SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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[ ] Definitive Proxy Statement
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VANGUARD ADMIRAL FUNDS
VANGUARD BALANCED INDEX FUND
VANGUARD BOND INDEX FUNDS
VANGUARD CALIFORNIA TAX-FREE FUNDS
VANGUARD CONVERTIBLE SECURITIES FUND
VANGUARD EXPLORER FUND
VANGUARD FENWAY FUNDS
VANGUARD FIXED INCOME SECURITIES FUNDS
VANGUARD FLORIDA TAX-FREE FUND
VANGUARD HORIZON FUNDS
VANGUARD INDEX FUNDS
VANGUARD INSTITUTIONAL INDEX FUNDS
VANGUARD INTERNATIONAL EQUITY INDEX FUNDS
VANGUARD MALVERN FUNDS
VANGUARD MASSACHUSETTS TAX-EXEMPT FUNDS
VANGUARD MONEY MARKET RESERVES
VANGUARD MORGAN GROWTH FUND
VANGUARD MUNICIPAL BOND FUNDS
VANGUARD NEW YORK TAX-FREE FUNDS
VANGUARD NEW JERSEY TAX-FREE FUNDS
VANGUARD OHIO TAX-FREE FUNDS
VANGUARD PENNSYLVANIA TAX-FREE FUNDS
VANGUARD PRIMECAP FUND
VANGUARD QUANTITATIVE FUNDS
VANGUARD SPECIALIZED FUNDS
VANGUARD STAR FUNDS
VANGUARD TAX-MANAGED FUNDS
VANGUARD TREASURY FUND
VANGUARD TRUSTEES EQUITY FUND
VANGUARD VARIABLE INSURANCE FUND
VANGUARD WELLESLEY INCOME FUND
VANGUARD WELLINGTON FUND
VANGUARD WHITEHALL FUNDS
VANGUARD WINDSOR FUNDS
VANGUARD WORLD FUND
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THE VANGUARD FUNDS*
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
All Vanguard funds will host a Special Meeting of Shareholders on TUESDAY,
DECEMBER 3, 2002, AT 9:30 A.M., EASTERN TIME, at Vanguard's North Carolina
offices: 2605 Water Ridge Parkway, Two North Falls Plaza, Rooms 517 and 519,
Charlotte, NC 28217. This joint meeting of the Vanguard funds is being held so
that shareholders can vote on proposals to:
1. Elect trustees for each fund;
2. Change certain funds' policy on investing in other mutual funds;
3. Authorize the trustees of certain index funds to change target indexes;
4. Reclassify certain index funds as nondiversified;
5. Change two money market funds' industry concentration policy;
6. Change certain bond and balanced funds' policy on borrowing money; and
7. Change the Utilities Income Fund's investment objective and concentration
in utilities stocks.
By Order of the Board of Trustees,
R. Gregory Barton, Secretary
SEPTEMBER 23, 2002
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YOUR VOTE IS IMPORTANT!
You can vote easily and quickly over the Internet, by toll-free telephone call,
or by mail. Just follow the simple instructions that appear on your enclosed
proxy card. Please help your fund avoid the expense of a follow-up mailing by
voting today!
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*Please see Part V of this booklet for an alphabetical list of all Vanguard
funds.
THE VANGUARD FUNDS
SPECIAL MEETING OF SHAREHOLDERS
DECEMBER 3, 2002
PROXY STATEMENT
INTRODUCTION
This combined proxy statement is being provided to you on behalf of the boards
of trustees of all Vanguard funds. We have divided the proxy statement into five
main parts:
Part I An Overview of Our Proposals begins on page x.
Part II Proposal Details begins on page x.
Part III Information on Fund Governance begins on page x.
Part IV More on Proxy Voting and Shareholder Meetings begins on page x.
Part V Fund and Investment Adviser Information begins on page x.
Please read the proxy statement before voting on our proposals. If you have
questions about the proxy statement, or if you would like additional
information, please call us toll-free at 1-800-992-0833. Participants in a
company-sponsored 401(k) or other retirement plan administered by Vanguard
should call us at 1-800-523-1188. This proxy statement was mailed to
shareholders beginning the week of September 23, 2002.
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ATTENTION: VANGUARD VARIABLE INSURANCE FUND SHAREHOLDERS
You have the right to instruct your annuity provider on how to vote the Vanguard
Variable Insurance Fund shares held under your plan. You can issue voting
instructions for these shares over the Internet, by toll-free telephone call, or
by mail. Just follow the simple instructions that appear on your enclosed proxy
card. Note that your annuity provider will "shadow vote" any fund shares for
which contract owners fail to provide voting instructions. This means that the
uninstructed shares will be voted in proportionately the same manner--either
"For," "Against," or "Abstain"--as the instructed shares.
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2
PART I AN OVERVIEW OF OUR PROPOSALS
Shareholders of all Vanguard funds are being asked to vote on a number of
proposals. Not all proposals apply to each fund. The table below shows each
proposal and the specific Vanguard funds to which it applies. Only shareholders
of record on September 6, 2002, are entitled to vote on a fund's proposals.
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PROPOSALS VANGUARD FUNDS
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1. ELECT TRUSTEES FOR EACH Applies to all Vanguard funds.
FUND.
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2. CHANGE THE FUND'S POLICY Applies to all Vanguard funds EXCEPT: Capital
ON INVESTING IN OTHER MUTUAL Value Fund, Developed Markets Index Fund,
FUNDS. Growth Equity Fund, Inflation-Protected
Securities Fund, InstitutionalDeveloped Markets
Index Fund, Institutional Total Bond Market
Index Fund, Institutional Total Stock Market
Index Fund, International Explorer Fund, the
LifeStrategy Funds, Massachusetts Tax-Exempt
Fund, Mid-Cap Growth Fund, STAR Fund, Total
International Stock Index Fund, U.S. Value Fund,
and the Diversified Value, Mid-Cap Index, REIT
Index, and Short-Term Corporate Portfolios of
the Variable Insurance Fund. These more recently
launched funds are excluded from Proposal 2
because they do not have this fundamental
policy.
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3. AUTHORIZE THE FUND'S Applies to Extended Market Index Fund, Growth
TRUSTEES TO CHANGE THE TARGET Index Fund, Mid-Cap Index Fund, Small-Cap Index
INDEX. Fund, Small-Cap Growth Index Fund, Small-Cap
Value Index Fund, Total Stock Market Index Fund,
and Value Index Fund.
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4. RECLASSIFY THE FUND AS Applies to 500 Index Fund, Balanced Index Fund,
NONDIVERSIFIED. Emerging Markets Stock Index Fund, European
Stock Index Fund, Extended Market Index Fund,
Institutional Index Fund, Institutional Total
Stock Market Index Fund, Mid-Cap Index Fund,
Pacific Stock Index Fund, REIT Index Fund,
Small-Cap Index Fund, Small-Cap Growth Index
Fund, Small-Cap Value Index Fund, the
Tax-Managed Funds, Total Stock Market Index
Fund, Value Index Fund, and the Equity Index,
Mid-Cap Index, and REIT Index Portfolios of the
Variable Insurance Fund.
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5. CHANGE THE FUND'S INDUSTRY Applies to Prime Money Market Fund and the
CONCENTRATION POLICY. Money Market Portfolio of the Variable
Insurance Fund.
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6. CHANGE THE FUND'S POLICY Applies to Asset Allocation Fund, Balanced Index
ON BORROWING MONEY. Fund, all Bond Index Funds, GNMA Fund,
High-Yield Corporate Fund, High-Yield Tax-Exempt
Fund, Inflation-Protected Securities Fund,
Institutional Total Bond Market Index Fund,
Insured Long-Term Tax-Exempt Fund, Intermediate-
Term Corporate Fund, Intermediate-Term Tax-
Exempt Fund, Intermediate-Term Treasury Fund,
Limited-Term Tax-Exempt Fund, Long-Term
Corporate Fund, Long-Term Tax-Exempt Fund,
Long-Term Treasury Fund, Short-Term Corporate
Fund, Short-Term Federal Fund, Short-Term Tax-
Exempt Fund, Short-Term Treasury Fund, all State
Tax-Exempt Funds, Tax-Exempt Money Market Fund,
Tax-Managed Balanced Fund, the Balanced,
High-Yield Bond, Short-Term Corporate, and Total
Bond Market Index Portfolios of the Variable
Insurance Fund, Wellesley Income Fund, and
Wellington Fund.
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7. CHANGE THE FUND'S Applies to Utilities Income Fund.
INVESTMENT OBJECTIVE AND
CONCENTRATION IN UTILITIES
STOCKS.
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3
PART II PROPOSAL DETAILS
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PROPOSAL 1--ELECT TRUSTEES FOR EACH FUND
>This proposal applies to all Vanguard funds.
================================================================================
We are asking shareholders of each Vanguard fund to elect a board of trustees.
The seven persons listed below have been nominated for election as Vanguard fund
trustees. Ms. Heisen and Messrs. Brennan, Ellis, Rankin, and Wilson currently
serve as trustees for all 109 Vanguard funds and are also nominees for trustee
for all funds. Mr. Gupta currently serves as trustee for 87 Vanguard funds, but
is a nominee for all funds. Dr. Malkiel currently serves as trustee, and is a
nominee, for 107 Vanguard funds. Each nominee also serves as a director of The
Vanguard Group, Inc., and each has consented to continue serving as a trustee
for the funds if elected by shareholders.
NOMINEES PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS
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INTERESTED TRUSTEE
JOHN J. BRENNAN(1) Chairman of the Board, Chief Executive Officer, and
Born 1954 Director/Trustee of The Vanguard Group, Inc., and
Trustee since May 1987 of each of the investment companies served by The
Vanguard Group, Inc.
INDEPENDENT TRUSTEES
CHARLES D. ELLIS(2) The Partners of '63 (pro bono ventures in
Born 1937 education); Senior Adviser to Greenwich Associates
Trustee since January 2001 (international business-strategy consulting);
Successor Trustee of Yale University; Overseer
of the Stern School of Business at New York
University; Trustee of the Whitehead
Institute for Biomedical Research.
RAJIV L. GUPTA(3) Chairman and Chief Executive Officer (since October
Born 1945 1999), Vice Chairman (January-September 1999),
Trustee since December 2001 and Vice President (prior to September 1999)
of Rohm and Haas Co.(chemicals); Director of
Technitrol, Inc. (electronic components), and
Agere Systems (communications components); Board
Member of the American Chemistry Council; Trustee
of Drexel University.
JOANN HEFFERNAN HEISEN Vice President, Chief Information Officer, and
Born 1950 Member of the Executive Committee of Johnson &
Trustee since July 1998 Johnson (pharmaceuticals/consumer products);
Director of the Medical Center at Princeton and
Women's Research and Education Institute.
BURTON G. MALKIEL(4) Chemical Bank Chairman's Professor of Economics,
Born 1932 Princeton University; Director of Vanguard
Trustee since May 1977 Investment Series plc (Irish investment fund)
(since November 2001), Vanguard Group (Ireland)
Limited (Irish investment management firm)
(since November 2001), Prudential Insurance Co.
of America, BKF Capital (investment
management), The Jeffrey Co. (holding company),
and NeuVis, Inc.(software company).
4
ALFRED M. RANKIN, JR. Chairman, President, Chief Executive Officer,
Born 1941 and Director of NACCO Industries, Inc. (forklift
Trustee since January 1993 trucks/housewares/ lignite); Director of Goodrich
Corporation (industrial products/aircraft systems
and services); Director of the Standard Products
Company (supplier for automotive industry)
until 1998.
J. Lawrence Wilson Retired Chairman and Chief Executive Officer of
Born 1936 Rohm and Haas Co. (chemicals); Director of Cummins
Trustee since April 1985 Inc.(diesel engines), The Mead Corp. (paper
products), and AmerisourceBergen Corp.
(pharmaceutical distribution); Trustee of
Vanderbilt University.
- ------------------------------------------------
(1) Mr. Brennan is considered an "interested person" of each Vanguard fund
because he holds the position of Chief Executive Officer in addition to serving
as Trustee.
(2) Mr. Ellis is a Senior Adviser to Greenwich Associates, a firm that
consults with financial services organizations around the world on business
strategy. For the last two recently completed fiscal years ending August 31,
2001, Vanguard has paid Greenwich subscription fees amounting to less than
$275,000 for research-based consulting services. Vanguard's subscription rates
are similar to those of other subscribers.
(3) Mr. Gupta is not currently a trustee for Vanguard Equity Income Fund,
Vanguard Growth Equity Fund, the Vanguard Municipal Bond Funds, or the Vanguard
State Tax-Exempt Funds.
(4) Dr. Malkiel is not a trustee or nominee for Vanguard Equity Income Fund
or Vanguard Growth Equity Fund.
* * * * *
WHY ARE FUND SHAREHOLDERS BEING ASKED TO ELECT TRUSTEES?
Federal law requires that shareholders elect at least one-half of a fund's
board of trustees. Four of the seven current trustees (Messrs. Brennan, Rankin,
and Wilson and Dr. Malkiel) were elected by shareholders through earlier
proxies. However, three of the current trustees (Ms. Heisen and Messrs. Ellis
and Gupta) were nominated by each board's independent nominating committee and
elected by each fund's full board, but were not elected by shareholders. In
light of the recent retirement of two long-serving elected trustees (Bruce K.
MacLaury and James O. Welch, Jr.) at the end of 2001, now is an appropriate time
to hold an election.
HOW MANY OF THE NOMINEES WILL BE "INDEPENDENT" TRUSTEES IF ELECTED?
Six of the seven nominees--all but Mr. Brennan--will be independent
trustees if elected by shareholders. Independent trustees have no affiliation
with Vanguard or the funds they oversee, apart from any personal investments
they choose to make as private individuals in the funds. Independent trustees
play a critical role in overseeing fund operations and representing the
interests of each fund's shareholders.
DOES EACH VANGUARD FUND HAVE A SEPARATE BOARD OF TRUSTEES?
Not necessarily. For organization purposes, the Vanguard funds are grouped
into 35 separate trusts. Each of these trusts is made up of one or more Vanguard
funds--which are sometimes called "series" of the trust--that share the same
5
board of trustees and therefore elect their trustees on a joint basis. Part V of
this booklet includes an alphabetical list of Vanguard funds, which specifies
the trust to which each fund belongs and provides a variety of other details
about the funds.
HOW LONG WILL EACH TRUSTEE SERVE IF ELECTED?
If elected, each trustee will serve until he or she resigns, retires, or is
removed from the board as provided in the fund's governing documents. A trustee
may be removed from the board by a shareholder vote representing two-thirds of
the total net asset value of all fund shares under the same trust. If a nominee
is unable to accept election, or subsequently leaves the board before the next
election, the board of trustees may, in its discretion, select
another person to fill the vacant position.
EACH FUND'S BOARD OF TRUSTEES RECOMMENDS
THAT YOU VOTE "FOR" EACH OF THE NOMINEES.
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PROPOSAL 2-- CHANGE CERTAIN FUNDS' POLICY ON INVESTING IN OTHER MUTUAL FUNDS
>This proposal applies to all Vanguard funds EXCEPT Capital Value Fund,
Developed Markets Index Fund, Growth Equity Fund, Inflation-Protected Securities
Fund, Institutional Developed Markets Index Fund, Institutional Total Bond
Market Index Fund, Institutional Total Stock Market Index Fund, International
Explorer Fund, the LifeStrategy Funds, Massachusetts Tax-Exempt Fund, Mid-Cap
Growth Fund, STAR Fund, Total International Stock Index Fund, U.S. Value Fund,
and the Diversified Value, Mid-Cap Index, REIT Index, and Short-Term Corporate
Portfolios of the Variable Insurance Fund.
================================================================================
We propose to change the policy of each Vanguard fund (excluding the funds noted
above, which do not have this fundamental policy) on investing in other mutual
funds. The main benefit of the proposed change is that it would enable the funds
to achieve greater diversification and modestly higher returns on their cash
reserves. (As used here, "cash reserves" primarily refers to cash received too
late in the day to be invested in an optimal way and to other amounts that may
be held by certain funds for temporary purposes or as collateral for securities
loans.) Under the revised policy, the funds would be able to invest cash
reserves in money market funds and short-term bond funds created by Vanguard
especially for this purpose. This program would be similar to the cash
management programs operated by several other large mutual fund complexes.
WHY CHANGE THE CURRENT POLICY?
The current policy prohibits the funds from investing in other "investment
companies" (a legal term that refers primarily to mutual funds) except through a
merger, consolidation, or acquisition of assets, or within certain limits
specified by the federal statute that regulates mutual funds. As a practical
matter, these statutory limits prevent the funds from investing their cash
reserves in other mutual funds. At present, the policy is "fundamental," meaning
that it can be changed only by shareholder vote.
6
HOW DO THE FUNDS INVEST THEIR CASH RESERVES NOW?
Currently, most of the funds pool their cash reserves each business day to
invest jointly in overnight repurchase agreements. This pooled arrangement,
which operates on the basis of a Securities and Exchange Commission (SEC)
exemption, gives the funds access to better rates than would be available if
they bought smaller repurchase agreements separately. However, the current
arrangement carries three significant disadvantages. First, returns from
repurchase agreements are limited in comparison with returns from other
low-risk, short-term investments. Second, a fund that receives cash very late in
the day may miss the opportunity to invest it in that day's pool. And third,
Vanguard's tax-exempt funds cannot participate in the pool because the income
from repurchase agreements is taxable.
HOW WOULD THE NEW CASH MANAGEMENT PROGRAM WORK?
Under the new cash management program, each fund would invest its cash
reserves in one or more new funds created by Vanguard especially for this
purpose. A range of dedicated funds--all short-term and low-risk in
nature--would be made available, so that each fund could invest its daily cash
reserves in the most appropriate options. (For instance, a tax-exempt fund would
invest its cash reserves so that it would generate only tax-exempt income.) In
this way, the funds would gain exposure to a wider selection of short-term
investments--not just repurchase agreements--without losing the economies
produced by investing cash on a pooled basis with other funds. The funds also
would gain exposure to instruments that should provide a higher rate of return
than overnight repurchase agreements, with no appreciable increase in risk to
shareholders.
Before implementing the new cash management program, Vanguard will need
shareholder approval of this proposal and SEC approval of Vanguard's request for
an exemption from certain legal provisions. The SEC has previously approved the
same type of program for other mutual fund companies; however, the agency
approves such programs only after determining that they are in the public
interest and consistent with the protection of investors.
WHAT IS THE PROPOSED POLICY?
The proposed policy reads as follows: The fund may invest in other
investment companies to the extent permitted by applicable law or SEC order. As
proposed, the new policy would be "non-fundamental," meaning that each fund's
board of trustees would have the flexibility to amend it further in
shareholders' best interests, without the expense and delay of a future
shareholder vote. Any future revision to the policy would have to conform to a
fund's investment objective and could not alter the basic nature of the fund.
EACH FUND'S BOARD OF TRUSTEES RECOMMENDS
THAT YOU VOTE "FOR" THIS PROPOSAL.
7
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PROPOSAL 3-- AUTHORIZE THE TRUSTEES OF CERTAIN INDEX FUNDS TO CHANGE TARGET
INDEXES
>This proposal applies to Extended Market Index Fund, Growth Index Fund, Mid-Cap
Index Fund, Small-Cap Index Fund, Small-Cap Growth Index Fund, Small-Cap Value
Index Fund, Total Stock Market Index Fund, and Value Index Fund.
================================================================================
We want to adopt a policy that authorizes the trustees of each of the above
index funds to change the target index used by the fund if the trustees
determine that doing so would be in shareholders' best interests. This
policy--which already exists for most Vanguard index funds, including Vanguard's
balanced, bond, and international stock index funds--would allow the trustees to
seek out new indexes that do a better job of tracking the market segment
targeted by each fund's investment objective. In addition, this policy would
allow the trustees to take prompt corrective action if a fund's existing index
were to begin experiencing difficulties in tracking its targeted market segment.
WOULD THERE BE A LIMIT ON THE TRUSTEES' AUTHORITY TO CHANGE TARGET INDEXES?
Yes. The trustees' authority to change target indexes would be subject to a
key overriding limitation. Specifically, any new target index would be required
to track the same market segment as the fund's existing index (e.g.,
large-capitalization growth stocks in the case of the Growth Index Fund,
small-cap value stocks in the case of the Small-Cap Value Index Fund). Because
of this limitation, any change in the fund's target index would not result in a
change in the fund's investment objective. The new policy would not apply to the
500 Index Fund or the Institutional Index Fund. These two funds target the
Standard & Poor's 500 Index, a broad-based index that enjoys considerable market
recognition.
WHY WOULD THE TRUSTEES WANT TO CHANGE A FUND'S TARGET INDEX?
Simply put, all indexes are not created equal. As the sponsor of 29 stock,
bond, and balanced index funds that together comprise over $200 billion in
indexed assets, Vanguard is continually seeking to identify or develop the most
appropriate index for each of the funds. As new indexes are created, we analyze
the quality and integrity of their construction methodology. We also regularly
explore improved construction and rebalancing methods. As explained below, we
believe new indexes under development by Morgan Stanley Capital International,
Inc. (MSCI), a well-established index provider that maintains indexes tracked by
Vanguard's international stock index funds, may offer improved indexing
techniques.
WHAT ARE THE CHARACTERISTICS OF AN "IDEAL" INDEX?
Based on Vanguard's indexing experience over the past 25 years, we have
formed certain views about the characteristics of an "ideal" index. We believe,
most importantly, that an index must be judged by how accurately it measures
returns from a designated market segment and not by how its returns compare to
those of other indexes over any particular period of time. No one can predict
which index will outperform over any time period. We believe that at least five
aspects of an index provider's construction methodology are critical to
producing a superior index. These are as follows:
> OBJECTIVITY. In our view, an index should be maintained according to
an objective set of rules that leaves virtually no doubt or ambiguity
as to whether particular stocks warrant inclusion in the index. In the
indexing world, an objective selection process leads to
consistency--which, in turn, enhances the integrity of an index.
8
> ADJUSTMENT FOR "FLOAT." We believe that an index should weight its
holdings in a manner that reflects the amount of a stock's "float," or
availability, in the marketplace. Many companies have shares of stock
outstanding that effectively are not available for purchase by the
investing public. These shares often represent closely held positions
in a company, or perhaps cross-holdings of other companies or
governments. Including these unavailable shares in index calculations
can produce a distorted picture of the returns actually attainable by
investors.
> APPROACH TO MARKET CAPITALIZATION. For indexes that focus on companies
of a particular size, we believe that the cutoffs between small-cap,
mid-cap, and large-cap should be defined as overlapping bands rather
than fixed lines. In addition, we believe that these bands separating
capitalization segments should be based on a list of companies ranked
by relative size rather than by the specific dollar amounts of their
market capitalization.
> APPROACH TO "VALUE" VERSUS "GROWTH." Many index providers construct
their value and growth indexes so that each investment style is a
perfect complement of the other. Essentially, growth is defined as
"not value," and value is defined as "not growth." We believe that
this is not the best approach. In the real world, investment managers
have their own independent criteria for determining whether a stock
meets their particular investment style. A growth manager would not
rule a stock out solely because it happened to meet another manager's
criteria for value, and vice versa. In our view, stocks should be
analyzed for inclusion in a value index or growth index in a way that
allows for overlapping holdings, and in some cases, exclusion from
both indexes. Similar to capitalization cutoffs, overlapping bands,
rather than a fixed line, should define investment styles.
> APPROACH TO REBALANCING. All index providers periodically rebalance
their indexes by adding or dropping stocks to ensure that the indexes
continue to measure their designated market segments. Index funds then
quickly adjust their portfolio holdings to keep in close step with
their target indexes, often incurring large transaction costs and
making trades at unattractive prices. This periodic rush into and out
of stocks is counterproductive, and not at all how investment managers
prefer to manage money. We believe that there are considerable
benefits to using a more rational approach to rebalancing indexes.
Gradual and orderly rebalancing more accurately reflects investment
activity in the markets, making the index a better proxy for its
target market. As an added benefit, this approach would enable index
funds to manage their transaction costs from portfolio adjustments in
much the same manner as other investors.
WHAT ARE THE BENEFITS OF ENABLING THE TRUSTEES TO ACT QUICKLY ON BEHALF OF
SHAREHOLDERS?
This proposal would allow the funds' trustees to change indexes in
shareholders' best interests without first obtaining shareholder approval. We
believe that this arrangement is preferable for several reasons:
> TIMING. This policy would enable the trustees to take immediate action
without the considerable delay (at least several months) required to
obtain formal shareholder approval. This ability would be particularly
valuable when time is of the essence in protecting shareholders'
interests.
9
> COSTS. Along the same lines, this policy would allow the trustees to
make a change without having the fund incur substantial costs in
undertaking a proxy mailing and holding a special shareholder meeting
to obtain formal approval of the change.
> CONFIDENTIALITY. This policy would allow the trustees to make a change
without tipping off the market about upcoming portfolio changes by the
fund.
HOW WOULD SWITCHING TO A NEW TARGET INDEX AFFECT A FUND'S SHAREHOLDERS?
Any replacement index would track the same market segment as a fund's
existing index, so shareholders should see no change in the overall character of
their investment. Nonetheless, there are certain risks associated with our
proposal.
> TRANSITION ISSUES. Switching to a new index would likely require
adjustments to a fund's portfolio holdings, which could temporarily
increase the fund's transaction costs and cause it to realize capital
gains or losses. In addition, if sophisticated traders and
market-timers obtain advance knowledge of portfolio adjustments to be
made by the fund, they could engage in harmful "front-running"--that
is, they could seek to profit by driving up the prices of stocks to be
bought by the fund, or driving down the prices of stocks to be sold by
the fund. For this reason, any index change would be held in strict
confidence by Vanguard until it actually occurs. Of course,
shareholders would be notified of any index change when it occurs.
> POTENTIAL FOR DIFFERENT INVESTMENT RETURNS. A fund's new target index
could provide different investment returns (lower or higher) or
different return volatility (greater or less) than its existing index
over any period of time. It is important to understand that the fund's
trustees would not base any decision to change indexes on expectations
about future investment returns. Rather, they would choose a new index
on the basis that it will measure returns from the fund's designated
market segment more accurately than the fund's existing index.
ARE THERE ANY INDEX CHANGES CURRENTLY IN THE WORKS?
For some time, Vanguard has been pursuing the development of better indexes
in accordance with the preferred indexing methods described above. MSCI recently
announced that it is creating a full range of new U.S. stock indexes, that we
believe may include many of the improved indexing methods we favor. Vanguard has
entered into a nonexclusive licensing agreement with MSCI to secure the right to
use these new indexes when available, currently expected in early 2003. Assuming
MSCI succeeds in developing what we consider to be clearly superior U.S. stock
indexes, fund management intends to recommend that the trustees adopt these
indexes for the funds.
10
IF SHAREHOLDERS APPROVE THIS PROPOSAL, WILL THE FUNDS BE REQUIRED TO ADOPT THE
NEW MSCI INDEXES?
No. The funds will adopt the new MSCI indexes only if their trustees
determine that to do so would be in the best interests of shareholders. Another
possibility--although there is no current plan to do so--would be for Vanguard
to develop and maintain its own target indexes for some or all of the funds.
Shareholder approval of this proposal would allow the funds' trustees to adopt
indexes maintained by MSCI, other outside providers, or Vanguard as they may be
developed in the future. Of course, the trustees may also decide to continue
with a fund's existing index.
In sum, we believe that this proposal holds significant benefits for
shareholders. The new policy would allow the funds' trustees to seek out and
adopt indexes that they believe will do a better job of tracking the market
segment targeted by each fund's investment objective. In addition, this policy
would allow the trustees to take prompt corrective action if a fund's existing
index were to begin experiencing difficulties in tracking its targeted market
segment. In short, the proposal would allow the trustees to change a fund's
index in a prompt, efficient, and confidential manner when they believe this to
be in the best interests of shareholders.
EACH FUND'S BOARD OF TRUSTEES RECOMMENDS
THAT YOU VOTE "FOR" THIS PROPOSAL.
================================================================================
Proposal 4--RECLASSIFY CERTAIN INDEX FUNDS AS NONDIVERSIFIED
>This proposal applies to 500 Index Fund, Balanced Index Fund, Emerging Markets
Stock Index Fund, European Stock Index Fund, Extended Market Index Fund,
Institutional Index Fund, Institutional Total Stock Market Index Fund, Mid-Cap
Index Fund, Pacific Stock Index Fund, REIT Index Fund, Small-Cap Index Fund,
Small-Cap Growth Index Fund, Small-Cap Value Index Fund, the Tax-Managed Funds,
Total Stock Market Index Fund, Value Index Fund, and the Equity Index, Mid-Cap
Index, and REIT Index Portfolios of the Variable Insurance Fund.
================================================================================
We propose to reclassify each of the above Vanguard stock index funds and stock
index-oriented funds as "nondiversified" under the federal statute that
regulates mutual funds. The purpose of this change is to eliminate a potential
conflict between each fund's indexing objective and the statute's requirements
for "diversified" funds. Specifically, the change to nondiversified status will
ensure that a fund can continue to track its target index even if that index
becomes dominated by a small number of stocks. Shareholders of the Growth Index
Fund approved a change to nondiversified status in 2001 after facing this
situation during 1999-2000.
WHAT'S THE DIFFERENCE BETWEEN DIVERSIFIED FUNDS AND NONDIVERSIFIED FUNDS?
By law, mutual funds must classify themselves as either diversified or
nondiversified. The difference is that diversified funds are subject to stricter
percentage limits on the amount of assets that can be invested in any one
company. Specifically, diversified funds are required to satisfy the following
requirements with respect to at least 75% of their total assets: A fund may not
purchase securities of any issuer if, as a result, (i) more than 5% of the
fund's total assets would be invested in securities of a single issuer, or (ii)
more than 10% of the outstanding voting securities of the issuer would be held
by the fund. For nondiversified funds, these requirements effectively apply to
only 50% of the fund's total assets. Both diversified and nondiversified funds
are prohibited from investing more than 25% of their total assets in the
securities of a single issuer.
11
WHAT'S THE POTENTIAL CONFLICT FACED BY INDEX FUNDS CLASSIFIED AS DIVERSIFIED?
Classifying an index or index-oriented fund as diversified has the
potential to prevent the fund from meeting its indexing objective. This is
because it's possible in certain markets for the largest positions in an index
to appreciate significantly relative to the index's other positions, causing the
index to become dominated by a handful of companies. A diversified index fund
tied to such an index would be forced to make a difficult choice: continue to
track the index, in which case the fund would violate its diversification
policy; or comply with its diversification policy, in which case the fund would
fail to track the index. We believe that an index fund should always track its
target index as closely as possible, regardless of market conditions.
WILL AN INDEX FUND MAKE ANY INVESTMENT CHANGES IF RECLASSIFIED AS
NONDIVERSIFIED?
No. It will be "business as usual" for any index fund or index-oriented
fund reclassified as nondiversified. Unless and until changes in the composition
of the fund's target index require otherwise, each fund will continue to meet
the standards that apply to diversified funds. A fund will exceed the investment
limits that apply to diversified funds only as necessary to track its target
index. In such a case, the fund would be considered riskier than a diversified
fund investing in the same types of securities. This is because the performance
of a nondiversified fund can be hurt (or helped) to a greater degree by the
performance of just a few securities.
EACH FUND'S BOARD OF TRUSTEES RECOMMENDS
THAT YOU VOTE "FOR" THIS PROPOSAL.
================================================================================
PROPOSAL 5-- CHANGE TWO MONEY MARKET FUNDS' INDUSTRY CONCENTRATION POLICY
>This proposal applies to Prime Money Market Fund and the Money Market Portfolio
of the Variable Insurance Fund.
================================================================================
We propose to change the industry concentration policy of the two funds named
above so that each will invest more than 25% of its assets in the financial
services sector. The purpose of this change is to allow the funds to take full
advantage of available money market opportunities.
WHY CHANGE THE CURRENT POLICY?
The current policy prohibits each fund from investing more than 25% of its
assets in any one industry (with an exception for U.S. government-issued or
- -guaranteed securities and certain bank instruments). However, financial
services companies are playing an increasingly important role in the world of
money market securities. Over the past few years, asset-backed securities and
other innovative financing vehicles offered by financial services companies have
come to attract money market assets that traditionally were directed to
certificates of deposit and banker's acceptances. Accordingly, financial
services companies have become a key issuer of money market securities. We
believe that our funds can take better advantage of money market opportunities
by investing more than 25% of their assets in financial services companies.
WHAT IS THE PROPOSED POLICY?
The proposed policy reads as follows: The fund may not purchase securities
of any issuer if, as a result, more than 25% of the fund's total assets would be
invested in the securities of companies whose principal business activities are
12
in the same industry, except that: (i) the fund will invest more than 25% of its
total assets in the financial services industry; and (ii) the fund may invest
more than 25% of its total assets in securities issued or guaranteed by the U.S.
government or its agencies and instrumentalities and in certificates of deposit
or bankers' acceptances of domestic institutions. Consistent with SEC
requirements, the new industry concentration policy would be "fundamental,"
meaning that it could be changed further in a material way only by a shareholder
vote.
WILL THE FUNDS STILL SEEK TO MAINTAIN A STABLE $1 SHARE PRICE?
Yes. If shareholders approve this proposal, the funds will continue to
invest in compliance with strict industry requirements for money market funds.
These risk-limiting requirements are intended to ensure (but cannot guarantee)
that money market funds will maintain a stable price of $1 per share. By
concentrating their assets in financial services companies, the funds will
assume the risk that negative developments in that sector may adversely affect
them. However, we believe that this risk is negligible, given the diversity and
breadth of the financial services sector and the protections afforded by money
market fund regulations.
EACH FUND'S BOARD OF TRUSTEES RECOMMENDS
THAT YOU VOTE "FOR" THIS PROPOSAL.
================================================================================
PROPOSAL 6-- CHANGE CERTAIN BOND AND BALANCED FUNDS' POLICY ON BORROWING MONEY
>This proposal applies to Asset Allocation Fund, Balanced Index Fund, all Bond
Index Funds, GNMA Fund, High-Yield Corporate Fund, High-Yield Tax-Exempt Fund,
Inflation-Protected Securities Fund, Institutional Total Bond Market Index Fund,
Insured Long-Term Tax-Exempt Fund, Intermediate-Term Corporate Fund,
Intermediate-Term Tax-Exempt Fund, Intermediate-Term Treasury Fund, Limited-Term
Tax-Exempt Fund, Long-Term Corporate Fund, Long-Term Tax-Exempt Fund, Long-Term
Treasury Fund, Short-Term Corporate Fund, Short-Term Federal Fund, Short-Term
Tax-Exempt Fund, Short-Term Treasury Fund, all State Tax-Exempt Funds,
Tax-Exempt Money Market Fund, Tax-Managed Balanced Fund, the Balanced,
High-Yield Bond, Short-Term Corporate, and Total Bond Market Index Portfolios of
the Variable Insurance Fund, Wellesley Income Fund, and Wellington Fund.
================================================================================
We propose to change the borrowing policy of the funds listed above to make it
clear that the funds may take advantage of certain investment opportunities that
do not involve leverage or a change to the fund's objective or risk profile.
WHAT'S THIS PROPOSAL ABOUT?
The current policy is intended to permit certain borrowings, up to 15% of
net assets, and is designed to prevent the funds from running leveraged
investment programs. There is no plan to change the intent of the existing
policy, which we believe is quite sound. The current wording of the policy,
however, needs to be modified so that it is clear that the funds may take
advantage of certain investment opportunities that do not involve leverage or a
change to the fund's objectives or risk profile.
13
WHAT'S UNCLEAR ABOUT THE CURRENT POLICY?
Under the current policy, funds may only borrow for "temporary or emergency
purposes", and funds may not make additional investments until they repay
outstanding borrowings. In addition, funds can borrow only through banks,
reverse repurchase agreements, or the Vanguard funds' interfund lending program.
Reading this strictly, as we do, the current policy effectively prevents the
funds from investing in certain types of instruments that may benefit the fund.
For example, these instruments include "mortgage dollar rolls," which provide an
efficient (and at times less expensive) way for funds to invest in the same
types of mortgage-backed securities that they routinely own today. Mortgage
dollar rolls are consistent with the funds' investment objectives and strategies
and would not be used to leverage a fund's assets or change its risk profile.
However, because mortgage dollar rolls could be considered borrowings, the
current policy restricts the funds' ability to take advantage of the benefits
they provide.
WHAT IS THE NEW POLICY?
The new policy reads as follows: A fund many not borrow money in excess of
15% of its net assets, and any borrowings by a fund must comply with all
applicable regulatory requirements. Consistent with SEC requirements, the new
borrowing policy would continue to be "fundamental," meaning that it could be
changed further only by a shareholder vote.
WILL THIS CHANGE MAKE THE FUND MORE RISKY?
It shouldn't. A fund would engage in investment activities consistent with
its existing risk profile, investment objective and investment strategies,
though it would be able to use certain additional investment opportunities not
currently available. A fund's total borrowings would be limited to 15% of its
net assets (which is less than one-half the SEC limit of 33 1/3% of a fund's
total assets), and separate accounts would be used to "cover" or informally
collateralize any borrowings as required by securities laws.
EACH FUND'S BOARD OF TRUSTEES RECOMMENDS
THAT YOU VOTE "FOR" THIS PROPOSAL.
================================================================================
PROPOSAL 7--CHANGE THE UTILITIES INCOME FUND'S INVESTMENT OBJECTIVE AND
CONCENTRATION IN UTILITIES STOCKS
>This proposal applies to Utilities Income Fund.
================================================================================
We propose to broaden the Utilities Income Fund's focus beyond utility stocks so
as to provide the fund with the ability to invest in companies with the capacity
to pay above average dividend income. This change also will increase the fund's
industry diversification and, in doing so, should lower the fund's risk. If
shareholders approve this proposal, the fund will be renamed Vanguard Dividend
Growth Fund and will begin investing in stocks of companies from different
industries.
WHY CHANGE THE FOCUS ON UTILITY STOCKS?
Currently, the fund invests at least 80% of its assets in common stocks of
utility companies. In the past, this was considered a conservative investment
policy because utility companies were closely regulated--they tended to have
relatively consistent and modestly increasing earnings and the capacity to pay
stable or increasing dividends. However, times have changed. The deregulation of
the various utility sectors, including electricity producers and distributors,
14
natural gas transmission companies, and telephone companies, has led to far less
stability in earnings and an overall decline in dividend payments. Broadening
the fund's focus beyond utility companies will allow its adviser to invest
across a diversified spectrum of companies whose stocks will typically offer
reasonable dividend income and prospects for attractive earnings and dividend
growth.
HOW ELSE WOULD THE FUND CHANGE?
The fund's current investment objective is to provide a high level of
current income and, secondarily, to provide moderate long-term growth of capital
and income. We propose to replace this with the objective to provide
above-average income and, secondarily, to provide long-term growth of capital
and income. In addition, the fund would adopt a policy to concentrate no more
than 25% of its assets in any single industry.
HOW WILL THESE CHANGES AFFECT SHAREHOLDERS?
The changes will affect shareholders primarily in two ways. First,
broadening the fund's focus beyond utility companies should decrease the fund's
overall risk for shareholders. Currently, the fund is subject to "industry
concentration risk," which is the chance that problems affecting the utility
industry will cause the fund to decrease in value. If the fund is able to invest
broadly in other industries, it will no longer be subject to industry
concentration risk. Second, while decreasing its utility stock holdings, the
fund could realize capital gains, which would be paid out as taxable
distributions. If this proposal is approved, the fund's adviser expects to
transition in an orderly manner approximately 95% of the current portfolio.
However, even with such significant portfolio turnover, it is expected that tax
losses carried forward by the fund would be sufficient to offset any gains in
the transition.
THE FUND'S BOARD OF TRUSTEES RECOMMENDS
THAT YOU VOTE "FOR" THIS PROPOSAL.
PART III INFORMATION ON FUND GOVERNANCE
This section provides information about each fund's board of trustees and
independent accountants, including specifics of how they are compensated. The
mailing address of the Vanguard funds' trustees and officers is P.O. Box 876,
Valley Forge, PA 19482.
BOARD RESPONSIBILITIES
The primary responsibility of the board of trustees of each fund is to
oversee the management of the fund for the benefit of shareholders. Each board
has a supermajority of independent trustees who are not "interested persons" of
the funds. As Vanguard's chairman and chief executive officer, Mr. Brennan is
the lone management representative on the funds' boards. The independent
trustees bring a broad range of relevant backgrounds, experiences, and skills to
the boards, particularly in those domains critical to the funds and their
shareholders. During 2001, the board of trustees of each fund held nine meetings
(six one-day meetings and three two-day meetings).
In the exercise of their oversight responsibilities, the funds' trustees
focus on matters they determine to be vitally important to fund shareholders.
This includes not only the management and performance of the funds, but also the
operating plans and budgets, strategic plans, and composition, performance, and
compensation of Vanguard management.
15
The business acumen, experience, and objective thinking of the funds'
independent trustees are considered invaluable assets for Vanguard management
and, ultimately, the funds' shareholders. Having management accountable to a
group of independent, highly experienced, and exceptionally qualified
individuals who act solely on behalf of shareholders makes management more
effective in the long run.
BOARD AND COMMITTEE MEETINGS
The board of trustees of each fund has three standing committees composed
exclusively of independent trustees.
o NOMINATING COMMITTEE. This committee is responsible for the nomination
of candidates for election to the board and has the authority to
recommend the removal of any trustee from the board. The committee
held two meetings in 2001. Shareholders may send recommendations for
nominees as trustee to Mr. Wilson, chairman of the committee.
o AUDIT COMMITTEE. This committee is responsible for overseeing the
accounting and financial reporting policies, the systems of internal
controls, and the independent audits of the funds. The committee held
two meetings in 2001.
o COMPENSATION COMMITTEE. This committee is responsible for overseeing
the compensation programs established for Vanguard employees,
officers, and trustees (including salary guidelines, merit increases,
bonuses, and other compensation arrangements). The committee held two
meetings in 2001.
BOARD COMPOSITION
There are important benefits in having the board of each fund include
trustees who serve on the boards of the other Vanguard funds. Service on
multiple fund boards gives the trustees greater familiarity with the funds'
operations that are complex-wide in nature. Such service also permits the
trustees to address common issues on a knowledgeable and consistent basis. It
also avoids the substantial additional costs, administrative complexities, and
redundancies that would result from having a different slate of trustees for
every Vanguard fund. For these reasons, the same individuals serve as trustees
of all funds, except as otherwise noted in the table on page ____ of this proxy
statement.
While there are many areas of common interest among the funds, the trustees
recognize that they are responsible for exercising their responsibilities at all
times on a fund-by-fund basis.
TRUSTEE COMPENSATION
Each fund (other than the Institutional Index Funds and Vanguard's funds of
funds) pays its proportionate share of the independent trustees'
compensation.(1) The funds' sole non-independent trustee--Mr. Brennan-- and the
funds' officers--receive no compensation from the funds. (2) The funds
compensate their independent trustees in three ways:
- --------------------------------
(1) The trustees of Vanguard Institutional Index Funds receive no compensation
directly from those funds, but The Vanguard Group, Inc., is responsible for
paying the trustees for their service. The trustees of Vanguard's funds-of-funds
receive no compensation from those funds.
(2) All fund officers are compensated by The Vanguard Group, Inc.
16
o The independent trustees receive an annual fee for their service to
the funds, reduced for any absences from scheduled board meetings.
o The independent trustees are reimbursed for the travel and other
expenses that they incur in attending board meetings.
o The independent trustees who began service prior to January 1, 2001,
are eligible for retirement benefits they had accrued (plus interest)
under a retirement plan. Those independent trustees who began their
service on or after January 1, 2001, are not eligible to participate
in the plan.
FUND OFFICERS
All 109 Vanguard funds employ their officers on a shared basis. Officers
are considered "interested persons" of the funds. In addition to Mr. Brennan,
they are as follows:
R. Gregory Barton Managing Director and General Counsel of The Vanguard
Born 1951 Group, Inc. (since September 1997); Secretary of The
Fund Officer since Vanguard Group, Inc., and of each of the investment
June 2001 companies served by The Vanguard Group (since
June 2001); Principal of The Vanguard Group
(since March 1982).
Thomas J. Higgins Principal of The Vanguard Group, Inc. (since July
Born 1957 1989); Treasurer of each of the investment
Fund Officer since companies served by The Vanguard Group (since
July 1998 July 1998).
TRUSTEE COMPENSATION TABLE
The following table provides compensation details for each of the trustees.
We list the amounts paid as compensation and accrued as retirement benefits by
each Vanguard fund for each trustee during the fund's most recent fiscal year.
In addition, the table shows the total accrued retirement benefits for each
trustee as of January 1, 2002, and the total amount of compensation paid to each
trustee by all funds during 2001.
- ------------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE INDEPENDENT TRUSTEES
- ------------------------------------------------------------------------------------------------------------------------------------
NAME OF TRUST BRENNAN ELLIS(1) GUPTA(2) HEISEN MALKIEL RANKIN WILSON
VANGUARD ADMIRAL FUNDS
- Aggregate Compensation from this Trust None $ 800 None $ 800 $ 804 $ 800 $ 918
- Accrued Pension/Retirement Benefits from this Trust None None None $ 94 $ 82 $ 54 $ 36
VANGUARD BALANCED INDEX FUND
- Aggregate Compensation from this Trust None $ 780 None $ 780 $ 784 $ 780 $ 893
- Accrued Pension/Retirement Benefits from this Trust None None None $ 91 $ 80 $ 53 $ 34
VANGUARD BOND INDEX FUNDS
- Aggregate Compensation from this Trust None $ 3,906 None $ 3,906 $ 3,925 $ 3,906 $ 4,467
- Accrued Pension/Retirement Benefits from this Trust None None None $ 456 $ 399 $ 265 $ 176
VANGUARD CALIFORNIA TAX-FREE FUNDS
- Aggregate Compensation from this Trust None $ 1,129 None $ 1,252 $ 1,257 $ 1,253 $ 1,430
- Accrued Pension/Retirement Benefits from this Trust None None None $ 144 $ 126 $ 83 $ 56
VANGUARD CONVERTIBLE SECURITIES FUND
- Aggregate Compensation from this Trust None $ 66 None $ 73 $ 73 $ 73 $ 82
- Accrued Pension/Retirement Benefits from this Trust None None None $ 8 $ 7 $ 5 $ 4
VANGUARD EXPLORER FUND
- Aggregate Compensation from this Trust None $ 856 None $ 1,055 $ 1,060 $ 1,055 $ 1,207
- Accrued Pension/Retirement Benefits from this Trust None None None $ 120 $ 105 $ 70 $ 47
VANGUARD FENWAY FUNDS
- Aggregate Compensation from this Trust None $ 620 None $ 620 None $ 620 $ 710
- Accrued Pension/Retirement Benefits from this Trust None None None $ 73 None $ 43 $ 27
VANGUARD FIXED INCOME SECURITIES FUNDS
- Aggregate Compensation from this Trust None $ 7,065 None $ 7,065 $ 7,100 $ 7,065 $ 8,084
- Accrued Pension/Retirement Benefits from this Trust None None None $ 826 $ 722 $ 479 $ 318
VANGUARD FLORIDA TAX-FREE FUNDS
- Aggregate Compensation from this Trust None $ 178 None $ 197 $ 198 $ 197 $ 226
- Accrued Pension/Retirement Benefits from this Trust None None None $ 23 $ 20 $ 13 $ 9
VANGUARD HORIZON FUNDS
- Aggregate Compensation from this Trust None $ 972 None $ 1,197 $ 1,203 $ 1,197 $ 1,371
- Accrued Pension/Retirement Benefits from this Trust None None None $ 136 $ 119 $ 79 $ 54
VANGUARD INDEX FUNDS
- Aggregate Compensation from this Trust None $27,900 None $27,900 $ 28,038 $27,900 $31,922
- Accrued Pension/Retirement Benefits from this Trust None None None $ 3,261 $ 2,852 $ 1,891 $ 1,259
VANGUARD INTERNATIONAL EQUITY INDEX FUNDS
- Aggregate Compensation from this Trust None $ 1,286 None $ 1,286 $ 1,292 $ 1,286 $ 1,472
- Accrued Pension/Retirement Benefits from this Trust None None None $ 150 $ 131 $ 87 $ 59
VANGUARD MALVERN FUNDS
- Aggregate Compensation from this Trust None $ 1,364 None $ 1,891 $ 1,901 $ 1,891 $ 2,162
- Accrued Pension/Retirement Benefits from this Trust None None None $ 212 $ 186 $ 123 $ 83
VANGUARD MASSACHUSETTS TAX-EXEMPT FUNDS
- Aggregate Compensation from this Trust None $ 40 None $ 45 $ 46 $ 45 $ 52
- Accrued Pension/Retirement Benefits from this Trust None None None $ 6 $ 4 $ 3 $ 2
VANGUARD MONEY MARKET RESERVES
- Aggregate Compensation from this Trust None $ 9,450 None $ 9,450 $ 9,497 $ 9,450 $10,812
- Accrued Pension/Retirement Benefits from this Trust None None None $ 1,104 $ 966 $ 640 $ 428
VANGUARD MORGAN GROWTH FUND
- Aggregate Compensation from this Trust None $ 711 None $ 711 $ 714 $ 711 $ 812
- Accrued Pension/Retirement Benefits from this Trust None None None $ 83 $ 73 $ 48 $ 32
VANGUARD MUNICIPAL BOND FUNDS
- Aggregate Compensation from this Trust None $ 4,890 None $ 6,058 $ 6,085 $ 6,058 $ 6,933
- Accrued Pension/Retirement Benefits from this Trust None None None $ 686 $ 600 $ 398 $ 264
VANGUARD NEW JERSEY TAX-FREE FUNDS
- Aggregate Compensation from this Trust None $ 506 None $ 561 $ 563 $ 561 $ 640
- Accrued Pension/Retirement Benefits from this Trust None None None $ 65 $ 57 $ 37 $ 25
VANGUARD NEW YORK TAX-FREE FUNDS
- Aggregate Compensation from this Trust None $ 548 None $ 608 $ 610 $ 608 $ 694
- Accrued Pension/Retirement Benefits from this Trust None None None $ 70 $ 61 $ 40 $ 27
VANGUARD OHIO TAX-FREE FUNDS
- Aggregate Compensation from this Trust None $ 168 None $ 186 $ 187 $ 186 $ 214
- Accrued Pension/Retirement Benefits from this Trust None None None $ 22 $ 19 $ 12 $ 8
VANGUARD PENNSYLVANIA TAX-FREE FUNDS
- Aggregate Compensation from this Trust None $ 782 None $ 867 $ 871 $ 867 $ 991
- Accrued Pension/Retirement Benefits from this Trust None None None $ 100 $ 87 $ 58 $ 38
VANGUARD PRIMECAP FUND
- Aggregate Compensation from this Trust None $ 3,102 None $ 3,102 $ 3,117 $ 3,102 $ 3,549
- Accrued Pension/Retirement Benefits from this Trust None None None $ 131 $ 217 $ 159 $ 168
VANGUARD QUANTITATIVE FUNDS
- Aggregate Compensation from this Trust None $ 1,281 None $ 1,281 $ 1,287 $ 1,281 $ 1,466
- Accrued Pension/Retirement Benefits from this Trust None None None $ 150 $ 131 $ 87 $ 57
VANGUARD SPECIALIZED FUNDS
- Aggregate Compensation from this Trust None $ 3,520 None $ 3,520 $ 3,538 $ 3,520 $ 4,028
- Accrued Pension/Retirement Benefits from this Trust None None None $ 411 $ 360 $ 239 $ 158
VANGUARD TAX-MANAGED FUNDS
- Aggregate Compensation from this Trust None $ 1,082 None $ 1,082 $ 1,087 $ 1,082 $ 1,239
- Accrued Pension/Retirement Benefits from this Trust None None None $ 126 $ 111 $ 73 $ 49
VANGUARD TREASURY FUND
- Aggregate Compensation from this Trust None $ 784 None $ 784 $ 788 $ 784 $ 900
- Accrued Pension/Retirement Benefits from this Trust None None None $ 92 $ 80 $ 53 $ 36
VANGUARD TRUSTEES' EQUITY FUND
- Aggregate Compensation from this Trust None $ 139 None $ 139 $ 140 $ 139 $ 158
- Accrued Pension/Retirement Benefits from this Trust None None None $ 16 $ 14 $ 9 $ 8
VANGUARD VARIABLE INSURANCE FUND
(Based on Fiscal Period October 1-December 31, 2001)
- Aggregate Compensation from this Trust None $ 100 None $ 100 $ 101 $ 100 $ 115
- Accrued Pension/Retirement Benefits from this Trust None None None $ 12 $ 10 $ 7 $ 5
VANGUARD WELLESLEY INCOME FUND
- Aggregate Compensation from this Trust None $ 962 None $ 962 $ 967 $ 962 $ 1,100
- Accrued Pension/Retirement Benefits from this Trust None None None $ 112 $ 98 $ 65 $ 44
Vanguard Wellington Fund
- Aggregate Compensation from this Trust None $ 4,310 None $ 4,767 $ 4,790 $ 4,767 $ 5,447
- Accrued Pension/Retirement Benefits from this Trust None None None $ 550 $ 481 $ 319 $ 211
VANGUARD WHITEHALL FUNDS
- Aggregate Compensation from this Trust None $ 81 None $ 100 $ 100 $ 100 $ 100
- Accrued Pension/Retirement Benefits from this Trust None None None $ 11 $ 10 $ 7 $ 4
VANGUARD WINDSOR FUNDS
- Aggregate Compensation from this Trust None $ 6,739 None $ 8,305 $ 8,346 $ 8,305 $ 9,499
- Accrued Pension/Retirement Benefits from this Trust None None None $ 945 $ 827 $ 548 $ 364
VANGUARD WORLD FUND
- Aggregate Compensation from this Trust None $ 2,997 None $ 6,477 $ 6,508 $ 6,477 $ 7,408
- Accrued Pension/Retirement Benefits from this Trust None None None $ 254 $ 420 $ 308 $ 324
ALL VANGUARD FUNDS
- Aggregate Compensation from all Vanguard Funds (3) None $104,000 None $104,000 $ 104,000 $ 104,000 $ 119,000
- Total Accrued Retirement Benefit at January 1, 2002 None None None $28,015 $ 97,922 $51,603 $72,873
- -----------------------------------------------------------------------------------------------------------------------------------
Notes:
(1) Mr. Ellis joined each fund's board, effective January 1, 2001.
(2) Mr. Gupta joined the boards of 87 funds, effective December 31, 2001.
(3) These amounts reflect the total compensation paid to each trustee for his or
her services to 109 funds (107 in the case of Mr. Malkiel) for the 2001 calendar
year, and therefore may not equal the sum of the amounts shown in the table,
which reflect compensation for each fund's recently completed fiscal year.
SELECTION OF PRICEWATERHOUSECOOPERS AS INDEPENDENT ACCOUNTANTS
The independent trustees of each Vanguard fund have selected
PricewaterhouseCoopers LLP (PwC) as independent accountants to audit and certify
the funds' financial statements. Representatives of PwC will be present at the
shareholder meeting and will be given the opportunity to make a statement if
they so choose.
In addition to serving as independent accountants, PwC has provided limited
nonaudit services (primarily tax and business advisory services) to both the
Vanguard funds and The Vanguard Group. The independent trustees carefully
considered these nonaudit services when evaluating PwC's independence for
purposes of its selection as the funds' independent accountants. In a letter to
17
the funds' audit committee dated June 25, 2002, PwC confirmed its status as
independent accountants with respect to the Vanguard funds within the meaning of
the federal securities laws.
PWC AUDIT REPORTS
PwC's audit report for each Vanguard fund's most recent fiscal year did not
contain any adverse opinions or disclaimers of opinion, nor did PwC qualify or
modify such reports as to uncertainty, audit scope, or accounting principles.
Further, there were no disagreements between any of the Vanguard funds and PwC
in three key areas: (i) accounting principles and practices, (ii) financial
statement disclosures, or (iii) audit scope and procedures--which, if not
resolved to PwC's satisfaction, would have caused the accountants to reference
the matter in their audit reports.
FUND-RELATED AUDIT FEES PAID TO PWC
The Vanguard funds are organized under 35 separate trusts, each of which
paid PwC the approximate amount shown in the table below as audit fees for the
trust's most recently ended fiscal year. Please refer to Part V for the name of
the trust to which each Vanguard fund belongs.
TRUST AUDIT FEES
-----------------------------------------------------------------------
Vanguard Admiral Funds $ 9,000
Vanguard Balanced Index Fund 12,500
Vanguard Bond Index Funds 48,000
Vanguard California Tax-Free Funds 33,000
Vanguard Convertible Securities Fund 12,500
Vanguard Explorer Fund 12,500
Vanguard Fenway Funds 25,000
Vanguard Fixed Income Securities Funds 120,000
Vanguard Florida Tax-Free Funds 12,000
Vanguard Horizon Funds 40,000
Vanguard Index Funds 112,000
Vanguard Institutional Index Funds 25,000
Vanguard International Equity Index Funds 45,000
Vanguard Malvern Funds 25,000
Vanguard Massachusetts Tax-Exempt Funds 12,000
Vanguard Money Market Reserves 8,000
Vanguard Morgan Growth Fund 12,500
Vanguard Municipal Bond Funds 81,000
Vanguard New Jersey Tax-Free Funds 21,000
Vanguard New York Tax-Free Funds 21,000
Vanguard Ohio Tax-Free Funds 21,000
Vanguard Pennsylvania Tax-Free Funds 21,000
Vanguard PRIMECAP Fund 12,500
Vanguard Quantitative Funds 12,500
Vanguard Specialized Funds 62,500
Vanguard STAR Funds 81,000
Vanguard Tax-Managed Funds 62,500
Vanguard Treasury Fund 9,000
Vanguard Trustees' Equity Fund 15,000
Vanguard Variable Insurance Fund 320,000
18
Vanguard Wellesley Income Fund $ 12,500
Vanguard Wellington Fund 12,500
Vanguard Whitehall Funds 12,500
Vanguard Windsor Funds 25,000
Vanguard World Fund 40,000
-----------------------------------------------------------------------
TOTAL AUDIT FEES $1,417,000
ALL OTHER FEES PAID TO PWC
For the year ended June 30, 2002, PwC was paid approximately $71,000 for all
nonaudit services rendered to the Vanguard funds, including tax compliance
services and SEC registration statement procedures. For that same year, PwC was
paid approximately $532,400 for nonaudit services provided to The Vanguard Group
and certain of its affiliates. This amount includes services in connection with
Vanguard's benefit plans and statements, transfer agent system, tax reporting
and documentation and educational training materials. No fees were paid to PwC
by any Vanguard entity for design or implementation of financial information
systems.
PART IV MORE ON PROXY VOTING AND SHAREHOLDER MEETINGS
This section provides information on a number of topics relating to proxy voting
and shareholder meetings.
VOTES NEEDED TO ELECT TRUSTEES. Shareholders of funds that are part of the
same trust will elect their trustees on a joint basis. (A list of trusts and
their component Vanguard funds is included in Part V of this proxy statement.)
For each trust, the seven nominees (six in the case of Vanguard Fenway Funds)
receiving the highest number of affirmative votes cast at the meeting will be
elected. A nominee will not be elected, however, if more votes are cast against
than for him or her.
VOTES NEEDED TO APPROVE PROPOSALS 2-7. Shareholders of each fund will vote
separately on each proposal applicable to that fund. For a proposal to pass for
a fund, it must be approved by the lesser of (i) shares representing 67% or more
of the fund's net assets voted, so long as shares representing more than 50% of
the fund's net assets are present or represented by proxy; or (ii) shares
representing more than 50% of the fund's net assets.
PROXY SOLICITATION METHODS. The funds will solicit shareholder proxies in a
variety of ways. All shareholders who are entitled to vote will receive these
proxy materials either by mail or electronically (assuming that applicable
requirements are met). In addition, Vanguard employees and officers may solicit
shareholder proxies in person, by telephone, by mail, or over the Internet.
PROXY SOLICITATION COSTS. Each fund will pay all costs of soliciting
proxies from its shareholders, including costs relating to the printing,
mailing, and tabulation of proxies. By voting immediately, you can help your
fund avoid the considerable expense of a second proxy solicitation.
19
QUORUM. Each fund must achieve a quorum in order for the shareholder
meeting to go forward. This means that a majority of a fund's shares must be
represented at the meeting, either in person or by proxy. All returned proxies
count toward a quorum, regardless of how they are voted ("For," "Against," or
"Abstain"). The funds will count abstentions and broker non-votes toward
establishing a quorum, but not toward the approval of any proposals. (A broker
non-vote is a proxy received from a broker who holds fund shares on behalf of an
investor, but who does not have discretionary power to vote the shares on the
investor's behalf, indicating that the broker has not received instructions from
the investor on the matter at issue.)
REVOKING YOUR PROXY. Your latest vote is the one that counts. Therefore you
can revoke a prior proxy simply by voting again--over the Internet, by using
your proxy card, or by toll-free telephone call. You can also revoke a prior
proxy by writing to the funds' secretary at the following address: R. Gregory
Barton, V26, The Vanguard Group, P.O. Box 2600, Valley Forge, PA 19482-2600, or
by voting in person at the meeting. You may revoke your proxy at any time up
until voting results are announced at the shareholder meeting.
SHAREHOLDER PROPOSALS. Any shareholder proposals to be included in the
proxy statement for a fund's next meeting of shareholders must be received by
the fund within a reasonable period of time prior to that meeting. None of the
funds currently plans to hold a meeting of shareholders in 2003.
VOTING RIGHTS. Shareholders are entitled to cast one vote for each dollar
of fund net assets owned on the record date and a fractional vote for each
fractional dollar of net assets owned on that date.
NOMINEE ACCOUNTS. Upon request, the Vanguard funds will reimburse nominees
for their reasonable expenses in forwarding proxy materials to beneficial owners
of the funds' shares. Please submit invoices for our review to: Melissa Nassar,
V26, The Vanguard Group, P.O. Box 2600, Valley Forge, PA 19482-2600.
ANNUAL/SEMIANNUAL REPORTS. Each fund's most recent annual and semiannual
reports to shareholders are available at no cost. To request a report, please
call us toll-free at 1-800-992-0833, or write to us at P.O. Box 2600, Valley
Forge, PA 19482-2600. The reports also are available at our website,
www.vanguard.com. Participants in a company-sponsored 401(k) or other retirement
plan administered by Vanguard should call us at 1-800-523-1188.
OTHER MATTERS. At this point, we know of no other business to be brought
before the shareholder meeting. However, if any other matters do come up, we
will use our best judgment to vote on your behalf. If you object to our voting
other matters on your behalf, please tell us so in writing before the meeting.
THE VANGUARD GROUP, INC. Except as noted below, each of the Vanguard funds
soliciting proxies is a member of The Vanguard Group, Inc. ("Vanguard").
Vanguard is owned jointly by the funds it oversees (and therefore indirectly by
the shareholders of those funds). Vanguard provides the funds--more than 95
distinct investment portfolios--with their corporate management, administrative,
and distribution services on an at-cost basis.
20
Funds organized under Vanguard Institutional Index Funds and Vanguard STAR
Funds are not members of The Vanguard Group, although they are administered by
and pay fees to The Vanguard Group for management, advisory, marketing,
accounting, transfer agency, and other services.
21
PART V FUND AND INVESTMENT ADVISER INFORMATION
This section provides information regarding the funds' and their investment
advisers.
INVESTMENT ADVISERS: Listed below are the names and addresses of all of the
Vanguard funds' investment advisers.
ADVISER ADDRESS
- --------------------------------------------------------------------------------
Alliance Capital Management L.P. 1345 Avenue of the Americas, New York, NY 10105
Barrow, Hanley, Mewhinney & Strauss, Inc. One McKinney Plaza, 3232 McKinney Avenue, 15th Floor, Dallas, TX 75204
Chartwell Investment Partners 1235 Westlakes Drive, Suite 330, Berwyn, PA 19312
Equinox Capital Management, LLC 590 Madison Avenue, 41st Floor, New York, NY 10022
Franklin Portfolio Associates, LLC Two International Place, 22nd Floor, Boston, MA 02110
Granahan Investment Management, Inc. 275 Wyman Street, Suite 270, Waltham, MA 02451
Grantham, Mayo, Van Otterloo & Co. LLC 40 Rowes Wharf, Boston, MA 02110
Hansberger Global Investors, Inc. 515 East Las Olas Boulevard, Suite 1300, Fort Lauderdale, FL 33301
John A. Levin & Co., Inc. One Rockefeller Plaza, 19th Floor, New York, NY 10020
Marathon Asset Management Limited Orion House, 5 Upper St. Martin's Lane, London, WC2H 9EA, England
Mellon Capital Management Corporation 595 Market Street, Suite 3000, San Francisco, CA 94105
M&G Investment Management Limited Laurence Pountney Hill, London, EC4H OHH, England
Newell Associates 525 University Avenue, Palo Alto, CA 94301
Oaktree Capital Management, LLC 333 South Grand Avenue, 28th Floor, Los Angeles, CA 90071
PRIMECAP Management Company 225 South Lake Avenue, Suite 400, Pasadena, CA 91101
Provident Investment Counsel, Inc. 300 North Lake Avenue, Pasadena, CA 91101
Sanford C. Bernstein & Co., LLC 767 Fifth Avenue, New York, NY 10153
Schroder Investment Management
North America Inc. 31 Gresham Street, London, EC2V 7QA, England
Tukman Capital Management, Inc. 60 East Sir Francis Drake Boulevard, Suite 204, Larkspur, CA 94939
22
Turner Investment Partners, Inc. 1235 Westlakes Drive, Suite 350, Berwyn, PA 19312
The Vanguard Group, Inc. P.O. Box 2600, Valley Forge, PA 19482
Wellington Management Company, LLP 75 State Street, Boston, MA 02109
23
VANGUARD FUND INFORMATION
This section provides certain required information for each of the
Vanguard(R) funds. The funds appear in alphabetical order and all information
presented is as of June 30, 2002. The year in parentheses is the fund's year of
inception. Among other things, we list the trustees' beneficial ownership of
each fund's shares based on certain dollar ranges. All trustees allocate
personal assets among the Vanguard funds according to their own investment
needs. In the aggregate, each trustee owns over $100,000 in shares of all
Vanguard funds. As a group, each fund's trustees and officers own less than 1%
of the outstanding shares of that fund. As we explained earlier in this
statement, Mr. Brennan is the only interested trustee of the Vanguard funds. All
other trustees are independent of Vanguard and the Vanguard funds.
VANGUARD(R)500 INDEX FUND (1976)
- -------------------------
o A series of Vanguard Index Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $76,997,630,057 and 843,099,074 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, over $100,000; GUPTA,
over $100,000; MALKIEL, $50,001-$100,000; RANKIN, over $100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
A
VANGUARD(R)ADMIRAL TREASURY MONEY MARKET FUND (1992)
- ---------------------------------------------
o A series of Vanguard Admiral Funds(R).
o Advised by The Vanguard Group, Inc.
o Net assets of $9,595,397,961 and 9,594,949,105 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund:
1. FedEx Corporation Retirement Savings Plan, Memphis, Tenn., owns
approximately 7.0%.
VANGUARD(R)ASSET ALLOCATION FUND (1988)
- ---------------------------------
o A series of Vanguard Malvern Funds.
o Advised by Mellon Capital Management Corporation.
o Net assets of $7,876,613,759 and 379,945,871 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, over $100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
B
VANGUARD(R)BALANCED INDEX FUND (1992)
- ------------------------------
o A series of Vanguard Balanced Index Fund.
o Advised by The Vanguard Group, Inc.
o Net assets of $4,319,343,628 and 260,633,436 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, $10,001-$50,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
24
C
VANGUARD(R)CALIFORNIA INTERMEDIATE-TERM TAX-EXEMPT FUND (1994)
- -------------------------------------------------------
o A series of Vanguard California Tax-Free Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $2,378,125,210 and 212,154,109 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)CALIFORNIA LONG-TERM TAX-EXEMPT FUND (1986)
- -----------------------------------------------
o A series of Vanguard California Tax-Free Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $2,077,045,558 and 177,466,040 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)CALIFORNIA TAX-EXEMPT MONEY MARKET FUND (1987)
- --------------------------------------------------
o A series of Vanguard California Tax-Free Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $3,209,174,915 and 3,209,065,639 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)CALVERT SOCIAL INDEX FUND (2000)
- ------------------------------------
o A series of Vanguard World Fund.
o Advised by The Vanguard Group, Inc.
o Net assets of $94,755,463 and 14,655,069 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, $10,001-$50,000.
o Shareholders who beneficially own more than 5% of this fund:
1. Preferred Professional Insurance Co., Omaha Neb., owns
approximately 6.2%.
VANGUARD(R)CAPITAL OPPORTUNITY FUND (1995)
- -----------------------------------
o A series of Vanguard Horizon Funds(R).
o Advised by PRIMECAP Management Company.
o Net assets of $4,182,264,634 and 213,719,228 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, over $100,000; HEISEN,
over $100,000; MALKIEL, $50,001-$100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)CAPITAL VALUE FUND (2001)
- -----------------------------
o A series of Vanguard Malvern Funds.
o Advised by Wellington Management Company, LLP.
o Net assets of $232,214,597 and 28,634,748 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, $10,001-$50,000;
WILSON, over $100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
25
VANGUARD(R)CONVERTIBLE SECURITIES FUND (1986)
- --------------------------------------
o A series of Vanguard Convertible Securities Fund.
o Advised by Oaktree Capital Management, LLC.
o Net assets of $280,807,365 and 25,884,603 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund: NONE.
D
VANGUARD(R)DEVELOPED MARKETS INDEX FUND (2000)
- ---------------------------------------
o A series of Vanguard STAR Funds.
o Advised by the fund's board of trustees.
o Net assets of $300,385,602 and 43,763,499 outstanding shares.
o Trustees who own shares of this fund: GUPTA, over $100,000.
o Shareholders who beneficially own more than 5% of this fund:
1. Chevrontexaco Employee Savings Investment Plan, San Ramon,
Calif., owns approximately 7.9%.
2. Rohm and Haas Company Employee Stock Ownership and Savings Plan,
Philadelphia, Pa., owns approximately 7.5%.
E
VANGUARD(R)EMERGING MARKETS STOCK INDEX FUND (1994)
- --------------------------------------------
o A series of Vanguard International Equity Index Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $1,024,618,822 and 120,992,609 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, over $100,000; WILSON,
over $100,000.
o Shareholders who beneficially own more than 5% of this fund:
1. Vanguard Total International Stock Index Fund Custodian
Account--Emerging Markets Portfolio, Valley Forge, Pa., owns
approximately 26.5%.
VANGUARD(R)ENERGY FUND (1984)
- ----------------------
o A series of Vanguard Specialized Funds.
o Advised by Wellington Management Company, LLP.
o Net assets of $1,543,405,943 and 555,666,510 outstanding shares.
o Trustees who own shares of this fund: WILSON, over $100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
26
VANGUARD(R)EQUITY INCOME FUND (1988)
- -----------------------------
o A series of Vanguard Fenway Funds.
o Advised by Newell Associates; John A. Levin & Co., Inc.; Wellington
Management Company, LLP; and The Vanguard Group, Inc.
o Net assets of $2,476,993,802 and 109,217,255 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, $1-$10,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)EUROPEAN STOCK INDEX FUND (1990)
- ------------------------------------
o A series of Vanguard International Equity Index Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $5,210,185,871 and 256,268,445 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, over $100,000; ELLIS,
over $100,000; MALKIEL, over $100,000; WILSON, over $100,000.
o Shareholders who beneficially own more than 5% of this fund:
1. Vanguard Total International Stock Index Fund Custodian
Account--European Portfolio, Valley Forge, Pa., owns
approximately 40.6%.
VANGUARD(R)EXPLORER(TM)FUND (1967)
- ---------------------------
o A series of Vanguard Explorer Fund.
o Advised by Chartwell Investment Partners; Granahan Investment
Management, Inc.; Grantham, Mayo, Van Otterloo & Co. LLC; The Vanguard
Group, Inc.; and Wellington Management Company, LLP.
o Net assets of $4,383,912,021 and 83,910,119 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, over $100,000; GUPTA,
$50,001-$100,000; RANKIN, over $100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)EXTENDED MARKET INDEX FUND (1987)
- -------------------------------------
o A series of Vanguard Index Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $4,422,373,876 and 208,411,863 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, $10,001-$50,000; GUPTA,
$50,001-$100,000; RANKIN, over $100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
F
VANGUARD(R)FEDERAL MONEY MARKET FUND (1981)
- ------------------------------------
o A series of Vanguard Money Market Reserves.
o Advised by The Vanguard Group, Inc.
o Net assets of $6,777,514,148 and 6,777,591,756 outstanding shares.
o Trustees who own shares of this fund: WILSON, $50,001-$100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
27
VANGUARD(R)FLORIDA LONG-TERM TAX-EXEMPT FUND (1992)
- --------------------------------------------
o A series of Vanguard Florida Tax-Free Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $1,162,734,996 and 99,743,641 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund: NONE.
G
VANGUARD(R)GLOBAL EQUITY FUND (1995)
- -----------------------------
o A series of Vanguard Horizon Funds.
o Advised by Marathon Asset Management Limited.
o Net assets of $244,932,738 and 19,875,537 outstanding shares.
o Trustees who own shares of this fund: WILSON, over $100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)GNMA FUND (1980)
- --------------------
o A series of Vanguard Fixed Income Securities Funds.
o Advised by Wellington Management Company, LLP.
o Net assets of $23,286,379,610 and 2,207,514,893 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)GROWTH AND INCOME FUND (1986)
- ---------------------------------
o A series of Vanguard Quantitative Funds.
o Advised by Franklin Portfolio Associates, LLC.
o Net assets of $6,118,489,569 and 237,296,776 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)GROWTH EQUITY FUND (1992)
- -----------------------------
o A series of Vanguard Fenway Funds.
o Advised by Turner Investment Partners, Inc.
o Net assets of $615,203,284 and 81,158,283 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, $10,001-$50,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)GROWTH INDEX FUND (1992)
- ----------------------------
o A series of Vanguard Index Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $8,326,711,333 and 381,425,503 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund: NONE.
28
H
VANGUARD(R)HEALTH CARE FUND (1984)
- ---------------------------
o A series of Vanguard Specialized Funds.
o Advised by Wellington Management Company, LLP.
o Net assets of $16,889,201,174 and 177,291,420 outstanding shares.
o Trustees who own shares of this fund: HEISEN, $10,001-$50,000; RANKIN,
$50,001-$100,000; WILSON, over $100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)HIGH-YIELD CORPORATE FUND (1978)
- ------------------------------------
o A series of Vanguard Fixed Income Securities Funds.
o Advised by Wellington Management Company, LLP.
o Net assets of $6,772,418,257 and 1,129,340,137 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, over $100,000; MALKIEL,
over $100,000; WILSON, $50,001-$100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)HIGH-YIELD TAX-EXEMPT FUND (1978)
- -------------------------------------
o A series of Vanguard Municipal Bond Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $3,933,052,427 and 369,313,999 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund: NONE.
I
VANGUARD(R)INFLATION-PROTECTED SECURITIES FUND (2000)
- ----------------------------------------------
o A series of Vanguard Fixed Income Securities Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $1,690,196,787 and 151,075,998 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund: NONE.
29
VANGUARD(R)INSTITUTIONAL DEVELOPED MARKETS INDEX FUND (2000)
- -----------------------------------------------------
o A series of Vanguard STAR Funds.
o Advised by the fund's board of trustees.
o Net assets of $279,265,321 and 40,989,194 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund:
1. Amica Mutual Insurance Company, Lincoln, R.I., owns approximately
13.4%.
2. Harvard International Investment Partnership, Boston, Mass., owns
approximately 13.0%.
3. Bost & Co., Pittsburgh, Pa., owns approximately 9.6%.
4. Marshall & Ilsley Trust Co., FBO Cuna Unitized Plans, Milwaukee,
Wis., owns approximately 8.3%.
5. Vanguard Fiduciary Trust Company, Aggressive Growth Portfolio,
Valley Forge, Pa., owns approximately 8.1%.
6. Conref & Co., Trustee, FBO Laclede Gas Pension, Milwaukee, Wis.,
owns approximately 6.6%.
VANGUARD(R)INSTITUTIONAL INDEX FUND (1990)
- -----------------------------------
o A series of Vanguard Institutional Index Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $32,727,340,471 and 361,707,275 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund:
1. Allfirst Trust Company, Custodian, The City of New York, Deferred
Compensation Plan, C/O Fascorp, Englewood, Co., owns
approximately 5.3%.
VANGUARD(R)INSTITUTIONAL TOTAL BOND MARKET INDEX FUND (2002)
- -----------------------------------------------------
o A series of Vanguard Institutional Index Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $429,403,056 and 8,557,870 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund:
1. SCIC Holdings LLC, C/O AON Insurance Managers, Burlington Vt.,
owns approximately 43.1%.
2. State of Utah, Land Permanent Trust Fund, Salt Lake City, Utah,
owns approximately 28.5%.
3. MAC & Co., Pittsburgh Pa., owns approximately 23.4%.
30
VANGUARD(R)INSTITUTIONAL TOTAL STOCK MARKET INDEX FUND (2001)
- ------------------------------------------------------
o A series of Vanguard Institutional Index Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $1,271,532,955 and 62,789,692 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund:
1. Trustees of the University of Pennsylvania (Endowment),
Philadelphia, Pa., owns approximately 28.7%.
2. Citibank NA, RJ Reynolds Capital Investment Plan, New York, N.Y.,
owns approximately 23.2%.
3. The Glenmede Trust Co., Trustee, The Pew Memorial Trust,
Philadelphia, Pa., owns approximately 21.7%.
4. Trustees of the University of Pennsylvania (Defined Benefit),
Philadelphia, Pa., owns approximately 7.4%.
VANGUARD(R)INSURED LONG-TERM TAX-EXEMPT FUND (1984)
- --------------------------------------------
o A series of Vanguard Municipal Bond Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $2,812,021,323 and 222,156,096 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)INTERMEDIATE-TERM BOND INDEX FUND (1994)
- --------------------------------------------
o A series of Vanguard Bond Index Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $2,673,519,687 and 261,372,134 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)INTERMEDIATE-TERM CORPORATE FUND (1993)
- -------------------------------------------
o A series of Vanguard Fixed Income Securities Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $3,213,697,366 and 331,288,806 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)INTERMEDIATE-TERM TAX-EXEMPT FUND (1977)
- --------------------------------------------
o A series of Vanguard Municipal Bond Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $11,254,717,662 and 830,297,655 outstanding shares.
o Trustees who own shares of this fund: WILSON, over $100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
31
VANGUARD(R)INTERMEDIATE-TERM TREASURY FUND (1991)
- ------------------------------------------
o A series of Vanguard Fixed Income Securities Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $3,883,340,864 and 345,241,991 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)INTERNATIONAL EXPLORER(TM)FUND (1996)3
- -----------------------------------------
o A series of Vanguard Whitehall Funds.
o Advised by Schroder Investment Management North America Inc.
VANGUARD(R)INTERNATIONAL GROWTH FUND (1981)
- ------------------------------------
o A series of Vanguard World Fund.
o Advised by Schroder Investment Management North America Inc.
o Net assets of $6,556,727,215 and 408,029,139 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, $50,001-$100,000;
RANKIN, $50,001-$100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)INTERNATIONAL VALUE FUND (1983)
- -----------------------------------
o A series of Vanguard Trustees' Equity Fund.
o Advised by Hansberger Global Investors, Inc.
o Net assets of $1,062,473,440 and 46,797,069 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, over $100,000.
o Shareholders who beneficially own more than 5% of this fund:
1. FedEx Corporation Retirement Savings Plan, Memphis, Tenn., owns
approximately 7.6%.
L
VANGUARD(R) LIFESTRATEGY(R) CONSERVATIVE GROWTH FUND (1994)
- ----------------------------------------------------
o A series of Vanguard STAR Funds.
o Advised by the fund's board of trustees.
o Net assets of $2,203,163,094 and 164,939,169 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund:
1. Mars Deferred Compensation Plan, Mount Olive, N.J., owns
approximately 6.4%.
2. IBEW Local 613 Defined Contribution Pension Plan, Atlanta, Ga.,
owns approximately 5.3%.
- ------------------------
(3) Vanguard International Explorer Fund did not become a Vanguard fund until
after June 30, 2002. Therefore, financial information for the fund is not
available as of June 30, 2002.
32
VANGUARD(R) LIFESTRATEGY(R) GROWTH FUND (1994)
- ---------------------------------------
o A series of Vanguard STAR Funds.
o Advised by the fund's board of trustees.
o Net assets of $3,542,159,633 and 222,710,105 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R) LIFESTRATEGY(R) INCOME FUND (1994)
- ---------------------------------------
o A series of Vanguard STAR Funds.
o Advised by the fund's board of trustees.
o Net assets of $956,286,134 and 76,739,365 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund:
1. Mars Deferred Compensation Plan, Mount Olive, N.J., owns
approximately 5.4%.
VANGUARD(R) LIFESTRATEGY(R) MODERATE GROWTH FUND (1994)
- ------------------------------------------------
o A series of Vanguard STAR Funds.
o Advised by the fund's board of trustees.
o Net assets of $4,172,622,068 and 280,931,147 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund:
1. Georgia-Pacific Corporation Salaried 401(k) Plan, Atlanta, Ga.,
owns approximately 6.9%.
VANGUARD(R)LIMITED-TERM TAX-EXEMPT FUND (1987)
- ---------------------------------------
o A series of Vanguard Municipal Bond Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $4,602,794,015 and 418,748,370 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, over $100,000; WILSON,
over $100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)LONG-TERM BOND INDEX FUND (1994)
- ------------------------------------
o A series of Vanguard Bond Index Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $627,086,722 and 58,178,492 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)LONG-TERM CORPORATE FUND (1973)
- -----------------------------------
o A series of Vanguard Fixed Income Securities Funds.
o Advised by Wellington Management Company, LLP.
o Net assets of $4,078,113,331 and 468,259,394 outstanding shares.
o Trustees who own shares of this fund: MALKIEL, over $100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
33
VANGUARD(R)LONG-TERM TAX-EXEMPT FUND (1977)
- ------------------------------------
o A series of Vanguard Municipal Bond Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $2,028,411,504 and 180,248,047 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)LONG-TERM TREASURY FUND (1986)
- ----------------------------------
o A series of Vanguard Fixed Income Securities Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $1,842,256,576 and 168,739,974 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund:
1. Variable Annuity Life Insurance Company, Houston, Texas, owns
approximately 13.1%.
M
VANGUARD(R)MASSACHUSETTS TAX-EXEMPT FUND (1998)
- ----------------------------------------
o A series of Vanguard Massachusetts Tax-Exempt Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $343,014,353 and 34,191,210 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)MID-CAP GROWTH FUND (1997)4
- ------------------------------
o A series of Vanguard Whitehall Funds.
o Advised by Provident Investment Counsel, Inc.
VANGUARD(R)MID-CAP INDEX FUND (1998)
- -----------------------------
o A series of Vanguard Index Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $3,604,384,362 and 288,408,749 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)MORGAN(TM)GROWTH FUND (1968)
- --------------------------------
o A series of Vanguard Morgan Growth Fund.
o Advised by Franklin Portfolio Associates, LLC; The Vanguard Group,
Inc.; and Wellington Management Company, LLP.
o Net assets of $3,115,244,592 and 237,332,253 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, over $100,000; RANKIN,
$10,001-$50,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
- -----------------------------
(4) Vanguard Mid-Cap Growth Fund did not become a Vanguard fund until after June
30, 2002. Therefore, financial information for the fund is not available as of
June 30, 2002.
34
N
VANGUARD(R) NEW JERSEY LONG-TERM TAX-EXEMPT FUND (1988)
- ------------------------------------------------
o A series of Vanguard New Jersey Tax-Free Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $1,522,761,229 and 126,533,806 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)NEW JERSEY TAX-EXEMPT MONEY MARKET FUND (1988)
- --------------------------------------------------
o A series of Vanguard New Jersey Tax-Free Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $1,660,355,372 and 1,660,325,241 outstanding shares.
o Trustees who own shares of this fund: MALKIEL, $10,001-$50,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R) NEW YORK LONG-TERM TAX-EXEMPT FUND (1986)
- ----------------------------------------------
o A series of Vanguard New York Tax-Free Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $2,083,811,536 and 185,238,703 outstanding shares.
o Trustees who own shares of this fund: MALKIEL, over $100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)NEW YORK TAX-EXEMPT MONEY MARKET FUND (1997)
- ------------------------------------------------
o A series of Vanguard New York Tax-Free Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $1,488,170,440 and 1,488,186,020 outstanding shares.
o Trustees who own shares of this fund: MALKIEL, $10,001-$50,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
O
VANGUARD(R)OHIO LONG-TERM TAX-EXEMPT FUND (1990)
- -----------------------------------------
o A series of Vanguard Ohio Tax-Free Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $518,992,304 and 42,938,256 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)OHIO TAX-EXEMPT MONEY MARKET FUND (1990)
- --------------------------------------------
o A series of Vanguard Ohio Tax-Free Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $645,445,328 and 645,461,825 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund:
1. Jaton Trust, Hudson, Ohio, owns approximately 9.3%.
35
P
VANGUARD(R)PACIFIC STOCK INDEX FUND (1990)
- -----------------------------------
o A series of Vanguard International Equity Index Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $1,831,183,459 and 247,670,771 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, over $100,000; ELLIS,
over $100,000; MALKIEL, $10,001-$50,000.
o Shareholders who beneficially own more than 5% of this fund:
1. Vanguard Total International Stock Index Fund Custodian
Account--Pacific Portfolio, Valley Forge, Pa., owns approximately
45.7%.
VANGUARD(R)PENNSYLVANIA LONG-TERM TAX-EXEMPT FUND (1986)
- -------------------------------------------------
o A series of Vanguard Pennsylvania Tax-Free Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $2,362,298,358 and 206,630,898 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, over $100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)PENNSYLVANIA TAX-EXEMPT MONEY MARKET FUND (1988)
- ----------------------------------------------------
o A series of Vanguard Pennsylvania Tax-Free Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $2,348,681,765 and 2,348,924,538 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, $1-$10,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)PRECIOUS METALS FUND (1984)
- -------------------------------
o A series of Vanguard Specialized Funds.
o Advised by M&G Investment Management Limited.
o Net assets of $604,802,441 and 54,263,997 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R) PRIMECAP FUND (1984)
- -------------------------
o A series of Vanguard PRIMECAP Fund.
o Advised by PRIMECAP Management Company.
o Net assets of $16,239,551,388 and 375,179,146 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, over $100,000; RANKIN,
over $100,000.
o Shareholders who beneficially own more than 5% of this fund:
1. FedEx Corporation Retirement Savings Plan, Memphis, Tenn., owns
approximately 7.2%.
36
VANGUARD(R)PRIME MONEY MARKET FUND (1975)
- ----------------------------------
o A series of Vanguard Money Market Reserves.
o Advised by The Vanguard Group, Inc.
o Net assets of $54,583,318,804 and 54,583,215,817 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, $1-$10,000; HEISEN,
$1-$10,000; WILSON, $1-$10,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
R
VANGUARD(R)REIT INDEX FUND (1996)
- --------------------------
o A series of Vanguard Specialized Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $2,082,477,884 and 138,506,529 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund: NONE.
S
VANGUARD(R)SELECTED VALUE FUND (1996)
- ------------------------------
o A series of Vanguard Whitehall Funds.
o Advised by Barrow, Hanley, Mewhinney & Strauss, Inc.
o Net assets of $1,396,256,753 and 102,600,127 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)SHORT-TERM BOND INDEX FUND (1994)
- -------------------------------------
o A series of Vanguard Bond Index Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $2,559,124,209 and 253,017,313 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)SHORT-TERM CORPORATE FUND (1982)
- ------------------------------------
o A series of Vanguard Fixed Income Securities Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $10,780,906,242 and 1,009,448,233 outstanding shares.
o Trustees who own shares of this fund: WILSON, over $100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
37
VANGUARD(R)SHORT-TERM FEDERAL FUND (1987)
- ----------------------------------
o A series of Vanguard Fixed Income Securities Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $2,696,662,355 and 254,436,916 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)SHORT-TERM TAX-EXEMPT FUND (1977)
- -------------------------------------
o A series of Vanguard Municipal Bond Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $3,289,942,355 and 209,155,332 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)SHORT-TERM TREASURY FUND (1991)
- -----------------------------------
o A series of Vanguard Fixed Income Securities Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $3,047,320,040 and 286,459,874 outstanding shares.
o Trustees who own shares of this fund: WILSON, $50,001-$100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)SMALL-CAP GROWTH INDEX FUND (1998)
- --------------------------------------
o A series of Vanguard Index Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $532,243,893 and 51,894,900 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, over $100,000.
o Shareholders who beneficially own more than 5% of this fund:
1. State Street Bank & Trust Co., Trustee, IBM Tax Deferred Savings
Plan, Westwood, Mass., owns approximately 22.1%.
VANGUARD(R)SMALL-CAP INDEX FUND (1960)
- -------------------------------
o A series of Vanguard Index Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $4,912,632,143 and 258,573,853 outstanding shares.
o Trustees who own shares of this fund: WILSON, over $100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)SMALL-CAP VALUE INDEX FUND (1998)
- -------------------------------------
o A series of Vanguard Index Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $2,191,637,838 and 206,295,073 outstanding shares.
o Trustees who own shares of this fund: ELLIS, over $100,000.
o Shareholders who beneficially own more than 5% of this fund:
1. State Street Bank & Trust Co., Trustee, IBM Tax Deferred Savings
Plan, Westwood, Mass., owns approximately 19.8%.
38
VANGUARD(R) STAR(TM) FUND (1985)
- -------------------------
o A series of Vanguard STAR Funds.
o Advised by the fund's board of trustees.
o Net assets of $7,904,492,940 and 513,940,050 outstanding shares.
o Trustees who own shares of this fund: WILSON, over $100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)STRATEGIC EQUITY FUND (1995)
- --------------------------------
o A series of Vanguard Horizon Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $983,085,877 and 66,436,191 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund: NONE.
T
VANGUARD(R)TAX-EXEMPT MONEY MARKET FUND (1980)
- ---------------------------------------
o A series of Vanguard Municipal Bond Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $9,770,495,564 and 9,771,580,382 outstanding shares.
o Trustees who own shares of this fund: WILSON, over $100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)TAX-MANAGED BALANCED FUND (1994)
- -------------------------------------
o A series of Vanguard Tax-Managed Funds(R).
o Advised by The Vanguard Group, Inc.
o Net assets of $422,631,186 and 26,167,405 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)TAX-MANAGED CAPITAL APPRECIATION FUND (1994)
- ------------------------------------------------
o A series of Vanguard Tax-Managed Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $2,269,441,108 and 84,895,673 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, over $100,000; WILSON,
over $100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)TAX-MANAGED GROWTH AND INCOME FUND (1994)
- ---------------------------------------------
o A series of Vanguard Tax-Managed Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $2,025,964,724 and 81,398,859 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, over $100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
39
VANGUARD(R)TAX-MANAGED INTERNATIONAL FUND (1999)
- -----------------------------------------
o A series of Vanguard Tax-Managed Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $425,324,960 and 55,248,649 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, $50,001-$100,000.
o Shareholders who beneficially own more than 5% of this fund:
1. Blue Cross and Blue Shield of Florida Inc., Jacksonville, Fla.,
owns approximately 10.3%.
2. Vanguard National Trust Company, Personal Trust Services, Valley
Forge, Pa., owns approximately 7.4%.
VANGUARD(R)TAX-MANAGED SMALL-CAP FUND (1999)
- -------------------------------------
o A series of Vanguard Tax-Managed Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $701,689,603 and 46,971,610 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, over $100,000; WILSON,
over $100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)TOTAL BOND MARKET INDEX FUND (1986)
- ---------------------------------------
o A series of Vanguard Bond Index Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $24,122,638,267 and 2,381,216,290 outstanding shares.
o Trustees who own shares of this fund: WILSON, over $100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)TOTAL INTERNATIONAL STOCK INDEX FUND (1996)
- -----------------------------------------------
o A series of Vanguard STAR Funds.
o Advised by the fund's board of trustees.
o Net assets of $3,225,060,939 and 351,353,764 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, over $100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)TOTAL STOCK MARKET INDEX FUND (1992)
- ----------------------------------------
o A series of Vanguard Index Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $24,320,799,879 and 1,038,220,199 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, over $100,000; MALKIEL,
over $100,000; RANKIN, over $100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
40
VANGUARD(R)TREASURY MONEY MARKET FUND (1983)
- -------------------------------------
o A series of Vanguard Treasury Fund.
o Advised by The Vanguard Group, Inc.
o Net assets of $4,722,799,221 and 4,722,173,907 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund:
1. Georgia-Pacific Corporation Salaried 401(k) Plan, Atlanta, Ga.,
owns approximately 5.8%.
U
VANGUARD(R) U.S. GROWTH FUND (1959)
- ---------------------------
o A series of Vanguard World Fund.
o Advised by Alliance Capital Management L.P.
o Net assets of $7,113,376,520 and 468,027,061 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, $50,001-$100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R) U.S VALUE FUND (2000)
- --------------------------
o A series of Vanguard Malvern Funds.
o Advised by Grantham, Mayo, Van Otterloo & Co. LLC.
o Net assets of $551,594,274 and 50,374,035 outstanding shares.
o Trustees who own shares of this fund: WILSON, $50,001-$100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)UTILITIES INCOME FUND (1992)
- --------------------------------
o A series of Vanguard Specialized Funds.
o Advised by Wellington Management Company, LLP.
o Net assets of $655,650,183 and 59,911,015 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund: NONE.
V
VANGUARD(R)VALUE INDEX FUND (1992)
- ---------------------------
o A series of Vanguard Index Funds.
o Advised by The Vanguard Group, Inc.
o Net assets of $3,860,095,054 and 227,520,844 outstanding shares.
o Trustees who own shares of this fund: NONE.
o Shareholders who beneficially own more than 5% of this fund: NONE.
41
VANGUARD(R)VARIABLE INSURANCE FUND--BALANCED PORTFOLIO (1991)
- ------------------------------------------------------
o A series of Vanguard Variable Insurance Fund.
o Advised by Wellington Management Company, LLP.
o Net assets of $744,708,654 and 47,899,561 outstanding shares.
o Trustees who own shares of this portfolio: BRENNAN, $10,001-$50,000.
o Shareholders who beneficially own more than 5% of this portfolio:
NONE.
VANGUARD(R)VARIABLE INSURANCE FUND--DIVERSIFIED VALUE PORTFOLIO (1999)
- ---------------------------------------------------------------
o A series of Vanguard Variable Insurance Fund.
o Advised by Barrow, Hanley, Mewhinney & Strauss, Inc.
o Net assets of $186,687,194 and 18,095,764 outstanding shares.
o Trustees who own shares of this portfolio: NONE.
o Shareholders who beneficially own more than 5% of this portfolio:
NONE.
VANGUARD(R)VARIABLE INSURANCE FUND--EQUITY INCOME PORTFOLIO (1993)
- -----------------------------------------------------------
o A series of Vanguard Variable Insurance Fund.
o Advised by Newell Associates.
o Net assets of $339,098,758 and 18,444,264 outstanding shares.
o Trustees who own shares of this portfolio: NONE.
o Shareholders who beneficially own more than 5% of this portfolio:
NONE.
VANGUARD(R)VARIABLE INSURANCE FUND--EQUITY INDEX PORTFOLIO (1991)
- ----------------------------------------------------------
o A series of Vanguard Variable Insurance Fund.
o Advised by The Vanguard Group, Inc.
o Net assets of $1,091,166,238 and 45,178,952 outstanding shares.
o Trustees who own shares of this portfolio: NONE.
o Shareholders who beneficially own more than 5% of this portfolio:
NONE.
VANGUARD(R)VARIABLE INSURANCE FUND--GROWTH PORTFOLIO (1993)
- ----------------------------------------------------
o A series of Vanguard Variable Insurance Fund.
o Advised by Alliance Capital Management L.P.
o Net assets of $377,357,753 and 38,113,491 outstanding shares.
o Trustees who own shares of this portfolio: NONE.
o Shareholders who beneficially own more than 5% of this portfolio:
NONE.
VANGUARD(R)VARIABLE INSURANCE FUND--HIGH YIELD BOND PORTFOLIO (1996)
- -------------------------------------------------------------
o A series of Vanguard Variable Insurance Fund.
o Advised by Wellington Management Company, LLP.
o Net assets of $194,573,480 and 24,235,367 outstanding shares.
o Trustees who own shares of this portfolio: NONE.
o Shareholders who beneficially own more than 5% of this portfolio:
NONE.
42
VANGUARD(R)VARIABLE INSURANCE FUND--INTERNATIONAL PORTFOLIO (1994)
- -----------------------------------------------------------
o A series of Vanguard Variable Insurance Fund.
o Advised by Schroder Investment Management North America Inc.
o Net assets of $247,478,246 and 22,003,644 outstanding shares.
o Trustees who own shares of this portfolio: NONE.
o Shareholders who beneficially own more than 5% of this portfolio:
NONE.
VANGUARD(R)VARIABLE INSURANCE FUND--MID-CAP INDEX PORTFOLIO (1999)
- ------------------------------------------------------------
o A series of Vanguard Variable Insurance Fund.
o Advised by The Vanguard Group, Inc.
o Net assets of $307,611,985 and 25,603,955 outstanding shares.
o Trustees who own shares of this portfolio: NONE.
o Shareholders who beneficially own more than 5% of this portfolio:
NONE.
VANGUARD(R)VARIABLE INSURANCE FUND--MONEY MARKET PORTFOLIO (1991)
- -----------------------------------------------------------
o A series of Vanguard Variable Insurance Fund.
o Advised by The Vanguard Group, Inc.
o Net assets of $956,653,134 and 956,633,330 outstanding shares.
o Trustees who own shares of this portfolio: NONE.
o Shareholders who beneficially own more than 5% of this portfolio:
NONE.
VANGUARD(R)VARIABLE INSURANCE FUND--REIT INDEX PORTFOLIO (1999)
- --------------------------------------------------------
o A series of Vanguard Variable Insurance Fund.
o Advised by The Vanguard Group, Inc.
o Net assets of $183,127,046 and 13,058,443 outstanding shares.
o Trustees who own shares of this portfolio: NONE.
o Shareholders who beneficially own more than 5% of this portfolio:
NONE.
VANGUARD(R)VARIABLE INSURANCE FUND--SHORT-TERM CORPORATE PORTFOLIO (1999)
- ------------------------------------------------------------------
o A series of Vanguard Variable Insurance Fund.
o Advised by The Vanguard Group, Inc.
o Net assets of $190,735,012 and 18,526,778 outstanding shares.
o Trustees who own shares of this portfolio: NONE.
o Shareholders who beneficially own more than 5% of this portfolio:
NONE.
VANGUARD(R) VARIABLE INSURANCE FUND--SMALL COMPANY GROWTH PORTFOLIO (1996)
- -------------------------------------------------------------------
o A series of Vanguard Variable Insurance Fund.
o Advised by Granahan Investment Management, Inc., and Grantham, Mayo,
Van Otterloo & Co. LLC.
o Net assets of $471,645,394 and 33,890,732 outstanding shares.
o Trustees who own shares of this portfolio: NONE.
o Shareholders who beneficially own more than 5% of this portfolio:
NONE.
43
VANGUARD(R)VARIABLE INSURANCE FUND - TOTAL BOND MARKET INDEX PORTFOLIO (1991)
- ----------------------------------------------------------------------
o A series of Vanguard Variable Insurance Fund.
o Advised by The Vanguard Group, Inc.
o Net assets of $581,439,762 and 52,141,998 outstanding shares.
o Trustees who own shares of this portfolio: NONE.
o Shareholders who beneficially own more than 5% of this portfolio:
NONE.
W
VANGUARD(R)WELLESLEY(R)INCOME FUND (1970)
- ----------------------------------
o A series of Vanguard Wellesley Income Fund.
o Advised by Wellington Management Company, LLP.
o Net assets of $8,035,103,304 and 373,366,242 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, $50,001-$100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)WELLINGTON(TM)FUND (1929)
- ------------------------------------
o A series of Vanguard Wellington Fund.
o Advised by Wellington Management Company, LLP.
o Net assets of $24,415,287,529 and 874,786,511 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, over $100,000; HEISEN,
$1-$10,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R)WINDSOR(TM)FUND (1958)
- --------------------------
o A series of Vanguard Windsor Funds.
o Advised by Sanford C. Bernstein & Co., LLC; The Vanguard Group, Inc.;
and Wellington Management Company, LLP.
o Net assets of $15,641,123,897 and 1,015,167,414 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, over $100,000; GUPTA,
$50,001-$100,000; MALKIEL, over $100,000; RANKIN, $50,001-$100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
VANGUARD(R) WINDSOR(TM) II FUND (1985)
- -------------------------------
o A series of Vanguard Windsor Funds.
o Advised by Barrow, Hanley, Mewhinney & Strauss, Inc.; Equinox Capital
Management, LLC; Tukman Capital Management, Inc.; and The Vanguard
Group, Inc.
o Net assets of $23,944,474,222 and 945,845,815 outstanding shares.
o Trustees who own shares of this fund: BRENNAN, $1-$10,000; RANKIN,
$50,001-$100,000.
o Shareholders who beneficially own more than 5% of this fund: NONE.
500 is a trademark of The McGraw-Hill Companies, Inc., and has been licensed for
use by The Vanguard Group, Inc. Vanguard mutual funds are not sponsored,
endorsed, sold, or promoted by Standard & Poor's, and Standard & Poor's makes no
representation regarding the advisability of investing in the funds.
44
Calvert Social Index is a trademark of Calvert Group, Ltd. and has been licensed
for use by The Vanguard Group, Inc. Vanguard Calvert Social Index Fund is not
sponsored, endorsed, sold, or promoted by Calvert Group, Ltd., and Calvert
Group, Ltd. makes no representation regarding the advisability of investing in
the fund.
45
[SHIP]
[THE VANGUARD GROUP LOGO] INTRODUCING VANGUARD'S EZVOTE(SM)
PROXY CARD
Our new proxy card makes voting faster and easier than
ever. And it reduces proxy costs-savings that we pass
along to you in the form of lower fund expenses!
================================================================================
STEP ONE: CHOOSE YOUR EZVOTE BALLOT
================================================================================
Use the Consolidated Ballot Use the Individual Ballots
at the bottom of this page to vote on the back of this page and
just once for all your OR any additional pages to
accounts registered to the same vote each account separately.
address and Tax ID number.
================================================================================
STEP TWO: CHOOSE YOUR EZVOTE METHOD OF VOTING
================================================================================
Vote by Internet Vote by Phone
* Go to www.vanguard.com * Call 1-888-221-0689
* Click on Vote My Proxy. OR * Enter the Master OR
* Enter the Master Control Number shown below.
Control Number shown below.
Vote by Mail
* Complete your proxy ballot.
* Sign and date your card.
* Mail in the envelope provided.
================================================================================
MASTER CONTROL NUMBER: XXX XXX XXX XXX XX
================================================================================
PLEASE NOTE:
[ ] Before voting, read the proxy statement carefully for an
explanation of each proposal.
[ ] Your proxy will be voted FOR each proposal unless you specify
otherwise.
[ ] Your votes will count only for funds actually considering
specific proposals.
[ ] The Board of Trustees recommends a vote FOR all proposals and
nominees.
By signing this proxy ballot, I appoint John J. Brennan, J. Lawrence Wilson, and
R. Gregory Barton as my Attorneys to vote all Vanguard fund shares that I am
entitled to vote at the Special Meeting of Shareholders to be held at 9:30 a.m.,
E.T., on December 3, 2002, and at any adjournments thereof. Any one of my
Attorneys may vote my shares as specified on this ballot, vote any other matters
that arise at the meeting in accordance with his best judgment, and appoint
substitute Attorneys to vote on my behalf. I revoke any previous proxies that I
have executed, and acknowledge receipt of the Notice of Special Meeting of
Shareholders and the proxy statement. Proxy Solicitation by the Board of
Trustees.
- --------------------------------------------------------------------------------
CONSOLIDATED BALLOT
Please fill in box(es) as shown using black or blue ink or number 2 pencil.
PLEASE DO NOT USE FINE POINT PENS.
PROPOSALS:
1. ELECT THE FOLLOWING NOMINEES AS TRUSTEES:
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT**
(01) John J. Brennan, (02) Charles D. Ellis, [ ] [ ] [ ]
(03) Rajiv L. Gupta, (04) JoAnn Heffernan Heisen,
(05) Burton G. Malkiel*, (06) Alfred M. Rankin, Jr.,
(07) J. Lawrence Wilson
*NOT a nominee for Vanguard Equity Income Fund or Vanguard Growth Equity Fund.
** Write number(s) of excluded nominees:
FOR AGAINST ABSTAIN
2. Change certain funds' policy on investing [ ] [ ] [ ]
in other mutual funds.
3. Authorize the trustees of certain index funds [ ] [ ] [ ]
to change target indexes.
4. Reclassify certain index funds as nondiversified. [ ] [ ] [ ]
5. Change two money market funds' industry [ ] [ ] [ ]
concentration policy.
6. Change certain bond and balanced funds' [ ] [ ] [ ]
policy on borrowing money.
7. Change the Utilities Income Fund's
investment objective and concentration
in utilities stocks. [ ] [ ] [ ]
Date __________________ 2002
NOTE: All required shareholders should sign
exactly as their names appear on this ballot.
When signing in a fiduciary capacity (e.g.,
trustee, etc.), please so state. Signers
for corporate and partnership accounts
should be authorized persons and indicate
their title.
------------------------------------------------
Signature(s) (and Title(s), if applicable).
- --------------------------------------------------------------------------------
INDIVIDUAL BALLOTS
TRUSTEES NOMINEES: . (01) John J. Brennan, (02) Charles D. Ellis,
(03) Rajiv L. Gupta, (04) JoAnn Heffernan Heisen,
(05) Burton G. Malkiel*, (06) Alfred M.
Rankin, Jr., (07) J. Lawrence Wilson
*NOT a nominee for Vanguard Equity Income Fund or Vanguard Growth Fund.
- --------------------------------------------------------------------------------
Please fill in box(es) as shown using black or blue ink or number 2 pencil.
PLEASE DO NOT USE FINE POINT PENS. (X)
XXX XXXXXXXXXX XXX
NAME PRINTS HERE
NAME PRINTS HERE CONTROL NUMBER
XXX XXX XXX XXX XX
FUNE NAME PRINTS HERE
1. ELECT THE FOLLOWING NOMINEES AS TRUSTEES. FOR WITHHOLD FOR ALL
(REFER TO NOMINEES AT TOPE OF PAGE) ALL ALL EXCEPT**
**EXCEPT#____________________________ [ ] [ ] [ ]
FOR AGAINST ABSTAIN
2. NOT APPLICABLE [ ] [ ] [ ]
3. NOT APPLICABLE [ ] [ ] [ ]
4. NOT APPLICABLE [ ] [ ] [ ]
5. NOT APPLICABLE [ ] [ ] [ ]
6. NOT APPLICABLE [ ] [ ] [ ]
7. NOT APPLICABLE [ ] [ ] [ ]
XXX XXXXXXXXXX XXX
NAME PRINTS HERE
NAME PRINTS HERE CONTROL NUMBER
XXX XXX XXX XXX XX
FUNE NAME PRINTS HERE
1. ELECT THE FOLLOWING NOMINEES AS TRUSTEES. FOR WITHHOLD FOR ALL
(REFER TO NOMINEES AT TOPE OF PAGE) ALL ALL EXCEPT**
**EXCEPT#____________________________ [ ] [ ] [ ]
FOR AGAINST ABSTAIN
2. Change policy on investing in
other mutual funds [ ] [ ] [ ]
3. NOT APPLICABLE [ ] [ ] [ ]
4. NOT APPLICABLE [ ] [ ] [ ]
5. NOT APPLICABLE [ ] [ ] [ ]
6. NOT APPLICABLE [ ] [ ] [ ]
7. NOT APPLICABLE [ ] [ ] [ ]
XXX XXXXXXXXXX XXX
NAME PRINTS HERE
NAME PRINTS HERE CONTROL NUMBER
XXX XXX XXX XXX XX
FUNE NAME PRINTS HERE
1. ELECT THE FOLLOWING NOMINEES AS TRUSTEES. FOR WITHHOLD FOR ALL
(REFER TO NOMINEES AT TOPE OF PAGE) ALL ALL EXCEPT**
**EXCEPT#____________________________ [ ] [ ] [ ]
FOR AGAINST ABSTAIN
2. Change policy on investing in
other mutual funds [ ] [ ] [ ]
3. Authorize trustees to change the target index [ ] [ ] [ ]
4. NOT APPLICABLE [ ] [ ] [ ]
5. NOT APPLICABLE [ ] [ ] [ ]
6. NOT APPLICABLE [ ] [ ] [ ]
7. NOT APPLICABLE [ ] [ ] [ ]
XXX XXXXXXXXXX XXX
NAME PRINTS HERE
NAME PRINTS HERE CONTROL NUMBER
XXX XXX XXX XXX XX
FUNE NAME PRINTS HERE
1. ELECT THE FOLLOWING NOMINEES AS TRUSTEES. FOR WITHHOLD FOR ALL
(REFER TO NOMINEES AT TOPE OF PAGE) ALL ALL EXCEPT**
**EXCEPT#____________________________ [ ] [ ] [ ]
FOR AGAINST ABSTAIN
2. NOT APPLICABLE [ ] [ ] [ ]
3. NOT APPLICABLE [ ] [ ] [ ]
4. Reclassify as nondiversified [ ] [ ] [ ]
5. NOT APPLICABLE [ ] [ ] [ ]
6. NOT APPLICABLE [ ] [ ] [ ]
7. NOT APPLICABLE [ ] [ ] [ ]
XXX XXXXXXXXXX XXX
NAME PRINTS HERE
NAME PRINTS HERE CONTROL NUMBER
XXX XXX XXX XXX XX
FUNE NAME PRINTS HERE
1. ELECT THE FOLLOWING NOMINEES AS TRUSTEES. FOR WITHHOLD FOR ALL
(REFER TO NOMINEES AT TOPE OF PAGE) ALL ALL EXCEPT**
**EXCEPT#____________________________ [ ] [ ] [ ]
FOR AGAINST ABSTAIN
2. Change policy on investing in
other mutual funds [ ] [ ] [ ]
3. NOT APPLICABLE [ ] [ ] [ ]
4. Reclassify as nondiversified [ ] [ ] [ ]
5. NOT APPLICABLE [ ] [ ] [ ]
6. NOT APPLICABLE [ ] [ ] [ ]
7. NOT APPLICABLE [ ] [ ] [ ]
XXX XXXXXXXXXX XXX
NAME PRINTS HERE
NAME PRINTS HERE CONTROL NUMBER
XXX XXX XXX XXX XX
FUNE NAME PRINTS HERE
1. ELECT THE FOLLOWING NOMINEES AS TRUSTEES. FOR WITHHOLD FOR ALL
(REFER TO NOMINEES AT TOPE OF PAGE) ALL ALL EXCEPT**
**EXCEPT#____________________________ [ ] [ ] [ ]
FOR AGAINST ABSTAIN
2. Change policy on investing in
other mutual funds [ ] [ ] [ ]
3. Authorize trustees to change the target index [ ] [ ] [ ]
4. Reclassify as nondiversified [ ] [ ] [ ]
5. NOT APPLICABLE [ ] [ ] [ ]
6. NOT APPLICABLE [ ] [ ] [ ]
7. NOT APPLICABLE [ ] [ ] [ ]
XXX XXXXXXXXXX XXX
NAME PRINTS HERE
NAME PRINTS HERE CONTROL NUMBER
XXX XXX XXX XXX XX
FUNE NAME PRINTS HERE
1. ELECT THE FOLLOWING NOMINEES AS TRUSTEES. FOR WITHHOLD FOR ALL
(REFER TO NOMINEES AT TOPE OF PAGE) ALL ALL EXCEPT**
**EXCEPT#____________________________ [ ] [ ] [ ]
FOR AGAINST ABSTAIN
2. Change policy on investing in
other mutual funds [ ] [ ] [ ]
3. NOT APPLICABLE [ ] [ ] [ ]
4. NOT APPLICABLE [ ] [ ] [ ]
5. Change industry concentration policy [ ] [ ] [ ]
6. NOT APPLICABLE [ ] [ ] [ ]
7. NOT APPLICABLE [ ] [ ] [ ]
XXX XXXXXXXXXX XXX
NAME PRINTS HERE
NAME PRINTS HERE CONTROL NUMBER
XXX XXX XXX XXX XX
FUNE NAME PRINTS HERE
1. ELECT THE FOLLOWING NOMINEES AS TRUSTEES. FOR WITHHOLD FOR ALL
(REFER TO NOMINEES AT TOPE OF PAGE) ALL ALL EXCEPT**
**EXCEPT#____________________________ [ ] [ ] [ ]
FOR AGAINST ABSTAIN
2. NOT APPLICABLE [ ] [ ] [ ]
3. NOT APPLICABLE [ ] [ ] [ ]
4. NOT APPLICABLE [ ] [ ] [ ]
5. NOT APPLICABLE [ ] [ ] [ ]
6. Change policy on borrowing money [ ] [ ] [ ]
7. NOT APPLICABLE [ ] [ ] [ ]
XXX XXXXXXXXXX XXX
NAME PRINTS HERE
NAME PRINTS HERE CONTROL NUMBER
XXX XXX XXX XXX XX
FUNE NAME PRINTS HERE
1. ELECT THE FOLLOWING NOMINEES AS TRUSTEES. FOR WITHHOLD FOR ALL
(REFER TO NOMINEES AT TOPE OF PAGE) ALL ALL EXCEPT**
**EXCEPT#____________________________ [ ] [ ] [ ]
FOR AGAINST ABSTAIN
2. Change policy on investing in
other mutual funds [ ] [ ] [ ]
3. NOT APPLICABLE [ ] [ ] [ ]
4. NOT APPLICABLE [ ] [ ] [ ]
5. NOT APPLICABLE [ ] [ ] [ ]
6. Change policy on borrowing money [ ] [ ] [ ]
7. NOT APPLICABLE [ ] [ ] [ ]
XXX XXXXXXXXXX XXX
NAME PRINTS HERE
NAME PRINTS HERE CONTROL NUMBER
XXX XXX XXX XXX XX
FUNE NAME PRINTS HERE
1. ELECT THE FOLLOWING NOMINEES AS TRUSTEES. FOR WITHHOLD FOR ALL
(REFER TO NOMINEES AT TOPE OF PAGE) ALL ALL EXCEPT**
**EXCEPT#____________________________ [ ] [ ] [ ]
FOR AGAINST ABSTAIN
2. Change policy on investing in
other mutual funds [ ] [ ] [ ]
3. NOT APPLICABLE [ ] [ ] [ ]
4. Reclassify as nondiversified [ ] [ ] [ ]
5. NOT APPLICABLE [ ] [ ] [ ]
6. Change policy on borrowing money [ ] [ ] [ ]
7. NOT APPLICABLE [ ] [ ] [ ]
XXX XXXXXXXXXX XXX
NAME PRINTS HERE
NAME PRINTS HERE CONTROL NUMBER
XXX XXX XXX XXX XX
FUNE NAME PRINTS HERE
1. ELECT THE FOLLOWING NOMINEES AS TRUSTEES. FOR WITHHOLD FOR ALL
(REFER TO NOMINEES AT TOPE OF PAGE) ALL ALL EXCEPT**
**EXCEPT#____________________________ [ ] [ ] [ ]
FOR AGAINST ABSTAIN
2. Change policy on investing in
other mutual funds [ ] [ ] [ ]
3. NOT APPLICABLE [ ] [ ] [ ]
4. NOT APPLICABLE [ ] [ ] [ ]
5. NOT APPLICABLE [ ] [ ] [ ]
6. NOT APPLICABLE [ ] [ ] [ ]
7. NOT APPLICABLE [ ] [ ] [ ]
NOTE: All required shareholders should sign exactly as their names appear on
this ballot. When signing in a fiduciary capacity (e.g., trustee, etc.) please
so state. Signers for corporate and partnership accounts should be authorized
persons and indicate their title.
Date______________________2002
___________________________________________
Signature(s) (and Title(s), if applicable)
EASY, FAST ELECTRONIC OPTIONS [SHIP]
[THE VANGUARD GROUP LOGO]
Vote by Internet: Go to www.vanguard.com
and click on Vote My Proxy.
Enter the *** MASTER CONTROL NUMBER *** shown below.
Vote by Phone: Call 1-888-221-0689.
Enter the *** MASTER CONTROL NUMBER *** shown below.
*** MASTER CONTROL NUMBER: 999 999 999 999 99 ***
FUND NAME PRINTS HERE
By signing this proxy ballot, I appoint John J. Brennan, J. Lawrence Wilson, and
R. Gregory Barton as my Attorneys to vote all Vanguard fund shares that I am
entitled to vote at the Special Meeting of Shareholders to be held at 9:30 a.m.,
E.T., on December 3, 2002, and at any adjournments thereof. Any one of my
Attorneys may vote my shares as specified on this ballot, vote any other matters
that arise at the meeting in accordance with his best judgment, and appoint
substitute Attorneys to vote on my behalf. I revoke any previous proxies that I
have executed, and acknowledge receipt of the Notice of Special Meeting of
Shareholders and the proxy statement. Proxy Solicitation by the Board of
Trustees.
Date _____________________________ , 2002
NOTE: All required shareholders should
sign exactly as their names appear on
this ballot. When signing in a fiduciary
capacity (e.g. trustee, etc.), please
so state. Signers for corporate and
partnership accounts should be authorized
persons and indicate their title.
--------------------------------------------
Signature(s) (and Titles(s), if applicable).
CONTINUED ON REVERSE SIDE
Please fill in box(es) as shown using black or blue ink or number 2 pencil.
PLEASE DO NOT USE FINE POINT PENS.
================================================================================
PLEASE NOTE:
* Before voting, read the proxy statement carefully for an explanation of
each proposal.
* YOUR PROXY WILL BE VOTED FOR EACH PROPOSAL UNLESS YOU SPECIFY OTHERWISE.
* The Board of Trustees recommends a vote FOR all proposals and nominees.
================================================================================
PROPOSALS:
1.ELECT THE FOLLOWING NOMINEES AS TRUSTEES:
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT**
1. (01) John J. Brennan, (02) Charles D. Ellis, [ ] [ ] [ ]
(03) Rajiv L. Gupta, (04) JoAnn Heffernan Heisen,
(05) Burton G. Malkiel*, (06) Alfred M.
Rankin, Jr., (07) J. Lawrence Wilson
*NOT a nominee for Vanguard Equity Income Fund or Vanguard Growth Equity Fund.
** Write number(s) of excluded nominees on the line below:
- ------------------------------------------------
FOR AGAINST ABSTAIN
2. NOT APPLICABLE [ ] [ ] [ ]
3. NOT APPLICABLE [ ] [ ] [ ]
4. NOT APPLICABLE [ ] [ ] [ ]
5. NOT APPLICABLE [ ] [ ] [ ]
6. NOT APPLICABLE [ ] [ ] [ ]
7. NOT APPLICABLE [ ] [ ] [ ]
PLEASE SIGN AND DATE ON REVERSE SIDE
VGD-1
Please fill in box(es) as shown using black or blue ink or number 2 pencil.
PLEASE DO NOT USE FINE POINT PENS.
================================================================================
PLEASE NOTE:
* Before voting, read the proxy statement carefully for an explanation of
each proposal.
* YOUR PROXY WILL BE VOTED FOR EACH PROPOSAL UNLESS YOU SPECIFY OTHERWISE.
* The Board of Trustees recommends a vote FOR all proposals and nominees.
================================================================================
PROPOSALS:
1.ELECT THE FOLLOWING NOMINEES AS TRUSTEES:
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT**
1. (01) John J. Brennan, (02) Charles D. Ellis, [ ] [ ] [ ]
(03) Rajiv L. Gupta, (04) JoAnn Heffernan Heisen,
(05) Burton G. Malkiel*, (06) Alfred M.
Rankin, Jr., (07) J. Lawrence Wilson
*NOT a nominee for Vanguard Equity Income Fund or Vanguard Growth Equity Fund.
** Write number(s) of excluded nominees on the line below:
- ------------------------------------------------
FOR AGAINST ABSTAIN
2. Change the fund's policy on
investing in other mutual funds. [ ] [ ] [ ]
3. NOT APPLICABLE [ ] [ ] [ ]
4. NOT APPLICABLE [ ] [ ] [ ]
5. NOT APPLICABLE [ ] [ ] [ ]
6. NOT APPLICABLE [ ] [ ] [ ]
7. NOT APPLICABLE [ ] [ ] [ ]
PLEASE SIGN AND DATE ON REVERSE SIDE
VGD-2
Please fill in box(es) as shown using black or blue ink or number 2 pencil.
PLEASE DO NOT USE FINE POINT PENS.
================================================================================
PLEASE NOTE:
* Before voting, read the proxy statement carefully for an explanation of
each proposal.
* YOUR PROXY WILL BE VOTED FOR EACH PROPOSAL UNLESS YOU SPECIFY OTHERWISE.
* The Board of Trustees recommends a vote FOR all proposals and nominees.
================================================================================
PROPOSALS:
1.ELECT THE FOLLOWING NOMINEES AS TRUSTEES:
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT**
1. (01) John J. Brennan, (02) Charles D. Ellis, [ ] [ ] [ ]
(03) Rajiv L. Gupta, (04) JoAnn Heffernan Heisen,
(05) Burton G. Malkiel*, (06) Alfred M.
Rankin, Jr., (07) J. Lawrence Wilson
*NOT a nominee for Vanguard Equity Income Fund or Vanguard Growth Equity Fund.
** Write number(s) of excluded nominees on the line below:
- ------------------------------------------------
FOR AGAINST ABSTAIN
2. Change the fund's policy on
investing in other mutual funds. [ ] [ ] [ ]
3. Authorize the fund's trustees to
change the target index. [ ] [ ] [ ]
4. NOT APPLICABLE [ ] [ ] [ ]
5. NOT APPLICABLE [ ] [ ] [ ]
6. NOT APPLICABLE [ ] [ ] [ ]
7. NOT APPLICABLE [ ] [ ] [ ]
PLEASE SIGN AND DATE ON REVERSE SIDE
VGD-3
Please fill in box(es) as shown using black or blue ink or number 2 pencil.
PLEASE DO NOT USE FINE POINT PENS.
================================================================================
PLEASE NOTE:
* Before voting, read the proxy statement carefully for an explanation of
each proposal.
* YOUR PROXY WILL BE VOTED FOR EACH PROPOSAL UNLESS YOU SPECIFY OTHERWISE.
* The Board of Trustees recommends a vote FOR all proposals and nominees.
================================================================================
PROPOSALS:
1.ELECT THE FOLLOWING NOMINEES AS TRUSTEES:
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT**
1. (01) John J. Brennan, (02) Charles D. Ellis, [ ] [ ] [ ]
(03) Rajiv L. Gupta, (04) JoAnn Heffernan Heisen,
(05) Burton G. Malkiel*, (06) Alfred M.
Rankin, Jr., (07) J. Lawrence Wilson
*NOT a nominee for Vanguard Equity Income Fund or Vanguard Growth Equity Fund.
** Write number(s) of excluded nominees on the line below:
- ------------------------------------------------
FOR AGAINST ABSTAIN
2. NOT APPLICABLE [ ] [ ] [ ]
3. NOT APPLICABLE [ ] [ ] [ ]
4. Reclassify the fund as nondiversified. [ ] [ ] [ ]
5. NOT APPLICABLE [ ] [ ] [ ]
6. NOT APPLICABLE [ ] [ ] [ ]
7. NOT APPLICABLE [ ] [ ] [ ]
PLEASE SIGN AND DATE ON REVERSE SIDE
VGD-4
Please fill in box(es) as shown using black or blue ink or number 2 pencil.
PLEASE DO NOT USE FINE POINT PENS.
================================================================================
PLEASE NOTE:
* Before voting, read the proxy statement carefully for an explanation of
each proposal.
* YOUR PROXY WILL BE VOTED FOR EACH PROPOSAL UNLESS YOU SPECIFY OTHERWISE.
* The Board of Trustees recommends a vote FOR all proposals and nominees.
================================================================================
PROPOSALS:
1.ELECT THE FOLLOWING NOMINEES AS TRUSTEES:
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT**
1. (01) John J. Brennan, (02) Charles D. Ellis, [ ] [ ] [ ]
(03) Rajiv L. Gupta, (04) JoAnn Heffernan Heisen,
(05) Burton G. Malkiel*, (06) Alfred M.
Rankin, Jr., (07) J. Lawrence Wilson
*NOT a nominee for Vanguard Equity Income Fund or Vanguard Growth Equity Fund.
** Write number(s) of excluded nominees on the line below:
- ------------------------------------------------
FOR AGAINST ABSTAIN
2. Change the fund's policy on investing
in other mutual funds. [ ] [ ] [ ]
3. NOT APPLICABLE [ ] [ ] [ ]
4. Reclassify the fund as nondiversified. [ ] [ ] [ ]
5. NOT APPLICABLE [ ] [ ] [ ]
6. NOT APPLICABLE [ ] [ ] [ ]
7. NOT APPLICABLE [ ] [ ] [ ]
PLEASE SIGN AND DATE ON REVERSE SIDE
VGD-5
Please fill in box(es) as shown using black or blue ink or number 2 pencil.
PLEASE DO NOT USE FINE POINT PENS.
================================================================================
PLEASE NOTE:
* Before voting, read the proxy statement carefully for an explanation of
each proposal.
* YOUR PROXY WILL BE VOTED FOR EACH PROPOSAL UNLESS YOU SPECIFY OTHERWISE.
* The Board of Trustees recommends a vote FOR all proposals and nominees.
================================================================================
PROPOSALS:
1.ELECT THE FOLLOWING NOMINEES AS TRUSTEES:
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT**
1. (01) John J. Brennan, (02) Charles D. Ellis, [ ] [ ] [ ]
(03) Rajiv L. Gupta, (04) JoAnn Heffernan Heisen,
(05) Burton G. Malkiel*, (06) Alfred M.
Rankin, Jr., (07) J. Lawrence Wilson
*NOT a nominee for Vanguard Equity Income Fund or Vanguard Growth Equity Fund.
** Write number(s) of excluded nominees on the line below:
- ------------------------------------------------
FOR AGAINST ABSTAIN
2. Change the fund's policy on investing
in other mutual funds. [ ] [ ] [ ]
3. Authorize the fund's trustees to change the
target index. [ ] [ ] [ ]
4. Reclassify the fund as nondiversified. [ ] [ ] [ ]
5. NOT APPLICABLE [ ] [ ] [ ]
6. NOT APPLICABLE [ ] [ ] [ ]
7. NOT APPLICABLE [ ] [ ] [ ]
PLEASE SIGN AND DATE ON REVERSE SIDE
VGD-6
Please fill in box(es) as shown using black or blue ink or number 2 pencil.
PLEASE DO NOT USE FINE POINT PENS.
================================================================================
PLEASE NOTE:
* Before voting, read the proxy statement carefully for an explanation of
each proposal.
* YOUR PROXY WILL BE VOTED FOR EACH PROPOSAL UNLESS YOU SPECIFY OTHERWISE.
* The Board of Trustees recommends a vote FOR all proposals and nominees.
================================================================================
PROPOSALS:
1.ELECT THE FOLLOWING NOMINEES AS TRUSTEES:
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT**
1. (01) John J. Brennan, (02) Charles D. Ellis, [ ] [ ] [ ]
(03) Rajiv L. Gupta, (04) JoAnn Heffernan Heisen,
(05) Burton G. Malkiel*, (06) Alfred M.
Rankin, Jr., (07) J. Lawrence Wilson
*NOT a nominee for Vanguard Equity Income Fund or Vanguard Growth Equity Fund.
** Write number(s) of excluded nominees on the line below:
- ------------------------------------------------
FOR AGAINST ABSTAIN
2. Change the fund's policy on investing
in other mutual funds. [ ] [ ] [ ]
3. NOT APPLICABLE [ ] [ ] [ ]
4. NOT APPLICABLE [ ] [ ] [ ]
5. Change the fund's industry concentration
policy. [ ] [ ] [ ]
6. NOT APPLICABLE [ ] [ ] [ ]
7. NOT APPLICABLE [ ] [ ] [ ]
PLEASE SIGN AND DATE ON REVERSE SIDE
VGD-7
Please fill in box(es) as shown using black or blue ink or number 2 pencil.
PLEASE DO NOT USE FINE POINT PENS.
================================================================================
PLEASE NOTE:
* Before voting, read the proxy statement carefully for an explanation of
each proposal.
* YOUR PROXY WILL BE VOTED FOR EACH PROPOSAL UNLESS YOU SPECIFY OTHERWISE.
* The Board of Trustees recommends a vote FOR all proposals and nominees.
================================================================================
PROPOSALS:
1.ELECT THE FOLLOWING NOMINEES AS TRUSTEES:
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT**
1. (01) John J. Brennan, (02) Charles D. Ellis, [ ] [ ] [ ]
(03) Rajiv L. Gupta, (04) JoAnn Heffernan Heisen,
(05) Burton G. Malkiel*, (06) Alfred M.
Rankin, Jr., (07) J. Lawrence Wilson
*NOT a nominee for Vanguard Equity Income Fund or Vanguard Growth Equity Fund.
** Write number(s) of excluded nominees on the line below:
- ------------------------------------------------
FOR AGAINST ABSTAIN
2. NOT APPLICABLE [ ] [ ] [ ]
3. NOT APPLICABLE [ ] [ ] [ ]
4. NOT APPLICABLE [ ] [ ] [ ]
5. NOT APPLICABLE [ ] [ ] [ ]
6. Change the fund's policy on borrowing money. [ ] [ ] [ ]
7. NOT APPLICABLE [ ] [ ] [ ]
PLEASE SIGN AND DATE ON REVERSE SIDE
VGD-8
Please fill in box(es) as shown using black or blue ink or number 2 pencil.
PLEASE DO NOT USE FINE POINT PENS.
================================================================================
PLEASE NOTE:
* Before voting, read the proxy statement carefully for an explanation of
each proposal.
* YOUR PROXY WILL BE VOTED FOR EACH PROPOSAL UNLESS YOU SPECIFY OTHERWISE.
* The Board of Trustees recommends a vote FOR all proposals and nominees.
================================================================================
PROPOSALS:
1.ELECT THE FOLLOWING NOMINEES AS TRUSTEES:
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT**
1. (01) John J. Brennan, (02) Charles D. Ellis, [ ] [ ] [ ]
(03) Rajiv L. Gupta, (04) JoAnn Heffernan Heisen,
(05) Burton G. Malkiel*, (06) Alfred M.
Rankin, Jr., (07) J. Lawrence Wilson
*NOT a nominee for Vanguard Equity Income Fund or Vanguard Growth Equity Fund.
** Write number(s) of excluded nominees on the line below:
- ------------------------------------------------
FOR AGAINST ABSTAIN
2. Change the fund's policy on
investing in other mutual funds. [ ] [ ] [ ]
3. NOT APPLICABLE [ ] [ ] [ ]
4. NOT APPLICABLE [ ] [ ] [ ]
5. NOT APPLICABLE [ ] [ ] [ ]
6. Change the fund's policy on borrowing money. [ ] [ ] [ ]
7. NOT APPLICABLE [ ] [ ] [ ]
PLEASE SIGN AND DATE ON REVERSE SIDE
VGD-9
Please fill in box(es) as shown using black or blue ink or number 2 pencil.
PLEASE DO NOT USE FINE POINT PENS.
================================================================================
PLEASE NOTE:
* Before voting, read the proxy statement carefully for an explanation of
each proposal.
* YOUR PROXY WILL BE VOTED FOR EACH PROPOSAL UNLESS YOU SPECIFY OTHERWISE.
* The Board of Trustees recommends a vote FOR all proposals and nominees.
================================================================================
PROPOSALS:
1.ELECT THE FOLLOWING NOMINEES AS TRUSTEES:
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT**
1. (01) John J. Brennan, (02) Charles D. Ellis, [ ] [ ] [ ]
(03) Rajiv L. Gupta, (04) JoAnn Heffernan Heisen,
(05) Burton G. Malkiel*, (06) Alfred M.
Rankin, Jr., (07) J. Lawrence Wilson
*NOT a nominee for Vanguard Equity Income Fund or Vanguard Growth Equity Fund.
** Write number(s) of excluded nominees on the line below:
- ------------------------------------------------
FOR AGAINST ABSTAIN
2. Change the fund's policy on investing
in other mutual funds. [ ] [ ] [ ]
3. NOT APPLICABLE [ ] [ ] [ ]
4. Reclassify the fund as nondiversified. [ ] [ ] [ ]
5. NOT APPLICABLE [ ] [ ] [ ]
6. Change the fund's policy on borrowing money. [ ] [ ] [ ]
7. NOT APPLICABLE [ ] [ ] [ ]
PLEASE SIGN AND DATE ON REVERSE SIDE
VGD-10
Please fill in box(es) as shown using black or blue ink or number 2 pencil.
PLEASE DO NOT USE FINE POINT PENS.
================================================================================
PLEASE NOTE:
* Before voting, read the proxy statement carefully for an explanation of
each proposal.
* YOUR PROXY WILL BE VOTED FOR EACH PROPOSAL UNLESS YOU SPECIFY OTHERWISE.
* The Board of Trustees recommends a vote FOR all proposals and nominees.
================================================================================
PROPOSALS:
1.ELECT THE FOLLOWING NOMINEES AS TRUSTEES:
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT**
1. (01) John J. Brennan, (02) Charles D. Ellis, [ ] [ ] [ ]
(03) Rajiv L. Gupta, (04) JoAnn Heffernan Heisen,
(05) Burton G. Malkiel*, (06) Alfred M.
Rankin, Jr., (07) J. Lawrence Wilson
*NOT a nominee for Vanguard Equity Income Fund or Vanguard Growth Equity Fund.
** Write number(s) of excluded nominees on the line below:
- ------------------------------------------------
FOR AGAINST ABSTAIN
2. Change the fund's policy on investing
in other mutual funds. [ ] [ ] [ ]
3. NOT APPLICABLE [ ] [ ] [ ]
4. NOT APPLICABLE [ ] [ ] [ ]
5. NOT APPLICABLE [ ] [ ] [ ]
6. NOT APPLICABLE [ ] [ ] [ ]
7. Change the fund's investment objective
and concentration in utilities stocks. [ ] [ ] [ ]
PLEASE SIGN AND DATE ON REVERSE SIDE
VGD-11
Description: Vanguard EzVote E-Delivery Template
Reply to: online@vanguard.com
Subject: IMPORTANT FUND PROPOSALS: YOUR VOTE COUNTS.
From: The Vanguard Group
Thank you for electing to receive proxy material electronically.
On December 3, 2002, all Vanguard(R) funds will conduct a Special Meeting of
Shareholders to consider important fund proposals. Those proposals are outlined
in your proxy statement.
To reduce expenses, we've prepared a combined proxy statement. Please review the
proposal(s) for fund(s) you owned as of September 6, 2002 and cast your vote.
The Board of Trustees recommends a vote FOR all proposals under consideration.
Casting your vote online is faster and easier than ever. Our new EzVote
Consolidated Proxy lets you vote once for all of your accounts registered to the
same address and Tax ID number. Or you can continue to vote each of these
accounts separately. The choice is yours.
* You can read the proxy statement at:
http://personal.vanguard.com/pdf/proxy2002.pdf
* You can cast your vote at
http://www.proxyweb.com/vanguard or by touch-tone phone at
1-888-221-0689. You will need your Master Control Number shown
below.
~HHBEGIN~
~FUND~
~CNTLNUM~
ACCOUNT NUMBER: ~ACCTNUM~
~HHEND~
When you vote online, you appoint John J. Brennan, J. Lawrence Wilson, and R.
Gregory Barton as your Attorneys to vote on your behalf at the Special Meeting
of Shareholders and at any adjournments thereof. Your Attorney(s) may vote as
you specify, vote on any matters that arise at the meeting in accordance with
his best judgment, or appoint substitute Attorney(s) to vote on your behalf. You
acknowledge receipt of the Notice of Special Meeting of Shareholders and the
proxy statement and revoke any previous proxies you have executed. Proxy
Solicitation by the Board of Trustees.
If you need to contact us, don't reply to this e-mail. Instead:
1. For questions about fund proposals or the shareholder meeting, call
Vanguard's Investor Information Department at 1-800-992-0833. Clients of
Vanguard's Institutional Investor Group or our Voyager(R) or Flagship
Services(R) should call their Vanguard representative or service team with
questions.
2. For technical questions about the online proxy vote, call Vanguard(R) Web
Technical Support Services at 1-800-860-8394.
You can update your mailing preferences or change your e-mail address online at
http://www.vanguard.com. Any change will apply to all Vanguard(R) accounts
registered under your taxpayer ID number.
Description: Vanguard single account E-Delivery Template
Reply to: online@vanguard.com
Subject: IMPORTANT FUND PROPOSALS: YOUR VOTE COUNTS.
From: The Vanguard Group
Thank you for electing to receive proxy material electronically.
On December 3, 2002, all Vanguard(R) funds will conduct a Special Meeting of
Shareholders to consider important fund proposals. Those proposals are outlined
in your proxy statement.
To reduce expenses, we've prepared a combined proxy statement. Please review the
proposal(s) for fund(s) you owned as of September 6, 2002 and cast your vote.
The Board of Trustees recommends a vote FOR all proposals under consideration.
* You can read the proxy statement at:
http://personal.vanguard.com/pdf/proxy2002.pdf
* You can cast your vote at http://www.proxyweb.com/vanguard or by touch-tone
phone at 1-888-221-0689. You will need your Master Control Number shown below.
~HHBEGIN~
MASTER CONTROL NUMBER: ~CNTLNUM~
FUND: ~FUND~
ACCOUNT NUMBER: ~ACCTNUM~
~HHEND~
When you vote online, you appoint John J. Brennan, J. Lawrence Wilson, and R.
Gregory Barton as your Attorneys to vote on your behalf at the Special Meeting
of Shareholders and at any adjournments thereof. Your Attorney(s) may vote as
you specify, vote on any matters that arise at the meeting in accordance with
his best judgment, or appoint substitute Attorney(s) to vote on your behalf. You
acknowledge receipt of the Notice of Special Meeting of Shareholders and the
proxy statement and revoke any previous proxies you have executed. Proxy
Solicitation by the Board of Trustees.
If you need to contact us, don't reply to this e-mail. Instead:
1. For questions about fund proposals or the shareholder meeting, call
Vanguard's Investor Information Department at 1-800-992-0833. Clients of
Vanguard's Institutional Investor Group or our Voyager(R) or Flagship
Services(R) should call their Vanguard representative or service team with
questions.
2. For technical questions about the online proxy vote, call Vanguard(R) Web
Technical Support Services at 1-800-860-8394.
You can update your mailing preferences or change your e-mail address online at
http://vanguard.com. Any change will apply to all Vanguard(R) accounts
registered under your Taxpayer ID number.