Prospectus
Vanguard Target Maturity Corporate Bond ETFs
Exchange-traded
fund shares that are not individually redeemable and are listed on
Nasdaq
Vanguard Target
Maturity 2027 Corporate Bond ETF Shares (VBCA)
Vanguard Target Maturity 2028 Corporate Bond ETF Shares (VBCB)
Vanguard Target Maturity 2029 Corporate Bond ETF Shares (VBCC)
Vanguard Target Maturity 2030 Corporate Bond ETF Shares (VBCD)
Vanguard Target Maturity 2031 Corporate Bond ETF Shares (VBCE)
Vanguard Target Maturity 2032 Corporate Bond ETF Shares (VBCF)
Vanguard Target Maturity 2033 Corporate Bond ETF Shares (VBCG)
Vanguard Target Maturity 2034 Corporate Bond ETF Shares (VBCH)
Vanguard Target Maturity 2035 Corporate Bond ETF Shares (VBCI)
Vanguard Target Maturity 2036 Corporate Bond ETF Shares (VBCJ)
Vanguard Target Maturity 2028 Corporate Bond ETF Shares (VBCB)
Vanguard Target Maturity 2029 Corporate Bond ETF Shares (VBCC)
Vanguard Target Maturity 2030 Corporate Bond ETF Shares (VBCD)
Vanguard Target Maturity 2031 Corporate Bond ETF Shares (VBCE)
Vanguard Target Maturity 2032 Corporate Bond ETF Shares (VBCF)
Vanguard Target Maturity 2033 Corporate Bond ETF Shares (VBCG)
Vanguard Target Maturity 2034 Corporate Bond ETF Shares (VBCH)
Vanguard Target Maturity 2035 Corporate Bond ETF Shares (VBCI)
Vanguard Target Maturity 2036 Corporate Bond ETF Shares (VBCJ)
This
is the Funds’ initial Prospectus, so it does not contain performance
data.
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.
(Fees paid directly from your investment)
|
| |
|
Transaction
Fee on Purchases and Sales |
|
|
Transaction
Fee on Reinvested Dividends |
|
*
(Expenses that you pay each year as a percentage of the value of your investment)
|
| |
|
Management
Fees |
% |
|
12b-1
Distribution Fee |
|
|
Other
Expenses |
% |
|
Total
Annual Fund Operating Expenses1
|
% |
1
|
1
Year |
3
Years |
|
$ |
$ |
1
2
Principal
Risks
3
4
During the 12 months prior to the planned liquidation date, the Fund’s yield generally will tend to move toward prevailing money market rates. As a result, the Fund’s yield may be lower than prevailing bond yields and/or the yields of bonds previously held by the Fund. This is especially relevant if you purchase shares during the year of the Planned Liquidation Date.
5
Investment
Advisor
The Vanguard Group,
Inc. (Vanguard) through its wholly owned subsidiary, Vanguard Capital Management
(VCM). VCM exercises portfolio management responsibilities for the
Fund.
Portfolio
Managers
Joshua C.
Barrickman, CFA, Principal of Vanguard and Portfolio Manager at VCM. He has
co-managed the Fund since its inception in March 2026.
Jake Riley, CFA,
Portfolio Manager at VCM. He has co-managed the Fund since its inception in
March 2026.
Purchase
and Sale of Fund Shares
ETF shares may only
be bought and sold in the secondary market through a brokerage firm. The price
you pay or receive for ETF shares will be the prevailing market price, which may
be more (premium) or less (discount) than the NAV of the shares. The brokerage
firm may charge you a commission to execute the transaction. Unless imposed by
your brokerage firm, there is no minimum dollar amount you must invest and no
minimum number of shares you must buy. ETF shares cannot be directly purchased
from or redeemed with the
6
Fund, except by
certain authorized broker-dealers. These broker-dealers may purchase and redeem
ETF shares only in large blocks known as creation units, typically in exchange
for baskets of securities.
An investor may
incur costs attributable to the difference between the highest price a buyer is
willing to pay to purchase ETF shares (bid) and the lowest price a seller is
willing to accept for ETF shares (ask) when buying or selling shares in the
secondary market (bid-ask spread). Recent information, including information on
the Fund’s NAV, market price, premiums and discounts, and bid-ask spreads, is
available online at vanguard.com.
Tax
Information
The Fund’s
distributions may be taxable as ordinary income or capital gains. 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. You
should consult your own tax advisor with respect to any particular U.S. or
non-U.S. tax consequences of your investment in the Fund. Additionally,
liquidation distributions are generally treated as a redemption of Fund shares,
resulting in capital gain or loss. For shareholders who have held their fund
shares for one year or less, any such liquidation distributions would result in
short-term gain or loss.
Payments
to Financial Intermediaries
The Fund and its
advisor do not pay financial intermediaries for sales of Fund
shares.
7
(Fees paid directly from your investment)
|
| |
|
Transaction
Fee on Purchases and Sales |
|
|
Transaction
Fee on Reinvested Dividends |
|
*
(Expenses that you pay each year as a percentage of the value of your investment)
|
| |
|
Management
Fees |
% |
|
12b-1
Distribution Fee |
|
|
Other
Expenses |
% |
|
Total
Annual Fund Operating Expenses1
|
% |
1
|
1
Year |
3
Years |
|
$ |
$ |
8
9
Principal
Risks
10
11
During the 12 months prior to the planned liquidation date, the Fund’s yield generally will tend to move toward prevailing money market rates. As a result, the Fund’s yield may be lower than prevailing bond yields and/or the yields of bonds previously held by the Fund. This is especially relevant if you purchase shares during the year of the Planned Liquidation Date.
12
Investment
Advisor
The Vanguard Group,
Inc. (Vanguard) through its wholly owned subsidiary, Vanguard Capital Management
(VCM). VCM exercises portfolio management responsibilities for the
Fund.
Portfolio
Managers
Joshua C.
Barrickman, CFA, Principal of Vanguard and Portfolio Manager at VCM. He has
co-managed the Fund since its inception in March 2026.
Jake Riley, CFA,
Portfolio Manager at VCM. He has co-managed the Fund since its inception in
March 2026.
Purchase
and Sale of Fund Shares
ETF shares may only
be bought and sold in the secondary market through a brokerage firm. The price
you pay or receive for ETF shares will be the prevailing market price, which may
be more (premium) or less (discount) than the NAV of the shares. The brokerage
firm may charge you a commission to execute the transaction. Unless imposed by
your brokerage firm, there is no minimum dollar amount you must invest and no
minimum number of shares you must buy. ETF shares cannot be directly purchased
from or redeemed with the
13
Fund, except by
certain authorized broker-dealers. These broker-dealers may purchase and redeem
ETF shares only in large blocks known as creation units, typically in exchange
for baskets of securities.
An investor may
incur costs attributable to the difference between the highest price a buyer is
willing to pay to purchase ETF shares (bid) and the lowest price a seller is
willing to accept for ETF shares (ask) when buying or selling shares in the
secondary market (bid-ask spread). Recent information, including information on
the Fund’s NAV, market price, premiums and discounts, and bid-ask spreads, is
available online at vanguard.com.
Tax
Information
The Fund’s
distributions may be taxable as ordinary income or capital gains. 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. You
should consult your own tax advisor with respect to any particular U.S. or
non-U.S. tax consequences of your investment in the Fund. Additionally,
liquidation distributions are generally treated as a redemption of Fund shares,
resulting in capital gain or loss. For shareholders who have held their fund
shares for one year or less, any such liquidation distributions would result in
short-term gain or loss.
Payments
to Financial Intermediaries
The Fund and its
advisor do not pay financial intermediaries for sales of Fund
shares.
14
(Fees paid directly from your investment)
|
| |
|
Transaction
Fee on Purchases and Sales |
|
|
Transaction
Fee on Reinvested Dividends |
|
*
(Expenses that you pay each year as a percentage of the value of your investment)
|
| |
|
Management
Fees |
% |
|
12b-1
Distribution Fee |
|
|
Other
Expenses |
% |
|
Total
Annual Fund Operating Expenses1
|
% |
1
|
1
Year |
3
Years |
|
$ |
$ |
15
16
Principal
Risks
17
18
During the 12 months prior to the planned liquidation date, the Fund’s yield generally will tend to move toward prevailing money market rates. As a result, the Fund’s yield may be lower than prevailing bond yields and/or the yields of bonds previously held by the Fund. This is especially relevant if you purchase shares during the year of the Planned Liquidation Date.
19
Investment
Advisor
The Vanguard Group,
Inc. (Vanguard) through its wholly owned subsidiary, Vanguard Capital Management
(VCM). VCM exercises portfolio management responsibilities for the
Fund.
Portfolio
Managers
Joshua C.
Barrickman, CFA, Principal of Vanguard and Portfolio Manager at VCM. He has
co-managed the Fund since its inception in March 2026.
Jake Riley, CFA,
Portfolio Manager at VCM. He has co-managed the Fund since its inception in
March 2026.
Purchase
and Sale of Fund Shares
ETF shares may only
be bought and sold in the secondary market through a brokerage firm. The price
you pay or receive for ETF shares will be the prevailing market price, which may
be more (premium) or less (discount) than the NAV of the shares. The brokerage
firm may charge you a commission to execute the transaction. Unless imposed by
your brokerage firm, there is no minimum dollar amount you must invest and no
minimum number of shares you must buy. ETF shares cannot be directly purchased
from or redeemed with the
20
Fund, except by
certain authorized broker-dealers. These broker-dealers may purchase and redeem
ETF shares only in large blocks known as creation units, typically in exchange
for baskets of securities.
An investor may
incur costs attributable to the difference between the highest price a buyer is
willing to pay to purchase ETF shares (bid) and the lowest price a seller is
willing to accept for ETF shares (ask) when buying or selling shares in the
secondary market (bid-ask spread). Recent information, including information on
the Fund’s NAV, market price, premiums and discounts, and bid-ask spreads, is
available online at vanguard.com.
Tax
Information
The Fund’s
distributions may be taxable as ordinary income or capital gains. 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. You
should consult your own tax advisor with respect to any particular U.S. or
non-U.S. tax consequences of your investment in the Fund. Additionally,
liquidation distributions are generally treated as a redemption of Fund shares,
resulting in capital gain or loss. For shareholders who have held their fund
shares for one year or less, any such liquidation distributions would result in
short-term gain or loss.
Payments
to Financial Intermediaries
The Fund and its
advisor do not pay financial intermediaries for sales of Fund
shares.
21
(Fees paid directly from your investment)
|
| |
|
Transaction
Fee on Purchases and Sales |
|
|
Transaction
Fee on Reinvested Dividends |
|
*
(Expenses that you pay each year as a percentage of the value of your investment)
|
| |
|
Management
Fees |
% |
|
12b-1
Distribution Fee |
|
|
Other
Expenses |
% |
|
Total
Annual Fund Operating Expenses1
|
% |
1
|
1
Year |
3
Years |
|
$ |
$ |
22
23
Principal
Risks
24
25
During the 12 months prior to the planned liquidation date, the Fund’s yield generally will tend to move toward prevailing money market rates. As a result, the Fund’s yield may be lower than prevailing bond yields and/or the yields of bonds previously held by the Fund. This is especially relevant if you purchase shares during the year of the Planned Liquidation Date.
26
Investment
Advisor
The Vanguard Group,
Inc. (Vanguard) through its wholly owned subsidiary, Vanguard Capital Management
(VCM). VCM exercises portfolio management responsibilities for the
Fund.
Portfolio
Managers
Joshua C.
Barrickman, CFA, Principal of Vanguard and Portfolio Manager at VCM. He has
co-managed the Fund since its inception in March 2026.
Jake Riley, CFA,
Portfolio Manager at VCM. He has co-managed the Fund since its inception in
March 2026.
Purchase
and Sale of Fund Shares
ETF shares may only
be bought and sold in the secondary market through a brokerage firm. The price
you pay or receive for ETF shares will be the prevailing market price, which may
be more (premium) or less (discount) than the NAV of the shares. The brokerage
firm may charge you a commission to execute the transaction. Unless imposed by
your brokerage firm, there is no minimum dollar amount you must invest and no
minimum number of shares you must buy. ETF shares cannot be directly purchased
from or redeemed with the
27
Fund, except by
certain authorized broker-dealers. These broker-dealers may purchase and redeem
ETF shares only in large blocks known as creation units, typically in exchange
for baskets of securities.
An investor may
incur costs attributable to the difference between the highest price a buyer is
willing to pay to purchase ETF shares (bid) and the lowest price a seller is
willing to accept for ETF shares (ask) when buying or selling shares in the
secondary market (bid-ask spread). Recent information, including information on
the Fund’s NAV, market price, premiums and discounts, and bid-ask spreads, is
available online at vanguard.com.
Tax
Information
The Fund’s
distributions may be taxable as ordinary income or capital gains. 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. You
should consult your own tax advisor with respect to any particular U.S. or
non-U.S. tax consequences of your investment in the Fund. Additionally,
liquidation distributions are generally treated as a redemption of Fund shares,
resulting in capital gain or loss. For shareholders who have held their fund
shares for one year or less, any such liquidation distributions would result in
short-term gain or loss.
Payments
to Financial Intermediaries
The Fund and its
advisor do not pay financial intermediaries for sales of Fund
shares.
28
(Fees paid directly from your investment)
|
| |
|
Transaction
Fee on Purchases and Sales |
|
|
Transaction
Fee on Reinvested Dividends |
|
*
(Expenses that you pay each year as a percentage of the value of your investment)
|
| |
|
Management
Fees |
% |
|
12b-1
Distribution Fee |
|
|
Other
Expenses |
% |
|
Total
Annual Fund Operating Expenses1
|
% |
1
|
1
Year |
3
Years |
|
$ |
$ |
29
30
Principal
Risks
31
32
During the 12 months prior to the planned liquidation date, the Fund’s yield generally will tend to move toward prevailing money market rates. As a result, the Fund’s yield may be lower than prevailing bond yields and/or the yields of bonds previously held by the Fund. This is especially relevant if you purchase shares during the year of the Planned Liquidation Date.
33
Investment
Advisor
The Vanguard Group,
Inc. (Vanguard) through its wholly owned subsidiary, Vanguard Capital Management
(VCM). VCM exercises portfolio management responsibilities for the
Fund.
Portfolio
Managers
Joshua C.
Barrickman, CFA, Principal of Vanguard and Portfolio Manager at VCM. He has
co-managed the Fund since its inception in March 2026.
Jake Riley, CFA,
Portfolio Manager at VCM. He has co-managed the Fund since its inception in
March 2026.
Purchase
and Sale of Fund Shares
ETF shares may only
be bought and sold in the secondary market through a brokerage firm. The price
you pay or receive for ETF shares will be the prevailing market price, which may
be more (premium) or less (discount) than the NAV of the shares. The brokerage
firm may charge you a commission to execute the transaction. Unless imposed by
your brokerage firm, there is no minimum dollar amount you must invest and no
minimum number of shares you must buy. ETF shares cannot be directly purchased
from or redeemed with the
34
Fund, except by
certain authorized broker-dealers. These broker-dealers may purchase and redeem
ETF shares only in large blocks known as creation units, typically in exchange
for baskets of securities.
An investor may
incur costs attributable to the difference between the highest price a buyer is
willing to pay to purchase ETF shares (bid) and the lowest price a seller is
willing to accept for ETF shares (ask) when buying or selling shares in the
secondary market (bid-ask spread). Recent information, including information on
the Fund’s NAV, market price, premiums and discounts, and bid-ask spreads, is
available online at vanguard.com.
Tax
Information
The Fund’s
distributions may be taxable as ordinary income or capital gains. 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. You
should consult your own tax advisor with respect to any particular U.S. or
non-U.S. tax consequences of your investment in the Fund. Additionally,
liquidation distributions are generally treated as a redemption of Fund shares,
resulting in capital gain or loss. For shareholders who have held their fund
shares for one year or less, any such liquidation distributions would result in
short-term gain or loss.
Payments
to Financial Intermediaries
The Fund and its
advisor do not pay financial intermediaries for sales of Fund
shares.
35
(Fees paid directly from your investment)
|
| |
|
Transaction
Fee on Purchases and Sales |
|
|
Transaction
Fee on Reinvested Dividends |
|
*
(Expenses that you pay each year as a percentage of the value of your investment)
|
| |
|
Management
Fees |
% |
|
12b-1
Distribution Fee |
|
|
Other
Expenses |
% |
|
Total
Annual Fund Operating Expenses1
|
% |
1
|
1
Year |
3
Years |
|
$ |
$ |
36
37
Principal
Risks
38
39
During the 12 months prior to the planned liquidation date, the Fund’s yield generally will tend to move toward prevailing money market rates. As a result, the Fund’s yield may be lower than prevailing bond yields and/or the yields of bonds previously held by the Fund. This is especially relevant if you purchase shares during the year of the Planned Liquidation Date.
40
Investment
Advisor
The Vanguard Group,
Inc. (Vanguard) through its wholly owned subsidiary, Vanguard Capital Management
(VCM). VCM exercises portfolio management responsibilities for the
Fund.
Portfolio
Managers
Joshua C.
Barrickman, CFA, Principal of Vanguard and Portfolio Manager at VCM. He has
co-managed the Fund since its inception in March 2026.
Jake Riley, CFA,
Portfolio Manager at VCM. He has co-managed the Fund since its inception in
March 2026.
Purchase
and Sale of Fund Shares
ETF shares may only
be bought and sold in the secondary market through a brokerage firm. The price
you pay or receive for ETF shares will be the prevailing market price, which may
be more (premium) or less (discount) than the NAV of the shares. The brokerage
firm may charge you a commission to execute the transaction. Unless imposed by
your brokerage firm, there is no minimum dollar amount you must invest and no
minimum number of shares you must buy. ETF shares cannot be directly purchased
from or redeemed with the
41
Fund, except by
certain authorized broker-dealers. These broker-dealers may purchase and redeem
ETF shares only in large blocks known as creation units, typically in exchange
for baskets of securities.
An investor may
incur costs attributable to the difference between the highest price a buyer is
willing to pay to purchase ETF shares (bid) and the lowest price a seller is
willing to accept for ETF shares (ask) when buying or selling shares in the
secondary market (bid-ask spread). Recent information, including information on
the Fund’s NAV, market price, premiums and discounts, and bid-ask spreads, is
available online at vanguard.com.
Tax
Information
The Fund’s
distributions may be taxable as ordinary income or capital gains. 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. You
should consult your own tax advisor with respect to any particular U.S. or
non-U.S. tax consequences of your investment in the Fund. Additionally,
liquidation distributions are generally treated as a redemption of Fund shares,
resulting in capital gain or loss. For shareholders who have held their fund
shares for one year or less, any such liquidation distributions would result in
short-term gain or loss.
Payments
to Financial Intermediaries
The Fund and its
advisor do not pay financial intermediaries for sales of Fund
shares.
42
(Fees paid directly from your investment)
|
| |
|
Transaction
Fee on Purchases and Sales |
|
|
Transaction
Fee on Reinvested Dividends |
|
*
(Expenses that you pay each year as a percentage of the value of your investment)
|
| |
|
Management
Fees |
% |
|
12b-1
Distribution Fee |
|
|
Other
Expenses |
% |
|
Total
Annual Fund Operating Expenses1
|
% |
1
|
1
Year |
3
Years |
|
$ |
$ |
43
44
Principal
Risks
45
46
During the 12 months prior to the planned liquidation date, the Fund’s yield generally will tend to move toward prevailing money market rates. As a result, the Fund’s yield may be lower than prevailing bond yields and/or the yields of bonds previously held by the Fund. This is especially relevant if you purchase shares during the year of the Planned Liquidation Date.
47
Investment
Advisor
The Vanguard Group,
Inc. (Vanguard) through its wholly owned subsidiary, Vanguard Capital Management
(VCM). VCM exercises portfolio management responsibilities for the
Fund.
Portfolio
Managers
Joshua C.
Barrickman, CFA, Principal of Vanguard and Portfolio Manager at VCM. He has
co-managed the Fund since its inception in March 2026.
Jake Riley, CFA,
Portfolio Manager at VCM. He has co-managed the Fund since its inception in
March 2026.
Purchase
and Sale of Fund Shares
ETF shares may only
be bought and sold in the secondary market through a brokerage firm. The price
you pay or receive for ETF shares will be the prevailing market price, which may
be more (premium) or less (discount) than the NAV of the shares. The brokerage
firm may charge you a commission to execute the transaction. Unless imposed by
your brokerage firm, there is no minimum dollar amount you must invest and no
minimum number of shares you must buy. ETF shares cannot be directly purchased
from or redeemed with the
48
Fund, except by
certain authorized broker-dealers. These broker-dealers may purchase and redeem
ETF shares only in large blocks known as creation units, typically in exchange
for baskets of securities.
An investor may
incur costs attributable to the difference between the highest price a buyer is
willing to pay to purchase ETF shares (bid) and the lowest price a seller is
willing to accept for ETF shares (ask) when buying or selling shares in the
secondary market (bid-ask spread). Recent information, including information on
the Fund’s NAV, market price, premiums and discounts, and bid-ask spreads, is
available online at vanguard.com.
Tax
Information
The Fund’s
distributions may be taxable as ordinary income or capital gains. 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. You
should consult your own tax advisor with respect to any particular U.S. or
non-U.S. tax consequences of your investment in the Fund. Additionally,
liquidation distributions are generally treated as a redemption of Fund shares,
resulting in capital gain or loss. For shareholders who have held their fund
shares for one year or less, any such liquidation distributions would result in
short-term gain or loss.
Payments
to Financial Intermediaries
The Fund and its
advisor do not pay financial intermediaries for sales of Fund
shares.
49
(Fees paid directly from your investment)
|
| |
|
Transaction
Fee on Purchases and Sales |
|
|
Transaction
Fee on Reinvested Dividends |
|
*
(Expenses that you pay each year as a percentage of the value of your investment)
|
| |
|
Management
Fees |
% |
|
12b-1
Distribution Fee |
|
|
Other
Expenses |
% |
|
Total
Annual Fund Operating Expenses1
|
% |
1
|
1
Year |
3
Years |
|
$ |
$ |
50
51
Principal
Risks
52
53
During the 12 months prior to the planned liquidation date, the Fund’s yield generally will tend to move toward prevailing money market rates. As a result, the Fund’s yield may be lower than prevailing bond yields and/or the yields of bonds previously held by the Fund. This is especially relevant if you purchase shares during the year of the Planned Liquidation Date.
54
Investment
Advisor
The Vanguard Group,
Inc. (Vanguard) through its wholly owned subsidiary, Vanguard Capital Management
(VCM). VCM exercises portfolio management responsibilities for the
Fund.
Portfolio
Manager
Joshua C.
Barrickman, CFA, Principal of Vanguard and Portfolio Manager at VCM. He has
co-managed the Fund since its inception in March 2026.
Jake Riley, CFA,
Portfolio Manager at VCM. He has co-managed the Fund since its inception in
March 2026.
Purchase
and Sale of Fund Shares
ETF shares may only
be bought and sold in the secondary market through a brokerage firm. The price
you pay or receive for ETF shares will be the prevailing market price, which may
be more (premium) or less (discount) than the NAV of the shares. The brokerage
firm may charge you a commission to execute the transaction. Unless imposed by
your brokerage firm, there is no minimum dollar amount you must invest and no
minimum number of shares you must buy. ETF shares cannot be directly purchased
from or redeemed with the
55
Fund, except by
certain authorized broker-dealers. These broker-dealers may purchase and redeem
ETF shares only in large blocks known as creation units, typically in exchange
for baskets of securities.
An investor may
incur costs attributable to the difference between the highest price a buyer is
willing to pay to purchase ETF shares (bid) and the lowest price a seller is
willing to accept for ETF shares (ask) when buying or selling shares in the
secondary market (bid-ask spread). Recent information, including information on
the Fund’s NAV, market price, premiums and discounts, and bid-ask spreads, is
available online at vanguard.com.
Tax
Information
The Fund’s
distributions may be taxable as ordinary income or capital gains. 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. You
should consult your own tax advisor with respect to any particular U.S. or
non-U.S. tax consequences of your investment in the Fund. Additionally,
liquidation distributions are generally treated as a redemption of Fund shares,
resulting in capital gain or loss. For shareholders who have held their fund
shares for one year or less, any such liquidation distributions would result in
short-term gain or loss.
Payments
to Financial Intermediaries
The Fund and its
advisor do not pay financial intermediaries for sales of Fund
shares.
56
(Fees paid directly from your investment)
|
| |
|
Transaction
Fee on Purchases and Sales |
|
|
Transaction
Fee on Reinvested Dividends |
|
*
(Expenses that you pay each year as a percentage of the value of your investment)
|
| |
|
Management
Fees |
% |
|
12b-1
Distribution Fee |
|
|
Other
Expenses |
% |
|
Total
Annual Fund Operating Expenses1
|
% |
1
|
1
Year |
3
Years |
|
$ |
$ |
57
58
Principal
Risks
59
60
During the 12 months prior to the planned liquidation date, the Fund’s yield generally will tend to move toward prevailing money market rates. As a result, the Fund’s yield may be lower than prevailing bond yields and/or the yields of bonds previously held by the Fund. This is especially relevant if you purchase shares during the year of the Planned Liquidation Date.
61
Investment
Advisor
The Vanguard Group,
Inc. (Vanguard) through its wholly owned subsidiary, Vanguard Capital Management
(VCM). VCM exercises portfolio management responsibilities for the
Fund.
Portfolio
Managers
Joshua C.
Barrickman, CFA, Principal of Vanguard and Portfolio Manager at VCM. He has
co-managed the Fund since its inception in March 2026.
Jake Riley, CFA,
Portfolio Manager at VCM. He has co-managed the Fund since its inception in
March 2026.
Purchase
and Sale of Fund Shares
ETF shares may only
be bought and sold in the secondary market through a brokerage firm. The price
you pay or receive for ETF shares will be the prevailing market price, which may
be more (premium) or less (discount) than the NAV of the shares. The brokerage
firm may charge you a commission to execute the transaction. Unless imposed by
your brokerage firm, there is no minimum dollar amount you must invest and no
minimum number of shares you must buy. ETF shares cannot be directly purchased
from or redeemed with the
62
Fund, except by
certain authorized broker-dealers. These broker-dealers may purchase and redeem
ETF shares only in large blocks known as creation units, typically in exchange
for baskets of securities.
An investor may
incur costs attributable to the difference between the highest price a buyer is
willing to pay to purchase ETF shares (bid) and the lowest price a seller is
willing to accept for ETF shares (ask) when buying or selling shares in the
secondary market (bid-ask spread). Recent information, including information on
the Fund’s NAV, market price, premiums and discounts, and bid-ask spreads, is
available online at vanguard.com.
Tax
Information
The Fund’s
distributions may be taxable as ordinary income or capital gains. 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. You
should consult your own tax advisor with respect to any particular U.S. or
non-U.S. tax consequences of your investment in the Fund. Additionally,
liquidation distributions are generally treated as a redemption of Fund shares,
resulting in capital gain or loss. For shareholders who have held their fund
shares for one year or less, any such liquidation distributions would result in
short-term gain or loss.
Payments
to Financial Intermediaries
The Fund and its
advisor do not pay financial intermediaries for sales of Fund
shares.
63
(Fees paid directly from your investment)
|
| |
|
Transaction
Fee on Purchases and Sales |
|
|
Transaction
Fee on Reinvested Dividends |
|
*
(Expenses that you pay each year as a percentage of the value of your investment)
|
| |
|
Management
Fees |
% |
|
12b-1
Distribution Fee |
|
|
Other
Expenses |
% |
|
Total
Annual Fund Operating Expenses1
|
% |
1
|
1
Year |
3
Years |
|
$ |
$ |
64
65
Principal
Risks
66
67
During the 12 months prior to the planned liquidation date, the Fund’s yield generally will tend to move toward prevailing money market rates. As a result, the Fund’s yield may be lower than prevailing bond yields and/or the yields of bonds previously held by the Fund. This is especially relevant if you purchase shares during the year of the Planned Liquidation Date.
68
Investment
Advisor
The Vanguard Group,
Inc. (Vanguard) through its wholly owned subsidiary, Vanguard Capital Management
(VCM). VCM exercises portfolio management responsibilities for the
Fund.
Portfolio
Managers
Joshua C.
Barrickman, CFA, Principal of Vanguard and Portfolio Manager at VCM. He has
co-managed the Fund since its inception in March 2026.
Jake Riley, CFA,
Portfolio Manager at VCM. He has co-managed the Fund since its inception in
March 2026.
Purchase
and Sale of Fund Shares
ETF shares may only
be bought and sold in the secondary market through a brokerage firm. The price
you pay or receive for ETF shares will be the prevailing market price, which may
be more (premium) or less (discount) than the NAV of the shares. The brokerage
firm may charge you a commission to execute the transaction. Unless imposed by
your brokerage firm, there is no minimum dollar amount you must invest and no
minimum number of shares you must buy. ETF shares cannot be directly purchased
from or redeemed with the
69
Fund, except by
certain authorized broker-dealers. These broker-dealers may purchase and redeem
ETF shares only in large blocks known as creation units, typically in exchange
for baskets of securities.
An investor may
incur costs attributable to the difference between the highest price a buyer is
willing to pay to purchase ETF shares (bid) and the lowest price a seller is
willing to accept for ETF shares (ask) when buying or selling shares in the
secondary market (bid-ask spread). Recent information, including information on
the Fund’s NAV, market price, premiums and discounts, and bid-ask spreads, is
available online at vanguard.com.
Tax
Information
The Fund’s
distributions may be taxable as ordinary income or capital gains. 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. You
should consult your own tax advisor with respect to any particular U.S. or
non-U.S. tax consequences of your investment in the Fund. Additionally,
liquidation distributions are generally treated as a redemption of Fund shares,
resulting in capital gain or loss. For shareholders who have held their fund
shares for one year or less, any such liquidation distributions would result in
short-term gain or loss.
Payments
to Financial Intermediaries
The Fund and its
advisor do not pay financial intermediaries for sales of Fund
shares.
70
More
on the Funds
This Prospectus
provides information about the following Vanguard exchange-traded funds (each a
“Fund” or a “Vanguard Target Maturity Corporate Bond ETF,” and collectively, the
“Funds” or the “Vanguard Target Maturity Corporate Bond ETFs”):
|
Vanguard
ETF Shares |
|
Vanguard
Target Maturity 2027 Corporate Bond ETF |
|
Vanguard
Target Maturity 2028 Corporate Bond ETF |
|
Vanguard
Target Maturity 2029 Corporate Bond ETF |
|
Vanguard
Target Maturity 2030 Corporate Bond ETF |
|
Vanguard
Target Maturity 2031 Corporate Bond ETF |
|
Vanguard
Target Maturity 2032 Corporate Bond ETF |
|
Vanguard
Target Maturity 2033 Corporate Bond ETF |
|
Vanguard
Target Maturity 2034 Corporate Bond ETF |
|
Vanguard
Target Maturity 2035 Corporate Bond ETF |
|
Vanguard
Target Maturity 2036 Corporate Bond
ETF |
Each Fund is a
series of Vanguard Wellesley Income Fund (the “Trust”). Unlike conventional
mutual fund shares, ETF shares cannot be purchased directly from or redeemed
directly with the issuing fund by an individual investor. Instead, only certain
authorized broker-dealers (“Authorized Participants”) can purchase and redeem
ETF shares directly from the issuing fund at net asset value. Authorized
Participants may purchase and redeem ETF shares from the issuing fund only in
large blocks (creation units), usually in exchange for baskets of securities.
Funds may also issue and redeem creation units in exchange for solely cash or a
combination of cash and securities. These trades may occur in-kind between
Vanguard and the Authorized Participant. Individual investors can purchase ETF
shares on the secondary market through a broker. Reading this Prospectus will
help you decide whether a Fund’s ETF shares are the right investment for
you.
As you consider an
investment in a Fund’s ETF shares, you should take into account your tolerance
for fluctuations in the securities markets. The costs of investing are another
important consideration. As a Fund shareholder, you will pay a proportionate
share of the costs of operating a Fund and any transaction costs incurred when a
Fund buys or sells securities, including costs generated by shareholders of
other share classes offered to the extent a Fund offers more than one share
class. These costs can erode a substantial portion of the gross income or the
capital appreciation a Fund achieves. Even seemingly small differences can, over
time, have a dramatic effect on a Fund’s performance.
71
Investment
Objectives and More on Principal Investment Strategies
In this section,
you will find more information about each Fund’s investment objective and the
principal investment strategies and policies that each Fund uses in pursuit of
its investment objective. The Trust’s board of trustees (the “Board”) oversees
each Fund’s management. The Board may approve changes to a Fund’s strategies or
policies in the interest of shareholders without shareholder approval unless the
strategy or policy is designated as fundamental.
Investment
Objectives
The Funds’
investment objectives are as follows:
• Vanguard
Target Maturity 2027 Corporate Bond ETF seeks to track the
performance of a market-weighted index composed of U.S. dollar-dominated,
investment-grade corporate bonds maturing in 2027.
• Vanguard Target Maturity 2028 Corporate Bond ETF seeks to track the performance of a market-weighted index composed of U.S. dollar-dominated, investment-grade corporate bonds maturing in 2028.
• Vanguard Target Maturity 2029 Corporate Bond ETF seeks to track the performance of a market-weighted index composed of U.S. dollar-dominated, investment-grade corporate bonds maturing in 2029.
• Vanguard Target Maturity 2030 Corporate Bond ETF seeks to track the performance of a market-weighted index composed of U.S. dollar-dominated, investment-grade corporate bonds maturing in 2030.
• Vanguard Target Maturity 2031 Corporate Bond ETF seeks to track the performance of a market-weighted index composed of U.S. dollar-dominated, investment-grade corporate bonds maturing in 2031.
• Vanguard Target Maturity 2032 Corporate Bond ETF seeks to track the performance of a market-weighted index composed of U.S. dollar-dominated, investment-grade corporate bonds maturing in 2032.
• Vanguard Target Maturity 2033 Corporate Bond ETF seeks to track the performance of a market-weighted index composed of U.S. dollar-dominated, investment-grade corporate bonds maturing in 2033.
• Vanguard Target Maturity 2034 Corporate Bond ETF seeks to track the performance of a market-weighted index composed of U.S. dollar-dominated, investment-grade corporate bonds maturing in 2034.
• Vanguard Target Maturity 2035 Corporate Bond ETF seeks to track the performance of a market-weighted index composed of U.S. dollar-dominated, investment-grade corporate bonds maturing in 2035.
• Vanguard Target Maturity 2036 Corporate Bond ETF seeks to track the
• Vanguard Target Maturity 2028 Corporate Bond ETF seeks to track the performance of a market-weighted index composed of U.S. dollar-dominated, investment-grade corporate bonds maturing in 2028.
• Vanguard Target Maturity 2029 Corporate Bond ETF seeks to track the performance of a market-weighted index composed of U.S. dollar-dominated, investment-grade corporate bonds maturing in 2029.
• Vanguard Target Maturity 2030 Corporate Bond ETF seeks to track the performance of a market-weighted index composed of U.S. dollar-dominated, investment-grade corporate bonds maturing in 2030.
• Vanguard Target Maturity 2031 Corporate Bond ETF seeks to track the performance of a market-weighted index composed of U.S. dollar-dominated, investment-grade corporate bonds maturing in 2031.
• Vanguard Target Maturity 2032 Corporate Bond ETF seeks to track the performance of a market-weighted index composed of U.S. dollar-dominated, investment-grade corporate bonds maturing in 2032.
• Vanguard Target Maturity 2033 Corporate Bond ETF seeks to track the performance of a market-weighted index composed of U.S. dollar-dominated, investment-grade corporate bonds maturing in 2033.
• Vanguard Target Maturity 2034 Corporate Bond ETF seeks to track the performance of a market-weighted index composed of U.S. dollar-dominated, investment-grade corporate bonds maturing in 2034.
• Vanguard Target Maturity 2035 Corporate Bond ETF seeks to track the performance of a market-weighted index composed of U.S. dollar-dominated, investment-grade corporate bonds maturing in 2035.
• Vanguard Target Maturity 2036 Corporate Bond ETF seeks to track the
72
performance
of a market-weighted index composed of U.S. dollar-dominated, investment-grade
corporate bonds maturing in 2036.
The Funds’
investment objectives are not fundamental and may be changed without shareholder
approval.
Implementation
of Investment Objectives
To achieve its
investment objective, each Fund employs an indexing, or passive, investment
approach designed to track the performance of its Target Index.
|
What
are Index Funds? |
|
Index
funds attempt to track—not outperform—the performance of a
specified
market index. An index is a group of securities whose overall
performance
is used as a standard to measure the investment
performance
of a particular market. Some indexes represent entire
markets,
such as the U.S. stock market, while others cover a segment of a
market,
such as short-term bonds. |
|
One
cannot invest directly in an index. Instead, an index fund’s advisor will
typically
seek to hold all, or substantially all, of the securities that make up
the
fund’s target index (often referred to as “replicating” an index or a
“full
replication”
approach) or a representative sample of the securities that
make
up a fund’s target index (“sampling” an
index). |
Under normal
circumstances, each Fund invests at least 80% of its net assets, plus the amount
of any borrowings for investment purposes, in the bonds that make up the Target
Index and in securities that the advisor determines have economic
characteristics that are substantially identical to the economic characteristics
of the securities that comprise the Target Index. During the final 12 months of
operations, as the bonds held by the Fund mature, the proceeds may be reinvested
in cash and cash equivalents (including government securities and money market
funds) rather than in new securities, to prepare for the Fund’s planned
liquidation. Investments in derivatives may be counted toward a Fund’s 80%
policy to the extent that they provide investment exposure to the securities
included within the policy or to one or more market risk factors associated with
such securities. Each Fund may change its 80% policy only upon 60 days’ notice
to shareholders.
Security
Selection
Each Fund invests
by sampling its Target Index. All of a Fund’s investments will be selected
through the sampling process. Using quantitative and qualitative methods, each
Fund’s advisor generally selects a representative sample of securities that
approximates the full Target Index in terms of key risk factors and
73
other
characteristics. These factors include maturity, duration, cash flow, credit
quality, and callability of the underlying bonds. In addition, each Fund keeps
sector and subsector exposure within tight boundaries relative to its Target
Index. Because each Fund does not hold all of the securities included in its
Target Index, some of the securities (and issuers) that are held will likely be
overweighted (or underweighted) compared with the Target Index. The maximum
overweight (or underweight) is constrained at the issuer level with the goal of
producing well-diversified credit exposure in the portfolio.
For their
benchmarks, the Funds use ten separate indices licensed to Vanguard by
Intercontinental Exchange, Inc. Each of these indexes is a float-adjusted,
market-weighted index that measures the investment-grade, fixed-rate, taxable
corporate bond market and includes U.S. dollar-denominated securities that are
publicly issued by U.S. and non-U.S. industrial, utility, and financial issuers.
A limited number of the bonds included in each Target Index may be
callable.
The components of
each Target Index are reconstituted and rebalanced on a monthly basis with the
last rebalance occurring at the end of December in the year prior to the year of
a Fund’s liquidation. Bonds may enter or fall out of the Target Index on a
monthly basis. New securities are added to and removed from the Target Index in
connection with the month-end index rebalancing process. When a bond that is
included in a Target Index matures, its maturity value will be represented in
the Target Index by cash throughout the remaining life of the Target
Index.
74
The following table
shows the number of bonds held in each Target Index as of January 31,
2026:
|
Vanguard
Fund |
Number
of Bonds
in
Target Index |
|
Vanguard
Target Maturity 2027 Corporate
Bond
ETF |
640 |
|
Vanguard
Target Maturity 2028 Corporate
Bond
ETF |
625 |
|
Vanguard
Target Maturity 2029 Corporate
Bond
ETF |
540 |
|
Vanguard
Target Maturity 2030 Corporate
Bond
ETF |
678 |
|
Vanguard
Target Maturity 2031 Corporate
Bond
ETF |
432 |
|
Vanguard
Target Maturity 2032 Corporate
Bond
ETF |
376 |
|
Vanguard
Target Maturity 2033 Corporate
Bond
ETF |
307 |
|
Vanguard
Target Maturity 2034 Corporate
Bond
ETF |
347 |
|
Vanguard
Target Maturity 2035 Corporate
Bond
ETF |
379 |
|
Vanguard
Target Maturity 2036 Corporate
Bond
ETF |
95 |
The Target Indexes
are owned, calculated, and controlled by the index provider in its sole
discretion. Neither the advisor nor any of its affiliates has discretion to
select Target Index components or change a Target Index’s
methodology.
75
Additional
Information Regarding the Funds’ Investments
The Funds’
investments are described in more detail below.
|
What
are Bonds? |
|
Generally
speaking, a bond
represents a debt or loan issued by, for
example,
a corporation, a government, or a financial institution. In most
instances,
the issuer agrees to pay the bondholder a fixed, variable, or
floating
rate of interest for a specified length of time, and to repay the bond
in
full on a specified maturity
date. The income
earned by a bond (or its
yield,
when expressed as a percentage of the bond’s price) can vary
based
on its maturity.
Longer-term bonds tend to have higher yields than
shorter-term
bonds, but are more sensitive to fluctuations in value. By
contrast,
shorter-term bonds are less likely to fluctuate in value, but tend
to
have lower yields. A bond’s duration
is a measure of how sensitive its
price
is to changes in interest rates. For example, if a bond has a duration
of
2 years, its price would fall by approximately 2% when interest rates
rise
by 1%. On the other hand, the bond’s price would rise by
approximately
2% when interest rates fall by 1%. A bond’s credit
quality
rating
is an assessment of the issuer’s ability to make timely interest
payments
and repay the bond in full on its stated maturity date. The higher
a
bond’s credit quality, the greater the perceived chance that the issuer
will
meet its payment obligations (and vice versa). Investment-grade
bonds
are those whose credit quality is considered by independent bond
rating
agencies, or through independent analysis conducted by an advisor,
to
be sufficient to ensure timely payment of principal and interest under
current
economic circumstances. Below investment-grade securities,
which
include bonds commonly known as “junk bonds,” have lower credit
quality
ratings.
|
• Corporate
Bonds
are issued by businesses that want to borrow money for some purpose, often to
develop a new product or service, to expand into a new market, or to buy another
company. As with other types of bonds, the issuer promises to repay the
principal on a specific date and to make interest payments in the meantime. The
amount of interest offered depends both on market conditions and on the
financial health of the corporation issuing the bonds. For example, companies
with lower credit ratings generally need to offer a higher interest rate in
order to obtain buyers for their bonds.
• International
Dollar-Denominated Bonds are U.S.
dollar-denominated bonds issued by foreign governments, agencies and
instrumentalities of foreign governments, foreign corporations, or U.S.
affiliates of foreign corporations. Because the values of such bonds are
designated in the U.S. dollar rather than the issuer’s local currency, it is the
issuer that assumes
76
the
currency risk, usually to attract U.S. investors. As a result, the values of
international dollar-denominated bonds are not affected directly by currency
movements. However, if the foreign issuer’s local currency weakens significantly
compared to the U.S. dollar, negative perceptions of the issuer’s ability to
make payments could cause the issuer’s bonds to decline in value. Many issuers
of international dollar-denominated bonds manage this risk by hedging their
currency exposure, and their effectiveness in doing so is reflected in their
credit rating.
• 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. 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’ advisor believes
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.
More
on Fund Risks
Investing in the
securities markets can result in a loss of principal. Each Fund is subject to a
variety of risks, including the principal risks listed below, that can impact
its net asset value (NAV), performance, and ability to achieve its investment
objective.
More
on Principal Risks
General
Market Risk. The markets in
which the Funds invest can be affected by a variety of factors. These factors,
which can be real or perceived, may include economic, market, political, and
regulatory conditions and developments as well as local, regional, or global
events such as wars, military conflicts, natural disasters, and public health
issues. In addition, investor sentiment and expectations regarding these factors
can also impact the markets. Different parts of the market, including different
industries and sectors as well as different types of securities, may react
differently to factors that affect the market. These factors can contribute to
market uncertainty, market volatility, and fluctuations in the value of the
Funds’ investments, thereby resulting in potential losses to the Funds over
short or long periods.
77
Investing
in Bond Markets. Each Fund may be
impacted by the general condition of the bond markets and by factors that affect
bonds and bond issuers. For example, as a general rule, bond prices and interest
rates move in opposite directions. When interest rates rise, bond prices tend to
fall, and when interest rates fall, bond prices tend to go up. Bond income also
is affected by changes in interest rates. Interest rates can rise or fall for a
number of reasons, including, but not limited to, central bank monetary policy,
inflationary or deflationary pressures, and changes in general market and
economic conditions. Changing interest rates, including, but not limited to,
rates that fall below zero, could have unpredictable effects on the overall
market and may expose the bond markets in particular to heightened volatility
and potential illiquidity. The degree to which a Fund is impacted by the
following bond market risks may vary based on factors disclosed throughout this
Prospectus, such as the types of bonds in which it invests and the overall
credit quality, average maturity, and/or average duration of its bond
holdings.
Interest
Rate Risk. A Fund’s
investments in bonds can be sensitive to interest rate changes and may be
affected differently depending on the overall interest rate environment. During
periods of rising interest rates, bond prices overall may decline, which could
result in a decline in a Fund’s value. The prices of longer-term bonds are more
sensitive to changes in interest rates than the prices of shorter-term
bonds.
Income
Risk.
During periods of falling interest rates, a Fund’s income may decline because
the Fund may have to invest new cash flow and cash from maturing bonds in bonds
with lower yields. The income paid by shorter-term bonds is subject to a higher
degree of fluctuation than the income paid by longer-term
bonds.
Credit
Risk.
Credit risk refers to the chance that an issuer will default (fail to meet its
credit obligations) or fail to make payments in a timely manner, which could
result in a loss to a Fund. In addition, negative perceptions of an issuer’s
ability to make payments can cause the price of a security to decline. A Fund
could be impacted by factors negatively impacting the issuers of its corporate
bond holdings. For example, if a company is restructured, there could be a
substantial decline in the credit quality and market value of any bonds issued
by that company. While all debt securities are subject to credit risk to some
extent, those with higher credit quality ratings generally pose less credit risk
than those with lower credit quality ratings.
78
Bond
Liquidity Risk. If a Fund is
unable to sell a security at an advantageous time or price, its returns may be
reduced. There may be limited trading in the secondary market for certain debt
securities, which could make them more difficult to value or sell. For example,
liquidity in the corporate bond market may be impacted by overall market
conditions or by a decline in the availability of credit.
Call
Risk.
Certain bonds held by a Fund may be callable. The issuer of a callable bond has
the right to “call” (redeem) the bond before its maturity date. When a bond is
called, the principal value of the bond is repaid earlier than anticipated
(prepayment) and the investor (in this case, a Fund) no longer receives the
interest payments that would have been paid up to the expected maturity date. In
addition, bond calls and the resulting prepayments cause a Fund to lose any
price appreciation that would have occurred between the time the bond was called
and its original maturity date.
During periods of
falling interest rates, it benefits issuers to call bonds with high interest
rates. When this occurs, a Fund likely will be forced to reinvest the proceeds
of any called bonds at a lower interest rate than that of the called bonds,
resulting in a decline in the Fund’s income and a potential loss in the value of
the Fund’s investments. If a Fund holds multiple callable bonds, frequent bond
calls (as is likely during periods of falling interest rates) and the Fund’s
subsequent reinvestment of the proceeds also would increase the Fund’s turnover
rate.
Extension
Risk. During periods of
rising interest rates, certain bonds held by a Fund may be paid off
substantially more slowly than originally anticipated. As a result, the value of
the bonds may fall, resulting in a decline in a Fund’s income and a potential
loss in the value of the Fund’s investments.
Investing
in a Target Maturity Fund. In general, if held
until the Planned Liquidation Date, an investment in the Fund may produce
returns comparable to a direct investment in a group of bonds of similar
maturity and credit quality (e.g., the bonds that make up the Target Index).
However, an investment in the Fund will differ from a direct investment in bonds
in several ways. Unlike the bonds that make up the Target Index, which pay
regular interest and a fixed amount of principal at maturity, the Fund’s
distributions and liquidation amount cannot be predicted at the time of
investment. Rather, the Fund’s income distributions will vary over time. The
Fund’s income distributions also could occur at a greater (or lesser) rate than
the interest payments the Fund receives on its bond holdings, which would result
in the Fund distributing a greater (or lesser) amount to shareholders at
liquidation. The rate of the Fund’s distributions could adversely affect the tax
characterization of your returns on an
79
investment in the
Fund relative to a direct investment in bonds. Additionally, if the liquidation
amount you receive is higher or lower than the amount of your initial
investment, you may experience a gain or loss for tax purposes.
During the 12
months prior to the planned liquidation date, the Fund’s yield generally will
tend to move toward prevailing money market rates. As a result, the Fund’s yield
may be lower than prevailing bond yields and/or the yields of bonds previously
held by the Fund. This is especially relevant if you purchase shares during the
year of the Planned Liquidation Date.
Index
Investing. Each Fund is
subject to the following risks associated with index investing:
Passive
Management. Each Fund seeks to
track the performance of its Target Index regardless of how the Target Index is
performing. The advisor’s use of an indexing, or passive, approach to select and
maintain investments for each Fund means that the advisor will select
investments for the purpose of tracking the Target Index and generally will not
use strategies to reduce negative impacts to the Fund during periods of market
volatility. As a result, a Fund’s performance may be lower than it would be if
it were actively managed.
Index
Sampling Strategy. Because the Fund
does not hold all of the securities included in its Target Index, it is subject
to the risk that the representative sample of securities selected by the advisor
will, in the aggregate, vary from the investment profile of the full Target
Index.
Tracking
Error.
The performance of a Fund’s investments, in the aggregate, may not match the
investment performance of its Target Index. It is important to understand that
an index fund will never perform exactly the same as its target index because,
among other things, an index fund has operating expenses and transaction costs
and its target index does not. Beyond these inherent differences in the
operation of an index fund versus the operation of its target index, there are a
variety of other factors that can cause or result in tracking error. These may
include, but are not limited to:
○
Price differences
between the securities held by the index fund and those included in its target
index
○
Cash flows into or
out of the index fund
○
The size of the
index fund
○
Compliance with new
or existing regulatory requirements
○
Portfolio
transactions carried out by the index fund’s advisor to minimize the
distribution of capital gains
○
Changes to the
underlying securities that make up the target index
○
Errors made by the
provider of the target index
80
Tracking error risk
may be heightened during times of increased market volatility or under other
unusual market conditions. An index fund using a sampling strategy may be more
likely to experience tracking error than an index fund using a replicating
strategy.
Index
Provider. Each Fund is
subject to risks associated with its index provider. The securities that make up
a Target Index and their weighting in the Target Index are determined by the
index provider. The index provider does not provide any warranty or accept any
liability with respect to the quality, accuracy, or completeness of the Target
Index or any data used to compile the Target Index. Under normal circumstances,
the index provider rebalances (updates) the Target Index on a regular schedule.
However, the index provider may also rebalance the Target Index outside of the
regular schedule or delay or cancel a scheduled rebalance, which could result in
added costs for a Fund or cause a Fund to experience tracking error. The index
provider may make errors, and it is possible that such errors may not be
identified by the index provider for a period of time or at all. Any gains,
losses, or costs associated with or resulting from an error made by the index
provider will generally be borne by a Fund and, as a result, a Fund’s
shareholders. A Fund’s advisor does not provide any warranty or guarantee
against any errors made by the index provider.
Concentration
Risk.
Except as may be necessary to approximate the composition of its Target Index,
each Fund will not concentrate its investments in the securities of issuers
whose principal business activities are in the same industry or group of
industries. However, it is possible that a Target Index could become
concentrated due to market conditions or the performance of a single or related
group of issuers. If a Target Index becomes concentrated and a Fund needs to
concentrate in the same industry or group of industries, its performance could
be negatively impacted by the industry or industries in which it is
concentrated.
ETF
Share Trading. Because ETF shares
trade on the secondary markets, they are subject to the following
risks:
ETF
Shares Trading at Prices Other Than NAV. ETF shares may
trade on a national securities exchange at prices above, below, or at their most
recent NAV. The NAV of a Fund’s ETF shares, which typically is calculated at the
end of each business day, will generally fluctuate with changes in the market
value of the Fund’s holdings. The market prices of ETF shares will also
fluctuate, in some cases materially, in accordance with changes in NAV and the
intraday value of a Fund’s holdings, as well as the relative supply of and
demand for the ETF shares on an exchange. Differences between secondary market
prices of ETF shares and the intraday value of a Fund’s holdings may be due
largely to
81
supply and demand
forces in the secondary market, which may not be the same forces as those
influencing prices for securities held by the Fund at a particular
time.
Although it is
expected that the market price of an ETF share typically will trade close to the
value of a Fund’s holdings, market prices are not expected to correlate exactly
to a Fund’s NAV due to timing reasons, supply and demand imbalances, and other
factors. In addition, disruptions to creations and redemptions; adverse
developments impacting market makers, authorized participants, or other market
participants; or high market volatility may result in the market price of ETF
shares differing significantly from a Fund’s NAV or the intraday value of a
Fund’s holdings. As a result of these factors, among others, you may pay more
(premium) or less (discount) than NAV when you buy ETF shares on the secondary
market, and you may receive more or less than NAV when you sell those shares.
These discounts and premiums are likely to be greatest during times of market
disruption or extreme market volatility.
Cost
of Buying or Selling Shares. Individual
investors who buy or sell ETF shares through a broker may incur a brokerage
commission or other charges imposed by brokers. In addition, the market price of
ETF shares, like the price of any security on an exchange, includes a “bid-ask
spread” charged by the market makers or other participants that trade the
particular security. The bid-ask spread is the difference between the highest
price a buyer is willing to pay to purchase ETF shares (bid) and the lowest
price a seller is willing to accept for ETF shares (ask) when buying or selling
shares in the secondary market. The bid-ask spread of a Fund’s ETF shares can
vary over time based on the Fund’s trading volume and market liquidity and may
increase if the Fund’s trading volume, the bid-ask spread of the Fund’s
underlying securities, or market liquidity decrease. In times of severe market
disruption, including when trading of a Fund’s holdings may be halted, the
bid-ask spread may increase significantly. This means that ETF shares may trade
at a discount to a Fund’s NAV, and the discount is likely to be greatest during
significant market volatility.
Short
Selling. ETF shares,
similar to shares of other issuers listed on an exchange, may be sold short. In
a short sale, an investor “borrows” securities from a lender for a fee and then
sells the borrowed securities on the open market with the hope that the borrowed
securities decline in price before the investor has to repurchase the securities
to return them to the lender. Short sales of ETF shares can increase their
volatility and lead to price decreases.
Lack
of Active Trading Market. Although ETF
shares are listed on a national securities exchange, it is possible that an
active trading market may not be maintained. Although this could happen at any
time, it is more likely to occur during times of severe market disruption. If
you attempt to sell your ETF shares
82
when an active
trading market is not functioning, you may have to sell at a significant
discount to NAV. In extreme cases, you may not be able to sell your shares at
all.
Trading
Halt.
Trading of ETF shares on an exchange may be halted by the activation of
individual or market-wide trading halts (which halt trading for a specific
period of time when the price of a particular security or overall market prices
decline by a specified percentage). Trading of ETF shares may also be halted if
(1) the shares are delisted from the listing exchange without first being listed
on another exchange or (2) exchange officials determine that such action is
appropriate in the interest of a fair and orderly market or for the protection
of investors. If a trading halt or unanticipated early closing of an exchange
occurs, a shareholder may be unable to purchase or sell ETF
shares.
Authorized
Participants. Only Authorized
Participants may engage in creation or redemption transactions directly with
each Fund. Each Fund has a limited number of financial institutions that may act
as Authorized Participants. The Fund’s Authorized Participants are not obligated
to engage in creation or redemption transactions. To the extent that a Fund’s
Authorized Participants are unable to or choose not to proceed with creation
and/or redemption transactions with respect to the Fund and no other Authorized
Participants step forward to engage in creation or redemption transactions with
the Fund, the Fund’s ETF shares may trade at a discount to NAV and possibly face
trading halts and/or delisting.
Additional
Risks
Geopolitical
and Sanctions Risk. Due to growing
dependencies between global economies, geopolitical events can negatively affect
all securities, markets, and economies. It is possible that events which only
impact one geographic area could have negative short- or long-term effects on
markets, issuers, and/or exchanges in the United States and other
countries.
At times, the
United States, other governments, or other supranational bodies (e.g., the
United Nations) may impose sanctions on countries and/or entities in response to
geopolitical events or other priorities. Compliance with sanctions could impact
the Funds, including the Funds’ ability to transact in or obtain exposure to
certain foreign securities and assets. Sanctions also could cause significant
losses to the Funds’ investments and its performance could be negatively
impacted. In lieu of sanctions, companies or specific goods that the company
produces could be subjected to trade embargoes or tariffs, which can also affect
securities markets and create volatility. So long as sanctions do not prohibit
investment in the company or issuer, the Funds typically also would not be
prohibited from investing in the affected company or
issuer.
83
Potential
Redemption Activity Impacts. The Vanguard funds
can be negatively impacted by certain large redemptions. These redemptions could
occur due to a single shareholder or multiple shareholders deciding to sell a
large quantity of shares of a fund or a share class of the fund. Large
redemptions can occur for many reasons, either as a result of actions taken by
the Vanguard funds or their advisors, or as a result of events unrelated to
actions taken by the Vanguard funds or their advisors. Actions taken by the
Vanguard funds or their advisors could include, but are not limited to, changes
to a fund’s advisor(s), changes to a fund’s portfolio manager(s), changes to the
composition of a fund’s portfolio, and/or other product changes or launches
that, for example, result in shareholders redeeming shares of one fund to
purchase shares of another fund or investment vehicle. For a fund of funds,
actions taken by the Vanguard funds or their advisors could include a withdrawal
from an underlying fund or a change in the allocation to underlying funds.
Events unrelated to actions taken by the Vanguard funds or their advisors could
include shareholders selling out of a fund in response to market movements or
regulatory changes.
A large redemption
could adversely affect a fund’s liquidity and NAV. For example, a large
redemption could require a fund’s manager to sell portfolio holdings at
unplanned or inopportune times. The manager’s sale of these holdings, which is a
taxable event, could require the fund to distribute any corresponding capital
gains or other taxable income to the fund’s remaining shareholders; see
Dividends,
Distributions, and Taxes in the
Investing
in Vanguard ETF®
Shares section for
additional information. The increased trading activity could also increase
underlying costs for the fund due to commissions paid by the
fund.
Investing
in Derivatives. Investing in
derivatives may present risks different from, and/or greater than, those
associated with investing directly in stocks, bonds, or other types of
investments. Derivatives could expose a Fund to increased volatility and/or
significant loss. Certain derivatives have an inherent leverage component,
providing the Fund exposure to a sizable position in an underlying asset with a
relatively small upfront investment at the time the Fund enters into the
derivatives position. For these derivatives, an adverse change in the value or
price of the underlying asset could result in a loss substantially greater than
the amount invested in the derivative itself. Some derivatives require the Fund
to enter into a contract with a counterparty. If the counterparty is unable or
unwilling to fulfill its contractual obligation, the Fund may experience a loss.
A liquid market may not always exist for the Fund’s derivatives positions. The
Fund may be unable to sell or otherwise exit its derivatives position at desired
times or prices, which could also result in a loss to the Fund. Some
derivatives, particularly OTC derivatives, can be complex and often are valued
subjectively. Valuation may be more difficult in times of market turmoil since
many investors and market makers may be reluctant to
84
purchase complex
instruments or quote prices for them. Improper valuations can result in
increased cash payment requirements to counterparties or a loss of value to the
Fund.
Derivatives may not
perform as intended, which may result in losses to the Fund. For example,
derivatives used for hedging or as a substitute for a portfolio instrument may
not provide the expected benefits, particularly during adverse market
conditions. The use of derivatives is also subject to legal risk, which includes
the risk of loss resulting from insufficient or unenforceable contractual
documentation, insufficient capacity or authority of the Fund’s counterparty,
and operational risk, which includes documentation or settlement issues, system
failures, inadequate controls, and human error.
Other
Investment Policies
In addition to
employing its principal investment strategies, each Fund may use the following
other investment strategies and types of investments in order to achieve its
investment objective.
Substitute
Index
Each Fund reserves
the right to substitute a different index for the index it currently tracks if a
current index is discontinued, if the Fund’s agreement with the provider of its
Target Index is terminated, or for any other reason determined in good faith by
the Board. In any such instance, a substitute index would represent the same
market segment as the Target Index.
Other
Types of Investments
Up to 20% of each
Fund’s assets may be used to purchase 144A securities, which are nonpublic,
investment-grade securities exempt from registration requirements under Rule
144A of the Securities Act of 1933, as well as smaller public issues or
medium-term notes not included in a Fund’s Target Index because of the small
size of the issue. The vast majority of such securities will have
characteristics and risks similar to the bonds included in a Fund’s Target
Index. Subject to the same 20% limit, each Fund may also purchase other
investments that are not included in its Target Index or may hold bonds that
were included in the Target Index when acquired but subsequently have been
removed.
Each Fund may
invest in derivatives such as fixed income futures and/or credit default swaps,
which typically provide returns similar to those of bonds. In general, 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
85
risks of a 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 favorably priced.
• Adjust
sensitivity to changes in interest rates.
Each Fund may
invest a small portion of its assets in shares of exchange-traded funds (ETFs).
These ETFs typically provide returns similar to those of bonds. Each Fund may
purchase 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 receives no additional revenue from
Fund assets invested in ETF shares of other Vanguard funds. Fund assets invested
in ETF shares of other Vanguard funds are excluded when allocating to the Fund
its share of the costs of Vanguard’s operations.
Cash
Management
Each Fund’s daily
cash balance may be invested in one or more Vanguard CMT Funds, which are used
as cash management vehicles for the Vanguard 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.
Temporary
Defensive Measures
Each Fund may
temporarily depart from its normal investment policies and strategies when the
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, a 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 favorably priced or provide needed liquidity, as
might be the case when the Fund receives large cash flows that it cannot
prudently invest immediately.
Portfolio
Holdings
Please consult the
Funds' Statement
of Additional Information or Vanguard’s
website for a description of the policies and procedures that govern disclosure
of each Fund’s portfolio holdings.
86
Management
and Distribution of the Funds
Each Fund is a
member of The Vanguard Group, Inc. (Vanguard), a family of over 200 funds. All
of the funds that are members of Vanguard (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.
|
How
is Vanguard’s Corporate Structure Unique? |
|
Vanguard
is owned jointly by the funds it oversees and thus indirectly by
the
shareholders in those funds. Most other mutual funds are operated by
management
companies that are owned by third parties—either public or
private
stockholders—and not by the funds they
serve. |
Investment
Advisor
The Vanguard Group,
Inc., P.O. Box 2600, Valley Forge, PA 19482, which began operations in 1975,
serves as advisor to the Funds through Vanguard Capital Management (VCM). VCM
exercises portfolio management responsibilities for the Funds. As of January 31,
2026, Vanguard served as advisor for approximately $10.1 trillion in assets.
Vanguard, through VCM, provides investment advisory services to the Funds
pursuant to the Funds’ Service Agreement and an intercompany service agreement
between Vanguard and VCM, subject to the supervision and oversight of the
trustees and officers of the Funds.
VCM, P.O. Box 2600,
Valley Forge, PA 19482, is a wholly owned subsidiary of Vanguard and was
established in 2025.
Each Fund reserves
the right to utilize a multimanager approach in the future. Under the terms of
an SEC exemption, the Board 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 arrangement will be communicated to shareholders in writing. As
Vanguard is the Funds’ sponsor and overall manager, Vanguard, through VCM, may
provide investment advisory services to a Fund under certain circumstances.
Vanguard may also recommend to the Board that an advisor be hired, terminated,
or replaced or that the terms of an existing advisory agreement be revised. The
Funds have
87
filed an
application seeking an 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.
A discussion
regarding the basis for the Board’s approval of each Fund’s investment advisory
arrangement will be available in each Fund’s Form N-CSR filed with the SEC and
in the applicable Financial Statements and Other Information document available
on each Fund’s website following each Fund’s commencement of
operations.
The managers
primarily responsible for the day-to-day management of the Funds
are:
Joshua
C. Barrickman, CFA, Principal of
Vanguard, Portfolio Manager at VCM, and co-head of Vanguard’s Fixed Income
Indexing Americas. He has been with Vanguard since 1998, has worked in
investment management since 1999, has managed investment portfolios since
2005,and has co-managed the Funds since their inception in March 2026.
Education: B.S., Ohio Northern University; M.B.A., Lehigh
University.
Jake
Riley,
CFA, Portfolio Manager at VCM. He has been with Vanguard since 2008, has worked
in investment management since 2011, and has co-managed the Funds since their
inception in March 2026. Education: B.S., James Madison University; M.B.A.,
University of Chicago Booth School of Business.
The Funds'
Statement
of Additional Information provides
information about the portfolio manager’s compensation, other accounts under
management, and ownership of shares of the Funds.
88
Investing
in Vanguard ETF®
Shares
The Funds’ ETF
shares are listed for trading on Nasdaq. You can buy and sell ETF shares on the
secondary market in the same way you buy and sell any other exchange-traded
security—through a broker. Your broker may charge a commission to execute a
transaction. Unless imposed by your broker, there is no minimum dollar amount
you must invest and no minimum number of ETF shares you must
buy.
Your ownership of
ETF shares will be shown on the records of the broker through which you hold the
shares. Vanguard will not have any record of your ownership. Your account
information will be maintained by your broker, which will provide you with
account statements, confirmations of your purchases and sales of ETF shares, and
tax information. Your broker also will be responsible for ensuring that you
receive income and capital gains distributions, as well as shareholder reports
and other communications from the fund whose ETF shares you own. You will
receive other services (e.g., dividend reinvestment and average cost
information) only if your broker offers these services.
Redemption
of ETF Shares by Authorized Participants
Unlike conventional
(i.e., not exchange-traded) mutual fund shares, ETF shares cannot be purchased
directly from or redeemed directly with the issuing fund by an individual
investor. Instead, only Authorized Participants can purchase and redeem ETF
shares directly from the issuing fund. Authorized Participants may purchase and
redeem ETF shares from the issuing fund only in large blocks (creation units),
usually in exchange for baskets of securities. Funds may also issue and redeem
creation units in exchange for solely cash or a combination of cash and
securities. These trades may occur in-kind between Vanguard and the Authorized
Participant. If cash is used to meet redemptions, a Fund typically obtains such
cash through positive cash flows or the sale of Fund holdings consistent with
the Fund’s investment objective and strategy.
Under certain
circumstances, including under stressed market conditions, a Fund may 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.
Pricing
of Fund Shares
ETF shares may only
be bought and sold in the secondary market. The price you pay or receive for the
ETF shares will be the prevailing market price, which may be more or less than
the Fund’s NAV. Your transaction will be priced at the NAV only if you purchase
or redeem your ETF shares in creation unit blocks (an
89
option available
only to certain authorized broker-dealers). NAV is typically 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. The time selected for NAV calculation in this rare event
generally shall also serve as the conclusion of the trading day. On U.S.
holidays or other days when the NYSE is closed, the NAV is not calculated, and
the Vanguard 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).
If a fund only has
one share class, the NAV per share is computed by dividing the total assets,
minus liabilities, of a fund by the number of fund shares outstanding. If a fund
has more than one share class, 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. The value of
securities and other investments held by the Vanguard funds is determined
pursuant to the valuation policies and procedures adopted by the Vanguard funds’
boards of trustees. Vanguard has been designated as the valuation designee for
the Vanguard funds pursuant to Rule 2a-5 under the Investment Company Act of
1940, subject to oversight by the Vanguard funds’ boards of
trustees.
Securities for
which market quotations are readily available are valued at their market value,
based on quotations provided by independent third-party pricing sources. Such
securities are generally valued at their official closing price, the last
reported sales price, or if there were no sales that day, the mean between the
closing bid and asking prices, from the principal exchange or market on which
they are traded. A fund’s investments in any mutual fund shares, including
institutional money market fund shares, are valued at the NAVs of the mutual
fund shares. A fund’s investments in any ETF shares or closed-end fund shares
are valued at the market value of those shares.
When the market
quotations are not readily available or do not accurately reflect the value of a
security or other investment, such security or other investment is priced at
fair value, generally based on information provided by independent third-party
pricing services, in accordance with the valuation policies and procedures
adopted by the Vanguard funds’ boards of trustees. Fair value represents a good
faith determination of the value of a fund’s investments. The fair value of a
security or other investment is the amount that the owner might reasonably
expect to receive upon the current sale of the security or other investment.
Fair-value pricing may require subjective
90
determinations. It
is possible that the price determined through fair-value pricing may differ from
the price quoted or published by other sources and may not be the price at which
those investments could have been sold during the period in which the fair value
was used.
Fair-value pricing
may be used in a variety of circumstances. For example, it may be used if the
value of a security or other investment has been materially affected by events
occurring after the close of the principal exchange or market on which the
security is traded but before the funds’ NAV is calculated. These events might
be company-specific (e.g., earnings report, merger announcement),
country-specific (e.g., significant price movements in U.S. or a foreign
market), or regional/global events (e.g., natural disaster, economic or
political news, interest rate change, act of terrorism). These events could
affect a single security or a large number of securities in a particular market,
and it most commonly occurs with foreign portfolio holdings because many foreign
markets operate at times that do not coincide with those of the major U.S.
markets. Events that could affect the value of the foreign portfolio holdings
may occur between the close of the foreign market and the time a fund’s NAV is
calculated. 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.
In addition,
fair-value pricing may be used if trading in a security is halted and does not
resume before a fund’s pricing time, a security does not trade in the course of
a day and a fund holds enough of the security that its price could affect the
NAV, or if the trading market on which a security is listed is suspended or
closed and no appropriate alternative trading market is
available.
Fixed income
securities are generally valued based on information furnished by independent
pricing services and are priced at fair value. Pricing services may use matrix
pricing or valuation models that utilize certain inputs and assumptions to
derive values. Pricing services generally value fixed income securities assuming
orderly transactions of an institutional round lot size, but a fund may hold or
transact in such securities in smaller odd lot sizes. Odd lots may trade at
lower prices than institutional round lots.
Failures by
third-party pricing services to carry out their obligations to the Vanguard
funds (e.g., any errors in the data provided by third-party pricing services)
could result in delays in the calculation of the funds’ NAVs and/or the
inability to calculate the NAVs over extended time periods. The funds may be
unable to recover any losses associated with such failures.
The Vanguard funds
have authorized certain financial intermediaries and their designees, and may,
from time to time, authorize certain funds of funds for which Vanguard serves as
the investment advisor (Vanguard Funds of Funds), to accept orders to purchase
or redeem fund shares on behalf of the Vanguard funds. In these circumstances,
the Vanguard fund will be deemed to receive an
91
order when accepted
by the authorized financial intermediary, its designee, or one of the Vanguard
Funds of Funds, and the order will be executed using the NAV next calculated
after such acceptance.
Vanguard’s website
will show the previous day’s closing NAV and closing market price for the fund’s
ETF Shares. The website also discloses, in the Premium/Discount analysis section
of a fund’s Price & Performance page, how frequently the fund traded at a
premium or discount to NAV (based on closing NAVs and market prices) and the
magnitudes of such premiums and discounts.
Dividends,
Distributions, 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. Each Fund may also make distributions that are treated
as a return of capital. Income dividends generally are declared monthly and
distributed monthly; capital gains distributions, if any, generally occur
annually in December. In addition, each Fund may make a supplemental
distribution at some other time during the year.
From time to time,
Vanguard and/or a fund’s board of trustees may adjust a fund’s fees and expenses
and/or reduce, refund, reimburse, waive, or otherwise return to the funds and
their shareholders a portion of prior fees and expenses (collectively, “expense
adjustments”). Fund performance and potentially shareholder distributions, will
reflect such expense adjustments. If you sell all or part of your investment in
a fund before an expense adjustment occurs, then you will not receive the
economic benefit, if any, of such expense adjustment. An expense adjustment at
any given time does not imply or guarantee that similar or additional expense
adjustments will be made in the future.
Reinvestment
of Distributions
In order to
reinvest dividend and capital gains distributions, investors in a Fund’s ETF
shares must hold their shares at a broker that offers a reinvestment service.
This can be the broker’s own service or a service made available by a third
party, such as the broker’s outside clearing firm or the Depository Trust
Company (DTC). If a reinvestment service is available, distributions of income
and capital gains can automatically be reinvested in additional whole and
fractional ETF shares of a Fund. If a reinvestment service is not available,
investors will receive their distributions in cash. To determine whether a
reinvestment service is available and whether there is a commission or other
charge for using this service, consult your broker.
As with all
exchange-traded funds, reinvestment of dividend and capital gains distributions
in additional ETF shares will occur two business days or more after the
ex-dividend date (the date when a distribution of dividends or capital gains
92
is deducted from
the price of a Fund’s shares). The exact number of days depends on your broker.
During that time, the amount of your distribution will not be invested in a Fund
and therefore will not share in the Fund’s income, gains, and
losses.
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 and recorded in December—if paid to you by the end of January—are
generally 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.
• Income and capital
gains distributions may vary considerably from month to month or year to year,
as applicable, as a result of a Fund’s normal investment activities and cash
flows.
• Capital gains
distributions may occur if Vanguard, a Fund, or its advisor makes changes that
would impact the Fund directly or indirectly, including changes to the Fund’s
portfolio or advisors or changes to any other Vanguard fund or product that
would involve the redemption of shares of the Fund and the related sale of the
Fund’s investments. Such changes could, depending on the timing, result in
capital gains distributions in the current fiscal year, subsequent fiscal year,
or both.
• 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 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 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.
• If you purchase
shares before an ex-dividend date when a fund has realized but not yet
distributed income or capital gains, the purchase price may include the amount
of the upcoming distribution, and you may pay the full price for the shares and
later receive a portion of the purchase price back as a taxable distribution. In
such case, you generally will be taxed upon receipt of such distribution, even
though the distribution effectively represents a return of a portion of your
purchase price. This is known as “buying a dividend.”
93
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 of Fund shares.
Income dividends
and capital gains distributions that you receive, as well as your gains or
losses from any sale of Fund shares, may be subject to state and local income
taxes.
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 own tax advisor for
detailed information about any tax consequences for you.
Frequent
Trading Limitations
Unlike frequent
trading of a Vanguard fund’s conventional share classes, frequent trading of ETF
shares generally does not disrupt portfolio management or otherwise harm fund
shareholders. The vast majority of trading in ETF shares occurs on the secondary
market. Because these trades do not involve the issuing fund, they do not pose
potential harm to the fund or its shareholders. Certain broker-dealers are
authorized to purchase and redeem ETF shares directly with the issuing fund.
Because these trades typically are effected in kind (i.e., for securities and
not for cash), or are assessed a transaction fee when effected in cash, they do
not cause any of the harmful effects to the issuing fund (as previously noted)
that may result from frequent trading. For these reasons, the boards of trustees
of Vanguard funds that issue ETF shares have determined that it is not necessary
to adopt policies and procedures to detect and deter frequent trading and
market-timing of ETF shares.
94
Additional
Information
A
Precautionary Note to Investment Companies. Each Fund’s ETF
shares are issued by a registered investment company, and therefore the
acquisition of such shares by other investment companies and private funds is
subject to the restrictions of Section 12(d)(1) of the Investment Company Act of
1940 (the 1940 Act). SEC Rule 12d1-4 under the 1940 Act permits registered
investment companies to invest in other registered investment companies beyond
the limits in Section 12(d)(1), subject to certain conditions, including that
funds with different investment advisors must enter into a fund of funds
investment agreement.
Forum
Selection. The Trust’s Bylaws
designate Delaware courts as the exclusive forum for certain claims against or
related to the Trust, a trustee, an officer, or other employee of the Trust,
except that, unless the Trust otherwise consents in writing, the U.S. Federal
District Courts are the exclusive forum for the resolution of complaints under
the Securities Act of 1933 or the 1940 Act. These provisions may limit a
shareholder’s ability to bring a claim in a different forum and may result in
increased shareholder costs in pursuing such a claim.
Shareholder
Rights. Each Fund’s
Agreement and Declaration of Trust, as amended, requires a shareholder bringing
a derivative action on behalf of the Trust that is subject to a pre-suit demand
to collectively hold at least 10% of the outstanding shares of the Trust or at
least 10% of the outstanding shares of the series or class to which the demand
relates and to undertake to reimburse the Trust for the expense of any counsel
or advisors used when considering the merits of the demand in the event that the
board of trustees determines not to bring such action. In each case, these
requirements do not apply to claims arising under the federal securities laws to
the extent that any such federal securities laws, rules, or regulations do not
permit such application. The Trust’s Bylaws also provide that shareholders waive
the right to trial by jury to the fullest extent permitted by
law.
Joint
Committed Credit Facility. Each Fund
participates, along with other funds managed by Vanguard, in a committed credit
facility provided by a syndicate of lenders pursuant to a credit agreement that
may be renewed annually; each Vanguard fund is individually liable for its
borrowings, if any, under the credit facility. The amount and terms of the
committed credit facility are subject to approval by the Board and renegotiation
with the lender syndicate on an annual basis.
Certain affiliates
of the Funds and the advisor may purchase and resell ETF shares pursuant to this
Prospectus.
95
|
Vanguard
Fund |
Inception
Date |
Vanguard
Fund
Number |
CUSIP
Number |
|
Vanguard
Target Maturity 2027 Corporate
Bond
ETF |
— |
V072 |
921938700 |
|
Vanguard
Target Maturity 2028 Corporate
Bond
ETF |
— |
V073 |
921938809 |
|
Vanguard
Target Maturity 2029 Corporate
Bond
ETF |
— |
V074 |
921938882 |
|
Vanguard
Target Maturity 2030 Corporate
Bond
ETF |
— |
V075 |
921938874 |
|
Vanguard
Target Maturity 2031 Corporate
Bond
ETF |
— |
V076 |
921938866 |
|
Vanguard
Target Maturity 2032 Corporate
Bond
ETF |
— |
V077 |
921938858 |
|
Vanguard
Target Maturity 2033 Corporate
Bond
ETF |
— |
V078 |
921938841 |
|
Vanguard
Target Maturity 2034 Corporate
Bond
ETF |
— |
V079 |
921938833 |
|
Vanguard
Target Maturity 2035 Corporate
Bond
ETF |
— |
V080 |
921938825 |
|
Vanguard
Target Maturity 2036 Corporate
Bond
ETF |
— |
V081 |
921938817 |
Inception Date means
the date on which the assets of a fund (or one of its share classes) are first
invested in accordance with the fund’s investment objective. For funds with a
subscription period, the inception date is the day after that period ends.
Investment performance is generally measured from the inception
date.
CFA® is a registered
trademark owned by CFA Institute.
CGS identifiers have
been provided by CUSIP Global Services, managed on behalf of the American
Bankers Association by FactSet Research Systems Inc., and are not for use or
dissemination in a manner that would serve as a substitute for any CUSIP
service. The CUSIP Database, © 2026 American Bankers Association. “CUSIP” is a
registered trademark of the American Bankers Association.
Source ICE Data
Indices, LLC (“ICE DATA”), is used with permission. ICE DATA, ITS AFFILIATES AND
THEIR RESPECTIVE THIRD PARTY SUPPLIERS DISCLAIM ANY AND ALL WARRANTIES AND
REPRESENTATIONS, EXPRESS AND/OR IMPLIED, INCLUDING ANY WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, INCLUDING TO THE
INDICES, INDEX DATA AND ANY DATA INCLUDED IN, RELATED TO, OR DERIVED THEREFROM.
NEITHER ICE DATA, ITS AFFILIATES NOR THEIR RESPECTIVE THIRD PARTY PROVIDERS
SHALL BE SUBJECT TO ANY DAMAGES OR LIABILITY WITH RESPECT TO THE ADEQUACY,
ACCURACY, TIMELINESS OR COMPLETENESS OF THE INDICES OR THE INDEX DATA OR ANY
COMPONENT THEREOF, AND THE INDICES AND INDEX DATA AND ALL COMPONENTS THEREOF ARE
PROVIDED ON AN “AS IS” BASIS AND VANGUARD TARGET MATURITY CORPORATE BOND ETFs
USE IS AT VANGUARD TARGET MATURITY CORPORATE BOND ETFs’ OWN RISK. ICE DATA, ITS
AFFILIATES AND THEIR RESPECTIVE THIRD PARTY SUPPLIERS DO NOT SPONSOR, ENDORSE,
OR RECOMMEND VANGUARD TARGET MATURITY CORPORATE BOND ETFs, OR ANY OF ITS
PRODUCTS OR SERVICES.
96
Connect
with Vanguard®˃
vanguard.com
For
More Information
If you would like
more information about Vanguard Target Maturity Corporate Bond ETFs, the
following documents are available free upon request:
Annual/Semiannual
Reports to Shareholders and Form N-CSR
Additional
information about the Funds’ investments is available in the Funds’ annual and
semiannual reports to shareholders and in Form N-CSR. In the annual reports, you
will find a discussion of the market conditions and investment strategies that
significantly affected the Funds’ performance during its last fiscal year. In
Form N-CSR, you will find the Funds’ annual and semiannual financial
statements.
Statement
of Additional Information (SAI)
The SAI provides more
detailed information about the Funds’ ETF shares and is incorporated by
reference into (and thus legally a part of) this Prospectus.
To obtain a free copy
of the latest annual or semiannual reports, financial statements (once
available), or the SAI, or to request additional information about Vanguard ETF
shares, please visit https://vgi.vg/fund-literature or contact us as
follows:
Telephone:
866-499-8473; Text telephone for people with hearing impairment:
800-749-7273
Information
Provided by the SEC
Reports and other
information about the Funds are available in the EDGAR database on the SEC’s
website at sec.gov, or you can receive copies of this information, for a fee, by
electronic request at the following email address:
[email protected].
Funds’ Investment
Company Act file number: 811-01766
©
2026 The Vanguard Group, Inc. All rights reserved.
Vanguard
Marketing Corporation, Distributor.
P
V072 032026