(PUB) Investing 2016

7

October 2 016

Morningstar FundInvestor

Data through September 30, 2016 FINRA members: For internal or institutional use only. Vanguard Tax-Managed Capital App Adm

Ticker VTCLX

Yield 1.7%

Total Assets $7,075 mil

Mstar Category Large Blend

Benchmark 1: Russell 1000 TR USD Benchmark 2: S&P 500 TR USD Morningstar Analyst Rating 09-22-16 Œ

Investment Style Equity

Historical Profile Return Risk Rating Above Avg Average QQQQ Above Avg

4 4 4 4 4 4 4 4

20.0

Growth of $10,000

Investment Values of Fund Investment Values of Benchmark 1

15.0

Morningstar Pillars Process

∞ Positive ∞ Positive ∞ Positive ∞ Positive ∞ Positive

10.0

Performance

People Parent

Performance Quartile (within Category)

* * ( * & * * * * & * 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 09-16 67.68 70.70 43.04 54.72 62.56 62.36 71.17 93.70 103.82 103.75 110.10 14.44 6.11 -37.58 29.11 16.02 1.38 16.35 33.67 12.52 1.68 7.53 -1.02 0.33 0.02 0.68 -0.08 -0.12 -0.07 0.56 -0.72 0.76 -0.39 -1.35 0.61 -0.58 2.65 0.95 -0.73 0.35 1.28 -1.17 0.29 -0.31 1.65 1.65 1.48 1.97 1.69 1.71 2.21 2.00 1.72 1.69 1.35 12.79 4.45 -39.06 27.14 14.33 -0.33 14.14 31.67 10.79 -0.02 6.18 0.99 1.12 1.04 0.85 0.92 1.07 1.38 1.42 1.62 1.75 1.39 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.10 0.09 0.10 0.15 0.12 0.12 0.12 0.12 0.12 0.11 0.11 1.56 1.57 1.72 1.80 1.59 1.65 1.96 1.71 1.66 1.69 1.86 49 43 51 37 19 27 28 29 37 18 28

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 09-30-16 1st Qtr 2nd Qtr

3rd Qtr

4th Qtr

Total

2012 2013 2014 2015 2016

12.96 -3.28 6.28 0.20 16.35 10.84 2.73 6.22 10.51 33.67 2.13 5.02 0.35 4.54 12.52 1.92 0.44 -6.84 6.61 1.68

.

5

5

8

26

7

2

3

4

6

10

2,941 3,283 2,045 2,526 2,860 3,305 3,702 5,040 5,760 5,982 6,478

Rating and Risk Time Period Load-Adj Return %

Portfolio Analysis 08-31-16 Total Stocks: 954 Share change since 07-31-16

0.88 2.47 4.03

— —

Morningstar Rtn vs Cat

Morningstar Risk vs Cat

Morningstar Risk-Adj Rating

Sector

YTD Ret % % Assets 8.98 2.76 5.77 2.02 14.83 1.69 17.29 1.51 23.88 1.42 9.41 1.35 22.56 1.33 -2.70 1.25 3.35 1.10

Trailing

Total Return%

+/- Bmark 1

+/- Bmark 2

%Rank Cat

Growth of $10,000

Apple Inc

Technology Technology

1 Yr 3 Yr 5 Yr

14.63 10.78 16.47

3 Mo 6 Mo

4.03 0.00 0.17 6.59 -0.08 0.19 14.63 -0.30 -0.80 10.78 0.00 -0.38 16.47 0.06 0.10 7.47 0.07 0.23

42 10,403 28 10,659 27 11,463 12 13,595 9 21,436 14 20,547

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

Avg QQQQ Avg QQQQQ Avg QQQQ

+Avg

Energy

High

1 Yr

Hlth Care Cnsmr Cyc Finan Svcs Technology Technology Technology Cnsmr Def Finan Svcs Industrl

10 Yr Incept

7.47 7.13

+Avg

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

Berkshire Hathaway Inc B

Facebook Inc A

Other Measures

Standard Index

Best Fit Index

— — — — —

General Electric Co

Alpha

-0.5 1.01

-0.1 1.01 100

Alphabet Inc A Alphabet Inc C

Beta

Tax Analysis

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

— 1.10

R-Squared

99

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

10.00 15.86

7 5 6

0.70 0.53 0.39

25 22 11

Procter & Gamble Co JPMorgan Chase & Co

15.54 1.08 2.91 1.06

Standard Deviation

11.01 10.78

7.05

Mean

T AT&T Inc

Comm Svcs 22.20 1.05

Sharpe Ratio

0.98

Wells Fargo & Co

Finan Svcs

-16.46 1.04 17.97 0.92 7.71 0.92 -1.13 0.84 7.18 0.79 -10.95 0.78

Potential Capital Gain Exposure: 50% of assets

Chevron Corp

Energy

Morningstar's Take by Adam McCullough 09-22-16 Vanguard Tax-Managed Capital Appreciation offers tax- efficient exposure to large- and mid-cap U.S. stocks. The combination of low fees, broad diversification, and effective tax management underpin its Morningstar Analyst Rating of Gold. The fund has two competing mandates: to efficiently track the Russell 1000 Index and minimize the tax consequences. To manage taxes, managers Donald Butler and William Coleman underweight higher- dividend-paying stocks and harvest capital losses to offset realized capital gains. As dividend payments are taxed when they are distributed, a lower dividend yield reduces investors’ tax bills. But this lower-yield tilt could modestly hinder performance when dividend stocks are in favor. Although the managers have discretion around their use of tax management strategies, they are constrained by strict tracking-error limits to the Russell 1000 Index. Consequently, the fund looks a lot like this benchmark, though it does carry a lower dividend yield. This is as far as the fund strays from the index. The fund’s sector allocations have been consistently within plus or minus

Pfizer Inc

Hlth Care

T Verizon Communications In

Comm Svcs 16.13 0.87

1% of the benchmark’s. Individual stock weightings do not tend to deviate significantly from the benchmark. So far, the fund has delivered on both mandates. It has not distributed a capital gain since its inception. Its post-tax returns rank in the top decile of the large-blend Morningstar Category during three-, five-, and 10-year trailing periods through August 2016. At the same time, it has kept tracking error very low. The fund’s tax-loss harvesting strategy may not be able to completely offset capital gains if it experiences large net outflows after a market runup, as managers must sell positions to meet redemptions. That said, the fund experienced rolling 12-month net outflows from March 2009 to May 2013 but avoided distributing capital gains.

The Home Depot Inc

Cnsmr Cyc Finan Svcs Cnsmr Cyc

Visa Inc Class A Walt Disney Co

Current Investment Style

Sector Weightings h Cyclical r BasicMat t CnsmrCyc y FinanSvcs u Real Est j Sensitive i CommSrvs o Energy p Industrl a Technlgy k Defensive s CnsmrDef d Hlthcare f Utilities

% of Stocks

Rel Bmark 1

Market Cap % Giant 43.2 Large 32.1 Mid 22.9 Small 1.8 Micro 0.0 Avg $mil: 54,334

Value Blend Growth

Large Mid Small

33.18 1.03 3.04 1.02 12.29 1.05 14.35 1.03 3.50 0.96 39.94 0.97 4.04 0.95 6.80 0.97 11.20 1.00 17.90 0.97 26.88 1.00 9.19 0.98 14.49 1.02 3.20 0.99

Value Measures

Rel Category

Price/Earnings 19.48

1.07 1.04 1.06 1.07 0.88 0.98 1.06 1.03 0.88 1.02

Price/Book Price/Sales

2.65 1.76

Price/Cash Flow 10.27 Dividend Yield % 2.02

Growth Measures

% Rel Category

Long-Term Erngs 8.88

Book Value

3.36 2.20 3.30

Composition - Net

Sales

Cash 0.1 Stocks 99.9 Bonds 0.0 Other 0.0 Foreign 0.3 (% of Stock)

Address:

Vanguard Tax-managed Funds

Minimum Purchase: Min Auto Inv Plan:

$10000 Add: $1 — Add: —

IRA: —

Cash Flow

Valley Forge, PA 19482

Historical Erngs 6.03

800-662-7447

Sales Fees:

No-load

Web Address:

www.vanguard.com

Management Fee:

0.10%

Profitability

%

Inception:

11-12-01

Actual Fees:

Mgt:0.10% Dist:—

Return on Equity Return on Assets

20.34

Advisor:

Vanguard Group Inc

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

10Yr:$141

6.53

Subadvisor:

None

Income Distribution:

None

Net Margin

12.55

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