Shareholders of the following funds approved a proposal to reclassify each fund as "non-diversified," as defined by the Investment Company Act of 1940:
- Vanguard Health Care Fund
- Vanguard Energy Fund
- Vanguard U.S. Growth Fund
- Vanguard Variable Insurance Funds—Growth Portfolio
- Vanguard Variable Insurance Funds—Real Estate Index Portfolio
"We're very grateful to all the Vanguard shareholders who voted during our proxy campaign over the past three months," said Tim Buckley, Vanguard chairman and CEO. "The merger will place value-oriented shareholders in a comparable value fund with better historical long-term investment performance and a lower expense ratio, and the diversification status changes will give the funds' investment advisors greater flexibility in managing those funds."
Merger of two value funds
The merger is scheduled to be completed on or about February 5. The combined fund will be called Vanguard Value Index Fund, with Vanguard Equity Index Group continuing as the sole investment advisor. The Value Index Fund's investment objective, benchmark, strategies, policies, and overall portfolio management process will not change.
U.S. Value is an actively managed fund that seeks to provide long-term capital appreciation and income and outperform its benchmark index, the Russell 3000 Value Index. Conversely, Value Index seeks to track the performance of its benchmark index, the CRSP US Large Cap Value Index, which measures the investment return of large-capitalization value stocks. Following the merger, the combined Value Index will continue seeking to track the CRSP US Large Cap Value Index.
Vanguard offers other large-cap value funds for investors who prefer an actively managed approach. There may be tax implications for U.S. Value shareholders considering such an alternative, depending on the account type.