<PAGE> 1
VANGUARD
INSTITUTIONAL
MONEY MARKET
PORTFOLIO
ANNUAL REPORT 1994
THE VANGUARD VOYAGE . . . STAYING THE COURSE
<PAGE> 2
THE VANGUARD VOYAGE . . . STAYING THE COURSE
WE ARE PRESENTLY OBSERVING TWO MILESTONES IN OUR HISTORY: (1) THE 20TH
ANNIVERSARY OF THE VANGUARD GROUP; AND (2) THE 65TH ANNIVERSARY YEAR OF
WELLINGTON FUND, THE OLDEST MUTUAL FUND ASSOCIATED WITH VANGUARD. WE CELEBRATE
THESE TWO EVENTS SINCE THEY HAVE INDELIBLY ALTERED THE MUTUAL FUND INDUSTRY--IN
OUR VIEW, FOR THE BETTER.
Wellington Fund--a pioneer in the mutual fund industry--began operations on
June 30, 1929. Its first fifteen years were a struggle for survival in an
industry that was shaken to its roots by the Great Crash of 1929-1933. From an
initial base of $100,000, Wellington's assets had grown to but $27 million by
the end of World War II. The Vanguard Group was founded on September 24, 1974.
Soon thereafter, we assumed responsibility for the management of Wellington
Fund and ten associated funds, with assets aggregating $1.4 billion.
The years that followed the founding of The Vanguard Group were marked by
exceptional growth. Today, Wellington Fund, with assets of nearly $9 billion,
remains one of the largest mutual funds in the nation. And Vanguard, now
managing 85 mutual fund portfolios, is entrusted with assets of $134 billion,
and ranks as the second largest fund complex in the world.
Our durability in an era of change--and our longevity in an era of
challenge--didn't "just happen." What brought us to where we are today is what
we were when we began. Put another way, we set our original investment course
based on sound principles, and our corporate course based on a single focus:
serving solely the interests of our Fund shareholders.
FOUNDING INVESTMENT PRINCIPLES
The founding investment principles of Wellington Fund were, above all,
conservative. The Fund provided a broadly diversified portfolio at a time when
holding individual securities was the conventional strategy. It incurred no
debt in an era of high leverage that would soon come back to haunt less
cautious investors. And it was a "balanced" fund--in fact, Wellington is
America's oldest balanced fund--with holdings from each of the three basic
financial asset classes: cash reserves, bonds, and common stocks. In short,
Wellington Fund was a staid investment in an era of stock speculation that was
to become, almost within moments, an era of conservatism.
For Vanguard, these investment principles endure. "Balance" is still our
watchword, because the three basic financial asset classes have different--and
usually countervailing--investment characteristics. When it began, Wellington
Fund provided a balanced program in a single investment; in 1994, such a
balance is often achieved by a combination of Vanguard money market, bond, and
stock funds.
"Conservatism," too, remains our standard. Over the years, we have tried
to maintain the discipline to eschew offering funds that lack sound financial
principles, often based on marketplace fads that could not--and did
not--endure. Our conservatism applies not only to the funds we offer, but to
the instruments in which they invest. For example, we have steered clear of
exotic derivative securities with unpredictable investment characteristics. Too
many fund managers have been taken in by these highly risky instruments, and
their shareholders have paid a heavy price--except in cases where the manager
has "made the fund whole," when to do otherwise would have shocked investors
and impaired their confidence in the fund complex.
Speculation, it seems, comes and goes, albeit in different guises. But the
investment principles to which we have adhered since Wellington Fund began in
1929 remain firm:
* We offer Funds with sound and durable investment objectives, designed for
long-term investors.
(please turn to inside back cover)
VANGUARD INSTITUTIONAL MONEY MARKET PORTFOLIO IS DESIGNED PRIMARILY FOR
INSTITUTIONAL INVESTORS. THE PORTFOLIO'S OBJECTIVE IS TO PROVIDE THE MAXIMUM
CURRENT INCOME THAT IS CONSISTENT WITH THE PRESERVATION OF CAPITAL AND
LIQUIDITY BY INVESTING IN SPECIFIED MONEY MARKET INSTRUMENTS. THE PORTFOLIO
INTENDS TO MAINTAIN A CONSTANT NET ASSET VALUE OF $1.00 PER SHARE.
<PAGE> 3
CHAIRMAN'S LETTER
DEAR SHAREHOLDER:
Reversing a steady decline that began five years ago, short-term interest rates
rose sharply during the twelve months ended November 30, the 1994 fiscal year
for Vanguard Institutional Money Market Portfolio. This reversal was good news
indeed for the Portfolio's shareholders.
The interest rate increase resulted in higher income yields for the Portfolio
for the full year, and, even more dramatically, a still higher yield at year
end. Indeed, the Portfolio's current yield is running about +70% above the
comparable figure presented one year ago. This table summarizes our results:
<TABLE>
<CAPTION>
- ---------------------------------------------------------
Total Return
----------------- Yield at Year End
Fiscal Year Ended ------------------
November 30, 1994 1994 1993
- ---------------------------------------------------------
<S> <C> <C> <C>
VIMMP +4.06% 5.29% 3.16%
- ---------------------------------------------------------
</TABLE>
Source: Donoghue's Money Fund Report
As we shall discuss later in this Annual Report, the Portfolio's yield nicely
exceeds competitive norms, not by reason of any sacrifice in the quality of our
Portfolio, but because of the extremely low level of our expenses. The Vanguard
expense advantage is our obvious and above-board method of assuring that the
maximum portion of the Fund's gross yield flows through to the net yield
received by our investors.
THE FISCAL YEAR IN REVIEW
Surely fiscal 1994 will go into the record book as "the year of the soaring
yields." In the short-term arena, the yield on the 90-day U.S. Treasury bill
rose from 3.2% to 5.8%; in the long-term arena, the yield on the 30-year U.S.
Treasury bond jumped from 6.3% to 8.0%. Yields rose accordingly in all sectors
of the credit market, including bank certificates of deposit, corporate and
municipal obligations, and agency securities of the Federal government.
A primary cause of the interest rate rise was investor fears about a
resurgence of inflation. So far, at least, the U.S. Consumer Price Index gives
little evidence of it. The CPI has risen just 2.7% over the past twelve months,
although more sensitive indicators--such as commodity prices and producer
prices--have been rising at higher rates.
In an effort to quell inflationary fears, the Federal Reserve has acted to
"tighten" the money supply in order to slow economic growth and rein in
potential future inflation. Fully six rate increases--in February, March,
April, May, August, and again in November--combined to raise the Federal funds
rate (at which banks borrow from one another) from 3.00% to 5.50%. Still, the
specter of inflation remains, and further rate increases may well lie in
prospect.
While the rate rise over the past twelve months was dramatic, it ought to
be placed in some sort of perspective. We attempt to do so with the chart at
the top of the following page, which shows the yields on U.S. Treasury bills
and U.S. Treasury bonds over the past five years. You will note that the 5.8%
bill yield is now approximately at the level reached in mid-1991, but is well
below the 8% level that prevailed when 1990 began. By the same token, the 8.0%
bond yield has merely returned to its level in mid-1992, about the same as the
yield reached at the beginning of 1990.
The interplay of bill yields and bond yields has resulted in a dramatic
change in the yield "spread" (i.e., the difference between the two yields), as
shown
[FIGURE 1]
1
<PAGE> 4
[FIGURE 2]
in the lower chart. At the start of the period, both yields were at 8%, a
spread of zero. By late 1992, the spread had risen to nearly 5% (500 "basis
points"), and investors who decided to choose bills over bonds had to
relinquish nearly two-thirds of their yield. Today, however, the spread has
narrowed to about 230 basis points, representing a significant increase in the
relative attractiveness of Treasury bills. The same principle, of course, has
been manifested over the past two years in the improving yields on money market
mutual funds relative to bond funds.
THE PORTFOLIO IN 1994
Frequent headlines in the press warn of the danger that higher interest rates
pose for the economy. But if high short-term rates are a bane to borrowers,
they are a boon to lenders, such as our Portfolio. Indeed, 1994 provided a
significant increase in the yield that our Portfolio earns.
Not only is the absolute yield on our Portfolio much improved, but our
yield relative to that of our average peer remains at a substantial premium.
This table presents the comparison:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
Annualized Current Yields
November 30, 1994
- ---------------------------------------------------------------
Average Institutional Vanguard
VIMMP Competitor Advantage
- ---------------------------------------------------------------
<S> <C> <C>
5.29% 5.15% +0.14%
- ---------------------------------------------------------------
</TABLE>
Source: Donoghue's Money Fund Report
Our yield advantage (and then some) is accounted for by our low expense ratio
(annual operating expenses as a percentage of average net assets) relative to
those of our competitors. The expense ratio of our Portfolio in 1994 was 0.15%;
the average ratio for institutional money market funds as a group was 0.44%.
Other factors held equal, this difference gives us "a leg up" in yield equal on
average to 0.29% annually. At current yield levels, and holding risk constant,
this advantage increases the dividends you receive from the Portfolio by 6%,
and should add to our relative performance margin year after year--over
competitive norms.
Money market funds, in the final analysis, are designed to provide you
with safety, liquidity, and yield. As a matter of sound investment principle,
we are not tempted to compromise on safety and liquidity, because our low
expenses make it easy for us to provide a premium yield without incurring extra
risk. Indeed, we believe our quality standards are among the highest--if not
the highest--in the field.
SOME THOUGHTS ABOUT INVESTMENT QUALITY
During the past year, it seems to me, too many money market funds were too
willing to compromise their quality standards to eke out a few extra basis
points in yield, often to offset their higher costs. Those that went too far
"out on a limb" found that the maintenance of their net asset values at $1.00
per share was endangered. In order to protect the $1.00 value, the sponsors of
most of these funds injected their own capital into the fund.
Few of these problems occurred in the "traditional" money market funds
with long histories of operation. Rather, most occurred in bank-managed
2
<PAGE> 5
[FIGURE 3]
money market funds--including funds managed by some of the largest and
best-known banks in America--which held such investments as higher-yielding
derivative securities and "structured notes" (which reset their yields
periodically). The market value of these investments is hostage to the very
kind of sharp interest rate jumps that have occurred in 1994.
On this point, I would reemphasize that no prime money market portfolio is
exempt from credit and maturity risk. Hence, there is no principal guarantee
such as that provided through bank savings accounts and certificates of deposit
insured by the Federal Deposit Insurance Corporation. Absent a major national
credit crunch, however, we believe that the $1.00 net asset value will be
preserved by prime money market funds that hold top-quality paper and maintain
their average portfolio maturities within a normal maximum of about 60 days.
(The average maturity of our Portfolio at fiscal year end was 38 days.)
A LONGER-TERM VIEW
Vanguard Institutional Money Market Portfolio has now completed its fifth year,
having commenced operations on October 3, 1989. We believe we have met our
objective of providing institutional investors a top-quality money market
portfolio at the lowest reasonable cost. Our performance record--largely
reflecting our expense ratio advantage--stands out among the crowd of
institutional money market funds. Our total return over the past five years has
been +29.1% (+5.2% annually), compared to +27.5% (5.0% annually) for the
average institutional fund. This return advantage has been recognized by the
marketplace, as our assets have more than doubled--with only very limited
marketing--in the past year, to $677 million.
Vanguard has now been offering money market portfolios for almost twenty
years. Our first Portfolio--the Prime Portfolio of Vanguard Money Market
Reserves--began operations on June 4, 1975, with a mere $100,000 of total net
assets. Today, as we prepare for our twentieth anniversary, our taxable money
market portfolios total about $21 billion, remarkable growth by any standard.
During these past two decades, we have survived, it seems to me, just
about anything the financial markets could throw at us. Using the yield on
3
<PAGE> 6
[FIGURE 4]
<TABLE>
<CAPTION>
Average Annual Total Returns--Periods Ended November 30, 1994
- --------------------------------------------------------------------------------------
1 Year 5 Years Since Inception*
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
VANGUARD INST. MONEY MARKET PORTFOLIO +4.06% +5.24% +5.36%
AVERAGE INST. MONEY MARKET FUND +3.79 +4.98 +5.10
90-DAY U.S. TREASURY BILL +4.03 +4.94 +5.04
</TABLE>
* Inception: October 3, 1989. Competitive performance data begins on September
30, 1989, to show competitive data.
Note: Past performance is not predictive of future performance.
the 90-day U.S. Treasury bill as our measuring stick, the chart on page 3 shows
that the nominal (stated) yields were fairly generous at the outset of our
history, but not sufficiently so to provide positive real returns (nominal
yields less inflation). As concerns about future inflation mounted and return
expectations increased, nominal yields soared (reaching above 15% in
1980--think of that!), and bills soon were generating positive real returns in
the area of 5% during 1981-1986.
By the beginning of 1989, rates had begun to tumble, and while the
inflation rate fell too, real yields were about zero during 1992-1993. Then,
Treasury bill yields began a sustained rise that has continued to this day. With
inflation seemingly muted, real returns today, at about 3.1%, are far higher
than in our early years, albeit below the "good old days" (for lenders, not
borrowers) in the early 1980s.
Above all, the chart provides an important long-term perspective. Looking
at but five years (as we did at the outset of this letter) makes it appear that
Treasury bill yields have soared, and, in a sense they have. But they remain
below their 20-year average of 7.5% on a nominal basis, even as bills currently
provide a real yield (3.1%) that is well above the historical norm (1.8%). With
savers presumably having learned from the lessons of the past--and demanding
higher real returns--I think that it is reasonable to expect that the present
level of real returns is sustainable.
LOOKING AHEAD
As we move into our second five years, we look forward to continuing to serve
our shareholders with an ongoing emphasis on high- quality investing with
exceptionally low costs--surely a winning formula for money market investors.
Sincerely,
/s/ JOHN C. BOGLE
- ------------------
John C. Bogle
Chairman of the Board December 20, 1994
Note: Mutual fund data from Lipper Analytical Services, Inc.
4
<PAGE> 7
AVERAGE ANNUAL TOTAL RETURNS
THE CURRENT YIELDS PROVIDED IN THE CHAIRMAN'S LETTER ARE CALCULATED IN
ACCORDANCE WITH THE SEC GUIDELINES. THE AVERAGE ANNUAL TOTAL RETURNS FOR THE
PORTFOLIO (PERIODS ENDED SEPTEMBER 30, 1994) ARE AS FOLLOWS:
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
-----------------------------
INCEPTION SINCE
DATE 1 YEAR INCEPTION
--------- ------ ---------
<S> <C> <C> <C>
VANGUARD INSTITUTIONAL MONEY MARKET PORTFOLIO 10/3/89 +3.73% +5.37%
</TABLE>
ALL OF THESE DATA REPRESENT PAST PERFORMANCE; FUTURE RETURNS WILL FLUCTUATE.
PLEASE NOTE THAT 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.
5
<PAGE> 8
REPORT FROM THE INVESTMENT ADVISER
In a departure from a five-year downward trend, short-term interest rates rose
dramatically during the fiscal year ended November 30, 1994. The increase in
rates came in response to actions taken by the Federal Reserve (the "Fed")--a
powerful force on short-term interest rates--to slow the growth of the economy
and counter the threat of inflation posed by rapid economic growth. By
influencing the cost of borrowing money for businesses and consumers, the Fed
attempts to encourage or restrain economic activity.
During the year, the Fed ran the gamut of its available monetary policy
options. The year opened with interest rates at very low levels, a holdover
from the Fed's efforts to stimulate the economy through one of the most anemic
recoveries this century. Not wanting to plant the seeds of inflation by
overstaying the period of easy monetary policy (a mistake committed often in
past cycles), the Fed began raising rates starting in February of this year,
with the stated goal of having a neutral impact on the economy.
Late in the year, economic statistics showed that the pace of growth in
the economy had not been slowed by previous Fed rate hikes, and that the spare
capacity in the economy--which acts as a cap on inflationary pressures--had
been consumed in the present growth phase. In response to this evidence, the
Fed increased rates further, to a level intended to restrict the growth rate of
the economy.
One of the most important aspects of the Fed's monetary policy stance as
it relates to money market investors is the relationship of short-term interest
rates to inflation. With the Fed in a restrictive policy mode, short-term
interest rates currently exceed the annual rate of inflation by about 3
percentage points.
In a low expense money market investment such as Vanguard Institutional
Money Market Portfolio, the present interest rate environment provides
investors with a positive real (after inflation) return. Investors in high tax
brackets may find themselves breaking even with inflation on an after tax
basis. Certainly there is no guarantee that money market investors can expect
substantial positive real returns into the future, but today's yield levels are
a definite improvement over recent years in both absolute and real terms. (For
more specific information on the return of Vanguard Institutional Money Market
Portfolio, please refer to the Chairman's letter.)
The rapid rise in short-term interest rates this year has brought its
share of bad news to some money market investment managers and shareholders.
These managers made investments that were inappropriate to the money market
fund goal of maintaining a stable principal value. In order to preserve the
value of their shareholders' investments, they "bailed out" the funds by
purchasing these soured investments at their funds' cost. However, for the
first time in industry history, a money market fund allowed its net asset value
per share to fall below $1.00 because its sponsor did not have the resources
for a bailout.
All of these investment managers made investments whose value could
reasonably have been foreseen to be unstable, and therefore were inappropriate
for money market funds. However painful, these losses should serve as a
reminder that, even in conservative investments like money market funds, there
are no guarantees against loss.
6
<PAGE> 9
We find these examples of overstepping the bounds of safety for some
nominal yield enhancement to be abhorrent. At Vanguard, our investment policies
are more stringent than the rules set down by the U.S. Securities and Exchange
Commission--both in terms of credit quality and price stability--because we do
not think the incremental yields to be gained by testing the regulatory limits
are worth the risks. Throughout the year, the net asset value of the Portfolio
has been stable based on market prices, and we have never invested in risky or
exotic derivative securities--nor will we. We rely on sound money management
practices and low costs as a formula to provide our investors with competitive
returns.
Sincerely,
Ian A. MacKinnon, Senior Vice President
Robert F. Auwaerter, Vice President
John Hollyer, Assistant Vice President
Vanguard Fixed Income Group
December 19, 1994
7
<PAGE> 10
FINANCIAL STATEMENTS
November 30, 1994
STATEMENT OF NET ASSETS
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT &
AGENCY OBLIGATIONS (6.7%)
- --------------------------------------------------------------------------------
Federal Home Loan
Mortgage Corp.
4.931%-5.47%, 12/2/94-3/2/95 $40,555 $ 40,403
Federal National Mortgage Assn.
5.751%, 3/6/95 5,000 4,925
- --------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT & AGENCY
OBLIGATIONS (Cost $45,328) 45,328
- --------------------------------------------------------------------------------
COMMERCIAL PAPER (69.5%)
- --------------------------------------------------------------------------------
BANK HOLDING COMPANIES (2.9%)
J.P. Morgan & Co., Inc.
5.242%-5.523%,
12/14/94-12/15/94 15,000 14,970
Norwest Corp.
5.075%, 12/7/94 5,000 4,996
---------
GROUP TOTAL 19,966
---------
- --------------------------------------------------------------------------------
FINANCE--AUTO (1.9%)
Ford Motor Credit Co.
5.535%, 12/23/94 5,000 4,983
Toyota Motor Credit Corp.
5.49%-5.997%, 12/6/94-2/6/95 7,655 7,598
---------
GROUP TOTAL 12,581
---------
- --------------------------------------------------------------------------------
FINANCE--SECURITIES DEALERS (1.9%)
Merrill Lynch & Co.
5.024%-5.932%, 12/5/94-2/2/95 13,000 12,981
---------
- --------------------------------------------------------------------------------
FINANCE--OTHER (20.5%)
A.I. Credit Corp.
5.85%-5.991%, 2/1/95-2/22/95 10,000 9,882
Asset Securitization
Cooperative Corp.
5.552%-5.583%, 2/6/95-2/7/95 12,000 11,877
Associates Corp.
5.172%, 12/7/94 4,784 4,780
Ciesco L.P.
5.142%-5.532%, 12/1/94-1/17/95 10,000 9,964
Commercial Credit Co.
5.374%, 12/15/94 13,000 12,973
Corporate Asset Funding Corp.
5.142%-5.50%, 12/1/94-12/13/94 12,500 12,489
John Deere Capital Corp.
5.374%, 12/16/94 5,000 4,989
General Electric Capital Corp.
5.088%-5.906%, 12/12/94-2/21/95 30,000 29,770
Harvard University
5.012%-5.527%, 12/6/94-12/19/94 17,000 16,968
Matterhorn Capital Corp.
5.522%, 12/14/94 10,000 9,980
Norwest Financial Inc.
5.527%, 12/20/94 10,000 9,971
Pitney Bowes Credit Corp.
4.879%, 12/6/94 5,000 4,997
---------
GROUP TOTAL 138,640
---------
- --------------------------------------------------------------------------------
INDUSTRIAL (10.2%)
Abbott Laboratories Co.
5.748%, 2/10/95 5,000 4,944
Chevron Oil Finance Co.
5.204%, 12/13/94 5,000 4,991
Dun & Bradstreet Corp.
5.38%-6.01%, 1/10/95-3/14/95 11,750 11,640
Kellogg Co.
5.171%, 12/7/94 6,500 6,494
Mobil Australia Finance Co.
5.542%, 12/13/94 5,192 5,182
Nestle Capital Corp.
5.043%, 12/8/94 10,000 9,990
Procter & Gamble Co.
5.844%, 2/16/95 10,000 9,877
SmithKline Beecham Corp.
5.50%, 12/13/94 6,000 5,989
Texaco Inc.
5.204%, 12/12/94 5,000 4,992
Vermont American Corp.
5.121%, 12/6/94 5,000 4,996
---------
GROUP TOTAL 69,095
---------
- --------------------------------------------------------------------------------
INSURANCE (5.2%)
AIG Funding Inc.
5.177%, 2/28/95 8,000 7,900
Metlife Funding Corp.
5.273%-5.505%, 12/14/94-12/21/94 10,984 10,955
SAFECO Credit Corp. Inc.
5.499%-5.734%, 1/18/95-2/16/95 13,500 13,378
St. Paul Cos. Inc.
5.204%, 12/12/94 3,000 2,995
---------
GROUP TOTAL 35,228
---------
- --------------------------------------------------------------------------------
UTILITIES (4.6%)
AT&T Corp.
5.549%-5.866%, 1/27/95-2/21/95 17,650 17,447
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- --------------------------------------------------------------------------------
<S> <C> <C>
Ameritech Corp.
5.594%, 1/30/95 $ 5,000 $ 4,954
Citizens Utilities Co.
4.95%-5.407%, 12/27/94-1/17/95 8,500 8,459
---------
GROUP TOTAL 30,860
---------
- --------------------------------------------------------------------------------
FOREIGN BANKS (8.3%)
Abbey National N.A.
5.465%-5.569%, 1/19/95-1/26/95 6,000 5,952
Barclays US Funding Corp.
5.033%, 12/5/94 5,000 4,997
Canadian Imperial Holdings Inc.
5.182%, 12/9/94 10,000 9,989
Commerzbank U.S. Finance Inc.
5.013%-5.731%, 12/1/94-2/7/95 12,300 12,243
Internationale Nederlanden
U.S. Funding Corp.
5.536%, 12/19/94 13,000 12,964
UBS Finance (DE) Inc.
5.75%, 12/1/94 10,000 10,000
---------
GROUP TOTAL 56,145
---------
- --------------------------------------------------------------------------------
CANADIAN GOVERNMENTS--
NATIONAL AND PROVINCIAL (7.2%)
Canada Bills
5.525%-5.867%, 12/16/94-2/24/95 15,000 14,909
Province of British Columbia
5.753%-5.833%, 2/14/95-4/5/95 13,161 12,943
Ontario Hydro
5.104%-5.475%, 12/8/94-1/17/95 21,000 20,900
---------
GROUP TOTAL 48,752
---------
- --------------------------------------------------------------------------------
OTHER FOREIGN GOVERNMENT (5.0%)
Caisse des Depots et Consignations
5.214%-5.892%, 12/13/94-2/2/95 15,000 14,929
KFW International Finance Inc.
5.571%, 1/31/95 4,000 3,963
New South Wales Treasury Corp.
5.172%, 12/8/94 5,000 4,995
Oesterreichische Kontrollbank
5.991%, 1/31/95 2,000 1,980
Wool International
5.405%-5.730%, 1/18/95-2/6/95 8,000 7,933
---------
GROUP TOTAL 33,800
---------
- --------------------------------------------------------------------------------
FOREIGN INDUSTRIAL (1.8%)
British Telecommunications PLC
5.388%-5.55%, 12/1/94-2/23/95 2,316 2,289
Siemens Corp.
5.70%-5.823%, 2/7/95-2/16/95 10,000 9,884
---------
GROUP TOTAL 12,173
---------
- --------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER (Cost $470,221) 470,221
- --------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT (12.8%)
- --------------------------------------------------------------------------------
U.S. BANKS (3.2%)
American Express Centurion Bank
5.20%-5.55%, 12/8/94-12/21/94 12,000 12,000
Wachovia Bank of Georgia
5.52%, 12/20/94 10,000 10,000
---------
GROUP TOTAL 22,000
---------
- --------------------------------------------------------------------------------
YANKEE CERTIFICATES OF DEPOSIT--
CANADIAN BRANCHES (2.2%)
ABN-AMRO
5.876%, 2/17/95 5,000 4,937
Barclays Bank
5.324%, 12/16/94 10,000 9,978
---------
GROUP TOTAL 14,915
---------
- --------------------------------------------------------------------------------
YANKEE CERTIFICATES OF DEPOSIT--
U.S. BRANCHES (7.4%)
ABN-AMRO
5.54%, 2/1/95 5,000 5,000
Bayerische Hypo Bank
5.52%, 1/24/95 3,000 3,000
Canadian Imperial Bank of Commerce
4.94%, 12/12/94 2,000 2,000
Credit Suisse
5.21%, 3/3/95 3,000 2,999
Rabobank Nederlanden
5.18%-5.19%, 1/27/95-3/7/95 8,000 7,995
Societe Generale
5.60%, 2/2/95 5,000 5,000
Swiss Bank
5.49%-5.64%, 1/18/95-2/28/95 10,000 10,000
Westdeutsche Landesbank
5.06%-5.15%, 1/5/95-1/17/95 14,000 14,000
---------
GROUP TOTAL 49,994
---------
- --------------------------------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT
(Cost $86,909) 86,909
- --------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 12
STATEMENTS OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- --------------------------------------------------------------------------------
<S> <C> <C>
EURODOLLAR CERTIFICATES OF DEPOSIT (5.0%)
- --------------------------------------------------------------------------------
Abbey National
5.22%, 2/22/95 $ 4,000 $ 3,999
Lloyds Bank
4.73%-5.12%, 12/12/94-2/2/95 10,000 10,000
National Westminster Bank
5.09%-5.80%, 1/13/95-3/16/95 20,000 19,997
- --------------------------------------------------------------------------------
TOTAL EURODOLLAR CERTIFICATES OF
DEPOSIT (COST $33,996) 33,996
- --------------------------------------------------------------------------------
BANK NOTES (4.4%)
- --------------------------------------------------------------------------------
Bank One (Texas)
5.799%, 12/2/94(1) 5,000 5,000
Morgan Bank (Delaware)
5.63%, 1/4/95(1) 5,000 4,998
National Bank of Detroit
5.07%, 1/19/95 10,000 9,999
Wachovia Bank of North Carolina
5.30%, 12/15/94 10,000 10,000
- --------------------------------------------------------------------------------
TOTAL BANK NOTES
(Cost $29,997) 29,997
- --------------------------------------------------------------------------------
BANKERS ACCEPTANCES (1.3%)
- --------------------------------------------------------------------------------
Republic Bank of New York
5.466%, 2/13/95 5,000 4,945
Wachovia Bank of North Carolina
5.531%, 12/16/94 3,500 3,492
- --------------------------------------------------------------------------------
TOTAL BANKERS ACCEPTANCES
(Cost $8,437) 8,437
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS (99.7%)
(Cost $674,888) 674,888
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (.3%)
- --------------------------------------------------------------------------------
Other Assets--Note B $ 2,901
Liabilities (867)
---------
2,034
- --------------------------------------------------------------------------------
NET ASSETS (100%)
- --------------------------------------------------------------------------------
Applicable to 676,928,149 outstanding
$.001 par value shares
(authorized 20,000,000,000 shares) $ 676,922
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $1.00
================================================================================
</TABLE>
+ See Note A to Financial Statements.
(1) Floating Rate Note.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AT NOVEMBER 30, 1994, NET ASSETS CONSISTED OF:
- --------------------------------------------------------------------------------
Amount Per
(000) Share
-------- -----
<S> <C> <C>
Paid in Capital $676,928 $1.00
Undistributed Net Investment Income -- --
Accumulated Net Realized Losses (6) --
Unrealized Appreciation of Investments -- --
- --------------------------------------------------------------------------------
NET ASSETS $676,922 $1.00
- --------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 13
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended
November 30, 1994
(000)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
INCOME
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . $21,060
- ----------------------------------------------------------------------------------------------------
Total Income . . . . . . . . . . . . . . . . . . . . . . 21,060
- ----------------------------------------------------------------------------------------------------
EXPENSES
The Vanguard Group--Note B
Investment Advisory Services . . . . . . . . . . . . . . . . . $ 48
Management and Administrative . . . . . . . . . . . . . . . . 484
Marketing and Distribution . . . . . . . . . . . . . . . . . . 117 649
Custodian's Fees . . . . . . . . . . . . . . . . . . . . . . . . ----- 30
Taxes (other than income taxes) . . . . . . . . . . . . . . . . 36
Shareholders' Reports . . . . . . . . . . . . . . . . . . . . . 10
Auditing Fees . . . . . . . . . . . . . . . . . . . . . . . . . 7
Annual Meeting and Proxy Costs . . . . . . . . . . . . . . . . . 1
Directors' Fees and Expenses . . . . . . . . . . . . . . . . . . 2
- ----------------------------------------------------------------------------------------------------
Total Expenses . . . . . . . . . . . . . . . . . . . . . 735
- ----------------------------------------------------------------------------------------------------
Net Investment Income . . . . . . . . . . . . . . . . . 20,325
- ----------------------------------------------------------------------------------------------------
REALIZED NET LOSS ON INVESTMENT
SECURITIES SOLD . . . . . . . . . . . . . . . . . . . . . . . . . (5)
- ----------------------------------------------------------------------------------------------------
UNREALIZED APPRECIATION
(DEPRECIATION) OF INVESTMENT SECURITIES . . . . . . . . . . . . . --
- ----------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations . . $20,320
====================================================================================================
</TABLE>
11
<PAGE> 14
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED Year Ended
NOVEMBER 30, 1994 November 30, 1993
(000) (000)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS
Net Investment Income . . . . . . . . . . . . . . . . . . . . . . $ 20,325 $ 9,060
Realized Net Loss . . . . . . . . . . . . . . . . . . . . . . . . (5) --
Unrealized Appreciation (Depreciation) . . . . . . . . . . . . . . -- --
- ----------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations . . . . 20,320 9,060
- ----------------------------------------------------------------------------------------------------
DISTRIBUTIONS (1)
Net Investment Income . . . . . . . . . . . . . . . . . . . . . . (20,325) (9,060)
- ----------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (at $1.00 per share)
Issued --Regular . . . . . . . . . . . . . . . . . . . . . . . 445,486 177,159
--In Lieu of Cash Distributions . . . . . . . . . . . . 18,410 8,876
--Exchange . . . . . . . . . . . . . . . . . . . . . . . 86,890 19,911
Redeemed --Regular . . . . . . . . . . . . . . . . . . . . . . . (152,819) (157,034)
--Exchange . . . . . . . . . . . . . . . . . . . . . . . (26,591) (12,327)
- ----------------------------------------------------------------------------------------------------
Net Increase from Capital Share Transactions . . . . . . . . 371,376 36,585
- ----------------------------------------------------------------------------------------------------
Total Increase . . . . . . . . . . . . . . . . . . . . . . . 371,371 36,585
- ----------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Year . . . . . . . . . . . . . . . . . . . . . . . . 305,551 268,966
- ----------------------------------------------------------------------------------------------------
End of Year . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 676,922 $ 305,551
====================================================================================================
(1) Income Dividends Per Share . . . . . . . . . . . . . . . . . . $.040 $.031
- ----------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 15
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Year Ended November 30,
----------------------------------------------
For a Share Outstanding Throughout Each Year 1994 1993 1992 1991 1990
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR . . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------
INVESTMENT OPERATIONS
Net Investment Income . . . . . . . . . . . . .040 .031 .040 .063 .082
Net Realized and Unrealized Gain
on Investments . . . . . . . . . . . . . . -- -- -- -- --
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS . . . .040 .031 .040 .063 .082
- ----------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income . . . . . (.040) (.031) (.040) (.063) (.082)
Distributions from Realized Capital Gains . . -- -- -- -- --
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS . . . . . . . . . . (.040) (.031) (.040) (.063) (.082)
- ----------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR . . . . . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00
====================================================================================================
TOTAL RETURN . . . . . . . . . . . . . . . . . . +4.06% +3.19% +4.02% +6.52% +8.49%
- ----------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Year (Millions) . . . . . . . $677 $306 $269 $218 $91
Ratio of Expenses to Average Net Assets . . . . . .15% .15% .15% .15% .15%
Ratio of Net Investment Income to
Average Net Assets . . . . . . . . . . . . . . 4.14% 3.14% 3.93% 6.14% 8.24%
- ----------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS
Vanguard Institutional Money Market Portfolio is a Portfolio of Vanguard
Institutional Portfolios, which is registered under the Investment Company Act
of 1940 as a diversified open-end investment company. The Fund invests in
short-term debt instruments of companies primarily operating in specific
industries; the issuers' abilities to meet these obligations may be affected by
economic developments in such industries.
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: 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.
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 November 30, 1994, the Fund had contributed capital of $94,000 to
Vanguard (included in Other Assets), representing .5% of Vanguard's
capitalization. The directors and officers of the Fund are also directors and
officers of Vanguard.
14
<PAGE> 17
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
Vanguard Institutional Money Market Portfolio
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Vanguard Institutional Money Market Portfolio (a portfolio of Vanguard
Institutional Portfolios, hereafter referred to as the "Fund") at November 30,
1994, the results of its operations, the changes in its net assets and the
financial highlights for each of the respective periods presented, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation of
securities at November 30, 1994, by correspondence with the custodian and
brokers and the application of alternative auditing procedures where
confirmations from brokers were not received, provide a reasonable basis for
the opinion expressed above.
PRICE WATERHOUSE LLP
Thirty South Seventeenth Street
Philadelphia, Pennsylvania 19103
December 30, 1994
15
<PAGE> 18
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 and Chief Executive Officer 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
JEREMY G. DUFFIELD VINCENT S. MCCORMACK
Senior Vice President Senior Vice President
Planning & Development Operations
JAMES H. GATELY RALPH K. PACKARD
Senior Vice President Senior Vice President
Institutional Chief Financial Officer
IAN A. MACKINNON
Senior Vice President
Fixed Income Group
16
<PAGE> 19
THE VANGUARD VOYAGE . . . STAYING THE COURSE
(continued from inside front cover)
* We set specific standards for each Fund's investment policies and
principles.
* We adhere to the highest standards of investment quality, consistent with
each Fund's objectives.
* We offer candor in our Fund descriptions (including full disclosure of
risk) to prospective investors, and in our description to shareholders of
each Fund's success (or, sometimes, lack of the same).
These principles make at least as much sense today as they did in 1929, perhaps
even more. For we live in an era when many fund organizations have become
asset-gathering machines, capitalizing on past performance that is unrepeatable
and investment fads that today, as yesterday, will come and go. The new
marketing policy is too often "if investors want it, we'll sell it to them."
But our principle remains "if it makes sound investment sense, we'll offer it,
even if it takes years to attract substantial assets."
FOUNDING CORPORATE VALUES
With the founding of The Vanguard Group in 1974, a new concept of values was
brought to bear on mutual fund management. Unlike other fund organizations,
Vanguard alone is structured to serve only its Funds' shareholders. Vanguard's
corporate structure places not the fund management company, but the fund
shareholders, "at the top" of the organizational chart. Vanguard Fund
shareholders are literally the owners of the firm and are entitled to all of
the benefits that, at other fund firms, accrue to the owners of the management
company.
Because of this unique structure, Vanguard has become best known for its
low costs, which we believe are just as essential a consideration in investing
in mutual funds as risk potential and total return. We call this relationship
between risk, return, and cost the "eternal triangle" of mutual fund investing.
We take special pride in our position as (by far) the lowest-cost provider
of financial services in the world. Under our "no- load" offering structure,
shareholders begin their Vanguard investment program with $1,000 of assets
(not, say, $950) for each $1,000 investment. Then, under our "at-cost"
operating structure, each $1,000 is managed for only about $3 per year; our
competitors may charge three, four, or even five times that amount.
In all, Vanguard has distinguished itself by providing Funds with sound
and durable goals to investors with long-term time horizons, and doing so at
the fairest financial terms available. We believe that the unique Vanguard
structure "promotes a healthy and viable mutual fund complex within which each
Fund can better prosper; enables the Funds to realize substantial savings from
advisory fee reductions; promotes savings from economies of scale; and provides
the Funds with direct and conflict-free control over distribution functions."
We are not alone in this belief. Indeed, the quotation is taken verbatim from
the unanimous decision of the U.S. Securities and Exchange Commission when, in
1981, it approved our application for the structure under which we operate
today.
A CLOSING THOUGHT
We are proud of what Wellington Fund, the other Vanguard Funds, and The
Vanguard Group have come to represent, and we are grateful for the success and
growth with which we have been blessed. We are an industry leader, and, as a
competitor observed a few years ago, we are "the standard by which all fund
organizations are judged."
In battle terms, "the vanguard" is the first wave of troops or ships, and
Vanguard surely is in the first wave of the battle for investment survival. As
we look behind us, however, the "second wave" is not in sight. No fund
organization has followed our lead, leaving ours a lonely course. No matter. We
have an organization that places the interests of our Fund shareholders first.
We have Funds that shall endure the vicissitudes of the future. Come what may,
we intend to "stay the course," and we shall do our very best to continue to
deserve your confidence and loyalty. We hope that you will stay the course with
us.
<PAGE> 20
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 Income Securities 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 STAR Fund
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]
Vanguard Financial Center Valley Forge, Pennsylvania 19482
Participant Services: 1-(800) 523-1188
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.
Q660-11/94
<PAGE> 21
EDGAR APPENDIX
This appendix describes the components of the printed version of this
report that do not translate into a format acceptable to the EDGAR system.
The front cover of the printed version of this report features the
Vanguard ship in the crashing sea.
A small picture of a rear view of the Vanguard ship crashing through
the sea appears at the top of the inside covers of the report.
A running head featuring a sextant appears on pages one through four.
A photograph of John C. Bogle appears at the lower-right of page one.
Two line charts appear at the upper-left of page two--the top chart
depicts the month-end yields of a 30-Year U.S. Treasury Bond and a 90-Day
U.S. Treasury Bill for the fiscal years 1990 through 1994, and the bottom
chart indicates the yield spread for the same periods.
A line chart showing U.S. Treasury Bill Yields for the calendar years
1975 through November 30, 1994 appears on page 3.
A cumulative performance line chart for the period September 30, 1989,
to November 30, 1994 appears on page 4.
A running head featuring a coiled rope appears on page five.
A running head featuring a map and telescope appears on pages six and
seven.
A running head featuring a log book and pen appears on pages eight
through fifteen.
A running head featuring a compass appears on page twenty.
At the bottom of the back cover there appears a triangle with the
sides labeled "risk," "cost," and "return."
A seagull in flight is featured at the top of the outside back cover
of the report.
