Fund Description

Vanguard Short-Term Bond Index Fund was incepted in March 1994 and is managed by the Vanguard Group. The objective of the fund is to seek a high level of interest income. The fund attempts to match the performance of the unmanaged Lehman Brothers 1-5 Year Government/Corporate Bond Index, which is made up of some 1,500 short-term bonds issued by the U.S. Treasury, federal agencies, and corporations. Because it is not cost-effective to own every security in the index, the fund invests in a large sample that matches key characteristics of the index. The fund holds a higher percentage than the index in high-quality corporate securities and a lower percentage in Treasury securities. The fund maintains an average maturity between 1 and 5 years. The fund excludes Government National Mortgage Association's and other mortgage-backed securities. The fund declares dividends on daily basis and distributes on the first business day of every month. Capital gains are distributed in December.