Vanguardfi Information Technology ETF - Vanguard Advisors

Vanguard? Information Technology ETF

Investment Approach Seeks to track the performance of the MSCI US Investable Market Information Technology 25/50 Index. Multicapitalization equity in the information technology sector. The fund employs a passively managed, full-replication strategy when possible. If regulatory constraints prevent full replication, the fund uses a sampling strategy to approximate the index's key characteristics. The fund remains fully invested. Low expenses minimize net tracking error.

Vanguard?

Quarterly Commentary

Major central banks slowed their pace of interest rate hikes or even hit the pause button during the second quarter. They also signaled that they stood ready to tighten monetary policy further to bring down inflation, which remained well above target. Stock markets worldwide nevertheless gained ground for the third consecutive quarter. With interest rates not expected to go much higher and with resilience in labor markets, consumer spending, and overall economic growth, concerns about a possible global recession appeared to ease.

Stocks finished higher, with equities in the United States showing more strength than those in Europe, Asia, and emerging markets.

Interest in long-duration bonds increased during the quarter as investors sought duration for relative protection against a potential recession. Investors also were supported by falling correlations between equities and bonds.

The MSCI US Investable Market Information Technology 25/50 Index returned 14.98% for the quarter ended June 30. The MSCI US Investable Market 2500 Index, which measures the U.S. stock market, returned 8.41%.

The top contributors were Apple (+17.8%), Microsoft (+18.4%), and NVIDIA (+52.3%).

PayPal Holdings (-17.0%) and QUALCOMM (-6.0%) were the biggest detractors.

For the 12-month period ended June 30, 2023, the MSCI US Investable Market Information Technology 25/50 Index returned 36.81%. Apple (+42.7%), NVIDIA (+179.3%), and Microsoft (+33.9%) contributed the largest returns. Fidelity National Information Services (-38.7%), CrowdStrike Holdings (-12.9%), and Intel (-7.0%) were the biggest detractors.

People and Process

Vanguard Information Technology ETF seeks to track the investment performance of the MSCI US Investable Market Information Technology 25/50 Index, an index of stocks of large, medium-size, and small U.S. companies in the information technology sector, as classified under the Global Industry Classification Standard (GICS). This GICS sector is made up of companies in the following three general areas: internet services and infrastructure companies, including data centers and cloud networking and storage infrastructure; companies that provide information technology consulting and services, technology hardware and equipment, including manufacturers and distributors of communications equipment, computers and peripherals, electronic equipment, and related instruments; and semiconductors and semiconductor equipment manufacturers. The fund attempts to replicate the target index by investing all, or substantially all, of its assets in the stocks that make up the index, holding each stock in approximately the same proportion as its weighting in the index. The fund may also sample its target index by holding stocks that, in the aggregate, are intended to approximate the index in terms of key characteristics, such as price/earnings ratio, earnings growth, and dividend yield. Typically, the fund will use a sampling strategy only if regulatory constraints or other considerations prevent it from replicating the index. Vanguard's Equity Index Group uses proprietary software to implement trading decisions that accommodate cash flows 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, 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 Information Technology ETF since 2004.

As of June 30, 2023

Vanguard Information Technology ETF

Investment Manager Biographies

Walter Nejman. Portfolio manager. Advised the fund since 2015. Worked in investment management since 2008. B.A., Arcadia University. M.B.A., Villanova University.

Nick Birkett. Portfolio manager. Advised the fund since 2021. Worked in investment management since 2006. BSc, University of Bath.

Total Returns

Information Technology ETF (1/26/2004) Net Asset Value Market Price

Information Technology Spliced Index

Expense Ratio 0.10% -- -- --

Quarter

14.95% 14.94 14.98

Year to Date

39.04% 39.03 39.11

1 Year

36.68% 36.66 36.81

3 Years

17.58% 17.57 17.72

5 Years

20.70% 20.68 20.85

10 Years

20.95% 20.95 21.09

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 U.S. Investable Market Information Technology 25/50 Index: MSCI US Investable Market Information Technology Index through February 26, 2010; MSCI US Investable Market Information Technology 25/50 Index thereafter.

Market price returns are calculated using the midpoint between the bid and offer price at the time NAV is calculated, typically 4 p.m., Eastern time.

As of June 30, 2023

Vanguard Information Technology ETF

Quarterly Returns

Year 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013

1st Quarter 20.95% -9.04 1.42 -13.13 20.62 4.11 11.92 1.54 1.61 2.20 5.38

2nd Quarter 14.95% -21.35 11.47 31.74 5.45 6.32 4.21 -1.96 0.06 5.75 1.61

3rd Quarter --

-5.70% 0.91 12.06 2.54 12.01 8.26 12.87 -4.82 3.42 8.99

4th Quarter --

4.24% 14.28 13.79 14.00 -17.31 8.55

1.23 8.53 5.58 12.18

Information Technology

ETF -- -29.67% 30.38 45.94 48.68 2.52 37.07 13.73 5.02 18.01 30.91

Information Technology

Spliced Index --

-29.58% 30.49 46.20 48.85

2.61 37.20 13.85

5.10 18.17 31.09

Year-End

Assets (Millions) $52,840

39,387 56,458 41,574 25,493 17,334 17,220 10,320

8,293 6,785 4,498

Recent Dividends and Distributions Ex-Dividend Date June 30, 2023 March 27, 2023 December 16, 2022 September 29, 2022 June 24, 2022 March 25, 2022 December 17, 2021 September 30, 2021 June 25, 2021 March 29, 2021 December 18, 2020 September 14, 2020

As of June 30, 2023

Income $0.68

0.77 0.87 0.76 0.60 0.68 0.82 0.89 0.59 0.63 0.69 0.71

Total Dividend

$0.68 0.77 0.87 0.76 0.60 0.68 0.82 0.89 0.59 0.63 0.69 0.71

Volatility Measures

R-Squared

Beta

Information Technology Spliced Idx

1.00

1.00

MSCI US Investable Market 2500 Idx

0.86

1.19

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

Vanguard Information Technology ETF

Fund Facts Fund Number Ticker Intra-day Ticker Benchmark Ticker CUSIP Number Assets (millions) Inception Expense Ratio

(as of 12/2022)

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)

0958 VGT VGT.IV M5US5ITI 92204A702 $52,840 1/26/2004

0.10%

Information Technology

ETF

MSCI US IMI Info

Tech 25/50

322 $359.1 Billion $1334.2 Billion

34.1x 8.1x 39.2% 26.1% 0.8% 0.0% 0.0% 6.3%

321 $359.1 Billion

$1321.0 Billion 34.5x 8.2x 39.2% 26.0% 0.8% 0.0% -- --

Top 10 Largest Holdings

% of Total Net Assets

Apple Inc.

23.2 %

Microsoft Corp.

20.7

NVIDIA Corp.

4.3

Broadcom Inc.

3.1

Adobe Inc.

2.0

Cisco Systems Inc.

1.8

Salesforce Inc.

1.8

Accenture plc

1.7

Oracle Corp.

1.7

Advanced Micro Devices Inc.

1.6

Total

61.9 %

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

As of June 30, 2023

Vanguard Information Technology ETF

Sector Diversification (% of Stocks)

Information Technology

ETF

MSCI US IMI Info

Tech 25/50

Overweight/ Underweight

Application Software

13.7%

13.5%

0.2

Communications Equipment

3.5

3.5

0.0

Electronic Components

1.2

1.1

0.1

Electronic Equipment & Instruments

1.6

1.5

0.1

Electronic Manufacturing Services

1.1

1.0

0.1

IT Consulting & Other Services

3.7

3.7

0.0

Internet Services & Infrastructure

1.7

1.7

0.0

Semiconductor Materials &

Equipment

3.8

3.8

0.0

Semiconductors

18.1

19.2

-1.1

Systems Software

26.3

26.3

0.0

Technology Distributors

0.6

0.6

0.0

Technology Hardware, Storage & Periphera

24.7

23.9

0.8

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 June 30, 2023

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