Item 1: Reports to Shareholders

Important information about access to shareholder reports

Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of your fund’s annual and semiannual shareholder reports will no longer be sent to you by mail, unless you specifically request them. Instead, you will be notified by mail each time a report is posted on the website and will be provided with a link to access the report.

If you have already elected to receive shareholder reports electronically, you will not be affected by this change and do not need to take any action. You may elect to receive shareholder reports and other communications from the fund electronically by contacting your financial intermediary (such as a broker-dealer or bank) or, if you invest directly with the fund, by calling Vanguard at one of the phone numbers on the back cover of this report or by logging on to vanguard.com.

You may elect to receive paper copies of all future shareholder reports free of charge. If you invest through a financial intermediary, you can contact the intermediary to request that you continue to receive paper copies. If you invest directly with the fund, you can call Vanguard at one of the phone numbers on the back cover of this report or log on to vanguard.com. Your election to receive paper copies will apply to all the funds you hold through an intermediary or directly with Vanguard.

Please note: The opinions expressed in this report are just that—informed opinions. They should not be considered promises or advice. Also, please keep in mind that the information and opinions cover the period through the date on the front of this report. Of course, the risks of investing in your fund are spelled out in the prospectus.

Your Fund’s Performance at a Glance

·    Vanguard Growth and Income Fund returned more than 14% for Investor and Admiral Shares for the 12 months ended September 30, 2020. Its performance trailed its benchmark, which returned more than 15%.

·    After a sharp, pandemic-related decline earlier in 2020, global stocks began a rebound in March that continued into the third quarter. Massive fiscal and monetary support from governments and central banks, signs of economic healing, and reported progress toward a COVID-19 vaccine all buoyed the markets until September, when investor sentiment soured a little.

·    Underweight positions in energy and financials as well as stock selection in information technology contributed positively to performance on a relative basis. Stock selection in consumer discretionary, communication services, and materials detracted the most.

·    For the ten years ended September 30, 2020, the fund’s average annual return slightly underperformed its benchmark.

Advisors’ Report

Vanguard Growth and Income Fund’s Investor Shares returned 14.07% for the 12 months ended September 30, 2020. The Admiral Shares returned 14.19%. The fund’s benchmark, the Standard & Poor’s 500 Index, returned 15.15%.

Your fund is managed by three independent advisors, a strategy that enhances the fund’s diversification by providing exposure to distinct yet complementary investment approaches. It is not uncommon for different advisors to have different views about individual securities or the broader investment environment.

The advisors, the percentage of fund assets each manages, and brief descriptions of their investment strategies are presented in the table on page 7. The advisors have also prepared a discussion of the investment environment that existed during the fiscal year and of how the portfolio’s positioning reflects this assessment. These comments were prepared on October 15, 2020.

D. E. Shaw Investment

Management, L.L.C.

Portfolio Manager:

Philip Kearns, Ph.D., Managing Director

Despite the strong performance of the S&P 500 Index, the 12 months ended September 30, 2020, were a volatile period for equity markets. Equities rose steadily through the fourth quarter of 2019 and the beginning of 2020, as U.S.-China trade negotiations improved risk sentiment. But as the COVID-19 pandemic swept around the world and raised concerns about global economic growth, the S&P 500 Index dropped more than 30% between February 20 and March 23.

U.S. stocks rebounded during the last six months of the period. The recovery was led by large-capitalization technology stocks and other large-cap stocks. The S&P 500 recouped all of its first-quarter losses by early August but gave back some of those gains in September.

The market’s strong performance from the end of March through August seemed to be driven by mostly positive developments in the COVID-19 pandemic. Equity market gains also were likely supported by monetary and fiscal policy efforts to encourage economic growth, including a $2 trillion U.S. government stimulus package. September losses were primarily the result of high valuations in the information technology sector, concerns about vaccine developments, and delays in further fiscal stimulus.

Our quantitative equity investment process deploys alpha models that seek to forecast individual stock returns and risk models that seek to mitigate active exposures— that is, meaningful overweighted and underweighted stakes, relative to our benchmark—to industries, sectors, and common risk factors. However, the resulting portfolios may exhibit small to moderate active exposures to industries, sectors, and risk factors as a byproduct of our focus on bottom-up stock selection.

While we actively monitor market activity, we generally do not make investment decisions in our benchmark-relative equity portfolios that are based on a subjective analysis of the investment environment. We attribute portfolio performance primarily to three major sources: bottom-up stock selection based on our forecasts; exposure to industry groups; and exposure to risk factors such as value, growth, and market capitalization.

Stock-specific exposures were the largest contributors to relative performance during the period. The largest detractors were exposures to technical risk factors—in particular, overweight exposures to small-cap stocks. Underweights to major oil companies and airlines added to relative performance, while overweights to department stores and underweights to semiconductors detracted.

The three largest single-stock contributors were underweight positions in Exxon Mobil and Boeing and an overweight position in Apple. The three largest detractors were underweight positions in Amazon and Salesforce.com and an overweight position in Citigroup.

The U.S. economy remains sluggish and faces uncertainty from domestic and external factors. The front end of the yield curve remains flat, with two- and five-year U.S. Treasury interest rates at historic lows.

During the period, the Federal Reserve reduced its benchmark rate gradually to near 0%. At its August meeting, the central bank provided guidance that indicated it would keep its benchmark rate near zero through 2023, and it moved to an average inflation target of 2% in place of a ceiling of 2%.

Uncertainty about coronavirus vaccine developments, together with the presidential election, also signal a wide range of possible outcomes with significant implications for the U.S. economy.

We believe global developments also present significant risks to the U.S. economy. Global demand continues to be dampened by COVID-19 as governments around the world seek to contain the pandemic. Tensions between the United States and China remain elevated, despite progress in trade negotiations.

Despite these uncertainties, U.S. equity indexes remain near all-time highs, led by large-cap stocks. Bullish equity market valuations may reflect investor optimism and, perhaps, a scarcity of other attractive investment opportunities.

Los Angeles Capital

Portfolio Managers:

Thomas D. Stevens, CFA,

Chairman and Principal

Hal W. Reynolds, CFA,

Chief Investment Officer and Principal

While global markets fell steeply in February and March because of the COVID-19 shock, as a whole, the 12-month period ended September 30, 2020, was strong. The S&P 500 Index was up 15%. Accommodative fiscal and monetary policy and restrained optimism by investors held off what could have been a larger market correction.

COVID-resilient technology stocks led the way, generating a 47% return as the Nasdaq reached new highs. While markets experience fluctuations, the resilience of growth stocks continues as the world relies more on the digital economy to do business. Value stocks continue to be vulnerable as questions remain about the opening of the physical economy and rising corporate debt. LA Capital’s “COVID Beta,” an analytical tool that measures stock-level sensitivities to the crisis, suggests that pandemic-associated risk declined meaningfully between the end of May and the end of September.

While investors continue to favor growth stocks with exposure to the digital economy, the quarter was also marked by positive returns for risk-on factors. Investor sentiment will likely continue to experience above-average volatility because of uncertainties about the path of the virus, the effectiveness of stimulus programs, and consumer behavior.

Peer momentum, defined by overlapping analyst coverage and similar business themes identified through a computer-generated transcript analysis, was a particularly strong measure of performance and added value to the portfolio. Over-weighting growth characteristics and sectors also helped our result. Larger-cap stocks outperformed, but a slight underweight hurt.

Over the 12 months, the portfolio maintained an overweight to information technology while shifting out of real estate and financials. We increased our exposure to companies with strong quality and momentum characteristics. Today, the portfolio is positioned toward more defensive companies with favorable quality metrics such as analyst sentiment, robust cash earnings, superior management and operational skill, and higher profit margins. The portfolio is positioned away both from firms with higher long-term growth and mature firms with higher pension risk.

The portfolio’s largest overweights are to information technology, consumer staples, retail, and health care, while the largest underweights are to communication services, real estate, and utilities.

Investors are paying close attention to economic indicators and interest rates to gauge the course of the global economy. Our investment outlook remains steady heading into the final quarter of 2020, and we expect interest rate volatility to continue to drive equity valuations and factor returns as investors face the uncertainties ahead.

Vanguard Quantitative Equity Group

Portfolio Managers:

James P. Stetler

Binbin Guo, Principal, Head of Alpha

Equity Investments

After a sharp, pandemic-related decline earlier in 2020, global stocks began a rebound in March that continued into the third quarter. Massive fiscal and monetary support from governments and central banks, signs of economic healing, and reported progress toward a COVID-19 vaccine all buoyed the markets. Investor sentiment soured and volatility returned in September, though, amid stretched valuations in the information technology sector, a resurgence in coronavirus infections in some regions, and dimmer chances of a new government aid package in the United States.

In the global bond market, the pandemic led to a wave of issuance, which drove up supply, but demand held up fairly well. Yields ended the quarter little changed.

Although it’s important to understand how overall performance is affected by such macro factors, our approach to investing focuses on specific fundamentals, not technical analysis of stock price movements. We believe that attractive stocks exhibit five key characteristics: high quality—healthy balance sheets and steady cash-flow generation; effective management decisions—sound investment policies that favor internal over external funding; consistent earnings growth—ability to grow earnings year after year; strong market sentiment—market confirmation of our view; and reasonable valuation— shares that are not overpriced.

Using these five themes, we generate a daily composite stock ranking. We then monitor our portfolio based on those rankings and adjust when appropriate to maximize expected returns while minimizing exposure to risks that our research indicates don’t improve returns (such as industry selection and other risks relative to our benchmark).

Over the 12 months ended September 30, 2020, our market sentiment model contributed to our relative performance while our valuation model detracted the most. Our strongest sector results were in information technology, driven in part by strong selection in semiconductor companies. Stock selection in consumer staples, consumer discretionary, and health care detracted the most.

At the stock level, top contributors included overweight positions in information technology companies—Advanced Micro Devices, Apple, and Cadence Design Systems—as well as underweights to Boeing in industrials and Exxon Mobil in energy. Underweight positions in NVIDIA and PayPal in information technology detracted, as did overweights to consumer staples company Coty, energy company Devon Energy, and industrials company General Electric.

About Your Fund’s Expenses

As a shareholder of the fund, you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross income, directly reduce the investment return of the fund.

A fund’s expenses are expressed as a percentage of its average net assets. This figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.

The accompanying table illustrates your fund’s costs in two ways:

·     Based on actual fund return. This section helps you to estimate the actual expenses that you paid over the period. The ”Ending Account Value“ shown is derived from the fund‘s actual return, and the third column shows the dollar amount that would have been paid by an investor who started with $1,000 in the fund. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period.

To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your fund under the heading ”Expenses Paid During Period.“

·    Based on hypothetical 5% yearly return. This section is intended to help you compare your fund‘s costs with those of other mutual funds. It assumes that the fund had a yearly return of 5% before expenses, but that the expense ratio is unchanged. In this case—because the return used is not the fund’s actual return—the results do not apply to your investment. The example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to calculate expenses based on a 5% return. You can assess your fund’s costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds.

Note that the expenses shown in the table are meant to highlight and help you compare ongoing costs only and do not reflect transaction costs incurred by the fund for buying and selling securities. Further, the expenses do not include any purchase, redemption, or account service fees described in the fund prospectus. If such fees were applied to your account, your costs would be higher. Your fund does not carry a “sales load.”

The calculations assume no shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.

You can find more information about the fund’s expenses, including annual expense ratios, in the Financial Statements section of this report. For additional information on operating expenses and other shareholder costs, please refer to your fund’s current prospectus.

The calculations are based on expenses incurred in the most recent six-month period. The fund’s annualized six-month expense ratios for that period are 0.33% for Investor Shares and 0.23% for Admiral Shares. The dollar amounts shown as “Expenses Paid” are equal to the annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by the number of days in the most recent 12-month period (183/366).

Growth and Income Fund

Performance Summary

All of the returns in this report represent past performance, which is not a guarantee of future results that may be achieved by the fund. (Current performance may be lower or higher than the performance data cited. For performance data current to the most recent month-end, visit our website at vanguard.com/performance.) Note, too, that both investment returns and principal value can fluctuate widely, so an investor’s shares, when sold, could be worth more or less than their original cost. The returns shown do not reflect taxes that a shareholder would pay on fund distributions or on the sale of fund shares.

Cumulative Performance: September 30, 2010, Through September 30, 2020

Initial Investment of $10,000

		Average Annual Total Returns
		Periods Ended September 30, 2020
					Final Value
		One	Five	Ten	of a $10,000
		Year	Years	Years	Investment
	Growth and Income Fund Investor Shares	14.07%	13.30%	13.60%	$35,805
	S&P 500 Index	15.15	14.15	13.74	36,244
	Dow Jones U.S. Total Stock Market Float Adjusted Index	14.77	13.60	13.43	35,263

See Financial Highlights for dividend and capital gains information.

Growth and Income Fund

Fund Allocation

As of September 30, 2020

The table reflects the fund's investments, except for short term investments and derivatives. Sector categories are based on the Global Industry Classification Standard (“GICS”), except for the “Other” category (if applicable), which includes securities that have not been provided a GICS classification as of the effective reporting period.

The Global Industry Classification Standard (“GICS”) was developed by and is the exclusive property and a service mark of MSCI Inc. (“MSCI”) and Standard and Poor’s, a division of McGraw-Hill Companies, Inc. (“S&P”), and is licensed for use by Vanguard. Neither MSCI, S&P nor any third party involved in making or compiling the GICS or any GICS classification makes any express or implied warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any such standard or classification. Without limiting any of the foregoing, in no event shall MSCI, S&P, any of its affiliates or any third party involved in making or compiling the GICS or any GICS classification have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.

Growth and Income Fund