Larry:

I need help in understanding the different figures for Vanugard Short Term Investment Grade Bond Fund.   The TYD Return is 1.20% and the Yield is 4.50%.   What does that wide difference mean?    The price of the bond fund has fallen only from $10.65 to $10.51 Jan. 2, 2008 to Jan. 27, 2008.    I simply do not understand Yield and YTD Return.

According to the glossary entries at the Vanguard web site, the total return is: "A percentage change, over a specified period, in a mutual fund's net asset value, with the ending net asset value adjusted to account for the reinvestment of all distributions of dividends and capital gains."

If during a year you do not make any transactions other than reinvesting distributions, the dollar value of a fund account will be its value at the end of the previous year multiplied by 1 plus the YTD return of the fund.

The yield is: "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 yield of a bond fund is a number that can be used when comparing different bond funds.  It is not the actual income distributed by a fund.  The actual income distributed by the fund affects the return, not the hypothetical income of the yield.