N-CSR 1 worldfinal.htm worldfinal.htm - Generated by SEC Publisher for SEC Filing

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR 

CERTIFIED SHAREHOLDER REPORT
OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-1027 
Name of Registrant: Vanguard World Funds 
Address of Registrant: P.O. Box 2600   
Valley Forge, PA 19482
Name and address of agent for service:  Heidi Stam, Esquire 
  P.O. Box 876 
  Valley Forge, PA 19482 
Registrant’s telephone number, including area code: (610) 669-1000 
Date of fiscal year end: August 31   
Date of reporting period: September 1, 2008 – August 31, 2009 

Item 1: Reports to Shareholders



Vanguard U.S. Growth Fund 
Annual Report 
August 31, 2009 



> Vanguard U.S. Growth Fund returned about –16% for the fiscal year ended

August 31, 2009.

> The fund’s disappointing return was nevertheless better than the return of its

benchmark index (about –17%) and the average return of competing funds

(about –18%).

> The fund’s result for the fiscal year encompassed two very different market

environments—a first half during which the fund returned about –39% and a

second half during which it returned about 37%.

Contents   
Your Fund’s Total Returns.  1 
President’s Letter.  2 
Advisors’ Report.  7 
Results of Proxy Voting.  10 
Fund Profile.  11 
Performance Summary.  13 
Financial Statements.  15 
Your Fund’s After-Tax Returns.  27 
About Your Fund’s Expenses.  28 
Glossary.  30 

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.

Cover photograph: Veronica Coia.



Your Fund’s Total Returns

Fiscal Year Ended August 31, 2009   
       Total 
  Returns 
Vanguard U.S. Growth Fund   
     Investor Shares  -16.29% 
     Admiral™ Shares  -16.15 
Russell 1000 Growth Index  -16.76 
Large-Cap Growth Funds Average  -17.84 
Large-Cap Growth Funds Average: Derived from data provided by Lipper Inc.   

Admiral Shares are a lower-cost class of shares available to many longtime shareholders and to those with significant investments in the fund.

Your Fund’s Performance at a Glance

August 31, 2008, Through August 31, 2009

      Distributions Per Share 
  Starting  Ending  Income  Capital 
  Share Price  Share Price  Dividends  Gains 
Vanguard U.S. Growth Fund         
     Investor Shares  $17.89  $14.83  $0.116  $0.000 
     Admiral Shares  46.37  38.41  0.376  0.000 

1



 

 

 

President’s Letter

Dear Shareholder,

Vanguard U.S. Growth Fund returned about –16% for the fiscal year ended August 31, its second annual loss in a row. However, the results mask a dramatic turnaround in market sentiment and fund performance that began about midway through U.S. Growth’s fiscal year.

Investor confidence abruptly returned in March as turmoil in the credit markets began to subside and economic reports began to suggest that the economy was on the mend. The corporate bond market and the stock market rebounded, helping turn the second half of the fund’s fiscal year into a mirror image of the first.

U.S. Growth returned about 37% for the second half of the fiscal year, compared with a return of almost –39% for its opening six months. Because of the sometimes confounding mathematics of percentages, these more or less inverse returns netted to the 12-month loss of about –16%. U.S. Growth outdid its benchmark index and the average return of peer-group funds for the year as a whole. On a relative basis, at least, the fund’s performance marks a positive change from its struggles in recent years.

2



Stocks sank, then soared as credit and economy stabilized

The fiscal year began with the September collapse of a major investment bank and the government-engineered rescue of several giant financial institutions. Stocks sank as the ensuing crisis spread from Wall Street to Main Street and around the globe. Stricken by seized-up credit markets and a near-total lack of confidence, businesses and consumers put the brakes on economic growth.

Governments in the United States and abroad responded with unprecedented stimulus and other programs. Over the past six months, these efforts started to take hold. Credit-market conditions improved, and the outlook for the U.S.

economy brightened. From their early-March lows, stocks took off on an almost-unbroken winning streak.

Even so, the broad U.S. stock market ended the 12 months in negative territory, with a return of about –18%. International markets performed somewhat better, as major European economies emerged from recession; the MSCI All Country World Index ex USA returned about –14%.

Despite the robust second-half rally, it may be premature to sound the all-clear signal. As the fiscal year came to a close, home foreclosures and the unemployment rate were rising, and the federal government’s list of problem banks had climbed above 400—the most since June 1994. There is

Market Barometer       
 
  Average Annual Total Returns 
  Periods Ended August 31, 2009 
  One             Three     Five 
  Year  Years  Years 
Stocks       
Russell 1000 Index (Large-caps)  -18.39%           -5.61%  0.94% 
Russell 2000 Index (Small-caps)  -21.29           -6.08  2.21 
Dow Jones U.S. Total Stock Market Index  -18.10           -5.17  1.45 
MSCI All Country World Index ex USA (International)  -13.96           -2.41  8.18 
 
Bonds       
Barclays Capital U.S. Aggregate Bond Index (Broad       
taxable market)  7.94%             6.35%  4.96% 
Barclays Capital Municipal Bond Index  5.67             4.14  4.15 
Citigroup Three-Month U.S. Treasury Bill Index  0.51             2.77  2.98 
 
CPI       
Consumer Price Index  -1.48%             1.91%  2.64% 

3



considerable historical evidence that recovery from a recession caused by a financial crisis tends to take longer than average.

Among bond investors, safety and yield traded places

The U.S. bond market also performed a U-turn during the year. Early on, as credit markets deteriorated, investors rushed to the relative safety and liquidity of U.S. Treasury securities, driving their prices up and yields down. Investors were so risk-averse that short-term Treasury yields briefly turned negative. November and December were among the ten best months ever for Treasury returns (adjusted for inflation). Corporate bonds, especially those of lower credit quality, struggled,

and their yield spreads above comparable Treasuries widened to near-historic levels during the first six months.

Several moves by the Treasury and the Federal Reserve Board—which slashed its target level for short-term interest rates to a range of 0%–0.25% in December—helped credit markets to attain some stability by the spring. In a dramatic reversal, investors regained their appetite for risk, favoring corporate bonds over Treasuries.

After all the ups and downs, Treasuries and high-yield corporate bonds produced similar 12-month returns of about 6%–7%. Overall, the broad U.S. taxable bond market returned about 8%. Tax-exempt municipal bonds, after a flat first half, returned more than 5% for the fiscal year.

Expense Ratios
Your Fund Compared With Its Peer Group

      Large-Cap 
  Investor  Admiral  Growth Funds 
  Shares  Shares  Average 
U.S. Growth Fund  0.50%  0.31%  1.34% 

The fund expense ratios shown are from the prospectus dated December 29, 2008, and represent estimated costs for the current fiscal year based on the fund’s net assets as of the prospectus date. For the fiscal year ended August 31, 2009, the expense ratios were 0.49% for the Investor Shares and 0.30% for the Admiral Shares. The peer-group expense ratio is derived from data provided by Lipper Inc. and captures information through year-end 2008.

4



Health care and energy stocks drove the fund’s return

During the market’s free fall in the fiscal year’s first half, every sector in which the fund invested posted negative results. By contrast, each of these sectors contributed a solid positive return during the second half.

The fund’s holdings in health care and energy had the most significant impact on its full-year performance; they were responsible for about half of the fund’s negative return. The fund’s consumer staples and industrial stocks also took a large chunk from its fiscal-year result.

The negative impact of other sectors, such as financials and materials, was less severe, in part because of stocks

that swam against the general market tide, including those of bankers Goldman Sachs and JPMorgan Chase and copper-miner Freeport-McMoRan.

The fund’s substantial holdings in information technology stocks—which represented about a third of its assets at the end of the period—held up relatively well, as a powerful second-half rally offset most of the sector’s decline in the first half. Over the full 12 months, the fund’s tech stocks trimmed about 1 percentage point from its return.

The only sector holdings that made a positive contribution to the fiscal-year return were—despite the economic

Total Returns   
Ten Years Ended August 31, 2009   
  Average 
  Annual Return 
U.S. Growth Fund Investor Shares             -6.30% 
Russell 1000 Growth Index             -3.17 
Large-Cap Growth Funds Average             -3.34 
Large-Cap Growth 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 www.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



slump—consumer discretionary stocks, which got a significant boost from Kohl’s, the department store chain.

Although it was difficult to find bright spots in the year’s disappointing results, the advisors’ stock selections helped the fund stay a few steps ahead of its comparative standards. Of course, we can’t forget that such “better” performance during market downturns is a relative concept.

A word on expenses

The fund’s expense ratio has risen over the past fiscal year. The explanation is twofold.

First, as the value of the fund assets has declined, the fund’s fixed expenses have accounted for a modestly higher percentage of fund assets. Second, the Vanguard funds’ contracts with external advisors typically include breakpoint pricing. As assets rise above a breakpoint threshold, advisory fees are paid at a lower rate. When assets fall, as they have during fiscal 2009, a smaller portion of assets is subject to the lower rate, causing the overall rate to increase.

A turn for the better after a tough stretch

U.S. Growth ended fiscal 2009 on a welcome note. The fund performed well compared with its benchmark index and peer funds during a very difficult time. The funds’ advisors—AllianceBernstein and William Blair & Company—deserve much credit for that performance.

Of course, a single year’s result is only a part of a long-term record. And, in truth, the fund’s performance in recent years has not consistently matched that of its

benchmark. Over the past decade, for example, the fund produced an average annual return of about –6%, compared with about –3% for its benchmark index.

Going forward, we have confidence in our advisors and their approach to large-cap growth investing, and we believe that the fund has the potential to produce competitive returns over the long term.

Keep in mind that the fund’s long-term results are likely to be composed of widely differing yearly returns, as you can see in the Performance Summary later in this report. That reflects a variety of factors, from changing economic circumstances to the changing fortunes of the fast-growing, dynamic companies in which the fund invests.

That is why we urge investors to maintain a portfolio that is balanced among stocks, bonds, and cash reserves and diversified within these asset classes—a portfolio that holds both growth and value stocks, for example. The exact mix of assets should be based on your unique objective, time horizon, and risk tolerance. U.S. Growth can serve as an element in such a diversified portfolio.

Thank you for entrusting your assets to Vanguard.

Sincerely,


F. William McNabb III
President and Chief Executive Officer
September 12, 2009

6



Advisors’ Report

For the 12 months ended August 31, 2009, Vanguard U.S. Growth Fund returned about –16%. Your fund is managed by two independent advisors, a strategy that enhances the fund’s diversification by providing exposure to distinct, yet complementary, investment approaches. It is not uncommon for different advisors to have different views about individual securities or the broader investment environment.

The table below presents the advisors, the percentage and amount of fund assets that each manages, and brief descriptions of their investment strategies. Each advisor has also prepared a discussion of the investment environment during the fiscal year and of how the portfolio’s

positioning reflects this assessment. These reports were prepared on September 10, 2009.

AllianceBernstein L.P.

Portfolio Managers:
James G. Reilly,
Executive Vice President

P. Scott Wallace, CFA,
Senior Vice President

After extending 2008’s sharp losses in January and February, U.S. equities rallied, with the S&P 500 gaining about 41% from March to August 2009 amid thawing credit markets, signs of economic recovery, and better-than-expected corporate profits.

Vanguard U.S. Growth Fund Investment Advisors   
 
  Fund Assets Managed   
Investment Advisor  %  $ Million  Investment Strategy 
AllianceBernstein L.P.  68  2,565  Uses a fundamentally based, research-driven approach 
      to large-capitalization growth investing. The advisor 
      seeks to build a diversified portfolio of successful, 
      well-managed companies with sustainable competitive 
      advantages and superior prospects for growth not fully 
      reflected in relative valuation. 
William Blair & Company, L.L.C.  30  1,146  Uses a fundamental investment approach in pursuit of 
      superior long-term investment results from 
      growth-oriented companies with leadership positions 
      and strong market presence. 
Cash Investments  2  82  These short-term reserves are invested by Vanguard in 
      equity index products to simulate investment in stocks. 
      Each advisor may also maintain a modest cash 
      position. 

7



Still, the S&P 500 finished the 12 months ended August 31, 2009, down about 18%. The growth investment style outperformed value during the period, with the Russell 1000 Growth Index returning about –17% and the Russell 1000 Value Index returning about –20%. For the 12 months, the fund outperformed its Russell 1000 Growth benchmark.

In the portion of the portfolio that we manage, our stock selection and overweighting in health care helped overall returns, as investors gravitated toward sectors perceived as defensive during the market turmoil. Our financial holdings, led by Goldman Sachs and JPMorgan Chase, also outperformed, reflecting emerging indications of these companies’ ability to take advantage of weakened competition and gain share in capital-markets segments. Our technology holdings, hurt by concerns about cutbacks in global tech spending, were the largest source of underperformance.

The market’s recent strength has provided a clear indication that fears about end-of-the-world scenarios have been put to rest, although investors are now questioning the sustainability of a rebound because of weak consumer spending. But it wasn’t the consumer segment that drove the economy down in the latest recession, and consumer spending often doesn’t lead the way out, as a wait-and-see attitude among employers causes rehiring to lag recovery.

With fears of financial Armageddon behind them, investors are returning their focus to earnings. Recent earnings reports showed a spike in earnings surprises relative to disappointments, suggesting that analysts were caught off guard by the moderation in declines. Meanwhile, earnings for growth companies have held up better this year and look more promising for 2010. Growth stocks are now priced on parity with value stocks, a seemingly counterintuitive occurrence. We expect investors to become more discerning as an economic recovery takes shape, and to gravitate toward companies that provide greater confidence in earnings stability and expansion; that should, in our view, favor the growth style.

William Blair & Company, L.L.C.

Portfolio Manager:
John F. Jostrand, CFA, Principal

The last year was an extremely difficult period for U.S. equity investors. The portfolio’s benchmark, the Russell 1000 Growth Index, returned about –17%. The period began with severe declines as the global financial crisis deepened, and record levels of volatility and indiscriminate selling occurred. Losses continued into early 2009 as investors reacted negatively to deteriorating economic and equity market fundamentals. As risk aversion increased, investors flocked to defensive groups such as consumer staples, health care, and larger-cap stocks.

8



After March 9, U.S. equity markets recorded an impressive positive performance. Stocks rallied as investors anticipated an economic recovery based on improved global economic data resulting from aggressive fiscal and monetary policy, both here and abroad. In general, over the last six months, riskier assets surpassed more conservative ones, emerging markets outperformed developed markets, and smaller-capitalization stocks surpassed large-caps.

Early in the period, our portion of the portfolio held up relatively well owing to our quality growth focus, although stock selection and an underweighted position in consumer staples weighed on results. The consumer staples sector was a strong performer as investors sought safety, but our exposure to it was substantially less than that of the index because we believe there are better opportunities for earnings growth in other groups. Campbell Soup, our weakest holding in consumer staples, came under pressure because of product-price discounting concerns, and we eliminated it.

Conversely, the consumer discretionary sector was the greatest contributor to our portion of the portfolio because of strong stock selection and an overweighting in a relatively good performer: Johnson Controls rallied as the economy and outlook for the automotive industry looked less dire.

In our view, we are probably past the worst of the recessionary declines, and economic recovery has begun. Signs of stabilization and improvement in the U.S. and other economies continue to appear. Global stimulus programs will continue to help as more of their components take effect. Additionally, in the near term, we should see an uptick in production as restocking occurs after the rapid reduction in inventory between October and March. Overall, our outlook for U.S. economic growth remains at subdued levels.

Many stocks—especially small-caps and those of lower quality—reacted positively and quickly to early signs of a recovery, even though there had been only slight improvement from the lows. Moving into 2010, investors are likely to focus on a company’s ability to sustain its recent advance, as demonstrated by a revival in sales combined with expense control. In this environment, we believe our portfolio will continue to benefit from our quality growth philosophy and our research-intensive investment process, which will help us to identify industry-leading companies with competitive business models that have compelling and sustainable earnings growth profiles and strong financial positions.

9



Results of Proxy Voting

At a special meeting of shareholders on July 2, 2009, fund shareholders approved the following two proposals:

Proposal 1—Elect trustees for each fund.*

The individuals listed in the table below were elected as trustees for each fund. All trustees with the exception of Messrs. McNabb and Volanakis (both of whom already served as directors of The Vanguard Group, Inc.) served as trustees to the funds prior to the shareholder meeting.

      Percentage 
Trustee  For  Withheld  For 
John J. Brennan  816,325,661  25,839,114  96.9% 
Charles D. Ellis  811,618,878  30,545,897  96.4% 
Emerson U. Fullwood  816,960,560  25,204,215  97.0% 
Rajiv L. Gupta  815,607,429  26,557,346  96.8% 
Amy Gutmann  818,039,387  24,125,388  97.1% 
JoAnn Heffernan Heisen  815,771,400  26,393,375  96.9% 
F. William McNabb III  817,559,701  24,605,074  97.1% 
André F. Perold  814,833,250  27,331,525  96.8% 
Alfred M. Rankin, Jr.  815,942,907  26,221,868  96.9% 
Peter F. Volanakis  817,780,699  24,384,076  97.1% 
* Results are for all funds within the same trust.       

Proposal 2—Update and standardize the funds’ fundamental policies regarding:
(a) Purchasing and selling real estate.
(b) Issuing senior securities.
(c) Borrowing money.
(d) Making loans.
(e) Purchasing and selling commodities.
(f) Concentrating investments in a particular industry or group of industries.
(g) Eliminating outdated fundamental investment policies not required by law.

The revised fundamental policies are clearly stated and simple, yet comprehensive, making oversight and compliance more efficient than under the former policies. The revised fundamental policies will allow the funds to respond more quickly to regulatory and market changes, while avoiding the costs and delays associated with successive shareholder meetings.

        Broker  Percentage 
Vanguard Fund  For  Abstain  Against  Non-Votes  For 
U.S. Growth Fund           
2a  165,876,100  4,890,892  4,356,102  4,561,467  92.3% 
2b  165,333,362  5,207,115  4,582,614  4,561,469  92.0% 
2c  164,407,000  5,129,930  5,586,162  4,561,469  91.5% 
2d  164,607,338  5,140,619  5,375,135  4,561,468  91.6% 
2e  165,078,411  5,040,748  5,003,934  4,561,468  91.9% 
2f  165,249,329  5,178,086  4,695,676  4,561,469  92.0% 
2g  166,305,489  5,073,329  3,744,272  4,561,470  92.6% 

10



U.S. Growth Fund

Fund Profile
As of August 31, 2009

Share-Class Characteristics   
  Investor  Admiral 
  Shares  Shares 
Ticker Symbol  VWUSX  VWUAX 
Expense Ratio1  0.50%  0.31% 
30-Day SEC Yield  0.58%  0.81% 

Portfolio Characteristics     
    Russell  DJ 
    1000  U.S. Total 
    Growth  Market 
  Fund  Index  Index 
Number of Stocks  86  627  4,345 
Median Market Cap  $53.2B  $35.3B  $27.3B 
Price/Earnings Ratio  24.2x  20.6x  26.0x 
Price/Book Ratio  2.6x  3.4x  2.1x 
Return on Equity  29.5%  23.6%  19.2% 
Earnings Growth Rate  21.8%  16.6%  9.7% 
Dividend Yield  1.1%  1.7%  2.0% 
Foreign Holdings  8.0%  0.0%  0.0% 
Turnover Rate  101%     
Short-Term Reserves  0.7%     

Volatility Measures     
    DJ 
  U.S. Total 
  Russell 1000  Market 
  Growth Index  Index 
R-Squared  0.97  0.93 
Beta  0.95  0.91 
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) 
Apple Inc.  Computer   
  Hardware   6.0% 
Google Inc.  Internet Software &   
  Services   5.5 
The Goldman Sachs  Investment Banking   
Group, Inc.  & Brokerage   4.2 
QUALCOMM Inc.  Communications   
  Equipment   4.0 
Hewlett-Packard Co.  Computer   
  Hardware   4.0 
JPMorgan Chase & Co.  Diversified Financial   
  Services   3.9 
Schlumberger Ltd.  Oil & Gas   
  Equipment &   
  Services   3.4 
Gilead Sciences, Inc.  Biotechnology   3.4 
Intel Corp.  Semiconductors   2.7 
Kohl's Corp.  Department Stores   2.6 
Top Ten    39.7% 
The holdings listed exclude any temporary cash investments and equity index products. 

 

Investment Focus

 

 

 

 

 

1 The expense ratios shown are from the prospectus dated December 29, 2008, and represent estimated costs for the current fiscal year based
on the fund’s net assets as of the prospectus date. For the fiscal year ended August 31, 2009, the expense ratios were 0.49% for the Investor
Shares and 0.30% for the Admiral Shares.

11



U.S. Growth Fund

Sector Diversification (% of equity exposure)

    Russell  DJ 
    1000  U.S. Total 
    Growth  Market 
  Fund  Index  Index 
Consumer       
Discretionary  9.9%  10.4%  10.0% 
Consumer Staples  7.0  16.0  10.0 
Energy  8.5  4.1  11.2 
Financials  13.8  5.3  16.5 
Health Care  14.2  16.8  13.2 
Industrials  9.0  10.1  10.3 
Information       
Technology  32.2  31.8  18.2 
Materials  5.3  4.0  3.8 
Telecommunication       
Services  0.0  0.5  2.9 
Utilities  0.1  1.0  3.9 

12



U.S. Growth 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 www.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: August 31, 1999, Through August 31, 2009
Initial Investment of $10,000


      Average Annual Total Returns   
    Periods Ended August 31, 2009   
          Final Value 
         One                   Five  Ten  of a $10,000 
         Year               Years  Years  Investment 
  U.S. Growth Fund Investor Shares  -16.29%             1.11%  -6.30%  $5,215 
•••••••  Dow Jones U.S. Total Stock Market         
  Index  -18.10             1.45  0.26  10,259 
 
 
– – – –  Large-Cap Russell 1000 Growth Growth Funds Index Average  -17.84 -16.76             0.74 1.21  -3.34 -3.17  7,119 7,249 

Large-Cap Growth Funds Average: Derived from data provided by Lipper Inc.

      Since  Final Value 
      Inception  of a $100,000 
  One Year  Five Years  (8/13/2001)  Investment 
U.S. Growth Fund Admiral Shares  -16.15%       1.33%  -2.63%  $80,665 
Dow Jones U.S. Total Stock Market         
Index  -18.10       1.45  1.15  109,681 
Russell 1000 Growth Index  -16.76       1.21  -0.87  93,192 
Performance for the fund’s Admiral Shares and comparative standards is calculated since the Admiral Shares’ inception.   

Vanguard fund total returns do not include the account service fee that may be applicable to certain accounts with balances below $10,000.
See Financial Highlights for dividend and capital gains information.

13



U.S. Growth Fund

Fiscal-Year Total Returns (%): August 31, 1999, Through August 31, 2009


Average Annual Total Returns: Periods Ended June 30, 2009
This table presents average annual total returns through the latest calendar quarter—rather than through the end of
the fiscal period. Securities and Exchange Commission rules require that we provide this information.

  Inception Date  One Year  Five Years  Ten Years 
Investor Shares  1/6/1959  -23.81%     -2.46%   -7.46% 
Admiral Shares  8/13/2001  -23.70     -2.26   -3.861 
1 Return since inception.         

Vanguard fund total returns do not include the account service fee that may be applicable to certain accounts with balances below $10,000.
See Financial Highlights for dividend and capital gains information.

14



U.S. Growth Fund

Financial Statements

Statement of Net Assets
As of August 31, 2009

The fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends.

For the second and fourth fiscal quarters, the lists appear in the fund’s semiannual and annual reports to shareholders. For the first and third fiscal quarters, the fund files the lists with the Securities and

Exchange Commission on Form N-Q. Shareholders can look up the fund’s Forms N-Q on the SEC’s website at www.sec.gov. Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room (see the back cover of this report for further information).

      Market 
      Value 
    Shares  ($000) 
Common Stocks (97.6%)1     
Consumer Discretionary (9.6%)   
*  Kohl’s Corp.  1,897,191  97,876 
  Johnson Controls, Inc.  1,662,400  41,178 
  Target Corp.  871,600  40,965 
  McDonald’s Corp.  688,790  38,737 
  Lowe’s Cos., Inc.  1,752,600  37,681 
*  Discovery     
   Communications Inc.     
   Class A  1,077,600  27,931 
*  O’Reilly Automotive, Inc.  437,100  16,732 
  Omnicom Group Inc.  372,630  13,534 
  Yum! Brands, Inc.  393,600  13,481 
*  Amazon.com, Inc.  160,600  13,039 
  The Walt Disney Co.  446,800  11,635 
  Toyota Motor Corp. ADR  134,500  11,458 
      364,247 
Consumer Staples (6.8%)     
  PepsiCo, Inc.  1,334,600  75,632 
  Wal-Mart Stores, Inc.  1,132,650  57,618 
  Costco Wholesale Corp.  962,200  49,053 
  CVS Caremark Corp.  810,840  30,422 
  Colgate-Palmolive Co.  405,200  29,458 
  General Mills, Inc.  174,800  10,441 
  Mead Johnson Nutrition Co.  155,800  6,179 
      258,803 
Energy (8.3%)     
  Schlumberger Ltd.  2,301,070  129,320 
  Occidental     
   Petroleum Corp.  737,900  53,941 
  Apache Corp.  379,950  32,277 
*  Cameron     
   International Corp.  890,640  31,805 

      Market 
      Value 
    Shares  ($000) 
*  Suncor Energy, Inc.     
   (New York Shares)  586,000  17,955 
  Petroleo Brasileiro SA ADR  376,800  14,936 
*  National Oilwell Varco Inc.  366,100  13,308 
  EOG Resources, Inc.  166,340  11,976 
  Petroleo Brasileiro SA     
   Series A ADR  236,200  7,842 
      313,360 
Exchange-Traded Fund (0.0%)     
^,2  Vanguard Growth ETF  3,100  147 
 
Financials (13.4%)     
  The Goldman Sachs     
   Group, Inc.  952,537  157,607 
  JPMorgan Chase & Co.  3,415,300  148,429 
  CME Group, Inc.  196,455  57,176 
*  Credit Suisse Group     
   AG ADR  831,200  42,300 
  Invesco, Ltd.  985,300  20,445 
  Franklin Resources, Inc.  215,700  20,131 
  Bank of America Corp.  984,300  17,314 
  Charles Schwab Corp.  931,785  16,828 
  The Principal     
   Financial Group, Inc.  504,900  14,339 
  Janus Capital Group Inc.  1,010,200  12,850 
      507,419 
Health Care (13.9%)     
*  Gilead Sciences, Inc.  2,826,460  127,360 
  Teva Pharmaceutical     
   Industries Ltd.     
   Sponsored ADR  1,465,060  75,451 
*  Celgene Corp.  1,397,360  72,900 
  Baxter International, Inc.  1,178,900  67,103 

15



U.S. Growth Fund

      Market 
      Value 
    Shares  ($000) 
  Alcon, Inc.  516,140  66,825 
*  Medco Health     
   Solutions, Inc.  967,600  53,431 
*  Thermo Fisher     
   Scientific, Inc.  653,120  29,527 
  Allergan, Inc.  332,435  18,590 
  UnitedHealth Group Inc.  555,700  15,560 
      526,747 
Industrials (8.7%)     
  Danaher Corp.  1,118,615  67,911 
  Illinois Tool Works, Inc.  1,061,100  44,375 
  United Parcel Service, Inc.  614,200  32,835 
*  Vestas Wind Systems A/S  1,335,100  31,942 
  Union Pacific Corp.  461,100  27,579 
  FedEx Corp.  328,200  22,551 
  W.W. Grainger, Inc.  215,300  18,832 
  J.B. Hunt Transport     
   Services, Inc.  632,210  17,721 
  Roper Industries Inc.  367,690  17,421 
  Rockwell Automation, Inc.  404,100  16,912 
  United Technologies Corp.  267,300  15,867 
*  Quanta Services, Inc.  574,600  12,710 
  Emerson Electric Co.  144,270  5,319 
      331,975 
Information Technology (31.7%)   
*  Apple Inc.  1,346,306  226,462 
*  Google Inc.  454,750  209,944 
  QUALCOMM Inc.  3,236,995  150,261 
  Hewlett-Packard Co.  3,338,000  149,843 
  Intel Corp.  5,021,910  102,045 
  Microsoft Corp.  2,585,595  63,735 
*  Cisco Systems, Inc.  2,471,080  53,375 
*  EMC Corp.  2,053,500  32,651 
  Visa Inc.  443,000  31,497 
  Taiwan Semiconductor     
   Manufacturing Co.,     
   Ltd. ADR  2,558,939  27,381 
  Altera Corp.  1,335,700  25,659 
*  Broadcom Corp.  767,000  21,821 
*  Juniper Networks, Inc.  831,000  19,171 
*  Cognizant Technology     
   Solutions Corp.  492,800  17,189 
  Amphenol Corp. Class A  472,700  16,526 
*  McAfee Inc.  394,400  15,689 
*  Activision Blizzard, Inc.  1,320,800  15,335 
*  Adobe Systems, Inc.  420,539  13,213 
*  Research In Motion Ltd.  169,500  12,384 
      1,204,181 

    Market 
    Value 
  Shares  ($000) 
Materials (5.2%)     
     Freeport-McMoRan     
       Copper & Gold, Inc.     
       Class B  683,200  43,028 
     Arcelor Mittal Class A     
       New York     
       Registered Shares  1,051,500  37,465 
     Praxair, Inc.  411,640  31,540 
     Rio Tinto PLC ADR  167,000  25,912 
     Air Products &     
       Chemicals, Inc.  320,730  24,064 
     Ecolab, Inc.  420,320  17,775 
     Monsanto Co.  187,255  15,707 
    195,491 
Total Common Stocks     
(Cost $3,676,708)    3,702,370 
Temporary Cash Investments (2.9%)1   
Money Market Fund (2.4%)     
3,4 Vanguard Market     
       Liquidity Fund,     
       0.277%  90,274,855  90,275 
 
  Face   
  Amount   
  ($000)   
U.S. Government and Agency Obligations (0.5%) 
5,6 Federal Home Loan     
       Bank, 0.275%, 2/19/10  18,000  17,978 
Total Temporary Cash Investments   
(Cost $108,251)    108,253 
Total Investments (100.5%)     
(Cost $3,784,959)    3,810,623 
Other Assets and Liabilities (-0.5%)   
Other Assets    28,778 
Liabilities4    (46,018) 
    (17,240) 
Net Assets (100%)    3,793,383 

16



U.S. Growth Fund

At August 31, 2009, net assets consisted of: 
  Amount 
  ($000) 
Paid-in Capital  10,485,150 
Overdistributed Net Investment Income  (1,156) 
Accumulated Net Realized Losses  (6,723,968) 
Unrealized Appreciation (Depreciation)   
 Investment Securities  25,664 
 Futures Contracts  7,693 
Net Assets  3,793,383 
 
 
Investor Shares—Net Assets   
Applicable to 199,343,891 outstanding   
$.001 par value shares of beneficial   
interest (unlimited authorization)  2,955,597 
Net Asset Value Per Share—   
Investor Shares  $14.83 
 
 
Admiral Shares—Net Assets   
Applicable to 21,810,598 outstanding   
$.001 par value shares of beneficial   
interest (unlimited authorization)  837,786 
Net Asset Value Per Share—   
Admiral Shares  $38.41 

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 $95,000.
1 The fund invests a portion of its cash reserves in equity markets
through the use of index futures contracts. After giving effect to
futures investments, the fund’s effective common stock and
temporary cash investment positions represent 99.8% and 0.7%,
respectively, of net assets.
2 Considered an affiliated company of the fund as the issuer is
another member of The Vanguard Group.
3 Affiliated money market fund available only to Vanguard funds
and certain trusts and accounts managed by Vanguard. Rate
shown is the 7-day yield.
4 Includes $98,000 of collateral received for securities on loan.
5 The issuer operates under a congressional charter; its securities
are not backed by the full faith and credit of the U.S.
government.
6 Securities with a value of $17,978,000 have been segregated as
initial margin for open futures contracts.
ADR—American Depositary Receipt.

See accompanying Notes, which are an integral part of the Financial Statements.

17



U.S. Growth Fund

Statement of Operations

  Year Ended 
  August 31, 2009 
  ($000) 
Investment Income   
Income   
Dividends1  41,434 
Interest1  2,154 
Security Lending  295 
Total Income  43,883 
Expenses   
Investment Advisory Fees—Note B   
       Basic Fee  5,688 
       Performance Adjustment  (1,163) 
The Vanguard Group—Note C   
     Management and Administrative—Investor Shares  8,366 
     Management and Administrative—Admiral Shares  1,046 
     Marketing and Distribution—Investor Shares  717 
     Marketing and Distribution—Admiral Shares  209 
Custodian Fees  54 
Auditing Fees  25 
Shareholders’ Reports and Proxies—Investor Shares  310 
Shareholders’ Reports and Proxies—Admiral Shares  32 
Trustees’ Fees and Expenses  8 
Total Expenses  15,292 
Expenses Paid Indirectly  (316) 
Net Expenses  14,976 
Net Investment Income  28,907 
Realized Net Gain (Loss)   
Investment Securities Sold1  (533,789) 
Futures Contracts  (53,722) 
Realized Net Gain (Loss)  (587,511) 
Change in Unrealized Appreciation (Depreciation)   
Investment Securities  (240,494) 
Futures Contracts  14,406 
Change in Unrealized Appreciation (Depreciation)  (226,088) 
Net Increase (Decrease) in Net Assets Resulting from Operations  (784,692) 

1 Dividend income, interest income, and realized net gain (loss) from affiliated companies of the fund were $2,000, $1,952,000, and
$0, respectively.

See accompanying Notes, which are an integral part of the Financial Statements.

18



U.S. Growth Fund

Statement of Changes in Net Assets

  Year Ended August 31, 
  2009  2008 
  ($000)  ($000) 
Increase (Decrease) in Net Assets     
Operations     
Net Investment Income  28,907  27,319 
Realized Net Gain (Loss)  (587,511)  138,171 
Change in Unrealized Appreciation (Depreciation)  (226,088)  (551,756) 
Net Increase (Decrease) in Net Assets Resulting from Operations  (784,692)  (386,266) 
Distributions     
Net Investment Income     
     Investor Shares  (23,339)  (25,051) 
     Admiral Shares  (8,835)  (11,166) 
Realized Capital Gain     
     Investor Shares     
     Admiral Shares     
Total Distributions  (32,174)  (36,217) 
Capital Share Transactions     
     Investor Shares  (65,408)  (351,798) 
     Admiral Shares  (77,153)  (106,170) 
Net Increase (Decrease) from Capital Share Transactions  (142,561)  (457,968) 
Total Increase (Decrease)  (959,427)  (880,451) 
Net Assets     
Beginning of Period  4,752,810  5,633,261 
End of Period1  3,793,383  4,752,810 

1 Net Assets—End of Period includes undistributed (overdistributed) net investment income of ($1,156,000) and $2,111,000.

See accompanying Notes, which are an integral part of the Financial Statements.

19



U.S. Growth Fund

Financial Highlights

Investor Shares           
 
For a Share Outstanding  Year Ended August 31, 
Throughout Each Period  2009  2008  2007  2006  2005 
Net Asset Value, Beginning of Period  $17.89  $19.44  $17.06  $16.77  $14.39 
Investment Operations           
Net Investment Income  .105  .089  .113  .059  .040 
Net Realized and Unrealized Gain (Loss)           
on Investments  (3.049)  (1.523)  2.354  .266  2.385 
Total from Investment Operations  (2.944)  (1.434)  2.467  .325  2.425 
Distributions           
Dividends from Net Investment Income  (.116)  (.116)  (.087)  (.035)       (.045) 
Distributions from Realized Capital Gains           
Total Distributions  (.116)  (.116)  (.087)  (.035)       (.045) 
Net Asset Value, End of Period  $14.83  $17.89  $19.44  $17.06  $16.77 
 
Total Return1  -16.29%  -7.44%  14.50%  1.93%  16.86% 
 
Ratios/Supplemental Data           
Net Assets, End of Period (Millions)  $2,956  $3,637  $4,308  $4,530  $4,848 
Ratio of Total Expenses to           
Average Net Assets2  0.49%  0.43%  0.50%  0.58%  0.55% 
Ratio of Net Investment Income to           
Average Net Assets  0.79%  0.47%  0.60%  0.34%  0.30% 
Portfolio Turnover Rate  101%  107%  51%  48%  38% 

1 Total returns do not include the account service fee that may be applicable to certain accounts with balances below $10,000.
2 Includes performance-based investment advisory fee increases (decreases) of (0.03%), (0.03%), (0.01%), 0.02%, and (0.02%).

See accompanying Notes, which are an integral part of the Financial Statements.

20



U.S. Growth Fund

Financial Highlights

Admiral Shares           
 
For a Share Outstanding  Year Ended August 31, 
Throughout Each Period  2009  2008  2007  2006  2005 
Net Asset Value, Beginning of Period  $46.37  $50.42  $44.24  $43.47  $37.29 
Investment Operations           
Net Investment Income  .335  .325  .416  .271  .226 
Net Realized and Unrealized Gain (Loss)           
on Investments  (7.919)  (3.950)  6.107  .677  6.163 
Total from Investment Operations  (7.584)  (3.625)  6.523  .948  6.389 
Distributions           
Dividends from Net Investment Income  (.376)  (.425)       (.343)  (.178)       (.209) 
Distributions from Realized Capital Gains           
Total Distributions  (.376)  (.425)       (.343)  (.178)       (.209) 
Net Asset Value, End of Period  $38.41  $46.37  $50.42  $44.24  $43.47 
 
Total Return  -16.15%  -7.28%  14.80%  2.16%  17.16% 
 
Ratios/Supplemental Data           
Net Assets, End of Period (Millions)  $838  $1,116  $1,325  $1,262  $1,012 
Ratio of Total Expenses to           
Average Net Assets1  0.30%  0.24%  0.27%  0.34%  0.32% 
Ratio of Net Investment Income to           
Average Net Assets  0.98%  0.66%  0.83%  0.58%  0.53% 
Portfolio Turnover Rate  101%  107%  51%  48%  38% 

1 Includes performance-based investment advisory fee increases (decreases) of (0.03%), (0.03%), (0.01%), 0.02%, and (0.02%).

See accompanying Notes, which are an integral part of the Financial Statements.




U.S. Growth Fund

Notes to Financial Statements

Vanguard U.S. Growth Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund offers two classes of shares, Investor Shares and

Admiral Shares. Investor Shares are available to any investor who meets the fund’s minimum purchase requirements. Admiral Shares are designed for investors who meet certain administrative, service, tenure, and account-size criteria.

A. The following significant accounting policies conform to generally accepted accounting principles for

U.S. mutual funds. The fund consistently follows such policies in preparing its financial statements.

1. Security Valuation: Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which market quotations are not readily available, or whose values have been materially affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued by methods deemed by the board of trustees to represent fair value. Investments in Vanguard Market Liquidity Fund are valued at that fund’s net asset value.

Temporary cash investments acquired over 60 days to maturity are valued using the latest bid prices or using valuations based on a matrix system (which considers such factors as security prices, yields, maturities, and ratings), both as furnished by independent pricing services. Other temporary cash investments are valued at amortized cost, which approximates market value.

2. Futures Contracts: The fund uses index futures contracts to a limited extent, with the objective of maintaining full exposure to the stock market while maintaining liquidity. The fund may purchase or sell futures contracts to achieve a desired level of investment, whether to accommodate portfolio turnover or cash flows from capital share transactions. The primary risks associated with the use of futures contracts are imperfect correlation between changes in market values of stocks held by the fund and the prices of futures contracts, and the possibility of an illiquid market.

Futures contracts are valued at their quoted daily settlement prices. The aggregate principal amounts of the contracts are not recorded in the Statement of Net Assets. Fluctuations in the value of the contracts are recorded in the Statement of Net Assets as an asset (liability) and in the Statement of Operations as unrealized appreciation (depreciation) until the contracts are closed, when they are recorded as realized futures gains (losses).

3. Federal Income Taxes: The fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income. Management has analyzed the fund’s tax positions taken for all open federal income tax years (August 31, 2006–2009), and has concluded that no provision for federal income tax is required in the fund’s financial statements.

4. Distributions: Distributions to shareholders are recorded on the ex-dividend date.

5. Security Lending: The fund may lend its securities to qualified institutional borrowers to earn additional income. Security loans are required to be secured at all times by collateral at least equal to the market value of securities loaned. The fund invests cash collateral received in Vanguard Market Liquidity Fund, and records a liability for the return of the collateral, during the period the securities are on loan. Security lending income represents the income earned on investing cash collateral, less expenses associated with the loan.

22



U.S. Growth Fund

6. Other: Dividend income is recorded on the ex-dividend date. Interest income includes income distributions received from Vanguard Market Liquidity Fund and is accrued daily. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment securities are those of the specific securities sold.

Each class of shares has equal rights as to assets and earnings, except that each class separately bears certain class-specific expenses related to maintenance of shareholder accounts (included in Management and Administrative expenses), shareholder reporting, and proxies. Marketing and distribution expenses are allocated to each class of shares based on a method approved by the board of trustees. Income, other non-class-specific expenses, and gains and losses on investments are allocated to each class of shares based on its relative net assets.

B. AllianceBernstein L.P. and William Blair & Company, L.L.C., each provide investment advisory services to a portion of the fund for a fee calculated at an annual percentage rate of average net assets managed by the advisor. The basic fee for AllianceBernstein L.P. is subject to quarterly adjustments based on performance for the preceding three years relative to the Russell 1000 Growth Index. The basic fee for William Blair & Company, L.L.C., is subject to quarterly adjustments based on performance since June 1, 2004, relative to the Russell 1000 Growth Index.

The Vanguard Group manages the cash reserves of the fund on an at-cost basis.

For the year ended August 31, 2009, the aggregate investment advisory fee represented an effective annual basic rate of 0.17% of the fund’s average net assets, before a decrease of $1,163,000 (0.03%) based on performance.

C. The Vanguard Group furnishes at cost corporate management, administrative, marketing, and distribution services. The costs of such services are allocated to the fund under methods approved by the board of trustees. The fund has committed to provide up to 0.40% of its net assets in capital contributions to Vanguard. At August 31, 2009, the fund had contributed capital of $827,000 to Vanguard (included in Other Assets), representing 0.02% of the fund’s net assets and 0.33% of

Vanguard’s capitalization. The fund’s trustees and officers are also directors and officers of Vanguard.

D. The fund has asked its investment advisors to direct certain security trades, subject to obtaining the best price and execution, to brokers who have agreed to rebate to the fund part of the commissions generated. Such rebates are used solely to reduce the fund’s management and administrative expenses. For the year ended August 31, 2009, these arrangements reduced the fund’s expenses by $316,000 (an annual rate of 0.01% of average net assets).

E. Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Level 1Quoted prices in active markets for identical securities.
Level 2Other significant observable inputs (including quoted prices for similar securities, interest
rates, prepayment speeds, credit risk, etc.).
Level 3Significant unobservable inputs (including the fund’s own assumptions used to determine
the fair value of investments).

23



U.S. Growth Fund

The following table summarizes the fund’s investments as of August 31, 2009, based on the inputs used to value them:

  Level 1  Level 2  Level 3 
Investments  ($000)  ($000)  ($000) 
Common Stocks  3,702,370     
Temporary Cash Investments  90,275  17,978   
Futures Contracts—Assets1  24     
Futures Contracts—Liabilities1  (819)     
Total  3,791,850  17,978   

1 Represents variation margin on the last day of the reporting period.

F. At August 31, 2009, the aggregate settlement value of open futures contracts and the related unrealized appreciation (depreciation) were:

        ($000) 
    Number of  Aggregate  Unrealized 
    Long (Short)  Settlement  Appreciation 
Futures Contracts  Expiration  Contracts  Value  (Depreciation) 
S&P 500 Index  September 2009  177  45,122  4,436 
S&P Mid-Cap 400 Index  September 2009  100  32,700  3,287 
E-mini S&P 500 Index  September 2009  75  3,824  (30) 

Unrealized appreciation (depreciation) on open futures contracts is required to be treated as realized gain (loss) for tax purposes.

G. Distributions are determined on a tax basis and may differ from net investment income and realized capital gains for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the financial statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain, or loss are recognized in different periods for financial statement and tax purposes; these differences will reverse at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.

For tax purposes, at August 31, 2009, the fund had $14,725,000 of ordinary income available for distribution. The fund had available capital loss carryforwards totaling $6,398,578,000 to offset future net capital gains of $2,582,798,000 through August 31, 2010, $2,548,333,000 through August 31, 2011, $887,490,000 through August 31, 2012, $123,651,000 through August 31, 2013, and $256,306,000 through August 31, 2017. In addition, the fund realized losses of $316,709,000 during the period from November 1, 2008, through August 31, 2009, which are deferred and will be treated as realized for tax purposes in fiscal 2010.

At August 31, 2009, the cost of investment securities for tax purposes was $3,785,265,000. Net unrealized appreciation of investment securities for tax purposes was $25,358,000, consisting of unrealized gains of $266,479,000 on securities that had risen in value since their purchase and $241,121,000 in unrealized losses on securities that had fallen in value since their purchase.

24



U.S. Growth Fund

H. During the year ended August 31, 2009, the fund purchased $3,386,073,000 of investment securities and sold $3,454,896,000 of investment securities, other than temporary cash investments.

I. Capital share transactions for each class of shares were:

  Year Ended August 31, 
  2009  2008 
  Amount  Shares  Amount  Shares 
  ($000)  (000)  ($000)  (000) 
Investor Shares         
Issued  397,147  30,584  488,406  26,158 
Issued in Lieu of Cash Distributions  22,922  1,941  24,561  1,226 
Redeemed  (485,477)  (36,477)  (864,765)  (45,681) 
Net Increase (Decrease)—Investor Shares  (65,408)  (3,952)  (351,798)  (18,297) 
Admiral Shares         
Issued  135,668  4,030  207,633  4,245 
Issued in Lieu of Cash Distributions  8,303  272  10,509  203 
Redeemed  (221,124)  (6,551)  (324,312)  (6,673) 
Net Increase (Decrease)—Admiral Shares  (77,153)  (2,249)  (106,170)  (2,225) 

J. In preparing the financial statements as of August 31, 2009, management considered the impact of subsequent events occurring through October 15, 2009, for potential recognition or disclosure in these financial statements.

25



Report of Independent Registered
Public Accounting Firm

To the Trustees of Vanguard World Fund and the Shareholders of Vanguard U.S. Growth 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 U.S. Growth Fund (the “Fund”) at August 31, 2009, 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 August 31, 2009 by correspondence with the custodian and broker and by agreement to the underlying ownership records for Vanguard Market Liquidity Fund, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania

October 15, 2009


Special 2009 tax information (unaudited) for Vanguard U.S. Growth Fund

This information for the fiscal year ended August 31, 2009, is included pursuant to provisions of the
Internal Revenue Code.

The fund distributed $32,174,000 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.

26



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 2009. (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.) The table shows returns for Investor Shares only; returns for other share classes will differ. 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: U.S. Growth Fund Investor Shares     
Periods Ended August 31, 2009       
       One     Five       Ten 
       Year  Years   Years 
Returns Before Taxes  -16.29%  1.11%  -6.30% 
Returns After Taxes on Distributions  -16.41  1.03  -6.86 
Returns After Taxes on Distributions and Sale of Fund Shares  -10.48  0.94  -4.97 

Vanguard fund total returns do not include the account service fee that may be applicable to certain accounts with balances below $10,000.

27



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 the account service fee described in the prospectus. If such a fee were applied to your account, your costs would be higher. Your fund does not charge transaction fees, such as purchase or redemption fees, nor does it 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.

28



Six Months Ended August 31, 2009       
  Beginning  Ending  Expenses 
  Account Value  Account Value  Paid During 
U.S. Growth Fund  2/28/2009  8/31/2009  Period 
Based on Actual Fund Return       
     Investor Shares  $1,000.00  $1,369.34  $3.11 
     Admiral Shares  1,000.00  1,370.81  1.79 
 
Based on Hypothetical 5% Yearly Return       
     Investor Shares  $1,000.00  $1,022.58  $2.65 
     Admiral Shares  1,000.00  1,023.69  1.53 

The calculations are based on expenses incurred in the most recent six-month period. The fund’s annualized six-month expense ratios for that period are 0.52% for the Investor Shares and 0.30% for the Admiral Shares. 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.

29



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 (in the case of bonds) 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. The percentage of a fund’s average net assets used to pay its annual administrative and advisory expenses. These expenses directly reduce returns to investors.

Foreign Holdings. The percentage of a fund represented by stocks 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.

30



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.

31



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 157 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 www.vanguard.com.

Interested Trustees  Emerson U. Fullwood 
  Born 1948. Trustee Since January 2008. Principal 
John J. Brennan1  Occupation(s) During the Past Five Years: Retired 
Born 1954. Trustee Since May 1987. Chairman of  Executive Chief Staff and Marketing Officer for North 
the Board. Principal Occupation(s) During the Past  America and Corporate Vice President of Xerox 
Five Years: Chairman of the Board and Director/Trustee  Corporation (photocopiers and printers); Director of 
of The Vanguard Group, Inc., and of each of the  SPX Corporation (multi-industry manufacturing), the 
investment companies served by The Vanguard Group;  United Way of Rochester, the Boy Scouts of America, 
Chief Executive Officer and President of The Vanguard  Amerigroup Corporation (direct health and medical 
Group and of each of the investment companies served  insurance carriers), and Monroe Community College 
by The Vanguard Group (1996–2008); Chairman of  Foundation. 
the Financial Accounting Foundation; Governor of   
the Financial Industry Regulatory Authority (FINRA);  Rajiv L. Gupta 
Director of United Way of Southeastern Pennsylvania.  Born 1945. Trustee Since December 2001.2 Principal 
  Occupation(s) During the Past Five Years: Retired 
F. William McNabb III1  Chairman and Chief Executive Officer of Rohm and 
Born 1957. Trustee Since July 2009. Principal  Haas Co. (chemicals); President of Rohm and Haas Co. 
Occupation(s) During the Past Five Years: Director of  (2006–2008); Board Member of American Chemistry 
The Vanguard Group, Inc., since 2008; Chief Executive  Council; Director of Tyco International, Ltd. (diversified 
Officer and President of The Vanguard Group and of  manufacturing and services) and Hewlett-Packard Co. 
each of the investment companies served by The  (electronic computer manufacturing); Trustee of The 
Vanguard Group since 2008; Director of Vanguard  Conference Board. 
Marketing Corporation; Managing Director of The   
Vanguard Group (1995–2008).  Amy Gutmann 
  Born 1949. Trustee Since June 2006. Principal 
  Occupation(s) During the Past Five Years: President of 
Independent Trustees  the University of Pennsylvania; Christopher H. Browne 
  Distinguished Professor of Political Science in the School 
Charles D. Ellis  of Arts and Sciences with Secondary Appointments 
Born 1937. Trustee Since January 2001. Principal  at the Annenberg School for Communication and the 
Occupation(s) During the Past Five Years: Applecore  Graduate School of Education of the University of 
Partners (pro bono ventures in education); Senior  Pennsylvania; Director of Carnegie Corporation of 
Advisor to Greenwich Associates (international business  New York, Schuylkill River Development Corporation, 
strategy consulting); Successor Trustee of Yale University;  and Greater Philadelphia Chamber of Commerce; 
Overseer of the Stern School of Business at New York  Trustee of the National Constitution Center. 
University; Trustee of the Whitehead Institute for   
Biomedical Research.   



JoAnn Heffernan Heisen  Executive Officers   
Born 1950. Trustee Since July 1998. Principal     
Occupation(s) During the Past Five Years: Retired  Thomas J. Higgins1   
Corporate Vice President, Chief Global Diversity Officer,  Born 1957. Chief Financial Officer Since September 
and Member of the Executive Committee of Johnson  2008. Principal Occupation(s) During the Past Five 
& Johnson (pharmaceuticals/consumer products);  Years: Principal of The Vanguard Group, Inc.; Chief 
Vice President and Chief Information Officer of Johnson  Financial Officer of each of the investment companies 
& Johnson (1997 –2005); Director of the University  served by The Vanguard Group since 2008; Treasurer 
Medical Center at Princeton and Women’s Research  of each of the investment companies served by The 
and Education Institute.  Vanguard Group (1998–2008). 
 
André F. Perold  Kathryn J. Hyatt1   
Born 1952. Trustee Since December 2004. Principal  Born 1955. Treasurer Since November 2008. Principal 
Occupation(s) During the Past Five Years: George Gund  Occupation(s) During the Past Five Years: Principal of 
Professor of Finance and Banking, Harvard Business  The Vanguard Group, Inc.; Treasurer of each of the 
School; Director and Chairman of UNX, Inc. (equities  investment companies served by The Vanguard 
trading firm); Chair of the Investment Committee of  Group since 2008; Assistant Treasurer of each of the 
HighVista Strategies LLC (private investment firm).  investment companies served by The Vanguard Group 
  (1988–2008).   
Alfred M. Rankin, Jr.     
Born 1941. Trustee Since January 1993. Principal  Heidi Stam1   
Occupation(s) During the Past Five Years: Chairman,  Born 1956. Secretary Since July 2005. Principal 
President, Chief Executive Officer, and Director of  Occupation(s) During the Past Five Years: Managing 
NACCO Industries, Inc. (forklift trucks/housewares/  Director of The Vanguard Group, Inc., since 2006; 
lignite); Director of Goodrich Corporation (industrial  General Counsel of The Vanguard Group since 2005; 
products/aircraft systems and services).  Secretary of The Vanguard Group and of each of the 
  investment companies served by The Vanguard Group 
Peter F. Volanakis  since 2005; Director and Senior Vice President of 
Born 1955. Trustee Since July 2009. Principal  Vanguard Marketing Corporation since 2005; Principal 
Occupation(s) During the Past Five Years: President  of The Vanguard Group (1997–2006). 
since 2007 and Chief Operating Officer since 2005     
of Corning Incorporated (communications equipment);     
President of Corning Technologies (2001–2005); Director  Vanguard Senior Management Team 
of Corning Incorporated and Dow Corning; Trustee of     
the Corning Incorporated Foundation and the Corning  R. Gregory Barton  Michael S. Miller 
Museum of Glass; Overseer of the Amos Tuck School  Mortimer J. Buckley  James M. Norris 
of Business Administration at Dartmouth College.  Kathleen C. Gubanich  Glenn W. Reed 
  Paul A. Heller  George U. Sauter 
 
 
  Founder   
  John C. Bogle   
  Chairman and Chief Executive Officer, 19741996 

1 These individuals are “interested persons” as defined in the Investment Company Act of 1940.
2 December 2002 for Vanguard Equity Income Fund, Vanguard Growth Equity Fund, the Vanguard Municipal Bond Funds, and the Vanguard
State Tax-Exempt Funds.


 

P.O. Box 2600
Valley Forge, PA 19482-2600

Connect with Vanguard® > www.vanguard.com

Fund Information > 800-662-7447  CFA® is a trademark owned by CFA Institute. 
 
Direct Investor Account Services > 800-662-2739   
 
Institutional Investor Services > 800-523-1036   
 
Text Telephone for People   
With Hearing Impairment > 800-952-3335   
 
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 our website, www.vanguard.com,   
and searching for “proxy voting guidelines,” or by calling   
Vanguard at 800-662-2739. The guidelines are also   
available from the SEC’s website, www.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   
www.vanguard.com or www.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  © 2009 The Vanguard Group, Inc. 
Commission, Washington, DC 20549-0102.  All rights reserved. 
Vanguard Marketing Corporation, Distributor. 
 
  Q230 102009 



Vanguard International Growth Fund 
Annual Report 
August 31, 2009 



> For the fiscal year ended August 31, 2009, Vanguard International Growth Fund

returned about –14%.

> The fund’s disappointing performance nevertheless exceeded the return of its

benchmark index and the average return of peer funds.

> Both developed and emerging markets posted losses; the developed European

market detracted the most from overall performance.

Contents   
 
Your Fund’s Total Returns  1 
President’s Letter  2 
Advisors’ Report  8 
Results of Proxy Voting  13 
Fund Profile  14 
Performance Summary  16 
Financial Statements  18 
Your Fund’s After-Tax Returns  35 
About Your Fund’s Expenses  36 
Glossary  38 

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.
Cover photograph: Veronica Coia.



Your Fund’s Total Returns

Fiscal Year Ended August 31, 2009     
  Ticker       Total 
  Symbol  Returns 
Vanguard International Growth Fund     
     Investor Shares  VWIGX  –13.75% 
     Admiral™ Shares1  VWILX  –13.57 
MSCI EAFE Index    –14.95 
International Funds Average2    –16.32 

Your Fund’s Performance at a Glance         
August 31, 2008–August 31, 2009         
      Distributions Per Share 
  Starting  Ending  Income  Capital 
  Share Price  Share Price  Dividends  Gains 
Vanguard International Growth Fund         
     Investor Shares  $20.43  $15.73  $0.562  $0.903 
     Admiral Shares  65.09  50.08  1.909  2.870 

1 A lower-cost class of shares available to many longtime shareholders and to those with significant investments in the fund.
2 Derived from data provided by Lipper Inc.

1




President’s Letter

Dear Shareholder:

In an extremely volatile period in the global stock markets, Vanguard International Growth Fund returned about –14% for the fiscal year ended August 31, 2009. This performance, although disappointing, compared favorably with that of the fund’s market benchmark, the Morgan Stanley Capital International Europe, Australasia, Far East (MSCI EAFE) Index, and the average return of international peer funds.

The first six months of the fiscal year were a time of severe gloom in global stock markets as credit markets froze and economic contraction was widespread. Foreign governments’ stimulus programs gained traction during the second half of the fiscal year, and global stock markets advanced strongly.

All ten of the fund’s sectors recorded declines for the year, and results were negative across all regions. Relative to the benchmark, however, the fund benefited from the advisors’ limited exposure to, and strong stock selection in, the financial sector, and from holdings in emerging markets. Emerging markets—which are not included in the index—outperformed developed markets.

If you invest in the fund through a taxable account, page 35 shows after-tax returns for investors in the highest tax bracket.

2



Stocks sank, then soared as credit and economy stabilized

The 12 months ended August 31 spanned two strikingly different half-years. The period began with the September collapse of a major investment bank and the government-engineered rescue of several giant financial institutions. Stocks sank as the ensuing crisis spread from Wall Street to Main Street and around the globe. Stricken by seized-up credit markets and a near-total lack of confidence, businesses and consumers put the brakes on economic growth.

Governments in the United States and abroad responded with unprecedented stimulus and other programs. Over the past six months, these efforts started to take hold. Credit-market conditions

improved, and the outlook for the U.S. economy brightened. From their early-March lows, stocks took off on an almost unbroken winning streak.

Even so, the broad U.S. stock market ended the 12 months in negative territory, with a return of about –18%. International markets performed somewhat better, as major European economies emerged from recession; the MSCI All Country World Index ex USA returned about –14%.

Despite the robust second-half rally, it may be premature to sound the all-clear signal. As the fiscal year came to a close, home foreclosures and the unemployment rate were rising, and the federal government’s list of problem banks had climbed above 400—the most since June 1994. There is

Market Barometer       
  Average Annual Total Returns 
  Periods Ended August 31, 2009 
  One Year  Three Years  Five Years 
Stocks       
MSCI All Country World Index ex USA (International)  –13.96%  –2.41%       8.18% 
Russell 1000 Index (Large-caps)  –18.39  –5.61       0.94 
Russell 2000 Index (Small-caps)  –21.29  –6.08       2.21 
Dow Jones U.S. Total Stock Market Index  –18.10  –5.17       1.45 
 
Bonds       
Barclays Capital U.S. Aggregate Bond Index       
(Broad taxable market)  7.94%  6.35%       4.96% 
Barclays Capital Municipal Bond Index  5.67  4.14       4.15 
Citigroup 3-Month Treasury Bill Index  0.51  2.77       2.98 
 
CPI       
Consumer Price Index  –1.48%  1.91%       2.64% 

3



considerable historical evidence that recovery from a recession caused by a financial crisis tends to take longer than average.

Among bond investors, safety and yield traded places

The U.S. bond market also performed a U-turn during the year. Early on, as credit markets deteriorated, investors rushed to the relative safety and liquidity of U.S. Treasury securities, driving their prices up and yields down. Investors were so risk-averse that short-term Treasury yields briefly turned negative. November and December were among the ten best months ever for Treasury returns (adjusted for inflation). Corporate bonds, especially those of lower credit quality, struggled,

and their yield spreads above comparable Treasuries widened to near-historic levels during the first six months.

Several moves by the Treasury and the Federal Reserve Board—which slashed its target level for short-term interest rates to a range of 0%–0.25% in December—helped credit markets to attain some stability by the spring. In a dramatic reversal, investors regained their appetite for risk, favoring corporate bonds over Treasuries.

After all the ups and downs, Treasuries and high-yield corporate bonds produced similar 12-month returns of about 6%–7%. Overall, the broad U.S. taxable bond market returned about 8%. Tax-exempt municipal bonds, after a flat first half, returned more than 5% for the fiscal year.

Expense Ratios1       
Your Fund Compared With Its Peer Group       
      International 
  Investor  Admiral  Funds 
  Shares  Shares  Average 
International Growth Fund  0.54%  0.35%  1.44% 

1 The fund expense ratios shown are from the prospectus dated December 29, 2008, and represent estimated costs for the current fiscal
year based on the fund’s net assets as of the prospectus date. The expense ratios for the fiscal year ended August 31, 2009, were 0.53%
for Investor Shares and 0.34% for Admiral Shares. The peer-group expense ratio is derived from data provided by Lipper Inc. and captures
information through year-end 2008.

4



Second-half rally could not offset losses

Global stock markets opened the fiscal year plagued by the credit crisis that began in the United States and the economic slowdown that followed. While the markets staged a solid rally over the year’s second half, the gains weren’t enough to offset the steep losses incurred earlier in the period.

Emerging-market stocks, while still down for the fiscal year, made an impressive comeback over the last six months, and your fund’s advisors reaped the benefits of opportunistically building up their allocation to emerging markets during the year. Leading the rally was China, where investors cheered the government’s stimulus program. Financial, consumer

discretionary, and industrial stocks contributed the most to China’s return. The advisors’ selection of financial stocks also had a positive effect on the fund.

More than half of International Growth Fund’s holdings were in the developed markets of Europe, and the fund’s losses were heavily influenced by this large stake. Holdings in the developed markets of the Pacific region also dragged down the fund’s return. Japan made up more than half of the fund’s stocks in the region, and its industrial and financial holdings especially weakened performance.

The region’s best performer was Hong Kong, which received a lift from several financial stocks.

Total Returns   
Ten Years Ended August 31, 2009   
  Average 
  Annual Return 
International Growth Fund Investor Shares               3.39% 
MSCI EAFE Index               2.27 
International Funds Average1               1.82 

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 www.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.

1 Derived from data provided by Lipper Inc.

5



On a sector basis, although financial companies faltered during the year, the fund’s advisors avoided some of the hardest-hit stocks and shared in the gains of those that improved. The fund was helped by avoiding troubled banks that suffered during the credit freeze that began last fall and continued into the first months of 2009.

The beaten-down industrial sector, particularly machinery, electrical equipment, and alternative energy companies, detracted the most from the fund’s return Industrial stocks are particularly sensitive in recessionary times, as many projects are halted or postponed. Also weighing on the fund’s performance was the telecommunication services sector.

For more about the advisors’ strategies and the fund’s positioning during the year, see the Advisors’ Report that follows this letter.

Ten-year record tops benchmark, peers

In a decade marked by historic volatility and two severe bear markets, Vanguard International Growth Fund has outperformed its unmanaged benchmark index and its peer group. The fund’s average annual return of about 3% during the past 10 years was more than 1 percentage point better than that of its benchmark and its peer-group average.

This performance is a credit to the skills, knowledge, and experience of the investment professionals who advise your fund. Schroder Investment Management North America has managed the fund since its 1981 inception, Baillie Gifford Overseas joined as an advisor in 2003, and M&G Investment Management came aboard in 2008. All three firms have many years of experience in managing growth-oriented funds.

As a shareholder, you have also benefited from the fund’s low costs, which allow you to keep more of its return.

A word on expenses

As detailed in the table and footnote on page 4, the fund’s expense ratios have risen over the past fiscal year. The explanation is threefold.

First, as the value of fund assets has declined, the fund’s fixed expenses have accounted for a modestly higher percentage of fund assets. Second, in fiscal 2008, the fund’s board of directors approved an increase in the advisory fee that took effect during fiscal 2009.

Third, many of the Vanguard funds’ advisory contracts include a performance incentive-fee/penalty provision. If the advisor outperforms its benchmark, the firm's fee increases; if it underperforms, the fee declines. The incentive fee

6



structure helps ensure that the interests of the advisors and the funds’ shareholders remain aligned. During the past year, the fund’s strong performance resulted in an increase in the performance adjustment. The fund’s financial statements include more information about the incentive fee.

Foreign stocks have a role in a diversified portfolio

After several years of superior returns, international markets suffered even more than U.S. stocks during the global financial crisis. The results led some investors to question the value of international investing and enlivened the debate about whether international stocks truly serve to diversify a portfolio.

As long as two asset classes do not move perfectly in tandem, there is potential for diversification to add value, and Vanguard’s research suggests that international equities can, in fact, help diversify your portfolio over the long run. The International Growth Fund can give you access to international companies with the potential for above-average growth, and can play a valuable role in your efforts to allocate your resources among and within the major asset classes in a way that fits your unique circumstances.

The past year’s extreme turbulence has no doubt been frustrating for investors, but it’s crucial not to let short-term volatility prevent you from considering the long-term merits of both international equities and the broader stock market. As international stocks rode a rollercoaster to frightening depths last year, an impulsive retreat from the markets would have kept an investor from participating in the strong rally and partial recovery at the end of the period.

Thank you for investing in Vanguard.

Sincerely,


F. William McNabb III
President and Chief Executive Officer
September 12, 2009

7



Advisors’ Report

For the fiscal year ended August 31, 2009, Vanguard International Growth Fund returned about –14%. Your fund is managed by three independent advisors, a strategy that enhances the fund’s diversification by providing exposure to distinct, yet complementary, investment approaches. It is not uncommon for different advisors to have different views about individual securities or the broader investment environment.

The advisors, the amount and percentage of fund assets each manages, and brief descriptions of their investment strategies are presented in the table below. The advisors have also prepared a discussion of the investment environment that existed during the fiscal year and of how their portfolio positioning reflects this assessment. These comments were prepared on September 15, 2009.

Vanguard International Growth Fund Investment Advisors

  Fund Assets Managed   
Investment Advisor  %  $ Million  Investment Strategy 
Schroder Investment  45  6,460  Equity analysts in 11 countries and an international team of
Management North America Inc.      global sector and regional specialists help to identify
      reasonably priced companies with strong growth prospects
      and a sustainable competitive advantage. 
Baillie Gifford Overseas Ltd.  42  5,963  The advisor seeks stocks that can generate above- 
      average growth in earnings and cash flow, producing 
      a bottom-up, stock-driven approach to country and 
      asset allocation. An in-depth view on each company 
      is measured against the consensus view, leading to 
      discrepancies and potential opportunities to add value. 
M&G Investment  8  1,099  The advisor constructs a portfolio using a long-term, 
Management Limited      bottom-up investment approach focusing on 
      identifying underappreciated companies—particularly 
      those with scarce assets—with the ability to deliver 
      high returns and growth potential. 
Cash Investments  5  639  These short-term reserves are invested by Vanguard 
      in equity index products to simulate investment in 
      stocks. Each advisor may also maintain a modest 
      cash position. 

8


Schroder Investment Management
North America Inc.

Portfolio Managers:
Virginie Maisonneuve, CFA
Head of Global and International Equities

Matthew Dobbs
Head of Global Small Companies

International equity markets declined by about 15% (measured in U.S. dollars) over the 12 months ended August 31, 2009, with a strong rally in the second half of the period wiping out some of the large losses the market experienced in the first half. The primary catalysts for the dramatic turn of events were the concerted efforts by governments to support the banking system and provide liquidity to markets, which helped underpin investors’ confidence that the worst of the crisis might have passed.

We had believed for some time that emerging markets—China and Brazil in particular—would be most capable of boosting their economies in this downturn. They entered the crisis in much better shape than the developed world and had underlying support from their growing middle classes and, in the case of Brazil, from resources. As markets collapsed, we added quality growth names in these regions, especially those benefiting from domestic consumption and infrastructure spending—areas in which we see strong long-term earnings support. Attractively priced examples in the portfolio include China-based auto company Denway

Motors, online travel agency ctrip.com, and conglomerate Swire Pacific, as well as banking group Itau Unibanco in Brazil and commodities companies such as CVRD (Companhia Vale do Rio Doce).

In Europe, we were cautious about banks throughout 2008 and kept our exposure in “safer” names, such as insurance companies (Admiral) and the better-capitalized banks. As valuations became increasingly depressed in the early part of 2009, we added holdings such as HSBC and BNP Paribas, as well as Nomura Holdings in Japan.

We also took advantage of poor market sentiment in the first quarter to add globally competitive companies with strong brand names and long-term earnings power, such as BMW and Nokia.

Although we successfully added to Honda on weakness, as the strong yen and bearish sentiment on the global car industry affected the share price, we have limited exposure to Japan, as we continue to find better-valued growth companies elsewhere.

On the downside, our exposure to industrials and materials hurt most early in the period, with steel producer ArcelorMittal and mining company Rio Tinto detracting from performance as commodity prices fell. This was due to companies drastically reducing inventory levels toward the end of 2008 amid falling global demand. We believed the sell-off

9



in some stocks had been overdone, and we added to some of the positions in which we had the greatest conviction. Indeed, companies began rebuilding stock in 2009 as the outlook improved, and many of our positions rebounded accordingly.

Looking forward, we believe the markets will continue to be volatile as investors shift their focus between different time horizons. On the one hand, equity markets are benefiting from the improving sequential macroeconomic data and the massive liquidity injected by governments globally. On the other hand, the long-term realities of deleveraging and the uncertain impact of the emergency measures put in place are still weighing on the markets. In this environment, we continue to focus on finding attractively priced globally competitive companies that demonstrate long-term earnings growth with strong structural drivers underpinning their growth.

Baillie Gifford Overseas Ltd.

Portfolio Manager:
James K. Anderson, Chief Investment
Officer and Head of Global Equities

It is surprising that our portfolio, which reflects our conviction in our investment ideas, performed roughly in line with its benchmark during 12 months of extreme volatility. What we lost, relatively speaking, in the first half of the period, when investors were panicking, we made back in the second half as confidence returned. It all feels like an expensive and nerve-racking round trip. The most important

thing for us was not to lose faith in our long-term policy. By sticking to our guns, we have benefited from the strong bounce in markets this year.

This implies that there was very little change in the makeup of the portfolio during the period, which is true. We still like the developing world (Brazil represents our most significant overweighting among countries), and we are heavily exposed to the industrial and technology sectors. Economic crises have not increased the appeal of pharmaceutical companies or utilities, in our opinion, and we have very little invested in them. The only change of note was a gradual tilt toward more technology businesses and retailers, and away from some of the industrials that have served us so well.

Our successes and failures balanced each other out during the period. The most surprising aspect of our performance was the strong contribution from retail stocks. We are overweighted in the sector; Inditex (Industria de Diseno Textil) and Woolworths Holdings were especially helpful. The main reasons for the shopkeepers’ resilience were relief that demand did not collapse, vigorous cost cutting, and hopes of feebler competition in the future. The main disappointment in the portfolio was our exposure to alternative energy (solar and wind power). The companies’ shares were dumped indiscriminately by other investors. Our positive long-term view is largely unchanged.

10



At the moment, the market’s verdict is that what we are going through is more a case of “back to the future” than a “brave new world.” This is probably correct. Countries with a heavy debt overhang, such as the United States and United Kingdom, may take longer to revive, but much of the global economy seems to be recovering more sharply than most people expected. Governments are determined not to risk a double dip, and the emerging world has come through the crisis in good shape. It is hard not to feel fairly optimistic.

M&G Investment
Management Limited

Portfolio Managers:
Graham E. French, Portfolio Manager

Greg Aldridge, Portfolio Manager

Following dramatic declines in the fourth quarter of 2008, when financial markets anticipated the possibility of another Great Depression, global equities rallied strongly from March 2009 onward as these fears subsided and investors focused on the prospects for recovery in the global economy. The first part of the period was characterized by the outperformance of defensive sectors such as health care and consumer staples; in the second, investors’ appetite for risk grew substantially, prompting a particularly strong recovery in emerging markets and, among industries, in more volatile financial and natural resources stocks.

In terms of performance, our exposure to technology stocks proved particularly beneficial, especially Samsung Electronics, the Korean consumer electronics business (a position we exited during the period); Compal Electronics, the Taiwanese computer manufacturer; and Ericsson, the Swedish mobile communications equipment maker.

The portfolio’s positions in emerging markets benefited from the resurgence in risk appetite as financial concerns eased and as the relative strength of many of these economies became more apparent. Positive contributions came from MTN, the South African mobile phone business with strong positions in a number of under-penetrated markets across Africa and the Middle East; Petrobras, the Brazilian oil and gas producer with exciting growth prospects; and Hankook Tire, the Korean tire manufacturer.

Elsewhere, strong returns came from the advertising agency Publicis and from the testing services company Intertek, a new holding during the year whose share price rebounded from levels that reflected overly pessimistic fears of a cyclical slowdown.

By contrast, the weakest performers were those whose sharp declines earlier in the period outweighed the subsequent rebound in their share prices. Inchcape, the international car distribution business, suffered as households constrained their discretionary spending; diamond miner and retailer Harry Winston was hurt by falling

11



diamond prices; and Dutch financial group ING succumbed to the pressures affecting much of the industry. Health care companies Astellas Pharma, Novartis, and GlaxoSmithKline, meanwhile, which had held up well in the first half of the period, didn’t participate in the second-half rally and also ended the year as net detractors from performance.

We established new positions in holdings with high-returning business models and scarce assets, such as G4S (Group 4 Securicor), a global security services business based in the United Kingdom, and South African energy producer Sasol. G4S has strong market positions around the world and benefits from the trend towards security outsourcing globally, while Sasol is a clearly differentiated energy producer with proven experience and know-how in converting coal and gas into liquid oil products.

During the period, we sold food producer Danone and, as we mentioned above, Samsung, with the proceeds being used to fund more compelling valuation opportunities elsewhere.

It has been an extraordinary year for investors in global equities. Following the dramatic fall and subsequent rally in share prices over the 12 months, we believe it is right to retain our focus on high-quality, value-creating businesses whose scarce assets differentiate them from their competitors and should enable them to generate high returns and grow over the long term.

12



Results of Proxy Voting

At a special meeting of shareholders on July 2, 2009, fund shareholders approved the following two proposals:

Proposal 1—Elect trustees for each fund.*

The individuals listed in the table below were elected as trustees for each fund. All trustees with the exception of Messrs. McNabb and Volanakis (both of whom already served as directors of The Vanguard Group, Inc.) served as trustees to the funds prior to the shareholder meeting.

      Percentage 
Trustee  For  Withheld  For 
John J. Brennan  816,325,661  25,839,114  96.9% 
Charles D. Ellis  811,618,878  30,545,897  96.4% 
Emerson U. Fullwood  816,960,560  25,204,215  97.0% 
Rajiv L. Gupta  815,607,429  26,557,346  96.8% 
Amy Gutmann  818,039,387  24,125,388  97.1% 
JoAnn Heffernan Heisen  815,771,400  26,393,375  96.9% 
F. William McNabb III  817,559,701  24,605,074  97.1% 
André F. Perold  814,833,250  27,331,525  96.8% 
Alfred M. Rankin, Jr.  815,942,907  26,221,868  96.9% 
Peter F. Volanakis  817,780,699  24,384,076  97.1% 
* Results are for all funds within the same trust.       

Proposal 2—Update and standardize the funds’ fundamental policies regarding:
(a) Purchasing and selling real estate.
(b) Issuing senior securities.
(c) Borrowing money.
(d) Making loans.
(e) Purchasing and selling commodities.
(f) Concentrating investments in a particular industry or group of industries.
(g) Eliminating outdated fundamental investment policies not required by law.

The revised fundamental policies are clearly stated and simple, yet comprehensive, making oversight and compliance more efficient than under the former policies. The revised fundamental policies will allow the funds to respond more quickly to regulatory and market changes, while avoiding the costs and delays associated with successive shareholder meetings.

        Broker  Percentage 
Vanguard Fund  For  Abstain  Against  Non-Votes  For 
International Growth Fund           
2a  487,872,988  9,212,832  10,770,095  30,667,450  90.6% 
2b  486,960,724  9,833,833  11,061,361  30,667,448  90.4% 
2c  463,170,280  9,854,477  34,831,160  30,667,449  86.0% 
2d  470,743,410  9,952,062  27,160,443  30,667,450  87.4% 
2e  479,258,089  9,484,466  19,113,358  30,667,452  89.0% 
2f  486,442,002  9,611,529  11,802,385  30,667,449  90.3% 
2g  491,503,528  9,499,079  6,853,310  30,667,449  91.3% 

13



International Growth Fund

Fund Profile
As of August 31, 2009

Portfolio Characteristics     
    Comparative  Broad 
  Fund  Index1  Index2 
Number of Stocks  177  959  1,794 
Median Market Cap  $34.7B  $32.3B  $27.5B 
Price/Earnings Ratio  21.4x  34.1x  27.3x 
Price/Book Ratio  2.0x  1.5x  1.6x 
Return on Equity  21.3%  17.9%  18.8% 
Earnings Growth Rate  16.1%  11.1%  13.5% 
Dividend Yield  2.6%  3.5%  3.2% 
Turnover Rate  51%     
Expense Ratio3       

Investor Shares 

0.54%     

Admiral Shares 

0.35%     
Short-Term Reserves  1.1%     

Sector Diversification (% of equity exposure)

  Comparative  Broad 
  Fund  Index1  Index2 
Consumer Discretionary 12.5%    9.9%  8.5% 
Consumer Staples  12.5  9.7  8.3 
Energy  8.7  8.1  10.7 
Financials  22.7  26.3  26.8 
Health Care  7.2  8.2  6.4 
Industrials  11.9  11.3  10.0 
Information Technology  8.9  5.0  6.6 
Materials  9.0  9.4  10.9 
Telecommunication       
Services  4.8  5.9  6.5 
Utilities  1.8  6.2  5.3 

Volatility Measures4   
  Fund Versus  Fund Versus 
  Comparative Index1  Broad Index2 
R-Squared  0.97  0.98 
Beta  1.06  0.99 

Ten Largest Holdings5 (% of total net assets)

SAP AG  application software   2.1% 
Tesco PLC  food retail   2.1 
Petroleo Brasileiro SA  integrated oil and gas   2.0 
Teva Pharmaceutical Industries Ltd. Sponsored ADR  pharmaceuticals   1.8 
Canon, Inc.  office electronics   1.7 
HSBC Holdings PLC  diversified banks   1.6 
BG Group PLC  integrated oil and gas   1.6 
Nestle SA (Registered)  packaged foods and meats   1.5 
Syngenta AG  fertilizers and agricultural chemicals   1.4 
L’Oreal SA  personal products   1.4 
Top Ten    17.2% 

Allocation by Region (% of equity exposure)


1 MSCI EAFE Index.
2 MSCI All Country World Index ex USA.
3 The expense ratios shown are from the prospectus dated December 29, 2008, and represent estimated costs for the current fiscal year
based on the fund’s net assets as of the prospectus date. The expense ratios for the fiscal year ended August 31, 2009, were 0.53% for
the Investor Shares and 0.34% for the Admiral Shares.
4 For an explanation of R-squared, beta, and other terms used here, see the Glossary.
5 The holdings listed exclude any temporary cash investments and equity index products.

14


.

International Growth Fund

Market Diversification (% of equity exposure)

  Comparative    Broad 
  Fund1  Index2  Index3 
Europe       
     United Kingdom  17.2%  21.0%  15.3% 
     France  10.0  10.7  7.8 
     Switzerland  8.4  7.7  5.6 
     Germany  6.9  7.9  5.7 
     Spain  3.5  4.7  3.4 
     Sweden  2.8  2.6  1.9 
     Netherlands  2.3  2.4  1.8 
     Denmark  1.8  0.9  0.7 
     Other European       
     Markets  1.5  8.0  5.8 
     Subtotal  54.4%  65.9%  48.0% 
Pacific       
     Japan  15.4%  22.9%  16.6% 
     Hong Kong  4.2  2.2  1.6 
     Australia  3.4  7.6  5.5 
     Singapore  1.3  1.3  0.9 
     Other Pacific       
     Markets  0.0  0.1  0.1 
     Subtotal  24.3%  34.1%  24.7% 
Emerging Markets       
     Brazil   6.4%     3.0% 
     China  5.4    3.7 
     Israel  2.3    0.6 
     Mexico  1.2    0.9 
     South Africa  1.1    1.5 
Other Emerging       
     Markets  3.7    10.6 
     Subtotal  20.1%    20.3% 
North America       
     Canada   1.2%     7.0% 

1 Market percentages exclude currency contracts held by the fund.
2 MSCI EAFE Index.
3 MSCI All Country World Index ex USA.

15



International Growth 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 www.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: August 31, 1999–August 31, 2009
Initial Investment of $10,000


     Average Annual Total Returns  Final Value 
    Periods Ended August 31, 2009  of a $10,000 
  One Year  Five Years  Ten Years  Investment 
International Growth Fund Investor Shares1  –13.75%               6.98%     3.39%  $13,951 
MSCI All Country World Index ex USA  –13.96               8.18     4.01  14,813 
MSCI EAFE Index  –14.95               5.82     2.27  12,517 
International Funds Average2  –16.32               5.28     1.82  11,974 

        Final Value 
             Since  of a $100,000 
  One Year  Five Years  Inception3  Investment 
International Growth Fund Admiral Shares1  –13.57%       7.20%       5.59%  $154,900 
MSCI All Country World Index ex USA  –13.96       8.18       7.11  173,830 
MSCI EAFE Index  –14.95       5.82       5.06  148,729 

1 Total returns do not reflect the 2% fee assessed on redemptions of shares purchased on or after June 27, 2003, and held for less than
two months, nor for the Investor Shares do they include the account service fee that may be applicable to certain accounts with balances
below $10,000.
2 Derived from data provided by Lipper Inc.
3 Performance for the fund’s Admiral Shares and comparative standards is calculated since the share class inception: August 13, 2001.
Note: See Financial Highlights tables for dividend and capital gains information.

16



International Growth Fund

Fiscal-Year Total Returns (%): August 31, 1999–August 31, 2009


Average Annual Total Returns: Periods Ended June 30, 2009
This table presents average annual total returns through the latest calendar quarter—rather than through the end
of the fiscal period. Securities and Exchange Commission rules require that we provide this information.

  Inception Date  One Year  Five Years  Ten Years 
Investor Shares1  9/30/1981  –29.78%       3.85%       2.26% 
Admiral Shares1  8/13/2001  –29.63       4.05       4.072 

1 Total returns do not reflect the 2% fee assessed on redemptions of shares purchased on or after June 27, 2003, and held for less than
two months, nor for the Investor Shares do they include the account service fee that may be applicable to certain accounts with balances
below $10,000.
2 Return since inception.
Note: See Financial Highlights tables for dividend and capital gains information.

17



International Growth Fund

Financial Statements

Statement of Net Assets

As of August 31, 2009

The fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth fiscal quarters, the lists appear in the fund’s semiannual and annual reports to shareholders. For the first and third fiscal quarters, the fund files the lists with the Securities and Exchange Commission on Form N-Q. Shareholders can look up the fund’s Forms N-Q on the SEC’s website at www.sec.gov. Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room (see the back cover of this report for further information).

      Market 
      Value 
    Shares  ($000) 
Common Stocks (94.4%)1     
Australia (3.0%)     
  Woolworths Ltd.  5,583,900  132,016 
  Woodside Petroleum Ltd.  2,777,000  115,227 
  Brambles Ltd.  14,934,900  93,806 
*  James Hardie Industries     
   NV  6,196,069  36,441 
  Amcor Ltd.  6,333,889  30,821 
  Sims Metal     
   Management Ltd.  750,000  14,502 
      422,813 
Austria (0.2%)     
^  Wienerberger AG  967,000  22,105 
 
Belgium (0.1%)     
  Barco NV  355,000  17,334 
 
Brazil (6.3%)     
  Petroleo Brasileiro SA     
   Series A ADR  7,733,400  256,749 
  Itau Unibanco Banco     
   Multiplo SA  8,592,375  143,922 
  Redecard SA  7,504,952  102,219 
  Banco Itau Holding     
   Financeira SA  5,404,490  90,529 
  Companhia Vale do     
   Rio Doce Pfd. Class A  4,149,000  71,788 
  BM&F BOVESPA SA  11,085,000  68,462 
*  Vale SA Preferred ADR  3,641,900  62,677 
  Companhia Brasileira de     
   Distribuicao Grupo Pao     
   de Acucar ADR  795,000  38,772 
  Petroleo Brasileiro     
   SA Pfd.  1,515,000  25,160 
  Banco do Brasil SA  1,220,000  17,044 
  Votorantim Celulose e     
   Papel SA  716,170  11,240 
      888,562 

      Market 
      Value 
    Shares  ($000) 
Canada (1.2%)     
  Niko Resources Ltd.  1,417,600  91,938 
  Canadian Pacific     
   Railway Ltd.  1,264,000  60,524 
  Sherritt     
   International Corp.  1,965,000  12,098 
  Harry Winston     
   Diamond Corp.  732,000  4,293 
      168,853 
China (5.3%)     
  China     
   Construction Bank  147,450,000  111,312 
  China Mobile     
   (Hong Kong) Ltd.  10,364,500  101,769 
  China Resources     
   Enterprise Ltd.  24,730,000  58,042 
  CNOOC Ltd.  44,035,000  57,648 
  Ping An Insurance     
   (Group) Co. of     
   China Ltd.  7,695,000  57,548 
^  Dongfang     
   Electrical Corp Ltd.  10,506,200  51,266 
  Denway Motors Ltd.  112,074,000  49,898 
^  Want Want China     
   Holdings Ltd.  89,703,000  47,673 
*  Ctrip.com     
   International Ltd. ADR  941,700  46,087 
  China Unicom Ltd.  29,408,000  41,119 
*  Baidu.com, Inc.  115,400  38,089 
^  China Overseas Land &     
   Investment Ltd.  16,430,800  33,406 
^  Tencent Holdings Ltd.  1,888,000  28,096 
^  China Merchants     
   Bank Co., Ltd. Class H  9,496,500  20,679 
  Chaoda Modern     
   Agriculture     
   Holdings Ltd.  20,000,719  11,874 
      754,506 

18



International Growth Fund     
 
 
 
      Market 
      Value 
    Shares  ($000) 
Denmark (1.8%)     
*  Vestas Wind Systems     
   A/S  1,485,736  106,619 
  Novo Nordisk A/S     
   B Shares  1,135,200  69,257 
  Novozymes A/S  634,400  54,469 
  AP Moller-Maersk A/S     
   B Shares  2,525  18,171 
      248,516 
France (9.3%)     
  L’Oreal SA  2,013,495  198,768 
  Axa  8,336,250  190,405 
  Essilor International SA  3,380,100  182,873 
  Total SA  2,859,000  164,050 
  Groupe Danone  2,210,000  120,494 
  BNP Paribas SA  1,354,000  109,176 
  GDF Suez  2,349,012  99,289 
  ArcelorMittal     
   (Amsterdam Shares)  2,609,425  93,325 
  PPR  605,000  70,431 
^  Publicis Groupe SA  785,000  28,933 
  Societe Generale Class A  347,000  28,048 
  European Aeronautic     
   Defence and Space Co.  1,300,000  27,038 
      1,312,830 
Germany (6.4%)     
  SAP AG  6,219,400  303,681 
  E.On AG  2,700,133  114,410 
  Adidas AG  2,142,810  101,064 
  Linde AG  861,000  86,657 
  Fresenius Medical Care     
   AG  1,756,000  78,792 
  Porsche AG  994,400  73,414 
  ThyssenKrupp AG  1,219,000  41,574 
  Celesio AG  1,522,800  41,495 
  Siemens AG  283,000  24,586 
  Symrise AG  1,345,000  22,262 
*,^  Q-Cells AG  986,500  15,147 
      903,082 
Hong Kong (4.1%)     
  Swire Pacific Ltd.     
   A Shares  18,217,500  190,129 
^  Hong Kong Exchanges &     
   Clearing Ltd.  6,214,500  108,194 
  Esprit Holdings Ltd.  17,380,500  105,752 
  Sun Hung Kai     
   Properties Ltd.  5,294,000  71,703 
  Shangri-La Asia Ltd.  26,390,000  38,830 
  Li & Fung Ltd.  10,292,000  34,215 
^  Techtronic     
   Industries Co., Ltd.  22,999,943  22,598 
*  Ports Design Limited  4,958,000  11,348 
      582,769 

    Market 
    Value 
  Shares  ($000) 
India (0.3%)     
     Reliance Capital Ltd.  1,454,500  25,990 
     Housing Development     
       Finance Corp. Ltd.  425,800  21,574 
    47,564 
Indonesia (0.5%)     
     PT Telekomunikasi     
       Indonesia Tbk  81,778,500  67,706 
 
Ireland (0.2%)     
     Kerry Group PLC     
       A Shares  850,000  22,236 
     Kerry Group PLC  75,000  1,967 
    24,203 
Israel (2.2%)     
     Teva Pharmaceutical     
       Industries Ltd.     
       Sponsored ADR  4,969,100  255,909 
     Makhteshim-Agan     
       Industries Ltd.  13,061,243  59,943 
    315,852 
Italy (0.6%)     
* Intesa Sanpaolo SpA  18,981,662  82,481 
 
Japan (14.0%)     
     Canon, Inc.  6,385,100  244,081 
     Honda Motor Co., Ltd.  6,170,100  193,467 
     Toyota Motor Corp.  2,843,900  121,248 
     Mitsubishi Corp.  5,978,000  120,845 
     Nintendo Co.  420,900  114,074 
     Uni-Charm Corp.  1,105,000  99,002 
     Mitsui Sumitomo     
       Insurance Group     
       Holdings, Inc.  3,434,100  96,592 
     Nippon Telegraph and     
       Telephone Corp.  1,929,000  85,875 
     Mitsubishi UFJ     
       Financial Group  12,839,400  81,623 
     Nomura Holdings Inc.  9,194,200  81,472 
     Bridgestone Corp.  4,414,500  80,562 
     Sekisui Chemical Co.  12,557,000  80,086 
     SMC Corp.  643,300  74,807 
     Rakuten, Inc.  116,652  70,465 
     Yamada Denki Co., Ltd.  1,023,570  69,592 
     Japan Tobacco, Inc.  23,355  67,717 
     THK Co., Inc.  3,095,300  57,937 
     JFE Holdings, Inc.  1,623,000  56,642 
     Hoya Corp.  2,310,700  52,065 
     Rohm Co., Ltd.  589,500  39,789 
     Kyocera Corp.  347,900  28,913 
     Trend Micro Inc.  695,000  27,279 
     Astellas Pharma Inc.  585,000  23,382 
     Yamaha Motor Co., Ltd.  1,600,000  18,871 
    1,986,386 

19



International Growth Fund     
 
 
 
    Market 
    Value 
  Shares  ($000) 
Luxembourg (0.1%)     
     Reinet Investments SA  542,339  7,508 
 
Mexico (1.2%)     
     Grupo Televisa SA ADR  3,880,000  67,823 
     America Movil SA de     
       CV Series L ADR  1,403,500  63,368 
     Wal-Mart de Mexico SA  8,200,000  29,062 
     Consorcio ARA SA     
       de CV  20,250,000  11,646 
    171,899 
Netherlands (2.2%)     
     Unilever NV  5,054,000  141,603 
     SBM Offshore NV  4,091,246  85,226 
     Reed Elsevier NV  4,998,000  53,103 
^ TNT NV  747,911  18,521 
     ING Groep NV  900,000  13,570 
    312,023 
Norway (0.1%)     
     StatoilHydro ASA  875,000  19,138 
 
Russia (0.7%)     
     OAO Gazprom-Sponsored     
       ADR (London Shares)  4,851,000  101,799 
 
Singapore (1.3%)     
     Jardine Matheson     
       Holdings Ltd.  4,516,400  130,881 
     Singapore Exchange Ltd.  6,541,000  37,960 
     DBS Group Holdings Ltd.  2,190,000  19,232 
    188,073 
South Africa (1.1%)     
     MTN Group Ltd.  6,307,372  103,416 
     Impala Platinum     
       Holdings Ltd.  1,778,600  41,574 
     Sasol Ltd.  406,000  15,309 
    160,299 
South Korea (0.9%)     
     Samsung     
       Electronics Co., Ltd.  116,000  71,528 
     Samsung Fire &     
       Marine Insurance Co.  186,900  33,486 
     Hankook Tire Co. Ltd.  1,080,000  19,177 
    124,191 
Spain (3.2%)     
     Banco Santander SA  11,409,450  175,651 
     Industria de Diseno Textil     
       SA  2,217,885  120,957 

      Market 
      Value 
    Shares  ($000) 
  Banco Bilbao Vizcaya     
   Argentaria SA  4,703,000  83,617 
  Gamesa Corporacion     
   Tecnologica SA  3,390,418  74,425 
      454,650 
Sweden (2.8%)     
  Atlas Copco AB A Shares  15,095,533  190,637 
  Sandvik AB  10,514,363  106,285 
  Svenska Handelsbanken     
   AB A Shares  1,703,706  44,774 
^  Oriflame Cosmetics SA  575,000  28,045 
  Telefonaktiebolaget LM     
   Ericsson AB Class B  2,725,000  26,148 
      395,889 
Switzerland (8.3%)     
  Nestle SA (Registered)  5,000,000  208,165 
  Syngenta AG  849,814  199,744 
  Credit Suisse Group     
   (Registered)  3,245,000  165,557 
  Roche Holdings AG  1,008,684  160,659 
*  UBS AG  8,367,391  154,039 
*  Compagnie Financiere     
   Richemont SA  3,236,100  88,338 
  Geberit AG  494,180  76,194 
  ABB Ltd.  2,331,300  44,898 
  Holcim Ltd. (Registered)  486,000  32,856 
  Novartis AG (Registered)  575,000  26,710 
  Zurich Financial Services     
   AG  50,000  11,019 
  Julius Baer Holding, Ltd.  198,745  10,135 
      1,178,314 
Taiwan (0.8%)     
  Taiwan Semiconductor     
   Manufacturing Co., Ltd.  37,122,508  66,703 
  Chinatrust Financial     
   Holding  43,888,000  24,364 
  Compal Electronics Inc.  19,738,200  19,872 
      110,939 
Turkey (0.5%)     
*  Turkiye Garanti     
   Bankasi A.S.  20,354,000  75,334 
 
United Kingdom (15.7%)     
  Tesco PLC  49,634,300  302,136 
  HSBC Holdings PLC  20,850,854  225,367 
  BG Group PLC  13,691,213  224,633 
  Standard Chartered PLC  7,532,300  170,015 
  Vodafone Group PLC  75,739,324  163,886 

20



International Growth Fund

      Market 
      Value 
    Shares  ($000) 
  BHP Billiton PLC  5,536,700  144,220 
  British American     
   Tobacco PLC  4,554,464  138,389 
  Rolls-Royce Group PLC  13,797,616  101,047 
  AstraZeneca Group PLC  2,164,000  100,420 
  Rio Tinto PLC  2,574,200  99,721 
  Admiral Group PLC  4,712,000  81,677 
  SABMiller PLC  2,480,000  57,192 
  Meggitt PLC  14,917,500  51,701 
  Capita Group PLC  3,551,612  39,248 
  The Sage Group PLC  9,902,000  35,406 
*  Signet Jewelers Ltd.  1,356,000  32,076 
  Lloyds Banking Group     
   PLC  16,799,464  30,081 
  Intertek Testing Services     
   PLC  1,460,000  28,607 
  GlaxoSmithKline PLC  1,410,000  27,534 
  Bunzl PLC  2,828,500  26,932 
  Unilever PLC  985,000  26,916 
  Ultra Electronics Holdings   
   PLC  1,130,000  23,082 
  Morrison Supermarkets     
   PLC  5,020,000  22,508 
  Inchcape PLC  47,815,000  21,451 
  Group 4 Securicor PLC  5,650,000  20,424 
  Victrex PLC  1,706,167  19,597 
      2,214,266 
Total Common Stocks     
(Cost $12,830,628)    13,359,884 
Temporary Cash Investments (6.1%)1   
Money Market Fund (5.7%)     
2,3  Vanguard Market Liquidity   
   Fund, 0.277%  804,503,971  804,504 

    Face  Market 
    Amount  Value 
    ($000)  ($000) 
U.S. Government and Agency Obligations (0.4%) 
4,5  Federal Home Loan Bank,     
   0.275%, 2/19/10  12,000  11,986 
4,5  Federal Home Loan     
  Mortgage Corp.,     
   0.210%, 9/28/09  6,000  5,999 
4,5  Federal National     
   Mortgage Assn.,     
   0.426%, 9/23/09  43,000  42,997 
      60,982 
Total Temporary Cash Investments   
(Cost $865,476)    865,486 
Total Investments (100.5%)     
(Cost $13,696,104)    14,225,370 
Other Assets and Liabilites (–0.5%)   
Other Assets    101,284 
Liabilities3    (166,035) 
      (64,751) 
Net Assets (100%)    14,160,619 

21



International Growth Fund

At August 31, 2009, net assets consisted of:

  Amount 
  ($000) 
Paid-in Capital  16,606,834 
Undistributed Net Investment Income  179,384 
Accumulated Net Realized Losses  (3,229,997) 
Unrealized Appreciation (Depreciation)   
 Investment Securities  529,266 
 Futures Contracts  60,307 
 Foreign Currencies and   
  Forward Currency Contracts  14,825 
Net Assets  14,160,619 
 
 
Investor Shares—Net Assets   
Applicable to 649,974,274 outstanding   
$.001 par value shares of beneficial   
interest (unlimited authorization)  10,226,306 
Net Asset Value Per Share—   
Investor Shares  $15.73 
 
 
Admiral Shares—Net Assets   
Applicable to 78,564,662 outstanding   
$.001 par value shares of beneficial   
interest (unlimited authorization)  3,934,313 
Net Asset Value Per Share—   
Admiral Shares  $50.08 

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 $79,970,000.
1 The fund invests a portion of its cash reserves in equity markets through the use of index futures contracts. After giving effect to futures
investments, the fund’s effective common stock and temporary cash investment positions represent 98.8% and 1.7%, respectively, of
net assets.
2 Affiliated money market fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard. Rate shown is the
7-day yield.
3 Includes $85,118,000 of collateral received for securities on loan.
4 The issuer operates under a congressional charter; its securities are not backed by the full faith and credit of the U.S. government.
5 Securities with a value of $60,982,000 have been segregated as initial margin for open futures contracts.
ADR—American Depositary Receipt.
See accompanying Notes, which are an integral part of the Financial Statements.

22



International Growth Fund

Statement of Operations

  Year Ended 
  August 31, 2009 
  ($000) 
Investment Income   
Income   
Dividends1,2  370,511 
Interest2  6,015 
Security Lending  9,573 
Total Income  386,099 
Expenses   
Investment Advisory Fees—Note B   
     Basic Fee  14,568 
     Performance Adjustment  2,906 
The Vanguard Group—Note C   
     Management and Administrative—Investor Shares  26,336 
     Management and Administrative—Admiral Shares  4,379 
     Marketing and Distribution—Investor Shares  2,496 
     Marketing and Distribution—Admiral Shares  955 
Custodian Fees  2,177 
Auditing Fees  35 
Shareholders’ Reports and Proxies—Investor Shares  570 
Shareholders’ Reports and Proxies—Admiral Shares  39 
Trustees’ Fees and Expenses  26 
Total Expenses  54,487 
Expenses Paid Indirectly  (267) 
Net Expenses  54,220 
Net Investment Income  331,879 
Realized Net Gain (Loss)   
Investment Securities Sold2  (3,109,339) 
Futures Contracts  (129,779) 
Foreign Currencies and Forward Currency Contracts  38,817 
Realized Net Gain (Loss)  (3,200,301) 
Change in Unrealized Appreciation (Depreciation)   
Investment Securities  358,382 
Futures Contracts  91,924 
Foreign Currencies and Forward Currency Contracts  (5,711) 
Change in Unrealized Appreciation (Depreciation)  444,595 
Net Increase (Decrease) in Net Assets Resulting from Operations  (2,423,827) 

1 Dividends are net of foreign withholding taxes of $19,340,000.
2 Dividend income, interest income, and realized net gain (loss) from affiliated companies of the fund were $0, $4,920,000, and
($82,634,000), respectively.
See accompanying Notes, which are an integral part of the Financial Statements.

23



International Growth Fund

Statement of Changes in Net Assets

  Year Ended August 31, 
  2009  2008 
  ($000)  ($000) 
Increase (Decrease) in Net Assets     
Operations     
Net Investment Income  331,879  402,143 
Realized Net Gain (Loss)  (3,200,301)  1,164,232 
Change in Unrealized Appreciation (Depreciation)  444,595  (4,104,988) 
Net Increase (Decrease) in Net Assets Resulting from Operations  (2,423,827)  (2,538,613) 
Distributions     
Net Investment Income     
     Investor Shares  (320,390)  (273,198) 
     Admiral Shares  (134,624)  (119,608) 
Realized Capital Gain1     
     Investor Shares  (514,799)  (1,145,568) 
     Admiral Shares  (202,398)  (456,714) 
Total Distributions  (1,172,211)  (1,995,088) 
Capital Share Transactions     
     Investor Shares  792,137  1,975,823 
     Admiral Shares  150,634  1,092,739 
Net Increase (Decrease) from Capital Share Transactions  942,771  3,068,562 
Total Increase (Decrease)  (2,653,267)  (1,465,139) 
Net Assets     
Beginning of Period  16,813,886  18,279,025 
End of Period2  14,160,619  16,813,886 

1 Includes fiscal 2009 and 2008 short-term gain distributions totaling $0 and $364,747,000, respectively. Short-term gain distributions
are treated as ordinary income dividends for tax purposes.
2 Net Assets—End of Period includes undistributed net investment income of $179,384,000 and $303,101,000.
See accompanying Notes, which are an integral part of the Financial Statements.

24



International Growth Fund

Financial Highlights

Investor Shares           
 
For a Share Outstanding  Year Ended August 31, 
Throughout Each Period  2009  2008  2007  2006  2005 
Net Asset Value, Beginning of Period  $20.43  $26.13  $23.97  $19.83  $16.33 
Investment Operations           
Net Investment Income  .3981  .473  .594  .541  .341 
Net Realized and Unrealized Gain (Loss)           
on Investments  (3.633)  (3.431)  4.132  4.284  3.474 
Total from Investment Operations  (3.235)  (2.958)       4.726  4.825  3.815 
Distributions           
Dividends from Net Investment Income  (.562)  (.528)  (.530)  (.370)  (.315) 
Distributions from Realized Capital Gains  (.903)  (2.214)  (2.036)  (.315)   
Total Distributions  (1.465)  (2.742)  (2.566)  (.685)  (.315) 
Net Asset Value, End of Period  $15.73  $20.43  $26.13  $23.97  $19.83 
 
Total Return2  –13.75%  –12.83%  20.87%  24.79%  23.54% 
 
Ratios/Supplemental Data           
Net Assets, End of Period (Millions)  $10,226  $11,969  $13,219  $10,466  $8,182 
Ratio of Total Expenses to           
Average Net Assets3  0.53%  0.47%  0.51%  0.55%  0.60% 
Ratio of Net Investment Income to           
Average Net Assets  2.84%1  2.07%  2.47%  2.52%  1.89% 
Portfolio Turnover Rate  51%  55%  41%  45%  48% 

1 Net investment income per share and the ratio of net investment income to average net assets include $0.061 and 0.48%, respectively,
resulting from income accrued in connection with a spinoff in October 2008 by Reinet Investments SA of British American Tobacco PLC.
2 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than two months or the account service fee that
may be applicable to certain accounts with balances below $10,000.
3 Includes performance-based investment advisory fee increases (decreases) of 0.03%, 0.02%, 0.01%, (0.01%), and (0.01%).
See accompanying Notes, which are an integral part of the Financial Statements.

25



International Growth Fund

Financial Highlights

Admiral Shares           
 
For a Share Outstanding  Year Ended August 31, 
Throughout Each Period  2009  2008  2007  2006  2005 
Net Asset Value, Beginning of Period  $65.09  $83.26  $76.36  $63.15  $51.96 
Investment Operations           
Net Investment Income  1.3401  1.649  2.051  1.861  1.222 
Net Realized and Unrealized Gain (Loss)           
on Investments  (11.571)  (10.929)  13.159  13.639  11.063 
Total from Investment Operations  (10.231)  (9.280)  15.210  15.500  12.285 
Distributions           
Dividends from Net Investment Income  (1.909)  (1.845)  (1.832)  (1.288)  (1.095) 
Distributions from Realized Capital Gains  (2.870)  (7.045)  (6.478)  (1.002)   
Total Distributions  (4.779)  (8.890)  (8.310)  (2.290)  (1.095) 
Net Asset Value, End of Period  $50.08  $65.09  $83.26  $76.36  $63.15 
 
Total Return2  –13.57%  –12.67%  21.11%  25.03%  23.84% 
 
Ratios/Supplemental Data           
Net Assets, End of Period (Millions)  $3,934  $4,845  $5,060  $3,506  $2,181 
Ratio of Total Expenses to           
Average Net Assets3  0.34%  0.28%  0.31%  0.35%  0.40% 
Ratio of Net Investment Income to           
Average Net Assets  3.03%1  2.26%  2.67%  2.72%  2.07% 
Portfolio Turnover Rate  51%  55%  41%  45%  48% 

1 Net investment income per share and the ratio of net investment income to average net assets include $0.194 and 0.48%, respectively,
resulting from income accrued in connection with a spinoff in October 2008 by Reinet Investments SA of British American Tobacco PLC.
2 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than two months.
3 Includes performance-based investment advisory fee increases (decreases) of 0.03%, 0.02%, 0.01%, (0.01%), and (0.01%).
See accompanying Notes, which are an integral part of the Financial Statements.

26



International Growth Fund

Notes to Financial Statements

Vanguard International Growth Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund invests in securities of foreign issuers, which may subject it to investment risks not normally associated with investing in securities of U.S. corporations. The fund offers two classes of shares: Investor Shares and Admiral Shares. Investor Shares are available to any investor who meets the fund’s minimum purchase requirements. Admiral Shares are designed for investors who meet certain administrative, service, tenure, and account-size criteria.

A. The following significant accounting policies conform to generally accepted accounting principles for U.S. mutual funds. The fund consistently follows such policies in preparing its financial statements.

1. Security Valuation: Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which market quotations are not readily available, or whose values have been affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued at their fair values calculated according to procedures adopted by the board of trustees. These procedures include obtaining quotations from an independent pricing service, monitoring news to identify significant market- or security-specific events, and evaluating changes in the values of foreign market proxies (for example, ADRs, futures contracts, or exchange-traded funds), between the time the foreign markets close and the fund’s pricing time. When fair-value pricing is employed, the prices of securities used by a fund to calculate its net asset value may differ from quoted or published prices for the same securities. Investments in Vanguard Market Liquidity Fund are valued at that fund’s net asset value. Temporary cash investments acquired over 60 days to maturity are valued using the latest bid prices or using valuations based on a matrix system (which considers such factors as security prices, yields, maturities, and ratings), both as furnished by independent pricing services. Other temporary cash investments are valued at amortized cost, which approximates market value.

2. Foreign Currency: Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates obtained from an independent third party as of the fund’s pricing time on the valuation date. Realized gains (losses) and unrealized appreciation (depreciation) on investment securities include the effects of changes in exchange rates since the securities were purchased, combined with the effects of changes in security prices. Fluctuations in the value of other assets and liabilities resulting from changes in exchange rates are recorded as unrealized foreign currency gains (losses) until the assets or liabilities are settled in cash, at which time they are recorded as realized foreign currency gains (losses).

3. Futures and Forward Currency Contracts: The fund uses index futures contracts to a limited extent, with the objective of maintaining full exposure to the stock market while maintaining liquidity. The fund may purchase or sell futures contracts to achieve a desired level of investment, whether to accommodate portfolio turnover or cash flows from capital share transactions. The primary risks associated with the use of futures contracts are imperfect correlation between changes in market values of stocks held by the fund and the prices of futures contracts, and the possibility of an illiquid market.

27



International Growth Fund

The fund may also enter into forward currency contracts to provide the appropriate currency exposure related to any open futures contracts or to protect the value of securities and related receivables and payables against changes in foreign exchange rates. The primary risk associated with the fund’s use of these contracts is that a counterparty will fail to fulfill its obligation to pay gains due to the fund under the contracts. Counterparty risk is mitigated by entering into forward currency contracts only with highly rated counterparties, by a master netting arrangement between the fund and the counterparty, and by the posting of collateral by the counterparty. The forward currency contracts contain provisions whereby a counterparty may terminate open contracts if the fund’s net assets decline below a certain level, triggering a payment by the fund if the fund is in a net liability position at the time of the termination. The payment amount would be reduced by any collateral the fund has posted. Any securities posted as collateral for open contracts are noted in the Statement of Net Assets.

Futures and forward currency contracts are valued at their quoted daily settlement prices. The aggregate principal amounts of the contracts are not recorded in the Statement of Net Assets. Fluctuations in the value of the contracts are recorded in the Statement of Net Assets as an asset (liability) and in the Statement of Operations as unrealized appreciation (depreciation) until the contracts are closed, when they are recorded as realized gains (losses) on futures or forward currency contracts.

4. Federal Income Taxes: The fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income. Management has analyzed the fund’s tax positions taken for all open federal income tax years (August 31, 2006–2009), and has concluded that no provision for federal income tax is required in the fund’s financial statements.

5. Distributions: Distributions to shareholders are recorded on the ex-dividend date.

6. Security Lending: The fund may lend its securities to qualified institutional borrowers to earn additional income. Security loans are required to be secured at all times by collateral at least equal to the market value of securities loaned. The fund invests cash collateral received in Vanguard Market Liquidity Fund, and records a liability for the return of the collateral, during the period the securities are on loan. Security lending income represents the income earned on investing cash collateral, less expenses associated with the loan.

7. Other: Dividend income is recorded on the ex-dividend date. Interest income includes income distributions received from Vanguard Market Liquidity Fund and is accrued daily. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment securities are those of the specific securities sold. Fees assessed on redemptions of capital shares are credited to paid-in capital.

Each class of shares has equal rights as to assets and earnings, except that each class separately bears certain class-specific expenses related to maintenance of shareholder accounts (included in Management and Administrative expenses), shareholder reporting, and proxies. Marketing and distribution expenses are allocated to each class of shares based on a method approved by the board of trustees. Income, other non-class-specific expenses, and gains and losses on investments are allocated to each class of shares based on its relative net assets.

B. Schroder Investment Management North America Inc., Baillie Gifford Overseas Ltd., and M&G Investment Management Ltd. each provide investment advisory services to a portion of the fund for a fee calculated at an annual percentage rate of average net assets managed by the advisor. The basic fees of Schroder Investment Management North America Inc. and Baillie Gifford Overseas Ltd. are

28



International Growth Fund

subject to quarterly adjustments based on performance for the preceding three years relative to the Morgan Stanley Capital International Europe, Australasia, Far East Index. The basic fee of M&G Investment Management Ltd. is subject to quarterly adjustments based on the fund’s performance since February 29, 2008, relative to the MSCI All Country World Index excluding USA.

The Vanguard Group manages the cash reserves of the fund on an at-cost basis.

For the year ended August 31, 2009, the aggregate investment advisory fee represented an effective annual basic rate of 0.13% of the fund’s average net assets before an increase of $2,906,000 (0.03%) based on performance.

C. The Vanguard Group furnishes at cost corporate management, administrative, marketing, and distribution services. The costs of such services are allocated to the fund under methods approved by the board of trustees. The fund has committed to provide up to 0.40% of its net assets in capital contributions to Vanguard. At August 31, 2009, the fund had contributed capital of $3,031,000 to Vanguard (included in Other Assets), representing 0.02% of the fund’s net assets and 1.21% of Vanguard’s capitalization. The fund’s trustees and officers are also directors and officers of Vanguard.

D. The fund has asked its investment advisors to direct certain security trades, subject to obtaining the best price and execution, to brokers who have agreed to rebate to the fund part of the commissions generated. Such rebates are used solely to reduce the fund’s management and administrative expenses. The fund’s custodian bank has also agreed to reduce its fees when the fund maintains cash on deposit in the non-interest-bearing custody account. For the year ended August 31, 2009, these arrangements reduced the fund’s management and administrative expenses by $263,000 and custodian fees by $4,000. The total expense reduction represented an effective annual rate of 0.00% of the fund’s average net assets.

E. Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Level 1Quoted prices in active markets for identical securities.
Level 2Other significant observable inputs (including quoted prices for similar securities, interest
rates, prepayment speeds, credit risk, etc.).
Level 3Significant unobservable inputs (including the fund’s own assumptions used to determine
the fair value of investments).

The following table summarizes the fund’s investments as of August 31, 2009, based on the inputs used to value them:

  Level 1  Level 2  Level 3 
Investments  ($000)  ($000)  ($000) 
Common Stocks  1,569,398  11,790,486   
Temporary Cash Investments  804,504  60,982   
Futures Contracts—Liabilities1  (3,728)     
Forward Currency Contracts—Assets  15,133     
Forward Currency Contracts—Liabilities  (720)     
Total  2,384,587  11,851,468   

1 Represents variation margin on the last day of the reporting period.

29



International Growth Fund

The following table summarizes changes in investments valued based on Level 3 inputs during the year ended August 31, 2009:

  Investments in 
  Common Stocks 
Amount Valued Based on Level 3 Inputs  ($000) 
Balance as of August 31, 2008  3,095 
Change in Unrealized Appreciation (Depreciation)  (2,212) 
Transfers out of Level 3  (883) 
Balance as of August 31, 2009   

F. At August 31, 2009, the fair values of derivatives were reflected in the Statement of Net Assets as follows:

    Foreign   
  Equity  Exchange   
  Contracts1  Contracts  Total 
Statement of Net Assets Caption  ($000)  ($000)  ($000) 
Other Assets    15,133  15,133 
Liabilities  (3,728)  (720)  (4,448) 
1 Represents variation margin on the last day of the reporting period.       

Realized net gain (loss) and the change in unrealized appreciation (depreciation) on derivatives for the year ended August 31, 2009, were:

    Foreign   
  Equity  Exchange   
  Contracts  Contracts  Total 
Realized Net Gain (Loss) on Derivatives  ($000)  ($000)  ($000) 
Futures Contracts  (129,779)    (129,779) 
Forward Currency Contracts    39,399  39,399 
Realized Net Gain (Loss) on Derivatives  (129,779)  39,399  (90,380) 
 
Change in Unrealized Appreciation (Depreciation)       
on Derivatives       
Futures Contracts  91,924    91,924 
Forward Currency Contracts    (7,193)  (7,193) 
Change in Unrealized Appreciation (Depreciation)       
on Derivatives  91,924  (7,193)  84,731 

30



International Growth Fund

At August 31, 2009, the aggregate settlement value of open futures contracts and the related unrealized appreciation (depreciation) were:

        ($000) 
    Number of  Aggregate  Unrealized 
    Long (Short)  Settlement  Appreciation 
Futures Contracts  Expiration  Contracts  Value  (Depreciation) 
Dow Jones EURO STOXX 50 Index  September 2009  6,093  242,639  27,999 
Topix Index  September 2009  1,567  162,502  6,998 
FTSE 100 Index  September 2009  2,000  160,323  18,407 
S&P ASX 200 Index  September 2009  635  59,837  6,903 

At August 31, 2009, the fund had open forward currency contracts to receive and deliver currencies as follows. Unrealized appreciation (depreciation) on open forward currency contracts is treated as realized gain (loss) for tax purposes.

        Unrealized 
        Appreciation 
  Contract Amount (000)  (Depreciation) 
Contract Settlement Date    Receive  Deliver  ($000) 
9/23/2009  EUR  165,648  USD 237,663  6,023 
9/16/2009  JPY  15,191,541  USD 163,548  5,866 
9/23/2009  GBP  95,177  USD 155,072  (672) 
9/23/2009  AUD  70,585  USD 59,436  3,196 

AUD—Australian dollar.
EUR—Euro.
GBP—British pound.
JPY—Japanese yen.
USD—U.S. dollar.

At August 31, 2009, counterparties had deposited in segregated accounts cash with a value sufficient to cover substantially all amounts due to the fund in connection with open forward currency contracts.

The fund had net unrealized foreign currency gains of $412,000 resulting from the translation of other assets and liabilities at August 31, 2009.

G. Distributions are determined on a tax basis and may differ from net investment income and realized capital gains for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the financial statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain, or loss are recognized in different periods for financial statement and tax purposes; these differences will reverse at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.

31



International Growth Fund

During the year ended August 31, 2009, the fund realized net foreign currency losses of $582,000, which decreased distributable net income for tax purposes; accordingly, such losses have been reclassified from accumulated net realized losses to undistributed net investment income.

For tax purposes, at August 31, 2009, the fund had $209,690,000 of ordinary income available for distribution. The fund had available capital loss carryforwards totaling $1,198,712,000 to offset future net capital gains through August 31, 2017. In addition, the fund realized losses of $2,008,606,000 during the period from November 1, 2008, through August 31, 2009, which are deferred and will be treated as realized for tax purposes in fiscal 2010.

At August 31, 2009, the cost of investment securities for tax purposes was $13,705,719,000. Net unrealized appreciation of investment securities for tax purposes was $519,651,000, consisting of unrealized gains of $1,991,582,000 on securities that had risen in value since their purchase and $1,471,931,000 in unrealized losses on securities that had fallen in value since their purchase.

H. During the year ended August 31, 2009, the fund purchased $5,792,126,000 of investment securities and sold $5,814,994,000 of investment securities, other than temporary cash investments.

I. Capital share transactions for each class of shares were:

  Year Ended August 31 
  2009  2008 
  Amount  Shares  Amount  Shares 
  ($000)  (000)  ($000)  (000) 
Investor Shares         
Issued  1,791,374  133,321  2,869,056  117,748 
Issued in Lieu of Cash Distributions  819,473  67,224  1,393,855  58,443 
Redeemed1  (1,818,710)  (136,394)  (2,287,088)  (96,226) 
Net Increase (Decrease)—Investor Shares  792,137  64,151  1,975,823  79,965 
Admiral Shares         
Issued  676,458  16,117  1,350,456  17,226 
Issued in Lieu of Cash Distributions  312,461  8,068  534,007  7,037 
Redeemed1  (838,285)  (20,055)  (791,724)  (10,598) 
Net Increase (Decrease)—Admiral Shares  150,634  4,130  1,092,739  13,665 

1 Net of redemption fees of $888,000 and $1,294,000 (fund totals).

32



International Growth Fund

J. The fund had invested in a company that was considered to be an affiliated company of the fund because the fund owned more than 5% of the outstanding voting securities of the company. Transactions during the period in securities of this company were as follows:

    Current Period Transactions   
  Aug. 31, 2008    Proceeds from    Aug. 31, 2009 
  Market  Purchases  Securities  Dividend  Market 
  Value  at Cost  Sold  Income  Value 
  ($000)  ($000)  ($000)  ($000)  ($000) 
SBM Offshore NV  177,698  4,251  50,772    NA1 

1 At August 31, 2009, the security was still held but the issuer was no longer an affiliated company of the fund.

K. In preparing the financial statements as of August 31, 2009, management considered the impact of subsequent events occurring through October 15, 2009, for potential recognition or disclosure in these financial statements.

33



Report of Independent Registered
Public Accounting Firm

To the Trustees of Vanguard World Fund and the Shareholders of Vanguard International Growth 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 International Growth Fund (the “Fund”) at August 31, 2009, 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 August 31, 2009 by correspondence with the custodian and brokers and by agreement to the underlying ownership records for Vanguard Market Liquidity Fund, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
October 15, 2009

 


Special 2009 tax information (unaudited) for Vanguard International Growth Fund

This information for the fiscal year ended August 31, 2009, is included pursuant to provisions of
the Internal Revenue Code.

The fund distributed $725,737,000 as capital gain dividends (from net long-term capital gains) to
shareholders during the fiscal year.

The fund distributed $340,487,000 of qualified dividend income to shareholders during the
fiscal year.

The fund will pass through foreign source income of $389,426,000 and foreign taxes paid of
$18,915,000 to shareholders. The pass-through of foreign taxes paid will affect only shareholders
on the fund’s dividend record date in December 2009. Shareholders will receive more detailed
information along with their Form 1099-DIV in January 2010.

34



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 2009. (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.)

The table shows returns for Investor Shares only; returns for other share classes will differ. 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: International Growth Fund Investor Shares1
Periods Ended August 31, 2009

  One   Five     Ten 
  Year  Years  Years 
Returns Before Taxes  –13.75%  6.98%  3.39% 
Returns After Taxes on Distributions  –15.18  5.58  2.25 
Returns After Taxes on Distributions and Sale of Fund Shares  –7.74  5.86  2.61 

1 Total returns do not reflect the 2% fee assessed on redemptions of shares purchased on or after June 27, 2003, and held for less than
two months, nor do they include the account service fee that may be applicable to certain accounts with balances below $10,000.

35



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 the 2% fee on redemptions of shares held for less than two months, nor do they include the account service fee described in the 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.

36



Six Months Ended August 31, 2009       
  Beginning  Ending  Expenses 
  Account Value  Account Value  Paid During 
International Growth Fund  2/28/2009  8/31/2009  Period1 
Based on Actual Fund Return       
     Investor Shares  $1,000.00  $1,563.62  $3.49 
     Admiral Shares  1,000.00  1,565.49  2.26 
Based on Hypothetical 5% Yearly Return       
     Investor Shares  $1,000.00  $1,022.48  $2.75 
     Admiral Shares  1,000.00  1,023.44  1.79 

1 The calculations are based on expenses incurred in the most recent six-month period. The fund’s annualized six-month expense ratios
that period are 0.54% for Investor Shares and 0.35% for Admiral Shares. The dollar amounts shown as “Expenses Paid” are equal to
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.

37



Glossary

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. The percentage of a fund’s average net assets used to pay its annual administrative and advisory expenses. These expenses directly reduce returns to investors.

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.

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.

38



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.

39



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 157 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 www.vanguard.com.

Interested Trustees  Emerson U. Fullwood 
  Born 1948. Trustee Since January 2008. Principal 
John J. Brennan1  Occupation(s) During the Past Five Years: Retired 
Born 1954. Trustee Since May 1987. Chairman of  Executive Chief Staff and Marketing Officer for North 
the Board. Principal Occupation(s) During the Past  America and Corporate Vice President of Xerox 
Five Years: Chairman of the Board and Director/Trustee  Corporation (photocopiers and printers); Director of 
of The Vanguard Group, Inc., and of each of the  SPX Corporation (multi-industry manufacturing), the 
investment companies served by The Vanguard Group;  United Way of Rochester, the Boy Scouts of America, 
Chief Executive Officer and President of The Vanguard  Amerigroup Corporation (direct health and medical 
Group and of each of the investment companies served  insurance carriers), and Monroe Community College 
by The Vanguard Group (1996–2008); Chairman of  Foundation. 
the Financial Accounting Foundation; Governor of   
the Financial Industry Regulatory Authority (FINRA);  Rajiv L. Gupta 
Director of United Way of Southeastern Pennsylvania.  Born 1945. Trustee Since December 2001.2 Principal 
  Occupation(s) During the Past Five Years: Retired 
F. William McNabb III1  Chairman and Chief Executive Officer of Rohm and 
Born 1957. Trustee Since July 2009. Principal  Haas Co. (chemicals); President of Rohm and Haas Co. 
Occupation(s) During the Past Five Years: Director of  (2006–2008); Board Member of American Chemistry 
The Vanguard Group, Inc., since 2008; Chief Executive  Council; Director of Tyco International, Ltd. (diversified 
Officer and President of The Vanguard Group and of  manufacturing and services) and Hewlett-Packard Co. 
each of the investment companies served by The  (electronic computer manufacturing); Trustee of The 
Vanguard Group since 2008; Director of Vanguard  Conference Board. 
Marketing Corporation; Managing Director of The   
Vanguard Group (1995–2008).  Amy Gutmann 
  Born 1949. Trustee Since June 2006. Principal 
  Occupation(s) During the Past Five Years: President of 
Independent Trustees  the University of Pennsylvania; Christopher H. Browne 
  Distinguished Professor of Political Science in the School 
Charles D. Ellis  of Arts and Sciences with Secondary Appointments 
Born 1937. Trustee Since January 2001. Principal  at the Annenberg School for Communication and the 
Occupation(s) During the Past Five Years: Applecore  Graduate School of Education of the University of 
Partners (pro bono ventures in education); Senior  Pennsylvania; Director of Carnegie Corporation of 
Advisor to Greenwich Associates (international business  New York, Schuylkill River Development Corporation, 
strategy consulting); Successor Trustee of Yale University;  and Greater Philadelphia Chamber of Commerce; 
Overseer of the Stern School of Business at New York  Trustee of the National Constitution Center. 
University; Trustee of the Whitehead Institute for   
Biomedical Research.   



JoAnn Heffernan Heisen  Executive Officers   
Born 1950. Trustee Since July 1998. Principal     
Occupation(s) During the Past Five Years: Retired  Thomas J. Higgins1   
Corporate Vice President, Chief Global Diversity Officer,  Born 1957. Chief Financial Officer Since September 
and Member of the Executive Committee of Johnson  2008. Principal Occupation(s) During the Past Five 
& Johnson (pharmaceuticals/consumer products);  Years: Principal of The Vanguard Group, Inc.; Chief 
Vice President and Chief Information Officer of Johnson  Financial Officer of each of the investment companies 
& Johnson (1997–2005); Director of the University  served by The Vanguard Group since 2008; Treasurer 
Medical Center at Princeton and Women’s Research  of each of the investment companies served by The 
and Education Institute.  Vanguard Group (1998–2008). 
 
André F. Perold  Kathryn J. Hyatt1   
Born 1952. Trustee Since December 2004. Principal  Born 1955. Treasurer Since November 2008. Principal 
Occupation(s) During the Past Five Years: George Gund  Occupation(s) During the Past Five Years: Principal of 
Professor of Finance and Banking, Harvard Business  The Vanguard Group, Inc.; Treasurer of each of the 
School; Director and Chairman of UNX, Inc. (equities  investment companies served by The Vanguard 
trading firm); Chair of the Investment Committee of  Group since 2008; Assistant Treasurer of each of the 
HighVista Strategies LLC (private investment firm).  investment companies served by The Vanguard Group 
  (1988–2008).   
Alfred M. Rankin, Jr.     
Born 1941. Trustee Since January 1993. Principal  Heidi Stam1   
Occupation(s) During the Past Five Years: Chairman,  Born 1956. Secretary Since July 2005. Principal 
President, Chief Executive Officer, and Director of  Occupation(s) During the Past Five Years: Managing 
NACCO Industries, Inc. (forklift trucks/housewares/  Director of The Vanguard Group, Inc., since 2006; 
lignite); Director of Goodrich Corporation (industrial  General Counsel of The Vanguard Group since 2005; 
products/aircraft systems and services).  Secretary of The Vanguard Group and of each of the 
  investment companies served by The Vanguard Group 
Peter F. Volanakis  since 2005; Director and Senior Vice President of 
Born 1955. Trustee Since July 2009. Principal  Vanguard Marketing Corporation since 2005; Principal 
Occupation(s) During the Past Five Years: President  of The Vanguard Group (1997–2006). 
since 2007 and Chief Operating Officer since 2005     
of Corning Incorporated (communications equipment);     
President of Corning Technologies (2001–2005); Director  Vanguard Senior Management Team 
of Corning Incorporated and Dow Corning; Trustee of     
the Corning Incorporated Foundation and the Corning  R. Gregory Barton  Michael S. Miller 
Museum of Glass; Overseer of the Amos Tuck School  Mortimer J. Buckley  James M. Norris 
of Business Administration at Dartmouth College.  Kathleen C. Gubanich  Glenn W. Reed 
  Paul A. Heller  George U. Sauter 
 
 
  Founder   
  John C. Bogle   
  Chairman and Chief Executive Officer, 1974–1996 

1 These individuals are “interested persons” as defined in the Investment Company Act of 1940.
2 December 2002 for Vanguard Equity Income Fund, Vanguard Growth Equity Fund, the Vanguard Municipal Bond Funds, and the Vanguard
State Tax-Exempt Funds.



                                                               

                                                                                                          P.O. Box 2600
                                                                                    Valley Forge, PA 19482-2600

Connect with Vanguard® > www.vanguard.com

Fund Information > 800-662-7447  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 our website,
Direct Investor Account Services > 800-662-2739  www.vanguard.com, and searching for “proxy voting guidelines,” or by calling Vanguard
   at 800-662-2739. The guidelines are also available from the SEC’s website, www.sec.gov. 
Institutional Investor Services > 800-523-1036  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 www.vanguard.com or www.sec.gov. 
Text Telephone for People   
With Hearing Impairment > 800-952-3335 
  You can review and copy information about your fund at the SEC’s Public Reference Room in
This material may be used in conjunction  Washington, D.C. To find out more about this public service, call the SEC at 202-551-8090.
with the offering of shares of any Information about your fund is also available on the SEC’s website, and you can receive 
Vanguard fund only if preceded or copies of this information, for a fee, by sending a request in either of two ways:
accompanied by the fund’s  via e-mail addressed to publicinfo@sec.gov or via regular mail addressed to the Public
current prospectus.  Reference Section, Securities and Exchange Commission, Washington, DC 20549-0102. 
 
 
CFA® is a trademark owned by CFA Institute.   
 
  © 2009 The Vanguard Group, Inc. 
  All rights reserved. 
  Vanguard Marketing Corporation, Distributor. 
  Q810 102009 



 

Vanguard FTSE Social Index Fund 
Annual Report 
August 31, 2009 
 


> For the fiscal year ended August 31, 2009, Vanguard FTSE Social Index Fund

returned about –18%.

> The fund’s result for the period was in line with that of its target index but

lagged the average return of large-capitalization growth funds.

> The fund’s significant holdings in the battered financial sector weighed heavily

on its performance.

Contents   
 
Your Fund’s Total Returns  1 
President’s Letter  2 
Results of Proxy Voting  8 
Fund Profile  9 
Performance Summary  10 
Financial Statements  12 
Your Fund’s After-Tax Returns  24 
About Your Fund’s Expenses  25 
Trustees Approve Advisory Arrangement  27 
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.
Cover photograph: Veronica Coia.



Your Fund’s Total Returns

Fiscal Year Ended August 31, 2009         
      Ticker  Total 
      Symbol  Returns 
Vanguard FTSE Social Index Fund         
     Investor Shares      VFTSX  –18.11% 
     Institutional Shares1      VFTNX  –18.03 
FTSE4Good US Select Index        –18.11 
Large-Cap Growth Funds Average2        –17.84 
 
 
Your Fund’s Performance at a Glance         
August 31, 2008–August 31, 2009         
      Distributions Per Share 
  Starting  Ending  Income  Capital 
  Share Price  Share Price  Dividends  Gains 
FTSE Social Index Fund         
     Investor Shares  $7.76  $6.20  $0.118  $0.000 
     Institutional Shares  7.77  6.20  0.129  0.000 

1 This class of shares carries lower expenses and is available for a minimum initial investment of $5 million.
2 Derived from data provided by Lipper Inc.

1



 

 

 

President’s Letter

Dear Shareholder,

For the 12 months ended August 31, Vanguard FTSE Social Index Fund’s performance reflected the weakness in the broader U.S. stock market. The fund returned –18.11% for Investor Shares and –18.03% for Institutional Shares.

Although these results are of course disappointing, the fund did meet its goal of closely tracking its benchmark, the FTSE4Good US Select Index, which closed the period with a return of –18.11%. The fund’s return was slightly behind the –17.84% average return of large-cap growth funds.

Your fund’s large stake in the U.S. financial sector—which neared collapse during the first half of the fiscal period—hurt its performance the most. An uptick for information technology stocks in the second half of the period helped a bit, but was not enough to offset losses in all sectors.

If you hold shares of the fund in a taxable account, you may wish to review the fund’s after-tax returns, which appear later in this report.

Stocks sank, then soared as credit and economy stabilized

The 12 months ended August 31 spanned two strikingly different half-years. The period began with the September collapse

2



of a major investment bank and the government-engineered rescue of several giant financial institutions. Stocks sank as the ensuing crisis spread from Wall Street to Main Street and around the globe. Stricken by seized-up credit markets and a near-total lack of confidence, businesses and consumers put the brakes on economic growth.

Governments in the United States and abroad responded with unprecedented stimulus and other programs. Over the past six months, these efforts started to take hold. Credit-market conditions improved, and the outlook for the U.S. economy brightened. From their early-March lows, stocks took off on an almost-unbroken winning streak.

Even so, the broad U.S. stock market ended the 12 months in negative territory, with a return of about –18%. International markets performed somewhat better, as major European economies emerged from recession; the MSCI All Country World Index ex USA returned about –14%.

Despite the robust second-half rally, it may be premature to sound the all-clear signal. As the fiscal year came to a close, home foreclosures and the unemployment rate were rising, and the federal government’s list of problem banks had climbed above 400—the most since June 1994. There is considerable historical evidence that recovery from a recession caused by a financial crisis tends to take longer than average.

Market Barometer       
    Average Annual Total Returns 
    Periods Ended August 31, 2009 
  One Year  Three Years  Five Years 
Stocks       
Russell 1000 Index (Large-caps)  –18.39%  –5.61%       0.94% 
Russell 2000 Index (Small-caps)  –21.29  –6.08       2.21 
Dow Jones U.S. Total Stock Market Index  –18.10  –5.17       1.45 
MSCI All Country World Index ex USA (International)  –13.96  –2.41       8.18 
 
Bonds       
Barclays Capital U.S. Aggregate Bond Index       
(Broad taxable market)  7.94%  6.35%       4.96% 
Barclays Capital Municipal Bond Index  5.67  4.14       4.15 
Citigroup 3-Month Treasury Bill Index  0.51  2.77       2.98 
 
CPI       
Consumer Price Index  –1.48%  1.91%       2.64% 

3



Among bond investors, safety and yield traded places

The U.S. bond market also performed a U-turn during the year. Early on, as credit markets deteriorated, investors rushed to the relative safety and liquidity of U.S. Treasury securities, driving their prices up and yields down. Investors were so risk-averse that short-term Treasury yields briefly turned negative. November and December were among the ten best months ever for Treasury returns (adjusted for inflation). Corporate bonds, especially those of lower credit quality, struggled, and their yield spreads above comparable Treasuries widened to near-historic levels during the first six months.

Several moves by the Treasury and the Federal Reserve Board—which slashed its target level for short-term interest rates to a range of 0%–0.25% in December—helped credit markets to attain some stability by the spring. In a dramatic reversal, investors regained their appetite for risk, favoring corporate bonds over Treasuries.

After all the ups and downs, Treasuries and high-yield corporate bonds produced similar 12-month returns of about 6%–7%. Overall, the broad U.S. taxable bond market returned about 8%. Tax-exempt municipal bonds, after a flat first half, returned more than 5% for the fiscal year.

Expense Ratios1       
Your Fund Compared With Its Peer Group    
      Large-Cap 
  Investor  Institutional  Growth Funds 
  Shares  Shares  Average 
FTSE Social Index Fund  0.31%  0.18%  1.34% 

1 The fund expense ratios shown are from the prospectuses dated December 29, 2008, and represent estimated costs for the current fiscal
year based on the fund’s net assets as of the prospectus date. For the fiscal year ended August 31, 2009, the expense ratios were 0.29%
for Investor Shares and 0.16% for Institutional Shares. The peer-group expense ratio is derived from data provided by Lipper Inc. and
captures information through year-end 2008.

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In a tough period, financials delivered the hardest blow

During the fiscal year ended August 31, Vanguard FTSE Social Index Fund mirrored its socially conscious target index by investing in companies that work to protect the environment, maintain fair hiring and promotion practices for women and minorities, and institute safe and healthy workplace habits.

The index’s criteria for selecting stocks differentiate the fund from most other large-cap growth funds. FTSE’s screening process typically leads the index, and thus the fund, to focus on a few sectors: financials, information technology, health care, and consumer discretionary.

Financials, the fund’s largest sector with about 30% of assets as of August 31, had the most influence on its performance. The fiscal period began with the collapse of Lehman Brothers in September 2008, an omen for a year plagued by a global recession and credit crisis. As commercial banks, diversified financial services firms, and insurance companies suffered major losses, the financial sector dragged down the fund’s overall performance by nearly 11 percentage points.

The information technology sector, the fund’s second-largest, benefited slightly from a late-period rally in tech stocks, primarily those of software developers and companies that manufacture computer

Total Returns   
May 31, 2000,1 Through August 31, 2009   
           Average 
  Annual Return 
FTSE Social Index Fund Investor Shares             –3.93% 
Spliced Social Index2             –3.80 
Large-Cap Growth Funds Average3             –5.45 

The performance data 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 www.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.

1 Fund inception.
2 Calvert Social Index through December 16, 2005; FTSE4Good US Select Index thereafter.
3 Derived from data provided by Lipper Inc.

5



hardware and semiconductor equipment. But those gains were too small to nudge the IT sector’s overall result into positive territory.

The consumer discretionary and health care sectors also struggled during the fiscal year. Traditionally defensive health care stocks drifted lower in a punishing stock market, while consumer discretionary companies—retailers, restaurants, and entertainment purveyors—struggled with Americans’ sudden, and dramatic, retreat from the malls.

Returns for the fund’s six smaller sectors, which together represented about 16% of its assets at the end of the period, also weakened its performance. Their returns ranged from about –43% for the energy sector to about –8% for the consumer staples sector.

The fund has a record of closely tracking its target

The FTSE Social Index Fund was launched in May 2000, at the height of the stock market’s tech boom. Since its inception, the fund has endured two recessions and

two of the worst bear markets on record, resulting in an average annual return of –3.93%. This is higher than the average return of large-cap growth funds (–5.45%) and is close to that of the fund’s spliced target index (–3.80%).

As the fund’s long-term record shows, the investment advisor, Vanguard Quantitative Equity Group, has done a fine job of tracking the index. In doing so, the group has been supported by the fund’s expense ratio, which is much lower than the average cost of peer funds.

Focus on the long term regardless of market conditions

During the past 12 months, Vanguard FTSE Social Index Fund has experienced one of the toughest economic periods since the 1930s. Although at this point the stock market has recovered from some of its losses, the only certainty about its near-term direction is continued uncertainty.

At Vanguard, we encourage you to focus on the long term and avoid making hasty investment decisions based on the markets’ short-term volatility. One of

6



the best ways to do that is to develop a well-balanced and diversified portfolio that is consistent with your long-term goals, time horizon, and risk tolerance—and then plan to stick with it. Such a portfolio should include a stable, cost-efficient mix of stocks, bonds, and short-term reserves.

A carefully planned investment program can help to cushion the stock market’s occasional sharp decline while allowing you to participate in its long-term potential for growth. For socially conscious investors who are also mindful of expenses, Vanguard FTSE Social Index Fund offers a low-cost option that can play an important role in this kind of long-term investment plan.

Thank you for investing with Vanguard.

Sincerely,


F. William McNabb III

President and Chief Executive Officer September 11, 2009

7



Results of Proxy Voting

At a special meeting of shareholders on July 2, 2009, fund shareholders approved the following two proposals:

Proposal 1—Elect trustees for each fund.*

The individuals listed in the table below were elected as trustees for each fund. All trustees with the exception of Messrs. McNabb and Volanakis (both of whom already served as directors of The Vanguard Group, Inc.) served as trustees to the funds prior to the shareholder meeting.

      Percentage 
Trustee  For  Withheld  For 
John J. Brennan  816,325,661  25,839,114  96.9% 
Charles D. Ellis  811,618,878  30,545,897  96.4% 
Emerson U. Fullwood  816,960,560  25,204,215  97.0% 
Rajiv L. Gupta  815,607,429  26,557,346  96.8% 
Amy Gutmann  818,039,387  24,125,388  97.1% 
JoAnn Heffernan Heisen  815,771,400  26,393,375  96.9% 
F. William McNabb III  817,559,701  24,605,074  97.1% 
André F. Perold  814,833,250  27,331,525  96.8% 
Alfred M. Rankin, Jr.  815,942,907  26,221,868  96.9% 
Peter F. Volanakis  817,780,699  24,384,076  97.1% 
* Results are for all funds within the same trust.       

Proposal 2—Update and standardize the funds’ fundamental policies regarding:
(a) Purchasing and selling real estate.
(b) Issuing senior securities.
(c) Borrowing money.
(d) Making loans.
(e) Purchasing and selling commodities.
(f) Concentrating investments in a particular industry or group of industries.
(g) Eliminating outdated fundamental investment policies not required by law.

The revised fundamental policies are clearly stated and simple, yet comprehensive, making oversight and compliance more efficient than under the former policies. The revised fundamental policies will allow the funds to respond more quickly to regulatory and market changes, while avoiding the costs and delays associated with successive shareholder meetings.

        Broker  Percentage 
  For  Abstain  Against  Non-Votes  For 
FTSE Social Index Fund           
2a  40,646,105  991,797  889,152  5,551,084  84.5% 
2b  40,466,332  1,165,376  895,345  5,551,085  84.2% 
2c  40,130,972  1,048,084  1,347,995  5,551,087  83.5% 
2d  40,107,519  1,074,962  1,344,572  5,551,086  83.4% 
2e  40,224,995  1,120,682  1,181,376  5,551,086  83.7% 
2f  40,403,409  1,253,173  870,474  5,551,083  84.0% 
2g  40,360,433  1,130,780  1,035,840  5,551,086  83.9% 

8




FTSE Social Index Fund

Fund Profile
As of August 31, 2009

Portfolio Characteristics     
    Target  Broad 
  Fund  Index1  Index2 
Number of Stocks  299  298  4,345 
Median Market Cap  $22.1B  $22.1B  $27.3B 
Price/Earnings Ratio  40.9x  40.8x  26.0x 
Price/Book Ratio  1.9x  1.9x  2.1x 
Yield3    1.2%  2.0% 
   Investor Shares  1.0%     
   Institutional Shares  1.1%     
Return on Equity  17.9%  17.9%  19.2% 
Earnings Growth Rate  9.1%  9.1%  9.7% 
Foreign Holdings  0.0%  0.0%  0.0% 
Turnover Rate  30%     
Expense Ratio4       
   Investor Shares  0.31%     
   Institutional Shares  0.18%     
Short-Term Reserves  0.0%     

Sector Diversification (% of equity exposure)

    Target  Broad 
  Fund  Index1  Index2 
Consumer Discretionary 11.5%  11.5%  10.0% 
Consumer Staples  6.3  6.3  10.0 
Energy  3.4  3.4  11.2 
Financials  30.6  30.5  16.5 
Health Care  15.5  15.5  13.2 
Industrials  3.6  3.6  10.3 
Information Technology  26.3  26.3  18.2 
Materials  0.8  0.8  3.8 
Telecommunication       
Services  1.3  1.3  2.9 
Utilities  0.7  0.8  3.9 

Volatility Measures5   
  Fund Versus  Fund Versus 
  Target Index1  Broad Index2 
R-Squared  1.00  0.97 
Beta  1.00  1.15 

Ten Largest Holdings6 (% of total net assets)

JPMorgan Chase & Co.  diversified financial services   5.3% 
Bank of America Corp.  diversified financial services   4.7 
Apple Inc.  computer hardware   4.7 
Intel Corp.  semiconductors   3.5 
Google Inc.  Internet and software services    3.4 
QUALCOMM Inc.  communications equipment   2.4 
McDonald’s Corp.  restaurants   1.9 
Amgen Inc.  biotechnology   1.9 
CVS Caremark Corp.  drug retail   1.7 
Medtronic, Inc.  health care equipment   1.3 
Top Ten    30.8% 

Investment Focus


1 FTSE4Good US Select Index.
2 Dow Jones U.S. Total Stock Market Index.
3 30-day SEC yield for the fund; annualized dividend yield for the indexes. See the Glossary.
4 The fund expense ratios shown are from the prospectuses dated December 29, 2008, and represent estimated costs for the current fiscal
year based on the fund’s net assets as of the prospectus date. For the fiscal year ended August 31, 2009, the expense ratios were 0.29%
for Investor Shares and 0.16% for Institutional Shares.
5 For an explanation of R-squared, beta, and other terms used here, see the Glossary.
6 The holdings listed exclude any temporary cash investments and equity index products.

9



FTSE Social Index 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 www.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 May 31, 2000–August 31, 2009

Initial Investment of $10,000


    Average Annual Total Returns   
    Periods Ended August 31, 2009  Final Value of 
      Since  a $10,000 
  One Year  Five Years  Inception1  Investment 
FTSE Social Index Fund Investor Shares2  –18.11%  –1.92%  –3.93%  $6,903 
Dow Jones U.S. Total Stock Market Index  –18.10  1.45  –0.69  9,379 
Spliced Social Index3  –18.11  –1.76  –3.80  6,991 
Large-Cap Growth Funds Average4  –17.84  0.74  –5.45  5,952 

        Final Value of 
             Since  a $5,000,000 
  One Year  Five Years  Inception1  Investment 
FTSE Social Index Fund Institutional Shares  –18.03%  –1.81%       1.43%  $5,493,135 
Dow Jones U.S. Total Stock Market Index  –18.10  1.45       4.58  6,729,032 
Spliced Social Index3  –18.11  –1.76       1.48  5,510,796 

1 Performance for the fund and its comparative standards is calculated since the fund’s inception: May 31, 2000, for Investor Shares and
January 14, 2003, for Institutional Shares.
2 Total returns do not include the account service fee that may be applicable to certain accounts with balances below $10,000.
3 Calvert Social Index through December 16, 2005; FTSE4Good US Select Index thereafter.
4 Derived from data provided by Lipper Inc.

10



FTSE Social Index Fund

Fiscal-Year Total Returns (%) May 31, 2000–August 31, 2009


Average Annual Total Returns: Periods Ended June 30, 2009

This table presents average annual total returns through the latest calendar quarter—rather than through the end of the fiscal period. Securities and Exchange Commission rules require that we provide this information.

        Since 
  Inception Date  One Year  Five Years  Inception 
Investor Shares2  5/31/2000  –26.87%     –5.52%  –5.49% 
Institutional Shares  1/14/2003  –26.80     –5.39   –0.74 

1 Calvert Social Index through December 16, 2005; FTSE4Good US Select Index thereafter.
2 Total returns do not include the account service fee that may be applicable to certain accounts with balances below $10,000.
Note: See Financial Highlights tables for dividend and capital gains information.

11



FTSE Social Index Fund

Financial Statements

Statement of Net Assets

As of August 31, 2009

The fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth fiscal quarters, the lists appear in the fund’s semiannual and annual reports to shareholders. For the first and third fiscal quarters, the fund files the lists with the Securities and Exchange Commission on Form N-Q. Shareholders can look up the fund’s Forms N-Q on the SEC’s website at www.sec.gov. Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room (see the back cover of this report for further information).

      Market 
      Value 
    Shares  ($000) 
Common Stocks (100.0%)     
Consumer Discretionary (11.5%)   
  McDonald’s Corp.  140,104  7,879 
  Target Corp.  95,929  4,509 
  Lowe’s Cos., Inc.  186,033  4,000 
*  Amazon.com, Inc.  40,557  3,293 
*  Kohl’s Corp.  38,647  1,994 
  Staples, Inc.  91,077  1,968 
  Best Buy Co., Inc.  52,776  1,915 
  TJX Cos., Inc.  52,341  1,882 
  Carnival Corp.  59,140  1,730 
*  Apollo Group, Inc. Class A  20,432  1,324 
  The Gap, Inc.  66,489  1,306 
*  Bed Bath & Beyond, Inc.  33,003  1,204 
  Coach, Inc.  40,412  1,143 
  Macy’s Inc.  53,472  830 
*  AutoZone Inc.  5,258  774 
  Nordstrom, Inc.  27,599  774 
  Genuine Parts Co.  20,331  753 
  H & R Block, Inc.  43,107  745 
  Ross Stores, Inc.  15,961  744 
  Harley-Davidson, Inc.  29,575  709 
  Pulte Homes, Inc.  48,498  620 
  Limited Brands, Inc.  40,880  610 
*  Dollar Tree, Inc.  11,274  563 
*  GameStop Corp. Class A  20,735  493 
*  Mohawk Industries, Inc.  8,740  438 
  Scripps Networks Interactive  12,280  399 
  Royal Caribbean Cruises, Ltd.  20,191  385 
  Wyndham Worldwide Corp.  22,452  340 
  PetSmart, Inc.  16,223  339 
*  Chico’s FAS, Inc.  22,479  286 
  Lennar Corp. Class A  18,340  278 
  American Eagle Outfitters, Inc.  19,894  269 
*  Career Education Corp.  11,117  264 
  Gannett Co., Inc.  29,622  256 
  RadioShack Corp.  15,926  241 
*  Lamar Advertising Co.     
  Class A  9,791  224 
*  Liberty Media Corp.–     
  Capital Series A  11,593  221 

      Market 
      Value 
    Shares  ($000) 
  Foot Locker, Inc.  19,977  213 
  KB Home  11,438  208 
*  Office Depot, Inc.  35,457  185 
  WABCO Holdings Inc.  8,313  159 
  Hillenbrand Inc.  7,884  158 
  New York Times Co. Class A  18,113  138 
  Weight Watchers     
   International, Inc.  4,838  133 
*  Ticketmaster     
   Entertainment Inc.  7,680  75 
*  HSN, Inc.  6,980  73 
*  Interval Leisure Group, Inc.  6,880  72 
*  Ascent Media Corp.  1,751  45 
      47,161 
Consumer Staples (6.3%)     
  CVS Caremark Corp.  185,102  6,945 
  Walgreen Co.  125,455  4,250 
  Costco Wholesale Corp.  54,800  2,794 
  General Mills, Inc.  41,679  2,490 
  Sysco Corp.  75,053  1,913 
  Kellogg Co.  36,216  1,705 
  Safeway, Inc.  54,598  1,040 
*  Dr. Pepper     
   Snapple Group, Inc.  32,090  849 
  The Hershey Co.  21,453  842 
  The Estee Lauder Cos. Inc.     
   Class A  15,014  538 
*  Whole Foods Market, Inc.  17,712  515 
  McCormick & Co., Inc.  14,714  479 
  Hormel Foods Corp.  12,704  469 
*  Dean Foods Co.  23,204  421 
  PepsiAmericas, Inc.  11,959  335 
  Alberto-Culver Co.  12,237  323 
      25,908 
Energy (3.4%)     
  Apache Corp.  42,387  3,601 
  Devon Energy Corp.  56,495  3,468 
  Spectra Energy Corp.  81,953  1,542 
  Williams Cos., Inc.  73,420  1,207 
  Peabody Energy Corp.  33,926  1,109 
*  Ultra Petroleum Corp.  19,306  896 

12



FTSE Social Index Fund       
 
 
 
        Market 
        Value 
      Shares  ($000) 
  CONSOL Energy, Inc.    22,966  859 
*  Newfield Exploration Co.  16,651  644 
  Pioneer Natural       
   Resources Co.    14,634  424 
  Teekay Shipping Corp.    6,789  122 
        13,872 
Financials (30.5%)       
  JPMorgan Chase & Co.  495,987  21,556 
  Bank of America Corp.  1,099,922  19,348 
  U.S. Bancorp    241,325  5,459 
  American Express Co.    151,044  5,108 
  MetLife, Inc.    104,115  3,931 
  The Travelers Cos., Inc.  74,297  3,746 
  State Street Corp.    62,794  3,295 
  Prudential Financial, Inc.  58,438  2,956 
  Charles Schwab Corp.    146,354  2,643 
  PNC Financial       
   Services Group    58,378  2,486 
  CME Group, Inc.    8,489  2,471 
  AFLAC Inc.    59,127  2,402 
  BB&T Corp.    82,056  2,293 
  Simon Property       
   Group, Inc. REIT    35,826  2,279 
  Ace Ltd.    42,600  2,223 
  The Chubb Corp.    44,617  2,204 
  Franklin Resources, Inc.  22,184  2,070 
  Northern Trust Corp.    30,534  1,785 
  T. Rowe Price Group Inc.  32,637  1,479 
  SunTrust Banks, Inc.    61,267  1,432 
*  Progressive Corp. of Ohio  85,955  1,420 
  The Principal Financial       
   Group, Inc.    39,549  1,123 
  HCP, Inc. REIT    34,702  988 
  The Hartford Financial       
   Services Group Inc.    41,404  982 
  Ameriprise Financial, Inc.  32,519  977 
  Lincoln National Corp.    38,515  972 
  Unum Group    42,189  951 
  Discover Financial Services  68,409  941 
  NYSE Euronext    33,083  938 
  M & T Bank Corp.    14,757  911 
  Hudson City Bancorp, Inc.  66,292  870 
  Regions Financial Corp.  146,952  861 
  Moody’s Corp.    29,790  811 
  Host Hotels &       
   Resorts Inc. REIT    76,611  764 
  XL Capital Ltd. Class A    43,251  750 
  KeyCorp    112,092  747 
  People’s United Financial Inc.  43,923  705 
*  Intercontinental Exchange Inc.  6,889  646 
  Plum Creek       
   Timber Co. Inc. REIT    20,642  625 
  ProLogis REIT    55,797  620 
  Kimco Realty Corp. REIT  47,785  600 
  Legg Mason Inc.    20,617  593 
  Genworth Financial Inc.  54,591  577 

      Market 
      Value 
    Shares  ($000) 
*  Leucadia National Corp.  22,502  560 
  Willis Group Holdings Ltd.  21,395  552 
  Cincinnati Financial Corp.  20,665  532 
  PartnerRe Ltd.  7,158  529 
*  SLM Corp.  58,876  524 
  W.R. Berkley Corp.  20,164  515 
  New York Community     
   Bancorp, Inc.  43,380  462 
  Assurant, Inc.  15,046  451 
  Liberty Property Trust REIT  13,180  432 
  RenaissanceRe Holdings Ltd.  7,838  427 
  AMB Property Corp. REIT  18,404  420 
*  Markel Corp.  1,237  407 
*  The St. Joe Co.  11,701  384 
  First American Corp.  11,817  372 
*  First Horizon National Corp.  26,985  361 
  Old Republic     
   International Corp.  30,262  360 
  Brown & Brown, Inc.  17,976  357 
  Commerce Bancshares, Inc.  9,644  354 
  White Mountains     
   Insurance Group Inc.  1,125  351 
  Regency Centers Corp. REIT  10,307  346 
  SEI Investments Co.  17,920  330 
  Marshall & Ilsley Corp.  45,907  327 
  Duke Realty Corp. REIT  28,086  324 
  Huntington Bancshares Inc.  70,136  320 
  Janus Capital Group Inc.  23,243  296 
  The Macerich Co. REIT  10,122  290 
  Zions Bancorp  14,676  259 
  Federated Investors, Inc.  9,806  257 
  City National Corp.  6,338  250 
*  E*TRADE Financial Corp.  135,947  239 
  Protective Life Corp.  10,814  233 
  TCF Financial Corp.  16,199  223 
  Valley National Bancorp  18,377  214 
*  MBIA, Inc.  26,727  180 
  Popular, Inc.  81,415  175 
  Associated Banc-Corp.  16,558  172 
  Fulton Financial Corp.  22,076  162 
  Synovus Financial Corp.  42,411  157 
  Forest City Enterprise     
   Class A  16,437  152 
  Unitrin, Inc.  5,672  107 
  Erie Indemnity Co. Class A  2,676  104 
  CIT Group Inc.  51,185  89 
*  Forestar Real Estate     
   Group, Inc.  4,848  70 
  Allied Capital Corp.  21,767  65 
  Ambac Financial Group, Inc.  34,269  60 
  Wesco Financial Corp.  181  55 
  The PMI Group Inc.  9,714  32 
*  iStar Financial Inc. REIT  13,964  29 
  Student Loan Corp.  494  24 
      124,429 

13



FTSE Social Index Fund     
 
 
 
      Market 
      Value 
    Shares  ($000) 
Health Care (15.5%)     
*  Amgen Inc.  129,829  7,756 
  Medtronic, Inc.  142,800  5,469 
*  Gilead Sciences, Inc.  115,865  5,221 
  UnitedHealth Group Inc.  151,309  4,237 
*  Medco Health Solutions, Inc.  61,305  3,385 
*  WellPoint Inc.  61,617  3,257 
*  Celgene Corp.  58,372  3,045 
  Covidien PLC  63,674  2,520 
*  Express Scripts Inc.  34,358  2,481 
*  Boston Scientific Corp.  191,063  2,245 
  Allergan, Inc.  39,105  2,187 
*  Genzyme Corp.  34,390  1,916 
*  Biogen Idec Inc.  36,809  1,848 
*  St. Jude Medical, Inc.  43,847  1,690 
  Cardinal Health, Inc.  45,897  1,587 
  Stryker Corp.  37,890  1,571 
  Alcon, Inc.  11,358  1,471 
  CIGNA Corp.  34,560  1,017 
  Quest Diagnostics, Inc.  17,695  955 
  AmerisourceBergen Corp.  38,756  826 
*  Hospira, Inc.  20,212  790 
*  Humana Inc.  21,455  766 
*  DaVita, Inc.  13,275  686 
*  Waters Corp.  12,271  617 
*  Henry Schein, Inc.  11,381  603 
  Beckman Coulter, Inc.  8,614  583 
*  Mylan Inc.  38,399  563 
*  Cephalon, Inc.  9,367  533 
*  Millipore Corp.  7,078  469 
*  Watson Pharmaceuticals, Inc.  13,222  467 
*  Patterson Companies, Inc.  15,282  416 
*  Coventry Health Care Inc.  18,737  409 
  Omnicare, Inc.  15,200  348 
  Universal Health     
  Services Class B  5,842  343 
*  King Pharmaceuticals, Inc.  30,969  321 
*  Sepracor Inc.  13,568  246 
*  Kinetic Concepts, Inc.  6,745  216 
*  Health Net Inc.  12,972  199 
      63,259 
Industrials (3.6%)     
  Deere & Co.  53,620  2,338 
  Norfolk Southern Corp.  46,707  2,142 
  PACCAR, Inc.  46,528  1,683 
  Republic Services, Inc.     
  Class A  48,202  1,234 
  C.H. Robinson Worldwide Inc.  21,470  1,208 
  W.W. Grainger, Inc.  9,381  821 
  Southwest Airlines Co.  93,510  765 
*  Iron Mountain, Inc.  25,590  750 
  Fastenal Co.  19,166  694 
*  Jacobs Engineering Group Inc.  15,555  684 
  Pitney Bowes, Inc.  26,339  589 
  Manpower Inc.  10,010  517 
  Equifax, Inc.  16,018  443 

      Market 
      Value 
    Shares  ($000) 
  Cintas Corp.  14,740  404 
  J.B. Hunt Transport     
   Services, Inc.  11,941  335 
*  Terex Corp.  13,659  225 
      14,832 
Information Technology (26.3%)   
*  Apple Inc.  113,265  19,052 
  Intel Corp.  707,119  14,369 
*  Google Inc.  29,990  13,845 
  QUALCOMM Inc.  208,730  9,689 
*  Dell Inc.  249,071  3,943 
  MasterCard, Inc. Class A  13,946  2,826 
*  eBay Inc.  121,630  2,693 
  Automatic Data     
   Processing, Inc.  63,651  2,441 
  Applied Materials, Inc.  168,634  2,223 
*  Adobe Systems, Inc.  66,441  2,087 
  Western Union Co.  89,392  1,613 
*  Symantec Corp.  104,631  1,582 
*  Juniper Networks, Inc.  67,308  1,553 
*  Broadcom Corp.  54,269  1,544 
*  Tyco Electronics Ltd.  58,334  1,331 
  Paychex, Inc.  46,340  1,311 
*  Cognizant Technology     
   Solutions Corp.  36,820  1,284 
*  Intuit, Inc.  40,922  1,136 
  CA, Inc.  49,229  1,097 
*  NVIDIA Corp.  69,406  1,008 
*  NetApp, Inc.  42,018  956 
*  Fiserv, Inc.  19,622  947 
*  Marvell Technology     
   Group Ltd.  58,940  899 
  Seagate Technology  62,577  867 
*  BMC Software, Inc.  23,520  838 
*  Citrix Systems, Inc.  23,132  825 
*  Micron Technology, Inc.  107,900  795 
*  McAfee Inc.  19,762  786 
  Xilinx, Inc.  35,162  782 
*  Check Point Software     
   Technologies Ltd.  26,963  751 
  Linear Technology Corp.  27,964  743 
  Altera Corp.  37,046  712 
*  Autodesk, Inc.  28,795  675 
  KLA-Tencor Corp.  21,612  674 
  Microchip Technology, Inc.  23,249  617 
*  Teradata Corp.  22,847  615 
*  Flextronics International Ltd.  102,335  607 
*  VeriSign, Inc.  24,425  517 
*  SanDisk Corp.  28,867  511 
*  LAM Research Corp.  16,112  495 
  National Semiconductor Corp.  29,402  446 
*  LSI Corp.  82,545  430 
*  Arrow Electronics, Inc.  15,263  422 
  Lender Processing     
   Services, Inc.  11,983  411 
*  Synopsys, Inc.  18,163  386 

14



FTSE Social Index Fund     
 
 
 
      Market 
      Value 
    Shares  ($000) 
  Total System Services, Inc.  25,175  384 
*  Akamai Technologies, Inc.  21,704  383 
  Broadridge Financial     
   Solutions LLC  18,150  378 
*  Advanced Micro Devices, Inc.  85,766  374 
*  Metavante Technologies  11,268  355 
*  IAC/InterActiveCorp  16,071  298 
  Jabil Circuit, Inc.  27,096  297 
*  DST Systems, Inc.  6,305  289 
  Diebold, Inc.  8,419  254 
*  Novellus Systems, Inc.  12,358  237 
*  Compuware Corp.  32,055  231 
*  Cadence Design Systems, Inc. 33,055  207 
*  JDS Uniphase Corp.  26,787  184 
*  Teradyne, Inc.  21,727  179 
*  Convergys Corp.  15,385  167 
*  EchoStar Corp.  4,940  92 
      107,643 
Materials (0.8%)     
  Southern Copper Corp.     
   (U.S. Shares)  32,473  918 
  Vulcan Materials Co.  15,727  787 
  Sigma-Aldrich Corp.  15,458  785 
*  Pactiv Corp.  16,680  415 
  Sealed Air Corp.  19,800  374 
      3,279 
Telecommunication Services (1.3%)   
*  Sprint Nextel Corp.  353,194  1,293 
  CenturyTel, Inc.  37,619  1,213 
*  Millicom International     
   Cellular SA  13,777  972 
*  Crown Castle     
   International Corp.  27,585  741 
*  NII Holdings Inc.  20,804  493 
  Frontier Communications     
   Corp.  39,583  281 
  Telephone & Data     
   Systems, Inc.  6,573  173 
      5,166 
Utilities (0.8%)     
*  NRG Energy, Inc.  33,779  907 
  Questar Corp.  22,018  743 
  EQT Corp.  16,330  648 
  Pepco Holdings, Inc.  27,780  398 
  TECO Energy, Inc.  27,204  362 
      3,058 
Total Common Stocks     
(Cost $453,110)    408,607 

    Market 
    Value 
  Shares  ($000) 
Temporary Cash Investment (0.0%)   
Money Market Fund (0.0%)     
1 Vanguard Market Liquidity     
       Fund, 0.277%     
       (Cost $91)  90,895  91 
Total Investments (100.0%)     
(Cost $453,201)    408,698 
Other Assets and Liabilities (0.0%)   
Other Assets    1,668 
Liabilities    (1,597) 
    71 
Net Assets (100%)    408,769 

At August 31, 2009, net assets consisted of:

Amount
  ($000) 
Paid-in Capital  544,236 
Undistributed Net Investment Income  1,708 
Accumulated Net Realized Losses  (92,672) 
Unrealized Appreciation (Depreciation)  (44,503) 
Net Assets  408,769 
 
Investor Shares—Net Assets   
Applicable to 49,135,703 outstanding   
$.001 par value shares of beneficial   
interest (unlimited authorization)  304,498 
Net Asset Value Per Share—   
Investor Shares  $6.20 
 
Institutional Shares—Net Assets   
Applicable to 16,811,932 outstanding   
$.001 par value shares of beneficial   
interest (unlimited authorization)  104,271 
Net Asset Value Per Share—   
Institutional Shares  $6.20 

See Note A in Notes to Financial Statements.
* Non-income-producing security.
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.
REIT—Real Estate Investment Trust.
See accompanying Notes, which are an integral part of the Financial Statements.

15



FTSE Social Index Fund

Statement of Operations

  Year Ended 
  August 31, 2009 
  ($000) 
Investment Income   
Income   
Dividends  6,293 
Interest1  5 
Security Lending  79 
Total Income  6,377 
Expenses   
The Vanguard Group—Note B   
     Investment Advisory Services  53 
     Management and Administrative—Investor Shares  554 
     Management and Administrative—Institutional Shares  84 
     Marketing and Distribution—Investor Shares  87 
     Marketing and Distribution—Institutional Shares  33 
Custodian Fees  36 
Auditing Fees  23 
Shareholders’ Reports and Proxies—Investor Shares  25 
Shareholders’ Reports and Proxies—Institutional Shares  2 
Trustees’ Fees and Expenses  1 
Total Expenses  898 
Net Investment Income  5,479 
Realized Net Gain (Loss) on Investment Securities Sold  (84,100) 
Change in Unrealized Appreciation (Depreciation) of Investment Securities  (23,637) 
Net Increase (Decrease) in Net Assets Resulting from Operations  (102,258) 

1 Interest income from an affiliated company of the fund was $5,000.
See accompanying Notes, which are an integral part of the Financial Statements.

16


 

FTSE Social Index Fund

Statement of Changes in Net Assets

  Year Ended August 31, 
  2009  2008 
  ($000)  ($000) 
Increase (Decrease) in Net Assets     
Operations     
Net Investment Income  5,479  8,845 
Realized Net Gain (Loss)  (84,100)  (6,921) 
Change in Unrealized Appreciation (Depreciation)  (23,637)  (99,890) 
Net Increase (Decrease) in Net Assets Resulting from Operations  (102,258)  (97,966) 
Distributions     
Net Investment Income     
     Investor Shares  (5,643)  (7,812) 
     Institutional Shares  (2,622)  (2,061) 
Realized Capital Gain     
     Investor Shares     
     Institutional Shares     
Total Distributions  (8,265)  (9,873) 
Capital Share Transactions     
     Investor Shares  (12,691)  (60,224) 
     Institutional Shares  (2,005)  51,023 
Net Increase (Decrease) from Capital Share Transactions  (14,696)  (9,201) 
Total Increase (Decrease)  (125,219)  (117,040) 
Net Assets     
Beginning of Period  533,988  651,028 
End of Period1  408,769  533,988 

1 Net Assets—End of Period includes undistributed net investment income of $1,708,000 and $4,494,000.
See accompanying Notes, which are an integral part of the Financial Statements.

17



FTSE Social Index Fund           
 
 
Financial Highlights           
 
 
Investor Shares           
 
For a Share Outstanding  Year Ended August 31, 
Throughout Each Period  2009  2008  2007  2006  2005 
Net Asset Value, Beginning of Period  $7.76  $9.30  $8.51  $8.03  $7.40 
Investment Operations           
Net Investment Income  .080  .125  .130  .110  .130 
Net Realized and Unrealized Gain (Loss)           
on Investments  (1.522)  (1.525)  .780  .470  .620 
Total from Investment Operations  (1.442)  (1.400)  .910  .580  .750 
Distributions           
Dividends from Net Investment Income  (.118)  (.140)  (.120)  (.100)  (.120) 
Distributions from Realized Capital Gains           
Total Distributions  (.118)  (.140)  (.120)  (.100)  (.120) 
Net Asset Value, End of Period  $6.20  $7.76  $9.30  $8.51  $8.03 
 
Total Return1  –18.11%  –15.26%  10.70%  7.25%  10.16% 
 
Ratios/Supplemental Data           
Net Assets, End of Period (Millions)  $304  $395  $540  $405  $361 
Ratio of Total Expenses to           
Average Net Assets  0.29%  0.24%  0.24%  0.25%  0.25% 
Ratio of Net Investment Income to           
Average Net Assets  1.50%  1.48%  1.48%  1.41%  1.74% 
Portfolio Turnover Rate  30%  41%  20%  51%2  12% 

1 Total returns do not include the account service fee that may be applicable to certain accounts with balances below $10,000.
2 Includes activity related to a change in the fund’s target index.
See accompanying Notes, which are an integral part of the Financial Statements.

18



FTSE Social Index Fund           
 
 
Financial Highlights           
 
 
Institutional Shares           
 
For a Share Outstanding  Year Ended August 31, 
Throughout Each Period  2009  2008  2007  2006  2005 
Net Asset Value, Beginning of Period  $7.77  $9.32  $8.52  $8.04  $7.41 
Investment Operations           
Net Investment Income  .087  .137  .152  .120  .138 
Net Realized and Unrealized Gain (Loss)           
on Investments  (1.528)  (1.535)  .780  .470  .620 
Total from Investment Operations  (1.441)  (1.398)  .932  .590  .758 
Distributions           
Dividends from Net Investment Income  (.129)  (.152)  (.132)  (.110)  (.128) 
Distributions from Realized Capital Gains           
Total Distributions  (.129)  (.152)  (.132)  (.110)  (.128) 
Net Asset Value, End of Period  $6.20  $7.77  $9.32  $8.52  $8.04 
 
Total Return  –18.03%  –15.22%  10.95%  7.37%  10.26% 
 
Ratios/Supplemental Data           
Net Assets, End of Period (Millions)  $104  $139  $111  $87  $27 
Ratio of Total Expenses to           
Average Net Assets  0.16%  0.11%  0.11%  0.12%  0.12% 
Ratio of Net Investment Income to           
Average Net Assets  1.63%  1.61%  1.61%  1.54%  1.83% 
Portfolio Turnover Rate  30%  41%  20%  51%1  12% 

1 Includes activity related to a change in the fund’s target index.
See accompanying Notes, which are an integral part of the Financial Statements.

19



FTSE Social Index Fund

Notes to Financial Statements

Vanguard FTSE Social Index Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund offers two classes of shares: Investor Shares and Institutional Shares. Investor Shares are available to any investor who meets the fund’s minimum purchase requirements. Institutional Shares are designed for investors who meet certain administrative and service criteria and invest a minimum of $5 million.

A. The following significant accounting policies conform to generally accepted accounting principles for U.S. mutual funds. The fund consistently follows such policies in preparing its financial statements.

1. Security Valuation: Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which market quotations are not readily available, or whose values have been materially affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued by methods deemed by the board of trustees to represent fair value. Investments in Vanguard Market Liquidity Fund are valued at that fund’s net asset value.

2. Federal Income Taxes: The fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income. Management has analyzed the fund’s tax positions taken for all open federal income tax years (August 31, 2006–2009), and has concluded that no provision for federal income tax is required in the fund’s financial statements.

3. Distributions: Distributions to shareholders are recorded on the ex-dividend date.

4. Security Lending: The fund may lend its securities to qualified institutional borrowers to earn additional income. Security loans are required to be secured at all times by collateral at least equal to the market value of securities loaned. The fund invests cash collateral received in Vanguard Market Liquidity Fund, and records a liability for the return of the collateral, during the period the securities are on loan. Security lending income represents the income earned on investing cash collateral, less expenses associated with the loan.

5. Other: Dividend income is recorded on the ex-dividend date. Interest income includes income distributions received from Vanguard Market Liquidity Fund and is accrued daily. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment securities are those of the specific securities sold.

Each class of shares has equal rights as to assets and earnings, except that each class separately bears certain class-specific expenses related to maintenance of shareholder accounts (included in Management and Administrative expenses), shareholder reporting, and proxies. Marketing and distribution expenses are allocated to each class of shares based on a method approved by the board of trustees. Income, other non-class-specific expenses, and gains and losses on investments are allocated to each class of shares based on its relative net assets.

20



FTSE Social Index Fund

B. The Vanguard Group furnishes at cost investment advisory, corporate management, administrative, marketing, and distribution services. The costs of such services are allocated to the fund under methods approved by the board of trustees. The fund has committed to provide up to 0.40% of its net assets in capital contributions to Vanguard. At August 31, 2009, the fund had contributed capital of $86,000 to Vanguard (included in Other Assets), representing 0.02% of the fund’s net assets and 0.03% of Vanguard’s capitalization. The fund’s trustees and officers are also directors and officers of Vanguard.

C. Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Level 1Quoted prices in active markets for identical securities.
Level 2Other significant observable inputs (including quoted prices for similar securities, interest
rates, prepayment speeds, credit risk, etc.).
Level 3Significant unobservable inputs (including the fund’s own assumptions used to determine
the fair value of investments).

At August 31, 2009, 100% of the fund’s investments were valued based on Level 1 inputs.

D. Distributions are determined on a tax basis and may differ from net investment income and realized capital gains for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the financial statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain, or loss are recognized in different periods for financial statement and tax purposes; these differences will reverse at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.

For tax purposes, at August 31, 2009, the fund had $2,587,000 of ordinary income available for distribution. The fund had available capital loss carryforwards totaling $25,902,000 to offset future net capital gains of $79,000 through August 31, 2012, $985,000 through August 31, 2013, $367,000 through August 31, 2014, $2,136,000 through August 31, 2016, and $22,335,000 through August 31, 2017.

In addition, the fund realized losses of $66,197,000 during the period from November 1, 2008, through August 31, 2009, which are deferred and will be treated as realized for tax purposes in fiscal 2010.

At August 31, 2009, the cost of investment securities for tax purposes was $453,753,000. Net unrealized depreciation of investment securities for tax purposes was $45,055,000, consisting of unrealized gains of $45,564,000 on securities that had risen in value since their purchase and $90,619,000 in unrealized losses on securities that had fallen in value since their purchase.

21



FTSE Social Index Fund

E. During the year ended August 31, 2009, the fund purchased $109,377,000 of investment securities and sold $125,659,000 of investment securities, other than temporary cash investments.

F. Capital share transactions for each class of shares were:       
  Year Ended August 31, 
  2009  2008 
  Amount  Shares  Amount  Shares 
  ($000)  (000)  ($000)  (000) 
Investor Shares         
Issued  69,845  13,553  89,674  10,639 
Issued in Lieu of Cash Distributions  5,331  1,125  7,393  821 
Redeemed  (87,867)  (16,390)  (157,291)  (18,620) 
Net Increase (Decrease)—Investor Shares  (12,691)  (1,712)  (60,224)  (7,160) 
Institutional Shares         
Issued  34,054  6,299  75,608  8,817 
Issued in Lieu of Cash Distributions  2,022  427  1,715  190 
Redeemed  (38,081)  (7,838)  (26,300)  (3,027) 
Net Increase (Decrease)—Institutional Shares  (2,005)  (1,112)  51,023  5,980 

G. In preparing the financial statements as of August 31, 2009, management considered the impact of subsequent events occurring through October 15, 2009, for potential recognition or disclosure in these financial statements.

22



Report of Independent Registered
Public Accounting Firm

To the Trustees of Vanguard World Fund and the Shareholders of Vanguard FTSE Social Index 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 FTSE Social Index Fund (the “Fund”) at August 31, 2009, 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 August 31, 2009 by correspondence with the custodian and by agreement to the underlying ownership records for Vanguard Market Liquidity Fund, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania

October 15, 2009

 

 


Special 2009 tax information (unaudited) for Vanguard FTSE Social Index Fund

This information for the fiscal year ended August 31, 2009, is included pursuant to provisions of the
Internal Revenue Code.

The fund distributed $8,265,000 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.

23



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 2009. (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.)

The table shows returns for Investor Shares only; returns for other share classes will differ. 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: FTSE Social Index Fund Investor Shares1     
Periods Ended August 31, 2009       
       One     Five         Since 
       Year   Years  Inception2 
Returns Before Taxes  –18.11%  –1.92%     –3.93% 
Returns After Taxes on Distributions  –18.41  –2.15     –4.15 
Returns After Taxes on Distributions and Sale of Fund Shares  –11.52  –1.59     –3.28 

1 Total returns do not include the account service fee that may be applicable to certain accounts with balances below $10,000.
2 Inception date for Investor Shares is May 31, 2000.

24



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.

Six Months Ended August 31, 2009       
  Beginning  Ending  Expenses 
  Account Value  Account Value  Paid During 
FTSE Social Index Fund  2/28/2009       8/31/2009  Period1 
Based on Actual Fund Return       
     Investor Shares  $1,000.00  $1,534.65  $1.85 
     Institutional Shares  1,000.00  1,534.65  1.02 
Based on Hypothetical 5% Yearly Return       
     Investor Shares  $1,000.00  $1,023.74  $1.48 
     Institutional Shares  1,000.00  1,024.40  0.82 

1 The calculations are based on expenses incurred in the most recent six-month period. The fund’s annualized six-month expense ratios for
that period are 0.29% for Investor Shares and 0.16% for Institutional Shares. 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.

25



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 the account service fee described in the prospectus. If such a fee were applied to your account, your costs would be higher. Your fund does not charge transaction fees, such as purchase or redemption fees, nor does it 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



Trustees Approve Advisory Arrangement

The board of trustees of Vanguard FTSE Social Index Fund has renewed the fund’s investment advisory
arrangement with The Vanguard Group, Inc. Vanguard—through its Quantitative Equity Group—serves
as the investment advisor to the fund. The board determined that continuing the fund’s internalized
management structure was in the best interests of the fund and its shareholders.

The board based its decision upon an evaluation of the advisor’s investment staff, portfolio manage-
ment process, and performance. The trustees considered the factors discussed below, among others.
However, no single factor determined whether the board approved the arrangement. Rather, it was the
totality of the circumstances that drove the board’s decision.

Nature, extent, and quality of services
The board considered the quality of the fund’s investment management over both the short and long
term, and took into account the organizational depth and stability of the advisor. The board noted that
Vanguard has been managing investments for more than three decades. The Quantitative Equity Group
adheres to a sound, disciplined investment management process; the team has considerable
experience, stability, and depth.

The board concluded that Vanguard’s experience, stability, depth, and performance, among other
factors, warranted continuation of the advisory arrangement.

Investment performance
The board considered the short- and long-term performance of the fund, including any periods of
outperformance or underperformance of its target index and peer group. The board concluded that
the fund has performed in line with expectations, and that the results have been consistent with the
fund’s investment strategies. Information about the fund’s most recent performance can be found
in the Performance Summary section of this report.

Cost
The board concluded that the fund’s expense ratio was well below the average expense ratio charged
by funds in its peer group and that the fund’s advisory expense ratio was also well below its peer-
group average. Information about the fund’s expense ratio appears in the About Your Fund’s Expenses
section of this report.

The board does not conduct a profitability analysis of Vanguard, because of Vanguard’s unique “at-cost”
structure. Unlike most other mutual fund management companies, Vanguard is owned by the funds it
oversees, and produces “profits” only in the form of reduced expenses for fund shareholders.

The benefit of economies of scale
The board concluded that the fund’s low-cost arrangement with Vanguard ensures that the fund will
realize economies of scale as it grows, with the cost to shareholders declining as fund assets increase.

The board will consider whether to renew the advisory arrangement again after a one-year period.

27



Glossary

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.

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. The percentage of a fund’s average net assets used to pay its annual administrative and advisory expenses. These expenses directly reduce returns to investors.

Foreign Holdings. The percentage of a fund represented by stocks 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.

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.

28



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.

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 (in the case of bonds) 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.

29



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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 157 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 www.vanguard.com.

Interested Trustees  Emerson U. Fullwood 
  Born 1948. Trustee Since January 2008. Principal 
John J. Brennan1  Occupation(s) During the Past Five Years: Retired 
Born 1954. Trustee Since May 1987. Chairman of  Executive Chief Staff and Marketing Officer for North 
the Board. Principal Occupation(s) During the Past  America and Corporate Vice President of Xerox 
Five Years: Chairman of the Board and Director/Trustee  Corporation (photocopiers and printers); Director of 
of The Vanguard Group, Inc., and of each of the  SPX Corporation (multi-industry manufacturing), the 
investment companies served by The Vanguard Group;  United Way of Rochester, the Boy Scouts of America, 
Chief Executive Officer and President of The Vanguard  Amerigroup Corporation (direct health and medical 
Group and of each of the investment companies served  insurance carriers), and Monroe Community College 
by The Vanguard Group (1996–2008); Chairman of  Foundation. 
the Financial Accounting Foundation; Governor of   
the Financial Industry Regulatory Authority (FINRA);  Rajiv L. Gupta 
Director of United Way of Southeastern Pennsylvania.  Born 1945. Trustee Since December 2001.2 Principal 
  Occupation(s) During the Past Five Years: Retired 
F. William McNabb III1  Chairman and Chief Executive Officer of Rohm and 
Born 1957. Trustee Since July 2009. Principal  Haas Co. (chemicals); President of Rohm and Haas Co. 
Occupation(s) During the Past Five Years: Director of  (2006–2008); Board Member of American Chemistry 
The Vanguard Group, Inc., since 2008; Chief Executive  Council; Director of Tyco International, Ltd. (diversified 
Officer and President of The Vanguard Group and of  manufacturing and services) and Hewlett-Packard Co. 
each of the investment companies served by The  (electronic computer manufacturing); Trustee of The 
Vanguard Group since 2008; Director of Vanguard  Conference Board. 
Marketing Corporation; Managing Director of The   
Vanguard Group (1995–2008).  Amy Gutmann 
  Born 1949. Trustee Since June 2006. Principal 
  Occupation(s) During the Past Five Years: President of 
Independent Trustees  the University of Pennsylvania; Christopher H. Browne 
  Distinguished Professor of Political Science in the School 
Charles D. Ellis  of Arts and Sciences with Secondary Appointments 
Born 1937. Trustee Since January 2001. Principal  at the Annenberg School for Communication and the 
Occupation(s) During the Past Five Years: Applecore  Graduate School of Education of the University of 
Partners (pro bono ventures in education); Senior  Pennsylvania; Director of Carnegie Corporation of 
Advisor to Greenwich Associates (international business  New York, Schuylkill River Development Corporation, 
strategy consulting); Successor Trustee of Yale University;  and Greater Philadelphia Chamber of Commerce; 
Overseer of the Stern School of Business at New York  Trustee of the National Constitution Center. 
University; Trustee of the Whitehead Institute for   
Biomedical Research.   



JoAnn Heffernan Heisen  Executive Officers   
Born 1950. Trustee Since July 1998. Principal     
Occupation(s) During the Past Five Years: Retired  Thomas J. Higgins1   
Corporate Vice President, Chief Global Diversity Officer,  Born 1957. Chief Financial Officer Since September 
and Member of the Executive Committee of Johnson  2008. Principal Occupation(s) During the Past Five 
& Johnson (pharmaceuticals/consumer products);  Years: Principal of The Vanguard Group, Inc.; Chief 
Vice President and Chief Information Officer of Johnson  Financial Officer of each of the investment companies 
& Johnson (1997–2005); Director of the University  served by The Vanguard Group since 2008; Treasurer 
Medical Center at Princeton and Women’s Research  of each of the investment companies served by The 
and Education Institute.  Vanguard Group (1998–2008). 
 
André F. Perold  Kathryn J. Hyatt1   
Born 1952. Trustee Since December 2004. Principal  Born 1955. Treasurer Since November 2008. Principal 
Occupation(s) During the Past Five Years: George Gund  Occupation(s) During the Past Five Years: Principal of 
Professor of Finance and Banking, Harvard Business  The Vanguard Group, Inc.; Treasurer of each of the 
School; Director and Chairman of UNX, Inc. (equities  investment companies served by The Vanguard 
trading firm); Chair of the Investment Committee of  Group since 2008; Assistant Treasurer of each of the 
HighVista Strategies LLC (private investment firm).  investment companies served by The Vanguard Group 
  (1988–2008).   
Alfred M. Rankin, Jr.     
Born 1941. Trustee Since January 1993. Principal  Heidi Stam1   
Occupation(s) During the Past Five Years: Chairman,  Born 1956. Secretary Since July 2005. Principal 
President, Chief Executive Officer, and Director of  Occupation(s) During the Past Five Years: Managing 
NACCO Industries, Inc. (forklift trucks/housewares/  Director of The Vanguard Group, Inc., since 2006; 
lignite); Director of Goodrich Corporation (industrial  General Counsel of The Vanguard Group since 2005; 
products/aircraft systems and services).  Secretary of The Vanguard Group and of each of the 
  investment companies served by The Vanguard Group 
Peter F. Volanakis  since 2005; Director and Senior Vice President of 
Born 1955. Trustee Since July 2009. Principal  Vanguard Marketing Corporation since 2005; Principal 
Occupation(s) During the Past Five Years: President  of The Vanguard Group (1997–2006). 
since 2007 and Chief Operating Officer since 2005     
of Corning Incorporated (communications equipment);     
President of Corning Technologies (2001–2005); Director  Vanguard Senior Management Team 
of Corning Incorporated and Dow Corning; Trustee of     
the Corning Incorporated Foundation and the Corning  R. Gregory Barton  Michael S. Miller 
Museum of Glass; Overseer of the Amos Tuck School  Mortimer J. Buckley  James M. Norris 
of Business Administration at Dartmouth College.  Kathleen C. Gubanich  Glenn W. Reed 
  Paul A. Heller  George U. Sauter 
 
 
  Founder   
  John C. Bogle   
  Chairman and Chief Executive Officer, 1974–1996 

1 These individuals are “interested persons” as defined in the Investment Company Act of 1940.
2 December 2002 for Vanguard Equity Income Fund, Vanguard Growth Equity Fund, the Vanguard Municipal Bond Funds, and the Vanguard
State Tax-Exempt Funds.



   

 

 

P.O. Box 2600
 Valley Forge, PA 19482-2600

Connect with Vanguard® > www.vanguard.com

Fund Information > 800-662-7447  All comparative mutual fund data are from Lipper Inc. 
  or Morningstar, Inc., unless otherwise noted. 
Direct Investor Account Services > 800-662-2739   
  You can obtain a free copy of Vanguard’s proxy voting 
Institutional Investor Services > 800-523-1036   guidelines by visiting our website, www.vanguard.com, 
  and searching for “proxy voting guidelines,” or by 
Text Telephone for People  calling Vanguard at 800-662-2739. The guidelines are 
With Hearing Impairment > 800-952-3335  also available from the SEC’s website, www.sec.gov. 
  In addition, you may obtain a free report on how your 
This material may be used in conjunction  fund voted the proxies for securities it owned during 
with the offering of shares of any Vanguard  the 12 months ended June 30. To get the report, visit 
fund only if preceded or accompanied by  either www.vanguard.com or www.sec.gov. 
the fund’s current prospectus. 
You can review and copy information about your fund 
  at the SEC’s Public Reference Room in Washington, D.C. 
“FTSE®” and “FTSE4Good” are trademarks jointly owned  To find out more about this public service, call the SEC 
by the London Stock Exchange plc and The Financial Times  at 202-551-8090. Information about your fund is also 
Limited and are used by FTSE International Limited under  available on the SEC’s website, and you can receive 
license. The FTSE4Good US Select Index is calculated by  copies of this information, for a fee, by sending a 
FTSE International Limited. FTSE International Limited does  request in either of two ways: via e-mail addressed to 
not sponsor, endorse, or promote the fund; is not in any  publicinfo@sec.gov or via regular mail addressed to the 
way connected to it; and does not accept any liability in  Public Reference Section, Securities and Exchange 
relation to its issue, operation, and trading.  Commission, Washington, DC 20549-0102. 
 
 
  © 2009 The Vanguard Group, Inc. 
  All rights reserved. 
  Vanguard Marketing Corporation, Distributor. 
  Q2130 102009 



Vanguard U.S. Sector Index Funds 
Annual Report 
August 31, 2009 

Vanguard Consumer Discretionary Index Fund  Vanguard Industrials Index Fund 
Vanguard Consumer Staples Index Fund   Vanguard Information Technology Index Fund 
Vanguard Energy Index Fund  Vanguard Materials Index Fund 
 Vanguard Financials Index Fund  Vanguard Telecommunication Services Index Fund 
Vanguard Health Care Index Fund  Vanguard Utilities Index Fund 



> After a dismal first half of the fiscal year, stocks rebounded dramatically on

encouraging economic news. Still, for the 12 months ended August 31, 2009,

the broad U.S. stock market returned about –18%.

> Unable to fully recover from their first-half losses, the Vanguard U.S. Sector

Index Funds produced fiscal-year returns ranging from about –8% for consumer

staples stocks to about –31% for energy stocks.

> Five of the U.S. Sector Index Funds returned considerably more than the broad

U.S. market, one returned about the same, and four returned considerably less.

Contents   
 
Your Fund’s Total Returns  1 
President’s Letter  2 
Results of Proxy Voting  5 
Consumer Discretionary Index Fund  8 
Consumer Staples Index Fund  19 
Energy Index Fund  28 
Financials Index Fund  38 
Health Care Index Fund  49 
Industrials Index Fund  59 
Information Technology Index Fund  70 
Materials Index Fund  80 
Telecommunication Services Index Fund  89 
Utilities Index Fund  98 
Your Fund’s After-Tax Returns  107 
About Your Fund’s Expenses  108 
Trustees Approve Advisory Arrangement  110 
Glossary  111 


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.
Cover photograph: Veronica Coia.



Your Fund’s Total Returns

Fiscal Year Ended August 31, 2009

Admiral™ Shares1 and ETF Shares2   
 
  Ticker       Total 
  Symbol   Return
Vanguard Consumer     
Discretionary Index Fund  VCDAX  –12.34% 
Vanguard Consumer     
Discretionary ETF  VCR   
     Market Price    –12.29 
     Net Asset Value    –12.32 
MSCI® US IMI/Consumer Discretionary    –12.30 
 
Vanguard Consumer Staples     
Index Fund  VCSAX   –8.26% 
Vanguard Consumer Staples ETF  VDC   
     Market Price     –8.17 
     Net Asset Value     –8.22 
MSCI US IMI/Consumer Staples     –9.22 
 
Vanguard Energy Index Fund  VENAX  –30.51% 
Vanguard Energy ETF  VDE   
     Market Price    –30.45 
     Net Asset Value    –30.49 
MSCI US IMI/Energy    –29.18 
 
Vanguard Financials Index Fund  VFAIX  –25.35% 
Vanguard Financials ETF  VFH   
     Market Price    –25.16 
     Net Asset Value    –25.31 
MSCI US IMI/Financials    –25.67 
 
Vanguard Health Care Index Fund  VHCIX  –10.74% 
Vanguard Health Care ETF  VHT   
     Market Price    –10.68 
     Net Asset Value    –10.70 
MSCI US IMI/Health Care    –10.52 

  Ticker       Total 
  Symbol Return  
Vanguard Industrials Index Fund  VINAX  –28.44% 
Vanguard Industrials ETF  VIS   
     Market Price    –28.40 
     Net Asset Value    –28.41 
MSCI US IMI/Industrials    –28.38 
 
Vanguard Information     
Technology Index Fund  VITAX   –9.79% 
Vanguard Information     
Technology ETF  VGT   
     Market Price     –9.73 
     Net Asset Value     –9.78 
MSCI US IMI/Information Technology   –9.62 
 
Vanguard Materials Index Fund  VMIAX  –25.91% 
Vanguard Materials ETF  VAW   
     Market Price    –25.84 
     Net Asset Value    –25.88 
MSCI US IMI/Materials    –26.00 
 
Vanguard Telecommunication     
Services Index Fund  VTCAX  –15.90% 
Vanguard Telecommunication     
Services ETF  VOX   
     Market Price    –15.82 
     Net Asset Value    –15.88 
MSCI US IMI/Telecommunication Services  –17.86 
 
Vanguard Utilities Index Fund  VUIAX  –18.39% 
Vanguard Utilities ETF  VPU   
     Market Price    –18.28 
     Net Asset Value    –18.34 
MSCI US IMI/Utilities    –18.21 
 
MSCI US IMI/2500    –18.26% 

1 A lower-cost class of shares available to many longtime shareholders and to those with significant investments in the fund.
2 Vanguard ETF™ Shares are traded on the NYSE Arca exchange and are available only through brokers. The table shows the ETF returns based on both the NYSE Arca market price and the net asset value for a
share. U.S. Pat. No. 6,879,964 B2; 7,337,138.
Note: MSCI US IMI/2500 is the Morgan Stanley Capital International US Investable Market 2500 Index.

1



 

 

 

President’s Letter

Dear Shareholder,

The two halves of the Vanguard U.S. Sector Index Funds’ fiscal year were nearly mirror images of each other. After continuing to fall steeply and broadly during the first half, stocks staged a dramatic turnaround in March as investors became more confident about credit markets and the economy. But when the dust settled, each of the funds and the broad U.S. market lost ground for the 12-month period.

The relatively recession-resistant Consumer Staples and Health Care Index Funds were among the five funds that performed better than the broad market. At the other end of the performance scale were the more economically sensitive Industrials Index Fund and Energy Index Fund (which was also hurt by the sharp fall in oil prices during the first six months).

To be considered successful, an index fund should closely track the performance of its target index whether markets are falling or rising. During a period of historically high stock price volatility, Vanguard Quantitative Equity Group—the sector funds’ advisor—achieved this in all sectors except for consumer staples, energy, and telecommunication services. Because there are regulatory limits on the percentage of a fund’s assets that can be

invested in any single stock, the advisor is not always able to match the composition of the target index—especially in highly concentrated sectors where a few stocks can have a disproportionate influence on results. In those sectors, fund returns may diverge from those of the target index.

If you hold shares in a taxable account, you may wish to review the table and discussion on after-tax returns for the fiscal year, based on the highest tax bracket, later in this report.

Stocks sank, then soared as credit and economy stabilized

The 12 months ended August 31 spanned two strikingly different half-years. The period began with the September collapse of a major investment bank and the government-engineered rescue of several giant financial institutions. Stocks sank as the ensuing crisis spread from Wall Street to Main Street and around the globe. Stricken by seized-up credit markets and a near-total lack of confidence, businesses and consumers put the brakes on economic growth.

Governments in the United States and abroad responded with unprecedented stimulus and other programs. Over the past six months, these efforts started to take hold. Credit-market conditions improved, and the outlook for the U.S.

Market Barometer       
    Average Annual Total Returns 
    Periods Ended August 31, 2009 
One Year   Three Years  Five Years 
Stocks       
Russell 1000 Index (Large-caps)  –18.39%  –5.61%       0.94% 
Russell 2000 Index (Small-caps)  –21.29  –6.08       2.21 
Dow Jones U.S. Total Stock Market Index  –18.10  –5.17       1.45 
MSCI All Country World Index ex USA (International)  –13.96  –2.41       8.18 
 
Bonds       
Barclays Capital U.S. Aggregate Bond Index (Broad taxable market)  7.94%  6.35%       4.96% 
Barclays Capital Municipal Bond Index  5.67  4.14       4.15 
Citigroup 3-Month Treasury Bill Index  0.51  2.77       2.98 
 
CPI       
Consumer Price Index  –1.48%  1.91%       2.64% 

2



economy brightened. From their early March lows, stocks took off on an almost-unbroken winning streak.

Even so, the broad U.S. stock market ended the 12 months in negative territory, with a return of about –18%. International markets performed somewhat better, as major European economies emerged from recession; the MSCI All Country World Index ex USA returned about –14%.

Despite the second-half rally, it may be premature to sound the all-clear signal. As the fiscal year came to a close, home foreclosures and the unemployment rate were rising, and the federal government’s list of problem banks had climbed above 400—the most since June 1994. There is considerable historical evidence that recovery from a recession caused by a financial crisis tends to take longer than average.

Among bond investors, safety and yield traded places

The U.S. bond market also performed a U-turn during the year. Early on, as credit markets deteriorated, investors rushed to the relative safety and liquidity of U.S. Treasury securities, driving their prices up and yields down. Investors were so risk-averse that short-term Treasury yields briefly turned negative. November and December were among the ten best months ever for Treasury returns (adjusted for inflation). Corporate bonds, especially those of lower credit quality, struggled, and their yield spreads above comparable Treasuries widened to near-historic levels during the first six months.

Several moves by the Treasury and the Federal Reserve—which slashed its target level for short-term interest rates to a range of 0%–0.25% in December—helped credit markets to attain some stability by the spring. In a dramatic reversal, investors regained their appetite for risk, favoring corporate bonds over Treasuries.

After all the ups and downs, Treasuries and high-yield corporate bonds produced similar 12-month returns of about 6%–7%.

Overall, the broad U.S. taxable bond market returned about 8%. Tax-exempt municipal bonds, after a flat first half, returned more than 5% for the fiscal year.

Stocks still behind, despite broad and steep rebound

An investor seeking to make sense of market trends during the past year or so could be easily forgiven for being confused. Amid all the major developments and noise, there may have been only one constant—inconsistency.

For example, just when consumers hunkered down and began adapting to record-high prices at the gas pump, crude oil prices abruptly began dropping. Ultra-safe Treasury bonds were the place to be, and then they weren’t. And the stock market sectors that fell the hardest during the bear market were among those that rebounded most strongly when the recovery began, while the previously more resilient sectors lagged.

The financial and materials sectors, on the one hand, and the consumer staples and health care sectors, on the other hand, illustrate the point. During the fiscal first half, the Financials and Materials Index Funds were the worst performers, losing more than half of their value. Many financial institutions struggled amid high-profile bank failures, tight credit, and troubled assets. At the same time, commodity-oriented companies—including chemical, fertilizer, and metals and mining firms—were hurt by falling prices and weak demand.

When global credit markets and the economy began stabilizing, financial and materials companies were among the major beneficiaries (the Financials Index Fund, for example, was the standout performer, returning more than 80% in the last six months of the period). Nevertheless, the gains were not sufficient to overcome the earlier steep losses (and the sometimes confounding arithmetic of percentages, in which, for example, a loss of 50% would require a gain of 100% to get back to even). As a result, the

Financials Index Fund (–25.35%) and the Materials Index Fund (–25.91%) finished the year in the bottom half of the ten sector funds. (Please note: In this discussion, returns refer to the funds’ Admiral Shares; ETF returns are detailed in the tables.)

In contrast, consumer staples and health care held up better during the first six months (although they suffered losses), but were pushed aside during the second-half rally that was led by lower-quality, higher-risk stocks. Yet, buoyed by their relatively stronger first-half performance, the Consumer Staples Index Fund (–8.26%) and the Health Care Index Fund (–10.74%) ranked at or near the top of the sector funds for the 12 months.

The Information Technology Index Fund (–9.79%), with middle-of-the pack returns in both the first and second halves of the fiscal year, ended up being the second-best performer. As the business outlook brightened, chip makers and computer firms helped reinvigorate the tech sector. Rounding out the group of five funds that outperformed the broad market for the full 12 months were the Consumer Discretionary Index Fund (–12.34%)—bolstered by improved consumer confidence—and the Telecommunication Services Index Fund (–15.90%), which represents a very small slice of the broad market.

The Utilities Index Fund (–18.39%), representing another small market segment, performed in line with the broad market. The Energy (–30.51%) and Industrials (–28.44%) Index Funds joined the financial and materials sectors in lagging the broad market for the year.

Still a place for sector funds in a well-balanced portfolio

Stocks have taken investors on a roller-coaster ride for almost two years. After soaring to record highs in October 2007, the U.S. stock market plunged in 2008, suffering its worst calendar year since the 1930s, before turning around this past spring. Will the recent rally continue? It’s anyone’s guess. But one thing is clear:

3



Investors who maintained a portfolio that was diversified across stocks, bonds, and money market funds were partly cushioned during the market’s gyrations.

Sector funds can play an important role in a well-balanced portfolio. For example, they can help you selectively increase exposure to key components of the economy in a low-cost and efficient manner if your strategy calls for such tactical decisions. And because the various sectors do not perform in lockstep, adding some sector funds to a portfolio can offer the opportunity to increase diversification.

Whether markets are rising or falling, indexing has proven its worth as a tax-efficient strategy to help investors capture the return of broad markets and of chosen market segments. For more than 30 years, Vanguard Quantitative Equity Group has been a leader in index fund management, delivering results that generally track their target indexes closely. And the low costs of Vanguard’s U.S. Sector Index Funds help you keep more of their returns, an important benefit that compounds over time.

Thank you for entrusting your assets to Vanguard.

Sincerely,


F. William McNabb III
President and Chief Executive Officer
September 15, 2009

Your Fund’s Performance at a Glance         
August 31, 2008–August 31, 2009         
 
      Distributions Per Share 
  Starting  Ending  Income  Capital 
  Share Price  Share Price  Dividends  Gains 
Consumer Discretionary Index Fund         
     Admiral Shares  $25.03  $21.43  $0.395  $0.000 
     ETF Shares  48.38  41.37  0.786  0.000 
Consumer Staples Index Fund         
     Admiral Shares  $34.06  $30.62  $0.569  $0.000 
     ETF Shares  69.04  62.07  1.173  0.000 
Energy Index Fund         
     Admiral Shares  $54.66  $37.34  $0.563  $0.000 
     ETF Shares  109.54  74.74  1.183  0.000 
Financials Index Fund         
     Admiral Shares  $20.38  $14.72  $0.453  $0.000 
     ETF Shares  40.66  29.38  0.914  0.000 
Health Care Index Fund         
     Admiral Shares  $28.68  $25.19  $0.364  $0.000 
     ETF Shares  57.36  50.37  0.754  0.000 
Industrials Index Fund         
     Admiral Shares  $34.20  $23.85  $0.557  $0.000 
     ETF Shares  66.65  46.45  1.111  0.000 
Information Technology Index Fund         
     Admiral Shares  $27.28  $24.39  $0.156  $0.000 
     ETF Shares  53.32  47.64  0.326  0.000 
Materials Index Fund         
     Admiral Shares  $42.85  $30.68  $0.796  $0.000 
     ETF Shares  84.27  60.23  1.599  0.000 
Telecommunication Services Index Fund         
     Admiral Shares  $31.58  $25.77  $0.673  $0.000 
     ETF Shares  62.05  50.58  1.373  0.000 
Utilities Index Fund         
     Admiral Shares  $39.26  $30.73  $1.251  $0.000 
     ETF Shares  78.22  61.24  2.514  0.000 

4



Results of Proxy Voting

At a special meeting of shareholders on July 2, 2009, fund shareholders approved the following two proposals:

Proposal 1—Elect trustees for each fund.*

The individuals listed in the table below were elected as trustees for each fund. All trustees with the exception of Messrs. McNabb and Volanakis (both of whom already served as directors of The Vanguard Group, Inc.) served as trustees to the funds prior to the shareholder meeting.

Consumer Discretionary Index Fund, Consumer Staples Index Fund, Energy Index Fund, Financials Index Fund, Health Care Index Fund, Industrials Index Fund, Information Technology Index Fund, Materials Index Fund, Telecommunication Services Index Fund, Utilities Index Fund

      Percentage 
Trustee  For  Withheld  For 
John J. Brennan  816,325,661  25,839,114  96.9% 
Charles D. Ellis  811,618,878  30,545,897  96.4% 
Emerson U. Fullwood  816,960,560  25,204,215  97.0% 
Rajiv L. Gupta  815,607,429  26,557,346  96.8% 
Amy Gutmann  818,039,387  24,125,388  97.1% 
JoAnn Heffernan Heisen  815,771,400  26,393,375  96.9% 
F. William McNabb III  817,559,701  24,605,074  97.1% 
André F. Perold  814,833,250  27,331,525  96.8% 
Alfred M. Rankin, Jr.  815,942,907  26,221,868  96.9% 
Peter F. Volanakis  817,780,699  24,384,076  97.1% 
* Results are for all funds within the same trust.       

Proposal 2—Update and standardize the funds’ fundamental policies regarding:
(a) Purchasing and selling real estate.
(b) Issuing senior securities.
(c) Borrowing money.
(d) Making loans.
(e) Purchasing and selling commodities.
(f) Concentrating investments in a particular industry or group of industries.
(g) Eliminating outdated fundamental investment policies not required by law.

The revised fundamental policies are clearly stated and simple, yet comprehensive, making oversight and compliance more efficient than under the former policies. The revised fundamental policies will allow the funds to respond more quickly to regulatory and market changes, while avoiding the costs and delays associated with successive shareholder meetings.

        Broker  Percentage 
Vanguard Fund  For  Abstain  Against  Non-Votes  For 
Consumer Discretionary Index Fund           
2a  1,030,496  5,817  6,877  322,376  75.5% 
2b  1,027,809  6,809  8,570  322,378  75.3% 
2c  1,024,001  10,641  8,545  322,378  75.0% 
2d  1,022,815  11,478  8,898  322,376  74.9% 
2e  1,022,695  11,316  9,179  322,376  74.9% 
2f  1,025,345  9,947  7,899  322,376  75.1% 
2g  1,023,766  9,781  9,642  322,377  75.0% 
Consumer Staples Index Fund           
2a  5,395,960  82,108  83,909  2,149,901  70.0% 
2b  5,386,842  91,188  83,948  2,149,900  69.9% 
2c  5,377,701  84,472  99,808  2,149,897  69.7% 
2d  5,377,305  83,347  101,323  2,149,903  69.7% 
2e  5,380,205  85,000  96,774  2,149,899  69.8% 
2f  5,389,858  84,940  87,182  2,149,898  69.9% 
2g  5,391,778  80,961  89,241  2,149,898  69.9% 

5



        Broker  Percentage 
Vanguard Fund  For  Abstain  Against  Non-Votes  For 
Energy Index Fund           
2a  5,984,167  151,517  93,308  1,991,076  72.8% 
2b  6,007,020  142,860  79,110  1,991,078  73.1% 
2c  5,919,728  166,365  142,897  1,991,078  72.0% 
2d  5,922,177  174,855  131,958  1,991,078  72.0% 
2e  5,972,028  142,377  114,587  1,991,076  72.7% 
2f  6,017,142  147,148  64,702  1,991,076  73.2% 
2g  6,025,346  137,549  66,099  1,991,074  73.3% 
Financials Index Fund           
2a  11,300,444  170,818  290,509  3,377,134  74.6% 
2b  11,357,431  194,699  209,642  3,377,134  75.0% 
2c  11,297,873  192,619  271,279  3,377,134  74.6% 
2d  11,348,241  182,847  230,685  3,377,132  75.0% 
2e  11,282,082  165,848  313,841  3,377,134  74.5% 
2f  11,380,060  180,675  201,035  3,377,135  75.2% 
2g  11,382,407  176,899  202,463  3,377,136  75.2% 
Health Care Index Fund           
2a  8,639,883  302,475  154,223  2,610,086  73.8% 
2b  8,618,222  309,731  168,627  2,610,087  73.6% 
2c  8,611,807  307,544  177,231  2,610,086  73.6% 
2d  8,620,515  308,918  167,148  2,610,086  73.6% 
2e  8,615,150  305,842  175,588  2,610,087  73.6% 
2f  8,642,276  305,647  148,656  2,610,088  73.8% 
2g  8,478,737  304,116  313,726  2,610,088  72.4% 
Industrials Index Fund           
2a  1,869,328  19,639  46,686  797,506  68.4% 
2b  1,872,867  22,559  40,227  797,507  68.5% 
2c  1,874,811  22,766  38,078  797,505  68.6% 
2d  1,867,457  22,497  45,701  797,504  68.3% 
2e  1,867,831  22,223  45,598  797,507  68.3% 
2f  1,875,432  22,766  37,454  797,507  68.6% 
2g  1,882,226  18,705  34,723  797,506  68.9% 
Information Technology Index Fund           
2a  5,814,868  56,635  63,970  1,403,210  79.2% 
2b  5,808,867  53,151  73,455  1,403,210  79.2% 
2c  5,807,196  56,470  71,806  1,403,211  79.1% 
2d  5,809,088  53,752  72,632  1,403,211  79.2% 
2e  5,813,456  54,501  67,515  1,403,211  79.2% 
2f  5,819,520  52,675  63,278  1,403,210  79.3% 
2g  5,818,243  56,709  60,520  1,403,211  79.3% 
Materials Index Fund           
2a  3,735,564  146,031  79,298  763,871  79.1% 
2b  3,713,921  154,742  92,229  763,871  78.6% 
2c  3,713,013  149,473  98,407  763,870  78.6% 
2d  3,702,408  153,636  104,849  763,870  78.4% 
2e  3,719,037  155,371  86,485  763,870  78.7% 
2f  3,722,773  156,188  81,932  763,870  78.8% 
2g  3,723,376  150,048  87,467  763,872  78.8% 

6



        Broker  Percentage 
Vanguard Fund  For  Abstain  Against  Non-Votes  For 
Telecommunication Services Index Fund         
2a  1,646,488  40,513  28,919  380,139  78.6% 
2b  1,639,141  40,377  36,402  380,139  78.2% 
2c  1,636,068  42,305  37,548  380,138  78.1% 
2d  1,639,925  42,629  33,364  380,139  78.2% 
2e  1,651,638  39,047  25,235  380,138  78.8% 
2f  1,646,392  39,874  29,654  380,138  78.5% 
2g  1,642,528  43,487  29,905  380,138  78.4% 
Utilities Index Fund           
2a  4,665,382  94,719  140,772  817,502  81.6% 
2b  4,678,535  83,138  139,197  817,505  81.8% 
2c  4,642,411  96,876  161,584  817,504  81.2% 
2d  4,637,426  88,704  174,741  817,504  81.1% 
2e  4,650,148  112,469  138,255  817,503  81.3% 
2f  4,704,636  89,086  107,151  817,503  82.3% 
2g  4,652,466  81,776  166,629  817,504  81.4% 

Fund shareholders did not approve this proposal:

Proposal 3—Institute procedures to prevent holding investments in companies that, in the judgment of the board, substantially contribute to genocide or crimes against humanity, the most egregious violations of human rights.

The trustees recommended a vote against the proposal because it called for procedures that duplicate existing practices and procedures of the Vanguard funds.

        Broker  Percentage 
Vanguard Fund  For  Abstain  Against  Non-Votes  For 
Energy Index Fund  576,604  264,612  5,387,774  1,991,078  7.0% 

7



Consumer Discretionary Index Fund

Fund Profile

As of August 31, 2009

Portfolio Characteristics     
    Target  Broad 
  Fund  Index1  Index2 
Number of Stocks  386  384  2,501 
Median Market Cap  $13.7B  $13.7B  $27.3B 
Price/Earnings Ratio  318.6x  302.7x  25.6x 
Price/Book Ratio  2.2x  2.2x  2.1x 
Yield3    1.4%  1.9% 
   Admiral Shares  1.1%     
   ETF Shares  1.1%     
Return on Equity  15.7%  15.7%  19.3% 
Earnings Growth Rate  8.5%  8.5%  9.9% 
Foreign Holdings  0.0%  0.0%  0.0% 
Turnover Rate  5%     
Expense Ratio4       
   Admiral Shares  0.28%     
   ETF Shares  0.25%     
Short-Term Reserves  0.0%     
 
 
Volatility Measures5       
Fund Versus  Fund Versus 
Target Index1  Broad Index2 
R-Squared  1.00    0.85 
Beta  1.00    1.19 

Industry Diversification (% of equity exposure) 
 
Advertising  1.6% 
Apparel Retail  6.1 
Apparel, Accessories & Luxury Goods  3.1 
Auto Parts & Equipment  2.7 
Automobile Manufacturers  2.0 
Automotive Retail  2.1 
Broadcasting  1.3 
Cable & Satellite  9.5 
Casinos & Gaming  2.4 
Computer & Electronics Retail  1.8 
Department Stores  3.4 
Education Services  2.3 
Footwear  2.4 
General Merchandise Stores  4.1 
Home Improvement Retail  7.6 
Homebuilding  2.0 
Homefurnishing Retail  1.2 
Hotels, Resorts & Cruise Lines  3.1 
Household Appliances  1.2 
Housewares & Specialties  1.4 
Internet Retail  4.0 
Leisure Products  1.4 
Movies & Entertainment  11.7 
Publishing  2.1 
Restaurants  11.1 
Specialized Consumer Services  1.5 
Specialty Stores  3.0 
Other Consumer Discretionary  3.9 

Ten Largest Holdings6 (% of total net assets) 
 
McDonald’s Corp.   5.6% 
Home Depot, Inc.   4.2 
The Walt Disney Co.   4.2 
Comcast Corp.   3.8 
Target Corp.   3.0 
Time Warner Inc.   3.0 
Lowe’s Cos., Inc.   2.9 
Amazon.com, Inc.   2.5 
News Corp.   2.2 
Ford Motor Co.   1.9 
Top Ten  33.3% 

1 MSCI US IMI/Consumer Discretionary.
2 MSCI US IMI/2500.
3 30-day SEC yield for the fund; annualized dividend yield for the indexes. See the Glossary.
4 The expense ratios shown are from the prospectuses dated December 29, 2008, and represent estimated costs for the current fiscal year based on the fund’s net assets as of the prospectus date.
For the fiscal year ended August 31, 2009, the expense ratios were 0.28% for the Admiral Shares and 0.25% for the ETF Shares.
5 For an explanation of R-squared, beta, and other terms used here, see the Glossary.
6 The holdings listed exclude any temporary cash investments and equity index products.

8



Consumer Discretionary Index 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 www.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: January 26, 2004–August 31, 2009

Initial Investment of $10,000


    Average Annual Total Returns   
    Periods Ended August 31, 2009  Final Value 
      Since  of a $10,000 
  One Year  Five Years  Inception1  Investment 
Consumer Discretionary Index Fund         
ETF Shares Net Asset Value2  –12.32%  –1.47%  –2.43%  $8,713 
Consumer Discretionary Index Fund         
ETF Shares Market Price  –12.29  –1.46  –2.43  8,714 
MSCI US IMI/2500  –18.26  1.36  0.52  10,295 
MSCI US IMI/Consumer Discretionary  –12.30  –1.36  –2.31  8,776 

      Final Value 
    Since  of a $100,000 
  One Year  Inception1  Investment 
Consumer Discretionary Index Fund Admiral Shares3  –12.34%  –5.50%  $79,164 
MSCI US IMI/2500  –18.26  –1.81  92,740 
MSCI US IMI/Consumer Discretionary  –12.30  –5.37  79,616 

1 Performance for the fund and its comparative standards is calculated since the following inception dates: January 26, 2004, for ETF Shares; July 14, 2005, for Admiral Shares.
2 For more information about how the ETF Shares’ market prices have compared with their net asset value, visit www.vanguard.com, select your ETF, and then select the Performance tab. The Premium/Discount
table there shows the percentages of days on which the ETF Shares’ market price was above or below the NAV.
3 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than one year.
Note: See Financial Highlights tables for dividend and capital gains information.

9



Consumer Discretionary Index Fund

Fiscal-Year Total Returns (%): January 26, 2004–August 31, 2009


Cumulative Returns: ETF Shares, January 26, 2004–August 31, 2009

      Cumulative 
      Since 
  One Year  Five Years  Inception 
Consumer Discretionary Index Fund ETF Shares Market Price  –12.29%     –7.10%  –12.86% 
Consumer Discretionary Index Fund ETF Shares Net Asset Value  –12.32     –7.12     –12.87 
MSCI US IMI/Consumer Discretionary  –12.30     –6.61     –12.24 

Average Annual Total Returns: Periods Ended June 30, 2009

This table presents average annual total returns through the latest calendar quarter—rather than through the end of the fiscal period. Securities and Exchange Commission rules require that we provide this information.

        Since 
  Inception Date  One Year  Five Years  Inception 
ETF Shares  1/26/2004       
     Market Price    –17.73%     –5.02%   –4.91% 
     Net Asset Value    –17.81     –5.01   –4.92 
Admiral Shares1  7/14/2005  –17.81     –8.90 

1 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than one year.
Note: See Financial Highlights tables for dividend and capital gains information.

10



Consumer Discretionary Index Fund

Financial Statements

Statement of Net Assets

As of August 31, 2009

The fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth fiscal quarters, the lists appear in the fund’s semiannual and annual reports to shareholders. For the first and third fiscal quarters, the fund files the lists with the Securities and Exchange Commission on Form N-Q. Shareholders can look up the fund’s Forms N-Q on the SEC’s website at www.sec.gov. Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room (see the back cover of this report for further information).

      Market 
      Value 
    Shares  ($000) 
Common Stocks (99.9%)     
Auto Components (3.1%)     
  Johnson Controls, Inc.  76,498  1,895 
*  The Goodyear Tire     
  & Rubber Co.  29,505  486 
  BorgWarner, Inc.  14,991  445 
  Autoliv, Inc.  10,945  351 
  Gentex Corp.  17,816  260 
*  TRW Automotive     
  Holdings Corp.  8,918  157 
  WABCO Holdings Inc.  8,224  157 
  Cooper Tire & Rubber Co.  7,244  103 
*  Tenneco Automotive, Inc.  6,027  95 
*  Exide Technologies  9,698  69 
*  Dana Holding Corp.  12,924  68 
  ArvinMeritor, Inc.  9,006  66 
*  Fuel Systems Solutions, Inc.  1,654  55 
*  Drew Industries, Inc.  2,575  53 
  Superior Industries     
  International, Inc.  2,946  42 
  American Axle &     
  Manufacturing Holdings, Inc.  5,921  37 
  Modine Manufacturing Co.  3,956  33 
*  Dorman Products, Inc.  1,582  22 
  Spartan Motors, Inc.  3,983  22 
*  Raser Technologies, Inc.  4,878  10 
      4,426 
Automobiles (2.5%)     
*  Ford Motor Co.  359,455  2,732 
  Harley-Davidson, Inc.  30,161  723 
  Thor Industries, Inc.  4,620  120 
  Winnebago Industries, Inc.  3,632  44 
      3,619 
Distributors (0.8%)     
  Genuine Parts Co.  20,501  759 
*  LKQ Corp.  16,242  282 
*  Core-Mark Holding Co., Inc.  1,213  35 
      1,076 
Diversified Consumer Services (3.8%)   
*  Apollo Group, Inc. Class A  17,534  1,137 
  H & R Block, Inc.  43,666  755 
*  ITT Educational Services, Inc.  4,930  518 
  DeVry, Inc.  8,292  424 
  Strayer Education, Inc.  1,803  381 
*  Career Education Corp.  11,585  275 
  Service Corp. International  32,280  228 
*  Corinthian Colleges, Inc.  10,633  204 
*  Brink’s Home Security     
  Holdings, Inc.  5,884  184 
  Hillenbrand Inc.  7,970  160 
  Matthews International Corp.  3,953  138 
  Sotheby’s  8,649  137 
*  Coinstar, Inc.  3,884  128 
  Weight Watchers     
  International, Inc.  4,449  122 
  Regis Corp.  7,111  115 
*  Capella Education Co.  1,807  114 

      Market 
      Value 
    Shares  ($000) 
*  American Public     
  Education, Inc.  2,198  76 
*  Steiner Leisure Ltd.  1,779  59 
  Stewart Enterprises, Inc.     
  Class A  10,785  57 
*  Universal Technical     
  Institute Inc.  2,579  52 
*  K12 Inc.  2,219  46 
*  Pre-Paid Legal Services, Inc.  964  44 
*  Lincoln Educational Services  1,359  30 
  Jackson Hewitt Tax     
  Service Inc.  3,660  20 
*  Grand Canyon Education Inc.  1,123  19 
      5,423 
Hotels, Restaurants & Leisure (16.9%)   
  McDonald’s Corp.  141,919  7,981 
  Yum! Brands, Inc.  59,378  2,034 
*  Starbucks Corp.  94,666  1,798 
  Carnival Corp.  56,358  1,648 
  Marriott International, Inc.     
  Class A  38,778  927 
  International     
  Game Technology  38,116  797 
  Starwood Hotels &     
  Resorts Worldwide, Inc.  24,011  715 
  Tim Hortons, Inc.  23,281  658 
*  Las Vegas Sands Corp.  42,395  605 
  Darden Restaurants Inc.  16,773  552 
*  Wynn Resorts Ltd.  9,499  514 
  Wyndham Worldwide Corp.  22,908  347 
  Royal Caribbean Cruises, Ltd.  17,803  340 
*  MGM Mirage, Inc.  34,039  288 
*  Bally Technologies Inc.  6,659  269 
*  WMS Industries, Inc.  6,288  266 
  Wendy’s/Arby’s Group, Inc.  51,413  259 
*  Penn National Gaming, Inc.  8,581  251 
  Burger King Holdings Inc.  12,122  217 
*  Panera Bread Co.  3,823  200 
  Brinker International, Inc.  13,119  191 
*  Chipotle Mexican Grill, Inc.     
  Class B  2,219  165 
*  Chipotle Mexican Grill, Inc.  1,863  156 
*  Jack in the Box Inc.  7,289  149 
*  Life Time Fitness, Inc.  4,663  145 
*  Scientific Games Corp.  8,939  138 
*  The Cheesecake Factory Inc.  7,357  135 
  Choice Hotels     
  International, Inc.  4,280  126 
*  Vail Resorts Inc.  3,327  110 
*  Gaylord Entertainment Co.  5,251  107 
  Bob Evans Farms, Inc.  3,967  107 
  International Speedway Corp.  3,550  99 
  Orient-Express Hotel Ltd.  9,884  98 
*  P.F. Chang’s China Bistro, Inc.  2,897  92 
*  Buffalo Wild Wings Inc.  2,182  90 
*  Sonic Corp.  7,332  84 
  Cracker Barrel Old     
  Country Store Inc.  2,862  81 

      Market 
      Value 
    Shares  ($000) 
*  CEC Entertainment Inc.  2,911  78 
*  Boyd Gaming Corp.  7,268  75 
*  Pinnacle Entertainment, Inc.  7,692  72 
*  Texas Roadhouse, Inc.  6,644  68 
*  Papa John’s International, Inc.  2,861  67 
  CKE Restaurants Inc.  6,025  58 
*  Ruby Tuesday, Inc.  7,750  57 
  Ameristar Casinos, Inc.  3,289  55 
*  Shuffle Master, Inc.  6,979  53 
*  Interval Leisure Group, Inc.  5,007  52 
  Churchill Downs, Inc.  1,214  46 
*  Peet’s Coffee & Tea Inc.  1,715  45 
*  Domino’s Pizza, Inc.  5,572  45 
  DineEquity, Inc.  2,016  42 
*  BJ’s Restaurants Inc.  2,400  41 
*  California Pizza Kitchen, Inc.  2,899  41 
*  Red Robin Gourmet     
  Burgers, Inc.  1,938  37 
*  Steak n Shake Co.  3,301  35 
  The Marcus Corp.  2,720  34 
  Ambassadors Group, Inc.  2,126  34 
*  Denny’s Corp.  12,236  31 
  Speedway Motorsports, Inc.  1,931  30 
*  AFC Enterprises, Inc.  3,196  27 
*  Isle of Capri Casinos, Inc.  2,199  22 
*  Krispy Kreme Doughnuts, Inc.  7,246  22 
  O’Charley’s Inc.  2,787  21 
*  Morgans Hotel Group  3,407  17 
*  Landry’s Restaurants, Inc.  1,504  15 
*  Monarch Casino & Resort, Inc.  1,228  12 
  Dover Downs Gaming     
  & Entertainment, Inc.  1,946  12 
*  Town Sports International     
  Holdings, Inc.  2,141  6 
      23,989 
Household Durables (5.9%)     
  Fortune Brands, Inc.  19,331  770 
  Whirlpool Corp.  9,498  610 
  Pulte Homes, Inc.  44,086  563 
  Garmin Ltd.  15,441  508 
  Newell Rubbermaid, Inc.  35,645  496 
  D. R. Horton, Inc.  36,681  492 
*  NVR, Inc.  595  402 
*  Toll Brothers, Inc.  17,593  400 
*  Mohawk Industries, Inc.  7,486  375 
  The Stanley Works  9,131  374 
  Leggett & Platt, Inc.  19,136  349 
  Black & Decker Corp.  7,731  341 
  Tupperware Brands Corp.  8,055  298 
  Snap-On Inc.  7,394  276 
*  Jarden Corp.  11,295  275 
  Harman International     
  Industries, Inc.  8,470  254 
  Lennar Corp. Class A  16,597  251 
  KB Home  10,291  187 
  MDC Holdings, Inc.  4,793  180 
  Tempur-Pedic     
  International Inc.  8,671  128 
  Ryland Group, Inc.  5,502  126 
*  Meritage Corp.  3,830  86 
*  Helen of Troy Ltd.  3,701  80 
  American Greetings Corp.     
  Class A  4,621  64 
  La-Z-Boy Inc.  6,715  57 
  Ethan Allen Interiors, Inc.  3,476  54 
  National Presto     
  Industries, Inc.  616  52 

11



 

   Consumer Discretionary Index Fund   Market 
      Value 
    Shares  ($000) 
*  Standard Pacific Corp.  13,419  49 
  Blyth, Inc.  816  37 
*  Hovnanian Enterprises Inc.     
  Class A  6,735  36 
*  M/I Homes, Inc.  2,238  35 
*  Universal Electronics, Inc.  1,784  34 
*  Furniture Brands     
  International Inc.  5,114  29 
*  iRobot Corp.  2,398  27 
  CSS Industries, Inc.  991  21 
*  Beazer Homes USA, Inc.  4,723  20 
*  Sealy Corp.  5,762  15 
*  Brookfield Homes Corp.  1,349  10 
      8,361 
Internet & Catalog Retail (4.5%)     
*  Amazon.com, Inc.  44,216  3,590 
*  Priceline.com, Inc.  5,091  784 
*  Liberty Media     
  Corp.-Interactive Series A  72,904  698 
*  Expedia, Inc.  25,338  584 
*  Netflix.com, Inc.  6,309  275 
*  Blue Nile Inc.  1,855  103 
*  HSN, Inc.  5,410  56 
  PetMed Express, Inc.  3,049  55 
  NutriSystem, Inc.  3,586  51 
*  Ticketmaster     
  Entertainment Inc.  5,035  49 
*  Shutterfly, Inc.  2,422  35 
*  Orbitz Worldwide, Inc.  4,649  29 
*  Overstock.com, Inc.  1,991  25 
*  Stamps.com Inc.  1,935  17 
*  Gaiam, Inc.  2,069  12 
*  1-800-FLOWERS.COM, Inc.  3,485  11 
      6,374 
Leisure Equipment & Products (1.5%)   
  Mattel, Inc.  46,184  831 
  Hasbro, Inc.  16,190  460 
  Eastman Kodak Co.  34,476  183 
  Polaris Industries, Inc.  3,984  150 
  Pool Corp.  6,222  148 
  Brunswick Corp.  11,256  105 
  Callaway Golf Co.  8,322  59 
*  JAKKS Pacific, Inc.  3,576  48 
*  RC2 Corp.  2,677  42 
  Sturm, Ruger & Co., Inc.  2,473  34 
*  Smith & Wesson Holding Corp.  6,164  33 
*  Leapfrog Enterprises, Inc.  4,457  18 
  Marine Products Corp.  1,586  8 
      2,119 
Media (26.1%)     
  The Walt Disney Co.  226,906  5,909 
  Time Warner Inc.  153,963  4,297 
  Comcast Corp. Class A  221,382  3,392 
  News Corp., Class A  260,859  2,796 
  Comcast Corp. Special     
  Class A  134,992  1,970 
*  Liberty Media Corp.  63,627  1,775 
*  Viacom Inc. Class B  70,672  1,770 
*  Time Warner Cable Inc.  45,355  1,674 
*  DIRECTV Group, Inc.  64,832  1,605 
  Omnicom Group Inc.  40,012  1,453 
  The McGraw-Hill Cos., Inc.  40,489  1,361 
  CBS Corp.  75,940  786 
  Cablevision Systems     
  NY Group Class A  31,777  710 
*  Discovery     
  Communications Inc.     
  Class A  17,247  447 
*  DISH Network Corp.  26,837  438 

        Market 
        Value 
      Shares  ($000) 
*  Discovery       
  Communications Inc.       
  Class C    18,097  423 
  Virgin Media Inc.    35,904  410 
*  Interpublic Group       
  of Cos., Inc.    61,540  387 
*  Liberty Global, Inc. Class A  17,507  383 
  Scripps Networks Interactive  11,520  374 
  News Corp., Class B    29,376  371 
*  Liberty Global, Inc. Series C  15,916  345 
  Washington Post Co. Class B  785  341 
*  Sirius XM Radio Inc.  496,191   334 
*  Marvel Entertainment, Inc.  6,606  320 
*  DreamWorks       
  Animation SKG, Inc.    8,714  294 
  Gannett Co., Inc.    29,901  258 
*  Liberty Media       
  Corp.-Capital Series A    11,561  221 
*  Lamar Advertising Co.       
  Class A    9,334  214 
  John Wiley & Sons Class A  5,703  183 
  Regal Entertainment Group     
  Class A    10,829  137 
  New York Times Co. Class A  17,431  133 
  Meredith Corp.    4,593  127 
  Interactive Data Corp.    4,805  111 
*  Morningstar, Inc.    2,452  109 
  Scholastic Corp.    4,021  98 
*  Lions Gate       
  Entertainment Corp.    14,889  98 
*  Valassis       
  Communications, Inc.    6,181  97 
  National CineMedia Inc.    5,409  81 
*  CTC Media, Inc.    5,881  78 
  Harte-Hanks, Inc.    5,264  69 
*  Live Nation, Inc.    9,266  65 
  Arbitron Inc.    3,392  62 
*  RCN Corp.    4,746  44 
*  Ascent Media Corp.    1,704  44 
  Cinemark Holdings Inc.    4,167  42 
  World Wrestling       
  Entertainment, Inc.    2,875  41 
  Belo Corp. Class A    11,490  38 
*  Clear Channel Outdoor       
  Holdings, Inc. Class A    5,264  36 
*  CKX, Inc.    5,643  36 
*  Dolan Media Co.    3,025  32 
*  Knology, Inc.    3,843  28 
*  Warner Music Group Corp.  5,948  27 
  E.W. Scripps Co. Class A  3,872  27 
*  Mediacom       
  Communications Corp.    5,188  26 
*  Martha Stewart Living       
  Omnimedia, Inc.    3,264  23 
*  Fisher Communications, Inc.  927  19 
  Journal Communications, Inc.  4,986  18 
  Sinclair Broadcast Group, Inc.  6,329  18 
*  Lin TV Corp.    3,579  13 
*  Outdoor Channel Holdings Inc.  1,779  12 
*  Crown Media Holdings, Inc.  1,826  3 
        37,033 
Multiline Retail (7.5%)       
  Target Corp.    91,899  4,319 
*  Kohl’s Corp.    37,267  1,923 
  Macy’s Inc.    54,039  839 
  J.C. Penney Co., Inc.       
  (Holding Co.)    27,189  817 
  Nordstrom, Inc.    20,860  585 
*  Dollar Tree, Inc.    11,564  577 
  Family Dollar Stores, Inc.  17,138  519 
*,^  Sears Holdings Corp.    7,177  455 

      Market 
      Value 
    Shares  ($000) 
*  Big Lots Inc.  10,622  270 
*  Saks Inc.  17,130  104 
*  99 Cents Only Stores  6,256  85 
  Dillard’s Inc.  7,180  82 
  Fred’s, Inc.  4,885  64 
*  Retail Ventures, Inc.  3,619  18 
      10,657 
Specialty Retail (21.8%)     
  Home Depot, Inc.  218,271  5,957 
  Lowe’s Cos., Inc.  189,614  4,077 
  Staples, Inc.  92,020  1,989 
  TJX Cos., Inc.  53,163  1,911 
  Best Buy Co., Inc.  45,518  1,651 
  The Gap, Inc.  62,647  1,231 
*  Bed Bath & Beyond, Inc.  33,557  1,224 
  Sherwin-Williams Co.  12,826  772 
  Ross Stores, Inc.  16,305  760 
*  O’Reilly Automotive, Inc.  17,451  668 
*  AutoZone Inc.  4,221  621 
  Tiffany & Co.  15,942  580 
  Limited Brands, Inc.  35,156  524 
  Advance Auto Parts, Inc.  12,252  518 
*  CarMax, Inc.  28,387  491 
*  GameStop Corp. Class A  20,118  479 
*  Urban Outfitters, Inc.  16,213  461 
  Abercrombie & Fitch Co.  11,300  365 
  PetSmart, Inc.  16,345  342 
*  Aeropostale, Inc.  8,674  340 
  American Eagle     
  Outfitters, Inc.  23,912  323 
*  Chico’s FAS, Inc.  22,881  291 
*  AutoNation, Inc.  14,761  280 
*  Dick’s Sporting Goods, Inc.  11,215  251 
  Guess ?, Inc.  7,102  249 
  RadioShack Corp.  16,063  243 
  Williams-Sonoma, Inc.  11,526  220 
*  J. Crew Group, Inc.  6,424  219 
  Foot Locker, Inc.  19,950  213 
*  Tractor Supply Co.  4,178  197 
*  Office Depot, Inc.  35,235  184 
*  Rent-A-Center, Inc.  8,573  169 
*  The Gymboree Corp.  3,721  167 
  Men’s Wearhouse, Inc.  6,366  165 
  Aaron Rents, Inc.  5,900  154 
*  Collective Brands, Inc.  8,175  129 
  OfficeMax, Inc.  9,774  111 
*  AnnTaylor Stores Corp.  7,533  106 
  Barnes & Noble, Inc.  5,113  106 
*  Jos. A. Bank Clothiers, Inc.  2,332  103 
*  The Dress Barn, Inc.  6,212  101 
*  The Children’s Place     
  Retail Stores, Inc.  3,205  97 
  The Buckle, Inc.  3,547  94 
  Penske Automotive     
  Group Inc.  5,296  94 
*  Jo-Ann Stores, Inc.  3,403  93 
  Group 1 Automotive, Inc.  3,089  87 
*  Cabela’s Inc.  5,168  83 
*  Charming Shoppes, Inc.  14,846  78 
*  Sally Beauty Co. Inc.  10,552  75 
  Stage Stores, Inc.  4,924  66 
*  Hibbett Sports Inc.  3,651  64 
  The Pep Boys (Manny,     
  Moe & Jack)  7,006  63 
  Cato Corp. Class A  3,562  61 
  Monro Muffler Brake, Inc.  2,357  61 
*  Coldwater Creek Inc.  7,938  59 
*  Genesco, Inc.  2,485  54 
  Finish Line, Inc.  6,435  53 
*  Asbury Automotive Group, Inc.  4,053  51 
  Sonic Automotive, Inc.  3,709  48 

12



Consumer Discretionary Index Fund

      Market 
      Value 
    Shares  ($000) 
*  Charlotte Russe Holding Inc.  2,706  47 
*  hhgregg, Inc.  2,421  42 
  Brown Shoe Co., Inc.  5,500  41 
*  Citi Trends Inc.  1,839  41 
*  Stein Mart, Inc.  3,292  41 
  Big 5 Sporting Goods Corp.  2,656  41 
*  The Wet Seal, Inc. Class A  11,486  40 
*  Hot Topic, Inc.  5,625  39 
*  Ulta Salon, Cosmetics &     
  Fragrance, Inc.  3,329  38 
*  Lumber Liquidators, Inc.  1,718  38 
*  Pacific Sunwear of     
  California, Inc.  8,494  38 
*  Zumiez Inc.  2,712  34 
  Christopher & Banks Corp.  4,568  31 
*  Pier 1 Imports Inc.  11,237  28 
*  DSW Inc. Class A  1,799  27 
*  Zale Corp.  4,163  27 
*  America’s Car-Mart, Inc.  1,288  26 
  Haverty Furniture Cos., Inc.  2,211  26 
  bebe stores, inc.  3,365  26 
*  Borders Group, Inc.  7,783  25 
*  Tween Brands, Inc.  3,197  24 
  Talbots Inc.  3,288  20 
*  New York & Co., Inc.  3,331  15 
*  Conn’s, Inc.  1,308  15 
*  Blockbuster Inc. Class A  13,171  13 
*  Systemax Inc.  930  12 
*  Build-A-Bear-Workshop, Inc.  1,865  9 
*  Blockbuster Inc. Class B  9,460  5 
      31,032 
Textiles, Apparel & Luxury Goods (5.5%)   
  NIKE, Inc. Class B  47,498  2,631 
  Coach, Inc.  40,853  1,156 
  VF Corp.  11,384  792 
  Polo Ralph Lauren Corp.  7,217  479 
*  Hanesbrands Inc.  12,183  257 
  Phillips-Van Heusen Corp.  6,613  250 
*  The Warnaco Group, Inc.  5,890  224 
*  Carter’s, Inc.  7,251  182 
  Jones Apparel Group, Inc.  10,958  171 
  Wolverine World Wide, Inc.  6,278  156 
*  Iconix Brand Group Inc.  8,924  153 
*  Fossil, Inc.  5,991  152 
*  Deckers Outdoor Corp.  1,677  114 
*  Under Armour, Inc.  4,247  101 
*  Lululemon Athletica, Inc.  4,976  100 
*  Skechers U.S.A., Inc.  4,261  76 
  UniFirst Corp.  1,847  74 
*  Timberland Co.  5,537  72 
*  True Religion Apparel, Inc.  3,097  70 
*  Crocs, Inc.  10,819  69 

        Market 
        Value 
    Shares  ($000) 
  Columbia Sportswear Co.    1,740  68 
*  Steven Madden, Ltd.    2,065  66 
  Liz Claiborne, Inc.  12,156  52 
*  Quiksilver, Inc.  16,345  46 
*  Maidenform Brands, Inc.  2,466  40 
  K-Swiss, Inc.    3,415  33 
*  Volcom, Inc.    2,190  31 
  Movado Group, Inc.  2,308  30 
*  FGX International Holdings Ltd.  1,844  27 
  Oxford Industries, Inc.    1,719  24 
  Weyco Group, Inc.    960  22 
*  American Apparel, Inc.    4,106  15 
*  Unifi, Inc.  6,287  14 
  Kenneth Cole Productions, Inc.  1,174  12 
        7,759 
Total Common Stocks       
(Cost $176,505)      141,868 
Convertible Preferred Stock (0.0%)     
Household Durables (0.0%)       
1  Sealy Corp., 8.000% (Cost $38)  350  24 
Temporary Cash Investment (0.2%)   
Money Market Fund (0.2%)       
2,3  Vanguard Market       
  Liquidity Fund, 0.277%       
  (Cost $285)  284,899  285 
Total Investments (100.1%)       
(Cost $176,828)      142,177 
Other Assets and Liabilities (–0.1%)   
Other Assets      519 
Liabilities3      (660) 
        (141) 
Net Assets (100%)      142,036 

At August 31, 2009, net assets consisted of: 
  Amount 
  ($000) 
Paid-in Capital  189,468 
Undistributed Net Investment Income  758 
Accumulated Net Realized Losses  (13,539) 
Unrealized Appreciation (Depreciation)  (34,651) 
Net Assets  142,036 
 
 
Admiral Shares—Net Assets   
Applicable to 59,543 outstanding   
$.001 par value shares of beneficial   
interest (unlimited authorization)  1,276 
Net Asset Value Per Share—   
Admiral Shares  $21.43 
 
 
ETF Shares—Net Assets   
Applicable to 3,402,208 outstanding   
$.001 par value shares of beneficial   
interest (unlimited authorization)  140,760 
Net Asset Value Per Share—   
ETF Shares  $41.37 

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 $209,000.
1 Non-income producing security—new issue that has not paid a dividend as of August 31, 2009.
2 Affiliated money market fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard. Rate shown is the 7-day yield.
3 Includes $218,000 of collateral received for securities on loan.
See accompanying Notes, which are an integral part of the Financial Statements.

13



Consumer Discretionary Index Fund

Statement of Operations

  Year Ended 
August 31, 2009 
  ($000) 
Investment Income   
Income   
Dividends  1,959 
Interest1  1 
Security Lending  156 
Total Income  2,116 
Expenses   
The Vanguard Group—Note B   
     Investment Advisory Services  16 
     Management and Administrative—   
     Admiral Shares  1 
     Management and Administrative—   
     ETF Shares  153 
     Marketing and Distribution—   
     Admiral Shares   
     Marketing and Distribution—   
     ETF Shares  39 
Custodian Fees  17 
Auditing Fees  24 
Shareholders’ Reports and Proxies—   
Admiral Shares   
Shareholders’ Reports and Proxies—   
ETF Shares  28 
Total Expenses  278 
Net Investment Income  1,838 
Realized Net Gain (Loss) on   
Investment Securities Sold  (63,452) 
Change in Unrealized Appreciation   
(Depreciation) of Investment Securities  1,356 
Net Increase (Decrease) in Net Assets   
Resulting from Operations  (60,258) 

Statement of Changes in Net Assets

  Year Ended August 31, 
  2009  2008 
  ($000)  ($000) 
Increase (Decrease) in Net Assets     
Operations     
Net Investment Income  1,838  1,962 
Realized Net Gain (Loss)  (63,452)  2,340 
Change in Unrealized Appreciation (Depreciation)  1,356  (33,599) 
Net Increase (Decrease) in Net Assets Resulting from Operations  (60,258)  (29,297) 
Distributions     
Net Investment Income     
     Admiral Shares  (11)  (4) 
     ETF Shares  (2,360)  (1,197) 
Realized Capital Gain     
     Admiral Shares     
     ETF Shares     
Total Distributions  (2,371)  (1,201) 
Capital Share Transactions     
     Admiral Shares  597  (123) 
     ETF Shares  (53,138)  172,810 
Net Increase (Decrease) from Capital Share Transactions  (52,541)  172,687 
Total Increase (Decrease)  (115,170)  142,189 
Net Assets     
Beginning of Period  257,206  115,017 
End of Period2  142,036  257,206 

1 Interest income from an affiliated company of the fund was $1,000.
2 Net Assets—End of Period includes undistributed net investment income of $758,000 and $1,291,000.
See accompanying Notes, which are an integral part of the Financial Statements.

14



Consumer Discretionary Index Fund

Financial Highlights

Admiral Shares           
          July 14, 
          20051 to 
      Year Ended August 31,  Aug. 31, 
For a Share Outstanding Throughout Each Period  2009  2008  2007  2006  2005 
Net Asset Value, Beginning of Period  $25.03  $31.02  $27.03  $27.75  $28.29 
Investment Operations           
Net Investment Income  .398  .2852  .217  .2452  .1602 
Net Realized and Unrealized Gain (Loss)           
on Investments  (3.603)  (6.075)  4.015  (.808)  (.700) 
Total from Investment Operations  (3.205)  (5.790)  4.232  (.563)  (.540) 
Distributions           
Dividends from Net Investment Income  (.395)  (.200)  (.242)  (.157)   
Distributions from Realized Capital Gains           
Total Distributions  (.395)  (.200)  (.242)  (.157)   
Net Asset Value, End of Period  $21.43  $25.03  $31.02  $27.03  $27.75 
 
Total Return3  –12.34%  –18.74%  15.64%  –2.03%  –1.91% 
 
Ratios/Supplemental Data           
Net Assets, End of Period (Millions)  $1.3  $0.7  $1.0  $0.6  $0.1 
Ratio of Total Expenses to           
Average Net Assets  0.28%  0.25%  0.27%  0.28%  0.28%4 
Ratio of Net Investment Income to           
Average Net Assets  1.58%  1.11%  0.84%  0.89%  0.67%4 
Portfolio Turnover Rate5  5%  12%  8%  10%  13% 

1 Inception.
2 Calculated based on average shares outstanding.
3 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than one year.
4 Annualized.
5 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares,
including ETF Creation Units.

See accompanying Notes, which are an integral part of the Financial Statements.

15



Consumer Discretionary Index Fund

Financial Highlights

ETF Shares           
 
        Year Ended August 31, 
For a Share Outstanding Throughout Each Period  2009  2008  2007  2006  2005 
Net Asset Value, Beginning of Period  $48.38  $60.02  $52.28  $53.65  $46.99 
Investment Operations           
Net Investment Income  .764  .5921  .450  .4941  .3501 
Net Realized and Unrealized Gain (Loss)           
on Investments  (6.988)  (11.772)  7.760  (1.556)  6.660 
Total from Investment Operations  (6.224)  (11.180)  8.210  (1.062)  7.010 
Distributions           
Dividends from Net Investment Income  (.786)  (.460)  (.470)  (.308)  (.350) 
Distributions from Realized Capital Gains           
Total Distributions  (.786)  (.460)  (.470)  (.308)  (.350) 
Net Asset Value, End of Period  $41.37  $48.38  $60.02  $52.28  $53.65 
 
Total Return  –12.32%  –18.70%  15.69%  –1.99%  14.91% 
 
Ratios/Supplemental Data           
Net Assets, End of Period (Millions)  $141  $257  $114  $47  $32 
Ratio of Total Expenses to           
Average Net Assets  0.25%  0.20%  0.22%  0.25%  0.26% 
Ratio of Net Investment Income to           
Average Net Assets  1.61%  1.16%  0.89%  0.92%  0.69% 
Portfolio Turnover Rate2  5%  12%  8%  10%  13% 

1 Calculated based on average shares outstanding.
2 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares,
including ETF Creation Units.

See accompanying Notes, which are an integral part of the Financial Statements.

16



Consumer Discretionary Index Fund

Notes to Financial Statements

Vanguard Consumer Discretionary Index Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund offers two classes of shares, Admiral Shares and ETF Shares. Admiral Shares are available to any investor who meets the fund’s minimum purchase requirements. ETF Shares are listed for trading on the NYSE Arca, Inc.; they can be purchased and sold through a broker.

A. The following significant accounting policies conform to generally accepted accounting principles for U.S. mutual funds. The fund consistently follows such policies in preparing its financial statements.

1. Security Valuation: Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which market quotations are not readily available, or whose values have been materially affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued by methods deemed by the board of trustees to represent fair value. Investments in Vanguard Market Liquidity Fund are valued at that fund’s net asset value.

2. Federal Income Taxes: The fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income. Management has analyzed the fund’s tax positions taken for all open federal income tax years (August 31, 2006–2009), and has concluded that no provision for federal income tax is required in the fund’s financial statements.

3. Distributions: Distributions to shareholders are recorded on the ex-dividend date.

4. Security Lending: The fund may lend its securities to qualified institutional borrowers to earn additional income. Security loans are required to be secured at all times by collateral at least equal to the market value of securities loaned. The fund invests cash collateral received in Vanguard Market Liquidity Fund, and records a liability for the return of the collateral, during the period the securities are on loan. Security lending income represents the income earned on investing cash collateral, less expenses associated with the loan.

5. Other: Dividend income is recorded on the ex-dividend date. Interest income includes income distributions received from Vanguard Market Liquidity Fund and is accrued daily. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment securities are those of the specific securities sold. Fees assessed on redemptions of capital shares are credited to paid-in capital.

Each class of shares has equal rights as to assets and earnings, except that each class separately bears certain class-specific expenses related to maintenance of shareholder accounts (included in Management and Administrative expenses), shareholder reporting, and proxies. Marketing and distribution expenses are allocated to each class of shares based on a method approved by the board of trustees. Income, other non-class-specific expenses, and gains and losses on investments are allocated to each class of shares based on its relative net assets.

B. The Vanguard Group furnishes at cost investment advisory, corporate management, administrative, marketing, and distribution services. The costs of such services are allocated to the fund under methods approved by the board of trustees. The fund has committed to provide up to 0.40% of its net assets in capital contributions to Vanguard. At August 31, 2009, the fund had contributed capital of $26,000 to Vanguard (included in Other Assets), representing 0.02% of the fund’s net assets and 0.01% of Vanguard’s capitalization. The fund’s trustees and officers are also directors and officers of Vanguard.

C. Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Level 1—Quoted prices in active markets for identical securities.

Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).

Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments).

At August 31, 2009, 100% of the fund’s investments were valued based on Level 1 inputs.

17



Consumer Discretionary Index Fund

D. Distributions are determined on a tax basis and may differ from net investment income and realized capital gains for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the financial statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain, or loss are recognized in different periods for financial statement and tax purposes; these differences will reverse at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.

During the year ended August 31, 2009, the fund realized $56,236,000 of net capital losses resulting from in-kind redemptions—in which shareholders exchanged fund shares for securities held by the fund rather than for cash. Because such losses are not taxable losses to the fund, they have been reclassified from accumulated net realized losses to paid-in capital.

For tax purposes, at August 31, 2009, the fund had $862,000 of ordinary income available for distribution. The fund had available capital loss carryforwards totaling $6,383,000 to offset future net capital gains of $36,000 through August 31, 2013, $86,000 through August 31, 2014, $178,000 through August 31, 2015, $1,526,000 through August 31, 2016, and $4,557,000 through August 31, 2017. In addition, the fund realized losses of $7,145,000 during the period from November 1, 2008, through August 31, 2009, which are deferred and will be treated as realized for tax purposes in fiscal 2010.

At August 31, 2009, the cost of investment securities for tax purposes was $176,839,000. Net unrealized depreciation of investment securities for tax purposes was $34,662,000, consisting of unrealized gains of $2,058,000 on securities that had risen in value since their purchase and $36,720,000 in unrealized losses on securities that had fallen in value since their purchase.

E. During the year ended August 31, 2009, the fund purchased $106,930,000 of investment securities and sold $160,051,000 of investment securities, other than temporary cash investments.

F. Capital share transactions for each class of shares were:       
      Year Ended August 31, 
    2009    2008 
  Amount  Shares  Amount  Shares 
  ($000)  (000)  ($000)  (000) 
Admiral Shares         
Issued  659  34  414  16 
Issued in Lieu of Cash Distributions  10  1  4   
Redeemed1  (72)  (4)  (541)  (19) 
Net Increase (Decrease)—Admiral Shares  597  31  (123)  (3) 
ETF Shares         
Issued  100,999  2,600  252,012  5,002 
Issued in Lieu of Cash Distributions         
Redeemed1  (154,137)  (4,500)  (79,202)  (1,600) 
Net Increase (Decrease)—ETF Shares  (53,138)  (1,900)  172,810  3,402 
1 Net of redemption fees for fiscal 2009 and 2008 of $0 and $7,000, respectively (fund totals).       

G. In preparing the financial statements as of August 31, 2009, management considered the impact of subsequent events occurring through October 15, 2009, for potential recognition or disclosure in these financial statements.

18



Consumer Staples Index Fund

Fund Profile

As of August 31, 2009

Portfolio Characteristics     
    Target  Broad 
  Fund  Index1  Index2 
Number of Stocks  112  112  2,501 
Median Market Cap  $41.8B  $88.2B  $27.3B 
Price/Earnings Ratio  16.8x  16.4x  25.6x 
Price/Book Ratio  3.0x  3.1x  2.1x 
Yield3    3.0%  1.9% 
   Admiral Shares  2.6%     
   ETF Shares  2.7%     
Return on Equity  23.4%  24.2%  19.3% 
Earnings Growth Rate  8.4%  8.4%  9.9% 
Foreign Holdings  0.0%  0.0%  0.0% 
Turnover Rate  17%     
Expense Ratio4       
   Admiral Shares  0.28%     
   ETF Shares  0.25%     
Short-Term Reserves  0.0%     

Industry Diversification (% of equity exposure) 
 
Agricultural Products  2.8% 
Drug Retail  8.0 
Food Distributors  1.9 
Food Retail  3.7 
Household Products  20.5 
Hypermarkets & Supercenters  11.8 
Packaged Foods & Meats  16.1 
Personal Products  3.5 
Soft Drinks  17.2 
Tobacco  12.8 
Other Consumer Staples  1.7 

Volatility Measures5   
  Fund Versus  Fund Versus 
  Target Index1  Broad Index2 
R-Squared  0.99  0.78 
Beta  1.01  0.60 

Ten Largest Holdings6 (% of total net assets) 
 
The Procter & Gamble Co.  12.9% 
Wal-Mart Stores, Inc.  9.5 
The Coca-Cola Co.  7.9 
Philip Morris International Inc.  7.0 
PepsiCo, Inc.  6.7 
CVS Caremark Corp.  4.9 
Kraft Foods Inc.  3.8 
Altria Group, Inc.  3.4 
Colgate-Palmolive Co.  3.3 
Walgreen Co.  3.0 
Top Ten  62.4% 

1 MSCI US IMI/Consumer Staples.
2 MSCI US IMI/2500.
3 30-day SEC yield for the fund; annualized dividend yield for the indexes. See the Glossary.
4 The expense ratios shown are from the prospectuses dated December 29, 2008, and represent estimated costs for the current fiscal year based on the fund’s net assets as of the prospectus date.
For the fiscal year ended August 31, 2009, the expense ratios were 0.28% for the Admiral Shares and 0.25% for the ETF Shares.
5 For an explanation of R-squared, beta, and other terms used here, see the Glossary.
6 The holdings listed exclude any temporary cash investments and equity index products.

19



Consumer Staples Index 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 www.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: January 26, 2004–August 31, 2009

Initial Investment of $10,000


    Average Annual Total Returns   
    Periods Ended August 31, 2009  Final Value 
      Since  of a $10,000 
  One Year  Five Years  Inception1  Investment 
Consumer Staples Index Fund         
ETF Shares Net Asset Value2   –8.22%               5.25%  5.20%  $13,278 
Consumer Staples Index Fund         
ETF Shares Market Price   –8.17               5.27       5.21  13,284 
MSCI US IMI/2500  –18.26               1.36       0.52  10,295 
MSCI US IMI/Consumer Staples   –9.22               5.18       5.09  13,199 

        Final Value 
      Since  of a $100,000 
  One Year  Five Years  Inception1  Investment 
Consumer Staples Index Fund Admiral Shares3  –8.26%  5.21%  5.26%  $133,134 
MSCI US IMI/2500  –18.26  1.36  0.92  105,229 
MSCI US IMI/Consumer Staples  –9.22  5.18  5.18  132,559 

1 Performance for the fund and its comparative standards is calculated since the following inception dates: January 26, 2004, for ETF Shares; January 30, 2004, for Admiral Shares.
2 For more information about how the ETF Shares’ market prices have compared with their net asset value, visit www.vanguard.com, select your ETF, and then select the Performance tab. The Premium/Discount
table there shows the percentages of days on which the ETF Shares’ market price was above or below the NAV.
3 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than one year.
Note: See Financial Highlights tables for dividend and capital gains information.

20



Consumer Staples Index Fund

Fiscal-Year Total Returns (%): January 26, 2004–August 31, 2009


Cumulative Returns: ETF Shares, January 26, 2004–August 31, 2009     
      Cumulative 
      Since 
  One Year  Five Years  Inception 
Consumer Staples Index Fund ETF Shares Market Price   –8.17%     29.30%  32.84% 
Consumer Staples Index Fund ETF Shares Net Asset Value   –8.22     29.13  32.78 
MSCI US IMI/Consumer Staples   –9.22     28.74  31.99 

Average Annual Total Returns: Periods Ended June 30, 2009

This table presents average annual total returns through the latest calendar quarter—rather than through the end of the fiscal period. Securities and Exchange Commission rules require that we provide this information.

             Since 
  Inception Date  One Year  Five Years  Inception 
ETF Shares  1/26/2004       
     Market Price     –9.63%       2.95%     3.94% 
     Net Asset Value     –9.63       2.97     3.95 
Admiral Shares1  1/30/2004   –9.67       2.94     4.01 

1 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than one year.
Note: See Financial Highlights tables for dividend and capital gains information.

21



Consumer Staples Index Fund

Financial Statements

Statement of Net Assets

As of August 31, 2009

The fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth fiscal quarters, the lists appear in the fund’s semiannual and annual reports to shareholders. For the first and third fiscal quarters, the fund files the lists with the Securities and Exchange Commission on Form N-Q. Shareholders can look up the fund’s Forms N-Q on the SEC’s website at www.sec.gov. Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room (see the back cover of this report for further information).

        Market 
        Value 
      Shares  ($000) 
Common Stocks (100.0%)     
Beverages (18.9%)       
  The Coca-Cola Co.    943,185  45,999 
  PepsiCo, Inc.    686,504  38,904 
  Molson Coors Brewing Co.     
  Class B    87,917  4,166 
*  Dr. Pepper Snapple       
  Group, Inc.    148,738  3,933 
  Coca-Cola Enterprises, Inc.  172,559  3,487 
  The Pepsi Bottling       
  Group, Inc.    87,904  3,141 
  Brown-Forman Corp.       
  Class B    50,615  2,263 
*  Constellation Brands, Inc.     
  Class A    127,500  1,886 
*  Hansen Natural Corp.    51,845  1,693 
  PepsiAmericas, Inc.    47,294  1,323 
*  Central European       
  Distribution Corp.    30,094  969 
*  Heckmann Corp.    141,997  591 
  Coca-Cola Bottling Co.    9,763  528 
*  Boston Beer Co., Inc.       
  Class A    13,275  528 
*  National Beverage Corp.  39,536  401 
        109,812 
Food & Staples Retailing (25.4%)   
  Wal-Mart Stores, Inc.  1,080,890  54,985 
  CVS Caremark Corp.    754,258  28,300 
  Walgreen Co.    521,407  17,665 
  Costco Wholesale Corp.  231,426  11,798 
  Sysco Corp.    322,356  8,217 
  The Kroger Co.    333,801  7,207 
  Safeway, Inc.    236,834  4,512 
*  Whole Foods Market, Inc.  84,673  2,462 
  SUPERVALU Inc.    129,895  1,864 
*  BJ’s Wholesale Club, Inc.  40,454  1,319 
  Casey’s General Stores, Inc.  40,895  1,135 
  Ruddick Corp.    38,665  1,027 
*  United Natural Foods, Inc.  35,856  969 
  The Andersons, Inc.    25,262  831 
*  Rite Aid Corp.    506,456  780 
*  Winn-Dixie Stores, Inc.  54,038  744 
  Ingles Markets, Inc.    35,901  592 
  PriceSmart, Inc.    30,366  539 
  Weis Markets, Inc.    16,505  515 
  Nash-Finch Co.    18,729  508 
  Village Super Market Inc.     
  Class A    15,597  447 
*  The Great Atlantic &       
  Pacific Tea Co., Inc.    57,622  387 
*  The Pantry, Inc.    24,624  373 

      Market 
      Value 
    Shares  ($000) 
  Spartan Stores, Inc.  20,826  276 
  Arden Group Inc. Class A  2,266  267 
*  Susser Holdings Corp.  16,444  176 
      147,895 
Food Products (18.9%)     
  Kraft Foods Inc.  773,825  21,938 
  General Mills, Inc.  176,269  10,529 
  Archer-Daniels-Midland Co.  308,688  8,899 
  Kellogg Co.  143,712  6,767 
  H.J. Heinz Co.  167,816  6,461 
  ConAgra Foods, Inc.  250,781  5,149 
  Bunge Ltd.  73,885  4,951 
  Campbell Soup Co.  126,079  3,954 
  Sara Lee Corp.  379,563  3,678 
  The Hershey Co.  93,708  3,676 
  J.M. Smucker Co.  70,008  3,659 
  McCormick & Co., Inc.  75,084  2,445 
*  Ralcorp Holdings, Inc.  36,977  2,320 
  Tyson Foods, Inc.  178,432  2,139 
*  Dean Foods Co.  104,943  1,904 
  Hormel Foods Corp.  49,394  1,825 
  Corn Products     
  International, Inc.  53,475  1,586 
  Del Monte Foods Co.  147,457  1,547 
  Flowers Foods, Inc.  61,617  1,465 
*  Green Mountain Coffee     
  Roasters, Inc.  22,155  1,333 
*  TreeHouse Foods Inc.  29,795  1,104 
  Lancaster Colony Corp.  20,730  1,042 
*  Smithfield Foods, Inc.  76,668  941 
*  Chiquita Brands     
  International, Inc.  57,065  879 
*  American Italian Pasta Co.  26,292  796 
*  Hain Celestial Group, Inc.  48,351  774 
  Lance, Inc.  31,208  757 
  J & J Snack Foods Corp.  17,301  756 
  Sanderson Farms, Inc.  17,581  731 
  Diamond Foods, Inc.  25,858  723 
  Cal-Maine Foods, Inc.  24,146  689 
*  American Dairy, Inc.  21,926  673 
*  Darling International, Inc.  92,855  651 
  B&G Foods Inc.  70,459  643 
  Tootsie Roll Industries, Inc.  24,412  577 
  Calavo Growers, Inc.  28,190  496 
*  Smart Balance Inc.  76,058  486 
  Alico, Inc.  14,372  426 
  Farmer Brothers, Inc.  20,635  426 
      109,795 
Household Products (20.5%)     
  The Procter & Gamble Co.  1,390,002  75,213 
  Colgate-Palmolive Co.  266,531  19,377 

        Market 
        Value 
      Shares  ($000) 
  Kimberly-Clark Corp.    220,866  13,354 
  The Clorox Co.    77,408  4,574 
*  Energizer Holdings, Inc.  40,935  2,678 
  Church & Dwight, Inc.    42,202  2,411 
*  Central Garden & Pet Co.     
  Class A    55,929  615 
  WD-40 Co.    22,403  604 
*  Central Garden & Pet Co.  20,922  254 
        119,080 
Personal Products (3.5%)       
  Avon Products, Inc.    231,925  7,391 
  The Estee Lauder Cos. Inc.     
  Class A    68,486  2,455 
  Alberto-Culver Co.    64,464  1,701 
*  NBTY, Inc.    43,296  1,605 
  Herbalife Ltd.    41,886  1,268 
  Mead Johnson Nutrition Co.  26,367  1,046 
*  Chattem, Inc.    15,514  950 
  Nu Skin Enterprises, Inc.  44,594  769 
*  Bare Escentuals, Inc.    74,196  689 
  Inter Parfums, Inc.    54,692  528 
*  Prestige Brands       
  Holdings Inc.    69,483  515 
*  USANA Health       
  Sciences, Inc.    12,808  404 
*  American Oriental       
  Bioengineering, Inc.    73,164  372 
*  Elizabeth Arden, Inc.    30,676  316 
*  Revlon, Inc.    40,335  183 
        20,192 
Tobacco (12.8%)       
  Philip Morris       
  International Inc.    892,640  40,802 
  Altria Group, Inc.  1,086,361  19,859 
  Lorillard, Inc.    91,640  6,669 
  Reynolds American Inc.  100,088  4,575 
  Universal Corp. (VA)    23,758  876 
  Vector Group Ltd.    47,275  746 
*  Alliance One       
  International, Inc.    125,368  480 
*  Star Scientific, Inc.    182,105  182 
        74,189 
Total Investments (100.0%)     
(Cost $629,635)      580,963 
Other Assets and Liabilities (0.0%)   
Other Assets      954 
Liabilities      (867) 
        87 
Net Assets (100%)      581,050 

22



Consumer Staples Index Fund

At August 31, 2009, net assets consisted of: 
  Amount 
  ($000) 
Paid-in Capital  636,664 
Undistributed Net Investment Income  9,418 
Accumulated Net Realized Losses  (16,360) 
Unrealized Appreciation (Depreciation)  (48,672) 
Net Assets  581,050 
 
 
Admiral Shares—Net Assets   
Applicable to 933,858 outstanding   
$.001 par value shares of beneficial   
interest (unlimited authorization)  28,596 
Net Asset Value Per Share—   
Admiral Shares  $30.62 
 
 
ETF Shares—Net Assets   
Applicable to 8,900,000 outstanding   
$.001 par value shares of beneficial   
interest (unlimited authorization)  552,454 
Net Asset Value Per Share—   
ETF Shares  $62.07 

See Note A in Notes to Financial Statements.
* Non-income-producing security.
See accompanying Notes, which are an integral part of the Financial Statements.

23



Consumer Staples Index Fund

Statement of Operations 
 
  Year Ended 
August 31, 2009 
  ($000) 
Investment Income   
Income   
Dividends  16,686 
Interest1  9 
Security Lending  146 
Total Income  16,841 
Expenses   
The Vanguard Group—Note B   
     Investment Advisory Services  81 
     Management and Administrative—   
     Admiral Shares  53 
     Management and Administrative—   
     ETF Shares  889 
     Marketing and Distribution—   
     Admiral Shares  5 
     Marketing and Distribution—   
     ETF Shares  164 
Custodian Fees  18 
Auditing Fees  24 
Shareholders’ Reports and Proxies—   
Admiral Shares  1 
Shareholders’ Reports and Proxies—   
ETF Shares  147 
Trustees’ Fees and Expenses  1 
Total Expenses  1,383 
Net Investment Income  15,458 
Realized Net Gain (Loss) on Investment   
Securities Sold  2,903 
Change in Unrealized Appreciation   
(Depreciation) of Investment Securities  (59,656) 
Net Increase (Decrease) in Net Assets   
Resulting from Operations  (41,295) 

Statement of Changes in Net Assets     
 
  Year Ended August 31, 
  2009  2008 
  ($000)  ($000) 
Increase (Decrease) in Net Assets     
Operations     
Net Investment Income  15,458  8,312 
Realized Net Gain (Loss)  2,903  21,737 
Change in Unrealized Appreciation (Depreciation)  (59,656)  (19,968) 
Net Increase (Decrease) in Net Assets Resulting from Operations  (41,295)  10,081 
Distributions     
Net Investment Income     
     Admiral Shares  (425)  (184) 
     ETF Shares  (11,495)  (6,259) 
Realized Capital Gain     
     Admiral Shares     
     ETF Shares     
Total Distributions  (11,920)  (6,443) 
Capital Share Transactions     
     Admiral Shares  11,397  9,079 
     ETF Shares  86,801  204,450 
Net Increase (Decrease) from Capital Share Transactions  98,198  213,529 
Total Increase (Decrease)  44,983  217,167 
Net Assets     
Beginning of Period  536,067  318,900 
End of Period2  581,050  536,067 

1 Interest income from an affiliated company of the fund was $9,000.
2 Net Assets—End of Period includes undistributed net investment income of $9,418,000 and $5,872,000.
See accompanying Notes, which are an integral part of the Financial Statements.

24



Consumer Staples Index Fund

Financial Highlights

Admiral Shares           
 
        Year Ended August 31, 
For a Share Outstanding Throughout Each Period  2009  2008  2007  2006  2005 
Net Asset Value, Beginning of Period  $34.06  $33.22  $30.56  $27.64  $25.82 
Investment Operations           
Net Investment Income  .7771  .6341  .662  .5471  .4271 
Net Realized and Unrealized Gain (Loss)           
on Investments  (3.648)  .766  2.460  2.716  1.952 
Total from Investment Operations  (2.871)  1.400  3.122  3.263     2.379 
Distributions           
Dividends from Net Investment Income  (.569)  (.560)       (.462)  (.343)  (.440) 
Distributions from Realized Capital Gains          (.119) 
Total Distributions  (.569)  (.560)       (.462)  (.343)  (.559) 
Net Asset Value, End of Period  $30.62  $34.06  $33.22  $30.56  $27.64 
 
Total Return2  –8.26%  4.15%  10.30%  11.92%  9.29% 
 
Ratios/Supplemental Data           
Net Assets, End of Period (Millions)  $29  $18  $9  $6  $4 
Ratio of Total Expenses to           
Average Net Assets  0.28%  0.25%  0.26%  0.28%  0.28% 
Ratio of Net Investment Income to           
Average Net Assets  2.77%  1.88%  2.16%  1.90%  1.69% 
Portfolio Turnover Rate3  17%  13%  12%  14%  7% 

1 Calculated based on average shares outstanding.
2 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than one year.
3 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares,
including ETF Creation Units.

ETF Shares           
 
        Year Ended August 31, 
For a Share Outstanding Throughout Each Period  2009  2008  2007  2006  2005 
Net Asset Value, Beginning of Period  $69.04  $67.35  $61.94  $56.03  $52.28 
Investment Operations           
Net Investment Income  1.6161  1.3271  1.370  1.0901  .9501 
Net Realized and Unrealized Gain (Loss)           
on Investments  (7.413)     1.522  5.000  5.523  3.894 
Total from Investment Operations  (5.797)     2.849  6.370  6.613  4.844 
Distributions           
Dividends from Net Investment Income  (1.173)  (1.159)  (.960)  (.703)  (.853) 
Distributions from Realized Capital Gains          (.241) 
Total Distributions  (1.173)  (1.159)  (.960)  (.703)  (1.094) 
Net Asset Value, End of Period  $62.07  $69.04  $67.35  $61.94  $56.03 
 
Total Return  –8.22%  4.18%  10.38%  11.91%  9.33% 
 
Ratios/Supplemental Data           
Net Assets, End of Period (Millions)  $552  $518  $310  $211  $73 
Ratio of Total Expenses to           
Average Net Assets  0.25%  0.20%  0.22%  0.25%  0.26% 
Ratio of Net Investment Income to           
Average Net Assets  2.80%  1.93%  2.20%  1.93%  1.71% 
Portfolio Turnover Rate2  17%  13%  12%  14%  7% 

1 Calculated based on average shares outstanding.
2 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares,
including ETF Creation Units.

See accompanying Notes, which are an integral part of the Financial Statements.

25



Consumer Staples Index Fund

Notes to Financial Statements

Vanguard Consumer Staples Index Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund offers two classes of shares, Admiral Shares and ETF Shares. Admiral Shares are available to any investor who meets the fund’s minimum purchase requirements. ETF Shares are listed for trading on the NYSE Arca, Inc.; they can be purchased and sold through a broker.

A. The following significant accounting policies conform to generally accepted accounting principles for U.S. mutual funds. The fund consistently follows such policies in preparing its financial statements.

1. Security Valuation: Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which market quotations are not readily available, or whose values have been materially affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued by methods deemed by the board of trustees to represent fair value. Investments in Vanguard Market Liquidity Fund are valued at that fund’s net asset value.

2. Federal Income Taxes: The fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income. Management has analyzed the fund’s tax positions taken for all open federal income tax years (August 31, 2006–2009), and has concluded that no provision for federal income tax is required in the fund’s financial statements.

3. Distributions: Distributions to shareholders are recorded on the ex-dividend date.

4. Security Lending: The fund may lend its securities to qualified institutional borrowers to earn additional income. Security loans are required to be secured at all times by collateral at least equal to the market value of securities loaned. The fund invests cash collateral received in Vanguard Market Liquidity Fund, and records a liability for the return of the collateral, during the period the securities are on loan. Security lending income represents the income earned on investing cash collateral, less expenses associated with the loan.

5. Other: Dividend income is recorded on the ex-dividend date. Interest income includes income distributions received from Vanguard Market Liquidity Fund and is accrued daily. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment securities are those of the specific securities sold. Fees assessed on redemptions of capital shares are credited to paid-in capital.

Each class of shares has equal rights as to assets and earnings, except that each class separately bears certain class-specific expenses related to maintenance of shareholder accounts (included in Management and Administrative expenses), shareholder reporting, and proxies. Marketing and distribution expenses are allocated to each class of shares based on a method approved by the board of trustees. Income, other non-class-specific expenses, and gains and losses on investments are allocated to each class of shares based on its relative net assets.

B. The Vanguard Group furnishes at cost investment advisory, corporate management, administrative, marketing, and distribution services. The costs of such services are allocated to the fund under methods approved by the board of trustees. The fund has committed to provide up to 0.40% of its net assets in capital contributions to Vanguard. At August 31, 2009, the fund had contributed capital of $127,000 to Vanguard (included in Other Assets), representing 0.02% of the fund’s net assets and 0.05% of Vanguard’s capitalization. The fund’s trustees and officers are also directors and officers of Vanguard.

C. Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Level 1—Quoted prices in active markets for identical securities.

Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).

Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments).

At August 31, 2009, 100% of the fund’s investments were valued based on Level 1 inputs.

26



Consumer Staples Index Fund

D. Distributions are determined on a tax basis and may differ from net investment income and realized capital gains for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the financial statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain, or loss are recognized in different periods for financial statement and tax purposes; these differences will reverse at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.

During the year ended August 31, 2009, the fund realized $12,714,000 of net capital gains resulting from in-kind redemptions—in which shareholders exchanged fund shares for securities held by the fund rather than for cash. Because such gains are not taxable to the fund, and are not distributed to shareholders, they have been reclassified from accumulated net realized losses to paid-in capital.

For tax purposes, at August 31, 2009, the fund had $9,733,000 of ordinary income available for distribution. The fund had available capital loss carryforwards totaling $5,981,000 to offset future net capital gains of $276,000 through August 31, 2014, $773,000 through August 31, 2015, $2,261,000 through August 31, 2016, and $2,671,000 through August 31, 2017. In addition, the fund realized losses of $10,379,000 during the period from November 1, 2008, through August 31, 2009, which are deferred and will be treated as realized for tax purposes in fiscal 2010.

At August 31, 2009, the cost of investment securities for tax purposes was $629,635,000. Net unrealized depreciation of investment securities for tax purposes was $48,672,000, consisting of unrealized gains of $13,452,000 on securities that had risen in value since their purchase and $62,124,000 in unrealized losses on securities that had fallen in value since their purchase.

E. During the year ended August 31, 2009, the fund purchased $365,348,000 of investment securities and sold $263,392,000 of investment securities, other than temporary cash investments.

F. Capital share transactions for each class of shares were:

      Year Ended August 31, 
    2009    2008 
  Amount  Shares  Amount  Shares 
  ($000)  (000)  ($000)  (000) 
Admiral Shares         
Issued  17,568  619  12,663  371 
Issued in Lieu of Cash Distributions  400  14  172  5 
Redeemed1  (6,571)  (236)  (3,756)  (113) 
Net Increase (Decrease)—Admiral Shares  11,397  397  9,079  263 
ETF Shares         
Issued  258,009  4,400  327,325  4,700 
Issued in Lieu of Cash Distributions         
Redeemed1  (171,208)  (3,000)  (122,875)  (1,800) 
Net Increase (Decrease)—ETF Shares  86,801  1,400  204,450  2,900 
1 Net of redemption fees for fiscal 2009 and 2008 of $49,000 and $35,000, respectively (fund totals).     

G. In preparing the financial statements as of August 31, 2009, management considered the impact of subsequent events occurring through October 15, 2009, for potential recognition or disclosure in these financial statements.

27



Energy Index Fund

Fund Profile

As of August 31, 2009

Portfolio Characteristics     
    Target  Broad 
  Fund  Index1  Index2 
Number of Stocks  158  158  2,501 
Median Market Cap  $28.5B  $66.7B  $27.3B 
Price/Earnings Ratio  16.2x  15.5x  25.6x 
Price/Book Ratio  1.7x  1.9x  2.1x 
Yield3    2.0%  1.9% 
   Admiral Shares  1.6%     
   ETF Shares  1.6%     
Return on Equity  25.1%  26.3%  19.3% 
Earnings Growth Rate  22.4%  19.6%  9.9% 
Foreign Holdings  0.0%  0.0%  0.0% 
Turnover Rate  25%     
Expense Ratio4       
   Admiral Shares  0.28%     
   ETF Shares  0.25%     
Short-Term Reserves  0.0%     

Industry Diversification (% of equity exposure) 
 
Coal & Consumable Fuels  2.6% 
Integrated Oil & Gas  47.0 
Oil & Gas Drilling  6.1 
Oil & Gas Equipment & Services  17.6 
Oil & Gas Exploration & Production  21.3 
Oil & Gas Refining & Marketing  2.1 
Oil & Gas Storage & Transportation  3.3 

Ten Largest Holdings6 (% of total net assets) 
 
ExxonMobil Corp.  19.8% 
Chevron Corp.  12.5 
Schlumberger Ltd.  6.5 
ConocoPhillips Co.  6.3 
Occidental Petroleum Corp.  4.8 
Apache Corp.  2.3 
Anadarko Petroleum Corp.  2.2 
Devon Energy Corp.  2.1 
Transocean Ltd.  2.0 
Marathon Oil Corp.  1.7 
Top Ten  60.2% 

Volatility Measures5   
  Fund Versus  Fund Versus 
  Target Index1  Broad Index2 
R-Squared  0.99  0.50 
Beta  1.06  0.95 

1 MSCI US IMI/Energy.
2 MSCI US IMI/2500.
3 30-day SEC yield for the fund; annualized dividend yield for the indexes. See the Glossary.
4 The expense ratios shown are from the prospectuses dated December 29, 2008, and represent estimated costs for the current fiscal year based on the fund’s net assets as of the prospectus date. For the fiscal year
ended August 31, 2009, the expense ratios were 0.28% for Admiral Shares and 0.25% for ETF Shares.
5 For an explanation of R-squared, beta, and other terms used here, see the Glossary.
6 The holdings listed exclude any temporary cash investments and equity index products.

28



Energy Index 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 www.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: September 23, 2004–August 31, 2009
Initial Investment of $10,000


   Average Annual Total Returns  Final Value 
  Periods Ended August 31, 2009  of a $10,000 
     One Year  Since Inception1  Investment 
Energy Index Fund ETF Shares Net Asset Value2       –30.49%                   9.96%  $15,980 
Energy Index Fund ETF Shares Market Price       –30.45                   9.99  15,999 
MSCI US IMI/2500       –18.26                   1.20  10,605 
MSCI US IMI/Energy       –29.18                   9.91  15,941 

      Final Value 
      of a $100,000 
  One Year  Since Inception1  Investment 
Energy Index Fund Admiral Shares3  –30.51%                   8.77%  $150,922 
MSCI US IMI/2500  –18.26                   0.77  103,819 
MSCI US IMI/Energy  –29.18                   8.68  150,335 

1 Performance for the fund and its comparative standards is calculated since the following inception dates: September 23, 2004, for ETF Shares; October 7, 2004, for Admiral Shares.
2 For more information about how the ETF Shares’ market prices have compared with their net asset value, visit www.vanguard.com, select your ETF, and then select the Performance tab. The Premium/Discount
table there shows the percentages of days on which the ETF Shares’ market price was above or below the NAV.
3 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than one year.
Note: See Financial Highlights tables for dividend and capital gains information.

29



Energy Index Fund

Fiscal-Year Total Returns (%): September 23, 2004–August 31, 2009


Cumulative Returns: ETF Shares, September 23, 2004–August 31, 2009     
    Cumulative 
    Since 
  One Year  Inception 
Energy Index Fund ETF Shares Market Price  –30.45%  59.99% 
Energy Index Fund ETF Shares Net Asset Value  –30.49  59.80 
MSCI US IMI/Energy  –29.18  59.41 

Average Annual Total Returns: Periods Ended June 30, 2009

This table presents average annual total returns through the latest calendar quarter—rather than through the end of the fiscal period. Securities and Exchange Commission rules require that we provide this information.

           Since 
  Inception Date  One Year  Inception 
ETF Shares  9/23/2004     
     Market Price    –45.13%     8.79% 
     Net Asset Value    –45.13     8.80 
Admiral Shares1  10/7/2004  –45.16     7.57 

1 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than one year.
Note: See Financial Highlights tables for dividend and capital gains information.

30



Energy Index Fund

Financial Statements

Statement of Net Assets

As of August 31, 2009

The fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth fiscal quarters, the lists appear in the fund’s semiannual and annual reports to shareholders. For the first and third fiscal quarters, the fund files the lists with the Securities and Exchange Commission on Form N-Q. Shareholders can look up the fund’s Forms N-Q on the SEC’s website at www.sec.gov. Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room (see the back cover of this report for further information).

      Market 
      Value 
    Shares  ($000) 
Common Stocks (100.0%)     
Energy Equipment & Services (23.7%)   
  Oil & Gas Drilling (6.1%)     
*  Transocean Ltd.  259,144  19,653 
  Noble Corp.  215,310  7,542 
  Diamond Offshore     
  Drilling, Inc.  59,089  5,284 
  ENSCO International, Inc.  118,000  4,354 
*  Nabors Industries, Inc.  244,152  4,317 
*  Pride International, Inc.  150,761  3,887 
  Helmerich & Payne, Inc.  91,190  3,051 
  Rowan Cos., Inc.  105,399  2,183 
  Patterson-UTI Energy, Inc.  147,435  1,959 
*  Unit Corp.  46,192  1,728 
*  Atwood Oceanics, Inc.  60,555  1,725 
*  Parker Drilling Co.  272,975  1,231 
*  Hercules Offshore, Inc.  229,504  1,056 
*  Pioneer Drilling Co.  132,004  752 
*  Bronco Drilling Co., Inc.  111,510  413 
*  Seahawk Drilling Inc.  10,050  224 
 
  Oil & Gas Equipment & Services (17.6%)   
  Schlumberger Ltd.  1,128,716  63,434 
  Halliburton Co.  694,090  16,457 
*  National Oilwell Varco Inc.  327,611  11,909 
*  Weatherford     
  International Ltd.  539,132  10,756 
  Baker Hughes Inc.  246,043  8,476 
*  Cameron International Corp. 177,038  6,322 
*  FMC Technologies Inc.  103,875  4,955 
  Smith International, Inc.  176,655  4,870 
  BJ Services Co.  245,052  3,935 
*  Oceaneering     
  International, Inc.  49,565  2,586 
*  Dresser Rand Group, Inc.  75,428  2,240 
  Core Laboratories N.V.  20,725  1,921 
  Tidewater Inc.  43,456  1,876 
*  SEACOR Holdings Inc.  22,332  1,700 
*  Oil States International, Inc.  53,892  1,588 
*  Key Energy Services, Inc.  216,167  1,546 
*  TETRA Technologies, Inc.  169,794  1,498 
*  Superior Energy     
  Services, Inc.  80,772  1,472 
*  Global Industries Ltd.  149,677  1,422 
*  Dril-Quip, Inc.  32,543  1,388 
*  Complete Production     
  Services, Inc.  143,244  1,289 
*  Exterran Holdings, Inc.  71,300  1,285 
*  NATCO Group Inc.  30,499  1,269 
  CARBO Ceramics Inc.  28,517  1,228 
*  Helix Energy Solutions     
  Group, Inc.  97,773  1,144 
*  Cal Dive International, Inc.  98,249  1,025 
*  Bristow Group, Inc.  35,002  1,022 
*  PHI Inc. Non-Voting Shares  48,231  1,006 
*  Allis-Chalmers Energy Inc.  274,429  900 
*  Dawson Geophysical Co.  33,759  837 
*  Gulfmark Offshore, Inc.  27,050  807 

      Market 
      Value 
    Shares  ($000) 
  Lufkin Industries, Inc.  18,203  805 
  Gulf Island Fabrication, Inc.  53,045  794 
*,^  SulphCo, Inc.  477,711  759 
  RPC Inc.  82,986  758 
*  Willbros Group, Inc.  58,973  734 
*  ION Geophysical Corp.  278,655  711 
*  Hornbeck Offshore     
  Services, Inc.  32,120  708 
*  OYO Geospace Corp.  34,152  687 
*  Superior Well Services, Inc.  73,402  663 
*  Matrix Service Co.  58,956  650 
*  Tesco Corp.  81,338  625 
*  T-3 Energy Services, Inc.  35,043  616 
*  Newpark Resources, Inc.  215,952  577 
*  Basic Energy Services Inc.  68,823  467 
      231,076 
Oil, Gas & Consumable Fuels (76.3%)   
  Coal & Consumable Fuels (2.6%)   
  Peabody Energy Corp.  212,673  6,950 
  CONSOL Energy, Inc.  152,622  5,710 
*  Alpha Natural     
  Resources, Inc.  122,468  3,957 
  Arch Coal, Inc.  148,556  2,573 
  Massey Energy Co.  86,042  2,330 
*  Patriot Coal Corp.  150,261  1,331 
*  International Coal     
  Group, Inc.  308,506  938 
*  James River Coal Co.  43,741  728 
*  USEC Inc.  130,316  593 
 
  Integrated Oil & Gas (47.2%)   
  ExxonMobil Corp.  2,792,730  193,117 
  Chevron Corp.  1,751,992  122,534 
  ConocoPhillips Co.  1,358,104  61,156 
  Occidental Petroleum Corp.  647,964  47,366 
  Marathon Oil Corp.  542,520  16,748 
  Hess Corp.  227,126  11,490 
  Murphy Oil Corp.  146,638  8,358 
 
  Oil & Gas Exploration & Production (21.2%) 
  Apache Corp.  268,005  22,767 
  Anadarko Petroleum Corp.  400,864  21,194 
  Devon Energy Corp.  341,490  20,961 
  XTO Energy, Inc.  425,218  16,413 
  EOG Resources, Inc.  194,087  13,974 
  Chesapeake Energy Corp.  448,505  10,244 
*  Southwestern Energy Co.  271,889  10,022 
  Noble Energy, Inc.  134,897  8,156 
  Range Resources Corp.  127,840  6,184 
*  Ultra Petroleum Corp.  120,437  5,592 
*  Petrohawk Energy Corp.  254,884  5,488 
*  Newfield Exploration Co.  110,099  4,260 
*  Denbury Resources, Inc.  212,909  3,240 
  Cimarex Energy Co.  82,210  3,210 
  Cabot Oil & Gas Corp.  90,176  3,179 
*  Plains Exploration     
  & Production Co.  116,017  3,045 

      Market 
      Value 
    Shares  ($000) 
  Pioneer Natural     
  Resources Co.  103,362  2,993 
*  Whiting Petroleum Corp.  52,307  2,539 
*  EXCO Resources, Inc.  158,949  2,330 
  St. Mary Land &     
  Exploration Co.  74,682  1,964 
*  Encore Acquisition Co.  50,205  1,892 
*  SandRidge Energy, Inc.  154,698  1,887 
*  Continental Resources, Inc.  52,301  1,846 
*  Concho Resources, Inc.  53,426  1,741 
*  Comstock Resources, Inc.  46,212  1,633 
*  Forest Oil Corp.  91,091  1,432 
*  Brigham Exploration Co.  207,342  1,358 
*  Mariner Energy Inc.  110,465  1,340 
*  Bill Barrett Corp.  43,669  1,277 
*  Quicksilver Resources, Inc.  116,836  1,264 
*  Swift Energy Co.  61,077  1,244 
*  Gulfport Energy Corp.  163,131  1,224 
*  Stone Energy Corp.  95,662  1,221 
  Penn Virginia Corp.  61,949  1,187 
*  Arena Resources, Inc.  38,528  1,178 
  Berry Petroleum Class A  51,844  1,170 
*  CNX Gas Corp.  40,490  1,145 
*  Rosetta Resources, Inc.  95,911  1,133 
*  McMoRan Exploration Co.  130,219  1,086 
  Atlas America, Inc.  47,653  1,057 
*  Goodrich Petroleum Corp.  37,589  900 
*  Carrizo Oil & Gas, Inc.  43,042  832 
  W&T Offshore, Inc.  79,998  790 
*  Contango Oil & Gas Co.  17,344  779 
*  Rex Energy Corp.  127,630  761 
*  ATP Oil & Gas Corp.  68,088  759 
*  PetroQuest Energy, Inc.  161,587  672 
*  Harvest Natural     
  Resources, Inc.  124,520  644 
*  Veneco Inc.  79,862  643 
*  Warren Resources Inc.  246,619  604 
*  BPZ Energy, Inc.  99,362  604 
*  Oilsands Quest, Inc.  675,138  594 
  Vaalco Energy, Inc.  125,850  594 
*  Petroleum     
  Development Corp.  41,821  573 
*  GMX Resources Inc.  53,545  567 
*  Delta Petroleum Corp.  307,916  554 
*  Approach Resources Inc.  69,541  522 
*  Northern Oil and Gas, Inc.  68,332  437 
*  Clayton Williams Energy, Inc.  18,579  368 
*  Endeavor International Corp.  242,529  269 
 
  Oil & Gas Refining & Marketing (2.1%)   
  Valero Energy Corp.  464,371  8,702 
  Sunoco, Inc.  103,619  2,787 
  Tesoro Corp.  122,121  1,719 
  World Fuel Services Corp.  30,946  1,391 
  Frontier Oil Corp.  104,359  1,339 
  Holly Corp.  50,726  1,159 
*  CVR Energy, Inc.  100,423  972 
*  Clean Energy Fuels Corp.  73,629  922 
*  Western Refining, Inc.  82,563  501 
  Delek US Holdings, Inc.  49,543  401 
  Alon USA Energy, Inc.  33,136  312 
 
  Oil & Gas Storage & Transportation (3.2%) 
  Spectra Energy Corp.  492,283  9,265 
  Williams Cos., Inc.  472,332  7,765 
  El Paso Corp.  593,686  5,480 

31



Energy Index Fund

      Market 
      Value 
    Shares  ($000) 
*  Kinder Morgan     
  Management, LLC  63,148  2,989 
  Southern Union Co.  111,900  2,220 
  Overseas Shipholding     
  Group Inc.  34,993  1,238 
  Crosstex Energy, Inc.  245,832  941 
*  Enbridge Energy     
  Management LLC  21,149  891 
  General Maritime Corp.  87,368  694 
*  Cheniere Energy, Inc.  132,110  363 
      745,466 
Total Common Stocks     
(Cost $1,031,756)    976,542 
Temporary Cash Investment (0.0%)   
Money Market Fund (0.0%)     
1,2  Vanguard Market     
  Liquidity Fund, 0.277%     
  (Cost $249)  248,600  249 
Total Investments (100.0%)     
(Cost $1,032,005)    976,791 
Other Assets and Liabilities (0.0%)   
Other Assets    4,521 
Liabilities2    (4,301) 
      220 
Net Assets (100%)    977,011 

At August 31, 2009, net assets consisted of: 
  Amount 
  ($000) 
Paid-in Capital  1,108,733 
Undistributed Net Investment Income  10,269 
Accumulated Net Realized Losses  (86,777) 
Unrealized Appreciation (Depreciation)  (55,214) 
Net Assets  977,011 
 
 
Admiral Shares—Net Assets   
Applicable to 2,885,656 outstanding   
$.001 par value shares of beneficial   
interest (unlimited authorization)  107,744 
Net Asset Value Per Share—   
Admiral Shares  $37.34 
 
 
ETF Shares—Net Assets   
Applicable to 11,630,703 outstanding   
$.001 par value shares of beneficial   
interest (unlimited authorization)  869,267 
Net Asset Value Per Share—   
ETF Shares  $74.74 

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 $198,000.
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 $249,000 of collateral received for securities on loan.
See accompanying Notes, which are an integral part of the Financial Statements.

32



Energy Index Fund

Statement of Operations

  Year Ended 
August 31, 2009 
  ($000) 
Investment Income   
Income   
Dividends  15,691 
Interest1  5 
Security Lending  85 
Total Income  15,781 
Expenses   
The Vanguard Group—Note B   
     Investment Advisory Services  91 
     Management and Administrative—   
     Admiral Shares  218 
     Management and Administrative—   
     ETF Shares  1,138 
     Marketing and Distribution—   
     Admiral Shares  27 
     Marketing and Distribution—   
     ETF Shares  211 
Custodian Fees  13 
Auditing Fees  24 
Shareholders’ Reports and Proxies—   
Admiral Shares  1 
Shareholders’ Reports and Proxies—   
ETF Shares  175 
Trustees’ Fees and Expenses  1 
Total Expenses  1,899 
Net Investment Income  13,882 
Realized Net Gain (Loss) on   
Investment Securities Sold  (45,410) 
Change in Unrealized Appreciation   
(Depreciation) of Investment Securities  (235,527) 
Net Increase (Decrease) in Net Assets   
Resulting from Operations  (267,055) 

Statement of Changes in Net Assets

  Year Ended August 31, 
  2009  2008 
  ($000)  ($000) 
Increase (Decrease) in Net Assets     
Operations     
Net Investment Income  13,882  9,456 
Realized Net Gain (Loss)  (45,410)  52,425 
Change in Unrealized Appreciation (Depreciation)  (235,527)  11,906 
Net Increase (Decrease) in Net Assets Resulting from Operations  (267,055)  73,787 
Distributions     
Net Investment Income     
     Admiral Shares  (1,381)  (1,147) 
     ETF Shares  (9,252)  (6,303) 
Realized Capital Gain     
     Admiral Shares     
     ETF Shares     
Total Distributions  (10,633)  (7,450) 
Capital Share Transactions     
     Admiral Shares  4,816  24,896 
     ETF Shares  256,766  130,701 
Net Increase (Decrease) from Capital Share Transactions  261,582  155,597 
Total Increase (Decrease)  (16,106)  221,934 
Net Assets     
Beginning of Period  993,117  771,183 
End of Period2  977,011  993,117 

1 Interest income from an affiliated company of the fund was $5,000.
2 Net Assets—End of Period includes undistributed net investment income of $10,269,000 and $7,020,000.
See accompanying Notes, which are an integral part of the Financial Statements.

33



Energy Index Fund

Financial Highlights

Admiral Shares           
          Oct. 7, 
          20041 to 
      Year Ended August 31,  Aug. 31, 
For a Share Outstanding Throughout Each Period  2009  2008  2007  2006  2005 
Net Asset Value, Beginning of Period  $54.66  $50.36  $40.36  $36.29  $25.98 
Investment Operations           
Net Investment Income  .578  .504  .5012  .4602         .5882,3 
Net Realized and Unrealized Gain (Loss)           
on Investments  (17.335)  4.246  9.944  3.960  9.833 
Total from Investment Operations  (16.757)  4.750  10.445  4.420  10.421 
Distributions           
Dividends from Net Investment Income  (.563)  (.450)  (.445)  (.350)  (.111) 
Distributions from Realized Capital Gains           
Total Distributions  (.563)  (.450)  (.445)  (.350)  (.111) 
Net Asset Value, End of Period  $37.34  $54.66  $50.36  $40.36  $36.29 
 
Total Return4  –30.51%  9.42%  26.03%  12.27%  40.27% 
 
Ratios/Supplemental Data           
Net Assets, End of Period (Millions)  $108  $148  $115  $83  $60 
Ratio of Total Expenses to           
Average Net Assets  0.28%  0.25%  0.26%  0.28%  0.28%5 
Ratio of Net Investment Income to           
Average Net Assets  1.81%  0.99%  1.16%  1.20%  1.95%3,5 
Portfolio Turnover Rate6  25%  11%  15%  21%  16% 

1 Inception.
2 Calculated based on average shares outstanding.
3 Net investment income per share and the ratio of net investment income to average net assets include $.163 and 0.52%, respectively,
resulting from a cash payment received in connection with the merger of Chevron Corp. and Unocal Corp. in August 2005.
4 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than one year.
5 Annualized.
6 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares,
including ETF Creation Units.

See accompanying Notes, which are an integral part of the Financial Statements.

34



Energy Index Fund

Financial Highlights

ETF Shares           
          Sept. 23, 
          20041 to 
      Year Ended August 31,  Aug. 31, 
For a Share Outstanding Throughout Each Period  2009  2008  2007  2006  2005 
Net Asset Value, Beginning of Period  $109.54  $100.92  $80.90  $72.72  $49.24 
Investment Operations           
Net Investment Income  1.191  1.059  1.0802  .9662         1.1692,3 
Net Realized and Unrealized Gain (Loss)           
on Investments  (34.808)  8.501  19.869  7.915  22.527 
Total from Investment Operations  (33.617)  9.560  20.949  8.881  23.696 
Distributions           
Dividends from Net Investment Income  (1.183)  (.940)  (.929)  (.701)  (.216) 
Distributions from Realized Capital Gains           
Total Distributions  (1.183)  (.940)  (.929)  (.701)  (.216) 
Net Asset Value, End of Period  $74.74  $109.54  $100.92  $80.90  $72.72 
 
Total Return  –30.49%  9.47%  26.09%  12.31%  48.29% 
 
Ratios/Supplemental Data           
Net Assets, End of Period (Millions)  $869  $845  $656  $340  $182 
Ratio of Total Expenses to           
Average Net Assets  0.25%  0.20%  0.22%  0.25%  0.26%4 
Ratio of Net Investment Income to           
Average Net Assets  1.84%  1.04%  1.20%  1.23%  1.97%3,4 
Portfolio Turnover Rate5  25%  11%  15%  21%  16% 

1 Inception.
2 Calculated based on average shares outstanding.
3 Net investment income per share and the ratio of net investment income to average net assets include $.324 and 0.52%, respectively,
resulting from a cash payment received in connection with the merger of Chevron Corp. and Unocal Corp. in August 2005.
4 Annualized.
5 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares,
including ETF Creation Units.

See accompanying Notes, which are an integral part of the Financial Statements.

35



Energy Index Fund

Notes to Financial Statements

Vanguard Energy Index Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund offers two classes of shares: Admiral Shares and ETF Shares. Admiral Shares are available to any investor who meets the fund’s minimum purchase requirements. ETF Shares are listed for trading on the NYSE Arca, Inc.; they can be purchased and sold through a broker.

A. The following significant accounting policies conform to generally accepted accounting principles for U.S. mutual funds. The fund consistently follows such policies in preparing its financial statements.

1. Security Valuation: Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which market quotations are not readily available, or whose values have been materially affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued by methods deemed by the board of trustees to represent fair value. Investments in Vanguard Market Liquidity Fund are valued at that fund’s net asset value.

2. Federal Income Taxes: The fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income. Management has analyzed the fund’s tax positions taken for all open federal income tax years (August 31, 2006–2009), and has concluded that no provision for federal income tax is required in the fund’s financial statements.

3. Distributions: Distributions to shareholders are recorded on the ex-dividend date.

4. Security Lending: The fund may lend its securities to qualified institutional borrowers to earn additional income. Security loans are required to be secured at all times by collateral at least equal to the market value of securities loaned. The fund invests cash collateral received in Vanguard Market Liquidity Fund, and records a liability for the return of the collateral, during the period the securities are on loan. Security lending income represents the income earned on investing cash collateral, less expenses associated with the loan.

5. Other: Dividend income is recorded on the ex-dividend date. Interest income includes income distributions received from Vanguard Market Liquidity Fund and is accrued daily. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment securities are those of the specific securities sold. Fees assessed on redemptions of capital shares are credited to paid-in capital.

Each class of shares has equal rights as to assets and earnings, except that each class separately bears certain class-specific expenses related to maintenance of shareholder accounts (included in Management and Administrative expenses), shareholder reporting, and proxies. Marketing and distribution expenses are allocated to each class of shares based on a method approved by the board of trustees. Income, other non-class-specific expenses, and gains and losses on investments are allocated to each class of shares based on its relative net assets.

B. The Vanguard Group furnishes at cost investment advisory, corporate management, administrative, marketing, and distribution services. The costs of such services are allocated to the fund under methods approved by the board of trustees. The fund has committed to provide up to 0.40% of its net assets in capital contributions to Vanguard. At August 31, 2009, the fund had contributed capital of $214,000 to Vanguard (included in Other Assets), representing 0.02% of the fund’s net assets and 0.09% of Vanguard’s capitalization. The fund’s trustees and officers are also directors and officers of Vanguard.

C. Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Level 1—Quoted prices in active markets for identical securities.

Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).

Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments).

At August 31, 2009, 100% of the fund’s investments were valued based on Level 1 inputs.

36



Energy Index Fund

D. Distributions are determined on a tax basis and may differ from net investment income and realized capital gains for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the financial statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain, or loss are recognized in different periods for financial statement and tax purposes; these differences will reverse at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.

During the year ended August 31, 2009, the fund realized $28,252,000 of net capital gains resulting from in-kind redemptions—in which shareholders exchanged fund shares for securities held by the fund rather than for cash. Because such gains are not taxable to the fund, and are not distributed to shareholders, they have been reclassified from accumulated net realized losses to paid-in capital.

For tax purposes, at August 31, 2009, the fund had $10,882,000 of ordinary income available for distribution. The fund had available capital loss carryforwards totaling $24,215,000 to offset future net capital gains of $5,000 through August 31, 2013, $789,000 through August 31, 2014, $461,000 through August 31, 2015, $1,694,000 through August 31, 2016, and $21,266,000 through August 31, 2017. In addition, the fund realized losses of $62,562,000 during the period from November 1, 2008, through August 31, 2009, which are deferred and will be treated as realized for tax purposes in fiscal 2010.

At August 31, 2009, the cost of investment securities for tax purposes was $1,032,005,000. Net unrealized depreciation of investment securities for tax purposes was $55,214,000, consisting of unrealized gains of $43,674,000 on securities that had risen in value since their purchase and $98,888,000 in unrealized losses on securities that had fallen in value since their purchase.

E. During the year ended August 31, 2009, the fund purchased $564,897,000 of investment securities and sold $293,047,000 of investment securities, other than temporary cash investments.

F. Capital share transactions for each class of shares were:

      Year Ended August 31, 
    2009    2008 
  Amount  Shares  Amount  Shares 
  ($000)  (000)  ($000)  (000) 
Admiral Shares         
Issued  40,669  1,162  58,522  1,041 
Issued in Lieu of Cash Distributions  1,181  36  1,022  18 
Redeemed1  (37,034)  (1,022)  (34,648)  (630) 
Net Increase (Decrease)—Admiral Shares  4,816  176  24,896  429 
ETF Shares         
Issued  350,914  5,017  261,143  2,311 
Issued in Lieu of Cash Distributions         
Redeemed1  (94,148)  (1,100)  (130,442)  (1,100) 
Net Increase (Decrease)—ETF Shares  256,766  3,917  130,701  1,211 
1 Net of redemption fees for fiscal 2009 and 2008 of $243,000 and $241,000, respectively (fund totals).     

G. In preparing the financial statements as of August 31, 2009, management considered the impact of subsequent events occurring through October 15, 2009, for potential recognition or disclosure in these financial statements.

37



Financials Index Fund

Fund Profile

As of August 31, 2009

Portfolio Characteristics     
    Target  Broad 
  Fund  Index1  Index2 
Number of Stocks  503  502  2,501 
Median Market Cap  $20.9B  $20.9B  $27.3B 
Price/Earnings Ratio  82.2x  82.0x  25.6x 
Price/Book Ratio  1.2x  1.2x  2.1x 
Yield3    1.7%  1.9% 
   Admiral Shares  2.0%     
   ETF Shares  2.0%     
Return on Equity  13.2%  13.2%  19.3% 
Earnings Growth Rate  –10.5%  –10.5%  9.9% 
Foreign Holdings  0.0%  0.0%  0.0% 
Turnover Rate  17%     
Expense Ratio4       
   Admiral Shares  0.28%     
   ETF Shares  0.25%     
Short-Term Reserves  0.0%     

Volatility Measures5   
  Fund Versus  Fund Versus 
  Target Index1  Broad Index2 
R-Squared  1.00  0.78 
Beta  1.00  1.44 

Industry Diversification (% of equity exposure) 
 
Asset Management & Custody Banks  8.3% 
Consumer Finance  4.0 
Diversified Banks  9.4 
Insurance Brokers  1.8 
Investment Banking & Brokerage  8.7 
Life & Health Insurance  6.1 
Mortgage REITs  1.1 
Multiline Insurance  2.2 
Office REITs  1.9 
Other Diversified Financial Services  21.0 
Property & Casualty Insurance  10.5 
Regional Banks  8.4 
Reinsurance  1.8 
Residential REITs  1.6 
Retail REITs  2.7 
Specialized Finance  2.6 
Specialized REITs  3.5 
Thrifts & Mortgage Finance  2.0 
Other Financials  2.4 

Ten Largest Holdings6 (% of total net assets) 
 
JPMorgan Chase & Co.   9.2% 
Bank of America Corp.   8.6 
Wells Fargo & Co.   6.8 
The Goldman Sachs Group, Inc.   4.5 
Citigroup Inc.   3.2 
U.S. Bancorp   2.4 
Berkshire Hathaway Inc. Class B   2.1 
American Express Co.   2.0 
Bank of New York Mellon Corp.   2.0 
Morgan Stanley   1.9 
Top Ten  42.7% 

1 MSCI US IMI/Financials.
2 MSCI US IMI/2500.
3 30-day SEC yield for the fund; annualized dividend yield for the indexes. See the Glossary.
4 The expense ratios shown are from the prospectuses dated December 29, 2008, and represent estimated costs for the current fiscal year based on the fund’s net assets as of the prospectus date. For the fiscal
year ended August 31, 2009, the expense ratios were 0.28% for Admiral Shares and 0.25% for ETF Shares.
5 For an explanation of R-squared, beta, and other terms used here, see the Glossary.
6 The holdings listed exclude any temporary cash investments and equity index products.

38



Financials Index 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 www.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: January 26, 2004–August 31, 2009
Initial Investment of $10,000


    Average Annual Total Returns   
    Periods Ended August 31, 2009  Final Value 
      Since  of a $10,000 
  One Year  Five Years  Inception1  Investment 
Financials Index Fund ETF Shares         
Net Asset Value2  –25.31%  –7.88%  –7.05%  $6,642 
Financials Index Fund ETF Shares         
Market Price  –25.16  –7.83  –7.04  6,646 
MSCI US IMI/2500  –18.26  1.36  0.52  10,295 
MSCI US IMI/Financials  –25.67  –7.86  –7.01  6,658 

        Final Value 
      Since  of a $100,000 
  One Year  Five Years  Inception1  Investment 
Financials Index Fund Admiral Shares3  –25.35%  7.91%         –6.83%  $67,413 
MSCI US IMI/2500  –18.26  1.36  1.04  105,926 
MSCI US IMI/Financials  –25.67  –7.86  –6.76  67,698 

1 Performance for the fund and its comparative standards is calculated since the following inception dates: January 26, 2004, for ETF Shares; February 4, 2004, for Admiral Shares.
2 For more information about how the ETF Shares’ market prices have compared with their net asset value, visit www.vanguard.com, select your ETF, and then select the Performance tab. The Premium/Discount
table there shows the percentages of days on which the ETF Shares’ market price was above or below the NAV.
3 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than one year.
Note: See Financial Highlights tables for dividend and capital gains information.

39



Financials Index Fund

Fiscal-Year Total Returns (%): January 26, 2004–August 31, 2009


Cumulative Returns: ETF Shares, January 26, 2004–August 31, 2009     
      Cumulative 
      Since 
  One Year  Five Years  Inception 
Financials Index Fund ETF Shares Market Price  –25.16%   –33.49%  –33.54% 
Financials Index Fund ETF Shares Net Asset Value  –25.31   –33.66     –33.58 
MSCI US IMI/Financials  –25.67   –33.57     –33.42 

Average Annual Total Returns: Periods Ended June 30, 2009
This table presents average annual total returns through the latest calendar quarter—rather than through the end of
the fiscal period. Securities and Exchange Commission rules require that we provide this information.

             Since 
  Inception Date  One Year  Five Years  Inception 
ETF Shares  1/26/2004       
     Market Price    –34.60%   –11.19%  –10.62% 
     Net Asset Value    –34.58   –11.78  –10.61 
Admiral Shares1  2/4/2004  –34.55   –11.19  –10.40 

1 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than one year.
Note: See Financial Highlights tables for dividend and capital gains information.

40



Financials Index Fund

Financial Statements

Statement of Net Assets

As of August 31, 2009

The fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth fiscal quarters, the lists appear in the fund’s semiannual and annual reports to shareholders. For the first and third fiscal quarters, the fund files the lists with the Securities and Exchange Commission on Form N-Q. Shareholders can look up the fund’s Forms N-Q on the SEC’s website at www.sec.gov. Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room (see the back cover of this report for further information).

      Market 
      Value 
    Shares  ($000) 
Common Stocks (100.1%)     
Capital Markets (17.0%)     
  The Goldman Sachs     
  Group, Inc.  176,059  29,131 
  Bank of New York     
  Mellon Corp.  439,891  13,025 
  Morgan Stanley  433,409  12,551 
  State Street Corp.  178,985  9,393 
  Charles Schwab Corp.  362,969  6,555 
  Franklin Resources, Inc.  59,770  5,578 
  Northern Trust Corp.  79,082  4,623 
  T. Rowe Price Group Inc.  94,082  4,264 
  Invesco, Ltd.  151,449  3,143 
  Ameriprise Financial, Inc.  93,875  2,819 
*  TD Ameritrade Holding Corp.  96,697  1,860 
  BlackRock, Inc.  7,811  1,559 
  Legg Mason Inc.  52,045  1,497 
  Eaton Vance Corp.  40,544  1,158 
*  Affiliated Managers     
  Group, Inc.  15,212  994 
  SEI Investments Co.  49,192  907 
  Federated Investors, Inc.  34,040  894 
*  Jefferies Group, Inc.  37,762  893 
  Janus Capital Group Inc.  66,300  843 
  Waddell & Reed     
  Financial, Inc.  31,397  833 
  Raymond James     
  Financial, Inc.  36,213  824 
*  E*TRADE Financial Corp.  388,679  684 
*  Knight Capital Group, Inc.     
  Class A  32,590  656 
  Greenhill & Co., Inc.  7,276  576 
  Apollo Investment Corp.  58,926  546 
*  Stifel Financial Corp.  9,056  510 
*  Investment Technology     
  Group, Inc.  16,013  395 
  Ares Capital Corp.  40,121  373 
*  Piper Jaffray Cos., Inc.  7,020  356 
*  KBW Inc.  11,626  333 
*  MF Global Ltd.  37,955  271 
  optionsXpress Holdings Inc.  15,987  266 
  American Capital Ltd.  101,640  252 
  Allied Capital Corp.  66,510  199 
  GFI Group Inc.  26,377  189 
  Prospect Energy Corp.  17,506  179 
*  Riskmetrics Group Inc.  11,304  176 
  BlackRock Kelso     
  Capital Corp.  20,685  164 
*  Broadpoint Gleacher     
  Securities Inc.  21,665  164 
  SWS Group, Inc.  9,238  134 
  Evercore Partners Inc.  5,238  132 
  Cohen & Steers, Inc.  6,217  122 
  Duff & Phelps Corp.  7,095  121 
  Hercules Technology     
  Growth Capital, Inc.  12,213  113 
*  TradeStation Group, Inc.  12,715  91 
*  FBR Capital Markets Corp.  16,274  88 

        Market 
        Value 
      Shares  ($000) 
  Gamco Investors Inc.       
  Class A    1,853  84 
  Calamos Asset       
  Management, Inc.    7,209  81 
  Westwood Holdings       
  Group, Inc.    2,062  79 
  MVC Capital, Inc.    8,080  74 
  Capital Southwest Corp.  952  72 
*  LaBranche & Co. Inc.    18,257  70 
  BGC Partners, Inc.    15,553  70 
*  Penson Worldwide, Inc.  5,283  54 
  NGP Capital Resources Co.  7,916  51 
*  FCStone Group, Inc.    9,755  47 
*  Thomas Weisel Partners     
  Group, Inc.    7,000  31 
        111,147 
Commercial Banks (17.8%)     
  Wells Fargo & Co.  1,610,723  44,327 
  U.S. Bancorp    698,675  15,804 
  BB&T Corp.    251,062  7,015 
  PNC Financial       
  Services Group    163,814  6,977 
  SunTrust Banks, Inc.    171,151  4,000 
  Fifth Third Bancorp    278,211  3,044 
  Regions Financial Corp.  403,388  2,364 
  KeyCorp    287,029  1,912 
  M & T Bank Corp.    27,969  1,727 
  Comerica, Inc.    55,613  1,483 
*  First Horizon National Corp.  79,121  1,059 
  Cullen/Frost Bankers, Inc.  19,686  970 
  Huntington Bancshares Inc.  200,103  912 
  Marshall & Ilsley Corp.    123,323  878 
  Commerce Bancshares, Inc.  23,839  876 
  Zions Bancorp    40,306  712 
  Bank of Hawaii Corp.    17,619  695 
  BancorpSouth, Inc.    27,740  638 
  City National Corp.    15,880  627 
  TCF Financial Corp.    42,593  586 
  Valley National Bancorp  49,786  581 
  Westamerica       
  Bancorporation    10,727  552 
  FirstMerit Corp.    30,375  546 
  Prosperity Bancshares, Inc.  15,367  531 
*  SVB Financial Group    12,224  486 
  Fulton Financial Corp.    64,763  475 
  Associated Banc-Corp.    44,697  464 
  UMB Financial Corp.    11,229  449 
*  Signature Bank    14,674  445 
  BOK Financial Corp.    8,755  396 
  CapitalSource Inc.    95,266  394 
  Synovus Financial Corp.  104,222  386 
  PrivateBancorp, Inc.    15,103  364 
  Wilmington Trust Corp.  25,712  361 
  Trustmark Corp.    17,923  341 
  IBERIABANK Corp.    7,005  339 
  Glacier Bancorp, Inc.    22,746  339 
  Hancock Holding Co.    8,784  337 
  Umpqua Holdings Corp.  30,941  319 

      Market 
      Value 
    Shares  ($000) 
  First Financial     
  Bankshares, Inc.  6,172  308 
  United Bankshares, Inc.  15,309  301 
  International     
  Bancshares Corp.  19,088  295 
  F.N.B. Corp.  40,940  290 
  NBT Bancorp, Inc.  12,677  286 
  Old National Bancorp  24,643  262 
  Webster Financial Corp.  19,539  255 
  Park National Corp.  4,130  247 
  East West Bancorp, Inc.  26,741  246 
  Wintrust Financial Corp.  8,801  244 
  Sterling Bancshares, Inc.  29,780  237 
  First Citizens BancShares     
  Class A  1,631  226 
  Whitney Holdings Corp.  25,039  226 
  Community Bank     
  System, Inc.  12,148  217 
  CVB Financial Corp.  30,630  215 
  Popular, Inc.  99,194  213 
*  Texas Capital     
  Bancshares, Inc.  12,388  205 
  PacWest Bancorp  10,262  202 
  City Holding Co.  5,974  190 
  Susquehanna     
  Bancshares, Inc.  32,077  187 
  First Midwest Bancorp, Inc.  17,958  184 
*  Investors Bancorp, Inc.  19,324  179 
  First Commonwealth     
  Financial Corp.  28,217  174 
  MB Financial, Inc.  12,337  171 
*  Pinnacle Financial     
  Partners, Inc.  11,268  170 
  Chemical Financial Corp.  7,889  165 
  Columbia Banking     
  System, Inc.  9,998  164 
  Independent Bank Corp. (MA)  7,005  162 
  National Penn     
  Bancshares Inc.  28,234  158 
  Cathay General Bancorp  16,449  152 
*  Western Alliance Bancorp  20,139  148 
  First Financial Bancorp  16,432  139 
  Community Trust Bancorp Inc.  4,740  127 
  WesBanco, Inc.  8,413  123 
  Bank of the Ozarks, Inc.  4,947  123 
  S & T Bancorp, Inc.  8,608  119 
  Boston Private Financial     
  Holdings, Inc.  23,608  119 
  SCBT Financial Corp.  4,587  118 
  Oriental Financial Group Inc.  8,641  117 
  StellarOne Corp.  8,347  117 
  Simmons First National Corp.  4,106  116 
  Renasant Corp.  7,379  112 
  Univest Corp. of Pennsylvania  5,386  112 
  First Financial Corp. (IN)  3,609  109 
  Tompkins Trustco, Inc.  2,464  108 
  The South Financial     
  Group, Inc.  59,324  104 
  Home Bancshares Inc.  5,068  103 
  Suffolk Bancorp  3,528  102 
  Arrow Financial Corp.  3,690  100 
*  United Community Banks, Inc.  14,570  98 
  Southside Bancshares, Inc.  4,534  98 
  Sandy Spring Bancorp, Inc.  6,128  96 
  First Bancorp (NC)  5,428  95 
  TowneBank  7,503  95 
  First BanCorp Puerto Rico  29,406  94 

41



Financials Index Fund

      Market 
      Value 
    Shares  ($000) 
  S.Y. Bancorp, Inc.  4,215  94 
  Northfield Bancorp, Inc.  7,432  91 
  Washington Trust     
  Bancorp, Inc.  5,205  91 
  Harleysville National Corp.  15,210  88 
  Lakeland Financial Corp.  4,304  86 
  First Source Corp.  5,257  85 
  Camden National Corp.  2,625  85 
  TriCo Bancshares  4,948  84 
  BancFirst Corp.  2,246  82 
  Cardinal Financial Corp.  10,168  80 
  Union Bankshares Corp.  4,770  80 
  Republic Bancorp, Inc.     
  Class A  3,670  78 
  Nara Bancorp, Inc.  8,474  74 
  Lakeland Bancorp, Inc.  7,784  69 
  Great Southern Bancorp, Inc.  3,224  68 
  Southwest Bancorp, Inc.  5,220  67 
  First Community     
  Bancshares, Inc.  5,385  67 
  Heartland Financial USA, Inc.  4,320  65 
  First Busey Corp.  10,394  65 
  Citizens & Northern Corp.  3,308  60 
  Wilshire Bancorp Inc.  7,038  58 
  Capital City Bank Group, Inc.  3,799  56 
  CoBiz Inc.  11,584  55 
  First Merchants Corp.  7,509  53 
  UCBH Holdings, Inc.  39,768  52 
  Ames National Corp.  2,148  52 
  Sterling Bancorp  6,299  48 
  Mainsource Financial     
  Group, Inc.  7,086  46 
  Pacific Capital Bancorp  17,016  41 
  Sterling Financial Corp.  19,497  41 
*  Citizens Banking Corp.  48,075  36 
*  Sun Bancorp, Inc. (NJ)  5,493  31 
  Central Pacific Financial Co.  10,568  29 
  Greene County Bancshares  4,238  26 
  Capitol Bancorp Ltd.  5,372  25 
  Old Second Bancorp, Inc.  4,538  25 
*  Hanmi Financial Corp.  13,704  21 
  Banner Corp.  4,471  14 
^  Frontier Financial Corp.  17,252  13 
      116,315 
Consumer Finance (4.0%)     
  American Express Co.  386,840  13,083 
  Capital One Financial Corp.  166,367  6,204 
  Discover Financial Services  197,832  2,720 
*  SLM Corp.  172,114  1,532 
*  AmeriCredit Corp.  48,635  839 
  Cash America     
  International Inc.  10,738  301 
*  EZCORP, Inc.  13,562  181 
*  First Cash Financial     
  Services, Inc.  8,596  161 
*  Nelnet, Inc.  10,542  156 
*  Dollar Financial Corp.  8,869  155 
*  World Acceptance Corp.  5,408  141 
*  Credit Acceptance Corp.  3,967  121 
  Advance America, Cash     
  Advance Centers, Inc.  13,543  78 
  Student Loan Corp.  1,517  74 
*  The First Marblehead Corp.  24,136  64 
*  Cardtronics Inc.  4,568  36 
*  CompuCredit Holdings Corp.  5,685  25 
  Advanta Corp. Class B  12,790  9 
  Advanta Corp. Class A  3,229  2 
      25,882 

        Market 
        Value 
      Shares  ($000) 
Diversified Financial Services (23.9%)   
  JPMorgan Chase & Co.  1,384,023  60,150 
  Bank of America Corp.  3,181,881  55,969 
  Citigroup Inc.  4,177,534  20,888 
  CME Group, Inc.    21,983  6,398 
  NYSE Euronext    95,825  2,716 
*  IntercontinentalExchange       
  Inc.    22,751  2,134 
  Moody’s Corp.    73,762  2,009 
*  Leucadia National Corp.    70,211  1,746 
*  Nasdaq OMX Group, Inc.    51,853  1,138 
*  MSCI, Inc.-Class A Shares    36,813  1,083 
*  PHH Corp.    20,137  428 
*  Interactive Brokers       
  Group, Inc.    14,968  284 
*  Portfolio Recovery       
  Associates, Inc.    5,709  251 
*  PICO Holdings, Inc.    7,290  242 
  CIT Group Inc.  138,801  241 
  Financial Federal Corp.    9,071  212 
*  MarketAxess Holdings, Inc.    11,008  122 
  Fifth Street Finance Corp.    10,844  112 
  Compass Diversified Trust    10,768  109 
  Life Partners Holdings    2,773  48 
*  Asset Acceptance       
  Capital Corp.    5,658  41 
*  NewStar Financial, Inc.    10,713  30 
  Teton Advisors Inc. Class B    25   
        156,351 
Insurance (22.5%)       
*  Berkshire Hathaway Inc.       
  Class B    4,095  13,456 
  MetLife, Inc.  301,283  11,376 
  The Travelers Cos., Inc.  215,556  10,868 
  Prudential Financial, Inc.  167,907  8,493 
  AFLAC Inc.  172,107  6,991 
  Ace Ltd.  123,651  6,452 
  The Chubb Corp.  129,670  6,404 
  The Allstate Corp.  187,606  5,514 
  Marsh & McLennan       
  Cos., Inc.  192,425  4,530 
  Loews Corp.  128,175  4,377 
*  Progressive Corp. of Ohio  237,858  3,929 
  Aon Corp.    91,698  3,829 
  The Principal Financial       
  Group, Inc.  114,383  3,248 
  The Hartford Financial       
  Services Group Inc.  119,752  2,841 
  Lincoln National Corp.  108,942  2,750 
  Unum Group  121,919  2,747 
  XL Capital Ltd. Class A  125,916  2,185 
*,^  American International       
  Group Inc.    44,552  2,020 
  Everest Re Group, Ltd.    22,630  1,908 
  Genworth Financial Inc.  159,447  1,684 
  Willis Group Holdings Ltd.    61,497  1,586 
  PartnerRe Ltd.    20,782  1,536 
  Axis Capital Holdings Ltd.    49,794  1,518 
  Cincinnati Financial Corp.    56,777  1,460 
  W.R. Berkley Corp.    52,971  1,353 
  Assurant, Inc.    43,459  1,302 
  Torchmark Corp.    30,439  1,297 
  RenaissanceRe Holdings Ltd.  22,980  1,251 
  Fidelity National Financial, Inc.     
  Class A    81,767  1,228 
  Reinsurance Group       
  of America, Inc.    26,706  1,150 
*  Markel Corp.    3,440  1,131 
  HCC Insurance Holdings, Inc.  41,296  1,092 
  Old Republic       
  International Corp.    88,631  1,056 

      Market 
      Value 
    Shares  ($000) 
*  Arch Capital Group Ltd.  15,617  1,015 
  Transatlantic Holdings, Inc.  19,581  957 
  First American Corp.  29,227  921 
  White Mountains     
  Insurance Group Inc.  2,939  917 
  Brown & Brown, Inc.  44,278  880 
  Arthur J. Gallagher & Co.  36,931  878 
  Assured Guaranty Ltd.  40,497  806 
  The Hanover Insurance     
  Group Inc.  18,831  770 
  Aspen Insurance     
  Holdings Ltd.  30,226  768 
  Allied World Assurance     
  Holdings, Ltd.  15,375  712 
  American Financial Group, Inc.  27,759  712 
  StanCorp Financial Group, Inc.  18,122  686 
  Platinum Underwriters     
  Holdings, Ltd.  18,874  684 
  IPC Holdings Ltd.  20,451  663 
  Protective Life Corp.  30,743  663 
  Endurance Specialty     
  Holdings Ltd.  17,999  620 
*  ProAssurance Corp.  11,509  604 
*  Alleghany Corp.  2,019  560 
  Montpelier Re Holdings Ltd.  30,206  486 
  Erie Indemnity Co. Class A  11,402  441 
  Delphi Financial Group, Inc.  17,705  414 
*  MBIA, Inc.  61,139  411 
*  Argo Group International     
  Holdings  11,420  403 
  Odyssey Re Holdings Corp.  7,803  395 
  Mercury General Corp.  10,154  377 
  Zenith National     
  Insurance Corp.  13,842  373 
  Max Re Capital Ltd.  17,573  360 
  R.L.I. Corp.  6,761  358 
  Unitrin, Inc.  18,535  351 
  Selective Insurance Group  19,566  333 
  Validus Holdings, Ltd.  12,635  324 
  Tower Group, Inc.  13,375  321 
*  Conseco, Inc.  68,446  294 
*  Navigators Group, Inc.  5,316  276 
  Employers Holdings, Inc.  17,148  254 
  Infinity Property &     
  Casualty Corp.  5,049  222 
*  Hilltop Holdings Inc.  16,799  206 
  Ambac Financial Group, Inc.  105,805  186 
  Horace Mann Educators Corp.  14,585  179 
  Harleysville Group, Inc.  5,166  167 
  United Fire & Casualty Co.  8,352  167 
  Meadowbrook Insurance     
  Group, Inc.  20,379  162 
  Safety Insurance Group, Inc.  4,925  158 
  Flagstone Reinsurance     
  Holdings Ltd.  14,079  153 
  American Equity Investment     
  Life Holding Co.  18,466  149 
  National Western Life     
  Insurance Co. Class A  879  145 
*  eHealth, Inc.  7,732  143 
*  Greenlight Capital Re. Ltd.  7,667  140 
  The Phoenix Cos., Inc.  42,776  127 
  Amtrust Financial Services Inc.  9,997  126 
  OneBeacon Insurance     
  Group Ltd.  8,697  119 
*  Amerisafe Inc.  6,937  118 
  National Financial     
  Partners Corp.  14,860  117 
  American Physicians     
  Capital, Inc.  3,647  109 
*  CNA Surety Corp.  6,598  105 

42



Financials Index Fund

        Market 
        Value 
      Shares  ($000) 
*  Citizens, Inc.    15,219  104 
  State Auto Financial Corp.    5,755  99 
  FBL Financial Group, Inc.       
  Class A    5,342  91 
  Stewart Information       
  Services Corp.    6,274  89 
*  FPIC Insurance Group, Inc.    2,672  85 
  First Mercury Financial Corp.    5,731  83 
  Presidential Life Corp.    8,246  82 
*  Seabright Insurance       
  Holdings, Inc.    7,901  79 
*  United America       
  Indemnity, Ltd.    12,012  75 
  Donegal Group Inc. Class A    4,527  66 
  Baldwin & Lyons, Inc. Class B  2,856  63 
  Kansas City Life Insurance Co.  1,630  58 
  EMC Insurance Group, Inc.    2,257  49 
  National Interstate Corp.    2,353  42 
  Universal Insurance       
  Holdings, Inc.    6,890  35 
*  Crawford & Co. Class B    4,426  21 
*  Crawford & Co. Class A    5,100  18 
        146,686 
Real Estate Investment Trusts (12.3%)   
  Simon Property Group, Inc.       
  REIT  103,355  6,575 
  Annaly Capital       
  Management Inc. REIT  200,457  3,476 
  Vornado Realty Trust REIT    58,025  3,338 
  Public Storage, Inc. REIT    46,488  3,280 
  HCP, Inc. REIT  107,056  3,049 
  Boston Properties, Inc. REIT    50,159  3,039 
  Equity Residential REIT  100,815  2,753 
  Ventas, Inc. REIT    57,585  2,258 
  Host Hotels &       
  Resorts Inc. REIT  218,149  2,175 
  Avalonbay       
  Communities, Inc. REIT    29,380  1,893 
  Plum Creek       
  Timber Co. Inc. REIT    59,983  1,817 
  ProLogis REIT  162,838  1,811 
  Health Care Inc. REIT    40,979  1,750 
  Kimco Realty Corp. REIT  131,579  1,651 
  Federal Realty Investment       
  Trust REIT    21,663  1,351 
  Rayonier Inc. REIT    28,999  1,246 
  Liberty Property Trust REIT    37,857  1,241 
  AMB Property Corp. REIT    53,795  1,228 
  Nationwide Health       
  Properties, Inc. REIT    37,909  1,209 
  Digital Realty Trust, Inc. REIT    26,650  1,161 
  Regency Centers Corp. REIT    29,564  992 
  Realty Income Corp. REIT    38,338  980 
  SL Green Realty Corp. REIT    27,436  968 
  Duke Realty Corp. REIT    82,421  949 
  Mack-Cali Realty Corp. REIT    28,227  904 
  Senior Housing Properties       
  Trust REIT    44,464  892 
  Camden Property Trust REIT    24,003  881 
  Chimera       
  Investment Corp. REIT  223,978  851 
  Weingarten Realty       
  Investors REIT    41,875  832 
  The Macerich Co. REIT    28,995  831 
  Hospitality Properties       
  Trust REIT    44,955  819 
  Alexandria Real Estate       
  Equities, Inc. REIT    14,474  806 
  MFA Mortgage       
  Investments, Inc. REIT  100,363  795 

    Market 
    Value 
  Shares  ($000) 
Corporate Office Properties     
Trust, Inc. REIT  21,152  780 
Highwood     
Properties, Inc. REIT  25,721  755 
Essex Property     
Trust, Inc. REIT  10,110  754 
UDR, Inc. REIT  55,049  704 
Taubman Co. REIT  19,466  616 
National Retail     
Properties REIT  29,297  601 
Washington REIT  21,507  580 
Tanger Factory Outlet     
Centers, Inc. REIT  14,712  553 
BRE Properties Inc.     
Class A REIT  18,987  537 
HRPT Properties Trust REIT  82,425  534 
Apartment Investment &     
Management Co.     
Class A REIT  43,047  524 
Omega Healthcare     
Investors, Inc. REIT  30,389  514 
American Campus     
Communities, Inc. REIT  18,862  491 
BioMed Realty     
Trust, Inc. REIT  36,022  486 
Brandywine Realty     
Trust REIT  45,623  484 
Healthcare Realty     
Trust Inc. REIT  21,931  475 
Home Properties, Inc. REIT  12,042  457 
Mid-America Apartment     
Communities, Inc. REIT  10,371  454 
Douglas Emmett, Inc. REIT  35,700  432 
Kilroy Realty Corp. REIT  15,500  430 
Potlatch Corp. REIT  14,587  424 
CBL & Associates     
Properties, Inc. REIT  45,259  424 
Equity Lifestyle     
Properties, Inc. REIT  10,521  423 
Redwood Trust, Inc. REIT  26,260  421 
Entertainment Properties     
Trust REIT  12,886  404 
Hatteras Financial Corp. REIT  13,377  400 
Developers Diversified     
Realty Corp. REIT  50,197  394 
DCT Industrial Trust Inc. REIT  74,392  393 
LaSalle Hotel Properties REIT  23,386  387 
PS Business Parks, Inc. REIT  7,006  371 
EastGroup     
Properties, Inc. REIT  9,299  350 
Capstead     
Mortgage Corp. REIT  23,453  320 
Franklin Street     
Properties Corp. REIT  22,256  316 
Extra Space Storage Inc. REIT 30,302  300 
National Health Investors REIT  8,696  288 
Post Properties, Inc. REIT  16,398  279 
Anworth Mortgage     
Asset Corp. REIT  36,845  276 
DiamondRock     
Hospitality Co. REIT  39,309  269 
Equity One, Inc. REIT  16,018  252 
Sovran Self Storage, Inc. REIT  8,153  240 
Inland Real Estate Corp. REIT  27,628  232 
Medical Properties     
Trust Inc. REIT  29,146  221 
Investors Real Estate     
Trust REIT  23,629  219 
Acadia Realty Trust REIT  13,756  211 
Alexander’s, Inc. REIT  740  210 
LTC Properties, Inc. REIT  7,681  196 

        Market 
        Value 
      Shares  ($000) 
  DuPont Fabros       
  Technology Inc. REIT    14,804  194 
  U-Store-It Trust REIT    29,652  192 
  Sunstone Hotel       
  Investors, Inc. REIT    27,008  169 
  Getty Realty       
  Holding Corp. REIT    6,917  163 
  Saul Centers, Inc. REIT    4,927  161 
  American Capital       
  Agency Corp. REIT    6,248  156 
  Colonial Properties Trust REIT  16,796  152 
  Lexington Realty Trust REIT    32,255  150 
  Parkway Properties Inc. REIT    8,078  146 
  Universal Health Realty       
  Income REIT    4,205  141 
  Cousins Properties, Inc. REIT    15,477  128 
  Education Realty       
  Trust, Inc. REIT    19,906  116 
  Sun Communities, Inc. REIT    6,506  116 
  First Potomac REIT    10,272  110 
  Cedar Shopping       
  Centers, Inc. REIT    16,405  105 
  Walter Investment       
  Management Corp. REIT    7,214  104 
  Urstadt Biddle Properties       
  Class A REIT    6,366  98 
  FelCor Lodging       
  Trust, Inc. REIT    23,477  96 
  Pennsylvania REIT    13,805  92 
  NorthStar Realty       
  Finance Corp. REIT    23,680  90 
  Ashford Hospitality       
  Trust REIT    28,816  89 
  First Industrial Realty       
  Trust REIT    15,501  81 
*  iStar Financial Inc. REIT    38,300  81 
  Kite Realty Group Trust REIT    22,143  81 
  CapLease, Inc. REIT    17,451  72 
  Ramco-Gershenson       
  Properties Trust REIT    6,865  72 
  RAIT Financial Trust REIT    23,467  67 
  Hersha Hospitality Trust REIT    18,364  57 
  Glimcher Realty Trust REIT    14,126  57 
  Winthrop Realty Trust REIT    4,949  45 
  Strategic Hotels and       
  Resorts, Inc. REIT    27,885  38 
*  Gramercy Capital Corp. REIT    16,102  26 
  Urstadt Biddle Properties REIT  1,308  19 
        80,646 
Real Estate Management & Development (0.6%) 
*  The St. Joe Co.    33,984  1,115 
*  CB Richard Ellis Group, Inc.    82,862  981 
  Jones Lang LaSalle Inc.    15,190  712 
  Forest City Enterprise       
  Class A    41,843  387 
*  Forestar Real Estate       
  Group, Inc.    12,628  182 
*  Tejon Ranch Co.    4,777  122 
  Consolidated-Tomoka       
  Land Co.    2,030  71 
*  Altisource Portfolio       
  Solutions SA    4,684  67 
*  Avatar Holding, Inc.    2,115  40 
*  Grubb & Ellis Co.    14,068  11 
        3,688 
Thrifts & Mortgage Finance (2.0%)   
  Hudson City Bancorp, Inc.  172,903  2,269 
  People’s United Financial Inc.  128,204  2,059 
  New York Community       
  Bancorp, Inc.  120,676  1,284 
*  Fannie Mae  403,609  779 

43



Financials Index Fund

        Market 
        Value 
      Shares  ($000) 
  First Niagara Financial       
  Group, Inc.    55,211  722 
*,^  Freddie Mac  239,739  549 
  Washington Federal Inc.  32,350  480 
  NewAlliance Bancshares, Inc.  35,328  416 
  TFS Financial Corp.    34,072  388 
  MGIC Investment Corp.  46,378  377 
  Astoria Financial Corp.    30,310  312 
  Radian Group, Inc.    30,006  275 
*  Ocwen Financial Corp.    26,347  273 
  Capitol Federal Financial  8,216  264 
  Brookline Bancorp, Inc.  21,620  226 
  Provident Financial       
  Services Inc.    19,882  219 
  TrustCo Bank NY    28,344  176 
  Northwest Bancorp, Inc.  7,173  147 
  Bank Mutual Corp.    16,323  144 
  Provident New York       
  Bancorp, Inc.    13,393  123 
  Berkshire Hills Bancorp, Inc.  5,066  114 
*  Beneficial Mutual       
  Bancorp, Inc.    12,359  110 
  The PMI Group Inc.    30,563  102 
  Dime Community Bancshares  8,766  98 
  Westfield Financial, Inc.  10,386  95 
  Flushing Financial Corp.  6,872  90 
  Kearny Financial Corp.    7,777  85 
  Danvers Bancorp, Inc.    5,889  76 
  First Financial Holdings, Inc.  4,166  75 
  BankFinancial Corp.    7,300  72 
  United Financial Bancorp, Inc.  5,550  68 
  Essa Bancorp Inc.    4,938  63 
  WSFS Financial Corp.    2,214  61 
  Abington Community       
  Bancorp Inc.    7,182  58 
  Oritani Financial Corp.    4,228  56 
  ViewPoint Financial Group  4,113  52 
  First Financial Northwest, Inc.  6,605  48 
  Rockville Financial, Inc.  3,383  45 
  Clifton Savings Bancorp, Inc.  3,538  37 
  Roma Financial Corp.    2,923  37 
*  Meridian Interstate       
  Bancorp, Inc.    3,820  35 
  NASB Financial Inc.    1,088  34 
*  Flagstar Bancorp, Inc.    23,555  19 
*  Waterstone Financial, Inc.  2,864  14 
        13,026 
Total Common Stocks       
(Cost $895,834)      653,741 
Temporary Cash Investment (0.2%)   
Money Market Fund (0.2%)     
1,2  Vanguard Market       
  Liquidity Fund, 0.277%     
  (Cost $1,491)  1,491,301  1,491 
Total Investments (100.3%)     
(Cost $897,325)      655,232 
Other Assets and Liabilities (–0.3%)   
Other Assets      3,370 
Liabilities2      (5,068) 
        (1,698) 
Net Assets (100%)      653,534 

At August 31, 2009, net assets consisted of: 
  Amount 
  ($000) 
Paid-in Capital  1,044,136 
Undistributed Net Investment Income  1,936 
Accumulated Net Realized Losses  (150,445) 
Unrealized Appreciation (Depreciation)  (242,093) 
Net Assets  653,534 
 
 
Admiral Shares—Net Assets   
Applicable to 5,019,812 outstanding   
$.001 par value shares of beneficial   
interest (unlimited authorization)  73,910 
Net Asset Value Per Share—   
Admiral Shares  $14.72 
 
 
ETF Shares—Net Assets   
Applicable to 19,728,783 outstanding   
$.001 par value shares of beneficial   
interest (unlimited authorization)  579,624 
Net Asset Value Per Share—   
ETF Shares  $29.38 

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 $1,258,000.
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 $1,491,000 of collateral received for securities on loan.
REIT—Real Estate Investment Trust.
See accompanying Notes, which are an integral part of the Financial Statements.

44



Financials Index Fund

Statement of Operations

  Year Ended 
August 31, 2009 
  ($000) 
Investment Income   
Income   
Dividends  15,026 
Interest1  3 
Security Lending  960 
Total Income  15,989 
Expenses   
The Vanguard Group—Note B   
     Investment Advisory Services  71 
     Management and Administrative—   
     Admiral Shares  122 
     Management and Administrative—   
     ETF Shares  646 
     Marketing and Distribution—   
     Admiral Shares  17 
     Marketing and Distribution—   
     ETF Shares  141 
Custodian Fees  67 
Auditing Fees  25 
Shareholders’ Reports and Proxies—   
Admiral Shares  1 
Shareholders’ Reports and Proxies—   
ETF Shares  147 
Trustees’ Fees and Expenses  1 
Total Expenses  1,238 
Net Investment Income  14,751 
Realized Net Gain (Loss) on   
Investment Securities Sold  (140,463) 
Change in Unrealized Appreciation   
(Depreciation) of Investment Securities  (46,975) 
Net Increase (Decrease) in Net Assets   
Resulting from Operations  (172,687) 

Statement of Changes in Net Assets

  Year Ended August 31, 
  2009  2008 
  ($000)  ($000) 
Increase (Decrease) in Net Assets     
Operations     
Net Investment Income  14,751  15,734 
Realized Net Gain (Loss)  (140,463)  (5,892) 
Change in Unrealized Appreciation (Depreciation)  (46,975)  (183,247) 
Net Increase (Decrease) in Net Assets Resulting from Operations  (172,687)  (173,405) 
Distributions     
Net Investment Income     
     Admiral Shares  (1,971)  (1,097) 
     ETF Shares  (14,745)  (12,437) 
Realized Capital Gain     
     Admiral Shares     
     ETF Shares     
Total Distributions  (16,716)  (13,534) 
Capital Share Transactions     
     Admiral Shares  13,533  78,669 
     ETF Shares  96,692  540,089 
Net Increase (Decrease) from Capital Share Transactions  110,225  618,758 
Total Increase (Decrease)  (79,178)  431,819 
Net Assets     
Beginning of Period  732,712  300,893 
End of Period2  653,534  732,712 

1 Interest income from an affiliated company of the fund was $3,000.
2 Net Assets—End of Period includes undistributed net investment income of $1,936,000 and $3,901,000.
See accompanying Notes, which are an integral part of the Financial Statements.

45



Financials Index Fund

Financial Highlights

Admiral Shares           
 
        Year Ended August 31, 
For a Share Outstanding Throughout Each Period  2009  2008  2007  2006  2005 
Net Asset Value, Beginning of Period  $20.38  $30.10  $29.86  $26.36  $25.35 
Investment Operations           
Net Investment Income  .389  .7001  .7701  .7161  .6601 
Net Realized and Unrealized Gain (Loss)           
on Investments2  (5.596)  (9.699)       .145  3.392  1.086 
Total from Investment Operations  (5.207)  (8.999)       .915  4.108  1.746 
Distributions           
Dividends from Net Investment Income  (.453)  (.721)  (.675)  (.608)  (.736) 
Distributions from Realized Capital Gains           
Total Distributions  (.453)  (.721)  (.675)  (.608)  (.736) 
Net Asset Value, End of Period  $14.72  $20.38  $30.10  $29.86  $26.36 
 
Total Return3  –25.35%  –30.36%  2.95%  15.76%  6.88% 
 
Ratios/Supplemental Data           
Net Assets, End of Period (Millions)  $74  $81  $19  $8  $3 
Ratio of Total Expenses to           
Average Net Assets  0.28%  0.25%  0.26%  0.28%  0.28% 
Ratio of Net Investment Income to           
Average Net Assets  2.97%  3.06%  2.37%  2.49%  2.59% 
Portfolio Turnover Rate4  17%  10%  12%  6%  6% 

1 Calculated based on average shares outstanding.
2 Includes increases from redemption fees of $.01, $.00, $.00, $.01, and $.00.
3 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than one year.
4 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares,
including ETF Creation Units.

ETF Shares           
 
        Year Ended August 31, 
For a Share Outstanding Throughout Each Period  2009  2008  2007  2006  2005 
Net Asset Value, Beginning of Period  $40.66  $60.04  $59.57  $52.57  $50.57 
Investment Operations           
Net Investment Income  .784  1.4491  1.5571  1.4301  1.3161 
Net Realized and Unrealized Gain (Loss)           
on Investments2  (11.150)  (19.368)  .282           6.800     2.160 
Total from Investment Operations  (10.366)  (17.919)  1.839           8.230     3.476 
Distributions           
Dividends from Net Investment Income  (.914)  (1.461)  (1.369)  (1.230)  (1.476) 
Distributions from Realized Capital Gains           
Total Distributions  (.914)  (1.461)  (1.369)  (1.230)  (1.476) 
Net Asset Value, End of Period  $29.38  $40.66  $60.04  $59.57  $52.57 
 
Total Return  –25.31%  –30.30%  2.97%  15.82%  6.85% 
 
Ratios/Supplemental Data           
Net Assets, End of Period (Millions)  $580  $651  $282  $125  $53 
Ratio of Total Expenses to           
Average Net Assets  0.25%  0.20%  0.22%  0.25%  0.26% 
Ratio of Net Investment Income to           
Average Net Assets  3.00%  3.11%  2.41%  2.52%  2.61% 
Portfolio Turnover Rate3  17%  10%  12%  6%  6% 

1 Calculated based on average shares outstanding.
2 Includes increases from redemption fees of $.02, $.01, $.01, $.01, and $.00.
3 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares,
including ETF Creation Units.
See accompanying Notes, which are an integral part of the Financial Statements.

46



Financials Index Fund

Notes to Financial Statements

Vanguard Financials Index Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund offers two classes of shares, Admiral Shares and ETF Shares. Admiral Shares are available to any investor who meets the fund’s minimum purchase requirements. ETF Shares are listed for trading on the NYSE Arca, Inc.; they can be purchased and sold through a broker.

A. The following significant accounting policies conform to generally accepted accounting principles for U.S. mutual funds. The fund consistently follows such policies in preparing its financial statements.

1. Security Valuation: Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which market quotations are not readily available, or whose values have been materially affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued by methods deemed by the board of trustees to represent fair value. Investments in Vanguard Market Liquidity Fund are valued at that fund’s net asset value.

2. Federal Income Taxes: The fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income. Management has analyzed the fund’s tax positions taken for all open federal income tax years (August 31, 2006–2009), and has concluded that no provision for federal income tax is required in the fund’s financial statements.

3. Distributions: Distributions to shareholders are recorded on the ex-dividend date.

4. Security Lending: The fund may lend its securities to qualified institutional borrowers to earn additional income. Security loans are required to be secured at all times by collateral at least equal to the market value of securities loaned. The fund invests cash collateral received in Vanguard Market Liquidity Fund, and records a liability for the return of the collateral, during the period the securities are on loan. Security lending income represents the income earned on investing cash collateral, less expenses associated with the loan.

5. Other: Dividend income is recorded on the ex-dividend date. Interest income includes income distributions received from Vanguard Market Liquidity Fund and is accrued daily. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment securities are those of the specific securities sold. Fees assessed on redemptions of capital shares are credited to paid-in capital.

Each class of shares has equal rights as to assets and earnings, except that each class separately bears certain class-specific expenses related to maintenance of shareholder accounts (included in Management and Administrative expenses), shareholder reporting, and proxies. Marketing and distribution expenses are allocated to each class of shares based on a method approved by the board of trustees. Income, other non-class-specific expenses, and gains and losses on investments are allocated to each class of shares based on its relative net assets.

B. The Vanguard Group furnishes at cost investment advisory, corporate management, administrative, marketing, and distribution services. The costs of such services are allocated to the fund under methods approved by the board of trustees. The fund has committed to provide up to 0.40% of its net assets in capital contributions to Vanguard. At August 31, 2009, the fund had contributed capital of $134,000 to Vanguard (included in Other Assets), representing 0.02% of the fund’s net assets and 0.05% of Vanguard’s capitalization. The fund’s trustees and officers are also directors and officers of Vanguard.

C. Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Level 1—Quoted prices in active markets for identical securities.

Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).

Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments).

At August 31, 2009, 100% of the fund’s investments were valued based on Level 1 inputs.

D. Distributions are determined on a tax basis and may differ from net investment income and realized capital gains for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the financial statements to reflect their tax

47



Financials Index Fund

character. Temporary differences arise when certain items of income, expense, gain, or loss are recognized in different periods for financial statement and tax purposes; these differences will reverse at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.

During the year ended August 31, 2009, the fund realized $3,938,000 of net capital losses resulting from in-kind redemptions—in which shareholders exchanged fund shares for securities held by the fund rather than for cash. Because such losses are not taxable losses to the fund, they have been reclassified from accumulated net realized losses to paid-in capital.

For tax purposes, at August 31, 2009, the fund had $2,221,000 of ordinary income available for distribution. The fund had available capital loss carryforwards totaling $30,027,000 to offset future net capital gains of $85,000 through August 31, 2014, $11,000 through August 31, 2015, $1,313,000 through August 31, 2016, and $28,618,000 through August 31, 2017. In addition, the fund realized losses of $118,026,000 during the period from November 1, 2008, through August 31, 2009, which are deferred and will be treated as realized for tax purposes in fiscal 2010.

At August 31, 2009, the cost of investment securities for tax purposes was $899,716,000. Net unrealized depreciation of investment securities for tax purposes was $244,484,000, consisting of unrealized gains of $6,449,000 on securities that had risen in value since their purchase and $250,933,000 in unrealized losses on securities that had fallen in value since their purchase.

E. During the year ended August 31, 2009, the fund purchased $444,317,000 of investment securities and sold $333,070,000 of investment securities, other than temporary cash investments.

F. Capital share transactions for each class of shares were:

      Year Ended August 31, 
    2009    2008 
  Amount  Shares  Amount  Shares 
  ($000)  (000)  ($000)  (000) 
Admiral Shares         
Issued  39,058  3,069  96,727  4,152 
Issued in Lieu of Cash Distributions  1,834  135  889  39 
Redeemed1  (27,359)  (2,179)  (18,947)  (817) 
Net Increase (Decrease)—Admiral Shares  13,533  1,025  78,669  3,374 
ETF Shares         
Issued  342,606  13,213  592,724  12,516 
Issued in Lieu of Cash Distributions         
Redeemed1  (245,914)  (9,500)  (52,635)  (1,200) 
Net Increase (Decrease)—ETF Shares  96,692  3,713  540,089  11,316 
1 Net of redemption fees for fiscal 2009 and 2008 of $383,000 and $200,000, respectively (fund totals).     

G. In preparing the financial statements as of August 31, 2009, management considered the impact of subsequent events occurring through October 15, 2009, for potential recognition or disclosure in these financial statements.

48



Health Care Index Fund

Fund Profile

As of August 31, 2009

Portfolio Characteristics     
    Target  Broad 
  Fund  Index1  Index2 
Number of Stocks  303  303  2,501 
Median Market Cap  $38.4B  $38.4B  $27.3B 
Price/Earnings Ratio  18.5x  18.4x  25.6x 
Price/Book Ratio  2.7x  2.7x  2.1x 
Yield3    1.8%  1.9% 
   Admiral Shares  1.5%     
   ETF Shares  1.5%     
Return on Equity  18.8%  18.8%  19.3% 
Earnings Growth Rate  11.9%  11.9%  9.9% 
Foreign Holdings  0.0%  0.0%  0.0% 
Turnover Rate  6%     
Expense Ratio4       
   Admiral Shares  0.28%     
   ETF Shares  0.25%     
Short-Term Reserves  0.0%     

Volatility Measures5   
  Fund Versus  Fund Versus 
  Target Index1  Broad Index2 
R-Squared  1.00  0.68 
Beta  1.00  0.68 

Industry Diversification (% of equity exposure) 
 
Biotechnology  14.6% 
Health Care Distributors  3.1 
Health Care Equipment  16.6 
Health Care Facilities  1.4 
Health Care Services  5.9 
Health Care Supplies  1.1 
Health Care Technology  1.0 
Life Sciences Tools & Services  4.3 
Managed Health Care  6.6 
Pharmaceuticals  45.4 

Ten Largest Holdings6 (% of total net assets) 
 
Johnson & Johnson  11.4% 
Pfizer Inc.  7.7 
Abbott Laboratories  4.8 
Merck & Co., Inc.  4.7 
Wyeth  4.4 
Amgen Inc.  4.2 
Schering-Plough Corp.  3.1 
Bristol-Myers Squibb Co.  3.0 
Medtronic, Inc.  2.9 
Gilead Sciences, Inc.  2.8 
Top Ten  49.0% 

1 MSCI US IMI/Health Care.
2 MSCI US IMI/2500.
3 30-day SEC yield for the fund; annualized dividend yield for the indexes. See the Glossary.
4 The expense ratios shown are from the prospectuses dated December 29, 2008, and represent estimated costs for the current fiscal year based on the fund’s net assets as of the prospectus date. For the fiscal year
ended August 31, 2009, the expense ratios were 0.28% for Admiral Shares and 0.25% for ETF Shares.
5 For an explanation of R-squared, beta, and other terms used here, see the Glossary.
6 The holdings listed exclude any temporary cash investments and equity index products.

49



Health Care Index 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 www.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: January 26, 2004–August 31, 2009
Initial Investment of $10,000


    Average Annual Total Returns   
    Periods Ended August 31, 2009  Final Value 
      Since  of a $10,000 
  One Year  Five Years  Inception1  Investment 
Health Care Index Fund ETF Shares         
Net Asset Value2  –10.70%               2.04%  0.84%  $10,481 
Health Care Index Fund ETF Shares         
Market Price  –10.68               2.06       0.84  10,482 
MSCI US IMI/2500  –18.26               1.36       0.52  10,295 
MSCI US IMI/Health Care  –10.52               2.27       1.06  10,609 

        Final Value 
      Since  of a $100,000 
  One Year  Five Years  Inception1  Investment 
Health Care Index Fund Admiral Shares3  –10.74%  2.00%  0.79%  $104,493 
MSCI US IMI/2500  –18.26  1.36  1.00  105,693 
MSCI US IMI/Health Care  –10.52  2.27  1.05  105,985 

1 Performance for the fund and its comparative standards is calculated since the following inception dates: January 26, 2004, for ETF Shares; February 5, 2004, for Admiral Shares.
2 For more information about how the ETF Shares’ market prices have compared with their net asset value, visit www.vanguard.com, select your ETF, and then select the Performance tab. The Premium/Discount
table there shows the percentages of days on which the ETF Shares’ market price was above or below the NAV.
3 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than one year.
Note: See Financial Highlights tables for dividend and capital gains information.

50



Health Care Index Fund

Fiscal-Year Total Returns (%): January 26, 2004–August 31, 2009


Cumulative Returns: ETF Shares, January 26, 2004–August 31, 2009     
      Cumulative 
      Since 
  One Year  Five Years  Inception 
Health Care Index Fund ETF Shares Market Price  –10.68%     10.75%  4.82% 
Health Care Index Fund ETF Shares Net Asset Value  –10.70     10.61         4.81 
MSCI US IMI/Health Care  –10.52     11.86         6.09 

Average Annual Total Returns: Periods Ended June 30, 2009
This table presents average annual total returns through the latest calendar quarter—rather than through the end
of the fiscal period. Securities and Exchange Commission rules require that we provide this information.

             Since 
  Inception Date  One Year  Five Years  Inception 
ETF Shares  1/26/2004       
     Market Price    –10.72%     –0.48%   –0.57% 
     Net Asset Value    –10.76     –0.48   –0.57 
Admiral Shares1  2/5/2004  –10.82     –0.52   –0.64 

1 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than one year.
Note: See Financial Highlights tables for dividend and capital gains information.

51



Health Care Index Fund

Financial Statements

Statement of Net Assets

As of August 31, 2009

The fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth fiscal quarters, the lists appear in the fund’s semiannual and annual reports to shareholders. For the first and third fiscal quarters, the fund files the lists with the Securities and Exchange Commission on Form N-Q. Shareholders can look up the fund’s Forms N-Q on the SEC’s website at www.sec.gov. Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room (see the back cover of this report for further information).

      Market 
      Value 
    Shares  ($000) 
Common Stocks (100.0%)     
Biotechnology (14.6%)     
*  Amgen Inc.  462,509  27,630 
*  Gilead Sciences, Inc.  413,880  18,649 
*  Celgene Corp.  210,391  10,976 
*  Genzyme Corp.  123,012  6,853 
*  Biogen Idec Inc.  131,856  6,620 
*  Vertex Pharmaceuticals, Inc.  79,185  2,962 
*  Cephalon, Inc.  33,557  1,910 
*  Alexion Pharmaceuticals, Inc.  37,184  1,678 
*  Human Genome     
  Sciences, Inc.  72,854  1,441 
*  Myriad Genetics, Inc.  43,175  1,320 
*  Dendreon Corp.  50,967  1,191 
*  United Therapeutics Corp.  10,857  994 
*  Onyx Pharmaceuticals, Inc.  27,829  892 
*  OSI Pharmaceuticals, Inc.  26,349  881 
*  Amylin Pharmaceuticals, Inc.  62,836  792 
*  BioMarin Pharmaceutical Inc.  45,617  751 
*  Isis Pharmaceuticals, Inc.  42,252  682 
*  Regeneron     
  Pharmaceuticals, Inc.  28,315  644 
*  Cubist Pharmaceuticals, Inc.  26,217  542 
  PDL BioPharma Inc.  54,545  494 
*  Seattle Genetics, Inc.  37,846  464 
*  Alkermes, Inc.  43,352  392 
*  Acorda Therapeutics Inc.  17,233  390 
*  Savient Pharmaceuticals Inc.  27,852  387 
  Martek Biosciences Corp.  15,202  373 
*  Alnylam Pharmaceuticals Inc.  16,068  359 
*  Theravance, Inc.  21,753  339 
*  Medivation Inc.  12,793  324 
*  AMAG Pharmaceuticals, Inc.  7,761  318 
*  Cepheid, Inc.  26,410  317 
*  Halozyme Therapeutics Inc.  38,625  287 
*  Geron Corp.  39,292  279 
*  Exelixis, Inc.  48,088  274 
*  Incyte Corp.  39,786  262 
*  InterMune Inc.  16,565  251 
*  Celera Corp.  36,781  241 
*  MannKind Corp.  30,314  236 
*  Allos Therapeutics Inc.  28,370  209 
*  Arena Pharmaceuticals, Inc.  42,176  196 
*  ImmunoGen, Inc.  24,514  179 
*  Pharmasset, Inc.  9,636  178 
*  Enzon Pharmaceuticals, Inc.  20,496  147 
*  Momenta     
  Pharmaceuticals, Inc.  13,664  135 
*  Genomic Health, Inc.  6,598  132 
*  Micromet, Inc.  19,695  125 
*  Rigel Pharmaceuticals, Inc.  16,862  119 
*  Ligand Pharmaceuticals Inc.     
  Class B  48,481  116 
*  Emergent BioSolutions Inc.  6,221  115 
*  Affymax Inc.  5,027  115 
*  Sangamo BioSciences, Inc.  15,971  112 
*  Facet Biotech Corp.  11,070  111 

      Market 
      Value 
    Shares  ($000) 
*  Zymogenetics, Inc.  18,681  110 
*,^  Osiris Therapeutics, Inc.  7,263  106 
*  ArQule, Inc.  19,186  104 
*  Abraxis BioScience  3,639  98 
*  Orexigen Therapeutics Inc.  12,208  97 
*  SIGA Technologies, Inc.  13,092  96 
*  Clinical Data, Inc.  5,752  91 
*  NPS Pharmaceuticals Inc.  21,586  90 
*  Maxygen Inc.  12,685  90 
*  Array BioPharma Inc.  21,087  87 
*  Nabi Biopharmaceuticals  24,303  74 
*  Progenics     
  Pharmaceuticals, Inc.  13,889  73 
*  GTx, Inc.  7,484  70 
*  Opko Health, Inc.  28,207  66 
*  Lexicon Pharmaceuticals Inc.  37,410  56 
*  XOMA Ltd.  63,820  56 
*  Neurocrine Biosciences, Inc.  17,596  53 
*  Myriad Pharmaceuticals Inc.  10,632  48 
*  Amicus Therapeutics, Inc.  3,610  35 
*  Idenix Pharmaceuticals Inc.  10,278  31 
      96,915 
Health Care Equipment & Supplies (17.7%)   
  Medtronic, Inc.  511,461  19,589 
  Baxter International, Inc.  276,398  15,733 
  Covidien PLC  230,399  9,117 
*  Boston Scientific Corp.  688,363  8,088 
  Becton, Dickinson & Co.  109,530  7,625 
*  St. Jude Medical, Inc.  158,362  6,103 
  Stryker Corp.  136,199  5,647 
*  Zimmer Holdings, Inc.  98,271  4,653 
*  Intuitive Surgical, Inc.  17,294  3,851 
  C.R. Bard, Inc.  45,257  3,647 
*  Hospira, Inc.  73,393  2,869 
*  Varian Medical Systems, Inc.  56,755  2,444 
  DENTSPLY International Inc.  64,207  2,164 
  Beckman Coulter, Inc.  31,144  2,109 
*  Hologic, Inc.  116,946  1,924 
*  ResMed Inc.  34,559  1,587 
*  Edwards Lifesciences Corp.  25,355  1,569 
*  IDEXX Laboratories, Inc.  26,889  1,365 
*  Inverness Medical     
  Innovations, Inc.  33,860  1,205 
*  Gen-Probe Inc.  23,808  918 
  Teleflex Inc.  18,205  825 
  STERIS Corp.  26,944  782 
*  Kinetic Concepts, Inc.  24,288  776 
*  Thoratec Corp.  25,648  673 
*  Nuvasive, Inc.  16,519  662 
*  Haemonetics Corp.  11,564  609 
  West Pharmaceutical     
  Services, Inc.  15,003  603 
*  Immucor Inc.  32,215  583 
  The Cooper Companies, Inc.  20,710  566 
  Hill-Rom Holdings, Inc.  27,188  557 
*  Masimo Corp.  22,156  557 

      Market 
      Value 
    Shares  ($000) 
*  American Medical Systems     
  Holdings, Inc.  33,468  510 
  Meridian Bioscience Inc.  18,514  446 
*  ev3 Inc.  29,037  370 
*  Align Technology, Inc.  26,125  350 
*  Integra LifeSciences Holdings  9,461  320 
*  Sirona Dental Systems Inc.  11,300  299 
  Invacare Corp.  13,459  291 
*  Wright Medical Group, Inc.  17,397  282 
*  Volcano Corp.  19,639  281 
*  Abaxis, Inc.  10,080  268 
*  Conceptus, Inc.  13,865  251 
*  CONMED Corp.  13,268  237 
*  ICU Medical, Inc.  6,087  226 
*  Greatbatch, Inc.  10,459  225 
*  Merit Medical Systems, Inc.  12,225  221 
  Analogic Corp.  6,092  217 
*  Quidel Corp.  13,393  207 
*  Orthofix International N.V.  7,038  193 
*  Cyberonics, Inc.  12,614  190 
*  SonoSite, Inc.  7,848  183 
*  Natus Medical Inc.  12,725  181 
*  Symmetry Medical Inc.  16,406  181 
*  Neogen Corp.  6,441  180 
*  Zoll Medical Corp.  9,765  176 
*  SurModics, Inc.  7,063  162 
*  Dexcom Inc.  17,707  138 
*  Orthovita, Inc.  31,190  132 
*  Accuray Inc.  20,270  130 
*  Kensey Nash Corp.  4,774  125 
*  ABIOMED, Inc.  14,263  118 
*  RTI Biologics, Inc.  24,723  112 
*  Palomar Medical     
  Technologies, Inc.  8,043  112 
  Atrion Corp.  772  106 
*  CryoLife Inc.  12,527  93 
*  IRIS International, Inc.  8,407  86 
*  Cantel Medical Corp.  6,368  86 
*  Synovis Life     
  Technologies, Inc.  5,246  82 
*  Insulet Corp.  8,256  76 
*  MAKO Surgical Corp.  8,891  76 
*  Somanetics Corp.  5,482  72 
*  ATS Medical, Inc.  21,131  57 
*  Exactech, Inc.  3,791  56 
*  OraSure Technologies, Inc.  21,335  56 
*  TomoTherapy, Inc.  16,056  54 
*  Cynosure Inc.  4,665  51 
*  Stereotaxis Inc.  14,315  50 
*  Hansen Medical Inc.  11,591  39 
      117,754 
Health Care Providers & Services (17.0%)   
  UnitedHealth Group Inc.  543,441  15,216 
*  Medco Health     
  Solutions, Inc.  220,354  12,168 
*  WellPoint Inc.  221,450  11,704 
*  Express Scripts Inc.  117,805  8,508 
  McKesson Corp.  123,940  7,047 
  Aetna Inc.  204,203  5,820 
  Cardinal Health, Inc.  163,875  5,667 
  Quest Diagnostics, Inc.  71,986  3,884 
  CIGNA Corp.  124,657  3,669 
*  Laboratory Corp. of     
  America Holdings  49,237  3,436 
  AmerisourceBergen Corp.  138,550  2,952 

52



Health Care Index Fund

      Market 
      Value 
    Shares  ($000) 
*  Humana Inc.  77,531  2,768 
*  DaVita, Inc.  47,239  2,443 
*  Henry Schein, Inc.  40,820  2,163 
*  Coventry Health Care Inc.  68,004  1,484 
*  Community Health     
  Systems, Inc.  41,605  1,280 
  Omnicare, Inc.  54,013  1,236 
  Universal Health Services     
  Class B  20,878  1,227 
*  Patterson Companies, Inc.  41,493  1,130 
*  MEDNAX, Inc.  20,859  1,086 
*  Tenet Healthcare Corp.  217,750  1,015 
*  VCA Antech, Inc.  38,657  957 
*  Lincare Holdings, Inc.  32,490  857 
  Owens & Minor, Inc.  18,981  840 
*  Health Management     
  Associates Class A  111,479  770 
*  Health Net Inc.  47,391  726 
*  Psychiatric Solutions, Inc.  24,246  650 
*  HealthSouth Corp.  40,204  628 
*  LifePoint Hospitals, Inc.  23,653  594 
*  AMERIGROUP Corp.  24,207  572 
*  PSS World Medical, Inc.  27,592  564 
*  Amedisys Inc.  12,390  552 
*  Magellan Health     
  Services, Inc.  16,128  518 
*  Catalyst Health     
  Solutions, Inc.  16,834  481 
*  WellCare Health Plans Inc.  19,253  467 
  Chemed Corp.  10,287  448 
*  HMS Holdings Corp.  11,601  436 
  Brookdale Senior Living Inc.  23,878  379 
*  Centene Corp.  19,638  340 
*  Emergency Medical     
  Services LP Class A  6,936  315 
*  Healthspring, Inc.  22,612  299 
*  AmSurg Corp.  14,422  293 
*  PharMerica Corp.  13,972  280 
*  Gentiva Health Services, Inc.  12,597  278 
*  inVentiv Health, Inc.  15,147  241 
  Landauer, Inc.  4,313  237 
*  Kindred Healthcare, Inc.  14,322  204 
*  Universal American Corp.  22,218  204 
*  Healthways, Inc.  15,403  201 
*  Hanger Orthopedic     
  Group, Inc.  14,118  198 
*  Odyssey Healthcare, Inc.  15,191  196 
*  MWI Veterinary Supply Inc.  5,258  196 
*  IPC The Hospitalist Co.  6,271  185 
*  LHC Group Inc.  7,544  184 
*  Bio-Reference     
  Laboratories, Inc.  5,408  180 
*  Emeritus Corp.  9,800  177 
*  RehabCare Group, Inc.  8,224  173 
*  Triple-S Management Corp.  9,169  170 
*  Air Methods Corp.  4,976  170 
*  Res-Care, Inc.  11,477  166 
*  Sun Healthcare Group Inc.  19,778  163 
*  AMN Healthcare     
  Services, Inc.  15,625  154 
*  Genoptix, Inc.  4,621  133 
*  Molina Healthcare Inc.  6,369  129 
*  Cross Country     
  Healthcare, Inc.  13,534  125 
*  CorVel Corp.  3,891  117 
  National Healthcare Corp.  3,030  116 

        Market 
        Value 
      Shares  ($000) 
*  Almost Family Inc.    3,356  92 
*  Assisted Living Concepts Inc.  4,499  91 
*  Clarient, Inc.    21,398  84 
*  Chindex International, Inc.    5,878  80 
  Ensign Group Inc.    5,153  71 
*  Skilled Healthcare Group Inc.  9,450  71 
*  MedCath Corp.    7,643  70 
*  Nighthawk Radiology       
  Holdings, Inc.    11,187  70 
*  Alliance HealthCare       
  Services Inc.    11,891  66 
*  Sunrise Senior Living, Inc.    20,913  46 
*  CardioNet, Inc.    6,385  46 
*  Virtual Radiologic Corp.    3,358  39 
        112,992 
Health Care Technology (1.0%)     
*  Cerner Corp.    31,291  1,931 
  IMS Health, Inc.    83,151  1,153 
*  HLTH Corp.    44,001  639 
  Quality Systems, Inc.    8,394  452 
  Allscripts Healthcare       
  Solutions, Inc.    29,969  445 
*  Eclipsys Corp.    25,559  428 
*  AthenaHealth Inc.    9,948  400 
*  MedAssets, Inc.    12,352  276 
*  Phase Forward Inc.    19,539  251 
  Computer Programs and       
  Systems, Inc.    4,481  173 
*  Omnicell, Inc.    14,429  159 
*  Vital Images, Inc.    6,783  86 
        6,393 
Life Sciences Tools & Services (4.3%)   
*  Thermo Fisher Scientific, Inc.  191,019  8,636 
*  Life Technologies Corp.    79,873  3,557 
*  Waters Corp.    43,984  2,212 
*  Illumina, Inc.    56,279  1,985 
*  Millipore Corp.    25,230  1,671 
*  Covance, Inc.    28,953  1,537 
*  Mettler-Toledo       
  International Inc.    15,287  1,336 
*  Charles River       
  Laboratories, Inc.    30,426  1,049 
  Techne Corp.    16,208  1,000 
  Pharmaceutical Product       
  Development, Inc.    48,471  975 
  PerkinElmer, Inc.    52,952  966 
*  Bio-Rad Laboratories, Inc.       
  Class A    8,600  742 
*  Varian, Inc.    13,355  684 
*  Dionex Corp.    8,201  493 
*  PAREXEL International Corp.  26,378  338 
*  Luminex Corp.    18,059  276 
*  Bruker BioSciences Corp.    26,183  266 
*  Affymetrix, Inc.    31,915  246 
*  Sequenom, Inc.    26,281  168 
*  eResearch Technology, Inc.    19,659  124 
*  Albany Molecular       
  Research, Inc.    11,096  89 
*  Kendle International Inc.    6,468  85 
*  Enzo Biochem, Inc.    15,593  79 
*  Life Sciences Research, Inc.  4,599  36 
        28,550 
Pharmaceuticals (45.4%)       
  Johnson & Johnson  1,259,228  76,108 
  Pfizer Inc.  3,083,499  51,494 
  Abbott Laboratories  706,233  31,943 

      Market 
      Value 
    Shares  ($000) 
  Merck & Co., Inc.  963,475  31,246 
  Wyeth  609,410  29,160 
  Schering-Plough Corp.  743,189  20,943 
  Bristol-Myers Squibb Co.  905,228  20,033 
  Eli Lilly & Co.  472,551  15,812 
  Allergan, Inc.  139,135  7,780 
*  Forest Laboratories, Inc.  137,114  4,013 
*  Mylan Inc.  139,079  2,040 
*  Watson     
  Pharmaceuticals, Inc.  45,403  1,602 
*  Endo Pharmaceuticals     
  Holdings, Inc.  52,696  1,189 
*  King Pharmaceuticals, Inc.  112,436  1,167 
  Perrigo Co. (U.S. Shares)  35,977  1,062 
*  Warner Chilcott PLC  45,740  932 
*  Valeant Pharmaceuticals     
  International  35,251  913 
*  Sepracor Inc.  49,664  901 
*  Auxilium     
  Pharmaceuticals, Inc.  19,303  556 
  Medicis     
  Pharmaceutical Corp.  25,793  476 
*  Nektar Therapeutics  42,056  349 
*  Par Pharmaceutical Cos. Inc.  15,775  323 
*  ViroPharma Inc.  35,940  288 
*  Salix Pharmaceuticals, Ltd.  21,877  274 
*  Xenoport Inc.  12,341  225 
*  Inspire Pharmaceuticals, Inc.  33,440  200 
*  Vivus, Inc.  29,947  185 
*  The Medicines Co.  23,863  182 
*  Questcor     
  Pharmaceuticals, Inc.  27,267  158 
*  Cypress Bioscience, Inc.  17,277  120 
*  Cadence     
  Pharmaceuticals, Inc.  9,477  103 
*  Pain Therapeutics, Inc.  16,479  84 
*  Durect Corp.  33,509  82 
*  Pozen Inc.  11,559  78 
*  MAP Pharmaceuticals Inc.  6,123  54 
*  K-V Pharmaceutical Co.     
  Class A  15,922  36 
*  Akorn, Inc.  26,476  35 
*  Sucampo     
  Pharmaceuticals Inc.  3,601  20 
*  Caraco Pharmaceutical     
  Laboratories, Ltd.  158  1 
      302,167 
Total Common Stocks     
(Cost $784,004)    664,771 
Temporary Cash Investment (0.0%)   
Money Market Fund (0.0%)     
1,2  Vanguard Market     
  Liquidity Fund, 0.277%     
  (Cost $49)  49,000  49 
Total Investments (100.0%)     
(Cost $784,053)    664,820 
Other Assets and Liabilities (0.0%)   
Other Assets    4,309 
Liabilities2    (4,056) 
      253 
Net Assets (100%)    665,073 

53



Health Care Index Fund

At August 31, 2009, net assets consisted of: 
  Amount 
  ($000) 
Paid-in Capital  798,382 
Undistributed Net Investment Income  7,265 
Accumulated Net Realized Losses  (21,341) 
Unrealized Appreciation (Depreciation)  (119,233) 
Net Assets  665,073 
 
 
Admiral Shares—Net Assets   
Applicable to 4,399,329 outstanding   
$.001 par value shares of beneficial   
interest (unlimited authorization)  110,824 
Net Asset Value Per Share—   
Admiral Shares  $25.19 
 
 
ETF Shares—Net Assets   
Applicable to 11,002,626 outstanding   
$.001 par value shares of beneficial   
interest (unlimited authorization)  554,249 
Net Asset Value Per Share—   
ETF Shares  $50.37 

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 $48,000.
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 $49,000 of collateral received for securities on loan.
See accompanying Notes, which are an integral part of the Financial Statements.

54



Health Care Index Fund

Statement of Operations

  Year Ended 
August 31, 2009 
  ($000) 
Investment Income   
Income   
Dividends  12,674 
Interest1  4 
Security Lending  57 
Total Income  12,735 
Expenses   
The Vanguard Group—Note B   
     Investment Advisory Services  87 
     Management and Administrative—   
     Admiral Shares  243 
     Management and Administrative—   
     ETF Shares  896 
     Marketing and Distribution—   
     Admiral Shares  25 
     Marketing and Distribution—   
     ETF Shares  167 
Custodian Fees  14 
Auditing Fees  24 
Shareholders’ Reports and Proxies—   
Admiral Shares  1 
Shareholders’ Reports and Proxies—   
ETF Shares  135 
Trustees’ Fees and Expenses  1 
Total Expenses  1,593 
Net Investment Income  11,142 
Realized Net Gain (Loss) on   
Investment Securities Sold  7,908 
Change in Unrealized Appreciation   
(Depreciation) of Investment Securities  (100,604) 
Net Increase (Decrease) in Net Assets   
Resulting from Operations  (81,554) 

Statement of Changes in Net Assets

  Year Ended August 31, 
  2009  2008 
  ($000)  ($000) 
Increase (Decrease) in Net Assets     
Operations     
Net Investment Income  11,142  9,098 
Realized Net Gain (Loss)  7,908  3,694 
Change in Unrealized Appreciation (Depreciation)  (100,604)  (35,268) 
Net Increase (Decrease) in Net Assets Resulting from Operations  (81,554)  (22,476) 
Distributions     
Net Investment Income     
     Admiral Shares  (1,658)  (1,807) 
     ETF Shares  (8,673)  (6,890) 
Realized Capital Gain     
     Admiral Shares     
     ETF Shares     
Total Distributions  (10,331)  (8,697) 
Capital Share Transactions     
     Admiral Shares  (7,704)  10,131 
     ETF Shares  14,318  162,011 
Net Increase (Decrease) from Capital Share Transactions  6,614  172,142 
Total Increase (Decrease)  (85,271)  140,969 
Net Assets     
Beginning of Period  750,344  609,375 
End of Period2  665,073  750,344 

1 Interest income from an affiliated company of the fund was $4,000.
2 Net Assets—End of Period includes undistributed net investment income of $7,265,000 and $6,454,000.
See accompanying Notes, which are an integral part of the Financial Statements.

55



Health Care Index Fund

Financial Highlights

Admiral Shares           
 
        Year Ended August 31, 
For a Share Outstanding Throughout Each Period  2009  2008  2007  2006  2005 
Net Asset Value, Beginning of Period  $28.68  $29.82  $27.99  $26.92  $23.97 
Investment Operations           
Net Investment Income  .398  .345  .392  .3041  .2741 
Net Realized and Unrealized Gain (Loss)           
on Investments  (3.524)  (1.090)  1.736  .951  2.762 
Total from Investment Operations  (3.126)  (.745)  2.128  1.255  3.036 
Distributions           
Dividends from Net Investment Income  (.364)  (.395)  (.298)           (.185)  (.086) 
Distributions from Realized Capital Gains           
Total Distributions  (.364)  (.395)  (.298)           (.185)  (.086) 
Net Asset Value, End of Period  $25.19  $28.68  $29.82  $27.99  $26.92 
 
Total Return2  –10.74%  –2.59%  7.65%  4.68%  12.70% 
 
Ratios/Supplemental Data           
Net Assets, End of Period (Millions)  $111  $136  $132  $108  $73 
Ratio of Total Expenses to           
Average Net Assets  0.28%  0.25%  0.26%  0.28%  0.28% 
Ratio of Net Investment Income to           
Average Net Assets  1.75%  1.36%  1.42%  1.12%  1.11% 
Portfolio Turnover Rate3  6%  8%  10%  11%  9% 

1 Calculated based on average shares outstanding.
2 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than one year.
3 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares,
including ETF Creation Units.

ETF Shares           
 
        Year Ended August 31, 
For a Share Outstanding Throughout Each Period  2009  2008  2007  2006  2005 
Net Asset Value, Beginning of Period  $57.36  $59.65  $55.99  $53.85  $47.90 
Investment Operations           
Net Investment Income  .809  .720  .809  .6221  .5971 
Net Realized and Unrealized Gain (Loss)           
on Investments  (7.045)  (2.190)  3.466  1.905  5.486 
Total from Investment Operations  (6.236)  (1.470)  4.275  2.527  6.083 
Distributions           
Dividends from Net Investment Income  (.754)  (.820)     (.615)  (.387)  (.133) 
Distributions from Realized Capital Gains           
Total Distributions  (.754)  (.820)     (.615)  (.387)  (.133) 
Net Asset Value, End of Period  $50.37  $57.36  $59.65  $55.99  $53.85 
 
Total Return  –10.70%  –2.55%  7.69%  4.71%  12.72% 
 
Ratios/Supplemental Data           
Net Assets, End of Period (Millions)  $554  $614  $477  $364  $205 
Ratio of Total Expenses to           
Average Net Assets  0.25%  0.20%  0.22%  0.25%  0.26% 
Ratio of Net Investment Income to           
Average Net Assets  1.78%  1.41%  1.46%  1.15%  1.13% 
Portfolio Turnover Rate2  6%  8%  10%  11%  9% 

1 Calculated based on average shares outstanding.
2 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares,
including ETF Creation Units.

See accompanying Notes, which are an integral part of the Financial Statements.

56



Health Care Index Fund

Notes to Financial Statements

Vanguard Health Care Index Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund offers two classes of shares, Admiral Shares and ETF Shares. Admiral Shares are available to any investor who meets the fund’s minimum purchase requirements. ETF Shares are listed for trading on the NYSE Arca, Inc.; they can be purchased and sold through a broker.

A. The following significant accounting policies conform to generally accepted accounting principles for U.S. mutual funds. The fund consistently follows such policies in preparing its financial statements.

1. Security Valuation: Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which market quotations are not readily available, or whose values have been materially affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued by methods deemed by the board of trustees to represent fair value. Investments in Vanguard Market Liquidity Fund are valued at that fund’s net asset value.

2. Federal Income Taxes: The fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income. Management has analyzed the fund’s tax positions taken for all open federal income tax years (August 31, 2006–2009), and has concluded that no provision for federal income tax is required in the fund’s financial statements.

3. Distributions: Distributions to shareholders are recorded on the ex-dividend date.

4. Security Lending: The fund may lend its securities to qualified institutional borrowers to earn additional income. Security loans are required to be secured at all times by collateral at least equal to the market value of securities loaned. The fund invests cash collateral received in Vanguard Market Liquidity Fund, and records a liability for the return of the collateral, during the period the securities are on loan. Security lending income represents the income earned on investing cash collateral, less expenses associated with the loan.

5. Other: Dividend income is recorded on the ex-dividend date. Interest income includes income distributions received from Vanguard Market Liquidity Fund and is accrued daily. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment securities are those of the specific securities sold. Fees assessed on redemptions of capital shares are credited to paid-in capital.

Each class of shares has equal rights as to assets and earnings, except that each class separately bears certain class-specific expenses related to maintenance of shareholder accounts (included in Management and Administrative expenses), shareholder reporting, and proxies. Marketing and distribution expenses are allocated to each class of shares based on a method approved by the board of trustees. Income, other non-class-specific expenses, and gains and losses on investments are allocated to each class of shares based on its relative net assets.

B. The Vanguard Group furnishes at cost investment advisory, corporate management, administrative, marketing, and distribution services. The costs of such services are allocated to the fund under methods approved by the board of trustees. The fund has committed to provide up to 0.40% of its net assets in capital contributions to Vanguard. At August 31, 2009, the fund had contributed capital of $145,000 to Vanguard (included in Other Assets), representing 0.02% of the fund’s net assets and 0.06% of Vanguard’s capitalization. The fund’s trustees and officers are also directors and officers of Vanguard.

C. Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Level 1—Quoted prices in active markets for identical securities.

Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).

Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments).

At August 31, 2009, 100% of the fund’s investments were valued based on Level 1 inputs.

57



Health Care Index Fund

D. Distributions are determined on a tax basis and may differ from net investment income and realized capital gains for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the financial statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain, or loss are recognized in different periods for financial statement and tax purposes; these differences will reverse at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.

During the year ended August 31, 2009, the fund realized $18,590,000 of net capital gains resulting from in-kind redemptions—in which shareholders exchanged fund shares for securities held by the fund rather than for cash. Because such gains are not taxable to the fund, and are not distributed to shareholders, they have been reclassified from accumulated net realized losses to paid-in capital.

For tax purposes, at August 31, 2009, the fund had $7,895,000 of ordinary income available for distribution. The fund had available capital loss carryforwards totaling $10,937,000 to offset future net capital gains of $207,000 through August 31, 2014, $343,000 through August 31, 2015, $3,126,000 through August 31, 2016, and $7,261,000 through August 31, 2017. In addition, the fund realized losses of $10,493,000 during the period from November 1, 2008, through August 31, 2009, which are deferred and will be treated as realized for tax purposes in fiscal 2010.

At August 31, 2009, the cost of investment securities for tax purposes was $784,071,000. Net unrealized depreciation of investment securities for tax purposes was $119,251,000, consisting of unrealized gains of $19,721,000 on securities that had risen in value since their purchase and $138,972,000 in unrealized losses on securities that had fallen in value since their purchase.

E. During the year ended August 31, 2009, the fund purchased $224,876,000 of investment securities and sold $216,796,000 of investment securities, other than temporary cash investments.

F. Capital share transactions for each class of shares were:

      Year Ended August 31, 
    2009    2008 
  Amount  Shares  Amount  Shares 
  ($000)  (000)  ($000)  (000) 
Admiral Shares         
Issued  9,782  428  26,987  923 
Issued in Lieu of Cash Distributions  758  34  847  28 
Redeemed1  (18,244)  (819)  (17,703)  (622) 
Net Increase (Decrease)—Admiral Shares  (7,704)  (357)  10,131  329 
ETF Shares         
Issued  189,315  4,100  222,891  3,800 
Issued in Lieu of Cash Distributions         
Redeemed1  (174,997)  (3,800)  (60,880)  (1,100) 
Net Increase (Decrease)—ETF Shares  14,318  300  162,011  2,700 
1 Net of redemption fees for fiscal 2009 and 2008 of $72,000 and $106,000, respectively (fund totals).     

G. In preparing the financial statements as of August 31, 2009, management considered the impact of subsequent events occurring through October 15, 2009, for potential recognition or disclosure in these financial statements.



Industrials Index Fund

Fund Profile

As of August 31, 2009

Portfolio Characteristics     
    Target  Broad 
  Fund  Index1  Index2 
Number of Stocks  374  374  2,501 
Median Market Cap  $18.4B  $18.4B  $27.3B 
Price/Earnings Ratio  19.5x  19.5x  25.6x 
Price/Book Ratio  2.2x  2.2x  2.1x 
Yield3    2.1%  1.9% 
   Admiral Shares  1.8%     
   ETF Shares  1.8%     
Return on Equity  19.4%  19.4%  19.3% 
Earnings Growth Rate  11.1%  11.1%  9.9% 
Foreign Holdings  0.0%  0.0%  0.0% 
Turnover Rate  8%     
Expense Ratio4       
   Admiral Shares  0.28%     
   ETF Shares  0.25%     
Short-Term Reserves  0.0%     

Volatility Measures5   
  Fund Versus  Fund Versus 
  Target Index1  Broad Index2 
R-Squared  1.00  0.92 
Beta  1.00  1.22 

Industry Diversification (% of equity exposure) 
 
Aerospace & Defense  22.0% 
Air Freight & Logistics  6.6 
Airlines  1.8 
Building Products  1.3 
Construction & Engineering  3.7 
Construction & Farm Machinery & Heavy Trucks  7.8 
Diversified Support Services  1.3 
Electrical Components & Equipment  6.5 
Environmental & Facilities Services  3.3 
Human Resource & Employment Services  1.4 
Industrial Conglomerates  19.0 
Industrial Machinery  10.0 
Office Services & Supplies  1.2 
Railroads  8.1 
Research & Consulting Services  1.5 
Trading Companies & Distributors  1.8 
Trucking  1.4 
Other Industrial  1.3 

Ten Largest Holdings6 (% of total net assets) 
 
General Electric Co.  12.5% 
United Technologies Corp.  4.5 
3M Co.  4.0 
United Parcel Service, Inc.  3.2 
The Boeing Co.  2.9 
Union Pacific Corp.  2.6 
Burlington Northern Santa Fe Corp.  2.4 
Emerson Electric Co.  2.4 
Caterpillar, Inc.  2.3 
Honeywell International Inc.  2.2 
Top Ten  39.0% 

1 MSCI US IMI/Industrials.
2 MSCI US IMI/2500.
3 30-day SEC yield for the fund; annualized dividend yield for the indexes. See the Glossary.
4 The expense ratios shown are from the prospectuses dated December 29, 2008, and represent estimated costs for the current fiscal year based on the fund’s net assets as of the prospectus date. For the fiscal year
ended August 31, 2009, the expense ratios were 0.28% for Admiral Shares and 0.25% for ETF Shares.
5 For an explanation of R-squared, beta, and other terms used here, see the Glossary.
6 The holdings listed exclude any temporary cash investments and equity index products.

59



Industrials Index 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 www.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: September 23, 2004–August 31, 2009

Initial Investment of $10,000


   Average Annual Total Returns  Final Value 
  Periods Ended August 31, 2009  of a $10,000 
  One Year  Since Inception1  Investment 
Industrials Index Fund ETF Shares Net Asset Value2       –28.41%                   0.32%  $10,160 
Industrials Index Fund ETF Shares Market Price  –28.40                   0.33  10,162 
MSCI US IMI/2500  –18.26                   1.20  10,605 
MSCI US IMI/Industrials       –28.38                   0.13  10,062 

      Final Value 
      of a $100,000 
  One Year  Since Inception1  Investment 
Industrials Index Fund Admiral Shares3  –28.44%               –8.86%  $73,533 
MSCI US IMI/2500  –18.26               –5.35  83,339 
MSCI US IMI/Industrials  –28.38               –8.74  73,857 

1 Performance for the fund and its comparative standards is calculated since the following inception dates: September 23, 2004, for ETF Shares; May 8, 2006, for Admiral Shares.
2 For more information about how the ETF Shares’ market prices have compared with their net asset value, visit www.vanguard.com, select your ETF, and then select the Performance tab. The Premium/Discount
table there shows the percentages of days on which the ETF Shares’ market price was above or below the NAV.
3 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than one year.
Note: See Financial Highlights tables for dividend and capital gains information.

60



Industrials Index Fund

Fiscal-Year Total Returns (%): September 23, 2004–August 31, 2009


Cumulative Returns: ETF Shares, September 23, 2004–August 31, 2009     
    Cumulative 
    Since 
  One Year  Inception 
Industrials Index Fund ETF Shares Market Price  –28.40%  1.62% 
Industrials Index Fund ETF Shares Net Asset Value  –28.41         1.60 
MSCI US IMI/Industrials  –28.38         0.62 

Average Annual Total Returns: Periods Ended June 30, 2009
This table presents average annual total returns through the latest calendar quarter—rather than through the end
of the fiscal period. Securities and Exchange Commission rules require that we provide this information.

      Since 
  Inception Date  One Year  Inception 
ETF Shares  9/23/2004     
     Market Price    –34.87%  –2.33% 
     Net Asset Value    –34.93  –2.33 
Admiral Shares1  5/8/2006  –34.94  –12.93 

1 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than one year.
Note: See Financial Highlights tables for dividend and capital gains information.

61



Industrials Index Fund

Financial Statements

Statement of Net Assets

As of August 31, 2009

The fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth fiscal quarters, the lists appear in the fund’s semiannual and annual reports to shareholders. For the first and third fiscal quarters, the fund files the lists with the Securities and Exchange Commission on Form N-Q. Shareholders can look up the fund’s Forms N-Q on the SEC’s website at www.sec.gov. Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room (see the back cover of this report for further information).

      Market 
      Value 
    Shares  ($000) 
Common Stocks (100.0%)     
Aerospace & Defense (21.8%)     
  United Technologies Corp.  146,185  8,678 
  The Boeing Co.  112,691  5,597 
  Honeywell International Inc.  115,430  4,243 
  Lockheed Martin Corp.  54,730  4,104 
  General Dynamics Corp.  53,458  3,164 
  Raytheon Co.  64,371  3,037 
  Northrop Grumman Corp.  50,196  2,450 
  Precision Castparts Corp.  22,860  2,087 
  L-3 Communications     
  Holdings, Inc.  19,016  1,415 
  ITT Industries, Inc.  28,229  1,414 
  Rockwell Collins, Inc.  25,872  1,191 
  Goodrich Corp.  20,219  1,115 
*  Alliant Techsystems, Inc.  5,349  413 
*  TransDigm Group, Inc.  6,294  280 
*  BE Aerospace, Inc.  15,647  268 
*  Spirit Aerosystems     
  Holdings Inc.  16,976  264 
  Curtiss-Wright Corp.  7,356  240 
*  Teledyne Technologies, Inc.  5,563  188 
*  Moog Inc.  6,321  183 
*  Hexcel Corp.  15,736  171 
*  Esterline Technologies Corp.  4,858  150 
*  Orbital Sciences Corp.  9,204  136 
  Triumph Group, Inc.  2,708  118 
*  AAR Corp.  6,373  108 
*  DynCorp International Inc.     
  Class A  5,988  103 
  Cubic Corp.  2,657  94 
  American Science &     
  Engineering, Inc.  1,488  92 
*  Axsys Technologies, Inc.  1,554  84 
*  Ceradyne, Inc.  4,136  78 
  HEICO Corp. Class A  2,330  72 
*  Aerovironment Inc.  2,413  68 
*  Stanley Inc.  2,309  59 
  Applied Signal     
  Technology, Inc.  2,018  51 
*  Argon ST, Inc.  2,307  46 
*  Taser International Inc.  9,543  43 
*  Ladish Co., Inc.  2,538  37 
  HEICO Corp.  950  35 
*  GenCorp, Inc.  7,367  33 
  Ducommun, Inc.  1,629  29 
      41,938 
Air Freight & Logistics (6.6%)     
  United Parcel Service, Inc.  114,220  6,106 
  FedEx Corp.  48,317  3,320 
  C.H. Robinson     
  Worldwide Inc.  27,682  1,557 
  Expeditors International     
  of Washington, Inc.  34,686  1,133 
*  UTI Worldwide, Inc.  15,463  199 
*  Hub Group, Inc.  6,042  133 

      Market 
      Value 
    Shares  ($000) 
*  Atlas Air Worldwide     
  Holdings, Inc.  2,919  73 
  Pacer International, Inc.  5,672  23 
      12,653 
Airlines (1.8%)     
  Southwest Airlines Co.  121,117  991 
*  Delta Air Lines Inc.  125,898  909 
*  Continental Airlines, Inc.     
  Class B  22,556  299 
*  AMR Corp.  46,492  254 
*  JetBlue Airways Corp.  38,295  223 
*  Alaska Air Group, Inc.  5,938  150 
*  UAL Corp.  23,484  146 
  Skywest, Inc.  9,314  144 
*  AirTran Holdings, Inc.  18,533  123 
*  Allegiant Travel Co.  1,997  78 
*  US Airways Group Inc.  21,409  73 
*  Hawaiian Holdings, Inc.  8,420  62 
*  Republic Airways     
  Holdings Inc.  5,582  51 
      3,503 
Building Products (1.3%)     
  Masco Corp.  58,661  849 
*  Owens Corning Inc.  12,562  281 
  Lennox International Inc.  7,694  276 
*  USG Corp.  11,315  168 
  Simpson Manufacturing Co.  6,337  163 
  Universal Forest     
  Products, Inc.  2,813  116 
  Ameron International Corp.  1,434  116 
*  Armstrong Worldwide     
  Industries, Inc.  3,270  109 
*  Griffon Corp.  8,728  92 
  Quanex Building     
  Products Corp.  6,131  83 
  Apogee Enterprises, Inc.  4,602  61 
  Gibraltar Industries Inc.  3,915  47 
  AAON, Inc.  2,150  45 
  American Woodmark Corp.  1,490  30 
*  Builders FirstSource, Inc.  2,931  23 
*  NCI Building Systems, Inc.  3,197  9 
*  China Architectural     
  Engineering Inc.  2,493  4 
      2,472 
Commercial Services & Supplies (6.8%)     
  Waste Management Inc.  76,294  2,283 
  Republic Services, Inc.     
  Class A  61,876  1,585 
*  Iron Mountain, Inc.  29,730  871 
  Pitney Bowes, Inc.  33,762  754 
*  Stericycle, Inc.  13,201  654 
  Cintas Corp.  22,475  617 
  R.R. Donnelley & Sons Co.  33,520  598 
  Avery Dennison Corp.  16,555  511 
*  Copart, Inc.  11,583  409 
*  Corrections Corp. of America  18,792  373 
*  Covanta Holding Corp.  20,148  361 

      Market 
      Value 
    Shares  ($000) 
*  Waste Connections, Inc.  13,092  358 
*  Tetra Tech, Inc.  9,793  289 
*  Clean Harbors Inc.  3,846  227 
  The Brink’s Co.  7,050  186 
*  United Stationers, Inc.  3,860  176 
  ABM Industries Inc.  7,082  159 
*  Geo Group Inc.  8,352  153 
  Mine Safety Appliances Co.  5,542  148 
  Herman Miller, Inc.  8,801  143 
  Deluxe Corp.  8,355  140 
  HNI Corp.  6,140  132 
  Rollins, Inc.  7,388  132 
*  Sykes Enterprises, Inc.  5,726  120 
  Healthcare Services     
  Group, Inc.  6,711  119 
  EnergySolutions  12,266  109 
*  Mobile Mini, Inc.  5,704  101 
*  EnerNOC Inc.  2,891  78 
*  GeoEye Inc.  2,988  76 
  Knoll, Inc.  7,677  74 
  McGrath RentCorp  3,716  73 
  G & K Services, Inc. Class A  3,107  73 
  Steelcase Inc.  10,841  68 
*  ATC Technology Corp.  3,227  67 
  Viad Corp.  3,345  60 
  Ennis, Inc.  4,205  57 
*  American Reprographics Co.  5,975  55 
  Interface, Inc.  8,213  54 
  American Ecology Corp.  2,841  52 
*  Team, Inc.  2,893  50 
*  Acco Brands Corp.  8,982  50 
*  Cornell Cos., Inc.  2,288  46 
  Bowne & Co., Inc.  6,255  44 
*  Cenveo Inc.  8,362  43 
*  M&F Worldwide Corp.  2,021  40 
*  Consolidated Graphics, Inc.  1,612  33 
*  Innerworkings, Inc.  5,143  29 
*  Fuel-Tech N.V.  2,740  28 
  Schawk, Inc.  2,445  28 
  Courier Corp.  1,618  26 
*  APAC Teleservices, Inc.  4,547  25 
  Kimball International, Inc.     
  Class B  3,874  25 
*  Standard Parking Corp.  1,389  24 
*  Waste Services, Inc.  4,599  20 
*  Metalico, Inc.  4,167  17 
  The Standard Register Co.  1,572  7 
      13,030 
Construction & Engineering (3.7%)   
  Fluor Corp.  29,341  1,552 
*  Jacobs Engineering     
  Group Inc.  20,166  887 
*  Quanta Services, Inc.  32,206  712 
*  Foster Wheeler AG  20,603  597 
  KBR Inc.  26,180  593 
*  URS Corp.  13,645  590 
*  Shaw Group, Inc.  13,640  400 
*  Aecom Technology Corp.  14,246  391 
*  EMCOR Group, Inc.  10,766  249 
  Granite Construction Co.  5,686  183 
*  Insituform Technologies Inc.     
  Class A  6,336  121 
*  Mastec Inc.  9,886  94 
*  Orion Marine Group, Inc.  4,265  87 
*  Tutor Perini Corp.  4,353  85 

62



Industrials Index Fund

        Market 
        Value 
      Shares  ($000) 
*  Layne Christensen Co.    3,149  81 
  Comfort Systems USA, Inc.    6,468  77 
*  Dycom Industries, Inc.    6,601  74 
*  MYR Group, Inc.    3,053  63 
  Great Lakes Dredge &       
  Dock Co.    8,595  56 
*  Northwest Pipe Co.    1,535  51 
*  Michael Baker Corp.    1,302  44 
*  Pike Electric Corp.    2,987  33 
*  Sterling Construction Co., Inc.  2,038  33 
*  Furmanite Corp.    5,805  21 
*  Argan Inc.    892  12 
  Primoris Services Corp.    978  7 
        7,093 
Electrical Equipment (6.6%)       
  Emerson Electric Co.    122,746  4,526 
  Rockwell Automation, Inc.    23,168  970 
*  First Solar, Inc.    7,580  922 
  Cooper Industries, Inc.       
  Class A    27,237  878 
  Roper Industries Inc.    14,791  701 
  AMETEK, Inc.    17,548  552 
  Hubbell Inc. Class B    8,005  308 
*  General Cable Corp.    8,440  298 
*  GrafTech International Ltd.    19,644  279 
  Regal-Beloit Corp.    5,766  262 
*  Thomas & Betts Corp.    8,689  241 
  Brady Corp. Class A    8,000  237 
*  SunPower Corp. Class A    8,667  220 
*  American       
  Superconductor Corp.    6,708  217 
  Acuity Brands, Inc.    6,691  215 
  Woodward Governor Co.    10,043  211 
  Baldor Electric Co.    7,163  201 
  Belden Inc.    7,632  160 
*  EnerSys    7,461  148 
*  SunPower Corp. Class B    6,863  147 
  A.O. Smith Corp.    3,195  122 
*  II-VI, Inc.    4,147  111 
  Franklin Electric, Inc.    3,031  95 
*  Energy Conversion       
  Devices, Inc.    7,466  83 
  Encore Wire Corp.    3,011  71 
*  AZZ Inc.    2,061  71 
*  Powell Industries, Inc.    1,401  53 
*  Evergreen Solar, Inc.    31,317  53 
*  Ener1, Inc.    7,526  48 
*  Polypore International Inc.    3,990  45 
*  FuelCell Energy, Inc.    9,967  36 
*  GT Solar International Inc.    5,822  30 
  Vicor Corp.    3,172  23 
*  Fushi Copperweld, Inc.    2,463  19 
  Preformed Line Products Co.  428  16 
*  Valence Technology Inc.    10,005  15 
*  Power-One, Inc.    10,570  14 
*  Orion Energy Systems Inc.    2,839  9 
*  Plug Power, Inc.    12,573  9 
        12,616 
Industrial Conglomerates (19.0%)   
  General Electric Co.  1,729,770  24,044 
  3M Co.    107,624  7,760 
  Tyco International Ltd.    77,325  2,450 
*  McDermott       
  International, Inc.    37,253  885 
  Textron, Inc.    43,402  667 
  Carlisle Co., Inc.    10,033  331 
  Otter Tail Corp.    5,492  129 
  Raven Industries, Inc.    2,643  76 
  Seaboard Corp.    61  67 

      Market 
      Value 
    Shares  ($000) 
  Tredegar Corp.  4,177  63 
  Standex International Corp.  1,965  34 
      36,506 
Machinery (17.8%)     
  Caterpillar, Inc.  98,295  4,454 
  Deere & Co.  69,043  3,010 
  Illinois Tool Works, Inc.  69,324  2,899 
  Danaher Corp.  44,251  2,687 
  PACCAR, Inc.  56,359  2,039 
  Ingersoll-Rand PLC  52,124  1,610 
  Cummins Inc.  31,318  1,419 
  Eaton Corp.  25,668  1,385 
  Parker Hannifin Corp.  26,227  1,276 
  Dover Corp.  30,440  1,053 
  Flowserve Corp.  9,152  789 
  Joy Global Inc.  16,649  647 
  Pall Corp.  19,274  573 
  Oshkosh Truck Corp.  14,286  480 
*  AGCO Corp.  15,099  472 
  Donaldson Co., Inc.  11,941  449 
*  Navistar International Corp.  10,341  447 
  SPX Corp.  7,994  445 
  Pentair, Inc.  15,318  434 
  Harsco Corp.  13,092  408 
  Bucyrus International, Inc.  12,235  365 
  IDEX Corp.  13,165  348 
  Lincoln Electric Holdings, Inc.  6,989  318 
  Kennametal, Inc.  13,096  289 
*  Terex Corp.  17,190  283 
  The Timken Co.  13,379  282 
  Wabtec Corp.  7,403  277 
*  Gardner Denver Inc.  8,512  276 
  CLARCOR Inc.  8,315  267 
  Nordson Corp.  4,933  264 
  Valmont Industries, Inc.  3,017  248 
  Graco, Inc.  9,791  246 
  The Toro Co.  5,945  226 
  Trinity Industries, Inc.  12,993  205 
  Kaydon Corp.  5,490  183 
  Crane Co.  7,631  179 
*  ESCO Technologies Inc.  4,293  159 
  Actuant Corp.  10,809  153 
  Mueller Industries Inc.  6,068  147 
  Watts Water Technologies, Inc.  4,753  143 
  Briggs & Stratton Corp.  8,104  143 
  The Manitowoc Co., Inc.  21,401  142 
*  The Middleby Corp.  2,738  129 
  Barnes Group, Inc.  7,258  107 
  Robbins & Myers, Inc.  4,548  106 
  Mueller Water Products, Inc.     
  Class A  18,887  87 
*  Chart Industries, Inc.  4,634  87 
  Badger Meter, Inc.  2,289  83 
  Lindsay Manufacturing Co.  1,899  79 
*  Astec Industries, Inc.  3,112  79 
  Albany International Corp.  4,478  77 
  John Bean Technologies Corp.  4,489  75 
*  EnPro Industries, Inc.  3,313  71 
  CIRCOR International, Inc.  2,762  71 
  Tennant Co.  2,679  69 
*  Blount International, Inc.  6,581  60 
*  Force Protection, Inc.  11,190  59 
  Gorman-Rupp Co.  2,461  58 
  Federal Signal Corp.  7,720  55 
  NACCO Industries, Inc.     
  Class A  930  54 
*  L.B. Foster Co. Class A  1,669  50 
*  Colfax Corp.  4,303  46 
  Titan International, Inc.  5,318  44 
  Sun Hydraulics Corp.  2,019  37 

      Market 
      Value 
    Shares  ($000) 
  Freightcar America Inc.  1,940  37 
*  Columbus McKinnon Corp.  2,915  36 
*  K-Tron International, Inc.  408  34 
  Cascade Corp.  1,329  34 
  Dynamic Materials Corp.  2,084  34 
  Ampco-Pittsburgh Corp.  1,406  34 
  The Greenbrier Cos., Inc.  2,533  33 
*  Energy Recovery Inc.  5,325  28 
*  3D Systems Corp.  3,106  25 
*  Kadant Inc.  2,101  25 
*  Tecumseh Products Co.     
  Class A  2,195  20 
  American Railcar     
  Industries, Inc.  1,745  17 
*  TriMas Corp.  2,800  14 
  Sauer-Danfoss, Inc.  1,968  11 
*  Tecumseh Products Co.     
  Class B  486  5 
      34,089 
Marine (0.4%)     
*  Kirby Corp.  8,300  307 
  Alexander & Baldwin, Inc.  6,817  196 
  Genco Shipping and     
  Trading Ltd.  4,635  90 
  Eagle Bulk Shipping Inc.  7,591  38 
*  American Commercial     
  Lines Inc.  1,652  35 
  Horizon Lines Inc.  4,715  26 
*  TBS International Ltd.  2,089  17 
      709 
Professional Services (2.9%)     
  Manpower Inc.  12,797  662 
  The Dun & Bradstreet Corp.  8,699  635 
  Robert Half International, Inc.  23,686  623 
  Equifax, Inc.  20,646  571 
*  IHS Inc. Class A  8,225  398 
*  FTI Consulting, Inc.  8,386  365 
*  Monster Worldwide Inc.  19,537  317 
  Watson Wyatt & Co. Holdings  6,960  304 
*  MPS Group, Inc.  15,079  149 
  The Corporate Executive     
  Board Co.  5,602  135 
*  CoStar Group, Inc.  3,074  117 
*  Resources Connection, Inc.  7,045  108 
*  Navigant Consulting, Inc.  8,151  103 
*  Korn/Ferry International  7,304  101 
*  TrueBlue, Inc.  7,098  96 
  Administaff, Inc.  3,754  91 
*  School Specialty, Inc.  3,075  70 
*  The Advisory Board Co.  2,630  69 
*  Exponent, Inc.  2,249  64 
*  Huron Consulting Group Inc.  3,221  61 
*  Kforce Inc.  5,373  60 
  Heidrick & Struggles     
  International, Inc.  2,771  58 
*  CBIZ Inc.  7,593  54 
  Kelly Services, Inc. Class A  4,601  53 
*  CRA International Inc.  1,762  49 
*  Spherion Corp.  8,467  46 
*  ICF International, Inc.  1,457  40 
  CDI Corp.  2,139  32 
*  First Advantage Corp. Class A  1,518  27 
*  Hill International Inc.  3,987  24 
*  Volt Information Sciences Inc.  2,334  23 
*  Odyssey Marine     
  Exploration, Inc.  8,251  15 
*  LECG Corp.  3,971  13 
      5,533 

63



Industrials Index Fund

      Market 
      Value 
    Shares  ($000) 
Road & Rail (9.5%)     
  Union Pacific Corp.  82,344  4,925 
  Burlington Northern     
  Santa Fe Corp.  55,443  4,603 
  Norfolk Southern Corp.  59,955  2,750 
  CSX Corp.  63,944  2,718 
  J.B. Hunt Transport     
  Services, Inc.  14,378  403 
*  Kansas City Southern  14,930  357 
  Ryder System, Inc.  9,092  346 
  Con-way, Inc.  7,564  316 
  Landstar System, Inc.  8,438  294 
*  Hertz Global Holdings Inc.  29,582  293 
*  Genesee & Wyoming Inc.     
  Class A  6,149  193 
  Knight Transportation, Inc.  10,273  169 
*  Old Dominion Freight Line, Inc.  4,567  163 
*  Avis Budget Group, Inc.  16,530  161 
  Heartland Express, Inc.  9,805  139 
  Werner Enterprises, Inc.  7,502  131 
  Arkansas Best Corp.  3,920  125 
*  Amerco, Inc.  1,113  51 
*  Marten Transport, Ltd.  2,678  45 
*  Saia, Inc.  2,205  39 
*  YRC Worldwide, Inc.  9,732  22 
*  Patriot Transportation     
  Holding, Inc.  273  21 
  Universal Truckload     
  Services, Inc.  1,046  17 
      18,281 
Trading Companies & Distributors (1.8%)   
  W.W. Grainger, Inc.  10,152  888 
  Fastenal Co.  21,790  789 
  MSC Industrial     
  Direct Co., Inc. Class A  7,159  283 
  Watsco, Inc.  4,011  212 
  GATX Corp.  7,700  211 
*  WESCO International, Inc.  6,499  156 
  Applied Industrial     
  Technology, Inc.  6,294  130 
*  Beacon Roofing Supply, Inc.  7,363  124 
*  Interline Brands, Inc.  5,297  89 
  Kaman Corp. Class A  4,198  87 
*  United Rentals, Inc.  8,816  81 
  Aircastle Ltd.  8,349  78 
*  Rush Enterprises, Inc.     
  Class A  4,276  60 
*  H&E Equipment Services, Inc.  3,410  34 
  TAL International Group, Inc.  2,633  32 
  Houston Wire & Cable Co.  2,703  31 
*  RSC Holdings Inc.  4,213  30 
  Aceto Corp.  4,036  27 
*  Titan Machinery, Inc.  2,169  26 
*  Rush Enterprises, Inc. Class B  1,230  16 
  Lawson Products, Inc.  720  13 
      3,397 
Transportation Infrastructure (0.0%)   
  Macquarie Infrastructure     
  Co. LLC  7,097  44 
Total Investments (100.0%)     
(Cost $294,972)    191,864 
Other Assets and Liabilities (0.0%)   
Other Assets    985 
Liabilities    (972) 
      13 
Net Assets (100%)    191,877 

At August 31, 2009, net assets consisted of: 
  Amount 
  ($000) 
Paid-in Capital  309,717 
Undistributed Net Investment Income  2,743 
Accumulated Net Realized Losses  (17,475) 
Unrealized Appreciation (Depreciation)  (103,108) 
Net Assets  191,877 
 
 
Admiral Shares—Net Assets   
Applicable to 252,176 outstanding   
$.001 par value shares of beneficial   
interest (unlimited authorization)  6,014 
Net Asset Value Per Share—   
Admiral Shares  $23.85 
 
 
ETF Shares—Net Assets   
Applicable to 4,001,305 outstanding   
$.001 par value shares of beneficial   
interest (unlimited authorization)  185,863 
Net Asset Value Per Share—   
ETF Shares  $46.45 

See Note A in Notes to Financial Statements.
* Non-income-producing security.
See accompanying Notes, which are an integral part of the Financial Statements.

64



Industrials Index Fund

Statement of Operations

  Year Ended 
August 31, 2009  
  ($000) 
Investment Income   
Income   
Dividends  5,681 
Interest1  1 
Security Lending  5 
Total Income  5,687 
Expenses   
The Vanguard Group—Note B   
     Investment Advisory Services  29 
     Management and Administrative—   
     Admiral Shares  13 
     Management and Administrative—   
     ETF Shares  224 
     Marketing and Distribution—   
     Admiral Shares  2 
     Marketing and Distribution—   
     ETF Shares  67 
Custodian Fees  37 
Auditing Fees  24 
Shareholders’ Reports and Proxies—   
Admiral Shares   
Shareholders’ Reports and Proxies—   
ETF Shares  78 
Total Expenses  474 
Net Investment Income  5,213 
Realized Net Gain (Loss) on   
Investment Securities Sold  (28,412) 
Change in Unrealized Appreciation   
(Depreciation) of Investment Securities  (81,669) 
Net Increase (Decrease) in Net Assets   
Resulting from Operations  (104,868) 

Statement of Changes in Net Assets

  Year Ended August 31, 
  2009  2008 
  ($000)  ($000) 
Increase (Decrease) in Net Assets     
Operations     
Net Investment Income  5,213  4,411 
Realized Net Gain (Loss)  (28,412)  18,166 
Change in Unrealized Appreciation (Depreciation)  (81,669)  (46,076) 
Net Increase (Decrease) in Net Assets Resulting from Operations  (104,868)  (23,499) 
Distributions     
Net Investment Income     
     Admiral Shares  (158)  (67) 
     ETF Shares  (5,112)  (3,337) 
Realized Capital Gain     
     Admiral Shares     
     ETF Shares     
Total Distributions  (5,270)  (3,404) 
Capital Share Transactions     
     Admiral Shares  (1,396)  7,721 
     ETF Shares  (54,110)  143,649 
Net Increase (Decrease) from Capital Share Transactions  (55,506)  151,370 
Total Increase (Decrease)  (165,644)  124,467 
Net Assets     
Beginning of Period  357,521  233,054 
End of Period2  191,877  357,521 

1 Interest income from an affiliated company of the fund was $1,000.
2 Net Assets—End of Period includes undistributed net investment income of $2,743,000 and $2,797,000.
See accompanying Notes, which are an integral part of the Financial Statements.

65



Industrials Index Fund

Financial Highlights

Admiral Shares         
        May 8, 
    Year Ended  20061 to 
    August 31,  Aug. 31, 
For a Share Outstanding Throughout Each Period  2009  2008  2007  2006 
Net Asset Value, Beginning of Period  $34.20  $37.94  $30.72  $34.10 
Investment Operations         
Net Investment Income  .635  .5762  .5102  .1642 
Net Realized and Unrealized Gain (Loss)         
on Investments  (10.428)  (3.816)  7.090  (3.544) 
Total from Investment Operations  (9.793)  (3.240)  7.600  (3.380) 
Distributions         
Dividends from Net Investment Income  (.557)  (.500)  (.380)   
Distributions from Realized Capital Gains         
Total Distributions  (.557)  (.500)  (.380)   
Net Asset Value, End of Period  $23.85  $34.20  $37.94  $30.72 
 
Total Return3  –28.44%  –8.67%  24.90%  –9.91% 
 
Ratios/Supplemental Data         
Net Assets, End of Period (Millions)  $6  $11  $4  $0.2 
Ratio of Total Expenses to Average Net Assets  0.28%  0.25%  0.26%  0.28%4 
Ratio of Net Investment Income to Average Net Assets  2.71%  1.63%  1.46%  1.35%4 
Portfolio Turnover Rate5  8%  7%  13%  9% 

1 Inception.
2 Calculated based on average shares outstanding.
3 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than one year.
4 Annualized.
5 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares,
including ETF Creation Units

See accompanying Notes, which are an integral part of the Financial Statements.

66



Industrials Index Fund

Financial Highlights

ETF Shares           
          Sept. 23, 
          20041 to 
      Year Ended August 31,  Aug. 31, 
For a Share Outstanding Throughout Each Period  2009  2008  2007  2006  2005 
Net Asset Value, Beginning of Period  $66.65  $73.94  $59.85  $54.30  $48.79 
Investment Operations           
Net Investment Income  1.253  1.1572  1.0262  .8422  .650 
Net Realized and Unrealized Gain (Loss)           
on Investments  (20.342)  (7.466)  13.808  5.160  5.180 
Total from Investment Operations  (19.089)  (6.309)  14.834  6.002  5.830 
Distributions           
Dividends from Net Investment Income  (1.111)  (.981)  (.744)  (.452)         (.320) 
Distributions from Realized Capital Gains           
Total Distributions  (1.111)  (.981)  (.744)  (.452)         (.320) 
Net Asset Value, End of Period  $46.45  $66.65  $73.94  $59.85  $54.30 
 
Total Return  –28.41%  –8.65%  24.95%  11.08%  11.94% 
 
Ratios/Supplemental Data           
Net Assets, End of Period (Millions)  $186  $347  $229  $120  $16 
Ratio of Total Expenses to Average Net Assets  0.25%  0.20%  0.22%  0.25%  0.26%3 
Ratio of Net Investment Income to           
Average Net Assets  2.74%  1.68%  1.50%  1.38%  1.30%3 
Portfolio Turnover Rate4  8%  7%  13%  9%  11% 

1 Inception.
2 Calculated based on average shares outstanding.
3 Annualized.
4 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares,
including ETF Creation Units.

See accompanying Notes, which are an integral part of the Financial Statements.

67



Industrials Index Fund

Notes to Financial Statements

Vanguard Industrials Index Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund offers two classes of shares: Admiral Shares and ETF Shares. Admiral Shares are available to any investor who meets the fund’s minimum purchase requirements. ETF Shares are listed for trading on the NYSE Arca, Inc.; they can be purchased and sold through a broker.

A. The following significant accounting policies conform to generally accepted accounting principles for U.S. mutual funds. The fund consistently follows such policies in preparing its financial statements.

1. Security Valuation: Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which market quotations are not readily available, or whose values have been materially affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued by methods deemed by the board of trustees to represent fair value. Investments in Vanguard Market Liquidity Fund are valued at that fund’s net asset value.

2. Federal Income Taxes: The fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income. Management has analyzed the fund’s tax positions taken for all open federal income tax years (August 31, 2006–2009), and has concluded that no provision for federal income tax is required in the fund’s financial statements.

3. Distributions: Distributions to shareholders are recorded on the ex-dividend date.

4. Security Lending: The fund may lend its securities to qualified institutional borrowers to earn additional income. Security loans are required to be secured at all times by collateral at least equal to the market value of securities loaned. The fund invests cash collateral received in Vanguard Market Liquidity Fund, and records a liability for the return of the collateral, during the period the securities are on loan. Security lending income represents the income earned on investing cash collateral, less expenses associated with the loan.

5. Other: Dividend income is recorded on the ex-dividend date. Interest income includes income distributions received from Vanguard Market Liquidity Fund and is accrued daily. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment securities are those of the specific securities sold. Fees assessed on redemptions of capital shares are credited to paid-in capital.

Each class of shares has equal rights as to assets and earnings, except that each class separately bears certain class-specific expenses related to maintenance of shareholder accounts (included in Management and Administrative expenses), shareholder reporting, and proxies. Marketing and distribution expenses are allocated to each class of shares based on a method approved by the board of trustees. Income, other non-class-specific expenses, and gains and losses on investments are allocated to each class of shares based on its relative net assets.

B. The Vanguard Group furnishes at cost investment advisory, corporate management, administrative, marketing, and distribution services. The costs of such services are allocated to the fund under methods approved by the board of trustees. The fund has committed to provide up to 0.40% of its net assets in capital contributions to Vanguard. At August 31, 2009, the fund had contributed capital of $39,000 to Vanguard (included in Other Assets), representing 0.02% of the fund’s net assets and 0.02% of Vanguard’s capitalization. The fund’s trustees and officers are also directors and officers of Vanguard.

C. Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Level 1—Quoted prices in active markets for identical securities.

Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).

Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments).

At August 31, 2009, 100% of the fund’s investments were valued based on Level 1 inputs.

68



Industrials Index Fund

D. Distributions are determined on a tax basis and may differ from net investment income and realized capital gains for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the financial statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain, or loss are recognized in different periods for financial statement and tax purposes; these differences will reverse at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.

During the year ended August 31, 2009, the fund realized $14,979,000 of net capital losses resulting from in-kind redemptions—in which shareholders exchanged fund shares for securities held by the fund rather than for cash. Because such losses are not taxable losses to the fund, they have been reclassified from accumulated net realized losses to paid-in capital.

For tax purposes, at August 31, 2009, the fund had $2,906,000 of ordinary income available for distribution. The fund had available capital loss carryforwards totaling $5,549,000 to offset future net capital gains of $18,000 through August 31, 2014, $283,000 through August 31, 2015, $552,000 through August 31, 2016, and $4,696,000 through August 31, 2017. In addition, the fund realized losses of $11,763,000 during the period from November 1, 2008, through August 31, 2009, which are deferred and will be treated as realized for tax purposes in fiscal 2010.

At August 31, 2009, the cost of investment securities for tax purposes was $295,135,000. Net unrealized depreciation of investment securities for tax purposes was $103,271,000, consisting of unrealized gains of $842,000 on securities that had risen in value since their purchase and $104,113,000 in unrealized losses on securities that had fallen in value since their purchase.

E. During the year ended August 31, 2009, the fund purchased $94,330,000 of investment securities and sold $149,730,000 of investment securities, other than temporary cash investments.

F. Capital share transactions for each class of shares were:

      Year Ended August 31, 
    2009    2008 
  Amount  Shares  Amount  Shares 
  ($000)  (000)  ($000)  (000) 
Admiral Shares         
Issued  3,309  160  9,334  262 
Issued in Lieu of Cash Distributions  128  6  56  2 
Redeemed1  (4,833)  (231)  (1,669)  (48) 
Net Increase (Decrease)—Admiral Shares  (1,396)  (65)  7,721  216 
ETF Shares         
Issued  77,709  1,900  250,498  3,601 
Issued in Lieu of Cash Distributions         
Redeemed1  (131,819)  (3,100)  (106,849)  (1,500) 
Net Increase (Decrease)—ETF Shares  (54,110)  (1,200)  143,649  2,101 
1 Net of redemption fees for fiscal 2009 and 2008 of $42,000 and $25,000, respectively (fund totals).     

G. In preparing the financial statements as of August 31, 2009, management considered the impact of subsequent events occurring through October 15, 2009, for potential recognition or disclosure in these financial statements.

69



Information Technology Index Fund

Fund Profile

As of August 31, 2009

Portfolio Characteristics     
    Target  Broad 
  Fund  Index1  Index2 
Number of Stocks  419  418  2,501 
Median Market Cap $107.4B   $107.4B  $27.3B 
Price/Earnings Ratio  34.5x  34.4x  25.6x 
Price/Book Ratio  3.3x  3.3x  2.1x 
Yield3    0.9%  1.9% 
   Admiral Shares  0.6%     
   ETF Shares  0.7%     
Return on Equity  22.6%  22.6%  19.3% 
Earnings Growth Rate  20.7%  20.7%  9.9% 
Foreign Holdings  0.0%  0.0%  0.0% 
Turnover Rate  12%     
Expense Ratio4       
   Admiral Shares  0.28%     
   ETF Shares  0.25%     
Short-Term Reserves  0.0%     

Volatility Measures5   
  Fund Versus  Fund Versus 
  Target Index1  Broad Index2 
R-Squared  1.00  0.86 
Beta  1.00  1.09 

Industry Diversification (% of equity exposure) 
 
Application Software  4.1% 
Communications Equipment  13.5 
Computer Hardware  22.4 
Computer Storage & Peripherals  3.3 
Data Processing & Outsourced Services  7.3 
Electronic Components  1.7 
Electronic Equipment & Instruments  1.1 
Electronic Manufacturing Services  1.4 
Internet Software & Services  9.1 
IT Consulting & Other Services  2.2 
Semiconductor Equipment  2.3 
Semiconductors  13.0 
Systems Software  16.7 
Other Information Technology  1.9 

Ten Largest Holdings6 (% of total net assets) 
 
Microsoft Corp.   9.7% 
International Business Machines Corp.   7.6 
Apple Inc.   7.4 
Cisco Systems, Inc.   6.1 
Intel Corp.   5.6 
Google Inc.   5.5 
Hewlett-Packard Co.   5.3 
Oracle Corp.   4.3 
QUALCOMM Inc.   3.8 
EMC Corp.   1.6 
Top Ten  56.9% 

1 MSCI US IMI/Information Technology.
2 MSCI US IMI/2500.
3 30-day SEC yield for the fund; annualized dividend yield for the indexes. See the Glossary.
4 The expense ratios shown are from the prospectuses dated December 29, 2008, and represent estimated costs for the current fiscal year based on the fund’s net assets as of the prospectus date. For the fiscal year
ended August 31, 2009, the expense ratios were 0.28% for the Admiral Shares and 0.25% for the ETF Shares.
5 For an explanation of R-squared, beta, and other terms used here, see the Glossary.
6 The holdings listed exclude any temporary cash investments and equity index products.

70



Information Technology Index 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 www.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: January 26, 2004–August 31, 2009
Initial Investment of $10,000


    Average Annual Total Returns   
    Periods Ended August 31, 2009  Final Value 
      Since  of a $10,000 
  One Year  Five Years  Inception1  Investment 
Information Technology Index Fund         
ETF Shares Net Asset Value2   –9.78%               3.94%  –0.64%  $9,646 
Information Technology Index Fund         
ETF Shares Market Price   –9.73               3.98  –0.62  9,656 
MSCI US IMI/2500  –18.26               1.36  0.52  10,295 
MSCI US IMI/Information Technology   –9.62               4.14  –0.46  9,746 

        Final Value 
             Since  of a $100,000 
  One Year  Five Years  Inception1  Investment 
Information Technology Index Fund         
Admiral Shares3   –9.79%       3.91%       1.30%  $107,273 
MSCI US IMI/2500  –18.26       1.36       1.23  106,858 
MSCI US IMI/Information Technology   –9.62       4.14       1.51  108,494 

1 Performance for the fund and its comparative standards is calculated since the following inception dates: January 26, 2004, for ETF Shares; March 25, 2004, for Admiral Shares.
2 For more information about how the ETF Shares’ market prices have compared with their net asset value, visit www.vanguard.com, select your ETF, and then select the Performance tab. The Premium/Discount
table there shows the percentages of days on which the ETF Shares’ market price was above or below the NAV.
3 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than one year.
Note: See Financial Highlights tables for dividend and capital gains information.

71



Information Technology Index Fund

Fiscal-Year Total Returns (%): January 26, 2004–August 31, 2009


Cumulative Returns: ETF Shares, January 26, 2004–August 31, 2009     
      Cumulative 
      Since 
  One Year  Five Years  Inception 
Information Technology Index Fund ETF Shares Market Price   –9.73%     21.54%  –3.44% 
Information Technology Index Fund ETF Shares Net Asset Value   –9.78     21.33  –3.54 
MSCI US IMI/Information Technology   –9.62     22.47  –2.54 

Average Annual Total Returns: Periods Ended June 30, 2009
This table presents average annual total returns through the latest calendar quarter—rather than through the end
of the fiscal period. Securities and Exchange Commission rules require that we provide this information.

             Since 
  Inception Date  One Year  Five Years  Inception 
ETF Shares  1/26/2004       
 Market Price    –18.51%     –1.26%   –2.71% 
 Net Asset Value    –18.54     –1.26   –2.71 
Admiral Shares1  3/25/2004  –18.55     –1.29   –0.81 

1 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than one year.
Note: See Financial Highlights tables for dividend and capital gains information.

72



Information Technology Index Fund

Financial Statements

Statement of Net Assets

As of August 31, 2009

The fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth fiscal quarters, the lists appear in the fund’s semiannual and annual reports to shareholders. For the first and third fiscal quarters, the fund files the lists with the Securities and Exchange Commission on Form N-Q. Shareholders can look up the fund’s Forms N-Q on the SEC’s website at www.sec.gov. Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room (see the back cover of this report for further information).

        Market 
        Value 
      Shares  ($000) 
Common Stocks (100.0%)     
Communications Equipment (13.5%)   
*  Cisco Systems, Inc.  1,899,079  41,020 
  QUALCOMM Inc.    544,918  25,295 
  Motorola, Inc.    755,015  5,421 
*  Juniper Networks, Inc.    172,305  3,975 
  Harris Corp.    43,920  1,525 
*  Brocade Communications     
   Systems, Inc.    127,046  919 
*  F5 Networks, Inc.    26,084  900 
*  Tellabs, Inc.    124,262  788 
*  CommScope, Inc.    26,831  723 
*  Polycom, Inc.    27,451  648 
*  3Com Corp.    127,067  553 
*  Arris Group Inc.    40,790  541 
*  Palm, Inc.    38,589  514 
*  JDS Uniphase Corp.    70,460  484 
  ADTRAN Inc.    18,417  419 
*  Ciena Corp.    29,827  400 
  Plantronics, Inc.    15,984  382 
*  Riverbed Technology, Inc.  18,121  349 
*  Comtech       
   Telecommunications Corp.  9,265  315 
*  Tekelec    19,507  304 
*  InterDigital, Inc.    14,174  297 
*  Starent Networks Corp.  13,790  279 
*  ADC Telecommunications, Inc.  31,740  270 
*  Emulex Corp.    27,043  262 
*  Blue Coat Systems, Inc.  12,773  250 
*  Avocent Corp.    14,689  240 
*  EchoStar Corp.    12,223  227 
*  ViaSat, Inc.    9,175  222 
*  Harmonic, Inc.    31,143  206 
*  Sycamore Networks, Inc.  65,114  198 
*  NETGEAR, Inc.    11,531  197 
*  Infinera Corp.    27,926  195 
*  Sonus Networks, Inc.    89,145  188 
*  Aruba Networks, Inc.    19,868  181 
  Black Box Corp.    5,740  144 
*  Harris Stratex Networks, Inc.     
   Class A    19,191  116 
*  Finisar Corp.    131,473  116 
*  DG FastChannel Inc.    6,479  112 
*  EMS Technologies, Inc.    5,000  94 
*  Oplink Communications, Inc.  6,635  92 
*  ShoreTel, Inc.    14,279  90 
*  SeaChange International, Inc.  9,478  85 
*  Hughes Communications Inc.  3,199  83 
*  Loral Space and       
   Communications Ltd.    4,003  83 
*  Symmetricom Inc.    14,323  75 
*  Acme Packet, Inc.    9,088  74 
*  Ixia    12,113  74 
*  Anaren, Inc.    4,511  73 

      Market 
      Value 
    Shares  ($000) 
*  Extreme Networks, Inc.  28,977  70 
*  Digi International, Inc.  7,751  66 
*  UTStarcom, Inc.  34,410  56 
*  Airvana, Inc.  8,185  53 
*  Powerwave Technologies, Inc.   42,302  52 
*  BigBand Networks Inc.  12,598  49 
  Bel Fuse, Inc. Class B  2,726  46 
*  Cogo Group, Inc.  8,448  46 
*  EMCORE Corp.  24,224  26 
*  OpNext, Inc.  7,078  19 
  Bel Fuse, Inc. Class A  681  12 
      90,493 
Computers & Peripherals (25.7%)   
  International Business     
  Machines Corp.  435,071  51,360 
*  Apple Inc.  293,728  49,408 
  Hewlett-Packard Co.  787,379  35,345 
*  EMC Corp.  662,991  10,542 
*  Dell Inc.  578,328  9,155 
*  Western Digital Corp.  73,381  2,516 
*  NetApp, Inc.  109,596  2,493 
*  Sun Microsystems, Inc.  246,382  2,286 
  Seagate Technology  161,798  2,241 
*  Teradata Corp.  56,879  1,532 
*  SanDisk Corp.  74,687  1,322 
*  NCR Corp.  51,893  692 
  Diebold, Inc.  21,717  655 
*  QLogic Corp.  39,855  630 
*  STEC Inc.  12,174  493 
*  Lexmark International, Inc.  25,778  486 
*  Synaptics Inc.  11,190  288 
*  Intermec, Inc.  16,153  230 
*  Electronics for Imaging, Inc.  16,814  179 
*  Avid Technology, Inc.  12,102  158 
*  Netezza Corp.  12,634  121 
*  Adaptec, Inc.  39,953  117 
*  Novatel Wireless, Inc.  10,079  97 
*  Stratasys, Inc.  6,368  92 
  Imation Corp.  10,399  89 
*  Quantum Corp.  68,917  85 
*  3PAR, Inc.  9,053  80 
*  Compellent Technologies, Inc.  4,574  68 
*  Super Micro Computer Inc.  8,476  68 
*  Silicon Graphics     
  International Corp.  9,583  53 
*  Isilon Systems Inc.  7,128  41 
      172,922 
Electronic Equipment, Instruments &   
Components (4.9%)     
  Corning, Inc.  511,573  7,715 
*  Tyco Electronics Ltd.  150,805  3,441 
*  Agilent Technologies, Inc.  113,711  2,920 
  Amphenol Corp. Class A  56,271  1,967 
*  Flextronics International Ltd.  266,168  1,578 

      Market 
      Value 
    Shares  ($000) 
*  Avnet, Inc.  49,598  1,322 
*  FLIR Systems, Inc.  49,469  1,139 
*  Arrow Electronics, Inc.  39,242  1,085 
*  Trimble Navigation Ltd.  39,255  999 
*  Ingram Micro, Inc. Class A  48,705  816 
*  Itron, Inc.  12,974  711 
*  Dolby Laboratories Inc.  17,307  675 
  Jabil Circuit, Inc.  59,712  654 
*  Tech Data Corp.  16,422  626 
  National Instruments Corp.  19,516  500 
*  Vishay Intertechnology, Inc.  56,601  457 
  Molex, Inc. Class A  24,217  408 
  Molex, Inc.  20,587  375 
*  Benchmark Electronics, Inc.  21,430  351 
*  Anixter International Inc.  9,832  345 
*  Plexus Corp.  12,894  325 
*  ScanSource, Inc.  8,657  242 
*  Rofin-Sinar Technologies Inc.  9,478  216 
*  Checkpoint Systems, Inc.  12,760  213 
  Cognex Corp.  12,537  201 
*  L-1 Identity Solutions Inc.  27,701  199 
  AVX Corp.  16,693  194 
*  SYNNEX Corp.  6,469  192 
*  Sanmina-SCI Corp.  28,935  183 
*  Coherent, Inc.  8,024  179 
*  Littelfuse, Inc.  7,134  179 
*  Insight Enterprises, Inc.  15,004  172 
*  Brightpoint, Inc.  21,448  157 
*  DTS Inc.  5,781  155 
*  Cogent Inc.  14,705  154 
*  TTM Technologies, Inc.  14,061  142 
  Park Electrochemical Corp.  6,349  137 
*  Rogers Corp.  5,157  135 
  MTS Systems Corp.  4,935  131 
*  Universal Display Corp.  10,623  116 
*  Echelon Corp.  9,925  113 
  Technitrol, Inc.  13,400  110 
  Methode Electronics, Inc.     
  Class A  12,630  109 
*  Electro Scientific     
  Industries, Inc.  8,785  108 
*  Maxwell Technologies, Inc.  7,341  99 
  CTS Corp.  11,072  98 
*  Multi-Fineline Electronix, Inc.  3,306  91 
  Daktronics, Inc.  11,319  91 
*  IPG Photonics Corp.  7,377  89 
*  FARO Technologies, Inc.  5,223  89 
*  OSI Systems Inc.  5,241  88 
*  Newport Corp.  11,745  83 
  Electro Rent Corp.  6,241  64 
*  Comverge Inc.  5,383  60 
*  Smart Modular     
  Technologies Inc.  13,100  50 
  Agilysys, Inc.  7,527  48 
*  CPI International, Inc.  2,422  23 
*  ICx Technologies, Inc.  3,876  18 
      33,137 
Internet Software & Services (9.1%)   
*  Google Inc.  79,379  36,647 
*  eBay Inc.  360,184  7,975 
*  Yahoo! Inc.  436,682  6,380 
*  VeriSign, Inc.  63,486  1,345 
*  Equinix, Inc.  12,498  1,053 

73



Information Technology Index Fund

      Market 
      Value 
    Shares  ($000) 
*   Akamai Technologies, Inc.  56,921  1,004 
*   IAC/InterActiveCorp  34,117  632 
*   Sohu.com Inc.  10,016  612 
*   VistaPrint Ltd.  13,158  545 
*   Digital River, Inc.  12,569  444 
*   Omniture, Inc.  22,488  322 
*  j2 Global Communications, Inc.  14,460  309 
*   EarthLink, Inc.  35,456  295 
*   ValueClick, Inc.  28,429  291 
*   DealerTrack Holdings Inc.  12,397  250 
*   GSI Commerce, Inc.  12,997  225 
*   SAVVIS, Inc.  12,505  212 
*   Rackspace Hosting, Inc.  15,812  205 
   United Online, Inc.  27,274  191 
*   Art Technology Group, Inc.  42,430  171 
*   Constant Contact, Inc.  6,896  144 
*   Move, Inc.  47,584  138 
*   Bankrate, Inc.  4,618  132 
*   RealNetworks, Inc.  31,664  112 
*   ModusLink Global     
     Solutions, Inc.  14,825  106 
*   WebMD Health Corp. Class A  3,199  105 
   NIC Inc.  13,465  103 
*   Switch and Data Inc.  7,311  99 
*   Vocus, Inc.  5,864  99 
*   The Knot, Inc.  9,514  96 
*   InfoSpace, Inc.  11,410  92 
*   ComScore Inc.  6,184  86 
*   Internet Capital Group Inc.  12,418  82 
*   Perficient, Inc.  10,588  82 
*   Terremark Worldwide, Inc.  13,771  73 
*   LoopNet, Inc.  8,973  72 
*   Internet Brands Inc.  8,634  63 
*   Liquidity Services, Inc.  5,498  60 
*   Internap Network     
     Services Corp.  16,054  49 
*   DivX, Inc.  8,842  46 
*   Dice Holdings Inc.  6,858  40 
*   Limelight Networks Inc.  11,936  40 
   Marchex, Inc.  8,088  35 
*   TechTarget  4,076  26 
      61,088 
IT Services (9.5%)     
  Visa Inc.  147,912  10,517 
  Accenture Ltd.  201,902  6,663 
  Automatic Data     
     Processing, Inc.  165,218  6,336 
  MasterCard, Inc. Class A  29,191  5,915 
  Western Union Co.  230,972  4,167 
* Cognizant Technology     
     Solutions Corp.  96,212  3,356 
  Paychex, Inc.  106,913  3,025 
* Fiserv, Inc.  51,246  2,473 
* Computer Sciences Corp.  49,878  2,437 
  Fidelity National Information     
     Services, Inc.  62,966  1,546 
* Affiliated Computer     
     Services, Inc. Class A  29,893  1,339 
* SAIC, Inc.  68,447  1,266 
  Global Payments Inc.  26,374  1,119 
  Lender Processing     
     Services, Inc.  31,238  1,071 
* Alliance Data Systems Corp.  19,121  1,062 
* Hewitt Associates, Inc.  27,758  1,000 
  Broadridge Financial     
     Solutions LLC  46,147  961 
*   Metavante Technologies  29,649  934 

      Market 
      Value 
    Shares  ($000) 
  Total System Services, Inc.  55,029  840 
*  DST Systems, Inc.  13,066  599 
*  NeuStar, Inc. Class A  23,803  552 
*  Perot Systems Corp.  29,591  493 
*  CACI International, Inc.  9,840  452 
*  Convergys Corp.  40,146  435 
*  ManTech International Corp.  7,215  381 
*  Wright Express Corp.  11,940  376 
*  Euronet Worldwide, Inc.  14,869  351 
*  Gartner, Inc. Class A  20,052  334 
*  CyberSource Corp.  21,650  332 
  Syntel, Inc.  8,162  327 
*  Genpact, Ltd.  24,581  311 
*  Unisys Corp.  121,917  298 
*  VeriFone Holdings, Inc.  24,992  288 
*  SRA International, Inc.  13,898  276 
*  Sapient Corp.  33,279  244 
  MAXIMUS, Inc.  5,723  238 
*  TeleTech Holdings, Inc.  13,237  226 
  Acxiom Corp.  24,274  221 
*  TNS Inc.  8,221  213 
*  CSG Systems     
   International, Inc.  11,332  171 
*  Forrester Research, Inc.  5,323  125 
*  Global Cash Access, Inc.  14,125  102 
*  RightNow Technologies Inc.  7,459  94 
  Heartland Payment     
   Systems, Inc.  7,453  93 
*  Ciber, Inc.  21,316  83 
  Cass Information     
   Systems, Inc.  2,381  74 
*  Ness Technologies Inc.  11,796  71 
*  infoGROUP, Inc.  11,286  70 
*  NCI, Inc.  2,214  65 
*  ExlService Holdings, Inc.  4,648  56 
  iGATE Corp.  7,977  53 
*  Integral Systems, Inc.  5,644  35 
*  China Information Security     
   Technology, Inc.  8,347  32 
      64,098 
Office Electronics (0.5%)     
  Xerox Corp.  284,709  2,463 
*  Zebra Technologies Corp.     
   Class A  20,024  500 
      2,963 
Semiconductors & Semiconductor   
Equipment (15.3%)     
  Intel Corp.  1,838,866  37,366 
  Texas Instruments, Inc.  419,586  10,318 
  Applied Materials, Inc.  437,653  5,768 
*  Broadcom Corp.  141,557  4,027 
  Analog Devices, Inc.  95,887  2,709 
*  Marvell Technology     
   Group Ltd.  173,075  2,639 
*  NVIDIA Corp.  179,894  2,612 
*  Micron Technology, Inc.  275,222  2,028 
  Xilinx, Inc.  90,096  2,004 
  Linear Technology Corp.  73,175  1,944 
  Maxim Integrated     
   Products, Inc.  100,350  1,885 
  Altera Corp.  96,415  1,852 
  KLA-Tencor Corp.  55,803  1,741 
  Microchip Technology, Inc.  59,836  1,589 
*  LAM Research Corp.  41,613  1,278 
*  MEMC Electronic     
   Materials, Inc.  73,786  1,177 

      Market 
      Value 
    Shares  ($000) 
  National     
   Semiconductor Corp.  75,414  1,144 
*  LSI Corp.  213,627  1,113 
*  ON Semiconductor Corp.  131,523  1,061 
*  Cree, Inc.  26,353  971 
*  Advanced Micro Devices, Inc.  186,814  815 
*  Varian Semiconductor     
   Equipment Associates, Inc.  23,971  733 
*  PMC Sierra Inc.  72,984  663 
*  Skyworks Solutions, Inc.  55,125  642 
*  Silicon Laboratories Inc.  13,967  629 
*  Rambus Inc.  32,555  622 
*  Novellus Systems, Inc.  32,071  614 
  Intersil Corp.  40,358  597 
*  Atmel Corp.  140,997  582 
*  Atheros     
   Communications, Inc.  19,979  552 
*  Cypress Semiconductor Corp.  47,248  478 
*  Teradyne, Inc.  56,991  470 
*  International Rectifier Corp.  23,688  445 
*  Fairchild Semiconductor     
   International, Inc.  40,659  409 
*  Tessera Technologies, Inc.  15,930  400 
*  RF Micro Devices, Inc.  82,343  387 
*  Integrated Device     
   Technology Inc.  54,985  376 
*  Microsemi Corp.  26,591  375 
*  Semtech Corp.  20,045  366 
*  TriQuint Semiconductor, Inc.  48,514  355 
*  FormFactor Inc.  16,080  353 
*  Cymer, Inc.  9,242  325 
*  FEI Co.  12,207  289 
*  MKS Instruments, Inc.  15,348  283 
*  Netlogic Microsystems Inc.  6,095  268 
*  Cabot Microelectronics Corp.  7,644  264 
*  Avago Technologies Ltd.  13,569  247 
*  Cavium Networks, Inc.  12,124  246 
*  OmniVision Technologies, Inc.  16,745  245 
*  Veeco Instruments, Inc.  10,526  226 
*  Hittite Microwave Corp.  6,519  224 
*  Diodes Inc.  10,894  221 
*  Amkor Technology, Inc.  39,128  217 
*  Monolithic Power Systems  9,397  212 
*  Verigy Ltd.  19,341  207 
*  Zoran Corp.  16,687  184 
*  ATMI, Inc.  10,393  177 
*  Applied Micro Circuits Corp.  21,475  171 
*  Standard Microsystem Corp.  7,195  167 
*  Entegris Inc.  36,932  148 
*  Brooks Automation, Inc.  20,921  136 
*  Volterra Semiconductor Corp.  7,449  132 
*  Sigma Designs, Inc.  8,654  122 
*  Kulicke & Soffa     
   Industries, Inc.  22,424  118 
  Micrel, Inc.  14,932  116 
*  Advanced Energy     
   Industries, Inc.  10,998  115 
*  Cirrus Logic, Inc.  20,263  101 
*  Supertex, Inc.  3,770  97 
*  Lattice Semiconductor Corp.  38,086  94 
*  Actel Corp.  8,478  92 
*  Exar Corp.  12,032  90 
  Cohu, Inc.  7,321  87 
*  Kopin Corp.  22,172  85 
*  Ultratech, Inc.  7,332  79 
*  ANADIGICS, Inc.  20,240  78 
*  Silicon Image, Inc.  24,445  74 

74



Information Technology Index Fund

        Market 
        Value 
      Shares  ($000) 
*  Pericom Semiconductor Corp.  8,259  71 
*  DSP Group Inc.    8,485  67 
*  Advanced Analogic       
   Technologies, Inc.    13,867  63 
*  Rudolph Technologies, Inc.    9,375  60 
*  Silicon Storage       
   Technology, Inc.    28,372  52 
*  Rubicon Technology, Inc.    4,241  52 
  IXYS Corp.    7,431  51 
*  Trident Microsystems, Inc.    20,787  50 
*  Conexant Systems, Inc.    16,401  45 
*  Mattson Technology, Inc.    15,914  26 
        102,563 
Software (21.5%)       
  Microsoft Corp.  2,637,216  65,007 
  Oracle Corp.  1,312,634  28,707 
*  Adobe Systems, Inc.    172,300  5,414 
*  Symantec Corp.    270,288  4,087 
  CA, Inc.    136,651  3,046 
*  Intuit, Inc.    100,507  2,791 
*  Activision Blizzard, Inc.    190,710  2,214 
*  BMC Software, Inc.    60,882  2,170 
*  Citrix Systems, Inc.    59,707  2,130 
*  McAfee Inc.    51,173  2,036 
*  Electronic Arts Inc.    106,325  1,937 
*  salesforce.com, inc.    36,608  1,899 
*  Autodesk, Inc.    73,648  1,726 
*  Red Hat, Inc.    62,482  1,435 
*  ANSYS, Inc.    28,865  1,014 
*  Rovi Corp.    33,308  1,014 
*  Synopsys, Inc.    47,468  1,008 
*  Sybase, Inc.    27,387  954 
  FactSet Research       
   Systems Inc.    14,689  809 
*  Nuance Communications, Inc.  64,913  800 
*  MICROS Systems, Inc.    26,411  736 
  Jack Henry & Associates Inc.  26,271  612 
*  VMware Inc.    16,652  590 
*  Compuware Corp.    81,063  584 
*  Solera Holdings, Inc.    21,667  571 
*  Cadence Design Systems, Inc.  86,754  544 
*  TIBCO Software Inc.    58,333  517 
*  Informatica Corp.    28,573  512 
*  Parametric Technology Corp.  37,970  505 
*  Novell, Inc.    113,297  493 
*  Concur Technologies, Inc.    13,535  479 
*  Quest Software, Inc.    21,798  359 
  Fair Isaac, Inc.    16,068  358 
*  Blackboard Inc.    9,807  337 
*  TiVo Inc.    34,398  337 
*  Ariba, Inc.    28,526  327 
*  SPSS, Inc.    5,975  298 
*  Progress Software Corp.    13,110  292 
*  Mentor Graphics Corp.    31,577  279 
  Take-Two Interactive       
   Software, Inc.    26,409  277 
  Blackbaud, Inc.    14,224  274 
*  Lawson Software, Inc.    42,697  263 
*  Commvault Systems, Inc.    12,911  236 

      Market 
      Value 
    Shares  ($000) 
*  Websense, Inc.  14,759  224 
*  Advent Software, Inc.  5,714  221 
*  The Ultimate Software     
   Group, Inc.  7,874  208 
*  JDA Software Group, Inc.  9,726  188 
*  MicroStrategy Inc.  2,973  184 
*  Tyler Technologies, Inc.  11,543  176 
*  AsiaInfo Holdings, Inc.  9,871  170 
  Pegasystems Inc.  5,288  162 
*  Taleo Corp. Class A  8,742  158 
*  ACI Worldwide, Inc.  11,405  155 
*  EPIQ Systems, Inc.  9,914  149 
*  Manhattan Associates, Inc.  7,832  140 
*  SonicWALL, Inc.  17,561  132 
*  SuccessFactors Inc.  11,003  131 
*  THQ Inc.  22,014  121 
*  Ebix, Inc.  2,325  115 
*  MSC Software Corp.  14,897  113 
*  S1 Corp.  17,815  112 
*  Epicor Software Corp.  17,589  111 
*  Smith Micro Software, Inc.  9,187  106 
*  NetScout Systems, Inc.  9,147  105 
*  ArcSight, Inc.  5,142  100 
*  Telecommunication     
   Systems, Inc.  12,991  98 
*  Sourcefire Inc.  5,022  95 
*  Bottomline Technologies, Inc.  7,699  93 
*  Radiant Systems, Inc.  8,552  92 
*  VASCO Data Security     
   International, Inc.  9,658  84 
*  Kenexa Corp.  6,680  82 
*  Interactive Intelligence Inc.  4,145  71 
*  Synchronoss Technologies, Inc.  6,535  69 
*  DemandTec, Inc.  8,103  69 
*  NetSuite Inc.  4,998  69 
*  Symyx Technologies, Inc.  11,057  68 
*  FalconStor Software, Inc.  12,297  62 
*  Monotype Imaging     
   Holdings Inc.  7,331  60 
*  PROS Holdings, Inc.  5,883  48 
*  Double-Take Software Inc.  5,391  47 
  OPNET Technologies, Inc.  4,370  41 
*  Chordiant Software, Inc.  9,761  38 
*  Deltek, Inc.  5,244  38 
*  OpenTV Corp.  28,286  36 
  Renaissance Learning, Inc.  2,837  28 
*  Magma Design     
   Automation, Inc.  14,215  20 
      144,567 
Total Investments (100.0%)     
(Cost $717,574)    671,831 
Other Assets and Liabilities (0.0%)   
Other Assets    6,562 
Liabilities    (6,405) 
      157 
Net Assets (100%)    671,988 

At August 31, 2009, net assets consisted of: 
  Amount 
  ($000) 
Paid-in Capital  751,570 
Undistributed Net Investment Income  2,394 
Accumulated Net Realized Losses  (36,233) 
Unrealized Appreciation (Depreciation)  (45,743) 
Net Assets  671,988 
 
 
Admiral Shares—Net Assets   
Applicable to 1,344,760 outstanding   
$.001 par value shares of beneficial   
interest (unlimited authorization)  32,797 
Net Asset Value Per Share—   
Admiral Shares  $24.39 
 
 
ETF Shares—Net Assets   
Applicable to 13,416,155 outstanding   
$.001 par value shares of beneficial   
interest (unlimited authorization)  639,191 
Net Asset Value Per Share—   
ETF Shares  $47.64 

See Note A in Notes to Financial Statements.
* Non-income-producing security.
See accompanying Notes, which are an integral part of the Financial Statements.

75



Information Technology Index Fund

Statement of Operations 
 
  Year Ended 
August 31, 2009 
  ($000) 
Investment Income   
Income   
Dividends  4,659 
Interest1  3 
Security Lending  16 
Total Income  4,678 
Expenses   
The Vanguard Group—Note B   
     Investment Advisory Services  58 
     Management and Administrative—   
     Admiral Shares  45 
     Management and Administrative—   
     ETF Shares  683 
     Marketing and Distribution—   
     Admiral Shares  6 
     Marketing and Distribution—   
     ETF Shares  124 
Custodian Fees  38 
Auditing Fees  24 
Shareholders’ Reports and Proxies—   
Admiral Shares   
Shareholders’ Reports and Proxies—   
ETF Shares  89 
Trustees’ Fees and Expenses  1 
Total Expenses  1,068 
Net Investment Income  3,610 
Realized Net Gain (Loss) on   
Investment Securities Sold  (27,908) 
Change in Unrealized Appreciation   
(Depreciation) of Investment Securities  5,476 
Net Increase (Decrease) in Net Assets   
Resulting from Operations  (18,822) 

Statement of Changes in Net Assets

  Year Ended August 31, 
  2009  2008 
  ($000)  ($000) 
Increase (Decrease) in Net Assets     
Operations     
Net Investment Income  3,610  2,711 
Realized Net Gain (Loss)  (27,908)  32,592 
Change in Unrealized Appreciation (Depreciation)  5,476  (98,555) 
Net Increase (Decrease) in Net Assets Resulting from Operations  (18,822)  (63,252) 
Distributions     
Net Investment Income     
     Admiral Shares  (133)  (64) 
     ETF Shares  (3,037)  (1,663) 
Realized Capital Gain     
     Admiral Shares     
     ETF Shares     
Total Distributions  (3,170)  (1,727) 
Capital Share Transactions     
     Admiral Shares  7,447  16,473 
     ETF Shares  163,810  119,838 
Net Increase (Decrease) from Capital Share Transactions  171,257  136,311 
Total Increase (Decrease)  149,265  71,332 
Net Assets     
Beginning of Period  522,723  451,391 
End of Period2  671,988  522,723 

1 Interest income from an affiliated company of the fund was $3,000.
2 Net Assets—End of Period includes undistributed net investment income of $2,394,000 and $1,954,000.
See accompanying Notes, which are an integral part of the Financial Statements.

76



Information Technology Index Fund           
 
 
Financial Highlights           
 
Admiral Shares           
 
        Year Ended August 31, 
For a Share Outstanding Throughout Each Period  2009  2008  2007  2006  2005 
Net Asset Value, Beginning of Period  $27.28  $29.95  $24.40  $23.93  $20.72 
Investment Operations           
Net Investment Income  .1631  .121  .1101  .0841  .3512 
Net Realized and Unrealized Gain (Loss)           
on Investments  (2.897)  (2.706)  5.500             .424  3.182 
Total from Investment Operations  (2.734)  (2.585)  5.610             .508  3.533 
Distributions           
Dividends from Net Investment Income  (.156)  (.085)  (.060)  (.038)       (.323) 
Distributions from Realized Capital Gains           
Total Distributions  (.156)  (.085)  (.060)  (.038)       (.323) 
Net Asset Value, End of Period  $24.39  $27.28  $29.95  $24.40  $23.93 
 
Total Return3  –9.79%  –8.67%  23.02%  2.12%  17.05% 
 
Ratios/Supplemental Data           
Net Assets, End of Period (Millions)  $33  $26  $12  $5  $2 
Ratio of Total Expenses to Average Net Assets  0.28%  0.25%  0.26%  0.28%  0.28% 
Ratio of Net Investment Income to           
Average Net Assets  0.82%  0.46%  0.38%  0.33%  1.26%2 
Portfolio Turnover Rate4  12%  11%  8%  8%  7% 

1 Calculated based on average shares outstanding.
2 Net investment income per share and the ratio of net investment income to average net assets include $.284 and 1.00%, respectively,
resulting from a special dividend from Microsoft Corp. in November 2004.
3 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than one year.
4 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares,
including ETF Creation Units.

ETF Shares           
 
        Year Ended August 31, 
For a Share Outstanding Throughout Each Period  2009  2008  2007  2006  2005 
Net Asset Value, Beginning of Period  $53.32  $58.52  $47.66  $46.76  $40.46 
Investment Operations           
Net Investment Income  .3311  .249  .2311  .1751  .6702 
Net Realized and Unrealized Gain (Loss)           
on Investments  (5.685)  (5.274)  10.765             .816  6.239 
Total from Investment Operations  (5.354)  (5.025)  10.996             .991  6.909 
Distributions           
Dividends from Net Investment Income  (.326)  (.175)  (.136)  (.091)  (.609) 
Distributions from Realized Capital Gains           
Total Distributions  (.326)  (.175)  (.136)  (.091)  (.609) 
Net Asset Value, End of Period  $47.64  $53.32  $58.52  $47.66  $46.76 
 
Total Return  –9.78%  –8.62%  23.10%  2.11%  17.07% 
 
Ratios/Supplemental Data           
Net Assets, End of Period (Millions)  $639  $497  $439  $172  $51 
Ratio of Total Expenses to Average Net Assets  0.25%  0.20%  0.22%  0.25%  0.26% 
Ratio of Net Investment Income to           
Average Net Assets  0.85%  0.51%  0.42%  0.36%  1.28%2 
Portfolio Turnover Rate3  12%  11%  8%  8%  7% 

1 Calculated based on average shares outstanding.
2 Net investment income per share and the ratio of net investment income to average net assets include $.553 and 1.00%, respectively,
resulting from a special dividend from Microsoft Corp. in November 2004.
3 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares,
including ETF Creation Units.

See accompanying Notes, which are an integral part of the Financial Statements.

77



Information Technology Index Fund

Notes to Financial Statements

Vanguard Information Technology Index Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund offers two classes of shares, Admiral Shares and ETF Shares. Admiral Shares are available to any investor who meets the fund’s minimum purchase requirements. ETF Shares are listed for trading on the NYSE Arca, Inc.; they can be purchased and sold through a broker.

A. The following significant accounting policies conform to generally accepted accounting principles for U.S. mutual funds. The fund consistently follows such policies in preparing its financial statements.

1. Security Valuation: Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which market quotations are not readily available, or whose values have been materially affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued by methods deemed by the board of trustees to represent fair value. Investments in Vanguard Market Liquidity Fund are valued at that fund’s net asset value.

2. Federal Income Taxes: The fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income. Management has analyzed the fund’s tax positions taken for all open federal income tax years (August 31, 2006–2009), and has concluded that no provision for federal income tax is required in the fund’s financial statements.

3. Distributions: Distributions to shareholders are recorded on the ex-dividend date.

4. Security Lending: The fund may lend its securities to qualified institutional borrowers to earn additional income. Security loans are required to be secured at all times by collateral at least equal to the market value of securities loaned. The fund invests cash collateral received in Vanguard Market Liquidity Fund, and records a liability for the return of the collateral, during the period the securities are on loan. Security lending income represents the income earned on investing cash collateral, less expenses associated with the loan.

5. Other: Dividend income is recorded on the ex-dividend date. Interest income includes income distributions received from Vanguard Market Liquidity Fund and is accrued daily. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment securities are those of the specific securities sold. Fees assessed on redemptions of capital shares are credited to paid-in capital.

Each class of shares has equal rights as to assets and earnings, except that each class separately bears certain class-specific expenses related to maintenance of shareholder accounts (included in Management and Administrative expenses), shareholder reporting, and proxies. Marketing and distribution expenses are allocated to each class of shares based on a method approved by the board of trustees. Income, other non-class-specific expenses, and gains and losses on investments are allocated to each class of shares based on its relative net assets.

B. The Vanguard Group furnishes at cost investment advisory, corporate management, administrative, marketing, and distribution services. The costs of such services are allocated to the fund under methods approved by the board of trustees. The fund has committed to provide up to 0.40% of its net assets in capital contributions to Vanguard. At August 31, 2009, the fund had contributed capital of $140,000 to Vanguard (included in Other Assets), representing 0.02% of the fund’s net assets and 0.06% of Vanguard’s capitalization. The fund’s trustees and officers are also directors and officers of Vanguard.

C. Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Level 1—Quoted prices in active markets for identical securities.

Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).

Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments).

At August 31, 2009, 100% of the fund’s investments were valued based on Level 1 inputs.

78



Information Technology Index Fund

D. Distributions are determined on a tax basis and may differ from net investment income and realized capital gains for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the financial statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain, or loss are recognized in different periods for financial statement and tax purposes; these differences will reverse at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.

During the year ended August 31, 2009, the fund realized $1,533,000 of net capital losses resulting from in-kind redemptions—in which shareholders exchanged fund shares for securities held by the fund rather than for cash. Because such losses are not taxable losses to the fund, they have been reclassified from accumulated net realized losses to paid-in capital.

For tax purposes, at August 31, 2009, the fund had $2,711,000 of ordinary income available for distribution. The fund had available capital loss carryforwards totaling $15,094,000 to offset future net capital gains of $63,000 through August 31, 2013, $188,000 through August 31, 2014, $612,000 through August 31, 2015, $218,000 through August 31, 2016, and $14,013,000 through August 31, 2017. In addition, the fund realized losses of $20,087,000 during the period from November 1, 2008, through August 31, 2009, which are deferred and will be treated as realized for tax purposes in fiscal 2010.

At August 31, 2009, the cost of investment securities for tax purposes was $718,626,000. Net unrealized depreciation of investment securities for tax purposes was $46,795,000, consisting of unrealized gains of $25,697,000 on securities that had risen in value since their purchase and $72,492,000 in unrealized losses on securities that had fallen in value since their purchase.

E. During the year ended August 31, 2009, the fund purchased $326,120,000 of investment securities and sold $154,777,000 of investment securities, other than temporary cash investments.

F. Capital share transactions for each class of shares were:

      Year Ended August 31, 
    2009    2008 
  Amount  Shares  Amount  Shares 
  ($000)  (000)  ($000)  (000) 
Admiral Shares         
Issued  14,130  714  22,099  752 
Issued in Lieu of Cash Distributions  116  7  58  2 
Redeemed1  (6,799)  (333)  (5,684)  (206) 
Net Increase (Decrease)—Admiral Shares  7,447  388  16,473  548 
ETF Shares         
Issued  264,940  6,802  344,646  6,010 
Issued in Lieu of Cash Distributions         
Redeemed1  (101,130)  (2,700)  (224,808)  (4,200) 
Net Increase (Decrease)—ETF Shares  163,810  4,102  119,838  1,810 
1 Net of redemption fees for fiscal 2009 and 2008 of $74,000 and $70,000, respectively (fund totals).     

G. In preparing the financial statements as of August 31, 2009, management considered the impact of subsequent events occurring through October 15, 2009, for potential recognition or disclosure in these financial statements.

79



Materials Index Fund

Fund Profile

As of August 31, 2009

Portfolio Characteristics     
    Target  Broad 
  Fund  Index1  Index2 
Number of Stocks  120  120  2,501 
Median Market Cap  $11.7B  $11.7B  $27.3B 
Price/Earnings Ratio  55.7x  55.1x  25.6x 
Price/Book Ratio  2.4x  2.4x  2.1x 
Yield3    1.8%  1.9% 
 Admiral Shares  1.5%     
 ETF Shares  1.5%     
Return on Equity  19.9%  19.9%  19.3% 
Earnings Growth Rate  12.9%  13.0%  9.9% 
Foreign Holdings  0.0%  0.0%  0.0% 
Turnover Rate  12%     
Expense Ratio4       
 Admiral Shares  0.28%     
 ETF Shares  0.25%     
Short-Term Reserves  0.0%     

Volatility Measures5   
  Fund Versus  Fund Versus 
  Target Index1  Broad Index2 
R-Squared  1.00  0.86 
Beta  1.00  1.28 

Industry Diversification (% of equity exposure) 
 
Aluminum  3.1% 
Commodity Chemicals  1.4 
Construction Materials  2.9 
Diversified Chemicals  18.3 
Diversified Metals & Mining  8.0 
Fertilizers & Agricultural Chemicals  15.2 
Forest Products  2.2 
Gold  5.1 
Industrial Gases  10.2 
Metal & Glass Containers  5.4 
Paper Packaging  3.4 
Paper Products  3.8 
Specialty Chemicals  11.0 
Steel  9.5 
Other Materials  0.5 

Ten Largest Holdings6 (% of total net assets) 
 
Monsanto Co.  11.0% 
E.I. du Pont de Nemours & Co.  6.9 
Freeport-McMoRan Copper & Gold, Inc.   
Class B  6.2 
Praxair, Inc.  5.6 
Dow Chemical Co.  5.5 
Newmont Mining Corp. (Holding Co.)  4.6 
Air Products & Chemicals, Inc.  3.8 
Nucor Corp.  3.4 
Alcoa Inc.  2.8 
Ecolab, Inc.  2.4 
Top Ten  52.2% 

1 MSCI US IMI/Materials.
2 MSCI US IMI/2500.
3 30-day SEC yield for the fund; annualized dividend yield for the indexes. See the Glossary.
4 The expense ratios shown are from the prospectuses dated December 29, 2008, and represent estimated costs for the current fiscal year based on the fund’s net assets as of the prospectus date.
For the fiscal year ended August 31, 2009, the expense ratios were 0.28% for the Admiral Shares and 0.25% for the ETF Shares.
5 For an explanation of R-squared, beta, and other terms used here, see the Glossary.
6 The holdings listed exclude any temporary cash investments and equity index products.

80



Materials Index 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 www.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: January 26, 2004–August 31, 2009
Initial Investment of $10,000


    Average Annual Total Returns   
    Periods Ended August 31, 2009  Final Value 
      Since  of a $10,000 
  One Year  Five Years  Inception1  Investment 
Materials Index Fund ETF Shares         
Net Asset Value2  –25.88%               4.99%  5.43%  $13,442 
Materials Index Fund ETF Shares         
Market Price  –25.84               5.02       5.44  13,452 
MSCI US IMI/2500  –18.26               1.36       0.52  10,295 
MSCI US IMI/Materials  –26.00               5.08       5.53  13,515 

        Final Value 
             Since  of a $100,000 
  One Year  Five Years  Inception1  Investment 
Materials Index Fund Admiral Shares3  –25.91%       4.96%       4.73%  $129,263 
MSCI US IMI/2500  –18.26       1.36       0.48  102,707 
MSCI US IMI/Materials  –26.00       5.08       4.87  130,179 

1 Performance for the fund and its comparative standards is calculated since the following inception dates: January 26, 2004, for ETF Shares; February 11, 2004, for Admiral Shares.
2 For more information about how the ETF Shares’ market prices have compared with their net asset value, visit www.vanguard.com, select your ETF, and then select the Performance tab. The Premium/Discount
table there shows the percentages of days on which the ETF Shares’ market price was above or below the NAV.
3 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than one year.
Note: See Financial Highlights tables for dividend and capital gains information.

81



Materials Index Fund

Fiscal-Year Total Returns (%): January 26, 2004–August 31, 2009


Cumulative Returns: ETF Shares, January 26, 2004–August 31, 2009     
      Cumulative 
      Since 
  One Year  Five Years  Inception 
Materials Index Fund ETF Shares Market Price  –25.84%     27.74%  34.52% 
Materials Index Fund ETF Shares Net Asset Value  –25.88     27.58  34.42 
MSCI US IMI/Materials  –26.00     28.13  35.15 

Average Annual Total Returns: Periods Ended June 30, 2009
This table presents average annual total returns through the latest calendar quarter—rather than through the end
of the fiscal period. Securities and Exchange Commission rules require that we provide this information.

             Since 
  Inception Date  One Year  Five Years  Inception 
ETF Shares  1/26/2004       
 Market Price    –40.08%       1.82%     2.77% 
 Net Asset Value    –40.08       1.80     2.77 
Admiral Shares1  2/11/2004  –40.10       1.77     2.05 

1 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than one year.
Note: See Financial Highlights tables for dividend and capital gains information.

82



Materials Index Fund

Financial Statements

Statement of Net Assets

As of August 31, 2009

The fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth fiscal quarters, the lists appear in the fund’s semiannual and annual reports to shareholders. For the first and third fiscal quarters, the fund files the lists with the Securities and Exchange Commission on Form N-Q. Shareholders can look up the fund’s Forms N-Q on the SEC’s website at www.sec.gov. Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room (see the back cover of this report for further information).

      Market 
      Value 
    Shares  ($000) 
Common Stocks (100.0%)     
Chemicals (56.1%)     
  Monsanto Co.  608,973  51,081 
  E.I. du Pont     
  de Nemours & Co.  1,008,280  32,194 
  Praxair, Inc.  343,017  26,282 
  Dow Chemical Co.  1,200,609  25,561 
  Air Products &     
  Chemicals, Inc.  234,098  17,564 
  Ecolab, Inc.  263,851  11,158 
  PPG Industries, Inc.  183,738  10,179 
  The Mosaic Co.  173,574  8,413 
  Sigma-Aldrich Corp.  136,233  6,921 
  Lubrizol Corp.  75,259  4,796 
  Eastman Chemical Co.  81,069  4,229 
  CF Industries Holdings, Inc.  51,452  4,202 
  Celanese Corp. Series A  160,689  4,093 
  Airgas, Inc.  81,896  3,808 
  FMC Corp.  77,408  3,692 
  Terra Industries, Inc.  111,497  3,469 
  International Flavors &     
  Fragrances, Inc.  88,198  3,142 
  Ashland, Inc.  78,131  2,866 
  Valspar Corp.  106,586  2,854 
  Nalco Holding Co.  154,466  2,765 
  Albemarle Corp.  81,980  2,642 
  RPM International, Inc.  143,631  2,338 
  Scotts Miracle-Gro Co.  51,225  2,084 
  Huntsman Corp.  185,453  1,593 
*  Solutia Inc.  127,817  1,563 
  Cytec Industries, Inc.  52,999  1,531 
  Cabot Corp.  73,626  1,457 
  Olin Corp.  86,569  1,449 
  Sensient Technologies Corp.  54,319  1,416 
*  W.R. Grace & Co.  81,302  1,360 
*  Intrepid Potash, Inc.  50,522  1,187 
  NewMarket Corp.  13,472  1,120 
  H.B. Fuller Co.  53,844  1,063 
*  Rockwood Holdings, Inc.  49,296  1,004 
  Minerals Technologies, Inc.  20,770  931 
*  OM Group, Inc.  33,812  920 
*  Calgon Carbon Corp.  57,365  820 
  Arch Chemicals, Inc.  27,820  813 
  Koppers Holdings, Inc.  22,902  625 
  Westlake Chemical Corp.  22,241  535 
  A. Schulman Inc.  25,992  522 
  Balchem Corp.  20,560  512 
*  PolyOne Corp.  97,263  496 
  Stepan Co.  8,563  463 
  Spartech Corp.  33,708  389 
  Ferro Corp.  48,429  382 
  Zep, Inc.  23,422  374 
  Innophos Holdings Inc.  19,602  374 

        Market 
        Value 
      Shares  ($000) 
  Innospec, Inc.    25,879  354 
*  GenTek, Inc.    11,217  308 
*  Zoltek Cos., Inc.    32,713  305 
*  LSB Industries, Inc.    17,394  269 
  Hawkins, Inc.    9,434  201 
  American Vanguard Corp.  22,183  194 
*  Landec Corp.    27,060  165 
        261,028 
Construction Materials (2.9%)     
  Vulcan Materials Co.    136,172  6,814 
  Martin Marietta Materials, Inc.  47,407  4,152 
  Eagle Materials, Inc.    46,617  1,227 
  Texas Industries, Inc.    26,176  1,041 
*  Headwaters Inc.    46,397  178 
*  United States Lime & Mineral  3,098  116 
        13,528 
Containers & Packaging (8.9%)     
*  Owens-Illinois, Inc.    187,204  6,354 
  Ball Corp.    99,650  4,829 
*  Crown Holdings, Inc.    178,051  4,421 
*  Pactiv Corp.    147,313  3,661 
  Sealed Air Corp.    176,723  3,342 
  Bemis Co., Inc.    120,378  3,201 
  Sonoco Products Co.    111,508  2,892 
  AptarGroup Inc.    75,858  2,608 
  Packaging Corp. of America  115,064  2,343 
  Rock-Tenn Co.    40,782  2,092 
  Temple-Inland Inc.    113,833  1,925 
  Silgan Holdings, Inc.    29,846  1,451 
  Greif Inc. Class A    27,125  1,344 
  Myers Industries, Inc.    33,913  347 
*  Graphic Packaging Holding Co.  92,622  197 
*  Bway Holding Co.    11,962  185 
        41,192 
Metals & Mining (26.1%)       
  Freeport-McMoRan Copper     
   & Gold, Inc. Class B    459,403  28,933 
  Newmont Mining Corp.       
   (Holding Co.)    534,434  21,479 
  Nucor Corp.    350,636  15,617 
  Alcoa Inc.  1,087,232  13,101 
  United States Steel Corp.  160,014  7,006 
  Cliffs Natural Resources Inc.  144,273  3,652 
  Steel Dynamics, Inc.    212,120  3,511 
  Walter Industries, Inc.    58,904  3,058 
  Allegheny Technologies Inc.  97,893  2,973 
  Reliance Steel &       
   Aluminum Co.    73,905  2,730 
  AK Steel Holding Corp.    121,857  2,476 
  Commercial Metals Co.    125,953  2,132 
  Compass Minerals       
   International, Inc.    36,457  1,939 
  Royal Gold, Inc.    43,500  1,726 

      Market 
      Value 
    Shares  ($000) 
  Schnitzer Steel Industries,     
   Inc. Class A  24,206  1,307 
*  Coeur d’Alene Mines Corp.  76,640  1,160 
  Titanium Metals Corp.  130,722  1,075 
  Carpenter Technology Corp.  48,834  1,041 
  Worthington Industries, Inc.  71,361  940 
*  Hecla Mining Co.  243,646  726 
  AMCOL International Corp.  25,517  565 
*  Century Aluminum Co.  54,685  560 
  Kaiser Aluminum Corp.  16,763  542 
*  Brush Engineered     
  Materials Inc.  22,331  495 
*  RTI International Metals, Inc.  25,400  488 
*  Horsehead Holding Corp.  38,757  434 
*  Allied Nevada Gold Corp.  51,337  415 
*  Haynes International, Inc.  13,654  370 
*  Stillwater Mining Co.  51,216  328 
  Olympic Steel, Inc.  10,108  272 
  A.M. Castle & Co.  18,678  206 
*  General Moly, Inc.  70,112  192 
      121,449 
Paper & Forest Products (6.0%)     
  International Paper Co.  458,251  10,517 
  Weyerhaeuser Co.  235,818  8,817 
  MeadWestvaco Corp.  191,706  4,208 
*  Louisiana-Pacific Corp.  116,926  880 
  Schweitzer-Mauduit     
  International, Inc.  17,117  842 
  Deltic Timber Corp.  11,960  611 
*  Clearwater Paper Corp.  12,777  590 
  Glatfelter  49,924  521 
  Wausau Paper Corp.  51,018  493 
*  Buckeye Technology, Inc.  42,854  432 
  Neenah Paper Inc.  16,075  182 
      28,093 
Total Investments (100.0%)     
(Cost $557,352)    465,290 
Other Assets and Liabilities (0.0%)   
Other Assets    2,306 
Liabilities    (2,318) 
      (12) 
Net Assets (100%)    465,278 

83



Materials Index Fund

At August 31, 2009, net assets consisted of: 
  Amount 
  ($000) 
Paid-in Capital  589,753 
Undistributed Net Investment Income  3,882 
Accumulated Net Realized Losses  (36,295) 
Unrealized Appreciation (Depreciation)  (92,062) 
Net Assets  465,278 
 
 
Admiral Shares—Net Assets   
Applicable to 2,932,456 outstanding   
$.001 par value shares of beneficial   
interest (unlimited authorization)  89,979 
Net Asset Value Per Share—   
Admiral Shares  $30.68 
 
 
ETF Shares—Net Assets   
Applicable to 6,230,611 outstanding   
$.001 par value shares of beneficial   
interest (unlimited authorization)  375,299 
Net Asset Value Per Share—   
ETF Shares  $60.23 

See Note A in Notes to Financial Statements.
* Non-income-producing security.
See accompanying Notes, which are an integral part of the Financial Statements.

84



Materials Index Fund

Statement of Operations

  Year Ended 
August 31, 2009 
  ($000) 
Investment Income   
Income   
Dividends  7,204 
Interest1  4 
Security Lending  187 
Total Income  7,395 
Expenses   
The Vanguard Group—Note B   
     Investment Advisory Services  38 
     Management and Administrative—   
     Admiral Shares  143 
     Management and Administrative—   
     ETF Shares  342 
     Marketing and Distribution—   
     Admiral Shares  19 
     Marketing and Distribution—   
     ETF Shares  76 
Custodian Fees  11 
Auditing Fees  24 
Shareholders’ Reports and Proxies—   
Admiral Shares  1 
Shareholders’ Reports and Proxies—   
ETF Shares  95 
Total Expenses  749 
Net Investment Income  6,646 
Realized Net Gain (Loss) on   
Investment Securities Sold  (21,222) 
Change in Unrealized Appreciation   
(Depreciation) of Investment Securities  (80,514) 
Net Increase (Decrease) in Net Assets   
Resulting from Operations  (95,090) 

Statement of Changes in Net Assets

  Year Ended August 31, 
  2009  2008 
  ($000)  ($000) 
Increase (Decrease) in Net Assets     
Operations     
Net Investment Income  6,646  7,970 
Realized Net Gain (Loss)  (21,222)  34,834 
Change in Unrealized Appreciation (Depreciation)  (80,514)  (35,820) 
Net Increase (Decrease) in Net Assets Resulting from Operations  (95,090)  6,984 
Distributions     
Net Investment Income     
     Admiral Shares  (1,751)  (1,057) 
     ETF Shares  (5,802)  (5,116) 
Realized Capital Gain     
     Admiral Shares     
     ETF Shares     
Total Distributions  (7,553)  (6,173) 
Capital Share Transactions     
     Admiral Shares  10,896  52,003 
     ETF Shares  85,342  49,893 
Net Increase (Decrease) from Capital Share Transactions  96,238  101,896 
Total Increase (Decrease)  (6,405)  102,707 
Net Assets     
Beginning of Period  471,683  368,976 
End of Period2  465,278  471,683 

1 Interest income from an affiliated company of the fund was $4,000.
2 Net Assets—End of Period includes undistributed net investment income of $3,882,000 and $4,789,000.
See accompanying Notes, which are an integral part of the Financial Statements.

85



Materials Index Fund           
 
 
Financial Highlights           
 
Admiral Shares           
 
        Year Ended August 31, 
For a Share Outstanding Throughout Each Period  2009  2008  2007  2006  2005 
Net Asset Value, Beginning of Period  $42.85  $41.75  $32.37  $28.34  $26.53 
Investment Operations           
Net Investment Income  .622  .732  .7001  .6721  .480 
Net Realized and Unrealized Gain (Loss)           
on Investments2  (11.996)  1.008  9.250  3.853  1.830 
Total from Investment Operations  (11.374)  1.740  9.950  4.525  2.310 
Distributions           
Dividends from Net Investment Income  (.796)     (.640)  (.570)  (.495)  (.500) 
Distributions from Realized Capital Gains           
Total Distributions  (.796)     (.640)  (.570)  (.495)  (.500) 
Net Asset Value, End of Period  $30.68  $42.85  $41.75  $32.37  $28.34 
 
Total Return3  –25.91%  4.09%  31.00%  16.08%  8.61% 
 
Ratios/Supplemental Data           
Net Assets, End of Period (Millions)  $90  $107  $57  $12  $7 
Ratio of Total Expenses to Average Net Assets  0.28%  0.25%  0.26%  0.28%  0.28% 
Ratio of Net Investment Income to           
Average Net Assets  2.23%  1.74%  1.80%  2.13%  1.81% 
Portfolio Turnover Rate4  12%  10%  6%  13%  12% 

1 Calculated based on average shares outstanding.
2 Includes increases from redemption fees of $.02, $.02, $.01, $.00, and $.00.
3 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than one year.
4 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares,
including ETF Creation Units.

ETF Shares           
 
        Year Ended August 31, 
For a Share Outstanding Throughout Each Period  2009  2008  2007  2006  2005 
Net Asset Value, Beginning of Period  $84.27  $82.10  $63.65  $55.70  $52.13 
Investment Operations           
Net Investment Income  1.242  1.470  1.4181  1.3361  .915 
Net Realized and Unrealized Gain (Loss)           
on Investments2  (23.683)     1.977  18.168  7.582  3.630 
Total from Investment Operations  (22.441)     3.447  19.586  8.918  4.545 
Distributions           
Dividends from Net Investment Income  (1.599)   (1.277)  (1.136)  (.968)  (.975) 
Distributions from Realized Capital Gains           
Total Distributions  (1.599)   (1.277)  (1.136)  (.968)  (.975) 
Net Asset Value, End of Period  $60.23  $84.27  $82.10  $63.65  $55.70 
 
Total Return  –25.88%  4.15%  31.06%  16.11%  8.62% 
 
Ratios/Supplemental Data           
Net Assets, End of Period (Millions)  $375  $365  $312  $95  $50 
Ratio of Total Expenses to Average Net Assets  0.25%  0.20%  0.22%  0.25%  0.26% 
Ratio of Net Investment Income to           
Average Net Assets  2.26%  1.79%  1.84%  2.16%  1.83% 
Portfolio Turnover Rate3  12%  10%  6%  13%  12% 

1 Calculated based on average shares outstanding.
2 Includes increases from redemption fees of $.03, $.04, $.02, $.00, and $.00.
3 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares,
including ETF Creation Units.

See accompanying Notes, which are an integral part of the Financial Statements.

86



Materials Index Fund

Notes to Financial Statements

Vanguard Materials Index Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund offers two classes of shares, Admiral Shares and ETF Shares. Admiral Shares are available to any investor who meets the fund’s minimum purchase requirements. ETF Shares are listed for trading on the NYSE Arca, Inc.; they can be purchased and sold through a broker.

A. The following significant accounting policies conform to generally accepted accounting principles for U.S. mutual funds. The fund consistently follows such policies in preparing its financial statements.

1. Security Valuation: Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which market quotations are not readily available, or whose values have been materially affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued by methods deemed by the board of trustees to represent fair value. Investments in Vanguard Market Liquidity Fund are valued at that fund’s net asset value.

2. Federal Income Taxes: The fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income. Management has analyzed the fund’s tax positions taken for all open federal income tax years (August 31, 2006–2009), and has concluded that no provision for federal income tax is required in the fund’s financial statements.

3. Distributions: Distributions to shareholders are recorded on the ex-dividend date.

4. Security Lending: The fund may lend its securities to qualified institutional borrowers to earn additional income. Security loans are required to be secured at all times by collateral at least equal to the market value of securities loaned. The fund invests cash collateral received in Vanguard Market Liquidity Fund, and records a liability for the return of the collateral, during the period the securities are on loan. Security lending income represents the income earned on investing cash collateral, less expenses associated with the loan.

5. Other: Dividend income is recorded on the ex-dividend date. Interest income includes income distributions received from Vanguard Market Liquidity Fund and is accrued daily. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment securities are those of the specific securities sold. Fees assessed on redemptions of capital shares are credited to paid-in capital.

Each class of shares has equal rights as to assets and earnings, except that each class separately bears certain class-specific expenses related to maintenance of shareholder accounts (included in Management and Administrative expenses), shareholder reporting, and proxies. Marketing and distribution expenses are allocated to each class of shares based on a method approved by the board of trustees. Income, other non-class-specific expenses, and gains and losses on investments are allocated to each class of shares based on its relative net assets.

B. The Vanguard Group furnishes at cost investment advisory, corporate management, administrative, marketing, and distribution services. The costs of such services are allocated to the fund under methods approved by the board of trustees. The fund has committed to provide up to 0.40% of its net assets in capital contributions to Vanguard. At August 31, 2009, the fund had contributed capital of $95,000 to Vanguard (included in Other Assets), representing 0.02% of the fund’s net assets and 0.04% of Vanguard’s capitalization. The fund’s trustees and officers are also directors and officers of Vanguard.

C. Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Level 1—Quoted prices in active markets for identical securities.

Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).

Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments).

At August 31, 2009, 100% of the fund’s investments were valued based on Level 1 inputs.

87



Materials Index Fund

D. Distributions are determined on a tax basis and may differ from net investment income and realized capital gains for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the financial statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain, or loss are recognized in different periods for financial statement and tax purposes; these differences will reverse at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.

During the year ended August 31, 2009, the fund realized $7,338,000 of net capital gains resulting from in-kind redemptions—in which shareholders exchanged fund shares for securities held by the fund rather than for cash. Because such gains are not taxable to the fund, and are not distributed to shareholders, they have been reclassified from accumulated net realized losses to paid-in capital.

For tax purposes, at August 31, 2009, the fund had $4,136,000 of ordinary income available for distribution. The fund had available capital loss carryforwards totaling $14,998,000 to offset future net capital gains of $6,000 through August 31, 2014, $698,000 through August 31, 2015, $1,458,000 through August 31, 2016, and $12,836,000 through August 31, 2017. In addition, the fund realized losses of $20,530,000 during the period from November 1, 2008, through August 31, 2009, which are deferred and will be treated as realized for tax purposes in fiscal 2010.

At August 31, 2009, the cost of investment securities for tax purposes was $558,119,000. Net unrealized depreciation of investment securities for tax purposes was $92,829,000, consisting of unrealized gains of $6,753,000 on securities that had risen in value since their purchase and $99,582,000 in unrealized losses on securities that had fallen in value since their purchase.

E. During the year ended August 31, 2009, the fund purchased $206,312,000 of investment securities and sold $111,135,000 of investment securities, other than temporary cash investments.

F. Capital share transactions for each class of shares were:

      Year Ended August 31, 
    2009    2008 
  Amount  Shares  Amount  Shares 
  ($000)  (000)  ($000)  (000) 
Admiral Shares         
Issued  36,435  1,409  72,955  1,626 
Issued in Lieu of Cash Distributions  1,643  72  987  22 
Redeemed1  (27,182)  (1,046)  (21,939)  (507) 
Net Increase (Decrease)—Admiral Shares  10,896  435  52,003  1,141 
ETF Shares         
Issued  160,431  3,104  200,303  2,323 
Issued in Lieu of Cash Distributions         
Redeemed1  (75,089)  (1,200)  (150,410)  (1,800) 
Net Increase (Decrease)—ETF Shares  85,342  1,904  49,893  523 
1 Net of redemption fees for fiscal 2009 and 2008 of $263,000 and $237,000, respectively (fund totals).     

G. In preparing the financial statements as of August 31, 2009, management considered the impact of subsequent events occurring through October 15, 2009, for potential recognition or disclosure in these financial statements.

88



Telecommunication Services Index Fund

Fund Profile

As of August 31, 2009

Portfolio Characteristics     
    Target  Broad 
  Fund  Index1  Index2 
Number of Stocks  42  42  2,501 
Median Market Cap  $9.6B  $88.2B  $27.3B 
Price/Earnings Ratio  28.3x  17.9x  25.6x 
Price/Book Ratio  2.0x  1.7x  2.1x 
Yield3    5.4%  1.9% 
 Admiral Shares  3.9%     
 ETF Shares  4.0%     
Return on Equity  8.9%  11.4%  19.3% 
Earnings Growth Rate  9.2%  9.0%  9.9% 
Foreign Holdings  0.0%  0.0%  0.0% 
Turnover Rate  25%     
Expense Ratio4       
 Admiral Shares  0.28%     
 ETF Shares  0.25%     
Short-Term Reserves  0.2%     

Volatility Measures5   
  Fund Versus  Fund Versus 
  Target Index1  Broad Index2 
R-Squared  0.90  0.71 
Beta  0.98  0.85 

Industry Diversification (% of equity exposure) 
 
Alternative Carriers  10.4% 
Integrated Telecommunication Services  61.4 
Wireless Telecommunication Services  28.2 

Ten Largest Holdings6 (% of total net assets) 
 
AT&T Inc.  20.6% 
Verizon Communications Inc.  19.8 
CenturyTel, Inc.  4.9 
American Tower Corp. Class A  4.2 
Sprint Nextel Corp.  3.9 
Crown Castle International Corp.  3.6 
Qwest Communications International Inc.  2.5 
NII Holdings Inc.  2.4 
Atlantic Tele-Network, Inc.  2.0 
Windstream Corp.  1.9 
Top Ten  65.8% 

1 MSCI US IMI/Telecommunication Services.
2 MSCI US IMI/2500.
3 30-day SEC yield for the fund; annualized dividend yield for the indexes. See the Glossary.
4 The expense ratios shown are from the prospectuses dated December 29, 2008, and represent estimated costs for the current fiscal year based on the fund’s net assets as of the prospectus date. For the fiscal year
ended August 31, 2009, the expense ratios were 0.28% for the Admiral Shares and 0.25% for the ETF Shares.
5 For an explanation of R-squared, beta, and other terms used here, see the Glossary.
6 The holdings listed exclude any temporary cash investments and equity index products.

89



Telecommunication Services Index 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 www.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: September 23, 2004–August 31, 2009
Initial Investment of $10,000


    Average Annual Total Returns   
    Periods Ended August 31, 2009  Final Value 
    Since  of a $10,000 
  One Year  Inception1  Investment 
Telecommunication Services Index Fund       
ETF Shares Net Asset Value2  –15.88%  2.62%  $11,360 
Telecommunication Services Index Fund       
ETF Shares Market Price  –15.82                                             2.61  11,354 
MSCI US IMI/2500  –18.26                                             1.20  10,605 
MSCI US IMI/Telecommunication Services  –17.86                                             1.51  10,766 

      Final Value 
    Since  of a $100,000 
  One Year  Inception1  Investment 
Telecommunication Services Index Fund       
Admiral Shares3  –15.90%  1.33%  $106,091 
MSCI US IMI/2500  –18.26  –0.84  96,306 
MSCI US IMI/Telecommunication Services  –17.86  0.85  103,882 

1 Performance for the fund and its comparative standards is calculated since the following inception dates: September 23, 2004, for ETF Shares; March 11, 2005, for Admiral Shares.
2 For more information about how the ETF Shares’ market prices have compared with their net asset value, visit www.vanguard.com, select your ETF, and then select the Performance tab. The Premium/Discount
table there shows the percentages of days on which the ETF Shares’ market price was above or below the NAV.
3 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than one year.
Note: See Financial Highlights tables for dividend and capital gains information.

90



Telecommunication Services Index Fund

Fiscal-Year Total Returns (%): September 23, 2004–August 31, 2009


Cumulative Returns: ETF Shares, September 23, 2004–August 31, 2009     
    Cumulative 
    Since 
  One Year  Inception 
Telecommunication Services Index Fund ETF Shares Market Price  –15.82%  13.54% 
Telecommunication Services Index Fund ETF Shares Net Asset Value  –15.88  13.60 
MSCI US IMI/Telecommunication Services  –17.86  7.66 

Average Annual Total Returns: Periods Ended June 30, 2009
This table presents average annual total returns through the latest calendar quarter—rather than through the end
of the fiscal period. Securities and Exchange Commission rules require that we provide this information.

           Since 
  Inception Date  One Year  Inception 
ETF Shares  9/23/2004     
 Market Price    –17.65%     2.32% 
 Net Asset Value    –17.72     2.31 
Admiral Shares1  3/11/2005  –17.76     0.94 

1 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than one year.
Note: See Financial Highlights tables for dividend and capital gains information.

91



Telecommunication Services Index Fund

Financial Statements

Statement of Net Assets

As of August 31, 2009

The fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth fiscal quarters, the lists appear in the fund’s semiannual and annual reports to shareholders. For the first and third fiscal quarters, the fund files the lists with the Securities and Exchange Commission on Form N-Q. Shareholders can look up the fund’s Forms N-Q on the SEC’s website at www.sec.gov. Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room (see the back cover of this report for further information).

      Market 
      Value 
    Shares  ($000) 
Common Stocks (99.8%)     
Diversified Telecommunication Services (71.6%) 
  Alternative Carriers (10.3%)   
*  Level 3     
   Communications, Inc.  2,273,021  2,728 
*  tw telecom inc.  223,407  2,558 
*  Cogent Communications     
   Group, Inc.  254,447  2,455 
*  Global Crossing Ltd.  209,983  2,360 
*,^ Vonage Holdings Corp.  1,380,881  1,975 
*  Premiere Global     
   Services, Inc.  172,811  1,618 
*  PAETEC Holding Corp.  565,039  1,582 
*  Neutral Tandem, Inc.  46,556  1,164 
 
  Integrated Telecommunication Services (61.3%)   
  AT&T Inc.  1,257,715  32,764 
  Verizon     
   Communications Inc.  1,013,734  31,466 
  CenturyTel, Inc.  243,580  7,851 
  Qwest Communications     
   International Inc.  1,108,272  3,979 
  Atlantic Tele-Network, Inc.  67,035  3,204 
  Windstream Corp.  357,064  3,060 
*  Cincinnati Bell Inc.  845,948  2,817 
  Frontier     
   Communications Corp.  314,721  2,238 
  Consolidated     
   Communications     
   Holdings, Inc.  137,617  1,940 
*  Cbeyond Inc.  112,732  1,619 
*  SureWest     
   Communications  125,963  1,596 
*  General     
   Communication, Inc.  222,322  1,483 
  Alaska Communications     
   Systems Holdings, Inc.  169,818  1,353 
  Iowa Telecommunications     
   Services Inc.  106,594  1,216 
  FairPoint     
   Communications, Inc.  894,724  725 
      113,751 

      Market 
      Value 
    Shares  ($000) 
Wireless Telecommunication Services (28.2%) 
*  American Tower Corp.     
   Class A  213,001  6,742 
*  Sprint Nextel Corp.  1,671,616  6,118 
*  Crown Castle     
   International Corp.  215,305  5,783 
*  NII Holdings Inc.  159,093  3,772 
*  SBA Communications Corp.  111,667  2,692 
*  Syniverse Holdings Inc.  128,534  2,297 
*  Fibertower Corp.  2,816,723  1,831 
*  USA Mobility, Inc.  135,051  1,719 
*  iPCS, Inc.  98,564  1,556 
*  Centennial Communications     
   Corp. Class A  197,686  1,497 
*  MetroPCS     
   Communications Inc.  186,416  1,484 
*  U.S. Cellular Corp.  40,063  1,463 
*  Leap Wireless     
   International, Inc.  80,849  1,333 
  Telephone &     
   Data Systems, Inc.  46,504  1,226 
  Telephone &     
   Data Systems, Inc.—     
   Special Common Shares  45,314  1,148 
  NTELOS Holdings Corp.  70,252  1,139 
  Shenandoah     
   Telecommunications Co.  65,648  1,132 
*  TerreStar Corp.  855,835  1,061 
*  ICO Global Communications     
   (Holdings) Ltd.  1,117,228  782 
      44,775 
Total Common Stocks     
(Cost $204,071)    158,526 
Temporary Cash Investment (0.2%)   
Money Market Fund (0.2%)     
1,2 Vanguard Market     
   Liquidity Fund, 0.277%     
   (Cost $307)  306,933  307 
Total Investments (100.0%)     
(Cost $204,378)    158,833 
Other Assets and Liabilities (0.0%)   
Other Assets    158 
Liabilities2    (219) 
      (61) 
Net Assets (100%)    158,772 

At August 31, 2009, net assets consisted of: 
  Amount 
  ($000) 
Paid-in Capital  247,456 
Undistributed Net Investment Income  3,157 
Accumulated Net Realized Losses  (46,296) 
Unrealized Appreciation (Depreciation)  (45,545) 
Net Assets  158,772 
 
 
Admiral Shares—Net Assets   
Applicable to 465,154 outstanding   
$.001 par value shares of beneficial   
interest (unlimited authorization)  11,986 
Net Asset Value Per Share—   
Admiral Shares  $25.77 
 
 
ETF Shares—Net Assets   
Applicable to 2,902,158 outstanding   
$.001 par value shares of beneficial   
interest (unlimited authorization)  146,786 
Net Asset Value Per Share—   
ETF Shares  $50.58 

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 $40,000.
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 $56,000 of collateral received for securities on loan.
See accompanying Notes, which are an integral part of the Financial Statements.

92



Telecommunication Services Index Fund

Statement of Operations

  Year Ended 
August 31, 2009 
  ($000) 
Investment Income   
Income   
Dividends  5,112 
Interest1  4 
Security Lending  40 
Total Income  5,156 
Expenses   
The Vanguard Group—Note B   
     Investment Advisory Services  20 
     Management and Administrative—   
     Admiral Shares  26 
     Management and Administrative—   
     ETF Shares  203 
     Marketing and Distribution—   
     Admiral Shares  4 
     Marketing and Distribution—   
     ETF Shares  41 
Auditing Fees  24 
Shareholders’ Reports and Proxies—   
Admiral Shares   
Shareholders’ Reports and Proxies—   
ETF Shares  35 
Total Expenses  353 
Net Investment Income  4,803 
Realized Net Gain (Loss) on   
Investment Securities Sold  (15,383) 
Change in Unrealized Appreciation   
(Depreciation) of Investment Securities  (4,088) 
Net Increase (Decrease) in Net Assets   
Resulting from Operations  (14,668) 

Statement of Changes in Net Assets

  Year Ended August 31, 
  2009  2008 
  ($000)  ($000) 
Increase (Decrease) in Net Assets     
Operations     
Net Investment Income  4,803  5,535 
Realized Net Gain (Loss)  (15,383)  (7,019) 
Change in Unrealized Appreciation (Depreciation)  (4,088)  (51,454) 
Net Increase (Decrease) in Net Assets Resulting from Operations  (14,668)  (52,938) 
Distributions     
Net Investment Income     
     Admiral Shares  (326)  (1,069) 
     ETF Shares  (4,534)  (5,594) 
Realized Capital Gain     
     Admiral Shares     
     ETF Shares     
Total Distributions  (4,860)  (6,663) 
Capital Share Transactions     
     Admiral Shares  (2,971)  (22,656) 
     ETF Shares  19,785  (73,150) 
Net Increase (Decrease) from Capital Share Transactions  16,814  (95,806) 
Total Increase (Decrease)  (2,714)  (155,407) 
Net Assets     
Beginning of Period  161,486  316,893 
End of Period2  158,772  161,486 

1 Interest income from an affiliated company of the fund was $3,000.
2 Net Assets—End of Period includes undistributed net investment income of $3,157,000 and $3,214,000.
See accompanying Notes, which are an integral part of the Financial Statements.

93



Telecommunication Services Index Fund           
 
 
Financial Highlights           
 
Admiral Shares           
          Mar. 11, 
          20051 to 
      Year Ended August 31,  Aug. 31, 
For a Share Outstanding Throughout Each Period  2009  2008  2007  2006  2005 
Net Asset Value, Beginning of Period  $31.58  $41.01  $33.29  $28.18  $26.75 
Investment Operations           
Net Investment Income  .8402  .9082  .8882       .8612,3  .3402 
Net Realized and Unrealized Gain (Loss)           
on Investments4  (5.977)  (9.338)  7.308  5.041  1.090 
Total from Investment Operations  (5.137)  (8.430)  8.196  5.902  1.430 
Distributions           
Dividends from Net Investment Income  (.673)  (1.000)  (.476)       (.792)   
Distributions from Realized Capital Gains           
Total Distributions  (.673)  (1.000)  (.476)       (.792)   
Net Asset Value, End of Period  $25.77  $31.58  $41.01  $33.29  $28.18 
 
Total Return5  –15.90%  –20.98%  24.77%  21.47%  5.35% 
 
Ratios/Supplemental Data           
Net Assets, End of Period (Millions)  $12  $19  $51  $6  $1 
Ratio of Total Expenses to Average Net Assets  0.28%  0.25%  0.27%  0.28%  0.28%6 
Ratio of Net Investment Income to           
Average Net Assets  3.39%  2.50%  2.17%  3.28%3  2.70%6 
Portfolio Turnover Rate7  25%  28%  17%  32%  41% 

1 Inception.
2 Calculated based on average shares outstanding.
3 Net investment income per share and the ratio of net investment income to average net assets include $.112 and 0.38%, respectively,
resulting from a special dividend from MCI in December 2005.
4 Includes increases from redemption fees of $.00, $.05, $.01, $.00, and $.00.
5 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than one year.
6 Annualized.
7 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares,
including ETF Creation Units.

See accompanying Notes, which are an integral part of the Financial Statements.

94



Telecommunication Services Index Fund           
 
 
Financial Highlights           
 
ETF Shares           
          Sept. 23, 
          20041 to 
      Year Ended August 31,  Aug. 31, 
For a Share Outstanding Throughout Each Period  2009  2008  2007  2006  2005 
Net Asset Value, Beginning of Period  $62.05  $80.60  $65.40  $55.35  $49.50 
Investment Operations           
Net Investment Income  1.6022  1.7642  1.7412     2.0402,3  1.3002 
Net Realized and Unrealized Gain (Loss)           
on Investments4  (11.699)  (18.316)  14.386  9.567  4.960 
Total from Investment Operations  (10.097)  (16.552)  16.127  11.607  6.260 
Distributions           
Dividends from Net Investment Income  (1.373)  (1.998)  (.927)  (1.557)  (.410) 
Distributions from Realized Capital Gains           
Total Distributions  (1.373)  (1.998)  (.927)  (1.557)  (.410) 
Net Asset Value, End of Period  $50.58  $62.05  $80.60  $65.40  $55.35 
 
Total Return  –15.88%  –20.94%  24.81%  21.49%  12.65% 
 
Ratios/Supplemental Data           
Net Assets, End of Period (Millions)  $147  $143  $266  $72  $17 
Ratio of Total Expenses to Average Net Assets  0.25%  0.20%  0.23%  0.25%  0.26%5 
Ratio of Net Investment Income to           
Average Net Assets  3.42%  2.55%  2.21%  3.31%3  2.72%5 
Portfolio Turnover Rate6  25%  28%  17%  32%  41% 

1      Inception.
2      Calculated based on average shares outstanding.
3      Net investment income per share and the ratio of net investment income to average net assets include $.219 and 0.38%, respectively, resulting from a special dividend from MCI in December 2005.
4      Includes increases from redemption fees of $.00, $.08, $.03, $.00, and $.00.
5      Annualized.
6      Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares, including ETF Creation Units.

See accompanying Notes, which are an integral part of the Financial Statements.

95



Telecommunication Services Index Fund

Notes to Financial Statements

Vanguard Telecommunication Services Index Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund offers two classes of shares: Admiral Shares and ETF Shares. Admiral Shares are available to any investor who meets the fund’s minimum purchase requirements. ETF Shares are listed for trading on the NYSE Arca, Inc.; they can be purchased and sold through a broker.

A. The following significant accounting policies conform to generally accepted accounting principles for U.S. mutual funds. The fund consistently follows such policies in preparing its financial statements.

1. Security Valuation: Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which market quotations are not readily available, or whose values have been materially affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued by methods deemed by the board of trustees to represent fair value. Investments in Vanguard Market Liquidity Fund are valued at that fund’s net asset value.

2. Federal Income Taxes: The fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income. Management has analyzed the fund’s tax positions taken for all open federal income tax years (August 31, 2006–2009), and has concluded that no provision for federal income tax is required in the fund’s financial statements.

3. Distributions: Distributions to shareholders are recorded on the ex-dividend date.

4. Security Lending: The fund may lend its securities to qualified institutional borrowers to earn additional income. Security loans are required to be secured at all times by collateral at least equal to the market value of securities loaned. The fund invests cash collateral received in Vanguard Market Liquidity Fund, and records a liability for the return of the collateral, during the period the securities are on loan. Security lending income represents the income earned on investing cash collateral, less expenses associated with the loan.

5. Other: Dividend income is recorded on the ex-dividend date. Interest income includes income distributions received from Vanguard Market Liquidity Fund and is accrued daily. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment securities are those of the specific securities sold. Fees assessed on redemptions of capital shares are credited to paid-in capital.

Each class of shares has equal rights as to assets and earnings, except that each class separately bears certain class-specific expenses related to maintenance of shareholder accounts (included in Management and Administrative expenses), shareholder reporting, and proxies. Marketing and distribution expenses are allocated to each class of shares based on a method approved by the board of trustees. Income, other non-class-specific expenses, and gains and losses on investments are allocated to each class of shares based on its relative net assets.

B. The Vanguard Group furnishes at cost investment advisory, corporate management, administrative, marketing, and distribution services. The costs of such services are allocated to the fund under methods approved by the board of trustees. The fund has committed to provide up to 0.40% of its net assets in capital contributions to Vanguard. At August 31, 2009, the fund had contributed capital of $36,000 to Vanguard (included in Other Assets), representing 0.02% of the fund’s net assets and 0.01% of Vanguard’s capitalization. The fund’s trustees and officers are also directors and officers of Vanguard.

C. Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Level 1—Quoted prices in active markets for identical securities.

Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).

Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments).

At August 31, 2009, 100% of the fund’s investments were valued based on Level 1 inputs.

96



Telecommunication Services Index Fund

D. Distributions are determined on a tax basis and may differ from net investment income and realized capital gains for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the financial statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain, or loss are recognized in different periods for financial statement and tax purposes; these differences will reverse at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.

During the year ended August 31, 2009, the fund realized $7,902,000 of net capital gains resulting from in-kind redemptions—in which shareholders exchanged fund shares for securities held by the fund rather than for cash. Because such gains are not taxable to the fund, and are not distributed to shareholders, they have been reclassified from accumulated net realized losses to paid-in capital.

For tax purposes, at August 31, 2009, the fund had $3,306,000 of ordinary income available for distribution. The fund had available capital loss carryforwards totaling $23,697,000 to offset future net capital gains of $29,000 through August 31, 2014, $818,000 through August 31, 2015, $4,154,000 through August 31, 2016, and $18,696,000 through August 31, 2017. In addition, the fund realized losses of $22,599,000 during the period from November 1, 2008, through August 31, 2009, which are deferred and will be treated as realized for tax purposes in fiscal 2010.

At August 31, 2009, the cost of investment securities for tax purposes was $204,378,000. Net unrealized depreciation of investment securities for tax purposes was $45,545,000, consisting of unrealized gains of $5,573,000 on securities that had risen in value since their purchase and $51,118,000 in unrealized losses on securities that had fallen in value since their purchase.

E. During the year ended August 31, 2009, the fund purchased $152,660,000 of investment securities and sold $136,425,000 of investment securities, other than temporary cash investments.

F. Capital share transactions for each class of shares were:

      Year Ended August 31, 
    2009    2008 
  Amount  Shares  Amount  Shares 
  ($000)  (000)  ($000)  (000) 
Admiral Shares         
Issued  1,801  74  4,265  123 
Issued in Lieu of Cash Distributions  299  14  1,014  26 
Redeemed1  (5,071)  (217)  (27,935)  (796) 
Net Increase (Decrease)—Admiral Shares  (2,971)  (129)  (22,656)  (647) 
ETF Shares         
Issued  117,888  2,702  93,859  1,400 
Issued in Lieu of Cash Distributions         
Redeemed1  (98,103)  (2,100)  (167,009)  (2,400) 
Net Increase (Decrease)—ETF Shares  19,785  602  (73,150)  (1,000) 
1 Net of redemption fees for fiscal 2009 and 2008 of $7,000 and $220,000, respectively (fund totals).     

G. In preparing the financial statements as of August 31, 2009, management considered the impact of subsequent events occurring through October 15, 2009, for potential recognition or disclosure in these financial statements.

97



Utilities Index Fund

Fund Profile

As of August 31, 2009

Portfolio Characteristics     
    Target  Broad 
  Fund  Index1  Index2 
Number of Stocks  88  88  2,501 
Median Market Cap  $11.1B  $11.1B  $27.3B 
Price/Earnings Ratio  14.3x  14.4x  25.6x 
Price/Book Ratio  1.4x  1.4x  2.1x 
Yield3    4.3%  1.9% 
 Admiral Shares  4.0%     
 ETF Shares  4.1%     
Return on Equity  13.6%  13.6%  19.3% 
Earnings Growth Rate  10.1%  10.1%  9.9% 
Foreign Holdings  0.0%  0.0%  0.0% 
Turnover Rate  10%     
Expense Ratio4       
 Admiral Shares  0.28%     
 ETF Shares  0.25%     
Short-Term Reserves  0.0%    —- 

Volatility Measures5   
  Fund Versus  Fund Versus 
  Target Index1  Broad Index2 
R-Squared  1.00  0.49 
Beta  1.00  0.60 

Industry Diversification (% of equity exposure) 
 
Electric Utilities  50.1% 
Gas Utilities  9.0 
Independent Power Producers &   
Energy Traders  7.4 
Multi-Utilities  31.8 
Water Utilities  1.7 

Ten Largest Holdings6 (% of total net assets) 
 
Exelon Corp.   7.6% 
Southern Co.   5.7 
FPL Group, Inc.   5.1 
Duke Energy Corp.   4.6 
Dominion Resources, Inc.   4.5 
Public Service Enterprise Group, Inc.   3.7 
Entergy Corp.   3.6 
American Electric Power Co., Inc.   3.5 
PG&E Corp.   3.5 
FirstEnergy Corp.   3.2 
Top Ten  45.0% 

1 MSCI US IMI/Utilities.
2 MSCI US IMI/2500.
3 30-day SEC yield for the fund; annualized dividend yield for the indexes. See the Glossary.
4 The expense ratios shown are from the prospectuses dated December 29, 2008, and represent estimated costs for the current fiscal year based on the fund’s net assets as of the prospectus date. For the fiscal year
ended August 31, 2009, the expense ratios were 0.28% for the Admiral Shares and 0.25% for the ETF Shares.
5 For an explanation of R-squared, beta, and other terms used here, see the Glossary.
6 The holdings listed exclude any temporary cash investments and equity index products.

98



Utilities Index 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 www.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: January 26, 2004–August 31, 2009
Initial Investment of $10,000


    Average Annual Total Returns   
    Periods Ended August 31, 2009  Final Value 
      Since  of a $10,000 
  One Year  Five Years  Inception1  Investment 
Utilities Index Fund ETF Shares         
Net Asset Value2  –18.34%               6.39%  6.99%  $14,593 
Utilities Index Fund ETF Shares         
Market Price  –18.28               6.43       7.00  14,602 
MSCI US IMI/2500  –18.26               1.36       0.52  10,295 
MSCI US IMI/Utilities  –18.21               6.60       7.21  14,759 

        Final Value 
             Since  of a $100,000 
  One Year  Five Years  Inception1  Investment 
Utilities Index Fund Admiral Shares3  –18.39%       6.35%       7.22%  $145,115 
MSCI US IMI/2500  –18.26       1.36       1.03  105,600 
MSCI US IMI/Utilities  –18.21       6.60       7.47  146,954 

1 Performance for the fund and its comparative standards is calculated since the following inception dates: January 26, 2004, for ETF Shares; April 28, 2004, for Admiral Shares.
2 For more information about how the ETF Shares’ market prices have compared with their net asset value, visit www.vanguard.com, select your ETF, and then select the Performance tab. The Premium/Discount
table there shows the percentages of days on which the ETF Shares’ market price was above or below the NAV.
3 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than one year.
Note: See Financial Highlights tables for dividend and capital gains information.

99



Utilities Index Fund

Fiscal-Year Total Returns (%): January 26, 2004–August 31, 2009


Cumulative Returns: ETF Shares, January 26, 2004–August 31, 2009     
      Cumulative 
      Since 
  One Year  Five Years  Inception 
Utilities Index Fund ETF Shares Market Price  –18.28%     36.57%  46.02% 
Utilities Index Fund ETF Shares Net Asset Value  –18.34     36.32  45.93 
MSCI US IMI/Utilities  –18.21     37.66  47.59 

Average Annual Total Returns: Periods Ended June 30, 2009
This table presents average annual total returns through the latest calendar quarter—rather than through the end
of the fiscal period. Securities and Exchange Commission rules require that we provide this information.

             Since 
  Inception Date  One Year  Five Years  Inception 
ETF Shares  1/26/2004       
 Market Price    –27.37%       6.43%     6.29% 
 Net Asset Value    –27.49       6.40     6.27 
Admiral Shares1  4/28/2004  –27.53       6.36     6.47 

1 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than one year.
Note: See Financial Highlights tables for dividend and capital gains information.

100



Utilities Index Fund

Financial Statements

Statement of Net Assets

As of August 31, 2009

The fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth fiscal quarters, the lists appear in the fund’s semiannual and annual reports to shareholders. For the first and third fiscal quarters, the fund files the lists with the Securities and Exchange Commission on Form N-Q. Shareholders can look up the fund’s Forms N-Q on the SEC’s website at www.sec.gov. Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room (see the back cover of this report for further information).

        Market 
        Value 
      Shares  ($000) 
Common Stocks (100.0%)     
Electric Utilities (50.0%)       
  Exelon Corp.    679,238  33,975 
  Southern Co.    806,763  25,171 
  FPL Group, Inc.    402,387  22,606 
  Duke Energy Corp.  1,327,141  20,557 
  Entergy Corp.    202,201  15,974 
  American Electric       
  Power Co., Inc.    491,586  15,451 
  FirstEnergy Corp.    314,313  14,185 
  PPL Corp.    387,742  11,400 
  Progress Energy, Inc.    287,716  11,373 
  Edison International    319,144  10,663 
  Allegheny Energy, Inc.    174,666  4,613 
  Northeast Utilities    180,575  4,296 
  Pinnacle West Capital Corp.  104,226  3,430 
  Pepco Holdings, Inc.    226,831  3,250 
  DPL Inc.    119,568  2,962 
  NV Energy Inc.    241,684  2,915 
  Great Plains Energy, Inc.  137,700  2,413 
  ITC Holdings Corp.    51,304  2,390 
  Westar Energy, Inc.    112,050  2,299 
  Hawaiian Electric       
  Industries Inc.    94,036  1,636 
  Cleco Corp.    62,574  1,528 
  Portland General Electric Co.  77,468  1,512 
  IDACORP, Inc.    48,731  1,388 
  UniSource Energy Corp.  36,866  1,078 
  PNM Resources Inc.    89,842  1,049 
  ALLETE, Inc.    28,811  974 
  MGE Energy, Inc.    23,849  845 
*  El Paso Electric Co.    46,638  790 
  UIL Holdings Corp.    28,934  751 
  Empire District Electric Co.  35,340  641 
  Central Vermont Public       
  Service Corp.    12,015  220 
        222,335 
Gas Utilities (9.0%)       
  Questar Corp.    179,467  6,059 
  EQT Corp.    128,218  5,086 
  ONEOK, Inc.    103,147  3,495 
  National Fuel Gas Co.    73,791  3,298 
  Energen Corp.    70,237  2,949 
  UGI Corp. Holding Co.    111,634  2,848 
  AGL Resources Inc.    79,570  2,673 
  Atmos Energy Corp.    94,869  2,584 
  Piedmont Natural Gas, Inc.  75,768  1,820 
  WGL Holdings Inc.    51,700  1,706 
  Nicor Inc.    46,620  1,688 
  New Jersey Resources Corp.  43,450  1,597 
  Northwest Natural Gas Co.  27,527  1,159 

      Market 
      Value 
    Shares  ($000) 
  Southwest Gas Corp.  46,099  1,122 
  South Jersey Industries, Inc.  30,879  1,070 
  The Laclede Group, Inc.  21,838  711 
  Chesapeake Utilities Corp.  7,073  218 
      40,083 
Independent Power Producers &   
Energy Traders (7.5%)     
*  AES Corp.  687,393  9,397 
*  NRG Energy, Inc.  270,885  7,273 
  Constellation Energy     
   Group, Inc.  184,847  5,851 
*  Calpine Corp.  353,705  4,160 
*  Mirant Corp.  148,688  2,505 
*  RRI Energy, Inc.  361,346  2,146 
*  Dynegy, Inc.  523,751  995 
  Ormat Technologies Inc.  21,190  764 
      33,091 
Multi-Utilities (31.8%)     
  Dominion Resources, Inc.  608,305  20,123 
  Public Service     
   Enterprise Group, Inc.  521,719  16,523 
  PG&E Corp.  379,998  15,424 
  Sempra Energy  239,293  12,005 
  Consolidated Edison Inc.  282,934  11,371 
  Xcel Energy, Inc.  469,832  9,279 
  Ameren Corp.  220,200  5,939 
  DTE Energy Co.  168,972  5,877 
  Wisconsin Energy Corp.  120,549  5,481 
  CenterPoint Energy Inc.  342,095  4,242 
  SCANA Corp.  119,331  4,138 
  NiSource, Inc.  283,130  3,740 
  MDU Resources Group, Inc.  180,197  3,498 
  NSTAR  110,129  3,484 
  CMS Energy Corp.  233,884  3,136 
  OGE Energy Corp.  99,024  3,097 
  Alliant Energy Corp.  114,078  3,005 
  TECO Energy, Inc.  208,522  2,778 
  Integrys Energy Group, Inc.  78,801  2,705 
  Vectren Corp.  79,382  1,838 
  Avista Corp.  56,597  1,105 
  Black Hills Corp.  39,980  1,023 
  NorthWestern Corp.  37,373  897 
  CH Energy Group, Inc.  16,391  750 
      141,458 
Water Utilities (1.7%)     
  American Water     
   Works Co., Inc.  134,992  2,713 
  Aqua America, Inc.  139,866  2,357 
  California Water     
   Service Group  20,438  761 
  American States Water Co.  19,033  628 

    Market 
    Value 
  Shares  ($000) 
   SJW Corp.  14,351  317 
   Consolidated Water Co., Ltd.  14,332  264 
   Middlesex Water Co.  13,904  212 
   Connecticut Water     
Services, Inc.  8,773  194 
    7,446 
Total Investments (100.0%)     
(Cost $550,627)    444,413 
Other Assets and Liabilities (0.0%)   
Other Assets    4,739 
Liabilities    (4,635) 
    104 
Net Assets (100%)    444,517 
 
 
At August 31, 2009, net assets consisted of: 
    Amount 
    ($000) 
Paid-in Capital    566,167 
Undistributed Net Investment Income  3,240 
Accumulated Net Realized Losses    (18,676) 
Unrealized Appreciation (Depreciation)  (106,214) 
Net Assets    444,517 
 
 
Admiral Shares—Net Assets     
Applicable to 2,631,155 outstanding   
$.001 par value shares of beneficial   
interest (unlimited authorization)  80,863 
Net Asset Value Per Share—     
Admiral Shares    $30.73 
 
 
ETF Shares—Net Assets     
Applicable to 5,938,600 outstanding   
$.001 par value shares of beneficial   
interest (unlimited authorization)  363,654 
Net Asset Value Per Share—     
ETF Shares    $61.24 

See Note A in Notes to Financial Statements.
* Non-income-producing security.
See accompanying Notes, which are an integral part of the Financial Statements.

101



Utilities Index Fund

Statement of Operations

  Year Ended 
August 31, 2009 
  ($000) 
Investment Income   
Income   
Dividends  17,553 
Interest1  3 
Total Income  17,556 
Expenses   
The Vanguard Group—Note B   
     Investment Advisory Services  56 
     Management and Administrative—   
     Admiral Shares  172 
     Management and Administrative—   
     ETF Shares  473 
     Marketing and Distribution—   
     Admiral Shares  22 
     Marketing and Distribution—   
     ETF Shares  99 
Custodian Fees  24 
Auditing Fees  24 
Shareholders’ Reports and Proxies—   
Admiral Shares  1 
Shareholders’ Reports and Proxies—   
ETF Shares  110 
Trustees’ Fees and Expenses  1 
Total Expenses  982 
Net Investment Income  16,574 
Realized Net Gain (Loss) on   
Investment Securities Sold  (17,489) 
Change in Unrealized Appreciation   
(Depreciation) of Investment Securities  (83,085) 
Net Increase (Decrease) in Net Assets   
Resulting from Operations  (84,000) 

Statement of Changes in Net Assets

  Year Ended August 31, 
  2009  2008 
  ($000)  ($000) 
Increase (Decrease) in Net Assets     
Operations     
Net Investment Income  16,574  12,740 
Realized Net Gain (Loss)  (17,489)  3,952 
Change in Unrealized Appreciation (Depreciation)  (83,085)  (26,543) 
Net Increase (Decrease) in Net Assets Resulting from Operations  (84,000)  (9,851) 
Distributions     
Net Investment Income     
     Admiral Shares  (3,297)  (3,122) 
     ETF Shares  (12,782)  (9,062) 
Realized Capital Gain     
     Admiral Shares     
     ETF Shares     
Total Distributions  (16,079)  (12,184) 
Capital Share Transactions     
     Admiral Shares  (4,742)  6,878 
     ETF Shares  69,532  102,404 
Net Increase (Decrease) from Capital Share Transactions  64,790  109,282 
Total Increase (Decrease)  (35,289)  87,247 
Net Assets     
Beginning of Period  479,806  392,559 
End of Period2  444,517  479,806 

1 Interest income from an affiliated company of the fund was $2,000.
2 Net Assets—End of Period includes undistributed net investment income of $3,240,000 and $2,745,000.
See accompanying Notes, which are an integral part of the Financial Statements.

102



Utilities Index Fund           
 
 
Financial Highlights           
 
Admiral Shares           
 
        Year Ended August 31, 
For a Share Outstanding Throughout Each Period  2009  2008  2007  2006  2005 
Net Asset Value, Beginning of Period  $39.26  $40.60  $36.47  $34.03  $26.70 
Investment Operations           
Net Investment Income  1.251     1.126  1.080  1.0801  .9721 
Net Realized and Unrealized Gain (Loss)           
on Investments2  (8.530)  (1.340)  4.089           2.378     7.623 
Total from Investment Operations  (7.279)  (.214)  5.169           3.458     8.595 
Distributions           
Dividends from Net Investment Income  (1.251)  (1.126)     (1.039)  (1.018)  (1.265) 
Distributions from Realized Capital Gains           
Total Distributions  (1.251)  (1.126)     (1.039)  (1.018)  (1.265) 
Net Asset Value, End of Period  $30.73  $39.26  $40.60  $36.47  $34.03 
 
Total Return3  –18.39%  –0.69%  14.33%  10.48%  32.87% 
 
Ratios/Supplemental Data           
Net Assets, End of Period (Millions)  $81  $109  $108  $52  $30 
Ratio of Total Expenses to Average Net Assets  0.28%  0.25%  0.26%  0.28%  0.28% 
Ratio of Net Investment Income to           
Average Net Assets  4.28%  2.75%  2.70%  3.26%  3.34% 
Portfolio Turnover Rate4  10%  18%  12%  9%  7% 

1 Calculated based on average shares outstanding.
2 Includes increases from redemption fees of $.01, $.02, $.02, $.04, and $.00.
3 Total returns do not reflect the 2% fee assessed on redemptions of shares held for less than one year.
4 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares,
including ETF Creation Units.

ETF Shares           
 
        Year Ended August 31, 
For a Share Outstanding Throughout Each Period  2009  2008  2007  2006  2005 
Net Asset Value, Beginning of Period  $78.22  $80.92  $72.68  $67.80  $53.14 
Investment Operations           
Net Investment Income  2.512     2.285  2.180  2.2141  2.0361 
Net Realized and Unrealized Gain (Loss)           
on Investments2  (16.978)  (2.695)  8.156           4.704  15.115 
Total from Investment Operations  (14.466)  (.410)  10.336           6.918  17.151 
Distributions           
Dividends from Net Investment Income  (2.514)  (2.290)  (2.096)  (2.038)  (2.491) 
Distributions from Realized Capital Gains           
Total Distributions  (2.514)  (2.290)  (2.096)  (2.038)  (2.491) 
Net Asset Value, End of Period  $61.24  $78.22  $80.92  $72.68  $67.80 
 
Total Return  –18.34%  –0.66%  14.37%  10.52%  32.93% 
 
Ratios/Supplemental Data           
Net Assets, End of Period (Millions)  $364  $371  $285  $183  $95 
Ratio of Total Expenses to Average Net Assets  0.25%  0.20%  0.22%  0.25%  0.26% 
Ratio of Net Investment Income to           
Average Net Assets  4.31%  2.80%  2.74%  3.29%  3.36% 
Portfolio Turnover Rate3  10%  18%  12%  9%  7% 

1 Calculated based on average shares outstanding.
2 Includes increases from redemption fees of $.02, $.04, $.03, $.06, and $.01.
3 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares,
including ETF Creation Units.

See accompanying Notes, which are an integral part of the Financial Statements.

103



Utilities Index Fund

Notes to Financial Statements

Vanguard Utilities Index Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund offers two classes of shares: Admiral Shares and ETF Shares. Admiral Shares are available to any investor who meets the fund’s minimum purchase requirements. ETF Shares are listed for trading on the NYSE Arca, Inc.; they can be purchased and sold through a broker.

A. The following significant accounting policies conform to generally accepted accounting principles for U.S. mutual funds. The fund consistently follows such policies in preparing its financial statements.

1. Security Valuation: Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which market quotations are not readily available, or whose values have been materially affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued by methods deemed by the board of trustees to represent fair value. Investments in Vanguard Market Liquidity Fund are valued at that fund’s net asset value.

2. Federal Income Taxes: The fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income. Management has analyzed the fund’s tax positions taken for all open federal income tax years (August 31, 2006–2009), and has concluded that no provision for federal income tax is required in the fund’s financial statements.

3. Distributions: Distributions to shareholders are recorded on the ex-dividend date.

4. Other: Dividend income is recorded on the ex-dividend date. Interest income includes income distributions received from Vanguard Market Liquidity Fund and is accrued daily. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment securities are those of the specific securities sold. Fees assessed on redemptions of capital shares are credited to paid-in capital.

Each class of shares has equal rights as to assets and earnings, except that each class separately bears certain class-specific expenses related to maintenance of shareholder accounts (included in Management and Administrative expenses), shareholder reporting, and proxies. Marketing and distribution expenses are allocated to each class of shares based on a method approved by the board of trustees. Income, other non-class-specific expenses, and gains and losses on investments are allocated to each class of shares based on its relative net assets.

B. The Vanguard Group furnishes at cost investment advisory, corporate management, administrative, marketing, and distribution services. The costs of such services are allocated to the fund under methods approved by the board of trustees. The fund has committed to provide up to 0.40% of its net assets in capital contributions to Vanguard. At August 31, 2009, the fund had contributed capital of $97,000 to Vanguard (included in Other Assets), representing 0.02% of the fund’s net assets and 0.04% of Vanguard’s capitalization. The fund’s trustees and officers are also directors and officers of Vanguard.

C. Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Level 1—Quoted prices in active markets for identical securities.

Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).

Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments).

At August 31, 2009, 100% of the fund’s investments were valued based on Level 1 inputs.

D. Distributions are determined on a tax basis and may differ from net investment income and realized capital gains for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the financial statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain, or loss are recognized in different periods for financial statement and tax purposes; these differences will reverse at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.



Utilities Index Fund

During the year ended August 31, 2009, the fund realized $2,395,000 of net capital losses resulting from in-kind redemptions—in which shareholders exchanged fund shares for securities held by the fund rather than for cash. Because such losses are not taxable losses to the fund, they have been reclassified from accumulated net realized losses to paid-in capital.

For tax purposes, at August 31, 2009, the fund had $3,560,000 of ordinary income available for distribution. The fund had available capital loss carryforwards totaling $3,425,000 to offset future net capital gains of $515,000 through August 31, 2015, and $2,910,000 through August 31, 2017. In addition, the fund realized losses of $14,092,000 during the period from November 1, 2008, through August 31, 2009, which are deferred and will be treated as realized for tax purposes in fiscal 2010.

At August 31, 2009, the cost of investment securities for tax purposes was $551,786,000. Net unrealized depreciation of investment securities for tax purposes was $107,373,000, consisting of unrealized gains of $556,000 on securities that had risen in value since their purchase and $107,929,000 in unrealized losses on securities that had fallen in value since their purchase.

E. During the year ended August 31, 2009, the fund purchased $193,693,000 of investment securities and sold $128,103,000 of investment securities, other than temporary cash investments.

F. Capital share transactions for each class of shares were:

      Year Ended August 31, 
    2009    2008 
  Amount  Shares  Amount  Shares 
  ($000)  (000)  ($000)  (000) 
Admiral Shares         
Issued  20,497  698  42,121  996 
Issued in Lieu of Cash Distributions  2,918  98  2,849  68 
Redeemed1  (28,157)  (949)  (38,092)  (935) 
Net Increase (Decrease)—Admiral Shares  (4,742)  (153)  6,878  129 
ETF Shares         
Issued  153,405  2,602  127,421  1,518 
Issued in Lieu of Cash Distributions         
Redeemed1  (83,873)  (1,400)  (25,017)  (300) 
Net Increase (Decrease)—ETF Shares  69,532  1,202  102,404  1,218 
1 Net of redemption fees for fiscal 2009 and 2008 of $113,000 and $228,000, respectively (fund totals).     

G. In preparing the financial statements as of August 31, 2009, management considered the impact of subsequent events occurring through October 15, 2009, for potential recognition or disclosure in these financial statements.

105



Report of Independent Registered
Public Accounting Firm

To the Trustees of Vanguard World Fund and the Shareholders of Vanguard Consumer Discretionary Index Fund, Vanguard Consumer Staples Index Fund, Vanguard Energy Index Fund, Vanguard Financials Index Fund, Vanguard Health Care Index Fund, Vanguard Industrials Index Fund, Vanguard Information Technology Index Fund, Vanguard Materials Index Fund, Vanguard Telecommunication Services Index Fund and Vanguard Utilities Index Fund:

In our opinion, the accompanying statements 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 Consumer Discretionary Index Fund, Vanguard Consumer Staples Index Fund, Vanguard Energy Index Fund, Vanguard Financials Index Fund, Vanguard Health Care Index Fund, Vanguard Industrials Index Fund, Vanguard Information Technology Index Fund, Vanguard Materials Index Fund, Vanguard Telecommunication Services Index Fund and Vanguard Utilities Index Fund (the “Funds”) at August 31, 2009, and the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, 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 Funds’ 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 August 31, 2009 by correspondence with the custodian and by agreement to the underlying ownership records for Vanguard Market Liquidity Fund, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania

October 15, 2009

Special 2009 tax information (unaudited) for Vanguard U.S. Sector Index Funds

This information for the fiscal year ended August 31, 2009, is included pursuant to provisions of the Internal Revenue Code.

The funds distributed qualified dividend income to shareholders during the fiscal year as follows:

For corporate shareholders, the percentage of investment income (dividend income plus short-term gains, if any) that qualifies for the dividends-received deduction is as follows:

  Qualified Dividend 
Index Fund  Income ($000) 
Consumer Discretionary  2,371 
Consumer Staples  11,920 
Energy  10,633 
Financials  13,425 
Health Care  10,331 
Industrials  5,270 
Information Technology  3,170 
Materials  7,553 
Telecommunication Services  4,860 
Utilities  16,079 

Index Fund  Percentage 
Consumer Discretionary       100.0% 
Consumer Staples       100.0 
Energy       100.0 
Financials  73.7 
Health Care       100.0 
Industrials       100.0 
Information Technology       100.0 
Materials       100.0 
Telecommunication Services       100.0 
Utilities       100.0 

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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 2009. (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.)

The table shows returns, based on the net asset value, for ETF Shares only; returns for other share classes will differ. 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: U.S. Sector Index Funds       
Periods Ended August 31, 2009       
  One  Five     Since 
  Year   Years Inception1 
Consumer Discretionary ETF       
Returns Before Taxes  –12.32%  –1.47%  –2.43% 
Returns After Taxes on Distributions  –12.64  –1.62  –2.57 
Returns After Taxes on Distributions and Sale of Fund Shares  –7.74  –1.24  –2.04 
 
Consumer Staples ETF       
Returns Before Taxes  –8.22%  5.25%   5.20% 
Returns After Taxes on Distributions  –8.50  4.96   4.95 
Returns After Taxes on Distributions and Sale of Fund Shares  –5.02  4.48   4.46 
 
Energy ETF       
Returns Before Taxes  –30.49%     9.96% 
Returns After Taxes on Distributions  –30.68     9.79 
Returns After Taxes on Distributions and Sale of Fund Shares  –19.62     8.67 
 
Financials ETF       
Returns Before Taxes  –25.31%  –7.88%  –7.05% 
Returns After Taxes on Distributions  –25.77  –8.32  –7.45 
Returns After Taxes on Distributions and Sale of Fund Shares  –16.11  –6.44  –5.76 
 
Health Care ETF       
Returns Before Taxes  –10.70%  2.04%   0.84% 
Returns After Taxes on Distributions  –10.92  1.88   0.71 
Returns After Taxes on Distributions and Sale of Fund Shares  –6.71  1.74   0.72 
 
Industrials ETF       
Returns Before Taxes  –28.41%     0.32% 
Returns After Taxes on Distributions  –28.69     0.13 
Returns After Taxes on Distributions and Sale of Fund Shares  –18.16     0.30 
 
Information Technology ETF       
Returns Before Taxes  –9.78%  3.94%  –0.64% 
Returns After Taxes on Distributions  –9.91  3.85  –0.72 
Returns After Taxes on Distributions and Sale of Fund Shares  –6.26  3.37  –0.55 
 
Materials ETF       
Returns Before Taxes  –25.88%  4.99%   5.43% 
Returns After Taxes on Distributions  –26.28  4.68   5.15 
Returns After Taxes on Distributions and Sale of Fund Shares  –16.52  4.25   4.65 
 
Telecommunication Services ETF       
Returns Before Taxes  –15.88%     2.62% 
Returns After Taxes on Distributions  –16.27     2.29 
Returns After Taxes on Distributions and Sale of Fund Shares  –9.92     2.25 
 
Utilities ETF       
Returns Before Taxes  –18.34%  6.39%   6.99% 
Returns After Taxes on Distributions  –18.85  5.86   6.51 
Returns After Taxes on Distributions and Sale of Fund Shares  –11.29  5.53   6.07 

1 For the Consumer Discretionary, Consumer Staples, Financials, Health Care, Information Technology, Materials, and Utilities ETFs, January 26, 2004; for the Energy, Industrials, and Telecommunication
Services ETFs, September 23, 2004.

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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 examples on this page 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 acompanying 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 the 2% fee on redemptions of Admiral Shares held for less than one year. If this fee 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 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.

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Six Months Ended August 31, 2009         
 
    Beginning  Ending  Expenses 
    Account Value  Account Value  Paid During 
Index Fund  Share Class  2/28/2009  8/31/2009  Period1 
Based on Actual Fund Return         
Consumer Discretionary  Admiral  $1,000.00  $1,543.95  $1.86 
  ETF  1,000.00  1,544.81  1.73 
Consumer Staples  Admiral  $1,000.00  $1,251.84  $1.65 
  ETF  1,000.00  1,252.17  1.48 
Energy  Admiral  $1,000.00  $1,291.59  $1.68 
  ETF  1,000.00  1,291.74  1.50 
Financials  Admiral  $1,000.00  $1,807.76  $2.12 
  ETF  1,000.00  1,808.60  1.84 
Health Care  Admiral  $1,000.00  $1,269.02  $1.66 
  ETF  1,000.00  1,269.41  1.49 
Industrials  Admiral  $1,000.00  $1,490.63  $1.88 
  ETF  1,000.00  1,491.17  1.63 
Information Technology  Admiral  $1,000.00  $1,509.28  $1.83 
  ETF  1,000.00  1,509.51  1.64 
Materials  Admiral  $1,000.00  $1,569.31  $1.88 
  ETF  1,000.00  1,569.31  1.68 
Telecommunication Services  Admiral  $1,000.00  $1,241.33  $1.58 
  ETF  1,000.00  1,241.53  1.47 
Utilities  Admiral  $1,000.00  $1,189.81  $1.60 
  ETF  1,000.00  1,190.18  1.44 
Based on Hypothetical 5% Yearly Return       
Consumer Discretionary  Admiral  $1,000.00  $1,023.74  $1.48 
  ETF  1,000.00  1,023.84  1.38 
Consumer Staples  Admiral  $1,000.00  $1,023.74  $1.48 
  ETF  1,000.00  1,023.89  1.33 
Energy  Admiral  $1,000.00  $1,023.74  $1.48 
  ETF  1,000.00  1,023.89  1.33 
Financials  Admiral  $1,000.00  $1,023.69  $1.53 
  ETF  1,000.00  1,023.89  1.33 
Health Care  Admiral  $1,000.00  $1,023.74  $1.48 
  ETF  1,000.00  1,023.89  1.33 
Industrials  Admiral  $1,000.00  $1,023.69  $1.53 
  ETF  1,000.00  1,023.89  1.33 
Information Technology  Admiral  $1,000.00  $1,023.74  $1.48 
  ETF  1,000.00  1,023.89  1.33 
Materials  Admiral  $1,000.00  $1,023.74  $1.48 
  ETF  1,000.00  1,023.89  1.33 
Telecommunication Services  Admiral  $1,000.00  $1,023.79  $1.43 
  ETF  1,000.00  1,023.89  1.33 
Utilities  Admiral  $1,000.00  $1,023.74  $1.48 
  ETF  1,000.00  1,023.89  1.33 

1 The calculations are based on expenses incurred in the most recent six-month period. The funds’ annualized six-month expense ratios for that period are: for the Consumer Discretionary Index Fund, 0.29% for Admiral Shares and 0.27% for ETF Shares; for the Consumer Staples Index Fund, 0.29% for Admiral Shares and 0.26% for ETF Shares; for the Energy Index Fund, 0.29% for Admiral Shares and 0.26% for ETF

Shares; for the Financials Index Fund, 0.30% for Admiral Shares and 0.26% for ETF Shares; for the Health Care Index Fund, 0.29% for Admiral Shares and 0.26% for ETF Shares; for the Industrials Index Fund, 0.30% for Admiral Shares and 0.26% for ETF Shares; for the Information Technology Index Fund, 0.29% for Admiral Shares and 0.26% for ETF Shares; for the Materials Index Fund, 0.29% for Admiral Shares and 0.26% for ETF Shares; for the Telecommunication Services Index Fund, 0.28% for Admiral Shares and 0.26% for ETF Shares; for the Utilities Index Fund, 0.29% for Admiral Shares and 0.26% for ETF Shares. 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.

109



Trustees Approve Advisory Arrangement

The board of trustees of Vanguard Consumer Discretionary Index Fund, Consumer Staples Index Fund, Energy Index Fund, Financials Index Fund, Health Care Index Fund, Industrials Index Fund, Information Technology Index Fund, Materials Index Fund, Telecommunication Services Index Fund, and Utilities Index Fund has renewed the funds’ investment advisory arrangement with The Vanguard Group, Inc. Vanguard—through its Quantitative Equity Group—serves as the investment advisor to the funds.

The board determined that continuing the funds’ internalized management structure was in the best interests of the funds and their shareholders.

The board based its decision upon an evaluation of the advisor’s investment staff, portfolio management process, and performance. The trustees considered the factors discussed below, among others. However, no single factor determined whether the board approved the arrangement. Rather, it was the totality of the circumstances that drove the board’s decision.

Nature, extent, and quality of services

The board considered the quality of the funds’ investment management over both the short and long term, and took into account the organizational depth and stability of the advisor. The board noted that Vanguard has been managing investments for more than three decades. The Quantitative Equity Group adheres to a sound, disciplined investment management process; the team has considerable experience, stability, and depth.

The board concluded that Vanguard’s experience, stability, depth, and performance, among other factors, warranted continuation of the advisory arrangements.

Investment performance

The board considered the short- and long-term performance of the funds, including any periods of outperformance or underperformance of their target indexes and peer groups. The board concluded that the funds have performed in line with expectations, and that their results have been consistent with their investment strategies. Information about each fund’s most recent performance can be found on the Performance Summary pages of this report.

Cost

The board concluded that the funds’ expense ratios were well below the average expense ratios charged by funds in their respective peer groups and that the funds’ advisory expense ratios were also well below their peer-group averages. Information about the funds’ expense ratios appears in the About Your Fund’s Expenses section of this report.

The board does not conduct a profitability analysis of Vanguard, because of Vanguard’s unique “at-cost” structure. Unlike most other mutual fund management companies, Vanguard is owned by the funds it oversees, and produces “profits” only in the form of reduced expenses for fund shareholders.

The benefit of economies of scale

The board concluded that the funds’ low-cost arrangement with Vanguard ensures that the funds will realize economies of scale as they grow, with the cost to shareholders declining as the funds’ assets increase.

The board will consider whether to renew the advisory arrangement again after a one-year period.

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Glossary

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 below). 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.

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. The percentage of a fund’s average net assets used to pay its annual administrative and advisory expenses. These expenses directly reduce returns to investors.

Foreign Holdings. The percentage of a fund represented by stocks 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.

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.

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 (in the case of bonds) 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.

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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 157 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 www.vanguard.com.

Interested Trustees 
 
John J. Brennan1 
Born 1954. Trustee Since May 1987. Chairman of 
the Board. Principal Occupation(s) During the Past 
Five Years: Chairman of the Board and Director/Trustee 
of The Vanguard Group, Inc., and of each of the 
investment companies served by The Vanguard Group; 
Chief Executive Officer and President of The Vanguard 
Group and of each of the investment companies served 
by The Vanguard Group (1996–2008); Chairman of 
the Financial Accounting Foundation; Governor of 
the Financial Industry Regulatory Authority (FINRA); 
Director of United Way of Southeastern Pennsylvania. 
 
F. William McNabb III1 
Born 1957. Trustee Since July 2009. Principal 
Occupation(s) During the Past Five Years: Director of 
The Vanguard Group, Inc., since 2008; Chief Executive 
Officer and President of The Vanguard Group and of 
each of the investment companies served by The 
Vanguard Group since 2008; Director of Vanguard 
Marketing Corporation; Managing Director of The 
Vanguard Group (1995–2008). 
 
 
Independent Trustees 
 
Charles D. Ellis 
Born 1937. Trustee Since January 2001. Principal 
Occupation(s) During the Past Five Years: Applecore 
Partners (pro bono ventures in education); Senior 
Advisor to Greenwich Associates (international business 
strategy consulting); Successor Trustee of Yale University; 
Overseer of the Stern School of Business at New York 
University; Trustee of the Whitehead Institute for 
Biomedical Research. 
 
Emerson U. Fullwood 
Born 1948. Trustee Since January 2008. Principal 
Occupation(s) During the Past Five Years: Retired 
Executive Chief Staff and Marketing Officer for North 
America and Corporate Vice President of Xerox 
Corporation (photocopiers and printers); Director of 
SPX Corporation (multi-industry manufacturing), the 
United Way of Rochester, the Boy Scouts of America, 
Amerigroup Corporation (direct health and medical 
insurance carriers), and Monroe Community College 
Foundation. 

Rajiv L. Gupta 
Born 1945. Trustee Since December 2001.2 Principal 
Occupation(s) During the Past Five Years: Retired 
Chairman and Chief Executive Officer of Rohm and 
Haas Co. (chemicals); President of Rohm and Haas Co. 
(2006–2008); Board Member of American Chemistry 
Council; Director of Tyco International, Ltd. (diversified 
manufacturing and services) and Hewlett-Packard Co. 
(electronic computer manufacturing); Trustee of The 
Conference Board. 
 
Amy Gutmann 
Born 1949. Trustee Since June 2006. Principal 
Occupation(s) During the Past Five Years: President of 
the University of Pennsylvania; Christopher H. Browne 
Distinguished Professor of Political Science in the School 
of Arts and Sciences with Secondary Appointments 
at the Annenberg School for Communication and the 
Graduate School of Education of the University of 
Pennsylvania; Director of Carnegie Corporation of 
New York, Schuylkill River Development Corporation, 
and Greater Philadelphia Chamber of Commerce; 
Trustee of the National Constitution Center. 
 
JoAnn Heffernan Heisen 
Born 1950. Trustee Since July 1998. Principal 
Occupation(s) During the Past Five Years: Retired 
Corporate Vice President, Chief Global Diversity Officer, 
and Member of the Executive Committee of Johnson 
& Johnson (pharmaceuticals/consumer products); 
Vice President and Chief Information Officer of Johnson 
& Johnson (1997–2005); Director of the University 
Medical Center at Princeton and Women’s Research 
and Education Institute. 
 
André F. Perold 
Born 1952. Trustee Since December 2004. Principal 
Occupation(s) During the Past Five Years: George Gund 
Professor of Finance and Banking, Harvard Business 
School; Director and Chairman of UNX, Inc. (equities 
trading firm); Chair of the Investment Committee of 
HighVista Strategies LLC (private investment firm). 
 
Alfred M. Rankin, Jr. 
Born 1941. Trustee Since January 1993. Principal 
Occupation(s) During the Past Five Years: Chairman, 
President, Chief Executive Officer, and Director of 
NACCO Industries, Inc. (forklift trucks/housewares/ 
lignite); Director of Goodrich Corporation (industrial 
products/aircraft systems and services). 

Peter F. Volanakis   
Born 1955. Trustee Since July 2009. Principal 
Occupation(s) During the Past Five Years: President 
since 2007 and Chief Operating Officer since 2005 
of Corning Incorporated (communications equipment); 
President of Corning Technologies (2001–2005); 
Director of Corning Incorporated and Dow Corning; 
Trustee of the Corning Incorporated Foundation and 
the Corning Museum of Glass; Overseer of the 
Amos Tuck School of Business Administration at 
Dartmouth College.   
 
 
Executive Officers   
 
Thomas J. Higgins1   
Born 1957. Chief Financial Officer Since September 
2008. Principal Occupation(s) During the Past Five 
Years: Principal of The Vanguard Group, Inc.; Chief 
Financial Officer of each of the investment companies 
served by The Vanguard Group since 2008; Treasurer 
of each of the investment companies served by The 
Vanguard Group (1998–2008). 
 
Kathryn J. Hyatt1   
Born 1955. Treasurer Since November 2008. Principal 
Occupation(s) During the Past Five Years: Principal of 
The Vanguard Group, Inc.; Treasurer of each of the 
investment companies served by The Vanguard 
Group since 2008; Assistant Treasurer of each of the 
investment companies served by The Vanguard Group 
(1988–2008).   
 
Heidi Stam1   
Born 1956. Secretary Since July 2005. Principal 
Occupation(s) During the Past Five Years: Managing 
Director of The Vanguard Group, Inc., since 2006; 
General Counsel of The Vanguard Group since 2005; 
Secretary of The Vanguard Group and of each of the 
investment companies served by The Vanguard Group 
since 2005; Director and Senior Vice President of 
Vanguard Marketing Corporation since 2005; Principal 
of The Vanguard Group (1997–2006). 
 
 
Vanguard Senior Management Team 
 
R. Gregory Barton  Michael S. Miller 
Mortimer J. Buckley  James M. Norris 
Kathleen C. Gubanich  Glenn W. Reed 
Paul A. Heller  George U. Sauter 
 
 
Founder   
 
John C. Bogle   
Chairman and Chief Executive Officer, 1974–1996 

1 These individuals are “interested persons” as defined in the Investment Company Act of 1940.
2 December 2002 for Vanguard Equity Income Fund, Vanguard Growth Equity Fund, the Vanguard Municipal Bond Funds, and the Vanguard
State Tax-Exempt Funds.



P. O. Box 2600
Valley Forge, PA 19482-2600

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Direct Investor Account Services > 800-662-2739  with respect to any such funds or securities. For any such funds 
  or securities, the prospectus or the Statement of Additional 
Institutional Investor Services > 800-523-1036  Information contains a more detailed description of the limited 
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TextTelephone for People  related funds. 
 
With Hearing Impairment > 800-952-3335   
 
 
  All comparative mutual fund data are from Lipper Inc. or 
  Morningstar, Inc., unless otherwise noted. 
This material may be used in conjunction with   
the offering of shares of any Vanguard fund  You can obtain a free copy of Vanguard’s proxy voting guidelines 
only if preceded or accompanied by the fund’s  by visiting our website, www.vanguard.com, and searching for 
current prospectus.  “proxy voting guidelines,” or by calling Vanguard at 800-662-2739. 
  The guidelines are also available from the SEC’s website, 
  www.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 www.vanguard.com 
  or www.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 20549-0102. 
 
 
 
 
                                                 © 2009 The Vanguard Group, Inc. 
                                                 All rights reserved. 
                                                 Vanguard Marketing Corporation, Distributor. 
                                                 Q4830 102009 



Vanguard Extended Duration Treasury 
Index Fund Annual Report 
August 31, 2009 
 


> For the fiscal year ended August 31, 2009, Vanguard Extended Duration Treasury

Index Fund’s Institutional Shares returned 8.05% and the fund’s ETF Shares,

as measured by net asset value, returned 7.98%.

> The strong demand for Treasury securities in the first half of the fiscal year

reversed in the second half, as investors perceived that the credit markets

and the economy were improving.

> The fund’s return was only a few steps behind the 8.39% return of its benchmark,

the Barclays Capital U.S. Treasury STRIPS 20–30 Year Equal Par Bond Index.

Contents   
 
Your Fund’s Total Returns  1 
President’s Letter  2 
Results of Proxy Voting  7 
Fund Profile  8 
Performance Summary  9 
Financial Statements  11 
About Your Fund’s Expenses  21 
Trustees Approve Advisory Arrangement  23 
Glossary  24 

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.
Cover photograph: Veronica Coia.



Your Fund’s Total Returns

Fiscal Year Ended August 31, 2009     
  Ticker     Total 
  Symbol  Returns 
Vanguard Extended Duration Treasury Index Fund     
     Institutional Shares1  VEDTX   8.05% 
     ETF Shares2  EDV   
           Market Price     9.67 
           Net Asset Value     7.98 
Barclays Capital U.S. Treasury STRIPS 20–30 Year Equal Par Bond Index     8.39 

Your Fund’s Performance at a Glance         
August 31, 2008–August 31, 2009         
      Distributions Per Share 
  Starting  Ending  Income  Capital 
  Share Price  Share Price  Dividends  Gains 
Vanguard Extended Duration Treasury         
Index Fund         
     Institutional Shares  $29.52  $30.69  $1.324  $0.000 
     ETF Shares  98.11  101.91  4.397  0.000 

1 This class of shares carries low expenses and is available for a minimum initial investment of $5 million.
2 Vanguard ETFShares are traded on the NYSE Arca exchange and are available only through brokers. The table shows ETF returns
based on both the NYSE Arca market price and the net asset value for a share. U.S. Pat. No. 6,879,964 B2; 7,337,138.

1




President’s Letter

Dear Shareholder,

The fiscal year ended August 31, 2009—the first full year of operation for Vanguard Extended Duration Treasury Index Fund—was one of the financial markets’ most turbulent periods. It included frozen corporate credit markets that sparked a rush toward the safety and liquidity of Treasuries, boosting the fund’s return. Aggressive government measures were then implemented to thaw those markets, helping produce a rally in corporate bonds. The resulting decline in demand for Treasuries dampened the fund’s return.

For the fiscal year as a whole, these contrary trends produced a total return of about 8% for the Extended Duration Treasury Index Fund, split evenly between capital return and income return. A high degree of short-term volatility can be expected for this fund because of its focus on long-term Treasury securities, which are particularly sensitive to fluctuations in interest rates and changes in demand during stressful periods.

Please note: As a result of the spike in Treasury prices early in the period and significant redemptions, the fund expects to distribute a sizable capital gain in December 2009.

2



Among bond investors, safety and yield traded places

The 12 months ended August 31 spanned two strikingly different half-years. The period began with the September collapse of Lehman Brothers and the government-engineered rescue of several giant financial institutions. Stocks sank as the ensuing crisis spread from Wall Street to Main Street and around the globe. Stricken by seized-up credit markets and a near-total lack of confidence, businesses and consumers put the brakes on economic growth.

Governments in the United States and abroad responded with unprecedented stimulus and other programs. Over the past six months, these efforts started to take hold. Credit-market conditions improved, and the outlook for the U.S.

economy brightened. From their early-March lows, stocks took off on an almost-unbroken winning streak.

The U.S. bond market also performed a U-turn during the year. Early on, as credit markets deteriorated, investors rushed to the relative safety and liquidity of U.S. Treasury securities, driving their prices up and yields down. Investors were so risk-averse that short-term Treasury yields briefly turned negative. November and December were among the ten best months ever for Treasury returns, adjusted for inflation. (The fund returned about 22% in each of those months.) Corporate bonds, especially those of lower credit quality, struggled, and their yield spreads above comparable Treasuries widened to near-historic levels during the first six months.

Market Barometer       
    Average Annual Total Returns 
    Periods Ended August 31, 2009 
One Year   Three Years  Five Years 
Bonds       
Barclays Capital U.S. Aggregate Bond Index (Broad taxable market)  7.94%  6.35%       4.96% 
Barclays Capital Municipal Bond Index  5.67  4.14       4.15 
Citigroup 3-Month Treasury Bill Index  0.51  2.77       2.98 
 
Stocks       
Russell 1000 Index (Large-caps)  –18.39%  –5.61%       0.94% 
Russell 2000 Index (Small-caps)  –21.29  –6.08       2.21 
Dow Jones U.S. Total Stock Market Index  –18.10  –5.17       1.45 
MSCI All Country World Index ex USA (International)  –13.96  –2.41       8.18 
 
CPI       
Consumer Price Index  –1.48%  1.91%       2.64% 

3



Several moves by the Treasury and the Federal Reserve Board—which slashed its target level for short-term interest rates to historic lows of 0%–0.25% in December—helped credit markets to attain some stability by the spring. In a dramatic reversal, investors regained their appetite for risk, favoring corporate bonds—especially high-yield bonds—over Treasuries.

After all the ups and downs, Treasuries and high-yield corporate bonds produced similar 12-month returns of about 6%–7%. Overall, the broad U.S. taxable bond market returned about 8%. Tax-exempt municipal bonds, after a flat first half, returned more than 5% for the fiscal year.

Stocks sank, then soared as credit and economy stabilized

The stock market’s first-half results weighed on its full-year returns. The broad U.S. stock market ended the 12 months in negative territory, with a return of about –18%. International markets performed somewhat better, as major European economies emerged from recession; the MSCI All Country World Index ex USA returned about –14%.

Despite the robust second-half rally, it may be premature to sound the all-clear signal. As the fiscal year came to a close, home foreclosures and the unemployment rate were rising, and the federal government’s list of problem banks

Expense Ratio1     
  Institutional  ETF 
  Shares  Shares 
Extended Duration Treasury Index Fund  0.11%  0.14% 

1 The fund expense ratios shown are from the prospectuses dated December 29, 2008, and represent estimated costs for the current fiscal year based on the fund’s net assets as of the prospectus date. For the fiscal year ended August 31, 2009, the expense ratios were 0.11% for Institutional Shares and 0.14% for the ETF Shares.

4



had climbed above 400—the most since June 1994. There is considerable historical evidence that recovery from a recession caused by a financial crisis tends to take longer than average.

Short-term volatility marks the fund’s fiscal-year results

The jagged ups and downs of the 30-year Treasury bond yields shown in the chart on page 6 help explain the volatility of returns experienced during fiscal-year 2009 by Vanguard Extended Duration Treasury Index Fund. Bond yields and prices are linked, moving up and down at the same time, but in opposite directions; the longer the maturity—the fund invests in long-term Treasury securities from 20 to 30 years in maturity—the greater the fluctuation.

The opening six months of the fund’s 2009 fiscal year were particularly volatile. Fears of financial-system collapse spurred investors toward Treasuries, driving down the fund’s yields—the sag in the chart represents a cumulative drop of 1.7 percentage points in yield in November and December. As we reported to you in our semiannual report, the extraordinary demand for Treasury securities, and the related decline in interest rates across the maturity spectrum, helped produce a return of almost 17% for the fund for the first half of the fiscal year.

Strong actions by the Fed and other central banks began having a salutary effect on the credit markets as the initial six months drew to a close. At the same

Total Returns   
November 28, 20071 Through August 31, 2009   
  Average 
  Annual Return 
Extended Duration Treasury Index Fund Institutional Shares  4.74% 
Barclays Capital U.S. Treasury STRIPS 20–30 Year Equal Par Bond Index               5.18 

The performance data shown represent past performance, which is not a guarantee of future results. Investment
returns and principal value will fluctuate, so investors’ shares, when sold, may be worth more or less than their
original cost. 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 www.vanguard.com/performance.

1 Fund inception.

5



time, investors interpreted a growing number of economic signals as suggesting that the economic slump was likely ending.

As a result, what had been a flight to quality in the first half of the year became, in the second half, a flight from quality. Demand for Treasuries fell, and demand for corporate bonds—especially high-yield bonds—and stocks rose. Long-term Treasury yields climbed back to about where they were 12 months before. Also helping keep yields higher was the large issuance of Treasury securities, as well as investor expectations of future issuance, to finance the federal government’s economic stimulus package and other programs.

The fund returned about –8% for the second half of the fiscal year, bringing the result for the fiscal year as a whole to, coincidentally, about 8%.

Monthly yields of 30-year Treasury bonds:
August 2008–August 2009


The fund can minimize an asset–liability mismatch

Vanguard Extended Duration Treasury Index Fund is designed to be used as a long-term investment tool. The fund was designed primarily as an instrument for managing defined-benefit pension plans. From a pension fund manager’s perspective, the fund’s total return is less important than how that total return relates to changes in the value of a pension plan’s liabilities. The fund invests in assets that move up and down in value in the same direction as long-term pension liabilities—since both respond similarly to interest-rate fluctuations—thus helping to reduce volatility in the ratio of a plan’s assets to its liabilities.

In addition, the fund invests in U.S. Treasury securities, deemed the safest of all bonds in terms of credit quality.

The fund also operates at a very low cost: As you know, low costs can be an important ally to any investor over the long term.

As always, thank you for entrusting your assets to Vanguard.

Sincerely,


F. William McNabb III
President and Chief Executive Officer
September 12, 2009




Results of Proxy Voting

At a special meeting of shareholders on July 2, 2009, fund shareholders approved the following two proposals:

Proposal 1—Elect trustees for the fund.*

The individuals listed in the table below were elected as trustees for the fund. All trustees with the exception of Messrs. McNabb and Volanakis (both of whom already served as directors of The Vanguard Group, Inc.) served as trustees to the fund prior to the shareholder meeting.

      Percentage 
Trustee  For  Withheld  For 
John J. Brennan  816,325,661  25,839,114  96.9% 
Charles D. Ellis  811,618,878  30,545,897  96.4% 
Emerson U. Fullwood  816,960,560  25,204,215  97.0% 
Rajiv L. Gupta  815,607,429  26,557,346  96.8% 
Amy Gutmann  818,039,387  24,125,388  97.1% 
JoAnn Heffernan Heisen  815,771,400  26,393,375  96.9% 
F. William McNabb III  817,559,701  24,605,074  97.1% 
André F. Perold  814,833,250  27,331,525  96.8% 
Alfred M. Rankin, Jr.  815,942,907  26,221,868  96.9% 
Peter F. Volanakis  817,780,699  24,384,076  97.1% 
* Results are for all funds within the same trust.       

Proposal 2—Update and standardize the fund’s fundamental policies regarding:
(a) Purchasing and selling real estate.
(b) Issuing senior securities.
(c) Borrowing money.
(d) Making loans.
(e) Purchasing and selling commodities.
(f) Concentrating investments in a particular industry or group of industries.
(g) Eliminating outdated fundamental investment policies not required by law.

The revised fundamental policies are clearly stated and simple, yet comprehensive, making oversight and compliance more efficient than under the former policies. The revised fundamental policies will allow the fund to respond more quickly to regulatory and market changes, while avoiding the costs and delays associated with successive shareholder meetings.

Extended Duration Treasury        Broker  Percentage 
Index Fund  For  Abstain  Against  Non-Votes  For 
2a  2,480,855  2,255  84,360  66,734  94.2% 
2b  2,480,869  2,211  84,390  66,734  94.2% 
2c  2,482,099  698  84,673  66,734  94.2% 
2d  2,480,548  2,330  84,592  66,734  94.2% 
2e  2,480,743  2,294  84,433  66,734  94.2% 
2f  2,480,713  2,308  84,449  66,734  94.2% 
2g  2,480,676  2,212  84,582  66,734  94.2% 

7



Extended Duration Treasury Index Fund

Fund Profile
As of August 31, 2009

Financial Attributes     
    Target 
  Fund  Index1 
Number of Issues  50  50 
Yield2    4.4% 
   Institutional Shares  4.3%   
   ETF Shares  4.3%   
Yield to Maturity  4.4%3  4.4% 
Average Coupon  0.0%  0.0% 
Average Effective Maturity  25.1 years  24.7 years 
Average Quality4  Aaa  Aaa 
Average Duration  25.7 years  25.3 years 
Expense Ratio5     
   Institutional Shares  0.11%   
   ETF Shares  0.14%   
Short-Term Reserves  0.0%   

Sector Diversification (% of portfolio)   
Treasury/Agency  100.0% 
Distribution by Maturity (% of portfolio)   
20–30 Years  100.0% 
Distribution by Credit Quality4 (% of portfolio) 
Aaa  100.0% 

Investment Focus


1 Barclays Capital U.S. Treasury STRIPS 20-30 Year Equal Par Bond Index.
2 30-day SEC yield for the fund; index yield assumes that all bonds are called or prepaid at the earliest possible date.
3 Before expenses.
4 Moody’s Investors Service.
5 The fund expense ratios shown are from the prospectus dated December 29, 2008, and represent estimated costs for the current fiscal
year based on the fund’s net assets as of the prospectus date. For the fiscal year ended August 31, 2009, the expense ratios were 0.11%

8



Extended Duration Treasury Index 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 www.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: November 28, 2007–August 31, 2009

Initial Investment of $5,000,000


  Total Returns   
  Periods Ended August 31, 2009  Final Value 
    Since  of a $5,000,000 
  One Year  Inception1  Investment 
Extended Duration Treasury Index Fund       
Institutional Shares               8.05%  4.74%  $5,423,233 
Barclays Capital U.S. Treasury STRIPS       
20–30 Year Equal Par Bond Index               8.39             5.18  5,463,435 

      Final Value 
    Since  of a $10,000 
  One Year  Inception1  Investment 
Extended Duration Treasury Index Fund       
ETF Shares Net Asset Value2  7.98%  5.90%  $11,046 
Barclays Capital U.S. Treasury STRIPS       
20–30 Year Equal Par Bond Index     8.39       6.65  11,182 

1 Performance for the fund and its comparative standards is calculated since the fund’s inception: November 28, 2007, for Institutional
Shares and December 6, 2007, for the ETF Shares.
2 For more information about how the ETF Shares’ market prices have compared with their net asset value, visit www.vanguard.com, select
your ETF, and then select the Performance tab. The Premium/Discount table there shows the percentages of days on which the ETF Shares’
market price was above or below the NAV.

9



Extended Duration Treasury Index Fund

Cumulative Returns: ETF Shares, December 6, 2007–August 31, 2009     
    Cumulative 
    Since 
  One Year  Inception1 
Extended Duration Treasury Index Fund ETF Shares Market Price     9.67%  12.57% 
Extended Duration Treasury Index Fund ETF Shares Net Asset Value     7.98  10.46 
Barclays Capital U.S. Treasury STRIPS 20–30 Year Equal Par Bond Index     8.39  11.82 

Total Returns (%): November 28, 2007–August 31, 2009       
        Barclays 
  Institutional Shares  Capital2 
Fiscal  Capital  Income  Total  Total 
Year  Return  Return  Return  Returns 
20083  –1.6%  2.0%  0.4%  0.8% 
2009  3.9  4.1   8.0  8.4 

Total Returns: Periods Ended June 30, 2009           
      Since Inception 
  Inception Date  One Year  Capital  Income   Total 
Institutional Shares  11/28/2007     6.42%  –1.03%   3.72%  2.69% 
ETF Shares  12/6/2007         
     Market Price       8.22      4.85 
     Net Asset Value       6.32  0.12   3.79  3.91 

1 Performance for the fund and its comparative standards is calculated since the ETF Shares’ inception on December 6, 2007.
2 Barclays Capital U.S. Treasury STRIPS 20–30 Year Equal Par Bond Index.
3 Since the Institutional Shares’ inception on November 28, 2007.
Note: See Financial Highlights tables for dividend and capital gains information.

10



Extended Duration Treasury Index Fund

Financial Statements

Statement of Net Assets
As of August 31, 2009

The fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth fiscal quarters, the lists appear in the fund’s semiannual and annual reports to shareholders. For the first and third fiscal quarters, the fund files the lists with the Securities and Exchange Commission on Form N-Q. Shareholders can look up the fund’s Forms N-Q on the SEC’s website at www.sec.gov. Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room (see the back cover of this report for further information).

      Face  Market 
    Maturity  Amount  Value 
  Coupon  Date  ($000)   ($000) 
U.S. Government Securities (99.9%)         
U.S. Treasury STRIPS Coupon  0.00%  11/15/29  12,450  5,127 
U.S. Treasury STRIPS Coupon  0.00%  2/15/30  10,650  4,340 
U.S. Treasury STRIPS Coupon  0.00%  5/15/30  15,700  6,319 
U.S. Treasury STRIPS Coupon  0.00%  8/15/30  12,250  4,884 
U.S. Treasury STRIPS Coupon  0.00%  11/15/30  11,175  4,416 
U.S. Treasury STRIPS Coupon  0.00%  2/15/31  14,650  5,716 
U.S. Treasury STRIPS Coupon  0.00%  5/15/31  12,790  4,943 
U.S. Treasury STRIPS Coupon  0.00%  8/15/31  11,050  4,222 
U.S. Treasury STRIPS Coupon  0.00%  11/15/31  11,300  4,273 
U.S. Treasury STRIPS Coupon  0.00%  2/15/32  12,850  4,801 
U.S. Treasury STRIPS Coupon  0.00%  5/15/32  11,905  4,403 
U.S. Treasury STRIPS Coupon  0.00%  8/15/32  12,100  4,429 
U.S. Treasury STRIPS Coupon  0.00%  11/15/32  11,745  4,258 
U.S. Treasury STRIPS Coupon  0.00%  2/15/33  10,800  3,873 
U.S. Treasury STRIPS Coupon  0.00%  5/15/33  11,300  4,014 
U.S. Treasury STRIPS Coupon  0.00%  8/15/33  12,150  4,267 
U.S. Treasury STRIPS Coupon  0.00%  11/15/33  11,250  3,911 
U.S. Treasury STRIPS Coupon  0.00%  2/15/34  11,800  4,056 
U.S. Treasury STRIPS Coupon  0.00%  5/15/34  12,360  4,207 
U.S. Treasury STRIPS Coupon  0.00%  8/15/34  12,600  4,244 
U.S. Treasury STRIPS Coupon  0.00%  11/15/34  10,225  3,405 
U.S. Treasury STRIPS Coupon  0.00%  2/15/35  13,150  4,334 
U.S. Treasury STRIPS Coupon  0.00%  5/15/35  12,025  3,924 
U.S. Treasury STRIPS Coupon  0.00%  8/15/35  11,050  3,565 
U.S. Treasury STRIPS Coupon  0.00%  11/15/35  11,435  3,664 
U.S. Treasury STRIPS Coupon  0.00%  2/15/36  14,000  4,419 
U.S. Treasury STRIPS Coupon  0.00%  5/15/36  12,920  4,031 
U.S. Treasury STRIPS Coupon  0.00%  8/15/36  11,800  3,645 
U.S. Treasury STRIPS Coupon  0.00%  11/15/36  10,430  3,185 
U.S. Treasury STRIPS Coupon  0.00%  2/15/37  19,045  5,763 
U.S. Treasury STRIPS Coupon  0.00%  5/15/37  14,000  4,189 
U.S. Treasury STRIPS Coupon  0.00%  8/15/37  10,445  3,106 
U.S. Treasury STRIPS Coupon  0.00%  11/15/37  12,200  3,574 
U.S. Treasury STRIPS Coupon  0.00%  2/15/38  10,750  3,146 
U.S. Treasury STRIPS Coupon  0.00%  5/15/38  10,750  3,112 
U.S. Treasury STRIPS Coupon  0.00%  8/15/38  8,200  2,363 
U.S. Treasury STRIPS Coupon  0.00%  11/15/38  5,000  1,429 
U.S. Treasury STRIPS Coupon  0.00%  2/15/39  7,100  2,029 
U.S. Treasury STRIPS Coupon  0.00%  5/15/39  5,900  1,654 
U.S. Treasury STRIPS Coupon  0.00%  8/15/39  9,400  2,607 

11



Extended Duration Treasury Index Fund

      Face  Market 
    Maturity  Amount  Value 
  Coupon  Date  ($000)  ($000) 
U.S. Treasury STRIPS Principal  0.00%  5/15/30  8,550  3,500 
U.S. Treasury STRIPS Principal  0.00%  2/15/31  8,100  3,212 
U.S. Treasury STRIPS Principal  0.00%  2/15/36  8,050  2,626 
U.S. Treasury STRIPS Principal  0.00%  2/15/37  5,200  1,623 
U.S. Treasury STRIPS Principal  0.00%  5/15/37  9,250  2,854 
U.S. Treasury STRIPS Principal  0.00%  2/15/38  12,700  3,789 
U.S. Treasury STRIPS Principal  0.00%  5/15/38  18,495  5,482 
U.S. Treasury STRIPS Principal  0.00%  2/15/39  18,950  5,438 
U.S. Treasury STRIPS Principal  0.00%  5/15/39  23,075  6,542 
U.S. Treasury STRIPS Principal  0.00%  8/15/39  13,400  3,757 
Total Investments (99.9%) (Cost $190,843)        196,670 
Other Assets and Liabilities (0.1%)         
Other Assets        9,000 
Liabilities        (8,878) 
        122 
Net Assets (100%)        196,792 

At August 31, 2009, net assets consisted of:   
  Amount 
  ($000) 
Paid-in Capital  160,590 
Undistributed Net Investment Income  1,444 
Accumulated Net Realized Gains  28,931 
Unrealized Appreciation (Depreciation)  5,827 
Net Assets  196,792 
 
Institutional Shares—Net Assets   
Applicable to 4,917,683 outstanding $.001 par value shares of   
beneficial interest (unlimited authorization)  150,934 
Net Asset Value Per Share—Institutional Shares  $30.69 
 
ETF Shares—Net Assets   
Applicable to 450,000 outstanding $.001 par value shares of   
beneficial interest (unlimited authorization)  45,858 
Net Asset Value Per Share—ETF Shares  $101.91 

See Note A in Notes to Financial Statements.
See accompanying Notes, which are an integral part of the Financial Statements.

12



Extended Duration Treasury Index Fund

Statement of Operations

  Year Ended 
  August 31, 2009 
  ($000) 
Investment Income   
Income   
Interest1  9,019 
Total Income  9,019 
Expenses   
The Vanguard Group—Note B   
     Investment Advisory Services  26 
     Management and Administrative—Institutional Shares  74 
     Management and Administrative—ETF Shares  21 
     Marketing and Distribution—Institutional Shares  63 
     Marketing and Distribution—ETF Shares  10 
Custodian Fees  26 
Auditing Fees  27 
Shareholders’ Reports and Proxies—Institutional Shares   
Shareholders’ Reports and Proxies—ETF Shares  9 
Total Expenses  256 
Net Investment Income  8,763 
Realized Net Gain (Loss) on Investment Securities Sold  42,012 
Change in Unrealized Appreciation (Depreciation) of Investment Securities  5,603 
Net Increase (Decrease) in Net Assets Resulting from Operations  56,378 

1 Interest income from an affiliated company of the fund was $3,000.
See accompanying Notes, which are an integral part of the Financial Statements.

13



Extended Duration Treasury Index Fund

Statement of Changes in Net Assets

    November 28, 
  Year Ended  20071 to 
  August 31,  August 31, 
  2009  2008 
  ($000)  ($000) 
Increase (Decrease) in Net Assets     
Operations     
Net Investment Income  8,763  4,313 
Realized Net Gain (Loss)  42,012  (927) 
Change in Unrealized Appreciation (Depreciation)  5,603  224 
Net Increase (Decrease) in Net Assets Resulting from Operations  56,378  3,610 
Distributions     
Net Investment Income     
     Institutional Shares  (7,647)  (2,278) 
     ETF Shares  (1,511)  (196) 
Realized Capital Gain     
     Institutional Shares     
     ETF Shares     
Total Distributions  (9,158)  (2,474) 
Capital Share Transactions     
     Institutional Shares  (154,948)  256,542 
     ETF Shares  41,503  5,339 
Net Increase (Decrease) from Capital Share Transactions  (113,445)  261,881 
Total Increase (Decrease)  (66,225)  263,017 
Net Assets     
Beginning of Period  263,017   
End of Period2  196,792  263,017 

1 Inception.
2 Net Assets—End of Period includes undistributed net investment income of $1,444,000 and $1,839,000.
See accompanying Notes, which are an integral part of the Financial Statements.

14



Extended Duration Treasury Index Fund

Financial Highlights

Institutional Shares     
  Year  Nov. 28, 
  Ended  20071 to 
  Aug. 31,  Aug. 31, 
For a Share Outstanding Throughout Each Period  2009  2008 
Net Asset Value, Beginning of Period  $29.52  $30.00 
Investment Operations     
Net Investment Income  1.2732  1.0232 
Net Realized and Unrealized Gain (Loss) on Investments3       1.221  (.928) 
Total from Investment Operations       2.494  .095 
Distributions     
Dividends from Net Investment Income  (1.324)  (.575) 
Distributions from Realized Capital Gains     
Total Distributions  (1.324)  (.575) 
Net Asset Value, End of Period  $30.69  $29.52 
 
Total Return4  8.05%  0.39% 
 
Ratios/Supplemental Data     
Net Assets, End of Period (Millions)  $151  $258 
Ratio of Total Expenses to Average Net Assets  0.11%  0.11%5 
Ratio of Net Investment Income to Average Net Assets  3.93%  4.55%5 
Portfolio Turnover Rate6  39%  36% 

1 Inception.
2 Calculated based on average shares outstanding.
3 Includes increases from purchase fees of $.01 and $.03.
4 Total returns do not include a portfolio transaction fee that may apply to aggregate purchases of more than $20 million by a single investor.
5 Annualized.
6 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares,
including ETF Creation Units.
See accompanying Notes, which are an integral part of the Financial Statements.

15



Extended Duration Treasury Index Fund

Financial Highlights

ETF Shares     
  Year  Dec. 6, 
  Ended  20071 to 
  Aug. 31,  Aug. 31, 
For a Share Outstanding Throughout Each Period  2009  2008 
Net Asset Value, Beginning of Period  $98.11  $97.78 
Investment Operations     
Net Investment Income  4.3172  3.1662 
Net Realized and Unrealized Gain (Loss) on Investments3       3.880  (.983) 
Total from Investment Operations       8.197       2.183 
Distributions     
Dividends from Net Investment Income  (4.397)  (1.853) 
Distributions from Realized Capital Gains     
Total Distributions  (4.397)  (1.853) 
Net Asset Value, End of Period  $101.91  $98.11 
 
Total Return  7.98%  2.29% 
 
Ratios/Supplemental Data     
Net Assets, End of Period (Millions)  $46  $5 
Ratio of Total Expenses to Average Net Assets  0.14%  0.14%4 
Ratio of Net Investment Income to Average Net Assets  3.90%  4.52%4 
Portfolio Turnover Rate5  39%  36% 

1 Inception.
2 Calculated based on average shares outstanding.
3 Includes increases from purchase fees of $.02 and $.11.
4 Annualized.
5 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares,
including ETF Creation Units.
See accompanying Notes, which are an integral part of the Financial Statements.

16



Extended Duration Treasury Index Fund

Notes to Financial Statements

Vanguard Extended Duration Treasury Index Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund offers three classes of shares: Institutional Shares, Institutional Plus Shares, and ETF Shares. Institutional Shares are designed for investors who meet certain administrative and service criteria and invest a minimum of $5 million. Institutional Plus Shares are available to investors who invest a minimum of $100 million. The fund has not issued any Institutional Plus Shares through August 31, 2009. ETF Shares are listed for trading on the NYSE Arca, Inc.; they can be purchased and sold through a broker.

A. The following significant accounting policies conform to generally accepted accounting principles for U.S. mutual funds. The fund consistently follows such policies in preparing its financial statements.

1. Security Valuation: Bonds, and temporary cash investments acquired over 60 days to maturity, are valued using the latest bid prices or using valuations based on a matrix system (which considers such factors as security prices, yields, maturities, and ratings), both as furnished by independent pricing services. Investments in Vanguard Market Liquidity Fund are valued at that fund’s net asset value. Securities for which market quotations are not readily available, or whose values have been affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued by methods deemed by the board of trustees to represent fair value.

2. Federal Income Taxes: The fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income. Management has analyzed the fund’s tax positions taken for all open federal income tax years (August 31, 2008–2009), and has concluded that no provision for federal income tax is required in the fund’s financial statements.

3. Distributions: Distributions to shareholders are recorded on the ex-dividend date.

4. Other: Interest income includes income distributions received from Vanguard Market Liquidity Fund and is accrued daily. Premiums and discounts on debt securities purchased are amortized and accreted, respectively, to interest income over the lives of the respective securities. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment securities are those of the specific securities sold. Fees, if any, assessed on purchases of Institutional Shares are credited to paid-in capital.

Each class of shares has equal rights as to assets and earnings, except that each class separately bears certain class-specific expenses related to maintenance of shareholder accounts (included in Management and Administrative expenses), shareholder reporting, and proxies. Marketing and distribution expenses are allocated to each class of shares based on a method approved by the board of trustees. Income, other non-class-specific expenses, and gains and losses on investments are allocated to each class of shares based on its relative net assets.

B. The Vanguard Group furnishes at cost investment advisory, corporate management, administrative, marketing, and distribution services. The costs of such services are allocated to the fund under methods approved by the board of trustees. The fund has committed to provide up to 0.40% of its net assets in capital contributions to Vanguard. At August 31, 2009, the fund had contributed capital of $39,000 to Vanguard (included in Other Assets), representing 0.02% of the fund’s net assets and 0.02% of Vanguard’s capitalization. The fund’s trustees and officers are also directors and officers of Vanguard.

17



Extended Duration Treasury Index Fund

C. Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Level 1Quoted prices in active markets for identical securities.
Level 2Other significant observable inputs (including quoted prices for similar securities,
interest rates, prepayment speeds, credit risk, etc.).
Level 3Significant unobservable inputs (including the fund’s own assumptions used to
determine the fair value of investments).

At August 31, 2009, 100% of the fund’s investments were valued based on Level 2 inputs.

D. Distributions are determined on a tax basis and may differ from net investment income and realized capital gains for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the financial statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain, or loss are recognized in different periods for financial statement and tax purposes; these differences will reverse at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.

During the year ended August 31, 2009, the fund realized $5,146,000 of net capital gains resulting from in-kind redemptions—in which shareholders exchanged fund shares for securities held by the fund rather than for cash. Because such gains are not taxable to the fund, and are not distributed to shareholders, they have been reclassified from accumulated net realized gains to paid-in capital.

The fund used a tax accounting practice to treat a portion of the price of capital shares redeemed during the year as distributions from realized capital gains. Accordingly, the fund has reclassified $7,487,000 from accumulated net realized gains to paid-in capital.

The fund used a capital loss carryforward of $435,000 to offset taxable capital gains realized during the year ended August 31, 2009, reducing the amount of capital gains that would otherwise be available to distribute to shareholders. For tax purposes, at August 31, 2009, the fund had $30,442,000 of ordinary income available for distribution.

At August 31, 2009, the cost of investment securities for tax purposes was $190,843,000. Net unrealized appreciation of investment securities for tax purposes was $5,827,000, consisting of unrealized gains of $8,157,000 on securities that had risen in value since their purchase and $2,330,000 in unrealized losses on securities that had fallen in value since their purchase.

E. During the year ended August 31, 2009, the fund purchased $146,800,000 of investment securities and sold $269,853,000 of investment securities, other than temporary cash investments.

18



Extended Duration Treasury Index Fund

F. Capital share transactions for each class of shares were:

  Year Ended  Inception1 to 
  August 31, 2009  August 31, 2008 
  Amount  Shares  Amount  Shares 
  ($000)  (000)  ($000)  (000) 
Institutional Shares         
Issued2  40,704  1,396  256,993  8,769 
Issued in Lieu of Cash Distributions  7,647  222  2,278  80 
Redeemed  (203,299)  (5,443)  (2,729)  (106) 
Net Increase (Decrease)—Institutional Shares  (154,948)  (3,825)  256,542  8,743 
ETF Shares         
Issued2  60,981  550  14,691  150 
Issued in Lieu of Cash Distributions         
Redeemed  (19,478)  (150)  (9,352)  (100) 
Net Increase (Decrease)—ETF Shares  41,503  400  5,339  50 
1 Inception was November 28, 2007, for Institutional Shares and December 6, 2007, for ETF Shares.     
2 Includes purchase fees of $42,000 and $289,000 (fund totals).         

G. In preparing the financial statements as of August 31, 2009, management considered the impact of subsequent events occurring through October 15, 2009, for potential recognition or disclosure in these financial statements.

19



Report of Independent Registered
Public Accounting Firm

To the Trustees of Vanguard World Fund and the Shareholders of Vanguard Extended Duration Treasury Index 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 Extended Duration Treasury Index Fund (the “Fund”) at August 31, 2009, the results of its operations for the year then ended, the changes in its net assets and the financial highlights for each of the periods indicated, 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 August 31, 2009 by correspondence with the custodian, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania

October 15, 2009

Special 2009 tax information (unaudited) for Vanguard Extended Duration Treasury Index Fund

This information for the fiscal year ended August 31, 2009, is included pursuant to provisions of the
Internal Revenue Code.

The fund distributed $3,294,000 as capital gain dividends (from net long-term capital gains) to
shareholders during the fiscal year.

For nonresident alien shareholders, 100% of income dividends are interest-related dividends.

20



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.

Six Months Ended August 31, 2009       
  Beginning  Ending  Expenses 
  Account Value  Account Value  Paid During 
Extended Duration Treasury Index Fund  2/29/2009  8/31/2009  Period1 
Based on Actual Fund Return       
     Institutional Shares  $1,000.00  $924.21  $0.53 
     ETF Shares  1,000.00  924.21  0.68 
Based on Hypothetical 5% Yearly Return       
     Institutional Shares  $1,000.00  $1,024.65  $0.56 
     ETF Shares  1,000.00  1024.50  0.71 

1 The calculations are based on expenses incurred in the most recent six-month period. The fund’s annualized six-month expense ratios for
that period are 0.11% for Institutional Shares and 0.14% for ETF Shares. 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.

21



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. 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.

22



Trustees Approve Advisory Arrangement

The board of trustees of Vanguard Extended Duration Treasury Index Fund has renewed the fund’s investment advisory arrangement with The Vanguard Group, Inc. Vanguard—through its Fixed Income Group—serves as the investment advisor to the fund. The board determined that continuing the fund’s internalized management structure was in the best interests of the fund and its shareholders.

The board based its decision upon an evaluation of the advisor’s investment staff, portfolio management process, and performance. The trustees considered the factors discussed below, among others. However, no single factor determined whether the board approved the arrangement. Rather, it was the totality of the circumstances that drove the board’s decision.

Nature, extent, and quality of services

The board considered the quality of the investment management services provided to the fund since its inception in 2007, and took into account the organizational depth and stability of the advisor. The board noted that Vanguard has been managing investments for more than three decades. The Fixed Income Group adheres to a sound, disciplined investment management process; the team has considerable experience, stability, and depth.

The board concluded that Vanguard’s experience, stability, depth, and performance, among other factors, warranted continuation of the advisory arrangements.

Investment performance

The board considered the fund’s performance since its inception in 2007, including any periods of outperformance or underperformance of its target index and peer group. The board concluded that the fund has performed in line with expectations, and that the results have been consistent with the fund’s investment strategies. Information about the fund’s most recent performance can be found in the Performance Summary section of this report.

Cost

The board concluded that the fund’s expense ratio was well below the average expense ratio charged by funds in its peer group and that the fund’s advisory expense ratio was also well below its peer-group average. Information about the fund’s expense ratio appears in the About Your Fund’s Expenses section of this report.

The board does not conduct a profitability analysis of Vanguard, because of Vanguard’s unique “at-cost” structure. Unlike most other mutual fund management companies, Vanguard is owned by the funds it oversees, and produces “profits” only in the form of reduced expenses for fund shareholders.

The benefit of economies of scale

The board concluded that the fund’s low-cost arrangement with Vanguard ensures that the fund will realize economies of scale as it grows, with the cost to shareholders declining as fund assets increase.

The board will consider whether to renew the advisory arrangement again after a one-year period.

23



Glossary

Average Coupon. The average interest rate paid on the fixed income securities held by a fund. It is expressed as a percentage of face value.

Average Duration. An estimate of how much the value of the bonds held by a fund will fluctuate in response to a change in interest rates. To see how the value could change, multiply the average duration by the change in rates. If interest rates rise by 1 percentage point, the value of the bonds in a fund with an average duration of five years would decline by about 5%. If rates decrease by a percentage point, the value would rise by 5%.

Average Effective Maturity. The average length of time until fixed income securities held by a fund reach maturity and are repaid, taking into consideration the possibility that the issuer may call the bond before its maturity date. The figure reflects the proportion of fund assets represented by each security; it also reflects any futures contracts held. In general, the longer the average effective maturity, the more a fund’s share price will fluctuate in response to changes in market interest rates.

Average Quality. An indicator of credit risk, this figure is the average of the ratings assigned to a fund’s fixed income holdings by credit-rating agencies. The agencies make their judgment after appraising an issuer’s ability to meet its obligations. Quality is graded on a scale, with Aaa or AAA indicating the most creditworthy bond issuers. U.S. Treasury securities are considered to have the highest credit quality.

Distribution by Coupon. A breakdown of the securities in a fund according to coupon rate—the interest rate that an issuer promises to pay, expressed as an annual percentage of face value. Securities with unusually high coupon rates may be subject to call risk, the possibility that they will be redeemed (or “called”) early by the issuer.

Expense Ratio. The percentage of a fund’s average net assets used to pay its annual administrative and advisory expenses. These expenses directly reduce returns to investors.

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.

Short-Term Reserves. The percentage of a fund invested in highly liquid, short-term securities that can be readily converted to cash.

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 (in the case of bonds) 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.

Yield to Maturity. The rate of return an investor would receive if the fixed income securities held by a fund were held to their maturity dates.

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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 157 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 www.vanguard.com.

Interested Trustees  Emerson U. Fullwood 
  Born 1948. Trustee Since January 2008. Principal 
John J. Brennan1  Occupation(s) During the Past Five Years: Retired 
Born 1954. Trustee Since May 1987. Chairman of  Executive Chief Staff and Marketing Officer for North 
the Board. Principal Occupation(s) During the Past  America and Corporate Vice President of Xerox 
Five Years: Chairman of the Board and Director/Trustee  Corporation (photocopiers and printers); Director of 
of The Vanguard Group, Inc., and of each of the  SPX Corporation (multi-industry manufacturing), the 
investment companies served by The Vanguard Group;  United Way of Rochester, the Boy Scouts of America, 
Chief Executive Officer and President of The Vanguard  Amerigroup Corporation (direct health and medical 
Group and of each of the investment companies served  insurance carriers), and Monroe Community College 
by The Vanguard Group (1996–2008); Chairman of  Foundation. 
the Financial Accounting Foundation; Governor of   
the Financial Industry Regulatory Authority (FINRA);  Rajiv L. Gupta 
Director of United Way of Southeastern Pennsylvania.  Born 1945. Trustee Since December 2001.2 Principal 
  Occupation(s) During the Past Five Years: Retired 
F. William McNabb III1  Chairman and Chief Executive Officer of Rohm and 
Born 1957. Trustee Since July 2009. Principal  Haas Co. (chemicals); President of Rohm and Haas Co. 
Occupation(s) During the Past Five Years: Director of  (2006–2008); Board Member of American Chemistry 
The Vanguard Group, Inc., since 2008; Chief Executive  Council; Director of Tyco International, Ltd. (diversified 
Officer and President of The Vanguard Group and of  manufacturing and services) and Hewlett-Packard Co. 
each of the investment companies served by The  (electronic computer manufacturing); Trustee of The 
Vanguard Group since 2008; Director of Vanguard  Conference Board. 
Marketing Corporation; Managing Director of The   
Vanguard Group (1995–2008).  Amy Gutmann 
  Born 1949. Trustee Since June 2006. Principal 
  Occupation(s) During the Past Five Years: President of 
Independent Trustees  the University of Pennsylvania; Christopher H. Browne 
  Distinguished Professor of Political Science in the School 
Charles D. Ellis  of Arts and Sciences with Secondary Appointments 
Born 1937. Trustee Since January 2001. Principal  at the Annenberg School for Communication and the 
Occupation(s) During the Past Five Years: Applecore  Graduate School of Education of the University of 
Partners (pro bono ventures in education); Senior  Pennsylvania; Director of Carnegie Corporation of 
Advisor to Greenwich Associates (international business  New York, Schuylkill River Development Corporation, 
strategy consulting); Successor Trustee of Yale University;  and Greater Philadelphia Chamber of Commerce; 
Overseer of the Stern School of Business at New York  Trustee of the National Constitution Center. 
University; Trustee of the Whitehead Institute for   
Biomedical Research.   



JoAnn Heffernan Heisen  Executive Officers   
Born 1950. Trustee Since July 1998. Principal     
Occupation(s) During the Past Five Years: Retired  Thomas J. Higgins1   
Corporate Vice President, Chief Global Diversity Officer,  Born 1957. Chief Financial Officer Since September 
and Member of the Executive Committee of Johnson  2008. Principal Occupation(s) During the Past Five 
& Johnson (pharmaceuticals/consumer products);  Years: Principal of The Vanguard Group, Inc.; Chief 
Vice President and Chief Information Officer of Johnson  Financial Officer of each of the investment companies 
& Johnson (1997–2005); Director of the University  served by The Vanguard Group since 2008; Treasurer 
Medical Center at Princeton and Women’s Research  of each of the investment companies served by The 
and Education Institute.  Vanguard Group (1998–2008). 
 
André F. Perold  Kathryn J. Hyatt1   
Born 1952. Trustee Since December 2004. Principal  Born 1955. Treasurer Since November 2008. Principal 
Occupation(s) During the Past Five Years: George Gund  Occupation(s) During the Past Five Years: Principal of 
Professor of Finance and Banking, Harvard Business  The Vanguard Group, Inc.; Treasurer of each of the 
School; Director and Chairman of UNX, Inc. (equities  investment companies served by The Vanguard 
trading firm); Chair of the Investment Committee of  Group since 2008; Assistant Treasurer of each of the 
HighVista Strategies LLC (private investment firm).  investment companies served by The Vanguard Group 
  (1988–2008).   
Alfred M. Rankin, Jr.     
Born 1941. Trustee Since January 1993. Principal  Heidi Stam1   
Occupation(s) During the Past Five Years: Chairman,  Born 1956. Secretary Since July 2005. Principal 
President, Chief Executive Officer, and Director of  Occupation(s) During the Past Five Years: Managing 
NACCO Industries, Inc. (forklift trucks/housewares/  Director of The Vanguard Group, Inc., since 2006; 
lignite); Director of Goodrich Corporation (industrial  General Counsel of The Vanguard Group since 2005; 
products/aircraft systems and services).  Secretary of The Vanguard Group and of each of the 
  investment companies served by The Vanguard Group 
Peter F. Volanakis  since 2005; Director and Senior Vice President of 
Born 1955. Trustee Since July 2009. Principal  Vanguard Marketing Corporation since 2005; Principal 
Occupation(s) During the Past Five Years: President  of The Vanguard Group (1997–2006). 
since 2007 and Chief Operating Officer since 2005     
of Corning Incorporated (communications equipment);     
President of Corning Technologies (2001–2005); Director  Vanguard Senior Management Team 
of Corning Incorporated and Dow Corning; Trustee of     
the Corning Incorporated Foundation and the Corning  R. Gregory Barton  Michael S. Miller 
Museum of Glass; Overseer of the Amos Tuck School  Mortimer J. Buckley  James M. Norris 
of Business Administration at Dartmouth College.  Kathleen C. Gubanich  Glenn W. Reed 
  Paul A. Heller  George U. Sauter 
 
 
  Founder   
  John C. Bogle   
  Chairman and Chief Executive Officer, 1974–1996 

1 These individuals are “interested persons” as defined in the Investment Company Act of 1940.
2 December 2002 for Vanguard Equity Income Fund, Vanguard Growth Equity Fund, the Vanguard Municipal Bond Funds, and the Vanguard
State Tax-Exempt Funds.



P.O. Box 2600
Valley Forge, PA 19482-2600

Connect with Vanguard® > www.vanguard.com

Fund Information > 800-662-7447  All comparative mutual fund data are from Lipper Inc. 
  or Morningstar, Inc., unless otherwise noted. 
Direct Investor Account Services > 800-662-2739   
 
Institutional Investor Services > 800-523-1036  You can obtain a free copy of Vanguard’s proxy voting 
  guidelines by visiting our website, www.vanguard.com, 
Text Telephone for People  and searching for “proxy voting guidelines,” or by 
With Hearing Impairment > 800-952-3335  calling Vanguard at 800-662-2739. The guidelines are 
  also available from the SEC’s website, www.sec.gov. 
  In addition, you may obtain a free report on how your 
  fund voted the proxies for securities it owned during 
This material may be used in conjunction   the 12 months ended June 30. To get the report, visit 
with the offering of shares of any Vanguard  either www.vanguard.com or www.sec.gov. 
fund only if preceded or accompanied by 
the fund’s current prospectus.   
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 20549-0102. 
 
 
 
 
  © 2009 The Vanguard Group, Inc. 
  All rights reserved. 
  Vanguard Marketing Corporation, Distributor. 
  Q12750 102009 



Vanguard Mega Cap 300 Index Funds 
Annual Report 
August 31, 2009 

Vanguard Mega Cap 300 Index Fund 
Vanguard Mega Cap 300 Growth Index Fund 
Vanguard Mega Cap 300 Value Index Fund 



> For the 12 months ended August 31, 2009, Vanguard’s Mega Cap 300 Index

Funds posted returns ranging from –18.32% to –17.28% for their ETF Shares,

as determined by the net asset value per share. The returns of the Institutional

Shares were marginally different.

> Despite dismal returns, all three of the funds closely tracked their target indexes.

> Stocks in the financial, energy, and industrial sectors of the market detracted

significantly from the funds’ returns.

Contents   
 
Your Fund’s Total Returns  1 
President’s Letter  2 
Results of Proxy Voting  8 
Mega Cap 300 Index Fund  10 
Mega Cap 300 Growth Index Fund  25 
Mega Cap 300 Value Index Fund  38 
Your Fund’s After-Tax Returns  53 
About Your Fund’s Expenses  54 
Trustees Approve Advisory Arrangement  56 
Glossary  57 


Mega Cap 300 Index Fund
Mega Cap 300 Growth Index Fund
Mega Cap 300 Value Index Fund

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.
Cover photograph: Veronica Coia.



Your Fund’s Total Returns

Fiscal Year Ended August 31, 2009     
  Ticker       Total 
  Symbol  Returns 
Vanguard Mega Cap 300 Index Fund     
     Institutional Shares1  VMCTX  –17.84% 
     ETF Shares2  MGC   
           Market Price    –17.81 
           Net Asset Value    –17.85 
MSCI US Large Cap 300 Index    –17.83 
Large-Cap Core Funds Average3    –17.76 
 
Vanguard Mega Cap 300 Growth Index Fund     
     Institutional Shares1  VMGAX  –17.25% 
     ETF Shares2  MGK   
           Market Price    –17.28 
           Net Asset Value    –17.28 
MSCI US Large Cap Growth Index    –17.23 
Large-Cap Growth Funds Average3    –17.84 
 
Vanguard Mega Cap 300 Value Index Fund     
     Institutional Shares1  VMVLX  –18.29% 
     ETF Shares2  MGV   
           Market Price    –18.28 
           Net Asset Value    –18.32 
MSCI US Large Cap Value Index    –18.45 
Large-Cap Value Funds Average3    –17.99 

1 This class of shares carries low expenses and is available for a minimum investment of $5 million.
2 Vanguard ETFShares are traded on the NYSE Arca exchange and are available only through brokers. The table shows ETF returns based
on both the NYSE Arca market price and the net asset value for a share. U.S. Pat. No. 6,879,964 B2; 7,337,138.
3 Derived from data provided by Lipper Inc.

1



 

 

 

President’s Letter

Dear Shareholder,

Vanguard’s Mega Cap 300 Index Funds are designed to capture the performance of the largest stocks in the U.S. market. The funds, which track MSCI large-cap indexes, allow shareholders to invest in the market segment as a whole through the Mega Cap 300 Index Fund, or directly in its growth or value segments through one of the other two funds.

All three funds turned in disappointing results for the 12 months ended August 31, 2009, as almost every segment of the stock market sustained a significant hit from the late-2008 financial crisis. The Mega Cap 300 Growth Index Fund produced the best results—meaning it declined the least—with an ETF return of –17.28%, as determined by the net asset value per share. The Mega Cap 300 Index Fund ETF was next in line, returning –17.85% for the period, while the Mega Cap 300 Value Index Fund ETF returned –18.32%. The funds closely tracked their respective indexes.

The Mega Cap 300 Index Funds also offer Institutional Shares, which are available for a minimum initial investment of $5 million. The table on page 1 shows the 12-month returns for the funds and their target indexes, along with the average returns for their peer groups.

2



Stocks sank, then soared as credit and economy stabilized

The 12 months ended August 31 spanned two strikingly different half-years. The period began with the September collapse of a major investment bank and the government-engineered rescue of several giant financial institutions. Stocks sank as the ensuing crisis spread from Wall Street to Main Street and around the globe. Stricken by seized-up credit markets and a near-total lack of confidence, businesses and consumers put the brakes on economic growth.

Governments in the United States and abroad responded with unprecedented stimulus and other programs. Over the past six months, these efforts started to take hold. Credit-market conditions

improved, and the outlook for the U.S. economy brightened. From their early-March lows, stocks took off on an almost-unbroken winning streak.

Even so, the broad U.S. stock market ended the 12 months in negative territory, with a return of about –18%. International markets performed somewhat better, as major European economies emerged from recession; the MSCI All Country World Index ex USA returned about –14%.

Despite the robust second-half rally, it may be premature to sound the all-clear signal. As the fiscal year came to a close, home foreclosures and the unemployment rate were rising, and the federal government’s list of problem banks had climbed above 400—the most since June 1994. There

Market Barometer       
    Average Annual Total Returns 
    Periods Ended August 31, 2009 
  One Year  Three Years  Five Years 
Stocks       
Russell 1000 Index (Large-caps)  –18.39%  –5.61%       0.94% 
Russell 2000 Index (Small-caps)  –21.29  –6.08       2.21 
Dow Jones U.S. Total Stock Market Index  –18.10  –5.17       1.45 
MSCI All Country World Index ex USA (International)  –13.96  –2.41       8.18 
 
Bonds       
Barclays Capital U.S. Aggregate Bond Index       
(Broad taxable market)  7.94%  6.35%       4.96% 
Barclays Capital Municipal Bond Index  5.67  4.14       4.15 
Citigroup 3-Month Treasury Bill Index  0.51  2.77       2.98 
 
CPI       
Consumer Price Index  –1.48%  1.91%       2.64% 

3



is considerable historical evidence that recovery from a recession caused by a financial crisis tends to take longer than average.

Among bond investors, safety and yield traded places

The U.S. bond market also performed a U-turn during the year. Early on, as credit markets deteriorated, investors rushed to the relative safety and liquidity of U.S. Treasury securities, driving their prices up and yields down. Investors were so risk-averse that short-term Treasury yields briefly turned negative. November and December were among the ten best months ever for Treasury returns (adjusted for inflation). Corporate bonds, especially those of lower credit quality, struggled,

and their yield spreads above comparable Treasuries widened to near-historic levels during the first six months.

Several moves by the Treasury and the Federal Reserve Board—which slashed its target level for short-term interest rates to a range of 0%–0.25% in December—helped credit markets to attain some stability by the spring. In a dramatic reversal, investors regained their appetite for risk, favoring corporate bonds over Treasuries.

After all the ups and downs, Treasuries and high-yield corporate bonds produced similar 12-month returns of about 6%–7%. Overall, the broad U.S. taxable bond market

Expense Ratios1       
Your Fund Compared With Its Peer Group       
  Institutional     ETF   Peer 
  Shares  Shares  Group 
Mega Cap 300 Index Fund         0.11%  0.13%  1.26% 
Mega Cap 300 Growth Index Fund         0.11  0.13  1.34 
Mega Cap 300 Value Index Fund         0.11  0.13  1.25 

1 The fund expense ratios shown are from the prospectuses dated December 29, 2008, and represent estimated costs for the current fiscal
year based on the funds’ net assets as of the prospectus date. The expense ratios for the fiscal year ended August 31, 2009, were: for the
Mega Cap 300 Index Fund, 0.11% for Institutional Shares and 0.13% for ETF Shares; for the Mega Cap 300 Growth Index Fund, 0.11% for
Institutional Shares and 0.13% for ETF Shares; and for the Mega Cap 300 Value Index Fund, 0.11% for Institutional Shares and 0.13% for
ETF Shares. Peer groups are: for the Mega Cap 300 Index Fund, the Large-Cap Core Funds Average; for the Mega Cap 300 Growth Index
Fund, the Large-Cap Growth Funds Average; and for the Mega Cap 300 Value Index Fund, the Large-Cap Value Funds Average. Peer-group
expense ratios are derived from data provided by Lipper Inc. and capture information through year-end 2008.

4



returned about 8%. Tax-exempt municipal bonds, after a flat first half, returned more than 5% for the fiscal year.

Overall weakness in stocks weighed on returns

The big-company stocks that make up the Mega Cap 300 Index Funds took a harsh pounding in the first several months of the fiscal year. Although stocks began to bounce back in mid-March, the rally wasn’t enough to overcome the earlier severe declines by the fiscal year-end.

Of the three funds, Mega Cap 300 Growth Index Fund fared the best for the 12-month period. Despite negative results from all ten market sectors, limited exposure to financial stocks turned out to be a small

win for the fund and its index. However, big losses from energy and industrial holdings took their toll on returns.

The Mega Cap 300 Value Index Fund turned in the worst performance of the three. Although the fund earned a positive contribution to returns from its holdings in the information technology and consumer discretionary sectors, the fund’s performance was dominated by the ongoing turmoil in the financial industry. As financial stocks continued to struggle throughout the year, the fund’s heavy weighting in the sector—about 25% of assets, on average, during the period—was a major drawback. Overall, financial stocks subtracted about 8 percentage points from the fund’s return.

Total Returns   
December 17, 2007,1 Through August 31, 2009   
           Average 
  Annual Return 
Mega Cap 300 Index Fund ETF Shares Net Asset Value           –16.04% 
MSCI US Large Cap 300 Index           –16.02 
Large-Cap Core Funds Average2           –16.32 
 
Mega Cap 300 Growth Index Fund ETF Shares Net Asset Value           –13.68% 
MSCI US Large Cap Growth Index           –13.62 
Large-Cap Growth Funds Average2           –16.35 
 
Mega Cap 300 Value Index Fund ETF Shares Net Asset Value           –18.48% 
MSCI US Large Cap Value Index           –18.54 
Large-Cap Value Funds Average2           –17.42 

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 www.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.

1 Inception date for ETF Shares.
2 Derived from data provided by Lipper Inc.

5



As you would expect, the return of the Mega Cap 300 Index Fund—which invests in both growth and value stocks—fell between those of the other two funds. Because it holds essentially the same stocks they do, its most significant losses stemmed from the same sectors: financials, energy, and industrials. Information technology stocks proved to be the fund’s one bright spot.

The funds have successfully tracked their indexes

The Vanguard Mega Cap 300 Index Funds were introduced in December 2007. Since then, the U.S. stock market has experienced one of the worst bear markets in history. Although their absolute returns are nothing to celebrate, the funds have succeeded over this tumultuous period by the standards of an index portfolio.

Despite the unsettled investment environment, the funds’ advisor, Vanguard Quantitative Equity Group, has managed to do an exceptional job of meeting the funds’ shared objective of tracking their respective indexes. The advisor is helped in this task by the funds’ low expense ratios, which are far below the average costs of peer funds.

Focus on the long term regardless of market conditions

During the past 12 months, U.S. stocks have experienced one of the toughest economic periods since the 1930s. Although at this point the market has recovered from some of its losses, the only certainty about its near-term direction is continued uncertainty.

At Vanguard, we encourage you to maintain a long-term perspective and avoid making hasty investment decisions based on the markets’ short-term volatility. One of the best ways to do that is to develop a well-balanced and diversified portfolio that is consistent with your long-term goals, time horizon, and risk tolerance—and then plan to stick with it. Such a portfolio should include a stable, cost-efficient mix of stocks, bonds, and short-term reserves.

Such a carefully planned investment program can help to cushion the stock market’s occasionally sharp declines while allowing you to participate in its long-term potential for growth. By providing a low-cost means of investing in the largest-capitalization stocks, either broadly or with a focus on their growth or value segments, the Vanguard Mega Cap 300 Index Funds can play an important role in your long-term investment plan.

Thank you for investing with Vanguard.

Sincerely,


F. William McNabb III
President and Chief Executive Officer
September 16, 2009

6



Your Fund’s Performance at a Glance         
August 31, 2008–August 31, 2009         
      Distributions Per Share 
  Starting  Ending  Income  Capital 
  Share Price  Share Price  Dividends  Gains 
Mega Cap 300 Index Fund         
     Institutional Shares  $87.14  $69.95  $1.462  $0.000 
     ETF Shares  44.21  35.49  0.734  0.000 
Mega Cap 300 Growth Index Fund         
     Institutional Shares  $91.10  $74.21  $1.043  $0.000 
     ETF Shares  46.04  37.50  0.520  0.000 
Mega Cap 300 Value Index Fund         
     Institutional Shares  $83.69  $66.02  $2.147  $0.000 
     ETF Shares  42.21  33.29  1.075  0.000 

7



Results of Proxy Voting

At a special meeting of shareholders on July 2, 2009, fund shareholders approved the following two proposals:

Proposal 1—Elect trustees for each fund.*
The individuals listed in the table below were elected as trustees for each fund. All trustees with
the exception of Messrs. McNabb and Volanakis (both of whom already served as directors of
The Vanguard Group, Inc.) served as trustees to the funds prior to the shareholder meeting.

Mega Cap 300 Index Fund, Mega Cap 300 Growth Index Fund, Mega Cap 300 Value Index Fund 
      Percentage 
Trustee  For  Withheld  For 
John J. Brennan  816,325,661  25,839,114  96.9% 
Charles D. Ellis  811,618,878  30,545,897  96.4% 
Emerson U. Fullwood  816,960,560  25,204,215  97.0% 
Rajiv L. Gupta  815,607,429  26,557,346  96.8% 
Amy Gutmann  818,039,387  24,125,388  97.1% 
JoAnn Heffernan Heisen  815,771,400  26,393,375  96.9% 
F. William McNabb III  817,559,701  24,605,074  97.1% 
André F. Perold  814,833,250  27,331,525  96.8% 
Alfred M. Rankin, Jr.  815,942,907  26,221,868  96.9% 
Peter F. Volanakis  817,780,699  24,384,076  97.1% 
* Results are for all funds within the same trust.       

Proposal 2—Update and standardize the funds’ fundamental policies regarding:
(a) Purchasing and selling real estate.
(b) Issuing senior securities.
(c) Borrowing money.
(d) Making loans.
(e) Purchasing and selling commodities.
(f) Concentrating investments in a particular industry or group of industries.
(g) Eliminating outdated fundamental investment policies not required by law.

The revised fundamental policies are clearly stated and simple, yet comprehensive, making oversight and compliance more efficient than under the former policies. The revised fundamental policies will allow the funds to respond more quickly to regulatory and market changes, while avoiding the costs and delays associated with successive shareholder meetings.

        Broker  Percentage 
Vanguard Fund  For  Abstain  Against  Non-Votes  For 
Mega Cap 300 Index Fund           
2a  3,029,690  120,798  413,104  707,369  70.9% 
2b  3,026,047  123,159  414,386  707,369  70.9% 
2c  2,868,635  121,543  573,413  707,370  67.2% 
2d  2,861,682  123,007  578,904  707,368  67.0% 
2e  2,856,608  123,078  583,905  707,370  67.0% 
2f  2,861,469  120,758  581,365  707,369  67.0% 
2g  3,017,484  119,727  426,381  707,369  70.7% 

8



        Broker  Percentage 
Vanguard Fund  For  Abstain  Against  Non-Votes  For 
Mega Cap 300 Growth Index Fund           
2a  2,903,193  40,184  17,465  1,190,431  69.9% 
2b  2,898,270  40,034  22,538  1,190,431  69.8% 
2c  2,893,581  41,046  26,215  1,190,431  69.7% 
2d  2,899,256  40,034  21,552  1,190,431  69.8% 
2e  2,895,519  39,823  25,500  1,190,431  69.8% 
2f  2,901,813  40,464  18,565  1,190,431  69.9% 
2g  2,898,375  40,464  22,003  1,190,431  69.8% 

Mega Cap 300 Value Index Fund           
2a  2,691,309  16,409  16,147  1,062,659  71.1% 
2b  2,689,661  16,431  17,773  1,062,659  71.0% 
2c  2,680,798  16,209  26,859  1,062,658  70.8% 
2d  2,686,805  16,331  20,729  1,062,659  71.0% 
2e  2,681,467  16,431  25,968  1,062,658  70.8% 
2f  2,686,167  18,997  18,701  1,062,659  70.9% 
2g  2,682,393  18,762  22,709  1,062,660  70.8% 

9



Mega Cap 300 Index Fund

Fund Profile
As of August 31, 2009

Portfolio Characteristics     
    Target  Broad 
  Fund  Index1  Index2 
Number of Stocks  303  304  4,345 
Median Market Cap  $50.1B  $50.1B  $27.3B 
Price/Earnings Ratio  21.2x  21.2x  26.0x 
Price/Book Ratio  2.2x  2.2x  2.1x 
Yield3    2.1%  2.0% 
   Institutional Shares  2.1%     
   ETF Shares  2.1%     
Return on Equity  21.1%  21.1%  19.2% 
Earnings Growth Rate  10.3%  10.0%  9.7% 
Foreign Holdings  0.0%  0.0%  0.0% 
Turnover Rate  10%     
Expense Ratio4       
   Institutional Shares  0.11%     
   ETF Shares  0.13%     
Short-Term Reserves  0.0%     

Sector Diversification (% of equity exposure) 
    Target  Broad 
   Fund  Index1  Index2 
Consumer Discretionary   8.3%  8.3%  10.0% 
Consumer Staples  12.0  12.0  10.0 
Energy  12.4  12.4  11.2 
Financials  15.0  15.0  16.5 
Health Care  13.9  13.9  13.2 
Industrials  9.6  9.6  10.3 
Information Technology  18.9  19.0  18.2 
Materials  3.0  3.0  3.8 
Telecommunication       
Services  3.5  3.5  2.9 
Utilities  3.4  3.3  3.9 

Ten Largest Holdings5 (% of total net assets) 
 
ExxonMobil Corp.  integrated oil   
  and gas   4.1% 
Microsoft Corp.  systems software   2.4 
Johnson & Johnson  pharmaceuticals   2.0 
JPMorgan Chase & Co.  diversified financial   
  services   2.0 
The Procter & Gamble Co.  household products   1.9 
International Business  computer   
Machines Corp.  hardware   1.9 
AT&T Inc.  integrated   
  telecommunication   
  services   1.9 
Bank of America Corp.  diversified financial   
  services   1.8 
Apple Inc.  computer hardware   1.8 
General Electric Co.  industrial   
  conglomerates   1.8 
Top Ten    21.6% 

Investment Focus


1 MSCI US Large Cap 300 Index.
2 Dow Jones U.S. Total Stock Market Index.
3 30-day SEC yield for the fund; annualized dividend yield for the indexes. See the Glossary.
4 The expense ratios shown are from the prospectuses dated December 29, 2008, and represent estimated costs for the current fiscal year
based on the fund’s net assets as of the prospectus date. For the fiscal year ended August 31, 2009, the expense ratios were 0.11% for
Institutional Shares and 0.13% for ETF Shares.
5 The holdings listed exclude any temporary cash investments and equity index products.

10



Mega Cap 300 Index 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 www.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 17, 2007–August 31, 2009
Initial Investment of $10,000


   Average Annual Total Returns   
  Periods Ended August 31, 2009  Final Value of 
           Since  a $10,000 
         One Year  Inception1  Investment 
Mega Cap 300 Index Fund ETF Shares Net Asset Value           –17.85%   –16.04%  $7,423 
Mega Cap 300 Index Fund ETF Shares Market Price           –17.81   –16.01  7,428 
Dow Jones U.S. Total Stock Market Index           –18.10   –15.63  7,486 
MSCI US Large Cap 300 Index           –17.83   –16.02  7,426 
Large-Cap Core Funds Average2           –17.76   –16.32  7,382 

      Final Value of 
           Since  a $5,000,000 
  One Year  Inception1  Investment 
Mega Cap 300 Index Fund Institutional Shares  –17.84%   –14.26%  $3,956,685 
Dow Jones U.S. Total Stock Market Index  –18.10   –14.03  3,972,863 
MSCI US Large Cap 300 Index  –17.83   –14.28  3,955,615 

1 Performance for the fund and its comparative standards is calculated since the following inception dates: December 17, 2007, for
ETF Shares and February 22, 2008, for Institutional Shares.
2 Derived from data provided by Lipper Inc.

11



Mega Cap 300 Index Fund

Cumulative Returns of ETF Shares: December 17, 2007–August 31, 2009     
    Cumulative 
    Since 
  One Year  Inception1 
Mega Cap 300 Index Fund ETF Shares Market Price  –17.81%  –25.72% 
Mega Cap 300 Index Fund ETF Shares Net Asset Value  –17.85  –25.77 
MSCI US Large Cap 300 Index  –17.83  –25.74 

Fiscal-Year Total Returns (%): December 17, 2007–August 31, 2009


Average Annual Total Returns: Periods Ended June 30, 2009

This table presents average annual total returns through the latest calendar quarter—rather than through the end of the fiscal period. Securities and Exchange Commission rules require that we provide this information.

           Since 
  Inception Date  One Year  Inception 
ETF Shares  12/17/2007     
     Market Price    –25.18%  –22.97% 
     Net Asset Value    –25.26  –23.01 
Institutional Shares  2/22/2008  –25.23  –22.08 

1 Performance for the fund’s ETF Shares and comparative standards is calculated since the ETF Shares’ inception: December 17, 2007.
Note: See Financial Highlights tables for dividend and capital gains information.

12



Mega Cap 300 Index Fund

Financial Statements

Statement of Net Assets
As of August 31, 2009

The fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth fiscal quarters, the lists appear in the fund’s semiannual and annual reports to shareholders. For the first and third fiscal quarters, the fund files the lists with the Securities and Exchange Commission on Form N-Q. Shareholders can look up the fund’s Forms N-Q on the SEC’s website at www.sec.gov. Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room (see the back cover of this report for further information).

      Market 
      Value 
    Shares  ($000) 
Common Stocks (100.0%)     
Consumer Discretionary (8.3%)     
  McDonald’s Corp.  40,023  2,251 
  Home Depot, Inc.  61,537  1,679 
  The Walt Disney Co.  63,992  1,666 
  Target Corp.  25,893  1,217 
  Time Warner Inc.  43,406  1,211 
  Lowe’s Cos., Inc.  53,475  1,150 
  Comcast Corp. Class A  66,966  1,026 
*  Amazon.com, Inc.  12,470  1,012 
  News Corp., Class A  74,525  799 
*  Ford Motor Co.  101,295  770 
  NIKE, Inc. Class B  13,395  742 
  Yum! Brands, Inc.  16,746  574 
  Staples, Inc.  25,952  561 
  TJX Cos., Inc.  15,103  543 
*  Kohl’s Corp.  10,499  542 
  Johnson Controls, Inc.  21,550  534 
*  Starbucks Corp.  26,646  506 
*  Liberty Media Corp.  17,898  499 
*  Viacom Inc. Class B  19,921  499 
  Comcast Corp. Special     
  Class A  33,553  490 
*  Time Warner Cable Inc.  12,783  472 
  Best Buy Co., Inc.  12,837  466 
  Carnival Corp.  15,886  465 
*  DIRECTV Group, Inc.  18,429  456 
  Omnicom Group Inc.  11,279  410 
  The McGraw-Hill Cos., Inc.  11,409  383 
  The Gap, Inc.  17,945  353 
*  Bed Bath & Beyond, Inc.  9,464  345 
  Coach, Inc.  11,645  329 
*  Apollo Group, Inc. Class A  4,945  321 
  Marriott International, Inc.     
  Class A  10,839  259 
  Macy’s Inc.  15,294  237 
  J.C. Penney Co., Inc.     
  (Holding Co.)  7,652  230 
  VF Corp.  3,202  223 
  CBS Corp.  21,273  220 

      Market 
      Value 
    Shares  ($000) 
  Sherwin-Williams Co.  3,621  218 
  Fortune Brands, Inc.  5,449  217 
*  AutoZone Inc.  1,190  175 
*  Las Vegas Sands Corp.  11,957  170 
  Garmin Ltd.  4,354  143 
*,^  Sears Holdings Corp.  2,022  128 
*  DISH Network Corp.  7,557  123 
*  Liberty Global, Inc. Class A  4,946  108 
*  Liberty Global, Inc. Series C  4,547  99 
  News Corp., Class B  7,118  90 
      24,911 
Consumer Staples (12.0%)     
  The Procter & Gamble Co.  105,740  5,721 
  Wal-Mart Stores, Inc.  85,191  4,334 
  The Coca-Cola Co.  75,586  3,686 
  Philip Morris International Inc.  71,162  3,253 
  PepsiCo, Inc.  56,478  3,201 
  CVS Caremark Corp.  52,817  1,982 
  Kraft Foods Inc.  53,429  1,515 
  Altria Group, Inc.  75,011  1,371 
  Colgate-Palmolive Co.  18,123  1,317 
  Walgreen Co.  35,978  1,219 
  Kimberly-Clark Corp.  14,996  907 
  Costco Wholesale Corp.  15,746  803 
  General Mills, Inc.  11,935  713 
  Archer-Daniels-Midland Co.  20,930  603 
  Sysco Corp.  21,373  545 
  Avon Products, Inc.  15,465  493 
  The Kroger Co.  22,422  484 
  Kellogg Co.  9,698  457 
  Lorillard, Inc.  6,099  444 
  H.J. Heinz Co.  11,417  439 
  ConAgra Foods, Inc.  16,225  333 
  The Clorox Co.  5,044  298 
  Safeway, Inc.  15,564  296 
  Reynolds American Inc.  6,325  289 
  Molson Coors Brewing Co.     
  Class B  5,501  261 
  Campbell Soup Co.  7,791  244 
  Sara Lee Corp.  24,009  233 

13



Mega Cap 300 Index Fund

      Market 
      Value 
    Shares  ($000) 
  The Hershey Co.  5,731  225 
  Coca-Cola Enterprises, Inc.  10,637  215 
  The Pepsi Bottling Group, Inc.  5,383  192 
  Brown-Forman Corp. Class B  2,911  130 
      36,203 
Energy (12.4%)     
  ExxonMobil Corp.  177,027  12,241 
  Chevron Corp.  72,727  5,087 
  Schlumberger Ltd.  43,404  2,439 
  ConocoPhillips Co.  51,061  2,299 
  Occidental Petroleum Corp.  29,407  2,150 
  Apache Corp.  12,160  1,033 
  Anadarko Petroleum Corp.  18,081  956 
  Devon Energy Corp.  15,279  938 
*  Transocean Ltd.  11,635  882 
  Marathon Oil Corp.  25,677  793 
  Halliburton Co.  32,486  770 
  XTO Energy, Inc.  19,944  770 
  EOG Resources, Inc.  9,081  654 
*  National Oilwell Varco Inc.  15,141  550 
  Hess Corp.  10,678  540 
*  Weatherford     
   International Ltd.  25,331  505 
  Chesapeake Energy Corp.  21,581  493 
*  Southwestern Energy Co.  12,466  460 
  Spectra Energy Corp.  23,399  440 
  Baker Hughes Inc.  11,236  387 
  Noble Energy, Inc.  6,280  380 
  Valero Energy Corp.  20,184  378 
  Murphy Oil Corp.  6,566  374 
  Williams Cos., Inc.  21,019  346 
  Noble Corp.  9,507  333 
  Peabody Energy Corp.  9,675  316 
*  Ultra Petroleum Corp.  5,496  255 
  Diamond Offshore     
   Drilling, Inc.  2,511  225 
  Smith International, Inc.  7,902  218 
      37,212 
Financials (15.0%)     
  JPMorgan Chase & Co.  136,377  5,927 
  Bank of America Corp.  313,517  5,515 
  Wells Fargo & Co.  158,704  4,367 
  The Goldman Sachs     
   Group, Inc.  17,351  2,871 
  Citigroup Inc.  411,619  2,058 
  U.S. Bancorp  68,842  1,557 
*  Berkshire Hathaway Inc.     
   Class B  404  1,327 
  American Express Co.  38,124  1,289 
  Bank of New York     
   Mellon Corp.  43,369  1,284 
  Morgan Stanley  42,708  1,237 
  MetLife, Inc.  29,695  1,121 
  The Travelers Cos., Inc.  21,239  1,071 
  State Street Corp.  17,615  924 
  Prudential Financial, Inc.  16,506  835 

      Market 
      Value 
    Shares  ($000) 
  BB&T Corp.  24,677  689 
  PNC Financial     
   Services Group  16,149  688 
  AFLAC Inc.  16,918  687 
  Simon Property Group, Inc.     
   REIT  10,185  648 
  Charles Schwab Corp.  35,750  646 
  Ace Ltd.  12,186  636 
  The Chubb Corp.  12,870  636 
  CME Group, Inc.  2,184  636 
  Capital One Financial Corp.  16,381  611 
  Franklin Resources, Inc.  5,917  552 
  The Allstate Corp.  18,467  543 
  Northern Trust Corp.  7,796  456 
  Marsh & McLennan     
   Cos., Inc.  18,957  446 
  Loews Corp.  12,593  430 
  T. Rowe Price Group Inc.  9,259  420 
  SunTrust Banks, Inc.  16,866  394 
*  Progressive Corp. of Ohio  23,471  388 
  Aon Corp.  9,038  377 
  Annaly Capital     
   Management Inc. REIT  19,777  343 
  Vornado Realty Trust REIT  5,712  329 
  Public Storage, Inc. REIT  4,601  325 
  The Principal Financial     
   Group, Inc.  11,273  320 
  Invesco, Ltd.  14,872  309 
  Boston Properties, Inc. REIT  4,952  300 
  Ameriprise Financial, Inc.  9,277  279 
  NYSE Euronext  9,630  273 
  Equity Residential REIT  9,871  270 
  Hudson City Bancorp, Inc.  17,016  223 
  Moody’s Corp.  7,251  197 
*  TD Ameritrade Holding Corp.  9,564  184 
*  Leucadia National Corp.  6,922  172 
  M & T Bank Corp.  2,759  170 
  BlackRock, Inc.  785  157 
      45,117 
Health Care (13.8%)     
  Johnson & Johnson  99,967  6,042 
  Pfizer Inc.  244,806  4,088 
  Abbott Laboratories  56,067  2,536 
  Merck & Co., Inc.  76,595  2,484 
  Wyeth  48,380  2,315 
*  Amgen Inc.  36,727  2,194 
  Schering-Plough Corp.  58,945  1,661 
  Bristol-Myers Squibb Co.  71,864  1,590 
  Medtronic, Inc.  40,606  1,555 
*  Gilead Sciences, Inc.  32,910  1,483 
  Eli Lilly & Co.  37,516  1,255 
  Baxter International, Inc.  21,949  1,249 
  UnitedHealth Group Inc.  43,153  1,208 
*  Medco Health Solutions, Inc.  17,499  966 
*  WellPoint Inc.  17,581  929 
*  Celgene Corp.  16,668  870 

14



Mega Cap 300 Index Fund

      Market 
      Value 
    Shares  ($000) 
  Covidien PLC  18,245  722 
*  Thermo Fisher Scientific, Inc.  15,207  688 
*  Express Scripts Inc.  9,325  674 
*  Boston Scientific Corp.  54,650  642 
  Allergan, Inc.  11,047  618 
  Becton, Dickinson & Co.  8,673  604 
  McKesson Corp.  9,933  565 
*  Genzyme Corp.  9,785  545 
*  Biogen Idec Inc.  10,468  526 
*  St. Jude Medical, Inc.  12,566  484 
  Aetna Inc.  16,212  462 
  Cardinal Health, Inc.  13,079  452 
  Stryker Corp.  10,759  446 
*  Zimmer Holdings, Inc.  7,803  370 
*  Forest Laboratories, Inc.  10,913  319 
  Quest Diagnostics, Inc.  5,716  309 
  CIGNA Corp.  9,896  291 
  C.R. Bard, Inc.  3,607  291 
*  Laboratory Corp. of     
   America Holdings  3,937  275 
      41,708 
Industrials (9.6%)     
  General Electric Co.  384,173  5,340 
  United Technologies Corp.  32,488  1,929 
  3M Co.  23,903  1,723 
  United Parcel Service, Inc.  25,368  1,356 
  The Boeing Co.  24,988  1,241 
  Union Pacific Corp.  18,289  1,094 
  Burlington Northern     
   Santa Fe Corp.  12,319  1,023 
  Emerson Electric Co.  27,354  1,009 
  Caterpillar, Inc.  21,831  989 
  Honeywell International Inc.  25,637  942 
  Lockheed Martin Corp.  12,173  913 
  FedEx Corp.  10,708  736 
  General Dynamics Corp.  11,881  703 
  Raytheon Co.  14,296  674 
  Deere & Co.  15,302  667 
  Illinois Tool Works, Inc.  15,398  644 
  Norfolk Southern Corp.  13,285  609 
  CSX Corp.  14,201  604 
  Danaher Corp.  9,823  596 
  Northrop Grumman Corp.  11,148  544 
  Tyco International Ltd.  17,168  544 
  Waste Management Inc.  16,918  506 
  Precision Castparts Corp.  5,078  464 
  PACCAR, Inc.  12,499  452 
  Ingersoll-Rand PLC  11,523  356 
  Republic Services, Inc.     
   Class A  13,668  350 
  Fluor Corp.  6,595  349 
  C.H. Robinson     
   Worldwide Inc.  6,156  346 
  L-3 Communications     
   Holdings, Inc.  4,302  320 

      Market 
      Value 
    Shares  ($000) 
  Cummins Inc.  6,952  315 
  ITT Industries, Inc.  6,247  313 
  Eaton Corp.  5,684  307 
  Parker Hannifin Corp.  5,839  284 
  Expeditors International of     
   Washington, Inc.  7,701  252 
  Southwest Airlines Co.  26,999  221 
*  First Solar, Inc.  1,686  205 
      28,920 
Information Technology (19.0%)   
  Microsoft Corp.  290,581  7,163 
  International Business     
   Machines Corp.  47,938  5,659 
*  Apple Inc.  32,365  5,444 
*  Cisco Systems, Inc.  209,249  4,520 
  Intel Corp.  202,615  4,117 
*  Google Inc.  8,747  4,038 
  Hewlett-Packard Co.  86,757  3,895 
  Oracle Corp.  144,632  3,163 
  QUALCOMM Inc.  60,042  2,787 
*  EMC Corp.  73,028  1,161 
  Visa Inc.  16,293  1,159 
  Texas Instruments, Inc.  46,253  1,137 
*  Dell Inc.  63,703  1,008 
*  eBay Inc.  39,675  878 
  Corning, Inc.  56,300  849 
  Accenture Ltd.  22,247  734 
*  Yahoo! Inc.  48,101  703 
  Automatic Data     
   Processing, Inc.  18,270  701 
  MasterCard, Inc. Class A  3,208  650 
  Applied Materials, Inc.  48,220  636 
*  Adobe Systems, Inc.  19,017  598 
  Motorola, Inc.  83,165  597 
  Western Union Co.  25,441  459 
*  Symantec Corp.  29,780  450 
*  Broadcom Corp.  15,593  444 
*  Juniper Networks, Inc.  19,170  442 
*  Tyco Electronics Ltd.  16,539  377 
*  Cognizant Technology     
   Solutions Corp.  10,580  369 
  CA, Inc.  15,024  335 
  Paychex, Inc.  11,783  333 
*  Agilent Technologies, Inc.  12,525  322 
*  Intuit, Inc.  11,034  306 
  Analog Devices, Inc.  10,567  299 
*  NVIDIA Corp.  19,816  288 
*  NetApp, Inc.  12,009  273 
  Xerox Corp.  31,238  270 
*  Sun Microsystems, Inc.  27,060  251 
*  Activision Blizzard, Inc.  21,006  244 
*  Electronic Arts Inc.  11,616  212 
*  VMware Inc.  1,835  65 
      57,336 

15



Mega Cap 300 Index Fund

      Market 
      Value 
    Shares  ($000) 
Materials (3.0%)     
  Monsanto Co.  19,783  1,659 
  E.I. du Pont de     
   Nemours & Co.  32,781  1,047 
  Freeport-McMoRan Copper     
   & Gold, Inc. Class B  14,913  939 
  Praxair, Inc.  11,134  853 
  Dow Chemical Co.  39,033  831 
  Newmont Mining Corp.     
   (Holding Co.)  17,334  697 
  Air Products &     
   Chemicals, Inc.  7,613  571 
  Nucor Corp.  11,391  507 
  Alcoa Inc.  35,346  426 
  Ecolab, Inc.  8,643  365 
  International Paper Co.  14,896  342 
  PPG Industries, Inc.  5,960  330 
  Weyerhaeuser Co.  7,665  287 
  The Mosaic Co.  5,643  274 
      9,128 
Telecommunication Services (3.5%)   
  AT&T Inc.  214,043  5,576 
  Verizon     
   Communications Inc.  103,052  3,199 
*  American Tower Corp.     
   Class A  14,410  456 
*  Sprint Nextel Corp.  101,451  371 
  CenturyTel, Inc.  10,741  346 
*  Crown Castle     
   International Corp.  10,489  282 
  Qwest Communications     
   International Inc.  55,807  200 
      10,430 
Utilities (3.4%)     
  Exelon Corp.  23,860  1,193 
  Southern Co.  28,386  886 
  FPL Group, Inc.  14,158  795 

    Market 
    Value 
  Shares  ($000) 
     Duke Energy Corp.  46,695  723 
     Dominion Resources, Inc.  21,403  708 
     Public Service Enterprise     
       Group, Inc.  18,308  580 
     Entergy Corp.  7,115  562 
     American Electric     
       Power Co., Inc.  17,297  544 
     PG&E Corp.  13,364  542 
     FirstEnergy Corp.  11,062  499 
     Sempra Energy  8,392  421 
     Progress Energy, Inc.  10,124  400 
     PPL Corp.  13,593  400 
     Consolidated Edison Inc.  9,938  399 
     Edison International  11,232  375 
* AES Corp.  24,063  329 
     Xcel Energy, Inc.  16,531  327 
     Ameren Corp.  7,704  208 
     Constellation Energy     
       Group, Inc.  6,462  205 
    10,096 
Total Common Stocks     
(Cost $327,607)    301,061 
Temporary Cash Investment (0.0%)   
Money Market Fund (0.0%)     
1,2 Vanguard Market     
       Liquidity Fund, 0.277%     
       (Cost $119)  118,801  119 
Total Investments (100.0%)     
(Cost $327,726)    301,180 
Other Assets and Liabilities (0.0%)   
Other Assets    1,714 
Liabilities2    (1,709) 
    5 
Net Assets (100%)    301,185 

16



Mega Cap 300 Index Fund

At August 31, 2009, net assets consisted of: 
  Amount 
  ($000) 
Paid-in Capital  341,004 
Undistributed Net Investment Income  1,167 
Accumulated Net Realized Losses  (14,440) 
Unrealized Appreciation (Depreciation)  (26,546) 
Net Assets  301,185 
 
 
Institutional Shares—Net Assets   
Applicable to 1,464,915 outstanding   
$.001 par value shares of beneficial   
interest (unlimited authorization)  102,468 
Net Asset Value Per Share—   
Institutional Shares  $69.95 
 
 
ETF Shares—Net Assets   
Applicable to 5,600,000 outstanding   
$.001 par value shares of beneficial   
interest (unlimited authorization)  198,717 
Net Asset Value Per Share—   
ETF Shares  $35.49 

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 $114,000.
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 $119,000 of collateral received for securities on loan.
REIT—Real Estate Investment Trust.
See accompanying Notes, which are an integral part of the Financial Statements.

17



Mega Cap 300 Index Fund

Statement of Operations

  Year Ended 
  August 31, 2009 
  ($000) 
Investment Income   
Income   
Dividends  5,963 
Interest1  3 
Security Lending  39 
Total Income  6,005 
Expenses   
The Vanguard Group—Note B   
     Investment Advisory Services  32 
     Management and Administrative—Institutional Shares  37 
     Management and Administrative—ETF Shares  73 
     Marketing and Distribution—Institutional Shares  25 
     Marketing and Distribution—ETF Shares  35 
Custodian Fees  27 
Auditing Fees  24 
Shareholders’ Reports and Proxies—Institutional Shares   
Shareholders’ Reports and Proxies—ETF Shares  18 
Total Expenses  271 
Net Investment Income  5,734 
Realized Net Gain (Loss)   
Investment Securities Sold  (9,477) 
Futures Contracts  111 
Realized Net Gain (Loss)  (9,366) 
Change in Unrealized Appreciation (Depreciation) of Investment Securities  (19,732) 
Net Increase (Decrease) in Net Assets Resulting from Operations  (23,364) 

1 Interest income from an affiliated company of the fund was $3,000.
See accompanying Notes, which are an integral part of the Financial Statements.

18



Mega Cap 300 Index Fund

Statement of Changes in Net Assets

    December 17, 
  Year Ended  20071 to 
  August 31,  August 31, 
  2009  2008 
  ($000)  ($000) 
Increase (Decrease) in Net Assets     
Operations     
Net Investment Income  5,734  1,004 
Realized Net Gain (Loss)  (9,366)  416 
Change in Unrealized Appreciation (Depreciation)  (19,732)  (6,814) 
Net Increase (Decrease) in Net Assets Resulting from Operations  (23,364)  (5,394) 
Distributions     
Net Investment Income     
     Institutional Shares  (2,078)  (216) 
     ETF Shares  (2,970)  (307) 
Realized Capital Gain     
     Institutional Shares     
     ETF Shares     
Total Distributions  (5,048)  (523) 
Capital Share Transactions     
     Institutional Shares  69,994  56,057 
     ETF Shares  118,353  91,110 
Net Increase (Decrease) from Capital Share Transactions  188,347  147,167 
Total Increase (Decrease)  159,935  141,250 
Net Assets     
Beginning of Period  141,250   
End of Period2  301,185  141,250 

1 Inception.
2 Net Assets—End of Period includes undistributed net investment income of $1,167,000 and $481,000.
See accompanying Notes, which are an integral part of the Financial Statements.

19



Mega Cap 300 Index Fund

Financial Highlights

Institutional Shares     
  Year  Feb. 22, 
  Ended  20081 to 
   August 31,  August 31, 
For a Share Outstanding Throughout Each Period  2009  2008 
Net Asset Value, Beginning of Period  $87.14  $91.07 
Investment Operations     
Net Investment Income  1.6812  .685 
Net Realized and Unrealized Gain (Loss) on Investments  (17.409)  (4.028) 
Total from Investment Operations  (15.728)  (3.343) 
Distributions     
Dividends from Net Investment Income  (1.462)  (.587) 
Distributions from Realized Capital Gains     
Total Distributions  (1.462)  (.587) 
Net Asset Value, End of Period  $69.95  $87.14 
 
Total Return  –17.84%  –3.69% 
 
Ratios/Supplemental Data     
Net Assets, End of Period (Millions)  $102  $53 
Ratio of Total Expenses to Average Net Assets  0.11%  0.08%3 
Ratio of Net Investment Income to Average Net Assets  2.59%  2.14%3 
Portfolio Turnover Rate4  10%  30% 

1 Inception.
2 Calculated based on average shares outstanding.
3 Annualized.
4 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares,
including ETF Creation Units.
See accompanying Notes, which are an integral part of the Financial Statements.

20



Mega Cap 300 Index Fund

Financial Highlights

ETF Shares     
  Year  Dec. 17, 
  Ended  20071 to 
  August 31,  August 31,  
For a Share Outstanding Throughout Each Period  2009  2008 
Net Asset Value, Beginning of Period  $44.21  $49.24 
Investment Operations     
Net Investment Income  .8222  .441 
Net Realized and Unrealized Gain (Loss) on Investments  (8.808)  (5.179) 
Total from Investment Operations  (7.986)  (4.738) 
Distributions     
Dividends from Net Investment Income  (.734)  (.292) 
Distributions from Realized Capital Gains     
Total Distributions  (.734)  (.292) 
Net Asset Value, End of Period  $35.49  $44.21 
 
Total Return  –17.85%  –9.64% 
 
Ratios/Supplemental Data     
Net Assets, End of Period (Millions)  $199  $88 
Ratio of Total Expenses to Average Net Assets  0.13%  0.13%3 
Ratio of Net Investment Income to Average Net Assets  2.57%  2.09%3 
Portfolio Turnover Rate4  10%  30% 

1 Inception.
2 Calculated based on average shares outstanding.
3 Annualized.
4 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares,
including ETF Creation Units.
See accompanying Notes, which are an integral part of the Financial Statements.

21



Mega Cap 300 Index Fund

Notes to Financial Statements

Vanguard Mega Cap 300 Index Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund offers two classes of shares: Institutional Shares and ETF Shares. Institutional Shares are designed for investors who meet certain administrative and service criteria and invest a minimum of $5 million. ETF Shares are listed for trading on the NYSE Arca, Inc.; they can be purchased and sold through a broker.

A. The following significant accounting policies conform to generally accepted accounting principles for U.S. mutual funds. The fund consistently follows such policies in preparing its financial statements.

1. Security Valuation: Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which market quotations are not readily available, or whose values have been materially affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued by methods deemed by the board of trustees to represent fair value. Investments in Vanguard Market Liquidity Fund are valued at that fund’s net asset value.

2. Futures Contracts: The fund uses index futures contracts to a limited extent, with the objectives of maintaining full exposure to the stock market, enhancing returns, maintaining liquidity, and minimizing transaction costs. The fund may purchase futures contracts to immediately invest incoming cash in the market, or sell futures in response to cash outflows, thereby simulating a fully invested position in the underlying index while maintaining a cash balance for liquidity. The fund may seek to enhance returns by using futures contracts instead of the underlying securities when futures are believed to be priced more attractively than the underlying securities. The primary risks associated with the use of futures contracts are imperfect correlation between changes in market values of stocks held by the fund and the prices of futures contracts, and the possibility of an illiquid market.

Futures contracts are valued at their quoted daily settlement prices. The aggregate principal amounts of the contracts are not recorded in the Statement of Net Assets. Fluctuations in the value of the contracts are recorded in the Statement of Net Assets as an asset (liability) and in the Statement of Operations as unrealized appreciation (depreciation) until the contracts are closed, when they are recorded as realized futures gains (losses).

3. Federal Income Taxes: The fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income. Management has analyzed the fund’s tax positions taken for all open federal income tax years (August 31, 2008–2009), and has concluded that no provision for federal income tax is required in the fund’s financial statements.

4. Distributions: Distributions to shareholders are recorded on the ex-dividend date.

5. Security Lending: The fund may lend its securities to qualified institutional borrowers to earn additional income. Security loans are required to be secured at all times by collateral at least equal to the market value of securities loaned. The fund invests cash collateral received in Vanguard Market Liquidity Fund, and records a liability for the return of the collateral, during the period the securities are on loan. Security lending income represents the income earned on investing cash collateral, less expenses associated with the loan.

22



Mega Cap 300 Index Fund

6. Other: Dividend income is recorded on the ex-dividend date. Interest income includes income distributions received from Vanguard Market Liquidity Fund and is accrued daily. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment securities are those of the specific securities sold.

Each class of shares has equal rights as to assets and earnings, except that each class separately bears certain class-specific expenses related to maintenance of shareholder accounts (included in Management and Administrative expenses), shareholder reporting, and proxies. Marketing and distribution expenses are allocated to each class of shares based on a method approved by the board of trustees. Income, other non-class-specific expenses, and gains and losses on investments are allocated to each class of shares based on its relative net assets.

B. The Vanguard Group furnishes at cost investment advisory, corporate management, administrative, marketing, and distribution services. The costs of such services are allocated to the fund under methods approved by the board of trustees. The fund has committed to provide up to 0.40% of its net assets in capital contributions to Vanguard. At August 31, 2009, the fund had contributed capital of $64,000 to Vanguard (included in Other Assets), representing 0.02% of the fund’s net assets and 0.03% of Vanguard’s capitalization. The fund’s trustees and officers are also directors and officers of Vanguard.

C. Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Level 1Quoted prices in active markets for identical securities.
Level 2Other significant observable inputs (including quoted prices for similar securities, interest
rates, prepayment speeds, credit risk, etc.).
Level 3Significant unobservable inputs (including the fund’s own assumptions used to determine the
fair value of investments).

At August 31, 2009, 100% of the fund’s investments were valued based on Level 1 inputs.

D. Distributions are determined on a tax basis and may differ from net investment income and realized capital gains for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the financial statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain, or loss are recognized in different periods for financial statement and tax purposes; these differences will reverse at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.

During the year ended August 31, 2009, the fund realized $3,235,000 of net capital gains resulting from in-kind redemptions—in which shareholders exchanged fund shares for securities held by the fund rather than for cash. Because such gains are not taxable to the fund, and are not distributed to shareholders, they have been reclassified from accumulated net realized losses to paid-in capital.

For tax purposes, at August 31, 2009, the fund had $1,216,000 of ordinary income available for distribution. The fund had available capital loss carryforwards totaling $948,000 to offset future net capital gains through August 31, 2017. In addition, the fund realized losses of $13,472,000 during the period from November 1, 2008, through August 31, 2009, which are deferred and will be treated as realized for tax purposes in fiscal 2010.

23



Mega Cap 300 Index Fund

At August 31, 2009, the cost of investment securities for tax purposes was $327,746,000. Net unrealized depreciation of investment securities for tax purposes was $26,566,000, consisting of unrealized gains of $8,155,000 on securities that had risen in value since their purchase and $34,721,000 in unrealized losses on securities that had fallen in value since their purchase.

E. During the year ended August 31, 2009, the fund purchased $391,851,000 of investment securities and sold $202,659,000 of investment securities, other than temporary cash investments.

F. Capital share transactions for each class of shares were:

  Year Ended  Inception1 to 
  August 31, 2009  August 31, 2008 
  Amount  Shares  Amount  Shares 
  ($000)  (000)  ($000)  (000) 
Institutional Shares         
Issued  69,116  847  60,241  673 
Issued in Lieu of Cash Distributions  2,078  33  216  2 
Redeemed  (1,200)  (21)  (6,200)  (69) 
Net Increase (Decrease)—Institutional Shares  69,994  859  56,057  606 
ETF Shares         
Issued  299,108  8,500  117,638  2,600 
Issued in Lieu of Cash Distributions         
Redeemed  (180,755)  (4,900)  (26,528)  (600) 
Net Increase (Decrease)—ETF Shares  118,353  3,600  91,110  2,000 
1 Inception was February 22, 2008, for Institutional Shares and December 17, 2007, for ETF Shares.     

The amount of Institutional Shares issued during the year ended August 31, 2009, includes $58,176,000 in purchases that were processed late and should have been recorded in the prior fiscal period. Vanguard, as transfer agent for the fund, offset any impact to the fund resulting from late processing of shareholder transactions. Accordingly, the purchases had no impact to the fund’s net asset value per share or total returns.

G. In preparing the financial statements as of August 31, 2009, management considered the impact of subsequent events occurring through October 15, 2009, for potential recognition or disclosure in these financial statements.

24



Mega Cap 300 Growth Index Fund

Fund Profile
As of August 31, 2009

Portfolio Characteristics     
    Target  Broad 
  Fund  Index1  Index2 
Number of Stocks  178  178  4,345 
Median Market Cap  $46.3B  $46.3B  $27.3B 
Price/Earnings Ratio  19.2x  19.1x  26.0x 
Price/Book Ratio  3.3x  3.4x  2.1x 
Yield3    1.5%  2.0% 
   Institutional Shares  1.3%     
   ETF Shares  1.3%     
Return on Equity  23.8%  23.8%  19.2% 
Earnings Growth Rate  19.5%  19.2%  9.7% 
Foreign Holdings  0.0%  0.0%  0.0% 
Turnover Rate  31%     
Expense Ratio4       
   Institutional Shares  0.11%     
   ETF Shares  0.13%     
Short-Term Reserves  0.0%     

Sector Diversification (% of equity exposure) 
    Target  Broad 
  Fund  Index1  Index2 
Consumer Discretionary  11.1%  11.1%  10.0% 
Consumer Staples  16.7  16.7  10.0 
Energy  5.8  5.8  11.2 
Financials  4.7  4.7  16.5 
Health Care  15.2  15.3  13.2 
Industrials  6.4  6.4  10.3 
Information Technology  36.1  36.0  18.2 
Materials  3.4  3.4  3.8 
Telecommunication       
Services  0.5  0.5  2.9 
Utilities  0.1  0.1  3.9 

Ten Largest Holdings5 (% of total net assets) 
 
Microsoft Corp.  systems software   4.9% 
International Business  computer   
Machines Corp.  hardware   3.9 
Apple Inc.  computer   
  hardware   3.7 
Cisco Systems, Inc.  communication   
  equipment   3.1 
Wal-Mart Stores, Inc.  hypermarkets and   
  supercenters   3.0 
Google Inc.  internet software and 
  services   2.8 
Hewlett-Packard Co.  computer hardware   2.7 
The Procter & Gamble Co.  household products   2.5 
Philip Morris     
International Inc.  tobacco   2.2 
PepsiCo, Inc.  soft drinks   2.2 
Top Ten    31.0% 

Investment Focus


1 MSCI US Large Cap Growth Index.
2 Dow Jones U.S. Total Stock Market Index.
3 30-day SEC yield for the fund; annualized dividend yield for the indexes. See the Glossary.
4 The expense ratios shown are from the prospectuses dated December 29, 2008, and represent estimated costs for the current fiscal year
based on the fund’s net assets as of the prospectus date. For the fiscal year ended August 31, 2009, the expense ratios were 0.11% for
Institutional Shares and 0.13% for ETF Shares.
5 The holdings listed exclude any temporary cash investments and equity index products.

25



Mega Cap 300 Growth Index 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 www.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 17, 2007–August 31, 2009
Initial Investment of $10,000


  Average Annual Total Returns   
  Periods Ended August 31, 2009  Final Value of 
    Since  a $10,000 
         One Year  Inception1  Investment 
Mega Cap 300 Growth Index Fund ETF Shares       
Net Asset Value           –17.28%  –13.68%  $7,783 
Mega Cap 300 Growth Index Fund ETF Shares       
Market Price           –17.28  –13.64  7,789 
Dow Jones U.S. Total Stock Market Index           –18.10  –15.63  7,486 
MSCI US Large Cap Growth Index           –17.23  –13.62  7,792 
Large-Cap Growth Funds Average2           –17.84  –16.35  7,377 

      Final Value of 
    Since  a $5,000,000 
  One Year  Inception1  Investment 
Mega Cap 300 Growth Index Fund Institutional Shares  –17.25%  –13.19%  $4,096,357 
Dow Jones U.S. Total Stock Market Index  –18.10  –15.79  3,924,643 
MSCI US Large Cap Growth Index  –17.23  –13.17  4,098,105 

1 Performance for the fund and its comparative standards is calculated since the following inception dates: December 17, 2007, for
ETF Shares and April 3, 2008, for Institutional Shares.
2 Derived from data provided by Lipper Inc.

26



Mega Cap 300 Growth Index Fund

Cumulative Returns of ETF Shares: December 17, 2007–August 31, 2009

    Cumulative 
    Since 
  One Year  Inception1 
Mega Cap 300 Growth Index Fund ETF Shares Market Price  –17.28%  –22.17% 
Mega Cap 300 Growth Index Fund ETF Shares Net Asset Value  –17.28  –22.11 
MSCI US Large Cap Growth Index  –17.23  –22.08 

Fiscal-Year Total Returns (%): December 17, 2007–August 31, 2009


Average Annual Total Returns: Periods Ended June 30, 2009

This table presents average annual total returns through the latest calendar quarter—rather than through the end of the fiscal period. Securities and Exchange Commission rules require that we provide this information.

           Since 
  Inception Date  One Year  Inception 
ETF Shares  12/17/2007     
     Market Price    –23.64%  –19.66% 
     Net Asset Value    –23.68  –19.69 
Institutional Shares  4/3/2008  –23.65  –20.55 

1 Performance for the fund’s ETF Shares and comparative standards is calculated since the ETF Shares’ inception: December 17, 2007.
Note: See Financial Highlights tables for dividend and capital gains information.

27



Mega Cap 300 Growth Index Fund

Financial Statements

Statement of Net Assets
As of August 31, 2009

The fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth fiscal quarters, the lists appear in the fund’s semiannual and annual reports to shareholders. For the first and third fiscal quarters, the fund files the lists with the Securities and Exchange Commission on Form N-Q. Shareholders can look up the fund’s Forms N-Q on the SEC’s website at www.sec.gov. Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room (see the back cover of this report for further information).

      Market 
      Value 
    Shares  ($000) 
Common Stocks (100.0%)     
Consumer Discretionary (11.1%)   
  McDonald’s Corp.  163,219  9,179 
  Target Corp.  105,660  4,966 
  Lowe’s Cos., Inc.  218,021  4,687 
*  Amazon.com, Inc.  50,840  4,128 
  Home Depot, Inc.  125,434  3,423 
*  Ford Motor Co.  413,174  3,140 
  NIKE, Inc. Class B  54,615  3,025 
  Yum! Brands, Inc.  68,272  2,338 
  Comcast Corp. Class A  150,088  2,299 
  Staples, Inc.  105,807  2,287 
*  Kohl’s Corp.  42,815  2,209 
  TJX Cos., Inc.  61,365  2,206 
*  Starbucks Corp.  108,850  2,067 
*  Viacom Inc. Class B  81,207  2,033 
  Best Buy Co., Inc.  52,333  1,899 
*  DIRECTV Group, Inc.  74,561  1,846 
  Omnicom Group Inc.  45,998  1,671 
  The McGraw-Hill Cos., Inc.  46,539  1,564 
  Comcast Corp. Special     
  Class A  98,330  1,435 
*  Bed Bath & Beyond, Inc.  38,582  1,407 
  Coach, Inc.  47,324  1,339 
*  Apollo Group, Inc. Class A  20,158  1,307 
  Marriott International, Inc.     
  Class A  44,584  1,066 
  Sherwin-Williams Co.  14,689  884 
*  AutoZone Inc.  4,859  716 
*  Las Vegas Sands Corp.  48,727  695 
  J.C. Penney Co., Inc.     
  (Holding Co.)  20,254  608 
  The Gap, Inc.  25,534  502 
*  Liberty Global, Inc. Class A  20,083  440 
*  Liberty Global, Inc. Series C  18,479  401 
  Garmin Ltd.  11,508  378 
*  DISH Network Corp.  19,977  326 
      66,471 

      Market 
      Value 
    Shares  ($000) 
Consumer Staples (16.7%)     
  Wal-Mart Stores, Inc.  347,408  17,673 
  The Procter & Gamble Co.  280,363  15,170 
  Philip Morris     
  International Inc.  290,271  13,268 
  PepsiCo, Inc.  230,369  13,055 
  CVS Caremark Corp.  215,436  8,083 
  Colgate-Palmolive Co.  73,910  5,373 
  The Coca-Cola Co.  107,866  5,261 
  Walgreen Co.  146,678  4,969 
  Costco Wholesale Corp.  64,199  3,273 
  Avon Products, Inc.  63,138  2,012 
  General Mills, Inc.  31,629  1,889 
  Kellogg Co.  39,603  1,865 
  Kimberly-Clark Corp.  21,453  1,297 
  Archer-Daniels-Midland Co.  42,751  1,233 
  The Clorox Co.  20,578  1,216 
  The Hershey Co.  23,430  919 
  Lorillard, Inc.  12,422  904 
  H.J. Heinz Co.  23,318  898 
  Campbell Soup Co.  20,650  648 
  Coca-Cola Enterprises, Inc.  21,566  436 
  The Pepsi Bottling Group, Inc.  7,794  279 
  Brown-Forman Corp. Class B  4,144  185 
      99,906 
Energy (5.8%)     
  Schlumberger Ltd.  177,059  9,951 
  Occidental Petroleum Corp.  41,964  3,068 
  Anadarko Petroleum Corp.  48,015  2,539 
*  Transocean Ltd.  30,834  2,338 
*  Weatherford     
  International Ltd.  103,268  2,060 
*  Southwestern Energy Co.  50,824  1,873 
  EOG Resources, Inc.  24,062  1,732 
  Noble Energy, Inc.  25,638  1,550 
  Hess Corp.  28,294  1,431 
  Peabody Energy Corp.  39,540  1,292 
*  National Oilwell Varco Inc.  30,939  1,125 
  XTO Energy, Inc.  28,547  1,102 
*  Ultra Petroleum Corp.  22,432  1,042 

28



Mega Cap 300 Growth Index Fund

      Market 
      Value 
    Shares  ($000) 
  Murphy Oil Corp.  17,459  995 
  Diamond Offshore     
  Drilling, Inc.  10,288  920 
  Smith International, Inc.  32,453  895 
  Noble Corp.  25,071  878 
      34,791 
Financials (4.7%)     
*  Berkshire Hathaway Inc.     
  Class B  1,645  5,405 
  Charles Schwab Corp.  145,758  2,632 
  American Express Co.  77,712  2,628 
  CME Group, Inc.  8,836  2,572 
  State Street Corp.  46,757  2,454 
  Franklin Resources, Inc.  24,079  2,247 
  U.S. Bancorp  98,228  2,222 
  Northern Trust Corp.  31,775  1,857 
  T. Rowe Price Group Inc.  37,836  1,715 
  Public Storage, Inc. REIT  18,721  1,321 
  Moody’s Corp.  29,662  808 
*  TD Ameritrade Holding Corp.  38,975  750 
  BlackRock, Inc.  3,140  627 
  Aon Corp.  12,893  538 
  Hudson City Bancorp, Inc.  34,732  456 
      28,232 
Health Care (15.2%)     
  Johnson & Johnson  203,895  12,323 
  Abbott Laboratories  228,711  10,345 
*  Amgen Inc.  149,844  8,952 
  Schering-Plough Corp.  240,550  6,779 
  Medtronic, Inc.  165,561  6,341 
*  Gilead Sciences, Inc.  134,260  6,050 
  Baxter International, Inc.  89,517  5,095 
*  Medco Health Solutions, Inc.  71,375  3,941 
*  Celgene Corp.  68,084  3,552 
*  Express Scripts Inc.  38,100  2,752 
  Allergan, Inc.  45,033  2,518 
  Becton, Dickinson & Co.  35,472  2,470 
  McKesson Corp.  40,154  2,283 
*  Genzyme Corp.  39,909  2,223 
*  Biogen Idec Inc.  42,708  2,144 
*  St. Jude Medical, Inc.  51,226  1,974 
*  WellPoint Inc.  35,861  1,895 
  Stryker Corp.  44,053  1,827 
  UnitedHealth Group Inc.  61,607  1,725 
*  Zimmer Holdings, Inc.  31,844  1,508 
  Quest Diagnostics, Inc.  23,320  1,258 
  C.R. Bard, Inc.  14,676  1,183 
*  Laboratory Corp. of     
  America Holdings  16,038  1,119 
  Aetna Inc.  23,149  660 
      90,917 
Industrials (6.4%)     
  United Parcel Service, Inc.  103,473  5,532 
  Union Pacific Corp.  74,564  4,460 
  Lockheed Martin Corp.  49,595  3,719 

      Market 
      Value 
    Shares  ($000) 
  FedEx Corp.  43,770  3,007 
  Raytheon Co.  58,307  2,751 
  Danaher Corp.  40,065  2,432 
  Precision Castparts Corp.  20,726  1,892 
  PACCAR, Inc.  51,029  1,846 
  Fluor Corp.  26,748  1,415 
  C.H. Robinson     
   Worldwide Inc.  25,075  1,411 
  Deere & Co.  31,273  1,363 
  Honeywell International Inc.  36,577  1,345 
  L-3 Communications     
   Holdings, Inc.  17,247  1,283 
  ITT Industries, Inc.  25,572  1,281 
  Parker Hannifin Corp.  23,780  1,157 
  Expeditors International     
   of Washington, Inc.  31,426  1,026 
  Southwest Airlines Co.  109,708  897 
*  First Solar, Inc.  6,869  835 
  Waste Management Inc.  24,238  725 
      38,377 
Information Technology (36.0%)   
  Microsoft Corp.  1,185,253  29,216 
  International Business     
   Machines Corp.  195,514  23,080 
*  Apple Inc.  132,012  22,206 
*  Cisco Systems, Inc.  853,594  18,438 
*  Google Inc.  35,676  16,471 
  Hewlett-Packard Co.  353,892  15,886 
  Oracle Corp.  589,850  12,900 
  QUALCOMM Inc.  244,905  11,368 
  Intel Corp.  289,122  5,875 
*  EMC Corp.  297,837  4,736 
  Visa Inc.  66,429  4,723 
*  Dell Inc.  259,721  4,111 
*  eBay Inc.  161,756  3,581 
  Corning, Inc.  229,818  3,466 
  Texas Instruments, Inc.  122,494  3,012 
  Accenture Ltd.  90,689  2,993 
*  Yahoo! Inc.  196,101  2,865 
  Automatic Data     
   Processing, Inc.  74,436  2,855 
  MasterCard, Inc. Class A  13,114  2,657 
*  Adobe Systems, Inc.  77,462  2,434 
  Western Union Co.  103,756  1,872 
*  Symantec Corp.  121,423  1,836 
*  Broadcom Corp.  63,566  1,808 
*  Juniper Networks, Inc.  77,820  1,795 
  Applied Materials, Inc.  127,863  1,685 
*  Cognizant Technology     
   Solutions Corp.  43,202  1,507 
  CA, Inc.  61,421  1,369 
  Paychex, Inc.  48,062  1,360 
*  Agilent Technologies, Inc.  51,087  1,312 
*  Intuit, Inc.  45,131  1,253 
*  NetApp, Inc.  49,214  1,120 
*  Sun Microsystems, Inc.  110,632  1,027 

29



Mega Cap 300 Growth Index Fund

      Market 
      Value 
    Shares  ($000) 
*  Activision Blizzard, Inc.  85,698  995 
*  Electronic Arts Inc.  47,790  871 
  Motorola, Inc.  118,656  852 
  Analog Devices, Inc.  27,926  789 
*  NVIDIA Corp.  52,500  762 
*  VMware Inc.  7,487  265 
      215,351 
Materials (3.5%)     
  Monsanto Co.  80,759  6,774 
  Freeport-McMoRan Copper     
   & Gold, Inc. Class B  60,899  3,835 
  Praxair, Inc.  45,480  3,485 
  Newmont Mining Corp.     
   (Holding Co.)  70,838  2,847 
  Ecolab, Inc.  35,119  1,485 
  Air Products     
   & Chemicals, Inc.  10,839  813 
  The Mosaic Co.  14,993  727 
  Weyerhaeuser Co.  15,687  587 
      20,553 
Telecommunication Services (0.5%)   
*  American Tower Corp.     
   Class A  58,817  1,862 
*  Crown Castle     
   International Corp.  43,017  1,155 
      3,017 
Utilities (0.1%)     
*  AES Corp.  49,448  676 
Total Investments (100.0%)     
(Cost $577,465)    598,291 
Other Assets and Liabilities (0.0%)   
Other Assets    2,963 
Liabilities    (2,933) 
      30 
Net Assets (100%)    598,321 

At August 31, 2009, net assets consisted of: 
  Amount 
  ($000) 
Paid-in Capital  609,050 
Undistributed Net Investment Income  1,388 
Accumulated Net Realized Losses  (32,943) 
Unrealized Appreciation (Depreciation)  20,826 
Net Assets  598,321 
 
 
Institutional Shares—Net Assets   
Applicable to 836,466 outstanding   
$.001 par value shares of beneficial   
interest (unlimited authorization)  62,074 
Net Asset Value Per Share—   
Institutional Shares  $74.21 
 
 
ETF Shares—Net Assets   
Applicable to 14,300,000 outstanding   
$.001 par value shares of beneficial   
interest (unlimited authorization)  536,247 
Net Asset Value Per Share—   
ETF Shares  $37.50 

See Note A in Notes to Financial Statements.
* Non-income-producing security.
REIT—Real Estate Investment Trust.
See accompanying Notes, which are an integral part of the Financial Statements.

30



Mega Cap 300 Growth Index Fund

Statement of Operations

  Year Ended 
  August 31, 2009 
  ($000) 
Investment Income   
Income   
Dividends  4,976 
Interest1  4 
Security Lending  13 
Total Income  4,993 
Expenses   
The Vanguard Group—Note B   
     Investment Advisory Services  36 
     Management and Administrative—Institutional Shares  20 
     Management and Administrative—ETF Shares  189 
     Marketing and Distribution—Institutional Shares  15 
     Marketing and Distribution—ETF Shares  57 
Custodian Fees  22 
Auditing Fees  24 
Shareholders’ Reports and Proxies—Institutional Shares   
Shareholders’ Reports and Proxies—ETF Shares  9 
Total Expenses  372 
Net Investment Income  4,621 
Realized Net Gain (Loss) on Investment Securities Sold  (47,518) 
Change in Unrealized Appreciation (Depreciation) of Investment Securities  22,156 
Net Increase (Decrease) in Net Assets Resulting from Operations  (20,741) 

1 Interest income from an affiliated company of the fund was $4,000.
See accompanying Notes, which are an integral part of the Financial Statements.

31



Mega Cap 300 Growth Index Fund

Statement of Changes in Net Assets

    December 17, 
  Year Ended  20071 to 
  August 31,  August 31, 
  2009  2008 
  ($000)  ($000) 
Increase (Decrease) in Net Assets     
Operations     
Net Investment Income  4,621  833 
Realized Net Gain (Loss)  (47,518)  (334) 
Change in Unrealized Appreciation (Depreciation)  22,156  (1,330) 
Net Increase (Decrease) in Net Assets Resulting from Operations  (20,741)  (831) 
Distributions     
Net Investment Income     
     Institutional Shares  (753)  (84) 
     ETF Shares  (2,928)  (301) 
Realized Capital Gain     
     Institutional Shares     
     ETF Shares     
Total Distributions  (3,681)  (385) 
Capital Share Transactions     
     Institutional Shares  (32,148)  96,712 
     ETF Shares  397,215  162,180 
Net Increase (Decrease) from Capital Share Transactions  365,067  258,892 
Total Increase (Decrease)  340,645  257,676 
Net Assets     
Beginning of Period  257,676   
End of Period2  598,321  257,676 

1 Inception.
2 Net Assets—End of Period includes undistributed net investment income of $1,388,000 and $448,000.
See accompanying Notes, which are an integral part of the Financial Statements.

32



Mega Cap 300 Growth Index Fund

Financial Highlights

Institutional Shares     
  Year  April 3, 
  Ended  20081 to 
  August 31,  August 31,  
For a Share Outstanding Throughout Each Period  2009  2008 
Net Asset Value, Beginning of Period  $91.10  $92.21 
Investment Operations     
Net Investment Income           1.053  .343 
Net Realized and Unrealized Gain (Loss) on Investments  (16.900)  (1.250) 
Total from Investment Operations  (15.847)  (.907) 
Distributions     
Dividends from Net Investment Income  (1.043)  (.203) 
Distributions from Realized Capital Gains     
Total Distributions  (1.043)  (.203) 
Net Asset Value, End of Period  $74.21  $91.10 
 
Total Return  –17.25%  –0.99% 
 
Ratios/Supplemental Data     
Net Assets, End of Period (Millions)  $62  $97 
Ratio of Total Expenses to Average Net Assets  0.11%  0.08%2 
Ratio of Net Investment Income to Average Net Assets  1.59%  1.16%2 
Portfolio Turnover Rate3  31%  9% 

1 Inception.
2 Annualized.
3 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares,
including ETF Creation Units.
See accompanying Notes, which are an integral part of the Financial Statements.

33



Mega Cap 300 Growth Index Fund

Financial Highlights

ETF Shares     
  Year  Dec. 17, 
  Ended  20071 to 
  August 31, August 31,  
For a Share Outstanding Throughout Each Period  2009  2008 
Net Asset Value, Beginning of Period  $46.04  $49.10 
Investment Operations     
Net Investment Income  .528  .237 
Net Realized and Unrealized Gain (Loss) on Investments  (8.548)  (3.139) 
Total from Investment Operations  (8.020)  (2.902) 
Distributions     
Dividends from Net Investment Income  (.520)  (.158) 
Distributions from Realized Capital Gains     
Total Distributions  (.520)  (.158) 
Net Asset Value, End of Period  $37.50  $46.04 
 
Total Return  –17.28%  –5.91% 
 
Ratios/Supplemental Data     
Net Assets, End of Period (Millions)  $536  $161 
Ratio of Total Expenses to Average Net Assets  0.13%  0.13%2 
Ratio of Net Investment Income to Average Net Assets  1.57%  1.11%2 
Portfolio Turnover Rate3  31%  9% 

1 Inception.
2 Annualized.
3 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares,
including ETF Creation Units.
See accompanying Notes, which are an integral part of the Financial Statements.

34



Mega Cap 300 Growth Index Fund

Notes to Financial Statements

Vanguard Mega Cap 300 Growth Index Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund offers two classes of shares: Institutional Shares and ETF Shares. Institutional Shares are designed for investors who meet certain administrative and service criteria and invest a minimum of $5 million. ETF Shares are listed for trading on the NYSE Arca, Inc.; they can be purchased and sold through a broker.

A. The following significant accounting policies conform to generally accepted accounting principles for U.S. mutual funds. The fund consistently follows such policies in preparing its financial statements.

1. Security Valuation: Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which market quotations are not readily available, or whose values have been materially affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued by methods deemed by the board of trustees to represent fair value. Investments in Vanguard Market Liquidity Fund are valued at that fund’s net asset value.

2. Federal Income Taxes: The fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income. Management has analyzed the fund’s tax positions taken for all open federal income tax years (August 31, 2008–2009), and has concluded that no provision for federal income tax is required in the fund’s financial statements.

3. Distributions: Distributions to shareholders are recorded on the ex-dividend date.

4. Security Lending: The fund may lend its securities to qualified institutional borrowers to earn additional income. Security loans are required to be secured at all times by collateral at least equal to the market value of securities loaned. The fund invests cash collateral received in Vanguard Market Liquidity Fund, and records a liability for the return of the collateral, during the period the securities are on loan. Security lending income represents the income earned on investing cash collateral, less expenses associated with the loan.

5. Other: Dividend income is recorded on the ex-dividend date. Interest income includes income distributions received from Vanguard Market Liquidity Fund and is accrued daily. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment securities are those of the specific securities sold.

Each class of shares has equal rights as to assets and earnings, except that each class separately bears certain class-specific expenses related to maintenance of shareholder accounts (included in Management and Administrative expenses), shareholder reporting, and proxies. Marketing and distribution expenses are allocated to each class of shares based on a method approved by the board of trustees. Income, other non-class-specific expenses, and gains and losses on investments are allocated to each class of shares based on its relative net assets.

35



Mega Cap 300 Growth Index Fund

B. The Vanguard Group furnishes at cost investment advisory, corporate management, administrative, marketing, and distribution services. The costs of such services are allocated to the fund under methods approved by the board of trustees. The fund has committed to provide up to 0.40% of its net assets in capital contributions to Vanguard. At August 31, 2009, the fund had contributed capital of $123,000 to Vanguard (included in Other Assets), representing 0.02% of the fund’s net assets and 0.05% of Vanguard’s capitalization. The fund’s trustees and officers are also directors and officers of Vanguard.

C. Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Level 1—Quoted prices in active markets for identical securities.
Level 2—Other significant observable inputs (including quoted prices for similar securities, interest
rates, prepayment speeds, credit risk, etc.).
Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine
the fair value of investments).

At August 31, 2009, 100% of the fund’s investments were valued based on Level 1 inputs.

D. Distributions are determined on a tax basis and may differ from net investment income and realized capital gains for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the financial statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain, or loss are recognized in different periods for financial statement and tax purposes; these differences will reverse at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.

During the year ended August 31, 2009, the fund realized $15,393,000 of net capital losses resulting from in-kind redemptions—in which shareholders exchanged fund shares for securities held by the fund rather than for cash. Because such losses are not taxable losses to the fund, they have been reclassified from accumulated net realized losses to paid-in capital.

For tax purposes, at August 31, 2009, the fund had $1,458,000 of ordinary income available for distribution. The fund had available capital loss carryforwards totaling $7,258,000 to offset future net capital gains through August 31, 2017. In addition, the fund realized losses of $25,649,000 during the period from November 1, 2008, through August 31, 2009, which are deferred and will be treated as realized for tax purposes in fiscal 2010.

At August 31, 2009, the cost of investment securities for tax purposes was $577,501,000. Net unrealized appreciation of investment securities for tax purposes was $20,790,000, consisting of unrealized gains of $34,777,000 on securities that had risen in value since their purchase and $13,987,000 in unrealized losses on securities that had fallen in value since their purchase.

E. During the year ended August 31, 2009, the fund purchased $866,769,000 of investment securities and sold $500,677,000 of investment securities, other than temporary cash investments.

36



Mega Cap 300 Growth Index Fund

F. Capital share transactions for each class of shares were:       
    Year Ended  Inception1 to 
  August 31, 2009  August 31, 2008 
  Amount  Shares  Amount  Shares 
  ($000)  (000)  ($000)  (000) 
Institutional Shares         
Issued  (32,901)  (235)  96,628  1,059 
Issued in Lieu of Cash Distributions  753  12  84  1 
Redeemed         
Net Increase (Decrease)—Institutional Shares  (32,148)  (223)  96,712  1,060 
ETF Shares         
Issued  773,526  23,100  167,115  3,600 
Issued in Lieu of Cash Distributions         
Redeemed  (376,311)  (12,300)  (4,935)  (100) 
Net Increase (Decrease)—ETF Shares  397,215  10,800  162,180  3,500 
1 Inception was April 3, 2008, for Institutional Shares and December 17, 2007, for ETF Shares.     

The amounts of Institutional Shares issued during the year ended August 31, 2009, are negative because they reflect the cancellation of $58,176,000 of purchases recorded during the prior fiscal period that were determined to have been processed incorrectly. Vanguard, as a transfer agent for the fund, offset any impact to the fund resulting from incorrectly processed shareholder transactions. Accordingly, the cancelled purchases had no impact to the fund’s net asset values per share or total returns.

G. In preparing the financial statements as of August 31, 2009, management considered the impact of subsequent events occurring through October 15, 2009, for potential recognition or disclosure in these financial statements.

37



Mega Cap 300 Value Index Fund

Fund Profile       
As of August 31, 2009       
 
Portfolio Characteristics     
    Target  Broad 
  Fund  Index1  Index2 
Number of Stocks  174  175  4,345 
Median Market Cap  $50.1B  $50.1B  $27.3B 
Price/Earnings Ratio  23.7x  23.6x  26.0x 
Price/Book Ratio  1.7x  1.7x  2.1x 
Yield3    2.8%  2.0% 
   Institutional Shares  2.8%     
   ETF Shares  2.8%     
Return on Equity  18.7%  18.7%  19.2% 
Earnings Growth Rate  1.7%  1.5%  9.7% 
Foreign Holdings  0.0%  0.0%  0.0% 
Turnover Rate  31%     
Expense Ratio4       
   Institutional Shares  0.11%     
   ETF Shares  0.13%     
Short-Term Reserves  0.0%     

Sector Diversification (% of equity exposure) 
    Target  Broad 
   Fund  Index1  Index2 
Consumer Discretionary   5.6%  5.6%  10.0% 
Consumer Staples  7.6  7.6  10.0 
Energy  18.6  18.7  11.2 
Financials  24.7  24.7  16.5 
Health Care  12.6  12.6  13.2 
Industrials  12.6  12.6  10.3 
Information Technology  2.9  2.9  18.2 
Materials  2.7  2.6  3.8 
Telecommunication       
Services  6.3  6.3  2.9 
Utilities  6.4  6.4  3.9 

Ten Largest Holdings5 (% of total net assets) 
 
ExxonMobil Corp.  integrated oil   
  and gas   7.9% 
JPMorgan Chase & Co.  diversified financial   
  services   3.8 
AT&T Inc.  integrated   
  telecommunication   
  services   3.6 
Bank of America Corp.  diversified financial   
  services   3.6 
General Electric Co.  industrial   
  conglomerates   3.5 
Chevron Corp.  integrated oil   
  and gas   3.3 
Wells Fargo & Co.  diversified banks   2.8 
Pfizer Inc.  pharmaceuticals   2.6 
Verizon  integrated   
Communications Inc.  telecommunication   
  services   2.1 
Johnson & Johnson  pharmaceuticals   2.0 
Top Ten    35.2% 

Investment Focus


1 MSCI US Large Cap Value Index.
2 Dow Jones U.S. Total Stock Market Index.
3 30-day SEC yield for the fund; annualized dividend yield for the indexes. See the Glossary.
4 The expense ratios shown are from the prospectuses dated December 29, 2008, and represent estimated costs for the current fiscal year
based on the fund’s net assets as of the prospectus date. For the fiscal year ended August 31, 2009, the expense ratios were 0.11% for
Institutional Shares and 0.13% for ETF Shares.
5 The holdings listed exclude any temporary cash investments and equity index products.




Mega Cap 300 Value Index 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 www.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 17, 2007–August 31, 2009
Initial Investment of $10,000


  Average Annual Total Returns   
  Periods Ended August 31, 2009  Final Value of 
    Since  a $10,000 
         One Year  Inception1  Investment 
Mega Cap 300 Value Index Fund ETF Shares       
Net Asset Value           –18.32%  –18.48%  $7,060 
Mega Cap 300 Value Index Fund ETF Shares       
Market Price           –18.28  –18.44  7,066 
Dow Jones U.S. Total Stock Market Index           –18.10  –15.63  7,486 
MSCI US Large Cap Value Index           –18.45  –18.54  7,051 
Large-Cap Value Funds Average2           –17.99  –17.42  7,217 

      Final Value of 
           Since  a $5,000,000 
  One Year  Inception1  Investment 
Mega Cap 300 Value Index Fund Institutional Shares  –18.29%   –16.22%  $3,842,084 
Dow Jones U.S. Total Stock Market Index  –18.10   –13.55  4,025,661 
MSCI US Large Cap Value Index  –18.45   –16.35  3,833,248 

1 Performance for the fund and its comparative standards is calculated since the following inception dates: December 17, 2007,
for ETF Shares and March 5, 2008, for Institutional Shares.
2 Derived from data provided by Lipper Inc.

39



Mega Cap 300 Value Index Fund

Cumulative Returns of ETF Shares: December 17, 2007–August 31, 2009

    Cumulative 
    Since 
  One Year  Inception1 
Mega Cap 300 Value Index Fund ETF Shares Market Price  –18.28%  –29.34% 
Mega Cap 300 Value Index Fund ETF Shares Net Asset Value  –18.32  –29.40 
MSCI US Large Cap Value Index  –18.45  –29.49 

Fiscal-Year Total Returns (%): December 17, 2007–August 31, 2009


Average Annual Total Returns: Periods Ended June 30, 2009

This table presents average annual total returns through the latest calendar quarter—rather than through the end of the fiscal period. Securities and Exchange Commission rules require that we provide this information.

           Since 
  Inception Date  One Year  Inception 
ETF Shares  12/17/2007     
     Market Price    –26.52%  –26.27% 
     Net Asset Value    –26.64  –26.29 
Institutional Shares  3/5/2008  –26.63  –25.25 

1 Performance for the fund’s ETF Shares and comparative standards is calculated since the ETF Shares’ inception: December 17, 2007.
Note: See Financial Highlights tables for dividend and capital gains information.



Mega Cap 300 Value Index Fund

Financial Statements

Statement of Net Assets

As of August 31, 2009

The fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth fiscal quarters, the lists appear in the fund’s semiannual and annual reports to shareholders. For the first and third fiscal quarters, the fund files the lists with the Securities and Exchange Commission on Form N-Q. Shareholders can look up the fund’s Forms N-Q on the SEC’s website at www.sec.gov. Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room (see the back cover of this report for further information).

      Market 
      Value 
    Shares  ($000) 
Common Stocks (100.0%)     
Consumer Discretionary (5.6%)     
  The Walt Disney Co.  96,718  2,519 
  Time Warner Inc.  65,477  1,827 
  Home Depot, Inc.  46,414  1,267 
  News Corp., Class A  116,565  1,250 
  Johnson Controls, Inc.  32,549  806 
*  Liberty Media Corp.  27,069  755 
*  Time Warner Cable Inc.  19,282  712 
  Carnival Corp.  24,111  705 
  Comcast Corp. Class A  37,809  579 
  Macy’s Inc.  22,980  357 
  The Gap, Inc.  17,323  340 
  VF Corp.  4,843  337 
  CBS Corp.  32,312  334 
  Fortune Brands, Inc.  8,220  327 
  Comcast Corp. Special     
  Class A  22,117  323 
*,^  Sears Holdings Corp.  3,043  193 
  J.C. Penney Co., Inc.     
  (Holding Co.)  4,019  121 
  News Corp., Class B  7,202  91 
  Garmin Ltd.  2,290  75 
*  DISH Network Corp.  3,990  65 
      12,983 
Consumer Staples (7.6%)     
  The Coca-Cola Co.  74,216  3,620 
  The Procter & Gamble Co.  55,922  3,026 
  Kraft Foods Inc.  80,774  2,290 
  Altria Group, Inc.  113,153  2,068 
  Kimberly-Clark Corp.  14,726  890 
  Sysco Corp.  32,283  823 
  The Kroger Co.  33,896  732 
  ConAgra Foods, Inc.  24,474  502 
  Archer-Daniels-Midland Co.  15,810  456 
  Safeway, Inc.  23,307  444 
  Reynolds American Inc.  9,562  437 
  Molson Coors Brewing Co.     
  Class B  8,283  392 
  General Mills, Inc.  6,302  376 

      Market 
      Value 
    Shares  ($000) 
  Sara Lee Corp.  36,074  350 
  Lorillard, Inc.  4,601  335 
  H.J. Heinz Co.  8,584  330 
  The Pepsi Bottling Group, Inc.  5,317  190 
  Coca-Cola Enterprises, Inc.  7,962  161 
  Campbell Soup Co.  4,105  129 
  Brown-Forman Corp. Class B  2,835  127 
      17,678 
Energy (18.6%)     
  ExxonMobil Corp.  267,344  18,487 
  Chevron Corp.  109,830  7,682 
  ConocoPhillips Co.  77,135  3,473 
  Occidental Petroleum Corp.  28,834  2,108 
  Apache Corp.  18,402  1,563 
  Devon Energy Corp.  23,158  1,421 
  Marathon Oil Corp.  38,734  1,196 
  Halliburton Co.  49,290  1,169 
  XTO Energy, Inc.  19,581  756 
  Chesapeake Energy Corp.  32,555  744 
  Spectra Energy Corp.  35,297  664 
  Baker Hughes Inc.  16,949  584 
  Valero Energy Corp.  30,443  570 
  Williams Cos., Inc.  31,746  522 
  Anadarko Petroleum Corp.  9,565  506 
*  Transocean Ltd.  6,143  466 
*  National Oilwell Varco Inc.  11,423  415 
  EOG Resources, Inc.  4,781  344 
  Hess Corp.  5,638  285 
  Murphy Oil Corp.  3,472  198 
  Noble Corp.  5,005  175 
      43,328 
Financials (24.7%)     
  JPMorgan Chase & Co.  205,953  8,951 
  Bank of America Corp.  473,467  8,328 
  Wells Fargo & Co.  239,672  6,596 
  The Goldman Sachs     
  Group, Inc.  26,204  4,336 
  Citigroup Inc.  621,756  3,109 
  Bank of New York     
  Mellon Corp.  65,595  1,942 

41



Mega Cap 300 Value Index Fund   
 
 
 
      Market 
      Value 
    Shares  ($000) 
  Morgan Stanley  64,585  1,870 
  MetLife, Inc.  44,926  1,696 
  The Travelers Cos., Inc.  32,139  1,620 
  U.S. Bancorp  67,680  1,531 
  Prudential Financial, Inc.  25,045  1,267 
  BB&T Corp.  37,326  1,043 
  AFLAC Inc.  25,622  1,041 
  PNC Financial     
   Services Group  24,360  1,037 
  Simon Property Group, Inc.     
   REIT  15,363  977 
  American Express Co.  28,755  973 
  Ace Ltd.  18,383  959 
  The Chubb Corp.  19,269  952 
  Capital One Financial Corp.  24,831  926 
  The Allstate Corp.  27,894  820 
  Marsh &     
   McLennan Cos., Inc.  28,597  673 
  Loews Corp.  19,051  651 
  SunTrust Banks, Inc.  25,411  594 
*  Progressive Corp. of Ohio  35,406  585 
  Annaly Capital     
   Management Inc. REIT  29,785  516 
  Vornado Realty Trust REIT  8,634  497 
  State Street Corp.  9,296  488 
  The Principal Financial     
   Group, Inc.  16,983  482 
  Invesco, Ltd.  22,488  467 
  Boston Properties, Inc. REIT  7,452  451 
  Ameriprise Financial, Inc.  13,963  419 
  Equity Residential REIT  14,987  409 
  NYSE Euronext  14,228  403 
  Aon Corp.  8,862  370 
*  Leucadia National Corp.  10,442  260 
  M & T Bank Corp.  4,160  257 
  Hudson City Bancorp, Inc.  12,788  168 
      57,664 
Health Care (12.6%)     
  Pfizer Inc.  369,702  6,174 
  Johnson & Johnson  75,485  4,562 
  Merck & Co., Inc.  115,536  3,747 
  Wyeth  73,085  3,497 
  Bristol-Myers Squibb Co.  108,632  2,404 
  Eli Lilly & Co.  56,742  1,899 
  UnitedHealth Group Inc.  42,312  1,185 
  Covidien PLC  27,573  1,091 
*  Thermo Fisher Scientific, Inc.  22,892  1,035 
*  Boston Scientific Corp.  82,439  969 
*  WellPoint Inc.  13,261  701 

      Market 
      Value 
    Shares  ($000) 
  Cardinal Health, Inc.  19,736  682 
*  Forest Laboratories, Inc.  16,528  484 
  Aetna Inc.  15,896  453 
  CIGNA Corp.  14,928  439 
      29,322 
Industrials (12.6%)     
  General Electric Co.  580,170  8,064 
  United Technologies Corp.  49,059  2,912 
  3M Co.  36,113  2,604 
  The Boeing Co.  37,839  1,879 
  Burlington Northern     
   Santa Fe Corp.  18,643  1,548 
  Emerson Electric Co.  41,257  1,521 
  Caterpillar, Inc.  33,040  1,497 
  General Dynamics Corp.  17,909  1,060 
  Illinois Tool Works, Inc.  23,327  976 
  Honeywell International Inc.  25,137  924 
  Norfolk Southern Corp.  20,087  921 
  CSX Corp.  21,422  910 
  Tyco International Ltd.  25,917  821 
  Northrop Grumman Corp.  16,816  821 
  Ingersoll-Rand PLC  17,436  539 
  Republic Services, Inc.     
   Class A  20,731  531 
  Deere & Co.  11,559  504 
  Waste Management Inc.  16,616  497 
  Cummins Inc.  10,474  475 
  Eaton Corp.  8,610  465 
      29,469 
Information Technology (2.9%)     
  Intel Corp.  198,914  4,042 
  Texas Instruments, Inc.  24,433  601 
  Motorola, Inc.  81,545  585 
*  Tyco Electronics Ltd.  25,068  572 
  Xerox Corp.  47,309  409 
  Applied Materials, Inc.  25,460  336 
  Analog Devices, Inc.  5,579  158 
*  NVIDIA Corp.  10,462  152 
      6,855 
Materials (2.7%)     
  E.I. du Pont de     
   Nemours & Co.  49,603  1,584 
  Dow Chemical Co.  58,880  1,254 
  Nucor Corp.  17,184  765 
  Alcoa Inc.  53,318  642 
  Air Products &     
   Chemicals, Inc.  7,451  559 
  International Paper Co.  22,471  516 
  PPG Industries, Inc.  9,003  499 

42



Mega Cap 300 Value Index Fund   
 
 
 
      Market 
      Value 
    Shares  ($000) 
  Weyerhaeuser Co.  5,784  216 
  The Mosaic Co.  2,962  144 
      6,179 
Telecommunication Services (6.3%)   
  AT&T Inc.  323,243  8,420 
  Verizon Communications Inc.  155,627  4,831 
*  Sprint Nextel Corp.  153,037  560 
  CenturyTel, Inc.  16,228  523 
  Qwest Communications     
   International Inc.  84,725  304 
      14,638 
Utilities (6.4%)     
  Exelon Corp.  36,150  1,808 
  Southern Co.  42,819  1,336 
  FPL Group, Inc.  21,357  1,200 
  Duke Energy Corp.  70,439  1,091 
  Dominion Resources, Inc.  32,286  1,068 
  Public Service Enterprise     
   Group, Inc.  27,728  878 
  Entergy Corp.  10,732  848 
  American Electric     
   Power Co., Inc.  26,091  820 
  PG&E Corp.  20,159  818 
  FirstEnergy Corp.  16,689  753 
  Sempra Energy  12,701  637 
  PPL Corp.  20,580  605 
  Progress Energy, Inc.  15,271  604 
  Consolidated Edison Inc.  15,017  604 
  Edison International  16,930  566 
  Xcel Energy, Inc.  24,937  492 
  Ameren Corp.  11,688  315 
  Constellation Energy     
   Group, Inc.  9,811  311 
*  AES Corp.  18,219  249 
      15,003 
Total Common Stocks     
(Cost $241,279)    233,119 

    Market 
    Value 
  Shares  ($000) 
Temporary Cash Investment (0.1%)   
Money Market Fund (0.1%)     
1,2 Vanguard Market     
       Liquidity Fund, 0.277%     
       (Cost $185)  184,802  185 
Total Investments (100.1%)     
(Cost $241,464)    233,304 
Other Assets and Liabilities (–0.1%)   
Other Assets    1,509 
Liabilities2    (1,705) 
    (196) 
Net Assets (100%)    233,108 

At August 31, 2009, net assets consisted of:

                                          Amount

  ($000) 
Paid-in Capital  260,651 
Undistributed Net Investment Income  1,264 
Accumulated Net Realized Losses  (20,647) 
Unrealized Appreciation (Depreciation)  (8,160) 
Net Assets  233,108 
 
 
Institutional Shares—Net Assets   
Applicable to 1,059,957 outstanding   
$.001 par value shares of beneficial   
interest (unlimited authorization)  69,973 
Net Asset Value Per Share—   
Institutional Shares  $66.02 
 
 
ETF Shares—Net Assets   
Applicable to 4,900,000 outstanding   
$.001 par value shares of beneficial   
interest (unlimited authorization)  163,135 
Net Asset Value Per Share—   
ETF Shares  $33.29 

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 $178,000.
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 $185,000 of collateral received for securities on loan.
REIT—Real Estate Investment Trust.
See accompanying Notes, which are an integral part of the Financial Statements.

43



Mega Cap 300 Value Index Fund

Statement of Operations

  Year Ended 
  August 31, 2009 
  ($000) 
Investment Income   
Income   
Dividends  6,246 
Interest1  3 
Security Lending  158 
Total Income  6,407 
Expenses   
The Vanguard Group—Note B   
     Investment Advisory Services  24 
     Management and Administrative—Institutional Shares  17 
     Management and Administrative—ETF Shares  57 
     Marketing and Distribution—Institutional Shares  15 
     Marketing and Distribution—ETF Shares  32 
Custodian Fees  31 
Auditing Fees  24 
Shareholders’ Reports and Proxies—Institutional Shares  1 
Shareholders’ Reports and Proxies—ETF Shares  9 
Total Expenses  210 
Net Investment Income  6,197 
Realized Net Gain (Loss)   
Investment Securities Sold  (16,926) 
Futures Contracts  15 
Realized Net Gain (Loss)  (16,911) 
Change in Unrealized Appreciation (Depreciation) of Investment Securities  (1,817) 
Net Increase (Decrease) in Net Assets Resulting from Operations  (12,531) 

1 Interest income from an affiliated company of the fund was $3,000.
See accompanying Notes, which are an integral part of the Financial Statements.

44



Mega Cap 300 Value Index Fund

Statement of Changes in Net Assets

    December 17, 
  Year Ended  20071 to 
  August 31,  August 31, 
  2009  2008 
  ($000)  ($000) 
Increase (Decrease) in Net Assets     
Operations     
Net Investment Income  6,197  1,283 
Realized Net Gain (Loss)  (16,911)  (340) 
Change in Unrealized Appreciation (Depreciation)  (1,817)  (6,343) 
Net Increase (Decrease) in Net Assets Resulting from Operations  (12,531)  (5,400) 
Distributions     
Net Investment Income     
     Institutional Shares  (1,849)  (127) 
     ETF Shares  (3,745)  (495) 
Realized Capital Gain     
     Institutional Shares     
     ETF Shares     
Total Distributions  (5,594)  (622) 
Capital Share Transactions     
     Institutional Shares  26,850  53,693 
     ETF Shares  74,049  102,663 
Net Increase (Decrease) from Capital Share Transactions  100,899  156,356 
Total Increase (Decrease)  82,774  150,334 
Net Assets     
Beginning of Period  150,334   
End of Period2  233,108  150,334 

1 Inception.
2 Net Assets—End of Period includes undistributed net investment income of $1,264,000 and $661,000.
See accompanying Notes, which are an integral part of the Financial Statements.

45



Mega Cap 300 Value Index Fund

Financial Highlights

Institutional Shares     
  Year  March 5, 
  Ended  20081 to 
  August 31, August 31,  
For a Share Outstanding Throughout Each Period  2009  2008 
Net Asset Value, Beginning of Period  $83.69  $90.01 
Investment Operations     
Net Investment Income  2.135  1.1242 
Net Realized and Unrealized Gain (Loss) on Investments  (17.658)  (6.444) 
Total from Investment Operations  (15.523)  (5.320) 
Distributions     
Dividends from Net Investment Income  (2.147)  (1.000) 
Distributions from Realized Capital Gains     
Total Distributions  (2.147)  (1.000) 
Net Asset Value, End of Period  $66.02  $83.69 
 
Total Return  –18.29%  –5.96% 
 
Ratios/Supplemental Data     
Net Assets, End of Period (Millions)  $70  $53 
Ratio of Total Expenses to Average Net Assets  0.11%  0.08%3 
Ratio of Net Investment Income to Average Net Assets  3.66%  3.19%3 
Portfolio Turnover Rate4  31%  12% 

1 Inception.
2 Calculated based on average shares outstanding.
3 Annualized.
4 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares,
including ETF Creation Units.
See accompanying Notes, which are an integral part of the Financial Statements.

46



Mega Cap 300 Value Index Fund

Financial Highlights

ETF Shares     
  Year  Dec. 17, 
  Ended  20071 to 
  August 31, August 31,  
For a Share Outstanding Throughout Each Period  2009  2008 
Net Asset Value, Beginning of Period  $42.21  $49.38 
Investment Operations     
Net Investment Income           1.070  .8862 
Net Realized and Unrealized Gain (Loss) on Investments  (8.915)  (7.560) 
Total from Investment Operations  (7.845)  (6.674) 
Distributions     
Dividends from Net Investment Income  (1.075)  (.496) 
Distributions from Realized Capital Gains     
Total Distributions  (1.075)  (.496) 
Net Asset Value, End of Period  $33.29  $42.21 
 
Total Return  –18.32%  –13.56% 
 
Ratios/Supplemental Data     
Net Assets, End of Period (Millions)  $163  $97 
Ratio of Total Expenses to Average Net Assets  0.13%  0.13%3 
Ratio of Net Investment Income to Average Net Assets  3.64%  3.14%3 
Portfolio Turnover Rate4  31%  12% 

1 Inception.
2 Calculated based on average shares outstanding.
3 Annualized.
4 Excludes the value of portfolio securities received or delivered as a result of in-kind purchases or redemptions of the fund’s capital shares,
including ETF Creation Units.
See accompanying Notes, which are an integral part of the Financial Statements.

47



Mega Cap 300 Value Index Fund

Notes to Financial Statements

Vanguard Mega Cap 300 Value Index Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund offers two classes of shares: Institutional Shares and ETF Shares. Institutional Shares are designed for investors who meet certain administrative and service criteria and invest a minimum of $5 million. ETF Shares are listed for trading on the NYSE Arca, Inc.; they can be purchased and sold through a broker.

A. The following significant accounting policies conform to generally accepted accounting principles for
U.S. mutual funds. The fund consistently follows such policies in preparing its financial statements.

1. Security Valuation: Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which market quotations are not readily available, or whose values have been materially affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued by methods deemed by the board of trustees to represent fair value. Investments in Vanguard Market Liquidity Fund are valued at that fund’s net asset value.

2. Futures Contracts: The fund uses index futures contracts to a limited extent, with the objectives of maintaining full exposure to the stock market, enhancing returns, maintaining liquidity, and minimizing transaction costs. The fund may purchase futures contracts to immediately invest incoming cash in the market, or sell futures in response to cash outflows, thereby simulating a fully invested position in the underlying index while maintaining a cash balance for liquidity. The fund may seek to enhance returns by using futures contracts instead of the underlying securities when futures are believed to be priced more attractively than the underlying securities. The primary risks associated with the use of futures contracts are imperfect correlation between changes in market values of stocks held by the fund and the prices of futures contracts, and the possibility of an illiquid market.

Futures contracts are valued at their quoted daily settlement prices. The aggregate principal amounts of the contracts are not recorded in the Statement of Net Assets. Fluctuations in the value of the contracts are recorded in the Statement of Net Assets as an asset (liability) and in the Statement of Operations as unrealized appreciation (depreciation) until the contracts are closed, when they are recorded as realized futures gains (losses).

3. Federal Income Taxes: The fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income. Management has analyzed the fund’s tax positions taken for all open federal income tax years (August 31, 2008–2009), and has concluded that no provision for federal income tax is required in the fund’s financial statements.

4. Distributions: Distributions to shareholders are recorded on the ex-dividend date.

5. Security Lending: The fund may lend its securities to qualified institutional borrowers to earn additional income. Security loans are required to be secured at all times by collateral at least equal to the market value of securities loaned. The fund invests cash collateral received in Vanguard Market Liquidity Fund, and records a liability for the return of the collateral, during the period the securities are on loan. Security lending income represents the income earned on investing cash collateral, less expenses associated with the loan.

48



Mega Cap 300 Value Index Fund

6. Other: Dividend income is recorded on the ex-dividend date. Interest income includes income distributions received from Vanguard Market Liquidity Fund and is accrued daily. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment securities are those of the specific securities sold.

Each class of shares has equal rights as to assets and earnings, except that each class separately bears certain class-specific expenses related to maintenance of shareholder accounts (included in Management and Administrative expenses), shareholder reporting, and proxies. Marketing and distribution expenses are allocated to each class of shares based on a method approved by the board of trustees. Income, other non-class-specific expenses, and gains and losses on investments are allocated to each class of shares based on its relative net assets.

B. The Vanguard Group furnishes at cost investment advisory, corporate management, administrative, marketing, and distribution services. The costs of such services are allocated to the fund under methods approved by the board of trustees. The fund has committed to provide up to 0.40% of its net assets in capital contributions to Vanguard. At August 31, 2009, the fund had contributed capital of $49,000 to Vanguard (included in Other Assets), representing 0.02% of the fund’s net assets and 0.02% of Vanguard’s capitalization. The fund’s trustees and officers are also directors and officers of Vanguard.

C. Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Level 1—Quoted prices in active markets for identical securities.
Level 2—Other significant observable inputs (including quoted prices for similar securities, interest
rates, prepayment speeds, credit risk, etc.).
Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine
the fair value of investments).

At August 31, 2009, 100% of the fund’s investments were valued based on Level 1 inputs.

D. Distributions are determined on a tax basis and may differ from net investment income and realized capital gains for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the financial statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain, or loss are recognized in different periods for financial statement and tax purposes; these differences will reverse at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.

During the year ended August 31, 2009, the fund realized $3,396,000 of net capital gains resulting from in-kind redemptions—in which shareholders exchanged fund shares for securities held by the fund rather than for cash. Because such gains are not taxable to the fund, and are not distributed to shareholders, they have been reclassified from accumulated net realized losses to paid-in capital.

For tax purposes, at August 31, 2009, the fund had $1,304,000 of ordinary income available for distribution. The fund had available capital loss carryforwards totaling $851,000 to offset future net capital gains through August 31, 2017. In addition, the fund realized losses of $19,616,000 during the period from November 1, 2008, through August 31, 2009, which are deferred and will be treated as realized for tax purposes in fiscal 2010.

49



Mega Cap 300 Value Index Fund

At August 31, 2009, the cost of investment securities for tax purposes was $241,643,000. Net unrealized depreciation of investment securities for tax purposes was $8,339,000, consisting of unrealized gains of $14,211,000 on securities that had risen in value since their purchase and $22,550,000 in unrealized losses on securities that had fallen in value since their purchase.

E. During the year ended August 31, 2009, the fund purchased $205,595,000 of investment securities and sold $103,655,000 of investment securities, other than temporary cash investments.

F. Capital share transactions for each class of shares were:

    Year Ended  Inception1 to 
  August 31, 2009  August 31, 2008 
  Amount  Shares  Amount  Shares 
  ($000)  (000)  ($000)  (000) 
Institutional Shares         
Issued  32,907  536  53,949  639 
Issued in Lieu of Cash Distributions  1,849  31  127  1 
Redeemed  (7,906)  (143)  (383)  (4) 
Net Increase (Decrease)—Institutional Shares  26,850  424  53,693  636 
ETF Shares         
Issued  123,860  4,200  102,663  2,300 
Issued in Lieu of Cash Distributions         
Redeemed  (49,811)  (1,600)     
Net Increase (Decrease)—ETF Shares  74,049  2,600  102,663  2,300 
1 Inception was March 5, 2008, for Institutional Shares and December 17, 2007, for ETF Shares.     

G. In preparing the financial statements as of August 31, 2009, management considered the impact of subsequent events occurring through October 15, 2009, for potential recognition or disclosure in these financial statements.

50



Report of Independent Registered
Public Accounting Firm

To the Trustees of Vanguard World Fund and the Shareholders of Vanguard Mega Cap 300 Index Fund, Vanguard Mega Cap 300 Growth Index Fund and Vanguard Mega Cap 300 Value Index Fund:

In our opinion, the accompanying statements 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 Mega Cap 300 Index Fund, Vanguard Mega Cap 300 Growth Index Fund and Vanguard Mega Cap 300 Value Index Fund (the “Funds”) at August 31, 2009, the results of each of their operations for the year then ended, the changes in each of their net assets and the financial highlights for each of the periods indicated, 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 Funds’ 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 August 31, 2009 by correspondence with the custodian and by agreement to the underlying ownership records for Vanguard Market Liquidity Fund, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania

October 15, 2009

51



Special 2009 tax information (unaudited) for Vanguard Mega Cap 300 Index Funds

This information for the fiscal period ended August 31, 2009, is included pursuant to provisions of the Internal Revenue Code.

The funds distributed qualified dividend income to shareholders during the fiscal year as follows:

  Qualified Dividend Income 
Index Fund  ($000) 
Mega Cap 300  5,048 
Mega Cap 300 Growth  3,600 
Mega Cap 300 Value  5,594 

For corporate shareholders, the percentage of investment income (dividend income plus short-term gains, if any) qualifies for the dividends-received deduction as follows:

Index Fund  Percentage 
Mega Cap 300         99.1% 
Mega Cap 300 Growth         98.1 
Mega Cap 300 Value         97.0 

52



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 2009. (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.)

The table shows returns, based on the net asset value, for ETF Shares only; returns for other share classes will differ. 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: Mega Cap 300 Index Funds     
Periods Ended August 31, 2009     
       One         Since 
       Year  Inception1 
Mega Cap 300 Index Fund ETF Shares     
Returns Before Taxes  –17.85%   –16.04% 
Returns After Taxes on Distributions  –18.13   –16.26 
Returns After Taxes on Distributions and Sale of Fund Shares  –11.29   –13.51 
 
Mega Cap 300 Growth Index Fund ETF Shares     
Returns Before Taxes  –17.28%   –13.68% 
Returns After Taxes on Distributions  –17.48   –13.83 
Returns After Taxes on Distributions and Sale of Fund Shares  –11.03   –11.55 
 
Mega Cap 300 Value Index Fund ETF Shares     
Returns Before Taxes  –18.32%   –18.48% 
Returns After Taxes on Distributions  –18.75   –18.81 
Returns After Taxes on Distributions and Sale of Fund Shares  –11.42   –15.53 

1 Inception date for ETF Shares is December 17, 2007.

53



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. Your fund does not charge transaction fees, such as purchase or redemption fees, nor does it 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.

54



Six Months Ended August 31, 2009       
  Beginning  Ending  Expenses 
  Account Value  Account Value  Paid During 
Index Fund  2/28/2009  8/31/2009  Period1 
Based on Actual Fund Return       
Mega Cap 300       
     Institutional Shares  $1,000.00  $1,390.42  $0.72 
     ETF Shares  1,000.00  1,390.24  0.78 
Mega Cap 300 Growth       
     Institutional Shares  $1,000.00  $1,358.93  $0.65 
     ETF Shares  1,000.00  1,358.67  0.77 
Mega Cap 300 Value       
     Institutional Shares  $1,000.00  $1,426.47  $0.73 
     ETF Shares  1,000.00  1,425.79  0.79 
Based on Hypothetical 5% Yearly Return       
Mega Cap 300       
     Institutional Shares  $1,000.00  $1,024.60  $0.61 
     ETF Shares  1,000.00  1,024.55  0.66 
Mega Cap 300 Growth       
     Institutional Shares  $1,000.00  $1,024.65  $0.56 
     ETF Shares  1,000.00  1,024.55  0.66 
Mega Cap 300 Value       
     Institutional Shares  $1,000.00  $1,024.60  $0.61 
     ETF Shares  1,000.00  1,024.55  0.66 

1 The calculations are based on expenses incurred in the most recent six-month period. The funds’ annualized six-month expense ratios for that period are: 0.12% for the Mega Cap 300 Index Fund Institutional Shares, and 0.13% for ETF Shares; 0.11% for the Mega Cap 300 Growth Index Fund Institutional Shares, and 0.13% for ETF Shares; 0.12% for the Mega Cap 300 Value Index Fund Institutional Shares, and 0.13% for ETF Shares. 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.

55



Trustees Approve Advisory Arrangement

The board of trustees of Vanguard Mega Cap 300 Index Fund, Mega Cap 300 Growth Index Fund, and Mega Cap 300 Value Index Fund has renewed the funds’ investment advisory arrangement with The Vanguard Group, Inc. Vanguard—through its Quantitative Equity Group—serves as investment advisor to the funds. The board determined that continuing the funds’ internalized management structure was in the best interests of the funds and their shareholders.

The board based its decision upon an evaluation of the advisor’s investment staff, portfolio management process, and performance. The trustees considered the factors discussed below, among others. However, no single factor determined whether the board approved the arrangement. Rather, it was the totality of the circumstances that drove the board’s decision.

Nature, extent, and quality of services

The board considered the quality of the funds’ investment management since their inceptions in 2007 and took into account the organizational depth and stability of the advisor. The board noted that Vanguard has been managing investments for more than three decades. The Quantitative Equity Group adheres to a sound, disciplined investment management process; the team has considerable experience, stability, and depth.

The board concluded that Vanguard’s experience, stability, depth, and performance, among other factors, warranted approval of the advisory arrangement.

Investment performance

The board considered the funds’ performance since their inceptions including any periods of outperformance and underperformance of their target indexes and peer groups. The board concluded that the funds have performed in line with expectations, and that their results have been consistent with their investment strategies. Information about each fund’s most recent performance can be found on the Performance Summary pages of this report.

Cost

The board concluded that the funds’ expense ratios were well below the average expense ratios charged by funds in their respective peer groups and that the funds’ advisory expense ratios were also well below their peer-group averages. Information about the funds’ expense ratios appears in the About Your Fund’s Expenses section of this report.

The board does not conduct a profitability analysis of Vanguard, because of Vanguard’s unique “at-cost” structure. Unlike most other mutual fund management companies, Vanguard is owned by the funds it oversees, and produces “profits” only in the form of reduced expenses for fund shareholders.

The benefit of economies of scale

The board concluded that the funds’ low-cost arrangement with Vanguard ensures that the funds will realize economies of scale as they grow, with the cost to shareholders declining as fund assets increase.

The board will consider whether to renew the advisory arrangement again after a one-year period.

56



Glossary

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. The percentage of a fund’s average net assets used to pay its annual administrative and advisory expenses. These expenses directly reduce returns to investors.

Foreign Holdings. The percentage of a fund represented by stocks 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.

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.

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.

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 (in the case of bonds) 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.

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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 157 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 www.vanguard.com.

Interested Trustees  Emerson U. Fullwood 
  Born 1948. Trustee Since January 2008. Principal 
John J. Brennan1  Occupation(s) During the Past Five Years: Retired 
Born 1954. Trustee Since May 1987. Chairman of  Executive Chief Staff and Marketing Officer for North 
the Board. Principal Occupation(s) During the Past  America and Corporate Vice President of Xerox 
Five Years: Chairman of the Board and Director/Trustee  Corporation (photocopiers and printers); Director of 
of The Vanguard Group, Inc., and of each of the  SPX Corporation (multi-industry manufacturing), the 
investment companies served by The Vanguard Group;  United Way of Rochester, the Boy Scouts of America, 
Chief Executive Officer and President of The Vanguard  Amerigroup Corporation (direct health and medical 
Group and of each of the investment companies served  insurance carriers), and Monroe Community College 
by The Vanguard Group (1996–2008); Chairman of  Foundation. 
the Financial Accounting Foundation; Governor of   
the Financial Industry Regulatory Authority (FINRA);  Rajiv L. Gupta 
Director of United Way of Southeastern Pennsylvania.  Born 1945. Trustee Since December 2001.2 Principal 
  Occupation(s) During the Past Five Years: Retired 
F. William McNabb III1  Chairman and Chief Executive Officer of Rohm and 
Born 1957. Trustee Since July 2009. Principal  Haas Co. (chemicals); President of Rohm and Haas Co. 
Occupation(s) During the Past Five Years: Director of  (2006–2008); Board Member of American Chemistry 
The Vanguard Group, Inc., since 2008; Chief Executive  Council; Director of Tyco International, Ltd. (diversified 
Officer and President of The Vanguard Group and of  manufacturing and services) and Hewlett-Packard Co. 
each of the investment companies served by The  (electronic computer manufacturing); Trustee of The 
Vanguard Group since 2008; Director of Vanguard  Conference Board. 
Marketing Corporation; Managing Director of The   
Vanguard Group (1995–2008).  Amy Gutmann 
  Born 1949. Trustee Since June 2006. Principal 
  Occupation(s) During the Past Five Years: President of 
Independent Trustees  the University of Pennsylvania; Christopher H. Browne 
  Distinguished Professor of Political Science in the School 
Charles D. Ellis  of Arts and Sciences with Secondary Appointments 
Born 1937. Trustee Since January 2001. Principal  at the Annenberg School for Communication and the 
Occupation(s) During the Past Five Years: Applecore  Graduate School of Education of the University of 
Partners (pro bono ventures in education); Senior  Pennsylvania; Director of Carnegie Corporation of 
Advisor to Greenwich Associates (international business  New York, Schuylkill River Development Corporation, 
strategy consulting); Successor Trustee of Yale University;  and Greater Philadelphia Chamber of Commerce; 
Overseer of the Stern School of Business at New York  Trustee of the National Constitution Center. 
University; Trustee of the Whitehead Institute for   
Biomedical Research.   



JoAnn Heffernan Heisen  Executive Officers   
Born 1950. Trustee Since July 1998. Principal     
Occupation(s) During the Past Five Years: Retired  Thomas J. Higgins1   
Corporate Vice President, Chief Global Diversity Officer,  Born 1957. Chief Financial Officer Since September 
and Member of the Executive Committee of Johnson  2008. Principal Occupation(s) During the Past Five 
& Johnson (pharmaceuticals/consumer products);  Years: Principal of The Vanguard Group, Inc.; Chief 
Vice President and Chief Information Officer of Johnson  Financial Officer of each of the investment companies 
& Johnson (1997–2005); Director of the University  served by The Vanguard Group since 2008; Treasurer 
Medical Center at Princeton and Women’s Research  of each of the investment companies served by The 
and Education Institute.  Vanguard Group (1998–2008). 
 
André F. Perold  Kathryn J. Hyatt1   
Born 1952. Trustee Since December 2004. Principal  Born 1955. Treasurer Since November 2008. Principal 
Occupation(s) During the Past Five Years: George Gund  Occupation(s) During the Past Five Years: Principal of 
Professor of Finance and Banking, Harvard Business  The Vanguard Group, Inc.; Treasurer of each of the 
School; Director and Chairman of UNX, Inc. (equities  investment companies served by The Vanguard 
trading firm); Chair of the Investment Committee of  Group since 2008; Assistant Treasurer of each of the 
HighVista Strategies LLC (private investment firm).  investment companies served by The Vanguard Group 
  (1988–2008).   
Alfred M. Rankin, Jr.     
Born 1941. Trustee Since January 1993. Principal  Heidi Stam1   
Occupation(s) During the Past Five Years: Chairman,  Born 1956. Secretary Since July 2005. Principal 
President, Chief Executive Officer, and Director of  Occupation(s) During the Past Five Years: Managing 
NACCO Industries, Inc. (forklift trucks/housewares/  Director of The Vanguard Group, Inc., since 2006; 
lignite); Director of Goodrich Corporation (industrial  General Counsel of The Vanguard Group since 2005; 
products/aircraft systems and services).  Secretary of The Vanguard Group and of each of the 
  investment companies served by The Vanguard Group 
Peter F. Volanakis  since 2005; Director and Senior Vice President of 
Born 1955. Trustee Since July 2009. Principal  Vanguard Marketing Corporation since 2005; Principal 
Occupation(s) During the Past Five Years: President  of The Vanguard Group (1997–2006). 
since 2007 and Chief Operating Officer since 2005     
of Corning Incorporated (communications equipment);     
President of Corning Technologies (2001–2005); Director  Vanguard Senior Management Team 
of Corning Incorporated and Dow Corning; Trustee of     
the Corning Incorporated Foundation and the Corning  R. Gregory Barton  Michael S. Miller 
Museum of Glass; Overseer of the Amos Tuck School  Mortimer J. Buckley  James M. Norris 
of Business Administration at Dartmouth College.  Kathleen C. Gubanich  Glenn W. Reed 
  Paul A. Heller  George U. Sauter 
 
 
  Founder   
  John C. Bogle   
  Chairman and Chief Executive Officer, 1974–1996 

1 These individuals are “interested persons” as defined in the Investment Company Act of 1940.
2 December 2002 for Vanguard Equity Income Fund, Vanguard Growth Equity Fund, the Vanguard Municipal Bond Funds, and the Vanguard
State Tax-Exempt Funds.



P.O. Box 2600
Valley Forge, PA 19482-2600

Connect with Vanguard® > www.vanguard.com

Fund Information > 800-662-7447  All comparative mutual fund data are from Lipper Inc. 
  or Morningstar, Inc., unless otherwise noted. 
Direct Investor Account Services > 800-662-2739   
  You can obtain a free copy of Vanguard’s proxy voting 
Institutional Investor Services > 800-523-1036  guidelines by visiting our website, www.vanguard.com, 
  and searching for “proxy voting guidelines,” or by 
Text Telephone for People  calling Vanguard at 800-662-2739. The guidelines are 
With Hearing Impairment > 800-952-3335  also available from the SEC’s website, www.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 
This material may be used in conjunction  either www.vanguard.com or www.sec.gov. 
with the offering of shares of any Vanguard 
fund only if preceded or accompanied by  You can review and copy information about your fund 
the fund’s current prospectus.  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 
The funds or securities referred to herein are not  available on the SEC’s website, and you can receive 
sponsored, endorsed, or promoted by MSCI, and MSCI  copies of this information, for a fee, by sending a 
bears no liability with respect to any such funds or  request in either of two ways: via e-mail addressed to 
securities. For any such funds or securities, the  publicinfo@sec.gov or via regular mail addressed to the 
prospectus or the Statement of Additional Information  Public Reference Section, Securities and Exchange 
contains a more detailed description of the limited  Commission, Washington, DC 20549-0102. 
relationship MSCI has with The Vanguard Group and 
any related funds. 
 
 
 
 
  © 2009 The Vanguard Group, Inc. 
  All rights reserved. 
  Vanguard Marketing Corporation, Distributor. 
  Q8280 102009 



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: Charles D. Ellis, Rajiv L. Gupta, JoAnn Heffernan Heisen, 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 August 31, 2009: $423,000
Fiscal Year Ended August 31, 2008: $405,000

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Aggregate Audit Fees of Registered Investment Companies in the Vanguard Group.

Fiscal Year Ended August 31, 2009: $3,354,640
Fiscal Year Ended August 31, 2008: $3,055,590

(b) Audit-Related Fees.

Fiscal Year Ended August 31, 2009: $876,210
Fiscal Year Ended August 31, 2008: $626,240

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 August 31, 2009: $423,070
Fiscal Year Ended August 31, 2008: $230,400

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 August 31, 2009: $0
Fiscal Year Ended August 31, 2008: $0

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 August 31, 2009: $423,070
Fiscal Year Ended August 31, 2008: $230,400

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: Not Applicable.

Item 6: Not Applicable.

Item 7: Not Applicable.

Item 8: Not Applicable.

Item 9: Not Applicable.

Item 10: 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.

  VANGUARD WORLD FUNDS 
 
 
BY:  /s/ F. WILLIAM MCNABB III* 
  F. WILLIAM MCNABB III 
  CHIEF EXECUTIVE OFFICER 

Date: October 22, 2009

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.

  VANGUARD WORLD FUNDS 
 
 
BY:  /s/ F. WILLIAM MCNABB III* 
  F. WILLIAM MCNABB III 
  CHIEF EXECUTIVE OFFICER 

Date: October 22, 2009

  VANGUARD WORLD FUNDS 
 
 
BY:  /s/ THOMAS J. HIGGINS* 
  THOMAS J. HIGGINS 
  CHIEF FINANCIAL OFFICER 

Date: October 22, 2009

* By: /s/ Heidi Stam

Heidi Stam, pursuant to a Power of Attorney filed on July 24, 2009, see file Number
2-88373, and a Power of Attorney filed on October 16, 2009, see File Number 2-52698, both
Incorporated by Reference