EDGAR HTML
Vanguard Bond Funds
Prospectus
May 28, 2021
Investor Shares & Admiral™ Shares
Vanguard Short-Term Treasury Fund Investor Shares (VFISX)
Vanguard Short-Term Treasury Fund Admiral Shares (VFIRX)
Vanguard Short-Term Federal Fund Investor Shares (VSGBX)
Vanguard Short-Term Federal Fund Admiral Shares (VSGDX)
Vanguard Short-Term Investment-Grade Fund Investor Shares (VFSTX)
Vanguard Short-Term Investment-Grade Fund Admiral Shares (VFSUX)
Vanguard Intermediate-Term Treasury Fund Investor Shares (VFITX)
Vanguard Intermediate-Term Treasury Fund Admiral Shares (VFIUX)
Vanguard Intermediate-Term Investment-Grade Fund Investor Shares (VFICX)
Vanguard Intermediate-Term Investment-Grade Fund Admiral Shares (VFIDX)
Vanguard GNMA Fund Investor Shares (VFIIX)
Vanguard GNMA Fund Admiral Shares (VFIJX)
Vanguard Long-Term Treasury Fund Investor Shares (VUSTX)
Vanguard Long-Term Treasury Fund Admiral Shares (VUSUX)
Vanguard Long-Term Investment-Grade Fund Investor Shares (VWESX)
Vanguard Long-Term Investment-Grade Fund Admiral Shares (VWETX)
 This prospectus contains financial data for the Funds through the fiscal year ended January 31, 2021.
The Securities and Exchange Commission (SEC) has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is
a criminal offense.
 
 

Contents

Vanguard Short-Term Treasury Fund
Investment Objective
The Fund seeks to provide current income while maintaining limited price volatility.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy, hold, and sell Investor Shares or Admiral Shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
Shareholder Fees
(Fees paid directly from your investment)
 
Investor Shares
Admiral Shares
Sales Charge (Load) Imposed on Purchases
None
None
Purchase Fee
None
None
Sales Charge (Load) Imposed on Reinvested Dividends
None
None
Redemption Fee
None
None
Account Service Fee Per Year
(for certain fund account balances below $10,000)
$20
$20
Annual Fund Operating Expenses
(Expenses that you pay each year as a percentage of the value of your investment)
 
Investor Shares
Admiral Shares
Management Fees
0.18%
0.09%
12b-1 Distribution Fee
None
None
Other Expenses
0.02%
0.01%
Total Annual Fund Operating Expenses
0.20%
0.10%
1

Examples
The following examples are intended to help you compare the cost of investing in the Fund's Investor Shares or Admiral Shares with the cost of investing in other mutual funds. They illustrate the hypothetical expenses that you would incur over various periods if you were to invest $10,000 in the Fund's shares. These examples assume that the shares provide a return of 5% each year and that total annual fund operating expenses remain as stated in the preceding table. You would incur these hypothetical expenses whether or not you were to redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
 
1 Year
3 Years
5 Years
10 Years
Investor Shares
$20
$64
$113
$255
Admiral Shares
$10
$32
$56
$128
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in more taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the previous expense examples, reduce the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 357% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests at least 80% of its assets in U.S. Treasury securities, which include bills, bonds, and notes issued by the U.S. Treasury. The Fund is expected to maintain a dollar-weighted average maturity of 1 to 4 years.
Principal Risks
The Fund is designed for investors with a low tolerance for risk, but you could still lose money by investing in it. The Fund is subject to the following risks, which could affect the Fund's performance, and the level of risk may vary based on market conditions:
•  Income risk, which is the chance that the Fund’s income will decline because of falling interest rates. Income risk is generally high for short-term bond funds, so investors should expect the Fund’s monthly income to fluctuate.
•  Interest rate risk, which is the chance that bond prices overall will decline because of rising interest rates. Although inflation-indexed bonds seek to provide inflation protection, their prices may decline when interest rates rise and vice
2

versa. Interest rate risk should be low for the Fund because it invests primarily in short-term bonds, whose prices are less sensitive to interest rate changes than are the prices of longer-term bonds.
•  Manager risk, which is the chance that poor security selection will cause the Fund to underperform relevant benchmarks or other funds with a similar investment objective.
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Annual Total Returns
The following bar chart and table are intended to help you understand the risks of investing in the Fund. The bar chart shows how the performance of the Fund's Investor Shares has varied from one calendar year to another over the periods shown. The table shows how the average annual total returns of the share classes presented compare with those of a relevant market index and another comparative index, which have investment characteristics similar to those of the Fund. Keep in mind that the Fund's past performance (before and after taxes) does not indicate how the Fund will perform in the future. Updated performance information is available on our website at vanguard.com/performance or by calling Vanguard toll-free at 800-662-7447.
Annual Total Returns — Vanguard Short-Term Treasury Fund Investor Shares1

1 The year-to-date return as of the most recent calendar quarter, which ended on March 31, 2021, was -0.18%.
During the periods shown in the bar chart, the highest and lowest returns for a calendar quarter were:
 
Total Return
Quarter
Highest
%2.67
March 31, 2020
Lowest
-0.70%
December 31, 2016
3

Average Annual Total Returns for Periods Ended December 31, 2020
 
1 Year
5 Years
10 Years
Vanguard Short-Term Treasury Fund Investor Shares
 
 
 
Return Before Taxes
%3.96
%2.05
%1.42
Return After Taxes on Distributions
3.07
1.30
0.89
Return After Taxes on Distributions and Sale of Fund Shares
2.38
1.24
0.87
Vanguard Short-Term Treasury Fund Admiral Shares
 
 
 
Return Before Taxes
%4.06
%2.15
%1.52
Comparative Indexes
(reflect no deduction for fees, expenses, or taxes)
 
 
 
Bloomberg Barclays U.S. 1-5 Year Treasury Bond Index
%4.38
%2.35
%1.79
Bloomberg Barclays U.S. Aggregate Bond Index
7.51
4.44
3.84
Actual after-tax returns depend on your tax situation and may differ from those shown in the preceding table. When after-tax returns are calculated, it is assumed that the shareholder was in the highest individual federal marginal income tax bracket at the time of each distribution of income or capital gains or upon redemption. State and local income taxes are not reflected in the calculations. Please note that after-tax returns are shown only for the Investor Shares and may differ for each share class. After-tax returns are not relevant for a shareholder who holds fund shares in a tax-deferred account, such as an individual retirement account or a 401(k) plan. Also, figures captioned Return After Taxes on Distributions and Sale of Fund Shares may be higher than other figures for the same period if a capital loss occurs upon redemption and results in an assumed tax deduction for the shareholder.
Investment Advisor
The Vanguard Group, Inc. (Vanguard)
Portfolio Manager
Gemma Wright-Casparius, Principal of Vanguard. She has managed the Fund since 2015.
Purchase and Sale of Fund Shares
You may purchase or redeem shares online through our website (vanguard.com), by mail (The Vanguard Group, P.O. Box 982901, El Paso, TX 79998-2901), or by telephone (800-662-2739). The minimum investment amount required to open and maintain a Fund account for Investor Shares or Admiral Shares is $3,000 or $50,000, respectively. The minimum investment amount required to add to an existing Fund account is generally $1. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on
4

special eligibility rules that may apply to them regarding Admiral Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility. If you are investing through an employer-sponsored retirement or savings plan, your plan administrator or your benefits office can provide you with detailed information on how you can invest through your plan.
Tax Information
The Fund’s distributions may be taxable as ordinary income or capital gain. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply.
Payments to Financial Intermediaries
The Fund and its investment advisor do not pay financial intermediaries for sales of Fund shares.
5

Vanguard Short-Term Federal Fund
Investment Objective
The Fund seeks to provide current income while maintaining limited price volatility.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy, hold, and sell Investor Shares or Admiral Shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
Shareholder Fees
(Fees paid directly from your investment)
 
Investor Shares
Admiral Shares
Sales Charge (Load) Imposed on Purchases
None
None
Purchase Fee
None
None
Sales Charge (Load) Imposed on Reinvested Dividends
None
None
Redemption Fee
None
None
Account Service Fee Per Year
(for certain fund account balances below $10,000)
$20
$20
Annual Fund Operating Expenses
(Expenses that you pay each year as a percentage of the value of your investment)
 
Investor Shares
Admiral Shares
Management Fees
0.18%
0.09%
12b-1 Distribution Fee
None
None
Other Expenses
0.02%
0.01%
Total Annual Fund Operating Expenses
0.20%
0.10%
6

Examples
The following examples are intended to help you compare the cost of investing in the Fund's Investor Shares or Admiral Shares with the cost of investing in other mutual funds. They illustrate the hypothetical expenses that you would incur over various periods if you were to invest $10,000 in the Fund's shares. These examples assume that the shares provide a return of 5% each year and that total annual fund operating expenses remain as stated in the preceding table. You would incur these hypothetical expenses whether or not you were to redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
 
1 Year
3 Years
5 Years
10 Years
Investor Shares
$20
$64
$113
$255
Admiral Shares
$10
$32
$56
$128
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in more taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the previous expense examples, reduce the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 663% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests at least 80% of its assets in short-term bonds issued or guaranteed by the U.S. government and its agencies and instrumentalities, many of which are not backed by the full faith and credit of the U.S. government. The Fund is expected to maintain a dollar-weighted average maturity of 1 to 4 years.
Principal Risks
The Fund is designed for investors with a low tolerance for risk, but you could still lose money by investing in it. The Fund is subject to the following risks, which could affect the Fund's performance, and the level of risk may vary based on market conditions:
•  Income risk, which is the chance that the Fund’s income will decline because of falling interest rates. Income risk is generally high for short-term bond funds, so investors should expect the Fund’s monthly income to fluctuate.
•  Interest rate risk, which is the chance that bond prices overall will decline because of rising interest rates. Interest rate risk should be low for the Fund
7

because it invests primarily in short-term bonds, whose prices are less sensitive to interest rate changes than are the prices of longer-term bonds.
•  Manager risk, which is the chance that poor security selection will cause the Fund to underperform relevant benchmarks or other funds with a similar investment objective.
•  Derivatives risk. The Fund may invest in derivatives, which may involve risks different from, and possibly greater than, those of investments directly in the underlying securities or assets.
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Annual Total Returns
The following bar chart and table are intended to help you understand the risks of investing in the Fund. The bar chart shows how the performance of the Fund's Investor Shares has varied from one calendar year to another over the periods shown. The table shows how the average annual total returns of the share classes presented compare with those of a relevant market index and another comparative index, which have investment characteristics similar to those of the Fund. Keep in mind that the Fund's past performance (before and after taxes) does not indicate how the Fund will perform in the future. Updated performance information is available on our website at vanguard.com/performance or by calling Vanguard toll-free at 800-662-7447.
Annual Total Returns — Vanguard Short-Term Federal Fund Investor Shares1

1 The year-to-date return as of the most recent calendar quarter, which ended on March 31, 2021, was -0.20%.
8

During the periods shown in the bar chart, the highest and lowest returns for a calendar quarter were:
 
Total Return
Quarter
Highest
%2.48
March 31, 2020
Lowest
-0.90%
June 30, 2013
Average Annual Total Returns for Periods Ended December 31, 2020
 
1 Year
5 Years
10 Years
Vanguard Short-Term Federal Fund Investor Shares
 
 
 
Return Before Taxes
%4.35
%2.30
%1.72
Return After Taxes on Distributions
3.63
1.57
1.13
Return After Taxes on Distributions and Sale of Fund Shares
2.57
1.44
1.08
Vanguard Short-Term Federal Fund Admiral Shares
 
 
 
Return Before Taxes
%4.45
%2.40
%1.82
Comparative Indexes
(reflect no deduction for fees, expenses, or taxes)
 
 
 
Bloomberg Barclays U.S. 1-5 Year Government Bond Index
%4.34
%2.35
%1.79
Bloomberg Barclays U.S. Aggregate Bond Index
7.51
4.44
3.84
Actual after-tax returns depend on your tax situation and may differ from those shown in the preceding table. When after-tax returns are calculated, it is assumed that the shareholder was in the highest individual federal marginal income tax bracket at the time of each distribution of income or capital gains or upon redemption. State and local income taxes are not reflected in the calculations. Please note that after-tax returns are shown only for the Investor Shares and may differ for each share class. After-tax returns are not relevant for a shareholder who holds fund shares in a tax-deferred account, such as an individual retirement account or a 401(k) plan. Also, figures captioned Return After Taxes on Distributions and Sale of Fund Shares may be higher than other figures for the same period if a capital loss occurs upon redemption and results in an assumed tax deduction for the shareholder.
Investment Advisor
The Vanguard Group, Inc. (Vanguard)
Portfolio Manager
Brian W. Quigley, CFA, Portfolio Manager at Vanguard. He has managed the Fund since 2015.
9

Purchase and Sale of Fund Shares
You may purchase or redeem shares online through our website (vanguard.com), by mail (The Vanguard Group, P.O. Box 982901, El Paso, TX 79998-2901), or by telephone (800-662-2739). The minimum investment amount required to open and maintain a Fund account for Investor Shares or Admiral Shares is $3,000 or $50,000, respectively. The minimum investment amount required to add to an existing Fund account is generally $1. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special eligibility rules that may apply to them regarding Admiral Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility. If you are investing through an employer-sponsored retirement or savings plan, your plan administrator or your benefits office can provide you with detailed information on how you can invest through your plan.
Tax Information
The Fund’s distributions may be taxable as ordinary income or capital gain. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply.
Payments to Financial Intermediaries
The Fund and its investment advisor do not pay financial intermediaries for sales of Fund shares.
10

Vanguard Short-Term Investment-Grade Fund
Investment Objective
The Fund seeks to provide current income while maintaining limited price volatility.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy, hold, and sell Investor Shares or Admiral Shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
Shareholder Fees
(Fees paid directly from your investment)
 
Investor Shares
Admiral Shares
Sales Charge (Load) Imposed on Purchases
None
None
Purchase Fee
None
None
Sales Charge (Load) Imposed on Reinvested Dividends
None
None
Redemption Fee
None
None
Account Service Fee Per Year
(for certain fund account balances below $10,000)
$20
$20
Annual Fund Operating Expenses
(Expenses that you pay each year as a percentage of the value of your investment)
 
Investor Shares
Admiral Shares
Management Fees
0.19%
0.09%
12b-1 Distribution Fee
None
None
Other Expenses
0.01%
0.01%
Total Annual Fund Operating Expenses
0.20%
0.10%
11

Examples
The following examples are intended to help you compare the cost of investing in the Fund's Investor Shares or Admiral Shares with the cost of investing in other mutual funds. They illustrate the hypothetical expenses that you would incur over various periods if you were to invest $10,000 in the Fund's shares. These examples assume that the shares provide a return of 5% each year and that total annual fund operating expenses remain as stated in the preceding table. You would incur these hypothetical expenses whether or not you were to redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
 
1 Year
3 Years
5 Years
10 Years
Investor Shares
$20
$64
$113
$255
Admiral Shares
$10
$32
$56
$128
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in more taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the previous expense examples, reduce the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 89% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests in a variety of high-quality and medium-quality fixed income securities, at least 80% of which will be short- and intermediate-term investment-grade securities. High-quality fixed income securities are those rated the equivalent of A3 or better by Moody‘s Investors Service, Inc. (Moody’s) or another independent rating agency or, if unrated, are determined to be of comparable quality by the Fund’s advisor. Medium-quality fixed income securities are those rated the equivalent of Baa1, Baa2, or Baa3 by Moody‘s or another independent rating agency or, if unrated, are determined to be of comparable quality by the Fund’s advisor. Investment-grade fixed income securities are those rated the equivalent of Baa3 and above by Moody’s or another independent rating agency or, if unrated, are determined to be of comparable quality by the Fund’s advisor. The Fund is expected to maintain a dollar-weighted average maturity of 1 to 4 years.
12

Principal Risks
The Fund is designed for investors with a low tolerance for risk, but you could still lose money by investing in it. The Fund is subject to the following risks, which could affect the Fund's performance, and the level of risk may vary based on market conditions:
•  Income risk, which is the chance that the Fund’s income will decline because of falling interest rates. Income risk is generally high for short-term bond funds, so investors should expect the Fund’s monthly income to fluctuate.
•  Interest rate risk, which is the chance that bond prices overall will decline because of rising interest rates. Interest rate risk should be low for the Fund because it invests primarily in short-term bonds, whose prices are less sensitive to interest rate changes than are the prices of longer-term bonds.
•  Credit risk, which is the chance that a bond issuer will fail to pay interest or principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline. Credit risk should be low to moderate for the Fund because it invests primarily in bonds that are considered high-quality or medium-quality.
•  Call risk, which is the chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupon rates or interest rates before their maturity dates. The Fund would then lose any price appreciation above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the Fund’s income. Such redemptions and subsequent reinvestments would also increase the Fund’s portfolio turnover rate.
•  Extension risk, which is the chance that during periods of rising interest rates, certain debt securities will be paid off substantially more slowly than originally anticipated, and the value of those securities may fall.
•  Liquidity risk, which is the chance that the Fund may not be able to sell a security in a timely manner at a desired price.
•  Manager risk, which is the chance that poor security selection will cause the Fund to underperform relevant benchmarks or other funds with a similar investment objective. In addition, significant investment in the financial sector subjects the Fund to proportionately higher exposure to the risks of this sector.
•  Derivatives risk. The Fund may invest in derivatives, which may involve risks different from, and possibly greater than, those of investments directly in the underlying securities or assets.
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
13

Annual Total Returns
The following bar chart and table are intended to help you understand the risks of investing in the Fund. The bar chart shows how the performance of the Fund's Investor Shares has varied from one calendar year to another over the periods shown. The table shows how the average annual total returns of the share classes presented compare with those of relevant market indexes, which have investment characteristics similar to those of the Fund. Keep in mind that the Fund's past performance (before and after taxes) does not indicate how the Fund will perform in the future. Updated performance information is available on our website at vanguard.com/performance or by calling Vanguard toll-free at 800-662-7447.
Annual Total Returns — Vanguard Short-Term Investment-Grade Fund Investor Shares1

1 The year-to-date return as of the most recent calendar quarter, which ended on March 31, 2021, was -0.49%.
During the periods shown in the bar chart, the highest and lowest returns for a calendar quarter were:
 
Total Return
Quarter
Highest
%4.82
June 30, 2020
Lowest
%1.53-
March 31, 2020
14

Average Annual Total Returns for Periods Ended December 31, 2020
 
1 Year
5 Years
10 Years
Vanguard Short-Term Investment-Grade Fund
Investor Shares
 
 
 
Return Before Taxes
%5.14
%3.28
2.66%
Return After Taxes on Distributions
4.18
2.27
1.69
Return After Taxes on Distributions and Sale of Fund Shares
3.03
2.07
1.63
Vanguard Short-Term Investment-Grade Fund
Admiral Shares
 
 
 
Return Before Taxes
%5.25
%3.38
2.76%
Comparative Indexes
(reflect no deduction for fees, expenses, or taxes)
 
 
 
Bloomberg Barclays U.S. 1-5 Year Credit Bond Index
%5.19
%3.54
%3.04
Bloomberg Barclays U.S. Aggregate Bond Index
7.51
4.44
3.84
Actual after-tax returns depend on your tax situation and may differ from those shown in the preceding table. When after-tax returns are calculated, it is assumed that the shareholder was in the highest individual federal marginal income tax bracket at the time of each distribution of income or capital gains or upon redemption. State and local income taxes are not reflected in the calculations. Please note that after-tax returns are shown only for the Investor Shares and may differ for each share class. After-tax returns are not relevant for a shareholder who holds fund shares in a tax-deferred account, such as an individual retirement account or a 401(k) plan. Also, figures captioned Return After Taxes on Distributions and Sale of Fund Shares may be higher than other figures for the same period if a capital loss occurs upon redemption and results in an assumed tax deduction for the shareholder.
Investment Advisor
The Vanguard Group, Inc. (Vanguard)
Portfolio Managers
Samuel C. Martinez, CFA, Portfolio Manager at Vanguard. He has co-managed the Fund since 2018.
Arvind Narayanan, CFA, Portfolio Manager at Vanguard. He has co-managed the Fund since 2019.
Daniel Shaykevich, Principal of Vanguard. He has co-managed the Fund since 2018.
15

Purchase and Sale of Fund Shares
You may purchase or redeem shares online through our website (vanguard.com), by mail (The Vanguard Group, P.O. Box 982901, El Paso, TX 79998-2901), or by telephone (800-662-2739). The minimum investment amount required to open and maintain a Fund account for Investor Shares or Admiral Shares is $3,000 or $50,000, respectively. The minimum investment amount required to add to an existing Fund account is generally $1. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special eligibility rules that may apply to them regarding Admiral Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility. If you are investing through an employer-sponsored retirement or savings plan, your plan administrator or your benefits office can provide you with detailed information on how you can invest through your plan.
Tax Information
The Fund’s distributions may be taxable as ordinary income or capital gain. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply.
Payments to Financial Intermediaries
The Fund and its investment advisor do not pay financial intermediaries for sales of Fund shares.
16

Vanguard Intermediate-Term Treasury Fund
Investment Objective
The Fund seeks to provide a moderate and sustainable level of current income.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy, hold, and sell Investor Shares or Admiral Shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
Shareholder Fees
(Fees paid directly from your investment)
 
Investor Shares
Admiral Shares
Sales Charge (Load) Imposed on Purchases
None
None
Purchase Fee
None
None
Sales Charge (Load) Imposed on Reinvested Dividends
None
None
Redemption Fee
None
None
Account Service Fee Per Year
(for certain fund account balances below $10,000)
$20
$20
Annual Fund Operating Expenses
(Expenses that you pay each year as a percentage of the value of your investment)
 
Investor Shares
Admiral Shares
Management Fees
0.18%
0.09%
12b-1 Distribution Fee
None
None
Other Expenses
0.02%
0.01%
Total Annual Fund Operating Expenses
0.20%
0.10%
17

Examples
The following examples are intended to help you compare the cost of investing in the Fund's Investor Shares or Admiral Shares with the cost of investing in other mutual funds. They illustrate the hypothetical expenses that you would incur over various periods if you were to invest $10,000 in the Fund's shares. These examples assume that the shares provide a return of 5% each year and that total annual fund operating expenses remain as stated in the preceding table. You would incur these hypothetical expenses whether or not you were to redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
 
1 Year
3 Years
5 Years
10 Years
Investor Shares
$20
$64
$113
$255
Admiral Shares
$10
$32
$56
$128
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in more taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the previous expense examples, reduce the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 309% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests at least 80% of its assets in U.S. Treasury securities, which include bills, bonds, and notes issued by the U.S. Treasury. The Fund is expected to maintain a dollar-weighted average maturity of 5 to 10 years.
Principal Risks
An investment in the Fund could lose money over short or long periods of time. You should expect the Fund's share price and total return to fluctuate within a wide range. The Fund is subject to the following risks, which could affect the Fund's performance, and the level of risk may vary based on market conditions:
•  Income risk, which is the chance that the Fund’s income will decline because of falling interest rates. Income risk is generally moderate for intermediate-term bond funds, so investors should expect the Fund’s monthly income to fluctuate accordingly.
•  Interest rate risk, which is the chance that bond prices overall will decline because of rising interest rates. Interest rate risk should be moderate for the
18

Fund because it invests primarily in short- and intermediate-term bonds, whose prices are less sensitive to interest rate changes than are the prices of long-term bonds.
•  Manager risk, which is the chance that poor security selection will cause the Fund to underperform relevant benchmarks or other funds with a similar investment objective.
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Annual Total Returns
The following bar chart and table are intended to help you understand the risks of investing in the Fund. The bar chart shows how the performance of the Fund's Investor Shares has varied from one calendar year to another over the periods shown. The table shows how the average annual total returns of the share classes presented compare with those of a relevant market index and another comparative index, which have investment characteristics similar to those of the Fund. Keep in mind that the Fund's past performance (before and after taxes) does not indicate how the Fund will perform in the future. Updated performance information is available on our website at vanguard.com/performance or by calling Vanguard toll-free at 800-662-7447.
Annual Total Returns — Vanguard Intermediate-Term Treasury Fund Investor Shares1

1 The year-to-date return as of the most recent calendar quarter, which ended on March 31, 2021, was -2.64%.
During the periods shown in the bar chart, the highest and lowest returns for a calendar quarter were:
 
Total Return
Quarter
Highest
%6.73
March 31, 2020
Lowest
-3.42%
December 31, 2016
19

Average Annual Total Returns for Periods Ended December 31, 2020
 
1 Year
5 Years
10 Years
Vanguard Intermediate-Term Treasury Fund
Investor Shares
 
 
 
Return Before Taxes
%8.21
%3.61
%3.28
Return After Taxes on Distributions
6.30
2.48
2.22
Return After Taxes on Distributions and Sale of Fund Shares
5.01
2.30
2.15
Vanguard Intermediate-Term Treasury Fund
Admiral Shares
 
 
 
Return Before Taxes
%8.32
%3.71
%3.39
Comparative Indexes
(reflect no deduction for fees, expenses, or taxes)
 
 
 
Bloomberg Barclays U.S. 5-10 Year Treasury Bond Index
%9.09
%4.17
%4.05
Bloomberg Barclays U.S. Aggregate Bond Index
7.51
4.44
3.84
Actual after-tax returns depend on your tax situation and may differ from those shown in the preceding table. When after-tax returns are calculated, it is assumed that the shareholder was in the highest individual federal marginal income tax bracket at the time of each distribution of income or capital gains or upon redemption. State and local income taxes are not reflected in the calculations. Please note that after-tax returns are shown only for the Investor Shares and may differ for each share class. After-tax returns are not relevant for a shareholder who holds fund shares in a tax-deferred account, such as an individual retirement account or a 401(k) plan. Also, figures captioned Return After Taxes on Distributions and Sale of Fund Shares may be higher than other figures for the same period if a capital loss occurs upon redemption and results in an assumed tax deduction for the shareholder.
Investment Advisor
The Vanguard Group, Inc. (Vanguard)
Portfolio Manager
Gemma Wright-Casparius, Principal of Vanguard. She has managed the Fund since 2015.
Purchase and Sale of Fund Shares
You may purchase or redeem shares online through our website (vanguard.com), by mail (The Vanguard Group, P.O. Box 982901, El Paso, TX 79998-2901), or by telephone (800-662-2739). The minimum investment amount required to open and maintain a Fund account for Investor Shares or Admiral Shares is $3,000 or $50,000, respectively. The minimum investment amount required to add to an
20

existing Fund account is generally $1. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special eligibility rules that may apply to them regarding Admiral Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility. If you are investing through an employer-sponsored retirement or savings plan, your plan administrator or your benefits office can provide you with detailed information on how you can invest through your plan.
Tax Information
The Fund’s distributions may be taxable as ordinary income or capital gain. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply.
Payments to Financial Intermediaries
The Fund and its investment advisor do not pay financial intermediaries for sales of Fund shares.
21

Vanguard Intermediate-Term Investment-Grade Fund
Investment Objective
The Fund seeks to provide a moderate and sustainable level of current income.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy, hold, and sell Investor Shares or Admiral Shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
Shareholder Fees
(Fees paid directly from your investment)
 
Investor Shares
Admiral Shares
Sales Charge (Load) Imposed on Purchases
None
None
Purchase Fee
None
None
Sales Charge (Load) Imposed on Reinvested Dividends
None
None
Redemption Fee
None
None
Account Service Fee Per Year
(for certain fund account balances below $10,000)
$20
$20
Annual Fund Operating Expenses
(Expenses that you pay each year as a percentage of the value of your investment)
 
Investor Shares
Admiral Shares
Management Fees
%0.18
0.09%
12b-1 Distribution Fee
None
None
Other Expenses
%0.02
0.01%
Total Annual Fund Operating Expenses
0.20%
0.10%
22

Examples
The following examples are intended to help you compare the cost of investing in the Fund's Investor Shares or Admiral Shares with the cost of investing in other mutual funds. They illustrate the hypothetical expenses that you would incur over various periods if you were to invest $10,000 in the Fund's shares. These examples assume that the shares provide a return of 5% each year and that total annual fund operating expenses remain as stated in the preceding table. You would incur these hypothetical expenses whether or not you were to redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
 
1 Year
3 Years
5 Years
10 Years
Investor Shares
$20
$64
$113
$255
Admiral Shares
$10
$32
$56
$128
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in more taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the previous expense examples, reduce the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 113% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests in a variety of high-quality and medium-quality fixed income securities, at least 80% of which will be short- and intermediate-term investment-grade securities. High-quality fixed income securities are those rated the equivalent of A3 or better by Moody‘s Investors Service, Inc. (Moody’s) or another independent rating agency or, if unrated, are determined to be of comparable quality by the Fund’s advisor. Medium-quality fixed income securities are those rated the equivalent of Baa1, Baa2, or Baa3 by Moody‘s or another independent rating agency or, if unrated, are determined to be of comparable quality by the Fund’s advisor. Investment-grade fixed income securities are those rated the equivalent of Baa3 and above by Moody‘s or another independent rating agency or, if unrated, are determined to be of comparable quality by the Fund’s advisor. The Fund is expected to maintain a dollar-weighted average maturity of 5 to 10 years.
23

Principal Risks
An investment in the Fund could lose money over short or long periods of time. You should expect the Fund's share price and total return to fluctuate within a wide range. The Fund is subject to the following risks, which could affect the Fund's performance, and the level of risk may vary based on market conditions:
•  Income risk, which is the chance that the Fund’s income will decline because of falling interest rates. Income risk is generally moderate for intermediate-term bond funds, so investors should expect the Fund’s monthly income to fluctuate accordingly.
•  Interest rate risk, which is the chance that bond prices overall will decline because of rising interest rates. Interest rate risk should be moderate for the Fund because it invests primarily in short- and intermediate-term bonds, whose prices are less sensitive to interest rate changes than are the prices of long-term bonds.
•  Liquidity risk, which is the chance that the Fund may not be able to sell a security in a timely manner at a desired price.
•  Call risk, which is the chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupon rates or interest rates before their maturity dates. The Fund would then lose any price appreciation above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the Fund’s income. Such redemptions and subsequent reinvestments would also increase the Fund’s portfolio turnover rate. Call risk should be moderate for the Fund.
•  Extension risk, which is the chance that during periods of rising interest rates, certain debt securities will be paid off substantially more slowly than originally anticipated, and the value of those securities may fall. Extension risk is generally moderate for intermediate-term bond funds.
•  Credit risk, which is the chance that a bond issuer will fail to pay interest or principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline. Credit risk should be low to moderate for the Fund because it invests primarily in bonds that are considered high-quality or medium-quality.
•  Manager risk, which is the chance that poor security selection will cause the Fund to underperform relevant benchmarks or other funds with a similar investment objective. In addition, significant investment in the financial sector subjects the Fund to proportionately higher exposure to the risks of this sector.
24

•  Derivatives risk. The Fund may invest in derivatives, which may involve risks different from, and possibly greater than, those of investments directly in the underlying securities or assets.
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Annual Total Returns
The following bar chart and table are intended to help you understand the risks of investing in the Fund. The bar chart shows how the performance of the Fund's Investor Shares has varied from one calendar year to another over the periods shown. The table shows how the average annual total returns of the share classes presented compare with those of a relevant market index and another comparative index, which have investment characteristics similar to those of the Fund. Keep in mind that the Fund's past performance (before and after taxes) does not indicate how the Fund will perform in the future. Updated performance information is available on our website at vanguard.com/performance or by calling Vanguard toll-free at 800-662-7447.
Annual Total Returns — Vanguard Intermediate-Term Investment-Grade Fund Investor Shares1

1 The year-to-date return as of the most recent calendar quarter, which ended on March 31, 2021, was -3.54%.
During the periods shown in the bar chart, the highest and lowest returns for a calendar quarter were:
 
Total Return
Quarter
Highest
%7.28
June 30, 2020
Lowest
-3.28%
June 30, 2013
25

Average Annual Total Returns for Periods Ended December 31, 2020
 
1 Year
5 Years
10 Years
Vanguard Intermediate-Term Investment-Grade Fund
Investor Shares
 
 
 
Return Before Taxes
%10.31
%5.54
%4.99
Return After Taxes on Distributions
8.05
3.98
3.35
Return After Taxes on Distributions and Sale of Fund Shares
6.34
3.60
3.22
Vanguard Intermediate-Term Investment-Grade Fund
Admiral Shares
 
 
 
Return Before Taxes
%10.42
%5.64
%5.10
Comparative Indexes
(reflect no deduction for fees, expenses, or taxes)
 
 
 
Bloomberg Barclays U.S. 5-10 Year Credit Bond Index
%9.49
%6.40
%5.69
Bloomberg Barclays U.S. Aggregate Bond Index
7.51
4.44
3.84
Actual after-tax returns depend on your tax situation and may differ from those shown in the preceding table. When after-tax returns are calculated, it is assumed that the shareholder was in the highest individual federal marginal income tax bracket at the time of each distribution of income or capital gains or upon redemption. State and local income taxes are not reflected in the calculations. Please note that after-tax returns are shown only for the Investor Shares and may differ for each share class. After-tax returns are not relevant for a shareholder who holds fund shares in a tax-deferred account, such as an individual retirement account or a 401(k) plan. Also, figures captioned Return After Taxes on Distributions and Sale of Fund Shares may be higher than other figures for the same period if a capital loss occurs upon redemption and results in an assumed tax deduction for the shareholder.
Investment Advisor
The Vanguard Group, Inc. (Vanguard)
Portfolio Managers
Samuel C. Martinez, CFA, Portfolio Manager at Vanguard. He has co-managed the Fund since 2018.
Arvind Narayanan, CFA, Portfolio Manager at Vanguard. He has co-managed the Fund since 2019.
Daniel Shaykevich, Principal of Vanguard. He has co-managed the Fund since 2018.
26

Purchase and Sale of Fund Shares
You may purchase or redeem shares online through our website (vanguard.com), by mail (The Vanguard Group, P.O. Box 982901, El Paso, TX 79998-2901), or by telephone (800-662-2739). The minimum investment amount required to open and maintain a Fund account for Investor Shares or Admiral Shares is $3,000 or $50,000, respectively. The minimum investment amount required to add to an existing Fund account is generally $1. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special eligibility rules that may apply to them regarding Admiral Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility. If you are investing through an employer-sponsored retirement or savings plan, your plan administrator or your benefits office can provide you with detailed information on how you can invest through your plan.
Tax Information
The Fund’s distributions may be taxable as ordinary income or capital gain. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply.
Payments to Financial Intermediaries
The Fund and its investment advisor do not pay financial intermediaries for sales of Fund shares.
27

Vanguard GNMA Fund
Investment Objective
The Fund seeks to provide a moderate level of current income.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy, hold, and sell Investor Shares or Admiral Shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
Shareholder Fees
(Fees paid directly from your investment)
 
Investor Shares
Admiral Shares
Sales Charge (Load) Imposed on Purchases
None
None
Purchase Fee
None
None
Sales Charge (Load) Imposed on Reinvested Dividends
None
None
Redemption Fee
None
None
Account Service Fee Per Year
(for certain fund account balances below $10,000)
$20
$20
Annual Fund Operating Expenses
(Expenses that you pay each year as a percentage of the value of your investment)
 
Investor Shares
Admiral Shares
Management Fees
0.20%
0.10%
12b-1 Distribution Fee
None
None
Other Expenses
0.01%
0.01%
Total Annual Fund Operating Expenses
0.21%
0.11%
28

Examples
The following examples are intended to help you compare the cost of investing in the Fund's Investor Shares or Admiral Shares with the cost of investing in other mutual funds. They illustrate the hypothetical expenses that you would incur over various periods if you were to invest $10,000 in the Fund's shares. These examples assume that the shares provide a return of 5% each year and that total annual fund operating expenses remain as stated in the preceding table. You would incur these hypothetical expenses whether or not you were to redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
 
1 Year
3 Years
5 Years
10 Years
Investor Shares
$22
$68
$118
$268
Admiral Shares
$11
$35
$62
$141
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in more taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the previous expense examples, reduce the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 638% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests at least 80% of its assets in Government National Mortgage Association (GNMA) pass-through certificates, which are fixed income securities representing part ownership in a pool of mortgage loans supported by the full faith and credit of the U.S. government. The balance of the Fund’s assets may be invested in other types of securities, such as U.S. Treasury or other U.S. government agency securities, including pass-through certificates, as well as in repurchase agreements collateralized by such securities. Securities issued by most U.S. government agencies, other than the U.S. Treasury and GNMA, are neither guaranteed by the U.S. Treasury nor supported by the full faith and credit of the U.S. government. The Fund’s dollar-weighted average maturity depends on homeowner prepayments of the underlying mortgages. Although the Fund does not observe specific maturity guidelines, its dollar-weighted average maturity will normally fall within an intermediate-term range (3 to 10 years).
29

Principal Risks
An investment in the Fund could lose money over short or long periods of time. You should expect the Fund's share price and total return to fluctuate within a wide range. The Fund is subject to the following risks, which could affect the Fund's performance, and the level of risk may vary based on market conditions:
•  Prepayment risk, which is the chance that during periods of falling interest rates, homeowners will refinance their mortgages before their maturity dates, resulting in prepayment of mortgage-backed securities held by the Fund. The Fund would then lose any price appreciation above the mortgage’s principal and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the Fund’s income. Such prepayments and subsequent reinvestments would also increase the Fund’s portfolio turnover rate. Prepayment risk is high for the Fund.
•  Extension risk, which is the chance that during periods of rising interest rates, homeowners will repay their mortgages at slower rates. This will lengthen the duration or average life of mortgage-backed securities held by the Fund and delay the Fund’s ability to reinvest proceeds at higher interest rates. Extension risk is high for the Fund.
•  Income risk, which is the chance that the Fund’s income will decline because of falling interest rates. Income risk is generally moderate for intermediate-term bond funds, so investors should expect the Fund’s monthly income to fluctuate accordingly.
•  Interest rate risk, which is the chance that bond prices overall will decline because of rising interest rates. In addition, when interest rates decline, GNMA prices typically do not rise as much as the prices of comparable bonds. This is because the market tends to discount GNMA prices for prepayment risk when interest rates decline. Interest rate risk should be moderate for the Fund.
•  Manager risk, which is the chance that poor security selection will cause the Fund to underperform relevant benchmarks or other funds with a similar investment objective.
•  Derivatives risk. The Fund may invest in derivatives, which may involve risks different from, and possibly greater than, those of investments directly in the underlying securities or assets.
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
30

Annual Total Returns
The following bar chart and table are intended to help you understand the risks of investing in the Fund. The bar chart shows how the performance of the Fund's Investor Shares has varied from one calendar year to another over the periods shown. The table shows how the average annual total returns of the share classes presented compare with those of a relevant market index and another comparative index, which have investment characteristics similar to those of the Fund. Keep in mind that the Fund's past performance (before and after taxes) does not indicate how the Fund will perform in the future. Updated performance information is available on our website at vanguard.com/performance or by calling Vanguard toll-free at 800-662-7447.
Annual Total Returns — Vanguard GNMA Fund Investor Shares1

1 The year-to-date return as of the most recent calendar quarter, which ended on March 31, 2021, was -0.68%.
During the periods shown in the bar chart, the highest and lowest returns for a calendar quarter were:
 
Total Return
Quarter
Highest
%3.05
September 30, 2011
Lowest
-2.79%
June 30, 2013
31

Average Annual Total Returns for Periods Ended December 31, 2020
 
1 Year
5 Years
10 Years
Vanguard GNMA Fund Investor Shares
 
 
 
Return Before Taxes
%3.73
%2.81
%2.95
Return After Taxes on Distributions
2.94
1.69
1.77
Return After Taxes on Distributions and Sale of Fund Shares
2.20
1.65
1.77
Vanguard GNMA Fund Admiral Shares
 
 
 
Return Before Taxes
%3.83
%2.92
%3.06
Comparative Indexes
(reflect no deduction for fees, expenses, or taxes)
 
 
 
Bloomberg Barclays U.S. GNMA Bond Index
%3.68
%2.78
%2.92
Bloomberg Barclays U.S. Aggregate Bond Index
7.51
4.44
3.84
Actual after-tax returns depend on your tax situation and may differ from those shown in the preceding table. When after-tax returns are calculated, it is assumed that the shareholder was in the highest individual federal marginal income tax bracket at the time of each distribution of income or capital gains or upon redemption. State and local income taxes are not reflected in the calculations. Please note that after-tax returns are shown only for the Investor Shares and may differ for each share class. After-tax returns are not relevant for a shareholder who holds fund shares in a tax-deferred account, such as an individual retirement account or a 401(k) plan. Also, figures captioned Return After Taxes on Distributions and Sale of Fund Shares may be higher than other figures for the same period if a capital loss occurs upon redemption and results in an assumed tax deduction for the shareholder.
Investment Advisor
Wellington Management Company LLP (Wellington Management)
Portfolio Managers
Joseph F. Marvan, CFA, Senior Managing Director and Fixed Income Portfolio Manager of Wellington Management. He has co-managed the Fund since May 2019.
Brian Conroy, CFA, Managing Director and Fixed Income Portfolio Manager of Wellington Management. He has co-managed the Fund since May 2019.
Purchase and Sale of Fund Shares
You may purchase or redeem shares online through our website (vanguard.com), by mail (The Vanguard Group, P.O. Box 982901, El Paso, TX 79998-2901), or by telephone (800-662-2739). The minimum investment amount required to open
32

and maintain a Fund account for Investor Shares or Admiral Shares is $3,000 or $50,000, respectively. The minimum investment amount required to add to an existing Fund account is generally $1. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special eligibility rules that may apply to them regarding Admiral Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility. If you are investing through an employer-sponsored retirement or savings plan, your plan administrator or your benefits office can provide you with detailed information on how you can invest through your plan.
Tax Information
The Fund’s distributions may be taxable as ordinary income or capital gain. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply.
Payments to Financial Intermediaries
The Fund and its investment advisor do not pay financial intermediaries for sales of Fund shares.
33

Vanguard Long-Term Treasury Fund
Investment Objective
The Fund seeks to provide a high and sustainable level of current income.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy, hold, and sell Investor Shares or Admiral Shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
Shareholder Fees
(Fees paid directly from your investment)
 
Investor Shares
Admiral Shares
Sales Charge (Load) Imposed on Purchases
None
None
Purchase Fee
None
None
Sales Charge (Load) Imposed on Reinvested Dividends
None
None
Redemption Fee
None
None
Account Service Fee Per Year
(for certain fund account balances below $10,000)
$20
$20
Annual Fund Operating Expenses
(Expenses that you pay each year as a percentage of the value of your investment)
 
Investor Shares
Admiral Shares
Management Fees
0.18%
0.09%
12b-1 Distribution Fee
None
None
Other Expenses
0.02%
0.01%
Total Annual Fund Operating Expenses
0.20%
0.10%
34

Examples
The following examples are intended to help you compare the cost of investing in the Fund's Investor Shares or Admiral Shares with the cost of investing in other mutual funds. They illustrate the hypothetical expenses that you would incur over various periods if you were to invest $10,000 in the Fund's shares. These examples assume that the shares provide a return of 5% each year and that total annual fund operating expenses remain as stated in the preceding table. You would incur these hypothetical expenses whether or not you were to redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
 
1 Year
3 Years
5 Years
10 Years
Investor Shares
$20
$64
$113
$255
Admiral Shares
$10
$32
$56
$128
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in more taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the previous expense examples, reduce the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 172% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests at least 80% of its assets in U.S. Treasury securities, which include bills, bonds, and notes issued by the U.S. Treasury. The Fund is expected to maintain a dollar-weighted average maturity of 15 to 30 years.
Principal Risks
An investment in the Fund could lose money over short or long periods of time. You should expect the Fund's share price and total return to fluctuate within a wide range. The Fund is subject to the following risks, which could affect the Fund's performance, and the level of risk may vary based on market conditions:
•  Interest rate risk, which is the chance that bond prices overall will decline because of rising interest rates. Interest rate risk should be high for the Fund because it invests primarily in long-term bonds, whose prices are more sensitive to interest rate changes than are the prices of shorter-term bonds.
35

•  Income risk, which is the chance that the Fund’s income will decline because of falling interest rates. Income risk should be low for the Fund because it invests primarily in long-term bonds.
•  Liquidity risk, which is the chance that the Fund may not be able to sell a security in a timely manner at a desired price.
•  Manager risk, which is the chance that poor security selection will cause the Fund to underperform relevant benchmarks or other funds with a similar investment objective.
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Annual Total Returns
The following bar chart and table are intended to help you understand the risks of investing in the Fund. The bar chart shows how the performance of the Fund's Investor Shares has varied from one calendar year to another over the periods shown. The table shows how the average annual total returns of the share classes presented compare with those of a relevant market index and another comparative index, which have investment characteristics similar to those of the Fund. Keep in mind that the Fund's past performance (before and after taxes) does not indicate how the Fund will perform in the future. Updated performance information is available on our website at vanguard.com/performance or by calling Vanguard toll-free at 800-662-7447.
Annual Total Returns — Vanguard Long-Term Treasury Fund Investor Shares1

1 The year-to-date return as of the most recent calendar quarter, which ended on March 31, 2021, was -13.28%.
36

During the periods shown in the bar chart, the highest and lowest returns for a calendar quarter were:
 
Total Return
Quarter
Highest
24.73%
September 30, 2011
Lowest
-12.07%
December 31, 2016
Average Annual Total Returns for Periods Ended December 31, 2020
 
1 Year
5 Years
10 Years
Vanguard Long-Term Treasury Fund Investor Shares
 
 
 
Return Before Taxes
%18.29
%7.79
%7.64
Return After Taxes on Distributions
14.76
6.03
5.83
Return After Taxes on Distributions and Sale of Fund Shares
11.89
5.40
5.38
Vanguard Long-Term Treasury Fund Admiral Shares
 
 
 
Return Before Taxes
%18.41
%7.90
%7.75
Comparative Indexes
(reflect no deduction for fees, expenses, or taxes)
 
 
 
Bloomberg Barclays U.S. Long Treasury Bond Index
%17.70
%7.85
%7.80
Bloomberg Barclays U.S. Aggregate Bond Index
7.51
4.44
3.84
Actual after-tax returns depend on your tax situation and may differ from those shown in the preceding table. When after-tax returns are calculated, it is assumed that the shareholder was in the highest individual federal marginal income tax bracket at the time of each distribution of income or capital gains or upon redemption. State and local income taxes are not reflected in the calculations. Please note that after-tax returns are shown only for the Investor Shares and may differ for each share class. After-tax returns are not relevant for a shareholder who holds fund shares in a tax-deferred account, such as an individual retirement account or a 401(k) plan. Also, figures captioned Return After Taxes on Distributions and Sale of Fund Shares may be higher than other figures for the same period if a capital loss occurs upon redemption and results in an assumed tax deduction for the shareholder.
Investment Advisor
The Vanguard Group, Inc. (Vanguard)
Portfolio Manager
Gemma Wright-Casparius, Principal of Vanguard. She has managed the Fund since 2015.
37

Purchase and Sale of Fund Shares
You may purchase or redeem shares online through our website (vanguard.com), by mail (The Vanguard Group, P.O. Box 982901, El Paso, TX 79998-2901), or by telephone (800-662-2739). The minimum investment amount required to open and maintain a Fund account for Investor Shares or Admiral Shares is $3,000 or $50,000, respectively. The minimum investment amount required to add to an existing Fund account is generally $1. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special eligibility rules that may apply to them regarding Admiral Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility. If you are investing through an employer-sponsored retirement or savings plan, your plan administrator or your benefits office can provide you with detailed information on how you can invest through your plan.
Tax Information
The Fund’s distributions may be taxable as ordinary income or capital gain. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply.
Payments to Financial Intermediaries
The Fund and its investment advisor do not pay financial intermediaries for sales of Fund shares.
38

Vanguard Long-Term Investment-Grade Fund
Investment Objective
The Fund seeks to provide a high and sustainable level of current income.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy, hold, and sell Investor Shares or Admiral Shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
Shareholder Fees
(Fees paid directly from your investment)
 
Investor Shares
Admiral Shares
Sales Charge (Load) Imposed on Purchases
None
None
Purchase Fee
None
None
Sales Charge (Load) Imposed on Reinvested Dividends
None
None
Redemption Fee
None
None
Account Service Fee Per Year
(for certain fund account balances below $10,000)
$20
$20
Annual Fund Operating Expenses
(Expenses that you pay each year as a percentage of the value of your investment)
 
Investor Shares
Admiral Shares
Management Fees
0.20%
0.11%
12b-1 Distribution Fee
None
None
Other Expenses
0.02%
0.01%
Total Annual Fund Operating Expenses
0.22%
0.12%
39

Examples
The following examples are intended to help you compare the cost of investing in the Fund's Investor Shares or Admiral Shares with the cost of investing in other mutual funds. They illustrate the hypothetical expenses that you would incur over various periods if you were to invest $10,000 in the Fund's shares. These examples assume that the shares provide a return of 5% each year and that total annual fund operating expenses remain as stated in the preceding table. You would incur these hypothetical expenses whether or not you were to redeem your investment at the end of the given period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
 
1 Year
3 Years
5 Years
10 Years
Investor Shares
$23
$71
$124
$280
Admiral Shares
$12
$39
$68
$154
Portfolio Turnover
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in more taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the previous expense examples, reduce the Fund's performance. During the most recent fiscal year, the Fund's portfolio turnover rate was 30% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests in a variety of high-quality and, to a lesser extent, medium-quality fixed income securities, at least 80% of which will be intermediate- and long-term investment-grade securities. High-quality fixed income securities are those rated the equivalent of A3 or better by Moody‘s Investors Service, Inc. (Moody’s) or another independent rating agency or, if unrated, are determined to be of comparable quality by the Fund’s advisor. Medium-quality fixed income securities are those rated the equivalent of Baa1, Baa2, or Baa3 by Moody‘s or another independent rating agency or, if unrated, are determined to be of comparable quality by the Fund’s advisor. Investment-grade fixed income securities are those rated the equivalent of Baa3 and above by Moody‘s or another independent rating agency or, if unrated, are determined to be of comparable quality by the Fund’s advisor. The Fund’s dollar-weighted average maturity is expected to fall within a range that is five years shorter than or five years longer than that of its benchmark index, which
40

had a dollar-weighted average maturity of 23.4 years as of January 31, 2019. The Fund uses multiple investment advisors. Each advisor independently selects and maintains a portfolio of securities for the Fund.
Principal Risks
An investment in the Fund could lose money over short or long periods of time. You should expect the Fund's share price and total return to fluctuate within a wide range. The Fund is subject to the following risks, which could affect the Fund's performance, and the level of risk may vary based on market conditions:
•  Interest rate risk, which is the chance that bond prices overall will decline because of rising interest rates. Interest rate risk should be high for the Fund because it invests primarily in long-term bonds, whose prices are more sensitive to interest rate changes than are the prices of shorter-term bonds.
•  Liquidity risk, which is the chance that the Fund may not be able to sell a security in a timely manner at a desired price.
•  Call risk, which is the chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupon rates or interest rates before their maturity dates. The Fund would then lose any price appreciation above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the Fund’s income. Such redemptions and subsequent reinvestments would also increase the Fund’s portfolio turnover rate. Call risk should be moderate for the Fund. To minimize the impact of call risk, the advisors generally seek to purchase bonds that have reasonable protection from being called.
•  Extension risk, which is the chance that during periods of rising interest rates, certain debt securities will be paid off substantially more slowly than originally anticipated, and the value of those securities may fall.
•  Credit risk, which is the chance that a bond issuer will fail to pay interest or principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline. Credit risk should be moderate for the Fund because it invests primarily in bonds that are considered high-quality and, to a lesser extent, in bonds that are considered medium-quality.
•  Income risk, which is the chance that the Fund’s income will decline because of falling interest rates. Income risk should be low for the Fund because it invests primarily in long-term bonds.
•  Manager risk, which is the chance that poor security selection will cause the Fund to underperform relevant benchmarks or other funds with a similar investment objective.
41

•  Derivatives risk. The Fund may invest in derivatives, which may involve risks different from, and possibly greater than, those of investments directly in the underlying securities or assets.
An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Annual Total Returns
The following bar chart and table are intended to help you understand the risks of investing in the Fund. The bar chart shows how the performance of the Fund's Investor Shares has varied from one calendar year to another over the periods shown. The table shows how the average annual total returns of the share classes presented compare with those of a relevant market index and another comparative index, which have investment characteristics similar to those of the Fund. Keep in mind that the Fund's past performance (before and after taxes) does not indicate how the Fund will perform in the future. Updated performance information is available on our website at vanguard.com/performance or by calling Vanguard toll-free at 800-662-7447.
Annual Total Returns — Vanguard Long-Term Investment-Grade Fund Investor Shares1

1 The year-to-date return as of the most recent calendar quarter, which ended on March 31, 2021, was -9.56%.
During the periods shown in the bar chart, the highest and lowest returns for a calendar quarter were:
 
Total Return
Quarter
Highest
11.05%
September 30, 2011
Lowest
-7.63%
June 30, 2015
42

Average Annual Total Returns for Periods Ended December 31, 2020
 
1 Year
5 Years
10 Years
Vanguard Long-Term Investment-Grade Fund
Investor Shares
 
 
 
Return Before Taxes
%15.36
%9.53
%8.42
Return After Taxes on Distributions
12.72
7.25
6.14
Return After Taxes on Distributions and Sale of Fund Shares
9.57
6.48
5.68
Vanguard Long-Term Investment-Grade Fund
Admiral Shares
 
 
 
Return Before Taxes
%15.48
%9.64
%8.53
Comparative Indexes
(reflect no deduction for fees, expenses, or taxes)
 
 
 
Bloomberg Barclays U.S. Long Credit A or Better Bond Index
%14.46
%9.28
%8.19
Bloomberg Barclays U.S. Aggregate Bond Index
7.51
4.44
3.84
Actual after-tax returns depend on your tax situation and may differ from those shown in the preceding table. When after-tax returns are calculated, it is assumed that the shareholder was in the highest individual federal marginal income tax bracket at the time of each distribution of income or capital gains or upon redemption. State and local income taxes are not reflected in the calculations. Please note that after-tax returns are shown only for the Investor Shares and may differ for each share class. After-tax returns are not relevant for a shareholder who holds fund shares in a tax-deferred account, such as an individual retirement account or a 401(k) plan. Also, figures captioned Return After Taxes on Distributions and Sale of Fund Shares may be higher than other figures for the same period if a capital loss occurs upon redemption and results in an assumed tax deduction for the shareholder.
Investment Advisors
Wellington Management Company LLP (Wellington Management)

The Vanguard Group, Inc. (Vanguard)
Portfolio Managers
Scott I. St. John, CFA, Senior Managing Director and Fixed Income Portfolio Manager of Wellington Management. He has managed a portion of the Fund since 2014.
Samuel C. Martinez, CFA, Portfolio Manager at Vanguard. He has co-managed a portion of the Fund since 2018.
Arvind Narayanan, CFA, Portfolio Manager at Vanguard. He has co-managed a portion of the Fund since 2019.
43

Daniel Shaykevich, Principal of Vanguard. He has co-managed a portion of the Fund since 2018.
Purchase and Sale of Fund Shares
You may purchase or redeem shares online through our website (vanguard.com), by mail (The Vanguard Group, P.O. Box 982901, El Paso, TX 79998-2901), or by telephone (800-662-2739). The minimum investment amount required to open and maintain a Fund account for Investor Shares or Admiral Shares is $3,000 or $50,000, respectively. The minimum investment amount required to add to an existing Fund account is generally $1. Financial intermediaries, institutional clients, and Vanguard-advised clients should contact Vanguard for information on special eligibility rules that may apply to them regarding Admiral Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility. If you are investing through an employer-sponsored retirement or savings plan, your plan administrator or your benefits office can provide you with detailed information on how you can invest through your plan.
Tax Information
The Fund’s distributions may be taxable as ordinary income or capital gain. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply.
Payments to Financial Intermediaries
The Fund and its investment advisors do not pay financial intermediaries for sales of Fund shares.
44

More on the Funds
This prospectus describes the principal risks you would face as a Fund shareholder. It is important to keep in mind one of the main principles of investing: generally, the higher the risk of losing money, the higher the potential reward. The reverse, also, is generally true: the lower the risk, the lower the potential reward. As you consider an investment in any mutual fund, you should take into account your personal tolerance for fluctuations in the securities markets. Look for this   symbol throughout the prospectus. It is used to mark detailed information about the more significant risks that you would confront as a Fund shareholder. To highlight terms and concepts important to mutual fund investors, we have provided Plain Talk® explanations along the way. Reading the prospectus will help you decide whether a Fund is the right investment for you. We suggest that you keep this prospectus for future reference.
Share Class Overview
This prospectus offers the Funds' Investor Shares and Admiral Shares. A separate prospectus offers Institutional Shares of Vanguard Short-Term Investment-Grade Fund, which are generally for investors who invest a minimum of $5 million.
All share classes offered by a Fund have the same investment objective, strategies, and policies. However, different share classes have different expenses; as a result, their investment returns will differ.
Plain Talk About Costs of Investing
Costs are an important consideration in choosing a mutual fund. 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. 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.
The following sections explain the principal investment strategies and policies that each Fund uses in pursuit of its investment objective. The Funds' board of trustees, which oversees each Fund's management, may change investment strategies or policies in the interest of shareholders without a shareholder vote, unless those strategies or policies are designated as fundamental. Note that each Fund’s investment objective is not fundamental and may be changed without a shareholder vote. However, each Fund‘s 80% investment policy may be changed only upon 60 days‘ notice to shareholders.
45

Market Exposure
Each Fund offered in this prospectus seeks to provide current income by investing in fixed income securities that meet defined standards for credit quality and maturity. These standards vary among the Funds, as shown in the following table. As a result, the levels of income provided by the Funds will vary, with the Short-Term Treasury Fund generally providing the least income and the Long-Term Investment-Grade Fund generally providing the most income.
Vanguard Fund
Primary Investments
Expected
Dollar-Weighted
Average Maturity
Short-Term Treasury
U.S. Treasury bonds
1–4 years
Short-Term Federal
U.S. government agency bonds
1–4 years
Short-Term Investment-Grade
Investment-grade bonds
1–4 years
Intermediate-Term Treasury
U.S. Treasury bonds
5–10 years
Intermediate-Term Investment-Grade
Investment-grade bonds
5–10 years
GNMA
GNMA pass-through certificates
Generally 3–10 years
Long-Term Treasury
U.S. Treasury bonds
15–30 years
Long-Term Investment-Grade
Investment-grade bonds
Generally 15–30 years
Each Fund is subject to interest rate risk, which is the chance that bond prices overall will decline because of rising interest rates. Interest rate risk should be moderate for intermediate-term bond funds and high for long-term bond funds.
Although fixed income securities (commonly referred to as bonds) are often thought to be less risky than stocks, there have been periods when bond prices have fallen significantly because of rising interest rates. For instance, prices of long-term bonds fell by almost 48% between December 1976 and September 1981.
To illustrate the relationship between bond prices and interest rates, the following table shows the effect of a 1% and a 2% change (both up and down) in interest rates on the values of three noncallable bonds (i.e., bonds that cannot be redeemed by the issuer) of different maturities, each with a face value of $1,000.
46

How Interest Rate Changes Affect the Value of a $1,000 Bond1
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)
$ 977
$ 1,024
$ 954
$ 1,049
Intermediate-Term (10 years)
922
1,086
851
1,180
Long-Term (20 years)
874
1,150
769
1,328
1 Assuming a 4% coupon rate.
These figures are for illustration only; you should not regard them as an indication of future performance of the bond market as a whole or the Funds in particular.
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.
How mortgage-backed securities are different: In general, declining interest
rates will not lift the prices of mortgage-backed securities—such as those
guaranteed by the Government National Mortgage Association—as much as
the prices of comparable bonds. Why? Because when interest rates fall, the
bond market tends to discount the prices of mortgage-backed securities for
prepayment risk—the possibility that homeowners will refinance their
mortgages at lower rates and cause the bonds to be paid off prior to
maturity. In part to compensate for this prepayment possibility,
mortgage-backed securities tend to offer higher yields than other bonds of
comparable credit quality and maturity. In contrast, when interest rates rise,
prepayments tend to slow down, subjecting mortgage-backed securities to
extension risk—the possibility that homeowners will repay their mortgages
at slower rates. This will lengthen the duration or average life of
mortgage-backed securities held by a fund and delay the fund’s ability to
reinvest proceeds at higher interest rates, making the fund more sensitive to
changes in interest rates.
47

Changes in interest rates can affect bond income as well as bond prices.
Each Fund is subject to income risk, which is the chance that the Fund‘s income will decline because of falling interest rates. A fund‘s income declines when interest rates fall because the fund then must invest new cash flow and cash from maturing bonds in lower-yielding bonds. Income risk is generally higher for short-term bond funds, moderate for intermediate-term bond funds, and lower for long-term bond funds.
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 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.
Although falling interest rates tend to strengthen bond prices, they can cause other problems for bond fund investors—bond calls and prepayments.
Plain Talk About Callable Bonds
Although bonds are issued with clearly defined maturities, in some cases the
bond issuer has a right to call in (redeem) the bond earlier than its maturity
date. When a bond is called, the bondholder must replace it with another
bond that may have a lower yield than the original bond. One way for bond
investors to protect themselves against call risk is to purchase a bond early
in its lifetime, long before its call date. Another way is to buy bonds with
lower coupon rates or interest rates, which make them less likely to
be called.
48

The Short-Term Investment-Grade, Intermediate-Term Investment-Grade, and Long-Term Investment-Grade Funds are subject to call risk, which is the chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupon rates or interest rates before their maturity dates. A Fund would then lose any price appreciation above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the Fund’s income. Such redemptions and subsequent reinvestments would also increase the Fund’s portfolio turnover rate.
Call risk should be moderate for the Long-Term Investment-Grade and Intermediate-Term Investment-Grade Funds.
The GNMA Fund is subject to prepayment risk, which is the chance that during periods of falling interest rates, homeowners will refinance their mortgages before their maturity dates, resulting in prepayment of mortgage-backed securities held by the Fund. The Fund would then lose any price appreciation above the mortgage’s principal and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the Fund's income. Such prepayments and subsequent reinvestments would also increase the Fund's portfolio turnover rate. Prepayment risk is high for the Fund.
The Short-Term Investment-Grade, Intermediate-Term Investment-Grade, Long-Term Investment-Grade, and GNMA Funds are subject to extension risk. Extension risk is the chance that during periods of rising interest rates, certain debt securities will be paid off substantially more slowly than originally anticipated, and the value of those securities may fall. For funds that invest in mortgage-backed securities, like the GNMA Fund, extension risk is the chance that during periods of rising interest rates, homeowners will repay their mortgages at slower rates. This will lengthen the duration or average life of mortgage-backed securities held by the Fund and delay the Fund’s ability to reinvest proceeds at higher interest rates.
Extension risk is high for the GNMA Fund and moderate for the Long-Term Investment-Grade and Intermediate-Term Investment-Grade Funds.
The Short-Term Investment-Grade, Intermediate-Term Investment-Grade, and Long-Term Investment-Grade Funds are subject to credit risk, which is the chance that a bond issuer will fail to pay interest or principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline.
49

Plain Talk About Credit Quality
A bond’s credit quality rating is an assessment of the issuer’s ability to pay
interest on the bond and, ultimately, to repay the principal. The lower the
credit quality, the greater the perceived chance that the bond issuer will
default, or fail to meet its payment obligations. All things being equal, the
lower a bond’s credit quality, the higher its yield should be to compensate
investors for assuming additional risk.
In relative terms, the Short-Term Treasury, Intermediate-Term Treasury, GNMA, and Long-Term Treasury Funds (which invest primarily in U.S. Treasury-issued or Treasury-backed securities) and the Short-Term Federal Fund generally have the lowest credit risk—and generally the lowest yields—among the Funds. By contrast, the Short-Term Investment-Grade, Intermediate-Term Investment-Grade, and Long-Term Investment-Grade Funds generally have the highest credit risk—and generally the highest yields—among the Funds.
The following table details the Funds’ credit quality policies, which generally apply at the time of investment, and illustrates the comparative credit risk for each Fund. The Funds may continue to hold bonds that are downgraded after purchase, even if they would no longer be eligible as new investments for a Fund.
Credit Ratings of the Funds’ Investments (Percentage of Fund Assets Under Normal Circumstances)
Vanguard Fund
Issued or Backed
by U.S. Gov’t. or
its Agencies and
Instrumentalities
High or
Highest
Quality
(Non-Gov’t.)
Upper-
Medium
Quality
Medium
Quality
Non-
Investment-
Grade
Short-Term Treasury
100%
0%
0%
0%
0%
Short-Term Federal
100%
0%
0%
0%
0%
Short-Term
Investment-Grade
—————————At least 80%———————————
No more
than 5%
Intermediate-Term
Treasury
100%
0%
0%
0%
0%
Intermediate-Term
Investment-Grade
—————————At least 80%———————————
No more
than 5%
GNMA
100%
0%
0%
0%
0%
Long-Term Treasury
100%
0%
0%
0%
0%
Long-Term
Investment-Grade
—————————At least 65%——————
No more
than 30%
No more
than 5%
50

The Long-term Investment Grade Fund may invest no more than 30% of its assets in medium-quality fixed income securities, preferred stocks, and convertible securities, and no more than 5% of its assets in non-investment-grade fixed income securities, preferred stocks, and convertible securities. Each of the Short-Term Investment-Grade Fund and the Intermediate-Term Investment Grade Fund may invest no more than 5% of its assets in non-investment-grade fixed income securities, preferred stocks, and convertible securities. Non-investment-grade fixed income securities are those rated the equivalent of Moody’s Ba1 or below or, if unrated, are determined to be of comparable quality by the Fund’s advisor.
The Short-Term Investment-Grade, Intermediate-Term Investment-Grade, Long-Term Investment-Grade, and Long-Term Treasury Funds are subject to liquidity risk, which is the chance that the Funds may not be able to sell a security in a timely manner at a desired price.
Corporate bonds are traded among dealers and brokers that connect buyers with sellers. Liquidity in the corporate bond market may be challenged depending on overall economic conditions and credit tightening. There may be little trading in the secondary market for particular bonds and other debt securities, which may make them more difficult to value or sell.
To a limited extent, the Investment-Grade Funds are subject to event risk, which is the chance that corporate fixed income securities held by these Funds may suffer a substantial decline in credit quality and market value because of a restructuring of the companies that issued the securities or because of other factors negatively affecting issuers.
Plain Talk About Types of Bonds
Bonds are issued (sold) by many sources: Corporations issue corporate
bonds; the federal government issues U.S. Treasury bonds; agencies of the
federal government issue agency bonds; financial institutions issue
asset-backed bonds; and mortgage holders issue “mortgage-backed”
pass-through certificates. Each issuer is responsible for paying back the
bond’s initial value as well as for making periodic interest payments. Many
bonds issued by government agencies and entities are neither guaranteed
nor insured by the U.S. government.
Market disruptions can adversely affect local and global markets as well as normal market conditions and operations. Any such disruptions could have an adverse impact on the value of a Fund's investments and Fund performance.
51

Security Selection
Long-Term Investment-Grade Fund. The Long-Term Investment-Grade Fund uses multiple investment advisors. Each advisor independently selects and maintains a portfolio of securities for the Fund.
Wellington Management, advisor to a portion of the Long-Term Investment-Grade Fund, uses a process that combines top-down strategy with bottom-up fundamental research and comprehensive risk management. Broad strategy is developed by applying top-down sector, quality, and interest rate outlooks. The portfolio manager establishes the sector allocation and duration guidelines, and also uses Wellington Management’s in-house fixed income credit analysts for bottom-up analysis and security recommendations. Final buy/sell decisions are made by the portfolio manager based on relative valuation and fundamental credit research.
Vanguard’s actively managed fixed income funds follow a portfolio manager-driven process that uses both top-down and bottom-up inputs. Portfolio managers are responsible for portfolio construction and strategy, leveraging the top-down insights of Vanguard’s senior investment leaders and Vanguard’s Investment Strategy Group, the bottom-up insights of the sector teams, and the relative value views across fixed income sectors. Risk optimization measures are present throughout the investment process, and the Senior Investment Committee provides governance and oversight for the entire lineup.
GNMA Fund. Wellington Management, advisor to the GNMA Fund, uses a flexible and diversified strategy that seeks to generate total return in excess of the Bloomberg Barclays U.S. GNMA Bond Index. Wellington Management makes significant use of security selection to add value over a market cycle. The Mortgage Investment Team establishes guidelines for the key drivers of return by analyzing a variety of frameworks for relative value, including cash flow and option-adjusted spreads on representative mortgage-backed securities in a variety of subsectors and maturities. The mortgage-backed securities analysts and portfolio managers use proprietary modeling, structural analysis, liquidity assessments, and trading strategies to develop investment strategies. Using the analyst input, the mortgage-backed portfolio manager is responsible for identifying attractive securities that implement portfolio strategy.
Short-Term Treasury, Short-Term Federal, Short-Term Investment-Grade, Intermediate-Term Treasury, Intermediate-Term Investment-Grade, and Long-Term Treasury Funds. Vanguard’s actively managed fixed income funds follow a portfolio manager-driven process that uses both top-down and bottom-up inputs. Portfolio managers are responsible for portfolio construction and strategy, leveraging the top-down insights of Vanguard’s senior investment
52

leaders and Vanguard’s Investment Strategy Group, the bottom-up insights of the sector teams, and the relative value views across fixed income sectors. Risk optimization measures are present throughout the investment process, and the Senior Investment Committee provides governance and oversight for the entire lineup.
The grid that follows shows, at a glance, the types of financial instruments that may be purchased by each Fund. Explanations of each type of financial instrument follow the grid.
 
Short-,
Intermediate-,
and Long-Term
Treasury Funds
Short-Term
Federal Fund
Short-,
Intermediate-,
and Long-Term
Investment-
Grade Funds
GNMA
Fund
Corporate Debt Obligations
 
 
 
U.S. Government & Agency Bonds
Municipal Bonds
 
 
 
Mortgage-Backed Securities
Mortgage Dollar Rolls
Cash Equivalent Investments Including
Repurchase Agreements
1
1
1
Futures, Options, and Other Derivatives
Asset-Backed Securities
 
 
International Dollar-Denominated Bonds
 
 
 
Foreign Currency Bonds
 
 
 
Preferred Stocks
 
 
 
Convertible Securities
 
 
 
Collateralized Mortgage Obligations
(CMOs)
1 Only repurchase agreements that are collateralized by U.S. Treasury or U.S. government agency securities.
•  Corporate debt obligations—usually called bonds—represent loans by an investor to a corporation.
•  U.S. government and agency bonds represent loans by investors to the U.S. Treasury or a wide variety of government agencies and instrumentalities. Securities issued by most U.S. government entities are neither guaranteed by the U.S. Treasury nor backed by the full faith and credit of the U.S. government. These entities include, among others, the Federal Home Loan Banks (FHLBs), the Federal National Mortgage Association (FNMA), and the Federal Home Loan Mortgage Corporation (FHLMC). Securities issued by the U.S. Treasury and a small number of U.S. government agencies, such as the Government National Mortgage Association (GNMA), are backed by the full faith and credit of the U.S.
53

government. The market values of U.S. government and agency securities and U.S. Treasury securities are subject to fluctuation.
Plain Talk About U.S. Government-Sponsored Enterprises
A variety of U.S. government-sponsored enterprises (GSEs), such as the
Federal Home Loan Mortgage Corporation (FHLMC), the Federal National
Mortgage Association (FNMA), and the Federal Home Loan Banks (FHLBs),
issue debt and mortgage-backed securities. Although GSEs may be chartered
or sponsored by acts of Congress, they are not funded by congressional
appropriations. In September of 2008, the U.S. Treasury placed FNMA and
FHLMC under conservatorship and appointed the Federal Housing Finance
Agency (FHFA) to manage their daily operations. In addition, the U.S. Treasury
entered into purchase agreements with FNMA and FHLMC to provide them
with capital in exchange for senior preferred stock. Generally, a GSE’s
securities are neither issued nor guaranteed by the U.S. Treasury and are not
backed by the full faith and credit of the U.S. government. In most cases,
these securities are supported only by the credit of the GSE, standing alone. In
some cases, a GSE’s securities may be supported by the ability of the GSE to
borrow from the U.S. Treasury or may be supported by the U.S. government in
some other way. Securities issued by the Government National Mortgage
Association (GNMA), however, are backed by the full faith and credit of the
U.S. government.
•  Municipal bonds represent loans by an investor to state or local governments or to other governmental authorities.
•  Mortgage-backed securities represent partial ownership interest in pools of commercial or residential mortgage loans made by financial institutions to finance a borrower’s real estate purchase. These loans are packaged by private or governmental issuers for sale to investors. As the underlying mortgage loans are paid by borrowers, the investors receive payments of interest and principal. To be announced (TBA) securities represent an agreement to buy or sell mortgage-backed securities with agreed-upon characteristics for a fixed unit price, with settlement on a scheduled future date beyond the typical settlement period for most other securities.
•  Mortgage dollar rolls are transactions in which a fund sells mortgage-backed securities to a dealer and simultaneously agrees to purchase similar securities in the future at a predetermined price. These transactions simulate an investment in mortgage-backed securities and have the potential to enhance a fund’s returns and reduce its administrative burdens, compared with holding mortgage-backed securities directly. These transactions may increase a fund’s portfolio turnover
54

rate. Mortgage dollar rolls will be used only if consistent with a fund's investment objective and risk profile.
•  Cash equivalent investments is a blanket term that describes a variety of short-term fixed income investments, including money market instruments, commercial paper, bank certificates of deposit, banker’s acceptances, and repurchase agreements. Repurchase agreements represent short-term (normally overnight) loans by a fund to banks or large securities dealers. The Treasury Funds, the GNMA Fund, and the Short-Term Federal Fund may invest only in repurchase agreements that are collateralized by U.S. Treasury or U.S. government agency securities. Repurchase agreements can carry several risks. For instance, if the seller is unable to repurchase the securities as promised, a fund may experience a loss when trying to sell the securities to another buyer. Also, if the seller becomes insolvent, a bankruptcy court may determine that the securities do not belong to a fund and order that the securities be used to pay off the seller’s debts. The Funds’ advisors believe that these risks can be controlled through careful security selection and monitoring.
•  Futures, options, and other derivatives are described in detail under Other Investment Policies and Risks.
•  Asset-backed securities are bonds that represent partial ownership in pools of consumer or commercial loans—most often credit card, automobile, or trade receivables. Asset-backed securities, which can be types of corporate fixed income obligations, are issued by entities formed solely for that purpose, but their value ultimately depends on repayments by underlying borrowers. A primary risk of asset-backed securities is that their maturity is difficult to predict, being driven by borrowers’ prepayments.
•  International dollar-denominated bonds are bonds denominated in U.S. dollars and issued by foreign governments and companies. To the extent that a Fund owns foreign bonds, it is subject to country risk, which is the chance that world events—such as political upheaval, financial troubles, or natural disasters—will adversely affect the value and/or liquidity of securities issued by companies in foreign countries. In addition, the prices of foreign bonds and the prices of U.S. bonds have, at times, moved in opposite directions. Because the bond’s value is designated in dollars rather than in the currency of the issuer’s country, the investor is not exposed to currency risk; rather, the issuer assumes that risk, usually to attract U.S. investors. Although currency movements do not affect the value of international dollar-denominated bonds directly, they could affect the value indirectly by adversely affecting the issuer’s ability (or the market’s perception of the issuer’s ability) to pay interest or repay principal.
•  Foreign currency bonds are bonds denominated in the local currency of a non-U.S. country and issued by foreign governments, government agencies, and companies. To the extent that a Fund owns foreign currency bonds, it will hedge
55

its exposure to those bonds back to the U.S. dollar. In addition to country risk, each Fund is subject to currency hedging risk. Currency hedging risk is the chance that the currency hedging transactions entered into by a Fund may not perfectly offset the Fund’s foreign currency exposure.
•  Preferred stocks distribute set dividends from the issuer. The preferred-stock holder’s claim on the issuer’s income and assets ranks before that of common-stock holders, but after that of bondholders.
•  Convertible securities are bonds or preferred stocks that are convertible into, or exchangeable for, common stocks.
•  Collateralized mortgage obligations (CMOs) are special bonds that are collateralized by mortgages or mortgage pass-through securities. Cash flow rights on underlying mortgages—the rights to receive principal and interest payments—are divided up and prioritized to create short-, intermediate-, and long-term bonds. CMOs rely on assumptions about the timing of cash flows on the underlying mortgages, including expected prepayment rates. The primary risk of a CMO is that these assumptions are wrong, which would either shorten or lengthen the bond’s maturity. Each Fund will invest only in CMOs that are believed to be consistent with its maturity and credit-quality standards.
Each Fund is subject to manager risk, which is the chance that poor security selection will cause the Fund to underperform relevant benchmarks or other funds with a similar investment objective.
Other Investment Policies and Risks
In addition to investing in bonds and other fixed income securities, each Fund may make other kinds of investments to achieve its investment objective.
Each Fund may invest up to 15% of its net assets in illiquid securities. Illiquid securities are investments that a Fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. Restricted securities are a special type of illiquid security; these securities have not been publicly issued and legally can be resold only to qualified buyers.
Each Fund may invest a small portion of its assets in fixed income futures, which are a type of derivative, and/or shares of exchange-traded funds (ETFs). These fixed income futures and ETFs typically provide returns similar to those of bonds. A Fund may purchase futures or ETFs when doing so will reduce the Fund’s transaction costs, facilitate cash management, mitigate risk, or have the potential to add value because the instruments are favorably priced. Vanguard
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receives no additional revenue from Fund assets invested in ETF Shares of other Vanguard funds. Fund assets invested in ETF Shares are excluded when allocating to the Fund its share of the costs of Vanguard operations.
Each Fund may invest in derivatives. In general, investments in derivatives may involve risks different from, and possibly greater than, those of investments directly in the underlying securities or assets.
Generally speaking, a derivative is a financial contract whose value is based on the value of a financial asset (such as a stock, a bond, or a currency), a physical asset (such as gold, oil, or wheat), a market index, or a reference rate.
Each Fund may invest in derivatives only if the expected risks and rewards of the derivatives are consistent with the investment objective, policies, strategies, and risks of the Fund as disclosed in this prospectus. In particular, derivatives will be used only when they may help the advisor to accomplish one or more of the following:
• Invest in eligible asset classes with greater efficiency and lower cost than is possible through direct investment.
• Add value when these instruments are attractively priced.
• Adjust sensitivity to changes in interest rates.
• Adjust the overall credit risk of the portfolio or actively overweight or underweight credit risk to specific bond issuers.
• Hedge foreign currency exposure.
• Hedge foreign interest rate exposure.
The Funds' derivative investments may include fixed income futures contracts; fixed income options, including options on swaps; currency swaps; foreign currency exchange forwards; interest rate swaps; total return swaps; credit default swaps; or other derivatives. Losses (or gains) involving futures contracts can sometimes be substantial—in part because a relatively small price movement in a futures contract may result in an immediate and substantial loss (or gain) for a fund. Similar risks exist for other types of derivatives.
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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—tend to be more specialized or complex and may be more
difficult to accurately value.
Cash Management
Each Fund‘s daily cash balance may be invested in Vanguard Market Liquidity Fund and/or Vanguard Municipal Cash Management Fund (each, a CMT Fund), which are low-cost money market funds. When investing in a CMT Fund, each Fund bears its proportionate share of the expenses of the CMT Fund in which it invests. Vanguard receives no additional revenue from Fund assets invested in a CMT Fund.
Methods Used to Meet Redemption Requests
Under normal circumstances, each Fund typically expects to meet redemptions with positive cash flows. For the Long-Term Investment-Grade Fund, the Fund seeks first to meet redemptions from a cash or cash equivalent reserve or Vanguard may elect to instruct the advisor to sell a cross section of the Fund’s holdings to meet redemptions, while also factoring in transaction costs. For all other Funds, in the event there are not offsetting positive cash flows, each Fund seeks to maintain its risk exposure by selling a cross section of the Fund’s holdings to meet redemptions, while also factoring in transaction costs. Additionally, a Fund may work with larger clients to implement their redemptions in a manner that is least disruptive to the portfolio; see “Potentially disruptive redemptions” under Redeeming Shares in the Investing With Vanguard section.
Under certain circumstances, including under stressed market conditions, there are additional tools that each Fund may use in order to meet redemptions, including advancing the settlement of market trades with counterparties to match investor redemption payments or delaying settlement of an investor’s transaction to match trade settlement within regulatory requirements. A Fund may also suspend payment of redemption proceeds for up to seven days; see “Emergency circumstances” under Redeeming Shares in the Investing With Vanguard section. Additionally under these unusual circumstances, a Fund may
58

borrow money (subject to certain regulatory conditions and if available under board-approved procedures) through an interfund lending facility; through a bank line-of-credit, including a joint committed credit facility; or through an uncommitted line-of-credit from Vanguard in order to meet redemption requests.
Temporary Investment Measures
Each Fund may temporarily depart from its normal investment policies and strategies when an advisor believes that doing so is in the Fund's best interest, so long as the strategy or policy employed is consistent with the Fund's investment objective. For instance, the Fund may invest beyond its normal limits in derivatives or exchange-traded funds that are consistent with the Fund's investment objective when those instruments are more favorably priced or provide needed liquidity, as might be the case if the Fund is transitioning assets from one advisor to another or receives large cash flows that it cannot prudently invest immediately.
In addition, each Fund may take temporary defensive positions that are inconsistent with its normal investment policies and strategies—for instance, by allocating substantial assets to cash equivalent investments or other less volatile instruments—in response to adverse or unusual market, economic, political, or other conditions. In doing so, the Fund may succeed in avoiding losses but may otherwise fail to achieve its investment objective.
Frequent Trading or Market-Timing
Background. Some investors try to profit from strategies involving frequent trading of mutual fund shares, such as market-timing. For funds holding foreign securities, investors may try to take advantage of an anticipated difference between the price of the fund’s shares and price movements in overseas markets, a practice also known as time-zone arbitrage. Investors also may try to engage in frequent trading of funds holding investments such as small-cap stocks and high-yield bonds. As money is shifted into and out of a fund by a shareholder engaging in frequent trading, the fund incurs costs for buying and selling securities, resulting in increased brokerage and administrative costs. These costs are borne by all fund shareholders, including the long-term investors who do not generate the costs. In addition, frequent trading may interfere with an advisor’s ability to efficiently manage the fund.
Policies to address frequent trading. The Vanguard funds (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) do not knowingly accommodate frequent trading. The board of trustees of each Vanguard fund (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) has adopted policies and procedures
59

reasonably designed to detect and discourage frequent trading and, in some cases, to compensate the fund for the costs associated with it. These policies and procedures do not apply to ETF Shares because frequent trading in ETF Shares generally does not disrupt portfolio management or otherwise harm fund shareholders. Although there is no assurance that Vanguard will be able to detect or prevent frequent trading or market-timing in all circumstances, the following policies have been adopted to address these issues:
• Each Vanguard fund reserves the right to reject any purchase request—including exchanges from other Vanguard funds—without notice and regardless of size. For example, a purchase request could be rejected because the investor has a history of frequent trading or if Vanguard determines that such purchase may negatively affect a fund’s operation or performance.
• Each Vanguard fund (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation-Protected Securities Index Fund) generally prohibits, except as otherwise noted in the Investing With Vanguard section, an investor’s purchases or exchanges into a fund account for 30 calendar days after the investor has redeemed or exchanged out of that fund account.
• Certain Vanguard funds charge shareholders purchase and/or redemption fees on transactions.
See the Investing With Vanguard section of this prospectus for further details on Vanguard’s transaction policies.
Each Vanguard fund (other than retail and government money market funds), in determining its net asset value, will use fair-value pricing when appropriate, as described in the Share Price section. Fair-value pricing may reduce or eliminate the profitability of certain frequent-trading strategies.
Do not invest with Vanguard if you are a market-timer.
Turnover Rate
Although the Funds generally seek to invest for the long term, each Fund may sell securities regardless of how long they have been held. The Financial Highlights section of this prospectus shows historical turnover rates for the Funds. A turnover rate of 100%, for example, would mean that a Fund had sold and replaced securities valued at 100% of its net assets within a one-year period. Shorter-term bonds will mature or be sold—and need to be replaced—more frequently than longer-term bonds. As a result, shorter-term bond funds tend to have higher turnover rates than longer-term bond funds. In general, the greater the turnover rate, the greater the impact transaction costs will have on a fund’s return. Also, funds with high turnover rates may be more
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likely to generate capital gains, including short-term capital gains, that must be distributed to shareholders and will be taxable to shareholders investing through a taxable account.
The Funds and Vanguard
Each Fund is a member of The Vanguard Group, a family of over 200 funds. All of the funds that are members of The Vanguard Group (other than funds of funds) share in the expenses associated with administrative services and business operations, such as personnel, office space, and equipment.
Vanguard Marketing Corporation provides marketing services to the funds. Although fund shareholders do not pay sales commissions or 12b-1 distribution fees, each fund (other than a fund of funds) or each share class of a fund (in the case of a fund with multiple share classes) pays its allocated share of the Vanguard funds’ marketing costs.
Plain Talk About Vanguard’s Unique Corporate Structure
The Vanguard Group 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.
Investment Advisors
Two investment advisors manage the Funds, subject to the supervision and oversight of the trustees and officers of the Funds. The Long-Term Investment-Grade Fund uses a multimanager approach. Wellington Management Company LLP serves as the advisor to the GNMA Fund and to a portion of the Long-Term Investment-Grade Fund. The Vanguard Group, Inc., through its Fixed Income Group, serves as the advisor to the remaining Funds, as well as to a portion of the Long-Term Investment-Grade Fund.
Wellington Management Company LLP, 280 Congress Street, Boston, MA 02210, a Delaware limited liability partnership, is an investment counseling firm that provides investment services to investment companies, employee benefit plans, endowments, foundations, and other institutions. Wellington Management and its predecessor organizations have provided investment advisory services for over 80 years. Wellington Management is owned by the
61

partners of Wellington Management Group LLP, a Massachusetts limited liability partnership. As of January 31, 2021, Wellington Management and its investment advisory affiliates had investment management authority with respect to approximately $1.3 trillion in assets.
The Vanguard Group, Inc., P.O. Box 2600, Valley Forge, PA 19482, began operations in 1975. As of January 31, 2021, Vanguard served as advisor for approximately $5.8 trillion in assets.
The GNMA and Long-Term Investment-Grade Funds each pay Wellington Management a fee, which is paid quarterly and is a percentage of average daily net assets under management by Wellington Management during the most recent fiscal quarter. The fee has breakpoints, which means that the percentage declines as assets go up. Vanguard provides investment advisory services to the remaining Funds (as well as to a portion of the Long-Term Investment-Grade Fund) pursuant to the Funds’ Service Agreement and subject to the supervision and oversight of the trustees and officers of the Funds.
For the fiscal year ended January 31, 2021, the advisory expenses or fees for each Fund (other than the Long-Term Investment-Grade Fund) represented an effective annual rate of 0.01% of the Fund’s average net assets. For the Long-Term Investment-Grade Fund, the aggregate advisory fees and expenses represented an effective annual rate of less than 0.01% of the Fund’s average net assets.
Under the terms of an SEC exemption, the Funds‘ board of trustees may, without prior approval from shareholders, change the terms of an advisory agreement with a third-party investment advisor or hire a new third-party investment advisor—either as a replacement for an existing advisor or as an additional advisor. Any significant change in a Fund’s advisory arrangements will be communicated to shareholders in writing. As the Funds‘ sponsor and overall manager, Vanguard may provide investment advisory services to a Fund at any time. Vanguard may also recommend to the board of trustees that an advisor be hired, terminated, or replaced or that the terms of an existing advisory agreement be revised. The Funds have filed an application seeking a similar SEC exemption with respect to investment advisors that are wholly owned subsidiaries of Vanguard. If the exemption is granted, the Funds may rely on the new SEC relief.
For a discussion of why the board of trustees approved each Fund's investment advisory arrangement, see the most recent semiannual reports to shareholders covering the fiscal period ended July 31.
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The managers primarily responsible for the day-to-day management of the Funds are:
Joseph F. Marvan, CFA, Senior Managing Director and Fixed Income Portfolio Manager of Wellington Management. He has worked in investment management since 1988, has been with Wellington Management since 2003, and has co-managed the GNMA Fund since May 2019. Education: B.S., Ithaca College; M.B.A., Babson College.
Brian Conroy, CFA, Managing Director and Fixed Income Portfolio Manager of Wellington Management. He has worked in investment management since 2005, has been with Wellington Management since 2012, and has co-managed the GNMA Fund since May 2019. Education: B.A., Harvard College; M.B.A., Harvard Business School.
Scott I. St. John, CFA, Senior Managing Director and Fixed Income Portfolio Manager of Wellington Management. He has worked in investment management since 1995, has been with Wellington Management since 2003, and has managed a portion of the Long-Term Investment-Grade Fund since 2014. Education: B.S., Cornell University; M.B.A., University of Rochester.
Samuel C. Martinez, CFA, Portfolio Manager at Vanguard. He has been with Vanguard since 2007, has worked in investment management since 2010, has managed investment portfolios since 2014, has co-managed the Short-Term Investment-Grade and Intermediate-Term Investment-Grade Funds since 2018, and has co-managed a portion of the Long-Term Investment-Grade Fund since 2018. Education: B.S., Southern Utah University; M.B.A., The Wharton School of the University of Pennsylvania.
Arvind Narayanan, CFA, Portfolio Manager at Vanguard. He has been with Vanguard since 2019, has worked in investment management since 2002, has managed investment portfolios since 2006, and has co-managed the Short-Term Investment-Grade and Intermediate-Term Investment-Grade Funds since 2019, and has co-managed a portion of the Long-Term Investment-Grade Fund since 2019. Education: B.A., Goucher College; M.B.A., New York University.
Brian W. Quigley, CFA, Portfolio Manager at Vanguard. He has been with Vanguard since 2003, has worked in investment management since 2005, and has managed investment portfolios, including the Short-Term Federal Fund, since 2015. Education: B.S., Lehigh University.
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Daniel Shaykevich, Principal of Vanguard. He has worked in investment management since 2001, has managed investment portfolios since 2004, has been with Vanguard since 2013, and has co-managed the Short-Term Investment-Grade and Intermediate-Term Investment-Grade Funds since 2018, and has co-managed a portion of the Long-Term Investment-Grade Fund since 2018. Education: B.S., Carnegie Mellon University.
Gemma Wright-Casparius, Principal of Vanguard. She has worked in investment management since 2005, has managed investment portfolios since 2008; has been with Vanguard since 2011; and has managed the Short-Term Treasury, Intermediate-Term Treasury, and Long-Term Treasury Funds since 2015. Education: B.B.A. and M.B.A., Bernard M. Baruch College of The City University of New York.
The Funds' Statement of Additional Information provides information about each portfolio manager’s compensation, other accounts under management, and ownership of shares of the Funds.
Dividends, Capital Gains, and Taxes
Fund Distributions
Each Fund distributes to shareholders virtually all of its net income (interest less expenses) as well as any net short-term or long-term capital gains realized from the sale of its holdings. From time to time, the Fund may also make distributions that are treated as a return of capital. Income dividends generally are declared daily and distributed monthly. Capital gains distributions, if any, generally occur annually in December. In addition, each Fund may occasionally make a supplemental distribution at some other time during the year.
You can receive distributions of income or capital gains in cash, or you can have them automatically reinvested in more shares of the Fund. However, if you are investing through an employer-sponsored retirement or savings plan, your distributions will be automatically reinvested in additional Fund shares.
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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.
Basic Tax Points
Investors in taxable accounts should be aware of the following basic federal income tax points:
• Distributions are taxable to you whether or not you reinvest these amounts in additional Fund shares.
• Distributions declared in December—if paid to you by the end of January—are taxable as if received in December.
• Any income dividend distribution or short-term capital gains distribution that you receive is taxable to you as ordinary income.
• Any distribution of net long-term capital gains is taxable to you as long-term capital gains, no matter how long you have owned shares in the Fund.
• Capital gains distributions may vary considerably from year to year as a result of the Funds' normal investment activities and cash flows.
• Your cost basis in the Fund will be decreased by the amount of any return of capital that you receive. This, in turn, will affect the amount of any capital gain or loss that you realize when selling or exchanging your Fund shares.
• Return of capital distributions generally are not taxable to you until your cost basis has been reduced to zero. If your cost basis is at zero, return of capital distributions will be treated as capital gains.
• A sale or exchange of Fund shares is a taxable event. This means that you may have a capital gain to report as income, or a capital loss to report as a deduction, when you complete your tax return.
• Any conversion between classes of shares of the same fund is a nontaxable event. By contrast, an exchange between classes of shares of different funds is a taxable event.
• Vanguard (or your intermediary) will send you a statement each year showing the tax status of all of your distributions.
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Individuals, trusts, and estates whose income exceeds certain threshold amounts are subject to a 3.8% Medicare contribution tax on “net investment income.” Net investment income takes into account distributions paid by the Fund and capital gains from any sale or exchange of Fund shares.
Income dividends and capital gains distributions that you receive, as well as your gains or losses from any sale or exchange of Fund shares, may be subject to state and local income taxes. Depending on your state’s rules, however, any dividends attributable to interest earned on direct obligations of the U.S. government may be exempt from state and local taxes. Vanguard will notify you each year how much, if any, of your dividends may qualify for this exemption.
This prospectus provides general tax information only. If you are investing through a tax-advantaged account, such as an IRA or an employer-sponsored retirement or savings plan, special tax rules apply. Please consult your tax advisor for detailed information about any tax consequences for you.
General Information
Backup withholding. By law, Vanguard must withhold 24% of any taxable distributions or redemptions from your account if you do not:
• Provide your correct taxpayer identification number.
• Certify that the taxpayer identification number is correct.
• Confirm that you are not subject to backup withholding.
Similarly, Vanguard (or your intermediary) must withhold taxes from your account if the IRS instructs us to do so.
Foreign investors. Vanguard funds offered for sale in the United States (Vanguard U.S. funds), including the Funds offered in this prospectus, are not widely available outside the United States. Non-U.S. investors should be aware that U.S. withholding and estate taxes and certain U.S. tax reporting requirements may apply to any investments in Vanguard U.S. funds. Foreign investors should visit the non-U.S. investors page on our website at vanguard.com for information on Vanguard’s non-U.S. products.
Invalid addresses. If an income dividend distribution or capital gains distribution check mailed to your address of record is returned as undeliverable, Vanguard will automatically reinvest the distribution and all future distributions until you provide us with a valid mailing address. Reinvestments will receive the net asset value calculated on the date of the reinvestment.
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Share Price
Share price, also known as net asset value (NAV), is calculated as of the close of regular trading on the New York Stock Exchange (NYSE), generally 4 p.m., Eastern time, on each day that the NYSE is open for business (a business day). In the rare event the NYSE experiences unanticipated disruptions and is unavailable at the close of the trading day, NAVs will be calculated as of the close of regular trading on the Nasdaq (or another alternate exchange if the Nasdaq is unavailable, as determined at Vanguard’s discretion), generally 4 p.m., Eastern time. Each share class has its own NAV, which is computed by dividing the total assets, minus liabilities, allocated to the share class by the number of Fund shares outstanding for that class. On U.S. holidays or other days when the NYSE is closed, the NAV is not calculated, and the Funds do not sell or redeem shares. However, on those days the value of a Fund’s assets may be affected to the extent that the Fund holds securities that change in value on those days (such as foreign securities that trade on foreign markets that are open).
Debt securities held by a Vanguard fund are valued based on information furnished by an independent pricing service or market quotations. When a fund determines that pricing-service information or market quotations either are not readily available or do not accurately reflect the value of a security, the security is priced at its fair value (the amount that the owner might reasonably expect to receive upon the current sale of the security).
The values of any foreign securities held by a fund are converted into U.S. dollars using an exchange rate obtained from an independent third party as of the close of regular trading on the NYSE. The values of any mutual fund shares, including institutional money market fund shares, held by a fund are based on the NAVs of the shares. The values of any ETF shares or closed-end fund shares held by a fund are based on the market value of the shares.
A fund also may use fair-value pricing on bond market holidays when the fund is open for business (such as Columbus Day and Veterans Day). Fair-value prices are determined by Vanguard according to procedures adopted by the board of trustees. When fair-value pricing is employed, the prices of securities used by a fund to calculate the NAV may differ from quoted or published prices for the same securities.
Vanguard fund share prices are published daily on our website at vanguard.com/prices.
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Financial Highlights
Financial highlights information is intended to help you understand a fund’s performance for the past five years (or, if shorter, its period of operations). Certain information reflects financial results for a single fund share. Total return represents the rate that an investor would have earned or lost each period on an investment in a fund or share class (assuming reinvestment of all distributions). This information has been obtained from the financial statements audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, whose report, along with fund financial statements, is included in a fund’s most recent annual report to shareholders. You may obtain a free copy of a fund’s latest annual or semiannual report, which is available upon request.
Vanguard Short-Term Treasury Fund Investor Shares
 
Year Ended January 31,
For a Share Outstanding Throughout Each Period
2021
2020
2019
2018
2017
Net Asset Value, Beginning of Period
$10.64
$10.48
$10.49
$10.65
$10.73
Investment Operations
 
 
 
 
 
Net Investment Income
0.0701
0.2451
0.2271
0.1271
0.094
Net Realized and Unrealized Gain (Loss) on Investments
0.286
0.160
(0.009)
(0.160)
(0.048)
Total from Investment Operations
0.356
0.405
0.218
(0.033)
0.046
Distributions
 
 
 
 
 
Dividends from Net Investment Income
(0.070)
(0.245)
(0.228)
(0.127)
(0.094)
Distributions from Realized Capital Gains
(0.156)
(0.032)
Total Distributions
(0.226)
(0.245)
(0.228)
(0.127)
(0.126)
Net Asset Value, End of Period
$10.77
$10.64
$10.48
$10.49
$10.65
Total Return2
3.35%
3.91%
2.11%
–0.31%
0.43%
Ratios/Supplemental Data
 
 
 
 
 
Net Assets, End of Period (Millions)
$701
$655
$671
$737
$900
Ratio of Total Expenses to Average Net Assets
0.20%
0.20%
0.20%
0.20%
0.20%
Ratio of Net Investment Income to Average Net Assets
0.64%
2.30%
2.18%
1.20%
0.87%
Portfolio Turnover Rate3
357%
340%
282%
280%
249%
1
Calculated based on average shares outstanding.
2
Total returns do not include account service fees that may have applied in the periods shown.
3
Includes 57%, 5%, 37%, 7%, and 3%, respectively, attributable to mortgage-dollar-roll activity.
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Vanguard Short-Term Treasury Fund Admiral Shares
 
Year Ended January 31,
For a Share Outstanding Throughout Each Period
2021
2020
2019
2018
2017
Net Asset Value, Beginning of Period
$10.64
$10.48
$10.49
$10.65
$10.73
Investment Operations
 
 
 
 
 
Net Investment Income
0.0791
0.2541
0.2381
0.1381
0.105
Net Realized and Unrealized Gain (Loss) on Investments
0.288
0.162
(0.010)
(0.160)
(0.048)
Total from Investment Operations
0.367
0.416
0.228
(0.022)
0.057
Distributions
 
 
 
 
 
Dividends from Net Investment Income
(0.081)
(0.256)
(0.238)
(0.138)
(0.105)
Distributions from Realized Capital Gains
(0.156)
(0.032)
Total Distributions
(0.237)
(0.256)
(0.238)
(0.138)
(0.137)
Net Asset Value, End of Period
$10.77
$10.64
$10.48
$10.49
$10.65
Total Return2
3.46%
4.01%
2.21%
–0.21%
0.53%
Ratios/Supplemental Data
 
 
 
 
 
Net Assets, End of Period (Millions)
$7,818
$8,243
$7,385
$7,044
$6,805
Ratio of Total Expenses to Average Net Assets
0.10%
0.10%
0.10%
0.10%
0.10%
Ratio of Net Investment Income to Average Net Assets
0.73%
2.40%
2.28%
1.30%
0.97%
Portfolio Turnover Rate3
357%
340%
282%
280%
249%
1
Calculated based on average shares outstanding.
2
Total returns do not include account service fees that may have applied in the periods shown.
3
Includes 57%, 5%, 37%, 7%, and 3%, respectively, attributable to mortgage-dollar-roll activity.
69

Vanguard Short-Term Federal Fund Investor Shares
 
Year Ended January 31,
For a Share Outstanding Throughout Each Period
2021
2020
2019
2018
2017
Net Asset Value, Beginning of Period
$10.79
$10.57
$10.55
$10.70
$10.79
Investment Operations