VANGUARD TAX-MANAGED FUND, INC.
PROSPECTUS SUPPLEMENT
JANUARY 29, 1998
THE SHARE PRICE OF EACH PORTFOLIO
Each Portfolio's share price--or net asset value per share (NAV)--is calculated
by dividing the total assets of the Portfolio, less all liabilities, by the
total number of shares outstanding. The NAV is determined as of the close of the
New York Stock Exchange (generally 4 p.m. Eastern time) on each day the exchange
is open for trading.
Portfolio securities for which market quotations are readily
available-including securities listed on national securities exchanges and those
quoted on the Nasdaq Stock Market--are valued at the last quoted sales price on
the day the valuation is made. If such securities were not traded on the
valuation date, they are valued at the mean of the latest bid and ask prices.
Price information on exchange-listed securities is taken from the exchange where
the security is primarily traded. Foreign securities are valued at the latest
quoted sales price available when the NAV is determined.
Bond and other securities may be valued at prices provided by a pricing
service when this information is believed to reflect their fair market value.
These prices may be determined without regard to bid or last sale prices of each
security, but will take into account institutional-size transactions in similar
groups of securities as well as any security-specific developments.
Short-term instruments (those with remaining maturities of 60 days or less)
may be valued at amortized cost, which approximates market value. Amortized cost
is the original cost plus any amortized discount or minus any amortized premium.
Other assets and securities for which no quotations are readily available
or that are restricted as to sale or resale are valued by any methods that the
Board of Directors deems in good faith to reflect fair value.
PS87
