VANGUARD MONEY MARKET RESERVES INC, 485BPOS, 1994-03-01

VANGUARD MONEY MARKET RESERVES INC
485BPOS, 1994-03-01

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form N-1A

REGISTRATION STATEMENT (NO. 2-52698) UNDER THE
SECURITIES ACT OF 1933
Pre-Effective Amendment No. X
Post-Effective Amendment No. 43 X
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. * X
VANGUARD MONEY MARKET RESERVES, INC.
(Exact Name of Registrant as Specified in Charter)

P.O. Box 2600, Valley Forge, PA 19482
(Address of Principal Executive Office)
Registrant's Telephone Number (610) 669-1000
Raymond J. Klapinsky, Esquire
P.O. Box 876
Valley Forge, PA 19482

It is proposed that this Amendment become effective on March 4, 1994, pursuant
to paragraph (b) of Rule 485 of the Securities Act of 1933.

Approximate Date of Proposed Public Offering: As soon as practicable after
this Registration Statement becomes effective*.

Registrant elects to register an indefinite number of shares pursuant to
Regulation 24f-2 under the Investment Company Act of 1940. Registrant filed
its Rule 24f-2 Notice for the period ended November 30, 1993 on January 25,
1994.

<PAGE>

VANGUARD MONEY MARKET RESERVES, INC.
CROSS REFERENCE SHEET
FORM N-1A ITEM NUMBER LOCATION IN PROSPECTUS
Item 1. Cover Page -- Cover Page
Item 2. Synopsis -- Highlights
Item 3. Condensed Financial Information -- Financial Highlights
Item 4. General Description of Registrant -- Investment Objective;
Investment Limitations; Investment Policies; General Information
Item 5. Management of the Fund -- Directors and Officers; Management of the
Fund; The Vanguard Group
Item 6. Capital Stock and Other Securities -- Opening an Account and
Purchasing Shares; Selling Your Shares; The Share Price of Each
Portfolio; Dividends and Taxes; General Information
Item 7. Purchase of Securities Being Offered -- Cover Page; Opening an
Account and Purchasing Shares
Item 8. Redemption or Repurchase -- Selling Shares
Item 9. Pending Legal Proceedings -- Not Applicable
FORM N-1A ITEM NUMBER LOCATION IN STATEMENT OF ADDITIONAL INFORMATION
Item 10. Cover Page -- Cover Page
Item 11. Table of Contents -- Cover Page
Item 12. General Information and History -- Investment Objectives and
Policies; General Information
Item 13. Investment Objective and Policies -- Investment Objectives and
Policies; Investment Limitations
Item 14. Management of the Fund -- Management of the Fund
Item 15. Control Persons and Principal Holders of Securities -- Management of
the Fund
Item 16. Investment Advisory and Other Services -- Management of the Fund
Item 17. Brokerage Allocation -- Not Applicable
Item 18. Capital Stock and Other Securities -- Financial Statements
Item 19. Purchase, Redemption and Pricing of Securities Being Offered --
Purchase of Shares; Redemption of Shares;
Item 20. Tax Status -- Appendix
Item 21. Underwriters -- Not Applicable
Item 22. Calculations of Yield Quotations of Money Market Fund -- Calculation
of Yield.
Item 23. Financial Statements -- Financial Statements

<PAGE>
- ------------------------------------------------------------------------------
THE VANGUARD GROUP
OF INVESTMENT
COMPANIES
Vanguard Financial Center
P.O. Box 2600
Valley Forge, PA 19482

INVESTOR INFORMATION
DEPARTMENT:
1-800-662-7447 (SHIP)

CLIENT SERVICES
DEPARTMENT:
1-800-662-2739 (CREW)

TELE-ACCOUNT FOR
24-HOUR ACCESS:
1-800-662-6273 (ON-BOARD)

TELECOMMUNICATION SERVICE
FOR THE HEARING-IMPAIRED:
1-800-662-2738

TRANSFER AGENT:
The Vanguard Group, Inc.
Vanguard Financial Center
Valley Forge, PA 19482

P R O S P E C T U S
MARCH 4, 1994

===============================================================================
A Member of The Vanguard Group
===============================================================================
PROSPECTUS -- MARCH 4, 1994
- -------------------------------------------------------------------------------
NEW ACCOUNT INFORMATION: INVESTOR INFORMATION DEPARTMENT--1-800-662-7447 (SHIP)
- -------------------------------------------------------------------------------
SHAREHOLDER ACCOUNT SERVICES: CLIENT SERVICES DEPARTMENT--1-800-662-2739 (CREW)
- -------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
Vanguard Money Market Reserves, Inc. (the "Fund") is an open-
end, diversified investment company known as a money market
fund. The Fund offers three separate Portfolios. The
objective of each Portfolio is to provide the maximum current
income that is consistent with the preservation of capital
and liquidity by investing in specified money market
instruments. Each Portfolio seeks to maintain, but does not
guarantee, a constant net asset value of $1.00 per share.
ALTHOUGH EACH PORTFOLIO INVESTS IN HIGH QUALITY INSTRUMENTS,
AN INVESTMENT IN THE PORTFOLIOS IS NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT AND THERE CAN BE NO
ASSURANCE THAT EACH PORTFOLIO WILL BE ABLE TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER SHARE.
- ------------------------------------------------------------------------------
OPENING AN ACCOUNT
To open a regular (non-retirement) account, please complete
and return the Account Registration Form. If you need
assistance in completing this Form, please call the Investor
Information Department. To open an Individual Retirement
Account (IRA), please use a Vanguard IRA Adoption Agreement.
To obtain a copy of this form, call 1-800-662-7447, Monday
through Friday, from 8:00 a.m. to 8:00 p.m. (Eastern time).
The minimum initial investment is $3,000 per Portfolio ($500
for Individual Retirement Accounts and Uniform Gifts/
Transfers to Minors Act accounts). The Fund is offered on a
no-load basis (i.e., there are no sales commissions or 12b-1
fees). However, the Fund incurs expenses for investment
advisory, management, administrative and distribution
services.
- ------------------------------------------------------------------------------
ABOUT THIS PROSPECTUS
This Prospectus is designed to set forth concisely the
information you should know about the Fund before you invest.
It should be retained for future reference. A "Statement of
Additional Information" containing additional information
about the Fund has been filed with the Securities and
Exchange Commission. This Statement is dated March 4, 1994,
and has been incorporated by reference into this Prospectus.
A copy may be obtained without charge by writing to the Fund
or by calling the Investor Information Department.
- ------------------------------------------------------------------------------
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page Page Page
<S> <C> <C>
Highlights.......................... 2 Implementation of Policies.......... 9 SHAREHOLDER GUIDE
Fund Expenses....................... 4 Investment Limitations.............. 10 Opening an Account and
Financial Highlights................ 4 Management of the Fund.............. 10 Purchasing Shares................. 15
Yield and Total Return.............. 6 Investment Adviser.................. 11 When Your Account Will Be
FUND INFORMATION Dividends and Taxes................. 12 Credited.......................... 18
Investment Objective................ 7 The Share Price of Each Portfolio... 13 Selling Your Shares................. 18
Investment Policies................. 7 General Information................. 14 Exchanging Your Shares.............. 21
Investment Risks.................... 8 Important Information About
Who Should Invest................... 9 Telephone Transactions............ 22
Transferring Registration........... 22
Other Vanguard Services............. 22
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
- ------------------------------------------------------------------------------
<PAGE>

HIGHLIGHTS
OBJECTIVE AND POLICIES
Vanguard Money Market Reserves, Inc. (the "Fund") is an open-
end, diversified investment company known as a money market
fund. The Fund offers three separate Portfolios. The
objective of each Portfolio is to provide the maximum current
income that is consistent with the preservation of capital
and liquidity by investing in specified money market
instruments.

Each Portfolio seeks to maintain a constant net asset value
of $1.00 per share. In pursuit of this objective, each
Portfolio will invest in securities that mature in less than
13 months, and each Portfolio will maintain an average
weighted maturity of 90 days or less. Page 7
- ------------------------------------------------------------------------------
THREE SEPARATE PORTFOLIOS
Investors may choose from three separate Portfolios, each of
which invests in specified money market instruments:

PRIME PORTFOLIO -- invests in high quality money market
obligations issued by financial institutions, nonfinancial
corporations, and the U.S. Government, state and municipal
governments and their agencies or instrumentalities, as well
as repurchase agreements collateralized by such securities.
The Prime Portfolio also invests in Eurodollar obligations
(dollar-denominated obligations issued outside the U.S. by
foreign banks or foreign branches of domestic banks) and
Yankee obligations (dollar-denominated obligations issued in
the U.S. by foreign banks).

FEDERAL PORTFOLIO -- invests in securities issued by the
United States Government or its agencies and
instrumentalities, and repurchase agreements collateralized
by such securities. A portion of the U.S. Government
securities held by the Federal Portfolio may not be backed by
the full faith and credit of the U.S. Government.

U.S. TREASURY PORTFOLIO -- invests in securities backed by
the full faith and credit of the U.S. Government. Page 7
- ------------------------------------------------------------------------------
RISK CHARACTERISTICS
The three Portfolios of the Fund differ primarily in terms of
credit risk. Credit risk is the possibility that an issuer of
securities held by a Portfolio will fail to make timely
payments of either interest or principal. The credit risk of
a Portfolio is a function of the credit quality of its
underlying securities. All other things being equal, money
market instruments with greater credit risk offer higher
yields. Although each Portfolio invests in high quality
instruments, money market portfolios, unlike federally-
insured bank deposits, are not insured or guaranteed.

<PAGE>
THE VANGUARD GROUP
The Fund is a member of The Vanguard Group of Investment
Companies, a group of 32 investment companies with 77
distinct investment portfolios and total assets in excess of
$130 billion. The Vanguard Group, Inc. ("Vanguard"), a
subsidiary jointly owned by the Vanguard Funds, provides all
corporate management, administrative, distribution and
shareholder accounting services on an at-cost basis to the
Funds in the Group. Page 10
- ------------------------------------------------------------------------------
INVESTMENT ADVISER
The Fund receives investment advisory services on an at-cost
basis from Vanguard's Fixed Income Group. As a result, the
Fund receives its investment advisory services at a
substantially lower cost than would be possible if the Fund
paid an investment advisory fee to an external investment
adviser. Page 11
- ------------------------------------------------------------------------------
DIVIDEND POLICY
Each Portfolio declares a dividend each business day based on
its ordinary income. Dividends are paid monthly and may be
received in cash or reinvested in additional shares. Page 12
- ------------------------------------------------------------------------------
PURCHASING SHARES
You may purchase shares by mail, wire or exchange from
another Vanguard Fund. The minimum initial investment is
$3,000 per Portfolio; the minimum for subsequent investments
is $100. There are no sales commissions or 12b-1 fees.
Page 15
- ------------------------------------------------------------------------------
SELLING SHARES
You may redeem shares of each Portfolio by mail, telephone,
wire or check. There is no charge for redemption, except for
wire withdrawals under $5,000, which are subject to a $5
charge. Your bank may also assess a fee for incoming wires.
Page 18
- ------------------------------------------------------------------------------
SERVICES TO SHAREHOLDERS
The Fund offers free checkwriting services (minimum $250 per
check) for easy access to your account balance. Page 18

The Fund also offers two special services: Fund Express, for
electronic transfers between the Fund and your bank account;
and Tele-Account, for around-the-clock telephone access to
your Fund account. Page 23
- ------------------------------------------------------------------------------

<PAGE>
FUND EXPENSES
The following table illustrates ALL expenses and fees that
you would incur as a shareholder of the Fund. The expenses
set forth below are for the 1993 fiscal year.

SHAREHOLDER TRANSACTION EXPENSES
-----------------------------------------------------------
Sales Load Imposed on Purchases..................... None
Sales Load Imposed on Reinvested Dividends.......... None
Redemption Fees*.................................... None
Exchange Fees....................................... None

<TABLE>
<CAPTION>
PRIME FEDERAL U.S. TREASURY
ANNUAL FUND OPERATING EXPENSES PORTFOLIO PORTFOLIO PORTFOLIO
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management & Administrative Expenses.......... 0.25% 0.25% 0.25%
Investment Advisory Fees...................... 0.01 0.01 0.01
12b-1 Fees.................................... None None None
Other Expenses
Distribution Costs.......................... 0.04 0.04 0.04
Miscellaneous Expenses...................... 0.02 0.02 0.02
Total Other Expenses.......................... 0.06 0.06 0.06
---- ---- ----
TOTAL OPERATING EXPENSES................ 0.32% 0.32% 0.32%
==== ==== ====
<FN>
*Wire redemptions of less than $5,000 are subject to a $5 processing fee.
</TABLE>

The purpose of this table is to assist you in understanding
the various expenses that you would bear directly or
indirectly as an investor in the Fund.

The following example illustrates the expenses that you would
incur on a $1,000 investment over various periods, assuming
(1) a 5% annual rate of return and (2) redemption at the end
of each period. As noted in the table above, the Fund charges
no redemption fees of any kind.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Prime Portfolio.......................... $3 $10 $18 $41
Federal Portfolio........................ $3 $10 $18 $41
U.S. Treasury Portfolio.................. $3 $10 $18 $41
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES OR PERFORMANCE. ACTUAL EXPENSES MAY
BE HIGHER OR LOWER THAN THOSE SHOWN.
- ------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following financial highlights for a share outstanding
throughout each period, insofar as they relate to each of the
five years in the period ended November 30, 1993, have been
audited by Price Waterhouse, independent accountants, whose
report thereon was unqualified. This information should be
read in conjunction with the Fund's financial statements and
notes thereto, which are incorporated by reference in the
Statement of Additional Information and this Prospectus, and
which appear, along with the report of Price Waterhouse, in
the Fund's 1993 Annual Report to Shareholders. For a more
complete discussion of the Fund's performance, please see the
Fund's 1993 Annual Report to Shareholders, which may be
obtained without charge by writing to the Fund or by calling
our Investor Information Department at 1-800- 662-7447.
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
PRIME PORTFOLIO
------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989 1988 1987 1986 1985 1984
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF YEAR............. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
INVESTMENT OPERATIONS
Net Investment Income......... .030 .038 .062 .080 .090 .072 .063 .066 .079 .101
Net Realized and Unrealized
Gain on Investment
Securities.................. -- -- -- -- -- -- -- -- -- --
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS.............. .030 .038 .062 .080 .090 .072 .063 .066 .079 .101
- ----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment
Income...................... (.030) (.038) (.062) (.080) (.090) (.072) (.063) (.066) (.079) (.101)
Distributions from Realized
Capital Gains............... -- -- -- -- -- -- -- -- -- --
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS....... (.030) (.038) (.062) (.080) (.090) (.072) (.063) (.066) (.079) (.101)
- ----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR.... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
============================================================================================================================
TOTAL RETURN.................... 3.02% 3.89% 6.39% 8.32% 9.40% 7.47% 6.49% 6.78% 8.20% 10.58%
============================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year
(Millions).................... $12,367 $12,638 $13,496 $13,579 $11,067 $6,863 $4,088 $2,186 $1,725 $1,498
Ratio of Expenses to Average
Net Assets.................... .32% .30% .30% .30% .28% .33% .37% .48% .51% .48%
Ratio of Net Investment Income
to Average Net Assets......... 2.98% 3.82% 6.20% 8.06% 9.05% 7.28% 6.30% 6.60% 7.90% 10.10%

</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
FEDERAL PORTFOLIO
------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989 1988 1987 1986 1985 1984
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF YEAR............. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
INVESTMENT OPERATIONS
Net Investment Income......... .029 .038 .060 .078 .088 .070 .061 .064 .077 .097
Net Realized and Unrealized
Gain on Investment
Securities.................. -- -- -- -- -- -- -- -- -- --
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS.............. .029 .038 .060 .078 .088 .070 .061 .064 .077 .097
- ----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment
Income...................... (.029) (.038) (.060) (.078) (.088) (.070) (.061) (.064) (.077) (.097)
Distributions from Realized
Capital Gains............... -- -- -- -- -- -- -- -- -- --
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS....... (.029) (.038) (.060) (.078) (.088) (.070) (.061) (.064) (.077) (.097)
- ----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR.... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
============================================================================================================================
TOTAL RETURN.................... 2.98% 3.83% 6.18% 8.14% 9.15% 7.20% 6.25% 6.56% 8.01% 10.18%
============================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year
(Millions).................... $1,907 $1,986 $2,000 $1,950 $1,531 $1,214 $839 $545 $498 $499
Ratio of Expenses to Average
Net Assets.................... .32% .30% .30% .30% .28% .33% .37% .48% .51% .48%
Ratio of Net Investment Income
to Average Net Assets......... 2.94% 3.76% 6.01% 7.90% 8.78% 7.00% 6.10% 6.40% 7.70% 9.70%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
U.S. TREASURY PORTFOLIO
------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989 1988 1987 1986 1985 1984
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF YEAR............. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
INVESTMENT OPERATIONS
Net Investment Income......... .028 .036 .058 .077 .085 .068 .058 .060 .072 .094
Net Realized and Unrealized
Gain on Investment Securities. -- -- -- -- -- -- -- -- -- --
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS.............. .028 .036 .058 .077 .085 .068 .058 .060 .072 .094
- ----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment
Income...................... (.028) (.036) (.058) (.077) (.085) (.068) (.058) (.060) (.072) (.094)
Distributions from Realized
Capital Gains............... -- -- -- -- -- -- -- -- -- --
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS....... (.028) (.036) (.058) (.077) (.085) (.068) (.058) (.060) (.072) (.094)
- ----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR.... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
============================================================================================================================
TOTAL RETURN.................... 2.86% 3.68% 5.94% 8.02% 8.89% 7.02% 5.99% 6.15% 7.45% 9.85%
============================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year
(Millions).................... $1,751 $2,321 $2,092 $1,594 $412 $140 $113 $56 $51 $51
Ratio of Expenses to Average Net
Assets........................ .32% .30% .30% .30% .31%++ .70%++ .79%++ .93%++ .96%++ .90%++
Ratio of Net Investment Income
to Average Net Assets......... 2.83% 3.60% 5.76% 7.74% 8.44% 6.85% 5.80% 6.00% 7.20% 9.40%

<FN>
++Insurance premiums represent .40%, .42%, .44%, .44%, .42% and .37%.
*Annualized.
</TABLE>
- ------------------------------------------------------------------------------
YIELD AND TOTAL RETURN
From time-to-time a Portfolio of the Fund may advertise its
yield and total return. Both yield and total return figures
are based on historical earnings and are not intended to
indicate future performance. The "total return" of a
Portfolio refers to the average annual compounded rates of
return over one-, five- and ten-year periods or over the life
of a Portfolio (as stated in the advertisement) that would
equate an initial amount invested at the beginning of a
stated period to the ending redeemable value of the
investment, assuming the reinvestment of all dividends and
distributions.

A Portfolio's "seven-day" or "current" yield reflects the
income earned by a hypothetical account in the Portfolio
during a seven-day period, expressed as an annual percentage
rate. A Portfolio's "effective yield" assumes the income over
the seven-day period is reinvested weekly, resulting in a
slightly higher stated yield through compounding.

Methods used to calculate advertised yields are standardized
for money market funds. However, these methods differ from
the accounting methods used by a Portfolio to maintain its
books and records, and so advertised yields may not fully
reflect the income paid to your own account.
- ------------------------------------------------------------------------------

<PAGE>
INVESTMENT OBJECTIVE
The Fund offers three separate Portfolios. The objective of
each Portfolio is to provide the maximum current income that
is consistent with the preservation of capital and liquidity
by investing in specified money market instruments. Each
Portfolio also seeks to maintain a constant net asset value
of $1.00 per share.
- ------------------------------------------------------------------------------
INVESTMENT POLICIES
Each Portfolio of the Fund invests in money market
instruments that mature in 13 months or less, and each
Portfolio maintains an average weighted maturity of 90 days
or less. The Portfolios differ chiefly in terms of the types
of securities in which they invest.

THE PRIME PORTFOLIO INVESTS IN HIGH QUALITY, MONEY MARKET SECURITIES
The Prime Portfolio will invest in the following high
quality, money market obligations issued by financial
institutions, nonfinancial corporations, and the U.S.
Government, state and municipal governments and their
agencies or instrumentalities:

(1) Negotiable certificates of deposit and bankers'
acceptances of U.S. banks having total assets in excess
of $1 billion.

(2) Repurchase agreements that are collateralized by U.S.
Treasury obligations, including bills, notes, bonds and
other debt obligations or securities issued or guaranteed
by agencies and instrumentalities of the U.S. Government
(as described in (1) and (2) for the Federal Portfolio).

(3) Commercial paper (including variable amount master demand
notes) rated Prime-1 by Moody's Investors Services, Inc.
or A-1 by Standard & Poor's Corporation or, if unrated,
issued by a corporation having an outstanding debt issue
rated Aa3 or better by Moody's or AA- or better by
Standard & Poor's.

(4) Short-term corporate obligations rated Aa3 or better by
Moody's or AA- or better by Standard & Poor's.

(5) Short-term Eurodollar and Yankee bank obligations.
Eurodollar bank obligations are dollar-denominated
certificates of deposit or time deposits issued outside
the U.S. capital markets by foreign branches of U.S.
banks or by foreign banks; Yankee bank obligations are
dollar-denominated obligations issued in the U.S. capital
markets by foreign banks.

(6) Securities eligible for purchase by the Federal
Portfolio, as described below.

In addition, up to 10% of the Prime Portfolio's net assets
may be invested in "restricted" money market securities,
which are not freely marketable or which are subject to
restrictions on disposition under the Securities Act of 1933.

THE FEDERAL PORTFOLIO INVESTS IN SHORT-TERM, U.S. GOVERNMENT OBLIGATIONS
In contrast with the Prime Portfolio, which invests in both
corporate and government securities, the Federal Portfolio
will invest only in the following U.S. Government obligations
and repurchase agreements collateralized by such securities:

(1) United States Treasury obligations including bills,
notes, bonds, and other debt obligations issued by the
United States Treasury. These securities are backed by
the full faith and credit of the U.S. Government.

<PAGE>
(2) Securities issued or guaranteed by agencies and
instrumentalities of the U.S. Government. These include
securities issued by the Federal Home Loan Banks, Federal
Land Bank, Farmers Home Administration, Farm Credit
Banks, Federal Intermediate Credit Bank, Federal National
Mortgage Association, Federal Financing Bank, Tennessee
Valley Authority, and others. Such "agency" securities
may not be backed by the full faith and credit of the
U.S. Government.

(3) Repurchase agreements that are collateralized by the
securities listed in (1) and (2) above.

THE U.S. TREASURY PORTFOLIO INVESTS IN "FULL FAITH AND CREDIT" SECURITIES
The U.S. Treasury Portfolio will invest 100% of its assets in
securities backed by the full faith and credit of the U.S.
Government. Such securities include:

(1) U.S. Treasury obligations backed by the full faith and
credit of the U.S. Government (at least 65% of the
Portfolio's assets will be invested in such obligations).

(2) Other full faith and credit obligations of the U.S.
Government. These include securities issued by the
General Services Administration, Government National
Mortgage Association, Rural Electrification
Administration, Small Business Administration, Federal
Financing Bank, and others.

See "Implementation of Policies" for a further description of
the Fund's investment practices.

The investment policies of each Portfolio are not
fundamental, and so may be changed without shareholder
approval by the Board of Directors. However, shareholders
would be notified of any material change in a Portfolio's
policies.
- ------------------------------------------------------------------------------
INVESTMENT RISKS
THE PORTFOLIOS VARY IN TERMS OF CREDIT RISK
The three Portfolios of the Fund differ primarily in terms of
credit risk. Credit risk is the possibility that an issuer of
securities held by a Portfolio will fail to make timely
payments of either interest or principal. The credit risk of
a Portfolio is a function of the credit quality of its
underlying securities. Although each Portfolio invests in
high quality instruments, money market portfolios, unlike
federally-insured bank deposits, are not insured or
guaranteed.

The U.S. Treasury Portfolio invests solely in full faith and
credit United States Government securities and therefore has
a very low credit risk.

The Federal Portfolio invests in securities issued by
agencies and instrumentalities sponsored by the U.S.
Government. Not all securities issued by U.S. agencies and
instrumentalities are backed by the full faith and credit of
the U.S. Government. As a result, the Federal Portfolio,
which is of very high quality in absolute terms, is subject
to a slightly higher degree of credit risk than the U.S.
Treasury Portfolio. The Federal Portfolio is therefore
expected to provide a correspondingly higher yield.

The Prime Portfolio invests primarily in high quality bank
and corporate money market obligations. These obligations,
though highly rated, are of somewhat lower credit quality
than those issued by the U.S. Government or its agencies and
instrumentalities. Thus, the Prime Portfolio is generally
expected to provide the highest yield of the three
Portfolios.
<PAGE>
THE PORTFOLIOS ARE SUBJECT TO INCOME RISK
Income risk is the potential for a decline in a Portfolio's
income due to falling market interest rates. Because the
Fund's Portfolios' income is based on short-term interest
rates, which can fluctuate substantially over short periods,
income risk is expected to be high for the Fund.
- ------------------------------------------------------------------------------
WHO SHOULD INVEST
INVESTORS SEEKING CURRENT INCOME AND PRINCIPAL STABILITY
The Fund is intended for investors seeking maximum current
income, consistent with the preservation of capital and
liquidity. In addition, each Portfolio expects to maintain a
constant net asset value of $1.00 per share. The Fund is thus
appropriate for investors who desire maximum principal
stability.

The Fund is designed to be a convenient and economical medium
for investing short-term funds. It is also useful as a
component of a long-term, balanced investment program,
consisting of money market instruments, bonds and stocks.
- ------------------------------------------------------------------------------
IMPLEMENTATION OF POLICIES
THE PRIME AND FEDERAL PORTFOLIOS MAY INVEST IN REPURCHASE AGREEMENTS
The Fund follows a number of additional investment practices
in pursuit of its objective.

The Prime and Federal Portfolios may invest in repurchase
agreements according to the restrictions and limitations set
forth above in "Investment Policies." A repurchase agreement
is a means of investing monies for a short period. In a
repurchase agreement, a seller -- a U.S. commercial bank or
recognized U.S. securities dealer -- sells securities to a
Portfolio and agrees to repurchase the securities at the
Portfolio's cost plus interest within a specified period
(normally one day). In these transactions, the securities
purchased by the Portfolio will have a total value equal to
or in excess of the value of the repurchase agreement, and
will be held by the Fund's Custodian Bank until repurchased.

The use of repurchase agreements involves certain risks. For
example, if the seller of the agreement defaults on its
obligation to repurchase the underlying securities at a time
when the value of these securities has declined, the
Portfolio may incur a loss upon disposition of them. If the
seller of the agreement becomes insolvent and subject to
liquidation or reorganization under the bankruptcy code or
other laws, a bankruptcy court may determine that the
underlying securities are collateral not within the control
of the Portfolio and therefore subject to sale by the trustee
in bankruptcy. Finally, it is possible that the Portfolio may
not be able to substantiate its interest in the underlying
securities. While the Fund's management acknowledges these
risks, it is expected that they can be controlled through
stringent security selection and careful monitoring.

THE PRIME PORTFOLIO MAY INVEST IN EURODOLLAR OR YANKEE OBLIGATIONS
Eurodollar bank obligations are dollar-denominated
certificates of deposit and time deposits issued outside the
U.S. capital markets by foreign branches of U.S. banks and by
foreign banks. Yankee bank obligations are dollar-denominated
obligations issued in the U.S. capital markets by foreign
banks.

Eurodollar and Yankee obligations are subject to the same
risks that pertain to domestic issues, notably credit risk,
market risk and liquidity risk. Additionally, Eurodollar (and
to a limited extent, Yankee) obligations are subject to
certain sovereign risks. One such risk is the possibility
<PAGE>
that a foreign government might prevent dollar-denominated
funds from flowing across its borders. Other risks include:
adverse political and economic developments in a foreign
country; the extent and quality of government regulation of
financial markets and institutions; the imposition of foreign
withholding taxes; and expropriation or nationalization of
foreign issuers. However, Eurodollar and Yankee obligations
will undergo the same credit analysis as domestic issues in
which the Prime Portfolio invests, and foreign issuers will
be required to meet the same tests of financial strength as
the domestic issuers approved for the Prime Portfolio.
- ------------------------------------------------------------------------------
INVESTMENT LIMITATIONS
THE FUND HAS ADOPTED CERTAIN FUNDAMENTAL LIMITATIONS
Each Portfolio of the Fund has adopted certain limitations
designed to reduce its risk exposure. These limitations
include the following:

(a) A Portfolio will not invest more than 5% of its assets in
the securities of any single company, excluding
obligations of the United States Government.

(b) A Portfolio will not purchase more than 10% of any class
of securities of any issuer.

(c) A Portfolio will not invest more than 25% of its assets
in any one industry, excluding obligations of the United
States Government or certificates of deposit or bankers'
acceptances of domestic institutions.

(d) A Portfolio will not borrow money except for emergency
purposes and then not in excess of 15% of total assets.

These investment limitations are considered at the time
investment securities are purchased. The limitations
described here and in the Statement of Additional Information
may be changed only with the approval of a majority of the
Fund's shareholders.
- ------------------------------------------------------------------------------
MANAGEMENT OF THE FUND
VANGUARD ADMINISTERS AND DISTRIBUTES THE FUND
The Fund is a member of The Vanguard Group of Investment
Companies, a family of 32 investment companies with 77
distinct investment portfolios and total assets in excess of
$130 billion. Through their jointly owned subsidiary, The
Vanguard Group, Inc. ("Vanguard"), the Fund and the other
funds in the Group obtain at cost virtually all of their
corporate management, administrative, shareholder accounting
and distribution services. Vanguard also provides investment
advisory services on an at-cost basis to certain Vanguard
funds. As a result of Vanguard's unique corporate structure,
the Vanguard funds have costs substantially lower than those
of most competing mutual funds. In 1993, the average expense
ratio (annual costs including advisory fees divided by total
net assets) for the Vanguard funds amounted to approximately
.30% compared to an average of 1.02% for the mutual fund
industry (data provided by Lipper Analytical Services).

The Officers of the Fund manage its day-to-day operations and
are responsible to the Fund's Board of Directors. The
Directors set broad policies for the Fund and choose its
Officers. A list of the Directors and Officers of the Fund
and a statement of their present positions and principal
occupations during the past five years can be found in the
Statement of Additional Information.

<PAGE>
Vanguard employs a supporting staff of management and
administrative personnel needed to provide the requisite
services to the funds and also furnishes the funds with
necessary office space, furnishings and equipment. Each fund
pays its share of Vanguard's total expenses, which are
allocated among the funds under methods approved by the Board
of Directors (Trustees) of each fund. In addition, each fund
bears its own direct expenses, such as legal, auditing and
custodian fees.

Vanguard also provides distribution and marketing services
to the Vanguard funds. The funds are available on a no-load
basis (i.e., there are no sales commissions or 12b-1 fees).
However, each fund bears its share of the Group's
distribution costs.
- ------------------------------------------------------------------------------
INVESTMENT ADVISER
VANGUARD MANAGES THE FUND'S INVESTMENTS
The three Portfolios of the Fund receive all investment
advisory services on an at-cost basis from Vanguard's Fixed
Income Group. The Group also provides investment advisory
services to 32 other Vanguard money market and bond
portfolios, both taxable and tax-exempt. Total assets under
management by Vanguard's Fixed Income Group were
approximately $52 billion as of December 31, 1993. The Fixed
Income Group is supervised by the Officers of the Fund. Ian
A. MacKinnon, Senior Vice President of Vanguard, has been in
charge of the Group since its inception in 1981.

The Fixed Income Group manages the investment and
reinvestment of the assets of the Fund's Portfolios and
continuously reviews, supervises and administers each
Portfolio's investment program, subject to the maturity and
quality standards specified in this Prospectus and supple-
mental guidelines approved by the Fund's Board of Directors.
The Fixed Income Group's selection of investments for the
Portfolios is based on: (a) continuing credit analysis of
those instruments held in the Portfolios and those being
considered for inclusion therein; (b) possible disparities in
yield relationships between different money market instru-
ments; and (c) actual or anticipated movements in the general
level of interest rates.

The Fixed Income Group is also responsible for the allocation
of principal business and portfolio brokerage and the
negotiation of commissions. The purchase and sale of
investment securities by the Fund will ordinarily be
principal transactions. Portfolio securities will normally be
purchased directly from the issuer or from an underwriter or
market maker for the securities. There usually will be no
brokerage commissions paid by a Portfolio for securities
purchased from an issuer. Purchases from underwriters of
securities will include a commission or concession paid by
the issuer to the underwriter, and purchases from dealers
serving as market makers will include a dealer's mark-up.

In purchasing and selling securities for each of the
Portfolios, it is the Fund's policy to seek to obtain quality
execution at the most favorable prices through issuers or
responsible broker-dealers. In selecting broker-dealers to
execute the securities transactions for the Portfolios,
consideration will be given to such factors as: the price of
the security; the rate of the commission; the size and
difficulty of the order; the reliability, integrity,
financial condition, general execution and operational
capabilities of competing broker-dealers; and the overall
brokerage and research services provided to the Fund.
- ------------------------------------------------------------------------------
<PAGE>
DIVIDENDS AND TAXES
DIVIDENDS ARE PAID ON THE FIRST BUSINESS DAY OF EACH MONTH
Each Portfolio's dividends are accrued daily based on
ordinary income and are distributed on the first business day
of the month. A Portfolio's dividends may be automatically
reinvested in additional shares or received in cash. See
"Choosing a Distribution Option" for a description of these
distribution methods.

Each Portfolio's dividends are computed and declared daily
as of the regular close of the New York Stock Exchange
(generally 4:00 p.m. Eastern time), and are payable to
shareholders of record as of 10:45 a.m. (Eastern time) on
that day. In other words, shareholders whose purchases of
shares are effective as of 10:45 a.m. will receive the
dividend for that day. See "When Your Account Will Be
Credited" for more information on the crediting of
dividends.

Net realized short-term capital gains of each Portfolio, if
any, will be distributed whenever the Directors determine
that such distributions would be in the best interest of
shareholders, but in any event at least once a year. The
Portfolios do not expect to realize any long-term capital
gains. Should any such gains be realized, they will be
distributed annually.

In addition, in order to satisfy certain distribution
requirements of the Tax Reform Act of 1986, the Fund may
declare special or regular year-end dividend and capital
gains distributions during December. Such distributions, if
received by shareholders by January 31, are deemed to have
been paid by the Fund and received by shareholders on
December 31 of the prior year.

DIVIDENDS WILL BE SUBJECT TO FEDERAL INCOME TAX
Each Portfolio of the Fund intends to continue to qualify
for taxation as a "regulated investment company" under the
Internal Revenue Code so that it will not be subject to
federal income tax to the extent its income is distributed to
shareholders. Dividends paid by each Portfolio from net
investment income, whether received in cash or reinvested in
additional shares, will be taxable to shareholders as
ordinary income. For corporate investors, dividends from net
investment income will not qualify for the intercorporate
dividends-received deduction.

Although the Portfolios do not expect to distribute any long-
term capital gains, any capital gains distribution made by a
Portfolio would be subject to federal income tax. Such
distributions would not qualify for the intercorporate
dividends-received deduction.

A sale of shares of a Portfolio, either by redemption or
exchange, is a taxable event, and may result in a capital
gain or loss. However, since each Portfolio seeks to maintain
a constant $1.00 share price for both purchases and
redemptions, shareholders are not expected to realize a
capital gain or loss upon sale.

Dividend distributions, any capital gains distributions, and
any capital gains or losses from redemptions and exchanges
may be subject to state and local taxes. However, depending
on your state's tax rules, the portion of a Portfolio's
income derived from direct U.S. Treasury obligations may be
exempt from state and local taxes. The Fund will indicate
each year the portion of a Portfolio's income, if any, that
may qualify for this exemption.

<PAGE>
The Fund is required to withhold 31% of taxable dividends,
capital gains distributions, and redemptions paid to
shareholders who have not complied with IRS taxpayer
identification regulations. You may avoid this withholding
requirement by certifying on your Account Registration Form
your proper Social Security or Taxpayer Identification Number
and certifying that you are not subject to backup
withholding.

The Fund has obtained a Certificate of Authority to do
business as a foreign corporation in Pennsylvania, and does
business and maintains an office in that state. In the
opinion of counsel, the shares of the Fund are exempt from
Pennsylvania personal property taxes.

The tax discussion set forth above is included for general
information only. Prospective investors should consult their
own tax advisers concerning the tax consequences of an
investment in the Fund.
- ------------------------------------------------------------------------------
THE SHARE PRICE OF EACH PORTFOLIO
Each Portfolio's share price or "net asset value" per share
is calculated daily at the close of trading on the New York
Stock Exchange (generally 4:00 p.m. Eastern time). Each
Portfolio determines its net asset value per share by
subtracting the Portfolio's liabilities (including accrued
expenses and dividends payable) from the total value of the
Portfolio's investments and other assets and by dividing the
result by the total outstanding shares of the Portfolio.

For the purpose of calculating each Portfolio's net asset
value per share, securities are valued by the "amortized
cost" method of valuation, which does not take into account
unrealized gains or losses. This involves valuing an
instrument at its cost and thereafter assuming a constant
amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the
market value of the instrument. While this method provides
certainty in valuation, it may result in periods during which
value, as determined by amortized cost, is higher or lower
than the price the Portfolio would receive if it sold the
instrument.

The use of amortized cost and the maintenance of each
Portfolio's per share net asset value at $1.00 is based on
its election to operate under the provisions of Rule 2a-7
under the Investment Company Act of 1940. As a condition of
operating under that rule, each Portfolio must maintain a
dollar-weighted average portfolio maturity of 90 days or less,
purchase only instruments having remaining maturities of 13
months or less, and invest only in securities that are
determined by the Directors to present minimal credit risks
and that are of high quality as determined by any major rating
service, or in the case of any instrument not so rated,
considered by the Directors to be of comparable quality.

The Directors have also agreed to establish procedures
reasonably designed, taking into account current market
conditions and each Portfolio's investment objective, to
stabilize the net asset value per share as computed for the
purposes of sales and redemptions at $1.00. These procedures
include periodic review, as the Directors deem appropriate
and at such intervals as are reasonable in light of current
market conditions, of the relationship between the amortized
cost value per share and a net asset value per share based
upon available indications of market value. In such a review,
<PAGE>
investments for which market quotations are readily available
are valued at the most recent bid price or quoted yield
equivalent for such securities or for securities of
comparable maturity, quality and type as obtained from one or
more of the major market makers for the securities to be
valued. Other investments and assets are valued at fair
value, as determined in good faith by the Directors.

In the event of a deviation of over 1/2 of 1% between a
Portfolio's net asset value based upon available market
quotations or market equivalents and $1.00 per share based on
amortized cost, the Directors will promptly consider what
action, if any, should be taken. The Directors will also take
such action as they deem appropriate to eliminate or to
reduce, to the extent reasonably practicable, any material
dilution or other unfair results which might arise from
differences between the two. Such action may include
redeeming shares in kind, selling instruments prior to
maturity to realize capital gains or losses or to shorten
average maturity, withholding dividends, paying distributions
from capital or capital gains, or utilizing a net asset value
per share based upon available market quotations.
- ------------------------------------------------------------------------------
GENERAL INFORMATION
The Fund, formerly known as "Whitehall Money Market Trust,"
and then as "Vanguard Money Market Trust, Inc.," is a
Maryland corporation. The Fund's Articles of Incorporation
permit the Directors to issue 35,000,000,000 shares of common
stock, with a $.001 par value. The Board of Directors has the
power to designate one or more classes ("Portfolios") of
shares of common stock and to classify or reclassify any
unissued shares with respect to such Portfolios. Currently
the Fund is offering shares of three Portfolios.

The shares of each Portfolio are fully paid and non-
assessable; have no preference as to conversion, exchange,
dividends, retirement or other features; and have no pre-
emptive rights. The shares of each Portfolio have non-
cumulative voting rights, meaning that the holders of more
than 50% of the shares voting for the election of Directors
can elect 100% of the Directors if they choose to do so.

Annual meetings of shareholders will not be held except as
required by the Investment Company Act of 1940 and other
applicable law. An annual meeting will be held on the removal
of a Director or Directors of the Fund if requested in
writing by holders of not less than 10% of the outstanding
shares of the Fund.

CoreStates Bank, N.A., Philadelphia, PA, has been retained to
act as Custodian of the assets of each Portfolio of the Fund.
The Vanguard Group, Inc., Valley Forge, PA, serves as the
Fund's Transfer and Dividend Disbursing Agent. Price
Waterhouse serves as independent accountants for the Fund and
will audit its financial statements annually. The Fund is not
involved in any litigation.
- ------------------------------------------------------------------------------

<PAGE>
SHAREHOLDER GUIDE
OPENING AN ACCOUNT AND PURCHASING SHARES
You may open a regular (non-retirement) account, either by
mail or wire. Simply complete and return an Account
Registration Form and any required legal documentation,
indicating the Portfolio you have chosen and the amount you
wish to invest. Your purchase must be equal to or greater
than the $3,000 minimum initial investment requirement in any
Portfolio ($500 for Uniform Gifts/Transfers to Minors Act
accounts). You must open a new Individual Retirement Account
by mail (IRAs may not be opened by wire) using a Vanguard IRA
Adoption Agreement. Your purchase must be equal to or greater
than the $500 minimum initial investment requirement, but no
more than $2,000 if you are making a regular IRA
contribution. Rollover contributions are generally limited to
the amount withdrawn within the past 60 days from an IRA or
other qualified Retirement Plan. If you need assistance with
the forms or have any questions about this Fund, please call
our Investor Information Department at 1-800-662-7447. NOTE:
For other account registrations (e.g., corporations,
associations, other organizations, trust or powers of
attorney), please call us to determine which additional forms
you may need.

Because of the risks associated with common stock
investments, the Fund is intended to be a long-term
investment vehicle and is not designed to provide investors
with a means of speculating on short-term stock market
movements. Consequently the Fund reserves the right to reject
any specific purchase (and exchange purchase) request. The
Fund also reserves the right to suspend the offering of
shares for a period of time.

Each Portfolio's shares are purchased at a $1.00 net asset
value after your investment has been received in the form of
Federal Funds. See "When Your Account Will Be Credited". The
Fund is offered on a no-load basis (i.e., there are no sales
commissions or 12b-1 fees).

ADDITIONAL INVESTMENTS
Subsequent investments to regular accounts may be made by
mail ($100 minimum per Portfolio), wire ($1,000 minimum per
Portfolio), exchange from another Vanguard Fund account ($100
minimum per Portfolio), or Vanguard Fund Express. Subsequent
investments to Individual Retirement Accounts may be made by
mail ($100 minimum) or exchange from another Vanguard Fund
account. In some instances, contributions may be made by wire
or Vanguard Fund Express. Please call us for more information
on these options.
-----------------------------------------------------------
<PAGE>
ADDITIONAL INVESTMENTS
NEW ACCOUNT TO EXISTING ACCOUNTS

PURCHASING BY MAIL Please include the amount Additional investments
Complete and sign of your initial should include the Invest-
the enclosed investment and the name by-Mail remittance form
Account of the Portfolios you attached to your Fund
Registration Form have selected on the confirmation statements.
registration form, make Please make your check
your check payable to The payable to The Vanguard
Vanguard Group (Portfolio Group (Portfolio Number),
Number), see below for see below for the
the appropriate number appropriate number. Write
and mail to: your account number on
VANGUARD FINANCIAL CENTER your check and, using the
P.O. BOX 2600 return envelope provided,
VALLEY FORGE, PA 19482 mail to the address
indicated on the Invest-
by-Mail Form.

For express or VANGUARD FINANCIAL CENTER All written requests
registered mail, 455 DEVON PARK DRIVE should be mailed to one of
send to: WAYNE, PA 19087 the addresses indicated
for new accounts. Do not
send registered or express
mail to the post office
box address.

VANGUARD MONEY MARKET RESERVES PORTFOLIOS:
Prime Portfolio--30
Federal Portfolio--33
U.S. Treasury Portfolio--50
-----------------------------------------------------------
PURCHASING BY WIRE CORESTATES BANK, N.A.
Money should be ABA 031000011
wired to: CORESTATES NO 0144 6936
ATTN VANGUARD
BEFORE WIRING VANGUARD MONEY MARKET RESERVES
Please contact NAME OF PORTFOLIO
Client Services ACCOUNT NUMBER
(1-800-662-2739) ACCOUNT RESGIATRATION

To assure proper receipt, please be sure your bank
includes the Portfolio name, the account number Vanguard has
assigned to you and the eight digit CoreStates number. If you
are opening a new account, please complete the Account
Registration Form and mail it to the "New Account" address
after completing your wire arrangement. NOTE: Federal Funds
wire purchase orders will be accepted only when the Fund and
Custodian Bank are open for business.
-------------------------------------------------------------
PURCHASING BY EXCHANGE (from a Vanguard account)
You may open an account or purchase additional shares by
making an exchange from an existing Vanguard Fund account.
Call Vanguard's Client Services Department at 1-800-662-2739.
The new account will have the same registration as the
existing account.
-------------------------------------------------------------
<PAGE>
PURCHASING BY FUND EXPRESS
Special Purchase and Automatic Investment
The Fund Express Special Purchase option lets you move
money from your bank account to your Vanguard account at your
request. Or if you choose the Automatic Investment option,
money will be moved from your bank account to your Vanguard
account on the schedule (monthly, bimonthly (every other
month), quarterly or yearly) you select. To establish these
Fund Express options, please provide the appropriate
information on the Account Registration Form. We will send
you a confirmation of your Fund Express service; please wait
three weeks before using the service.
- ------------------------------------------------------------------------------
CHOOSING A DISTRIBUTION OPTION
You must select one of three distribution options:
1. AUTOMATIC REINVESTMENT OPTION -- Both dividends and
capital gains distributions will be reinvested in
additional Fund shares. This option will be selected for
you automatically unless you specify another option.
2. CASH DIVIDEND OPTION -- Your dividends will be paid in
cash and your capital gains will be reinvested in
additional Fund shares.
3. ALL CASH OPTION -- Both dividend and capital gains
distributions will be paid in cash.

In addition, an option to invest your cash dividends and/
or capital gains distributions in another Vanguard Fund
Account is available. Please call our Client Services
Department 1-800-662-2739) for information. You may also
elect Vanguard Dividend Express which allows you to transfer
your cash dividends and/or capital gains distributions
automatically to your bank account. Please see "Other
Vanguard Services" for more information.

You may change your option by calling our Client Services
Department (1-800-662-2739).
- ------------------------------------------------------------------------------
IMPORTANT ACCOUNT INFORMATION
ESTABLISHING OPTIONAL SERVICES
The easiest way to establish optional Vanguard services on
your account is to select the options you desire when you
complete your Account Registration Form. If you wish to add
shareholder options later, you may need to provide Vanguard
with additional information and a signature guarantee. Please
call our Client Services Department (1-800-662-2739) for
further assistance.

SIGNATURE GUARANTEES
For our mutual protection, we may require a signature
guarantee on certain written transaction requests. A
signature guarantee verifies the authenticity of your
signature, and may be obtained from banks, brokers and any
other guarantor that Vanguard deems acceptable. A SIGNATURE
GUARANTEE CANNOT BE PROVIDED BY A NOTARY PUBLIC.

CERTIFICATES
Share certificates will not be issued.

BROKER-DEALER PURCHASES
If you purchase shares in Vanguard Funds through a registered
broker-dealer or investment adviser, the broker-dealer or
adviser may charge a service fee.

CANCELLING TRADES
The Fund will not cancel any trade (e.g., a purchase,
exchange or redemption) believed to be authentic, received in
writing or by telephone, once the trade has been received.
- ------------------------------------------------------------------------------
<PAGE>
WHEN YOUR ACCOUNT WILL BE CREDITED
The trade date is the date on which your account is credited.
It is generally the day on which the Fund receives your
investment in the form of Federal Funds (monies credited to
the Fund's Custodian Bank by a Federal Reserve Bank). Your
trade date varies according to your method of payment for
your shares.

For purchases by check, the Fund is ordinarily credited with
Federal Funds within one business day. Thus, if your purchase
by check is received by the regular close of the New York
Stock Exchange (generally 4:00 p.m. Eastern time), your trade
date is the business day following receipt of your check. If
your purchase is received after the close of the Exchange,
your trade date is the second business day following receipt
of your check.

For purchases by Federal Funds wire or exchange from another
Vanguard Fund, the Fund is credited immediately with Federal
Funds. Thus, if your purchase by Federal Funds wire or
exchange is received by the close of the Exchange, your trade
date is the day of receipt. If your purchase is received
after the close of the Exchange, your trade date is the
business day following receipt of your wire or exchange.

Your shares are purchased at a $1.00 net asset value. You
will begin to earn dividends on the calendar day following
the trade date. (For a Friday trade date, you will begin
earning dividends on Saturday.) For a purchase by Federal
Funds wire, you may qualify for a dividend on the date of
purchase if you have notified the Fund of your intention to
make the purchase by 10:45 a.m. (Eastern time) on the
business day of the wire.

In order to prevent lengthy processing delays caused by the
clearing of foreign checks, Vanguard will only accept a
foreign check which has been drawn in U.S. dollars and has
been issued by a foreign bank with a U.S. correspondent bank.

Each Portfolio reserves the right to suspend the offering of
shares for a period of time. Each Portfolio also reserves the
right to reject any specific purchase request.
- ------------------------------------------------------------------------------
SELLING YOUR SHARES
You may withdraw any portion of the funds in your account by
redeeming shares at any time. You may initiate a request by
writing or by telephoning. Your redemption proceeds are
normally mailed, credited or wired--depending upon the method
of withdrawal you have PREVIOUSLY chosen--within two business
days after the receipt of the request in Good Order.

SELLING BY WRITING A CHECK
You may withdraw funds from your account by writing a check
payable in the amount of $250 or more. When a check is
presented for payment to the Fund's agent, CoreStates Bank,
the Fund will redeem sufficient shares in your account to
cover the amount of the check.

In order to establish the checkwriting option on your
account, all registered shareholders must sign a signature
card. After your completed signature card is received by the
Fund, an initial supply of checks will be mailed within 10
business days. There is no charge for checks or for their
clearance. CORPORATIONS, TRUSTS AND OTHER ORGANIZATIONS
SHOULD CALL OUR CLIENT SERVICES DEPARTMENT (1-800-662-2739)
<PAGE>
BEFORE SUBMITTING SIGNATURE CARDS, AS ADDITIONAL DOCUMENTS
MAY BE REQUIRED TO ESTABLISH THE CHECKWRITING SERVICE.

Before establishing the checkwriting option, you should be
aware that:

1. The Fund does not allow an account to be closed through
the checkwriting option.
2. Vanguard cannot guarantee a stop payment on the
checkwriting option. If you wish to reverse a stop payment
order, you must do so in writing.
3. The Fund reserves the right to terminate or alter this
service at any time.
-------------------------------------------------------------
SELLING BY MAIL
Requests should be mailed to VANGUARD FINANCIAL CENTER,
VANGUARD MONEY MARKET RESERVES, P.O. BOX 1120, VALLEY FORGE,
PA 19482. (For express or registered mail, send your request
to Vanguard Financial Center, Vanguard Money Market Reserves,
455 Devon Park Drive, Wayne, PA 19087.)

The redemption price of shares will be at a $1.00 net asset
value per share. All requests must be received in Good Order.

DEFINITION OF GOOD ORDER
GOOD ORDER means that the request includes the following:

1. The account number and Portfolio name.
2. The amount of the transaction (specified in dollars or
shares).
3. The signatures of all owners EXACTLY as they are
registered on the account.
4. Any required signature guarantees.
5. Other supporting legal documentation that might be
required, in the case of estates, corporations, trusts,
and certain other accounts.

IF YOU HAVE QUESTIONS ABOUT THIS DEFINITION AS IT PERTAINS
TO YOUR REQUEST, PLEASE CALL OUR CLIENT SERVICES DEPARTMENT
AT 1-800-662-2739.
-------------------------------------------------------------
SELLING BY TELEPHONE
To sell shares by telephone, you or your pre-authorized
representative may call our Client Services Department at 1-
800-662-2739. For telephone redemptions, you may have the
proceeds sent to you by mail, or by wire. In addition to the
details below, please see "Important Information About
Telephone Transactions."

BY MAIL: Telephone mail redemption is automatically
established on your account unless you indicate otherwise on
your Account Registration Form. You may redeem any amount by
calling Vanguard. The proceeds will be paid to the registered
shareholders and mailed to the address of record.

BY WIRE: Telephone wire redemption must be specifically
elected for your account. The best time to elect telephone
wire redemption is at the time you complete your Account
Registration Form. If you do not presently have telephone
wire redemption and wish to establish it, please contact our
Client Services Department.

With the wire redemption option, you may withdraw a
minimum of $1,000 and have the amount wired directly to your
bank account. Wire redemptions less than $5,000 are subject
to a $5 charge deducted by Vanguard. There is no Vanguard
charge for wire redemptions of $5,000 or more. However, your
bank may assess a separate fee to accept incoming wires.

<PAGE>
A request to change the bank associated with your wire
redemption option must be received in writing, signed by each
registered shareholder, and accompanied by a voided check or
preprinted deposit slip. A signature guarantee is required if
your bank registration is not identical to your Vanguard Fund
account registration.
-------------------------------------------------------------
SELLING BY FUND EXPRESS
Automatic Withdrawal & Special Redemption
If you select the Fund Express Automatic Withdrawal option,
money will be automatically moved from your Vanguard Fund
account to your bank account according to the schedule you
have selected. The Special Redemption option lets you move
money from your Vanguard account to your bank account upon
your request. You may elect Fund Express on the Account
Registration Form or call our Investor Information Department
at 1-800-662-7447 for a Fund Express application.
-------------------------------------------------------------
SELLING BY EXCHANGE
You may sell shares of a Portfolio by making an exchange
into another Vanguard Fund account. Please see "Exchanging
Your Shares" for details.
-------------------------------------------------------------
IMPORTANT REDEMPTION INFORMATION
Shares purchased by check or Fund Express may not be
redeemed until payment for the purchase is collected, which
will take ten calendar days. Your money is invested and earns
dividends during the holding period.

DELIVERY OF REDEMPTION PROCEEDS
Redemption requests received by telephone prior to the close
of the New York Stock Exchange (generally 4:00 p.m. Eastern
time) are processed on the day of receipt and the redemption
proceeds are normally sent on the following business day.

Redemption requests received by telephone after the close of
the Exchange are processed on the business day following
receipt and the proceeds are normally sent on the second
business day following receipt. Redemption proceeds must be
sent to you within seven days of receipt of your request in
Good Order.

If you experience difficulty in making a telephone redemption
during periods of drastic economic or market changes, your
redemption request may be made by regular or express mail. It
will be implemented at the net asset value next determined
after your request has been received by Vanguard in Good
Order. The Fund reserves the right to revise or terminate the
telephone redemption privilege at any time.

The Fund may suspend the redemption right or postpone payment
at times when the New York Stock Exchange is closed or under
any emergency circumstances as determined by the United
States Securities and Exchange Commission.
-------------------------------------------------------------
VANGUARD'S AVERAGE COST STATEMENT
If you make a redemption from a qualifying account,
Vanguard will send you an Average Cost Statement which
provides you with the tax basis of the shares you redeemed.
Please see "Other Vanguard Services" for additional
information.
-------------------------------------------------------------
MINIMUM ACCOUNT BALANCE
REQUIREMENT
Due to the relatively high cost of maintaining smaller
accounts, the Fund reserves the right to redeem shares in any
account that is below the minimum initial investment amount
of $3,000. In addition, if at any time the total investment
does not have a value of at least $1,000, you may be notified
that the value of your account is below the Fund's minimum
account balance requirement. You would then be allowed 60
days to make an additional investment before the account is
<PAGE>
liquidated. Proceeds would be promptly paid to the
shareholder. This minimum requirement does not apply to IRAs,
other retirement accounts, and Uniform Gifts/Transfers to
Minors Act accounts.
- ------------------------------------------------------------------------------
EXCHANGING YOUR SHARES
Should your investment goals change, you may exchange your
shares of Vanguard Money Market Reserves for those of other
available Vanguard Funds.

EXCHANGING BY TELEPHONE
Call Client Services at 1-800-662-2739
When exchanging shares by telephone, please have ready the
Portfolio name, account number, Social Security Number or
Taxpayer Identification Number listed on the account, and
account address. Requests for telephone exchanges received
prior to close of trading on the New York Stock Exchange
(generally 4:00 p.m. Eastern time) are processed at the close
of business that same day. Requests received after close of
the Exchange are processed the next business day. TELEPHONE
EXCHANGES ARE NOT ACCEPTED INTO OR FROM VANGUARD BALANCED
INDEX FUND, VANGUARD/EXPLORER FUND, VANGUARD INDEX TRUST,
VANGUARD INTERNATIONAL EQUITY INDEX FUND--EUROPEAN AND PACIFIC
PORTFOLIOS, AND VANGUARD QUANTITATIVE PORTFOLIOS. If you
experience difficulty in making a telephone exchange, your
exchange request may be made by regular or express mail, and
it will be implemented at the closing net asset value on the
date received by Vanguard provided the request is received in
Good Order.
-------------------------------------------------------------
EXCHANGING BY MAIL
Please be sure to include on your exchange request the
name and account number of your current Fund, the name of the
Fund you wish to exchange into, the amount you wish to
exchange, and the signatures of all registered account
holders. Send your request to VANGUARD FINANCIAL CENTER,
VANGUARD MONEY MARKET RESERVES, P.O. BOX 1120, VALLEY FORGE,
PA 19482. (For express or registered mail, send your request
to Vanguard Financial Center, Vanguard Money Market Reserves,
455 Devon Park Drive, Wayne, PA 19087.)
-------------------------------------------------------------
IMPORTANT EXCHANGE INFORMATION
Before you make an exchange, you should consider the
following:

* Please read the Fund's prospectus before making an
exchange. For a copy and for answers to any questions you
may have, call our Investor Information Department
(1-800-662-7447).

* An exchange is treated as a redemption and a purchase.
Therefore, you could realize a taxable gain or loss on the
transaction.

* Exchanges are accepted only if the registrations and the
Taxpayer Identification numbers of the two accounts are
identical.

* New accounts are not currently accepted in Vanguard/
Windsor Fund.

* Shares will be redeemed by exchange at the net asset
value per share.

* When opening a new account by exchange, you must meet the
minimum investment requirement of the new Fund.

<PAGE>
* Exchanges can only be made in states where a Fund's shares
are legally registered. Each investment company member of
the Vanguard Group (except the Vanguard State Tax-Free
Funds) is registered in all fifty states.

Every effort will be made to maintain the exchange privilege.
However, the Fund reserves the right to revise or terminate
its provisions, limit the amount of or reject any exchange,
as deemed necessary, at any time.
- ------------------------------------------------------------------------------
IMPORTANT INFORMATION ABOUT TELEPHONE TRANSACTIONS
The ability to initiate redemptions (except wire
redemptions) and exchanges by telephone is automatically
established on your account unless you request in writing
that telephone transactions on your account not be
permitted.

To protect your account from losses resulting from
unauthorized or fraudulent telephone instructions, Vanguard
adheres to the following security procedures:

1. SECURITY CHECK. To request a transaction by telephone,
the caller must know (i) the name of the Portfolio;
(ii) the 10-digit account number; (iii) the exact name
in which the account is registered; and (iv) the Social
Security or Taxpayer Identification number listed on
the account.

2. PAYMENT POLICY. The proceeds of any telephone
redemption made by mail will be made payable to the
registered shareowner and mailed to the address of
record, only.

Neither the Fund nor Vanguard will be responsible for the
authenticity of transaction instructions received by
telephone, provided that reasonable security procedures have
been followed. Vanguard believes that the security procedures
described above are reasonable and that if such procedures
are followed, you will bear the risk of any losses resulting
from unauthorized or fraudulent telephone transactions on
your account. If Vanguard fails to follow reasonable security
procedures, it may be liable for any losses resulting from
unauthorized or fraudulent telephone transactions on your
account.
- ------------------------------------------------------------------------------
TRANSFERRING REGISTRATION
You may transfer the registration of any of your Fund
shares to another person by completing a transfer form and
sending it to: VANGUARD FINANCIAL CENTER, P.O. BOX 1110,
VALLEY FORGE, PA 19482 ATTENTION: TRANSFER DEPARTMENT. The
request must be in Good Order. BEFORE MAILING YOUR REQUEST,
PLEASE CALL OUR CLIENT SERVICES DEPARTMENT (1-800-662-2739)
FOR FULL INSTRUCTIONS.
- ------------------------------------------------------------------------------
OTHER VANGUARD SERVICES
For more information about any of these services, please call
our Investor Information Department at 1-800-662-7447.

STATEMENTS AND REPORTS
Vanguard will send you a confirmation statement each time
you initiate a transaction in your account except for
checkwriting redemptions from Vanguard money market accounts.
You will also receive a comprehensive account statement at
the end of each calendar quarter. The fourth-quarter
statement will be a year-end statement, listing all
transaction activity for the entire calendar year.

<PAGE>
Vanguard's Average Cost Statement provides you with the
average cost of shares redeemed from your account, using the
average cost single category method. This service is
available for most taxable accounts opened since January 1,
1986. In general, investors who redeem shares from a
qualifying Vanguard account may expect to receive their
Average Cost Statement in February of the following year.
Please call our Client Services Department (1-800-662-2739)
for information.

Financial reports on the Fund will be mailed to you semi-
annually, according to the Fund's fiscal year-end.

VANGUARD DIRECT DEPOSIT SERVICE
With Vanguard's Direct Deposit Service, most U.S. Government
checks (including Social Security and military pension
checks) and private payroll checks may be automatically
deposited into your Vanguard Fund account. Separate brochures
and forms are available for direct deposit of U.S. Government
and private payroll checks.

VANGUARD AUTOMATIC EXCHANGE SERVICE
Vanguard's Automatic Exchange Service allows you to move
money automatically among your Vanguard Fund accounts. For
instance, the service can be used to "dollar cost average"
from a money market portfolio into a stock or bond fund or to
contribute to an IRA or other retirement plan.

VANGUARD FUND EXPRESS
Vanguard's Fund Express allows you to transfer money
between your Fund account and your account at a bank, savings
and loan association, or a credit union that is a member of
the Automated Clearing House (ACH) system. You may elect this
service on the Account Registration Form or call our Investor
Information Department (1-800-662-7447) for a Fund Express
application.

The minimum amount that can be transferred by telephone is
$100. However, if you have established one of the automatic
options, the minimum amount is $50. The maximum amount that
can be transferred using any of the options is $100,000.

Special rules govern how your Fund Express purchases or
redemptions are credited to your account. In addition, some
services of Fund Express cannot be used with specific
Vanguard Funds. For more information, please refer to the
Vanguard Fund Express brochure.

VANGUARD DIVIDEND EXPRESS
Vanguard's Dividend Express allows you to transfer your
dividends and/or capital gains distributions automatically
from your Fund account, one business day after the Fund's
payable date, to your account at a bank, savings and loan
association, or credit union that is a member of the
Automated Clearing House (ACH) network. You may elect this
service on the Account Registration Form or call our Investor
Information Department (1-800-662-7447) for a Vanguard
Dividend Express application.

VANGUARD TELE-ACCOUNT
Vanguard's Tele-Account is a convenient, automated service
that provides share price, price change and yield quotations
on Vanguard Funds through any TouchTone(TM) telephone. This
free service also lets you obtain information about your
account balance, your last transaction, and your most recent
dividend or capital gains payment. To contact Vanguard's
Tele-Account service, dial 1-800-ON-BOARD (1-800-662-6273).
A free brochure offering detailed operating instructions is
available from our Investor Information Department
(1-800-662-7447).
- ------------------------------------------------------------------------------

<PAGE>

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<PAGE>

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<PAGE>

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<PAGE>

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<PAGE>
- ------------------------------------------------------------------------------
THE VANGUARD GROUP
OF INVESTMENT
COMPANIES
Institutional Division
P.O. Box 2900
Vanguard Financial Center
Valley Forge, PA 19482

PARTICIPANT SERVICES:
1-800-523-1188

I N S T I T U T I O N A L
P R O S P E C T U S
MARCH 4, 1994

<PAGE>
==============================================================================
A Member of The Vanguard Group
==============================================================================
PROSPECTUS -- MARCH 4, 1994
- ------------------------------------------------------------------------------
FUND INFORMATION: PARTICIPANT SERVICES -- 1-800-523-1188
- ------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
Vanguard Money Market Reserves, Inc. (the "Fund") is an open-
end, diversified investment company known as a money market
fund. The Fund offers three separate Portfolios. The
objective of each Portfolio is to provide the maximum current
income that is consistent with the preservation of capital
and liquidity by investing in specified money market
instruments. Each Portfolio seeks to maintain a constant net
asset value of $1.00 per share. ALTHOUGH EACH PORTFOLIO
INVESTS IN HIGH QUALITY INSTRUMENTS, AN INVESTMENT IN THE
PORTFOLIOS IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT EACH PORTFOLIO
WILL BE ABLE TO MAINTAIN A CONSTANT NET ASSET VALUE OF $1.00
PER SHARE.
- ------------------------------------------------------------------------------
IMPORTANT NOTE
This Prospectus is intended exclusively for participants in
employer-sponsored retirement or savings plans, such as tax-
qualified pension and profit-sharing plans and 401(k) thrift
plans, as well as 403(b) custodial accounts for non-profit
educational and charitable organizations. Another version of
this Prospectus, containing information on how to open a
personal investment account with the Fund, is available for
individual investors. To obtain a copy of that version of the
Prospectus, please call 1-800-662-7447.
- ------------------------------------------------------------------------------
OPENING AN ACCOUNT
A Portfolio of the Fund is an investment option under a
retirement or savings program sponsored by your employer. The
administrator of your retirement plan or your employee
benefits office can provide you with detailed information on
how to participate in your plan and how to elect a Portfolio
of the Fund as an investment option.

If you have any questions about the Fund, please contact
Participant Services at 1-800-523-1188. If you have any
questions about your plan account, contact your plan
administrator or the organization that provides recordkeeping
services for your plan.
- ------------------------------------------------------------------------------
ABOUT THIS PROSPECTUS
This Prospectus is designed to set forth concisely the
information you should know about the Fund before you invest.
It should be retained for future reference. A "Statement of
Additional Information" containing additional information
about the Fund has been filed with the Securities and
Exchange Commission. This Statement is dated March 4, 1994,
and has been incorporated by reference into this Prospectus.
A copy may be obtained without charge by writing to the Fund
or by calling the Investor Information Department.
- ------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page Page Page
<S> <C> <C>
Highlights.......................... 2 Investment Risks.................... 8 Dividends and Taxes................. 12
Fund Expenses....................... 4 Who Should Invest................... 9 The Share Price of Each Portfolio... 12
Financial Highlights................ 4 Implementation of Policies.......... 9 General Information................. 13
Yield and Total Return.............. 6 Investment Limitations.............. 10 SERVICE GUIDE
Investment Objective................ 7 Management of the Fund.............. 10 Participating in Your Plan.......... 14
Investment Policies................. 7 Investment Adviser.................. 11
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

HIGHLIGHTS
OBJECTIVE AND POLICIES
Vanguard Money Market Reserves, Inc. (the "Fund") is an
open-end, diversified investment company known as a money
market fund. The Fund offers three separate Portfolios. The
objective of each Portfolio is to provide the maximum current
income that is consistent with the preservation of capital
and liquidity by investing in specified money market
instruments.

In absolute terms, the credit quality of each Portfolio is
very high. In relative terms, the U.S. Treasury Portfolio,
which invests in full faith and credit obligations of the
U.S. Government, offers the lowest credit risk and therefore
usually the lowest yield. The Federal Portfolio includes U.S.
Government securities that are not backed by the full faith
and credit of the U.S. Government, and so potential credit
risk and yield are somewhat higher. The Prime Portfolio,
although of a very high credit quality in general, invests in
the money market obligations of private financial and
nonfinancial corporations. It therefore offers the highest
relative credit risk and yield of the three Portfolios.Page 8
- ------------------------------------------------------------------------------
<PAGE>
THE VANGUARD GROUP
The Fund is a member of The Vanguard Group of Investment
Companies, a group of 32 investment companies with 77
distinct investment portfolios and total assets in excess of
$130 billion. The Vanguard Group, Inc. ("Vanguard"), a
subsidiary jointly owned by the Vanguard Funds, provides all
corporate management, administrative, distribution and
shareholder accounting services on an at-cost basis to the
Funds in the Group.
Page 10
- ------------------------------------------------------------------------------
INVESTMENT ADVISER
The Fund receives investment advisory services on an at-cost
basis from Vanguard's Fixed Income Group. As a result, the
Fund receives its investment advisory services at a
substantially lower cost than would be possible if the Fund
paid an investment advisory fee to an external investment
adviser.
Page 11
- ------------------------------------------------------------------------------
DIVIDEND POLICY
Each Portfolio declares a dividend each business day based
on its ordinary income (interest income less expenses).
Dividends are paid monthly. Dividends are automatically
reinvested in additional shares.
Page 12
- ------------------------------------------------------------------------------

<PAGE>
FUND EXPENSES
The following table illustrates ALL expenses and fees that
a shareholder of the Fund would incur. The expenses set forth
below are for the 1993 fiscal year.

The purpose of this table is to assist you in
understanding the various expenses an investor would bear
directly or indirectly as a shareholder in the Fund.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Prime Portfolio.......................... $3 $10 $18 $41
Federal Portfolio........................ $3 $10 $18 $41
U.S. Treasury Portfolio.................. $3 $10 $18 $41
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES OR PERFORMANCE. ACTUAL EXPENSES MAY
BE HIGHER OR LOWER THAN THOSE SHOWN.
- ------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following financial highlights for a share outstanding
throughout each period, insofar as they relate to each of the
five years in the period ended November 30, 1993, have been
audited by Price Waterhouse, independent accountants, whose
report thereon was unqualified. This information should be
read in conjunction with the Fund's financial statements and
notes thereto which are incorporated by reference in the
Statement of Additional Information and this Prospectus, and
which appear, along with the report of Price Waterhouse, in
the Fund's 1993 Annual Report to Shareholders. For a more
complete discussion of the Fund's performance, please see the
Fund's 1993 Annual Report to Shareholders, which may be
obtained without charge by writing to the Fund or by calling
Participant Services at 1-800-523-1188.

<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
PRIME PORTFOLIO
------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989 1988 1987 1986 1985 1984
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF YEAR............. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
INVESTMENT OPERATIONS
Net Investment Income......... .030 .038 .062 .080 .090 .072 .063 .066 .079 .101
Net Realized and Unrealized
Gain on Investment
Securities.................. -- -- -- -- -- -- -- -- -- --
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS.............. .030 .038 .062 .080 .090 .072 .063 .066 .079 .101
- ----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment
Income...................... (.030) (.038) (.062) (.080) (.090) (.072) (.063) (.066) (.079) (.101)
Distributions from Realized
Capital Gains............... -- -- -- -- -- -- -- -- -- --
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS....... (.030) (.038) (.062) (.080) (.090) (.072) (.063) (.066) (.079) (.101)
- ----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR.... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
============================================================================================================================
TOTAL RETURN.................... 3.02% 3.89% 6.39% 8.32% 9.40% 7.47% 6.49% 6.78% 8.20% 10.58%
============================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year
(Millions).................... $12,367 $12,638 $13,496 $13,579 $11,067 $6,863 $4,088 $2,186 $1,725 $1,498
Ratio of Expenses to Average
Net Assets.................... .32% .30% .30% .30% .28% .33% .37% .48% .51% .48%
Ratio of Net Investment Income
to Average Net Assets......... 2.98% 3.82% 6.20% 8.06% 9.05% 7.28% 6.30% 6.60% 7.90% 10.10%

(1) Negotiable certificates of deposit and bankers'
acceptances of U.S. banks having total assets in excess
of $1 billion.

(3) Commercial paper (including variable amount master demand
notes) rated Prime-1 by Moody's Investors Services, Inc.
or A-1 by Standard & Poor's Corporation or, if unrated,
issued by a corporation having an outstanding debt issue
rated Aa or better by Moody's or AA or better by Standard
& Poor's.

(4) Short-term corporate obligations rated Aa or better by
Moody's or AA or better by Standard & Poor's.

(6) Securities eligible for purchase by the Federal
Portfolio, as described below.

<PAGE>
(2) Securities issued or guaranteed by agencies and
instrumentalities of the U.S. Government. These include
securities issued by the Federal Home Loan Banks, Federal
Land Bank, Farmers Home Administration, Farm Credit
Banks, Federal Intermediate Credit Bank, Federal National
Mortgage Association, Federal
Financing Bank, Tennessee Valley Authority, and others.
Such "agency" securities may not be backed by the full
faith and credit of the U.S. Government.

(3) Repurchase agreements that are collateralized by the
securities listed in (1) and (2) above.

(1) U.S. Treasury obligations backed by the full faith and
credit of the U.S. Government (at least 65% of the
Portfolio's assets will be invested in such obligations).

See "Implementation of Policies" for a further description of
the Fund's investment practices.

The U.S. Treasury Portfolio invests solely in full faith
and credit United States Government securities and therefore
has a very low credit risk.

Eurodollar and Yankee obligations are subject to the same
risks that pertain to domestic issues, notably credit risk,
market risk and liquidity risk. Additionally, Eurodollar (and
to a limited extent, Yankee) obligations are subject to
certain sovereign risks. One such risk is the possibility
that a foreign government might prevent dollar-denominated
<PAGE>
funds from flowing across its borders. Other risks include:
adverse political and economic developments in a foreign
country; the extent and quality of government regulation of
financial markets and institutions; the imposition of foreign
withholding taxes; and expropriation or nationalization of
foreign issuers. However, Eurodollar and Yankee obligations
will undergo the same credit analysis as domestic issues in
which the Prime Portfolio invests, and foreign issuers will
be required to meet the same tests of financial strength as
the domestic issuers approved for the Prime Portfolio.

PORTFOLIO TURNOVER WILL BE HIGH
Each Portfolio of the Fund is expected to have a high
portfolio turnover rate due to the short maturities of the
securities purchased. However, this high turnover rate
should not increase the Fund's costs since brokerage
commissions are not normally charged on the purchase or sale
of money market instruments.
- ------------------------------------------------------------------------------
INVESTMENT LIMITATIONS
THE FUND HAS ADOPTED CERTAIN FUNDAMENTAL LIMITATIONS
Each Portfolio of the Fund has adopted certain limitations
designed to reduce its risk exposure. These limitations
include the following:

(a) A Portfolio will not invest more than 5% of its assets in
the securities of any single company, excluding
obligations of the United States Government.

(b) A Portfolio will not purchase more than 10% of any class
of securities of any issuer.

(d) A Portfolio will not borrow money except for emergency
purposes and then not in excess of 15% of total assets.

The Officers of the Fund manage its day-to-day operations and
are responsible to the Fund's Board of Directors. The
Directors set broad policies for the Fund and choose its
<PAGE>
Officers. A list of the Directors and Officers of the Fund
and a statement of their present positions and principal
occupations during the past five years can be found in the
Statement of Additional Information.

Vanguard employs a supporting staff of management and
administrative personnel needed to provide the requisite
services to the funds and also furnishes the funds with
necessary office space, furnishings and equipment. Each fund
pays its share of Vanguard's total expenses, which are
allocated among the funds under methods approved by the Board
of Directors (Trustees) of each fund. In addition, each fund
bears its own direct expenses, such as legal, auditing and
custodian fees.

Vanguard also provides distribution and marketing services
to the Vanguard funds. The funds are available on a no-load
basis (i.e., there are no sales commissions or 12b-1 fees).
However, each fund bears its share of the Group's
distribution costs.
- ------------------------------------------------------------------------------
INVESTMENT ADVISER
VANGUARD MANAGES THE FUND'S INVESTMENTS
The three Portfolios of the Fund receive all investment
advisory services on an at-cost basis from Vanguard's Fixed
Income Group. The Group also provides investment advisory
services to 32 other Vanguard money market and bond
portfolios, both taxable and tax-exempt. Total assets under
management by Vanguard's Fixed Income Group were $52 billion
as of December 31, 1993. The Fixed Income Group is supervised
by the Officers of the Fund. Ian A. MacKinnon, Senior Vice
President of Vanguard, has been in charge of the Group since
its inception in 1981.

The Fixed Income Group manages the investment and
reinvestment of the assets of the Fund's Portfolios and
continuously reviews, supervises and administers each
Portfolio's investment program, subject to the maturity and
quality standards specified in this Prospectus and
supplemental guidelines approved by the Fund's Board of
Directors. The Fixed Income Group's selection of investments
for the Portfolios is based on: (a) continuing credit
analysis of those instruments held in the Portfolios and
those being considered for inclusion therein; (b) possible
disparities in yield relationships between different money
market instruments; and (c) actual or anticipated movements
in the general level of interest rates.

In purchasing and selling securities for each of the
Portfolios, it is the Fund's policy to seek to obtain quality
execution at the most favorable prices through issuers or
responsible broker-dealers. In selecting broker-dealers to
execute the securities transactions for the Portfolios,
consideration will be given to such factors as: the price of
the security; the rate of the commission; the size and
difficulty of the order; the reliability, integrity,
financial condition, general execution and operational
<PAGE>
capabilities of competing broker-dealers; and the overall
brokerage and research services provided to the Fund.
- ------------------------------------------------------------------------------
DIVIDENDS AND TAXES
DIVIDENDS ARE PAID ON THE FIRST BUSINESS DAY OF EACH MONTH
Each Portfolio's dividends are accrued daily based on
ordinary income and are distributed on the first business day
of the month. A Portfolio's dividends may be automatically
reinvested in additional shares or received in cash. All
dividend distributions are automatically reinvested in
additional shares of a Portfolio. Each Portfolio of the Fund
intends to continue to qualify as a "regulated investment
company" under the Internal Revenue Code so that it will not
be subject to federal income tax to the extent its income is
distributed to its shareholders.

If you utilize the Fund as an investment option in an
employer-sponsored retirement savings plan, dividend
distributions from the Fund will generally not be subject to
current taxation, but will accumulate on a tax-deferred
basis. In general, employer-sponsored retirement and savings
plans are governed by complex tax rules. If you participate
in such a plan, consult your plan administrator, your plan's
Summary Plan Description, or a professional tax adviser
regarding the tax consequences of your participation in the
plan and of any plan contributions or withdrawals.
- ------------------------------------------------------------------------------
THE SHARE PRICE OF EACH PORTFOLIO
Each Portfolio's share price or "net asset value" per share
is calculated daily at the close of trading on the New York
Stock Exchange (generally 4:00 p.m. Eastern time). Each
Portfolio determines its net asset value per share by
subtracting the Portfolio's liabilities (including accrued
expenses and dividends payable) from the total value of the
Portfolio's investments and other assets and by dividing the
result by the total outstanding shares of the Portfolio.

The use of amortized cost and the maintenance of each
Portfolio's per share net asset value at $1.00 is based on
its election to operate under the provisions of Rule 2a-7
under the Investment Company Act of 1940. As a condition of
operating under that rule, each Portfolio must maintain a
dollar-weighted average portfolio maturity of 90 days or
less, purchase only instruments having remaining maturities
of 13 months or less, and invest only in securities that are
determined by the Directors to present minimal credit risks
and that are of high quality as determined by any major
rating service, or in the case of any instrument not so
rated, considered by the Directors to be of comparable
quality.

The Directors have also agreed to establish procedures
reasonably designed, taking into account current market
conditions and each Portfolio's investment objective, to
stabilize the net asset value per share as computed for the
<PAGE>
purposes of sales and redemptions at $1.00. These procedures
include periodic review, as the Directors deem appropriate
and at such intervals as are reasonable in light of current
market conditions, of the relationship between the amortized
cost value per share and a net asset value per share based
upon available indications of market value. In such a review,
investments for which market quotations are readily available
are valued at the most recent bid price or quoted yield
equivalent for such securities or for securities of
comparable maturity, quality and type as obtained from one or
more of the major market makers for the securities to be
valued. Other investments and assets are valued at fair
value, as determined in good faith by the Directors.

SERVICE GUIDE
PARTICIPATING IN YOUR PLAN
One or more Portfolios of the Fund is available as an
investment option in your retirement or savings plan. The
administrator of your plan or your employee benefits office
can provide you with detailed information on how to
participate in your plan and how to elect a Portfolio of the
Fund as an investment option.

If you have any questions about a Portfolio, including the
Portfolio's investment objective, policies, risk
characteristics or historical performance, please contact
Participant Services at 1-800-523-1188.

If you have questions about your account, contact your plan
administrator or the organization which provides
recordkeeping services for your plan.
-------------------------------------------------------------
INVESTMENT OPTIONS AND ALLOCATIONS
You may be permitted to elect different investment options,
alter the amounts contributed to your plan, or change how
contributions are allocated among your investment options in
accordance with your plan's specific provisions. See your
plan administrator or employee benefits office for more
details.
-------------------------------------------------------------
TRANSACTIONS IN FUND SHARES
Contributions, exchanges or redemptions of a Portfolio's
shares are effective when received in "good order" by
Vanguard. "Good order" means that complete information on the
contribution, exchange or redemption and the appropriate
monies have been received by Vanguard.
-------------------------------------------------------------
MAKING EXCHANGES
Your plan may allow you to exchange monies from one
investment option to another. Check with your plan
administrator for details on the rules governing exchanges in
your plan. Certain investment options, particularly company
stock or guaranteed investment contracts (GICs), may be
subject to unique restrictions.

Before making an exchange, you should consider the following:

* If you are making an exchange to another Vanguard Fund
option, please read the Fund's prospectus. Contact
Participant Services at 1-800-523-1188 for a copy.

* Exchanges are accepted by Vanguard only as permitted by
your plan. Your plan administrator can explain how
frequently exchanges are allowed.
- ------------------------------------------------------------------------------
<PAGE>

(This page intentionally left blank.)

<PAGE>
VANGUARD MONEY MARKET RESERVES

PART B

STATEMENT OF ADDITIONAL INFORMATION
MARCH 4, 1994

This Statement is not a prospectus but should be read in conjunction with the
Fund's current Prospectus (dated March 4, 1994). To obtain the Prospectus
please call the Investor Information Department:

1-800-662-7447

TABLE OF CONTENTS PAGE
--------------- ---
Investment Limitations....................................... 1
Yield and Total Return....................................... 3
Calculation of Yield......................................... 3
Purchase of Shares........................................... 4
Redemption of Shares......................................... 4
Shareholder Services......................................... 4
Performance Measures......................................... 5
Management of the Fund....................................... 6
Description of Shares and Voting Rights...................... 9
Financial Statements......................................... 9
Appendix-Description of Securities and Ratings............... 9

INVESTMENT LIMITATIONS

The following restrictions and fundamental policies cannot be changed
without approval of the holders of a majority of the outstanding shares of the
Fund (as defined in the Investment Company Act of 1940), including a majority
of the shares of each Portfolio. The Fund may not under any circumstances:

1) purchase securities for any Portfolio of the Fund other than the
securities in which the Portfolio is authorized to invest as set forth
in the Prospectus under "Investment Objectives" and "Investment
Policies";

2) borrow money in excess of 15% of the total assets of any Portfolio taken
at market value and then only from banks as a temporary measure for
extraordinary or emergency purposes; the Fund will not borrow to
increase income (leveraging) but only to facilitate redemption requests
which might otherwise require untimely dispositions of portfolio
securities; the Fund will repay all borrowings before making additional
investments and interest paid on such borrowings will reduce net income;

3) make loans to other persons (except by the purchase of obligations in
which the Fund is authorized to invest); provided, however, that the
Fund will not enter into repurchase agreements if, as a result thereof,
more than 10% of the net assets of any Portfolio (taken at current
value) would be subject to repurchase agreements maturing in more than
seven days;

4) purchase the securities of any issuer (other than obligations issued or
guaranteed as to principal and interest by the Government of the United
States, its agencies or instrumentalities) if, as a result, (a) more
than 5% of a Portfolio's total assets (taken at current value) would be
invested in the securities of such issuer, or (b) any Portfolio would
hold more than 10% of any class of securities of such issuer (for this
purpose, all debt obligations of an issuer maturing in less than one
year are treated as a single class of securities);

<PAGE>

5) write, or invest in, put, call, straddle or spread options or invest in
interests in oil, gas or other mineral exploration or development
programs;

6) purchase securities on margin or sell any securities short;

7) purchase or retain securities of an issuer if an officer or director of
such issuer is an officer or Director of the Fund or its investment
adviser and one or more of such officers or directors (trustees) of the
Fund or its investment adviser owns beneficially more than 1/2% of the
shares of securities of such issuer and all such directors and officers
owning more than 1/2% of such shares or securities together own more
than 5% of such shares or securities;

8) purchase any securities which could cause more than 25% of the value of
a Portfolio's total net assets at the time of such purchase to be
invested in the securities of one or more issuers conducting their
principal business activities in the same industry, provided that there
is no limitation with respect to investments in United States Treasury
Bills, other obligations issued or guaranteed by the Federal Government,
its agencies and instrumentalities or certificates of deposit or
bankers' acceptances of domestic institutions;

9) mortgage, pledge or hypothecate its assets except in an amount up to 15%
(10% as long as the Fund's shares are registered for sale in certain
states) of the value of a Portfolio's total assets but only to secure
borrowings for temporary or emergency purposes;

10) engage in the business of underwriting securities issued by other
persons, except to the extent that the Portfolio may technically be
deemed to be an underwriter under the Securities Act of 1933, as
amended, in disposing of investment securities;

11) purchase or otherwise acquire any security if, as a result, more than
10% of its net assets (including any investment in The Vanguard Group
Inc.) would be invested in securities that are illiquid;

12) purchase or sell real estate, real estate investment trust securities,
commodities, or commodity contracts;

13) invest in companies for the purpose of exercising control;

14) invest in securities of other investment companies, except as they may
be acquired as part of a merger, consolidation or acquisition of assets;
and

15) issue senior securities.

Notwithstanding these limitations, the Fund may own all or any portion of
the securities of, or make loans to, or contribute to the costs or other
financial requirements of, any company which will be: (1) wholly owned by the
Fund and one or more other investment companies, and is (2) primarily engaged
in the business of providing, at-cost, management, administrative,
distribution or related services to the Fund and other investment companies.
See "Management of the Fund."
As an operational policy of the Fund, the Fund will not in the aggregate,
enter into repurchase agreements maturing in more than seven days, purchase
restricted securities or invest in any other illiquid securities if, as a
result thereof, more than 10% of the net assets of the Fund would be invested
in such assets.
The above-mentioned investment limitations are considered at the time
investment securities are purchased.

<PAGE>

YIELD AND TOTAL RETURN

The yield of each Portfolio of the Fund for the 7-day period ended November
30, 1993 is set forth below. Yields are calculated daily for each Portfolio.

Prime Portfolio............................ 3.00%
Federal Portfolio.......................... 2.95%
U.S. Treasury Portfolio.................... 2.77%

The average annual total return of each Portfolio of the Fund for the one-,
five- and ten-year periods ending November 30, 1993 is set forth below:

<TABLE>
<CAPTION>
1 Year Ended 5 Years Ended 10 Years Ended
11/30/93 11/30/93 11/30/93
------- -------- --------
<S> <C> <C> <C>
Prime Portfolio...................................... +3.02% +6.18% +7.03%
Federal Portfolio.................................... +2.98% +6.03% +6.83%
U.S. Treasury Portfolio.............................. +2.86% +5.85% +6.57%*

</TABLE>

Total return is computed by finding the average compounded rates of return
over the periods set forth above that would equate an initial amount invested
at the beginning of the periods to the ending redeemable value of the
investment.

CALCULATION OF YIELD

The current yield of each of the Fund's Portfolios is calculated daily on a
base period return of a hypothetical account having a beginning balance of one
share for a particular period of time (generally 7 days). The return is
determined by dividing the net change (exclusive of any capital changes) in
such account by its average net asset value for the period, and then
multiplying it by 365/7 to get the annualized current yield. The calculation
of net change reflects the value of additional shares purchased with the
dividends by the Portfolio, including dividends on both the original share and
on such additional shares. An effective yield, which reflects the effects of
compounding and represents an annualization of the current yield with all
dividends reinvested, may also be calculated for the Portfolio by adding 1 to
the net change, raising the sum to the 365/7 power, and subtracting 1 from the
result.
Set forth below is an example, for purposes of illustration only, of the
current and effective yield calculations for each of the Portfolios for the 7
day base period ended November 30, 1993.
<TABLE>
<CAPTION>
U.S. TREASURY
PRIME PORTFOLIO FEDERAL PORTFOLIO PORTFOLIO
--------------- ----------------- -------------
11/30/93 11/30/93 11/30/93
-------- -------- --------
<S> <C> <C> <C>
Value of account at beginning of period......................... $1.00000 $1.00000 $1.00000
Value of same account at end of period*......................... 1.00058 1.00057 1.00053
-------- -------- --------
Net Change in account value..................................... $ .00058 $ .00057 $ .00053
Annualized Current Net Yield (Net Change X
365/7) average net asset value................................ 3.02% 2.97% 2.76%
Effective Yield ((Net Change)+1)365/7-1......................... 3.07% 3.02% 2.80%
Average Weighted Maturity of Investments........................ 59 Days 60 Days 58 Days
<FN>
*Exclusive of any capital changes.
</TABLE>

The net asset value of a share of each Portfolio is $1.00 and it is not
expected to fluctuate. However, the yield of each Portfolio will fluctuate.
The annualization of a week's dividend is not a representation by the
Portfolio as to what an investment in the Portfolio will actually yield in the
future. Actual yields will depend on such variables as investment quality,
average maturity, the type of instruments the Portfolio invests in, changes in
interest rates on instruments, changes in the expenses of the Fund and other
factors. Yields are one basis investors may use to analyze the Portfolios of
the Fund, and other investment vehicles; however, yields of other investment
<PAGE>
vehicles may not be comparable because of the factors set forth in the
preceding sentence, differences in the time periods compared, and differences
in the methods used in valuing portfolio instruments, computing net asset
values and calculating yields.

PURCHASE OF SHARES

The Fund reserves the right in its sole discretion (i) to suspend the
offerings of its shares, (ii) to reject purchase orders when in the judgment
of management such rejection is in the best interest of the Fund, and (iii) to
reduce or waive the minimum for initial and subsequent investments for certain
fiduciary accounts or under circumstances where certain economies can be
achieved in sales of the Fund's shares.

REDEMPTION OF SHARES

The Fund may suspend redemption privileges for each Portfolio or postpone
the date of payment (i) during any period that the New York Stock Exchange is
closed, or trading on the Exchange is restricted as determined by the
Securities and Exchange Commission (the "Commission"), (ii) during any period
when an emergency exists as defined by the rules of the Commission as a result
of which it is not reasonably practicable for a Portfolio to dispose of
securities owned by it, or fairly to determine the value of its assets, and
(iii) for such other periods as the Commission may permit.
The Fund has made an election with the Commission to pay in cash all
redemptions requested by any shareholder of record limited in amount during
any 90-day period to the lesser of $250,000 or l% of the net assets of the
Fund at the beginning of such period. Such committment is irrevocable without
the prior approval of the Commission. Redemptions in excess of the above
limits may be paid in whole or in part, in investment readily marketable
securities or in cash, as the Directors may deem advisable; however, payment
will be made wholly in cash unless the Directors believe that economic or
market conditions exist which would make such a practice detrimental to the
best interests of the Fund. If redemptions are paid in investment securities,
such securities will be valued as set forth in the Prospectus under "The Share
Price of Each Portfolio" and a redeeming shareholder would normally incur
brokerage expenses if he converted these securities to cash.
No charge is made by the Fund for redemptions; except for wire withdrawals
in amounts less than $5,000 which will be subject to a maximum charge of $5.00
which will be deducted from the principal in your account. Any redemption may
be more or less than the shareholder's cost depending on the market value of
the securities held by each Portfolio.

SHAREHOLDER SERVICES

EXCHANGE PRIVILEGE. Each Portfolio's shares may be exchanged without cost for
shares of any other Portfolio, or for the shares of any open-end Fund
currently offering its shares to new investors in The Vanguard Group
("Vanguard"). A shareholder of any other open-end Fund in Vanguard may
likewise exchange his shares for shares of any of the Fund's Portfolios.
Exchange requests may be made either by mail, telephone or telegraph.
Telephone and telegraph exchanges (referred to as "expedited exchanges")
will be accepted only if the account of the shareholder and the registration
of the two accounts is identical. Requests for expedited exchanges received
prior to the close of the New York Stock Exchange (generally 4:00 P.M. Eastern
time) will be processed at the next determined net asset value after such
request is received. Requests received after the close of the New York Stock
Exchange (generally 4:00 P.M. Eastern time), will be processed on the next
business day. NO EXPEDITED EXCHANGES WILL BE ACCEPTED INTO, OR FROM, VANGUARD
BALANCED INDEX FUND, VANGUARD/EXPLORER FUND, VANGUARD INDEX TRUST, VANGUARD
QUANTITATIVE PORTFOLIOS AND VANGUARD INTERNATIONAL EQUITY INDEX FUND. Neither
the Fund nor Vanguard will be responsible for the authenticity of exchange
instructions received by telephone or telegraph. Expedited exchanges may also
be subject to limitations as to amounts and frequency, and to other
restrictions established by the Board of Directors to assure that such
exchanges do not disadvantage the Fund and its shareholders. Shareholders may
obtain the terms of these limitations, which may be revised at any time, from
Vanguard.
Any such exchange will be based on the respective net asset values of the
shares involved. There are no sales commissions or charges of any kind. Before
making an exchange, a shareholder should consider the investment objectives
and policies of the Portfolio or Fund to be purchased, and other relevant
<PAGE>
information (including the minimum initial investment), which can be found in
the prospectus relating to that particular Portfolio or Fund. A prospectus for
any of the Vanguard Funds or Portfolios may be obtained from Vanguard.
For Federal income tax purposes an exchange between Funds is a taxable event
and, accordingly, a capital gain or loss may be realized. In a revenue ruling
relating to circumstances similar to the Fund's, an exchange between series of
a Fund was also deemed to be a taxable event. It is likely, therefore, that a
capital gain or loss would be realized on an exchange between Portfolios; you
may want to consult your tax adviser for further information in this regard.
The exchange privilege may be modified or terminated at any time, and any of
the Portfolios or Vanguard Funds may limit or discontinue the offering of its
shares without notice to shareholders.

TRANSFER OF SHARES. Fund shares may be transferred to another person by
sending appropriate written instructions to Vanguard. The account must be
clearly identified and include the number of shares to be transferred and the
signatures of all registered owners. The signature on the letter of
instructions or any stock power must be guaranteed. As in the case of
withdrawals, the written request must be received in "Good Order" before any
transfer can be made.

INFORMATION FOR SHAREHOLDERS. Following any purchase or redemption, a
shareholder will receive a statement which reflects all activity during the
current calendar year. Each shareholder will also receive a monthly statement,
which includes a valuation as of the day the statement is prepared.
Shareholders will receive semi-annual financial statements audited at least
annually by independent accountants whose selection is ratified by
shareholders.

PERFORMANCE MEASURES

Vanguard Money Market Reserves may use one or more of the following
unmanaged indexes for comparative performance purposes:

STANDARD AND POOR'S 500 COMPOSITE STOCK PRICE INDEX -- is a well diversified
list of 500 companies representing the U.S. Stock Market.

WILSHIRE 5000 EQUITY INDEXES -- consists of nearly 5,000 common equity
securities, covering all stocks in the U.S. for which daily pricing is
available.

WILSHIRE 4500 EQUITY INDEX -- consists of all stocks in the Wilshire 5000
except for the 500 stocks in the Standard and Poor's 500 Index.

RUSSELL 3000 STOCK INDEX -- a diversified portfolio of over 3,000 common
stocks accounting for over 90% of the market value of publicly traded stocks
in the U.S.

RUSSELL 2000 STOCK INDEX -- a subset of approximately 2,000 of the smallest
stocks contained in the Russell 3000; a widely used benchmark for small
capitalization common stocks.

MORGAN STANLEY CAPITAL INTERNATIONAL EAFE INDEX -- is an arithmetic, market
value-weighted average of the performance of over 900 securities listed on the
stock exchanges of countries in Europe, Australia and the Far East.

GOLDMAN SACHS 100 CONVERTIBLE BOND INDEX -- currently includes 67 bonds and 33
preferreds. The original list of names was generated by screening for
convertible issues of 100 million or greater in market capitalization. The
index is priced monthly.

SALOMON BROTHERS GNMA INDEX -- includes pools of mortgages originated by
private lenders and guaranteed by the mortgage pools of the Government
National Mortgage Association.

SALOMON BROTHERS HIGH-GRADE CORPORATE BOND INDEX -- consists of publicly
issued, non-convertible corporate bonds rated AA or AAA. It is a value-
weighted, total return index, including approximately 800 issues with
maturities of 12 years or greater.

SHEARSON LEHMAN LONG-TERM TREASURY BOND -- is composed of all bonds covered by
the Shearson Lehman Hutton Treasury Bond Index with maturities of 10 years or
greater.

<PAGE>
MERRILL LYNCH CORPORATE & GOVERNMENT BOND -- consists of over 4,500 U.S.
Treasury, Agency and investment grade corporate bonds.

SHEARSON LEHMAN CORPORATE (BAA) BOND INDEX -- all publicly offered fixed rate,
nonconvertible domestic corporate bonds rated Baa by Moody's, with a maturity
longer than 1 year and with more than $25 million outstanding. This index
includes over 1,000 issues.

BOND BUYER MUNICIPAL INDEX (20 YEAR) BOND -- is a yield index on current
coupon high grade general obligation municipal bonds.

STANDARD & POOR'S PREFERRED INDEX -- is a yield index based upon the average
yield of four high grade, non-callable preferred stock issues.

NASDAQ INDUSTRIAL INDEX -- is composed of more than 3,000 industrial issues.
It is a value-weighted index calculated on price change only and does not
include income.

COMPOSITE INDEX -- 70% Standard & Poor's 500 Index and 30% NASDAQ Industrial
Index.

COMPOSITE INDEX -- 35% Standard & Poor's 500 Index and 65% Salomon Brothers
High-Grade Bond Index.

COMPOSITE INDEX -- 65% Standard & Poor's 500 Index and 35% Salomon Brothers
High-Grade Bond Index.

LEHMAN BROTHERS AGGREGATE BOND INDEX -- is a market weighted index that
contains individually priced U.S. Treasury, agency, corporate, and mortgage
pass-through securities corporate rated BBB- or better. The Index has a market
value of over $4 trillion.

LEHMAN BROTHERS MUTUAL FUND SHORT (1-5) GOVERNMENT/CORPORATE INDEX -- is a
market weighted index that contains individually priced U.S. Treasury, agency,
and corporate investment grade bonds rated BBB- or better with maturities
between 1 and 5 years. The index has a market value of over $1.3 trillion.

LEHMAN BROTHERS MUTUAL FUND INTERMEDIATE (5-10) GOVERNMENT/CORPORATE INDEX
- -- is a market weighted index that contains individually priced U.S. Treasury,
agency, and corporate securities rated BBB- or better with maturities between
5 and 10 years. The index has a market value of over $600 billion.

LEHMAN BROTHERS MUTUAL FUND LONG (10+) GOVERNMENT/CORPORATE INDEX -- is a
market weighted index that contains individually priced U.S. Treasury, agency,
and corporate securities rated BBB- or better with maturities greater than 10
years. The index has a market value of over $900 billion.

LIPPER SMALL COMPANY GROWTH FUND AVERAGE -- the average performance of small
company growth funds as defined by Lipper Analytical Services, Inc. Lipper
defines a small company growth fund as a fund that by prospectus or portfolio
practice, limits its investments to companies on the basis of the size of the
company. From time to time, Vanguard may advertise using the average
performance and/or the average expense ratio of the small company growth
funds. (This fund category was first established in 1982. For years prior to
1982, the results of the Lipper Small Company Growth category were estimated
using the returns of the Funds that constituted the Group at its inception.)

LIPPER BALANCED FUND AVERAGE -- An industry benchmark of average balanced
funds with similar investment objectives and policies, as measured by Lipper
Analytical Services, Inc.

LIPPER NON-GOVERNMENT MONEY MARKET FUND AVERAGE -- An industry benchmark of
average non-government money market funds with similar investment objectives
and policies, as measured by Lipper Analytical Services, Inc.

LIPPER GOVERNMENT MONEY MARKET FUND AVERAGE -- An industry benchmark of
average government money market funds with similar investment objectives and
policies, as measured by Lipper Analytical Services, Inc.

<PAGE>
MANAGEMENT OF THE FUND

OFFICERS AND DIRECTORS

The Fund's Officers, under the supervision of the Board of Directors, manage
the day to day operations of the Fund. The Directors, who are elected annually
by shareholders, set broad policies for the Fund and choose its Officers. A
list of the Directors and Officers of the Fund and a brief statement of their
present positions and principal occupations during the past 5 years is set
forth below. The mailing address of the Directors and Officers of the Fund is
Post Office Box 876, Valley Forge, PA 19482.
<TABLE>
<C> <S>
JOHN C. BOGLE, Chairman, Chief Executive Officer and JOHN C. SAWHILL, Director
Director* President and Chief Executive Officer of The Nature
Chairman, Chief Executive Officer, and Director of The Conservancy; formerly, Director and Senior Partner,
Vanguard Group, Inc., and of each of the investment McKinsey & Co.; President, New York University; Director
companies in The Vanguard Group. Director of The Mead of Pacific Gas and Electric Company and NACCO Industries.
Corporation and General Accident Insurance. JAMES O. WELCH, JR., Director
JOHN J. BRENNAN, President & Director* Retired Chairman of Nabisco Brands Inc., retired Vice
President and Director of The Vanguard Group, Inc. and Chairman and Director of RJR Nabisco; Director of TECO
each of the investment companies in The Vanguard Group. Energy, Inc.
ROBERT E. CAWTHORN, Director J. LAWRENCE WILSON, Director
Chairman and Chief Executive Officer, Rhone-Poulenc Rorer, Chairman and Director of Rohm & Haas Company; Director of
Inc.; Director of Immune Response Corp. and Sun Company, Cummins Engine Company and Vanderbilt University; Trustee
Inc.; Trustee, Universal Health Realty Income Trust. of the Culver Educational Foundation.
BARBARA BARNES HAUPTFUHRER, Director RAYMOND J. KLAPINSKY, Secretary*
Director of The Great Atlantic and Pacific Tea Company, Senior Vice President and Secretary of The Vanguard Group,
Alco Standard Corp., Raytheon Company, Knight-Ridder, Inc.; Secretary of each of the investment companies in The
Inc., and Massachusetts Mutual Life Insurance Co. Vanguard Group.
BRUCE K. MACLAURY, Director RICHARD F. HYLAND, Treasurer*
President, The Brookings Institution; Director of Dayton Treasurer of The Vanguard Group, Inc. and of each of the
Hudson Corporation, American Express Bank, Ltd. and The investment companies in The Vanguard Group.
St. Paul Companies, Inc. KAREN E. WEST, Controller*
BURTON G. MALKIEL, Director Vice President of The Vanguard Group, Inc.; Controller of
Chemical Bank Chairman's Professor of Economics, Princeton each of the investment companies in The Vanguard Group.
University; Director of Prudential Insurance Co. of
America, Amdahl Corporation, Baker Fentress & Co., Jeffrey
Co., and The Southern New England Telephone Company.
ALFRED M. RANKIN, JR. Director
President, Chief Executive Officer and Director of NACCO
Industries, Inc.; Director of The BFGoodrich Company, The
Standard Products Company and The Reliance Electric
Company.
<FN>
- -----------
*Officers of the Fund are "interested persons" as defined in the Investment Company Act of 1940.
</TABLE>
- ------------------------------------------------------------------------------
THE VANGUARD GROUP

The Fund is a member of The Vanguard Group of Investment Companies. Through
their jointly owned subsidiary, The Vanguard Group, Inc. ("Vanguard"), the
Fund and the other Funds in the Group obtain at cost virtually all of their
corporate management, administrative and distribution services. Vanguard also
provides investment advisory services on an at-cost basis to certain of the
Vanguard Funds.
Vanguard employs a supporting staff of management and administrative
personnel needed to provide the requisite services to the Funds and also
furnishes the Funds with necessary office space, furnishings and equipment.
Each Fund pays its share of Vanguard's total expenses which are allocated
among the Funds under methods approved by the Board of Directors (Trustees) of
each Fund. In addition, each Fund bears its own direct expenses such as legal,
auditing and custodian fees.
The Fund's Officers are also Officers and employees of Vanguard. No Officer
or employee owns, or is permitted to own, any securities of any external
adviser for the Funds.
The Vanguard Group, Inc. ("Vanguard") was established and operates under
a Funds' Service Agreement which was approved by the shareholders of each of
the Funds. The amounts of which each of the Funds have invested are adjusted
from time to time in order to maintain the proportionate relationship between
each Fund's relative net assets and its contribution to Vanguard's capital. At
November 30, 1993, the Fund had contributed capital of $2,592,000 to Vanguard,
representing 13.0% of Vanguard's capitalization. The Fund's service agreement
was amended on May 10, 1993, to provide as follows: (a) each Vanguard Fund may
invest up to 0.40% of its current assets in Vanguard and (b) there is no other
limitation on the amount that each Vanguard Fund may contribute to Vanguard's
Capitalization.
<PAGE>
MANAGEMENT. Corporate management and administrative services include: (1)
executive staff; (2) accounting and financial; (3) legal and regulatory; (4)
shareholder account maintenance; (5) monitoring and control of custodian
relationships; (6) shareholder reporting; and (7) review and evaluation of
advisory and other services provided to the Funds by third parties. During the
fiscal year ended November 30, 1993, the Fund's share of Vanguard's actual net
costs of operation relating to management and administrative services
(including transfer agency) totaled approximately $40,450,000.

DISTRIBUTION. Vanguard provides all distribution and marketing activities for
the Funds in the Group. Vanguard Marketing Corporation, a wholly-owned
subsidiary of The Vanguard Group, Inc., acts as Sales Agent for the shares of
the Funds, in connection with any sales made directly to investors in the
states of Florida, Missouri, New York, Ohio, Texas and such other states as it
may be required.
The principal distribution expenses are for advertising, promotional
materials and marketing personnel. Distribution services may also include
organizing and offering to the public, from time to time, one or more new
investment companies which will become members of the Group. The Directors and
Officers of Vanguard determine the amount to be spent annually on distribution
activities, the manner and amount to be spent on each Fund, and whether to
organize new investment companies.
One half of the distribution expenses of a marketing and promotional
nature is allocated among the Funds based upon relative net assets. The
remaining one half of those expenses is allocated among the Funds based upon
each Fund's sales for the preceding 24 months relative to the total sales of
the Funds as a Group, provided, however, that no Fund's aggregate quarterly
rate of contribution for distribution expenses of a marketing and promotional
nature shall exceed 125% of average distribution expense rate for the Group,
and that no Fund shall incur annual distribution expenses in excess of 20/100
of 1% of its average month-end net assets. During the fiscal year ended
November 30, 1993, the Fund paid approximately $5,845,000 of the Group's
distribution and marketing expenses or approximately 4/100 of 1% of the Fund's
average month-end net assets.

INVESTMENT ADVISORY SERVICES. Vanguard also provides the Fund, Vanguard
Municipal Bond Fund, Vanguard Bond Index Fund, Vanguard Institutional Money
Market Portfolio, several Portfolios of Vanguard Fixed Income Securities Fund,
Vanguard Admiral Funds, Vanguard California Tax-Free Fund, Vanguard
Pennsylvania Tax-Free Fund, Vanguard Ohio Tax-Free Fund, Vanguard New York
Insured Tax-Free Fund, Vanguard New Jersey Tax-Free Fund, Vanguard Florida
Tax-Free Fund, Vanguard Index Trust, Vanguard Balanced Index Fund, several
Portfolios of Vanguard Variable Insurance Fund and Vanguard International
Equity Index Fund with investment advisory services. These services are
provided on an at-cost basis from a money management staff employed directly
by Vanguard. The compensation and other expenses of this staff are paid by the
Funds utilizing these services. During the years ended November 30, 1991, 1992
and 1993, the Fund paid approximately $1,072,000, $1,532,000 and $1,603,000,
respectively, of Vanguard's expenses relating to investment advisory
services.

REMUNERATION OF DIRECTORS. The Fund pays each Director (Trustee), who is
not also an Officer, an annual fee plus travel and other expenses incurred in
attending Board meetings. During the year ended November 30, 1993 the Fund
paid $53,000 in Directors' fees and expenses. The Fund's Officers and
employees are paid by Vanguard which, in turn, is reimbursed by the Fund and
each other Fund in the Group, for its proportionate share of Officers' and
employees' salaries and retirement benefits.

The following information is furnished with respect to the Director and
Officer of the Fund for whom the Fund's proportionate shares of remuneration
exceeded $60,000 for the fiscal year ended November 30, 1993, and for all
Directors and officers as a group:

NAMES AND CAPACITIES IN WHICH DIRECT AMOUNT CONTRIBUTED
REMUNERATION WAS RECEIVED REMUNERATION TO RETIREMENT PLAN
----------------------------- ------------ ------------------
John C. Bogle, $422,709 $40,762
Chairman and Chief
Executive Officer

John J. Brennan, 188,587 23,098
President

All Directors and Officers
as a Group (12) $733,762(1) $80,249(2)

<PAGE>
(1) Includes, in the aggregate, $53,000 of fees and expenses paid by the Fund
to its "non-interested" Directors, and the Fund's proportionate share of
remuneration paid by Vanguard to all Officers of the Fund, as a group.
(2) Includes the Fund's proportionate share of benefits paid by Vanguard under
its Retirement and Thrift Plans to all Officers of the Fund, as a group.
Under its retirement plan, Vanguard contributes annually an amount equal
to 10% of each eligible Officer's annual compensation plus 5.7% of that
part of an eligible Officer's compensation during the year, if any, that
exceeds the Social Security Taxable Wage Base then in effect. Under the
Thrift Plan, all eligible Officers are permitted to make pre-tax basic
contributions in a maximum amount equal to 4% of total compensation which
are matched by Vanguard on a 100% basis. Directors who are not Officers
are paid an annual fee based on the number of years of service on the
board, up to fifteen years of service, upon retirement. The fee is equal
to $1,000 for each year of service and each investment company member of
The Vanguard Group contributes a proportionate amount of this fee based on
its relative net assets. This fee is paid, subsequent to a Director's
retirement, for a period of ten years or until the death of a retired
Director.

DESCRIPTION OF SHARES AND VOTING RIGHTS

The Articles of Incorporation, as amended and restated, permit the
Directors to issue 35,000,000,000 shares of common stock, with a $.001 par
value. The Board of Directors has the power to designate one or more classes
("Portfolios") of shares of common stock and to classify or reclassify any
unissued shares with respect to such Portfolios. Currently the Fund is
offering shares of three Portfolios.
The shares of each Portfolio are fully paid and nonassessable, and have no
preference as to conversion, exchange, dividends, retirement or other
features. The shares of each Portfolio have no pre-emptive rights. The shares
of each Portfolio have non-cumulative voting rights, which means that the
holders of more than 50% of the shares voting for the election of Directors
can elect 100% of the Directors if they choose to do so. A shareholder is
entitled to one vote for each full share held (and a fractional vote for each
fractional share held), then standing in his name on the books of the Fund. On
any matter submitted to a vote of shareholders, all shares of the Fund then
issued and outstanding and entitled to vote, irrespective of the class, shall
be voted in the aggregate and not by class: except (i) when required by the
Investment Company Act of 1940, shares shall be voted by individual class; and
(ii) when the matter does not affect any interest of a particular class, then
only shareholders of the affected class or classes shall be entitled to vote
thereon.

FINANCIAL STATEMENTS

The Fund's financial statements for the year ended November 30, 1993,
including the financial highlights for each of the five fiscal years in the
period ended November 30, 1993, appearing in the Fund's 1993 Annual Report to
Shareholders, and the report thereon of Price Waterhouse, independent
accountants, also appearing therein, are incorporated by reference in this
Statement of Additional Information. The Fund's Annual Report to Shareholders
is enclosed with this Statement of Additional Information.

APPENDIX -- DESCRIPTION OF SECURITIES AND RATINGS

A-1 AND PRIME-1 COMMERCIAL PAPER RATINGS

Commercial paper rated A-1 by Standard & Poor's has the following
characteristics: (1) liquidity ratios are adequate to meet cash requirements;
(2) long-term senior debt is rated "A" or better; (3) the issuer has access to
at least two additional channels of borrowing; (4) basic earnings and cash
flow have an upward trend with allowance made for unusual circumstances; (5)
typically, the issuer's industry is well established and the issuer has a
strong position within the industry; and (6) the reliability and quality of
management are unquestioned. Relative strength or weakness of the above
factors determine whether the issuer's commercial paper is A-1,
A-2, or A-3. The rating Prime-1 is the highest commercial paper rating
assigned by Moody's. Among the factors considered by Moody's in assigning
ratings are the following: (1) evaluation of the management of the issuer; (2)
economic evaluation of the issuer's industry or industries and the appraisal
of speculative-type risks which may be inherent in certain areas; (3)
evaluation of the issuer's products in relation to competition and customer
acceptance; (4) liquidity; (5) amount and quality of long-term debt; (6) trend
of earnings over a period of ten years; (7) financial strength of a parent
company and the relationships which exist with the issuer; and
(8) recognition by the management of obligations which may be present or may
arise as a result of public interest questions and preparations to meet such
obligations.
<PAGE>

BOND RATINGS

Bonds rated AA by Standard & Poor's are judged by S&P to be high-grade
obligations, and in the majority of instances differs only in small degrees
from issues rated AAA (the AA rating may be modified by the addition of a plus
or minus sign to show relative standing with the AA category). Bonds rated AAA
are considered by S&P to be the highest grade obligations and possess the
ultimate degree of protection as to principal and interest. Bonds rated Aa by
Moody's are judged by Moody's to be of high quality by all standards. Together
with the Aaa group, they comprise what are generally known as high-grade
bonds. They are rated lower than Aaa bonds because margins of protection may
not be as large or fluctuations of protective elements may be of greater
amplitude or there may be other elements present which make the long-term
risks appear somewhat larger. Moody's also supplies numerical indicators, 1, 2
and 3 to the Aa rating category. The modifier 1 indicates that the security is
in the higher end of its rating category; the modifier 2 indicates a mid-range
ranking and 3 indicates a ranking toward the lower end of the category.

VARIABLE AMOUNT MASTER DEMAND NOTES

Variable amount master demand notes are demand obligations that permit the
investment of fluctuating amounts at varying market rates of interest pursuant
to an arrangement between the issuer and a commercial bank acting as agent for
the payees of such notes, whereby both parties have the right to vary the
amount of the outstanding indebtedness on the notes. Because variable amount
master demand notes are direct lending arrangements between a lender and a
borrower, it is not generally contemplated that such instruments will be
traded, and there is no secondary market for these notes, although they are
redeemable (and thus immediately repayable by the borrower) at face value,
plus accrued interest, at any time. In connection with a Portfolio's
investment in variable amount master demand notes, Vanguard's investment
management staff will monitor, on an ongoing basis, the earning power, cash
flow and other liquidity ratios of the issuer, and the borrower's ability to
pay principal and interest on demand.

DESCRIPTION OF U.S. GOVERNMENT SECURITIES

As used in this prospectus, the term "U.S. Government Securities" refers to
a variety of securities which are issued or guaranteed by the United States
Treasury, by various agencies of the United States Government, and by various
instrumentalities which have been established or sponsored by the United
States Government. The term also refers to "repurchase agreements"
collateralized by such securities.
U.S. Treasury Securities are backed by the "full faith and credit" of the
United States. Securities issued or guaranteed by Federal agencies and the
U.S. Government sponsored instrumentalities may or may not be backed by the
full faith and credit of the United States. In the case of securities not
backed by the full faith and credit of the United States, the investor must
look principally to the agency or instrumentality issuing or guaranteeing the
obligation for ultimate repayment, and may not be able to assert a claim
against the United States itself in the event the agency or instrumentality
does not meet its commitment.
Some of the U.S. Government agencies that issue or guarantee securities
include the Export-Import Bank of the United States, Farmers Home
Administration, Federal Housing Administration, Maritime Administration, Small
Business Administration, and The Tennessee Valley Authority.
An instrumentality of the U.S. Government is a government agency organized
under Federal charter with government supervision. Instrumentalities issuing
or guaranteeing securities include, among others, Federal Home Loan Banks, the
Federal Land Banks, Central Bank for Cooperatives, Federal Intermediate Credit
Banks, and the Federal National Mortgage Association.

DESCRIPTION OF REPURCHASE AGREEMENTS

Repurchase agreements are transactions by which a person purchases a
security and simultaneously commits to resell that security to the seller (a
member bank of the Federal Reserve System or recognized securities dealer) at
an agreed upon price on an agreed upon date within a number of days (usually
not more than seven) from the date of purchase. The resale price reflects the
<PAGE>
purchase price plus an agreed upon market rate of interest which is unrelated
to the coupon rate or maturity of the purchased security. A repurchase
agreement involves the obligation of the seller to pay the agreed upon price,
which obligation is in effect secured by the value of the underlying security.
The use of repurchase agreements involves certain risks. For example, if the
seller of the agreement defaults on its obligation to repurchase the
underlying securities at a time when the value of these securities has
declined, the Portfolio may incur a loss upon disposition of them. If the
seller of the agreement becomes insolvent and subject to liquidation or
reorganization under the Bankruptcy Code or other laws, a bankruptcy court may
determine that the underlying securities are collateral not within the control
of the Portfolio and therefore subject to sale by the trustee in bankruptcy.
Finally, it is possible that the Portfolio may not be able to substantiate its
interest in the underlying securities. While the Fund's management
acknowledges these risks, it is expected that they can be controlled through
stringent security selection criteria and careful monitoring procedures.

EURODOLLAR AND YANKEE OBLIGATIONS

Eurodollar bank obligations are dollar-denominated certificates of deposit
and time deposits issued outside the U.S. capital markets by foreign branches
of banks and by foreign banks. Yankee bank obligations are dollar-denominated
obligations issued in the U.S. capital markets by foreign banks.
Eurodollar and Yankee obligations are subject to the same risks that pertain
to domestic issues, notably credit risk, market risk and liquidity risk.
Additionally, Eurodollar (and to a limited extent, Yankee) obligations are
subject to certain sovereign risks. One such risk is the possibility that a
sovereign country might prevent capital, in the form of dollars, from flowing
across their borders. Other risks include: adverse political and economic
developments; the extent and quality of government regulation of financial
markets and institutions; the imposition of foreign withholding taxes; and
expropriation or nationalization of foreign issuers. However, Eurodollar and
Yankee obligations will undergo the same credit analysis as domestic issues in
which the Prime Portfolio invests, and will have at least the same financial
strength as the domestic issuers approved for the Prime Portfolio.

<PAGE>

PART C
VANGUARD MONEY MARKET RESERVES, INC.
OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS
The Registrant's audited financial statements for the year ended November
30, 1993, including Price Waterhouse's report thereon, are incorporated by
reference, in the Statement of Additional Information, from the Registrant's
1993 Annual Report to Shareholders which has been filed with the Commission.
The financial statements included in the Annual Report are:
1. Statement of Net Assets as of November 30, 1993
2. Statement of Operations for the year ended November 30, 1993
3. Statement of Changes in Net Assets for each of the two years in the
period ended November 30, 1993
4. Financial Highlights for each of the five years in the period ended
November 30, 1993
5. Notes to Financial Statements
6. Report of Independent Accountants

(B) EXHIBITS
1. Articles of Incorporation
2. By-Laws of Registrant
3. Not Applicable
4. Not Applicable
5. Not Applicable
6. Not Applicable
7. Reference is made to the section entitled "Management of the Fund" in
the Registrant's Statement of Additional Information
8. Form of Custody Agreement
9. Form of Vanguard Service Agreement
10. Opinion of Counsel
11. Consent of Independent Accountants*
12. Financial Statements--reference is made to (a) above
13. Not Applicable
14. Not Applicable
15. Not Applicable
16. Schedule for Computation of Performance Quotations*
- ----------
*Filed herewith

ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Registrant is not controlled by or under common control with any person.
The officers of the Registrant, the 32 investment companies in The Vanguard
Group of Investment Companies and The Vanguard Group, Inc. are identical.
Reference is made to the caption "Management of the Fund" in the Prospectus
constituting Part A and in the Statement of Additional Information
constituting Part B of this Registration Statement.

ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of November 30, 1993 the number of shareholders of each portfolio of
the Fund was as follows:
Prime Portfolio.................................. 691,533
Federal Portfolio................................ 101,247
U.S. Treasury Portfolio.......................... 73,308

<PAGE>

ITEM 27. INDEMNIFICATION
Reference is made to Article XI of Registrant's Articles of Incorporation.

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Investment advisory services are provided to the Registrant on an at-cost
basis by The Vanguard Group, Inc., a jointly-owned subsidiary of the
Registrant and the other Funds in the Group. See the information concerning
The Vanguard Group set forth in Parts A and B.

ITEM 29. PRINCIPAL UNDERWRITERS
(a) None
(b) Not Applicable

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The books, accounts and other documents required by Section 31(a) under
the Investment Company Act and the rules promulgated thereunder will be
maintained in the physical possession of Registrant; Registrant's Transfer
Agent, The Vanguard Group, Inc. c/o The Vanguard Financial Center, Valley
Forge, Pennsylvania 19482; and the Registrant's Custodian, CoreStates Bank,
N.A., Philadelphia, Pa.

ITEM 31. MANAGEMENT SERVICES
Other than the Amended and Restated Funds' Service Agreement with The
Vanguard Group, Inc. which was previously filed as Exhibit 9(c) and described
in Part B hereof under "Management of the Fund;" the Registrant is not a party
of any management-related service contract.

ITEM 32. UNDERTAKINGS
Annual meetings of shareholders will not be held except as required by the
Investment Company Act of 1940 ("1940 Act") or other applicable law.
Registrant undertakes to comply with the provisions of Section 16(c) of the
1940 Act in regard to shareholders' rights to call a meeting of shareholders
for the purpose of voting on the removal of Directors and to assist in
shareholder communications in such matters, to the extent required by law.
Registrant hereby undertakes to provide an Annual Report to Shareholders
or prospective investors, free of charge, upon request.

<PAGE>

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Post-
Effective Amendment to this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the Town of Valley Forge and
the Commonwealth of Pennsylvania, on the 1st day of March, 1994.

VANGUARD MONEY MARKET RESERVES, INC.

BY:
(Raymond J. Klapinsky)
John C. Bogle*, Chairman and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the date indicated:

BY:
(Raymond J. Klapinsky)
John C. Bogle*, Chairman of the Board, Director, and Chief Executive
Officer
March 1, 1994

BY:
(Raymond J. Klapinsky)
John J. Brennan*, Director and President
March 1, 1994

BY:
(Raymond J. Klapinsky)
Robert E. Cawthorn*, Director
March 1, 1994

BY:
(Raymond J. Klapinsky)
Barbara B. Hauptfuhrer*, Director
March 1, 1994

BY:
(Raymond J. Klapinsky)
Bruce K. MacLaury, Director
March 1, 1994

BY:
(Raymond J. Klapinsky)
Burton G. Malkiel*, Director
March 1, 1994

BY:
(Raymond J. Klapinsky)
John C. Sawhill*, Director
March 1, 1994

BY:
(Raymond J. Klapinsky)
James O. Welch, Jr.*, Director
March 1, 1994

BY:
(Raymond J. Klapinsky)
J. Lawrence Wilson*, Director
March 1, 1994

BY:
(Raymond J. Klapinsky)
Richard F. Hyland*, Treasurer and Principal Financial Officer and
Accounting Officer
March 1, 1994

*By Power of Attorney. See File Number 2-14336, January 23, 1990. Incorporated
by Reference.

INDEX TO EXHIBITS

Consent of Independent Accountants......................................... 11
Schedule for Computation of Performance Quotations......................... 16

EXHIBIT 11

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectuses and
the Statement of Additional Information, constituting parts of this amended
Registration Statement on Form N-1A, of our report dated December 27, 1993,
relating to the financial statements, including the financial highlights,
appearing in the November 30, 1993 Annual Report to Shareholders of Vanguard
Money Market Reserves, Inc., which are also incorporated by reference into the
Registration Statement. We also consent to the references to us under the
headings "Financial Highlights" and "General Information" in the Prospectuses
and "Financial Statements" in the Statement of Additional Information.

BY: PRICE WATERHOUSE

Philadelphia, PA
February 28, 1994

EXHIBIT 16
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
VANGUARD MONEY MARKET RESERVES

1. Average Annual Total Return (As of November 30, 1993)

P (1 + T)n = ERV

Where: P = a hypothetical initial payment of $1,000

T = average annual total return

N = number of years

ERV = ending redeemable value at the end of the period

EXAMPLE:
- -------------
Prime
----
One Year
----------
P = $1,000
T = 3.02%
N = 1
ERV = $1,030.20

Five Year
----------
P = $1,000
T = 6.18%
N = 5
ERV = $1,349.38

Ten Year
----------
P = $1,000
T = 7.03%
N = 10
ERV = $1,972.85

Federal
----
One Year
----------
P = $1,000
T = 2.98%
N = 1
ERV = $1,029.79

Five Year
----------
P = $1,000
T = 6.03%
N = 5
ERV = $1,340.02

Ten Year
----------
P = $1,000
T = 6.83%
N = 10
ERV = $1,935.55

<PAGE>

U.S. Treasury
-------
One Year
----------
P = $1,000
T = 2.86%
N = 1
ERV = $1,028.60

Five Year
----------
P = $1,000
T = 5.85%
N = 5
ERV = $1,328.95

Ten Year
----------
P = $1,000
T = 6.57%*
N = 10
ERV = $1,888.88*

----------
*Since the Fund's inception on March 9, 1983.

2. YIELD (30 Days Ended November 30, 1993)

[( a )6 ]
Yield = 2 [(--- + 1) - 1] -b x 100
[(cXd ) ]

Where: a = dividends and interest paid during the period

b = expense ratios during the period (net of reimbursements)

c = the average daily number of shares outstanding during the
period

d = the maximum offering price per share on the last day of the
period

Example a = $
b = $0.00
c =
d = $
Yield = %