VANGUARD TO INTRODUCE SEVEN NEW BOND INDEX FUNDS AND ETFS

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VANGUARD TO INTRODUCE SEVEN NEW BOND INDEX FUNDS AND ETFS

August 11th, 2009

VALLEY FORGE, PA, August 11, 2009 —To complement its broad array of low-cost, actively managed fixed income funds, as well as its five existing bond index funds and ETFs, Vanguard has filed a registration statement with the Securities and Exchange Commission for seven new bond index funds and ETFs. The new offerings will bring the total number of Vanguard Bond Index Funds to 12. The funds will offer ETF Shares and Signal® Shares1 with expected expense ratios of 0.15%, and Institutional Shares1 with an expense ratio of 0.09%. The funds are expected to be available for purchase in late 2009. The new funds are:

Fund	Index
Vanguard Short-Term Government Bond Index Fund	Barclays Capital U.S. 1-3 Government Bond Index
Vanguard Intermediate-Term Government Bond Index Fund	Barclays Capital U.S. 3-10 Government Bond Index
Vanguard Long-Term Government Bond Index Fund	Barclays Capital U.S. 10+ Government Bond Index
Vanguard Short-Term Corporate Bond Index Fund*	Barclays Capital U.S. 1-5 Corporate Bond Index
Vanguard Intermediate-Term Corporate Bond Index Fund*	Barclays Capital U.S. 5-10 Corporate Bond Index
Vanguard Long-Term Corporate Bond Index Fund*	Barclays Capital U.S.10+ Corporate Bond Index
Vanguard Mortgage-Backed Securities Index Fund	Barclays Capital U.S. MBS Index

“Vanguard has a quarter-century of experience in bond index management, and expanding our range of funds is a logical extension of our capabilities,” said Bill McNabb, Vanguard president and CEO. “Financial advisors and institutions want to construct broadly diversified fixed income portfolios, while retaining the ability to emphasize particular sectors or durations. Working in concert, our broad-based bond index funds and these new, more targeted funds can help to achieve this goal.”
Vanguard is a pioneer in bond index management, introducing the industry’s first no-load bond index fund, Vanguard Total Bond Market Index Fund, in 1986. Vanguard followed with three additional bond index funds in 1994, and launched bond ETFs in 2007. Today, Vanguard Total Bond Market Index Fund has $59.5 billion in total assets, and the Total Bond Market ETF (ticker: BND) is among the industry’s top-15 best-selling ETFs.
The Vanguard Fixed Income Group is one of the largest bond managers in the world and is responsible for more than $460 billion in fixed income assets across 42 taxable and tax-exempt funds. Its team of more than 100 tenured investment and research professionals steered the funds clear of subprime-related credits that had been the focus of last year’s credit crisis, and over 3-, 5-, and 10-year periods, all of Vanguard’s active and indexed fixed income funds have outperformed the average return of their respective peer groups (source: Lipper Inc. as of June 30, 2009) 2.
As the financial markets begin to emerge from the instability of the past 18 months, stock and bond indexing has gained market share as investors recognize the potential benefits of the approach’s low costs and broad diversification. Following two consecutive years of industry-leading cash flow,Vanguard has garnered more than $70 billion of net new cash flow to long-term funds through July 2009 (Source: Strategic Insight Simfund MF and Vanguard). The majority of that cash is flowing into indexed products, whether traditional bond or equity index funds, Vanguard’s 39 existing ETFs, or index-based products like Vanguard Target Retirement Funds. In addition, Vanguard continues to gain momentum in the ETF market, with nearly $67 billion in assets and $13 billion in net cash flow year-to-date through July 2009.

About Vanguard

Vanguard, headquartered in Valley Forge, Pennsylvania, is one of the world’s largest investment management companies and a leading provider of company-sponsored retirement plan services. Vanguard manages approximately $1.2 trillion in U.S. mutual fund assets, including nearly $490 billion in retirement assets. Vanguard offers more than 150 funds to U.S. investors and more than 50 additional funds in non-U.S. markets.

Disclosures:
1 Signal Shares minimum investment for Vanguard Financial Advisor Services clients is $5 million per fund in aggregate at the firm level and $1 million per plan for employee benefit assets. Institutional shares are available to companies and organizations with account balances of $5 million or more. Not available on accounts receiving administrative or recordkeeping services.

Asset figures as of July 31, 2009, unless otherwise noted.

2For the ten-year period ended June 30, 2009, 28 of 28 Vanguard bond funds outperformed their Lipper averages; results will vary for other time periods. Only funds with a minimum three, five and ten-year history were included in the comparison (Source: Lipper Inc.). Note that the competitive performance data shown represent past performance, which is not a guarantee of future results, and that all investments are subject to risks. For the most recent performance, visit our website at www.vanguard.com/performance

A registration statement relating to these securities has been filed with the Securities and Exchange Commission but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This communication shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, these securities in any state in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state.

Copies of the final Vanguard fund and ETF prospectuses, when available, as well as prospectuses for all other Vanguard funds can be obtained by visiting www.vanguard.com, or calling 800-662-7447. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing. Please note that a preliminary prospectus is subject to change.

Vanguard ETF Shares can be bought and sold only through a broker (who will charge a commission) and cannot be redeemed with the issuing fund. The market price of Vanguard ETF Shares may be more or less than net asset value.
Mutual funds are subject to risks. Investments in bond funds are subject to interest rate, credit, and inflation risk.
Vanguard Marketing Corporation, Distributor.

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