Inflation-Protected Securities Fund Investor Shares (VIPSX)

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Indexed to Barclays US Trsy Inflat Prtcd Index

  Fact sheet (12/31/2013)

Summary of this fund

Vanguard Inflation-Protected Securities Fund seeks to provide investors inflation protection and income consistent with investment in inflation-indexed securities.

Investment approach

  • Invests primarily in Treasury inflation-protected securities.
  • Seeks inflation protection and income consistent with Treasury inflation-protected securities.
  • Principal and interest adjusted for inflation.
  • Provides unique diversification benefits.

PRICE AND DISTRIBUTIONS

Price and distributions

as of 04/17/2014

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.

Change $/%
$13.33
– $0.04 negative change   – 0.30%
SEC yield

A non-money market fund's SEC yield is based on a formula mandated by the Securities and Exchange Commission (SEC) that calculates a fund's hypothetical annualized income, as a percentage of its assets. A security's income, for the purposes of this calculation, is based on the current market yield to maturity (in the case of bonds) or projected dividend yield (for stocks) of the fund's holdings over a trailing 30 day period. This hypothetical income will differ (at times, significantly) from the fund's actual experience; as a result, income distributions from the fund may be higher or lower than implied by the SEC yield.



The SEC yield for a money market fund is calculated by annualizing its daily income distributions for the previous seven days.

– 0.16% E,G

SEC yield

Inflation-Protect Sec Inv

Important information about the Vanguard® Inflation-Protected Securities Fund

The yield quoted is the real yield, or the yield before adjusting for inflation. The actual yield on the Vanguard Inflation-Protected Securities Fund will be a combination of the real yield and an inflation adjustment. A complete estimate of the fund's yield requires that an estimate of future inflation be added to the real yield. Because inflation fluctuates, it cannot be projected into the future precisely enough to be included in the yield quote. The inflation adjustment is based on changes to the Consumer Price Index and can either be positive or negative, based on the change to the CPI. Investors interested in maintaining the purchasing power of their investment should reinvest their dividend distributions.

BASED ON HOLDINGS' YIELD TO MATURITY FOR 30 DAYS AS OF END OF PREVIOUS WEEK.
DOES NOT INCLUDE ANY INCOME ADJUSTMENT RESULTING FROM CHANGE IN INFLATION RATE

Distribution yield

The fund's current monthly income dividend per share, annualized (by dividing by the number of days in the month and multiplying by 365) as a percentage of the fund's average NAV during the month.

 as of —

KEY FUND FACTS

Key fund facts

Expense ratio
0.20% as of 04/29/2013
Lipper peer average
expense ratio
0.77% as of 12/31/2013
Designation
Inflation Protected Bond
Inception on
06/29/2000
Total net assets

This represents the total net assets for all share classes of Vanguard's U.S. funds that share the same investment strategy, management and holdings, but does not include any collective trusts sharing the same investment mandate.

$26.1 billion as of 03/31/2014
Net assets for
VIPSX
 
$6.3 billion as of 03/31/2014
Holdings 
38 as of 03/31/2014
Management style
Active
Benchmark
Barclays US Trsy Inflat Prtcd Index
Turnover rate 
 44.30%(Fiscal year-end  12/31/2013)

Fees and minimums

Fees and minimums

Purchase fee:

A fee charged by some mutual funds when an investor buys shares. This fee is not a sales charge or load because it is paid directly to the fund to offset the costs of trading certain securities.

None
Redemption fee:

A fee charged by some mutual funds when an investor sells shares. A redemption fee differs from a back-end load because the money is paid back into the fund. Many funds charge redemption fees only when shares are bought and then sold within a specific period of time, generally in an effort to discourage market-timing and short-term trading. Some brokers also charge their clients redemption fees for the sale of securities.

None
Minimum investment:
$3,000

ETF Knowledge Center™   

STYLEBOX

Stylebox

Bond
Portfolio of inflation-indexed securities.



Expected range
Central tendency

About our styleboxes  

Objective

Vanguard Inflation-Protected Securities Fund seeks to provide investors inflation protection and income consistent with investment in inflation-indexed securities.

Investment approach

  • Invests primarily in Treasury inflation-protected securities.
  • Seeks inflation protection and income consistent with Treasury inflation-protected securities.
  • Principal and interest adjusted for inflation.
  • Provides unique diversification benefits.

Total returns

as of 03/31/2014

View as:

as of 03/31/2014

View as:
7%
6
5
4
3
2
1
0
-1
-2
-3
-4
-5
-6
-7%
 
 
 
 
 
  YTD 1 year 5 year 10 year Since inception

06/29/2000

NAV
1.99% – 6.79% 4.65% 4.29% 6.23%
Benchmark

Barclays U.S. Treasury Inflation Protected Securities Index

**
1.95% – 6.49% 4.91% 4.53%

Note: Fee adjusted for mutual funds where applicable.

* The fund held a subscription period from June 5, 2000 (the effective date of the fund) to June 29, 2000, during which time all assets were held directly or indirectly in money market instruments. Performance measurement began June 29, 2000.

** Includes the inflation-indexed securities within the Barclays U.S. Treasury Bond Index, which represents U.S. Treasury obligations with maturities of more than 1 year.

The performance data shown represent past performance, which is not a guarantee of future results. Investment returns and principal value will fluctuate, so investors' shares, when sold, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data cited.


People and process

Firms

Vanguard Fixed Income Group

Product management

Vanguard Inflation-Protected Securities Fund seeks to provide inflation protection and income consistent with investments in Treasury inflation-protected securities. The fund is actively managed using a style-pure, risk-controlled approach that seeks high predictability of returns relative to the benchmark. At least 80% of assets are invested in inflation-indexed bonds issued by the U.S. government, government agencies, and corporations. The fund may invest up to 20% of assets in nominal Treasury and corporate bonds, although this option is generally not used. The managers seek to position portfolio holdings along the Treasury inflation-protected securities yield curve, exploiting bond pricing inefficiencies and changes in inflation. The fund provides unique portfolio diversification benefits due to its low correlations with nominal Treasury bonds and stocks.

Firm and manager details  

Distribution by credit quality(% of fund) as of 03/31/2014

(% of fund) as of 03/31/2014
  Credit rating  VIPSX
U.S. Government 98.5%
Aaa 1.5%
Aa 0.0%
A 0.0%
Baa 0.0%
< Baa 0.0%
0%
100%
Total 100.0%
* Credit-quality ratings are measured on a scale that generally ranges from AAA (highest) to D (lowest). “NR” is used to classify securities for which a rating is not available. Credit-quality ratings for each issue are obtained from Moody’s Investors Service and Standard & Poor’s, and the higher rating for each issue is used.

Fundamentals

Bondas of 03/31/2014 VIPSX Benchmark

Barclays U.S. Treasury Inflation Protected Securities Index

Number of bonds 38 35
Yield to maturity* 2.28% 2.28%
Short-term reserves 1.50% N/A
Average duration** 7.9 (years) 7.9 (years)
Average maturity 8.4 (years) 8.4 (years)
Average coupon 1.03% 1.15%

This figure is an estimated yield to maturity (YTM) for the fund. It is calculated by adding the trailing 12-month inflation adjustment to the "real" (i.e., before inflation) YTM of the fund. Adding the 12-month inflation adjustment allows the fund's yield to be more directly comparable with those of other bond funds.

** This duration estimates the percentage change in the price of the fund for a given change in nominal interest rates on conventional Treasury securities. Actual inflation-protected securities (TIPS) price movements could be significantly different than those implied by this estimate. The relationship of TIPS and conventional bonds varies and is difficult to predict with accuracy for inflation-protected funds.


Risk and volatility as of 03/31/2014

as of 03/31/2014
  VIPSX Benchmark

Barclays U.S. Treasury Inflation Protected Securities Index

R-squared N/A 0.99
Beta N/A 1.01
Alpha – 0.02 N/A
Standard deviation 5.61% 5.52%
Sharpe ratio 0.58 0.63

Risk and volatility are based on the share class with the earliest inception date.

Risk measures are calculated from trailing 36-month fund returns relative to the associated benchmarks.

An investment in the fund could lose money over short or even long periods. You should expect the fund’s share price and total return to fluctuate within a wide range, like the fluctuations of the overall bond market. The fund’s performance could be hurt by:

  • Income fluctuations: The fund’s quarterly income distributions are likely to fluctuate considerably more than the income distributions of a typical bond fund. Income fluctuations associated with changes in interest rates are expected to be low; however, income fluctuations associated with changes in inflation are expected to be high. Overall, investors can expect income fluctuations to be high for the fund.
  • Interest rate risk: The chance that bond prices overall will decline because of rising interest rates. Although inflation-indexed bonds seek to provide inflation protection, their prices may decline when interest rates rise and vice versa. Because the fund’s dollar-weighted average maturity is expected to be in the range of 7 to 20 years, interest rate risk is expected to be moderate to high for the fund.
  • Manager risk: The chance that poor security selection or focus on securities in a particular sector, category, or group of companies will cause the fund to underperform relevant benchmarks or other funds with a similar investment objective.



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