[SHIP][VANGUARD LOGO]
P.O. Box 2600
Valley Forge, PA 19482-2600
610-669-6893
edward_delk@vanguard.com
November 30, 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,
The following responds 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.
Comment 1: Prospectus - An Introduction to Vanguard Managed PayoutFunds
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Comment: Describe the fact that the Funds may make a 13th distribution as
well as additional distributions.
Response: We have added the requested description.
Comment: Please confirm that Vanguard believes that "[t]he Funds'
investment strategies are expected to generate positive long-term
returns under most economic and market conditions with a moderate
level of risk."
Response: The referenced sentence has been removed from each Fund Profile.
Comment 2: Prospectus - Fund Profile - Vanguard Managed Payout Real Growth
Fund
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Comment: Please clarify the meaning of "combine a variety of asset classes
and investments with relatively low or negative historical
correlation . . . ."
Response: The referenced sentence has been removed from each Fund Profile.
Comment 3: Prospectus - Fund Profile - Vanguard Managed Payout Capital
Preservation Fund
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Comment: Do you believe this Fund can achieve its objective?
Response: Yes.
Christian Sandoe, Esq.
November 30, 2007
Page 2
Comment 4: Prospectus - Fund Profile - Summary of Primary Risks
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Comment: Please mention emerging markets risk within the description of
"stock risk."
Response: The requested description has been added.
Comment: Please describe the extent to which the Managed Payout Funds will
invest in "subprime" investments or "subprime" mortgage loans.
Response: The Managed Payout Funds are not expected to invest directly in
"subprime" investments or "subprime" mortgage loans. In addition,
the Managed Payout Funds are not expected to have any material
indirect exposure to "subprime" investments or "subprime"
mortgage loans, although they should be expected to invest in
stocks and bonds of banks, brokerage firms and other institutions
that have exposure to the subprime lending business. As we
discussed during our telephone call on November 13, 2007,
Vanguard's response to this question is necessarily limited by
the fact that we are not aware of any SEC-published definition,
or any other legal definition, of a "subprime" investment or a
"subprime" mortgage loan as you used those terms.
Comment: Please move the risk disclosure appearing under "Summary of
Primary Risks" into each Fund Profile under the heading "Primary
Risks."
Response: This change has been made.
Comment 5: Prospectus - More on the Funds
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Comment: Please state whether the Funds' investment objectives are
fundamental or non-fundamental.
Response: The requested statement has been added.
Comment: Under the heading "Security Selection," in the risk flag on asset
allocation strategy risk, why do you state that "[e]ach Fund's
asset allocation strategy . . . may involve more risk than other
funds that invest only in stocks, bonds, and cash"?
Response: This statement reflects the potential additional risks associated
with the use of commodity-linked investments and market neutral
investments. Those risks are different from the risks of stocks,
bonds, and cash.
Comment: Does the table of "U.S. Commodity Futures Returns" under the
heading "Commodity-Linked Investments" present information that
is indicative of what the commodity futures market would have
looked like prior to the period covered by the table? The period
covered by the table seems relatively short compared to the
period covered by the table of "U.S. Stock Market Returns" under
the heading "Stocks."
Response: The U.S. Commodity Futures Returns table presents information
about the S&P GSCITM Total Return Index, which is a widely used
barometer of commodity futures returns and, more generally,
Christian Sandoe, Esq.
November 30, 2007
Page 3
commodities activity. We are not aware of another widely used
index of commodity futures performance that covers a
significantly longer period of time than this index. Because the
history of the S&P GSCI Total Return Index is relatively short,
however, we have revised the prospectus to add a new table that
illustrates the volatility of commodity futures prices as
reflected by the prices of physical commodities that are bought
"on the spot." The additional table shows the best, worst, and
average annual total returns for the U.S. commodity market as
measured by the CRB Spot IndexTM over various periods from 1948
through 2006. (This index is a measure of price movements of 22
basic physical commodities whose markets are presumed to be among
the first to be influenced by changes in economic conditions.) We
are not aware of another widely used benchmark of commodity
prices that covers a greater period of time than the the CRB Spot
Index.
Comment 6: SAI - Investment Limitations: All Funds
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Comment: Please add disclosure indicating that (i) compliance with the
Funds' investment limitations, except for borrowing, is measured
at the time securities are purchased, and (ii) any borrowing in
excess of the limits imposed by Section 18 of the 1940 Act must
be reduced to such limits within three days (excluding Sundays
and holidays).
Response: We have modified the disclosure as follows (additions appear as
underlined text):
"Compliance with the investment limitations set forth above is
generally measured at the time the securities are purchased.
Unless otherwise required by the 1940 Act, if a percentage
restriction is adhered to at the time the investment is made, a
later change in percentage resulting from a change in the market
value of assets will not constitute a violation of such
restriction. All investment limitations must comply with
applicable regulatory requirements. For more details, see
"Investment Policies."
Comment: Tandy Requirements
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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 responses and explanations.
Sincerely,
Edward C. Delk
Principal