Vanguard Brokerage Initial Margin Risk Disclosure Statement

Vanguard Brokerage Initial Margin Risk Disclosure Statement

Vanguard Brokerage Services® is providing this statement, in accordance with FINRA rules and regulations, to inform You of some important facts about purchasing Securities on margin and to alert You to the risks involved with margin Securities in a margin account. Before trading Securities in Your Margin Account, You should carefully review this Margin Risk Disclosure Statement. You should call Vanguard Brokerage Services with any questions or concerns You may have with Your Margin Account.

When You purchase Securities, You may pay for the Securities in full or You may borrow part of the purchase price from Vanguard Brokerage Services. If You choose to borrow funds from Vanguard Brokerage Services, You will open a margin account with Us. The Securities purchased are Our collateral for the loan to You. If the Securities in Your Account decline in value, so does the value of the collateral supporting Your loan. As a result, Vanguard Brokerage Services can take action by issuing a margin call and/or by selling Securities and Other Property in any of Your accounts held with Vanguard Brokerage Services or any of its affiliates to satisfy minimum equity requirements.

Before placing any trades in a margin account, it is important that You fully understand that this activity involves a high degree of risk.

These risks include, but are not limited to, the following:

You can lose more funds than You deposit into Your Margin Account.

If the Securities in Your Margin Account decline in value, You may be required to deposit additional funds or marginable Securities to prevent Vanguard Brokerage Services from selling those or Other Securities in Your Account. Market conditions can magnify any potential for loss.

Vanguard Brokerage Services can force the sale of Securities and Other Property in Your Account. You are not entitled to choose which Securities or other assets in Your Account will be liquidated or sold to meet a margin call.

If the equity in Your Account falls below the maintenance margin requirements, or Vanguard Brokerage Services' higher "house" maintenance margin requirements (see next item below), Vanguard Brokerage Services reserves the right to sell the Securities and Other Property in Your Account to cover the margin deficiency. You will also be responsible for any shortfall in the Account after such sale. Because the Securities and Other Property in Your Account are collateral for the margin loan that has been granted to You, Vanguard Brokerage Services has the right to decide which Securities to sell in order to protect its interests.

Vanguard Brokerage Services can increase Our "house" maintenance margin requirements at any time without advance written notice.

At this time, the minimum margin maintenance requirement is 35% for most marginable Securities held at Vanguard Brokerage Services. Your Account would be at 35% equity under the following scenario: $100,000 market value – $65,000 margin debt = 35% equity. However, maintenance requirements may vary for certain Securities. For example, Vanguard Brokerage Services now requires a 50% or higher maintenance requirement for concentrated positions, that is, for margin accounts with a large percentage of holdings in a small number of Securities or for a large amount of holdings in one particular industry group or sector. In addition, not all Securities held at Vanguard Brokerage Services are marginable. Please note that We may change Our "house" maintenance margin requirements anytime and these changes will take effect immediately and result in the issuance of a maintenance margin call. Your failure to satisfy the call may cause Vanguard Brokerage Services to liquidate or sell Securities and Other Property in Your Account. You should ascertain the margin requirements for a particular Security before placing a trade in a margin account. If You have any questions about Our margin requirements, call Us at 800-992-8327 Monday through Friday from 8 a.m. to 8 p.m., Eastern time.

Vanguard Brokerage Services can sell Your Securities and Other Property without contacting You.

Some investors mistakenly believe that a firm must contact them for a margin call to be valid and that the firm cannot liquidate Securities and Other Property in their accounts to meet the call unless the firm has contacted them first. This is not the case. Vanguard Brokerage Services will attempt to notify You when a margin call exists, but is not required to do so. However, even if You are contacted and given explicit instructions regarding the amount and payment deadline of Your margin call, Vanguard Brokerage Services can still take necessary steps to protect its financial interests, including by selling Securities and Other Property in any of Your accounts held by Vanguard Brokerage Services or any of its affiliates at any time without contacting You, if We deem it necessary, to mitigate the risk associated with adverse market fluctuations or otherwise.

You are not entitled to an extension of time to meet a margin maintenance call.

Although Vanguard Brokerage Services may allow more time to meet a margin call under extenuating circumstances, You are not automatically entitled to receive an extension.

Interest rates on margin debit balances may vary.

Interest charged on any margin debit balances may be up to 3.00 percentage points above the Vanguard Brokerage Services Base Lending Rate. The interest period begins two business days before the beginning of each month and ends three business days before the following month's end. At the close of each interest period during which credit was extended to You, an interest charge is computed by multiplying the average daily debit balance by the applicable schedule rate, and by the number of days during which a debit balance was outstanding, and then dividing by 360. If there has been a change in the Vanguard Brokerage Services Base Lending Rate, separate computations will be made with respect to each rate of charge for the appropriate number of days at each rate during the interest period. If not paid, the interest charge for credit extended to Your Account at the close of the interest period is added to the opening debit balance for the next interest period. If there is a cash balance in both Your Cash and Margin Accounts, interest will be calculated on the combined debit balance for that currency and charged to the Margin Account. Generally, You will not receive interest on any credit balances in Your short account because such credit collateralizes the stock borrowed for delivery against the short sale.

All trades will be executed through Your Margin Account.

All Securities must be held in Your Margin Account. Purchases of open-end mutual funds and Vanguard ETFs® will settle in Your cash account and after 30 days be journaled into Your Margin Account.