How are recharacterization earnings/loss calculated?
Vanguard has adopted the method set forth in IRS Notice 2000-39 and Proposed Regulations 1.408-11 to calculate the earnings or losses for a recharacterization.
The calculations are based on ALL assets in your IRA plan, not just the fund contributed to. For partial recharacterization, the client may choose the date(s) of the original contribution that they would like to be used in the calculation for earnings/loss.
Additional information and examples can be found at irs.gov under IRS Publication 590-A, Contributions to an IRA. For a more detailed explanation of publication 590-A and examples of how to calculate your own earnings or loss please visit the IRS website.
A chart to help with earnings/loss calculation can be found on that webpage under "Worksheet 1-3. Determining the Amount of Net Income Due to an IRA Contribution and Total Amount to be Recharacterized"