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: 811-22114
| Name of Registrant: |
Vanguard Montgomery Funds |
| Address of Registrant: |
P.O. Box 2600 |
| |
Valley Forge, PA 19482 |
| Name and address of agent for service: |
Natalie Lamarque, Esquire |
| |
P.O. Box 876 |
| |
Valley Forge, PA 19482 |
Registrant’s
telephone number, including area code: (610) 669-1000
Date of fiscal
year end: December 31
Date of reporting
period: January 1, 2026—June 30, 2026
Item 1: Reports to Shareholders.
TABLE OF CONTENTS
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Vanguard Market Neutral Fund
Semi-Annual Shareholder Report | June 30, 2026
This semi-annual shareholder report contains important information about Vanguard Market Neutral Fund (the "Fund") for the period of January 1, 2026, to June 30, 2026. You can find additional information about the Fund at https://personal1.vanguard.com/ngf-next-gen-form-webapp/fund-literature. You can also request this information by contacting us at 800-662-7447. The report describes changes to the Fund that occurred during the reporting period.
What were the Fund costs for the last six months?
(based on a hypothetical $10,000 investment)
Table SummaryShare Class Name | Costs of a $10,000 investment | Costs paid as a percentage of a $10,000 investment |
|---|
Investor Shares | $127 | 2.39%Footnote Reference1 |
|---|
| Footnote | Description |
Footnote1 | Annualized. |
Fund Statistics
(as of June 30, 2026)
Table SummaryFund Net Assets (in millions) | $601 |
|---|
Number of Portfolio Holdings | 615 |
|---|
Portfolio Turnover Rate | 52% |
|---|
Portfolio Composition % of Net Assets
(as of June 30, 2026)
Table SummarySector | Long Portfolio | Short Portfolio |
|---|
Communication Services | 3.2% | 3.8% |
|---|
Consumer Discretionary | 13.4% | 13.4% |
|---|
Consumer Staples | 1.9% | 1.9% |
|---|
Energy | 4.0% | 4.2% |
|---|
Financials | 19.6% | 18.8% |
|---|
Health Care | 12.1% | 12.1% |
|---|
Industrials | 14.0% | 14.0% |
|---|
Information Technology | 12.2% | 11.1% |
|---|
Materials | 4.2% | 4.5% |
|---|
Real Estate | 8.6% | 8.6% |
|---|
Utilities | 3.0% | 2.9% |
|---|
Other Assets and Liabilities—Net | 3.8% | 4.7% |
|---|
This table reflects the Fund's investments, including short-term investments and other assets and liabilities.
How has the Fund changed?
Effective January 12, 2026, The Vanguard Group, Inc. exercises portfolio management responsibilities for the fund through its wholly-owned subsidiary, Vanguard Portfolio Management, LLC.
This is a summary of certain changes to the Fund since December 31, 2025. For more complete information, you may review the Fund’s prospectus, at https://personal1.vanguard.com/ngf-next-gen-form-webapp/fund-literature or upon request at 800-662-7447.
Where can I find additional information about the Fund?
Additional information about the Fund, including its prospectus, financial information, holdings, and proxy voting information is available at https://personal1.vanguard.com/ngf-next-gen-form-webapp/fund-literature.
Connect with Vanguard® • vanguard.com
Fund Information • 800-662-7447
Direct Investor Account Services • 800-662-2739
Text Telephone for People Who Are Deaf or Hard of Hearing •
800-749-7273
© 2026 The Vanguard Group, Inc.
All rights reserved.
Vanguard Marketing Corporation, Distributor.
SR634
Vanguard Market Neutral Fund
Institutional Shares (VMNIX)
Semi-Annual Shareholder Report | June 30, 2026
This semi-annual shareholder report contains important information about Vanguard Market Neutral Fund (the "Fund") for the period of January 1, 2026, to June 30, 2026. You can find additional information about the Fund at https://personal1.vanguard.com/ngf-next-gen-form-webapp/fund-literature. You can also request this information by contacting us at 800-662-7447. The report describes changes to the Fund that occurred during the reporting period.
What were the Fund costs for the last six months?
(based on a hypothetical $10,000 investment)
Table SummaryShare Class Name | Costs of a $10,000 investment | Costs paid as a percentage of a $10,000 investment |
|---|
Institutional Shares | $133 | 2.51%Footnote Reference1 |
|---|
| Footnote | Description |
Footnote1 | Annualized. |
Fund Statistics
(as of June 30, 2026)
Table SummaryFund Net Assets (in millions) | $601 |
|---|
Number of Portfolio Holdings | 615 |
|---|
Portfolio Turnover Rate | 52% |
|---|
Portfolio Composition % of Net Assets
(as of June 30, 2026)
Table SummarySector | Long Portfolio | Short Portfolio |
|---|
Communication Services | 3.2% | 3.8% |
|---|
Consumer Discretionary | 13.4% | 13.4% |
|---|
Consumer Staples | 1.9% | 1.9% |
|---|
Energy | 4.0% | 4.2% |
|---|
Financials | 19.6% | 18.8% |
|---|
Health Care | 12.1% | 12.1% |
|---|
Industrials | 14.0% | 14.0% |
|---|
Information Technology | 12.2% | 11.1% |
|---|
Materials | 4.2% | 4.5% |
|---|
Real Estate | 8.6% | 8.6% |
|---|
Utilities | 3.0% | 2.9% |
|---|
Other Assets and Liabilities—Net | 3.8% | 4.7% |
|---|
This table reflects the Fund's investments, including short-term investments and other assets and liabilities.
How has the Fund changed?
Effective January 12, 2026, The Vanguard Group, Inc. exercises portfolio management responsibilities for the fund through its wholly-owned subsidiary, Vanguard Portfolio Management, LLC.
This is a summary of certain changes to the Fund since December 31, 2025. For more complete information, you may review the Fund’s prospectus, at https://personal1.vanguard.com/ngf-next-gen-form-webapp/fund-literature or upon request at 800-662-7447.
Where can I find additional information about the Fund?
Additional information about the Fund, including its prospectus, financial information, holdings, and proxy voting information is available at https://personal1.vanguard.com/ngf-next-gen-form-webapp/fund-literature.
Connect with Vanguard® • vanguard.com
Fund Information • 800-662-7447
Institutional Investor Services • 800-523-1036
Text Telephone for People Who Are Deaf or Hard of Hearing •
800-749-7273
© 2026 The Vanguard Group, Inc.
All rights reserved.
Vanguard Marketing Corporation, Distributor.
SR734
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 – Market Neutral Fund
A majority of independent trustees of the board of Vanguard Market Neutral
Fund (Trustees) have renewed the fund’s investment advisory arrangement with The Vanguard Group, Inc. (Vanguard), which provides
investment advisory services to the fund through its subsidiary, Vanguard Portfolio Management LLC (VPM). The trustees determined that
continuing 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 Oversight and Manager Search team met regularly with the advisor
and made presentations to the Trustees during the fiscal year that directed the Trustees’ focus to relevant information and topics.
The board, or an investment committee made up of 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 the 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. 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
over both the short and long term 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 continuation 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.
The Trustees concluded that 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 expenses were also 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.
Item 12: Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 13: Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item
14: Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item
15: Submission of Matters to a Vote of Security Holders.
Not applicable.
Item
16: 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 changes in the Registrant’s Internal Control Over Financial Reporting
that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the
Registrant’s internal control over financial reporting.
Item
17: Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable.
Item 18: Recovery of Erroneously Awarded Compensation
Not applicable.
Item 19: Exhibits.
