<PAGE> 1
VANGUARD/MORGAN GROWTH FUND, INC.
PROSPECTUS SUPPLEMENT
JANUARY 10, 1996
The Board of Directors of Vanguard/Morgan Growth Fund, Inc. (the "Fund") has
approved a revised investment advisory agreement with Franklin Portfolio
Associates ("FPA"), the Fund's investment adviser. The new agreement involves
a reduction in the annual rate of advisory fees to be paid to FPA.
Under the terms of the new agreement, the Fund will pay FPA a basic
advisory fee at the end of each fiscal quarter that is calculated by applying a
quarterly rate, based on the following annual percentage rates, to the Fund's
average month-end net assets for the quarter:
<TABLE>
<CAPTION>
NET ASSETS ANNUAL BASIC FEE RATE
----------------------------------------------------------------------------
<S> <C>
First $100 million 0.25%
Next $200 million 0.20
Next $200 million 0.15
Over $500 million 0.10
</TABLE>
Both the current and revised agreements provide that the basic fee may
be increased or decreased by applying an incentive/penalty fee adjustment based
on the investment performance of the Fund relative to the investment record of
the Growth Fund Stock Index. Under the incentive/penalty fee schedule, the
basic fee payable to FPA may be increased or decreased by as much as .10%
depending on the investment performance of the equity investments managed by
FPA.
This revised investment advisory agreement replaces the Fund's
existing agreement with the adviser dated April 24, 1990, and will go into
effect on or about April 1, 1996. Until this date, the adviser has agreed to
waive its advisory fees to the extent necessary to abide by the new fee
schedule.
