Vanguard Files for Low-Cost Bond ETFs.

VALLEY FORGE, Pa. -- Vanguard today filed a registration statement with the U.S. Securities and Exchange Commission (SEC) to offer exchange-traded shares for four existing bond index funds: Vanguard[R] Total Bond Market Index Fund, Vanguard Short-Term Bond Index Fund, Vanguard Intermediate-Term Bond Index Fund, and Vanguard Long-Term Bond Index Fund. Vanguard's ability to offer bond ETFs is contingent on the SEC's approval of a pending exemptive application.

"With Vanguard's equity ETFs gaining momentum in the marketplace, we look forward to broadening our offerings with a series of bond ETFs," said Vanguard Chief Investment Officer Gus Sauter, who noted that assets in Vanguard ETFs nearly doubled in 2006 to $22 billion. "These four Vanguard bond ETFs will provide investors with broadly diversified exposure to the entire U.S. bond market and discrete segments of the market at an extremely low cost of 0.11%."

Vanguard's ETFs are uniquely structured as separate share classes of existing mutual funds. Vanguard Total Bond Market ETF will be a share class of the $40 billion Vanguard Total Bond Market Index Fund, the industry's first bond index fund and one of the largest bond mutual funds in the country. The fund, introduced in 1986, tracks the performance of the market-weighted Lehman Brothers Aggregate Bond Index and holds nearly 2,800 corporate, Treasury, agency, and mortgage securities.

The three other bond ETFs will be based on separate shares of existing, well-diversified Vanguard bond index funds that target specific maturity segments of the domestic bond market, as detailed in the table below.

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The four bond ETFs will be managed by the Vanguard Fixed Income Group, which oversees $310 billion in assets, including $65 billion in bond index fund assets.

Vanguard launched its first ETF in 2001 and, over the past five years, has broadened its ETF line-up to 27 offerings that cover an array of markets and styles. In December 2006, Vanguard filed a registration statement with the SEC for Vanguard FTSE All-World ex USA Index Fund, an international equity fund that will invest in developed and emerging markets. The fund will offer ETF Shares and is expected to be available in the first quarter of 2007.

The new international ETF and broad bond market ETF will round out Vanguard's total market ETF offerings. The $6.9 billion Vanguard Total Stock Market ETF (VTI), which tracks the entire U.S. stock market, is the lowest-cost ETF in the marketplace, with an expense ratio of 0.07% (source: Lipper Inc., 2006).

The Vanguard Group, headquartered in Valley Forge, Pennsylvania, is the nation's second-largest mutual fund firm and a leading provider of company-sponsored retirement plan services. Vanguard manages more than $1.1 trillion in U.S. mutual fund assets, including $300 billion in employer-sponsored retirement plans. Vanguard offers more than 140 funds to U.S. investors and more than 40 additional funds in foreign markets.

All investments are subject to risk. Diversification does not ensure a profit or protect against a loss in a declining market.

A registration statement relating to the Vanguard Bond ETFs has been filed with the Securities and Exchange Commission but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This communication shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, these securities in any state in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state. Copies of the final prospectus can be obtained from Vanguard. Please note that a preliminary prospectus is subject to change.

For more information, visit www.vanguard.com, or call 800-662-7447 for Vanguard Funds and 800-522-5555 for Vanguard annuity products, to obtain fund and annuity contract prospectuses. Visit our website, call 800-992-8327, or contact your broker to obtain a product description and prospectus for Vanguard ETF Shares. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.

Vanguard ETF Shares can be bought and sold only through a broker (who will charge a commission) and cannot be redeemed with the issuing fund. The market price of Vanguard ETF Shares may be more or less than net asset value.

All ETF products are subject to market risk, which may result in the loss of principal.

Vanguard assets are as of December 31, 2006, unless otherwise noted.

Vanguard and Vanguard ETFs are trademarks of The Vanguard Group, Inc. All other marks are the exclusive property of their respective owners.

U.S. Pat. No. 6,879,964 B2.

Vanguard Marketing Corporation, Distributor.