<PAGE> 1
CHAIRMAN'S LETTER
TO OUR SHAREHOLDERS:
During the six months ended June 30, the first half of Vanguard Institutional
Index Fund's 1995 fiscal year, we participated in the strongest bull market
for common stocks in recent memory. The rally was sharp, sustained, and bereft
of even mild interim setbacks.
What is more, the market leadership was provided by the large blue-chip
stocks. The Standard & Poor's 500 Composite Stock Price Index, the Fund's
benchmark, is of course heavily weighted towards the nation's largest stocks
and proved to be a formidable competitor for actively managed accounts. The
Fund's total return of +20.19% matched the Index return and led the +16.63%
return of the average equity mutual fund by a wide margin.
<TABLE>
<CAPTION>
- --------------------------------------------------------
Total Return
----------------
Six Months Ended
June 30, 1995
- --------------------------------------------------------
<S> <C>
VANGUARD INSTITUTIONAL INDEX FUND +20.19%
- --------------------------------------------------------
STANDARD & POOR'S 500 STOCK INDEX +20.19%
- --------------------------------------------------------
</TABLE>
Note: "Standard & Poor's," "S&P 500," and "500" are registered trademarks of
Standard & Poor's Corporation.
The Fund's return reflects the increase in net asset value from $43.22 per
share on December 31, 1994, to $51.48 per share on June 30, 1995, adjusted to
take into account two dividend distributions of $.22 per share paid in late
March and June.
THE PERIOD IN REVIEW
After a moderately disappointing 1994, the stock market sprung to life as 1995
began. During the past six months, the market has moved upward, week after
week, in virtually straight-line fashion, delighting the bulls and astonishing
the bears. On balance, the Dow Jones Industrial Average rose from 3834 as the
year began to 4556 on June 30.
As usual, there were many opinions as to the source of the market's
surprising strength. In my view, it resulted from a combination of: (1) the
sharp decline in interest rates (the yield on the long-term U.S. Treasury bond
fell from 7.8% to 6.6% during the period, a dip of 120 basis points); (2) the
diminishing threat of additional increases in short-term interest rates by the
Federal Reserve Board; (3) a slight softening in U.S. economic growth,
resulting in continued optimism about the outlook for inflation; (4)
record-breaking corporate profits; and (5) a hint of speculative fever in the
marketplace. Whatever the cause, the Standard & Poor's 500 Index provided a
total return of +20.2% for the six months.
Particularly dramatic was the dominance of the Standard & Poor's 500
Index, and thus our Fund, over the results achieved by the average general
equity fund. The Index outpaced fully 83% of all professionally managed equity
mutual funds during the past six months--the best ranking that I can recall.
This success follows an equally good 1994, when the Index outpaced 78% of the
equity funds. That said, I would caution you that these two excellent periods
follow relatively low rankings from 1991 to 1993, during which the Index
outpaced "only" about 44% of all general equity funds.
Much of the return differences between the Index and the average mutual
fund can be traced to market capitalization. Common stock mutual funds, on
average, are more heavily weighted towards medium and smaller capitalization
companies than the Standard & Poor's 500 Index, which is dominated by the
largest U.S. stocks. Thus, when smaller stocks do well, as in 1991 to 1993,
the average common stock fund can be expected to make a stronger showing
relative to the Index. On the other hand, when larger stocks lead, as in 1994,
and thus far in 1995, the Index may be expected to smartly outperform the
average stock fund.
In all environments, of course, the index fund strategy has a head start
over the average equity fund due to the vastly lower fund expenses (0.07% for
our Fund versus 1.27% for the average equity fund). In addition, the index
fund's buy-and-hold investment approach results in lower portfolio transaction
costs.
The chart on page 2 shows how remarkable the Index's results have been so
far in 1995. Again, it was a period when large cap stocks overshadowed those
of smaller companies. Indeed, the return of the Russell
1
<PAGE> 2
2000 Index, with a median market capitalization of $400 million, lagged the
return of the Standard & Poor's 500 Index, with a median market capitalization
of $15.7 billion, by a margin of 5.8% (+14.4% versus +20.2%).
Over time, the benefits of broad diversification and, most importantly,
low costs have paid off "in spades" for index fund investors. The record of
the past 15 years shows that the Standard & Poor's 500 Index has outpaced 73%
of common stock mutual funds.
Our prospects relative to other equity funds are only part of the game;
the more important part is the future absolute returns provided by stocks. I
emphasize that the 1995 bull market has been so strong and so swift that
caution should be the order of the day. What this means is that long-term
investors should continue to balance stock holdings with holdings of bonds and
reserves, and not attempt to outguess the market by making major, precipitate
reallocations among these three basic classes of financial assets. In our 1994
Annual Report six months ago, we urged you to "stay the course." It proved
fine advice then; we reiterate it now.
Sincerely,
/s/ JOHN C. BOGLE
- -----------------
John C. Bogle
Chairman of the Board
July 17, 1995
Note: Mutual fund data from Lipper Analytical Services, Inc.
[FIGURE 1]
Bar chart showing percent of General Equity Funds outperformed by S & P 500
Index for the period 1984-1995.
2
<PAGE> 3
TOTAL INVESTMENT RETURN TABLE
The following table illustrates the results of a single-share investment in
VANGUARD INSTITUTIONAL INDEX FUND since inception through June 30, 1995.
During the period illustrated, stock prices fluctuated widely; these results
should not be considered a representation of the dividend income or capital
gain or loss that may be realized from an investment made in the Fund today.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
PERIOD PER SHARE DATA TOTAL INVESTMENT RETURN*
- -------------------------------------------------------------------------------------------------------------------------
Institutional Index Fund
Value with Income -------------------------- S&P 500
Year Ended Net Asset Capital Gains Income Dividends & Capital Capital Income Total Index Total
December 31 Value Distributions Dividends Gains Reinvested Return Return Return Return
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INITIAL (7/90) $34.10 -- -- $34.10 -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
1990 31.62 -- $ .52 32.14 - 7.3% +1.6% - 5.7% - 5.8%
- -------------------------------------------------------------------------------------------------------------------------
1991 39.91 $.06 1.16 41.89 +26.4 +3.9 + 30.3 + 30.4
- -------------------------------------------------------------------------------------------------------------------------
1992 41.45 .25 1.17 45.05 + 4.5 +3.0 + 7.5 + 7.6
- -------------------------------------------------------------------------------------------------------------------------
1993 44.20 .18 1.19 49.56 + 7.1 +2.9 + 10.0 + 10.1
- -------------------------------------------------------------------------------------------------------------------------
1994 43.22 .34 1.21 50.21 - 1.5 +2.8 + 1.3 + 1.3
- -------------------------------------------------------------------------------------------------------------------------
1995 (6/30) 51.48 -- .44 60.35 +19.1 +1.1 + 20.2 + 20.2
- -------------------------------------------------------------------------------------------------------------------------
LIFETIME +77.0% +77.1%
- -------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN +12.3% +12.3%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Includes reinvestment of income dividends and any capital gains distributions
both for the Fund and the Index.
Note: No adjustment has been made for income taxes payable by shareholders on
reinvested income dividends and capital gains distributions.
AVERAGE ANNUAL TOTAL RETURNS--THE AVERAGE ANNUAL TOTAL RETURNS FOR THE FUND
(PERIODS ENDED JUNE 30, 1995) ARE AS FOLLOWS:
<TABLE>
<CAPTION>
SINCE INCEPTION
---------------------------------
INCEPTION TOTAL CAPITAL INCOME
DATE 1 YEAR RETURN RETURN RETURN
--------- ------ ------ ------- ------
<S> <C> <C> <C> <C> <C>
VANGUARD INSTITUTIONAL INDEX FUND 7/31/90 +26.06% +12.32% +9.17% +3.15%
</TABLE>
ALL OF THESE DATA 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.
3
<PAGE> 4
FINANCIAL STATEMENTS
(unaudited)
June 30, 1995
STATEMENT OF NET ASSETS
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- -----------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS
- -----------------------------------------------------------------
General Electric Co. 1,927,762 $ 108,678
Exxon Corp. 1,413,757 99,847
AT&T Corp. 1,800,793 95,667
The Coca-Cola Co. 1,442,502 91,960
Royal Dutch Petroleum Co. ADR 610,088 74,354
Philip Morris Cos., Inc. 961,486 71,511
Wal-Mart Stores, Inc. 2,614,894 69,948
Merck & Co., Inc. 1,407,512 68,968
International Business
Machines Corp. 660,896 63,446
*Microsoft Corp. 661,484 59,782
Intel Corp. 942,582 59,618
Procter & Gamble Co. 782,311 56,229
Johnson & Johnson 734,476 49,669
Motorola, Inc. 669,849 44,964
Hewlett-Packard Co. 580,620 43,256
E.I. du Pont de Nemours & Co. 628,899 43,237
Mobil Corp. 450,371 43,236
American International Group, Inc. 359,599 40,994
PepsiCo, Inc. 896,356 40,896
General Motors Corp. 850,680 39,876
Bristol-Myers Squibb Co. 577,070 39,313
GTE Corp. 1,103,975 37,673
Amoco Corp. 565,036 37,646
Abbott Laboratories, Inc. 908,345 36,788
BellSouth Corp. 564,841 35,867
Ford Motor Co. 1,168,719 34,769
Chevron Corp. 741,975 34,595
Pfizer, Inc. 359,365 33,196
The Walt Disney Co. 592,748 32,972
SBC Communications, Inc. 691,685 32,942
McDonald's Corp. 789,486 30,889
Federal National Mortgage Assn. 310,524 29,306
Bell Atlantic Corp. 496,618 27,811
Ameritech Corp. 629,636 27,704
Minnesota Mining &
Manufacturing Co. 477,997 27,365
American Home Products Corp. 350,648 27,131
Sears, Roebuck & Co. 442,072 26,469
Citicorp 452,309 26,177
Eli Lilly & Co. 332,833 26,127
The Boeing Co. 388,760 24,346
Unilever NV ADR 182,138 23,701
Eastman Kodak Co. 387,339 23,482
Dow Chemical Co. 313,715 22,548
Gillette Co. 504,368 22,507
BankAmerica Corp. 425,971 22,417
U.S. West Inc. 535,614 22,295
Columbia/HCA Healthcare Corp. 504,091 21,802
Home Depot, Inc. 515,985 20,962
Chrysler Corp. 420,066 20,111
Atlantic Richfield Co. 182,967 20,081
American Express Co. 564,419 19,825
NYNEX Corp. 484,508 19,501
Texaco, Inc. 295,573 19,397
Emerson Electric Co. 265,623 18,992
Capital Cities/ABC, Inc. 175,156 18,917
*Oracle Corp. 490,819 18,897
Schering-Plough Corp. 423,490 18,686
*Viacom International Class B 391,505 18,156
Kellogg Co. 250,203 17,858
Time Warner, Inc. 432,320 17,779
*Tele-Communications Inc. Class A 742,993 17,367
Schlumberger Ltd. 275,730 17,130
Southern Co. 757,354 16,946
MCI Communications Corp. 773,543 16,921
Anheuser-Busch Co., Inc. 291,801 16,596
NationsBank, Inc. 308,864 16,563
*AirTouch Communications Inc. 562,513 16,032
Travelers Group Inc. 363,843 15,918
WMX Technologies Inc. 550,652 15,625
Sara Lee Corp. 545,867 15,557
*Cisco Systems, Inc. 305,753 15,441
J.P. Morgan & Co., Inc. 213,463 14,969
The Seagram Co. Ltd. 424,373 14,694
Caterpillar, Inc. 227,484 14,616
Banc One Corp. 449,026 14,481
Allied-Signal, Inc. 323,579 14,399
Lockheed Martin Corp. 227,335 14,351
Xerox Corp. 121,815 14,283
Texas Instruments, Inc. 106,063 14,199
Pacific Gas & Electric Co. 489,572 14,198
Federal Home Loan Mortgage Corp. 205,765 14,146
ITT Corp. 120,147 14,117
Campbell Soup Co. 283,513 13,892
*COMPAQ Computer Corp. 297,762 13,511
Sprint Corp. 396,604 13,336
Warner-Lambert Co. 153,416 13,251
Chemical Banking Corp. 274,161 12,954
Union Pacific Corp. 233,635 12,938
Pacific Telesis Group 482,639 12,911
Micron Technology Inc. 233,630 12,820
J.C. Penney Co., Inc. 264,490 12,696
General Re Corp. 93,236 12,482
International Paper Co. 144,152 12,361
Computer Associates
International, Inc. 182,238 12,347
H.J. Heinz Co. 277,160 12,299
*Amgen, Inc. 150,666 12,091
Colgate-Palmolive Co. 164,998 12,065
May Department Stores Co. 282,734 11,769
Monsanto Co. 129,969 11,713
Baxter International, Inc. 317,825 11,561
</TABLE>
4
<PAGE> 5
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- -----------------------------------------------------------------
<S> <C> <C>
Rockwell International Corp. 246,519 $ 11,278
Weyerhaeuser Co. 234,156 11,035
United Technologies Corp. 140,414 10,970
Archer-Daniels-Midland Co. 587,385 10,940
Kimberly-Clark Corp. 182,404 10,921
Raytheon Co. 140,109 10,876
Norwest Corp. 368,728 10,601
Northern Telecom Ltd. 288,432 10,528
Merrill Lynch & Co., Inc. 200,259 10,514
Automatic Data Processing, Inc. 164,068 10,316
CPC International, Inc. 166,458 10,279
Aluminum Co. of America 202,726 10,162
Barrick Gold Corp. 402,105 10,153
The Dun & Bradstreet Corp. 192,951 10,130
Medtronic, Inc. 131,310 10,127
Norfolk Southern Corp. 150,178 10,118
PPG Industries, Inc. 234,712 10,093
Wells Fargo & Co. 55,980 10,090
AMP, Inc. 238,652 10,083
Enron Corp. 286,406 10,060
McDonnell Douglas Corp. 129,895 9,969
Phillips Petroleum Co. 298,152 9,951
ConAgra, Inc. 279,328 9,742
Duke Power Co. 233,126 9,675
The Chase Manhattan Corp. 202,075 9,498
Tenneco, Inc. 205,823 9,468
General Mills, Inc. 179,914 9,243
*Toys R Us, Inc. 315,532 9,229
Dean Witter Discover & Co. 192,178 9,032
CSX Corp. 119,673 8,990
Georgia-Pacific Corp. 103,175 8,950
The Limited, Inc. 406,513 8,943
First Union Corp. 195,782 8,859
Texas Utilities Co. 257,004 8,835
The Bank of New York Co., Inc. 217,300 8,773
Browning-Ferris Industries, Inc. 242,287 8,753
SCECorp 508,931 8,715
Gannett Co., Inc. 159,468 8,651
Albertson's, Inc. 289,058 8,599
American Brands, Inc. 214,933 8,544
Corning, Inc. 260,728 8,539
Scott Paper Co. 172,382 8,533
KeyCorp 270,357 8,482
Deere & Co. 98,479 8,432
*Novell, Inc. 416,939 8,287
*Applied Materials, Inc. 95,800 8,263
Occidental Petroleum Corp. 361,150 8,261
United Healthcare Corp. 197,110 8,155
FPL Group, Inc. 211,113 8,154
Loews Corp. 67,100 8,119
Aetna Life & Casualty Co. 128,323 8,068
The Chubb Corp. 99,000 7,932
Consolidated Edison Co.
of New York, Inc. 267,323 7,886
American General Corp. 233,119 7,868
First Data Corp. 136,343 7,755
Alcan Aluminium Ltd. 255,726 7,736
Public Service Enterprise Group Inc. 278,477 7,728
Unocal Corp. 277,458 7,665
SunTrust Banks, Inc. 130,920 7,626
Kmart Corp. 520,009 7,605
Upjohn Co. 196,611 7,447
American Electric Power Co., Inc. 211,166 7,417
*Silicon Graphics, Inc. 180,478 7,197
Dominion Resources, Inc. 196,627 7,177
Illinois Tool Works, Inc. 129,933 7,146
The Goodyear Tire & Rubber Co. 172,539 7,117
Placer Dome Group, Inc. 271,413 7,091
Air Products & Chemicals, Inc. 126,941 7,077
Walgreen Co. 140,117 7,023
PECO Energy Corp. 252,394 6,972
Wachovia Corp. 194,883 6,967
Mellon Bank Corp. 166,703 6,939
First Interstate Bancorp. 86,436 6,936
Nike, Inc. Class B 82,213 6,906
PNC Bank Corp. 260,089 6,860
*Digital Equipment Corp. 167,147 6,811
Marsh & McLennan Cos., Inc. 82,972 6,731
USX-Marathon Group 338,263 6,681
UST, Inc. 222,677 6,625
Pitney Bowes, Inc. 171,853 6,595
W.R. Grace & Co. 107,237 6,582
Mattel, Inc. 251,664 6,543
Unicom Corp. 244,202 6,502
Hercules, Inc. 132,725 6,470
Burlington Northern, Inc. 101,926 6,460
*AMR Corp. 86,535 6,458
Apple Computer, Inc. 137,861 6,393
CIGNA Corp. 82,232 6,383
International Flavors &
Fragrances, Inc. 126,985 6,318
Houston Industries, Inc. 149,454 6,296
Entergy Corp. 259,229 6,254
Honeywell, Inc. 144,785 6,244
R.R. Donnelley & Sons Co. 173,193 6,235
First Chicago Corp. 102,455 6,134
Wm. Wrigley, Jr. Co. 132,249 6,133
Sysco Corp. 207,516 6,122
PacifiCorp 323,490 6,065
*DSC Communications Corp. 130,053 6,047
Fleet Financial Group, Inc. 161,231 5,986
Westinghouse Electric Corp. 407,458 5,959
TRW, Inc. 74,037 5,914
Dayton-Hudson Corp. 81,633 5,857
</TABLE>
5
<PAGE> 6
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- -----------------------------------------------------------------
<S> <C> <C>
NBD Bancorp, Inc. 182,230 $ 5,831
Ralston-Purina Group 114,332 5,831
CoreStates Financial Corp. 164,390 5,733
Central & South West Corp. 217,674 5,714
The Gap, Inc. 163,820 5,713
MBNA Corp. 169,048 5,705
Barnett Banks, Inc. 110,374 5,657
Textron, Inc. 96,882 5,631
Eastman Chemical 94,633 5,631
U.S. Healthcare, Inc. 182,430 5,587
Champion International Corp. 106,505 5,552
Bankers Trust New York Corp. 89,182 5,529
*CUC International, Inc. 131,400 5,519
Hershey Foods Corp. 98,731 5,455
ALLTEL Corp. 214,901 5,453
*Boston Scientific Corp. 170,813 5,445
Household International, Inc. 109,963 5,443
Lowes Cos., Inc. 182,030 5,438
First Fidelity Bancorp. 91,981 5,427
Carolina Power & Light Co. 177,981 5,384
Nucor Corp. 99,465 5,321
Burlington Resources, Inc. 143,991 5,310
Genuine Parts Co. 139,654 5,289
*Sun Microsystems, Inc. 108,816 5,278
Cooper Industries, Inc. 133,186 5,261
Avon Products, Inc. 77,990 5,225
Union Carbide Corp. 156,246 5,215
Amerada Hess Corp. 105,841 5,173
Eaton Corp. 88,522 5,145
*Crown Cork & Seal Co., Inc. 102,605 5,143
Rubbermaid, Inc. 183,055 5,080
Boatmen's Bancshares, Inc. 143,278 5,033
Quaker Oats Co. 152,243 5,005
Marriott International 139,324 4,998
Alco Standard Corp. 62,560 4,997
Loral Corp. 96,357 4,986
Winn Dixie Stores, Inc. 86,279 4,983
Conrail, Inc. 89,166 4,960
Morton International, Inc. 168,441 4,927
National City Corp. 166,924 4,903
H & R Block, Inc. 119,223 4,903
Fluor Corp. 94,155 4,896
Detroit Edison Co. 164,904 4,865
Salomon, Inc. 120,873 4,850
Masco Corp. 178,698 4,825
American Stores Co. 168,928 4,751
Bank of Boston Corp. 126,412 4,740
St. Paul Cos., Inc. 96,052 4,731
Lincoln National Corp. 107,685 4,711
Shawmut National Corp. 147,255 4,694
Dover Corp. 64,511 4,693
Tyco International Ltd. 86,898 4,692
CBS, Inc. 69,809 4,677
Phelps Dodge Corp. 79,098 4,667
Halliburton Co. 129,967 4,646
Engelhard Corp. 108,236 4,641
CINergy Corp. 176,662 4,637
Whirlpool Corp. 83,966 4,618
Union Camp Corp. 79,759 4,616
Dresser Industries, Inc. 207,384 4,614
Ingersoll-Rand Co. 120,224 4,599
Transamerica Corp. 78,899 4,596
Tribune Co. 74,879 4,596
*Promus Co., Inc. 116,627 4,548
Great Lakes Chemical Corp. 75,320 4,538
Becton, Dickinson & Co. 76,295 4,444
Santa Fe Pacific Corp. 173,171 4,416
Newell Co. 179,780 4,405
*Cabletron Systems, Inc. 81,500 4,340
Tandy Corp. 83,595 4,336
Union Electric Corp. 116,237 4,330
The McGraw-Hill Cos. 56,760 4,307
*Advanced Micro Devices, Inc. 117,352 4,269
Delta Air Lines, Inc. 57,805 4,263
Rohm & Haas Co. 77,039 4,228
Baltimore Gas & Electric Co. 167,896 4,197
Panhandle Eastern Corp. 169,884 4,141
Newmont Mining Corp. 98,041 4,105
Safeco Corp. 71,672 4,094
Melville Corp. 119,368 4,088
Dow Jones & Co., Inc. 110,076 4,059
Williams Cos., Inc. 115,330 4,022
Pioneer Hi Bred International 96,327 4,022
Consolidated Natural Gas Co. 105,945 3,999
Providian Corp. 109,797 3,980
Clorox Co. 60,429 3,943
Ohio Edison Co. 173,618 3,928
Praxair, Inc. 157,017 3,925
*National Semiconductor Corp. 141,237 3,919
General Public Utilities Corp. 131,200 3,903
Southwest Airlines Co. 163,415 3,902
VF Corp. 72,261 3,884
*Federal Express Corp. 63,796 3,876
UNUM Corp. 82,657 3,875
Nordstrom, Inc. 93,569 3,860
Hilton Hotels Corp. 54,842 3,853
The Mead Corp. 64,085 3,805
Dillard Department Stores Class A 128,600 3,778
Inco Ltd. 133,414 3,769
Reynolds Metals Co. 71,578 3,704
Coastal Corp. 119,259 3,622
*Price/Costco Inc. 221,767 3,604
Premark International, Inc. 69,244 3,592
*Computer Sciences Corp. 62,396 3,549
</TABLE>
6
<PAGE> 7
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- -----------------------------------------------------------------
<S> <C> <C>
Northern States Power Co.
of Minnesota 76,741 $ 3,540
Harcourt General, Inc. 82,545 3,508
Circuit City Stores, Inc. 109,781 3,472
Service Corp. International 109,269 3,456
Sherwin-Williams Co. 96,866 3,451
*Lotus Development Corp. 53,741 3,426
*The Kroger Co. 126,809 3,408
W.W. Grainger, Inc. 57,798 3,396
Westvaco Corp. 76,623 3,391
Interpublic Group of Cos., Inc. 89,009 3,338
Sun Co., Inc. 121,708 3,332
Dana Corp. 115,145 3,296
Baker Hughes, Inc. 160,541 3,291
*Tenet Healthcare Corp. 227,354 3,268
Knight-Ridder, Inc. 56,712 3,225
Louisiana-Pacific Corp. 122,669 3,220
General Dynamics Corp. 71,698 3,182
Hasbro, Inc. 99,787 3,168
Kerr-McGee Corp. 58,834 3,155
Great Western Financial Corp. 152,967 3,155
Golden West Financial Corp. 66,655 3,141
Mallinckrodt Group, Inc. 87,229 3,097
Deluxe Corp. 93,410 3,094
Reebok International Ltd. 90,854 3,089
*Tellabs, Inc. 64,200 3,082
Torchmark Corp. 81,387 3,072
Laidlaw Inc. Class B 315,500 3,037
Times Mirror Co. Class A 126,964 3,031
Parker Hannifin Corp. 83,598 3,030
Temple-Inland Inc. 63,555 3,027
Jefferson-Pilot Corp. 55,178 3,021
Cyprus Amax Minerals Co. 105,305 3,001
Sonat, Inc. 98,261 2,997
Black & Decker Corp. 96,918 2,992
USX-U.S. Steel Group 86,917 2,988
Pall Corp. 132,111 2,939
H.F. Ahmanson & Co. 133,258 2,932
Northrop Grumman Corp. 56,165 2,928
Nalco Chemical Co. 77,221 2,809
*FMC Corp. 41,557 2,795
Sigma Aldrich Corp. 56,762 2,781
Bausch & Lomb, Inc. 66,205 2,748
Comcast Corp. Class A Special 148,043 2,739
U.S. Bancorp 111,680 2,680
*Western Atlas Inc. 60,260 2,674
Beneficial Corp. 60,185 2,648
St. Jude Medical, Inc. 52,958 2,648
Johnson Controls, Inc. 46,486 2,626
Brown-Forman Corp. Class B 78,533 2,621
The Dial Corp. 105,792 2,618
New York Times Co. Class A 110,437 2,595
Homestake Mining Co. 156,966 2,590
James River Corp. 93,175 2,574
*Andrew Corp. 43,892 2,535
Moore Corp. Ltd. 113,335 2,508
Pennzoil Co. 52,607 2,479
American Greetings Corp. Class A 84,567 2,474
Ashland Inc. 70,289 2,469
Rite Aid Corp. 95,899 2,457
Avery Dennison Corp. 60,626 2,425
Niagara Mohawk Power Corp. 163,498 2,412
Echlin, Inc. 67,751 2,354
SuperValu, Inc. 79,141 2,305
Autodesk, Inc. 54,232 2,305
Cooper Tire & Rubber Co. 94,425 2,302
Whitman Corp. 118,474 2,295
Woolworth Corp. 150,796 2,281
Pacific Enterprises 92,677 2,271
Harris Corp. 43,945 2,269
Comcast Corp. Class A 124,726 2,261
*ALZA Corp. 93,998 2,197
*Stone Container Corp. 103,100 2,191
Boise Cascade Corp. 53,653 2,173
Ryder System, Inc. 89,665 2,141
General Signal Corp. 53,833 2,140
*Tandem Computers, Inc. 132,308 2,133
Armstrong World Industries Inc. 42,146 2,113
Worthington Industries, Inc. 103,406 2,107
*Unisys Corp. 193,124 2,100
Manor Care Inc. 71,353 2,078
Polaroid Corp. 50,990 2,078
*Varity Corp. 47,089 2,072
Wendy's International, Inc. 115,568 2,066
Roadway Services, Inc. 44,108 2,062
*Biomet, Inc. 132,937 2,044
Paccar, Inc. 43,857 2,039
Cummins Engine Co., Inc. 46,410 2,025
*Bethlehem Steel Corp. 124,314 2,020
*Owens-Corning Fiberglas Corp. 54,324 2,003
Allergan, Inc. 73,384 1,991
*Darden Restaurants Inc. 179,914 1,957
Maytag Corp. 121,341 1,941
Mercantile Stores Co., Inc. 41,566 1,933
Scientific-Atlanta, Inc. 87,343 1,922
Raychem Corp. 49,992 1,918
*Ceridian Corp. 51,914 1,914
Giant Food, Inc. Class A 66,903 1,898
The Stanley Works 50,062 1,896
Ecolab, Inc. 76,262 1,868
Pep Boys (Manny, Moe & Jack) 69,506 1,859
Brunswick Corp. 109,023 1,853
USF&G Corp. 111,581 1,813
*Columbia Gas Systems, Inc. 57,086 1,812
</TABLE>
7
<PAGE> 8
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- -----------------------------------------------------------------
<S> <C> <C>
Liz Claiborne, Inc. 85,227 $ 1,811
*Fruit of the Loom, Inc. 85,600 1,808
Tektronix, Inc. 36,616 1,803
Harnischfeger Industries Inc. 51,908 1,797
*Santa Fe Pacific Gold Corp. 148,211 1,797
Snap-On Inc. 45,638 1,768
C.R. Bard, Inc. 58,800 1,764
Federal Paper Board Co., Inc. 49,024 1,734
Millipore Corp. 25,527 1,723
*King World Productions, Inc. 41,793 1,693
Inland Steel Industries, Inc. 55,094 1,680
Perkin-Elmer Corp. 47,308 1,679
The Timkin Co. 35,129 1,620
*Oryx Energy Co. 117,034 1,609
National Service Industries, Inc. 54,989 1,588
The BF Goodrich Co. 29,237 1,568
Teledyne Inc. 63,715 1,561
NICOR, Inc. 57,573 1,547
Bemis Co., Inc. 59,066 1,536
Thomas & Betts Corp. 22,182 1,517
Louisiana Land & Exploration Co. 37,739 1,505
*Amdahl Corp. 134,402 1,495
McDermott International, Inc. 60,811 1,467
ASARCO, Inc. 47,687 1,454
Foster Wheeler Corp. 41,237 1,454
Potlatch Corp. 33,055 1,380
United States Surgical Corp. 65,448 1,366
*Beverly Enterprises Inc. 106,822 1,322
ENSERCH Corp. 75,719 1,297
*Navistar International Corp. 84,849 1,283
Russell Corp. 44,143 1,269
Crane Co. 34,048 1,234
Republic New York Corp. 21,900 1,226
Ogden Corp. 55,120 1,206
Ball Corp. 34,050 1,187
Alexander & Alexander Services, Inc. 49,713 1,187
Briggs & Stratton Corp. 33,576 1,158
Echo Bay Mines Ltd. 127,689 1,149
Great Atlantic & Pacific Tea Co., Inc. 43,293 1,142
Trinova Corp. 32,541 1,139
Pittston Services Group 47,065 1,130
Fleming Cos., Inc. 42,249 1,120
Jostens Inc. 51,409 1,092
TJX Cos., Inc. 81,760 1,083
Consolidated Freightways, Inc. 48,922 1,082
Safety-Kleen Corp. 65,237 1,052
Shared Medical Systems Corp. 26,055 1,045
USLIFE Corp. 25,885 1,042
Cincinnati Milacron, Inc. 38,232 1,032
Fleetwood Enterprises, Inc. 52,034 1,028
Bruno's Inc. 88,214 1,025
Peoples Energy Corp. 39,447 1,021
EG & G, Inc. 60,434 1,012
*Santa Fe Energy Resources Inc. 102,718 976
Alberto-Culver Co. Class B 31,573 955
Centex Corp. 32,418 916
NorAm Energy Corp. 139,566 907
Longs Drug Stores, Inc. 23,062 865
Pulte Corp. 30,105 843
Springs Industries Inc. Class A 22,618 843
*Viacom International Class A 18,016 838
*Armco, Inc. 123,455 833
Helmerich & Payne, Inc. 27,550 813
Meredith Corp. 31,276 794
John H. Harland Co. 34,474 789
First Mississippi Corp. 23,001 785
*USAir Group, Inc. 66,458 773
*Rowan Cos., Inc. 94,143 765
*Cray Research, Inc. 28,595 697
Adolph Coors Co. Class B 43,341 693
Eastern Enterprises 22,711 678
Giddings & Lewis, Inc. 38,197 678
*Bally Entertainment Corp. 53,142 651
ONEOK, Inc. 30,308 648
Charming Shoppes, Inc. 116,234 610
NACCO Industries, Inc. Class A 9,897 593
Stride Rite Corp. 56,280 584
*Intergraph Corp. 51,298 571
Yellow Corp. 31,430 570
*Community Psychiatric Centers 49,682 559
*Shoney's Inc. 47,143 554
Luby's Cafeterias, Inc. 26,626 536
Kaufman & Broad Home Corp. 36,143 524
*Ryan's Family Steak Houses, Inc. 59,825 464
Brown Group, Inc. 19,640 447
Outboard Marine Corp. 21,986 431
Bassett Furniture Industries, Inc. 15,418 424
*Data General Corp. 41,986 404
*Zenith Electronics Corp. 53,052 391
Handleman Co. 37,917 365
*M/A-Com, Inc. 30,158 354
Zurn Industries, Inc. 14,082 282
*Morrison-Knudsen Co., Inc. 37,367 252
Skyline Corp. 12,041 218
SPX Corp. 3,474 40
*Hartmarx Corp. 700 4
- -----------------------------------------------------------------
TOTAL COMMON STOCKS (99.3%)(1)
(Cost $3,664,190) 4,553,414
- -----------------------------------------------------------------
</TABLE>
8
<PAGE> 9
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- -----------------------------------------------------------------
<S> <C> <C>
TEMPORARY CASH INVESTMENTS (.6%)
- -----------------------------------------------------------------
COMMERCIAL PAPER
BASF Corp. 6.153%, 7/3/95 $ 24,346 $ 24,338
U.S. TREASURY BILL--NOTE D
5.68%, 9/21/95 2,000 1,975
- -----------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $26,313) 26,313
- -----------------------------------------------------------------
TOTAL INVESTMENTS (99.9%)
(Cost $3,690,503) 4,579,727
- -----------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (.1%)
- -----------------------------------------------------------------
Other Assets--Notes B and E 81,204
Liabilities--Note E (74,412)
-------
6,792
- -----------------------------------------------------------------
NET ASSETS (100%)
- -----------------------------------------------------------------
Applicable to 89,096,370 outstanding
shares of beneficial interest
(unlimited authorization) $4,586,519
- -----------------------------------------------------------------
NET ASSET VALUE PER SHARE $51.48
=================================================================
</TABLE>
+ See Note A to Financial Statements.
* Non-Income Producing Security.
(1) The combined market value of common stocks and Standard & Poor's 500 Index
futures contracts represents 100.0% of net assets.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
AT JUNE 30, 1995, NET ASSETS CONSISTED OF:
- -----------------------------------------------------------------
Amount Per
(000) Share
---------- ------
<S> <C> <C>
Paid in Capital--Note C $3,670,583 $41.20
Undistributed Net
Investment Income 18,927 .21
Accumulated Net
Realized Gains--Note C 7,034 .08
Unrealized Appreciation of
Investments--Note D 889,975 9.99
- -----------------------------------------------------------------
NET ASSETS $4,586,519 $51.48
- -----------------------------------------------------------------
</TABLE>
9
<PAGE> 10
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1995
(000)
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
INCOME
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 53,964
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
- -------------------------------------------------------------------------------------------------------------------
Total Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,042
- -------------------------------------------------------------------------------------------------------------------
EXPENSES
The Vanguard Group--Note B . . . . . . . . . . . . . . . . . . . . . . . . . . 1,284
- -------------------------------------------------------------------------------------------------------------------
Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,284
- -------------------------------------------------------------------------------------------------------------------
Net Investment Income . . . . . . . . . . . . . . . . . . . . . . . 52,758
- -------------------------------------------------------------------------------------------------------------------
REALIZED NET GAIN
Investment Securities Sold . . . . . . . . . . . . . . . . . . . . . . . . . . 18,060
Futures Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,745
- -------------------------------------------------------------------------------------------------------------------
Realized Net Gain . . . . . . . . . . . . . . . . . . . . . . . . . 22,805
- -------------------------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION)
Investment Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 656,733
Futures Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 559
- -------------------------------------------------------------------------------------------------------------------
Change in Unrealized Appreciation (Depreciation) . . . . . . . . . . 657,292
- -------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations . . . . . . . . $732,855
===================================================================================================================
</TABLE>
10
<PAGE> 11
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED Year Ended
JUNE 30, 1995 December 31, 1994
(000) (000)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS
Net Investment Income . . . . . . . . . . . . . . . . . . . . . . . . $ 52,758 $ 86,437
Realized Net Gain . . . . . . . . . . . . . . . . . . . . . . . . . . 22,805 59,110
Change in Unrealized Appreciation (Depreciation) . . . . . . . . . . 657,292 (104,278)
- -------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations . . . . . . . . . . . . . . . . . 732,855 41,269
- -------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS (1)
Net Investment Income . . . . . . . . . . . . . . . . . . . . . . . . (37,787) (86,378)
Realized Net Gain . . . . . . . . . . . . . . . . . . . . . . . . . . -- (24,704)
- -------------------------------------------------------------------------------------------------------------------
Total Distributions . . . . . . . . . . . . . . . . . . . . . . (37,787) (111,082)
- -------------------------------------------------------------------------------------------------------------------
NET EQUALIZATION CREDITS--Note A . . . . . . . . . . . . . . . . . . . 1,916 1,482
- -------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (2)
Issued -- Regular . . . . . . . . . . . . . . . . . . . . . . . . . 744,517 872,789
-- In Lieu of Cash Distributions . . . . . . . . . . . . . . 33,132 101,035
-- Exchange . . . . . . . . . . . . . . . . . . . . . . . . 113,890 62,420
Redeemed -- Regular . . . . . . . . . . . . . . . . . . . . . . . . . (223,645) (731,115)
-- Exchange . . . . . . . . . . . . . . . . . . . . . . . . (43,514) (74,579)
- -------------------------------------------------------------------------------------------------------------------
Net Increase from Capital Share Transactions . . . . . . . . . . 624,380 230,550
- -------------------------------------------------------------------------------------------------------------------
Total Increase . . . . . . . . . . . . . . . . . . . . . . . . . 1,321,364 162,219
- -------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . 3,265,155 3,102,936
- -------------------------------------------------------------------------------------------------------------------
End of Period (3) . . . . . . . . . . . . . . . . . . . . . . . . . . $4,586,519 $3,265,155
===================================================================================================================
(1) Distributions Per Share
Net Investment Income . . . . . . . . . . . . . . . . . . . . $.44 $1.21
Realized Net Gain . . . . . . . . . . . . . . . . . . . . . . -- $ .34
- -------------------------------------------------------------------------------------------------------------------
(2) Shares Issued and Redeemed
Issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,460 21,720
Issued in Lieu of Cash Distributions . . . . . . . . . . . . . 678 2,327
Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,595) (18,694)
- -------------------------------------------------------------------------------------------------------------------
13,543 5,353
- -------------------------------------------------------------------------------------------------------------------
(3) Undistributed Net Investment Income . . . . . . . . . . . . . $ 18,927 $ 2,040
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 12
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Year Ended December 31, July 31 to
SIX MONTHS ENDED --------------------------------------- Dec. 31,
For a Share Outstanding Throughout Each Period JUNE 30, 1995 1994 1993 1992 1991 1990
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . $43.22 $44.20 $41.45 $39.91 $31.62 $34.10
------- ------ -------- ------ ------- ------
INVESTMENT OPERATIONS
Net Investment Income . . . . . . . . . . . . .62 1.23 1.20 1.17 1.16 .52
Net Realized and Unrealized Gain (Loss)
on Investments . . . . . . . . . . . . . . 8.08 (.66) 2.92 1.79 8.35 (2.48)
------- ------ -------- ------ ------- ------
TOTAL FROM INVESTMENT OPERATIONS . . . 8.70 .57 4.12 2.96 9.51 (1.96)
- ----------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income . . . . . (.44) (1.21) (1.19) (1.17) (1.16) (.52)
Distributions from Realized Capital Gains . . -- (.34) (.18) (.25) (.06) --
------- ------ -------- ------ ------- ------
TOTAL DISTRIBUTIONS . . . . . . . . . . (.44) (1.55) (1.37) (1.42) (1.22) (.52)
- ----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . $51.48 $43.22 $44.20 $41.45 $39.91 $31.62
======================================================================================================================
TOTAL RETURN . . . . . . . . . . . . . . . . . . +20.19% +1.31% +10.02% +7.54% +30.34% -5.74%
- ----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (Millions) . . . . . . $4,587 $3,265 $3,103 $1,525 $1,069 $512
Ratio of Expenses to Average Net Assets . . . . . .07%* .07% .07% .07% .08% .09%*
Ratio of Net Investment Income to
Average Net Assets . . . . . . . . . . . . . . 2.65%* 2.80% 2.72% 2.94% 3.15% 3.98%*
Portfolio Turnover Rate . . . . . . . . . . . . . 5%*+ 23%+ 4%+ 9%+ 4% 2%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
+ Portfolio turnover rates excluding in-kind redemptions were 4%, 19%, 3%, and
6%, respectively.
12
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS
Vanguard Institutional Index Fund is registered under the Investment Company
Act of 1940 as a diversified open-end investment company.
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 listed on an exchange are valued at the
latest quoted sales prices as of the close of the New York Stock
Exchange (generally 4:00 PM) on the valuation date; securities not
traded are valued at the mean of the latest quoted bid and asked
prices; securities not listed are valued at the latest quoted bid
prices. Temporary cash investments are valued 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. EQUALIZATION: The Fund follows the accounting practice known as
"equalization," under which a portion of the price of capital shares
issued and redeemed, equivalent to undistributed net investment income
per share on the date of the transaction, is credited or charged to
undistributed income. As a result, undistributed income per share is
unaffected by Fund share sales or redemptions.
4. FUTURES: The Fund utilizes Standard & Poor's 500 Index futures
contracts to a limited extent, with the objectives of maintaining full
exposure to the stock market, enhancing returns, maintaining liquidity
and minimizing transaction costs. The Fund may purchase futures
contracts to immediately position incoming cash in the market, thereby
simulating a fully invested position in the underlying index while
maintaining a cash balance for liquidity. In the event of redemptions,
the Fund may pay departing shareholders from its cash balance and
reduce its futures position accordingly. Returns may be enhanced by
using futures contracts instead of the underlying securities when
futures are believed to be priced more attractively than the
underlying securities.
The primary risks associated with the use of futures contracts are
imperfect correlation between changes in market values of stocks
contained in the underlying index and the prices of futures contracts,
and the possibility of an illiquid market. Futures contracts are
valued based upon their quoted daily settlement prices. Fluctuations
in the values of futures contracts are recorded as unrealized
appreciation (depreciation) until terminated, at which time realized
gains (losses) are recognized. Unrealized appreciation (depreciation)
related to open futures contracts is required to be treated as
realized gain (loss) for Federal income tax purposes.
5. 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. Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
B. The Vanguard Group, Inc. provides investment advisory, corporate
management, administrative, marketing, and distribution services and pays for
all other operating expenses, except for taxes, in return for a fee calculated
at an annual percentage rate of the average net assets of the Fund. For the six
months ended June 30, 1995, the fee for such services represented an effective
annual rate of .07 of 1% of average net assets. The Fund's trustees and
officers are also directors and officers of Vanguard.
C. During the six months ended June 30, 1995, purchases and sales of
investment securities other than U.S. Government securities and temporary cash
investments were $729,342,000 and $105,466,000, respectively.
13
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS (continued)
During the six months ended June 30, 1995, the Fund realized $11,966,000 of net
capital gains resulting from in-kind redemptions. Such gains are not taxable
to the Fund and therefore will not be distributed to shareholders; accordingly,
such gains have been reclassified from accumulated net realized gains to paid
in capital.
D. At June 30, 1995, unrealized appreciation of investment securities for
financial reporting and Federal income tax purposes was $889,224,000, of which
$938,823,000 related to appreciated securities and $49,599,000 related to
depreciated securities.
At June 30, 1995, the aggregate settlement value of open Standard & Poor's 500
Index futures contracts expiring in September 1995, the related unrealized
appreciation, and the market value of securities deposited as initial margin
for those contracts were $33,923,000, $751,000, and $1,975,000, respectively.
E. The market value of securities on loan to broker/dealers at June 30,
1995, was $6,731,000, for which the Fund had received cash collateral of
$6,779,000.
14
<PAGE> 15
TRUSTEES 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,
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. and Kmart
Corporation.
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 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 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
[THE VANGUARD GROUP LOGO]
Vanguard Financial Center Valley Forge, Pennsylvania 19482
New Account Information: Shareholder Account Services:
1-(800) 662-7447 1-(800) 662-2739
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.
Q942-6/95
[VANGUARD INSTITUTIONAL INDEX FUND LOGO]
SEMI-ANNUAL REPORT
JUNE 30, 1995
