VANGUARD FIXED INCOME SECURITIES FUND INC, 497, 2000-06-01

VANGUARD FIXED INCOME SECURITIES FUND INC
497, 2000-06-01

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<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT (NO.2-47371) UNDER THE SECURITIES ACT OF 1933

PRE-EFFECTIVE AMENDMENT NO.
POST-EFFECTIVE AMENDMENT NO. 51
AND

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

AMENDMENT NO. 52

VANGUARD FIXED INCOME SECURITIES FUNDS
(EXACT NAME OF REGISTRANT AS SPECIFIED IN DECLARATION OF TRUST)

P.O. BOX 2600, VALLEY FORGE, PA 19482
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)

REGISTRANT'S TELEPHONE NUMBER (610) 669-1000

R. GREGORY BARTON, ESQUIRE
P.O. BOX 876
VALLEY FORGE, PA 19482

IT IS PROPOSED THAT THIS FILING BECOME EFFECTIVE:
ON MAY 31, 2000 PURSUANT TO PARAGRAPH (B) OF RULE 485.

APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.

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<PAGE>
[SHIP LOGO]
[THE VANGUARD GROUP LOGO]

VANGUARD INFLATION-PROTECTED SECURITIES FUND
SUPPLEMENT TO THE PROSPECTUS DATED JUNE 5, 2000

SUBSCRIPTION PERIOD
Vanguard Inflation-Protected Securities Fund is holding a subscription period
from June 5 through June 29, 2000. During this period, the Fund will invest in
money market securities rather than follow its normal investment policies. This
strategy should allow the Fund to accumulate sufficient assets to construct a
representative portfolio on a single day (June 29, 2000), and is expected to
significantly reduce initial trading costs.
During the subscription period, you may instruct Vanguard in writing to
exchange assets into the Fund from a different Vanguard account. Assets to be
exchanged will remain in the originating account until the close of the
subscription period (June 29, 2000). VANGUARD WILL COMPLETE YOUR EXCHANGE ONLY
IF THERE ARE SUFFICIENT ASSETS IN THE ORIGINATING ACCOUNT ON JUNE 29 TO MEET THE
FUND'S MINIMUM INITIAL INVESTMENT REQUIREMENT OF $3,000 ($1,000 FOR IRAS AND
UGMA/UTMA ACCOUNTS).

<PAGE>
[SHIP GRAPHIC]

VANGUARD(R)
BOND FUNDS
Prospectus
May 31, 2000

___________
This prospectus contains
financial data for the Funds
through the fiscal year
ended January 31, 2000.

VANGUARD SHORT-TERM
TREASURY FUND

VANGUARD SHORT-TERM
FEDERAL FUND

VANGUARD SHORT-TERM
CORPORATE FUND

VANGUARD INTERMEDIATE-
TERM TREASURY FUND

VANGUARD INTERMEDIATE-
TERM CORPORATE FUND

VANGUARD GNMA FUND

VANGUARD LONG-TERM
TREASURY FUND

VANGUARD LONG-TERM
CORPORATE FUND

[A MEMBER OF THE VANGUARD GROUP(R) LOGO]
<PAGE>
VANGUARD BOND FUNDS
Prospectus
May 31, 2000
A Group of Bond Mutual Funds

--------------------------------------------------------------------------------
CONTENTS
--------------------------------------------------------------------------------
1 AN INTRODUCTION TO VANGUARD BOND FUNDS 34 INVESTMENT ADVISERS

2 FUND PROFILES 35 DIVIDENDS, CAPITAL GAINS, AND TAXES

2 Vanguard Short-Term Treasury Fund 37 SHARE PRICE

5 Vanguard Short-Term Federal Fund 38 FINANCIAL HIGHLIGHTS

8 Vanguard Short-Term Corporate Fund 43 INVESTING WITH VANGUARD

11 Vanguard Intermediate-Term Treasury Fund 43 Services and Account Features

14 Vanguard Intermediate-Term Corporate Fund 44 Types of Accounts

17 Vanguard GNMA Fund 45 Buying Shares

20 Vanguard Long-Term Treasury Fund 47 Redeeming Shares

23 Vanguard Long-Term Corporate Fund 51 Transferring Registration

26 MORE ON THE FUNDS 51 Fund and Account Updates

34 THE FUNDS AND VANGUARD GLOSSARY (inside back cover)
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
WHY READING THIS PROSPECTUS IS IMPORTANT

This prospectus explains the objective, risks, and strategies of eight Vanguard
bond funds. To highlight terms and concepts important to mutual fund investors,
we have provided "Plain Talk(R)" explanations along the way. Reading the
prospectus will help you to decide which Funds, if any, are the right
investment for you. We suggest that you keep it for future reference.
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
IMPORTANT NOTE ON THE SHORT-TERM CORPORATE FUND

The Short-Term Corporate Fund features two separate classes of shares: Investor
and Institutional. Investor Shares have an investment minimum of $3,000 ($1,000
for IRAs), and are available through this prospectus (for retail investors) and
a separate prospectus (for participants in employer-sponsored retirement or
savings plans). Institutional Shares have an investment minimum of $50 million
and are available through a separate prospectus.

Note that the Fund's separate share classes have different expenses; as a
result, their investment performances will vary.
--------------------------------------------------------------------------------

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>

AN INTRODUCTION TO VANGUARD BOND FUNDS

This prospectus contains information about eight Vanguard bond funds. Each of
these Funds seeks to provide a high level of current income and preserve
investors' principal. To achieve this objective, each Fund invests in
fixed-income securities meeting defined credit quality and dollar-weighted
average maturity standards. These standards vary from Fund to Fund, as shown in
the following table.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
DOLLAR-WEIGHTED AVERAGE
FUND PRIMARY INVESTMENTS MATURITY
---------------------------------------------------------------------------------------------
<S> <C> <C>
Short-Term Treasury U.S. Treasury bonds 1-3 years
Short-Term Federal U.S. government agency bonds 1-3 years
Short-Term Corporate Investment-grade corporate bonds 1-3 years
Intermediate-Term Treasury U.S. Treasury bonds 5-10 years
Intermediate-Term Corporate Investment-grade corporate bonds 5-10 years
GNMA GNMA mortgage certificates Generally 5-10 years
Long-Term Treasury U.S. Treasury bonds 15-30 years
Long-Term Corporate Investment-grade corporate bonds 15-25 years
---------------------------------------------------------------------------------------------
</TABLE>

On the following pages, you'll find profiles that summarize key features of
each Fund. Following the profiles, there is important additional information
about the Funds.

<PAGE>
2

FUND PROFILE--
VANGUARD(R) SHORT-TERM TREASURY FUND

The following profile summarizes key features of Vanguard Short-Term Treasury
Fund.

INVESTMENT OBJECTIVE
The Fund seeks to provide a high level of current income and preserve investors'
principal.

INVESTMENT STRATEGIES
The Fund invests at least 85% of its total assets in short-term bonds whose
interest and principal payments are backed by the full faith and credit of the
U.S. government. In addition, at least 65% of the Fund's total assets will
always be invested in U.S. Treasury securities. The Fund generally will maintain
a dollar-weighted average maturity of between one and three years. For more
information, see "Investment Strategies" under MORE ON THE FUNDS.

PERFORMANCE/RISK INFORMATION
The bar chart and table below provide an indication of the risk of investing in
the Fund. The bar chart shows the Fund's performance in each calendar year since
inception. The table shows how the Fund's average annual total returns for one
and five calendar years and since inception compare with those of a broad-based
bond market index. Keep in mind that the Fund's past performance does not
indicate how it will perform in the future.

-------------------------------------------------------
ANNUAL TOTAL RETURNS
-------------------------------------------------------
[BAR CHART]
6.75% 1992
6.41% 1993
-0.58% 1994
12.11% 1995
4.39% 1996
6.39% 1997
7.36% 1998
1.85% 1999
-------------------------------------------------------
The Fund's year-to-date return as of the quarter ended
March 31, 2000 was 1.24%.
-------------------------------------------------------

During the period shown in the bar chart, the highest return for a calendar
quarter was 3.86% (quarter ended September 30, 1992) and the lowest return for a
quarter was -1.19% (quarter ended March 31, 1994).

<PAGE>

-----------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 1999
-----------------------------------------------------------------------
SINCE
1 YEAR 5 YEARS INCEPTION*
-----------------------------------------------------------------------
Vanguard Short-Term Treasury Fund 1.85% 6.37% 5.79%
Lehman Brothers 1-5 Year U.S. Treasury
Bond Index 1.89% 6.74% 6.11%
-----------------------------------------------------------------------
*October 28, 1991.
-----------------------------------------------------------------------

FEES AND EXPENSES
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The expenses shown under Annual Fund Operating Expenses
are based upon those incurred in the fiscal year ended January 31, 2000.

SHAREHOLDER FEES (fees paid directly from your investment)
Sales Charge (Load) Imposed on Purchases: None
Sales Charge (Load) Imposed on Reinvested Dividends: None
Redemption Fee: None
Exchange Fee: None

ANNUAL FUND OPERATING EXPENSES (expenses deducted from the Fund's assets)
Management Expenses: 0.24%
12b-1 Distribution Fee: None
Other Expenses: 0.03%
TOTAL ANNUAL FUND OPERATING EXPENSES: 0.27%

The following example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. It illustrates the
hypothetical expenses that you would incur over various periods if you invest
$10,000 in the Fund. This example assumes that the Fund provides a return of 5%
a year, and that operating expenses remain the same. The results apply whether
or not you redeem your investment at the end of each period.

-------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------
$28 $87 $152 $343
-------------------------------------------------

THIS EXAMPLE SHOULD NOT BE CONSIDERED TO REPRESENT ACTUAL EXPENSES OR
PERFORMANCE FROM THE PAST OR FOR THE FUTURE. ACTUAL FUTURE EXPENSES MAY BE
HIGHER OR LOWER THAN THOSE SHOWN.
<PAGE>
4

<TABLE>
<CAPTION>
<S> <C>
-----------------------------------------------------------------------------------------------------
ADDITIONAL INFORMATION
DIVIDENDS AND CAPITAL GAINS MINIMUM INITIAL INVESTMENT
Dividends are declared daily and distributed on the $3,000; $1,000 for IRAs and custodial accounts
first business day of each month; capital gains, if for minors
any, are distributed annually in December
NEWSPAPER ABBREVIATION
INVESTMENT ADVISER STTsry
The Vanguard Group, Valley Forge, Pa.,
since inception VANGUARD FUND NUMBER
032
INCEPTION DATE
October 28, 1991 CUSIP NUMBER
922031703
NET ASSETS AS OF JANUARY 31, 2000
$1.18 billion TICKER SYMBOL
VFISX
SUITABLE FOR IRAS
Yes
-----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

FUND PROFILE--
VANGUARD(R) SHORT-TERM FEDERAL FUND

The following profile summarizes key features of Vanguard Short-Term Federal
Fund.

INVESTMENT OBJECTIVE
The Fund seeks to provide a high level of current income and preserve investors'
principal.

INVESTMENT STRATEGIES
The Fund invests primarily in short-term bonds issued by U.S. government
agencies and instrumentalities, most of which are not backed by the full faith
and credit of the U.S. government. The Fund generally will maintain a
dollar-weighted average maturity of between one and three years. For more
information, see "Investment Strategies" under MORE ON THE FUNDS.

PERFORMANCE/RISK INFORMATION
The bar chart and table below provide an indication of the risk of investing in
the Fund. The bar chart shows the Fund's performance in each calendar year over
a ten-year period. The table shows how the Fund's average annual total returns
for one, five, and ten calendar years compare with those of a broad-based bond
market index. Keep in mind that the Fund's past performance does not indicate
how it will perform in the future.

----------------------------------------------------
ANNUAL TOTAL RETURNS
----------------------------------------------------
[BAR CHART]
9.31% 1990
12.24% 1991
6.19% 1992
7.00% 1993
-0.94% 1994
12.26% 1995
4.78% 1996
6.46% 1997
7.22% 1998
2.07% 1999
----------------------------------------------------
The Fund's year-to-date return as of the quarter
ended March 31, 2000 was 1.37%.
----------------------------------------------------

During the period shown in the bar chart, the highest return for a calendar
quarter was 4.06% (quarter ended December 31, 1991) and the lowest return for a
quarter was -0.98% (quarter ended March 31, 1994).

<PAGE>
6

------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR YEARS ENDED DECEMBER 31, 1999
------------------------------------------------------------------
1 YEAR 5 YEARS 10 YEARS
------------------------------------------------------------------
Vanguard Short-Term Federal Fund 2.07% 6.51% 6.59%
Lehman Brothers 1-5 Year U.S.
Government Bond Index 1.96 6.74 6.88
------------------------------------------------------------------

ANNUAL FUND OPERATING EXPENSES (expenses deducted from the Fund's assets)
Management Expenses: 0.24%
12b-1 Distribution Fee: None
Other Expenses: 0.03%
TOTAL ANNUAL FUND OPERATING EXPENSES: 0.27%

-------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------
$28 $87 $152 $343
-------------------------------------------------

THIS EXAMPLE SHOULD NOT BE CONSIDERED TO REPRESENT ACTUAL EXPENSES OR
PERFORMANCE FROM THE PAST OR FOR THE FUTURE. ACTUAL FUTURE EXPENSES MAY BE
HIGHER OR LOWER THAN THOSE SHOWN.
<PAGE>

<TABLE>
<CAPTION>
<S> <C>
------------------------------------------------------------------------------------------------------
ADDITIONAL INFORMATION
DIVIDENDS AND CAPITAL GAINS MINIMUM INITIAL INVESTMENT
Dividends are declared daily and distributed on the $3,000; $1,000 for IRAs and custodial accounts
first business day of each month; capital gains, if for minors
any, are distributed annually in December
NEWSPAPER ABBREVIATION
INVESTMENT ADVISER STFed
The Vanguard Group, Valley Forge, Pa., since inception
VANGUARD FUND NUMBER
INCEPTION DATE 049
December 31, 1987
CUSIP NUMBER
NET ASSETS AS OF JANUARY 31, 2000 922031604
$1.48 billion
TICKER SYMBOL
SUITABLE FOR IRAS VSGBX
Yes
------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
8

FUND PROFILE--
VANGUARD(R) SHORT-TERM CORPORATE FUND

The following profile summarizes key features of Vanguard Short-Term Corporate
Fund.

INVESTMENT OBJECTIVE
The Fund seeks to provide a high level of current income and preserve investors'
principal.

INVESTMENT STRATEGIES
The Fund invests in a variety of high-quality and, to a lesser extent,
medium-quality fixed-income securities, primarily short-term and
intermediate-term corporate bonds. High-quality bonds are those rated the
equivalent of "A3" or better by Moody's Investors Service, Inc. or another
independent rating agency; medium-quality bonds are those rated the equivalent
of Moody's "Baa1", "Baa2", or "Baa3." The Fund is permitted to invest in foreign
bonds to a limited extent, so long as they are denominated in U.S. dollars. The
Fund will generally maintain a dollar-weighted average maturity of between one
and three years. For more information, see "Investment Strategies" under MORE ON
THE FUNDS.

PERFORMANCE/RISK INFORMATION

The bar chart and table below provide an indication of the risk of investing in
the Fund. The bar chart shows the Fund's performance in each calendar year over
a ten-year period. The table shows how the Fund's average annual total returns
for one, five, and ten calendar years compare with those of a broad-based bond
market index. Keep in mind that the Fund's past performance does not indicate
how it will perform in the future.

----------------------------------------------------
ANNUAL TOTAL RETURNS
----------------------------------------------------
[BAR CHART]
9.23% 1990
13.08% 1991
7.20% 1992
7.07% 1993
-0.08% 1994
12.74% 1995
4.79% 1996
6.95% 1997
6.57% 1998
3.30% 1999
----------------------------------------------------
The Fund's year-to-date return as of the quarter
ended March 31, 2000 was 1.45%.
----------------------------------------------------

<PAGE>
9

During the period shown in the bar chart, the highest return for a calendar
quarter was 3.98% (quarter ended December 31, 1991) and the lowest return for a
quarter was -1.00% (quarter ended March 31, 1994).

-------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR YEARS ENDED DECEMBER 31, 1999
-------------------------------------------------------------------
1 YEAR 5 YEARS 10 YEARS
-------------------------------------------------------------------
Vanguard Short-Term Corporate Fund 3.30% 6.82% 7.02%
Lehman Brothers 1-5 Year Investment-
Grade Debt Index 2.49 7.30 7.49
-------------------------------------------------------------------

ANNUAL FUND OPERATING EXPENSES (expenses deducted from the Fund's assets)
Management Expenses: 0.23%
12b-1 Distribution Fee: None
Other Expenses: 0.02%
TOTAL ANNUAL FUND OPERATING EXPENSES: 0.25%

-------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------
$26 $80 $141 $318
-------------------------------------------------

THIS EXAMPLE SHOULD NOT BE CONSIDERED TO REPRESENT ACTUAL EXPENSES OR
PERFORMANCE FROM THE PAST OR FOR THE FUTURE. ACTUAL FUTURE EXPENSES MAY BE
HIGHER OR LOWER THAN THOSE SHOWN.
<PAGE>
10

<TABLE>
<CAPTION>
<S> <C>
------------------------------------------------------------------------------------------------------
ADDITIONAL INFORMATION
DIVIDENDS AND CAPITAL GAINS MINIMUM INITIAL INVESTMENT
Dividends are declared daily and distributed on the $3,000; $1,000 for IRAs and custodial accounts
first business day of each month; capital gains, if for minors
any, are distributed annually in December
NEWSPAPER ABBREVIATION
INVESTMENT ADVISER STCor
The Vanguard Group, Valley Forge, Pa., since inception VANGUARD FUND NUMBER
039
INCEPTION DATE
October 29, 1982 CUSIP NUMBER
922031406
NET ASSETS (ALL SHARE CLASSES) AS OF
JANUARY 31, 2000 TICKER SYMBOL
$7.17 billion VFSTX

SUITABLE FOR IRAS
Yes
------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

11
FUND PROFILE--
VANGUARD(R) INTERMEDIATE-TERM TREASURY FUND

The following profile summarizes key features of Vanguard Intermediate-Term
Treasury Fund.

INVESTMENT OBJECTIVE
The Fund seeks to provide a high level of current income and preserve investors'
principal.

INVESTMENT STRATEGIES
The Fund invests at least 85% of its total assets in intermediate-term bonds
whose interest and principal payments are backed by the full faith and credit of
the U.S. government. In addition, at least 65% of the Fund's total assets will
always be invested in U.S. Treasury securities. The Fund will generally maintain
a dollar-weighted average maturity of between 5 and 10 years. For more
information, see "Investment Strategies" under MORE ON THE FUNDS.

----------------------------------------------------
ANNUAL TOTAL RETURNS
----------------------------------------------------
[BAR CHART]
7.78% 1992
11.43% 1993
-4.33% 1994
20.44% 1995
1.92% 1996
8.96% 1997
10.61% 1998
-3.52% 1999
----------------------------------------------------
The Fund's year-to-date return as of the quarter
ended March 31, 2000 was 2.58%.
----------------------------------------------------

During the period shown in the bar chart, the highest return for a calendar
quarter was 7.23% (quarter ended June 30, 1995) and the lowest return for a
quarter was -3.60% (quarter ended March 31, 1994).

<PAGE>

-------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR YEARS ENDED DECEMBER 31, 1999
-------------------------------------------------------------------------
1 YEAR 5 YEARS SINCE INCEPTION*
-------------------------------------------------------------------------
Vanguard Intermediate-Term Treasury
Fund -3.52% 7.37% 6.98%
Lehman Brothers 5-10 Year U.S.
Treasury Bond Index -3.99 7.74 7.23
-------------------------------------------------------------------------
*October 28, 1991.
-------------------------------------------------------------------------

ANNUAL FUND OPERATING EXPENSES (expenses deducted from the Fund's assets)
Management Expenses: 0.24%
12b-1 Distribution Fee: None
Other Expenses: 0.03%
TOTAL ANNUAL FUND OPERATING EXPENSES: 0.27%

-------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------
$28 $87 $152 $343
-------------------------------------------------

THIS EXAMPLE SHOULD NOT BE CONSIDERED TO REPRESENT ACTUAL EXPENSES OR
PERFORMANCE FROM THE PAST OR FOR THE FUTURE. ACTUAL FUTURE EXPENSES MAY BE
HIGHER OR LOWER THAN THOSE SHOWN.
<PAGE>

<TABLE>
<CAPTION>
<S> <C>
--------------------------------------------------------------------------------------------------------------
ADDITIONAL INFORMATION
DIVIDENDS AND CAPITAL GAINS MINIMUM INITIAL INVESTMENT
Dividends are declared daily and distributed on the $3,000; $1,000 for IRAs and custodial accounts
first business day of each month; capital gains, if for minors
any, are distributed annually in December
NEWSPAPER ABBREVIATION
INVESTMENT ADVISER ITTsry
The Vanguard Group, Valley Forge, Pa., since inception
VANGUARD FUND NUMBER
INCEPTION DATE 035
October 28, 1991
CUSIP NUMBER
NET ASSETS AS OF JANUARY 31, 2000 922031802
$1.65 billion
TICKER SYMBOL
SUITABLE FOR IRAS VFITX
Yes
--------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
14

FUND PROFILE--
VANGUARD(R) INTERMEDIATE-TERM CORPORATE FUND

The following profile summarizes key features of Vanguard Intermediate-Term
Corporate Fund.

INVESTMENT OBJECTIVE
The Fund seeks to provide a high level of current income and preserve investors'
principal.

INVESTMENT STRATEGIES
The Fund invests in a variety of high-quality and, to a lesser extent,
medium-quality fixed-income securities, primarily short-term and
intermediate-term corporate bonds. High- quality bonds are those rated the
equivalent of "A3" or better by Moody's Investors Service, Inc. or another
independent rating agency; medium-quality bonds are those rated the equivalent
of Moody's "Baa1", "Baa2", or "Baa3." The Fund is permitted to invest in foreign
bonds to a limited extent, so long as they are denominated in U.S. dollars. The
Fund will generally maintain a dollar-weighted average maturity of between five
and ten years. For more information, see "Investment Strategies" under MORE ON
THE FUNDS.

PRIMARY RISKS
The Fund is subject to the following primary risks:
o Income risk, which is the chance that falling interest rates will cause the
Fund's income to decline. Income risk is generally moderate for
intermediate-term bond funds.
o Interest rate risk, which is the chance that bond prices overall, including
the prices of bonds held by the Fund, will decline due to rising interest
rates. Interest rate risk is generally moderate for intermediate-term bond
funds.
o Call risk, which is the chance that during periods of falling interest
rates, a bond issuer will "call"--or repay--a higher-yielding bond before
its maturity date. Forced to reinvest the unanticipated proceeds at lower
rates, the Fund would experience a decline in income and lose the
opportunity for additional price appreciation associated with falling
rates. Call risk is generally moderate for intermediate-term bond funds.
o Credit risk, which is the chance that a bond issuer will fail to pay
interest and principal in a timely manner. Credit risk should be low for
the Fund.

PERFORMANCE/RISK INFORMATION
The following bar chart and table provide an indication of the risk of investing
in the Fund. The bar chart shows the Fund's performance in each calendar year
since inception. The table shows how the Fund's average annual total returns for
one and five calendar years and since inception compare with those of a
broad-based bond market index. Keep in mind that the Fund's past performance
does not indicate how it will perform in the future.
<PAGE>
15

----------------------------------------------------
ANNUAL TOTAL RETURNS
----------------------------------------------------
-4.20% 1994
21.39% 1995
2.78% 1996
8.93% 1997
8.30% 1998
-1.53% 1999
----------------------------------------------------
The Fund's year-to-date return as of the quarter
ended March 31, 2000 was 1.99%.
----------------------------------------------------

During the period shown in the bar chart, the highest return for a calendar
quarter was 7.20% (quarter ended June 30, 1995) and the lowest return for a
quarter was -3.41% (quarter ended March 31, 1994).

-------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR YEARS ENDED DECEMBER 31, 1999
-------------------------------------------------------------------------
1 YEAR 5 YEARS SINCE INCEPTION*
-------------------------------------------------------------------------
Vanguard Intermediate-Term -1.53% 7.71% 5.50%
Corporate Fund
Lehman Brothers 5-10 Year -2.22 8.05 5.83
Investment- Grade Debt Index
-------------------------------------------------------------------------
*November 1, 1993.
-------------------------------------------------------------------------

ANNUAL FUND OPERATING EXPENSES (expenses deducted from the Fund's assets)
Management Expenses: 0.23%
12b-1 Distribution Fee: None
Other Expenses: 0.02%
TOTAL ANNUAL FUND OPERATING EXPENSES: 0.25%

<PAGE>

The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. It illustrates the
hypothetical expenses that you would incur over various periods if you invest
$10,000 in the Fund. This example assumes that the Fund provides a return of 5%
a year, and that operating expenses remain the same. The results apply whether
or not you redeem your investment at the end of each period.

------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------------------------------------------
$26 $80 $141 $318
------------------------------------------------

THIS EXAMPLE SHOULD NOT BE CONSIDERED TO REPRESENT ACTUAL EXPENSES OR
PERFORMANCE FROM THE PAST OR FOR THE FUTURE. ACTUAL FUTURE EXPENSES MAY BE
HIGHER OR LOWER THAN THOSE SHOWN.

<TABLE>
<CAPTION>
<S> <C>
--------------------------------------------------------------------------------------------------------------
ADDITIONAL INFORMATION
DIVIDENDS AND CAPITAL GAINS MINIMUM INITIAL INVESTMENT
Dividends are declared daily and distributed on the $3,000; $1,000 for IRAs and custodial accounts
first business day of each month; capital gains, if
any, are for minors distributed annually in December NEWSPAPER ABBREVIATION
ITCorp
INVESTMENT ADVISER
The Vanguard Group, Valley Forge, Pa., since inception VANGUARD FUND NUMBER
071
INCEPTION DATE
November 1, 1993 CUSIP NUMBER
922031885
NET ASSETS AS OF JANUARY 31, 2000
$1.48 billion TICKER SYMBOL
VFICX
SUITABLE FOR IRAS
Yes
--------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

17
FUND PROFILE--
VANGUARD(R) GNMA FUND

The following profile summarizes key features of Vanguard GNMA Fund.

INVESTMENT OBJECTIVE
The Fund seeks to provide a high level of current income and preserve investors'
principal.

INVESTMENT STRATEGIES
The Fund invests at least 80% of its total assets in Government National
Mortgage Association (GNMA or "Ginnie Mae") pass-through certificates, which are
fixed-income securities representing part ownership in a pool of mortgage loans
backed by the U.S. government. The balance of the Fund's assets may be invested
in U.S. Treasury or other U.S. government agency securities, as well as
repurchase agreements collateralized by such securities. The Fund's
dollar-weighted average maturity depends on homeowner prepayments of the
underlying mortgages. While the Fund does not observe specific maturity
guidelines, the Fund's dollar-weighted average maturity will normally fall
within an intermediate-term range (5-10 years). For more information, see
"Investment Strategies" under MORE ON THE FUNDS.

PRIMARY RISKS
The Fund is subject to the following primary risks:
o Prepayment risk, which is the chance that mortgage-backed bonds will be
paid off early due to homeowners refinancing their mortgages during periods
of falling interest rates. Forced to reinvest the unanticipated proceeds at
lower rates, the Fund would experience a decline in income and lose the
opportunity for additional price appreciation associated with falling
rates. Prepayment risk is high for the Fund.
o Income risk, which is the chance that falling interest rates will cause the
Fund's income to decline. Income risk is generally moderate for
intermediate-term bond funds.
o Interest rate risk, which is the chance that bond prices overall will
decline due to rising interest rates. Also, declining interest rates
typically will not lift GNMA prices as much as the prices of comparable
bonds. This is because the market tends to discount GNMA prices for
prepayment risk when interest rates fall. Interest rate risk is generally
moderate for intermediate-term bond funds.

PERFORMANCE/RISK INFORMATION
The following bar chart and table provide an indication of the risk of investing
in the Fund. The bar chart shows the Fund's performance in each calendar year
over a ten-year period. The table shows how the Fund's average annual total
returns for one, five, and ten calendar years compare with those of a
broad-based bond market index. Keep in mind that the Fund's past performance
does not indicate how it will perform in the future.
<PAGE>

----------------------------------------------------
ANNUAL TOTAL RETURNS
----------------------------------------------------
10.32% 1990
16.77% 1991
6.85% 1992
5.90% 1993
-0.95% 1994
17.04% 1995
5.24% 1996
9.47% 1997
7.14% 1998
0.78% 1999
----------------------------------------------------
The Fund's year-to-date return as of the quarter
ended March 31, 2000 was 2.16%.
----------------------------------------------------

During the period shown in the bar chart, the highest return for a calendar
quarter was 5.91% (quarter ended September 30, 1991) and the lowest return for a
quarter was -2.28% (quarter ended March 31, 1994).

-----------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR YEARS ENDED DECEMBER 31, 1999
-----------------------------------------------------------------
1 YEAR 5 YEARS 10 YEARS
-----------------------------------------------------------------
Vanguard GNMA Fund 0.78% 7.80% 7.71%
Lehman Brothers GNMA Bond Index 1.93 8.08 7.87
-----------------------------------------------------------------

ANNUAL FUND OPERATING EXPENSES (expenses deducted from the Fund's assets)
Management Expenses: 0.24%
12b-1 Distribution Fee: None
Other Expenses: 0.03%
TOTAL ANNUAL FUND OPERATING EXPENSES: 0.27%

<PAGE>
19

-------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------
$28 $87 $152 $343
-------------------------------------------------

THIS EXAMPLE SHOULD NOT BE CONSIDERED TO REPRESENT ACTUAL EXPENSES OR
PERFORMANCE FROM THE PAST OR FOR THE FUTURE. ACTUAL FUTURE EXPENSES MAY BE
HIGHER OR LOWER THAN THOSE SHOWN.
<TABLE>
<CAPTION>
<S> <C>
--------------------------------------------------------------------------------------------------------------
ADDITIONAL INFORMATION
DIVIDENDS AND CAPITAL GAINS MINIMUM INITIAL INVESTMENT
Dividends are declared daily and distributed on the $3,000; $1,000 for IRAs and custodial
first business day of accounts each month; capital gains, if for minors
any, are distributed annually in December
NEWSPAPER ABBREVIATION
INVESTMENT ADVISER GNMA
Wellington Management Company, LLP,
Boston, Mass., since inception VANGUARD FUND NUMBER
036
INCEPTION DATE
June 27, 1980 CUSIP NUMBER
922031307
NET ASSETS AS OF JANUARY 31, 2000
$12.23 billion TICKER SYMBOL
VFIIX
SUITABLE FOR IRAS
Yes
--------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
20

FUND PROFILE--
VANGUARD(R) LONG-TERM TREASURY FUND

The following profile summarizes key features of Vanguard Long-Term Treasury
Fund.

INVESTMENT OBJECTIVE
The Fund seeks to provide a high level of current income and preserve investors'
principal.

INVESTMENT STRATEGIES
The Fund invests at least 85% of its total assets in long-term bonds whose
principal and interest payments are backed by the full faith and credit of the
U.S. government. In addition, at least 65% of the Fund's total assets will
always be invested in U.S. Treasury securities. The Fund will generally maintain
a dollar-weighted average maturity of between 15 and 30 years. For more
information, see "Investment Strategies" under MORE ON THE FUNDS.

PERFORMANCE/RISK INFORMATION
The bar chart and table below provide an indication of the risk of investing in
the Fund. The bar chart shows the Fund's performance in each calendar year over
a ten-year period. The table shows how the Fund's average annual total returns
for one, five, and ten calendar years compare with those of a broad-based bond
market index. Keep in mind that the Fund's past performance does not indicate
how it will perform in the future.

----------------------------------------------------
ANNUAL TOTAL RETURNS
----------------------------------------------------
5.78% 1990
17.43% 1991
7.40% 1992
16.79% 1993
-7.03% 1994
30.11% 1995
-1.25% 1996
13.90% 1997
13.05% 1998
-8.66% 1999
----------------------------------------------------
The Fund's year-to-date return as of the quarter
ended March 31, 2000 was 7.52%.
----------------------------------------------------

During the period shown in the bar chart, the highest return for a calendar
quarter was 10.53% (quarter ended June 30, 1995) and the lowest return for a
quarter was -6.85% (quarter ended March 31, 1996).
<PAGE>
21

-----------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR YEARS ENDED DECEMBER 31, 1999
-----------------------------------------------------------------
1 YEAR 5 YEARS 10 YEARS
-----------------------------------------------------------------
Vanguard Long-Term Treasury Fund -8.66% 8.61% 8.15%
Lehman Brothers Long U.S. Treasury
Bond Index -8.74 9.08 8.56
-----------------------------------------------------------------

ANNUAL FUND OPERATING EXPENSES (expenses deducted from the Fund's assets)
Management Expenses: 0.25%
12b-1 Distribution Fee: None
Other Expenses: 0.03%
TOTAL ANNUAL FUND OPERATING EXPENSES: 0.28%

------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------------------------------------------
$29 $90 $157 $356
------------------------------------------------

THIS EXAMPLE SHOULD NOT BE CONSIDERED TO REPRESENT ACTUAL EXPENSES OR
PERFORMANCE FROM THE PAST OR FOR THE FUTURE. ACTUAL FUTURE EXPENSES MAY BE
HIGHER OR LOWER THAN THOSE SHOWN.
<PAGE>
22

<TABLE>
<CAPTION>
<S> <C>
--------------------------------------------------------------------------------------------------------------
ADDITIONAL INFORMATION
DIVIDENDS AND CAPITAL GAINS MINIMUM INITIAL INVESTMENT
Dividends are declared daily and distributed on the $3,000; $1,000 for IRAs and custodial accounts
first business day of each month; capital gains, if for minors
any, are distributed annually in December
NEWSPAPER ABBREVIATION
INVESTMENT ADVISER LTTsry
The Vanguard Group, Valley Forge, Pa.,
since inception VANGUARD FUND NUMBER
083
INCEPTION DATE
May 19, 1986 CUSIP NUMBER
922031505
NET ASSETS AS OF JANUARY 31, 2000
$1.18 billion TICKER SYMBOL
VUSTX
SUITABLE FOR IRAS
Yes
--------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

23
FUND PROFILE--
VANGUARD(R) LONG-TERM CORPORATE FUND

The following profile summarizes key features of Vanguard Long-Term Corporate
Fund.

INVESTMENT OBJECTIVE
The Fund seeks to provide a high level of current income and preserve investors'
principal.

INVESTMENT STRATEGIES
The Fund invests in a variety of high- or upper-medium-quality and, to a lesser
extent, medium-quality fixed-income securities, primarily long-term corporate
bonds. High-quality bonds are those rated the equivalent of "A3" or better by
Moody's Investors Service, Inc. or another independent rating agency;
medium-quality bonds are those rated the equivalent of Moody's "Baa1", Baa2", or
"Baa3." The Fund is permitted to invest in foreign bonds to a limited extent, so
long as they are denominated in U.S. dollars. The Fund's dollar-weighted average
maturity is expected to range between 15 and 25 years. For more information, see
"Investment Strategies" under MORE ON THE FUNDS.

PRIMARY RISKS
The Fund is subject to the following primary risks:
o Interest rate risk, which is the chance that bond prices overall, including
the prices of bonds held by the Fund, will decline due to rising interest
rates. Interest rate risk is generally high for long-term bond funds.
o Call risk, which is the chance that during periods of falling interest
rates, a bond issuer will "call"--or repay--a higher-yielding bond before
its maturity date. Forced to reinvest the unanticipated proceeds at lower
rates, the Fund would experience a decline in income and lose the
opportunity for additional price appreciation associated with falling
rates. Call risk is generally moderate for long-term bond funds.
o Income risk, which is the chance that falling interest rates will cause the
Fund's income to decline. Income risk is generally low for long-term bond
funds.
o Credit risk, which is the chance that a bond issuer will fail to pay
interest and principal in a timely manner. Credit risk should be low for
the Fund.

PERFORMANCE/RISK INFORMATION
The following bar chart and table provide an indication of the risk of investing
in the Fund. The bar chart shows the Fund's performance in each calendar year
over a ten-year period. The table shows how the Fund's average annual total
returns for one, five, and ten calendar years compare with those of a
broad-based bond market index. Keep in mind that the Fund's past performance
does not indicate how it will perform in the future.
<PAGE>
24

----------------------------------------------------
ANNUAL TOTAL RETURNS
----------------------------------------------------
6.21% 1990
20.90% 1991
9.78% 1992
14.49% 1993
-5.30% 1994
26.40% 1995
1.20% 1996
13.79% 1997
9.21% 1998
-6.23% 1999
----------------------------------------------------
The Fund's year-to-date return as of the quarter
ended March 31, 2000 was 2.64%.
----------------------------------------------------

During the period shown in the bar chart, the highest return for a calendar
quarter was 8.56% (quarter ended June 30, 1995) and the lowest return for a
quarter was -4.68% (quarter ended March 31, 1996).

-------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR YEARS ENDED DECEMBER 31, 1999
-------------------------------------------------------------------
1 YEAR 5 YEARS 10 YEARS
-------------------------------------------------------------------
Vanguard Long-Term Corporate Fund -6.23% 8.31% 8.58%
Lehman Brothers Long Corporate AA or
Better Bond Index -7.00 8.44 8.35
-------------------------------------------------------------------

ANNUAL FUND OPERATING EXPENSES (expenses deducted from the Fund's assets)
Management Expenses: 0.28%
12b-1 Distribution Fee: None
Other Expenses: 0.02%
TOTAL ANNUAL FUND OPERATING EXPENSES: 0.30%
<PAGE>
25

------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------------------------------------------
$31 $97 $169 $381
------------------------------------------------

THIS EXAMPLE SHOULD NOT BE CONSIDERED TO REPRESENT ACTUAL EXPENSES OR
PERFORMANCE FROM THE PAST OR FOR THE FUTURE. ACTUAL FUTURE EXPENSES MAY BE
HIGHER OR LOWER THAN THOSE SHOWN.

<TABLE>
<CAPTION>
<S> <C>
--------------------------------------------------------------------------------------------------------------
ADDITIONAL INFORMATION
DIVIDENDS AND CAPITAL GAINS MINIMUM INITIAL INVESTMENT
Dividends are declared daily and distributed on the $3,000; $1,000 for IRAs and custodial
first business day of accounts each month; capital gains, if for minors
any, are distributed annually in December
NEWSPAPER ABBREVIATION
INVESTMENT ADVISER LTCorp
Wellington Management Company, LLP,
Boston, Mass., since inception VANGUARD FUND NUMBER
028
INCEPTION DATE
July 9, 1973 CUSIP NUMBER
922031109
NET ASSETS AS OF JANUARY 31, 2000
$3.68 billion TICKER SYMBOL
VWESX
SUITABLE FOR IRAS
Yes
--------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
26

MORE ON THE FUNDS

The following sections discuss other important features of the Funds, including
additional risk information, investment strategies, costs and market timing, and
turnover rate. Note that the investment objective of each Fund is not
fundamental, and may be changed without a shareholder vote.

ADDITIONAL RISK INFORMATION
Because the Funds invest primarily in bonds, they are subject to certain risks.

[FLAG] THE FUNDS ARE SUBJECT--IN VARYING DEGREES--TO INTEREST RATE RISK, WHICH
IS THE CHANCE THAT BOND PRICES OVERALL WILL DECLINE DUE TO RISING INTEREST
RATES. INTEREST RATE RISK SHOULD BE LOW FOR SHORT-TERM BOND FUNDS, MODERATE
FOR INTERMEDIATE-TERM BONDS, AND HIGH FOR LONG-TERM BOND FUNDS.

Changes in interest rates will affect bond income as well as bond prices.

[FLAG] THE FUNDS ARE SUBJECT--IN VARYING DEGREES--TO INCOME RISK, WHICH IS THE
CHANCE THAT A FUND'S DIVIDENDS (INCOME) WILL DECLINE DUE TO FALLING
INTEREST RATES. INCOME RISK IS GENERALLY HIGHER FOR SHORT-TERM BOND FUNDS
AND LOWER FOR LONG-TERM BOND FUNDS.

--------------------------------------------------------------------------------
PLAIN TALK ABOUT
BONDS AND INTEREST RATES

As a rule, when interest rates rise, bond prices fall. The opposite is also
true: Bond prices go up when interest rates fall. Why do bond prices and
interest rates move in opposite directions? Let's assume that you hold a bond
offering a 5% yield. A year later, interest rates are on the rise and bonds are
offered with a 6% yield. With higher-yielding bonds available, you would have
trouble selling your 5% bond for the price you paid--causing you to lower your
asking price. On the other hand, if interest rates were falling and 4% bonds
were being offered, you should be able to sell your 5% bond for more than you
paid.

The difference with GNMAs: In general, declining interest rates will not lift
GNMA prices as much as the prices of comparable bonds. Why? Because when
interest rates fall, the bond market tends to discount GNMA prices for
prepayment risk--the possibility that homeowners will refinance their mortgages
at lower rates and cause GNMAs to be paid off prior to maturity. In part to
compensate for this "drag" on price, GNMAs tend to offer higher yields than
other bonds of comparable credit quality and maturity.
--------------------------------------------------------------------------------

In the past, bond investors--even Treasury bond investors--have seen the
value of their investment rise and fall--sometimes significantly--with changes
in interest rates. Between December 1976 and September 1981, for instance,
rising interest rates caused long-term bond prices to fall by almost 48%.
<PAGE>
27

Because each Fund invests mainly in bonds, changes in interest rates will
impact, to varying degrees, the value of the Funds' assets. To illustrate how
much of an impact, the table below shows the effect of a 1% and a 2% change
(both up and down) in interest rates on three bonds of different maturities,
each with a face value of $1,000.

-------------------------------------------------------------------------------
HOW INTEREST RATE CHANGES AFFECT THE VALUE OF A $1,000 BOND*
-------------------------------------------------------------------------------
AFTER A 1% AFTER A 1% AFTER A 2% AFTER A 2%
TYPE OF BOND (MATURITY) INCREASE DECREASE INCREASE DECREASE
-------------------------------------------------------------------------------
Short-Term (2.5 years) $978 $1,023 $956 $1,046
Intermediate-Term (10 years) 932 1,074 870 1,156
Long-Term (20 years) 901 1,116 816 1,251
-------------------------------------------------------------------------------
*Assuming a 7% yield.
-------------------------------------------------------------------------------

These figures are for illustration only; you should not regard them as an
indication of future returns from the bond market as a whole or any Fund in
particular.

--------------------------------------------------------------------------------
PLAIN TALK ABOUT
BOND MATURITIES

A bond is issued with a specific maturity date--the date when the bond's
issuer, or seller, must pay back the bond's initial value (known as its "face
value"). Bond maturities generally range from less than one year (short-term)
to 30 years (long-term). The longer a bond's maturity, the more risk you, as a
bond investor, face as interest rates rise--but also the more interest you
could receive. Long-term bonds are more suitable for investors willing to take
greater risks in hope of higher yields; short-term bond investors should be
willing to accept lower yields in return for less fluctuation in the value of
their investment.
--------------------------------------------------------------------------------

While falling interest rates tend to strengthen bond prices, they can cause
other sorts of problems for bond fund investors--bond calls and prepayments.

[FLAG] BECAUSE THEY INVEST IN BONDS THAT ARE CALLABLE, THE FUNDS ARE SUBJECT TO
CALL RISK, WHICH IS THE CHANCE THAT DURING PERIODS OF FALLING INTEREST
RATES, A BOND ISSUER WILL "CALL"--OR REPAY--A HIGHER-YIELDING BOND BEFORE
ITS MATURITY DATE. FORCED TO REINVEST THE UNANTICIPATED PROCEEDS AT LOWER
INTEREST RATES, A FUND WOULD EXPERIENCE A DECLINE IN INCOME AND LOSE THE
OPPORTUNITY FOR ADDITIONAL PRICE APPRECIATION ASSOCIATED WITH FALLING
RATES.

Call risk is generally moderate for longer-term corporate bonds, and
consequently is moderate for the Intermediate-Term and Long-Term Corporate
Funds. Call risk is low for the various Short-Term and Treasury Funds.
<PAGE>
28

--------------------------------------------------------------------------------
PLAIN TALK ABOUT
CALLABLE BONDS

Although bonds are issued with clearly defined maturities, a bond issuer may be
able to redeem, or call, a bond earlier than its maturity date. The bondholder
must now replace the called bond with a bond that may have a lower yield than
the original. One way for bond investors to protect themselves against call
risk is to purchase a bond early in its lifetime, long before its call date.
The other way is to buy bonds with low coupons, which makes them less likely to
be called.
--------------------------------------------------------------------------------

[FLAG] BECAUSE IT INVESTS IN MORTGAGE-BACKED SECURITIES, THE GNMA FUND IS
SUBJECT TO PREPAYMENT RISK, WHICH IS THE CHANCE THAT MORTGAGE-BACKED BONDS
WILL BE PAID OFF EARLY DUE TO HOMEOWNERS REFINANCING THEIR MORTGAGES DURING
PERIODS OF FALLING INTEREST RATES. FORCED TO REINVEST THE UNANTICIPATED
PROCEEDS AT LOWER RATES, THE FUND WOULD EXPERIENCE A DECLINE IN INCOME AND
LOSE THE OPPORTUNITY FOR ADDITIONAL PRICE APPRECIATION ASSOCIATED WITH
FALLING RATES.

Since the GNMA Fund invests most of its assets in mortgage-backed bonds,
the prepayment risk to the Fund is high.

[FLAG] THE FUNDS ARE SUBJECT--IN VARYING DEGREES--TO CREDIT RISK, WHICH IS THE
CHANCE THAT A BOND ISSUER WILL FAIL TO PAY INTEREST AND PRINCIPAL IN A
TIMELY MANNER.

--------------------------------------------------------------------------------
PLAIN TALK ABOUT
CREDIT QUALITY

A bond's credit quality depends on the issuer's ability to pay interest on the
bond and, ultimately, to repay the debt. The lower the rating by one of the
independent bond-rating agencies (for example, Moody's or Standard & Poor's),
the greater the chance (in the rating agency's opinion) that the bond issuer
will default, or fail to meet its payment obligations. All things being equal,
the lower a bond's credit rating, the higher its yield should be to compensate
investors for assuming additional risk. Bonds rated in one of the four highest
rating categories are considered "investment-grade." The Funds' Statement of
Additional Information includes a detailed description of the credit-rating
scales used by major, independent bond-rating agencies.
--------------------------------------------------------------------------------

The credit quality of each Fund depends on the quality of its investments.
In absolute terms, the average credit quality of each Fund's holdings is high or
upper-medium. In relative terms, the Short-Term Treasury, Intermediate-Term
Treasury, and Long-Term Treasury Funds (which invest primarily in securities
backed by the full faith and credit of the U.S. government) offer the highest
credit quality of the Funds. The dollar-weighted average credit quality of each
Fund's holdings as rated by Moody's Investors Service, as of January 31, 2000,
follow:
<PAGE>
29

---------------------------------------------------------
FUND AVERAGE QUALITY
---------------------------------------------------------
Short-Term Treasury Treasury
Short-Term Federal Agency
Short-Term Corporate A1
Intermediate-Term Treasury Treasury
Intermediate-Term Corporate A1
GNMA Treasury
Long-Term Treasury Treasury
Long-Term Corporate Aa3
---------------------------------------------------------

The following table details the Funds' credit quality policies, and
illustrates the comparative credit risk encountered by an investor in each Fund.
Note that the Funds apply these policies at the time of investment. A Fund may
continue to hold bonds that have been downgraded after purchase, even if those
bonds would no longer be eligible for purchase by the Fund.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
CREDIT RATINGS OF THE FUNDS' INVESTMENTS (PERCENTAGE OF FUND ASSETS)
-----------------------------------------------------------------------------------------
ISSUED
OR BACKED HIGH
BY U.S. GOV'T, OR HIGHEST UPPER SPECULATIVE
ITS AGENCIES AND QUALITY MEDIUM MEDIUM OR LOWER
FUND INSTRUMENTALITIES (NON-GOV'T) QUALITY QUALITY QUALITY
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Short-Term Treasury 100% 0% 0% 0% 0%
-----------------------------------------------------------------------------------------
Short-Term Federal 100% 0% 0% 0% 0%
-----------------------------------------------------------------------------------------
Short-Term Corporate ----------At least 70%---------- No more 0%
than 30%
-----------------------------------------------------------------------------------------
Intermediate-Term 100% 0% 0% 0% 0%
Treasury
-----------------------------------------------------------------------------------------
Intermediate-Term ----------At least 70%---------- No more 0%
Corporate than 30%
-----------------------------------------------------------------------------------------
GNMA 100% 0% 0% 0% 0%
-----------------------------------------------------------------------------------------
Long-Term Treasury 100% 0% 0% 0% 0%
-----------------------------------------------------------------------------------------
Long-Term Corporate ----------At least 70%--------- No more 0%
than 30%
-----------------------------------------------------------------------------------------
</TABLE>

--------------------------------------------------------------------------------
PLAIN TALK ABOUT
TYPES OF BONDS

Bonds are issued (sold) by many sources: Corporations issue corporate bonds;
the federal government issues U.S. Treasury bonds; agencies of the federal
government issue agency bonds; and mortgage holders issue "mortgage-backed"
pass-through certificates such as those of the Government National Mortgage
Association (GNMAs). Each issuer is responsible for paying back the bond's
initial value as well as making periodic interest payments.
--------------------------------------------------------------------------------

Each of the Corporate Funds may invest no more than 30% of its assets in
medium- quality bonds, preferred stocks, and convertible securities.
To a limited extent, the Corporate Funds are also exposed to event risk,
which is the chance that corporate bonds and other fixed-income securities held
by these Funds may suffer a substantial decline in credit quality and market
value due to a restructuring of the companies that issued the securities.
<PAGE>
30

[FLAG] THE FUNDS ARE SUBJECT TO MANAGER RISK, WHICH IS THE CHANCE THAT A FUND'S
ADVISER WILL DO A POOR JOB OF SELECTING SECURITIES.

To help you distinguish between the Funds and their various risks, a
summary table is provided below.

---------------------------------------------------------------------------
RISKS OF THE FUNDS
---------------------------------------------------------------------------
PREPAYMENT/
INCOME INTEREST CALL CREDIT
FUND RISK RATE RISK RISK RISK
---------------------------------------------------------------------------
Short-Term Treasury High Low Low Negligible
Short-Term Federal High Low Low Very Low
Short-Term Corporate High Low Low Low
Intermediate-Term Treasury Moderate Moderate Low Negligible
Intermediate-Term Corporate Moderate Moderate Moderate Low
GNMA Moderate Moderate High Negligible
Long-Term Treasury Low High Low Negligible
Long-Term Corporate Low High Moderate Low
---------------------------------------------------------------------------

INVESTMENT STRATEGIES
The grid below shows, at a glance, the types of financial instruments that may
be purchased by each Fund. Explanations of each type of financial instrument
follow the grid.

--------------------------------------------------------------------------------
SHORT-, SHORT-,
INTERMEDIATE-, INTERMEDIATE-,
AND LONG-TERM SHORT-TERM AND LONG-TERM GNMA
TREASURY FUNDS FEDERAL FUND CORPORATE FUNDS FUND
--------------------------------------------------------------------------------
Corporate Debt .
--------------------------------------------------------------------------------
U.S. Government & . . . .
Agency Bonds
--------------------------------------------------------------------------------
State & Municipal .
Bonds
--------------------------------------------------------------------------------
Cash Reserves .* .* . .*
--------------------------------------------------------------------------------
Futures, Options, and . . . .
Other Derivatives
--------------------------------------------------------------------------------
Asset-Backed . .
Securities
--------------------------------------------------------------------------------
International .
Dollar-Denominated Bonds
--------------------------------------------------------------------------------
Preferred Stocks .
--------------------------------------------------------------------------------
Convertible Securities .
--------------------------------------------------------------------------------
Collateralized . . . .
Mortgage Obligations (CMOs)
--------------------------------------------------------------------------------
Restricted or Illiquid . . . .
Securities
--------------------------------------------------------------------------------
*Repurchase agreements only.
--------------------------------------------------------------------------------

o Corporate debt. As the name implies, corporate debt obligations--usually
called bonds--represent loans by an investor to a corporation.
<PAGE>

o U.S. government and agency bonds. These bonds represent loans by an
investor to the U.S. Treasury Department or a wide variety of governmental
agencies and instrumentalities. Timely payment of principal and interest on
U.S. Treasury bonds is always guaranteed by the full faith and credit of
the U.S. government; many (but not all) agency bonds have the same
guarantee.
o State and municipal bonds. These bonds represent loans by an investor to a
state or municipal government, or one of their agencies or
instrumentalities.
o Cash reserves. This blanket term describes a variety of short-term
fixed-income investments, including money market instruments, commercial
paper, bank certificates of deposit, banker's acceptances, and repurchase
agreements. Repurchase agreements represent short-term (normally overnight)
loans by a Fund to commercial banks or large securities dealers. The
Treasury Funds, the GNMA Fund, and the Short-Term Federal Fund may invest
in repurchase agreements only if collateralized by U.S. Treasury or U.S.
government agency securities.
o Futures, options, and other derivatives. Each Fund may invest up to 20% of
its total assets in bond futures contracts, options, credit swaps, interest
rate swaps, and other types of derivatives. (As a practical matter, the
limit is 15% for the Treasury Funds, because they must invest at least 85%
of their total assets in U.S. government securities.) Losses (or gains)
involving futures contracts can sometimes be substantial--in part because a
relatively small price movement in a futures contract may result in an
immediate and substantial loss (or gain) for a fund. Similar risks exist
for other types of derivatives. For this reason, the Funds will not use
futures, options, or other derivatives for speculative purposes or as
leveraged investments that magnify the gains or losses of an investment.

The reasons for which a Fund will invest in futures and options are:
--To keep cash on hand to meet shareholder redemptions or other needs while
simulating full investment in bonds.
--To reduce the Fund's transaction costs, for hedging purposes, or to add value
when these instruments are favorably priced.

--------------------------------------------------------------------------------
PLAIN TALK ABOUT
DERIVATIVES

A derivative is a financial contract whose value is based on (or "derived"
from) a traditional security (such as a stock or a bond), an asset (such as a
commodity like gold), or a market index (such as the S&P 500 Index). Some forms
of derivatives, such as exchange-traded futures and options on securities,
commodities, or indices, have been trading on regulated exchanges for more than
two decades. These types of derivatives are standardized contracts that can
easily be bought and sold, and whose market values are determined and published
daily. Non-standardized derivatives, on the other hand, tend to be more
specialized or complex, and may be harder to value. If used for speculation or
as leveraged investments, derivatives can carry considerable risks.
--------------------------------------------------------------------------------

o Asset-backed securities. These bonds represent partial ownership in pools
of consumer or commercial loans--most often credit card, automobile, or
trade receivables. Asset-backed securities are issued by entities formed
solely for that purpose, but their value ultimately depends on repayments
by underlying borrowers. A primary risk of asset-backed securities is that
their maturity is difficult to predict and driven by borrowers'
prepayments.

<PAGE>
32

o International dollar-denominated bonds. The Corporate Funds may invest in
bonds of foreign issuers, so long as they are denominated in U.S. dollars.
To the extent that it owns foreign bonds, a Fund is subject to country
risk, which is the chance that political events (such as war), financial
problems (such as government default), or natural disasters (such as an
earthquake) will weaken a country's economy and cause investments in that
country to lose money. Because the bond's value is designated in dollars
rather than the currency of the issuer's country, the investor is not
exposed to currency risk; rather, the issuer assumes that risk, usually in
order to attract U.S. investors.
o Preferred stocks. Holders of preferred stocks receive set dividends from
the issuer. Their claim on the issuer's income and assets ranks before that
of common stock holders, but after that of bondholders.
o Convertible securities. Bonds or preferred stocks that are convertible
into, or exchangeable for, common stocks are known as convertible
securities.
o Collateralized mortgage obligations (CMOs). CMOs are special bonds that are
collateralized by mortgages or mortgage pass-through securities. In a CMO
deal, cash flow rights on underlying mortgages--the rights to receive
principal and interest payments--are divided up and prioritized to create
short-, intermediate-, and long-term bonds. CMOs rely on assumptions about
the timing of cash flows on the underlying mortgages, including expected
prepayment rates. The primary risk of a CMO is that these assumptions are
wrong, which would either shorten or lengthen the bond's maturity.
o Restricted or illiquid securities. Restricted securities are privately
placed securities that, pursuant to the rules of the Securities and
Exchange Commission, generally can be sold only to qualified institutional
buyers. Because these securities can in turn be resold only to qualified
institutional investors, they may be considered illiquid securities--that
is, they could be difficult for the Funds to convert to cash, if needed. A
Fund will not invest more than 15% of its net assets in illiquid
securities. The Funds' Board of Trustees may, from time to time, determine
that certain restricted securities are liquid; such securities would not be
subject to the 15% limitation. In other words, the Funds may invest without
limit in restricted securities that are deemed to be liquid securities.

The Funds may, from time to time, take temporary investment measures--such
as holding cash reserves without limit--that are inconsistent with the Funds'
primary investment strategies, in response to adverse market, economic,
political, or other conditions. In taking such measures, a Fund may not achieve
its investment objective.
The Funds are generally managed without regard to tax ramifications.

--------------------------------------------------------------------------------
PLAIN TALK ABOUT
THE COSTS OF INVESTING

Costs are an important consideration in choosing a mutual fund. That's because
you, as a shareholder, pay the costs of operating a fund, plus any transaction
costs associated with the buying and selling of securities by the fund. These
costs can erode a substantial portion of the gross income or capital
appreciation a fund achieves. Even seemingly small differences in expenses can,
over time, have a dramatic effect on a fund's performance.
--------------------------------------------------------------------------------
<PAGE>
33

COSTS AND MARKET-TIMING
Some investors try to profit from a strategy called market-timing--switching
money into investments when they expect prices to rise, and taking money out
when they expect prices to fall. As money is shifted in and out, a fund incurs
expenses for buying and selling securities. These costs are borne by all fund
shareholders, including the long-term investors who do not generate the costs.
Although several of the Bond Funds are suitable for investors' short-term needs,
the Funds discourage market-timing, and therefore have adopted the following
policies, among others, to discourage short-term trading:
o Each Fund reserves the right to reject any purchase request--including
exchanges from other Vanguard funds--that it regards as disruptive to the
efficient management of the Fund. A purchase request could be rejected
because of the timing of the request or because of a history of excessive
trading by the investor.
o There is a limit on the number of times you can exchange into and out of a
Fund (see "Redeeming Shares" in the INVESTING WITH VANGUARD section).
o Each Fund reserves the right to stop offering shares at any time.

THE VANGUARD FUNDS DO NOT PERMIT MARKET-TIMING. DO NOT INVEST IN THESE
FUNDS IF YOU ARE A MARKET-TIMER.

--------------------------------------------------------------------------------
PLAIN TALK ABOUT
TURNOVER RATE

Before investing in a mutual fund, you should review its turnover rate. This
gives an indication of how transaction costs could affect the fund's future
returns. In general, the greater the volume of buying and selling by the fund,
the greater the impact that brokerage commissions and other transaction costs
will have on its return. Also, funds with high turnover rates may be more
likely to generate capital gains that must be distributed to shareholders as
income subject to taxes.
--------------------------------------------------------------------------------

TURNOVER RATE
Each Fund may sell securities regardless of how long the securities have been
held. A Fund may sell securities based on the adviser's determination that
securities with relatively greater value are available for purchase by the Fund,
or to raise cash. Shorter-term bonds will mature or be sold, and need to be
replaced, more frequently than longer-term bonds. As a result, shorter-term bond
funds may have higher turnover rates than longer-term bond funds.

--------------------------------------------------------------------------------
PLAIN TALK ABOUT
VANGUARD'S UNIQUE CORPORATE STRUCTURE

The Vanguard Group is truly a MUTUAL mutual fund company. It is owned jointly
by the funds it oversees and thus indirectly by the shareholders in those
funds. Most other mutual funds are operated by for-profit management companies
that may be owned by one person, by a group of individuals, or by investors who
own the management company's stock. By contrast, Vanguard provides its services
on an "at-cost" basis, and the funds' expense ratios reflect only these costs.
No separate management company reaps profits or absorbs losses from operating
the funds.
--------------------------------------------------------------------------------
<PAGE>

THE FUNDS AND VANGUARD

Each Fund is part of Vanguard Fixed Income Securities Funds, an investment
company that is a member of The Vanguard Group. Vanguard is a family of more
than 35 investment companies with more than 100 funds holding assets worth more
than $550 billion. All of the Vanguard funds share in the expenses associated
with business operations, such as personnel, office space, equipment, and
advertising.
Vanguard also provides marketing services to the funds. Although
shareholders do not pay sales commissions or 12b-1 distribution fees, each fund
pays its allocated share of The Vanguard Group's marketing costs.

INVESTMENT ADVISERS

Two investment advisers manage the Funds, subject to the control of the Funds'
Trustees and officers.
Wellington Management Company, LLP (Wellington Management), 75 State Street,
Boston, MA 02109, manages the GNMA and Long-Term Corporate Funds for a quarterly
fee, which is based on certain annual percentage rates applied to the Funds'
average month-end assets for the quarter. Wellington Management was founded in
1928, and as of March 31, 2000 manages more than $248 billion in stock and bond
portfolios, including 14 Vanguard funds.
The Vanguard Group (Vanguard), P.O. Box 2600, Valley Forge, PA 19482, founded
in 1975, serves as adviser for the remaining Funds offered in this prospectus
through its Fixed Income Group, on an at-cost basis. As of January 31, 2000,
Vanguard served as adviser for about $364 billion in assets.
For the fiscal year ended January 31, 2000, the investment advisory expenses
for each Fund (with the exception of the Long-Term Corporate Fund) represented
an effective annual rate of approximately 0.01% of each Fund's average net
assets. For the Long-Term Corporate Fund, the investment advisory expenses
represented an effective annual rate of 0.03% of its average net assets.
The Funds have authorized their advisers to choose brokers or dealers to handle
the purchase and sale of securities for the Funds, and to get the best available
price and most favorable execution from these brokers or dealers with respect to
all transactions. Also, the Funds may direct the advisers to use a particular
broker for certain transactions in exchange for commission rebates or research
services provided to the Funds.
<PAGE>
35

--------------------------------------------------------------------------------
PLAIN TALK ABOUT
THE FUNDS' ADVISERS

The individuals primarily responsible for the Short-Term Treasury, Short-Term
Federal, Short-Term Corporate, Intermediate-Term Treasury, Intermediate-Term
Corporate, and Long-Term Treasury Funds are:

IAN A. MACKINNON, Managing Director of Vanguard and head of Vanguard's Fixed
Income Group; has worked in investment management since 1974; primary
responsibility for Vanguard's internal fixed-income policies and strategies
since 1981; B.A., Lafayette College; M.B.A., Pennsylvania State University.

ROBERT F. AUWAERTER, Principal of Vanguard, and Fund Manager of the
Intermediate-Term Treasury, Intermediate-Term Corporate, and Long-Term Treasury
Funds since their inception and the Short-Term Corporate Fund since 1983; has
worked in investment management since 1978; has managed portfolio investments
since 1979; with Vanguard since 1981; B.S., University of Pennsylvania; M.B.A.,
Northwestern University.

JOHN W. HOLLYER, Principal of Vanguard, and Fund Manager of the Short-Term
Federal Fund since 1996; has worked in investment management since 1987; has
managed portfolio investments since joining Vanguard in 1989; B.S., University
of Pennsylvania.

DAVID R. GLOCKE, Principal of Vanguard and Fund Manager of the Short-Term
Treasury Fund since 2000; has worked in investment management since 1991; has
managed portfolio investments with Vanguard since 1997; B.S., University of
Wisconsin.

The individuals primarily responsible for managing the GNMA and Long-Term
Corporate Funds are:

PAUL D. KAPLAN, Senior Vice President and Partner of Wellington Management, and
Fund Manager of the GNMA Fund since 1994; has worked in investment management
since 1974; with Wellington Management since 1978; B.A., Dickinson College;
M.S., The Sloan School of Management, Massachusetts Institute of Technology.

EARL E. MCEVOY, Senior Vice President and Partner of Wellington Management, and
Fund Manager of the Long-Term Corporate Fund since 1994; has worked in
investment management since 1972; with Wellington Management since 1978; B.A.,
Dartmouth College; M.B.A., Columbia Business School.
--------------------------------------------------------------------------------

The Board of Trustees may, without prior approval from shareholders, change
the terms of the advisory agreements or hire new investment advisers, either as
replacements for Wellington Management or Vanguard, or as additional advisers.
Any such change will be communicated to shareholders in writing.

DIVIDENDS, CAPITAL GAINS, AND TAXES

FUND DISTRIBUTIONS

Each Fund distributes to shareholders virtually all of its net income (interest
less expenses), as well as any capital gains realized from the sale of its
holdings. The Funds' income dividends accrue daily and are distributed on the
first business day of every month; capital gains distributions generally occur
in December. In addition, the Funds may occasionally be required to make
supplemental capital gains distributions at some other time during a year.
<PAGE>

You can receive distributions of income dividends or capital gains in cash, or
you can have them automatically reinvested in more shares of a Fund.

--------------------------------------------------------------------------------
PLAIN TALK ABOUT
DISTRIBUTIONS

As a shareholder, you are entitled to your share of the fund's income from
interest, and gains from the sale of investments. You receive such earnings as
either an income dividend or a capital gains distribution. Income dividends
come from interest the fund earns from its money market and bond investments.
Capital gains are realized whenever the fund sells securities for higher prices
than it paid for them. These capital gains are either short-term or long-term,
depending on whether the fund held the securities for one year or less, or more
than one year.
--------------------------------------------------------------------------------

BASIC TAX POINTS

Vanguard will send you a statement each year showing the tax status of all your
distributions. In addition, taxable investors should be aware of the following
basic tax points:
o Distributions are taxable to you for federal income tax purposes whether or
not you reinvest these amounts in additional Fund shares.
o Distributions declared in December--if paid to you by the end of
January--are taxable for federal income tax purposes as if received in
December.
o Any dividends and short-term capital gains that you receive are taxable to
you as ordinary income for federal income tax purposes.
o Any distributions of net long-term capital gains are taxable to you as
long-term capital gains for federal income tax purposes, no matter how long
you've owned shares in a Fund.
o Capital gains distributions may vary considerably from year to year as a
result of the Funds' normal investment activities and cash flows.
o A sale or exchange of Fund shares is a taxable event. This means that you
may have a capital gain to report as income, or a capital loss to report as
a deduction, when you complete your federal income tax return.
o Dividend and capital gains distributions that you receive, as well as your
gains or losses from any sale or exchange of Fund shares, may be subject to
state and local income taxes. Depending on your state's rules, however, any
dividends attributable to interest earned on direct obligations of the U.S.
Treasury may be exempt from state and local taxes. Vanguard will notify you
each year how much, if any, of your dividends may qualify for this
exemption.

GENERAL INFORMATION

BACKUP WITHHOLDING. By law, Vanguard must withhold 31% of any taxable
distributions or redemptions from your account if you do not:
o provide us with your correct taxpayer identification number;
o certify that the taxpayer identification number is correct; and
o confirm that you are not subject to backup withholding.
Similarly, Vanguard must withhold from your account if the IRS instructs us
to do so.

FOREIGN INVESTORS. The Vanguard funds generally do not offer their shares for
sale outside of the United States. Foreign investors should be aware that U.S.
withholding and estate taxes may apply to any investments in Vanguard funds.

INVALID ADDRESSES. If a dividend or capital gains distribution check mailed to
your address of record is returned as undeliverable, Vanguard will automatically
reinvest all future distributions until you provide us with a valid mailing
address.
<PAGE>
37

TAX CONSEQUENCES. This prospectus provides general tax information only. If you
are investing through a tax-deferred retirement account, such as an IRA, special
tax rules apply. Please consult your tax adviser for detailed information about
a fund's tax consequences for you.

--------------------------------------------------------------------------------
PLAIN TALK ABOUT
"BUYING A CAPITAL GAIN"

Unless you are investing through a tax-deferred retirement account (such as an
IRA), it is not to your advantage to buy shares of a fund shortly before it
makes a capital gains distribution, because doing so can cost you money in
taxes. This is known as "buying a capital gain." For example: On December 15,
you invest $5,000, buying 250 shares for $20 each. If the fund pays a capital
gains distribution of $1 per share on December 16, its share price would drop
to $19 (not counting market change). You still have only $5,000 (250 shares x
$19 = $4,750 in share value, plus 250 shares x $1 = $250 in distributions), but
you owe tax on the $250 distribution you received--even if you had reinvested
it in more shares. To avoid "buying a capital gain," check a fund's
distribution schedule before you invest.
--------------------------------------------------------------------------------

SHARE PRICE

Each Fund's share price, called its net asset value, or NAV, is calculated each
business day after the close of regular trading on the New York Stock Exchange
(the NAV is not calculated on holidays or other days when the Exchange is
closed). For each of the Funds except the Short-Term Corporate Fund, net asset
value per share is computed by adding up the total value of the Fund's
investments and other assets, subtracting any of its liabilities (debts), and
then dividing by the number of Fund shares outstanding:

TOTAL ASSETS - LIABILITIES
NET ASSET VALUE = -------------------------------
NUMBER OF SHARES OUTSTANDING

Net asset value per share for the Short-Term Corporate Fund is computed in
a similar way, by dividing the net assets attributable to each class by the
number of Fund shares outstanding for each class.
Knowing the daily net asset value is useful to you as a shareholder because
it indicates the current value of your investment. The Fund's NAV, multiplied by
the number of shares you own, gives you the dollar amount you would have
received had you sold all of your shares back to the Fund that day.
A NOTE ON PRICING: Bonds and other fixed-income securities are valued on
the basis of prices provided by a pricing service when such prices are believed
to reflect the fair market value of such securities. When these quotations are
not readily available, investments will be priced at their fair value,
calculated according to procedures adopted by the Funds' Board of Trustees.
Each Fund's share price can be found daily in the mutual fund listings of
most major newspapers under the heading "Vanguard Funds." Different newspapers
use different abbreviations for each Fund, but the most common are: STTSRY,
STFED, STCOR, ITTSRY, ITCORP, GNMA, LTTSRY, and LTCORP.
<PAGE>
38

FINANCIAL HIGHLIGHTS

The following financial highlights tables are intended to help you understand
each Fund's financial performance for the past five years, and certain
information reflects financial results for a single Fund share in each case. The
total returns in each table represent the rate that an investor would have
earned or lost each year on an investment in the Fund (assuming reinvestment of
all dividends and capital gains distributions). This information has been
derived from the financial statements audited by PricewaterhouseCoopers LLP,
independent accountants, whose report--along with each Fund's financial
statements--is included in the Funds' most recent annual report to shareholders.
You may have the annual report sent to you without charge by contacting
Vanguard.

--------------------------------------------------------------------------------
PLAIN TALK ABOUT
HOW TO READ THE FINANCIAL HIGHLIGHTS TABLE

This explanation uses the Short-Term Treasury Fund as an example. The Fund
began fiscal 2000 with a net asset value (price) of $10.37 per share. During
the period, the Fund earned $0.534 per share from investment income (interest).
There was a decline of $0.413 per share in the value of investments held or
sold by the Fund.

Shareholders received $0.551 per share in the form of dividend and capital
gains distributions. A portion of each year's capital gains distributions may
come from the prior year's capital gains.

The earnings ($0.121 per share) minus the distributions ($0.551 per share)
resulted in a share price of $9.94 at the end of the year. This was a decrease
of $0.43 per share (from $10.37 at the beginning of the year to $9.94 at the
end of the year). For a shareholder who reinvested the distributions in the
purchase of more shares, the total return from the Fund was 1.20% for the year.

39
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
VANGUARD SHORT-TERM TREASURY FUND
YEAR ENDED JANUARY 31,
--------------------------------------------------------------------
2000 1999 1998 1997 1996
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $10.37 $10.27 $10.16 $10.36 $ 9.89
--------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .534 .545 .590 .586 .625
Net Realized and Unrealized Gain(Loss) on
Investments (.413) .122 .110 (.200) .470
--------------------------------------------------------------------
Total from Investment Operations .121 .667 .700 .386 1.095
--------------------------------------------------------------------

DISTRIBUTIONS
Dividends from Net Investment Income (.534) (.545) (.590) (.586) (.625)
Distributions from Realized Capital Gains (.017) (.022) -- --
--------------------------------------------------------------------
Total Distributions (.551) (.567) (.590) (.586) (.625)
--------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $ 9.94 $10.37 $10.27 $10.16 $10.36
==============================================================================================================
TOTAL RETURN 1.20% 6.66% 7.11% 3.89% 11.37%
==============================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year (Millions) $1,177 $1,197 $1,009 $970 $919
Ratio of Total Expenses to Average Net Assets 0.27% 0.27% 0.27% 0.25% 0.27%
Ratio of Net Investment Income to
Average Net Assets 5.27% 5.27% 5.80% 5.77% 6.14%
Turnover Rate 124% 132% 83% 86% 93%
==============================================================================================================
</TABLE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
VANGUARD SHORT-TERM FEDERAL FUND
YEAR ENDED JANUARY 31,
--------------------------------------------------------------------
2000 1999 1998 1997 1996
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $10.26 $10.19 $10.11 $10.28 $ 9.79
--------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS .567 .581 .611 .615 .601
Net Investment Income --------------------------------------------------------------------
Net Realized and Unrealized Gain(Loss) on
Investments (.410) .070 .080 (.170) .490
--------------------------------------------------------------------
Total from Investment Operations .157 .651 .691 .445 1.091
--------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.567) (.581) (.611) (.615) (.601)
Distributions from Realized Capital Gains -- -- -- -- --
Total Distributions (.567) (.581) (.611) (.615) (.601)
--------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $ 9.85 $10.26 $10.19 $10.11 $10.28
==============================================================================================================
TOTAL RETURN 1.59% 6.57% 7.06% 4.51% 11.43%
==============================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year (Millions) $1,478 $1,644 $1,460 $1,348 $1,402
Ratio of Total Expenses to Average Net Assets 0.27% 0.27% 0.27% 0.25% 0.27%
Ratio of Net Investment Income to
Average Net Assets 5.64% 5.68% 6.04% 6.09% 5.93%
Turnover Rate 93% 107% 94% 57% 74%
==============================================================================================================
</TABLE>
<PAGE>

40
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
VANGUARD SHORT-TERM CORPORATE FUND
YEAR ENDED JANUARY 31,
--------------------------------------------------------------------
2000 1999 1998 1997 1996
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $10.86 $10.87 $10.75 $10.94 $10.40
--------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .660 .660 .664 .663 .671
Net Realized and Unrealized Gain (Loss) on
Investments (.370) (.010) .120 (.190) .540
--------------------------------------------------------------------
Total from Investment Operations .290 .650 .784 .473 1.211
--------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.660) (.660) (.664) (.663) (.671)
Distributions from Realized Capital Gains -- -- -- -- --
--------------------------------------------------------------------
Total Distributions (.660) (.660) (.664) (.663) (.671)
--------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $10.49 $10.86 $10.87 $10.75 $10.94
==============================================================================================================
TOTAL RETURN 2.77% 6.16% 7.53% 4.52% 11.95%
==============================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year (Millions) $6,731 $5,529 $4,709 $4,531 $3,873
Ratio of Total Expenses to Average Net Assets 0.25% 0.27% 0.28% 0.25% 0.27%
Ratio of Net Investment Income to
Average Net Assets 6.21% 6.08% 6.17% 6.18% 6.23%
Turnover Rate 52% 46% 45% 45% 62%
==============================================================================================================
</TABLE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
VANGUARD INTERMEDIATE-TERM TREASURY FUND
YEAR ENDED JANUARY 31,
--------------------------------------------------------------------
2000 1999 1998 1997 1996
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $11.16 $10.80 $10.37 $10.90 $ 9.76
--------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .625 .630 .647 .649 .662
Net Realized and Unrealized Gain(Loss) on
Investments (1.130) .360 .430 (.530) 1.140
--------------------------------------------------------------------
Total from Investment Operations (.505) .990 1.077 .119 1.802
--------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.625) (.630) (.647) (.649) (.662)
Distributions from Realized Capital Gains -- -- -- -- --
--------------------------------------------------------------------
Total Distributions (.625) (.630) (.647) (.649) (.662)
--------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $10.03 $11.16 $10.80 $10.37 $10.90
==============================================================================================================
TOTAL RETURN -4.59% 9.44% 10.78% 1.28% 18.96%
==============================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year (Millions) $1,652 $1,876 $1,595 $1,279 $1,226
Ratio of Total Expenses to Average Net Assets 0.27% 0.27% 0.27% 0.25% 0.28%
Ratio of Net Investment Income to
Average Net Assets 5.96% 5.76% 6.19% 6.26% 6.34%
Turnover Rate 66% 63% 30% 42% 56%
==============================================================================================================
</TABLE>

<PAGE>
41

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
VANGUARD INTERMEDIATE-TERM CORPORATE FUND
YEAR ENDED JANUARY 31,
--------------------------------------------------------------------
2000 1999 1998 1997 1996
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $10.07 $10.03 $ 9.72 $10.17 $ 9.07
--------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .623 .627 .638 .639 .658
Net Realized and Unrealized Gain (Loss) on
Investments (.894) .122 .321 (.430) 1.110
--------------------------------------------------------------------
Total from InvestmentOperations (.271) .749 .959 .209 1.758
--------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.623) (.627) (.638) (.639) (.658)
Distributions from Realized Capital Gains (.046) (.082) (.011) (.020) --
--------------------------------------------------------------------
Total Distributions (.669) (.709) (.649) (.659) (.658)
--------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $ 9.13 $10.07 $10.03 $ 9.72 $10.17
==============================================================================================================
TOTAL RETURN -2.70% 7.73% 10.24% 2.29% 19.94%
==============================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year (Millions) $1,475 $1,234 $899 $592 $424
Ratio of Total Expenses to Average Net Assets 0.25% 0.27% 0.26% 0.25% 0.28%
Ratio of Net Investment Income to
Average Net Assets 6.60% 6.25% 6.51% 6.61% 6.70%
Turnover Rate 67% 71% 69% 85% 78%
==============================================================================================================
</TABLE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
VANGUARD GNMA FUND
YEAR ENDED JANUARY 31
--------------------------------------------------------------------
2000 1999 1998 1997 1996
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $10.47 $10.48 $10.23 $10.45 $ 9.71
--------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .669 .687 .718 .727 .734
Net Realized and Unrealized Gain (Loss) on
Investments (.760) .002 .253 (.220) .740
--------------------------------------------------------------------------------------------------------------
Total from Investment Operations (.091) .689 .971 .507 1.474
--------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.669) (.687) (.718) (.727) (.734)
Distributions from Realized Capital Gains -- (.012) (.003) -- --
--------------------------------------------------------------------------------------------------------------
Total Distributions (.669) (.699) (.721) (.727) (.734)
--------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $ 9.71 $10.47 $10.48 $10.23 $10.45
==============================================================================================================
TOTAL RETURN -0.89% 6.79% 9.86% 5.15% 15.64%
==============================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year (Millions) $12,228 $11,354 $8,894 $7,400 $6,998
Ratio of Total Expenses to Average Net Assets 0.27% 0.30% 0.31% 0.27% 0.29%
Ratio of Net Investment Income to
Average Net Assets 6.63% 6.56% 6.97% 7.16% 7.22%
Turnover Rate 5% 7% 3% 12% 7%
==============================================================================================================
</TABLE>
<PAGE>
42

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
VANGUARD LONG-TERM TREASURY FUND
YEAR ENDED JANUARY 31,
--------------------------------------------------------------------
2000 1999 1998 1997 1996
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $11.42 $10.79 $ 9.84 $10.73 $ 9.23
--------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .611 .629 .643 .655 .669
Net Realized and Unrealized Gain (Loss) on
Investments (1.560) .630 .950 (.877) 1.725
--------------------------------------------------------------------
Total from Investment Operations (.949) 1.259 1.593 (.222) 2.394
--------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.611) (.629 (.643) (.655) (.669)
Distributions from Realized Capital Gains (.120) -- -- (.013) (.225)
--------------------------------------------------------------------
Total Distributions (.731) (.629) (.643) (.668) (.894)
--------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $ 9.74 $11.42 $10.79 $ 9.84 $10.73
==============================================================================================================
TOTAL RETURN -8.41% 12.02% 16.85% -1.85% 26.72%
==============================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year (Millions) $1,178 $1,450 $1,061 $898 $916
Ratio of Total Expenses to Average Net Assets 0.28% 0.27% 0.27% 0.25% 0.27%
Ratio of Net Investment Income to
Average Net Assets 5.98% 5.69% 6.38% 6.66% 6.57%
Turnover Rate 43% 22% 18% 31% 105%
==============================================================================================================
</TABLE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
VANGUARD LONG-TERM CORPORATE FUND
YEAR ENDED JANUARY 31,
--------------------------------------------------------------------
2000 1999 1998 1997 1996
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $9.38 $9.32 $8.71 $9.43 $8.18
--------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .561 .582 .613 .619 .627
Net Realized and Unrealized Gain (Loss) on
Investments (1.560) .266 .685 (.566) 1.250
--------------------------------------------------------------------
Total from Investment Operations (.684) .848 1.298 .053 1.877
--------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.561) (.582) (.613) (.619) (.627)
Distributions from Realized Capital Gains (.055) (.206) (.075) (.154) --
--------------------------------------------------------------------
Total Distributions (.616) (.788) (.688) (.773) (.627)
--------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $8.08 $9.38 $9.32 $8.71 $9.43
==============================================================================================================
TOTAL RETURN -7.40% 9.52% 15.52% 0.86% 23.64%
==============================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year (Millions) $3,681 $4,232 $3,720 $3,324 $3,376
Ratio of Total Expenses to Average Net Assets 0.30% 0.30% 0.32% 0.28% 0.31%
Ratio of Net Investment Income to
Average Net Assets 6.59% 6.26% 6.87% 7.06% 7.03%
Turnover Rate 7% 43% 33% 30% 49%
==============================================================================================================
</TABLE>

"Standard & Poor's(R)," "S&P(R)," "S&P 500(R)," "Standard & Poor's 500,"
and "500" are trademarks of The McGraw-Hill Companies, Inc.
<PAGE>

--------------------------------------------------------------------------------
INVESTING WITH VANGUARD

Are you looking for the most convenient way to open or add money to a Vanguard
account? Obtain instant access to fund information? Establish an account for a
minor child or for your retirement savings?
Vanguard can help. Our goal is to make it easy and pleasant for you to do
business with us.
The following sections of the prospectus briefly explain the many services
we offer. Booklets providing detailed information are available on the services
marked with a [BOOK]. Please call us to request copies.
--------------------------------------------------------------------------------

SERVICES AND ACCOUNT FEATURES

Vanguard offers many services that make it convenient to buy, sell, or exchange
shares, or to obtain fund or account information.
--------------------------------------------------------------------------------
TELEPHONE REDEMPTIONS (SALES AND EXCHANGES)
Automatically set up for these Funds unless you notify us otherwise.
--------------------------------------------------------------------------------
CHECKWRITING [CKECK]
Method for drawing money from your account by writing a check for $250 or more.
--------------------------------------------------------------------------------
VANGUARD DIRECT DEPOSIT SERVICE [BOOK]
Automatic method for depositing your paycheck or U.S. government payment
(including Social Security and government pension checks) into your account.
--------------------------------------------------------------------------------
VANGUARD AUTOMATIC EXCHANGE SERVICE [BOOK]
Automatic method for moving a fixed amount of money from one Vanguard fund
account to another.
--------------------------------------------------------------------------------
VANGUARD FUND EXPRESS(R) [BOOK]
Electronic method for buying or selling shares. You can transfer money between
your Vanguard fund account and an account at your bank, savings and loan, or
credit union on a systematic schedule or whenever you wish.
--------------------------------------------------------------------------------
VANGUARD DIVIDEND EXPRESS(R) [BOOK]
Electronic method for transferring dividend and/or capital gains distributions
directly from your Vanguard fund account to your bank, savings and loan, or
credit union account.
--------------------------------------------------------------------------------
VANGUARD TELE-ACCOUNT(R) 1-800-662-6273 (ON-BOARD) [BOOK]
Toll-free 24-hour access to Vanguard fund and account information--as well as
some transactions--by using any touch-tone phone. Tele-Account provides total
return, share price, price change, and yield quotations for all Vanguard funds;
gives your account balances and history (e.g., last transaction, latest dividend
distribution); and allows you to sell or exchange fund shares to and from most
Vanguard funds.
--------------------------------------------------------------------------------
ONLINE TRANSACTIONS www.vanguard.com [PC]
You can use your personal computer to perform certain transactions for most
Vanguard funds by accessing our website. To establish this service, you must
register through our website. We will then mail you an account access password
that allows you to process the following financial and administrative
transactions online:
o Open a new account.*
o Buy, sell, or exchange shares of most funds.
o Change your name/address.
<PAGE>
44
o Add/change fund options (including dividend options, Vanguard Fund Express,
bank instructions, checkwriting, and Vanguard Automatic Exchange Service).
(Some restrictions may apply.) Please call our Client Services Department
for assistance.

*Only current Vanguard shareholders can open a new account online, by exchanging
shares from other existing Vanguard accounts.
--------------------------------------------------------------------------------
INVESTOR INFORMATION DEPARTMENT: 1-800-662-7447 (SHIP)
TEXT TELEPHONE:1-800-952-3335
Call Vanguard for information on our funds, fund services, and retirement
accounts, and to request literature.
--------------------------------------------------------------------------------
CLIENT SERVICES DEPARTMENT: 1-800-662-2739 (CREW) TEXT TELEPHONE: 1-800-749-7273
Call Vanguard for information on your account, account transactions, and account
statements.
--------------------------------------------------------------------------------
SERVICES FOR CLIENTS OF VANGUARD'S INSTITUTIONAL DIVISION: 1-888-809-8102
Vanguard's Institutional Division offers a variety of specialized services for
large institutional investors, including the ability to effect account
transactions through private electronic networks and third-party recordkeepers.
--------------------------------------------------------------------------------

TYPES OF ACCOUNTS

Individuals and institutions can establish a variety of accounts with Vanguard.
--------------------------------------------------------------------------------
FOR ONE OR MORE PEOPLE
Open an account in the name of one (individual) or more (joint tenants) people.
--------------------------------------------------------------------------------
FOR HOLDING PERSONAL TRUST ASSETS [BOOK]
Invest assets held in an existing personal trust.
--------------------------------------------------------------------------------
FOR INDIVIDUAL RETIREMENT ACCOUNTS [BOOK]
Open a traditional IRA account or a Roth IRA account. Eligibility and other
requirements are established by federal law and Vanguard custodial account
agreements. For more information, please call 1-800-662-7447 (SHIP).
--------------------------------------------------------------------------------
FOR AN ORGANIZATION [BOOK]
Open an account as a corporation, partnership, endowment, foundation, or other
entity.
--------------------------------------------------------------------------------
FOR THIRD-PARTY TRUSTEE RETIREMENT INVESTMENTS
Open an account as a retirement trust or plan based on an existing corporate or
institutional plan. These accounts are established by the trustee of the
existing plan.
--------------------------------------------------------------------------------
VANGUARD PROTOTYPE PLANS
Open a variety of retirement accounts using Vanguard prototype plans for
individuals, sole proprietorships, and small businesses. For more information,
please call 1-800-662-2003.
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
A NOTE ON INVESTING WITH VANGUARD THROUGH OTHER FIRMS
You may purchase or sell Fund shares through a financial intermediary such as a
bank, broker, or investment adviser. If you invest with Vanguard through an
intermediary, please read that firm's program materials carefully to learn of
any special rules that may apply. For example, special terms may apply to
additional service features, fees, or other policies. Consult your intermediary
to determine when your order will be priced.
--------------------------------------------------------------------------------
<PAGE>

BUYING SHARES

You buy your shares at a Fund's next-determined net asset value after Vanguard
receives your request. As long as your request is received before the close of
trading on the New York Stock Exchange, generally 4:00 p.m. Eastern time, you
will buy your shares at that day's net asset value. You will begin earning
dividends on your investment the following business day. You may convert
Investor Shares of the Short-Term Corporate Fund into Institutional Shares,
provided that you meet the minimum initial investment requirements for
Institutional Shares.
--------------------------------------------------------------------------------
MINIMUM INVESTMENT TO . . .
open a new account
$3,000 (regular account); $1,000 (traditional IRAs and Roth IRAs).

add to an existing account
$100 by mail or exchange; $1,000 by wire.
--------------------------------------------------------------------------------
A NOTE ON LOW BALANCES
Each Fund reserves the right to close any nonretirement account whose balance
falls below the minimum initial investment. The Fund will deduct a $10 annual
fee in June if your nonretirement account balance at that time is below $2,500.
The fee is waived if your total Vanguard account assets are $50,000 or more.
--------------------------------------------------------------------------------
BY MAIL TO . . .[ENVELOPE]
open a new account
Complete and sign the account registration form and enclose your check.

add to an existing account
Mail your check with an Invest-By-Mail form detached from your confirmation
statement to the address listed on the form. Please do not alter Invest-By-Mail
forms, since they are fund- and account-specific.

Make your check payable to: The Vanguard Group-(insert appropriate Fund number;
see below)
Vanguard Short-Term Treasury Fund-32
Vanguard Short-Term Federal Fund-49
Vanguard Short-Term Corporate Fund-39
Vanguard Intermediate-Term Treasury Fund-35
Vanguard Intermediate-Term Corporate Fund-71
Vanguard GNMA Fund-36
Vanguard Long-Term Treasury Fund-83
Vanguard Long-Term Corporate Fund-28

All purchases must be made in U.S. dollars, and checks must be drawn on U.S.
banks.

First-class mail to: Express or Registered mail to:
The Vanguard Group The Vanguard Group
P.O. Box 1110 455 Devon Park Drive
Valley Forge, PA 19482-1110 Wayne, PA 19087-1815
<PAGE>

For clients of Vanguard's Institutional Division . . .

First-class mail to: Express or Registered mail to:
The Vanguard Group The Vanguard Group
P.O. Box 2900 455 Devon Park Drive
Valley Forge, PA 19482-2900 Wayne, PA 19087-1815

--------------------------------------------------------------------------------
IMPORTANT NOTE: To prevent check fraud, Vanguard will not accept checks made
payable to third parties.
--------------------------------------------------------------------------------
BY TELEPHONE TO . . .[TELEPHONE]
open a new account
Call Vanguard Tele-Account* 24 hours a day--or Client Services during business
hours--to exchange from another Vanguard fund account with the same registration
(name, address, taxpayer identification number, and account type).(Note that
some restrictions apply to index fund accounts.)

add to an existing account
Call Vanguard Tele-Account* 24 hours a day--or Client Services during business
hours--to exchange from another Vanguard fund account with the same registration
(name, address, taxpayer identification number, and account type). (Note that
some restrictions apply to index fund accounts.) Use Vanguard Fund Express (see
"Services and Account Features") to transfer assets from your bank account. Call
Client Services before your first use to verify that this option is available.

Vanguard Tele-Account Client Services
1-800-662-6273 1-800-662-2739

*You must obtain a Personal Identification Number (PIN) through Tele-Account at
least seven days before you request your first exchange.
--------------------------------------------------------------------------------
IMPORTANT NOTE: Once you have initiated a telephone transaction and a
confirmation number has been assigned, the transaction cannot be revoked. We
reserve the right to refuse any purchase request.
--------------------------------------------------------------------------------
BY WIRE TO OPEN A NEW ACCOUNT OR ADD TO AN EXISTING ACCOUNT [WIRE]
Call Client Services to arrange your wire transaction. Wire transactions to
retirement accounts are only available for asset transfers and direct rollovers
from other financial institutions. Individual IRA contributions will not be
accepted by wire.
--------------------------------------------------------------------------------

Wire to:
FRB ABA 021001088 HSBC Bank USA

For credit to:
Account: 000112046
Vanguard Incoming Wire Account
<PAGE>

47
In favor of:
Vanguard Short-Term Treasury Fund-32
Vanguard Short-Term Federal Fund-49
Vanguard Short-Term Corporate Fund-39
Vanguard Intermediate-Term Treasury Fund-35
Vanguard Intermediate-Term Corporate Fund-71
Vanguard GNMA Fund-36
Vanguard Long-Term Treasury Fund-83
Vanguard Long-Term Corporate Fund-28
[Account number, or temporary number for a new account]
[Registered account owner(s)]
[Registered address]

--------------------------------------------------------------------------------
You can redeem (that is, sell or exchange) shares purchased by check or Vanguard
Fund Express at any time. However, while your redemption request will be
processed at the next-determined net asset value after it is received, your
redemption proceeds will not be available until payment for your purchase is
collected, which may take up to ten calendar days.
--------------------------------------------------------------------------------
A NOTE ON LARGE PURCHASES
It is important that you call Vanguard before you invest a large dollar amount.
It is our responsibility to consider the interests of all Fund shareholders and
so we reserve the right to refuse any purchase that may disrupt a Fund's
operation or performance.
--------------------------------------------------------------------------------

REDEEMING SHARES

This section describes how you can redeem--that is, sell or exchange--a Fund's
shares.

When Selling Shares:
o Vanguard sends the redemption proceeds to you or a designated third party.*
o You can sell all or part of your Fund shares at any time.
*May require a signature guarantee; see footnote on page 50.

When Exchanging Shares:
o The redemption proceeds are used to purchase shares of a different Vanguard
fund.
o You must meet the receiving fund's minimum investment requirements.
o Vanguard reserves the right to revise or terminate the exchange privilege,
limit the amount of an exchange, or reject an exchange at any time, without
notice.
o In order to exchange into an account with a different registration
(including a different name, address, or taxpayer identification number),
you must obtain the guaranteed signatures of all current account owners on
your written instructions.

In both cases, your transaction will be based on the Fund's next-determined
share price, subject to any special rules discussed in the "Redeeming Shares"
section of this prospectus.

--------------------------------------------------------------------------------
HOW TO REQUEST A REDEMPTION
You can request a redemption from your Fund account in any one of three ways:
online, by telephone, or by mail. You can also sell shares by check.
<PAGE>
48

The Vanguard funds whose shares you cannot exchange online or by telephone
are: VANGUARD U.S. STOCK INDEX FUNDS, VANGUARD BALANCED INDEX FUND, VANGUARD
INTERNATIONAL STOCK INDEX FUNDS, VANGUARD REIT INDEX FUND, and VANGUARD GROWTH
AND INCOME FUND. These funds do, however, permit online and telephone exchanges
within IRAs and other retirement accounts. If you sell shares of these funds
online, you will receive a redemption check at your address of record.
NOTE: Once a redemption is initiated and a confirmation number given, the
transaction CANNOT be canceled.
--------------------------------------------------------------------------------
ONLINE REQUESTS www.vanguard.com LOGO
You can use your personal computer to sell or exchange shares of most Vanguard
funds by accessing our website. To establish this service, you must register
through our website. We will then mail you an account access password that will
enable you to sell or exchange shares online (as well as perform other
transactions).
--------------------------------------------------------------------------------
TELEPHONE REQUESTS LOGO
All Account Types Except Retirement:
Call Vanguard Tele-Account 24 hours a day--or Client Services during business
hours--to sell or exchange shares. You can exchange shares from a Fund to open
an account in another Vanguard fund or to add to an existing Vanguard fund
account with an identical registration.

Retirement Accounts:
You can exchange--but not sell--shares by calling Tele-Account or Client
Services.

Vanguard Tele-Account Client Services
1-800-662-6273 1-800-662-2739
--------------------------------------------------------------------------------
SPECIAL INFORMATION: We will automatically establish the telephone redemption
option for your account, unless you instruct us otherwise in writing. While
telephone redemption is easy and convenient, this account feature involves a
risk of loss from unauthorized or fraudulent transactions. Vanguard will take
reasonable precautions to protect your account from fraud. You should do the
same by keeping your account information private and immediately reviewing any
account statements that we send to you. Make sure to contact Vanguard
immediately about any transaction you believe to be unauthorized.
--------------------------------------------------------------------------------
We reserve the right to refuse a telephone redemption if the caller is unable to
provide:
o The ten-digit account number.
o The name and address exactly as registered on the account.
o The primary Social Security or employer identification number as registered
on the account.
o The Personal Identification Number (PIN), if applicable (for instance,
Tele-Account). Please note that Vanguard will not be responsible for any
account losses due to telephone fraud, so long as we have taken reasonable
steps to verify the caller's identity. If you wish to remove the telephone
redemption feature from your account, please notify us in writing.
--------------------------------------------------------------------------------
A NOTE ON UNUSUAL CIRCUMSTANCES
Vanguard reserves the right to revise or terminate the telephone redemption
privilege at any time, without notice. In addition, Vanguard can stop selling
shares or postpone payment at times when the New York Stock Exchange is closed
or under any emergency circumstances as determined by the U.S. Securities and
Exchange Commission. If you experience difficulty making a telephone redemption
during periods of drastic economic or market change, you can send us your
request by regular or express mail. Follow the instructions on selling or
exchanging shares by mail in this section.
--------------------------------------------------------------------------------
<PAGE>

--------------------------------------------------------------------------------
MAIL REQUESTS [ENVELOPE]
All Account Types Except Retirement:
Send a letter of instruction signed by all registered account holders. Include
the fund name and account number and (if you are selling) a dollar amount or
number of shares OR (if you are exchanging) the name of the fund you want to
exchange into and a dollar amount or number of shares. To exchange into an
account with a different registration (including a different name, address,
taxpayer identification number, or account type), you must provide Vanguard with
written instructions that include the guaranteed signatures of all current
owners of the fund from which you wish to redeem.

Vanguard Retirement Accounts:
For information on how to request distributions from:
o Traditional IRAs and Roth IRAs--call Client Services.
o SEP-IRAs, SIMPLE IRAs, 403(b)(7) custodial accounts, and Profit-Sharing and
Money Purchase Pension (Keogh) Plans--call Individual Retirement Plans at
1-800-662-2003.

Depending on your account registration type, additional documentation may be
required.

First-class mail to: Express or Registered mail to:
The Vanguard Group The Vanguard Group
P.O. Box 1110 455 Devon Park Drive
Valley Forge, PA 19482-1110 Wayne, PA 19087-1815

For clients of Vanguard's Institutional Division . . .

First-class mail to: Express or Registered mail to:
The Vanguard Group The Vanguard Group
P.O. Box 2900 455 Devon Park Drive
Valley Forge, PA 19482-2900 Wayne, PA 19087-1815

--------------------------------------------------------------------------------
CHECK REQUESTS [CHECK]
You can sell shares by writing a check for $250 or more.
--------------------------------------------------------------------------------
A NOTE ON LARGE REDEMPTIONS
It is important that you call Vanguard before you redeem a large dollar amount.
It is our responsibility to consider the interests of all fund shareholders, and
so we reserve the right to delay delivery of your redemption proceeds--up to
seven days--if the amount may disrupt a Fund's operation or performance.

If you redeem more than $250,000 worth of Fund shares within any 90-day period,
each Fund reserves the right to pay part or all of the redemption proceeds above
$250,000 in-kind, i.e., in securities, rather than in cash. If payment is made
in-kind, you may incur brokerage commissions if you elect to sell the securities
for cash.
--------------------------------------------------------------------------------
OPTIONS FOR REDEMPTION PROCEEDS
You may receive your redemption proceeds in one of four ways: check, wire (money
market funds and other daily dividend funds only) exchange to another Vanguard
fund, or Fund Express redemption.
--------------------------------------------------------------------------------
<PAGE>
50

--------------------------------------------------------------------------------
CHECK REDEMPTIONS
Normally, Vanguard will mail your check within two business days of a
redemption.
--------------------------------------------------------------------------------
WIRE REDEMPTIONS [WIRE]
The wire redemption option is not automatic; you must establish it by completing
a special form or the appropriate section of your account application. Wire
redemptions can be initiated by mail or by telephone during Vanguard's business
hours, but not online.

For Money Market Funds:
For telephone requests made by 10:30 a.m. Eastern time, the wire will arrive at
your bank by the close of business that same day. Requests made by 4:00 p.m.
Eastern time will arrive at your bank by the close of business on the following
business day.

For Other Daily Dividend Funds:
For telephone requests made by 4:00 p.m. Eastern time, the wire will arrive at
your bank by the close of business on the following business day.
--------------------------------------------------------------------------------
NOTE: Wire redemptions of less than $5,000 are subject to a $5 processing fee.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EXCHANGE REDEMPTIONS
As described above, an exchange involves using the proceeds of your redemption
to purchase shares of another Vanguard fund.
--------------------------------------------------------------------------------
FUND EXPRESS REDEMPTIONS
Vanguard will electronically transfer funds to your pre-linked checking or
savings account.

FOR OUR MUTUAL PROTECTION
For your best interests and ours, Vanguard applies these additional requirements
to redemptions:
REQUEST IN "GOOD ORDER"
All redemption requests must be received by Vanguard in "good order." This means
that your request must include:
o The Fund name and account number.
o The amount of the transaction (in dollars or shares).
o Signatures of all owners exactly as registered on the account (for mail
requests).
o Signature guarantees (if required).*
o Any supporting legal documentation that may be required.
o Any outstanding certificates representing shares to be redeemed.

*For instance, a signature guarantee must be provided by all registered account
shareholders when redemption proceeds are to be sent to a different person or
address. A signature guarantee can be obtained from most commercial and savings
banks, credit unions, trust companies, or member firms of a U.S. stock
exchange.

<PAGE>

A "round trip" is a redemption from a Fund followed by a purchase back into the
Fund. Also, "round trip" covers transactions accomplished by any combination of
methods, including transactions conducted by check, wire, or exchange to/from
another Vanguard fund. "Substantive" means a dollar amount that Vanguard
determines, in its sole discretion, could adversely affect the management of the
Fund.
--------------------------------------------------------------------------------
RETURN YOUR SHARE CERTIFICATES
Any portion of your account represented by share certificates cannot be redeemed
until you return the certificates to Vanguard. Certificates must be returned
(unsigned), along with a letter requesting the sale or exchange you wish to
process, via certified mail to:

The Vanguard Group
455 Devon Park Drive
Wayne, PA 19087-1815
--------------------------------------------------------------------------------
ALL TRADES ARE FINAL
Vanguard will not cancel any transaction request (including any purchase or
redemption) that we believe to be authentic once the request has been initiated
and a confirmation number assigned.
--------------------------------------------------------------------------------
UNCASHED CHECKS
Please cash your distribution or redemption checks promptly. Vanguard will not
pay interest on uncashed checks.
--------------------------------------------------------------------------------

TRANSFERRING REGISTRATION

You can transfer the registration of your Fund shares to another owner by
completing a transfer form and sending it to Vanguard.

First-class mail to: Express or Registered mail to:
The Vanguard Group The Vanguard Group
P.O. Box 1110 455 Devon Park Drive
Valley Forge, PA 19482-1110 Wayne, PA 19087-1815

For clients of Vanguard's Institutional Division . . .

FUND AND ACCOUNT UPDATES

To keep each Fund's costs as low as possible (so that you and other
shareholders can keep more of the Fund's investment earnings), Vanguard attempts
to eliminate duplicate mailings to the same address. When two or more Fund
shareholders have the same last name and address, we send just one Fund report
to that address--instead of mailing separate reports to each shareholder. If you
want us to send separate reports, notify our Client Services Department at
1-800-662-2739.

--------------------------------------------------------------------------------
CONFIRMATION STATEMENT
Sent each time you buy, sell, or exchange shares; confirms the trade date and
the amount of your transaction.
--------------------------------------------------------------------------------
PORTFOLIO SUMMARY [BOOK]
Mailed quarterly for most accounts; shows the market value of your account at
the close of the statement period, as well as distributions, purchases, sales,
and exchanges for the current calendar year.
--------------------------------------------------------------------------------
FUND FINANCIAL REPORTS
Mailed in March and September for these Funds.
--------------------------------------------------------------------------------
TAX STATEMENTS
Generally mailed in January; report previous year's dividend and capital gains
distributions, proceeds from the sale of shares, and distributions from IRAs or
other retirement accounts.
--------------------------------------------------------------------------------
AVERAGE COST REVIEW STATEMENT [BOOK]
Issued quarterly for most taxable accounts (accompanies your Portfolio Summary);
shows the average cost of shares that you redeemed during the calendar year,
using only the average cost single category method.
--------------------------------------------------------------------------------
CHECKWRITING STATEMENT
Sent monthly to shareholders using Vanguard's checkwriting option. Our statement
provides images of the front and back of each checkwriting draft paid in the
previous month. This consolidated statement is sent instead of the original
canceled drafts, which will not be returned.
--------------------------------------------------------------------------------
<PAGE>

GLOSSARY OF INVESTMENT TERMS

AVERAGE MATURITY
The average length of time until bonds held by a fund reach maturity (or are
called) and are repaid. In general, the longer the average maturity, the more a
fund's share price will fluctuate in response to changes in market interest
rates.

BOND
A debt security (IOU) issued by a corporation, government, or government agency
in exchange for the money you lend it. In most instances, the issuer agrees to
pay back the loan by a specific date and make regular interest payments until
that date.

CAPITAL GAINS DISTRIBUTION
Payment to mutual fund shareholders of gains realized on securities that the
fund has sold at a profit, minus any realized losses.

CASH RESERVES
Cash deposits, short-term bank deposits, and money market instruments which
include U.S. Treasury bills, bank certificates of deposit (CDs), repurchase
agreements, commercial paper, and banker's acceptances.

CREDIT QUALITY
An assessment of the ability of a preferred stock issuer to pay dividends in a
timely manner.

DIVIDEND INCOME
Payment to shareholders of income from interest or dividends generated by a
fund's investments.

EXPENSE RATIO
The percentage of a fund's average net assets used to pay its expenses. The
expense ratio includes management fees, administrative fees, and any 12b-1
distribution fees.

FACE VALUE
The amount to be paid at maturity of a bond; also known as the par value or
principal.

INVESTMENT ADVISER
An organization that makes the day-to-day decisions regarding a fund's
investments.

INVESTMENT-GRADE
A bond whose credit quality is considered by independent bond-rating agencies to
be sufficient to ensure timely payment of principal and interest under current
economic circumstances. Bonds rated in one of the four highest rating categories
are considered "investment-grade."

MATURITY
The date when a bond issuer agrees to repay the bond's principal, or face value,
to the bond's buyer.

NET ASSET VALUE (NAV)
The market value of a mutual fund's total assets, minus liabilities, divided by
the number of shares outstanding. The value of a single share is called its
share value or share price.

PRINCIPAL
The amount of money you put into an investment.

SECURITIES
Stocks, bonds, money market instruments, and interests in other investment
vehicles.

TOTAL RETURN
A percentage change, over a specified time period, in a mutual fund's net asset
value, with the ending net asset value adjusted to account for the reinvestment
of all distributions of dividends and capital gains.

VOLATILITY
The fluctuations in value of a mutual fund or other security. The greater a
fund's volatility, the wider the fluctuations between its high and low prices.

YIELD
Income (interest or dividends) earned by an investment, expressed as a
percentage of the investment's price.
<PAGE>
[SHIP LOGO]
[THE VANGUARD GROUP(R)]
Post Office Box 2600
Valley Forge, PA 19482-2600

FOR MORE INFORMATION
If you'd like more information about
Vanguard Bond Funds, the following
documents are available free
upon request:

ANNUAL/SEMIANNUAL REPORTS TO
SHAREHOLDERS
Additional information about the
Funds' investments is available in
the Funds' annual and semiannual
reports to shareholders.

STATEMENT OF ADDITIONAL
INFORMATION (SAI)
The SAI provides more detailed
information about the Funds.

The current annual and semiannual
reports and the SAI are incorporated
by reference into (and are thus
legally a part of) this prospectus.

To receive a free copy of the latest
annual or semiannual report or the
SAI, or to request additional
information about the Funds or other
Vanguard funds, please contact us
as follows:

THE VANGUARD GROUP
INVESTOR INFORMATION
DEPARTMENT
P.O. BOX 2600
VALLEY FORGE,
PA 19482-2600

TELEPHONE:
1-800-662-7447 (SHIP)

TEXT TELEPHONE:
1-800-952-3335

WORLD WIDE WEB:
WWW.VANGUARD.COM

If you are a current Fund
shareholder and would like
information about your account,
account transactions, and/or a
ccount statements, please call:

CLIENT SERVICES DEPARTMENT
TELEPHONE:
1-800-662-2739 (CREW)

TEXT TELEPHONE:
1-800-662-2738

INFORMATION PROVIDED BY THE
SECURITIES AND EXCHANGE
COMMISSION (SEC)
You can review and copy
information about the Funds
(including the SAI) at the SEC's
Public Reference Room in
Washington, DC. To find out more
about this public service, call the
SEC at 1-202-942-8090. Reports and
other information about the Funds
are also available on the SEC's
website (www.sec.gov), or you can
receive copies of this information,
for a fee, by electronic request at
the following e-mail address:
[email protected], or by writing
the Public Reference Section,
Securities and Exchange
Commission, Washington, DC
20549-0102.

Funds' Investment Company Act
file number: 811-2368

P028N-052000
<PAGE>

[SHIP GRAPHIC]

VANGUARD(R)
BOND FUNDS
Participant Prospectus
May 31, 2000

___________
This prospectus contains
financial data for the Funds
through the fiscal year
ended January 31, 2000.

VANGUARD SHORT-TERM
TREASURY FUND

VANGUARD SHORT-TERM
FEDERAL FUND

VANGUARD SHORT-TERM
CORPORATE FUND

VANGUARD INTERMEDIATE-
TERM TREASURY FUND

VANGUARD INTERMEDIATE-
TERM CORPORATE FUND

VANGUARD GNMA FUND

VANGUARD LONG-TERM
TREASURY FUND

VANGUARD LONG-TERM
CORPORATE FUND

[A MEMBER OF THE VANGUARD GROUP(R) LOGO]
<PAGE>

VANGUARD BOND FUNDS
Participant Prospectus
May 31, 2000
A Group of Bond Mutual Funds

2 FUND PROFILES 34 THE FUNDS AND VANGUARD

2 Vanguard Short-Term Treasury Fund 34 INVESTMENT ADVISERS

5 Vanguard Short-Term Federal Fund 35 DIVIDENDS, CAPITAL GAINS, AND
TAXES
8 Vanguard Short-Term Corporate Fund
36 SHARE PRICE
11 Vanguard Intermediate-TermTreasury Fund
37 FINANCIAL HIGHLIGHTS
14 Vanguard Intermediate-Term Corporate Fund
42 INVESTING WITH VANGUARD
17 Vanguard GNMA Fund
43 ACCESSING FUND INFORMATION
20 Vanguard Long-Term Treasury Fund BY COMPUTER

23 Vanguard Long-Term Corporate Fund GLOSSARY (inside back cover)

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
WHY READING THIS PROSPECTUS IS IMPORTANT

This prospectus explains the objective, risks, and strategies of eight Vanguard
bond funds. To highlight terms and concepts important to mutual fund investors,
we have provided "Plain Talk(R)" explanations along the way. Reading the
prospectus will help you to decide which Funds, if any, are the right investment
for you. We suggest that you keep it for future reference.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
IMPORTANT NOTE

This prospectus is intended for participants in employer-sponsored retirement or
savings plans. Another version--for investors who would like to open a personal
investment account--can be obtained by calling Vanguard at 1-800-662-7447.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
IMPORTANT NOTE ON THE SHORT-TERM CORPORATE FUND

AN INTRODUCTION TO VANGUARD BOND FUNDS

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
DOLLAR-WEIGHTED AVERAGE
FUND PRIMARY INVESTMENTS MATURITY
---------------------------------------------------------------------------------------------
<S> <C> <C>
Short-Term Treasury U.S. Treasury bonds 1-3 years
Short-Term Federal U.S. government agency bonds 1-3 years
Short-Term Corporate Investment-grade corporate bonds 1-3 years
Intermediate-Term Treasury U.S. Treasury bonds 5-10 years
Intermediate-Term Corporate Investment-grade corporate bonds 5-10 years
GNMA GNMA mortgage certificates Generally 5-10 years
Long-Term Treasury U.S. Treasury bonds 15-30 years
Long-Term Corporate Investment-grade corporate bonds 15-25 years
---------------------------------------------------------------------------------------------
</TABLE>

On the following pages, you'll find profiles that summarize key features of
each Fund. Following the profiles, there is important additional information
about the Funds.
<PAGE>
2

FUND PROFILE--
VANGUARD(R) SHORT-TERM TREASURY FUND

The following profile summarizes key features of Vanguard Short-Term Treasury
Fund.

INVESTMENT OBJECTIVE
The Fund seeks to provide a high level of current income and preserve investors'
principal.

ANNUAL FUND OPERATING EXPENSES (expenses deducted from the Fund's assets)
Management Expenses: 0.24%
12b-1 Distribution Fee: None
Other Expenses: 0.03%
TOTAL ANNUAL FUND OPERATING EXPENSES: 0.27%

-------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------
$28 $87 $152 $343
-------------------------------------------------

THIS EXAMPLE SHOULD NOT BE CONSIDERED TO REPRESENT ACTUAL EXPENSES OR
PERFORMANCE FROM THE PAST OR FOR THE FUTURE. ACTUAL FUTURE EXPENSES MAY BE
HIGHER OR LOWER THAN THOSE SHOWN.
<PAGE>
4

-------------------------------------------------------------------------------
ADDITIONAL INFORMATION
DIVIDENDS AND CAPITAL GAINS NEWSPAPER ABBREVIATION
Dividends are declared daily and distributed on the STTsry
first business day of each month; capital gains, if
any, are distributed annually in December VANGUARD FUND NUMBER
032
INVESTMENT ADVISER
The Vanguard Group, Valley Forge, Pa., CUSIP NUMBER
since inception 922031703

INCEPTION DATE TICKER SYMBOL
October 28, 1991 VFISX

NET ASSETS AS OF JANUARY 31, 2000
$1.18 billion
-------------------------------------------------------------------------------
<PAGE>

FUND PROFILE--
VANGUARD(R) SHORT-TERM FEDERAL FUND

The following profile summarizes key features of Vanguard Short-Term Federal
Fund.

INVESTMENT OBJECTIVE
The Fund seeks to provide a high level of current income and preserve investors'
principal.

PERFORMANCE/RISK INFORMATION
The bar chart and table below provide an indication of the risk of investing in
the Fund. The bar chart shows the Fund's performance in each calendar year over
a ten-year period. The table shows how the Fund's average annual total returns
for one, five, and ten calendar years compare with those of a broad-based bond
market index. Keep in mind that the Fund's past performance does not indicate
how it will perform in the future.

ANNUAL FUND OPERATING EXPENSES (expenses deducted from the Fund's assets)
Management Expenses: 0.24%
12b-1 Distribution Fee: None
Other Expenses: 0.03%
TOTAL ANNUAL FUND OPERATING EXPENSES: 0.27%

-------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------
$28 $87 $152 $343
-------------------------------------------------

THIS EXAMPLE SHOULD NOT BE CONSIDERED TO REPRESENT ACTUAL EXPENSES OR
PERFORMANCE FROM THE PAST OR FOR THE FUTURE. ACTUAL FUTURE EXPENSES MAY BE
HIGHER OR LOWER THAN THOSE SHOWN.
<PAGE>
7

--------------------------------------------------------------------------------
ADDITIONAL INFORMATION
DIVIDENDS AND CAPITAL GAINS NEWSPAPER ABBREVIATION
Dividends are declared daily and distributed on the STFed
first business day of each month; capital gains, if
any, are distributed annually in December VANGUARD FUND NUMBER
049
INVESTMENT ADVISER
The Vanguard Group, Valley Forge, Pa., since inception CUSIP NUMBER
922031604
INCEPTION DATE
December 31, 1987 TICKER SYMBOL
VSGBX
NET ASSETS AS OF JANUARY 31, 2000
$1.48 billion
--------------------------------------------------------------------------------
<PAGE>
8

FUND PROFILE--
VANGUARD(R) SHORT-TERM CORPORATE FUND

The following profile summarizes key features of Vanguard Short-Term Corporate
Fund.

INVESTMENT OBJECTIVE
The Fund seeks to provide a high level of current income and preserve investors'
principal.

PERFORMANCE/RISK INFORMATION

ANNUAL FUND OPERATING EXPENSES (expenses deducted from the Fund's assets)
Management Expenses: 0.23%
12b-1 Distribution Fee: None
Other Expenses: 0.02%
TOTAL ANNUAL FUND OPERATING EXPENSES: 0.25%

-------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------
$26 $80 $141 $318
-------------------------------------------------

THIS EXAMPLE SHOULD NOT BE CONSIDERED TO REPRESENT ACTUAL EXPENSES OR
PERFORMANCE FROM THE PAST OR FOR THE FUTURE. ACTUAL FUTURE EXPENSES MAY BE
HIGHER OR LOWER THAN THOSE SHOWN.
<PAGE>
10

-------------------------------------------------------------------------------
ADDITIONAL INFORMATION
DIVIDENDS AND CAPITAL GAINS NEWSPAPER ABBREVIATION
Dividends are declared daily and distributed on the STCor
first business day of each month; capital gains, if VANGUARD FUND NUMBER
any, are distributed annually in December 039

INVESTMENT ADVISER CUSIP NUMBER
The Vanguard Group, Valley Forge, Pa., since inception 922031406

INCEPTION DATE TICKER SYMBOL
October 29, 1982 VFSTX

NET ASSETS (ALL SHARE CLASSES) AS OF
JANUARY 31, 2000
$7.17 billion
-------------------------------------------------------------------------------
<PAGE>

11
FUND PROFILE--
VANGUARD(R) INTERMEDIATE-TERM TREASURY FUND

The following profile summarizes key features of Vanguard Intermediate-Term
Treasury Fund.

INVESTMENT OBJECTIVE
The Fund seeks to provide a high level of current income and preserve investors'
principal.

ANNUAL FUND OPERATING EXPENSES (expenses deducted from the Fund's assets)
Management Expenses: 0.24%
12b-1 Distribution Fee: None
Other Expenses: 0.03%
TOTAL ANNUAL FUND OPERATING EXPENSES: 0.27%

-------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------
$28 $87 $152 $343
-------------------------------------------------

THIS EXAMPLE SHOULD NOT BE CONSIDERED TO REPRESENT ACTUAL EXPENSES OR
PERFORMANCE FROM THE PAST OR FOR THE FUTURE. ACTUAL FUTURE EXPENSES MAY BE
HIGHER OR LOWER THAN THOSE SHOWN.
<PAGE>

--------------------------------------------------------------------------------
ADDITIONAL INFORMATION
DIVIDENDS AND CAPITAL GAINS NEWSPAPER ABBREVIATION
Dividends are declared daily and distributed on the ITTsry
first business day of each month; capital gains, if
any, are distributed annually in December VANGUARD FUND NUMBER
035
INVESTMENT ADVISER
The Vanguard Group, Valley Forge, Pa., since inception CUSIP NUMBER
922031802
INCEPTION DATE
October 28, 1991 TICKER SYMBOL
VFITX
NET ASSETS AS OF JANUARY 31, 2000
$1.65 billion
--------------------------------------------------------------------------------
<PAGE>
14

FUND PROFILE--
VANGUARD(R) INTERMEDIATE-TERM CORPORATE FUND

The following profile summarizes key features of Vanguard Intermediate-Term
Corporate Fund.

INVESTMENT OBJECTIVE
The Fund seeks to provide a high level of current income and preserve investors'
principal.

INVESTMENT STRATEGIES
The Fund invests in a variety of high-quality and, to a lesser extent,
medium-quality fixed-income securities, primarily short-term and
intermediate-term corporate bonds. High- quality bonds are those rated the
equivalent of "A3" or better by Moody's Investors Service, Inc. or another
independent rating agency; medium-quality bonds are those rated the equivalent
of Moody's "Baa1", "Baa2", or "Baa3." The Fund is permitted to invest in foreign
bonds to a limited extent, so long as they are denominated in U.S. dollars. The
Fund will generally maintain a dollar-weighted average maturity of between five
and ten years. For more information, see "Investment Strategies" under MORE ON
THE FUNDS.

-------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR YEARS ENDED DECEMBER 31, 1999
-------------------------------------------------------------------------
1 YEAR 5 YEARS SINCE INCEPTION*
-------------------------------------------------------------------------
Vanguard Intermediate-Term -1.53% 7.71% 5.50%
Corporate Fund
Lehman Brothers 5-10 Year -2.22 8.05 5.83
Investment- Grade Debt Index
-------------------------------------------------------------------------
*November 1, 1993.
-------------------------------------------------------------------------

ANNUAL FUND OPERATING EXPENSES (expenses deducted from the Fund's assets)
Management Expenses: 0.23%
12b-1 Distribution Fee: None
Other Expenses: 0.02%
TOTAL ANNUAL FUND OPERATING EXPENSES: 0.25%
<PAGE>
16

The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. It illustrates the
hypothetical expenses that you would incur over various periods if you invest
$10,000 in the Fund. This example assumes that the Fund provides a return of 5%
a year, and that operating expenses remain the same. The results apply whether
or not you redeem your investment at the end of each period.

------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------------------------------------------
$26 $80 $141 $318
------------------------------------------------

THIS EXAMPLE SHOULD NOT BE CONSIDERED TO REPRESENT ACTUAL EXPENSES OR
PERFORMANCE FROM THE PAST OR FOR THE FUTURE. ACTUAL FUTURE EXPENSES MAY BE
HIGHER OR LOWER THAN THOSE SHOWN.

--------------------------------------------------------------------------------
ADDITIONAL INFORMATION
DIVIDENDS AND CAPITAL GAINS NEWSPAPER ABBREVIATION
Dividends are declared daily and distributed on the ITCorp
first business day of each month; capital gains, if
any, are for minors distributed annually in December VANGUARD FUND NUMBER
071
INVESTMENT ADVISER
The Vanguard Group, Valley Forge, Pa., since inception CUSIP NUMBER
922031885
INCEPTION DATE
November 1, 1993 TICKER SYMBOL
VFICX
NET ASSETS AS OF JANUARY 31, 2000
$1.48 billion
--------------------------------------------------------------------------------
<PAGE>

17
FUND PROFILE--
VANGUARD(R) GNMA FUND

The following profile summarizes key features of Vanguard GNMA Fund.

INVESTMENT OBJECTIVE
The Fund seeks to provide a high level of current income and preserve investors'
principal.

PERFORMANCE/RISK INFORMATION
The following bar chart and table provide an indication of the risk of investing
in the Fund. The bar chart shows the Fund's performance in each calendar year
over a ten-year period. The table shows how the Fund's average annual total
returns for one, five, and ten calendar years compare with those of a
broad-based bond market index. Keep in mind that the Fund's past performance
does not indicate how it will perform in the future.
<PAGE>

ANNUAL FUND OPERATING EXPENSES (expenses deducted from the Fund's assets)
Management Expenses: 0.24%
12b-1 Distribution Fee: None
Other Expenses: 0.03%
TOTAL ANNUAL FUND OPERATING EXPENSES: 0.27%

<PAGE>
19

-------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------
$28 $87 $152 $343
-------------------------------------------------

INCEPTION DATE TICKER SYMBOL
June 27, 1980 VFIIX

NET ASSETS AS OF JANUARY 31, 2000
$12.23 billion
-----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
20

FUND PROFILE--
VANGUARD(R) LONG-TERM TREASURY FUND

The following profile summarizes key features of Vanguard Long-Term Treasury
Fund.

INVESTMENT OBJECTIVE
The Fund seeks to provide a high level of current income and preserve investors'
principal.

PERFORMANCE/RISK INFORMATION
The bar chart and table below provide an indication of the risk of investing in
the Fund. The bar chart shows the Fund's performance in each calendar year over
a ten-year period. The table shows how the Fund's average annual total returns
for one, five, and ten calendar years compare with those of a broad-based bond
market index. Keep in mind that the Fund's past performance does not indicate
how it will perform in the future.

-----------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR YEARS ENDED DECEMBER 31, 1999
-----------------------------------------------------------------
1 YEAR 5 YEARS 10 YEARS
-----------------------------------------------------------------
Vanguard Long-Term Treasury Fund -8.66% 8.61% 8.15%
Lehman Brothers Long U.S. Treasury
Bond Index -8.74 9.08 8.56
-----------------------------------------------------------------

ANNUAL FUND OPERATING EXPENSES (expenses deducted from the Fund's assets)
Management Expenses: 0.25%
12b-1 Distribution Fee: None
Other Expenses: 0.03%
TOTAL ANNUAL FUND OPERATING EXPENSES: 0.28%

------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------------------------------------------
$29 $90 $157 $356
------------------------------------------------

THIS EXAMPLE SHOULD NOT BE CONSIDERED TO REPRESENT ACTUAL EXPENSES OR
PERFORMANCE FROM THE PAST OR FOR THE FUTURE. ACTUAL FUTURE EXPENSES MAY BE
HIGHER OR LOWER THAN THOSE SHOWN.
<PAGE>
22

INCEPTION DATE TICKER SYMBOL
May 19, 1986 VUSTX

NET ASSETS AS OF JANUARY 31, 2000
$1.18 billion
--------------------------------------------------------------------------------
<PAGE>

FUND PROFILE--
VANGUARD(R) LONG-TERM CORPORATE FUND

The following profile summarizes key features of Vanguard Long-Term Corporate
Fund.

INVESTMENT OBJECTIVE
The Fund seeks to provide a high level of current income and preserve investors'
principal.

PERFORMANCE/RISK INFORMATION
The following bar chart and table provide an indication of the risk of investing
in the Fund. The bar chart shows the Fund's performance in each calendar year
over a ten-year period. The table shows how the Fund's average annual total
returns for one, five, and ten calendar years compare with those of a
broad-based bond market index. Keep in mind that the Fund's past performance
does not indicate how it will perform in the future.
<PAGE>
24

-------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR YEARS ENDED DECEMBER 31, 1999
-------------------------------------------------------------------
1 YEAR 5 YEARS 10 YEARS
-------------------------------------------------------------------
Vanguard Long-Term Corporate Fund -6.23% 8.31% 8.58%
Lehman Brothers Long Corporate AA or
Better Bond Index -7.00 8.44 8.35
-------------------------------------------------------------------

------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------------------------------------------
$31 $97 $169 $381
------------------------------------------------

THIS EXAMPLE SHOULD NOT BE CONSIDERED TO REPRESENT ACTUAL EXPENSES OR
PERFORMANCE FROM THE PAST OR FOR THE FUTURE. ACTUAL FUTURE EXPENSES MAY BE
HIGHER OR LOWER THAN THOSE SHOWN.

<TABLE>
<CAPTION>
<S> <C>
-------------------------------------------------------------------------------------------
ADDITIONAL INFORMATION
DIVIDENDS AND CAPITAL GAINS NEWSPAPER ABBREVIATION
Dividends are declared daily and distributed on the LTCorp
first business day of accounts each month; capital gains, if
any, are distributed annually in December VANGUARD FUND NUMBER
028
INVESTMENT ADVISER
Wellington Management Company, LLP, CUSIP NUMBER
Boston, Mass., since inception 922031109

INCEPTION DATE TICKER SYMBOL
July 9, 1973 VWESX

NET ASSETS AS OF JANUARY 31, 2000
$3.68 billion
-------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
26