Vanguard Market Neutral FundProspectus

April 28, 2020

Investor Shares

Vanguard Market Neutral Fund Investor Shares (VMNFX)

See the inside front cover for important information about access to yourfund’s annual and semiannual shareholder reports.

This prospectus contains financial data for the Fund through the fiscal year ended December 31, 2019.

The Securities and Exchange Commission (SEC) has not approved or disapproved thesesecurities or passed upon the adequacy of this prospectus. Any representation to the contrary isa criminal offense.

Important information about access to shareholder reports

Beginning on January 1, 2021, as permitted by regulations adopted by theSEC, paper copies of your fund’s annual and semiannual shareholder reportswill no longer be sent to you by mail, unless you specifically request them.Instead, you will be notified by mail each time a report is posted on thewebsite and will be provided with a link to access the report.

If you have already elected to receive shareholder reports electronically, youwill not be affected by this change and do not need to take any action. You mayelect to receive shareholder reports and other communications from the fundelectronically by contacting your financial intermediary (such as a broker-dealeror bank) or, if you invest directly with the fund, by calling Vanguard at one ofthe phone numbers on the back cover of this prospectus or by logging on tovanguard.com.

You may elect to receive paper copies of all future shareholder reports free ofcharge. If you invest through a financial intermediary, you can contact theintermediary to request that you continue to receive paper copies. If you investdirectly with the fund, you can call Vanguard at one of the phone numbers onthe back cover of this prospectus or log on to vanguard.com. Your election toreceive paper copies will apply to all the funds you hold through anintermediary or directly with Vanguard.

Contents

Fund Summary 1

More on the Fund 7

The Fund and Vanguard 18

Investment Advisor 18

Dividends, Capital Gains, and Taxes 20

Share Price 23

Financial Highlights 25

Investing With Vanguard 26

Purchasing Shares 26

Converting Shares 29

Redeeming Shares 30

Exchanging Shares 34

Frequent-Trading Limitations 35

Other Rules You Should Know 37

Fund and Account Updates 41

Employer-Sponsored Plans 42

Contacting Vanguard 44

Additional Information 44

Glossary of Investment Terms 45

Fund Summary

Investment ObjectiveThe Fund seeks to provide long-term capital appreciation while limiting exposureto general stock market risk.

Fees and ExpensesThe following table describes the fees and expenses you may pay if you buy andhold Investor Shares of the Fund.

Shareholder Fees(Fees paid directly from your investment)

Sales Charge (Load) Imposed on Purchases NonePurchase Fee NoneSales Charge (Load) Imposed on Reinvested Dividends NoneRedemption Fee NoneAccount Service Fee Per Year(for certain fund account balances below $10,000) $20

Annual Fund Operating Expenses(Expenses that you pay each year as a percentage of the value of your investment)

Management Fees 0.18%12b-1 Distribution Fee NoneOther Expenses

Dividend Expenses on Securities Sold Short1 1.26%Borrowing Expenses on Securities Sold Short2 0.00%Other Operating Expenses 0.02%

Total of Other Expenses 1.28%Total Annual Fund Operating Expenses3 1.46%1 When a cash dividend is declared on a stock the Fund has sold short, the Fund is required to pay an amount equal

to that dividend to the party from which the Fund borrowed the stock and to record the payment of the dividendas an expense.

2 In connection with its short sales, the Fund may receive income or be charged a fee on borrowed stock. Thisincome or fee is calculated on a daily basis, based upon the market value of the borrowed stock and a variablerate that is dependent upon the availability of the stock. A net amount of fees is listed as Borrowing Expenses onSecurities Sold Short.

3 Excluding borrowing and dividend expenses on securities sold short, the Total Annual Fund Operating Expensesare 0.20%.

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Example

The following example is intended to help you compare the cost of investing inthe Fund’s Investor Shares with the cost of investing in other mutual funds. Itillustrates the hypothetical expenses that you would incur over various periods ifyou were to invest $10,000 in the Fund’s shares. This example assumes that theshares provide a return of 5% each year and that total annual fund operatingexpenses remain as stated in the preceding table. You would incur thesehypothetical expenses whether or not you were to redeem your investment atthe end of the given period. Although your actual costs may be higher or lower,based on these assumptions your costs would be:

1 Year 3 Years 5 Years 10 Years$149 $462 $797 $1,746

Portfolio Turnover

The Fund pays transaction costs, such as commissions, when it buys and sellssecurities (or “turns over” its portfolio). A higher portfolio turnover rate mayindicate higher transaction costs and may result in more taxes when Fundshares are held in a taxable account. These costs, which are not reflected inannual fund operating expenses or in the previous expense example, reduce theFund’s performance. During the most recent fiscal year, the Fund’s portfolioturnover rate was 141% of the average value of its portfolio.

Principal Investment StrategiesThe Fund follows a market neutral strategy, which the Fund defines as a strategydesigned to produce a portfolio that is neutral with respect to general stockmarket risk (sometimes referred to as beta neutrality). Beta is a measure of aportfolio’s volatility relative to the volatility of the general stock market. The Fund,as a whole, does not seek to adhere to any other definition of market neutrality.

To implement the strategy, the advisor buys securities that it believes offer anappropriate balance between strong growth prospects and reasonable valuationsrelative to their industry peers and sells short securities that it considers to beovervalued, in amounts that it believes will achieve market neutrality. By takinglong and short positions in different securities, the Fund attempts to limit theeffect of market movements on portfolio performance. The advisor does this byusing a quantitative process and may, at any time, buy or sell short any numberof publicly traded, exchange-listed equity securities and may emphasize specificindustries, styles (growth/value), capitalization ranges, countries, or otherfactors. The overall performance of the Fund depends on the net performance ofits long and short positions, and it is possible for the Fund to experience a net

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loss across all positions. If the Fund’s investment strategy is successful,however, the net performance of its long and short positions will producelong-term capital appreciation that reflects the quality of the advisor’s securityselections, with limited exposure to general stock market risk.

The Fund’s long/short market neutral investment strategy is an absolute-returninvestment approach seeking performance that exceeds the returns of 3-monthU.S. Treasury bills. An investment in the Fund, however, is different from aninvestment in 3-month U.S. Treasury bills because, among other things,U.S. Treasury bills are backed by the full faith and credit of the U.S. government,U.S. Treasury bills have a fixed rate of return, investors in U.S. Treasury bills havea very low risk of losing their investment, and an investment in the Fund isexpected to be substantially more volatile than an investment inU.S. Treasury bills.

Because of the Fund’s market neutral strategy, the Fund’s overall pricemovements are not expected to correlate with the general stock market’s pricemovements. In other words, the Fund is expected to have returns that areindependent of the returns and direction of the general stock market.

Principal RisksAn investment in the Fund could lose money over short or long periods of time,and the entire amount invested could be lost. There can be no assurance that theFund’s investment objective or strategies will be achieved, and results may varysubstantially over time. The Fund is subject to the following risks, which couldaffect the Fund’s performance:

• Strategy risk, which is the chance that the Fund’s investment strategy will notsucceed. There is no guarantee that the Fund will be able to limit exposure togeneral stock market risk or produce returns that exceed the returns of 3-monthU.S. Treasury bills. The Fund’s use of short sales in combination with its longpositions in an attempt to improve performance or to reduce overall portfolio riskmay not be successful and may result in greater losses or lower positive returnsthan if the Fund held only long positions. When the general stock market isperforming strongly, the Fund is expected to underperform the market becausethe Fund’s short positions will likely lose money. If the Fund’s market neutralstrategy is unsuccessful, the Fund may be subject to stock market risk, which isthe chance that stock prices overall will decline. Stock markets tend to move incycles, with periods of rising prices and periods of falling prices.

• Short-selling risk, which is the chance that the Fund will lose money inconnection with its short sales of securities. Short selling allows an investor toprofit from declines in the prices of securities. To engage in a short sale, theFund must “borrow” securities for a fee. To close out short positions, the Fund

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may have to sell related long positions at disadvantageous times to producecash to unwind a short position. There is no guarantee that the price of theborrowed securities will decline; in fact, it may rise. The Fund’s loss on a shortsale is theoretically unlimited, because there is no upward limit on the price aborrowed security could attain. Short selling involves higher transaction coststhan long-only investing, which could offset any gains and increase any losses.

• Manager risk, which is the chance that poor security selection or strategyexecution will cause the Fund to fail to achieve its investment objective or tounderperform other funds with a similar investment strategy. The advisor’ssecurity selection process may not eliminate all stock market risk factorsassociated with the long and short positions it establishes for the Fund. It ispossible that the stocks the Fund holds long will decline in value at the sametime that the stocks it holds short increase in value, thereby increasing potentiallosses to the Fund. Any gain from a short position may be partially or totallyoffset by a decline in a long position, or vice versa.

• Investment risk, which is the chance that the types of securities purchased bythe Fund will, intentionally or unintentionally, increase the Fund’s sensitivity tocertain investment factors. These factors may include, but are not limited to,market capitalization ranges, styles (growth/value), and industries of theunderlying securities. These factors may cause the Fund to fail to achieve itsinvestment objective of limiting exposure to general stock market risk or cause itto underperform other funds with a similar investment strategy.

• Derivatives risk. The Fund may invest in derivatives, which may involve risksdifferent from, and possibly greater than, those of investments directly in theunderlying securities or assets.

An investment in the Fund is not a deposit of a bank and is not insured orguaranteed by the Federal Deposit Insurance Corporation or any othergovernment agency.

Annual Total ReturnsThe following bar chart and table are intended to help you understand the risksof investing in the Fund. The bar chart shows how the performance of the Fund’sInvestor Shares has varied from one calendar year to another over the periodsshown. The table shows how the average annual total returns of the InvestorShares compare with those of a relevant market index and other comparativebenchmarks, which have investment characteristics similar to those of the Fund.The Spliced Market Neutral Index USD reflects the performance of the Citigroup3-Month U.S. Treasury Bill Index through March 31, 2016, and the Citigroup3-Month U.S. Treasury Bill Index (Daily) thereafter. Returns for the Equity MarketNeutral Funds Average are derived from data provided by Lipper, a Thomson

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Reuters Company. Keep in mind that the Fund’s past performance (before andafter taxes) does not indicate how the Fund will perform in the future. Updatedperformance information is available on our website atvanguard.com/ performance or by calling Vanguard toll-free at 800-662-7447.

Annual Total Returns — Vanguard Market Neutral Fund Investor Shares

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

0%

5%

10%

15%

-5%

-10%

-15%

–1.03

7.80

–1.50

8.594.26 5.41

2.62

–4.89

0.59

–9.57

During the periods shown in the bar chart, the highest and lowest returns for acalendar quarter were:

Total Return QuarterHighest 7.04% September 30, 2015Lowest -5.64% June 30, 2019

Average Annual Total Returns for Periods Ended December 31, 2019

1 Year 5 Years 10 YearsVanguard Market Neutral Fund Investor Shares

Return Before Taxes –9.57% –1.32% 1.08%Return After Taxes on Distributions –10.42 –1.62 0.92Return After Taxes on Distributions and Sale of Fund Shares –5.39 –1.03 0.82Comparative Benchmarks

FTSE 3-Month U.S. Treasury Bill Index(reflects no deduction for fees or expenses) 2.25% 1.04% 0.55%Spliced Market Neutral Index USD(reflects no deduction for fees, expenses, or taxes) 2.25 1.04 0.55FTSE 3-month Treasury Bill Index(reflects no deduction for fees, expenses, or taxes) 2.25 1.05 0.56Equity Market Neutral Funds Average(reflects no deduction for taxes) –3.44 –0.93 0.07

Actual after-tax returns depend on your tax situation and may differ from thoseshown in the preceding table. When after-tax returns are calculated, it isassumed that the shareholder was in the highest individual federal marginalincome tax bracket at the time of each distribution of income or capital gains or

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upon redemption. State and local income taxes are not reflected in thecalculations. Please note that after-tax returns are not relevant for a shareholderwho holds fund shares in a tax-deferred account, such as an individual retirementaccount or a 401(k) plan. Also, figures captioned Return After Taxes onDistributions and Sale of Fund Shares may be higher than other figures for thesame period if a capital loss occurs upon redemption and results in an assumedtax deduction for the shareholder.

Investment AdvisorThe Vanguard Group, Inc. (Vanguard)

Portfolio Managers

James P. Stetler, Senior Portfolio Manager at Vanguard. He has co-managed theFund since 2012.

Binbin Guo, Ph.D., Principal of Vanguard and head of the Alpha EquityInvestment team within Vanguard’s Quantitative Equity Group. He hasco-managed the Fund since 2016.

Purchase and Sale of Fund SharesYou may purchase or redeem shares online through our website (vanguard.com),by mail (The Vanguard Group, P.O. Box 1110, Valley Forge, PA 19482-1110), or bytelephone (800-662-2739). The minimum investment amount required to openand maintain a Fund account for Investor Shares is $50,000. The minimuminvestment amount required to add to an existing Fund account is generally $1.Financial intermediaries and institutional clients should contact Vanguard forinformation on special eligibility rules that may apply to them regarding InvestorShares. If you are investing through an intermediary, please contact that firmdirectly for more information regarding your eligibility. If you are investingthrough an employer-sponsored retirement or savings plan, your planadministrator or your benefits office can provide you with detailed information onhow you can invest through your plan.

Tax InformationThe Fund’s distributions may be taxable as ordinary income or capital gain. If youare investing through a tax-advantaged account, such as an IRA or anemployer-sponsored retirement or savings plan, special tax rules apply.

Payments to Financial IntermediariesThe Fund and its investment advisor do not pay financial intermediaries for salesof Fund shares.

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More on the Fund

This prospectus describes the principal risks you would face as a Fundshareholder. It is important to keep in mind one of the main principles ofinvesting: generally, the higher the risk of losing money, the higher the potentialreward. The reverse, also, is generally true: the lower the risk, the lower thepotential reward. As you consider an investment in any mutual fund, you shouldtake into account your personal tolerance for fluctuations in the securitiesmarkets. Look for this symbol throughout the prospectus. It is used tomark detailed information about the more significant risks that you wouldconfront as a Fund shareholder. To highlight terms and concepts important tomutual fund investors, we have provided Plain Talk® explanations along the way.Reading the prospectus will help you decide whether the Fund is the rightinvestment for you. We suggest that you keep this prospectus forfuture reference.

Share Class OverviewThis prospectus offers the Fund’s Investor Shares. A separate prospectus offersthe Fund’s Institutional Shares, which are generally for investors who invest aminimum of $5 million.

Both share classes offered by the Fund have the same investment objective,strategies, and policies. However, different share classes have differentexpenses; as a result, their investment returns will differ.

Plain Talk About Fund Expenses

All mutual funds have operating expenses. These expenses, which arededucted from a fund’s gross income, are expressed as a percentage of thenet assets of the fund. Assuming that operating expenses remain as statedin the Fees and Expenses section, Vanguard Market Neutral Fund InvestorShares‘ expense ratio would be 1.46%, or $14.60 per $1,000 of average netassets, including borrowing and dividend expenses on short sales. Excludingborrowing and dividend expenses on short sales, the Investor Shares‘expense ratio would be 0.20%, or $2.00 per $1,000 of average net assets. Incomparison, the average expense ratio for alternative equity market neutralfunds in 2019 was 1.80%, or $18.00 per $1,000 of average net assets, alsoexcluding borrowing and dividend expenses on short sales (derived fromdata provided by Lipper, a Thomson Reuters Company, which reports on themutual fund industry).

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Plain Talk About Costs of Investing

Costs are an important consideration in choosing a mutual fund. That isbecause you, as a shareholder, pay a proportionate share of the costs ofoperating a fund and any transaction costs incurred when the fund buys orsells securities. These costs can erode a substantial portion of the grossincome or the capital appreciation a fund achieves. Even seemingly smalldifferences in expenses can, over time, have a dramatic effect on afund’s performance.

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Plain Talk About Short Sale Borrowing and Dividend Expenses

The Fund engages in short selling as a principal investment strategy. A shortsale occurs when the Fund sells a stock it does not own and then borrowsthe stock from a lender in order to settle the transaction. When the Fundsells short, it will normally incur two types of expenses—borrowingexpenses and dividend expenses—both of which increase the Fund’sexpense ratio.

In connection with the short sale, the Fund may receive income or becharged a fee on borrowed stock. This income or fee is calculated on a dailybasis, based upon the market value of the borrowed stock and a variable ratethat is dependent upon the availability of the stock. The net amounts ofincome or fees are recorded as “interest income” (for net income received)or “borrowing expense on securities sold short” (for net fees charged) on theFund’s Statement of Operations.

The Fund incurs dividend expenses until the borrowed stock is returned tothe lender. These expenses are paid to the lender of the stock and are basedupon the amount of any dividends declared on the stock. Having sold theborrowed stock, the Fund does not itself collect the dividends, and thus hasa net expense payable to the lender. This payment is recorded as “dividendexpense on securities sold short” on the Fund’s Statement of Operations.Short sale dividend expenses generally reduce the market value of the stockby the amount of the dividend declared, thus increasing the Fund’sunrealized gain or reducing the Fund’s unrealized loss on the stock sold short.

It is important to note that when the Fund sells a stock short, the proceedsare typically held in cash equivalent investments, which earn interest at anegotiated rate. This interest, when combined with the Fund’s otherinvestment income, is expected to offset—in part—the Fund’s short saleborrowing and dividend expenses and thereby reduce total expenses.

The following sections explain the principal investment strategies and policiesthat the Fund uses in pursuit of its objective. The Fund‘s board of trustees, whichoversees the Fund’s management, may change investment strategies or policiesin the interest of shareholders without a shareholder vote, unless thosestrategies or policies are designated as fundamental. Note that the Fund’sinvestment objective is not fundamental and may be changed without ashareholder vote.

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An investment in the Fund could lose money over short or long periodsof time, and the entire amount invested could be lost. There can be noassurance that the Fund’s investment objective or strategies will beachieved, and results may vary substantially over time.

Market disruptions can adversely affect local and global markets as well asnormal market conditions and operations. Any such disruptions could have anadverse impact on the value of the Fund’s investments and Fund performance.

Security SelectionVanguard, the Fund’s investment advisor, selects and maintains a diversifiedportfolio of common stocks for the Fund. The advisor employs active investmentmanagement methods, which means that securities are bought and soldaccording to the advisor’s evaluations of companies and their financial prospects,the prices of the securities, and the stock market and the economy in general.

The Fund follows a market neutral strategy, which the Fund defines as a strategydesigned to produce a portfolio that is neutral with respect to general stockmarket risk (sometimes referred to as beta neutrality). Beta is a measure of aportfolio’s volatility relative to the volatility of the general stock market. The Fund,as a whole, does not seek to adhere to any other definition of market neutrality.By taking long and short positions in different securities, the Fund attempts tolimit the effect of market movements on portfolio performance. The advisor may,at any time, buy or sell short any number of publicly traded, exchange-listedequity securities and may emphasize specific industries, styles (growth/value),capitalization ranges, countries, or other factors. The overall performance of theFund depends on the net performance of its long and short positions, and it ispossible for the Fund to experience a net loss across all positions. If the Fund’sinvestment strategy is successful, however, the net performance of its long andshort positions will produce long-term capital appreciation that reflects thequality of the advisor’s security selections, with limited exposure to generalstock market risk.

To implement the strategy, Vanguard buys securities that it believes offer anappropriate balance between strong growth prospects and reasonable valuationsrelative to their industry peers and sells short securities that it considers to beovervalued, in amounts that it believes will achieve market neutrality. Vanguardmanages the portfolio through the use of a quantitative process that wasdeveloped and managed by Vanguard’s Alpha Equity Investment team and iscontinually evolving. All potential enhancements to the process go throughrigorous peer vetting and validation before being implemented.

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The Fund is subject to strategy risk, which is the chance that the Fund’sinvestment strategy will not succeed. There is no guarantee that the Fundwill be able to limit exposure to general stock market risk or producereturns that exceed the returns of 3-month U.S. Treasury bills. The Fund’suse of short sales in combination with its long positions in an attempt toimprove performance or to reduce overall portfolio risk may not besuccessful and may result in greater losses or lower positive returns thanif the Fund held only long positions. When the general stock market isperforming strongly, the Fund is expected to underperform the marketbecause the Fund’s short positions will likely lose money. If the Fund’smarket neutral strategy is unsuccessful, the Fund may be subject to stockmarket risk, which is the chance that stock prices overall will decline.Stock markets tend to move in cycles, with periods of rising prices andperiods of falling prices.

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Plain Talk About Market Neutral Investing

The goal of market neutral investing is to generate returns that areindependent of the returns and direction of the stock market (called beta)and driven largely by the value added by the advisor’s skill in selecting stocks(called alpha). A portfolio that has the same volatility as that of the generalstock market has a beta of 1. If a portfolio has a beta less than 1, theportfolio is less volatile than the general stock market. On the other hand, aportfolio that has a beta greater than 1 is more volatile than the general stockmarket. For instance, if a portfolio has a beta of 1.1, it is expected to move1.1 times the movement of the general stock market. So, if the general stockmarket increases 10%, the portfolio’s expected return over the same periodwould be 11%. A market neutral portfolio could hold, for example, longpositions with a beta of 0.5 and short positions with a beta of –0.5, whichwould render the portfolio market neutral.

Market neutral investing is often implemented through a long/short portfolioof investments in publicly traded stocks. The advisor buys what it believesare attractive (or undervalued) stocks for the long portion of the portfolio andsells what it believes are unattractive (or overvalued) stocks for the shortportion of the portfolio, in amounts it believes will achieve market neutrality.The long portion of the portfolio is expected to deliver the overall returns ofthe stock market, plus additional performance unique to the specific stockspurchased by the advisor. The short portion of the portfolio is expected todeliver the inverse of the overall returns of the stock market, plus additionalperformance unique to the specific stocks the advisor sold short. The longand short positions can have risk exposures significantly different from thoseof the general stock market. The larger these risk differences, the more theperformance of the portfolio will differ from that of the general stock market.The market exposure of the combined long and short positions is expectedto cancel out, producing a net stock market return close to zero, plus orminus the alpha added by the advisor’s stock selection process. Marketneutral investing is sometimes called an “absolute return” strategy becauseit seeks positive returns, whether the stock market goes up or down,although many market neutral funds have experienced periods of negativereturns. Market neutral funds will generally underperform more traditional(long-only) stock portfolios during periods of significant market appreciation.

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Plain Talk About Equity Short Sales

A short sale of an equity security is the sale of a security that the seller doesnot own. In order to deliver the security to the purchaser, the short sellerborrows the security, typically from a broker-dealer or an institutionalinvestor, for a fee. The short seller later closes out the position by returningthe security to the lender, typically by purchasing the same security on theopen market. A short sale theoretically carries the risk of an unlimited loss,because the price of the underlying security could increase without limit,thus increasing the cost of buying that security to cover the short position. Inaddition, there can be no assurance that the security needed to cover a shortposition will be available for purchase. Also, the purchase of a security toclose out the short position can itself cause the price of the security to risefurther, thereby exacerbating the loss. Short selling is often used to profitfrom an expected downward price movement in a security.

The Fund is subject to short-selling risk, which is the chance that the Fundwill lose money in connection with its short sales of securities. Shortselling allows an investor to profit from declines in the prices ofsecurities. To engage in a short sale, the Fund must “borrow” securitiesfor a fee. To close out short positions, the Fund may have to sell relatedlong positions at disadvantageous times to produce cash to unwind ashort position. There is no guarantee that the price of the borrowedsecurities will decline; in fact, it may rise. The Fund’s loss on a short saleis theoretically unlimited, because there is no upward limit on the price aborrowed security could attain. Short selling involves higher transactioncosts than long-only investing, which could offset any gains and increaseany losses.

The market value of the long and short positions in the Fund will not always beequal because of continuous changes in the prices of securities. The Fundexpects that the advisor will need to frequently rebalance its long and shortpositions. The Fund’s holdings will also need to reflect changes in the universe ofsecurities the advisor considers undervalued or overvalued. As a result, the Fundis expected to experience a high portfolio turnover rate, possibly in excess of100%.

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The Fund is subject to manager risk, which is the chance that poorsecurity selection or strategy execution will cause the Fund to fail toachieve its investment objective or to underperform other funds with asimilar investment strategy. The advisor’s security selection process maynot eliminate all stock market risk factors associated with the long andshort positions it establishes for the Fund. It is possible that the stocksthe Fund holds long will decline in value at the same time that the stocksit holds short increase in value, thereby increasing potential losses to theFund. Any gain from a short position may be partially or totally offset bya decline in a long position, or vice versa.

The Fund is subject to investment risk, which is the chance that the typesof securities purchased by the Fund will, intentionally or unintentionally,increase the Fund’s sensitivity to certain investment factors. These factorsmay include, but are not limited to, market capitalization ranges, styles(growth/value), and industries of the underlying securities. These factorsmay cause the Fund to fail to achieve its investment objective of limitingexposure to general stock market risk or cause it to underperform otherfunds with a similar investment strategy.

Other Investment Policies and RisksIn addition to investing in publicly traded stocks on a long and short basis, theFund may make other kinds of investments to achieve its objective.

The Fund may invest in derivatives. In general, investments in derivativesmay involve risks different from, and possibly greater than, those ofinvestments directly in the underlying securities or assets.

Generally speaking, a derivative is a financial contract whose value is based onthe value of a financial asset (such as a stock, a bond, or a currency), a physicalasset (such as gold, oil, or wheat), a market index, or a reference rate. The Fundmay invest in derivatives only if the expected risks and rewards of the derivativesare consistent with the investment objective, policies, strategies, and risks ofthe Fund as disclosed in this prospectus. In particular, derivatives will be usedonly when they may help the advisor to accomplish one or more ofthe following:

• Invest in eligible asset classes with greater efficiency and lower cost than ispossible through direct investment.

• Add value when these instruments are attractively priced.

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The market for many derivatives is, or suddenly can become, illiquid, which mayresult in significant, rapid, and unpredictable changes in the prices forderivatives. The Fund’s use of a derivative subjects it to the risk ofnonperformance by the counterparty, potentially resulting in delayed, partial, oreven nonpayment of amounts due under the derivative contract.

The Fund’s derivative investments may include futures contracts and optionsthereon, options on stocks or stock indexes, warrants, swap agreements, orother derivatives. Losses (or gains) involving futures contracts can sometimes besubstantial—in part because a relatively small price movement in a futurescontract may result in an immediate and substantial loss (or gain) for a fund.Similar risks exist for other types of derivatives.

Plain Talk About Derivatives

Derivatives can take many forms. Some forms of derivatives—such asexchange-traded futures and options on securities, commodities, orindexes—have been trading on regulated exchanges for decades. Thesetypes of derivatives are standardized contracts that can easily be bought andsold and whose market values are determined and published daily. On theother hand, non-exchange-traded derivatives—such as certain swapagreements and foreign currency exchange forward contracts—tend to bemore specialized or complex and may be more difficult to accurately value.

Cash ManagementThe Fund’s daily cash balance may be invested in Vanguard Market LiquidityFund and/or Vanguard Municipal Cash Management Fund (each, a CMT Fund),which are low-cost money market funds. When investing in a CMT Fund, theFund bears its proportionate share of the expenses of the CMT Fund in which itinvests. Vanguard receives no additional revenue from Fund assets invested in aCMT Fund.

Methods Used to Meet Redemption RequestsUnder normal circumstances, the Fund typically expects to meet redemptionswith positive cash flows. When this is not an option, the Fund seeks to maintainits risk exposure by selling a cross section of the Fund’s holdings to meetredemptions, while also factoring in transaction costs. Additionally, the Fund maywork with larger clients to implement their redemptions in a manner that is leastdisruptive to the portfolio; see “Potentially disruptive redemptions” underRedeeming Shares in the Investing With Vanguard section.

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Under certain circumstances, including under stressed market conditions, thereare additional tools that the Fund may use in order to meet redemptions,including advancing the settlement of market trades with counterparties tomatch investor redemption payments or delaying settlement of an investor’stransaction to match trade settlement within regulatory requirements. The Fundmay also suspend payment of redemption proceeds for up to seven days; see“Emergency circumstances” under Redeeming Shares in the Investing WithVanguard section. Additionally under these unusual circumstances, the Fundmay borrow money (subject to certain regulatory conditions and if availableunder board-approved procedures) through an interfund lending facility orthrough a bank line-of-credit, including a joint committed credit facility, in order tomeet redemption requests.

Temporary Investment MeasuresThe Fund may temporarily depart from its normal investment policies andstrategies when the advisor believes that doing so is in the Fund‘s best interest,so long as the strategy or policy employed is consistent with the Fund‘sinvestment objective. For instance, the Fund may invest beyond its normal limitsin derivatives or exchange-traded funds that are consistent with the Fund‘sinvestment objective when those instruments are more favorably priced orprovide needed liquidity, as might be the case if the Fund is transitioning assetsfrom one advisor to another or receives large cash flows that it cannot prudentlyinvest immediately.

In addition, the Fund may take temporary defensive positions that areinconsistent with its normal investment policies and strategies—for instance, byallocating substantial assets to cash equivalent investments or other less volatileinstruments—in response to adverse or unusual market, economic, political, orother conditions. In doing so, the Fund may succeed in avoiding losses but mayotherwise fail to achieve its investment objective.

Frequent Trading or Market-TimingBackground. Some investors try to profit from strategies involving frequenttrading of mutual fund shares, such as market-timing. For funds holding foreignsecurities, investors may try to take advantage of an anticipated differencebetween the price of the fund’s shares and price movements in overseasmarkets, a practice also known as time-zone arbitrage. Investors also may try toengage in frequent trading of funds holding investments such as small-capstocks and high-yield bonds. As money is shifted into and out of a fund by ashareholder engaging in frequent trading, the fund incurs costs for buying andselling securities, resulting in increased brokerage and administrative costs.

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These costs are borne by all fund shareholders, including the long-term investorswho do not generate the costs. In addition, frequent trading may interfere withan advisor’s ability to efficiently manage the fund.

Policies to address frequent trading. The Vanguard funds (other than moneymarket funds and short-term bond funds, but including Vanguard Short-TermInflation-Protected Securities Index Fund) do not knowingly accommodatefrequent trading. The board of trustees of each Vanguard fund (other than moneymarket funds and short-term bond funds, but including Vanguard Short-TermInflation-Protected Securities Index Fund) has adopted policies and proceduresreasonably designed to detect and discourage frequent trading and, in somecases, to compensate the fund for the costs associated with it. These policiesand procedures do not apply to ETF Shares because frequent trading in ETFShares generally does not disrupt portfolio management or otherwise harm fundshareholders. Although there is no assurance that Vanguard will be able todetect or prevent frequent trading or market-timing in all circumstances, thefollowing policies have been adopted to address these issues:

• Each Vanguard fund reserves the right to reject any purchaserequest—including exchanges from other Vanguard funds—without notice andregardless of size. For example, a purchase request could be rejected becausethe investor has a history of frequent trading or if Vanguard determines that suchpurchase may negatively affect a fund’s operation or performance.

• Each Vanguard fund (other than money market funds and short-term bondfunds, but including Vanguard Short-Term Inflation-Protected Securities IndexFund) generally prohibits, except as otherwise noted in the Investing WithVanguard section, an investor’s purchases or exchanges into a fund account for30 calendar days after the investor has redeemed or exchanged out of thatfund account.

• Certain Vanguard funds charge shareholders purchase and/or redemption feeson transactions.

See the Investing With Vanguard section of this prospectus for further detailson Vanguard’s transaction policies.

Each Vanguard fund (other than retail and government money market funds), indetermining its net asset value, will use fair-value pricing when appropriate, asdescribed in the Share Price section. Fair-value pricing may reduce or eliminatethe profitability of certain frequent-trading strategies.

Do not invest with Vanguard if you are a market-timer.

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Turnover RateAlthough the Fund generally seeks to invest for the long term, it may sellsecurities regardless of how long they have been held. The Financial Highlightssection of this prospectus shows historical turnover rates for the Fund. Aturnover rate of 100%, for example, would mean that the Fund had sold andreplaced securities valued at 100% of its net assets within a one-year period. Ingeneral, the greater the turnover rate, the greater the impact transaction costswill have on a fund’s return. Also, funds with high turnover rates may be morelikely to generate capital gains, including short-term capital gains, that must bedistributed to shareholders and will be taxable to shareholders investing througha taxable account.

The Fund and Vanguard

The Fund is a member of The Vanguard Group, a family of over 200 funds. All ofthe funds that are members of The Vanguard Group (other than funds of funds)share in the expenses associated with administrative services and businessoperations, such as personnel, office space, and equipment.

Vanguard Marketing Corporation provides marketing services to the funds.Although fund shareholders do not pay sales commissions or 12b-1 distributionfees, each fund (other than a fund of funds) or each share class of a fund (in thecase of a fund with multiple share classes) pays its allocated share of theVanguard funds’ marketing costs.

Plain Talk About Vanguard’s Unique Corporate Structure

The Vanguard Group is owned jointly by the funds it oversees and thusindirectly by the shareholders in those funds. Most other mutual funds areoperated by management companies that are owned by third parties—eitherpublic or private stockholders—and not by the funds they serve.

Investment Advisor

The Vanguard Group, Inc., P.O. Box 2600, Valley Forge, PA 19482, which beganoperations in 1975, serves as advisor to the Fund through its Quantitative EquityGroup. As of December 31, 2019, Vanguard served as advisor for approximately$5 trillion in assets. Vanguard provides investment advisory services to the Fundpursuant to the Funds’ Service Agreement and subject to the supervision andoversight of the trustees and officers of the Fund.

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For the fiscal year ended December 31, 2019, the advisory expensesrepresented an effective annual rate of 0.09% of the Fund’s average net assets.

Although the Fund is managed solely by Vanguard, the Fund reserves the right toutilize a multimanager approach in the future. Under the terms of an SECexemption, the Fund’s board of trustees may, without prior approval fromshareholders, change the terms of an advisory agreement with a third-partyinvestment advisor or hire a new third-party investment advisor—either as areplacement for an existing advisor or as an additional advisor. Any significantchange in the Fund’s advisory arrangements will be communicated toshareholders in writing. As the Fund’s sponsor and overall manager, Vanguardmay provide investment advisory services to the Fund at any time. Vanguard mayalso recommend to the board of trustees that an advisor be hired, terminated, orreplaced or that the terms of an existing advisory agreement be revised. TheFund has filed an application seeking a similar SEC exemption with respect toinvestment advisors that are wholly owned subsidiaries of Vanguard. If theexemption is granted, the Fund may rely on the new SEC relief.

For a discussion of why the board of trustees approved the Fund’s investmentadvisory arrangement, see the most recent semiannual report to shareholderscovering the fiscal period ended June 30.

The managers primarily responsible for the day-to-day management of theFund are:

James P. Stetler, Senior Portfolio Manager at Vanguard. He has been withVanguard since 1982; has worked in investment management since 1996; hasmanaged investment portfolios since 2003, and has co-managed the Fund since2012. Education: B.S., Susquehanna University; M.B.A., SaintJoseph’s University.

Binbin Guo, Ph.D., Principal of Vanguard and head of the Alpha EquityInvestment team within Vanguard’s Quantitative Equity Group. He oversees theactive quantitative equity funds and separately managed equity accounts. Hehas been with Vanguard since 2007 and has co-managed the Fund since 2016.Education: B.S. and M.S., Tsinghua University, China; Ph.D. and M.Phil.,Yale University.

The Fund’s Statement of Additional Information provides information about eachportfolio manager’s compensation, other accounts under management, andownership of shares of the Fund.

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Dividends, Capital Gains, and Taxes

Fund DistributionsThe Fund distributes to shareholders virtually all of its net income (interest anddividends, less expenses) as well as any net short-term or long-term capitalgains realized from the sale of its holdings. Income and capital gainsdistributions, if any, generally occur annually in December. In addition, the Fundmay occasionally make a supplemental distribution at some other time duringthe year.

You can receive distributions of income or capital gains in cash, or you can havethem automatically reinvested in more shares of the Fund. However, if you areinvesting through an employer-sponsored retirement or savings plan, yourdistributions will be automatically reinvested in additional Fund shares.

Plain Talk About Distributions

As a shareholder, you are entitled to your portion of a fund’s income frominterest and dividends as well as capital gains from the fund’s sale ofinvestments. Income consists of both the dividends that the fund earns fromany stock holdings and the interest it receives from any money market andbond investments. Capital gains are realized whenever the fund sellssecurities for higher prices than it paid for them. These capital gains areeither short-term or long-term, depending on whether the fund held thesecurities for one year or less or for more than one year.

Basic Tax PointsInvestors in taxable accounts should be aware of the following basic federalincome tax points:

• Distributions are taxable to you whether or not you reinvest these amounts inadditional Fund shares.

• Distributions declared in December—if paid to you by the end of January—aretaxable as if received in December.

• Any dividend distribution or short-term capital gains distribution that youreceive is taxable to you as ordinary income. If you are an individual and meetcertain holding-period requirements with respect to your Fund shares, you maybe eligible for reduced tax rates on “qualified dividend income,” if any, distributedby the Fund.

• Any distribution of net long-term capital gains is taxable to you as long-termcapital gains, no matter how long you have owned shares in the Fund.

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• Capital gains distributions may vary considerably from year to year as a resultof the Fund’s normal investment activities and cash flows.

• A sale or exchange of Fund shares is a taxable event. This means that you mayhave a capital gain to report as income, or a capital loss to report as a deduction,when you complete your tax return.

• Any conversion between classes of shares of the same fund is a nontaxableevent. By contrast, an exchange between classes of shares of different funds isa taxable event.

• Vanguard (or your intermediary) will send you a statement each year showingthe tax status of all of your distributions.

Individuals, trusts, and estates whose income exceeds certain thresholdamounts are subject to a 3.8% Medicare contribution tax on “net investmentincome.” Net investment income takes into account distributions paid by theFund and capital gains from any sale or exchange of Fund shares.

Dividend distributions and capital gains distributions that you receive, as well asyour gains or losses from any sale or exchange of Fund shares, may be subjectto state and local income taxes.

The Fund’s short sales will be subject to tax rules that may affect the amount,timing, and character of distributions to shareholders. This prospectus providesgeneral tax information only. If you are investing through a tax-advantagedaccount, such as an IRA or an employer-sponsored retirement or savings plan,special tax rules apply. Please consult your tax advisor for detailed informationabout any tax consequences for you, including potential consequences for you ifthe Fund simultaneously holds long and short positions with respect to thesame security.

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Plain Talk About Buying a Dividend

Unless you are a tax-exempt investor or investing through a tax-advantagedaccount (such as an IRA or an employer-sponsored retirement or savingsplan), you should consider avoiding a purchase of fund shares shortly beforethe fund makes a distribution, because doing so can cost you money intaxes. This is known as “buying a dividend.” For example: On December 15,you invest $5,000, buying 250 shares for $20 each. If the fund pays adistribution of $1 per share on December 16, its share price will drop to $19(not counting market change). You still have only $5,000 (250 shares x $19 =$4,750 in share value, plus 250 shares x $1 = $250 in distributions), but youowe tax on the $250 distribution you received—even if you reinvest it inmore shares. To avoid buying a dividend, check a fund’s distribution schedulebefore you invest.

General InformationBackup withholding. By law, Vanguard must withhold 24% of any taxabledistributions or redemptions from your account if you do not:

• Provide your correct taxpayer identification number.

• Certify that the taxpayer identification number is correct.

• Confirm that you are not subject to backup withholding.

Similarly, Vanguard (or your intermediary) must withhold taxes from your accountif the IRS instructs us to do so.

Foreign investors. Vanguard funds offered for sale in the United States(Vanguard U.S. funds), including the Fund offered in this prospectus, are notwidely available outside the United States. Non-U.S. investors should be awarethat U.S. withholding and estate taxes and certain U.S. tax reportingrequirements may apply to any investments in Vanguard U.S. funds. Foreigninvestors should visit the non-U.S. investors page on our website atvanguard.com for information on Vanguard’s non-U.S. products.

Invalid addresses. If a dividend distribution or capital gains distribution checkmailed to your address of record is returned as undeliverable, Vanguard willautomatically reinvest the distribution and all future distributions until you provideus with a valid mailing address. Reinvestments will receive the net asset valuecalculated on the date of the reinvestment.

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Share Price

Share price, also known as net asset value (NAV), is calculated as of the close ofregular trading on the New York Stock Exchange (NYSE), generally 4 p.m.,Eastern time, on each day that the NYSE is open for business (a business day).In the rare event the NYSE experiences unanticipated disruptions and isunavailable at the close of the trading day, the Fund reserves the right to treatsuch day as a business day and calculate NAVs as of the close of regular tradingon the Nasdaq (or another alternate exchange if the Nasdaq is unavailable, asdetermined at Vanguard’s discretion), generally 4 p.m., Eastern time. Each shareclass has its own NAV, which is computed by dividing the total assets, minusliabilities, allocated to the share class by the number of Fund shares outstandingfor that class. On U.S. holidays or other days when the NYSE is closed, the NAVis not calculated, and the Fund does not sell or redeem shares. However, onthose days the value of the Fund’s assets may be affected to the extent that theFund holds securities that change in value on those days (such as foreignsecurities that trade on foreign markets that are open).

Stocks held by a Vanguard fund are valued at their market value when reliablemarket quotations are readily available from the principal exchange or market onwhich they are traded. Such securities are generally valued at their official closingprice, the last reported sales price, or if there were no sales that day, the meanbetween the closing bid and asking prices. When a fund determines that marketquotations either are not readily available or do not accurately reflect the value ofa security, the security is priced at its fair value (the amount that the ownermight reasonably expect to receive upon the current sale of the security).

The values of any foreign securities held by a fund are converted into U.S. dollarsusing an exchange rate obtained from an independent third party as of the closeof regular trading on the NYSE. The values of any mutual fund shares, includinginstitutional money market fund shares, held by a fund are based on the NAVs ofthe shares. The values of any ETF shares or closed-end fund shares held by afund are based on the market value of the shares.

A fund also will use fair-value pricing if the value of a security it holds has beenmaterially affected by events occurring before the fund’s pricing time but afterthe close of the principal exchange or market on which the security is traded.This most commonly occurs with foreign securities, which may trade on foreignexchanges that close many hours before the fund’s pricing time. Interveningevents might be company-specific (e.g., earnings report, merger announcement)or country-specific or regional/global (e.g., natural disaster, economic or political

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news, act of terrorism, interest rate change). Intervening events include pricemovements in U.S. markets that exceed a specified threshold or that areotherwise deemed to affect the value of foreign securities.

Fair-value pricing may be used for domestic securities—for example, if (1) tradingin a security is halted and does not resume before the fund’s pricing time or asecurity does not trade in the course of a day and (2) the fund holds enough ofthe security that its price could affect the NAV.

Fair-value prices are determined by Vanguard according to procedures adoptedby the board of trustees. When fair-value pricing is employed, the prices ofsecurities used by a fund to calculate the NAV may differ from quoted orpublished prices for the same securities.

Vanguard fund share prices are published daily on our website atvanguard.com/prices.

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Financial Highlights

Financial highlights information is intended to help you understand a fund’sperformance for the past five years (or, if shorter, its period of operations).Certain information reflects financial results for a single fund share. Total returnrepresents the rate that an investor would have earned or lost each period on aninvestment in a fund or share class (assuming reinvestment of all distributions).This information has been obtained from the financial statements audited byPricewaterhouseCoopers LLP, an independent registered public accounting firm,whose report, along with fund financial statements, is included in a fund’s mostrecent annual report to shareholders. You may obtain a free copy of a fund’slatest annual or semiannual report, which is available upon request.

Vanguard Market Neutral Fund Investor Shares

Year Ended December 31,For a Share Outstanding Throughout Each Period 2019 2018 2017 2016 2015Net Asset Value, Beginning of Period $11.62 $11.66 $12.39 $12.12 $11.50

Investment Operations

Net Investment Income (Loss) 0.2061 0.1081 0.1111 0.050 0.0021

Net Realized and Unrealized Gain (Loss) on Investments (1.314) (0.038) (0.717) 0.267 0.620Total from Investment Operations (1.108) 0.070 (0.606) 0.317 0.622Distributions

Dividends from Net Investment Income (0.322) (0.110) (0.124) (0.047) (0.002)Distributions from Realized Capital Gains — — — — —Total Distributions (0.322) (0.110) (0.124) (0.047) (0.002)Net Asset Value, End of Period $10.19 $11.62 $11.66 $12.39 $12.12

Total Return –9.57% 0.59% –4.89% 2.62% 5.41%

Ratios/Supplemental Data

Net Assets, End of Period (Millions) $408 $1,209 $1,368 $1,760 $650Ratio of Total Expenses to Average Net AssetsBased on Total Expenses2,3 1.46% 1.80% 1.54% 1.60% 1.46%Net of Dividend and Borrowing Expense on SecuritiesSold Short

0.20% 0.20% 0.22% 0.22% 0.25%

Ratio of Net Investment Income (Loss) to Average NetAssets

1.90% 0.93% 0.94% 0.48% 0.01%

Portfolio Turnover Rate 141% 110% 79% 64% 68%

1 Calculated based on average shares outstanding.2 Includes dividend expense on securities sold short of 1.26%, 1.60%, 1.32%, 1.38%, and 1.06%, respectively.3 Includes borrowing expense on securities sold short of 0.00%, 0.00%, 0.00%, 0.00%, and 0.15%, respectively.

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Investing With Vanguard

This section of the prospectus explains the basics of doing business withVanguard. Vanguard fund shares can be held directly with Vanguard or indirectlythrough an intermediary, such as a bank, a broker, or an investment advisor. Ifyou hold Vanguard fund shares directly with Vanguard, you should carefully readeach topic within this section that pertains to your relationship with Vanguard. Ifyou hold Vanguard fund shares indirectly through an intermediary (includingshares held in a brokerage account through Vanguard Brokerage Services®),please see Investing With Vanguard Through Other Firms, and also refer to youraccount agreement with the intermediary for information about transacting inthat account. If you hold Vanguard fund shares through an employer-sponsoredretirement or savings plan, please see Employer-Sponsored Plans. Vanguardreserves the right to change the following policies without notice. Please call orcheck online for current information. See Contacting Vanguard.

For Vanguard fund shares held directly with Vanguard, each fund you hold in anaccount is a separate “fund account.” For example, if you hold three funds in anonretirement account titled in your own name, two funds in a nonretirementaccount titled jointly with your spouse, and one fund in an individual retirementaccount, you have six fund accounts—and this is true even if you hold the samefund in multiple accounts. Note that each reference to “you” in this prospectusapplies to any one or more registered account owners or persons authorized totransact on your account.

Purchasing Shares

Vanguard reserves the right, without notice, to increase or decrease theminimum amount required to open, convert shares to, or maintain a fundaccount or to add to an existing fund account.

Investment minimums may differ for certain categories of investors.

Account Minimums for Investor SharesTo open and maintain an account. $50,000. Financial intermediaries andinstitutional clients should contact Vanguard for information on special eligibilityrules that may apply to them regarding Investor Shares. If you are investingthrough an intermediary, please contact that firm directly for more informationregarding your eligibility.

To add to an existing account. Generally $1.

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How to Initiate a Purchase RequestBe sure to check Exchanging Shares, Frequent-Trading Limitations, and OtherRules You Should Know before placing your purchase request.

Online. You may open certain types of accounts, request a purchase of shares,and request an exchange through our website or our mobile application if you areregistered for online access.

By telephone. You may call Vanguard to begin the account registration processor request that the account-opening forms be sent to you. You may also callVanguard to request a purchase of shares in your account or to request anexchange. See Contacting Vanguard.

By mail. You may send Vanguard your account registration form and check toopen a new fund account. To add to an existing fund account, you may send yourcheck with an Invest-by-Mail form (from a transaction confirmation or youraccount statement) or with a deposit slip (available online).

How to Pay for a PurchaseBy electronic bank transfer. You may purchase shares of a Vanguard fundthrough an electronic transfer of money from a bank account. To establish theelectronic bank transfer service on an account, you must designate the bankaccount online, complete a form, or fill out the appropriate section of youraccount registration form. After the service is set up on your account, you canpurchase shares by electronic bank transfer on a regular schedule (AutomaticInvestment Plan) or upon request. Your purchase request can be initiated online(if you are registered for online access), by telephone, or by mail.

By wire. Wiring instructions vary for different types of purchases. Please callVanguard for instructions and policies on purchasing shares by wire. SeeContacting Vanguard.

By check. You may make initial or additional purchases to your fund account bysending a check with a deposit slip or by utilizing our mobile application if you areregistered for online access. Also see How to Initiate a Purchase Request. Makeyour check payable to Vanguard and include the appropriate fund number (e.g.,Vanguard—634).

By exchange. You may purchase shares of a Vanguard fund using the proceedsfrom the simultaneous redemption of shares of another Vanguard fund. You mayinitiate an exchange online (if you are registered for online access), by telephone,or by mail with an exchange form. See Exchanging Shares.

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Trade DateThe trade date for any purchase request received in good order will depend onthe day and time Vanguard receives your request, the manner in which you arepaying, and the type of fund you are purchasing. Your purchase will be executedusing the NAV as calculated on the trade date. NAVs are calculated only on daysthat the NYSE is open for trading (a business day). In the rare event the NYSEexperiences unanticipated disruptions and is unavailable at the close of thetrading day, NAVs will be calculated as of the close of regular trading on theNasdaq (or another alternate exchange if the Nasdaq is unavailable, asdetermined at Vanguard’s discretion), generally 4 p.m., Eastern time. The timeselected for NAV calculation in this rare event shall also serve as the conclusionof the trade date. See Share Price.

For purchases by check into all funds other than money market funds and forpurchases by exchange, wire, or electronic bank transfer into all funds: If thepurchase request is received by Vanguard on a business day before the close ofregular trading on the NYSE (generally 4 p.m., Eastern time), the trade date forthe purchase will be the same day. If the purchase request is received on abusiness day after the close of regular trading on the NYSE, or on a nonbusinessday, the trade date for the purchase will be the next business day.

For purchases by check into money market funds: If the purchase request isreceived by Vanguard on a business day before the close of regular trading onthe NYSE (generally 4 p.m., Eastern time), the trade date for the purchase will bethe next business day. If the purchase request is received on a business dayafter the close of regular trading on the NYSE, or on a nonbusiness day, the tradedate for the purchase will be the second business day following the dayVanguard receives the purchase request. Because money market instrumentsmust be purchased with federal funds and it takes a money market mutual fundone business day to convert check proceeds into federal funds, the trade date forthe purchase will be one business day later than for other funds.

If your purchase request is not accurate and complete, it may be rejected. SeeOther Rules You Should Know—Good Order.

For further information about purchase transactions, consult our website atvanguard.com or see Contacting Vanguard.

Other Purchase Rules You Should KnowCheck purchases. All purchase checks must be written in U.S. dollars, be drawnon a U.S. bank, and be accompanied by good order instructions. Vanguard doesnot accept cash, traveler’s checks, starter checks, or money orders. In addition,Vanguard may refuse checks that are not made payable to Vanguard.

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New accounts. We are required by law to obtain from you certain personalinformation that we will use to verify your identity. If you do not provide theinformation, we may not be able to open your account. If we are unable to verifyyour identity, Vanguard reserves the right, without notice, to close your accountor take such other steps as we deem reasonable. Certain types of accounts mayrequire additional documentation.

Refused or rejected purchase requests. Vanguard reserves the right to stopselling fund shares or to reject any purchase request at any time and withoutnotice, including, but not limited to, purchases requested by exchange fromanother Vanguard fund. This also includes the right to reject any purchaserequest because the investor has a history of frequent trading or because thepurchase may negatively affect a fund’s operation or performance.

Large purchases. Call Vanguard before attempting to invest a largedollar amount.

No cancellations. Vanguard will not accept your request to cancel any purchaserequest once processing has begun. Please be careful when placing apurchase request.

Converting Shares

When a conversion occurs, you receive shares of one class in place of shares ofanother class of the same fund. At the time of conversion, the dollar value of the“new” shares you receive equals the dollar value of the “old” shares that wereconverted. In other words, the conversion has no effect on the value of yourinvestment in the fund at the time of the conversion. However, the number ofshares you own after the conversion may be greater than or less than thenumber of shares you owned before the conversion, depending on the NAVs ofthe two share classes.

Vanguard will not accept your request to cancel any self-directed conversionrequest once processing has begun. Please be careful when placing aconversion request.

A conversion between share classes of the same fund is a nontaxable event.

Trade DateThe trade date for any conversion request received in good order will depend onthe day and time Vanguard receives your request. Your conversion will beexecuted using the NAVs of the different share classes on the trade date. NAVsare calculated only on days that the NYSE is open for trading (a business day). In

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the rare event the NYSE experiences unanticipated disruptions and is unavailableat the close of the trading day, NAVs will be calculated as of the close of regulartrading on the Nasdaq (or another alternate exchange if the Nasdaq isunavailable, as determined at Vanguard’s discretion), generally 4 p.m., Easterntime. The time selected for NAV calculation in this rare event shall also serve asthe conclusion of the trade date. See Share Price.

For a conversion request received by Vanguard on a business day before theclose of regular trading on the NYSE (generally 4 p.m., Eastern time), the tradedate will be the same day. For a conversion request received on a business dayafter the close of regular trading on the NYSE, or on a nonbusiness day, the tradedate will be the next business day. See Other Rules You Should Know.

Conversions to Institutional SharesYou are eligible for a self-directed conversion from Investor Shares toInstitutional Shares of the Fund, provided that your account meets all eligibilityrequirements. You may request a conversion through our website (if you areregistered for online access), or you may contact Vanguard by telephone or bymail to request this transaction. Accounts that qualify for Institutional Shares willnot be automatically converted.

Mandatory Conversions to Investor SharesIf an account no longer meets the balance requirements for Institutional SharesVanguard may automatically convert the shares in the account to InvestorShares. A decline in the account balance because of market movement mayresult in such a conversion. Vanguard will notify the investor in writing before anymandatory conversion occurs.

Redeeming Shares

How to Initiate a Redemption RequestBe sure to check Exchanging Shares, Frequent-Trading Limitations, and OtherRules You Should Know before placing your redemption request.

Online. You may request a redemption of shares or request an exchange throughour website or our mobile application if you are registered for online access.

By telephone. You may call Vanguard to request a redemption of shares or anexchange. See Contacting Vanguard.

By mail. You may send a form (available online) to Vanguard to redeem from afund account or to make an exchange.

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How to Receive Redemption ProceedsBy electronic bank transfer. You may have the proceeds of a fund redemptionsent directly to a designated bank account. To establish the electronic banktransfer service on an account, you must designate a bank account online,complete a form, or fill out the appropriate section of your account registrationform. After the service is set up on your account, you can redeem shares byelectronic bank transfer on a regular schedule (Automatic Withdrawal Plan) orupon request. Your redemption request can be initiated online (if you areregistered for online access), by telephone, or by mail.

By wire. To receive your proceeds by wire, you may instruct Vanguard to wireyour redemption proceeds ($100 minimum) to a previously designated bankaccount. To establish the wire redemption service, you generally must designatea bank account online, complete a form, or fill out the appropriate section of youraccount registration form.

Please note that Vanguard charges a $10 wire fee for outgoing wireredemptions. The fee is assessed in addition to, rather than being withheld from,redemption proceeds and is paid directly to the fund in which you invest. Forexample, if you redeem $100 via a wire, you will receive the full $100, and the$10 fee will be assessed to your fund account through an additional redemptionof fund shares. If you redeem your entire fund account, your redemptionproceeds will be reduced by the amount of the fee. The wire fee does not applyto accounts held by Flagship and Flagship Select clients; accounts held throughintermediaries, including Vanguard Brokerage Services; or accounts held byinstitutional clients.

By exchange. You may have the proceeds of a Vanguard fund redemptioninvested directly in shares of another Vanguard fund. You may initiate anexchange online (if you are registered for online access), by telephone, or bymail. See Exchanging Shares.

By check. If you have not chosen another redemption method, Vanguard will mailyou a redemption check, generally payable to all registered account owners,normally within two business days of your trade date, and generally to theaddress of record.

Trade DateThe trade date for any redemption request received in good order will depend onthe day and time Vanguard receives your request and the manner in which youare redeeming. Your redemption will be executed using the NAV as calculated onthe trade date. NAVs are calculated only on days that the NYSE is open fortrading (a business day). In the rare event the NYSE experiences unanticipated

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disruptions and is unavailable at the close of the trading day, NAVs will becalculated as of the close of regular trading on the Nasdaq (or another alternateexchange if the Nasdaq is unavailable, as determined at Vanguard’s discretion),generally 4 p.m., Eastern time. The time selected for NAV calculation in this rareevent shall also serve as the conclusion of the trade date. See Share Price.

For redemptions by check, exchange, or wire: If the redemption request isreceived by Vanguard on a business day before the close of regular trading onthe NYSE (generally 4 p.m., Eastern time), the trade date will be the same day. Ifthe redemption request is received on a business day after the close of regulartrading on the NYSE, or on a nonbusiness day, the trade date will be the nextbusiness day.

• Note on timing of wire redemptions from money market funds: Fortelephone requests received by Vanguard on a business day before10:45 a.m., Eastern time (2 p.m., Eastern time, for Vanguard Prime MoneyMarket Fund; 12:30 p.m., Eastern time, for Vanguard Federal Money MarketFund), the redemption proceeds generally will leave Vanguard by the close ofbusiness the same day. For telephone requests received by Vanguard on abusiness day after those cut-off times, or on a nonbusiness day, and for allrequests other than by telephone, the redemption proceeds generally willleave Vanguard by the close of business on the next business day.

• Note on timing of wire redemptions from all other funds: For requestsreceived by Vanguard on a business day before the close of regular trading onthe NYSE (generally 4 p.m., Eastern time), the redemption proceeds generallywill leave Vanguard by the close of business on the next business day. Forrequests received by Vanguard on a business day after the close of regulartrading on the NYSE, or on a nonbusiness day, the redemption proceedsgenerally will leave Vanguard by the close of business on the second businessday after Vanguard receives the request.

For redemptions by electronic bank transfer: If the redemption request isreceived by Vanguard on a business day before the close of regular trading onthe NYSE (generally 4 p.m., Eastern time), the trade date will be the same day. Ifthe redemption request is received on a business day after the close of regulartrading on the NYSE, or on a nonbusiness day, the trade date will be the nextbusiness day.

If your redemption request is not accurate and complete, it may be rejected. Ifwe are unable to send your redemption proceeds by wire or electronic banktransfer because the receiving institution rejects the transfer, Vanguard will makeadditional efforts to complete your transaction. If Vanguard is still unable tocomplete the transaction, we may send the proceeds of the redemption to you

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by check, generally payable to all registered account owners, or use yourproceeds to purchase new shares of the fund from which you sold shares for thepurpose of the wire or electronic bank transfer transaction. See Other Rules YouShould Know—Good Order.

If your redemption request is received in good order, we typically expect thatredemption proceeds will be paid by the Fund within one business day of thetrade date; however, in certain circumstances, investors may experience a longersettlement period at the time of the transaction. For further information, see“Potentially disruptive redemptions” and “Emergency circumstances.”

For further information about redemption transactions, consult our website atvanguard.com or see Contacting Vanguard.

Other Redemption Rules You Should KnowDocumentation for certain accounts. Special documentation may be requiredto redeem from certain types of accounts, such as trust, corporate, nonprofit, orretirement accounts. Please call us before attempting to redeem from thesetypes of accounts.

Potentially disruptive redemptions. Vanguard reserves the right to pay all orpart of a redemption in kind—that is, in the form of securities—if we reasonablybelieve that a cash redemption would negatively affect the fund’s operation orperformance or that the shareholder may be engaged in market-timing orfrequent trading. Under these circumstances, Vanguard also reserves the right todelay payment of the redemption proceeds for up to seven calendar days. Bycalling us before you attempt to redeem a large dollar amount, you may avoidin-kind or delayed payment of your redemption. Please see Frequent-TradingLimitations for information about Vanguard’s policies to limit frequent trading.

Recently purchased shares. Although you can redeem shares at any time,proceeds may not be made available to you until the fund collects payment foryour purchase. This may take up to seven calendar days for shares purchased bycheck or by electronic bank transfer. If you have written a check on a fund withcheckwriting privileges, that check may be rejected if your fund account does nothave a sufficient available balance.

Address change. If you change your address online or by telephone, there maybe up to a 14-day restriction (starting on the business day after your address ischanged) on your ability to request check redemptions online and by telephone.You can request a redemption in writing (using a form available online) at anytime. Confirmations of address changes are sent to both the old andnew addresses.

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Payment to a different person or address. At your request, we can make yourredemption check payable, or wire your redemption proceeds, to a differentperson or send it to a different address. However, this generally requires thewritten consent of all registered account owners and may require additionaldocumentation, such as a signature guarantee or a notarized signature. You mayobtain a signature guarantee from some commercial or savings banks, creditunions, trust companies, or member firms of a U.S. stock exchange.

No cancellations. Vanguard will not accept your request to cancel anyredemption request once processing has begun. Please be careful when placinga redemption request.

Emergency circumstances. Vanguard funds can postpone payment ofredemption proceeds for up to seven calendar days. In addition, Vanguard fundscan suspend redemptions and/or postpone payments of redemption proceedsbeyond seven calendar days at times when the NYSE is closed or duringemergency circumstances, as determined by the SEC.

Exchanging Shares

An exchange occurs when you use the proceeds from the redemption of shares ofone Vanguard fund to simultaneously purchase shares of a different Vanguardfund.You can make exchange requests online (if you are registered for onlineaccess), by telephone, or by mail. See Purchasing Shares and Redeeming Shares.

If the NYSE is open for regular trading (generally until 4 p.m., Eastern time, on abusiness day) at the time an exchange request is received in good order, thetrade date generally will be the same day. See Other Rules You ShouldKnow—Good Order for additional information on all transaction requests.

Vanguard will not accept your request to cancel any exchange request onceprocessing has begun. Please be careful when placing an exchange request.

Call Vanguard before attempting to exchange a large dollar amount. By calling usbefore you attempt to exchange a large dollar amount, you may avoid delayed orrejected transactions.

Please note that Vanguard reserves the right, without notice, to revise orterminate the exchange privilege, limit the amount of any exchange, or reject anexchange, at any time, for any reason. See Frequent-Trading Limitations foradditional restrictions on exchanges.

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Frequent-Trading Limitations

Because excessive transactions can disrupt management of a fund and increasethe fund’s costs for all shareholders, the board of trustees of each Vanguard fundplaces certain limits on frequent trading in the funds. Each Vanguard fund (otherthan money market funds and short-term bond funds, but including VanguardShort-Term Inflation-Protected Securities Index Fund) limits an investor’spurchases or exchanges into a fund account for 30 calendar days after theinvestor has redeemed or exchanged out of that fund account. ETF Shares arenot subject to these frequent-trading limits.

For Vanguard Retirement Investment Program pooled plans, the limitations applyto exchanges made online or by telephone.

These frequent-trading limitations do not apply to the following:

• Purchases of shares with reinvested dividend or capital gains distributions.

• Transactions through Vanguard’s Automatic Investment Plan, AutomaticExchange Service, Direct Deposit Service, Automatic Withdrawal Plan, RequiredMinimum Distribution Service, and Vanguard Small Business Online®.

• Discretionary transactions through Vanguard Personal Advisor Services®,Vanguard Institutional Advisory Services®, and Vanguard Digital Advisor™.

• Redemptions of shares to pay fund or account fees.

• Redemptions of shares to remove excess shareholder contributions to certaintypes of retirement accounts (including, but not limited to, IRAs and VanguardIndividual 401(k) Plans).

• Transfers and reregistrations of shares within the same fund.

• Purchases of shares by asset transfer or direct rollover.

• Conversions of shares from one share class to another in the same fund.

• Checkwriting redemptions.

• Section 529 college savings plans.

• Certain approved institutional portfolios and asset allocation programs, as wellas trades made by funds or trusts managed by Vanguard or its affiliates thatinvest in other Vanguard funds. (Please note that shareholders of Vanguard’sfunds of funds are subject to the limitations.)

For participants in employer-sponsored defined contribution plans,* thefrequent-trading limitations do not apply to:

• Purchases of shares with participant payroll or employer contributions orloan repayments.

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• Purchases of shares with reinvested dividend or capital gains distributions.

• Distributions, loans, and in-service withdrawals from a plan.

• Redemptions of shares as part of a plan termination or at the direction ofthe plan.

• Transactions executed through the Vanguard Managed Account Program.

• Redemptions of shares to pay fund or account fees.

• Share or asset transfers or rollovers.

• Reregistrations of shares.

• Conversions of shares from one share class to another in the same fund.

• Exchange requests submitted by written request to Vanguard. (Exchangerequests submitted by fax, if otherwise permitted, are subject to the limitations.)

* The following Vanguard fund accounts are subject to the frequent-tradinglimitations: SEP-IRAs, SIMPLE IRAs, certain Individual 403(b)(7) CustodialAccounts, and Vanguard Individual 401(k) Plans.

Accounts Held by Institutions (Other Than Defined Contribution Plans)Vanguard will systematically monitor for frequent trading in institutional clients’accounts. If we detect suspicious trading activity, we will investigate and takeappropriate action, which may include applying to a client’s accounts the 30-daypolicy previously described, prohibiting a client’s purchases of fund shares,and/or revoking the client’s exchange privilege.

Accounts Held by IntermediariesWhen intermediaries establish accounts in Vanguard funds for the benefit oftheir clients, we cannot always monitor the trading activity of the individualclients. However, we review trading activity at the intermediary (omnibus) level,and if we detect suspicious activity, we will investigate and take appropriateaction. If necessary, Vanguard may prohibit additional purchases of fund sharesby an intermediary, including for the benefit of certain of the intermediary’sclients. Intermediaries also may monitor their clients’ trading activities withrespect to Vanguard funds.

For those Vanguard funds that charge purchase and/or redemption fees,intermediaries will be asked to assess these fees on client accounts and remitthese fees to the funds. The application of purchase and redemption fees andfrequent-trading limitations may vary among intermediaries. There are noassurances that Vanguard will successfully identify all intermediaries or that

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intermediaries will properly assess purchase and redemption fees or administerfrequent-trading limitations. If you invest with Vanguard through an intermediary,please read that firm’s materials carefully to learn of any other rules or fees thatmay apply.

Other Rules You Should Know

Prospectus and Shareholder Report MailingsWhen two or more shareholders have the same last name and address, just onesummary prospectus (or prospectus) and/or shareholder report may be sent inan attempt to eliminate the unnecessary expense of duplicate mailings. You mayrequest individual prospectuses and reports by contacting our Client ServicesDepartment by telephone or online. See Contacting Vanguard.

Vanguard.comRegistration. If you are a registered user of vanguard.com, you can review youraccount holdings; buy, sell, or exchange shares of most Vanguard funds; andperform most other transactions through our website. You must register for thisservice online.

Electronic delivery. Vanguard can deliver your account statements, transactionconfirmations, prospectuses, certain tax forms, and shareholder reportselectronically. If you are a registered user of vanguard.com, you can consent tothe electronic delivery of these documents by logging on and changing yourmailing preferences under “Account Maintenance.” You can revoke yourelectronic consent at any time through our website, and we will begin to sendpaper copies of these documents within 30 days of receiving your revocation.

Telephone TransactionsAutomatic. When we set up your account, we will automatically enable you todo business with us by telephone, unless you instruct us otherwise in writing.

Tele-Account®. To obtain fund and account information through Vanguard’sautomated telephone service, you must first establish a Personal IdentificationNumber (PIN) by calling Tele-Account at 800-662-6273.

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Proof of a caller’s authority. We reserve the right to refuse a telephone requestif the caller is unable to provide the requested information or if we reasonablybelieve that the caller is not an individual authorized to act on the account.Before we allow a caller to act on an account, we may request thefollowing information:

• Authorization to act on the account (as the account owner or by legaldocumentation or other means).

• Account registration and address.

• Fund name and account number, if applicable.

• Other information relating to the caller, the account owner, or the account.

Good OrderWe reserve the right to reject any transaction instructions that are not in “goodorder.” Good order generally means that your instructions:

• Are provided by the person(s) authorized in accordance with Vanguard’spolicies and procedures to access the account and request transactions.

• Include the fund name and account number.

• Include the amount of the transaction (stated in dollars, shares,or percentage).

Written instructions also must generally be provided on a Vanguard formand include:

• Signature(s) and date from the authorized person(s).

• Signature guarantees or notarized signatures, if required for the type oftransaction. (Call Vanguard for specific requirements.)

• Any supporting documentation that may be required.

Good order requirements may vary among types of accounts and transactions.For more information, consult our website at vanguard.com or seeContacting Vanguard.

Vanguard reserves the right, without notice, to revise the requirements forgood order.

Future Trade-Date RequestsVanguard does not accept requests to hold a purchase, conversion, redemption,or exchange transaction for a future date. All such requests will receive tradedates as previously described in Purchasing Shares, Converting Shares,Redeeming Shares, and Exchanging Shares. Vanguard reserves the right toreturn future-dated purchase checks.

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Accounts With More Than One OwnerIf an account has more than one owner or authorized person, Vanguard generallywill accept instructions from any one owner or authorized person.

Responsibility for FraudYou should take precautions to protect yourself from fraud. Keep youraccount-related information private, and review any account confirmations,statements, or other information that we provide to you as soon as you receivethem. Let us know immediately if you discover unauthorized activity or seesomething on your account that you do not understand or that looks unusual.

Vanguard will not be responsible for losses that result from transactions by aperson who we reasonably believe is authorized to act on your account.

Uncashed ChecksPlease cash your distribution or redemption checks promptly. Vanguard will notpay interest on uncashed checks. Vanguard may be required to transfer assetsrelated to uncashed checks to a state under the state’s abandoned property law.

Dormant AccountsIf your account has no activity in it for a period of time, Vanguard may berequired to transfer it to a state under the state’s abandoned property law,subject to potential federal or state withholding taxes.

Unusual CircumstancesIf you experience difficulty contacting Vanguard online or by telephone, you cansend us your transaction request on a Vanguard form by regular or express mail.

Investing With Vanguard Through Other FirmsYou may purchase or sell shares of most Vanguard funds through a financialintermediary, such as a bank, a broker, or an investment advisor. Please consultyour financial intermediary to determine which, if any, shares are availablethrough that firm and to learn about other rules that may apply. Your financialintermediary can provide you with account information and any required taxforms. You may be required to pay a commission on purchases of mutual fundshares made through a financial intermediary.

Please see Frequent-Trading Limitations—Accounts Held by Intermediaries forinformation about the assessment of any purchase or redemption fees and themonitoring of frequent trading for accounts held by intermediaries.

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Account Service FeeVanguard may charge a $20 account service fee on fund accounts that have abalance below $10,000 for any reason, including market fluctuation. The accountservice fee may be applied to both retirement and nonretirement fund accountsand may be assessed on fund accounts in all Vanguard funds, regardless of theaccount minimum. The fee, which will be collected by redeeming fund shares inthe amount of $20, will be deducted from fund accounts subject to the fee onceper calendar year.

If you elect to receive your statements and other materials electronically (i.e., bye-delivery), the account service fee will not be charged, so long as your electionremains in effect. You can make your e-delivery election on vanguard.com.

Beginning on January 1, 2021, you may elect to receive paper copies ofshareholder reports free of charge as noted on the cover of this prospectus.

Certain account types have alternative fee structures, including SIMPLE IRAs,Vanguard Retirement Investment Program pooled plans, and Vanguard Individual401(k) Plans.

Low-Balance AccountsThe Fund reserves the right to liquidate a fund account whose balance fallsbelow the account minimum for any reason, including market fluctuation. Thisliquidation policy applies to nonretirement fund accounts and accounts that areheld through intermediaries. Any such liquidation will be preceded by writtennotice to the investor.

Right to Change PoliciesIn addition to the rights expressly stated elsewhere in this prospectus, Vanguardreserves the right, without notice, to (1) alter, add, or discontinue any conditionsof purchase (including eligibility requirements), redemption, exchange,conversion, service, or privilege at any time and (2) alter, impose, discontinue, orwaive any purchase fee, redemption fee, account service fee, or other feecharged to a shareholder or a group of shareholders. Changes may affect any orall investors. These actions will be taken when, at the sole discretion of Vanguardmanagement, Vanguard believes they are in the best interest of a fund.

Account RestrictionsVanguard reserves the right to: (1) redeem all or a portion of a fund/account tomeet a legal obligation, including tax withholding, tax lien, garnishment order, orother obligation imposed on your account by a court or government agency; (2)redeem shares, close an account, or suspend account privileges, features, oroptions in the case of threatening conduct or activity; (3) redeem shares, close

40

an account, or suspend account privileges, features, or options if Vanguardbelieves or suspects that not doing so could result in a suspicious, fraudulent, orillegal transaction; (4) place restrictions on the ability to redeem any or all sharesin an account if it is required to do so by a court or government agency; (5) placerestrictions on the ability to redeem any or all shares in an account if Vanguardbelieves that doing so will prevent fraud, financial exploitation or abuse, or toprotect vulnerable investors; (6) freeze any account and/or suspend accountservices if Vanguard has received reasonable notice of a dispute regarding theassets in an account, including notice of a dispute between the registered orbeneficial account owners; and (7) freeze any account and/or suspend accountservices upon initial notification to Vanguard of the death of an account owner.

Share ClassesVanguard reserves the right, without notice, to change the eligibilityrequirements of its share classes, including the types of clients who are eligibleto purchase each share class.

Fund and Account Updates

Confirmation StatementsWe will send (or provide through our website, whichever you prefer) aconfirmation of your trade date and the amount of your transaction when youbuy, sell, exchange, or convert shares. However, we will not send confirmationsreflecting only checkwriting redemptions or the reinvestment of dividend orcapital gains distributions. For any month in which you had a checkwritingredemption, a Checkwriting Activity Statement will be sent to you itemizing thecheckwriting redemptions for that month. Promptly review each confirmationstatement that we provide to you. It is important that you contact Vanguardimmediately with any questions you may have about any transaction reflected ona confirmation statement, or Vanguard will consider the transactionproperly processed.

Portfolio SummariesWe will send (or provide through our website, whichever you prefer) quarterlyportfolio summaries to help you keep track of your accounts throughout the year.Each summary shows the market value of your account at the close of thestatement period, as well as all distributions, purchases, redemptions,exchanges, transfers, and conversions for the current calendar quarter (ormonth). Promptly review each summary that we provide to you. It is important

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that you contact Vanguard immediately with any questions you may have aboutany transaction reflected on the summary, or Vanguard will consider thetransaction properly processed.

Tax Information StatementsFor most accounts, Vanguard (or your intermediary) is required to provide annualtax forms to assist you in preparing your income tax returns. These forms aregenerally available for each calendar year early in the following year. Registeredusers of vanguard.com can also view certain forms through our website.Vanguard (or your intermediary) may also provide you with additional tax-relateddocumentation. For more information, consult our website at vanguard.com orsee Contacting Vanguard.

Annual and Semiannual ReportsWe will send (or provide through our website, whichever you prefer) reportsabout Vanguard Market Neutral Fund twice a year, in February and August. Thesereports include overviews of the financial markets and provide the followingspecific Fund information:

• Performance assessments and comparisons with industry benchmarks.

• Reports from the advisor.

• Financial statements with listings of Fund holdings.

Portfolio HoldingsPlease consult the Fund’s Statement of Additional Information or our website fora description of the policies and procedures that govern disclosure of the Fund’sportfolio holdings.

Employer-Sponsored Plans

Your plan administrator or your employee benefits office can provide you withdetailed information on how to participate in your plan and how to elect the Fundas an investment option.

• If you have any questions about the Fund or Vanguard, including those aboutthe Fund’s investment objective, strategies, or risks, contact Vanguard ParticipantServices toll-free at 800-523-1188 or visit our website at vanguard.com.

• If you have questions about your account, contact your plan administrator orthe organization that provides recordkeeping services for your plan.

• Be sure to carefully read each topic that pertains to your transactionswith Vanguard.

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Vanguard reserves the right to change its policies without noticeto shareholders.

TransactionsProcessing times for your transaction requests may differ among recordkeepersor among transaction and funding types. Your plan’s recordkeeper (which mayalso be Vanguard) will determine the necessary processing time frames for yourtransaction requests prior to submission to the Fund. Consult your recordkeeperor plan administrator for more information.

If Vanguard is serving as your plan recordkeeper and if your transaction involvesone or more investments with an early cut-off time for processing or anothertrading restriction, your entire transaction will be subject to the restriction whenthe trade date for your transaction is determined.

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Contacting Vanguard

WebVanguard.com For the most complete source of Vanguard news

For fund, account, and service informationFor most account transactionsFor literature requests24 hours a day, 7 days a week

PhoneVanguard Tele-Account®

800-662-6273For automated fund and account informationToll-free, 24 hours a day, 7 days a week

Investor Information 800-662-7447(Text telephone for people withhearing impairment at 800-749-7273)

For fund and service informationFor literature requests

Client Services 800-662-2739(Text telephone for people withhearing impairment at 800-749-7273)

For account informationFor most account transactions

Participant Services 800-523-1188(Text telephone for people withhearing impairment at 800-749-7273)

For information and services for participants inemployer-sponsored plans

Institutional Division888-809-8102

For information and services for large institutionalinvestors

Financial Advisor and IntermediarySales Support 800-997-2798

For information and services for financial intermediariesincluding financial advisors, broker-dealers, trustinstitutions, and insurance companies

Financial Advisory and IntermediaryTrading Support 800-669-0498

For account information and trading support forfinancial intermediaries including financial advisors,broker-dealers, trust institutions, and insurancecompanies

Additional Information

InceptionDate

NewspaperAbbreviation

VanguardFund Number

CUSIPNumber

Market Neutral Fund

Investor Shares 11/11/19981 MktNeuInv 634 92205G104

1 Inception date of the Laudus Fund shares. The Laudus Fund was reorganized with and into Vanguard MarketNeutral Fund on November 30, 2007.

CGS identifiers have been provided by CUSIP Global Services, managed on behalf of the American BankersAssociation by Standard & Poor’s Financial Services, LLC, and are not for use or dissemination in a manner that wouldserve as a substitute for any CUSIP service. The CUSIP Database, ©2020 American Bankers Association. “CUSIP” is aregistered trademark of the American Bankers Association.

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Glossary of Investment Terms

Borrowing Expense on Securities Sold Short. A fee charged by a fund’s brokerwhen a fund sells a stock short. This fee is calculated on a daily basis, basedupon the market value of the stock sold short and a variable rate that isdependent upon the availability of the stock.

Capital Gains Distributions. Payments to mutual fund shareholders of gainsrealized on securities that a fund has sold at a profit, minus any realized losses.

Cash Equivalent Investments. Cash deposits, short-term bank deposits, andmoney market instruments that include U.S. Treasury bills and notes, bankcertificates of deposit (CDs), repurchase agreements, commercial paper, andbanker’s acceptances.

Citigroup 3-Month U.S. Treasury Bill Index (Daily). An index that measuresperformance of short-term U.S. government debt securities and accrues incomeon a daily basis.

Common Stock. A security representing ownership rights in a corporation.

Dividend Distributions. Payments to mutual fund shareholders of income frominterest or dividends generated by a fund’s investments.

Dividend Expense on Securities Sold Short. The amount of money that a fundis required to pay to a lender of stock that the fund has sold short when adividend has been declared on the stock.

Expense Ratio. A fund’s total annual operating expenses expressed as apercentage of the fund’s average net assets. The expense ratio includesmanagement and administrative expenses, but it does not include thetransaction costs of buying and selling portfolio securities.

FTSE 3-Month U.S. Treasury Bill Index. An index that measures theperformance of short-term U.S. government debt securities and accrues incomeon a monthly basis.

Inception Date. The date on which the assets of a fund (or one of its shareclasses) are first invested in accordance with the fund’s investment objective.For funds with a subscription period, the inception date is the day after thatperiod ends. Investment performance is generally measured from theinception date.

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Joint Committed Credit Facility. The Fund participates, along with other fundsmanaged by Vanguard, in a committed credit facility provided by a syndicate oflenders pursuant to a credit agreement that may be renewed annually; eachVanguard fund is individually liable for its borrowings, if any, under the creditfacility. The amount and terms of the committed credit facility are subject toapproval by the Fund’s board of trustees and renegotiation with the lendersyndicate on an annual basis.

Mutual Fund. An investment company that pools the money of many peopleand invests it in a variety of securities in an effort to achieve a specific objectiveover time.

New York Stock Exchange (NYSE). A stock exchange based in New York Citythat is open for regular trading on business days, Monday through Friday, from9:30 a.m. to 4 p.m., Eastern time.

Quantitative Process. An assessment of specific measurable factors, such ascost of capital; value of assets; and projections of sales, costs, earnings, andprofits. The use of a quantitative process provides a systematic approach toinvestment decisions and portfolios.

Securities. Stocks, bonds, money market instruments, and other investments.

Short Sale. A transaction in which a fund sells a stock it does not own and thenborrows the stock from a lender in order to settle the transaction. A fund willengage in short sales when its advisor believes that the price of the stock willdecline or underperform.

Total Return. A percentage change, over a specified time period, in a mutualfund’s net asset value, assuming the reinvestment of all distributions ofdividends and capital gains.

Volatility. The fluctuations in value of a mutual fund or other security. The greatera fund’s volatility, the wider the fluctuations in its returns.

Yield. Income (interest or dividends) earned by an investment, expressed as apercentage of the investment’s price.

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Connect with Vanguard®

> vanguard.com

For More InformationIf you would like more information about VanguardMarket Neutral Fund, the following documents areavailable free upon request:

Annual/Semiannual Reports to ShareholdersAdditional information about the Fund’s investments isavailable in the Fund’s annual and semiannual reportsto shareholders. In the annual report, you will find adiscussion of the market conditions and investmentstrategies that significantly affected the Fund’sperformance during its last fiscal year.

Statement of Additional Information (SAI)The SAI provides more detailed information about theFund and is incorporated by reference into (and thuslegally a part of) this prospectus.

To receive a free copy of the latest annual orsemiannual report or the SAI, or to request additionalinformation about the Fund or other Vanguard funds,please visit vanguard.com or contact us as follows:

If you are an individual investor:Telephone: 800-662-7447;Text telephone for people with hearing impairment:800-749-7273

If you are a participant in an employer-sponsored plan:Telephone: 800-523-1188; Text telephone for peoplewith hearing impairment: 800-749-7273

If you are a current Vanguard shareholder and wouldlike information about your account, accounttransactions, and/or account statements, please call:

Client Services DepartmentTelephone: 800-662-2739;Text telephone for people with hearing impairment:800-749-7273

Information Provided by the Securities andExchange Commission (SEC)Reports and other information about the Fund areavailable in the EDGAR database on the SEC’s websiteat www.sec.gov, or you can receive copies of thisinformation, for a fee, by electronic request at thefollowing email address: publicinfo@sec.gov.

Fund’s Investment Company Act file number: 811-22114

© 2020 The Vanguard Group, Inc. All rights reserved.Vanguard Marketing Corporation, Distributor.

P 634 042020