Vanguard Balanced Index Fund

Investor Shares
Balanced fund (stocks and bonds)

Investment objective
Vanguard Balanced Index Fund
seeks —with 60% of its assets— to
track the investment performance of
a benchmark index that measures
the investment return of the overall
U.S. stock market. With 40% of its
assets, the fund seeks to track the
investment performance of a broad,
market-weighted bond index.
Who should invest Total net assets: $3,425 million
· Investors seeking income and long-term growth of income Expense ratio: 0.25%
and capital. as of December 31, 2009
· Investors seeking a simple, low-cost way to own a broadly
diversified portfolio of stocks and bonds. Ticker symbol: VBINX
· Investors with a long-term investment horizon (at least five Newspaper listing: Balanced
years). Inception date: November 9, 1992
Who should not invest Fund number: 0002

Investment strategy · Investors unwilling to accept significant fluctuations in Overall risk level:
The fund’s assets are divided share price. Conservative Moderate Aggressive

between stocks and bonds, with an 1 2 3 4 5

average of 60% of its assets in
stocks and 40% in bonds. The
fund’s stock segment attempts to
track the performance of the MSCI
US Broad Market Index, an
unmanaged index that covers all Performance
regularly traded U.S. stocks. The Annual returns 2000–2009
fund’s bond segment attempts to 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
track the performance of the
Barclays Capital U.S. Aggregate -2.04 -2.16 -3.02 -3.06 -9.52 -9.02 19.87 20.13 9.33 9.33 4.65 4.84 11.02 11.08 6.16 6.29 -22.21 -22.04 20.05 19.71

Bond Index, an unmanaged index

Percent (%)

that covers virtually all taxable fixed

income securities.

See reverse side for Fund Profile.

-2.04 -2.16 -3.02 -3.06 -9.52 -9.02 19.87 20.13 9.33 9.33 4.65 4.84 11.02 11.08 6.16 6.29 -22.21 -22.04 20.05 19.71

Balanced Index Fund Investor Shares

Balanced Composite Index

Total returns
Periods Ended June 30, 2010

Quarter Year to One Year Three Five Years Ten Years

Date Years

Balanced Index Fund

Investor Shares -5.46% -1.37% 13.64% -2.28% 2.39% 2.38%

Balanced Composite Index -5.51% -1.33% 13.76% -2.30% 2.44% 2.48%

The performance data shown represent past performance, which is not a guarantee of future results. Investment returns and
principal value will fluctuate, so investors’ shares, when sold, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance data cited. For performance data current to the most recent
month-end, visit our website at www.vanguard.com/performance.
Figures for periods of less than one year are cumulative returns. All other figures represent average annual returns. Performance
figures include the reinvestment of all dividends and any capital gains distributions. All returns are net of expenses.
Balanced Composite Index: Made up of two unmanaged benchmarks, weighted 60% Dow Jones Wilshire 5000 Index and 40%
Lehman U.S. Aggregate Bond Index through May 31, 2005; and 60% MSCI US Broad Market Index and 40% Barclays Capital U.S.
Aggregate Bond Index through December 31, 2009, after which the Barclays index was replaced by the Barclays Capital U.S.
Aggregate Float Adjusted Index.

Connect with Vanguard® > www.vanguard.com F0002R 062010

Vanguard Balanced Index Fund
Investor Shares

Plain talk about risk Fund profile

The fund is subject to several stock and bond market risks, any of which could cause an investor as of June 30, 2010
to lose money. However, because stock and bond prices can move in different directions or to
different degrees, the fund’s bond and short-term investment holdings may counteract some of Fund allocation
the volatility experienced by the fund’s stock holdings. The fund’s performance could be hurt by:
Stocks 57.8%
Stock market risk: The chance that stock prices overall will decline. Stock markets tend to Bonds 42.2
move in cycles, with periods of rising stock prices and periods of falling stock prices. The fund’s
Short-Term Reserves 0.0
target index may, at times, become focused in stocks of a particular sector, category, or group of
companies. Distribution by issuer–Bonds
Interest rate risk: The chance that bond prices overall will decline because of rising interest Asset-Backed 4.3%
rates. Commercial Mortgage-Backed 0.0
Income risk: The chance that the fund’s income will decline because of falling interest rates. Finance 7.0
Call risk: The chance that during periods of falling interest rates, the issuer of a bond will Foreign 4.3
repay—or call—securities with higher coupons, or interest rates, before their maturity dates. Government Mortgage-Backed 31.2
Forced to reinvest the unanticipated proceeds at lower interest rates, the fund would experience Industrial 10.7
a decline in income and lose the opportunity for additional price appreciation associated with Treasury/Agency 39.5
falling interest rates. Utilities 2.3
Credit risk: The chance that a bond issuer will fail to pay interest and principal in a timely Other 0.7
manner, or that negative perceptions of the issuer’s ability to make such payments will cause the Top sector holdings–Stocks
price of that bond to decline.
Consumer Discretionary 10.9%
Index sampling risk: The chance that the securities selected for the fund, in the aggregate, will
Consumer Staples 10.0
not provide investment performance matching that of the Index. Index sampling risk for the fund
should be low. Energy 10.2
Financials 16.3
Health Care 12.3
Investment terms Industrials 11.1
Bond: A debt security (IOU) issued by a corporation, government, or government agency in Information Technology 18.8
exchange for the money the bondholder lends it. In most instances, the issuer agrees to pay
Materials 3.8
back the loan by a specific date and make regular interest payments until that date.
Telecommunication Services 2.8
Dividends: A payment of cash or stock from a company’s earnings to each stockholder as Utilities 3.8
declared by the company’s board of directors.
Ten largest holdings *
Expenses: The costs of running a fund, expressed as a percentage of the fund’s assets. For
example, a fund may have expenses that total 0.30% (less than half of 1%) of its assets. 1. Exxon Mobil Corp.
2. Apple Inc.
Interest: Payments made by a company, a government, or a government agency to investors
who lend them money. For example, an investor buys a bond from a company, which agrees to 3. Microsoft Corp.
pay back the loan by a certain date at a set rate. 4. Procter & Gamble Co.
5. Johnson & Johnson
Mutual fund: An investment company that pools the money of many shareholders and invests it 6. International Business Machines Corp.
in a variety of securities in an effort to achieve a specific objective over time.
7. General Electric Co.
Total return: The change in the net asset value of an investment, assuming reinvestment of all 8. JPMorgan Chase & Co.
dividend and capital gain distributions. 9. Bank of America Corp.
10. AT&T Inc.
Top 10 as % of Total Net Assets 9.0%

*The holdings listed exclude any temporary cash investments and

equity index products.

The funds or securities referred to herein are not sponsored, endorsed, or promoted by MSCI,
and MSCI bears no liability with respect to any such funds or securities. For any such funds or
securities, the prospectus or the Statement of Additional Information contains a more detailed
description of the limited relationship MSCI has with The Vanguard Group and any related funds.
For more information about Vanguard funds, visit www.vanguard.com, or call
800-523-1188, to obtain a prospectus. Investment objectives, risks, charges, expenses,
and other important information about a fund are contained in the prospectus; read and
Investment Products:
consider it carefully before investing.
• Not FDIC Insured
Financial advisor clients: For more information about Vanguard funds, contact your • No Bank Guarantee
financial advisor to obtain a prospectus. • May Lose Value

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