VANGUARD ASSET ALLOCATION FUND INC
497, 1997-11-10
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Vanguard
Asset Allocation
Fund

Fund Profile
November 10, 1997

A member of
The Vanguard Group
<PAGE>
1        OBJECTIVE

Vanguard Asset  Allocation Fund seeks to provide capital growth and income.  The
Fund may not meet these objectives.

2        INVESTMENT STRATEGY

The Fund's assets are allocated among stocks of large companies,  long-term U.S.
Treasury bonds,  and money market  instruments in a mix that, the Fund's adviser
estimates,  will take advantage of the current market  conditions.  There are no
limits on the amount of assets that can be invested in each class.

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:

- - A HIGH  degree of STOCK  MARKET  RISK (the  possibility  that stock  prices in
general will decline over short or extended periods) because of the Fund's stock
holdings.

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 it 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%.

- - A HIGH degree of  INTEREST  RATE RISK (the  possibility  that bond prices will
fall as  interest  rates  rise--and  vice  versa)  because  of the  Fund's  bond
holdings.  For instance,  a 2% increase in interest  rates would cause a 20-year
bond to drop  approximately  20% in value,  while a 2%  decrease  in rates would
cause the same bond to rise about 22% in value.

- - A HIGH degree of MANAGER RISK (the  possibility that the Fund's adviser may do
a poor job of allocating assets among the classes).

<PAGE>

4        APPROPRIATENESS

This Fund may be suitable for investors who:
- -        Want a balanced  investment program that includes the three major asset
         classes (stocks, bonds, and money market instruments).

- -        Plan to invest for at least five years.

- -        Want  a  fund  that  offers  less   investment   risk  and  share-price
         fluctuation than one made up entirely of stocks.

The Fund is not suitable for investors who:
- -        Cannot tolerate fluctuating share prices.

5        FEES AND EXPENSES

Vanguard Asset Allocation  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 1997 was 0.49% of assets.

ANNUAL FUND OPERATING EXPENSES
- ------------------------------
Investment Advisory Fees.............0.09%
Distribution Costs...................0.02
Other Expenses.......................0.38
                                    -----
TOTAL OPERATING EXPENSES.............0.49%
                                    ===== 

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.

1 YEAR          3 YEARS         5 YEARS          10 YEARS
- ---------------------------------------------------------
  $5              $16             $27               $62

This example  should not be considered to represent  past or future  expenses or
performance. Actual expenses may be higher or lower than those shown.

<PAGE>

6        PAST PERFORMANCE

                                   PERFORMANCE
                          ANNUAL RETURNS (%) 1989-1996
                     VANGUARD ASSET               S&P
                    ALLOCATION FUND               500*

1989                     23.7                     31.7
1990                      0.9                     -3.1
1991                     25.6                     30.5
1992                      7.5                      7.6
1993                     13.5                     10.1
1994                     -2.3                      1.3
1995                     35.5                     37.6
1996                     15.7                     23.0


                               PERFORMANCE SUMMARY
                       (PERIODS ENDED SEPTEMBER 30, 1997)
                          AVERAGE ANNUAL TOTAL RETURNS
                         ASSET ALLOCATION            S&P
                               FUND                  500*
1 Year                         29.4%                40.4%
5 Years                        16.7%                20.8%
Since Inception**              15.7%                18.1%

Note: In evaluating past  performance,  it is important to consider that returns
from stocks and bonds 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.
** November 3, 1988.

"Standard & Poor's 500," "S&P  500(R),"  "Standard &  Poor's(R),"  "S&P(R)," and
"500" are trademarks of The McGraw-Hill Companies, Inc.

<PAGE>

7        INVESTMENT ADVISER

The Fund is managed by Mellon  Capital  Management  Corporation,  which  manages
total assets of more than $64 billion.

William Fouse,  Chairman of Mellon Capital Management,  has been responsible for
overseeing his firm's strategy for the Fund since the Fund's inception in 1988.

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 AND EXCHANGES

You may redeem or  exchange  shares by sending a letter to or calling  Vanguard.
You may exchange shares through Vanguard's website at  http://www.vanguard.com.*
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 a loss.

10       DISTRIBUTIONS

The Fund expects to pay dividends semiannually.  Capital gains distributions, if
any,  are  paid  annually.  Dividend  and  capital  gains  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

- -        Vanguard Fund Express(R)--electronic transfers between your bank 
         account and the Fund.
- -        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).
- -        Investor Information--toll-free access to Vanguard Associates by
         calling 1-800-662-7447 (SHIP).

*Before using this service,  you must register  through our website and obtain a
confidential password.

<PAGE>

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  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 can be obtained at no cost by calling Vanguard.

(C) 1997 Vanguard Marketing
Corporation, Distributor

FP78 o  1197-9B


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