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FUND TRUSTEES ANNOUNCE REDUCTION IN ESTIMATED MARKET VALUE PER SHARE OF VANGUARD REAL ESTATE FUND I BY 7 PERCENT AND FUND II BY 3 PERCENT

FUND TRUSTEES ANNOUNCE REDUCTION IN ESTIMATED MARKET VALUE PER SHARE OF
    VANGUARD REAL ESTATE FUND I BY 7 PERCENT AND FUND II BY 3 PERCENT
    VALLEY FORGE, Pa., Nov. 4 /PRNewswire/ -- After an interim review of each fund's investments performed by the adviser (Aldrich, Eastman & Waltch, Inc.), the board of trustees of Vanguard Real Estate Fund I (AMEX: VRO) and Vanguard Real Estate Fund II (AMEX: VRT) said today they expect appraised values will be reduced from the levels reported at year-end 1990.
    According to the adviser's estimates, the present market value per share of Fund I's investments is approximately 7 percent lower than the $9.39 reported at year-end in Fund I's 1990 Annual Report.  For Fund II, the current estimated market value per share of the fund's investments is approximately 3 percent lower than the $9.61 reported at year-end in Fund II's 1990 Annual Report.  The results of each fund's annual investment appraisals -- which are performed by independent appraisers -- will be completed by December 1991; nonetheless, the trustees agreed that providing this information, at this time, was in the best interest of current and prospective shareholders.
    Reflecting these changes, Vanguard Real Estate Fund I increased its allowance for possible losses by $4.9 million or $0.43 per share, based upon the adviser's estimates of market value and the fund's accounting policies.  Including this provision for possible losses, Fund I incurred a net loss in the amount of $0.29 per share for the quarter ended Sept. 30, 1991.  Neither the fund's cash flow from operations nor its taxable income is affected by the provision for possible losses. Accordingly, as previously reported, the fund has declared and will pay a cash dividend in the amount of $0.15 per share for the quarter ended Sept. 30, 1991.
    For Vanguard Real Estate Fund II, net income for the quarter ended Sept. 30, 1991, was $0.12 per share.  Fund II has declared and will pay a $0.15 cash dividend for the quarter ended Sept. 30, 1991.
    "These reductions in estimated market value reflect the continued weakening of the nation's commercial real estate markets over the past year," said John C. Bogle, chairman of the funds.  "We expect further  tough sledding' ahead in the real estate market, perhaps for several years.  But we recognize real estate as a cyclical business, and we would hope for recovery prior to the fund's liquidation phase, expected to occur between 1994 and 1999 for Fund I, and 1995 and 2000 for Fund II."
                VANGUARD REAL ESTATE FUND I
    Periods Ended      Net Income (Loss)      Dividends
    Sept. 30, 1991   (000s)      Per Share    Per Share
    Quarter         $(3,297)       $(.29)      $0.15
    Nine Months        577           .05        0.45
                VANGUARD REAL ESTATE FUND II
    Periods Ended      Net Income (Loss)      Dividends
    Sept. 30, 1991   (000s)      Per Share    Per Share
    Quarter           $826         $.12        $0.15
    Nine Months      2,534          .38         0.45
    -0-                          11/4/91
    /CONTACT:  Jeffrey S. Molitor of The Vanguard Group, 215-669-6303/
    (VRO VRT) CO:  Vanguard Real Estate Fund I; Vanguard Real Estate Fund II ST:  Pennsylvania IN:  FIN SU:  ERN MK -- PH017 -- 0830 11/04/91 15:29 EST
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Publication:PR Newswire
Date:Nov 4, 1991
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