[SHIP LOGO]
[THE VANGUARD GROUP(R) LOGO]
October 28, 2005
Christian Sandoe, Esq.
Division of Investment Management
U.S. Securities and Exchange Commission via electronic filing
450 Fifth Street,
N.W., Fifth Floor
Washington, D.C. 20549
Re: Vanguard Index Funds
Dear Mr. Sandoe:
The following responds to your comments of October 28, 2005 on the post-
effective amendment of the registration statement of the above-referenced
registrant. You commented on Post-Effective Amendment No. 97 that was filed on
September 16, 2005.
Comment 1: Cover Sheet
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Comment: The cover sheet indicated that PEA No. 97 was a 485(b) filing.
This filing contained disclosure that rendered it ineligible
for a 485(b) filing.
Response: The cover sheet contained a typo. Our intention, as stated in
the cover letter that accompanied our filing, was to file PEA
No. 97 as a 485(a) filing.
Comment 2: Cover Letter
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Comment: The paragraph regarding Rule 485(d)(2) requires some
modifications since it contains some technical inaccuracies.
Response: We will make appropriate modifications to the cover letters
used for future filings.
Comment 3: Prospectus - Primary Investment Strategies of Institutional
Total Stock Market Index Fund
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Comment: Since the MSCI US Broad Market Index includes mid- and small-
cap stocks, their risks should be disclosed in the risk/return
summary.
Response: Since the MSCI US Broad Market Index, with a median market-cap
of approximately $27 billion, is dominated by large-cap
stocks, we do not consider the much lesser existence of the
mid- and small-cap stocks to warrant inclusion of this
disclosure in the primary investment strategies
October 28, 2005
Christian Sandoe
Page 2 of 4
section. However, we will include a reference to the
Institutional Total Stock Market Index Fund where we discuss
the risks of mid- and small-cap stocks in the Item 4
disclosure.
Comment 4: Risk of Nondiversification
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Comment: Modify the final sentence in the paragraph so it clarifies
that these funds, while classified as nondiviersified, have
actually "operated as" (rather than "have been") diversified.
Response: We will make the requested modification.
Comment 5: Other Investment Policies and Risks
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Comment: The prospectus states that each Fund may invest to a limited
extent in foreign securities. As US stock index funds, are
there international holdings?
Response: The funds do not intentionally invest in foreign stocks.
However, to the extent that a stock holding of one of the
funds is issued by a US company, and that company is part of a
merger or acquisition by or with a foreign company, the fund
may inadvertently wind up with a foreign holding. A fund would
only continue to hold such a security if it remains a holding
of the fund's target index.
Comment 6: Frequent Trading or Market-Timing
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Comment: The Fund's broad policies with respect to frequent trading and
market-timing are disclosed on page 34 of the prospectus under
the heading "Frequent Trading or Market-Timing." However,
specific policies applicable to discrete types of investors
are disclosed in various places throughout the "Investing with
Vanguard" section. All of the Fund's policies concerning
frequent trading and market-timing should be disclosed
together under the heading "Frequent Trading and
Market-Timing."
Response: We believe that the Fund's policies against frequent trading
and market-timing are properly disclosed in the prospectus
pursuant to Item 6(e)(4) of Form N-1A. Item 6(e)(4) does not
require that the specific policies applicable to each type of
shareholder be disclosed together in the prospectus. As such,
we believe that it is appropriate to have the general
discussion of the Fund's policies against frequent trading and
Market-timing under the heading "Frequent Trading or
Market-Timing" with a reference to the "Investing with
Vanguard" section where specific policies applicable to
different types of shareholders and transactions are
disclosed.
We believe that removing the disclosure from the "Investing
with Vanguard" section and combining the disclosure into a
single "Frequent Trading and Market-Timing" section would make
the discussion of transaction policies
October 28, 2005
Christian Sandoe
Page 3 of 4
incomplete in the "Investing with Vanguard" section. Repeating
the specific policies in both the "Investing with Vanguard"
section and under the "Frequent Trading and Market-Timing"
heading would unnecessarily clutter the prospectus with
duplicative disclosure.
Comment 7: Share Price
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Comment: Describe the effects of fair value pricing.
Response: We have reviewed our disclosure and think we already describe
the effects of fair value pricing.
In the Share Price section, we state that "[w]hen fair-value
pricing is employed, the prices of securities used by a fund
to calculate its NAV may differ from quoted or published
prices for the same securities." We think that is the primary
effect of using fair-value pricing.
Additionally, in the Frequent Trading or Market-Timing
section, we state that "Each fund (other than money market
funds), in determining its net asset value, will use
fair-value pricing as described in the Share Price section.
When used, fair-value pricing may reduce or eliminate the
profitability of certain frequent-trading strategies." We
think this is an additional possible effect of using
fair-value pricing.
We think the above disclosure addresses your comment, so we do
not plan to add anything.
Comment 8: Converting Shares
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Comment: Better explain what self-directed conversions are.
Response: A self-directed conversion is a conversion done at the
direction of the shareholder. We do not think clarification
on this point is necessary and we are comfortable with our
existing disclosure.
Comment 9: Frequent Trading Limits
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Comment: The disclosure states that each Vanguard fund..."limits"
purchases or exchanges into a fund for 60 days after an
investor has redeemed or exchanged out of that fund. If by
"limit" we mean "refuse" we should clarify that point.
Response: "Limits" accurately describes the policy since immediately
following the sentence in question, we list the situations
where we will allow purchases or exchanges into a fund during
the 60-day period. Since there are a handful of exceptions, we
are actually "limiting" rather than "refusing" purchases.
Accordingly, we do not plan to amend the sentence.
October 28, 2005
Christian Sandoe
Page 4 of 4
Comment 10: SAI - Description of PM Compensation
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Comment: Do the portfolio managers of these funds manage any funds
subject to performance fees?
Response: No, these portfolio managers do not manage any funds subject
to performance fees.
Comment 11: Tandy Requirements
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Comment: The SEC is now requiring all registrants to provide at the end
of response letters to registration statement comments, the
following statements:
o Each Fund is responsible for the adequacy and accuracy of
the disclosure in the filing.
o Staff comments or changes in response to staff comments in
the filings reviewed by the staff do not foreclose the
Commission from taking any action with respect to the
filing.
o Each Fund may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under
the federal securities laws of the United States.
Response: As required by the SEC, we will provide the foregoing
acknowledgements.
* * * * *
As required by the SEC, the Funds acknowledge that:
o Each Fund is responsible for the adequacy and accuracy of the disclosure in
the filing.
o Staff comments or changes in response to staff comments in the filings
reviewed by the staff do not foreclose the Commission from taking any action
with respect to the filing.
o Each Fund may not assert staff comments as a defense in any proceeding
initiated by the Commission or any person under the federal securities laws of
the United States.
Please contact me at (610) 669-1538 with any questions or comments
regarding the above responses. Thank you.
Sincerely,
Judith L. Gaines
Associate Counsel