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FUND PROFILE
FOR
VANGUARD
MONEY MARKET
RESERVES
---------------
PRIME PORTFOLIO
July 31, 1995
In addition to the Prime Portfolio,
Vanguard Money Market Reserves offers
the U.S. Treasury and Federal Portfolios.
[VANGUARD GROUP LOGO]
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1 OBJECTIVE
As a money market fund, the Prime Portfolio seeks to provide maximum current
income consistent with preservation of capital and liquidity.
2 INVESTMENT STRATEGIES
The Portfolio invests in high-quality money market securities issued by
financial institutions, non-financial corporations, and the U.S. government.
The 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). THE PORTFOLIO DOES NOT INVEST IN DERIVATIVE
SECURITIES.
The Portfolio maintains 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,
but 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
The following table illustrates all expenses and fees that you would incur as a
shareholder of the Portfolio. The expenses shown below are for the 1994 fiscal
year.
<TABLE>
<S> <C> <C>
Sales Load Imposed on Purchases . . . . . None
Sales Load Imposed on Reinvested
Dividends . . . . . . . . . . . . . . None
Redemption Fees** . . . . . . . . . . . . None
Exchange Fees . . . . . . . . . . . . . . None
ANNUAL FUND OPERATING EXPENSES
----------------------------------------------------------------------------
Management and Administration . . . . . . 0.27%
Investment Advisory Fees . . . . . . . . . 0.01
12b-1 Fees . . . . . . . . . . . . . . . . None
Other Expenses
Distribution Costs . . . . . . . . . . 0.03
Miscellaneous Expenses . . . . . . . . 0.01
----
Total Other Expenses . . . . . . . . . . . 0.04
----
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.
**Wire redemptions of less than $5,000 are subject to a $5 charge.
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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 Money Market Funds 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 necessarily indicative of future performance.
Annualized tax-free current yield for the
30-day period ended June 30, 1995:
5.82%
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.
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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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[FIGURE 4]
This Fund Profile contains key
information about the Portfolio. More details
appear in the Portfolio's accompanying prospectus.
0795-55S (C) 1995 Vanguard Marketing Corporation, Distributor FP30
