SEC Division of Investment Management staff letter: Vanguard Funds (Vanguard Dividend Appreciation Index Fund, Vanguard Short-Term Corporate Bond Index Fund, Vanguard Developed Markets Index Fund, Vanguard Inflation-Protected Securities Fund, Vanguard Intermediate-Term Investment Grade Fund, Vanguard Long-Term Investment Grade Fund, Vanguard Long-Term Treasury Fund, Vanguard Short-Term Federal Fund, Vanguard Short-Term Treasury Fund, Vanguard Short-Term Investment-Grade Fund, Vanguard 500 Index Fund, Vanguard Capital Opportunity Fund, Vanguard Cash Reserves Federal Money Market Fund (f/k/a Vanguard Prime Money Market Fund), Vanguard Dividend Growth Fund, Vanguard Equity Income Fund, Vanguard European Stock Index Fund, Vanguard Federal Money Market Fund, Vanguard FTSE All-World Ex-US Index Fund, Vanguard FTSE Social Index Fund, Vanguard Global Equity Fund, Vanguard GNMA Fund, Vanguard Growth Index Fund, Vanguard High-Yield Corporate Fund, Vanguard Intermediate-Term Bond Index Fund, Vang — SEC — US

Nov. 1, 2024

November 1, 2024

Via E-Mail

Stephen Bier
Dechert LLP
Three Bryant Park
1095 Avenue of the Americas
New York, NY 10036 stephen.bier@dechert.com

Re: Vanguard Funds (Vanguard Dividend Appreciation Index Fund, Vanguard Short-Term Corporate Bond Index Fund, Vanguard Developed Markets Index Fund, Vanguard Inflation-Protected Securities Fund, Vanguard Intermediate-Term Investment Grade Fund, Vanguard Long-Term Investment Grade Fund, Vanguard Long-Term Treasury Fund, Vanguard Short-Term Federal Fund, Vanguard Short-Term Treasury Fund, Vanguard Short-Term Investment-Grade Fund, Vanguard 500 Index Fund, Vanguard Capital Opportunity Fund, Vanguard Cash Reserves Federal Money Market Fund (f/k/a Vanguard Prime Money Market Fund), Vanguard Dividend Growth Fund, Vanguard Equity Income Fund, Vanguard European Stock Index Fund, Vanguard Federal Money Market Fund, Vanguard FTSE All-World Ex-US Index Fund, Vanguard FTSE Social Index Fund, Vanguard Global Equity Fund, Vanguard GNMA Fund, Vanguard Growth Index Fund, Vanguard High-Yield Corporate Fund, Vanguard Intermediate-Term Bond Index Fund, Vanguard Intermediate-Term Tax-Exempt Fund, Vanguard Intermediate-Term Treasury Fund, Vanguard International Growth Fund, Vanguard LifeStrategy Moderate Growth Fund, Vanguard Mid-Cap Index Fund, Vanguard Mid-Cap Value Index Fund, Vanguard New York Long-Term Tax-Exempt Fund, Vanguard Pacific Stock Index Fund, Vanguard PRIMECAP Fund, Vanguard Real Estate Index Fund, Vanguard Small-Cap Index Fund, Vanguard Small-Cap Value Index Fund, Vanguard STAR Fund, Vanguard Strategic Equity Fund, Vanguard Target Retirement Income Fund, Vanguard Tax-Managed Capital Appreciation Fund, Vanguard Tax-Managed Small-Cap Fund, Vanguard Total Bond Market Index Fund, Vanguard Total International Stock Index Fund, Vanguard Total Stock Market Index Fund, Vanguard Wellesley Income Fund, Vanguard Wellington Fund, and Vanguard Windsor Fund, Vanguard Windsor II Fund)

Omission of Shareholder Proposal Submitted by Judith Blanchard, Alyse Simon, Marjorie A. McDiarmid (as executor for John McDiarmid), Camille Dull, Patrick Mehr, Robert S. Nelson, Bonnie R. Nelson, Kani Ilangovan, David Leon, Janet Diamond, Mary Haskell, William Rosenfeld, Mary Lou Rosczyk, and Shoshana Grossman-Crist, Pursuant to Rule 14a-8 Under the Securities Exchange Act of 1934, as amended

Dear Mr. Bier:

In two letters dated September 3, 2024, on behalf of Vanguard Dividend Appreciation Index Fund, Vanguard Short-Term Corporate Bond Index Fund, Vanguard Developed Markets Index Fund, Vanguard Inflation-Protected Securities Fund, Vanguard Intermediate-Term Investment Grade Fund, Vanguard Long-Term Investment Grade Fund, Vanguard Long-Term Treasury Fund, Vanguard Short-Term Federal Fund, Vanguard Short-Term Treasury Fund, and Vanguard Short-Term Investment-Grade Fund (the funds expressly listed above, the “First Group of Funds”) and on behalf of Vanguard 500 Index Fund, Vanguard Capital Opportunity Fund, Vanguard Cash Reserves Federal Money Market Fund (f/k/a Vanguard Prime Money Market Fund), Vanguard Dividend Growth Fund, Vanguard Equity Income Fund, Vanguard European Stock Index Fund, Vanguard Federal Money Market Fund, Vanguard FTSE All-World Ex-US Index Fund, Vanguard FTSE Social Index Fund, Vanguard Global Equity Fund, Vanguard GNMA Fund, Vanguard Growth Index Fund, Vanguard High-Yield Corporate Fund, Vanguard Intermediate-Term Bond Index Fund, Vanguard Intermediate-Term Tax-Exempt Fund, Vanguard Intermediate-Term Treasury Fund, Vanguard International Growth Fund, Vanguard LifeStrategy Moderate Growth Fund, Vanguard Mid-Cap Index Fund, Vanguard Mid-Cap Value Index Fund, Vanguard New York Long-Term Tax-Exempt Fund, Vanguard Pacific Stock Index Fund, Vanguard PRIMECAP Fund, Vanguard Real Estate Index Fund, Vanguard Small-Cap Index Fund, Vanguard Small-Cap Value Index Fund, Vanguard STAR Fund, Vanguard Strategic Equity Fund, Vanguard Target Retirement Income Fund, Vanguard Tax-Managed Capital Appreciation Fund, Vanguard Tax-Managed Small-Cap Fund, Vanguard Total Bond Market Index Fund, Vanguard Total International Stock Index Fund, Vanguard Total Stock Market Index Fund, Vanguard Wellesley Income Fund, Vanguard Wellington Fund, and Vanguard Windsor Fund, Vanguard Windsor II Fund (the “Second Group of Funds”), you requested confirmation from the staff of the Division of Investment Management that it would not recommend enforcement action to the Securities and Exchange Commission (the “Commission”) if a shareholder proposal and supporting statement (the “Proposal”) submitted by Judith Blanchard, Alyse Simon, Marjorie A. McDiarmid (as executor for John McDiarmid), Camille Dull, Patrick Mehr, Robert S. Nelson, Bonnie R. Nelson, Kani Ilangovan, David Leon, Janet Diamond, Mary Haskell, William Rosenfeld, Mary Lou Rosczyk, and Shoshana Grossman-Crist (the “Proponents”) on August 13, 2018, September 19, 2018, October 15, 2018, October 17, 2018, October 18, 2018, October 22, 2018, October 23, 2018, October 28, 2018, October 29, 2018, November 1, 2018, November 18, 2018, November 30, 2018, and December 29, 2018, is excluded from the proxy materials for the Funds’ 2025 Special Meeting (the “Proxy Materials”). We also received supplemental correspondence from you dated September 24, 2024 and October 2, 2024. The Proposal provides:

RESOLVED, Shareholders request that the Board institute transparent procedures to avoid holding or recommending investments in companies that, in management’s judgment, substantially contribute to genocide or crimes against humanity, the most egregious violations of human rights.

The First Group of Funds argues that the Proposal may be excluded from the Proxy Materials, as permitted by Rule 14a-8(f)(1) under the Securities Exchange Act of 1934 (the “Exchange Act”), because the First Group of Funds is unable to confirm that the Proponents continue to be shareholders of the First Group of Funds and have continuously held the requisite amount of fund shares since submitting the Proposal, as required by Rule 14a-8(b)(1) under the Exchange Act.

Based on the information you provided, there appears to be a basis for your view that the Proposal may be excluded in reliance on Rule 14a-8(b)(1). Accordingly, we will not recommend enforcement action to the Commission if the First Group of Funds excludes the Proposal from their Proxy Materials in reliance on Rule 14a-8(b)(1). In reaching this position, we have not found it necessary to address the alternative basis for exclusion upon which the First Group of Funds relies.

The Second Group of Funds argues that the Proposal may be excluded from the Proxy Materials, as permitted by Rule 14a-8(i)(7) under the Exchange Act, because the Proposal deals with matters relating to the Second Group of Funds’ ordinary business operations.

Based on the information you provided, there appears to be a basis for your view that the Proposal may be excluded in reliance on Rule 14a-8(i)(7), as relating to the funds’ ordinary business operations. Accordingly, we will not recommend enforcement action to the Commission if the Second Group of Funds excludes the Proposal from their Proxy Materials in reliance on Rule 14a-8(i)(7).

Attached is a description of the informal procedures the Division follows in responding to shareholder proposals. If you have any questions or comments concerning this matter, please feel free to contact me at (202) 551-5166.

Sincerely,

/s/ Lisa N. Larkin

Lisa N. Larkin
Senior Counsel
Division of Investment Management

Attachment cc: (via email)
Judith Blanchard
Alyse Simon
Marjorie A. McDiarmid (as executor for John McDiarmid) Camille Dull Patrick Mehr Robert S. Nelson Bonnie R. Nelson Kani Ilangovan David Leon Janet Diamond Mary Haskell William Rosenfeld Mary Lou Rosczyk Shoshana Grossman-Crist

Last Reviewed or Updated: Nov. 1, 2024

Resources

Enclosure 1 of 2 · 3 pages · PDF 151 KBRegulator's file ↗

First Incoming Request Letter from Funds

1095 Avenue of the Americas
New York, NY 10036-6797
+1 212 698 3500 Main
+1 212 698 3599 Fax www.dechert.com
STEPHEN H. BIER stephen.bier@dechert.com
+1 212 698 3889 Direct
VIA E-MAIL
September 3, 2024
Office of Chief Counsel
Division of Investment Management
U.S. Securities and Exchange Commission
100 F Street N.E.
Washington, D.C. 20549
IMshareholderproposals@sec.gov
Re: Shareholder Proposals Submitted by Judith Blanchard, Alyse Simon, John McDiarmid and Shoshana Grossman-Crist Dear Sir or Madam:
We are counsel to (i) Vanguard Dividend Appreciation Index Fund, Vanguard Short-Term Corporate Bond Index Fund (each, a “JB-Proposal Fund”), (ii) Vanguard Developed Markets Index Fund, Vanguard Equity Income Fund (each, an “AS-Proposal Fund”), (iii) Vanguard GNMA Fund, Vanguard Inflation-Protected Securities Fund, Vanguard Intermediate-Term Investment Grade Fund, Vanguard Long-Term Investment Grade Fund, Vanguard Long-Term Treasury Fund, Vanguard Short-Term Federal Fund, Vanguard Short-Term Treasury Fund, Vanguard Total Bond Market Index Fund (each, a “JM-Proposal Fund”), and (iv) Vanguard Short-Term InvestmentGrade Fund (the “SGC-Proposal Fund,” and collectively with the JB-Proposal Funds, AS-Proposal Funds and JM-Proposal Funds, the “Funds”). On September 19, 2018, October 18, 2018, October 22, 2018, and October 23, 2018 respectively, Vanguard received identical shareholder proposals and supporting statements for each AS-Proposal Fund from Alyse Simon, for each JM-Proposal Fund from John McDiarmid, for the SGC-Proposal Fund from Shoshana Grossman-Crist, and for each JB-Proposal Fund (each, a “Proposal” received from a “Proponent”) for inclusion in applicable Fund’s proxy statement and form of proxy (the “Proxy Materials”) for the Fund’s next meeting of shareholders. The purpose of this letter is to notify the U.S. Securities and Exchange Commission (the “Commission”) of each Fund’s intent to exclude the Proposal from its Proxy Materials. We respectfully request confirmation that the staff of the Division of Investment Management (the “Staff”) will not recommend any enforcement action to the Commission if, in reliance on certain provisions of Rule 14a-8 under the Securities Exchange Act of 1934, as amended, each Fund excludes the Proposal from its Proxy Materials.

FISMA & OMB Memorandum M-07-16

In accordance with Rule 14a-8(j) and Staff Legal Bulletin No. 14D (“SLB 14D”), we are emailing this letter to IMshareholderproposals@sec.gov. Additionally, in accordance with Rule 14a-8(j), we have copied the Proponent or their agent, as appropriate, on the email and are simultaneously forwarding a copy of this letter via overnight mail to the Proponent or their agent, as appropriate. Pursuant to Rule 14a-8(j), this letter is being submitted not less than 80 calendar days before the Funds will file their definitive Proxy Materials. Rule 14a-8(k) and SLB 14D provide that shareholder proponents are required to send issuers a copy of any correspondence that the proponents elect to submit to the Commission or its Staff. Accordingly, we are taking this opportunity to inform the Proponent or their agent, as appropriate, that if they elect to submit additional correspondence to the Commission or its Staff with respect to the relevant Proposal, a copy of that correspondence should be furnished concurrently to the undersigned on behalf of the Funds pursuant to Rule 14a-8(k) and SLB 14D. Please send any response by the Staff to this letter to my attention by email (stephen.bier@dechert.com) and send a copy of the response to the attention of the Proponents at the mailing address and/or email address set forth in the Proposal.
I. The Proposal
On September 19, 2018, October 18, October 22 and October 23, 2018, Vanguard received from each Proponent, as applicable, the Proposal for inclusion in the relevant Fund’s Proxy Materials. The Proposal reads as follows:
RESOLVED
Shareholders request that the Board institute transparent procedures to avoid holding or recommending investments in companies that, in management’s judgment, substantially contribute to genocide or crimes against humanity, the most egregious violations of human rights.
II. Exclusion of the Proposal
The Proposal may be excluded from each Fund’s Proxy Materials because the Proponents have not continuously held the requisite amount of Fund shares required by Rule 14a-8(b). Vanguard has confirmed that each Proponent’s shares in the relevant Fund have been sold. Because

Enclosure 2 of 2 · 52 pages · PDF 6.8 MBRegulator's file ↗

Second Incoming Request Letter from Funds

1095 Avenue of the Americas
New York, NY 10036-6797
+1 212 698 3500 Main
+1 212 698 3599 Fax www.dechert.com
STEPHEN H. BIER stephen.bier@dechert.com
+1 212 698 3889 Direct
VIA E-MAIL
September 3, 2024
Office of Chief Counsel
Division of Investment Management
U.S. Securities and Exchange Commission
100 F Street N.E.
Washington, D.C. 20549
IMshareholderproposals@sec.gov
Re: Notice of Intent to Exclude Shareholder Proposal from Proxy Materials Dear Sir or Madam:
We are counsel to the Vanguard Funds listed on Appendix A of the attached letter (collectively, the “Funds”). Back in 2018, Vanguard received identical shareholder proposals and supporting statements (together, the “Proposal”) from the shareholders listed in Appendix A (the “Proponents”) for inclusion in the Funds’ proxy statement and form of proxy (the “Proxy Materials”) in connection with the Funds’ next special meeting of shareholders. The purpose of this letter is to notify the U.S. Securities and Exchange Commission (the “Commission”) of the Funds’ intent to exclude the Proposal from its Proxy Materials. We respectfully request confirmation that the Commission staff (“Staff”) will not recommend any enforcement action to the Commission if, in reliance on certain provisions of Rule 14a-8 under the Securities Exchange Act of 1934, as amended, the Funds exclude the Proposal from their Proxy Materials. In accordance with Rule 14a-8(j) and Staff Legal Bulletin No. 14D (“SLB 14D”), we are emailing this letter to IMshareholderproposals@sec.gov. Additionally, in accordance with Rule 14a-8(j), we have copied the Proponents on the email and are simultaneously forwarding a copy of this letter via overnight mail to the Proponents and to their designated representatives. Rule 14a-8(k) and SLB 14D provide that shareholder proponents are required to send issuers a copy of any correspondence that the proponents elect to submit to the Commission or the Staff. Accordingly, we are taking this opportunity to inform the Proponents that if the Proponents elect to submit additional correspondence to the Commission or Staff with respect to the Proposal, a copy of that correspondence should be furnished concurrently to the undersigned on behalf of the Funds pursuant to Rule 14a-8(k) and SLB 14D.

FISMA & OMB Memorandum M-07-16

Please send any response to this letter to my attention by email (stephen.bier@dechert.com) and send a copy of the response to the attention of the Proponents at the mailing address and/or email address set forth in the Proposal.
I. The Proposal
In 2018, the Funds received the following Proposal for inclusion in the Funds’ Proxy Materials:
We believe that:

While reasonable people may disagree about socially responsible investing, few
want their investments to help fund genocide. KRC Research’s 2010 study showed 88% of respondents want their mutual funds to be genocide-free.
Millions of Vanguard investors voted for genocide-free investing proposals,
submitted by supporters of Investors Against Genocide. Details on genocide-free investing are available at http://bit.ly/2AiqPWD.
Vanguard has opposed genocide-free investing since the issue was raised in 2007.
Genocide-free investing is consistent with the company’s values. Notably,
Vanguard a) Signed the UN Principles for Responsible Investment in 2014, agreeing to incorporate social issues into investment decision-making processes and “better align investors with broader objectives of society.” b) Claims “Our PRI membership is a natural extension of the Vanguard mission” and “we’ve always sought to take a stand for all investors and advocate for their best interests.” c) Publishes its pledge to “Align our interests with our clients’ interests” and “Hold ourselves to the highest standards of ethical behavior and stewardship.” d) Should protect shareholder interests in avoiding investments substantially contributing to genocide.
Examples demonstrate that Vanguard’s policies inadequately support genocidefree investing because Vanguard and funds it manages:

3 a) Have for many years been one of the world’s largest holders of both PetroChina and Sinopec. PetroChina’s controlling parent, CNPC, is Sudan’s largest oil partner, thereby helping fund genocide there. CNPC/PetroChina also partners with Syria. Sinopec, another oil company, also operates in both countries. b) Claim to have a policy that applied to all of its funds to consider social issues and “potential divestment” in cases of “crimes against humanity or patterns of egregious abuses of human rights,” but have taken no action to avoid problem investments.
6. Individuals, by owning Vanguard funds, may inadvertently invest in companies
that help support genocide. With no policy to prevent these investments, Vanguard may at any time increase holdings in problem companies.
7. Vanguard can implement a genocide-free investing policy because:
a) Ample alternative investments exist. b) Avoiding problem companies need not significantly affect investment performance, as shown in Gary Brinson’s classic asset allocation study. c) Appropriate disclosure can address any legal concerns regarding exclusion of problem companies, even in index funds that sample rather than replicate their index. d) Management can easily obtain independent assessments to identify companies connected to genocide. e) Other large financial firms (including T. Rowe Price and TIAA) have policies to avoid such investments. f) Procedures may include time-limited engagement with problem companies if management believes that their behavior can be changed. g) In the rare case that the company believes it cannot avoid an investment tied to genocide, it can prominently disclose the issue to shareholders. h) Only a handful of Vanguard’s funds would be affected.

4
RESOLVED
Shareholders request that the Board institute transparent procedures to avoid holding or recommending investments in companies that, in management’s judgment, substantially contribute to genocide or crimes against humanity, the most egregious violations of human rights.
II. Exclusion of the Proposal
A. Exclusion of the Proposal is Consistent with Commission Guidance and Recent Staff Precedent The Funds believe they may properly omit the Proposal from their Proxy Materials because the Proposal interferes with the Funds’ ordinary business operations. This is the same reason an identical proposal was omitted from the proxy statements of certain Vanguard funds in 2020, with the concurrence of the Staff (“2020 Letter”). 1

The Commission has explained that the policy underlying the ordinary business exception rests on two central considerations. The first consideration is that certain tasks are so fundamental to management’s ability to run a company on a day-to-day basis that the tasks could not, as a practical matter, be subject to direct shareholder oversight. The second consideration relates to “the degree to which the proposal seeks to ‘micro-manage’ the company by probing too deeply into matters of a complex nature upon which shareholders, as a group, would not be in a position to make an informed judgment.”2

Applying these considerations, the Staff in 2020 agreed with the Vanguard funds that the Proposal sought to micromanage the funds “by seeking to impose specific methods for implementing complex policies,” and thus could be excluded pursuant to Rule 14a-8(i)(7), the ordinary business exception. 3 A copy of the 2020 Letter and the related correspondence with the Staff are included here as Appendix B and are incorporated herein by reference. 1 See Vanguard Funds, SEC No-Action Letter (pub. avail. Sept. 11, 2020). 2 Securities Exchange Act Release No. 40018 (May 21, 1998) (the “1998 Release”). 3 In addition to the relief provided to Vanguard in the 2020 Letter, the Staff has agreed the Proposal may be excluded from the proxy statements of other financial services firms. See, e.g., JPMorgan Chase & Co., SEC No-Action Letter (pub. avail. March 13, 2019).

5
B. Subsequent Staff Guidance Does Not Impact the Conclusion Reached in the 2020 Letter Following Vanguard’s receipt of the 2020 Letter, the Staff published Staff Legal Bulletin No. 14L (“SLB 14L”), which rescinded and replaced certain guidance with respect to the ordinary business exception. 4 SLB 14L stated that “proposals seeking detail or seeking to promote timeframes or methods do not per se constitute micromanagement.” However, SLB 14L reiterated the essence of the micromanagement concept outlined by the Commission, noting that the Staff would focus on “the level of granularity sought in the proposal and whether and to what extent it inappropriately limits discretion of the board or management.” SLB 14L does not change the conclusion that the Proposal impermissibly micromanages the Funds. The Proposal inappropriately interferes with the discretion of the Funds’ Board of Trustees (“Board”) and management by seeking to impose specific selection criteria in making (or recommending) investment decisions on behalf of the Funds, including avoiding investments in (or divesting from) specific categories of companies disfavored by the Proposal’s proponents. The selection of investments is fundamental to the business and operations of the Funds as investment companies. 5 It constitutes a core management function involving the evaluation and selection of investment opportunities for each of the Funds and is intended to be separate from direct shareholder oversight. The Proponents nonetheless seek to impose a specific outcome for investment decision-making without considering a Fund’s established investment objective or any other investment criteria established by the Funds’ Board, implemented by management and disclosed to investors. Such action inappropriately limits the discretion of the Board and management, and thus constitutes micromanagement of the Funds. The Proposal raises particular micromanagement concerns for those Funds that have an investment objective to seek to track the investment performance of a specified benchmark index (“Index Funds”). Vanguard’s management does not determine the components of an Index Fund’s benchmark. Instead, benchmarks are constructed and maintained by independent third parties with stated methodologies for representing specific markets or subsets of those markets. As a manager of index funds, Vanguard does not make active, fundamental assessments of companies to inform the Index Funds’ portfolio holdings. Rather, Vanguard is obligated to invest an Index Fund’s assets in a manner that closely tracks its benchmark. The Proposal nonetheless seeks to cause an Index Fund to incorporate actively managed fund approaches into its business operations and to avoid 4 Shareholder Proposals: Staff Legal Bulletin No. 14L (CF), available at https://www.sec.gov/newsroom/whats-new/shareholder-proposals-staff-legal-bulletin-no-14l-cf. 5 The Staff has consistently recognized that “the ordinary business operations of an investment
company include buying and selling portfolio securities.” See College Retirement Equities Fund, SEC No-Action Letter (pub. avail. May 3. 2004); see also, Morgan Stanley Africa Investment Fund, Inc., SEC No-Action Letter (pub. avail. Apr 26, 1991) (noting that an investment company’s ordinary business operations include “the purchase and sale of securities and the management of the fund’s portfolio securities”).

6 investments in companies that may be components of an Index Fund’s benchmark. This would interfere with an Index Fund’s investment objective, as disclosed to Index Fund shareholders. Our conclusion that the Proposal seeks to micromanage the Funds is consistent with the conclusion reached by the Staff in other contexts since the publication of SLB 14L. For example, in Chubb Ltd., the company argued that a shareholder proposal requiring the company’s board to “adopt and disclose a policy for the timebound phase out of the [c]ompany’s underwriting risks associated with new fossil fuel exploration and development projects” micromanaged the company by delving too deeply into a complex issue about which shareholders would not be qualified to make an informed decision. 6 The company noted that the proposal inappropriately interfered with the discretion of the company’s board and management in managing its environmental commitments, and that the proposal interfered with underwriting decisions – which is Chubb’s core business. Similarly, the Proposal here seeks to impose upon the Funds a particular policy that precludes investments in a specific group of companies, interfering with the judgment of the Board and Vanguard management. It also interferes with the core business of the Funds – the day-to-day management of the Funds’ investments, consistent with a Fund’s defined investment objective. 7

C. The Significant Social Policy Exception is Inapplicable
The Proposal also does not qualify for the significant social policy exception. In granting the 2020 Letter, the Staff necessarily concurred that the exception does not apply to the Proposal. SLB 14L also included new guidance about the scope of the significant social policy exception. It stated that the Staff “will no longer focus on determining the nexus between a policy issue and the company, but will instead focus on the social policy significance of the issue that is the subject of the shareholder proposal.” SLB 14L added that, “[i]n making this determination, the [S]taff will consider whether the proposal raises issues with a broad societal impact, such that they transcend the ordinary business of the company.”8

SLB 14L aligns with the 1998 Release, where the Commission explained that proposals focusing on significant social policy issues “generally would not be considered to be excludable, because the proposals would transcend the day-to-day business matters and raise policy issues so 6 SEC No-Action Letter (pub. avail. Mar. 27, 2023). 7 See also Kroger Co., SEC No-Action Letter (pub. avail. Apr. 25, 2023) (concurring with the exclusion of a proposal that micromanaged the company even though the objective of the proposal was to “mitigate severe risks of forced labor and other human rights violations in the [c]ompany’s produce supply chain”); Amazon.com, Inc., SEC No-Action Letter (pub. avail. Apr. 7, 2023), recon. denied (Apr. 20, 2023) (concurring with the exclusion of a proposal addressing climate change goals due to micromanagement); Chubb Ltd., SEC No-Action Letter (pub. avail. Mar. 27, 2023) (same). 8 Emphasis added.

7 significant that it would be appropriate for a shareholder vote.”9 In Staff Legal Bulletin No. 14H, the Staff explained that proposals focusing on a significant social policy issue are not excludable under the ordinary business exception “because the proposals would transcend the day-to-day business matters….”10 We agree that genocide and crimes against humanity raise significant social policy issues. However, the Proposal here relates specifically to the Funds’ investment operations, and thus does not “transcend the day-to-day” business of the Funds. This is demonstrated through the text of the Proposal itself, which focuses on the proponents’ interpretation of Vanguard’s corporate values. By way of example, the Proposal states that “[g]enocide-free investing is consistent with [Vanguard’s] values,” noting Vanguard’s signing of the UN Principles for Responsible Investment, and Vanguard’s “pledge to ‘Align our interests with our clients’ interests’ and ‘[h]old ourselves to the highest standards of ethical behavior and stewardship.’” It then claims that “Vanguard’s policies inadequately support genocide-free investing,” noting the Funds’ holdings in particular companies objectionable to the Proponents. By focusing on a perceived contradiction between Vanguard’s corporate values and Fund investments, and by prescribing a specific change to day-to-day management of the Funds, the Proposal fails to “transcend the day-to-day” business of the Funds, as required for a proposal to qualify for the significant social policy exception. Our view is consistent with recent Staff precedent. For example, in Bank of America Corporation, the Staff recently considered a proposal requesting the board to “conduct and publish a review … of whether and to what extent Bank of America requested that Company clients deny their products or services to certain customers or categories of customers…”11 In correspondence with the Staff, the proponent argued that the proposal dealt with multiple significant policy issues, including the adoption of a social credit system in the United States. The company argued, however, that the proposal did not transcend the company’s ordinary business operations because the proposal focused on “the terms upon which the [c]ompany offers its products and services to clients as well as management of its customer relations.” The company noted that the central focus of the proposal was the company’s “policies, practices and procedures for determining the terms on which it engages with clients and how to manage its customer relations.” After considering these arguments, the Staff granted no-action relief, concluding that the proposal related to ordinary business matters. Similarly here, the Proposal relates to the Funds’ ordinary business of purchasing and selling Portfolio securities, with multiple references to Vanguard and its internal policies. 9 1998 Release (emphasis added). 10 Shareholder Proposals: Staff Legal Bulletin No. 14H (CF),
available at https://www.sec.gov/corpfin/staff-legal-bulletin-14h-shareholder-proposals (emphasis in original). 11 SEC No-Action Letter (pub. avail. Feb. 29, 2024).

Appendix A
Fund Active/Index Shareholder
Proponent(s)
Vanguard 500 Index Fund Index Diamond; Ilangovan; Mehr Vanguard Capital Opportunity Fund Active Ilangovan Vanguard Cash Reserves Federal Money Market Fund (f/k/a Vanguard Prime Money Market Fund) Active Leon; Diamond Vanguard Dividend Appreciation Index Fund Index Blanchard Vanguard Dividend Growth Fund Active Rosczyk Vanguard Equity Income Fund Active Ilangovan; Rosenfeld Vanguard European Stock Index Fund Index Rosenfeld Vanguard Federal Money Market Fund Active Diamond Vanguard FTSE All-World Ex-US Index Fund Index Blanchard Vanguard FTSE Social Index Fund Index Grossman-Crist; Rosczyk; Nelson(s) Vanguard Global Equity Fund Active Leon Vanguard GNMA Fund Active Diamond; Mehr; McDiarmid (deceased) Vanguard Growth Index Fund Index Mehr Vanguard High-Yield Corporate Fund Active Dull; Leon Vanguard Inflation-Protected Securities Fund Active McDiarmid (deceased) Vanguard Intermediate-Term Bond Index Fund Index Mehr Vanguard Intermediate-Term Investment-Grade Fund Active McDiarmid (deceased) Vanguard Intermediate-Term Tax-Exempt Fund Active Diamond Vanguard Intermediate-Term Treasury Fund Active Mehr Vanguard International Growth Fund Active Rosczyk; Rosenfeld Vanguard LifeStrategy Moderate Growth Fund Active Blanchard Vanguard Long-Term Investment-Grade Fund Active McDiarmid (deceased) Vanguard Long-Term Treasury Fund Active McDiarmid (deceased) Vanguard Mid-Cap Index Fund Index Dull; Diamond Vanguard Mid-Cap Value Index Fund Index Ilangovan Vanguard New York Long-Term Tax-Exempt Fund Active Diamond

10
Fund Active/Index Shareholder
Proponent(s)
Vanguard Pacific Stock Index Fund Index Rosenfeld Vanguard PRIMECAP Fund Active Diamond; Rosczyk Vanguard Real Estate Index Fund Index Blanchard; Rosenfeld Vanguard Short-Term Corporate Bond Index Fund Index Blanchard Vanguard Short-Term Federal Fund Active McDiarmid (deceased) Vanguard Short-Term Investment-Grade Fund Active Grossman-Crist Vanguard Short-Term Treasury Fund Active McDiarmid (deceased) Vanguard Small-Cap Index Fund Index Diamond; Rosenfeld Vanguard Small-Cap Value Index Fund Index Blanchard Vanguard STAR Fund Active Blanchard Vanguard Strategic Equity Fund Active Ilangovan Vanguard Target Retirement Income Fund Active Haskell Vanguard Tax-Managed Capital Appreciation Fund Active Leon Vanguard Tax-Managed Small-Cap Fund Active Rosczyk Vanguard Total Bond Market Index Fund Index Blanchard; Diamond; Dull; McDiarmid (deceased); Mehr Vanguard Total International Stock Index Fund Index Grossman-Crist; Mehr Vanguard Total Stock Market Index Fund Index Blanchard; Diamond; Dull; Grossman-Crist; Ilangovan; Mehr; Rosenfeld Vanguard Value Index Fund Index Rosczyk Vanguard Wellesley Income Fund Active Rosczyk; Diamond Vanguard Wellington Fund Active Rosczyk; Diamond Vanguard Windsor Fund Active Mehr Vanguard Windsor II Fund Active Dull; Diamond

Appendix B

VIA E-MAIL
July 27, 2020
Office of Chief Counsel
Division of Investment Management
U.S. Securities and Exchange Commission
100 F Street N.E.
Washington, D.C. 20549
IMshareholderproposals@sec.gov
Re: Shareholder Proposal Submitted by Kani Illangovan and Mary Lou Rosczyk for Inclusion in the Vanguard Funds’ 2020 Proxy Materials Dear Sir or Madam:
We are counsel to the Vanguard Funds listed on Appendix A of the attached letter (collectively, the “Funds”). On October 17, 2018 and November 1, 2018, Vanguard received a shareholder proposal and supporting statement (together, the “Proposal”) from Kani Illangovan and Mary Lou Rosczyk (the “Proponents”) for inclusion in the Funds’ 2020 proxy statement and form of proxy (the “2020 Proxy Materials”) to be distributed to the Funds’ shareholders in connection with a 2020 Special Meeting of Shareholders. The purpose of this letter is to notify the U.S. Securities and Exchange Commission (the “Commission”) of the Funds’ intent to exclude the Proposal from its 2020 Proxy Materials. We respectfully request confirmation that the staff of the Division of Investment Management (the “IM Division”) will not recommend any enforcement action to the Commission if, in reliance on certain provisions of Rule 14a-8 under the Securities Exchange Act of 1934, as amended, the Funds exclude the Proposal from their 2020 Proxy Materials. In accordance with Rule 14a-8(j) and Staff Legal Bulletin No. 14D (“SLB 14D”), we are emailing this letter to IMshareholderproposals@sec.gov. Additionally, in accordance with Rule 14a-8(j), we have copied the Proponents on the email and are simultaneously forwarding a copy of this letter via overnight mail to the Proponents and to their agents. The Funds presently intend to file their definitive 2020 Proxy Materials with the Commission on or about October 15, 2020, or as soon as possible thereafter. Accordingly, pursuant to Rule 14a-8(j), this letter is being submitted not less than 80 calendar days before the Funds will file their definitive 2020 Proxy Materials. Rule 14a-8(k) and SLB 14D provide that shareholder proponents are required to send issuers a copy of any correspondence that the proponents elect to submit to the Commission or the IM Division. Accordingly, we are taking this opportunity to inform the Proponents that if the

Proponents elect to submit additional correspondence to the Commission or the IM Division with respect to this Proposal, a copy of that correspondence should be furnished concurrently to the undersigned on behalf of the Funds pursuant to Rule 14a-8(k) and SLB 14D. Please send any response by the IM Division to this letter to my attention by email (stephen.bier@dechert.com) or by fax (212-698-0682) and send a copy of the response to the attention of the Proponents at the mailing address and/or email address set forth in the Proposal.
I. The Proposal
On October 17, 2018 and November 1, 2018, Vanguard received from the Proponents the Proposal for inclusion in the Funds’ 2020 Proxy Materials. The Proposal reads as follows:
WHEREAS
We believe that:

While reasonable people may disagree about socially responsible investing,
few want their investments to help fund genocide. KRC Research’s 2010 study showed 88% of respondents want their mutual funds to be genocidefree.
Millions of Vanguard investors voted for genocide-free investing proposals,
submitted by supporters of Investors Against Genocide. Details on genocidefree investing are available at http://bit.ly/2AiqPWD.
Vanguard has opposed genocide-free investing since the issue was raised in
2007.
Genocide-free investing is consistent with the company’s values. Notably,
Vanguard:
a) Signed the UN Principles for Responsible Investment in 2014, agreeing to incorporate social issues into investment decisionmaking processes and “better align investors with broader objectives of society.” b) Claims “Our PRI membership is a natural extension of the Vanguard mission” and “we’ve always sought to take a stand for all investors and advocate for their best interests.” c) Publishes its pledge to “Align our interests with our clients’ interests” and “Hold ourselves to the highest standards of ethical behavior and stewardship.” d) Should protect shareholder interests in avoiding investments substantially contributing to genocide.
Examples demonstrate that Vanguard’s policies inadequately support
genocide-free investing because Vanguard and funds it manages:
a) Have for many years been one of the world’s largest holders of both PetroChina and Sinopec. PetroChina’s controlling parent, CNPC, is Sudan’s largest oil partner, thereby helping fund genocide there. CNPC/PetroChina also partners with Syria. Sinopec, another oil company, also operates in both countries. b) Claim to have a policy that applied to all of its funds to consider social issues and “potential divestment” in cases of “crimes against humanity or patterns of egregious abuses of human rights,” but have taken no action to avoid problem investments.
Individuals, by owning Vanguard funds, may inadvertently invest in
companies that help support genocide. With no policy to prevent these investments, Vanguard may at any time increase holdings in problem companies.
Vanguard can implement a genocide-free investing policy because:
a) Ample alternative investments exist. b) Avoiding problem companies need not significantly affect investment performance, as shown in Gary Brinson’s classic asset allocation study. c) Appropriate disclosure can address any legal concerns regarding exclusion of problem companies, even in index funds that sample rather than replicate their index. d) Management can easily obtain independent assessments to identify companies connected to genocide. e) Other large financial firms (including T. Rowe Price and TIAA) have policies to avoid such investments. f) Procedures may include time-limited engagement with problem companies if management believes that their behavior can be changed. g) In the rare case that the company believes it cannot avoid an investment tied to genocide, it can prominently disclose the issue to shareholders. h) Only a handful of Vanguard’s funds would be affected. RESOLVED Shareholders request that the Board institute transparent procedures to avoid holding or recommending investments in companies that, in management’s judgment, substantially contribute to genocide or crimes against humanity, the most egregious violations of human rights.

II. Exclusion of the Proposal
A. Bases for Excluding the Proposal
As discussed more fully below, the Funds believe they may properly omit the Proposal from their 2020 Proxy Materials in reliance on Rule 14a-8(i)(7), as the Proposal deals with matters related to the Funds’ ordinary business operations and seeks to impermissibly micromanage the Funds; and Rule 14a-8(i)(10), as the Proposal has already been substantially implemented by the Funds. The Funds believe that the Proposal’s goal of dictating the day-today decision-making of the Funds’ management personnel with regard to the selection of investment opportunities constitutes a clear case of micromanagement, as supported by recent Staff decisions. As discussed in greater detail below, the Funds have already substantially implemented the Proposal through procedures requiring Vanguard to monitor and advise the Funds on the human rights practices of portfolio companies. By conceding that the Funds already have a policy that addresses the issues presented in the Proposal, but objecting that the Funds do not use the specific methods outlined in the Proposal, the Proponents have acknowledged their intent to micromanage the Funds. As such, the Funds believe the Proposal can be properly omitted under both Rule 14a-8(i)(7) and Rule 14a-8(i)(10). B. The Proposal May Be Omitted Under Rule 14a-8(i)(7), as it Seeks to Micromanage the Funds A proposal may be omitted under Rule 14a-8(i)(7) if it “deals with a matter relating to the company’s ordinary business operations.” The Commission has explained that the policy underlying the ordinary business exclusion under Rule 14a-8(i)(7) rests on two central considerations. The first consideration is that certain tasks are so fundamental to management’s ability to run a company on a day-to-day basis that the tasks could not, as a practical matter, be subject to direct shareholder oversight. The second consideration relates to “the degree to which the proposal seeks to ‘micro-manage’ the company by probing too deeply into matters of a complex nature upon which shareholders, as a group, would not be in a position to make an informed judgment.”1 The Commission has repeatedly recognized that a proposal that seeks to micromanage the determinations of a company’s management regarding day-to-day decisions is excludable under Rule 14a-8(i)(7) as a component of “ordinary business.” The Commission has provided extensive guidance through staff bulletins and no-action precedent supporting the exclusion of shareholder proposals on micromanagement grounds. For example, the 1998 Release stated that the micromanagement consideration “may come into play in a number of circumstances, such as where the proposal involves intricate detail, or seeks to impose specific time-frames or methods of implementing complex policies.” In Staff Legal Bulletin No. 14J (Oct. 23, 2018) (“SLB 14J”), the Staff stated that “it is the manner in which a proposal seeks to address an issue that results in Securities Exchange Act Release No. 40018 (May 21, 1998) (the
“1998 Release”). 1

exclusion on micromanagement grounds.” SLB 14J also provides that proposals “seek[ing] to impose specific time-frames or methods for implementing complex policies” are excludable under Rule 14a-8(i)(7) as seeking to micromanage a company. The Staff has also repeatedly recognized that “the ordinary business operations of an investment company include buying and selling portfolio securities.”2 The staff of the Division of Corporation Finance (the “Staff”) has already considered this issue and concluded that a nearly identical proposal, submitted by William Rosenfeld, may be omitted because it “micromanages the [c]ompany by seeking to impose specific methods for implementing complex policies. 3 The Proposal at hand is a nearly verbatim submission of Mr. Rosenfeld’s proposal in the JPM/IAG Letter and seeks to micromanage the Company by subverting the day-to-day decision-making of management with regard to the selection of investment opportunities in the exact same way. The request in the JPM/IAG Letter specifically sought to require a prohibition on certain investments and to require a policy that would prohibit the company from making investments in certain companies. 4 The Staff agreed in the JPM/IAG Letter that such demands clearly constitute micromanagement and may be properly omitted pursuant to Rule 14a-8(i)(7). That the Proposal clearly seeks to micromanage the Funds’ management of specific investment decisions is evidenced by its identification of the Funds’ holdings in PetroChina and Sinopec as inconsistent with the Proposal’s goals, thereby seeking to cause the Funds’ divestment from those investments. The Proposal attempts to mandate a policy that would exclude specific investments from the Funds’ ordinary business decisions. Just as the Staff agreed in the JPM/IAG Letter, the Proposal constitutes micromanagement because it seizes the ordinary decision-making functions of the Company and imposes a specific method for implementing complex policies. The Proposal seeks to impose upon the Funds a method for implementing a complex policy that specifically addresses the securities in which the Funds would be permitted to invest. This is precisely the type of management function that Rule 14a-8(i)(7) recognizes as improper for direct shareholder oversight. Specifically, the Proposal requests that the Funds “institute transparent procedures to avoid holding or recommending investments in companies 2 See College Retirement Equities Fund, SEC No-Action Letter (pub. avail. May 3. 2004) (“2004 CREF Letter”); see also, Morgan Stanley Africa Investment Fund, Inc.; SEC No-Action Letter (pub. avail. Apr 26, 1991) (“Morgan Stanley Letter”) (noting that an investment company’s ordinary business operations include “the purchase and sale of securities and the management of the fund’s portfolio securities”); State Street Corp., SEC No-Action Letter (pub. avail. Feb. 24, 2009). 3 JPMorgan Chase & Co., SEC No-Action Letter (pub. avail. March 13, 2019) (“JPM/IAG
Letter”) 4 The proposal in the JPM/IAG Letter sought to micromanage the overarching investment policies and decisions of JPMorgan Chase & Co. as a bank holding company; similarly, the Proponents’ Proposal seeks to micromanage the investment decision making and portfolio composition of certain Vanguard Funds.

that…substantially contribute to genocide or crimes against humanity.” In so doing, the Proposal impermissibly seeks to micromanage the Funds by (i) explicitly restricting its day-to-day decision making with respect to the complex matters of selecting investments for the investment portfolios of its mutual and other funds and (ii) establishing criteria for excluding specific categories of investments. The selection and analysis of investments is fundamental to the business and operations of the Funds as investment companies; it constitutes a core management function involving the daily, complex evaluation and selection of investment opportunities for each of the Funds and is intended to be separate from direct shareholder oversight pursuant to Rule 14a8(i)(7). The Proponents seek to impose a specific outcome for this analysis without considering any other investment criteria established and followed by management. In two 2018 letters submitted by JPMorgan Chase & Co., the Staff likewise agreed that similar proposals may be excluded because they sought to “impose specific methods for implementing complex policies.”5 In the JPM Christensen Letter, the Staff concurred in the exclusion of a proposal which would have required a report on the reputational, financial and climate risks associated with project and corporate lending, underwriting, advising and investing for tar sands production and transportation. While that proposal did not explicitly dictate an alteration of company policy, the Staff found that it nevertheless sought to micromanage the company by imposing “specific methods for implementing complex policies.” In the JPM Harrington Letter, the Staff concurred that JPMorgan Chase & Co. may exclude a proposal which would have required the company to establish a human and indigenous peoples’ rights committee that, among other things, would adopt policies and procedures to require consideration of human and indigenous peoples’ rights in connection with certain financing decisions. The Staff likewise agreed that such proposal would also micromanage the Company by seeking to “impose specific methods for implementing complex policies.” 6 Like the request in the JPM/IAG Letter, the Proposal, micromanages even more than the proposals addressed in the JPM 2018 Letters by requiring prohibitions on specific companies from investment by the Funds rather than merely requiring a consideration of certain factors. The Proposal interferes with the ability of the Funds’ Board to oversee the day-to-day operations of the Funds by requiring the Board to adopt a specific policy position that imposes mandates on the core business of the Funds. Furthermore, as discussed in greater detail below, the Funds’ management has adopted and developed policies and procedures to govern the monitoring and reporting of portfolio company human rights practices. The development and implementation of these policies and procedures are fundamental to the management of the
day-to-day operations of the Funds. As illustrated by the Staff’s recent precedent, the Proposal impermissibly seeks to 5 See JPMorgan Chase & Co., SEC No-Action Letter (pub. avail. March 30, 2018) (“JPM Christensen Letter”) and JPMorgan Chase & Co., SEC No-Action Letter (pub. avail. Mar. 30,
2018) (“JPM Harrington Letter” and together with the JPM Christensen Letter, the “JPM 2018
Letters”).
6 See JPM Harrington Letter, supra note 4.

micromanage the Funds by replacing the informed and reasoned judgments of management with respect to the Funds’ day-to-day operations, and therefore may be properly excluded under Rule 14a-8(i)(7). The Vanguard Group, Inc. (“Vanguard”) is a global financial services firm which offers more than 400 investment products with total assets of approximately $5 trillion. In order to manage the investments made by the Funds, Vanguard’s management relies on its deep understanding of complex financial markets, products and companies, including information to which the Funds’ shareholders do not have access. The Funds’ management expends significant effort determining how to manage investments in order to satisfy its fiduciary obligation to its investors, while also taking into account complex public policy matters relating to its investments. This includes the development and implementation of policies and procedures such as the Funds’ Procedures and Guidelines for Monitoring and Reporting on Portfolio Company Human Rights Practices. The investment decisions made by the Funds’ management require complex analysis and industry expertise at many levels. While social and public policy issues are given due consideration within the Funds’ operating model, they are one of many factors considered in an evaluation of the best interests of the Funds and its shareholders. As noted above, the Funds’ management focuses extensively on establishing appropriate standards for making investment decisions, which are then implemented on a day-to-day basis when selecting investments. Per the guidance in SLB 14J, a proposal is excludable on the basis of micromanagement, even with a proper subject matter, if it “probe[s] too deeply into matters of a complex nature,” which the Proposal seeks to do. By seeking to prohibit the Funds from making investments in particular companies and forcing them to divest from others, the Proposal seeks to micromanage the Funds in a manner consistent with other Commission decisions. For example, in Exxon Mobil, a proposal sought the specific outcome of a new board committee devoted to climate risk to evaluate the board and management’s climate strategy and to better inform board decision making on climate risks and opportunities. 7 The company argued, among other things, that the proposal unduly interfered with the company’s board processes by assigning a specific set of responsibilities for how a new board committee should assess and manage climate related risks, thereby removing flexibility for the board in overseeing, assessing and managing those risks. The Staff agreed that the proposal “micromanages the [c]ompany by dictating that the board charter a new board committee on climate risk. As a result, the [p]roposal unduly limits the board’s flexibility and discretion in determining how the board should oversee climate risk.” In requiring a specific policy prohibiting certain types of investments, the Proposal similarly seeks to dictate
specific actions to be taken by the Funds with respect to complex matters (investment policies and decisions) that the management of the Funds is well positioned to consider, whereas shareholders as a group are not. In Intel Corporation, the Staff concurred with the omission of a proposal under Rule 14a8(i)(7) that would have required Intel to: “update its “Global Human Rights Principles” to include Exxon Mobil Co., SEC No-Action Letter (pub. avail. Mar. 6, 2020). 7

the following statement, as well as displaying said statement on all websites and communications which have Diversity and/or Inclusion as their primary subject matter: “Intel affirms and believes all that the Pride flag and the Gay Pride movement it is associated with represent or assert to be right and true.”” 8 The Staff agreed with Intel that the proposal micromanaged the company by dictating that it must adopt a certain policy position and adopt specific measures on how to implement that position. In Apple Inc. (December 21, 2017), the Staff likewise concurred with the company that a shareholder proposal requiring the company’s board to prepare a “report that evaluates the potential for the [c]ompany to achieve, by a fixed date, “net-zero” emissions of greenhouse gases relative to operations directly owned by the [c]ompany and major suppliers” micromanaged the company by delving too deeply into a complex issue about which shareholders would not be qualified to make an informed decision. 9 Similar to the excluded proposals in the Staff decisions cited above, the Proposal seeks to impose upon the Funds a particular policy that precludes investments in a specific group of companies, thereby significantly impacting the Funds’ day-to-day investment selection. Further, as the Proposal specifically identifies investments in PetroChina and Sinopec as inconsistent with the Proposal’s goals, the Proposal seeks to force the Funds to divest themselves of certain prior investments that do not meet the policies requested by the Proposal. As the Proposal seeks to dictate the day-to-day management decisions of the Funds by overlaying a specific policy consideration, the Funds are of the view that the Proposal seeks to micromanage the Funds by probing too deeply into a complex issue about which shareholders would not be qualified to make an informed decision. As a result, the Proposal may be properly omitted pursuant to Rule 14- 8(i)(7).
C. The Proposal May Be Omitted Under Rule 14a-8(i)(10), As It Has Been
Substantially Implemented By The Funds
Rule 14a-8(i)(10) permits omission of a shareholder proposal if “the company has already substantially implemented the proposal.” The ability to omit proposals that have been “substantially implemented” is designed to “avoid the possibility of shareholders having to consider matters which already have been favorably acted upon by the management.”10 Initially, the Staff interpreted the predecessor to Rule 14a-8(i)(10) narrowly and granted no-action relief only when the proposals were “fully effected” by the company. However, in 1983, the Staff acknowledged that the “previous formalistic application of [Rule 14a-8(i)(10)] defeated its purpose” because there was a pattern of proponents successfully convincing the Commission to deny no-action relief by submitting proposals that differed from a company’s existing policies only by a few words. Therefore, a proposal need not be implemented completely or precisely as 8 Intel Corporation, SEC No-Action Letter (pub. avail. Mar. 15, 2019). 9 Apple Inc., SEC No-Action Letter (pub. avail. Dec. 21, 2017). 10 SEC Release No. 34-12598 (July 7, 1976).

presented for the Staff to determine that the subject of the proposal has been acted upon favorably by management. 11 Instead, the company’s actions must address the essential objectives of the proposal. Because the Funds have already implemented procedures to escalate allegations of the most egregious violations that substantially contribute to genocide or crimes against humanity, the Funds have substantially implemented the Proposal, and it may be excluded from the 2020 Proxy Materials. The Funds have already substantially implemented the Proposal as each Fund’s Board of Trustees (“Board”) has implemented the procedures called for by the Proposal. The Proposal requests that each Board “institute transparent procedures to avoid holding or recommending investments in companies that, in management’s judgment, substantially contribute to genocide or crimes against humanity, the most egregious violations of human rights.” In this case, the Funds have implemented procedures requiring Vanguard to monitor and advise the Funds on the human rights practices of portfolio companies. With respect to the Funds, these policies, procedures and controls include: (i) assessing human rights violations based on the United Nations’ Universal Declaration of Human Rights, securities filings, proxy reports, news reports, and other third-party materials that assist Fund analysts in identifying both companies and their specific business practices that may violate human rights; (ii) direct communication to the company in question to convey the expectation that human rights violations cease and to communicate possible divestment; (iii) publicly advocating and leveraging other industry resources to effect change; and (iv) recommending divestment if the company actively disregards prior steps, and if doing so is in the best interest of Fund shareholders. In the judgment of management and the Board, these policies, procedures and controls meet the Proposal’s request that the Funds “institute transparent procedures to avoid holding or recommending investments in companies that . . . substantially contribute to genocide or crimes against humanity, the most egregious violations of human rights.” Specifically, Vanguard’s “Investment Stewardship” analysts review third-party materials and communicate with the Funds to determine whether a particular portfolio company is engaged in business practices that may violate human rights or otherwise constitute a crime against humanity. If a violation is deemed to exist, Investment Stewardship will consider a variety of actions, including further engagement with the portfolio company, votes on related ballot items or against directors, and recommending further action to Vanguard’s Investment Stewardship Oversight Committee (“ISOC”). ISOC will then consider the recommendations made by Investment Stewardship and, based on their assessment of the violations, authorize further action to the extent necessary. Such action may include formal
letters to company leadership, participation in industry efforts, public advocacy, and ultimately, recommending divestment to the Board. Investment Stewardship prepares updates for the Board on portfolio company human rights practices and any recommended changes to the Funds’ procedures at least annually. Consistent with its oversight responsibilities, ISOC may report to the Board on matters it has considered under Vanguard’s procedures. If ISOC believes divestment is warranted (or that SEC Release No. 20091 (August 16, 1983). 11

escalation to the Board is otherwise appropriate) ISOC will report to the Board and recommend the appropriate course of action (including divestment of a Fund’s shares of the company). Although the Proposal defers to the judgment of the Board to “institute transparent procedures” to prevent the Funds from holding investments in companies that substantially contribute to genocide or crimes against humanity, the Board has already exercised its judgment by directing management to develop and implement robust procedures directly addressing the ways in which the Funds will monitor and address the human rights practices of its portfolio companies. The Staff has previously stated that “a determination that [a] [c]ompany has substantially implemented the proposal depends upon whether its particular policies, practices and procedures compare favorably with the guidelines of the proposal.”12 Where a company has implemented the essential objectives of a shareholder proposal or has policies and procedures concerning the subject matter already in place, the Commission staff has consistently found that the proposal has been substantially implemented and could be properly excluded from the company’s proxy materials. 13 In Freeport-McMoran Copper & Gold, Inc., 14 the Staff agreed that a company may exclude a proposal requesting that the company make certain enhancements to its human rights policy, even where the specific elements of the company’s policy were not identical with the shareholder proponents’ objectives. 15 Similarly, in The Talbots, Inc., a shareholder requested implementation of a code of corporate conduct based on human rights standards of the United Nations’ International Labor Organization. 16 The proposal was found to have been substantially implemented because the company had established and implemented similar human rights standards, even though those standards did not precisely comply with the standards referenced in the shareholder proposal. 17 Additionally, in The Boeing Co., the Commission 12 See Texaco Inc., SEC No-Action Letter (pub. avail. March 28, 1991). 13 See, e.g., Exxon Mobil Co., SEC No-Action Letter (pub. avail. Apr. 2, 2019); The TJX Companies, Inc., SEC No-Action Letter (pub. avail. February 4, 2019); Verizon Communications Inc., SEC No-Action Letter (pub. avail. Dec. 19, 2018); Apple Inc., SEC No-Action Letter (pub. avail. Nov. 19, 2018); Sun Microsystems, Inc., SEC No-Action Letter (pub. avail. Aug. 28, 2008); Anheuser-Busch Cos., Inc., SEC No-Action Letter (pub. avail. Jan. 17, 2007); ConAgra Foods, Inc., SEC No-Action Letter (pub avail. July 3, 2006); Johnson & Johnson, SEC No-Action Letter (pub. avail Feb. 17, 2006); Freeport-McMoran Copper & Gold, Inc., SEC No-Action Letter (pub. avail. Mar. 5, 2003). 14 See supra note 14. 15 SEC No-Action Letter (pub. avail. Mar. 5, 2003). See also, AMR Corp., SEC No-Action Letter (pub. avail. April 17, 2000); Kmart Corp., SEC No-Action Letter (pub. avail. Mar. 12, 1999). 16 SEC
No-Action Letter (pub. avail. Apr. 5, 2002). 17 Id.; see also The Gap, Inc., SEC No-Action Letter (pub. avail. Mar. 16, 2001) (concerning a proposal relating to child labor practices where the company already implemented related procedures); Kmart Corp., SEC No-Action Letter (pub. avail. Feb. 23, 2000) (concerning vendor

Appendix A
Vanguard U.S. Value Fund
Vanguard Health Care Fund
Vanguard Energy Fund

August 3, 2020
VIA E_MAIL (IMshareholderproposals@sec.gov)
Office of Chief Counsel
Division of Investment Management
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20249
Re: Shareholder Proposals Submitted by Kani Ilangovan and Mary Lou Rosczyk for Dear Sir or Madam:
On behalf of Kani Ilangovan and Mary Lou Rosczyk, the proponents of the shareholder proposals, I submit this letter in response to the - Investment Ma 2020 Special Meeting of Shareholders. he title of the Proposal is Genocide-free - es for exclusion of the Proposal under Rule 14a-8 under the Securities Exchange Act of 1934, as amended. This letter sets forth our response to each of the two bases for exclusion identified in the Letter and demonstrates that the Proposal should not be excluded because Vanguard has not met its burden under Rule 14a-8(g) to demonstrate that - been substantially implemented by the Funds. Background In reviewing this response, please put the Proposal in the following context. After the founders and supporters of Investors Against Genocide understood about the genocide being committed by the government of Sudan in Darfur and that substantial resources supporting the genocide were provided to the government of Sudan by a limited number of publicly-held companies, we resolved not to invest in any of those companies. However, after much effort, we discovered that some mutual funds we held invested in those companies and as a result we had done so indirectly. Our objective as individuals and investors is to do what we can so that investors do

not inadvertently invest in companies that support genocide. The Proponents share these concerns which is why they submitted Genocide-free Investing Proposals to various Vanguard Funds. We have good reason to expect that Vanguard shares these values because, as stated in the body of the Proposal:
Genocide-free inve a) Signed the UN Principles for Responsible Investment in 2014, agreeing to align investors with broader objectiv b) c) The overriding issue and concern behind Genocide-free Investing is that the Proposal represents a significant social policy issue. Rule 14a-8(i)(7) states that a proposal may not be -to-day business matters and raise policy issues so -free Investing is clearly such an issue. Here are just a few of the highlights of the public interest in Genocide-free Investing, compiled in a whitepaper from 2014: 1  Beginning in 2005 there has been a broad, public campaign to respond to the genocide in Sudan.  Many millions of shareholders have voted for Genocide-free investing when it has been on the ballot.  In 2012 when shareholders were presented with the proposal and management took a neutral position, shareholders overwhelmingly voted in favor of the proposal (85% of the yes/no votes were in favor, with 59.8% for, 10.7% against, and 29.5% abstaining). 2  30 states 3 and 61 colleges 4 decided to divest from oil companies involved with Sudan.  Both houses of Congress unanimously passed the Sudan Accountability and Divestment Act of 2007. 5 1 https://www.investorsagainstgenocide.org/files/2014-0716-White-Paper-on-genocide-free-investing.pdf 2 ING Emerging Countries proxy voting results from June 28, 2012 , http://www.sec.gov/Archives/edgar/data/895430/000117152012001135/ex99-77c.htm 3 http://www.investorsagainstgenocide.org/statesthat-divested-fromsudan/ 4 - and-universities-that-divested-from-sudan 5 http://www.govtrack.us/congress/bill.xpd?bill=s110-2271

Vanguard cites five Staff rulings, since the Franklin Resources (2013) ruling, that are not directly on the subject of Genocide-free Investing, but which support excluding other proposals because of micromanagement. None of the five rulings apply to the Genocide-free Investing Proposal that Vanguard now seeks to exclude. The three micromanagement factors highlighted by the Staff in 1998 and 2018 as potentially allowing a proposal to be excluded on the basis of micromanagement are when the proposal:
1.
2. seeks to impose specific time3.
In JPMorgan Chase & Co. (The Christensen Fund) (Mar. 30, 2018), 16 the Staff noted that the proposal required a litany of specific elements and concluded that the pr of: Short- and medium-term risk of portfolio devaluation due to stranding of high-cost tar sand financing aligns with t establishing a specific policy, similar to that of other banks, restricting financing for tar sands defined or required by the Genocide-free Investing Proposal. There are no such specific elements and certainly no litany of details in the investment policy requested by the Genocidefree Investing Proposal. In JPMorgan Chase & Co. (Harrington) (Mar. 30, 2018), 17 the Staff noted that the proposal uld adopt policies and procedures to require the Company and its fiduciaries in all relevant instances of corporate level, project or consortium financing, ensure consideration of finance rights, and ensure respect for the free, prior and informed consent of indigenous communities business, not only owned by the company, but also all potential finance recipients. Further, it established by the Staff. Neither of these factors are defined or required by the Genocide-free Investing Proposal. 16 https://www.sec.gov/divisions/corpfin/cf-noaction/14a-8/2018/christenfundetal033018-14a8.pdf 17 https://www.sec.gov/divisions/corpfin/cf-noaction/14a-8/2018/johnharrington033018-14a8.pdf

In Exxon Mobil Corporation (Seitchik) (March 6, 2020), 18 the Staff stated that the Proposal micromanages the Company by dictating that the board charter a new board committee on on to define in detail significant parts of that charter. T for implementing complex policies). Neither of these factors are defined or required by the Genocide-free Investing Proposal. report to the full board on corporate strategy, above and beyond matters of legal compliance, assessing the company's responses to climate related risks and opportunities, including the potential impacts of climate change on business, strategy, financial planning, and our to oversee climate risk, other than chartering a committee at the Board level. In Intel Corporation (Hotz) (March 15, 2019), 19 micromanage the Company by dictating that the Company must adopt a specific policy position and prescribing how the Company saw that prescribing how the Company should communicate the policy was improper micromanaging. It is not clear from the Staff determination and the No-Action filings what the Staff determined regarding whether there was a significant social policy at the core of the proposal and how that might affect its view of having a shareholder vote on that policy. In contrast, the Staff has clearly determined that there is a significant social policy at the core of the Genocide-free Investing Proposal, and the Genocide-free Investing Proposal does not In Apple Inc. (Jantz) (Dec. 5, 2016), 20 the proposal imposed a deadline to generate a plan to reach netaspects of the business which are directly owned by the Company and major suppliers, including but not limited to manufacturing and distribution, research facilities, corporate company by probing too deeply into matters of a complex nature upon which shareholders, as a group, would not be in a position to make an informed judgment. Clearly, this proposal failed - Staff. No such intricate details or specific time-frames are defined or required by the Genocidefree Investing Proposal. In the Apple Inc. (Jantz) case, the Staff could see that shareholders would have difficulty making an informed judgment about setting deadlines and requirements not only for Apple but for its entire supply chain. In contrast, Genocide-free Investing is easy for shareholders to understand and relate to. 18 https://www.sec.gov/divisions/corpfin/cf-noaction/14a-8/2020/lambexxon030620-14a8.pdf 19 https://www.sec.gov/divisions/corpfin/cf-noaction/14a-8/2019/hotzintel031519-14a8.pdf 20 https://www.sec.gov/divisions/corpfin/cf-noaction/14a-8/2016/christinejantzapple120516-14a8.pdf

As shown by reviewing the details of the five cases cited by Vanguard, the Staff had ample reason to support excluding those proposals. In contrast, the Proposal on Genocide-free Investing that Vanguard seeks to exclude does not impose a time-frame, does not seek to create a complex policy or impose a method to implement it, and does not require intricate detail. It therefore meets none of the criteria set by the Staff in 1998 and 2018 as potentially allowing a proposal to be excluded on the basis of micromanagement. con definition, and method of implementation up to Vanguard to determine. Further, the Proposal 1C. The JPMorgan (2019) No-Action case It is unclear what informed the judgment of the Staff in the Division of Corporate Finance in its determination on the No-Action case of JPMorgan (Rosenfeld) (2019). 21 Given the extensive history of No-Action challenges to Genocide-free Investing proposals, starting in 2008 and continuing through 2018, 11 years with six No-Action cases directly about Genocide-free Investing, it was surprising to see JPMorgan make the same arguments that had been repeatedly rejected. It was even more surprising to discover that the Staff ruled in favor of seeking to impose specific methods for implementing complex policies - would cause a different determination than that of the four earlier No-Action cases that argued unsuccessfully that Genocide-free Investing sought to inappropriately micromanage the company. JPMorgan made no new substantive argument and the Staff did not provide a clue. Reliance on the doctrine of stare decisis should have generated a different determination, with the Staff ruling against JPMorgan as it had repeatedly in the past. Indeed, the Staff had provided an explicit judgment in Franklin Resources (Rosenfeld) (2013) after evaluating NoAction challenges to Genocide-free Investing repeatedly, not merely ruling against the claim of micromanagement, but explicitly stated that the Genocide-free Investing “proposal focuses on the significant policy issue of human rights and does not seek to micromanage the company to such a degree that exclusion of the proposal would be appropriate.” Given the conflicting precedents by the Staff on Genocide-free Investing, from 2008 through 2018 ruling four times that Genocide-free Investing does not seek to micromanage, and once in 2019 ruling the opposite, we request that the Staff reconsider the matter and reverse the precedent of the case from the Division of Corporate Finance in 2019. https://www.sec.gov/divisions/corpfin/cf-noaction/14a-8/2019/rosenfeld031319-14a8.pdf 21

One possibility that may explain the surprising No-Action determination in 2019 is that the defense of Genocide- -Action letter was insufficiently robust, relying too heavily on the multiple precedents and the principle of stare decisis. Letter does not make that mistake. 1D. Response to other arguments on micromanagement from Vanguard’s Letter Note that Vanguard does not claim that it would be too difficult or too complex to implement This claim will be discussed in Section 2, below. Requesting transparent procedures to act on a significant social issue is not micromanagement how Vanguard does its business. Indeed, the Proposal does request a change. The Proposal asks for an investment policy that is apparently missing at Vanguard and which is important to shareholders. The Proposal resolution states:
Shareholders request that the Board institute transparent procedures to avoid holding or recommending investments in companies that, in management's judgment, substantially contribute to genocide or crime against humanity, the most egregious arguments about the complexity of its business, day-to-day decision-making of management, the selection of investment opportunities, excluding specific investments, and ordinary business, and how investing is the core of its business. These exact claims about micromanagement were made and rejected by the Staff, repeatedly, in the four No-Action cases on Genocide-free Investing, from 2008 through 2018, detailed above. rating impermissible micromanagement, but rather as demonstrating that the Proposal asks Vanguard to implement a high-level principle, an investment policy, that Vanguard currently lacks. Requesting implementation of a high-level principle is what might well be expected from a -free Investing is clearly such an issue. their decision-making or operations. Indeed, as the SLB 14K 22 makes clear, proper proposals dealing with a significant policy issue must arguments prove the point that Genocide-free Investing is a significant policy issue that applies to Vanguard. Vanguard does not show that Genocide-free Investing fails the tests for micromanagement 22 https://www.sec.gov/corpfin/staff-legal-bulletin-14k-shareholder-proposals

Vanguard cites five Staff rulings, since the Franklin Resources (2013) ruling, that are not directly on the subject of Genocide-free Investing, but which support excluding other proposals because of micromanagement. Vanguard claims that Genocide-free Investing should be excluded because it is somehow like those cases. However, as reviewed in detail in Section 1B, above, it is clear that, unlike Genocide-free Investing, these proposals could be excluded based on longstanding factors established by the Staff, failing one or more of the three factors as potentially allowing a proposal to be excluded on the basis of micromanagement:

involves intric
seeks to impose specific time3.
In contrast, the Genocide-
-
-
Proposal includes one or more of these three defects. methods, and time-frames. However, none of those are defects in the Proposal. In short, none of the five cases that Vanguard cites supports its claim that Genocide-free Investing fails one of the three tests. Beyond referencing earlier No-Action cases and quoting the three factors of potential micromanagement, Va -free Investing might First, Vanguard -to-day decisionhat goal and does not dictate day-to-day decision-making. The Proposal is not about the ordinary business of buying and selling securities. Rather, it is about the management responsibilities of financial institutions, such as Vanguard, and whether shareholders should be able to expect -free. define the method that Vanguard should use. There are many ways that Vanguard might does not limit does focus the requested procedures on the subject of the Proposal, Genocide-free Investing. The Proposal seeks to instill an awareness of a significant social policy goal in connection with implementation on a day-to-day basis and leaves it to the Board and management's judgment to define the companies to be avoided and the procedures to be implemented. TIAA-CREF and

T. Rowe Price, companies similar to the Company, have already implemented such procedures and have done so if very different ways. Although complexities related to the specific content question of whether to institute such procedures is clearly not complex or beyond the capacity of shareholders to make an informed judgment. The Proposal states a general principle that the Fund have transparent procedures to avoid tify individual companies to be avoided or specify the process by which the Fund should avoid these investments. Rather it leaves the day-to-day implementation of the policy entirely up to Fund management. Fund managers would determine the securities to be avoided, the process for avoiding them, the oversight procedures for ensuring the policy is implemented, the reporting process to shareholders, and any and all other operational details. In this way, the Proposal avoids micromanaging and allows the Fund full flexibility in implementing the requested procedures in a way that does not interfere with its ordinary business operations. The details of checking securities for investments that contribute to genocide are beyond the abilities and resources of a t business and is not too complex for the Funds. Avoiding genocide-related securities may appropriately leaves these details to the technical experts within the Fund who are entirely capable of successfully and efficiently implementing them. Second, Vanguard incorrectly claims that mentioning PetroChina and Sinopec in the body of the Proposal is evidence of micromanagement. Rather, PetroChina and Sinopec are referenced in the body of the Proposal to help shareholders understand why Genocide-free Investing is relevant today, rather than merely a theoretical problem. Neither company is mentioned in the request for that both PetroChina and Sinopec are tied to genocide. However, the resolved clause stating companies substantially contribute. Indeed, in discussions with Vanguard starting in 2009 and continuing to 2020, we have made clear that Vanguard need not agree with our judgment investments in substantia action to avoid problem investments. Vanguard incorrectly represents this concern as micromanaging, claiming the Proposal wants Vanguard to use a However, the lack of action over the course of 14 years, from 2007 through 2020, is a clear

Genocide-free Investing which requests making an genocide or crimes against humanity. This difference is not a question of micromanaging methods, but rather reflects completely different that the Funds have already substantially implemented the Proposal is directly discussed in
Section 2, below.)
The intent of the Proposal is not to prohibit the Company or its subsidiaries from holding or recommending investments in any specific company, but to encourage the Company to implement long term systemic procedures to avoid holding investments in companies that substantially contribute to genocide or crimes against humanity. Such an investment policy would apply to Sudan today and to future cases of genocide and crimes against humanity wherever they may occur. Shareholders considering Genocide-free Investing are able to make an informed judgment ciple that governs the question of whether a proposal impermissibly seeks to micromanage -- whether shareholders This formal framing has been in place since 1998 23 and reinforced in October 2018 by SLB 14J 24 which states:
into matters of a complex nature upon which shareholders, as a group, would not be in a position to make an informed Shareholders have not had difficulty in understanding and making a decision on Genocide-free - to understand. Many millions of shareholders have voted for Genocide-free investing when it has been on the proxy ballot. For example, in 2012 when shareholders were presented with the proposal and management took a neutral position, shareholders overwhelmingly voted in favor of the proposal (85% of the yes/no votes were in favor, with 59.8% for, 10.7% against, and 29.5% abstaining). 25 Market research has confirmed the importance of the issue to the public, with 88% of Americans indicating they would like their mutual funds to be Genocide-free. 26 Even when management strongly opposes Genocide-free Investing, shareholders show strong support. 27 For example, in proxy voting for five funds at Fidelity on December 8, 2017, Genocide-free Investing received as high as 39.9% and as low as 30.8% of the yes/no votes. Similarly, in proxy voting for 48 funds at Vanguard on November 15, 2017, Genocide-free Investing received as high as 46.4% of the yes/no votes and as low as 8.3% of the yes/no votes, with typical results around 20% in favor. 23 https://www.sec.gov/rules/final/34-40018.htm 24 https://www.sec.gov/corpfin/staff-legal-bulletin-14j-shareholder-proposals#_ednref6 25 ING Emerging Countries proxy voting results from June 28, 2012 , http://www.sec.gov/Archives/edgar/data/895430/000117152012001135/ex99-77c.htm 26 https://www.investorsagainstgenocide.org/files/KRC-research-results-from-2010-and-2007.pdf 27 https://www.investorsagainstgenocide.org/about/resources/voting-results-for-genocide-free-investingshareholder-proposals/

Resources continued to recommend and make additional investments in companies tied to genocide. The Staff ruled against ING (Rosenfeld) (May 7, 2012) 30 which claimed the proposal should be excluded because, among other claims, the fund had already substantially implemented the proposal. In that case, ING provided documentation that the affirming that the Fund will not invest in companies subject to United States' sanctions, address cases that were not already required by U.S. law. ING provided no evidence that it was substantially contributing to genocide or crimes against humanity. Further, ING continued to recommend and make additional investments in companies tied to genocide. -free genocide. TIAA-CREF developed and implemented such a policy. 31 In that case, TIAA-CREF divested from PetroChina and Sinopec, but not all of the companies that were flagged by Investors Against Genocide. M stantially TIAA-CREF's commitment and action were clear and concrete. That proposal was withdrawn. Subsequently, a different shareholder proposal was submitted to TIAA-CREF, using much of the language of Genocide-free Investing, but focusing its resolution on Israel. In CREF (Tamari) (May 10, 2013) 32 the Staff agreed with TIAA- -CREF successfully arg companies we judge to be complicit in genocide and crimes against humanity, the most serious human rights violations, after sustained efforts at dialogue have failed and divestment can be -CREF provided a proof point material business dealings in Sudan. Clearly, this is a meaningful process that the organization -CREF clearly showed its policy addressed companies tied to genocide, management's criteria for action, and proof of applying the policy. In this No-Action ruling, TIAA- -free investing made it harder, not easier, for special-interest groups to push the institution to consider more controversial human rights concerns. The Staff supported TIAA-CREF in resisting efforts from a shareholder seeking to force the firm into divestment which management felt was inappropriate. 30 https://www.sec.gov/divisions/investment/noaction/2012/ingemergingcountries050712-14a8.pdf 31 https://web.archive.org/web/20130921184533/http://www1.tiaacref.org:80/public/about/press/about_us/releases/pressrelease313.html 32 https://www.sec.gov/divisions/investment/noaction/2013/steve-tamari-shareholder-letter-cref-050113- 14a8.pdf

d direct involvement [emphasis added] in crimes against humanity or 35 Writing on its website about the proxy vote, the group seeks to identify companies whose involvement in crimes against humanity or human rights violations would warrant the trustees' consideration. When such companies are identified, they are trustees then apply their judgment to determine whether further action is warranted. 36 37Shortly thereafter, Vanguard increased its holdings of PetroChina. 38 Apparently, there are no criteria for Vanguard Fund management to determine action, even if Vanguard identifies companies warranting action, PetroChina's contribution to genocide insignificant to Vanguard. Shortly afterwards, noted Sudan researcher Eric Reeves estimated the death toll in Darfur to have increased to 500,000. 39 2017 Vanguard did not seek No-Action relief to exclude genocide-free investing in 2017, but Vanguard opposed the genocide-free investing shareholder proposal when it was the ballot for voting at 48 of its funds at its shareholder meeting in 2017. Vanguard's statement of opposition 40 for all its funds, but instead implied that it could not implement such a proposal because it was unwise and possibly illegal. 2020 Now, in 2020, Vanguard's Letter claims it has already substantially implemented Genocide-free Investing. As you can see, in 2009. It states: 41 35 Vanguard definitive proxy materials filing, March 2009, - https://www.sec.gov/Archives/edgar/data/34066/000093247109000972/definitivefilingseccomments.txt 36 https://web.archive.org/web/20090618151048/http://www.vanguard.com/jumppage/proxy/prop3.html 37 Ibid. 38 - http://archive.boston.com/business/markets/articles/2009/04/14/group_vanguard_misled_on_investing/ 39 Quantifying November 6, 2017 - http://sudanreeves.org/2017/01/05/quantifying-genocide-darfur-mortality-updateaugust-6-2010/ 40 https://www.sec.gov/Archives/edgar/data/891190/000093247117004795/def14a.htm 41 https://about.vanguard.com/investment-stewardship/principles-policies/

VIA E-MAIL
August 14, 2020
Office of Chief Counsel
Division of Investment Management
U.S. Securities and Exchange Commission
100 F Street N.E.
Washington, D.C. 20549
IMshareholderproposals@sec.gov
Re: Shareholder Proposal Submitted by Kani Ilangovan and Mary Lou Rosczyk for Inclusion in the Vanguard Funds’ 2020 Proxy Materials Dear Sir or Madam:
This letter responds to the August 3, 2020 letter from Eric Cohen (the “Proponent Letter”) concerning our July 27, 2020 letter (“Initial Request Letter”) on behalf of our client, the Vanguard Funds listed on Appendix A of the Initial Request Letter (“Vanguard Funds”). The Initial Request Letter seeks confirmation that the staff of the Division of Investment Management will not recommend enforcement action to the U.S. Securities and Exchange Commission if the Vanguard Funds exclude a shareholder proposal (the “Proposal”) submitted by Kani Ilangovan and Mary Lou Rosczyk (the “Proponents”) for inclusion in the Vanguard Funds’ 2020 proxy statement and form of proxy (the “Proxy Materials”). As discussed in the Initial Request Letter, we continue to believe that the Vanguard Funds have substantially implemented the Proposal consistent with the criteria required under Rule 14a8(i)(10) in order to omit the proposal from its Proxy Materials. The Vanguard Funds’ board of directors has considered the best way to address investments in companies that raise human rights concerns, and subsequently developed a formal procedure to identify and monitor portfolio companies whose direct involvement in crimes against humanity or patterns of egregious abuses of human rights would warrant engagement or potential divestment. Pursuant to the Staff guidance on Rule 14a-8, a proposal need not be implemented completely or precisely as presented for the Staff to determine that the subject of the proposal has been acted upon favorably by management. Instead, the company’s actions must address the essential objectives of the proposal. 1 Because the Vanguard Funds have already implemented procedures to address the most egregious violations that substantially contribute to genocide or crimes against humanity, including the possibility of divestment, the Funds have substantially 1 SEC Release No. 20091 (August 16, 1983).

implemented the Proposal.
The Proponent Letter acknowledges that Vanguard has already established a formal procedure to identify and monitor portfolio companies whose direct involvement in crimes against humanity, or patterns of egregious abuses of human rights, would warrant engagement or potential divestment. But the Proponent Letter argues that this policy of monitoring such companies, and assessing whether engagement or divestment is appropriate, is not enough to satisfy the requirements of the Proposal. Instead, according to the Proponent Letter, the Proposal requires a specific action to be taken by Vanguard — avoid recommending or investing in the specific companies targeted by the Proponents. This response demonstrates that the Proposal, as construed by the Proponent Letter, actually is designed to micromanage the Vanguard Funds by requiring a specific method for implementing a complex policy—and thus is separately excludable pursuant to Rule 14a-8(i)(7). In the Initial Request Letter, we explained that the Proposal may be properly omitted from the Proxy Materials pursuant to Rule 14a-8(i)(7) because the Proposal “deals with a matter relating to the [Vanguard Funds’] ordinary business operations.” Specifically, we argued that the Proposal would micromanage the Vanguard Funds by seeking to impose specific selection criteria in making (or recommending) investment decisions on behalf of the Vanguard Funds, including avoiding investments in (or divesting from) specific categories of companies disfavored by the Proponents. We noted that the staff of the Division of Corporation Finance just last year concluded that JPMorgan Chase & Co. could omit a nearly identical shareholder proposal from its proxy materials, concluding that “the Proposal micromanages the Company by seeking to impose specific methods for implementing complex policies,” and thus was excludable under Rule 14a-8(i)(7). 2 In response, the Proponent Letter argues that “the Proposal represents a significant social policy issue,” and cites several no-action letters issued on or before 2014 that allowed the inclusion of similar proposals in proxy materials. 3 Importantly, however, the Proponent Letter does not account for the Commission staff’s most recent public interpretations on the scope of Rule 14a8(i)(7). Specifically, whether the Proposal addresses a significant policy issue is irrelevant under the micromanagement consideration underlying Rule 14a-8(i)(7). 4 Staff Legal Bulletin No. 14I, published on November 1, 2017 (“SLB 14I”), stated:
2 See JPMorgan Chase & Co., SEC No-Action Letter (pub. avail. March 13, 2019) (“JPM 2019 Letter”). 3 The Proponent Letter also makes reference to a March 29, 2018 letter to J.P. Morgan rejecting application of Rule 14a-8(i)(7), but that letter concerned a request for a “Report on Investments Tied to Genocide,” not a request to avoid investing in or recommending specific categories of companies. See JPMorgan Chase & Co., SEC No-Action Letter (pub. avail. March 29, 2018). Accordingly, that letter is not relevant to the current Proposal. 4 See JPM 2019 Letter.

“The Commission has stated that the policy underlying the ‘ordinary business’ exception rests on two central considerations. The first relates to the proposal’s subject matter; the second, the degree to which the proposal ‘micromanages’ the company. Under the first consideration, proposals that raise matters that are ‘so fundamental to management’s ability to run a company on a day-to-day basis that they could not, as a practical matter, be subject to direct shareholder oversight’ may be excluded, unless such a proposal focuses on policy issues that are sufficiently significant because they transcend ordinary business and would be appropriate for a shareholder vote.” (emphasis added) (footnotes omitted). Staff Legal Bulletin No. 14J, issued on October 23, 2018 (“SLB 14J”), then stated that, “[u]nlike the first consideration, which looks to a proposal’s subject matter, the second consideration looks only to the degree to which a proposal seeks to micromanage.” (emphasis added). Accordingly, whether the Proposal addresses a significant policy issue has no bearing on whether the Vanguard Funds may exclude the Proposal under Rule 14a-8(i)(7) under the “micromanagement” consideration. SLB 14I noted the Commission’s view that the micromanagement consideration “may come into play in a number of circumstances, such as where the proposal involves intricate detail, or seeks to impose specific time-frames or methods of implementing complex policies.”5 The Proposal, as it is construed in the Proponent Letter, micromanages the Vanguard Funds by seeking to impose a specific method for implementing complex policies — namely, divesting from, or avoiding making or recommending investments in, the specific companies disfavored by the Proponents. In addition to imposing a specific method for implementing complex policies, the Proposal imposes a time frame for doing so, evidenced by the Proponent Letter’s conclusion that the Vanguard Funds’ policy does not compare favorably with the Proposal because the Funds did not take the specific action desired within the Proponent’s desired time frame. The Proponent Letter acknowledges that the staff of the Division of Corporation Finance — applying the updated guidance in SLB 14I and SLB 14J — most recently concluded that a nearly identical proposal resulted in micromanagement of the company and thus was excludable under Rule 14a-8(i)(7). The Proponent Letter then suggests that the considerations in that case may be different, since JPMorgan is a bank and not an investment company. However, the fact that the Vanguard Funds are in the business of investing only enhances the argument that the Proposal interferes with Vanguard’s ordinary business operations. Indeed, the staff of the Division of Investment Management has repeatedly recognized that “the ordinary business operations of an See SLB 14I (emphasis added). See also Securities Exchange Act Release No. 40018 (May 21, 1998). 5

investment company include buying and selling portfolio securities.”6 Thus, by specifically interfering with the Funds’ investment decision making process, the Proposal is fundamentally aimed at micromanaging an investment company’s ordinary business operations. For the foregoing reasons and those discussed in the Initial Request Letter, the Vanguard Funds respectfully submit that Vanguard’s existing, board-approved human rights policies already have substantially implemented the Proposal, and thus the Proposal is excludable under Rule 14a8(i)(10). To the extent the Proposal requires more specific methods for implementing complex policies, as envisaged by the Proponent Letter, the Proposal micromanages the Funds, and thus is excludable under Rule 14a-8(i)(7). We accordingly request that the staff confirm that it will not recommend any enforcement action to the Commission if the Vanguard Funds exclude the Proposal from their 2020 Proxy Materials. Please note that we have concurrently sent copies of this correspondence to the Proponents. Should you have any questions regarding any aspect of this letter or require any additional information, please contact the undersigned at 212-698-3889 or stephen.bier@dechert.com. Sincerely, Stephen H. Bier cc: Kani Illangovan Mary Lou Rosczyk 6 See College Retirement Equities Fund, SEC No-Action Letter (pub. avail. May 3. 2004) (“2004 CREF Letter”); see also, Morgan Stanley Africa Investment Fund, Inc.; SEC No-Action Letter (pub. avail. Apr 26, 1991) (“Morgan Stanley Letter”) (noting that an investment company’s ordinary business operations include “the purchase and sale of securities and the management of the fund’s portfolio securities”); State Street Corp., SEC No-Action Letter (pub. avail. Feb. 24, 2009).

August 19, 2020
VIA E_MAIL (IMshareholderproposals@sec.gov)
Office of Chief Counsel
Division of Investment Management
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20249
Re: Shareholder Proposal Submitted by Kani Ilangovan and Mary Lou Rosczyk for Dear Sir or Madam:
On behalf of Kani Ilangovan and Mary Lou Rosczyk, the proponents of the shareholder proposals, I submit this letter in r up requesting NoSpecial Meeting of Shareholders. - As discussed in our response letter of August 3, 202 Initial Letter, we continue to believe that Vanguard has not met its burden under Rule 14a-8(g) to demonstrate that it is entitled to exclude the Proposal on either of the two bases it proposed in its Initial Letter Proposal has already been substantially implemented by the Funds. This letter responds to the four specific arguments presented in Vanguard's Second Letter. For reference, the Proposal resolution states:
or recommending investments in companies that, in management's judgment, substantially contribute to genocide or crime against humanity, the most egregious The first argument in Vanguard's Second Letter claims the Proposal micromanages because it impermissible micromanagement.

Vanguard's argument confu addresses a significant social policy concern (genocide-free investing), of the procedures which address the policy. The Proposal states the objective and asks for procedures, but does not define the procedures in any way, leaving between the methods in the procedure and the objective of the method and procedures. For example, Merriam-Webster 1 Note that the Proposal does not preclude Vanguard from regard to specific circumstances or the possibility of reasonable exceptions 2 ) in the methods and procedures that Vanguard may choose to implement the proposal. Vanguard's argument is overly broad. The test for micromanagement is not purely on whether the policy may be complex, but whether the proposal is inappropriately defining the methods to implement complex policies. As we noted in our Initial Response:
The details of checking securities for investments that contribute to genocide are beyond the abilities and resources of a typical investor. However, selecting securities is -related the Proposal appropriately leaves these details to the technical experts within the Fund who are entirely capable of successfully and efficiently implementing them. The second argument in Vanguard's Second Letter is in reference to the No-Action case of JPMorgan (Rosenfeld) (2019). 3 We discussed the JPMorgan (2019) case in our Initial Response and summarize here. We believe the Corporation Finance division incorrectly decided the JPMorgan No-Action request in 2019 when it upended a long line of decisions allowing shareholders to be heard on Genocide-free Investing. JPMorgan made no new substantive argument. Reliance on the doctrine of stare decisis should have generated a different determination, with the Staff ruling against JPMorgan as it had repeatedly in the past, including the Staff s explicit judgment in Franklin Resources (Rosenfeld) (2013) that the Genocide-free Investing “proposal focuses on the significant policy issue of human rights and does not seek to micromanage the company to such a degree that exclusion of the proposal would be appropriate.” Given the conflicting precedents by the Staff on Genocide-free Investing, from 2008 through 2018 ruling four times that Genocide-free Investing does not seek to micromanage, and once in 2019 ruling the opposite, we request that the Staff reconsider the matter. One possibility that may explain the surprising No-Action determination in 2019 is that the defense of Genocide- -Action 1 https://www.merriam-webster.com/dictionary/method 2 https://www.sec.gov/corpfin/staff-legal-bulletin-14k-shareholder-proposals 3 https://www.sec.gov/divisions/corpfin/cf-noaction/14a-8/2019/rosenfeld031319-14a8.pdf

letter was insufficiently robust, relying too heavily on the multiple precedents and the principle of stare decisis. Therefore we request that the Staff evaluate Vanguard s No-Action request on its own merits, considering the details of Vanguard s letters and our responses. The third argument compare favorably with the Proposal because the Funds did not take the specific action desired delta between Vanguard's stated policies and the Proposal, showing that Vanguard had not As an additional proof point, we reviewed the history of Vanguard's policy. In our Initial Response we observed:
The body of the Proposal clearly identifies as a concern that Vanguard and the Funds it its funds to consider social issues investments. However, the lack of action over the course of 14 years, from 2007 does not compare favorably with Genocide-free Investing s judgment, question of micromanaging methods, but rather reflects completely different management procedures. Vanguard now argues that pointing out the lack of action by Vanguard over 14 years is proof that the Proposal impermissibly micromanages by imposing a time-frame. Vanguard's argument is overly broad. Following this infinitely elastic logic, a fund or company could pretend to have a policy on some subject that commits to act on some everyday issue, but never in fact acts, and then assert in its defense that concerns about not acting are illegitimate micromanagement. Surely, it is not the intent of the Commission or the Staff to allow or encourage policies on business operations that are merely theoretical window dressing and never executed. The plain language of the Proposal does not impose a time-frame. Further, Vanguard's lack of action over 14 years is evidence that Vanguard's policy, in actuality, does not compare favorably with Genocide-free Investing, rather than being support for Vanguard's claim of micromanagement. The fourth argument Proposal is fundamentally aimed at same argument in its Initial Letter. See our Initial Response for a detailed response to this inaccurate claim. s overly broad, incorrectly claiming that a proposal that involves

significant because they transcend ordinary business and would be appropriate for a shareholder vote. Genocide-free Investing is just such a policy issue, as we demonstrated in our Initial Response. touched but transcended ordinary business could be excluded as micromanagement. Surely that is not the intent of the Rule 14a-8(i)(7) regarding shareholder proposals and ordinary business, which is why there are additional tests for micromanagement, rather than merely involving ordinary business. Vanguard does not succeed in demonstrating in its Initial Letter or Second Letter that the Proposal fails the tests for micromanagement. the overarching principle that governs the question of whether a proposal impermissibly seeks to micromanage -- whether shareholders considering the proposal have the ability to make an quotes part of SLB 14J 4 but fails to quote that key part which states:
into matters of a complex nature upon which shareholders, as a group, would not be in a position to make an informed judgment [emphasis added] Shareholders have not had difficulty in understanding and making an informed judgment on Genocide-free Investing, as we detailed in our Initial Response, and which included an explicit determination from the Staff to that effect. The Proposal seeks to enable shareholders, by their votes, to ask Vanguard to make an effort to avoid investments in companies substantially contributing to genocide. We -Action relief and allow shareholders to vote on this significant social policy. Sincerely, Eric Cohen, Chairperson Investors Against Genocide Cc: Vanguard Kani Ilangovan Mary Lou Rosczyk https://www.sec.gov/corpfin/staff-legal-bulletin-14j-shareholder-proposals# ednref6 4

September 11, 2020
Via E-Mail
Stephen Bier
Dechert LLP
Three Bryant Park
1095 Avenue of the Americas
New York, NY 10036 stephen.bier@dechert.com
Vanguard Funds (Vanguard U.S. Value Fund, Vanguard Health Care Fund, Vanguard Energy Fund) Shareholder Proposal of Kani Ilangovan and Mary Lou Rosczyk Dear Mr. Bier:
In a letter dated July 27, 2020, on behalf of Vanguard U.S. Value Fund, Vanguard Health Care Fund, and Vanguard Energy Fund (the “Vanguard Funds”), you requested confirmation from the staff of the Division of Investment Management (“IM”) that it would not recommend enforcement action to the Securities and Exchange Commission (the “Commission”) if a shareholder proposal and supporting statement (the “Proposal”) submitted by Kani Ilangovan and Mary Lou Rosczyk (the “Proponents”) on October 17, 2018 and November 1, 2018 is excluded from the proxy materials for the Funds’ 2020 Special Meeting (the “Proxy Materials”). The Proposal provides:
Shareholders request that the Board institute transparent procedures to avoid holding or recommending investments in companies that, in management’s judgment, substantially contribute to genocide or crimes against humanity, the most egregious violations of human rights. There appears to be some basis for your view that the Proposal may be omitted from the Funds’ Proxy Materials pursuant to Rule 14a-8(i)(7) under the Securities Exchange Act of 1934, as relating to the Funds’ ordinary business operations. In our view, the Proposal micromanages the Funds by seeking to impose specific methods for implementing complex policies. Accordingly, the Division of Investment Management (the “Division”) will not recommend enforcement action to the Commission if the Funds omit the Proposal from the Proxy Materials in reliance on Rule 14a-8(i)(7). In reaching this position, we have not found it necessary to address the alternative basis for omission set forth in your letter. Attached is a description of the informal procedures the Division follows in responding to shareholder proposals. You may contact imshareholderporposals@sec.gov if you have any questions. Attachment cc:
Kani Ilangovan
Mary Lou Rosczyk
Eric Cohen
Sincerely,
/s/ Lisa N. Larkin
Lisa N. Larkin
Senior Counsel

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