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FUND PROFILE
FOR
VANGUARD
MONEY MARKET
RESERVES
PRIME PORTFOLIO
November 9, 1995
In addition to the Prime Portfolio,
Vanguard Money Market Reserves offers
the U.S. Treasury and Federal Portfolios.
[THE VANGUARD GROUP LOGO]
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1 OBJECTIVE
As a money market fund, the Prime Portfolio seeks to provide maximum current
income while preserving capital and liquidity.
2 INVESTMENT STRATEGIES
The Portfolio invests in high-quality, U.S. dollar-denominated money market
securities.
The Portfolio seeks an average maturity of 90 days or less, and maintains the
following minimum quality ratings:
<TABLE>
<CAPTION>
MINIMUM QUALITY
MONEY MARKET OBLIGATION RATING*
----------------------------------------------------------------
<S> <C>
Certificates of Deposit A-1
Commercial Paper Prime-1
Short-Term Corporate Obligations Aa3
</TABLE>
3 RISKS
This Portfolio seeks to maintain a stable principal value of $1.00 per share,
although there can be no assurance that it will be ble to do so. The value of
the shares is not guaranteed by the Portfolio or any agency of the U.S.
Government, including the FDIC.
Investors in the Portfolio are exposed to:
- - a VERY LOW degree of PRINCIPAL RISK because the short-term nature of
the Portfolio's investments minimizes the impact of interest rate
fluctuations.
- - a LOW degree of CREDIT RISK (the possibility that an issuer of a money
market instrument will fail to make timely payments of interest or
principal).
- - a HIGH degree of INCOME VOLATILITY as the level of income will
fluctuate in response to changing interest rates.
* As rated by Moody's Investors Services, Inc.
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4 APPROPRIATENESS
This Portfolio may be appropriate for investors . . .
- - Looking for stability of principal.
- - With short-term goals or needing a temporary investment.
- - Seeking a market rate of income in very short-term securities.
This Portfolio is inappropriate for investors . . .
- - Seeking a steady level of income.
- - Seeking growth of capital.
5 FEES AND EXPENSES
Like all Vanguard Funds, this is a pure no-load Portfolio. There are no sales
charges to buy or sell shares. There are also no 12b-1 fees.
Shareholders absorb the Portfolio's advisory and operating expenses indirectly.
These expenses are deducted from the Portfolio's total assets before
calculating daily share prices and income distributions. For the Portfolio's
1994 fiscal year, the expense ratio amounted to 0.32% of assets.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
--------------------------------------------------------------
<S> <C>
Investment Advisory Fees........................... 0.01%
Distribution Costs................................. 0.03
Other Expenses..................................... 0.28
----
Total Operating Expenses........................... 0.32%
====
</TABLE>
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.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------------------------------------------------------------
<S> <C> <C> <C>
$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.
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6 PAST PERFORMANCE
PERFORMANCE
ANNUAL RETURNS (%) 1985-1994
<TABLE>
<CAPTION>
'85 '86 '87 '88 '89 '90 '91 '92 '93 '94
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Prime Portfolio 8.1 6.6 6.6 7.6 9.4 8.3 6.1 3.7 3.0 4.1
Lipper Non-Government Money Market
Fund Average** 7.8 6.3 6.1 7.0 8.8 7.8 5.7 3.3 2.6 3.7
</TABLE>
Performance figures include the reinvestment of all dividends. All returns are
net of expenses. The performance data quoted represent past performance, which
is not indicative of future performance; future returns will fluctuate.
Annualized current yield for the
seven-day period ended September 30, 1995:
5.52%
For the latest yield, call Vanguard at
1-800-662-7447
The average annualized current yield represents the Portfolio's average income
less all expenses for the seven-day period, annualized by 365 days and divided
by the average total net assets over the same period.
** 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.
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7 INVESTMENT ADVISER
The Portfolio is managed by Vanguard's Fixed Income Group, which manages total
assets of more than $60 billion.
8 PURCHASES
You may purchase shares by mail, wire, or exchange from another Vanguard Fund.
The minimum initial investment is $3,000 ($500 for IRAs). There are no sales
commissions or 12b-1 fees.
9 REDEMPTIONS
You may redeem shares by writing a check ($250 minimum), sending a letter, or
calling Vanguard. There is no charge for redemptions except for wire
withdrawals under $5,000, which are subject to a $5 charge.
10 DISTRIBUTIONS
The Portfolio declares a dividend each business day based on its ordinary
income. Dividends are paid on the first business day of each month and may be
received in cash or reinvested in additional shares.
11 OTHER SERVICES
- - Free checkwriting.
- - Vanguard Fund Express(R)--electronic transfers between your bank account
and the Portfolio.
- - Vanguard Tele-Account(R)--around-the-clock access to Vanguard Fund
information, account balances, and some transactions by calling
1-800-662-6273 (ON-BOARD).
- - Investor Information--toll-free access to Vanguard Associates by calling
1-800-662-7447 (SHIP).
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This Fund Profile contains key
information about the Portfolio. More details appear
in the Portfolio's accompanying prospectus.
1195-52S (C) 1995 Vanguard Marketing Corporation, Distributor FP30
