VANGUARD HORIZON FUND--CAPITAL OPPORTUNITY PORTFOLIO
PROSPECTUS SUPPLEMENT
DECEMBER 24, 1997
Effective February 2, 1998, Husic Capital Management will be replaced by
PRIMECAP Management Company (PMC) as the Portfolio's investment adviser. The
Portfolio's investment objective, policies and limitations will remain the same
following this advisory change. However, the Portfolio may realize modest
capital gains as PMC replaces stocks that Husic had purchased. PMC's address is
225 South Lake Avenue, Pasadena, CA 91101.
The Portfolio will pay PMC an advisory fee at the end of each fiscal
quarter. This fee will be calculated by applying a quarterly rate, based on the
following annual percentage rates, to the Portfolio's average month-end net
assets for the quarter:
NET ASSETS RATE
-----------------------------------------------
First $50 million 0.500%
Next $200 million 0.450
Next $250 million 0.375
Next $1.75 billion 0.250
Next $2.75 billion 0.200
Next $5 billion 0.175
Over $10 billion 0.150
In light of the advisory change, the Portfolio will waive its 1% fee on
share redemptions from December 16, 1997, through March 31, 1998.
PS69
