VANGUARD QUANTITATIVE PORTFOLIOS INC, 497, 1999-04-09

VANGUARD QUANTITATIVE PORTFOLIOS INC
497, 1999-04-09

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form N-1A

REGISTRATION STATEMENT (NO. 33-8553) UNDER
THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. [X]
Post-Effective Amendment No. 15 [X]

and

REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940

Amendment No. 17 [X]

VANGUARD QUANTITATIVE FUNDS
(Exact Name of Registrant as Specified in Declaration of Trust)

P.O. Box 2600,
Valley Forge, PA 19482
(Address of Principal Executive Office)

Registrant's Telephone Number (610) 669-1000

R. Gregory Barton, Esquire
P.O. Box 876
Valley Forge, PA 19482

It is proposed that this filing become effective: April 9, 1999, pursuant to
paragraph (b) of Rule 485.

Approximate Date of Proposed Public Offering: As soon as practicable after
this Registration Statement becomes effective.

We have elected to register an indefinite number of shares pursuant to Regu-
lation 24f-2 under the Investment Company Act of 1940. We filed our Rule 24f-2
Notice for the year ended December 31, 1998 on March 18, 1999.

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VANGUARD QUANTITATIVE FUNDS

CROSS REFERENCE SHEET

<TABLE>
<CAPTION>
Form N-1A
Item Number Location in Prospectus
<C> <C> <S>
Item 1. Front and Back Cover Pages............ Front and Back Cover Pages
Item 2. Risk/Return Summary: Investments,
Risks and Performance................. Fund Profile
Item 3. Risk/Return Summary: Fee Table........ Fee Table
Item 4. Investment Objectives, Principal
Investment Strategies, and Related
Risks................................. A Word About Risk; Who
Should Invest; Primary
Investment Strategies
Item 5. Management's Discussion of Fund
Performance........................... Herein incorporated by
reference to Registrant's
Annual Report to
Shareholders dated December
31, 1998 filed with the
Securities & Exchange
Commission's EDGAR system
on February 25, 1999
Item 6. Management, Organization, and Capital
Structure............................. The Fund and Vanguard;
Investment Adviser
Item 7. Shareholder Information............... Share Price; Dividends,
Capital Gains, and Taxes;
Investing with Vanguard
Item 8. Distribution Arrangements............. Not Applicable
Item 9. Financial Highlights Information...... Financial Highlights
<CAPTION>
Form N-1A Location in Statement
Item Number of Additional Information
<C> <C> <S>
Item 10. Cover Page and Table of Contents...... Cover Page; Table of
Contents
Item 11. Fund History.......................... Description of the Trust
Item 12. Description of the Fund and its
Investments and Risks................. Investment Policies;
Fundamental Investment
Limitations; Description of
the Trust
Item 13. Management of the Fund................ Management of the Trust
Item 14. Control Persons and Principal Holders
of Securities......................... Management of the Trust
Item 15. Investment Advisory and Other
Services.............................. Investment Advisory
Services
Item 16. Brokerage Allocation and Other
Practices............................. Portfolio Transactions
Item 17. Capital Stock and Other Securities.... Description of the Trust
Item 18. Purchase, Redemption, and Pricing of
Shares................................ Purchase of Shares;
Redemption of Shares; Share
Price
Item 19. Taxation of the Fund.................. Description of the Trust
Item 20. Underwriters.......................... Not Applicable
Item 21. Calculation of Performance Data....... Yield and Total Return
Item 22. Financial Statements.................. Financial Statements
</TABLE>
<PAGE>

Fund Profile

The following profile summarizes key features of Vanguard Growth and Income
Fund.

INVESTMENT OBJECTIVE
The Fund is a stock fund that seeks to provide a total return (capital
appreciation plus dividend income) greater than the return of the Standard &
Poor's 500 Composite Stock Price Index.

INVESTMENT STRATEGIES

To achieve its objective, the Fund's adviser uses computer models to select a
broadly diversified group of stocks that, as a whole, has investment
characteristics similar to the S&P 500 Index, but is expected to provide a
higher total return than the Index. At least 65% (and typically more than 90%)
of the Fund's assets will be invested in stocks that are included in the Index.
Most of the stocks held by the Fund provide dividend income as well as the
potential for capital appreciation.

PRIMARY RISKS
The Fund's total return, like stock prices generally, will fluctuate within a
wide range, so an investor could lose money over short or even long periods. The
Fund is also subject to:

. Investment style risk, which is the chance that returns from
large-capitalization stocks--which comprise most of the Fund's holdings--will
trail returns from other asset classes or the overall stock market.

. Manager risk, which is the chance that poor security selection will cause the
Fund to underperform other funds with similar investment objectives.

PERFORMANCE/RISK INFORMATION
The bar chart and table below provide an indication of the risk of investing in
the Fund. The bar chart shows the Fund's performance in each calendar year over
a ten-year period. The table shows how the Fund's average annual returns for
one, five, and ten calendar years compare with those of a broad-based securities
market index. Keep in mind that the Fund's past performance does not indicate
how it will perform in the future.

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Annual Total Returns
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[BAR CHART APPEARS HERE]

1989 32.00%
1990 -2.44%
1991 30.29%
1992 7.01%
1993 13.83%
1994 -0.61%
1995 35.93%
1996 23.06%
1997 35.59%
1998 23.94%

During the period shown in the bar chart, the highest return for a calendar
quarter was 20.63% (quarter ended December 31, 1998) and the lowest return for a
quarter was -13.63% (quarter ended September 30, 1990).

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Average Annual Total Returns for Years Ended December 31, 1998
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1 Year 5 Years 10 Years
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Vanguard Growth and Income Fund 23.94% 22.81% 19.03%
S&P 500 Index 28.58 24.06 19.21
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<PAGE>

PLAIN TALK ABOUT
The Costs of Investing

Costs are an important consideration in choosing a mutual fund. That's because
you, as a shareholder, pay the costs of operating a fund, plus any transaction
costs associated with the fund's buying and selling of securities. These costs
can erode a substantial portion of the gross income or capital appreciation a
fund achieves. Even seemingly small differences in expenses can, over time, have
a dramatic effect on a fund's performance.

PLAIN TALK ABOUT
Fund Expenses

All mutual funds have operating expenses. These expenses, which are deducted
from a fund's gross income, are expressed as a percentage of the net assets of
the fund. Vanguard Growth and Income Fund's expense ratio in fiscal year 1998
was 0.36%, or $3.60 per $1,000 of average net assets. The average growth and
income mutual fund had expenses in 1998 of 1.20%, or $12.00 per $1,000 of
average net assets, according to Lipper Inc., which reports on the mutual fund
industry.

FEES AND EXPENSES
The following table describes the fees and expenses you would pay if you buy and
hold shares of the Fund. The expenses shown under Annual Fund Operating Expenses
are based upon those incurred in the fiscal year ended December 31, 1998.

Shareholder Fees (fees paid directly from your investment)
Sales Charge (Load) Imposed on Purchases: None
Sales Charge (Load) Imposed on Reinvested Dividends: None
Redemption Fees: None
Exchange Fees: None

Annual Fund Operating Expenses (expenses deducted from the
Fund's assets)
Management Expenses: 0.33%
12b-1 Distribution Fees: None
Other Expenses: 0.03%
Total Annual Fund Operating Expenses: 0.36%

The following example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. It illustrates the
hypothetical expenses that you would incur over various periods if you invest
$10,000 in the Fund. This example assumes that the Fund provides a return of 5%
a year, and that operating expenses remain the same. The results apply whether
or not you redeem your investment at the end of each period.

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1 Year 3 Years 5 Years 10 Years
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$37 $116 $202 $456
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This example should not be considered to represent actual expenses or
performance from the past or for the future. Actual future expenses may be
higher or lower than those shown.
<PAGE>

Additional Information

Dividends and Capital Gains
Dividends are distributed semiannually in June and December; capital gains, if
any, are distributed annually in December

Investment Adviser
Franklin Portfolio Associates LLC, Boston, Mass., since inception

Inception Date
December 10, 1986

Net Assets as of December 31, 1998
$5.16 billion

Suitable for IRAs
Yes

Minimum Initial Investment
$3,000; $1,000 for IRAs and custodial accounts for minors

Newspaper Abbreviation
GroInc

Vanguard Fund Number
093

Cusip Number
921913109

Ticker Symbol
VQNPX

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A Word About Risk

This prospectus describes the risks you would face as an investor in Vanguard
Growth and Income Fund. It is important to keep in mind one of the main axioms
of investing: The higher the risk of losing money, the higher the potential
reward. The reverse, also, is generally true: The lower the risk, the lower the
potential reward. As you consider an investment in Vanguard Growth and Income
Fund, you should also take into account your personal tolerance for the daily
fluctuations of the stock market.

Look for this [GRAPHIC APPEARS HERE] symbol throughout the prospectus. It is
used to mark detailed information about each type of risk that you would
confront as a shareholder of the Fund.
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Who Should Invest

The Fund may be a suitable investment for you if:

. You wish to add a growth and income stock fund to your existing holdings,
which could include other stock investments as well as bond, money market, and
tax-exempt investments.
. You are looking to achieve a total return greater than that of the S&P 500
Index.
. You are seeking growth of capital over the long term--at least five years--and
are able to tolerate wide fluctuations in the value of your investment.
. You are looking for some dividend income.

PLAIN TALK ABOUT
Costs and Market-Timing

Some investors try to profit from market-timing--switching money into
investments when they expect prices to rise, and taking money out when they
expect the market to fall. As money is shifted in and out, a fund incurs
expenses for buying and selling securities. These costs are borne by all fund
shareholders, including the long-term investors who do not generate the costs.
Therefore, the Fund discourages short-term trading by, among other things,
limiting the number of exchanges it permits.

The Vanguard funds do not permit market-timing. Do not invest in this Fund if
you are a market-timer.
<PAGE>

PLAIN TALK ABOUT
Large-Cap, Mid-Cap, and Small-Cap Stocks

Stocks of publicly traded companies--and mutual funds that hold these
stocks--can be classified by the companies' market value, or capitalization.
Generally, Vanguard defines large-capitalization (large-cap) funds as those
holding stocks of companies whose outstanding shares have a market value
exceeding $10 billion. Mid-cap funds hold stocks of companies with a market
value between $1 billion and $10 billion. Small-cap funds typically hold stocks
of companies with a market value of less than $1 billion.

The Fund has adopted the following policies, among others, to discourage
short-term trading:

. The Fund reserves the right to reject any purchase request--including
exchanges from other Vanguard funds--that it regards as disruptive to the
efficient management of the Fund. This could be because of the timing of the
investment or because of a history of excessive trading by the investor.

. There is a limit on the number of times you can exchange into and out of the
Fund (see "Redeeming Shares" in the Investing with Vanguard section).

. The Fund reserves the right to stop offering shares at any time.

Primary Investment Strategies

This section explains the strategies that the investment adviser uses in pursuit
of the Fund's objective--a total return greater than that of the S&P 500
Composite Stock Price Index. It also explains how the adviser implements these
strategies. The Fund's Board of Trustees oversees the management of the Fund,
and may change the investment strategies in the interest of shareholders. In
addition, this section discusses several important risks--market risk,
investment style risk, and manager risk--faced by investors in the Fund.

Market Exposure
The Fund invests in a broadly diversified group of common stocks. The Fund
typically invests more than 90% (and never less than 65%) of its assets in
selected stocks that are part of the S&P 500 Index. The stocks that comprise the
S&P 500 Index are mostly large-capitalization stocks that collectively represent
about 70% of the market value of all U.S. common stocks.

[GRAPHIC APPEARS HERE]
The Fund is subject to stock market risk, which is the possibility that stock
prices overall will decline over short or even long periods. Stock markets tend
to move in cycles, with periods of rising prices and periods of falling prices.

To illustrate the volatility of stock prices, the following table shows the
best, worst, and average total returns for the U.S. stock market over various
periods as measured by the S&P 500 Index, a widely used barometer of market
activity. (Total returns consist of dividend income plus change in market
price.) Note that the returns shown do not include the costs of buying and
selling stocks or other expenses that a real-world investment portfolio would
incur. Note, also, that the gap between best and worst tends to narrow over the
long term.

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U.S. Stock Market Returns (1926-1998)
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1 Year 5 Years 10 Years 20 Years
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Best 54.2% 24.1% 19.9% 17.7%
Worst -43.1 -12.4 -0.8 3.1
Average 13.1 10.7 11.0 11.0
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<PAGE>

The table covers all of the 1-, 5-, 10-, and 20-year periods from 1926
through 1998. You can see, for example, that while the average return on stocks
for all of the 5-year periods was 10.7%, returns for individual 5-year periods
ranged from a -12.4% average (from 1928 through 1932) to 24.1% (from 1994
through 1998). These average returns reflect past performance on common stocks;
you should not regard them as an indication of future returns from either the
stock market as a whole or this Fund in particular.

Because Vanguard Growth and Income Fund's holdings are not identical to the
S&P 500 Index or any other market index, the performance of the Fund will not
mirror the returns of any particular index. However, because the Fund's
investment characteristics will be similar to those of the S&P 500 Index, the
Fund's performance is expected, in any given year, to be within a few percentage
points of the Index. Such relative performance, of course, cannot be assured.

[GRAPHIC APPEARS HERE]
The Fund is subject to investment style risk, which is the possibility that
returns from large- capitalization stocks--which comprise most of the Fund's
holdings--will trail returns from other asset classes or the overall stock
market. As a group, large-capitalization stocks tend to go through cycles of
doing better--or worse--than common stocks in general. These periods have, in
the past, lasted for as long as several years.

Security Selection

Franklin Portfolio Associates LLC, adviser to the Fund, selects a diversified
group of common stocks in order to pursue the Fund's objective of achieving a
total return greater than that of the S&P 500 Index.

Generally, the stocks selected provide capital appreciation as well as
dividend income. Stocks are chosen by the adviser so that, in the aggregate, the
investment characteristics of the Fund are similar to those of the Index. These
characteristics include such measures as dividend yield, price/earnings ratio,
"beta" (relative volatility), return on equity, and price/book ratio. However,
while assuring that the Fund's investment characteristics are similar to those
of the Index, the adviser looks to invest in individual stocks--including stocks
not a part of the Index--that will in the aggregate provide a higher total
return than that of the Index. Of course, there is no assurance that the Fund's
performance will match or exceed the performance of the S&P 500 Index.

In order to select stocks for the Fund, the adviser employs a "quantitative
model" approach that combines both active and passive management techniques.
First, the adviser ranks a universe of approximately 3,500 stocks using several
computer investment models. These models compare the potential returns of the
stocks based on current and projected earnings, price/earnings ratios, yields,
and other information. A separate program then selects the stocks for the Fund
from among the stocks rated highly by the investment models. The Fund's holdings
are not derived strictly from the highest ranked stocks. Instead, stocks are
selected so that the Fund's aggregate characteristics resemble those of the S&P
500 Index. To help the Fund pursue performance above the Index, stocks are sold
as their attractiveness decreases relative to the universe of stocks under
consideration.

The Fund is generally managed without regard to tax ramifications.

[GRAPHIC APPEARS HERE]
The Fund is subject to manager risk, which is the possibility that the adviser
may do a poor job of selecting stocks.
<PAGE>

PLAIN TALK ABOUT
Turnover Rate

Before investing in a mutual fund, you should review its turnover rate. This
gives an indication of how transaction costs could affect the fund's future
returns. In general, the greater the volume of buying and selling by the fund,
the greater the impact that brokerage commissions and other transaction costs
will have on its return. Also, funds with high turnover rates may be more likely
to generate capital gains that must be distributed to shareholders as income
subject to taxes. The average turnover rate for all domestic stock funds is
approximately 88%, according to Morningstar, Inc.

PLAIN TALK ABOUT
Derivatives

A derivative is a financial contract whose value is based on (or "derived" from)
a traditional security (such as a stock or a bond), an asset (such as a
commodity like gold), or a market index (such as the S&P 500 Index). Futures and
options are derivatives that have been trading on regulated exchanges for more
than two decades. These "traditional" derivatives are standardized contracts
that can easily be bought and sold, and whose market values are determined and
published daily. It is these characteristics that differentiate futures and
options from the relatively new types of derivatives. If used for speculation or
as leveraged investments, derivatives can carry considerable risks.

Turnover Rate
Although the Fund generally seeks to invest for the long term, it may sell
securities regardless of how long the securities have been held. The Fund's
average turnover rate for the past five years has been about 64%. (A turnover
rate of 100% would occur, for example, if the Fund sold and replaced securities
valued at 100% of its net assets within a one-year period.)

Other Investment Policies and Risks
The Fund may invest, to a limited extent, in foreign securities.

The Fund may also invest, to a limited extent, in stock futures and options
contracts, which are traditional types of derivatives. Losses (or gains)
involving futures can sometimes be substantial--in part because a relatively
small price movement in a futures contract may result in an immediate and
substantial loss (or gain) for a fund. This Fund will not use futures for
speculative purposes or as leveraged investments that magnify the gains or
losses of an investment. The value of all futures and options contracts in which
the Fund acquires an interest cannot exceed 20% of its total assets.

The reasons for which the Fund will invest in futures and options are:

. To keep cash on hand to meet shareholder redemptions or other needs while
simulating full investment in stocks.

. To reduce the Fund's transaction costs or add value when these instruments
are favorably priced.

The Fund may, from time to time, take temporary defensive measures-- such as
holding cash reserves without limit--that are inconsistent with the Fund's
primary investment strategies, in response to adverse market, economic,
political, or other conditions. In taking such measures, the Fund may not
achieve its investment objective.

The Fund and Vanguard

The Fund is a member of The Vanguard Group, a family of more than 35 investment
companies with more than 100 distinct investment portfolios holding assets worth
more than $450 billion. All of the Vanguard funds share in the expenses
associated with business operations, such as personnel, office space, equipment,
and advertising.

Vanguard also provides marketing services to the funds. Although shareholders
do not pay sales commissions or 12b-1 distribution fees, each fund pays its
allocated share of The Vanguard Group's marketing costs.
<PAGE>

PLAIN TALK ABOUT
Vanguard's Unique Corporate Structure

The Vanguard Group is truly a mutual mutual fund company. It is owned jointly by
the funds it oversees and thus indirectly by the shareholders in those funds.
Most other mutual funds are operated by for-profit management companies that may
be owned by one person, by a group of individuals, or by investors who own the
management company's stock. By contrast, Vanguard provides its services on an
"at-cost" basis, and the funds' expense ratios reflect only these costs. No
separate management company reaps profits or absorbs losses from operating the
funds.

Investment Adviser
The Fund employs Franklin Portfolio Associates LLC, Two International Place,
Boston, MA 02110, as its investment adviser. Franklin Portfolio Associates
manages the Fund subject to the control of the Trustees and officers of the
Fund.

Franklin Portfolio Associates' advisory fee is paid quarterly. This fee is
based on certain annual percentage rates applied to the Fund's average month-end
assets for each quarter. In addition, Franklin Portfolio Associates' advisory
fee is increased or decreased based on the Fund's cumulative investment
performance over a trailing 36-month period as compared with the cumulative
total return of the S&P 500 Index over the same period.

The incentive/penalty fee structure will not be in full operation until April
30, 2001. Until then, Franklin Portfolio Associates' fee will be calculated
using certain transition rules.

For the year ended December 31, 1998, the investment advisory fee paid to
Franklin Portfolio Associates represented an effective annual rate of 0.10% of
the Fund's average net assets.

The Fund has authorized Franklin Portfolio Associates to choose brokers or
dealers to handle the purchase and sale of securities for the Fund, and to get
the best available price and most favorable execution from these brokers with
respect to all transactions.

In the interest of obtaining better execution of a transaction, Franklin
Portfolio Associates may choose brokers who charge higher commissions. If more
than one broker can obtain the best available price and favorable execution of a
transaction, then Franklin Portfolio Associates is authorized to choose a broker
who, in addition to executing the transaction, will provide research services to
Franklin Portfolio Associates or the Fund. Also, the Fund may direct Franklin
Portfolio Associates to use a particular broker for certain transactions in
exchange for commission rebates or research services provided to the Fund.

The Board of Trustees may, without prior approval from shareholders, change
the terms of the advisory agreement between the Fund and Franklin Portfolio
Associates, or hire a new investment adviser, either as a replacement for
Franklin Portfolio Associates or as an additional adviser. Any such change will
be communicated to shareholders in writing.

PLAIN TALK ABOUT
The Fund's Adviser

Franklin Portfolio Associates LLC is an investment advisory firm founded in
1982. The firm specializes in the management of stock portfolios through the use
of quantitative investment models. As of December 31, 1998, Franklin Portfolio
Associates managed more than $18.6 billion in assets. The manager responsible
for overseeing the implementation of Franklin Portfolio Associates' strategy for
Vanguard Growth and Income Fund is:

John J. Nagorniak, President of Franklin Portfolio Associates; has worked in
investment management since 1970; with Franklin Portfolio Associates since 1982;
has managed the Fund since its inception; B.A., Princeton University; M.S., the
Sloan School of Management, Massachusetts Institute of Technology.
<PAGE>

Year 2000 Challenge

The common practice in computer programming of using just two digits to identify
a year has resulted in the Year 2000 challenge throughout the information
technology industry. If unchanged, many computer applications and systems could
misinterpret dates occurring after December 31, 1999, leading to errors or
failure. Such failure could adversely affect a fund's operations, including
pricing, securities trading, and the servicing of shareholder accounts.

The Vanguard Group is dedicated to providing uninterrupted, high-quality
performance from our computer systems before, during, and after 2000. In July
1998, we completed the renovation and initial testing of our internal systems.
Vanguard is diligently working with external partners, suppliers, and vendors,
including fund managers and other service providers, to assure that the systems
with which we interact remain operational at all times.

In addition to taking every reasonable step to secure our internal systems and
external relationships, Vanguard is further developing contingency plans
intended to assure that unexpected systems failures will not adversely affect
the Fund's operations. Vanguard intends to monitor these processes through the
rollover of 1999 into 2000 and to quickly implement alternate solutions if
necessary.

However, despite Vanguard's efforts and contingency plans, noncompliant
computer systems could have a material adverse effect on the Fund's business,
operations, or financial condition. Additionally, the Fund's performance could
be hurt if a computer-system failure at a company or governmental unit affects
the price of securities the Fund owns.

PLAIN TALK ABOUT
Distributions

As a shareholder, you are entitled to your share of the fund's income from
interest and dividends, and gains from the sale of investments. You receive such
earnings as either an income dividend or a capital gains distribution. Income
dividends come from both the dividends that the fund earns from its holdings and
the interest it receives from its money market and bond investments. Capital
gains are realized whenever the fund sells securities for higher prices than it
paid for them. These capital gains are either short-term or long-term depending
on whether the fund held the securities for less than or more than one year.

Dividends, Capital Gains, and Taxes

The Fund distributes to shareholders virtually all of its net income (interest
and dividends less expenses) as well as any capital gains realized from the sale
of its holdings. Income distributions generally occur in June and December;
capital gains distributions generally occur in December. In addition, the Fund
may occasionally be required to make supplemental income or capital gains
distributions at some other time during the year. You can receive distributions
of income or capital gains in cash, or you can have them automatically invested
in more shares of the Fund. In either case, these distributions are taxable to
you. It is important to note that distributions of dividends and capital gains
that are declared in December--if paid to you by the end of January--are taxed
as if they had been paid to you in December.

Vanguard will send you a statement each year showing the tax status of all
your distributions. If you have chosen to receive dividend and/or capital gains
distributions in cash, and the postal or other delivery service is unable to
deliver checks to your address of record, we will change the distribution option
so that all dividends and other distributions are automatically invested in
additional shares. We will not pay interest on uncashed distribution checks.

. The dividends and short-term capital gains that you receive are considered
ordinary income for tax purposes.

. Any distributions of net long-term capital gains by the Fund are taxable to
you as long-term capital gains, no matter how long you've owned shares in the
Fund.

. Although the Fund does not seek to realize any particular amount of capital
gains during a year, such gains are realized from time to time as by-products
of its ordinary investment activities. Consequently, distributions may vary
considerably from year to year.
<PAGE>

. If you sell or exchange shares, any gain or loss you have is a taxable event.
This means that you may have a capital gain to report as income, or a capital
loss to report as a deduction, when you complete your federal income tax
return.

. Distributions of dividends or capital gains, and capital gains or losses from
your sale or exchange of Fund shares, may be subject to state and local
income taxes as well.

The tax information in this prospectus is provided as general information and
will not apply to you if you are investing through a tax-deferred account such
as an IRA or a qualified employee benefit plan. (Non-U.S. investors may be
subject to U.S. withholding and estate tax.) You should consult your tax adviser
about the tax consequences of an investment in the Fund.

Important Note: By law, the Fund must withhold 31% of your taxable
distributions and any redemption proceeds if you do not provide your correct
taxpayer identification number, or certify that it is correct, or if the IRS
instructs the Fund to do so.

Share Price

The Fund's share price, called its net asset value, or NAV, is calculated each
business day after the close of trading on the New York Stock Exchange (the NAV
is not calculated on holidays or other days the Exchange is closed). Net asset
value per share is computed by adding up the total value of the Fund's
investments and other assets, subtracting any of its liabilities (debts), and
then dividing by the number of Fund shares outstanding:

PLAIN TALK ABOUT
"Buying a Dividend"

Unless you are investing through a tax-deferred retirement account (such as an
IRA), it is not to your advantage to buy shares of a fund shortly before it
makes a distribution, because doing so can cost you money in taxes. This is
known as "buying a dividend." For example: On December 15, you invest $5,000,
buying 250 shares for $20 each. If the fund pays a distribution of $1 per share
on December 16, its share price would drop to $19 (not counting market change).
You still have only $5,000 (250 shares x $19 = $4,750 in share value, plus 250
shares x $1 = $250 in distributions), but you owe tax on the $250 distribution
you received--even if you reinvest it in more shares. To avoid "buying a
dividend," check a fund's distribution schedule before you invest.

Total Assets - Liabilities
Net Asset Value = -----------------------------------
Number of Shares Outstanding

A Note on Pricing: The Fund's investments will be priced at their market
value when market quotations are readily available. When these quotations are
not readily available, investments will be priced at their fair value,
calculated according to procedures adopted by the Fund's Board of Trustees.

The Fund's share price can be found daily in the mutual fund listings of most
major newspapers under the heading "Vanguard Funds." Different newspapers use
different abbreviations of the Fund's name, but the most common is GroInc.
<PAGE>

PLAIN TALK ABOUT
How to Read the Financial Highlights Table

The Fund began fiscal 1998 with a net asset value (price) of $26.19 per share.
During the year, the Fund earned $.32 per share from investment income (interest
and dividends) and $5.86 per share from investments that had appreciated in
value or that were sold for higher prices than the Fund paid for them.

Shareholders received $1.61 per share in the form of dividend and capital
gains distributions. A portion of each year's distributions may come from the
prior year's income or capital gains.

The earnings ($6.18 per share) minus the distributions ($1.61 per share)
resulted in a share price of $30.76 at the end of the year. This was an increase
of $4.57 per share (from $26.19 at the beginning of the year to $30.76 at the
end of the year). For a shareholder who reinvested the distributions in the
purchase of more shares, the total return from the Fund was 23.94% for the year.

As of December 31, 1998, the Fund had $5.16 billion in net assets. For the
year, its expense ratio was 0.36% ($3.60 per $1,000 of net assets); and its net
investment income amounted to 1.27% of its average net assets. It sold and
replaced securities valued at 47% of its net assets.

Financial Highlights

The following financial highlights table is intended to help you understand the
Fund's financial performance for the past five years, and certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned or lost each year on
an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been derived from the financial statements
audited by PricewaterhouseCoopers LLP, independent accountants, whose
report--along with the Fund's financial statements--is included in the Fund's
most recent annual report to shareholders. You may have the annual report sent
to you without charge by contacting Vanguard.

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Vanguard Growth and Income Fund
Year Ended December 31,
-------------------------------------------------------
1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $26.19 $22.23 $19.95 $15.56 $ 16.45
- -------------------------------------------------------------------------------------------------------
Investment Operations
Net Investment Income .32 .41 .41 .41 .40
Net Realized and Unrealized Gain (Loss)
on Investments 5.86 7.15 4.09 5.14 (.50)
-------------------------------------------------------
Total from Investment Operations 6.18 7.56 4.50 5.55 (.10)
-------------------------------------------------------
Distributions
Dividends from Net Investment Income (.33) (.42) (.40) (.42) (.39)
Distributions from Realized Capital Gains (1.28) (3.18) (1.82) (.74) (.40)
-------------------------------------------------------
Total Distributions (1.61) (3.60) (2.22) (1.16) (.79)
- -------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $30.76 $26.19 $22.23 $19.95 $ 15.56
=======================================================================================================

Total Return 23.94% 35.59% 23.06% 35.93% -0.61%
=======================================================================================================

Ratios/Supplemental Data
Net Assets, End of Period (Millions) $5,161 $2,142 $1,285 $ 909 $ 596
Ratio of Total Expenses to
Average Net Assets 0.36% 0.36% 0.38% 0.47% 0.48%
Ratio of Net Investment Income to
Average Net Assets 1.27% 1.74% 1.97% 2.25% 2.50%
Turnover Rate 47% 66% 75% 59% 71%
=======================================================================================================
</TABLE>
From time to time, the Vanguard funds advertise yield and total return
figures. Yield is a measure of past dividend income. Total return includes both
past dividend income (assuming that it has been reinvested) plus realized and
unrealized capital appreciation (or depreciation). Neither yield nor total
return should be used to predict the future performance of a fund.

"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.
<PAGE>

Investing with Vanguard

Are you looking for the most convenient way to open or add money to a Vanguard
account? Obtain instant access to fund information? Establish an account for a
minor child or for your retirement savings?
Vanguard can help. Our goal is to make it easy and pleasant for you to do
business with us.
The following sections of the prospectus briefly explain the many services we
offer. Booklets providing detailed information are available on the services
marked with a [GRAPHIC APPEARS HERE]. Please call us to request copies.

Services and Account Features

Vanguard offers many services that make it convenient to buy, sell, or exchange
shares, or to obtain fund or account information.
- --------------------------------------------------------------------------------
Telephone Redemptions (Sales and Exchanges)
Automatically set up for this Fund unless you notify us otherwise.

Note: Limitations do apply; see page 14.
- --------------------------------------------------------------------------------
Vanguard Direct Deposit Service(TM)[GRAPHIC APPEARS HERE]
Automatic method for depositing your paycheck or U.S. government payment
(including Social Security and government pension checks) into your account.
- --------------------------------------------------------------------------------
Vanguard Automatic Exchange Service(TM)[GRAPHIC APPEARS HERE]
Automatic method for moving a fixed amount of money from one Vanguard fund
account to another.
- --------------------------------------------------------------------------------
Vanguard Fund Express(R)[GRAPHIC APPEARS HERE]
Electronic method for buying or selling shares. You can transfer money between
your Vanguard fund account and an account at your bank, savings and loan, or
credit union on a systematic schedule or whenever you wish.
- --------------------------------------------------------------------------------
Vanguard Dividend Express(TM)[GRAPHIC APPEARS HERE]
Electronic method for transferring dividend and/or capital gains distributions
directly from your Vanguard fund account to your bank, savings and loan, or
credit union account.
- --------------------------------------------------------------------------------
Vanguard Tele-Account(R) 1-800-662-6273 (ON-BOARD)[GRAPHIC APPEARS HERE]
Toll-free 24-hour access to Vanguard fund and account information--as well as
some transactions--by using any touch-tone phone. Tele-Account provides total
return, share price, price change, and yield quotations for all Vanguard funds;
gives your account balances and history (e.g., last transaction, latest dividend
distribution); and allows you to sell or exchange fund shares.
- --------------------------------------------------------------------------------
Access Vanguard(TM) www.vanguard.com [GRAPHIC APPEARS HERE]
You can use your personal computer to perform certain transactions for most
Vanguard funds by accessing our website. To establish this service, you must
register through the website. We will then send to you, by mail, an account
access password that allows you to process the following financial and
administrative transactions online:
. Open a new account.*
. Buy, sell, or exchange shares of most funds.
. Change your name/address.
. Add/change fund options (including dividend options, Vanguard Fund Express,
bank instructions, checkwriting, and Vanguard Automatic Exchange Service).

. Only current Vanguard shareholders can open a new account online, by
exchanging shares from other existing Vanguard accounts.
- --------------------------------------------------------------------------------
Investor Information Department: 1-800-662-7447 (SHIP) Text Telephone:
1-800-952-3335
Call Vanguard for information on our funds, fund services, and retirement
accounts, and to request literature.
- --------------------------------------------------------------------------------
Client Services Department: 1-800-662-2739 (CREW) Text Telephone: 1-800-662-2738
Call Vanguard for information on your account, account transactions, and account
statements.
- --------------------------------------------------------------------------------
Services for Clients of Vanguard's Institutional Division: 1-888-809-8102
Vanguard's Institutional Division offers a variety of specialized services for
large institutional investors, including the ability to effect account
transactions through private electronic networks and third-party recordkeepers.
- --------------------------------------------------------------------------------
<PAGE>

Types of Accounts

Individuals and institutions can establish a variety of accounts with Vanguard.
- --------------------------------------------------------------------------------
For One or More People
Open an account in the name of one (individual) or more (joint tenants) people.
- --------------------------------------------------------------------------------
For Holding Personal Trust Assets
Invest assets held in an existing personal trust.
- --------------------------------------------------------------------------------
For Individual Retirement Accounts
Open a traditional IRA account or a Roth IRA account. Eligibility and other
requirements are established by federal law and Vanguard custodial account
agreements. For more information, please call 1-800-662-7447 (SHIP).
- --------------------------------------------------------------------------------
For an Organization
Open an account as a corporation, partnership, endowment,
foundation, or other entity.
- --------------------------------------------------------------------------------
For Third-Party Trustee Retirement Investments
Open an account as a retirement trust or plan based on an existing corporate or
institutional plan. These accounts are established by the trustee of the
existing plan.
- --------------------------------------------------------------------------------
Vanguard Prototype Plans
Open a variety of retirement accounts using Vanguard prototype plans for
individuals, sole proprietorships, and small businesses. For more information,
please call 1-800-662-2003.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
A Note on Investing with Vanguard Through Other Firms
You may purchase or sell Fund shares through a financial intermediary such as a
bank, broker, or investment adviser. If you invest with Vanguard through an
intermediary, please read that firm's program materials carefully to learn of
any special rules that may apply. For example, special terms may apply to
additional service features, fees or other policies. Consult your intermediary
to determine when your order will be priced.
- --------------------------------------------------------------------------------

Buying Shares

You buy your shares at the Fund's next-determined net asset value after Vanguard
receives your request. As long as your request is received before the close of
trading on the New York Stock Exchange, generally 4 p.m. Eastern time, you will
buy your shares at that day's net asset value.
- --------------------------------------------------------------------------------
Minimum Investment to . . .
open a new account
$3,000 (regular account); $1,000 (traditional IRAs and Roth IRAs).

add to an existing account
$100 by mail or exchange; $1,000 by wire.
- --------------------------------------------------------------------------------
A Note on Low Balances
The Fund reserves the right to close any nonretirement account whose balance
falls below the minimum initial investment. The Fund will deduct a $10 annual
fee in June if your nonretirement account balance falls below $2,500.
The fee is waived if your total Vanguard account assets are $50,000 or more.
- --------------------------------------------------------------------------------
By Mail to . . . [GRAPHIC APPEARS HERE]
open a new account
Complete and sign the application form and enclose your check.

add to an existing account
Mail your check with an Invest-By-Mail form detached from your confirmation
statement to the address listed on the form.
<PAGE>

Make your check payable to: The Vanguard Group-93
All purchases must be made in U.S. dollars, and checks must be drawn on U.S.
banks.

First-class mail to: Express or Registered mail to:
The Vanguard Group The Vanguard Group
P.O. Box 2600 455 Devon Park Drive
Valley Forge, PA 19482-2600 Wayne, PA 19087-1815

For clients of Vanguard's Institutional Division . . .

First-class mail to: Express or Registered mail to:
The Vanguard Group The Vanguard Group
P.O. Box 2900 455 Devon Park Drive
Valley Forge, PA 19482-2900 Wayne, PA 19087-1815

- --------------------------------------------------------------------------------
IMPORTANT NOTE: To prevent check fraud, Vanguard will not accept checks made
payable to third parties.
- --------------------------------------------------------------------------------

By Telephone to . . . [GRAPHIC APPEARS HERE]
open a new account
Call Vanguard Tele-Account* 24 hours a day--or Client Services during business
hours--to exchange from another Vanguard fund account with the same registration
(name, address, taxpayer identification number, and account type).

add to an existing account
Call Vanguard Tele-Account* 24 hours a day--or Client Services during business
hours--to exchange from another Vanguard fund account with the same registration
(name, address, taxpayer identification number, and account type). Use Vanguard
Fund Express (see "Services and Account Features") to transfer assets from your
bank account. Call Client Services before your first use to verify that this
option is in place.

Vanguard Tele-Account Client Services
1-800-662-6273 1-800-662-2739

*You must obtain a Personal Identification Number through Tele-Account at
least seven days before you request your first exchange.
- --------------------------------------------------------------------------------
IMPORTANT NOTE: Once you've requested a telephone transaction and a confirmation
number has been assigned, the transaction cannot be revoked. We reserve the
right to refuse any purchase request.
- --------------------------------------------------------------------------------
By Wire to Open a New Account or Add to an Existing Account [GRAPHIC APPEARS
HERE]
Call Client Services to arrange your wire transaction. Wire transactions are not
available for retirement accounts, except for asset transfers and direct
rollovers.

Wire to:
FRB ABA 021001088
Marine Midland Bank, New York

For credit to:
Account: 000112046
Vanguard Incoming Wire Account

In favor of:
Vanguard Growth and Income Fund-93
[Account number, or temporary number for a new account]
[Registered account owner/s]
[Registered address]
- --------------------------------------------------------------------------------
<PAGE>

Buying Shares (continued)

You can redeem (that is, sell or exchange) shares purchased by check or
Vanguard Fund Express at any time. However, while your redemption request will
be processed at the next-determined net asset value after it is received, your
redemption proceeds will not be available until payment for your purchase is
collected, which may take up to ten calendar days.
- --------------------------------------------------------------------------------
A Note on Large Purchases
It is important that you call Vanguard before you invest a large dollar amount.
We must consider the interests of all Fund shareholders and so reserve the right
to refuse any purchase that will disrupt the Fund's operation or performance.
- --------------------------------------------------------------------------------

Redeeming Shares

This section describes how you can redeem--that is, sell or exchange--the Fund's
shares.

When Selling Shares:
. Vanguard sends the redemption proceeds to you or a designated third party.*
. You can sell all or part of your Fund shares at any time.

*May require a signature guarantee; see footnote on page 16.

When Exchanging Shares:
. The redemption proceeds are used to purchase shares of a different Vanguard
fund.

. You must meet the receiving fund's minimum investment requirements.

. Vanguard reserves the right to revise or terminate the exchange privilege,
limit the amount of an exchange, or reject an exchange at any time, without
notice.

In both cases, your transaction will be based on the Fund's next-determined
share price, subject to any special rules discussed in this prospectus. For
exchanges, the purchase side of the transaction will be based on the receiving
fund's next-determined share price, again subject to any special rules discussed
in this prospectus.
- --------------------------------------------------------------------------------
Note: Once a redemption is processed and a confirmation number given, the
transaction cannot be canceled.
- --------------------------------------------------------------------------------

HOW TO REQUEST A REDEMPTION
You can request a redemption from your Fund account in any one of three ways:
online, by telephone, or by mail.
- --------------------------------------------------------------------------------
Online Requests [GRAPHIC APPEARS HERE]

Access Vanguard at www.vanguard.com
You can use your personal computer to sell or exchange shares of most Vanguard
funds by accessing our website. To establish this service, you must register
through the website. We will then send you, by mail, an account access password
that will enable you to sell or exchange shares online (as well as perform other
transactions).

Note: The Vanguard funds whose shares you cannot exchange online or by
telephone are Vanguard U.S. Stock Index Funds, Vanguard Balanced Index Fund,
Vanguard International Stock Index Funds, Vanguard REIT Index Fund, Vanguard
Total International Stock Index Fund, and Vanguard Growth and Income Fund. These
funds do, however, permit online and telephone exchanges within IRAs and other
retirement accounts. If you sell shares of these funds online, you will receive
a redemption check at your address of record.
- --------------------------------------------------------------------------------
Telephone Requests [GRAPHIC APPEARS HERE]
All Account Types Except Retirement:
Call Vanguard Tele-Account 24 hours a day--or Client Services during business
hours--to sell shares.
<PAGE>

Retirement Accounts:
You can exchange--but not sell--shares by calling Tele-Account or Client
Services.

Vanguard Tele-Account Client Services
1-800-662-6273 1-800-662-2739
- --------------------------------------------------------------------------------
SPECIAL INFORMATION: We will automatically establish the telephone redemption
option for your account, unless you instruct us otherwise in writing. While
telephone redemption is easy and convenient, this account feature involves a
risk of loss from unauthorized or fraudulent transactions. Vanguard will take
reasonable precautions to protect your account from fraud. You should do the
same by keeping your account information private and immediately reviewing any
account statements that we send to you. Make sure to contact Vanguard
immediately about any transaction you believe to be unauthorized.

We reserve the right to refuse a telephone redemption if the caller is unable to
provide:
- --------------------------------------------------------------------------------
. The ten-digit account number.
. The name and address exactly as registered on the account.

. The primary Social Security or employer identification number as registered
on the account.

. The Personal Identification Number, if applicable.

Please note that Vanguard will not be responsible for any account losses due to
telephone fraud, so long as we have taken reasonable steps to verify the
caller's identity. If you wish to remove the telephone redemption feature from
your account, please notify us in writing.
- --------------------------------------------------------------------------------
A Note on Unusual Circumstances

Vanguard reserves the right to revise or terminate the telephone redemption
privilege at any time, without notice. In addition, Vanguard can stop selling
shares or postpone payment at times when the New York Stock Exchange is closed
or under any emergency circumstances as determined by the U.S. Securities and
Exchange Commission. If you experience difficulty making a telephone redemption
during periods of drastic economic or market change, you can send us your
request by regular or express mail. Follow the instructions on selling or
exchanging shares by mail in this section.
- --------------------------------------------------------------------------------
Mail Requests [GRAPHIC APPEARS HERE]
All Account Types Except Retirement:
Send a letter of instruction signed by all registered account holders. Include
the fund name and account number and (if you are selling) a dollar amount or
number of shares OR (if you are exchanging) the name of the fund you want to
exchange into and a dollar amount or number of shares. To exchange into an
account with a different registration (including a different name, address,
taxpayer identification number, or account type), you must provide Vanguard with
written instructions that include the guaranteed signatures of all current
owners of the fund from which you wish to redeem.

Vanguard Retirement Accounts:
For information on how to request distributions from:
. Traditional IRAs and Roth IRAs--call Client Services.
. SEP-IRAs, SIMPLE IRAs, 403(b)(7) custodial accounts, and Profit-Sharing and
Money Purchase Pension (Keogh) Plans--call Individual Retirement Plans at
1-800-662-2003.

Depending on your account registration type, additional documentation may be
required.

First-class mail to: Express or Registered mail to:
The Vanguard Group The Vanguard Group
P.O. Box 1120 455 Devon Park Drive
Valley Forge, PA 19482-1120 Wayne, PA 19087-1815
<PAGE>

Redeeming Shares (continued)

For clients of Vanguard's Institutional Division ...

First-class mail to: Express or Registered mail to:
The Vanguard Group The Vanguard Group
P.O. Box 2900 455 Devon Park Drive
Valley Forge, PA 19482-2900 Wayne, PA 19087-1815
- --------------------------------------------------------------------------------
A Note on Large Redemptions
It is important that you call Vanguard before you redeem a large dollar amount.
We must consider the interests of all fund shareholders and so reserve the right
to delay delivery of your redemption proceeds--up to seven days--if the amount
will disrupt the Fund's operation or performance.
If you redeem more than $250,000 worth of Fund shares within any 90-day period,
the Fund reserves the right to pay part or all of the redemption proceeds above
$250,000 in kind, i.e., in securities, rather than in cash. If payment is made
in kind, you may incur brokerage commissions if you elect to sell the securities
for cash.
- --------------------------------------------------------------------------------

OPTIONS FOR REDEMPTION PROCEEDS
You may receive your redemption proceeds in one of two ways: check, or exchange
to another Vanguard fund.
- --------------------------------------------------------------------------------
Check Redemptions
Normally, Vanguard will mail your check within two business days of a
redemption.
- --------------------------------------------------------------------------------
Exchange Redemptions
As described above, an exchange involves using the proceeds of your redemption
to purchase shares of another Vanguard fund.
- --------------------------------------------------------------------------------

FOR OUR MUTUAL PROTECTION
For your best interests and ours, Vanguard applies these additional requirements
to redemptions:

Request in "Good Order"
All redemption requests must be received by Vanguard in "good order." This means
that your request must include:

. The Fund name and account number.
. The amount of the transaction (in dollars or shares).
. Signatures of all owners exactly as registered on the account (for mail
requests).
. Signature guarantees (if required).*
. Any supporting legal documentation that may be required.
. Any outstanding certificates representing shares to be redeemed.

*For instance, a signature guarantee must be provided by all registered account
shareholders when redemption proceeds are to be sent to a different person or
address. A signature guarantee can be obtained from most banks, credit unions,
and licensed brokers.

Transactions are processed at the next-determined share price after Vanguard has
received all required information.
- --------------------------------------------------------------------------------
Limits on Account Activity Because excessive account transactions can disrupt
management of the Fund and increase the Fund's costs for all shareholders,
Vanguard limits account activity as follows:

. You may make no more than two substantive "round trips" through the Fund
during any 12-month period.
. Your round trips through the Fund must be at least 30 days apart.
. The Fund may refuse a share purchase at any time, for any reason.
. Vanguard may revoke an investor's telephone exchange privilege at any time,
for any reason.

A "round trip" is a redemption from the Fund followed by a purchase back into
the Fund. Also, "round trip" covers transactions accomplished by any combination
of methods, including transactions conducted by check, wire, or exchange to/from
another Vanguard fund. "Substantive" means a dollar amount that Vanguard
determines, in its sole discretion, could adversely affect the management of the
Fund.
- --------------------------------------------------------------------------------
<PAGE>

- --------------------------------------------------------------------------------
Return Your Share Certificates
Any portion of your account represented by share certificates cannot be redeemed
until you return the certificates to Vanguard. Certificates must be returned
(unsigned), along with a letter requesting the sale or exchange you wish to
process, via certified mail to:

The Vanguard Group
455 Devon Park Drive
Wayne, PA 19087-1815
- --------------------------------------------------------------------------------
All Trades Final
Vanguard will not cancel any transaction request (including any purchase or
redemption) that we believe to be authentic once the request has been received
and a confirmation number assigned.
- --------------------------------------------------------------------------------

Transferring Registration

You can transfer the registration of your Fund shares to another owner by
completing a transfer form and sending it to Vanguard.

First-class mail to: Express or Registered mail to:
The Vanguard Group The Vanguard Group
P.O. Box 1110 455 Devon Park Drive
Valley Forge, PA 19482-1110 Wayne, PA 19087-1815

For clients of Vanguard's Institutional Division . . .

Fund and Account Updates

STATEMENTS AND REPORTS
We will send you account and tax statements to help you keep track of your Fund
account throughout the year as well as when you are preparing your income tax
returns.

In addition, you will receive financial reports about the Fund twice a year.
These comprehensive reports include an assessment of the Fund's performance (and
a comparison to its industry benchmark), an overview of the markets, a report
from the advisers, and the Fund's financial statements which include a listing
of the Fund's holdings.

To keep the Fund's costs as low as possible (so that you and other shareholders
can keep more of the Fund's investment earnings), Vanguard attempts to eliminate
duplicate mailings to the same address. When we find that two or more Fund
shareholders have the same last name and address, we send just one Fund report
to that address--instead of mailing separate reports to each shareholder. If you
want us to send separate reports, however, you may notify our Client Services
Department at 1-800-662-2739.
- --------------------------------------------------------------------------------
Confirmation Statement Sent each time you buy,
sell, or exchange shares; confirms the trade date and the amount of your
transaction.
- --------------------------------------------------------------------------------
Portfolio Summary Mailed quarterly for most accounts; shows the
market value of your account at the close of the statement period, as well as
distributions, purchases, sales, and exchanges for the current calendar year.
- --------------------------------------------------------------------------------
<PAGE>

Fund and Account Updates (continued)

- --------------------------------------------------------------------------------
Fund Financial Reports
Mailed in February and August for this Fund.
- --------------------------------------------------------------------------------
Tax Statements
Generally mailed in January; report previous year's dividend and capital gains
distributions, proceeds from the sale of shares, and distributions from IRAs or
other retirement accounts.
- --------------------------------------------------------------------------------
Average Cost Review Statement
Issued quarterly for most taxable accounts (accompanies your Portfolio Summary);
shows the average cost of shares that you redeemed during the calendar year,
using the average cost single category method.
- --------------------------------------------------------------------------------
<PAGE>

(This page intentionally left blank.)
<PAGE>

Glossary of Investment Terms

Capital Gains Distribution
Payment to mutual fund shareholders of gains realized on securities that the
fund has sold at a profit, minus any realized losses.

Cash Reserves
Cash deposits, short-term bank deposits, and money market instruments which
include U.S. Treasury bills, bank certificates of deposit (CDs), repurchase
agreements, commercial paper, and banker's acceptances.

Common Stock
A security representing ownership rights in a corporation. A stockholder is
entitled to share in the company's profits, some of which may be paid out as
dividends.

Dividend Income
Payment to shareholders of income from interest or dividends generated by a
fund's investments.

Expense Ratio
The percentage of a fund's average net assets used to pay its expenses. The
expense ratio includes management fees, administrative fees, and any
12b-1 distribution fees.

Fund Diversification
Holding a variety of securities so that a fund's return is not badly hurt by the
poor performance of a single security or industry.

Growth and Income Stock Fund
A mutual fund that invests in the stocks of companies that seek moderate growth
and some dividend income.

Investment Adviser
An organization that makes the day-to-day decisions regarding a fund's
investments.

Mutual Fund
An investment company that pools the money of many people and invests it in a
variety of securities in an effort to achieve a specific objective over time.

Net Asset Value (NAV)
The market value of a mutual fund's total assets, minus liabilities, divided by
the number of shares outstanding. The value of a single share is called its
share value or share price.

Price/Earnings (P/E) Ratio
The current share price of a stock, divided by its per-share earnings (profits)
from the past year. A stock selling for $20, with earnings of $2 per share, has
a price/earnings ratio of 10.

Principal
The amount of your own money you put into an investment.

Securities
Stocks, bonds, and other investment vehicles.

Total Return
A percentage change, over a specified time period, in a mutual fund's net asset
value, with the ending net asset value adjusted to account for the reinvestment
of all distributions of dividends and capital gains.

Volatility
The fluctuations in value of a mutual fund or other security. The greater a
fund's volatility, the wider the fluctuations between its high and low prices.

Yield
Income (interest or dividends) earned by an investment, expressed as a
percentage of the investment's price.
<PAGE>

[LOGO OF THE VANGUARD GROUP(R) APPEARS HERE]
THE VANGUARD GROUP(R)

Post Office Box 2600
Valley Forge, PA 19482-2600

For More Information
If you'd like more information about Vanguard Growth and Income Fund, the
following documents are available free upon request:

Annual/Semiannual Report to Shareholders
Additional information about the Fund's investments is available in the Fund's
annual and semiannual reports to shareholders. In these reports, you will find a
discussion of the market conditions and investment strategies that significantly
affected the Fund's performance during the most recent fiscal year.

Statement of Additional Information (SAI)
The SAI provides more detailed information about the Fund.

The current annual and semiannual reports and the SAI are incorporated by
reference into (and are thus legally a part of) this prospectus.

To receive a free copy of the latest annual or semiannual report or the SAI, or
to request additional information about the Fund or other Vanguard funds, please
contact us as follows:

The Vanguard Group
Investor Information
Department
P.O. Box 2600
Valley Forge, PA 19482-2600

Telephone:
1-800-662-7447 (SHIP)

Text Telephone:
1-800-952-3335

World Wide Web:
www.vanguard.com

Post Office Box 2600
Valley Forge, PA 19482-2600

If you are a current Fund shareholder and would like information about your
account, account transactions, and/or account statements, please call:

Client Services Department
Telephone:
1-800-662-2739 (CREW)

Text Telephone:
1-800-662-2738

Information provided by the Securities and Exchange Commission (SEC)

You can review and copy information about the Fund (including the SAI) at the
SEC's Public Reference Room in Washington, D.C. To find out more about this
public service, call the SEC at 1-800-SEC-0330. Reports and other information
about the Fund are also available on the SEC's website (www.sec.gov), or you can
receive copies of this information, for a fee, by writing the Public Reference
Section, Securities and Exchange Commission, Washington, DC 20549-6009.

Fund's Investment Company Act
file number: 811-4526

P093N-04/09/1999
<PAGE>

Vanguard Growth and Income Fund
Prospectus
April 9, 1999

A Growth and Income Stock Mutual Fund

Contents

1 Fund Profile

3 Additional Information

3 A Word About Risk

3 Who Should Invest

4 Primary Investment Strategies

6 The Fund and Vanguard

7 Investment Adviser

8 Year 2000 Challenge

8 Dividends, Capital Gains, and Taxes

9 Share Price

10 Financial Highlights

11 Investing with Vanguard

11 Services and Account Features

12 Types of Accounts

12 Buying Shares

14 Redeeming Shares

17 Transferring Registration

17 Fund and Account Updates

Glossary (inside back cover)

- --------------------------------------------------------------------------------
Why Reading This Prospectus Is Important

This prospectus explains the objective, risks, and strategies of Vanguard Growth
and Income Fund. To highlight terms and concepts important to mutual fund
investors, we have provided "Plain Talk(R)" explanations along the way. Reading
the prospectus will help you to decide whether the Fund is the right investment
for you. We suggest that you keep it for future reference.
- --------------------------------------------------------------------------------

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
<PAGE>

Vanguard Growth and Income Fund
Participant Prospectus
April 9, 1999

A Growth and Income Stock Mutual Fund

Contents

1 Fund Profile

3 Additional Information

3 A Word About Risk

3 Who Should Invest

4 Primary Investment Strategies

6 The Fund and Vanguard

7 Investment Adviser

8 Year 2000 Challenge

8 Dividends, Capital Gains, and Taxes

9 Share Price

10 Financial Highlights

11 Investing with Vanguard

11 Accessing Fund Information by Computer

Glossary (inside back cover)

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Why Reading This Prospectus Is Important

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Important Note

This prospectus is intended for participants in employer-sponsored retirement or
savings plans. Another version--for investors who would like to open a personal
investment account--can be obtained by calling Vanguard at 1-800-662-7447.

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Fund Profile

The following profile summarizes key features of Vanguard Growth and Income
Fund.

INVESTMENT STRATEGIES

PRIMARY RISKS
The Fund's total return, like stock prices generally, will fluctuate within a
wide range, so an investor could lose money over short or even long periods. The
Fund is also subject to:

. Manager risk, which is the chance that poor security selection will cause the
Fund to underperform other funds with similar investment objectives.

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Annual Total Returns
- --------------------------------------------------------------------------------

[BAR CHART APPEARS HERE]

1989 32.00%
1990 -2.44%
1991 30.29%
1992 7.01%
1993 13.83%
1994 -0.61%
1995 35.93%
1996 23.06%
1997 35.59%
1998 23.94%

PLAIN TALK ABOUT
The Costs of Investing

PLAIN TALK ABOUT
Fund Expenses

Annual Fund Operating Expenses (expenses deducted from the
Fund's assets)
Management Expenses: 0.33%
12b-1 Distribution Fees: None
Other Expenses: 0.03%
Total Annual Fund Operating Expenses: 0.36%

This example should not be considered to represent actual expenses or
performance from the past or for the future. Actual future expenses may be
higher or lower than those shown.
<PAGE>

Additional Information

Dividends and Capital Gains
Dividends are distributed semiannually in June and December; capital gains, if
any, are distributed annually in December

Investment Adviser
Franklin Portfolio Associates LLC, Boston, Mass., since inception

Inception Date
December 10, 1986

Net Assets as of December 31, 1998
$5.16 billion

Newspaper Abbreviation
GroInc

Vanguard Fund Number
093

Cusip Number
921913109

Ticker Symbol
VQNPX
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A Word About Risk

Who Should Invest

The Fund may be a suitable investment for you if:

PLAIN TALK ABOUT
Costs and Market-Timing

The Vanguard funds do not permit market-timing. Do not invest in this Fund if
you are a market-timer.
<PAGE>

PLAIN TALK ABOUT
Large-Cap, Mid-Cap, and Small-Cap Stocks

The Fund has adopted the following policies, among others, to discourage
short-term trading:

. There is a limit on the number of times you can exchange into and out of the
Fund (see "Exchanges" in the Investing with Vanguard section).

. The Fund reserves the right to stop offering shares at any time.

Primary Investment Strategies

Market Exposure

The Fund invests in a broadly diversified group of common stocks. The Fund
typically invests more than 90% (and never less than 65%) of its assets in
selected stocks that are part of the S&P 500 Index. The stocks that comprise the
S&P 500 Index are mostly large-capitalization stocks that collectively represent
about 70% of the market value of all U.S. common stocks.

[GRAPHIC APPEARS HERE]

The Fund is subject to stock market risk, which is the possibility that stock
prices overall will decline over short or even long periods. Stock markets tend
to move in cycles, with periods of rising prices and periods of falling prices.

The table covers all of the 1-, 5-, 10-, and 20-year periods from 1926 through
1998. You can see, for example, that while the average return on stocks for all
of the 5-year periods was 10.7%, returns for individual 5-year periods ranged
from a -12.4% average (from 1928 through 1932) to 24.1% (from 1994 through
1998). These average returns reflect past performance on common stocks; you
should not regard them as an indication of future returns from either the stock
market as a whole or this Fund in particular.

[GRAPHIC APPEARS HERE]

The Fund is subject to investment style risk, which is the possibility that
returns from large-capitalization stocks--which comprise most of the Fund's
holdings--will trail returns from other asset classes or the overall stock
market. As a group, large-capitalization stocks tend to go through cycles of
doing better--or worse--than common stocks in general. These periods have, in
the past, lasted for as long as several years.

Security Selection
Franklin Portfolio Associates LLC, adviser to the Fund, selects a diversified
group of common stocks in order to pursue the Fund's objective of achieving a
total return greater than that of the S&P 500 Index.

The Fund is generally managed without regard to tax ramifications.

[GRAPHIC APPEARS HERE]
The Fund is subject to manager risk, which is the possibility that the adviser
may do a poor job of selecting stocks.
<PAGE>

PLAIN TALK ABOUT
Turnover Rate

PLAIN TALK ABOUT
Derivatives

Turnover Rate

Although the Fund generally seeks to invest for the long term, it may sell
securities regardless of how long the securities have been held. The Fund's
average turnover rate for the past five years has been about 64%. (A turnover
rate of 100% would occur, for example, if the Fund sold and replaced securities
valued at 100% of its net assets within a one-year period.)

Other Investment Policies and Risks
The Fund may invest, to a limited extent, in foreign securities.

The Fund may also invest, to a limited extent, in stock futures and
options contracts, which are traditional types of derivatives. Losses (or gains)
involving futures can sometimes be substantial--in part because a relatively
small price movement in a futures contract may result in an immediate and
substantial loss (or gain) for a fund. This Fund will not use futures for
speculative purposes or as leveraged investments that magnify the gains or
losses of an investment. The value of all futures and options contracts in which
the Fund acquires an interest cannot exceed 20% of its total assets.

The reasons for which the Fund will invest in futures and options are:

. To keep cash on hand to meet shareholder redemptions or other needs while
simulating full investment in stocks.

. To reduce the Fund's transaction costs or add value when these instruments are
favorably priced.

The Fund may, from time to time, take temporary defensive measures--such as
holding cash reserves without limit--that are inconsistent with the Fund's
primary investment strategies, in response to adverse market, economic,
political, or other conditions. In taking such measures, the Fund may not
achieve its investment objective.

The Fund and Vanguard

PLAIN TALK ABOUT
Vanguard's Unique Corporate Structure

Investment Adviser

The Fund employs Franklin Portfolio Associates LLC, Two International Place,
Boston, MA 02110, as its investment adviser. Franklin Portfolio Associates
manages the Fund subject to the control of the Trustees and officers of the
Fund.

The incentive/penalty fee structure will not be in full operation until April
30, 2001. Until then, Franklin Portfolio Associates' fee will be calculated
using certain transition rules.

For the year ended December 31, 1998, the investment advisory fee paid to
Franklin Portfolio Associates represented an effective annual rate of 0.10% of
the Fund's average net assets.

PLAIN TALK ABOUT
The Fund's Adviser

Year 2000 Challenge

Dividends, Capital Gains, and Taxes

Dividend and capital gains distributions of Fund shares that are held as an
investment option in an employer-sponsored retirement or savings plan will be
reinvested in additional Fund shares and accumulate on a tax-deferred basis. You
will not owe taxes on these distributions until you begin withdrawals. You
should consult your plan administrator, your plan's Summary Plan Description, or
your tax adviser about the tax consequences of an investment in the Fund and of
any plan withdrawals.

PLAIN TALK ABOUT
Distributions

<PAGE>

Share Price

Total Assets - Liabilities
Net Asset Value = ------------------------------------
Number of Shares Outstanding

Knowing the daily net asset value is useful to you as a shareholder because it
indicates the current value of your investment. The Fund's NAV, multiplied by
the number of shares you own, gives you the dollar amount you would have
received had you sold all of your shares back to the Fund that day.
A Note on Pricing: The Fund's investments will be priced at their market value
when market quotations are readily available. When these quotations are not
readily available, investments will be priced at their fair value, calculated
according to procedures adopted by the Fund's Board of Trustees.
The Fund's share price can be found daily in the mutual fund listings of most
major newspapers under the heading "Vanguard Funds." Different newspapers use
different abbreviations of the Fund's name, but the most common is GroInc.
<PAGE>

PLAIN TALK ABOUT
How to Read the Financial Highlights Table

Shareholders received $1.61 per share in the form of dividend and capital
gains distributions. A portion of each year's distributions may come from the
prior year's income or capital gains.

Financial Highlights

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Vanguard Growth and Income Fund
Year Ended December 31,
---------------------------------------------------
1998 1997 1996 1995 1994
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $26.19 $22.23 $19.95 $15.56 $16.45
- ---------------------------------------------------------------------------------------------------
Investment Operations
Net Investment Income .32 .41 .41 .41 .40
Net Realized and Unrealized Gain (Loss)
on Investments 5.86 7.15 4.09 5.14 (.50)
---------------------------------------------------
Total from Investment Operations 6.18 7.56 4.50 5.55 (.10)
---------------------------------------------------
Distributions
Dividends from Net Investment Income (.33) (.42) (.40) (.42) (.39)
Distributions from Realized Capital Gains (1.28) (3.18) (1.82) (.74) (.40)
---------------------------------------------------
Total Distributions (1.61) (3.60) (2.22) (1.16) (.79)
- ---------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $30.76 $26.19 $22.23 $19.95 $15.56
===================================================================================================

Total Return 23.94% 35.59% 23.06% 35.93% -0.61%
===================================================================================================

From time to time, the Vanguard funds advertise yield and total return
figures. Yield is a measure of past dividend income. Total return includes both
past dividend income (assuming that it has been reinvested) plus realized and
unrealized capital appreciation (or depreciation). Neither yield nor total
return should be used to predict the future performance of a fund.

"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.
<PAGE>

Investing with Vanguard

The Fund is an investment option in your retirement or savings plan. Your plan
administrator or your employee benefits office can provide you with detailed
information on how to participate in your plan and how to elect the Fund as an
investment option.

. If you have any questions about the Fund or Vanguard, including the Fund's
investment objective, strategies, or risks, contact Vanguard's Participant
Services Center, toll-free, at 1-800-523-1188.

. If you have questions about your account, contact your plan administrator or
the organization that provides record-keeping services for your plan.

Investment Options and Allocations
Your plan's specific provisions may allow you to change your investment
selections, the amount of your contributions, or how your contributions are
allocated among the investment choices available to you. Contact your plan
administrator or employee benefits office for more details.

Transactions
Contributions, exchanges, or redemptions of the Fund's shares are processed as
soon as they have been received by Vanguard in good order. Good order means that
your request includes complete information on your contribution, exchange, or
redemption, and that Vanguard has received the appropriate assets.

Exchanges
The exchange privilege (your ability to redeem shares from one fund to purchase
shares of another fund) may be available to you through your plan. Although we
make every effort to maintain the exchange privilege, Vanguard reserves the
right to revise or terminate this privilege, limit the amount of an exchange or
reject any exchange, at any time, without notice. Because excessive exchanges
can potentially disrupt the management of the Fund and increase its transaction
costs, Vanguard limits participant exchange activity to no more than four
substantive "round trips" through the Fund (at least 90 days apart) during any
12-month period. A "round trip" is a redemption from the Fund followed by a
purchase back into the Fund. "Substantive" means a dollar amount that Vanguard
determines, in its sole discretion, could adversely affect the management of the
Fund.
Before making an exchange to or from another fund available in your plan,
consider the following:

. Certain investment options, particularly funds made up of company stock or
investment contracts, may be subject to unique restrictions.

. Make sure to read that fund's prospectus. Contact Participant Services,
toll-free, at 1-800-523-1188 for a copy.

. Vanguard can accept exchanges only as permitted by your plan. Contact your
plan administrator for details on the exchange policies that apply to your
plan.

Accessing Fund Information by Computer

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Vanguard on the World Wide Web www.vanguard.com
Use your personal computer to visit Vanguard's education-oriented website, which
provides timely news and information about Vanguard funds and services; an
online "university" that offers a variety of mutual fund classes; and
easy-to-use, interactive tools to help you create your own investment and
retirement strategies.
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<PAGE>