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 - Commodity Strategy Fund
A majority
of independent trustees of the board of Commodity Strategy 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 subsidiaries,
Vanguard Capital Management LLC (VCM) and Vanguard Portfolio Management (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 VCM and 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, VCM and VPM. 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 Quantitative
Equity group, now within VPM, adheres to the same sound, disciplined investment management process and has considerable experience, stability
and depth. The Quantitative Equity Group 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 each of VCM and VPM’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 and VPM’s Quantitative Equity team, in their respective management of Vanguard funds,
including the 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 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 and 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 VCM and 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 - Emerging Markets Select Stock Fund
A majority
of independent trustees of the board of Vanguard Emerging Markets Select Stock Fund has renewed the fund’s investment advisory
arrangements with Pzena Investment Management, LLC (Pzena), Baillie Gifford Overseas Limited (Baillie Gifford), and Wellington Management
Company LLP (Wellington Management). 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, Pena is an independent investment management firm that uses a deep value investment strategy in a range of domestic
and international portfolios. The advisor employs 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 earnings recovery, and (3) there is meaningful downside protection in case the earnings recovery does
not materialize. Pzena has advised a portion of the fund since the fund’s inception in 2011.
Baillie
Gifford. Baillie Gifford—a unit of Baillie Gifford & Co., founded in 1908—is among the largest independently owned
investment management firms in the United Kingdom. Consistent with its long-term approach, Baillie Gifford’s Emerging Markets Equity
Team focuses on companies it believes possess the most substantial growth prospects over the next five to ten years. The team’s
deep, differentiated analysis and intentional regional rotations avoid “home-bias” and encourage depth across industries.
The team is willing to deviate meaningfully from the benchmark and endure short-term volatility in order to invest in companies the team
believes have the most potential for substantial long-term growth. Baillie Gifford has managed a portion of the fund since 2018.
Wellington
Management. Founded in 1928, Wellington Management is among the nation’s oldest and most respected institutional investment
managers. The advisor employs a “research portfolio” approach by allocating sleeves to global industry analysts based on
each analyst’s area of industry coverage. The global industry analysts make independent buy and sell decisions in their respective
industries. Wellington Management has advised a portion of the fund since the fund’s inception in 2011.
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 the fund and each advisor, 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, Baillie Gifford, or Wellington Management 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 Arrangement - Global Environmental Opportunities Stock Fund
A majority
of independent trustees of the board of Vanguard Global Environmental Opportunities Stock Fund has renewed the fund’s investment
advisory arrangement with Ninety One North America, Inc. (Ninety One). 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 2022; it also took into account
the organizational depth and stability of the advisor. The trustees considered that Ninety One, founded in 1991 in South Africa, employs
a Global Environment strategy led by co-portfolio managers Deidre Cooper and Graeme Baker who average over 20 years of investment experience.
The co-portfolio managers are supported by a diverse team of ten equity analysts. The team has a deep understanding of environmental
trends and regulatory complexities complemented by analytical strength. The idea generation methods are data-driven, structured, and
lead to a differentiated investable universe from which the team constructs a concentrated climate portfolio. Ninety One has managed
the fund since its inception in 2022.
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 2022, including any periods of outperformance or underperformance compared
with a relevant benchmark and peer group.
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 Ninety One in determining whether to approve the advisory fee, because Ninety One 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.
