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 - Emerging Markets Government Bond Index Fund
A majority
of independent trustees of the board of Vanguard Emerging Markets Government Bond Index Fund (Trustees) have approved a restructuring
of the fund’s management structure whereby the Vanguard Group, Inc. (Vanguard) will now provide investment advisory services
to the fund through its subsidiary, Vanguard Capital Management LLC (VCM). The trustees determined that approving the advisory arrangement
was in the best interests of the fund and its shareholders.
The Trustees
based their decisions upon an evaluation of VCM’s investment staff, portfolio management process, and performance. This evaluation
included information provided by Vanguard’s Oversight and Manager Search team, which is responsible for fund and advisor oversight
and product management. The Trustees considered the factors discussed below, among others. However, no single factor determined whether
to approve the arrangement. Rather, it was the totality of the circumstances that drove the Trustee’s decisions.
Nature,
extent, and quality of services
The Trustees
considered the quality of the investment management services to be provided to the funds and took into account the organizational depth
and stability of Vanguard and VCM. The Trustees considered that Vanguard has been managing investments for more than four decades. The
Fixed Income Group, now within VCM, adheres to the same sound, disciplined investment management process and has considerable experience,
stability and depth. The Fixed Income Group emphasizes a disciplined and repeatable approach to risk-taking and security selection, with
the objective of delivering tight tracking error and consistent, risk-adjusted alpha.
The Trustees
concluded that VCM’s experience, stability, depth, and performance, among other factors, warranted approval of the advisory arrangement.
Investment
performance
The Trustees
determined that VCM’s Fixed Income Group, in its management of Vanguard funds, including the funds, has a track record of consistent
performance and disciplined investment processes. The Trustees concluded the performance was such that the advisory arrangement warranted
approval.
Cost
The Trustees
concluded that the fund’s expense ratio will remain below the average expense ratio charged by funds in its peer group and that
the fund’s advisory expenses will also continue to be below the peer-group average.
The Trustees
do not conduct a profitability analysis of Vanguard in providing investment advisory services through VCM 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 Trustees
concluded that the fund’s arrangement with Vanguard, and services rendered through VCM, ensure that the fund will realize economies
of scale as it grows, with the cost to shareholders declining as fund assets increase.
The Trustees
will consider whether to renew the advisory arrangement again after a one-year period.
Trustees
Approve Advisory Arrangement - Global Minimum Volatility Fund
A majority
of independent trustees of the board of Vanguard Global Minimum Volatility Fund (Trustees) has approved a restructuring of the fund’s
management structure whereby the Vanguard Group, Inc. (Vanguard) will now provide investment advisory services to the fund through
its subsidiary, Vanguard Portfolio Management LLC (VPM). The trustees determined that approving the advisory arrangements was in the
best interests of the fund and its shareholders.
The Trustees
based their decision upon an evaluation of VPM’s investment staff, portfolio management process, and performance. This evaluation
included information provided by Vanguard’s Oversight and Manager Search team, which is responsible for fund and advisor oversight
and product management. The Trustees considered the factors discussed below, among others. However, no single factor determined whether
to approve the arrangement. Rather, it was the totality of the circumstances that drove the Trustee’s decisions.
Nature,
extent, and quality of services
The Trustees
considered the quality of the investment management services to be provided to the fund and took into account the organizational depth
and stability of Vanguard and VPM. The Trustees considered that Vanguard has been managing investments for more than four decades. The
Quantitative Equity Group (QE), now within VPM, adheres to the same sound, disciplined investment management process and has considerable
experience, stability and depth. VPM is led by experienced portfolio managers and analysts, is appropriately resourced, and has depth
and stability. In its management of other Vanguard passive and active equity funds and portfolios, the team has a track record of consistent
performance as a result of its disciplined investment processes. QE seeks to generate consistent, risk-controlled alpha through quantitative
models that emphasize securities with attractive valuations, good business models, solid growth prospects, and positive market sentiment.
The Trustees
concluded that VPM’s experience, stability, depth, and performance, among other factors, warranted approval of the advisory arrangement.
Investment
performance
The Trustees
determined that VPM’s Quantitative Equity Group, in its management of Vanguard funds, including the fund, has a track record of
consistent performance and disciplined investment processes.
Cost
The Trustees
concluded that the fund’s expense ratio will remain below the average expense ratio charged by funds in its peer group and that
the fund’s advisory expenses will also continue to be below the peer-group average.
The Trustees
do not conduct a profitability analysis of Vanguard in providing investment advisory services through VPM 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 Trustees
concluded that the fund’s arrangement with Vanguard, and services rendered through VPM, ensure that the fund will realize economies
of scale as it grows, with the cost to shareholders declining as fund assets increase.
The Trustees
will consider whether to renew the advisory arrangement again after a one-year period.
Trustees
Approve Advisory Arrangements - International Dividend Index Funds
A majority
of independent trustees of the board of Vanguard International Dividend Appreciation Index Fund and Vanguard International High Dividend
Yield Index Fund (Trustees) has approved a restructuring of the each fund’s management structure whereby the Vanguard Group, Inc.
(Vanguard) will now provide investment advisory services to each fund through its subsidiary, Vanguard Capital Management LLC (VCM).
The trustees determined that approving the advisory arrangements was in the best interests of each fund and its shareholders.
The Trustees
based their decision upon an evaluation of VCM’s investment staff, portfolio management process, and performance. This evaluation
included information provided by Vanguard’s Oversight and Manager Search team, which is responsible for fund and advisor oversight
and product management. The Trustees considered the factors discussed below, among others. However, no single factor determined whether
to approve the arrangement. Rather, it was the totality of the circumstances that drove the Trustee’s decisions.
Nature,
extent, and quality of services
The Trustees
considered the quality of the investment management services to be provided to each fund and took into account the organizational depth
and stability of Vanguard and VCM. The Trustees considered that Vanguard has been managing investments for more than four decades. The
Global Equity Index Management team (GE), now within VCM, adheres to the same sound, disciplined investment management process and has
considerable experience, stability and depth. GE has specific expertise and experience managing large, broad-market U.S. equity index
strategies, seeking to minimize transaction costs and tracking error while opportunistically adding excess returns through sophisticated
trading and superior access to corporate actions. Additionally, GE has significant resources and expertise in global and non-U.S. trading
and currency hedging capabilities.
The Trustees
concluded that VCM’s experience, stability, depth, and performance, among other factors, warranted approval of the advisory arrangement.
Investment
performance
The Trustees
determined that VCM’s Global Equity Index Management team, in its management of Vanguard funds, including each fund, has a track
record of consistent performance and disciplined investment processes. The Trustees concluded the performance was such that the advisory
arrangements warranted approval.
Cost
The Trustees
concluded that each fund’s expense ratio will remain below the average expense ratio charged by funds in its peer group and that
each fund’s advisory expenses will also continue to be below the peer-group average.
The Trustees
do not conduct a profitability analysis of Vanguard in providing investment advisory services through VCM 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 Trustees
concluded that each fund’s arrangement with Vanguard, and services rendered through VCM, ensure that each fund will realize economies
of scale as it grows, with the cost to shareholders declining as fund assets increase.
The Trustees
will consider whether to renew the advisory arrangement again after a one-year period.
Trustees
Approve Advisory Arrangement - International Dividend Growth Fund
A majority
of independent trustees of the board of Vanguard International Dividend Growth Fund has renewed the fund’s investment advisory
arrangement with Wellington Management Company LLP (Wellington Management). The trustees determined that renewing the fund’s advisory
arrangement was in the best interests of the fund and its shareholders.
The trustees
based their decision upon an evaluation of the 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 advisor 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 investment management services provided to the fund since its inception in 2023; it also took into account
the organizational depth and stability of the advisor. The board considered that Wellington Management, founded in 1928, is among the
nation’s oldest and most respected institutional investment managers. Wellington Management seeks to invest in 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. Wellington Management has managed the fund since its inception in 2023.
The trustees
concluded that the advisor’s experience, stability, depth, and performance, among other factors, warranted continuation of the
advisory arrangement.
Investment
performance
The trustees
considered the fund’s performance since its inception in 2023. The trustees concluded the performance was such that the advisory
arrangement 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 in determining whether to approve the advisory fee, because the firm is 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
schedule. The breakpoints reduce the effective rate of the fee as the fund’s assets increase.
The trustees
will consider whether to renew the advisory arrangement again after a one-year period.
Trustees
Approve Advisory Arrangements- Selected Value Fund
A majority
of independent trustees of the board 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 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 trustees considered the following:
Pzena.
Founded in 1995, Pzena is a global investment management firm that employs a
deep-value investment approach. Pzena uses in-depth fundamental research to identify companies that are temporarily underperforming their
long-term earnings power. Companies are purchased when Pzena judges that: (1) the company’s problems are temporary; (2) management
has a viable strategy to generate recovery; and (3) there is meaningful downside protection in case the earnings recovery does not
materialize. 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 is comprised of 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 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 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, 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
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 Pzena, C&B, or Donald Smith & Co 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.
