Vanguard U.S. Government Bond Funds

1 Vanguard Government Bond FundsVanguard Short-Term treasury FundVanguard Short-Term Federal FundVanguard Intermediate-Term treasury FundVanguard GNMA FundVanguard Long-Term treasury FundAnnual Report | January 31, 2018 ContentsPlease note: The opinions expressed in this report are just that informed opinions. They should not be considered promisesor advice. Also, please keep in mind that the information and opinions cover the period through the date on the front of thisreport. Of course, the risks of investing in your fund are spelled out in the the Glossary for definitions of investment terms used in this the cover: Nautical images have been part of Vanguard s rich heritage since its start in 1975. For anincoming ship, a lighthouse offers a beacon and safe path to shore. You can similarly depend on Vanguard to putyou first and light the way as you strive to meet your financial goals.

2 Our client focus and low costs,stemming from our unique ownership structure, assure that your interests are paramount. Vanguard s Principles for Investing SuccessWe want to give you the best chance of investment success. Theseprinciples, grounded in Vanguard s research and experience, can put you onthe right Create clear, appropriate investment Develop a suitable asset allocation using broadly diversified Minimize Maintain perspective and long-term single theme unites these principles: Focus on the things you can believe there is no wiser course for any Fund s Performance at a Glance.. 1 CEO s Perspective.. 4 Advisors Report.. 7 Results of Proxy Voting.. 13 Short-Term treasury Fund.. 15 Short-Term Federal Fund.. 32 Intermediate-Term treasury Fund.. 51 GNMA Fund.. 68 Long-Term treasury Fund.. 89 About Your Fund s Expenses.

3 107 Glossary.. 110 Your Fund s Performance at a Glance1 Total Returns: Fiscal Year Ended January 31, 201830-Day SECY ieldIncomeReturnsCapitalReturnsTotalRetu rns Vanguard Short-Term treasury Fund Investor Shares Shares Barclays 1 5 Year treasury treasury Funds Average treasury Funds Average: Derived from data provided by Lipper, a Thomson Reuters Company. Vanguard Short-Term Federal Fund Investor Shares Shares Barclays 1 5 Year Government Government Funds Average Government Funds Average: Derived from data provided by Lipper, a Thomson Reuters Company. Vanguard Intermediate-Term treasury Fund Investor Shares Shares Barclays 5 10 Year treasury treasury Funds Average treasury Funds Average: Derived from data provided by Lipper, a Thomson Reuters Company.

4 For the 12 months ended January 31, 2018, the returns of the Funds in this report ranged from for both Vanguard Short-Term treasury Fund and Vanguard Intermediate-Term treasury Fund to for Vanguard Long-Term treasury Fund. (Returns cited are for Investor Shares.) Results versus their benchmark indexes and peer groups were mixed. Short-term interest rates moved significantly higher during the period as the Federal Reserve raised its federal Funds target rate three times. Longer-term rates, which are driven more by expectations for growth and inflation down the road, moved less. Holding more shorter maturities proved a headwind for the Short-Term and Intermediate-Term treasury Funds , whereas the Short-Term Federal Fund s over-weighted allocation to agency debt helped. Yield curve positioning and duration worked against the Long-Term treasury Fund.

5 In the GNMA Fund, mortgage-related securities other than GNMAs added value. 230-Day SECY ieldIncomeReturnsCapitalReturnsTotalRetu rns Vanguard GNMA Fund Investor Shares Shares Barclays GNMA Bond Funds Average Funds Average: Derived from data provided by Lipper, a Thomson Reuters Company. Vanguard Long-Term treasury Fund Investor Shares Shares Barclays Long treasury Bond treasury Funds Average treasury Funds Average: Derived from data provided by Lipper, a Thomson Reuters Company. Admiral Shares carry lower expenses and are available to investors who meet certain account-balance Returns: Ten Years Ended January 31, 2018 AverageAnnual ReturnShort-Term treasury Fund Investor Shares Barclays 1 5 Year treasury Bond Index treasury Funds treasury Funds Average: Derived from data provided by Lipper, a Thomson Reuters Federal Fund Investor Shares Barclays 1 5 Year Government Bond Index Government Funds Government Funds Average: Derived from data provided by Lipper, a Thomson Reuters treasury Fund Investor Shares Barclays 5 10 Year treasury Bond Index treasury Funds treasury Funds Average: Derived from data provided by Lipper, a Thomson Reuters Fund Investor Shares Barclays GNMA Bond Index Funds Funds Average.

6 Derived from data provided by Lipper, a Thomson Reuters ReturnLong-Term treasury Fund Investor Shares Barclays Long treasury Bond Index treasury Funds treasury Funds Average: Derived from data provided by Lipper, a Thomson Reuters figures shown represent past performance, which is not a guarantee of future results. (Current performance may be lower or higher than the performance data cited. For performance data current to the most recent month-end, visit our website at ) Note, too, that both investment returns and principal value can fluctuate widely, so an investor s shares, when sold, could be worth more or less than their original RatiosYour Fund Compared With Its Peer GroupInvestorSharesAdmiralShares Peer GroupAverage Short-Term treasury Federal treasury treasury fund expense ratios shown are from the prospectus dated May 26, 2017, and represent estimated costs for the current fiscal year.

7 Forthe fiscal year ended January 31, 2018, the Funds expense ratios were: for the Short-Term treasury Fund, for Investor Shares for Admiral Shares; for the Short-Term Federal Fund, for Investor Shares and for Admiral Shares; for theIntermediate-Term treasury Fund, for Investor Shares and for Admiral Shares; for the GNMA Fund, for InvestorShares and for Admiral Shares; and for the Long-Term treasury Fund, for Investor Shares and for Admiral expense ratios are derived from data provided by Lipper, a Thomson Reuters Company, and capture information throughyear-end groups: For the Short-Term treasury Fund, Short-Term treasury Funds ; for the Short-Term Federal Fund, Short-Intermediate Funds ; for the Intermediate-Term treasury Fund, General treasury Funds ; for the GNMA Fund, GNMA Funds ; and for theLong-Term treasury Fund, General treasury Shareholder,When you start a new job, it s natural to reflect on both the past and the future.

8 And so it is in my case, having begun my service as just the fourth chief executive in Vanguard s feel extremely fortunate to have the chance to lead a company filled with people who come to work every day passionate about Vanguard s core purpose: to take a stand for all investors, to treat them fairly, and to give them the best chance for investment success. Making a real differenceWhen I joined Vanguard in 1991, I found a mission-driven team focused on improving lives helping people retire more com-fortably, put their children through college, and achieve financial security. I found a company with purpose in an industry ripe for was clear, even early in my career, that the cards were stacked against most investors. Hidden fees, performance-chasing, and poor advice were relentlessly eroding investors dreams.

9 We knew Vanguard could be different and, as a result, could make a real difference. Over the past 25 years, for example, Vanguard has lowered our Funds asset-weighted average expense ratio CEO s PerspectiveTim BuckleyPresident and Chief Executive Officer4from to And over the past decade, 94% of our Funds have beaten the average annual return of their on your successVanguard is built for Vanguard investors as a client-owned company, we focus solely on you, our fund shareholders. Everything we do is designed to give our clients the best chance for investment success. In my new role as CEO, I intend to keep this priority front and center. We re proud of what we ve achieved, but we re even more excited about what s to come. As I write this, we ve experienced a period of pronounced market volatility. Strong economic growth and budding signs of inflation have raised concerns about a more aggressive Federal Reserve.

10 Although volatility can test investors nerves, we sometimes think of this as Vanguard weather a time when having a disciplined, low-cost, and long-term approach to investment management serves investors well. Market Barometer Average Annual Total Returns Periods Ended January 31, 2018 One Year Three Years Five YearsStocksRussell 1000 Index (Large-caps) 2000 Index (Small-caps) 3000 Index (Broad market) All-World ex US Index (International) BondsBloomberg Barclays Aggregate Bond Index (Broad taxable market) Barclays Municipal Bond Index (Broad tax-exempt market) Three-Month treasury Bill Index CPIC onsumer Price Index performance data shown represent past performance, which is not a guarantee of future For the ten-year period through December 31, 2017, 9 of 9 Vanguard money market Funds , 56 of 60 bond Funds , 21 of 22 balanced Funds , and 131 of 140 stock Funds , or 217 of 231 Vanguard Funds , outperformed their peer-group averages.