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Online Brochure Contents Click the links below to move quickly through this document. Vanguard ® ETF ® Shares Vanguard ® Bond ETF Shares Product Description Vanguard ® U.S. Stock ETF Shares Product Description Vanguard ® Sector ETF Shares Product Description Vanguard ® International ETF Shares Product Description Vanguard ® Extended Duration Treasury ETF Shares Product Description To print this kit: You can print selected pages by clicking your browser’s printer icon and entering the appropriate PDF page numbers. You can also print this kit in its entirety by clicking the printer icon and selecting “All.”

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Page 1: ETF Shares Product Description

Online Brochure Contents

Click the links below to move quickly through this document.

Vanguard® ETF® Shares

• Vanguard® Bond ETF Shares Product Description

• Vanguard® U.S. Stock ETF Shares Product Description

• Vanguard® Sector ETF Shares Product Description

• Vanguard® International ETF Shares Product Description

• Vanguard® Extended Duration Treasury ETF Shares Product Description

To print this kit:

You can print selected pages by clicking your browser’s printer icon and entering the appropriate PDF page numbers. You can also print this kit in its entirety by clicking the printer icon and selecting “All.”

Page 2: ETF Shares Product Description

Product Description for Vanguard U.S. Stock ETFs

Page 3: ETF Shares Product Description

What are Vanguard U.S. Stock ETFs?

Vanguard U.S. Stock ETFs are exchange-traded shares issued by one of the following Vanguard U.S. Stock Index Funds:

ETF share class Fund (Trading symbol) Target indexVanguard Total Stock Vanguard Total Stock MSCI® US Broad Market Index Fund Market ETF (VTI) Market IndexVanguard Extended Vanguard Extended S&P Completion Market Index Fund Market ETF (VXF) IndexVanguard Mega Cap Vanguard Mega Cap MSCI US Large-Cap300 Index Fund 300 ETF (MGC) 300 IndexVanguard Mega Cap Vanguard Mega Cap MSCI US Large-Cap300 Growth 300 Growth Growth IndexIndex Fund ETF (MGK)Vanguard Mega Cap Vanguard Mega Cap MSCI US Large-Cap300 Value 300 Value ETF (MGV) Value IndexIndex FundVanguard Large-Cap Vanguard Large-Cap MSCI US Prime Index Fund ETF (VV) Market 750 IndexVanguard Mid-Cap Vanguard Mid-Cap MSCI US Mid Value Index Fund Value ETF (VOE) Cap Value Index Vanguard Mid-Cap Vanguard Mid-Cap MSCI US Mid Index Fund ETF (VO) Cap 450 IndexVanguard Mid-Cap Vanguard Mid-Cap MSCI US Mid Growth Index Fund Growth ETF (VOT) Cap Growth Index Vanguard Small-Cap Vanguard Small-Cap MSCI US Small Index Fund ETF (VB) Cap 1750 Index Vanguard Value Vanguard Value MSCI US Prime Index Fund ETF (VTV) Market Value IndexVanguard Small-Cap Vanguard Small-Cap MSCI US Small Value Index Fund Value ETF (VBR) Cap Value IndexVanguard Growth Vanguard Growth MSCI US Prime Index Fund ETF (VUG) Market Growth Index Vanguard Small-Cap Vanguard Small-Cap MSCI US Small Growth Index Fund Growth ETF (VBK) Cap Growth IndexVanguard Dividend Vanguard Dividend Dividend AchieversAppreciation Appreciation Select Index1

Index Fund ETF (VIG) Vanguard High Vanguard High FTSE HighDividend Yield Dividend Yield Dividend Yield Index Fund ETF (VYM) Index

1 Administered exclusively for Vanguard by Mergent, Inc.

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The funds issue conventional mutual fund shares(Investor, Admiral™, Signal®, and/or Institutional Shares)as well as exchange-traded ETF Shares. There aresignificant differences between conventional mutualfund shares and ETF Shares, and it is important thatyou be aware of those differences.

How do a fund’s ETF Shares differ from itsconventional shares?

Conventional shares of a Vanguard mutual fund arebought from and redeemed with the issuing fund(either directly or through a fund supermarket) for cashat a net asset value (NAV) typically calculated once aday. ETF Shares, by contrast, cannot be bought from or redeemed with the issuing fund, except as noted on page 6 (see “How do I buy and sell ETF Shares?”).Rather, you must buy and sell ETF Shares through abroker. Your purchase or sale of a fund’s ETF Shareswill occur not at the daily NAV, but at market pricesthat change throughout the day based on the supply of, and demand for, ETF Shares and on changes in theprices of the fund’s portfolio holdings. At any giventime, the market price of a fund’s ETF Shares may be more than, less than, or equal to the NAV of thoseshares. Like common stocks (and unlike conventionalmutual fund shares), ETF Shares will be listed fortrading on a national securities exchange—in this case, the NYSE Arca, Inc. (NYSE Arca).

What are the investment objectives andinvestment strategies of the various Vanguard U.S. Stock ETFs?

Each U.S. Stock ETF is designed to give investorsexposure to a segment of the U.S. stock market (or, in the case of Vanguard Total Stock Market ETF, theentire U.S. stock market) by seeking to tracking theperformance of a benchmark index. Each Vanguard fundthat issues U.S. stock ETF Shares (except the funds that

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issue Total Stock Market and Extended Market ETFShares) invests all, or substantially all, of its assets in the stocks that make up the index, holding each stock inapproximately the same proportion as its weighting inthe index. For more information on the indexes trackedby Vanguard ETFs™, go to www.mscibarra.com orwww.dividendachievers.com.

• Total Stock Market ETF gives investors exposure tothe entire U.S. stock market. It seeks to track theMSCI US Broad Market Index, which includes large-,mid-, and small-cap companies. This index represents99.5% or more of the capitalization of the U.S. equitymarket. The Fund that issues Total Stock Market ETFShares typically invests all, or substantially all, of itsassets in the top 95% of its target index’s total marketcapitalization and in a representative sample of theremaining stocks.

• Extended Market ETF gives investors exposure to mid- and small-cap U.S. stocks. It seeks to track the Standard & Poor’s (S&P) Completion Index, which consists of all the U.S. common stocks regularly traded on the New York and American StockExchanges and the Nasdaq over-the-counter market,except those stocks included in the S&P 500 Index.The Fund that issues Extended Market ETF Sharesinvests all, or substantially all, of its assets in 1,200stocks in its target index (covering nearly 80% of the index’s total market capitalization) and in arepresentative sample of the remaining stocks.

• Mega Cap 300 ETF seeks to track the performance of the MSCI US Large-Cap 300 Index, a free-floatadjusted, market-capitalization-weighted indexdesigned to measure equity market performance of large-capitalization stocks. The Fund that issuesMega Cap 300 ETF Shares invests all, or substantiallyall, of its assets in the stocks that make up the Index, holding each stock in approximately the same proportion as its weighting in the Index.

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• Mega Cap 300 Growth ETF seeks to track theperformance of the MSCI US Large Cap Growth Index,which represents the growth companies of the MSCIUS Large Cap 300 Index. The index is a free-floatadjusted, market-capitalization-weighted indexdesigned to measure equity market performance of large-capitalization growth stocks. The Fund thatissues Mega Cap 300 Growth ETF Shares invests all,or substantially all, of its assets in the stocks that makeup the Index, holding each stock in approximately thesame proportion as its weighting in the Index.

• Mega Cap 300 Value ETF seeks to track theperformance of the MSCI US Large Cap Value Index,which represents the value companies of the MSCIUS Large Cap 300 Index. The index is a free-floatadjusted, market-capitalization-weighted indexdesigned to measure equity market performance of large-capitalization value stocks. The Fund thatissues Mega Cap 300 Value ETF Shares invests all, orsubstantially all, of its assets in the stocks that makeup the Index, holding each stock in approximately thesame proportion as its weighting in the Index.

• Large-Cap ETF seeks to track the MSCI US PrimeMarket 750 Index, a broadly diversified index ofstocks, predominantly of large U.S. companies.

• Mid-Cap Value ETF seeks to track the MSCI US Mid Cap Value Index, a broadly diversified index of value stocks of medium-size U.S. companies.

• Mid-Cap ETF seeks to track the MSCI US Mid Cap 450 Index, a broadly diversified indexof stocks of medium-size U.S. companies.

• Mid-Cap Growth ETF seeks to track the MSCI USMid Cap Growth Index, a broadly diversified index of growth stocks of medium-size U.S. companies.

• Small-Cap ETF seeks to track the MSCI US Small Cap1750 Index, a broadly diversified index of stocks ofsmall U.S. companies.

• Value ETF seeks to track the MSCI US Prime MarketValue Index, a broadly diversified index predominantlymade up of value stocks of large U.S. companies.

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• Small-Cap Value ETF seeks to track the MSCI US Small Cap Value Index, a broadly diversified index of value stocks of small U.S. companies.

• Growth ETF seeks to track the MSCI US PrimeMarket Growth Index, a broadly diversified indexpredominantly made up of growth stocks of large U.S. companies.

• Small-Cap Growth ETF seeks to track the MSCI USSmall Cap Growth Index, a broadly diversified index of growth stocks of small U.S. companies.

• Dividend Appreciation ETF seeks to track theDividend Achievers Select Index, a broadly diversifiedindex of common stocks of companies that have arecord of increasing dividends over time.

• High Dividend Yield ETF seeks to track the FTSEHigh Dividend Yield Index, a broadly diversified indexof common stocks of companies that pay dividendsthat generally are higher than average.

What are the risks of owning VanguardU.S. Stock ETFs?

• When you own one of the Vanguard U.S. Stock ETFs,you own shares of a fund that holds a portfolio ofstocks. The price of a fund’s ETF Shares will rise andfall as the stocks held by the fund fluctuate in value.An investment in a Vanguard U.S. Stock ETF couldlose money over short or even long periods.

• Vanguard U.S. Stock ETFs are subject to stock marketrisk, which is the chance that stock prices overall willdecline. Stock markets tend to move in cycles, withperiods of rising prices and periods of falling prices.

• Vanguard U.S. Stock ETFs (except Vanguard TotalStock Market ETF) are subject to investment stylerisk, which is the chance that returns from themarket segment in which a particular fund invests(such as small-cap value stocks) will trail returns fromthe overall stock market. Specific types of stockstend to go through cycles of doing better—or worse—than the stock market in general. These periods have,in the past, lasted for as long as several years.

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• The market price of a fund’s ETF Shares may differfrom the NAV of those shares. The difference betweenmarket price and NAV is expected to be small most of the time, but in times of extreme market volatilitythe difference may become significant.

• Although Vanguard U.S. Stock ETFs will be listed fortrading on the NYSE Arca, it is possible that an activetrading market may not be maintained.

• Trading of a fund’s ETF Shares on the NYSE Arca may be halted if NYSE Arca officials deem such action appropriate, if the shares are delisted from the NYSE Arca, or if the activation of marketwide“circuit breakers” (which are tied to large decreases in the Dow Jones Industrial Average) halts stock trading generally.

How do I buy and sell ETF Shares?

You can buy and sell ETF Shares on the secondarymarket in the same way you buy and sell any otherexchange-traded security—through a broker. In mostcases, the broker will charge you a commission toexecute the transaction. Unless imposed by your broker,there is no minimum dollar amount you must invest andno minimum number of ETF Shares you must buy.

ETF Shares cannot be purchased or redeemed directlywith the issuing fund except by certain authorizedbroker-dealers. These broker-dealers may purchase andredeem ETF Shares only in large blocks worth severalmillion dollars and only in exchange for baskets ofsecurities rather than cash.

In addition, owners of conventional mutual fund sharesissued by one of Vanguard’s U.S. stock index funds may convert those shares into ETF Shares. To initiate a conversion, you must contact your broker. Vanguardcharges a fee for conversions, and your broker mayimpose an additional fee. Please note that a fund’s ETFShares may not be converted into or exchanged forconventional mutual fund shares of the same fund or ETF Shares of another fund.

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What fees and expenses will I incur to buy,own, and sell Vanguard U.S. Stock ETFs?

When you buy or sell ETF Shares through a broker, you will pay a commission in an amount that will varydepending on the firm. You will also incur the cost of the “bid-asked spread,” which is the differencebetween the price a dealer will pay for a security and the somewhat higher price at which the dealer will sell the same security.

The total annual operating expenses (i.e., the “expenseratio”) through fiscal year 2007 were as follows:

Total Stock Market ETF 0.07% (7 basis points)Extended Market ETF 0.08% (8 basis points)Mega Cap 300 ETF1 0.13% (13 basis points)Mega Cap 300 Growth ETF1 0.13% (13 basis points)Mega Cap 300 Value ETF1 0.13% (13 basis points)Large-Cap ETF 0.07% (7 basis points)Mid-Cap Value ETF 0.13% (13 basis points) Mid-Cap ETF 0.13% (13 basis points)Mid-Cap Growth ETF 0.13% (13 basis points)Small-Cap ETF 0.10% (10 basis points)Value ETF 0.10% (10 basis points)Small-Cap Value ETF 0.11% (11 basis points)Growth ETF 0.10% (10 basis points)Small-Cap Growth ETF 0.11% (11 basis points)Dividend Appreciation ETF 0.28% (28 basis points)High Dividend Yield ETF 0.25% (25 basis points)

1 Inception date: December 10, 2007.

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How often will I receive distributions ofdividends and capital gains? Can I reinvestthese distributions?

Dividends for Total Stock Market, Mega Cap 300, Mega Cap 300 Growth, Mega Cap 300 Value, Large-Cap, Value, Growth, Dividend Appreciation, and HighDividend Yield ETFs are distributed quarterly in March,June, September, and December. Dividends forExtended Market, Mid-Cap Value, Mid-Cap, Mid-CapGrowth, Small-Cap, Small-Cap Value, and Small-CapGrowth ETFs are distributed annually in December. Forall U.S. stock ETFs, capital gains, if any, are distributed in December. Each Vanguard U.S. Stock ETF mayoccasionally make a supplemental distribution at someother time during the year.

Some brokers are able to reinvest dividend and capitalgains distributions in additional ETF Shares, while othersare not. Please ask your broker whether it offers areinvestment service and, if so, whether there is a charge for the service. If your broker does not offer a reinvestment service, you will receive all dividend and capital gains distributions in cash.

Who manages the funds that issue U.S. Stock ETF Shares?

All of the Vanguard funds that issue U.S. Stock ETFs are advised and managed by The Vanguard Group, Inc.(Vanguard), a registered investment advisor.

As an owner of ETF Shares, do I receiveservices from Vanguard?

Because you hold ETF Shares through a brokerageaccount, Vanguard will have no record of your ownership (unless your broker is Vanguard BrokerageServices®). Your broker will service your account. Forexample, the broker will provide account statements,confirmations of your purchases and sales of ETFShares, and year-end tax information. It also will beresponsible for ensuring that you receive shareholder

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reports and other communications from the fund whose ETF Shares you own. You will receive certainservices (e.g., dividend reinvestment and average costinformation) only if your broker offers those services.

Where can I find price information aboutVanguard U.S. Stock ETFs?

The closing market price of each issue of ETF Shareson the preceding business day is published in thebusiness section of most major newspapers in thelisting of stocks traded on the NYSE Arca. Vanguard’swebsite at www.vanguard.com shows the precedingbusiness day’s closing NAV and closing market price,as well as historical performance information. Thewebsite also discloses how frequently each issue ofETF Shares traded at a premium or discount to NAV(based on closing NAVs and market prices) and themagnitude of those premiums and discounts.

What other information can you tell meabout ETF Shares?

• Each Vanguard fund that issues ETF Shares reservesthe right to substitute a different index for the index it currently tracks if the current index is discontinued, if the fund’s license with the sponsor of the currentindex is terminated, or for any other reason determinedin good faith by the fund’s board of trustees. In everysuch instance, the substitute index would measure thesame market segment as the current index.

• If a fund’s ETF Shares are delisted from the NYSEArca, Vanguard will seek to list the shares on anotherstock exchange, convert the ETF Shares intoconventional shares of the same fund, or redeem the ETF Shares at NAV.

• ETF Shares are investment company securities subjectto the restrictions of section 12(d)(1) of the InvestmentCompany Act of 1940.

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Institutional Division

P.O. Box 2900Valley Forge, PA 19482-2900

Connect with Vanguard® > www.vanguard.com

© 2008 The Vanguard Group, Inc.All rights reserved. U.S. Pat. No. 6,879,964 B2; 7,337,138.Vanguard Marketing Corporation, Distributor.

VIPPD 102008

For more information aboutVanguard ETF™ Shares, visitwww.vanguard.com, call 866-499-8473, or contact yourbroker to obtain a productdescription and prospectus.Investment objectives, risks,charges, expenses, and otherimportant information arecontained in these documents;read and consider them carefully before investing.

Dividend Achievers is a trademark ofMergent, Inc., and has been licensed for use by The Vanguard Group, Inc.Vanguard mutual funds are notsponsored, endorsed, sold, or promotedby Mergent, and Mergent makes norepresentation regarding the advisabilityof investing in the funds. “FTSE®” is atrademark jointly owned by the LondonStock Exchange plc and The FinancialTimes Limited and is used by FTSEInternational Limited under license. The FTSE High Dividend Yield Index iscalculated by FTSE International Limited.

FTSE International Limited does notsponsor, endorse, or promote the fund; is not in any way connected to it; and does not accept any liability inrelation to its issue, operation, andtrading. Standard & Poor’s® and S&P®

are trademarks of The McGraw-HillCompanies, Inc., and have been licensedfor use by The Vanguard Group, Inc.Vanguard mutual funds are notsponsored, endorsed, sold, or promotedby Standard & Poor’s, and Standard &Poor’s makes no representation regardingthe advisability of investing in the funds. The funds or securities referred toherein that are offered by The VanguardGroup and track an MSCI index are not sponsored, endorsed, or promoted by MSCI, and MSCI bears no liabilitywith respect to any such funds orsecurities. For such funds or securities,the prospectus or the Statement ofAdditional Information contains a more detailed description of the limitedrelationship MSCI has with The VanguardGroup and any related funds.

Page 13: ETF Shares Product Description

Product Description for Vanguard® U.S. Sector ETFs

Page 14: ETF Shares Product Description

What are Vanguard U.S. Sector ETFs?

Vanguard U.S. Sector ETFs are exchange-traded sharesissued by one of the following Vanguard U.S. SectorIndex Funds:

ETF share class Fund (Trading symbol) Target indexVanguard Consumer Vanguard Consumer MSCI® US Investable Discretionary Discretionary Market ConsumerIndex Fund ETF (VCR) Discretionary IndexVanguard Consumer Vanguard Consumer MSCI US InvestableStaples Index Fund Staples ETF Market Consumer

(VDC) Staples IndexVanguard Energy Vanguard Energy MSCI US InvestableIndex Fund ETF (VDE) Market Energy IndexVanguard Financials Vanguard Financials MSCI US InvestableIndex Fund ETF (VFH) Market Financials

IndexVanguard Health Vanguard Health MSCI US InvestableCare Index Fund Care ETF (VHT) Market Health

Care IndexVanguard Industrials Vanguard Industrials MSCI US InvestableIndex Fund ETF (VIS) Market Industrials

IndexVanguard Information Vanguard Information MSCI US InvestableTechnology Technology Market InformationIndex Fund ETF (VGT) Technology IndexVanguard Materials Vanguard Materials MSCI US InvestableIndex Fund ETF (VAW) Market Materials

IndexVanguard REIT Vanguard REIT MSCI USIndex Fund ETF (VNQ) REIT IndexVanguard Vanguard MSCI US InvestableTelecommunication Telecommunication Market Telecommuni-Services Index Fund Services ETF (VOX) cation Services IndexVanguard Utilities Vanguard Utilities MSCI US InvestableIndex Fund ETF (VPU) Market Utilities Index

The funds issue conventional mutual fund shares as well as exchange-traded ETF Shares. There aresignificant differences between conventional mutualfund shares and ETF Shares, and it is important that you be aware of those differences.

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How do a fund’s ETF Shares differ from itsconventional shares?

Conventional shares of a Vanguard mutual fund arebought from and redeemed with the issuing fund(either directly or through a fund supermarket) for cashat a net asset value (NAV) typically calculated once aday. ETF Shares, by contrast, cannot be bought from or redeemed with the issuing fund, except as noted on page 7 (see “How do I buy and sell ETF Shares?”).Rather, you must buy and sell ETF Shares through abroker. Your purchase or sale of a fund’s ETF Shareswill occur not at the daily NAV, but at market pricesthat change throughout the day based on the supplyof, and demand for, ETF shares and on changes in theprices of the fund’s portfolio holdings. At any giventime, the market price of a fund’s ETF Shares may bemore than, less than, or equal to the NAV of thoseshares. Like common stocks (and unlike conventionalmutual fund shares), ETF Shares will be listed fortrading on a national securities exchange—in this case,the NYSE Arca, Inc. (NYSE Arca).

What are the investment objectives andinvestment strategies of the variousVanguard U.S. Sector ETFs?

Each U.S. Sector ETF is designed to give investorsexposure to a segment of the U.S. stock market bytracking the performance of a benchmark index. Ineach case, other than Vanguard REIT ETF, the index is a subset of the MSCI US InvestableMarket 2500 Index, with companies classified intodifferent sectors according to the Global IndustryClassification Standard.

• Consumer Discretionary ETF seeks to track theperformance of the MSCI US Investable MarketConsumer Discretionary Index, an index of stocksissued by U.S. companies within the consumerdiscretionary sector. This sector is made up of thosemanufacturing and service industries that tend to bethe most sensitive to economic cycles. Among the

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industries included in the manufacturing segment are:automotive, household durable goods, textiles andapparel, and leisure equipment. The services segmentincludes hotels, restaurants and other leisure facilities,media production and services, and consumer retailingand services.

• Consumer Staples ETF seeks to track theperformance of the MSCI US Investable MarketConsumer Staples Index, an index of stocks issuedby U.S. companies within the consumer staplessector. This sector is made up of companies whosebusinesses are less sensitive to economic cycles. It includes manufacturers and distributors of food,beverages, and tobacco, as well as producers ofnondurable household goods and personal products.It also includes food and drug retailing companies aswell as hypermarkets and consumer supercenters.

• Energy ETF seeks to track the performance of theMSCI US Investable Market Energy Index, an index ofstocks issued by U.S. companies within the energysector. This sector is made up of companies whosebusinesses are dominated by either of the followingactivities: the construction or provision of oil rigs,drilling equipment, and other energy-related servicesand equipment (such as seismic data collection); orcompanies engaged in the exploration, production,marketing, refining, and/or transportation of oil and gas products, coal, and other consumable fuels.

• Financials ETF seeks to track the performance ofthe MSCI US Investable Market Financials Index, an index of stocks issued by U.S. companies withinthe financials sector. This sector is made up ofcompanies involved in activities such as banking,mortgage finance, consumer finance, specializedfinance, investment banking and brokerage, assetmanagement and custody, corporate lending,insurance, financial investment, and real estate(including REITs).

• Health Care ETF seeks to track the performance of the MSCI US Investable Market Health Care Index, anindex of stocks issued by U.S. companies within thehealth care sector. This sector is made up of two mainindustry groups. The first group includes companies

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that manufacture health care equipment and suppliesor provide healthcare-related services (such asdistributors of health care products, providers of basichealth care services, and owners and operators ofhealth care facilities and organizations). The secondgroup includes companies primarily involved in theresearch, development, production, and marketing ofpharmaceuticals and biotechnology products.

• Industrials ETF seeks to track the performance of the MSCI US Investable Market Industrials Index, anindex of stocks issued by U.S. companies within theindustrials sector. This sector is made up of companieswhose businesses are dominated by one of thefollowing activities: the manufacture and distribution of capital goods (including aerospace and defense,construction, engineering and building products,electrical equipment, and industrial machinery); theprovision of commercial services and supplies(including printing, employment, environmental, andoffice services); or the provision of transportationservices (including airlines, couriers, marine, road and rail, and transportation infrastructure).

• Information Technology ETF seeks to track theperformance of the MSCI US Investable MarketInformation Technology Index, an index of stocksissued by U.S. companies within the informationtechnology sector. This sector is made up ofcompanies in the following three general areas:technology software and services, includingcompanies that primarily develop software in various fields (such as the Internet, applications,systems, databases management, and/or homeentertainment) and companies that provideinformation technology consulting and services, dataprocessing, and outsourced services; technologyhardware and equipment, including manufacturersand distributors of communications equipment,computers and peripherals, electronic equipment, and related instruments; and semiconductors andsemiconductor equipment manufacturers.

• Materials ETF seeks to track the performance of the MSCI US Investable Market Materials Index, anindex of stocks issued by U.S. companies within the

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materials sector. This sector is made up of companies in a wide range of commodity-related manufacturingindustries. Included within this sector are companiesthat manufacture chemicals, construction materials,glass, paper, forest products, and related packagingproducts, as well as metals, minerals, and miningcompanies, including producers of steel.

• REIT ETF seeks to track the performance of the MSCI US REIT Index, an index of stocks issued byU.S. equity real estate investment trusts. Equity REITsare companies that own and manage real estateproperties, including retail, office, residentialapartment, industrial, and other types of properties.Equity REITs generate income from rental and leasepayments, and they offer the potential for growth fromproperty appreciation as well as occasional capitalgains from the sale of property.

• Telecommunication Services ETF seeks to track the performance of the MSCI US Investable MarketTelecommunications Services Index, an index of stocks issued by U.S. companies within thetelecommunications services sector. This sector ismade up of companies that provide communicationsservices primarily through fixed-line, cellular, wireless,high bandwidth, and/or fiber-optic cable networks.

• Utilities ETF seeks to track the performance of theMSCI US Investable Market Utilities Index, an index of stocks issued by U.S. companies within the utilitiessector. This sector is made up of electric, gas, andwater utility companies as well as companies thatoperate as independent producers and/or distributorsof power. The sector includes both nuclear andnonnuclear facilities.

What are the risks of owning VanguardU.S. Sector ETFs?

• When you own one of the Vanguard U.S. Sector ETFs,you own shares of a fund that holds a portfolio ofstocks. The price of a fund’s ETF Shares will rise andfall as the stocks held by the fund fluctuate in value.An investment in a Vanguard U.S. Sector ETF couldlose money over short or even long periods.

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• Vanguard U.S. Sector ETFs are subject to stock marketrisk, which is the chance that stock prices overall willdecline. Stock markets tend to move in cycles, withperiods of rising prices and periods of falling prices.

• Vanguard U.S. Sector ETFs are subject to sector risk,which is the chance that there will be overall problemsaffecting a particular sector, or that returns from aparticular sector will trail returns from the overall stockmarket. Because each Vanguard U.S. sector index fund invests all, or substantially all, of its assets in a particular sector, each fund’s performance largelydepends on the overall condition of the sector in whichit invests.

• Vanguard U.S. Sector ETF Shares are subject tonondiversification risk, which is the chance that afund’s performance could be hurt disproportionatelyby the poor performance of relatively few stocks or even a single stock. Each Vanguard U.S. sector indexfund is considered nondiversified, which means thatit may invest a greater percentage of its assets insecurities of particular issuers as compared withother mutual funds.

• Vanguard U.S. Sector ETFs that sample their targetindexes to comply with IRS diversification rules,which include Consumer Staples, Energy, andTelecommunication Services ETFs, may experience a greater degree of tracking error than otherVanguard ETFs™.

• The market price of a fund’s ETF Shares may differfrom the NAV of those shares. The difference betweenmarket price and NAV is expected to be small most ofthe time, but in times of extreme market volatility thedifference may become significant.

• Although Vanguard U.S. Sector ETFs will be listed fortrading on the NYSE Arca, it is possible that an activetrading market may not be maintained.

• Trading of a fund’s ETF Shares on the NYSE Arca may be halted if NYSE Arca officials deem suchaction appropriate, if the shares are delisted from the NYSE Arca, or if the activation of marketwide“circuit breakers” (which are tied to large decreasesin the Dow Jones Industrial Average) halts stocktrading generally.

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How do I buy and sell ETF Shares?

You can buy and sell ETF Shares on the secondarymarket in the same way you buy and sell any otherexchange-traded security—through a broker. In mostcases, the broker will charge you a commission toexecute the transaction. Unless imposed by your broker,there is no minimum dollar amount you must invest andno minimum number of ETF Shares you must buy.

ETF Shares cannot be purchased or redeemed directlywith the issuing fund except by certain authorizedbroker-dealers. These broker-dealers may purchase andredeem ETF Shares only in large blocks worth severalmillion dollars and only in exchange for baskets ofsecurities rather than cash.

In addition, owners of conventional mutual fund sharesissued by one of Vanguard’s U.S. sector index funds may convert those shares into ETF Shares. To initiate a conversion, you must contact your broker. Vanguardcharges a fee for conversions, and your broker mayimpose an additional fee. Please note that a fund’s ETFShares may not be converted into or exchanged forconventional mutual fund shares of the same fund orETF Shares of another fund.

What fees and expenses will I incur to buy,own, and sell Vanguard U.S. Sector ETFs?

When you buy or sell ETF Shares through a broker, youwill pay a commission in an amount that will varydepending on the firm. You will also incur the cost of the “bid-asked spread,” which is the differencebetween the price a dealer will pay for a security andthe somewhat higher price at which the dealer will sell the same security.

The total annual operating expenses (i.e., the expenseratio) for each of the U.S. Sector ETFs through fiscal year2007 were as follows: 0.22% ($2.20 per $1,000 ofaverage net assets), except for Vanguard REIT ETF, whichwas 0.10% ($1.00 per $1,000 of average net assets), and Vanguard Telecommunication Services ETF, which was 0.23% ($2.30 per $1,000 of average net assets).

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How often will I receive distributions ofdividends and capital gains? Can I reinvest these distributions?

Except as noted, U.S. Sector ETFs distribute dividendsin December. Financials, REIT, and Utilities ETFsdistribute dividends (a portion of which, in the case of REIT ETF, may be attributable to return of capital)quarterly in March, June, September, and December.U.S. Sector ETFs distribute capital gains, if any, in December; REIT ETF may occasionally make a supplemental distribution at some other time during the year.

Some brokers are able to reinvest dividend and capitalgains distributions in additional ETF Shares, while othersare not. Please ask your broker whether it offers areinvestment service and, if so, whether there is acharge for the service. If your broker does not offer areinvestment service, you will receive all dividend andcapital gains distributions in cash.

Who manages the funds that issue U.S. Sector ETF Shares?

All of the Vanguard funds that issue U.S. Sector ETFs are advised and managed by The Vanguard Group, Inc.(Vanguard), a registered investment advisor.

As an owner of ETF Shares, do I receiveservices from Vanguard?

Because you hold ETF Shares through a brokerageaccount, Vanguard will have no record of your ownership(unless your broker is Vanguard Brokerage Services®).Your broker will service your account. For example, thebroker will provide account statements, confirmations of your purchases and sales of ETF Shares, and year-endtax information. It also will be responsible for ensuringthat you receive shareholder reports and othercommunications from the fund whose ETF Shares you own. You will receive certain services (e.g., dividendreinvestment and average-cost information) only if your broker offers those services.

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Where can I find price information aboutVanguard U.S. Sector ETFs?

The closing market price of each issue of ETF Shares on the preceding business day is published in thebusiness section of most major newspapers in thelisting of stocks traded on the NYSE Arca. Vanguard’swebsite at www.vanguard.com shows the precedingbusiness day’s closing NAV and closing market price, aswell as historical performance information. The websitealso discloses how frequently each issue of ETF Sharestraded at a premium or discount to NAV (based onclosing NAVs and market prices) and the magnitude of those premiums and discounts.

What other information can you tell meabout ETF Shares?

• Each Vanguard fund that issues ETF Shares reservesthe right to substitute a different index for the indexit currently tracks if the current index is discontinued,if the fund’s license with the sponsor of the currentindex is terminated, or for any other reasondetermined in good faith by the fund’s board oftrustees. In every such instance, the substitute index would measure the same market segment asthe current index.

• If a fund’s ETF Shares are delisted from the NYSE Arca,Vanguard will seek to list the shares on another stockexchange, convert the ETF Shares into conventionalshares of the same fund, or redeem the ETF Shares at NAV.

• ETF Shares are investment company securities subjectto the restrictions of section 12(d)(1) of the InvestmentCompany Act of 1940.

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For more information aboutVanguard ETF™ Shares, visitwww.vanguard.com, call 866-499-8473, or contact yourbroker to obtain a productdescription and prospectus.Investment objectives, risks,charges, expenses, and otherimportant information arecontained in these documents;read and consider them carefully before investing.

The funds or securities referred to hereinthat are offered by The Vanguard Groupand track an MSCI index are notsponsored, endorsed, or promoted byMSCI, and MSCI bears no liability withrespect to any such funds or securities.For such funds or securities, theprospectus or the Statement of AdditionalInformation contains a more detaileddescription of the limited relationshipMSCI has with The Vanguard Group.

Vanguard, Vanguard ETFs, Vanguard ETF,Vanguard Brokerage Services, Connectwith Vanguard, and the ship logo aretrademarks of The Vanguard Group, Inc.All other trademarks are the exclusiveproperty of their respective owners.

Institutional Division

P.O. Box 2900Valley Forge, PA 19482-2900

Connect with Vanguard® > www.vanguard.com

© 2008 The Vanguard Group, Inc.All rights reserved. U.S. Pat. No. 6,879,964 B2; 7,337,138.Vanguard Marketing Corporation, Distributor.

DIPPV 082008

Page 24: ETF Shares Product Description

Product Description forVanguard® InternationalStock ETFs

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What are international stock ETFs?

International stock ETFs are exchange-traded sharesissued by one of the following Vanguard® internationalstock funds:

ETF share class Fund (Trading symbol) Target indexVanguard FTSE Vanguard FTSE FTSE All-WorldAll-World ex-US All-World ex-US ex US IndexIndex Fund ETF (VEU)Vanguard Tax- Vanguard MSCI® EAFE® IndexManaged Europe PacificInternational Fund ETF (VEA)Vanguard European Vanguard European MSCI Europe IndexStock Index Fund ETF (VGK)Vanguard Pacific Vanguard Pacific MSCI Pacific IndexStock Index Fund ETF (VPL)Vanguard Emerging Vanguard Emerging MSCI EmergingMarkets Stock Markets ETF (VWO) Markets IndexIndex FundVanguard Total Vanguard Total FTSE All-World IndexWorld Stock World Stock Index Fund ETF (VT)

The funds issue conventional mutual fund shares(Investor, Admiral™, Signal™, or Institutional Shares) as well as ETF Shares. There are significant differencesbetween conventional mutual fund shares and ETFShares, and it is important that you be aware of those differences.

How do a fund’s ETF Shares differ from itsconventional shares?

Conventional shares of a Vanguard mutual fund arebought from and redeemed with the issuing fund (eitherdirectly or through a fund supermarket) at a net assetvalue (NAV) calculated once a day. ETF Shares, bycontrast, cannot be bought from or redeemed with theissuing fund, except as noted on page 5 (see “How do I buy and sell ETF Shares?”). Rather, you must buy andsell ETF Shares through a brokerage firm. Your purchaseor sale of a fund’s ETF Shares will occur not at the dailyNAV, but at market prices that change throughout the day based on the supply of and demand for shares. At any given time, the market price of a fund’s ETFShares may be more than, less than, or equal to the

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NAV of those shares. Like common stocks (and unlikeconventional mutual fund shares), ETF Shares will belisted for trading on a stock exchange—in these cases, the American Stock Exchange or NYSE Arca (each a“national securities exchange”).

What are the investment objectives andinvestment strategies of the variousinternational stock ETFs?

Each issue of international stock ETFs is designed to give investors exposure to a segment of the internationalstock market by tracking the performance of a benchmarkindex. Each Vanguard fund that issues international stockETF Shares invests all, or substantially all, of its assets inthe stocks that make up the fund’s target index, holdingeach stock in approximately the same proportion as itsweighting in the index. For more information on theindexes tracked by international stock ETFs, go towww.mscibarra.com or www.ftse.com.

• Vanguard FTSE All-World ex-US ETF givesinvestors exposure to developed and emerging stockmarkets around the world. It seeks to track the FTSEAll-World ex US Index, which includes approximately2,200 stocks of companies located in 46 countries,including both developed and emerging markets. As of March 31, 2008, the largest markets covered in the index were the United Kingdom, Japan, France,Germany, Australia, and Switzerland (which made up 15%, 14%, 9%, 7%, 5%, and 5%, respectively,of the Index’s market capitalization).

• Vanguard Europe Pacific ETF gives investorsexposure to the Europe and Pacific markets. It seeks to track the MSCI EAFE Index, which includesapproximately 1,200 common stocks of companieslocated in 21 countries in Europe, Australia, Asia, and the Far East.

• Vanguard European ETF gives investors exposure to European stock markets. It seeks to track the MSCIEurope Index, which consists of approximately 600common stocks of companies located in 16 European

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countries—mostly companies in the United Kingdom,France, Germany, and Switzerland which made up31%, 16%, 13%, and 10%, respectively, of the Index’smarket capitalization, as of March 31, 2008. Othercountries represented in the index include Austria,Belgium, Denmark, Finland, Greece, Ireland, Italy, theNetherlands, Norway, Portugal, Spain, and Sweden.

• Vanguard Pacific ETF gives investors exposure to the stock markets of Japan and other major markets of the Pacific region. It seeks to track the MSCI PacificIndex, which consists of approximately 550 commonstocks of companies located primarily in Japan,Australia, Hong Kong, Singapore, and New Zealand. As of March 31, 2008, Japan and Australia made up 67% and 21%, respectively, of the Index’s market capitalization.

• Vanguard Emerging Markets ETF gives investorsexposure to emerging stock markets around the world.It seeks to track the MSCI Emerging Markets Index,which includes approximately 850 common stocks ofcompanies located in 25 emerging markets of Europe,Asia, Africa, and Latin America. Five countries—China,South Korea, Brazil, Taiwan, and Russia—collectivelyrepresent a majority of the Index, with 14%, 14%,14%, 12%, and 10%, respectively, of the Index’smarket capitalization as of March 31, 2008. Othercountries represented in the index include Argentina,Chile, Colombia, the Czech Republic, Egypt, Hungary,India, Indonesia, Israel, Jordan, Malaysia, Mexico,Morocco, Pakistan, Peru, the Philippines, Poland, South Africa, Thailand, and Turkey.

• Vanguard Total World Stock ETF gives investorsexposure to developed and emerging markets aroundthe world. It seeks to track the FTSE All-World Index,which includes approximately 2,900 stocks ofcompanies located in 47 countries, including bothdeveloped and emerging markets. As of March 31,2008, the largest markets covered in the Index werethe United States, the United Kingdom, Japan, France,and Germany which made up 41%, 9%, 9%, 5%, and4%, respectively, of the Index’s market capitalization.

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What are the risks of owning internationalstock ETFs?

• When you own international stock ETFs, you ownshares of a fund that holds a portfolio of stocks. The price of a fund’s ETF Shares will rise and fall as the stocks held by the fund fluctuate in value. An investment in international stock ETFs could lose money over short or even long periods.

• International stock ETFs are subject to stock marketrisk, which is the chance that stock prices overall willdecline. Stock markets tend to move in cycles, withperiods of rising prices and periods of falling prices. In addition, investments in foreign stock markets canbe riskier than U.S. stock investments. The prices offoreign stocks and the prices of U.S. stocks have, attimes, moved in opposite directions.

• International stock ETFs are subject to country risk,which is the chance that world events—such aspolitical upheaval, financial troubles, or naturaldisasters—will adversely affect the value of companiesin a particular country. Each issue of international stock ETFs, especially Pacific ETFs, have significantexposure to a small number of countries. Aninvestment in international stock ETFs therefore may involve a higher degree of country risk than an investment in more geographically diversifiedinternational funds.

• European and Pacific ETFs are subject to regional risk, which is the chance that an entire region will be hurt by political upheaval, financial troubles, ornatural disasters.

• Emerging Markets ETF and, to a lesser degree, FTSEAll-World ex-US ETF and Total World Stock ETF, aresubject to emerging markets risk, which is the chancethat emerging markets will be substantially morevolatile, and substantially less liquid, than the moredeveloped foreign markets.

• International stock ETFs are subject to currency risk,which is the chance that the value of a foreigninvestment, measured in U.S. dollars, will decreasebecause of unfavorable changes in currency exchange rates.

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• The market price of a fund’s ETF Shares will varysomewhat from the NAV of those shares. Therefore,you may pay more than NAV when purchasing ETFShares and you may receive less than NAV whenselling them. The variation between market price andNAV is expected to be small most of the time, but intimes of extreme market volatility the difference maybecome significant.

• Although international stock ETFs will be listed fortrading on a national securities exchange, it is possiblethat an active trading market may not develop or be maintained.

• Trading of a fund’s ETF Shares on a national securitiesexchange may be halted if exchange officials deemsuch action appropriate, the shares are delisted fromthe exchange, or the activation of marketwide “circuitbreakers” (which are tied to large decreases in stockprices) halts stock trading generally.

How do I buy and sell ETF Shares?

You buy and sell ETF Shares in the same way you buyand sell any other exchange-traded security—through abrokerage firm. The firm will charge you a commissionto execute the transaction. Unless imposed by yourbrokerage firm, there is no minimum dollar amount youmust invest and no minimum number of ETF Shares you must purchase.

ETF Shares cannot be purchased or redeemed directlywith the issuing fund except by certain authorizedbroker-dealers. These broker-dealers may purchase and redeem ETF Shares only in large blocks worthseveral million dollars and only in exchange for basketsof securities or, in the case of Emerging Markets ETFand to a lesser extent FTSE All-World ex-US ETF andTotal World Stock ETF, securities and cash.

In addition, owners of conventional mutual fund sharesissued by one of Vanguard’s international funds mayconvert those shares into ETF Shares. To initiate a conversion, you must contact your brokerage firm.Vanguard charges a fee for conversions, and yourbrokerage firm may impose an additional fee. Please

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note that a fund’s ETF Shares may not be converted into or exchanged for conventional mutual fund sharesof the same fund or ETF Shares of another fund.

What fees and expenses will I incur to buy,own, and sell international stock ETFs?

When you buy or sell ETF Shares through a brokeragefirm, you will pay commissions in an amount that willvary depending on the firm. You will also incur the cost of the “bid-asked spread,” which is the differencebetween the price a dealer will pay for a security andthe somewhat higher price at which the dealer will sell the same security.

The total annual operating expenses (i.e., the “expenseratio”) for the international stock ETFs are expected to be:

FTSE All-World ex-US ETF: 0.25% (25 basis points)=$2.50 per$1,000 of average net assets

Europe Pacific ETF: 0.12% (12 basis points)=$1.20 per $1,000 of average net assets

European ETF: 0.12% (12 basis points)=$1.20 per $1,000 of average net assets

Pacific ETF: 0.12% (12 basis points)=$1.20 per $1,000 of average net assets

Emerging Markets ETF: 0.25% (25 basis points)=$2.50 per$1,000 of average net assets

Total World Stock ETF: 0.25% (25 basis points)=$2.50 per$1,000 of average net assets

How often will I receive distributions ofdividends and capital gains? Can I reinvestthese distributions?

Vanguard’s international funds generally distributedividends and capital gains, if any, in December.

Some brokerage firms are able to reinvest dividend and capital gains distributions in additional ETF Shares,while others are not. Please ask your firm whether itoffers a reinvestment service and, if so, whether thereis a charge for the service. If your brokerage firm doesnot offer a reinvestment service, you will receive alldividends and capital gains distributions in cash.

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Who manages the funds that issueinternational stock ETF Shares?

All of the Vanguard funds that issue international stockETF Shares are advised and managed by The VanguardGroup, Inc. (Vanguard), a registered investment advisor.

As an owner of ETF Shares, do I receiveservices from Vanguard?

Because you hold ETF Shares through a brokerageaccount, Vanguard will have no record of your ownership(unless your broker is Vanguard Brokerage Services®).Your brokerage firm will service your account. Forexample, the firm will provide account statements,confirmations of your purchases and sales of ETF Shares,and year-end tax information. It also will be responsiblefor ensuring that you receive shareholder reports andother communications from the fund whose ETF Sharesyou own. You will receive certain services (e.g., dividendreinvestment and average cost information) only if yourbrokerage firm offers those services.

Where can I find price information aboutinternational stock ETFs?

The closing market price of each issue of ETF Shareson the preceding business day is published in thebusiness section of many major newspapers in the listing of stocks traded on a national securitiesexchange. Vanguard’s website at www.vanguard.comshows the preceding business day’s closing NAV and closing market price. The website also discloseshow frequently each issue of ETF Shares traded at a premium or discount to NAV (based on closing NAVs and market prices), and the magnitude of those premiums and discounts.

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What other information can you tell meabout ETF Shares?

• Each Vanguard fund that issues ETF Shares reservesthe right to substitute a different index for the index itcurrently tracks if the current index is discontinued, thefund’s license with the sponsor of the current index isterminated, or for any other reason determined in goodfaith by the fund’s board of trustees. In every suchinstance, the substitute index will measure the samegeneral market or market sector as the current index.

• If a fund’s ETF Shares are delisted from a nationalsecurities exchange, Vanguard will seek to list theshares on another stock exchange, convert the ETFShares into conventional shares of the same fund, or redeem the ETF Shares at NAV.

• ETF Shares are investment company securities subjectto the restrictions of section 12(d)(1) of the InvestmentCompany Act of 1940.

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For more information aboutVanguard ETF™ Shares, visitwww.vanguard.com, call 866-499-8473, or contact yourbroker to obtain a productdescription and prospectus.Investment objectives, risks,charges, expenses, and otherimportant information arecontained in these documents;read and consider them carefully before investing.

Vanguard, Vanguard ETF, Admiral, Signal,Vanguard Brokerage Services, Connect withVanguard, and the ship logo are trademarksof The Vanguard Group, Inc. The funds orsecurities referred to herein that areoffered by The Vanguard Group and track an MSCI index are not sponsored, endorsed,or promoted by MSCI, and MSCI bears noliability with respect to any such funds orsecurities. For such funds or securities, theprospectus or the Statement of AdditionalInformation contains a more detaileddescription of the limited relationshipMSCI has with The Vanguard Group.“FTSE®” is a trademark jointly owned bythe London Stock Exchange plc and TheFinancial Times Limited, and is used byFTSE International Limited under license.The FTSE All-World ex USA Index iscalculated by FTSE International Limited.FTSE International Limited does not sponsor,endorse, or promote the fund; is not in any way connected to it; and does notaccept any liability in relation to its issue,operation, and trading. All other trademarksare the exclusive property of theirrespective owners.

Institutional Division

P.O. Box 2900Valley Forge, PA 19482-2900

Connect with Vanguard® > www.vanguard.com

© 2008 The Vanguard Group, Inc.All rights reserved. U.S. Pat. No. 6,879,964 B2; 7,337,138.Vanguard Marketing Corporation, Distributor.

VIPD 062008

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Product Description for Vanguard Bond ETFs™

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What are Vanguard Bond ETFs?

Vanguard Bond ETFs are exchange-traded shares issuedby one of the following Vanguard Bond Index Funds:

ETF share classFund (Trading symbol) Target indexVanguard Total Vanguard Total Lehman BrothersBond Market Bond Market U.S. AggregateIndex Fund ETF (BND) Bond IndexVanguard Vanguard Lehman BrothersShort-Term Short-Term 1–5 Year U.S. Bond Index Fund Bond ETF (BSV) Government/

Credit IndexVanguard Vanguard Lehman BrothersIntermediate-Term Intermediate-Term 5–10 Year U.S. Bond Index Fund Bond ETF (BIV) Government/

Credit IndexVanguard Vanguard Lehman BrothersLong-Term Long-Term U.S. LongBond Index Fund Bond ETF (BLV) Government/

Credit Index

The funds issue conventional mutual fund shares(Investor, Admiral™, Signal®, and/or Institutional Shares)as well as ETF Shares. There are significant differencesbetween conventional mutual fund shares and ETFShares, and it is important that you be aware of those differences.

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How do a fund’s ETF Shares differ from its conventional shares?

Conventional shares of a Vanguard mutual fund arebought from and redeemed with the issuing fund (eitherdirectly or through a fund supermarket) for cash at a net asset value (NAV) typically calculated once a day.ETF Shares, by contrast, cannot be bought from orredeemed with the issuing fund, except as noted onpage 5 (see “How do I buy and sell ETF Shares?”).Rather, you must buy and sell ETF Shares through abroker. Your purchase or sale of a fund’s ETF Shares will occur not at the daily NAV, but at market prices thatchange throughout the day based on the supply of, anddemand for, ETF Shares and on changes in the prices of the fund’s portfolio holdings. At any given time, themarket price of a fund’s ETF Shares may be more than,less than, or equal to the NAV of those shares. Likecommon stocks (and unlike conventional mutual fundshares), ETF Shares will be listed for trading on anational securities exchange—in this case, the NYSEArca, Inc. (NYSE Arca).

What are the investment objectives and investment strategies of the variousVanguard Bond ETFs?

Each Vanguard Bond ETF™ is designed to give investorsexposure to a segment of the U.S. taxable, investment-grade bond market by seeking to track the performanceof a benchmark index. Each ETF invests by sampling itstarget index, meaning that it holds a range of securitiesthat, in the aggregate, approximates the full index interms of key characteristics (average maturity, averagecredit quality, issuer type, and yield) and risk factors. For more information on the indexes tracked by theVanguard Bond ETFs, go to www.lehman.com/fi/indices.

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• Total Bond Market ETF seeks to track the LehmanBrothers U.S. Aggregate Bond Index. This indexrepresents a wide spectrum of public, investment-grade, taxable, fixed income securities in the United States—including government, corporate, and international dollar-denominated bonds, as well as mortgage-backed and asset-backed securities—all with maturities of more than 1 year.

• Short-Term Bond ETF seeks to track the LehmanBrothers 1–5 Year U.S. Government/Credit Index. This index includes all medium and larger issues ofU.S. government, investment-grade corporate, andinvestment-grade international dollar-denominatedbonds that have maturities between 1 and 5 years and are publicly issued.

• Intermediate-Term Bond ETF seeks to track theLehman Brothers 5–10 Year U.S. Government/CreditIndex. This index includes all medium and larger issuesof U.S. government, investment-grade corporate, andinvestment-grade international dollar-denominatedbonds that have maturities between 5 and 10 yearsand are publicly issued.

• Long-Term Bond ETF seeks to track the LehmanBrothers U.S. Long Government/Credit Index. Thisindex includes all medium and larger issues of U.S. government, investment-grade corporate, andinvestment-grade international dollar-denominatedbonds that have maturities of greater than 10 years and are publicly issued.

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What are the risks of owning VanguardBond ETFs?

• When you own one of the Vanguard Bond ETFs, youown shares of a fund that holds a portfolio of bonds.The price of a fund’s ETF Shares will rise and fall asthe bonds held by the fund fluctuate in value. Aninvestment in a Vanguard Bond ETF could losemoney over short or even long periods.

• Vanguard Bond ETFs are subject to interest rate risk,which is the chance that bond prices overall willdecline because of rising interest rates. The longer the time until a bond matures, the more sensitive the price of the bond is to changes in interest rates.Accordingly, interest rate risk should be high for theLong-Term Bond ETF, moderate for the Total BondMarket ETF and the Intermediate-Term Bond ETF, and low for the Short-Term Bond ETF.

• Vanguard Bond ETFs are subject to income risk, which is the chance that the fund’s income will decline because of falling interest rates. Income riskshould be high for the Short-Term Bond ETF, moderate for the Total Bond Market ETF and the Intermediate-Term Bond ETF, and low for the Long-Term Bond ETF.

• Vanguard Bond ETFs are subject to credit risk, which is the chance that a bond issuer will fail to pay interestand principal in a timely manner, or that negativeperceptions of the issuer’s ability to make suchpayments will cause the price of that bond to decline.Credit risk should be low for the funds because eachfund purchases only bonds that are issued by the U.S. Treasury or are of investment-grade quality.

• Vanguard Bond ETFs are subject to index samplingrisk, which is the chance that the securities selectedfor the fund, in the aggregate, will not provideinvestment performance matching that of the fund’sindex. Index sampling risk should be low for each ofthe funds.

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• The market price of a fund’s ETF Shares may differfrom the NAV of those shares. The difference betweenmarket price and NAV is expected to be small most ofthe time, but in times of extreme market volatility, thedifference may become significant.

• Although Vanguard Bond ETFs will be listed for tradingon the NYSE Arca, it is possible that an active tradingmarket may not be maintained.

• Trading of a fund’s ETF Shares on the NYSE Arca may be halted if NYSE Arca officials deem such action appropriate, if the shares are delisted from the NYSE Arca, or if the activation of marketwide “circuit breakers” (which are tied to large decreases in the Dow Jones Industrial Average) halts stock trading generally.

How do I buy and sell ETF Shares?

You can buy and sell ETF Shares on the secondarymarket in the same way you buy and sell any otherexchange-traded security—through a broker. In mostcases, the broker will charge you a commission toexecute the transaction. Unless imposed by your broker,there is no minimum dollar amount you must invest andno minimum number of ETF Shares you must buy.

ETF Shares cannot be purchased or redeemed directlywith the issuing fund except by certain authorizedbroker-dealers. These broker-dealers may purchase andredeem ETF Shares only in large blocks worth severalmillion dollars and only in exchange for baskets ofsecurities rather than cash.

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What fees and expenses will I incur to buy,own, and sell Vanguard Bond ETFs?

Investors in an ETF bear two types of costs: ownershipcosts, which consist of the fund’s operating expenses,and transaction costs, which consist of the costsincurred in buying and selling the fund’s shares.

Ownership costs: The total annualized operatingexpenses (i.e., the “expense ratio”) for each of theVanguard Bond ETFs through fiscal year 2007 was0.11% (11 basis points).

Transaction costs: When you buy or sell an ETF through a broker, you will pay a commission in anamount that will vary depending on the firm. You willalso incur the cost of the “bid-asked spread,” which isthe difference between the price a dealer will pay for a security and the somewhat higher price at which thedealer will sell the same security.

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How often will I receive distributions ofdividends and capital gains? Can I reinvestthese distributions?

Each Vanguard Bond ETF declares and distributesdividends monthly; capital gains, if any, are distributed in December.

Some brokers are able to reinvest dividend and capitalgains distributions in additional ETF Shares, while othersare not. Please ask your broker whether it offers areinvestment service and, if so, whether there is acharge for the service. If your broker does not offer areinvestment service, you will receive all dividend andcapital gains distributions in cash.

As with all exchange-traded funds, reinvestment ofdividend and capital gains distributions in additionalshares of the Vanguard Bond ETFs will occur severalbusiness days after the ex-dividend date (the date whena distribution of dividends or capital gains is deductedfrom the price of the fund’s shares); the exact numberof days depends on your broker. During that time, theamount of your distribution will not be invested in thefund and therefore will not participate in the fund’sincome, gains, and losses.

Who manages the funds that issue Vanguard Bond ETF Shares?

All of the Vanguard bond funds that issue ETF Sharesare advised and managed by The Vanguard Group, Inc.(Vanguard), a registered investment advisor.

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As an owner of ETF Shares, do I receiveservices from Vanguard?

Because you hold ETF Shares through a brokerageaccount, Vanguard will have no record of yourownership (unless your broker is Vanguard BrokerageServices®). Your broker will service your account. Forexample, the broker will provide account statements,confirmations of your purchases and sales of ETFShares, and year-end tax information. It also will beresponsible for ensuring that you receive shareholderreports and other communications from the fundwhose ETF Shares you own. You will receive certainservices (e.g., dividend reinvestment and average costinformation) only if your broker offers those services.

Where can I find price information aboutVanguard Bond ETFs?

Vanguard’s website at www.vanguard.com shows the preceding business day’s closing NAV and closingmarket price, as well as historical performanceinformation. The website also discloses how frequentlyeach issue of ETF Shares traded at a premium or discount to NAV (based on closing NAVs and market prices) and the magnitude of those premiumsand discounts.

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What other information can you tell meabout ETF Shares?

• Each Vanguard fund that issues ETF Shares reservesthe right to substitute a different index for the index it currently tracks if the current index isdiscontinued, if the fund’s license with the sponsor of the current index is terminated, or for any otherreason determined in good faith by the fund’s board of trustees. In every such instance, the substituteindex would measure the same general market ormarket segment as the current index.

• If a fund’s ETF Shares are delisted from the NYSEArca, Vanguard will seek to list the shares on another stock exchange, convert the ETF Shares into conventional shares of the same fund, or redeem the ETF Shares at NAV.

• ETF Shares are investment company securities subject to the restrictions of section 12(d)(1) of the Investment Company Act of 1940.

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Institutional Division

P.O. Box 2900Valley Forge, PA 19482-2900

Connect with Vanguard® > www.vanguard.com

© 2008 The Vanguard Group, Inc.All rights reserved. U.S. Pat. No. 6,879,964 B2; 7,337,138.Vanguard Marketing Corporation, Distributor.

VBIPD 102008

For more information aboutVanguard ETF Shares, visitwww.vanguard.com, call 866-499-8473, or contact yourbroker to obtain a productdescription and prospectus.Investment objectives, risks,charges, expenses, and otherimportant information arecontained in these documents;read and consider themcarefully before investing.

Vanguard Bond ETFs are not sponsored,endorsed, sold or promoted by Lehman Brothers. Lehman makes norepresentation or warranty, express orimplied, to the owners of VanguardBond ETFs or any member of the publicregarding the advisability of investing in securities generally or in VanguardBond ETFs particularly or the ability ofthe Lehman Index to track general bondmarket performance. Lehman herebyexpressly disclaims all warranties ofmerchantability and fitness for aparticular purpose with respect to theLehman Index and any data includedtherein. Lehman’s only relationship to Vanguard and Vanguard Bond ETFs is the licensing of the Lehman Index,which is determined, composed, andcalculated by Lehman without regard to Vanguard or Vanguard Bond ETFs.Lehman is not responsible for and hasnot participated in the determination ofthe timing, prices, or quantities ofVanguard Bond ETFs to be issued.

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Product Description forVanguard ExtendedDuration Treasury ETF

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What is Vanguard Extended DurationTreasury ETF?

Vanguard Extended Duration Treasury ETF is anexchange-traded class of shares issued by:

ETF share class Fund (Trading symbol) Target indexVanguard Extended Vanguard Extended Lehman BrothersDuration Treasury Duration Treasury Treasury STRIPSIndex Fund ETF (EDV) 20–30 Year Equal Par

Bond Index

The fund issues conventional mutual fund shares(Institutional and Institutional Plus Shares) as well as ETF Shares. There are significant differences betweenconventional mutual fund shares and ETF Shares, and it is important that you be aware of those differences.

Vanguard Extended Duration Treasury Index Fund is primarily intended for pension plans and otherinstitutional investors that desire to closely matchlong-term liabilities with a portfolio of U.S. Treasurysecurities of similar long-term duration. Interest raterisk is expected to be extremely high for the fundbecause it invests mainly in zero-coupon long-termbonds, which have prices that are very sensitive tointerest rate changes. Because the fund investsmainly in Treasury STRIPS with maturities rangingfrom 20 to 30 years, rising interest rates may causethe value of the fund’s investments to declinesignificantly. Prospective investors are urged to consult with their own advisors to determine thesuitability of investment in the fund and therelationship of this investment to their overallinvestment programs and financial and tax positions.

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How do a fund’s ETF Shares differ from its conventional shares?

Conventional shares of a Vanguard mutual fund arebought from and redeemed with the issuing fund(either directly or through a fund supermarket) for cashat a net asset value (NAV) typically calculated once aday. ETF Shares, by contrast, cannot be bought from orredeemed with the issuing fund, except as noted onpage 4 (see “How do I buy and sell ETF Shares?”).Rather, you must buy and sell ETF Shares through abroker. Your purchase or sale of a fund’s ETF Shareswill occur not at the daily NAV, but at market pricesthat change throughout the day based on the supplyof, and demand for, ETF Shares and on changes in theprices of the fund’s portfolio holdings. At any giventime, the market price of a fund’s ETF Shares may bemore than, less than, or equal to the NAV of thoseshares. Like common stocks (and unlike conventionalmutual fund shares), ETF Shares will be listed fortrading on a national securities exchange—in thiscase, the NYSE Arca, Inc. (NYSE Arca).

What are the investment objectives andinvestment strategies of VanguardExtended Duration Treasury ETF?

Vanguard Extended Duration Treasury ETF is designedto give investors exposure to a segment of the U.S.bond market by seeking to track the performance of a benchmark index. The ETF invests by sampling itstarget index, meaning that it holds a range of securitiesthat, in the aggregate, approximates the full index interms of key characteristics and other risk factors.These factors include duration, cash flow, and qualityof the underlying bonds. For more information on theindex tracked by Vanguard Extended Duration TreasuryETF, go to www.lehman.com/fi/indices.

Extended Duration Treasury ETF seeks to track theLehman Brothers Treasury STRIPS 20–30 Year Equal

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Par Bond Index. This index includes zero-coupon U.S.Treasury securities (Treasury STRIPS) with maturitiesranging from 20 to 30 years. A Treasury STRIPrepresents a single coupon payment, or a singleprincipal payment, from a U.S. Treasury security that hasbeen "stripped" into separately tradable components.

What are the risks of owning VanguardExtended Duration Treasury ETF?

• When you own Vanguard Extended Duration TreasuryETF, you own shares of the fund that holds a portfolio ofTreasury STRIPS. The price of the fund’s ETF Shares willrise and fall as Treasury STRIPS held by the fundfluctuate in value. An investment in VanguardExtended Duration Treasury ETF could lose moneyover short or even long periods.

• Vanguard Extended Duration Treasury ETF is subject to interest rate risk, which is the chance that bond prices overall will decline because of risinginterest rates. Interest rate risk is expected to beextremely high for the fund because it invests mainlyin zero-coupon long-term bonds, which have pricesthat are very sensitive to interest rate changes.Because the fund invests mainly in Treasury STRIPSwith maturities ranging from 20 to 30 years, risinginterest rates may cause the value of the fund’sinvestments to decline significantly.

• Vanguard Extended Duration Treasury ETF is subject to index sampling risk, which is the chance that thesecurities selected for the fund, in the aggregate, willnot provide investment performance matching that ofthe fund’s index. Index sampling risk should be low for the fund.

• The market price of the fund’s ETF Shares may differfrom the NAV of those shares. The difference betweenmarket price and NAV is expected to be small most ofthe time, but in times of extreme market volatility thedifference may become significant.

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• Although Vanguard Extended Duration Treasury ETF will be listed for trading on the NYSE Arca, it is possible that an active trading market may not be maintained.

• Trading of the fund’s ETF Shares on the NYSE Arca may be halted if NYSE Arca officials deem such action appropriate, if the shares are delisted from theNYSE Arca, or if the activation of marketwide “circuitbreakers” (which are tied to large decreases in the DowJones Industrial Average) halts stock trading generally.

How do I buy and sell ETF Shares?

You can buy and sell ETF Shares on the secondarymarket in the same way you buy and sell any otherexchange-traded security—through a broker. In mostcases, the broker will charge you a commission toexecute the transaction. Unless imposed by yourbroker, there is no minimum dollar amount you mustinvest and no minimum number of ETF Shares youmust buy.

ETF Shares cannot be purchased or redeemed directlywith the issuing fund except by certain authorizedbroker-dealers. These broker-dealers may purchase andredeem ETF Shares only in large blocks worth severalmillion dollars and only in exchange for baskets ofsecurities rather than cash.

What fees and expenses will I incur to buy,own, and sell Vanguard Extended DurationTreasury ETF Shares?

Investors in an ETF bear two types of costs: ownershipcosts, which consist of the ETF’s operating expenses;and transaction costs, which consist of the costs incurredin buying and selling the fund’s shares.

Ownership costs: The total annualized operating expenses (i.e., the expense ratio) for VanguardExtended Duration Treasury ETF through fiscal year2007 were 0.14% (14 basis points).

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Transaction costs: When you buy or sell an ETF through a broker, you will pay a commission in anamount that will vary depending on the firm. You will also incur the cost of the “bid-asked spread,” which isthe difference between the price a dealer will pay for asecurity and the somewhat higher price at which thedealer will sell the same security.

How often will I receive distributions ofdividends and capital gains? Can I reinvestthese distributions?

Vanguard Extended Duration Treasury ETF’s incomedividends accrue daily and are distributed quarterly inMarch, June, September, and December. Capital gains,if any, are distributed in December.

Some brokers are able to reinvest dividend and capitalgains distributions in additional ETF Shares, while othersare not. Please ask your broker whether it offers areinvestment service and, if so, whether there is acharge for the service. If your broker does not offer a reinvestment service, you will receive all dividend and capital gains distributions in cash.

As with all exchange-traded funds, reinvestment ofdividend and capital gains distributions in additionalshares of the Vanguard Extended Duration Treasury ETFwill occur several business days after the ex-dividenddate (the date when a distribution of dividends or capitalgains is deducted from the price of the fund’s shares);the exact number of days depends on your broker.During that time, the amount of your distribution will notbe invested in the ETF and therefore will not participate in the ETF income, gains, and losses.

Who manages Vanguard ExtendedDuration Treasury Index Fund and its ETF Shares?

Vanguard Extended Duration Treasury Index Fund and itsETF Shares are advised and managed by The VanguardGroup, Inc. (Vanguard), a registered investment advisor.

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As an owner of ETF Shares, do I receiveservices from Vanguard?

Because you hold ETF Shares through a brokerageaccount, Vanguard will have no record of yourownership (unless your broker is Vanguard BrokerageServices®). Your broker will service your account. Forexample, the broker will provide account statements,confirmations of your purchases and sales of ETFShares, and year-end tax information. It also will beresponsible for ensuring that you receive shareholderreports and other communications from the fundwhose ETF Shares you own. You will receive certainservices (e.g., dividend reinvestment and average costinformation) only if your broker offers those services.

Where can I find price information about Vanguard Extended DurationTreasury ETF?

Vanguard’s website at www.vanguard.comshows the preceding business day’s closing NAV and closing market price, as well as historicalperformance information. The website also discloseshow frequently each issue of ETF Shares traded at a premium or discount to NAV (based on closing NAVs and market prices) and the magnitude of those premiums and discounts.

What other information can you tell meabout ETF Shares?

• Each Vanguard fund that issues ETF Shares reserves the right to substitute a different indexfor the index it currently tracks if the current index is discontinued, if the fund’s license with the sponsor of the current index is terminated, or for any otherreason determined in good faith by the fund’s board of trustees. In every such instance, the substituteindex would measure the same market segment as the current index.

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• If a fund’s ETF Shares are delisted from the NYSEArca, Vanguard will seek to list the shares on anotherstock exchange, convert the ETF Shares intoconventional shares of the same fund, or redeem theETF Shares at NAV.

• ETF Shares are investment company securities subjectto the restrictions of section 12(d)(1) of the InvestmentCompany Act of 1940.

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For more information aboutVanguard ETF™ Shares, visitwww.vanguard.com, call 866-499-8473, or contact yourbroker to obtain a productdescription and prospectus.Investment objectives, risks,charges, expenses, and otherimportant information arecontained in these documents;read and consider them carefully before investing.

Vanguard Extended Duration Treasury ETF isnot sponsored, endorsed, sold, or promotedby Lehman Brothers. Lehman makes norepresentation or warranty, express orimplied, to the owners of VanguardExtended Duration Treasury ETF or anymember of the public regarding theadvisability of investing in securitiesgenerally or in Vanguard Extended DurationTreasury ETF particularly or the ability of theLehman Index to track general bond marketperformance. Lehman hereby expresslydisclaims all warranties of merchantabilityand fitness for a particular purpose withrespect to the Lehman Index and any dataincluded therein. Lehman’s only relationshipto Vanguard and Vanguard ExtendedDuration Treasury ETF is the licensing of the Lehman Index which is determined,composed, and calculated by Lehmanwithout regard to Vanguard or VanguardExtended Duration Treasury ETF. Lehman isnot responsible for and has not participatedin the determination of the timing, prices,or quantities of Vanguard ExtendedDuration Treasury ETF to be issued.

Institutional Division

P.O. Box 2900Valley Forge, PA 19482-2900

Connect with Vanguard® > www.vanguard.com

© 2008 The Vanguard Group, Inc.All rights reserved. U.S. Pat. No. 6,879,964 B2; 7,337,138.Vanguard Marketing Corporation, Distributor.

VEDPD 102008