Vanguard has filed a preliminary proxy statement with the Securities and Exchange Commission to make several shifts in policy for some funds, a spokesperson with the firm told the MutualFundWire.com. This would be the first step in getting shareholder approval for the various issues.

The first proposal, if approved, would allow Vanguard mutual funds to invest their cash reserves in specially created money market and short-term bond funds. This shift would cover 89 of Vanguard's funds. This is a policy currently pursued by other mutual fund complexes.

The second proposal would allow the board of trustees of eight index funds to change the target benchmark if the board feels that it would be in investors' best interests. Those funds are:

• Total Stock Market Index Fund (VTSMX)
• Extended Market Index Fund (VEXMX)
• SmallCap Index Fund (NAESX)
• Growth Index Fund (VIGRX)
• Value Index Fund (VIVAX)
• Mid-Cap Index Fund (VIGRX)>VIMSX)
• SmallCap Growth Index Fund (VISGX)
• SmallCap Value Index Fund (VISVX)

"This is language that would allow the board to consider making these changes. 19 of other funds have this language. They are newer funds. So far, none of those funds have made a change," the official reported.

The firm is also looking to reclassify some of its index funds as "non-diversified". This change will allow Vanguard to continue to pursue its target benchmarks while funds are dominated by a small number of stocks.

Vanguard is also looking to change its borrowing policy. The new proposal would allow its taxable Dan tax-free bond fund to take advantage of certain investment opportunities that do not involve leverage or a change to the fund's objectives or risk profile.

And, finally, Vanguard is asking investors to elect a board of trustees. The nominees include John Brennan, chair, and six independent trustees: Charles Ellis, Rajiv Gupta, JoAnn Heffernan Heisen, Burton Malkiel, Alfred Rankin Jr., and J. Lawrence Wilson. 

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