<PAGE> 1
VANGUARD SPECIALIZED PORTFOLIOS, INC.
PROSPECTUS SUPPLEMENT
FEBRUARY 2, 1996
The Board of Directors of Vanguard Specialized Portfolios, Inc. (the
"Fund") has approved a revised investment advisory agreement with Wellington
Management Company ("WMC"), the investment adviser for the Fund's Energy,
Health Care and Utilities Income Portfolios (the "Portfolios"). The new
agreement involves a reduction in the annual rate of advisory fees to be paid
to WMC.
Under the terms of the new agreement, the Portfolios will pay WMC a basic
advisory fee at the end of each fiscal quarter, based on the Portfolios'
aggregate average month-end net assets during the quarter. The quarterly rate
is applied according to the following annual fee schedule:
<TABLE>
<CAPTION>
NET ASSETS ANNUAL BASIC FEE RATE
---------- ---------------------
<S> <C>
First $500 million 0.150%
Next $500 million 0.125
Next $1 billion 0.100
Next $1 billion 0.075
Over $3 billion 0.050
</TABLE>
Once the advisory fee to WMC is calculated for the three Portfolios under
the schedule, the total fee is reduced in order that the advisory fee paid by
the Utilities Income Portfolio does not exceed 0.08%.
This revised investment advisory agreement replaces the Fund's original
agreement with the adviser dated May 31, 1993, and will go into effect on or
about May 1, 1996. Until the effective date, the adviser has agreed to waive
its advisory fees to the extent necessary to abide by the new fee schedule.
AFSP
