<PAGE> 1
VANGUARD
MORGAN GROWTH
FUND
Fund Profile
April 24, 1997
[LOGO]
THE VANGUARD GROUP
<PAGE> 2
1 OBJECTIVE
Vanguard/Morgan Growth Fund seeks to provide long-term capital growth. The Fund
may not meet this objective.
2 INVESTMENT STRATEGY
The Fund invests across many industries--buying stocks of large companies with
strong records of growth, sales, and earnings, as well as stocks of smaller
companies that have plans to expand or have performed well during specific
market cycles. The Fund aims to match and, if possible, outperform an index of
the 50 largest growth mutual funds in the U.S. In addition to investing in
common stocks, the Fund may also invest, to a limited degree, in short-term
fixed-income securities, and futures and options contracts.
3 RISKS
The Fund's total return will fluctuate, so an investor could lose money over
short or extended periods. More specifically, investors in the Fund 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 1996, the S&P 500 Index provided an annualized total return of
10.7%, but provided a negative return--averaging -12.3%--in 20 of these 71
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 Fund is likely to perform differently
than broader market benchmarks like the S&P 500 Index.
<PAGE> 3
4 APPROPRIATENESS
This Fund 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 Fund is not suitable for investors who . . .
o Are seeking current income.
o Cannot tolerate fluctuating share prices.
5 FEES AND EXPENSES
Vanguard/Morgan Growth Fund--like all Vanguard funds--is offered on a pure
no-load basis (that is, the Fund has no 12b-1 fees or charges to buy or sell
shares).
The Fund's operating expenses are deducted from its total assets before daily
share prices and income distributions are calculated. The Fund's expense ratio
for fiscal year 1996 was 0.51% of assets.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
------------------------------
<S> <C>
Investment Advisory Fees..... 0.16%
Distribution Costs........... 0.02
Other Expenses............... 0.33
----
Total Operating Expenses .... 0.51%
====
</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>
$5 $16 $29 $64
</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.
<PAGE> 4
6 PAST PERFORMANCE
[BAR GRAPH]
<TABLE>
<CAPTION>
Average Annual Total Return
--------------------------------
Morgan Growth Fund S&P 500*
------------------ --------
<S> <C> <C>
1 Year 15.0% 19.8%
5 Years 14.2% 16.4%
10 Years 11.9% 13.4%
</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.
<PAGE> 5
7 INVESTMENT ADVISER
The Fund employs a multi-adviser approach. The four investment advisers select
stocks and maintain portfolios independently of one another. As of March 31,
1997, the Fund's assets were divided as follows:
<TABLE>
<CAPTION>
Percentage of
Adviser Fund's Assets
------- -------------
<S> <C>
Wellington Management Company, LLP 40.6%
Franklin Portfolio Associates 37.4
Husic Capital Management 12.2
Vanguard Core Management Group 9.8
</TABLE>
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 Fund'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 Fund expects to pay dividend and capital gains distributions annually. These
distributions can 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 Fund.
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).
<PAGE> 6
[LOGO]
THE VANGUARD GROUP
Post Office Box 2600
Valley Forge, PA 19482
Toll-Free Investor
Information
1-800-662-7447
World Wide Web
http://www.vanguard.com
E-mail
[email protected]
This Fund Profile contains key information about the Fund. If you would like
more information before you invest, please consult the Fund's accompanying
prospectus. For details about the Fund's holdings or recent investment
strategies, please review the Fund's most recent annual or semiannual report.
The prospectus and reports may be obtained at no cost by calling Vanguard.
FP26.0497-12B
