Vanguard Total Stock Market Index Fund 529.com

Annual Report | December 31, 2016

Vanguard Total Stock Market Index Fund

A new format, unwavering commitment

As you begin reading this report, you'll notice that we've made some improvements to the opening sections--based on feedback from you, our clients. Page 1 starts with a new "Your Fund's Performance at a Glance," a concise, handy summary of how your fund performed during the period. In the renamed "Chairman's Perspective," Bill McNabb will focus on enduring principles and investment insights. We've modified some tables, and eliminated some redundancy, but we haven't removed any information. At Vanguard, we're always looking for better ways to communicate and to help you make sound investment decisions. Thank you for entrusting your assets to us.

Contents Your Fund's Performance at a Glance. . . . . . . . . . . . . . . . . . 1 Chairman's Perspective. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Fund Profile. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 Performance Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Your Fund's After-Tax Returns. . . . . . . . . . . . . . . . . . . . . . . 32 About Your Fund's Expenses. . . . . . . . . . . . . . . . . . . . . . . . 33 Glossary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Please note: The opinions expressed in this report are just that--informed opinions. They should not be considered promises or advice. Also, please keep in mind that the information and opinions cover the period through the date on the front of this report. Of course, the risks of investing in your fund are spelled out in the prospectus. See the Glossary for definitions of investment terms used in this report. About the cover: No matter what language you speak, Vanguard has one consistent message and set of principles. Our primary focus is on you, our clients. We conduct our business with integrity as a faithful steward of your assets. This message is shown translated into seven languages, reflecting our expanding global presence.

Your Fund's Performance at a Glance

? Vanguard Total Stock Market Index Fund returned well over 12% for the 12 months ended December 31, 2016. The fund closely tracked its target index, the CRSP US Total Market Index, and exceeded the average return of its multicapitalization core fund peers.

? The fund offers investors exposure to every segment, size, and style of the U.S. equity market.

? Small-cap stocks outperformed their large- and mid-cap counterparts, while value stocks outpaced growth.

? The fund recorded positive returns in nine of the ten market sectors. Returns surpassed 20% in four sectors and 10% in seven. The fund's largest sector, financials, contributed most to the outcome. Only health care stocks declined.

? Over the past ten years, the fund posted an average annual return of about 7%, in line with its benchmark and more than 1 percentage point higher than its peer-fund average.

Total Returns: Fiscal Year Ended December 31, 2016

Total Returns

Vanguard Total Stock Market Index Fund

Investor Shares

12.53%

ETF Shares

Market Price

12.74

Net Asset Value

12.68

AdmiralTM Shares

12.66

Institutional Shares

12.67

Institutional Plus Shares

12.69

Institutional Select Shares (Inception: 6/27/2016)

14.24

CRSP US Total Market Index

12.68

Multi-Cap Core Funds Average

10.19

Multi-Cap Core 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 requirements. Institutional Shares, Institutional Plus Shares, and Institutional Select Shares are available to certain institutional investors who meet specific administrative, service, and account-size criteria. The Vanguard ETF? Shares shown are traded on the NYSE Arca exchange and are available only through brokers. The table provides ETF returns based on both the NYSE Arca market price and the net asset value for a share. U.S. Pat. Nos. 6,879,964; 7,337,138; 7,720,749; 7,925,573; 8,090,646; and 8,417,623.

For the ETF Shares, the market price is determined by the midpoint of the bid-offer spread as of the closing time of the New York Stock Exchange (generally 4 p.m., Eastern time). The net asset value is also determined as of the NYSE closing time. For more information about how the ETF Shares' market prices have compared with their net asset value, visit , select your ETF, and then select the Price and Performance tab. The ETF premium/discount analysis there shows the percentages of days on which the ETF Shares' market price was above or below the NAV.

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Total Returns: Ten Years Ended December 31, 2016

Total Stock Market Index Fund Investor Shares Spliced Total Stock Market Index Multi-Cap Core Funds Average For a benchmark description, see the Glossary. Multi-Cap Core Funds Average: Derived from data provided by Lipper, a Thomson Reuters Company.

Average Annual Return

7.11% 7.23 5.51

The 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 performance.) 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 cost.

Expense Ratios Your Fund Compared With Its Peer Group

Investor Shares

Institutional

ETF Admiral Institutional Institutional

Select Peer Group

Shares Shares

Shares Plus Shares

Shares Average

Total Stock Market Index Fund 0.16% 0.05% 0.05%

0.04%

0.02%

0.01%

1.17%

The fund expense ratios shown are from the prospectus dated April 27, 2016, and represent estimated costs for the current fiscal year. For the fiscal year ended December 31, 2016, the fund's expense ratios were: 0.15% for Investor Shares, 0.04% for ETF Shares, 0.04% for Admiral Shares, 0.03% for Institutional Shares, 0.02% for Institutional Plus Shares, and 0.01% for Institutional Select Shares (annualized since inception). The peer-group expense ratio is derived from data provided by Lipper, a Thomson Reuters Company, and captures information through year-end 2015.

Peer group: Multi-Cap Core Funds.

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Chairman's Perspective

Bill McNabb Chairman and Chief Executive Officer

Dear Shareholder,

If you're like most investors, a big question on your mind is: What's in store for the markets and the economy in 2017?

At Vanguard, we're just as curious about the immediate future. But our curiosity is tempered by our belief that forecasts should give a range of possible outcomes, not pinpoint predictions. After all, there are bound to be occurrences the experts won't see coming.

What really matters for investors In 2016, we saw two cases in point: The United Kingdom's June vote to exit the European Union and the November election of Donald Trump as U.S. president. Both unexpected outcomes triggered swift market reactions. But despite some short-term volatility, the markets' 12-month performance as of December 31, 2016, proved to be less dramatic. U.S. stocks posted healthy returns, and U.S. bonds provided returns close to their long-term averages. International stocks and bonds also advanced, although returns for U.S. investors were reduced by the strength of the U.S. dollar.

The surprises of 2016 remind us to be skeptical of overly precise short-term predictions about 2017. At the cusp of a new year, market prognosticators forecast where the Standard & Poor's 500 Index or the yield on the 10-year Treasury note will end up in 12 months. Such predictions can be attention-getting. They can also be dead wrong.

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