[SHIP][VANGUARD]
P.O. Box 2600
Valley Forge, PA 19482-2600
610-669-1538
Judy_L_Gaines
April 12, 2006
Christian Sandoe, Esq.
Division of Investment Management
U.S. Securities and Exchange Commission VIA ELECTRONIC FILING
450 Fifth Street,
N.W., Fifth Floor
Washington, D.C. 20549
RE: VANGUARD BALANCED INDEX FUND
Dear Mr. Sandoe:
The following responds to your comments of April 11, 2006 on the
post-effective amendment of the registration statement of the above-referenced
registrant. You commented on Post-Effective Amendment No. 28 that was filed on
February 24, 2006.
COMMENT 1: PROSPECTUS - PRIMARY INVESTMENT STRATEGIES
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Comment: Consider adding information to this section regarding the credit
quality and maturity of the bond portion, and the
market-capitalization of the stock portion.
Response: We have considered the comment and do not plan to make the
requested revision. We include the more detailed information in
our Item 4 disclosure. Since Form N-1A does not specifically
require credit quality and market capitalization in the Item 2
disclosure, and since our Item 2 disclosure summarizes the
highlights that are more fully fleshed out in our Item 4
disclosure, we are comfortable with our existing disclosure.
COMMENT 2: PROSPECTUS - FREQUENT TRADING OR MARKET TIMING
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Comment: The Fund's broad policies with respect to frequent trading and
market-timing are disclosed under the heading "Frequent Trading
or Market-Timing." However, specific policies applicable to
discrete types of investors are disclosed in various places
throughout the "Investing with Vanguard" section. All of the
Fund's policies concerning frequent trading and market-timing
should be disclosed together under the heading "Frequent Trading
and Market-Timing."
Response: We believe that the Fund's policies against frequent trading and
market-timing are properly disclosed in the prospectus pursuant
April 12, 2006
Page 2
to Item 6(e)(4) of Form N-1A. Item 6(e)(4) does not require that
the specific policies applicable to each type of shareholder be
disclosed together in the prospectus. As such, we believe that it
is appropriate to have the general discussion of the Fund's
policies against frequent trading and market-timing under the
heading "Frequent Trading or Market-Timing" with a reference to
the "Investing with Vanguard" section where specific policies
applicable to different types of shareholders and transactions
are disclosed.
We believe that removing the disclosure from the "Investing with
Vanguard" section and combining the disclosure into a single
"Frequent Trading and Market-Timing" section would make the
discussion of transaction policies incomplete in the "Investing
with Vanguard" section. Repeating the specific policies in both
the "Investing with Vanguard" section and under the "Frequent
Trading and Market-Timing" heading would unnecessarily clutter
the prospectus with duplicative disclosure.
COMMENT 3: PROSPECTUS - INVESTMENT ADVISOR
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Comment: Please add details regarding Mr. Davis' business experience
during the past 5 years.
Response: We will add the requested clarification.
COMMENT 4: SAI - INVESTMENT LIMITATIONS
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Comment: Although our SAI says that fundamental investment limitations are
tested at the time securities are purchased, there are borrowing
requirements under the 1940 Act that require adjustments to fund
holdings within specific time periods if limits are exceeded. The
SAI disclosure should be revised accordingly.
Response: In the Investment Policies section of the SAI under the
"Borrowing" heading, we disclose the regulatory requirement that
a fund must have continuous asset coverage of 300% of the amount
borrowed. We also disclose that if a fund's 300% asset coverage
declines due to market fluctuation, a fund may be required to
sell some of its portfolio holdings within three days to restore
the 300% asset coverage.
In the Investment Limitations section of the SAI, we disclose our
fundamental borrowing limitation as follows, "The Fund may not
borrow in excess of 15% of its net assets, and any borrowings by
the Fund must comply with all applicable regulatory
requirements." (emphasis added)
We think that these two sections, when read together, address the comment
sufficiently.
COMMENT 5: SAI - DESCRIPTION OF COMPENSATION
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Comment: Please expand on the discussion of the PM compensation by
specifying what benchmark index each PM is compared to in
determining his compensation.
Response: We will make the requested revisions.
April 12, 2006
Page 3
COMMENT 6 - TANDY REQUIREMENTS
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Comment: The SEC is now requiring all registrants to provide at the end of
response letters to registration statement comments, the
following statements:
o The Fund is responsible for the adequacy and accuracy of the
disclosure in the filing.
o Staff comments or changes in response to staff comments in
the filings reviewed by the staff do not foreclose the
Commission from taking any action with respect to the
filing.
o The Fund may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under
the federal securities laws of the United States.
Response: As required by the SEC, we will provide the foregoing
acknowledgements.
* * * * *
As required by the SEC, the Fund acknowledges that:
o The Fund is responsible for the adequacy and accuracy of the
disclosure in the filing.
o Staff comments or changes in response to staff comments in
the filings reviewed by the staff do not foreclose the
Commission from taking any action with respect to the
filing.
o The Fund may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under
the federal securities laws of the United States.
Please contact me at (610) 669-1538 with any questions or comments
regarding the above responses. Thank you.
Sincerely,
Judith L. Gaines
Associate Counsel
Securities Regulation, Legal Department