P.O. Box 2600
Valley Forge, PA 19482-2600
610-669-4294
michael_drayo@vanguard.com
| February 26, 2016 | |
| Asen Parachkevov, Esq. | |
| U.S. Securities and Exchange Commission | via electronic filing |
| 100 F Street, N.E. | |
| Washington, DC 20549 | |
RE: |
Vanguard Malvern Funds (the “Trust”) File No. 033-23444 Post-Effective Amendment No. 68 – Vanguard Core Bond Fund (the “Core Bond Fund”), Vanguard Emerging Markets Bond Fund (the “Emerging Markets Bond Fund”, collectively the “Funds”). |
Dear Mr. Parachkevov,
This letter responds to your comments provided on February 5, 2016, on the above referenced post-effective amendment.
| Comment 1: | Core Bond Fund – Prospectus - Fund Summary – Fees and Expenses | ||
| Comment: | Please provide the Fund’s complete fee table in your response letter. | ||
| Response: | Please see the revised fee table below. | ||
| Annual Fund Operating Expenses | |||
| (Expenses that you pay each year as a percentage of the value of your investment) | |||
| Admiral | |||
| Investor Shares | Shares | ||
| Management Fees | 0.22% | 0.12% | |
| 12b-1 Distribution Fee | None | None | |
| Other Expenses | 0.03% | 0.03% | |
| Total Annual Fund Operating Expenses | 0.25% | 0.15% | |
| Comment 2: | Core Bond Fund – Prospectus – Fund Summary – Principal Investment Strategies |
| Comment: | Please clarify that the 80% policy includes “borrowings for investment purposes.” |
| Response: | We have considered the comment, and for consistency purposes do not plan to modify |
| the disclosure. | |
Asen Parachkevov, Esq.
February 26, 2016
Page 2
| Comment 3: | Core Bond Fund – Prospectus – Fund Summary – Principal Investment Strategies |
| Comment: | Please confirm if the Fund will invest in collateral debt obligations, collateral loan |
| obligations, or 3(c)(1) / 3(c)(7) securities in any material manner. | |
| Response: | The Fund does not presently intend to invest in these investments in any material manner. |
| Comment 4: | Core Bond Fund – Prospectus – Fund Summary – Principal Investment Strategies |
| Comment: | Please confirm if the Fund will invest in foreign securities as a principal investment |
| strategy. | |
| Response: | The Fund does not intend to invest in foreign securities as a principal investment strategy. |
| The prospectus includes disclosure that the Fund may invest “no more than 10% of its | |
| assets in non-U.S. dollar denominated bonds.” | |
| Comment 5: | Core Bond Fund –Prospectus – Fund Summary – Principal Investment Strategies |
| Comment: | Please explain circumstances and market conditions when the dollar average weighted |
| maturity will be “longer or shorter.” | |
| Response: | The market conditions where dollar average weighted maturity would be longer or |
| shorter than the stated range is dependent on the interest rate environment (i.e., rising | |
| interest rages may cause a decrease in maturity, while decreasing interest rates may | |
| increase maturity). | |
| Comment 6: | Core Bond Fund –Prospectus – Fund Summary – Principal Investment Strategies |
| Comment: | Please confirm if derivative investments will be used as a principal investment strategy. |
| Response: | We confirm that derivative investments are not part of the Fund’s principal investment |
| strategy. | |
| Comment 7: | Emerging Markets Bond Fund – Prospectus – Fund Summary – Principal |
| Investment Strategies | |
| Comment: | Please confirm if the 80% policy includes “borrowings for investment purposes.” |
| Response: | We have considered the comment, and for consistency purposes do not plan to modify |
| the disclosure. | |
| Comment 8: | Emerging Markets Bond Fund – Prospectus – Fund Summary – Principal |
| Investment Strategies | |
| Comment: | Please include a description of what would be considered an emerging market country. |
| Please explain what is meant for an issuer to be “tied economically to an emerging | |
| market country”. | |
Asen Parachkevov, Esq.
February 26, 2016
Page 3
| Response: | In the “More on the Fund” section, under “Security Selection” the following disclosure is |
| included: | |
| “The Fund’s advisor may consider emerging market countries to be those included in the | |
| Fund’s benchmark index; countries classified as emerging economies by the International | |
| Monetary Fund; and other countries or markets with similar emerging characteristics. The | |
| advisor will consider, among other things, a country’s political and economic stability | |
| and the development of its financial and capital markets when determining what | |
| constitutes an emerging market country.” | |
| An issuer is “tied economically to an emerging market country” if, for example, its | |
| operations or source of revenues were in (or derived from) an emerging markets country. | |
| Comment 9: | Emerging Markets Bond Fund – Prospectus – Fund Summary – Principal |
| Investment Strategies | |
| Comment: | Please confirm if derivatives investments will be used as a principal strategy. |
| Response: | We confirm that derivatives investments are not part of the Fund’s principal investment |
| strategies. The Fund has the flexibility to enter into derivative transactions for various | |
| purposes. They will primarily be used for currency hedging. | |
| Comment 10: | Emerging Markets Bond Fund – Prospectus – Fund Summary – Principal Risks |
| Comment: | Please confirm if the Fund will invest in securities that are in default at the time of |
| investment. If so, then include additional risk disclosure on this type of securities. | |
| Response: | We confirm that the Fund does not intend to invest in securities that are at default at the |
| time of investment. | |
| Comment 11: | Statement of Additional Information – Fundamental Policies |
| Comment: | Please confirm if the industry concentration language is consistent with Section 8 of the |
| Investment Company Act of 1940 and please describe how a Fund determines if it is | |
| concentrated in an industry. | |
| Response: | We believe that the current industry concentration policy is consistent with Section 8 of |
| the Investment Company Act of 1940. We determine what is considered an industry | |
| through the definitions of “industry” and “industry groups” as defined by the Global | |
| Industry Classification Standards as set forth by certain index providers. | |
Comment 12: |
Statement of Additional Information – Investment Advisory Services – Description of Compensation |
Comment: |
Please include the benchmark in the determination of a bonus of a portfolio manager. |
Asen Parachkevov, Esq.
February 26, 2016
Page 4
Response: We believe this section is consistent with Item 20(b) of Form N-1A.
Tandy Requirements
As required by the SEC, the Funds acknowledge that:
- Each Fund is responsible for the adequacy and accuracy of the disclosure in the filing.
- Staff comments or changes in response to staff comments in the filings reviewed by the staff do not foreclose the Commission from taking any action with respect to the filing.
- A Fund may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
Please contact me at (610) 669-4294 with any questions or comments regarding the above response.
Thank you.
Sincerely,
Michael J. Drayo
Senior Counsel
The Vanguard Group, Inc.