Why is Vanguard launching Vanguard Core Bond Fund?

We believe most investors should have broad exposure to the fixed income market in their asset allocation. While Vanguard Total Bond Market Index Fund features passive fixed income management, we didn’t offer an equivalent actively managed fund. Vanguard Core Bond Fund is an option for investors who prefer active management.

Who should buy this fund?

Vanguard Core Bond Fund will offer broad exposure primarily to the U.S. fixed income market, and can serve as a low-cost, core holding for investors who prefer active management. The fund is designed to provide a transparent, risk-controlled option, especially in comparison with many competitor funds. Some bond funds use active investment approaches that may introduce significant exposure to high-yield bonds1, reducing the diversification benefits many investors want. The Vanguard Core Bond Fund limits exposure to these high-yield bonds to 5% of its holdings.

Who will manage the fund?

Vanguard Fixed Income Group will manage the fund. Senior portfolio managers Gregory S. Nassour, CFA; Brian Quigley; and Gemma Wright-Casparius will serve as co-portfolio managers. With 71 total years of investment management experience in aggregate, the three managers currently oversee multiple investment-grade2 corporate bond, Treasury, and government bond funds.

Which share classes will be available, and what are their expense ratios and initial investment minimums?

The fund will be available in Investor Shares with a $3,000 minimum and an estimated 0.25% expense ratio. Admiral Shares have a $50,000 minimum and an estimated 0.15% expense ratio.

What is the fund’s benchmark?

The fund will use the Barclays U.S. Aggregate Float Adjusted Index.

How frequently will the fund pay dividends and capital gains?

Dividends will be declared and paid on a monthly basis, and capital gains, if any, on an annual basis.

How long is the fund’s subscription period?

The period will run from March 10, 2016, through March 24, 2016. During this time, all shares will be priced at $10 per share for Investor Shares and $20 per share for Admiral Shares.

Where will my assets be invested during the subscription period?

All assets will be held directly or indirectly in money market instruments.

1High-yield bonds generally have medium- and lower-range credit quality ratings and are therefore subject to a higher level of credit risk than bonds with higher credit quality ratings.

2Investment-grade is a rating that indicates that a corporate bond has a relatively low risk of default.

All investing is subject to risk, including possible loss of principal.

Investments in bonds are subject to interest rate, credit, and inflation risk.