Vanguard Variable Insurance Funds: Special tax information

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Vanguard Variable Insurance Funds: Special tax information

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March 30, 2023

This information attributable to the income and capital gains distributed in March 2023 for the fiscal year ended December 31, 2022, is included pursuant to provisions of the Internal Revenue Code for corporate shareholders only. The Vanguard Variable Insurance Fund Portfolios had income and distributions with tax attributes as outlined below.  Taxpayers should consult their advisor regarding more complex tax situations. Although Vanguard aims to ensure the accuracy of the information contained in this supplement, we cannot guarantee that the information herein will not be subject to change or that a tax authority might disagree with the information herein or any tax position taken by a taxpayer in reliance upon the information in this supplement.

Dividends-received deduction (DRD)

Below are the percentages of ordinary dividends (i.e., dividend income plus short-term capital gains, if any) that qualified for the intercorporate dividends-received deduction. The percentages are applicable to the March 2023 distribution:
 

Name

Qualifying Percentage

Balanced Portfolio

41.4%

Capital Growth Portfolio

100.0%

Conservative Allocation Portfolio

16.7%

Diversified Value Portfolio

90.2%

Equity Income Portfolio

93.6%

Equity Index Portfolio

100.0%

Growth Portfolio

100.0%

Mid-Cap Index Portfolio

91.7%

Moderate Allocation Portfolio

24.5%

Small Company Growth Portfolio

100.0%

Total Stock Market Index Portfolio

98.3%


Please note that the dividends-received deduction is subject to other requirements and limitations. The Global Bond Index, High Yield Bond, International, Money Market, Real Estate Index, Short-Term Investment-Grade, Total Bond Market Index, and Total International Stock Market Index Portfolios have no income qualifying for the DRD.

Section 163(j) interest dividends information

Below are the percentages of ordinary dividends (i.e., dividend income plus short-term capital gains, if any) that qualified as 163(j) interest dividends. Please note that the rules regarding 163(j) interest dividends are subject to other requirements and limitations. The percentages are applicable to the March 2023 distribution:|
 

Name

Qualifying Percentage

Balanced Portfolio

30.5%

Conservative Allocation Portfolio

33.8%

Global Bond Index Portfolio

56.6%

High Yield Bond Portfolio

94.3%

Moderate Allocation Portfolio

23.7%

Money Market Portfolio

99.8%

Short-Term Investment-Grade Portfolio

100.0%

Total Bond Market Index Portfolio

100.0%


The Capital Growth, Diversified Value, Equity Income, Equity Index, Growth, International, Mid-Cap Index, Real Estate Index, Small Company Growth, Total International Stock Market Index, and Total Stock Market Index Portfolios have no income qualifying for 163(j).

Foreign tax credit

The following funds have designated, as available for pass-through treatment to shareholders, foreign-source income and foreign taxes paid for the Portfolio’s fiscal year ended December 31, 2022:

  1. Conservative Allocation Portfolio
  2. International Portfolio
  3. Moderate Allocation Portfolio
  4. Total International Stock Market Index Portfolio

Shareholders are asked to contact Fund Tax Services at FTS@Vanguard.com for more information. This pass-through information will only be relevant for investors who were shareholders in the Portfolio on the dividend record date of March 27, 2023.

Long-term capital gains

Below are the amounts distributed as capital gain dividends (from net long-term capital gains) to shareholders:
 

Name

Long-term capital gains

Balanced Portfolio

$128,886,000

Capital Growth Portfolio

$80,141,000

Conservative Allocation Portfolio

$11,190,000

Diversified Value Portfolio

$58,548,000

Equity Income Portfolio

$101,807,000

Equity Index Portfolio

$265,513,000

Global Bond Index Portfolio

$668,000

International Portfolio

$99,383,000

Mid-Cap Index Portfolio

$41,107,000

Moderate Allocation Portfolio

$18,737,000

Real Estate Index Portfolio

$49,990,000

Total International Stock Market Index Portfolio

$12,438,000

Total Stock Market Index Portfolio                    

$228,791,000


The Growth, High Yield Bond, Money Market, Short-Term Investment-Grade, Small Company Growth, and Total Bond Market Index Portfolios distributed no capital gains dividends (from net long-term capital gains).

 

U.S. government obligations

Below are the percentages of total income derived from U.S. government obligations. Direct U.S. government obligations and obligations of certain U.S. government agencies are generally exempt from taxation in most states.1 Advisors should check with state or local tax offices or with a tax advisor to determine whether their clients' states allow them to exclude some or all the income their clients earn from mutual funds that invest in U.S. government obligations.

Name

Income from U.S. government obligations²

Balanced Portfolio

5.68%

Capital Growth Portfolio

1.30%

Conservative Allocation Portfolio

16.30%

Diversified Value Portfolio

1.61%

Equity Income Portfolio

0.48%

Equity Index Portfolio

0.12%

Global Bond Index Portfolio

28.39%

High Yield Bond Portfolio

0.25%

International Portfolio

0.67%

Mid-Cap Index Portfolio

0.08%

Moderate Allocation Portfolio

10.87%

Money Market Portfolio

58.88%

Short-Term Investment-Grade Portfolio

10.81%

Small Company Growth Portfolio

2.71%

Total Bond Market Index Portfolio

32.86%

Total Bond Market Index Portfolio

0.10%

Total Stock Market Index Portfolio

0.15%


¹ Investments in U.S. government obligations may include the following: Federal Farm Credit Banks, Federal Home Loan Banks, the Student Loan Marketing Association, the Tennessee Valley Authority, the U.S. Treasury Department (bonds, notes, bills, certificates, and savings bonds), and certain other U.S. government obligations. GNMA, FNMA, Freddie Mac, repurchase agreements, and certain other securities are not U.S. government obligations, and, therefore, generally subject to state and local taxes.

² The percentages provided apply only to income distributions (dividends); they do not apply to capital gains distributions (whether long-term or short-term).

Note:

  • All investments are subject to risk, including the possible loss of the money you invest.

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