<PAGE> 1
VANGUARD
MONEY MARKET
FUNDS
VANGUARD PRIME MONEY MARKET FUND
VANGUARD FEDERAL MONEY MARKET FUND
VANGUARD TREASURY MONEY MARKET FUND
[PHOTO]
Annual Report
November 30, 1999
[THE VANGUARD GROUP LOGO]
<PAGE> 2
[PHOTO]
John C. Bogle
FELLOW SHAREHOLDERS:
Two roads diverged in a wood, and I--I took the one less traveled by, and that
has made all the difference.
I can think of no better words than those of Robert Frost to begin this special
letter to our shareholders, who have placed such extraordinary trust in me and
in Vanguard over the past quarter century. When the firm was founded 25 years
ago, we deliberately took a new road to managing a mutual fund enterprise.
Instead of having the funds controlled by an outside management company with its
own financial interests, the Vanguard funds--there were only 11 of them
then--would be controlled by their own shareholders and operate solely in their
financial interests. The outcome of our unprecedented decision was by no means
certain. We described it then as "The Vanguard Experiment."
Well, I guess it's fair to say it's an experiment no more. During the
past 25 years, the assets we hold in stewardship for investors have grown from
$1 billion to more than $500 billion, and I believe that our reputation for
integrity, fair-dealing, and sound investment principles is second to none in
this industry. Our staggering growth--which I never sought-- has come in
important part as a result of the simple investment ideas and basic human values
that are the foundation of my personal philosophy. I have every confidence that
they will long endure at Vanguard, for they are the right ideas and right
values, unshakable and eternal.
While Emerson believed that "an institution is the lengthened shadow of
one man" Vanguard today is far greater than any individual. The Vanguard crew
has splendidly implemented and enthusiastically supported our founding ideas and
values, and deserves the credit for a vital role in forging our success over the
years. It is a dedicated crew of fine human beings, working together in an
organization that is well prepared to press on regardless long after I am gone.
Creating and leading this enterprise has been an exhilarating run. Through it
all, I've taken the kudos and the blows alike, enjoying every moment to the
fullest, and even getting a second chance at life with a heart transplant three
years ago. What more could a man ask?
While I shall no longer be serving on the Vanguard Board, I want to
assure you that I will remain vigorous and active in a newly created Vanguard
unit, researching the financial markets, writing, and speaking. I'll continue to
focus whatever intellectual power and ethical strength I possess on my mission
to assure that mutual fund investors everywhere receive a fair shake. In the
spirit of Robert Frost:
But I have promises to keep, and miles to go before I sleep, and miles to
go before I sleep.
You have given me your loyalty and friendship over these long years, and
I deeply appreciate your thousands of letters of support. For my part, I will
continue to keep an eagle eye on your interests, for you deserve no less. May
God bless you all, always.
/s/ JCB
CONTENTS
REPORT FROM THE CHAIRMAN.........................1
THE MARKETS IN PERSPECTIVE.......................4
REPORT FROM THE ADVISER..........................6
PERFORMANCE SUMMARIES............................8
FUND PROFILES...................................12
FINANCIAL STATEMENTS............................14
REPORT OF INDEPENDENT ACCOUNTANTS...............32
<PAGE> 3
[PHOTO]
John J. Brennan
REPORT FROM THE CHAIRMAN
Short-term interest rates rose during the 12 months ended November 30, 1999, the
fiscal year for the Vanguard Money Market Funds. The Prime Money Market Fund
earned a total return of 5.0% during the period. After factoring in the 2.6%
rise in consumer prices for the 12-month period, the fund's real, or
inflation-adjusted, total return was a solid 2.4%.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
TOTAL RETURNS
FISCAL YEAR ENDED NOVEMBER 30, 1999
--------------------------------------
AVERAGE
VANGUARD COMPETING VANGUARD
MONEY MARKET FUND FUND FUND* ADVANTAGE
- ------------------------------------------------------------------
<S> <C> <C> <C>
Prime 5.0% 4.4% +0.6%
(SEC 7-Day Annualized
Yield: 5.36%)
Federal 4.9 4.4 +0.5
(SEC 7-Day Annualized
Yield: 5.21%)
Treasury 4.5 4.2 +0.3
(SEC 7-Day Annualized
Yield: 4.77%)
- ------------------------------------------------------------------
Prime Institutional Shares** 5.1% 4.9% +0.2%
(SEC 7-Day Annualized
Yield: 5.54%)
- ------------------------------------------------------------------
</TABLE>
*Derived from data provided by Lipper Inc.
**Minimum initial investment is $10 million.
The table at right presents the total returns of our funds and their
peers for the past 12 months. We also present our annualized yields as of
November 30. During the fiscal year, each fund provided what we call "the
Vanguard advantage," an edge over its average competitor that results
principally from our much lower operating costs. Our funds' costs were lower
than those of their average peers by roughly 0.5 percentage point for the Prime
Money Market Fund, 0.3 percentage point for the Federal Money Market Fund, 0.4
percentage point for the Treasury Money Market Fund, and 0.3 percentage point
for the Prime Institutional Shares. The share price of each fund remained at $1
throughout the period, as is expected but not guaranteed.
FINANCIAL MARKETS IN REVIEW
The 12-month period ended November 30 featured plenty of positive economic news,
as well as plenty of concern over how much longer the good times can roll before
inflation begins to accelerate. The U.S. economy's expansion continued to
display remarkable staying power; inflation-adjusted economic output rose 4.3%
from the third quarter of 1998 to the third quarter of 1999, and the nation's
unemployment rate was at its lowest point in three decades. Overseas economies
also picked up steam. Despite heightened business activity and a significant
rise in energy prices, inflation was moderate.
Of course, financial markets seek to look ahead, not behind. And a belief
that higher inflation could not be far off was reflected in a steady rise in
interest rates during the fiscal year. The yield of the 30-year U.S. Treasury
bond increased 123 basis points to end the fiscal year at 6.29%. The Federal
Reserve Board aided the uptrend by raising its target for short-term interest
rates three times by a total of 75 basis points (0.75 percentage point) in an
attempt to slow the economy. The yields on 3-month Treasury bills and commercial
paper climbed by about the same amount.
Amid rising interest rates--which force bond prices lower--the bond
market suffered its worst year since 1994. Price declines were most severe among
bonds with long-term maturities. The price of long-term Treasury bonds, for
instance, fell by more than -13%. The acute sensitivity of long-term bonds to
interest-rate shifts reflects the fact that investors
1
<PAGE> 4
in such securities receive their cash flow over many years. The "present value"
of far-off dividend or principal payments declines as interest rates rise. This
phenomenon was strikingly displayed during the fiscal year: The Lehman Brothers
Aggregate Bond Index, a benchmark of the overall market for taxable
investment-grade bonds, had a total return of zero, with its interest income of
6.2% entirely offset by a price decline of -6.2%.
Despite rising rates, stock market averages managed an impressive
advance, albeit an uneven one. The entire U.S. stock market, as represented by
the Wilshire 5000 Total Market Index, rose 22.4%, but a large portion of the
gain was concentrated in relatively few stocks. Technology was the
best-performing sector. The tech stocks in the S&P 500 Index leapt 66%, boosting
the unmanaged index to its fifth straight fiscal year of double-digit returns
(20.9%). Small- and mid-cap stocks, as measured by the Wilshire 4500 Completion
Index, did even better over the period, gaining 29.0%.
FISCAL 1999 PERFORMANCE OVERVIEW
Money market interest rates rose during the fiscal year, though not as much as
long-term rates. On balance, the yield of the 3-month U.S. Treasury bill--a good
proxy for money market rates--climbed 82 basis points during the period, ending
at 5.30% on November 30. Yields on 3-month Treasuries fluctuated between a low
of 4.27% on April 13 and a high of 5.33% on November 29. As this
1.06-percentage-point spread indicates, interest rates were quite volatile
during fiscal 1999.
For investors in a money market fund, the level of income received
depends primarily on two factors: market interest rates and the cost of
investing in the fund. As noted, market interest rates moved higher during the
fiscal year. Naturally, the yields of our funds followed suit with a slight lag,
as the funds used proceeds from maturing securities to invest in new ones
offering higher rates. On balance, as the accompanying table shows, the yields
of the funds climbed by 30 to 38 basis points between November 30, 1998, and
November 30, 1999.
All of our funds outperformed their average peers, by margins that ranged
from 0.2 to 0.6 percentage point. The chief reason, as always, was cost. The
Prime, Federal, and Treasury Money Market Funds once again operated at expense
ratios (expenses as a percentage of average net assets) of just 0.33%, or $3.30
per $1,000 invested. That was nearly half a percentage point less than the 0.82%
expense ratio of the average money market fund. The average institutional money
market fund charged 0.40% in expenses, nearly three times the 0.15% expense
ratio of our Prime Institutional Shares. It is difficult to overstate the
importance of such cost differentials. With virtually all money market funds
investing in the same short-term securities, those funds with the lowest costs
almost certainly will deliver higher returns to their shareholders.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
ANNUALIZED 7-DAY YIELD
ON NOVEMBER 30,
------------------------------
MONEY MARKET FUND 1999 1998
- -------------------------------------------------------------------------
<S> <C> <C>
Prime 5.36% 4.98%
Federal 5.21 4.91
Treasury 4.77 4.47
- -------------------------------------------------------------------------
Prime Institutional Shares 5.54% 5.16%
- -------------------------------------------------------------------------
</TABLE>
LONG-TERM PERFORMANCE OVERVIEW
If costs matter a great deal in the short run, they are paramount over long
periods. I am happy to report that each of our funds outperformed its average
peer over the ten-year period ended November 30. The margins of our
superiority--ranging from 0.2 percentage point for the Treasury Money Market
Fund to 0.5 percentage point for the Federal
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<PAGE> 5
Money Market Fund--reflect the head start afforded by our low operating costs.
In addition, we benefit from the expertise of Vanguard's Fixed Income Group,
which oversees each of the funds and preserves the stability of your principal
investment through careful credit analysis and sound management.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
TOTAL RETURNS
TEN YEARS ENDED NOVEMBER 30, 1999
-----------------------------------------------------
FINAL VALUE OF
AVERAGE A $10,000
ANNUAL RETURN INITIAL INVESTMENT
-----------------------------------------------------
AVERAGE AVERAGE
VANGUARD COMPETING VANGUARD COMPETING
MONEY MARKET FUND FUND FUND FUND FUND
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Prime 5.2% 4.8% $16,658 $15,911
Federal 5.2 4.7 16,526 15,827
Treasury* 4.9 4.7 16,184 15,780
- --------------------------------------------------------------------------------
Prime
Institutional Shares** 5.4% 5.1% $16,926,607 $16,498,837
- --------------------------------------------------------------------------------
</TABLE>
*Before December 2, 1996, known as the U.S. Treasury Portfolio.
**For Prime Institutional Shares, final value of a $10 million initial
investment.
The adjacent table shows the average annual return for each Vanguard fund
and its average competitor over the past decade. It also shows the value, as of
November 30, of hypothetical $10,000 initial investments ($10 million, in the
case of Prime Institutional Shares) made in each fund ten years ago. As shown,
time compounds the value of "the Vanguard advantage." Specifically, investors in
our funds earned an extra $400-$700 for each $10,000 invested (an extra $428,000
for owners of Prime Institutional Shares). We are committed to maintaining the
lowest reasonable costs for all of the Vanguard funds. Further, we expect our
unique operating structure--under which the Vanguard funds own The Vanguard
Group, and our funds are operated at cost--to continue to provide exceptional
value for our clients. Of course, market interest rates constantly ebb and flow,
so no one can know what future yields and returns will be provided by money
market instruments.
IN SUMMARY
Money market funds offer several compelling advantages--safety, liquidity, and
current income--for short-term savers and long-term investors alike. Whether you
wish to preserve capital for a specific financial goal or to balance the risks
of stock funds and bond funds in a long-term portfolio, you are well-served by a
low-cost money market fund. I assure you that we will continue to manage your
investment with care and thrift. Thank you for your trust.
/s/ JOHN J. BRENNAN
John J. Brennan
Chairman and Chief Executive Officer December 15, 1999
A NOTE OF THANKS TO OUR FOUNDER
As you may have read on the inside cover of our report, our founder, John C.
Bogle, is retiring December 31, 1999, as Senior Chairman of our Board after
nearly 25 years of devoted service to Vanguard and our shareholders. Vanguard
investors have Jack to thank for creating a truly mutual mutual fund company
that operates solely in the interest of its fund shareholders. And mutual fund
investors everywhere have benefited from his energetic efforts to improve this
industry. Finally, on a personal note, I am forever grateful to Jack for giving
me the opportunity to join this great company in 1982.
3
<PAGE> 6
THE MARKETS IN PERSPECTIVE
YEAR ENDED NOVEMBER 30, 1999
Strong economic expansion sent global stock markets charging higher but dealt a
blow to bond prices during the fiscal year ended November 30, 1999. The
powerhouse U.S. economy led the global growth parade, joined by Asian, European,
and Latin American economies that had slumped or stagnated in 1998.
Interest rates rose sharply as investors and monetary policymakers grew
increasingly worried that such strong economic growth would cause inflation to
surge. Although the rise in rates caused bond prices to fall, it only tempered
the stock market's advance.
U.S. STOCK MARKETS
Against the backdrop of a booming economy, U.S. companies reported solid
increases in earnings during the fiscal year. The nation's economic output
increased at an inflation-adjusted rate of 4.3%--a very rapid pace for such a
large, mature economy. Consumer spending, which accounts for roughly two-thirds
of economic activity, powered the expansion. Americans spent freely, encouraged
by rising wealth from a long bull market, a hot job market, and climbing
incomes.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
PERIODS ENDED NOVEMBER 30, 1999
-----------------------------------
1 YEAR 3 YEARS 5 YEARS
- --------------------------------------------------------------------------------
STOCKS
<S> <C> <C> <C>
S&P 500 Index 20.9% 24.3% 27.5%
Russell 2000 Index 15.7 10.1 14.8
Wilshire 5000 Index 22.4 22.6 25.6
MSCI EAFE Index 21.4 12.3 11.4
- --------------------------------------------------------------------------------
BONDS
Lehman Aggregate Bond Index 0.0% 5.6% 8.0%
Lehman 10 Year Municipal Bond Index -0.4 4.8 7.6
Salomon Smith Barney 3-Month
U.S. Treasury Bill Index 4.7 5.0 5.2
- --------------------------------------------------------------------------------
OTHER
Consumer Price Index 2.6% 2.0% 2.4%
- --------------------------------------------------------------------------------
</TABLE>
The stock market, as measured by the Wilshire 5000 Index, gained 22.4%
overall. For a change, mid-capitalization and small-cap stocks outpaced their
large-cap brethren. The large-cap S&P 500 Index, which accounts for more than
75% of the U.S. stock market's total value, gained 20.9% during the year; the
rest of the market (as measured by the Wilshire 4500 Index) gained 29.0%.
Increasingly optimistic expectations for future corporate earnings more
than offset the negative effects of rising interest rates during fiscal 1999.
Higher rates often hurt stock prices because many investors use current rates to
discount the value of a stock's projected earnings and dividends. The higher the
interest rate, the more future earnings are discounted, and the less investors
will pay for the stock now.
Because of a remarkable surge in prices for technology stocks, growth
stocks again outperformed value stocks during the past year. Within the S&P 500
Index, growth stocks--characterized by high prices in relation to earnings, book
value, and dividends--recorded a 28.5% return, 16 percentage points above the
12.5% return for value stocks. The disparity was even greater in the small-cap
segment of the market; growth stocks within the small-cap Russell 2000 Index
gained 32.7%, while value stocks posted a -1.4% return.
Technology stocks within the S&P 500 Index gained 66%. QUALCOMM posted an
eye-popping 1,200% return, and a number of computer-related stocks doubled or
tripled in
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<PAGE> 7
price, including Sun Microsystems (+257%), Apple Computer (+206%), Oracle
(+197%), Gateway (+172%), Texas Instruments (+152%), and Cisco Systems (+136%).
Big gains for wireless telecommunications and cable-TV stocks powered the
utilities category to an overall gain of nearly 28%. The producer-durables
group, which includes some technology-related manufacturers as well as aircraft
and equipment makers, gained 27%. Oil exploration and service firms in the
"other energy" category posted a 26% return, assisted by a jump in prices for
oil and natural gas.
The year's worst-performing sector was consumer staples (down nearly
- -12%). This group suffered as severe price competition and a stronger dollar in
Europe crimped profits for many food and beverage makers, and the specter of
litigation costs caused tobacco stocks to slump. The auto & transportation group
declined -2% overall, with airline stocks hurt by rising prices for jet fuel.
U.S. BOND MARKETS
Stock investors may cheer a fast-growing economy, but rapid growth tends to
worry bond investors. Early in the fiscal year, inflation seemed
dormant--plunging oil prices had taken commodity price indexes to the lowest
point in a quarter-century. But as the world economy began hitting on all
cylinders, the bond market feared that a minuscule U.S. unemployment rate,
rising commodity prices, and capacity constraints would cause inflation to
accelerate. Although oil prices were up nearly 150% during the fiscal year, the
overall price level, as measured by the Consumer Price Index, increased by a
moderate 2.6%.
The Federal Reserve Board, anticipating price pressures, abandoned its
bias toward easier monetary policy, and by mid-year was boosting interest rates
to try to throttle back the economic engines. The bond market was ahead of the
Fed--interest rates began rising sharply in February. By fiscal year-end, the
yield of 30-year U.S. Treasury bonds had risen 1.23 percentage points (123 basis
points) to 6.29%. The 10-year Treasury note's yield rose 148 basis points, from
4.71% to 6.19%. The rise in short-term rates was more restrained; 3-month
Treasury bill yields were up 82 basis points to 5.30% at fiscal year-end.
Bond prices fall when interest rates rise, and long-term bond prices are
most sensitive to changing rates. Long-term Treasury bond prices fell by more
than -13%, resulting in total returns of -8%. The Lehman Aggregate Bond Index, a
measure of the overall taxable bond market, which has an intermediate-term
structure on average, broke even on the year, as interest income of 6.2% was
offset by price declines. The damage to municipal bond prices was not as severe
as for Treasuries, and the intermediate-term Lehman 7 Year Municipal Bond Index
recorded a price decline of -3.7% and a total return of 0.5%.
INTERNATIONAL STOCK MARKETS
International markets had a strong year, with European stocks gaining 21.9% in
local-currency terms and Pacific-region stocks advancing 30.2%. However,
currency effects significantly altered the returns to U.S.-based investors. The
U.S. dollar rose in value against most European currencies but fell sharply
against the Japanese yen. As a result, returns from Europe plunged to 9.8% in
dollar terms while returns from the Pacific soared to 51.0%.
Overall, U.S. investors earned 21.4% in the major developed international
markets, as measured by the Morgan Stanley Capital International Europe,
Australasia, Far East (EAFE) Index. The bull markets in most nations stemmed
from renewed optimism that economic growth would continue to accelerate. Japan
and the rest of Asia, which were hit hardest by currency and economic crises in
1997 and 1998, saw the biggest stock gains.
Emerging markets, as measured by the Select Emerging Markets Free Index,
gained 37.1% in U.S.-dollar terms, as investors regained an appetite for the
considerable risks of smaller markets.
5
<PAGE> 8
REPORT FROM THE ADVISER
The fiscal year ended November 30, 1999, could best be characterized as a return
to normalcy after a detour onto 1998's bumpy road of global market turmoil.
Rising interest rates during fiscal 1999 depressed the returns of many bond
investments into negative territory. Money market fund returns, conversely, have
been helped by the increase in yields. The result is that the returns of the
various Vanguard Money Market Funds--ranging from 4.5% to about 5.0%--were ahead
of virtually all bond investments this year. Importantly, these returns also
were well in excess of the 2.6% rate of inflation during our fiscal year. While
money market investments have provided a nice premium above inflation for the
last five years, such a margin is high by longer-term norms.
At the opening of the year, uncertainty was high and nerves were frayed
after a series of financial crises, from the meltdown of emerging markets to the
near-collapse of a major hedge-fund manager, Long Term Capital Management. For
months, market participants tended to shun risk of all kinds. However, the
pendulum of investor sentiment began its inexorable swing from fear toward
greed. The better returns available to those taking added credit, prepayment, or
liquidity risk became compelling as evidence mounted that the domestic and
overseas economies were not plunging into recession, but instead were staying on
track and building momentum.
By mid-year, the Federal Reserve Board was so confident of the
recuperation of global markets that it began to tighten monetary policy. Between
June and November 1999, the Fed raised the benchmark federal funds rate by 0.75
percentage point to 5.50%. These actions fully rescinded the rate reductions
engineered by the Fed in 1998 to help quell market jitters. Yields on money
market securities rose commensurately.
Regardless of financial market conditions, the performance of the U.S.
economy has been phenomenal. Real, or inflation-adjusted, economic growth is
running in excess of 4% (as it has for over three years), and unemployment is at
30-year lows. Yet inflation, at 2.6% for the past 12 months, is quiescent. If
events had followed the pattern of past economic cycles, serious inflationary
pressures would have emerged some time ago. Their absence is almost certainly
attributable in large part to technology-led enhancements in productivity, along
with some help from intensified global competition. The $64,000 question is
whether higher productivity growth will be a lasting feature of the "new
economy" or a temporary phenomenon merely delaying "old economy" pressures that
will eventually assert themselves. The Fed appears to have one foot in each
camp, as it takes relatively minor steps to cool the economy while acknowledging
that the rate of expansion is well above previously estimated limits for
noninflationary growth. The future course of money market rates will be greatly
influenced by the Fed's evolving judgment of these issues.
Another upward force on money market rates was an increase in funding
pressure as the turn of the millennium approached. As we anticipated, the
typical seasonal dislocations in short-term rates--caused primarily by the
desire of banks and securities firms to shrink their balance sheets at
year-end--were
6
<PAGE> 9
exaggerated this year. Starting in September, commercial paper
(CP) issuers began to seek maturity dates beyond December 31 in order to lock in
funding through the New Year changeover. The trend accelerated in October, and
by late in the month 38% of outstanding CP had maturity dates after December 31,
compared with 13% of outstanding commercial paper at the same point in 1998.
This accelerated pace of issuance boosted short-term rates to extreme levels. At
present, however, concerns seem to have lessened and market liquidity appears to
be improved. Actions by government authorities contributed to the improvement.
The Fed greatly expanded the universe of securities that borrowers can use as
collateral for borrowing from the Fed's discount window or from its special
liquidity facility. Also, the Fed auctioned a large volume of options that
entitle holders to raise cash for short periods around year-end through
repurchase agreements with the Fed. These innovative options provided a very
low-cost backstop to support liquidity in the event of severe disintermediation.
Also, the U.S. Treasury issued nearly $50 billion in extra T-bills to create a
large cash cushion into early 2000. These added T-bills dispelled the fears of
some investors that the supply of the safest, most-liquid short-term securities
would become desperately short.
In October, we extended the maturities of the Vanguard Money Market Funds
to take advantage of the attractive yields described above. This enabled us to
match up our investments with the liquidity offered by issuers and to limit the
potential impact of a drought of new issues in December. We plan to let the
average maturity of the funds decline as the year-end approaches, keeping them
highly liquid and lowering their price sensitivity to interest rate changes.
In managing the Prime Money Market Fund, we pay close attention, as
always, to the credit quality and liquidity of the securities in which we
invest. Also, we diversify the holdings broadly, allocating more assets to
higher-rated securities. These usually are not the highest-yielding investments;
however, the extra yield available for taking added credit risk is relatively
small, especially in light of our fund's low expenses when compared with its
average peer. The combination of our attention to credit quality and our low
operating costs produces a competitive, and often superior, return with a highly
creditworthy fund. Shareholders of our Federal and Treasury Money Market Funds
enjoy the benefit of our cost advantage while holding assets of the same U.S.
government quality as those of our competitors.
Ian A. MacKinnon, Managing Director
Robert F. Auwaerter, Principal
John Hollyer, Principal
David R. Glocke, Principal
Vanguard Fixed Income Group
December 13, 1999
INVESTMENT PHILOSOPHY
The funds reflect a belief that the highest level of current income consistent
with capital preservation and liquidity can be provided by holding
high-quality money market instruments issued by financial institutions,
nonfinancial corporations, the U.S. government, and federal
agencies.
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<PAGE> 10
PERFORMANCE SUMMARY
PRIME MONEY MARKET FUND
All of the data on this page represent past performance, which cannot be used to
predict future returns that may be achieved by the fund. Note that returns can
fluctuate widely. An investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the fund seeks to preserve the value of your investment at $1
per share, it is possible to lose money by investing in the fund.
<TABLE>
<CAPTION>
TOTAL INVESTMENT RETURNS: NOVEMBER 30, 1979-NOVEMBER 30, 1999
- ---------------------------------------------------------------
PRIME MONEY MARKET FUND AVERAGE
FUND*
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
1980 0.0% 12.8% 12.8% 12.5%
1981 0.0 17.6 17.6 17.5
1982 0.0 13.1 13.1 12.8
1983 0.0 8.9 8.9 8.6
1984 0.0 10.6 10.6 10.1
1985 0.0 8.2 8.2 7.9
1986 0.0 6.8 6.8 6.4
1987 0.0 6.5 6.5 6.0
1988 0.0 7.5 7.5 6.9
1989 0.0 9.4 9.4 8.8
1990 0.0 8.3 8.3 7.8
1991 0.0 6.4 6.4 5.9
1992 0.0 3.9 3.9 3.4
1993 0.0 3.0 3.0 2.6
1994 0.0 3.9 3.9 3.5
1995 0.0 5.8 5.8 5.4
1996 0.0 5.3 5.3 4.8
1997 0.0 5.4 5.4 4.9
1998 0.0 5.4 5.4 4.9
1999 0.0 5.0 5.0 4.4
- ---------------------------------------------------------------
</TABLE>
*Average Money Market Fund.
See Financial Highlights table on page 28 for dividend
information for the past five years.
SEC 7-Day Annualized Yield (11/30/1999): 5.36%
[LINE GRAPH]
<TABLE>
<CAPTION>
CUMULATIVE PERFORMANCE: NOVEMBER 30, 1989-NOVEMBER 30, 1999
- ----------------------------------------------------------------
Prime Money Average Money Salomon Smith Barney
Market Fund Market Fund 3-Month T-Bill Index
<S> <C> <C> <C>
1989 11 10000 10000 10000
1990 02 10204 10191 10193
1990 05 10412 10391 10398
1990 08 10624 10590 10604
1990 11 10833 10783 10798
1991 02 11033 10969 10977
1991 05 11209 11132 11140
1991 08 11374 11283 11298
1991 11 11526 11420 11443
1992 02 11658 11539 11561
1992 05 11774 11641 11676
1992 08 11882 11733 11779
1992 11 11975 11813 11868
1993 02 12068 11893 11960
1993 05 12158 11968 12048
1993 08 12247 12043 12141
1993 11 12337 12123 12234
1994 02 12429 12202 12327
1994 05 12534 12294 12440
1994 08 12665 12404 12573
1994 11 12815 12541 12725
1995 02 12993 12702 12898
1995 05 13186 12878 13088
1995 08 13376 13040 13274
1995 11 13561 13212 13454
1996 02 13743 13376 13633
1996 05 13918 13533 13805
1996 08 14099 13684 13984
1996 11 14281 13850 14165
1997 02 14465 14013 14343
1997 05 14656 14182 14532
1997 08 14855 14347 14719
1997 11 15054 14526 14908
1998 02 15255 14704 15098
1998 05 15461 14887 15294
1998 08 15668 15054 15487
1998 11 15870 15236 15671
1999 02 16062 15404 15841
1999 05 16251 15568 16021
1999 08 16446 15721 16207
1999 11 16658 15911 16404
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1999
-------------------------------- FINAL VALUE OF A
1 YEAR 5 YEARS 10 YEARS $10,000 INVESTMENT
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Prime Money Market Fund 4.97% 5.39% 5.24% $16,658
Average Money Market Fund* 4.43 4.88 4.75 15,911
Salomon Smith Barney 3-Month Treasury Index 4.68 5.21 5.07 16,404
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
*Derived from data provided by Lipper Inc.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS: PERIODS ENDED SEPTEMBER 30, 1999*
- ------------------------------------------------------------------------------------------------------------------------
10 YEARS
INCEPTION ------------------------------
DATE 1 YEAR 5 YEARS CAPITAL INCOME TOTAL
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Prime Money Market Fund 6/4/1975 4.94% 5.37% 0.00% 5.29% 5.29%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
*SEC rules require that we provide this average annual total return information
through the latest calendar quarter.
8
<PAGE> 11
PERFORMANCE SUMMARY
PRIME MONEY MARKET FUND INSTITUTIONAL SHARES
All of the data on this page represent past performance, which cannot be used to
predict future returns that may be achieved by the fund. Note that returns can
fluctuate widely. An investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the fund seeks to preserve the value of your investment at $1
per share, it is possible to lose money by investing in the fund.
<TABLE>
<CAPTION>
TOTAL INVESTMENT RETURNS: OCTOBER 3, 1989-NOVEMBER 30, 1999
- --------------------------------------------------------------
PRIME MONEY MARKET FUND AVERAGE
INSTITUTIONAL SHARES FUND**
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN* RETURN
- --------------------------------------------------------------
<S> <C> <C> <C> <C>
1989 0.0% 1.4% 1.4% 1.4%
1990 0.0 8.5 8.5 8.3
1991 0.0 6.5 6.5 6.2
1992 0.0 4.0 4.0 3.8
1993 0.0 3.2 3.2 2.9
1994 0.0 4.1 4.1 3.8
1995 0.0 6.0 6.0 5.7
1996 0.0 5.5 5.5 5.2
1997 0.0 5.6 5.6 5.3
1998 0.0 5.6 5.6 5.3
1999 0.0 5.1 5.1 4.9
- --------------------------------------------------------------
</TABLE>
*Prior to 10/28/1995, total returns are for Vanguard Institutional Money Market
Portfolio.
**Average Institutional Money Market Fund.
See Financial Highlights table on page 28 for dividend information.
SEC 7-Day Annualized Yield (11/30/1999): 5.54%
[LINE GRAPH]
<TABLE>
<CAPTION>
CUMULATIVE PERFORMANCE: NOVEMBER 30, 1989-NOVEMBER 30, 1999
- --------------------------------------------------------------------------
Prime Money Average
Market Fund Institutional
Institutional Money Market Salomon Smith Barney
Shares Fund 3-Month Treasury Index
<S> <C> <C> <C>
1989 11 10000000 10000000 10000000
1990 02 10207544 10202000 10193230
1990 05 10421052 10410346 10398457
1990 08 10637037 10619822 10603601
1990 11 10849326 10827000 10797759
1991 02 11052811 11020068 10976901
1991 05 11232570 11193204 11140161
1991 08 11401118 11353651 11297977
1991 11 11557040 11501522 11443208
1992 02 11692585 11612947 11561477
1992 05 11813244 11745029 11676314
1992 08 11924285 11846400 11779367
1992 11 12022471 11933979 11867933
1993 02 12121205 12007787 11959551
1993 05 12216335 12113823 12048270
1993 08 12311083 12200607 12141280
1993 11 12406448 12284838 12233787
1994 02 12503841 12357214 12327000
1994 05 12615883 12482083 12439515
1994 08 12753722 12608107 12573093
1994 11 12910064 12750434 12724574
1995 02 13095660 12905874 12898413
1995 05 13296453 13116173 13087648
1995 08 13493746 13301553 13274374
1995 11 13685222 13481034 13454385
1996 02 13874340 13641509 13632765
1996 05 14057017 13834939 13805260
1996 08 14246044 14010526 13984114
1996 11 14436391 14183395 14165286
1997 02 14627768 14339954 14343090
1997 05 14828035 14548822 14531806
1997 08 15035010 14743277 14718608
1997 11 15242792 14933697 14907811
1998 02 15453365 15110010 15097942
1998 05 15668246 15334458 15293544
1998 08 15885789 15539414 15487053
1998 11 16097740 15731156 15670520
1999 02 16298736 15895731 15840529
1999 05 16497648 16105781 16021159
1999 08 16703581 16294629 16207201
1999 11 16926607 16498837 16403900
- --------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1999 FINAL VALUE OF A
----------------------------------- $10,000,000
1 YEAR 5 YEARS 10 YEARS INVESTMENT
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Prime Money Market Fund Institutional Shares* 5.15% 5.57% 5.40% $16,926,607
Average Institutional Money Market Fund** 4.88 5.29 5.13 16,498,837
Salomon Smith Barney 3-Month Treasury Index 4.68 5.21 5.07 16,403,900
- -----------------------------------------------------------------------------------------------------------
</TABLE>
*Prior to 10/28/1995, total returns are for Vanguard Institutional Money
Market Portfolio.
**Derived from data provided by Lipper Inc.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS: PERIODS ENDED SEPTEMBER 30, 1999*
- -------------------------------------------------------------------------------------------------------------------------
SINCE INCEPTION
INCEPTION -------------------------------
DATE 1 YEAR 5 YEARS CAPITAL INCOME TOTAL
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Prime Money Market Fund 10/3/1989 5.12% 5.55% 0.00% 5.46% 5.46%
Institutional Shares**
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
*SEC rules require that we provide this average annual total return
information through the latest calendar quarter.
**Prior to 10/28/1995, total returns are for Vanguard Institutional Money Market
Portfolio.
9
<PAGE> 12
PERFORMANCE SUMMARY
FEDERAL MONEY MARKET FUND
All of the data on this page represent past performance, which cannot be used
to predict future returns that may be achieved by the fund. Note that returns
can fluctuate widely. An investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the fund seeks to preserve the value of your investment at $1
per share, it is possible to lose money by investing in the fund.
<TABLE>
<CAPTION>
TOTAL INVESTMENT RETURNS: JULY 13, 1981-NOVEMBER 30, 1999
- -------------------------------------------------------------
FEDERAL MONEY MARKET FUND AVERAGE
FUND*
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
- -------------------------------------------------------------
<S> <C> <C> <C> <C>
1981 0.0% 5.9% 5.9% 5.7%
1982 0.0 11.9 11.9 11.7
1983 0.0 8.5 8.5 8.3
1984 0.0 10.2 10.2 9.8
1985 0.0 8.0 8.0 7.7
1986 0.0 6.6 6.6 6.3
1987 0.0 6.3 6.3 5.9
1988 0.0 7.2 7.2 6.7
1989 0.0 9.2 9.2 8.6
1990 0.0 8.1 8.1 7.7
1991 0.0 6.2 6.2 5.7
1992 0.0 3.8 3.8 3.4
1993 0.0 3.0 3.0 2.6
1994 0.0 3.8 3.8 3.4
1995 0.0 5.8 5.8 5.3
1996 0.0 5.3 5.3 4.8
1997 0.0 5.4 5.4 4.9
1998 0.0 5.4 5.4 4.9
1999 0.0 4.9 4.9 4.4
- -------------------------------------------------------------
</TABLE>
*Average Government Money Market Fund.
See Financial Highlights table on page 29 for dividend
information for the past five years.
SEC 7-Day Annualized Yield (11/30/1999): 5.21%
<TABLE>
<CAPTION>
CUMULATIVE PERFORMANCE: NOVEMBER 30, 1989-NOVEMBER 30, 1999
- --------------------------------------------------------------------------
Average
Government
Federal Money Money Market Salomon Smith Barney
Market Fund Fund 3-Month Treasury Index
<S> <C> <C> <C>
1989 11 10000 10000 10000
1990 02 10200 10189 10193
1990 05 10405 10384 10398
1990 08 10611 10581 10604
1990 11 10815 10771 10798
1991 02 11004 10947 10977
1991 05 11174 11104 11140
1991 08 11334 11256 11298
1991 11 11484 11389 11443
1992 02 11612 11505 11561
1992 05 11726 11609 11676
1992 08 11832 11703 11779
1992 11 11924 11778 11868
1993 02 12013 11856 11960
1993 05 12101 11931 12048
1993 08 12191 12010 12141
1993 11 12280 12080 12234
1994 02 12370 12158 12327
1994 05 12474 12249 12440
1994 08 12602 12363 12573
1994 11 12749 12489 12725
1995 02 12924 12646 12898
1995 05 13115 12817 13088
1995 08 13302 12985 13274
1995 11 13484 13147 13454
1996 02 13663 13306 13633
1996 05 13836 13462 13805
1996 08 14015 13620 13984
1996 11 14194 13775 14165
1997 02 14374 13934 14343
1997 05 14563 14104 14532
1997 08 14758 14276 14719
1997 11 14954 14446 14908
1998 02 15152 14621 15098
1998 05 15353 14810 15294
1998 08 15557 14991 15487
1998 11 15755 15160 15671
1999 02 15942 15320 15841
1999 05 16128 15486 16021
1999 08 16320 15654 16207
1999 11 16526 15827 16404
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1999
---------------------------------- FINAL VALUE OF A
1 YEAR 5 YEARS 10 YEARS $10,000 INVESTMENT
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Federal Money Market Fund 4.89% 5.33% 5.15% $16,526
Average Government Money Market Fund* 4.40 4.85 4.70 15,827
Salomon Smith Barney 3-Month Treasury Index 4.68 5.21 5.07 16,404
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
*Derived from data provided by Lipper Inc.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS: PERIODS ENDED SEPTEMBER 30, 1999*
- --------------------------------------------------------------------------------------------------------------------
10 YEARS
INCEPTION -----------------------------
DATE 1 YEAR 5 YEARS CAPITAL INCOME TOTAL
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Federal Money Market Fund 7/13/1981 4.88% 5.32% 0.00% 5.21% 5.21%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
*SEC rules require that we provide this average annual total return information
through the latest calendar quarter.
10
<PAGE> 13
PERFORMANCE SUMMARY
TREASURY MONEY MARKET FUND
All of the data on this page represent past performance, which cannot be used
to predict future returns that may be achieved by the fund. Note that returns
can fluctuate widely. An investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the fund seeks to preserve the value of your investment at $1
per share, it is possible to lose money by investing in the fund.
<TABLE>
<CAPTION>
TOTAL INVESTMENT RETURNS: MARCH 9, 1983-NOVEMBER 30, 1999
- -------------------------------------------------------------
TREASURY MONEY MARKET FUND* AVERAGE
FUND**
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
- -------------------------------------------------------------
<S> <C> <C> <C> <C>
1983 0.0% 6.1% 6.1% 6.2%
1984 0.0 9.9 9.9 10.1
1985 0.0 7.5 7.5 7.9
1986 0.0 6.2 6.2 6.4
1987 0.0 6.0 6.0 6.0
1988 0.0 7.0 7.0 6.9
1989 0.0 8.9 8.9 8.7
1990 0.0 8.0 8.0 7.8
1991 0.0 5.9 5.9 5.8
1992 0.0 3.7 3.7 3.5
1993 0.0 2.9 2.9 2.6
1994 0.0 3.6 3.6 3.4
1995 0.0 5.5 5.5 5.2
1996 0.0 5.1 5.1 4.8
1997 0.0 5.1 5.1 4.8
1998 0.0 5.1 5.1 4.8
1999 0.0 4.5 4.5 4.2
- -------------------------------------------------------------
</TABLE>
*Prior to 12/2/1996, known as the U.S. Treasury Portfolio; prior to 3/13/1989,
total returns are for the Insured Portfolio.
**Average Money Market Fund through 3/31/1989; Average Treasury Money Market
Fund thereafter.
See Financial Highlights table on page 29 for dividend information for the past
five years.
SEC 7-Day Annualized Yield (11/30/1999): 4.77%
<TABLE>
<CAPTION>
CUMULATIVE PERFORMANCE: NOVEMBER 30, 1989-NOVEMBER 30, 1999
- -------------------------------------------------------------------------
Average
Treasury
Treasury Money Money Market Salomon Smith Barney
Market Fund Fund 3-Month Treasury Index
<S> <C> <C> <C>
1989 11 10000 10000 10000
1990 02 10196 10189 10193
1990 05 10399 10385 10398
1990 08 10603 10583 10604
1990 11 10803 10776 10798
1991 02 10983 10952 10977
1991 05 11147 11112 11140
1991 08 11301 11263 11298
1991 11 11445 11400 11443
1992 02 11568 11518 11561
1992 05 11678 11625 11676
1992 08 11781 11718 11779
1992 11 11867 11797 11868
1993 02 11952 11875 11960
1993 05 12036 11955 12048
1993 08 12122 12030 12141
1993 11 12207 12106 12234
1994 02 12292 12185 12327
1994 05 12391 12277 12440
1994 08 12511 12387 12573
1994 11 12649 12515 12725
1995 02 12812 12670 12898
1995 05 12992 12842 13088
1995 08 13169 13007 13274
1995 11 13341 13171 13454
1996 02 13512 13330 13633
1996 05 13679 13486 13805
1996 08 13850 13641 13984
1996 11 14023 13798 14165
1997 02 14194 13955 14343
1997 05 14373 14121 14532
1997 08 14557 14288 14719
1997 11 14739 14459 14908
1998 02 14925 14631 15098
1998 05 15115 14806 15294
1998 08 15304 14981 15487
1998 11 15485 15145 15671
1999 02 15653 15296 15841
1999 05 15824 15452 16021
1999 08 15999 15611 16207
1999 11 16184 15780 16404
- -------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1999
----------------------------------- FINAL VALUE OF A
1 YEAR 5 YEARS 10 YEARS $10,000 INVESTMENT
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Treasury Money Market Fund* 4.51% 5.05% 4.93% $16,184
Average Treasury Money Market Fund** 4.19 4.75 4.67 15,780
Salomon Smith Barney 3-Month Treasury Index 4.68 5.21 5.07 16,404
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
*Prior to 12/2/1996, known as the U.S. Treasury Portfolio.
**Derived from data provided by Lipper Inc.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS: PERIODS ENDED SEPTEMBER 30, 1999*
- -------------------------------------------------------------------------------------------------------------------------
10 YEARS
INCEPTION --------------------------------
DATE 1 YEAR 5 YEARS CAPITAL INCOME TOTAL
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Treasury Money Market Fund** 3/9/1983 4.51% 5.05% 0.00% 4.99% 4.99%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
*SEC rules require that we provide this average annual total return information
through the latest calendar quarter.
**Prior to 12/2/1996, known as the U.S. Treasury Portfolio.
11
<PAGE> 14
FUND PROFILE
PRIME MONEY MARKET FUND
This Profile provides a snapshot of the fund's characteristics as of November
30, 1999. Key elements of this Profile are defined below.
<TABLE>
<CAPTION>
FINANCIAL ATTRIBUTES
- -------------------------------------------------------------
<S> <C>
Yield 5.4%
Yield--Institutional Shares 5.5%
Average Maturity 69 days
Average Quality Aa1
Expense Ratio 0.33%
Expense Ratio--Institutional Shares 0.15%
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY ISSUER
(% OF PORTFOLIO)
- -------------------------------------------------------------
<S> <C>
Certificates of Deposit 17.1%
Commercial Paper 44.7
Treasury/Agency 31.0
Other 7.2
- -------------------------------------------------------------
Total 100.0%
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY CREDIT QUALITY
(% OF PORTFOLIO)
- -------------------------------------------------------------
<S> <C>
Treasury/Agency 31.0%
Aaa 17.3
Aa 36.2
A 15.5
Baa 0.0
Ba 0.0
B 0.0
Not Rated 0.0
- -------------------------------------------------------------
Total 100.0%
</TABLE>
AVERAGE MATURITY. The average length of time until bonds held by a fund
reach maturity (or are called) and are repaid. In general, the longer the
average maturity, the more a fund's share price will fluctuate in response to
changes in market interest rates.
AVERAGE QUALITY. An indicator of credit risk, this figure is the average of the
ratings assigned to a fund's securities holdings by credit-rating agencies. The
agencies make their judgment after appraising an issuer's ability to meet its
obligations. Quality is graded on a scale, with Aaa or AAA indicating the most
creditworthy bond issuers and A-1 or MIG-1 indicating the most creditworthy
issuers of money market securities. U.S. Treasury securities are considered to
have the highest credit quality.
DISTRIBUTION BY CREDIT QUALITY. This breakdown of a fund's securities by credit
rating can help in gauging the risk that returns could be affected by defaults
or other credit problems.
DISTRIBUTION BY ISSUER. A breakdown of a fund's holdings by type of issuer or
type of instrument.
EXPENSE RATIO. The percentage of a fund's average net assets used to pay its
annual administrative and advisory expenses. These expenses directly reduce
returns to investors.
YIELD. A snapshot of a fund's interest income. The yield, expressed as a
percentage of the fund's net asset value, is based on income earned over the
past seven days and is annualized, or projected forward for the coming
year.
12
<PAGE> 15
FUND PROFILE FEDERAL
MONEY MARKET FUND
This Profile provides a snapshot of the fund's characteristics as of November
30, 1999. Key elements of this Profile are defined on page 12.
<TABLE>
<CAPTION>
FINANCIAL ATTRIBUTES
- -------------------------------------------------------------
<S> <C>
Yield 5.2%
Average Maturity 70 days
Average Quality Agency
Expense Ratio 0.33%
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY
CREDIT QUALITY (% OF PORTFOLIO)
- -------------------------------------------------------------
<S> <C>
Agency 100.0%
</TABLE>
FUND PROFILE
TREASURY MONEY MARKET FUND
This Profile provides a snapshot of the fund's characteristics as of November
30, 1999. Key elements of this Profile are defined on page 12.
<TABLE>
<CAPTION>
FINANCIAL ATTRIBUTES
- -------------------------------------------------------------
<S> <C>
Yield 4.8%
Average Maturity 77 days
Average Quality Treasury
Expense Ratio 0.33%
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY CREDIT QUALITY
(% OF PORTFOLIO)
- -------------------------------------------------------------
<S> <C>
Treasury 100.0%
</TABLE>
13
<PAGE> 16
FINANCIAL STATEMENTS
NOVEMBER 30, 1999
STATEMENT OF NET ASSETS
This Statement provides a detailed list of each fund's holdings on the last day
of the reporting period, including each security's maturity date, coupon rate
or yield to maturity at the time of purchase, and statement-date market value.
Securities are grouped and subtotaled by type of instrument (U.S. government
obligations, commercial paper, certificates of deposit, etc.). Other assets are
added to, and liabilities are subtracted from, the value of Total Investments
to calculate the fund's Net Assets. Finally, Net Assets are divided by the
outstanding shares of the fund to arrive at its share price, or Net Asset Value
(NAV) Per Share. Each fund's objective is to maintain a constant NAV of $1.00
per share.
At the end of the Statement of Net Assets of each fund, you will find a
table displaying the composition of the fund's net assets. Virtually the entire
amount of net assets consists of Paid in Capital (money invested by
shareholders). Undistributed Net Investment Income is usually zero because the
fund distributes its net income to shareholders as a dividend each day, and
Accumulated Realized Gains (Losses) are very small because the fund seldom
realizes any significant gains or losses on sales of securities.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
PRIME MONEY MARKET FUND YIELD** DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS (30.8%)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Federal Home Loan Bank 4.90% 1/14/2000 $ 87,950 $ 87,935
Federal Home Loan Bank 4.93% 1/13/2000 380,000 380,000
Federal Home Loan Bank 4.93% 1/19/2000 200,000 199,986
Federal Home Loan Bank 5.10% 3/3/2000 250,000 249,968
Federal Home Loan Bank 5.17% 12/1/1999 (1) 500,000 500,000
Federal Home Loan Bank 5.23% 12/15/1999 (1) 500,000 499,846
Federal Home Loan Bank 5.243% 12/9/1999 (1) 300,000 299,896
Federal Home Loan Bank 5.421% 12/28/1999 (1) 183,000 182,921
Federal Home Loan Bank 5.839% 2/12/2000 (1) 500,000 499,811
Federal Home Loan Bank 5.976% 1/11/2000 (1) 200,000 199,984
Federal Home Loan Mortgage Corp. 4.924% 1/21/2000 167,794 166,663
Federal Home Loan Mortgage Corp. 4.98% 4/28/2000 500,000 499,825
Federal Home Loan Mortgage Corp. 5.277% 12/18/1999 (1) 900,000 899,668
Federal Home Loan Mortgage Corp. 5.393% 12/20/1999 (1) 250,000 249,940
Federal Home Loan Mortgage Corp. 5.423% 12/22/1999 (1) 300,000 299,934
Federal Home Loan Mortgage Corp. 5.622% 1/12/2000 200,000 198,712
Federal National Mortgage Assn. 4.72% 12/16/1999 400,000 399,994
Federal National Mortgage Assn. 5.11% 5/22/2000 200,000 199,955
Federal National Mortgage Assn. 5.226% 12/2/1999 (1) 500,000 499,774
Federal National Mortgage Assn. 5.226% 12/4/1999 (1) 500,000 499,755
Federal National Mortgage Assn. 5.229% 12/7/1999 (1) 200,000 199,929
Federal National Mortgage Assn. 5.24% 12/15/1999 (1) 540,000 539,912
Federal National Mortgage Assn. 5.243% 12/14/1999 (1) 715,000 714,713
Federal National Mortgage Assn. 5.399% 12/24/1999 (1) 250,000 249,946
Federal National Mortgage Assn. 5.41% 12/21/1999 (1) 980,000 979,579
Federal National Mortgage Assn. 5.411% 12/26/1999 (1) 930,000 929,592
Federal National Mortgage Assn. 5.414% 12/23/1999 (1) 710,000 709,761
Federal National Mortgage Assn. 5.426% 12/28/1999 (1) 500,000 499,831
U.S. Treasury Bill 4.817% 1/6/2000 250,000 248,820
U.S. Treasury Note 6.375% 1/15/2000 600,000 601,042
- -------------------------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS
(COST $12,687,692) 12,687,692
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 17
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
YIELD** DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER (44.5%)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BANK HOLDING COMPANIES (3.8%)
Bank One Corp. 6.027% 4/18/2000 $ 50,000 $ 48,871
Bank One Corp. 6.036% 3/27/2000 50,000 49,045
Chase Manhattan Corp. 6.028% 4/27/2000 300,000 292,785
Citigroup 5.812% 2/3/2000 50,000 49,498
Citigroup 5.813% 2/4/2000 50,000 49,490
Citigroup 5.815% 2/7/2000 50,000 49,466
Citigroup 5.816% 2/8/2000 50,000 49,459
Citigroup 5.858% 2/14/2000 100,000 98,810
Citigroup 5.859% 2/15/2000 50,000 49,397
Citigroup 5.86% 2/16/2000 50,000 49,389
Citigroup 5.895% 2/17/2000 50,000 49,377
Citigroup 5.911% 3/3/2000 50,000 49,257
Wells Fargo & Co. 5.87% 3/29/2000 199,670 195,908
Wells Fargo & Co. 5.939% 2/11/2000 25,000 24,708
Wells Fargo & Co. 5.96% 3/2/2000 200,000 197,034
Wells Fargo & Co. 6.029% 3/30/2000 250,000 245,165
-----------
1,547,659
-----------
FINANCE--AUTO (5.0%)
Daimler-Chrysler NA Holding Corp. 5.972% 3/21/2000 150,000 147,313
Daimler-Chrysler NA Holding Corp. 6.057% 4/17/2000 50,000 48,873
Daimler-Chrysler NA Holding Corp. 6.083% 2/17/2000 100,000 98,711
Daimler-Chrysler NA Holding Corp. 6.093% 2/22/2000 150,000 147,939
Daimler-Chrysler NA Holding Corp. 6.093% 2/23/2000 100,000 98,609
Daimler-Chrysler NA Holding Corp. 6.094% 2/16/2000 50,000 49,363
Daimler-Chrysler NA Holding Corp. 6.103% 2/24/2000 250,000 246,476
Ford Motor Credit Co. 5.988% 4/27/2000 200,000 195,223
Ford Motor Credit Co. 6.005% 4/19/2000 150,000 146,599
General Motors Acceptance Corp. 5.906% 2/8/2000 50,000 49,442
General Motors Acceptance Corp. 5.925% 3/16/2000 100,000 98,301
General Motors Acceptance Corp. 5.956% 2/14/2000 50,000 49,389
General Motors Acceptance Corp. 5.972% 2/11/2000 250,000 247,060
General Motors Acceptance Corp. 5.983% 3/22/2000 100,000 98,189
General Motors Acceptance Corp. 6.083% 2/17/2000 150,000 148,090
General Motors Acceptance Corp. 6.098% 1/27/2000 100,000 99,052
New Center Asset Trust 5.917% 2/9/2000 100,000 98,866
-----------
2,067,495
-----------
FINANCE--OTHER (17.8%)
American Express Credit Corp. 5.960% 3/23/2000 200,000 196,346
American Express Credit Corp. 5.994% 2/29/2000 200,000 197,075
American General Corp. 5.971% 2/10/2000 50,000 49,420
Asset Securitization Cooperative Corp. 5.962% 2/18/2000 243,000 239,896
Asset Securitization Cooperative Corp. 6.002% 1/27/2000 185,000 183,263
Asset Securitization Cooperative Corp. 6.004% 2/24/2000 65,000 64,101
Associates Corp. of North America 5.724% 2/7/2000 75,000 74,212
Associates Corp. of North America 5.725% 2/8/2000 75,000 74,201
Associates Corp. of North America 5.726% 2/9/2000 50,000 49,459
Bank One Financial Corp. 6.133% 2/28/2000 50,000 49,258
BellSouth Capital Funding Corp. 5.826% 2/16/2000 55,000 54,334
Caterpillar Financial Services Corp. 5.93% 2/8/2000 36,640 36,229
Caterpillar Financial Services Corp. 5.931% 2/9/2000 16,985 16,792
CIT Group Holdings Inc. 5.92% 2/29/2000 125,000 123,181
CIT Group Holdings Inc. 5.953% 2/11/2000 70,000 69,178
CIT Group Holdings Inc. 6.069% 2/16/2000 200,000 197,455
Centric Capital Corp. 5.382% 12/3/1999 10,000 9,997
Centric Capital Corp. 5.488% 12/1/1999 15,000 15,000
Centric Capital Corp. 5.492% 12/7/1999 12,055 12,044
Centric Capital Corp. 5.604% 12/6/1999 31,200 31,177
Centric Capital Corp. 5.937% 2/8/2000 10,070 9,957
</TABLE>
15
<PAGE> 18
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
PRIME MONEY MARKET FUND YIELD** DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Centric Capital Corp. 5.954% 3/24/2000 $ 15,000 $ 14,725
Centric Capital Corp. 5.97% 1/20/2000 11,200 11,108
Centric Capital Corp. 5.977% 2/25/2000 25,000 24,649
Centric Capital Corp. 5.981% 1/10/2000 16,250 16,143
Centric Capital Corp. 6.016% 1/28/2000 20,945 20,744
Centric Capital Corp. 6.016% 2/3/2000 10,000 9,895
Centric Capital Corp. 6.017% 1/26/2000 50,000 49,537
Centric Capital Corp. 6.017% 2/4/2000 9,600 9,497
Centric Capital Corp. 6.019% 1/31/2000 50,000 49,496
Centric Capital Corp. 6.023% 2/10/2000 40,500 40,029
Centric Capital Corp. 6.049% 2/11/2000 15,000 14,822
Centric Capital Corp. 6.11% 4/21/2000 7,000 6,836
Centric Capital Corp. 6.134% 4/20/2000 8,000 7,814
Ciesco LP 5.60% 12/1/1999 7,970 7,970
Delaware Funding 5.405% 12/2/1999 19,838 19,835
Delaware Funding 5.967% 2/22/2000 10,331 10,192
Delaware Funding 5.986% 1/28/2000 122,374 121,206
Delaware Funding 5.995% 2/10/2000 76,752 75,865
Delaware Funding 5.999% 1/26/2000 50,589 50,122
Delaware Funding 6.012% 1/21/2000 6,042 5,991
Delaware Funding 6.053% 2/15/2000 101,826 100,553
Delaware Funding 6.16% 1/18/2000 82,232 81,567
Enterprise Funding Corp. 5.372% 12/2/1999 52,218 52,210
Enterprise Funding Corp. 5.372% 12/3/1999 25,000 24,993
Enterprise Funding Corp. 5.461% 12/13/1999 30,022 29,968
Enterprise Funding Corp. 5.473% 12/1/1999 32,906 32,906
Enterprise Funding Corp. 5.933% 2/4/2000 51,735 51,188
Enterprise Funding Corp. 5.959% 2/22/2000 45,102 44,492
Enterprise Funding Corp. 5.963% 2/11/2000 18,684 18,464
Enterprise Funding Corp. 5.996% 1/28/2000 20,224 20,031
Enterprise Funding Corp. 6.019% 2/2/2000 100,675 99,637
Enterprise Funding Corp. 6.122% 2/16/2000 80,628 79,593
General Electric Capital Corp. 5.816% 2/7/2000 150,000 148,399
General Electric Capital Corp. 5.867% 2/16/2000 75,000 74,086
General Electric Capital Corp. 5.881% 2/29/2000 200,000 197,140
General Electric Capital Corp. 5.893% 3/14/2000 300,000 295,051
General Electric Capital Corp. 5.897% 2/24/2000 100,000 98,645
General Electric Capital Corp. 5.90% 3/13/2000 75,000 73,773
General Electric Capital Corp. 5.90% 4/26/2000 50,000 48,836
General Electric Capital Corp. 5.908% 4/13/2000 100,000 97,875
General Electric Capital Corp. 6.074% 4/17/2000 650,000 635,337
General Electric Capital Corp. 6.084% 4/14/2000 100,000 97,784
International Business Machines Credit 5.997% 2/9/2000 200,000 197,713
Intrepid Funding 6.106% 2/17/2000 30,693 30,296
Intrepid Funding 6.178% 2/10/2000 147,857 146,090
Norwest Financial 6.01% 3/2/2000 100,000 98,501
Norwest Financial 6.10% 2/9/2000 150,000 148,256
Park Avenue Receivable Corp. 5.394% 12/2/1999 56,178 56,170
Park Avenue Receivable Corp. 5.948% 3/14/2000 46,510 45,733
Park Avenue Receivable Corp. 5.985% 2/23/2000 54,278 53,540
Park Avenue Receivable Corp. 5.985% 3/23/2000 77,637 76,221
Park Avenue Receivable Corp. 6.099% 4/6/2000 43,717 42,802
Park Avenue Receivable Corp. 6.108% 3/10/2000 77,484 76,199
Park Avenue Receivable Corp. 6.121% 4/13/2000 28,926 28,285
Park Avenue Receivable Corp. 6.196% 1/18/2000 150,000 148,780
Preferred Receivables Funding Co. 5.471% 12/6/1999 150,000 149,888
Preferred Receivables Funding Co. 5.954% 2/17/2000 141,610 139,808
Preferred Receivables Funding Co. 5.966% 2/14/2000 30,815 30,438
Preferred Receivables Funding Co. 5.997% 1/26/2000 118,065 116,961
Preferred Receivables Funding Co. 6.012% 2/3/2000 50,000 49,477
</TABLE>
16
<PAGE> 19
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
YIELD** DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Preferred Receivables Funding Co. 6.039% 1/25/2000 $ 35,000 $ 34,681
Preferred Receivables Funding Co. 6.102% 4/28/2000 20,000 19,510
Preferred Receivables Funding Co. 6.183% 1/20/2000 34,525 34,231
Private Export Funding Corp. 5.864% 3/10/2000 10,000 9,840
Private Export Funding Corp. 5.867% 3/15/2000 85,000 83,572
Private Export Funding Corp. 5.999% 2/28/2000 45,000 44,346
Private Export Funding Corp. 6.003% 3/3/2000 65,000 64,016
Riverwoods Funding Corp. 5.937% 2/9/2000 15,000 14,829
Riverwoods Funding Corp. 5.962% 2/15/2000 75,000 74,050
Riverwoods Funding Corp. 6.095% 2/3/2000 25,000 24,734
Riverwoods Funding Corp. 6.106% 2/10/2000 100,000 98,821
Riverwoods Funding Corp. 6.138% 1/25/2000 50,000 49,539
Riverwoods Funding Corp. 6.138% 1/27/2000 50,000 49,523
Riverwoods Funding Corp. 6.139% 1/26/2000 25,000 24,766
Riverwoods Funding Corp. 6.149% 2/7/2000 50,000 49,431
Riverwoods Funding Corp. 6.177% 2/2/2000 25,000 24,734
Three Rivers Funding 5.402% 12/2/1999 62,096 62,087
Triple A One Funding Corp. 5.382% 12/3/1999 67,404 67,384
Triple A One Funding Corp. 5.393% 12/1/1999 34,115 34,115
Triple A One Funding Corp. 5.420% 12/9/1999 18,967 18,944
Triple A One Funding Corp. 6.015% 1/27/2000 67,607 66,973
Variable Funding Capital Corp. 5.933% 2/17/2000 25,000 24,683
Variable Funding Capital Corp. 6.118% 1/26/2000 26,099 25,853
-----------
7,357,399
-----------
INDUSTRIAL (1.5%)
Chevron U.K. Investment PLC 5.907% 3/9/2000 25,000 24,605
Chevron U.K. Investment PLC 5.947% 3/13/2000 25,000 24,587
Chevron USA Inc. 5.888% 2/17/2000 43,512 42,970
Chevron Transport Co. 5.918% 3/10/2000 20,000 19,681
Chevron Transport Co. 5.937% 2/22/2000 25,000 24,667
E.I. du Pont de Nemours & Co. 5.904% 4/27/2000 25,000 24,410
Emerson Electric Co. 5.82% 1/31/2000 18,346 18,169
Lucent Technologies 5.848% 5/24/2000 50,000 48,622
Lucent Technologies 5.849% 5/25/2000 50,000 48,614
Lucent Technologies 5.854% 5/23/2000 50,000 48,627
Pfizer Inc. 5.817% 3/17/2000 45,000 44,244
Pfizer Inc. 5.852% 4/3/2000 80,000 78,435
Pfizer Inc. 5.908% 3/21/2000 24,610 24,174
Procter & Gamble 5.359% 12/14/1999 50,000 49,904
Procter & Gamble 5.868% 2/24/2000 45,000 44,386
Vermont American Corp. 5.841% 1/31/2000 40,000 39,612
-----------
605,707
-----------
INSURANCE (2.9%)
Aegon Funding Corp. 5.718% 2/10/2000 100,000 98,905
Aegon Funding Corp. 5.752% 2/15/2000 121,750 120,318
Aegon Funding Corp. 5.82% 2/28/2000 223,690 220,565
Aegon Funding Corp. 5.836% 2/23/2000 122,000 120,381
Aegon Funding Corp. 5.869% 2/22/2000 182,000 179,608
Aegon Funding Corp. 6.07% 4/20/2000 103,500 101,112
Metlife Funding Inc. 5.94% 1/31/2000 64,276 63,638
Metlife Funding Inc. 5.954% 2/3/2000 71,017 70,276
Prudential Funding 5.896% 3/2/2000 25,000 24,633
USAA Capital Corp. 5.832% 2/17/2000 55,000 54,323
USAA Capital Corp. 5.837% 2/16/2000 9,500 9,385
USAA Capital Corp. 5.845% 2/11/2000 25,000 24,715
USAA Capital Corp. 5.845% 2/24/2000 40,300 39,758
USAA Capital Corp. 5.856% 2/28/2000 20,000 19,718
USAA Capital Corp. 5.868% 2/29/2000 22,350 22,030
USAA Capital Corp. 6.75% 12/15/1999 20,000 20,014
-----------
1,189,379
-----------
</TABLE>
17
<PAGE> 20
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
PRIME MONEY MARKET FUND YIELD** DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UTILITIES (0.5%)
BellSouth Capital Funding Corp. 6.035% 2/8/2000 $ 50,000 $ 49,433
BellSouth Capital Funding Corp. 6.036% 2/9/2000 120,000 118,619
Duke Energy 5.83% 2/11/2000 48,982 48,423
-----------
216,475
-----------
FOREIGN BANKS (5.2%)
ABN-AMRO North America Finance Inc. 6.053% 4/24/2000 250,000 244,089
ABN-AMRO North America Finance Inc. 6.061% 3/21/2000 199,560 195,924
CBA (Delaware) Finance Inc. 5.428% 12/21/1999 25,000 24,926
CBA (Delaware) Finance Inc. 5.43% 12/22/1999 70,000 69,781
CBA (Delaware) Finance Inc. 5.94% 2/28/2000 65,000 64,060
CBA (Delaware) Finance Inc. 5.95% 2/18/2000 50,000 49,357
Cregem North America Inc. 5.814% 2/1/2000 100,000 99,024
Cregem North America Inc. 5.841% 3/20/2000 100,000 98,268
Cregem North America Inc. 5.853% 2/16/2000 140,000 138,299
Lloyds Bank 5.399% 12/6/1999 50,000 49,963
Lloyds Bank 5.854% 4/3/2000 181,000 177,434
Lloyds Bank 6.016% 1/10/2000 100,000 99,342
UBS Finance Inc. 4.951% 12/27/1999 100,000 99,654
UBS Finance Inc. 4.974% 12/23/1999 139,231 138,821
UBS Finance Inc. 5.043% 12/13/1999 100,000 99,837
UBS Finance Inc. 5.334% 12/6/1999 400,000 399,705
UBS Finance Inc. 5.388% 12/3/1999 100,000 99,970
-----------
2,148,454
-----------
CANADIAN GOVERNMENT--NATIONAL & PROVINCIAL (0.8%)
Canadian Wheat Board 5.82% 2/17/2000 50,000 49,385
Canadian Wheat Board 5.822% 2/18/2000 15,000 14,813
Canadian Wheat Board 5.859% 3/30/2000 50,000 49,052
Canadian Wheat Board 5.956% 3/29/2000 70,000 68,656
Canadian Wheat Board 6.007% 4/20/2000 50,000 48,858
Province of British Columbia 5.846% 3/6/2000 20,000 19,697
Province of British Columbia 5.993% 4/17/2000 31,600 30,895
Province of British Columbia 5.997% 4/10/2000 38,200 37,390
-----------
318,746
-----------
OTHER FOREIGN GOVERNMENT (3.1%)
Caisse des Depots et Consignations 5.298% 12/2/1999 238,000 237,965
Caisse des Depots et Consignations 5.385% 12/15/1999 100,000 99,793
Caisse des Depots et Consignations 5.399% 12/17/1999 100,000 99,763
KFW International Finance Inc. 5.815% 3/16/2000 200,000 196,673
KFW International Finance Inc. 5.822% 2/18/2000 78,000 77,028
KFW International Finance Inc. 5.83% 3/3/2000 86,333 85,066
KFW International Finance Inc. 5.858% 4/6/2000 20,000 19,596
KFW International Finance Inc. 5.859% 4/7/2000 20,000 19,593
KFW International Finance Inc. 5.861% 4/12/2000 40,000 39,155
KFW International Finance Inc. 5.863% 4/11/2000 40,000 39,161
KFW International Finance Inc. 5.868% 5/11/2000 30,000 29,231
KFW International Finance Inc. 5.974% 3/29/2000 45,000 44,131
KFW International Finance Inc. 5.978% 3/30/2000 125,000 122,634
KFW International Finance Inc. 6.009% 3/13/2000 20,000 19,664
Oesterreichische Kontrollbank 5.837% 2/23/2000 45,150 44,550
Oesterreichische Kontrollbank 6.023% 4/4/2000 92,100 90,226
-----------
1,264,229
-----------
FOREIGN INDUSTRIAL (1.7%)
BP America 5.813% 1/24/2000 50,000 49,575
BP America 5.814% 1/25/2000 100,000 99,134
BP America 5.82% 2/17/2000 200,000 197,539
Glaxo Wellcome PLC 5.871% 3/10/2000 46,700 45,961
Glaxo Wellcome PLC 6.017% 2/9/2000 173,475 171,485
Glaxo Wellcome PLC 6.042% 3/22/2000 148,000 145,288
-----------
708,982
-----------
</TABLE>
18
<PAGE> 21
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
YIELD** DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FOREIGN UTILITIES (2.2%)
British Telecommunications PLC 5.836% 3/28/2000 $ 150,000 $ 147,207
British Telecommunications PLC 5.847% 3/30/2000 45,000 44,148
British Telecommunications PLC 5.90% 5/3/2000 45,000 43,903
British Telecommunications PLC 5.904% 4/7/2000 45,000 44,083
British Telecommunications PLC 6.00% 2/14/2000 100,000 98,775
British Telecommunications PLC 6.029% 4/25/2000 143,350 139,949
British Telecommunications PLC 6.033% 2/17/2000 100,000 98,720
France Telecom 6.092% 1/14/2000 22,000 21,839
France Telecom 6.099% 1/13/2000 30,000 29,785
France Telecom 6.103% 1/28/2000 35,000 34,662
France Telecom 6.108% 2/3/2000 60,000 59,360
France Telecom 6.111% 2/4/2000 26,000 25,718
Telstra Corp. 5.463% 12/2/1999 24,000 23,996
Telstra Corp. 5.467% 12/6/1999 28,486 28,465
Telstra Corp. 5.957% 2/17/2000 30,000 29,619
Telstra Corp. 5.977% 3/2/2000 30,000 29,549
-----------
899,778
-----------
- -------------------------------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER
(COST $18,324,303) 18,324,303
- -------------------------------------------------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT (12.3%)
- -------------------------------------------------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT--U.S. BANKS (1.8%)
Chase Manhattan Bank 5.365% 5/22/2000 20,000 19,941
Chase Manhattan Bank 5.61% 2/1/2000 100,000 100,000
Chase Manhattan Bank 5.90% 2/10/2000 200,000 200,000
Harris Trust & Savings 5.40% 12/2/1999 93,825 93,825
Nationsbank N.A. 4.99% 1/11/2000 21,000 21,001
U.S. Bank N.A. 5.99% 2/29/2000 150,000 150,000
U.S. Bank N.A. 6.05% 2/7/2000 50,000 50,000
U.S. Bank N.A. 6.05% 2/8/2000 100,000 100,000
-----------
734,767
-----------
YANKEE CERTIFICATES OF DEPOSIT--U.S. BRANCHES (10.5%)
ABN-AMRO Bank 5.04% 4/17/2000 100,000 99,978
ABN-AMRO Bank 5.10% 2/22/2000 61,500 61,493
ABN-AMRO Bank 5.23% 3/10/2000 50,000 49,861
ABN-AMRO Bank 5.695% 12/2/1999 (1) 200,000 199,930
Bank of Montreal 6.33% 1/14/2000 50,000 50,000
Barclays Bank PLC 5.23% 3/1/2000 100,000 99,983
Barclays Bank PLC 5.65% 12/2/1999 (1) 200,000 199,948
Bayerische Landesbank Girozentrale 5.75% 12/2/1999 (1) 550,000 550,000
Bayerische Landesbank Girozentrale 5.88% 3/9/2000 28,700 28,698
Bayerische Landesbank Girozentrale 5.91% 3/16/2000 100,000 100,000
Bayerische Landesbank Girozentrale 5.95% 5/4/2000 200,000 200,000
Credit Communal de Belgique SA 5.81% 2/22/2000 160,000 160,000
Credit Communal de Belgique SA 5.84% 2/28/2000 200,000 200,000
Deutsche Bank 5.92% 2/24/2000 150,000 150,000
Dresdner Bank 5.93% 2/24/2000 100,000 100,000
Lloyds Bank 5.85% 3/16/2000 15,000 15,000
Lloyds Bank 5.99% 4/17/2000 10,000 9,998
National Westminster Bank 4.98% 1/7/2000 75,000 75,000
National Westminster Bank 5.047% 2/9/2000 98,800 98,784
National Westminster Bank 5.06% 2/10/2000 100,000 99,992
National Westminster Bank 5.105% 2/22/2000 100,000 99,992
National Westminster Bank 5.20% 4/3/2000 45,000 44,862
National Westminster Bank 5.90% 4/5/2000 50,000 50,002
Rabobank Nederlanden 5.00% 1/24/2000 50,000 49,998
Rabobank Nederlanden 5.08% 4/12/2000 97,000 96,980
Rabobank Nederlanden 5.095% 2/22/2000 100,000 99,992
Rabobank Nederlanden 5.125% 2/18/2000 25,000 24,999
Rabobank Nederlanden 5.14% 3/27/2000 32,000 31,888
</TABLE>
19
<PAGE> 22
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
PRIME MONEY MARKET FUND YIELD** DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Rabobank Nederlanden 5.15% 3/20/2000 $ 100,000 $ 99,988
Rabobank Nederlanden 5.165% 3/15/2000 100,000 99,981
Rabobank Nederlanden 5.20% 3/13/2000 24,000 23,929
Rabobank Nederlanden 5.25% 3/2/2000 200,000 199,981
Toronto Dominion Bank 5.18% 2/29/2000 14,000 13,968
UBS AG 5.08% 4/12/2000 100,000 99,979
UBS AG 5.20% 2/29/2000 130,000 129,991
UBS AG 5.24% 3/1/2000 150,000 149,989
UBS AG 5.285% 3/1/2000 100,000 99,995
Westdeutsche Landesbank 5.42% 12/14/1999 130,000 130,000
Westdeutsche Landesbank 5.95% 3/1/2000 25,000 25,000
Westdeutsche Landesbank 6.12% 1/20/2000 200,000 200,000
-----------
4,320,179
-----------
- -------------------------------------------------------------------------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT
(COST $5,054,946) 5,054,946
- -------------------------------------------------------------------------------------------------------------------------
EURODOLLAR CERTIFICATES OF DEPOSIT (4.7%)
- -------------------------------------------------------------------------------------------------------------------------
BankAustria 6.00% 1/24/2000 50,000 50,001
BankAustria 6.04% 1/24/2000 50,000 50,001
Barclays Bank PLC 5.60% 1/31/2000 35,000 35,000
Barclays Bank PLC 5.725% 2/7/2000 100,000 100,001
Bayerische Landesbank Girozentrale 5.57% 1/20/2000 100,000 100,001
Bayerische Landesbank Girozentrale 5.86% 3/16/2000 35,000 35,000
Bayerische Landesbank Girozentrale 5.88% 4/3/2000 90,000 90,000
Bayerische Landesbank Girozentrale 6.02% 4/18/2000 15,000 14,998
Bayerische Landesbank Girozentrale 6.11% 1/21/2000 30,000 30,000
Credit Agricole Indosuez 5.45% 12/22/1999 100,000 100,000
Credit Agricole Indosuez 6.01% 4/27/2000 200,000 200,000
Halifax PLC 5.02% 12/20/1999 100,000 100,000
Halifax PLC 5.07% 12/21/1999 100,000 100,000
Halifax PLC 5.12% 4/10/2000 200,000 200,000
Halifax PLC 5.86% 4/3/2000 136,000 136,000
Halifax PLC 5.95% 5/8/2000 50,000 50,000
Halifax PLC 6.02% 4/26/2000 160,000 160,000
Halifax PLC 6.04% 4/20/2000 32,000 32,000
ING Bank 5.91% 2/14/2000 25,000 24,998
ING Bank 5.95% 2/10/2000 18,000 18,001
ING Bank 5.96% 2/9/2000 50,000 50,004
Landesbank Hessen-Thueringen 6.01% 4/27/2000 195,000 195,000
Lloyds Bank 6.03% 5/2/2000 25,000 25,001
National Westminster Bank PLC 5.855% 3/17/2000 45,000 45,001
- -------------------------------------------------------------------------------------------------------------------------
TOTAL EURODOLLAR CERTIFICATES OF DEPOSIT
(COST $1,941,007) 1,941,007
- -------------------------------------------------------------------------------------------------------------------------
BANKERS ACCEPTANCE (0.2%)
- -------------------------------------------------------------------------------------------------------------------------
Bank of America National Association
(COST $100,000) 5.90% 5/8/2000 100,000 100,000
- -------------------------------------------------------------------------------------------------------------------------
OTHER NOTES (6.9%)
- -------------------------------------------------------------------------------------------------------------------------
Abbey National Treasury Services 5.05% 4/17/2000 146,000 145,961
Abbey National Treasury Services 5.14% 4/25/2000 100,000 99,977
Abbey National Treasury Services 5.25% 3/1/2000 150,000 149,982
Associates Corp. of North America 5.473% 12/20/1999 (1) 250,000 249,948
Associates Corp. of North America 5.53% 12/29/1999 (1) 500,000 499,824
Bank of America N.T.S.A 5.86% 3/13/2000 100,000 100,000
Bank of America National Association 5.75% 12/2/1999 (1) 250,000 250,000
Bank of America National Association 5.86% 3/9/2000 100,000 100,000
FCC National Bank 5.89% 3/13/2000 50,000 50,000
Fifth Third Bank 5.99% 1/28/2000 100,000 100,000
First National Bank of Chicago 5.09% 4/19/2000 100,000 99,978
First National Bank of Chicago 5.13% 3/24/2000 200,000 199,970
</TABLE>
20
<PAGE> 23
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
YIELD** DATE (000) (000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
First National Bank of Chicago 5.13% 4/4/2000 $ 150,000 $ 149,975
First National Bank of Chicago 5.90% 3/13/2000 200,000 200,008
First USA Bank 6.08% 4/20/2000 150,000 150,006
Nationsbank N.A. 4.87% 12/16/1999 100,000 99,999
Nationsbank N.A. 5.135% 3/20/2000 150,000 149,983
Wachovia Bank 4.90% 1/10/2000 50,000 49,993
- -------------------------------------------------------------------------------------------------------------------------
TOTAL OTHER NOTES
(COST $2,845,604) 2,845,604
- -------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (99.4%)
(COST $40,953,552) 40,953,552
- -------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (0.6%)
- -------------------------------------------------------------------------------------------------------------------------
Other Assets--Note B 554,111
Liabilities (301,479)
------------
252,632
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS (100%) $41,206,184
=========================================================================================================================
</TABLE>
*See Note A in Notes to Financial Statements.
**Represents annualized yield at date of purchase for discount securities, and
coupon for coupon-bearing securities.
(1) Adjustable Rate Note.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
AT NOVEMBER 30, 1999, NET ASSETS CONSISTED OF:
- -------------------------------------------------------------------------------------------------------------------------
AMOUNT
(000)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C>
Paid in Capital $41,206,245
Undistributed Net Investment Income --
Accumulated Net Realized Losses (61)
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS $41,206,184
=========================================================================================================================
Investor Shares--Net Assets applicable to 39,430,444,835 outstanding $.001 par value shares
of beneficial interest (unlimited authorization) $39,430,389
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE--INVESTOR SHARES $1.00
=========================================================================================================================
Institutional Shares--Net Assets applicable to 1,775,796,164 outstanding $.001 par value shares
of beneficial interest (unlimited authorization) $1,775,795
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE--INSTITUTIONAL SHARES $1.00
=========================================================================================================================
</TABLE>
21
<PAGE> 24
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
FEDERAL MONEY MARKET FUND YIELD** DATE (000) (000)
- --------------------------------------------------------------------------------------------------------------------------
GOVERNMENT AND AGENCY OBLIGATIONS (99.7%)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Federal Farm Credit Bank 4.76% 1/18/2000 $ 125,000 $ 124,983
Federal Home Loan Bank 4.93% 1/13/2000 60,000 60,000
Federal Home Loan Bank 5.15% 3/8/2000 50,000 50,003
Federal Home Loan Bank 5.17% 12/1/1999 (1) 150,000 150,000
Federal Home Loan Bank 5.21% 12/11/1999 (1) 100,000 99,991
Federal Home Loan Bank 5.445% 1/28/2000 200,000 198,292
Federal Home Loan Bank 5.551% 2/2/2000 200,000 198,110
Federal Home Loan Bank 5.593% 2/11/2000 50,200 49,646
Federal Home Loan Bank 5.598% 2/16/2000 113,000 111,666
Federal Home Loan Bank 5.60% 2/17/2000 76,000 75,103
Federal Home Loan Bank 5.604% 3/29/2000 70,000 68,739
Federal Home Loan Bank 5.613% 2/23/2000 55,000 54,296
Federal Home Loan Bank 5.614% 2/24/2000 33,851 33,413
Federal Home Loan Bank 5.62% 12/1/1999 (1) 175,000 174,927
Federal Home Loan Bank 5.63% 12/1/1999 (1) 15,000 14,991
Federal Home Loan Bank 5.689% 3/8/2000 75,000 73,871
Federal Home Loan Bank 5.695% 3/1/2000 300,000 295,742
Federal Home Loan Bank 5.696% 2/25/2000 68,507 67,587
Federal Home Loan Bank 5.72%-5.746% 4/19/2000 98,720 96,579
Federal Home Loan Bank 5.735% 4/7/2000 46,612 45,686
Federal Home Loan Bank 5.74% 4/12/2000 29,465 28,857
Federal Home Loan Bank 5.839% 2/12/2000 (1) 140,000 139,947
Federal Home Loan Bank 5.976% 1/11/2000 (1) 90,000 89,993
Federal Home Loan Bank 6.05% 11/3/2000 250,000 249,875
Federal Home Loan Mortgage Corp. 4.925%-5.359% 1/21/2000 140,223 139,265
Federal Home Loan Mortgage Corp. 4.98% 4/28/2000 50,000 49,982
Federal Home Loan Mortgage Corp. 5.162% 12/31/1999 90,000 89,616
Federal Home Loan Mortgage Corp. 5.277% 12/18/1999 (1) 200,000 199,926
Federal Home Loan Mortgage Corp. 5.362% 1/27/2000 15,913 15,782
Federal Home Loan Mortgage Corp. 5.571% 1/14/2000 31,643 31,432
Federal Home Loan Mortgage Corp. 5.585%-5.634% 1/10/2000 338,764 336,681
Federal Home Loan Mortgage Corp. 5.636% 2/28/2000 150,000 147,968
Federal Home Loan Mortgage Corp. 5.648% 1/26/2000 75,000 74,353
Federal Home Loan Mortgage Corp. 5.731% 8/1/2000 30,000 28,898
Federal National Mortgage Assn. 4.72% 12/16/1999 40,000 39,999
Federal National Mortgage Assn. 4.80% 2/4/2000 150,000 149,967
Federal National Mortgage Assn. 4.98% 3/24/2000 50,000 49,984
Federal National Mortgage Assn. 5.05% 5/12/2000 50,000 49,984
Federal National Mortgage Assn. 5.18% 3/10/2000 40,000 39,992
Federal National Mortgage Assn. 5.22% 12/27/1999 60,000 59,777
Federal National Mortgage Assn. 5.229% 12/7/1999 (1) 100,000 99,964
Federal National Mortgage Assn. 5.24% 12/15/1999 (1) 300,000 299,951
Federal National Mortgage Assn. 5.243% 12/14/1999 (1) 135,000 134,946
Federal National Mortgage Assn. 5.349% 1/18/2000 12,598 12,511
Federal National Mortgage Assn. 5.399% 12/24/1999 (1) 220,000 219,952
Federal National Mortgage Assn. 5.554% 2/7/2000 41,200 40,780
Federal National Mortgage Assn. 5.613% 2/17/2000 50,000 49,400
Federal National Mortgage Assn. 5.658% 3/1/2000 80,753 79,630
Federal National Mortgage Assn. 5.722% 4/24/2000 37,599 36,755
Federal National Mortgage Assn. 5.725% 4/25/2000 128,000 125,109
Federal National Mortgage Assn. 5.739% 4/17/2000 46,196 45,208
Overseas Private Investment Corp. (U.S. Government Guaranteed) 5.46% 12/15/1999 (1) 21,875 21,875
Overseas Private Investment Corp. (U.S. Government Guaranteed) 6.128% 1/18/2000 (1) 7,175 7,175
- --------------------------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS
(COST $5,229,159) 5,229,159
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 25
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
YIELD** DATE (000) (000)
- --------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (6.9%)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bank of America N.A.
(Dated 11/30/1999, Repurchase Value $340,054,000
Collateralized by Federal National Mortgage Assn.
6.00%, 5/1/2014) 5.74% 12/1/1999 $340,000 $ 340,000
Societe Generale (NY)
(Dated 11/30/1999, Repurchase Value $19,220,000
Collateralized by U.S. Treasury Notes
5.625%-6.00%,
8/15/2000-9/30/2001) 5.52% 12/1/1999 19,217 19,217
- --------------------------------------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(COST $359,217) 359,217
- --------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (106.6%)
(COST $5,588,376) 5,588,376
- --------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-6.6%)
- --------------------------------------------------------------------------------------------------------------------------
Other Assets--Note B 41,379
Payables for Investment Securities Purchased (363,329)
Other Liabilities (23,232)
-----------
(345,182)
- --------------------------------------------------------------------------------------------------------------------------
NET ASSETS (100%)
- --------------------------------------------------------------------------------------------------------------------------
Applicable to 5,243,074,974 outstanding $.001 par value shares
of beneficial interest (unlimited authorization) $5,243,194
==========================================================================================================================
NET ASSET VALUE PER SHARE $1.00
==========================================================================================================================
</TABLE>
*See Note A in Notes to Financial Statements.
**Represents annualized yield at date of purchase for discount securities, and
coupon for coupon-bearing securities.
(1) Adjustable Rate Note.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
AT NOVEMBER 30, 1999, NET ASSETS CONSISTED OF:
- --------------------------------------------------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Paid in Capital $5,243,105 $1.00
Undistributed Net Investment Income -- --
Accumulated Net Realized Gains 89 --
- --------------------------------------------------------------------------------------------------------------------------
NET ASSETS $5,243,194 $1.00
==========================================================================================================================
</TABLE>
23
<PAGE> 26
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
TREASURY MONEY MARKET FUND YIELD** DATE (000) (000)
- --------------------------------------------------------------------------------------------------------------------------
GOVERNMENT OBLIGATIONS (106.0%)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Bill 4.405%-4.905% 12/2/1999 $ 304,561 $ 304,521
U.S. Treasury Bill 4.497%-4.607% 12/9/1999 228,061 227,831
U.S. Treasury Bill 4.693% 12/30/1999 88,000 87,669
U.S. Treasury Bill 4.691%-4.797% 1/6/2000 396,501 394,641
U.S. Treasury Bill 4.716%-5.359% 1/13/2000 580,000 576,451
U.S. Treasury Bill 5.214%-5.274% 1/20/2000 261,781 259,902
U.S. Treasury Bill 5.076%-5.101% 2/3/2000 90,000 89,196
U.S. Treasury Bill 5.102%-5.169% 2/10/2000 224,315 222,084
U.S. Treasury Bill 5.192%-5.218% 2/17/2000 235,000 232,388
U.S. Treasury Bill 5.171%-5.183% 2/24/2000 241,322 238,412
U.S. Treasury Bill 5.219%-5.265% 3/2/2000 309,613 305,552
U.S. Treasury Note 5.50% 2/29/2000 310,000 310,221
U.S. Treasury Note 5.625% 4/30/2000 7,412 7,416
U.S. Treasury Note 5.875% 2/15/2000 233,000 233,305
U.S. Treasury Note 6.375% 1/15/2000 45,000 45,082
U.S. Treasury Note 6.375% 5/15/2000 466,614 468,726
U.S. Treasury Note 6.75% 4/30/2000 238,000 239,343
U.S. Treasury Note 6.875% 3/31/2000 505,000 507,592
U.S. Treasury Note 7.125% 2/29/2000 115,000 115,544
- --------------------------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $4,865,876) 4,865,876
- --------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES--NET (-6.0%) (273,262)
- --------------------------------------------------------------------------------------------------------------------------
NET ASSETS (100%)
- --------------------------------------------------------------------------------------------------------------------------
Applicable to 4,592,226,392 outstanding $.001 par value shares
of beneficial interest (unlimited authorization) $4,592,614
==========================================================================================================================
NET ASSET VALUE PER SHARE $1.00
==========================================================================================================================
</TABLE>
*See Note A in Notes to Financial Statements.
**Represents annualized yield at date of purchase for discount securities, and
coupon for coupon-bearing securities.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments in Securities, at Value $4,865,876
Receivables for Investment Securities Sold 396,980
Other Assets--Note B 48,365
---------------
Total Assets 5,311,221
---------------
LIABILITIES
Payables for Investment Securities Purchased 693,523
Other Liabilities 25,084
---------------
Total Liabilities 718,607
---------------
NET ASSETS (100%) $4,592,614
==========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
AT NOVEMBER 30, 1999, NET ASSETS CONSISTED OF:
- --------------------------------------------------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Paid in Capital $4,592,246 $1.00
Undistributed Net Investment Income -- --
Accumulated Net Realized Gains 368 --
- --------------------------------------------------------------------------------------------------------------------------
NET ASSETS $4,592,614 $1.00
==========================================================================================================================
</TABLE>
24
<PAGE> 27
STATEMENT OF OPERATIONS
This Statement shows interest earned by each fund during the reporting period,
and details the operating expenses charged to each class of its shares. Expenses
directly reduce the amount of investment income available to pay to shareholders
as income dividends. This Statement also shows any Net Gain (Loss) realized on
the sale of investments, and any Unrealized Appreciation (Depreciation) on
investments during the period. For money market funds, Realized Net Gain (Loss)
should always be minimal and Unrealized Appreciation (Depreciation) should be
zero.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
PRIME FEDERAL TREASURY
MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND
----------------------------------------------------
YEAR ENDED NOVEMBER 30, 1999
----------------------------------------------------
(000) (000) (000)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME
Interest $1,989,475 $244,154 $205,285
----------------------------------------------------
Total Income 1,989,475 244,154 205,285
----------------------------------------------------
EXPENSES
The Vanguard Group--Note B
Investment Advisory Services 4,718 584 535
Management and Administrative 36,394 5,648 5,490
Shareholder Account Maintenance(1) 72,567 8,288 7,152
Marketing and Distribution(1) 8,595 1,060 977
Custodian Fees 1,050 63 45
Auditing Fees 26 10 9
Shareholders' Reports(1) 800 82 76
Trustees' Fees and Expenses 56 7 6
----------------------------------------------------
Total Expenses 124,206 15,742 14,290
Expenses Paid Indirectly--Note C (44) (19) (15)
----------------------------------------------------
Net Expenses 124,162 15,723 14,275
- --------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 1,865,313 228,431 191,010
- --------------------------------------------------------------------------------------------------------------------------
REALIZED NET GAIN ON INVESTMENT SECURITIES SOLD 462 159 292
- --------------------------------------------------------------------------------------------------------------------------
UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENT SECURITIES -- -- --
- --------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,865,775 $228,590 $191,302
==========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
(1)Expenses of the Prime Money Market Fund by Class are:
- --------------------------------------------------------------------------------------------------------------------------
(000)
-------------------------------------------------
INVESTOR INSTITUTIONAL
SHARES SHARES TOTAL
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class-Specific Expenses:
Shareholder Account Maintenance $ 72,326 $ 241 $ 72,567
Marketing and Distribution 8,316 279 8,595
Shareholders' Reports 777 23 800
-------------------------------------------------
Total Class-Specific Expenses 81,419 543 81,962
All Other Fund Expenses 40,754 1,490 42,244
- --------------------------------------------------------------------------------------------------------------------------
Total Expenses $122,173 $2,033 $124,206
==========================================================================================================================
</TABLE>
See Note D in Notes to Financial Statements.
25
<PAGE> 28
STATEMENT OF CHANGES IN NET ASSETS
This Statement shows how each fund's total net assets changed during the two
most recent reporting periods. The Operations section summarizes information
detailed in the Statement of Operations. Because the fund distributes its income
to shareholders each day, the amounts of Dividends from Net Investment Income
generally equal the net income earned as shown under the Operations section. The
Capital Share Transactions section shows the amount shareholders invested in the
fund, either by purchasing shares or by reinvesting distributions, and the
amounts redeemed. Dividends and Capital Share Transactions are shown separately
for each class of shares.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
PRIME MONEY MARKET FUND
YEAR ENDED NOVEMBER 30,
------------------------------------
1999 1998
(000) (000)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net Investment Income $ 1,865,313 $ 1,612,115
Realized Net Gain (Loss) 462 (414)
Unrealized Appreciation (Depreciation) -- --
------------------------------------
Net Increase in Net Assets Resulting from Operations 1,865,775 1,611,701
------------------------------------
DIVIDENDS FROM NET INVESTMENT INCOME
Investor Shares (1,797,001) (1,566,704)
Institutional Shares (68,312) (45,411)
------------------------------------
Total Dividends (1,865,313) (1,612,115)
------------------------------------
CAPITAL SHARE TRANSACTIONS--INVESTOR SHARES (AT $1.00)
Issued 50,885,818 40,996,560
Issued in Lieu of Cash Distributions 1,727,975 1,502,710
Redeemed (46,916,245) (35,246,336)
------------------------------------
Net Increase--Investor Shares 5,697,548 7,252,934
------------------------------------
CAPITAL SHARE TRANSACTIONS--INSTITUTIONAL SHARES (AT $1.00)
Issued 3,264,695 1,343,463
Issued in Lieu of Cash Distributions 62,112 43,052
Redeemed (2,693,960) (1,194,286)
------------------------------------
Net Increase--Institutional Shares 632,847 192,229
- --------------------------------------------------------------------------------------------------------------------------
Total Increase 6,330,857 7,444,749
- --------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Year 34,875,327 27,430,578
------------------------------------
End of Year $41,206,184 $34,875,327
==========================================================================================================================
</TABLE>
26
<PAGE> 29
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
FEDERAL MONEY MARKET FUND TREASURY MONEY MARKET FUND
------------------------------ --------------------------------
YEAR ENDED NOVEMBER 30,
----------------------------------------------------------------------
1999 1998 1999 1998
(000) (000) (000) (000)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net Investment Income $ 228,431 $ 196,905 $ 191,010 $ 176,087
Realized Net Gain (Loss) 159 8 292 117
Unrealized Appreciation (Depreciation) -- -- -- --
----------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations 228,590 196,913 191,302 176,204
----------------------------------------------------------------------
DIVIDENDS FROM NET INVESTMENT INCOME (228,431) (196,905) (191,010) (176,087)
----------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (AT $1.00)
Issued 4,831,291 3,829,342 4,821,379 4,266,305
Issued in Lieu of Cash Distributions 220,153 189,680 183,629 168,890
Redeemed (4,071,311) (3,251,422) (4,354,937) (3,729,654)
----------------------------------------------------------------------
Net Increase from Capital Share Transactions 980,133 767,600 650,071 705,541
- --------------------------------------------------------------------------------------------------------------------------
Total Increase 980,292 767,608 650,363 705,658
- --------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Year 4,262,902 3,495,294 3,942,251 3,236,593
----------------------------------------------------------------------
End of Year $5,243,194 $4,262,902 $4,592,614 $3,942,251
==========================================================================================================================
</TABLE>
27
<PAGE> 30
FINANCIAL HIGHLIGHTS
Each fund's objective is to maintain a constant NAV of $1.00 per share by
distributing all of its income and avoiding capital gains or losses. The
financial highlights table summarizes each fund's investment results and
distributions to shareholders on a per-share basis for each class of shares.
The table also presents the Total Return and shows net investment income and
expenses as percentages of average net assets for each fund or class of shares.
These data will help you assess the variability of net income returns from year
to year and how much it costs to operate the fund.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
PRIME MONEY MARKET FUND INVESTOR SHARES
YEAR ENDED NOVEMBER 30,
------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR 1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .049 .053 .053 .052 .057
Net Realized and Unrealized Gain (Loss) on Investments -- -- -- -- --
------------------------------------------------------------
Total from Investment Operations .049 .053 .053 .052 .057
------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.049) (.053) (.053) (.052) (.057)
Distributions from Realized Capital Gains -- -- -- -- --
------------------------------------------------------------
Total Distributions (.049) (.053) (.053) (.052) (.057)
- --------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
==========================================================================================================================
TOTAL RETURN 4.97% 5.42% 5.41% 5.31% 5.82%
==========================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year (Millions) $39,430 $33,732 $26,480 $22,218 $18,764
Ratio of Total Expenses to Average Net Assets 0.33% 0.33% 0.32% 0.32% 0.32%
Ratio of Net Investment Income to Average Net Assets 4.85% 5.28% 5.28% 5.18% 5.64%
==========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
PRIME MONEY MARKET FUND INSTITUTIONAL SHARES
YEAR ENDED NOVEMBER 30,
--------------------------------------------- OCT. 28* TO
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 1999 1998 1997 1996 NOV. 30, 1995
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .050 .055 .054 .054 .005
Net Realized and Unrealized Gain (Loss) on Investments -- -- -- -- --
------------------------------------------------------------
Total from Investment Operations .050 .055 .054 .054 .005
------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.050) (.055) (.054) (.054) (.005)
Distributions from Realized Capital Gains -- -- -- -- --
------------------------------------------------------------
Total Distributions (.050) (.055) (.054) (.054) (.005)
- --------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
==========================================================================================================================
TOTAL RETURN 5.15% 5.61% 5.59% 5.49% 0.53%
==========================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $1,776 $1,143 $951 $910 $793
Ratio of Total Expenses to Average Net Assets 0.15% 0.15% 0.15% 0.15% 0.15%**
Ratio of Net Investment Income to Average Net Assets 5.04% 5.46% 5.44% 5.35% 5.65%**
==========================================================================================================================
</TABLE>
*Inception.
**Annualized.
28
<PAGE> 31
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
FEDERAL MONEY MARKET FUND
YEAR ENDED NOVEMBER 30,
------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR 1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .048 .052 .052 .051 .056
Net Realized and Unrealized Gain (Loss) on Investments -- -- -- -- --
------------------------------------------------------------
Total from Investment Operations .048 .052 .052 .051 .056
------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.048) (.052) (.052) (.051) (.056)
Distributions from Realized Capital Gains -- -- -- -- --
------------------------------------------------------------
Total Distributions (.048) (.052) (.052) (.051) (.056)
- --------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
==========================================================================================================================
TOTAL RETURN 4.89% 5.35% 5.35% 5.26% 5.77%
==========================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year (Millions) $5,243 $4,263 $3,495 $3,100 $2,637
Ratio of Total Expenses to Average Net Assets 0.33% 0.33% 0.32% 0.32% 0.32%
Ratio of Net Investment Income to Average Net Assets 4.79% 5.21% 5.22% 5.13% 5.61%
==========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
TREASURY MONEY MARKET FUND
YEAR ENDED NOVEMBER 30,
------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR 1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .044 .050 .050 .050 .053
Net Realized and Unrealized Gain (Loss) on Investments -- -- -- -- --
------------------------------------------------------------
Total from Investment Operations .044 .050 .050 .050 .053
------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.044) (.050) (.050) (.050) (.053)
Distributions from Realized Capital Gains -- -- -- -- --
------------------------------------------------------------
Total Distributions (.044) (.050) (.050) (.050) (.053)
- --------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00
==========================================================================================================================
TOTAL RETURN 4.51% 5.06% 5.10% 5.11% 5.47%
==========================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year (Millions) $4,593 $3,942 $3,237 $2,917 $2,527
Ratio of Total Expenses to Average Net Assets 0.33% 0.33% 0.32% 0.32% 0.32%
Ratio of Net Investment Income to Average Net Assets 4.41% 4.94% 4.98% 4.99% 5.33%
==========================================================================================================================
</TABLE>
29
<PAGE> 32
NOTES TO FINANCIAL STATEMENTS
Vanguard Money Market Funds comprise the Prime Money Market Fund, Federal Money
Market Fund, and Treasury Money Market Fund, each of which is registered under
the Investment Company Act of 1940 as a diversified open-end investment company,
or mutual fund. The Prime Money Market Fund invests in short-term debt
instruments of companies primarily operating in specific industries; the
issuers' abilities to meet their obligations may be affected by economic
developments in such industries. The Federal Money Market Fund invests in
short-term debt instruments issued by the U.S. government or its agencies and
instrumentalities. The Treasury Money Market Fund invests in short-term debt
instruments backed by the full faith and credit of the U.S. government.
A. The following significant accounting policies conform to generally accepted
accounting principles for mutual funds. The funds consistently follow such
policies in preparing their financial statements.
1. SECURITY VALUATION: Securities are valued at amortized cost, which
approximates market value.
2. FEDERAL INCOME TAXES: Each fund intends to continue to qualify as a
regulated investment company and distribute all of its taxable income.
Accordingly, no provision for federal income taxes is required in the financial
statements.
3. OTHER: Security transactions are accounted for on the date the
securities are purchased or sold. Costs used to determine realized gains
(losses) on the sale of investment securities are those of the specific
securities sold. Discounts and premiums are accreted and amortized,
respectively, to interest income over the lives of the respective securities.
Dividends from net investment income are declared daily and paid on the first
business day of the following month.
4. REPURCHASE AGREEMENTS: 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.
B. The Vanguard Group furnishes at cost investment advisory, corporate
management, administrative, shareholder accounting, marketing, and distribution
services. The costs of such services are allocated to each fund under methods
approved by the Board of Trustees. Each fund has committed to provide up to
0.40% of its assets in capital contributions to Vanguard. At November 30, 1999,
the funds had contributed capital to Vanguard (included in Other Assets) of:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
CAPITAL CONTRIBUTED PERCENTAGE PERCENTAGE
TO VANGUARD OF PORTFOLIO OF VANGUARD'S
MONEY MARKET FUND (000) NET ASSETS CAPITALIZATION
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Prime $8,513 0.02% 8.5%
Federal 1,090 0.02 1.1
Treasury 944 0.02 1.0
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
The funds' Trustees and officers are also Directors and officers of Vanguard.
30
<PAGE> 33
C. The funds' custodian bank has agreed to reduce its fees when the funds
maintain cash on deposit in their non-interest-bearing custody accounts. For the
year ended November 30, 1999, custodian fee offset arrangements reduced expenses
by:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
EXPENSE REDUCTION
MONEY MARKET FUND (000)
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
Prime $44
Federal 19
Treasury 15
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
D. The Prime Money Market Fund offers two classes of shares, the Investor Shares
and the Institutional Shares. Institutional shares are designed primarily for
institutional investors that meet certain administrative and servicing criteria
and have a minimum investment of $10 million. Investor shares are offered to all
other investors. Both classes of shares have equal rights as to assets and
earnings, except that each class bears certain class-specific expenses related
to its shareholder activity. For the year ended November 30, 1999, class-
specific expenses of the Investor Shares and Institutional Shares represented
effective annual rates of 0.22% and 0.04%, respectively, of their average net
assets. Income, expenses not attributable to a specific class, and gains and
losses on investments are allocated to each class of shares based on its
relative net assets.
31
<PAGE> 34
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of
Vanguard Money Market Funds
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Prime Money Market Fund, Federal
Money Market Fund and Treasury Money Market Fund (hereafter referred to as the
"Funds") at November 30, 1999, the results of each of their operations for the
year then ended, the changes in each of their net assets for each of the two
years in the period then ended and the financial highlights for each of the
periods indicated, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Funds' management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
November 30, 1999 by correspondence with the custodian, provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Thirty South Seventeenth Street
Philadelphia, Pennsylvania 19103
January 6, 2000
32
<PAGE> 35
The People Who Govern Your Fund
The Trustees of your mutual fund are there to see that the fund is operated
and managed in your best interests since, as a shareholder, you are part owner
of the fund. Your fund Trustees also serve on the Board of Directors of The
Vanguard Group, which is owned by the funds and exists solely to provide
services to them on an at-cost basis.
Seven of Vanguard's nine board members are independent, meaning that they
have no affiliation with Vanguard or the funds they oversee, apart from the
sizable personal investments they have made as private individuals. They bring
distinguished backgrounds in business, academia, and public service to their
task of working with Vanguard officers to establish the policies and oversee the
activities of the funds.
Among board members' responsibilities are selecting investment advisers for
the funds; monitoring fund operations, performance, and costs; reviewing
contracts; nominating and selecting new Trustees/Directors; and electing
Vanguard officers.
The list below provides a brief description of each Trustee's professional
affiliations. Noted in parentheses is the year in which the Trustee joined the
Vanguard Board.
TRUSTEES
JOHN C. BOGLE - (1967) Founder, Senior Chairman of the Board, and
Director/Trustee of The Vanguard Group, Inc., and each of the investment
companies in The Vanguard Group.
JOHN J. BRENNAN - (1987) Chairman of the Board, Chief Executive Officer, and
Director/Trustee of The Vanguard Group, Inc., and each of the investment
companies in The Vanguard Group.
JoANN HEFFERNAN HEISEN - (1998) Vice President, Chief Information Officer, and a
member of the Executive Committee of Johnson & Johnson; Director of Johnson &
Johnson, Merck Consumer Pharmaceuticals Co., The Medical Center at Princeton,
and Women's Research and Education Institute.
BRUCE K. MacLAURY - (1990) President Emeritus of The Brookings Institution;
Director of American Express Bank Ltd., The St. Paul Companies, Inc., and
National Steel Corp.
BURTON G. MALKIEL - (1977) Chemical Bank Chairman's Professor of Economics,
Princeton University; Director of Prudential Insurance Co. of America, Banco
Bilbao Gestinova, Baker Fentress & Co., The Jeffrey Co., and Select Sector SPDR
Trust.
ALFRED M. RANKIN, JR. - (1993) Chairman, President, Chief Executive Officer, and
Director of NACCO Industries, Inc.; Director of The BFGoodrich Co.
JOHN C. SAWHILL - (1991) President and Chief Executive Officer of The Nature
Conservancy; formerly, Director and Senior Partner of McKinsey & Co. and
President of New York University; Director of Pacific Gas and Electric Co.,
Procter & Gamble Co., NACCO Industries, and Newfield Exploration Co.
JAMES O. WELCH, JR. - (1971) Retired Chairman of Nabisco Brands, Inc.; retired
Vice Chairman and Director of RJR Nabisco; Director of TECO Energy, Inc., and
Kmart Corp.
J. LAWRENCE WILSON - (1985) Retired Chairman of Rohm & Haas Co.; Director of
Cummins Engine Co. and The Mead Corp.; Trustee of Vanderbilt University.
OTHER FUND OFFICERS
RAYMOND J. KLAPINSKY - Secretary; Managing Director and Secretary of The
Vanguard Group, Inc.; Secretary of each of the investment companies in The
Vanguard Group.
THOMAS J. HIGGINS - Treasurer; Principal of The Vanguard Group, Inc.; Treasurer
of each of the investment companies in The Vanguard Group.
VANGUARD MANAGING DIRECTORS
R. GREGORY BARTON - Legal Department.
ROBERT A. DiSTEFANO - Information Technology.
JAMES H. GATELY - Individual Investor Group.
KATHLEEN C. GUBANICH - Human Resources.
IAN A. MacKINNON - Fixed Income Group.
F. WILLIAM McNABB, III - Institutional Investor Group.
MICHAEL S. MILLER - Planning and Development.
RALPH K. PACKARD - Chief Financial Officer.
GEORGE U. SAUTER - Core Management Group.
<PAGE> 36
ABOUT OUR COVER
Our cover art, depicting HMS Vanguard at sea, is a reproduction of Leading the
Way, a 1984 work created and copyrighted by noted naval artist Tom Freeman, of
Forest Hill, Maryland.
[PHOTO]
All comparative mutual fund data are from Lipper Inc. or Morningstar, Inc.,
unless otherwise noted.
"Standard & Poor's(R)," "S&P(R)," "S&P 500(R)," "Standard & Poor's 500," and
"500" are trademarks of The McGraw-Hill Companies, Inc.
Frank Russell Company is the owner of trademarks and copyrights relating to the
Russell Indexes. "Wilshire 4500" and "Wilshire 5000" are trademarks of Wilshire
Associates.
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Valley Forge, Pennsylvania 19482-2600
WORLD WIDE WEB
www.vanguard.com
FUND INFORMATION
1-800-662-7447
INDIVIDUAL ACCOUNT SERVICES
1-800-662-2739
INSTITUTIONAL INVESTOR SERVICES
1-800-523-1036
This report is intended for the funds' shareholders. It may not be distributed
to prospective investors unless it is preceded or accompanied by the current
fund prospectus.
Q300-01/21/2000
(C) 2000 The Vanguard Group, Inc.
All rights reserved.
Vanguard Marketing
Corporation, Distributor.
