FOR IMMEDIATE RELEASE
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                                                                        CONTACT:

                                                                  JOHN S. WOERTH
                                                                    610.669.6224

                                                                   REBECCA COHEN
                                                                    610.503.2273

                                                                       AMY CHAIN
                                                                    610-669-2149





              VANGUARD PLANS TO ADOPT LAUDUS ROSENBERG EQUITY FUND

     VALLEY FORGE,  PA, August 22, 2007 - The Vanguard  Group today  announced a
proposal with Charles  Schwab  Investment  Management  to reorganize  the Laudus
Rosenberg U.S.  Large/Mid  Capitalization  Long/Short Equity Fund (RMNIX) into a
new  Vanguard(R)  fund.  The $21  million  open-end  fund,  which is a member of
Schwab's  Laudus family of funds,  is  sub-advised  by AXA Rosenberg  Investment
Management LLC.

     Shareholders of the Laudus Rosenberg Fund are expected to be mailed a proxy
statement detailing the terms of the proposed reorganization in early October. A
special  shareholder  meeting is scheduled for  mid-November.  If approved,  the
tax-free reorganization is expected to be completed by year-end 2007.

     In  conjunction  with the  reorganization  proposal,  Vanguard  has filed a
registration  statement  with the U.S.  Securities  and Exchange  Commission for
Vanguard  Market  Neutral  Fund.  The new  no-load  fund  will  seek to  provide
long-term capital  appreciation  while limiting exposure to general stock market
risk by using a long/short market-neutral strategy.

     AXA  Rosenberg  would  continue  to serve as an  investment  advisor of the
reorganized fund. Vanguard Quantitative Equity Group would also manage a portion
of the fund.

     "We  view  the  adoption  of the  fund  as an  opportunity  to  expand  our
relationship with a respected advisor and bring a new investment strategy to our
institutional  clients  through a relatively  low-cost fund with an  established
track record," said Vanguard CEO Jack Brennan.

     In June,  Vanguard  added AXA  Rosenberg to the  advisory  teams of the $12
billion  Vanguard(R)  Explorer(TM) Fund and the $1.4 billion Vanguard U.S. Value
Fund.  AXA Rosenberg  manages 12% of the Explorer Fund and 50% of the U.S. Value
Fund.

     Vanguard  expects  the new  Market  Neutral  Fund to  appeal  primarily  to
institutional investors,  particularly endowments and foundations. The fund will
require  minimum  initial  investments  of $250,000 for  Investor  Shares and $5
million for Institutional Shares.


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VANGUARD  TO ADOPT FUND                                              PAGE 2 OF 3


     "We have considerably  expanded our product offerings and advisory services
to  institutional  clients over the past several years," said Mr.  Brennan,  who
noted that  Vanguard's  institutional  offerings now include  structured  equity
funds and target retirement commingled trusts.  Vanguard also plans to introduce
an extended-duration U.S. Treasury index fund next month.

     Vanguard Market Neutral Fund will offer two share classes,  Investor Shares
and Institutional  Shares,  which will feature estimated expense ratios of 0.75%
and 0.60%, respectively.  The Laudus Rosenberg fund currently has expense ratios
of  1.54%  and  1.24%  (after  fee  waivers)  for the  respective  Investor  and
Institutional  Shares,  including a 12b-1 fee of 0.25% on  Investor  shares that
will not be charged by the new fund. The average  expense ratio for funds in the
long/short category is 1.97%, according to Morningstar, Inc. (Note: All of these
expense  figures  are net of  dividend  expenses  associated  with the  shorting
strategy of  long/short  funds,  which can add 100 to 150 basis  points to total
annual operating expenses.)

     The new fund will  assess a 1% fee on shares  redeemed  within  one year of
purchase,  which is half the current 2% fee on shares redeemed within 30 days of
purchase.

     AXA Rosenberg Group LLC, an AXA Investment Managers Company, was founded in
1985 by Drs. Barr  Rosenberg and Kenneth Reid. As of July 31, 2007 AXA Rosenberg
managed $137 billion in individual  country,  regional and global strategies for
pension funds, foundations and government entities in the Americas, Europe, Asia
and  Japan.  Headquartered  in  Orinda,  California,  the  firm has  offices  in
Greenwich, Connecticut, Toronto, London, Tokyo, Hong Kong, Singapore and Sydney.

     Vanguard   Quantitative   Equity  Group  oversees  $25  billion  in  active
quantitative equity fund assets. The group serves as the sole investment advisor
to six actively manage funds--the Strategic Equity Fund, the Strategic Small-Cap
Equity Fund, and four structured equity funds--and manages portions of six other
actively managed funds.

     The long/short market-neutral strategy to be employed by the new fund is an
absolute-return investment approach that seeks performance exceeding the returns
of 3-month U.S. Treasury bills.  Each advisor will  independently buy securities
it  considers to be  undervalued  and sell short an  approximately  equal dollar
amount of  securities  deemed  overvalued.  The overall  return of the fund will
depend on the net performance of its long and short  positions.  The fund's goal
is to produce  long-term  capital  appreciation that reflects the quality of the
advisors' security  selections,  with limited  correlation to the returns of the
U.S. stock market as a whole.

     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  manages more than $1.2
trillion  in U.S.  mutual  fund  assets,  including  more than $325  billion  in
employer-sponsored retirement plans. Vanguard offers more than 140 funds to U.S.
investors and more than 40 additional funds in foreign markets.


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VANGUARD TO ADOPT FUND                                               PAGE 3 OF 3


     A registration  statement relating to Vanguard Market Neutral Fund has been
     filed with the  Securities  and Exchange  Commission but has not yet become
     effective.  These  securities  may not be sold  nor  may  offers  to buy be
     accepted prior to the time the registration  statement  becomes  effective.
     The  Vanguard  Market  Neutral  Fund is being  formed  through the proposed
     reorganization of an existing fund known as Laudus Rosenberg U.S. Large/Mid
     Capitalization Long/Short Equity Fund. Shareholders of the Laudus Rosenberg
     Fund may or may not approve the reorganization proposal. If the proposal is
     not approved by shareholders,  the registration  statement previously filed
     for Vanguard Market Neutral Fund will be withdrawn.

     This   communication   shall  not  constitute  an  offer  to  sell  or  the
     solicitation  of an offer to buy,  nor  shall  there be any sale of,  these
     securities in any state in which such offer, solicitation, or sale would be
     unlawful prior to registration or  qualification  under the securities laws
     of any such state.

     A   combined   proxy   statement/prospectus   relating   to  the   proposed
     reorganization of Laudus Rosenberg U.S. Large/Mid Capitalization Long/Short
     Equity Fund has been filed with the U.S. Securities and Exchange Commission
     but has not yet  become  effective.  Both the  registration  statement  for
     Vanguard  Market Neutral Fund and the combined  proxy  statement/prospectus
     (SEC File No. 811-22114)  contain  important  information for investors and
     may be obtained without charge from the SEC's web site (www.sec.gov).

                                # # #                                     VR-736


All asset figures are as of July 31, 2007, unless otherwise noted.

For more information,  visit www.vanguard.com,  or call 800-662-7447 to obtain a
fund prospectus.  Investment  objectives,  risks, charges,  expenses,  and other
important  information  about a fund are contained in the  prospectus;  read and
consider it carefully before investing.

Copies of the  Vanguard  Market  Neutral  Fund and  Vanguard  Extended  Duration
Treasury Index Fund prospectuses, as well as prospectuses for all other Vanguard
funds can be obtained by calling  800-662-7447.  Investment  objectives,  risks,
charges, expenses, and other important information about a fund are contained in
these documents; read and consider them carefully before investing.  Please note
that a preliminary prospectus is subject to change.

Registration  statements  relating  to the  Vanguard  Market  Neutral  Fund  and
Vanguard  Extended  Duration  Treasury  Index  Fund  have  been  filed  with the
Securities and Exchange Commission but have not yet become effective.

Investments  are  subject  to risk.  Investments  in bond  funds are  subject to
interest  rate,  credit,  and  inflation  risk.  Prices of mid-cap  stocks often
fluctuate more than those of large-company stocks.

A short sale is the sale of a security that the seller does not own,  usually to
take  advantage of an expected  drop in the price.  The short  seller  typically
borrows the security from a broker-dealer and delivers it to the purchaser.  The
short seller later  closes out the short  position by returning  the security to
the lender, usually by purchasing it on the open market. The Fund's use of short
sales  in  combination  with  its  long  positions  in  an  attempt  to  improve
performance  or to reduce  overall  portfolio risk may not be successful and may
result in greater  losses or lower  positive  returns than if the Fund held only
long positions. The Fund's loss on a short sale is potentially unlimited because



there is no upward limit on the price a borrowed  security  could attain.  Short
selling also involves high transaction costs.

Vanguard and Explorer are trademarks of The Vanguard Group, Inc.

All other marks are the exclusive property of their respective owners.

Vanguard Marketing Corporation, Distributor.