General Interest Brochure

More choice for the experienced investor

Your employer’s retirement plan allows you to use the Vanguard Brokerage Option (VBO®). VBO provides expanded investment choices which can benefit experienced investors. Through VBO you may have access to individual stocks, bonds, options, and thousands of mutual funds from hundreds of fund families, depending on the rules set forth by your employer’s retirement plan.

Use this guide to take charge of your VBO account, which will be serviced by Vanguard Brokerage Services®. Review the guide carefully before you begin trading. In addition to being governed by brokerage rules and regulations, your VBO account is subject to the provisions of your employer’s retirement plan.

Your guide to what’s inside

VBO and your planWhat you can and cannot invest in 2What you should know before you trade 4

1

How VBO worksYour settlement fund 6Availability of sale proceeds 7Account protection 9

2

Accessing your VBO accountVanguard.com 10Vanguard Brokerage Services associates 12

3

Investing in mutual fundsThree things to consider when choosing a mutual fund 15Placing mutual fund orders 17

4

Investing in bonds and CDsU.S. Treasury securities 19Placing fixed income orders 20Consider bond risk 21

5

Beyond your employer’s planMutual funds and brokerage services 22Financial counseling services 24

6

2 > Section 1 VBO and your plan

Through the Vanguard Brokerage Option you can broaden the range of your retirement plan to include individual stocks, bonds, options, and thousands of mutual funds from hundreds of fund families.

Note that your plan may have specific provisions and restrictions. It is important that you review the Plan Highlights insert that is part of your application kit. It provides information about the provisions that will affect your ability to trade.

What assets you can use In general, all your plan assets can be transferred to your VBO account. However, your plan may impose certain limits. Check the Plan Highlights insert for details or call a Vanguard Participant Services associate at 800-523-1188 Monday through Friday from 8:30 a.m. to 9 p.m., Eastern time.

If you still have assets in a self-directed brokerage option through a previous employer, you may be able to roll them over directly into your VBO account. Call Vanguard Participant Services to review your plan’s provisions for qualified rollovers.

What you can and cannot invest in Through your VBO account, you may be able to invest in:

• Stocks. You have access to most of the stocks and exchange-traded funds (ETFs) on every U.S. stock market, including the Nasdaq and most over-the-counter markets.

• Fixed income instruments. You can buy a wide variety of fixed income securities, including Treasuries, government agency bonds, and corporate bonds, as well as certificates of deposit (CDs) insured by the Federal Deposit Insurance Corporation.

• Mutual funds. You can hold shares of Vanguard funds and thousands of non-Vanguard funds from hundreds of fund families not included in your plan’s main investment options.

You cannot invest in:

• Stock or debt securities issued by your employer.

• Mutual funds and other investments that are already available among your plan’s main investment options.

• Securities bought on margin or securities that may result in taxable income from unrelated business.

See the Plan Highlights insert for other investment restrictions. Keep in mind that most of these restrictions are intended to reduce the investment risk for savings you’ve set aside for retirement.

VBO and your planSection 1

Beneficiary information Any beneficiary you designated for your plan’s main investment options will also be a beneficiary of your VBO account. To change your designated beneficiaries, log on to your account at vanguard.com/retirementplans and access Beneficiaries under My Profile.

Duplicate statements and confirmations You may want another individual, such as your financial advisor, to receive copies of your VBO statements and trading confirmations. If so, indicate your preference on your application.

Trading authorization You may want to authorize another individual, such as your spouse or financial advisor, to trade in your VBO account on your behalf. If your plan allows for a power of attorney, you may assign a “limited agent” to your account. You can do this by filling out the agent authorization form and the plan’s power of attorney form.

You can call Vanguard Participant Services at 800-523-1188 for the appropriate forms. At the same time you can arrange to have duplicates of your account statements and trading confirmations sent to authorized individuals.

Loans and withdrawals If your plan allows loans and you wish to take one, both the balance in your plan’s main investment options and your VBO account balance may be considered when your eligible loan amount is calculated. However, you must have enough money in your plan’s main investment options to cover the full amount of the loan. If you don’t, you must sell assets in your VBO account and transfer the proceeds to your plan’s main investment options to make up the difference.

Similarly, you cannot make withdrawals directly from your VBO account. If you’d like to withdraw money from your VBO account, you first must sell VBO holdings and, after that money has settled, transfer the proceeds to your plan’s main investment options. Keep in mind that withdrawals may be taxable. Withdrawals before age 591⁄2 may also be subject to a 10% federal penalty tax.

Section 1 VBO and your plan > 3

4 > Section 1 VBO and your plan

What you should know before you trade Keep several things in mind before you start trading:

• Investing in individual stocks can be significantly riskier than investing in mutual funds. Individual stocks can be sensitive to the whims of the market. A bad decision by a company or an event that affects the company’s sector could drastically drive down the value of your investment. If a poorly run company files for bankruptcy, you could lose your entire investment. You may want to limit how much of your retirement savings you invest in any one stock. Vanguard believes that broad diversification, with exposure to all parts of the stock and bond markets, helps reduce risk. Keep in mind, however, that diversification does not ensure a profit or protect against a loss in a declining market.All investing is subject to risk, including the possible loss of the money you invest.

• It’s a good idea to do your homework before you trade. With a brokerage account, you are solely responsible for researching, selecting, and monitoring your investments.

• Frequent trading can reduce returns by driving up your overall costs. You’ll pay a separate commission for each security you trade.

Investing in volatile markets A volatile stock market is characterized by high trading volume, the inability of market makers to quickly match buy and sell orders, and extreme price volatility. Under these conditions, stock prices can change dramatically in seconds. Even real-time quotes can lag behind what is happening in the market.

Keep these things in mind during volatile markets:

• Initial public offerings can be volatile during their first few days of trading.

• Limit orders can minimize your risk of loss. They allow you to place an upper or lower limit on the amount you are willing to pay or accept for a stock. Market orders, by contrast, are executed at the best price available when your order reaches the market.

• High trading volumes can overwhelm the flow of trading information, and confirmation of your trade could be delayed. If you cancel an order and then replace it with another for the same stock, you could end up buying or selling the same security twice.

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What to do when you retire or change jobsCheck with your employer or Vanguard Participant Services, at 800-523-1188, to learn about your plan’s provisions. Here are some options. You can:

• Leave your money in your VBO account, and continue trading, until you have taken a final distribution.

• Transfer your VBO assets in kind to a Vanguard brokerage IRA. This allows you to continue to defer income taxes and retain ownership of your investments exactly as you held them in your VBO account.

• Sell some or all of the holdings in your VBO account, transfer the proceeds to your plan’s main investment options, then withdraw the cash or roll it over to a qualified retirement plan. You may owe income tax on withdrawals. You may also owe a 10% federal penalty tax on withdrawals made before age 591⁄2.

Closing your VBO account If you decide to close your VBO account, take these steps:

1. Sell the holdings.

2. Cancel any open orders.

3. After proceeds have settled, transfer the proceeds to your plan’s main investment options.

4. Instruct Vanguard Participant Services to close your VBO account. If you don’t, you may be charged the annual account maintenance fee.

6 > Section 2 How VBO works

You should understand how your VBO account works before you begin trading, especially if you’re more accustomed to the workings of mutual fund accounts.

Your settlement fund Your VBO account and your plan’s main investment options are linked through Vanguard Prime Money Market Fund. This settlement fund acts as a “sweep account,” allowing you to move assets easily for the purpose of trading.

Any money transferred from your plan’s main investment options will be held in this settlement fund until you trade. Similarly, any proceeds from sales of VBO assets will be “swept” into this fund after settlement. Any commissions and fees for trades will be added to the cost of your purchases and subtracted from your sale proceeds. These will be reflected in your settlement fund.

Transferring money in To transfer money into your settlement fund before you begin trading, log on to your account at vanguard.com /retirementplans or call Vanguard Participant Services at 800-523-1188 and request an exchange into your VBO account.

Assuming the exchange is made before the fund’s transaction cutoff time, the money will be in your VBO settlement fund and available for trading the next business day. (See pages 10 through 12 to learn how to make a trade.) Please note that you must have enough money in your settlement fund before you can trade.

Transferring money outOnce you’ve sold an asset in your VBO account, proceeds will move into your settlement fund. The settlement period can range from one to three days, depending on the type of security sold.

The day after settlement you can call Vanguard Participant Services at 800-523-1188 to transfer money into one or more of your plan’s main investment options.

How VBO worksSection 2

Section 2 How VBO works > 7

Mutual fund pricing Your mutual fund orders are priced at the trade date’s closing net asset value (NAV). The settlement period depends on the fund. Generally, mutual fund shares cannot be sold until one business day after settlement.

Settlement policies Stock settlements occur on the third business day after the trade date. Settlement for other types of securities varies.

Availability of sale proceeds Net sale proceeds are transferred to your settlement fund. They earn dividends on the settlement date

and can be moved to your plan’s main investment options on the first business day after the settlement date.

The chart below shows the settlement schedule of different types of securities. Net proceeds can be moved to your plan’s main investment options on the first business day after settlement.

Sweep of funds for purchases Your trades involve the sweep of assets between your VBO investments and your settlement fund. The purchase amount, plus any transaction fee, is redeemed from your VBO settlement fund on the settlement date. Your money earns dividends up to the last business day before the settlement date.

Security type Settlement* Usual availability of proceeds

Domestic stocks and corporate bonds Third business day (T+3) Fourth business day

Treasuries on the secondary market First business day (T+1) Second business day

CDs on the secondary market Third business day (T+3) Fourth business day

Non-Vanguard funds through First business day (some funds can First business day after settlement FundAccess® take up to three business days)**

*The settlement period does not include the time it takes to transfer money from your plan’s main investment options to your VBO account.**Vanguard Brokerage Services cannot guarantee settlement times for mutual fund transactions.

Settlement schedule for securities trades

8 > Section 2 How VBO works

It’s critical that you have enough money in place at the proper time. If you don’t, your order could be rejected and restrictions could be placed on your account. Vanguard Brokerage Services may sell investments in your VBO account to cover any debit in the account resulting from insufficient funds to pay for your purchases. Any investments sold for this purpose will be sold at your expense. Please see the Vanguard Brokerage Account Agreement for details. You’ll find it with your new account application.

If you need personal assistance with your order, you must place it through Vanguard Brokerage Services at 800-339-4515 Monday through Friday from 8 a.m. to 5 p.m., Eastern time.

Account services You’ll receive the following services with your VBO account:

• Comprehensive quarterly plan statements. Your quarterly statement will provide balances for your VBO account and for your plan’s main investment options.

• VBO account updates. You’ll get a detailed account statement for your VBO account each month that it has activity.

• Dividend reinvestment. Dividends will automatically be reinvested for stocks that allow it, unless you elect to have them swept into your settlement fund.

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Account protection Securities in your account are held in custody by Vanguard Brokerage Services, a division of Vanguard Marketing Corporation. Should Vanguard Brokerage Services fail or if unauthorized trades are placed in your account, your assets are protected through the Securities Investor Protection Corporation (SIPC), a nonprofit corporation established by Congress. Vanguard Marketing Corporation is a member of the Securities Investor Protection Corporation (SIPC), which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). An explanatory brochure is available upon request or at sipc.org.

Vanguard Brokerage Services maintains excess SIPC coverage secured through an independent issuer. Account protection and coverage, either under the SIPC or the additional insurance secured by us, doesn’t cover fluctuations in the market value of your investments. Positions held away aren’t in the custody or control of Vanguard Brokerage Services, nor are they covered by the SIPC or the additional insurance secured by us. For Vanguard Brokerage Option accounts through an employer-sponsored retirement plan, your settlement fund is held in custody by Vanguard Brokerage Services.

Preventing an order’s delay or rejectionEnsuring that your money is available for a specific purchase can help prevent an order’s delay or rejection. Check with a Vanguard Brokerage Services associate at 800-339-4515 Monday through Friday from 8 a.m. to 5 p.m., Eastern time. The deadline for moving money to your VBO account through a Vanguard Participant Services associate is 4 p.m., Eastern time, on the business day before you wish to trade.

Account restrictions Industry regulations may require Vanguard Brokerage Services to restrict your account for the following reasons:

• Insufficient funds in your settlement fund at settlement.

• Market-timing in connection with your mutual fund purchases through FundAccess.

Refer to specific fund prospectuses for details.

10 > Section 3 Accessing your VBO account

You can access your VBO account online or by phone. Either option can help you do your homework and create an investing strategy for the long term.

Remember, of course, that all investing is subject to risk, including the possible loss of the money you invest.

Vanguard.com If you want round-the-clock access to your account, our website is designed with you in mind.

How to registerTo register for online account access, go to vanguard.com/register. You’ll need your plan number, which you can find on your quarterly statement, to register for online account access.

What you can do online After setting up your user name and password through vanguard.com, you can:

• View current positions, balances, transaction histories, statements, and confirmations.

• Buy or sell stocks, ETFs, and mutual funds.

• Change or cancel equity orders.

• Invest after the market close (limit orders only) from 4:15 p.m. to 6:30 p.m., Eastern time, on days the exchanges are open.

• Obtain quotes.

• Find the last closing NAVs of FundAccess mutual funds.

• Take advantage of stock research and portfolio analytics.

• Access and download prospectuses of Vanguard and non-Vanguard funds.

Accessing your VBO account

Section 3

Section 3 Accessing your VBO account > 11

Placing your stock orderVanguard.com gives you access to stocks on every U.S. exchange and most over-the-counter markets, if your plan allows. For commission information, refer to the VBO Commission Schedule that is part of your application kit.

Before placing your order, you’ll need to know the company’s name or ticker symbol, the number of shares you intend to trade, the order type (market or limit), and the duration for orders other than market orders—that is, good for day or good until canceled (GTC) orders.

Always make sure that your settlement fund has enough money to cover your order and any fees and commissions.

If you decide to change an order, use the “Change orders” option. Be aware, though, that in the time it takes you to enter information into the “Change orders” or “Cancel orders” screen, your original order may be executed and you’ll be responsible for the trade.

Note that orders listed in “Order status” are cleared away each business day at midnight. (The exception is open GTC orders.) Executed orders appear the next business day in “Transaction history.”

Confirming your online order You can confirm an online order two ways:

• Order confirmation. Shortly after you send your order, a message indicating we have received it will appear on your screen.

• Order status screen. Check for your order receipt under “Order status.” Any descriptor, such as “Open” or “Pending,” indicates that your order has been received.

Vanguard Brokerage Services will mail you a written confirmation of each executed order. Confirmations of GTC orders are mailed only if your order is executed.

Written confirmations are generated for buy and sell dollar-cost averaging transactions in FundAccess. A record of the transactions will appear on your monthly statement. Vanguard Brokerage Services acts as agent on these transactions and receives compensation from the fund company.

Checking your order’s status To determine if your order has been executed, look under “Order status.” The status screen will display the orders you have placed that day and any GTC orders.

12 > Section 3 Accessing your VBO account

Vanguard Brokerage Services associates Vanguard Brokerage Services associates are available by calling 800-339-4515 Monday through Friday from 8 a.m. to 5 p.m., Eastern time, and pressing 2. Our associates can explain the provisions of your plan as they relate to VBO. They have access to the latest investment and financial market news, as well as company and industry information. Our associates don’t work on commission, so you can be confident that they have no conflicting loyalties. Their main goal is to keep you well informed as you make important decisions affecting your brokerage account.

What you can do through an associate Our knowledgeable associates can help you:

• Determine how your plan’s provisions affect your use of VBO.

• Place trades.

• Change or cancel orders (if not yet executed) and check the status of orders.

• Get market updates and news about specific companies.

• Confirm order executions and cancellations of trades placed through vanguard.com or a Vanguard Brokerage Services associate.

Order changes and cancellationsOur associates can change or cancel a trade placed through vanguard.com as long as the trade has not yet been executed. If you change an existing order you will be charged the associate-assisted commission rate when the trade is executed.

When your phone number changesTime is critical if we have a question about a trade you’ve placed. If your phone number changes, make sure you let us know.

How to place an order Before you place your order, you’ll need to know the following:

• The name or ticker symbol of the security.

• The number of shares you intend to buy or sell.

• The order type (market or limit).

• The order duration (day or GTC), if applicable.

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Market orders and limit ordersA market order is an order to buy or sell immediately at the best available price, whatever it is. Your trade is guaranteed to be executed but is not guaranteed at the quoted price. To protect yourself against market volatility, you may want to consider placing a limit or stop order.

A limit order is an order to buy or sell at a specified price or better, but there is no guarantee that such an order will be executed. Unless you specify otherwise, a limit order may result in a partial execution, with full commission charges for such trades. You will be charged a full commission for each portion of one order if the portions are executed on different days. If all portions are executed on one day, only one commission will be charged.

Stop orders and stop-limit ordersA stop order is an order that triggers a market order once a specified price (the stop price) has been achieved. This order may execute at a price significantly different from the stop price depending on market conditions. Market centers may differ on what market conditions dictate when a stop order should be activated.

A stop order is designed to protect a profit or prevent a loss if the stock begins to move in the wrong direction. A risk of stop orders is that they may be triggered by temporary market movements or executed at prices several points higher or lower than the stop price.

A stop-limit order combines a stop order and a limit order. A stop-limit order is an order to buy or sell at a specified price or better, but only after a given stop price has been achieved. Once the stop price has been achieved, a limit order is triggered, setting a sales-price floor or a purchase-price ceiling. Be aware that a stock may trade quickly through your limit price and that the order may not execute.*

*Please note that trades are executed in the order in which they are received.

14 > Section 4 Investing in mutual funds

You can invest in mutual funds from other fund companies without giving up the integrity, quality, and breadth of service that Vanguard provides. Through FundAccess you can hold shares in Vanguard and non-Vanguard mutual funds not included in your plan’s main investment options.

Vanguard Brokerage Services offers you a choice of thousands of mutual funds from hundreds of fund families. Hundreds of these funds are offered with no transaction fee; others are offered for a flat transaction fee per order, regardless of share quantity.

If your plan allows, you become eligible to invest through FundAccess when you open your VBO account. No additional forms are necessary. For a complete listing of the fund families that participate in FundAccess, visit vanguard.com. If you prefer, you can call Vanguard Brokerage Services at 800-339-4515 Monday through Friday from 8 a.m. to 5 p.m., Eastern time.

Please remember that all transactions are subject to any terms and conditions in a fund’s prospectus and/or Vanguard Brokerage Services policies. Mutual funds are subject to market risk.

Investing in mutual fundsSection 4

Section 4 Investing in mutual funds > 15

Three things to consider when choosing a mutual fundMany mutual funds boast about short-term performance. Vanguard believes that investing is a long-term strategy. When evaluating funds, you should consider how their investment objectives, policies, and risks fit into your overall mix of assets. You may want to ask these three questions:

1. Does the fund complement your existing asset mix? It’s important to know how each investment fits into your plan and why you chose that particular asset.

You may want to use your plan’s main investment options to put together a solid foundation for your retirement assets. Although different funds and strategies can be used for this foundation, consider creating a portfolio of broad stock and bond index funds.

You may also want to consider more narrowly focused funds depending on your risk tolerance, investment objectives, and time horizon. Funds that concentrate on a relatively narrow market sector face the risk of higher share-price volatility.

2. What does the fund cost to own? When you’re shopping for a mutual fund, cost is a vital consideration. Fund costs are subtracted, dollar for dollar, from investment returns. In short, a low-cost fund returns more to an investor than a high-cost fund with identical investments.

One measure of a mutual fund’s cost is its expense ratio. That’s the everyday cost of running a fund. A fund with an expense ratio of 1% spends $1 annually on expenses out of every $100 you’ve invested. The average expense ratio for Vanguard funds in 2012 was 0.19%, less than one-fifth the industry average of 1.11%, according to Lipper Inc.

3. How has the fund performed over the long run? Past performance may be the most overrated aspect of fund selection. It’s not a measure of future returns, something many investors learn the hard way. Yet it can offer some useful clues:

• A fund that consistently lags far behind its benchmark could have an underlying problem, such as a high expense ratio or an unskilled manager.

• A fund with extraordinarily high short-term gains may invest in a narrow sector of the market that’s experienced a recent boom. If its sector cools off, the fund’s performance could fall sharply.

A long-term investor may find it valuable to look at a fund’s long-term performance record. Past performance is not a guarantee of future results. For the ten-year period ended June 30, 2013, these percentages of Vanguard funds outperformed their industry averages, as measured by Lipper Inc.:

• 100% of money market funds

• 92% of balanced funds

• 90% of bond funds

• 89% of stock funds

Results will vary for other time periods. Only funds with a minimum ten-year history were included in the comparisons. The competitive performance data shown represent past performance, which is not a guarantee of future results, and all investments are subject to risks. For the most recent performance, visit vanguard.com/performance.

16 > Section 4 Investing in mutual funds

Using FundAccess Here’s what you can do when you use FundAccess for your mutual fund transactions:

• Buy, sell, and exchange shares.

• Reinvest dividends automatically in eligible funds at no charge.

• View fund information online, including prospectuses and annual and semiannual reports.

Dollar-cost averaging Through FundAccess you can also take advantage of dollar-cost averaging for eligible funds. That means you invest fixed amounts in the funds at regular intervals. A benefit of doing this is that you buy fewer shares when the price is high and more when the price is low.*

Initial and subsequent minimum investments for a specific fund are listed in the fund’s prospectus. A minimum of two transactions is required with a minimum transaction amount of $100 to establish dollar-cost averaging service. No fee is charged to establish dollar-cost averaging for Vanguard mutual funds and FundAccess funds without a transaction fee. However, a $3-per-transaction fee is charged for dollar-cost averaging of FundAccess transaction-fee funds.

*Dollar-cost averaging does not guarantee that your investments will make a profit, nor does it protect you against losses when stock or bond prices are falling. You should consider whether you would be willing to continue investing during a long downturn in the market, because dollar-cost averaging involves making continuous investments regardless of fluctuating price levels.

Getting account information Account information for your VBO mutual fund investments is available in the secure area of our website. Because fund orders are executed at the closing NAV each day, orders placed through FundAccess should be reflected the next business day. You can also check your orders by speaking with a Vanguard Brokerage Services associate at 800-339-4515 Monday through Friday from 8 a.m. to 5 p.m., Eastern time.

Frequent trading, market-timing Certain funds have policies and procedures regarding frequent trading or market-timing. Rapid flows of money into and out of a mutual fund can disrupt the fund’s operation and performance and result in higher transaction costs. Please check your fund’s prospectus for details. Also, please note that Vanguard Brokerage Services will cooperate with funds with respect to their frequent-trading or market-timing policies and procedures.

Please read carefully the Vanguard Brokerage Services frequent-trading and market-timing policy in your application kit or on vanguard.com.

Section 4 Investing in mutual funds > 17

Placing mutual fund orders You can place your FundAccess orders online at vanguard.com or through a Vanguard Brokerage Services associate.

Vanguard Brokerage Services executes most mutual fund orders on the trade date at that day’s NAV if the order is received before the fund’s transaction cutoff time. Orders received after the fund’s cutoff time, or on a weekend or holiday, are executed at the closing NAV on the next business day. Cutoff times vary by fund; you can visit vanguard.com to check the cutoff time that applies to your FundAccess order. Cutoff times for specific funds are located in the website’s Fees & minimums section for each fund.

Preparing your fund order Before you place an order to buy or sell shares through FundAccess, you need to know the following:

• VBO account number.

• Fund name or symbol.

• Quantity to be bought or sold.

• Applicable fees.

• Cutoff time for transactions.

For buy orders, you’ll also need to know the fund’s minimum investment, which you can find in the fund’s prospectus.

18 > Section 5 Investing in bonds and CDs

If you are interested in investing in fixed income securities, call Vanguard Brokerage Services at 800-339-4515 and press 2 to speak with an associate. After reviewing your plan’s provisions to confirm that it allows investing in fixed income securities, the associate will transfer you to the Fixed Income Desk for assistance.

Fixed Income Desk associates offer a high level of service at competitive rates. Before you place your order, they assist you with researching quotes from a large selection of securities and answer any questions you may have regarding your fixed income investment.

Through the Fixed Income Desk you can invest in U.S. Treasury securities, corporate bonds, mortgage-backed securities, municipal bonds, and CDs, if your plan allows.

What you can do through the Fixed Income Desk You can do the following with the help of a Fixed Income Desk associate:

• Buy or sell bonds and CDs.

• Get research assistance (for example, find an issuer’s credit history).

• Get market quotes and information about yields.

A note about riskBonds are subject to the risk that an issuer will fail to make payments on time, and that bond prices will decline because of rising interest rates or negative perceptions of an issuer’s ability to make payments. While U.S. Treasury or government agency securities provide substantial protection against credit risk, they do not protect investors against price changes due to changing interest rates. While the market values of government securities are not guaranteed and may fluctuate, these securities are guaranteed as to the timely payment of principal and interest.

Investing in bonds and CDs

Section 5

Section 5 Investing in bonds and CDs > 19

Maturity of issue Auction schedule

4 weeks Tuesdays

13 weeks and 26 weeks Mondays

52 weeks Monthly

2 years Monthly

5 years Monthly

10 years February, March, May, June, August, September, November, December

Inflation-indexed Irregular (Call a Vanguard Brokerage Services associate at 800-339-4515 for details.)

U.S. Treasury auction schedule

U.S. Treasury securities The Federal Reserve offers new Treasury issues on a set schedule (see chart below), with dates announced one to two weeks in advance. To place an order for new issues, call Vanguard

Brokerage Services after the auction is announced but before 10 a.m., Eastern time, on the day of the auction. Results of your order will be available on the first business day after the auction. This schedule is subject to change.

20 > Section 5 Investing in bonds and CDs

Placing fixed income orders To place an order, call Vanguard Brokerage Services at 800-339-4515 and press 2 to speak with an associate. After reviewing your plan’s provisions, the associate will transfer you to the Fixed Income Desk for assistance.

Vanguard Brokerage Services does not carry a bond inventory but helps you find the most competitively priced offerings in its extensive dealer network. Because Vanguard does not put up capital to maintain an inventory, we can pass our savings on to investors in the form of competitive rates.

Preparing your bond orderBefore you place an order to buy fixed income securities, you need to know the following:

• VBO account number.

• Quantity to be purchased.

• Desired credit quality.

• Price restriction. (Are you willing to pay a premium to the bond’s face value, or are you looking for a bond that has been discounted below face value?)

Before you place an order to sell bonds, you need to know the following:

• VBO account number.

• Quantity to be sold.

Section 5 Investing in bonds and CDs > 21

Consider bond riskWhen interest rates drop, bond prices rise. The opposite is also true: When interest rates rise, bond prices fall. Why? Most bond interest, or coupon, rates never change, even though market interest rates fluctuate regularly.

If interest rates drop and you hold a bond that pays higher interest than prevailing rates, your bond may have greater resale value. If interest rates rise and you hold a bond that pays lower interest than prevailing rates, your bond may have less resale value.

Bonds with longer maturities typically have greater interest rate risk and, therefore, offer higher yields. A long-term bond is more susceptible to fluctuating interest rates for a longer time than a short-term bond.

Bonds of entities with low credit ratings typically offer investors higher yields but have greater default, or credit, risk. In exchange for a higher yield, you must be willing to accept a greater level of investment risk—the possibility that the bond issuer won’t be able to repay principal or pay interest on time.

Bond funds are subject to the risk that an issuer will fail to make payments on time, and that bond prices will decline because of rising interest rates or negative perceptions of an issuer’s ability to make payments. Because high-yield bonds are considered speculative, investors should be prepared to assume a substantially greater level of credit risk than with other types of bonds.

22 > Section 6 Beyond your employer’s plan

As a participant in your employer’s retirement plan, you may already be familiar with Vanguard’s unique advantages: an unwavering focus on clients, exceptional value, and plain talk.

In addition to helping you invest your retirement savings with the Vanguard Brokerage Option, Vanguard can help you manage savings outside your plan.

Mutual funds and brokerage services You can buy Vanguard mutual funds directly for your personal savings through a Vanguard mutual fund account. With Vanguard Brokerage Services you can access a full range of investments, including individual stocks, bonds, ETFs, CDs, and options, as well as thousands of mutual funds from hundreds of fund families.

Learn more on vanguard.com or by calling 800-992-8327 Monday through Friday from 8 a.m. to 10 p.m., Eastern time, and Saturdays from 9 a.m. to 4 p.m.

IRAs, education accounts If you want to save for retirement beyond what your employer’s plan allows, consider a Vanguard IRA®. Should you leave your employer, you can move your retirement-plan money to a Vanguard IRA and give it the potential to grow tax-deferred. To learn more about Vanguard IRAs, go to vanguard.com or call 877-662-7447.

Vanguard also offers college savings accounts, such as 529 plans. Find out more on vanguard.com or by calling 866-734-4533.

All investing is subject to risk including the possible loss of the money you invest.

When taking withdrawals from a tax-deferred plan before age 591⁄2, you may have to pay ordinary income tax plus a 10% federal penalty tax.

Beyond your employer’s plan

Section 6

In addition to helping you invest your retirement savings with the Vanguard Brokerage Option, Vanguard can help you manage savings outside your plan.

24 > Section 6 Beyond your employer’s plan

Financial counseling services• Vanguard Financial Planning Services

can help you make important decisions about money. Maybe your financial situation is complex because of a divorce, death of a spouse, or some other circumstance. You can choose from three distinct analyses—investment, retirement, and estate planning. Learn more on vanguard.com or by calling 800-547-3332.

• Vanguard Asset Management Services™ provides ongoing professional counseling to help you manage your investments and preserve your wealth if your portfolio is $500,000 or more. Learn more on vanguard.com or by calling 800-523-7734.

Personal services Vanguard Voyager®, Voyager Select®, and Flagship® Services are special services for clients with substantial Vanguard mutual fund assets. Learn more about these services by visiting vanguard.com or calling 800-962-5167.

Vanguard.comVisit our website anytime to:

• Review your retirement plan account.

• Research funds.

• Calculate how much money you may need in retirement.

• Track your progress with easy-to-read snapshots.

• Get personalized solutions using interactive planning tools.

When you invest with Vanguard, we promise to:

• Put your interests first at all times and invest the majority of our personal assets alongside yours.

• Manage your investments with prudence, a long-term perspective, and the goal of providing returns that are consistently better than those of competitors.

• Adhere to the highest standards of ethical behavior and fiduciary responsibility.

• Strive to be the highest-value provider of investment services by offering outstanding performance and service, while keeping costs as low as possible.

• Communicate candidly with you about investment risks and costs, as well as potential rewards, in keeping with our “plain talk” philosophy.

• Maintain highly effective controls to protect your assets and confidential information.

• Employ a talented, diligent, and diverse crew to ensure your money and your needs are well cared for.

• Adapt, evolve, and continuously improve, because you should expect excellence in all that we do.

> Our pledge to clients

Vanguard Institutional Investor Group

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

Connect with Vanguard® > vanguard.com

at optionsclearing.com. It may also be obtained from your broker, any exchange on which options are traded, or by contacting The OCC at One North Wacker Drive, Suite 500, Chicago, IL 60606 (888-678-4667 or 888-OPTIONS). The booklet contains information on options issued by The OCC. It’s intended for educational purposes. No statement in the booklet should be construed as a recommendation to buy or sell a security or to provide investment advice. For further assistance, please call The Options Industry Council (OIC) helpline at 888-OPTIONS or visit optionseducation.org. The OIC can provide you with balanced options education and tools to assist you with your options questions and trading.

Vanguard Financial Planning Services are provided by Vanguard Advisers, Inc., a federally registered investment advisor. Vanguard Asset Management Services are provided by Vanguard National Trust Company, which is a federally chartered, limited-purpose trust company operated under the supervision of the Office of the Comptroller of the Currency.

Vanguard Brokerage Services is a division of Vanguard Marketing Corporation, Member FINRA and SIPC.

For more information, visit vanguard.com, or call 800-523-1188 for Vanguard funds and 800-339-4515 for non-Vanguard funds offered through Vanguard Brokerage Services, to obtain a prospectus. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing.

An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although a money market fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in such a fund.

Options are a leveraged investment and are not suitable for every investor. Options involve risk, including the possibility that you could lose more money than you invest. Prior to buying or selling options, you must receive a copy of Characteristics and Risks of Standardized Options issued by The Options Clearing Corporation (OCC). A copy of this booklet is available

© 2013 The Vanguard Group, Inc. All rights reserved. Vanguard Marketing Corporation, Distributor of the Vanguard Funds.

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