy and the liquidity of its portfolio investments during normal and reasonably
foreseeable stressed conditions, its short- and long-term cash-flow projections during both normal and reasonably foreseeable stressed conditions, and its cash and cash-equivalent holdings and access to other funding
sources. As required by the rule, the Program includes policies and procedures for classification of fund portfolio holdings in four liquidity categories, maintaining certain levels of highly liquid investments, and
limiting holdings of illiquid investments.
The board of trustees of
Vanguard Whitehall Funds approved the appointment of liquidity risk management program administrators responsible for administering Vanguard International Explorer Fund’s Program and for carrying out the
specific responsibilities set forth in the Program, including reporting to the board on at least an annual basis regarding the Program’s operation, its adequacy, and the effectiveness of its implementation for
the past year (the “Program Administrator Report”). The board has reviewed the Program Administrator Report covering the period from January 1, 2022, through December 31, 2022 (the “Review
Period”). The Program Administrator Report stated that during the Review Period the Program operated and was implemented effectively to manage the fund’s liquidity risk.
21
Semiannual Report | April 30, 2023
Vanguard High
Dividend Yield Index Fund
About Your Fund’s Expenses
As a shareholder of the fund,
you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross
income, directly reduce the investment return of the fund.
A fund‘s expenses are
expressed as a percentage of its average net assets. This figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your fund and
to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.
The accompanying table
illustrates your fund’s costs in two ways:
| • | Based on actual fund return. This section helps you to estimate the actual expenses that you paid over the period. The ”Ending Account Value“ shown is derived from the fund’s actual return, and the third column shows the dollar amount that would have been paid by an investor who started with $1,000 in the fund. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period. |
To do so, simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your fund under the heading ”Expenses Paid During Period.“
| • | Based on hypothetical 5% yearly return. This section is intended to help you compare your fund‘s costs with those of other mutual funds. It assumes that the fund had a yearly return of 5% before expenses, but that the expense ratio is unchanged. In this case—because the return used is not the fund’s actual return—the results do not apply to your investment. The example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to calculate expenses based on a 5% return. You can assess your fund’s costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds. |
Note that the expenses shown
in the table are meant to highlight and help you compare ongoing costs only and do not reflect transaction costs incurred by the fund for buying and selling securities. Further, the expenses do not include any purchase, redemption, or
account service fees described in the fund prospectus. If such fees were applied to your account, your costs would be higher. Your fund does not carry a “sales load.”
The calculations assume no
shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.
You can find more information
about the fund’s expenses, including annual expense ratios, in the Financial Statements section of this report. For additional information on operating expenses and other shareholder costs, please refer to your
fund’s current prospectus.
1
| Six Months Ended April 30, 2023 | |||
| Beginning Account Value 10/31/2022 | Ending Account Value 4/30/2023 | Expenses Paid During Period | |
| Based on Actual Fund Return | |||
| High Dividend Yield Index Fund | |||
| ETF Shares | $1,000.00 | $1,020.30 | $0.30 |
| Admiral™ Shares | 1,000.00 | 1,020.30 | 0.40 |
| Based on Hypothetical 5% Yearly Return | |||
| High Dividend Yield Index Fund | |||
| ETF Shares | $1,000.00 | $1,024.50 | $0.30 |
| Admiral Shares | 1,000.00 | 1,024.40 | 0.40 |
The calculations are
based on expenses incurred in the most recent six-month period. The fund's annualized six-month expense ratios for that period are 0.06% for ETF Shares and 0.08% for Admiral Shares. The dollar amounts shown as
“Expenses Paid” are equal to the annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by the
number of days in the most recent 12-month period (181/365).
2
High Dividend Yield Index Fund
Fund Allocation
As of April 30, 2023
| Basic Materials | 2.4% |
| Consumer Discretionary | 9.3 |
| Consumer Staples | 13.8 |
| Energy | 10.9 |
| Financials | 19.1 |
| Health Care | 13.2 |
| Industrials | 11.7 |
| Real Estate | 0.0 |
| Technology | 6.7 |
| Telecommunications | 4.9 |
| Utilities | 8.0 |
The table reflects the fund’s
investments, except for short-term investments and derivatives. Sector categories are based on the Industry Classification Benchmark (“ICB”), except for the “Other” category (if applicable),
which includes securities that have not been provided an ICB classification as of the effective reporting period.
The fund may invest in
derivatives (such as futures and swap contracts) for various reasons, including, but not limited to, attempting to remain fully invested and tracking its target index as closely as possible.
The Industry
Classification Benchmark (“ICB”) is owned by FTSE. FTSE does not accept any liability to any person for any loss or damage arising out of any error or omission in the ICB.
3
High Dividend Yield Index Fund
Financial Statements (unaudited)
Schedule of Investments
As of April 30, 2023
The fund files its complete
schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports
are available on the SEC’s website at www.sec.gov.
4
High Dividend Yield Index Fund
Derivative Financial
Instruments Outstanding as of Period End
| Futures Contracts | ||||
| ($000) | ||||
| Expiration | Number of Long (Short) Contracts | Notional Amount | Value and Unrealized Appreciation (Depreciation) | |
| Long Futures Contracts | ||||
| E-mini S&P 500 Index | June 2023 | 437 | 91,519 | 4,870 |
| Over-the-Counter Total Return Swaps | ||||||
| Reference Entity | Termination Date | Counterparty | Notional Amount ($000) | Floating Interest Rate Received (Paid)1 (%) | Value and Unrealized Appreciation ($000) | Value and Unrealized (Depreciation) ($000) |
| Clorox Co. | 8/31/23 | BANA | 16,299 | (4.827) | 827 | — |
| Paramount Global Class B | 8/31/23 | BANA | 13,297 | (4.827) | 706 | — |
| 1,533 | — | |||||
| 1 | Based on USD Overnight Bank Funding Rate as of the most recent reset date. Floating interest payment received/paid monthly. |
| BANA—Bank of America, N.A. |
At April 30, 2023, the
counterparties had deposited in segregated accounts securities with a value of $1,510,000 in connection with open over-the-counter swap contracts.
See accompanying
Notes, which are an integral part of the Financial Statements.
10
High Dividend Yield Index Fund
Statement of Assets and Liabilities
As of April 30, 2023
| ($000s, except shares, footnotes, and per-share amounts) | Amount |
| Assets | |
| Investments in Securities, at Value1 | |
| Unaffiliated Issuers (Cost $53,100,331) | 61,925,671 |
| Affiliated Issuers (Cost $96,534) | 96,540 |
| Total Investments in Securities | 62,022,211 |
| Investment in Vanguard | 2,171 |
| Cash | 16,207 |
| Cash Collateral Pledged—Futures Contracts | 4,900 |
| Receivables for Accrued Income | 96,036 |
| Receivables for Capital Shares Issued | 4,616 |
| Variation Margin Receivable—Futures Contracts | 759 |
| Unrealized Appreciation—Over-the-Counter Swap Contracts | 1,533 |
| Total Assets | 62,148,433 |
| Liabilities | |
| Payables for Investment Securities Purchased | 25,640 |
| Collateral for Securities on Loan | 69,818 |
| Payables for Capital Shares Redeemed | 10,484 |
| Payables to Vanguard | 1,627 |
| Total Liabilities | 107,569 |
| Net Assets | 62,040,864 |
| 1 Includes $67,132,000 of securities on loan. | |
11
High Dividend Yield Index Fund
| Statement of Assets and Liabilities (continued) | |
| At April 30, 2023, net assets consisted of: | |
| ($000s, except shares, footnotes, and per-share amounts) | Amount |
| Paid-in Capital | 54,251,546 |
| Total Distributable Earnings (Loss) | 7,789,318 |
| Net Assets | 62,040,864 |
| ETF Shares—Net Assets | |
| Applicable to 465,925,492 outstanding $.001 par value shares of beneficial interest (unlimited authorization) | 49,782,790 |
| Net Asset Value Per Share—ETF Shares | $106.85 |
| Admiral Shares—Net Assets | |
| Applicable to 380,463,890 outstanding $.001 par value shares of beneficial interest (unlimited authorization) | 12,258,074 |
| Net Asset Value Per Share—Admiral Shares | $32.22 |
See accompanying Notes, which are an
integral part of the Financial Statements.
12
High Dividend Yield Index Fund
Statement of Operations
| Six Months Ended April 30, 2023 | |
| ($000) | |
| Investment Income | |
| Income | |
| Dividends1 | 1,014,828 |
| Interest2 | 501 |
| Securities Lending—Net | 1,379 |
| Total Income | 1,016,708 |
| Expenses | |
| The Vanguard Group—Note B | |
| Investment Advisory Services | 729 |
| Management and Administrative—ETF Shares | 12,089 |
| Management and Administrative—Admiral Shares | 4,317 |
| Marketing and Distribution—ETF Shares | 1,131 |
| Marketing and Distribution—Admiral Shares | 277 |
| Custodian Fees | 471 |
| Shareholders’ Reports—ETF Shares | 638 |
| Shareholders’ Reports—Admiral Shares | 114 |
| Trustees’ Fees and Expenses | 13 |
| Other Expenses | 7 |
| Total Expenses | 19,786 |
| Expenses Paid Indirectly | (2) |
| Net Expenses | 19,784 |
| Net Investment Income | 996,924 |
| Realized Net Gain (Loss) | |
| Investment Securities Sold2,3 | 1,717,392 |
| Futures Contracts | 760 |
| Swap Contracts | 5,002 |
| Realized Net Gain (Loss) | 1,723,154 |
| Change in Unrealized Appreciation (Depreciation) | |
| Investment Securities2 | (1,495,473) |
| Futures Contracts | 3,163 |
| Swap Contracts | (62) |
| Change in Unrealized Appreciation (Depreciation) | (1,492,372) |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 1,227,706 |
| 1 | Dividends are net of foreign withholding taxes of $871,000. |
| 2 | Interest income, realized net gain (loss), and change in unrealized appreciation (depreciation) from an affiliated company of the fund were $403,000, $3,000, and ($1,000), respectively. Purchases and sales are for temporary cash investment purposes. |
| 3 | Includes $2,124,750,000 of net gain (loss) resulting from in-kind redemptions. |
See accompanying Notes, which are an
integral part of the Financial Statements.
13
High Dividend Yield Index Fund
Statement of Changes in Net Assets
| Six Months Ended April 30, 2023 | Year Ended October 31, 2022 | ||
| ($000) | ($000) | ||
| Increase (Decrease) in Net Assets | |||
| Operations | |||
| Net Investment Income | 996,924 | 1,684,583 | |
| Realized Net Gain (Loss) | 1,723,154 | 639,561 | |
| Change in Unrealized Appreciation (Depreciation) | (1,492,372) | (1,659,684) | |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 1,227,706 | 664,460 | |
| Distributions | |||
| ETF Shares | (779,132) | (1,318,564) | |
| Admiral Shares | (193,285) | (352,553) | |
| Total Distributions | (972,417) | (1,671,117) | |
| Capital Share Transactions | |||
| ETF Shares | 887,862 | 9,692,470 | |
| Admiral Shares | 9,799 | 1,017,487 | |
| Net Increase (Decrease) from Capital Share Transactions | 897,661 | 10,709,957 | |
| Total Increase (Decrease) | 1,152,950 | 9,703,300 | |
| Net Assets | |||
| Beginning of Period | 60,887,914 | 51,184,614 | |
| End of Period | 62,040,864 | 60,887,914 | |
See accompanying Notes, which are an
integral part of the Financial Statements.
14
High Dividend Yield Index Fund
Financial Highlights
| ETF Shares | ||||||
| For a Share Outstanding Throughout Each Period | Six Months Ended April 30, 2023 | Year Ended October 31, | ||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||
| Net Asset Value, Beginning of Period | $106.42 | $108.42 | $79.49 | $89.60 | $83.26 | $82.46 |
| Investment Operations | ||||||
| Net Investment Income1 | 1.730 | 3.232 | 3.010 | 2.950 | 2.891 | 2.623 |
| Net Realized and Unrealized Gain (Loss) on Investments | .392 | (2.016) | 28.887 | (10.184) | 6.251 | .731 |
| Total from Investment Operations | 2.122 | 1.216 | 31.897 | (7.234) | 9.142 | 3.354 |
| Distributions | ||||||
| Dividends from Net Investment Income | (1.692) | (3.216) | (2.967) | (2.876) | (2.802) | (2.554) |
| Distributions from Realized Capital Gains | — | — | — | — | — | — |
| Total Distributions | (1.692) | (3.216) | (2.967) | (2.876) | (2.802) | (2.554) |
| Net Asset Value, End of Period | $106.85 | $106.42 | $108.42 | $79.49 | $89.60 | $83.26 |
| Total Return | 2.03% | 1.18% | 40.55% | -8.17% | 11.31% | 4.05% |
| Ratios/Supplemental Data | ||||||
| Net Assets, End of Period (Millions) | $49,783 | $48,689 | $39,766 | $26,279 | $26,816 | $21,328 |
| Ratio of Total Expenses to Average Net Assets | 0.06%2 | 0.06%2 | 0.06% | 0.06% | 0.06% | 0.06% |
| Ratio of Net Investment Income to Average Net Assets | 3.18% | 3.01% | 2.99% | 3.53% | 3.38% | 3.08% |
| Portfolio Turnover Rate3 | 4% | 9% | 8% | 11% | 7% | 13% |
| The expense ratio and net investment income ratio for the current period have been annualized. | ||||||
| 1 | Calculated based on average shares outstanding. |
| 2 | The ratio of expenses to average net assets for the period net of reduction from custody fee offset arrangements was 0.06%. |
| 3 | Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares, including ETF Creation Units. |
See accompanying
Notes, which are an integral part of the Financial Statements.
15
High Dividend Yield Index Fund
Financial Highlights
| Admiral Shares | |||||
| For a Share Outstanding Throughout Each Period | Six Months Ended April 30, 2023 | Year Ended October 31, | February 7, 20191 to October 31, 2019 | ||
| 2022 | 2021 | 2020 | |||
| Net Asset Value, Beginning of Period | $32.09 | $32.69 | $23.97 | $27.02 | $25.00 |
| Investment Operations | |||||
| Net Investment Income2 | .519 | .970 | .902 | .887 | .624 |
| Net Realized and Unrealized Gain (Loss) on Investments | .118 | (.607) | 8.707 | (3.075) | 2.010 |
| Total from Investment Operations | .637 | .363 | 9.609 | (2.188) | 2.634 |
| Distributions | |||||
| Dividends from Net Investment Income | (.507) | (.963) | (.889) | (.862) | (.614) |
| Distributions from Realized Capital Gains | — | — | — | — | — |
| Total Distributions | (.507) | (.963) | (.889) | (.862) | (.614) |
| Net Asset Value, End of Period | $32.22 | $32.09 | $32.69 | $23.97 | $27.02 |
| Total Return3 | 2.03% | 1.19% | 40.50% | -8.19% | 10.64% |
| Ratios/Supplemental Data | |||||
| Net Assets, End of Period (Millions) | $12,258 | $12,199 | $11,418 | $7,665 | $8,814 |
| Ratio of Total Expenses to Average Net Assets | 0.08%4 | 0.08%4 | 0.08% | 0.08% | 0.08%5 |
| Ratio of Net Investment Income to Average Net Assets | 3.16% | 2.99% | 2.97% | 3.52% | 3.24%5 |
| Portfolio Turnover Rate6 | 4% | 9% | 8% | 11% | 7%7 |
| The expense ratio and net investment income ratio for the current period have been annualized. | |||||
| 1 | Inception. |
| 2 | Calculated based on average shares outstanding. |
| 3 | Total returns do not include account service fees that may have applied in the periods shown. Fund prospectuses provide information about any applicable account service fees. |
| 4 | The ratio of expenses to average net assets for the period net of reduction from custody fee offset arrangements was 0.08%. |
| 5 | Annualized. |
| 6 | Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares, including ETF Creation Units. |
| 7 | Reflects the fund’s portfolio turnover for the fiscal year ended October 31, 2019. |
See accompanying Notes, which are an
integral part of the Financial Statements.
16
High Dividend Yield Index Fund
Notes to Financial Statements
Vanguard High Dividend Yield
Index Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund offers two classes of shares: ETF Shares and Admiral Shares. Each of the share classes has
different eligibility and minimum purchase requirements, and is designed for different types of investors. ETF Shares are listed for trading on NYSE Arca; they can be purchased and sold through a broker.
A. The following significant accounting policies conform to generally accepted accounting principles for U.S. investment companies. The fund consistently follows such policies in preparing its
financial statements.
1. Security Valuation:
Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official
closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which
market quotations are not readily available, or whose values have been affected by events occurring before the fund's pricing time but after the close of the securities’ primary markets, are valued by methods
deemed by the valuation designee to represent fair value and subject to oversight by the board of trustees. Investments in Vanguard Market Liquidity Fund are valued at that fund's net asset value.
2. Futures Contracts:
The fund uses index futures contracts to a limited extent, with the objectives of maintaining full exposure to the stock market, maintaining liquidity, and minimizing transaction costs. The fund may purchase futures
contracts to immediately invest incoming cash in the market, or sell futures in response to cash outflows, thereby simulating a fully invested position in the underlying index while maintaining a cash balance for
liquidity. The primary risks associated with the use of futures contracts are imperfect correlation between changes in market values of stocks held by the fund and the prices of futures contracts, and the possibility
of an illiquid market. Counterparty risk involving futures is mitigated because a regulated clearinghouse is the counterparty instead of the clearing broker. To further mitigate counterparty risk, the fund trades
futures contracts on an exchange, monitors the financial strength of its clearing brokers and clearinghouse, and has entered into clearing agreements with its clearing brokers. The clearinghouse imposes initial margin
requirements to secure the fund’s performance and requires daily settlement of variation margin representing changes in the market value of each contract. Any securities pledged as initial margin for open
contracts are noted in the Schedule of Investments.
Futures contracts are valued
at their quoted daily settlement prices. The notional amounts of the contracts are not recorded in the Statement of Assets and Liabilities. Fluctuations in the value of the contracts are recorded in the Statement of
Assets and Liabilities as an asset (liability) and in the Statement of Operations as unrealized appreciation (depreciation) until the contracts are closed, when they are recorded as realized gains (losses) on futures
contracts.
During the six months ended
April 30, 2023, the fund’s average investments in long and short futures contracts represented less than 1% and 0% of net assets, respectively, based on the average of the notional amounts at each quarter-end
during the period.
3. Swap Contracts: The
fund has entered into equity swap contracts to earn the total return on selected reference stocks in the fund’s target index. Under the terms of the swaps, the fund receives the total return on the referenced
stock (i.e., receiving the increase or paying the decrease in value of the selected reference stock and receiving the equivalent of any dividends in respect of the selected referenced stock) over a specified period of
time, applied to a notional
17
High Dividend Yield Index Fund
amount that represents the value of a
designated number of shares of the selected reference stock at the beginning of the equity swap contract. The fund also pays a floating rate that is based on short-term interest rates, applied to the notional amount.
At the same time, the fund generally invests an amount approximating the notional amount of the swap in high-quality temporary cash investments.
A risk associated with all
types of swaps is the possibility that a counterparty may default on its obligation to pay net amounts due to the fund. The fund’s maximum amount subject to counterparty risk is the unrealized appreciation on
the swap contract. The fund mitigates its counterparty risk by entering into swaps only with a diverse group of prequalified counterparties, monitoring their financial strength, entering into master netting
arrangements with its counterparties, and requiring its counterparties to transfer collateral as security for their performance. In the absence of a default, the collateral pledged or received by the fund cannot be
repledged, resold, or rehypothecated. In the event of a counterparty’s default (including bankruptcy), the fund may terminate any swap contracts with that counterparty, determine the net amount owed by either
party in accordance with its master netting arrangements, and sell or retain any collateral held up to the net amount owed to the fund under the master netting arrangements. The swap contracts contain provisions
whereby a counterparty may terminate open contracts if the fund's net assets decline below a certain level, triggering a payment by the fund if the fund is in a net liability position at the time of the termination.
The payment amount would be reduced by any collateral the fund has pledged. Any securities pledged as collateral for open contracts are noted in the Schedule of Investments. The value of collateral received or pledged
is compared daily to the value of the swap contracts exposure with each counterparty, and any difference, if in excess of a specified minimum transfer amount, is adjusted and settled within two business days.
The notional amounts of swap
contracts are not recorded in the Statement of Assets and Liabilities. Swaps are valued daily based on market quotations received from independent pricing services or recognized dealers and the change in value is
recorded in the Statement of Assets and Liabilities as an asset (liability) and in the Statement of Operations as unrealized appreciation (depreciation) until periodic payments are made or the termination of the swap,
at which time realized gain (loss) is recorded.
During the six months ended
April 30, 2023, the fund’s average amounts of investments in total return swaps represented less than 1% of net assets, based on the average of notional amounts at each quarter-end during the period.
4. Federal Income Taxes:
The fund intends to continue to qualify as a regulated investment company and distribute virtually all of its taxable income. The fund’s tax returns are open to examination by the relevant tax authorities until
expiration of the applicable statute of limitations, which is generally three years after the filing of the tax return. Management has analyzed the fund’s tax positions taken for all open federal and state
income tax years, and has concluded that no provision for income tax is required in the fund’s financial statements.
5. Distributions:
Distributions to shareholders are recorded on the ex-dividend date. Distributions are determined on a tax basis at the fiscal year-end and may differ from net investment income and realized capital gains for financial
reporting purposes.
18
High Dividend Yield Index Fund
6. Securities Lending:
To earn additional income, the fund lends its securities to qualified institutional borrowers. Security loans are subject to termination by the fund at any time, and are required to be secured at all times by
collateral in an amount at least equal to the market value of securities loaned. Daily market fluctuations could cause the value of loaned securities to be more or less than the value of the collateral received. When
this occurs, the collateral is adjusted and settled before the opening of the market on the next business day. The fund further mitigates its counterparty risk by entering into securities lending transactions only
with a diverse group of prequalified counterparties, monitoring their financial strength, and entering into master securities lending agreements with its counterparties. The master securities lending agreements
provide that, in the event of a counterparty’s default (including bankruptcy), the fund may terminate any loans with that borrower, determine the net amount owed, and sell or retain the collateral up to the net
amount owed to the fund; however, such actions may be subject to legal proceedings. While collateral mitigates counterparty risk, in the event of a default, the fund may experience delays and costs in recovering the
securities loaned. The fund invests cash collateral received in Vanguard Market Liquidity Fund, and records a liability in the Statement of Assets and Liabilities for the return of the collateral, during the period
the securities are on loan. Collateral investments in Vanguard Market Liquidity Fund are subject to market appreciation or depreciation. Securities lending income represents fees charged to borrowers plus income
earned on invested cash collateral, less expenses associated with the loan. During the term of the loan, the fund is entitled to all distributions made on or in respect of the loaned securities.
7. Credit Facilities and
Interfund Lending Program: The fund and certain other funds managed by The Vanguard Group ("Vanguard") participate in a $4.3 billion committed credit facility provided by a syndicate of lenders pursuant to a credit
agreement and an uncommitted credit facility provided by Vanguard. Both facilities may be renewed annually. Each fund is individually liable for its borrowings, if any, under the credit facilities. Borrowings may be
utilized for temporary or emergency purposes and are subject to the fund’s regulatory and contractual borrowing restrictions. With respect to the committed credit facility, the participating funds are charged
administrative fees and an annual commitment fee of 0.10% of the undrawn committed amount of the facility, which are allocated to the funds based on a method approved by the fund’s board of trustees and included
in Management and Administrative expenses on the fund’s Statement of Operations. Any borrowings under either facility bear interest at an agreed-upon spread plus the higher of the federal funds effective rate,
the overnight bank funding rate, or the Daily Simple Secured Overnight Financing Rate inclusive of an additional agreed-upon spread. However, borrowings under the uncommitted credit facility may bear interest based
upon an alternate rate agreed to by the fund and Vanguard.
In accordance with an
exemptive order (the “Order”) from the SEC, the fund may participate in a joint lending and borrowing program that allows registered open-end Vanguard funds to borrow money from and lend money to each
other for temporary or emergency purposes (the “Interfund Lending Program”), subject to compliance with the terms and conditions of the Order, and to the extent permitted by the fund’s investment
objective and investment policies. Interfund loans and borrowings normally extend overnight but can have a maximum duration of seven days. Loans may be called on one business day’s notice. The interest rate to
be charged is governed by the conditions of the Order and internal procedures adopted by the board of trustees. The board of trustees is responsible for overseeing the Interfund Lending Program.
For the six months ended April
30, 2023, the fund did not utilize the credit facilities or the Interfund Lending Program.
19
High Dividend Yield Index Fund
8. Other: Dividend
income is recorded on the ex-dividend date. Non-cash dividends included in income, if any, are recorded at the fair value of the securities received. Interest income includes income distributions received from
Vanguard Market Liquidity Fund and is accrued daily. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment
securities are those of the specific securities sold.
Each class of shares has equal
rights as to assets and earnings, except that each class separately bears certain class-specific expenses related to maintenance of shareholder accounts (included in Management and Administrative expenses) and
shareholder reporting. Marketing and distribution expenses are allocated to each class of shares based on a method approved by the board of trustees. Income, other non-class-specific expenses, and gains and losses on
investments are allocated to each class of shares based on its relative net assets.
B. In accordance with the terms of a Funds’ Service Agreement (the “FSA”) between Vanguard and the fund, Vanguard furnishes to the fund investment advisory, corporate
management, administrative, marketing, and distribution services at Vanguard’s cost of operations (as defined by the FSA). These costs of operations are allocated to the fund based on methods and guidelines
approved by the board of trustees and are generally settled twice a month.
Upon the request of Vanguard,
the fund may invest up to 0.40% of its net assets as capital in Vanguard. At April 30, 2023, the fund had contributed to Vanguard capital in the amount of $2,171,000, representing less than 0.01% of the fund’s
net assets and 0.87% of Vanguard’s capital received pursuant to the FSA. The fund’s trustees and officers are also directors and employees, respectively, of Vanguard.
C. The fund’s custodian bank has agreed to reduce its fees when the fund maintains cash on deposit in the non-interest-bearing custody account. For the six months ended April 30,
2023, custodian fee offset arrangements reduced the fund’s expenses by $2,000 (an annual rate of less than 0.01% of average net assets).
D. Various inputs may be used to determine the value of the fund’s investments and derivatives. These inputs are summarized in three broad levels for financial statement purposes. The
inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.
Level 1—Quoted prices in active markets for identical securities.
Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).
Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments). Any investments and derivatives valued with significant
unobservable inputs are noted on the Schedule of Investments.
20
High Dividend Yield Index Fund
The following table summarizes
the market value of the fund's investments and derivatives as of April 30, 2023, based on the inputs used to value them:
| Level 1 ($000) | Level 2 ($000) | Level 3 ($000) | Total ($000) | |
| Investments | ||||
| Assets | ||||
| Common Stocks | 61,925,671 | — | — | 61,925,671 |
| Temporary Cash Investments | 96,540 | — | — | 96,540 |
| Total | 62,022,211 | — | — | 62,022,211 |
| Derivative Financial Instruments | ||||
| Assets | ||||
| Futures Contracts1 | 4,870 | — | — | 4,870 |
| Swap Contracts | — | 1,533 | — | 1,533 |
| Total | 4,870 | 1,533 | — | 6,403 |
| 1 | Includes cumulative appreciation (depreciation) on futures contracts and centrally cleared swaps, if any, as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities. |
E. As of April 30, 2023, gross unrealized appreciation and depreciation for investments and derivatives based on cost for U.S. federal income tax purposes were as follows:
| Amount ($000) | |
| Tax Cost | 53,278,390 |
| Gross Unrealized Appreciation | 11,963,932 |
| Gross Unrealized Depreciation | (3,213,708) |
| Net Unrealized Appreciation (Depreciation) | 8,750,224 |
The fund’s tax-basis
capital gains and losses are determined only at the end of each fiscal year. For tax purposes, at October 31, 2022, the fund had available capital losses totaling $2,837,648,000 that may be carried forward
indefinitely to offset future net capital gains. The fund will use these capital losses to offset net taxable capital gains, if any, realized during the year ending October 31, 2023; should the fund realize net
capital losses for the year, the losses will be added to the loss carryforward balance above.
F. During the six months ended April 30, 2023, the fund purchased $8,425,314,000 of investment securities and sold $7,492,888,000 of investment securities, other than temporary cash
investments. Purchases and sales include $5,880,817,000 and $5,068,966,000, respectively, in connection with in-kind purchases and redemptions of the fund’s capital shares.
The fund purchased securities
from and sold securities to other Vanguard funds or accounts managed by Vanguard or its affiliates, in accordance with procedures adopted by the board of trustees in compliance with Rule 17a-7 of the Investment
Company Act of 1940. For the six months ended April 30, 2023, such purchases were $260,539,000 and sales were $571,147,000, resulting in net realized loss of $130,903,000; these amounts, other than temporary cash
investments, are included in the purchases and sales of investment securities noted above.
21
High Dividend Yield Index Fund
G. Capital share transactions for each class of shares were:
| Six Months Ended April 30, 2023 | Year Ended October 31, 2022 | ||||
| Amount ($000) | Shares (000) | Amount ($000) | Shares (000) | ||
| ETF Shares | |||||
| Issued | 5,964,123 | 56,573 | 12,609,654 | 117,634 | |
| Issued in Lieu of Cash Distributions | — | — | — | — | |
| Redeemed | (5,076,261) | (48,150) | (2,917,184) | (26,900) | |
| Net Increase (Decrease)—ETF Shares | 887,862 | 8,423 | 9,692,470 | 90,734 | |
| Admiral Shares | |||||
| Issued | 857,840 | 26,252 | 2,387,226 | 73,103 | |
| Issued in Lieu of Cash Distributions | 150,171 | 4,775 | 273,445 | 8,660 | |
| Redeemed | (998,212) | (30,706) | (1,643,184) | (50,873) | |
| Net Increase (Decrease)—Admiral Shares | 9,799 | 321 | 1,017,487 | 30,890 | |
H. Significant market disruptions, such as those caused by pandemics (e.g., COVID-19 pandemic), natural or environmental disasters, war (e.g., Russia’s invasion of Ukraine), acts
of terrorism, or other events, can adversely affect local and global markets and normal market operations. Any such disruptions could have an adverse impact on the value of the fund's investments and fund
performance.
To the extent the fund’s
investment portfolio reflects concentration in a particular market, industry, sector, country or asset class, the fund may be adversely affected by the performance of these concentrations and may be subject to
increased price volatility and other risks.
The use of derivatives may
expose the fund to various risks. Derivatives can be highly volatile, and any initial investment is generally small relative to the notional amount so that transactions may be leveraged in terms of market exposure. A
relatively small market movement may have a potentially larger impact on derivatives than on standard securities. Leveraged derivatives positions can, therefore, increase volatility. Additional information regarding
the fund's use of derivative(s) and the specific risks associated is described under significant accounting policies.
I. Management has determined that no events or transactions occurred subsequent to April 30, 2023, that would require recognition or disclosure in these financial statements.
22
Trustees Approve Advisory Arrangement
The board of trustees of Vanguard High
Dividend Yield Index Fund has renewed the fund’s investment advisory arrangement with The Vanguard Group, Inc. (Vanguard), through its Equity Index Group. The board determined that continuing the fund’s
internalized management structure was in the best interests of the fund and its shareholders.
The board based its decision
upon an evaluation of the advisor’s investment staff, portfolio management process, and performance. This evaluation included information provided to the board by Vanguard’s Portfolio Review Department,
which is responsible for fund and advisor oversight and product management. The Portfolio Review Department met regularly with the advisor and made presentations to the board during the fiscal year that directed the
board’s focus to relevant information and topics.
The board, or an investment
committee made up of board members, also received information throughout the year during advisor presentations. For each advisor presentation, the board was provided with letters and reports that included information
about, among other things, the advisory firm and the advisor’s assessment of the investment environment, portfolio performance, and portfolio characteristics.
In addition, the board
received periodic reports throughout the year, which included information about the fund’s performance relative to its peers and benchmark, as applicable, and updates, as needed, on the Portfolio Review
Department’s ongoing assessment of the advisor.
Prior to their meeting, the
trustees were provided with a memo and materials that summarized the information they received over the course of the year. They also considered the factors discussed below, among others. However, no single factor
determined whether the board approved the arrangement. Rather, it was the totality of the circumstances that drove the board’s decision.
Nature, extent, and quality of
services
The board reviewed the quality of the
fund’s investment management services over both the short and long term, and took into account the organizational depth and stability of the advisor. The board considered that Vanguard has been managing
investments for more than four decades. The Equity Index Group adheres to a sound, disciplined investment management process; the team has considerable experience, stability, and depth.
The board concluded that
Vanguard’s experience, stability, depth, and performance, among other factors, warranted continuation of the advisory arrangement.
Investment performance
The board considered the short- and long-term
performance of the fund, including any periods of outperformance or underperformance compared with its target index and peer group. The board concluded that the performance was such that the advisory arrangement
should continue.
Cost
The board concluded that the fund’s
expense ratio was below the average expense ratio charged by funds in its peer group and that the fund’s advisory expenses were also below the peer-group average.
23
The board does not conduct a
profitability analysis of Vanguard because of Vanguard’s unique structure. Unlike most other mutual fund management companies, Vanguard is owned by the funds it oversees.
The benefit of economies of
scale
The board concluded that the fund’s
arrangement with Vanguard ensures that the fund will realize economies of scale as it grows, with the cost to shareholders declining as fund assets increase.
The board will consider
whether to renew the advisory arrangement again after a one-year period.
24
Liquidity Risk Management
Vanguard funds (except for the
money market funds) have adopted and implemented a written liquidity risk management program (the “Program”) as required by Rule 22e-4 under the Investment Company Act of 1940. Rule 22e-4 requires that
each fund adopt a program that is reasonably designed to assess and manage the fund’s liquidity risk, which is the risk that the fund could not meet redemption requests without significant dilution of remaining
investors’ interests in the fund.
Assessment and management of a
fund’s liquidity risk under the Program take into consideration certain factors, such as the fund’s investment strategy and the liquidity of its portfolio investments during normal and reasonably
foreseeable stressed conditions, its short- and long-term cash-flow projections during both normal and reasonably foreseeable stressed conditions, and its cash and cash-equivalent holdings and access to other funding
sources. As required by the rule, the Program includes policies and procedures for classification of fund portfolio holdings in four liquidity categories, maintaining certain levels of highly liquid investments, and
limiting holdings of illiquid investments.
The board of trustees of
Vanguard Whitehall Funds approved the appointment of liquidity risk management program administrators responsible for administering Vanguard High Dividend Yield Index Fund’s Program and for carrying out the
specific responsibilities set forth in the Program, including reporting to the board on at least an annual basis regarding the Program’s operation, its adequacy, and the effectiveness of its implementation for
the past year (the “Program Administrator Report”). The board has reviewed the Program Administrator Report covering the period from January 1, 2022, through December 31, 2022 (the “Review
Period”). The Program Administrator Report stated that during the Review Period the Program operated and was implemented effectively to manage the fund’s liquidity risk.
25
Semiannual Report | April 30, 2023
Vanguard Emerging
Markets Government Bond Index Fund
Contents
About Your Fund’s Expenses | 1 |
Financial Statements | 4 |
Trustees Approve Advisory Arrangement | 34 |
Liquidity Risk Management | 36 |
About Your Fund’s Expenses
As a shareholder of the fund,
you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross
income, directly reduce the investment return of the fund.
A fund’s expenses are
expressed as a percentage of its average net assets. This figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your fund and
to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.
The accompanying table
illustrates your fund’s costs in two ways:
| • | Based on actual fund return. This section helps you to estimate the actual expenses that you paid over the period. The ”Ending Account Value“ shown is derived from the fund‘s actual return, and the third column shows the dollar amount that would have been paid by an investor who started with $1,000 in the fund. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period. |
To do so, simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your fund under the heading ”Expenses Paid During Period.“
| • | Based on hypothetical 5% yearly return. This section is intended to help you compare your fund‘s costs with those of other mutual funds. It assumes that the fund had a yearly return of 5% before expenses, but that the expense ratio is unchanged. In this case—because the return used is not the fund’s actual return—the results do not apply to your investment. The example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to calculate expenses based on a 5% return. You can assess your fund’s costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds. |
Note that the expenses shown
in the table are meant to highlight and help you compare ongoing costs only and do not reflect transaction costs incurred by the fund for buying and selling securities. Further, the expenses do not include any purchase, redemption, or
account service fees described in the fund prospectus. If such fees were applied to your account, your costs would be higher. Your fund does not carry a “sales load.”
The calculations assume no
shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.
You can find more information
about the fund’s expenses, including annual expense ratios, in the Financial Statements section of this report. For additional information on operating expenses and other shareholder costs, please refer to your
fund’s current prospectus.
1
| Six Months Ended April 30, 2023 | |||
| Beginning Account Value 10/31/2022 | Ending Account Value 4/30/2023 | Expenses Paid During Period | |
| Based on Actual Fund Return | |||
| Emerging Markets Government Bond Index Fund | |||
| ETF Shares | $1,000.00 | $1,103.90 | $1.04 |
| Admiral™ Shares | 1,000.00 | 1,103.90 | 1.04 |
| Institutional Shares | 1,000.00 | 1,103.70 | 0.94 |
| Based on Hypothetical 5% Yearly Return | |||
| Emerging Markets Government Bond Index Fund | |||
| ETF Shares | $1,000.00 | $1,023.80 | $1.00 |
| Admiral Shares | 1,000.00 | 1,023.80 | 1.00 |
| Institutional Shares | 1,000.00 | 1,023.90 | 0.90 |
The calculations are
based on expenses incurred in the most recent six-month period. The fund’s annualized six-month expense ratios for that period are 0.20% for ETF Shares, 0.20% for Admiral Shares and 0.18% for Institutional
Shares. The dollar amounts shown as “Expenses Paid” are equal to the annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent
six-month period, then divided by the number of days in the most recent 12-month period (181/365).
2
Emerging Markets Government Bond Index Fund
Fund Allocation
As of April 30, 2023
| Saudi Arabia | 10.3% |
| Mexico | 10.1 |
| Turkey | 7.4 |
| Indonesia | 7.4 |
| United Arab Emirates | 6.3 |
| Qatar | 4.9 |
| China | 4.2 |
| Brazil | 3.6 |
| Philippines | 3.5 |
| Colombia | 3.3 |
| Oman | 2.5 |
| Panama | 2.5 |
| Dominican Republic | 2.4 |
| Chile | 2.3 |
| Peru | 2.3 |
| Bahrain | 2.0 |
| South Africa | 1.8 |
| Argentina | 1.8 |
| Egypt | 1.7 |
| Uruguay | 1.5 |
| Romania | 1.3 |
| Malaysia | 1.3 |
| Hungary | 1.3 |
| Nigeria | 1.1 |
| Poland | 1.0 |
| Other | 12.2 |
The table reflects the fund’s
investments, except for short-term investments and derivatives.
The fund may invest in
derivatives (such as futures and swap contracts) for various reasons, including, but not limited to, attempting to remain fully invested and tracking its target index as closely as possible.
3
Emerging Markets Government Bond Index Fund
Financial Statements (unaudited)
Schedule of Investments
As of April 30, 2023
The fund files its complete
schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports
are available on the SEC’s website at www.sec.gov.
| Coupon | Maturity Date | Face Amount ($000) | Market Value• ($000) | ||
| U.S. Government and Agency Obligations (0.3%) | |||||
| United States Treasury Note/Bond | 4.250% | 12/31/24 | 2,325 | 2,324 | |
| United States Treasury Note/Bond | 4.625% | 2/28/25 | 4,945 | 4,986 | |
| United States Treasury Note/Bond | 3.875% | 3/31/25 | 3,875 | 3,859 | |
| United States Treasury Note/Bond | 4.000% | 2/29/28 | 465 | 475 | |
| Total U.S. Government and Agency Obligations (Cost $11,632) | 11,644 | ||||
| Corporate Bonds (13.6%) | |||||
| Azerbaijan (0.2%) | |||||
| 1 | Southern Gas Corridor CJSC | 6.875% | 3/24/26 | 7,425 | 7,638 |
| Brazil (0.2%) | |||||
| Petrobras Global Finance BV | 6.875% | 1/20/40 | 1 | 1 | |
| Petrobras Global Finance BV | 6.850% | 6/5/15 | 6,126 | 5,344 | |
| 5,345 | |||||
| Chile (0.2%) | |||||
| Corp. Nacional del Cobre de Chile | 3.700% | 1/30/50 | 9,800 | 7,370 | |
| China (2.8%) | |||||
| Bank of China Ltd. | 5.000% | 11/13/24 | 11,175 | 11,150 | |
| China Cinda Finance 2015 I Ltd. | 4.250% | 4/23/25 | 6,250 | 6,078 | |
| China Construction Bank Corp. | 2.450% | 6/24/30 | 7,375 | 6,972 | |
| China Construction Bank Corp. | 2.850% | 1/21/32 | 7,400 | 6,987 | |
| China Taiping Insurance Holdings Co. Ltd. | 6.400% | Perpetual | 3,700 | 3,798 | |
| CNAC HK Finbridge Co. Ltd. | 5.125% | 3/14/28 | 6,480 | 6,398 | |
| CNOOC Finance 2015 USA LLC | 3.500% | 5/5/25 | 7,750 | 7,562 | |
| Industrial & Commercial Bank of China Ltd. | 4.875% | 9/21/25 | 7,290 | 7,235 | |
| Industrial & Commercial Bank of China Ltd. | 3.200% | Perpetual | 22,485 | 21,081 | |
| Sinopec Group Overseas Development 2015 Ltd. | 3.250% | 4/28/25 | 5,450 | 5,298 | |
| Sinopec Group Overseas Development 2018 Ltd. | 2.700% | 5/13/30 | 5,550 | 5,031 | |
| State Grid Overseas Investment 2014 Ltd. | 4.125% | 5/7/24 | 5,320 | 5,283 | |
| State Grid Overseas Investment BVI Ltd. | 3.500% | 5/4/27 | 9,094 | 8,865 | |
| 101,738 | |||||
| Colombia (0.6%) | |||||
| Ecopetrol SA | 5.375% | 6/26/26 | 5,515 | 5,222 | |
| Ecopetrol SA | 6.875% | 4/29/30 | 7,675 | 6,875 | |
| Ecopetrol SA | 8.875% | 1/13/33 | 7,090 | 6,872 | |
| Ecopetrol SA | 5.875% | 5/28/45 | 7,247 | 4,771 | |
| 23,740 | |||||
4
Emerging Markets Government Bond Index Fund
| Coupon | Maturity Date | Face Amount ($000) | Market Value• ($000) | ||
| Indonesia (0.5%) | |||||
| 2 | Freeport Indonesia PT | 5.315% | 4/14/32 | 4,300 | 4,147 |
| Freeport Indonesia PT | 5.315% | 4/14/32 | 1,175 | 1,134 | |
| Pertamina Persero PT | 6.450% | 5/30/44 | 5,200 | 5,416 | |
| Pertamina Persero PT | 6.500% | 11/7/48 | 200 | 208 | |
| Perusahaan Perseroan Persero PT Perusahaan Listrik Negara | 4.125% | 5/15/27 | 5,657 | 5,505 | |
| 16,410 | |||||
| Kazakhstan (0.1%) | |||||
| KazMunayGas National Co. JSC | 6.375% | 10/24/48 | 5,550 | 4,701 | |
| Malaysia (0.9%) | |||||
| Petronas Capital Ltd. | 3.500% | 3/18/25 | 5,600 | 5,485 | |
| Petronas Capital Ltd. | 3.500% | 4/21/30 | 8,150 | 7,703 | |
| Petronas Capital Ltd. | 4.500% | 3/18/45 | 5,500 | 5,209 | |
| Petronas Capital Ltd. | 4.550% | 4/21/50 | 10,150 | 9,507 | |
| 2 | Petronas Capital Ltd. | 3.404% | 4/28/61 | 3,670 | 2,688 |
| Petronas Capital Ltd. | 3.404% | 4/28/61 | 2,750 | 2,034 | |
| 32,626 | |||||
| Mexico (3.9%) | |||||
| Mexico City Airport Trust | 5.500% | 7/31/47 | 7,779 | 6,023 | |
| Petroleos Mexicanos | 6.875% | 8/4/26 | 9,140 | 8,638 | |
| Petroleos Mexicanos | 6.490% | 1/23/27 | 5,656 | 5,071 | |
| Petroleos Mexicanos | 6.500% | 3/13/27 | 14,705 | 13,205 | |
| Petroleos Mexicanos | 5.350% | 2/12/28 | 7,370 | 6,122 | |
| 3 | Petroleos Mexicanos | 8.750% | 6/2/29 | 7,000 | 6,434 |
| Petroleos Mexicanos | 6.840% | 1/23/30 | 8,600 | 6,947 | |
| Petroleos Mexicanos | 5.950% | 1/28/31 | 13,865 | 10,260 | |
| 3 | Petroleos Mexicanos | 6.700% | 2/16/32 | 24,869 | 19,164 |
| Petroleos Mexicanos | 10.000% | 2/7/33 | 7,275 | 6,762 | |
| Petroleos Mexicanos | 6.625% | 6/15/35 | 10,085 | 7,045 | |
| Petroleos Mexicanos | 6.500% | 6/2/41 | 5,725 | 3,652 | |
| Petroleos Mexicanos | 6.750% | 9/21/47 | 20,355 | 12,542 | |
| Petroleos Mexicanos | 6.350% | 2/12/48 | 5,775 | 3,408 | |
| Petroleos Mexicanos | 7.690% | 1/23/50 | 29,529 | 19,774 | |
| Petroleos Mexicanos | 6.950% | 1/28/60 | 13,930 | 8,520 | |
| 143,567 | |||||
| Peru (0.1%) | |||||
| Petroleos del Peru SA | 5.625% | 6/19/47 | 7,400 | 4,692 | |
| Qatar (1.0%) | |||||
| 2 | QatarEnergy | 1.375% | 9/12/26 | 3,700 | 3,360 |
| QatarEnergy | 1.375% | 9/12/26 | 2,175 | 1,978 | |
| 2 | QatarEnergy | 2.250% | 7/12/31 | 4,050 | 3,495 |
| QatarEnergy | 2.250% | 7/12/31 | 8,650 | 7,477 | |
| QatarEnergy | 3.125% | 7/12/41 | 12,809 | 10,097 | |
| QatarEnergy | 3.300% | 7/12/51 | 14,700 | 11,113 | |
| 37,520 | |||||
| Saudi Arabia (2.3%) | |||||
| Gaci First Investment Co. | 4.750% | 2/14/30 | 6,300 | 6,371 | |
| Gaci First Investment Co. | 4.875% | 2/14/35 | 7,500 | 7,432 | |
| Gaci First Investment Co. | 5.125% | 2/14/53 | 6,300 | 5,878 | |
| 2 | SA Global Sukuk Ltd. | 1.602% | 6/17/26 | 3,900 | 3,587 |
| SA Global Sukuk Ltd. | 1.602% | 6/17/26 | 4,138 | 3,805 | |
| SA Global Sukuk Ltd. | 2.694% | 6/17/31 | 10,050 | 8,972 | |
| Saudi Arabian Oil Co. | 3.500% | 4/16/29 | 11,566 | 10,950 | |
5
Emerging Markets Government Bond Index Fund
| Coupon | Maturity Date | Face Amount ($000) | Market Value• ($000) | ||
| Saudi Arabian Oil Co. | 2.250% | 11/24/30 | 7,425 | 6,340 | |
| Saudi Arabian Oil Co. | 4.250% | 4/16/39 | 11,075 | 10,178 | |
| Saudi Arabian Oil Co. | 4.375% | 4/16/49 | 10,780 | 9,535 | |
| Saudi Arabian Oil Co. | 3.250% | 11/24/50 | 8,683 | 6,235 | |
| Saudi Arabian Oil Co. | 3.500% | 11/24/70 | 8,200 | 5,565 | |
| 84,848 | |||||
| United Arab Emirates (0.8%) | |||||
| 3 | Abu Dhabi Crude Oil Pipeline LLC | 4.600% | 11/2/47 | 8,075 | 7,623 |
| 2 | DP World Ltd. | 6.850% | 7/2/37 | 6,070 | 6,791 |
| DP World Ltd. | 5.625% | 9/25/48 | 275 | 268 | |
| DP World Salaam | 6.000% | Perpetual | 5,450 | 5,444 | |
| MDGH GMTN RSC Ltd. | 3.700% | 11/7/49 | 5,203 | 4,281 | |
| MDGH GMTN RSC Ltd. | 3.950% | 5/21/50 | 7,700 | 6,587 | |
| 30,994 | |||||
| Total Corporate Bonds (Cost $578,907) | 501,189 | ||||
| Sovereign Bonds (84.3%) | |||||
| Angola (0.8%) | |||||
| Republic of Angola | 9.500% | 11/12/25 | 2,325 | 2,301 | |
| Republic of Angola | 8.250% | 5/9/28 | 7,550 | 6,638 | |
| Republic of Angola | 8.000% | 11/26/29 | 6,423 | 5,432 | |
| 2 | Republic of Angola | 8.750% | 4/14/32 | 5,000 | 4,137 |
| Republic of Angola | 8.750% | 4/14/32 | 1,650 | 1,369 | |
| Republic of Angola | 9.375% | 5/8/48 | 6,150 | 4,727 | |
| Republic of Angola | 9.125% | 11/26/49 | 4,200 | 3,147 | |
| 27,751 | |||||
| Argentina (1.7%) | |||||
| 4 | Provincia de Buenos Aires, 6.375% coupon rate effective 9/1/23 | 5.250% | 9/1/37 | 22,685 | 7,017 |
| Republic of Argentina | 1.000% | 7/9/29 | 9,626 | 2,299 | |
| 4 | Republic of Argentina, 0.750% coupon rate effective 7/9/23 | 0.500% | 7/9/30 | 58,797 | 14,408 |
| 4 | Republic of Argentina, 3.625% coupon rate effective 7/9/23 | 1.500% | 7/9/35 | 75,693 | 16,864 |
| 4 | Republic of Argentina, 3.625% coupon rate effective 7/9/23 | 1.500% | 7/9/46 | 7,649 | 1,767 |
| 4 | Republic of Argentina, 4.250% coupon rate effective 7/9/23 | 3.875% | 1/9/38 | 41,871 | 11,576 |
| 4 | Republic of Argentina, 4.875% coupon rate effective 7/9/29 | 3.500% | 7/9/41 | 38,299 | 9,623 |
| 63,554 | |||||
| Armenia (0.2%) | |||||
| Republic of Armenia | 7.150% | 3/26/25 | 1,800 | 1,829 | |
| Republic of Armenia | 3.950% | 9/26/29 | 1,850 | 1,536 | |
| 2 | Republic of Armenia | 3.600% | 2/2/31 | 750 | 590 |
| Republic of Armenia | 3.600% | 2/2/31 | 1,850 | 1,457 | |
| 5,412 | |||||
| Azerbaijan (0.1%) | |||||
| 3 | Republic of Azerbaijan | 3.500% | 9/1/32 | 3,860 | 3,368 |
| Bahamas (0.1%) | |||||
| 2,3 | Commonwealth of Bahamas | 6.000% | 11/21/28 | 850 | 651 |
| 3 | Commonwealth of Bahamas | 6.000% | 11/21/28 | 1,850 | 1,422 |
| 2,3 | Commonwealth of Bahamas | 8.950% | 10/15/32 | 1,750 | 1,421 |
| 3 | Commonwealth of Bahamas | 8.950% | 10/15/32 | 1,400 | 1,142 |
| 4,636 | |||||
| Bahrain (1.9%) | |||||
| CBB International Sukuk Co. 6 Spc | 5.250% | 3/20/25 | 2,900 | 2,877 | |
| CBB International Sukuk Co. 6 Spc | 6.875% | 10/5/25 | 3,900 | 4,025 | |
6
Emerging Markets Government Bond Index Fund
| Coupon | Maturity Date | Face Amount ($000) | Market Value• ($000) | ||
| CBB International Sukuk Programme Co. WLL | 6.250% | 11/14/24 | 3,562 | 3,587 | |
| CBB International Sukuk Programme Co. WLL | 4.500% | 3/30/27 | 3,456 | 3,366 | |
| CBB International Sukuk Programme Co. WLL | 3.950% | 9/16/27 | 3,725 | 3,579 | |
| CBB International Sukuk Programme Co. WLL | 3.875% | 5/18/29 | 3,750 | 3,392 | |
| 2 | CBB International Sukuk Programme Co. WLL | 6.250% | 10/18/30 | 3,900 | 3,954 |
| Kingdom of Bahrain | 7.000% | 1/26/26 | 5,625 | 5,786 | |
| Kingdom of Bahrain | 4.250% | 1/25/28 | 2,375 | 2,195 | |
| Kingdom of Bahrain | 7.000% | 10/12/28 | 5,700 | 5,846 | |
| Kingdom of Bahrain | 6.750% | 9/20/29 | 4,550 | 4,537 | |
| Kingdom of Bahrain | 7.375% | 5/14/30 | 3,650 | 3,760 | |
| Kingdom of Bahrain | 5.625% | 9/30/31 | 3,570 | 3,308 | |
| Kingdom of Bahrain | 5.450% | 9/16/32 | 3,700 | 3,309 | |
| Kingdom of Bahrain | 5.250% | 1/25/33 | 3,680 | 3,188 | |
| 2 | Kingdom of Bahrain | 5.625% | 5/18/34 | 1,500 | 1,314 |
| Kingdom of Bahrain | 5.625% | 5/18/34 | 2,200 | 1,930 | |
| 2 | Kingdom of Bahrain | 7.750% | 4/18/35 | 3,700 | 3,727 |
| Kingdom of Bahrain | 6.000% | 9/19/44 | 4,525 | 3,570 | |
| Kingdom of Bahrain | 7.500% | 9/20/47 | 3,225 | 2,931 | |
| Kingdom of Bahrain | 6.250% | 1/25/51 | 1,900 | 1,494 | |
| 71,675 | |||||
| Belarus (0.1%) | |||||
| Republic of Belarus | 5.875% | 2/24/26 | 2,175 | 1,023 | |
| Republic of Belarus | 7.625% | 6/29/27 | 2,035 | 921 | |
| Republic of Belarus | 6.200% | 2/28/30 | 2,100 | 779 | |
| Republic of Belarus | 6.378% | 2/24/31 | 2,500 | 920 | |
| 3,643 | |||||
| Bermuda (0.3%) | |||||
| Government of Bermuda | 3.717% | 1/25/27 | 2,150 | 2,083 | |
| Government of Bermuda | 2.375% | 8/20/30 | 2,000 | 1,716 | |
| 2 | Government of Bermuda | 5.000% | 7/15/32 | 2,000 | 2,015 |
| Government of Bermuda | 5.000% | 7/15/32 | 1,600 | 1,609 | |
| 2 | Government of Bermuda | 3.375% | 8/20/50 | 1,000 | 715 |
| Government of Bermuda | 3.375% | 8/20/50 | 1,600 | 1,146 | |
| 9,284 | |||||
| Bolivia (0.1%) | |||||
| 2,3 | Bolivian Government | 4.500% | 3/20/28 | 700 | 396 |
| 3 | Bolivian Government | 4.500% | 3/20/28 | 3,506 | 1,967 |
| 2 | Bolivian Government | 7.500% | 3/2/30 | 1,400 | 953 |
| Bolivian Government | 7.500% | 3/2/30 | 1,200 | 815 | |
| 4,131 | |||||
| Brazil (3.4%) | |||||
| Federative Republic of Brazil | 4.250% | 1/7/25 | 16,328 | 16,145 | |
| Federative Republic of Brazil | 8.750% | 2/4/25 | 3,248 | 3,448 | |
| Federative Republic of Brazil | 2.875% | 6/6/25 | 7,350 | 7,033 | |
| Federative Republic of Brazil | 6.000% | 4/7/26 | 6,400 | 6,636 | |
| Federative Republic of Brazil | 10.125% | 5/15/27 | 2,900 | 3,406 | |
| Federative Republic of Brazil | 4.625% | 1/13/28 | 11,175 | 10,950 | |
| Federative Republic of Brazil | 4.500% | 5/30/29 | 7,250 | 6,890 | |
| Federative Republic of Brazil | 3.875% | 6/12/30 | 12,700 | 11,348 | |
| Federative Republic of Brazil | 3.750% | 9/12/31 | 5,475 | 4,742 | |
| Federative Republic of Brazil | 6.000% | 10/20/33 | 11,600 | 11,410 | |
| Federative Republic of Brazil | 8.250% | 1/20/34 | 1,600 | 1,843 | |
| Federative Republic of Brazil | 7.125% | 1/20/37 | 6,100 | 6,524 | |
| Federative Republic of Brazil | 5.625% | 1/7/41 | 8,025 | 7,118 | |
7
Emerging Markets Government Bond Index Fund
| Coupon | Maturity Date | Face Amount ($000) | Market Value• ($000) | ||
| Federative Republic of Brazil | 5.000% | 1/27/45 | 12,586 | 9,920 | |
| Federative Republic of Brazil | 5.625% | 2/21/47 | 8,273 | 7,002 | |
| Federative Republic of Brazil | 4.750% | 1/14/50 | 16,485 | 12,152 | |
| 126,567 | |||||
| Chile (2.1%) | |||||
| Republic of Chile | 3.125% | 1/21/26 | 2,600 | 2,527 | |
| Republic of Chile | 2.750% | 1/31/27 | 5,800 | 5,481 | |
| Republic of Chile | 3.240% | 2/6/28 | 7,690 | 7,369 | |
| Republic of Chile | 2.450% | 1/31/31 | 8,332 | 7,323 | |
| Republic of Chile | 2.550% | 1/27/32 | 600 | 523 | |
| Republic of Chile | 2.550% | 7/27/33 | 8,522 | 7,146 | |
| Republic of Chile | 3.500% | 1/31/34 | 7,650 | 6,929 | |
| Republic of Chile | 3.100% | 5/7/41 | 10,050 | 7,760 | |
| Republic of Chile | 4.340% | 3/7/42 | 7,225 | 6,561 | |
| Republic of Chile | 3.860% | 6/21/47 | 4,625 | 3,848 | |
| Republic of Chile | 3.500% | 1/25/50 | 8,400 | 6,474 | |
| Republic of Chile | 4.000% | 1/31/52 | 3,750 | 3,113 | |
| Republic of Chile | 3.500% | 4/15/53 | 5,450 | 4,171 | |
| Republic of Chile | 3.100% | 1/22/61 | 7,300 | 4,892 | |
| Republic of Chile | 3.250% | 9/21/71 | 3,750 | 2,498 | |
| 76,615 | |||||
| China (1.4%) | |||||
| China Government Bond | 1.950% | 12/3/24 | 7,900 | 7,616 | |
| China Government Bond | 0.550% | 10/21/25 | 8,220 | 7,542 | |
| China Government Bond | 2.625% | 11/2/27 | 4,324 | 4,161 | |
| China Government Bond | 3.500% | 10/19/28 | 3,600 | 3,597 | |
| China Government Bond | 2.125% | 12/3/29 | 8,200 | 7,557 | |
| China Government Bond | 1.200% | 10/21/30 | 4,950 | 4,226 | |
| China Government Bond | 1.750% | 10/26/31 | 3,200 | 2,808 | |
| China Government Bond | 2.750% | 12/3/39 | 2,775 | 2,310 | |
| China Government Bond | 4.000% | 10/19/48 | 2,000 | 1,948 | |
| China Government Bond | 2.250% | 10/21/50 | 1,200 | 830 | |
| 2 | China Government Bond | 2.500% | 10/26/51 | 2,325 | 1,662 |
| China Government Bond | 2.500% | 10/26/51 | 1,400 | 1,015 | |
| Export-Import Bank of China | 3.625% | 7/31/24 | 5,275 | 5,198 | |
| 50,470 | |||||
| Colombia (2.6%) | |||||
| Republic of Colombia | 8.125% | 5/21/24 | 2,380 | 2,428 | |
| Republic of Colombia | 4.500% | 1/28/26 | 6,317 | 5,991 | |
| Republic of Colombia | 3.875% | 4/25/27 | 6,150 | 5,537 | |
| Republic of Colombia | 4.500% | 3/15/29 | 7,225 | 6,295 | |
| Republic of Colombia | 3.000% | 1/30/30 | 5,725 | 4,387 | |
| Republic of Colombia | 3.125% | 4/15/31 | 9,415 | 6,975 | |
| Republic of Colombia | 3.250% | 4/22/32 | 7,675 | 5,550 | |
| Republic of Colombia | 8.000% | 4/20/33 | 5,142 | 5,131 | |
| Republic of Colombia | 7.500% | 2/2/34 | 8,846 | 8,466 | |
| Republic of Colombia | 7.375% | 9/18/37 | 6,562 | 6,099 | |
| Republic of Colombia | 6.125% | 1/18/41 | 8,845 | 6,961 | |
| Republic of Colombia | 4.125% | 2/22/42 | 4,200 | 2,601 | |
| Republic of Colombia | 5.625% | 2/26/44 | 8,875 | 6,459 | |
| Republic of Colombia | 5.000% | 6/15/45 | 16,500 | 11,044 | |
| Republic of Colombia | 5.200% | 5/15/49 | 9,770 | 6,569 | |
| Republic of Colombia | 4.125% | 5/15/51 | 6,050 | 3,551 | |
8
Emerging Markets Government Bond Index Fund
| Coupon | Maturity Date | Face Amount ($000) | Market Value• ($000) | ||
| Republic of Colombia | 3.875% | 2/15/61 | 4,900 | 2,680 | |
| 96,724 | |||||
| Costa Rica (0.6%) | |||||
| Republic of Costa Rica | 4.375% | 4/30/25 | 1,800 | 1,770 | |
| Republic of Costa Rica | 6.125% | 2/19/31 | 4,650 | 4,703 | |
| 2,3 | Republic of Costa Rica | 6.550% | 4/3/34 | 5,350 | 5,467 |
| Republic of Costa Rica | 5.625% | 4/30/43 | 1,900 | 1,661 | |
| Republic of Costa Rica | 7.000% | 4/4/44 | 3,530 | 3,487 | |
| Republic of Costa Rica | 7.158% | 3/12/45 | 4,701 | 4,690 | |
| 21,778 | |||||
| Dominican Republic (2.3%) | |||||
| Dominican Republic | 5.500% | 1/27/25 | 4,850 | 4,808 | |
| Dominican Republic | 6.875% | 1/29/26 | 6,495 | 6,627 | |
| Dominican Republic | 5.950% | 1/25/27 | 6,150 | 6,106 | |
| Dominican Republic | 6.000% | 7/19/28 | 4,919 | 4,857 | |
| 2 | Dominican Republic | 5.500% | 2/22/29 | 2,550 | 2,433 |
| Dominican Republic | 5.500% | 2/22/29 | 3,950 | 3,765 | |
| Dominican Republic | 4.500% | 1/30/30 | 7,406 | 6,556 | |
| 2 | Dominican Republic | 7.050% | 2/3/31 | 2,000 | 2,035 |
| 2 | Dominican Republic | 4.875% | 9/23/32 | 700 | 603 |
| Dominican Republic | 4.875% | 9/23/32 | 10,650 | 9,200 | |
| 2 | Dominican Republic | 6.000% | 2/22/33 | 1,300 | 1,216 |
| Dominican Republic | 6.000% | 2/22/33 | 6,100 | 5,689 | |
| Dominican Republic | 5.300% | 1/21/41 | 5,450 | 4,330 | |
| Dominican Republic | 7.450% | 4/30/44 | 5,250 | 5,105 | |
| Dominican Republic | 6.850% | 1/27/45 | 7,194 | 6,492 | |
| Dominican Republic | 6.500% | 2/15/48 | 3,600 | 3,079 | |
| Dominican Republic | 6.400% | 6/5/49 | 5,600 | 4,712 | |
| Dominican Republic | 5.875% | 1/30/60 | 11,677 | 8,943 | |
| 86,556 | |||||
| Ecuador (0.6%) | |||||
| 3 | Republic of Ecuador | 0.000% | 7/31/30 | 3,655 | 1,127 |
| 4 | Republic of Ecuador, 2.500% coupon rate effective 7/31/23 | 1.500% | 7/31/40 | 12,558 | 4,101 |
| 4 | Republic of Ecuador, 3.500% coupon rate effective 7/31/23 | 2.500% | 7/31/35 | 30,976 | 11,303 |
| 4 | Republic of Ecuador, 6.000% coupon rate effective 7/31/23 | 5.500% | 7/31/30 | 13,585 | 7,167 |
| 23,698 | |||||
| Egypt (1.7%) | |||||
| Arab Republic of Egypt | 5.750% | 5/29/24 | 4,345 | 3,632 | |
| Arab Republic of Egypt | 5.875% | 6/11/25 | 5,600 | 4,049 | |
| Arab Republic of Egypt | 5.250% | 10/6/25 | 3,150 | 2,171 | |
| Arab Republic of Egypt | 3.875% | 2/16/26 | 2,900 | 1,871 | |
| Arab Republic of Egypt | 7.500% | 1/31/27 | 7,100 | 4,783 | |
| Arab Republic of Egypt | 5.800% | 9/30/27 | 4,725 | 2,904 | |
| Arab Republic of Egypt | 6.588% | 2/21/28 | 4,600 | 2,837 | |
| Arab Republic of Egypt | 7.600% | 3/1/29 | 6,175 | 3,793 | |
| Arab Republic of Egypt | 5.875% | 2/16/31 | 5,375 | 2,884 | |
| Arab Republic of Egypt | 7.053% | 1/15/32 | 3,400 | 1,885 | |
| Arab Republic of Egypt | 7.625% | 5/29/32 | 5,969 | 3,354 | |
| 2 | Arab Republic of Egypt | 7.300% | 9/30/33 | 925 | 499 |
| Arab Republic of Egypt | 7.300% | 9/30/33 | 3,900 | 2,109 | |
| Arab Republic of Egypt | 6.875% | 4/30/40 | 1,575 | 807 | |
| Arab Republic of Egypt | 8.500% | 1/31/47 | 8,980 | 4,742 | |
| Arab Republic of Egypt | 7.903% | 2/21/48 | 5,800 | 2,936 | |
| Arab Republic of Egypt | 8.700% | 3/1/49 | 5,400 | 2,875 | |
9
Emerging Markets Government Bond Index Fund
| Coupon | Maturity Date | Face Amount ($000) | Market Value• ($000) | ||
| Arab Republic of Egypt | 8.875% | 5/29/50 | 7,340 | 3,913 | |
| 2 | Arab Republic of Egypt | 8.750% | 9/30/51 | 950 | 502 |
| Arab Republic of Egypt | 8.750% | 9/30/51 | 1,875 | 995 | |
| Arab Republic of Egypt | 8.150% | 11/20/59 | 1,750 | 895 | |
| 2 | Arab Republic of Egypt | 7.500% | 2/16/61 | 3,000 | 1,500 |
| Arab Republic of Egypt | 7.500% | 2/16/61 | 2,500 | 1,246 | |
| 2 | Egyptian Financial Co. for Sovereign Taskeek | 10.875% | 2/28/26 | 5,425 | 4,475 |
| 61,657 | |||||
| El Salvador (0.3%) | |||||
| Republic of El Salvador | 6.375% | 1/18/27 | 2,762 | 1,743 | |
| Republic of El Salvador | 8.625% | 2/28/29 | 2,385 | 1,395 | |
| Republic of El Salvador | 8.250% | 4/10/32 | 1,732 | 974 | |
| Republic of El Salvador | 7.650% | 6/15/35 | 3,650 | 1,837 | |
| Republic of El Salvador | 7.625% | 2/1/41 | 2,518 | 1,257 | |
| Republic of El Salvador | 7.125% | 1/20/50 | 4,275 | 2,084 | |
| 2 | Republic of El Salvador | 9.500% | 7/15/52 | 150 | 83 |
| Republic of El Salvador | 9.500% | 7/15/52 | 3,350 | 1,845 | |
| 11,218 | |||||
| Ethiopia (0.1%) | |||||
| Federal Republic of Ethiopia | 6.625% | 12/11/24 | 3,750 | 2,621 | |
| Gabon (0.2%) | |||||
| Republic of Gabon | 6.950% | 6/16/25 | 2,800 | 2,591 | |
| 3 | Republic of Gabon | 6.625% | 2/6/31 | 3,000 | 2,217 |
| 2,3 | Republic of Gabon | 6.625% | 2/6/31 | 700 | 517 |
| 2 | Republic of Gabon | 7.000% | 11/24/31 | 2,125 | 1,569 |
| Republic of Gabon | 7.000% | 11/24/31 | 600 | 443 | |
| 7,337 | |||||
| Georgia (0.0%) | |||||
| 2 | Republic of Georgia | 2.750% | 4/22/26 | 750 | 674 |
| Republic of Georgia | 2.750% | 4/22/26 | 1,000 | 898 | |
| 1,572 | |||||
| Ghana (0.5%) | |||||
| 3,5 | Republic of Ghana | 8.125% | 1/18/26 | 4,645 | 1,887 |
| 3,5 | Republic of Ghana | 6.375% | 2/11/27 | 6,051 | 2,290 |
| 3,5 | Republic of Ghana | 7.875% | 3/26/27 | 1,980 | 772 |
| 3,5 | Republic of Ghana | 7.750% | 4/7/29 | 3,400 | 1,267 |
| 3,5 | Republic of Ghana | 7.625% | 5/16/29 | 3,700 | 1,375 |
| 3,5 | Republic of Ghana | 10.750% | 10/14/30 | 3,650 | 2,502 |
| 3,5 | Republic of Ghana | 8.125% | 3/26/32 | 4,500 | 1,670 |
| 5 | Republic of Ghana | 8.625% | 4/7/34 | 3,350 | 1,245 |
| 3,5 | Republic of Ghana | 7.875% | 2/11/35 | 3,854 | 1,436 |
| 2,5 | Republic of Ghana | 8.875% | 5/7/42 | 200 | 70 |
| 5 | Republic of Ghana | 8.875% | 5/7/42 | 1,900 | 670 |
| 3,5 | Republic of Ghana | 8.627% | 6/16/49 | 3,250 | 1,147 |
| 3,5 | Republic of Ghana | 8.950% | 3/26/51 | 3,725 | 1,319 |
| 2,3,5 | Republic of Ghana | 8.750% | 3/11/61 | 200 | 69 |
| 3,5 | Republic of Ghana | 8.750% | 3/11/61 | 3,050 | 1,070 |
| 18,789 | |||||
| Guatemala (0.5%) | |||||
| Republic of Guatemala | 4.500% | 5/3/26 | 2,250 | 2,199 | |
| Republic of Guatemala | 4.375% | 6/5/27 | 2,000 | 1,930 | |
| Republic of Guatemala | 4.875% | 2/13/28 | 2,400 | 2,339 | |
| 2 | Republic of Guatemala | 5.250% | 8/10/29 | 1,700 | 1,660 |
10
Emerging Markets Government Bond Index Fund
| Coupon | Maturity Date | Face Amount ($000) | Market Value• ($000) | ||
| 3 | Republic of Guatemala | 4.900% | 6/1/30 | 2,000 | 1,919 |
| Republic of Guatemala | 5.375% | 4/24/32 | 2,000 | 1,952 | |
| 2 | Republic of Guatemala | 3.700% | 10/7/33 | 900 | 754 |
| Republic of Guatemala | 3.700% | 10/7/33 | 1,075 | 899 | |
| Republic of Guatemala | 4.650% | 10/7/41 | 2,100 | 1,721 | |
| 3 | Republic of Guatemala | 6.125% | 6/1/50 | 5,000 | 4,695 |
| 20,068 | |||||
| Honduras (0.1%) | |||||
| Republic of Honduras | 6.250% | 1/19/27 | 2,570 | 2,311 | |
| Republic of Honduras | 5.625% | 6/24/30 | 2,100 | 1,664 | |
| 3,975 | |||||
| Hungary (1.3%) | |||||
| 2 | Republic of Hungary | 6.125% | 5/22/28 | 5,300 | 5,507 |
| Republic of Hungary | 6.125% | 5/22/28 | 200 | 207 | |
| 2 | Republic of Hungary | 5.250% | 6/16/29 | 4,675 | 4,642 |
| Republic of Hungary | 5.250% | 6/16/29 | 3,150 | 3,123 | |
| 2 | Republic of Hungary | 2.125% | 9/22/31 | 5,200 | 4,059 |
| Republic of Hungary | 2.125% | 9/22/31 | 2,950 | 2,308 | |
| Republic of Hungary | 6.250% | 9/22/32 | 5,025 | 5,212 | |
| 2 | Republic of Hungary | 5.500% | 6/16/34 | 3,825 | 3,754 |
| Republic of Hungary | 5.500% | 6/16/34 | 1,800 | 1,768 | |
| Republic of Hungary | 7.625% | 3/29/41 | 5,970 | 6,796 | |
| 2 | Republic of Hungary | 3.125% | 9/21/51 | 4,600 | 2,849 |
| Republic of Hungary | 3.125% | 9/21/51 | 2,700 | 1,677 | |
| 2 | Republic of Hungary | 6.750% | 9/25/52 | 4,600 | 4,780 |
| 46,682 | |||||
| Indonesia (6.8%) | |||||
| Perusahaan Penerbit SBSN Indonesia III | 3.900% | 8/20/24 | 2,450 | 2,442 | |
| Perusahaan Penerbit SBSN Indonesia III | 4.350% | 9/10/24 | 5,200 | 5,209 | |
| Perusahaan Penerbit SBSN Indonesia III | 4.325% | 5/28/25 | 7,619 | 7,637 | |
| Perusahaan Penerbit SBSN Indonesia III | 2.300% | 6/23/25 | 3,005 | 2,884 | |
| Perusahaan Penerbit SBSN Indonesia III | 4.550% | 3/29/26 | 6,320 | 6,364 | |
| 2 | Perusahaan Penerbit SBSN Indonesia III | 1.500% | 6/9/26 | 2,950 | 2,689 |
| Perusahaan Penerbit SBSN Indonesia III | 1.500% | 6/9/26 | 2,495 | 2,274 | |
| Perusahaan Penerbit SBSN Indonesia III | 4.150% | 3/29/27 | 7,377 | 7,357 | |
| 2 | Perusahaan Penerbit SBSN Indonesia III | 4.400% | 6/6/27 | 3,575 | 3,590 |
| Perusahaan Penerbit SBSN Indonesia III | 4.400% | 6/6/27 | 3,300 | 3,314 | |
| Perusahaan Penerbit SBSN Indonesia III | 4.400% | 3/1/28 | 5,790 | 5,829 | |
| Perusahaan Penerbit SBSN Indonesia III | 4.450% | 2/20/29 | 3,835 | 3,872 | |
| Perusahaan Penerbit SBSN Indonesia III | 2.800% | 6/23/30 | 3,950 | 3,563 | |
| Perusahaan Penerbit SBSN Indonesia III | 2.550% | 6/9/31 | 3,500 | 3,068 | |
| 2 | Perusahaan Penerbit SBSN Indonesia III | 4.700% | 6/6/32 | 4,400 | 4,493 |
| Perusahaan Penerbit SBSN Indonesia III | 4.700% | 6/6/32 | 1,050 | 1,072 | |
| Perusahaan Penerbit SBSN Indonesia III | 3.800% | 6/23/50 | 2,900 | 2,360 | |
| 2 | Perusahaan Penerbit SBSN Indonesia III | 3.550% | 6/9/51 | 1,300 | 1,022 |
| Perusahaan Penerbit SBSN Indonesia III | 3.550% | 6/9/51 | 1,450 | 1,140 | |
| Republic of Indonesia | 4.125% | 1/15/25 | 7,300 | 7,281 | |
| Republic of Indonesia | 4.750% | 1/8/26 | 7,325 | 7,375 | |
| Republic of Indonesia | 4.350% | 1/8/27 | 4,700 | 4,706 | |
| Republic of Indonesia | 3.850% | 7/18/27 | 3,570 | 3,514 | |
| Republic of Indonesia | 4.150% | 9/20/27 | 2,725 | 2,705 | |
| Republic of Indonesia | 3.500% | 1/11/28 | 4,886 | 4,717 | |
| Republic of Indonesia | 4.550% | 1/11/28 | 3,400 | 3,430 | |
| Republic of Indonesia | 4.100% | 4/24/28 | 4,000 | 3,959 | |
11
Emerging Markets Government Bond Index Fund
| Coupon | Maturity Date | Face Amount ($000) | Market Value• ($000) | ||
| Republic of Indonesia | 4.750% | 2/11/29 | 4,558 | 4,637 | |
| Republic of Indonesia | 3.400% | 9/18/29 | 2,450 | 2,316 | |
| Republic of Indonesia | 2.850% | 2/14/30 | 4,600 | 4,193 | |
| Republic of Indonesia | 3.850% | 10/15/30 | 5,800 | 5,581 | |
| Republic of Indonesia | 1.850% | 3/12/31 | 4,650 | 3,840 | |
| Republic of Indonesia | 2.150% | 7/28/31 | 5,050 | 4,245 | |
| Republic of Indonesia | 3.550% | 3/31/32 | 3,800 | 3,541 | |
| Republic of Indonesia | 4.650% | 9/20/32 | 6,500 | 6,519 | |
| Republic of Indonesia | 4.850% | 1/11/33 | 3,280 | 3,329 | |
| Republic of Indonesia | 8.500% | 10/12/35 | 5,600 | 7,402 | |
| Republic of Indonesia | 6.625% | 2/17/37 | 5,112 | 5,966 | |
| Republic of Indonesia | 7.750% | 1/17/38 | 7,150 | 9,118 | |
| Republic of Indonesia | 5.250% | 1/17/42 | 8,250 | 8,357 | |
| Republic of Indonesia | 4.625% | 4/15/43 | 5,210 | 4,940 | |
| Republic of Indonesia | 6.750% | 1/15/44 | 7,255 | 8,581 | |
| Republic of Indonesia | 5.125% | 1/15/45 | 7,401 | 7,395 | |
| Republic of Indonesia | 5.950% | 1/8/46 | 4,616 | 4,997 | |
| Republic of Indonesia | 5.250% | 1/8/47 | 5,350 | 5,373 | |
| Republic of Indonesia | 4.750% | 7/18/47 | 3,700 | 3,538 | |
| Republic of Indonesia | 4.350% | 1/11/48 | 6,350 | 5,717 | |
| Republic of Indonesia | 5.350% | 2/11/49 | 3,173 | 3,240 | |
| Republic of Indonesia | 3.700% | 10/30/49 | 3,550 | 2,856 | |
| Republic of Indonesia | 3.500% | 2/14/50 | 2,900 | 2,250 | |
| Republic of Indonesia | 4.200% | 10/15/50 | 6,650 | 5,788 | |
| Republic of Indonesia | 3.050% | 3/12/51 | 7,300 | 5,428 | |
| Republic of Indonesia | 4.300% | 3/31/52 | 3,200 | 2,810 | |
| Republic of Indonesia | 5.450% | 9/20/52 | 2,000 | 2,048 | |
| Republic of Indonesia | 5.650% | 1/11/53 | 2,480 | 2,619 | |
| Republic of Indonesia | 3.200% | 9/23/61 | 2,400 | 1,657 | |
| Republic of Indonesia | 4.450% | 4/15/70 | 3,700 | 3,191 | |
| Republic of Indonesia | 3.350% | 3/12/71 | 3,075 | 2,112 | |
| 251,450 | |||||
| Iraq (0.2%) | |||||
| 3 | Republic of Iraq | 5.800% | 1/15/28 | 6,216 | 5,809 |
| Ivory Coast (0.2%) | |||||
| 3 | Ivory Coast | 6.375% | 3/3/28 | 2,950 | 2,833 |
| 3 | Ivory Coast | 6.125% | 6/15/33 | 4,600 | 3,896 |
| 6,729 | |||||
| Jamaica (0.5%) | |||||
| 3 | Jamaica | 6.750% | 4/28/28 | 5,650 | 5,953 |
| 3 | Jamaica | 8.000% | 3/15/39 | 4,350 | 5,271 |
| Jamaica | 7.875% | 7/28/45 | 6,500 | 7,592 | |
| 18,816 | |||||
| Jordan (0.6%) | |||||
| Kingdom of Jordan | 4.950% | 7/7/25 | 1,800 | 1,734 | |
| Kingdom of Jordan | 6.125% | 1/29/26 | 3,500 | 3,440 | |
| Kingdom of Jordan | 5.750% | 1/31/27 | 3,600 | 3,449 | |
| Kingdom of Jordan | 7.750% | 1/15/28 | 1,800 | 1,828 | |
| 2 | Kingdom of Jordan | 7.500% | 1/13/29 | 5,750 | 5,761 |
| Kingdom of Jordan | 5.850% | 7/7/30 | 4,261 | 3,835 | |
| Kingdom of Jordan | 7.375% | 10/10/47 | 3,650 | 3,086 | |
| 23,133 | |||||
12
Emerging Markets Government Bond Index Fund
| Coupon | Maturity Date | Face Amount ($000) | Market Value• ($000) | ||
| Kazakhstan (0.7%) | |||||
| Republic of Kazakhstan | 3.875% | 10/14/24 | 5,720 | 5,732 | |
| Republic of Kazakhstan | 5.125% | 7/21/25 | 9,000 | 9,286 | |
| Republic of Kazakhstan | 4.875% | 10/14/44 | 2,950 | 2,711 | |
| Republic of Kazakhstan | 4.875% | 10/14/44 | 850 | 781 | |
| Republic of Kazakhstan | 6.500% | 7/21/45 | 5,280 | 5,640 | |
| 24,150 | |||||
| Kenya (0.5%) | |||||
| Republic of Kenya | 6.875% | 6/24/24 | 7,025 | 6,081 | |
| Republic of Kenya | 7.000% | 5/22/27 | 3,600 | 2,902 | |
| Republic of Kenya | 7.250% | 2/28/28 | 3,600 | 2,784 | |
| Republic of Kenya | 8.000% | 5/22/32 | 4,550 | 3,426 | |
| 2 | Republic of Kenya | 6.300% | 1/23/34 | 1,100 | 717 |
| Republic of Kenya | 6.300% | 1/23/34 | 2,500 | 1,644 | |
| Republic of Kenya | 8.250% | 2/28/48 | 3,550 | 2,384 | |
| 19,938 | |||||
| Kuwait (0.4%) | |||||
| Kuwait | 3.500% | 3/20/27 | 16,350 | 16,111 | |
| Lebanon (0.1%) | |||||
| 5 | Lebanon Republic | 6.200% | 2/26/25 | 6,678 | 406 |
| 5 | Lebanon Republic | 6.600% | 11/27/26 | 6,775 | 409 |
| 5 | Lebanon Republic | 6.850% | 3/23/27 | 5,600 | 341 |
| 5 | Lebanon Republic | 6.750% | 11/29/27 | 4,059 | 247 |
| 5 | Lebanon Republic | 6.650% | 11/3/28 | 3,230 | 196 |
| 5 | Lebanon Republic | 6.850% | 5/25/29 | 3,300 | 202 |
| 5 | Lebanon Republic | 6.650% | 2/26/30 | 5,630 | 341 |
| 5 | Lebanon Republic | 7.000% | 3/23/32 | 4,470 | 270 |
| 5 | Lebanon Republic | 7.250% | 3/23/37 | 3,675 | 223 |
| 2,635 | |||||
| Malaysia (0.4%) | |||||
| Malaysia Sovereign Sukuk Bhd. | 3.043% | 4/22/25 | 3,850 | 3,767 | |
| 2 | Malaysia Sovereign Sukuk Bhd. | 2.070% | 4/28/31 | 1,250 | 1,105 |
| Malaysia Sovereign Sukuk Bhd. | 4.236% | 4/22/45 | 2,025 | 1,970 | |
| 2 | Malaysia Sovereign Sukuk Bhd. | 3.075% | 4/28/51 | 700 | 550 |
| Malaysia Sukuk Global Bhd. | 3.179% | 4/27/26 | 3,750 | 3,668 | |
| Malaysia Sukuk Global Bhd. | 4.080% | 4/27/46 | 2,300 | 2,183 | |
| Malaysia Wakala Sukuk Bhd. | 2.070% | 4/28/31 | 925 | 818 | |
| Malaysia Wakala Sukuk Bhd. | 3.075% | 4/28/51 | 750 | 589 | |
| 14,650 | |||||
| Maldives (0.0%) | |||||
| 2 | Maldives Sukuk Issuance Ltd. | 9.875% | 4/8/26 | 1,365 | 1,117 |
| Maldives Sukuk Issuance Ltd. | 9.875% | 4/8/26 | 400 | 327 | |
| 1,444 | |||||
| Mexico (6.1%) | |||||
| United Mexican States | 3.900% | 4/27/25 | 2,850 | 2,818 | |
| United Mexican States | 4.125% | 1/21/26 | 7,912 | 7,804 | |
| United Mexican States | 4.150% | 3/28/27 | 8,770 | 8,683 | |
| United Mexican States | 3.750% | 1/11/28 | 6,975 | 6,742 | |
| United Mexican States | 5.400% | 2/9/28 | 4,600 | 4,752 | |
| United Mexican States | 4.500% | 4/22/29 | 11,536 | 11,408 | |
| United Mexican States | 3.250% | 4/16/30 | 8,325 | 7,535 | |
| United Mexican States | 2.659% | 5/24/31 | 12,807 | 10,836 | |
| United Mexican States | 8.300% | 8/15/31 | 4,050 | 4,792 | |
13
Emerging Markets Government Bond Index Fund
| Coupon | Maturity Date | Face Amount ($000) | Market Value• ($000) | ||
| United Mexican States | 4.750% | 4/27/32 | 7,965 | 7,753 | |
| United Mexican States | 7.500% | 4/8/33 | 3,100 | 3,593 | |
| United Mexican States | 4.875% | 5/19/33 | 8,375 | 8,126 | |
| United Mexican States | 3.500% | 2/12/34 | 10,897 | 9,362 | |
| United Mexican States | 6.750% | 9/27/34 | 6,479 | 7,205 | |
| United Mexican States | 6.350% | 2/9/35 | 9,525 | 10,211 | |
| United Mexican States | 6.050% | 1/11/40 | 10,199 | 10,520 | |
| United Mexican States | 4.280% | 8/14/41 | 11,520 | 9,650 | |
| United Mexican States | 4.750% | 3/8/44 | 13,206 | 11,473 | |
| United Mexican States | 5.550% | 1/21/45 | 10,309 | 9,929 | |
| United Mexican States | 4.600% | 1/23/46 | 8,500 | 7,152 | |
| United Mexican States | 4.350% | 1/15/47 | 4,031 | 3,259 | |
| United Mexican States | 4.600% | 2/10/48 | 5,548 | 4,621 | |
| United Mexican States | 4.500% | 1/31/50 | 8,199 | 6,773 | |
| United Mexican States | 5.000% | 4/27/51 | 9,175 | 8,032 | |
| United Mexican States | 4.400% | 2/12/52 | 7,780 | 6,211 | |
| United Mexican States | 6.338% | 5/4/53 | 9,870 | 10,161 | |
| United Mexican States | 3.771% | 5/24/61 | 11,350 | 7,857 | |
| United Mexican States | 3.750% | 4/19/71 | 11,160 | 7,600 | |
| United Mexican States | 5.750% | 10/12/10 | 9,790 | 8,710 | |
| 223,568 | |||||
| Mongolia (0.2%) | |||||
| 2 | Mongolia | 5.125% | 4/7/26 | 848 | 780 |
| Mongolia | 5.125% | 4/7/26 | 1,725 | 1,586 | |
| Mongolia | 3.500% | 7/7/27 | 1,700 | 1,411 | |
| 2 | Mongolia | 8.650% | 1/19/28 | 1,900 | 1,917 |
| 2 | Mongolia | 4.450% | 7/7/31 | 1,100 | 848 |
| Mongolia | 4.450% | 7/7/31 | 1,000 | 771 | |
| 7,313 | |||||
| Morocco (0.6%) | |||||
| Kingdom of Morocco | 2.375% | 12/15/27 | 2,600 | 2,306 | |
| 2 | Kingdom of Morocco | 5.950% | 3/8/28 | 4,500 | 4,628 |
| Kingdom of Morocco | 3.000% | 12/15/32 | 3,850 | 3,114 | |
| 2 | Kingdom of Morocco | 6.500% | 9/8/33 | 4,525 | 4,696 |
| Kingdom of Morocco | 5.500% | 12/11/42 | 2,665 | 2,326 | |
| 2 | Kingdom of Morocco | 4.000% | 12/15/50 | 1,550 | 1,060 |
| Kingdom of Morocco | 4.000% | 12/15/50 | 3,225 | 2,216 | |
| 20,346 | |||||
| Mozambique (0.1%) | |||||
| 4 | Republic of Mozambique, 9.000% coupon rate effective 9/15/23 | 5.000% | 9/15/31 | 3,425 | 2,408 |
| Namibia (0.1%) | |||||
| Republic of Namibia | 5.250% | 10/29/25 | 2,700 | 2,579 | |
| Nigeria (1.1%) | |||||
| Republic of Nigeria | 7.625% | 11/21/25 | 3,900 | 3,544 | |
| Republic of Nigeria | 6.500% | 11/28/27 | 5,200 | 4,183 | |
| 2 | Republic of Nigeria | 6.125% | 9/28/28 | 3,000 | 2,291 |
| Republic of Nigeria | 6.125% | 9/28/28 | 1,800 | 1,375 | |
| 2 | Republic of Nigeria | 8.375% | 3/24/29 | 2,350 | 1,915 |
| Republic of Nigeria | 8.375% | 3/24/29 | 2,352 | 1,925 | |
| Republic of Nigeria | 7.143% | 2/23/30 | 4,900 | 3,683 | |
| Republic of Nigeria | 8.747% | 1/21/31 | 3,885 | 3,092 | |
| Republic of Nigeria | 7.875% | 2/16/32 | 5,400 | 4,038 | |
14
Emerging Markets Government Bond Index Fund
| Coupon | Maturity Date | Face Amount ($000) | Market Value• ($000) | ||
| 2 | Republic of Nigeria | 7.375% | 9/28/33 | 575 | 399 |
| Republic of Nigeria | 7.375% | 9/28/33 | 4,950 | 3,446 | |
| Republic of Nigeria | 7.696% | 2/23/38 | 4,542 | 3,018 | |
| Republic of Nigeria | 7.625% | 11/28/47 | 5,450 | 3,430 | |
| Republic of Nigeria | 9.248% | 1/21/49 | 2,600 | 1,903 | |
| 2 | Republic of Nigeria | 8.250% | 9/28/51 | 3,050 | 1,985 |
| Republic of Nigeria | 8.250% | 9/28/51 | 1,550 | 1,013 | |
| 41,240 | |||||
| Oman (2.5%) | |||||
| Oman Sovereign Sukuk Co. | 4.397% | 6/1/24 | 6,625 | 6,549 | |
| Oman Sovereign Sukuk Co. | 5.932% | 10/31/25 | 5,631 | 5,766 | |
| 2 | Oman Sovereign Sukuk Co. | 4.875% | 6/15/30 | 4,100 | 4,137 |
| Oman Sovereign Sukuk Co. | 4.875% | 6/15/30 | 2,433 | 2,456 | |
| Sultanate of Oman | 4.875% | 2/1/25 | 4,244 | 4,204 | |
| Sultanate of Oman | 4.750% | 6/15/26 | 8,900 | 8,743 | |
| Sultanate of Oman | 5.375% | 3/8/27 | 7,025 | 7,009 | |
| Sultanate of Oman | 6.750% | 10/28/27 | 5,315 | 5,620 | |
| Sultanate of Oman | 5.625% | 1/17/28 | 8,750 | 8,837 | |
| Sultanate of Oman | 6.000% | 8/1/29 | 7,972 | 8,160 | |
| Sultanate of Oman | 6.250% | 1/25/31 | 6,150 | 6,387 | |
| Sultanate of Oman | 7.375% | 10/28/32 | 3,737 | 4,165 | |
| Sultanate of Oman | 6.500% | 3/8/47 | 7,215 | 6,781 | |
| Sultanate of Oman | 6.750% | 1/17/48 | 10,150 | 9,829 | |
| Sultanate of Oman | 7.000% | 1/25/51 | 3,650 | 3,632 | |
| 92,275 | |||||
| Pakistan (0.2%) | |||||
| Islamic Republic of Pakistan | 8.250% | 9/30/25 | 1,625 | 675 | |
| Islamic Republic of Pakistan | 6.000% | 4/8/26 | 5,075 | 1,853 | |
| Islamic Republic of Pakistan | 6.875% | 12/5/27 | 5,650 | 2,007 | |
| Islamic Republic of Pakistan | 7.375% | 4/8/31 | 5,450 | 1,867 | |
| Islamic Republic of Pakistan | 8.875% | 4/8/51 | 2,770 | 914 | |
| Pakistan Global Sukuk Programme Co. Ltd. | 7.950% | 1/31/29 | 3,350 | 1,479 | |
| 8,795 | |||||
| Panama (2.5%) | |||||
| Republic of Panama | 3.750% | 3/16/25 | 4,459 | 4,373 | |
| Republic of Panama | 7.125% | 1/29/26 | 3,925 | 4,168 | |
| Republic of Panama | 8.875% | 9/30/27 | 3,750 | 4,380 | |
| Republic of Panama | 3.875% | 3/17/28 | 3,963 | 3,825 | |
| Republic of Panama | 9.375% | 4/1/29 | 3,350 | 4,104 | |
| Republic of Panama | 3.160% | 1/23/30 | 6,400 | 5,670 | |
| Republic of Panama | 2.252% | 9/29/32 | 9,000 | 6,967 | |
| Republic of Panama | 3.298% | 1/19/33 | 3,450 | 2,923 | |
| Republic of Panama | 6.400% | 2/14/35 | 8,795 | 9,316 | |
| 3 | Republic of Panama | 6.700% | 1/26/36 | 7,200 | 7,761 |
| 3 | Republic of Panama | 4.500% | 5/15/47 | 3,520 | 2,821 |
| 3 | Republic of Panama | 4.500% | 4/16/50 | 10,100 | 7,891 |
| 3 | Republic of Panama | 4.300% | 4/29/53 | 6,425 | 4,814 |
| Republic of Panama | 6.853% | 3/28/54 | 3,650 | 3,818 | |
| Republic of Panama | 4.500% | 4/1/56 | 9,200 | 6,984 | |
| 3 | Republic of Panama | 3.870% | 7/23/60 | 10,850 | 7,264 |
| Republic of Panama | 4.500% | 1/19/63 | 5,300 | 3,908 | |
| 90,987 | |||||
| Papua New Guinea (0.0%) | |||||
| Papua New Guinea | 8.375% | 10/4/28 | 1,800 | 1,627 | |
15
Emerging Markets Government Bond Index Fund
| Coupon | Maturity Date | Face Amount ($000) | Market Value• ($000) | ||
| Paraguay (0.5%) | |||||
| Republic of Paraguay | 5.000% | 4/15/26 | 1,900 | 1,887 | |
| Republic of Paraguay | 4.700% | 3/27/27 | 2,000 | 1,966 | |
| 3 | Republic of Paraguay | 4.950% | 4/28/31 | 3,600 | 3,487 |
| 2 | Republic of Paraguay | 2.739% | 1/29/33 | 400 | 322 |
| Republic of Paraguay | 2.739% | 1/29/33 | 1,400 | 1,132 | |
| 2 | Republic of Paraguay | 3.849% | 6/28/33 | 400 | 349 |
| Republic of Paraguay | 3.849% | 6/28/33 | 1,700 | 1,488 | |
| Republic of Paraguay | 6.100% | 8/11/44 | 3,800 | 3,623 | |
| Republic of Paraguay | 5.600% | 3/13/48 | 2,050 | 1,798 | |
| 3 | Republic of Paraguay | 5.400% | 3/30/50 | 4,150 | 3,532 |
| 19,584 | |||||
| Peru (2.1%) | |||||
| Republic of Peru | 7.350% | 7/21/25 | 5,509 | 5,810 | |
| Republic of Peru | 2.392% | 1/23/26 | 3,900 | 3,684 | |
| Republic of Peru | 4.125% | 8/25/27 | 3,922 | 3,860 | |
| Republic of Peru | 2.844% | 6/20/30 | 50 | 44 | |
| Republic of Peru | 2.783% | 1/23/31 | 16,080 | 13,938 | |
| Republic of Peru | 1.862% | 12/1/32 | 3,700 | 2,863 | |
| Republic of Peru | 8.750% | 11/21/33 | 7,600 | 9,713 | |
| Republic of Peru | 3.000% | 1/15/34 | 8,475 | 7,097 | |
| 3 | Republic of Peru | 6.550% | 3/14/37 | 4,216 | 4,696 |
| Republic of Peru | 3.300% | 3/11/41 | 4,570 | 3,518 | |
| Republic of Peru | 5.625% | 11/18/50 | 9,548 | 9,874 | |
| Republic of Peru | 3.550% | 3/10/51 | 6,325 | 4,775 | |
| Republic of Peru | 2.780% | 12/1/60 | 7,310 | 4,474 | |
| Republic of Peru | 3.600% | 1/15/72 | 3,655 | 2,516 | |
| Republic of Peru | 3.230% | 7/28/21 | 3,652 | 2,231 | |
| 79,093 | |||||
| Philippines (3.4%) | |||||
| Republic of Philippines | 10.625% | 3/16/25 | 5,575 | 6,218 | |
| Republic of Philippines | 5.500% | 3/30/26 | 3,700 | 3,822 | |
| Republic of Philippines | 3.229% | 3/29/27 | 2,300 | 2,213 | |
| Republic of Philippines | 5.170% | 10/13/27 | 1,800 | 1,870 | |
| Republic of Philippines | 3.000% | 2/1/28 | 7,350 | 6,958 | |
| Republic of Philippines | 4.625% | 7/17/28 | 1,650 | 1,676 | |
| Republic of Philippines | 3.750% | 1/14/29 | 5,550 | 5,375 | |
| Republic of Philippines | 9.500% | 2/2/30 | 6,685 | 8,548 | |
| Republic of Philippines | 2.457% | 5/5/30 | 4,775 | 4,187 | |
| Republic of Philippines | 7.750% | 1/14/31 | 5,500 | 6,597 | |
| Republic of Philippines | 1.648% | 6/10/31 | 5,175 | 4,218 | |
| Republic of Philippines | 1.950% | 1/6/32 | 2,900 | 2,387 | |
| Republic of Philippines | 6.375% | 1/15/32 | 3,550 | 4,018 | |
| Republic of Philippines | 3.556% | 9/29/32 | 3,000 | 2,807 | |
| Republic of Philippines | 5.609% | 4/13/33 | 3,725 | 4,026 | |
| Republic of Philippines | 5.000% | 7/17/33 | 3,350 | 3,474 | |
| Republic of Philippines | 6.375% | 10/23/34 | 7,135 | 8,097 | |
| Republic of Philippines | 5.000% | 1/13/37 | 4,955 | 5,030 | |
| Republic of Philippines | 3.950% | 1/20/40 | 7,400 | 6,496 | |
| Republic of Philippines | 3.700% | 3/1/41 | 7,275 | 6,170 | |
| Republic of Philippines | 3.700% | 2/2/42 | 7,395 | 6,206 | |
| Republic of Philippines | 2.950% | 5/5/45 | 4,800 | 3,525 | |
| Republic of Philippines | 2.650% | 12/10/45 | 5,550 | 3,853 | |
| Republic of Philippines | 3.200% | 7/6/46 | 8,175 | 6,178 | |
| Republic of Philippines | 4.200% | 3/29/47 | 3,800 | 3,373 | |
16
Emerging Markets Government Bond Index Fund
| Coupon | Maturity Date | Face Amount ($000) | Market Value• ($000) | ||
| Republic of Philippines | 5.950% | 10/13/47 | 3,150 | 3,484 | |
| Republic of Philippines | 5.500% | 1/17/48 | 4,100 | 4,300 | |
| 125,106 | |||||
| Poland (1.0%) | |||||
| 6 | Republic of Poland | 3.250% | 4/6/26 | 6,390 | 6,238 |
| Republic of Poland | 5.500% | 11/16/27 | 5,450 | 5,722 | |
| Republic of Poland | 5.750% | 11/16/32 | 5,450 | 5,915 | |
| Republic of Poland | 4.875% | 10/4/33 | 9,275 | 9,451 | |
| Republic of Poland | 5.500% | 4/4/53 | 9,210 | 9,564 | |
| 36,890 | |||||
| Qatar (3.8%) | |||||
| State of Qatar | 3.400% | 4/16/25 | 7,242 | 7,097 | |
| State of Qatar | 3.250% | 6/2/26 | 12,850 | 12,556 | |
| State of Qatar | 4.500% | 4/23/28 | 10,960 | 11,257 | |
| State of Qatar | 4.000% | 3/14/29 | 14,825 | 14,844 | |
| State of Qatar | 3.750% | 4/16/30 | 12,215 | 12,116 | |
| 2 | State of Qatar | 9.750% | 6/15/30 | 4,093 | 5,516 |
| 2 | State of Qatar | 6.400% | 1/20/40 | 2,970 | 3,526 |
| 2 | State of Qatar | 5.750% | 1/20/42 | 3,800 | 4,247 |
| State of Qatar | 4.625% | 6/2/46 | 7,850 | 7,696 | |
| State of Qatar | 5.103% | 4/23/48 | 21,790 | 22,348 | |
| State of Qatar | 4.817% | 3/14/49 | 21,975 | 21,739 | |
| State of Qatar | 4.400% | 4/16/50 | 18,575 | 17,400 | |
| 140,342 | |||||
| Romania (1.3%) | |||||
| 2 | Romania | 3.000% | 2/27/27 | 3,450 | 3,152 |
| Romania | 3.000% | 2/27/27 | 1,024 | 936 | |
| 2 | Romania | 5.250% | 11/25/27 | 3,340 | 3,307 |
| Romania | 5.250% | 11/25/27 | 1,700 | 1,684 | |
| 2 | Romania | 6.625% | 2/17/28 | 4,370 | 4,555 |
| 2 | Romania | 3.000% | 2/14/31 | 1,000 | 835 |
| Romania | 3.000% | 2/14/31 | 3,276 | 2,737 | |
| 2 | Romania | 3.625% | 3/27/32 | 3,350 | 2,865 |
| Romania | 3.625% | 3/27/32 | 1,000 | 857 | |
| 2 | Romania | 7.125% | 1/17/33 | 4,600 | 4,929 |
| Romania | 7.125% | 1/17/33 | 612 | 656 | |
| 2 | Romania | 6.000% | 5/25/34 | 1,550 | 1,537 |
| Romania | 6.000% | 5/25/34 | 2,770 | 2,752 | |
| Romania | 6.125% | 1/22/44 | 3,800 | 3,660 | |
| Romania | 5.125% | 6/15/48 | 4,328 | 3,652 | |
| 2 | Romania | 4.000% | 2/14/51 | 1,576 | 1,096 |
| Romania | 4.000% | 2/14/51 | 5,444 | 3,788 | |
| 2 | Romania | 7.625% | 1/17/53 | 4,600 | 4,958 |
| Romania | 7.625% | 1/17/53 | 200 | 216 | |
| 48,172 | |||||
| Rwanda (0.0%) | |||||
| 2 | Republic of Rwanda | 5.500% | 8/9/31 | 1,700 | 1,229 |
| Republic of Rwanda | 5.500% | 8/9/31 | 600 | 434 | |
| 1,663 | |||||
| Saudi Arabia (7.9%) | |||||
| Kingdom of Saudi Arabia | 4.000% | 4/17/25 | 15,750 | 15,635 | |
| Kingdom of Saudi Arabia | 2.900% | 10/22/25 | 8,700 | 8,424 | |
| Kingdom of Saudi Arabia | 3.250% | 10/26/26 | 19,389 | 18,855 | |
| Kingdom of Saudi Arabia | 2.500% | 2/3/27 | 4,900 | 4,631 | |
17
Emerging Markets Government Bond Index Fund
| Coupon | Maturity Date | Face Amount ($000) | Market Value• ($000) | ||
| 2 | Kingdom of Saudi Arabia | 4.750% | 1/18/28 | 7,825 | 7,974 |
| Kingdom of Saudi Arabia | 4.750% | 1/18/28 | 2,675 | 2,731 | |
| Kingdom of Saudi Arabia | 3.625% | 3/4/28 | 18,832 | 18,307 | |
| Kingdom of Saudi Arabia | 4.375% | 4/16/29 | 14,975 | 15,100 | |
| Kingdom of Saudi Arabia | 4.500% | 4/17/30 | 11,150 | 11,257 | |
| Kingdom of Saudi Arabia | 3.250% | 10/22/30 | 6,119 | 5,713 | |
| Kingdom of Saudi Arabia | 2.750% | 2/3/32 | 3,750 | 3,345 | |
| Kingdom of Saudi Arabia | 5.500% | 10/25/32 | 8,950 | 9,710 | |
| Kingdom of Saudi Arabia | 2.250% | 2/2/33 | 10,595 | 8,861 | |
| 2 | Kingdom of Saudi Arabia | 4.875% | 7/18/33 | 11,550 | 11,892 |
| Kingdom of Saudi Arabia | 4.875% | 7/18/33 | 980 | 1,010 | |
| Kingdom of Saudi Arabia | 4.500% | 10/26/46 | 24,000 | 21,587 | |
| Kingdom of Saudi Arabia | 4.625% | 10/4/47 | 16,493 | 15,001 | |
| Kingdom of Saudi Arabia | 5.000% | 4/17/49 | 12,900 | 12,253 | |
| Kingdom of Saudi Arabia | 5.250% | 1/16/50 | 12,942 | 12,797 | |
| Kingdom of Saudi Arabia | 3.250% | 11/17/51 | 5,895 | 4,261 | |
| 2 | Kingdom of Saudi Arabia | 5.000% | 1/18/53 | 9,950 | 9,426 |
| Kingdom of Saudi Arabia | 5.000% | 1/18/53 | 700 | 666 | |
| Kingdom of Saudi Arabia | 3.750% | 1/21/55 | 10,023 | 7,767 | |
| Kingdom of Saudi Arabia | 4.500% | 4/22/60 | 11,050 | 9,842 | |
| Kingdom of Saudi Arabia | 3.450% | 2/2/61 | 8,200 | 5,916 | |
| KSA Sukuk Ltd. | 3.628% | 4/20/27 | 16,075 | 15,809 | |
| KSA Sukuk Ltd. | 5.268% | 10/25/28 | 9,150 | 9,619 | |
| KSA Sukuk Ltd. | 4.303% | 1/19/29 | 6,800 | 6,850 | |
| KSA Sukuk Ltd. | 2.969% | 10/29/29 | 9,145 | 8,527 | |
| KSA Sukuk Ltd. | 2.250% | 5/17/31 | 7,225 | 6,316 | |
| 290,082 | |||||
| Senegal (0.2%) | |||||
| 3 | Republic of Senegal | 6.250% | 5/23/33 | 4,050 | 3,198 |
| 3 | Republic of Senegal | 6.750% | 3/13/48 | 3,600 | 2,417 |
| 5,615 | |||||
| Serbia (0.3%) | |||||
| 2 | Republic of Serbia | 6.250% | 5/26/28 | 2,600 | 2,658 |
| Republic of Serbia | 2.125% | 12/1/30 | 4,845 | 3,789 | |
| 2 | Republic of Serbia | 6.500% | 9/26/33 | 3,500 | 3,554 |
| 10,001 | |||||
| South Africa (1.7%) | |||||
| Republic of South Africa | 5.875% | 9/16/25 | 7,300 | 7,290 | |
| Republic of South Africa | 4.875% | 4/14/26 | 4,450 | 4,312 | |
| Republic of South Africa | 4.850% | 9/27/27 | 4,000 | 3,805 | |
| Republic of South Africa | 4.300% | 10/12/28 | 6,800 | 6,113 | |
| Republic of South Africa | 4.850% | 9/30/29 | 7,625 | 6,853 | |
| Republic of South Africa | 5.875% | 6/22/30 | 5,064 | 4,751 | |
| Republic of South Africa | 5.875% | 4/20/32 | 5,050 | 4,591 | |
| Republic of South Africa | 6.250% | 3/8/41 | 3,091 | 2,585 | |
| Republic of South Africa | 5.375% | 7/24/44 | 3,750 | 2,728 | |
| Republic of South Africa | 5.000% | 10/12/46 | 3,900 | 2,658 | |
| Republic of South Africa | 5.650% | 9/27/47 | 5,475 | 3,957 | |
| Republic of South Africa | 6.300% | 6/22/48 | 2,140 | 1,676 | |
| Republic of South Africa | 5.750% | 9/30/49 | 11,050 | 7,939 | |
| Republic of South Africa | 7.300% | 4/20/52 | 5,750 | 4,906 | |
| 64,164 | |||||
18
Emerging Markets Government Bond Index Fund
| Coupon | Maturity Date | Face Amount ($000) | Market Value• ($000) | ||
| Sri Lanka (0.3%) | |||||
| 5 | Republic of Sri Lanka | 6.350% | 6/28/24 | 1,800 | 601 |
| 5 | Republic of Sri Lanka | 6.125% | 6/3/25 | 2,350 | 841 |
| 5 | Republic of Sri Lanka | 6.850% | 11/3/25 | 5,600 | 1,975 |
| 5 | Republic of Sri Lanka | 6.825% | 7/18/26 | 3,700 | 1,305 |
| 5 | Republic of Sri Lanka | 6.200% | 5/11/27 | 5,350 | 1,773 |
| 5 | Republic of Sri Lanka | 6.750% | 4/18/28 | 4,625 | 1,537 |
| 5 | Republic of Sri Lanka | 7.850% | 3/14/29 | 5,200 | 1,720 |
| 5 | Republic of Sri Lanka | 7.550% | 3/28/30 | 5,475 | 1,813 |
| 11,565 | |||||
| Suriname (0.0%) | |||||
| 5 | Republic of Suriname | 9.250% | 10/26/26 | 1,900 | 1,361 |
| Tajikistan (0.0%) | |||||
| 3 | Republic of Tajikistan | 7.125% | 9/14/27 | 1,800 | 1,402 |
| Trinidad & Tobago (0.1%) | |||||
| Republic of Trinidad & Tobago | 4.500% | 8/4/26 | 3,550 | 3,480 | |
| 2 | Republic of Trinidad & Tobago | 4.500% | 6/26/30 | 450 | 435 |
| Republic of Trinidad & Tobago | 4.500% | 6/26/30 | 1,400 | 1,349 | |
| 5,264 | |||||
| Tunisia (0.1%) | |||||
| Tunisian Republic | 5.750% | 1/30/25 | 3,525 | 1,824 | |
| Turkey (7.3%) | |||||
| Hazine Mustesarligi Varlik Kiralama A/S | 4.489% | 11/25/24 | 3,478 | 3,330 | |
| 2 | Hazine Mustesarligi Varlik Kiralama A/S | 9.758% | 11/13/25 | 12,550 | 12,893 |
| Hazine Mustesarligi Varlik Kiralama A/S | 5.125% | 6/22/26 | 4,400 | 4,006 | |
| 2 | Hazine Mustesarligi Varlik Kiralama A/S | 7.250% | 2/24/27 | 8,600 | 8,267 |
| Hazine Mustesarligi Varlik Kiralama A/S | 7.250% | 2/24/27 | 3,500 | 3,365 | |
| Republic of Turkey | 6.350% | 8/10/24 | 7,400 | 7,253 | |
| Republic of Turkey | 5.600% | 11/14/24 | 9,925 | 9,544 | |
| Republic of Turkey | 7.375% | 2/5/25 | 12,100 | 11,925 | |
| Republic of Turkey | 4.250% | 3/13/25 | 7,350 | 6,819 | |
| Republic of Turkey | 6.375% | 10/14/25 | 9,158 | 8,703 | |
| Republic of Turkey | 4.750% | 1/26/26 | 7,300 | 6,652 | |
| Republic of Turkey | 4.250% | 4/14/26 | 2,812 | 2,511 | |
| Republic of Turkey | 4.875% | 10/9/26 | 11,874 | 10,640 | |
| Republic of Turkey | 6.000% | 3/25/27 | 13,367 | 12,315 | |
| Republic of Turkey | 8.600% | 9/24/27 | 6,550 | 6,552 | |
| Republic of Turkey | 9.875% | 1/15/28 | 12,875 | 13,324 | |
| Republic of Turkey | 5.125% | 2/17/28 | 7,350 | 6,411 | |
| Republic of Turkey | 6.125% | 10/24/28 | 10,103 | 9,067 | |
| Republic of Turkey | 9.375% | 3/14/29 | 12,000 | 12,145 | |
| Republic of Turkey | 7.625% | 4/26/29 | 7,175 | 6,825 | |
| Republic of Turkey | 11.875% | 1/15/30 | 5,579 | 6,535 | |
| Republic of Turkey | 5.250% | 3/13/30 | 7,300 | 6,018 | |
| Republic of Turkey | 9.125% | 7/13/30 | 9,000 | 9,008 | |
| Republic of Turkey | 5.950% | 1/15/31 | 8,400 | 7,080 | |
| Republic of Turkey | 5.875% | 6/26/31 | 6,950 | 5,799 | |
| Republic of Turkey | 9.375% | 1/19/33 | 9,250 | 9,343 | |
| Republic of Turkey | 6.500% | 9/20/33 | 6,275 | 5,325 | |
| Republic of Turkey | 8.000% | 2/14/34 | 5,321 | 5,289 | |
| Republic of Turkey | 6.875% | 3/17/36 | 10,150 | 8,677 | |
| Republic of Turkey | 7.250% | 3/5/38 | 3,625 | 3,236 | |
| Republic of Turkey | 6.750% | 5/30/40 | 7,200 | 5,811 | |
19
Emerging Markets Government Bond Index Fund
| Coupon | Maturity Date | Face Amount ($000) | Market Value• ($000) | ||
| Republic of Turkey | 6.000% | 1/14/41 | 10,815 | 8,124 | |
| Republic of Turkey | 4.875% | 4/16/43 | 11,200 | 7,474 | |
| Republic of Turkey | 6.625% | 2/17/45 | 10,800 | 8,550 | |
| Republic of Turkey | 5.750% | 5/11/47 | 13,070 | 9,275 | |
| 268,091 | |||||
| Ukraine (0.3%) | |||||
| 5 | Ukraine | 7.750% | 9/1/25 | 8,675 | 1,715 |
| 5 | Ukraine | 8.994% | 2/1/26 | 2,920 | 513 |
| 5 | Ukraine | 7.750% | 9/1/26 | 4,630 | 816 |
| 5 | Ukraine | 7.750% | 9/1/27 | 5,075 | 888 |
| 5 | Ukraine | 7.750% | 9/1/28 | 5,005 | 883 |
| 5 | Ukraine | 7.750% | 9/1/29 | 5,080 | 903 |
| 5 | Ukraine | 9.750% | 11/1/30 | 5,965 | 1,070 |
| 2,5 | Ukraine | 6.876% | 5/21/31 | 650 | 105 |
| 5 | Ukraine | 6.876% | 5/21/31 | 5,750 | 941 |
| 5 | Ukraine | 7.375% | 9/25/34 | 10,730 | 1,774 |
| 2,5 | Ukraine | 7.253% | 3/15/35 | 1,800 | 292 |
| 5 | Ukraine | 7.253% | 3/15/35 | 7,400 | 1,206 |
| 11,106 | |||||
| United Arab Emirates (5.4%) | |||||
| Dubai DOF Sukuk Ltd. | 5.000% | 4/30/29 | 6,230 | 6,447 | |
| 7 | Dubai DOF Sukuk Ltd. | 2.763% | 9/9/30 | 4,700 | 4,242 |
| Emirate of Abu Dhabi | 2.125% | 9/30/24 | 10,950 | 10,548 | |
| Emirate of Abu Dhabi | 2.500% | 4/16/25 | 11,000 | 10,617 | |
| Emirate of Abu Dhabi | 3.125% | 5/3/26 | 9,747 | 9,465 | |
| Emirate of Abu Dhabi | 3.125% | 10/11/27 | 15,000 | 14,530 | |
| Emirate of Abu Dhabi | 1.625% | 6/2/28 | 7,446 | 6,687 | |
| Emirate of Abu Dhabi | 2.500% | 9/30/29 | 10,825 | 9,982 | |
| Emirate of Abu Dhabi | 3.125% | 4/16/30 | 11,025 | 10,512 | |
| Emirate of Abu Dhabi | 1.700% | 3/2/31 | 5,450 | 4,654 | |
| Emirate of Abu Dhabi | 1.875% | 9/15/31 | 6,300 | 5,395 | |
| 2 | Emirate of Abu Dhabi | 2.000% | 10/19/31 | 2,200 | 1,903 |
| Emirate of Abu Dhabi | 2.000% | 10/19/31 | 1,475 | 1,276 | |
| Emirate of Abu Dhabi | 4.050% | 7/7/32 | 6,400 | 6,429 | |
| 2 | Emirate of Abu Dhabi | 2.875% | 10/19/41 | 1,850 | 1,460 |
| Emirate of Abu Dhabi | 2.875% | 10/19/41 | 2,100 | 1,662 | |
| Emirate of Abu Dhabi | 4.125% | 10/11/47 | 11,225 | 10,137 | |
| Emirate of Abu Dhabi | 3.125% | 9/30/49 | 14,700 | 11,112 | |
| Emirate of Abu Dhabi | 3.875% | 4/16/50 | 14,600 | 12,573 | |
| Emirate of Abu Dhabi | 3.000% | 9/15/51 | 4,650 | 3,411 | |
| Emirate of Abu Dhabi | 4.951% | 7/7/52 | 4,575 | 4,630 | |
| Emirate of Abu Dhabi | 3.250% | 10/19/61 | 7,100 | 5,321 | |
| Emirate of Abu Dhabi | 2.700% | 9/2/70 | 5,500 | 3,447 | |
| Emirate of Dubai | 5.250% | 1/30/43 | 3,825 | 3,655 | |
| Emirate of Dubai | 3.900% | 9/9/50 | 4,642 | 3,442 | |
| 2 | Finance Department Government of Sharjah | 6.500% | 11/23/32 | 3,450 | 3,578 |
| Finance Department Government of Sharjah | 6.500% | 11/23/32 | 200 | 208 | |
| Finance Department Government of Sharjah | 3.625% | 3/10/33 | 2,800 | 2,331 | |
| Finance Department Government of Sharjah | 4.000% | 7/28/50 | 3,748 | 2,449 | |
| Finance Department Government of Sharjah | 4.375% | 3/10/51 | 1,800 | 1,255 | |
| RAK Capital | 3.094% | 3/31/25 | 3,733 | 3,612 | |
| Sharjah Sukuk Ltd. | 3.764% | 9/17/24 | 1,910 | 1,874 | |
| Sharjah Sukuk Program Ltd. | 3.854% | 4/3/26 | 4,820 | 4,649 | |
| Sharjah Sukuk Program Ltd. | 2.942% | 6/10/27 | 3,490 | 3,197 | |
| Sharjah Sukuk Program Ltd. | 4.226% | 3/14/28 | 4,475 | 4,296 | |
20
Emerging Markets Government Bond Index Fund
| Coupon | Maturity Date | Face Amount ($000) | Market Value• ($000) | ||
| Sharjah Sukuk Program Ltd. | 3.234% | 10/23/29 | 3,614 | 3,244 | |
| Sharjah Sukuk Program Ltd. | 3.886% | 4/4/30 | 2,700 | 2,463 | |
| Sharjah Sukuk Program Ltd. | 3.200% | 7/13/31 | 2,700 | 2,334 | |
| 199,027 | |||||
| Uruguay (1.5%) | |||||
| 3 | Oriental Republic of Uruguay | 4.375% | 10/27/27 | 5,266 | 5,321 |
| 3 | Oriental Republic of Uruguay | 4.375% | 1/23/31 | 7,600 | 7,665 |
| Oriental Republic of Uruguay | 7.875% | 1/15/33 | 3,300 | 4,143 | |
| Oriental Republic of Uruguay | 5.750% | 10/28/34 | 5,562 | 6,175 | |
| 3 | Oriental Republic of Uruguay | 7.625% | 3/21/36 | 4,015 | 5,091 |
| 3 | Oriental Republic of Uruguay | 4.125% | 11/20/45 | 2,600 | 2,421 |
| 3 | Oriental Republic of Uruguay | 5.100% | 6/18/50 | 14,367 | 14,714 |
| 3 | Oriental Republic of Uruguay | 4.975% | 4/20/55 | 9,509 | 9,543 |
| 55,073 | |||||
| Uzbekistan (0.1%) | |||||
| Republic of Uzbekistan | 5.375% | 2/20/29 | 1,625 | 1,505 | |
| Republic of Uzbekistan | 3.700% | 11/25/30 | 2,300 | 1,884 | |
| 2 | Republic of Uzbekistan | 3.900% | 10/19/31 | 950 | 776 |
| Republic of Uzbekistan | 3.900% | 10/19/31 | 1,450 | 1,183 | |
| 5,348 | |||||
| Vietnam (0.1%) | |||||
| Socialist Republic of Vietnam | 4.800% | 11/19/24 | 3,900 | 3,816 | |
| Zambia (0.1%) | |||||
| 5 | Republic of Zambia | 8.970% | 7/30/27 | 4,825 | 2,245 |
| Total Sovereign Bonds (Cost $3,624,632) | 3,112,618 | ||||
| Shares | |||||
| Temporary Cash Investments (0.6%) | |||||
| Money Market Fund (0.6%) | |||||
| 8 | Vanguard Market Liquidity Fund (Cost $20,185) | 4.853% | 201,858 | 20,184 | |
| Total Investments (98.8%) (Cost $4,235,356) | 3,645,635 | ||||
| Other Assets and Liabilities—Net (1.2%) | 45,578 | ||||
| Net Assets (100.0%) | 3,691,213 | ||||
| Cost is in $000. | |||||
| • | See Note A in Notes to Financial Statements. |
| 1 | Guaranteed by the Republic of Azerbaijan. |
| 2 | Security exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be sold in transactions exempt from registration, normally to qualified institutional buyers. At April 30, 2023, the aggregate value was $248,656,000, representing 6.7% of net assets. |
| 3 | The average or expected maturity is shorter than the final maturity shown because of the possibility of interim principal payments and prepayments or the possibility of the issue being called. |
| 4 | Step bond. |
| 5 | Non-income-producing security—security in default. |
| 6 | Securities with a value of $155,000 have been segregated as initial margin for open futures contracts. |
| 7 | Guaranteed by the Kingdom of United Arab Emirates. |
| 8 | Affiliated money market fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard. Rate shown is the 7-day yield. |
| GMTN—Global Medium Term Note. |
21
Emerging Markets Government Bond Index Fund
Derivative Financial
Instruments Outstanding as of Period End
| Futures Contracts | ||||
| ($000) | ||||
| Expiration | Number of Long (Short) Contracts | Notional Amount | Value and Unrealized Appreciation (Depreciation) | |
| Long Futures Contracts | ||||
| 5-Year U.S. Treasury Note | June 2023 | 41 | 4,499 | (9) |
| 10-Year U.S. Treasury Note | June 2023 | 47 | 5,415 | 111 |
| Ultra 10-Year U.S. Treasury Note | June 2023 | 7 | 850 | 2 |
| 104 | ||||
| Short Futures Contracts | ||||
| 2-Year U.S. Treasury Note | June 2023 | (33) | (6,803) | (68) |
| Long U.S. Treasury Bond | June 2023 | (12) | (1,580) | (34) |
| Ultra Long U.S. Treasury Bond | June 2023 | (10) | (1,414) | (20) |
| (122) | ||||
| (18) | ||||
See accompanying
Notes, which are an integral part of the Financial Statements.
22
Emerging Markets Government Bond Index Fund
Statement of Assets and Liabilities
As of April 30, 2023
| ($000s, except shares, footnotes, and per-share amounts) | Amount |
| Assets | |
| Investments in Securities, at Value | |
| Unaffiliated Issuers (Cost $4,215,171) | 3,625,451 |
| Affiliated Issuers (Cost $20,185) | 20,184 |
| Total Investments in Securities | 3,645,635 |
| Investment in Vanguard | 129 |
| Foreign Currency, at Value (Cost $4) | 4 |
| Receivables for Investment Securities Sold | 28,810 |
| Receivables for Accrued Income | 49,127 |
| Receivables for Capital Shares Issued | 13,399 |
| Total Assets | 3,737,104 |
| Liabilities | |
| Due to Custodian | 483 |
| Payables for Investment Securities Purchased | 44,816 |
| Payables for Capital Shares Redeemed | 90 |
| Payables for Distributions | 171 |
| Payables to Vanguard | 300 |
| Variation Margin Payable—Futures Contracts | 31 |
| Total Liabilities | 45,891 |
| Net Assets | 3,691,213 |
| At April 30, 2023, net assets consisted of: | |
| Paid-in Capital | 4,534,453 |
| Total Distributable Earnings (Loss) | (843,240) |
| Net Assets | 3,691,213 |
| ETF Shares—Net Assets | |
| Applicable to 55,182,986 outstanding $.001 par value shares of beneficial interest (unlimited authorization) | 3,410,210 |
| Net Asset Value Per Share—ETF Shares | $61.80 |
| Admiral Shares—Net Assets | |
| Applicable to 10,266,598 outstanding $.001 par value shares of beneficial interest (unlimited authorization) | 159,038 |
| Net Asset Value Per Share—Admiral Shares | $15.49 |
| Institutional Shares—Net Assets | |
| Applicable to 4,909,118 outstanding $.001 par value shares of beneficial interest (unlimited authorization) | 121,965 |
| Net Asset Value Per Share—Institutional Shares | $24.84 |
See accompanying
Notes, which are an integral part of the Financial Statements.
23
Emerging Markets Government Bond Index Fund
Statement of Operations
| Six Months Ended April 30, 2023 | |
| ($000) | |
| Investment Income | |
| Income | |
| Interest1 | 97,117 |
| Total Income | 97,117 |
| Expenses | |
| The Vanguard Group—Note B | |
| Investment Advisory Services | 41 |
| Management and Administrative—ETF Shares | 2,901 |
| Management and Administrative—Admiral Shares | 151 |
| Management and Administrative—Institutional Shares | 95 |
| Marketing and Distribution—ETF Shares | 87 |
| Marketing and Distribution—Admiral Shares | 4 |
| Marketing and Distribution—Institutional Shares | 2 |
| Custodian Fees | 36 |
| Shareholders’ Reports—ETF Shares | 92 |
| Shareholders’ Reports—Admiral Shares | 1 |
| Shareholders’ Reports—Institutional Shares | — |
| Trustees’ Fees and Expenses | 1 |
| Other Expenses | 6 |
| Total Expenses | 3,417 |
| Expenses Paid Indirectly | (3) |
| Net Expenses | 3,414 |
| Net Investment Income | 93,703 |
| Realized Net Gain (Loss) | |
| Investment Securities Sold1 | (43,216) |
| Futures Contracts | (491) |
| Realized Net Gain (Loss) | (43,707) |
| Change in Unrealized Appreciation (Depreciation) | |
| Investment Securities1 | 259,596 |
| Futures Contracts | (174) |
| Change in Unrealized Appreciation (Depreciation) | 259,422 |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 309,418 |
| 1 | Interest income, realized net gain (loss), capital gain distributions received, and change in unrealized appreciation (depreciation) from an affiliated company of the fund were $227,000, ($1,000), less than $1,000, and ($2,000), respectively. Purchases and sales are for temporary cash investment purposes. |
See accompanying
Notes, which are an integral part of the Financial Statements.
24
Emerging Markets Government Bond Index Fund
Statement of Changes in Net Assets
| Six Months Ended April 30, 2023 | Year Ended October 31, 2022 | ||
| ($000) | ($000) | ||
| Increase (Decrease) in Net Assets | |||
| Operations | |||
| Net Investment Income | 93,703 | 147,527 | |
| Realized Net Gain (Loss) | (43,707) | (163,273) | |
| Change in Unrealized Appreciation (Depreciation) | 259,422 | (798,914) | |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 309,418 | (814,660) | |
| Distributions | |||
| ETF Shares | (85,718) | (135,745) | |
| Admiral Shares | (4,386) | (9,185) | |
| Institutional Shares | (3,224) | (2,162) | |
| Total Distributions | (93,328) | (147,092) | |
| Capital Share Transactions | |||
| ETF Shares | 628,374 | 446,745 | |
| Admiral Shares | (8,379) | (26,860) | |
| Institutional Shares | 63,266 | 22,957 | |
| Net Increase (Decrease) from Capital Share Transactions | 683,261 | 442,842 | |
| Total Increase (Decrease) | 899,351 | (518,910) | |
| Net Assets | |||
| Beginning of Period | 2,791,862 | 3,310,772 | |
| End of Period | 3,691,213 | 2,791,862 | |
See accompanying
Notes, which are an integral part of the Financial Statements.
25
Emerging Markets Government Bond Index Fund
Financial Highlights
| ETF Shares | ||||||
| For a Share Outstanding Throughout Each Period | Six Months Ended April 30, 2023 | Year Ended October 31, | ||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||
| Net Asset Value, Beginning of Period | $57.55 | $78.02 | $78.01 | $80.38 | $74.27 | $80.73 |
| Investment Operations | ||||||
| Net Investment Income1 | 1.668 | 3.170 | 3.190 | 3.551 | 3.738 | 3.411 |
| Net Realized and Unrealized Gain (Loss) on Investments2 | 4.271 | (20.455) | (.036) | (2.322) | 6.044 | (6.445) |
| Total from Investment Operations | 5.939 | (17.285) | 3.154 | 1.229 | 9.782 | (3.034) |
| Distributions | ||||||
| Dividends from Net Investment Income | (1.689) | (3.185) | (3.144) | (3.599) | (3.672) | (3.426) |
| Distributions from Realized Capital Gains | — | — | — | — | — | — |
| Total Distributions | (1.689) | (3.185) | (3.144) | (3.599) | (3.672) | (3.426) |
| Net Asset Value, End of Period | $61.80 | $57.55 | $78.02 | $78.01 | $80.38 | $74.27 |
| Total Return | 10.39% | -22.68% | 4.06% | 1.65% | 13.47% | -3.84% |
| Ratios/Supplemental Data | ||||||
| Net Assets, End of Period (Millions) | $3,410 | $2,582 | $3,024 | $1,853 | $1,538 | $1,033 |
| Ratio of Total Expenses to Average Net Assets | 0.20%3 | 0.20%3 | 0.20% | 0.25% | 0.25% | 0.30% |
| Ratio of Net Investment Income to Average Net Assets | 5.47% | 4.73% | 4.02% | 4.55% | 4.79% | 4.42% |
| Portfolio Turnover Rate4 | 10% | 17% | 16% | 21% | 48% | 25% |
| The expense ratio and net investment income ratio for the current period have been annualized. | ||||||
| 1 | Calculated based on average shares outstanding. |
| 2 | Includes increases from purchase fees of $0.02, $0.02, $0.00, $0.00, $0.00, and $0.04. |
| 3 | The ratio of expenses to average net assets for the period net of reduction from custody fee offset arrangements was 0.20%. |
| 4 | Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares, including ETF Creation Units. |
See accompanying
Notes, which are an integral part of the Financial Statements.
26
Emerging Markets Government Bond Index Fund
Financial Highlights
| Admiral Shares | ||||||
| For a Share Outstanding Throughout Each Period | Six Months Ended April 30, 2023 | Year Ended October 31, | ||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||
| Net Asset Value, Beginning of Period | $14.42 | $19.58 | $19.58 | $20.16 | $18.63 | $20.24 |
| Investment Operations | ||||||
| Net Investment Income1 | .419 | .798 | .806 | .897 | .939 | .858 |
| Net Realized and Unrealized Gain (Loss) on Investments2 | 1.075 | (5.149) | (.015) | (.586) | 1.521 | (1.613) |
| Total from Investment Operations | 1.494 | (4.351) | .791 | .311 | 2.460 | (.755) |
| Distributions | ||||||
| Dividends from Net Investment Income | (.424) | (.809) | (.791) | (.891) | (.930) | (.855) |
| Distributions from Realized Capital Gains | — | — | — | — | — | — |
| Total Distributions | (.424) | (.809) | (.791) | (.891) | (.930) | (.855) |
| Net Asset Value, End of Period | $15.49 | $14.42 | $19.58 | $19.58 | $20.16 | $18.63 |
| Total Return3 | 10.39% | -22.67% | 4.04% | 1.66% | 13.46% | -3.80% |
| Ratios/Supplemental Data | ||||||
| Net Assets, End of Period (Millions) | $159 | $156 | $242 | $243 | $273 | $256 |
| Ratio of Total Expenses to Average Net Assets | 0.20%4 | 0.20%4 | 0.20% | 0.25% | 0.25% | 0.30% |
| Ratio of Net Investment Income to Average Net Assets | 5.46% | 4.69% | 4.03% | 4.57% | 4.79% | 4.42% |
| Portfolio Turnover Rate5 | 10% | 17% | 16% | 21% | 48% | 25% |
| The expense ratio and net investment income ratio for the current period have been annualized. | ||||||
| 1 | Calculated based on average shares outstanding. |
| 2 | Includes increases from purchase fees of $0.00, $0.00, $0.00, $0.00, $0.00, and $0.01. |
| 3 | Total returns do not include transaction or account service fees that may have applied in the periods shown. Fund prospectuses provide information about any applicable transaction and account service fees. |
| 4 | The ratio of expenses to average net assets for the period net of reduction from custody fee offset arrangements was 0.20%. |
| 5 | Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares, including ETF Creation Units. |
See accompanying
Notes, which are an integral part of the Financial Statements.
27
Emerging Markets Government Bond Index Fund
Financial Highlights
| Institutional Shares | ||||||
| For a Share Outstanding Throughout Each Period | Six Months Ended April 30, 2023 | Year Ended October 31, | ||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||
| Net Asset Value, Beginning of Period | $23.13 | $31.41 | $31.40 | $32.33 | $29.88 | $32.47 |
| Investment Operations | ||||||
| Net Investment Income1 | .675 | 1.286 | 1.298 | 1.443 | 1.522 | 1.380 |
| Net Realized and Unrealized Gain (Loss) on Investments2 | 1.718 | (8.261) | (.014) | (.938) | 2.425 | (2.596) |
| Total from Investment Operations | 2.393 | (6.975) | 1.284 | .505 | 3.947 | (1.216) |
| Distributions | ||||||
| Dividends from Net Investment Income | (.683) | (1.305) | (1.274) | (1.435) | (1.497) | (1.374) |
| Distributions from Realized Capital Gains | — | — | — | — | — | — |
| Total Distributions | (.683) | (1.305) | (1.274) | (1.435) | (1.497) | (1.374) |
| Net Asset Value, End of Period | $24.84 | $23.13 | $31.41 | $31.40 | $32.33 | $29.88 |
| Total Return3 | 10.37% | -22.66% | 4.10% | 1.68% | 13.46% | -3.82% |
| Ratios/Supplemental Data | ||||||
| Net Assets, End of Period (Millions) | $122 | $54 | $45 | $42 | $51 | $19 |
| Ratio of Total Expenses to Average Net Assets | 0.18%4 | 0.18%4 | 0.18% | 0.23% | 0.23% | 0.29% |
| Ratio of Net Investment Income to Average Net Assets | 5.48% | 4.79% | 4.05% | 4.59% | 4.81% | 4.43% |
| Portfolio Turnover Rate5 | 10% | 17% | 16% | 21% | 48% | 25% |
| The expense ratio and net investment income ratio for the current period have been annualized. | ||||||
| 1 | Calculated based on average shares outstanding. |
| 2 | Includes increases from purchase fees of $0.00, $0.00, $0.00, $0.00, $0.00, and $0.02. |
| 3 | Total returns do not include transaction or account service fees that may have applied in the periods shown. Fund prospectuses provide information about any applicable transaction and account service fees. |
| 4 | The ratio of expenses to average net assets for the period net of reduction from custody fee offset arrangements was 0.18%. |
| 5 | Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares, including ETF Creation Units. |
See accompanying
Notes, which are an integral part of the Financial Statements.
28
Emerging Markets Government Bond Index Fund
Notes to Financial Statements
Vanguard Emerging Markets
Government Bond Index Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund offers three classes of shares: ETF Shares, Admiral Shares, and
Institutional Shares. Each of the share classes has different eligibility and minimum purchase requirements, and is designed for different types of investors. ETF Shares are listed for trading on Nasdaq; they can be
purchased and sold through a broker.
| A. | The following significant accounting policies conform to generally accepted accounting principles for U.S. investment companies. The fund consistently follows such policies in preparing its financial statements. |
1. Security Valuation:
Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Bonds and temporary cash investments are valued using the latest bid prices or
using valuations based on a matrix system (which considers such factors as security prices, yields, maturities, and ratings), both as furnished by independent pricing services. Investments in Vanguard Market Liquidity
Fund are valued at that fund's net asset value. Securities for which market quotations are not readily available, or whose values have been affected by events occurring before the fund’s pricing time but after
the close of the securities’ primary markets, are valued by methods deemed by the valuation designee to represent fair value and subject to oversight by the board of trustees.
2. Futures Contracts:
The fund uses futures contracts to invest in fixed income asset classes with greater efficiency and lower cost than is possible through direct investment, to add value when these instruments are attractively priced,
or to adjust sensitivity to changes in interest rates. The primary risks associated with the use of futures contracts are imperfect correlation between changes in market values of bonds held by the fund and the prices
of futures contracts, and the possibility of an illiquid market. Counterparty risk involving futures is mitigated because a regulated clearinghouse is the counterparty instead of the clearing broker. To further
mitigate counterparty risk, the fund trades futures contracts on an exchange, monitors the financial strength of its clearing brokers and clearinghouse, and has entered into clearing agreements with its clearing
brokers. The clearinghouse imposes initial margin requirements to secure the fund’s performance and requires daily settlement of variation margin representing changes in the market value of each contract. Any
securities pledged as initial margin for open contracts are noted in the Schedule of Investments.
Futures contracts are valued
at their quoted daily settlement prices. The notional amounts of the contracts are not recorded in the Statement of Assets and Liabilities. Fluctuations in the value of the contracts are recorded in the Statement of
Assets and Liabilities as an asset (liability) and in the Statement of Operations as unrealized appreciation (depreciation) until the contracts are closed, when they are recorded as realized gains (losses) on futures
contracts.
During the six months ended
April 30, 2023, the fund’s average investments in long and short futures contracts represented less than 1% of net assets, based on the average of the notional amounts at each quarter-end during the period.
3. Federal Income Taxes:
The fund intends to continue to qualify as a regulated investment company and distribute virtually all of its taxable income. The fund’s tax returns are open to examination by the relevant tax authorities until
expiration of the applicable statute of limitations,
29
Emerging Markets Government Bond Index Fund
which is generally three years after the
filing of the tax return. Management has analyzed the fund’s tax positions taken for all open federal and state income tax years, and has concluded that no provision for income tax is required in the
fund’s financial statements.
4. Distributions:
Distributions to shareholders are recorded on the ex-dividend date. Distributions are determined on a tax basis at the fiscal year-end and may differ from net investment income and realized capital gains for financial
reporting purposes.
5. Credit Facilities and
Interfund Lending Program: The fund and certain other funds managed by The Vanguard Group ("Vanguard") participate in a $4.3 billion committed credit facility provided by a syndicate of lenders pursuant to a credit
agreement and an uncommitted credit facility provided by Vanguard. Both facilities may be renewed annually. Each fund is individually liable for its borrowings, if any, under the credit facilities. Borrowings may be
utilized for temporary or emergency purposes and are subject to the fund’s regulatory and contractual borrowing restrictions. With respect to the committed credit facility, the participating funds are charged
administrative fees and an annual commitment fee of 0.10% of the undrawn committed amount of the facility, which are allocated to the funds based on a method approved by the fund’s board of trustees and included
in Management and Administrative expenses on the fund’s Statement of Operations. Any borrowings under either facility bear interest at an agreed-upon spread plus the higher of the federal funds effective rate,
the overnight bank funding rate, or the Daily Simple Secured Overnight Financing Rate inclusive of an additional agreed-upon spread. However, borrowings under the uncommitted credit facility may bear interest based
upon an alternate rate agreed to by the fund and Vanguard.
In accordance with an
exemptive order (the “Order”) from the SEC, the fund may participate in a joint lending and borrowing program that allows registered open-end Vanguard funds to borrow money from and lend money to each
other for temporary or emergency purposes (the “Interfund Lending Program”), subject to compliance with the terms and conditions of the Order, and to the extent permitted by the fund’s investment
objective and investment policies. Interfund loans and borrowings normally extend overnight but can have a maximum duration of seven days. Loans may be called on one business day’s notice. The interest rate to
be charged is governed by the conditions of the Order and internal procedures adopted by the board of trustees. The board of trustees is responsible for overseeing the Interfund Lending Program.
For the six months ended April
30, 2023, the fund did not utilize the credit facilities or the Interfund Lending Program.
6. Other: Interest
income includes income distributions received from Vanguard Market Liquidity Fund and is accrued daily. Premiums and discounts on debt securities are amortized and accreted, respectively, to interest income over the
lives of the respective securities, except for premiums on certain callable debt securities that are amortized to the earliest call date. Security transactions are accounted for on the date securities are bought or
sold. Costs used to determine realized gains (losses) on the sale of investment securities are those of the specific securities sold. Fees assessed on capital share transactions are credited to paid-in capital.
Each class of shares has equal
rights as to assets and earnings, except that each class separately bears certain class-specific expenses related to maintenance of shareholder accounts (included in Management and Administrative expenses) and
shareholder reporting. Marketing and distribution expenses are allocated to each class of shares based on a method approved by the board of
30
Emerging Markets Government Bond Index Fund
trustees. Income, other non-class-specific
expenses, and gains and losses on investments are allocated to each class of shares based on its relative net assets.
| B. | In accordance with the terms of a Funds' Service Agreement (the “FSA”) between Vanguard and the fund, Vanguard furnishes to the fund investment advisory, corporate management, administrative, marketing, and distribution services at Vanguard’s cost of operations (as defined by the FSA). These costs of operations are allocated to the fund based on methods and guidelines approved by the board of trustees and are generally settled twice a month. |
Upon the request of Vanguard,
the fund may invest up to 0.40% of its net assets as capital in Vanguard. At April 30, 2023, the fund had contributed to Vanguard capital in the amount of $129,000, representing less than 0.01% of the fund’s net
assets and 0.05% of Vanguard’s capital received pursuant to the FSA. The fund’s trustees and officers are also directors and employees, respectively, of Vanguard.
| C. | The fund’s custodian bank has agreed to reduce its fees when the fund maintains cash on deposit in the non-interest-bearing custody account. For the six months ended April 30, 2023, custodian fee offset arrangements reduced the fund’s expenses by $3,000 (an annual rate of less than 0.01% of average net assets). |
| D. | Various inputs may be used to determine the value of the fund’s investments and derivatives. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities. |
Level 1—Quoted prices in active markets for identical securities.
Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).
Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments). Any investments and derivatives valued with significant
unobservable inputs are noted on the Schedule of Investments.
31
Emerging Markets Government Bond Index Fund
The following table summarizes
the market value of the fund’s investments and derivatives as of April 30, 2023, based on the inputs used to value them:
| Level 1 ($000) | Level 2 ($000) | Level 3 ($000) | Total ($000) | |
| Investments | ||||
| Assets | ||||
| U.S. Government and Agency Obligations | — | 11,644 | — | 11,644 |
| Corporate Bonds | — | 501,189 | — | 501,189 |
| Sovereign Bonds | — | 3,112,618 | — | 3,112,618 |
| Temporary Cash Investments | 20,184 | — | — | 20,184 |
| Total | 20,184 | 3,625,451 | — | 3,645,635 |
| Derivative Financial Instruments | ||||
| Assets | ||||
| Futures Contracts1 | 113 | — | — | 113 |
| Liabilities | ||||
| Futures Contracts1 | 131 | — | — | 131 |
| 1 | Includes cumulative appreciation (depreciation) on futures contracts and centrally cleared swaps, if any, as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities. |
| E. | As of April 30, 2023, gross unrealized appreciation and depreciation for investments and derivatives based on cost for U.S. federal income tax purposes were as follows: |
| Amount ($000) | |
| Tax Cost | 4,238,297 |
| Gross Unrealized Appreciation | 8,280 |
| Gross Unrealized Depreciation | (600,960) |
| Net Unrealized Appreciation (Depreciation) | (592,680) |
The fund’s tax-basis
capital gains and losses are determined only at the end of each fiscal year. For tax purposes, at October 31, 2022, the fund had available capital losses totaling $258,847,000 that may be carried forward indefinitely
to offset future net capital gains. The fund will use these capital losses to offset net taxable capital gains, if any, realized during the year ending October 31, 2023; should the fund realize net capital losses for
the year, the losses will be added to the loss carryforward balance above.
| F. | During the six months ended April 30, 2023, the fund purchased $933,024,000 of investment securities and sold $278,419,000 of investment securities, other than U.S. government securities and temporary cash investments. Purchases and sales of U.S. government securities were $77,173,000 and $69,929,000, respectively. Purchases and sales include $571,606,000 and $0, respectively, in connection with in-kind purchases and redemptions of the fund's capital shares. |
32
Emerging Markets Government Bond Index Fund
| G. | Capital share transactions for each class of shares were: |
| Six Months Ended April 30, 2023 | Year Ended October 31, 2022 | ||||
| Amount ($000) | Shares (000) | Amount ($000) | Shares (000) | ||
| ETF Shares | |||||
| Issued1 | 628,374 | 10,313 | 722,837 | 10,308 | |
| Issued in Lieu of Cash Distributions | — | — | — | — | |
| Redeemed | — | — | (276,092) | (4,200) | |
| Net Increase (Decrease)—ETF Shares | 628,374 | 10,313 | 446,745 | 6,108 | |
| Admiral Shares | |||||
| Issued1 | 15,103 | 974 | 30,869 | 1,842 | |
| Issued in Lieu of Cash Distributions | 3,419 | 220 | 7,464 | 449 | |
| Redeemed | (26,901) | (1,730) | (65,193) | (3,837) | |
| Net Increase (Decrease)—Admiral Shares | (8,379) | (536) | (26,860) | (1,546) | |
| Institutional Shares | |||||
| Issued1 | 67,757 | 2,772 | 39,706 | 1,508 | |
| Issued in Lieu of Cash Distributions | 3,224 | 130 | 2,162 | 83 | |
| Redeemed | (7,715) | (311) | (18,911) | (700) | |
| Net Increase (Decrease)—Institutional Shares | 63,266 | 2,591 | 22,957 | 891 | |
| 1 | Includes purchase fees for fiscal 2023 and 2022 of $1,045,000 and $1,041,000, respectively (fund totals). |
| H. | Significant market disruptions, such as those caused by pandemics (e.g., COVID-19 pandemic), natural or environmental disasters, war (e.g., Russia’s invasion of Ukraine), acts of terrorism, or other events, can adversely affect local and global markets and normal market operations. Any such disruptions could have an adverse impact on the value of the fund’s investments and fund performance. |
To the extent the fund’s
investment portfolio reflects concentration in a particular market, industry, sector, country or asset class, the fund may be adversely affected by the performance of these concentrations and may be subject to
increased price volatility and other risks.
Credit risk is the risk that a
counterparty to a transaction or an issuer of a financial instrument will fail to pay interest and principal when due, or that perceptions of the issuer’s ability to make such payments will cause the price of an
investment to decline. Investment in debt securities will generally increase credit risk.
The use of derivatives may
expose the fund to various risks. Derivatives can be highly volatile, and any initial investment is generally small relative to the notional amount so that transactions may be leveraged in terms of market exposure. A
relatively small market movement may have a potentially larger impact on derivatives than on standard securities. Leveraged derivatives positions can, therefore, increase volatility. Additional information regarding
the fund's use of derivative(s) and the specific risks associated is described under significant accounting policies.
| I. | Management has determined that no events or transactions occurred subsequent to April 30, 2023, that would require recognition or disclosure in these financial statements. |
33
Trustees Approve Advisory Arrangement
The board of trustees of
Vanguard Emerging Markets Government Bond Index Fund has renewed the fund’s investment advisory arrangement with The Vanguard Group, Inc. (Vanguard), through its Fixed Income Group. The board determined that
continuing the fund’s internalized management structure was in the best interests of the fund and its shareholders.
The board based its decision
upon an evaluation of the advisor’s investment staff, portfolio management process, and performance. This evaluation included information provided to the board by Vanguard’s Portfolio Review Department,
which is responsible for fund and advisor oversight and product management. The Portfolio Review Department met regularly with the advisor and made presentations to the board during the fiscal year that directed the
board’s focus to relevant information and topics.
The board, or an investment
committee made up of board members, also received information throughout the year during advisor presentations. For each advisor presentation, the board was provided with letters and reports that included information
about, among other things, the advisory firm and the advisor’s assessment of the investment environment, portfolio performance, and portfolio characteristics.
In addition, the board
received periodic reports throughout the year, which included information about the fund’s performance relative to its peers and benchmark, as applicable, and updates, as needed, on the Portfolio Review
Department’s ongoing assessment of the advisor.
Prior to their meeting, the
trustees were provided with a memo and materials that summarized the information they received over the course of the year. They also considered the factors discussed below, among others. However, no single factor
determined whether the board approved the arrangement. Rather, it was the totality of the circumstances that drove the board’s decision.
Nature, extent, and quality of
services
The board reviewed the quality of the
fund’s investment management services over both the short and long term and took into account the organizational depth and stability of the advisor. The board considered that Vanguard has been managing
investments for more than four decades. The Fixed Income Group adheres to a sound, disciplined investment management process; the team has considerable experience, stability, and depth.
The board concluded that
Vanguard’s experience, stability, depth, and performance, among other factors, warranted continuation of the advisory arrangement.
Investment performance
The board considered the short- and long-term
performance of the fund, including any periods of outperformance or underperformance compared with its target index and peer group. The board concluded that the performance was such that the advisory arrangement
should continue.
Cost
The board concluded that the fund’s
expense ratio was below the average expense ratio charged by funds in its peer group and that the fund’s advisory expenses were also below the peer-group average.
34
The board does not conduct a
profitability analysis of Vanguard because of Vanguard’s unique structure. Unlike most other mutual fund management companies, Vanguard is owned by the funds it oversees.
The benefit of economies of
scale
The board concluded that the fund’s
arrangement with Vanguard ensures that the fund will realize economies of scale as it grows, with the cost to shareholders declining as fund assets increase.
The board will consider
whether to renew the advisory arrangement again after a one-year period.
35
Liquidity Risk Management
Vanguard funds (except for the
money market funds) have adopted and implemented a written liquidity risk management program (the “Program”) as required by Rule 22e-4 under the Investment Company Act of 1940. Rule 22e-4 requires that
each fund adopt a program that is reasonably designed to assess and manage the fund’s liquidity risk, which is the risk that the fund could not meet redemption requests without significant dilution of remaining
investors’ interests in the fund.
Assessment and management of a
fund’s liquidity risk under the Program take into consideration certain factors, such as the fund’s investment strategy and the liquidity of its portfolio investments during normal and reasonably
foreseeable stressed conditions, its short- and long-term cash-flow projections during both normal and reasonably foreseeable stressed conditions, and its cash and cash-equivalent holdings and access to other funding
sources. As required by the rule, the Program includes policies and procedures for classification of fund portfolio holdings in four liquidity categories, maintaining certain levels of highly liquid investments, and
limiting holdings of illiquid investments.
The board of trustees of
Vanguard Whitehall Funds approved the appointment of liquidity risk management program administrators responsible for administering Vanguard Emerging Markets Government Bond Index Fund’s Program and for carrying
out the specific responsibilities set forth in the Program, including reporting to the board on at least an annual basis regarding the Program’s operation, its adequacy, and the effectiveness of its
implementation for the past year (the “Program Administrator Report”). The board has reviewed the Program Administrator Report covering the period from January 1, 2022, through December 31, 2022 (the
“Review Period”). The Program Administrator Report stated that during the Review Period the Program operated and was implemented effectively to manage the fund’s liquidity risk.
36
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Connect with
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Semiannual Report | April 30, 2023
Vanguard Global
Minimum Volatility Fund
Contents
About Your Fund’s Expenses | 1 |
Financial Statements | 4 |
Trustees Approve Advisory Arrangement | 22 |
Liquidity Risk Management | 24 |
About Your Fund’s Expenses
As a shareholder of the fund,
you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross
income, directly reduce the investment return of the fund.
A fund’s expenses are
expressed as a percentage of its average net assets. This figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your fund and
to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.
The accompanying table
illustrates your fund’s costs in two ways:
| • | Based on actual fund return. This section helps you to estimate the actual expenses that you paid over the period. The ”Ending Account Value“ shown is derived from the fund‘s actual return, and the third column shows the dollar amount that would have been paid by an investor who started with $1,000 in the fund. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period. |
To do so, simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your fund under the heading ”Expenses Paid During Period.“
| • | Based on hypothetical 5% yearly return. This section is intended to help you compare your fund‘s costs with those of other mutual funds. It assumes that the fund had a yearly return of 5% before expenses, but that the expense ratio is unchanged. In this case—because the return used is not the fund’s actual return—the results do not apply to your investment. The example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to calculate expenses based on a 5% return. You can assess your fund’s costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds. |
Note that the expenses shown
in the table are meant to highlight and help you compare ongoing costs only and do not reflect transaction costs incurred by the fund for buying and selling securities. Further, the expenses do not include any purchase, redemption, or
account service fees described in the fund prospectus. If such fees were applied to your account, your costs would be higher. Your fund does not carry a “sales load.”
The calculations assume no
shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.
You can find more information
about the fund’s expenses, including annual expense ratios, in the Financial Statements section of this report. For additional information on operating expenses and other shareholder costs, please refer to your
fund’s current prospectus.
1
| Six Months Ended April 30, 2023 | |||
| Beginning Account Value 10/31/2022 | Ending Account Value 4/30/2023 | Expenses Paid During Period | |
| Based on Actual Fund Return | |||
| Global Minimum Volatility Fund | |||
| Investor Shares | $1,000.00 | $1,063.40 | $1.07 |
| Admiral™ Shares | 1,000.00 | 1,064.10 | 0.72 |
| Based on Hypothetical 5% Yearly Return | |||
| Global Minimum Volatility Fund | |||
| Investor Shares | $1,000.00 | $1,023.75 | $1.05 |
| Admiral Shares | 1,000.00 | 1,024.10 | 0.70 |
The calculations are
based on expenses incurred in the most recent six-month period. The fund’s annualized six-month expense ratios for that period are 0.21% for Investor Shares and 0.14% for Admiral Shares. The dollar amounts shown
as “Expenses Paid” are equal to the annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by
the number of days in the most recent 12-month period (181/365).
2
Global Minimum Volatility Fund
Fund Allocation
As of April 30, 2023
| United States | 53.7% |
| Japan | 10.8 |
| Canada | 4.5 |
| Australia | 4.2 |
| United Kingdom | 4.1 |
| India | 3.3 |
| Switzerland | 3.3 |
| China | 3.2 |
| South Korea | 2.7 |
| Taiwan | 2.1 |
| France | 1.7 |
| Hong Kong | 1.5 |
| Brazil | 1.4 |
| Other | 3.5 |
The table reflects the fund’s
investments, except for short-term investments and derivatives.
3
Global Minimum Volatility Fund
Financial Statements (unaudited)
Schedule of Investments
As of April 30, 2023
The fund files its complete
schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports
are available on the SEC’s website at www.sec.gov.
4
Global Minimum Volatility Fund
5
Global Minimum Volatility Fund
6
Global Minimum Volatility Fund
7
Global Minimum Volatility Fund
| Shares | Market Value• ($000) | ||
| Temporary Cash Investments (2.8%) | |||
| Money Market Fund (2.8%) | |||
| 5,6 | Vanguard Market Liquidity Fund, 4.853% (Cost $58,334) | 583,440 | 58,338 |
| Total Investments (101.6%) (Cost $1,878,541) | 2,104,454 | ||
| Other Assets and Liabilities—Net (-1.6%) | (32,269) | ||
| Net Assets (100%) | 2,072,185 | ||
| Cost is in $000. | |||
| • | See Note A in Notes to Financial Statements. |
| * | Non-income-producing security. |
| 1 | Includes partial security positions on loan to broker-dealers. The total value of securities on loan is $47,150,000. |
| 2 | Security exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be sold in transactions exempt from registration, normally to qualified institutional buyers. At April 30, 2023, the aggregate value was $29,176,000, representing 1.4% of net assets. |
| 3 | Securities with a value of $547,000 have been segregated as collateral for open forward currency contracts. |
| 4 | Securities with a value of $1,330,000 have been segregated as initial margin for open futures contracts. |
| 5 | Affiliated money market fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard. Rate shown is the 7-day yield. |
| 6 | Collateral of $50,821,000 was received for securities on loan. |
| ADR—American Depositary Receipt. | |
| GDR—Global Depositary Receipt. |
Derivative Financial
Instruments Outstanding as of Period End
| Futures Contracts | ||||
| ($000) | ||||
| Expiration | Number of Long (Short) Contracts | Notional Amount | Value and Unrealized Appreciation (Depreciation) | |
| Long Futures Contracts | ||||
| E-mini S&P 500 Index | June 2023 | 80 | 16,754 | 127 |
| Euro Stoxx 50 Index | June 2023 | 1 | 48 | 3 |
| S&P ASX 200 Index | June 2023 | 4 | 484 | 19 |
| Topix Index | June 2023 | 9 | 1,359 | 27 |
| 176 | ||||
| Forward Currency Contracts | |||||||
| Contract Settlement Date | Contract Amount (000) | Unrealized Appreciation ($000) | Unrealized Depreciation ($000) | ||||
| Counterparty | Receive | Deliver | |||||
| Toronto-Dominion Bank | 5/17/23 | AUD | 3,727 | USD | 2,503 | — | (35) |
| Bank of Montreal | 5/17/23 | CHF | 1,696 | USD | 1,903 | — | (1) |
| State Street Bank & Trust Co. | 5/17/23 | GBP | 946 | USD | 1,182 | 8 | — |
| BNP Paribas | 5/17/23 | HKD | 8,566 | USD | 1,094 | — | (1) |
8
Global Minimum Volatility Fund
| Forward Currency Contracts (continued) | |||||||
| Contract Settlement Date | Contract Amount (000) | Unrealized Appreciation ($000) | Unrealized Depreciation ($000) | ||||
| Counterparty | Receive | Deliver | |||||
| BNP Paribas | 5/17/23 | JPY | 689,689 | USD | 5,211 | — | (136) |
| State Street Bank & Trust Co. | 5/17/23 | USD | 88,211 | AUD | 131,284 | 1,277 | — |
| Deutsche Bank AG | 5/17/23 | USD | 28,151 | BRL | 140,864 | 14 | — |
| Goldman Sachs International | 5/17/23 | USD | 1,829 | BRL | 9,055 | 20 | — |
| Royal Bank of Canada | 5/17/23 | USD | 87,662 | CAD | 118,066 | 491 | — |
| Toronto-Dominion Bank | 5/17/23 | USD | 2,829 | CAD | 3,800 | 24 | — |
| Toronto-Dominion Bank | 5/17/23 | USD | 72,406 | CHF | 64,673 | — | (98) |
| Citibank, N.A. | 5/17/23 | USD | 65,736 | EUR | 59,825 | — | (255) |
| Toronto-Dominion Bank | 5/17/23 | USD | 78,335 | GBP | 62,732 | — | (536) |
| Bank of Montreal | 5/17/23 | USD | 7,080 | GBP | 5,674 | — | (54) |
| Toronto-Dominion Bank | 5/17/23 | USD | 101,109 | HKD | 792,004 | 131 | — |
| Barclays Bank plc | 5/17/23 | USD | 4,322 | IDR | 64,142,370 | — | (48) |
| BNP Paribas | 5/17/23 | USD | 703 | ILS | 2,576 | — | (7) |
| State Street Bank & Trust Co. | 5/17/23 | USD | 66,007 | INR | 5,419,941 | — | (165) |
| Goldman Sachs International | 5/17/23 | USD | 2,346 | INR | 192,605 | — | (5) |
| Royal Bank of Canada | 5/17/23 | USD | 229,029 | JPY | 30,299,556 | 6,056 | — |
| Toronto-Dominion Bank | 5/17/23 | USD | 56,144 | KRW | 74,024,551 | 780 | — |
| Royal Bank of Canada | 5/17/23 | USD | 2,200 | MXN | 39,930 | — | (13) |
| Citibank, N.A. | 5/17/23 | USD | 1,879 | MXN | 34,202 | — | (16) |
| State Street Bank & Trust Co. | 5/16/23 | USD | 10,157 | NOK | 105,986 | 204 | — |
| Citibank, N.A. | 5/17/23 | USD | 2,972 | NZD | 4,773 | 21 | — |
| Toronto-Dominion Bank | 5/17/23 | USD | 1,523 | SEK | 15,715 | — | (11) |
| State Street Bank & Trust Co. | 5/17/23 | USD | 15,640 | SGD | 20,742 | 86 | — |
| Barclays Bank plc | 5/17/23 | USD | 41,623 | TWD | 1,263,458 | 440 | — |
| BNP Paribas | 5/17/23 | USD | 1,524 | TWD | 46,262 | 16 | — |
| 9,568 | (1,381) | ||||||
| AUD—Australian dollar. |
| BRL—Brazilian real. |
| CAD—Canadian dollar. |
| CHF—Swiss franc. |
| EUR—euro. |
| GBP—British pound. |
| HKD—Hong Kong dollar. |
| IDR—Indonesian rupiah. |
| ILS—Israeli shekel. |
| INR—Indian rupee. |
| JPY—Japanese yen. |
| KRW—Korean won. |
| MXN—Mexican peso. |
| NOK—Norwegian krone. |
| NZD—New Zealand dollar. |
| SEK—Swedish krona. |
| SGD—Singapore dollar. |
| TWD—Taiwanese dollar. |
| USD—U.S. dollar. |
At April 30, 2023, the
counterparties had deposited in segregated accounts securities with a value of $5,401,000 and cash of $450,000 in connection with open forward currency contracts.
See accompanying
Notes, which are an integral part of the Financial Statements.
9
Global Minimum Volatility Fund
Statement of Assets and Liabilities
As of April 30, 2023
| ($000s, except shares, footnotes, and per-share amounts) | Amount |
| Assets | |
| Investments in Securities, at Value1 | |
| Unaffiliated Issuers (Cost $1,820,207) | 2,046,116 |
| Affiliated Issuers (Cost $58,334) | 58,338 |
| Total Investments in Securities | 2,104,454 |
| Investment in Vanguard | 73 |
| Cash | 4,172 |
| Cash Collateral Pledged—Forward Currency Contracts | 70 |
| Foreign Currency, at Value (Cost $1,361) | 1,347 |
| Receivables for Accrued Income | 9,380 |
| Receivables for Capital Shares Issued | 854 |
| Variation Margin Receivable—Futures Contracts | 166 |
| Unrealized Appreciation—Forward Currency Contracts | 9,568 |
| Total Assets | 2,130,084 |
| Liabilities | |
| Payables for Investment Securities Purchased | 4,217 |
| Collateral for Securities on Loan | 50,821 |
| Payables for Capital Shares Redeemed | 1,342 |
| Payables to Vanguard | 138 |
| Unrealized Depreciation—Forward Currency Contracts | 1,381 |
| Total Liabilities | 57,899 |
| Net Assets | 2,072,185 |
| 1 Includes $47,150,000 of securities on loan. | |
| At April 30, 2023, net assets consisted of: | |
| Paid-in Capital | 1,816,702 |
| Total Distributable Earnings (Loss) | 255,483 |
| Net Assets | 2,072,185 |
| Investor Shares—Net Assets | |
| Applicable to 16,620,295 outstanding $.001 par value shares of beneficial interest (unlimited authorization) | 231,136 |
| Net Asset Value Per Share—Investor Shares | $13.91 |
| Admiral Shares—Net Assets | |
| Applicable to 66,189,016 outstanding $.001 par value shares of beneficial interest (unlimited authorization) | 1,841,049 |
| Net Asset Value Per Share—Admiral Shares | $27.82 |
See accompanying
Notes, which are an integral part of the Financial Statements.
10
Global Minimum Volatility Fund
Statement of Operations
| Six Months Ended April 30, 2023 | |
| ($000) | |
| Investment Income | |
| Income | |
| Dividends1 | 33,305 |
| Interest2 | 323 |
| Securities Lending—Net | 1,565 |
| Total Income | 35,193 |
| Expenses | |
| The Vanguard Group—Note B | |
| Investment Advisory Services | 246 |
| Management and Administrative—Investor Shares | 209 |
| Management and Administrative—Admiral Shares | 974 |
| Marketing and Distribution—Investor Shares | 6 |
| Marketing and Distribution—Admiral Shares | 39 |
| Custodian Fees | 43 |
| Shareholders’ Reports—Investor Shares | 12 |
| Shareholders’ Reports—Admiral Shares | 11 |
| Trustees’ Fees and Expenses | — |
| Other Expenses | 15 |
| Total Expenses | 1,555 |
| Expenses Paid Indirectly | (8) |
| Net Expenses | 1,547 |
| Net Investment Income | 33,646 |
| Realized Net Gain (Loss) | |
| Investment Securities Sold2 | 51,460 |
| Futures Contracts | 780 |
| Forward Currency Contracts | (42,752) |
| Foreign Currencies | 34 |
| Realized Net Gain (Loss) | 9,522 |
| Change in Unrealized Appreciation (Depreciation) | |
| Investment Securities2 | 85,630 |
| Futures Contracts | (318) |
| Forward Currency Contracts | 544 |
| Foreign Currencies | 246 |
| Change in Unrealized Appreciation (Depreciation) | 86,102 |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 129,270 |
| 1 | Dividends are net of foreign withholding taxes of $1,907,000. |
| 2 | Interest income, realized net gain (loss), capital gain distributions received, and change in unrealized appreciation (depreciation) from an affiliated company of the fund were $323,000, $10,000, less than $1,000, and ($1,000), respectively. Purchases and sales are for temporary cash investment purposes. |
See accompanying
Notes, which are an integral part of the Financial Statements.
11
Global Minimum Volatility Fund
Statement of Changes in Net Assets
| Six Months Ended April 30, 2023 | Year Ended October 31, 2022 | ||
| ($000) | ($000) | ||
| Increase (Decrease) in Net Assets | |||
| Operations | |||
| Net Investment Income | 33,646 | 59,902 | |
| Realized Net Gain (Loss) | 9,522 | 161,639 | |
| Change in Unrealized Appreciation (Depreciation) | 86,102 | (334,683) | |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 129,270 | (113,142) | |
| Distributions | |||
| Investor Shares | (12,533) | (10,057) | |
| Admiral Shares | (89,062) | (83,618) | |
| Total Distributions | (101,595) | (93,675) | |
| Capital Share Transactions | |||
| Investor Shares | (31,646) | (18,912) | |
| Admiral Shares | 457 | (448,415) | |
| Net Increase (Decrease) from Capital Share Transactions | (31,189) | (467,327) | |
| Total Increase (Decrease) | (3,514) | (674,144) | |
| Net Assets | |||
| Beginning of Period | 2,075,699 | 2,749,843 | |
| End of Period | 2,072,185 | 2,075,699 | |
See accompanying
Notes, which are an integral part of the Financial Statements.
12
Global Minimum Volatility Fund
Financial Highlights
| Investor Shares | ||||||
| For a Share Outstanding Throughout Each Period | Six Months Ended April 30, 2023 | Year Ended October 31, | ||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||
| Net Asset Value, Beginning of Period | $13.72 | $14.83 | $12.77 | $14.71 | $13.78 | $13.57 |
| Investment Operations | ||||||
| Net Investment Income1 | .216 | .347 | .252 | .293 | .428 | .374 |
| Net Realized and Unrealized Gain (Loss) on Investments | .641 | (.952) | 2.085 | (1.571) | 1.403 | .148 |
| Total from Investment Operations | .857 | (.605) | 2.337 | (1.278) | 1.831 | .522 |
| Distributions | ||||||
| Dividends from Net Investment Income | (.344) | (.505) | (.277) | (.397) | (.300) | (.312) |
| Distributions from Realized Capital Gains | (.323) | — | — | (.265) | (.601) | — |
| Total Distributions | (.667) | (.505) | (.277) | (.662) | (.901) | (.312) |
| Net Asset Value, End of Period | $13.91 | $13.72 | $14.83 | $12.77 | $14.71 | $13.78 |
| Total Return2 | 6.34% | -4.28% | 18.51% | -9.22% | 14.41% | 3.89% |
| Ratios/Supplemental Data | ||||||
| Net Assets, End of Period (Millions) | $231 | $260 | $301 | $338 | $643 | $515 |
| Ratio of Total Expenses to Average Net Assets | 0.21%3 | 0.21%3 | 0.21% | 0.21% | 0.21% | 0.23% |
| Ratio of Net Investment Income to Average Net Assets | 2.92% | 2.46% | 1.77% | 2.16% | 3.09% | 2.66% |
| Portfolio Turnover Rate | 20% | 51%4 | 24% | 58% | 46% | 24% |
| The expense ratio and net investment income ratio for the current period have been annualized. | ||||||
| 1 | Calculated based on average shares outstanding. |
| 2 | Total returns do not include account service fees that may have applied in the periods shown. Fund prospectuses provide information about any applicable account service fees. |
| 3 | The ratio of expenses to average net assets for the period net of reduction from custody fee offset arrangements was 0.21%. |
| 4 | Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares. |
See accompanying
Notes, which are an integral part of the Financial Statements.
13
Global Minimum Volatility Fund
Financial Highlights
| Admiral Shares | ||||||
| For a Share Outstanding Throughout Each Period | Six Months Ended April 30, 2023 | Year Ended October 31, | ||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||
| Net Asset Value, Beginning of Period | $27.44 | $29.67 | $25.56 | $29.45 | $27.58 | $27.15 |
| Investment Operations | ||||||
| Net Investment Income1 | .443 | .712 | .520 | .608 | .878 | .758 |
| Net Realized and Unrealized Gain (Loss) on Investments | 1.290 | (1.910) | 4.177 | (3.155) | 2.819 | .297 |
| Total from Investment Operations | 1.733 | (1.198) | 4.697 | (2.547) | 3.697 | 1.055 |
| Distributions | ||||||
| Dividends from Net Investment Income | (.706) | (1.032) | (.587) | (.812) | (.624) | (.625) |
| Distributions from Realized Capital Gains | (.647) | — | — | (.531) | (1.203) | — |
| Total Distributions | (1.353) | (1.032) | (.587) | (1.343) | (1.827) | (.625) |
| Net Asset Value, End of Period | $27.82 | $27.44 | $29.67 | $25.56 | $29.45 | $27.58 |
| Total Return2 | 6.41% | -4.24% | 18.60% | -9.18% | 14.54% | 3.93% |
| Ratios/Supplemental Data | ||||||
| Net Assets, End of Period (Millions) | $1,841 | $1,816 | $2,449 | $2,824 | $3,483 | $2,542 |
| Ratio of Total Expenses to Average Net Assets | 0.14%3 | 0.14%3 | 0.14% | 0.14% | 0.14% | 0.15% |
| Ratio of Net Investment Income to Average Net Assets | 3.00% | 2.52% | 1.83% | 2.26% | 3.16% | 2.74% |
| Portfolio Turnover Rate | 20% | 51%4 | 24% | 58% | 46% | 24% |
| The expense ratio and net investment income ratio for the current period have been annualized. | ||||||
| 1 | Calculated based on average shares outstanding. |
| 2 | Total returns do not include account service fees that may have applied in the periods shown. Fund prospectuses provide information about any applicable account service fees. |
| 3 | The ratio of expenses to average net assets for the period net of reduction from custody fee offset arrangements were 0.14%. |
| 4 | Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares. |
See accompanying
Notes, which are an integral part of the Financial Statements.
14
Global Minimum Volatility Fund
Notes to Financial Statements
Vanguard Global Minimum
Volatility Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund offers two classes of shares: Investor Shares and Admiral Shares. Each of the share
classes has different eligibility and minimum purchase requirements, and is designed for different types of investors.
| A. | The following significant accounting policies conform to generally accepted accounting principles for U.S. investment companies. The fund consistently follows such policies in preparing its financial statements. |
1. Security Valuation:
Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official
closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which
market quotations are not readily available, or whose values have been affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued by
methods deemed by the valuation designee to represent fair value and subject to oversight by the board of trustees. These procedures include obtaining quotations from an independent pricing service, monitoring
news to identify significant market- or security-specific events, and evaluating changes in the values of foreign market proxies (for example, ADRs, futures contracts, or exchange-traded funds), between the time the
foreign markets close and the fund’s pricing time. When fair-value pricing is employed, the prices of securities used by a fund to calculate its net asset value may differ from quoted or published prices for the
same securities. Investments in Vanguard Market Liquidity Fund are valued at that fund's net asset value.
2. Foreign Currency:
Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates obtained from an independent third party as of the fund’s pricing time on the
valuation date. Realized gains (losses) and unrealized appreciation (depreciation) on investment securities include the effects of changes in exchange rates since the securities were purchased, combined with the
effects of changes in security prices. Fluctuations in the value of other assets and liabilities resulting from changes in exchange rates are recorded as unrealized foreign currency gains (losses) until the assets or
liabilities are settled in cash, at which time they are recorded as realized foreign currency gains (losses).
3. Futures Contracts:
The fund uses index futures contracts to a limited extent, with the objective of maintaining full exposure to the stock market while maintaining liquidity. The fund may purchase or sell futures contracts to achieve a
desired level of investment, whether to accommodate portfolio turnover or cash flows from capital share transactions. The primary risks associated with the use of futures contracts are imperfect correlation between
changes in market values of stocks held by the fund and the prices of futures contracts, and the possibility of an illiquid market. Counterparty risk involving futures is mitigated because a regulated clearinghouse is
the counterparty instead of the clearing broker. To further mitigate counterparty risk, the fund trades futures contracts on an exchange, monitors the financial strength of its clearing brokers and clearinghouse, and
has entered into clearing agreements with its clearing brokers. The clearinghouse imposes initial margin requirements to secure the fund’s performance and requires daily settlement of variation margin
representing changes in the market value of each contract. Any securities pledged as initial margin for open contracts are noted in the Schedule of Investments.
Futures contracts are valued
at their quoted daily settlement prices. The notional amounts of the contracts are not recorded in the Statement of Assets and Liabilities. Fluctuations in the value of
15
Global Minimum Volatility Fund
the contracts are recorded in the Statement
of Assets and Liabilities as an asset (liability) and in the Statement of Operations as unrealized appreciation (depreciation) until the contracts are closed, when they are recorded as realized gains (losses) on
futures contracts.
During the six months ended
April 30, 2023, the fund’s average investments in long and short futures contracts represented 1% and 0% of net assets, respectively, based on the average of the notional amounts at each quarter-end during the
period.
4. Forward Currency
Contracts: The fund enters into forward currency contracts to protect the value of securities and related receivables and payables against changes in future foreign exchange rates. The fund’s risks in using
these contracts include movement in the values of the foreign currencies relative to the U.S. dollar and the ability of the counterparties to fulfill their obligations under the contracts. The fund mitigates its
counterparty risk by entering into forward currency contracts only with a diverse group of prequalified counterparties, monitoring their financial strength, entering into master netting arrangements with its
counterparties, and requiring its counterparties to transfer collateral as security for their performance. In the absence of a default, the collateral pledged or received by the fund cannot be repledged, resold, or
rehypothecated. The master netting arrangements provide that, in the event of a counterparty’s default (including bankruptcy), the fund may terminate the forward currency contracts, determine the net amount owed
by either party in accordance with its master netting arrangements, and sell or retain any collateral held up to the net amount owed to the fund under the master netting arrangements. The forward currency contracts
contain provisions whereby a counterparty may terminate open contracts if the fund’s net assets decline below a certain level, triggering a payment by the fund if the fund is in a net liability position at the
time of the termination. The payment amount would be reduced by any collateral the fund has pledged. Any securities pledged as collateral for open contracts are noted in the Schedule of Investments. The value of
collateral received or pledged is compared daily to the value of the forward currency contracts exposure with each counterparty, and any difference, if in excess of a specified minimum transfer amount, is adjusted and
settled within two business days.
Forward currency contracts are
valued at their quoted daily prices obtained from an independent third party, adjusted for currency risk based on the expiration date of each contract. The notional amounts of the contracts are not recorded in the
Statement of Assets and Liabilities. Fluctuations in the value of the contracts are recorded in the Statement of Assets and Liabilities as an asset (liability) and in the Statement of Operations as unrealized
appreciation (depreciation) until the contracts are closed, when they are recorded as realized gains (losses) on forward currency contracts.
During the six months ended
April 30, 2023, the fund’s average investment in forward currency contracts represented 48% of net assets, based on the average of the notional amounts at each quarter-end during the period.
5. Federal Income Taxes:
The fund intends to continue to qualify as a regulated investment company and distribute virtually all of its taxable income. The fund’s tax returns are open to examination by the relevant tax authorities until
expiration of the applicable statute of limitations, which is generally three years after the filing of the tax return. Management has analyzed the fund’s tax positions taken for all open federal and state
income tax years, and has concluded that no provision for income tax is required in the fund’s financial statements.
16
Global Minimum Volatility Fund
6. Distributions:
Distributions to shareholders are recorded on the ex-dividend date. Distributions are determined on a tax basis at the fiscal year-end and may differ from net investment income and realized capital gains for financial
reporting purposes.
7. Securities Lending:
To earn additional income, the fund lends its securities to qualified institutional borrowers. Security loans are subject to termination by the fund at any time, and are required to be secured at all times by
collateral in an amount at least equal to the market value of securities loaned. Daily market fluctuations could cause the value of loaned securities to be more or less than the value of the collateral received. When
this occurs, the collateral is adjusted and settled before the opening of the market on the next business day. The fund further mitigates its counterparty risk by entering into securities lending transactions only
with a diverse group of prequalified counterparties, monitoring their financial strength, and entering into master securities lending agreements with its counterparties. The master securities lending agreements
provide that, in the event of a counterparty’s default (including bankruptcy), the fund may terminate any loans with that borrower, determine the net amount owed, and sell or retain the collateral up to the net
amount owed to the fund; however, such actions may be subject to legal proceedings. While collateral mitigates counterparty risk, in the event of a default, the fund may experience delays and costs in recovering the
securities loaned. The fund invests cash collateral received in Vanguard Market Liquidity Fund, and records a liability in the Statement of Assets and Liabilities for the return of the collateral, during the period
the securities are on loan. Collateral investments in Vanguard Market Liquidity Fund are subject to market appreciation or depreciation. Securities lending income represents fees charged to borrowers plus income
earned on invested cash collateral, less expenses associated with the loan. During the term of the loan, the fund is entitled to all distributions made on or in respect of the loaned securities.
8. Credit Facilities and
Interfund Lending Program: The fund and certain other funds managed by The Vanguard Group ("Vanguard") participate in a $4.3 billion committed credit facility provided by a syndicate of lenders pursuant to a credit
agreement and an uncommitted credit facility provided by Vanguard. Both facilities may be renewed annually. Each fund is individually liable for its borrowings, if any, under the credit facilities. Borrowings may be
utilized for temporary or emergency purposes and are subject to the fund’s regulatory and contractual borrowing restrictions. With respect to the committed credit facility, the participating funds are charged
administrative fees and an annual commitment fee of 0.10% of the undrawn committed amount of the facility, which are allocated to the funds based on a method approved by the fund’s board of trustees and included
in Management and Administrative expenses on the fund’s Statement of Operations. Any borrowings under either facility bear interest at an agreed-upon spread plus the higher of the federal funds effective rate,
the overnight bank funding rate, or the Daily Simple Secured Overnight Financing Rate inclusive of an additional agreed-upon spread. However, borrowings under the uncommitted credit facility may bear interest based
upon an alternate rate agreed to by the fund and Vanguard.
In accordance with an
exemptive order (the “Order”) from the SEC, the fund may participate in a joint lending and borrowing program that allows registered open-end Vanguard funds to borrow money from and lend money to each
other for temporary or emergency purposes (the “Interfund Lending Program”), subject to compliance with the terms and conditions of the Order, and to the extent permitted by the fund’s investment
objective and investment policies. Interfund loans and borrowings normally extend overnight but can have a maximum duration of seven days. Loans may be called on one business day’s notice. The interest rate to
be charged is governed by the conditions of the Order and internal procedures adopted by the board of trustees. The board of trustees is responsible for overseeing the Interfund Lending Program.
17
Global Minimum Volatility Fund
For the six months ended April
30, 2023, the fund did not utilize the credit facilities or the Interfund Lending Program.
9. Other: Dividend
income is recorded on the ex-dividend date. Non-cash dividends included in income, if any, are recorded at the fair value of the securities received. Interest income includes income distributions received from
Vanguard Market Liquidity Fund and is accrued daily. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment
securities are those of the specific securities sold.
Taxes on foreign dividends and
capital gains have been provided for in accordance with the fund's understanding of the applicable countries' tax rules and rates. Deferred foreign capital gains tax, if any, is accrued daily based upon net unrealized
gains. The fund has filed tax reclaims for previously withheld taxes on dividends earned in certain European Union countries. These filings are subject to various administrative and judicial proceedings within
these countries. Amounts related to these reclaims are recorded when there are no significant uncertainties as to the ultimate resolution of proceedings, the likelihood of receipt of these reclaims, and the potential
timing of payment. Such tax reclaims and related professional fees, if any, are included in dividend income and other expenses, respectively.
Each class of shares has equal
rights as to assets and earnings, except that each class separately bears certain class-specific expenses related to maintenance of shareholder accounts (included in Management and Administrative expenses) and
shareholder reporting. Marketing and distribution expenses are allocated to each class of shares based on a method approved by the board of trustees. Income, other non-class-specific expenses, and gains and losses on
investments are allocated to each class of shares based on its relative net assets.
| B. | In accordance with the terms of a Funds' Service Agreement (the “FSA”) between Vanguard and the fund, Vanguard furnishes to the fund investment advisory, corporate management, administrative, marketing, and distribution services at Vanguard’s cost of operations (as defined by the FSA). These costs of operations are allocated to the fund based on methods and guidelines approved by the board of trustees and are generally settled twice a month. |
Upon the request of Vanguard,
the fund may invest up to 0.40% of its net assets as capital in Vanguard. At April 30, 2023, the fund had contributed to Vanguard capital in the amount of $73,000, representing less than 0.01% of the fund’s net
assets and 0.03% of Vanguard’s capital received pursuant to the FSA. The fund’s trustees and officers are also directors and employees, respectively, of Vanguard.
| C. | The fund’s custodian bank has agreed to reduce its fees when the fund maintains cash on deposit in the non-interest-bearing custody account. For the six months ended April 30, 2023, custodian fee offset arrangements reduced the fund’s expenses by $8,000 (an annual rate of less than 0.01% of average net assets). |
| D. | Various inputs may be used to determine the value of the fund’s investments and derivatives. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities. |
Level 1—Quoted prices in active markets for identical securities.
Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).
18
Global Minimum Volatility Fund
Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments). Any investments and derivatives valued with significant
unobservable inputs are noted on the Schedule of Investments.
The following table summarizes
the market value of the fund’s investments and derivatives as of April 30, 2023, based on the inputs used to value them:
| Level 1 ($000) | Level 2 ($000) | Level 3 ($000) | Total ($000) | |
| Investments | ||||
| Assets | ||||
| Common Stocks—North and South America | 1,225,878 | — | — | 1,225,878 |
| Common Stocks—Other | 112,576 | 707,662 | — | 820,238 |
| Temporary Cash Investments | 58,338 | — | — | 58,338 |
| Total | 1,396,792 | 707,662 | — | 2,104,454 |
| Derivative Financial Instruments | ||||
| Assets | ||||
| Futures Contracts1 | 176 | — | — | 176 |
| Forward Currency Contracts | — | 9,568 | — | 9,568 |
| Total | 176 | 9,568 | — | 9,744 |
| Liabilities | ||||
| Forward Currency Contracts | — | 1,381 | — | 1,381 |
| 1 | Includes cumulative appreciation (depreciation) on futures contracts and centrally cleared swaps, if any, as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities. |
19
Global Minimum Volatility Fund
E.At April 30, 2023, the fair values of derivatives were reflected in the Statement of Assets and Liabilities as follows:
| Statement of Assets and Liabilities | Equity Contracts ($000) | Foreign Exchange Contracts ($000) | Total ($000) |
| Unrealized Appreciation—Futures Contracts1 | 176 | — | 176 |
| Unrealized Appreciation—Forward Currency Contracts | — | 9,568 | 9,568 |
| Total Assets | 176 | 9,568 | 9,744 |
| Unrealized Depreciation—Forward Currency Contracts | — | 1,381 | 1,381 |
| Total Liabilities | — | 1,381 | 1,381 |
| 1 | Includes cumulative appreciation (depreciation) on futures contracts and centrally cleared swaps, if any, as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities. |
Realized net gain (loss) and
the change in unrealized appreciation (depreciation) on derivatives for the six months ended April 30, 2023, were:
| Realized Net Gain (Loss) on Derivatives | Equity Contracts ($000) | Foreign Exchange Contracts ($000) | Total ($000) |
| Futures Contracts | 780 | — | 780 |
| Forward Currency Contracts | — | (42,752) | (42,752) |
| Realized Net Gain (Loss) on Derivatives | 780 | (42,752) | (41,972) |
| Change in Unrealized Appreciation (Depreciation) on Derivatives | |||
| Futures Contracts | (318) | — | (318) |
| Forward Currency Contracts | — | 544 | 544 |
| Change in Unrealized Appreciation (Depreciation) on Derivatives | (318) | 544 | 226 |
| F. | As of April 30, 2023, gross unrealized appreciation and depreciation for investments and derivatives based on cost for U.S. federal income tax purposes were as follows: |
| Amount ($000) | |
| Tax Cost | 1,878,850 |
| Gross Unrealized Appreciation | 317,578 |
| Gross Unrealized Depreciation | (83,611) |
| Net Unrealized Appreciation (Depreciation) | 233,967 |
| G. | During the six months ended April 30, 2023, the fund purchased $418,698,000 of investment securities and sold $548,849,000 of investment securities, other than temporary cash investments. |
The fund purchased securities
from and sold securities to other Vanguard funds or accounts managed by Vanguard or its affiliates, in accordance with procedures adopted by the board of trustees in compliance with Rule 17a-7 of the Investment
Company Act of 1940. For the six
20
Global Minimum Volatility Fund
months ended April 30, 2023, such purchases
were $973,000 and sales were $4,536,000, resulting in net realized gain of $82,000; these amounts, other than temporary cash investments, are included in the purchases and sales of investment securities noted
above.
| H. | Capital share transactions for each class of shares were: |
| Six Months Ended April 30, 2023 | Year Ended October 31, 2022 | ||||
| Amount ($000) | Shares (000) | Amount ($000) | Shares (000) | ||
| Investor Shares | |||||
| Issued | 13,482 | 980 | 38,697 | 2,740 | |
| Issued in Lieu of Cash Distributions | 11,655 | 854 | 9,216 | 633 | |
| Redeemed | (56,783) | (4,165) | (66,825) | (4,728) | |
| Net Increase (Decrease)—Investor Shares | (31,646) | (2,331) | (18,912) | (1,355) | |
| Admiral Shares | |||||
| Issued | 70,857 | 2,590 | 190,619 | 6,722 | |
| Issued in Lieu of Cash Distributions | 79,820 | 2,926 | 73,352 | 2,518 | |
| Redeemed | (150,220) | (5,486) | (712,386) | (25,628) | |
| Net Increase (Decrease)—Admiral Shares | 457 | 30 | (448,415) | (16,388) | |
| I. | Significant market disruptions, such as those caused by pandemics (e.g., COVID-19 pandemic), natural or environmental disasters, war (e.g., Russia’s invasion of Ukraine), acts of terrorism, or other events, can adversely affect local and global markets and normal market operations. Any such disruptions could have an adverse impact on the value of the fund’s investments and fund performance. |
To the extent the fund’s
investment portfolio reflects concentration in a particular market, industry, sector, country or asset class, the fund may be adversely affected by the performance of these concentrations and may be subject to
increased price volatility and other risks.
The use of derivatives may
expose the fund to various risks. Derivatives can be highly volatile, and any initial investment is generally small relative to the notional amount so that transactions may be leveraged in terms of market exposure. A
relatively small market movement may have a potentially larger impact on derivatives than on standard securities. Leveraged derivatives positions can, therefore, increase volatility. Additional information regarding
the fund's use of derivative(s) and the specific risks associated is described under significant accounting policies.
| J. | Management has determined that no events or transactions occurred subsequent to April 30, 2023, that would require recognition or disclosure in these financial statements. |
21
Trustees Approve Advisory Arrangement
The board of trustees of
Vanguard Global Minimum Volatility Fund has renewed the fund’s investment advisory arrangement with The Vanguard Group, Inc. (Vanguard), through its Quantitative Equity Group. The board determined that
continuing the fund’s internalized management structure was in the best interests of the fund and its shareholders.
The board based its decision
upon an evaluation of the advisor’s investment staff, portfolio management process, and performance. This evaluation included information provided to the board by Vanguard’s Portfolio Review Department,
which is responsible for fund and advisor oversight and product management. The Portfolio Review Department met regularly with the advisor and made presentations to the board during the fiscal year that directed the
board’s focus to relevant information and topics.
The board, or an investment
committee made up of board members, also received information throughout the year during advisor presentations. For each advisor presentation, the board was provided with letters and reports that included information
about, among other things, the advisory firm and the advisor’s assessment of the investment environment, portfolio performance, and portfolio characteristics.
In addition, the board
received periodic reports throughout the year, which included information about the fund’s performance relative to its peers and benchmark, as applicable, and updates, as needed, on the Portfolio Review
Department’s ongoing assessment of the advisor.
Prior to their meeting, the
trustees were provided with a memo and materials that summarized the information they received over the course of the year. They also considered the factors discussed below, among others. However, no single factor
determined whether the board approved the arrangement. Rather, it was the totality of the circumstances that drove the board’s decision.
Nature, extent, and quality of
services
The board reviewed the quality of the
fund’s investment management services over both the short and long term and took into account the organizational depth and stability of the advisor. The board considered that Vanguard has been managing
investments for more than four decades. The Quantitative Equity Group adheres to a sound, disciplined investment management process; the team has considerable experience, stability, and depth.
The board concluded that
Vanguard’s experience, stability, depth, and performance, among other factors, warranted continuation of the advisory arrangement.
Investment performance
The board considered the short- and long-term
performance of the fund, including any periods of outperformance or underperformance compared with a relevant benchmark index and peer group. The board concluded that the performance was such that the advisory
arrangement should continue.
22
Cost
The board concluded that the fund’s
expense ratio was below the average expense ratio charged by funds in its peer group and that the fund’s advisory expenses were also below the peer-group average.
The board does not conduct a
profitability analysis of Vanguard because of Vanguard’s unique structure. Unlike most other mutual fund management companies, Vanguard is owned by the funds it oversees.
The benefit of economies of
scale
The board concluded that the fund’s
arrangement with Vanguard ensures that the fund will realize economies of scale as it grows, with the cost to shareholders declining as fund assets increase.
The board will consider
whether to renew the advisory arrangement again after a one-year period.
23
Liquidity Risk Management
Vanguard funds (except for the
money market funds) have adopted and implemented a written liquidity risk management program (the “Program”) as required by Rule 22e-4 under the Investment Company Act of 1940. Rule 22e-4 requires that
each fund adopt a program that is reasonably designed to assess and manage the fund’s liquidity risk, which is the risk that the fund could not meet redemption requests without significant dilution of remaining
investors’ interests in the fund.
Assessment and management of a
fund’s liquidity risk under the Program take into consideration certain factors, such as the fund’s investment strategy and the liquidity of its portfolio investments during normal and reasonably
foreseeable stressed conditions, its short- and long-term cash-flow projections during both normal and reasonably foreseeable stressed conditions, and its cash and cash-equivalent holdings and access to other funding
sources. As required by the rule, the Program includes policies and procedures for classification of fund portfolio holdings in four liquidity categories, maintaining certain levels of highly liquid investments, and
limiting holdings of illiquid investments.
The board of trustees of
Vanguard Whitehall Funds approved the appointment of liquidity risk management program administrators responsible for administering Vanguard Global Minimum Volatility Fund's Program and for carrying out the specific
responsibilities set forth in the Program, including reporting to the board on at least an annual basis regarding the Program’s operation, its adequacy, and the effectiveness of its implementation for the past
year (the “Program Administrator Report”). The board has reviewed the Program Administrator Report covering the period from January 1, 2022, through December 31, 2022 (the “Review Period”). The
Program Administrator Report stated that during the Review Period the Program operated and was implemented effectively to manage the fund’s liquidity risk.
24
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Connect with
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Semiannual Report | April 30, 2023
Vanguard
International Dividend Index Funds
| Vanguard International Dividend Appreciation Index Fund |
| Vanguard International High Dividend Yield Index Fund |
Contents
About Your Fund’s Expenses | 1 |
International Dividend Appreciation Index Fund | 3 |
International High Dividend Yield Index Fund | 22 |
Trustees Approve Advisory Arrangements | 55 |
Liquidity Risk Management | 57 |
About Your Fund’s Expenses
As a shareholder of the fund,
you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross
income, directly reduce the investment return of the fund.
A fund’s expenses are
expressed as a percentage of its average net assets. This figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your fund and
to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.
The accompanying table
illustrates your fund’s costs in two ways:
| • | Based on actual fund return. This section helps you to estimate the actual expenses that you paid over the period. The ”Ending Account Value“ shown is derived from the fund‘s actual return, and the third column shows the dollar amount that would have been paid by an investor who started with $1,000 in the fund. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period. |
To do so, simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your fund under the heading ”Expenses Paid During Period.“
| • | Based on hypothetical 5% yearly return. This section is intended to help you compare your fund‘s costs with those of other mutual funds. It assumes that the fund had a yearly return of 5% before expenses, but that the expense ratio is unchanged. In this case—because the return used is not the fund’s actual return—the results do not apply to your investment. The example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to calculate expenses based on a 5% return. You can assess your fund’s costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds. |
Note that the expenses shown
in the table are meant to highlight and help you compare ongoing costs only and do not reflect transaction costs incurred by the fund for buying and selling securities. Further, the expenses do not include any purchase, redemption, or
account service fees described in the fund prospectus. If such fees were applied to your account, your costs would be higher. Your fund does not carry a “sales load.”
The calculations assume no
shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.
You can find more information
about the fund’s expenses, including annual expense ratios, in the Financial Statements section of this report. For additional information on operating expenses and other shareholder costs, please refer to your
fund’s current prospectus.
1
| Six Months Ended April 30, 2023 | |||
| Beginning Account Value 10/31/2022 | Ending Account Value 4/30/2023 | Expenses Paid During Period | |
| Based on Actual Fund Return | |||
| International Dividend Appreciation Index Fund | |||
| ETF Shares | $1,000.00 | $1,194.40 | $0.82 |
| Admiral™ Shares | 1,000.00 | 1,193.80 | 0.87 |
| International High Dividend Yield Index Fund | |||
| ETF Shares | $1,000.00 | $1,188.60 | $1.19 |
| Admiral Shares | 1,000.00 | 1,188.20 | 1.19 |
| Based on Hypothetical 5% Yearly Return | |||
| International Dividend Appreciation Index Fund | |||
| ETF Shares | $1,000.00 | $1,024.05 | $0.75 |
| Admiral Shares | 1,000.00 | 1,024.00 | 0.80 |
| International High Dividend Yield Index Fund | |||
| ETF Shares | $1,000.00 | $1,023.70 | $1.10 |
| Admiral Shares | 1,000.00 | 1,023.70 | 1.10 |
The calculations are
based on expenses incurred in the most recent six-month period. The funds' annualized six-month expense ratios for that period are: for the International Dividend Appreciation Index Fund, 0.15% for ETF Shares and
0.16% for Admiral Shares; and for the International High Dividend Yield Index Fund, 0.22% for ETF Shares and 0.22% for Admiral Shares. The dollar amounts shown as “Expenses Paid" are equal to the annualized
expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by the number of days in the most recent 12-month period
(181/365).
2
International Dividend Appreciation Index Fund
Fund Allocation
As of April 30, 2023
| Switzerland | 17.5% |
| Japan | 17.2 |
| Canada | 15.6 |
| United Kingdom | 10.2 |
| India | 6.4 |
| Germany | 6.0 |
| Denmark | 5.8 |
| France | 5.6 |
| Australia | 4.0 |
| Hong Kong | 3.7 |
| Sweden | 2.0 |
| Netherlands | 1.1 |
| Other | 4.9 |
The table reflects the fund’s
investments, except for short-term investments and derivatives.
The fund may invest in
derivatives (such as futures and swap contracts) for various reasons, including, but not limited to, attempting to remain fully invested and tracking its target index as closely as possible.
3
International Dividend Appreciation Index
Fund
Financial Statements (unaudited)
Schedule of Investments
As of April 30, 2023
The fund files its complete
schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports
are available on the SEC’s website at www.sec.gov.
4
International Dividend Appreciation Index
Fund
5
International Dividend Appreciation Index
Fund
6
International Dividend Appreciation Index
Fund
7
International Dividend Appreciation Index
Fund
| Shares | Market Value• ($000) | ||
| Temporary Cash Investments (0.6%) | |||
| Money Market Fund (0.6%) | |||
| 2,3 | Vanguard Market Liquidity Fund, 4.853% (Cost $30,102) | 301,053 | 30,102 |
| Total Investments (99.9%) (Cost $4,806,526) | 5,164,889 | ||
| Other Assets and Liabilities—Net (0.1%) | 4,073 | ||
| Net Assets (100%) | 5,168,962 | ||
| Cost is in $000. | |||
| • | See Note A in Notes to Financial Statements. |
| * | Non-income-producing security. |
| 1 | Includes partial security positions on loan to broker-dealers. The total value of securities on loan is $19,542,000. |
| 2 | Affiliated money market fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard. Rate shown is the 7-day yield. |
| 3 | Collateral of $20,489,000 was received for securities on loan. |
| ADR—American Depositary Receipt. | |
| Ptg. Ctf.—Participating Certificates. |
Derivative Financial
Instruments Outstanding as of Period End
| Futures Contracts | ||||
| ($000) | ||||
| Expiration | Number of Long (Short) Contracts | Notional Amount | Value and Unrealized Appreciation (Depreciation) | |
| Long Futures Contracts | ||||
| E-mini S&P 500 Index | June 2023 | 1 | 209 | 9 |
| Euro Stoxx 50 Index | June 2023 | 332 | 15,804 | 812 |
| MSCI EAFE Index | June 2023 | 4 | 430 | (1) |
| MSCI Emerging Markets Index | June 2023 | 127 | 6,250 | 121 |
| Topix Index | June 2023 | 70 | 10,574 | 512 |
| 1,453 | ||||
8
International Dividend Appreciation Index
Fund
| Forward Currency Contracts | |||||||
| Contract Settlement Date | Contract Amount (000) | Unrealized Appreciation ($000) | Unrealized Depreciation ($000) | ||||
| Counterparty | Receive | Deliver | |||||
| Bank of America, N.A. | 6/21/23 | CHF | 1,411 | USD | 1,581 | 7 | — |
| Bank of America, N.A. | 6/21/23 | EUR | 13,087 | USD | 14,148 | 315 | — |
| Bank of America, N.A. | 6/21/23 | GBP | 138 | USD | 166 | 7 | — |
| Barclays Bank plc | 6/21/23 | INR | 20,992 | USD | 254 | 2 | — |
| Bank of America, N.A. | 6/21/23 | JPY | 1,025,641 | USD | 7,643 | — | (55) |
| State Street Bank & Trust Co. | 6/21/23 | USD | 14,611 | CHF | 13,540 | — | (629) |
| State Street Bank & Trust Co. | 6/21/23 | USD | 5,239 | JPY | 687,461 | 153 | — |
| 484 | (684) | ||||||
| CHF—Swiss franc. |
| EUR—euro. |
| GBP—British pound. |
| INR—Indian rupee. |
| JPY—Japanese yen. |
| USD—U.S. dollar. |
At April 30, 2023, the
counterparties had deposited in segregated accounts cash of $520,000 in connection with open forward currency contracts.
See accompanying
Notes, which are an integral part of the Financial Statements.
9
International Dividend Appreciation Index
Fund
Statement of Assets and Liabilities
As of April 30, 2023
| ($000s, except shares, footnotes, and per-share amounts) | Amount |
| Assets | |
| Investments in Securities, at Value1 | |
| Unaffiliated Issuers (Cost $4,776,424) | 5,134,787 |
| Affiliated Issuers (Cost $30,102) | 30,102 |
| Total Investments in Securities | 5,164,889 |
| Investment in Vanguard | 176 |
| Cash Collateral Pledged—Futures Contracts | 1,915 |
| Cash Collateral Pledged—Forward Currency Contracts | 520 |
| Foreign Currency, at Value (Cost $6,235) | 5,916 |
| Receivables for Investment Securities Sold | 6,663 |
| Receivables for Accrued Income | 27,636 |
| Receivables for Capital Shares Issued | 2,210 |
| Variation Margin Receivable—Futures Contracts | 273 |
| Unrealized Appreciation—Forward Currency Contracts | 484 |
| Total Assets | 5,210,682 |
| Liabilities | |
| Due to Custodian | 5,053 |
| Payables for Investment Securities Purchased | 13,882 |
| Collateral for Securities on Loan | 20,489 |
| Payables for Capital Shares Redeemed | 137 |
| Payables to Vanguard | 401 |
| Unrealized Depreciation—Forward Currency Contracts | 684 |
| Deferred Foreign Capital Gains Taxes | 1,074 |
| Total Liabilities | 41,720 |
| Net Assets | 5,168,962 |
| 1 Includes $19,542,000 of securities on loan. | |
| At April 30, 2023, net assets consisted of: | |
| Paid-in Capital | 4,912,906 |
| Total Distributable Earnings (Loss) | 256,056 |
| Net Assets | 5,168,962 |
| ETF Shares—Net Assets | |
| Applicable to 64,078,917 outstanding $.001 par value shares of beneficial interest (unlimited authorization) | 4,854,083 |
| Net Asset Value Per Share—ETF Shares | $75.75 |
| Admiral Shares—Net Assets | |
| Applicable to 8,538,656 outstanding $.001 par value shares of beneficial interest (unlimited authorization) | 314,879 |
| Net Asset Value Per Share—Admiral Shares | $36.88 |
See accompanying
Notes, which are an integral part of the Financial Statements.
10
International Dividend Appreciation Index
Fund
Statement of Operations
| Six Months Ended April 30, 2023 | |
| ($000) | |
| Investment Income | |
| Income | |
| Dividends1 | 47,037 |
| Non-Cash Dividends | 9,282 |
| Interest2 | 220 |
| Securities Lending—Net | 143 |
| Total Income | 56,682 |
| Expenses | |
| The Vanguard Group—Note B | |
| Investment Advisory Services | 166 |
| Management and Administrative—ETF Shares | 2,825 |
| Management and Administrative—Admiral Shares | 210 |
| Marketing and Distribution—ETF Shares | 98 |
| Marketing and Distribution—Admiral Shares | 7 |
| Custodian Fees | 85 |
| Shareholders’ Reports—ETF Shares | 87 |
| Shareholders’ Reports—Admiral Shares | 3 |
| Trustees’ Fees and Expenses | 1 |
| Other Expenses | 7 |
| Total Expenses | 3,489 |
| Expenses Paid Indirectly | (48) |
| Net Expenses | 3,441 |
| Net Investment Income | 53,241 |
| Realized Net Gain (Loss) | |
| Investment Securities Sold2 | (97,160) |
| Futures Contracts | 723 |
| Forward Currency Contracts | (414) |
| Foreign Currencies | 1,598 |
| Realized Net Gain (Loss) | (95,253) |
| Change in Unrealized Appreciation (Depreciation) | |
| Investment Securities2,3 | 808,090 |
| Futures Contracts | 1,578 |
| Forward Currency Contracts | (189) |
| Foreign Currencies | 1,010 |
| Change in Unrealized Appreciation (Depreciation) | 810,489 |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 768,477 |
| 1 | Dividends are net of foreign withholding taxes of $6,523,000. |
| 2 | Interest income, realized net gain (loss), capital gain distributions received, and change in unrealized appreciation (depreciation) from an affiliated company of the fund were $191,000, $4,000, less than $1,000, and less than $1,000, respectively. Purchases and sales are for temporary cash investment purposes. |
| 3 | The change in unrealized appreciation (depreciation) is net of the change in deferred foreign capital gains taxes of ($1,448,000). |
See accompanying Notes,
which are an integral part of the Financial Statements.
11
International Dividend Appreciation Index
Fund
Statement of Changes in Net Assets
| Six Months Ended April 30, 2023 | Year Ended October 31, 2022 | ||
| ($000) | ($000) | ||
| Increase (Decrease) in Net Assets | |||
| Operations | |||
| Net Investment Income | 53,241 | 77,130 | |
| Realized Net Gain (Loss) | (95,253) | (21,169) | |
| Change in Unrealized Appreciation (Depreciation) | 810,489 | (1,130,453) | |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 768,477 | (1,074,492) | |
| Distributions | |||
| ETF Shares | (45,676) | (304,771) | |
| Admiral Shares | (3,070) | (23,591) | |
| Total Distributions | (48,746) | (328,362) | |
| Capital Share Transactions | |||
| ETF Shares | 673,001 | 662,695 | |
| Admiral Shares | 18,143 | 25,028 | |
| Net Increase (Decrease) from Capital Share Transactions | 691,144 | 687,723 | |
| Total Increase (Decrease) | 1,410,875 | (715,131) | |
| Net Assets | |||
| Beginning of Period | 3,758,087 | 4,473,218 | |
| End of Period | 5,168,962 | 3,758,087 | |
See accompanying
Notes, which are an integral part of the Financial Statements.
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International Dividend Appreciation Index
Fund
Financial Highlights
| ETF Shares | ||||||
| For a Share Outstanding Throughout Each Period | Six Months Ended April 30, 2023 | Year Ended October 31, | ||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||
| Net Asset Value, Beginning of Period | $64.12 | $89.86 | $69.97 | $68.72 | $58.65 | $64.25 |
| Investment Operations | ||||||
| Net Investment Income1 | .831 | 1.401 | 1.094 | .958 | 1.4522 | 1.196 |
| Net Realized and Unrealized Gain (Loss) on Investments3 | 11.561 | (20.753) | 19.776 | 1.551 | 9.578 | (5.623) |
| Total from Investment Operations | 12.392 | (19.352) | 20.870 | 2.509 | 11.030 | (4.427) |
| Distributions | ||||||
| Dividends from Net Investment Income | (.762) | (1.206) | (.980) | (1.259) | (.960) | (1.173) |
| Distributions from Realized Capital Gains | — | (5.182) | — | — | — | — |
| Total Distributions | (.762) | (6.388) | (.980) | (1.259) | (.960) | (1.173) |
| Net Asset Value, End of Period | $75.75 | $64.12 | $89.86 | $69.97 | $68.72 | $58.65 |
| Total Return | 19.44% | -22.90% | 29.93% | 3.73% | 18.96% | -7.04% |
| Ratios/Supplemental Data | ||||||
| Net Assets, End of Period (Millions) | $4,854 | $3,508 | $4,150 | $2,456 | $1,305 | $861 |
| Ratio of Total Expenses to Average Net Assets | 0.15%4 | 0.15%4 | 0.15% | 0.20% | 0.20% | 0.25% |
| Ratio of Net Investment Income to Average Net Assets | 2.33% | 1.87% | 1.28% | 1.40% | 2.24%2 | 1.83% |
| Portfolio Turnover Rate5 | 13% | 22% | 65% | 17% | 42% | 36% |
| The expense ratio and net investment income ratio for the current period have been annualized. | ||||||
| 1 | Calculated based on average shares outstanding. |
| 2 | Net investment income per share and the ratio of net investment income to average net assets include $0.388 and 0.65%, respectively, resulting from a special dividend from Naspers Ltd. in September 2019. |
| 3 | Includes increases from purchase and redemption fees of $0.00, $0.00, $0.00, $0.01, $0.02, and $0.02. |
| 4 | The ratio of expenses to average net assets for the period net of reduction from custody fee offset arrangements were 0.15%. |
| 5 | Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares, including ETF Creation Units. |
See accompanying
Notes, which are an integral part of the Financial Statements.
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International Dividend Appreciation Index
Fund
Financial Highlights
| Admiral Shares | ||||||
| For a Share Outstanding Throughout Each Period | Six Months Ended April 30, 2023 | Year Ended October 31, | ||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||
| Net Asset Value, Beginning of Period | $31.23 | $43.72 | $34.03 | $33.42 | $28.52 | $31.24 |
| Investment Operations | ||||||
| Net Investment Income1 | .396 | .675 | .518 | .453 | .6862 | .576 |
| Net Realized and Unrealized Gain (Loss) on Investments3 | 5.623 | (10.061) | 9.645 | .765 | 4.679 | (2.727) |
| Total from Investment Operations | 6.019 | (9.386) | 10.163 | 1.218 | 5.365 | (2.151) |
| Distributions | ||||||
| Dividends from Net Investment Income | (.369) | (.583) | (.473) | (.608) | (.465) | (.569) |
| Distributions from Realized Capital Gains | — | (2.521) | — | — | — | — |
| Total Distributions | (.369) | (3.104) | (.473) | (.608) | (.465) | (.569) |
| Net Asset Value, End of Period | $36.88 | $31.23 | $43.72 | $34.03 | $33.42 | $28.52 |
| Total Return4 | 19.38% | -22.85% | 29.96% | 3.72% | 18.96% | -7.03% |
| Ratios/Supplemental Data | ||||||
| Net Assets, End of Period (Millions) | $315 | $250 | $323 | $220 | $218 | $175 |
| Ratio of Total Expenses to Average Net Assets | 0.16%5 | 0.16%5 | 0.16% | 0.20% | 0.20% | 0.25% |
| Ratio of Net Investment Income to Average Net Assets | 2.28% | 1.85% | 1.25% | 1.36% | 2.24%2 | 1.83% |
| Portfolio Turnover Rate6 | 13% | 22% | 65% | 17% | 42% | 36% |
| The expense ratio and net investment income ratio for the current period have been annualized. | ||||||
| 1 | Calculated based on average shares outstanding. |
| 2 | Net investment income per share and the ratio of net investment income to average net assets include $0.188 and 0.65%, respectively, resulting from a special dividend from Naspers Ltd. in September 2019. |
| 3 | Includes increases from purchase and redemption fees of $0.00, $0.00, $0.00, $0.00, $0.00, and $0.01. |
| 4 | Total returns do not include transaction or account service fees that may have applied in the periods shown. Fund prospectuses provide information about any applicable transaction and account service fees. |
| 5 | The ratio of expenses to average net assets for the period net of reduction from custody fee offset arrangements were 0.16%. |
| 6 | Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares, including ETF Creation Units. |
See accompanying
Notes, which are an integral part of the Financial Statements.
14
International Dividend Appreciation Index
Fund
Notes to Financial Statements
Vanguard International
Dividend Appreciation Index Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund offers two classes of shares: ETF Shares and Admiral Shares. Each of
the share classes has different eligibility and minimum purchase requirements, and is designed for different types of investors. ETF Shares are listed for trading on Nasdaq; they can be purchased and sold through a
broker.
| A. | The following significant accounting policies conform to generally accepted accounting principles for U.S. investment companies. The fund consistently follows such policies in preparing its financial statements. |
1. Security Valuation:
Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official
closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which
market quotations are not readily available, or whose values have been affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued by
methods deemed by the valuation designee to represent fair value and subject to oversight by the board of trustees. These procedures include obtaining quotations from an independent pricing service, monitoring
news to identify significant market- or security-specific events, and evaluating changes in the values of foreign market proxies (for example, ADRs, futures contracts, or exchange-traded funds), between the time the
foreign markets close and the fund’s pricing time. When fair-value pricing is employed, the prices of securities used by a fund to calculate its net asset value may differ from quoted or published prices for the
same securities. Investments in Vanguard Market Liquidity Fund are valued at that fund's net asset value.
2. Foreign Currency:
Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates obtained from an independent third party as of the fund’s pricing time on the
valuation date. Realized gains (losses) and unrealized appreciation (depreciation) on investment securities include the effects of changes in exchange rates since the securities were purchased, combined with the
effects of changes in security prices. Fluctuations in the value of other assets and liabilities resulting from changes in exchange rates are recorded as unrealized foreign currency gains (losses) until the assets or
liabilities are settled in cash, at which time they are recorded as realized foreign currency gains (losses).
3. Futures Contracts:
The fund uses index futures contracts to a limited extent, with the objectives of maintaining full exposure to the stock market, maintaining liquidity, and minimizing transaction costs. The fund may purchase futures
contracts to immediately invest incoming cash in the market, or sell futures in response to cash outflows, thereby simulating a fully invested position in the underlying index while maintaining a cash balance for
liquidity. The primary risks associated with the use of futures contracts are imperfect correlation between changes in market values of stocks held by the fund and the prices of futures contracts, and the possibility
of an illiquid market. Counterparty risk involving futures is mitigated because a regulated clearinghouse is the counterparty instead of the clearing broker. To further mitigate counterparty risk, the fund trades
futures contracts on an exchange, monitors the financial strength of its clearing brokers and clearinghouse, and has entered into clearing agreements with its clearing brokers. The clearinghouse imposes initial margin
requirements to secure the fund’s performance and requires daily settlement of variation margin representing changes in the market value of each contract. Any securities pledged as initial margin for open
contracts are noted in the Schedule of Investments.
15
International Dividend Appreciation Index
Fund
Futures contracts are valued
at their quoted daily settlement prices. The notional amounts of the contracts are not recorded in the Statement of Assets and Liabilities. Fluctuations in the value of the contracts are recorded in the Statement of
Assets and Liabilities as an asset (liability) and in the Statement of Operations as unrealized appreciation (depreciation) until the contracts are closed, when they are recorded as realized gains (losses) on futures
contracts.
During the six months ended
April 30, 2023, the fund’s average investments in long and short futures contracts represented 1% and 0% of net assets, respectively, based on the average of the notional amounts at each quarter-end during the
period.
4. Forward Currency
Contracts: The fund enters into forward currency contracts to protect the value of securities and related receivables and payables against changes in future foreign exchange rates. The fund’s risks in using
these contracts include movement in the values of the foreign currencies relative to the U.S. dollar and the ability of the counterparties to fulfill their obligations under the contracts. The fund mitigates its
counterparty risk by entering into forward currency contracts only with a diverse group of prequalified counterparties, monitoring their financial strength, entering into master netting arrangements with its
counterparties, and requiring its counterparties to transfer collateral as security for their performance. In the absence of a default, the collateral pledged or received by the fund cannot be repledged, resold, or
rehypothecated. The master netting arrangements provide that, in the event of a counterparty’s default (including bankruptcy), the fund may terminate the forward currency contracts, determine the net amount owed
by either party in accordance with its master netting arrangements, and sell or retain any collateral held up to the net amount owed to the fund under the master netting arrangements. The forward currency contracts
contain provisions whereby a counterparty may terminate open contracts if the fund’s net assets decline below a certain level, triggering a payment by the fund if the fund is in a net liability position at the
time of the termination. The payment amount would be reduced by any collateral the fund has pledged. Any securities pledged as collateral for open contracts are noted in the Schedule of Investments. The value of
collateral received or pledged is compared daily to the value of the forward currency contracts exposure with each counterparty, and any difference, if in excess of a specified minimum transfer amount, is adjusted and
settled within two business days.
Forward currency contracts are
valued at their quoted daily prices obtained from an independent third party, adjusted for currency risk based on the expiration date of each contract. The notional amounts of the contracts are not recorded in the
Statement of Assets and Liabilities. Fluctuations in the value of the contracts are recorded in the Statement of Assets and Liabilities as an asset (liability) and in the Statement of Operations as unrealized
appreciation (depreciation) until the contracts are closed, when they are recorded as realized gains (losses) on forward currency contracts.
During the six months ended
April 30, 2023, the fund’s average investment in forward currency contracts represented 1% of net assets, based on the average of the notional amounts at each quarter-end during the period.
5. Federal Income Taxes:
The fund intends to continue to qualify as a regulated investment company and distribute virtually all of its taxable income. The fund’s tax returns are open to examination by the relevant tax authorities until
expiration of the applicable statute of limitations, which is generally three years after the filing of the tax return. Management has analyzed the fund’s tax positions taken for all open federal and state
income tax years, and has concluded that no provision for income tax is required in the fund’s financial statements.
16
International Dividend Appreciation Index
Fund
6. Distributions:
Distributions to shareholders are recorded on the ex-dividend date. Distributions are determined on a tax basis at the fiscal year-end and may differ from net investment income and realized capital gains for financial
reporting purposes.
7. Securities Lending:
To earn additional income, the fund lends its securities to qualified institutional borrowers. Security loans are subject to termination by the fund at any time, and are required to be secured at all times by
collateral in an amount at least equal to the market value of securities loaned. Daily market fluctuations could cause the value of loaned securities to be more or less than the value of the collateral received. When
this occurs, the collateral is adjusted and settled before the opening of the market on the next business day. The fund further mitigates its counterparty risk by entering into securities lending transactions only
with a diverse group of prequalified counterparties, monitoring their financial strength, and entering into master securities lending agreements with its counterparties. The master securities lending agreements
provide that, in the event of a counterparty’s default (including bankruptcy), the fund may terminate any loans with that borrower, determine the net amount owed, and sell or retain the collateral up to the net
amount owed to the fund; however, such actions may be subject to legal proceedings. While collateral mitigates counterparty risk, in the event of a default, the fund may experience delays and costs in recovering the
securities loaned. The fund invests cash collateral received in Vanguard Market Liquidity Fund, and records a liability in the Statement of Assets and Liabilities for the return of the collateral, during the period
the securities are on loan. Collateral investments in Vanguard Market Liquidity Fund are subject to market appreciation or depreciation. Securities lending income represents fees charged to borrowers plus income
earned on invested cash collateral, less expenses associated with the loan. During the term of the loan, the fund is entitled to all distributions made on or in respect of the loaned securities.
8. Credit Facilities and
Interfund Lending Program: The fund and certain other funds managed by The Vanguard Group ("Vanguard") participate in a $4.3 billion committed credit facility provided by a syndicate of lenders pursuant to a credit
agreement and an uncommitted credit facility provided by Vanguard. Both facilities may be renewed annually. Each fund is individually liable for its borrowings, if any, under the credit facilities. Borrowings may be
utilized for temporary or emergency purposes and are subject to the fund’s regulatory and contractual borrowing restrictions. With respect to the committed credit facility, the participating funds are charged
administrative fees and an annual commitment fee of 0.10% of the undrawn committed amount of the facility, which are allocated to the funds based on a method approved by the fund’s board of trustees and included
in Management and Administrative expenses on the fund’s Statement of Operations. Any borrowings under either facility bear interest at an agreed-upon spread plus the higher of the federal funds effective rate,
the overnight bank funding rate, or the Daily Simple Secured Overnight Financing Rate inclusive of an additional agreed-upon spread. However, borrowings under the uncommitted credit facility may bear interest based
upon an alternate rate agreed to by the fund and Vanguard.
In accordance with an
exemptive order (the “Order”) from the SEC, the fund may participate in a joint lending and borrowing program that allows registered open-end Vanguard funds to borrow money from and lend money to each
other for temporary or emergency purposes (the “Interfund Lending Program”), subject to compliance with the terms and conditions of the Order, and to the extent permitted by the fund’s investment
objective and investment policies. Interfund loans and borrowings normally extend overnight but can have a maximum duration of seven days. Loans may be called on one business day’s notice. The interest rate to
be charged is governed by the conditions of the Order and internal procedures adopted by the board of trustees. The board of trustees is responsible for overseeing the Interfund Lending Program.
17
International Dividend Appreciation Index
Fund
For the six months ended April
30, 2023, the fund did not utilize the credit facilities or the Interfund Lending Program.
9. Other: Dividend
income is recorded on the ex-dividend date. Non-cash dividends included in income, if any, are recorded at the fair value of the securities received. Interest income includes income distributions received from
Vanguard Market Liquidity Fund and is accrued daily. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment
securities are those of the specific securities sold. Fees assessed on capital share transactions are credited to paid-in capital.
Taxes on foreign dividends and
capital gains have been provided for in accordance with the fund's understanding of the applicable countries' tax rules and rates. Deferred foreign capital gains tax, if any, is accrued daily based upon net unrealized
gains. The fund has filed tax reclaims for previously withheld taxes on dividends earned in certain European Union countries. These filings are subject to various administrative and judicial proceedings within
these countries. Amounts related to these reclaims are recorded when there are no significant uncertainties as to the ultimate resolution of proceedings, the likelihood of receipt of these reclaims, and the potential
timing of payment. Such tax reclaims and related professional fees, if any, are included in dividend income and other expenses, respectively.
Each class of shares has equal
rights as to assets and earnings, except that each class separately bears certain class-specific expenses related to maintenance of shareholder accounts (included in Management and Administrative expenses) and
shareholder reporting. Marketing and distribution expenses are allocated to each class of shares based on a method approved by the board of trustees. Income, other non-class-specific expenses, and gains and losses on
investments are allocated to each class of shares based on its relative net assets.
| B. | In accordance with the terms of a Funds' Service Agreement (the “FSA”) between Vanguard and the fund, Vanguard furnishes to the fund investment advisory, corporate management, administrative, marketing, and distribution services at Vanguard’s cost of operations (as defined by the FSA). These costs of operations are allocated to the fund based on methods and guidelines approved by the board of trustees and are generally settled twice a month. |
Upon the request of Vanguard,
the fund may invest up to 0.40% of its net assets as capital in Vanguard. At April 30, 2023, the fund had contributed to Vanguard capital in the amount of $176,000, representing less than 0.01% of the fund’s net
assets and 0.07% of Vanguard’s capital received pursuant to the FSA. The fund’s trustees and officers are also directors and employees, respectively, of Vanguard.
| C. | The fund’s custodian bank has agreed to reduce its fees when the fund maintains cash on deposit in the non-interest-bearing custody account. For the six months ended April 30, 2023, custodian fee offset arrangements reduced the fund’s expenses by $48,000 (an annual rate of less than 0.01% of average net assets). |
| D. | Various inputs may be used to determine the value of the fund’s investments and derivatives. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities. |
Level 1—Quoted prices in active markets for identical securities.
18
International Dividend Appreciation Index
Fund
Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).
Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments). Any investments and derivatives valued with significant
unobservable inputs are noted on the Schedule of Investments.
The following table summarizes
the market value of the fund’s investments and derivatives as of April 30, 2023, based on the inputs used to value them:
| Level 1 ($000) | Level 2 ($000) | Level 3 ($000) | Total ($000) | |
| Investments | ||||
| Assets | ||||
| Common Stocks—North and South America | 831,828 | — | — | 831,828 |
| Common Stocks—Other | 46,019 | 4,256,940 | — | 4,302,959 |
| Temporary Cash Investments | 30,102 | — | — | 30,102 |
| Total | 907,949 | 4,256,940 | — | 5,164,889 |
| Derivative Financial Instruments | ||||
| Assets | ||||
| Futures Contracts1 | 1,454 | — | — | 1,454 |
| Forward Currency Contracts | — | 484 | — | 484 |
| Total | 1,454 | 484 | — | 1,938 |
| Liabilities | ||||
| Futures Contracts1 | 1 | — | — | 1 |
| Forward Currency Contracts | — | 684 | — | 684 |
| Total | 1 | 684 | — | 685 |
| 1 | Includes cumulative appreciation (depreciation) on futures contracts and centrally cleared swaps, if any, as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities. |
| E. | At April 30, 2023, the fair values of derivatives were reflected in the Statement of Assets and Liabilities as follows: |
| Statement of Assets and Liabilities | Equity Contracts ($000) | Foreign Exchange Contracts ($000) | Total ($000) |
| Unrealized Appreciation—Futures Contracts1 | 1,454 | — | 1,454 |
| Unrealized Appreciation—Forward Currency Contracts | — | 484 | 484 |
| Total Assets | 1,454 | 484 | 1,938 |
| Unrealized Depreciation—Futures Contracts1 | 1 | — | 1 |
| Unrealized Depreciation—Forward Currency Contracts | — | 684 | 684 |
| Total Liabilities | 1 | 684 | 685 |
| 1 | Includes cumulative appreciation (depreciation) on futures contracts and centrally cleared swaps, if any, as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities. |
19
International Dividend Appreciation Index
Fund
Realized net gain (loss) and
the change in unrealized appreciation (depreciation) on derivatives for the six months ended April 30, 2023, were:
| Realized Net Gain (Loss) on Derivatives | Equity Contracts ($000) | Foreign Exchange Contracts ($000) | Total ($000) |
| Futures Contracts | 723 | — | 723 |
| Forward Currency Contracts | — | (414) | (414) |
| Realized Net Gain (Loss) on Derivatives | 723 | (414) | 309 |
| Change in Unrealized Appreciation (Depreciation) on Derivatives | |||
| Futures Contracts | 1,578 | — | 1,578 |
| Forward Currency Contracts | — | (189) | (189) |
| Change in Unrealized Appreciation (Depreciation) on Derivatives | 1,578 | (189) | 1,389 |
| F. | As of April 30, 2023, gross unrealized appreciation and depreciation for investments and derivatives based on cost for U.S. federal income tax purposes were as follows: |
| Amount ($000) | |
| Tax Cost | 4,814,642 |
| Gross Unrealized Appreciation | 545,373 |
| Gross Unrealized Depreciation | (193,873) |
| Net Unrealized Appreciation (Depreciation) | 351,500 |
The fund’s tax-basis
capital gains and losses are determined only at the end of each fiscal year. For tax purposes, at October 31, 2022, the fund had available capital losses totaling $27,589,000 that may be carried forward indefinitely
to offset future net capital gains. The fund will use these capital losses to offset net taxable capital gains, if any, realized during the year ending October 31, 2023; should the fund realize net capital losses for
the year, the losses will be added to the loss carryforward balance above.
| G. | During the six months ended April 30, 2023, the fund purchased $1,279,876,000 of investment securities and sold $593,709,000 of investment securities, other than temporary cash investments. Purchases and sales include $582,054,000 and $0, respectively, in connection with in-kind purchases and redemptions of the fund's capital shares. |
20
International Dividend Appreciation Index
Fund
| H. | Capital share transactions for each class of shares were: |
| Six Months Ended April 30, 2023 | Year Ended October 31, 2022 | ||||
| Amount ($000) | Shares (000) | Amount ($000) | Shares (000) | ||
| ETF Shares | |||||
| Issued1 | 673,001 | 9,366 | 676,377 | 8,730 | |
| Issued in Lieu of Cash Distributions | — | — | — | — | |
| Redeemed2 | — | — | (13,682) | (200) | |
| Net Increase (Decrease)—ETF Shares | 673,001 | 9,366 | 662,695 | 8,530 | |
| Admiral Shares | |||||
| Issued1 | 33,779 | 988 | 65,935 | 1,814 | |
| Issued in Lieu of Cash Distributions | 2,565 | 76 | 20,104 | 513 | |
| Redeemed2 | (18,201) | (521) | (61,011) | (1,723) | |
| Net Increase (Decrease)—Admiral Shares | 18,143 | 543 | 25,028 | 604 | |
| 1 | Includes purchase fees for fiscal 2023 and 2022 of $83,000 and $200,000, respectively (fund totals). |
| 2 | Net of redemption fees for fiscal 2023 and 2022 of $38,000 and $203,000, respectively (fund totals). |
| I. | Significant market disruptions, such as those caused by pandemics (e.g., COVID-19 pandemic), natural or environmental disasters, war (e.g., Russia’s invasion of Ukraine), acts of terrorism, or other events, can adversely affect local and global markets and normal market operations. Any such disruptions could have an adverse impact on the value of the fund’s investments and fund performance. |
To the extent the fund’s
investment portfolio reflects concentration in a particular market, industry, sector, country or asset class, the fund may be adversely affected by the performance of these concentrations and may be subject to
increased price volatility and other risks.
The use of derivatives may
expose the fund to various risks. Derivatives can be highly volatile, and any initial investment is generally small relative to the notional amount so that transactions may be leveraged in terms of market exposure. A
relatively small market movement may have a potentially larger impact on derivatives than on standard securities. Leveraged derivatives positions can, therefore, increase volatility. Additional information regarding
the fund's use of derivative(s) and the specific risks associated is described under significant accounting policies.
| J. | Management has determined that no events or transactions occurred subsequent to April 30, 2023, that would require recognition or disclosure in these financial statements. |
21
International High Dividend Yield Index Fund
Fund Allocation
As of April 30, 2023
| United Kingdom | 13.1% |
| Japan | 12.8 |
| Australia | 7.8 |
| Canada | 7.7 |
| Germany | 6.8 |
| France | 6.6 |
| Switzerland | 6.0 |
| China | 5.6 |
| Taiwan | 4.3 |
| Spain | 2.7 |
| Italy | 2.6 |
| Brazil | 2.5 |
| Hong Kong | 1.8 |
| South Korea | 1.6 |
| Saudi Arabia | 1.5 |
| Singapore | 1.5 |
| Netherlands | 1.4 |
| Sweden | 1.4 |
| Finland | 1.4 |
| South Africa | 1.2 |
| Mexico | 1.2 |
| India | 1.0 |
| Other | 7.5 |
The table reflects the fund’s
investments, except for short-term investments and derivatives.
The fund may invest in
derivatives (such as futures and swap contracts) for various reasons, including, but not limited to, attempting to remain fully invested and tracking its target index as closely as possible.
22
International High Dividend Yield Index Fund
Financial Statements (unaudited)
Schedule of Investments
As of April 30, 2023
The fund files its complete
schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports
are available on the SEC’s website at www.sec.gov.
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| Shares | Market Value• ($000) | ||
| Temporary Cash Investments (2.0%) | |||
| Money Market Fund (2.0%) | |||
| 4,5 | Vanguard Market Liquidity Fund, 4.853% (Cost $132,699) | 1,327,041 | 132,691 |
| Total Investments (101.3%) (Cost $6,385,863) | 6,579,386 | ||
| Other Assets and Liabilities—Net (-1.3%) | (85,841) | ||
| Net Assets (100%) | 6,493,545 | ||
| Cost is in $000. | |||
| • | See Note A in Notes to Financial Statements. |
| * | Non-income-producing security. |
| 1 | Includes partial security positions on loan to broker-dealers. The total value of securities on loan is $125,473,000. |
| 2 | Security exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be sold in transactions exempt from registration, normally to qualified institutional buyers. At April 30, 2023, the aggregate value was $71,953,000, representing 1.1% of net assets. |
| 3 | Security value determined using significant unobservable inputs. |
| 4 | Affiliated money market fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard. Rate shown is the 7-day yield. |
| 5 | Collateral of $132,650,000 was received for securities on loan. |
| ADR—American Depositary Receipt. | |
| GDR—Global Depositary Receipt. | |
| NVDR—Non-Voting Depository Receipt. |
Derivative Financial
Instruments Outstanding as of Period End
| Futures Contracts | ||||
| ($000) | ||||
| Expiration | Number of Long (Short) Contracts | Notional Amount | Value and Unrealized Appreciation (Depreciation) | |
| Long Futures Contracts | ||||
| MSCI EAFE Index | June 2023 | 370 | 39,768 | 1,629 |
| MSCI Emerging Markets Index | June 2023 | 217 | 10,679 | 140 |
| 1,769 | ||||
| Forward Currency Contracts | |||||||
| Contract Settlement Date | Contract Amount (000) | Unrealized Appreciation ($000) | Unrealized Depreciation ($000) | ||||
| Counterparty | Receive | Deliver | |||||
| Bank of America, N.A. | 6/21/23 | AUD | 4,706 | USD | 3,164 | — | (43) |
| State Street Bank & Trust Co. | 6/21/23 | CAD | 9,000 | USD | 6,688 | — | (38) |
| Bank of America, N.A. | 6/21/23 | JPY | 27,139 | USD | 201 | — | (1) |
| State Street Bank & Trust Co. | 6/21/23 | USD | 5,308 | AUD | 8,000 | 2 | — |
| Bank of America, N.A. | 6/21/23 | USD | 6 | AUD | 9 | — | — |
| Goldman Sachs International | 6/21/23 | USD | 3,098 | BRL | 16,335 | — | (145) |
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International High Dividend Yield Index Fund
| Forward Currency Contracts (continued) | |||||||
| Contract Settlement Date | Contract Amount (000) | Unrealized Appreciation ($000) | Unrealized Depreciation ($000) | ||||
| Counterparty | Receive | Deliver | |||||
| BNP Paribas | 6/21/23 | USD | 8,664 | CAD | 11,720 | 4 | — |
| State Street Bank & Trust Co. | 6/21/23 | USD | 6,039 | CHF | 5,600 | — | (264) |
| Bank of America, N.A. | 6/21/23 | USD | 7,372 | EUR | 6,677 | — | (7) |
| State Street Bank & Trust Co. | 6/21/23 | USD | 3,492 | EUR | 3,258 | — | (108) |
| State Street Bank & Trust Co. | 6/21/23 | USD | 4,560 | GBP | 3,720 | — | (121) |
| Bank of Montreal | 6/21/23 | USD | 1,454 | GBP | 1,212 | — | (71) |
| Goldman Sachs International | 6/21/23 | USD | 691 | HKD | 5,401 | 1 | — |
| Bank of America, N.A. | 6/21/23 | USD | 12,544 | JPY | 1,642,460 | 393 | — |
| BNP Paribas | 6/21/23 | USD | 1,327 | TWD | 40,457 | 3 | — |
| 403 | (798) | ||||||
| AUD—Australian dollar. |
| BRL—Brazilian real. |
| CAD—Canadian dollar. |
| CHF—Swiss franc. |
| EUR—euro. |
| GBP—British pound. |
| HKD—Hong Kong dollar. |
| JPY—Japanese yen. |
| TWD—Taiwanese dollar. |
| USD—U.S. dollar. |
See accompanying
Notes, which are an integral part of the Financial Statements.
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International High Dividend Yield Index Fund
Statement of Assets and Liabilities
As of April 30, 2023
| ($000s, except shares, footnotes, and per-share amounts) | Amount |
| Assets | |
| Investments in Securities, at Value1 | |
| Unaffiliated Issuers (Cost $6,253,164) | 6,446,695 |
| Affiliated Issuers (Cost $132,699) | 132,691 |
| Total Investments in Securities | 6,579,386 |
| Investment in Vanguard | 216 |
| Cash | 4,243 |
| Cash Collateral Pledged—Futures Contracts | 1,500 |
| Cash Collateral Pledged—Forward Currency Contracts | 600 |
| Foreign Currency, at Value (Cost $3,165) | 2,864 |
| Receivables for Accrued Income | 43,946 |
| Receivables for Capital Shares Issued | 97 |
| Variation Margin Receivable—Futures Contracts | 15 |
| Unrealized Appreciation—Forward Currency Contracts | 403 |
| Total Assets | 6,633,270 |
| Liabilities | |
| Payables for Investment Securities Purchased | 4,645 |
| Collateral for Securities on Loan | 132,650 |
| Payables for Capital Shares Redeemed | 32 |
| Payables to Vanguard | 681 |
| Unrealized Depreciation—Forward Currency Contracts | 798 |
| Deferred Foreign Capital Gains Taxes | 919 |
| Total Liabilities | 139,725 |
| Net Assets | 6,493,545 |
| 1 Includes $125,473,000 of securities on loan. | |
| At April 30, 2023, net assets consisted of: | |
| Paid-in Capital | 6,377,068 |
| Total Distributable Earnings (Loss) | 116,477 |
| Net Assets | 6,493,545 |
| ETF Shares—Net Assets | |
| Applicable to 94,515,936 outstanding $.001 par value shares of beneficial interest (unlimited authorization) | 6,040,737 |
| Net Asset Value Per Share—ETF Shares | $63.91 |
| Admiral Shares—Net Assets | |
| Applicable to 14,615,098 outstanding $.001 par value shares of beneficial interest (unlimited authorization) | 452,808 |
| Net Asset Value Per Share—Admiral Shares | $30.98 |
See accompanying
Notes, which are an integral part of the Financial Statements.
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International High Dividend Yield Index Fund
Statement of Operations
| Six Months Ended April 30, 2023 | |
| ($000) | |
| Investment Income | |
| Income | |
| Dividends1 | 128,468 |
| Interest2 | 167 |
| Securities Lending—Net | 542 |
| Total Income | 129,177 |
| Expenses | |
| The Vanguard Group—Note B | |
| Investment Advisory Services | 206 |
| Management and Administrative—ETF Shares | 4,889 |
| Management and Administrative—Admiral Shares | 419 |
| Marketing and Distribution—ETF Shares | 149 |
| Marketing and Distribution—Admiral Shares | 12 |
| Custodian Fees | 515 |
| Shareholders’ Reports—ETF Shares | 127 |
| Shareholders’ Reports—Admiral Shares | 5 |
| Trustees’ Fees and Expenses | 1 |
| Other Expenses | 19 |
| Total Expenses | 6,342 |
| Expenses Paid Indirectly | (73) |
| Net Expenses | 6,269 |
| Net Investment Income | 122,908 |
| Realized Net Gain (Loss) | |
| Investment Securities Sold2 | (44,653) |
| Futures Contracts | 4,323 |
| Forward Currency Contracts | (557) |
| Foreign Currencies | 1,651 |
| Realized Net Gain (Loss) | (39,236) |
| Change in Unrealized Appreciation (Depreciation) | |
| Investment Securities2,3 | 833,909 |
| Futures Contracts | 1,320 |
| Forward Currency Contracts | (1,188) |
| Foreign Currencies | 464 |
| Change in Unrealized Appreciation (Depreciation) | 834,505 |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 918,177 |
| 1 | Dividends are net of foreign withholding taxes of $13,649,000. |
| 2 | Interest income, realized net gain (loss), capital gain distributions received, and change in unrealized appreciation (depreciation) from an affiliated company of the fund were $139,000, $21,000, less than $1,000, and ($13,000), respectively. Purchases and sales are for temporary cash investment purposes. |
| 3 | The change in unrealized appreciation (depreciation) is net of the change in deferred foreign capital gains taxes of $525,000. |
See accompanying
Notes, which are an integral part of the Financial Statements.
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International High Dividend Yield Index Fund
Statement of Changes in Net Assets
| Six Months Ended April 30, 2023 | Year Ended October 31, 2022 | ||
| ($000) | ($000) | ||
| Increase (Decrease) in Net Assets | |||
| Operations | |||
| Net Investment Income | 122,908 | 215,954 | |
| Realized Net Gain (Loss) | (39,236) | (22,768) | |
| Change in Unrealized Appreciation (Depreciation) | 834,505 | (919,882) | |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 918,177 | (726,696) | |
| Distributions | |||
| ETF Shares | (83,414) | (187,355) | |
| Admiral Shares | (7,325) | (20,245) | |
| Total Distributions | (90,739) | (207,600) | |
| Capital Share Transactions | |||
| ETF Shares | 1,084,226 | 1,981,919 | |
| Admiral Shares | (35,791) | 114,673 | |
| Net Increase (Decrease) from Capital Share Transactions | 1,048,435 | 2,096,592 | |
| Total Increase (Decrease) | 1,875,873 | 1,162,296 | |
| Net Assets | |||
| Beginning of Period | 4,617,672 | 3,455,376 | |
| End of Period | 6,493,545 | 4,617,672 | |
See accompanying
Notes, which are an integral part of the Financial Statements.
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International High Dividend Yield Index Fund
Financial Highlights
| ETF Shares | ||||||
| For a Share Outstanding Throughout Each Period | Six Months Ended April 30, 2023 | Year Ended October 31, | ||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||
| Net Asset Value, Beginning of Period | $54.67 | $67.77 | $50.47 | $61.27 | $58.85 | $65.69 |
| Investment Operations | ||||||
| Net Investment Income1 | 1.318 | 3.259 | 2.824 | 2.076 | 2.746 | 2.639 |
| Net Realized and Unrealized Gain (Loss) on Investments2 | 8.903 | (13.260) | 16.986 | (10.944) | 2.302 | (7.097) |
| Total from Investment Operations | 10.221 | (10.001) | 19.810 | (8.868) | 5.048 | (4.458) |
| Distributions | ||||||
| Dividends from Net Investment Income | (.981) | (3.099) | (2.510) | (1.932) | (2.628) | (2.382) |
| Distributions from Realized Capital Gains | — | — | — | — | — | — |
| Total Distributions | (.981) | (3.099) | (2.510) | (1.932) | (2.628) | (2.382) |
| Net Asset Value, End of Period | $63.91 | $54.67 | $67.77 | $50.47 | $61.27 | $58.85 |
| Total Return | 18.86% | -15.16% | 39.55% | -14.55% | 8.87% | -7.03% |
| Ratios/Supplemental Data | ||||||
| Net Assets, End of Period (Millions) | $6,041 | $4,198 | $3,061 | $1,325 | $1,264 | $889 |
| Ratio of Total Expenses to Average Net Assets | 0.22%3 | 0.22%3 | 0.22% | 0.28%3 | 0.27% | 0.32% |
| Ratio of Net Investment Income to Average Net Assets | 4.31% | 5.24% | 4.29% | 3.81% | 4.59% | 4.06% |
| Portfolio Turnover Rate4 | 6% | 16% | 18% | 20% | 15% | 10% |
| The expense ratio and net investment income ratio for the current period have been annualized. | ||||||
| 1 | Calculated based on average shares outstanding. |
| 2 | Includes increases from purchase and redemption fees of $0.00, $0.01, $0.00, $0.03, $0.01, and $0.02. |
| 3 | The ratio of expenses to average net assets for the period net of reduction from custody fee offset arrangements were 0.22%, 0.22% and 0.27%, respectively. |
| 4 | Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares, including ETF Creation Units. |
See accompanying
Notes, which are an integral part of the Financial Statements.
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International High Dividend Yield Index Fund
Financial Highlights
| Admiral Shares | ||||||
| For a Share Outstanding Throughout Each Period | Six Months Ended April 30, 2023 | Year Ended October 31, | ||||
| 2022 | 2021 | 2020 | 2019 | 2018 | ||
| Net Asset Value, Beginning of Period | $26.51 | $32.85 | $24.45 | $29.69 | $28.52 | $31.83 |
| Investment Operations | ||||||
| Net Investment Income1 | .619 | 1.559 | 1.329 | 1.034 | 1.322 | 1.264 |
| Net Realized and Unrealized Gain (Loss) on Investments2 | 4.325 | (6.398) | 8.286 | (5.336) | 1.120 | (3.423) |
| Total from Investment Operations | 4.944 | (4.839) | 9.615 | (4.302) | 2.442 | (2.159) |
| Distributions | ||||||
| Dividends from Net Investment Income | (.474) | (1.501) | (1.215) | (.938) | (1.272) | (1.151) |
| Distributions from Realized Capital Gains | — | — | — | — | — | — |
| Total Distributions | (.474) | (1.501) | (1.215) | (.938) | (1.272) | (1.151) |
| Net Asset Value, End of Period | $30.98 | $26.51 | $32.85 | $24.45 | $29.69 | $28.52 |
| Total Return3 | 18.82% | -15.11% | 39.59% | -14.59% | 8.83% | -7.00% |
| Ratios/Supplemental Data | ||||||
| Net Assets, End of Period (Millions) | $453 | $420 | $395 | $267 | $199 | $181 |
| Ratio of Total Expenses to Average Net Assets | 0.22%4 | 0.22%4 | 0.22% | 0.28%4 | 0.27% | 0.32% |
| Ratio of Net Investment Income to Average Net Assets | 4.19% | 5.15% | 4.19% | 3.99% | 4.57% | 4.06% |
| Portfolio Turnover Rate5 | 6% | 16% | 18% | 20% | 15% | 10% |
| The expense ratio and net investment income ratio for the current period have been annualized. | ||||||
| 1 | Calculated based on average shares outstanding. |
| 2 | Includes increases from purchase and redemption fees of $0.00, $0.00, $0.00, $0.01, $0.01, and $0.01. |
| 3 | Total returns do not include transaction or account service fees that may have applied in the periods shown. Fund prospectuses provide information about any applicable transaction and account service fees. |
| 4 | The ratio of expenses to average net assets for the period net of reduction from custody fee offset arrangements were 0.22%, 0.22% and 0.27%, respectively. |
| 5 | Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares, including ETF Creation Units. |
See accompanying
Notes, which are an integral part of the Financial Statements.
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International High Dividend Yield Index Fund
Notes to Financial Statements
Vanguard International High
Dividend Yield Index Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund offers two classes of shares: ETF Shares and Admiral Shares. Each of the
share classes has different eligibility and minimum purchase requirements, and is designed for different types of investors. ETF Shares are listed for trading on Nasdaq; they can be purchased and sold through a
broker.
| A. | The following significant accounting policies conform to generally accepted accounting principles for U.S. investment companies. The fund consistently follows such policies in preparing its financial statements. |
1. Security Valuation:
Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official
closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which
market quotations are not readily available, or whose values have been affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued by
methods deemed by the valuation designee to represent fair value and subject to oversight by the board of trustees. These procedures include obtaining quotations from an independent pricing service, monitoring
news to identify significant market- or security-specific events, and evaluating changes in the values of foreign market proxies (for example, ADRs, futures contracts, or exchange-traded funds), between the time the
foreign markets close and the fund’s pricing time. When fair-value pricing is employed, the prices of securities used by a fund to calculate its net asset value may differ from quoted or published prices for the
same securities. Investments in Vanguard Market Liquidity Fund are valued at that fund's net asset value.
2. Foreign Currency:
Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates obtained from an independent third party as of the fund’s pricing time on the
valuation date. Realized gains (losses) and unrealized appreciation (depreciation) on investment securities include the effects of changes in exchange rates since the securities were purchased, combined with the
effects of changes in security prices. Fluctuations in the value of other assets and liabilities resulting from changes in exchange rates are recorded as unrealized foreign currency gains (losses) until the assets or
liabilities are settled in cash, at which time they are recorded as realized foreign currency gains (losses).
3. Futures Contracts:
The fund uses index futures contracts to a limited extent, with the objectives of maintaining full exposure to the stock market, maintaining liquidity, and minimizing transaction costs. The fund may purchase futures
contracts to immediately invest incoming cash in the market, or sell futures in response to cash outflows, thereby simulating a fully invested position in the underlying index while maintaining a cash balance for
liquidity. The primary risks associated with the use of futures contracts are imperfect correlation between changes in market values of stocks held by the fund and the prices of futures contracts, and the possibility
of an illiquid market. Counterparty risk involving futures is mitigated because a regulated clearinghouse is the counterparty instead of the clearing broker. To further mitigate counterparty risk, the fund trades
futures contracts on an exchange, monitors the financial strength of its clearing brokers and clearinghouse, and has entered into clearing agreements with its clearing brokers. The clearinghouse imposes initial margin
requirements to secure the fund’s performance and requires daily settlement of variation margin representing changes in the market value of each contract. Any securities pledged as initial margin for open
contracts are noted in the Schedule of Investments.
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International High Dividend Yield Index Fund
Futures contracts are valued
at their quoted daily settlement prices. The notional amounts of the contracts are not recorded in the Statement of Assets and Liabilities. Fluctuations in the value of the contracts are recorded in the Statement of
Assets and Liabilities as an asset (liability) and in the Statement of Operations as unrealized appreciation (depreciation) until the contracts are closed, when they are recorded as realized gains (losses) on futures
contracts.
During the six months ended
April 30, 2023, the fund’s average investments in long and short futures contracts represented 1% and 0% of net assets, respectively, based on the average of the notional amounts at each quarter-end during the
period.
4. Forward Currency
Contracts: The fund enters into forward currency contracts to protect the value of securities and related receivables and payables against changes in future foreign exchange rates. The fund’s risks in using
these contracts include movement in the values of the foreign currencies relative to the U.S. dollar and the ability of the counterparties to fulfill their obligations under the contracts. The fund mitigates its
counterparty risk by entering into forward currency contracts only with a diverse group of prequalified counterparties, monitoring their financial strength, entering into master netting arrangements with its
counterparties, and requiring its counterparties to transfer collateral as security for their performance. In the absence of a default, the collateral pledged or received by the fund cannot be repledged, resold, or
rehypothecated. The master netting arrangements provide that, in the event of a counterparty’s default (including bankruptcy), the fund may terminate the forward currency contracts, determine the net amount owed
by either party in accordance with its master netting arrangements, and sell or retain any collateral held up to the net amount owed to the fund under the master netting arrangements. The forward currency contracts
contain provisions whereby a counterparty may terminate open contracts if the fund’s net assets decline below a certain level, triggering a payment by the fund if the fund is in a net liability position at the
time of the termination. The payment amount would be reduced by any collateral the fund has pledged. Any securities pledged as collateral for open contracts are noted in the Schedule of Investments. The value of
collateral received or pledged is compared daily to the value of the forward currency contracts exposure with each counterparty, and any difference, if in excess of a specified minimum transfer amount, is adjusted and
settled within two business days.
Forward currency contracts are
valued at their quoted daily prices obtained from an independent third party, adjusted for currency risk based on the expiration date of each contract. The notional amounts of the contracts are not recorded in the
Statement of Assets and Liabilities. Fluctuations in the value of the contracts are recorded in the Statement of Assets and Liabilities as an asset (liability) and in the Statement of Operations as unrealized
appreciation (depreciation) until the contracts are closed, when they are recorded as realized gains (losses) on forward currency contracts.
During the six months ended
April 30, 2023, the fund’s average investment in forward currency contracts represented 1% of net assets, based on the average of the notional amounts at each quarter-end during the period.
5. Federal Income Taxes:
The fund intends to continue to qualify as a regulated investment company and distribute virtually all of its taxable income. The fund’s tax returns are open to examination by the relevant tax authorities until
expiration of the applicable statute of limitations, which is generally three years after the filing of the tax return. Management has analyzed the fund’s tax positions taken for all open federal and state
income tax years, and has concluded that no provision for income tax is required in the fund’s financial statements.
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International High Dividend Yield Index Fund
6. Distributions:
Distributions to shareholders are recorded on the ex-dividend date. Distributions are determined on a tax basis at the fiscal year-end and may differ from net investment income and realized capital gains for financial
reporting purposes.
7. Securities Lending:
To earn additional income, the fund lends its securities to qualified institutional borrowers. Security loans are subject to termination by the fund at any time, and are required to be secured at all times by
collateral in an amount at least equal to the market value of securities loaned. Daily market fluctuations could cause the value of loaned securities to be more or less than the value of the collateral received. When
this occurs, the collateral is adjusted and settled before the opening of the market on the next business day. The fund further mitigates its counterparty risk by entering into securities lending transactions only
with a diverse group of prequalified counterparties, monitoring their financial strength, and entering into master securities lending agreements with its counterparties. The master securities lending agreements
provide that, in the event of a counterparty’s default (including bankruptcy), the fund may terminate any loans with that borrower, determine the net amount owed, and sell or retain the collateral up to the net
amount owed to the fund; however, such actions may be subject to legal proceedings. While collateral mitigates counterparty risk, in the event of a default, the fund may experience delays and costs in recovering the
securities loaned. The fund invests cash collateral received in Vanguard Market Liquidity Fund, and records a liability in the Statement of Assets and Liabilities for the return of the collateral, during the period
the securities are on loan. Collateral investments in Vanguard Market Liquidity Fund are subject to market appreciation or depreciation. Securities lending income represents fees charged to borrowers plus income
earned on invested cash collateral, less expenses associated with the loan. During the term of the loan, the fund is entitled to all distributions made on or in respect of the loaned securities.
8. Credit Facilities and
Interfund Lending Program: The fund and certain other funds managed by The Vanguard Group ("Vanguard") participate in a $4.3 billion committed credit facility provided by a syndicate of lenders pursuant to a credit
agreement and an uncommitted credit facility provided by Vanguard. Both facilities may be renewed annually. Each fund is individually liable for its borrowings, if any, under the credit facilities. Borrowings may be
utilized for temporary or emergency purposes and are subject to the fund’s regulatory and contractual borrowing restrictions. With respect to the committed credit facility, the participating funds are charged
administrative fees and an annual commitment fee of 0.10% of the undrawn committed amount of the facility, which are allocated to the funds based on a method approved by the fund’s board of trustees and included
in Management and Administrative expenses on the fund’s Statement of Operations. Any borrowings under either facility bear interest at an agreed-upon spread plus the higher of the federal funds effective rate,
the overnight bank funding rate, or the Daily Simple Secured Overnight Financing Rate inclusive of an additional agreed-upon spread. However, borrowings under the uncommitted credit facility may bear interest based
upon an alternate rate agreed to by the fund and Vanguard.
In accordance with an
exemptive order (the “Order”) from the SEC, the fund may participate in a joint lending and borrowing program that allows registered open-end Vanguard funds to borrow money from and lend money to each
other for temporary or emergency purposes (the “Interfund Lending Program”), subject to compliance with the terms and conditions of the Order, and to the extent permitted by the fund’s investment
objective and investment policies. Interfund loans and borrowings normally extend overnight but can have a maximum duration of seven days. Loans may be called on one business day’s notice. The interest rate to
be charged is governed by the conditions of the Order and internal procedures adopted by the board of trustees. The board of trustees is responsible for overseeing the Interfund Lending Program.
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International High Dividend Yield Index Fund
For the six months ended April
30, 2023, the fund did not utilize the credit facilities or the Interfund Lending Program.
9. Other: Dividend
income is recorded on the ex-dividend date. Non-cash dividends included in income, if any, are recorded at the fair value of the securities received. Interest income includes income distributions received from
Vanguard Market Liquidity Fund and is accrued daily. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment
securities are those of the specific securities sold. Fees assessed on capital share transactions are credited to paid-in capital.
Taxes on foreign dividends and
capital gains have been provided for in accordance with the fund's understanding of the applicable countries' tax rules and rates. Deferred foreign capital gains tax, if any, is accrued daily based upon net unrealized
gains. The fund has filed tax reclaims for previously withheld taxes on dividends earned in certain European Union countries. These filings are subject to various administrative and judicial proceedings within
these countries. Amounts related to these reclaims are recorded when there are no significant uncertainties as to the ultimate resolution of proceedings, the likelihood of receipt of these reclaims, and the potential
timing of payment. Such tax reclaims and related professional fees, if any, are included in dividend income and other expenses, respectively.
Each class of shares has equal
rights as to assets and earnings, except that each class separately bears certain class-specific expenses related to maintenance of shareholder accounts (included in Management and Administrative expenses) and
shareholder reporting. Marketing and distribution expenses are allocated to each class of shares based on a method approved by the board of trustees. Income, other non-class-specific expenses, and gains and losses on
investments are allocated to each class of shares based on its relative net assets.
| B. | In accordance with the terms of a Funds' Service Agreement (the “FSA”) between Vanguard and the fund, Vanguard furnishes to the fund investment advisory, corporate management, administrative, marketing, and distribution services at Vanguard’s cost of operations (as defined by the FSA). These costs of operations are allocated to the fund based on methods and guidelines approved by the board of trustees and are generally settled twice a month. |
Upon the request of Vanguard,
the fund may invest up to 0.40% of its net assets as capital in Vanguard. At April 30, 2023, the fund had contributed to Vanguard capital in the amount of $216,000, representing less than 0.01% of the fund’s net
assets and 0.09% of Vanguard’s capital received pursuant to the FSA. The fund’s trustees and officers are also directors and employees, respectively, of Vanguard.
| C. | The fund’s custodian bank has agreed to reduce its fees when the fund maintains cash on deposit in the non-interest-bearing custody account. For the six months ended April 30, 2023, custodian fee offset arrangements reduced the fund’s expenses by $73,000 (an annual rate of less than 0.01% of average net assets). |
| D. | Various inputs may be used to determine the value of the fund’s investments and derivatives. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities. |
Level 1—Quoted prices in active markets for identical securities.
51
International High Dividend Yield Index Fund
Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).
Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments). Any investments and derivatives valued with significant
unobservable inputs are noted on the Schedule of Investments.
The following table summarizes
the market value of the fund’s investments and derivatives as of April 30, 2023, based on the inputs used to value them:
| Level 1 ($000) | Level 2 ($000) | Level 3 ($000) | Total ($000) | |
| Investments | ||||
| Assets | ||||
| Common Stocks—North and South America | 735,266 | 18,529 | — | 753,795 |
| Common Stocks—Other | 4,091 | 5,688,330 | 479 | 5,692,900 |
| Temporary Cash Investments | 132,691 | — | — | 132,691 |
| Total | 872,048 | 5,706,859 | 479 | 6,579,386 |
| Derivative Financial Instruments | ||||
| Assets | ||||
| Futures Contracts1 | 1,769 | — | — | 1,769 |
| Forward Currency Contracts | — | 403 | — | 403 |
| Total | 1,769 | 403 | — | 2,172 |
| Liabilities | ||||
| Forward Currency Contracts | — | 798 | — | 798 |
| 1 | Includes cumulative appreciation (depreciation) on futures contracts and centrally cleared swaps, if any, as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities. |
| E. | At April 30, 2023, the fair values of derivatives were reflected in the Statement of Assets and Liabilities as follows: |
| Statement of Assets and Liabilities | Equity Contracts ($000) | Foreign Exchange Contracts ($000) | Total ($000) |
| Unrealized Appreciation—Futures Contracts1 | 1,769 | — | 1,769 |
| Unrealized Appreciation—Forward Currency Contracts | — | 403 | 403 |
| Total Assets | 1,769 | 403 | 2,172 |
| Unrealized Depreciation—Forward Currency Contracts | — | 798 | 798 |
| Total Liabilities | — | 798 | 798 |
| 1 | Includes cumulative appreciation (depreciation) on futures contracts and centrally cleared swaps, if any, as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities. |
52
International High Dividend Yield Index Fund
Realized net gain (loss) and
the change in unrealized appreciation (depreciation) on derivatives for the six months ended April 30, 2023, were:
| Realized Net Gain (Loss) on Derivatives | Equity Contracts ($000) | Foreign Exchange Contracts ($000) | Total ($000) |
| Futures Contracts | 4,323 | — | 4,323 |
| Forward Currency Contracts | — | (557) | (557) |
| Realized Net Gain (Loss) on Derivatives | 4,323 | (557) | 3,766 |
| Change in Unrealized Appreciation (Depreciation) on Derivatives | |||
| Futures Contracts | 1,320 | — | 1,320 |
| Forward Currency Contracts | — | (1,188) | (1,188) |
| Change in Unrealized Appreciation (Depreciation) on Derivatives | 1,320 | (1,188) | 132 |
| F. | As of April 30, 2023, gross unrealized appreciation and depreciation for investments and derivatives based on cost for U.S. federal income tax purposes were as follows: |
| Amount ($000) | |
| Tax Cost | 6,407,814 |
| Gross Unrealized Appreciation | 542,099 |
| Gross Unrealized Depreciation | (369,153) |
| Net Unrealized Appreciation (Depreciation) | 172,946 |
The fund’s tax-basis
capital gains and losses are determined only at the end of each fiscal year. For tax purposes, at October 31, 2022, the fund had available capital losses totaling $78,299,000 that may be carried forward indefinitely
to offset future net capital gains. The fund will use these capital losses to offset net taxable capital gains, if any, realized during the year ending October 31, 2023; should the fund realize net capital losses for
the year, the losses will be added to the loss carryforward balance above.
| G. | During the six months ended April 30, 2023, the fund purchased $1,420,715,000 of investment securities and sold $358,366,000 of investment securities, other than temporary cash investments. Purchases and sales include $813,532,000 and $0, respectively, in connection with in-kind purchases and redemptions of the fund's capital shares. |
53
International High Dividend Yield Index Fund
| H. | Capital share transactions for each class of shares were: |
| Six Months Ended April 30, 2023 | Year Ended October 31, 2022 | ||||
| Amount ($000) | Shares (000) | Amount ($000) | Shares (000) | ||
| ETF Shares | |||||
| Issued1 | 1,084,226 | 17,732 | 2,022,275 | 32,224 | |
| Issued in Lieu of Cash Distributions | — | — | — | — | |
| Redeemed2 | — | — | (40,356) | (600) | |
| Net Increase (Decrease)—ETF Shares | 1,084,226 | 17,732 | 1,981,919 | 31,624 | |
| Admiral Shares | |||||
| Issued1 | 47,153 | 1,591 | 184,464 | 6,153 | |
| Issued in Lieu of Cash Distributions | 4,493 | 158 | 11,257 | 386 | |
| Redeemed2 | (87,437) | (2,963) | (81,048) | (2,728) | |
| Net Increase (Decrease)—Admiral Shares | (35,791) | (1,214) | 114,673 | 3,811 | |
| 1 | Includes purchase fees for fiscal 2023 and 2022 of $117,000 and $643,000, respectively (fund totals). |
| 2 | Net of redemption fees for fiscal 2023 and 2022 of $69,000 and $174,000, respectively (fund totals). |
| I. | Significant market disruptions, such as those caused by pandemics (e.g., COVID-19 pandemic), natural or environmental disasters, war (e.g., Russia’s invasion of Ukraine), acts of terrorism, or other events, can adversely affect local and global markets and normal market operations. Any such disruptions could have an adverse impact on the value of the fund’s investments and fund performance. |
To the extent the fund’s
investment portfolio reflects concentration in a particular market, industry, sector, country or asset class, the fund may be adversely affected by the performance of these concentrations and may be subject to
increased price volatility and other risks.
The use of derivatives may
expose the fund to various risks. Derivatives can be highly volatile, and any initial investment is generally small relative to the notional amount so that transactions may be leveraged in terms of market exposure. A
relatively small market movement may have a potentially larger impact on derivatives than on standard securities. Leveraged derivatives positions can, therefore, increase volatility. Additional information regarding
the fund's use of derivative(s) and the specific risks associated is described under significant accounting policies.
At April 30, 2023, one
shareholder was a record or beneficial owner of 26% of the fund’s net assets. If this shareholder were to redeem its investment in the fund, the redemption might result in an increase in the fund’s expense
ratio, cause the fund to incur higher transaction costs, or lead to the realization of taxable capital gains.
| J. | Management has determined that no events or transactions occurred subsequent to April 30, 2023, that would require recognition or disclosure in these financial statements. |
54
Trustees Approve Advisory Arrangements
The board of trustees of
Vanguard International Dividend Appreciation Index Fund and Vanguard International High Dividend Yield Index Fund has renewed the funds’ investment advisory arrangements with The Vanguard Group, Inc. (Vanguard),
through its Equity Index Group. The board determined that continuing each fund’s internalized management structure was in the best interests of the fund and its shareholders.
The board based its decisions
upon an evaluation of the advisor’s investment staff, portfolio management process, and performance. This evaluation included information provided to the board by Vanguard’s Portfolio Review Department,
which is responsible for fund and advisor oversight and product management. The Portfolio Review Department met regularly with the advisor and made presentations to the board during the fiscal year that directed the
board’s focus to relevant information and topics.
The board, or an investment
committee made up of board members, also received information throughout the year during advisor presentations. For each advisor presentation, the board was provided with letters and reports that included information
about, among other things, the advisory firm and the advisor’s assessment of the investment environment, portfolio performance, and portfolio characteristics.
In addition, the board
received periodic reports throughout the year, which included information about each fund’s performance relative to its peers and benchmark, as applicable, and updates, as needed, on the Portfolio Review
Department’s ongoing assessment of the advisor.
Prior to their meeting, the
trustees were provided with a memo and materials that summarized the information they received over the course of the year. They also considered the factors discussed below, among others. However, no single factor
determined whether the board approved the arrangements. Rather, it was the totality of the circumstances that drove the board’s decision.
Nature, extent, and quality of
services
The board reviewed the quality of the
investment management services provided to the funds since their inceptions in 2016; it also took into account the organizational depth and stability of the advisor. The board considered that Vanguard has been
managing investments for more than four decades. The Equity Index Group adheres to a sound, disciplined investment management process; the team has considerable experience, stability, and depth.
The board concluded that
Vanguard’s experience, stability, depth, and performance, among other factors, warranted continuation of the advisory arrangements.
Investment performance
The board considered each fund’s
performance since their inception in 2016, including any periods of outperformance or underperformance compared with its respective target index and peer group. The board concluded that the performance was such that
the advisory arrangements should continue.
55
Cost
The board concluded that the funds’
expense ratios were below the average expense ratios charged by funds in their respective peer groups and that the funds’ advisory expenses were also below their peer-group averages.
The board does not conduct a
profitability analysis of Vanguard because of Vanguard’s unique structure. Unlike most other mutual fund management companies, Vanguard is owned by the funds it oversees.
The benefit of economies of
scale
The board concluded that each fund’s
arrangement with Vanguard ensures that the funds will realize economies of scale as they grow, with the cost to shareholders declining as fund assets increase.
The board will consider
whether to renew the advisory arrangements again after a one-year period.
56
Liquidity Risk Management
Vanguard funds (except for the
money market funds) have adopted and implemented a written liquidity risk management program (the “Program”) as required by Rule 22e-4 under the Investment Company Act of 1940. Rule 22e-4 requires that
each fund adopt a program that is reasonably designed to assess and manage the fund’s liquidity risk, which is the risk that the fund could not meet redemption requests without significant dilution of remaining
investors’ interests in the fund.
Assessment and management of a
fund’s liquidity risk under the Program take into consideration certain factors, such as the fund’s investment strategy and the liquidity of its portfolio investments during normal and reasonably
foreseeable stressed conditions, its short- and long-term cash-flow projections during both normal and reasonably foreseeable stressed conditions, and its cash and cash-equivalent holdings and access to other funding
sources. As required by the rule, the Program includes policies and procedures for classification of fund portfolio holdings in four liquidity categories, maintaining certain levels of highly liquid investments, and
limiting holdings of illiquid investments.
The board of trustees of
Vanguard Whitehall Funds approved the appointment of liquidity risk management program administrators responsible for administering the Program for Vanguard International Dividend Appreciation Index Fund and Vanguard
International High Dividend Yield Index Fund, and for carrying out the specific responsibilities set forth in the Program, including reporting to the board on at least an annual basis regarding the Program’s
operation, its adequacy, and the effectiveness of its implementation for the past year (the “Program Administrator Report”). The board has reviewed the Program Administrator Report covering the period from
January 1, 2022, through December 31, 2022 (the “Review Period”). The Program Administrator Report stated that during the Review Period the Program operated and was implemented effectively to manage the
funds' liquidity risk.
57
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Semiannual Report | April 30, 2023
Vanguard Advice
Select Global Value Fund
About Your Fund’s Expenses
As a shareholder of the fund,
you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross
income, directly reduce the investment return of the fund.
A fund‘s expenses are
expressed as a percentage of its average net assets. This figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your fund and
to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.
The accompanying table
illustrates your fund’s costs in two ways:
| • | Based on actual fund return. This section helps you to estimate the actual expenses that you paid over the period. The ”Ending Account Value“ shown is derived from the fund’s actual return, and the third column shows the dollar amount that would have been paid by an investor who started with $1,000 in the fund. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period. |
To do so, simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your fund under the heading ”Expenses Paid During Period.“
| • | Based on hypothetical 5% yearly return. This section is intended to help you compare your fund‘s costs with those of other mutual funds. It assumes that the fund had a yearly return of 5% before expenses, but that the expense ratio is unchanged. In this case—because the return used is not the fund’s actual return—the results do not apply to your investment. The example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to calculate expenses based on a 5% return. You can assess your fund’s costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds. |
Note that the expenses shown
in the table are meant to highlight and help you compare ongoing costs only and do not reflect transaction costs incurred by the fund for buying and selling securities. Further, the expenses do not include any purchase, redemption, or
account service fees described in the fund prospectus. If such fees were applied to your account, your costs would be higher. Your fund does not carry a “sales load.”
The calculations assume no
shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.
You can find more information
about the fund’s expenses, including annual expense ratios, in the Financial Statements section of this report. For additional information on operating expenses and other shareholder costs, please refer to your
fund’s current prospectus.
1
| Six Months Ended April 30, 2023 | |||
| Advice Select Global Value Fund | Beginning Account Value 10/31/2022 | Ending Account Value 4/30/2023 | Expenses Paid During Period |
| Based on Actual Fund Return | $1,000.00 | $1,147.30 | $2.24 |
| Based on Hypothetical 5% Yearly Return | 1,000.00 | 1,022.71 | 2.11 |
The calculations are
based on expenses incurred in the most recent six-month period. The fund's annualized six-month expense ratio for that period is 0.42%. The dollar amounts shown as ”Expenses Paid” are equal to the
annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by the number of days in the most recent 12-month
period (181/365).
2
Advice Select Global Value Fund
Fund Allocation
As of April 30, 2023
| United States | 52.1% |
| Japan | 9.0 |
| United Kingdom | 8.5 |
| France | 4.0 |
| Spain | 3.6 |
| Ireland | 3.4 |
| Hong Kong | 3.3 |
| China | 2.8 |
| South Korea | 2.4 |
| Netherlands | 2.0 |
| Canada | 1.5 |
| Switzerland | 1.4 |
| Sweden | 1.2 |
| Belgium | 1.0 |
| Norway | 1.0 |
| Other | 2.8 |
The table reflects the fund’s
investments, except for short-term investments.
3
Advice Select Global Value Fund
Financial Statements (unaudited)
Schedule of Investments
As of April 30, 2023
The fund files its complete
schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports
are available on the SEC’s website at www.sec.gov.
4
Advice Select Global Value Fund
See accompanying
Notes, which are an integral part of the Financial Statements.
5
Advice Select Global Value Fund
Statement of Assets and Liabilities
As of April 30, 2023
| ($000s, except shares, footnotes, and per-share amounts) | Amount |
| Assets | |
| Investments in Securities, at Value | |
| Unaffiliated Issuers (Cost $603,766) | 627,159 |
| Affiliated Issuers (Cost $11,836) | 11,837 |
| Total Investments in Securities | 638,996 |
| Investment in Vanguard | 21 |
| Foreign Currency, at Value (Cost $328) | 328 |
| Receivables for Accrued Income | 1,789 |
| Receivables for Capital Shares Issued | 2,304 |
| Total Assets | 643,438 |
| Liabilities | |
| Payables for Investment Securities Purchased | 7,116 |
| Payables for Capital Shares Redeemed | 390 |
| Payables to Investment Advisor | 307 |
| Payables to Vanguard | 52 |
| Total Liabilities | 7,865 |
| Net Assets | 635,573 |
| At April 30, 2023, net assets consisted of: | |
| Paid-in Capital | 601,857 |
| Total Distributable Earnings (Loss) | 33,716 |
| Net Assets | 635,573 |
| Net Assets | |
| Applicable to 25,970,106 outstanding $.001 par value shares of beneficial interest (unlimited authorization) | 635,573 |
| Net Asset Value Per Share | $24.47 |
See accompanying Notes, which are an
integral part of the Financial Statements.
6
Advice Select Global Value Fund
Statement of Operations
| Six Months Ended April 30, 2023 | |
| ($000) | |
| Investment Income | |
| Income | |
| Dividends1 | 4,834 |
| Interest2 | 217 |
| Total Income | 5,051 |
| Expenses | |
| Investment Advisory Fees—Note B | |
| Basic Fee | 473 |
| Performance Adjustment | 31 |
| The Vanguard Group—Note C | |
| Management and Administrative | 396 |
| Marketing and Distribution | 14 |
| Custodian Fees | 46 |
| Shareholders’ Reports | 4 |
| Trustees’ Fees and Expenses | — |
| Other Expenses | 8 |
| Total Expenses | 972 |
| Net Investment Income | 4,079 |
| Realized Net Gain (Loss) | |
| Investment Securities Sold2 | 8,403 |
| Foreign Currencies | 4 |
| Realized Net Gain (Loss) | 8,407 |
| Change in Unrealized Appreciation (Depreciation) | |
| Investment Securities2 | 39,739 |
| Foreign Currencies | — |
| Change in Unrealized Appreciation (Depreciation) | 39,739 |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 52,225 |
| 1 | Dividends are net of foreign withholding taxes of $403,000. |
| 2 | Interest income, realized net gain (loss), capital gain distributions received, and change in unrealized appreciation (depreciation) from an affiliated company of the fund were $217,000, less than $1,000, less than $1,000, and less than $1,000, respectively. Purchases and sales are for temporary cash investment purposes. |
See accompanying Notes, which are an
integral part of the Financial Statements.
7
Advice Select Global Value Fund
Statement of Changes in Net Assets
| Six Months Ended April 30, 2023 | November 9, 20211 to October 31, 2022 | ||
| ($000) | ($000) | ||
| Increase (Decrease) in Net Assets | |||
| Operations | |||
| Net Investment Income | 4,079 | 1,615 | |
| Realized Net Gain (Loss) | 8,407 | (1,235) | |
| Change in Unrealized Appreciation (Depreciation) | 39,739 | (16,350) | |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 52,225 | (15,970) | |
| Distributions | |||
| Total Distributions | (2,521) | (12) | |
| Capital Share Transactions | |||
| Issued | 299,343 | 341,698 | |
| Issued in Lieu of Cash Distributions | 2,112 | 12 | |
| Redeemed | (26,630) | (14,684) | |
| Net Increase (Decrease) from Capital Share Transactions | 274,825 | 327,026 | |
| Total Increase (Decrease) | 324,529 | 311,044 | |
| Net Assets | |||
| Beginning of Period | 311,044 | — | |
| End of Period | 635,573 | 311,044 | |
| 1 | Inception. |
See accompanying Notes, which are an
integral part of the Financial Statements.
8
Advice Select Global Value Fund
Financial Highlights
| Six Months Ended April 30, 2023 | November 9, 20211 to October 31, 2022 | |
| For a Share Outstanding Throughout Each Period | ||
| Net Asset Value, Beginning of Period | $21.47 | $25.00 |
| Investment Operations | ||
| Net Investment Income2 | .207 | .313 |
| Net Realized and Unrealized Gain (Loss) on Investments | 2.943 | (3.812) |
| Total from Investment Operations | 3.150 | (3.499) |
| Distributions | ||
| Dividends from Net Investment Income | (.138) | (.031) |
| Distributions from Realized Capital Gains | (.012) | — |
| Total Distributions | (.150) | (.031) |
| Net Asset Value, End of Period | $24.47 | $21.47 |
| Total Return3 | 14.73% | -14.01% |
| Ratios/Supplemental Data | ||
| Net Assets, End of Period (Millions) | $636 | $311 |
| Ratio of Total Expenses to Average Net Assets | 0.42%4 | 0.40%5 |
| Ratio of Net Investment Income to Average Net Assets | 1.70% | 1.45%5 |
| Portfolio Turnover Rate | 32% | 56% |
| The expense ratio and net investment income ratio for the current period have been annualized. | ||
| 1 | Inception. |
| 2 | Calculated based on average shares outstanding. |
| 3 | Total returns do not include account service fees that may have applied in the periods shown. Fund prospectuses provide information about any applicable account service fees. |
| 4 | Includes performance-based investment advisory fee increases (decreases) of 0.01%. |
| 5 | Annualized. |
See accompanying Notes, which are an
integral part of the Financial Statements.
9
Advice Select Global Value Fund
Notes to Financial Statements
Vanguard Advice Select Global
Value Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund.
A. The following significant accounting policies conform to generally accepted accounting principles for U.S. investment companies. The fund consistently follows such policies in preparing its
financial statements.
1. Security Valuation:
Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official
closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which
market quotations are not readily available, or whose values have been affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued by
methods deemed by the valuation designee to represent fair value and subject to oversight by the board of trustees. These procedures include obtaining quotations from an independent pricing service, monitoring news to
identify significant market- or security-specific events, and evaluating changes in the values of foreign market proxies (for example, ADRs, futures contracts, or exchange-traded funds), between the time the foreign
markets close and the fund’s pricing time. When fair-value pricing is employed, the prices of securities used by a fund to calculate its net asset value may differ from quoted or published prices for the same
securities. Investments in Vanguard Market Liquidity Fund are valued at that fund's net asset value.
2. Foreign Currency:
Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates obtained from an independent third party as of the fund’s pricing time on the
valuation date. Realized gains (losses) and unrealized appreciation (depreciation) on investment securities include the effects of changes in exchange rates since the securities were purchased, combined with the
effects of changes in security prices. Fluctuations in the value of other assets and liabilities resulting from changes in exchange rates are recorded as unrealized foreign currency gains (losses) until the assets or
liabilities are settled in cash, at which time they are recorded as realized foreign currency gains (losses).
3. Federal Income Taxes:
The fund intends to qualify as a regulated investment company and distribute virtually all of its taxable income. The fund’s tax returns are open to examination by the relevant tax authorities until expiration
of the applicable statute of limitations, which is generally three years after the filing of the tax return. Management has analyzed the fund’s tax positions taken for all open federal and state income tax
years, and has concluded that no provision for income tax is required in the fund’s financial statements.
4. Distributions:
Distributions to shareholders are recorded on the ex-dividend date. Distributions are determined on a tax basis at the fiscal year-end and may differ from net investment income and realized capital gains for financial
reporting purposes.
5. Credit Facilities and
Interfund Lending Program: The fund and certain other funds managed by The Vanguard Group ("Vanguard") participate in a $4.3 billion committed credit facility provided by a syndicate of lenders pursuant to a credit
agreement and an uncommitted credit facility provided by Vanguard. Both facilities may be renewed annually. Each fund is individually liable for its borrowings, if any, under the credit facilities. Borrowings may be
utilized for temporary or emergency purposes and are subject to the fund’s regulatory and contractual borrowing restrictions. With respect to the committed credit facility, the participating funds are charged
10
Advice Select Global Value Fund
administrative fees and an annual commitment
fee of 0.10% of the undrawn committed amount of the facility, which are allocated to the funds based on a method approved by the fund’s board of trustees and included in Management and Administrative expenses on
the fund’s Statement of Operations. Any borrowings under either facility bear interest at an agreed-upon spread plus the higher of the federal funds effective rate, the overnight bank funding rate, or the Daily
Simple Secured Overnight Financing Rate inclusive of an additional agreed-upon spread. However, borrowings under the uncommitted credit facility may bear interest based upon an alternate rate agreed to by the fund and
Vanguard.
In accordance with an
exemptive order (the “Order”) from the SEC, the fund may participate in a joint lending and borrowing program that allows registered open-end Vanguard funds to borrow money from and lend money to each
other for temporary or emergency purposes (the “Interfund Lending Program”), subject to compliance with the terms and conditions of the Order, and to the extent permitted by the fund’s investment
objective and investment policies. Interfund loans and borrowings normally extend overnight but can have a maximum duration of seven days. Loans may be called on one business day’s notice. The interest rate to
be charged is governed by the conditions of the Order and internal procedures adopted by the board of trustees. The board of trustees is responsible for overseeing the Interfund Lending Program.
For the six months ended April
30, 2023, the fund did not utilize the credit facilities or the Interfund Lending Program.
6. Other: Dividend
income is recorded on the ex-dividend date. Non-cash dividends included in income, if any, are recorded at the fair value of the securities received. Interest income includes income distributions received from
Vanguard Market Liquidity Fund and is accrued daily. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment
securities are those of the specific securities sold.
B. Wellington Management Company llp provides investment advisory services to the fund for a fee calculated at an annual percentage rate of average net assets. In accordance with the advisory contract entered into with
Wellington Management Company llp , beginning February 1, 2023, the investment advisory fee will be subject to quarterly adjustments based on performance relative to the MSCI ACWI Value Index since January 31, 2022.
For the six months ended April 30, 2023, the investment advisory fee represented an effective annual basic rate of 0.20% of the fund’s average net assets, before a net increase of $31,000 (0.01%)
based on performance.
C. In accordance with the terms of a Funds’ Service Agreement (the “FSA”) between Vanguard and the fund, Vanguard furnishes to the fund corporate management, administrative,
marketing, distribution, and cash management services at Vanguard’s cost of operations (as defined by the FSA). These costs of operations are allocated to the fund based on methods and guidelines approved by the
board of trustees and are generally settled twice a month.
Upon the request of Vanguard,
the fund may invest up to 0.40% of its net assets as capital in Vanguard. At April 30, 2023, the fund had contributed to Vanguard capital in the amount of $21,000, representing less than 0.01% of the fund’s net
assets and less than 0.01% of Vanguard’s capital received pursuant to the FSA. The fund’s trustees and officers are also directors and employees, respectively, of Vanguard.
11
Advice Select Global Value Fund
D. Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or
methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.
Level 1—Quoted prices in active markets for identical securities.
Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).
Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments). Any investments valued with significant unobservable
inputs are noted on the Schedule of Investments.
The following table summarizes
the market value of the fund's investments as of April 30, 2023, based on the inputs used to value them:
| Level 1 ($000) | Level 2 ($000) | Level 3 ($000) | Total ($000) | |
| Investments | ||||
| Assets | ||||
| Common Stocks—North and South America | 338,808 | — | — | 338,808 |
| Common Stocks—Other | 32,222 | 256,129 | — | 288,351 |
| Temporary Cash Investments | 11,837 | — | — | 11,837 |
| Total | 382,867 | 256,129 | — | 638,996 |
E. As of April 30, 2023, gross unrealized appreciation and depreciation for investments based on cost for U.S. federal income tax purposes were as follows:
| Amount ($000) | |
| Tax Cost | 617,068 |
| Gross Unrealized Appreciation | 49,338 |
| Gross Unrealized Depreciation | (27,410) |
| Net Unrealized Appreciation (Depreciation) | 21,928 |
F. During the six months ended April 30, 2023, the fund purchased $421,331,000 of investment securities and sold $148,917,000 of investment securities, other than temporary cash
investments.
12
Advice Select Global Value Fund
G. Capital shares issued and redeemed were:
| Six Months Ended April 30, 2023 | November 9, 20211 to October 31, 2022 | ||
| Shares (000) | Shares (000) | ||
| Issued | 12,503 | 15,146 | |
| Issued in Lieu of Cash Distributions | 93 | 1 | |
| Redeemed | (1,113) | (660) | |
| Net Increase (Decrease) in Shares Outstanding | 11,483 | 14,487 |
| 1 | Inception. |
H. Significant market disruptions, such as those caused by pandemics (e.g., COVID-19 pandemic), natural or environmental disasters, war (e.g., Russia’s invasion of Ukraine), acts
of terrorism, or other events, can adversely affect local and global markets and normal market operations. Any such disruptions could have an adverse impact on the value of the fund's investments and fund
performance.
To the extent the fund’s
investment portfolio reflects concentration in a particular market, industry, sector, country or asset class, the fund may be adversely affected by the performance of these concentrations and may be subject to
increased price volatility and other risks.
I. Management has determined that no events or transactions occurred subsequent to April 30, 2023, that would require recognition or disclosure in these financial statements.
13
Trustees Approve Advisory Arrangement
The board of trustees of Vanguard Advice
Select Global Value Fund has renewed the fund’s investment advisory arrangement with Wellington Management Company llp (Wellington Management). The board determined renewing the investment advisory arrangement was in the best interests of the fund and its prospective shareholders.
The board based its decision
upon an evaluation of the advisor’s investment staff, portfolio management process, and performance. This evaluation included information provided to the board by Vanguard’s Portfolio Review Department,
which is responsible for fund and advisor oversight and product management. The Portfolio Review Department met regularly with the advisor and made presentations to the board during the fiscal year that directed the
board’s focus to relevant information and topics.
The board, or an investment
committee made up of board members, also received information throughout the year during advisor presentations. For each advisor presentation, the board was provided with letters and reports that included information
about, among other things, the advisory firm and the advisor’s assessment of the investment environment, portfolio performance, and portfolio characteristics.
In addition, the board
received periodic reports throughout the year, which included information about each fund’s performance relative to its peers and benchmark, as applicable, and updates, as needed, on the Portfolio Review
Department’s ongoing assessment of the advisor.
Prior to their meeting, the
trustees were provided with a memo and materials that summarized the information they received over the course of the year. They also considered the factors discussed below, among others. However, no single factor
determined whether the board approved the arrangements. Rather, it was the totality of the circumstances that drove the board’s decision.
Nature, extent, and quality of
services
The board reviewed the quality of the
investment management services provided to the fund since its inception in 2021; it also took into account the organizational depth and stability of the advisor. The board considered that Wellington Management, an
investment management company founded in 1928, is among the nation’s oldest and most respected institutional investment managers. Wellington Management utilizes a bottom-up, fundamentally driven approach to
invest in solid companies whose current fundamentals are depressed relative to longer-term earnings potential. Wellington Management has the ability to seek undervalued stocks across the capitalization spectrum. The
investment team has the support of Wellington Management’s global industry analysts in conducting their research-intensive approach. Wellington Management has managed the fund since its inception in 2021.
The board concluded that the
advisor’s experience, stability, depth, and performance, among other factors, warranted approval of the advisory arrangement.
Investment performance
The board considered the fund’s
performance since its inception in 2021, including any periods of outperformance or underperformance compared with a relevant benchmark and peer group.
14
The board concluded that the
performance was such that the advisory arrangement should continue.
Cost
The board concluded that the fund’s
expense ratio was below the average expense ratio charged by funds in its peer group and that the fund’s advisory fee rate was below its peer-group average.
The board did not consider the
profitability of Wellington Management in determining whether to approve the advisory fee, because Wellington Management is independent of Vanguard and the advisory fee is the result of arm’s-length
negotiations.
The benefit of economies of
scale
The board concluded that the fund’s
shareholders benefit from economies of scale because of breakpoints in the fund’s advisory fee schedule with Wellington Management. The breakpoints reduce the effective rate of the fee as the fund’s assets
increase.
The board will consider
whether to renew the advisory arrangement again after a one-year period.
15
Liquidity Risk Management
Vanguard funds (except for the
money market funds) have adopted and implemented a written liquidity risk management program (the “Program”) as required by Rule 22e-4 under the Investment Company Act of 1940. Rule 22e-4 requires that
each fund adopt a program that is reasonably designed to assess and manage the fund’s liquidity risk, which is the risk that the fund could not meet redemption requests without significant dilution of remaining
investors’ interests in the fund.
Assessment and management of a
fund’s liquidity risk under the Program take into consideration certain factors, such as the fund’s investment strategy and the liquidity of its portfolio investments during normal and reasonably
foreseeable stressed conditions, its short- and long-term cash-flow projections during both normal and reasonably foreseeable stressed conditions, and its cash and cash-equivalent holdings and access to other funding
sources. As required by the rule, the Program includes policies and procedures for classification of fund portfolio holdings in four liquidity categories, maintaining certain levels of highly liquid investments, and
limiting holdings of illiquid investments.
The board of trustees of
Vanguard Whitehall Funds approved the appointment of liquidity risk management program administrators responsible for administering Vanguard Advice Select Global Value Fund’s Program and for carrying out the
specific responsibilities set forth in the Program, including reporting to the board on at least an annual basis regarding the Program’s operation, its adequacy, and the effectiveness of its implementation for
the past year (the “Program Administrator Report”). The board has reviewed the Program Administrator Report covering the period from January 1, 2022, through December 31, 2022 (the “Review
Period”). The Program Administrator Report stated that during the Review Period the Program operated and was implemented effectively to manage the fund’s liquidity risk.
16
Semiannual Report | April 30, 2023
Vanguard Advice
Select International Growth Fund
About Your Fund’s Expenses
As a shareholder of the fund,
you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross
income, directly reduce the investment return of the fund.
A fund‘s expenses are
expressed as a percentage of its average net assets. This figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your fund and
to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.
The accompanying table
illustrates your fund’s costs in two ways:
| • | Based on actual fund return. This section helps you to estimate the actual expenses that you paid over the period. The ”Ending Account Value“ shown is derived from the fund’s actual return, and the third column shows the dollar amount that would have been paid by an investor who started with $1,000 in the fund. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period. |
To do so, simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your fund under the heading ”Expenses Paid During Period.“
| • | Based on hypothetical 5% yearly return. This section is intended to help you compare your fund‘s costs with those of other mutual funds. It assumes that the fund had a yearly return of 5% before expenses, but that the expense ratio is unchanged. In this case—because the return used is not the fund’s actual return—the results do not apply to your investment. The example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to calculate expenses based on a 5% return. You can assess your fund’s costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds. |
Note that the expenses shown
in the table are meant to highlight and help you compare ongoing costs only and do not reflect transaction costs incurred by the fund for buying and selling securities. Further, the expenses do not include any purchase, redemption, or
account service fees described in the fund prospectus. If such fees were applied to your account, your costs would be higher. Your fund does not carry a “sales load.”
The calculations assume no
shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.
You can find more information
about the fund’s expenses, including annual expense ratios, in the Financial Statements section of this report. For additional information on operating expenses and other shareholder costs, please refer to your
fund’s current prospectus.
1
| Six Months Ended April 30, 2023 | |||
| Advice Select International Growth Fund | Beginning Account Value 10/31/2022 | Ending Account Value 4/30/2023 | Expenses Paid During Period |
| Based on Actual Fund Return | $1,000.00 | $1,266.40 | $2.30 |
| Based on Hypothetical 5% Yearly Return | 1,000.00 | 1,022.76 | 2.06 |
The calculations are
based on expenses incurred in the most recent six-month period. The fund's annualized six-month expense ratio for that period is 0.41%. The dollar amounts shown as ”Expenses Paid” are equal to the
annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by the number of days in the most recent 12-month
period (181/365).
2
Advice Select International Growth Fund
Fund Allocation
As of April 30, 2023
| United States | 28.0% |
| Netherlands | 18.0 |
| France | 11.8 |
| China | 10.9 |
| Germany | 8.6 |
| Sweden | 7.5 |
| Italy | 4.5 |
| Denmark | 4.2 |
| United Kingdom | 2.9 |
| Japan | 2.0 |
| Canada | 1.6 |
The table reflects the fund’s
investments, except for short-term investments.
3
Advice Select International Growth Fund
Financial Statements (unaudited)
Schedule of Investments
As of April 30, 2023
The fund files its complete
schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports
are available on the SEC’s website at www.sec.gov.
See accompanying
Notes, which are an integral part of the Financial Statements.
4
Advice Select International Growth Fund
Statement of Assets and Liabilities
As of April 30, 2023
| ($000s, except shares, footnotes, and per-share amounts) | Amount |
| Assets | |
| Investments in Securities, at Value | |
| Unaffiliated Issuers (Cost $403,544) | 431,311 |
| Affiliated Issuers (Cost $10,586) | 10,587 |
| Total Investments in Securities | 441,898 |
| Investment in Vanguard | 15 |
| Cash | 72 |
| Foreign Currency, at Value (Cost $99) | 99 |
| Receivables for Accrued Income | 435 |
| Receivables for Capital Shares Issued | 1,641 |
| Total Assets | 444,160 |
| Liabilities | |
| Payables for Investment Securities Purchased | 3,139 |
| Payables for Capital Shares Redeemed | 259 |
| Payables to Investment Advisor | 196 |
| Payables to Vanguard | 36 |
| Total Liabilities | 3,630 |
| Net Assets | 440,530 |
| At April 30, 2023, net assets consisted of: | |
| Paid-in Capital | 415,773 |
| Total Distributable Earnings (Loss) | 24,757 |
| Net Assets | 440,530 |
| Net Assets | |
| Applicable to 27,500,738 outstanding $.001 par value shares of beneficial interest (unlimited authorization) | 440,530 |
| Net Asset Value Per Share | $16.02 |
See accompanying Notes, which are an
integral part of the Financial Statements.
5
Advice Select International Growth Fund
Statement of Operations
| Six Months Ended April 30, 2023 | |
| ($000) | |
| Investment Income | |
| Income | |
| Dividends1 | 829 |
| Non-Cash Dividends | 666 |
| Interest2 | 169 |
| Total Income | 1,664 |
| Expenses | |
| Investment Advisory Fees—Note B | |
| Basic Fee | 357 |
| Performance Adjustment | (14) |
| The Vanguard Group—Note C | |
| Management and Administrative | 264 |
| Marketing and Distribution | 10 |
| Custodian Fees | 35 |
| Shareholders’ Reports | 4 |
| Trustees’ Fees and Expenses | — |
| Other Expenses | 8 |
| Total Expenses | 664 |
| Net Investment Income | 1,000 |
| Realized Net Gain (Loss) | |
| Investment Securities Sold2 | (1,405) |
| Foreign Currencies | (44) |
| Realized Net Gain (Loss) | (1,449) |
| Change in Unrealized Appreciation (Depreciation) | |
| Investment Securities2 | 59,296 |
| Foreign Currencies | (1) |
| Change in Unrealized Appreciation (Depreciation) | 59,295 |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 58,846 |
| 1 | Dividends are net of foreign withholding taxes of $143,000. |
| 2 | Interest income, realized net gain (loss), capital gain distributions received, and change in unrealized appreciation (depreciation) from an affiliated company of the fund were $169,000, ($1,000), less than $1,000, and less than $1,000, respectively. Purchases and sales are for temporary cash investment purposes. |
See accompanying Notes, which are an
integral part of the Financial Statements.
6
Advice Select International Growth Fund
Statement of Changes in Net Assets
| Six Months Ended April 30, 2023 | November 9, 20211 to October 31, 2022 | ||
| ($000) | ($000) | ||
| Increase (Decrease) in Net Assets | |||
| Operations | |||
| Net Investment Income (Loss) | 1,000 | (46) | |
| Realized Net Gain (Loss) | (1,449) | (2,515) | |
| Change in Unrealized Appreciation (Depreciation) | 59,295 | (31,528) | |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 58,846 | (34,089) | |
| Distributions | |||
| Total Distributions | — | — | |
| Capital Share Transactions | |||
| Issued | 205,820 | 239,368 | |
| Issued in Lieu of Cash Distributions | — | — | |
| Redeemed | (19,847) | (9,568) | |
| Net Increase (Decrease) from Capital Share Transactions | 185,973 | 229,800 | |
| Total Increase (Decrease) | 244,819 | 195,711 | |
| Net Assets | |||
| Beginning of Period | 195,711 | — | |
| End of Period | 440,530 | 195,711 | |
| 1 | Inception. |
See accompanying Notes, which are an
integral part of the Financial Statements.
7
Advice Select International Growth Fund
Financial Highlights
| Six Months Ended April 30, 2023 | November 9, 20211 to October 31, 2022 | |
| For a Share Outstanding Throughout Each Period | ||
| Net Asset Value, Beginning of Period | $12.65 | $25.00 |
| Investment Operations | ||
| Net Investment Income (Loss)2 | .048 | (.009) |
| Net Realized and Unrealized Gain (Loss) on Investments | 3.322 | (12.341) |
| Total from Investment Operations | 3.370 | (12.350) |
| Distributions | ||
| Dividends from Net Investment Income | — | — |
| Distributions from Realized Capital Gains | — | — |
| Total Distributions | — | — |
| Net Asset Value, End of Period | $16.02 | $12.65 |
| Total Return3 | 26.64% | -49.40% |
| Ratios/Supplemental Data | ||
| Net Assets, End of Period (Millions) | $441 | $196 |
| Ratio of Total Expenses to Average Net Assets | 0.41%4 | 0.42%5 |
| Ratio of Net Investment Income to Average Net Assets | 0.62% | (0.06%)5 |
| Portfolio Turnover Rate | 4% | 11% |
| The expense ratio and net investment income ratio for the current period have been annualized. | ||
| 1 | Inception. |
| 2 | Calculated based on average shares outstanding. |
| 3 | Total returns do not include account service fees that may have applied in the periods shown. Fund prospectuses provide information about any applicable account service fees. |
| 4 | Includes performance-based investment advisory fee increases (decreases) of (0.01%). |
| 5 | Annualized. |
See accompanying Notes, which are an
integral part of the Financial Statements.
8
Advice Select International Growth Fund
Notes to Financial Statements
Vanguard Advice Select
International Growth Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund.
A. The following significant accounting policies conform to generally accepted accounting principles for U.S. investment companies. The fund consistently follows such policies in preparing its
financial statements.
1. Security Valuation:
Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official
closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which
market quotations are not readily available, or whose values have been affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued by
methods deemed by the valuation designee to represent fair value and subject to oversight by the board of trustees. These procedures include obtaining quotations from an independent pricing service, monitoring news to
identify significant market- or security-specific events, and evaluating changes in the values of foreign market proxies (for example, ADRs, futures contracts, or exchange-traded funds), between the time the foreign
markets close and the fund’s pricing time. When fair-value pricing is employed, the prices of securities used by a fund to calculate its net asset value may differ from quoted or published prices for the same
securities. Investments in Vanguard Market Liquidity Fund are valued at that fund's net asset value.
2. Foreign Currency:
Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates obtained from an independent third party as of the fund’s pricing time on the
valuation date. Realized gains (losses) and unrealized appreciation (depreciation) on investment securities include the effects of changes in exchange rates since the securities were purchased, combined with the
effects of changes in security prices. Fluctuations in the value of other assets and liabilities resulting from changes in exchange rates are recorded as unrealized foreign currency gains (losses) until the assets or
liabilities are settled in cash, at which time they are recorded as realized foreign currency gains (losses).
3. Federal Income Taxes:
The fund intends to qualify as a regulated investment company and distribute virtually all of its taxable income. The fund’s tax returns are open to examination by the relevant tax authorities until expiration
of the applicable statute of limitations, which is generally three years after the filing of the tax return. Management has analyzed the fund’s tax positions taken for all open federal and state income tax
years, and has concluded that no provision for income tax is required in the fund’s financial statements.
4. Distributions:
Distributions to shareholders are recorded on the ex-dividend date. Distributions are determined on a tax basis at the fiscal year-end and may differ from net investment income and realized capital gains for financial
reporting purposes.
5. Credit Facilities and
Interfund Lending Program: The fund and certain other funds managed by The Vanguard Group ("Vanguard") participate in a $4.3 billion committed credit facility provided by a syndicate of lenders pursuant to a credit
agreement and an uncommitted credit facility provided by Vanguard. Both facilities may be renewed annually. Each fund is individually liable for its borrowings, if any, under the credit facilities. Borrowings may be
utilized for temporary or emergency purposes and are subject to the fund’s regulatory and contractual borrowing restrictions. With respect to the committed credit facility, the participating funds are charged
9
Advice Select International Growth Fund
administrative fees and an annual commitment
fee of 0.10% of the undrawn committed amount of the facility, which are allocated to the funds based on a method approved by the fund’s board of trustees and included in Management and Administrative expenses on
the fund’s Statement of Operations. Any borrowings under either facility bear interest at an agreed-upon spread plus the higher of the federal funds effective rate, the overnight bank funding rate, or the Daily
Simple Secured Overnight Financing Rate inclusive of an additional agreed-upon spread. However, borrowings under the uncommitted credit facility may bear interest based upon an alternate rate agreed to by the fund and
Vanguard.
In accordance with an
exemptive order (the “Order”) from the SEC, the fund may participate in a joint lending and borrowing program that allows registered open-end Vanguard funds to borrow money from and lend money to each
other for temporary or emergency purposes (the “Interfund Lending Program”), subject to compliance with the terms and conditions of the Order, and to the extent permitted by the fund’s investment
objective and investment policies. Interfund loans and borrowings normally extend overnight but can have a maximum duration of seven days. Loans may be called on one business day’s notice. The interest rate to
be charged is governed by the conditions of the Order and internal procedures adopted by the board of trustees. The board of trustees is responsible for overseeing the Interfund Lending Program.
For the six months ended April
30, 2023, the fund did not utilize the credit facilities or the Interfund Lending Program.
6. Other: Dividend
income is recorded on the ex-dividend date. Non-cash dividends included in income, if any, are recorded at the fair value of the securities received. Interest income includes income distributions received from
Vanguard Market Liquidity Fund and is accrued daily. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment
securities are those of the specific securities sold.
B. Baillie Gifford Overseas Ltd. provides investment advisory services to the fund for a fee calculated at an annual percentage rate of average net assets. In accordance with the advisory
contract entered into with Baillie Gifford Overseas Ltd., beginning February 1, 2023, the investment advisory fee will be subject to quarterly adjustments based on performance relative to the MSCI ACWI ex-USA Growth
Index since January 31, 2022. For the six months ended April 30, 2023, the investment advisory fee represented an effective annual basic rate of 0.22% of the fund’s average net assets, before a net decrease of $14,000 (0.01%)
based on performance.
C. In accordance with the terms of a Funds’ Service Agreement (the “FSA”) between Vanguard and the fund, Vanguard furnishes to the fund corporate management, administrative,
marketing, distribution, and cash management services at Vanguard’s cost of operations (as defined by the FSA). These costs of operations are allocated to the fund based on methods and guidelines approved by the
board of trustees and are generally settled twice a month.
Upon the request of Vanguard,
the fund may invest up to 0.40% of its net assets as capital in Vanguard. At April 30, 2023, the fund had contributed to Vanguard capital in the amount of $15,000, representing less than 0.01% of the fund’s net
assets and less than 0.01% of Vanguard’s capital received pursuant to the FSA. The fund’s trustees and officers are also directors and employees, respectively, of Vanguard.
10
Advice Select International Growth Fund
D. Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or
methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.
Level 1—Quoted prices in active markets for identical securities.
Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).
Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments). Any investments valued with significant unobservable
inputs are noted on the Schedule of Investments.
The following table summarizes
the market value of the fund's investments as of April 30, 2023, based on the inputs used to value them:
| Level 1 ($000) | Level 2 ($000) | Level 3 ($000) | Total ($000) | |
| Investments | ||||
| Assets | ||||
| Common Stocks—North and South America | 127,793 | — | — | 127,793 |
| Common Stocks—Other | 22,321 | 281,197 | — | 303,518 |
| Temporary Cash Investments | 10,587 | — | — | 10,587 |
| Total | 160,701 | 281,197 | — | 441,898 |
E. As of April 30, 2023, gross unrealized appreciation and depreciation for investments based on cost for U.S. federal income tax purposes were as follows:
| Amount ($000) | |
| Tax Cost | 418,135 |
| Gross Unrealized Appreciation | 58,341 |
| Gross Unrealized Depreciation | (34,578) |
| Net Unrealized Appreciation (Depreciation) | 23,763 |
The fund’s tax-basis
capital gains and losses are determined only at the end of each fiscal year. For tax purposes, at October 31, 2022, the fund had available capital losses totaling $32,000 that may be carried forward indefinitely to
offset future net capital gains. The fund will use these capital losses to offset net taxable capital gains, if any, realized during the year ending October 31, 2023; should the fund realize net capital losses for the
year, the losses will be added to the loss carryforward balance above.
F. During the six months ended April 30, 2023, the fund purchased $192,973,000 of investment securities and sold $11,555,000 of investment securities, other than temporary cash
investments.
11
Advice Select International Growth Fund
G. Capital shares issued and redeemed were:
| Six Months Ended April 30, 2023 | November 9, 20211 to October 31, 2022 | ||
| Shares (000) | Shares (000) | ||
| Issued | 13,311 | 16,125 | |
| Issued in Lieu of Cash Distributions | — | — | |
| Redeemed | (1,281) | (654) | |
| Net Increase (Decrease) in Shares Outstanding | 12,030 | 15,471 |
| 1 | Inception. |
H. Significant market disruptions, such as those caused by pandemics (e.g., COVID-19 pandemic), natural or environmental disasters, war (e.g., Russia’s invasion of Ukraine), acts
of terrorism, or other events, can adversely affect local and global markets and normal market operations. Any such disruptions could have an adverse impact on the value of the fund's investments and fund
performance.
To the extent the fund’s
investment portfolio reflects concentration in a particular market, industry, sector, country or asset class, the fund may be adversely affected by the performance of these concentrations and may be subject to
increased price volatility and other risks.
I. Management has determined that no events or transactions occurred subsequent to April 30, 2023, that would require recognition or disclosure in these financial statements.
12
Trustees Approve Advisory Arrangement
The board of trustees of Vanguard Advice
Select International Growth Fund has renewed the fund’s investment advisory arrangement with Baillie Gifford Overseas Ltd. (Baillie Gifford). The board determined renewing the fund’s advisory
arrangement was in the best interests of the fund and its shareholders.
The board based its decision
upon an evaluation of the advisor’s investment staff, portfolio management process, and performance. This evaluation included information provided to the board by Vanguard’s Portfolio Review Department,
which is responsible for fund and advisor oversight and product management. The Portfolio Review Department met regularly with the advisor and made presentations to the board during the fiscal year that directed the
board’s focus to relevant information and topics.
The board, or an investment
committee made up of board members, also received information throughout the year during advisor presentations. For each advisor presentation, the board was provided with letters and reports that included information
about, among other things, the advisory firm and the advisor’s assessment of the investment environment, portfolio performance, and portfolio characteristics.
In addition, the board
received periodic reports throughout the year, which included information about each fund’s performance relative to its peers and benchmark, as applicable, and updates, as needed, on the Portfolio Review
Department’s ongoing assessment of the advisor.
Prior to their meeting, the
trustees were provided with a memo and materials that summarized the information they received over the course of the year. They also considered the factors discussed below, among others. However, no single factor
determined whether the board approved the arrangement. Rather, it was the totality of the circumstances that drove the board’s decision.
Nature, extent, and quality of
services
The board reviewed the quality of the
investment management services provided to the fund since its inception in 2021; it also took into account the organizational depth and stability of the advisor. The board considered that Baillie Gifford—a unit
of Baillie Gifford & Co., founded in 1908—is among the largest independently owned investment management firms in the United Kingdom. The advisor utilizes fundamental research to make long-term investments
in companies that have above-average growth potential resulting from sustainable competitive advantages, special cultures and management, or competitive strength in underestimated technology shifts. Baillie Gifford
believes that equities’ asymmetrical return pattern means that alpha is generated by focusing on the upside and the potential to earn exponential returns rather than being overly concerned with avoiding losing
investments. The advisor takes a bottom-up, stock-driven approach to sector and country allocation. Baillie Gifford has advised the fund since its inception in 2021.
The board concluded that the
advisor’s experience, stability, depth, and performance, among other factors, warranted continuation of the advisory arrangement.
Investment performance
The board considered the fund’s
performance since its inception in 2021, including any periods of outperformance or underperformance compared with a relevant benchmark and peer group.
13
The board concluded that the
performance was such that the advisory arrangement should continue.
Cost
The board concluded that the fund’s
expense ratio was below the average expense ratio charged by funds in its peer group and that the fund’s advisory fee rate was also below its peer group average.
The board did not consider the
profitability of Baillie Gifford in determining whether to approve the advisory fee, because Baillie Gifford is independent of Vanguard and the advisory fee is the result of arm’s-length negotiations.
The benefit of economies of
scale
The board concluded that the fund’s
shareholders benefit from economies of scale because of breakpoints in the fund’s advisory fee schedule with Baillie Gifford. The breakpoints reduce the effective rate of the fee as the fund’s assets
increase.
The board will consider
whether to renew the advisory arrangement again after a one-year period.
14
Liquidity Risk Management
Vanguard funds (except for the
money market funds) have adopted and implemented a written liquidity risk management program (the “Program”) as required by Rule 22e-4 under the Investment Company Act of 1940. Rule 22e-4 requires that
each fund adopt a program that is reasonably designed to assess and manage the fund’s liquidity risk, which is the risk that the fund could not meet redemption requests without significant dilution of remaining
investors’ interests in the fund.
Assessment and management of a
fund’s liquidity risk under the Program take into consideration certain factors, such as the fund’s investment strategy and the liquidity of its portfolio investments during normal and reasonably
foreseeable stressed conditions, its short- and long-term cash-flow projections during both normal and reasonably foreseeable stressed conditions, and its cash and cash-equivalent holdings and access to other funding
sources. As required by the rule, the Program includes policies and procedures for classification of fund portfolio holdings in four liquidity categories, maintaining certain levels of highly liquid investments, and
limiting holdings of illiquid investments.
The board of trustees of
Vanguard Whitehall Funds approved the appointment of liquidity risk management program administrators responsible for administering Vanguard Advice Select International Growth Fund’s Program and for carrying out
the specific responsibilities set forth in the Program, including reporting to the board on at least an annual basis regarding the Program’s operation, its adequacy, and the effectiveness of its implementation
for the past year (the “Program Administrator Report”). The board has reviewed the Program Administrator Report covering the period from January 1, 2022, through December 31, 2022 (the “Review
Period”). The Program Administrator Report stated that during the Review Period the Program operated and was implemented effectively to manage the fund’s liquidity risk.
15
Semiannual Report | April 30, 2023
Vanguard Advice
Select Dividend Growth Fund
About Your Fund’s Expenses
As a shareholder of the fund,
you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross
income, directly reduce the investment return of the fund.
A fund‘s expenses are
expressed as a percentage of its average net assets. This figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your fund and
to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.
The accompanying table
illustrates your fund’s costs in two ways:
| • | Based on actual fund return. This section helps you to estimate the actual expenses that you paid over the period. The ”Ending Account Value“ shown is derived from the fund’s actual return, and the third column shows the dollar amount that would have been paid by an investor who started with $1,000 in the fund. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period. |
To do so, simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your fund under the heading ”Expenses Paid During Period.“
| • | Based on hypothetical 5% yearly return. This section is intended to help you compare your fund‘s costs with those of other mutual funds. It assumes that the fund had a yearly return of 5% before expenses, but that the expense ratio is unchanged. In this case—because the return used is not the fund’s actual return—the results do not apply to your investment. The example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to calculate expenses based on a 5% return. You can assess your fund’s costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds. |
Note that the expenses shown
in the table are meant to highlight and help you compare ongoing costs only and do not reflect transaction costs incurred by the fund for buying and selling securities. Further, the expenses do not include any purchase, redemption, or
account service fees described in the fund prospectus. If such fees were applied to your account, your costs would be higher. Your fund does not carry a “sales load.”
The calculations assume no
shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.
You can find more information
about the fund’s expenses, including annual expense ratios, in the Financial Statements section of this report. For additional information on operating expenses and other shareholder costs, please refer to your
fund’s current prospectus.
1
| Six Months Ended April 30, 2023 | |||
| Advice Select Dividend Growth Fund | Beginning Account Value 10/31/2022 | Ending Account Value 4/30/2023 | Expenses Paid During Period |
| Based on Actual Fund Return | $1,000.00 | $1,070.50 | $2.41 |
| Based on Hypothetical 5% Yearly Return | 1,000.00 | 1,022.46 | 2.36 |
The calculations are
based on expenses incurred in the most recent six-month period. The fund's annualized six-month expense ratio for that period is 0.47%. The dollar amounts shown as ”Expenses Paid” are equal to the
annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by the number of days in the most recent 12-month
period (181/365).
2
Advice Select Dividend Growth Fund
Fund Allocation
As of April 30, 2023
| Consumer Discretionary | 15.1% |
| Consumer Staples | 15.5 |
| Financials | 17.8 |
| Health Care | 19.0 |
| Industrials | 11.0 |
| Information Technology | 10.3 |
| Materials | 9.3 |
| Real Estate | 2.0 |
The table reflects the fund’s
investments, except for short-term investments. Sector categories are based on the Global Industry Classification Standard (“GICS”), except for the “Other” category (if applicable), which
includes securities that have not been provided a GICS classification as of the effective reporting period.
The Global Industry
Classification Standard (“GICS”) was developed by and is the exclusive property and a service mark of MSCI Inc. (“MSCI”) and Standard and Poor’s, a division of McGraw-Hill Companies, Inc.
(“S&P”), and is licensed for use by Vanguard. Neither MSCI, S&P nor any third party involved in making or compiling the GICS or any GICS classification makes any express or implied warranties or
representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness,
merchantability or fitness for a particular purpose with respect to any such standard or classification. Without limiting any of the foregoing, in no event shall MSCI, S&P, any of its affiliates or any third party
involved in making or compiling the GICS or any GICS classification have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the
possibility of such damages.
3
Advice Select Dividend Growth Fund
Financial Statements (unaudited)
Schedule of Investments
As of April 30, 2023
The fund files its complete
schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports
are available on the SEC’s website at www.sec.gov.
See accompanying
Notes, which are an integral part of the Financial Statements.
4
Advice Select Dividend Growth Fund
Statement of Assets and Liabilities
As of April 30, 2023
| ($000s, except shares, footnotes, and per-share amounts) | Amount |
| Assets | |
| Investments in Securities, at Value | |
| Unaffiliated Issuers (Cost $368,014) | 390,221 |
| Affiliated Issuers (Cost $19,290) | 19,292 |
| Total Investments in Securities | 409,513 |
| Investment in Vanguard | 13 |
| Receivables for Accrued Income | 427 |
| Receivables for Capital Shares Issued | 1,541 |
| Total Assets | 411,494 |
| Liabilities | |
| Payables for Investment Securities Purchased | 2,851 |
| Payables for Capital Shares Redeemed | 624 |
| Payables to Investment Advisor | 234 |
| Payables to Vanguard | 32 |
| Total Liabilities | 3,741 |
| Net Assets | 407,753 |
| At April 30, 2023, net assets consisted of: | |
| Paid-in Capital | 387,589 |
| Total Distributable Earnings (Loss) | 20,164 |
| Net Assets | 407,753 |
| Net Assets | |
| Applicable to 15,965,386 outstanding $.001 par value shares of beneficial interest (unlimited authorization) | 407,753 |
| Net Asset Value Per Share | $25.54 |
See accompanying Notes, which are an
integral part of the Financial Statements.
5
Advice Select Dividend Growth Fund
Statement of Operations
| Six Months Ended April 30, 2023 | |
| ($000) | |
| Investment Income | |
| Income | |
| Dividends | 2,489 |
| Interest1 | 239 |
| Total Income | 2,728 |
| Expenses | |
| Investment Advisory Fees—Note B | |
| Basic Fee | 364 |
| Performance Adjustment | 25 |
| The Vanguard Group—Note C | |
| Management and Administrative | 265 |
| Marketing and Distribution | 9 |
| Custodian Fees | 7 |
| Shareholders’ Reports | 4 |
| Trustees’ Fees and Expenses | — |
| Other Expenses | 8 |
| Total Expenses | 682 |
| Net Investment Income | 2,046 |
| Realized Net Gain (Loss) on Investment Securities Sold1 | (2,447) |
| Change in Unrealized Appreciation (Depreciation) of Investment Securities1 | 22,096 |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 21,695 |
| 1 | Interest income, realized net gain (loss), capital gain distributions received, and change in unrealized appreciation (depreciation) from an affiliated company of the fund were $239,000, less than $1,000, less than $1,000, and $1,000, respectively. Purchases and sales are for temporary cash investment purposes. |
See accompanying Notes, which are an
integral part of the Financial Statements.
6
Advice Select Dividend Growth Fund
Statement of Changes in Net Assets
| Six Months Ended April 30, 2023 | November 9, 20211 to October 31, 2022 | ||
| ($000) | ($000) | ||
| Increase (Decrease) in Net Assets | |||
| Operations | |||
| Net Investment Income | 2,046 | 934 | |
| Realized Net Gain (Loss) | (2,447) | (861) | |
| Change in Unrealized Appreciation (Depreciation) | 22,096 | 113 | |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 21,695 | 186 | |
| Distributions | |||
| Total Distributions | (1,439) | (274) | |
| Capital Share Transactions | |||
| Issued | 193,111 | 221,568 | |
| Issued in Lieu of Cash Distributions | 1,210 | 248 | |
| Redeemed | (16,844) | (11,708) | |
| Net Increase (Decrease) from Capital Share Transactions | 177,477 | 210,108 | |
| Total Increase (Decrease) | 197,733 | 210,020 | |
| Net Assets | |||
| Beginning of Period | 210,020 | — | |
| End of Period | 407,753 | 210,020 | |
| 1 | Inception. |
See accompanying Notes, which are an
integral part of the Financial Statements.
7
Advice Select Dividend Growth Fund
Financial Highlights
| Six Months Ended April 30, 2023 | November 9, 20211 to October 31, 2022 | |
| For a Share Outstanding Throughout Each Period | ||
| Net Asset Value, Beginning of Period | $24.00 | $25.00 |
| Investment Operations | ||
| Net Investment Income2 | .171 | .295 |
| Net Realized and Unrealized Gain (Loss) on Investments | 1.512 | (1.187) |
| Total from Investment Operations | 1.683 | (.892) |
| Distributions | ||
| Dividends from Net Investment Income | (.133) | (.108) |
| Distributions from Realized Capital Gains | (.010) | — |
| Total Distributions | (.143) | (.108) |
| Net Asset Value, End of Period | $25.54 | $24.00 |
| Total Return3 | 7.05% | -3.56% |
| Ratios/Supplemental Data | ||
| Net Assets, End of Period (Millions) | $408 | $210 |
| Ratio of Total Expenses to Average Net Assets | 0.47%4 | 0.45%5 |
| Ratio of Net Investment Income to Average Net Assets | 1.40% | 1.28%5 |
| Portfolio Turnover Rate | 5% | 20% |
| The expense ratio and net investment income ratio for the current period have been annualized. | ||
| 1 | Inception. |
| 2 | Calculated based on average shares outstanding. |
| 3 | Total returns do not include account service fees that may have applied in the periods shown. Fund prospectuses provide information about any applicable account service fees. |
| 4 | Includes performance-based investment advisory fee increases (decreases) of 0.02%. |
| 5 | Annualized. |
See accompanying Notes, which are an
integral part of the Financial Statements.
8
Advice Select Dividend Growth Fund
Notes to Financial Statements
Vanguard Advice Select
Dividend Growth Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund.
A. The following significant accounting policies conform to generally accepted accounting principles for U.S. investment companies. The fund consistently follows such policies in preparing its
financial statements.
1. Security Valuation:
Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official
closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which
market quotations are not readily available, or whose values have been affected by events occurring before the fund's pricing time but after the close of the securities’ primary markets, are valued by methods
deemed by the valuation designee to represent fair value and subject to oversight by the board of trustees. Investments in Vanguard Market Liquidity Fund are valued at that fund's net asset value.
2. Federal Income Taxes:
The fund intends to qualify as a regulated investment company and distribute virtually all of its taxable income. The fund’s tax returns are open to examination by the relevant tax authorities until expiration
of the applicable statute of limitations, which is generally three years after the filing of the tax return. Management has analyzed the fund’s tax positions taken for all open federal and state income tax
years, and has concluded that no provision for income tax is required in the fund’s financial statements.
3. Distributions:
Distributions to shareholders are recorded on the ex-dividend date. Distributions are determined on a tax basis at the fiscal year-end and may differ from net investment income and realized capital gains for financial
reporting purposes.
4. Credit Facilities and
Interfund Lending Program: The fund and certain other funds managed by The Vanguard Group ("Vanguard") participate in a $4.3 billion committed credit facility provided by a syndicate of lenders pursuant to a credit
agreement and an uncommitted credit facility provided by Vanguard. Both facilities may be renewed annually. Each fund is individually liable for its borrowings, if any, under the credit facilities. Borrowings may be
utilized for temporary or emergency purposes and are subject to the fund’s regulatory and contractual borrowing restrictions. With respect to the committed credit facility, the participating funds are charged
administrative fees and an annual commitment fee of 0.10% of the undrawn committed amount of the facility, which are allocated to the funds based on a method approved by the fund’s board of trustees and included
in Management and Administrative expenses on the fund’s Statement of Operations. Any borrowings under either facility bear interest at an agreed-upon spread plus the higher of the federal funds effective rate,
the overnight bank funding rate, or the Daily Simple Secured Overnight Financing Rate inclusive of an additional agreed-upon spread. However, borrowings under the uncommitted credit facility may bear interest based
upon an alternate rate agreed to by the fund and Vanguard.
In accordance with an
exemptive order (the “Order”) from the SEC, the fund may participate in a joint lending and borrowing program that allows registered open-end Vanguard funds to borrow money from and lend money to each
other for temporary or emergency purposes (the “Interfund Lending Program”), subject to compliance with the terms and conditions of the Order, and to the extent permitted by the fund’s investment
objective and investment policies. Interfund loans and borrowings normally extend overnight but can have a maximum duration of seven days. Loans may
9
Advice Select Dividend Growth Fund
be called on one business day’s notice.
The interest rate to be charged is governed by the conditions of the Order and internal procedures adopted by the board of trustees. The board of trustees is responsible for overseeing the Interfund Lending
Program.
For the six months ended April
30, 2023, the fund did not utilize the credit facilities or the Interfund Lending Program.
5. Other: Dividend
income is recorded on the ex-dividend date. Non-cash dividends included in income, if any, are recorded at the fair value of the securities received. Interest income includes income distributions received from
Vanguard Market Liquidity Fund and is accrued daily. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment
securities are those of the specific securities sold.
B. Wellington Management Company llp provides investment advisory services to the fund for a fee calculated at an annual percentage rate of average net assets. In accordance with the advisory contract entered into with
Wellington Management Company llp , beginning February 1, 2023, the investment advisory fee will be subject to quarterly adjustments based on performance relative to the S&P U.S. Dividend Growers Index since January
31, 2022. For the six months ended April 30, 2023, the investment advisory fee represented an effective annual basic rate of 0.25% of the fund’s average net assets, before a net increase of $25,000 (0.02%) based on
performance.
C. In accordance with the terms of a Funds’ Service Agreement (the “FSA”) between Vanguard and the fund, Vanguard furnishes to the fund corporate management, administrative,
marketing, and distribution services at Vanguard’s cost of operations (as defined by the FSA). These costs of operations are allocated to the fund based on methods and guidelines approved by the board of
trustees and are generally settled twice a month.
Upon the request of Vanguard,
the fund may invest up to 0.40% of its net assets as capital in Vanguard. At April 30, 2023, the fund had contributed to Vanguard capital in the amount of $13,000, representing less than 0.01% of the fund’s net
assets and less than 0.01% of Vanguard’s capital received pursuant to the FSA. The fund’s trustees and officers are also directors and employees, respectively, of Vanguard.
D. Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or
methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.
Level 1—Quoted prices in active markets for identical securities.
Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).
Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments). Any investments valued with significant unobservable
inputs are noted on the Schedule of Investments.
At April 30, 2023, 100% of the
market value of the fund's investments was determined based on Level 1 inputs.
10
Advice Select Dividend Growth Fund
E. As of April 30, 2023, gross unrealized appreciation and depreciation for investments based on cost for U.S. federal income tax purposes were as follows:
| Amount ($000) | |
| Tax Cost | 388,794 |
| Gross Unrealized Appreciation | 28,802 |
| Gross Unrealized Depreciation | (8,083) |
| Net Unrealized Appreciation (Depreciation) | 20,719 |
F. During the six months ended April 30, 2023, the fund purchased $181,148,000 of investment securities and sold $14,028,000 of investment securities, other than temporary cash
investments.
G. Capital shares issued and redeemed were:
| Six Months Ended April 30, 2023 | November 9, 20211 to October 31, 2022 | ||
| Shares (000) | Shares (000) | ||
| Issued | 7,848 | 9,238 | |
| Issued in Lieu of Cash Distributions | 50 | 11 | |
| Redeemed | (684) | (498) | |
| Net Increase (Decrease) in Shares Outstanding | 7,214 | 8,751 |
| 1 | Inception. |
H. Significant market disruptions, such as those caused by pandemics (e.g., COVID-19 pandemic), natural or environmental disasters, war (e.g., Russia’s invasion of Ukraine), acts
of terrorism, or other events, can adversely affect local and global markets and normal market operations. Any such disruptions could have an adverse impact on the value of the fund's investments and fund
performance.
To the extent the fund’s
investment portfolio reflects concentration in a particular market, industry, sector, country or asset class, the fund may be adversely affected by the performance of these concentrations and may be subject to
increased price volatility and other risks.
I. Management has determined that no events or transactions occurred subsequent to April 30, 2023, that would require recognition or disclosure in these financial statements.
11
Trustees Approve Advisory Arrangement
The board of trustees of Vanguard Advice
Select Dividend Growth Fund has renewed the fund’s investment advisory arrangement with Wellington Management Company llp (Wellington Management). The board determined renewing the fund’s advisory arrangement was in the best interests of the fund and its shareholders.
The board based its decision
upon an evaluation of the advisor’s investment staff, portfolio management process, and performance. This evaluation included information provided to the board by Vanguard’s Portfolio Review Department,
which is responsible for fund and advisor oversight and product management. The Portfolio Review Department met regularly with the advisor and made presentations to the board during the fiscal year that directed the
board’s focus to relevant information and topics.
The board, or an investment
committee made up of board members, also received information throughout the year during advisor presentations. For each advisor presentation, the board was provided with letters and reports that included information
about, among other things, the advisory firm and the advisor’s assessment of the investment environment, portfolio performance, and portfolio characteristics.
In addition, the board
received periodic reports throughout the year, which included information about each fund’s performance relative to its peers and benchmark, as applicable, and updates, as needed, on the Portfolio Review
Department’s ongoing assessment of the advisor.
Prior to their meeting, the
trustees were provided with a memo and materials that summarized the information they received over the course of the year. They also considered the factors discussed below, among others. However, no single factor
determined whether the board approved the arrangement. Rather, it was the totality of the circumstances that drove the board’s decision.
Nature, extent, and quality of
services
The board reviewed the quality of the
investment management services provided to the fund since its inception in 2021; it also took into account the organizational depth and stability of the advisor. The board considered that Wellington Management, an
investment management company founded in 1928, is among the nation’s oldest and most respected institutional investment managers. Wellington Management seeks to invest in select companies with a history of
paying a stable or growing dividend and the ability to continue increasing their dividend over the long term. Utilizing fundamental research, Wellington Management focuses on a company’s ability to create value
and the ability and willingness to distribute that value to shareholders in a sustainable manner. Valuation is also an important input to the investment process, as Wellington Management seeks to purchase these
businesses when short-term dislocations have made the share price attractive. Wellington Management has managed the fund since its inception in 2021.
The board concluded that the
advisor’s experience, stability, depth, and performance, among other factors, warranted continuation of the advisory arrangement.
Investment performance
The board considered the fund’s
performance since its inception in 2021, including any periods of outperformance or underperformance compared with a relevant benchmark and peer group.
12
The board concluded that the
performance was such that the advisory arrangement should continue.
Cost
The board concluded that the fund’s
expense ratio was below the average expense ratio charged by funds in its peer group and that the fund’s advisory fee rate was also below its peer group average.
The board did not consider the
profitability of Wellington Management in determining whether to approve the advisory fee, because Wellington Management is independent of Vanguard and the advisory fee is the result of arm’s-length
negotiations.
The benefit of economies
of scale
The board concluded that the fund’s
shareholders benefit from economies of scale because of breakpoints in the fund’s advisory fee schedule with Wellington Management. The breakpoints reduce the effective rate of the fee as the fund’s assets
increase.
The board will consider
whether to renew the advisory arrangement again after a one-year period.
13
Liquidity Risk Management
Vanguard funds (except for the
money market funds) have adopted and implemented a written liquidity risk management program (the “Program”) as required by Rule 22e-4 under the Investment Company Act of 1940. Rule 22e-4 requires that
each fund adopt a program that is reasonably designed to assess and manage the fund’s liquidity risk, which is the risk that the fund could not meet redemption requests without significant dilution of remaining
investors’ interests in the fund.
Assessment and management of a
fund’s liquidity risk under the Program take into consideration certain factors, such as the fund’s investment strategy and the liquidity of its portfolio investments during normal and reasonably
foreseeable stressed conditions, its short- and long-term cash-flow projections during both normal and reasonably foreseeable stressed conditions, and its cash and cash-equivalent holdings and access to other funding
sources. As required by the rule, the Program includes policies and procedures for classification of fund portfolio holdings in four liquidity categories, maintaining certain levels of highly liquid investments, and
limiting holdings of illiquid investments.
The board of trustees of
Vanguard Whitehall Funds approved the appointment of liquidity risk management program administrators responsible for administering Vanguard Advice Select Dividend Growth Fund’s Program and for carrying out the
specific responsibilities set forth in the Program, including reporting to the board on at least an annual basis regarding the Program’s operation, its adequacy, and the effectiveness of its implementation for
the past year (the “Program Administrator Report”). The board has reviewed the Program Administrator Report covering the period from January 1, 2022, through December 31, 2022 (the “Review
Period”). The Program Administrator Report stated that during the Review Period the Program operated and was implemented effectively to manage the fund’s liquidity risk.
14
Item 2: Code of Ethics.
Not applicable.
Item 3: Audit Committee Financial Expert.
Not applicable.
Item 4: Principal Accountant Fees and Services.
Not applicable.
Item 5: Audit Committee of Listed Registrants.
Not applicable.
Item 6: Investments.
Not applicable. The complete schedule of investments is included as part of the report to shareholders filed under Item 1 of this Form.
Item 7: Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8: Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9: Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10: Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11: Controls and Procedures.
(a) Disclosure Controls and Procedures. The Principal Executive and Financial Officers concluded that the Registrant’s Disclosure Controls and Procedures are effective based on their evaluation of the Disclosure Controls and Procedures as of a date within 90 days of the filing date of this report.
(b) Internal Control Over Financial Reporting. There were no significant changes in the Registrant’s Internal Control Over Financial Reporting or in other factors that could significantly affect this control subsequent to the date of the evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Item 12: Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable.
Item 13: Exhibits.
| (a)(1) | Not applicable. |
| (a)(2) | Certifications filed herewith. |
| (b) | Certifications filed herewith. |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| VANGUARD WHITEHALL FUNDS | ||
| BY: | /s/ MORTIMER J. BUCKLEY* | |
| MORTIMER J. BUCKLEY | ||
| CHIEF EXECUTIVE OFFICER | ||
Date: June 19, 2023
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| VANGUARD WHITEHALL FUNDS | ||
| BY: | /s/ MORTIMER J. BUCKLEY* | |
| MORTIMER J. BUCKLEY | ||
| CHIEF EXECUTIVE OFFICER | ||
Date: June 19, 2023
| VANGUARD WHITEHALL FUNDS | ||
| BY: | /s/ CHRISTINE BUCHANAN* | |
| CHRISTINE BUCHANAN | ||
| CHIEF FINANCIAL OFFICER | ||
Date: June 19, 2023
| * By: | /s/ Anne E. Robinson |
Anne E. Robinson, pursuant to a Power of Attorney filed on March 29, 2023 (see File Number 2-11444), Incorporated by Reference.