Vanguardfi Small-Cap Index Fund - Vanguard Advisors

Vanguard?

Vanguard? Small-Cap Index Fund

Investment Approach Seeks to track the performance of the CRSP US Small Cap Index. Small-cap equity diversified across growth and value styles. Passively managed, full-replication approach. Fund remains fully invested. Low expenses minimize net tracking error.

Note: The Investor Shares are closed to new investors.

Vanguard Style View: Small Blend

Index portfolio of small-capitalization stocks diversified across investment styles.

Investment style Value Blend Growth Large

Mid

Small

Market capitalization

Central tendency Expected range of fund holdings

Quarterly Commentary

Major stock markets continued to advance in the first quarter of 2024, with a number of indexes reaching record highs. In the U.S., inflation readings came in higher than expected, but the labor market stayed on a solid footing, consumer spending remained strong, and the economy showed continued vigor. Given this backdrop, the Federal Reserve left interest rates unchanged.

Global stocks returned just shy of 8% for the quarter, as measured by the FTSE Global All Cap Index. U.S. equities led the way, while those in emerging markets lagged but still finished in positive territory.

With rate cuts looking less imminent, bond yields generally rose and prices declined. The broad U.S. investment-grade bond market returned ?0.72% (as measured by the Bloomberg U.S. Aggregate Float Adjusted Index).

The CRSP US Small Cap Index returned 7.51% for the three-month period ended March 31. The index's large-cap counterpart, the CRSP US Large Cap Index, returned 10.38%.

Industrials (+11.8%), technology (+11.3%), and consumer discretionary (+8.4%) were the top contributors to performance. Real estate (?1.7%) and telecommunications (?9.0%) detracted.

For the 12-month period ended March 31, 2024, the CRSP US Small Cap Index returned 22.42%. Industrials (+35.2%), technology (+31.5%), financials (+29.1%), and consumer discretionary (+20.1%) were the leading contributors. The only detractor was telecommunications (?16.1%).

People and Process

Vanguard Small-Cap Index Fund seeks to track the investment performance of the CRSP US Small Cap Index, an unmanaged benchmark representing small U.S. companies. Using full replication, the portfolio holds all stocks in the same capitalization weighting as the index. The experience and stability of Vanguard's Equity Index Group have permitted continuous refinement of techniques for reducing tracking error. The group uses proprietary software to implement trading decisions that accommodate cash flow and maintain close correlation with index characteristics. Vanguard's refined indexing process, combined with low management fees and efficient trading, has provided tight tracking net of expenses.

Vanguard Equity Index Group

Launched in 1975, The Vanguard Group, Malvern, Pennsylvania, is among the world's largest equity and fixed income managers. As chief investment officer, Gregory Davis, CFA, oversees Vanguard's Equity Index, Investment Strategy, Quantitative Equity, and Fixed Income Groups. Rodney Comegys, Principal and global head of Vanguard's Equity Index Group, is responsible for all equity index funds. The Equity Index Group manages indexed equity portfolios covering U.S. and international markets. It has developed sophisticated portfolio construction methodologies and efficient trading strategies that seek to deliver returns that are highly correlated with target portfolio benchmarks. The group has advised Vanguard Small-Cap Index Fund since 1989.

Investment Manager Biographies

Gerard C. O'Reilly, Principal. Portfolio manager. Advised the fund since 2016. Worked in investment management since 1992. B.S., Villanova University.

Kenny Narzikul, CFA. Portfolio manager. Advised the fund since 2023. Worked in investment management since 2016. B.B.A., James Madison University.

As of March 31, 2024

Vanguard Small-Cap Index Fund

Total Returns

Small-Cap Index Fund Investor Shares (10/3/1960) Admiral Shares (11/13/2000) Institutional Shares (7/7/1997) Institutional Plus Shares (12/17/2010)

Spliced Small-Cap Index

Expense Ratio

0.17% 0.05 0.04 0.03

--

Quarter

7.48% 7.52 7.52 7.52 7.51

Year to Date

7.48% 7.52 7.52 7.52 7.51

1 Year

22.36% 22.50 22.53 22.53 22.42

3 Years

3.67% 3.80 3.81 3.82 3.75

5 Years

9.85% 9.99 10.00 10.01 9.94

10 Years

8.81% 8.94 8.95 8.96 8.91

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 performance. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index. Figures for periods of less than one year are cumulative returns. All other figures represent average annual returns. Performance figures include the reinvestment of all dividends and any capital gains distributions. All returns are net of expenses.

Note: Spliced Small-Cap Index: Russell 2000 Index through May 16, 2003; MSCI US Small Cap 1750 Index through January 30, 2013; CRSP US Small Cap Index thereafter. Admiral class shareholders are required to maintain specific minimum balances and meet other special criteria. Institutional class shareholders are required to maintain a minimum balance of $5 million. Institutional Plus class shareholders are required to maintain a minimum balance of $100 million.

As of March 31, 2024

Vanguard Small-Cap Index Fund

Quarterly Returns: Investor Shares

Year 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014

1st Quarter 7.48% 3.70 -5.77 10.19

-30.10 16.15 -0.24 3.70 0.97 4.75 2.56

2nd Quarter --

5.29% -16.90

5.57 26.65 2.85

6.18 1.92 3.95 -0.60 3.72

3rd Quarter --

-4.63% -2.64 -2.65 5.76 -1.49 4.74 4.54 6.14 -10.34 -5.51

4th Quarter --

13.37% 7.94 3.84 27.05 8.11 -18.36 5.07 6.08 3.07 6.82

Small-Cap Index --

18.05% -17.71 17.59 18.96 27.22 -9.43 16.10 18.17 -3.78

7.37

Spliced Small-Cap

Index --

18.09% -17.64

17.71 19.07 27.35 -9.33 16.24 18.26 -3.68 7.54

Year-End

Assets (Millions)

$360 375 424 619 709 754

3,332 4,345 4,401 4,058 4,606

Quarterly Returns: Admiral Shares

Year 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014

1st Quarter 7.52% 3.74 -5.74 10.22

-30.07 16.18 -0.21 3.74 1.00 4.81 2.59

2nd Quarter --

5.32% -16.88

5.60 26.66

2.87 6.20 1.95 3.98 -0.56 3.77

3rd Quarter --

-4.61% -2.61 -2.62 5.79 -1.45 4.77 4.57 6.17 -10.33 -5.49

4th Quarter --

13.41% 7.97 3.87 27.10 8.14 -18.33 5.10 6.10 3.11 6.84

Small-Cap Index --

18.20% -17.61 17.73 19.11 27.37 -9.31 16.24 18.30 -3.64 7.50

Spliced Small-Cap

Index --

18.09% -17.64

17.71 19.07 27.35 -9.33 16.24 18.26 -3.68 7.54

Year-End

Assets (Millions) $55,202

51,854 44,944 55,266 47,313 42,386 31,382 33,801 27,778 21,441 20,034

As of March 31, 2024

Vanguard Small-Cap Index Fund

Quarterly Returns: Institutional Shares

Year 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014

1st Quarter 7.52% 3.74 -5.74

10.23 -30.08

16.20 -0.21 3.74 1.00 4.81 2.61

2nd Quarter --

5.34% -16.88

5.59 26.69

2.87 6.21 1.94 3.98 -0.56 3.77

3rd Quarter --

-4.61% -2.60 -2.61 5.80 -1.45 4.78 4.59

6.15 -10.32 -5.47

4th Quarter --

13.41% 7.96 3.86 27.10 8.14 -18.34 5.10 6.13 3.12 6.83

Small-Cap Index --

18.22% -17.60 17.73

19.12 27.40 -9.32 16.25 18.32 -3.63

7.53

Spliced Small-Cap

Index --

18.09% -17.64

17.71 19.07 27.35 -9.33 16.24 18.26 -3.68 7.54

Year-End

Assets (Millions) $22,046

20,490 17,363 21,841 18,957 17,337 14,454 15,352 13,030 10,036 9,975

Quarterly Returns: Institutional Plus Shares

Year 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014

1st Quarter 7.52% 3.74 -5.74 10.22

-30.07 16.19 -0.20 3.75 1.02 4.81 2.60

2nd Quarter --

5.33% -16.88

5.60 26.68 2.88

6.21 1.94 3.99 -0.56 3.77

3rd Quarter --

-4.60% -2.60 -2.61 5.80 -1.45 4.74 4.59

6.16 -10.32 -5.47

4th Quarter --

13.42% 7.98 3.87 27.11 8.15 -18.31 5.10 6.11 3.11 6.85

Small-Cap Index --

18.22% -17.60 17.75

19.13 27.40 -9.30 16.27 18.33 -3.62

7.55

Spliced Small-Cap

Index --

18.09% -17.64

17.71 19.07 27.35 -9.33 16.24 18.26 -3.68 7.54

Year-End

Assets (Millions)

$11,059 10,573 9,146 12,638 10,172 8,846 7,866 9,531 8,080 6,925 6,024

As of March 31, 2024

Vanguard Small-Cap Index Fund

Fund Facts

Fund Number Ticker Newspaper Listing CUSIP Number Assets (millions)

(Total $145,285) Inception Expense Ratio

(as of 4/2023)

Equity Characteristics

Number of stocks Median market cap Average market cap Price/earnings ratio Price/book ratio Return on equity Earnings growth rate Equity yield (dividend) Foreign holdings Short-term reserves Turnover rate (fiscal year end)

Investor Shares

0048 NAESX SmCap 922908702

$360

10/3/1960

0.17%

Admiral Shares

0548 VSMAX SmCapAdml 922908686 $55,202

11/13/2000

0.05%

Institutional Shares 0857 VSCIX

SmCapInst 922908876

$22,046

7/7/1997

0.04%

Institutional Plus

Shares 1861

VSCPX SmCapIstPl 922908397

$11,059

12/17/2010

0.03%

Small-Cap Index

1,413 $7.3 Billion $8.5 Billion

18.2x 2.4x 10.5% 15.2% 1.4% 0.2% 0.0% 12.0%

CRSP US Small Cap

Index

1,407 $7.3 Billion $8.5 Billion

18.2x 2.4x 10.5% 15.2% 1.4% 0.0%

-- --

Volatility Measures

R-Squared

Beta

Spliced Small Cap Index

1.00

1.00

DJ US Total Stock Mkt Float Adj Idx

0.87

1.07

R-squared and beta are calculated from trailing 36-month fund returns relative to the associated benchmark.

Top 10 Largest Holdings

% of Total Net Assets

MicroStrategy Inc.

0.4 %

Builders FirstSource Inc.

0.4

Targa Resources Corp.

0.4

Deckers Outdoor Corp.

0.4

Axon Enterprise Inc.

0.4

PTC Inc.

0.4

Entegris Inc.

0.4

Williams-Sonoma Inc.

0.4

DraftKings Inc.

0.3

Booz Allen Hamilton Holding Corp.

0.3

Total

3.8 %

The holdings listed exclude any temporary cash investments and equity index products.

As of March 31, 2024

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