VANGUARD/MORGAN GROWTH FUND
PROSPECTUS SUPPLEMENT
June 24, 1998
Effective May 1, 1998, the Fund has implemented a new advisory fee schedule for
the portion of its assets managed by Franklin Portfolio Associates LLC
(Associates). THE NEW SCHEDULE WILL RESULT IN LOWER CURRENT ADVISORY FEES AND
SMALLER FEE INCREASES AS FUND ASSETS GROW. Associates' advisory fee is paid
quarterly, based on average month-end net assets managed during the quarter. The
new fee schedule is as follows:
Average Assets Managed Annual Rate Average Assets Managed Annual Rate
- ------------------------------------- ------------------------------------
First $100 million 0.25% Next $500 million 0.10%
Next $200 million 0.20 Next $4 billion 0.08
Next $200 million 0.15 Assets over $5 billion 0.06
As before, Associates' advisory fee may be adjusted based on its
total-return performance as compared with that of the Growth Fund Stock Index.
Under the new fee schedule, Associates' basic fee may be increased or decreased
by as much as 80% based on performance.
PS26
