Vanguard Ultra-Short-Term Tax-Exempt Fund Investor Shares 

This fund’s investment objective is to seek to provide current income that is exempt from federal personal income taxes, with limited price volatility. At least 75% of the securities held by the fund are municipal bonds in the top three credit-rating categories as determined by a nationally recognized statistical rating organization or, if unrated, determined to be of comparable quality by the advisor. The fund may invest up to 20% of its assets in medium-grade quality bonds, as determined by a rating organization or by the advisor. The remaining 5% may be invested in securities with lower credit ratings or, if unrated, determined to be of comparable quality by the advisor. The fund has some potential for higher yield than a money market fund because it holds longer-maturity securities. Along with the potential for higher yield, however, comes an increase in risk. A decline in interest rates can lead to less income for short-term bond funds, while a rise in interest rates can put pressure on the fund’s share price. Investors looking for a fund that seeks to provide modest federal tax-exempt interest income and can tolerate some income and share price risk may wish to consider this fund.