[SHIP][VANGUARD LOGO]
P.O. Box 2600
Valley Forge, PA 19482-2600
610-669-6893
edward_delk@vanguard.com
November 28, 2007
Christian Sandoe, Esq.
U.S. Securities & Exchange Commission via electronic filing
100 F Street, N.E.
Washington, DC 20549
RE: Vanguard Valley Forge Funds
Dear Mr. Sandoe,
This letter describes certain changes we made to the prospectus for the
Managed Payout Funds. These changes are in addition to the changes we made in
response to your comments of November 9 and 13, 2007 on Post-Effective Amendment
No. 32 of the registration statement of the above-referenced registrant, which
was filed on September 27, 2007.
1. Fund Names and Investment Objectives. We have revised the Funds' names to
be more reflective of their respective investment objectives. We also
simplified the wording of the Funds' investment objectives.
2. Primary Investment Strategies. We have revised the Primary Investment
Strategies section of each Fund Profile as follows:
a. The introductory paragraph has been simplified but also revised to
reflect the degree of flexibility the Funds have in the allocation of
their assets.
b. The description of "Stocks" reflects a change in the underlying stock
index funds that are likely to be used to create stock exposure. The
description was also revised to include the Vanguard REIT Index, which
was formerly listed under the heading "Real Estate Investments".
c. A new heading called "Other Investments" has been added to cover two
previously-listed investment categories (Commodity-Linked Investments
and Market Neutral Investments)(1) as well as a new investment
category. The new investment category is called "Investments in a
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(1) The disclosure under Commodity-Linked Investments and Market Neutral
Investments is unchanged from the original version except for the deletion
of the following text that formerly appeared at the end of the fourth
sentence under Market Neutral Investments: "to the extent consistent with
the advisors' individual investment decisions to create exposure to
specific risk factors."
Christian Sandoe, Esq.
November 28, 2007
Page 2
Prospective Absolute Return Fund." The text that follows describes,
among other things, the fact that it is possible, but not yet decided,
that Vanguard may establish and manage a private investment fund
("absolute return fund") that uses multiple absolute return investment
strategies. The text also describes the fact that it is possible, but
not yet decided, that the Managed Payout Funds may in the future
invest in the absolute return fund. The text goes on to describe the
absolute return fund in further detail. If the absolute return fund is
established and approved for investment by the Managed Payout Funds,
each Fund expects to adhere to a policy (which can be changed only by
the board of trustees) that it will not invest more than 40% of its
assets in the absolute return fund under any circumstances.(2)
3. Primary Risks. We have revised the Primary Risks section of each Fund
Profile as follows:
a. Risks relating to the managed distribution policy have been added.
b. The risks previously described under the heading "Asset allocation
strategy risk" have been merged into the more appropriate heading
"Manager risk." The risks described under "Manager risk" have been
updated for clarity.
c. "Stock risk" has been expanded to include the risk that previously
appeared under the heading "Real estate investment risk" (now called
"REIT stock risk"). "Inflation-linked investment risk" has been moved
but is unchanged except for the inclusion of the word "primarily."
d. "Commodity-linked investment risk" has been moved and expanded to
cover more fully the risks of derivatives.
e. "Market neutral investment risk" has been moved and remains unchanged
except to the extent needed to make "short sale risk" more general and
thus applicable (by reference) to the absolute return fund.
f. A new category of risks has been added to address the prospective
absolute return fund.
4. Fees and Expenses. We have revised the fees and expenses table in each Fund
Profile to update the expense ratios and add footnote disclosure. We also
added a "Plain Talk About Acquired Fund Short Sale Dividend Expenses."
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(2) See Cornish & Carey Commercial, Inc., SEC No-Action Letter (pub. avail. June
21, 1996).
Christian Sandoe, Esq.
November 28, 2007
Page 3
5. Additional Information. We expanded the description of distributions , and
added a description of the potential for additional distributions beyond
the twelve scheduled monthly distributions per calendar year, under the
heading "Additional Information." We also provided certain missing
information.
6. Part 4 of the Prospectus. We have revised part 4 of the prospectus to
conform to the changes described above in part 2 of the prospectus. We also
added a "Plain Talk About Absolute Return Investing."
Tandy Requirements
As required by the SEC, each Fund acknowledges that:
o The Fund 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 Fund 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) 669-6893 with any questions or comments
regarding the above.
Sincerely,
Edward C. Delk
Principal