[SHIP LOGO]
[THE VANGUARD GROUP/(R)/LOGO]
February 8, 2006
Christian Sandoe, Esq.
Division of Investment Management
U.S. Securities and Exchange Commission VIA ELECTRONIC FILING 100 F Street, NE
Washington, DC 20549
RE: VANGUARD STAR FUNDS (THE "TRUST")
Dear Mr. Sandoe:
The following responds to your comments of February 3 and 6, 2006 on
the post-effective amendment of the registration statement of the
above-referenced registrant. You commented on Post-Effective Amendment No. 42
that was filed on December 21, 2005.
COMMENT 1: VANGUARD STAR FUND PROSPECTUS: PRIMARY INVESTMENT STRATEGIES
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Comment: Discuss the fund's mid-cap investments in the primary
investment strategies.
Response: The median market capitalizations of the majority of the STAR
Fund's underlying U.S. equity funds are in the large-cap
range, as shown in the table below. As a point of comparison,
the median market capitalization of the S&P 500 Index as of
December 31, 2005 was 53.3 billion. Vanguard classifies each
of the underlying funds, except Vanguard Explorer Fund, as a
large-cap fund. Therefore we are not going to update the
fund's primary investment strategies at this time.
---------------- -------------------- -------------------
Underlying Fund Percentage of STAR Median Market Cap
Fund's U.S. stock of Underlying
fund holdings as Fund as of
of 10/31/05 12/31/05
---------------- -------------------- -------------------
Windsor II 32.2% 43 billion
---------------- -------------------- -------------------
Windsor 17.5% 57.3 billion
---------------- -------------------- -------------------
U.S. Growth 14.1% 51.6 billion
---------------- -------------------- -------------------
Primecap 13.9% 25.8 billion
---------------- -------------------- -------------------
Morgan Growth 13.8% 17.9 billion
---------------- -------------------- -------------------
Explorer 8.5% 1.8 billion
---------------- -------------------- -------------------
February 8, 2006
Christian Sandoe
Page 2 of 4
COMMENT 2: VANGUARD STAR FUND PROSPECTUS: FEES AND EXPENSES
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Comment: Describe the reimbursement arrangement between Vanguard STAR
Fund and The Vanguard Group.
Response: Pursuant to SEC exemptive orders,(1) Vanguard STAR Fund and
Vanguard have entered into a Special Service Agreement (the
"Agreement") under which Vanguard provides the fund with
administrative, distribution, and management services. The
Agreement further provides that Vanguard will reimburse the
fund's expenses to the extent of savings in administrative and
marketing costs realized by Vanguard in the operation of the
fund. Accordingly, all expenses incurred by the fund during
the year ended October 31, 2005, were reimbursed by Vanguard.
COMMENT 3: VANGUARD STAR FUND PROSPECTUS AND STATEMENT OF ADDITIONAL
INFORMATION: PORTFOLIO MANAGERS
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Comment: Disclose the top 5 portfolio managers (based on the fund's
underlying funds) and provide the required disclosure in
the statement of additional information.
Response: We do not believe that it is appropriate to list the
underlying funds' portfolio managers as the portfolio managers
of Vanguard STAR Fund. As stated in the fund's prospectus, the
fund does not employ an investment advisor. The fund's board
of trustees decides how to allocate the fund's assets among
underlying funds. We have added a sentence to the fund's
prospectus stating that information about each underlying
fund's portfolio managers is available in the respective
underlying fund's prospectus.
COMMENT 4: VANGUARD LIFESTRATEGY FUND PROSPECTUS: PRIMARY RISKS
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Comment: For each LifeStrategy Fund, describe the impact of maturity on
interest rate risk.
Response: Item 2 of Form N-1A requires a summary of the principal risks
of investing in the fund. We believe that our description of
interest rate risk in the primary risk section appropriately
summarizes that risk. When we discuss interest rate risk later
in the prospectus we include a table that shows the effect of
changes in interest rates for bonds of different maturities.
(1) In the Matter of Vanguard Special Tax-Advantaged Retirement Fund, Inc., et
al., Investment Company Act Release No. 14361, 1985 SEC LEXIS 2236 (February 7,
1985); and In the Matter of Vanguard STAR Fund, et al., Investment Company Act
Release No. 21426, 1995 SEC LEXIS 2860 (October 18, 1995) (hereinafter the "1995
Order").
February 8, 2006
Christian Sandoe
Page 3 of 4
COMMENT 5: VANGUARD LIFESTRATEGY FUND PROSPECTUS: PRIMARY RISKS
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Comment: Add small- and mid-cap risk to the Primary Risks section for
each Vanguard LifeStrategy Fund.
Response: The LifeStrategy Funds are balanced funds that are less
volatile than the market as a whole. The LifeStrategy
Income Fund had only 30% of its assets allocated to stocks as
of October 31, 2005. The LifeStrategy Conservative Growth,
Moderate Growth, and Growth Funds had betas of 0.44, 0.65, and
0.86, respectively, in comparison with the Dow Jones Wilshire
5000 Index for the period ended October 31, 2005. Requiring
each fund to provide small- and mid-cap risk disclosure when
each fund as a whole is in fact less volatile than the Dow
Jones Wilshire 5000 Index would be inappropriate and would
mislead investors regarding the risks of the fund overall.
Therefore, we have not added mid- and small-cap risk
disclosure to the funds' Primary Risks sections. We discuss
the risks of mid- and small-cap stocks in the Item 4
disclosure and we are comfortable with that disclosure in that
location.
COMMENT 6: VANGUARD LIFESTRATEGY FUND PROSPECTUS: PRIMARY RISKS
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Comment: On page 20 of the prospectus, replace inflation with income.
Response: The text has been updated as requested.
COMMENT 7: VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND: PRIMARY RISKS
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Comment: Add Emerging Markets Risk as a primary risk.
Response: We have added to country risk a statement that country risk is
especially high in emerging markets.
COMMENT 8: TANDY REQUIREMENTS
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Comment: The SEC is now requiring all registrants to provide at the end
of response letters to registration statement
comments, the following statements:
o The Trust is responsible for the adequacy and accuracy
of the disclosure in the filing.
o Staff comments or changes in response to staff comments
in the filings reviewed by the staff do not foreclose
the Commission from taking any action with respect to
the filing.
o The Trust may not assert staff comments as a defense in
any proceeding initiated by the Commission or any
person under the federal securities laws of the United
States.
Response: As required by the SEC, we will provide the foregoing
acknowledgements.
February 8, 2006
Christian Sandoe
Page 4 of 4
* * * * *
As required by the SEC, the Trust acknowledges that:
o The Trust is responsible for the adequacy and accuracy of
the disclosure in the filing.
o Staff comments or changes in response to staff comments in
the filings reviewed by the staff do not foreclose the
Commission from taking any action with respect to the
filing.
o The Trust may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under
the federal securities laws of the United States.
Please contact me at (610) 503-5854 with any questions or comments
regarding the above responses. Thank you.
Sincerely,
/s/ Sarah A. Buescher
Sarah A. Buescher
Senior Counsel