N-Q 1 chester_final.htm CHESTER QUARTERLY REPORT

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

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF
REGISTERED MANAGEMENT COMPANY


Investment Company Act file number: 811-4098

Name of Registrant: Vanguard Chester 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: September 30

Date of reporting period: June 30, 2008

Item 1: Schedule of Investments



Vanguard PRIMECAP Fund

Schedule of Investments

As of June 30, 2008

 

 

 

Shares

Market
Value•
($000

)

 

Common Stocks (93.4%)

 

Consumer Discretionary (10.2%)

 

*

DIRECTV Group, Inc.

28,720,807

744,156

 

 

Sony Corp. ADR

12,075,000

528,160

 

 

TJX Cos., Inc.

12,844,800

404,226

 

1

Whirlpool Corp.

5,585,000

344,762

 

 

Target Corp.

5,019,000

233,333

 

*

Kohl's Corp.

5,167,400

206,903

 

 

The Walt Disney Co.

5,650,000

176,280

 

 

Eastman Kodak Co.

9,000,000

129,870

 

*

Amazon.com, Inc.

1,502,600

110,186

 

*

Bed Bath & Beyond, Inc.

3,345,975

94,022

 

 

Mattel, Inc.

4,533,700

77,617

 

 

Best Buy Co., Inc.

1,575,000

62,370

 

 

Lowe's Cos., Inc.

2,450,000

50,837

 

*

Viacom Inc. Class B

1,378,200

42,090

 

 

Carnival Corp.

1,200,000

39,552

 

 

Abercrombie & Fitch Co.

375,000

23,505

 

 

Comcast Corp. Class A

831,450

15,773

 

 

3,283,642

 

Consumer Staples (1.7%)

 

 

Costco Wholesale Corp.

6,900,000

483,966

 

 

Avon Products, Inc.

1,600,000

57,632

 

 

541,598

 

Energy (8.9%)

 

 

Noble Energy, Inc.

5,960,000

599,338

 

 

Schlumberger Ltd.

5,098,500

547,732

 

 

Hess Corp.

3,000,000

378,570

 

 

Peabody Energy Corp.

4,100,000

361,005

 

 

EOG Resources, Inc.

2,245,000

294,544

 

*

Plains Exploration & Production Co.

3,869,620

282,366

 

 

EnCana Corp.

2,232,000

202,956

 

 

ConocoPhillips Co.

900,000

84,951

 

*

Patriot Coal Corp.

360,000

55,184

 

 

Murphy Oil Corp.

350,000

34,318

 

 

Noble Corp.

470,000

30,531

 

*

National Oilwell Varco Inc.

13,000

1,153

 

 

2,872,648

 

Financials (4.2%)

 

 

Marsh & McLennan Cos., Inc.

13,678,000

363,151

 

*

Berkshire Hathaway Inc. Class B

65,600

263,187

 

 

Bank of New York Mellon Corp.

3,962,280

149,893

 

 

Discover Financial Services

10,140,800

133,554

 

 

The Chubb Corp.

2,400,000

117,624

 

 

American International Group, Inc.

4,277,300

113,177

 

 

AFLAC Inc.

980,000

61,544

 

 

JPMorgan Chase & Co.

880,000

30,193

 

 

Wells Fargo & Co.

1,150,000

27,312

 

 

Progressive Corp. of Ohio

1,180,000

22,090

 

 

Capital One Financial Corp.

505,000

19,195

 

 

State Street Corp.

180,000

11,518

 

 

Fannie Mae

300,000

5,853

 

 

Freddie Mac

295,000

4,838

 

 

Fifth Third Bancorp

445,000

4,530

 

*

SLM Corp.

110,000

2,129

 

 

Citigroup, Inc.

60,000

1,006

 

 

Washington Mutual, Inc.

100,000

493

 

 

1,331,287

 

Health Care (21.6%)

 

 

Eli Lilly & Co.

25,703,500

1,186,474

 

 

Medtronic, Inc.

20,606,652

1,066,394

 

 

Novartis AG ADR

18,849,765

1,037,491

 

*

Biogen Idec Inc.

13,750,893

768,537

 

*

Amgen, Inc.

15,087,100

711,508

 

 

Roche Holdings AG

3,050,000

548,306

 

*

Boston Scientific Corp.

37,877,610

465,516

 

*

Genzyme Corp.

4,400,000

316,888

 

1

Applera Corp.-Applied Biosystems Group

8,799,800

294,617

 

 

GlaxoSmithKline PLC ADR

5,675,000

250,948

 

*,1

Millipore Corp.

2,820,000

191,365

 

 

Wyeth

1,160,000

55,634

 

*

Sepracor Inc.

2,200,000

43,824

 

*

Genentech, Inc.

66,800

5,070

 

 

Sanofi-Aventis ADR

90,000

2,991

 

 

6,945,563

 

Industrials (9.8%)

 

 

FedEx Corp.

13,591,800

1,070,898

 

 

Southwest Airlines Co.

34,118,300

444,903

 

 

Caterpillar, Inc.

5,256,900

388,064

 

 

United Parcel Service, Inc.

3,515,000

216,067

 

 

Union Pacific Corp.

2,501,300

188,848

 

 

Deere & Co.

2,570,000

185,374

 

 

 

 

 

 

 

Honeywell International Inc.

3,317,600

166,809

 

 

The Boeing Co.

1,274,650

83,770

 

 

Canadian Pacific Railway Ltd.

1,228,700

81,266

 

*,^,1

AMR Corp.

15,219,100

77,922

 

 

Donaldson Co., Inc.

1,600,000

71,424

 

 

Granite Construction Co.

1,500,000

47,295

 

 

C.H. Robinson Worldwide Inc.

853,500

46,806

 

*,1

Alaska Air Group, Inc.

2,540,000

38,964

 

 

Pall Corp.

750,000

29,760

 

 

3M Co.

300,000

20,877

 

 

Norfolk Southern Corp.

30,500

1,911

 

 

Canadian National Railway Co.

13,600

654

 

 

 

3,161,612

 

Information Technology (26.8%)

 

*

Adobe Systems, Inc.

25,055,000

986,916

 

*

Oracle Corp.

41,550,600

872,563

 

 

Texas Instruments, Inc.

30,935,000

871,130

 

 

Microsoft Corp.

26,490,000

728,740

 

*

Google Inc.

1,097,500

577,746

 

*,1

Intuit, Inc.

17,300,000

476,961

 

 

QUALCOMM Inc.

10,733,000

476,223

 

 

Hewlett-Packard Co.

8,650,000

382,417

 

 

Corning, Inc.

16,280,400

375,263

 

 

Intel Corp.

17,300,000

371,604

 

*

EMC Corp.

22,229,200

326,547

 

*,1

Citrix Systems, Inc.

9,950,000

292,630

 

*

Symantec Corp.

12,009,200

232,378

 

*

Micron Technology, Inc.

36,512,373

219,074

 

*

eBay Inc.

6,625,000

181,061

 

 

Accenture Ltd.

4,136,200

168,426

 

^

LM Ericsson Telephone Co. ADR Class B

16,127,714

167,728

 

 

Applied Materials, Inc.

7,435,000

141,934

 

*

NVIDIA Corp.

6,900,000

129,168

 

 

KLA-Tencor Corp.

2,691,000

109,551

 

1

Plantronics, Inc.

4,701,500

104,938

 

 

Motorola, Inc.

14,170,000

104,008

 

 

ASML Holding NV (New York Shares)

3,623,111

88,404

 

*

Nortel Networks Corp.

7,472,040

61,420

 

*

Rambus Inc.

2,500,000

47,675

 

*

Cisco Systems, Inc.

1,500,000

34,890

 

*

Dell Inc.

1,380,000

30,194

 

*

Yahoo! Inc.

882,400

18,230

 

*

Entegris Inc.

2,583,472

16,922

 

*

Agilent Technologies, Inc.

107,681

3,827

 

*

Verigy Ltd.

13,184

299

 

 

 

8,598,867

 

Materials (9.8%)

 

 

Potash Corp. of Saskatchewan, Inc.

6,243,300

1,427,031

 

 

Monsanto Co.

6,351,460

803,079

 

 

Praxair, Inc.

3,850,100

362,833

 

 

Alcoa Inc.

4,854,000

172,899

 

 

Weyerhaeuser Co.

2,377,231

121,572

 

 

Freeport-McMoRan Copper & Gold, Inc. Class B

600,000

70,314

 

*

Domtar Corp.

12,582,723

68,576

 

^

Vulcan Materials Co.

1,000,000

59,780

 

 

Dow Chemical Co.

1,500,000

52,365

 

 

Rohm & Haas Co.

20,000

929

 

 

 

3,139,378

 

Telecommunication Services (0.3%)

 

 

Sprint Nextel Corp.

11,202,000

106,419

 

 

 

Utilities (0.1%)

 

*

AES Corp.

1,615,000

31,024

 

 

 

Total Common Stocks
(Cost $20,658,816)

 

30,012,038

 

Temporary Cash Investments (7.3%)

 

Money Market Fund (7.3%)

 

2

Vanguard Market Liquidity Fund, 2.405% (Cost $2,328,513)

2,328,513,048

2,328,513

 

Total Investments (100.7%)
(Cost $22,987,329)

 

32,340,551

 

Other Assets and Liabilities-Net (-0.7%)

(215,472)

 

Net Assets (100%)

32,125,079

 

 

 

 

 

 

*

Non-income-producing security.

 

^

Part of security position is on loan to broker-dealers.

 

1

Considered an affiliated company of the fund as the fund owns more than 5% of the outstanding voting securities of such company.

 

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.

 

 

 

ADR—American Depositary Receipt.

 

 

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.

 

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).

 

At June 30, 2008, the cost of investment securities for tax purposes was $22,987,329,000. Net unrealized appreciation of investment securities for tax purposes was $9,353,222,000, consisting of unrealized gains of $12,233,324,000 on securities that had risen in value since their purchase and $2,880,102,000 in unrealized losses on securities that had fallen in value since their purchase.

 

Certain of the fund's investments are in companies that are considered to be affiliated companies of the fund because the fund owns more than 5% of the outstanding voting securities of the company. Transactions during the period in securities of these companies were as follows:

 

 

 

Current Period Transactions

 

 

September 30, 2007

 

Proceeds from

 

June 30, 2008

 

Market

Purchases

Securities

Dividend

Market

 

Value

at Cost

Sold

Income

Value

 

($000)

($000)

($000)

($000)

($000)

Alaska Air Group, Inc.

58,649

-

-

-

38,964

AMR Corp.

na¹

233,108

115,486

-

77,922

Applera Corp.-Applied Biosystems Group

na¹

-

4,999

1,502

294,617

Citrix Systems, Inc.

401,184

-

-

-

292,630

Intuit, Inc.

na¹

16,636

-

-

476,961

Millipore Corp.

213,756

-

-

-

191,365

 

 

 

Plantronics, Inc.

134,228

-

-

705

104,938

Pogo Producing Co.

173,139

-

-

-

na²

Tektronix, Inc.

132,359

-

181,313

286

-

Whirlpool Corp.

356,400

121,103

-

6,265

344,762

 

 

 

 

 

 

 

1,469,715

 

 

8,758

1,822,159

 

 

 

 

 

 

¹ At September 30, 2007, the issuer was not an affiliated company of the fund.

 

 

² In November 2007, Pogo Producing Co. merged with Plains Exploration & Production Co.

 

 

At June 30, 2008, Plains Exploration & Production Co. was not an affiliated company of the fund.

 

 

 

 

 

 



Vanguard Target Retirement Income Fund
Schedule of Investments
As of June 30, 2008

 

 

Shares

Market
Value
($000)

Investment Companies (104.7%)

U.S. Stock Funds (25.0%)

 

Vanguard Total Stock Market Index Fund Investor Shares

16,122,054

503,330

 

Vanguard Total Stock Market ETF

123,358

7,906

 

511,236

Bond Funds (68.2%)

 

Vanguard Total Bond Market Index Fund Investor Shares

96,162,804

964,513

 

Vanguard Inflation-Protected Securities Fund Investor Shares

33,664,750

427,206

 

1,391,719

International Stock Funds (6.3%)

 

Vanguard European Stock Index Fund Investor Shares

1,994,163

69,577

 

Vanguard Pacific Stock Index Fund Investor Shares

2,640,938

31,295

 

Vanguard Emerging Markets Stock Index Fund Investor Shares

934,746

27,341

 

128,213

Money Market Fund (5.2%)

 

Vanguard Prime Money Market Fund Investor Shares

107,038,918

107,039

Total Investment Companies (Cost $2,134,253)

2,138,207

Other Assets and Liabilities - Net (-4.7%)

(96,424)

Net Assets (100%)

2,041,783

 

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. Investments in other Vanguard funds (with the exception of ETF Shares) are valued at that fund’s net asset value. ETFs are valued at the latest quoted sales prices or official closing prices taken from their primary market or, if not traded on the valuation date, at the mean of the latest quoted bid and asked prices.

 

At June 30, 2008, the cost of investment securities for tax purposes was $2,134,253,000. Net unrealized appreciation of investment securities for tax purposes was $3,954,000, consisting of unrealized gains of $15,778,000 on securities that had risen in value since their purchase and $11,824,000 in unrealized losses on securities that had fallen in value since their purchase.

 

 

 



Vanguard Target Retirement 2005 Fund

Schedule of Investments

As of June 30, 2008

 

 

Shares

Market
Value
($000)

Investment Companies (100.2%)

U.S. Stock Funds (33.7%)

 

Vanguard Total Stock Market Index Fund Investor Shares

19,467,971

607,790

 

Vanguard Total Stock Market ETF

200,000

12,818

 

620,608

Bond Funds (56.1%)

 

Vanguard Total Bond Market Index Fund Investor Shares

77,531,537

777,641

 

Vanguard Inflation-Protected Securities Fund Investor Shares

20,287,719

257,451

 

1,035,092

International Stock Funds (8.4%)

 

Vanguard European Stock Index Fund Investor Shares

2,420,400

84,448

 

Vanguard Pacific Stock Index Fund Investor Shares

3,230,620

38,283

 

Vanguard Emerging Markets Stock Index Fund Investor Shares

1,128,249

33,001

 

155,732

Money Market Fund (2.0%)

 

Vanguard Prime Money Market Fund Investor Shares

36,160,082

36,160

Total Investment Companies (Cost $1,830,040)

1,847,592

Other Assets and Liabilities - Net (-0.2%)

(4,279)

Net Assets (100%)

1,843,313

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. Investments in other Vanguard funds (with the exception of ETF Shares) are valued at that fund’s net asset value. ETFs are valued at the latest quoted sales prices or official closing prices taken from their primary market or, if not traded on the valuation date, at the mean of the latest quoted bid and asked prices.

 

At June 30, 2008, the cost of investment securities for tax purposes was $1,830,040,000. Net unrealized appreciation of investment securities for tax purposes was $17,552,000, consisting of unrealized gains of $22,484,000 on securities that had risen in value since their purchase and $4,932,000 in unrealized losses on securities that had fallen in value since their purchase.

 

 

 

 



Vanguard Target Retirement 2010 Fund

Schedule of Investments

As of June 30, 2008

 

 

Shares

Market
Value
($000)

 

Investment Companies (100.2%)

 

U.S. Stock Funds (43.6%)

 

 

Vanguard Total Stock Market Index Fund Investor Shares

36,145,686

1,128,468

 

 

Vanguard Total Stock Market ETF

14,400

923

 

 

1,129,391

 

Bond Funds (45.7%)

 

 

Vanguard Total Bond Market Index Fund Investor Shares

103,902,910

1,042,146

 

 

Vanguard Inflation-Protected Securities Fund Investor Shares

11,265,533

142,960

 

 

1,185,106

 

International Stock Funds (10.9%)

 

 

Vanguard European Stock Index Fund Investor Shares

4,400,048

153,518

 

 

Vanguard Pacific Stock Index Fund Investor Shares

5,866,629

69,520

 

 

Vanguard Emerging Markets Stock Index Fund Investor Shares

2,060,557

60,271

 

 

283,309

 

Total Investment Companies (Cost $2,721,733)

2,597,806

 

Other Assets and Liabilities - Net (-0.2%)

(4,669)

 

Net Assets (100%)

2,593,137

 

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. Investments in other Vanguard funds (with the exception of ETF Shares) are valued at that fund’s net asset value. ETFs are valued at the latest quoted sales prices or official closing prices taken from their primary market or, if not traded on the valuation date, at the mean of the latest quoted bid and asked prices.

 

At June 30, 2008, the cost of investment securities for tax purposes was $2,721,733,000. Net unrealized depreciation of investment securities for tax purposes was $123,927,000, consisting of unrealized gains of $4,969,000 on securities that had risen in value since their purchase and $128,896,000 in unrealized losses on securities that had fallen in value since their purchase.

 

 

 



Vanguard Target Retirement 2015 Fund

Schedule of Investments

As of June 30, 2008

 

 

Shares

Market
Value
($000)

Investment Companies (100.0%)

 

U.S. Stock Funds (50.5%)

 

 

Vanguard Total Stock Market Index Fund Investor Shares

129,822,521

4,053,059

 

Vanguard Total Stock Market ETF

1,105,600

70,858

 

4,123,917

Bond Funds (36.8%)

 

Vanguard Total Bond Market Index Fund Investor Shares

298,955,960

2,998,528

 

 

 

 

International Stock Funds (12.7%)

 

 

Vanguard European Stock Index Fund Investor Shares

16,104,700

561,893

 

Vanguard Pacific Stock Index Fund Investor Shares

21,480,840

254,548

 

Vanguard Emerging Markets Stock Index Fund Investor Shares

7,501,657

219,424

 

1,035,865

Total Investment Companies (Cost $8,194,562)

 

8,158,310

Other Assets and Liabilities - Net (0.0%)

 

(1,028)

Net Assets (100%)

 

8,157,282

 

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. Investments in other Vanguard funds (with the exception of ETF Shares) are valued at that fund’s net asset value. ETFs are valued at the latest quoted sales prices or official closing prices taken from their primary market or, if not traded on the valuation date, at the mean of the latest quoted bid and asked prices.

 

At June 30, 2008, the cost of investment securities for tax purposes was $8,194,562,000. Net unrealized depreciation of investment securities for tax purposes was $36,252,000, consisting of unrealized gains of $88,950,000 on securities that had risen in value since their purchase and $125,202,000 in unrealized losses on securities that had fallen in value since their purchase.

 

 

 



Vanguard Target Retirement 2020 Fund

Schedule of Investments

As of June 30, 2008

 

 

Shares

Market
Value
($000)

Investment Companies (97.4%)

 

U.S. Stock Funds (55.1%)

 

 

Vanguard Total Stock Market Index Fund Investor Shares

66,890,403

2,088,318

 

Vanguard Total Stock Market ETF

55,400

3,551

 

2,091,869

Bond Funds (28.5%)

 

 

Vanguard Total Bond Market Index Fund Investor Shares

107,814,386

1,081,378

 

 

 

 

International Stock Funds (13.8%)

 

 

Vanguard European Stock Index Fund Investor Shares

8,153,426

284,473

 

Vanguard Pacific Stock Index Fund Investor Shares

10,892,725

129,079

 

Vanguard Emerging Markets Stock Index Fund Investor Shares

3,801,127

111,183

 

524,735

Money Market Fund (0.0%)

 

1

Vanguard Market Liquidity Fund, 2.405%

1,225,178

1,225

Total Investment Companies (Cost $3,934,554)

 

3,699,207

Other Assets and Liabilities - Net (2.6%)

 

98,941

Net Assets (100%)

 

3,798,148

 

 

 

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.


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. Investments in other Vanguard funds (with the exception of ETF Shares) are valued at that fund’s net asset value. ETFs are valued at the latest quoted sales prices or official closing prices taken from their primary market or, if not traded on the valuation date, at the mean of the latest quoted bid and asked prices.

 

At June 30, 2008, the cost of investment securities for tax purposes was $3,934,554,000. Net unrealized depreciation of investment securities for tax purposes was $235,347,000, consisting entirely of unrealized losses on securities that had fallen in value since their purchase.

 

 

 



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Item 2: 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. During the last fiscal quarter, there was no significant change in the Registrant’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 3:

 Exhibits.
(a) 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 CHESTER FUNDS

BY: (signature)
(HEIDI STAM)
JOHN J. BRENNAN*
CHIEF EXECUTIVE OFFICER

Date: August 19, 2008

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 CHESTER FUNDS

BY: (signature)
(HEIDI STAM)
JOHN J. BRENNAN*
CHIEF EXECUTIVE OFFICER

Date: August 19, 2008

VANGUARD CHESTER FUNDS

BY: (signature)
(HEIDI STAM)
THOMAS J. HIGGINS*
TREASURER

Date: August 19, 2008

* By Power of Attorney. Filed on January 18, 2008, see File Number 2-29601. Incorporated by reference.