| |
Transaction
Fee on Purchases and Sales |
|
Transaction
Fee on Reinvested Dividends |
|
Transaction
Fee on Conversion to ETF Shares |
|
| |
Management
Fees |
% |
12b-1
Distribution Fee |
|
Other
Expenses |
% |
Total
Annual Fund Operating Expenses |
% |
1
Year |
3
Years |
5
Years |
10
Years |
$ |
$ |
$ |
$ |
|
Total
Return |
Quarter |
|
% |
|
|
-
% |
|
|
1
Year |
5
Years |
10
Years |
Vanguard
Extended Duration Treasury Index Fund
ETF
Shares |
|
|
|
Based
on NAV |
|
|
|
Return Before
Taxes |
-
% |
-
% |
% |
Return After
Taxes on Distributions |
- |
- |
- |
Return After
Taxes on Distributions and Sale of Fund Shares |
- |
- |
- |
Based
on Market Price |
|
|
|
Return Before
Taxes |
- |
- |
|
Bloomberg
U.S. Treasury STRIPS 20-30 Year Equal Par
Bond
Index
(reflects no
deduction for fees, expenses, or taxes) |
-
% |
-
% |
% |
Bloomberg
U.S. Aggregate Float Adjusted Index
(reflects no
deduction for fees, expenses, or taxes) |
- |
|
|
Plain
Talk About Fund Expenses |
All funds
have operating expenses. These expenses, which are deducted
from a
fund’s gross income, are expressed as a percentage of the net assets
of the
fund. Assuming that operating expenses remain as stated in the Fees
and
Expenses section, Vanguard Extended Duration Treasury Index Fund
ETF
Shares’ expense ratio would be 0.06%, or $0.60 per $1,000 of average
net
assets. The average expense ratio for general U.S. Treasury funds in
2022 was
0.21%, or $2.10 per $1,000 of average net assets (derived from
data
provided by Lipper, a Thomson Reuters Company, which reports on the
fund
industry). |
Plain
Talk About Costs of Investing |
Costs are
an important consideration in choosing an ETF. That is because
you, as a
shareholder, pay a proportionate share of the costs of operating a
fund and
any transaction costs incurred when the fund buys or sells
securities,
including costs generated by shareholders of other share classes
offered by
the fund. These costs can erode a substantial portion of the gross
income or
the capital appreciation a fund achieves. Even seemingly small
differences
in expenses can, over time, have a dramatic effect on a
fund’s
performance. |
Plain
Talk About Treasury STRIPS |
A
Treasury STRIP represents a single coupon payment, or a single principal
payment,
on a U.S. Treasury security that has been “stripped” into separately
tradable
components. For example, a newly issued 10-year U.S. Treasury
note
can be divided into 20 semiannual coupon payments (coupon STRIPS)
and
a single principal payment (principal STRIP). Treasury STRIPS are
obligations
of the U.S. Treasury and are backed by the full faith and credit of
the
U.S. government. Treasury
STRIPS are sometimes called zero-coupon securities because the
only
time an investor receives payment is at maturity. Consequently,
these
securities
are more sensitive to changes in interest rates than
coupon-bearing
securities with the same maturity date.
Treasury
STRIPS
are popular with pension funds and insurance companies because
these
securities have known cash values at maturity, which enables investors
to
closely match their liabilities with guaranteed payments from the
U.S.
Treasury. Because Treasury STRIPS do not pay interest, they are
issued
and sold at a discount to face value. We
expect the Fund will be required to distribute income dividends to
shareholders,
but because Treasury STRIPS do not pay interest and are
purchased
at an “original issue discount,” the Fund does not receive cash
interest
payments on the STRIPS in which it invests. As a result, the Fund
may
need to liquidate assets, at potentially inopportune times, to satisfy its
income
dividend distribution requirements.
|
Type
of Bond (Maturity) |
After
a 1%
Increase |
After
a 1%
Decrease |
After
a 2%
Increase |
After
a 2%
Decrease |
Short-Term
(2.5 years)1
|
$977 |
$1,024 |
$954 |
$1,049 |
Intermediate-Term
(10 years)1
|
922 |
1,086 |
851 |
1,180 |
Long-Term
(20 years)1
|
874 |
1,150 |
769 |
1,328 |
Long-Term
Zero-Coupon (20 years) |
800 |
1,200 |
600 |
1,400 |
Plain
Talk About Bonds and Interest Rates |
As
a rule, when interest rates rise, bond prices fall. The opposite is also
true:
Bond
prices go up when interest rates fall. Why do bond prices and interest
rates
move in opposite directions? Let’s assume that you hold a bond
offering
a 4% yield. A year later, interest rates are on the rise and bonds of
comparable
quality and maturity are offered with a 5% yield. With
higher-yielding
bonds available, you would have trouble selling your 4% bond
for
the price you paid—you would probably have to lower your asking price.
On
the other hand, if interest rates were falling and 3% bonds were being
offered,
you should be able to sell your 4% bond for more than you
paid. |
Plain
Talk About Bond Maturities |
A
bond is issued with a specific maturity date—the date when the issuer must
pay
back the bond’s principal (face value). Bond maturities range from less
than
1 year to more than 30 years. Typically, the longer a bond’s maturity, the
more
price risk you, as a bond investor, will face as interest rates rise—but
also
the higher the potential yield you could receive. Longer-term bonds are
generally
more suitable for investors willing to take a greater risk of price
fluctuations
to get higher and more stable interest income. Shorter-term bond
investors
should be willing to accept lower yields and greater income
variability
in return for less fluctuation in the value of their investment. The
stated
maturity of a bond may differ from the effective maturity of a bond,
which
takes into consideration that an action such as a call or refunding may
cause
bonds to be repaid before their stated maturity
dates. |
Plain
Talk About Derivatives |
Derivatives
can take many forms. Some forms of derivatives—such as
exchange-traded
futures and options on securities, commodities, or
indexes—have
been trading on regulated exchanges for decades. These
types
of derivatives are standardized contracts that can easily be bought and
sold
and whose market values are determined and published daily. On the
other
hand, non-exchange-traded derivatives—such as certain swap
agreements
and foreign currency exchange forward contracts—tend to be
more
specialized or complex and may be more difficult to accurately
value. |
Plain
Talk About Vanguard’s Unique Corporate Structure |
Vanguard
is owned jointly by the funds it oversees and thus indirectly by the
shareholders
in those funds. Most other mutual funds are operated by
management
companies that are owned by third parties—either public or
private
stockholders—and not by the funds they
serve. |
Plain
Talk About Distributions |
As
a shareholder, you are entitled to your portion of a fund’s income from
interest
as well as capital gains from the fund’s sale of investments. Income
consists
of interest the fund earns from its money market and bond
investments.
Capital gains are realized whenever the fund sells securities for
higher
prices than it paid for them. These capital gains are either short-term
or
long-term, depending on whether the fund held the securities for one year
or
less or for more than one year.
|
Vanguard
Fund |
Inception
Date |
Vanguard
Fund
Number |
CUSIP
Number |
Vanguard
Extended Duration Treasury Index Fund | |||
ETF
Shares |
12/6/2007 |
930 |
921910709 |
For a
Share Outstanding
Throughout
Each Period |
Year Ended August
31, | ||||
2023 |
2022 |
2021 |
2020 |
2019 | |
Net
Asset Value, Beginning of Period |
$96.31 |
$140.69 |
$163.11 |
$146.43 |
$113.39 |
Investment
Operations |
|
|
|
|
|
Net
Investment Income1 |
3.033 |
2.769 |
2.795 |
3.146 |
3.347 |
Net
Realized and Unrealized Gain (Loss) on
Investments2 |
(18.048) |
(44.418) |
(17.061) |
18.113 |
32.972 |
Total from
Investment Operations |
(15.015) |
(41.649) |
(14.266) |
21.259 |
36.319 |
Distributions |
|
|
|
|
|
Dividends
from Net Investment Income |
(2.775) |
(2.731) |
(2.820) |
(3.329) |
(3.279) |
Distributions
from Realized Capital Gains |
— |
— |
(5.334) |
(1.250) |
— |
Total
Distributions |
(2.775) |
(2.731) |
(8.154) |
(4.579) |
(3.279) |
Net
Asset Value, End of Period |
$78.52 |
$96.31 |
$140.69 |
$163.11 |
$146.43 |
Total
Return |
-15.83% |
-30.00% |
-8.94% |
14.98% |
32.92% |
Ratios/Supplemental
Data |
|
|
|
|
|
Net
Assets, End of Period (Millions) |
$2,356 |
$1,312 |
$1,277 |
$1,810 |
$1,333 |
Ratio of
Total Expenses to Average Net Assets |
0.06%3 |
0.06%3 |
0.06% |
0.07% |
0.07% |
Ratio of
Net Investment Income to Average Net
Assets |
3.56% |
2.33% |
1.93% |
2.06% |
2.87% |
Portfolio
Turnover Rate4 |
24% |
15% |
23% |
17% |
20% |
|
|
|
|
|
|
|
|
1 |
Calculated
based on average shares outstanding. |
2 |
Includes
increases from purchase fees of $.03, $.03, $.07, $.07, and
$.04. |
3 |
The ratio of
expenses to average net assets for the period net of reduction from
custody fee
offset
arrangements was 0.06%. |
4 |
Excludes the
value of portfolio securities received or delivered as a result of in-kind
purchases
or
redemptions of the fund’s capital shares, including ETF Creation
Units. |