GEMINI II INC, DEFR14A, 1995-03-13

GEMINI II INC
DEFR14A, 1995-03-13

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<PAGE> 1
LOGO

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO THE SHAREHOLDERS OF
GEMINI II, INC.

Notice is hereby given that the Annual Meeting of Shareholders of Gemini
II, Inc. (the "Fund") will be held in the Majestic Building, Room 118A,
Vanguard Financial Center, 100 Vanguard Boulevard, Malvern, Pennsylvania, on
Tuesday, April 18, 1995, at 9:30 A.M., Eastern Time, for the following
purposes:

1. To elect a Board of Directors.

2. To ratify or reject the selection of Price Waterhouse LLP,
independent accountants, as auditors of the Fund for the fiscal year
ending December 31, 1995.

3. To consider and act upon any other matters which may properly come
before the meeting.

By Order of the Board of Directors
RAYMOND J. KLAPINSKY, Secretary

March 13, 1995

- -------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
Please indicate your voting instructions on the enclosed Proxy Card, date
and sign it, and return it in the envelope provided, which is addressed for
your convenience and needs no postage if mailed in the United States. In
order to avoid the additional expense to the Fund of further solicitation, we
ask your cooperation in mailing your Proxy Card promptly.
- -------------------------------------------------------------------------------

<PAGE> 2

(THIS PAGE INTENTIONALLY LEFT BLANK)

<PAGE> 3

LOGO

ANNUAL MEETING OF SHAREHOLDERS

April 18, 1995

PROXY STATEMENT

The enclosed proxy is solicited by and on behalf of the Board of Directors
of Gemini II, Inc. All costs of solicitation (including printing and mailing
this Proxy Statement, meeting notice and form of proxy, as well as any
necessary supplementary solicitations) will be paid by the Fund. In addition
to the solicitation of proxies by mail, officers and employees of the Fund
and The Vanguard Group, Inc. ("Vanguard") may solicit in person or telephone.
Persons holding shares as nominees will, upon request, be reimbursed for
their reasonable expenses in sending soliciting materials to their
principals.

Holders of record at the close of business on March 9, 1995, are entitled
to vote at the meeting or at any adjourned session. Each share is entitled to
one vote. As of the record date, there were 10,920,550 Income Shares and
10,920,550 Capital Shares issued and outstanding. This Proxy Statement was
mailed to shareholders on or about March 13, 1995.

Shares represented by a properly executed proxy will be voted in
accordance with the instructions thereon, or if no specification is made, the
persons named as proxies will vote for management's slate of Directors and as
recommended by the Board of Directors. Proxies may be revoked at any time
before they are exercised by the subsequent execution and submission of a
revised proxy, by written notice of revocation to the Secretary of the Fund,
or by voting in person at the meeting. The mailing address of the Fund is c/o
Vanguard Financial Center, P.O. Box 2600, Valley Forge, Pennsylvania 19482.

Shareholders who need directions to the location of the Annual Meeting
should call 1-800-852-6999, between the hours of 8:00 A.M. and 9:00 P.M.,
Eastern Time, on any business day.

A copy of the Fund's Annual Report for the fiscal year ended December 31,
1994, including financial statements, has been mailed to each shareholder of
the Fund entitled to vote at the meeting.

<PAGE> 4

1. ELECTION OF DIRECTORS

It is intended that all properly executed proxies will be voted (unless
such authority has been withheld in the proxy) as follows:

1) All such proxies representing both Income Shares and Capital Shares
voting as a single class in favor of the five (5) persons designated as
Directors to be elected by the holders of Income Shares and Capital Shares;

2) All such proxies representing Capital Shares voting in favor of the two
(2) persons designated as Directors to be elected by holders of Capital
Shares; and

3) All such proxies representing Income Shares voting in favor of the two
(2) persons designated as Directors to be elected by the holders of Income
Shares.

If any such nominee is not available for election at the time of the
meeting, the persons named as proxies will vote for such substitute nominee
as the Board of Directors may recommend unless the number of Directors
serving on the Board is reduced. The Directors, if elected, will serve as
Directors of the Fund until the next annual meeting of shareholders and until
their successors have been elected and qualified. All of the nominees are
presently Directors of the Fund. All of the Directors were elected by
shareholders.

TO BE ELECTED BY THE HOLDERS OF BOTH
INCOME SHARES AND CAPITAL SHARES
VOTING AS A SINGLE CLASS

<PAGE> 5

<TABLE>
<CAPTION>
Share Holdings
as of
Principal Occupation, Year First March 9, 1995
Business Experience Became a ------------------
Name Age and Other Directorships Director Income Capital
- ----------------- ----- ------------------------------ ------------ -------- ---------
<S> <C> <C> <C> <C> <C>
Barbara B.
Hauptfuhrer (2).. 66 Director of the Great Atlantic 1984 200 200
and Pacific Tea Company,
Raytheon Company,
Massachusetts Mutual Life
Insurance Co., Knight-Ridder,
Inc., ALCO Standard, Inc. and
Trustee Emerita of Wellesley
College
Burton G.
Malkiel (2)...... 62 Chemical Bank Chairman's 1984 1,000 1,000
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. (2).. 52 Chairman, President and Chief 1992 None None
Executive Officer of NACCO
Industries; Director of The
B.F. Goodrich Company, The
Standard Products Co. and The
Reliance Electric Company.
TO BE ELECTED BY THE HOLDERS OF CAPITAL SHARES
John J.
Brennan (1)(2) .. 40 President of the Fund, 1987 200 200
Vanguard, and each of the
Vanguard Funds.

Bruce K.
MacLaury (3) .... 63 President, The Brookings 1989 None None
Institution; Director of
American Express Bank, Ltd.
The St. Paul Companies, Inc.
and Scott Paper Company.
TO BE ELECTED BY THE HOLDERS OF INCOME SHARES
John C.
Sawhill (2) ..... 58 President and Chief Executive 1991 None None
Officer, The Nature
Conservancy; formerly,
Director and Senior Partner,
McKinsey & Co., and President,
New York University; Director
of Pacific Gas and Electric
Company and NACCO Industries.

<PAGE> 6

</TABLE>
<TABLE>
<CAPTION>
Share Holdings
as of
Principal Occupation, Year First March 9, 1995
Business Experience Became a ------------------
Name Age and Other Directorships Director Income Capital
- ----------------- ----- ------------------------------ ------------ -------- ---------
<S> <C> <C> <C> <C> <C>
J. Lawrence
Wilson (2) ...... 59 Chairman and Chief Executive 1985 None None
Officer of Rohm & Haas
Company; Director of Cummins
Engine Company, Vanguard Real
Estate Funds I and II; Trustee
of Vanderbilt University and
the Culver Education
Foundation.

</TABLE>

- ------
(1) An officer is considered an "interested person" of the Fund as defined in
the Investment Company Act of 1940.
(2) A Director (Trustee) of Vanguard and each of the Vanguard Funds.
(3) A Director (Trustee) of each of the Vanguard Funds, except Vanguard
Municipal Bond Fund, and the six Vanguard State Tax-Free Funds.

BOARD MEETINGS AND COMMITTEES

During the fiscal year ended December 31, 1994, the Fund's Board of
Directors held ten meetings.

The Board has a standing Compensation, Nomination and Audit Committee,
which is composed of the Directors who are not "interested persons" of the
Fund. During the fiscal year ended December 31, 1994, the Committee held
three meetings. The Committee is responsible principally for: (1) selecting
the Fund's independent accountants, and reviewing their fees; (2) meeting
with the Fund's independent accountants for the purpose of reviewing the
adequacy of the Fund's internal accounting controls; (3) evaluating the
performance of the Fund's officers and employees, and developing and
approving the overall compensation plan (including basic salary, customary
insurance and other benefits, and incentives) for such officers and employees
(who are paid through Vanguard); and (4) interviewing, evaluating and
recommending to shareholders candidates for election to the Fund's Board of
Directors.

The Committee will consider Director nominations recommended by
shareholders. Such nominations can be made by submitting a written request
for consideration of a candidate, including a resume, to Mr. J. Lawrence
Wilson, the Chairman of the Committee.

<PAGE> 7

PRINCIPAL EXECUTIVE OFFICERS

<TABLE>
<CAPTION>
Name Age Office
- ---------------------- ----- ------------------
<S> <C> <C>
John C. Bogle ........ 65 Chairman and Chief
Executive Officer
John J. Brennan ..... 40 President
Raymond J. Klapinsky 56 Secretary
Richard F. Hyland .... 57 Treasurer
Karen E. West ........ 48 Controller
</TABLE>

The officers of the Fund also hold identical positions with the other
Vanguard Funds and are officers of Vanguard.

REMUNERATION OF DIRECTORS AND OFFICERS

The Fund pays each Director, who is not also an officer, an annual fee
plus a proportionate share of travel and other expenses incurred in attending
Board meetings. Directors who are also officers receive no remuneration for
their services as Directors. The Fund's proportionate share of remuneration
paid by Vanguard (and reimbursed by the Fund) during the fiscal year ended
December 31, 1994 to all officers of the Fund, as a group, was approximately
$13,422.

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 maximum period of ten years or
until the death of a retired Director. 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, during the fiscal year ended December 31,
1994, was approximately $295.

Compensation Table

<TABLE>
<CAPTION>
Pension or
Retirement Total
Benefits Estimated Compensation
Aggregate Accrued as part Annual From Fund and
Compensation of Fund Benefits Upon Fund Complex
Name of Director from Fund Expenses Retirement Paid to Director
- ---------------------- -------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
John C. Bogle* ......... -- -- -- --
John J. Brennan* ...... -- -- -- --
Robert E. Cawthorn ..... $ 222 $ 37 $13,000 $50,000
Barbara B. Hauptfuhrer.. $ 222 $ 45 $15,000 $50,000
Burton G. Malkiel ..... $ 222 $ 30 $15,000 $50,000
Bruce K. MacLaury ..... $ 200 $ 37 $12,000 $45,000
James O. Welch, Jr. .... $ 213 $ 35 $15,000 $48,000
J. Lawrence Wilson ..... $ 217 $ 25 $15,000 $49,000
John C. Sawhill ........ $ 222 $ 28 $15,000 $50,000
Alfred M. Rankin, Jr... $ 222 $ 24 $15,000 $50,000
</TABLE>

- ------
*As "Interested Directors", Messrs. Bogle and Brennan receive no compensation
for their service as Directors.

<PAGE> 8

2. RATIFICATION OR REJECTION OF AUDITORS

The Board of Directors has selected Price Waterhouse LLP as independent
accountants to audit and certify financial statements of the Fund for the
fiscal year ending December 31, 1995. Price Waterhouse LLP has served the
Fund in this capacity since the Fund's inception. In connection with the
audit function, Price Waterhouse LLP also reviews the Fund's Annual Report to
shareholders and the Fund's filings with the Securities and Exchange
Commission. Neither Price Waterhouse LLP nor any of its partners has any
direct or material indirect financial interest in the Fund.

A representative of Price Waterhouse LLP will be present at the meeting if
requested by a shareholder (either by telephone or in writing) in advance of
the meeting. Such requests should be directed to the Secretary of the Fund.

REQUIRED VOTE

An affirmative vote of a majority of the shares of the Fund represented at
the meeting (Income Shares and Capital Shares voting as a single class) will
be required to ratify this appointment.

3. OTHER INFORMATION

INVESTMENT ADVISORY SERVICES

The Fund employs Wellington Management Company (the "Adviser"), 75 State
Street, Boston, Massachusetts 02109, under an investment advisory agreement
dated as of February 1, 1985 (the "Agreement") to manage the investment and
reinvestment of the assets of the Fund and to continuously review, supervise
and administer the Fund's investment program. The Adviser discharges its
responsibilities subject to the control of the officers and Directors of the
Fund. This Agreement continues in effect until January 31, 1996, and is not
being presented to shareholders for approval. Pursuant to the Agreement, the
Fund pays the Adviser a fee (the "Basic Fee") at the end of each fiscal
quarter, calculated by applying a quarterly rate, based on the following
annual percentage rates, to the Fund's average month-end net assets for the
quarter:

<TABLE>
<CAPTION>
Net Assets Rate
------------------ --------
<S> <C>
First $300 million..... 0.350%
Over $300 million...... 0.275%
</TABLE>

The Basic Fee, as provided above, may be increased or decreased by an
amount equal to 0.10% per annum (0.025%) per quarter of the average month-end
net assets of the Fund if the Fund's investment performance for the
thirty-six months preceding the end of the quarter is twelve percentage
points or more above or below, respectively, the investment record of the
Standard and Poor's Composite Stock Price Index of 500 Common Stocks (the

<PAGE> 9

"S&P Index") for the same period; or by an amount equal to 0.05% per annum
(0.0125% per quarter) if the Fund's investment performance for such thirty-six
months is six or more but less than twelve percentage points above or below,
respectively, the investment record of the S&P Index.

During the fiscal year ended December 31, 1994, the Fund paid the Adviser
a base advisory fee of approximately $1,161,000 (.34 of 1% of average net
assets), before an increase of approximately $319,000 (.09 of 1% of average
net assets) based on the Fund's investment performance.

The adviser is a Massachusetts general partnership of which the following
persons are managing partners; Messrs. Robert W. Doran, Duncan M. McFarland,
and John B. Neff.

PORTFOLIO TRANSACTIONS

The investment advisory agreement authorizes the Adviser (with the ap-
proval of the Fund's Board of Directors) to select the brokers or dealers
that will execute the purchases and sales of portfolio securities for the
Fund and directs the Adviser to use its best efforts to obtain the best
available price and most favorable execution with respect to all transactions
for the Fund. The Adviser has undertaken to execute each investment
transaction at a price and commission which provides that most favorable
total cost or proceeds reasonably obtainable under the circumstances.

In placing portfolio transactions, the Adviser uses its best judgment to
choose the broker most capable of providing the brokerage services necessary
to obtain best available price and most favorable execution. The full range
and quality of brokerage services available will be considered in making
these determinations. In those instances where it is reasonably determined
that more than one broker can offer the brokerage services needed to obtain
the best available price and most favorable execution, consideration may be
given to those brokers which supply investment research and statistical
information and provide other services in addition to execution services to
the Fund. The Adviser considers the investment services it receives useful in
the performance of its obligations under the agreement but is unable to
determine the amount by which such services may reduce its expenses.

The investment advisory agreement also incorporates the concepts of Sec-
tion 28(e) of the Securities Exchange Act of 1934 by providing that, subject
to the approval of the Fund's Board of Directors, the Adviser may cause the
Fund to pay a broker-dealer which furnishes brokerage and research services a
higher commission than that which might be charged by another broker-dealer
for effecting that same transaction; provided that such commission is deemed
reasonable in terms of either that particular transaction or the overall
responsibilities of the Adviser to the Fund and the other Funds in the Group.

Currently, it is the Fund's policy that the Adviser may at times pay
higher commissions in recognition of brokerage services felt necessary for

<PAGE> 10

the achievement of better execution of certain securities transactions that
otherwise might not be available. The Adviser only will pay such higher
commissions if it believes this to be in the best interest of the Fund. Some
brokers or dealers who may receive such higher commissions in recognition of
brokerage services related to execution of securities transactions are also
providers of research information to the Adviser and/or the Fund. However, the
Adviser has informed the Fund that it will not pay higher commission rates
specifically for the purpose of obtaining research services.

THE VANGUARD GROUP

Gemini II is a member of The Vanguard Group of Investment Companies which
consists of the 32 investment companies listed below:

<TABLE>
<CAPTION>
<S> <C>
Vanguard/Windsor Funds Vanguard/Wellesley Income Fund
Gemini II Vanguard Preferred Stock Fund
Vanguard Explorer Fund Vanguard Bond Index Fund
Vanguard/Morgan Growth Fund Vanguard Municipal Bond Fund
Vanguard/PRIMECAP Fund Vanguard California Tax-Free Fund
Vanguard Specialized Portfolios Vanguard New Jersey Tax-Free Fund
Vanguard World Fund Vanguard New York Insured
Vanguard Index Trust Tax-Free Fund
Vanguard Quantitative Portfolios Vanguard Pennsylvania
Vanguard/Trustees' Equity Fund Tax-Free Fund
Vanguard Equity Income Fund Vanguard International Equity
Vanguard Asset Allocation Fund Index Fund
Vanguard/Wellington Fund Vanguard Ohio Tax-Free Fund
Vanguard Money Market Reserves Vanguard Florida Insured
Vanguard Institutional Portfolios Tax-Free Fund
Vanguard Convertible Securities Vanguard Variable Insurance Fund
Fund Vanguard Admiral Funds
Vanguard Fixed Income Securities Vanguard Balanced Index Fund
Fund Vanguard Tax-Managed Fund
</TABLE>

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 some 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 appropriate 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.

<PAGE> 11

The Vanguard Group was established and operates under a Funds' Service
agreement which was approved by the shareholders of each of the Funds. The
Fund's Service Agreement was amended on May 15, 1993 to provide as follows:
(a) each Vanguard Fund may invest up to .40% of its current net assets in
Vanguard, and (b) there is no limit on the amount that each Vanguard Fund may
contribute to Vanguard's capitalization. The amounts 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 December 31, 1994, the Fund had
contributed capital of $50,000 to Vanguard, representing .2% of Vanguard's
capitalization.

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 December 31, 1994, the Fund's share of Vanguard's
actual net costs of operation relating to management and administrative
services totaled approximately $423,000.

Distribution. Vanguard provides all distribution and marketing activities
for the Funds in the Group, except the Fund, which does not offer additional
shares for sale. 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 their relative net assets
(including the Fund). The remaining one-half of these expenses is allocated
among the Funds (except the Fund) 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 the 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 December 31, 1994,
the Fund paid approximately $43,000 of the Group's distribution and marketing
expenses.

LITIGATION

The Fund is not involved in any litigation.

SHAREHOLDER PROPOSALS

Notice is hereby given that any shareholder proposals which may properly
be included in the proxy solicitation material for the next annual meeting,
now scheduled for April 1996, must be received by the Fund no later than
February 15, 1996.

<PAGE> 12

ADJOURNMENT

If sufficient votes in favor of any of the proposals set forth herein are
not received by the time scheduled for the meeting, the persons named as
proxies may propose one or more adjournments of the meeting for a period or
periods of not more than 60 days in the aggregate to permit further
solicitation of proxies with respect to any of such proposals. Any
adjournment will require the affirmative vote of a majority of the votes cast
on the question in person or by proxy at the session of the meeting to be
adjourned. The persons named as proxies will vote in favor of such
adjournment those proxies which they are entitled to vote in favor of such
proposals. They will vote against any such adjournment those proxies required
to be voted against any such proposals. The Fund pays the costs of any
additional solicitation and of any adjourned session.

OTHER MATTERS

The Board of Directors know of no other business to be brought before the
meeting. However, if any other matters come before the meeting, it is the
intention that proxies which do not contain specific restrictions to the
contrary will be voted on such matters in accordance with the judgment of the
persons named in the enclosed form of proxy.

4. FINANCIAL STATEMENTS

The financial statements of the Fund are not set forth in this Proxy
Statement, since they were included in the Annual Report of the Fund for the
fiscal year ended December 31, 1994, which has been mailed to all
shareholders. The financial statements in the Annual Report should be read in
connection with the Proxy Statement, but the Annual Report is not to be
regarded as proxy solicitation material.

<PAGE> 13

LOGO 100% Recycled
X34-12/94 Paper

<PAGE> 14

GEMINI II ("FUND"): Income Shares
P PROXY SOLICITED BY THE BOARD OF DIRECTORS
R
O
X The undersigned, revoking previous proxies, hereby appoints John C.
Y Bogle, J. Lawrence Wilson and Raymond J. Klapinsky, or any one or
more of them, attorneys, with full power of substitution, to vote all
shares of the Fund which the undersigned is entitled to vote at the
Annual Meeting of Shareholders to be held in the Majestic Building,
Room 118A, Vanguard Financial Center, 100 Vanguard Boulevard, Malvern, PA
on April 18, 1995 at 9:30 A.M., E.T., and at any adjournments thereof.
All powers may be exercised by a majority of said proxy holders or
substitutes voting or acting or, if only one votes and acts, then by that
one. This Proxy shall be voted on the proposals described in the Proxy
Statement as specified on the reverse side. Receipt of the Notice of the
Meeting and the accompanying Proxy Statements is hereby acknowledged.

SEE REVERSE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE

<PAGE> 15

/X/ Please mark
votes as in
this example.

Please refer to the Proxy Statement discussion of each of these matters.

IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE PROPOSALS.
---
As to any other matter, said attorneys shall vote in accordance with their
best judgment.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
---
1. To elect the seven nominees specified below as Directors:
Nominees: John C. Bogle, Robert E. Cawthorn, Barbara B. Hauptfuhrer,
Burton G. Malkiel, Alfred M. Rankin, Jr., John C. Sawhill and
J. Lawrence Wilson.
FOR WITHHELD
/ / / /

/ /
---------------------------------------------
For all nominees except as noted above

FOR AGAINST ABSTAIN
2. To ratify the selection of / / / / / /
Price Waterhouse LLP, as
auditors of the Fund.

MARK HERE
FOR ADDRESS
CHANGE AND
NOTE AT LEFT / /

NOTE: Please sign exactly as your name appears
on this Proxy. When signing in a fiduciary
capacity, such as executor, administrator,
trustee, attorney, guardian, etc., please so
indicate. Corporate and partnership proxies
should be signed by an authorized person
indicating the person's title.

PLEASE SIGN, DATE AND Signature Date
RETURN PROMPTLY IN ENCLOSED ---------------------- ------------
ENVELOPE. Signature Date
---------------------- ------------

<PAGE> 16

GEMINI II ("FUND"): Capital Shares
P PROXY SOLICITED BY THE BOARD OF DIRECTORS
R
O
X The undersigned, revoking previous proxies, hereby appoints John C.
Y Bogle, J. Lawrence Wilson and Raymond J. Klapinsky, or any one or
more of them, attorneys, with full power of substitution, to vote all
shares of the Fund which the undersigned is entitled to vote at the
Annual Meeting of Shareholders to be held in the Majestic Building,
Room 118A, Vanguard Financial Center, 100 Vanguard Boulevard, Malvern, PA
on April 18, 1995 at 9:30 A.M., E.T., and at any adjournments thereof.
All powers may be exercised by a majority of said proxy holders or
substitutes voting or acting or, if only one votes and acts, then by that
one. This Proxy shall be voted on the proposals described in the Proxy
Statement as specified on the reverse side. Receipt of the Notice of the
Meeting and the accompanying Proxy Statements is hereby acknowledged.