Our unwavering commitment to you

Vanguard investors are the "smart money"

Stronger discipline, lower costs, and better performance

Extending The Vanguard Effect into fixed income, savings, and advice

Improving your experience and expanding your choice

A revolutionary zeal for investors

My fellow Vanguard investor-owners,

The past year had more than its fair share of uncertainty—in markets, in the economy, and for many, in your household finances. But at least one thing remained steadfast: Vanguard is your firm. You are our owners, and Vanguard is unambiguously on your side, focused on your long‑term success.¹

I wrote to you last May to mark Vanguard’s 50^th anniversary. This year, I am writing to welcome millions of new investor-owners to Vanguard, to highlight the resilience of your disciplined approach, and to share our progress on our mission to give you the best chance for investment success.

Markets performed well this past year, but not without bouts of uncertainty, volatility, and temptation. Yet, you did something hopeful, hard, and wise: You stayed true to your investment principles. While I am of course biased, I believe your focus on goals, balance, discipline, and cost distinguished you as the ultimate smart money investors.

Clear goals anchor decisions when markets are full of sound and fury. Even as inflation and higher rates put pressure on household budgets, 45% of investors in Vanguard 401(k) plans increased their contribution rate, and most others held their contributions steady.² As a result, the average rate of retirement savings in Vanguard plans rose to an all‑time high of 12% of income.³ In aggregate, you invested record levels of net new assets with Vanguard as you saw opportunities to get closer to your longer-term goals.

In 1976, Jack Bogle launched the first index fund for individual investors, now known as the Vanguard 500 Index Fund, taking the first step toward making diversified, tax-efficient investing accessible to millions. Had you invested $10,000 in the fund back then, it would be worth roughly $2 million today.⁴

Fifty years later, you continue to follow Bogle’s maxim to “buy the haystack,” with the greater choice we now offer across our stock, bond, and balanced funds. Last year, for example, you put roughly half of your new investments into fixed income, adding diversity to your portfolios. Many of you—including those who rely on us for advice and those who invest in our Target Retirement Funds—also benefited from diversification across global markets.

While all major asset classes delivered positive returns in 2025, market fluctuations felt much more choppy in any given week, including recently. Into this mix, the siren songs of speculation grew louder, providing ample opportunity for investors to flinch.

You stayed the course and stayed invested, a time-tested way to build wealth for the long term. During tariff‑related volatility last April, 93% of Vanguard investors chose patience over panic and kept their portfolios unchanged. Among those who did trade, you chose to invest more rather than pull back by a factor of 5:1. This year, in the wake of stock, bond, and energy price volatility resulting from conflict in the Middle East, your steady, buy-and-hold behavior mirrored that of years past.

As we announced in February, we lowered fees again, trimming our average annual fund operating cost to 0.06%, or $6 per $10,000 invested. The rest of the fund industry still charges an average of 0.44%, pocketing more than seven times our fees.⁵ Combined with the fee cuts we announced in 2025, that’s an estimated $600 million dollars of savings for investors that will compound over time.⁶

Fee cuts are one way in which you, as owners, participate in our growing economies of scale. We are also making record levels of investment in our client experience as outlined later in this letter.

Lower fees reflect our belief that in investing you get what you don’t pay for. Costs matter, not just because of what you save but also in the performance of your funds. Low fees and strong performance aren’t opposites—they go together, as shown in the chart below.

Morningstar recently estimated that Vanguard investors benefited from “nearly $5 trillion of income and gains” over the last decade, thanks largely to disciplined investing on your part that allowed you to “participate more fully” in your funds’ returns.⁷

Over the ten years ended March 31, 2026, the overwhelming majority of Vanguard funds outperformed their peer‑group averages. These strong results reflect our low operating costs, the expertise of our index and active portfolio managers, and your discipline in staying invested for the long term.

Ten years ended March 31, 2026

We take pride in what we have helped you achieve with your investments, but we find purpose in finding additional areas where we can extend “The Vanguard Effect” to improve the quality of what the asset and wealth management industry offers while lowering the price and increasing access.

We have been focused on three areas where we saw meaningful opportunity to improve your chances of investment success: getting better performance from your fixed income investments—particularly active fixed income; earning better yields from your cash savings; and increasing the accessibility, quality, and personalization of advice and guidance especially when aided by AI.

Fixed income is a critical part of your portfolio, providing stability and income that becomes more important as you approach retirement. Fixed income markets are also complex and inefficient, providing opportunities for active management to outperform. But for too long, Wall Street has been selling a narrative that to get the outperformance that active fixed income can deliver, investors need to pay much higher fees—exactly when retirees can least afford them.

It’s a false dichotomy. We charge an average of 10 basis points for active fixed income management, while our peers charge four times that.⁹ Lower fees are a reason for our outperformance, because having a lower fee threshold allows our portfolio managers to be more disciplined about risk and generate better long-term outcomes. Case in point: 86% of Vanguard’s active fixed income funds have outperformed peers over the past decade, and 100% of them are priced in the lowest cost decile.¹⁰

Ten years ended March 31, 2026

We built our fixed income business 45 years ago to take a stand for investors—starting in active, expanding into index, and today ranking among the top managers in both.¹¹ We will continue to broaden our lineup, especially in active fixed income, where we see the greatest opportunity to lower the cost and raise the bar on performance.

Our goal is to help your savings grow through investing. Still, there are moments when holding cash can play an important role in providing flexibility for major purchases, security for unforeseen expenses, and balance within a long‑term plan.

Savers deserve a better deal than they are getting today from most wealth and asset managers on their cash. Our money market funds, often used for cash allocation in an investment portfolio, charge about half the industry average fee, allowing you to earn more.¹²

But you also told us you were tired of getting next to nothing when you needed to hold cash in a traditional savings account. We launched Cash Plus Accounts a few years ago with bank partnerships to provide higher yields (currently eight times the average bank savings yield¹³) and FDIC insurance.¹⁴ Since then, over half a million of you have opened Cash Plus Accounts—some as a basic emergency fund alongside your Vanguard 401(k), some for the convenience of money movement like paying bills,¹⁵ but most just to get a fairer deal than what the industry offers.

Later this year, you will see expanded ways you can use Cash Plus to transfer your money or make payments. We’re also enhancing the value we deliver for clients who prefer to hold cash. Whether you want to keep your cash in money market funds, savings accounts, or both, paying close attention to your cash yields can make a meaningful impact to your overall outcomes. It’s where many firms look to profit at your expense. We are determined to make better cash savings solutions more widely available.

High-quality financial advice shouldn’t be a luxury good. Today, only one out of five Americans work with a fee-based financial advisor.¹⁶ Fiduciary advisors are in short supply and are typically focused on high-net-worth individuals, leaving most people underserved. The problem will compound as large numbers of advisors are expected to retire in the coming years. We’re also seeing long-time self-directed investors come to us for help as they face new circumstances—such as managing retirement income, navigating tax events, or spouses taking the lead on household investment decisions.

Vanguard’s Advisor’s Alpha® research over the last 25 years found that advisors following wealth management best practices can help clients achieve better outcomes. More than half of U.S. investors are also using or seriously considering using generative AI for financial guidance.¹⁷ You have told us that you want AI support, but that you are looking for something more trusted, more personalized, and more private than what is available today.

Earlier this year, we made our AI-enabled Expert Insights tool available to advisors—those who work at Vanguard as well as registered investment advisors who use Vanguard funds—to put the expertise of Vanguard’s portfolio analysis specialists directly in advisors’ hands. It is the latest in a range of AI tools we’ve added to enable our growing ranks of Vanguard advisors to spend more time with you and support you with even more personalized care.

For investors who prefer getting their support digitally, we have Vanguard Digital Advisor. Investors with as little as $100 can get access to advice at a fee of 0.15% (a fraction of the industry average).¹⁸

Later this year, we’ll pilot our new AI capability for Digital Advisor that connects directly to your portfolio and financial plan. You’ll get clear, insightful answers from it, personalized to how you like to interact with your finances, and of course rooted in Vanguard’s proven methodology. With launch planned for early next year, this new tool will deliver personalized investment advice across a broad range of topics. Our goal is to increase access to advice, putting an advisor in every investor’s pocket, grounded in our time-tested principles for investing success.

Making sure our service always meets your expectations is at the top of my list.

You should always feel that Vanguard is right alongside you, so even as we lower fees, we are making record investments to make it easier to get the support you need and the experience you deserve, whether delivered digitally or through our crew.

We are near completion of a multiyear, multibillion-dollar investment to modernize our technology infrastructure, including the systems behind our website and mobile app, so they work together reliably, intuitively, and securely. We are also stepping up investments in several places where you will see and feel the difference in your experience with us.

Over the next few months, we will launch a refreshed website that brings your entire relationship with Vanguard together in one place—clearly and simply—with the information you have told us you want. This site was shaped by feedback from thousands of investors who tested it with us. Thank you if you were one of them.

We are expanding our chat capabilities on the site and on mobile—which now serves more than two million investors per month—and enhancing both with AI-enabled features that will answer your questions whenever you have them. You’ll see your finances with an intuitive, personalized experience.

And when you need a person, not a screen, help should be available and effective. We’ve increased the number of trained representatives taking your calls by nearly 20%. More calls—now 85%—are resolved in a single conversation, and we are focused on getting that number even higher. We’ve also added dedicated service support that stays with you through the most deeply personal moments like navigating an inheritance or rolling over your retirement savings to the next job or the next chapter.

For investors with higher assets and more complex needs, we are bringing back a more personalized tier of service under the Flagship® name. Since joining Vanguard, I’ve heard consistently from investors who valued the client care Flagship stood for.

Beginning later this year, eligible investors for Flagship service will start to see enhanced support, including more access to service teams, financial consultants, and education resources aligned to life stages and goals, along with a differentiated approach to Cash Plus and partner benefits as relationships deepen. As this next chapter of Flagship service rolls out, our focus is on delivering flexible, personal, and responsive support.

All these efforts reflect our continued commitment to improving your experience and giving you the best chance for investment success.

A better experience also means having a voice. With Vanguard Investor Choice, more than 22 million equity index fund investors can choose how their share of those funds is voted at public company meetings—and we are committed to extending that option to all U.S. equity index fund investors over time.

In a couple months, the United States will mark 250 years since an audacious idea was declared in Philadelphia—that ordinary people could build a fair system and shape their own future.

Benjamin Franklin gave early voice to that ideal and extended it further, arguing that financial independence wasn’t a privilege reserved for those born into wealth. Rather, it ought to be within the reach of every American who worked hard and saved effectively, ensuring that the system worked for, not against, them.

Two centuries later, that same idealism drove Jack Bogle to found Vanguard—just outside Philadelphia in Valley Forge. His revolutionary idea was that an investor-owned company that takes a stand for you—that is dedicated to giving you a fair shake—would improve your chances of investment success and make the system of investing better for everyone.

Neither experiment will ever be finished. But both have endured because they are rooted in hope and renewed by work.

Our crew put Bogle’s idealism into practice every day, applying discipline, judgment, humanity, and a long‑term mindset to the work behind your investments and service. We will continue to pursue our mission, in service of your interests, with tenacity and with the same zeal that has defined us for more than half a century.

Thank you again for your trust in us and in Vanguard.

Salim Ramji
Chief Executive Officer

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