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News Tips From The Vanguard Group; Vanguard State Tax-Exempt Funds to Change Investment Policy and Name.

VALLEY FORGE, Pa. -- The Boards of Trustees of six Vanguard(R) funds have decided to remove the requirement that the funds hold a minimum percentage of their assets in municipal bonds that are insured. The funds affected by this change are:
 -- Vanguard(R) California Insured Long-Term Tax-Exempt Fund
 -- Vanguard(R) California Insured Intermediate-Term Tax-Exempt Fund
 -- Vanguard(R) Florida Insured Long-Term Tax-Exempt Fund
 -- Vanguard(R) New Jersey Insured Long-Term Tax-Exempt Fund
 -- Vanguard(R) New York Insured Long-Term Tax-Exempt Fund
 -- Vanguard(R) Pennsylvania Insured Long-Term Tax-Exempt Fund


The change will take effect in late March 2002, and Vanguard will notify shareholders in the funds' upcoming annual reports. There will be no modification to the funds' objectives of providing income exempt from both federal and state personal income taxes. To reflect the policy change, the six funds will be renamed in March 2002, removing the word "Insured" from the funds' names. Vanguard made similar changes to its Ohio Long-Term Tax-Exempt Fund in 2001.

The decision to adjust the portfolio requirements was based on several factors, including the decreasing issuance of new municipal bond issues carrying insurance and on the rising cost of this insurance. Vanguard expects that removing the requirement will have a favorable impact on the funds by broadening the universe of securities available for investment, thereby increasing the funds' diversification. Moreover, the change may increase the funds' income yields over time because uninsured bonds historically offer higher yields than insured bonds.

As the fund managers gradually buy more uninsured bonds, there will be a modest increase in the funds' credit risk. However, the funds will continue to adhere to Vanguard's high standards of credit quality, investing no less than 75% of assets in high-grade municipal bonds, and a maximum of 5% of assets in lower-rated or unrated securities.

Vanguard Enhances Website for Employer-Sponsored Retirement Plan Participants.

Vanguard has enhanced its website for participants in employer-sponsored retirement plans administered by Vanguard (http://retirementplans.vanguard.com/). The new features simplify the overall participant retirement planning experience by providing integrated education, advice, and customized plan information throughout the site. The straightforward navigation provides easy access to interactive investment analytical tools to help participants select appropriate asset allocations for stocks, bonds, and money market investments. Financial Engines(R), an independent online investment advisory service, is also available to participants whose plan offers the service. Additionally, the site makes it easier for participants to consolidate their entire financial relationship with Vanguard, including employer, Vanguard IRA, and brokerage accounts, into a single view. Participants who have a transaction history of at least one year or more are also provided with personalized rates of return on their retirement plan investments.

Vanguard Files Supplement to Money Market Funds' Statements of Additional Information.

Vanguard will today file a supplement to the Statement of Additional Information for the Vanguard(R) Prime Money Market Fund and Vanguard(R) Tax-Exempt Money Market Fund, which reflects that both funds no longer carry the private insurance that partially protected the funds against default by the securities they hold. The cost of default insurance on money market securities has increased considerably over the past year. Vanguard believes that these costs -- which add to the overall expenses paid by the funds' shareholders -- are not justified by the limited benefit of the insurance. The Prime Money Market and Tax-Exempt Money Market funds continue to limit overall risk by holding the highest-rated securities, conducting careful credit analysis, and by remaining broadly diversified.

The Vanguard Group, headquartered in Valley Forge, Pennsylvania, is the nation's second largest mutual fund firm and a leading provider of company-sponsored retirement plan services. Vanguard serves more than 15 million shareholder accounts and manages some $580 billion in U.S. mutual fund assets, including more than $170 billion in employer-sponsored retirement plans. Vanguard offers 106 funds to U.S. investors and 33 additional funds in international markets.

Vanguard funds are offered by prospectus only. Prospectuses contain more complete information on risks, distribution charges, and other expenses and should be read carefully before you invest. Prospectuses can be obtained directly from The Vanguard Group, 1-800-662-7447.

Vanguard Marketing Corporation, Distributor.

CONTACT: Brian S. Mattes, Principal, +1-610-669-6219, or John S. Woerth, Principal, +1-610-669-6224; or John Demming, Manager, +1-610-669-5457; or Kate Nelson, Manager, +1-610-669-0530; or Rebecca Cohen, PR Associate, +1-610-669-5188, all of Vanguard.

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Contact: Brian S. Mattes, Principal, +1-610-669-6219, or John S. Woerth, Principal, +1-610-669-6224; or John Demming, Manager, +1-610-669-5457; or Kate Nelson, Manager, +1-610-669-0530; or Rebecca Cohen, PR Associate, +1-610-669-5188, all of Vanguard

Website: http://retirementplans.vanguard.com/

Website: http://www.vanguard.com/
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Date:Jan 18, 2002
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