Company Press Release

Vanguard Chief Investment Officer Gus Sauter Announces Plans to Retire After 25-Year Career

VALLEY FORGE, PA, JUNE 22, 2012—George U. “Gus” Sauter, managing director and chief investment officer of Vanguard, today announced his plans to retire, effective December 31, 2012.

Mr. Sauter, 57, joined Vanguard in 1987 and currently directs Vanguard’s global investment management groups, which oversee aggregate assets of $1.6 trillion of Vanguard’s $2.1 trillion in global assets.

“I’ve had the privilege of working with Gus Sauter for 25 years, and he has been a valued colleague and friend,” said Vanguard CEO Bill McNabb. “On behalf of the entire Vanguard family, I thank him for his dedication and service to our clients and our crew. Under his leadership, Vanguard has emerged as a world-class investment management firm with an unparalleled record of accomplishment. And it is equally important to acknowledge Gus for his contributions as a member of Vanguard’s senior staff; the entire enterprise has greatly benefited from his values, judgment, investment acumen, and ability to identify and develop the best investment talent in the industry.”

Mortimer J. “Tim” Buckley, managing director, will assume the role of chief investment officer upon Mr. Sauter’s retirement. Mr. Buckley, 43, has been a member of Vanguard’s senior staff since 2001 and has directed Vanguard’s Retail Investor Group since 2006. The group serves 5 million individual investors through its client services, high net worth, brokerage, advice, annuity, college savings, and processing operations. Mr. Buckley joined Vanguard in 1991 as assistant to then Chairman John C. Bogle. He has held various leadership positions within Vanguard’s Planning and Development, Retail Investor, and Web Services groups. From 2001 to 2006, Mr. Buckley served as chief information officer and head of Vanguard’s Information Technology Division.

Mr. Buckley is also a long-tenured member of Vanguard’s Portfolio Review Group, which comprises nine executives including Mr. McNabb and six members of Vanguard’s senior staff. The group has oversight responsibilities for Vanguard’s in-house investment management functions and 30 external investment advisory firms employed by Vanguard in the United States and abroad. Mr. Buckley earned an A.B. in economics from Harvard in 1991, and an M.B.A. from Harvard Business School in 1996.

“Tim Buckley has a strong commitment to the Vanguard way of investing, a keen intellect, and a passion for serving Vanguard clients,” said Mr. McNabb. “He will inherit a deep, talented group of more than 300 highly experienced equity, fixed income, risk management, and investment strategy professionals who oversee Vanguard portfolios on behalf of clients around the globe.”

Vanguard’s investment management leadership team in the U.S. includes Robert F. Auwaerter, principal, who heads Vanguard’s Fixed Income Group. Mr. Auwaerter joined Vanguard in 1981 and has nearly 35 years of fixed income management experience. Joseph H. Davis, Ph.D., principal and director of Vanguard’s Investment Strategy Group, serves as Vanguard’s chief economist. Mr. Davis joined Vanguard in 2002. John W. Hollyer, CFA, principal, leads the Risk Management Group, which focuses on investment risk controls and processes. Mr. Hollyer joined the company in 1989 and has more than 20 years of fixed income management experience. Sandip Bhagat, CFA, principal, leads Vanguard’s Equity Investment Group, which manages Vanguard’s index funds and active quantitative strategies. Mr. Bhagat has 25 years of experience in equity portfolio management and has been with Vanguard since 2009. Vanguard’s investment management leadership team abroad includes Joseph Brennan and Jeffrey S. Molitor, who direct the investment management function for Vanguard Investments Australia and the London-based Vanguard Asset Management Limited, respectively.

“I look forward to working closely with Gus and the entire investment management team in the months ahead as I transition to this important role. Our focus will continue to be on low-cost, broad-based, and enduring investments, and managing Vanguard’s clearly defined portfolios with our hallmark discipline and prudence,” said Mr. Buckley.

A Distinguished Career

Mr. Sauter joined Vanguard as head of the firm’s internal equity management group on October 5, 1987, which was two weeks prior to the market crash when stocks declined more than 22% in a single day. At that time, Vanguard offered two index funds—Vanguard 500 Index Fund and Vanguard Total Bond Market Index Fund, with aggregate assets of $1.2 billion. Mr. Sauter assumed responsibility for the equity index management function, where he developed new trading programs and strategies that minimized trading costs and enhanced benchmark tracking precision.

Vanguard introduced its second equity index portfolio (Vanguard Extended Market Index Fund) in December 1987 and, in subsequent years, Mr. Sauter worked to expand Vanguard’s index line-up: Vanguard Small Capitalization Index Fund (1989); Vanguard European Index Fund (1990); Vanguard Pacific Index Fund (1990); Vanguard Total Stock Market Index Fund (1992); Vanguard Balanced Index Fund (1992); Vanguard Growth Index Fund (1992); and Vanguard Value Index Fund (1992). From this pioneering stage, Vanguard has emerged as a worldwide leader in indexing, managing more than $1.1 trillion in aggregate index assets.

Mr. Sauter was also responsible for developing Vanguard’s active quantitative equity strategies. Vanguard’s in-house equity investment group began managing portions of Vanguard Windsor II Fund in 1991 and Vanguard Morgan Growth Fund in 1993. In 1995, the group was named as the sole investment adviser of a new fund, now the $3.3 billion Vanguard Strategic Equity Fund. Today, Vanguard Equity Income Group manages 15 domestic active mandates totaling $12.1 billion.

Seeking to broaden the acceptance and use of index funds, Mr. Sauter led Vanguard’s foray into exchange-traded funds (ETFs). Unlike the then existing exchange-traded vehicles that operated as stand-alone investment products, Mr. Sauter developed a unique structure under which ETFs are offered as a separate share class of existing Vanguard index funds. The company’s first ETF—Vanguard Total Stock Market ETF (ticker: VTI)—began trading in 2001 and is now one of the largest in the industry with $20 billion in net assets. Vanguard is now an ETF leader, offering 64 ETFs with nearly $200 billion in aggregate assets.

In 2003, Mr. Sauter was named Vanguard’s first chief investment officer. In this new role, he assumed oversight responsibility for all in-house stock and fixed income management functions. In recent years, Mr. Sauter has focused on integrating Vanguard’s global investment management capabilities to support the company’s expansion in Australia, the Pacific Rim, the U.K, Canada, and Europe. Vanguard has invested considerably in its investment management infrastructure and has hired additional portfolio managers, analysts, and trading personnel to support its growing global business.

Throughout his career, Mr. Sauter participated on a number of committees that have helped shape the investment markets, including the Equity Markets Committee of the Investment Company Institute, the Institutional Traders Advisory Committee of the New York Stock Exchange, and the Nasdaq Quality of Markets Committee. He also has served on the trading committee of the Securities Industry Association, currently known as Securities Industry and Financial Markets Association (SIFMA), and the AIMR (currently CFA Institute) Best Execution Task Force. He also supported the U.S. Securities and Exchange Commission in several market structure initiatives, including Regulation National Market System.

Prior to his Vanguard career, Mr. Sauter was a trust investment officer with First Bancorp of Ohio (formerly The First National Bank of Ohio). He earned an A.B. in economics from Dartmouth College and an M.B.A. in finance from The University of Chicago.

“I look back with a mixture of pride and humility on helping to popularize the indexing concept. I am also grateful for being associated with Vanguard for nearly my entire career, for it is an organization that truly stands alone in putting the interests of its clients first and giving them the best chance for investment success,” said Mr. Sauter, who is considering a number of endeavors, including teaching, after he steps down. “It istime to pass the baton to a new leader who can further build upon our strong investment management foundation. Tim Buckley is the right choice for Vanguard and for our clients.”

About Vanguard

Vanguard, headquartered in Valley Forge, Pennsylvania, is one of the world’s largest investment management companies. Vanguard manages 170 U.S.-based mutual funds with approximately $1.8 trillion in assets and has nearly $2.1 trillion in global assets.