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, 2022—September 30, 2023
Item 1: Reports to Shareholders
Your Fund’s Performance at a Glance | 1 |
Advisors' Report | 2 |
About Your Fund’s Expenses | 5 |
Performance Summary | 7 |
Financial Statements | 9 |
• | For the 12 months ended September 30, 2023, Vanguard Equity Income Fund returned 12.54% for Investor Shares and 12.64% for Admiral Shares. The fund slightly outpaced its benchmark, which returned 12.48%. |
• | Early on, inflation began to ease off multidecade highs amid aggressive interest rate hikes by the Federal Reserve. Unexpected resilience in the labor market and consumer spending helped dial back expectations of a sustained recession, but the prospect of higher rates for longer weighed on market sentiment toward the close of the period. |
• | From a sector perspective, selection in communication services and health care helped relative performance the most. Energy and real estate were the biggest detractors. |
• | For the 10 years ended September 30, 2023, the fund posted an average annual return of 9.60% for Investor Shares and 9.70% for Admiral Shares. These results were above that of the fund's benchmark index, which returned 9.47%. |
Average Annual Total Returns Periods Ended September 30, 2023 | |||
One Year | Three Years | Five Years | |
Stocks | |||
Russell 1000 Index (Large-caps) | 21.19% | 9.53% | 9.63% |
Russell 2000 Index (Small-caps) | 8.93 | 7.16 | 2.40 |
Russell 3000 Index (Broad U.S. market) | 20.46 | 9.38 | 9.14 |
FTSE All-World ex US Index (International) | 20.67 | 4.23 | 3.00 |
Bonds | |||
Bloomberg U.S. Aggregate Float Adjusted Index (Broad taxable market) | 0.78% | -5.18% | 0.18% |
Bloomberg Municipal Bond Index (Broad tax-exempt market) | 2.66 | -2.30 | 1.05 |
FTSE Three-Month U.S. Treasury Bill Index | 4.71 | 1.78 | 1.74 |
CPI | |||
Consumer Price Index | 3.70% | 5.75% | 4.04% |
Fund Assets Managed | |||
Investment Advisor | % | $ Million | Investment Strategy |
Wellington Management Company llp | 64 | 33,056 | 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 | 35 | 17,884 | Employs a quantitative fundamental management approach, using models that assess valuation, dividend growth and sustainability, market sentiment, and earnings and balance-sheet quality of companies as compared with their peers. |
Cash Investments | 1 | 502 | 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, 2023 | |||
Beginning Account Value 3/31/2023 | Ending Account Value 9/30/2023 | Expenses Paid During Period | |
Based on Actual Fund Return | |||
Equity Income Fund | |||
Investor Shares | $1,000.00 | $1,009.50 | $1.36 |
Admiral™ Shares | 1,000.00 | 1,010.00 | 0.91 |
Based on Hypothetical 5% Yearly Return | |||
Equity Income Fund | |||
Investor Shares | $1,000.00 | $1,023.72 | $1.37 |
Admiral Shares | 1,000.00 | 1,024.17 | 0.91 |
Average Annual Total Returns Periods Ended September 30, 2023 | |||||
One Year | Five Years | Ten Years | Final Value of a $10,000 Investment | ||
Equity Income Fund Investor Shares | 12.54% | 7.70% | 9.60% | $25,016 | |
FTSE High Dividend Yield Index | 12.48 | 6.89 | 9.47 | 24,719 | |
Dow Jones U.S. Total Stock Market Float Adjusted Index | 20.49 | 9.01 | 11.19 | 28,891 |
One Year | Five Years | Ten Years | Final Value of a $50,000 Investment | ||
Equity Income Fund Admiral Shares | 12.64% | 7.80% | 9.70% | $126,199 | |
FTSE High Dividend Yield Index | 12.48 | 6.89 | 9.47 | 123,595 | |
Dow Jones U.S. Total Stock Market Float Adjusted Index | 20.49 | 9.01 | 11.19 | 144,456 |
Communication Services | 1.0% |
Consumer Discretionary | 5.4 |
Consumer Staples | 13.6 |
Energy | 11.5 |
Financials | 19.8 |
Health Care | 14.6 |
Industrials | 10.7 |
Information Technology | 9.2 |
Materials | 4.1 |
Real Estate | 2.2 |
Utilities | 7.9 |
Shares | Market Value• ($000) | ||
Common Stocks (97.8%) | |||
Communication Services (1.0%) | |||
Verizon Communications Inc. | 6,591,834 | 213,641 | |
Comcast Corp. Class A | 4,346,525 | 192,725 | |
AT&T Inc. | 3,185,601 | 47,848 | |
TEGNA Inc. | 2,483,157 | 36,180 | |
Omnicom Group Inc. | 214,997 | 16,013 | |
506,407 | |||
Consumer Discretionary (5.3%) | |||
Home Depot Inc. | 3,179,951 | 960,854 | |
TJX Cos. Inc. | 3,697,648 | 328,647 | |
Lennar Corp. Class A | 2,885,322 | 323,820 | |
Tractor Supply Co. | 1,385,412 | 281,308 | |
McDonald's Corp. | 660,120 | 173,902 | |
Williams-Sonoma Inc. | 855,774 | 132,987 | |
Tapestry Inc. | 3,358,033 | 96,544 | |
Macy's Inc. | 7,543,960 | 87,586 | |
Travel & Leisure Co. | 1,616,481 | 59,373 | |
Best Buy Co. Inc. | 825,639 | 57,357 | |
Bloomin' Brands Inc. | 2,254,212 | 55,431 | |
Starbucks Corp. | 552,844 | 50,458 | |
Wendy's Co. | 2,190,006 | 44,698 | |
Ralph Lauren Corp. | 295,463 | 34,300 | |
Advance Auto Parts Inc. | 364,456 | 20,384 | |
2,707,649 | |||
Consumer Staples (13.3%) | |||
Procter & Gamble Co. | 6,999,133 | 1,020,893 | |
Philip Morris International Inc. | 9,324,546 | 863,266 | |
Archer-Daniels-Midland Co. | 7,823,127 | 590,020 | |
Unilever plc ADR | 11,137,006 | 550,168 | |
Keurig Dr Pepper Inc. | 17,059,634 | 538,573 | |
Pernod Ricard SA | 2,617,351 | 435,763 | |
Kenvue Inc. | 20,190,497 | 405,425 | |
Walmart Inc. | 2,418,408 | 386,776 | |
Kellogg Co. | 6,050,246 | 360,050 | |
PepsiCo Inc. | 1,565,574 | 265,271 | |
Kimberly-Clark Corp. | 1,980,476 | 239,340 | |
Coca-Cola Co. | 4,240,224 | 237,368 | |
Mondelez International Inc. Class A | 3,318,834 | 230,327 | |
Altria Group Inc. | 4,651,485 | 195,595 | |
Kroger Co. | 3,078,928 | 137,782 | |
Hershey Co. | 639,727 | 127,997 | |
Target Corp. | 1,119,423 | 123,775 | |
Colgate-Palmolive Co. | 1,202,205 | 85,489 |
Shares | Market Value• ($000) | ||
Ingredion Inc. | 273,499 | 26,912 | |
Coca-Cola Europacific Partners plc | 328,925 | 20,551 | |
J M Smucker Co. | 146,392 | 17,993 | |
Medifast Inc. | 120,836 | 9,045 | |
6,868,379 | |||
Energy (11.2%) | |||
ConocoPhillips | 11,754,930 | 1,408,241 | |
EOG Resources Inc. | 9,267,885 | 1,174,797 | |
Exxon Mobil Corp. | 4,656,463 | 547,507 | |
Diamondback Energy Inc. | 3,011,305 | 466,391 | |
Coterra Energy Inc. | 16,141,080 | 436,616 | |
Chevron Corp. | 2,353,379 | 396,827 | |
Phillips 66 | 2,732,302 | 328,286 | |
Enbridge Inc. | 9,569,168 | 317,387 | |
Marathon Petroleum Corp. | 1,349,957 | 204,303 | |
Valero Energy Corp. | 1,317,656 | 186,725 | |
Schlumberger NV | 2,802,277 | 163,373 | |
APA Corp. | 2,599,351 | 106,833 | |
HF Sinclair Corp. | 850,333 | 48,409 | |
5,785,695 | |||
Financials (19.4%) | |||
JPMorgan Chase & Co. | 12,933,381 | 1,875,599 | |
MetLife Inc. | 10,936,952 | 688,044 | |
Chubb Ltd. | 2,829,224 | 588,988 | |
Raymond James Financial Inc. | 5,333,400 | 535,633 | |
Regions Financial Corp. | 30,958,204 | 532,481 | |
M&T Bank Corp. | 4,012,794 | 507,418 | |
Morgan Stanley | 6,083,857 | 496,869 | |
American International Group Inc. | 7,771,673 | 470,963 | |
Intercontinental Exchange Inc. | 4,112,476 | 452,455 | |
Royal Bank of Canada | 4,724,994 | 412,926 | |
PNC Financial Services Group Inc. | 3,334,558 | 409,384 | |
Bank of America Corp. | 12,790,843 | 350,213 | |
Wells Fargo & Co. | 7,489,492 | 306,021 | |
Fidelity National Information Services Inc. | 4,457,085 | 246,343 | |
Citigroup Inc. | 4,801,083 | 197,468 | |
Ameriprise Financial Inc. | 468,972 | 154,611 | |
Bank of New York Mellon Corp. | 2,891,508 | 123,323 |
Shares | Market Value• ($000) | ||
Hartford Financial Services Group Inc. | 1,716,248 | 121,699 | |
Discover Financial Services | 1,375,473 | 119,157 | |
MGIC Investment Corp. | 6,666,329 | 111,261 | |
Synchrony Financial | 3,442,748 | 105,245 | |
Goldman Sachs Group Inc. | 307,977 | 99,652 | |
Aflac Inc. | 1,141,384 | 87,601 | |
SLM Corp. | 5,740,926 | 78,191 | |
Popular Inc. | 1,132,712 | 71,372 | |
Jefferies Financial Group Inc. | 1,912,176 | 70,043 | |
Everest Group Ltd. | 185,229 | 68,844 | |
Unum Group | 1,255,929 | 61,779 | |
Jackson Financial Inc. Class A | 1,380,881 | 52,777 | |
US Bancorp | 1,586,453 | 52,448 | |
Travelers Cos. Inc. | 309,481 | 50,541 | |
Assurant Inc. | 336,008 | 48,244 | |
Radian Group Inc. | 1,792,546 | 45,011 | |
American Financial Group Inc. | 399,967 | 44,664 | |
Truist Financial Corp. | 1,557,201 | 44,551 | |
Western Union Co. | 3,257,333 | 42,932 | |
BlackRock Inc. | 58,973 | 38,125 | |
Corebridge Financial Inc. | 1,751,534 | 34,593 | |
Zions Bancorp NA | 968,295 | 33,784 | |
Fidelity National Financial Inc. | 708,523 | 29,262 | |
East West Bancorp Inc. | 510,749 | 26,922 | |
Comerica Inc. | 581,677 | 24,169 | |
Fifth Third Bancorp | 761,487 | 19,288 | |
Reinsurance Group of America Inc. | 86,335 | 12,535 | |
Lincoln National Corp. | 501,118 | 12,373 | |
Progressive Corp. | 51,872 | 7,226 | |
Credicorp Ltd. | 53,386 | 6,832 | |
Evercore Inc. Class A | 45,315 | 6,248 | |
9,976,108 | |||
Health Care (14.3%) | |||
Merck & Co. Inc. | 12,846,205 | 1,322,517 | |
Pfizer Inc. | 36,843,687 | 1,222,105 | |
Johnson & Johnson | 7,715,986 | 1,201,765 | |
UnitedHealth Group Inc. | 1,026,327 | 517,464 | |
Gilead Sciences Inc. | 6,550,101 | 490,865 | |
AbbVie Inc. | 2,883,182 | 429,767 | |
Becton Dickinson and Co. | 1,585,994 | 410,027 | |
AstraZeneca plc ADR | 5,492,336 | 371,941 | |
Elevance Health Inc. | 778,921 | 339,158 | |
Roche Holding AG | 1,181,743 | 322,617 | |
Amgen Inc. | 1,157,309 | 311,038 | |
CVS Health Corp. | 3,164,408 | 220,939 | |
Bristol-Myers Squibb Co. | 1,856,649 | 107,760 | |
Medtronic plc | 621,382 | 48,691 | |
Royalty Pharma plc Class A | 1,354,503 | 36,761 | |
7,353,415 | |||
Industrials (10.4%) | |||
General Dynamics Corp. | 3,338,065 | 737,612 | |
Johnson Controls International plc | 8,622,295 | 458,792 | |
Emerson Electric Co. | 4,694,533 | 453,351 | |
Honeywell International Inc. | 2,130,415 | 393,573 |
Shares | Market Value• ($000) | ||
RTX Corp. | 5,347,141 | 384,834 | |
Siemens AG (Registered) | 2,498,823 | 357,104 | |
Canadian National Railway Co. | 2,932,606 | 317,583 | |
Eaton Corp. plc | 1,484,358 | 316,584 | |
Caterpillar Inc. | 1,077,653 | 294,199 | |
L3Harris Technologies Inc. | 1,527,459 | 265,961 | |
Union Pacific Corp. | 1,234,882 | 251,459 | |
Automatic Data Processing Inc. | 990,590 | 238,316 | |
United Parcel Service Inc. Class B (XNYS) | 1,386,029 | 216,040 | |
Lockheed Martin Corp. | 453,866 | 185,613 | |
3M Co. | 1,633,972 | 152,972 | |
Cummins Inc. | 502,026 | 114,693 | |
PACCAR Inc. | 1,284,880 | 109,241 | |
ManpowerGroup Inc. | 1,164,043 | 85,348 | |
Oshkosh Corp. | 244,903 | 23,371 | |
nVent Electric plc | 310,400 | 16,448 | |
Ryder System Inc. | 50,254 | 5,375 | |
5,378,469 | |||
Information Technology (9.0%) | |||
Cisco Systems Inc. | 20,301,338 | 1,091,400 | |
Broadcom Inc. | 1,167,842 | 969,986 | |
QUALCOMM Inc. | 6,593,127 | 732,233 | |
NXP Semiconductors NV | 1,766,574 | 353,173 | |
Corning Inc. | 11,584,353 | 352,975 | |
TE Connectivity Ltd. | 2,355,179 | 290,935 | |
Analog Devices Inc. | 1,519,365 | 266,026 | |
HP Inc. | 4,680,779 | 120,296 | |
Texas Instruments Inc. | 649,177 | 103,226 | |
Intel Corp. | 2,660,211 | 94,570 | |
International Business Machines Corp. | 488,204 | 68,495 | |
Dell Technologies Inc. Class C | 902,789 | 62,202 | |
KLA Corp. | 134,535 | 61,706 | |
NetApp Inc. | 564,848 | 42,861 | |
4,610,084 | |||
Materials (4.0%) | |||
Rio Tinto plc ADR | 8,747,907 | 556,717 | |
LyondellBasell Industries NV Class A | 3,528,773 | 334,175 | |
Barrick Gold Corp. (XTSE) | 21,644,315 | 314,925 | |
PPG Industries Inc. | 2,149,511 | 279,006 | |
Celanese Corp. | 1,781,417 | 223,603 | |
CF Industries Holdings Inc. | 1,549,518 | 132,856 | |
Reliance Steel & Aluminum Co. | 470,243 | 123,312 | |
Steel Dynamics Inc. | 921,573 | 98,811 | |
2,063,405 | |||
Real Estate (2.2%) | |||
Crown Castle Inc. | 4,545,335 | 418,307 | |
Welltower Inc. | 3,954,549 | 323,957 | |
Host Hotels & Resorts Inc. | 17,202,047 | 276,437 | |
Weyerhaeuser Co. | 3,374,503 | 103,462 | |
1,122,163 |
Shares | Market Value• ($000) | ||
Utilities (7.7%) | |||
American Electric Power Co. Inc. | 8,567,770 | 644,468 | |
Exelon Corp. | 14,118,787 | 533,549 | |
Sempra | 7,637,981 | 519,612 | |
NextEra Energy Inc. | 8,385,497 | 480,405 | |
Atmos Energy Corp. | 3,988,689 | 422,522 | |
Dominion Energy Inc. | 7,345,503 | 328,124 | |
Vistra Corp. | 3,892,848 | 129,165 | |
Xcel Energy Inc. | 2,218,848 | 126,962 | |
WEC Energy Group Inc. | 1,548,733 | 124,750 | |
PPL Corp. | 4,699,042 | 110,709 | |
DTE Energy Co. | 1,106,528 | 109,856 | |
Eversource Energy | 1,652,050 | 96,067 | |
National Fuel Gas Co. | 1,754,869 | 91,095 | |
UGI Corp. | 3,873,204 | 89,084 | |
Public Service Enterprise Group Inc. | 855,267 | 48,673 | |
AES Corp. | 2,876,466 | 43,722 | |
Evergy Inc. | 524,488 | 26,592 | |
IDACORP Inc. | 212,022 | 19,856 | |
Entergy Corp. | 102,045 | 9,439 | |
Southern Co. | 99,014 | 6,408 | |
Duke Energy Corp. | 50,588 | 4,465 | |
3,965,523 | |||
Total Common Stocks (Cost $42,346,205) | 50,337,297 | ||
Temporary Cash Investments (2.2%) | |||
Money Market Fund (1.1%) | |||
1 | Vanguard Market Liquidity Fund, 5.391% | 5,338,443 | 533,791 |
Face Amount ($000) | |||
Repurchase Agreements (1.1%) | |||
Goldman Sachs & Co. 5.290%, 10/2/23 (Dated 9/29/23, Repurchase Value $227,200,000, collateralized by Freddie Mac 5.000%–5.500%, 8/1/30–10/1/53, and United States Treasury Note/Bond 2.500%–4.125%, 10/31/27–2/15/46, with a value of $231,642,000) | 227,100 | 227,100 |
Face Amount ($000) | Market Value• ($000) | ||
NatWest Markets plc 5.280%, 10/2/23 (Dated 9/29/23, Repurchase Value $145,564,000, collateralized by United States Treasury Note/Bond 0.625%–3.125%, 8/31/29–8/15/30, with a value of $148,410,000) | 145,500 | 145,500 | |
Nomura International plc 5.270%, 10/2/23 (Dated 9/29/23, Repurchase Value $203,890,000, collateralized by United States Treasury Inflation Indexed Note/Bond 1.000%, 2/15/49, and U.S. Treasury Note/Bond 0.375%–4.625%, 1/31/24–8/15/43, with a value of $207,876,000) | 203,800 | 203,800 | |
576,400 | |||
Total Temporary Cash Investments (Cost $1,110,072) | 1,110,191 | ||
Total Investments (100.0%) (Cost $43,456,277) | 51,447,488 | ||
Other Assets and Liabilities—Net (0.0%) | (5,206) | ||
Net Assets (100%) | 51,442,282 | ||
Cost is in $000. |
• | See Note A in Notes to Financial Statements. |
1 | Affiliated money market fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard. Rate shown is the 7-day yield. |
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 2023 | 2,697 | 583,294 | (24,550) |
($000s, except shares, footnotes, and per-share amounts) | Amount |
Assets | |
Investments in Securities, at Value | |
Unaffiliated Issuers (Cost $42,922,605) | 50,913,697 |
Affiliated Issuers (Cost $533,672) | 533,791 |
Total Investments in Securities | 51,447,488 |
Investment in Vanguard | 1,797 |
Cash | 79 |
Cash Collateral Pledged—Futures Contracts | 30,779 |
Foreign Currency, at Value (Cost $7) | 18 |
Receivables for Investment Securities Sold | 158,777 |
Receivables for Accrued Income | 95,368 |
Receivables for Capital Shares Issued | 19,875 |
Total Assets | 51,754,181 |
Liabilities | |
Payables for Investment Securities Purchased | 242,155 |
Payables to Investment Advisor | 10,243 |
Payables for Capital Shares Redeemed | 55,507 |
Payables to Vanguard | 2,348 |
Variation Margin Payable—Futures Contracts | 1,646 |
Total Liabilities | 311,899 |
Net Assets | 51,442,282 |
At September 30, 2023, net assets consisted of: | |
Paid-in Capital | 41,204,654 |
Total Distributable Earnings (Loss) | 10,237,628 |
Net Assets | 51,442,282 |
Investor Shares—Net Assets | |
Applicable to 126,374,740 outstanding $.001 par value shares of beneficial interest (unlimited authorization) | 4,943,050 |
Net Asset Value Per Share—Investor Shares | $39.11 |
Admiral Shares—Net Assets | |
Applicable to 567,314,124 outstanding $.001 par value shares of beneficial interest (unlimited authorization) | 46,499,232 |
Net Asset Value Per Share—Admiral Shares | $81.96 |
Year Ended September 30, 2023 | |
($000) | |
Investment Income | |
Income | |
Dividends1 | 1,623,084 |
Interest2 | 52,179 |
Securities Lending—Net | 3,610 |
Total Income | 1,678,873 |
Expenses | |
Investment Advisory Fees—Note B | |
Basic Fee | 45,157 |
Performance Adjustment | 2,697 |
The Vanguard Group—Note C | |
Management and Administrative—Investor Shares | 9,102 |
Management and Administrative—Admiral Shares | 40,616 |
Marketing and Distribution—Investor Shares | 275 |
Marketing and Distribution—Admiral Shares | 2,499 |
Custodian Fees | 299 |
Auditing Fees | 32 |
Shareholders’ Reports—Investor Shares | 118 |
Shareholders’ Reports—Admiral Shares | 690 |
Trustees’ Fees and Expenses | 30 |
Other Expenses | 16 |
Total Expenses | 101,531 |
Expenses Paid Indirectly | (90) |
Net Expenses | 101,441 |
Net Investment Income | 1,577,432 |
Realized Net Gain (Loss) | |
Investment Securities Sold2 | 2,594,369 |
Futures Contracts | 1,606 |
Foreign Currencies | 823 |
Realized Net Gain (Loss) | 2,596,798 |
Change in Unrealized Appreciation (Depreciation) | |
Investment Securities2 | 1,788,083 |
Futures Contracts | 111,412 |
Foreign Currencies | 397 |
Change in Unrealized Appreciation (Depreciation) | 1,899,892 |
Net Increase (Decrease) in Net Assets Resulting from Operations | 6,074,122 |
1 | Dividends are net of foreign withholding taxes of $13,166,000. |
2 | Interest income, realized net gain (loss), capital gain distributions received, and change in unrealized appreciation (depreciation) from an affiliated company of the fund were $31,335,000, $112,000, $2,000, and ($48,000), respectively. Purchases and sales are for temporary cash investment purposes. |
Year Ended September 30, | ||
2023 ($000) | 2022 ($000) | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net Investment Income | 1,577,432 | 1,445,651 |
Realized Net Gain (Loss) | 2,596,798 | 3,027,890 |
Change in Unrealized Appreciation (Depreciation) | 1,899,892 | (6,877,921) |
Net Increase (Decrease) in Net Assets Resulting from Operations | 6,074,122 | (2,404,380) |
Distributions | ||
Investor Shares | (441,135) | (417,573) |
Admiral Shares | (4,056,028) | (3,618,297) |
Total Distributions | (4,497,163) | (4,035,870) |
Capital Share Transactions | ||
Investor Shares | (43,886) | 181,131 |
Admiral Shares | 2,048,004 | 5,413,453 |
Net Increase (Decrease) from Capital Share Transactions | 2,004,118 | 5,594,584 |
Total Increase (Decrease) | 3,581,077 | (845,666) |
Net Assets | ||
Beginning of Period | 47,861,205 | 48,706,871 |
End of Period | 51,442,282 | 47,861,205 |
Investor Shares | |||||
For a Share Outstanding Throughout Each Period | Year Ended September 30, | ||||
2023 | 2022 | 2021 | 2020 | 2019 | |
Net Asset Value, Beginning of Period | $37.83 | $42.95 | $33.75 | $36.51 | $37.98 |
Investment Operations | |||||
Net Investment Income1 | 1.157 | 1.159 | 1.041 | 1.000 | 1.002 |
Net Realized and Unrealized Gain (Loss) on Investments | 3.597 | (2.848) | 9.232 | (2.067) | .972 |
Total from Investment Operations | 4.754 | (1.689) | 10.273 | (1.067) | 1.974 |
Distributions | |||||
Dividends from Net Investment Income | (1.149) | (1.134) | (1.012) | (1.034) | (.997) |
Distributions from Realized Capital Gains | (2.325) | (2.297) | (.061) | (.659) | (2.447) |
Total Distributions | (3.474) | (3.431) | (1.073) | (1.693) | (3.444) |
Net Asset Value, End of Period | $39.11 | $37.83 | $42.95 | $33.75 | $36.51 |
Total Return2 | 12.54% | -4.67% | 30.66% | -2.87% | 6.43% |
Ratios/Supplemental Data | |||||
Net Assets, End of Period (Millions) | $4,943 | $4,823 | $5,285 | $4,482 | $5,478 |
Ratio of Total Expenses to Average Net Assets3 | 0.27%4 | 0.28%4 | 0.28% | 0.28% | 0.27% |
Ratio of Net Investment Income to Average Net Assets | 2.86% | 2.69% | 2.56% | 2.89% | 2.84% |
Portfolio Turnover Rate | 48% | 40% | 29% | 35% | 32% |
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%, 0.01%, and 0.01%. |
4 | The ratio of expenses to average net assets for the period net of reduction from broker commission abatement arrangements was 0.27% and 0.28%, respectively. |
Admiral Shares | |||||
For a Share Outstanding Throughout Each Period | Year Ended September 30, | ||||
2023 | 2022 | 2021 | 2020 | 2019 | |
Net Asset Value, Beginning of Period | $79.28 | $90.01 | $70.73 | $76.52 | $79.61 |
Investment Operations | |||||
Net Investment Income1 | 2.503 | 2.516 | 2.262 | 2.159 | 2.167 |
Net Realized and Unrealized Gain (Loss) on Investments | 7.534 | (5.973) | 19.342 | (4.331) | 2.028 |
Total from Investment Operations | 10.037 | (3.457) | 21.604 | (2.172) | 4.195 |
Distributions | |||||
Dividends from Net Investment Income | (2.484) | (2.460) | (2.196) | (2.236) | (2.156) |
Distributions from Realized Capital Gains | (4.873) | (4.813) | (.128) | (1.382) | (5.129) |
Total Distributions | (7.357) | (7.273) | (2.324) | (3.618) | (7.285) |
Net Asset Value, End of Period | $81.96 | $79.28 | $90.01 | $70.73 | $76.52 |
Total Return2 | 12.64% | -4.58% | 30.77% | -2.77% | 6.51% |
Ratios/Supplemental Data | |||||
Net Assets, End of Period (Millions) | $46,499 | $43,039 | $43,422 | $30,816 | $30,972 |
Ratio of Total Expenses to Average Net Assets3 | 0.18%4 | 0.19%4 | 0.19% | 0.19% | 0.18% |
Ratio of Net Investment Income to Average Net Assets | 2.95% | 2.78% | 2.64% | 2.98% | 2.93% |
Portfolio Turnover Rate | 48% | 40% | 29% | 35% | 32% |
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%, 0.01%, and 0.01%. |
4 | The ratio of expenses to average net assets for the period net of reduction from broker commission abatement arrangements was 0.18% and 0.19%, respectively. |
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. | The fund has asked its investment advisor to direct certain security trades, subject to obtaining the best price and execution, to brokers who have agreed to rebate to the fund part of the commissions generated. Such rebates are used solely to reduce the fund’s management and administrative expenses. For the year ended September 30, 2023, these arrangements reduced the fund’s expenses by $90,000 (an annual rate of less than 0.01% of average net assets). |
E. | 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 | 49,221,813 | 1,115,484 | — | 50,337,297 |
Temporary Cash Investments | 533,791 | 576,400 | — | 1,110,191 |
Total | 49,755,604 | 1,691,884 | — | 51,447,488 |
Derivative Financial Instruments | ||||
Liabilities | ||||
Futures Contracts1 | 24,550 | — | — | 24,550 |
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. |
F. | 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 applicable foreign currency transactions and distributions in connection with fund share redemptions were reclassified between the following accounts: |
Amount ($000) | |
Paid-in Capital | 158,111 |
Total Distributable Earnings (Loss) | (158,111) |
Amount ($000) | |
Undistributed Ordinary Income | 100,807 |
Undistributed Long-Term Gains | 2,325,917 |
Net Unrealized Gains (Losses) | 7,810,904 |
Capital Loss Carryforwards | — |
Qualified Late-Year Losses | — |
Other Temporary Differences | — |
Total | 10,237,628 |
Year Ended September 30, | ||
2023 Amount ($000) | 2022 Amount ($000) | |
Ordinary Income* | 1,550,267 | 1,723,789 |
Long-Term Capital Gains | 2,946,896 | 2,312,081 |
Total | 4,497,163 | 4,035,870 |
* | Includes short-term capital gains, if any. |
Amount ($000) | |
Tax Cost | 43,636,694 |
Gross Unrealized Appreciation | 10,586,259 |
Gross Unrealized Depreciation | (2,775,465) |
Net Unrealized Appreciation (Depreciation) | 7,810,794 |
G. | During the year ended September 30, 2023, the fund purchased $24,814,495,000 of investment securities and sold $25,322,883,000 of investment securities, other than temporary cash investments. |
H. | Capital share transactions for each class of shares were: |
Year Ended September 30, | |||||
2023 | 2022 | ||||
Amount ($000) | Shares (000) | Amount ($000) | Shares (000) | ||
Investor Shares | |||||
Issued | 585,386 | 14,340 | 847,534 | 19,586 | |
Issued in Lieu of Cash Distributions | 411,265 | 10,313 | 385,775 | 9,104 | |
Redeemed | (1,040,537) | (25,752) | (1,052,178) | (24,275) | |
Net Increase (Decrease)—Investor Shares | (43,886) | (1,099) | 181,131 | 4,415 | |
Admiral Shares | |||||
Issued | 7,447,318 | 87,620 | 9,294,275 | 102,758 | |
Issued in Lieu of Cash Distributions | 3,644,882 | 43,619 | 3,190,190 | 35,953 | |
Redeemed | (9,044,196) | (106,801) | (7,071,012) | (78,259) | |
Net Increase (Decrease)—Admiral Shares | 2,048,004 | 24,438 | 5,413,453 | 60,452 |
I. | Significant market disruptions, such as those caused by pandemics (e.g., COVID-19 pandemic), natural or environmental disasters, war (e.g., Russia’s invasion of Ukraine), acts of terrorism, or other events, can adversely affect local and global markets and normal market operations. Any such disruptions could have an adverse impact on the value of the fund’s investments and fund performance. |
J. | Management has determined that no events or transactions occurred subsequent to September 30, 2023, that would require recognition or disclosure in these financial statements. |
Philadelphia, Pennsylvania
November 16, 2023
Matthew Benchener | Thomas M. Rampulla |
Joseph Brennan | Karin A. Risi |
Mortimer J. Buckley | Anne E. Robinson |
Gregory Davis | Michael Rollings |
John James | Nitin Tandon |
Chris D. Mclsaac | Lauren Valente |
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 |
• | For the 12 months ended September 30, 2023, Vanguard PRIMECAP Core Fund returned 24.60% for the period. Its benchmark, the MSCI US Prime Market 750 Index, returned 21.49%. |
• | Early on, inflation began to ease off multidecade highs amid aggressive interest rate hikes by the Federal Reserve. Unexpected resilience in the labor market and consumer spending helped dial back expectations of a sustained recession, but the prospect of higher rates for longer weighed on market sentiment toward the close of the period. |
• | Small-, mid-, and large-capitalization stocks all posted positive returns for the 12-month period. Large-capitalization stocks held up better than mid- and small-caps, while growth stocks, as measured by the MSCI US Prime Market Growth Index, outperformed value, as measured by the MSCI US Prime Market Value Index. |
• | Compared with the benchmark, the fund’s performance was helped most by stock selection in the information technology, health care, and industrial sectors, while stock selection in consumer staples detracted from relative results. |
Average Annual Total Returns Periods Ended September 30, 2023 | |||
One Year | Three Years | Five Years | |
Stocks | |||
Russell 1000 Index (Large-caps) | 21.19% | 9.53% | 9.63% |
Russell 2000 Index (Small-caps) | 8.93 | 7.16 | 2.40 |
Russell 3000 Index (Broad U.S. market) | 20.46 | 9.38 | 9.14 |
FTSE All-World ex US Index (International) | 20.67 | 4.23 | 3.00 |
Bonds | |||
Bloomberg U.S. Aggregate Float Adjusted Index (Broad taxable market) | 0.78% | -5.18% | 0.18% |
Bloomberg Municipal Bond Index (Broad tax-exempt market) | 2.66 | -2.30 | 1.05 |
FTSE Three-Month U.S. Treasury Bill Index | 4.71 | 1.78 | 1.74 |
CPI | |||
Consumer Price Index | 3.70% | 5.75% | 4.04% |
• | 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, 2023 | |||
PRIMECAP Core Fund | Beginning Account Value 3/31/2023 | Ending Account Value 9/30/2023 | Expenses Paid During Period |
Based on Actual Fund Return | $1,000.00 | $1,069.60 | $2.33 |
Based on Hypothetical 5% Yearly Return | 1,000.00 | 1,022.81 | 2.28 |
Average Annual Total Returns Periods Ended September 30, 2023 | |||||
One Year | Five Years | Ten Years | Final Value of a $10,000 Investment | ||
PRIMECAP Core Fund | 24.60% | 8.36% | 11.95% | $30,929 | |
MSCI US Prime Market 750 Index | 21.49 | 9.77 | 11.78 | 30,450 | |
Dow Jones U.S. Total Stock Market Float Adjusted Index | 20.49 | 9.01 | 11.19 | 28,891 |
Communication Services | 6.0% |
Consumer Discretionary | 9.9 |
Consumer Staples | 1.0 |
Energy | 3.7 |
Financials | 9.1 |
Health Care | 30.0 |
Industrials | 15.0 |
Information Technology | 23.5 |
Materials | 1.7 |
Real Estate | 0.1 |
Shares | Market Value• ($000) | ||
Common Stocks (95.6%) | |||
Communication Services (5.7%) | |||
* | Alphabet Inc. Class A | 1,700,200 | 222,488 |
* | Alphabet Inc. Class C | 1,267,840 | 167,165 |
Activision Blizzard Inc. | 587,075 | 54,968 | |
* | Walt Disney Co. | 661,335 | 53,601 |
* | T-Mobile US Inc. | 276,100 | 38,668 |
* | Meta Platforms Inc. Class A | 92,200 | 27,679 |
Nintendo Co. Ltd. | 507,500 | 21,088 | |
Electronic Arts Inc. | 169,850 | 20,450 | |
* | Charter Communications Inc. Class A | 40,850 | 17,967 |
* | Netflix Inc. | 19,100 | 7,212 |
Comcast Corp. Class A | 156,200 | 6,926 | |
* | Altice USA Inc. Class A | 574,200 | 1,878 |
640,090 | |||
Consumer Discretionary (9.4%) | |||
1 | Sony Group Corp. ADR | 1,780,100 | 146,698 |
TJX Cos. Inc. | 1,573,500 | 139,853 | |
* | Mattel Inc. | 5,701,671 | 125,608 |
Ross Stores Inc. | 1,057,080 | 119,397 | |
Whirlpool Corp. | 697,474 | 93,252 | |
* | Alibaba Group Holding Ltd. ADR | 958,900 | 83,175 |
* | CarMax Inc. | 1,053,400 | 74,507 |
* | Royal Caribbean Cruises Ltd. | 721,800 | 66,507 |
* | Tesla Inc. | 190,400 | 47,642 |
Marriott International Inc. Class A | 183,290 | 36,027 | |
* | Capri Holdings Ltd. | 429,763 | 22,610 |
McDonald's Corp. | 70,500 | 18,572 | |
Newell Brands Inc. | 2,000,000 | 18,060 | |
Bath & Body Works Inc. | 526,300 | 17,789 | |
1 | Restaurant Brands International Inc. | 168,300 | 11,212 |
* | Victoria's Secret & Co. | 391,700 | 6,534 |
* | Burlington Stores Inc. | 46,000 | 6,224 |
Lowe's Cos. Inc. | 25,000 | 5,196 | |
* | Carnival Corp. | 348,400 | 4,780 |
* | MGM Resorts International | 94,900 | 3,488 |
* | Amazon.com Inc. | 24,000 | 3,051 |
* | Leslie's Inc. | 511,100 | 2,893 |
Las Vegas Sands Corp. | 59,400 | 2,723 | |
Hilton Worldwide Holdings Inc. | 13,800 | 2,072 |
Shares | Market Value• ($000) | ||
* | Norwegian Cruise Line Holdings Ltd. | 68,440 | 1,128 |
1,058,998 | |||
Consumer Staples (0.9%) | |||
* | Dollar Tree Inc. | 355,500 | 37,843 |
* | BJ's Wholesale Club Holdings Inc. | 437,200 | 31,203 |
Sysco Corp. | 286,300 | 18,910 | |
Tyson Foods Inc. Class A | 180,000 | 9,088 | |
Altria Group Inc. | 168,400 | 7,082 | |
104,126 | |||
Energy (3.6%) | |||
Pioneer Natural Resources Co. | 663,723 | 152,358 | |
Cameco Corp. | 1,162,400 | 46,078 | |
Valero Energy Corp. | 295,400 | 41,861 | |
Hess Corp. | 272,400 | 41,677 | |
EOG Resources Inc. | 309,621 | 39,248 | |
Coterra Energy Inc. | 997,050 | 26,970 | |
TechnipFMC plc | 698,600 | 14,209 | |
Schlumberger NV | 216,400 | 12,616 | |
* | Southwestern Energy Co. | 1,925,000 | 12,416 |
* | Transocean Ltd. (XNYS) | 1,287,200 | 10,568 |
398,001 | |||
Financials (8.7%) | |||
Raymond James Financial Inc. | 1,785,855 | 179,353 | |
Wells Fargo & Co. | 3,741,700 | 152,886 | |
JPMorgan Chase & Co. | 838,600 | 121,614 | |
Visa Inc. Class A | 374,590 | 86,159 | |
Northern Trust Corp. | 1,180,950 | 82,052 | |
Evercore Inc. Class A | 586,130 | 80,816 | |
Goldman Sachs Group Inc. | 236,800 | 76,621 | |
Discover Financial Services | 437,281 | 37,882 | |
CME Group Inc. | 154,050 | 30,844 | |
Bank of New York Mellon Corp. | 546,800 | 23,321 | |
Mastercard Inc. Class A | 55,400 | 21,933 | |
KeyCorp. | 1,947,600 | 20,956 | |
Fidelity National Information Services Inc. | 352,000 | 19,455 | |
Progressive Corp. | 130,500 | 18,179 | |
* | PayPal Holdings Inc. | 220,800 | 12,908 |
* | WEX Inc. | 50,480 | 9,495 |
Shares | Market Value• ($000) | ||
Charles Schwab Corp. | 90,400 | 4,963 | |
Bank of America Corp. | 62,959 | 1,724 | |
981,161 | |||
Health Care (28.6%) | |||
Eli Lilly & Co. | 1,916,472 | 1,029,395 | |
AstraZeneca plc ADR | 5,674,180 | 384,255 | |
Amgen Inc. | 1,345,180 | 361,531 | |
* | Biogen Inc. | 1,264,267 | 324,929 |
* | Boston Scientific Corp. | 3,174,630 | 167,620 |
Novartis AG ADR | 1,547,300 | 157,608 | |
Thermo Fisher Scientific Inc. | 280,970 | 142,219 | |
Bristol-Myers Squibb Co. | 1,753,210 | 101,756 | |
* | Elanco Animal Health Inc. (XNYS) | 7,390,688 | 83,071 |
Zimmer Biomet Holdings Inc. | 580,550 | 65,149 | |
GSK plc ADR | 1,652,350 | 59,898 | |
Roche Holding AG | 213,112 | 58,180 | |
* | BioMarin Pharmaceutical Inc. | 540,110 | 47,789 |
* | LivaNova plc | 799,810 | 42,294 |
CVS Health Corp. | 584,850 | 40,834 | |
Agilent Technologies Inc. | 234,630 | 26,236 | |
Abbott Laboratories | 252,400 | 24,445 | |
Stryker Corp. | 62,700 | 17,134 | |
Danaher Corp. | 48,140 | 11,944 | |
* | Illumina Inc. | 85,370 | 11,720 |
Humana Inc. | 23,844 | 11,601 | |
* | IQVIA Holdings Inc. | 46,056 | 9,062 |
2 | Siemens Healthineers AG | 148,420 | 7,507 |
Sanofi ADR | 135,000 | 7,241 | |
Alcon Inc. | 84,460 | 6,508 | |
* | Waters Corp. | 20,331 | 5,575 |
UnitedHealth Group Inc. | 8,489 | 4,280 | |
Medtronic plc | 54,400 | 4,263 | |
* | Zimvie Inc. | 23,730 | 223 |
3,214,267 | |||
Industrials (14.4%) | |||
FedEx Corp. | 937,100 | 248,257 | |
Siemens AG (Registered) | 1,524,682 | 217,890 | |
AECOM | 2,332,280 | 193,673 | |
Southwest Airlines Co. | 6,068,369 | 164,271 | |
Jacobs Solutions Inc. | 968,345 | 132,179 | |
United Parcel Service Inc. Class B (XNYS) | 554,100 | 86,368 | |
Airbus SE | 632,750 | 84,693 | |
* | United Airlines Holdings Inc. | 1,414,640 | 59,839 |
Delta Air Lines Inc. | 1,569,610 | 58,076 | |
* | TransDigm Group Inc. | 61,250 | 51,642 |
Textron Inc. | 535,600 | 41,852 | |
Caterpillar Inc. | 125,000 | 34,125 | |
* | XPO Inc. | 432,100 | 32,261 |
General Dynamics Corp. | 139,500 | 30,825 | |
Carrier Global Corp. | 501,000 | 27,655 | |
* | American Airlines Group Inc. | 2,122,700 | 27,192 |
Union Pacific Corp. | 84,400 | 17,186 | |
Otis Worldwide Corp. | 183,300 | 14,721 | |
JB Hunt Transport Services Inc. | 71,500 | 13,479 | |
Moog Inc. Class A | 118,400 | 13,374 | |
* | Saia Inc. | 28,500 | 11,361 |
* | GXO Logistics Inc. | 164,200 | 9,630 |
* | RXO Inc. | 437,100 | 8,624 |
Shares | Market Value• ($000) | ||
Rockwell Automation Inc. | 25,650 | 7,333 | |
CSX Corp. | 208,100 | 6,399 | |
Knight-Swift Transportation Holdings Inc. | 121,700 | 6,103 | |
L3Harris Technologies Inc. | 34,000 | 5,920 | |
Deere & Co. | 13,650 | 5,151 | |
Norfolk Southern Corp. | 20,700 | 4,076 | |
AMETEK Inc. | 10,000 | 1,478 | |
1,615,633 | |||
Information Technology (22.5%) | |||
Microsoft Corp. | 991,130 | 312,949 | |
Intel Corp. | 7,602,380 | 270,265 | |
KLA Corp. | 588,075 | 269,726 | |
* | Flex Ltd. | 8,399,230 | 226,611 |
Texas Instruments Inc. | 1,369,950 | 217,836 | |
Oracle Corp. | 1,292,250 | 136,875 | |
Applied Materials Inc. | 976,329 | 135,173 | |
Micron Technology Inc. | 1,796,150 | 122,192 | |
Intuit Inc. | 160,200 | 81,853 | |
* | Adobe Inc. | 158,600 | 80,870 |
Analog Devices Inc. | 420,770 | 73,673 | |
ASML Holding NV GDR (Registered) | 122,200 | 71,934 | |
HP Inc. | 2,362,053 | 60,705 | |
NetApp Inc. | 752,500 | 57,100 | |
QUALCOMM Inc. | 501,100 | 55,652 | |
Hewlett Packard Enterprise Co. | 3,192,320 | 55,451 | |
Jabil Inc. | 417,500 | 52,977 | |
Apple Inc. | 299,000 | 51,192 | |
Cisco Systems Inc. | 890,300 | 47,862 | |
Corning Inc. | 853,000 | 25,991 | |
Telefonaktiebolaget LM Ericsson ADR | 4,154,200 | 20,189 | |
* | Keysight Technologies Inc. | 150,620 | 19,928 |
Teradyne Inc. | 182,140 | 18,298 | |
* | Western Digital Corp. | 385,400 | 17,586 |
NVIDIA Corp. | 34,100 | 14,833 | |
Seagate Technology Holdings plc | 222,900 | 14,700 | |
* | BlackBerry Ltd. | 1,276,500 | 6,012 |
* | Ciena Corp. | 65,000 | 3,072 |
2,521,505 | |||
Materials (1.7%) | |||
Glencore plc | 9,248,241 | 52,664 | |
Albemarle Corp. | 286,465 | 48,710 | |
DuPont de Nemours Inc. | 329,800 | 24,600 | |
Freeport-McMoRan Inc. | 416,200 | 15,520 | |
Corteva Inc. | 266,693 | 13,644 | |
Dow Inc. | 234,500 | 12,091 | |
Tronox Holdings plc | 799,000 | 10,739 | |
Linde plc | 13,500 | 5,027 | |
Greif Inc. Class B | 24,000 | 1,597 | |
184,592 | |||
Real Estate (0.1%) | |||
American Homes 4 Rent Class A | 220,000 | 7,412 | |
Total Common Stocks (Cost $4,905,164) | 10,725,785 |
Shares | Market Value• ($000) | ||
Temporary Cash Investments (4.5%) | |||
Money Market Fund (4.5%) | |||
3,4 | Vanguard Market Liquidity Fund, 5.391% (Cost $506,543) | 5,067,241 | 506,673 |
Total Investments (100.1%) (Cost $5,411,707) | 11,232,458 | ||
Other Assets and Liabilities—Net (-0.1%) | (10,590) | ||
Net Assets (100%) | 11,221,868 | ||
Cost is in $000. |
• | See Note A in Notes to Financial Statements. |
* | Non-income-producing security. |
1 | Includes partial security positions on loan to broker-dealers. The total value of securities on loan is $4,680,000. |
2 | 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, 2023, the aggregate value was $7,507,000, representing 0.1% of net assets. |
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 $4,832,000 was received for securities on loan. |
ADR—American Depositary Receipt. | |
GDR—Global Depositary Receipt. |
($000s, except shares, footnotes, and per-share amounts) | Amount |
Assets | |
Investments in Securities, at Value1 | |
Unaffiliated Issuers (Cost $4,905,164) | 10,725,785 |
Affiliated Issuers (Cost $506,543) | 506,673 |
Total Investments in Securities | 11,232,458 |
Investment in Vanguard | 391 |
Cash | 2,228 |
Receivables for Investment Securities Sold | 657 |
Receivables for Accrued Income | 11,780 |
Receivables for Capital Shares Issued | 666 |
Total Assets | 11,248,180 |
Liabilities | |
Payables for Investment Securities Purchased | 9,084 |
Collateral for Securities on Loan | 4,832 |
Payables to Investment Advisor | 8,808 |
Payables for Capital Shares Redeemed | 2,890 |
Payables to Vanguard | 698 |
Total Liabilities | 26,312 |
Net Assets | 11,221,868 |
1 Includes $4,680,000 of securities on loan. | |
At September 30, 2023, net assets consisted of: | |
Paid-in Capital | 4,835,658 |
Total Distributable Earnings (Loss) | 6,386,210 |
Net Assets | 11,221,868 |
Net Assets | |
Applicable to 368,694,801 outstanding $.001 par value shares of beneficial interest (unlimited authorization) | 11,221,868 |
Net Asset Value Per Share | $30.44 |
Year Ended September 30, 2023 | |
($000) | |
Investment Income | |
Income | |
Dividends1 | 171,651 |
Interest2 | 25,464 |
Securities Lending—Net | 10 |
Total Income | 197,125 |
Expenses | |
Investment Advisory Fees—Note B | 33,453 |
The Vanguard Group—Note C | |
Management and Administrative | 15,610 |
Marketing and Distribution | 450 |
Custodian Fees | 246 |
Auditing Fees | 28 |
Shareholders’ Reports | 80 |
Trustees’ Fees and Expenses | 6 |
Other Expenses | 16 |
Total Expenses | 49,889 |
Expenses Paid Indirectly | (2) |
Net Expenses | 49,887 |
Net Investment Income | 147,238 |
Realized Net Gain (Loss) | |
Investment Securities Sold2 | 522,756 |
Foreign Currencies | (27) |
Realized Net Gain (Loss) | 522,729 |
Change in Unrealized Appreciation (Depreciation) | |
Investment Securities2 | 1,645,336 |
Foreign Currencies | 86 |
Change in Unrealized Appreciation (Depreciation) | 1,645,422 |
Net Increase (Decrease) in Net Assets Resulting from Operations | 2,315,389 |
1 | Dividends are net of foreign withholding taxes of $2,927,000. |
2 | Interest income, realized net gain (loss), capital gain distributions received, and change in unrealized appreciation (depreciation) from an affiliated company of the fund were $25,464,000, ($17,000), $1,000, and $118,000, respectively. Purchases and sales are for temporary cash investment purposes. |
Year Ended September 30, | ||
2023 ($000) | 2022 ($000) | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net Investment Income | 147,238 | 123,984 |
Realized Net Gain (Loss) | 522,729 | 682,004 |
Change in Unrealized Appreciation (Depreciation) | 1,645,422 | (2,632,497) |
Net Increase (Decrease) in Net Assets Resulting from Operations | 2,315,389 | (1,826,509) |
Distributions | ||
Total Distributions | (822,420) | (814,697) |
Capital Share Transactions | ||
Issued | 459,021 | 609,191 |
Issued in Lieu of Cash Distributions | 653,229 | 650,830 |
Redeemed | (1,022,158) | (1,035,560) |
Net Increase (Decrease) from Capital Share Transactions | 90,092 | 224,461 |
Total Increase (Decrease) | 1,583,061 | (2,416,745) |
Net Assets | ||
Beginning of Period | 9,638,807 | 12,055,552 |
End of Period | 11,221,868 | 9,638,807 |
For a Share Outstanding Throughout Each Period | Year Ended September 30, | ||||
2023 | 2022 | 2021 | 2020 | 2019 | |
Net Asset Value, Beginning of Period | $26.49 | $33.78 | $27.08 | $27.08 | $29.92 |
Investment Operations | |||||
Net Investment Income1 | .394 | .339 | .243 | .398 | .391 |
Net Realized and Unrealized Gain (Loss) on Investments | 5.839 | (5.312) | 8.746 | 1.553 | (1.020) |
Total from Investment Operations | 6.233 | (4.973) | 8.989 | 1.951 | (.629) |
Distributions | |||||
Dividends from Net Investment Income | (.365) | (.236) | (.357) | (.388) | (.322) |
Distributions from Realized Capital Gains | (1.918) | (2.081) | (1.932) | (1.563) | (1.889) |
Total Distributions | (2.283) | (2.317) | (2.289) | (1.951) | (2.211) |
Net Asset Value, End of Period | $30.44 | $26.49 | $33.78 | $27.08 | $27.08 |
Total Return2 | 24.60% | -15.92% | 34.71% | 7.02% | -1.06% |
Ratios/Supplemental Data | |||||
Net Assets, End of Period (Millions) | $11,222 | $9,639 | $12,056 | $9,681 | $10,655 |
Ratio of Total Expenses to Average Net Assets | 0.46%3 | 0.46% | 0.46% | 0.46% | 0.46% |
Ratio of Net Investment Income to Average Net Assets | 1.34% | 1.08% | 0.76% | 1.52% | 1.48% |
Portfolio Turnover Rate | 6% | 6% | 8% | 8% | 7% |
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 | The ratio of expenses to average net assets for the period net of reduction from custody fee offset arrangements was 0.46%. |
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, 2023, 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. | The fund’s custodian bank has agreed to reduce its fees when the fund maintains cash on deposit in the non-interest-bearing custody account. For the year ended September 30, 2023, custodian fee offset arrangements reduced the fund’s expenses by $2,000 (an annual rate of less than 0.01% of average net assets). |
E. | 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 | 10,283,763 | 442,022 | — | 10,725,785 |
Temporary Cash Investments | 506,673 | — | — | 506,673 |
Total | 10,790,436 | 442,022 | — | 11,232,458 |
F. | 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 | 25,726 |
Total Distributable Earnings (Loss) | (25,726) |
Amount ($000) | |
Undistributed Ordinary Income | 116,228 |
Undistributed Long-Term Gains | 452,148 |
Net Unrealized Gains (Losses) | 5,817,834 |
Capital Loss Carryforwards | — |
Qualified Late-Year Losses | — |
Other Temporary Differences | — |
Total | 6,386,210 |
Year Ended September 30, | ||
2023 Amount ($000) | 2022 Amount ($000) | |
Ordinary Income* | 131,946 | 105,812 |
Long-Term Capital Gains | 690,474 | 708,885 |
Total | 822,420 | 814,697 |
* | Includes short-term capital gains, if any. |
Amount ($000) | |
Tax Cost | 5,414,646 |
Gross Unrealized Appreciation | 6,295,115 |
Gross Unrealized Depreciation | (477,302) |
Net Unrealized Appreciation (Depreciation) | 5,817,813 |
G. | During the year ended September 30, 2023, the fund purchased $619,573,000 of investment securities and sold $1,197,231,000 of investment securities, other than temporary cash investments. |
H. | Capital shares issued and redeemed were: |
Year Ended September 30, | ||
2023 Shares (000) | 2022 Shares (000) | |
Issued | 15,850 | 19,092 |
Issued in Lieu of Cash Distributions | 24,113 | 20,256 |
Redeemed | (35,183) | (32,307) |
Net Increase (Decrease) in Shares Outstanding | 4,780 | 7,041 |
I. | Significant market disruptions, such as those caused by pandemics (e.g., COVID-19 pandemic), natural or environmental disasters, war (e.g., Russia’s invasion of Ukraine), acts of terrorism, or other events, can adversely affect local and global markets and normal market operations. Any such disruptions could have an adverse impact on the value of the fund’s investments and fund performance. |
J. | Management has determined that no events or transactions occurred subsequent to September 30, 2023, that would require recognition or disclosure in these financial statements. |
Philadelphia, Pennsylvania
November 16, 2023
Matthew Benchener | Thomas M. Rampulla |
Joseph Brennan | Karin A. Risi |
Mortimer J. Buckley | Anne E. Robinson |
Gregory Davis | Michael Rollings |
John James | Nitin Tandon |
Chris D. Mclsaac | Lauren Valente |
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, 2023: $60,000
Fiscal Year Ended September 30, 2022: $58,000
Aggregate Audit Fees of Registered Investment Companies in the Vanguard Group.
Fiscal Year Ended September 30, 2023: $9,326,156
Fiscal Year Ended September 30, 2022: $10,494,508
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, 2023: $3,295,934
Fiscal Year Ended September 30, 2022: $2,757,764
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, 2023: $1,678,928
Fiscal Year Ended September 30, 2022: $5,202,689
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, 2023: $25,000
Fiscal Year Ended September 30, 2022: $298,000
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, 2023: $1,703,928
Fiscal Year Ended September 30, 2022: $5,500,689
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. There were no 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. |
(a)(2) | Certifications filed 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 21, 2023
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 21, 2023
VANGUARD FENWAY FUNDS | ||
BY: | /s/ CHRISTINE BUCHANAN* | |
CHRISTINE BUCHANAN | ||
CHIEF FINANCIAL OFFICER |
Date: November 21, 2023
* By: | /s/ Anne E. Robinson |
Anne E. Robinson, pursuant to a Power of Attorney filed on July 21, 2023 (see File Number 33-53683) and to a Power of Attorney filed on March 29, 2023 (see File Number 2-11444), Incorporated by Reference.