Report of Independent Registered Public Accounting Firm
To the Trustees of Vanguard Fenway Funds and the Shareholders of Vanguard Growth Equity Fund:
In our opinion, the accompanying statement of net assets and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Vanguard Growth Equity Fund (constituting a separate portfolio of Vanguard Fenway Funds, hereafter referred to as the “Fund”) at September 30, 2012, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at September 30, 2012 by correspondence with the custodian and broker and by agreement to the underlying ownership records of the transfer agent, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
November 12, 2012
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Special 2012 tax information (unaudited) for Vanguard Growth Equity Fund
|
This information for the fiscal year ended September 30, 2012, is included pursuant to provisions of the Internal Revenue Code.
The fund distributed $3,035,000 of qualified dividend income to shareholders during the fiscal year.
For corporate shareholders, 100% of investment income (dividend income plus short-term gains, if any) qualifies for the dividends-received deduction.
25
Your Fund’s After-Tax Returns
This table presents returns for your fund both before and after taxes. The after-tax returns are shown in two ways: (1) assuming that an investor owned the fund during the entire period and paid taxes on the fund’s distributions, and (2) assuming that an investor paid taxes on the fund’s distributions
and
sold all shares at the end of each period.
Calculations are based on the highest individual federal income tax and capital gains tax rates in effect at the times of the distributions and the hypothetical sales. State and local taxes were not considered. After-tax returns reflect any qualified dividend income, using actual prior-year figures and estimates for 2012. (In the example, returns after the sale of fund shares may be higher than those assuming no sale. This occurs when the sale would have produced a capital loss. The calculation assumes that the investor received a tax deduction for the loss.)
Please note that your actual after-tax returns will depend on your tax situation and may differ from those shown. Also note that if you own the fund in a tax-deferred account, such as an individual retirement account or a 401(k) plan, this information does not apply to you. Such accounts are not subject to current taxes.
Finally, keep in mind that a fund’s performance—whether before or after taxes—does not guarantee future results.
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Average Annual Total Returns: Growth Equity Fund
|
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Periods Ended September 30, 2012
|
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One
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Five
|
Ten
|
|
|
Year
|
Years
|
Years
|
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Returns Before Taxes
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26.80%
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-0.40%
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7.46%
|
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Returns After Taxes on Distributions
|
26.71
|
-0.50
|
7.39
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Returns After Taxes on Distributions and Sale of Fund Shares
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17.52
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-0.36
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6.58
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26
About Your Fund’s Expenses
As a shareholder of the fund, you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross income, directly reduce the investment return of the fund.
A fund’s expenses are expressed as a percentage of its average net assets. This figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.
The accompanying table illustrates your fund’s costs in two ways:
•
Based on actual fund return.
This section helps you to estimate the actual expenses that you paid over the period. The ”Ending Account Value“ shown is derived from the fund‘s actual return, and the third column shows the dollar amount that would have been paid by an investor who started with $1,000 in the fund. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period.
To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your fund under the heading ”Expenses Paid During Period.“
•
Based on hypothetical 5% yearly return.
This section is intended to help you compare your fund‘s costs with those of other mutual funds. It assumes that the fund had a yearly return of 5% before expenses, but that the expense ratio is unchanged. In this case—because the return used is not the fund’s actual return—the results do not apply to your investment. The example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to calculate expenses based on a 5% return. You can assess your fund’s costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds.
Note that the expenses shown in the table are meant to highlight and help you compare
ongoing
costs only and do not reflect transaction costs incurred by the fund for buying and selling securities. Further, the expenses do not include any purchase, redemption, or account service fees described in the fund prospectus. If such fees were applied to your account, your costs would be higher. Your fund does not carry a “sales load.”
The calculations assume no shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.
You can find more information about the fund’s expenses, including annual expense ratios, in the Financial Statements section of this report. For additional information on operating expenses and other shareholder costs, please refer to your fund’s current prospectus.
27
|
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Six Months Ended September 30, 2012
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Beginning
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Ending
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Expenses
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Account Value
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Account Value
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Paid During
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Growth Equity Fund
|
3/31/2012
|
9/30/2012
|
Period
|
|
Based on Actual Fund Return
|
$1,000.00
|
$993.66
|
$2.70
|
|
Based on Hypothetical 5% Yearly Return
|
1,000.00
|
1,022.36
|
2.74
|
The calculations are based on expenses incurred in the most recent six-month period. The fund’s annualized six-month expense ratio for that period is 0.54%. The dollar amounts shown as “Expenses Paid” are equal to the annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by the number of days in the most recent 12-month period.
28
Glossary
30-Day SEC Yield.
A fund’s 30-day SEC yield is derived using a formula specified by the U.S. Securities and Exchange Commission. Under the formula, data related to the fund’s security holdings in the previous 30 days are used to calculate the fund’s hypothetical net income for that period, which is then annualized and divided by the fund’s estimated average net assets over the calculation period. For the purposes of this calculation, a security’s income is based on its current market yield to maturity (for bonds), its actual income (for asset-backed securities), or its projected dividend yield (for stocks). Because the SEC yield represents hypothetical annualized income, it will differ—at times significantly—from the fund’s actual experience. As a result, the fund’s income distributions may be higher or lower than implied by the SEC yield.
Beta.
A measure of the magnitude of a fund’s past share-price fluctuations in relation to the ups and downs of a given market index. The index is assigned a beta of 1.00. Compared with a given index, a fund with a beta of 1.20 typically would have seen its share price rise or fall by 12% when the index rose or fell by 10%. For this report, beta is based on returns over the past 36 months for both the fund and the index. Note that a fund’s beta should be reviewed in conjunction with its R-squared (see definition). The lower the R-squared, the less correlation there is between the fund and the index, and the less reliable beta is as an indicator of volatility.
Dividend Yield.
Dividend income earned by stocks, expressed as a percentage of the aggregate market value (or of net asset value, for a fund). The yield is determined by dividing the amount of the annual dividends by the aggregate value (or net asset value) at the end of the period. For a fund, the dividend yield is based solely on stock holdings and does not include any income produced by other investments.
Earnings Growth Rate.
The average annual rate of growth in earnings over the past five years for the stocks now in a fund.
Equity Exposure.
A measure that reflects a fund’s investments in stocks and stock futures. Any holdings in short-term reserves are excluded.
Expense Ratio.
A fund’s total annual operating expenses expressed as a percentage of the fund’s average net assets. The expense ratio includes management and administrative expenses, but does not include the transaction costs of buying and selling portfolio securities.
Foreign Holdings.
The percentage of a fund represented by securities or depositary receipts of companies based outside the United States.
Inception Date.
The date on which the assets of a fund (or one of its share classes) are first invested in accordance with the fund’s investment objective. For funds with a subscription period, the inception date is the day after that period ends. Investment performance is measured from the inception date.
Median Market Cap.
An indicator of the size of companies in which a fund invests; the midpoint of market capitalization (market price x shares outstanding) of a fund’s stocks, weighted by the proportion of the fund’s assets invested in each stock. Stocks representing half of the fund’s assets have market capitalizations above the median, and the rest are below it.
Price/Book Ratio.
The share price of a stock divided by its net worth, or book value, per share. For a fund, the weighted average price/book ratio of the stocks it holds.
29
Price/Earnings Ratio.
The ratio of a stock’s current price to its per-share earnings over the past year. For a fund, the weighted average P/E of the stocks it holds. P/E is an indicator of market expectations about corporate prospects; the higher the P/E, the greater the expectations for a company’s future growth.
R-Squared.
A measure of how much of a fund’s past returns can be explained by the returns from the market in general, as measured by a given index. If a fund’s total returns were precisely synchronized with an index’s returns, its R-squared would be 1.00. If the fund’s returns bore no relationship to the index’s returns, its R-squared would be 0. For this report, R-squared is based on returns over the past 36 months for both the fund and the index.
Return on Equity.
The annual average rate of return generated by a company during the past five years for each dollar of shareholder’s equity (net income divided by shareholder’s equity). For a fund, the weighted average return on equity for the companies whose stocks it holds.
Short-Term Reserves.
The percentage of a fund invested in highly liquid, short-term securities that can be readily converted to cash.
Turnover Rate.
An indication of the fund’s trading activity. Funds with high turnover rates incur higher transaction costs and may be more likely to distribute capital gains (which may be taxable to investors). The turnover rate excludes in-kind transactions, which have minimal impact on costs.
30
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The People Who Govern Your Fund
The trustees of your mutual fund are there to see that the fund is operated and managed in your best interests since, as a shareholder, you are a part owner of the fund. Your fund’s trustees also serve on the board of directors of The Vanguard Group, Inc., which is owned by the Vanguard funds and provides services to them on an at-cost basis.
A majority of Vanguard’s board members are independent, meaning that they have no affiliation with Vanguard or the funds they oversee, apart from the sizable personal investments they have made as private individuals. The independent board members have distinguished backgrounds in business, academia, and public service. Each of the trustees and executive officers oversees 179 Vanguard funds.
The following table provides information for each trustee and executive officer of the fund. More information about the trustees is in the
Statement of Additional Information
, which can be obtained, without charge, by contacting Vanguard at 800-662-7447, or online at vanguard.com.
|
InterestedTrustee
1
|
and Delphi Automotive LLP (automotive components);
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|
|
Senior Advisor at New Mountain Capital; Trustee of
|
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F. William McNabb III
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The Conference Board.
|
|
Born 1957. Trustee Since July 2009. Chairman of the
|
|
|
Board. Principal Occupation(s) During the Past Five
|
Amy Gutmann
|
|
Years: Chairman of the Board of The Vanguard Group,
|
Born 1949. Trustee Since June 2006. Principal
|
|
Inc., and of each of the investment companies served
|
Occupation(s) During the Past Five Years: President
|
|
by The Vanguard Group, since January 2010; Director
|
of the University of Pennsylvania; Christopher H.
|
|
of The Vanguard Group since 2008; Chief Executive
|
Browne Distinguished Professor of Political Science
|
|
Officer and President of The Vanguard Group and of
|
in the School of Arts and Sciences with secondary
|
|
each of the investment companies served by The
|
appointments at the Annenberg School for
|
|
Vanguard Group since 2008; Director of Vanguard
|
Communication and the Graduate School of Education
|
|
Marketing Corporation; Managing Director of The
|
of the University of Pennsylvania; Member of the
|
|
Vanguard Group (1995–2008).
|
National Commission on the Humanities and Social
|
|
|
Sciences; Trustee of Carnegie Corporation of New
|
|
IndependentTrustees
|
York and of the National Constitution Center; Chair
|
|
|
of the U. S. Presidential Commission for the Study
|
|
Emerson U. Fullwood
|
of Bioethical Issues.
|
|
|
|
Born 1948. Trustee Since January 2008. Principal
|
JoAnn Heffernan Heisen
|
|
Occupation(s) During the Past Five Years: Executive
|
Born 1950. Trustee Since July 1998. Principal
|
|
Chief Staff and Marketing Officer for North America
|
Occupation(s) During the Past Five Years: Corporate
|
|
and Corporate Vice President (retired 2008) of Xerox
|
Vice President and Chief Global Diversity Officer
|
|
Corporation (document management products and
|
(retired 2008) and Member of the Executive
|
|
services); Executive in Residence and 2010
|
Committee (1997–2008) of Johnson & Johnson
|
|
Distinguished Minett Professor at the Rochester
|
(pharmaceuticals/medical devices/consumer
|
|
Institute of Technology; Director of SPX Corporation
|
products); Director of Skytop Lodge Corporation
|
|
(multi-industry manufacturing), the United Way of
|
(hotels), the University Medical Center at Princeton,
|
|
Rochester, Amerigroup Corporation (managed health
|
the Robert Wood Johnson Foundation, and the Center
|
|
care), the University of Rochester Medical Center,
|
for Talent Innovation; Member of the Advisory Board
|
|
Monroe Community College Foundation, and North
|
of the Maxwell School of Citizenship and Public Affairs
|
|
Carolina A&T University.
|
at Syracuse University.
|
|
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Rajiv L. Gupta
|
F. Joseph Loughrey
|
|
Born 1945. Trustee Since December 2001.
2
|
Born 1949. Trustee Since October 2009. Principal
|
|
Principal Occupation(s) During the Past Five Years:
|
Occupation(s) During the Past Five Years: President
|
|
Chairman and Chief Executive Officer (retired 2009)
|
and Chief Operating Officer (retired 2009) of Cummins
|
|
and President (2006–2008) of Rohm and Haas Co.
|
Inc. (industrial machinery); Director of SKF AB
|
|
(chemicals); Director of Tyco International, Ltd.
|
(industrial machinery), Hillenbrand, Inc. (specialized
|
|
(diversified manufacturing and services), Hewlett-
|
consumer services), the Lumina Foundation for
|
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Packard Co. (electronic computer manufacturing),
|
|
|
|
|
|
|
Education, and Oxfam America; Chairman of the
|
Executive Officers
|
|
|
Advisory Council for the College of Arts and Letters
|
|
|
|
and Member of the Advisory Board to the Kellogg
|
Glenn Booraem
|
|
|
Institute for International Studies at the University
|
Born 1967. Controller Since July 2010. Principal
|
|
of Notre Dame.
|
Occupation(s) During the Past Five Years: Principal
|
|
|
of The Vanguard Group, Inc.; Controller of each of
|
|
Mark Loughridge
|
the investment companies served by The Vanguard
|
|
Born 1953. Trustee Since March 2012. Principal
|
Group; Assistant Controller of each of the investment
|
|
Occupation(s) During the Past Five Years: Senior Vice
|
companies served by The Vanguard Group (2001–2010).
|
|
President and Chief Financial Officer at IBM (information
|
|
|
|
technology services); Fiduciary Member of IBM’s
|
Thomas J. Higgins
|
|
|
Retirement Plan Committee.
|
Born 1957. Chief Financial Officer Since September
|
|
|
2008. Principal Occupation(s) During the Past Five
|
|
Scott C. Malpass
|
Years: Principal of The Vanguard Group, Inc.; Chief
|
|
Born 1962. Trustee Since March 2012. Principal
|
Financial Officer of each of the investment companies
|
|
Occupation(s) During the Past Five Years: Chief
|
served by The Vanguard Group; Treasurer of each of
|
|
Investment Officer and Vice President at the University
|
the investment companies served by The Vanguard
|
|
of Notre Dame; Assistant Professor of Finance at the
|
Group (1998–2008).
|
|
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Mendoza College of Business at Notre Dame; Member
|
|
|
|
of the Notre Dame 403(b) Investment Committee;
|
Kathryn J. Hyatt
|
|
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Director of TIFF Advisory Services, Inc. (investment
|
Born 1955. Treasurer Since November 2008. Principal
|
|
advisor); Member of the Investment Advisory
|
Occupation(s) During the Past Five Years: Principal of
|
|
Committees of the Financial Industry Regulatory
|
The Vanguard Group, Inc.; Treasurer of each of the
|
|
Authority (FINRA) and of Major League Baseball.
|
investment companies served by The Vanguard
|
|
|
Group; Assistant Treasurer of each of the investment
|
|
André F. Perold
|
companies served by The Vanguard Group (1988–2008).
|
|
Born 1952. Trustee Since December 2004. Principal
|
|
|
|
Occupation(s) During the Past Five Years: George
|
Heidi Stam
|
|
|
Gund Professor of Finance and Banking at the Harvard
|
Born 1956. Secretary Since July 2005. Principal
|
|
Business School (retired 2011); Chief Investment
|
Occupation(s) During the Past Five Years: Managing
|
|
Officer and Managing Partner of HighVista Strategies
|
Director of The Vanguard Group, Inc.; General Counsel
|
|
LLC (private investment firm); Director of Rand
|
of The Vanguard Group; Secretary of The Vanguard
|
|
Merchant Bank; Overseer of the Museum of Fine
|
Group and of each of the investment companies
|
|
Arts Boston.
|
served by The Vanguard Group; Director and Senior
|
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Vice President of Vanguard Marketing Corporation.
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Alfred M. Rankin, Jr.
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Born 1941. Trustee Since January 1993. Principal
|
Vanguard Senior ManagementTeam
|
|
Occupation(s) During the Past Five Years: Chairman,
|
|
|
|
President, and Chief Executive Officer of NACCO
|
Mortimer J. Buckley
|
Michael S. Miller
|
|
Industries, Inc. (forklift trucks/housewares/lignite);
|
Kathleen C. Gubanich
|
James M. Norris
|
|
Director of Goodrich Corporation (industrial products/
|
Paul A. Heller
|
Glenn W. Reed
|
|
aircraft systems and services) and the National
|
Martha G. King
|
George U. Sauter
|
|
Association of Manufacturers; Chairman of the Board
|
Chris D. McIsaac
|
|
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of the Federal Reserve Bank of Cleveland and of
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University Hospitals of Cleveland; Advisory Chairman
|
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of the Board of The Cleveland Museum of Art.
|
Chairman Emeritus and Senior Advisor
|
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Peter F. Volanakis
|
John
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|
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Born 1955. Trustee Since July 2009. Principal
|
Chairman, 1996–2009
|
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Occupation(s) During the Past Five Years: President
|
Chief Executive Officer and President, 1996–2008
|
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and Chief Operating Officer (retired 2010) of Corning
|
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|
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Incorporated (communications equipment); Director
|
Founder
|
|
|
of SPX Corporation (multi-industry manufacturing);
|
|
|
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Overseer of the Amos Tuck School of Business
|
John C. Bogle
|
|
Administration at Dartmouth College; Advisor to the
|
Chairman and Chief Executive Officer, 1974–1996
|
|
Norris Cotton Cancer Center.
|
|
|
1 Mr. McNabb is considered an “interested person,” as defined in the Investment Company Act of 1940, because he is an officer of the
Vanguard funds.
2 December 2002 for Vanguard Equity Income Fund, Vanguard Growth Equity Fund, the Vanguard Municipal Bond Funds, and the Vanguard
State Tax-Exempt Funds.
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P.O. Box 2600
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Valley Forge, PA 19482-2600
|
Connect with Vanguard®
>
vanguard.com
|
|
|
|
Fund Information
>
800-662-7447
|
|
|
Direct Investor Account Services
>
800-662-2739
|
|
|
Institutional Investor Services
>
800-523-1036
|
|
|
Text Telephone for People
|
|
|
With Hearing Impairment
>
800-749-7273
|
|
|
|
|
This material may be used in conjunction
|
|
|
with the offering of shares of any Vanguard
|
|
|
fund only if preceded or accompanied by
|
|
|
the fund’s current prospectus.
|
|
|
|
|
All comparative mutual fund data are from Lipper Inc. or
|
|
|
Morningstar, Inc., unless otherwise noted.
|
|
|
|
|
You can obtain a free copy of Vanguard’s proxy voting
|
|
|
guidelines by visiting vanguard.com/proxyreporting or by
|
|
|
calling Vanguard at 800-662-2739. The guidelines are
|
|
|
also available from the SEC’s website, sec.gov. In
|
|
|
addition, you may obtain a free report on how your fund
|
|
|
voted the proxies for securities it owned during the 12
|
|
|
months ended June 30. To get the report, visit either
|
|
|
vanguard.com/proxyreporting or sec.gov.
|
|
|
|
|
You can review and copy information about your fund at
|
|
|
the SEC’s Public Reference Room in Washington, D.C. To
|
|
|
find out more about this public service, call the SEC at
|
|
|
202-551-8090. Information about your fund is also
|
|
|
available on the SEC’s website, and you can receive
|
|
|
copies of this information, for a fee, by sending a
|
|
|
request in either of two ways: via e-mail addressed to
|
|
|
publicinfo@sec.gov or via regular mail addressed to the
|
|
|
Public Reference Section, Securities and Exchange
|
|
|
Commission, Washington, DC 20549-1520.
|
|
|
|
© 2012 The Vanguard Group, Inc.
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All rights reserved.
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Vanguard Marketing Corporation, Distributor.
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|
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Q5440 112012
|
|
|
|
Annual Report
| September 30, 2012
|
|
Vanguard PRIMECAP Core Fund
|
|
|
|
>
For the fiscal year 2012, Vanguard PRIMECAP Core Fund returned about 23%, trailing the return of its benchmark index and the average return of peer funds.
>
The fund’s returns in information technology, one of its largest sectors, were less than half those recorded by the benchmark’s information technology stocks.
>
While the health care sector was a bright spot for the fund, it couldn’t offset the shortfalls in technology and other areas.
|
|
|
|
Contents
|
|
|
Your Fund’s Total Returns.
|
1
|
|
Chairman’s Letter.
|
2
|
|
Advisor’s Report.
|
8
|
|
Fund Profile.
|
12
|
|
Performance Summary.
|
13
|
|
Financial Statements.
|
15
|
|
Your Fund’s After-Tax Returns.
|
25
|
|
About Your Fund’s Expenses.
|
26
|
|
Glossary.
|
28
|
Please note: The opinions expressed in this report are just that—informed opinions. They should not be considered promises or advice. Also, please keep in mind that the information and opinions cover the period through the date on the front of this report. Of course, the risks of investing in your fund are spelled out in the prospectus.
See the Glossary for definitions of investment terms used in this report.
About the cover: Our cover photograph shows rigging on the HMS
Surprise
, a replica of an 18th-century Royal Navy frigate. It was featured in the 2003 movie
Master and Commander: The Far Side of the World
, which was based on Patrick O’Brian’s sea novels, set amid the Napoleonic Wars. Vanguard was named for another ship of that era, the HMS
Vanguard
, which was the flagship of British Admiral Horatio Nelson at the Battle of the Nile.
Your Fund’s Total Returns
|
|
|
|
Fiscal Year Ended September 30, 2012
|
|
|
|
Total
|
|
|
Returns
|
|
Vanguard PRIMECAP Core Fund
|
22.55%
|
|
MSCI US Prime Market 750 Index
|
29.98
|
|
Multi-Cap Core Funds Average
|
25.24
|
|
Multi-Cap Core Funds Average: Derived from data provided by Lipper Inc.
|
|
|
|
|
|
|
|
Your Fund’s Performance at a Glance
|
|
|
|
|
|
September 30, 2011, Through September 30, 2012
|
|
|
|
|
|
|
|
|
Distributions Per Share
|
|
|
Starting
|
Ending
|
Income
|
Capital
|
|
|
Share Price
|
Share Price
|
Dividends
|
Gains
|
|
Vanguard PRIMECAP Core Fund
|
$12.37
|
$14.98
|
$0.163
|
$0.000
|
1
Chairman’s Letter
De
ar
Sh
ar
ehol
d
e
r
,
Global stock markets began the fiscal year strongly and––after weathering some springtime disruption––also finished on a high note with four straight months of gains. Although Vanguard PRIMECAP Core Fund’s performance was strong for the 12 months ended September 30, 2012, it trailed its comparative standards. The fund returned about 23% for the period, compared to about 30% for its benchmark, the MSCI US Prime 750 Index, and about 25% on average for peer multi-capitalization core funds.
The f
und
’s
r
et
urn
s ofte
n d
ive
rg
e f
r
o
m
those of its
b
e
n
ch
mar
k
and p
ee
r
s
b
ec
au
se of the
ad
viso
r
’s willi
ngn
ess to est
ab
lish o
u
tsize
d
st
a
kes i
n
wh
a
t it co
n
si
d
e
r
s the
mar
ket’s
m
ost
pr
o
m
isi
ng
lo
ng
-te
rm
i
n
vest
m
e
n
t o
pp
o
r
t
un
ities.
In r
ece
n
t ye
ar
s, the
ad
viso
r
h
a
s fo
und
those o
pp
o
r
t
un
ities i
n
i
n
fo
rma
tio
n
tech
n
olo
g
y
and
he
a
lth c
ar
e co
mpan
ies. Ove
r
the
pa
st
1
2
m
o
n
ths, the f
und
’s tech stocks wei
g
he
d
o
n r
el
a
tive
p
e
r
fo
rman
ce, while its he
a
lth c
ar
e stocks
ga
ve it
a b
oost.
O
n a
se
para
te
n
ote,
I
w
an
t to i
n
fo
rm
yo
u
th
a
t
Vanguard
h
a
s eli
m
i
na
te
d
the
r
e
d
e
mp
tio
n
fee fo
r
yo
ur
f
und
, effective
Ma
y 2
3
. The f
und
’s t
ru
stees
d
ete
rm
i
n
e
d
th
a
t the fee, o
n
e of seve
ra
l
m
e
a
s
ur
es i
n p
l
a
ce to
d
isco
urag
e f
r
eq
u
e
n
t t
rad
i
ng and pr
otect the i
n
te
r
ests of lo
ng
-te
rm
i
n
vesto
r
s, w
a
s
n
o lo
ng
e
r n
ee
d
e
d
.
2
I
f yo
u
hol
d
f
und
sh
ar
es i
n a
t
a
x
ab
le
a
cco
un
t, yo
u ma
y wish to
r
eview the t
ab
le of
a
fte
r
-t
a
x
r
et
urn
s,
ba
se
d
o
n
the hi
g
hest fe
d
e
ra
l i
n
co
m
e t
a
x
bra
cket, th
a
t
app
e
ar
s l
a
te
r
i
n
this
r
e
p
o
r
t.
Stocks notched a powerful rally,
with help from central bankers
U.S. stocks s
urg
e
d 3
0% i
n
the
1
2
m
o
n
ths
e
nd
e
d
Se
p
te
mb
e
r 3
0, o
u
t
pa
ci
ng
the
ga
i
n
s of thei
r
i
n
te
rna
tio
na
l co
un
te
rpar
ts. The
ra
lly c
am
e
am
i
d m
oves
b
y U.S.
and
E
ur
o
p
e
an
ce
n
t
ra
l
ban
ke
r
s to q
u
iet—
a
t le
a
st te
mp
o
rar
ily—i
n
vesto
r
s’ co
n
ce
rn
s
ab
o
u
t the U.S. eco
n
o
m
y
and
the fi
nan
ces of E
ur
o
p
e
an g
ove
rnm
e
n
ts
and ban
ks.
While U.S. stocks we
r
e the st
and
o
u
ts, E
ur
o
p
e
an and
e
m
e
rg
i
ng mar
kets stocks
a
lso
p
oste
d d
o
ub
le-
d
i
g
it
r
es
u
lts. The
d
evelo
p
e
d mar
kets of the
Pa
cific
r
e
g
io
n
we
r
e the we
a
kest
p
e
r
fo
rm
e
r
s
bu
t still
r
eco
rd
e
d a m
o
d
est
ad
v
an
ce.
In
J
u
ly, the
pr
esi
d
e
n
t of the E
ur
o
p
e
an
Ce
n
t
ra
l B
an
k
d
ecl
ar
e
d
th
a
t
p
olicy
ma
ke
r
s wo
u
l
d d
o wh
a
teve
r
w
a
s
n
ee
d
e
d
to
pr
ese
r
ve the e
ur
o co
mm
o
n
c
urr
e
n
cy.
Th
a
t
pr
o
n
o
un
ce
m
e
n
t w
a
s e
n
co
urag
i
ng
to i
n
vesto
r
s,
bu
t E
ur
o
p
e’s fi
nan
ci
a
l t
r
o
ub
les
ar
e
b
y
n
o
m
e
an
s
r
esolve
d
.
Vanguard
eco
n
o
m
ists
b
elieve the
m
ost likely sce
nar
io is th
a
t the E
ur
ozo
n
e will “
mudd
le th
r
o
ug
h” fo
r
seve
ra
l ye
ar
s, with occ
a
sio
na
l s
p
ikes i
n mar
ket vol
a
tility,
a
s fisc
a
l ti
g
hte
n
i
ng
co
n
ti
nu
es i
n
the f
a
ce of we
a
k eco
n
o
m
ic
gr
owth.
|
|
|
|
|
|
Market Barometer
|
|
|
|
|
|
|
|
|
Average Annual Total Returns
|
|
|
Periods Ended September 30, 2012
|
|
|
One
|
Three
|
Five
|
|
|
Year
|
Years
|
Years
|
|
Stocks
|
|
|
|
|
Russell 1000 Index (Large-caps)
|
30.06%
|
13.27%
|
1.22%
|
|
Russell 2000 Index (Small-caps)
|
31.91
|
12.99
|
2.21
|
|
Dow Jones U.S. Total Stock Market Index
|
30.00
|
13.29
|
1.53
|
|
MSCI All Country World Index ex USA (International)
|
14.48
|
3.17
|
-4.12
|
|
|
|
Bonds
|
|
|
|
|
Barclays U.S. Aggregate Bond Index (Broad taxable market)
|
5.16%
|
6.19%
|
6.53%
|
|
Barclays Municipal Bond Index (Broad tax-exempt market)
|
8.32
|
5.99
|
6.06
|
|
Citigroup Three-Month U.S. Treasury Bill Index
|
0.05
|
0.08
|
0.63
|
|
|
|
CPI
|
|
|
|
|
Consumer Price Index
|
1.99%
|
2.33%
|
2.11%
|
3
Bonds produced solid returns;
future results may be more muted
Bo
nd
s o
n
ce
aga
i
n ad
v
an
ce
d
; the
br
o
ad
U.S. t
a
x
ab
le
mar
ket
r
et
urn
e
d ab
o
u
t 5% fo
r
the
1
2
m
o
n
ths.
Am
o
ng
U.S. T
r
e
a
s
ur
ies, lo
ng
-te
rm b
o
nd
s we
r
e
par
tic
u
l
ar
ly st
r
o
ng a
s they
b
e
n
efite
d
f
r
o
m
the
F
e
d
e
ra
l
R
ese
r
ve’s
b
o
nd
-
bu
yi
ng pr
o
gram
.
A
s
b
o
nd pr
ices
r
ose, the yiel
d
of the
1
0-ye
ar
U.S. T
r
e
a
s
ur
y
n
ote fell to
a r
eco
rd
low i
n
J
u
ly, closi
ng b
elow
1
.5%. (Bo
nd
yiel
d
s
and pr
ices
m
ove i
n
o
pp
osite
d
i
r
ectio
n
s.) By the e
nd
of the
p
e
r
io
d
, the yiel
d
h
ad
cli
mb
e
d
,
bu
t it still
r
e
ma
i
n
e
d
low
b
y histo
r
ic
a
l st
andard
s.
Bo
nd
hol
d
e
r
s h
a
ve e
n
joye
d
ye
ar
s of st
r
o
ng r
et
urn
s. B
u
t
a
s Ti
m
B
u
ckley, o
ur
i
n
co
m
i
ng
chief i
n
vest
m
e
n
t office
r
, h
a
s
n
ote
d
,
i
n
vesto
r
s sho
u
l
dn
’t
b
e s
urpr
ise
d
if f
u
t
ur
e
r
es
u
lts
ar
e
mu
ch
m
o
r
e
m
o
d
est.
A
s yiel
d
s t
umb
le, the sco
p
e fo
r
f
ur
the
r d
ecli
n
es—
and pr
ice i
n
c
r
e
a
ses—
d
i
m
i
n
ishes.
The
F
e
d
e
ra
l
R
ese
r
ve
ann
o
un
ce
d
o
n
Se
p
te
mb
e
r 13
th
a
t it wo
u
l
d
co
n
ti
nu
e to hol
d
its t
arg
et fo
r
sho
r
t-te
rm
i
n
te
r
est
ra
tes
b
etwee
n
0%
and
0.25%
a
t le
a
st th
r
o
ug
h
m
i
d
-20
1
5. The exce
p
tio
na
lly low
ra
tes, i
n p
l
a
ce si
n
ce l
a
te 2008, ke
p
t
a
ti
g
ht li
d
o
n r
et
urn
s f
r
o
m m
o
n
ey
mar
ket f
und
s
and
s
a
vi
ng
s
a
cco
un
ts.
The fund’s technology holdings
hindered relative performance
The
PRIM
EC
AP
Co
r
e
Fund
seeks to
i
n
vest i
n
co
mpan
ies with
und
e
rappr
eci
a
te
d
lo
ng
-te
rm gr
owth
pr
os
p
ects. Si
n
ce the f
und
’s i
n
ce
p
tio
n
i
n
2004, this co
n
t
rar
i
an
|
|
|
|
|
Expense Ratios
|
|
|
|
Your Fund Compared With Its Peer Group
|
|
|
|
|
|
Peer Group
|
|
|
Fund
|
Average
|
|
PRIMECAP Core Fund
|
0.51%
|
1.18%
|
The fund expense ratio shown is from the prospectus dated January 27, 2012, and represents estimated costs for the current fiscal year. For the fiscal year ended September 30, 2012, the fund’s expense ratio was 0.50%. The peer-group expense ratio is derived from data provided by Lipper Inc. and captures information through year-end 2011.
Peer group: Multi-Cap Core Funds.
4
appr
o
a
ch h
a
s
b
ee
n
effective
m
o
r
e ofte
n
th
an n
ot. Howeve
r
,
a b
y-
pr
o
du
ct of the f
und
’s willi
ngn
ess to i
gn
o
r
e the
mar
ket co
n
se
n
s
u
s i
n
its se
ar
ch fo
r
s
up
e
r
io
r
i
n
vest
m
e
n
ts c
an b
e occ
a
sio
na
l st
r
etches whe
n
this
d
isti
n
ctive
appr
o
a
ch hol
d
s
ba
ck
r
et
urn
s. S
u
ch w
a
s the c
a
se ove
r
the 20
1
2 fisc
a
l ye
ar
.
The f
und pa
i
d a pr
ice fo
r
its hol
d
i
ng
s i
n
tech
n
olo
g
y, whe
r
e it l
a
cke
d
ex
p
os
ur
e to so
m
e of the secto
r
’s
br
i
g
htest st
ar
s.
PRIM
EC
AP
Co
r
e’s tech
n
olo
g
y stocks cli
mb
e
d ab
o
u
t
1
5%. Those i
n
the
b
e
n
ch
mar
k
r
et
urn
e
d m
o
r
e th
an 3
0%.
The f
und
h
a
s
n
’t h
ad m
e
an
i
ng
f
u
l ex
p
os
ur
e to ce
r
t
a
i
n
co
mpan
ies th
a
t h
a
ve
b
est c
ap
it
a
lize
d
o
n
hi
g
h
d
e
mand
fo
r
s
mar
t
p
ho
n
es
and
t
ab
lets.
In
ste
ad
, its tech hol
d
i
ng
s i
n
cl
ud
e
a numb
e
r
of fo
rm
e
r
ly hi
g
h-flyi
ng
co
mpan
ies th
a
t h
a
ve f
a
lle
n
(te
mp
o
rar
ily, i
n
the
ad
viso
r
’s j
udgm
e
n
t) f
r
o
m
co
n
s
um
e
r
s’
and
i
n
vesto
r
s’ f
a
vo
r
. The f
und
’s i
n
vest
m
e
n
ts i
n
ho
m
e e
n
te
r
t
a
i
nm
e
n
t softw
ar
e fi
rm
s s
u
ffe
r
e
d a
s co
n
s
um
e
r
s’ t
a
stes
and
s
p
e
nd
i
ng
h
a
ve shifte
d
so
m
ewh
a
t f
r
o
m gam
i
ng
to
m
o
b
ile tech
n
olo
g
y.
Indu
st
r
i
a
l stocks we
r
e
a
lso
a d
is
app
oi
n
t-
m
e
n
t fo
r PRIM
EC
AP
Co
r
e. The f
und
’s
a
i
r
li
n
e
and
lo
g
istic co
mpan
ies––which
ar
e s
u
sce
p
ti
b
le to swi
ng
s
b
oth l
arg
e
and
s
ma
ll––st
rugg
le
d
ove
r
the
p
e
r
io
d
. Hi
g
he
r
f
u
el
pr
ices
and
we
a
ke
r g
lo
ba
l t
rad
e h
a
ve c
u
t i
n
to so
m
e co
mpan
ies’
pr
ofit
ab
ility.
|
|
|
|
Total Returns
|
|
|
Inception Through September 30, 2012
|
|
|
|
Average
|
|
|
Annual Return
|
|
PRIMECAP Core Fund (Returns since inception: 12/9/2004)
|
6.57%
|
|
MSCI US Prime Market 750 Index
|
5.09
|
|
Multi-Cap Core Funds Average
|
3.80
|
|
Multi-Cap Core Funds Average: Derived from data provided by Lipper Inc.
|
The figures shown represent past performance, which is not a guarantee of future results. (Current performance may be lower or higher than the performance data cited. For performance data current to the most recent month-end, visit our website at vanguard.com/performance.) Note, too, that both investment returns and principal value can fluctuate widely, so an investor’s shares, when sold, could be worth more or less than their original cost.
5
Aga
i
n
st these so
r
e s
p
ots fo
r
the f
und
, he
a
lth c
ar
e stocks
pr
ovi
d
e
d a
t le
a
st
a par
ti
a
l s
a
lve. The f
und
’s
a
lloc
a
tio
n
to he
a
lth c
ar
e w
a
s
m
o
r
e th
an d
o
ub
le th
a
t of its i
nd
ex co
un
te
rpar
t
and a
cco
un
te
d
fo
r
8
p
e
r
ce
n
t
ag
e
p
oi
n
ts of its
r
et
urn
.
M
ost of the st
r
e
ng
th c
am
e f
r
o
m
the
b
iotech-
n
olo
g
y i
ndu
st
r
y, whe
r
e the f
und
’s stocks
b
e
n
efite
d
f
r
o
m d
evelo
p
i
ng drug p
i
p
eli
n
es
and
thei
r
st
r
o
ng
fi
nan
ci
a
l
p
ositio
n
.
F
o
r m
o
r
e o
n
the
ad
viso
r
’s st
ra
te
g
y
and
o
u
tlook,
p
le
a
se see the
Ad
viso
r
’s
R
e
p
o
r
t followi
ng
this lette
r
.
In seeking strong long-term results,
the fund takes the patient approach
PRIM
EC
AP Manag
e
m
e
n
t Co
mpan
y, the
f
und
’s
ad
viso
r
,
ma
i
n
t
a
i
n
s
an
i
n
vest
m
e
n
t
p
hiloso
p
hy
r
oote
d
i
n a
co
n
victio
n
th
a
t
d
ee
p
f
undam
e
n
t
a
l
r
ese
ar
ch c
an un
cove
r
o
pp
o
r
t
un
ities th
a
t will yiel
d
o
u
tsize
d r
ew
ard
s ove
r
the
n
ext th
r
ee to five ye
ar
s.
Si
n
ce
PRIM
EC
AP
Co
r
e’s i
n
ce
p
tio
n
o
n
Dece
mb
e
r
9, 2004, the f
und
h
a
s
r
eco
rd
e
d an a
ve
rag
e
annua
l
r
et
urn
of 6.57%,
m
o
r
e th
an 1 p
e
r
ce
n
t
ag
e
p
oi
n
t
a
he
ad
of its
mar
ket
b
e
n
ch
mar
k, the
M
SC
I
US
Pr
i
m
e 750
Ind
ex,
and m
o
r
e th
an
2
p
e
r
ce
n
t
ag
e
p
oi
n
ts
a
he
ad
of the
a
ve
rag
e
r
et
urn
of
p
ee
r
f
und
s.
An
i
n
iti
a
l i
n
vest
m
e
n
t of $
1
0,000 i
n
the
PRIM
EC
AP
Co
r
e
Fund
wo
u
l
d
h
a
ve
gr
ow
n
to $
1
6,4
31
,
ab
o
u
t $
1
,700
m
o
r
e th
an
it wo
u
l
d
h
a
ve e
arn
e
d
h
ad
it
b
ee
n
co
mp
o
und
e
d a
t the
b
e
n
ch
mar
k’s
r
et
urn
.
Of co
ur
se, ei
g
ht ye
ar
s is
a r
el
a
tively
br
ief
p
e
r
io
d
fo
r
ev
a
l
ua
ti
ng
the f
und
’s lo
ng
-te
rm
i
n
vest
m
e
n
t st
ra
te
g
y. B
u
t we
ar
e co
n
fi
d
e
n
t th
a
t
PRIM
EC
AP Manag
e
m
e
n
t’s
d
ee
p
ex
p
e
r
tise
and
q
ua
lity of
r
ese
ar
ch will co
n
ti
nu
e to wo
r
k i
n
i
n
vesto
r
s’ f
a
vo
r
.
Vanguard
’s c
u
sto
mar
y low costs hel
p
e
d
the
ad
viso
r
’s c
au
se
and a
llowe
d
sh
ar
ehol
d
e
r
s to kee
p m
o
r
e of the f
und
’s
r
et
urn
s.
The lessons of the financial crisis
remain relevant four years later
In
Se
p
te
mb
e
r
, the e
nd
of yo
ur
f
und
’s
fisc
a
l ye
ar
, we
mar
ke
d
the fo
ur
th
ann
ive
r
s
ar
y of Leh
man
B
r
othe
r
s’ coll
ap
se, the st
ar
t of the 2008–2009 fi
nan
ci
a
l c
r
isis. Whe
n
the Leh
man n
ews
br
oke,
I
w
a
s s
p
e
a
ki
ng
to i
n
stit
u
tio
na
l clie
n
ts
a
t
an
eve
n
t i
n
W
a
shi
ng
to
n
, D.C.,
a
ll of th
r
ee weeks i
n
to
m
y
n
ew
r
ole
a
s
Vanguard
’s CEO.
In
the e
n
s
u
i
ng m
o
n
ths,
I
w
a
s st
ru
ck
b
oth
b
y how fo
r
t
una
te
I
w
a
s to wo
r
k with
a gr
e
a
t te
am
of
Vanguard
“c
r
ew”
and b
y the
r
e
mar
k
ab
le ste
ad
i
n
ess
d
e
m
o
n
st
ra
te
d b
y o
ur
clie
n
ts.
Man
y clie
n
ts ex
p
e
r
ie
n
ce
d
si
gn
ific
an
t losses,
bu
t si
gn
s of
pan
ic we
r
e few. O
n ba
l
an
ce, they
r
e
ma
i
n
e
d
co
mm
itte
d
to thei
r
lo
ng
-te
rm
i
n
vest
m
e
n
t
pr
o
gram
s
and manag
e
d
to
b
e
n
efit f
r
o
m
the fi
nan
ci
a
l
mar
kets’ s
ub
seq
u
e
n
t
r
ecove
r
y.
A
s the c
r
isis
r
ece
d
es f
ur
the
r
i
n
ti
m
e, it’s i
mp
o
r
t
an
t
n
ot to lose si
g
ht of the lesso
n
s th
a
t it ill
um
i
na
te
d ab
o
u
t i
n
vesti
ng and
6
so
und
fi
nan
ci
a
l
pra
ctices
g
e
n
e
ra
lly.
F
i
r
st
am
o
ng
those lesso
n
s is th
a
t
d
ive
r
sific
a
tio
n d
oes wo
r
k. Dive
r
sific
a
tio
n d
i
dn
’t i
mmun
ize i
n
vesto
r
s f
r
o
m
the
mar
ket’s
d
ecli
n
e,
bu
t it ce
r
t
a
i
n
ly hel
p
e
d
to i
n
s
u
l
a
te the
m
f
r
o
m
the wo
r
st of it.
Seco
nd
, s
a
vi
ng m
o
n
ey
and
livi
ng
withi
n
yo
ur m
e
an
s
ar
e c
r
itic
a
l.
In
vesto
r
s
ar
e
a
cti
ng
o
n
this lesso
n a
s they
pa
y off
d
e
b
t, which is
a
fo
rm
of s
a
vi
ng
,
and
i
n
c
r
e
a
se thei
r
s
a
vi
ng
s
ra
tes f
r
o
m
the
dang
e
r
o
u
sly low levels th
a
t
pr
ev
a
ile
d b
efo
r
e the c
r
isis.
Thi
rd
, h
a
vi
ng
the co
urag
e to stick with
a
so
und
i
n
vest
m
e
n
t
p
l
an
—
a
s so
man
y of o
ur
clie
n
ts
d
i
d
—is i
mp
o
r
t
an
t
dur
i
ng
vol
a
tile,
un
ce
r
t
a
i
n
ti
m
es.
In
vesto
r
s who
r
esiste
d
the
urg
e to
ba
il o
u
t of stocks
a
t the
d
e
p
ths of the c
r
isis h
a
ve l
arg
ely
b
ee
n r
ew
ard
e
d
i
n
the s
u
ccee
d
i
ng
ye
ar
s.
I am
ve
r
y o
p
ti
m
istic th
a
t, if i
n
vesto
r
s e
mbra
ce these lesso
n
s, they c
an g
ive the
m
selves
a b
ette
r
ch
an
ce of
r
e
a
chi
ng
thei
r
lo
ng
-te
rm g
o
a
ls.
A
s
a
lw
a
ys, th
an
k yo
u
fo
r
i
n
vesti
ng
with
Vanguard
.
Si
n
ce
r
ely,
F
. Willi
am M
cN
abb III
Ch
a
i
rman and
Chief Exec
u
tive Office
r
Octo
b
e
r 11
, 20
1
2
7
Advisor’s Report
F
o
r
the fisc
a
l ye
ar
e
nd
e
d
Se
p
te
mb
e
r 3
0, 20
1
2,
Vanguard PRIM
EC
AP
Co
r
e
Fund r
et
urn
e
d
22.55%, t
ra
ili
ng b
oth the 29.98%
r
et
urn
of its
b
e
n
ch
mar
k, the
unmanag
e
d M
SC
I
US
Pr
i
m
e
Mar
ket 750
Ind
ex,
and
the 25.24%
a
ve
rag
e
r
et
urn
of
mu
lti-c
ap
it
a
liz
a
tio
n
co
r
e f
und
co
mp
etito
r
s.
The investment environment
The stock
mar
ket showe
d
st
r
o
ng ga
i
n
s
ove
r
the
pa
st
1
2
m
o
n
ths
d
es
p
ite
a m
o
r
e ch
a
lle
ng
i
ng g
lo
ba
l eco
n
o
m
ic o
u
tlook.
G
r
owth i
n
U.S.
gr
oss
d
o
m
estic
pr
o
du
ct (GD
P
) fo
r
the seco
nd
q
uar
te
r
of 20
1
2 w
a
s j
u
st
1
.
3
%, s
ugg
esti
ng a
slow
d
ow
n
i
n
the
m
i
d
st of
an a
l
r
e
ad
y te
p
i
d r
ecove
r
y. Co
n
s
um
e
r
s
p
e
nd
i
ng
t
r
e
nd
s h
a
ve
b
ee
n m
ixe
d
, with si
gn
s of
a
ccele
ra
tio
n
followe
d b
y
p
e
r
io
d
s of sl
ugg
ish
n
ess
a
s ho
u
sehol
d
s st
rugg
le i
n
the f
a
ce of hi
g
h
un
e
mp
loy
m
e
n
t, little
gr
owth i
n p
e
r
so
na
l i
n
co
m
e,
and a d
iffic
u
lt ho
u
si
ng mar
ket.
Des
p
ite
n
ews th
a
t the
un
e
mp
loy
m
e
n
t
ra
te
dr
o
pp
e
d b
elow 8% i
n
Se
p
te
mb
e
r
fo
r
the fi
r
st ti
m
e si
n
ce J
anuar
y 2009, jo
b gr
owth
r
e
ma
i
n
s we
a
k. The offici
a
l
un
e
mp
loy
m
e
n
t
ra
te likely
und
e
r
st
a
tes the
d
iffic
u
lt jo
b
e
n
vi
r
o
nm
e
n
t, si
n
ce it
d
oes
n
ot
r
eflect wo
r
ke
r
s who
ar
e
n
o lo
ng
e
r
seeki
ng
e
mp
loy
m
e
n
t o
r
those who
ar
e
und
e
r
e
mp
loye
d
. O
u
tsi
d
e the U
n
ite
d
St
a
tes, eco
n
o
m
ic
and g
eo
p
olitic
a
l
d
evelo
pm
e
n
ts we
r
e l
arg
ely
n
e
ga
tive. The sove
r
ei
gn
-
d
e
b
t c
r
isis co
n
ti
nu
e
d
to wei
g
h o
n
E
ur
o
p
e
an
eco
n
o
m
ies, Chi
na
showe
d
si
gn
s of slowi
ng
eco
n
o
m
ic
gr
owth,
and
te
n
sio
n
s fl
ar
e
d
i
n
the
M
i
dd
le E
a
st.
Management of the fund
Des
p
ite the s
ubpar r
es
u
lts of the
pa
st
fisc
a
l ye
ar
, o
ur
i
n
vest
m
e
n
t
appr
o
a
ch
r
e
ma
i
n
s co
n
siste
n
t. We
r
ely o
n
f
undam
e
n
t
a
l
r
ese
ar
ch to i
d
e
n
tify co
mpan
ies whose
r
eve
nu
es
and
e
arn
i
ng
s will, i
n
o
ur
o
p
i
n
io
n
,
gr
ow
m
o
r
e
rap
i
d
ly ove
r a
th
r
ee-to-five-ye
ar
ti
m
e f
ram
e th
an
c
urr
e
n
t v
a
l
ua
tio
n
s
m
i
g
ht s
ugg
est. We seek to c
ap
it
a
lize o
n
sit
ua
tio
n
s i
n
which the f
undam
e
n
t
a
l v
a
l
u
e of
a
co
mpan
y si
gn
ific
an
tly excee
d
s its c
urr
e
n
t
mar
ket v
a
l
u
e.
This i
n
vest
m
e
n
t st
ra
te
g
y h
a
s le
d u
s to
bu
il
d and ma
i
n
t
a
i
n
si
gn
ific
an
t i
n
vest
m
e
n
ts i
n
i
n
fo
rma
tio
n
tech
n
olo
g
y
and
he
a
lth c
ar
e co
mpan
ies th
a
t we
b
elieve offe
r
the
p
ote
n
ti
a
l fo
r
hi
g
he
r r
et
urn
s th
an
the ove
ra
ll
mar
ket will
pr
o
du
ce. These two secto
r
s
ma
ke
up m
o
r
e th
an
50% of the f
und
’s hol
d
i
ng
s (ve
r
s
u
s sli
g
htly
m
o
r
e th
an 3
0% fo
r
the
M
SC
I
US
Pr
i
m
e
Mar
ket 750
Ind
ex). Ei
g
ht of the te
n
l
arg
est hol
d
i
ng
s i
n
the f
und ar
e he
a
lth c
ar
e o
r
i
n
fo
rma
tio
n
tech
n
olo
g
y stocks.
Technology
P
oo
r
stock selectio
n
i
n
the i
n
fo
rma
tio
n
tech
n
olo
g
y secto
r
h
ur
t the f
und
’s
r
el
a
tive
r
et
urn
s fo
r
the
pa
st
1
2
m
o
n
ths. The
I
T stocks i
n
the
M
SC
I
US
Pr
i
m
e
Mar
ket 750
Ind
ex
r
et
urn
e
d 31
.
1
% fo
r
the fisc
a
l ye
ar
.
In
co
mpar
iso
n
, the f
und
’s hol
d
i
ng
s i
n
the secto
r r
et
urn
e
d
o
n
ly
1
5.0%.
A ma
jo
r r
e
a
so
n
fo
r
this
gap
w
a
s the f
und
’s
m
i
n
i
ma
l
p
ositio
n
i
n App
le (+76%), which i
n Augu
st
a
tt
a
i
n
e
d
the hi
g
hest
mar
ket c
ap
it
a
liz
a
tio
n
of
an
y co
mpan
y i
n
histo
r
y. Not
ab
le
d
et
ra
cto
r
s withi
n
the
p
o
r
tfolio we
r
e
8
R
ese
ar
ch i
n M
otio
n
(–6
3
%)
and
Elect
r
o
n
ic
Ar
ts (–
3
8%). Seve
ra
l of the f
und
’s l
arg
est
I
T hol
d
i
ng
s, i
n
cl
ud
i
ng
Tex
a
s
In
st
rum
e
n
ts (+6%), S
an
Disk (+8%),
and F
lext
r
o
n
ics (+7%), h
ad
lowe
r r
et
urn
s th
an
the
M
SC
I
US
Pr
i
m
e
Mar
ket 750
Ind
ex; howeve
r
, o
ur
hol
d
i
ng
s i
n A
S
M
L Hol
d
i
ng
(+57%)
and
Goo
g
le (+47%)
par
ti
a
lly offset the
m
.
Des
p
ite the
d
is
app
oi
n
ti
ng r
es
u
lts ove
r
the
pa
st
1
2
m
o
n
ths, we
r
e
ma
i
n
e
n
th
u
si
a
stic
ab
o
u
t the f
und
’s i
n
fo
rma
tio
n
tech
n
olo
g
y hol
d
i
ng
s fo
r
seve
ra
l
r
e
a
so
n
s.
Man
y of these co
mpan
ies
ar
e t
rad
i
ng a
t
a
tt
ra
ctive v
a
l
ua
tio
n
s, with
g
oo
d gr
owth
pr
os
p
ects
and
l
arg
e c
a
sh
ba
l
an
ces. The
ad
o
p
tio
n
of
m
o
b
ile co
mpu
ti
ng d
evices, s
u
ch
a
s s
mar
t
p
ho
n
es
and
t
ab
let co
mpu
te
r
s,
and
the co
n
ti
nu
e
d
ex
pan
sio
n
of the i
n
te
rn
et th
r
o
ug
h soci
a
l
n
etwo
r
ki
ng and
e-co
mm
e
r
ce
app
lic
a
tio
n
s
ar
e hel
p
i
ng
to
dr
ive
gr
owth i
n d
e
mand
fo
r
se
m
ico
ndu
cto
r
s, co
mpu
te
r
h
ard
w
ar
e, softw
ar
e, sto
rag
e,
and
tech
n
olo
g
y-
dr
ive
n
se
r
vices s
u
ch
a
s co
n
s
u
lti
ng and da
t
a ana
lytics. So
m
e of the l
arg
est hol
d
i
ng
s i
n
the
p
o
r
tfolio, i
n
cl
ud
i
ng
Goo
g
le, Q
ua
lco
mm
, Tex
a
s
In
st
rum
e
n
ts, O
ra
cle,
and M
ic
r
osoft,
ar
e well-
p
ositio
n
e
d
to c
ap
it
a
lize o
n
these t
r
e
nd
s.
Health care
The f
und
’s he
a
lth c
ar
e stocks co
n
t
r
i
bu
te
d
f
a
vo
rab
ly to its
r
es
u
lts. Two of o
ur
l
arg
est hol
d
i
ng
s, Bio
g
e
n Id
ec (+60%)
and Amg
e
n
(+56%), we
r
e
am
o
ng
the
b
i
gg
est
ga
i
n
e
r
s. Bio
g
e
n Id
ec
r
e
p
o
r
te
d
f
a
vo
rab
le
r
es
u
lts f
r
o
m
st
ud
ies of its
n
ew o
ra
l
drug
to t
r
e
a
t
mu
lti
p
le scle
r
osis, while
Amg
e
n
’s stock
pr
ice i
n
c
r
e
a
se
d
followi
ng
the co
mpan
y’s
ann
o
un
ce
m
e
n
t i
n
Nove
mb
e
r
20
11
of
a
sh
ar
e
r
e
pur
ch
a
se
pr
o
gram
th
a
t i
n
cl
ud
e
d a
$5
b
illio
n
D
u
tch te
nd
e
r
offe
r
.
We co
n
ti
nu
e to
b
elieve th
a
t l
arg
e
p
h
arma
ce
u
tic
a
l,
b
iotech
n
olo
g
y,
and m
e
d
ic
a
l
d
evice co
mpan
ies will ex
p
e
r
ie
n
ce
gr
owth i
n r
eve
nu
es
and
e
arn
i
ng
s f
r
o
m n
ew
pr
o
du
cts,
an ag
i
ng g
lo
ba
l
p
o
pu
l
a
tio
n
,
and gr
owi
ng d
e
mand
i
n
e
m
e
rg
i
ng mar
kets.
In
the w
a
ke of co
n
si
d
e
rab
le
p
olitic
a
l
and r
e
gu
l
a
to
r
y ch
a
lle
ng
es
a
s well
a
s
an unu
s
ua
lly hi
g
h
numb
e
r
of
pa
te
n
t ex
p
i
ra
tio
n
s, we
ar
e e
n
co
urag
e
d b
y
an
i
n
c
r
e
a
se i
n n
ew
drug appr
ov
a
ls
b
y the U.S.
F
oo
d and
D
rug Adm
i
n
ist
ra
tio
n
i
n
the
pa
st two ye
ar
s.
F
o
r
the lo
ng
e
r
te
rm
, we
b
elieve th
a
t the
ag
i
ng
of
p
o
pu
l
a
tio
n
s i
n
the U
n
ite
d
St
a
tes, E
ur
o
p
e,
and
J
apan
,
a
lo
ng
with
r
isi
ng
st
andard
s of livi
ng
i
n d
evelo
p
i
ng mar
kets s
u
ch
a
s Chi
na and Ind
i
a
, sho
u
l
d
le
ad
to
gr
e
a
te
r d
e
mand
fo
r
he
a
lth c
ar
e
pr
o
du
cts.
The he
a
lth c
ar
e i
ndu
st
r
y s
p
e
nd
s te
n
s of
b
illio
n
s of
d
oll
ar
s
annua
lly o
n r
ese
ar
ch
and d
evelo
pm
e
n
t, which we
b
elieve will le
ad
to the
d
iscove
r
y of
m
o
r
e effective t
r
e
a
t
m
e
n
ts fo
r man
y
d
ise
a
ses, s
u
ch
a
s c
an
ce
r
,
d
i
ab
etes,
and A
lzhei
m
e
r
’s.
F
o
r
ex
amp
le,
b
ec
au
se of the
rap
i
d d
ecli
n
e i
n
the cost of seq
u
e
n
ci
ng
h
uman g
e
n
o
m
es, it is ex
p
ecte
d
th
a
t
m
illio
n
s of i
nd
ivi
dua
ls
g
lo
ba
lly will h
a
ve thei
r g
e
n
o
m
e seq
u
e
n
ce
d
i
n
the
n
e
ar
f
u
t
ur
e.
Fur
the
r
, c
an
ce
r
cell
g
e
n
o
m
es
ar
e
b
ei
ng
seq
u
e
n
ce
d
to
ga
i
n an und
e
r
st
and
i
ng
of the s
p
ecific
mu
t
a
tio
n
s
r
es
p
o
n
si
b
le fo
r
thei
r pr
olife
ra
tio
n
.
9
The
a
v
a
il
ab
ility of this i
n
c
r
e
a
si
ng
ly
r
ich
and br
o
ad
set of
g
e
n
etic i
n
fo
rma
tio
n
is hel
p
i
ng r
ese
ar
che
r
s
b
ette
r und
e
r
st
and
how
pa
tie
n
ts with ce
r
t
a
i
n g
e
n
etic t
ra
its
d
evelo
p d
ise
a
ses
and r
es
p
o
nd
to
pa
tho
g
e
n
s, che
m
ic
a
ls,
and drug
s. Th
a
t
gr
owi
ng
k
n
owle
dg
e
ba
se is e
nab
li
ng
the
d
evelo
pm
e
n
t of
n
ew, hi
g
hly effective t
arg
ete
d drug
the
rap
ies
and a
ssoci
a
te
d d
i
agn
ostic tests,
br
i
ng
i
ng
the
p
ossi
b
ility of
p
e
r
so
na
lize
d m
e
d
ici
n
e close
r
to
r
e
a
lity.
Other sectors
P
oo
r
stock selectio
n
i
n
the i
ndu
st
r
i
a
l
and
co
n
s
um
e
r d
isc
r
etio
nar
y secto
r
s h
ur
t the f
und
’s
r
el
a
tive
r
et
urn
s; Ex
p
e
d
ito
r
s
In
te
rna
tio
na
l (–
1
0%), So
u
thwest
A
i
r
li
n
es (+9%),
and
C.H.
R
o
b
i
n
so
n
(–
13
%) we
r
e
am
o
ng
the
b
i
gg
est
d
et
ra
cto
r
s i
n
the i
ndu
st
r
i
a
ls secto
r
.
AMR
(–87%), which file
d
fo
r ban
k
rup
tcy l
a
st f
a
ll, w
a
s
an
othe
r d
et
ra
cto
r
.
In
the co
n
s
um
e
r d
isc
r
etio
nar
y secto
r
,
Ama
zo
n
.co
m
(+
1
8%), So
n
y (–
3
8%),
and
Be
d
B
a
th & Beyo
nd
(+
1
0%)
a
ll l
agg
e
d
the
M
SC
I
US
Pr
i
m
e
Mar
ket 750
Ind
ex. The f
und
’s
m
i
n
i
ma
l ex
p
os
ur
e to the fi
nan
ci
a
l secto
r
, co
mb
i
n
e
d
with
p
oo
r
stock selectio
n
withi
n
the secto
r
,
a
lso h
ur
t
r
et
urn
s. O
n
the othe
r
h
and
, the f
und b
e
n
efite
d
f
r
o
m
h
a
vi
ng b
elow-
b
e
n
ch
mar
k ex
p
os
ur
e to co
n
s
um
e
r
st
ap
les
and u
tilities, the two secto
r
s with the lowest
r
et
urn
s i
n
the
M
SC
I
US
Pr
i
m
e
Mar
ket 750
Ind
ex ove
r
the
pa
st
1
2
m
o
n
ths.
Outlook
A
s we e
n
te
r
fisc
a
l ye
ar
20
13
, we
ar
e
m
o
r
e te
mp
e
r
e
d
i
n
o
ur
o
p
ti
m
is
m
fo
r
U.S. eq
u
ities th
an
we we
r
e
a
ye
ar ag
o.
Va
l
ua
tio
n
s
g
e
n
e
ra
lly see
m a
tt
ra
ctive
r
el
a
tive to histo
r
ic
a
l st
andard
s, es
p
eci
a
lly
g
ive
n
the low i
n
te
r
est
ra
te e
n
vi
r
o
nm
e
n
t.
A
ltho
ug
h the S&
P
500
Ind
ex, which is
g
e
n
e
ra
lly
r
e
pr
ese
n
t
a
tive of the ove
ra
ll stock
mar
ket, is co
n
si
d
e
rab
ly hi
g
he
r
th
an
it w
a
s
a
ye
ar ag
o, eq
u
ities
r
e
ma
i
n a
tt
ra
ctive co
mpar
e
d
with
m
ost othe
r a
sset cl
a
sses.
A
s we w
r
ite, the
a
ve
rag
e
d
ivi
d
e
nd
of the S&
P
500 is
a
l
m
ost 2%, which is still
ab
ove the c
urr
e
n
t yiel
d
o
n
the
1
0-ye
ar
U.S.
T
r
e
a
s
ur
y
b
o
nd
.
In
the secto
r
s whe
r
e the f
und
h
a
s the
gr
e
a
test wei
g
hti
ng
s, we fi
nd
c
urr
e
n
t v
a
l
ua
tio
n
s co
mp
elli
ng
. We
b
elieve th
a
t i
n
vesto
r
s
ma
y
b
e
und
e
r
esti
ma
ti
ng
the
gr
owth
p
ote
n
ti
a
l of
man
y co
mpan
ies.
A
ltho
ug
h we ex
p
ect the eco
n
o
m
ic
gr
owth
ra
te i
n
the U
n
ite
d
St
a
tes to
b
e
m
o
d
est i
n
the
n
e
ar
f
u
t
ur
e, we
b
elieve th
a
t,
b
ec
au
se of
g
lo
ba
liz
a
tio
n and
i
nn
ov
a
tio
n
,
man
y U.S. co
mpan
ies c
an gr
ow
r
eve
nu
es
and
e
arn
i
ng
s
a
t
a
f
a
ste
r ra
te th
an
the GD
P
will
gr
ow. U.S. co
rp
o
ra
tio
n
s
g
e
n
e
ra
te
an
i
n
c
r
e
a
si
ng p
o
r
tio
n
of thei
r r
eve
nu
es
and
e
arn
i
ng
s f
r
o
m abr
o
ad
; l
a
st ye
ar
, 46% of the
r
eve
nu
es fo
r
S&
P
500 co
mpan
ies c
am
e f
r
o
m
o
u
tsi
d
e the U
n
ite
d
St
a
tes.
Pr
os
p
ects fo
r
i
n
te
rna
tio
na
l
gr
owth
ar
e
par
tic
u
l
ar
ly
a
tt
ra
ctive fo
r
co
mpan
ies i
n
the i
n
fo
rma
tio
n
tech
n
olo
g
y, he
a
lth c
ar
e,
and
i
ndu
st
r
i
a
ls secto
r
s.
10
We
a
lso
b
elieve th
a
t i
nn
ov
a
tio
n b
y U.S. co
mpan
ies,
par
tic
u
l
ar
ly those i
n
the i
n
fo
rma
tio
n
tech
n
olo
g
y
and
he
a
lth c
ar
e secto
r
s, sho
u
l
d r
es
u
lt i
n r
eve
nu
e
and
e
arn
i
ng
s
gr
owth o
pp
o
r
t
un
ities th
a
t
ar
e
n
ot
r
eflecte
d
i
n
c
urr
e
n
t ex
p
ect
a
tio
n
s. These two secto
r
s
r
e
pr
ese
n
t
ar
e
a
s whe
r
e we
b
elieve the U
n
ite
d
St
a
tes h
a
s
a
st
r
o
ng
co
mp
etitive
ad
v
an
t
ag
e
r
el
a
tive to the
r
est of the wo
r
l
d
. We ex
p
ect th
a
t the s
ub
st
an
ti
a
l i
n
vest
m
e
n
t i
n r
ese
ar
ch
and d
evelo
pm
e
n
t will le
ad
to
n
ew
pr
o
du
cts
and
se
r
vices th
a
t i
mpr
ove
pr
o
du
ctivity fo
r bu
si
n
esses
and
q
ua
lity of life fo
r
co
n
s
um
e
r
s.
Fur
the
rm
o
r
e, the stock
mar
ket
ma
y
b
e
und
e
r
v
a
l
u
i
ng
the c
a
sh o
n
the
ba
l
an
ce sheets of
man
y co
mpan
ies.
A
s U.S. co
rp
o
ra
tio
n
s h
a
ve
r
ecove
r
e
d
f
r
o
m
the
r
ecessio
n
,
man
y h
a
ve i
mpr
ove
d
thei
r ba
l
an
ce sheets
b
y
pa
yi
ng d
ow
n d
e
b
t
and gr
owi
ng
thei
r
c
a
sh
ba
l
an
ces, which
r
e
pr
ese
n
t
an und
e
ru
tilize
d a
sset i
n
the c
urr
e
n
t low i
n
te
r
est
ra
te e
n
vi
r
o
nm
e
n
t. Th
a
t
a
sset co
u
l
d b
e
a
so
ur
ce of hi
g
he
r r
et
urn
s i
n
the f
u
t
ur
e. Co
mpan
ies with st
r
o
ng
c
a
sh flows h
a
ve see
n
co
n
si
d
e
rab
le
appr
eci
a
tio
n
i
n
thei
r
stock
pr
ice
a
s they
r
et
urn
e
d
c
a
sh to sh
ar
ehol
d
e
r
s
b
y
ra
isi
ng d
ivi
d
e
nd
s o
r b
y
bu
yi
ng ba
ck sh
ar
es.
In
closi
ng
, we
n
ote th
a
t the f
und
’s
r
et
urn
s h
a
ve
g
e
n
e
ra
lly l
agg
e
d
those of the
M
SC
I
US
Pr
i
m
e
Mar
ket 750 i
nd
ex fo
r
the
pa
st two ye
ar
s. We
ar
e ce
r
t
a
i
n
ly
d
is
app
oi
n
te
d
with these
r
es
u
lts,
bu
t we
a
cce
p
t th
a
t o
ur
low-t
urn
ove
r appr
o
a
ch will
n
ot
pr
o
du
ce
r
et
urn
s th
a
t excee
d
the i
nd
ex eve
r
y ye
ar
. O
ur d
isci
p
li
n
e
d
st
ra
te
g
y of co
n
ti
nu
i
ng
to
add
to hi
g
h-co
n
victio
n
, o
u
t-of-f
a
vo
r p
ositio
n
s
a
s they
d
ecli
n
e e
n
s
ur
es th
a
t if o
ur
view of the f
undam
e
n
t
a
ls
u
lti
ma
tely
pr
oves co
rr
ect, the f
und
will hol
d
l
arg
e
r p
ositio
n
s o
n
the w
a
y
up
th
an
it
d
i
d
o
n
the w
a
y
d
ow
n
.
In
o
ur
view, this
appr
o
a
ch is i
n
st
rum
e
n
t
a
l to
d
elive
r
i
ng
s
up
e
r
io
r r
el
a
tive
r
et
urn
s ove
r
the lo
ng run
.
PRIM
EC
AP Manag
e
m
e
n
t Co
mpan
y
Octo
b
e
r 1
2, 20
1
2
11
PRIMECAP Core Fund
Fund Profile
As of September 30, 2012
|
|
|
|
|
|
Portfolio Characteristics
|
|
|
|
|
|
MSCI US
|
DJ
|
|
|
|
Prime
|
U.S. Total
|
|
|
|
Market
|
Market
|
|
|
Fund
|
750 Index
|
Index
|
|
Number of Stocks
|
139
|
744
|
3,638
|
|
Median Market Cap
|
$44.7B
|
$50.2B
|
$35.6B
|
|
Price/Earnings Ratio
|
17.2x
|
16.4x
|
17.0x
|
|
Price/Book Ratio
|
2.9x
|
2.3x
|
2.2x
|
|
Return on Equity
|
22.0%
|
18.8%
|
18.0%
|
|
Earnings Growth Rate
|
11.7%
|
10.8%
|
10.4%
|
|
Dividend Yield
|
1.9%
|
2.1%
|
2.0%
|
|
Foreign Holdings
|
14.5%
|
0.0%
|
0.0%
|
|
Turnover Rate
|
10%
|
—
|
—
|
|
Ticker Symbol
|
VPCCX
|
—
|
—
|
|
Expense Ratio
1
|
0.51%
|
—
|
—
|
|
30-Day SEC Yield
|
1.39%
|
—
|
—
|
|
Short-Term Reserves
|
1.9%
|
—
|
—
|
|
|
|
|
|
|
Sector Diversification (% of equity exposure)
|
|
|
|
MSCI US
|
DJ
|
|
|
|
Prime
|
U.S. Total
|
|
|
|
Market
|
Market
|
|
|
Fund
|
750 Index
|
Index
|
|
Consumer Discretionary
|
11.0%
|
12.0%
|
12.0%
|
|
Consumer Staples
|
1.8
|
10.4
|
9.5
|
|
Energy
|
4.4
|
11.0
|
10.4
|
|
Financials
|
7.4
|
14.8
|
16.0
|
|
Health Care
|
30.3
|
11.7
|
11.9
|
|
Industrials
|
14.3
|
10.0
|
10.6
|
|
Information Technology
|
25.4
|
19.8
|
19.2
|
|
Materials
|
4.5
|
3.7
|
3.9
|
|
Telecommunication
|
|
|
|
|
Services
|
0.1
|
3.1
|
2.9
|
|
Utilities
|
0.8
|
3.5
|
3.6
|
|
|
|
|
|
Volatility Measures
|
|
|
|
|
|
DJ
|
|
|
MSCI US
|
U.S. Total
|
|
|
Prime Market
|
Market
|
|
|
750 Index
|
Index
|
|
R-Squared
|
0.98
|
0.98
|
|
Beta
|
1.00
|
0.98
|
These measures show the degree and timing of the fund’s fluctuations compared with the indexes over 36 months.
|
|
|
|
|
Ten Largest Holdings (% of total net
assets)
|
|
Amgen Inc.
|
Biotechnology
|
6.5%
|
|
Roche Holding AG
|
Pharmaceuticals
|
4.4
|
|
Eli Lilly & Co.
|
Pharmaceuticals
|
3.5
|
|
Google Inc. Class A
|
Internet Software &
|
|
|
|
Services
|
3.4
|
|
Marsh & McLennan Cos.
|
|
|
|
Inc.
|
Insurance Brokers
|
3.1
|
|
Biogen Idec Inc.
|
Biotechnology
|
3.0
|
|
Novartis AG
|
Pharmaceuticals
|
3.0
|
|
Medtronic Inc.
|
Health Care
|
|
|
|
Equipment
|
2.6
|
|
Johnson & Johnson
|
Pharmaceuticals
|
2.5
|
|
Boeing Co.
|
Aerospace &
|
|
|
|
Defense
|
2.2
|
|
Top Ten
|
|
34.2%
|
The holdings listed exclude any temporary cash investments and equity index products.
Investment Focus
1 The expense ratio shown is from the prospectus dated January 27, 2012, and represents estimated costs for the current fiscal year. For the fiscal year ended September 30, 2012, the expense ratio was 0.50%.
12
PRIMECAP Core Fund
Performance Summary
All of the returns in this report represent past performance, which is not a guarantee of future results that may be achieved by the fund. (Current performance may be lower or higher than the performance data cited. For performance data current to the most recent month-end, visit our website at vanguard.com/performance.) Note, too, that both investment returns and principal value can fluctuate widely, so an investor’s shares, when sold, could be worth more or less than their original cost.
The returns shown do not reflect taxes that a shareholder would pay on fund distributions or on the sale of fund shares.
Cumulative Performance: December 9, 2004, Through September 30, 2012
Initial Investment of $10,000
|
|
|
|
|
|
|
|
|
|
|
Average Annual Total Returns
|
|
|
|
|
Periods Ended September 30, 2012
|
|
|
|
|
|
|
Since
|
Final Value
|
|
|
|
One
|
Five
|
Inception
|
of a $10,000
|
|
|
|
Year
|
Years
|
(12/9/2004)
|
Investment
|
|
|
PRIMECAP Core Fund
|
22.55%
|
2.74%
|
6.57%
|
$16,431
|
|
•••••••
•
|
MSCI US Prime Market 750 Index
|
29.98
|
1.34
|
5.09
|
14,732
|
|
– – –
–
|
Multi-Cap Core Funds Average
|
|
|
|
|
|
|
|
25.24
|
-0.23
|
3.80
|
13,377
|
|
|
Dow Jones U.S. Total Stock Market
|
30.00
|
1.53
|
5.21
|
14,863
|
|
Multi-Cap Core Funds Average: Derived from data provided by Lipper Inc.
|
|
"Since Inception" performance is calculated from the inception date for both the fund and its comparative standards.
|
See Financial Highlights for dividend and capital gains information.
13
PRIMECAP Core Fund
Fiscal-Year Total Returns (%): December 9, 2004, Through September 30, 2012
14
PRIMECAP Core Fund
Financial Statements
Statement of Net Assets
As of September 30, 2012
Th
e
f
und report
s
a comp
l
ete
lis
t o
f i
t
s h
o
l
d
i
ng
s i
n regu
l
ator
y fili
ng
s f
our t
i
me
s i
n eac
h fis
ca
l y
ear, at t
h
e
q
uarter-end
s
. For t
h
e
s
econd and
f
ourt
h fis
ca
l q
uarter
s
, t
h
e
lis
t
s
appear
i
n t
h
e
f
und
’s s
em
i
annua
l
and annua
l
report
s
to
sh
are
h
o
l
der
s
. For t
h
e
fi
r
s
t and t
hi
rd
fis
ca
l q
uarter
s
, t
h
e
f
und
fil
e
s
t
h
e
lis
t
s wi
t
h
t
h
e Secur
i
t
i
e
s
and E
x
c
h
ange Comm
issi
on on Form
N
-
Q
. S
h
are
h
o
l
der
s
can
l
oo
k
up t
h
e
f
und
’s
Form
s N
-
Q
on t
h
e SEC
’s w
eb
si
te at
s
ec.go
v
. Form
s N
-
Q
ma
y
a
ls
o be re
vi
e
w
ed and cop
i
ed at t
h
e SEC
’s
Pub
li
c Re
f
erence Room
(s
ee t
h
e bac
k
co
v
er o
f
t
his
report
f
or
f
urt
h
er
i
n
f
ormat
i
on
)
.
|
|
|
|
|
|
|
|
|
Mar
k
et
|
|
|
|
|
Va
l
ue
|
|
|
|
S
h
are
s
|
(
$000
)
|
|
Common Stocks (98.6%)
|
|
|
|
Consumer Discretionary (10.8%)
|
|
|
|
TJ
X Co
s
. Inc.
|
1,
4
50,000
|
6
4
,9
4
6
|
|
*
|
DIREC
T
V
|
1,095,
788
|
5
7
,
48
5
|
|
|
W
a
l
t D
is
ne
y
Co.
|
1,090,300
|
5
7
,001
|
|
*
|
CarMa
x
Inc.
|
1,91
7
,600
|
5
4
,26
8
|
|
|
Li
m
i
ted
B
rand
s
Inc.
|
1,0
7
1,200
|
52,
7
6
7
|
|
*
|
B
ed
B
at
h & B
e
y
ond Inc.
|
8
31,
4
91
|
52,3
84
|
|
|
Carn
iv
a
l
Corp.
|
1,01
4
,
4
00
|
36,965
|
|
|
Matte
l
Inc.
|
1,000,000
|
35,
48
0
|
|
|
Whi
r
l
poo
l
Corp.
|
330,000
|
2
7
,360
|
|
*
|
Amazon.com Inc.
|
7
9,
7
00
|
20,269
|
|
|
Son
y
Corp. ADR
|
1,20
8
,200
|
1
4
,136
|
|
|
L
o
w
e
’s
Co
s
. Inc.
|
2
7
5,000
|
8
,316
|
|
|
VF Corp.
|
51,2
7
0
|
8
,1
7
0
|
|
|
Mac
y’s
Inc.
|
162,300
|
6,106
|
|
|
Ti
me
W
arner Cab
l
e Inc.
|
53,500
|
5,0
8
6
|
|
|
N
ord
s
trom Inc.
|
60,000
|
3,311
|
|
|
Ro
ss
Store
s
Inc.
|
4
0,350
|
2,60
7
|
|
|
Ro
y
a
l
Car
i
bbean
|
|
|
|
|
Cru
is
e
s L
td.
|
77
,000
|
2,326
|
|
|
H
a
s
bro Inc.
|
1
4
,100
|
53
8
|
|
|
|
|
509,521
|
|
Consumer Staples (1.8%)
|
|
|
|
|
Ke
ll
ogg Co.
|
8
63,000
|
44
,5
8
3
|
|
|
Pep
si
Co Inc.
|
4
30,000
|
30,
4
31
|
|
|
Co
s
tco
Wh
o
l
e
s
a
l
e Corp.
|
100,000
|
10,012
|
|
|
CVS Caremar
k
Corp.
|
21,000
|
1,01
7
|
|
|
|
|
86,043
|
|
Energy (4.3%)
|
|
|
|
|
Sc
hl
umberger
L
td.
|
61
7
,300
|
44
,6
4
9
|
|
|
EOG Re
s
ource
s
Inc.
|
262,900
|
29,
4
5
8
|
|
|
N
at
i
ona
l
O
ilw
e
ll
Varco Inc.
|
250,000
|
20,02
8
|
|
|
Encana Corp.
|
909,600
|
19,93
8
|
|
|
N
ob
l
e Energ
y
Inc.
|
200,000
|
1
8
,5
4
2
|
|
|
Petro
l
eo
B
ra
sil
e
i
ro SA ADR
|
|
|
|
|
Ty
pe A
|
661,
4
00
|
1
4
,59
7
|
|
*
|
Cameron
|
|
|
|
|
Internat
i
ona
l
Corp.
|
215,550
|
12,0
8
6
|
|
|
|
|
|
|
|
|
|
Mar
k
et
|
|
|
|
|
Va
l
ue
|
|
|
|
S
h
are
s
|
(
$000
)
|
|
|
Ceno
v
u
s
Energ
y
Inc.
|
303,62
4
|
10,5
8
1
|
|
|
H
e
ss
Corp.
|
150,000
|
8
,05
8
|
|
|
Cabot O
il &
Ga
s
Corp.
|
152,900
|
6,
8
65
|
|
*
|
McDermott
|
|
|
|
|
Internat
i
ona
l
Inc.
|
500,000
|
6,110
|
|
*
|
Sout
hw
e
s
tern Energ
y
Co.
|
150,000
|
5,21
7
|
|
|
T
ran
s
ocean
L
td.
|
6
7
,000
|
3,00
8
|
|
|
E
xx
onMob
il
Corp.
|
2
4
,000
|
2,195
|
|
|
N
ob
l
e Corp.
|
20,000
|
7
16
|
|
|
Petro
l
eo
B
ra
sil
e
i
ro SA ADR
|
30,000
|
6
88
|
|
|
|
|
202,736
|
|
Financials (7.3%)
|
|
|
|
|
Mar
sh &
|
|
|
|
|
Mc
L
ennan Co
s
. Inc.
|
4
,255,
4
00
|
1
44
,3
8
6
|
|
|
C
h
ar
l
e
s
Sc
hw
ab Corp.
|
4
,
4
00,000
|
56,2
7
6
|
|
*
|
B
er
kshi
re
H
at
h
a
w
a
y
Inc.
|
|
|
|
|
C
l
a
ss B
|
5
4
5,000
|
48
,069
|
|
|
C
h
ubbCorp.
|
600,000
|
4
5,
7
6
8
|
|
|
Willis
Group
H
o
l
d
i
ng
s
p
l
c
|
56
7
,900
|
20,96
7
|
|
|
W
e
lls
Fargo
&
Co.
|
4
50,000
|
15,53
8
|
|
|
Amer
i
can E
x
pre
ss
Co.
|
10
8
,300
|
6,15
8
|
|
|
Progre
ssiv
e Corp.
|
200,000
|
4
,1
48
|
|
|
Comer
i
ca Inc.
|
36,000
|
1,11
8
|
|
|
|
|
342,428
|
|
Health Care (29.9%)
|
|
|
|
|
Amgen Inc.
|
3,601,900
|
303,
7
12
|
|
|
Roc
h
e
H
o
l
d
i
ng AG
|
1,106,
4
00
|
206,9
48
|
|
|
E
liLilly &
Co.
|
3,
47
0,600
|
16
4
,5
4
1
|
|
*
|
Bi
ogen Idec Inc.
|
951,09
7
|
1
4
1,932
|
|
|
N
o
v
art
is
AG ADR
|
2,2
8
6,350
|
1
4
0,062
|
|
|
Medtron
i
c Inc.
|
2,
8
31,900
|
122,111
|
|
|
J
o
h
n
s
on
& J
o
h
n
s
on
|
1,699,
8
50
|
11
7
,13
7
|
|
|
G
l
a
x
oSm
i
t
h
K
li
nep
l
c ADR
|
1,
4
5
7
,000
|
6
7
,3
7
2
|
|
|
Abbott
L
aborator
i
e
s
|
7
3
4
,
8
00
|
50,3
78
|
|
|
Sano
fi
ADR
|
6
4
6,300
|
2
7
,
8
30
|
|
*
|
W
ater
s
Corp.
|
325,09
4
|
2
7
,090
|
|
*
|
B
o
s
ton Sc
i
ent
ifi
c Corp.
|
3,632,200
|
20,
84
9
|
|
*
|
I
ll
um
i
naInc.
|
203,200
|
9,
7
9
4
|
|
|
Ag
il
ent
T
ec
h
no
l
og
i
e
s
Inc.
|
7
0,000
|
2,691
|
15
PRIMECAP Core Fund
|
|
|
|
|
|
|
|
|
Mar
k
et
|
|
|
|
|
Va
l
ue
|
|
|
|
S
h
are
s
|
(
$000
)
|
|
|
Str
yk
er Corp.
|
4
5,500
|
2,533
|
|
*
|
Cerner Corp.
|
5,000
|
3
87
|
|
|
|
|
1,405,367
|
|
Industrials (14.1%)
|
|
|
|
|
B
oe
i
ng Co.
|
1,
4
96,600
|
10
4
,193
|
|
|
H
one
yw
e
ll
|
|
|
|
|
Internat
i
ona
l
Inc.
|
1,390,100
|
8
3,05
8
|
|
|
Sout
hw
e
s
t A
i
r
li
ne
s
Co.
|
8
,950,625
|
78
,
4
9
7
|
|
|
U
n
i
ted Parce
l
Ser
vi
ce Inc.
|
|
|
|
|
C
l
a
ss B
|
9
7
5,900
|
69,
84
5
|
|
|
FedE
x
Corp.
|
59
7
,
47
5
|
50,55
8
|
|
|
U
n
i
on Pac
ifi
c Corp.
|
30
7
,
7
50
|
36,530
|
|
|
E
x
ped
i
tor
s
Internat
i
ona
l
o
f
|
|
|
|
|
W
a
shi
ngton Inc.
|
939,
7
00
|
3
4
,16
7
|
|
|
Roc
kw
e
ll
Automat
i
on Inc.
|
4
3
8
,000
|
30,
4
63
|
|
|
C.
H
. Rob
i
n
s
on
|
|
|
|
|
W
or
l
d
wi
de Inc.
|
515,950
|
30,209
|
|
|
European Aeronaut
i
c
|
|
|
|
|
De
f
ence and Space Co.
|
|
|
|
|
N
V
|
8
6
7
,350
|
2
7
,
4
91
|
|
|
N
or
f
o
lk
Sout
h
ern Corp.
|
31
4
,000
|
19,9
8
0
|
|
^
|
R
i
tc
hi
e
B
ro
s
|
|
|
|
|
Auct
i
oneer
s
Inc.
|
8
9
8
,300
|
1
7
,2
74
|
|
|
Caterp
ill
ar Inc.
|
196,050
|
16,
8
6
8
|
|
*
|
B
abcoc
k & Wil
co
x
Co.
|
4
53,300
|
11,5
4
6
|
|
*
|
AECOM
T
ec
h
no
l
og
y
Corp.
|
4
95,000
|
10,
474
|
|
|
Repub
li
c Ser
vi
ce
s
Inc.
|
|
|
|
|
C
l
a
ss
A
|
230,935
|
6,353
|
|
|
IDEX Corp.
|
13
7
,000
|
5,
7
22
|
|
^
|
Canad
i
an Pac
ifi
c
|
|
|
|
|
Ra
ilw
a
y L
td.
|
63,030
|
5,225
|
|
|
CSX Corp.
|
22
7
,500
|
4
,
7
21
|
|
|
Cumm
i
n
s
Inc.
|
50,000
|
4
,610
|
|
*
|
De
l
ta A
i
r
Li
ne
s
Inc.
|
44
0,000
|
4
,030
|
|
*
|
U
n
i
ted Cont
i
nenta
l
|
|
|
|
|
H
o
l
d
i
ng
s
Inc.
|
195,000
|
3,
8
03
|
|
|
Sa
f
ran SA
|
100,000
|
3,59
7
|
|
|
SPX Corp.
|
33,000
|
2,159
|
|
*
|
J
acob
s
Eng
i
neer
i
ng
|
|
|
|
|
Group Inc.
|
50,000
|
2,022
|
|
|
C
hi
cago
B
r
i
dge
&
|
|
|
|
|
Iron Co.
N
V
|
30,000
|
1,1
4
3
|
|
|
|
|
664,538
|
|
Information Technology (25.0%)
|
|
|
*
|
Goog
l
e Inc. C
l
a
ss
A
|
21
4
,100
|
161,53
8
|
|
|
T
e
x
a
s
In
s
trument
s
Inc.
|
3,
77
6,
7
00
|
10
4
,0
48
|
|
|
Intu
i
t Inc.
|
1,612,500
|
9
4
,9
44
|
|
|
QU
A
L
COMM Inc.
|
1,395,000
|
87
,1
74
|
|
|
M
i
cro
s
o
f
tCorp.
|
2,660,600
|
7
9,233
|
|
|
Orac
l
e Corp.
|
2,
44
1,600
|
7
6,
88
6
|
|
*
|
SanD
isk
Corp.
|
1,326,016
|
5
7
,5
8
9
|
|
*
|
EMC Corp.
|
2,0
4
0,100
|
55,633
|
|
*
|
F
l
e
x
tron
i
c
s
|
|
|
|
|
Internat
i
ona
l L
td.
|
7
,9
7
9,
7
00
|
47
,
878
|
|
|
|
|
|
|
|
|
|
Mar
k
et
|
|
|
|
|
Va
l
ue
|
|
|
|
S
h
are
s
|
(
$000
)
|
|
|
V
is
aInc. C
l
a
ss
A
|
3
4
1,035
|
4
5,
7
9
4
|
|
*
|
E
l
ectron
i
cArt
s
Inc.
|
3,
47
5,
8
00
|
44
,10
8
|
|
*
|
S
y
mantecCorp.
|
2,263,500
|
4
0,
74
3
|
|
|
ASM
L H
o
l
d
i
ng
N
V
|
65
4
,
8
00
|
35,150
|
|
|
A
l
teraCorp.
|
950,000
|
32,2
8
6
|
|
|
Inte
l
Corp.
|
1,2
8
5,600
|
29,15
7
|
|
|
T
e
l
e
f
ona
k
t
i
ebo
l
aget
L
M
|
|
|
|
|
Er
i
c
ss
on ADR
|
2,55
4
,
8
00
|
23,325
|
|
|
App
li
ed Mater
i
a
ls
Inc.
|
1,951,000
|
21,
78
3
|
|
|
Accenture p
l
c C
l
a
ss
A
|
309,200
|
21,653
|
|
|
K
L
A-
T
encorCorp.
|
4
3
4
,600
|
20,
7
33
|
|
|
Corn
i
ng Inc.
|
1,296,
7
00
|
1
7
,052
|
|
*
|
Adobe S
ys
tem
s
Inc.
|
50
8
,000
|
16,
4
90
|
|
|
Motoro
l
a So
l
ut
i
on
s
Inc.
|
252,000
|
12,
7
39
|
|
*
|
Re
s
earc
h
In Mot
i
on
L
td.
|
1,52
7
,100
|
11,
4
53
|
|
|
App
l
e Inc.
|
1
7
,000
|
11,3
4
3
|
|
*
|
N
VIDIA Corp.
|
5
4
5,000
|
7
,2
7
0
|
|
|
Act
ivisi
on
Bli
zzard Inc.
|
5
7
5,000
|
6,
48
6
|
|
|
C
is
coS
ys
tem
s
Inc.
|
300,000
|
5,
7
2
7
|
|
|
Ma
s
tercard Inc. C
l
a
ss
A
|
8
,300
|
3,
747
|
|
|
H
e
wl
ett-Pac
k
ard Co.
|
19
7
,000
|
3,361
|
|
|
X
ili
n
x
Inc.
|
3
7
,300
|
1,2
4
6
|
|
|
Ana
l
og De
vi
ce
s
Inc.
|
30,000
|
1,1
7
6
|
|
|
|
|
1,177,745
|
|
Materials (4.5%)
|
|
|
|
|
Mon
s
anto Co.
|
77
2,350
|
7
0,299
|
|
|
Pota
sh
Corp. o
f
|
|
|
|
|
Sa
sk
atc
h
e
w
an Inc.
|
1,2
7
5,900
|
55,
4
00
|
|
|
Cabot Corp.
|
74
0,000
|
2
7
,062
|
|
|
Pra
x
a
i
r Inc.
|
21
4
,
7
00
|
22,303
|
|
|
N
e
w
mont M
i
n
i
ng Corp.
|
2
8
6,300
|
16,036
|
|
|
Gre
if
Inc. C
l
a
ss
A
|
130,000
|
5,
74
3
|
|
|
Do
w
C
h
em
i
ca
l
Co.
|
130,000
|
3,
7
65
|
|
|
Internat
i
ona
l
Paper Co.
|
100,000
|
3,632
|
|
*
|
Cro
w
n
H
o
l
d
i
ng
s
Inc.
|
7
5,000
|
2,
7
56
|
|
^
|
Gre
if
Inc. C
l
a
ss B
|
36,500
|
1,
8
05
|
|
|
Ka
is
er A
l
um
i
num Corp.
|
10,000
|
5
84
|
|
|
|
|
209,385
|
|
Telecommunication Services (0.1%)
|
|
|
*
|
Spr
i
nt
N
e
x
te
l
Corp.
|
7
31,300
|
4
,03
7
|
|
|
|
Utilities (0.8%)
|
|
|
|
|
Pub
li
c Ser
vi
ce Enterpr
is
e
|
|
|
|
|
Group Inc.
|
616,
4
93
|
19,
8
39
|
|
|
E
x
e
l
onCorp.
|
199,500
|
7
,09
8
|
|
|
N
e
x
tEra Energ
y
Inc.
|
56,
7
00
|
3,9
88
|
|
*
|
AES Corp.
|
1
7
2,69
8
|
1,
8
9
4
|
|
|
Ed
is
on Internat
i
ona
l
|
35,
8
00
|
1,636
|
|
|
F
i
r
s
tEnerg
y
Corp.
|
22,000
|
9
7
0
|
|
|
|
|
35,425
|
|
Total Common Stocks
|
|
|
|
(Cost $3,468,572)
|
|
4,637,225
|
16
PRIMECAP Core Fund
|
|
|
|
|
|
|
Mar
k
et
|
|
|
|
Va
l
ue
|
|
|
S
h
are
s
|
(
$000
)
|
|
Temporary Cash Investment (2.1%)
|
|
|
Money Market Fund (2.1%)
|
|
|
1,2
Vanguard Mar
k
et
|
|
|
|
Liq
u
i
d
i
t
y
Fund, 0.163
%
|
|
|
(Cost $96,629)
|
96,62
8
,
778
|
96,629
|
|
Total Investments (100.7%)
|
|
|
(Cost $3,565,201)
|
|
4,733,854
|
|
Other Assets and Liabilities (-0.7%)
|
|
|
Ot
h
er A
ss
et
s
|
|
1
7
,5
87
|
|
Li
ab
ili
t
i
e
s
2
|
|
(4
9,0
4
3
)
|
|
|
|
(
31,
4
56
)
|
|
Net Assets (100%)
|
|
|
|
Applicable to 313,906,748 outstanding
|
|
|
$.001 par value shares of beneficial
|
|
|
interest (unlimited authorization)
|
4,702,398
|
|
Net Asset Value Per Share
|
$14.98
|
|
|
|
|
At September 30, 2012, net assets consisted of:
|
|
|
Amount
|
|
|
(
$000
)
|
|
Pa
i
d-
i
n Cap
i
ta
l
|
3,
4
10,6
47
|
|
U
nd
is
tr
i
buted
N
et In
v
e
s
tment Income
|
4
1,625
|
|
Accumu
l
ated
N
et Rea
li
zed Ga
i
n
s
|
8
1,3
8
0
|
|
U
nrea
li
zed Apprec
i
at
i
on
(
Deprec
i
at
i
on
)
|
|
|
In
v
e
s
tment Secur
i
t
i
e
s
|
1,16
8
,653
|
|
Fore
i
gn Currenc
i
e
s
|
93
|
|
Net Assets
|
4,702,398
|
See Note A in Notes to Financial Statements.
* Non-income-producing security.
^ Part of security position is on loan to broker-dealers. The total value of securities on loan is $8,487,000.
1 Affiliated money market fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard. Rate shown is the
7-day yield.
2 Includes $8,991,000 of collateral received for securities on loan.
ADR—American Depositary Receipt.
See accompanying Notes, which are an integral part of the Financial Statements.
17
PRIMECAP Core Fund
|
|
|
|
Statement of Operations
|
|
|
|
|
|
Year Ended
|
|
|
September 30, 2012
|
|
|
(
$000
)
|
|
Investment Income
|
|
|
Income
|
|
|
D
ivi
dend
s
1
|
88
,
44
3
|
|
Intere
s
t
2
|
1
7
2
|
|
Secur
i
t
y L
end
i
ng
|
4
1
7
|
|
T
ota
l
Income
|
8
9,032
|
|
Expenses
|
|
|
In
v
e
s
tment Ad
vis
or
y
Fee
s
—
N
ote
B
|
1
4
,
77
2
|
|
Th
e Vanguard Group—
N
ote C
|
|
|
Management and Adm
i
n
is
trat
iv
e
|
7
,956
|
|
Mar
k
et
i
ng and D
is
tr
i
but
i
on
|
8
26
|
|
Cu
s
tod
i
an Fee
s
|
88
|
|
Aud
i
t
i
ng Fee
s
|
26
|
|
S
h
are
h
o
l
der
s’
Report
s
|
51
|
|
T
ru
s
tee
s’
Fee
s
and E
x
pen
s
e
s
|
9
|
|
T
ota
l
E
x
pen
s
e
s
|
23,
7
2
8
|
|
Net Investment Income
|
65,304
|
|
Realized Net Gain (Loss)
|
|
|
In
v
e
s
tment Secur
i
t
i
e
s
So
l
d
|
139,332
|
|
Fore
i
gn Currenc
i
e
s
|
(7
2
)
|
|
Realized Net Gain (Loss)
|
139,260
|
|
Change in Unrealized Appreciation (Depreciation)
|
|
|
In
v
e
s
tment Secur
i
t
i
e
s
|
7
35,
7
39
|
|
Fore
i
gn Currenc
i
e
s
|
(
112
)
|
|
Change in Unrealized Appreciation (Depreciation)
|
735,627
|
|
Net Increase (Decrease) in Net Assets Resulting from Operations
|
940,191
|
|
1 Dividends are net of foreign withholding taxes of $2,852,000.
|
|
2 Interest income from an affiliated company of the fund was $172,000.
|
See accompanying Notes, which are an integral part of the Financial Statements.
18
PRIM
EC
AP
Co
r
e
Fund
|
|
|
|
|
St
a
te
m
e
n
t o
f
C
hang
es
in N
et
A
ssets
|
|
|
|
|
|
|
Y
e
ar
E
nd
e
d
Se
p
te
mb
e
r 3
0,
|
|
|
20
1
2
|
20
11
|
|
|
($000)
|
($000)
|
|
Incr
e
a
se (De
cr
e
a
se)
in N
et
A
ssets
|
|
|
|
O
p
e
ra
t
i
o
n
s
|
|
|
|
Net
In
vest
m
e
n
t
In
co
m
e
|
65,
3
04
|
50,86
3
|
|
R
e
a
lize
d
Net G
a
i
n
(Loss)
|
13
9,260
|
98,546
|
|
Ch
ang
e i
n
U
nr
e
a
lize
d Appr
eci
a
tio
n
(De
pr
eci
a
tio
n
)
|
7
3
5,627
|
(
1
27,844)
|
|
Net
In
c
r
e
a
se (Dec
r
e
a
se) i
n
Net
A
ssets
R
es
u
lti
ng
f
r
o
m
O
p
e
ra
tio
n
s
|
940,
1
9
1
|
2
1
,565
|
|
D
i
st
ribu
t
i
o
n
s
|
|
|
|
Net
In
vest
m
e
n
t
In
co
m
e
|
(55,4
3
2)
|
(5
1
,4
1
8)
|
|
R
e
a
lize
d
C
ap
it
a
l G
a
i
n
|
—
|
—
|
|
Tot
a
l Dist
r
i
bu
tio
n
s
|
(55,4
3
2)
|
(5
1
,4
1
8)
|
|
C
api
t
al
S
har
e
Tran
s
ac
t
i
o
n
s
|
|
|
|
I
ss
u
e
d
|
1
65,4
1
7
|
3
46,
1
9
3
|
|
I
ss
u
e
d
i
n
Lie
u
of C
a
sh Dist
r
i
bu
tio
n
s
|
49,692
|
46,
3
58
|
|
R
e
d
ee
m
e
d
1
|
(742,
1
40)
|
(587,2
1
2)
|
|
Net
In
c
r
e
a
se (Dec
r
e
a
se) f
r
o
m
C
ap
it
a
l Sh
ar
e T
ran
s
a
ctio
n
s
|
(527,0
31
)
|
(
1
94,66
1
)
|
|
Tot
a
l
In
c
r
e
a
se (Dec
r
e
a
se)
|
3
57,728
|
(224,5
1
4)
|
|
N
et
A
ssets
|
|
|
|
Be
ginning
o
f P
e
ri
o
d
|
4
,
344
,6
7
0
|
4
,
5
6
9
,
184
|
|
E
nd
o
f P
e
ri
o
d
2
|
4
,
7
02,
398
|
4
,
344
,6
7
0
|
1 N
et o
f r
e
d
e
mp
t
i
o
n f
ee
s f
o
r fis
c
al
20
1
2
and
20
11
o
f $9
0,000
and $
223,000,
r
e
sp
ect
iv
e
ly
. E
ff
ect
iv
e M
ay
23, 20
1
2, t
h
e
r
e
d
e
mp
t
i
o
n f
ee
was
e
limina
te
d
.
2
N
et
Ass
et
s
—E
nd
o
f P
e
ri
o
d in
c
lud
e
s undis
t
ribu
te
d n
et
inv
e
s
t
m
e
n
t
in
co
m
e o
f $41
,62
5
,000
and $
3
4
,
99
2,000.
See accompanying Notes, which are an integral part of the Financial Statements.
19
PRIMECAP Core Fund
Financial Highlights
|
|
|
|
|
|
|
|
For a S
h
are Out
s
tand
i
ng
|
|
|
Year Ended September 30,
|
|
Th
roug
h
out Eac
h
Per
i
od
|
2012
|
2011
|
2010
|
2009
|
200
8
|
|
Net Asset Value,
B
eginning of Period
|
$12.37
|
$12.51
|
$11.42
|
$11.41
|
$14.03
|
|
Investment Operations
|
|
|
|
|
|
|
N
et In
v
e
s
tment Income
|
.206
|
.1
4
5
|
.133
1
|
.09
7
|
.13
8
2
|
|
N
et Rea
li
zed and
U
nrea
li
zed Ga
i
n
(L
o
ss)
|
|
|
|
|
|
|
on In
v
e
s
tment
s
|
2.56
7
|
(
.1
4
3
)
|
1.051
|
.030
|
(
2.
4
1
7)
|
|
T
ota
l f
rom In
v
e
s
tment Operat
i
on
s
|
2.
77
3
|
.002
|
1.1
84
|
.12
7
|
(
2.2
7
9
)
|
|
Distributions
|
|
|
|
|
|
|
D
ivi
dend
s f
rom
N
et In
v
e
s
tment Income
|
(
.163
)
|
(
.1
4
2
)
|
(
.09
4)
|
(
.11
7)
|
(
.110
)
|
|
D
is
tr
i
but
i
on
s f
rom Rea
li
zed Cap
i
ta
l
Ga
i
n
s
|
—
|
—
|
—
|
—
|
(
.231
)
|
|
T
ota
l
D
is
tr
i
but
i
on
s
|
(
.163
)
|
(
.1
4
2
)
|
(
.09
4)
|
(
.11
7)
|
(
.3
4
1
)
|
|
Net Asset Value, End of Period
|
$14.98
|
$12.37
|
$12.51
|
$11.42
|
$11.41
|
|
|
|
Total Return
3
|
22.55%
|
-0.10%
|
10.39%
|
1.45%
|
-16.52%
|
|
|
|
Ratios/Supplemental Data
|
|
|
|
|
|
|
N
et A
ss
et
s
, End o
f
Per
i
od
(
M
illi
on
s)
|
$
4
,
7
02
|
$
4
,3
4
5
|
$
4
,569
|
$
4
,2
4
5
|
$3,253
|
|
Rat
i
o o
f T
ota
l
E
x
pen
s
e
s
to
|
|
|
|
|
|
|
A
v
erage
N
et A
ss
et
s
|
0.50
%
|
0.51
%
|
0.51
%
|
0.5
4%
|
0.50
%
|
|
Rat
i
o o
f N
et In
v
e
s
tment Income to
|
|
|
|
|
|
|
A
v
erage
N
et A
ss
et
s
|
1.39
%
|
1.01
%
|
1.09
%
1
|
1.10
%
|
1.12
%
2
|
|
Port
f
o
li
o
T
urno
v
er Rate
|
10
%
|
9
%
|
8%
|
5
%
|
9
%
|
1 Net investment income per share and the ratio of net investment income to average net assets include $.019 and 0.15%, respectively,
resulting from a special dividend from Weyerhaeuser Co in July 2010.
2 Net investment income per share and the ratio of net investment income to average net assets include $.027 and 0.2
3
%, respectively,
resulting from a special dividend from AS
M
L Holding NV in October 2007.
3
Total returns do not include transaction or account service fees that may have applied in the periods shown. Fund prospectuses provide
information about any applicable transaction and account service fees.
See accompanying Notes, which are an integral part of the Financial Statements.
20
PRIMECAP Core Fund
Notes to Financial Statements
Vanguard PRIMECAP Core Fund
is
reg
is
tered under t
h
e In
v
e
s
tment Compan
y
Act o
f
19
4
0 a
s
an open-end
i
n
v
e
s
tment compan
y
, or mutua
l f
und.
A.
Th
e
f
o
ll
o
wi
ng
si
gn
ifi
cant account
i
ng po
li
c
i
e
s
con
f
orm to genera
lly
accepted account
i
ng pr
i
nc
i
p
l
e
s f
or
U
.S. mutua
l f
und
s
.
Th
e
f
und con
sis
tent
ly f
o
ll
o
ws s
uc
h
po
li
c
i
e
s i
n prepar
i
ng
i
t
s fi
nanc
i
a
l s
tatement
s
.
1. Secur
i
t
y
Va
l
uat
i
on: Secur
i
t
i
e
s
are
v
a
l
ued a
s
o
f
t
h
e c
l
o
s
e o
f
trad
i
ng on t
h
e
N
e
w
Yor
k
Stoc
k
E
x
c
h
ange
(
genera
lly 4
p.m., Ea
s
tern t
i
me
)
on t
h
e
v
a
l
uat
i
on date. E
q
u
i
t
y s
ecur
i
t
i
e
s
are
v
a
l
ued at t
h
e
l
ate
s
t
q
uoted
s
a
l
e
s
pr
i
ce
s
or o
ffi
c
i
a
l
c
l
o
si
ng pr
i
ce
s
ta
k
en
f
rom t
h
e pr
i
mar
y
mar
k
et
i
n
whi
c
h
eac
h s
ecur
i
t
y
trade
s
;
s
uc
h s
ecur
i
t
i
e
s
not traded on t
h
e
v
a
l
uat
i
on date are
v
a
l
ued at t
h
e mean o
f
t
h
e
l
ate
s
t
q
uoted b
i
d and a
sk
ed pr
i
ce
s
. Secur
i
t
i
e
s f
or
whi
c
h
mar
k
et
q
uotat
i
on
s
are not read
ily
a
v
a
il
ab
l
e, or
wh
o
s
e
v
a
l
ue
s h
a
v
e been a
ff
ected b
y
e
v
ent
s
occurr
i
ng be
f
ore t
h
e
f
und
’s
pr
i
c
i
ng t
i
me but a
f
ter t
h
e c
l
o
s
e o
f
t
h
e
s
ecur
i
t
i
e
s’
pr
i
mar
y
mar
k
et
s
, are
v
a
l
ued at t
h
e
i
r
f
a
i
r
v
a
l
ue
s
ca
l
cu
l
ated accord
i
ng to procedure
s
adopted b
y
t
h
e board o
f
tru
s
tee
s
.
Th
e
s
e procedure
s i
nc
l
ude obta
i
n
i
ng
q
uotat
i
on
s f
rom an
i
ndependent pr
i
c
i
ng
s
er
vi
ce, mon
i
tor
i
ng ne
ws
to
i
dent
ify si
gn
ifi
cant mar
k
et- or
s
ecur
i
t
y
-
s
pec
ifi
c e
v
ent
s
, and e
v
a
l
uat
i
ng c
h
ange
s i
n t
h
e
v
a
l
ue
s
o
f f
ore
i
gn mar
k
et pro
xi
e
s (f
or e
x
amp
l
e, ADR
s
,
f
uture
s
contract
s
, or e
x
c
h
ange-traded
f
und
s)
, bet
w
een t
h
e t
i
me t
h
e
f
ore
i
gn mar
k
et
s
c
l
o
s
e and t
h
e
f
und
’s
pr
i
c
i
ng t
i
me.
Wh
en
f
a
i
r-
v
a
l
ue pr
i
c
i
ng
is
emp
l
o
y
ed, t
h
e pr
i
ce
s
o
f s
ecur
i
t
i
e
s
u
s
ed b
y
a
f
und to ca
l
cu
l
ate
i
t
s
net a
ss
et
v
a
l
ue ma
y
d
iff
er
f
rom
q
uoted or pub
lish
ed pr
i
ce
s f
or t
h
e
s
ame
s
ecur
i
t
i
e
s
. In
v
e
s
tment
s i
n Vanguard Mar
k
et
Liq
u
i
d
i
t
y
Fund are
v
a
l
ued at t
h
at
f
und
’s
net a
ss
et
v
a
l
ue.
2. Fore
i
gn Currenc
y
: Secur
i
t
i
e
s
and ot
h
er a
ss
et
s
and
li
ab
ili
t
i
e
s
denom
i
nated
i
n
f
ore
i
gn currenc
i
e
s
are tran
sl
ated
i
nto
U
.S. do
ll
ar
s
u
si
ng e
x
c
h
ange rate
s
obta
i
ned
f
rom an
i
ndependent t
hi
rd part
y
a
s
o
f
t
h
e
f
und
’s
pr
i
c
i
ng t
i
me on t
h
e
v
a
l
uat
i
on date. Rea
li
zed ga
i
n
s (l
o
ss
e
s)
and unrea
li
zed apprec
i
at
i
on
(
deprec
i
at
i
on
)
on
i
n
v
e
s
tment
s
ecur
i
t
i
e
s i
nc
l
ude t
h
e e
ff
ect
s
o
f
c
h
ange
s i
n e
x
c
h
ange rate
s si
nce t
h
e
s
ecur
i
t
i
e
s w
ere purc
h
a
s
ed, comb
i
ned
wi
t
h
t
h
e e
ff
ect
s
o
f
c
h
ange
s i
n
s
ecur
i
t
y
pr
i
ce
s
. F
l
uctuat
i
on
s i
n t
h
e
v
a
l
ue o
f
ot
h
er a
ss
et
s
and
li
ab
ili
t
i
e
s
re
s
u
l
t
i
ng
f
rom c
h
ange
s i
n e
x
c
h
ange rate
s
are recorded a
s
unrea
li
zed
f
ore
i
gn currenc
y
ga
i
n
s (l
o
ss
e
s)
unt
il
t
h
e a
ss
et
s
or
li
ab
ili
t
i
e
s
are
s
ett
l
ed
i
n ca
sh
, at
whi
c
h
t
i
me t
h
e
y
are recorded a
s
rea
li
zed
f
ore
i
gn currenc
y
ga
i
n
s (l
o
ss
e
s)
.
3. Federa
l
Income
T
a
x
e
s
:
Th
e
f
und
i
ntend
s
to cont
i
nue to
q
ua
lify
a
s
a regu
l
ated
i
n
v
e
s
tment compan
y
and d
is
tr
i
bute a
ll
o
f i
t
s
ta
x
ab
l
e
i
ncome. Management
h
a
s
ana
ly
zed t
h
e
f
und
’s
ta
x
po
si
t
i
on
s
ta
k
en
f
or a
ll
open
f
edera
l i
ncome ta
x y
ear
s (
September 30, 2009–2012
)
, and
h
a
s
conc
l
uded t
h
at no pro
visi
on
f
or
f
edera
l i
ncome ta
x is
re
q
u
i
red
i
n t
h
e
f
und
’s fi
nanc
i
a
l s
tatement
s
.
4
. D
is
tr
i
but
i
on
s
: D
is
tr
i
but
i
on
s
to
sh
are
h
o
l
der
s
are recorded on t
h
e e
x
-d
ivi
dend date.
5. Secur
i
t
y L
end
i
ng:
Th
e
f
und ma
y l
end
i
t
s s
ecur
i
t
i
e
s
to
q
ua
lifi
ed
i
n
s
t
i
tut
i
ona
l
borro
w
er
s
to earn add
i
t
i
ona
l i
ncome. Secur
i
t
y l
oan
s
are re
q
u
i
red to be
s
ecured at a
ll
t
i
me
s
b
y
co
ll
atera
l
at
l
ea
s
t e
q
ua
l
to t
h
e mar
k
et
v
a
l
ue o
f s
ecur
i
t
i
e
s l
oaned.
Th
e
f
und
i
n
v
e
s
t
s
ca
sh
co
ll
atera
l
rece
iv
ed
i
n Vanguard Mar
k
et
Liq
u
i
d
i
t
y
Fund, and record
s
a
li
ab
ili
t
y f
or t
h
e return o
f
t
h
e co
ll
atera
l
, dur
i
ng t
h
e per
i
od t
h
e
s
ecur
i
t
i
e
s
are on
l
oan. Secur
i
t
y l
end
i
ng
i
ncome repre
s
ent
s f
ee
s
c
h
arged to borro
w
er
s
p
l
u
s i
ncome earned on
i
n
v
e
s
t
i
ng ca
sh
co
ll
atera
l
,
l
e
ss
e
x
pen
s
e
s
a
ss
oc
i
ated
wi
t
h
t
h
e
l
oan.
6. Ot
h
er: D
ivi
dend
i
ncome
is
recorded on t
h
e e
x
-d
ivi
dend date. Intere
s
t
i
ncome
i
nc
l
ude
s i
ncome d
is
tr
i
but
i
on
s
rece
iv
ed
f
rom Vanguard Mar
k
et
Liq
u
i
d
i
t
y
Fund and
is
accrued da
ily
. Secur
i
t
y
tran
s
act
i
on
s
are accounted
f
or on t
h
e date
s
ecur
i
t
i
e
s
are boug
h
t or
s
o
l
d. Co
s
t
s
u
s
ed to determ
i
ne rea
li
zed ga
i
n
s (l
o
ss
e
s)
on t
h
e
s
a
l
e o
f i
n
v
e
s
tment
s
ecur
i
t
i
e
s
are t
h
o
s
e o
f
t
h
e
s
pec
ifi
c
s
ecur
i
t
i
e
s s
o
l
d. Fee
s
a
ss
e
ss
ed on redempt
i
on
s
o
f
cap
i
ta
l sh
are
s
pr
i
or to Ma
y
23, 2012,
w
ere cred
i
ted to pa
i
d-
i
n cap
i
ta
l
.
21
PRIMECAP Core Fund
B
.
PRIMECAP Management Compan
y
pro
vi
de
s i
n
v
e
s
tment ad
vis
or
y s
er
vi
ce
s
to t
h
e
f
und
f
or a
f
ee ca
l
cu
l
ated at an annua
l
percentage rate o
f
a
v
erage net a
ss
et
s
. For t
h
e
y
ear ended September 30, 2012, t
h
e
i
n
v
e
s
tment ad
vis
or
y f
ee repre
s
ented an e
ff
ect
iv
e annua
l
rate o
f
0.31
%
o
f
t
h
e
f
und
’s
a
v
erage net a
ss
et
s
.
C.
Th
e Vanguard Group
f
urn
ish
e
s
at co
s
t corporate management, adm
i
n
is
trat
iv
e, mar
k
et
i
ng, and d
is
tr
i
but
i
on
s
er
vi
ce
s
.
Th
e co
s
t
s
o
f s
uc
h s
er
vi
ce
s
are a
ll
ocated to t
h
e
f
und under met
h
od
s
appro
v
ed b
y
t
h
e board o
f
tru
s
tee
s
.
Th
e
f
und
h
a
s
comm
i
tted to pro
vi
de up to 0.
4
0
%
o
f i
t
s
net a
ss
et
s i
n cap
i
ta
l
contr
i
but
i
on
s
to Vanguard. At September 30, 2012, t
h
e
f
und
h
ad contr
i
buted cap
i
ta
l
o
f
$6
7
0,000 to Vanguard
(i
nc
l
uded
i
n Ot
h
er A
ss
et
s)
, repre
s
ent
i
ng 0.01
%
o
f
t
h
e
f
und
’s
net a
ss
et
s
and 0.2
7%
o
f
Vanguard
’s
cap
i
ta
li
zat
i
on.
Th
e
f
und
’s
tru
s
tee
s
and o
ffi
cer
s
are a
ls
o d
i
rector
s
and o
ffi
cer
s
o
f
Vanguard.
D.
Var
i
ou
s i
nput
s
ma
y
be u
s
ed to determ
i
ne t
h
e
v
a
l
ue o
f
t
h
e
f
und
’s i
n
v
e
s
tment
s
.
Th
e
s
e
i
nput
s
are
s
ummar
i
zed
i
n t
h
ree broad
l
e
v
e
ls f
or
fi
nanc
i
a
l s
tatement purpo
s
e
s
.
Th
e
i
nput
s
or met
h
odo
l
og
i
e
s
u
s
ed to
v
a
l
ue
s
ecur
i
t
i
e
s
are not nece
ss
ar
ily
an
i
nd
i
cat
i
on o
f
t
h
e r
isk
a
ss
oc
i
ated
wi
t
h i
n
v
e
s
t
i
ng
i
n t
h
o
s
e
s
ecur
i
t
i
e
s
.
Level 1
—
Q
uoted pr
i
ce
s i
n act
iv
e mar
k
et
s f
or
i
dent
i
ca
l s
ecur
i
t
i
e
s
.
Level 2
—
Ot
h
er
si
gn
ifi
cant ob
s
er
v
ab
l
e
i
nput
s (i
nc
l
ud
i
ng
q
uoted pr
i
ce
s f
or
si
m
il
ar
s
ecur
i
t
i
e
s
,
i
ntere
s
t
rate
s
, prepa
y
ment
s
peed
s
, cred
i
t r
isk
, etc.
)
.
Level 3
—
S
i
gn
ifi
cant unob
s
er
v
ab
l
e
i
nput
s (i
nc
l
ud
i
ng t
h
e
f
und
’s
o
w
n a
ss
umpt
i
on
s
u
s
ed to determ
i
ne
t
h
e
f
a
i
r
v
a
l
ue o
f i
n
v
e
s
tment
s)
.
Th
e
f
o
ll
o
wi
ng tab
l
e
s
ummar
i
ze
s
t
h
e mar
k
et
va
l
ue o
f
t
h
e
f
und
’s i
n
v
e
s
tment
s
a
s
o
f
September 30,
2012, ba
s
ed on t
h
e
i
nput
s
u
s
ed to
v
a
l
ue t
h
em:
|
|
|
|
|
|
|
L
e
v
e
l
1
|
L
e
v
e
l
2
|
L
e
v
e
l
3
|
|
In
v
e
s
tment
s
|
(
$000
)
|
(
$000
)
|
(
$000
)
|
|
Common Stoc
ks
|
4
,399,1
8
9
|
23
8
,036
|
—
|
|
T
emporar
y
Ca
sh
In
v
e
s
tment
s
|
96,629
|
—
|
—
|
|
T
ota
l
|
4
,
4
95,
8
1
8
|
23
8
,036
|
—
|
E.
D
is
tr
i
but
i
on
s
are determ
i
ned on a ta
x
ba
sis
and ma
y
d
iff
er
f
rom net
i
n
v
e
s
tment
i
ncome and rea
li
zed cap
i
ta
l
ga
i
n
s f
or
fi
nanc
i
a
l
report
i
ng purpo
s
e
s
. D
iff
erence
s
ma
y
be permanent or temporar
y
. Permanent d
iff
erence
s
are rec
l
a
ssifi
ed among cap
i
ta
l
account
s i
n t
h
e
fi
nanc
i
a
l s
tatement
s
to re
fl
ect t
h
e
i
r ta
x
c
h
aracter.
T
emporar
y
d
iff
erence
s
ar
is
e
wh
en certa
i
n
i
tem
s
o
f i
ncome, e
x
pen
s
e, ga
i
n, or
l
o
ss
are recogn
i
zed
i
n d
iff
erent per
i
od
s f
or
fi
nanc
i
a
l s
tatement and ta
x
purpo
s
e
s
; t
h
e
s
e d
iff
erence
s will
re
v
er
s
e at
s
ome t
i
me
i
n t
h
e
f
uture. D
iff
erence
s i
n c
l
a
ssifi
cat
i
on ma
y
a
ls
o re
s
u
l
t
f
rom t
h
e treatment o
f sh
ort-term ga
i
n
s
a
s
ord
i
nar
y i
ncome
f
or ta
x
purpo
s
e
s
.
Th
e
f
und u
s
ed a ta
x
account
i
ng pract
i
ce to treat a port
i
on o
f
t
h
e pr
i
ce o
f
cap
i
ta
l sh
are
s
redeemed dur
i
ng t
h
e
y
ear a
s
d
is
tr
i
but
i
on
s f
rom net
i
n
v
e
s
tment
i
ncome and rea
li
zed cap
i
ta
l
ga
i
n
s
. Accord
i
ng
ly
, t
h
e
f
und
h
a
s
rec
l
a
ssifi
ed $3,16
7
,000
f
rom und
is
tr
i
buted net
i
n
v
e
s
tment
i
ncome, and $
4
,10
8
,000
f
rom accumu
l
ated net rea
li
zed ga
i
n
s
, to pa
i
d-
i
n cap
i
ta
l
Dur
i
ng t
h
e
y
ear ended September 30, 2012, t
h
e
f
und rea
li
zed net
f
ore
i
gn currenc
y l
o
ss
e
s
o
f
$
7
2,000,
whi
c
h
decrea
s
ed d
is
tr
i
butab
l
e net
i
ncome
f
or ta
x
purpo
s
e
s
; accord
i
ng
ly
,
s
uc
h l
o
ss
e
s h
a
v
e been rec
l
a
ssifi
ed
f
rom accumu
l
ated net rea
li
zed ga
i
n
s
to und
is
tr
i
buted net
i
n
v
e
s
tment
i
ncome.
22
PRIMECAP Core Fund
Th
e
f
und u
s
ed cap
i
ta
l l
o
ss
carr
yf
or
w
ard
s
o
f
$53,326,000 to o
ffs
et ta
x
ab
l
e cap
i
ta
l
ga
i
n
s
rea
li
zed dur
i
ng t
h
e
y
ear ended September 30, 2012, reduc
i
ng t
h
e amount o
f
cap
i
ta
l
ga
i
n
s
t
h
at
w
ou
l
d ot
h
er
wis
e be a
v
a
il
ab
l
e to d
is
tr
i
bute to
sh
are
h
o
l
der
s
. For ta
x
purpo
s
e
s
, at September 30, 2012, t
h
e
f
und
h
ad $
48
,
4
60,000 o
f
ord
i
nar
y i
ncome and $
8
1,3
78
,000 o
f l
ong-term cap
i
ta
l
ga
i
n
s
a
v
a
il
ab
l
e
f
or d
is
tr
i
but
i
on.
At September 30, 2012, t
h
e co
s
t o
f i
n
v
e
s
tment
s
ecur
i
t
i
e
s f
or ta
x
purpo
s
e
s w
a
s
$3,565,201,000.
N
et unrea
li
zed apprec
i
at
i
on o
f i
n
v
e
s
tment
s
ecur
i
t
i
e
s f
or ta
x
purpo
s
e
s w
a
s
$1,16
8
,653,000, con
sis
t
i
ng o
f
unrea
li
zed ga
i
n
s
o
f
$1,35
4
,336,000 on
s
ecur
i
t
i
e
s
t
h
at
h
ad r
is
en
i
n
v
a
l
ue
si
nce t
h
e
i
r purc
h
a
s
e and $1
8
5,6
8
3,000
i
n unrea
li
zed
l
o
ss
e
s
on
s
ecur
i
t
i
e
s
t
h
at
h
ad
f
a
ll
en
i
n
v
a
l
ue
si
nce t
h
e
i
r purc
h
a
s
e.
F.
Dur
i
ng t
h
e
y
ear ended September 30, 2012, t
h
e
f
und purc
h
a
s
ed $
4
61,5
8
1,000 o
f i
n
v
e
s
tment
s
ecur
i
t
i
e
s
and
s
o
l
d $925,119,000 o
f i
n
v
e
s
tment
s
ecur
i
t
i
e
s
, ot
h
er t
h
an temporar
y
ca
sh i
n
v
e
s
tment
s
.
G.
Cap
i
ta
l sh
are
s iss
ued and redeemed
w
ere:
|
|
|
|
|
|
Year Ended September 30,
|
|
|
2012
|
2011
|
|
|
S
h
are
s
|
S
h
are
s
|
|
|
(
000
)
|
(
000
)
|
|
I
ss
ued
|
11,
7
32
|
2
4
,9
8
5
|
|
I
ss
ued
i
n
Li
eu o
f
Ca
sh
D
is
tr
i
but
i
on
s
|
3,662
|
3,3
7
2
|
|
Redeemed
|
(
52,603
)
|
(4
2,610
)
|
|
N
et Increa
s
e
(
Decrea
s
e
) i
n S
h
are
s
Out
s
tand
i
ng
|
(
3
7
,209
)
|
(
1
4
,253
)
|
H.
In prepar
i
ng t
h
e
fi
nanc
i
a
l s
tatement
s
a
s
o
f
September 30, 2012, management con
si
dered t
h
e
i
mpact o
f s
ub
s
e
q
uent e
v
ent
s f
or potent
i
a
l
recogn
i
t
i
on or d
is
c
l
o
s
ure
i
n t
h
e
s
e
fi
nanc
i
a
l s
tatement
s
.
23
Report of Independent Registered Public Accounting Firm
T
o t
h
e
T
ru
s
tee
s
o
f
Vanguard Fen
w
a
y
Fund
s
and t
h
e S
h
are
h
o
l
der
s
o
f
t
h
e Vanguard PRIMECAP Core Fund:
In our op
i
n
i
on, t
h
e accompan
yi
ng
s
tatement o
f
net a
ss
et
s
and t
h
e re
l
ated
s
tatement
s
o
f
operat
i
on
s
and o
f
c
h
ange
s i
n net a
ss
et
s
and t
h
e
fi
nanc
i
a
l hi
g
hli
g
h
t
s
pre
s
ent
f
a
i
r
ly
,
i
n a
ll
mater
i
a
l
re
s
pect
s
, t
h
e
fi
nanc
i
a
l
po
si
t
i
on o
f
t
h
e Vanguard PRIMECAP Core Fund
(
con
s
t
i
tut
i
ng a
s
eparate port
f
o
li
o o
f
Vanguard Fen
w
a
y
Fund
s
,
h
erea
f
ter re
f
erred to a
s
t
h
e “Fund”
)
at September 30, 2012, t
h
e re
s
u
l
t
s
o
f i
t
s
operat
i
on
s f
or t
h
e
y
ear t
h
en ended, t
h
e c
h
ange
s i
n
i
t
s
net a
ss
et
s f
or eac
h
o
f
t
h
e t
w
o
y
ear
s i
n t
h
e per
i
od t
h
en ended and t
h
e
fi
nanc
i
a
l hi
g
hli
g
h
t
s f
or eac
h
o
f
t
h
e
fiv
e
y
ear
s i
n t
h
e per
i
od t
h
en ended,
i
n con
f
orm
i
t
y wi
t
h
account
i
ng pr
i
nc
i
p
l
e
s
genera
lly
accepted
i
n t
h
e
U
n
i
ted State
s
o
f
Amer
i
ca.
Th
e
s
e
fi
nanc
i
a
l s
tatement
s
and
fi
nanc
i
a
l hi
g
hli
g
h
t
s (h
erea
f
ter re
f
erred to a
s
“
fi
nanc
i
a
l s
tatement
s
”
)
are t
h
e re
s
pon
si
b
ili
t
y
o
f
t
h
e Fund
’s
management; our re
s
pon
si
b
ili
t
y is
to e
x
pre
ss
an op
i
n
i
on on t
h
e
s
e
fi
nanc
i
a
l s
tatement
s
ba
s
ed on our aud
i
t
s
.
W
e conducted our aud
i
t
s
o
f
t
h
e
s
e
fi
nanc
i
a
l s
tatement
s i
n accordance
wi
t
h
t
h
e
s
tandard
s
o
f
t
h
e Pub
li
c Compan
y
Account
i
ng O
v
er
si
g
h
t
B
oard
(U
n
i
ted State
s)
.
Th
o
s
e
s
tandard
s
re
q
u
i
re t
h
at
w
e p
l
an and per
f
orm t
h
e aud
i
t to obta
i
n rea
s
onab
l
e a
ss
urance about
wh
et
h
er t
h
e
fi
nanc
i
a
l s
tatement
s
are
f
ree o
f
mater
i
a
l
m
iss
tatement. An aud
i
t
i
nc
l
ude
s
e
x
am
i
n
i
ng, on a te
s
t ba
sis
, e
vi
dence
s
upport
i
ng t
h
e amount
s
and d
is
c
l
o
s
ure
s i
n t
h
e
fi
nanc
i
a
l s
tatement
s
, a
ss
e
ssi
ng t
h
e account
i
ng pr
i
nc
i
p
l
e
s
u
s
ed and
si
gn
ifi
cant e
s
t
i
mate
s
made b
y
management, and e
v
a
l
uat
i
ng t
h
e o
v
era
ll fi
nanc
i
a
l s
tatement pre
s
entat
i
on.
W
e be
li
e
v
e t
h
at our aud
i
t
s
,
whi
c
h i
nc
l
uded con
fi
rmat
i
on o
f s
ecur
i
t
i
e
s
at September 30, 2012 b
y
corre
s
pondence
wi
t
h
t
h
e cu
s
tod
i
an and b
y
agreement to t
h
e under
lyi
ng o
w
ner
shi
p record
s
o
f
t
h
e tran
sf
er agent, pro
vi
de a rea
s
onab
l
e ba
sis f
or our op
i
n
i
on.
Pr
i
ce
w
ater
h
ou
s
eCooper
s LL
P
P
hil
ade
l
p
hi
a, Penn
sylv
an
i
a
N
o
v
ember 9, 2012
|
|
|
Special 2012 tax information (unaudited) for Vanguard PRIMECAP Core Fund
|
This i
n
f
ormat
i
on
f
or t
h
e
fis
ca
l y
ear ended September 30, 2012,
is i
nc
l
uded pur
s
uant to pro
visi
on
s
o
f
t
h
e Interna
l
Re
v
enue Code.
Th
e
f
und d
is
tr
i
buted $55,
4
32,000 o
f q
ua
lifi
ed d
ivi
dend
i
ncome to
sh
are
h
o
l
der
s
dur
i
ng t
h
e
fis
ca
l y
ear.
For corporate
sh
are
h
o
l
der
s
, 100
%
o
f i
n
v
e
s
tment
i
ncome
(
d
ivi
dend
i
ncome p
l
u
s sh
ort-term ga
i
n
s
,
if
an
y) q
ua
lifi
e
s f
or t
h
e d
ivi
dend
s
-rece
iv
ed deduct
i
on.
24
Your Fund’s After-Tax Returns
This table presents returns for your fund both before and after taxes. The after-tax returns are shown in two ways: (1) assuming that an investor owned the fund during the entire period and paid taxes on the fund’s distributions, and (2) assuming that an investor paid taxes on the fund’s distributions
and
sold all shares at the end of each period.
Calculations are based on the highest individual federal income tax and capital gains tax rates in effect at the times of the distributions and the hypothetical sales. State and local taxes were not considered. After-tax returns reflect any qualified dividend income , using actual prior-year figures and estimates for 2012. (In the example, returns after the sale of fund shares may be higher than those assuming no sale. This occurs when the sale would have produced a capital loss. The calculation assumes that the investor received a tax deduction for the loss.)
Please note that your actual after-tax returns will depend on your tax situation and may differ from those shown. Also note that if you own the fund in a tax-deferred account, such as an individual retirement account or a 401(k) plan, this information does not apply to you. Such accounts are not subject to current taxes.
Finally, keep in mind that a fund’s performance—whether before or after taxes—does not guarantee future results.
|
|
|
|
|
|
Average Annual Total Returns: PRIMECAP Core Fund
|
|
|
|
|
Periods Ended September 30, 2012
|
|
|
|
|
|
|
|
Since
|
|
|
One
|
Five
|
Inception
|
|
|
Year
|
Years
|
(12/9/2004)
|
|
Returns Before Taxes
|
22.55%
|
2.74%
|
6.57%
|
|
Returns After Taxes on Distributions
|
22.34
|
2.51
|
6.36
|
|
Returns After Taxes on Distributions and Sale of Fund Shares
|
14.91
|
2.29
|
5.69
|
25
About Your Fund’s Expenses
As a shareholder of the fund, you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross income, directly reduce the investment return of the fund.
A typical fund’s expenses are expressed as a percentage of its average net assets. This figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.
The accompanying table illustrates your fund’s costs in two ways:
•
Based on actual fund return.
This section helps you to estimate the actual expenses that you paid over the period. The ”Ending Account Value“ shown is derived from the fund‘s actual return, and the third column shows the dollar amount that would have been paid by an investor who started with $1,000 in the fund. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period.
To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your fund under the heading ”Expenses Paid During Period.“
•
Based on hypothetical 5% yearly return.
This section is intended to help you compare your fund‘s costs with those of other mutual funds. It assumes that the fund had a yearly return of 5% before expenses, but that the expense ratio is unchanged. In this case—because the return used is not the fund’s actual return—the results do not apply to your investment. The example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to calculate expenses based on a 5% return. You can assess your fund’s costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds.
Note that the expenses shown in the table are meant to highlight and help you compare
ongoing
costs only and do not reflect transaction costs incurred by the fund for buying and selling securities. Further, the expenses do not include any purchase, redemption, or account service fees described in the fund prospectus. If such fees were applied to your account, your costs would be higher. Your fund does not carry a “sales load.”
The calculations assume no shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.
You can find more information about the fund’s expenses, including annual expense ratios, in the Financial Statements section of this report. For additional information on operating expenses and other shareholder costs, please refer to your fund’s current prospectus.
26
|
|
|
|
|
|
Six Months Ended September 30, 2012
|
|
|
|
|
|
Beginning
|
Ending
|
Expenses
|
|
|
Account Value
|
Account Value
|
Paid During
|
|
PRIMECAP Core Fund
|
3/31/2012
|
9/30/2012
|
Period
|
|
Based on Actual Fund Return
|
$1,000.00
|
$1,016.28
|
$2.53
|
|
Based on Hypothetical 5% Yearly Return
|
1,000.00
|
1,022.56
|
2.54
|
The calculations are based on expenses incurred in the most recent six-month period. The fund’s annualized six-month expense ratio for that period is 0.50%. The dollar amounts shown as “Expenses Paid” are equal to the annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by the number of days in the most recent 12-month period.
27
Glossary
30-Day SEC Yield.
A fund’s 30-day SEC yield is derived using a formula specified by the U.S. Securities and Exchange Commission. Under the formula, data related to the fund’s security holdings in the previous 30 days are used to calculate the fund’s hypothetical net income for that period, which is then annualized and divided by the fund’s estimated average net assets over the calculation period. For the purposes of this calculation, a security’s income is based on its current market yield to maturity (for bonds), its actual income (for asset-backed securities), or its projected dividend yield (for stocks). Because the SEC yield represents hypothetical annualized income, it will differ—at times significantly—from the fund’s actual experience. As a result, the fund’s income distributions may be higher or lower than implied by the SEC yield.
Beta.
A measure of the magnitude of a fund’s past share-price fluctuations in relation to the ups and downs of a given market index. The index is assigned a beta of 1.00. Compared with a given index, a fund with a beta of 1.20 typically would have seen its share price rise or fall by 12% when the index rose or fell by 10%. For this report, beta is based on returns over the past 36 months for both the fund and the index. Note that a fund’s beta should be reviewed in conjunction with its R-squared (see definition). The lower the R-squared, the less correlation there is between the fund and the index, and the less reliable beta is as an indicator of volatility.
Dividend Yield.
Dividend income earned by stocks, expressed as a percentage of the aggregate market value (or of net asset value, for a fund). The yield is determined by dividing the amount of the annual dividends by the aggregate value (or net asset value) at the end of the period. For a fund, the dividend yield is based solely on stock holdings and does not include any income produced by other investments.
Earnings Growth Rate.
The average annual rate of growth in earnings over the past five years for the stocks now in a fund.
Equity Exposure.
A measure that reflects a fund’s investments in stocks and stock futures. Any holdings in short-term reserves are excluded.
Expense Ratio.
A fund’s total annual operating expenses expressed as a percentage of the fund’s average net assets. The expense ratio includes management and administrative expenses, but does not include the transaction costs of buying and selling portfolio securities.
Foreign Holdings.
The percentage of a fund represented by securities or depositary receipts of companies based outside the United States.
Inception Date.
The date on which the assets of a fund (or one of its share classes) are first invested in accordance with the fund’s investment objective. For funds with a subscription period, the inception date is the day after that period ends. Investment performance is measured from the inception date.
Median Market Cap.
An indicator of the size of companies in which a fund invests; the midpoint of market capitalization (market price x shares outstanding) of a fund’s stocks, weighted by the proportion of the fund’s assets invested in each stock. Stocks representing half of the fund’s assets have market capitalizations above the median, and the rest are below it.
Price/Book Ratio.
The share price of a stock divided by its net worth, or book value, per share. For a fund, the weighted average price/book ratio of the stocks it holds.
28
Price/Earnings Ratio.
The ratio of a stock’s current price to its per-share earnings over the past year. For a fund, the weighted average P/E of the stocks it holds. P/E is an indicator of market expectations about corporate prospects; the higher the P/E, the greater the expectations for a company’s future growth.
R-Squared.
A measure of how much of a fund’s past returns can be explained by the returns from the market in general, as measured by a given index. If a fund’s total returns were precisely synchronized with an index’s returns, its R-squared would be 1.00. If the fund’s returns bore no relationship to the index’s returns, its R-squared would be 0. For this report, R-squared is based on returns over the past 36 months for both the fund and the index.
Return on Equity.
The annual average rate of return generated by a company during the past five years for each dollar of shareholder’s equity (net income divided by shareholder’s equity). For a fund, the weighted average return on equity for the companies whose stocks it holds.
Short-Term Reserves.
The percentage of a fund invested in highly liquid, short-term securities that can be readily converted to cash.
Turnover Rate.
An indication of the fund’s trading activity. Funds with high turnover rates incur higher transaction costs and may be more likely to distribute capital gains (which may be taxable to investors). The turnover rate excludes in-kind transactions, which have minimal impact on costs.
29
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The People Who Govern Your Fund
Th
e tru
s
tee
s
o
f y
our mutua
l f
und are t
h
ere to
s
ee t
h
at t
h
e
f
und
is
operated and managed
i
n
y
our be
s
t
i
ntere
s
t
s si
nce, a
s
a
sh
are
h
o
l
der,
y
ou are a part o
w
ner o
f
t
h
e
f
und. Your
f
und
’s
tru
s
tee
s
a
ls
o
s
er
v
e on t
h
e board o
f
d
i
rector
s
o
f Th
e Vanguard Group, Inc.,
whi
c
h is
o
w
ned b
y
t
h
e Vanguard
f
und
s
and pro
vi
de
s s
er
vi
ce
s
to t
h
em on an at-co
s
t ba
sis
.
A ma
j
or
i
t
y
o
f
Vanguard
’s
board member
s
are
i
ndependent, mean
i
ng t
h
at t
h
e
y h
a
v
e no a
ffili
at
i
on
wi
t
h
Vanguard or t
h
e
f
und
s
t
h
e
y
o
v
er
s
ee, apart
f
rom t
h
e
si
zab
l
e per
s
ona
l i
n
v
e
s
tment
s
t
h
e
y h
a
v
e made a
s
pr
iv
ate
i
nd
ivi
dua
ls
.
Th
e
i
ndependent board member
s h
a
v
e d
is
t
i
ngu
ish
ed bac
k
ground
s i
n bu
si
ne
ss
, academ
i
a, and pub
li
c
s
er
vi
ce. Eac
h
o
f
t
h
e tru
s
tee
s
and e
x
ecut
iv
e o
ffi
cer
s
o
v
er
s
ee
s
1
7
9 Vanguard
f
und
s
.
Th
e
f
o
ll
o
wi
ng tab
l
e pro
vi
de
s i
n
f
ormat
i
on
f
or eac
h
tru
s
tee and e
x
ecut
iv
e o
ffi
cer o
f
t
h
e
f
und. More
i
n
f
ormat
i
on about t
h
e tru
s
tee
s is i
n t
h
e
Statement of Additional Information
,
whi
c
h
can be obta
i
ned,
wi
t
h
out c
h
arge, b
y
contact
i
ng Vanguard at
8
00-662-
7447
, or on
li
ne at
v
anguard.com.
|
|
|
|
InterestedTrustee
1
|
and De
l
p
hi
Automot
iv
e
LL
P
(
automot
iv
e component
s)
;
|
|
|
Sen
i
or Ad
vis
or at
N
e
w
Mounta
i
n Cap
i
ta
l
;
T
ru
s
tee o
f
|
|
F. William McNabb III
|
Th
e Con
f
erence
B
oard.
|
|
B
orn 195
7
.
T
ru
s
tee S
i
nce
J
u
ly
2009. C
h
a
i
rman o
f
t
h
e
|
|
|
B
oard. Pr
i
nc
i
pa
l
Occupat
i
on
(s)
Dur
i
ng t
h
e Pa
s
t F
iv
e
|
Amy Gutmann
|
|
Year
s
: C
h
a
i
rman o
f
t
h
e
B
oard o
f Th
e Vanguard Group,
|
B
orn 19
4
9.
T
ru
s
tee S
i
nce
J
une 2006. Pr
i
nc
i
pa
l
|
|
Inc., and o
f
eac
h
o
f
t
h
e
i
n
v
e
s
tment compan
i
e
s s
er
v
ed
|
Occupat
i
on
(s)
Dur
i
ng t
h
e Pa
s
t F
iv
e Year
s
: Pre
si
dent
|
|
b
y Th
e Vanguard Group,
si
nce
J
anuar
y
2010; D
i
rector
|
o
f
t
h
e
U
n
iv
er
si
t
y
o
f
Penn
sylv
an
i
a; C
h
r
is
top
h
er
H
.
|
|
o
f Th
e Vanguard Group
si
nce 200
8
; C
hi
e
f
E
x
ecut
iv
e
|
B
ro
w
ne D
is
t
i
ngu
ish
ed Pro
f
e
ss
or o
f
Po
li
t
i
ca
l
Sc
i
ence
|
|
O
ffi
cer and Pre
si
dent o
f Th
e Vanguard Group and o
f
|
i
n t
h
e Sc
h
oo
l
o
f
Art
s
and Sc
i
ence
s wi
t
h s
econdar
y
|
|
eac
h
o
f
t
h
e
i
n
v
e
s
tment compan
i
e
s s
er
v
ed b
y Th
e
|
appo
i
ntment
s
at t
h
e Annenberg Sc
h
oo
l f
or
|
|
Vanguard Group
si
nce 200
8
; D
i
rector o
f
Vanguard
|
Commun
i
cat
i
on and t
h
e Graduate Sc
h
oo
l
o
f
Educat
i
on
|
|
Mar
k
et
i
ng Corporat
i
on; Manag
i
ng D
i
rector o
f Th
e
|
o
f
t
h
e
U
n
iv
er
si
t
y
o
f
Penn
sylv
an
i
a; Member o
f
t
h
e
|
|
Vanguard Group
(
1995–200
8)
.
|
N
at
i
ona
l
Comm
issi
on on t
h
e
H
uman
i
t
i
e
s
and Soc
i
a
l
|
|
|
Sc
i
ence
s
;
T
ru
s
tee o
f
Carneg
i
e Corporat
i
on o
f N
e
w
|
|
IndependentTrustees
|
Yor
k
and o
f
t
h
e
N
at
i
ona
l
Con
s
t
i
tut
i
on Center; C
h
a
i
r
|
|
|
of the U.S. Presidential Commission for the Study
|
|
Emerson U. Fullwood
|
o
f Bi
oet
hi
ca
l
I
ss
ue
s
.
|
|
|
|
|
B
orn 19
48
.
T
ru
s
tee S
i
nce
J
anuar
y
200
8
. Pr
i
nc
i
pa
l
|
JoAnn Heffernan Heisen
|
|
Occupat
i
on
(s)
Dur
i
ng t
h
e Pa
s
t F
iv
e Year
s
: E
x
ecut
iv
e
|
Born 1950. Trustee Since July 1998. Principal
|
|
C
hi
e
f
Sta
ff
and Mar
k
et
i
ng O
ffi
cer
f
or
N
ort
h
Amer
i
ca
|
Occupation(s) During the Past Five Years: Corporate
|
|
and Corporate V
i
ce Pre
si
dent
(
ret
i
red 200
8)
o
f
Xero
x
|
Vice President and Chief Global Diversity Officer
|
|
Corporat
i
on
(
document management product
s
and
|
(retired 2008) and Member of the Executive
|
|
s
er
vi
ce
s)
; E
x
ecut
iv
e
i
n Re
si
dence and 2010
|
Committee (1997–2008) of Johnson & Johnson
|
|
D
is
t
i
ngu
ish
ed M
i
nett Pro
f
e
ss
or at t
h
e Roc
h
e
s
ter
|
(pharmaceuticals/medical devices/consumer
|
|
In
s
t
i
tute o
f T
ec
h
no
l
og
y
; D
i
rector o
f
SPX Corporat
i
on
|
products); Director of Skytop Lodge Corporation
|
|
(
mu
l
t
i
-
i
ndu
s
tr
y
manu
f
actur
i
ng
)
, t
h
e
U
n
i
ted
W
a
y
o
f
|
(hotels), the University Medical Center at Princeton,
|
|
Roc
h
e
s
ter, Amer
i
group Corporat
i
on
(
managed
h
ea
l
t
h
|
the Robert Wood Johnson Foundation, and the Center
|
|
care
)
, t
h
e
U
n
iv
er
si
t
y
o
f
Roc
h
e
s
ter Med
i
ca
l
Center,
|
for Talent Innovation; Member of the Advisory Board
|
|
Monroe Commun
i
t
y
Co
ll
ege Foundat
i
on, and
N
ort
h
|
of the Maxwell School of Citizenship and Public Affairs
|
|
Caro
li
na A
&T U
n
iv
er
si
t
y
.
|
at Syracuse University.
|
|
|
|
|
Rajiv L. Gupta
|
F. Joseph Loughrey
|
|
B
orn 19
4
5.
T
ru
s
tee S
i
nce December 2001.
2
|
Born 1949. Trustee Since October 2009. Principal
|
|
Pr
i
nc
i
pa
l
Occupat
i
on
(s)
Dur
i
ng t
h
e Pa
s
t F
iv
e Year
s
:
|
Occupation(s) During the Past Five Years: President
|
|
C
h
a
i
rman and C
hi
e
f
E
x
ecut
iv
e O
ffi
cer
(
ret
i
red 2009
)
|
and Chief Operating Officer (retired 2009) of Cummins
|
|
and Pre
si
dent
(
2006–200
8)
o
f
Ro
h
m and
H
aa
s
Co.
|
Inc. (industrial machinery); Director of SKF AB
|
|
(
c
h
em
i
ca
ls)
; D
i
rector o
f Ty
co Internat
i
ona
l
,
L
td.
|
(industrial machinery), Hillenbrand, Inc. (specialized
|
|
(
d
iv
er
sifi
ed manu
f
actur
i
ng and
s
er
vi
ce
s)
,
H
e
wl
ett-
|
consumer services), the Lumina Foundation for
|
|
Pac
k
ard Co.
(
e
l
ectron
i
c computer manu
f
actur
i
ng
)
,
|
|
|
|
|
|
|
Educat
i
on, and O
xf
am Amer
i
ca; C
h
a
i
rman o
f
t
h
e
|
Executive Officers
|
|
|
Ad
vis
or
y
Counc
il f
or t
h
e Co
ll
ege o
f
Art
s
and
L
etter
s
|
|
|
and Member o
f
t
h
e Ad
vis
or
y B
oard to t
h
e Ke
ll
ogg
|
Glenn Booraem
|
|
|
In
s
t
i
tute
f
or Internat
i
ona
l
Stud
i
e
s
at t
h
e
U
n
iv
er
si
t
y
|
B
orn 196
7
. Contro
ll
er S
i
nce
J
u
ly
2010. Pr
i
nc
i
pa
l
|
|
o
f N
otre Dame.
|
Occupat
i
on
(s)
Dur
i
ng t
h
e Pa
s
t F
iv
e Year
s
: Pr
i
nc
i
pa
l
|
|
|
o
f Th
e Vanguard Group, Inc.; Contro
ll
er o
f
eac
h
o
f
|
|
Mark Loughridge
|
t
h
e
i
n
v
e
s
tment compan
i
e
s s
er
v
ed b
y Th
e Vanguard
|
|
B
orn 1953.
T
ru
s
tee S
i
nce Marc
h
2012. Pr
i
nc
i
pa
l
|
Group; A
ssis
tant Contro
ll
er o
f
eac
h
o
f
t
h
e
i
n
v
e
s
tment
|
|
Occupat
i
on
(s)
Dur
i
ng t
h
e Pa
s
t F
iv
e Year
s
: Sen
i
or V
i
ce
|
compan
i
e
s s
er
v
ed b
y Th
e Vanguard Group
(
2001–2010
)
.
|
|
Pre
si
dent and C
hi
e
f
F
i
nanc
i
a
l
O
ffi
cer at I
B
M
(i
n
f
ormat
i
on
|
|
|
|
tec
h
no
l
og
y s
er
vi
ce
s)
; F
i
duc
i
ar
y
Member o
f
I
B
M
’s
|
Thomas J. Higgins
|
|
|
Ret
i
rement P
l
an Comm
i
ttee.
|
B
orn 195
7
. C
hi
e
f
F
i
nanc
i
a
l
O
ffi
cer S
i
nce September
|
|
|
200
8
. Pr
i
nc
i
pa
l
Occupat
i
on
(s)
Dur
i
ng t
h
e Pa
s
t F
iv
e
|
|
Scott C. Malpass
|
Year
s
: Pr
i
nc
i
pa
l
o
f Th
e Vanguard Group, Inc.; C
hi
e
f
|
|
B
orn 1962.
T
ru
s
tee S
i
nce Marc
h
2012. Pr
i
nc
i
pa
l
|
F
i
nanc
i
a
l
O
ffi
cer o
f
eac
h
o
f
t
h
e
i
n
v
e
s
tment compan
i
e
s
|
|
Occupat
i
on
(s)
Dur
i
ng t
h
e Pa
s
t F
iv
e Year
s
: C
hi
e
f
|
s
er
v
ed b
y Th
e Vanguard Group;
T
rea
s
urer o
f
eac
h
o
f
|
|
In
v
e
s
tment O
ffi
cer and V
i
ce Pre
si
dent at t
h
e
U
n
iv
er
si
t
y
|
t
h
e
i
n
v
e
s
tment compan
i
e
s s
er
v
ed b
y Th
e Vanguard
|
|
o
f N
otre Dame; A
ssis
tant Pro
f
e
ss
or o
f
F
i
nance at t
h
e
|
Group
(
199
8
–200
8)
.
|
|
|
Mendoza Co
ll
ege o
f B
u
si
ne
ss
at
N
otre Dame; Member
|
|
|
|
o
f
t
h
e
N
otre Dame
4
03
(
b
)
In
v
e
s
tment Comm
i
ttee;
|
Kathryn J. Hyatt
|
|
|
D
i
rector o
f T
IFF Ad
vis
or
y
Ser
vi
ce
s
, Inc.
(i
n
v
e
s
tment
|
B
orn 1955.
T
rea
s
urer S
i
nce
N
o
v
ember 200
8
. Pr
i
nc
i
pa
l
|
|
ad
vis
or
)
; Member o
f
t
h
e In
v
e
s
tment Ad
vis
or
y
|
Occupat
i
on
(s)
Dur
i
ng t
h
e Pa
s
t F
iv
e Year
s
: Pr
i
nc
i
pa
l
o
f
|
|
Comm
i
ttee
s
o
f
t
h
e F
i
nanc
i
a
l
Indu
s
tr
y
Regu
l
ator
y
|
Th
e Vanguard Group, Inc.;
T
rea
s
urer o
f
eac
h
o
f
t
h
e
|
|
Aut
h
or
i
t
y (
FI
N
RA
)
and o
f
Ma
j
or
L
eague
B
a
s
eba
ll
.
|
i
n
v
e
s
tment compan
i
e
s s
er
v
ed b
y Th
e Vanguard
|
|
|
Group; A
ssis
tant
T
rea
s
urer o
f
eac
h
o
f
t
h
e
i
n
v
e
s
tment
|
|
André F. Perold
|
compan
i
e
s s
er
v
ed b
y Th
e Vanguard Group
(
19
88
–200
8)
.
|
|
B
orn 1952.
T
ru
s
tee S
i
nce December 200
4
. Pr
i
nc
i
pa
l
|
|
|
|
Occupat
i
on
(s)
Dur
i
ng t
h
e Pa
s
t F
iv
e Year
s
: George
|
Heidi Stam
|
|
|
Gund Pro
f
e
ss
or o
f
F
i
nance and
B
an
ki
ng at t
h
e
H
ar
v
ard
|
B
orn 1956. Secretar
y
S
i
nce
J
u
ly
2005. Pr
i
nc
i
pa
l
|
|
B
u
si
ne
ss
Sc
h
oo
l (
ret
i
red 2011
)
; C
hi
e
f
In
v
e
s
tment
|
Occupat
i
on
(s)
Dur
i
ng t
h
e Pa
s
t F
iv
e Year
s
: Manag
i
ng
|
|
O
ffi
cer and Manag
i
ng Partner o
f Hi
g
h
V
is
ta Strateg
i
e
s
|
D
i
rector o
f Th
e Vanguard Group, Inc.; Genera
l
Coun
s
e
l
|
|
LL
C
(
pr
iv
ate
i
n
v
e
s
tment
fi
rm
)
; D
i
rector o
f
Rand
|
o
f Th
e Vanguard Group; Secretar
y
o
f Th
e Vanguard
|
|
Merc
h
ant
B
an
k
; O
v
er
s
eer o
f
t
h
e Mu
s
eum o
f
F
i
ne
|
Group and o
f
eac
h
o
f
t
h
e
i
n
v
e
s
tment compan
i
e
s
|
|
Art
s B
o
s
ton.
|
s
er
v
ed b
y Th
e Vanguard Group; D
i
rector and Sen
i
or
|
|
|
V
i
ce Pre
si
dent o
f
Vanguard Mar
k
et
i
ng Corporat
i
on.
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|
Alfred M. Rankin, Jr.
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B
orn 19
4
1.
T
ru
s
tee S
i
nce
J
anuar
y
1993. Pr
i
nc
i
pa
l
|
Vanguard Senior ManagementTeam
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|
Occupat
i
on
(s)
Dur
i
ng t
h
e Pa
s
t F
iv
e Year
s
: C
h
a
i
rman,
|
|
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|
Pre
si
dent, and C
hi
e
f
E
x
ecut
iv
e O
ffi
cer o
f N
ACCO
|
Mortimer J. Buckley
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Michael S. Miller
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|
Indu
s
tr
i
e
s
, Inc.
(f
or
klif
t truc
ks
/
h
ou
s
e
w
are
s
/
li
gn
i
te
)
;
|
Kathleen C. Gubanich
|
James M. Norris
|
|
D
i
rector o
f
Goodr
i
c
h
Corporat
i
on
(i
ndu
s
tr
i
a
l
product
s
/
|
Paul A. Heller
|
Glenn W. Reed
|
|
a
i
rcra
f
t
sys
tem
s
and
s
er
vi
ce
s)
and t
h
e
N
at
i
ona
l
|
Martha G. King
|
George U. Sauter
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|
A
ss
oc
i
at
i
on o
f
Manu
f
acturer
s
; C
h
a
i
rman o
f
t
h
e
B
oard
|
Chris D. McIsaac
|
|
|
o
f
t
h
e Federa
l
Re
s
er
v
e
B
an
k
o
f
C
l
e
v
e
l
and and o
f
|
|
|
|
U
n
iv
er
si
t
y H
o
s
p
i
ta
ls
o
f
C
l
e
v
e
l
and; Ad
vis
or
y
C
h
a
i
rman
|
Chairman Emeritus and Senior Advisor
|
|
o
f
t
h
e
B
oard o
f Th
e C
l
e
v
e
l
and Mu
s
eum o
f
Art.
|
|
|
|
|
John J. Brennan
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Peter F. Volanakis
|
Chairman, 1996–2009
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Born 1955. Trustee Since July 2009. Principal
|
C
hi
e
f
E
x
ecut
iv
e O
ffi
cer and Pre
si
dent, 1996–200
8
|
|
Occupat
i
on
(s)
Dur
i
ng t
h
e Pa
s
t F
iv
e Year
s
: Pre
si
dent
|
|
|
|
and C
hi
e
f
Operat
i
ng O
ffi
cer
(
ret
i
red 2010
)
o
f
Corn
i
ng
|
|
|
|
Incorporated
(
commun
i
cat
i
on
s
e
q
u
i
pment
)
; D
i
rector
|
Founder
|
|
|
o
f
SPX Corporat
i
on
(
mu
l
t
i
-
i
ndu
s
tr
y
manu
f
actur
i
ng
)
;
|
John C. Bogle
|
|
|
Overseer of the Amos Tuck School of Business
|
C
h
a
i
rman and C
hi
e
f
E
x
ecut
iv
e O
ffi
cer, 19
74
–1996
|
|
Adm
i
n
is
trat
i
on at Dartmout
h
Co
ll
ege; Ad
vis
or to t
h
e
|
|
|
|
N
orr
is
Cotton Cancer Center.
|
|
|
1 Mr. McNabb is considered an “interested person,” as defined in the Investment Company Act of 1940, because he is an officer of the
Vanguard funds.
2 December 2002 for Vanguard Equity Income Fund, Vanguard Growth Equity Fund, the Vanguard Municipal Bond Funds, and the Vanguard
State Tax-Exempt Funds.
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P.O. Box 2600
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|
|
Valley Forge, PA 19482-2600
|
Connect with Vanguard®
>
vanguard.com
|
|
|
|
Fund Information
>
800-662-7447
|
|
|
Direct Investor Account Services
>
800-662-2739
|
|
|
Institutional Investor Services
>
800-523-1036
|
|
|
Text Telephone for People
|
|
|
With Hearing Impairment
>
800-749-7273
|
|
|
|
|
This material may be used in conjunction
|
|
|
with the offering of shares of any Vanguard
|
|
|
fund only if preceded or accompanied by
|
|
|
the fund’s current prospectus.
|
|
|
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|
All comparative mutual fund data are from Lipper Inc. or
|
|
|
Morningstar, Inc., unless otherwise noted.
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|
|
|
|
You can obtain a free copy of Vanguard’s proxy voting
|
|
|
guidelines by visiting vanguard.com/proxyreporting or by
|
|
|
calling Vanguard at 800-662-2739. The guidelines are
|
|
|
also available from the SEC’s website, sec.gov. In
|
|
|
addition, you may obtain a free report on how your fund
|
|
|
voted the proxies for securities it owned during the 12
|
|
|
months ended June 30. To get the report, visit either
|
|
|
vanguard.com/proxyreporting or sec.gov.
|
|
|
|
|
You can review and copy information about your fund at
|
|
|
the SEC’s Public Reference Room in Washington, D.C. To
|
|
|
find out more about this public service, call the SEC at
|
|
|
202-551-8090. Information about your fund is also
|
|
|
available on the SEC’s website, and you can receive
|
|
|
copies of this information, for a fee, by sending a
|
|
|
request in either of two ways: via e-mail addressed to
|
|
|
publicinfo@sec.gov or via regular mail addressed to the
|
|
|
Public Reference Section, Securities and Exchange
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|
|
Commission, Washington, DC 20549-1520.
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|
© 2012 The Vanguard Group, Inc.
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All rights reserved.
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Vanguard Marketing Corporation, Distributor.
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Q12200 112012
|
Item 2
: Code of Ethics. The Registrant has adopted a code of ethics that applies to the Registrant’s principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. The Code of Ethics was amended during the reporting period covered by this report to make certain technical, non-material changes.
Item 3
: Audit Committee Financial Expert. The following members of the Audit Committee have been determined by the Registrant’s Board of Trustees to be Audit Committee Financial Experts serving on its Audit Committee, and to be independent: Rajiv L. Gupta, Amy Gutmann, JoAnn Heffernan Heisen, F. Joseph Loughrey, Mark Loughridge, Scott C. Malpass, André F. Perold, and Alfred M. Rankin, Jr.
Item 4
: Principal Accountant Fees and Services.
(a) Audit Fees.
Audit Fees of the Registrant
Fiscal Year Ended September 30, 2012: $82,000
Fiscal Year Ended September 30, 2011: $80,000
Aggregate Audit Fees of Registered Investment Companies in the Vanguard Group.
Fiscal Year Ended September 30, 2012: $4,809,780
Fiscal Year Ended September 30, 2011: $3,978,540
(b) Audit-Related Fees.
Fiscal Year Ended September 30, 2012: $1,812,565
Fiscal Year Ended September 30, 2011: $1,341,750
Includes fees billed in connection with assurance and related services provided to the Registrant, The Vanguard Group, Inc., Vanguard Marketing Corporation, and other registered investment companies in the Vanguard Group.
(c) Tax Fees.
Fiscal Year Ended September 30, 2012: $490,518
Fiscal Year Ended September 30, 2011: $373,830
Includes fees billed in connection with tax compliance, planning and advice services provided to the Registrant, The Vanguard Group, Inc., Vanguard Marketing Corporation, and other registered investment companies in the Vanguard Group and related to income and excise taxes.
(d) All Other Fees.
Fiscal Year Ended September 30, 2012: $16,000
Fiscal Year Ended September 30, 2011: $16,000
Includes fees billed for services related to risk management and privacy matters. Services were provided to the Registrant, The Vanguard Group, Inc., Vanguard Marketing Corporation, and other registered investment companies in the Vanguard Group.
(e) (1) Pre-Approval Policies. The policy of the Registrant’s Audit Committee is to consider and, if appropriate, approve before the principal accountant is engaged for such services, all specific audit and non-audit services provided to: (1) the Registrant; (2) The Vanguard Group, Inc.; (3) other entities controlled by The Vanguard Group, Inc. that provide ongoing services to the Registrant; and (4) other registered investment companies in the Vanguard Group. In making a determination, the Audit Committee considers whether the services are consistent with maintaining the principal accountant’s independence.
In the event of a contingency situation in which the principal accountant is needed to provide services in between scheduled Audit Committee meetings, the Chairman of the Audit Committee would be called on to consider and, if appropriate, pre-approve audit or permitted non-audit services in an amount sufficient to complete services through the next Audit Committee meeting, and to determine if such services would be consistent with maintaining the accountant’s independence. At the next scheduled Audit Committee meeting, services and fees would be presented to the Audit Committee for formal consideration, and, if appropriate, approval by the entire Audit Committee. The Audit Committee would again consider whether such services and fees are consistent with maintaining the principal accountant’s independence.
The Registrant’s Audit Committee is informed at least annually of all audit and non-audit services provided by the principal accountant to the Vanguard complex, whether such services are provided to: (1) the Registrant; (2) The Vanguard Group, Inc.; (3) other entities controlled by The Vanguard Group, Inc. that provide ongoing services to the Registrant; or (4) other registered investment companies in the Vanguard Group.
(2) No percentage of the principal accountant’s fees or services were approved pursuant to the waiver provision of paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) For the most recent fiscal year, over 50% of the hours worked under the principal accountant’s engagement were
not
performed by persons other than full-time, permanent employees of the principal accountant.
(g) Aggregate Non-Audit Fees.
Fiscal Year Ended September 30, 2012: $506,518
Fiscal Year Ended September 30, 2011: $389,830
Includes fees billed for non-audit services provided to the Registrant, The Vanguard Group, Inc., Vanguard Marketing Corporation, and other registered investment companies in the Vanguard Group.
(h) For the most recent fiscal year, the Audit Committee has determined that the provision of all non-audit services was consistent with maintaining the principal accountant’s independence.
Item 5
: Audit Committee of Listed Registrants.
Not Applicable.
Item 6
: Investments.
Not Applicable.
Item 7
: Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not Applicable.
Item 8
: Portfolio Managers of Closed-End Management Investment Companies.
Not Applicable.
Item 9
: Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated
Purchasers.
Not Applicable.
Item 10
: Submission of Matters to a Vote of Security Holders.
Not Applicable.
Item 11
: Controls and Procedures.
(a) Disclosure Controls and Procedures. The Principal Executive and Financial Officers concluded that the Registrant's Disclosure Controls and Procedures are effective based on their evaluation of the Disclosure Controls and Procedures as of a date within 90 days of the filing date of this report.
(b) Internal Control Over Financial Reporting. There were no significant changes in Registrant’s Internal Control Over Financial Reporting or in other factors that could significantly affect this control subsequent to the date of the evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Item 12
: Exhibits.
(a) Code of Ethics.
(b) Certifications.
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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VANGUARD FENWAY FUNDS
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By:
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/s/ F. WILLIAM MCNABB III*
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F. WILLIAM MCNABB III
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CHIEF EXECUTIVE OFFICER
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Date: November 16, 2012
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
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VANGUARD FENWAY FUNDS
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By:
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/s/ F. WILLIAM MCNABB III*
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F. WILLIAM MCNABB III
|
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CHIEF EXECUTIVE OFFICER
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Date: November 16, 2012
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VANGUARD FENWAY FUNDS
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By:
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/s/ THOMAS J. HIGGINS*
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THOMAS J. HIGGINS
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CHIEF FINANCIAL OFFICER
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Date: November 16, 2012
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* By: /s/ Heidi Stam
Heidi Stam, pursuant to a Power of Attorney filed on March 27, 2012 see file Number 2-11444,
Incorporated by Reference.