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Author: rpb Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35400  
Subject: Re: Vanguard Inflation Protected Securities Fund Date: 8/16/2002 9:28 AM
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Investors in Vanguard Inflation-Protected Securities Fund do not experience the adverse consequences of phantom income. That's because the fund pays a quarterly distribution that accounts for both real coupon payments and inflation adjustments to our underlying holdings.

They are paying out the money in a dividend, so you will be taxed like any other dividend. If the fund did not pay out this dividend then you would have to figure out how much tax you would owe. Both articles are saying the same thing.
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