Vanguard Institutional Target Retirement Funds

Annual Report | September 30, 2021

Vanguard Institutional Target Retirement Funds

Vanguard Institutional Target Retirement 2040 Fund Vanguard Institutional Target Retirement 2045 Fund Vanguard Institutional Target Retirement 2050 Fund Vanguard Institutional Target Retirement 2055 Fund Vanguard Institutional Target Retirement 2060 Fund Vanguard Institutional Target Retirement 2065 Fund

Contents Your Fund's Performance at a Glance . . . . . . . . . . . . . . . . 1 About Your Fund's Expenses . . . . . . . . . . . . . . . . . . . . . . . . 2 Institutional Target Retirement 2040 Fund . . . . . . . . . . . 4 Institutional Target Retirement 2045 Fund . . . . . . . . . . .17 Institutional Target Retirement 2050 Fund . . . . . . . . . . .30 Institutional Target Retirement 2055 Fund . . . . . . . . . . .43 Institutional Target Retirement 2060 Fund . . . . . . . . . . .56 Institutional Target Retirement 2065 Fund . . . . . . . . . . .69

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.

Your Fund's Performance at a Glance

? For the 12 months ended September 30, 2021, returns for the six Vanguard Institutional Target Retirement Funds covered in this report ranged from 23.12% for the Institutional Target Retirement 2040 Fund to 25.79% for the Institutional Target Retirement 2060 Fund. (The funds with target dates of 2015 through 2035, as well as the Institutional Target Retirement Income Fund, are covered in a separate report.)

? The global economy rebounded faster than many had expected after the sharp pandemic-induced contraction in the spring of 2020. Stock returns were strong and bond yields moved broadly higher.

? Vanguard Institutional Target Retirement Funds are designed to reach an allocation of 70% bonds and 30% stocks within seven years after their target dates. The funds invest all their assets in Vanguard index funds that seek to match the performance of broad stock and bond market indexes.

? From their inception dates through September 30, the funds' average annual returns ranged from 9.76% for the Institutional Target Retirement 2040 Fund to 12.07% for the Institutional Target Retirement 2065 Fund.

? In late September, Vanguard announced plans to merge each of the Institutional Target Retirement Funds into its corresponding Vanguard Target Retirement Fund. The mergers are scheduled to be completed in February 2022.

Market Barometer

Stocks Russell 1000 Index (Large-caps) Russell 2000 Index (Small-caps) Russell 3000 Index (Broad U.S. market) FTSE All-World ex US Index (International)

Bonds Bloomberg U.S. Aggregate Bond Index (Broad taxable market) Bloomberg Municipal Bond Index (Broad tax-exempt market) FTSE Three-Month U.S. Treasury Bill Index

CPI Consumer Price Index

Average Annual Total Returns Periods Ended September 30, 2021

One Year

Three Years

Five Years

30.96% 47.68 31.88 24.73

16.43% 10.54 16.00

8.49

17.11% 13.45 16.85

9.28

-0.90% 2.63 0.06

5.39%

5.36% 5.06 1.14

2.81%

2.94% 3.26 1.13

2.59%

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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. The Institutional Target Retirement Funds have no direct expenses, but each fund bears its proportionate share of the costs for the underlying funds in which it invests. These indirect expenses make up the acquired fund fees and expenses, also expressed as a percentage of average net assets. 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 costs were calculated using the acquired fund fees and expenses for each Institutional Target Retirement Fund.

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. Further, the expenses do not include any purchase, redemption, or account service fees described in the fund prospectus. If such fees were applied to your account, your costs would be higher. Your fund does not carry a "sales load."

The calculations assume no shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.

You can find more information about the fund's expenses 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 September 30, 2021

Beginning Account Value

3/31/2021

Ending Account Value

9/30/2021

Expenses Paid During

Period

Based on Actual Fund Return

Institutional Target Retirement 2040 Fund

$1,000.00

$1,051.20

$0.46

Institutional Target Retirement 2045 Fund

$1,000.00

$1,054.40

$0.46

Institutional Target Retirement 2050 Fund

$1,000.00

$1,054.90

$0.46

Institutional Target Retirement 2055 Fund

$1,000.00

$1,055.10

$0.46

Institutional Target Retirement 2060 Fund

$1,000.00

$1,055.20

$0.46

Institutional Target Retirement 2065 Fund

$1,000.00

$1,054.80

$0.46

Based on Hypothetical 5% Yearly Return

Institutional Target Retirement 2040 Fund

$1,000.00

$1,024.62

$0.46

Institutional Target Retirement 2045 Fund

$1,000.00

$1,024.62

$0.46

Institutional Target Retirement 2050 Fund

$1,000.00

$1,024.62

$0.46

Institutional Target Retirement 2055 Fund

$1,000.00

$1,024.62

$0.46

Institutional Target Retirement 2060 Fund

$1,000.00

$1,024.62

$0.46

Institutional Target Retirement 2065 Fund

$1,000.00

$1,024.62

$0.46

The calculations are based on the acquired fund fees and expenses for the most recent six-month period. The underlying funds' annualized expense figures for that period are (in order as listed from top to bottom above) 0.09%, 0.09%, 0.09%, 0.09%, 0.09%, and 0.09%. The dollar amounts shown as "Expenses Paid" are equal to the annualized average weighted expense ratio for the underlying funds 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 (183/365).

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InstitutionalTarget Retirement 2040 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 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: June 26, 2015, Through September 30, 2021 Initial Investment of $5,000,000

$12,000,000 8,961,018

2015

2016

2017

2018

2019

2020

2021

3,000,000

Average Annual Total Returns Periods Ended September 30, 2021

One Year

Five Years

Since Inception (6/26/2015)

Final Value of a $5,000,000

Investment

Institutional Target Retirement 2040 Fund

23.12%

12.08%

9.76%

$ 8,961,018

Target 2040 Composite Index

23.51

12.42

10.11

9,137,340

MSCI US Broad Market Index

32.45

16.95

14.16

11,457,681

Target 2040 Composite Index: Derived by applying the fund's target asset allocation to the results of the following benchmarks: for international stocks, the FTSE Global All Cap ex US Index; for U.S. bonds, the Bloomberg U.S. Aggregate Float Adjusted Index; for international bonds, the Bloomberg Global Aggregate ex-USD Float Adjusted RIC Capped Index Hedged; and for U.S. stocks, the CRSP US Total Market Index. International stock benchmark returns are adjusted for withholding taxes.

Since Inception performance is calculated from the fund's inception date for both the fund and its comparative standard(s).

See Financial Highlights for dividend and capital gains information. 4

InstitutionalTarget Retirement 2040 Fund

Underlying Vanguard Funds

As of September 30, 2021

Vanguard Total Stock Market Index Fund Institutional Shares

48.2%

Vanguard Total International Stock Index Fund

Investor Shares

32.5

Vanguard Total Bond Market II Index Fund

Investor Shares

13.4

Vanguard Total International Bond II Index

Fund Admiral Shares

5.9

The table reflects the fund's investments, except for short-term investments and derivatives.

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InstitutionalTarget Retirement 2040 Fund

Financial Statements

Schedule of Investments

As of September 30, 2021

The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund's Form N-PORT reports are available on the SEC's website at .

Investment Companies (98.7%)

U.S. Stock Fund (47.6%) Vanguard Total Stock Market Index Fund Institutional Shares

Shares

Market Value? ($000)

214,176,739 23,152,505

International Stock Fund (32.1%) Vanguard Total International Stock Index Fund Investor Shares

768,111,553 15,615,708

U.S. Bond Fund (13.2%) 1 Vanguard Total Bond Market II Index Fund Investor Shares

576,181,802

6,407,142

International Bond Fund (5.8%) 1 Vanguard Total International Bond II Index Fund Admiral Shares Total Investment Companies (Cost $36,529,112) Temporary Cash Investments (1.3%) Money Market Fund (1.3%) 1 Vanguard Market Liquidity Fund, 0.068% (Cost $664,035) Total Investments (100.0%) (Cost $37,193,147) Other Assets and Liabilities--Net (0.0%) Net Assets (100%)

141,731,054

2,837,456 48,012,811

6,640,516

664,052 48,676,863

(21,777) 48,655,086

Cost is in $000.

? See Note A in Notes to Financial Statements.

1 Affiliated fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard. Rate shown for Vanguard Market Liquidity Fund is the 7-day yield.

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