You have a mission. Vanguard fixed income can help you achieve it.

You have a mission. Vanguard fixed income can help you achieve it.

Everything you do is focused on your mission. Key to its continuing success is a delicately balanced investment portfolio designed both to achieve long-term goals and meet the current needs of your beneficiaries. It s likely that fixed income allocations are an important element of your investment strategy. Yet, the proliferation of fixed income choices and managers can make any investor uncertain about the most appropriate fit for their unique needs and circumstances. Here s where Vanguard can help: Not only are we a leading provider of fixed income investments; we re also ranked second worldwide in assets managed for nonprofit organizations like yours. 1 2 1 Source: Pensions & Investments, as of December 31, 2013.

Qualities that set Vanguard fixed income apart A seasoned, stable team. Our fixed income professionals apply their deep expertise in a hub-and-satellite structure that ensures the right balance of independent thinking and teamwork. The team s depth helps ensure consistency and stability over the long run. Tight risk controls. A fully integrated, vigilant risk-management process permeates Vanguard s investment process to create long-term value for our shareholders. Alignment with your interests. Vanguard is owned by the Vanguard funds, which, in turn, are owned by their shareholders. With no outside owners to answer to and therefore no competing loyalties we make every decision with only your needs in mind. We continuously strive to lower costs so that more of your investment return can support your mission. 3

The best chance for investment success lies in the details World-class portfolio management Vanguard Fixed Income Group comprises more than 100 investment professionals, including portfolio managers, traders, analysts, researchers, and support staff. The overwhelming majority of the senior management team has more than two decades of fixed income experience most of that time with Vanguard. Their hub-and-satellite approach blends top-down and bottom-up inputs into portfolio management, which adds value from multiple uncorrelated sources with tight risk control. The hub is the senior strategy team, which develops a macro view, determines market-sector outlooks based on this view, and allocates the risk budget to the satellite teams. The satellite teams determine subsector allocations (Treasury, investment-grade corporate and noncorporate, CMBS/ABS, TIPS, MBS agency) and security selection. Vigilant risk control Vanguard investment-strategy professionals and those who manage our fixed income investments combine their experience, research and expertise, and sophisticated investment models and other tools to help ensure the integrity of the investments and their place in helping achieve your mission. Constant, robust risk management. Our risk management team of quantitative researchers, data analysts, and portfolio analysts apply sophisticated tools and their experience to control risk in our active and indexed fixed income investments. By choice, the team is a stand-alone group, reporting to Vanguard s chief investment officer. This segregation preserves the integrity of our rigid checks-andbalance system. 4

In-depth credit-risk research. Vanguard s credit analysts combine proprietary research tools and their deep experience to help protect against credits that could go bad and help provide inherent and expected results from a successful strategy. Their efforts have resulted in a consistent track record of success in helping shield your mission s beneficiaries from downside risk. Disciplined duration policies. Most nonprofit investment strategies, by their very nature, are long term. However, they must also accommodate liquidity to meet the shorter-term, continuing needs of beneficiaries. Vanguard fixed income investments span the duration array for any nonprofit portfolio from the very short term to the very long (30 years). Tight benchmark tracking for index investments. Even given a very long-term outlook and strategy, it s important for nonprofit investors like you to avoid the volatility that can compromise any current liquidity needs of your mission and its beneficiaries. Vanguard s sophisticated tools and riskmanagement techniques closely track each index investment s benchmark to help reduce portfolio risk. Active investments, of course, seek to achieve their anticipated returns. Aligned with you Oftentimes, the only method to seek improved performance from fixed income is to assume greater risk. Vanguard s low-cost approach to investing means more of an investment s performance is retained by our shareholders without enduring undue risk. Performance. Nonprofit investors have benefited from our rigorous framework for analyzing fixed income investments that have consistently outperformed their respective peers over one-, two-, three-, five, and ten-year periods. 2 2 For the one-year period ended June 30, 2014, 67 of 99 Vanguard bond funds outperformed their Lipper averages. For the three-year period ended June 30, 2014, 63 of 84 Vanguard bond funds outperformed their Lipper averages. For the five-year period ended June 30, 2014, 37 of 63 Vanguard bond funds outperformed their Lipper averages. For the ten-year period ended June 30, 2014, 45 of 51 Vanguard bond funds outperformed their Lipper averages. Results will vary for other time periods. Only funds with a minimum one-, three-, five-, or ten-year history, respectively, were included in the comparison. (Source: Lipper, a Thomson Reuters Company.) Note that the competitive performance represents past performance, which is not a guarantee of future results, and that all investments are subject to risks. For the most recent performance, visit institutional.vanguard.com/performance. 5

Let s start the conversation As a nonprofit investor, you know your mission and what you expect your investment strategy to accomplish. We d be privileged to begin the conversation with you or your consultant to learn more about your circumstances and share our approach to helping you further your mission. Contact your Vanguard representative or call 888-888-7064. 6

Institutional Investor Group P.O. Box 2900 Valley Forge, PA 19482-2900 Connect with Vanguard > institutional.vanguard.com For more information about Vanguard funds, visit institutional.vanguard.com or call 800-523-1036 to obtain a prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing. All investing is subject to risk, including the possible loss of the money you invest. Bond funds are subject to the risk that an issuer will fail to make payments on time, and that bond prices will decline because of rising interest rates or negative perceptions of an issuer s ability to make payments. Investments in bonds are subject to interest rate, credit, and inflation risk. Diversification does not ensure a profit or protect against a loss. For institutional use only. Not for distribution to retail investors. 2014 The Vanguard Group, Inc. All rights reserved. Vanguard Marketing Corporation, Distributor. FISBRO 102014