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VANGUARD ANNOUNCES TWO NEW INDEX FUNDS NOW EFFECTIVE

 VANGUARD ANNOUNCES TWO NEW INDEX FUNDS NOW EFFECTIVE
 VALLEY FORGE, Pa., Nov. 4 /PRNewswire/ -- The Vanguard Group of


Investment Companies has announced that its two new index mutual funds -- the Value Portfolio and the Growth Portfolio of Vanguard Index Trust -- are now effective.
 The new portfolios will seek to track market indexes that were constructed earlier this year by Standard & Poor's Corporation in conjunction with BARRA, a leading investment technology and consulting company, using a method developed by Nobel Prize winner William F. Sharpe of Stanford University. Under that methodology, the S&P 500 has been divided into two equal segments: a Growth Index containing those companies with the highest ratios of market price to book value, and a Value Index containing those with the lowest price-to-book ratios.
 "While, over time, the returns on the two indexes have been similar, the yield of the Value Index has been significantly higher than that of the Growth Index," said Vanguard Chairman John C. Bogle. "Given their differing yields and other fundamental attributes, the two indexes would be appropriate considerations for two different investors. We believe that the Growth Portfolio should be more suitable for investors in the 'accumulation' phase of their investment program; the Value Portfolio should be more suitable for investors in the 'distribution' phase." Both portfolios offer the broad diversification advantage inherent in index funds, and therefore represent attractive alternatives to actively managed value or growth oriented funds that may hold smaller and more concentrated portfolios, thereby subjecting investors to greater risk.
 The expense ratios of the two new portfolios are expected to be 0.20 percent, as compared to 1.30 percent for the average actively managed equity fund (source: Lipper Analytical Services). The portfolios are also expected to have low turnover, leading to low transaction costs and minimal realized capital gains, thus significantly lowering the immediate tax burden on fund investors. (Low portfolio turnover also tends to provide a measure of tax-deferred capital growth over time).
 As Portfolios of Vanguard Index Trust, the new Funds will complement the Trust's three existing Portfolios (500, Extended Market, and Total Stock Market). Investment advisory services will be provided by the Vanguard Core Management Group, which manages eight other Vanguard index funds and several indexed separate accounts, with aggregate assets exceeding $10 billion.
 "Indexing represents a major commitment for Vanguard," said Bogle. "And we are confident that indexing will become a major element in the equity fund marketplace, particularly given indexing's four strengths: very low costs, relative performance predictability, consistency of performance, and performance superiority over time."
 The Vanguard Group of Investment Companies, headquartered in Valley Forge, is the nation's largest pure no-load mutual fund organization, with total net assets of more than $93 billion owned by some four million investor accounts. The two new index offerings will bring to 70 the number of investment portfolios offered by The Vanguard Group.
 -0- 11/4/92
 /CONTACT: Brian Mattes of Vanguard, 215-669-6219/ CO: The Vanguard Group of Investment Companies ST: Pennsylvania IN: FIN SU: PDT


CC -- PH019 -- 2512 11/04/92 13:08 EST
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Publication:PR Newswire
Date:Nov 4, 1992
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