Vanguard Balanced Index Fund Prospectus Investor Shares

57 Pages·2006·0.72 MB·English

Vanguard Balanced Index Fund
Supplement Dated February 17, 2023, to the Prospectus and
Summary Prospectuses DatedApril 29, 2022
ImportantChangestoVanguardBalancedIndexFund
Effectiveimmediately,AurélieDenisandMichaelR.Roachhavebeenaddedas
co-portfoliomanagersofVanguardBalancedIndexFund(theFund).Theyreplace
WilliamA.Coleman,whohadpreviouslyco-managedtheFund,andjoinJoshua
C.Barrickman,GerardC.O’Reilly,andTaraTalone,whowillcontinueto
co-managetheFund.
Accordingly,allreferencestoMr.ColemanintheFund’sProspectusand
SummaryProspectusesareherebydeletedintheirentirety.TheFund’s
investmentobjective,strategies,andpoliciesremainunchanged.
ProspectusandSummaryProspectusTextChanges
ThefollowingreplacesWilliamA.Colemanundertheheading“Investment
Advisor”intheFundSummarysectionfortheFund:
AurélieDenis,CFA,PortfolioManageratVanguard.Shehasco-managedthe
stockportionoftheFundsinceFebruary2023.
MichaelR.Roach,PortfolioManageratVanguard.Hehasco-managedthestock
portionoftheFundsinceFebruary2023.
ProspectusTextChanges
ThefollowingreplacesWilliamA.Colemanundertheheading“Investment
Advisor”intheMoreontheFundsection:
AurélieDenis,CFA,PortfolioManageratVanguard.ShehasbeenwithVanguard
since2016,hasworkedininvestmentmanagementsince2017,hasmanaged
investmentportfoliossince2023,andhasco-managedtheFundsinceFebruary
2023.Education:B.S.,PennsylvaniaStateUniversity.
MichaelR.Roach,PortfolioManageratVanguard.HehasbeenwithVanguard
since1998,hasworkedininvestmentmanagementsince2000,hadpreviously
managedinvestmentportfoliosfrom2009-2019,andhasco-managedtheFund
sinceFebruary2023.Education:B.S.,BloomsburgUniversityofPennsylvania;
M.S.,DrexelUniversity.
CFA®isaregisteredtrademarkownedbyCFAInstitute.
©2023TheVanguardGroup,Inc.Allrightsreserved.
VanguardMarketingCorporation,Distributor. PS002B022023
Prospectus Supplement Dated December 5, 2022
Important Changes toVanguard’s FrequentTrading Policy
TheBoardofTrusteesoftheVanguardFundshaveapprovedcertainchangesto
theVanguardFundsFrequentTradingPolicy,effectiveimmediately.
ProspectusTextChanges
Thefollowingisaddedtoreplacethesecondandthirdbulletpointsintheir
entiretyundertheheading“Frequent-TradingLimitations”intheInvestingwith
Vanguardsection:
(cid:129) TransactionsthroughVanguard’sAutomaticInvestmentPlan,Automatic
ExchangeService,DirectDepositService,AutomaticWithdrawalPlan,Required
MinimumDistributionService,VanguardSmallBusinessOnline®andcertain
transactionsthroughintermediariesrelatingtosystematictradesandrequired
minimumdistributions.
(cid:129) DiscretionarytransactionsthroughVanguardPersonalAdvisorServices®,
VanguardInstitutionalAdvisoryServices®,VanguardDigitalAdvisor™and
discretionary(advisor-directed)transactionsthroughcertainintermediaries.
©2022TheVanguardGroup,Inc.Allrightsreserved.
VanguardMarketingCorporation,Distributor. PSFTP122022
Vanguard Balanced Index Fund
Supplement Dated September 30, 2022, to the Prospectus and
Summary Prospectus DatedApril 29, 2022
ImportantChangestoVanguardBalancedIndexFund(theFund)
Effectiveimmediately,TaraTalonehasbeenaddedasaco-portfoliomanagerof
thebondportionoftheFund.ShejoinsJoshuaC.Barrickman,whowillcontinue
toco-managethebondportionoftheFund,andWilliamA.ColemanandGerard
C.O’Reilly,whowillcontinuetoco-managethestockportionoftheFund.
TheFund’sinvestmentobjective,strategies,andpoliciesremainunchanged.
ProspectusandSummaryProspectusTextChanges
Thefollowingisaddedundertheheading“InvestmentAdvisor”intheFund
Summarysection:
TaraTalone,CFA,PortfolioManageratVanguard.Shehasco-managedthebond
portionoftheFundsinceSeptember2022.
ProspectusTextChanges
Thefollowingisaddedundertheheading“InvestmentAdvisor”intheMoreon
theFundsection:
TaraTalone,CFA,PortfolioManageratVanguard.ShehasbeenwithVanguard
since2006,hasmanagedinvestmentportfoliossince2018,andhasco-managed
theFundsinceSeptember2022.Education:B.S.,SaintJoseph’sUniversity;
M.B.A.,TheWhartonSchooloftheUniversityofPennsylvania.
CFA®isaregisteredtrademarkownedbyCFAInstitute.
©2022TheVanguardGroup,Inc.Allrightsreserved.
VanguardMarketingCorporation,Distributor. PS002A092022
Vanguard Balanced Index Fund
Prospectus
April29,2022
InvestorShares
VanguardBalancedIndexFundInvestorShares(VBINX)
ThisprospectuscontainsfinancialdatafortheFundthroughthefiscalyearendedDecember31,2021.
TheSecuritiesandExchangeCommission(SEC)hasnotapprovedordisapprovedthese
securitiesorpassedupontheadequacyofthisprospectus.Anyrepresentationtothecontraryis
acriminaloffense.
Contents
FundSummary 1 InvestingWithVanguard 29
InvestinginIndexFunds 7 PurchasingShares 29
MoreontheFund 8 ConvertingShares 32
TheFundandVanguard 20 RedeemingShares 33
InvestmentAdvisor 21 ExchangingShares 37
Dividends,CapitalGains,andTaxes 22 Frequent-TradingLimitations 38
SharePrice 25 OtherRulesYouShouldKnow 40
FinancialHighlights 27 FundandAccountUpdates 44
Employer-SponsoredPlans 46
ContactingVanguard 47
AdditionalInformation 48
GlossaryofInvestmentTerms 50
Fund Summary
InvestmentObjective
With60%ofitsassets,theFundseekstotracktheperformanceofabenchmark
indexthatmeasurestheinvestmentreturnoftheoverallU.S.stockmarket.With
40%ofitsassets,theFundseekstotracktheperformanceofabroad,
market-weightedbondindex.
FeesandExpenses
Thefollowingtabledescribesthefeesandexpensesyoumaypayifyoubuy,
hold,andsellInvestorSharesoftheFund.Youmaypayotherfees,suchas
brokeragecommissionsandotherfeestofinancialintermediaries,whicharenot
reflectedinthetableandexamplebelow.
ShareholderFees
(Feespaiddirectlyfromyourinvestment)
SalesCharge(Load)ImposedonPurchases None
PurchaseFee None
SalesCharge(Load)ImposedonReinvestedDividends None
RedemptionFee None
AccountServiceFeePerYear
(forcertainfundaccountbalancesbelow$10,000) $20
AnnualFundOperatingExpenses
(Expensesthatyoupayeachyearasapercentageofthevalueofyourinvestment)
ManagementFees 0.17%
12b-1DistributionFee None
OtherExpenses 0.01%
TotalAnnualFundOperatingExpenses 0.18%
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Example
Thefollowingexampleisintendedtohelpyoucomparethecostofinvestingin
theFund’sInvestorShareswiththecostofinvestinginothermutualfunds.It
illustratesthehypotheticalexpensesthatyouwouldincurovervariousperiodsif
youweretoinvest$10,000intheFund’sshares.Thisexampleassumesthatthe
sharesprovideareturnof5%eachyearandthattotalannualfundoperating
expensesremainasstatedintheprecedingtable.Youwouldincurthese
hypotheticalexpenseswhetherornotyouweretoredeemyourinvestmentat
theendofthegivenperiod.Althoughyouractualcostsmaybehigherorlower,
basedontheseassumptionsyourcostswouldbe:
1Year 3Years 5Years 10Years
$18 $58 $101 $230
PortfolioTurnover
TheFundpaystransactioncosts,suchascommissions,whenitbuysandsells
securities(or“turnsover”itsportfolio).Ahigherportfolioturnoverratemay
indicatehighertransactioncostsandmayresultinmoretaxeswhenFund
sharesareheldinataxableaccount.Thesecosts,whicharenotreflectedin
annualfundoperatingexpensesorinthepreviousexpenseexample,reducethe
Fund’sperformance.Duringthemostrecentfiscalyear,theFund’sportfolio
turnoverratewas35%oftheaveragevalueofitsportfolio.
PrincipalInvestmentStrategies
TheFundemploysanindexinginvestmentapproachdesignedtotrackthe
performanceoftwobenchmarkindexes.TheFundinvestsbysamplingitstarget
indexes,meaningthatitholdsarangeofsecuritiesthat,intheaggregate,
approximatesthefullindexesintermsofkeycharacteristics.
Withapproximately60%ofitsassets,theFundseekstotracktheinvestment
performanceoftheCRSPUSTotalMarketIndex,whichrepresents
approximately100%oftheinvestableU.S.stockmarketandincludeslarge-,
mid-,small-,andmicro-capstocks.TheFundsamplestheIndexbyholdinga
broadlydiversifiedcollectionofstocksthat,intheaggregate,approximatesthe
fullIndex.
Withapproximately40%ofitsassets,theFundseekstotracktheinvestment
performanceoftheBloombergU.S.AggregateFloatAdjustedIndex,which
representsawidespectrumofpublic,investment-grade,taxable,fixedincome
securitiesintheUnitedStates—includinggovernment,corporate,and
internationaldollar-denominatedbonds,aswellasmortgage-backedand
asset-backedsecurities—allwithmaturitiesofmorethan1year.Atleast80%of
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thebondportionoftheFundisinvestedinbondsheldintheBloomberg
U.S.AggregateFloatAdjustedIndex,andalloftheFund’sbondholdingsare
selectedthroughthesamplingprocess.ThebondportionoftheFundmaintains
adollar-weightedaveragematurityconsistentwiththatoftheIndex.Asof
December31,2021,thedollar-weightedaveragematurityoftheIndexwas
9years.
PrincipalRisks
TheFundissubjecttotherisksassociatedwiththestockandbondmarkets,any
ofwhichcouldcauseaninvestortolosemoney,andthelevelofriskmayvary
basedonmarketconditions.However,becausestockandbondpricescanmove
indifferentdirectionsortodifferentdegrees,theFund’sbondholdingsmay
counteractsomeofthevolatilityexperiencedbytheFund’sstockholdings.
Withapproximately60%ofitsassetsallocatedtostocks,theFundis
proportionatelysubjectto:
(cid:129) Stockmarketrisk,whichisthechancethatstockpricesoverallwilldecline.
Stockmarketstendtomoveincycles,withperiodsofrisingpricesandperiods
offallingprices.Inaddition,theFund’stargetstockindexmay,attimes,become
focusedinstocksofaparticularmarketsector,whichwouldsubjecttheFundto
proportionatelyhigherexposuretotherisksofthatsector.
Withapproximately40%ofitsassetsallocatedtobonds,theFundis
proportionatelysubjectto:
(cid:129) Interestraterisk,whichisthechancethatbondpricesoverallwilldecline
becauseofrisinginterestrates.Interestrateriskshouldbemoderateforthe
FundbecausetheFundinvestsonlyaportionofitsassetsinbondsandbecause
theaveragedurationoftheFund’sbondportfolioisgenerallyintermediate-term.
Thepricesofshort-andintermediate-termbondsarelesssensitivetointerest
ratechangesthanarethepricesoflong-termbonds.
(cid:129) Incomerisk,whichisthechancethattheFund’sincomewilldeclinebecause
offallinginterestrates.Afundholdingbondswillexperienceadeclineinincome
wheninterestratesfallbecausethefundthenmustinvestnewcashflowand
cashfrommaturingbondsinlower-yieldingbonds.
(cid:129) Prepaymentrisk,whichisthechancethatduringperiodsoffallinginterest
rates,homeownerswillrefinancetheirmortgagesbeforetheirmaturitydates,
resultinginprepaymentofmortgage-backedsecuritiesheldbytheFund.The
Fundwouldthenloseanypriceappreciationabovethemortgage’sprincipaland
wouldbeforcedtoreinvesttheunanticipatedproceedsatlowerinterestrates,
resultinginadeclineintheFund’sincome.Suchprepaymentsandsubsequent
reinvestmentswouldalsoincreasetheFund’sportfolioturnoverrate.
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(cid:129) Extensionrisk,whichisthechancethatduringperiodsofrisinginterestrates,
certaindebtsecuritieswillbepaidoffsubstantiallymoreslowlythanoriginally
anticipated,andthevalueofthosesecuritiesmayfall.Thiswilllengthenthe
durationoraveragelifeofthosesecuritiesanddelayafund’sabilitytoreinvest
proceedsathigherinterestrates,makingafundmoresensitivetochangesin
interestrates.Forfundsthatinvestinmortgage-backedsecurities,thereisa
chancethatduringperiodsofrisinginterestrates,homeownerswillrepaytheir
mortgagesatslowerrates.
(cid:129) Callrisk,whichisthechancethatduringperiodsoffallinginterestrates,
issuersofcallablebondsmaycall(redeem)securitieswithhighercouponrates
orinterestratesbeforetheirmaturitydates.TheFundwouldthenloseanyprice
appreciationabovethebond’scallpriceandwouldbeforcedtoreinvestthe
unanticipatedproceedsatlowerinterestrates,resultinginadeclineinthe
Fund’sincome.Suchredemptionsandsubsequentreinvestmentswouldalso
increasetheFund’sportfolioturnoverrate.
(cid:129) Creditrisk,whichisthechancethatabondissuerwillfailtopayinterestor
principalinatimelymannerorthatnegativeperceptionsoftheissuer’sabilityto
makesuchpaymentswillcausethepriceofthatbondtodecline.
TheFundisalsosubjecttoindexsamplingrisk,whichisthechancethatthe
securitiesselectedfortheFundwillnotprovideinvestmentperformance
matchingthatoftheFund’stargetindexes.
AninvestmentintheFundisnotadepositofabankandisnotinsuredor
guaranteedbytheFederalDepositInsuranceCorporationoranyother
governmentagency.
AnnualTotalReturns
Thefollowingbarchartandtableareintendedtohelpyouunderstandtherisks
ofinvestingintheFund.ThebarchartshowshowtheperformanceoftheFund‘s
InvestorShareshasvariedfromonecalendaryeartoanotherovertheperiods
shown.ThetableshowshowtheaverageannualtotalreturnsoftheInvestor
Sharescomparewiththoseofrelevantmarketindexesandothercomparative
indexes,whichhaveinvestmentcharacteristicssimilartothoseoftheFund.The
SplicedTotalStockMarketIndexreflectstheperformanceoftheMSCIUSBroad
MarketIndexthroughJune2,2013,andtheCRSPUSTotalMarketIndex
thereafter.TheBalancedCompositeIndexisweighted60%MSCIUSBroad
MarketIndexand40%BloombergU.S.AggregateFloatAdjustedIndexthrough
January14,2013,and60%CRSPUSTotalMarketIndexand40%Bloomberg
U.S.AggregateFloatAdjustedIndexthereafter.KeepinmindthattheFund’s
pastperformance(beforeandaftertaxes)doesnotindicatehowtheFundwill
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