Vanguardfi Capital Growth Portfolio - The Vanguard Group

Vanguard?

Vanguard? Capital Growth Portfolio

Investment Approach Multi-cap growth equity, emphasizing large- and mid-cap issues. Seeks long-term capital appreciation. Invests in out-of-favor growth companies at attractive valuations. Fundamental stock selection process. The managers develop separate subportfolios. Portfolio may be concentrated by sector and holdings.

Vanguard Style View: Large Growth

Portfolio of large- and mid-capitalization growth-oriented equities.

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.

For the quarter, the Capital Growth Portfolio underperformed its benchmark, the Standard & Poor's 500 Index (+10.56%), and peer-group average (+11.73%). Unfavorable security selection in consumer discretionary (+5.0%) and information technology (+12.7%) hurt returns. An overweight allocation to health care (+8.8%) and an underweight allocation to communication services (+15.8%) also weighed on results. Biogen (?17%) and an underweight allocation to NVIDIA (+82%) were among the top detractors. Eli Lilly (+34%) was the top contributor.

On the other side of the ledger, positive security selection in health care (+8.8%) and financials (+12.5%) boosted returns; holdings in Eli Lilly (+34%) and Wells Fargo (+19%) positively contributed. Underweight allocations to consumer staples (+7.5%) and consumer discretionary (+5.0%) boosted relative returns as well.

For the 12 months ended March 31, the portfolio surpassed its benchmark (+29.88%) and underperformed its peer-group average (+30.8%). Positive security selection in health care (+16.1%) and financials (+33.5%) helped performance. Underweight allocations to consumer staples (+7.2%) and energy (+17.7%) also boosted returns. Eli Lilly (+128%) and an underweight allocation to Apple (+5%) were among the top contributors. NVIDIA (+225%) was the top detractor.

Notes: Company returns may differ if a security was held in the portfolio for less than the full period.

People and Process

Vanguard Variable Insurance Fund Capital Growth Portfolio seeks long-term capital appreciation, using a fundamental approach to invest in growth-oriented companies at attractive valuation levels. The portfolio has flexibility to invest across all industry sectors and market capitalizations, although holdings are generally large- and mid-cap stocks. The portfolio tends to focus on cyclically out-of-favor industries, seeking to identify companies with long-term growth potential overlooked by the market. The portfolio's three managers rely almost exclusively on independent research. Each manager is responsible for a separate subportfolio and has autonomy to implement his best ideas. The managers anticipate holding companies for at least three to five years, resulting in low turnover. The portfolio may be relatively concentrated, with the top ten holdings often representing 30%?40% of assets.

PRIMECAP Management Company

Founded in 1983, PRIMECAP Management Company, Pasadena, California, is recognized for its long-term approach to growth equity investing. The firm has advised Capital Growth Portfolio since 2003.

Investment Manager Biographies

Theo A. Kolokotrones, Chairman. Portfolio manager. Advised the portfolio since 2003. Worked in investment management since 1970. B.A., University of Chicago. M.B.A., Harvard Business School.

Joel P. Fried, President. Portfolio manager. Advised the portfolio since 2003. Worked in investment management since 1985. B.S., University of California, Los Angeles. M.B.A., Anderson Graduate School of Business, University of California, Los Angeles.

Alfred W. Mordecai, Executive Vice President. Portfolio manager. Advised the portfolio since 2003. Worked in investment management since 1997. B.S.E., Duke University. M.E.A., Virginia Polytechnic Institute and State University. M.B.A., Harvard Business School.

M. Mohsin Ansari, Executive Vice President. Portfolio manager. Advised the portfolio since 2007. Worked in investment management since 2000. B.A., Colgate University. B.S., Washington University. M.B.A., Harvard Business School.

As of March 31, 2024

Vanguard Capital Growth Portfolio

James M. Marchetti, Senior Vice President. Portfolio manager. Advised the portfolio since 2015. Worked in investment management since 2005. B.A., Massachusetts Institute of Technology. M.B.A., MIT Sloan School of Management.

Total Returns

Variable Insurance Fund - Capital Growth Portfolio (12/3/2002) S&P 500 Index Variable Insurance Multi-Cap Growth Funds Average

Expense Ratio

0.34% --

--

Quarter

9.16% 10.56

11.73

Year to Date

9.16% 10.56

11.73

1 Year

30.72% 29.88

30.80

3 Years

9.34% 11.49

3.10

5 Years

14.15% 15.05

12.54

10 Years

13.29% 12.96

11.82

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: Average fund returns are derived from data provided by Lipper, a Thomson Reuters Company.

Volatility Measures

R-Squared

Beta

S&P 500 Index DJ US Total Stock Mkt Float Adj Idx

0.94

0.92

0.94

0.91

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

As of March 31, 2024

Vanguard Capital Growth Portfolio

Fund Facts Fund Number CUSIP Number Assets (millions) 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)

0277 921925822

$1,932 12/3/2002

0.34%

VVIF Capital Growth Portfolio

S&P 500 Index

110

504

$158.4 Billion $224.7 Billion

$460.3 Billion $803.7 Billion

26.4x

26.1x

4.4x

4.5x

24.0%

24.6%

8.3%

13.9%

1.2%

1.3%

11.2%

0.0%

4.3%

--

3.9%

--

Top 10 Largest Holdings

% of Total Net Assets

Eli Lilly & Co.

12.9%

Micron Technology Inc.

3.6

Alphabet Inc.

3.6

Microsoft Corp.

3.4

Amgen Inc.

3.3

FedEx Corp.

3.3

KLA Corp.

3.2

Adobe Inc.

2.8

Intel Corp.

2.6

Biogen Inc.

2.6

Total

41.3 %

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

Sector Diversification (% of Stocks)

VVIF Capital Growth Portfolio

S&P 500 Overweight/ Index Underweight

Communication Services Consumer Discretionary

5.4%

8.9%

-3.5

9.4

10.3

-0.9

Consumer Staples

0.4

6.0

-5.6

Energy

2.4

3.9

-1.5

Financials

7.1

13.2

-6.1

Health Care Industrials Information Technology

31.7

12.4

19.3

12.9

8.8

4.1

29.5

29.6

-0.1

Materials

1.2

2.4

-1.2

Other

0.0

0.0

0.0

Real Estate

0.0

2.3

-2.3

Utilities

0.0

2.2

-2.2

Total

100.0%

100.0%

Sector categories are based on the Global Industry Classification Standard ("GICS"), except for the "Other" category (if applicable), which includes securities that have not been provided a GICS classification as of the effective reporting period.

As of March 31, 2024

Vanguard Capital Growth Portfolio

3 month attribution

Health Care Real Estate Consumer Staples Industrials Utilities Financials Energy Materials Cash Communication Services Information Technology Consumer Discretionary Total

Portfolio

Avg. weight

30.9 0.0 0.3 11.9 0.0 6.5 2.1 1.1 4.1 5.1 28.3 9.5 100.0

3 mo. return

12.3 0.0 1.3 11.5 0.0 14.7 10.2 0.3 1.3 7.8 10.5 -3.7 9.3

Contrib. Return

3.8 0.0 0.0 1.3 0.0 0.9 0.2 0.0 0.1 0.4 2.9 -0.4 9.3

Benchmark

Avg. weight

12.7 2.4 6.1 8.7 2.2 13.0 3.8 2.3 0.0 8.9 29.6 10.5 100.0

3 mo. return

8.9 -0.5 7.5 11.0 4.6 12.5 13.7 8.9 0.0 15.8 12.7 5.0 10.6

Contrib. Return

1.2 0.0 0.5 0.9 0.1 1.6 0.5 0.2 0.0 1.4 3.8 0.5 10.6

Attribution

Alloc. effect

-0.3 0.3 0.2 0.0 0.1 -0.1 0.0 0.0 -0.4 -0.2 0.0 0.0 -0.4

Select effect

1.0 0.0 0.0 0.1 0.0 0.1 -0.1 -0.1 0.0 -0.4 -0.6 -0.9 -0.9

Total effect

0.7 0.3 0.2 0.1 0.1 0.0 -0.1 -0.1 -0.4 -0.6 -0.6 -0.9 -1.3

12 month attribution

Portfolio

Avg. weight

12 mo. return

Contrib. Return

Benchmark

Avg. weight

12 mo. return

Contrib. Return

Attribution

Alloc. effect

Select effect

Total effect

Health Care Consumer Staples Utilities Real Estate Energy Financials Information Technology Materials

30.8

35.7

10.7

13.2

16.1

2.0

-2.7

6.4

3.7

0.2

-0.7

0.0

6.5

7.2

0.4

1.6

0.0

1.6

0.0

0.0

0.0

2.5

0.4

-0.1

0.9

0.0

0.9

0.0

0.0

0.0

2.4

10.3

0.3

0.5

0.0

0.5

2.2

22.0

0.4

4.2

17.7

0.6

0.3

0.1

0.4

6.3

41.1

2.4

12.8

33.5

4.1

-0.2

0.5

0.2

27.2

45.8

12.2

28.3

46.0

12.9

-0.2

0.1

-0.1

1.2

-2.8

-0.1

2.4

17.6

0.4

0.2

-0.3

-0.1

Industrials Cash Communication Services

12.5

22.4

4.1

5.4

5.3

25.7

2.7

8.5

26.4

2.2

-0.2

-0.5

-0.7

0.3

0.0

0.0

0.0

-1.1

0.0

-1.1

1.4

8.6

50.1

4.0

-0.6

-1.2

-1.8

Consumer Discretionary

10.2

8.9

1.1

10.5

28.7

3.1

0.1

-2.2

-2.1

Total

100.0

31.2

31.2

100.0

29.9

29.9

-1.5

2.8

1.3

The portfolio attribution data shown above is provided by FactSet based on information provided by Vanguard about the fund's daily portfolio holdings as of the market close. Because the fund buys and sells stocks throughout the trading day and not necessarily at the market close, the attribution data shown above is an estimate and may not precisely reflect actual attribution information. Information noted above does not reflect fair-value adjustments to prices of foreign securities held in the portfolio.

Top contributors--3 month

Eli Lilly and Company Apple Inc. Micron Technology Inc. KLA Corporation UnitedHealth Group Incorporated

3 mo. return

33.7 -10.8 38.3 20.4

-5.7

Total Ending Bench effect weight weight

2.2

13.0

1.4

1.4

0.3

5.7

0.7

3.7

0.3

0.3

3.3

0.2

0.2

0.0

1.0

Top detractors--3 month

Meta Platforms Inc. Intel Corporation Adobe Inc. Biogen Inc. NVIDIA Corporation

3 mo. return

37.3 -11.8 -15.4 -16.7 82.5

Total Ending Bench effect weight weight

-0.5

0.2

2.4

-0.6

2.6

0.4

-0.8

2.8

0.5

-0.9

2.6

0.1

-1.3

2.0

5.1

As of March 31, 2024

Vanguard Capital Growth Portfolio

Top contributors--12 month

Eli Lilly and Company Apple Inc. Micron Technology Inc. KLA Corporation Pfizer Inc.

12 mo. return

128.4 4.5

96.9 76.9 -28.4

Total Ending Bench effect weight weight

6.8

13.0

1.4

1.7

0.3

5.7

1.5

3.7

0.3

1.1

3.3

0.2

0.4

0.0

0.4

Top detractors--12 month

Texas Instruments Incorporated Inc. Meta Platforms Inc. Biogen Inc. NVIDIA Corporation

12 mo. return

-3.3 74.6 129.4 -22.4 225.4

Total Ending Bench effect weight weight

-0.9

2.5

0.4

-1.0

0.8

3.7

-1.3

0.2

2.4

-2.2

2.6

0.1

-2.3

2.0

5.1

As of March 31, 2024

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download