VANGUARD INSTITUTIONAL INDEX FUND
PROSPECTUS SUPPLEMENT
DECEMBER 29, 1997
For each of the Fund's share classes, the share price--or net asset value (NAV)
per share--is calculated by dividing the total net assets attributed to the
share class by the total number of shares outstanding for that class. The NAV is
determined as of the close of the New York Stock Exchange (generally 4 p.m.
Eastern time) on each day the exchange is open for trading.
Portfolio securities for which market quotations are readily
available--including securities listed on national securities exchanges and on
the NASDAQ Stock Market--are valued at the latest quoted sale price on the day
the valuation is made. If such securities were not traded on the valuation date,
they are valued at the mean of the latest quoted bid and ask prices. For
exchange-listed securities, price information is taken from the exchange where
the security is primarily traded. Foreign securities are valued at the latest
quoted sales price available when the NAV is determined. Securities may be
valued at prices provided by a pricing service when this information is believed
to reflect their fair market value.
Short-term instruments (those with remaining maturities of 60 days or less)
may be valued at amortized cost, which approximates market value. Amortized cost
is the original cost plus any amortized discount or minus any amortized premium.
Other assets and securities for which no quotations are readily available,
or which are restricted as to sale or resale, are valued by any methods that the
Board of Trustees deems in good faith to reflect fair value.
PS94
