Vanguard To Merge Growth Funds And Change Advisory Teams Of Three Stock Funds

VALLEY FORGE, PA (December 17, 2018)—Vanguard today announced plans to merge the $15.1 billion Vanguard Morgan Growth Fund into the $10.2 billion Vanguard U.S. Growth Fund. Following the merger, scheduled to be completed in early 2019, the fund will retain the U.S. Growth Fund name and continue to invest primarily in large-capitalization stocks of U.S. companies considered to have above-average earnings growth potential and reasonable stock prices in comparison with expected earnings.

Four current advisors of the U.S. Growth Fund will be retained (Wellington Management Company LLP, Jackson Square Partners LLC, Jennison Associates LLC, and Baillie Gifford Overseas Ltd.) and Vanguard Quantitative Equity Group will be added to the advisory team.

Given the similarities in objectives, strategies, portfolios, and performance between the funds, Vanguard determined that the merger results in a stronger combination of investment advisors and in greater efficiencies in the administration of the combined U.S. Growth Fund. Following the merger, the expense ratios for the fund’s Investor and Admiral Shares are expected to be 0.38% and 0.28%, respectively (which is lower than the current expense ratios of the U.S. Growth Fund and equal to those of the Morgan Growth Fund).

Vanguard is also realigning the multi-manager approach teams of three funds, as follows:

• The $5.4 billion Vanguard Global Equity Fund will be advised by two of the current advisors, Baillie Gifford and Marathon Asset Management LLP. Acadian Asset Management LLC will no longer manage a portion of the fund.
• The team for the $4.2 billion Vanguard Mid-Cap Growth Fund will include current advisor RS Investments Management Co. LLC, along with two new advisors to the fund: Frontier Capital Management LLC and Wellington.
• The $664 million Growth Portfolio of Vanguard Variable Insurance Fund will be managed by two of the current advisors: Jackson Square and Wellington.

Concurrent with these changes, William Blair Investment Management, LLC will no longer serve as an advisor for the U.S. Growth Fund, the Mid-Cap Growth Fund, and the Growth Portfolio of Vanguard Variable Insurance Fund.

The merger and the advisory changes are a result of Vanguard’s ongoing and comprehensive review of its global fund and ETF line-up. Matthew Brancato, who heads Vanguard’s product group, said: “We employ a rigorous evaluation process in overseeing our funds and advisors to ensure we provide sound, enduring offerings that meet the long-term needs of our clients. We have a long track record of product leadership and making changes that we believe are in the best interests of our clients, including merging funds, changing advisors, modifying mandates, and closing and liquidating funds.”

Vanguard’s recent efforts to improve its product line-up have included:

• Introducing new funds. Vanguard launched six factor-based ETFs, two ESG ETFs, and expanded its bond offerings with Vanguard Emerging Markets Bond Fund, Vanguard Total World Bond ETF, and Vanguard Global Credit Bond Fund over the past year.
• Modifying advisory teams. Baillie Gifford was added to the advisory team of the $588 million Vanguard Emerging Markets Select Stock Fund in July.
• Modifying mandates. The $1.5 billion Vanguard Precious Metals and Mining Fund was renamed in July to Vanguard Global Capital Cycles Fund as part of a restructuring intended to broaden the fund’s mandate and diversify its portfolio.
• Transitioning to new benchmarks. Vanguard changed benchmarks for three sector funds and their corresponding ETF Shares (Vanguard Communication Services Index Fund, Vanguard Consumer Discretionary Index Fund, and Vanguard Information Technology Index Fund) in March to make them consistent with S&P, Dow Jones, and MSCI’s revisions under the Global Industry Classification Standards methodology.

Vanguard’s active fund leadership

Today Vanguard is among the largest providers of actively managed funds in the world with $1.3 trillion in active assets. Vanguard partners with 25 advisors from around the world and employs a multi-manager structure for 17 of its actively managed U.S. domiciled equity funds. The firm has more than $429.3 billion in active equity funds, with a weighted average expense ratio of 0.28%.

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About Vanguard

Vanguard is one of the world’s largest investment management companies. As of November 30, 2018, Vanguard managed $5.1 trillion in global assets. The firm headquartered in Valley Forge, Pennsylvania, offers 400 funds to its more than 20 million investors worldwide. For more information, visit vanguard.com.

All asset figures as of November 30, 2018, unless otherwise noted.

For more information about Vanguard funds, visit vanguard.com/fund prospectus to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing.

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U.S. Patent Nos. 6,879,964; 7,337,138; 7,720,749; 7,925,573; 8,090,646; and 8,417,623.

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