<PAGE> 1
VANGUARD ADMIRAL FUNDS(R)
July 31, 2000
semiannual
VANGUARD ADMIRAL
TREASURY MONEY
MARKET FUND
VANGUARD ADMIRAL
SHORT-TERM
TREASURY FUND
VANGUARD ADMIRAL
INTERMEDIATE-TERM
TREASURY FUND
VANGUARD ADMIRAL
LONG-TERM
TREASURY FUND
[PHOTO]
[MEMBERS OF THE VANGUARD GROUP(R) LOGO]
<PAGE> 2
HAVE THE PRINCIPLES OF INVESTING CHANGED?
In a world of frenetic change in business, technology, and the financial
markets, it is natural to wonder whether the basic principles of investing have
changed.
We don't think so.
The most successful investors over the coming decade will be those who
began the new century with a fundamental understanding of risk and who had the
discipline to stick with long-term investment programs.
Certainly, investors today confront a challenging, even unprecedented,
environment. Valuations of market indexes are at or near historic highs. The
strength and duration of the bull market in U.S. stocks have inflated people's
expectations and diminished their recognition of the market's considerable
risks. And the incredible divergence in stock returns--many technology-related
stocks gained 100% or more in 1999, yet prices fell for more than half of all
stocks--has made some investors question the idea of diversification.
And then there is the Internet. Undeniably, it is a powerful medium for
communications and transacting business. For investors, the Internet is a vast
source of information about investments, and online trading has made it
inexpensive and convenient to trade stocks and invest in mutual funds.
However, new tools do not guarantee good workmanship. Information is not
the same as wisdom. Indeed, much of the information, opinion, and rumor that
swirl about financial markets each day amounts to "noise" of no lasting
significance. And the fact that rapid-fire trading is easy does not make it
beneficial. Frequent trading is almost always counterproductive because
costs--even at low commission rates--and taxes detract from the returns that the
markets provide. Sadly, many investors jump into a "hot" mutual fund just in
time to see it cool off. Meanwhile, long-term fund investors are hurt by
speculative trading activity because they bear part of the costs involved in
accommodating purchases and redemptions.
Vanguard believes that intelligent investors should resist short-term
thinking and focus instead on a few time-tested principles:
- Invest for the long term. Pursuing your long-term investment goals is
more like a marathon than a sprint.
- Diversify your investments with holdings in stocks, bonds, and cash
investments. Remember that, at any moment, some part of a diversified portfolio
will lag other parts, and be wary of taking on more risk by "piling onto" the
best-performing part of your holdings. Today's leader could well be tomorrow's
laggard.
- Step back from the daily frenzy of the markets; focus on your overall
asset allocation.
- Capture as much of the market's return as possible by minimizing costs
and taxes. Costs and taxes diminish long-term returns while doing nothing to
reduce the risks you incur as an investor.
<TABLE>
<CAPTION>
CONTENTS
<S> <C>
REPORT FROM THE CHAIRMAN................................... 1
THE MARKETS IN PERSPECTIVE................................. 5
REPORT FROM THE ADVISER.................................... 7
PERFORMANCE SUMMARIES...................................... 9
FUND PROFILES.............................................. 11
FINANCIAL STATEMENTS....................................... 16
</TABLE>
All comparative mutual fund data are from Lipper Inc. or Morningstar, Inc.,
unless otherwise noted.
"Standard & Poor's(R)," "S&P(R)," "S&P 500(R)," "Standard & Poor's 500," and
"500" are trademarks of The McGraw-Hill Companies, Inc.
Frank Russell Company is the owner of trademarks and copyrights relating to the
Russell indexes.
"Wilshire 5000(R)" and "Wilshire 4500" are trademarks of Wilshire Associates
Incorporated.
<PAGE> 3
REPORT FROM THE CHAIRMAN
[PHOTO]
John J. Brennan
Bond prices generally recovered during the six months ended July 31, 2000, the
first half of the Vanguard Admiral Funds' fiscal year. Longer-term Treasury
bonds displayed particular strength, helping our bond funds to rebound from a
disappointing fiscal 2000. Our returns ranged from 2.9% for our Treasury Money
Market Fund to 9.1% for our Long-Term Treasury Fund.
The adjacent table presents the six-month total return (capital change
plus reinvested dividends) for each fund compared with those of its average
mutual fund competitor and an unmanaged bond market index. The table also lists
the funds' annualized yields, which fluctuated during the half-year in line with
interest rates. The yields on the Treasury Money Market and Short-Term Treasury
Funds rose, while those on the Intermediate- and Long-Term Treasury Funds
declined. On July 31, our yields ranged from 5.98% for the Money Market Fund to
6.55% for the Short-Term Treasury Fund.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
TOTAL RETURNS SEC
SIX MONTHS ENDED ANNUALIZED
JULY 31, 2000 YIELD*
------------------------------------------------------------------------------
<S> <C> <C>
ADMIRAL TREASURY
MONEY MARKET FUND 2.9% 5.98%
Average U.S. Treasury Money
Market Fund** 2.6
Salomon Smith Barney 3-Month
U.S. Treasury Bill Index 2.8
------------------------------------------------------------------------------
ADMIRAL SHORT-TERM TREASURY FUND 3.9% 6.55%
Average Short U.S. Treasury Fund** 3.5
Lehman Brothers 1-5 Year
U.S. Treasury Bond Index 4.0
------------------------------------------------------------------------------
ADMIRAL INTERMEDIATE-TERM
TREASURY FUND 5.9% 6.46%
Average Intermediate
U.S. Treasury Fund** 5.2
Lehman Brothers 5-10 Year
U.S. Treasury Bond Index 6.3
------------------------------------------------------------------------------
ADMIRAL LONG-TERM TREASURY FUND 9.1% 6.22%
Average General
U.S. Treasury Fund** 6.9
Lehman Brothers Long
U.S. Treasury Bond Index 9.4
------------------------------------------------------------------------------
</TABLE>
*7-day yield for the Money Market Fund; 30-day yield for other funds.
**Derived from data provided by Lipper Inc.
Details on each fund, including per-share net asset values and income
dividends, are presented in the table that follows this letter.
We believe that any semiannual review of bond fund returns should also
include a look at a full year's interest income. That's because six-month
returns for bond funds account for only half of the year's interest income,
while prices fully and immediately reflect movements in interest rates--rising
when rates fall and falling when rates rise. Over long periods, however, the
price effects of fluctuating interest rates tend to be offset, so interest
income accounts for virtually all of the total return on a bond fund.
The table on page 2 presents each fund's return for the twelve months
ended July 31, divided into its income and capital components. It also
illustrates the inverse relationship between interest rates and bond prices.
During the past twelve months, interest rates on short- and intermediate-term
bonds rose, causing declines in the value of our Short- and
1
<PAGE> 4
<TABLE>
<CAPTION>
------------------------------------------------------------------------
COMPONENTS OF TOTAL RETURNS
TWELVE MONTHS ENDED
JULY 31, 2000
--------------------------------------
INCOME CAPITAL TOTAL
ADMIRAL TREASURY FUND RETURN RETURN RETURN
------------------------------------------------------------------------
<S> <C> <C> <C>
Money Market 5.4% 0.0% 5.4%
Short-Term 5.9 -0.7 5.2
Intermediate-Term 6.4 -0.8 5.6
Long-Term 6.6 2.1 8.7
------------------------------------------------------------------------
</TABLE>
Intermediate-Term Treasury Funds. But long-term interest rates moved lower,
leading to a price increase for the Long-Term Treasury Fund. Keep in mind that
rising interest rates, which cause bond prices to fall, are not entirely bad
news. Money market yields and returns quickly adjust higher. And for long-term
bonds, a rise in interest rates causes an immediate price decline, but the
long-term effect can be beneficial because a bond fund's dividend income is
reinvested at higher yields. Conversely, when rates drop, bond prices rise
immediately, but over the long haul, lower rates diminish the income earned on
reinvested dividends. For further information on capital and income returns for
each fund, see the Performance Summaries beginning on page 9.
Our Money Market Fund maintained its share price of $1, as is expected
but not guaranteed.
THE PERIOD IN REVIEW
The financial markets were stormy during the six months ended July 31. Overall,
the economic news was good. The economy continued its robust growth--the
production of goods and services during the second quarter of 2000 was about 6%
higher than in the same period last year, even after adjusting for inflation.
Unemployment remained low, hovering around 4% of the workforce. But investors
spent much of the half-year worrying about a resurgence in inflation and the
heady valuations of many technology-related stocks. In this environment, bonds
delivered higher returns than stocks.
The Federal Reserve Board, in an effort to slow the economy's momentum
and head off an uptick in inflation, continued to raise short-term interest
rates during the period. The Fed boosted its target for the federal funds
rate--the rate that banks charge each other for overnight loans--three times, by
a total of 1 percentage point (100 basis points).
The Fed's efforts succeeded in pushing up short-term interest rates: The
yield of 3-month U.S. Treasury bills climbed 53 basis points to end the
half-year at 6.22%. However, rates on longer-term government issues quickly went
the other way, as the Treasury started to repurchase its bonds for the first
time since the 1930s. The shrinking supply of long-term public debt--the
government has also curbed new bond issuance--caused long-term Treasury prices
to rise and their yields to fall. Evidence that the economy may be easing into a
period of slower growth mounted in June, prompting rallies in both the stock and
bond markets. By July 31, the 30-year Treasury bond's yield had fallen 71 basis
points, to 5.78%. The yield of the 10-year Treasury bond declined a bit less (64
basis points), to 6.03% at the end of the period. Treasury bonds in each
maturity range (short-, intermediate-, and long-term) outperformed their
investment-grade corporate counterparts. The margin was greatest (4.6 percentage
points) for long-term bonds.
Led by the Treasury sector, the bond market rebounded from a difficult
fiscal 2000. The Lehman Aggregate Bond Index, a broad measure of the U.S. bond
market, excluding only high-yield ("junk") bonds and municipal securities,
posted a return of 5.3% during the six months ended July 31.
2
<PAGE> 5
The U.S. stock market, meanwhile, rose modestly during the half-year. The
Wilshire 5000 Total Market Index, which tracks the entire U.S. stock market,
returned 1.5%. The large-capitalization-dominated S&P 500 Index returned 3.2%,
outperforming the small-cap-oriented Russell 2000 Index (up 1.3%). The Nasdaq
Composite Index, which is crowded with technology stocks, declined -3.9%.
PERFORMANCE OVERVIEW
During the half-year ended July 31, the returns of each of the Vanguard Admiral
Funds outpaced those of competing mutual funds that hold Treasury securities of
similar maturity. Our TREASURY MONEY MARKET FUND gained 2.9% for the period,
beating the 2.6% average return of Treasury money market funds, not surprising
given our much lower operating costs.
Our SHORT-TERM TREASURY FUND returned 3.9%, a bit better than the 3.5%
return of the average short-term Treasury fund. The two other Admiral funds
outpaced their peers by wider margins. The INTERMEDIATE-TERM TREASURY FUND
returned 5.9%, versus 5.2% for competing funds. Our LONG-TERM TREASURY FUND
returned 9.1%, well ahead of the 6.9% average return of its peers.
Our bond funds outpaced the results of competing funds, in part because
our investment adviser, Vanguard Fixed Income Group, maintained average fund
maturities that were longer than those of their average peers. For example, the
average weighted maturity of our Long-Term Treasury Fund is 18.3 years, while
the average maturity of its comparative group is just over 16 years. Longer
maturities typically mean higher yields, but also increased price sensitivity to
changes in interest rates.
It's important to understand that when interest rates are declining--as
they have been for the better part of the past decade--our funds have an extra
advantage over their average peers. Of course, our longer-than-average
maturities are a detriment when rates are rising.
Our funds performed in line with their unmanaged indexes during the six
months. The Treasury Money Market Fund outpaced its index by 0.1 percentage
point, but the other three funds fell short by 0.1-0.4 percentage point.
Expenses explain most of the shortfall. While each of our funds has an
annualized expense ratio (expenses as a percentage of average net assets) of
0.15%, indexes exist only "on paper" and therefore incur no operating costs.
We believe that our policy of maintaining longer maturities will pay off
for shareholders in the long run because, as noted, longer maturities normally
provide higher yields. What is more, our funds are aided in their quest to
provide superior yields by their extremely low expenses. The average expense
ratios of our comparative groups run from 0.60% for short-term Treasury funds to
0.84% for intermediate-term Treasury funds. This difference gives us a
remarkable and sustainable advantage of as much as 69 basis points (0.69
percentage point). In the bond market--particularly the market for Treasury
securities--costs clearly matter.
IN SUMMARY
Stocks probably disappointed many investors during the six months ended July 31.
After all, they've been delivering double-digit gains with regularity since the
mid-1990s, and have not often trailed bonds. For long-term investors, however,
the lesson of the half-year should be plain: Trying to "time the market" is
hazardous.
3
<PAGE> 6
Bond investors who stayed true to their investment plan after enduring a
difficult fiscal 2000 were rewarded during the half-year. The course of interest
rates is impossible to predict. But I am confident that investors who maintain a
balanced mix of stock funds, bond funds, and short-term reserves, suitable for
their time horizons, goals, and tolerance for risk, stand the best chance of
success.
/s/ JOHN J. BRENNAN
John J. Brennan
Chairman and Chief Executive Officer
August 15, 2000
IN MEMORY
It is with great sadness that I report the death of John C. Sawhill, an
independent trustee of the funds and a member of The Vanguard Group's board of
directors since 1991. John, an economist who was president and chief executive
officer of The Nature Conservancy, died on May 18 at age 63. He was a senior
lecturer at the Harvard Business School and had formerly served as president of
New York University and as deputy secretary of the U.S. Department of Energy
under President Jimmy Carter. John was a remarkable man who was full of energy,
vigor, and life. His experience and wisdom added a great deal to Vanguard, and
his death is a blow to everyone who knew and loved him. Though John's work on
behalf of our funds was often carried on behind the scenes, he was a dedicated
advocate for the best interests of our shareholders. He will be missed.
<TABLE>
<CAPTION>
FUND STATISTICS
-----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PERIODS ENDED JULY 31, 2000
PER SHARE SIX MONTHS TWELVE MONTHS
------------------------ ------------------------- -------------------------- SEC
JAN. 31, JULY 31, INCOME CAPITAL INCOME CAPITAL ANNUALIZED
ADMIRAL TREASURY FUND 2000 2000 DIVIDENDS GAINS DIVIDENDS GAINS YIELD*
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Money Market $ 1.00 $ 1.00 $0.028 -- $0.053 -- 5.98%
Short-Term 9.81 9.89 0.296 -- 0.570 -- 6.55
Intermediate-Term 9.82 10.07 0.319 -- 0.629 -- 6.46
Long-Term 10.02 10.60 0.324 -- 0.644 -- 6.22
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*7-day yield for the Money Market Fund; 30-day yield for the other funds.
4
<PAGE> 7
THE MARKETS IN PERSPECTIVE
SIX MONTHS ENDED JULY 31, 2000
After playing second fiddle to stocks in the past several years, bonds provided
both a smoother and a more profitable ride than stocks during the six months
ended July 31, 2000. The Lehman Aggregate Bond Index--a proxy for the
investment-grade taxable bond market--recorded a 5.3% return, well ahead of the
1.5% return for the entire U.S. stock market, as measured by the Wilshire 5000
Index. Stock investors encountered considerable turbulence, as big day-to-day
fluctuations in stocks were commonplace. And outside of the United States,
stocks on average declined during the six months.
The economic backdrop was murky. Growth was quite robust--better than 5%
after inflation--in the United States. Overseas economies also were picking up
strength, and corporations generally registered solid profit gains. Still,
investors were uncertain whether the economic good times would keep rolling,
given that the Federal Reserve Board and other central banks were raising
interest rates during the period.
The Fed, with three rate increases totaling 1 percentage point, sought to
cool off the economy to keep it from overheating and pushing up inflation.
Because of sharply higher costs for oil and other energy products, the Consumer
Price Index gained 2.3% during the six months and 3.5% for the 12 months ended
July 31. Yet core inflation, which excludes energy and food items, registered a
moderate 2.4% gain during the 12 months ended July 31.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
TOTAL RETURNS
PERIODS ENDED JULY 31, 2000
----------------------------------------
6 MONTHS 1 YEAR 5 YEARS*
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
STOCKS
S&P 500 Index 3.2% 9.0% 22.6%
Russell 2000 Index 1.3 13.8 12.3
Wilshire 5000 Index 1.5 11.2 21.1
MSCI EAFE Index -1.7 9.3 9.4
-----------------------------------------------------------------------------------------------
BONDS
Lehman Aggregate Bond Index 5.3% 6.0% 6.5%
Lehman 10 Year Municipal Bond Index 5.8 5.2 5.9
Salomon Smith Barney 3-Month
U.S. Treasury Bill Index 2.8 5.4 5.2
-----------------------------------------------------------------------------------------------
OTHER
Consumer Price Index 2.3% 3.5% 2.5%
-----------------------------------------------------------------------------------------------
</TABLE>
*Annualized.
U.S. STOCK MARKETS
Rising profits, the powerful economy, and continued optimism--especially for the
"new economy" TMT stocks (technology, media, and telecommunications)--kept
market averages rising in February and early March. But in mid-March, value
stocks took charge and TMT stocks slumped. Market leadership flip-flopped again
in June, when growth stocks held sway, and in July, when value stocks
outperformed growth stocks.
The period was marked not only by volatility in market averages but also
by extreme moves in individual stocks. Wall Street was unforgiving: Companies
that disappointed market expectations saw their stock prices plunge. The
large-capitalization S&P 500 Index posted a 3.2% return, more than double that
of the overall market, and the small-cap Russell 2000 Index edged up 1.3%. The
Nasdaq Composite Index, which had stratospheric gains in 1999, lost some
altitude, registering a -3.9% return.
5
<PAGE> 8
The rise in oil and natural gas prices helped oil-exploration and
services companies in the "other energy" group to post the market's biggest
gains: an average of 22%. Financial services companies, whose stocks had been
hurt by rising interest rates in 1999, rebounded with a 13% return. Another 1999
laggard, the health care sector, posted gains exceeding 9% during the past
half-year. Big drops in regional Bell companies and AT&T caused a -15% return
for the utilities sector, the worst for any market group. The materials &
processing group fell -9%, largely because higher energy costs hurt
energy-intensive companies such as chemical and aluminum makers.
U.S. BOND MARKETS
The Fed's three increases in its target federal funds rate (charged on overnight
loans between banks) elevated the rate by 1 percentage point to 6.50% during the
six months. However, because the market had anticipated some tightening by the
Fed, yields of 3-month U.S. Treasury bills rose only half as far (0.53
percentage point, or 53 basis points, to 6.22%). And on longer-term Treasury
securities, yields actually fell and prices rose. In part, this was due to a
shrinking supply of Treasury debt: A large and growing federal budget surplus
allows the Treasury to issue fewer new bonds and to buy back billions of
dollars' worth of outstanding bonds. The 10-year Treasury note's yield declined
64 basis points to 6.03% on July 31, and the yield of the 30-year Treasury fell
71 basis points to 5.78%.
Because short-term rates moved higher while long-term rates slid, there
was an "inversion" in the U.S. Treasury yield curve. Instead of the usual upward
slope--with yields increasing along with maturity--the curve sloped downward. On
July 31, the 5.78% yield of 30-year Treasuries was 55 basis points lower than
the 6.33% yield of 3-year Treasury notes. Falling rates mean rising prices for
bonds, of course, and the 5.3% return of the Lehman Aggregate Bond Index during
the six months reflected a price gain of 1.7% in addition to an income return of
3.6%.
Corporate bonds didn't fare as well as Treasuries, in part because of a
very different supply situation--corporations were issuing large amounts of new
debt. Also, heavy borrowing by companies and the Fed's efforts to slow the
economy raised the chances that some companies would have trouble paying their
debts. Concern about credit quality was evident in the split between returns for
low- and high-quality corporate bonds: a zero return for the Lehman High Yield
Index of low-quality "junk" bonds, versus 4.8% for the high-quality Lehman
Credit A or Better Index. Mortgage-backed bonds and municipal bonds, which also
boast high credit quality, had solid returns: 5.6% for the Lehman GNMA Index and
4.8% for the tax-exempt Lehman 7 Year Municipal Bond Index.
INTERNATIONAL STOCK MARKETS
Because of a rise in the value of the U.S. dollar against most other currencies
and a slump in Asian markets, international stocks were generally unprofitable
for U.S. investors during the past six months. Although the Morgan Stanley
Capital International Europe, Australasia, Far East (MSCI EAFE) Index of
developed foreign markets registered a 3.1% return in local currencies, the
stronger dollar resulted in a -1.7% return for U.S. investors.
The MSCI Europe Index generated an 8.4% return in euros, the common
currency of 11 European countries. However, this was cut to a 2.8% return for
dollar-based investors. The MSCI Pacific Free Index declined -10.6% in dollars
and -8.1% in local currencies due to a slump in Japanese stocks, which account
for more than 75% of the index.
The Select Emerging Markets Free Index fell -10.0% in U.S. dollars, stung
by weakness in South Korea (-18%), South Africa (-17%), Thailand (-50%), and
Turkey (-16%). Israel was the biggest gainer among emerging markets, with a 28%
return.
6
<PAGE> 9
REPORT FROM THE ADVISER
In a welcome turnabout from a difficult 1999, the Vanguard Admiral Funds posted
strong results for the fiscal first half ended July 31, 2000. Our six-month
returns ranged from 2.9% for our Treasury Money Market Fund to 9.1% for our
Long-Term Treasury Fund.
Conditions during the past six months were favorable for all four funds.
Interest rates rose for U.S. Treasury bills, which aided the Treasury Money
Market Fund. But yields declined and prices rose for longer-term Treasury notes
and bonds, resulting in capital appreciation as well as income return for the
Admiral Short-Term, Intermediate-Term, and Long-Term Treasury Funds.
To understand what has occurred so far this fiscal year, it's necessary
to go back to autumn 1998. At that time, yields on long-term U.S. Treasury bonds
had fallen below 5%. This was because of surging demand for Treasuries as a safe
haven from the financial crisis that swept global markets after Russia defaulted
on its government bonds. When it became apparent that the crisis was not going
to result in a financial Armageddon, as some had predicted, interest rates
rebounded. Rates rose through 1999 to levels that reflected the strong demand
for loans by households and corporations in a growing economy.
The Federal Reserve Board, attempting to slow the economy and forestall a
rise in inflation, boosted short-term interest rates three times in 1999. The
yield on the benchmark 30-year Treasury bond rose from its all-time low of 4.72%
on October 5, 1998 (during the height of the financial crisis) to 6.48% on
December 31, 1999. Because bond prices move in the opposite direction from
yields, long-term Treasury prices plummeted in 1999.
During the first half of 2000, the U.S. economy continued to grow at an
exceptional pace--real (inflation-adjusted) gross domestic product expanded at a
5% annual rate. The Fed focused on indications that the demand for goods and
services was outstripping their available supply, which could cause a buildup in
inflationary pressures. Fed Chairman Alan Greenspan repeatedly identified the
rise in stock prices as one source of excess spending on goods and services,
contending that this "wealth effect" was fueling an unsustainably high pace of
demand. The Fed raised its target federal funds rate (the interest charged by
banks for overnight loans) three times during the fiscal half-year, to 6.50%.
This influenced rates on short-term Treasury bills, which rose during the
period.
Normally, bond yields rise along with short-term rates when the Fed is
tightening monetary policy. But during our fiscal half-year, from January 31 to
July 31, yields on Treasury bonds actually declined by 0.3 to 0.7 percentage
point. The result was that the yield curve was inverted: Longer-term bonds
sported lower yields than short-term bonds.
The reason for this unusual inversion of yields was a shrinking supply of
long-term Treasury securities. The federal government, which is expected to post
a $230 billion budget surplus this year, has started to reduce the size of its
auctions of new securities and has said it would also buy back $30 billion of
its outstanding debt. Given the strong economy and huge
7
<PAGE> 10
federal tax revenues (federal tax receipts as a percentage of gross domestic
product are at the highest level since World War II), it's now projected that
the Treasury will be able to pay off all of its outstanding marketable debt by
the end of this decade.
In other sectors of the bond market, yields didn't closely follow the
lead of Treasury bonds. Government agency and mortgage-backed securities didn't
enjoy the price gains seen for Treasuries, in part because issuance of new
agency and mortgage-backed securities rose.
A REVIEW OF OUR FUNDS
The decline in longer-term interest rates during the last six months served as a
tailwind, in the form of positive capital returns, that augmented the income
generated by the Admiral Short-Term, Intermediate-Term, and Long-Term Treasury
Funds. During the half-year, we maintained the funds' durations (a measure of
the sensitivity of a bond's price to changes in interest rates) below those of
their benchmarks. The result was that we didn't benefit as much as our index
targets from the decline in interest rates during the period. However, compared
with peer funds, our Intermediate-Term and Long-Term Treasury Funds generally
have longer durations and, thus, greater price gains than our competitors in an
environment of falling interest rates.
We adjusted the average maturity of the Admiral Treasury Money Market
Fund at various points during the half-year, based on conditions in the
short-term Treasury market and our expectations for the Fed's interest rate
policy. Short-term rates today are about 1 percentage point higher than a year
ago, which means that money market investors are earning higher rates of return.
THE RISKS AHEAD
In the last two months, signs have emerged that the economy's rapid growth pace
is slowing. These signs have led many market participants to believe that the
Fed is at or near the end of its policy-tightening cycle. If they are correct,
the environment should be a favorable one for bond investors. However, if the
economy resumes growth at or near the rapid rates experienced during most of the
first half of 2000, the Fed may raise short-term interest rates again. This
would have a ripple effect and push up rates across the entire spectrum of
maturities.
The Vanguard Admiral Funds provide a full array of maturity options for
Treasuries, so that investors can match their own needs fairly closely. We
believe it's important for investors to periodically reevaluate their holdings
as risk and return relationships change. What will not change is our commitment
to providing disciplined portfolio management at the lowest possible cost.
Ian A. MacKinnon, Managing Director
Robert F. Auwaerter, Principal
John W. Hollyer, Principal
David R. Glocke, Principal
Vanguard Fixed Income Group
August 10, 2000
INVESTMENT PHILOSOPHY
The funds reflect a belief that investors who want the unparalleled credit
quality of U.S. Treasury securities should be able to select portfolios with
maturities appropriate to their needs.
8
<PAGE> 11
PERFORMANCE SUMMARIES
All of the data on this page represent past performance, which cannot be used to
predict future returns that may be achieved by the funds. An investment in a
money market fund is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency. Although the fund seeks to preserve
the value of your investment at $1 per share, it is possible to lose money by
investing in the fund. Note that income returns can fluctuate, as can the share
price of the Admiral Short-Term Treasury Fund. An investor's shares in this
fund, when redeemed, could be worth more or less than their original cost.
<TABLE>
<CAPTION>
ADMIRAL TREASURY MONEY MARKET FUND
TOTAL INVESTMENT RETURNS: DECEMBER 14, 1992-JULY 31, 2000
-------------------------------------------------------------------
ADMIRAL TREASURY AVERAGE
MONEY MARKET FUND FUND*
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
1993 0.0% 0.4% 0.4% 0.4%
1994 0.0 3.0 3.0 2.6
1995 0.0 4.2 4.2 3.8
1996 0.0 5.7 5.7 5.3
1997 0.0 5.2 5.2 4.7
1998 0.0 5.3 5.3 4.8
1999 0.0 5.1 5.1 4.6
2000 0.0 4.8 4.8 4.3
2001** 0.0 2.9 2.9 2.6
-------------------------------------------------------------------
</TABLE>
SEC 7-Day Annualized Yield (7/31/2000): 5.98%
*Average Treasury Money Market Fund; derived from data provided by Lipper Inc.
**Six months ended July 31, 2000.
See Financial Highlights table on page 27 for dividend information for the past
five years.
<TABLE>
<CAPTION>
ADMIRAL SHORT-TERM TREASURY FUND
TOTAL INVESTMENT RETURNS: DECEMBER 14, 1992-JULY 31, 2000
--------------------------------------------------------------------
ADMIRAL SHORT-TERM TREASURY FUND LEHMAN*
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
1993 1.7% 0.7% 2.4% 2.3%
1994 1.0 4.5 5.5 6.1
1995 -4.6 5.2 0.6 -0.1
1996 4.7 6.7 11.4 12.0
1997 -1.9 6.0 4.1 4.1
1998 1.1 6.1 7.2 7.9
1999 1.1 5.6 6.7 7.0
2000 -3.9 5.3 1.4 1.3
2001** 0.8 3.1 3.9 4.0
--------------------------------------------------------------------
</TABLE>
*Lehman 1-5 Year Treasury Index.
**Six months ended July 31, 2000.
See Financial Highlights table on page 28 for dividend and capital gains
information for the past five years.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS: PERIODS ENDED JUNE 30, 2000*
---------------------------------------------------------------------------------------------------------------------------------
SINCE INCEPTION
INCEPTION -----------------------------------
DATE 1 YEAR 5 YEARS CAPITAL INCOME TOTAL
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Admiral Treasury Money Market Fund 12/14/1992 -5.29% 5.22% 0.00% 4.78% 4.78%
Admiral Short-Term Treasury Fund 12/14/1992 4.68 5.55 -0.04 5.63 5.59
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*SEC rules require that we provide this average annual total return information
through the latest calendar quarter.
9
<PAGE> 12
PERFORMANCE SUMMARIES (continued)
All of the data on this page represent past performance, which cannot be used to
predict future returns that may be achieved by the funds. Note, too, that both
share price and return can fluctuate. An investor's shares, when redeemed, could
be worth more or less than their original cost.
<TABLE>
<CAPTION>
ADMIRAL INTERMEDIATE-TERM TREASURY FUND
TOTAL INVESTMENT RETURNS: DECEMBER 14, 1992-JULY 31, 2000
--------------------------------------------------------------------
ADMIRAL INTERMEDIATE-TERM
TREASURY FUND LEHMAN*
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
1993 2.9% 0.9% 3.8% 3.8%
1994 4.1 5.8 9.9 10.6
1995 -9.4 5.7 -3.7 -4.5
1996 11.7 7.5 19.2 19.6
1997 -5.0 6.3 1.3 1.3
1998 4.2 6.8 11.0 11.7
1999 3.3 6.1 9.4 10.0
2000 -9.9 5.6 -4.3 -5.0
2001** 2.5 3.4 5.9 6.3
--------------------------------------------------------------------
</TABLE>
*Lehman 5-10 Year Treasury Index.
**Six months ended July 31, 2000.
See Financial Highlights table on page 28 for dividend and capital gains
information for the past five years.
<TABLE>
<CAPTION>
ADMIRAL LONG-TERM TREASURY FUND
TOTAL INVESTMENT RETURNS: DECEMBER 14, 1992-JULY 31, 2000
--------------------------------------------------------------------
ADMIRAL LONG-TERM TREASURY FUND LEHMAN*
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
1993 3.0% 1.0% 4.0% 3.8%
1994 8.6 7.3 15.9 16.7
1995 -12.9 6.3 -6.6 -7.5
1996 18.6 8.1 26.7 27.4
1997 -8.1 6.4 -1.7 -1.6
1998 9.8 7.3 17.1 18.3
1999 5.9 6.2 12.1 12.3
2000 -13.7 5.4 -8.3 -8.3
2001** 5.8 3.3 9.1 9.4
--------------------------------------------------------------------
</TABLE>
*Lehman Long Treasury Index.
**Six months ended July 31, 2000.
See Financial Highlights table on page 29 for dividend and capital gains
information for the past five years.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS: PERIODS ENDED JUNE 30, 2000*
------------------------------------------------------------------------------------------------------------------------------------
SINCE INCEPTION
INCEPTION -----------------------------------
DATE 1 YEAR 5 YEARS CAPITAL INCOME TOTAL
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Admiral Intermediate-Term Treasury Fund 12/14/1992 4.57% 5.93% 0.31% 6.30% 6.61%
Admiral Long-Term Treasury Fund 12/14/1992 6.43 7.07 1.45 6.75 8.20
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*SEC rules require that we provide this average annual total return information
through the latest calendar quarter.
10
<PAGE> 13
FUND PROFILE
ADMIRAL TREASURY MONEY MARKET FUND
This Profile provides a snapshot of the fund's characteristics as of July 31,
2000. Key elements of this Profile are defined on page 12.
<TABLE>
<CAPTION>
FINANCIAL ATTRIBUTES
----------------------------------------------------------------------
<S> <C>
Yield 6.0%
Average Maturity 58 days
Average Quality Treasury
Expense Ratio 0.15%*
</TABLE>
*Annualized.
<TABLE>
<CAPTION>
DISTRIBUTION BY CREDIT QUALITY
(% OF PORTFOLIO)
----------------------------------------------------------------------
<S> <C>
Treasury 100.0%
</TABLE>
11
<PAGE> 14
AVERAGE COUPON. The average interest rate paid on the securities held by a fund.
It is expressed as a percentage of face value.
AVERAGE DURATION. An estimate of how much a bond fund's share price will
fluctuate in response to a change in interest rates. To see how the price could
shift, multiply the fund's duration by the change in rates. If interest rates
rise by one percentage point, the share price of a fund with an average duration
of five years would decline by about 5%. If rates decrease by a percentage
point, the fund's share price would rise by 5%.
AVERAGE MATURITY. The average length of time until bonds held by a fund reach
maturity (or are called) and are repaid. In general, the longer the average
maturity, the more a fund's share price will fluctuate in response to changes in
market interest rates.
AVERAGE QUALITY. An indicator of credit risk, this figure is the average of the
ratings assigned to a fund's securities holdings by credit-rating agencies. The
agencies make their judgment after appraising an issuer's ability to meet its
obligations. U.S. Treasury securities are considered to have the highest credit
quality, with U.S. agency bonds almost equally high.
BETA. A measure of the magnitude of a fund's past share-price fluctuations in
relation to the ups and downs of the overall market (or appropriate market
index). The market (or index) is assigned a beta of 1.00, so a fund with a beta
of 1.20 would have seen its share price rise or fall by 12% when the overall
market rose or fell by 10%.
CASH INVESTMENTS. The percentage of a fund's net assets invested in "cash
equivalents"--highly liquid, short-term, interest-bearing securities. This
figure does not include cash invested in futures contracts to simulate bond
investment.
DISTRIBUTION BY CREDIT QUALITY. This breakdown of a fund's securities by credit
rating can help in gauging the risk that returns could be affected by defaults
or other credit problems.
DISTRIBUTION BY MATURITY. An indicator of interest-rate risk. In general, the
higher the concentration of longer-maturity issues, the more a fund's share
price will fluctuate in response to changes in interest rates.
EXPENSE RATIO. The percentage of a fund's average net assets used to pay its
annual administrative and advisory expenses. These expenses directly reduce
returns to investors.
INVESTMENT FOCUS. This grid indicates the focus of a fund in terms of two
attributes: average maturity (short, medium, or long) and average credit quality
(Treasury/agency, investment-grade corporate, or below investment-grade).
R-SQUARED. A measure of how much of a fund's past returns can be explained by
the returns from the overall market (or its benchmark index). If a fund's total
return were precisely synchronized with the overall market's return, its
R-squared would be 1.00. If a fund's returns bore no relationship to the
market's returns, its R-squared would be 0.
YIELD. A snapshot of a fund's interest income. The yield, expressed as a
percentage of the fund's net asset value, is based on income earned over the
past 30 days (7 days for money market funds) and is annualized, or projected
forward for the coming year.
YIELD TO MATURITY. The rate of return an investor would receive if the
securities held by a fund were held to their maturity dates.
12
<PAGE> 15
FUND PROFILE
ADMIRAL SHORT-TERM TREASURY FUND
This Profile provides a snapshot of the fund's characteristics as of July 31,
2000, compared where appropriate to an unmanaged index. Key elements of this
Profile are defined on page 12.
<TABLE>
<CAPTION>
FINANCIAL ATTRIBUTES
----------------------------------------------------------------------
ADMIRAL LEHMAN
SHORT-TERM INDEX*
----------------------------------------------------------------------
<S> <C> <C>
Number of Issues 35 5,974
Yield 6.6% 6.9%
Yield to Maturity 6.6% 7.2%
Average Coupon 6.1% 6.9%
Average Maturity 2.5 years 8.8 years
Average Quality Treasury Aaa
Average Duration 2.0 years 4.9 years
Expense Ratio 0.15%** --
Cash Investments 1.7% --
</TABLE>
*Lehman Aggregate Bond Index.
**Annualized.
<TABLE>
<CAPTION>
INVESTMENT FOCUS
----------------------------------------------------------------------
<S> <C>
AVERAGE MATURITY Short
CREDIT QUALITY Treasury/Agency
</TABLE>
<TABLE>
<CAPTION>
VOLATILITY MEASURES
----------------------------------------------------------------------
ADMIRAL LEHMAN
SHORT-TERM INDEX*
----------------------------------------------------------------------
<S> <C> <C>
R-Squared 0.82 1.00
Beta 0.52 1.00
</TABLE>
*Lehman Aggregate Bond Index.
<TABLE>
<CAPTION>
DISTRIBUTION BY CREDIT QUALITY
(% OF PORTFOLIO)
----------------------------------------------------------------------
<S> <C>
Treasury 89.8%
Agency 10.2
----------------------------------------------------------------------
Total 100.0%
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY MATURITY
(% OF PORTFOLIO)
----------------------------------------------------------------------
<S> <C>
Under 1 Year 1.2%
1-3 Years 72.5
3-5 Years 21.5
Over 5 Years 4.8
----------------------------------------------------------------------
Total 100.0%
</TABLE>
13
<PAGE> 16
FUND PROFILE
ADMIRAL INTERMEDIATE-TERM TREASURY FUND
This Profile provides a snapshot of the fund's characteristics as of July 31,
2000, compared where appropriate to an unmanaged index. Key elements of this
Profile are defined on page 12.
<TABLE>
<CAPTION>
FINANCIAL ATTRIBUTES
----------------------------------------------------------------------
ADMIRAL LEHMAN
INTERMEDIATE-TERM INDEX*
----------------------------------------------------------------------
<S> <C> <C>
Number of Issues 35 5,974
Yield 6.5% 6.9%
Yield to Maturity 6.5% 7.2%
Average Coupon 7.2% 6.9%
Average Maturity 7.6 years 8.8 years
Average Quality Treasury Aaa
Average Duration 5.3 years 4.9 years
Expense Ratio 0.15%** --
Cash Investments 3.0% --
</TABLE>
*Lehman Aggregate Bond Index.
**Annualized.
<TABLE>
<CAPTION>
INVESTMENT FOCUS
----------------------------------------------------------------------
<S> <C>
AVERAGE MATURITY MEDIUM
CREDIT QUALITY TREASURY/AGENCY
</TABLE>
<TABLE>
<CAPTION>
VOLATILITY MEASURES
----------------------------------------------------------------------
ADMIRAL LEHMAN
INTERMEDIATE-TERM INDEX*
----------------------------------------------------------------------
<S> <C> <C>
R-Squared 0.92 1.00
Beta 1.38 1.00
</TABLE>
*Lehman Aggregate Bond Index.
<TABLE>
<CAPTION>
DISTRIBUTION BY CREDIT QUALITY
(% OF PORTFOLIO)
----------------------------------------------------------------------
<S> <C>
Treasury 92.8%
Agency 7.2
----------------------------------------------------------------------
Total 100.0%
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY MATURITY
(% OF PORTFOLIO)
----------------------------------------------------------------------
<S> <C>
Under 1 Year 1.6%
1-5 Years 13.4
5-10 Years 79.0
10-20 Years 4.7
20-30 Years 1.3
Over 30 Years 0.0
----------------------------------------------------------------------
Total 100.0%
</TABLE>
14
<PAGE> 17
FUND PROFILE
ADMIRAL LONG-TERM TREASURY FUND
This Profile provides a snapshot of the fund's characteristics as of July 31,
2000, compared where appropriate to an unmanaged index. Key elements of this
Profile are defined on page 12.
<TABLE>
<CAPTION>
FINANCIAL ATTRIBUTES
----------------------------------------------------------------------
ADMIRAL LEHMAN
LONG-TERM INDEX*
----------------------------------------------------------------------
<S> <C> <C>
Number of Issues 19 5,974
Yield 6.2% 6.9%
Yield to Maturity 6.2% 7.2%
Average Coupon 7.8% 6.9%
Average Maturity 18.3 years 8.8 years
Average Quality Treasury Aaa
Average Duration 9.6 years 4.9 years
Expense Ratio 0.15%** --
Cash Investments 3.3% --
----------------------------------------------------------------------
</TABLE>
*Lehman Aggregate Bond Index.
**Annualized.
<TABLE>
<CAPTION>
INVESTMENT FOCUS
----------------------------------------------------------------------
<S> <C>
AVERAGE MATURITY LONG
CREDIT QUALITY TREASURY/AGENCY
</TABLE>
<TABLE>
<CAPTION>
VOLATILITY MEASURES
----------------------------------------------------------------------
ADMIRAL LEHMAN
LONG-TERM INDEX*
----------------------------------------------------------------------
<S> <C> <C>
R-Squared 0.84 1.00
Beta 1.99 1.00
</TABLE>
*Lehman Aggregate Bond Index.
<TABLE>
<CAPTION>
DISTRIBUTION BY CREDIT QUALITY
(% OF PORTFOLIO)
----------------------------------------------------------------------
<S> <C>
Treasury 94.4%
Agency 5.6
----------------------------------------------------------------------
Total 100.0%
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY MATURITY
(% OF PORTFOLIO)
----------------------------------------------------------------------
<S> <C>
Under 1 Year 1.3%
1-5 Years 0.0
5-10 Years 13.6
10-20 Years 39.3
20-30 Years 45.8
Over 30 Years 0.0
----------------------------------------------------------------------
Total 100.0%
</TABLE>
15
<PAGE> 18
FINANCIAL STATEMENTS
JULY 31, 2000 (UNAUDITED)
STATEMENT OF NET ASSETS
This Statement provides a detailed list of each fund's holdings including each
security's market value on the last day of the reporting period. Other assets
are added to, and liabilities are subtracted from, the value of Total
Investments to calculate the fund's Net Assets. Finally, Net Assets are divided
by the outstanding shares of the fund to arrive at its share price, or Net Asset
Value (NAV) Per Share.
At the end of the Statement of Net Assets of each fund, you will find a
table displaying the composition of the fund's net assets on both a dollar and
per-share basis. Undistributed Net Investment Income is usually zero because the
fund distributes its net income to shareholders as a dividend each day. Any
realized gains must be distributed annually, so the bulk of net assets consists
of Paid in Capital (money invested by shareholders). The balance shown for
Accumulated Net Realized Gains usually approximates the amount available to
distribute to shareholders as capital gains as of the statement date, but may
differ because certain investments or transactions may be treated differently
for financial statement and tax purposes. Any Accumulated Net Realized Losses,
and any cumulative excess of distributions over net realized gains, will appear
as negative balances. Unrealized Appreciation (Depreciation) is the difference
between the value of the fund's investments and their cost, and reflects the
gains (losses) that would be realized if the fund were to sell all of its
investments at their statement-date values.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
ADMIRAL TREASURY MONEY MARKET FUND YIELD** DATE (000) (000)
--------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES (98.9%)
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Bill 5.629%-5.881% 9/7/2000 $413,003 $ 410,579
U.S. Treasury Bill 5.825%-5.922% 8/24/2000 464,918 463,195
U.S. Treasury Bill 5.996% 9/14/2000 2,824 2,804
U.S. Treasury Bill 5.594%-6.037% 10/5/2000 115,824 114,578
U.S. Treasury Bill 6.073% 10/12/2000 8,176 8,078
U.S. Treasury Bill 6.037%-6.103% 8/10/2000 130,302 130,070
U.S. Treasury Bill 6.076%-6.122% 10/26/2000 369,278 363,973
U.S. Treasury Bill 5.774%-6.175% 8/17/2000 881,932 879,553
U.S. Treasury Bill 6.175%-6.196% 11/2/2000 433,000 426,338
U.S. Treasury Bill 6.217% 1/18/2001 4,287 4,165
U.S. Treasury Bond 5.750% 11/15/2000 159,931 159,656
U.S. Treasury Note 4.000% 10/31/2000 400,000 397,745
U.S. Treasury Note 4.500% 9/30/2000 618,438 616,567
U.S. Treasury Note 4.500% 1/31/2001 71,730 71,047
U.S. Treasury Note 4.625% 11/30/2000 97,500 96,956
U.S. Treasury Note 5.000% 2/28/2001 220,000 218,296
U.S. Treasury Note 5.125% 8/31/2000 382,585 382,206
U.S. Treasury Note 5.250% 1/31/2001 60,000 59,645
U.S. Treasury Note 5.625% 11/30/2000 60,000 59,863
U.S. Treasury Note 5.750% 10/31/2000 50,000 49,935
U.S. Treasury Note 6.000% 8/15/2000 308,754 308,749
U.S. Treasury Note 6.125% 9/30/2000 290,000 289,793
U.S. Treasury Note 6.250% 8/31/2000 274,396 274,371
U.S. Treasury Note 8.500% 11/15/2000 38,000 38,227
--------------------------------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT SECURITIES
(COST $5,826,389) 5,826,389
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE> 19
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
MARKET
VALUE*
(000)
--------------------------------------------------------------------------------------------------------------------------------
<S> <C>
OTHER ASSETS AND LIABILITIES--NET (1.1%) $ 64,214
--------------------------------------------------------------------------------------------------------------------------------
NET ASSETS (100%)
--------------------------------------------------------------------------------------------------------------------------------
Applicable to 5,890,391,606 outstanding $.001 par value shares of beneficial interest
(unlimited authorization) $5,890,603
================================================================================================================================
NET ASSET VALUE PER SHARE $1.00
================================================================================================================================
</TABLE>
*See Note A in Notes to Financial Statements.
**Represents annualized yield at date of purchase for discount securities, and
coupon for coupon-bearing securities.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments in Securities, at Value $5,826,389
Receivables for Investment Securities Sold 428,126
Other Assets--Note B 87,600
----------
Total Assets 6,342,115
----------
LIABILITIES
Payables for Investment Securities Purchased 426,338
Other Liabilities 25,174
----------
Total Liabilities 451,512
----------
--------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $5,890,603
================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
AT JULY 31, 2000, NET ASSETS CONSISTED OF:
--------------------------------------------------------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Paid in Capital $5,890,391 $1.00
Undistributed Net Investment Income -- --
Accumulated Net Realized Gains 212 --
Unrealized Appreciation -- --
--------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $5,890,603 $1.00
================================================================================================================================
</TABLE>
17
<PAGE> 20
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
ADMIRAL SHORT-TERM TREASURY FUND COUPON DATE (000) (000)
--------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS (98.3%)
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT SECURITIES (88.1%)
U.S. Treasury Inflation-Indexed Note 4.250% 1/15/2010 $ 20,363 $ 20,733
U.S. Treasury Note 5.500% 2/28/2003 47,500 46,566
U.S. Treasury Note 5.500% 3/31/2003 48,000 47,036
U.S. Treasury Note 5.500% 5/31/2003 5,000 4,894
U.S. Treasury Note 5.625% 9/30/2001 31,000 30,714
U.S. Treasury Note 5.750% 11/30/2002 42,600 42,053
U.S. Treasury Note 5.750% 4/30/2003 71,200 70,178
U.S. Treasury Note 5.750% 8/15/2003 6,000 5,907
U.S. Treasury Note 5.875% 10/31/2001 105,500 104,787
U.S. Treasury Note 5.875% 11/30/2001 10,000 9,930
U.S. Treasury Note 6.250% 1/31/2002 115,000 114,737
U.S. Treasury Note 6.250% 2/15/2003 4,000 3,991
U.S. Treasury Note 6.375% 1/31/2002 61,000 60,963
U.S. Treasury Note 6.625% 4/30/2002 (4) 78,500 78,794
U.S. Treasury Note 7.500% 11/15/2001 39,800 40,307
Bariven, SA Eximbank Guaranteed Export Financing
(U.S. Government Guaranteed) 6.277% 4/15/2001 (1)(3) 1,600 1,597
Eximbank Guaranteed Export Financing
(U.S. Government Guaranteed) 5.730% 7/15/2001 (1)(2) 21,427 21,224
Guaranteed Export Trust (U.S. Government Guaranteed) 7.460% 12/15/2002 (1) 5,739 5,793
Guaranteed Trade Trust (U.S. Government Guaranteed) 6.104% 7/15/2003 (1) 20,000 19,684
Overseas Private Investment Corp. (U.S. Government Guaranteed) 5.100% 6/30/2007 (1) 15,200 14,159
Overseas Private Investment Corp. (U.S. Government Guaranteed) 5.696% 2/1/2005 (1) 5,000 4,871
Overseas Private Investment Corp. (U.S. Government Guaranteed) 5.735% 1/15/2001 (1) 3,250 3,243
Overseas Private Investment Corp. (U.S. Government Guaranteed) 5.760% 6/15/2006 (1) 16,000 15,418
Overseas Private Investment Corp. (U.S. Government Guaranteed) 5.926% 6/15/2005 (1) 9,447 9,166
Overseas Private Investment Corp. (U.S. Government Guaranteed) 7.450% 12/15/2010 (1) 14,318 14,250
Private Export Funding Corp. (U.S. Government Guaranteed) 5.730% 1/15/2004 65,950 63,414
Private Export Funding Corp. (U.S. Government Guaranteed) 6.310% 9/30/2004 10,000 9,740
Private Export Funding Corp. (U.S. Government Guaranteed) 6.450% 9/30/2004 40,000 39,160
Private Export Funding Corp. (U.S. Government Guaranteed) 7.650% 5/15/2006 14,500 14,897
Vendee Mortgage Trust (U.S. Government Guaranteed) 7.250% 8/15/2004 (1) 4,544 4,539
----------
922,745
----------
AGENCY BONDS AND NOTES (4.6%)
Federal Farm Credit Bank 5.730% 7/28/2003 9,361 9,058
Federal Home Loan Mortgage Corp. 5.000% 1/15/2004 10,500 9,869
Federal National Mortgage Assn. 6.130% 6/3/2004 30,000 28,938
----------
47,865
----------
MORTGAGE-BACKED SECURITIES (5.6%)
Federal Home Loan Mortgage Corp. 6.000% 8/1/2006 (1) 37,994 36,268
Federal National Mortgage Assn. 6.000% 11/15/2003 (1) 22,894 22,004
----------
58,272
----------
--------------------------------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS
(COST $1,037,037) 1,028,882
--------------------------------------------------------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS (8.6%)
--------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS
Collateralized by U.S. Government Obligations
in a Pooled Cash Account 6.59% 8/1/2000 12,119 12,119
Collateralized by U.S. Government Obligations
in a Pooled Cash Account--Note G 6.60% 8/1/2000 77,736 77,736
--------------------------------------------------------------------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(COST $89,855) 89,855
--------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (106.9%)
(COST $1,126,892) 1,118,737
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE> 21
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
MARKET
VALUE*
(000)
--------------------------------------------------------------------------------------------------------------------------------
<S> <C>
OTHER ASSETS AND LIABILITIES (-6.9%)
--------------------------------------------------------------------------------------------------------------------------------
Other Assets--Note B $ 13,800
Security Lending Collateral Payable to Brokers--Note G (77,736)
Other Liabilities (7,817)
----------
(71,753)
--------------------------------------------------------------------------------------------------------------------------------
NET ASSETS (100%)
--------------------------------------------------------------------------------------------------------------------------------
Applicable to 105,857,621 outstanding $.001 par value shares of beneficial interest
(unlimited authorization) $1,046,984
================================================================================================================================
NET ASSET VALUE PER SHARE $9.89
================================================================================================================================
</TABLE>
*See Note A in Notes to Financial Statements.
(1) The average maturity is shorter than the final maturity shown due to
scheduled interim principal payments.
(2) Security exempt from registration under Rule 144A of the Securities Act of
1933. This security may be sold in transactions exempt from registration,
normally to qualified institutional buyers. At July 31, 2000, the value of
this security was $21,224,000, representing 2.0% of net assets.
(3) Restricted security representing 0.2% of net assets at July 31, 2000.
(4) Securities with a value of $1,004,000 have been segregated as initial margin
for open futures contracts.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
AT JULY 31, 2000, NET ASSETS CONSISTED OF:
--------------------------------------------------------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Paid in Capital $1,076,019 $10.16
Undistributed Net Investment Income -- --
Accumulated Net Realized Losses (20,796) (.19)
Unrealized Depreciation--Note F
Investment Securities (8,155) (.08)
Futures Contracts (84) --
--------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $1,046,984 $ 9.89
================================================================================================================================
</TABLE>
19
<PAGE> 22
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
ADMIRAL INTERMEDIATE-TERM TREASURY FUND COUPON DATE (000) (000)
--------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS (97.0%)
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT SECURITIES (89.9%)
U.S. Treasury Bond 7.500% 11/15/2016 $ 48,115 $ 54,841
U.S. Treasury Bond 10.375% 11/15/2012 180,850 222,322
U.S. Treasury Bond 11.250% 2/15/2015 3,900 5,788
U.S. Treasury Inflation-Indexed Note 3.875% 4/15/2029 16,267 16,337
U.S. Treasury Inflation-Indexed Note 4.250% 1/15/2010 26,798 27,285
U.S. Treasury Note 6.000% 8/15/2009 41,200 40,923
U.S. Treasury Note 6.125% 8/15/2007 167,300 166,771
U.S. Treasury Note 6.500% 8/15/2005 10,000 10,120
U.S. Treasury Note 6.500% 10/15/2006 51,800 52,576
U.S. Treasury Note 6.500% 2/15/2010 7,305 7,546
U.S. Treasury Note 6.875% 5/15/2006 33,100 34,152
U.S. Treasury Note 7.000% 7/15/2006 163,200 169,508
U.S. Treasury Note 7.500% 2/15/2005 73,850 77,489
Export Funding Trust (U.S. Government Guaranteed) 8.210% 12/29/2006 (1) 6,539 6,754
Government Export Trust (U.S. Government Guaranteed) 6.000% 3/15/2005 (1) 5,929 5,831
Guaranteed Export Trust (U.S. Government Guaranteed) 7.460% 12/15/2005 (1) 7,652 7,724
Guaranteed Trade Trust (U.S. Government Guaranteed) 6.690% 1/15/2009 (1)(2) 15,531 15,175
Guaranteed Trade Trust (U.S. Government Guaranteed) 7.390% 6/26/2006 (1) 1,430 1,435
Guaranteed Trade Trust (U.S. Government Guaranteed) 7.800% 8/15/2006 (1) 5,417 5,512
Guaranteed Trade Trust (U.S. Government Guaranteed) 8.170% 1/15/2007 (1) 2,167 2,242
Overseas Private Investment Corp. (U.S. Government Guaranteed) 5.940% 6/20/2006 (1) 3,158 3,067
Overseas Private Investment Corp. (U.S. Government Guaranteed) 6.080% 8/15/2004 (1) 15,778 15,428
Overseas Private Investment Corp. (U.S. Government Guaranteed) 6.726% 9/15/2010 (1) 8,217 8,123
Overseas Private Investment Corp. (U.S. Government Guaranteed) 6.750% 12/15/2008 (1) 11,333 11,225
Overseas Private Investment Corp. (U.S. Government Guaranteed) 7.050% 11/15/2013 (1) 36,161 36,161
Overseas Private Investment Corp. (U.S. Government Guaranteed) 7.600% 12/15/2012 (1) 11,000 11,084
Private Export Funding Corp. (U.S. Government Guaranteed) 6.490% 7/15/2007 5,500 5,319
Private Export Funding Corp. (U.S. Government Guaranteed) 5.250% 5/15/2005 28,000 25,997
Private Export Funding Corp. (U.S. Government Guaranteed) 5.870% 7/31/2008 49,800 45,874
Private Export Funding Corp. (U.S. Government Guaranteed) 7.110% 4/15/2007 14,125 14,132
Private Export Funding Corp. (U.S. Government Guaranteed) 7.200% 11/15/2010 5,700 5,719
Private Export Funding Corp. (U.S. Government Guaranteed) 7.250% 6/15/2010 60,500 60,873
Private Export Funding Corp. (U.S. Government Guaranteed) 7.650% 5/15/2006 6,675 6,858
----------
1,180,191
----------
AGENCY BONDS AND NOTES (7.1%)
Federal Home Loan Mortgage Corp. 7.000% 3/15/2010 18,870 18,706
Federal National Mortgage Assn. 7.125% 6/15/2010 74,620 74,742
----------
93,448
----------
--------------------------------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS
(COST $1,291,307) 1,273,639
--------------------------------------------------------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS (29.9%)
--------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS
Collateralized by U.S. Government Obligations
in a Pooled Cash Account 6.59% 8/1/2000 21,004 21,004
Collateralized by U.S. Government Obligations
in a Pooled Cash Account--Note G 6.60% 8/1/2000 372,154 372,154
--------------------------------------------------------------------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(COST $393,158) 393,158
--------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (126.9%)
(COST $1,684,465) 1,666,797
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
20
<PAGE> 23
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
MARKET
VALUE*
(000)
--------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-26.9%)
--------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Other Assets--Note B $ 21,145
Security Lending Collateral Payable to Brokers--Note G (372,154)
Other Liabilities (2,605)
----------
(353,614)
--------------------------------------------------------------------------------------------------------------------------------
NET ASSETS (100%)
--------------------------------------------------------------------------------------------------------------------------------
Applicable to 130,352,383 outstanding $.001 par value shares of beneficial interest
(unlimited authorization) $1,313,183
================================================================================================================================
NET ASSET VALUE PER SHARE $10.07
================================================================================================================================
</TABLE>
*See Note A in Notes to Financial Statements.
(1) The average maturity is shorter than the final maturity shown due to
scheduled interim principal payments.
(2) Security exempt from registration under Rule 144A of the Securities Act of
1933. This security may be sold in transactions exempt from registration,
normally to qualified institutional buyers. At July 31, 2000, the value of
this security was $15,175,000, representing 1.2% of net assets.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
AT JULY 31, 2000, NET ASSETS CONSISTED OF:
--------------------------------------------------------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Paid in Capital $1,365,304 $10.47
Undistributed Net Investment Income -- --
Accumulated Net Realized Losses (34,453) (.26)
Unrealized Depreciation--Note F
Investment Securities (17,668) (.14)
Futures Contracts -- --
--------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $1,313,183 $10.07
================================================================================================================================
</TABLE>
21
<PAGE> 24
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
ADMIRAL LONG-TERM TREASURY FUND COUPON DATE (000) (000)
--------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS (96.7%)
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT SECURITIES (91.2%)
U.S. Treasury Bond 6.000% 2/15/2026 $ 100 $ 99
U.S. Treasury Bond 6.250% 5/15/2030 8,930 9,512
U.S. Treasury Bond 6.750% 8/15/2026 35,785 39,088
U.S. Treasury Bond 6.875% 8/15/2025 2,200 2,429
U.S. Treasury Bond 7.500% 11/15/2016 11,080 12,629
U.S. Treasury Bond 7.875% 2/15/2021 51,279 61,724
U.S. Treasury Bond 8.125% 5/15/2021 61,425 75,795
U.S. Treasury Bond 8.125% 8/15/2019 26,608 32,524
U.S. Treasury Bond 8.875% 2/15/2019 40,953 53,263
U.S. Treasury Bond 9.250% 2/15/2016 21,150 27,663
U.S. Treasury Bond 9.875% 11/15/2015 27,400 37,423
U.S. Treasury Inflation-Indexed Note 4.027% 1/15/2009 4,660 4,811
U.S. Treasury Inflation-Indexed Note 4.046% 4/15/2029 2,500 2,616
U.S. Treasury Inflation-Indexed Note 4.305% 1/15/2010 6,285 6,515
Private Export Funding Corp. (U.S. Government Guaranteed) 6.670% 9/15/2009 4,000 3,860
Private Export Funding Corp. (U.S. Government Guaranteed) 7.200% 11/15/2010 1,950 1,957
Private Export Funding Corp. (U.S. Government Guaranteed) 7.250% 6/15/2010 16,650 16,753
----------
388,661
----------
AGENCY BONDS AND NOTES (5.5%)
Federal Home Loan Bank 5.800% 9/2/2008 20,225 18,534
Federal Home Loan Mortgage Corp. 7.000% 3/15/2010 4,650 4,610
----------
23,144
----------
--------------------------------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS
(COST $399,967) 411,805
--------------------------------------------------------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS (5.2%)
--------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS
Collateralized by U.S. Government Obligations
in a Pooled Cash Account 6.59% 8/1/2000 5,332 5,332
Collateralized by U.S. Government Obligations
in a Pooled Cash Account--Note G 6.60% 8/1/2000 16,862 16,862
--------------------------------------------------------------------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(COST $22,194) 22,194
--------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (101.9%)
(COST $422,161) 433,999
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 25
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
MARKET
VALUE*
(000)
--------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-1.9%)
--------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Other Assets--Note B $ 10,437
Security Lending Collateral Payable to Brokers--Note G (16,862)
Other Liabilities (1,554)
----------
(7,979)
--------------------------------------------------------------------------------------------------------------------------------
NET ASSETS (100%)
--------------------------------------------------------------------------------------------------------------------------------
Applicable to 40,173,718 outstanding $.001 par value shares of beneficial interest
(unlimited authorization) $ 426,020
================================================================================================================================
NET ASSET VALUE PER SHARE $ 10.60
================================================================================================================================
</TABLE>
*See Note A in Notes to Financial Statements.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
AT JULY 31, 2000, NET ASSETS CONSISTED OF:
--------------------------------------------------------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Paid in Capital $ 425,247 $ 10.59
Undistributed Net Investment Income -- --
Accumulated Net Realized Loss (11,065) (.28)
Unrealized Appreciation--Note F
Investment Securities 11,838 .29
Futures Contracts -- --
--------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 426,020 $ 10.60
================================================================================================================================
</TABLE>
23
<PAGE> 26
STATEMENT OF OPERATIONS
This Statement shows interest earned by each fund during the reporting period,
and details the operating expenses charged to the fund. These expenses directly
reduce the amount of investment income available to pay to shareholders as
income dividends. This Statement also shows any Net Gain (Loss) realized on the
sale of investments, and the increase or decrease in the Unrealized Appreciation
(Depreciation) on investments during the period. If a fund invested in futures
contracts during the period, the results of these investments are shown
separately.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
ADMIRAL ADMIRAL ADMIRAL ADMIRAL
TREASURY SHORT-TERM INTERMEDIATE-TERM LONG-TERM
MONEY MARKET TREASURY TREASURY TREASURY
FUND FUND FUND FUND
--------------------------------------------------------------------------------
SIX MONTHS ENDED JULY 31, 2000
--------------------------------------------------------------------------------
(000) (000) (000) (000)
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
INCOME
Interest $168,848 $33,376 $41,896 $13,618
Security Lending -- 104 373 41
--------------------------------------------------------------------------------
Total Income 168,848 33,480 42,269 13,659
--------------------------------------------------------------------------------
EXPENSES
The Vanguard Group--Note B
Investment Advisory Services 356 67 78 26
Management and Administrative 3,315 615 742 238
Marketing and Distribution 564 108 122 41
Custodian Fees 51 14 10 8
Auditing Fees 5 3 3 3
Shareholders' Reports 46 4 5 3
Trustees' Fees and Expenses 4 -- 1 --
--------------------------------------------------------------------------------
Total Expenses 4,341 811 961 319
Expenses Paid Indirectly--Note C (3) -- -- --
--------------------------------------------------------------------------------
Net Expenses 4,338 811 961 319
-----------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 164,510 32,669 41,308 13,340
-----------------------------------------------------------------------------------------------------------------------------
REALIZED NET GAIN (LOSS)
Investment Securities Sold 185 (5,868) (624) (1,319)
Futures Contracts -- (91) (25) 53
-----------------------------------------------------------------------------------------------------------------------------
REALIZED NET GAIN (LOSS) 185 (5,959) (649) (1,266)
-----------------------------------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION)
Investment Securities -- 14,988 33,965 26,105
Futures Contracts -- (84) 190 15
-----------------------------------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) -- 14,904 34,155 26,120
-----------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $164,695 $41,614 $74,814 $38,194
=============================================================================================================================
</TABLE>
24
<PAGE> 27
STATEMENT OF CHANGES IN NET ASSETS
This Statement shows how each fund's total net assets changed during the two
most recent reporting periods. The Operations section summarizes information
detailed in the Statement of Operations. Because the fund distributes its income
to shareholders each day, the amounts of Distributions--Net Investment Income
generally equal the net income earned as shown under the Operations section. The
amounts of Distributions--Realized Capital Gain may not match the capital gains
shown in the Operations section, because distributions are determined on a tax
basis and may be made in a period different from the one in which the gains were
realized on the financial statements. The Capital Share Transactions section
shows the amount shareholders invested in the fund, either by purchasing shares
or by reinvesting distributions, and the amounts redeemed. The corresponding
numbers of Shares Issued and Redeemed are shown at the end of the Statement.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
ADMIRAL TREASURY ADMIRAL SHORT-TERM
MONEY MARKET FUND TREASURY FUND
--------------------------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
JUL. 31, 2000 JAN. 31, 2000 JUL. 31, 2000 JAN. 31, 2000
(000) (000) (000) (000)
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net Investment Income $ 164,510 $ 259,962 $ 32,669 $ 65,330
Realized Net Gain (Loss) 185 37 (5,959) (14,724)
Change in Unrealized Appreciation (Depreciation) -- -- 14,904 (33,310)
--------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 164,695 259,999 41,614 17,296
--------------------------------------------------------------------------
DISTRIBUTIONS
Net Investment Income (164,510) (259,962) (32,669) (65,330)
Realized Capital Gain -- -- -- (2,088)
--------------------------------------------------------------------------
Total Distributions (164,510) (259,962) (32,669) (67,418)
--------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS(1)
Issued 2,953,606 5,808,863 184,147 565,512
Issued in Lieu of Cash Distributions 156,706 244,537 24,888 51,770
Redeemed (2,867,690) (5,462,597) (270,792) (724,694)
--------------------------------------------------------------------------
Net Increase (Decrease) from Capital
Share Transactions 242,622 590,803 (61,757) (107,412)
--------------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) 242,807 590,840 (52,812) (157,534)
--------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Period 5,647,796 5,056,956 1,099,796 1,257,330
--------------------------------------------------------------------------
End of Period $5,890,603 $5,647,796 $1,046,984 $1,099,796
================================================================================================================================
(1)Shares Issued (Redeemed)
Issued 2,953,606 5,808,863 18,709 56,468
Issued in Lieu of Cash Distributions 156,706 244,537 2,527 5,185
Redeemed (2,867,690) (5,462,597) (27,496) (72,513)
--------------------------------------------------------------------------
Net Increase (Decrease) in
Shares Outstanding 242,622 590,803 (6,260) (10,860)
================================================================================================================================
</TABLE>
25
<PAGE> 28
STATEMENT OF CHANGES IN NET ASSETS (continued)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
ADMIRAL INTERMEDIATE-TERM ADMIRAL LONG-TERM
TREASURY FUND TREASURY FUND
---------------------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
JUL. 31, 2000 JAN. 31, 2000 JUL. 31, 2000 JAN. 31, 2000
(000) (000) (000) (000)
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net Investment Income $ 41,308 $ 80,416 $ 13,340 $ 28,507
Realized Net Gain (Loss) (649) (33,716) (1,266) (8,790)
Change in Unrealized Appreciation (Depreciation) 34,155 (107,177) 26,120 (60,532)
---------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 74,814 (60,477) 38,194 (40,815)
---------------------------------------------------------------------
DISTRIBUTIONS
Net Investment Income (41,308) (80,416) (13,340) (28,507)
Realized Capital Gain -- (5,431) -- (4,442)
---------------------------------------------------------------------
Total Distributions (41,308) (85,847) (13,340) (32,949)
---------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS(1)
Issued 150,342 593,029 61,984 307,237
Issued in Lieu of Cash Distributions 31,664 66,698 10,050 25,103
Redeemed (187,532) (588,132) (122,329) (305,846)
---------------------------------------------------------------------
Net Increase (Decrease) from Capital
Share Transactions (5,526) 71,595 (50,295) 26,494
----------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) 27,980 (74,729) (25,441) (47,270)
----------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Period 1,285,203 1,359,932 451,461 498,731
---------------------------------------------------------------------
End of Period $1,313,183 $1,285,203 $426,020 $451,461
============================================================================================================================
(1)Shares Issued (Redeemed)
Issued 15,131 57,596 5,979 29,162
Issued in Lieu of Cash Distributions 3,176 6,530 963 2,390
Redeemed (18,884) (57,479) (11,809) (29,053)
---------------------------------------------------------------------
Net Increase (Decrease) in
Shares Outstanding (577) 6,647 (4,867) 2,499
============================================================================================================================
</TABLE>
26
<PAGE> 29
FINANCIAL HIGHLIGHTS
This table summarizes each fund's investment results and distributions to
shareholders on a per-share basis. It also presents the fund's Total Return and
shows net investment income and expenses as percentages of average net assets.
These data will help you assess: the variability of the fund's net income and
total returns from year to year; the relative contributions of net income and
capital gains to the fund's total return; how much it costs to operate the fund;
and the extent to which the fund tends to distribute capital gains. The table
also shows the Portfolio Turnover Rate, a measure of trading activity. A
turnover rate of 100% means that the average security is held in the fund for
one year. Money market funds are not required to report a Portfolio Turnover
Rate.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
ADMIRAL TREASURY MONEY MARKET FUND
YEAR ENDED JANUARY 31,
FOR A SHARE OUTSTANDING SIX MONTHS ENDED -------------------------------------------------------
THROUGHOUT EACH PERIOD JULY 31, 2000 2000 1999 1998 1997 1996
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
============================================================================================================================
INVESTMENT OPERATIONS
Net Investment Income .028 .047 .050 .052 .051 .055
Net Realized and Unrealized Gain (Loss)
on Investments -- -- -- -- -- --
------------------------------------------------------------------
Total from Investment Operations .028 .047 .050 .052 .051 .055
------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.028) (.047) (.050) (.052) (.051) (.055)
Distributions from Realized Capital Gains -- -- -- -- -- --
------------------------------------------------------------------
Total Distributions (.028) (.047) (.050) (.052) (.051) (.055)
----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
============================================================================================================================
TOTAL RETURN 2.86% 4.79% 5.12% 5.31% 5.24% 5.66%
============================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $5,891 $5,648 $5,057 $3,880 $3,247 $1,778
Ratio of Total Expenses to
Average Net Assets 0.15%* 0.15% 0.15% 0.15% 0.15% 0.15%
Ratio of Net Investment Income to
Average Net Assets 5.67%* 4.69% 4.97% 5.20% 5.12% 5.50%
============================================================================================================================
</TABLE>
*Annualized.
27
<PAGE> 30
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
ADMIRAL SHORT-TERM TREASURY FUND
YEAR ENDED JANUARY 31,
FOR A SHARE OUTSTANDING SIX MONTHS ENDED ----------------------------------------------------------
THROUGHOUT EACH PERIOD JULY 31, 2000 2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $9.81 $10.22 $10.15 $10.04 $10.23 $ 9.77
==============================================================================================================================
INVESTMENT OPERATIONS
Net Investment Income .296 .532 .548 .592 .587 .626
Net Realized and Unrealized Gain (Loss)
on Investments .080 (.393) .114 .110 (.190) .460
-------------------------------------------------------------------
Total from Investment Operations .376 .139 .662 .702 .397 1.086
-------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.296) (.532) (.548) (.592) (.587) (.626)
Distributions from Realized Capital Gains -- (.017) (.044) -- -- --
-------------------------------------------------------------------
Total Distributions (.296) (.549) (.592) (.592) (.587) (.626)
-----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $9.89 $ 9.81 $10.22 $10.15 $10.04 $10.23
==============================================================================================================================
TOTAL RETURN 3.88% 1.41% 6.70% 7.21% 4.05% 11.41%
==============================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $1,047 $1,100 $1,257 $781 $553 $426
Ratio of Total Expenses to
Average Net Assets 0.15%* 0.15% 0.15% 0.15% 0.15% 0.15%
Ratio of Net Investment Income to
Average Net Assets 6.02%* 5.32% 5.35% 5.89% 5.85% 6.22%
Portfolio Turnover Rate 218%* 120% 130% 81% 80% 95%
==============================================================================================================================
</TABLE>
*Annualized.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
ADMIRAL INTERMEDIATE-TERM TREASURY FUND
YEAR ENDED JANUARY 31,
FOR A SHARE OUTSTANDING SIX MONTHS ENDED ---------------------------------------------------------
THROUGHOUT EACH PERIOD JULY 31, 2000 2000 1999 1998 1997 1996
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.82 $10.94 $10.60 $10.17 $10.70 $ 9.58
=================================================================================================================================
INVESTMENT OPERATIONS
Net Investment Income .319 .610 .624 .645 .648 .665
Net Realized and Unrealized Gain (Loss)
on Investments .250 (1.078) .348 .430 (.530) 1.120
-------------------------------------------------------------------------
Total from Investment Operations .569 (.468) .972 1.075 .118 1.785
-------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.319) (.610) (.624) (.645) (.648) (.665)
Distributions from Realized Capital Gains -- (.042) (.008) -- -- --
-------------------------------------------------------------------------
Total Distributions (.319) (.652) (.632) (.645) (.648) (.665)
---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $10.07 $ 9.82 $10.94 $10.60 $10.17 $10.70
=================================================================================================================================
TOTAL RETURN 5.87% -4.33% 9.45% 10.98% 1.30% 19.16%
=================================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $1,313 $1,285 $1,360 $905 $659 $585
Ratio of Total Expenses to
Average Net Assets 0.15%* 0.15% 0.15% 0.15% 0.15% 0.15%
Ratio of Net Investment Income to
Average Net Assets 6.43%* 5.96% 5.80% 6.28% 6.37% 6.49%
Portfolio Turnover Rate 64%* 72% 63% 34% 52% 64%
=================================================================================================================================
</TABLE>
*Annualized.
28
<PAGE> 31
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
ADMIRAL LONG-TERM TREASURY FUND
YEAR ENDED JANUARY 31,
FOR A SHARE OUTSTANDING SIX MONTHS ENDED ----------------------------------------------------------
THROUGHOUT EACH PERIOD JULY 31, 2000 2000 1999 1998 1997 1996
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.02 $11.72 $11.12 $10.13 $11.06 $ 9.40
==================================================================================================================================
INVESTMENT OPERATIONS
Net Investment Income .324 .636 .654 .669 .681 .691
Net Realized and Unrealized Gain (Loss)
on Investments .580 (1.597) .653 .990 (.900) 1.749
-------------------------------------------------------------------------
Total from Investment Operations .904 (.961) 1.307 1.659 (.219) 2.440
-------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.324) (.636) (.654) (.669) (.681) (.691)
Distributions from Realized Capital Gains -- (.103) (.053) -- (.030) (.089)
-------------------------------------------------------------------------
Total Distributions (.324) (.739) (.707) (.669) (.711) (.780)
----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $10.60 $10.02 $11.72 $11.12 $10.13 $11.06
==================================================================================================================================
TOTAL RETURN 9.12% -8.30% 12.11% 17.05% -1.75% 26.74%
==================================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $426 $451 $499 $327 $192 $186
Ratio of Total Expenses to
Average Net Assets 0.15%* 0.15% 0.15% 0.15% 0.15% 0.15%
Ratio of Net Investment Income to
Average Net Assets 6.26%* 6.05% 5.72% 6.41% 6.72% 6.66%
Portfolio Turnover Rate 71%* 55% 32% 13% 42% 125%
==================================================================================================================================
</TABLE>
*Annualized.
29
<PAGE> 32
NOTES TO FINANCIAL STATEMENTS
Vanguard Admiral Funds comprise the Admiral Treasury Money Market Fund, Admiral
Short-Term Treasury Fund, Admiral Intermediate-Term Treasury Fund, and Admiral
Long-Term Treasury Fund, each of which is registered under the Investment
Company Act of 1940 as a diversified open-end investment company, or mutual
fund.
A. The following significant accounting policies conform to generally accepted
accounting principles for mutual funds. The funds consistently follow such
policies in preparing their financial statements.
1. SECURITY VALUATION: Admiral Treasury Money Market Fund: Investment
securities are valued at amortized cost, which approximates market value. Other
funds: Bonds, and temporary cash investments acquired over 60 days to maturity,
are valued using the latest bid prices or using valuations based on a matrix
system (which considers such factors as security prices, yields, maturities, and
ratings), both as furnished by independent pricing services. Other temporary
cash investments are valued at amortized cost, which approximates market value.
Securities for which market quotations are not readily available are valued by
methods deemed by the board of trustees to represent fair value.
2. FEDERAL INCOME TAXES: Each fund intends to continue to qualify as a
regulated investment company and distribute all of its income. Accordingly, no
provision for federal income taxes is required in the financial statements.
3. REPURCHASE AGREEMENTS: The Admiral Short-Term Treasury,
Intermediate-Term Treasury, and Long-Term Treasury Funds, along with other
members of The Vanguard Group, transfer uninvested cash balances into a Pooled
Cash Account, which is invested in repurchase agreements secured by U.S.
government securities. Securities pledged as collateral for repurchase
agreements are held by a custodian bank until the agreements mature. Each
agreement requires that the market value of the collateral be sufficient to
cover payments of interest and principal; however, in the event of default or
bankruptcy by the other party to the agreement, retention of the collateral may
be subject to legal proceedings.
4. FUTURES CONTRACTS: Each Admiral fund, except the Treasury Money
Market Fund, may use Municipal Bond Index, U.S. Treasury Bond, and U.S. Treasury
Note futures contracts, with the objectives of enhancing returns, managing
interest-rate risk, maintaining liquidity, and minimizing transaction costs. The
funds may purchase or sell futures contracts instead of bonds to take advantage
of pricing differentials between the futures contracts and the underlying bonds.
The funds may also seek to take advantage of price differences among bond market
sectors by simultaneously buying futures (or bonds) of one market sector and
selling futures (or bonds) of another sector. Futures contracts may also be used
to simulate a fully invested position in the underlying bonds while maintaining
a cash balance for liquidity. The primary risks associated with the use of
futures contracts are imperfect correlation between changes in market values of
bonds held by the funds and the prices of futures contracts, and the possibility
of an illiquid market.
Futures contracts are valued based upon their quoted daily settlement
prices. The aggregate principal amounts of the contracts are not recorded in the
financial statements. Fluctuations in the value of the contracts are recorded in
the Statement of Net Assets as an asset (liability) and in the Statement of
Operations as unrealized appreciation (depreciation) until the contracts are
closed, when they are recorded as realized futures gains (losses).
5. DISTRIBUTIONS: Distributions from net investment income are declared
daily and paid on the first business day of the following month. Annual
distributions from realized capital gains, if any, are recorded on the
ex-dividend date.
6. OTHER: Security transactions are accounted for on the date
securities are bought or sold. Costs used to determine realized gains (losses)
on the sale of investment securities are those of the specific securities sold.
Premiums and discounts on debt securities purchased are amortized and accreted,
respectively, to interest income over the lives of the respective securities.
30
<PAGE> 33
B. The Vanguard Group furnishes at cost investment advisory, corporate
management, administrative, marketing, and distribution services. The costs of
such services are allocated to the funds under methods approved by the board of
trustees. Each fund has committed to provide up to 0.40% of its net assets in
capital contributions to Vanguard. At July 31, 2000, the funds had contributed
capital to Vanguard (included in Other Assets) of:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
CAPITAL CONTRIBUTED PERCENTAGE PERCENTAGE
TO VANGUARD OF FUND OF VANGUARD'S
ADMIRAL FUND (000) NET ASSETS CAPITALIZATION
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Treasury Money Market $1,112 0.02% 1.1%
Short-Term Treasury 205 0.02 0.2
Intermediate-Term Treasury 249 0.02 0.2
Long-Term Treasury 80 0.02 0.1
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The fund's trustees and officers are also directors and officers of Vanguard.
C. The funds' custodian banks have agreed to reduce their fees when the funds
maintain cash on deposit in their non-interest-bearing custody accounts. For the
six months ended July 31, 2000, custodian fee offset arrangements reduced
expenses of the Admiral Treasury Money Market Fund by $3,000.
D. During the six months ended July 31, 2000, purchases and sales of U.S.
government securities other than temporary cash investments were:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
(000)
--------------------------------------------------
ADMIRAL FUND PURCHASES SALES
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Short-Term Treasury $1,158,144 $1,185,911
Intermediate-Term Treasury 400,279 395,572
Long-Term Treasury 147,174 189,766
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
E. Capital gain distributions are determined on a tax basis and may differ from
realized capital gains for financial reporting purposes due to differences in
the timing of realization of gains. The Admiral Long-Term Treasury Fund had
realized losses totaling $406,000 through January 31, 2000, which are deferred
for tax purposes and reduce the amount of unrealized appreciation on investment
securities for tax purposes (see Note F).
At January 31, 2000, the funds had the following capital losses available
to offset future net capital gains:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
EXPIRATION
FISCAL YEARS ENDING AMOUNT
ADMIRAL FUND JANUARY 31, (000)
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Short-Term Treasury 2008-2009 $13,925
Intermediate-Term Treasury 2008-2009 33,921
Long-Term Treasury 2008-2009 9,360
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
31
<PAGE> 34
NOTES TO FINANCIAL STATEMENTS (continued)
F. At July 31, 2000, net unrealized appreciation (depreciation) of investment
securities for federal income tax purposes was:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
(000)
---------------------------------------------------------------------
NET UNREALIZED
APPRECIATED DEPRECIATED APPRECIATION
ADMIRAL FUND SECURITIES SECURITIES (DEPRECIATION)
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Short-Term Treasury $ 1,735 $ (9,890) $ (8,155)
Intermediate-Term Treasury 2,847 (20,515) (17,668)
Long-Term Treasury* 16,557 (5,125) 11,432
----------------------------------------------------------------------------------------------------------------------------------
*See Note E.
</TABLE>
At July 31, 2000, the aggregate settlement value of open futures
contracts expiring in September 2000 and the related unrealized appreciation
(depreciation) were:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
(000)
---------------------------------------
NUMBER AGGREGATE
OF SHORT SETTLEMENT UNREALIZED
ADMIRAL FUND/FUTURES CONTRACTS CONTRACTS VALUE DEPRECIATION
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Short-Term Treasury/
5-Year Treasury Note 45 $4,464 $(84)
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
G. The market values of securities on loan to broker/dealers at July 31, 2000,
and collateral received with respect to such loans, were:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
(000)
-----------------------------------------------------------------------
COLLATERAL RECEIVED
------------------------------------------
MARKET VALUE MARKET VALUE
OF LOANED OF U.S. TREASURY
ADMIRAL FUND SECURITIES CASH SECURITIES
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Short-Term Treasury $126,149 $ 77,736 $50,966
Intermediate-Term Treasury 372,195 372,154 8,043
Long-Term Treasury 16,564 16,862 --
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Cash collateral received is invested in repurchase agreements. Security loans
are required to be secured at all times by collateral at least equal to the
market value of securities loaned; however, in the event of default or
bankruptcy by the other party to the agreement, retention of the collateral may
be subject to legal proceedings.
32
<PAGE> 35
THE PEOPLE WHO GOVERN YOUR FUND
The trustees of your mutual fund are there to see that the fund is operated and
managed in your best interests since, as a shareholder, you are part owner of
the fund. Your fund trustees also serve on the board of directors of The
Vanguard Group, which is owned by the funds and exists solely to provide
services to them on an at-cost basis.
Six of Vanguard's seven board members are independent, meaning that
they have no affiliation with Vanguard or the funds they oversee, apart from the
sizable personal investments they have made as private individuals. They bring
distinguished backgrounds in business, academia, and public service to their
task of working with Vanguard officers to establish the policies and oversee the
activities of the funds.
Among board members' responsibilities are selecting investment advisers
for the funds; monitoring fund operations, performance, and costs; reviewing
contracts; nominating and selecting new trustees/directors; and electing
Vanguard officers.
The list below provides a brief description of each trustee's
professional affiliations. Noted in parentheses is the year in which the trustee
joined the Vanguard board.
TRUSTEES
JOHN J. BRENNAN - (1987) Chairman of the Board, Chief Executive Officer, and
Director/Trustee of The Vanguard Group, Inc., and each of the investment
companies in The Vanguard Group.
JOANN HEFFERNAN HEISEN - (1998) Vice President, Chief Information Officer, and a
member of the Executive Committee of Johnson & Johnson; Director of Johnson &
JohnsonoMerck Consumer Pharmaceuticals Co., The Medical Center at Princeton, and
Women's Research and Education Institute.
BRUCE K. MACLAURY - (1990) President Emeritus of The Brookings Institution;
Director of American Express Bank Ltd., The St. Paul Companies, Inc., and
National Steel Corp.
BURTON G. MALKIEL - (1977) Chemical Bank Chairman's Professor of Economics,
Princeton University; Director of Prudential Insurance Co. of America, Banco
Bilbao Gestinova, Baker Fentress & Co., The Jeffrey Co., and Select Sector SPDR
Trust.
ALFRED M. RANKIN, JR. - (1993) Chairman, President, Chief Executive Officer, and
Director of NACCO Industries, Inc.; Director of The BFGoodrich Co.
JAMES O. WELCH, JR. - (1971) Retired Chairman of Nabisco Brands, Inc.; retired
Vice Chairman and Director of RJR Nabisco; Director of TECO Energy, Inc., and
Kmart Corp.
J. LAWRENCE WILSON - (1985) Retired Chairman of Rohm & Haas Co.; Director of
AmeriSource Health Corporation, Cummins Engine Co., and The Mead Corp.; Trustee
of Vanderbilt University.
OTHER FUND OFFICERS
RAYMOND J. KLAPINSKY - Secretary; Managing Director and Secretary of The
Vanguard Group, Inc.; Secretary of each of the investment companies in The
Vanguard Group.
THOMAS J. HIGGINS - Treasurer; Principal of The Vanguard Group, Inc.; Treasurer
of each of the investment companies in The Vanguard Group.
VANGUARD MANAGING DIRECTORS
R. GREGORY BARTON - Legal Department.
ROBERT A. DISTEFANO - Information Technology.
JAMES H. GATELY - Individual Investor Group.
KATHLEEN C. GUBANICH - Human Resources.
IAN A. MACKINNON - Fixed Income Group.
F. WILLIAM MCNABB, III - Institutional Investor Group.
MICHAEL S. MILLER - Planning and Development.
RALPH K. PACKARD - Chief Financial Officer.
GEORGE U. SAUTER - Quantitative Equity Group.
<PAGE> 36
ABOUT OUR COVER
Our cover art, depicting HMS Vanguard at sea, is a reproduction of Leading the
Way, a 1984 work created and copyrighted by noted naval artist Tom Freeman, of
Forest Hill, Maryland.
[THE VANGUARD GROUP LOGO]
Post Office Box 2600
Valley Forge, Pennsylvania 19482-2600
WORLD WIDE WEB
www.vanguard.com
FUND INFORMATION
1-800-662-7447
INDIVIDUAL ACCOUNT SERVICES
1-800-662-2739
INSTITUTIONAL INVESTOR SERVICES
1-800-523-1036
This report is intended for the funds' shareholders. It may not be distributed
to prospective investors unless it is preceded or accompanied by the current
fund prospectus.
Q122 092000
(C) 2000 The Vanguard Group, Inc.
All rights reserved.
Vanguard Marketing
Corporation, Distributor.
