NOTES TO FINANCIAL STATEMENTS
Vanguard Bond Index Fund is registered under the Investment Company Act of 1940 as a diversified open-end
investment company, or mutual fund, and comprises the Total Bond Market, Short-Term Bond, Intermediate-
Term Bond, and Long-Term Bond Portfolios. Certain of the Fund's investments are in corporate debt
instruments; the issuers' abilities to meet their obligations may be affected by economic developments in their
A. The following significant accounting policies conform to generally accepted accounting principles for mutual
funds. The Fund consistently follows such policies in preparing its financial statements.
1. SECURITY VALUATION: Bonds, and temporary cash investments acquired over 60 days to maturity, are
valued using the latest bid prices or using valuations based on a matrix system (which considers such factors as
security prices, yields, maturities, and ratings), both as furnished by independent pricing services. Other
temporary cash investments are valued at amortized cost, which approximates market value.
2. FEDERAL INCOME TAXES: Each Portfolio intends to continue to qualify as a regulated investment
company and distribute all of its income. Accordingly, no provision for federal income taxes is required in the
3. REPURCHASE AGREEMENTS: Each Portfolio of the Fund, along with other members of The Vanguard
Group, transfers uninvested cash balances into a Pooled Cash Account, which is invested in repurchase
agreements secured by U.S. government securities. Securities pledged as collateral for repurchase agreements
are held by a custodian bank until the agreements mature. Each agreement requires that the market value of the
collateral be sufficient to cover payments of interest and principal; however, in the event of default or bankruptcy
by the other party to the agreement, retention of the collateral may be subject to legal proceedings.
4. DISTRIBUTIONS: Distributions from net investment income are d