VANGUARD TO SIMPLIFY CONSTRUCTION, IMPROVE DIVERSIFICATION IN TARGET RETIREMENT FUNDS

VALLEY FORGE, PA, September 27, 2010—Vanguard plans to simplify the construction of its Target Retirement Funds and certain other funds-of-funds by replacing their three underlying international portfolios with a single broad international stock index fund. Vanguard will also increase the overall international equity exposure of these funds.

Assets in the funds’ current international component funds—Vanguard European Stock Index Fund, Vanguard Pacific Stock Index Fund and Vanguard Emerging Markets Stock Index Fund—will be moved to Vanguard Total International Stock Index Fund. The transition will occur in the coming months in the 12 Vanguard Target Retirement Funds and three Vanguard Managed Payout Funds.

“We believe that the funds’ shareholders will realize numerous benefits by the move to the Total International Stock Index Fund, including more streamlined portfolio construction and more diversified international exposure,” said Vanguard Chief Investment Officer Gus Sauter.

Under the simplified approach, most of the Target Retirement Funds will comprise three broad index funds. Target Retirement Funds with target dates greater than five years from the current year will offer allocations constructed using only three funds: Current Construction New Construction Vanguard Total Stock Market Index Fund Vanguard Total Stock Market Index Fund Vanguard Total Bond Market II Index Fund Vanguard Total Bond Market II Index Fund Vanguard European Stock Index Fund Vanguard Total International Stock Index Fund Vanguard Pacific Stock Index Fund Vanguard Emerging Markets Stock Index Fund

The Target Retirement 2005 and 2010 Funds, as well as the Target Retirement Income Fund, invest in the funds in the table above, in addition to the Vanguard Inflation-Protected Securities Fund and Vanguard Prime Money Market Fund. The Target Retirement 2015 Fund invests in the funds above as well as in the Vanguard Inflation-Protected Securities Fund. The use of Vanguard Total International Stock Index Fund offers better representation of the international equity markets. The fund’s benchmark, which Vanguard recently announced will change to the MSCI® All Country World ex USA Investable Market Index, provides broad coverage of developed and emerging countries across the capitalization spectrum, including international small-cap companies, as well as Canada.

Change in International Equity Allocation Vanguard also plans to increase the international equity exposure of Vanguard Target Retirement Funds, Vanguard LifeStrategy Funds, and Vanguard STAR Fund from approximately 20% to approximately 30% of the equity allocations. The exposure to domestic equities in these funds will be commensurately reduced, so that the overall allocation of stocks and bonds remains the same. For example, the table below shows the planned change in the domestic/international stock mix of the Target Retirement 2025 Fund; the other funds will experience similar adjustments.

Vanguard Target Retirement 2025 Fund Current Allocation New Allocation Stocks 75% 75% Domestic 60% 52% International 15% 23% Bonds 25% 25%

"This increased international allocation will incrementally increase diversification and hence, marginally reduce the volatility of the funds over the long term," said Mr. Sauter, who noted that the new weightings will also reduce the “home bias” of the funds.

Investments in Target Retirement Funds are subject to the risks of their underlying funds. The year in the fund name refers to the approximate year (the target date) when an investor in the fund would retire and leave the workforce. The fund will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. An investment in a Target Retirement Fund is not guaranteed at any time, including on or after the target date.

About Vanguard Vanguard, headquartered in Valley Forge, Pennsylvania, is one of the world’s largest investment management companies. Vanguard manages nearly $1.4 trillion in U.S. mutual fund assets. Vanguard offers more than 165 index and actively managed funds and ETFs to U.S. investors and more than 50 additional funds in non-U.S. markets.

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All asset figures are as of August 31, 2010, unless otherwise noted.

For more information, visit Vanguard.com, or call 800-662-7447 to obtain a fund prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.

Mutual funds are subject to risks, including possible loss of principal. Prices of small-cap stocks often fluctuate more than those of large-company stocks. Foreign investing involves additional risks including currency fluctuations and political uncertainty. Stocks of companies in emerging markets are generally more risky than stocks of companies in developed countries. Investments in bonds are subject to interest rate, credit, and inflation risk. Diversification does not ensure a profit or protect against a loss in a declining market.

The funds or securities referred to herein are not sponsored, endorsed, or promoted by MSCI, and MSCI bears no liability with respect to any such funds or securities. For any such funds or securities, the prospectus or the Statement of Additional Information contains a more detailed description of the limited relationship MSCI has with The Vanguard Group and any related funds.

Vanguard Marketing Corporation, Distributor.


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