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: 811-05445
Name of Registrant: | Vanguard Fenway Funds |
Address of Registrant: | P.O. Box 2600 |
Valley Forge, PA 19482 |
Name and address of agent for service: | Anne E. Robinson, Esquire |
P.O. Box 876 | |
Valley Forge, PA 19482 |
Registrant’s telephone number, including area code: (610) 669-1000
Date of fiscal year end: September 30
Date of reporting period: October 1, 2020—September 30, 2021
Item 1: Reports to Shareholders
Your Fund’s Performance at a Glance | 1 |
Advisors’ Report | 2 |
About Your Fund’s Expenses | 6 |
Performance Summary | 8 |
Financial Statements | 10 |
• | For the 12 months ended September 30, Vanguard Equity Income Fund returned 30.66% for Investor Shares and 30.77% for Admiral Shares. The fund underperformed its benchmark, which returned 31.58%. |
• | The global economy rebounded faster than many had expected after the pandemic-induced contraction in the spring of 2020. Swift and extensive fiscal and monetary support from policymakers has been one of the keys to the rebound. Stock returns were excellent for the 12-month period, reflecting the recovery following the sharp downturn at the start of the pandemic. |
• | The fund’s two advisors focus on investing in large-capitalization value companies with higher yields, and they emphasize dividends. That focus helped the fund’s performance during the period, as value stocks generally outperformed their growth counterparts. |
• | By sector, industrials and information technology contributed most to relative returns. Energy and financials were the biggest detractors. |
Average Annual Total Returns Periods Ended September 30, 2021 | |||
One Year | Three Years | Five Years | |
Stocks | |||
Russell 1000 Index (Large-caps) | 30.96% | 16.43% | 17.11% |
Russell 2000 Index (Small-caps) | 47.68 | 10.54 | 13.45 |
Russell 3000 Index (Broad U.S. market) | 31.88 | 16.00 | 16.85 |
FTSE All-World ex US Index (International) | 24.73 | 8.49 | 9.28 |
Bonds | |||
Bloomberg U.S. Aggregate Bond Index (Broad taxable market) | -0.90% | 5.36% | 2.94% |
Bloomberg Municipal Bond Index (Broad tax-exempt market) | 2.63 | 5.06 | 3.26 |
FTSE Three-Month U.S. Treasury Bill Index | 0.06 | 1.14 | 1.13 |
CPI | |||
Consumer Price Index | 5.39% | 2.81% | 2.59% |
Fund Assets Managed | |||
Investment Advisor | % | $ Million | Investment Strategy |
Wellington Management Company LLP | 64 | 31,153 | A fundamental approach to seeking desirable stocks. Our selections typically offer above-average dividend yields, below-average valuations, and the potential for dividend increases in the future. |
Vanguard Quantitative Equity Group | 34 | 16,678 | Employs a quantitative fundamental management approach, using models that assess valuation, growth prospects, management decisions, market sentiment, and earnings and balance-sheet quality of companies as compared with their peers. |
Cash Investments | 2 | 876 | These short-term reserves are invested by Vanguard in equity index products to simulate investment in stocks. Each advisor may also maintain a modest cash position. |
• | 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. |
• | 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. |
Six Months Ended September 30, 2021 | |||
Beginning Account Value 3/31/2021 | Ending Account Value 9/30/2021 | Expenses Paid During Period | |
Based on Actual Fund Return | |||
Equity Income Fund | |||
Investor Shares | $1,000.00 | $1,049.60 | $1.44 |
Admiral™ Shares | 1,000.00 | 1,050.10 | 0.98 |
Based on Hypothetical 5% Yearly Return | |||
Equity Income Fund | |||
Investor Shares | $1,000.00 | $1,023.67 | $1.42 |
Admiral Shares | 1,000.00 | 1,024.12 | 0.96 |
Average Annual Total Returns Periods Ended September 30, 2021 | |||||
One Year | Five Years | Ten Years | Final Value of a $10,000 Investment | ||
Equity Income Fund Investor Shares | 30.66% | 11.75% | 13.64% | $35,930 | |
FTSE High Dividend Yield Index | 31.58 | 10.97 | 13.42 | 35,218 | |
Dow Jones U.S. Total Stock Market Float Adjusted Index | 32.13 | 16.82 | 16.56 | 46,280 |
One Year | Five Years | Ten Years | Final Value of a $50,000 Investment | ||
Equity Income Fund Admiral Shares | 30.77% | 11.85% | 13.74% | $181,255 | |
FTSE High Dividend Yield Index | 31.58 | 10.97 | 13.42 | 176,088 | |
Dow Jones U.S. Total Stock Market Float Adjusted Index | 32.13 | 16.82 | 16.56 | 231,402 |
Communication Services | 4.9% |
Consumer Discretionary | 5.4 |
Consumer Staples | 14.4 |
Energy | 6.2 |
Financials | 21.7 |
Health Care | 16.5 |
Industrials | 10.1 |
Information Technology | 8.8 |
Materials | 4.4 |
Real Estate | 0.6 |
Utilities | 7.0 |
Shares | Market Value• ($000) | ||
Common Stocks (97.7%) | |||
Communication Services (4.8%) | |||
Comcast Corp. Class A | 20,223,813 | 1,131,118 | |
Verizon Communications Inc. | 13,888,929 | 750,141 | |
AT&T Inc. | 7,088,317 | 191,456 | |
Omnicom Group Inc. | 1,299,200 | 94,140 | |
Interpublic Group of Cos. Inc. | 2,144,237 | 78,629 | |
Lumen Technologies Inc. | 5,656,593 | 70,085 | |
2,315,569 | |||
Consumer Discretionary (5.2%) | |||
Home Depot Inc. | 2,404,704 | 789,368 | |
Lowe's Cos. Inc. | 2,652,137 | 538,012 | |
McDonald's Corp. | 2,221,479 | 535,621 | |
TJX Cos. Inc. | 3,001,075 | 198,011 | |
Target Corp. | 580,615 | 132,827 | |
Best Buy Co. Inc. | 939,399 | 99,304 | |
H&R Block Inc. | 3,930,040 | 98,251 | |
Polaris Inc. | 448,170 | 53,628 | |
Whirlpool Corp. | 196,586 | 40,076 | |
Foot Locker Inc. | 662,739 | 30,261 | |
Big Lots Inc. | 466,591 | 20,231 | |
Newell Brands Inc. | 609,021 | 13,484 | |
Williams-Sonoma Inc. | 53,664 | 9,516 | |
2,558,590 | |||
Consumer Staples (14.0%) | |||
Procter & Gamble Co. | 9,590,841 | 1,340,800 | |
Philip Morris International Inc. | 8,925,538 | 846,052 | |
Mondelez International Inc. Class A | 11,702,563 | 680,855 | |
PepsiCo Inc. | 4,161,129 | 625,875 | |
Coca-Cola Co. | 9,871,039 | 517,933 | |
Kimberly-Clark Corp. | 3,347,689 | 443,368 | |
Archer-Daniels-Midland Co. | 7,117,531 | 427,123 | |
Walmart Inc. | 2,457,059 | 342,465 | |
Unilever plc ADR | 6,088,003 | 330,092 | |
Nestle SA ADR | 2,103,351 | 252,844 | |
Kellogg Co. | 3,629,693 | 232,010 | |
Altria Group Inc. | 4,131,730 | 188,076 | |
Tyson Foods Inc. Class A | 1,513,850 | 119,503 | |
Colgate-Palmolive Co. | 1,450,138 | 109,601 | |
General Mills Inc. | 1,463,244 | 87,531 | |
Hershey Co. | 383,119 | 64,843 | |
Walgreens Boots Alliance Inc. | 1,236,913 | 58,197 |
Shares | Market Value• ($000) | ||
Conagra Brands Inc. | 1,352,646 | 45,814 | |
Campbell Soup Co. | 829,981 | 34,702 | |
Coca-Cola Europacific Partners plc | 590,332 | 32,640 | |
Nu Skin Enterprises Inc. Class A | 519,115 | 21,009 | |
Medifast Inc. | 62,626 | 12,064 | |
Bunge Ltd. | 109,854 | 8,933 | |
Kraft Heinz Co. | 238,383 | 8,777 | |
6,831,107 | |||
Energy (6.0%) | |||
Pioneer Natural Resources Co. | 4,150,536 | 691,106 | |
ConocoPhillips | 9,407,823 | 637,568 | |
1 | TC Energy Corp. | 7,103,993 | 341,907 |
Chevron Corp. | 2,510,089 | 254,648 | |
Exxon Mobil Corp. | 3,888,706 | 228,734 | |
Phillips 66 | 1,890,095 | 132,363 | |
Kinder Morgan Inc. | 7,474,048 | 125,041 | |
Schlumberger NV | 3,907,137 | 115,807 | |
Halliburton Co. | 3,546,212 | 76,669 | |
EOG Resources Inc. | 869,850 | 69,823 | |
Targa Resources Corp. | 1,361,484 | 66,999 | |
Williams Cos. Inc. | 2,508,637 | 65,074 | |
Devon Energy Corp. | 1,328,561 | 47,177 | |
Cimarex Energy Co. | 482,235 | 42,051 | |
APA Corp. | 972,830 | 20,848 | |
Marathon Petroleum Corp. | 159,219 | 9,841 | |
DTE Midstream LLC | 115,152 | 5,325 | |
2,930,981 | |||
Financials (21.2%) | |||
JPMorgan Chase & Co. | 11,857,151 | 1,940,897 | |
Bank of America Corp. | 34,445,147 | 1,462,196 | |
Morgan Stanley | 9,865,263 | 959,989 | |
MetLife Inc. | 13,726,547 | 847,340 | |
Chubb Ltd. | 3,979,332 | 690,334 | |
BlackRock Inc. | 697,901 | 585,302 | |
Truist Financial Corp. | 8,795,539 | 515,858 | |
PNC Financial Services Group Inc. | 2,266,051 | 443,330 | |
Progressive Corp. | 4,763,404 | 430,564 | |
Citigroup Inc. | 3,860,918 | 270,959 | |
M&T Bank Corp. | 1,784,900 | 266,557 | |
Wells Fargo & Co. | 5,561,166 | 258,094 | |
Fifth Third Bancorp | 3,106,203 | 131,827 | |
Aflac Inc. | 2,453,381 | 127,895 | |
Synchrony Financial | 2,471,192 | 120,792 | |
Regions Financial Corp. | 5,541,208 | 118,083 |
Shares | Market Value• ($000) | ||
Ally Financial Inc. | 2,152,214 | 109,870 | |
Citizens Financial Group Inc. | 2,307,063 | 108,386 | |
Jefferies Financial Group Inc. | 2,667,608 | 99,048 | |
First American Financial Corp. | 1,264,096 | 84,758 | |
KeyCorp. | 3,455,589 | 74,710 | |
Unum Group | 2,966,880 | 74,350 | |
First Horizon Corp. | 4,262,410 | 69,435 | |
Discover Financial Services | 539,832 | 66,318 | |
U.S. Bancorp | 1,031,245 | 61,297 | |
Hartford Financial Services Group Inc. | 858,543 | 60,313 | |
Prudential Financial Inc. | 510,824 | 53,739 | |
PacWest Bancorp | 1,102,050 | 49,945 | |
OneMain Holdings Inc. | 806,610 | 44,630 | |
Fidelity National Financial Inc. | 819,925 | 37,175 | |
T Rowe Price Group Inc. | 172,018 | 33,836 | |
Bank of New York Mellon Corp. | 585,141 | 30,334 | |
Virtu Financial Inc. Class A | 1,187,376 | 29,007 | |
New York Community Bancorp Inc. | 1,772,003 | 22,806 | |
Equitable Holdings Inc. | 666,802 | 19,764 | |
Comerica Inc. | 236,102 | 19,006 | |
Invesco Ltd. | 729,770 | 17,595 | |
CME Group Inc. | 40,339 | 7,801 | |
10,344,140 | |||
Health Care (16.2%) | |||
Johnson & Johnson | 10,873,070 | 1,756,001 | |
Pfizer Inc. | 21,524,238 | 925,757 | |
Eli Lilly & Co. | 3,963,297 | 915,720 | |
Merck & Co. Inc. | 11,341,208 | 851,838 | |
UnitedHealth Group Inc. | 1,249,674 | 488,298 | |
Becton Dickinson and Co. | 1,621,176 | 398,517 | |
AstraZeneca plc ADR | 6,517,351 | 391,432 | |
Baxter International Inc. | 3,848,828 | 309,561 | |
Anthem Inc. | 812,172 | 302,778 | |
Medtronic plc | 2,353,776 | 295,046 | |
Roche Holding AG | 650,656 | 237,470 | |
Bristol-Myers Squibb Co. | 3,378,937 | 199,932 | |
Gilead Sciences Inc. | 2,834,090 | 197,961 | |
Novartis AG (Registered) | 2,321,646 | 190,373 | |
AbbVie Inc. | 1,424,413 | 153,651 | |
Cardinal Health Inc. | 1,817,102 | 89,874 | |
CVS Health Corp. | 964,858 | 81,878 | |
Amgen Inc. | 353,129 | 75,093 | |
Organon & Co. | 241,813 | 7,929 | |
7,869,109 | |||
Industrials (9.9%) | |||
Lockheed Martin Corp. | 1,849,168 | 638,148 | |
Johnson Controls International plc | 7,974,077 | 542,875 | |
Eaton Corp. plc | 3,543,648 | 529,102 | |
Raytheon Technologies Corp. | 5,985,063 | 514,476 | |
General Dynamics Corp. | 2,501,457 | 490,361 | |
Caterpillar Inc. | 2,289,356 | 439,488 | |
L3Harris Technologies Inc. | 1,384,500 | 304,922 | |
Union Pacific Corp. | 1,265,203 | 247,992 |
Shares | Market Value• ($000) | ||
Honeywell International Inc. | 893,115 | 189,591 | |
United Parcel Service Inc. Class B | 1,026,695 | 186,961 | |
Illinois Tool Works Inc. | 783,711 | 161,938 | |
3M Co. | 828,919 | 145,409 | |
Cummins Inc. | 553,218 | 124,231 | |
Nielsen Holdings plc | 4,014,850 | 77,045 | |
Watsco Inc. | 199,094 | 52,684 | |
nVent Electric plc | 1,109,614 | 35,874 | |
Triton International Ltd. | 571,760 | 29,754 | |
PACCAR Inc. | 345,986 | 27,305 | |
Fastenal Co. | 523,617 | 27,024 | |
ABM Industries Inc. | 372,093 | 16,748 | |
ManpowerGroup Inc. | 123,654 | 13,389 | |
Timken Co. | 175,203 | 11,462 | |
Snap-on Inc. | 38,321 | 8,007 | |
4,814,786 | |||
Information Technology (8.6%) | |||
Cisco Systems Inc. | 22,763,435 | 1,239,014 | |
Analog Devices Inc. | 2,823,277 | 472,842 | |
TE Connectivity Ltd. | 3,313,010 | 454,611 | |
Corning Inc. | 10,328,805 | 376,898 | |
Texas Instruments Inc. | 1,487,637 | 285,939 | |
Intel Corp. | 5,155,528 | 274,686 | |
International Business Machines Corp. | 1,759,976 | 244,513 | |
QUALCOMM Inc. | 1,726,149 | 222,639 | |
Broadcom Inc. | 294,038 | 142,588 | |
HP Inc. | 4,666,633 | 127,679 | |
Seagate Technology Holdings plc | 1,235,856 | 101,983 | |
Fidelity National Information Services Inc. | 765,800 | 93,183 | |
KLA Corp. | 198,227 | 66,309 | |
Western Union Co. | 2,273,326 | 45,967 | |
Automatic Data Processing Inc. | 213,116 | 42,606 | |
4,191,457 | |||
Materials (4.3%) | |||
Celanese Corp. Class A | 3,138,410 | 472,770 | |
PPG Industries Inc. | 3,055,643 | 436,988 | |
LyondellBasell Industries NV Class A | 3,518,625 | 330,223 | |
1 | Rio Tinto plc ADR | 2,070,596 | 138,357 |
Dow Inc. | 2,027,134 | 116,682 | |
Nucor Corp. | 1,137,359 | 112,019 | |
International Paper Co. | 1,960,103 | 109,609 | |
Linde plc | 361,487 | 106,053 | |
Reliance Steel & Aluminum Co. | 602,880 | 85,862 | |
Steel Dynamics Inc. | 1,036,602 | 60,620 | |
CF Industries Holdings Inc. | 1,004,156 | 56,052 | |
Packaging Corp. of America | 178,568 | 24,542 | |
Huntsman Corp. | 675,178 | 19,979 | |
Westrock Co. | 359,746 | 17,926 | |
Greif Inc. Class A | 199,602 | 12,894 | |
2,100,576 | |||
Real Estate (0.6%) | |||
Crown Castle International Corp. | 1,658,041 | 287,372 |
Shares | Market Value• ($000) | ||
Utilities (6.9%) | |||
Dominion Energy Inc. | 6,651,271 | 485,676 | |
Sempra Energy | 3,658,896 | 462,850 | |
Duke Energy Corp. | 4,315,509 | 421,151 | |
Exelon Corp. | 7,675,068 | 371,013 | |
American Electric Power Co. Inc. | 4,475,599 | 363,329 | |
DTE Energy Co. | 1,985,929 | 221,848 | |
Entergy Corp. | 2,068,827 | 205,455 | |
Southern Co. | 2,099,815 | 130,126 | |
UGI Corp. | 2,370,089 | 101,013 | |
NextEra Energy Inc. | 1,277,489 | 100,308 | |
AES Corp. | 4,350,935 | 99,332 | |
Evergy Inc. | 1,563,737 | 97,264 | |
PPL Corp. | 2,778,690 | 77,470 | |
WEC Energy Group Inc. | 474,031 | 41,810 | |
FirstEnergy Corp. | 1,166,347 | 41,545 | |
Public Service Enterprise Group Inc. | 565,899 | 34,463 | |
IDACORP Inc. | 333,022 | 34,428 | |
CMS Energy Corp. | 473,173 | 28,263 | |
NRG Energy Inc. | 567,416 | 23,168 | |
CenterPoint Energy Inc. | 456,156 | 11,221 | |
3,351,733 | |||
Total Common Stocks (Cost $34,619,464) | 47,595,420 | ||
Temporary Cash Investments (3.1%) | |||
Money Market Fund (2.4%) | |||
2,3 | Vanguard Market Liquidity Fund, 0.068% | 11,871,417 | 1,187,142 |
Face Amount ($000) | |||
Repurchase Agreements (0.7%) | |||
Goldman Sachs & Co. 0.050%, 10/1/21 (Dated 9/30/2021, Repurchase Value $113,900,000, collateralized by Federal Farm Credit Bank 3.500%, 12/20/23, Federal Home Loan Mortgage Corp. 2.000%–6.500%, 4/1/23–9/1/51, Federal National Mortgage Assn. 1.500%–7.500%, 4/1/24–11/1/59, Government National Mortgage Assn. 2.500%–5.500%, 1/20/24–9/15/56, and U.S. Treasury Note/Bond 1.875%, 6/30/26, with a value of $116,178,000) | 113,900 | 113,900 |
Face Amount ($000) | Market Value• ($000) | ||
Nomura International plc 0.050%, 10/1/21 (Dated 9/30/2021, Repurchase Value $101,000,000, collateralized by Federal Home Loan Mortgage Corp. 0.000%, 9/15/29–3/15/31, and U.S.Treasury Note/Bond 1.375%–2.000%, 12/31/21–6/30/23, with a value of $103,020,000) | 101,000 | 101,000 | |
RBS Securities Inc. 0.050%, 10/1/21 (Dated 9/30/2021, Repurchase Value $97,300,000, collateralized by U.S. Treasury Note/Bond 0.750%–8.000%, 11/15/21–2/15/50, with a value of $99,246,000) | 97,300 | 97,300 | |
312,200 | |||
Total Temporary Cash Investments (Cost $1,499,158) | 1,499,342 | ||
Total Investments (100.8%) (Cost $36,118,622) | 49,094,762 | ||
Other Assets and Liabilities—Net (-0.8%) | (387,891) | ||
Net Assets (100%) | 48,706,871 | ||
Cost is in $000. |
• | See Note A in Notes to Financial Statements. |
1 | Includes partial security positions on loan to broker-dealers. The total value of securities on loan is $335,180,000. |
2 | Affiliated money market fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard. Rate shown is the 7-day yield. |
3 | Collateral of $353,226,000 was received for securities on loan, of which $335,593,000 is held in Vanguard Market Liquidity Fund and $17,633,000 is held in cash. |
ADR—American Depositary Receipt. |
Futures Contracts | ||||
($000) | ||||
Expiration | Number of Long (Short) Contracts | Notional Amount | Value and Unrealized Appreciation (Depreciation) | |
Long Futures Contracts | ||||
E-mini S&P 500 Index | December 2021 | 4,261 | 915,636 | (31,833) |
($000s, except shares and per-share amounts) | Amount |
Assets | |
Investments in Securities, at Value | |
Unaffiliated Issuers (Cost $34,931,664) | 47,907,620 |
Affiliated Issuers (Cost $1,186,958) | 1,187,142 |
Total Investments in Securities | 49,094,762 |
Investment in Vanguard | 1,664 |
Cash | 43,121 |
Cash Collateral Pledged—Futures Contracts | 48,879 |
Receivables for Accrued Income | 82,007 |
Receivables for Capital Shares Issued | 41,201 |
Total Assets | 49,311,634 |
Liabilities | |
Foreign Currency Due to Custodian, at Value (Proceeds $945) | 938 |
Payables for Investment Securities Purchased | 194,364 |
Collateral for Securities on Loan | 353,226 |
Payables to Investment Advisor | 10,755 |
Payables for Capital Shares Redeemed | 32,193 |
Payables to Vanguard | 2,228 |
Variation Margin Payable—Futures Contracts | 11,059 |
Total Liabilities | 604,763 |
Net Assets | 48,706,871 |
At September 30, 2021, net assets consisted of: | |
Paid-in Capital | 33,295,199 |
Total Distributable Earnings (Loss) | 15,411,672 |
Net Assets | 48,706,871 |
Investor Shares—Net Assets | |
Applicable to 123,058,523 outstanding $.001 par value shares of beneficial interest (unlimited authorization) | 5,285,352 |
Net Asset Value Per Share—Investor Shares | $42.95 |
Admiral Shares—Net Assets | |
Applicable to 482,424,321 outstanding $.001 par value shares of beneficial interest (unlimited authorization) | 43,421,519 |
Net Asset Value Per Share—Admiral Shares | $90.01 |
Year Ended September 30, 2021 | |
($000) | |
Investment Income | |
Income | |
Dividends1 | 1,255,573 |
Interest2 | 739 |
Securities Lending—Net | 283 |
Total Income | 1,256,595 |
Expenses | |
Investment Advisory Fees—Note B | |
Basic Fee | 35,877 |
Performance Adjustment | 5,313 |
The Vanguard Group—Note C | |
Management and Administrative—Investor Shares | 9,255 |
Management and Administrative—Admiral Shares | 34,448 |
Marketing and Distribution—Investor Shares | 369 |
Marketing and Distribution—Admiral Shares | 1,638 |
Custodian Fees | 232 |
Auditing Fees | 31 |
Shareholders’ Reports—Investor Shares | 89 |
Shareholders’ Reports—Admiral Shares | 405 |
Trustees’ Fees and Expenses | 32 |
Total Expenses | 87,689 |
Net Investment Income | 1,168,906 |
Realized Net Gain (Loss) | |
Investment Securities Sold2 | 2,470,068 |
Futures Contracts | 245,526 |
Foreign Currencies | 61 |
Realized Net Gain (Loss) | 2,715,655 |
Change in Unrealized Appreciation (Depreciation) | |
Investment Securities2 | 7,139,424 |
Futures Contracts | (35,292) |
Foreign Currencies | (335) |
Change in Unrealized Appreciation (Depreciation) | 7,103,797 |
Net Increase (Decrease) in Net Assets Resulting from Operations | 10,988,358 |
1 | Dividends are net of foreign withholding taxes of $10,384,000. |
2 | Interest income, realized net gain (loss), and change in unrealized appreciation (depreciation) from an affiliated company of the fund were $616,000, $45,000, and ($46,000), respectively. Purchases and sales are for temporary cash investment purposes. |
Year Ended September 30, | ||
2021 ($000) | 2020 ($000) | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net Investment Income | 1,168,906 | 1,056,659 |
Realized Net Gain (Loss) | 2,715,655 | 9,842 |
Change in Unrealized Appreciation (Depreciation) | 7,103,797 | (2,277,728) |
Net Increase (Decrease) in Net Assets Resulting from Operations | 10,988,358 | (1,211,227) |
Distributions | ||
Investor Shares | (138,888) | (244,854) |
Admiral Shares | (1,066,361) | (1,510,435) |
Total Distributions | (1,205,249) | (1,755,289) |
Capital Share Transactions | ||
Investor Shares | (398,046) | (565,450) |
Admiral Shares | 4,023,566 | 2,380,683 |
Net Increase (Decrease) from Capital Share Transactions | 3,625,520 | 1,815,233 |
Total Increase (Decrease) | 13,408,629 | (1,151,283) |
Net Assets | ||
Beginning of Period | 35,298,242 | 36,449,525 |
End of Period | 48,706,871 | 35,298,242 |
Investor Shares | |||||
For a Share Outstanding Throughout Each Period | Year Ended September 30, | ||||
2021 | 2020 | 2019 | 2018 | 2017 | |
Net Asset Value, Beginning of Period | $33.75 | $36.51 | $37.98 | $35.64 | $31.69 |
Investment Operations | |||||
Net Investment Income1 | 1.041 | 1.000 | 1.002 | .965 | .908 |
Net Realized and Unrealized Gain (Loss) on Investments | 9.232 | (2.067) | .972 | 2.764 | 4.292 |
Total from Investment Operations | 10.273 | (1.067) | 1.974 | 3.729 | 5.200 |
Distributions | |||||
Dividends from Net Investment Income | (1.012) | (1.034) | (.997) | (.943) | (.912) |
Distributions from Realized Capital Gains | (.061) | (.659) | (2.447) | (.446) | (.338) |
Total Distributions | (1.073) | (1.693) | (3.444) | (1.389) | (1.250) |
Net Asset Value, End of Period | $42.95 | $33.75 | $36.51 | $37.98 | $35.64 |
Total Return2 | 30.66% | -2.87% | 6.43% | 10.58% | 16.68% |
Ratios/Supplemental Data | |||||
Net Assets, End of Period (Millions) | $5,285 | $4,482 | $5,478 | $5,751 | $6,002 |
Ratio of Total Expenses to Average Net Assets3 | 0.28% | 0.28% | 0.27% | 0.27% | 0.26% |
Ratio of Net Investment Income to Average Net Assets | 2.56% | 2.89% | 2.84% | 2.60% | 2.70% |
Portfolio Turnover Rate | 29% | 35% | 32% | 37% | 28% |
1 | Calculated based on average shares outstanding. |
2 | 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. |
3 | Includes performance-based investment advisory fee increases (decreases) of 0.01%, 0.01%, 0.01%, (0.00%), and (0.01%). |
Admiral Shares | |||||
For a Share Outstanding Throughout Each Period | Year Ended September 30, | ||||
2021 | 2020 | 2019 | 2018 | 2017 | |
Net Asset Value, Beginning of Period | $70.73 | $76.52 | $79.61 | $74.69 | $66.43 |
Investment Operations | |||||
Net Investment Income1 | 2.262 | 2.159 | 2.167 | 2.099 | 1.968 |
Net Realized and Unrealized Gain (Loss) on Investments | 19.342 | (4.331) | 2.028 | 5.806 | 8.977 |
Total from Investment Operations | 21.604 | (2.172) | 4.195 | 7.905 | 10.945 |
Distributions | |||||
Dividends from Net Investment Income | (2.196) | (2.236) | (2.156) | (2.048) | (1.977) |
Distributions from Realized Capital Gains | (.128) | (1.382) | (5.129) | (.937) | (.708) |
Total Distributions | (2.324) | (3.618) | (7.285) | (2.985) | (2.685) |
Net Asset Value, End of Period | $90.01 | $70.73 | $76.52 | $79.61 | $74.69 |
Total Return2 | 30.77% | -2.77% | 6.51% | 10.70% | 16.75% |
Ratios/Supplemental Data | |||||
Net Assets, End of Period (Millions) | $43,422 | $30,816 | $30,972 | $27,625 | $23,373 |
Ratio of Total Expenses to Average Net Assets3 | 0.19% | 0.19% | 0.18% | 0.18% | 0.17% |
Ratio of Net Investment Income to Average Net Assets | 2.64% | 2.98% | 2.93% | 2.69% | 2.79% |
Portfolio Turnover Rate | 29% | 35% | 32% | 37% | 28% |
1 | Calculated based on average shares outstanding. |
2 | 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. |
3 | Includes performance-based investment advisory fee increases (decreases) of 0.01%, 0.01%, 0.01%, (0.00%), and (0.01%). |
A. | The following significant accounting policies conform to generally accepted accounting principles for U.S. investment companies. The fund consistently follows such policies in preparing its financial statements. |
B. | Wellington Management Company llp provides investment advisory services to a portion of the fund for a fee calculated at an annual percentage rate of average net assets managed by the advisor. The basic fee is subject to quarterly adjustments based on performance relative to the FTSE High Dividend Yield Index for the preceding three years. |
C. | In accordance with the terms of a Funds' Service Agreement (the “FSA”) between Vanguard and the fund, Vanguard furnishes to the fund investment advisory, corporate management, administrative, marketing, and distribution services at Vanguard’s cost of operations (as defined by the FSA). These costs of operations are allocated to the fund based on methods and guidelines approved by the board of trustees and are generally settled twice a month. |
D. | Various inputs may be used to determine the value of the fund’s investments and derivatives. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities. |
Level 1 ($000) | Level 2 ($000) | Level 3 ($000) | Total ($000) | |
Investments | ||||
Assets | ||||
Common Stocks | 47,167,577 | 427,843 | — | 47,595,420 |
Temporary Cash Investments | 1,187,142 | 312,200 | — | 1,499,342 |
Total | 48,354,719 | 740,043 | — | 49,094,762 |
Derivative Financial Instruments | ||||
Liabilities | ||||
Futures Contracts1 | 31,833 | — | — | 31,833 |
1 | Includes cumulative appreciation (depreciation) on futures contracts and centrally cleared swaps, if any, as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities. |
E. | Permanent differences between book-basis and tax-basis components of net assets are reclassified among capital accounts in the financial statements to reflect their tax character. These reclassifications have no effect on net assets or net asset value per share. As of period end, permanent differences primarily attributable to the accounting for foreign currency transactions and distributions in connection with fund share redemptions were reclassified between the following accounts: |
Amount ($000) | |
Paid-in Capital | 156,945 |
Total Distributable Earnings (Loss) | (156,945) |
Amount ($000) | |
Undistributed Ordinary Income | 289,512 |
Undistributed Long-Term Gains | 2,166,957 |
Capital Loss Carryforwards | — |
Qualified Late-Year Losses | — |
Net Unrealized Gains (Losses) | 12,955,203 |
Year Ended September 30, | ||
2021 Amount ($000) | 2020 Amount ($000) | |
Ordinary Income* | 1,141,227 | 1,097,069 |
Long-Term Capital Gains | 64,022 | 658,220 |
Total | 1,205,249 | 1,755,289 |
* | Includes short-term capital gains, if any. |
Amount ($000) | |
Tax Cost | 36,140,052 |
Gross Unrealized Appreciation | 13,566,147 |
Gross Unrealized Depreciation | (611,437) |
Net Unrealized Appreciation (Depreciation) | 12,954,710 |
F. | During the year ended September 30, 2021, the fund purchased $15,654,757,000 of investment securities and sold $12,474,437,000 of investment securities, other than temporary cash investments. |
G. | Capital share transactions for each class of shares were: |
Year Ended September 30, | |||||
2021 | 2020 | ||||
Amount ($000) | Shares (000) | Amount ($000) | Shares (000) | ||
Investor Shares | |||||
Issued | 905,414 | 22,254 | 748,125 | 21,799 | |
Issued in Lieu of Cash Distributions | 127,115 | 3,134 | 224,894 | 6,622 | |
Redeemed | (1,430,575) | (35,121) | (1,538,469) | (45,669) | |
Net Increase (Decrease)—Investor Shares | (398,046) | (9,733) | (565,450) | (17,248) |
Year Ended September 30, | |||||
2021 | 2020 | ||||
Amount ($000) | Shares (000) | Amount ($000) | Shares (000) | ||
Admiral Shares | |||||
Issued | 9,053,463 | 106,583 | 7,839,439 | 109,634 | |
Issued in Lieu of Cash Distributions | 918,531 | 10,777 | 1,305,973 | 18,414 | |
Redeemed | (5,948,428) | (70,619) | (6,764,729) | (97,111) | |
Net Increase (Decrease)—Admiral Shares | 4,023,566 | 46,741 | 2,380,683 | 30,937 |
H. | Management has determined that no events or transactions occurred subsequent to September 30, 2021, that would require recognition or disclosure in these financial statements. |
Philadelphia, Pennsylvania
November 19, 2021
Matthew Benchener | Thomas M. Rampulla |
Joseph Brennan | Karin A. Risi |
Mortimer J. Buckley | Anne E. Robinson |
Gregory Davis | Michael Rollings |
John James | Nitin Tandon |
John T. Marcante | Lauren Valente |
Chris D. Mclsaac |
All rights reserved.
Vanguard Marketing Corporation, Distributor.
Your Fund’s Performance at a Glance | 1 |
Advisor’s Report | 2 |
About Your Fund’s Expenses | 5 |
Performance Summary | 7 |
Financial Statements | 9 |
• | Vanguard PRIMECAP Core Fund returned 34.71% for the 12 months ended September 30, 2021, outperforming its benchmark, the MSCI US Prime Market 750 Index. |
• | The global economy rebounded faster than many had expected after the pandemic-induced contraction in the spring of 2020. Countries that have been more successful in containing the virus have generally fared better economically. Swift and extensive fiscal and monetary support from policymakers has also been key to the rebound. Stock returns were excellent for the year under review, reflecting the recovery following the sharp downturn at the start of the pandemic. |
• | Value stocks outperformed their growth counterparts, and small-capitalization stocks outdistanced mid- and large-caps for the fiscal year. |
• | In the bond markets, yields moved higher across much of the developed world amid concerns about inflation and the prospect of central banks scaling back their bond-buying programs or raising interest rates. |
• | Compared with the benchmark, the fund was helped most by strong stock selection in the information technology sector. The advisor’s overweighting and stock selection within health care detracted most from relative results. |
Average Annual Total Returns Periods Ended September 30, 2021 | |||
One Year | Three Years | Five Years | |
Stocks | |||
Russell 1000 Index (Large-caps) | 30.96% | 16.43% | 17.11% |
Russell 2000 Index (Small-caps) | 47.68 | 10.54 | 13.45 |
Russell 3000 Index (Broad U.S. market) | 31.88 | 16.00 | 16.85 |
FTSE All-World ex US Index (International) | 24.73 | 8.49 | 9.28 |
Bonds | |||
Bloomberg U.S. Aggregate Bond Index (Broad taxable market) | -0.90% | 5.36% | 2.94% |
Bloomberg Municipal Bond Index (Broad tax-exempt market) | 2.63 | 5.06 | 3.26 |
FTSE Three-Month U.S. Treasury Bill Index | 0.06 | 1.14 | 1.13 |
CPI | |||
Consumer Price Index | 5.39% | 2.81% | 2.59% |
• | 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. |
• | 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. |
Six Months Ended September 30, 2021 | |||
PRIMECAP Core Fund | Beginning Account Value 3/31/2021 | Ending Account Value 9/30/2021 | Expenses Paid During Period |
Based on Actual Fund Return | $1,000.00 | $1,037.50 | $2.35 |
Based on Hypothetical 5% Yearly Return | 1,000.00 | 1,022.76 | 2.33 |
Average Annual Total Returns Periods Ended September 30, 2021 | |||||
One Year | Five Years | Ten Years | Final Value of a $10,000 Investment | ||
PRIMECAP Core Fund | 34.71% | 15.74% | 16.65% | $46,635 | |
MSCI US Prime Market 750 Index | 30.74 | 17.28 | 16.84 | 47,414 | |
Dow Jones U.S. Total Stock Market Float Adjusted Index | 32.13 | 16.82 | 16.56 | 46,280 |
Communication Services | 6.7% |
Consumer Discretionary | 12.0 |
Consumer Staples | 0.6 |
Energy | 1.9 |
Financials | 10.5 |
Health Care | 24.5 |
Industrials | 16.0 |
Information Technology | 26.0 |
Materials | 1.7 |
Real Estate | 0.1 |
Shares | Market Value• ($000) | ||
Common Stocks (96.1%) | |||
Communication Services (6.5%) | |||
* | Alphabet Inc. Class A | 96,100 | 256,925 |
* | Alphabet Inc. Class C | 75,387 | 200,930 |
* | Walt Disney Co. | 391,735 | 66,270 |
* | T-Mobile U.S. Inc. | 507,427 | 64,829 |
Activision Blizzard Inc. | 635,600 | 49,189 | |
* | Facebook Inc. Class A | 137,600 | 46,700 |
* | Charter Communications Inc. Class A | 41,470 | 30,172 |
Electronic Arts Inc. | 136,650 | 19,439 | |
Nintendo Co. Ltd. | 38,850 | 18,566 | |
Comcast Corp. Class A | 319,738 | 17,883 | |
* | Altice USA Inc. Class A | 227,000 | 4,703 |
* | Audacy Inc. Class A | 924,300 | 3,401 |
779,007 | |||
Consumer Discretionary (11.6%) | |||
Sony Group Corp. ADR | 1,934,900 | 213,961 | |
* | CarMax Inc. | 1,351,350 | 172,919 |
Whirlpool Corp. | 744,724 | 151,820 | |
* | Alibaba Group Holding Ltd. ADR | 823,900 | 121,978 |
Ross Stores Inc. | 1,040,920 | 113,304 | |
* | Mattel Inc. | 5,929,941 | 110,060 |
TJX Cos. Inc. | 1,644,700 | 108,517 | |
* | Tesla Inc. | 89,800 | 69,638 |
* | Amazon.com Inc. | 12,475 | 40,981 |
Newell Brands Inc. | 1,785,100 | 39,522 | |
Bath & Body Works Inc. | 605,800 | 38,184 | |
* | Carnival Corp. | 1,432,100 | 35,817 |
* | Royal Caribbean Cruises Ltd. | 378,800 | 33,694 |
* | Marriott International Inc. Class A | 195,390 | 28,935 |
* | Dollar Tree Inc. | 252,000 | 24,122 |
* | Capri Holdings Ltd. | 471,100 | 22,806 |
* | Victoria's Secret & Co. | 326,433 | 18,039 |
* | Burlington Stores Inc. | 49,000 | 13,895 |
Restaurant Brands International Inc. | 140,500 | 8,597 | |
Lowe's Cos. Inc. | 35,000 | 7,100 | |
McDonald's Corp. | 24,700 | 5,955 | |
MGM Resorts International | 95,000 | 4,099 | |
* | Las Vegas Sands Corp. | 79,600 | 2,913 |
* | O'Reilly Automotive Inc. | 4,300 | 2,628 |
* | Norwegian Cruise Line Holdings Ltd. | 68,440 | 1,828 |
Shares | Market Value• ($000) | ||
* | Hilton Worldwide Holdings Inc. | 13,800 | 1,823 |
* | AutoZone Inc. | 1,055 | 1,791 |
VF Corp. | 25,000 | 1,675 | |
1,396,601 | |||
Consumer Staples (0.5%) | |||
Sysco Corp. | 221,500 | 17,388 | |
* | BJ's Wholesale Club Holdings Inc. | 306,700 | 16,844 |
Tyson Foods Inc. Class A | 190,000 | 14,999 | |
Altria Group Inc. | 250,424 | 11,399 | |
Mowi ASA | 100,000 | 2,537 | |
Philip Morris International Inc. | 15,500 | 1,469 | |
Constellation Brands Inc. Class A | 3,000 | 632 | |
65,268 | |||
Energy (1.8%) | |||
Pioneer Natural Resources Co. | 619,323 | 103,123 | |
EOG Resources Inc. | 343,921 | 27,606 | |
Cabot Oil & Gas Corp. | 1,095,350 | 23,835 | |
Valero Energy Corp. | 311,500 | 21,983 | |
Cameco Corp. | 752,600 | 16,354 | |
* | Southwestern Energy Co. | 1,983,300 | 10,987 |
Hess Corp. | 95,990 | 7,498 | |
* | Transocean Ltd. | 1,237,200 | 4,689 |
* | TechnipFMC plc | 184,100 | 1,386 |
Schlumberger NV | 42,100 | 1,248 | |
* | Technip Energies NV | 7,820 | 123 |
218,832 | |||
Financials (10.1%) | |||
JPMorgan Chase & Co. | 1,557,266 | 254,909 | |
Wells Fargo & Co. | 4,057,300 | 188,299 | |
Charles Schwab Corp. | 2,026,464 | 147,608 | |
Goldman Sachs Group Inc. | 330,300 | 124,863 | |
Raymond James Financial Inc. | 1,349,925 | 124,571 | |
Northern Trust Corp. | 988,580 | 106,579 | |
Bank of America Corp. | 1,793,959 | 76,154 | |
Discover Financial Services | 547,281 | 67,234 | |
Marsh & McLennan Cos. Inc. | 347,712 | 52,654 | |
U.S. Bancorp | 633,300 | 37,643 | |
Morgan Stanley | 165,000 | 16,056 | |
Progressive Corp. | 142,800 | 12,908 |
Shares | Market Value• ($000) | ||
CME Group Inc. | 55,250 | 10,684 | |
1,220,162 | |||
Health Care (23.5%) | |||
Eli Lilly & Co. | 2,482,172 | 573,506 | |
AstraZeneca plc ADR | 5,673,090 | 340,726 | |
* | Biogen Inc. | 1,145,447 | 324,150 |
Amgen Inc. | 1,456,100 | 309,640 | |
Thermo Fisher Scientific Inc. | 433,840 | 247,866 | |
Novartis AG ADR | 1,825,040 | 149,252 | |
* | Elanco Animal Health Inc. (XNYS) | 4,250,291 | 135,542 |
* | Boston Scientific Corp. | 3,011,030 | 130,649 |
Bristol-Myers Squibb Co. | 1,741,750 | 103,059 | |
Roche Holding AG | 246,237 | 89,869 | |
CVS Health Corp. | 706,180 | 59,926 | |
* | LivaNova plc | 702,840 | 55,658 |
Zimmer Biomet Holdings Inc. | 372,000 | 54,446 | |
Abbott Laboratories | 418,090 | 49,389 | |
Agilent Technologies Inc. | 267,670 | 42,166 | |
* | Illumina Inc. | 102,730 | 41,668 |
1 | Siemens Healthineers AG | 519,491 | 33,692 |
* | BioMarin Pharmaceutical Inc. | 288,770 | 22,319 |
* | IQVIA Holdings Inc. | 84,222 | 20,174 |
Stryker Corp. | 47,400 | 12,500 | |
Alcon Inc. | 126,760 | 10,200 | |
Medtronic plc | 60,000 | 7,521 | |
Humana Inc. | 18,544 | 7,216 | |
Sanofi ADR | 135,420 | 6,529 | |
Danaher Corp. | 17,707 | 5,391 | |
UnitedHealth Group Inc. | 8,489 | 3,317 | |
* | Waters Corp. | 7,137 | 2,550 |
Cerner Corp. | 10,000 | 705 | |
2,839,626 | |||
Industrials (15.4%) | |||
* | Southwest Airlines Co. | 6,936,369 | 356,737 |
Siemens AG (Registered) | 1,626,019 | 265,937 | |
FedEx Corp. | 840,300 | 184,269 | |
* | AECOM | 2,858,900 | 180,540 |
Jacobs Engineering Group Inc. | 972,785 | 128,923 | |
United Parcel Service Inc. Class B | 585,900 | 106,692 | |
* | Airbus SE | 697,495 | 92,471 |
* | United Airlines Holdings Inc. | 1,483,700 | 70,580 |
Caterpillar Inc. | 309,970 | 59,505 | |
* | TransDigm Group Inc. | 85,150 | 53,182 |
* | Delta Air Lines Inc. | 1,124,310 | 47,907 |
* | American Airlines Group Inc. | 2,231,000 | 45,780 |
Textron Inc. | 648,400 | 45,265 | |
Union Pacific Corp. | 176,200 | 34,537 | |
General Dynamics Corp. | 170,000 | 33,325 | |
Carrier Global Corp. | 436,100 | 22,573 | |
* | XPO Logistics Inc. | 241,100 | 19,187 |
* | GXO Logistics Inc. | 241,100 | 18,912 |
AMETEK Inc. | 143,090 | 17,745 | |
Deere & Co. | 52,620 | 17,631 | |
Otis Worldwide Corp. | 178,700 | 14,703 | |
CSX Corp. | 339,000 | 10,082 | |
Rockwell Automation Inc. | 26,200 | 7,704 | |
L3Harris Technologies Inc. | 34,000 | 7,488 | |
Science Applications International Corp. | 80,000 | 6,845 |
Shares | Market Value• ($000) | ||
Pentair plc | 87,310 | 6,341 | |
Old Dominion Freight Line Inc. | 4,500 | 1,287 | |
1,856,148 | |||
Information Technology (25.0%) | |||
Microsoft Corp. | 1,418,860 | 400,005 | |
Texas Instruments Inc. | 1,665,080 | 320,045 | |
KLA Corp. | 730,370 | 244,316 | |
Intel Corp. | 4,178,800 | 222,646 | |
Applied Materials Inc. | 1,217,700 | 156,755 | |
* | Flex Ltd. | 8,381,560 | 148,186 |
Micron Technology Inc. | 1,756,120 | 124,649 | |
Asml Holding NV GDR (Registered) | 166,075 | 123,744 | |
Telefonaktiebolaget LM Ericsson ADR | 9,991,945 | 111,910 | |
Intuit Inc. | 202,300 | 109,143 | |
NetApp Inc. | 1,075,500 | 96,537 | |
* | Adobe Inc. | 166,900 | 96,088 |
Hewlett Packard Enterprise Co. | 6,612,198 | 94,224 | |
QUALCOMM Inc. | 710,860 | 91,687 | |
Analog Devices Inc. | 481,600 | 80,658 | |
HP Inc. | 2,826,123 | 77,323 | |
* | PayPal Holdings Inc. | 278,150 | 72,377 |
Cisco Systems Inc. | 1,104,600 | 60,123 | |
Visa Inc. Class A | 264,400 | 58,895 | |
Oracle Corp. | 636,000 | 55,415 | |
Apple Inc. | 375,000 | 53,062 | |
Corning Inc. | 1,092,900 | 39,880 | |
* | Keysight Technologies Inc. | 211,400 | 34,731 |
* | WEX Inc. | 151,480 | 26,682 |
NVIDIA Corp. | 114,520 | 23,724 | |
Fidelity National Information Services Inc. | 180,000 | 21,902 | |
Teradyne Inc. | 144,800 | 15,808 | |
* | Western Digital Corp. | 263,600 | 14,878 |
*,2 | BlackBerry Ltd. | 1,328,700 | 12,928 |
Mastercard Inc. Class A | 29,000 | 10,083 | |
Jabil Inc. | 115,000 | 6,713 | |
* | Ciena Corp. | 55,000 | 2,824 |
* | Nokia OYJ ADR | 360,000 | 1,962 |
3,009,903 | |||
Materials (1.6%) | |||
Albemarle Corp. | 461,265 | 101,003 | |
Glencore plc | 6,551,523 | 30,819 | |
DuPont de Nemours Inc. | 354,933 | 24,132 | |
Dow Inc. | 285,300 | 16,422 | |
Corteva Inc. | 292,893 | 12,325 | |
Freeport-McMoRan Inc. | 290,000 | 9,434 | |
Greif Inc. Class B | 30,000 | 1,944 | |
196,079 | |||
Real Estate (0.1%) | |||
American Homes 4 Rent Class A | 224,000 | 8,539 | |
Total Common Stocks (Cost $4,782,539) | 11,590,165 |
Shares | Market Value• ($000) | ||
Temporary Cash Investments (3.9%) | |||
Money Market Fund (3.9%) | |||
3,4 | Vanguard Market Liquidity Fund, 0.068% (Cost $468,943) | 4,690,382 | 469,038 |
Total Investments (100.0%) (Cost $5,251,482) | 12,059,203 | ||
Other Assets and Liabilities—Net (0.0%) | (3,651) | ||
Net Assets (100%) | 12,055,552 | ||
Cost is in $000. |
• | See Note A in Notes to Financial Statements. |
* | Non-income-producing security. |
1 | Security exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be sold in transactions exempt from registration, normally to qualified institutional buyers. At September 30, 2021, the aggregate value was $33,692,000, representing 0.3% of net assets. |
2 | Includes partial security positions on loan to broker-dealers. The total value of securities on loan is $10,905,000. |
3 | Affiliated money market fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard. Rate shown is the 7-day yield. |
4 | Collateral of $11,207,000 was received for securities on loan. |
ADR—American Depositary Receipt. | |
GDR—Global Depositary Receipt. |
($000s, except shares and per-share amounts) | Amount |
Assets | |
Investments in Securities, at Value | |
Unaffiliated Issuers (Cost $4,782,539) | 11,590,165 |
Affiliated Issuers (Cost $468,943) | 469,038 |
Total Investments in Securities | 12,059,203 |
Investment in Vanguard | 415 |
Cash | 140 |
Receivables for Accrued Income | 10,887 |
Receivables for Capital Shares Issued | 17,009 |
Total Assets | 12,087,654 |
Liabilities | |
Payables for Investment Securities Purchased | 4,344 |
Collateral for Securities on Loan | 11,207 |
Payables to Investment Advisor | 9,401 |
Payables for Capital Shares Redeemed | 6,389 |
Payables to Vanguard | 761 |
Total Liabilities | 32,102 |
Net Assets | 12,055,552 |
At September 30, 2021, net assets consisted of: | |
Paid-in Capital | 4,467,648 |
Total Distributable Earnings (Loss) | 7,587,904 |
Net Assets | 12,055,552 |
Net Assets | |
Applicable to 356,874,204 outstanding $.001 par value shares of beneficial interest (unlimited authorization) | 12,055,552 |
Net Asset Value Per Share | $33.78 |
Year Ended September 30, 2021 | |
($000) | |
Investment Income | |
Income | |
Dividends1 | 139,539 |
Interest2 | 327 |
Securities Lending—Net | 286 |
Total Income | 140,152 |
Expenses | |
Investment Advisory Fees—Note B | 35,317 |
The Vanguard Group—Note C | |
Management and Administrative | 16,297 |
Marketing and Distribution | 620 |
Custodian Fees | 337 |
Auditing Fees | 30 |
Shareholders’ Reports | 51 |
Trustees’ Fees and Expenses | 8 |
Total Expenses | 52,660 |
Net Investment Income | 87,492 |
Realized Net Gain (Loss) | |
Investment Securities Sold2 | 888,551 |
Foreign Currencies | 81 |
Realized Net Gain (Loss) | 888,632 |
Change in Unrealized Appreciation (Depreciation) | |
Investment Securities2 | 2,245,996 |
Foreign Currencies | (88) |
Change in Unrealized Appreciation (Depreciation) | 2,245,908 |
Net Increase (Decrease) in Net Assets Resulting from Operations | 3,222,032 |
1 | Dividends are net of foreign withholding taxes of $6,103,000. |
2 | Interest income, realized net gain (loss), and change in unrealized appreciation (depreciation) from an affiliated company of the fund were $327,000, $5,000, and ($6,000), respectively. Purchases and sales are for temporary cash investment purposes. |
Year Ended September 30, | ||
2021 ($000) | 2020 ($000) | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net Investment Income | 87,492 | 154,668 |
Realized Net Gain (Loss) | 888,632 | 649,027 |
Change in Unrealized Appreciation (Depreciation) | 2,245,908 | (178,935) |
Net Increase (Decrease) in Net Assets Resulting from Operations | 3,222,032 | 624,760 |
Distributions | ||
Total Distributions | (791,131) | (761,125) |
Capital Share Transactions | ||
Issued | 1,427,812 | 546,293 |
Issued in Lieu of Cash Distributions | 655,544 | 633,199 |
Redeemed | (2,140,054) | (2,016,777) |
Net Increase (Decrease) from Capital Share Transactions | (56,698) | (837,285) |
Total Increase (Decrease) | 2,374,203 | (973,650) |
Net Assets | ||
Beginning of Period | 9,681,349 | 10,654,999 |
End of Period | 12,055,552 | 9,681,349 |
For a Share Outstanding Throughout Each Period | Year Ended September 30, | ||||
2021 | 2020 | 2019 | 2018 | 2017 | |
Net Asset Value, Beginning of Period | $27.08 | $27.08 | $29.92 | $26.33 | $22.55 |
Investment Operations | |||||
Net Investment Income1 | .243 | .398 | .391 | .314 | .304 |
Net Realized and Unrealized Gain (Loss) on Investments | 8.746 | 1.553 | (1.020) | 4.379 | 4.701 |
Total from Investment Operations | 8.989 | 1.951 | (.629) | 4.693 | 5.005 |
Distributions | |||||
Dividends from Net Investment Income | (.357) | (.388) | (.322) | (.287) | (.278) |
Distributions from Realized Capital Gains | (1.932) | (1.563) | (1.889) | (.816) | (.947) |
Total Distributions | (2.289) | (1.951) | (2.211) | (1.103) | (1.225) |
Net Asset Value, End of Period | $33.78 | $27.08 | $27.08 | $29.92 | $26.33 |
Total Return2 | 34.71% | 7.02% | -1.06% | 18.27% | 23.13% |
Ratios/Supplemental Data | |||||
Net Assets, End of Period (Millions) | $12,056 | $9,681 | $10,655 | $11,654 | $10,224 |
Ratio of Total Expenses to Average Net Assets | 0.46% | 0.46% | 0.46% | 0.46% | 0.46% |
Ratio of Net Investment Income to Average Net Assets | 0.76% | 1.52% | 1.48% | 1.13% | 1.27% |
Portfolio Turnover Rate | 8% | 8% | 7% | 9% | 9% |
1 | Calculated based on average shares outstanding. |
2 | 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. |
A. | The following significant accounting policies conform to generally accepted accounting principles for U.S. investment companies. The fund consistently follows such policies in preparing its financial statements. |
B. | PRIMECAP Management Company provides investment advisory services to the fund for a fee calculated at an annual percentage rate of average net assets. For the year ended September 30, 2021, the investment advisory fee represented an effective annual basic rate of 0.31% of the fund’s average net assets. |
C. | In accordance with the terms of a Funds' Service Agreement (the “FSA”) between Vanguard and the fund, Vanguard furnishes to the fund corporate management, administrative, marketing, and distribution services at Vanguard’s cost of operations (as defined by the FSA). These costs of operations are allocated to the fund based on methods and guidelines approved by the board of trustees and are generally settled twice a month. |
D. | Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities. |
Level 1 ($000) | Level 2 ($000) | Level 3 ($000) | Total ($000) | |
Investments | ||||
Assets | ||||
Common Stocks | 11,051,462 | 538,703 | — | 11,590,165 |
Temporary Cash Investments | 469,038 | — | — | 469,038 |
Total | 11,520,500 | 538,703 | — | 12,059,203 |
E. | Permanent differences between book-basis and tax-basis components of net assets are reclassified among capital accounts in the financial statements to reflect their tax character. These reclassifications have no effect on net assets or net asset value per share. As of period end, |
Amount ($000) | |
Paid-in Capital | 72,595 |
Total Distributable Earnings (Loss) | (72,595) |
Amount ($000) | |
Undistributed Ordinary Income | 86,227 |
Undistributed Long-Term Gains | 693,971 |
Capital Loss Carryforwards | — |
Qualified Late-Year Losses | — |
Net Unrealized Gains (Losses) | 6,807,706 |
Year Ended September 30, | ||
2021 Amount ($000) | 2020 Amount ($000) | |
Ordinary Income* | 124,588 | 177,564 |
Long-Term Capital Gains | 666,543 | 583,561 |
Total | 791,131 | 761,125 |
* | Includes short-term capital gains, if any. |
Amount ($000) | |
Tax Cost | 5,251,623 |
Gross Unrealized Appreciation | 7,045,661 |
Gross Unrealized Depreciation | (238,082) |
Net Unrealized Appreciation (Depreciation) | 6,807,579 |
F. | During the year ended September 30, 2021, the fund purchased $891,030,000 of investment securities and sold $1,807,418,000 of investment securities, other than temporary cash investments. |
G. | Capital shares issued and redeemed were: |
Year Ended September 30, | ||
2021 Shares (000) | 2020 Shares (000) | |
Issued | 43,207 | 21,308 |
Issued in Lieu of Cash Distributions | 22,897 | 22,793 |
Redeemed | (66,768) | (80,073) |
Net Increase (Decrease) in Shares Outstanding | (664) | (35,972) |
H. | Management has determined that no events or transactions occurred subsequent to September 30, 2021, that would require recognition or disclosure in these financial statements. |
Philadelphia, Pennsylvania
November 19, 2021
Matthew Benchener | Thomas M. Rampulla |
Joseph Brennan | Karin A. Risi |
Mortimer J. Buckley | Anne E. Robinson |
Gregory Davis | Michael Rollings |
John James | Nitin Tandon |
John T. Marcante | Lauren Valente |
Chris D. Mclsaac |
All rights reserved.
Vanguard Marketing Corporation, Distributor.
Item 2: Code of Ethics.
The Registrant has adopted a code of ethics that applies to the Registrant’s principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. The Code of Ethics was amended during the reporting period covered by this report to make certain technical, non-material changes.
Item 3: Audit Committee Financial Expert.
All members of the Audit Committee have been determined by the Registrant’s Board of Trustees to be Audit Committee Financial Experts and to be independent: F. Joseph Loughrey, Mark Loughridge, Sarah Bloom Raskin, and Peter F. Volanakis.
Item 4: Principal Accountant Fees and Services.
(a) Audit Fees.
Audit Fees of the Registrant.
Fiscal Year Ended September 30, 2021: $61,000
Fiscal Year Ended September 30, 2020: $53,000
Aggregate Audit Fees of Registered Investment Companies in the Vanguard Group.
Fiscal Year Ended September 30, 2021: $11,244,694
Fiscal Year Ended September 30, 2020: $10,761,407
Includes fees billed in connection with audits of the Registrant, other registered investment companies in the Vanguard complex, The Vanguard Group, Inc., and Vanguard Marketing Corporation.
(b) Audit-Related Fees.
Fiscal Year Ended September 30, 2021: $2,955,181
Fiscal Year Ended September 30, 2020: $2,915,863
Includes fees billed in connection with assurance and related services provided to the Registrant, other registered investment companies in the Vanguard complex, The Vanguard Group, Inc., and Vanguard Marketing Corporation.
(c) Tax Fees.
Fiscal Year Ended September 30, 2021: $2,047,574
Fiscal Year Ended September 30, 2020: $247,168
Includes fees billed in connection with tax compliance, planning, and advice services provided to the Registrant, other registered investment companies in the Vanguard complex, The Vanguard Group, Inc., and Vanguard Marketing Corporation.
(d) All Other Fees.
Fiscal Year Ended September 30, 2021: $280,000
Fiscal Year Ended September 30, 2020: $115,000
Includes fees billed for services related to tax reported information provided to the Registrant, other registered investment companies in the Vanguard complex, The Vanguard Group, Inc., and Vanguard Marketing Corporation.
(e) (1) Pre-Approval Policies. The policy of the Registrant’s Audit Committee is to consider, and, if appropriate, approve before the principal accountant is engaged for such services, all specific audit and non-audit services provided to: the Registrant, other registered investment companies in the Vanguard complex, The Vanguard Group, Inc., and entities controlled by The Vanguard Group, Inc. that provide ongoing services to the Registrant. In making a determination, the Audit Committee considers whether the services are consistent with maintaining the principal accountant’s independence.
In the event of a contingency situation in which the principal accountant is needed to provide services in between scheduled Audit Committee meetings, the Chairman of the Audit Committee would be called on to consider and, if appropriate, pre-approve audit or permitted non-audit services in an amount sufficient to complete services through the next Audit Committee meeting, and to determine if such services would be consistent with maintaining the accountant’s independence. At the next scheduled Audit Committee meeting, services and fees would be presented to the Audit Committee for formal consideration, and, if appropriate, approval by the entire Audit Committee. The Audit Committee would again consider whether such services and fees are consistent with maintaining the principal accountant’s independence.
The Registrant’s Audit Committee is informed at least annually of all audit and non-audit services provided by the principal accountant to the Vanguard complex, whether such services are provided to: the Registrant, other registered investment companies in the Vanguard complex, The Vanguard Group, Inc., or other entities controlled by The Vanguard Group, Inc. that provide ongoing services to the Registrant.
(2) No percentage of the principal accountant’s fees or services were approved pursuant to the waiver provision of paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) For the most recent fiscal year, over 50% of the hours worked under the principal accountant’s engagement were not performed by persons other than full-time, permanent employees of the principal accountant.
(g) Aggregate Non-Audit Fees.
Fiscal Year Ended September 30, 2021: $2,327,574
Fiscal Year Ended September 30, 2020: $362,168
Includes fees billed for non-audit services provided to the Registrant, other registered investment companies in the Vanguard complex, The Vanguard Group, Inc., and Vanguard Marketing Corporation.
(h) For the most recent fiscal year, the Audit Committee has determined that the provision of all non-audit services was consistent with maintaining the principal accountant’s independence.
Item 5: Audit Committee of Listed Registrants.
The Registrant is a listed issuer as defined in rule 10A-3 under the Securities Exchange Act of 1934 (“Exchange Act”). The Registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Registrant’s audit committee members are: F. Joseph Loughrey, Mark Loughridge, Sarah Bloom Raskin, and Peter F. Volanakis.
Item 6: Investments.
Not applicable. The complete schedule of investments is included as part of the report to shareholders filed under Item 1 of this Form.
Item 7: Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8: Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9: Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10: Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11: 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. In 2020, a third-party service provider began performing certain administrative and accounting services for Vanguard Equity Income Fund and Vanguard PRIMECAP Core Fund. There were no other significant changes in the Registrant’s Internal Control Over Financial Reporting or in other factors that could significantly affect this control subsequent to the date of the evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Item 12: Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable.
Item 13: Exhibits.
(a)(1) | Code of Ethics filed herewith. |
(a)(2) | Certifications filed herewith. |
(b) | Certifications field herewith. |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
VANGUARD FENWAY FUNDS | ||
BY: | /s/ MORTIMER J. BUCKLEY* | |
MORTIMER J. BUCKLEY | ||
CHIEF EXECUTIVE OFFICER |
Date: November 19, 2021
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
VANGUARD FENWAY FUNDS | ||
BY: | /s/ MORTIMER J. BUCKLEY* | |
MORTIMER J. BUCKLEY | ||
CHIEF EXECUTIVE OFFICER |
Date: November 19, 2021
VANGUARD FENWAY FUNDS | ||
BY: | /s/ CHRISTINE BUCHANAN* | |
CHRISTINE BUCHANAN | ||
CHIEF FINANCIAL OFFICER |
Date: November 19, 2021
* By: /s/ Anne E. Robinson
Anne E. Robinson, pursuant to a Power of Attorney filed on November 29, 2021 (see File Number 33-64845), a Power of Attorney filed on October 12, 2021 (see File Number 33-23444), and a Power of Attorney filed on August 26, 2021 (see file Number 811-02652), Incorporated by Reference.