VANGUARD BALANCED INDEX FUND INC
497, 1995-03-08
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                          VANGUARD BALANCED INDEX FUND
                             PROSPECTUS SUPPLEMENT
                                 MARCH 7, 1995

       The Fund reserves the right to deduct a transaction fee, ranging from
0.15% to 0.25%, from purchases of the shares of the Fund, if such purchase or
cumulative purchases are of a size that is reasonably deemed to be disruptive
to efficient portfolio management. The fee will be paid to the Fund to offset
transaction costs of buying securities. The fee is not paid to Vanguard and
is not a sales charge.

                                                                            PS02



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