SHIP LOGO VANGUARD(R)
P.O. Box 2600 Valley Forge,
PA 19482-2600
610-503-2398
Barry_A_Mendelson@vanguard.com
April 22, 2008
Christian Sandoe, Esq.
U.S. Securities & Exchange Commission via electronic filing
100 F Street, N.E.
Washington, DC 20549
RE: VANGUARD MALVERN FUNDS
FILE NO. 33-23444
Dear Mr. Sandoe,
The following responds to your comments of April 14, 2008 on the
post-effective amendment of the registration statement of the above-referenced
registrant. You commented on Post-Effective Amendment No. 35 that was filed on
February 26, 2008.
COMMENT: The biography of William E. Ricks on page 13 of the U.S. Value
Fund prospectus states that "[h]e has worked in investment management with AXA
Rosenberg since 1989, . . . ." Please state more precisely what Mr. Ricks was
doing.
RESPONSE: We have amended Mr. Ricks' biography to state that "[h]e has
worked in investment management with AXA Rosenberg since 1989, including
trading, operations, portfolio engineering, and portfolio construction."
COMMENT: The chart on pp. 28-29 of the SAI, which shows the principal
occupations and directorships of the fund's trustees, does not reference the
fact that each fund trustee is also a director of The Vanguard Group, Inc.
(Vanguard).
RESPONSE: This fact is stated at the bottom of pg. 27, so it is unnecessary
to restate it for each of the trustees in the chart. (This is why the heading of
that particular column of the chart refers to "outside" rather than "other"
directorships.)
COMMENT: Why aren't all of the funds' trustees "interested" given that all
of them serve as directors of Vanguard?
RESPONSE: A trustee of a fund would be an interested person of the fund if
he or she was an interested person of the fund's principal underwriter or
investment adviser.
o None of the fund trustees serves on the board of, or is otherwise an
interested person of, the funds' principal underwriter, Vanguard
Marketing Corporation. And even if they did so serve, Vanguard has an
exemption from Section 2(a)(19), the definition of "interested person"
for such service. See In the Matter of The Vanguard Group, Inc., et
al., 47 SEC 450, Inv. Co. Act Release No. 11645 (Feb. 25, 1981).
o Although fund trustees are also Vanguard directors, Vanguard is not an
investment adviser of any of the Malvern Funds - or ANY Vanguard fund.
Although Vanguard provides advisory services to some Vanguard funds,
it does so at cost. Pursuant to Section 2(a)(20) of the Investment
Company Act, the definition of "investment adviser" "does not include
. . . (iii) a company furnishing [advisory] services at cost to one or
more investment companies . . . ."
COMMENT: Text on Page B-36 of the SAI, under the heading "Description of
Compensation," states that the portfolio manager's bonus is determined, in part,
by how closely the manager tracks the fund's benchmark index over a one-year
period. Please clarify whether the manager's performance is based on a pre-tax
or post-tax basis.
RESPONSE: We will amend this discussion to indicate that the comparison is
based on the manager's pre-tax performance and to make other minor changes.
COMMENT: Text on page B-38 of the SAI, under the heading "Description of
Compensation," states that a Vanguard portfolio manager's base salary "is
determined by the manager's experience and performance in the role, taking into
account the ongoing compensation benchmark analyses performed by the Vanguard
Human Resources Department." Please identify a peer group or benchmark to which
manager's compensation is compared.
RESPONSE: We believe the information requested is not required and that the
text in its current form sufficiently informs prospective investors as to how
the manager's base salary is determined.
* * * * * * * *
COMMENT: TANDY REQUIREMENTS
- ------------------------------------
As required by the SEC, the Funds acknowledge 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.
Sincerely,
Barry A. Mendelson
Principal
The Vanguard Group, Inc.
Enclosures
cc: Christian Sandoe, Esq.
U.S. Securities and Exchange Commission