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FUND PROFILE PROSPECTUS
FOR
VANGUARD
INDEX TRUST
----------------
500 PORTFOLIO
MAY 24, 1996
The 500 Portfolio is part of
Vanguard Index Trust, which also includes the
Extended Market, Total Stock Market,
Small Capitalization Stock,
Value, and Growth Portfolios.
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1 OBJECTIVE
The 500 Portfolio seeks to track, as closely as possible, the investment
performance of the Standard & Poor's 500 Composite Stock Price Index.* The
Portfolio may not meet this objective. Although not an objective, long-term
capital growth and some dividend income may be achieved as the Portfolio tracks
its index.
2 INVESTMENT STRATEGIES
The Portfolio's adviser does not follow traditional methods of active
investment management, which involve buying and selling securities based on
research and analysis. Rather, the adviser uses a passive, or indexing,
investment approach, which attempts to parallel the investment performance of a
target benchmark, or index.
The Portfolio holds all 500 stocks in the S&P 500 Index in approximately the
same proportions as represented in the Index. In addition to investing in
common stocks, the Portfolio may also invest, to a limited degree, in
short-term fixed-income securities, and futures and options contracts.
3 RISKS
The Portfolio's total return will fluctuate, so an investor could lose money
over short or even extended periods. More specifically, investors in the
Portfolio are exposed to . . .
o A HIGH degree of STOCK MARKET RISK (the possibility that stock prices
in general will decline over short or extended periods).
Historical returns for the U.S. stock market (as measured by the S&P 500 Index)
show some of this market volatility. From 1926 to 1995, the S&P 500 Index
provided an annualized total return of 10.5%, but provided a negative return --
averaging -- 12.3% -- in 20 of these 70 years. Annual returns for the period
ranged from a low of -43.3% to a high of +53.9%.
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4 APPROPRIATENESS
This Portfolio may be suitable for investors who . . .
o Are seeking long-term capital growth with some income.
o Want a simple way to invest in the stocks of many U.S. companies and
industries.
o Are willing to assume above-average investment risk.
o Plan to invest for at least five years.
The Portfolio is not suitable for investors who . . .
o Cannot tolerate fluctuating share prices.
o Want to "beat" the stock market.
5 FEES AND EXPENSES
The 500 Portfolio -- like all Vanguard Funds -- is offered on a pure no-load
basis (that is, the Portfolio has no 12b-1 fees or charges to buy or sell
shares).
The Portfolio's operating expenses are deducted from its total assets before
daily share prices and income distributions are calculated. The Portfolio's
expense ratio for fiscal year 1995 was 0.20% of assets.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES**
----------------------------------------------
<S> <C>
Investment Advisory Fees . . . . . . . 0.00%
Distribution Costs . . . . . . . . . . 0.02
Other Expenses . . . . . . . . . . . . 0.18
----
TOTAL OPERATING EXPENSES . . . . . . . 0.20%
====
</TABLE>
In addition, the Portfolio charges a $10 annual maintenance fee ($2.50 deducted
each quarter), which is waived for accounts with balances of $10,000 or more.
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>
$12 $36 $61 $124
</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 (%) 1986-1995
[GRAPH]
PERFORMANCE SUMMARY
(PERIODS ENDED MARCH 31, 1996)
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
500 PORTFOLIO** S&P 500+
<S> <C> <C>
1 Year +32.0% +32.1%
5 Years +14.5% +14.7%
10 Years +13.7% +14.0%
</TABLE>
Note: In evaluating past performance, it is important to consider that returns
from stocks were close to their highest levels in history during the past ten
years. Past performance is not indicative of future performance.
Performance figures include the reinvestment of all dividends and any capital
gains distributions. All returns are net of expenses. The performance data
quoted represent past performance. The investment return and principal value of
an investment will fluctuate so that investors' shares, when redeemed, may be
worth more or less than their original cost.
*The Portfolio is neither affiliated with nor sponsored by Standard & Poor's
Corporation. The inclusion of a stock in the S&P 500 Index in no way implies
that Standard & Poor's believes the stock to be an attractive investment.
**Figures are not adjusted for the $10 annual maintenance fee for accounts with
balances of less than $10,000.
+The Standard & Poor's 500 Composite Stock Price Index is a diversified group
of 500 securities used to measure U.S. stock market performance. An index is
unmanaged; you cannot invest in an index.
"Standard & Poor's(R)" and "S&P 500(R)" are trademarks of The McGraw-Hill
Companies, Inc.
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7 INVESTMENT ADVISER
The Portfolio is managed by Vanguard Core Management Group, which manages total
assets of more than $39 billion. George U. Sauter, a Principal of Vanguard, has
been responsible for the Portfolio's investments since 1986.
8 PURCHASES
You may purchase shares by mail, wire, or exchange from another Vanguard Fund
(telephone exchanges permitted for retirement accounts only). The minimum
initial investment is $3,000 ($1,000 for IRAs and accounts for minors).
9 REDEMPTIONS
You may redeem shares by sending a letter to or calling Vanguard. The
Portfolio's share price is expected to fluctuate and, at redemption, may be
higher or lower than at the time of initial purchase, resulting in a gain or
loss.
10 DISTRIBUTIONS
The Portfolio expects to pay dividends quarterly. Capital gains distributions,
if any, are paid annually. Dividend and capital gains distributions can be
automatically reinvested or received in cash. Dividend and capital gains
distributions are taxable to you whether reinvested in additional shares or
received in cash.
11 OTHER SERVICES
o Vanguard Fund Express(R) -- electronic transfers between your bank
account and the Portfolio.
o 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).
o 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.
If you would like more information before you invest, please
consult the Portfolio's prospectus. For details about the Portfolio's
holdings or recent investment strategies, please review the Portfolio's
most recent annual or semi-annual report. The prospectus and
reports may be obtained at no cost by calling 1-800-662-7447.
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0596-77S (C) 1996 Vanguard Marketing Corporation, Distributor FP40
