VANGUARD GROWTH AND INCOME PORTFOLIO
PROSPECTUS SUPPLEMENT
June 24, 1998
Effective May 1, 1998, the Portfolio and its adviser, Franklin Portfolio
Associates LLC (Associates), have implemented a new advisory fee schedule. THE
NEW SCHEDULE WILL RESULT IN LOWER CURRENT ADVISORY FEES AND SMALLER ADVISORY FEE
INCREASES AS PORTFOLIO 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 0.30% Next $3 billion 0.08%
Next $650 million 0.15 Over $5 billion 0.06
Next $1.25 billion 0.10
As before, Associates' advisory fee may be adjusted based on its
total-return performance as compared with that of the S&P 500 Index. Under the
new fee schedule, Associates' basic fee may be increased or decreased by as much
as 60% based upon performance.
"Standard & Poor's(R)," "S&P(R)," "S&P 500(R)," "Standard & Poor's 500," and
"500" are trademarks of The McGraw-Hill Companies, Inc.
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