<PAGE> 1
CHAIRMAN'S LETTER
FELLOW SHAREHOLDER:
Following the sharp rise in short-term interest rates that took place from
March to December of 1994, rates stabilized at high levels during most of the
six months ended May 31--the first half of the 1995 fiscal year for Vanguard
Money Market Reserves--before sliding lower in the final weeks of the period.
The end result was that the net income on each of our three Portfolios
increased by about +80% compared to the first half of 1994.
The table below shows the impact of the dramatic surge in short-term
rates on our annualized yields over the past year and one-half:
<TABLE>
<CAPTION>
- --------------------------------------------------------
Seven-Day Annualized Yield
-----------------------------------------
May 31, November 30, May 31, November 30,
Portfolio 1995 1994 1994 1993
- --------------------------------------------------------
<S> <C> <C> <C> <C>
PRIME 5.9% 5.1% 3.8% 3.0%
FEDERAL 5.8 5.0 3.7 3.0
U.S. TREASURY 5.5 4.8 3.5 2.8
- --------------------------------------------------------
</TABLE>
With the Federal Reserve Board remaining relatively tight-fisted in its
monetary policy during the past six months, the stability in money market
yields resulted simply from the diminishing threat of further increases in the
Federal funds rate (at which banks borrow from one another). Contrast this
stability with fiscal 1994, when the Fed raised this key rate on fully six
separate occasions. It would appear that the Fed's tough policy is bearing
fruit: inflation so far remains quite subdued, and business activity has slowed
to a more normal growth rate.
As always, the pundits do not agree on what comes next. Some look for a
continuation of the present tight monetary policy; others expect a rate
reduction, given lessened inflation expectations and the likely pressure that
the Administration, with a Presidential election year before it, is apt to put
on the Fed to stimulate the economy. Still others, expecting inflation to
return to the economy, believe that a further rise in short-term rates may be
required. That is a wide spread of opinion! My guess is that extreme changes in
rates--either up or down--are unlikely to take place during the remainder of
our fiscal year.
Whatever the case may be, your holdings in Vanguard Money Market
Reserves are certain to remain attractive relative to other comparable money
market fund portfolios. The principal reason for our income advantage, as you
know, is that our operating expenses are so much lower than industry norms. Our
Prime Portfolio, for example, operates at an annual expense ratio of about 0.3%
compared with 0.7% for our average competitor. This advantage of 0.4% carries
directly to the bottom line: the yield you receive. Thus, in a market in which
gross yields are, say, 6%, the Prime Portfolio would provide a net yield of
5.7%, compared with 5.3% for other money market portfolios.
I want to underscore that our higher yields do not arise from the Fund's
ownership of lower quality money market instruments. Our Portfolio quality is,
we believe, unsurpassed in the money market field. Other funds which stinted on
quality last year ran the risk of price declines that would potentially reduce
their net asset values below the $1.00 level that investors have come to take
for granted. In fact, the managers of some 25 money market funds actually had
to shore up their funds' asset values with cash infusions. Our focus on quality
precluded our having to do so.
Investors who are concerned about the quality of non-governmental
holdings in their money market funds can, of course, easily exchange to a U.S.
Treasury money market portfolio holding instruments guaranteed by the full
faith and credit of the U.S. Government. In Vanguard Money Market Reserves, as
shown in the table to the left, the yield sacrifice for making such a switch is
small; in most other prime money market funds, with their substantially higher
costs, switching to Vanguard's Treasury Portfolio can actually result in an
enhanced yield.
(continued)
1
<PAGE> 2
Your Portfolios' early returns for 1995, then, are absolutely good,
and relatively strong. We look forward to providing you with more information
in our Annual Report six months hence.
Sincerely,
/s/ JOHN C. BOGLE
- ---------------------
John C. Bogle
Chairman of the Board
June 13, 1995
Note: Mutual fund data from Lipper Analytical Services, Inc.
AVERAGE ANNUAL TOTAL RETURNS--THE CURRENT YIELDS QUOTED IN THE CHAIRMAN'S
LETTER ARE CALCULATED IN ACCORDANCE WITH SEC GUIDELINES. THE AVERAGE ANNUAL
TOTAL RETURNS FOR THE PORTFOLIOS (PERIODS ENDED MARCH 31, 1995) ARE AS FOLLOWS:
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
INCEPTION ------------------------------
PORTFOLIO DATE 1 YEAR 5 YEAR 10 YEAR
- ------------- --------- ------ ------ -------
<S> <C> <C> <C> <C>
PRIME 6/4/75 +4.78% +4.91% +6.27%
FEDERAL 7/13/81 +4.72 +4.81 +6.10
U.S. TREASURY 3/13/89* +4.46 +4.63 +5.87
</TABLE>
*TOTAL RETURNS PROVIDED PRIOR TO MARCH 13, 1989, ARE FOR THE INSURED PORTFOLIO,
WHICH BEGAN OPERATIONS ON MARCH 9, 1983.
ALL OF THESE DATA REPRESENT PAST PERFORMANCE; FUTURE RETURNS WILL FLUCTUATE. AN
INVESTMENT IN A MONEY MARKET FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT, AND THERE IS NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER SHARE.
2
<PAGE> 3
REPORT FROM THE INVESTMENT ADVISER
On balance, money market interest rates fell somewhat in the first half of
fiscal year 1995 as expectations of future short-term rates traveled from
extreme pessimism to outright optimism. The bond markets started the fiscal
year with the worst case scenario of a protracted period of rising interest
rates factored into interest rate levels. This pessimism was fostered by the
experience of 1994, when the Federal Reserve (the "Fed") raised interest rates
with the intention of cooling the surging economy.
The Fed, which attempts to steer the economy on a path of sustainable,
non-inflationary growth by raising and lowering the cost of borrowing for
businesses and consumers, did in fact raise short-term interest rates in
February 1995. The Fed increased the Federal funds rate (the rate at which
banks borrow and lend reserves among themselves) by 0.5% to 6.0%. However, by
this time, government statistics were giving preliminary hints that economic
growth was moderating and inflation was relatively well behaved. As is typical
of markets, investors looked to the most current data and began to abandon
their expectations of more Fed rate hikes. This touched off an impressive bond
market rally that has continued up to the timeof this writing.
As signs of the slower economy have proliferated, money market interest
rates actually have included expectations of cuts in short-term interest rates
by the Fed. The money market yield curve (the curve plotting the relationship
of interest rates for investments of various maturities from short-term to
long-term) has adopted an inverted configuration with six-month and one-year
rates below those for shorter maturities. This condition indicates that the
market expects the Fed to lower short-term rates by as much as 0.5% in the
coming months.
The underlying assumption is that the Fed has succeeded in engineering a
"soft landing" for the economy. While a soft landing no doubt would be a highly
desirable outcome for bond and stock market investors, a review of economic
history shows that it is highly unlikely. Monetary policy is not precise enough
to achieve such a result without a healthy dose of good luck. Unfortunately,
the high variability in both the timing and magnitude of the economy's response
to policy changes makes the Fed's activities more an art than a science.
Throughout the wild swings in market expectations of this fiscal half
year, we have steered a conservative course for the various Portfolios of the
Vanguard Money Market Reserves Fund. Specifically, we have kept the average
weighted maturity of the Portfolios in the market neutral band of our
investment policy guidelines. This has helped us to ride out the market's
gyrations this year. By keeping our interest rate sensitivity stable, we were
able to lock in some attractive yields when rates were higher, and by the same
token, we are not making excessive commitments to the market now that rates
have fallen.
In terms of the credit quality of our investments, we have determined
that lower quality money market securities generally do not provide adequate
additional return for the additional credit risk taken. Thus, we have
emphasized high credit quality issuers in the Prime Portfolio, the holdings of
which are all rated in the highest category by the nationally recognized credit
rating agencies.
Finally, we have not invested (nor will we) in the risky or exotic
derivative securities that have caused losses for investors whose managers did
not fully evaluate the risks of such strategies. As always, we are relying on
our conservative management philosophy in combination with our exceptionally
low-cost structure to provide our investors with highly competitive returns and
peace of mind.
Sincerely,
Ian A. MacKinnon, Senior Vice President
Robert F. Auwaerter, Vice President
John Hollyer, Assistant Vice President
Vanguard Fixed Income Group
June 15, 1995
3
<PAGE> 4
FINANCIAL STATEMENTS
(unaudited)
May 31, 1995
STATEMENT OF NET ASSETS
<TABLE>
<CAPTION>
Face Market
Amount Value
PRIME PORTFOLIO (000) (000)+
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT AND AGENCY
OBLIGATIONS (14.1%)
- --------------------------------------------------------------------------------
Federal Home Loan Bank
5.86%-9.50%,
5/24/96-6/6/96 $ 61,615 $ 61,327
6.02%-6.185%,
6/5/95-7/3/95(1) 785,100 784,945
Federal Home Loan
Mortgage Corp.
5.898%-6.649%,
6/21/95-3/28/96 58,975 57,505
6.083%, 6/5/95(1) 100,000 99,962
Federal National Mortgage Assn.
6.002%-6.205%,
6/5/95-7/18/95(1) 600,000 599,736
5.83%-9.20%, 6/20/95-6/6/96 781,675 778,278
- --------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AND
AGENCY OBLIGATIONS
(Cost $2,381,753) 2,381,753
- --------------------------------------------------------------------------------
COMMERCIAL PAPER (57.6%)
- --------------------------------------------------------------------------------
BANK HOLDING COMPANIES (3.9%)
Banc One Corp.
5.981%-6.112%,
6/15/95-8/4/95 135,400 134,698
CoreStates Capital
6.041%-6.136%,
6/6/95-7/12/95 48,000 47,810
J.P. Morgan & Co., Inc.
5.983%-6.114%,
6/6/95-7/24/95 314,000 312,986
Norwest Corp.
5.985%-6.097%,
6/13/95-8/25/95 130,000 128,892
Republic New York Corp.
6.115%, 6/6/95 30,000 29,975
-----------
GROUP TOTAL 654,361
-----------
- --------------------------------------------------------------------------------
FINANCE--AUTO (2.1%)
Daimler-Benz N.A. Co.
5.975%, 6/23/95 20,935 20,859
Ford Motor Credit Corp.
5.976%-6.04%,
6/23/95-7/28/95 316,000 313,271
Toyota Motor Credit Corp.
6.093%-6.176%,
6/5/95-8/2/95 30,000 29,833
-----------
GROUP TOTAL 363,963
-----------
- --------------------------------------------------------------------------------
FINANCE--OTHER (18.4%)
A.I. Credit Corp.
6.04%-6.769%,
6/8/95-7/17/95 85,000 84,661
American Express Credit Corp.
5.993%-6.113%,
6/5/95-7/27/95 150,000 149,472
Ameritech Capital Funding Corp.
5.952%-6.077%,
7/31/95-2/12/96 124,000 121,544
Asset Securitization
Cooperative Corp.
5.995%-6.151%,
6/1/95-8/14/95 301,823 299,428
Associates Corp.
6.018%-6.082%,
6/2/95-8/11/95 325,000 322,826
Cargill Financial
5.956%-5.969%,
9/25/95-9/29/95 50,000 49,042
Ciesco L.P.
5.977%-6.093%,
6/15/95-8/10/95 254,866 252,967
CIT Group Holdings Inc.
5.987%-6.121%,
6/2/95-7/13/95 325,000 323,682
Commercial Credit Co.
6.018%-6.061%,
6/13/95-7/14/95 125,000 124,374
Corporate Asset Funding Corp.
5.996%-6.198%,
6/26/95-8/3/95 155,665 154,437
Eiger Capital Corp.
5.965%-5.979%,
6/8/95-6/23/95 113,490 113,138
General Electric Capital Corp.
6.023%-6.912%,
6/12/95-8/28/95 620,000 614,613
Harvard University
5.961%-6.04%,
6/2/95-8/14/95 30,000 29,875
Household Finance Corp.
6.136%-6.137%,
6/6/95-6/7/95 100,000 99,907
Matterhorn Capital Corp.
6.03%, 6/14/95 50,000 49,892
Pitney Bowes Credit Corp.
5.987%-6.122%,
6/14/95-8/29/95 170,380 169,013
Stanford University
6.782%, 7/10/95 10,000 9,929
</TABLE>
4
<PAGE> 5
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- --------------------------------------------------------------------------------
<S> <C> <C>
Transamerica Finance
5.999%-6.061%,
6/16/95-7/7/95 $150,000 $ 149,491
----------
GROUP TOTAL 3,118,291
----------
- --------------------------------------------------------------------------------
INDUSTRIAL (13.1%)
Amtrak Trust
6.214%, 6/5/95(1)* 80,581 80,580
Bayer Corp.
5.989%-6.114%,
6/5/95-8/14/95 90,000 89,470
Campbell Soup Co.
6.04%, 8/4/95 6,000 5,937
Cargill Inc.
5.959%-6.093%,
6/21/95-8/30/95 142,500 141,607
Chevron Oil Finance Co.
5.987%-6.062%,
6/7/95-7/7/95 350,000 348,892
Chevron Transport Corp.
5.995%-6.007%,
7/14/95-9/25/95 20,000 19,739
R.R. Donnelley & Sons Co.
5.984%-6.008%,
6/23/95-7/21/95 42,800 42,552
Emerson Electric Co.
6.002%, 7/10/95 22,100 21,958
Exxon Imperial U.S. Inc.
5.994%-6.068%,
6/26/95-8/28/95 107,068 106,055
H.J. Heinz & Co.
5.976%, 7/10/95 32,900 32,688
Hewlett Packard Co.
5.969%-6.089%,
6/27/95-8/29/95 105,000 104,026
Kimberly Clark Corp.
5.987%, 7/17/95 45,000 44,660
Eli Lilly & Co.
5.956%-6.138%,
6/9/95-8/18/95 217,000 215,559
Lockheed Martin Corp.
6.00%, 6/15/95 24,780 24,722
McDonald's Corp.
5.966%, 6/13/95 24,130 24,082
Miles Inc.
6.137%, 6/20/95 20,000 19,936
Mobil Australia Finance Co.
6.065%-6.144%,
6/16/95-8/18/95 27,887 27,713
Motorola Inc.
5.99%-5.997%, 6/1/95-7/13/95 50,000 49,827
Nestle Capital Corp.
5.939%-6.08%,
6/16/95-10/23/95 91,747 91,015
Norfolk Southern Corp.
6.07%-6.17%, 7/10/95-8/3/95 52,904 52,453
Norwest Corp.
5.997%, 8/29/95 15,000 14,781
PepsiCo
5.979%, 6/27/95 49,587 49,374
Pfizer Inc.
5.958%-5.97%,
6/7/95-6/20/95 176,000 175,656
Procter & Gamble Co.
6.07%-6.072%, 8/1/95-8/2/95 24,350 24,101
Schering Corp.
6.122%-6.24%,
6/12/95-10/30/95 75,000 73,920
Shell Oil Co.
6.068%, 8/1/95 22,000 21,777
SmithKline Beecham Corp.
6.126%, 6/1/95 46,680 46,680
United Parcel Service of America Inc.
6.004%-6.101%, 6/1/95-8/2/95 34,100 33,764
Vermont American Corp.
5.958%, 6/8/95 11,408 11,395
Wal-Mart Stores Inc.
5.989%-6.04%,
7/21/95-8/4/95 153,000 151,613
Warner Lambert Co.
5.976%-6.105%, 6/8/95-8/1/95 80,000 79,649
----------
GROUP TOTAL 2,226,181
----------
- --------------------------------------------------------------------------------
INSURANCE (3.6%)
AIG Funding Inc.
6.049%-6.323%,
6/16/95-8/28/95 45,740 45,252
John Hancock Capital Corp.
6.122%, 6/29/95 25,000 24,883
MetLife Funding Corp.
5.983%-6.071%,
7/24/95-7/31/95 233,466 231,296
Prudential Funding Corp.
5.997%, 7/14/95 100,000 99,291
Prudential Insurance
5.969%, 6/9/95 15,000 14,980
SAFECO Credit Co. Inc.
6.033%-6.164%,
6/14/95-8/7/95 36,500 36,247
USAA Capital Corp.
6.027%-6.157%,
6/6/95-8/4/95 155,000 154,196
----------
GROUP TOTAL 606,145
----------
- --------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 6
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- --------------------------------------------------------------------------------
<S> <C> <C>
UTILITIES (2.6%)
Ameritech Corp.
6.067%-6.468%,
6/29/95-7/31/95 $123,531 $ 122,482
AT&T Corp.
5.973%-6.003%,
6/5/95-6/28/95 85,000 84,754
BellSouth Telecommunications Inc.
6.023%, 8/7/95 24,000 23,735
Southwestern Bell Telephone Co.
6.114%, 6/2/95 73,000 72,988
U S WEST Communications Inc.
6.009%-6.061%,
6/20/95-7/26/95 138,000 137,032
----------
GROUP TOTAL 440,991
----------
- --------------------------------------------------------------------------------
FOREIGN BANKS (7.3%)
ABN AMRO
5.979%-5.981%,
6/16/95-6/19/95 45,000 44,879
Abbey National N.A.
6.023%-6.733%,
6/13/95-8/9/95 215,500 214,187
Barclays U.S. Funding Corp.
5.981%, 6/19/95 100,000 99,703
Bayerische Landesbank Girozentrale
6.096%, 7/31/95 25,000 24,750
Bayerische Vereinsbank
5.964%-6.881%, 6/5/95-7/5/95 92,000 91,563
Canadian Imperial Holdings Inc.
6.009%, 7/7/95 138,000 137,179
Commerzbank U.S. Finance Inc.
5.979%-6.144%,
6/9/95-6/30/95 142,078 141,770
Commonwealth Bank of Australia
6.01%, 7/19/95 38,000 37,698
Toronto Dominion Holdings
USA Inc.
6.067%-6.876%,
6/30/95-8/1/95 280,000 277,484
UBS Finance (Delaware) Inc.
5.958%, 6/9/95 174,841 174,610
----------
GROUP TOTAL 1,243,823
----------
- --------------------------------------------------------------------------------
CANADIAN GOVERNMENT--
NATIONAL AND PROVINCIAL (2.0%)
Canada Bills
6.547%-6.771%,
7/10/95-7/20/95 200,000 198,426
Canadian Wheat Board
6.07%-6.18%, 6/12/95-7/26/95 74,900 74,548
Federal Business Development Bank
6.036%, 8/17/95 20,000 19,745
Province of British Columbia
5.964%-6.887%,
7/10/95-11/8/95 53,600 52,658
----------
GROUP TOTAL 345,377
----------
- --------------------------------------------------------------------------------
OTHER FOREIGN GOVERNMENT (3.8%)
Caisse des Depots et Consignations
5.951%-6.102%,
6/8/95-9/1/95 265,000 263,485
Electricite de France
6.091%-6.155%,
6/26/95-7/5/95 90,000 89,563
KFW International Finance Inc.
5.981%-6.104%,
6/6/95-7/19/95 55,000 54,783
New South Wales Treasury Corp.
5.997%-6.166%,
6/5/95-7/21/95 180,331 179,449
Oesterreichische Kontrollbank
5.979%, 7/11/95 16,000 15,895
Wool International
5.994%, 7/28/95 40,000 39,624
----------
GROUP TOTAL 642,799
----------
- --------------------------------------------------------------------------------
FOREIGN INDUSTRIAL (.7%)
BASF Corp.
6.081%, 6/6/95 20,000 19,983
Ciba Geigy Corp.
6.094%, 8/3/95 10,000 9,895
Glaxo Holdings
6.021%-6.04%,
6/22/95-6/23/95 42,500 42,350
Siemens Corp.
5.974%-6.345%,
6/21/95-8/28/95 50,000 49,534
----------
GROUP TOTAL 121,762
----------
- --------------------------------------------------------------------------------
FOREIGN UTILITY (.1%)
British Telecommunications PLC
6.052%, 8/23/95 15,233 15,024
----------
- --------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER
(Cost $9,778,717) 9,778,717
- --------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT (21.4%)
- --------------------------------------------------------------------------------
U.S. BANKS (1.9%)
American Express Centurion Bank
6.10%, 6/9/95 25,000 25,000
Banc One Corp. (Akron)
5.99%, 6/28/95 100,000 100,001
</TABLE>
6
<PAGE> 7
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- --------------------------------------------------------------------------------
<S> <C> <C>
Banc One Corp. (Cleveland)
5.99%, 6/28/95 $ 48,000 $ 48,000
National Bank of Detroit
6.00%, 6/30/95 150,000 150,000
----------
GROUP TOTAL 323,001
----------
- --------------------------------------------------------------------------------
YANKEE CERTIFICATES OF DEPOSIT--
CANADIAN BRANCHES (.4%)
ABN AMRO
6.00%, 6/16/95 50,000 49,876
Barclays Bank
6.062%, 6/14/95 25,000 24,946
----------
GROUP TOTAL 74,822
----------
- --------------------------------------------------------------------------------
YANKEE CERTIFICATES OF DEPOSIT--
U.S. BRANCHES (19.1%)
ABN AMRO
5.98%-6.26%, 8/4/95-8/25/95 170,000 170,005
Bank of Montreal
6.01%-6.08%, 6/9/95-7/26/95 277,000 277,003
Bank of Nova Scotia
5.97%-6.18%, 6/9/95-7/17/95 300,000 300,000
Barclays Bank
5.98%, 6/19/95 100,000 100,000
Bayerische Hypo Bank
6.01%-6.18%, 6/5/95-7/10/95 152,000 152,003
Bayerische Landesbank
6.06%-6.17%, 6/19/95-8/3/95 316,000 316,007
Bayerische Vereinsbank
6.01%, 7/17/95 100,000 100,000
Caisse Nationale de Credit Agricole
6.12%-6.31%, 6/29/95-9/22/95 175,000 175,000
Canadian Imperial
Bank of Commerce
6.005%-6.02%,
6/12/95-7/6/95 125,000 125,000
Commerzbank
6.08%, 6/12/95 40,000 40,000
Credit Suisse
6.17%-6.21%,
9/21/95-10/19/95 53,000 53,021
Dresdner Bank
6.17%, 6/29/95 148,000 148,000
Lloyds Bank
6.13%-6.18%, 6/12/95-6/23/95 70,000 70,001
National Westminster Bank
6.01%-6.875%,
6/12/95-7/31/95 337,000 337,008
Rabobank Nederlanden
6.75%, 6/5/95 19,000 19,000
Societe Generale
6.01%-6.06%,
6/13/95-8/22/95 325,000 325,004
Swiss Bank
5.97%-6.01%,
7/24/95-8/29/95 243,000 243,000
Westdeutsche Landesbank
6.07%-6.08%, 6/6/95-7/27/95 275,000 275,000
----------
GROUP TOTAL 3,225,052
----------
- --------------------------------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT
(Cost $3,622,875) 3,622,875
- --------------------------------------------------------------------------------
EURODOLLAR CERTIFICATES
OF DEPOSIT (4.5%)
- --------------------------------------------------------------------------------
Abbey National
6.02%-6.25%,
6/12/95-7/19/95 157,000 157,003
Bayerische Landesbank Girozentrale
6.13%-6.17%, 6/1/95-7/6/95 109,000 109,003
Commerzbank
6.08%, 7/26/95 35,000 35,002
Deutsche Bank
6.13%-6.82%, 6/16/95-8/8/95 268,000 268,041
Lloyds Bank
6.75%, 7/11/95 10,000 10,006
Morgan Guaranty
6.18%, 9/26/95 15,000 15,000
National Westminster Bank
6.29%-6.52%, 8/9/95-10/5/95 35,000 35,030
Rabobank Nederlanden
6.10%-6.16%, 8/9/95-9/5/95 35,000 35,001
Toronto Dominion
5.95%, 11/1/95 50,000 50,000
Union Bank of Switzerland
7.25%, 9/29/95 40,000 40,011
- --------------------------------------------------------------------------------
TOTAL EURODOLLAR
CERTIFICATES OF DEPOSIT
(Cost $754,097) 754,097
- --------------------------------------------------------------------------------
BANKERS ACCEPTANCES (.9%)
- --------------------------------------------------------------------------------
Republic Bank of New York
6.671%, 6/5/95 11,000 10,992
Wachovia Bank of Georgia
5.966%-6.554%, 6/5/95-8/1/95 93,100 92,440
Wachovia Bank of North Carolina
5.967%-6.141%,
6/6/95-7/31/95 45,200 44,934
- --------------------------------------------------------------------------------
TOTAL BANKERS ACCEPTANCES
(Cost $148,366) 148,366
- --------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 8
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- -------------------------------------------------------------------------------
<S> <C> <C>
OTHER NOTES (3.2%)
- -------------------------------------------------------------------------------
Bank One (Texas)
6.306%-6.337%,
6/1/95-6/2/95(1) $145,000 $ 145,000
Morgan Bank (Delaware)
5.86%-5.90%, 6/6/95(1) 145,000 144,980
National Bank of Detroit
6.30%, 9/20/95 50,000 49,998
State Street Bank & Trust
6.18%, 6/12/95 50,000 50,000
Wachovia Bank of North Carolina
6.01%, 8/15/95 50,000 50,000
6.115%, 7/3/95(1) 100,000 100,000
- --------------------------------------------------------------------------------
TOTAL OTHER NOTES
(Cost $539,978) 539,978
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS (101.7%)
(Cost $17,225,786) 17,225,786
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-1.7%)
- --------------------------------------------------------------------------------
Other Assets--Note B 174,763
Liabilities (466,977)
----------
(292,214)
- --------------------------------------------------------------------------------
NET ASSETS (100%)
- --------------------------------------------------------------------------------
Applicable to 16,933,438,795 outstanding
$.001 par value shares
(authorized 25,000,000,000 shares) $16,933,572
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $1.00
================================================================================
</TABLE>
+ See Note A to Financial Statements.
(1) Floating Rate Note.
* Put Option Obligation.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
AT MAY 31, 1995, NET ASSETS CONSISTED OF:
- -----------------------------------------------------------------------------------
Amount Per
(000) Share
----------- --------
<S> <C> <C>
Paid in Capital $16,933,437 $1.00
Undistributed Net
Investment Income -- --
Accumulated Net
Realized Gains 135 --
Unrealized Appreciation
of Investments -- --
- -----------------------------------------------------------------------------------
NET ASSETS $16,933,572 $1.00
- -----------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Face Market
Amount Value
FEDERAL PORTFOLIO (000) (000)+
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT AND AGENCY
OBLIGATIONS (92.8%)
- --------------------------------------------------------------------------------
Federal Home Loan Bank
6.02%-6.197%,
6/5/95-7/3/95(1) $219,965 $ 219,919
6.026%-7.017%,
6/5/95-9/6/95 132,975 132,345
Federal Home Loan Mortgage
Corp.6.083%, 6/5/95(1) 100,000 99,962
5.898%-6.649%,6/2/95-3/28/96 915,387 907,983
Federal National Mortgage Assn.
5.889%-6.731%,
6/9/95-11/27/95 767,990 761,547
Overseas Private Investment Corp.
(U.S. Government Guaranteed)
6.286%-6.458%,
6/6/95-11/25/95(1)* 124,682 124,682
- --------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AND
AGENCY OBLIGATIONS
(Cost $2,246,438) 2,246,438
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (6.1%)
- --------------------------------------------------------------------------------
BT Securities Corp.
6.15%, 6/1/95
(Collateralized by U.S. Treasury
Bond 11.25%, 2/15/15) 140,000 140,000
Goldman Sachs
6.10%, 6/1/95
(Collateralized by U.S. Treasury
Bond 8.75%, 8/15/20) 7,810 7,810
- --------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost $147,810) 147,810
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS (98.9%)
(Cost $2,394,248) 2,394,248
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (1.1%)
- --------------------------------------------------------------------------------
Other Assets--Note B 34,223
Liabilities (8,168)
----------
26,055
- --------------------------------------------------------------------------------
NET ASSETS (100%)
- --------------------------------------------------------------------------------
Applicable to 2,420,179,767 outstanding
$.001 par value shares
(authorized 5,000,000,000 shares) $2,420,303
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $1.00
================================================================================
</TABLE>
+ See Note A to Financial Statements.
(1) Floating Rate Note.
* Put Option Obligation.
8
<PAGE> 9
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
AT MAY 31, 1995, NET ASSETS CONSISTED OF:
- -----------------------------------------------------------------------------------
Amount Per
(000) Share
---------- -----
<S> <C> <C>
Paid in Capital $2,420,209 $1.00
Undistributed Net
Investment Income -- --
Accumulated Net
Realized Gains 94 --
Unrealized Appreciation
of Investments -- --
- -----------------------------------------------------------------------------------
NET ASSETS $2,420,303 $1.00
- -----------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Face Market
Amount Value
U.S. TREASURY PORTFOLIO (000) (000)+
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS (104.4%)
- --------------------------------------------------------------------------------
U.S. TREASURY BILLS
5.67%-5.824%,
6/1/95-8/31/95 $1,954,633 $1,942,506
U.S. TREASURY NOTES
4.125%-10.50%,
6/30/95-8/15/95 453,340 454,038
- --------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT
OBLIGATIONS (Cost $2,396,544) 2,396,544
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-4.4%)
- --------------------------------------------------------------------------------
Accounts Receivable for Securities Sold 226,501
Other Assets--Note B 25,819
Accounts Payable for Securities Purchased (343,164)
Other Liabilities (10,020)
-----------
(100,864)
- --------------------------------------------------------------------------------
NET ASSETS (100%)
- --------------------------------------------------------------------------------
Applicable to 2,295,437,299 outstanding
$.001 par value shares
(authorized 5,000,000,000 shares) $2,295,680
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $1.00
================================================================================
</TABLE>
+ See Note A to Financial Statements.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AT MAY 31, 1995, NET ASSETS CONSISTED OF:
- --------------------------------------------------------------------------------
Amount Per
(000) Share
---------- -----
<S> <C> <C>
Paid in Capital $2,295,456 $1.00
Undistributed Net
Investment Income -- --
Accumulated Net
Realized Gains 224 --
Unrealized Appreciation
of Investments -- --
- --------------------------------------------------------------------------------
NET ASSETS $2,295,680 $1.00
- --------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 10
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
PRIME FEDERAL U.S. TREASURY
PORTFOLIO PORTFOLIO PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------------
Six Months Ended Six Months Ended Six Months Ended
May 31, 1995 May 31, 1995 May 31,1995
(000) (000) (000)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
INCOME
Interest . . . . . . . . . . . . . . . . . $482,454 $67,912 $61,589
- -------------------------------------------------------------------------------------------------------------------------------
Total Income . . . . . . . . . . . . . 482,454 67,912 61,589
- -------------------------------------------------------------------------------------------------------------------------------
EXPENSES
The Vanguard Group--Note B
Investment Advisory Services . . . . . $ 984 $ 142 $ 137
Management and Administrative . . . . . 20,844 2,916 2,825
Marketing and Distribution . . . . . . 2,142 23,970 309 3,367 295 3,257
--------- ------- -------
Custodian's Fees . . . . . . . . . . . . . 229 46 30
Taxes (other than income taxes) . . . . . . 647 107 86
Auditing Fees . . . . . . . . . . . . . . . 11 4 4
Shareholders' Reports . . . . . . . . . . . 254 38 31
Annual Meeting and Proxy Costs . . . . . . 322 47 50
Directors' Fees and Expenses . . . . . . . 29 4 4
- -------------------------------------------------------------------------------------------------------------------------------
Total Expenses . . . . . . . . . . . . 25,462 3,613 3,462
- -------------------------------------------------------------------------------------------------------------------------------
Net Investment Income . . . . . . . . 456,992 64,299 58,127
- -------------------------------------------------------------------------------------------------------------------------------
REALIZED NET GAIN (LOSS) ON
INVESTMENT SECURITIES SOLD . . . . . . . . . (53) 17 51
- -------------------------------------------------------------------------------------------------------------------------------
UNREALIZED APPRECIATION
(DEPRECIATION) OF
INVESTMENT SECURITIES . . . . . . . . . . . . -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations . . . . $456,939 $64,316 $58,178
===============================================================================================================================
</TABLE>
10
<PAGE> 11
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
PRIME FEDERAL U.S. TREASURY
PORTFOLIO PORTFOLIO PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS Year SIX MONTHS Year SIX MONTHS Year
ENDED Ended ENDED Ended ENDED Ended
MAY 31, November 30, MAY 31, November 30, MAY 31, November 30,
1995 1994 1995 1994 1995 1994
(000) (000) (000) (000) (000) (000)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS
Net Investment Income . . . . . . . . $ 456,992 $ 510,164 $ 64,299 $ 76,777 $ 58,127 $ 69,207
Realized Net Gain (Loss) . . . . . . . (53) (97) 17 (55) 51 (24)
Unrealized Appreciation
(Depreciation) . . . . . . . . . . . -- -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Net Increase in
Net Assets Resulting
from Operations . . . . . . . 456,939 510,067 64,316 76,722 58,178 69,183
- -------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS (1)
Net Investment Income . . . . . . . . (456,992) (510,164) (64,299) (76,777) (58,127) (69,207)
- -------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
(AT $1.00 PER SHARE)
Issued --Regular . . . . . . . . . . 7,906,110 12,442,610 842,343 1,302,611 1,061,740 1,583,805
--In Lieu of Cash
Distributions . . . . . . . 435,991 489,573 61,218 73,348 55,479 66,010
--Exchange . . . . . . . . . 2,332,473 5,289,175 259,978 643,634 303,799 594,652
Redeemed --Regular . . . . . . . . . . (6,769,396) (11,774,731) (725,506) (1,294,420) (770,859) (1,269,326)
--Exchange . . . . . . . . . (2,080,270) (3,705,050) (214,171) (435,756) (410,587) (670,287)
- -------------------------------------------------------------------------------------------------------------------------------
Net Increase from
Capital Share
Transactions . . . . . . . . . . . 1,824,908 2,741,577 223,862 289,417 239,572 304,854
- -------------------------------------------------------------------------------------------------------------------------------
Total Increase . . . . . . . . . . . . 1,824,855 2,741,480 223,879 289,362 239,623 304,830
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Period . . . . . . . . . 15,108,717 12,367,237 2,196,424 1,907,062 2,056,057 1,751,227
- -------------------------------------------------------------------------------------------------------------------------------
End of Period . . . . . . . . . . . . $16,933,572 $15,108,717 $2,420,303 $2,196,424 $2,295,680 $2,056,057
===============================================================================================================================
(1) Income Dividends
Per Share . . . . . . . . . . . . $.029 $.038 $.028 $.038 $.027 $.036
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 12
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
PRIME PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------------
Year Ended November 30,
SIX MONTHS ENDED ------------------------------------------------------
For a Share Outstanding Throughout Each Period MAY 31, 1995 1994 1993 1992 1991 1990
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- -----
INVESTMENT OPERATIONS
Net Investment Income . . . . . . . . . . . .029 .038 .030 .038 .062 .080
Net Realized and Unrealized Gain (Loss)
on Investments . . . . . . . . . . . . . -- -- -- -- -- --
----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS . . .029 .038 .030 .038 .062 .080
- -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income . . . . (.029) (.038) (.030) (.038) (.062) (.080)
Distributions from Realized Capital Gains . . -- -- -- -- -- --
----- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS . . . . . . . . (.029) (.038) (.030) (.038) (.062) (.080)
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD . . . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
=============================================================================================================================
TOTAL RETURN . . . . . . . . . . . . . . . . . +2.90% +3.87% +3.02% +3.89% +6.39% +8.32%
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (Millions) . . . . . $16,934 $15,109 $12,367 $12,638 $13,496 $13,579
Ratio of Expenses to Average Net Assets . . . . .32%* .32% .32% .30% .30% .30%
Ratio of Net Investment Income to
Average Net Assets . . . . . . . . . . . . . 5.74%* 3.84% 2.98% 3.82% 6.20% 8.06%
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FEDERAL PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------------
Year Ended November 30,
SIX MONTHS ENDED -------------------------------------------------------
For a Share Outstanding Throughout Each Period MAY 31, 1995 1994 1993 1992 1991 1990
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- -----
INVESTMENT OPERATIONS
Net Investment Income . . . . . . . . . . . .028 .038 .029 .038 .060 .078
Net Realized and Unrealized Gain (Loss) . .
on Investments . . . . . . . . . . . . . . -- -- -- -- -- --
----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS . . .028 .038 .029 .038 .060 .078
- -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income . . . . (.028) (.038) (.029) (.038) (.060) (.078)
Distributions from Realized Capital Gains . . -- -- -- -- -- --
----- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS . . . . . . . . (.028) (.038) (.029) (.038) (.060) (.078)
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD . . . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
=============================================================================================================================
TOTAL RETURN . . . . . . . . . . . . . . . . . +2.87% +3.82% +2.98% +3.83% +6.18% +8.14%
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (Millions) . . . . . $2,420 $2,196 $1,907 $1,986 $2,000 $1,950
Ratio of Expenses to Average Net Assets . . . . .32%* .32% .32% .30% .30% .30%
Ratio of Net Investment Income to
Average Net Assets . . . . . . . . . . . . . 5.69%* 3.78% 2.94% 3.76% 6.01% 7.90%
- -----------------------------------------------------------------------------------------------------------------------------
* Annualized.
</TABLE>
12
<PAGE> 13
<TABLE>
<CAPTION>
U.S. TREASURY PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------------
Year Ended November 30,
SIX MONTHS ENDED -------------------------------------------------------
For a Share Outstanding Throughout Each Period MAY 31, 1995 1994 1993 1992 1991 1990
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- -----
INVESTMENT OPERATIONS
Net Investment Income . . . . . . . . . . . .027 .036 .028 .036 .058 .077
Net Realized and Unrealized Gain (Loss)
on Investments . . . . . . . . . . . . . -- -- -- -- -- --
----- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS . . .027 .036 .028 .036 .058 .077
- -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income . . . . (.027) (.036) (.028) (.036) (.058) (.077)
Distributions from Realized Capital Gains . . -- -- -- -- -- --
----- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS . . . . . . . . (.027) (.036) (.028) (.036) (.058) (.077)
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD . . . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
=============================================================================================================================
TOTAL RETURN . . . . . . . . . . . . . . . . . +2.71% +3.63% +2.86% +3.68% +5.94% +8.02%
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (Millions) . . . . . $2,296 $2,056 $1,751 $2,321 $2,092 $1,594
Ratio of Expenses to Average Net Assets . . . . .32%* .32% .32% .30% .30% .30%
Ratio of Net Investment Income to
Average Net Assets . . . . . . . . . . . . . 5.37%* 3.59% 2.83% 3.60% 5.76% 7.74%
- -----------------------------------------------------------------------------------------------------------------------------
* Annualized.
</TABLE>
13
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS
Vanguard Money Market Reserves is registered under the Investment Company Act
of 1940 as a diversified open-end investment company and consists of the Prime,
Federal, and U.S. Treasury Portfolios. The Prime Portfolio invests in
short-term debt instruments of companies primarily operating in specific
industries; the issuers' abilities to meet their obligations may be affected by
economic developments in such industries. The Federal Portfolio invests in
short-term debt instruments issued by the U.S. Government or its agencies and
instrumentalities. The U.S. Treasury Portfolio invests in short-term debt
instruments backed by the full faith and credit of the U.S. Government.
A. The following significant accounting policies are in conformity with
generally accepted accounting principles for investment companies. Such
policies are consistently followed by the Fund in the preparation of financial
statements.
1. SECURITY VALUATION: Securities are stated at amortized cost which
approximates market value.
2. FEDERAL INCOME TAXES: Each Portfolio of the Fund intends to continue to
qualify as a regulated investment company and distribute all of its taxable
income. Accordingly, no provision for Federal income taxes is required in
the financial statements.
3. OTHER: Security transactions are accounted for on the date the securities are
purchased or sold. Costs used in determining realized gains and losses on
the sale of investment securities are those of specific securities sold.
Discounts and premiums are accreted and amortized, respectively, to interest
income over the lives of the respective securities. Distributions from net
investment income are declared on a daily basis payable on the first
business day of the following month.
4. REPURCHASE AGREEMENTS: Securities pledged as collateral for repurchase
agreements are held by the Fund's custodian bank until maturity of the
repurchase agreement. Provisions of each agreement ensure that the market
value of the collateral is sufficient in the event of default; however, in
the event of default or bankruptcy by the other party to the agreement,
realization and/or retention of the collateral may be subject to legal
proceedings.
B. The Vanguard Group, Inc. furnishes at cost investment advisory, corporate
management, administrative, marketing, and distribution services. The costs of
such services are allocated to the Fund under methods approved by the Board of
Directors. At May 31, 1995, the Fund had contributed capital of $2,964,000 to
Vanguard (included in Other Assets), representing 14.8% of Vanguard's
capitalization. The directors and officers of the Fund are also directors and
officers of Vanguard.
14
<PAGE> 15
DIRECTORS AND OFFICERS
JOHN C. BOGLE, Chairman and Chief Executive Officer
Chairman and Director of The Vanguard Group, Inc., and of each of the
investment companies in The Vanguard Group.
JOHN J. BRENNAN, President
President and Director of The Vanguard Group, Inc., and of each of the
investment companies in The Vanguard Group.
ROBERT E. CAWTHORN, Chairman of Rhone-Poulenc Rorer, Inc.; Director of Sun
Company, Inc.
BARBARA BARNES HAUPTFUHRER, Director of The Great Atlantic and Pacific Tea
Company, Alco Standard Corp., Raytheon Company, Knight-Ridder, Inc., and
Massachusetts Mutual Life Insurance Co.
BRUCE K. MACLAURY, President of The Brookings Institution; Director of American
Express Bank Ltd., The St. Paul Companies, Inc., and Scott Paper Company.
BURTON G. MALKIEL, Chemical Bank Chairman's Professor of Economics, Princeton
University; Director of Prudential Insurance Co. of America, Amdahl
Corporation, Baker Fentress & Co., The Jeffrey Co., and Southern New England
Communications Company.
ALFRED M. RANKIN, JR., Chairman, President, and Chief Executive Officer of
NACCO Industries, Inc.; Director of NACCO Industries, The BFGoodrich Company,
Reliance Electric Company, and The Standard Products Company.
JOHN C. SAWHILL, President and Chief Executive Officer of The Nature
Conservancy; formerly, Director and Senior Partner of McKinsey & Co. and
President of New York University; Director of Pacific Gas and Electric Company
and NACCO Industries.
JAMES O. WELCH, JR., Retired Chairman of Nabisco Brands, Inc.; retired Vice
Chairman and Director of RJR Nabisco; Director of TECO Energy, Inc.
J. LAWRENCE WILSON, Chairman and Chief Executive Officer of Rohm & Haas
Company; Director of Cummins Engine Company; Trustee of Vanderbilt University
and the Culver Educational Foundation.
OTHER FUND OFFICERS
RICHARD F. HYLAND, Treasurer; Treasurer of The Vanguard Group, Inc., and of
each of the investment companies in The Vanguard Group.
RAYMOND J. KLAPINSKY, Secretary; Senior Vice President and Secretary of The
Vanguard Group, Inc.; Secretary of each of the investment companies in The
Vanguard Group.
KAREN E. WEST, Controller; Vice President of The Vanguard Group, Inc.;
Controller of each of the investment companies in The Vanguard Group.
OTHER VANGUARD GROUP OFFICERS
ROBERT A. DISTEFANO IAN A. MACKINNON
Senior Vice President Senior Vice President
Information Technology Fixed Income Group
JEREMY G. DUFFIELD F. WILLIAM MCNABB III
Senior Vice President Senior Vice President
Planning & Development Institutional
JAMES H. GATELY RALPH K. PACKARD
Senior Vice President Senior Vice President
Individual Investor Group Chief Financial Officer
15
<PAGE> 16
THE VANGUARD FAMILY OF FUNDS
FIXED INCOME FUNDS
MONEY MARKET FUNDS
Vanguard Admiral Funds
U.S. Treasury Money
Market Portfolio
Vanguard Money Market Reserves
TAX-EXEMPT MONEY MARKET FUNDS
Vanguard Municipal Bond Fund
Money Market Portfolio
Vanguard State Tax-Free Funds
Money Market Portfolios
(CA, NJ, OH, PA)
TAX-EXEMPT INCOME FUNDS
Vanguard Municipal Bond Fund
Vanguard State Tax-Free Funds
Insured Longer-Term Portfolios
(CA, FL, NJ, NY, OH, PA)
INCOME FUNDS
Vanguard Admiral Funds
Vanguard Fixed IncomeSecurities Fund
Vanguard Preferred Stock Fund
EQUITY AND BALANCED FUNDS
GROWTH AND INCOME FUNDS
Vanguard Convertible
Securities Fund
Vanguard Equity Income Fund
Vanguard Quantitative Portfolios
Vanguard/Trustees' Equity Fund
U.S. Portfolio
Vanguard/Windsor Fund
Vanguard/Windsor II
BALANCED FUNDS
Vanguard Asset Allocation Fund
Vanguard LifeStrategy Funds
Income Portfolio
Conservative Growth Portfolio
Moderate Growth Portfolio
Growth Portfolio
Vanguard STAR Portfolio
Vanguard/Wellesley Income Fund
Vanguard/Wellington Fund
GROWTH FUNDS
Vanguard/Morgan Growth Fund
Vanguard/PRIMECAP Fund
Vanguard U.S. Growth Portfolio
AGGRESSIVE GROWTH FUNDS
Vanguard Explorer Fund
Vanguard Specialized Portfolios
INTERNATIONAL FUNDS
Vanguard International
Growth Portfolio
Vanguard/Trustees' Equity Fund
International Portfolio
INDEX FUNDS
Vanguard Index Trust
Total Stock Market Portfolio
500 Portfolio
Extended Market Portfolio
Growth Portfolio
Value Portfolio
Small Capitalization Stock Portfolio
Vanguard International Equity
Index Fund
European Portfolio
Pacific Portfolio
Emerging Markets Portfolio
Vanguard Bond Index Fund
Vanguard Tax-Managed Fund
Vanguard Balanced Index Fund
[LOGO]
<TABLE>
<S> <C>
Vanguard Financial Center Valley Forge, Pennsylvania 19482
New Account Information: 1-(800) 662-7447 Shareholder Account Services: 1-(800) 662-2739
</TABLE>
This Report has been prepared for shareholders and may be distributed
to others only if preceded or accompanied by a current prospectus. All Funds
in the Vanguard Family are offered by prospectus only.
Q302-5/95
[VANGUARD MONEY MARKET
RESERVES LOGO]
SEMI-ANNUAL REPORT
MAY 31, 1995
