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Speaking out on behalf of all investors

April 30, 2013

As a Vanguard client, you count on us to help you achieve investment success. To do that, we aim to provide excellent investment products and services at very low cost.

We also keep a weather eye on the larger environment. Instability in the economy and the financial markets is bad for investors because it creates uncertainty and weakens investor confidence. It can also prompt investors to make short-term emotional decisions that could wreak havoc on a sensible long-term investment program.

In recent months, we've spoken out on the U.S. "fiscal cliff" crisis as lawmakers sought to avert a combination of automatic federal spending cuts and tax increases. In a Vanguard Blog post written as the crisis intensified in December, Chairman and CEO Bill McNabb called the debate "an incredible opportunity" to resolve the long-term fiscal imbalance that has been destabilizing the U.S. economy and the markets.

"I would remind folks that this debate is not just about the near-term fiscal cliff," Mr. McNabb wrote. "It's about enacting a long-term plan to address the federal deficit."

Shareholders periodically question why we speak out on these divisive topics. It sometimes becomes imperative, given our view of Vanguard's core purpose: to take a stand for all investors, treat them fairly, and give them the best chance for investment success.

We certainly recognize that our millions of clients hold differing views on political and economic issues. But just as we've tried throughout our history to educate investors about the dangers of high costs and to advocate for better risk disclosures, we have an obligation to address public policies that threaten the $2 trillion our clients have entrusted to us for their retirement, college savings, and other financial goals.

When clients' interests are at stake, we've also exercised our voice on narrower investment issues such as fee disclosure and money market regulatory reform. On occasion, our leaders have provided expert testimony on Capitol Hill and at agency hearings.

As the fiscal cliff crisis roiled the financial markets this winter, Vanguard's call centers heard from worried clients who asked whether they should change their portfolios in anticipation of a dire outcome. (Our position, as always, was that investors should be cautious and watchful but avoid rash actions.) The worst-case scenario was averted by a political agreement on the cusp of the new year. But now, as we enter the second quarter of 2013, the long-term U.S. debt problem remains a cloud over the markets.

We'll continue to speak out on this critical issue and others. A stable economy and stable financial markets are essential if you want the best chance for investment success.

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