vanguard high dividend yield index fund · 2020-06-19 · six months ended april 30, 2020 beginning...

Semiannual Report | April 30, 2020

Vanguard High Dividend Yield Index Fund

See the inside front cover for important information about accessto your fund’s annual and semiannual shareholder reports.

Important information about access to shareholder reports

Beginning on January 1, 2021, as permitted by regulations adopted by theSecurities and Exchange Commission, paper copies of your fund’s annual andsemiannual shareholder reports will no longer be sent to you by mail, unless youspecifically request them. Instead, you will be notified by mail each time a report isposted on the website and will be provided with a link to access the report.

If you have already elected to receive shareholder reports electronically, you willnot be affected by this change and do not need to take any action. You may elect toreceive shareholder reports and other communications from the fund electronicallyby contacting your financial intermediary (such as a broker-dealer or bank) or, if youinvest directly with the fund, by calling Vanguard at one of the phone numbers onthe back cover of this report or by logging on to vanguard.com.

You may elect to receive paper copies of all future shareholder reports free ofcharge. If you invest through a financial intermediary, you can contact theintermediary to request that you continue to receive paper copies. If you investdirectly with the fund, you can call Vanguard at one of the phone numbers on theback cover of this report or log on to vanguard.com.Your election to receive papercopies will apply to all the funds you hold through an intermediary or directly withVanguard.

Contents

About Your Fund’s Expenses . . . . . . . . . . . . . . . . . . . . . . . . 1

Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Trustees Approve Advisory Arrangements . . . . . . . . . . .21

Liquidity Risk Management. . . . . . . . . . . . . . . . . . . . . . . . . .23

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 ongoingcosts only and do not reflect transaction costs incurred by the fund for buying and sellingsecurities. Further, the expenses do not include any purchase, redemption, or account service feesdescribed in the fund prospectus. If such fees were applied to your account, your costs would behigher. 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.

About Your Fund’s Expenses

1

Six Months Ended April 30, 2020Beginning

Account Value10/31/2019

EndingAccount Value

4/30/2020

ExpensesPaid During

Period

Based on Actual Fund Return

High Dividend Yield Index Fund

ETF Shares $1,000.00 $ 884.80 $0.28

AdmiralTM Shares 1,000.00 885.10 0.37

Based on Hypothetical 5%Yearly Return


ETF Shares $1,000.00 $1,024.56 $0.30

Admiral Shares 1,000.00 1,024.47 0.40

The calculations are based on expenses incurred in the most recent six-month period. The fund’s annualized six-month expense ratios forthat period are: 0.06% for ETF Shares and 0.08% for Admiral Shares. The dollar amounts shown as “Expenses Paid” are equal to theannualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recentsix-month period, then divided by the number of days in the most recent 12-month period (182/366).

2

Basic Materials 3.4%

Consumer Goods 14.7

Consumer Services 9.1

Financials 15.7

Health Care 16.5

Industrials 8.4

Oil & Gas 6.4

Technology 11.1

Telecommunications 5.3

Utilities 9.4

The table reflects the fund’s investments, except for short-terminvestments and derivatives. Sector categories are based on theIndustry Classification Benchmark (“ICB”), except for the “Other”category (if applicable), which includes securities that have notbeen provided an ICB classification as of the effective reportingperiod.

The fund may invest in derivatives (such as futures and swapcontracts) for various reasons, including, but not limited to,attempting to remain fully invested and tracking their target indexas closely as possible.

The Industry Classification Benchmark (“ICB”) is owned by FTSE. FTSE does not accept any liability to any person for anyloss or damage arising out of any error or omission in the ICB.


Fund AllocationAs of April 30, 2020

3

The fund files its complete schedule of portfolio holdings with the Securities and ExchangeCommission (SEC) for the first and third quarters of each fiscal year as an exhibit to its reports onForm N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website atwww.sec.gov.

Shares

MarketValue•

($000)

Common Stocks (99.8%)

Basic Materials (3.4%)Linde plc 1,986,848 365,560Air Products &Chemicals Inc. 814,027 183,628

DuPont de Nemours Inc. 2,767,911 130,147Dow Inc. 2,768,331 101,570LyondellBasell IndustriesNV Class A 984,004 57,023

International Paper Co. 1,453,154 49,771Nucor Corp. 1,129,443 46,522RPM International Inc. 472,947 31,408Eastman Chemical Co. 507,158 30,688CF Industries Holdings Inc. 803,579 22,098Reliance Steel &Aluminum Co. 239,999 21,499

Scotts Miracle-Gro Co. 145,483 18,044Huntsman Corp. 795,434 13,371Southern Copper Corp. 304,108 9,865Olin Corp. 588,153 7,852Cabot Corp. 206,536 7,000Commercial Metals Co. 431,235 6,874Compass MineralsInternational Inc. 125,280 6,159

Domtar Corp. 209,532 4,895Schweitzer-MauduitInternational Inc. 113,442 3,655

Trinseo SA 143,375 2,932Orion Engineered CarbonsSA 222,416 2,026

Schnitzer SteelIndustries Inc. Class A 101,469 1,579

1 Nexa Resources SA 126,372 530

1,124,696Consumer Goods (14.6%)

Procter & Gamble Co. 9,016,881 1,062,820PepsiCo Inc. 5,181,038 685,400Coca-Cola Co. 14,181,668 650,797Philip MorrisInternational Inc. 5,758,378 429,575

Altria Group Inc. 6,918,293 271,543Colgate-Palmolive Co. 3,128,203 219,819

Shares

MarketValue•

($000)

Kimberly-Clark Corp. 1,260,589 174,567General Mills Inc. 2,237,371 133,996General Motors Co. 4,576,934 102,020Clorox Co. 465,673 86,820Archer-Daniels-Midland Co. 2,060,179 76,515Ford Motor Co. 14,475,776 73,682Corteva Inc. 2,775,494 72,690Hershey Co. 533,624 70,668Kraft Heinz Co. 2,321,929 70,424VF Corp. 1,138,689 66,158Conagra Brands Inc. 1,783,885 59,653Kellogg Co. 910,380 59,630JM Smucker Co. 406,086 46,663Garmin Ltd. 536,754 43,563Genuine Parts Co. 520,100 41,234Hasbro Inc. 465,743 33,631Campbell Soup Co. 619,615 30,968Molson Coors BeverageCo. Class B 645,142 26,457

Whirlpool Corp. 229,800 25,678Coca-Cola EuropeanPartners plc 647,018 25,648

Bunge Ltd. 507,319 20,125Autoliv Inc. 324,264 19,462Newell Brands Inc. 1,398,722 19,414Leggett & Platt Inc. 482,748 16,959Flowers Foods Inc. 718,328 16,004Tapestry Inc. 1,018,700 15,158Polaris Inc. 211,804 15,023Hanesbrands Inc. 1,322,167 13,142Harley-Davidson Inc. 565,131 12,337LCI Industries 89,080 7,725Spectrum BrandsHoldings Inc. 167,004 7,191

Goodyear Tire & RubberCo. 857,835 6,151

Coty Inc. Class A 1,090,956 5,946Nu Skin Enterprises Inc.Class A 202,364 5,911

MDC Holdings Inc. 185,548 5,4271 B&G Foods Inc. 232,552 4,516

Vector Group Ltd. 406,947 4,354


Financial Statements (unaudited)

Schedule of InvestmentsAs of April 30, 2020

4

Shares

MarketValue•

($000)

Universal Corp. 89,790 4,343HNI Corp. 157,070 3,823Steelcase Inc. Class A 333,634 3,653Kontoor Brands Inc. 161,599 3,137Knoll Inc. 179,535 2,094Signet Jewelers Ltd. 189,461 1,906National PrestoIndustries Inc. 18,418 1,498

* Tenneco Inc. Class A 188,793 980Ethan Allen Interiors Inc. 84,794 959

4,857,857Consumer Services (9.1%)

Comcast Corp. Class A 16,663,705 627,055Walmart Inc. 5,146,774 625,590McDonald's Corp. 2,795,576 524,338CVS Health Corp. 4,805,339 295,769Target Corp. 1,812,792 198,936Walgreens BootsAlliance Inc. 2,781,038 120,391

Sysco Corp. 1,743,086 98,083Best Buy Co. Inc. 818,604 62,812Las Vegas Sands Corp. 1,245,590 59,813Omnicom Group Inc. 797,380 45,475Darden Restaurants Inc. 478,740 35,326

1 Carnival Corp. 1,644,944 26,155Vail Resorts Inc. 148,081 25,322Interpublic Group of Cos.Inc. 1,431,523 24,307

Nielsen Holdings plc 1,310,351 19,301* IAA Inc. 489,036 18,877

Williams-Sonoma Inc. 283,677 17,543Delta Air Lines Inc. 607,300 15,735Wyndham Hotels &Resorts Inc. 354,409 13,365

H&R Block Inc. 723,555 12,047Kohl's Corp. 576,397 10,640L Brands Inc. 839,738 9,985Cracker Barrel Old CountryStore Inc. 87,831 8,555

TEGNA Inc. 797,136 8,545WyndhamDestinations Inc. 329,782 8,433

1 Nordstrom Inc. 398,432 7,483Extended StayAmerica Inc. 670,580 7,289

KAR Auction Services Inc. 472,432 7,0771 Macy's Inc. 1,138,866 6,674

Gap Inc. 799,293 6,490JohnWiley & Sons Inc.Class A 163,124 6,125

Six Flags EntertainmentCorp. 292,906 5,861

Cinemark Holdings Inc. 393,800 5,623American EagleOutfitters Inc. 583,037 4,635

Shares

MarketValue•

($000)

Penske AutomotiveGroup Inc. 124,297 4,472

Office Depot Inc. 1,992,758 4,424Sinclair BroadcastGroup Inc. Class A 225,675 3,983

Cheesecake Factory Inc. 152,804 3,406Big Lots Inc. 142,931 3,352Brinker International Inc. 137,743 3,207

1 Bed Bath & Beyond Inc. 447,973 2,773International GameTechnology plc 359,839 2,713

Dine Brands Global Inc. 58,323 2,589Abercrombie & Fitch Co.Class A 226,876 2,400

1 Meredith Corp. 145,867 2,163Weis Markets Inc. 34,730 1,738Buckle Inc. 106,069 1,624Guess? Inc. 168,435 1,575Designer Brands Inc.Class A 227,848 1,447

Copa Holdings SA Class A 28,745 1,271Gannett Co. Inc. 422,307 477

3,013,269Financials (15.6%)

JPMorgan Chase & Co. 11,554,022 1,106,413Wells Fargo & Co. 13,853,925 402,457Citigroup Inc. 7,814,050 379,450CME Group Inc. 1,309,574 233,379BlackRock Inc. 437,873 219,830US Bancorp 5,144,800 187,785Truist Financial Corp. 4,949,451 184,714Chubb Ltd. 1,665,505 179,891PNC Financial ServicesGroup Inc. 1,599,024 170,568

Morgan Stanley 4,300,428 169,566Progressive Corp. 2,153,430 166,460MetLife Inc. 2,878,516 103,857Aflac Inc. 2,687,497 100,082T Rowe Price Group Inc. 850,780 98,376Travelers Cos. Inc. 942,390 95,379Prudential Financial Inc. 1,467,884 91,552State Street Corp. 1,319,739 83,196American InternationalGroup Inc. 3,215,645 81,774

Arthur J Gallagher & Co. 690,808 54,228Ameriprise Financial Inc. 468,190 53,814Fifth Third Bancorp 2,622,468 49,014Synchrony Financial 2,267,826 44,880KeyCorp 3,628,155 42,268Regions Financial Corp. 3,568,374 38,360Cincinnati Financial Corp. 562,950 37,042Principal FinancialGroup Inc. 1,007,651 36,689

Citizens FinancialGroup Inc. 1,609,836 36,044


5

Shares

MarketValue•

($000)

HuntingtonBancshares Inc. 3,749,471 34,645

Western Union Co. 1,551,023 29,578Equitable Holdings Inc. 1,514,036 27,737Fidelity NationalFinancial Inc. 965,886 26,127

People's UnitedFinancial Inc. 1,619,225 20,548

Franklin Resources Inc. 1,018,790 19,194First American FinancialCorp. 401,846 18,533

Comerica Inc. 531,258 18,520NewYork CommunityBancorp Inc. 1,670,061 18,137

Old Republic InternationalCorp. 1,038,292 16,561

TCF Financial Corp. 557,732 16,559Legg Mason Inc. 315,767 15,735Cullen/Frost Bankers Inc. 208,071 14,952Eaton Vance Corp. 394,358 14,473Popular Inc. 347,292 13,402Unum Group 748,523 13,062Glacier Bancorp Inc. 318,509 12,129Invesco Ltd. 1,405,285 12,114Valley National Bancorp 1,420,735 11,877Community BankSystem Inc. 186,566 11,658

Axis Capital Holdings Ltd. 303,946 11,124Synovus Financial Corp. 515,881 10,839United Bankshares Inc. 358,046 10,727RLI Corp. 146,316 10,656Janus Henderson Groupplc 578,273 10,351

Lazard Ltd. Class A 374,900 10,310First Horizon NationalCorp. 1,134,311 10,300

CVB Financial Corp. 490,760 10,200Umpqua Holdings Corp. 813,129 10,184Bank of Hawaii Corp. 146,453 9,985FNB Corp. 1,192,877 9,650Old National Bancorp 626,740 8,881PacWest Bancorp 434,542 8,795First Hawaiian Inc. 484,388 8,520Federated Hermes Inc.Class B 353,516 8,050

Associated Banc-Corp. 567,256 8,021Cathay General Bancorp 282,578 7,890Investors Bancorp Inc. 834,189 7,766BankUnited Inc. 373,590 7,401Columbia BankingSystem Inc. 267,629 7,223

Fulton Financial Corp. 589,242 6,888Trustmark Corp. 250,705 6,671HancockWhitney Corp. 318,124 6,652Kennedy-WilsonHoldings Inc. 449,722 6,364

Shares

MarketValue•

($000)

WesBanco Inc. 249,685 6,162Westamerica Bancorp 95,525 6,018Santander Consumer USAHoldings Inc. 377,000 5,877

Capitol FederalFinancial Inc. 485,009 5,815

OneMain Holdings Inc. 240,188 5,815First Financial Bancorp 364,138 5,600Navient Corp. 715,978 5,456Artisan Partners AssetManagement Inc. Class A 183,005 5,388

Horace Mann EducatorsCorp. 151,499 5,327

Moelis & Co. Class A 173,543 5,184NBT Bancorp Inc. 156,275 5,177Cohen & Steers Inc. 83,486 4,820Bank of NT Butterfield &Son Ltd. 208,579 4,591

Pacific PremierBancorp Inc. 213,474 4,558

Safety InsuranceGroup Inc. 54,073 4,549

Northwest Bancshares Inc. 419,256 4,448Hope Bancorp Inc. 443,814 4,416GreatWesternBancorp Inc. 225,572 4,241

ProAssurance Corp. 197,805 4,231Mercury General Corp. 100,905 4,133City Holding Co. 58,129 3,929Waddell & ReedFinancial Inc. Class A 256,693 3,735

S&T Bancorp Inc. 138,405 3,697BGC Partners Inc. Class A 1,130,258 3,498Provident FinancialServices Inc. 241,358 3,463

First CommonwealthFinancial Corp. 362,464 3,451

CNA Financial Corp. 103,905 3,281Sandy Spring Bancorp Inc. 127,022 3,239Berkshire HillsBancorp Inc. 180,914 3,083

Brookline Bancorp Inc. 288,782 2,948StockYards Bancorp Inc. 74,907 2,475TFS Financial Corp. 177,290 2,420Boston Private FinancialHoldings Inc. 314,695 2,392

TrustCo Bank Corp. 364,581 2,297American NationalInsurance Co. 27,340 2,201

WashingtonTrustBancorp Inc. 60,436 2,116

Dime CommunityBancshares Inc. 121,600 1,998

Community TrustBancorp Inc. 58,840 1,995

Brightsphere InvestmentGroup Inc. 241,891 1,792


6

Shares

MarketValue•

($000)

FBL Financial Group Inc.Class A 37,479 1,465

Flushing Financial Corp. 104,861 1,310Republic Bancorp Inc.Class A 35,665 1,189

5,185,837Health Care (16.5%)

Johnson & Johnson 9,849,835 1,477,869Pfizer Inc. 20,627,414 791,268Merck & Co. Inc. 9,429,680 748,151Bristol-Myers Squibb Co. 8,657,431 526,458Amgen Inc. 2,183,011 522,220Eli Lilly & Co. 3,146,104 486,513AbbVie Inc. 5,474,533 450,007Gilead Sciences Inc. 4,721,504 396,606Cardinal Health Inc. 1,081,764 53,526Patterson Cos. Inc. 305,357 5,582

5,458,200Industrials (8.4%)

Lockheed Martin Corp. 916,753 356,6723M Co. 2,069,787 314,442United Parcel Service Inc.Class B 2,581,101 244,327

Automatic DataProcessing Inc. 1,612,107 236,480

Caterpillar Inc. 1,982,778 230,756Illinois ToolWorks Inc. 1,184,314 192,451Waste Management Inc. 1,568,967 156,928Emerson Electric Co. 2,262,404 129,025Eaton Corp. plc 1,525,758 127,401Cummins Inc. 542,829 88,753PACCAR Inc. 1,254,721 86,864Johnson ControlsInternational plc 2,824,314 82,216

Paychex Inc. 1,187,351 81,357Fastenal Co. 2,112,699 76,522CH RobinsonWorldwide Inc. 497,837 35,297

Packaging Corp. ofAmerica 346,721 33,511

Westrock Co. 944,249 30,395Snap-on Inc. 201,508 26,254Toro Co. 396,147 25,278Hubbell Inc. Class B 201,274 25,044Watsco Inc. 119,539 19,245National Instruments Corp. 479,653 18,428Sonoco Products Co. 365,290 17,841MDU ResourcesGroup Inc. 732,315 16,448

Xerox Holdings Corp. 651,592 11,918nVent Electric plc 558,319 10,413MSC Industrial Direct Co.Inc. Class A 160,689 9,583

Timken Co. 244,411 9,185ABM Industries Inc. 247,226 8,527

Shares

MarketValue•

($000)

Kennametal Inc. 300,341 7,692GATX Corp. 128,452 7,617Macquarie InfrastructureCorp. 270,405 7,460

Ryder System Inc. 191,534 6,780Otter Tail Corp. 149,663 6,642Triton International Ltd. 197,470 6,118McGrath RentCorp 89,259 4,869Mobile Mini Inc. 160,557 4,587SFL Corp. Ltd. 302,812 3,419EnerpacTool Group Corp.Class A 198,979 3,395

Covanta Holding Corp. 431,942 3,360Greif Inc. Class A 94,142 3,190Atlas Corp. 407,481 3,040Greenbrier Cos. Inc. 117,981 2,003H&E EquipmentServices Inc. 115,980 1,886

Myers Industries Inc. 134,673 1,6651 GasLog Ltd. 145,543 672

2,775,956Oil & Gas (6.4%)

Exxon Mobil Corp. 15,701,547 729,651Chevron Corp. 7,065,868 650,060Phillips 66 1,632,813 119,473Kinder Morgan Inc. 7,201,843 109,684Valero Energy Corp. 1,517,523 96,135Williams Cos. Inc. 4,489,246 86,957Schlumberger Ltd. 5,130,168 86,289Marathon Petroleum Corp. 2,381,808 76,408Occidental PetroleumCorp. 3,315,915 55,044

ONEOK Inc. 1,522,824 45,578Apache Corp. 1,385,229 18,119Targa Resources Corp. 842,058 10,913Helmerich & Payne Inc. 393,121 7,772Murphy Oil Corp. 550,645 6,531Delek US Holdings Inc. 271,222 6,333Equitrans Midstream Corp. 748,866 6,276PBF Energy Inc. Class A 485,170 5,531

* Cosan Ltd. Class A 407,363 5,434CVR Energy Inc. 136,131 3,247Core Laboratories NV 160,337 3,144Archrock Inc. 516,308 2,483Golar LNG Ltd. 347,203 2,462RPC Inc. 212,396 724Nabors Industries Ltd. 26,002 383

2,134,631Technology (11.1%)

Intel Corp. 15,856,096 951,049Cisco Systems Inc. 15,851,467 671,785International BusinessMachines Corp. 3,283,938 412,331

Texas Instruments Inc. 3,469,980 402,761Broadcom Inc. 1,430,953 388,675


7

Shares

MarketValue•

($000)

QUALCOMM Inc. 4,226,307 332,484KLA Corp. 582,924 95,652HP Inc. 5,380,935 83,458Corning Inc. 2,800,024 61,628Maxim IntegratedProducts Inc. 992,140 54,548

Western Digital Corp. 1,101,564 50,760Hewlett PackardEnterprise Co. 4,824,705 48,537

Seagate Technology plc 958,577 47,881NetApp Inc. 844,872 36,980Juniper Networks Inc. 1,224,639 26,452Cogent CommunicationsHoldings Inc. 155,446 13,031

TiVo Corp. 459,179 3,228Xperi Corp. 176,244 2,693Pitney Bowes Inc. 629,349 2,222ADTRAN Inc. 171,990 1,768

3,687,923Telecommunications (5.3%)

VerizonCommunications Inc. 15,331,677 880,805

AT&T Inc. 27,010,807 823,019CenturyLink Inc. 4,029,389 42,792

1,746,616Utilities (9.4%)

NextEra Energy Inc. 1,806,208 417,451Dominion Energy Inc. 3,040,850 234,541Duke Energy Corp. 2,692,230 227,924Southern Co. 3,845,682 218,166American Electric PowerCo. Inc. 1,825,381 151,707

Exelon Corp. 3,612,635 133,957Sempra Energy 1,042,079 129,062Xcel Energy Inc. 1,940,703 123,351WEC Energy Group Inc. 1,163,056 105,315Eversource Energy 1,198,071 96,684Consolidated Edison Inc. 1,226,362 96,637Public Service EnterpriseGroup Inc. 1,872,756 94,967

FirstEnergy Corp. 1,997,734 82,447Edison International 1,294,921 76,025PPL Corp. 2,843,968 72,294DTE Energy Co. 685,241 71,087Entergy Corp. 735,016 70,201Ameren Corp. 905,474 65,873CMS Energy Corp. 1,046,245 59,730Evergy Inc. 841,786 49,186Atmos Energy Corp. 446,234 45,503Alliant Energy Corp. 888,590 43,141NiSource Inc. 1,380,667 34,669Essential Utilities Inc. 799,365 33,405AES Corp. 2,458,663 32,577PinnacleWest CapitalCorp. 415,518 31,991

Shares

MarketValue•

($000)

CenterPoint Energy Inc. 1,860,562 31,685UGI Corp. 814,097 24,569OGE Energy Corp. 727,549 22,932IDACORP Inc. 186,641 17,130ONE Gas Inc. 204,891 16,332Hawaiian ElectricIndustries Inc. 398,782 15,740

Portland General ElectricCo. 329,051 15,396

Southwest GasHoldings Inc. 199,318 15,108

Black Hills Corp. 223,844 13,865Spire Inc. 182,692 13,329New Jersey ResourcesCorp. 376,547 12,720

National Fuel Gas Co. 309,085 12,673PNM Resources Inc. 291,459 11,801ALLETE Inc. 204,948 11,797NorthWestern Corp. 185,375 10,694Avista Corp. 244,150 10,508El Paso Electric Co. 150,241 10,216South JerseyIndustries Inc. 340,336 9,730

Avangrid Inc. 206,862 8,895Northwest Natural HoldingCo. 112,336 7,313

Clearway Energy Inc.Class C 291,440 5,838

AtlanticaYield plc 217,079 5,197TerraForm Power Inc.Class A 290,589 5,033

Clearway Energy Inc.Class A 127,710 2,388

3,108,780

Total Common Stocks(Cost $33,788,466) 33,093,765

Temporary Cash Investments (0.2%)

Money Market Fund (0.1%)2,3 Vanguard Market Liquidity

Fund, 0.522% 404,075 40,407

FaceAmount

($000)

U.S. Government and Agency Obligations (0.1%)4 United States Treasury Bill,

0.102%, 7/14/20 4,890 4,8894 United States Treasury Bill,

0.087%, 9/24/20 1,400 1,399


8

FaceAmount

($000)

MarketValue•

($000)

United States Treasury Bill,0.116%, 9/29/20 2,500 2,499

8,787

TotalTemporary Cash Investments(Cost $49,182) 49,194

Total Investments (100.0%)(Cost $33,837,648) 33,142,959

Other Assets andLiabilities-Net (0.0%)3,4 12,310

Net Assets (100.0%) 33,155,269

Cost rounded to $000.• See Note A in Notes to Financial Statements.* Non-income-producing security.1 Includes partial security positions on loan tobroker-dealers. The total value of securities on loanis $35,698,000.

2 Affiliated money market fund available only toVanguard funds and certain trusts and accountsmanaged by Vanguard. Rate shown is the 7-dayyield.

3 Collateral of $40,375,000 was received forsecurities on loan.

4 Securities with a value of $6,288,000 and cash of$293,000 has been segregated as initial margin foropen futures contracts.

Derivative Financial Instruments Outstanding as of Period End

Futures Contracts

($000)

Expiration

Number ofLong (Short)Contracts

NotionalAmount

Value andUnrealized

Appreciation(Depreciation)

Long Futures Contracts

E-mini S&P 500 Index June 2020 543 78,800 7,497


See accompanying Notes, which are an integral part of the Financial Statements.

9

($000s, except shares and per-share amounts) Amount

Assets

Investments in Securities, at Value

Unaffiliated Issuers (Cost $33,797,253) 33,102,552

Affiliated Issuers (Cost $40,395) 40,407

Total Investments in Securities 33,142,959

Investment in Vanguard 1,566

Cash 6,504

Cash Collateral Pledged—Futures Contracts 293

Receivables for Accrued Income 59,612

Receivables for Capital Shares Issued 5,771

Total Assets 33,216,705

Liabilities

Payables for Investment Securities Purchased 7,337

Collateral for Securities on Loan 40,375

Payables for Capital Shares Redeemed 9,877

Variation Margin Payable—Futures Contracts 1,048

Payables to Vanguard 2,799

Total Liabilities 61,436

Net Assets 33,155,269

At April 30, 2020, net assets consisted of:

Paid-in Capital 34,118,145

Total Distributable Earnings (Loss) (962,876)

Net Assets 33,155,269

ETF Shares—Net Assets

Applicable to 326,129,880 outstanding $.001 par value shares of beneficial interest(unlimited authorization) 25,465,616

Net Asset Value Per Share—ETF Shares $78.08

Admiral Shares—Net Assets

Applicable to 326,591,656 outstanding $.001 par value shares of beneficial interest(unlimited authorization) 7,689,653

Net Asset Value Per Share—Admiral Shares $23.55



Statement of Assets and LiabilitiesAs of April 30, 2020

10

Six Months EndedApril 30, 2020

($000)

Investment Income

Income

Dividends 640,384

Interest1 228

Securities Lending—Net 93

Total Income 640,705

Expenses

The Vanguard Group—Note B

Investment Advisory Services 1,539

Management and Administrative—ETF Shares 5,819

Management and Administrative—Admiral Shares 2,775

Marketing and Distribution—ETF Shares 824

Marketing and Distribution—Admiral Shares 201

Custodian Fees 251

Shareholders’ Reports—ETF Shares 256

Shareholders’ Reports—Admiral Shares 46

Trustees’ Fees and Expenses 11

Total Expenses 11,722

Net Investment Income 628,983

Realized Net Gain (Loss)

Investment Securities Sold1,2 561,577

Futures Contracts (12,037)

Realized Net Gain (Loss) 549,540

Change in Unrealized Appreciation (Depreciation)

Investment Securities1 (5,621,430)

Futures Contracts 6,575

Change in Unrealized Appreciation (Depreciation) (5,614,855)

Net Increase (Decrease) in Net Assets Resulting from Operations (4,436,332)

1 Interest income, realized net gain (loss), and change in unrealized appreciation (depreciation) from an affiliated company of the fundwere $188,000, $24,000, and $12,000, respectively. Purchases and sales are for temporary cash investment purposes.

2 Includes $722,002,000 of the net gain (loss) resulting from in-kind redemptions.



Statement of Operations

11

Six Months EndedApril 30,

2020

Year EndedOctober 31,

2019($000) ($000)

Increase (Decrease) in Net Assets

Operations

Net Investment Income 628,983 1,077,014

Realized Net Gain (Loss) 549,540 903,905

Change in Unrealized Appreciation (Depreciation) (5,614,855) 1,477,708

Net Increase (Decrease) in Net Assets Resulting from Operations (4,436,332) 3,458,627

Distributions1

Investor Shares — (136,910)

ETF Shares (435,474) (785,436)

Admiral Shares (132,970) (131,730)

Total Distributions (568,444) (1,054,076)

Capital ShareTransactions

Investor Shares (5,748) (8,358,258)

ETF Shares 2,455,639 3,714,888

Admiral Shares 74,198 8,543,837

Net Increase (Decrease) from Capital Share Transactions 2,524,089 3,900,467

Total Increase (Decrease) (2,480,687) 6,305,018

Net Assets

Beginning of Period 35,635,956 29,330,938

End of Period 33,155,269 35,635,956

1 Certain prior period numbers have been reclassed to conform with current period presentation.



Statement of Changes in Net Assets

12

Investor Shares

For a Share OutstandingThroughout Each Period

November 1,2019 to

November 7,20191

Year Ended October 31,

2019 2018 2017 2016 2015

Net Asset Value, Beginning of Period $35.50 $32.98 $32.67 $28.20 $26.89 $26.98

Investment Operations

Net Investment Income .0372 1.1412 1.011 2 .9272 .854 .815

Net Realized and Unrealized Gain (Loss) onInvestments .623 2.461 .284 4.472 1.286 (.088)

Total from Investment Operations .660 3.602 1.295 5.399 2.140 .727

Distributions

Dividends from Net Investment Income — (1.082) (.985) (.929) (.830) (.817)

Distributions from Realized Capital Gains — — — — — —

Total Distributions — (1.082) (.985) (.929) (.830) (.817)

Net Asset Value, End of Period $36.161 $35.50 $32.98 $32.67 $28.20 $26.89

Total Return3 — 11.20% 3.96% 19.37% 8.11% 2.78%

Ratios/Supplemental Data

Net Assets, End of Period (Millions) $— $6 $8,003 $7,590 $5,879 $4,368

Ratio of Total Expenses toAverage Net Assets 0.14% 0.14% 0.14% 0.15% 0.15% 0.16%

Ratio of Net Investment Income toAverage Net Assets 5.42% 3.43% 3.00% 3.00% 3.19% 3.06%

Portfolio Turnover Rate4 2%5 7% 13% 9% 7% 11%

The expense ratio and net investment income ratio for the current period have been annualized.1 Net asset value as of November 7, 2019, on which date the remaining Investor Shares were converted to Admiral Shares.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 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.5 Reflects the fund’s portfolio turnover for the period ended April 30, 2020.


Financial Highlights


13

ETF Shares


Six MonthsEnded

April 30,2020

Year Ended October 31,

2019 2018 2017 2016 2015

Net Asset Value, Beginning of Period $89.60 $83.26 $82.46 $71.19 $67.88 $68.11


Net Investment Income 1.4941 2.8911 2.6231 2.3941 2.203 2.104

Net Realized and Unrealized Gain (Loss) onInvestments (11.680) 6.251 .731 11.301 3.245 (.222)

Total from Investment Operations (10.186) 9.142 3.354 13.695 5.448 1.882

Distributions

Dividends from Net Investment Income (1.334) (2.802) (2.554) (2.425) (2.138) (2.112 )

Distributions from Realized Capital Gains — — — — — —

Total Distributions (1.334) (2.802) (2.554) (2.425) (2.138) (2.112 )

Net Asset Value, End of Period $78.08 $89.60 $83.26 $82.46 $71.19 $67.88

Total Return -11.52% 11.31% 4.05% 19.46% 8.18% 2.84%


Net Assets, End of Period (Millions) $25,466 $26,816 $21,328 $20,010 $15,497 $11,214

Ratio of Total Expenses toAverage Net Assets 0.06% 0.06% 0.06% 0.08% 0.08% 0.09%

Ratio of Net Investment Income toAverage Net Assets 3.48% 3.38% 3.08% 3.07% 3.26% 3.13%

Portfolio Turnover Rate2 2% 7% 13% 9% 7% 11%

The expense ratio and net investment income ratio for the current period have been annualized.1 Calculated based on average shares outstanding.2 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.




14

Admiral Shares


Six MonthsEnded

April 30,2020

February 7,20191 to

October 31,2019

Net Asset Value, Beginning of Period $27.02 $25.00


Net Investment Income2 .450 .624

Net Realized and Unrealized Gain (Loss) on Investments (3.521) 2.010

Total from Investment Operations (3.071) 2.634

Distributions

Dividends from Net Investment Income (.399) (.614)

Distributions from Realized Capital Gains — —

Total Distributions (.399) (.614)

Net Asset Value, End of Period $23.55 $27.02

Total Return3 -11.49% 10.64%


Net Assets, End of Period (Millions) $7,690 $8,814

Ratio of Total Expenses to Average Net Assets 0.08% 0.08%4

Ratio of Net Investment Income to Average Net Assets 3.47% 3.24%4

Portfolio Turnover Rate5 2% 7%6

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 Annualized.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.6 Reflects the fund’s portfolio turnover for the fiscal year ended October 31, 2019.




15

Vanguard High Dividend Yield Index Fund is registered under the Investment Company Act of 1940as an open-end investment company, or mutual fund. The fund offers two classes of shares: ETFShares and Admiral Shares. Each of the share classes has different eligibility and minimumpurchase requirements, and is designed for different types of investors. ETF Shares are listed fortrading on NYSE Arca; they can be purchased and sold through a broker. Prior to November 7, 2019,the fund offered Investor Shares. Effective at the close of business on November 7, 2019, theremaining Investor Shares were converted to Admiral Shares.

Market disruptions associated with the COVID-19 pandemic have had a global impact, anduncertainty exists as to the long-term implications. Such disruptions can adversely affect assets ofthe fund and thus fund performance.

A. The following significant accounting policies conform to generally accepted accountingprinciples for U.S. investment companies. The fund consistently follows such policies in preparingits financial statements.

1. Security Valuation: Securities are valued as of the close of trading on the NewYork StockExchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at thelatest quoted sales prices or official closing prices taken from the primary market in which eachsecurity trades; such securities not traded on the valuation date are valued at the mean of thelatest quoted bid and asked prices. Securities for which market quotations are not readily available,or whose values have been materially affected by events occurring before the fund's pricing timebut after the close of the securities’ primary markets, are valued at their fair values calculatedaccording to procedures adopted by the board of trustees. Investments in Vanguard MarketLiquidity Fund are valued at that fund's net asset value. Temporary cash investments are valuedusing the latest bid prices or using valuations based on a matrix system (which considers suchfactors as security prices, yields, maturities, and ratings), both as furnished by independent pricingservices.

2. Futures Contracts: The fund uses index futures contracts to a limited extent, with the objectivesof maintaining full exposure to the stock market, maintaining liquidity, and minimizing transactioncosts. The fund may purchase futures contracts to immediately invest incoming cash in themarket, or sell futures in response to cash outflows, thereby simulating a fully invested position inthe underlying index while maintaining a cash balance for liquidity. The primary risks associatedwith the use of futures contracts are imperfect correlation between changes in market values ofstocks 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 thecounterparty instead of the clearing broker. To further mitigate counterparty risk, the fund tradesfutures contracts on an exchange, monitors the financial strength of its clearing brokers andclearinghouse, and has entered into clearing agreements with its clearing brokers. Theclearinghouse imposes initial margin requirements to secure the fund’s performance and requiresdaily settlement of variation margin representing changes in the market value of each contract. Anyassets 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 thecontracts are not recorded in the Schedule of Investments. Fluctuations in the value of thecontracts are recorded in the Statement of Assets and Liabilities as an asset (liability) and in theStatement of Operations as unrealized appreciation (depreciation) until the contracts are closed,when they are recorded as realized gains (losses) on futures contracts.


Notes to Financial Statements

16

During the six months ended April 30, 2020, the fund’s average investments in long and shortfutures contracts represented less than 1% and 0% of net assets, respectively, based on theaverage of the notional amounts at each quarter-end during the period.

3. Federal IncomeTaxes: The fund intends to continue to qualify as a regulated investmentcompany and distribute all of its taxable income. Management has analyzed the fund’s taxpositions taken for all open federal income tax years (October 31, 2017–2019), and for the periodended April 30, 2020, and has concluded that no provision for federal income tax is required in thefund’s financial statements.

4. Distributions: Distributions to shareholders are recorded on the ex-dividend date. Distributionsare determined on a tax basis at the fiscal year-end and may differ from net investment incomeand realized capital gains for financial reporting purposes.

5. Securities Lending: To earn additional income, the fund lends its securities to qualifiedinstitutional borrowers. Security loans are subject to termination by the fund at any time, and arerequired to be secured at all times by collateral in an amount at least equal to the market value ofsecurities loaned. Daily market fluctuations could cause the value of loaned securities to be moreor less than the value of the collateral received.When this occurs, the collateral is adjusted andsettled before the opening of the market on the next business day. The fund further mitigates itscounterparty risk by entering into securities lending transactions only with a diverse group ofprequalified counterparties, monitoring their financial strength, and entering into master securitieslending agreements with its counterparties. The master securities lending agreements providethat, in the event of a counterparty’s default (including bankruptcy), the fund may terminate anyloans with that borrower, determine the net amount owed, and sell or retain the collateral up tothe 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 experiencedelays and costs in recovering the securities loaned. The fund invests cash collateral received inVanguard Market Liquidity Fund, and records a liability in the Statement of Assets and Liabilitiesfor the return of the collateral, during the period the securities are on loan. Collateral investmentsin Vanguard Market Liquidity Fund are subject to market appreciation or deprecation. Securitieslending income represents fees charged to borrowers plus income earned on invested cashcollateral, less expenses associated with the loan. During the term of the loan, the fund is entitledto all distributions made on or in respect of the loaned securities.

6. Credit Facilities and Interfund Lending Program: The fund and certain other funds managed byThe Vanguard Group (“Vanguard”) participate in a $4.3 billion committed credit facility provided bya syndicate of lenders pursuant to a credit agreement and, effective May 2020, an uncommittedcredit facility provided by Vanguard. Both facilities may be renewed annually. Each fund isindividually liable for its borrowings, if any, under the credit facilities. Borrowings may be utilizedfor temporary or emergency purposes, subject to the fund’s regulatory and contractual borrowingrestrictions.With respect to the committed credit facility, the participating funds are chargedadministrative fees and an annual commitment fee of 0.10% of the undrawn committed amount ofthe facility; these fees are allocated to the funds based on a method approved by the fund’s boardof trustees and included in Management and Administrative expenses on the fund’s Statement ofOperations. Any borrowings under either facility bear interest at a rate based upon the higher ofthe one-month London Interbank Offered Rate (or an acceptable alternate rate, if necessary),federal funds effective rate, or overnight bank funding rate plus an agreed-upon spread, exceptthat borrowings under the uncommitted credit facility may bear interest based upon an alternativerate agreed to by the fund and Vanguard.


17

In accordance with an exemptive order (the “Order”) from the SEC, the fund may participate in ajoint lending and borrowing program that allows registered open-end Vanguard funds to borrowmoney from and lend money to each other for temporary or emergency purposes (the “InterfundLending Program”), subject to compliance with the terms and conditions of the Order, and to theextent permitted by the fund’s investment objective and investment policies. Interfund loans andborrowings normally extend overnight, but can have a maximum duration of seven days. Loansmay be called on one business day’s notice. The interest rate to be charged is governed by theconditions of the Order and internal procedures adopted by the board of trustees. The board oftrustees is responsible for overseeing the Interfund Lending Program.

For the six months ended April 30, 2020, the fund did not utilize the credit facilities or theInterfund Lending Program.

7. Other: Dividend income is recorded on the ex-dividend date. Interest income includes incomedistributions received from Vanguard Market Liquidity Fund and is accrued daily. Premiums anddiscounts on debt securities are amortized and accreted, respectively, to interest income over thelives of the respective securities, except for premiums on certain callable debt securities that areamortized to the earliest call date. Security transactions are accounted for on the date securitiesare bought or sold. Costs used to determine realized gains (losses) on the sale of investmentsecurities are those of the specific securities sold.

Each class of shares has equal rights as to assets and earnings, except that each class separatelybears certain class-specific expenses related to maintenance of shareholder accounts (included inManagement and Administrative expenses) and shareholder reporting. Marketing and distributionexpenses are allocated to each class of shares based on a method approved by the board oftrustees. Income, other non-class-specific expenses, and gains and losses on investments areallocated 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 Vanguardand the fund, Vanguard furnishes to the fund investment advisory, corporate management,administrative, marketing, and distribution services at Vanguard’s cost of operations (as defined bythe FSA). These costs of operations are allocated to the fund based on methods and guidelinesapproved by the board of trustees. Vanguard does not require reimbursement in the current periodfor certain costs of operations (such as deferred compensation/benefits and risk/insurance costs);the fund’s liability for these costs of operations is included in Payables to Vanguard on theStatement of Assets and Liabilities, and subsequently, in May 2020, such liability was fully paid toVanguard. All other costs of operations payable to Vanguard 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 inVanguard. At April 30, 2020, the fund had contributed to Vanguard capital in the amount of$1,566,000, representing less than 0.01% of the fund’s net assets and 0.63% of Vanguard’scapital received pursuant to the FSA. The fund’s trustees and officers are also directors andemployees, respectively, of Vanguard.

C. Various inputs may be used to determine the value of the fund’s investments. These inputs aresummarized in three broad levels for financial statement purposes. The inputs or methodologiesused to value securities are not necessarily an indication of the risk associated with investing inthose securities.

Level 1—Quoted prices in active markets for identical securities.


18

Level 2—Other significant observable inputs (including quoted prices for similar securities, interestrates, prepayment speeds, credit risk, etc.).

Level 3—Significant unobservable inputs (including the fund’s own assumptions used todetermine the fair value of investments). Any investments valued with significant unobservableinputs are noted on the Schedule of Investments.

The following table summarizes the market value of the fund's investments and derivatives as ofApril 30, 2020, based on the inputs used to value them:

Level 1($000)

Level 2($000)

Level 3($000)

Total($000)

Investments

Assets

Common Stocks 33,093,765 — — 33,093,765

Temporary Cash Investments 40,407 8,787 — 49,194

Total 33,134,172 8,787 — 33,142,959

Derivative Financial Instruments

Liabilities

Futures Contracts1 1,048 — — 1,048

1 Represents variation margin on the last day of the reporting period.

D. As of April 30, 2020, gross unrealized appreciation and depreciation for investments andderivatives based on cost for U.S. federal income tax purposes were as follows:

Amount($000)

Tax Cost 33,911,398

Gross Unrealized Appreciation 4,289,269

Gross Unrealized Depreciation (5,050,211)

Net Unrealized Appreciation (Depreciation) (760,942)

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, 2019, the fund had available capital losses totaling $978,815,000 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, 2020;

should the fund realize net capital losses for the year, the losses will be added to the loss

carryforward balance above.

E. During the six months ended April 30, 2020, the fund purchased $5,723,117,000 of investmentsecurities and sold $2,798,264,000 of investment securities, other than temporary cashinvestments. Purchases and sales include $4,650,494,000 and $2,100,671,000, respectively, inconnection with in-kind purchases and redemptions of the fund’s capital shares.


19

F. Capital share transactions for each class of shares were:

Six Months EndedApril 30, 2020

Year EndedOctober 31, 2019

Amount($000)

Shares(000)

Amount($000)

Shares(000)

Investor Shares

Issued 61 2 1,187,273 35,128

Issued in Lieu of Cash Distributions — — 112,567 3,539

Redeemed1 (5,809) (161) (9,658,098) (281,141)

Net Increase (Decrease)—Investor Shares (5,748) (159) (8,358,258) (242,474)

ETF Shares

Issued 4,794,392 55,107 7,516,552 88,367

Issued in Lieu of Cash Distributions — — — —

Redeemed (2,338,753) (28,250) (3,801,664) (45,250)

Net Increase (Decrease)—ETF Shares 2,455,639 26,857 3,714,888 43,117

Admiral Shares2

Issued1 1,163,639 45,826 9,304,199 355,228

Issued in Lieu of Cash Distributions 104,743 4,058 100,934 3,824

Redeemed (1,194,184) (49,522) (861,296) (32,822)

Net Increase (Decrease)—Admiral Shares 74,198 362 8,543,837 326,230

1 In November 2018, the fund announced changes to the availability and minimum investment criteria of the Investor and Admiral shareclasses. As a result, all of the outstanding Investor Shares automatically converted to Admiral Shares beginning in April 2019, with theexception of those held by Vanguard funds and certain other institutional investors. Investor Shares—Redeemed and AdmiralShares—Issued include 4,000 and 5,000 shares, respectively, in the amount of $91,000 from the conversion during the six monthsended April 30, 2020. Investor Shares—Redeemed and Admiral Shares—Issued include 244,521,000 and 321,285,000 shares,respectively, in the amount of $8,204,425,000 from the conversion during the year ended October 31, 2019.

2 Inception was February 7, 2019, for Admiral Shares.

G. Management has determined that no other material events or transactions occurredsubsequent to April 30, 2020, that would require recognition or disclosure in these financialstatements.


20

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 monthly 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 monthly reports, which included a Market and Economic Report, a

Fund Dashboard Monthly Summary, and a Fund Performance Report.

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 servicesThe 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 performanceThe 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.

CostThe board concluded that the fund’s expense ratio was well below the average expense ratio

charged by funds in its peer group and that the fund’s advisory expenses were also well below the

peer-group average.

Trustees Approve Advisory Arrangements

21

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 scaleThe 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 the fund’s assets

increase.

The board will consider whether to renew the advisory arrangement again after a one-year period.

22

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 VanguardWhitehall 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 December 1, 2018, through December 31, 2019 (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.

Liquidity Risk Management Program

23

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Connect withVanguard® > vanguard.com

Fund Information > 800-662-7447

Direct Investor Account Services > 800-662-2739

Institutional Investor Services > 800-523-1036

TextTelephone for PeopleWhoAre Deaf or Hard of Hearing > 800-749-7273

This material may be used in conjunctionwith the offering of shares of any Vanguardfund only if preceded or accompanied bythe fund’s current prospectus.

You can obtain a free copy of Vanguard’s proxy votingguidelines by visiting vanguard.com/proxyreporting or bycalling Vanguard at 800-662-2739. The guidelines arealso available from the SEC’s website, www.sec.gov. Inaddition, you may obtain a free report on how your fundvoted the proxies for securities it owned during the 12months ended June 30. To get the report, visit eithervanguard.com/proxyreporting or www.sec.gov.

You can review information about your fund on the SEC’swebsite, and you can receive copies of this information,for a fee, by sending a request via email addressed [email protected].

© 2020 The Vanguard Group, Inc.All rights reserved.U.S. Pat. Nos. 6,879,964; 7,337,138; 7,720,749;7,925,573; 8,090,646; and 8,417,623.Vanguard Marketing Corporation, Distributor.

Q6232 062020

vanguard high dividend yield index fund · 2020-06-19 · six months ended april 30, 2020 beginning...

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