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VANGUARD
U.S. GROWTH
PORTFOLIO
Fund Profile
November 1, 1996
The U.S. Growth Portfolio is part of
Vanguard World Fund,
which also includes
the International Growth Portfolio.
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1 OBJECTIVE
Vanguard U.S. Growth Portfolio seeks to provide long-term capital growth. The
Portfolio may not meet this objective.
2 INVESTMENT STRATEGIES
The Portfolio invests primarily in common stocks of high-quality, seasoned U.S.
companies, emphasizing companies with strong growth records, leading market
positions, and low sensitivity to changing economic conditions. In addition to
investing in common stocks, the Portfolio may also invest, to a limited degree,
in short-term fixed-income securities, and futures and options contracts.
3 RISKS
The Portfolio's total return will fluctuate, so an investor could lose money
over short or extended periods. More specifically, investors in the Portfolio
are exposed to . . .
o A HIGH degree of STOCK MARKET RISK (the possibility that stock prices
in general will decline over short or extended periods).
Historical returns for the U.S. stock market (as measured by the Standard &
Poor's 500 Composite Stock Price Index) show some of this market volatility.
From 1926 to 1995, the S&P 500 Index provided an annualized total return of
10.5%, but provided a negative return -- averaging -12.3% -- in 20 of these
70 years. Annual returns for the period ranged from a low of -43.3% to a high
of 53.9%.
Because it emphasizes growth stocks, the Portfolio is likely to perform
differently than broader market benchmarks like the S&P 500 Index.
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4 APPROPRIATENESS
This Portfolio may be suitable for investors who . . .
o Are seeking long-term capital growth.
o Are willing to assume above-average investment risk.
o Want a growth fund as part of a balanced investment program.
o Plan to invest for at least five years.
The Portfolio is not suitable for investors who . . .
o Are seeking current income.
o Cannot tolerate fluctuating share prices.
5 FEES AND EXPENSES
Vanguard U.S. Growth Portfolio -- like all Vanguard Funds -- is offered on a
pure no-load basis (that is, the Portfolio has no 12b-1 fees or charges to buy
or sell shares).
The Portfolio's operating expenses are deducted from its total assets before
daily share prices and income distributions are calculated. The Portfolio's
expense ratio for fiscal year 1996 was 0.43% of assets.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
------------------------------
<S> <C>
Investment Advisory Fees . . . . . . . 0.16%
Distribution Costs . . . . . . . . . . 0.02
Other Expenses . . . . . . . . . . . . 0.25
----
TOTAL OPERATING EXPENSES . . . . . . . 0.43%
</TABLE>
The following example illustrates the expenses that you would incur on a $1,000
investment over various periods, assuming (1) a 5% annual rate of return and
(2) redemption at the end of each period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- ---------
<S> <C> <C> <C>
$4 $14 $24 $54
</TABLE>
This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be higher or lower than those
shown.
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6 PAST PERFORMANCE
PERFORMANCE
ANNUAL RETURNS (%) 1986 - 1995
<TABLE>
<CAPTION>
VANGUARD S&P
U.S. GROWTH 500
PORTFOLIO INDEX
--------- -----
<S> <C> <C>
1986 . . . . . . . . . . . . . . . . 7.8 18.6
1987 . . . . . . . . . . . . . . . . -6.1 5.1
1988 . . . . . . . . . . . . . . . . 8.8 16.6
1989 . . . . . . . . . . . . . . . . 37.7 31.7
1990 . . . . . . . . . . . . . . . . 4.6 -3.1
1991 . . . . . . . . . . . . . . . . 46.8 30.5
1992 . . . . . . . . . . . . . . . . 2.8 7.6
1993 . . . . . . . . . . . . . . . . -1.4 10.1
1994 . . . . . . . . . . . . . . . . 3.9 1.3
1995 . . . . . . . . . . . . . . . . 38.4 37.6
</TABLE>
PERFORMANCE SUMMARY
PERIODS ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
U.S. GROWTH PORTFOLIO S&P 500*
--------------------- --------
<S> <C> <C>
1 Year 27.2% 20.3%
5 Years 14.7% 15.2%
10 Years 14.3% 15.0%
</TABLE>
Note: In evaluating past performance, it is important to consider that returns
from stocks were close to their highest levels in history during the past ten
years. Past performance is not indicative of future performance.
Performance figures include the reinvestment of all dividends and any capital
gains distributions. All returns are net of expenses. The performance data
quoted represent past performance. The investment return and principal value of
an investment will fluctuate so that investors' shares, when redeemed, may be
worth more or less than their original cost.
*The Standard & Poor's 500 Composite Stock Price Index is a diversified group
of 500 securities used to measure U.S. stock market performance. An index is
unmanaged; you cannot invest in an index.
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7 INVESTMENT ADVISER
The Portfolio has been managed by Lincoln Capital Management Company since
August 1987. Lincoln manages total assets of more than $41 billion.
The managers responsible for overseeing the Portfolio are J. Parker Hall III,
President of Lincoln, and David M. Fowler, Vice President of Lincoln. Both have
served in this capacity since August 1987.
8 PURCHASES
You may purchase shares by mail, wire, or exchange from another Vanguard Fund.
The minimum initial investment is $3,000 ($1,000 for IRAs and custodial accounts
for minors).
9 REDEMPTIONS
You may redeem shares by sending a letter to or calling Vanguard. The
Portfolio's share price is expected to fluctuate and, at redemption, may be
higher or lower than at the time of initial purchase, resulting in a taxable
gain or loss.
10 DISTRIBUTIONS
The Portfolio expects to pay dividend and capital gains distributions annually.
These distributions may be automatically reinvested or received in cash. All
distributions are taxable to you whether reinvested in additional shares or
received in cash.
11 OTHER SERVICES
o Vanguard Fund Express(R) -- electronic transfers between your bank
account and the Portfolio.
o Vanguard Tele-Account(R) -- around-the-clock access to Vanguard Fund
information, account balances, and some transactions by calling
1-800-662-6273 (ON-BOARD).
o Investor Information -- toll-free access to Vanguard Associates by
calling 1-800-662-7447 (SHIP).
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Post Office Box 2600
Valley Forge, PA 19482
TOLL-FREE INVESTOR
INFORMATION
1-800-662-7447
America Online(R)
Keyword: Vanguard
World Wide Web
http://www.vanguard.com
E-mail
[email protected]
THIS FUND PROFILE CONTAINS KEY INFORMATION ABOUT THE PORTFOLIO. IF YOU WOULD
LIKE MORE INFORMATION BEFORE YOU INVEST, PLEASE CONSULT THE PORTFOLIO'S
ACCOMPANYING PROSPECTUS. FOR DETAILS ABOUT THE PORTFOLIO'S HOLDINGS OR RECENT
INVESTMENT STRATEGIES, PLEASE REVIEW THE PORTFOLIO'S MOST RECENT ANNUAL OR
SEMI-ANNUAL REPORT. THE PROSPECTUS AND REPORTS MAY BE OBTAINED AT NO COST BY
CALLING VANGUARD.
(C) 1996 Vanguard Marketing
Corporation, Distributor
FP23 o 1096-38S
