Vanguard
Institutional Index Fund
Prospectus
Institutional
Shares & Institutional Plus Shares
Vanguard
Institutional Index Fund Institutional Shares (VINIX)
Vanguard Institutional Index Fund Institutional Plus Shares (VIIIX)
Vanguard Institutional Index Fund Institutional Plus Shares (VIIIX)
This prospectus
contains financial data for the Fund through the fiscal year ended December 31,
2023.
The
Securities and Exchange Commission (SEC) has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.
(Fees paid directly from your investment)
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Institutional
Shares |
Institutional
Plus Shares |
|
Sales
Charge (Load) Imposed on Purchases |
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Purchase
Fee |
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|
Sales
Charge (Load) Imposed on Reinvested
Dividends |
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Redemption
Fee |
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(Expenses that you pay each year as a percentage of the value of your investment)
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Institutional
Shares |
Institutional
Plus Shares |
|
Management
Fees |
% |
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|
12b-1
Distribution Fee |
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Other
Expenses |
% |
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|
Total Annual
Fund Operating Expenses |
% |
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1
|
|
1
Year |
3
Years |
5
Years |
10
Years |
|
Institutional
Shares |
$ |
$ |
$ |
$ |
|
Institutional
Plus Shares |
$ |
$ |
$ |
$ |
2
3
|
|
Total
Return |
Quarter |
|
|
% |
|
|
|
-
% |
|
|
|
1
Year |
5
Years |
10
Years |
|
Vanguard
Institutional Index Fund Institutional Shares |
|
|
|
|
Return Before
Taxes |
% |
% |
% |
|
Return After
Taxes on Distributions |
|
|
|
|
Return After
Taxes on Distributions and Sale of Fund Shares |
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|
|
|
Vanguard
Institutional Index Fund Institutional
Plus
Shares |
|
|
|
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Return Before
Taxes |
% |
% |
% |
|
Standard
& Poor’s 500 Index
(reflects no
deduction for fees, expenses, or taxes) |
% |
% |
% |
|
Dow
Jones U.S. Total Stock Market Float Adjusted Index
(reflects no
deduction for fees, expenses, or taxes) |
|
|
|
4
Investment
Advisor
The Vanguard Group,
Inc. (Vanguard)
Portfolio
Managers
Nick Birkett, CFA, Portfolio
Manager at Vanguard. He has co-managed the Fund since 2023.
Michelle Louie, CFA, Portfolio
Manager and Principal of Vanguard. She has co-managed the Fund since
2017.
Purchase
and Sale of Fund Shares
You may purchase or
redeem shares online through our website (vanguard.com), by mail (The
Vanguard Group, P.O. Box 982901, El Paso, TX 79998-2901), or by telephone
(800-662-2739). The minimum investment amount required to open and maintain a
Fund account for Institutional Shares or Institutional Plus Shares is $5 million
or $100 million, respectively. The minimum investment amount required to add to
an existing Fund account is generally $1. If you are investing through an
employer-sponsored retirement or savings plan, your plan administrator or your
benefits office can provide you with detailed information on how you can invest
through your plan.
Tax
Information
The Fund’s
distributions may be taxable as ordinary income or capital gain. If you are
investing through a tax-advantaged account, such as an IRA or an
employer-sponsored retirement or savings plan, special tax rules
apply.
Payments
to Financial Intermediaries
The Fund and its
investment advisor do not pay financial intermediaries for sales of Fund
shares.
5
Investing
in Index Funds
What
Is Indexing?
Indexing is an
investment strategy for tracking the performance of a specified market
benchmark, or “index.” An index is a group of securities whose overall
performance is used as a standard to measure the investment performance of a
particular market. There are many types of indexes. Some represent entire
markets—such as the U.S. stock market or the U.S. bond market. Other indexes
cover market segments—such as small-capitalization stocks or short-term bonds.
One cannot invest directly in an index.
The index provider determines the
securities to include in the index and the weighting of each security in the
index. Under normal circumstances, the index provider will rebalance an index on
a regular schedule. An index provider may carry out additional ad hoc index
rebalances or delay or cancel a scheduled rebalance. Generally, the index
provider does not provide any warranty, or accept any liability, with respect to
the quality, accuracy, or completeness of either the target index or its related
data. Errors made by the index provider may occur from time to time and may not
be identified by the index provider for a period of time or at all. Vanguard
does not provide any warranty or guarantee against such errors. Therefore, the
gains, losses, or costs associated with the index provider’s errors will
generally be borne by the index fund and its shareholders.
An index fund seeks
to hold all, or a representative sample, of the securities that make up its
target index. Index funds attempt to mirror the performance of the target index,
for better or worse. However, an index fund generally does not perform
exactly like its target
index. For example, index funds have operating expenses and transaction costs.
Market indexes do not, and therefore they will usually have a slight performance
advantage over funds that track them. The ability of an index fund to match its
performance to that of its target index can also be impacted by, among other
things, the timing and size of cash flows, asset valuation differences, and the
size of the fund. Market disruptions could also have an adverse effect on a
fund’s ability to adjust its exposure to the required levels in order to track
the index. The risk that a fund may not track the performance of its target
index may be heightened during times of increased market volatility or other
unusual market conditions.
Index funds
typically have the following characteristics:
• Variety
of investments. Depending on a
fund’s benchmark index, the fund may invest in the securities of a variety of
companies, industries, and/or governments or government agencies.
• Relative
performance consistency. Because they seek
to track market benchmarks, index funds usually do not perform dramatically
better or worse than their benchmarks.
• Low
cost.
Index funds are generally inexpensive to run compared with actively managed
funds. They have low or no research costs and typically keep trading
activity—and thus brokerage commissions and other transaction costs—to a minimum
compared with actively managed funds.
6
More
on the Fund
This prospectus
describes the principal risks you would face as a Fund shareholder. It is
important to keep in mind one of the main principles of investing: generally,
the higher the risk of losing money, the higher the potential reward. The
reverse, also, is generally true: the lower the risk, the lower the potential
reward. As you consider an investment in any mutual fund, you should take into
account your personal tolerance for fluctuations in the securities markets. Look
for this
symbol throughout
the prospectus. It is used to mark detailed information about the more
significant risks that you would confront as a Fund shareholder. To highlight
terms and concepts important to mutual fund investors, we have provided Plain
Talk® explanations along
the way. Reading the prospectus will help you decide whether the Fund is the
right investment for you. We suggest that you keep this prospectus for future
reference.
symbol throughout
the prospectus. It is used to mark detailed information about the more
significant risks that you would confront as a Fund shareholder. To highlight
terms and concepts important to mutual fund investors, we have provided Plain
Talk® explanations along
the way. Reading the prospectus will help you decide whether the Fund is the
right investment for you. We suggest that you keep this prospectus for future
reference.Share
Class Overview
This prospectus offers the Fund’s
Institutional Shares and Institutional Plus Shares, which are generally for
investors who invest a minimum of $5 million and $100 million,
respectively.
Both share classes offered by the
Fund have the same investment objective, strategies, and policies. However,
because different share classes can have different expenses, their investment
returns may differ.
|
Plain
Talk About Fund Expenses |
|
All mutual
funds have operating expenses. These expenses, which are
deducted
from a fund’s gross income, are expressed as a percentage of the
net assets
of the fund. Assuming that operating expenses remain as stated in
the Fees
and Expenses section, Vanguard Institutional Index Fund’s expense
ratios
would be as follows: for Institutional Shares, 0.035%, or $0.35 per
$1,000 of
average net assets; for Institutional Plus Shares, 0.02%, or $0.20
per $1,000
of average net assets. The average expense ratio for large-cap
core funds
in 2023 was 0.88%, or $8.80 per $1,000 of average net assets
(derived
from data provided by Lipper, a Thomson Reuters Company, which
reports on
the mutual fund industry). |
7
|
Plain
Talk About Costs of Investing |
|
Costs are
an important consideration in choosing a mutual fund. That is
because
you, as a shareholder, pay a proportionate share of the costs of
operating
a fund and any transaction costs incurred when the fund buys or
sells
securities, including costs generated by shareholders of other share
classes
offered by the fund. These costs can erode a substantial portion of
the gross
income or the capital appreciation a fund achieves. Even
seemingly
small differences in expenses can, over time, have a dramatic
effect on
a fund’s performance. |
The following sections explain the
principal investment strategies and policies that the Fund uses in pursuit of
its investment objective. The Fund’s board of trustees, which oversees the
Fund’s management, may change investment strategies or policies in the interest
of shareholders without a shareholder vote, unless those strategies or policies
are designated as fundamental. Under normal circumstances, the Fund will invest
at least 80% of its assets in the stocks that make up its target index. The Fund
may change its 80% policy only upon 60 days‘ notice to
shareholders.
Market
Exposure
The
Fund is subject to stock market risk, which is the chance that stock prices
overall will decline. Stock markets tend to move in cycles, with periods of
rising prices and periods of falling prices. The Fund’s target index tracks a
subset of the U.S. stock market, which could cause the Fund to perform
differently from the overall stock market. In addition, the Fund’s target index
may, at times, become focused in stocks of a particular market sector, which
would subject the Fund to proportionately higher exposure to the risks of that
sector.
Stocks of publicly traded companies
are often classified according to market capitalization, which is the market
value of a company’s outstanding shares. These classifications typically include
small-cap, mid-cap, and large-cap. It is important to understand that there are
no “official” definitions of small-, mid-, and large-cap, even among Vanguard
fund advisors, and that market capitalization ranges can change over time. The
asset-weighted median market capitalization of the Fund’s stock holdings as of
December 31, 2023, was $205 billion.
8
The
Fund is subject to investment style risk, which is the chance that returns from
large-capitalization stocks will trail returns from the overall stock market.
Large-cap stocks tend to go through cycles of doing better—or worse—than other
segments of the stock market or the stock market in general. These periods have,
in the past, lasted for as long as several years.
Market disruptions can adversely
affect local and global markets as well as normal market conditions and
operations. Any such disruptions could have an adverse impact on the value of
the Fund’s investments and Fund performance.
Security
Selection
The Fund attempts
to track the investment performance of the S&P 500 Index, a float-adjusted,
market-capitalization-weighted index designed to measure the performance of
large-cap stocks in the United States. The Fund uses the replication method of
indexing, meaning that it seeks to invest all, or substantially all, of its
assets in the stocks that make up the Index, holding each stock in approximately
the same proportion as its weighting in the Index.
The S&P 500 Index is a widely
recognized benchmark of U.S. stock market performance that is dominated by the
stocks of large U.S. companies. The Index is made up of approximately 500 top
companies in leading industries of the U.S. economy, as determined by the index
provider. Each stock in the Index has a market capitalization of $15.8 billion
or greater. The Index is rebalanced on a quarterly basis.
The
Fund is subject to index replicating risk, which is the chance that the Fund may
be prevented from holding one or more securities in the same proportion as in
its target index.
The ability of the advisor to
purchase or dispose of certain Fund investments is or may be restricted or
impaired because of limitations imposed by law, regulation, or by certain
regulators or issuers. As a result, the advisor may be required to limit
purchases or sell existing investments. If the Fund is required to limit its
investment in a particular issuer, then the Fund may seek to obtain regulatory
relief or special permission from an issuer to exceed a certain percentage
ownership in that issuer’s shares. Other options the Fund may pursue include
seeking to obtain economic exposure to that issuer through alternative means,
such as through a derivative or through investment in a wholly owned subsidiary,
both of which may be more costly than owning securities of the issuer directly.
Ownership restrictions and limitations could result in unanticipated tax
consequences to the Fund that may affect the amount, timing, and character of
distributions to shareholders. See Other
Investment Policies and Risks for further information related to
derivatives.
9
Other
Investment Policies and Risks
The Fund reserves the right to
substitute a different index for the index it currently tracks if the current
index is discontinued, if the Fund’s agreement with the provider of its target
index is terminated, or for any other reason determined in good faith by the
Fund’s board of trustees. In any such instance, the substitute index would
represent the same market segment as the current index.
The Fund has the ability to invest
in foreign securities to the extent necessary to carry out its investment
strategy of holding all, or substantially all, of the stocks that make up the
index it tracks. It is not expected that the Fund will invest more than 5% of
its assets in foreign securities.
To track its target
index as closely as possible, the Fund attempts to remain fully invested in
stocks. To help stay fully invested and to reduce transaction costs, the Fund
may invest, to a limited extent, in derivatives, including equity futures. The
Fund may also use derivatives such as total return swaps to obtain exposure to a
stock, a basket of stocks, or an index. Generally speaking, a derivative is a
financial contract whose value is based on the value of a financial asset (such
as a stock, a bond, or a currency), a physical asset (such as gold, oil, or
wheat), a market index, or a reference rate. Investments in derivatives may
subject the Fund to risks different from, and possibly greater than, those of
investments directly in the underlying securities or assets. The Fund will not
use derivatives for speculation or for the purpose of leveraging (magnifying)
investment returns.
Cash
Management
The Fund’s daily cash balance may
be invested in Vanguard Market Liquidity Fund and/or Vanguard Municipal Cash
Management Fund (each, a CMT Fund), which are low-cost money market funds. When
investing in a CMT Fund, the Fund bears its proportionate share of the expenses
of the CMT Fund in which it invests. Vanguard receives no additional revenue
from Fund assets invested in a CMT Fund.
Redemption
Requests
Methods
used to meet redemption requests. Under normal
circumstances, the Fund typically expects to meet redemptions with positive cash
flows. When this is not an option, the Fund seeks to maintain its risk exposure
by selling a cross section of the Fund’s holdings to meet redemptions, while
also factoring in transaction costs. Additionally, the Fund may work with larger
clients to implement their redemptions in a manner that is least disruptive to
the portfolio; see “Potentially disruptive redemptions” under Redeeming
Shares
in the Investing
With Vanguard
section.
10
Under certain
circumstances, including under stressed market conditions, there are additional
tools that the Fund may use in order to meet redemptions, including advancing
the settlement of market trades with counterparties to match investor redemption
payments or delaying settlement of an investor’s transaction to match trade
settlement within regulatory requirements. The Fund may also suspend payment of
redemption proceeds for up to seven days; see “Emergency circumstances” under
Redeeming
Shares
in the Investing
With Vanguard
section.
Additionally under these unusual circumstances, the Fund may borrow money
(subject to certain regulatory conditions and if available under board-approved
procedures) through an interfund lending facility; through a bank
line-of-credit, including a joint committed credit facility; or through an
uncommitted line-of-credit from Vanguard in order to meet redemption
requests.
Potential
redemption activity impacts. At times, the Fund may experience
adverse effects when certain large shareholders, or multiple shareholders
comprising significant ownership of the Fund or a share class of the Fund,
redeem large amounts of shares of the Fund. Large redemptions may cause the Fund
to sell portfolio securities at times when it would not otherwise do so. This
may result in the Fund distributing capital gains or other taxable income to
non-redeeming shareholders. Large redemptions may also increase the Fund’s
transaction costs. Redemption activity can occur for many reasons, including
shareholder reactions to market movements or other events unrelated to
Vanguard’s actions, or when Vanguard makes product changes that, for example,
may result in a shareholder redeeming shares of the Fund to purchase shares of
another similar fund or investment vehicle. When experiencing large redemptions,
the Fund reserves the right to pay all or part of the redemption in-kind and/or
delay payment of the redemption proceeds for up to seven calendar days; see
“Potentially disruptive redemptions” under Redeeming
Shares in the
Investing With
Vanguard
section.
Temporary
Investment Measures
The Fund may temporarily depart
from its normal investment policies and strategies when the advisor believes
that doing so is in the Fund’s best interest, so long as the strategy or policy
employed is consistent with the Fund’s investment objective. For instance, the
Fund may invest beyond its normal limits in derivatives or exchange-traded funds
that are consistent with the Fund’s investment objective when those instruments
are more favorably priced or provide needed liquidity, as might be the case when
the Fund receives large cash flows that it cannot prudently invest
immediately.
11
Frequent
Trading or Market-Timing
Background.
Some
investors try to profit from strategies involving frequent trading of mutual
fund shares, such as market-timing. For funds holding foreign securities,
investors may try to take advantage of an anticipated difference between the
price of the fund’s shares and price movements in overseas markets, a practice
also known as time-zone arbitrage. Investors also may try to engage in frequent
trading of funds holding investments such as small-cap stocks and high-yield
bonds. As money is shifted into and out of a fund by a shareholder engaging in
frequent trading, the fund incurs costs for buying and selling securities,
resulting in increased brokerage and administrative costs. These costs are borne
by all fund shareholders,
including the long-term investors who do not generate the costs. In addition,
frequent trading may interfere with an advisor’s ability to efficiently manage
the fund.
Policies
to address frequent trading. The Vanguard funds
(other than money market funds and short-term bond funds, but including Vanguard
Short-Term Inflation-Protected Securities Index Fund) do not knowingly
accommodate frequent trading. The board of trustees of each Vanguard fund (other
than money market funds and short-term bond funds, but including Vanguard
Short-Term Inflation-Protected Securities Index Fund) has adopted policies and
procedures reasonably designed to detect and discourage frequent trading and, in
some cases, to compensate the fund for the costs associated with it. These
policies and procedures do not apply to ETF Shares because frequent trading in
ETF Shares generally does not disrupt portfolio management or otherwise harm
fund shareholders. Although there is no assurance that Vanguard will be able to
detect or prevent frequent trading or market-timing in all circumstances, the
following policies have been adopted to address these issues:
• Each Vanguard
fund reserves the right to reject any purchase request—including exchanges from
other Vanguard funds—without notice and regardless of size. For example, a
purchase request could be rejected because the investor has a history of
frequent trading or if Vanguard determines that such purchase may negatively
affect a fund’s operation or performance.
• Each Vanguard
fund (other than money market funds and short-term bond funds, but including
Vanguard Short-Term Inflation-Protected Securities Index Fund) generally
prohibits, except as otherwise noted in the Investing
With Vanguard section, an
investor’s purchases or exchanges into a fund account for 30 calendar days after
the investor has redeemed or exchanged out of that fund
account.
• Certain Vanguard
funds charge shareholders purchase and/or redemption fees on
transactions.
12
See the
Investing
With Vanguard section of this
prospectus for further details on Vanguard’s transaction policies.
Each Vanguard fund
(other than retail and government money market funds), in determining its net
asset value, will use fair-value pricing when appropriate, as described in the
Share
Price
section. Fair-value pricing may reduce or eliminate the profitability of certain
frequent-trading strategies.
Do
not invest with Vanguard if you are a market-timer.
A precautionary
note to investment companies: The Fund’s shares are issued by a
registered investment company, and therefore the acquisition of such shares by
other investment companies and private funds is subject to the restrictions of
Section 12(d)(1) of the Investment Company Act of 1940 (the 1940 Act). SEC Rule
12d1-4 under the 1940 Act permits registered investment companies to invest in
other registered investment companies beyond the limits in Section 12(d)(1),
subject to certain conditions, including that funds with different investment
advisors must enter into a fund of funds investment
agreement.
Turnover
Rate
Although the Fund
generally seeks to invest for the long term, it may sell securities regardless
of how long they have been held. Generally, an index fund sells securities in
response to redemption requests or to changes in the composition of its target
index. Turnover rates for large-cap stock index funds tend to be low because
large-cap indexes—such as the S&P 500 Index—typically do not change
significantly from year to year. The Financial
Highlights section of this
prospectus shows historical turnover rates for the Fund. A turnover rate of
100%, for example, would mean that the Fund had sold and replaced securities
valued at 100% of its net assets within a one-year period. In general, the
greater the turnover rate, the greater the impact transaction costs will have on
a fund’s return. Also, funds with high turnover rates may be more likely to
generate capital gains, including short-term capital gains, that must be
distributed to shareholders and will be taxable to shareholders investing
through a taxable account.
The
Fund and Vanguard
The Fund is a
member of The Vanguard Group, Inc. (Vanguard), a family of over 200 funds. All
of the funds that are members of Vanguard (other than funds of funds) share in
the expenses associated with administrative services and business operations,
such as personnel, office space, and equipment.
13
Vanguard Marketing
Corporation provides marketing services to the funds. Although fund shareholders
do not pay sales commissions or 12b-1 distribution fees, each fund (other than a
fund of funds) or each share class of a fund (in the case of a fund with
multiple share classes) pays its allocated share of the Vanguard funds’
marketing costs.
|
Plain
Talk About Vanguard’s Unique Corporate Structure |
|
Vanguard
is owned jointly by the funds it oversees and thus indirectly by the
shareholders
in those funds. Most other mutual funds are operated by
management
companies that are owned by third parties—either public or
private
stockholders—and not by the funds they
serve. |
Investment
Advisor
The Vanguard Group, Inc., P.O. Box
2600, Valley Forge, PA 19482, which began operations in 1975, serves as advisor
to the Fund through its Equity Index Group. As of December 31, 2023, Vanguard
served as advisor for approximately $7.2 trillion in assets. Vanguard provides
investment advisory services to the Fund pursuant to the Funds’ Service
Agreement and subject to the supervision and oversight of the trustees and
officers of the Fund.
For the fiscal year ended December
31, 2023, the advisory expenses represented an effective annual rate of less
than 0.01% of the Fund’s average net assets.
For a discussion of why the board
of trustees approved the Fund’s investment advisory arrangement, see the most
recent semiannual report to shareholders covering the fiscal period ended June
30.
Under the terms of an SEC
exemption, the Fund’s board of trustees may, without prior approval from
shareholders, change the terms of an advisory agreement with a third-party
investment advisor or hire a new third-party investment advisor—either as a
replacement for an existing advisor or as an additional advisor. Any significant
change in the Fund’s advisory arrangements will be communicated to shareholders
in writing. As the Fund’s sponsor and overall manager, Vanguard may provide
investment advisory services to the Fund at any time. Vanguard may also
recommend to the board of trustees that an advisor be hired, terminated, or
replaced or that the terms of an existing advisory agreement
14
be revised. The
Fund has filed an application seeking a similar SEC exemption with respect to
investment advisors that are wholly owned subsidiaries of Vanguard. If the
exemption is granted, the Fund may rely on the new SEC relief.
The managers
primarily responsible for the day-to-day management of the Fund
are:
Nick
Birkett, CFA,
Portfolio Manager at Vanguard. He has worked in investment management since
2005, has been with Vanguard since 2017, and has co-managed the Fund since 2023.
Education: B.S., University of Bath.
Michelle
Louie, CFA, Portfolio
Manager and Principal of Vanguard. She has been with Vanguard since 2010, has
worked in investment management since 2011, has managed investment portfolios
since 2016, and has co-managed the Fund since 2017. Education: B.S., The
American University; M.B.A., Georgia Institute of Technology.
The Fund’s Statement of
Additional Information
provides information about each portfolio manager’s compensation, other accounts
under management, and ownership of shares of the Fund.
Dividends,
Capital Gains, and Taxes
Fund
Distributions
The Fund
distributes to shareholders virtually all of its net income (interest and
dividends, less expenses) as well as any net short-term or long-term capital
gains realized from the sale of its holdings. From time to time, the Fund may
also make distributions that are treated as a return of capital. Income
dividends generally are distributed quarterly in March, June, September, and
December; capital gains distributions, if any, generally occur annually in
December. In addition, the Fund may occasionally make a supplemental
distribution at some other time during the year.
You can receive
distributions of income or capital gains in cash, or you can have them
automatically reinvested in more shares of the Fund. However, if you are
investing through an employer-sponsored retirement or savings plan, your
distributions will be automatically reinvested in additional Fund
shares.
15
|
Plain
Talk About Distributions |
|
As
a shareholder, you are entitled to your portion of a fund’s income from
interest
and dividends as well as capital gains from the fund’s sale of
investments.
Income consists of both the dividends that the fund earns from
any
stock holdings and the interest it receives from any money market and
bond
investments. Capital gains are realized whenever the fund sells
securities
for higher prices than it paid for them. These capital gains are
either
short-term or long-term, depending on whether the fund held the
securities
for one year or less or for more than one
year. |
Basic
Tax Points
Investors in
taxable accounts should be aware of the following basic federal income tax
points:
• Distributions are
taxable to you whether or not you reinvest these amounts in additional Fund
shares.
• Distributions
declared in December—if paid to you by the end of January—are taxable as if
received in December.
• Any dividend
distribution or short-term capital gains distribution that you receive is
taxable to you as ordinary income. If you are an individual and meet certain
holding-period requirements with respect to your Fund shares, you may be
eligible for reduced tax rates on “qualified dividend income,” if any, or a
special tax deduction on “qualified REIT dividends,” if any, distributed by the
Fund.
• Any distribution
of net long-term capital gains is taxable to you as long-term capital gains, no
matter how long you have owned shares in the Fund.
• Capital gains distributions can
occur when the Fund sells assets at a gain. Capital gains distributions vary
from year to year as a result of the Fund’s investment activities and cash
flows, including those due to redemption activity by Fund shareholders.
• Capital gains distributions may
occur if Vanguard makes changes that would impact the Fund directly or
indirectly, including if Vanguard makes changes to the Fund’s portfolio or to
any other Vanguard fund or product that would involve the redemption of shares
of the Fund and the related sale of the Fund’s investments.
• Your cost basis
in the Fund will be decreased by the amount of any return of capital that you
receive. This, in turn, will affect the amount of any capital gain or loss that
you realize when selling or exchanging your Fund shares.
16
• Return of capital
distributions generally are not taxable to you until your cost basis has been
reduced to zero. If your cost basis is at zero, return of capital distributions
will be treated as capital gains.
• A sale or
exchange of Fund shares is a taxable event. This means that you may have a
capital gain to report as income, or a capital loss to report as a deduction,
when you complete your tax return.
• Any conversion
between classes of shares of the same fund is a nontaxable
event.
By contrast, an exchange between classes of shares of different funds is a
taxable
event.
• Vanguard (or your
intermediary) will send you a statement each year showing the tax status of all
of your distributions.
Individuals,
trusts, and estates whose income exceeds certain threshold amounts are subject
to a 3.8% Medicare contribution tax on “net investment income.” Net investment
income takes into account distributions paid by the Fund and capital gains from
any sale or exchange of Fund shares.
Dividend
distributions and capital gains distributions that you receive, as well as your
gains or losses from any sale or exchange of Fund shares, may be subject to
state and local income taxes.
This prospectus
provides general tax information only. If you are investing through a
tax-advantaged account, such as an IRA or an employer-sponsored retirement or
savings plan, special tax rules apply. Please consult your tax advisor for
detailed information about any tax consequences for you.
|
Plain
Talk About Buying a Dividend |
|
Unless
you are a tax-exempt investor or investing through a tax-advantaged
account
(such as an IRA or an employer-sponsored retirement or savings
plan),
you should consider avoiding a purchase of fund shares shortly before
the
fund makes a distribution, because doing so can cost you money in
taxes.
This is known as “buying a dividend.” For example: On December 15,
you
invest $5,000, buying 250 shares for $20 each. If the fund pays a
distribution
of $1 per share on December 16, its share price will drop to $19
(not
counting market change). You still have only $5,000 (250 shares x $19 =
$4,750
in share value, plus 250 shares x $1 = $250 in distributions), but you
owe
tax
on the $250 distribution you received—even if you reinvest it in more
shares.
To avoid buying a dividend, check a fund’s distribution schedule
before
you invest.
|
17
General
Information
Backup
withholding. By law, Vanguard
must withhold 24% of any taxable distributions or redemptions from your account
if you do not:
• Provide your
correct taxpayer identification number.
• Certify that the
taxpayer identification number is correct.
• Confirm that you
are not subject to backup withholding.
Similarly, Vanguard
(or your intermediary) must withhold taxes from your account if the IRS
instructs us to do so.
Foreign
investors. Vanguard funds
offered for sale in the United States (Vanguard U.S. funds), including the Fund
offered in this prospectus, are not widely available outside the United States.
Non-U.S. investors should be aware that U.S. withholding and estate taxes and
certain U.S. tax reporting requirements may apply to any investments in Vanguard
U.S. funds. Foreign investors should visit the non-U.S. investors page on our
website at vanguard.com for information on
Vanguard’s non-U.S. products.
Invalid
addresses. If a dividend
distribution or capital gains distribution check mailed to your address of
record is returned as undeliverable, Vanguard will automatically reinvest the
distribution and all future distributions until you provide us with a valid
mailing address. Reinvestments will receive the net asset value calculated on
the date of the reinvestment.
Share
Price
Share price, also
known as net
asset value (NAV), is
calculated as of the close of regular trading on the New York Stock Exchange
(NYSE), generally 4 p.m., Eastern time, on each day that the NYSE is open for
business (a business day). In the rare event the NYSE experiences unanticipated
disruptions and is unavailable at the close of the trading day, NAVs will be
calculated as of the close of regular trading on the Nasdaq (or another
alternate exchange if the Nasdaq is unavailable, as determined at Vanguard’s
discretion), generally 4 p.m., Eastern time. Each share class has its own NAV,
which is computed by dividing the total assets, minus liabilities, allocated to
the share class by the number of Fund shares outstanding for that class. On U.S.
holidays or other days when the NYSE is closed, the NAV is not calculated, and
the Fund does not sell or redeem shares. However, on those days the value of the
Fund’s assets may be affected to the extent that the Fund holds securities that
change in value on those days (such as foreign securities that trade on foreign
markets that are open).
18
Stocks held by a
Vanguard fund are valued at their market
value
when reliable market quotations are readily available from the principal
exchange or market on which they are traded. Such securities are generally
valued at their official closing price, the last reported sales price, or if
there were no sales that day, the mean between the closing bid and asking
prices. When a fund determines that market quotations either are not readily
available or do not accurately reflect the value of a security, the security is
priced at its fair
value
(the amount that the owner might reasonably expect to receive upon the current
sale of the security).
The values of any
foreign securities held by a fund are converted into U.S. dollars using an
exchange rate obtained from an independent third party as of the close of
regular trading on the NYSE. The values of any mutual fund shares, including
institutional money market fund shares, held by a fund are based on the NAVs of
the shares. The values of any ETF shares or closed-end fund shares held by a
fund are based on the market value of the shares.
A fund also will use fair-value
pricing if the value of a security it holds has been materially affected by
events occurring before the fund’s pricing time but after the close of the
principal exchange or market on which the security is traded. This most commonly
occurs with foreign securities, which may trade on foreign exchanges that close
many hours before the fund’s pricing time. Intervening events might be
company-specific (e.g., earnings report, merger announcement) or
country-specific or regional/global (e.g., natural disaster, economic or
political news, interest rate change, act of terrorism). Intervening events
include price movements in U.S. markets that exceed a specified threshold or
that are otherwise deemed to affect the value of foreign securities.
Fair-value pricing may be used for
domestic securities—for example, if (1) trading in a security is halted and does
not resume before the fund’s pricing time or a security does not trade in the
course of a day and (2) the fund holds enough of the security that its price
could affect the NAV.
Fair-value prices
are determined by Vanguard according to procedures adopted by the board of
trustees. When fair-value pricing is employed, the prices of securities used by
a fund to calculate the NAV may differ from quoted or published prices for the
same securities.
The Fund has
authorized certain financial intermediaries and their designees, and may, from
time to time, authorize certain funds of funds for which Vanguard serves as the
investment advisor (Vanguard Funds of Funds), to accept orders to buy or sell
fund shares on its behalf. The Fund will be deemed to receive an order when
accepted by the financial intermediary, its designee, or one of the Vanguard
Funds of Funds, and the order will receive the NAV next computed by the Fund
after such acceptance.
19
Financial
Highlights
Financial
highlights information is intended to help you understand a fund’s performance
for the past five years (or, if shorter, its period of operations). Certain
information reflects financial results for a single fund share. Total return
represents the rate that an investor would have earned or lost each period on an
investment in a fund or share class (assuming reinvestment of all
distributions). This information has been obtained from the financial statements
audited by PricewaterhouseCoopers LLP, an independent registered public
accounting firm, whose report, along with fund financial statements, is included
in a fund’s most recent annual report to shareholders. You may obtain a free
copy of a fund’s latest annual or semiannual report, which is available upon
request.
Vanguard
Institutional Index Fund Institutional Shares
|
|
|
|
|
|
|
|
For a
Share Outstanding
Throughout
Each Period |
Year Ended December
31, | ||||
|
2023 |
2022 |
2021 |
2020 |
2019 | |
|
Net
Asset Value, Beginning of Period |
$321.63 |
$405.79 |
$331.47 |
$290.23 |
$227.55 |
|
Investment
Operations |
|
|
|
|
|
|
Net
Investment Income1 |
5.793 |
5.515 |
5.048 |
5.261 |
5.203 |
|
Net
Realized and Unrealized Gain (Loss) on
Investments |
77.739 |
(78.817) |
88.637 |
46.122 |
65.746 |
|
Total from
Investment Operations |
83.532 |
(73.302) |
93.685 |
51.383 |
70.949 |
|
Distributions |
|
|
|
|
|
|
Dividends
from Net Investment Income |
(5.801) |
(5.584) |
(5.199) |
(5.273) |
(5.550) |
|
Distributions
from Realized Capital Gains |
(5.881) |
(5.274) |
(14.166) |
(4.870) |
(2.719) |
|
Total
Distributions |
(11.682) |
(10.858) |
(19.365) |
(10.143) |
(8.269) |
|
Net
Asset Value, End of Period |
$393.48 |
$321.63 |
$405.79 |
$331.47 |
$290.23 |
|
Total
Return |
26.24% |
-18.14% |
28.67% |
18.39% |
31.46% |
|
Ratios/Supplemental
Data |
|
|
|
|
|
|
Net
Assets, End of Period (Millions) |
$112,347 |
$96,179 |
$128,441 |
$119,012 |
$116,814 |
|
Ratio of
Total Expenses to Average Net Assets |
0.035%2 |
0.035%2 |
0.035% |
0.035% |
0.035% |
|
Ratio of
Net Investment Income to Average Net
Assets |
1.62% |
1.58% |
1.35% |
1.83% |
1.98% |
|
Portfolio
Turnover Rate3 |
3% |
3% |
3% |
4% |
4% |
|
|
|
|
1 |
Calculated
based on average shares outstanding. |
|
2 |
The
ratio of expenses to average net assets for the period net of reduction
from custody fee
offset
arrangements was 0.035%. |
|
3 |
Excludes
the value of portfolio securities received or delivered as a result of
in-kind purchases
or
redemptions of the fund’s capital
shares. |
21
Vanguard
Institutional Index Fund Institutional Plus Shares
|
|
|
|
|
|
|
|
For a
Share Outstanding
Throughout
Each Period |
Year Ended December
31, | ||||
|
2023 |
2022 |
2021 |
2020 |
2019 | |
|
Net
Asset Value, Beginning of Period |
$321.62 |
$405.80 |
$331.48 |
$290.25 |
$227.57 |
|
Investment
Operations |
|
|
|
|
|
|
Net
Investment Income1 |
5.844 |
5.563 |
5.117 |
5.310 |
5.252 |
|
Net
Realized and Unrealized Gain (Loss) on
Investments |
77.742 |
(78.832) |
88.627 |
46.108 |
65.739 |
|
Total from
Investment Operations |
83.586 |
(73.269) |
93.744 |
51.418 |
70.991 |
|
Distributions |
|
|
|
|
|
|
Dividends
from Net Investment Income |
(5.855) |
(5.637) |
(5.256) |
(5.318) |
(5.592) |
|
Distributions
from Realized Capital Gains |
(5.881) |
(5.274) |
(14.168) |
(4.870) |
(2.719) |
|
Total
Distributions |
(11.736) |
(10.911) |
(19.424) |
(10.188) |
(8.311) |
|
Net
Asset Value, End of Period |
$393.47 |
$321.62 |
$405.80 |
$331.48 |
$290.25 |
|
Total
Return |
26.26% |
-18.13% |
28.69% |
18.41% |
31.48% |
|
Ratios/Supplemental
Data |
|
|
|
|
|
|
Net
Assets, End of Period (Millions) |
$153,068 |
$129,299 |
$176,415 |
$142,174 |
$125,359 |
|
Ratio of
Total Expenses to Average Net Assets |
0.02%2 |
0.02%2 |
0.02% |
0.02% |
0.02% |
|
Ratio of
Net Investment Income to Average Net
Assets |
1.63% |
1.60% |
1.37% |
1.84% |
1.99% |
|
Portfolio
Turnover Rate3 |
3% |
3% |
3% |
4% |
4% |
|
|
|
|
1 |
Calculated
based on average shares outstanding. |
|
2 |
The
ratio of expenses to average net assets for the period net of reduction
from custody fee
offset
arrangements was 0.02%. |
|
3 |
Excludes
the value of portfolio securities received or delivered as a result of
in-kind purchases
or
redemptions of the fund’s capital
shares. |
22
Investing
With Vanguard
This section of the prospectus
explains the basics of doing business with Vanguard. Vanguard fund shares can be
held indirectly through an intermediary, such as a bank, a broker, or an
investment advisor. If you hold Vanguard fund shares indirectly through an
intermediary (including shares held in a brokerage account through Vanguard
Brokerage Services®), please see Investing With
Vanguard Through Other Firms, and also refer to your account
agreement with the intermediary for information about transacting in that
account. If you hold Vanguard fund shares through an employer-sponsored
retirement or savings plan, please see Employer-Sponsored
Plans. Vanguard
reserves the right to change the policies in this section without notice. Please
call or check online for current information. See Contacting
Vanguard.
In certain circumstances, Vanguard fund shares can be held directly with Vanguard. If you hold Vanguard fund shares directly with Vanguard, you should carefully read each topic within this section that pertains to your relationship with Vanguard. Vanguard reserves the right, upon reasonable notice, to discontinue the ability to hold Vanguard fund shares directly with Vanguard for any or all investors and/or to transfer such shares to an affiliate or other financial institution.
In certain circumstances, Vanguard fund shares can be held directly with Vanguard. If you hold Vanguard fund shares directly with Vanguard, you should carefully read each topic within this section that pertains to your relationship with Vanguard. Vanguard reserves the right, upon reasonable notice, to discontinue the ability to hold Vanguard fund shares directly with Vanguard for any or all investors and/or to transfer such shares to an affiliate or other financial institution.
For Vanguard fund
shares held directly with Vanguard, each fund you hold in an account is a
separate “fund account.” For example, if you hold three funds in a nonretirement
account titled in your own name, two funds in a nonretirement account titled
jointly with your spouse, and one fund in an individual retirement account, you
have six fund accounts—and this is true even if you hold the same fund in
multiple accounts. Note that each reference to “you” in this prospectus applies
to any one or more registered account owners or persons authorized to transact
on your account.
Purchasing
Shares
Vanguard reserves
the right, without notice, to increase or decrease the minimum amount required
to open, convert shares to, or maintain a fund account or to add to an existing
fund account.
Investment minimums
may differ for certain categories of investors.
Account
Minimums for Institutional Shares and Institutional Plus Shares
To
open and maintain an account. Institutional
Shares—$5 million; Institutional Plus Shares—$100 million. If you request
Institutional Plus Shares when you open a new account but the investment amount
does not meet the account
23
minimum for
Institutional Plus Shares, your investment will be placed in Institutional
Shares of the Fund. Institutional clients should contact Vanguard for
information on special eligibility rules that may apply to them.
Certain Vanguard
institutional clients may meet the minimum investment amount by aggregating
separate accounts within the same fund. This aggregation policy does not apply
to financial intermediaries.
Vanguard may charge
additional recordkeeping fees for institutional clients whose accounts are
recordkept by Vanguard. Please contact your Vanguard representative to determine
whether additional recordkeeping fees apply to your account.
To
add to an existing account. Generally
$1.
How
to Initiate a Purchase Request
Be sure to check
Exchanging
Shares, Frequent-Trading Limitations, and Other
Rules You Should Know before placing
your purchase request.
Online. You may open
certain types of accounts, request a purchase of shares, and request an exchange
through our website or our mobile application if your account is eligible and
you are registered for online access.
By
telephone. You may call
Vanguard to begin the account registration process or request that the
account-opening forms be sent to you. You may also call Vanguard to request a
purchase of shares in your account or to request an exchange. See Contacting
Vanguard.
By
mail.
You may send Vanguard your account registration form and check to open a new
fund account. To add to an existing fund account, you may send your check with
an Invest-by-Mail form (from a transaction confirmation or your account
statement) or with a deposit slip (available online).
How
to Pay for a Purchase
By
electronic bank transfer. You may purchase
shares of a Vanguard fund through an electronic transfer of money from a bank
account. To establish the electronic bank transfer service on an account, you
must designate the bank account online, complete a form, or fill out the
appropriate section of your account registration form. After the service is set
up on your account, you can purchase shares by electronic bank transfer on a
regular schedule (Automatic Investment Plan), if eligible, or upon request. Your
purchase request can be initiated online (if you are registered for online
access), by telephone, or by mail.
24
By
wire.
Wiring instructions vary for different types of purchases. Please call Vanguard
for instructions and policies on purchasing shares by wire. See Contacting
Vanguard.
By
check.
You may make initial or additional purchases to your fund account by sending a
check with a deposit slip or by utilizing our mobile application if your account
is eligible and you are registered for online access. Also see How
to Initiate a Purchase Request. Make your check
payable to Vanguard and include the appropriate fund number (e.g., Vanguard—xx).
For a list of Fund numbers (for share classes in this prospectus), see
Additional
Information.
By
exchange. You may purchase
shares of a Vanguard fund using the proceeds from the simultaneous redemption of
shares of another Vanguard fund. You may initiate an exchange online (if you are
registered for online access), by telephone, or by mail with an exchange form.
See Exchanging
Shares.
Trade
Date
The trade date for
any purchase request received in good order will depend on the day and time
Vanguard receives your request, the manner in which you are paying, and the type
of fund you are purchasing. Your purchase will be executed using the NAV as
calculated on the trade date. NAVs are calculated only on days that the NYSE is
open for trading (a business day). In the rare event the NYSE experiences
unanticipated disruptions and is unavailable at the close of the trading day,
NAVs will be calculated as of the close of regular trading on the Nasdaq (or
another alternate exchange if the Nasdaq is unavailable, as determined at
Vanguard’s discretion), generally 4 p.m., Eastern time. The time selected for
NAV calculation in this rare event shall also serve as the conclusion of the
trading day. See Share
Price.
For purchases by
check into all funds
other than money market funds and for purchases by exchange, wire, or electronic
bank transfer into all funds: If
the purchase request is received by Vanguard on a business day before the close
of regular trading on the NYSE (generally 4 p.m., Eastern time), the trade date
for the purchase will be the same day. If the purchase request is received on a
business day after the close of regular trading on the NYSE, or on a nonbusiness
day, the trade date for the purchase will be the next business day.
For purchases by
check into money market
funds: If the purchase request is received by Vanguard on a business day before
the close of regular trading on the NYSE (generally 4 p.m., Eastern time), the
trade date for the purchase will be the next business day. If the purchase
request is received on a business day after the close of regular trading on the
NYSE, or on a nonbusiness day, the trade date for the purchase will be the
second business day following the day
25
Vanguard receives
the purchase request. Because money market instruments must be purchased with
federal funds and it takes a money market mutual fund one business day to
convert check proceeds into federal funds, the trade date for the purchase will
be one business day later than for other funds.
If applicable,
orders by Vanguard Funds of Funds will be treated as received by the Fund at the
same time that corresponding orders are received in proper form by the Vanguard
Funds of Funds.
If your purchase
request is not accurate and complete, it may be rejected. See Other
Rules You Should Know—Good Order.
For further
information about purchase transactions, consult our website at vanguard.com or see
Contacting
Vanguard.
Other
Purchase Rules You Should Know
Check
purchases. All purchase
checks must be written in U.S. dollars, be drawn on a U.S. bank, and be
accompanied by good order instructions. Vanguard does not accept cash,
traveler’s checks, starter checks, or money orders. In addition, Vanguard may
refuse checks that are not made payable to Vanguard.
New
accounts. We are required by
law to obtain from you certain personal information that we will use to verify
your identity. If you do not provide the information, we may not be able to open
your account. If we are unable to verify your identity, Vanguard reserves the
right, without notice, to close your account or take such other steps as we deem
reasonable. Certain types of accounts may require additional
documentation.
Refused
or rejected purchase requests. Vanguard reserves
the right to stop selling fund shares or to reject any purchase request at any
time and without notice, including, but not limited to, purchases requested by
exchange from another Vanguard fund. This also includes the right to reject any
purchase request because the investor has a history of frequent trading or
because the purchase may negatively affect a fund’s operation or
performance.
Large
purchases. Call Vanguard
before attempting to invest a large dollar amount.
No
cancellations. Vanguard will not
accept your request to cancel any purchase request once processing has begun.
Please be careful when placing a purchase request.
26
Converting
Shares
When a conversion
occurs, you receive shares of one class in place of shares of another class of
the same fund. At the time of conversion, the dollar value of the “new” shares
you receive equals the dollar value of the “old” shares that were converted. In
other words, the conversion has no effect on the value of your investment in the
fund at the time of the conversion. However, the number of shares you own after
the conversion may be greater than or less than the number of shares you owned
before the conversion, depending on the NAVs of the two share
classes.
Vanguard will not
accept your request to cancel any self-directed conversion request once
processing has begun. Please be careful when placing a conversion
request.
A conversion
between share classes of the same fund is a nontaxable
event.
Trade
Date
The trade date for
any conversion request received in good order will depend on the day and time
Vanguard receives your request. Your conversion will be executed using the NAVs
of the different share classes on the trade date. NAVs are calculated only on
days that the NYSE is open for trading (a business day). In the rare event the
NYSE experiences unanticipated disruptions and is unavailable at the close of
the trading day, NAVs will be calculated as of the close of regular trading on
the Nasdaq (or another alternate exchange if the Nasdaq is unavailable, as
determined at Vanguard’s discretion), generally 4 p.m., Eastern time. The time
selected for NAV calculation in this rare event shall also serve as the
conclusion of the trading day. See Share
Price.
For a conversion
request received by Vanguard on a business day before the close of regular
trading on the NYSE (generally 4 p.m., Eastern time), the trade date will be the
same day. For a conversion request received on a business day after the close of
regular trading on the NYSE, or on a nonbusiness day, the trade date will be the
next business day. See Other
Rules You Should Know.
Conversions
From Institutional Shares to Institutional Plus Shares
You may convert
Institutional Shares to Institutional Plus Shares of the Fund, provided that
your account balance is at least $100 million.
27
Mandatory
Conversions to Institutional Shares
If an account no
longer meets the balance requirements for Institutional Plus Shares, Vanguard
may automatically convert the shares in the account to Institutional Shares. A
decline in the account balance because of market movement may result in such a
conversion. Vanguard will notify the investor in writing before any mandatory
conversion occurs.
Redeeming
Shares
How
to Initiate a Redemption Request
Be sure to check
Exchanging
Shares, Frequent-Trading Limitations, and Other
Rules You Should Know before placing
your redemption request.
Online. You may request a
redemption of shares or request an exchange through our website or our mobile
application if your account is eligible and you are registered for online
access.
By
telephone. You may call
Vanguard to request a redemption of shares or an exchange. See Contacting
Vanguard.
By
mail.
You may send a form (available online) to Vanguard to redeem from a fund account
or to make an exchange.
How
to Receive Redemption Proceeds
By
electronic bank transfer. You may have the
proceeds of a fund redemption sent directly to a designated bank account. To
establish the electronic bank transfer service on an account, you must designate
a bank account online, complete a form, or fill out the appropriate section of
your account registration form. After the service is set up on your account, you
can redeem shares by electronic bank transfer on a regular schedule (Automatic
Withdrawal Plan), if eligible, or upon request. Your redemption request can be
initiated online (if you are registered for online access), by telephone, or by
mail.
By
wire.
To receive your proceeds by wire, you may instruct Vanguard to wire your
redemption proceeds ($100 minimum) to a previously designated bank account. To
establish the wire redemption service, you generally must designate a bank
account online, complete a form, or fill out the appropriate section of your
account registration form.
Please note that
Vanguard charges a $10 wire fee for outgoing wire redemptions. The fee is
assessed in addition to, rather than being withheld from, redemption proceeds
and is paid directly to the fund in which you invest. For example, if you redeem
$100 via a wire, you will receive the full $100, and the $10 fee will be
28
assessed to your
fund account through an additional redemption of fund shares. If you redeem your
entire fund account, your redemption proceeds will be reduced by the amount of
the fee. The wire fee does not apply to accounts held by Flagship and Flagship
Select clients; accounts held through intermediaries, including Vanguard
Brokerage Services; or accounts held by institutional clients.
By
exchange. You may have the
proceeds of a Vanguard fund redemption invested directly in shares of another
Vanguard fund. You may initiate an exchange online (if you are registered for
online access), by telephone, or by mail. See Exchanging
Shares.
By
check.
If you have not chosen another redemption method, Vanguard will mail you a
redemption check, generally payable to all registered account owners, normally
within two business days of your trade date, and generally to the address of
record.
Trade
Date
The trade date for
any redemption request received in good order will depend on the day and time
Vanguard receives your request and the manner in which you are redeeming. Your
redemption will be executed using the NAV as calculated on the trade date. NAVs
are calculated only on days that the NYSE is open for trading (a business day).
In the rare event the NYSE experiences unanticipated disruptions and is
unavailable at the close of the trading day, NAVs will be calculated as of the
close of regular trading on the Nasdaq (or another alternate exchange if the
Nasdaq is unavailable, as determined at Vanguard’s discretion), generally 4
p.m., Eastern time. The time selected for NAV calculation in this rare event
shall also serve as the conclusion of the trading day. See Share
Price.
For redemptions by
check,
exchange, or wire: If the redemption
request is received by Vanguard on a business day before the close of regular
trading on the NYSE (generally 4 p.m., Eastern time), the trade date will be the
same day. If the redemption request is received on a business day after the
close of regular trading on the NYSE, or on a nonbusiness day, the trade date
will be the next business day.
• Note on timing of
wire redemptions from money market funds: For telephone requests received by
Vanguard on a business day before 10:45 a.m., Eastern time (2 p.m., Eastern
time, for Vanguard Cash Reserves Federal Money Market Fund; 12:30 p.m., Eastern
time, for Vanguard Federal Money Market Fund), the redemption proceeds generally
will leave Vanguard by the close of business the same day. For telephone
requests received by Vanguard on a business day after those cut-off times, or on
a nonbusiness day, and for all requests other than by telephone, the redemption
proceeds
29
generally will
leave Vanguard by the close of business on the next business day.
• Note on timing of
wire redemptions from all other funds: For requests received by Vanguard on a
business day before the close of regular trading on the NYSE (generally 4 p.m.,
Eastern time), the redemption proceeds generally will leave Vanguard by the
close of business on the next business day. For requests received by Vanguard on
a business day after the close of regular trading on the NYSE, or on a
nonbusiness day, the redemption proceeds generally will leave Vanguard by the
close of business on the second business day after Vanguard receives the
request.
For redemptions by
electronic
bank transfer: If the redemption
request is received by Vanguard on a business day before the close of regular
trading on the NYSE (generally 4 p.m., Eastern time), the trade date will be the
same day. If the redemption request is received on a business day after the
close of regular trading on the NYSE, or on a nonbusiness day, the trade date
will be the next business day.
If your redemption
request is not accurate and complete, it may be rejected. If we are unable to
send your redemption proceeds by wire or electronic bank transfer because the
receiving institution rejects the transfer, Vanguard will make additional
efforts to complete your transaction. If Vanguard is still unable to complete
the transaction, we may send the proceeds of the redemption to you by check,
generally payable to all registered account owners, or use your proceeds to
purchase new shares of the fund from which you sold shares for the purpose of
the wire or electronic bank transfer transaction. See Other
Rules You Should Know—Good Order.
If your redemption
request is received in good order, we typically expect that redemption proceeds
will be paid by the Fund within one business day of the trade date; however, in
certain circumstances, investors may experience a longer settlement period at
the time of the transaction. For further information, see “Potentially
disruptive redemptions” and “Emergency circumstances.”
For further
information about redemption transactions, consult our website at vanguard.com or see
Contacting
Vanguard.
Other
Redemption Rules You Should Know
Documentation
for certain accounts. Special
documentation may be required to redeem from certain types of accounts, such as
trust, corporate, nonprofit, or retirement accounts. Please call us before attempting to
redeem from these types of accounts.
30
Potentially
disruptive redemptions. Vanguard reserves the right to pay
all or part of a redemption in kind—that is, in the form of securities—if we
reasonably believe that a cash redemption would negatively affect the fund’s
operation or performance or that the shareholder may be engaged in market-timing
or frequent trading. Under these circumstances, Vanguard also reserves the right
to delay payment of the redemption proceeds for up to seven calendar days. By
calling us before you attempt to redeem a large
dollar amount, you may avoid in-kind or delayed payment of your redemption.
Please see Frequent
Trading Limitations for information about Vanguard’s
policies to limit frequent trading.
Recently
purchased shares. Although you can
redeem shares at any time, proceeds may not be made available to you until the
fund collects payment for your purchase. This may take up to seven calendar days
for shares purchased by check or by electronic bank transfer. If you have
written a check on a fund in an account with checkwriting privileges, that check
may be rejected if your fund account does not have a sufficient available
balance.
Share
certificates. Share certificates
are no longer issued for Vanguard funds. Shares currently held in certificates
cannot be redeemed, exchanged, converted, or transferred (reregistered) until
you return the certificates (unsigned) to Vanguard by registered
mail.
Address
change. If you change your
address online or by telephone, there may be up to a 14-day restriction
(starting on the business day after your address is changed) on your ability to
request check redemptions online and by telephone. You can request a redemption
in writing (using a form available online) at any time. Confirmations of address
changes are sent to both the old and new addresses.
Payment
to a different person or address. At your request,
we can make your redemption check payable, or wire your redemption proceeds, to
a different person or send it to a different address. However, this generally
requires the written consent of all registered account owners and may require
additional documentation, such as a signature guarantee or a notarized
signature. You may obtain a signature guarantee from some commercial or savings
banks, credit unions, trust companies, or member firms of a U.S. stock
exchange.
No
cancellations. Vanguard will not
accept your request to cancel any redemption request once processing has begun.
Please be careful when placing a redemption request.
31
Emergency
circumstances. Vanguard funds can
postpone payment of redemption proceeds for up to seven calendar days. In
addition, Vanguard funds can suspend redemptions and/or postpone payments of
redemption proceeds beyond seven calendar days at times when the NYSE is closed
or during emergency circumstances, as determined by the SEC.
Exchanging
Shares
An exchange occurs
when you use the proceeds from the redemption of shares of one Vanguard fund to
simultaneously purchase shares of a different Vanguard fund. You can make
exchange requests online (if you are registered for online access), by
telephone, or by mail. See Purchasing
Shares
and
Redeeming Shares.
If the NYSE is open
for regular trading (generally until 4 p.m., Eastern time, on a business day) at
the time an exchange request is received in good order, the trade date generally
will be the same day. See Other
Rules You Should Know—Good Order for additional
information on all transaction requests.
Vanguard will not
accept your request to cancel any exchange request once processing has begun.
Please be careful when placing an exchange request.
Call Vanguard
before attempting to exchange a large dollar amount. By calling us before you attempt to
exchange a large dollar amount, you may avoid delayed or rejected
transactions.
Please note that
Vanguard reserves the right, without notice, to revise or terminate the exchange
privilege, limit the amount of any exchange, or reject an exchange, at any time,
for any reason. See Frequent
Trading Limitations for additional
restrictions on exchanges.
Frequent-Trading
Limitations
Because excessive
transactions can disrupt management of a fund and increase the fund’s costs for
all shareholders, the board of trustees of each Vanguard fund places certain
limits on frequent trading in the funds. Each Vanguard fund (other than money
market funds and short-term bond funds, but including Vanguard Short-Term
Inflation-Protected Securities Index Fund) limits an investor’s purchases or
exchanges into a fund account for 30 calendar days after the investor has
redeemed or exchanged out of that fund account. ETF Shares are not subject to
these frequent-trading limits.
32
For Vanguard
Retirement Investment Program pooled plans, the limitations apply to exchanges
made online or by telephone.
These
frequent-trading limitations do
not
apply to the following:
• Certain transactions below dollar
value or other thresholds specified by Vanguard.
• In-kind transactions to a
shareholder’s donor advised fund managed by Vanguard Charitable.
• Purchases of
shares with reinvested dividend or capital gains distributions.
• Transactions
through Vanguard’s Automatic Investment Plan, Automatic Exchange Service, Direct
Deposit Service, Automatic Withdrawal Plan, Required Minimum Distribution
Service, Vanguard Small Business Online®, and certain
transactions through intermediaries relating to systematic trades and required
minimum distributions.
• Discretionary
transactions through Vanguard Personal Advisor Services®, Vanguard
Institutional Advisory Services®, Vanguard Digital
Advisor™, and discretionary (advisor-directed) transactions through certain
intermediaries.
• Redemptions of
shares to pay fund or account fees.
• Redemptions of
shares to remove excess shareholder contributions to certain types of retirement
accounts (including, but not limited to, IRAs and Vanguard Individual 401(k)
Plans).
• Transfers and
reregistrations of shares within the same fund.
• Purchases of
shares by asset transfer or direct rollover.
• Conversions of
shares from one share class to another in the same fund.
• Checkwriting
redemptions.
• Section 529
college savings plans.
• Certain approved
institutional portfolios and asset allocation programs, as well as trades made
by funds or trusts managed by Vanguard or its affiliates that invest in other
Vanguard funds. (Please note that shareholders of Vanguard’s
funds of funds are subject to the
limitations.)
For participants in
employer-sponsored defined contribution plans,* the frequent-trading limitations
do
not
apply to:
• Purchases of
shares with participant payroll or employer contributions or loan
repayments.
• Purchases of
shares with reinvested dividend or capital gains distributions.
• Distributions,
loans, and in-service withdrawals from a plan.
33
• Redemptions of
shares as part of a plan termination or at the direction of the
plan.
• Transactions
executed through the Vanguard Managed Account Program.
• Redemptions of
shares to pay fund or account fees.
• Share or asset
transfers or rollovers.
• Reregistrations
of shares.
• Conversions of
shares from one share class to another in the same fund.
• Exchange requests
submitted by written request to Vanguard. (Exchange requests submitted by fax,
if otherwise permitted,
are
subject to the limitations.)
*The following Vanguard fund
accounts are also subject to the frequent-trading limitations: SEP-IRAs, SIMPLE
IRAs, certain individual 403(b)(7) Custodial Accounts, and Vanguard Individual
401(k) Plans.
Accounts
Held by Institutions (Other Than Defined Contribution Plans)
Vanguard will
systematically monitor for frequent trading in institutional clients’ accounts.
If we detect suspicious trading activity, we will investigate and take
appropriate action, which may include applying to a client’s accounts the 30-day
policy previously described, prohibiting a client’s purchases of fund shares,
and/or revoking the client’s exchange privilege.
Accounts
Held by Intermediaries
When intermediaries
establish accounts in Vanguard funds for the benefit of their clients, we cannot
always monitor the trading activity of the individual clients. However, we
review trading activity at the intermediary (omnibus) level, and if we detect
suspicious activity, we will investigate and take appropriate action. If
necessary, Vanguard may prohibit additional purchases of fund shares by an
intermediary, including for the benefit of certain of the intermediary’s
clients. Intermediaries also may monitor their clients’ trading activities with
respect to Vanguard funds.
For those Vanguard
funds that charge purchase and/or redemption fees, intermediaries will be asked
to assess these fees on client accounts and remit these fees to the funds. The
application of purchase and redemption fees and frequent-trading limitations may
vary among intermediaries. There are no assurances that Vanguard will
successfully identify all intermediaries or that intermediaries will properly
assess purchase and redemption fees or administer frequent-trading limitations.
If you invest with Vanguard through an intermediary, please read that firm’s
materials carefully to learn of any other rules or fees that may
apply.
34
Other
Rules You Should Know
Prospectus
and Shareholder Report Mailings
When two or more
shareholders have the same last name and address, just one summary prospectus
(or prospectus) and/or shareholder report may be sent in an attempt to eliminate
the unnecessary expense of duplicate mailings. You may request individual
prospectuses and reports by contacting our Client Services Department in
writing, by telephone, or online. See Contacting
Vanguard.
Vanguard.com
Registration. If you are a
registered user of vanguard.com, you can review
your account holdings; buy, sell, or exchange shares of most Vanguard funds; and
perform most other transactions through our website. You must register for this
service online.
Electronic
delivery. Vanguard can
deliver your account statements, transaction confirmations, prospectuses,
certain tax forms, and shareholder reports electronically. If you are a
registered user of vanguard.com, you can consent
to the electronic delivery of these documents by logging on and changing your
mailing preferences under “Account Maintenance.” You can revoke your electronic
consent at any time through our website, and we will begin to send paper copies
of these documents within 30 days of receiving your revocation.
Telephone
Transactions
Automatic. When we set up
your account, we will automatically enable you to do business with us by
telephone, unless
you instruct us otherwise in writing.
Proof
of a caller’s authority. We reserve the
right to refuse a telephone request if the caller is unable to provide the
requested information or if we reasonably believe that the caller is not an
individual authorized to act on the account. Before we allow a caller to act on
an account, we may request the following information:
• Authorization to
act on the account (as the account owner or by legal documentation or other
means).
• Account
registration and address.
• Fund name and
account number, if applicable.
• Other information
relating to the caller, the account owner, or the account.
35
Good
Order
We reserve the
right to reject any transaction instructions that are not in “good order.” Good
order generally means that your instructions:
• Are provided by
the person(s) authorized in accordance with Vanguard’s policies and procedures
to access the account and request transactions.
• Include the fund
name and account number.
• Include the
amount of the transaction (stated in dollars, shares, or
percentage).
Written
instructions also must generally be provided on a Vanguard form and
include:
• Signature(s) and
date from the authorized person(s).
• Signature
guarantees or notarized signatures, if required for the type of transaction.
(Call Vanguard for specific requirements.)
• Any supporting
documentation that may be required.
Good order
requirements may vary among types of accounts and transactions. For more
information, consult our website at vanguard.com or see
Contacting
Vanguard.
Vanguard reserves
the right, without notice, to revise the requirements for good
order.
Future
Trade-Date Requests
Vanguard does not
accept requests to hold a purchase, conversion, redemption, or exchange
transaction for a future date. All such requests will receive trade dates as
previously described in Purchasing
Shares, Converting Shares, Redeeming Shares, and Exchanging
Shares. Vanguard reserves
the right to return future-dated purchase checks.
Accounts
With More Than One Owner
If an account has
more than one owner or authorized person, Vanguard generally will accept
instructions from any one owner or authorized person.
Responsibility
for Fraud
You should take
precautions to protect yourself from fraud. Keep your account-related
information private, and review any account confirmations, statements, or other
information that we provide to you as soon as you receive them. Let us know
immediately if you discover unauthorized activity or see something on your
account that you do not understand or that looks unusual.
36
Vanguard will not
be responsible for losses that result from transactions by a person who we
reasonably believe is authorized to act on your account.
Uncashed
Checks
Please cash your
distribution or redemption checks promptly. Vanguard will not pay interest on
uncashed checks. Vanguard may be required to transfer assets related to uncashed
checks to a state under the state’s abandoned property law.
Dormant
Accounts
If your account has
no activity in it for a period of time, Vanguard may be required to transfer it
to a state under the state’s abandoned property law, subject to potential
federal or state withholding taxes.
Unusual
Circumstances
If you experience
difficulty contacting Vanguard online or by telephone, you can send us your
transaction request on a Vanguard form by regular or express mail.
Investing
With Vanguard Through Other Firms
You may purchase or
sell shares of most Vanguard funds through a financial intermediary, such as a
bank, a broker, or an investment advisor. Please consult your financial
intermediary to determine which, if any, shares are available through that firm
and to learn about other rules that may apply. Your financial intermediary can
provide you with account information and any required tax forms. You may be
required to pay a commission on purchases of mutual fund shares made through a
financial intermediary.
Please see
Frequent-Trading
Limitations—Accounts Held by Intermediaries for information
about the assessment of any purchase or redemption fees and the monitoring of
frequent trading for accounts held by intermediaries.
Low
Balance Accounts
The Fund reserves the right to
convert an investor’s Institutional Plus Shares to Institutional Shares of the
Fund if the investor’s fund account balance falls below the account minimum for
any reason, including market fluctuation. In addition, the Fund reserves the
right to liquidate an investor’s Institutional Shares if the investor’s fund
account balance falls below the account minimum for that share class for any
reason, including market fluctuation. This liquidation policy applies to
nonretirement fund accounts and accounts that are held through intermediaries.
Any such conversion or liquidation will be preceded by written notice to the
investor.
37
Right
to Change Policies
In addition to the
rights expressly stated elsewhere in this prospectus, Vanguard reserves the
right, without notice, to (1) alter, add, or discontinue any conditions of
purchase (including eligibility requirements), redemption, exchange, conversion,
service, or privilege at any time and (2) alter, impose, discontinue, or waive
any purchase fee, redemption fee, account service fee, or other fee charged to a
shareholder or a group of shareholders. Changes may affect any or all investors.
These actions will be taken when, at the sole discretion of Vanguard management,
Vanguard believes they are in the best interest of a fund.
Account
Restrictions
Vanguard reserves
the right to: (1) redeem all or a portion of a fund/account to meet a legal
obligation, including tax withholding, tax lien, garnishment order, or other
obligation imposed on your account by a court or government agency; (2) redeem
shares, close an account, or suspend account privileges, features, or options in
the case of threatening conduct or activity; (3) redeem shares, close an
account, or suspend account privileges, features, or options if Vanguard
believes or suspects that not doing so could result in a suspicious, fraudulent,
or illegal transaction; (4) place restrictions on the ability to redeem any or
all shares in an account if it is required to do so by a court or government
agency; (5) place restrictions on the ability to redeem any or all shares in an
account if Vanguard believes that doing so will prevent fraud, financial
exploitation or abuse, or to protect vulnerable investors; (6) freeze any
account and/or suspend account services if Vanguard has received reasonable
notice of a dispute regarding the assets in an account, including notice of a
dispute between the registered or beneficial account owners; and (7) freeze any
account and/or suspend account services upon initial notification to Vanguard of
the death of an account owner.
Share
Classes
Vanguard reserves
the right, without notice, to change the eligibility requirements of its share
classes, including the types of clients who are eligible to purchase each share
class.
Shareholder
Rights
The Fund’s Agreement and
Declaration of Trust, as amended, requires a shareholder bringing a derivative
action on behalf of Vanguard Institutional Index Funds (the Trust) that is
subject to a pre-suit demand to collectively hold at least 10% of the
outstanding shares of the Trust or at least 10% of the outstanding shares of the
series or class to which the demand relates and to undertake to reimburse the
Trust for the expense of any counsel or advisors used when considering the
merits of the demand in the event that the board of trustees
38
determines not to
bring such action. In each case, these requirements do not apply to claims
arising under the federal securities laws to the extent that any such federal
securities laws, rules, or regulations do not permit such
application.
Fund
and Account Updates
Confirmation
Statements
We will send (or
provide through our website, whichever you prefer) a confirmation of your trade
date and the amount of your transaction when you buy, sell, exchange, or convert
shares. However, we will not send confirmations reflecting only checkwriting
redemptions or the reinvestment of dividend or capital gains distributions. For
any month in which you had a checkwriting redemption a Checkwriting Activity
Statement will be sent to you itemizing the checkwriting redemptions for that
month. Promptly review each confirmation statement that we provide to you. It is
important that you contact Vanguard immediately with any questions you may have
about any transaction reflected on a confirmation statement, or Vanguard will
consider the transaction properly processed.
Portfolio
Summaries
We will send (or
provide through our website, whichever you prefer) quarterly portfolio summaries
to help you keep track of your accounts throughout the year. Each summary shows
the market value of your account at the close of the statement period, as well
as all distributions, purchases, redemptions, exchanges, transfers, and
conversions for the current calendar quarter (or month). Promptly review each
summary that we provide to you. It is important that you contact Vanguard
immediately with any questions you may have about any transaction reflected on
the summary, or Vanguard will consider the transaction properly
processed.
Tax
Information Statements
For most accounts,
Vanguard (or your intermediary) is required to provide annual tax forms to
assist you in preparing your income tax returns. These forms are generally
available for each calendar year early in the following year. Registered users
of vanguard.com can also view
certain forms through our website. Vanguard (or your intermediary) may also
provide you with additional tax-related documentation. For more information,
consult our website at vanguard.com or see
Contacting
Vanguard.
39
Annual
and Semiannual Reports
We will send (or
provide through our website, whichever you prefer) reports about Vanguard
Institutional Index Fund twice a year, in February and August. These reports
include overviews of the financial markets and provide the following specific
Fund information:
• Performance
assessments and comparisons with industry benchmarks.
• Financial
statements with listings of Fund holdings.
Portfolio
Holdings
Please consult the Fund’s
Statement of
Additional Information
or our website for a description of the policies and procedures that govern
disclosure of the Fund’s portfolio holdings.
Employer-Sponsored
Plans
Your plan
administrator or your employee benefits office can provide you with detailed
information on how to participate in your plan and how to elect the Fund as an
investment option.
• If you have any
questions about the Fund or Vanguard, including those about the Fund’s
investment objective, strategies, or risks, contact Vanguard Participant
Services toll-free at 800-523-1188 or visit our website at vanguard.com.
• If you have
questions about your account, contact your plan administrator or the
organization that provides recordkeeping services for your plan.
• Be sure to
carefully read each topic that pertains to your transactions with
Vanguard.
Vanguard reserves
the right to change its policies without notice to shareholders.
Transactions
Processing times
for your transaction requests may differ among recordkeepers or among
transaction and funding types. Your plan’s recordkeeper (which may also be
Vanguard) will determine the necessary processing time frames for your
transaction requests prior to submission to the Fund. Consult your recordkeeper
or plan administrator for more information.
If Vanguard is
serving as your plan recordkeeper and if your transaction involves one or more
investments with an early cut-off time for processing or another trading
restriction, your entire transaction will be subject to the restriction when the
trade date for your transaction is determined.
40
Contacting
Vanguard
|
Web |
|
|
Vanguard.com |
For
the most complete source of Vanguard news
For
fund, account, and service information
For
most account transactions
For
literature requests
24
hours a day, 7 days a week |
|
Phone | |
|
Investor
Information 800-662-7447
(Text
telephone for people with
hearing
impairment at 800-749-7273) |
For
fund and service information
For
literature requests |
|
Client
Services 800-662-2739
(Text
telephone for people with
hearing
impairment at 800-749-7273) |
For
account information
For
most account transactions |
|
Participant
Services 800-523-1188
(Text
telephone for people with
hearing
impairment at 800-749-7273) |
For
information and services for participants in
employer-sponsored
plans |
|
Institutional
Division
888-809-8102 |
For
information and services for large institutional
investors |
|
Financial
Advisor and Intermediary
Sales
Support 800-997-2798 |
For
information and services for financial intermediaries
including
financial advisors, broker-dealers, trust
institutions,
and insurance companies |
|
Financial
Advisory and Intermediary
Trading
Support 800-669-0498 |
For
account information and trading support for
financial
intermediaries including financial advisors,
broker-dealers,
trust institutions, and insurance
companies |
41
Additional
Information
The Fund’s Bylaws require, unless
the Trust otherwise consents in writing, that the U.S. Federal District Courts
be the sole and exclusive forum for the resolution of complaints under the
Securities Act of 1933. This provision may limit a shareholder’s ability to
bring a claim in a different forum and may result in increased shareholder costs
in pursuing such a claim.
|
Vanguard
Fund |
Inception
Date |
Newspaper
Abbreviation |
Vanguard
Fund
Number |
CUSIP
Number |
|
Vanguard
Institutional Index
Fund |
| |||
|
Vanguard
Institutional Shares |
7/31/1990 |
InstIdx |
94 |
922040100 |
|
Vanguard
Institutional Plus Shares |
7/7/1997 |
InstPlus |
854 |
922040209 |
CGS identifiers have been provided by
CUSIP Global Services, managed on behalf of the American Bankers Association by
Standard & Poor’s Financial Services, LLC, and are not for use or
dissemination in a manner that would serve as a substitute for any CUSIP
service. The CUSIP Database, © 2024 American Bankers Association. “CUSIP” is a
registered trademark of the American Bankers Association.
42
CFA® is a registered
trademark owned by CFA Institute.
The S&P 500 Index
is a product of S&P Dow Jones Indices LLC, a division of S&P Global, or
its affiliates (“SPDJI”) and has been licensed for use by Vanguard. Standard
& Poor’s® and
S&P®
are
registered trademarks of Standard & Poor’s Financial Services LLC, a
division of S&P Global (“S&P”) and Dow Jones® is a registered
trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). The trademarks have
been licensed to SPDJI and have been sublicensed for use for certain purposes by
Vanguard. Vanguard Institutional Index Fund is not sponsored, endorsed, sold or
promoted by SPDJI, Dow Jones, S&P, or any of their respective affiliates
(collectively, “S&P Dow Jones Indices”). S&P Dow Jones Indices makes no
representation or warranty, express or implied, to the owners of Vanguard
Institutional Index Fund or any member of the public regarding the advisability
of investing in securities generally or in Vanguard Institutional Index Fund
particularly or the ability of the S&P 500 Index to track general market
performance. S&P Dow Jones Indices’ only relationship to Vanguard with
respect to the S&P 500 Index is the licensing of the Index and certain
trademarks, service marks and/or trade names of S&P Dow Jones Indices and/or
its licensors. The S&P 500 Index is determined, composed and calculated by
S&P Dow Jones Indices without regard to Vanguard or Vanguard Institutional
Index Fund. S&P Dow Jones Indices has no obligation to take the needs of
Vanguard or the owners of Vanguard Institutional Index Fund into consideration
in determining, composing or calculating the S&P 500 Index. S&P Dow
Jones Indices is not responsible for and has not participated in the
determination of the prices, and amount of Vanguard Institutional Index Fund or
the timing of the issuance or sale of Vanguard Institutional Index Fund or in
the determination or calculation of the equation by which Vanguard Institutional
Index Fund is to be converted into cash, surrendered or redeemed, as the case
may be. S&P Dow Jones Indices has no obligation or liability in connection
with the administration, marketing or trading of Vanguard Institutional Index
Fund. There is no assurance that investment products based on the S&P 500
Index will accurately track index performance or provide positive investment
returns. S&P Dow Jones Indices LLC is not an investment advisor. Inclusion
of a security within an index is not a recommendation by S&P Dow Jones
Indices to buy, sell, or hold such security, nor is it considered to be
investment advice.
S&P DOW JONES INDICES DOES NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE INDEX OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY VANGUARD, OWNERS OF VANGUARD INSTITUTIONAL INDEX FUND, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDEX OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND VANGUARD, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.
S&P DOW JONES INDICES DOES NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE INDEX OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY VANGUARD, OWNERS OF VANGUARD INSTITUTIONAL INDEX FUND, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDEX OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND VANGUARD, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.
43
Glossary
of Investment Terms
Capital
Gains Distributions. Payments to mutual
fund shareholders of gains realized on securities that a fund has sold at a
profit, minus any realized losses.
Common
Stock.
A security representing ownership rights in a corporation.
Dividend
Distributions.
Payments to mutual fund shareholders of income from interest or dividends
generated by a fund’s investments.
Dow
Jones U.S. Total Stock Market Float Adjusted Index. An index that
represents the entire U.S. stock market and tracks more than 5,000 stocks,
excluding shares of securities not available for public
trading.
Expense
Ratio. A fund’s total
annual operating expenses expressed as a percentage of the fund’s average net
assets. The expense ratio includes management and administrative expenses, but
it does not include the transaction costs of buying and selling portfolio
securities.
Inception
Date. The date on
which the assets of a fund (or one of its share classes) are first invested in
accordance with the fund’s investment objective. For funds with a subscription
period, the inception date is the day after that period ends. Investment
performance is generally measured from the inception date.
Indexing. A low-cost
investment strategy in which a mutual fund attempts to track—rather than
outperform—a specified market benchmark, or “index.”
Joint Committed
Credit Facility. The
Fund participates, along with other funds managed by Vanguard, in a committed
credit facility provided by a syndicate of lenders pursuant to a credit
agreement that may be renewed annually; each Vanguard fund is individually
liable for its borrowings, if any, under the credit facility. The amount and
terms of the committed credit facility are subject to approval by the Fund’s
board of trustees and renegotiation with the lender syndicate on an annual
basis.
Median Market
Capitalization. An
indicator of the size of companies in which a fund invests; the midpoint of
market capitalization (market price x shares outstanding) of a fund’s stocks,
weighted by the proportion of the fund’s assets invested in each stock. Stocks
representing half of the fund’s assets have market capitalizations above the
median, and the rest are below it.
Mutual
Fund.
An investment company that pools the money of many people and invests it in a
variety of securities in an effort to achieve a specific objective over
time.
44
New
York Stock Exchange (NYSE). A stock exchange
based in New York City that is open for regular trading on business days, Monday
through Friday, from 9:30 a.m. to 4 p.m., Eastern time.
Return of
Capital. A return of
capital occurs when a fund’s distributions exceed its earnings in a fiscal year.
A return of capital is a return of all or part of your original investment or
amounts paid in excess of your original investment in a fund. In general, a
return of capital reduces your cost basis in a fund’s shares and is not taxable
to you until your cost basis has been reduced to zero.
Securities. Stocks, bonds,
money market instruments, and other investments.
Total
Return. A percentage
change, over a specified time period, in a mutual fund’s net asset value,
assuming the reinvestment of all distributions of dividends and capital
gains.
Volatility. The fluctuations in value of a
mutual fund or other security. The greater a fund’s volatility, the wider the
fluctuations in its returns.
Yield. Income (interest
or dividends) earned by an investment, expressed as a percentage of the
investment’s price.
Connect
with Vanguard®
˃
vanguard.com
For
More Information
If you would like
more information about Vanguard Institutional Index Fund, the following
documents are available free upon request:
Annual/Semiannual
Reports to Shareholders
Additional information about the
Fund’s investments is available in the Fund’s annual and semiannual reports to
shareholders. In the annual report, you will find a discussion of the market
conditions and investment strategies that significantly affected the Fund’s
performance during its last fiscal year.
Statement
of Additional Information (SAI)
The SAI provides more
detailed information about the Fund and is incorporated by reference into (and
thus legally a part of) this prospectus.
To receive a free
copy of the latest annual or semiannual report or the SAI, or to request
additional information about the Fund or other Vanguard funds, please visit
vanguard.com
or
contact us as follows:
If
you are an individual investor:
Telephone: 800-662-7447; Text telephone for people with hearing impairment: 800-749-7273
Telephone: 800-662-7447; Text telephone for people with hearing impairment: 800-749-7273
If
you are a client of Vanguard’s Institutional Division:
Telephone: 888-809-8102;
Text telephone for people with hearing impairment:
800-749-7273
Telephone: 888-809-8102;
Text telephone for people with hearing impairment:
800-749-7273
If you are a current
Vanguard shareholder and would like information about your account, account
transactions, and/or account statements, please call:
Client Services
Department
Telephone: 800-662-2739; Text telephone for people with hearing impairment: 800-749-7273
Telephone: 800-662-2739; Text telephone for people with hearing impairment: 800-749-7273
Information
Provided by the SEC
Reports and other
information about the Fund are available in the EDGAR database on the SEC’s
website at sec.gov, or you can receive copies of this information, for a fee, by
electronic request at the following email address:
[email protected].
Fund’s Investment Company Act file
number: 811-06093
© 2024 The
Vanguard Group, Inc. All rights reserved.
Vanguard
Marketing Corporation, Distributor.
I
854 042024