Item 8: Changes in and Disagreements with Accountants for Open-End
Management Investment Companies.
Not applicable.
Item 9: Proxy Disclosures for Open-End Management Investment Companies.
Not applicable.
Item 10: Remuneration Paid to Directors, Officers, and Others of
Open-End Management Investment Companies.
Not applicable. The Trustees’ Fees and Expenses are included
in the financial statements filed under Item 7 of this Form.
Item 11: Statement Regarding Basis for Approval of Investment Advisory
Contracts.
Trustees Approve Advisory Arrangement - Windsor Fund
A majority of independent trustees of the board of Vanguard Windsor
Fund has renewed the fund’s investment advisory arrangements with Wellington Management Company LLP (Wellington Management) and
Pzena Investment Management, LLC (Pzena). The trustees determined that renewing the fund’s advisory arrangements was in the best
interests of the fund and its shareholders.
The trustees based their decision upon an evaluation of each advisor’s
investment staff, portfolio management process, and performance. This evaluation included information provided to the trustees by Vanguard’s
Oversight and Manager Search team (OMS), which is responsible for fund and advisor oversight and product management. OMS met regularly
with the advisors and made presentations to the trustees during the fiscal year that directed their focus to relevant information and
topics.
The trustees also received information throughout the year during
advisor presentations conducted by the Oversight and Manager Search team. For each advisor presentation, the trustees were 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 trustees 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 Oversight and Manager Search team’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 trustees approved the arrangement. Rather, it was the totality of the
circumstances that drove the trustees’ decision.
Nature, extent, and quality of services
The trustees 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:
Wellington Management. Founded in 1928, Wellington Management
is among the nation’s oldest and most respected institutional investment managers. Using a bottom-up, fundamentally driven approach,
Wellington Management invests 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 its research-intensive approach. Wellington Management has advised
the fund since its inception in 1958.
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
there is meaningful downside protection in case earnings do not recover. Pzena has managed a portion of the fund since 2012.
The trustees concluded that each advisor’s experience, stability,
depth, and performance, among other factors, warranted continuation of the advisory arrangements.
Investment performance
The trustees considered the short- and long-term performance of each
advisor’s subportfolio, including any periods of outperformance or underperformance compared with a relevant benchmark index and
peer group. The trustees concluded the performance was such that the advisory arrangements should continue.
Cost
The trustees 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 the peer-group
average.
The trustees did not consider the profitability of Wellington Management
or Pzena in determining whether to approve the advisory fee, because the firms are independent of Vanguard and the advisory fee is the
result of arm’s-length negotiations.
The benefit of economies of scale
The trustees concluded that the fund’s shareholders benefit
from economies of scale because of breakpoints in the fund’s advisory fee schedules. The breakpoints reduce the effective rate
of the fees as the fund’s assets managed by each advisor increase.
The trustees will consider whether to renew the advisory arrangements
again after a one-year period.
Trustees Approve Advisory Arrangements - Windsor II Fund
At their November 2025 meeting, a majority of independent trustees
of the board of Vanguard Windsor Fund renewed the fund’s investment advisory arrangements with Lazard Asset Management LLC (Lazard);
Hotchkis and Wiley Capital Management, LLC (Hotchkis and Wiley); Aristotle Capital Management, LLC (Aristotle) and Sanders Capital, LLC
(Sanders Capital). The trustees subsequently also approved a restructuring of the fund’s advisory structure, whereby Lazard was
removed as advisor and Harris Associates L.P. (doing business as Harris | Oakmark,
“Harris | Oakmark”) has been added as advisor
to the fund. The trustees determined that renewals and restructuring of the fund’s advisory arrangements was in the best interests
of the fund and its shareholders.
The trustees based their decision upon an evaluation of each advisor’s
investment staff, portfolio management process, and performance. This evaluation included information provided to the trustees by Vanguard’s
Oversight and Manager Search team (OMS), which is responsible for fund and advisor oversight and product management. OMS met regularly
with the advisors and made presentations to the trustees during the fiscal year that directed their focus to relevant information and
topics.
The trustees also received information throughout the year during
advisor presentations conducted by the Oversight and Manager Search team. For each advisor presentation, the trustees were 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 trustees 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 Oversight and Manager Search team’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 trustees approved the arrangement. Rather, it was the totality of the
circumstances that drove the trustees’ decision.
Nature, extent, and quality of services
The trustees reviewed the quality of the fund’s investment management
services over both the short and long term, and the services to be provided by Harris | Oakmark. The trustees
took into account the organizational depth and stability of each advisor. The trustees considered the following:
Lazard. Lazard, a subsidiary of the investment bank Lazard
Ltd., provides investment management services for clients around the world in a variety of investment mandates, including international
equities, domestic equities, and fixed income securities. The investment team employs a relative value, bottom-up stock-selection process
to identify stocks with sustainable financial productivity and attractive valuations. Using scenario analysis, the team seeks to understand
the durability and future direction of financial productivity and valuation. Lazard managed a portion of the fund from 2007 until 2025.
Hotchkis and Wiley. Founded in 1980, Hotchkis and Wiley is
a value-oriented firm that manages various large-, mid-, and small-capitalization portfolios. Hotchkis and Wiley invests in companies
where it believes that the present value of future cash flows exceeds the market price. The advisor believes that the market frequently
undervalues companies due to the extrapolation of current trends, while capital flows usually cause a company’s returns and profitability
to normalize over the long term. Hotchkis and Wiley seeks to identify these companies with a disciplined, bottom-up research process.
The portfolio managers leverage the support of a broad analyst team, which is organized into sector teams in an effort to better understand
the impact that industry dynamics and macro-economic risk factors might have on individual companies. Hotchkis and Wiley has managed
a portion of the fund since 2003.
Aristotle. Aristotle is an employee-owned investment firm that
provides investment management services to clients across a variety of value equity strategies, including domestic, international and
global. The team has employed the same research-driven, bottom-up, quality-value approach for more than 20 years, seeking to invest in
high-quality companies trading at attractive valuations. Aristotle has managed a portion of the fund since 2019.
Sanders Capital. Founded in 2009, Sanders Capital employs a
traditional, bottom-up, fundamental research approach to identify securities that are undervalued relative to their expected total return.
The portfolio managers are supported by a well-credentialed and experienced analyst team, in addition to a quantitative research analyst.
Sanders Capital has managed a portion of the fund since 2010.
Harris | Oakmark. Founded
in 1976, Harris | Oakmark is an investment advisory firm who serves individuals and institutions.
The team’s investment approach is focused on value investing, leveraging a broad but consistent value philosophy along with a rigorous
process of research and debate to deliver performance over all time horizons.
The trustees concluded that each advisor’s experience, stability,
depth, and performance, among other factors, warranted approval and continuation of the advisory arrangements.
Investment performance
The trustees considered the short-, long-term, and since inception
performance, as applicable, of Lazard’s, Hotchkis and Wiley’s, Aristotle’s, Sanders Capital’s subportfolios,
including any periods of outperformance or underperformance compared with a relevant benchmark index and peer group. The trustees concluded
the performance was such that the advisory arrangements should continue.
The trustees also considered the performance of other funds and portfolios
managed by Harris and concluded that the firm has a track record of successfully managing their respective
strategies to be employed by the fund. The trustees concluded the performance was such that the advisory arrangement warranted approval.
Cost
The trustees 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 the peer-group
average, and that the fund’s expense ratio and advisory fee rate will remain below the peer group averages with the restructuring
of the advisory arrangements.
The trustees did not consider the profitability of Lazard, Hotchkis
and Wiley, Aristotle, Sanders Capital or Harris | Oakmark in determining whether to approve the advisory
fee, because the firms are independent of Vanguard and the advisory fee is the result of arm’s-length negotiations.
The benefit of economies of scale
The trustees concluded that the fund’s shareholders benefit
and will continue to benefit from economies of scale because of breakpoints in the fund’s advisory fee schedules. The breakpoints
reduce the effective rate of the fees as the fund’s assets managed by each advisor increase.
The trustees will consider whether to renew the advisory arrangements
again after a one-year period, and the arrangement with Harris | Oakmark within a two-year period.
