(PUB) Investing 2016

7

September 2016

Morningstar FundInvestor

Data through August 31, 2016 FINRA members: For internal or institutional use only. Vanguard Tax-Managed Balanced Adm

Mstar Category Allocation--30% to 50% Equity

Ticker VTMFX

Yield 2.0%

Total Assets $2,973 mil

Benchmark 1: Morningstar Mod Con Tgt Risk TR USD Benchmark 2: Morningstar Mod Tgt Risk TR USD Morningstar Analyst Rating 08-19-16 Œ

Investment Style Equity

Historical Profile Return Risk Rating High Average QQQQQ Highest

4 4 4 4 4 4 4 4

14.0 16.0 18.0

Growth of $10,000

Investment Values of Fund Investment Values of Benchmark 1

Morningstar Pillars Process

12.0

∞ Positive ∞ Positive ∞ Positive ∞ Positive ∞ Positive

Performance

10.0

People Parent

Performance Quartile (within Category)

* * * ( ( & * & & & ( 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 08-16 20.02 20.45 16.19 18.75 19.96 20.55 22.25 24.90 26.79 26.86 28.15 9.09 5.11 -18.32 19.14 9.22 5.58 10.87 14.34 9.81 2.35 5.85 -0.64 -2.89 -5.27 3.83 -0.44 2.99 1.21 5.52 5.51 3.38 -1.22 -3.87 -3.52 3.87 -2.63 -3.12 4.99 -1.17 0.04 4.92 4.14 -1.90 2.94 2.97 2.79 3.10 2.67 2.60 2.56 2.33 2.17 2.08 1.00 6.14 2.15 -21.12 16.04 6.55 2.98 8.31 12.02 7.64 0.27 4.84 0.55 0.59 0.57 0.50 0.50 0.51 0.52 0.51 0.54 0.55 0.27 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.12 0.12 0.13 0.15 0.15 0.12 0.12 0.12 0.12 0.11 0.11 2.84 2.86 3.01 2.86 2.58 2.55 2.43 2.21 2.15 2.11 2.22 27 44 43 61 66 6 29 3 2 1 58

Price

History

Morningstar Analyst Rating Morningstar evaluates mutual funds based on five key pillars, which its analysts believe lead to funds that are more likely to outperform over the long term on a risk-adjusted basis. Analyst Rating Spectrum Œ „ ´ ‰ Á

NAV

Total Return % +/- Bmark 1 +/- Bmark 2 Income Return % Capital Return % Capital Gains $ Expense Ratio % Income Ratio % Turnover Rate % Net Assets $mil Total Rtn % Rank Cat Income $

Pillar Spectrum ∞ Positive

§ Negative

¶ Neutral

Performance 08-31-16 1st Qtr 2nd Qtr

3rd Qtr

4th Qtr

Total

2012 2013 2014 2015 2016

6.82 -0.66 4.06 0.41 10.87 5.29 -0.10 3.36 5.18 14.34 2.44 3.37 0.89 2.78 9.81 1.47 -0.24 -2.57 3.79 2.35

.

4

10

19

27

23

12

7

9

8

9

662

722

587

669

733

797 1,015 1,401 1,911 2,478 2,973

Rating and Risk Time Period Load-Adj Return %

Portfolio Analysis 07-31-16 Total Stocks: 818 Share change since 06-30-16

1.46 2.36

— — —

Morningstar Rtn vs Cat

Morningstar Risk vs Cat

Morningstar Risk-Adj Rating

Sector

YTD Ret % % Assets 2.38 1.31 5.52 1.02 14.65 0.85 18.47 0.80 13.80 0.67 13.97 0.65 1.77 0.65 20.50 0.64

Trailing

Total Return%

+/- Bmark 1

+/- Bmark 2

%Rank Cat

Growth of $10,000

Apple Inc

Technology Technology

1 Yr 3 Yr 5 Yr

8.77 8.74 9.19 6.47 7.53

3 Mo 6 Mo

2.77 -0.52 -1.10 8.02 -0.22 -2.73 8.77 1.33 0.54 8.74 3.55 2.60 9.19 3.42 1.90 6.47 1.14 0.66 6.00 0.01 -0.66

62 10,277 60 10,802 10 10,877 1 12,859 2 15,520 5 18,724 15 23,981

Microsoft Corp Exxon Mobil Corp Johnson & Johnson Amazon.com Inc

Avg QQQQQ Avg QQQQQ Avg QQQQQ

High High High

Energy

1 Yr

Hlth Care Cnsmr Cyc Finan Svcs

10 Yr Incept

3 Yr Avg 5 Yr Avg 10 Yr Avg 15 Yr Avg

Berkshire Hathaway Inc B

General Electric Co

Industrl

Other Measures

Standard Index

Best Fit Index

Facebook Inc A

Technology

Alpha

4.0

3.0

AT&T Inc

Comm Svcs 22.99 0.62

Beta

0.73

0.46

Tax Analysis

Tax Adj Rtn% %Rank Cat Tax-Cost Rat %Rank Cat

R-Squared

92

95

3 Yr (estimated) 5 Yr (estimated) 10 Yr (estimated)

7.97 8.52 5.88

1 1 1

0.71 0.61 0.55

15

Date of Maturity

Value $000

% Assets

Total Fixed Income: 1443

Amount 000

9 2

Standard Deviation

5.18 8.74 1.63

Mean

Fixed-Income Style Duration: Moderate Quality: Medium Avg Eff Duration 1 Avg Eff Maturity Avg Credit Quality Avg Wtd Coupon Sector Weightings h Cyclical r BasicMat t CnsmrCyc y FinanSvcs u Real Est j Sensitive i CommSrvs

Equity Style Style:

Sharpe Ratio

Potential Capital Gain Exposure: 20% of assets

Blend

Size:

Large-Cap

Morningstar's Take by Gretchen Rupp 08-19-16 Vanguard Tax-Managed Balanced fund follows a straightforward approach for taxable accounts. The prudent process, experienced team, and rock-bottom fees support the fund’s Morningstar Analyst Rating of Gold. On the surface, this fund may not appear unusual, but the tax-managed approach creates a distinct portfolio. It splits exposure evenly between an equity stake that closely tracks the Russell 1000 Index and a fixed-income sleeve made up of tax-efficient municipal bonds. Lead manager Bill Coleman runs the stock portion, tweaking position sizes to improve post-tax returns by mitigating dividend payments. The fund’s dividend yield is about 20 basis points less than its benchmark as of July 2016, reflecting the typical result of the adjustments. Jim D’Arcy has managed the fixed income portion since June 2013 with a higher-quality stance than its peers in the allocation--30% to 50% equity Morningstar Category. The fund held about 70%-75% of the bond portfolio in bonds rated AAA or AA compared with the roughly 50% category average as of July 2016. D’Arcy’s preference for higher-quality bonds, along with minor duration

4.8 Yrs 5.3 Yrs

Value Measures

Rel Category

adjustments, has helped the fixed-income portion stay slightly ahead of its index over his tenure through July 2016. The fund’sstructuralbias tomunicipalbonds, instead of taxable bonds, has provided an advantage in recent years, as the underlying municipal bond index topped the Barclays U.S. Aggregate Bond Index by 50 basis points annually over the five years through July 2016. But this is likely not a permanent trend, and category peers that follow a core index would benefit should the direction reverse. In addition to the fund’s tax-efficient holdings, Coleman engages in tax-loss harvesting, locking in either equity or bond losses to offset gains. This process helps keep the annual tax bill low. Indeed, the fund has not made a capital gains distribution since its 1994 inception, the only allocation fund with at least a three-year history that can make that claim. The fund’s 0.11% expense ratio is among the lowest of its allocation peer group, providing another advantage for investors.

Price/Earnings 19.51

1.08 1.26 1.14 1.26 0.66 1.01 1.73 -0.51 -7.54 -0.94

Price/Book Price/Sales

2.62 1.80

A

4.43% 1 figure provided by fund as of 07-31-16

Price/Cash Flow 10.10 Dividend Yield % 2.07

% of Stocks

Rel Bmark 1

Growth Measures

% Rel Category

Long-Term Erngs 8.81

32.20 0.86 3.03 0.58 11.91 1.06 13.50 0.82 3.76 0.82 40.27 1.08 4.51 1.03 6.72 0.96 11.06 0.98 17.98 1.22 27.53 1.10 9.48 0.98 14.70 1.30 3.35 0.82

Book Value

3.16 1.74 2.05

Sales

Cash Flow

Historical Erngs 5.60

Market Cap % Giant

45.1 Small

2.6 0.0

Large 31.1 Micro

o Energy p Industrl a Technlgy k Defensive s CnsmrDef d Hlthcare f Utilities

Mid

21.2 Avg $mil:

56,582

Composition - Net

Cash 1.0 Stocks 48.5 Bonds 50.5 Other 0.0 Foreign 0.3 (% of Stock)

Address:

Vanguard Tax-managed Funds

Minimum Purchase: Min Auto Inv Plan:

$10000 Add: $1 — Add: —

IRA: —

Valley Forge, PA 19482

800-662-7447

Sales Fees:

No-load

Web Address:

www.vanguard.com

Management Fee:

0.10%

Inception:

09-06-94

Actual Fees:

Mgt:0.10% Dist:—

Advisor:

Vanguard Group Inc

Expense Projections: 3Yr:$35 5Yr:$62

10Yr:$141

Subadvisor:

None

Income Distribution:

Quarterly

A

ß ® Mutual Funds

©2016Morningstar, Inc.All rights reserved. The information herein is not represented orwarranted to be accurate, complete or timely. Past performance is no guarantee of future results.Access updated reports at www.morningstar.com . To order reprints, email reprints@morningstar.com