UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT
OF
REGISTERED MANAGEMENT COMPANY
Investment Company Act file number: | 811-1530 |
Name of Registrant: | Vanguard Explorer Fund |
Address of Registrant: | P.O. Box 2600 Valley Forge, PA 19482 |
Name and address of agent for service: | R. Gregory Barton, Esquire P.O. Box 876 Valley Forge, PA 19482 |
Registrant’s telephone number, including area code: (610) 669-1000
Date of fiscal year end: | October 31 |
Date of reporting period: | November 1, 2003 - October 31, 2004 |
Item 1: | Reports to Shareholders |
Vanguard® Explorer™ Fund | |
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October 31, 2004 |
![Annual Report Annual Report](https://capedge.com/proxy/N-CSR/0000932471-04-001541/frontcover.gif)
![Your Fund Report Your Fund Report](https://capedge.com/proxy/N-CSR/0000932471-04-001541/yourfundreport.gif)
CONTENTS | |
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1 | LETTER FROM THE CHAIRMAN |
7 | FUND PROFILE |
8 | GLOSSARY OF INVESTMENT TERMS |
9 | PERFORMANCE SUMMARY |
11 | YOUR FUND'S AFTER-TAX RETURNS |
12 | ABOUT YOUR FUND'S EXPENSES |
14 | FINANCIAL STATEMENTS |
SUMMARY | |
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• | The Investor Shares of Vanguard Explorer Fund posted a 2004 fiscal-year return of 6.1%, well ahead of the return of the average small-capitalization growth fund. |
• | Across the stock market, returns were tepid compared with the 2003 fiscal period. |
• | Astute stock selection in the consumer discretionary and health care sectors contributed significantly to the fund's performance. Technology holdings were the most notable laggards. |
VANGUARD’S PLEDGE TO CLIENTS
We recognize that your relationship with Vanguard rests on the twin pillars of trust and excellence, each of which is built upon the character of our people. Our Pledge to Clients reflects our ongoing efforts to deserve your trust and to continually improve so that we can offer you excellence in all that we do.
We will:
• | Put your interests first at all times. |
• | Continually seek to earn your trust by adhering to the highest standards of ethical behavior and fiduciary responsibility. |
• | Strive to be the highest-value provider of investment services, which means outstanding investment performance and service, both at the lowest possible cost. |
• | Communicate candidly not only about the rewards of investing but also about the risks and costs. |
• | Maintain highly effective controls to safeguard your assets and protect your confidential information. |
• | Invest a majority of our personal assets alongside yours. |
Please note: The opinions expressed in this report are just that—informed opinions. They should not be considered promises or advice.
Want less clutter in your mailbox? Just register with Vanguard.com® and opt to get fund reports online. | |
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LETTER FROM THE CHAIRMAN
![John J. Brennan John J. Brennan](https://capedge.com/proxy/N-CSR/0000932471-04-001541/brennanpic.gif)
Dear Shareholder,
The Explorer Fund had a 2004 fiscal year that was quite different from its 2003 fiscal year. For the 12 months ended October 31, Explorer returned 6.1% for Investor Shares and 6.2% for Admiral Shares. Although these gains were modest compared with last year’s return of more than 40%, the fund held up quite well in fiscal 2004 compared with its performance yardsticks.
The fund’s returns were in line with the result of small growth stocks in general, as measured by the Russell 2500 Growth Index, and surpassed the return of the average peer fund by 3.6 percentage points. Numerous strongly performing stock selections accounted for the fund’s success.
2004 Total Returns | Fiscal Year Ended October 31 |
---|---|
Vanguard Explorer Fund | |
Investor Shares | 6.1% |
Admiral Shares | 6.2 |
Russell 2500 Growth Index | 6.1 |
Average Small-Cap Growth Fund* | 2.5 |
Dow Jones Wilshire 5000 Index | 10.0 |
*Derived from data provided by Lipper Inc. |
The adjacent table presents the total returns (capital change plus reinvested distributions) for Explorer’s Investor and Admiral Shares as well as for the fund’s comparative measures and the broad U.S. stock market, as measured by the Dow Jones Wilshire 5000 Composite Index. The table on page 6 shows the change in the fund’s net asset values over the period. If your fund investment is a taxable account, you may wish to see page 11 for a report on the fund’s after-tax returns.
STOCKS LOCKED IN THEIR EARLY GAINS
The rally in stocks that began in 2003 carried into January, but then lost momentum. For the broad stock market, the gains recorded early in the fiscal year held at the end, despite sharp market swings in the
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Admiral™ Shares
A lower-cost class of shares available to many longtime shareholders and to those with significant investments in the fund.
latter half of the period. Investors digested the good and the bad as solid corporate earnings growth and positive economic reports competed for attention with ever-rising prices for crude oil and pronounced geopolitical uncertainties. For the 12 months, the Dow Jones Wilshire 5000 Index returned 10.0%.
Smaller-capitalization stocks provided higher returns for the fiscal year than did large-caps. Across the market-cap spectrum, value-oriented stocks (those that generally trade at below-market valuations relative to their book values and other fundamental measures) earned far better returns than growth-oriented issues (those expected to produce above-average earnings growth). Value investors benefited handsomely from gains among companies producing and selling oil and raw materials. Returns from most international markets were enhanced for U.S.-based investors by the continued weakness of the greenback relative to major currencies.
THE BOND MARKET WAS SWAYED BY ECONOMIC UNCERTAINTIES
Yields of bonds fell during the first half of the period, boosting bond prices and returns. In April, however, yields began to climb on reports of higher-than-expected inflation and strong job growth. Yields tailed off again in August and September, as reports suggested the economic recovery had lost some steam. The yield of the 10-year U.S. Treasury note, a benchmark for longer-term interest rates, started the fiscal year at 4.29%, dropped to a low of 3.69% in March, climbed to 4.65% by the end of May, and finished the period at 4.02%.
Investment-grade taxable bonds, as measured by the Lehman Brothers Aggregate Bond Index, recorded another strong year, returning 5.5% for the 12 months, slightly ahead of their three-year average. Below-investment-grade bonds were the best performers, however, benefiting from improved corporate fundamentals and investors’ appetite for higher yields.
The yield of the 3-month Treasury bill (a proxy for money market rates) rose 0.94 percentage point over the fiscal year in response to the Federal Reserve Board’s three separate actions—in June, August, and September—to raise its target for the federal funds rate. The T-bill, which yielded 0.95% at the start of the fiscal year, yielded 1.89% as of October 31.
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RETAIL AND HEALTH STOCKS FLOURISHED; TECH STOCKS LAGGED
The fund’s performance in the 12 months ended October 31, 2004, reflected a cooling of the speculative fervor that developed among stock investors during the 2003 fiscal year. While smaller, riskier securities—most notably technology stocks—dominated the prior period, they were spurned in fiscal 2004 as investors refocused on reasonably valued companies with good earnings records. The fund had modest returns for both halves of the period, rising 3.7% in the first six months and 2.3% in the second. Nine of the 12 sectors in which Explorer invests had positive 12-month returns; seven of the nine posted double-digit gains.
The fund’s best-performing stocks were in the consumer discretionary and health care sectors. Consumer discretionary issues, which accounted for nearly 25% of Explorer’s assets on average, contributed 2.6 percentage points of the fund’s 6.1% return. Many of the sector’s retailers posted excellent results, as consumer spending stayed healthy and earnings rose despite lingering concerns over the economy’s strength. The fund’s health care holdings (nearly 19% of assets on average) also turned in very good results in the aggregate, contributing 2 percentage points to the total return. Among this sector’s strong performers were numerous biotechnology concerns and makers of medical devices. More modest gains came from the “other energy” sector—which was bolstered by high oil prices—as well as from the financial services and materials & processing sectors.
Market Barometer | Average Annual Total Returns Periods Ended October 31, 2004 | ||||||
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One Year | Three Years | Five Years | |||||
Stocks | |||||||
Russell 1000 Index(Large-caps) | 9.3 | % | 4.5 | % | -1.6 | % | |
Russell 2000 Index(Small-caps) | 11.7 | 12.3 | 7.7 | ||||
Dow Jones Wilshire 5000 Index | 10.0 | 5.8 | -0.9 | ||||
(Entire market) | |||||||
MSCI All Country World Index | |||||||
ex USA (International) | 19.7 | 11.6 | 0.4 | ||||
Bonds | |||||||
Lehman Aggregate Bond Index | 5.5 | % | 5.4 | % | 7.6 | % | |
(Broad taxable market) | |||||||
Lehman Municipal Bond Index | 6.0 | 5.7 | 7.2 | ||||
Citigroup 3-Month Treasury Bill Index | 1.1 | 1.4 | 2.9 | ||||
CPI | |||||||
Consumer Price Index | 3.2 | % | 2.4 | % | 2.6 | % | |
On the other side of the coin, the fund’s stake in technology (20% of assets on average) was a drain on performance, erasing nearly 3 percentage points from the overall return. Explorer’s tech holdings posted a disappointing –13.4% return, almost a percentage point worse than the return of the index sector. While there were some good performers among the fund’s tech stocks, the majority saw declines. Small-cap tech issues were vulnerable to the market’s
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shifting sentiment in the period, as investors turned away from companies that lacked proven products, competitive market positions, and solid fundamentals.
The Explorer Fund’s five advisors make it a priority to emphasize reasonable stock valuations. They are not willing to pay a premium for growth potential alone. This “growth at a reasonable price” philosophy benefited the fund once again during fiscal 2004. In our view, the multi-advisor structure provides a valuable diversification of strategy, allowing Explorer to benefit from the strengths of each manager’s approach as the advisors search out the best holdings to meet the fund’s objective. (The table below shows the percentage of assets managed by each advisor at the fiscal year-end.)
TEN-YEAR RECORD: THE FUND ECLIPSES ITS BENCHMARKS
It is imprudent to judge the relative success of a fund by one-year performance figures; short-term volatility can make comparisons unfair and meaningless. However, a look at longer-term results sheds light on the enduring character of a fund and helps balance the inevitable “bad” years with the “good” years.
As the table on page 5 shows, the Explorer Fund has an impressive performance record for the past decade. In the first column, the table shows the annualized returns for your fund, its benchmarks, and the broad U.S. stock market. In the second, it shows the growth of hypothetical $10,000 investments made in each at the start of the period.
Fund Assets Managed | October 31, 2004 | ||||
---|---|---|---|---|---|
$ Million | Percentage | ||||
Grantham, Mayo, Van Otterloo & Co. LLC | $2,378 | 29 | % | ||
Vanguard Quantitative Equity Group | 2,048 | 24 | |||
Granahan Investment Management, Inc. | 1,836 | 22 | |||
Wellington Management Company, LLP | 1,281 | 15 | |||
Chartwell Investment Partners | 632 | 7 | |||
Cash Investments* | 288 | 3 | |||
Total | $8,463 | 100 | % | ||
* | These short-term reserves are invested by The Vanguard Group in equity index products to simulate investment in stocks. Each advisor may also maintain a modest cash position. |
Your fund’s advantage is clear. While a $10,000 investment in the Russell 2500 Growth Index would have increased to $21,942, the same investment in Explorer would have reached $28,282, an advantage of 2.8 percentage points annually and a surplus of $6,340 over ten years. This is a notable accomplishment, given that indexes
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lack the real-world operating and transaction costs that mutual funds incur. Your fund also outpaced the gains of both the average competing fund and the broad market.
KEEP THINGS SIMPLE THROUGH ALL TYPES OF MARKETS
The Explorer Fund invests in a very unpredictable segment of the stock market. However, the time-tested strategies of its investment advisors remain steadfast through bull and bear markets alike, an approach that clearly has benefited the fund over the years. Likewise, you can weather the markets’ uncertainties by sticking with a well-planned strategy.
Total Returns | Ten Years Ended October 31, 2004 | ||||
---|---|---|---|---|---|
Average Annual Return | Final Value of a $10,000 Initial Investment | ||||
Explorer Fund | |||||
Investor Shares | 11.0 | % | $28,282 | ||
Russell 2500 Growth Index | 8.2 | 21,942 | |||
Average Small-Cap | |||||
Growth Fund | 10.4 | 27,013 | |||
Dow Jones Wilshire | |||||
5000 Index | 10.7 | 27,743 | |||
At Vanguard, we believe that investors should choose a portfolio of diversified stock, bond, and money market funds in proportions determined by their unique goals, circumstances, and risk tolerance. Such a balanced strategy enables you to benefit from the gains of whichever asset class happens to be leading the market, while it gives you some cushioning from the weaknesses of the other asset classes. As one element of such a diversified portfolio, the Explorer Fund can play a valuable role.
We appreciate the trust you place in Vanguard every day.
Sincerely,
![John J. Brennan John J. Brennan](https://capedge.com/proxy/N-CSR/0000932471-04-001541/sigjjb.gif)
John J. Brennan
CHAIRMAN AND CHIEF EXECUTIVE OFfiCER
NOVEMBER 15, 2004
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Your Fund's Performance at a Glance | October 31, 2003-October 31, 2004 | |||
---|---|---|---|---|
Distributions Per Share | ||||
Starting Share Price | Ending Share Price | Income Dividends | Capital Gains | |
Explorer Fund | ||||
Investor Shares | $63.17 | $67.01 | $0.00 | $0.00 |
Admiral Shares | 58.71 | 62.37 | 0.00 | 0.00 |
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As of 10/31/2004 | FUND PROFILE This Profile provides a snapshot of the fund's characteristics, compared where indicated with both an appropriate market index and a broad market index. Key terms are defined on page 8. |
EXPLORER FUND
Portfolio Characteristics | Fund | Comparative Index* | Broad Index** |
---|---|---|---|
Number of Stocks | 961 | 1,665 | 5,004 |
Median Market Cap | $1.7B | $1.7B | $26.2B |
Price/Earnings Ratio | 25.0x | 27.6x | 22.0x |
Price/Book Ratio | 2.9x | 3.4x | 2.7x |
Yield | 0.5% | 1.6% | |
Investor Shares | 0.0% | ||
Admiral Shares | 0.1% | ||
Return on Equity | 11.9% | 13.3% | 15.8% |
Earnings Growth Rate | 14.4% | 16.0% | 7.4% |
Foreign Holdings | 2.1% | 0.0% | 0.9% |
Turnover Rate | 82% | — | — |
Expense Ratio | — | — | |
Investor Shares | 0.57% | ||
Admiral Shares | 0.43% | ||
Short-Term Reserves | 3% | — | — |
Volatility Measures | Fund | Comparative Index* | Fund | Broad Index** |
---|---|---|---|---|
R-Squared | 0.98 | 1.00 | 0.82 | 1.00 |
Beta | 0.96 | 1.00 | 1.17 | 1.00 |
Sector Diversification (% of portfolio) | Fund | Comparative Index* | Broad Index** | ||||
---|---|---|---|---|---|---|---|
Auto & Transportation | 4 | % | 4 | % | 3 | % | |
Consumer Discretionary | 24 | 25 | 16 | ||||
Consumer Staples | 1 | 1 | 6 | ||||
Financial Services | 11 | 13 | 23 | ||||
Health Care | 18 | 19 | 12 | ||||
Integrated Oils | 0 | 0 | 4 | ||||
Other Energy | 6 | 4 | 3 | ||||
Materials & Processing | 5 | 6 | 4 | ||||
Producer Durables | 8 | 8 | 4 | ||||
Technology | 17 | 19 | 14 | ||||
Utilities | 2 | 1 | 7 | ||||
Other | 1 | 0 | 4 | ||||
Short-Term Reserves | 3 | % | — | — | |||
Ten Largest Holdings (% of total net assets) | |||
---|---|---|---|
Nextel Partners, Inc. | 0.7 | % | |
(telecommunications) | |||
Alliance Data Systems Corp. | 0.6 | ||
(financial services) | |||
Foot Locker, Inc. | 0.6 | ||
(retail) | |||
Bausch & Lomb, Inc. | 0.6 | ||
(medical) | |||
Urban Outfitters, Inc. | 0.6 | ||
(retail) | |||
MSC Industrial Direct Co., Inc. Class A | 0.6 | ||
(industrial manufacturing) | |||
Acxiom Corp. | 0.5 | ||
(business services) | |||
Brunswick Corp. | 0.4 | ||
(automotive and transport) | |||
American Eagle Outfitters, Inc. | 0.4 | ||
(retail) | |||
Cooper Cos., Inc. | 0.4 | ||
(health care) | |||
Top Ten | 5.4 | % | |
“Ten Largest Holdings” excludes any temporary cash investments and equity index products.
Investment Focus
![Investment Focus Investment Focus](https://capedge.com/proxy/N-CSR/0000932471-04-001541/if_stock3.gif)
*Russell 2500 Growth Index. **Dow Jones Wilshire 5000 Index. | Visit our website at Vanguard.com for regularly updated fund information. |
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GLOSSARY OF INVESTMENT TERMS
Beta. A measure of the magnitude of a fund’s past share-price fluctuations in relation to the ups and downs of a given market index. The index is assigned a beta of 1.00. Compared with a given index, a fund with a beta of 1.20 typically would have seen its share price rise or fall by 12% when the index rose or fell by 10%. A fund’s beta should be reviewed in conjunction with its R-squared (see definition below). The lower the R-squared, the less correlation there is between the fund and the index, and the less reliable beta is as an indicator of volatility.
Earnings Growth Rate. The average annual rate of growth in earnings over the past five years for the stocks now in a fund.
Expense Ratio. The percentage of a fund’s average net assets used to pay its annual administrative and advisory expenses. These expenses directly reduce returns to investors.
Foreign Holdings. The percentage of a fund’s equity assets represented by stocks or depositary receipts of companies based outside the United States.
Median Market Cap. An indicator of the size of companies in which a fund invests; the midpoint of market capitalization (market price x shares outstanding) of a fund’s stocks, weighted by the proportion of the fund’s assets invested in each stock. Stocks representing half of the fund’s assets have market capitalizations above the median, and the rest are below it.
Price/Book Ratio. The share price of a stock divided by its net worth, or book value, per share. For a fund, the weighted average price/book ratio of the stocks it holds.
Price/Earnings Ratio. The ratio of a stock’s current price to its per-share earnings over the past year. For a fund, the weighted average P/E of the stocks it holds. P/E is an indicator of market expectations about corporate prospects; the higher the P/E, the greater the expectations for a company’s future growth.
R-Squared. A measure of how much of a fund’s past returns can be explained by the returns from the market in general, as measured by a given index. If a fund’s total returns were precisely synchronized with an index’s returns, its R-squared would be 1.00. If the fund’s returns bore no relationship to the index’s returns, its R-squared would be 0.
Return on Equity. The annual average rate of return generated by a company during the past five years for each dollar of shareholder’s equity (net income divided by shareholder’s equity). For a fund, the weighted average return on equity for the companies whose stocks it holds.
Short-Term Reserves. The percentage of a fund invested in highly liquid, short-term securities that can be readily converted to cash.
Turnover Rate. An indication of the fund’s trading activity. Funds with high turnover rates incur higher transaction costs and may be more likely to distribute capital gains (which may be taxable to investors).
Yield. A snapshot of a fund’s income from interest and dividends. The yield, expressed as a percentage of the fund’s net asset value, is based on income earned over the past 30 days and is annualized, or projected forward for the coming year. The index yield is based on the current annualized rate of income provided by securities in the index.
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As of 10/31/2004 | 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. (For performance data current to the most recent month-end, which may be higher or lower than that cited, visit our website at www.vanguard.com.) 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. |
EXPLORER FUND
Cumulative Performance October 31, 1994–October 31, 2004
![Cumulative Performance Cumulative Performance](https://capedge.com/proxy/N-CSR/0000932471-04-001541/explorer_mtn.gif)
Average Annual Total Returns Periods Ended October 31, 2004 | Final Value | ||||||||
---|---|---|---|---|---|---|---|---|---|
One Year | Five Years | Ten Years | of a $10,000 Investment | ||||||
Explorer Fund Investor Shares | 6.08 | % | 9.09 | % | 10.96 | % | $28,282 | ||
Dow Jones Wilshire 5000 Index | 10.00 | -0.94 | 10.74 | 27,743 | |||||
Russell 2500 Growth Index | 6.14 | 1.13 | 8.18 | 21,942 | |||||
Average Small-Cap Growth Fund* | 2.52 | 2.51 | 10.45 | 27,013 | |||||
One Year | Since Inception** | Final Value of a $250,000 Investment | |||||
---|---|---|---|---|---|---|---|
Explorer Fund Admiral Shares | 6.23 | % | 7.84 | % | $312,771 | ||
Dow Jones Wilshire 5000 Index | 10.00 | 4.14 | 281,958 | ||||
Russell 2500 Growth Index | 6.14 | 5.58 | 293,735 | ||||
Fiscal-Year Total Returns (%) October 31, 1994–October 31, 2004
![Fiscal-Year Total Returns (%) Fiscal-Year Total Returns (%)](https://capedge.com/proxy/N-CSR/0000932471-04-001541/explorer_bar.gif)
*Derived from data provided by Lipper Inc.
**November 12, 2001.
Note: See Financial Highlights tables on pages 29 and 30 for dividend and capital gains information.
9
PERFORMANCE SUMMARIES (CONTINUED)
Average Annual Total Returns for periods ended September 30, 2004
This table presents average annual total returns through the latest calendar quarter— rather than through the end of the fiscal period. Securities and Exchange Commission rules require that we provide this information.
One | Five | Ten Years | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Inception Date | Year | Years | Capital | Income | Total | ||||||||
Explorer Fund | |||||||||||||
Investor Shares | 12/11/1967 | 12.56 | % | 9.11 | % | 10.38 | % | 0.33 | % | 10.71 | % | ||
Admiral Shares | 11/12/2001 | 12.72 | 7.13 | * | — | — | — | ||||||
*Return since inception |
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YOUR FUND’S AFTER-TAX RETURNS
This table presents returns for your fund both before and after taxes. The after-tax returns are shown in two ways: (1) assuming that an investor owned the fund during the entire period and paid taxes on the fund’s distributions, and (2) assuming that an investor paid taxes on the fund’s distributions and sold all shares at the end of each period.
Calculations are based on the highest individual federal income tax and capital gains tax rates in effect at the times of the distributions and the hypothetical sales. State and local taxes were not considered. After-tax returns reflect the reduced tax rates on ordinary income (including qualified dividend income) and short-term capital gains that became effective as of January 1, 2003, and on long-term capital gains realized on or after May 6, 2003. To calculate qualified dividend income, we used actual 2003 figures and estimates for 2004. (In the example, returns after the sale of fund shares may be higher than those assuming no sale. This occurs when the sale would have produced a capital loss. The calculation assumes that the investor received a tax deduction for the loss.)
The table shows returns for Investor Shares only; returns for other share classes will differ. Please note that your actual after-tax returns will depend on your tax situation and may differ from those shown. Also note that if you own the fund in a tax-deferred account, such as an individual retirement account or a 401(k) plan, this information does not apply to you. Such accounts are not subject to current taxes.
Finally, keep in mind that a fund’s performance—whether before or after taxes—does not guarantee future results.
Average Annual Total Returns | Periods Ended October 31, 2004 | ||||||
---|---|---|---|---|---|---|---|
One Year | Five Years | Ten Years | |||||
Explorer Fund Investor Shares | |||||||
Returns Before Taxes | 6.08 | % | 9.09 | % | 10.96 | % | |
Returns After Taxes on Distributions | 6.08 | 6.97 | 8.94 | ||||
Returns After Taxes on Distributions and Sale of Fund Shares | 3.95 | 6.67 | 8.51 | ||||
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ABOUT YOUR FUND’S EXPENSES
We believe it is important for you to understand the impact of costs on your investment. All mutual funds have operating 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 table below 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. |
Six Months Ended October 31, 2004 | |||
---|---|---|---|
Explorer Fund | Beginning Account Value 4/30/2004 | Ending Account Value 10/31/2004 | Expenses Paid During Period* |
Based on Actual Fund Return | |||
Investor Shares | $1,000.00 | $1,022.90 | $2.70 |
Admiral Shares | 1,000.00 | 1,023.47 | 2.14 |
Based on Hypothetical 5% Yearly Return | |||
Investor Shares | $1,000.00 | $1,022.47 | $2.69 |
Admiral Shares | 1,000.00 | 1,023.03 | 2.14 |
* | 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 0.53% for Investor Shares and 0.42% 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. |
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Expense Ratios: Your fund compared with its peer group | |||
---|---|---|---|
Investor Shares | Admiral Shares | Average Small-Cap Growth Fund | |
Explorer Fund | 0.57% | 0.43% | 1.78%* |
* | Peer-group expense ratio is derived from data provided by Lipper Inc. and captures information through year-end 2003. |
Note that the expenses shown in the table on page 12 are meant to highlight and help you compare ongoing costs only and do not reflect any transactional costs or account maintenance fees. They do not include your fund’s low-balance fee, which is described in the prospectus. If this fee were applied to your account, your costs would be higher. Your fund does not charge transaction fees, such as purchase or redemption fees, nor does it 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 the appropriate fund prospectus.
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As of 10/31/2004 | FINANCIAL STATEMENTS |
STATEMENT OF NET ASSETS
This Statement provides a detailed list of the fund’s holdings, including each security’s market value on the last day of the reporting period. Securities are grouped and subtotaled by asset type (common stocks, bonds, etc.) and by industry sector. Other assets are added to, and liabilities are subtracted from, the value of Total Investments to calculate the fund’s Net Assets. Finally, Net Assets are divided by the outstanding shares of the fund to arrive at its share price, or Net Asset Value (NAV) Per Share.
At the end of the Statement of Net Assets, you will find a table displaying the composition of the fund’s net assets. Because all income and any realized gains must be distributed to shareholders each year, the bulk of net assets consists of Paid-in Capital (money invested by shareholders). The amounts shown for Undistributed Net Investment Income and Accumulated Net Realized Gains usually approximate the sums the fund had available to distribute to shareholders as income dividends or capital gains as of the statement date, but may differ because certain investments or transactions may be treated differently for financial statement and tax purposes. Any Accumulated Net Realized Losses, and any cumulative excess of distributions over net income or net realized gains, will appear as negative balances. Unrealized Appreciation (Depreciation) is the difference between the market value of the fund’s investments and their cost, and reflects the gains (losses) that would be realized if the fund were to sell all of its investments at their statement-date values. The fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the fund’s semiannual and annual reports to shareholders. For the first and third quarters, the fund files the lists with the Securities and Exchange Commission on Form N-Q. Shareholders can look up the fund’s Forms N-Q on the SEC’s website at www.sec.gov. Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room (see the back cover of this report for further information).
Explorer Fund | Shares | Market Value^ (000) |
---|---|---|
COMMON STOCKS (92.5%)(1) | ||
Auto & Transportation (3.6%) | ||
C.H. Robinson Worldwide, Inc. | 628,500 | $33,901 |
J.B. Hunt Transport Services, Inc. | 555,800 | 22,710 |
CNF Inc. | 505,400 | 22,126 |
Polaris Industries, Inc. | 371,001 | 22,019 |
*AMR Corp. | 2,282,900 | 17,624 |
Heartland Express, Inc. | 812,940 | 16,633 |
Oshkosh Truck Corp. | 276,300 | 16,274 |
Tidewater Inc. | 504,800 | 15,613 |
*Landstar System, Inc. | 229,160 | 15,569 |
Visteon Corp. | 1,964,200 | 13,965 |
*Swift Transportation Co., Inc. | 690,972 | 13,059 |
*AirTran Holdings, Inc. | 1,071,700 | 12,453 |
Winnebago Industries, Inc. | 322,700 | 10,133 |
Thor Industries, Inc. | 291,500 | 8,107 |
Dana Corp. | 458,200 | 6,832 |
*EGL, Inc. | 211,085 | 6,750 |
*Navistar International Corp. | 178,299 | 6,160 |
*Wabash National Corp. | 228,800 | 5,624 |
Overseas Shipholding Group Inc. | 87,800 | 5,000 |
*ExpressJet Holdings, Inc. | 434,500 | 4,832 |
Fairmont Hotels & Resorts, Inc. | 137,885 | 3,913 |
*Old Dominion Freight Line, Inc. | 135,500 | 3,797 |
*Tenneco Automotive, Inc. | 294,800 | 3,756 |
*Genesee & Wyoming Inc. | ||
Class A | 141,900 | 3,593 |
*Mesa Air Group Inc. | 521,200 | 2,992 |
*Knight Transportation, Inc. | 124,900 | 2,934 |
Monaco Coach Corp. | 154,200 | 2,737 |
Superior Industries | ||
International, Inc. | 100,000 | 2,727 |
*Yellow Roadway Corp. | 55,400 | 2,659 |
Florida East Coast | ||
Industries, Inc. Class A | 68,500 | 2,593 |
307,085 | ||
14
Shares | Market Value^ (000) | |
---|---|---|
Consumer Discretionary (22.7%) | ||
Advertising Agencies (1.2%) | ||
Catalina Marketing Corp. | 1,212,200 | $31,044 |
*ValueClick, Inc. | 2,309,462 | 21,455 |
*Lamar Advertising Co. Class A | 363,770 | 15,067 |
ADVO, Inc. | 446,700 | 14,272 |
*R.H. Donnelley Corp. | 132,300 | 7,177 |
*Valassis Communications, Inc. | 117,000 | 4,022 |
Harte-Hanks, Inc. | 104,400 | 2,687 |
*Ventiv Health, Inc. | 148,800 | 2,574 |
*aQuantive, Inc. | 120,528 | 1,079 |
Cable Television Services (0.4%) | ||
*Astro All Asia Networks PLC | 7,458,300 | 10,206 |
*TiVo Inc. | 1,421,800 | 9,562 |
*Insight Communications Co., Inc. | 961,500 | 8,134 |
*Charter Communications, Inc. | 714,400 | 1,800 |
Casinos & Gambling (1.4%) | ||
Station Casinos, Inc. | 431,850 | 22,003 |
*Argosy Gaming Co. | 437,000 | 17,301 |
Mandalay Resort Group | 170,200 | 11,710 |
*Caesars Entertainment, Inc. | 647,600 | 11,592 |
*Aztar Corp. | 365,000 | 11,297 |
*Shuffle Master, Inc. | 254,100 | 10,695 |
*Scientific Games Corp. | 368,735 | 7,810 |
Ameristar Casinos, Inc. | 155,691 | 5,406 |
*WMS Industries, Inc. | 168,025 | 4,915 |
*Isle of Capri Casinos, Inc. | 207,230 | 4,694 |
Boyd Gaming Corp. | 102,400 | 3,429 |
GTECH Holdings Corp. | 120,700 | 2,857 |
*Multimedia Games Inc. | 177,000 | 2,336 |
Harrah's Entertainment, Inc. | 22,650 | 1,326 |
*MTR Gaming Group Inc. | 126,000 | 1,134 |
Commercial Information Services (0.2%) | ||
*Ask Jeeves, Inc. | 371,615 | 9,580 |
*ProQuest Co. | 181,100 | 4,719 |
*infoUSA Inc. | 217,128 | 2,274 |
Communications & Media | ||
*Gemstar-TV Guide | ||
International, Inc. | 474,800 | 2,730 |
*Entravision Communications Corp. | 61,600 | 496 |
Consumer Electronics (0.9%) | ||
Harman International | ||
Industries, Inc. | 162,100 | 19,481 |
*InfoSpace, Inc. | 282,990 | 14,857 |
*Earthlink, Inc. | 859,400 | 8,878 |
*iVillage Inc. | 1,720,400 | 8,817 |
*Take-Two Interactive | ||
Software, Inc. | 186,660 | $6,152 |
*Activision, Inc. | 342,800 | 4,964 |
*United Online, Inc. | 481,321 | 4,520 |
*CNET Networks, Inc. | 327,296 | 2,674 |
*NetFlix.com, Inc. | 160,900 | 1,524 |
*THQ Inc. | 20,000 | 378 |
Consumer Products (0.4%) | ||
Matthews International Corp. | 121,042 | 4,056 |
Tupperware Corp. | 237,100 | 3,957 |
Blyth, Inc. | 129,400 | 3,891 |
*The Yankee Candle Co., Inc. | 132,000 | 3,656 |
*Jarden Corp. | 101,500 | 3,565 |
Oakley, Inc. | 239,100 | 3,037 |
The Nautilus Group, Inc. | 137,950 | 2,711 |
The Topps Co., Inc. | 211,900 | 2,136 |
*RC2 Corp. | 66,400 | 1,850 |
Alberto-Culver Co. Class B | 21,500 | 964 |
Cosmetics (0.2%) | ||
*Helen of Troy Ltd. | 441,800 | 11,730 |
Nu Skin Enterprises, Inc. | 213,900 | 4,137 |
Education--Services (0.4%) | ||
*ITT Educational Services, Inc. | 406,500 | 15,451 |
*Education Management Corp. | 458,093 | 12,286 |
*Bright Horizons Family | ||
Solutions, Inc. | 83,000 | 5,254 |
*Laureate Education Inc. | 112,157 | 4,399 |
Strayer Education, Inc. | 6,644 | 645 |
Electrical--Household Appliances (0.1%) | ||
Maytag Corp. | 283,200 | 4,928 |
Entertainment (0.6%) | ||
*AMC Entertainment, Inc. | 907,100 | 17,425 |
*LodgeNet Entertainment Corp. | 799,800 | 10,837 |
Movie Gallery, Inc. | 513,686 | 8,311 |
*Gaylord Entertainment Co. | 180,800 | 6,059 |
*Hollywood Entertainment Corp. | 414,900 | 4,033 |
Funeral Parlors & Cemeteries | ||
*Service Corp. International | 449,700 | 2,973 |
Hotel/Motel (0.4%) | ||
The Marcus Corp. | 563,600 | 11,982 |
Hilton Hotels Corp. | 544,790 | 10,841 |
Intrawest Corp. | 361,300 | 7,027 |
*Wynn Resorts Ltd. | 49,100 | 2,855 |
Choice Hotel International, Inc. | 55,100 | 2,750 |
15
Explorer Fund | Shares | Market Value^ (000) |
---|---|---|
Household Equipment & Products | ||
The Stanley Works | 78,800 | $3,508 |
Household Furnishings (0.3%) | ||
Furniture Brands | ||
International Inc. | 557,400 | 12,157 |
Ethan Allen Interiors, Inc. | 105,200 | 4,007 |
American Woodmark Corp. | 79,600 | 2,960 |
*Select Comfort Corp. | 138,400 | 2,369 |
Jewelry, Watches & Gems (0.2%) | ||
*Fossil, Inc. | 483,850 | 14,399 |
Tiffany & Co. | 69,475 | 2,038 |
Leisure Time (0.3%) | ||
*Penn National Gaming, Inc. | 362,920 | 15,072 |
SCP Pool Corp. | 290,800 | 8,488 |
Callaway Golf Co. | 344,200 | 3,590 |
*Steiner Leisure Ltd. | 51,074 | 1,246 |
Miscellaneous Business & Consumer Discretionary (0.1%) | ||
Techtronic Industries | ||
Co. Ltd. ADR | 1,247,400 | 12,420 |
Publishing--Miscellaneous (0.3%) | ||
*Playboy Enterprises, Inc. | ||
Class B | 1,037,000 | 11,511 |
*(2) Hollywood Media Corp. | 1,825,023 | 6,570 |
R.R. Donnelley & Sons Co. | 172,800 | 5,435 |
Reader's Digest Association, Inc. | 156,900 | 2,209 |
John Wiley & Sons Class A | 47,000 | 1,525 |
Advanced Marketing Services | 16,200 | 170 |
Publishing--Newspapers (0.1%) | ||
Hollinger International, Inc. | 309,600 | 5,526 |
*Journal Register Co. | 64,000 | 1,203 |
Radio & Television Broadcasters (0.5%) | ||
*XM Satellite Radio Holdings, Inc. | 552,300 | 17,850 |
World Wrestling | ||
Entertainment, Inc. | 561,003 | 6,956 |
*Radio One, Inc. Class D | 299,825 | 4,404 |
Sinclair Broadcast Group, Inc. | 561,720 | 3,932 |
*Cumulus Media Inc. | 199,982 | 3,250 |
*Emmis Communications, Inc. | 154,361 | 2,887 |
*Salem Communications Corp. | 54,900 | 1,373 |
Gray Television, Inc. | 86,900 | 1,154 |
*Beasley Broadcast Group, Inc. | 9,800 | 161 |
Rent & Lease Services--Consumer (0.1%) | ||
*Rent-A-Center, Inc. | 255,300 | 6,125 |
Aaron Rents, Inc. Class B | 258,175 | 5,602 |
Restaurants (1.6%) | ||
*Rare Hospitality International Inc. | 680,588 | $18,859 |
*CEC Entertainment Inc. | 474,050 | 18,023 |
Applebee's International, Inc. | 592,571 | 13,552 |
Ruby Tuesday, Inc. | 485,500 | 11,992 |
Outback Steakhouse | 298,065 | 11,800 |
*California Pizza Kitchen, Inc. | 410,800 | 9,087 |
*Jack in the Box Inc. | 246,100 | 8,212 |
*Papa John's International, Inc. | 242,578 | 7,830 |
*Sonic Corp. | 266,150 | 7,247 |
*The Cheesecake Factory | 165,100 | 7,167 |
*CKE Restaurants Inc. | 469,100 | 5,662 |
*Brinker International, Inc. | 167,800 | 5,420 |
CBRL Group, Inc. | 106,589 | 3,865 |
*Red Robin Gourmet Burgers | 81,342 | 3,393 |
Darden Restaurants Inc. | 114,100 | 2,795 |
*Ryan's Restaurant Group, Inc. | 56,750 | 794 |
*Texas Roadhouse, Inc. | 21,600 | 497 |
Retail (7.5%) | ||
Foot Locker, Inc. | 2,043,900 | 49,871 |
*Urban Outfitters, Inc. | 1,177,300 | 48,269 |
MSC Industrial Direct Co., Inc. | ||
Class A | 1,405,674 | 47,990 |
American Eagle Outfitters, Inc. | 851,900 | 34,826 |
Claire's Stores, Inc. | 1,054,200 | 27,430 |
*Pacific Sunwear of | ||
California, Inc. | 1,050,925 | 24,634 |
Fastenal Co. | 359,100 | 19,833 |
*Dick's Sporting Goods, Inc. | 516,905 | 18,609 |
*Electronics Boutique | ||
Holdings Corp. | 526,510 | 17,975 |
*Hibbett Sporting Goods, Inc. | 771,050 | 17,241 |
Nordstrom, Inc. | 364,600 | 15,743 |
*Hot Topic, Inc. | 761,500 | 15,656 |
*Chico's FAS, Inc. | 387,900 | 15,528 |
*Aeropostale, Inc. | 489,650 | 15,448 |
Abercrombie & Fitch Co. | 382,995 | 15,006 |
*O'Reilly Automotive, Inc. | 344,600 | 14,838 |
Borders Group, Inc. | 620,000 | 14,130 |
*Fisher Scientific | ||
International Inc. | 240,856 | 13,816 |
*Insight Enterprises, Inc. | 709,910 | 13,172 |
CDW Corp. | 188,270 | 11,678 |
*Men's Wearhouse, Inc. | 360,300 | 11,198 |
Fred's, Inc. | 615,000 | 10,781 |
*Genesco, Inc. | 380,400 | 9,738 |
*Global Imaging Systems, Inc. | 275,678 | 9,704 |
*United Natural Foods, Inc. | 355,337 | 9,662 |
*Advance Auto Parts, Inc. | 216,200 | 8,458 |
bebe stores, inc | 273,750 | 8,451 |
16
Shares | Market Value^ (000) | |
---|---|---|
The Neiman Marcus | ||
Group, Inc. Class A | 129,600 | $7,884 |
Michaels Stores, Inc. | 263,200 | 7,659 |
*Tuesday Morning Corp. | 225,000 | 7,344 |
PETsMART, Inc. | 217,380 | 6,952 |
*Barnes & Noble, Inc. | 197,099 | 6,557 |
*A.C. Moore Arts & Crafts, Inc. | 233,500 | 6,016 |
*GameStop Corp. | 282,000 | 5,524 |
*PETCO Animal Supplies, Inc. | 147,100 | 5,262 |
*Jos. A. Bank Clothiers, Inc. | 161,625 | 5,130 |
*The Children's Place | ||
Retail Stores, Inc. | 159,203 | 4,915 |
Pier 1 Imports Inc. | 266,200 | 4,778 |
*Priceline.com, Inc. | 224,890 | 4,484 |
*BJ's Wholesale Club, Inc. | 149,900 | 4,352 |
*Tractor Supply Co. | 112,500 | 4,082 |
*AnnTaylor Stores Corp. | 167,500 | 3,762 |
*Guitar Center, Inc. | 82,800 | 3,695 |
*Sharper Image Corp. | 158,600 | 3,247 |
*Too Inc. | 139,400 | 3,070 |
*Dollar Tree Stores, Inc. | 101,600 | 2,936 |
*J. Jill Group, Inc. | 158,100 | 2,779 |
*Coldwater Creek Inc. | 118,800 | 2,735 |
*Linens `n Things, Inc. | 111,200 | 2,678 |
Blockbuster Inc. Class A | 330,600 | 2,248 |
*Stein Mart, Inc. | 131,600 | 2,187 |
*Big 5 Sporting Goods Corp. | 67,935 | 1,725 |
*Jo-Ann Stores, Inc. | 58,100 | 1,433 |
*Stage Stores, Inc. | 34,719 | 1,250 |
*The Dress Barn, Inc. | 67,400 | 1,080 |
*Mothers Work, Inc. | 73,000 | 945 |
*Charlotte Russe Holding Inc. | 37,020 | 489 |
Services--Commercial (3.7%) | ||
The Corporate Executive | ||
Board Co. | 421,645 | 26,838 |
*MPS Group, Inc. | 2,440,370 | 25,697 |
*Getty Images, Inc. | 392,600 | 23,214 |
*CoStar Group, Inc. | 561,600 | 22,672 |
The Brink's Co. | 550,500 | 17,671 |
*Navigant Consulting, Inc. | 646,125 | 16,069 |
Manpower Inc. | 352,875 | 15,968 |
*Labor Ready, Inc. | 998,128 | 14,323 |
*Copart, Inc. | 705,798 | 13,114 |
*Korn/Ferry International | 700,818 | 12,194 |
Regis Corp. | 281,400 | 12,044 |
*Coinstar, Inc. | 427,144 | 11,033 |
*Wireless Facilities, Inc. | 1,279,700 | 9,444 |
*DiamondCluster | ||
International, Inc. | 773,100 | 9,420 |
*ChoicePoint Inc. | 191,834 | 7,986 |
*Harris Interactive Inc. | 1,123,000 | $7,636 |
*West Corp. | 255,559 | 7,186 |
*Resources Connection, Inc. | 132,300 | 5,554 |
*Heidrick & Struggles | ||
International, Inc. | 175,425 | 5,023 |
*Monster Worldwide Inc. | 178,500 | 5,007 |
*Iron Mountain, Inc. | 149,505 | 4,941 |
*4Kids Entertainment Inc. | 262,300 | 4,797 |
*MemberWorks, Inc. | 140,700 | 4,193 |
Aramark Corp. Class B | 166,100 | 3,746 |
*Corrections Corp. of America REIT | 94,800 | 3,294 |
*Convergys Corp. | 248,100 | 3,228 |
*Teletech Holdings Inc. | 291,307 | 2,913 |
Sabre Holdings Corp. | 117,200 | 2,521 |
*MAXIMUS, Inc. | 87,300 | 2,373 |
Gevity HR, Inc. | 114,000 | 2,030 |
*Autobytel Inc. | 279,400 | 1,945 |
*AMN Healthcare Services, Inc. | 133,172 | 1,571 |
*Tetra Tech, Inc. | 106,900 | 1,405 |
*Spherion Corp. | 186,700 | 1,342 |
*Charles River Associates Inc. | 28,500 | 1,145 |
*Gartner, Inc. Class B | 92,087 | 1,069 |
Shoes (0.5%) | ||
*Timberland Co. | 219,100 | 13,453 |
Finish Line, Inc. | 293,400 | 10,160 |
K-Swiss, Inc. | 311,095 | 7,777 |
Kenneth Cole Productions, Inc. | 215,551 | 5,712 |
*Skechers U.S.A., Inc. | 194,318 | 2,145 |
*Deckers Outdoor Corp. | 49,800 | 1,885 |
*Steven Madden, Ltd. | 93,400 | 1,495 |
Textile--Apparel Manufacturing (1.0%) | ||
*Quiksilver, Inc. | 925,600 | 25,223 |
Jones Apparel Group, Inc. | 491,600 | 17,353 |
Phillips-Van Heusen Corp. | 524,000 | 11,942 |
*Guess?, Inc. | 669,400 | 11,179 |
*Columbia Sportswear Co. | 122,500 | 7,394 |
*World Co. Ltd. | 238,200 | 6,954 |
*The Warnaco Group, Inc. | 274,700 | 5,604 |
*Carter's, Inc. | 22,600 | 711 |
Wholesale & International Trade (0.1%) | ||
*Central European | ||
Distribution Corp. | 355,100 | 8,988 |
Wholesalers (0.2%) | ||
*Tech Data Corp. | 264,800 | 10,695 |
*United Stationers, Inc. | 90,300 | 4,018 |
*Brightpoint, Inc. | 91,250 | 1,386 |
1,921,229 | ||
17
Explorer Fund | Shares | Market Value^ (000) |
---|---|---|
Consumer Staples (0.8%) | ||
*Constellation Brands, Inc. | ||
Class A | 334,500 | $13,122 |
Sanderson Farms, Inc. | 362,794 | 11,787 |
*Rite Aid Corp. | 2,047,500 | 7,617 |
Adolph Coors Co. Class B | 108,500 | 7,237 |
*NBTY, Inc. | 233,700 | 6,436 |
SuperValu Inc. | 212,000 | 6,252 |
*7-Eleven, Inc. | 202,200 | 4,260 |
*Wild Oats Markets Inc. | 680,300 | 4,136 |
PepsiAmericas, Inc. | 140,600 | 2,847 |
*Boston Beer Co., Inc. Class A | 73,700 | 1,862 |
Universal Corp. (VA) | 31,900 | 1,460 |
Tootsie Roll Industries, Inc. | 47,483 | 1,440 |
Church & Dwight, Inc. | 52,050 | 1,417 |
Winn-Dixie Stores, Inc. | 246,300 | 847 |
70,720 | ||
Financial Services (10.2%) | ||
*Alliance Data Systems Corp. | 1,198,795 | 50,685 |
Global Payments Inc. | 482,755 | 26,436 |
*The First Marblehead Corp. | 464,535 | 24,899 |
Avalonbay Communities, | ||
Inc. REIT | 372,300 | 24,374 |
*CheckFree Corp. | 745,500 | 23,111 |
Regency Centers Corp. REIT | 471,700 | 23,047 |
*Providian Financial Corp. | 1,422,000 | 22,112 |
Jefferies Group, Inc. | 494,400 | 19,840 |
*The Dun & Bradstreet Corp. | 345,300 | 19,530 |
Legg Mason Inc. | 286,875 | 18,277 |
*S1 Corp. | 1,941,577 | 18,231 |
The Chicago Mercantile | ||
Exchange | 100,300 | 17,626 |
*Investment Technology | ||
Group, Inc. | 1,110,800 | 17,106 |
*Affiliated Managers Group, Inc. | 301,785 | 16,852 |
City National Corp. | 226,400 | 15,599 |
IndyMac Bancorp, Inc. REIT | 477,000 | 15,388 |
*Euronet Worldwide, Inc. | 666,200 | 15,269 |
*E*TRADE Group, Inc. | 1,183,250 | 15,264 |
Ryder System, Inc. | 297,200 | 14,890 |
*BISYS Group, Inc. | 1,012,369 | 14,781 |
Reinsurance Group | ||
of America, Inc. | 332,700 | 14,333 |
Bank of Hawaii Corp. | 263,600 | 12,587 |
Brown & Brown, Inc. | 299,400 | 12,503 |
*Ocwen Financial Corp. | 1,657,377 | 12,430 |
*La Quinta Corp. REIT | 1,442,950 | 11,616 |
Westcorp, Inc. | 285,000 | 11,377 |
Assured Guaranty Ltd. | 681,000 | 11,182 |
Commerce Bancorp, Inc. | 182,300 | 10,799 |
Friedman, Billings, | ||
Ramsey Group, Inc. REIT | 623,800 | 10,692 |
*Silicon Valley Bancshares | 264,619 | 10,587 |
*CapitalSource Inc. | 462,870 | 10,368 |
Redwood Trust, Inc. REIT | 172,200 | 10,360 |
Commercial Capital | ||
Bancorp, Inc. | 447,456 | 10,036 |
East West Bancorp, Inc. | 245,900 | 9,846 |
Fremont General Corp. | 447,600 | 9,623 |
FactSet Research Systems Inc. | 185,400 | 9,240 |
American Capital Strategies, Ltd. | 276,240 | 8,550 |
Eaton Vance Corp. | 182,900 | 7,978 |
Prentiss Properties Trust REIT | 209,400 | 7,534 |
UCBH Holdings, Inc. | 174,077 | 7,501 |
*Accredited Home Lenders | ||
Holding Co. | 205,192 | 7,403 |
Cash America International Inc. | 275,000 | 6,958 |
Certegy, Inc. | 193,100 | 6,826 |
*eFunds Corp. | 337,900 | 6,653 |
*CB Richard Ellis Group, Inc. | 253,150 | 6,557 |
Flagstar Bancorp, Inc. | 308,900 | 6,453 |
John H. Harland Co. | 199,600 | 6,433 |
AmerUs Group Co. | 149,800 | 6,259 |
GATX Corp. | 221,400 | 6,040 |
SEI Corp. | 164,600 | 5,924 |
TCF Financial Corp. | 182,900 | 5,765 |
Federated Investors, Inc. | 193,400 | 5,607 |
*Arch Capital Group Ltd. | 146,800 | 5,515 |
*WellChoice Inc. | 124,985 | 5,219 |
*CompuCredit Corp. | 261,000 | 4,967 |
Zenith National Insurance Corp. | 119,900 | 4,924 |
*Tradestation Group Inc. | 745,000 | 4,612 |
*Conseco, Inc. | 273,700 | 4,587 |
Protective Life Corp. | 115,400 | 4,535 |
Student Loan Corp. | 29,500 | 4,322 |
*Piper Jaffray Cos., Inc. | 98,600 | 4,312 |
Investors Financial | ||
Services Corp. | 105,900 | 4,076 |
Jack Henry & Associates Inc. | 218,000 | 4,064 |
WFS Financial, Inc. | 91,765 | 4,043 |
Arthur J. Gallagher & Co. | 140,500 | 3,948 |
Equifax, Inc. | 146,900 | 3,841 |
Bristol West Holdings, Inc. | 218,685 | 3,761 |
Greater Bay Bancorp | 116,900 | 3,653 |
*Ohio Casualty Corp. | 163,000 | 3,403 |
Maguire Properties, Inc. REIT | 129,400 | 3,384 |
*Nelnet, Inc. | 174,100 | 3,379 |
*Signature Bank | 113,125 | 3,334 |
Boston Private | ||
Financial Holdings, Inc. | 135,750 | 3,331 |
Community First | ||
Bankshares, Inc. | 101,700 | 3,277 |
*Financial Federal Corp. | 87,400 | 3,261 |
18
Shares | Market Value^ (000) | |
---|---|---|
*Calamos Asset | ||
Management, Inc. | 164,850 | $3,215 |
*United Rentals, Inc. | 205,800 | 3,180 |
*AmeriCredit Corp. | 163,300 | 3,168 |
Bank of the Ozarks, Inc. | 97,700 | 3,154 |
*Kronos, Inc. | 63,350 | 3,107 |
Independent Bank Corp. (MI) | 113,415 | 3,081 |
*Digital Insight Corp. | 194,900 | 3,052 |
The Phoenix Cos., Inc. | 286,800 | 3,026 |
Waddell & Reed Financial, Inc. | 140,600 | 2,954 |
Hudson United Bancorp | 71,400 | 2,842 |
*Alleghany Corp. | 9,800 | 2,831 |
*Sterling Financial Corp. | 74,316 | 2,792 |
Impac Mortgage | ||
Holdings, Inc. REIT | 123,100 | 2,783 |
*Allmerica Financial Corp. | 91,700 | 2,760 |
First BanCorp Puerto Rico | 44,400 | 2,421 |
City Holding Co. | 69,600 | 2,412 |
PXRE Group Ltd. | 96,300 | 2,363 |
*Triad Guaranty, Inc. | 43,000 | 2,344 |
Gold Banc Corp., Inc. | 155,200 | 2,258 |
International Bancshares Corp. | 56,192 | 2,079 |
Manufactured Home | ||
Communities, Inc. REIT | 59,100 | 2,038 |
Irwin Financial Corp. | 71,000 | 1,770 |
McGrath Rent Corp. | 41,700 | 1,623 |
Westamerica Bancorporation | 28,300 | 1,618 |
W Holding Co., Inc. | 80,000 | 1,599 |
Aspen Insurance Holdings Ltd. | 61,800 | 1,421 |
*iPayment Holdings, Inc. | 29,143 | 1,306 |
Hilb, Rogal and Hamilton Co. | 38,700 | 1,227 |
*USI Holdings Corp. | 117,563 | 1,142 |
MoneyGram International, Inc. | 51,400 | 956 |
*eSPEED, Inc. Class A | 87,100 | 858 |
Scottish Re Group Ltd. | 37,000 | 833 |
*FelCor Lodging Trust, Inc. REIT | 53,700 | 624 |
CVB Financial Corp. | 24,100 | 598 |
*Interactive Data Corp. | 26,400 | 521 |
First Industrial Realty Trust REIT | 4,200 | 162 |
867,203 | ||
Health Care (17.3%) | ||
Bausch & Lomb, Inc. | 803,700 | 48,994 |
Cooper Cos., Inc. | 486,200 | 34,204 |
*Charles River Laboratories, Inc. | 726,853 | 34,009 |
*CONMED Corp. | 1,004,200 | 28,188 |
*Covance, Inc. | 709,480 | 28,181 |
Mentor Corp. | 759,100 | 26,417 |
*Humana Inc. | 1,310,500 | 25,096 |
*Eon Labs, Inc. | 998,575 | 24,575 |
*Triad Hospitals, Inc. | 736,866 | 24,339 |
DENTSPLY International Inc. | 462,850 | 24,073 |
*Biogen Idec Inc. | 402,500 | 23,409 |
*MGI Pharma, Inc. | 838,100 | $22,352 |
*Human Genome Sciences, Inc. | 2,151,000 | 22,134 |
*Henry Schein, Inc. | 345,200 | 21,827 |
Arrow International, Inc. | 739,028 | 21,110 |
*Beverly Enterprises, Inc. | 2,300,700 | 19,993 |
*Cerner Corp. | 437,188 | 19,739 |
*Protein Design Labs, Inc. | 1,005,400 | 19,253 |
Manor Care, Inc. | 587,000 | 19,218 |
*Andrx Group | 881,000 | 19,065 |
*Advanced Medical Optics, Inc. | 483,500 | 18,905 |
*Ocular Sciences, Inc. | 375,600 | 18,348 |
*IDEXX Laboratories Corp. | 366,898 | 18,286 |
*Salix Pharmaceuticals, Ltd. | 1,128,164 | 18,084 |
*IDX Systems Corp. | 510,500 | 17,120 |
*Affymetrix, Inc. | 523,600 | 15,970 |
*LifePoint Hospitals, Inc. | 486,300 | 15,766 |
Medicis Pharmaceutical Corp. | 387,611 | 15,764 |
*Dade Behring Holdings Inc. | 279,200 | 15,716 |
*Kindred Healthcare, Inc. | 649,850 | 15,661 |
*Kissei Pharmaceutical Co., Ltd. | 805,000 | 14,896 |
*PacifiCare Health Systems, Inc. | 412,300 | 14,686 |
*Matria Healthcare, Inc. | 450,600 | 14,068 |
*Amylin Pharmaceuticals, Inc. | 642,900 | 13,694 |
*Community Health Systems, Inc. | 502,340 | 13,473 |
*Millennium Pharmaceuticals, Inc. | 1,033,200 | 13,411 |
*Techne Corp. | 370,393 | 13,342 |
*Watson Pharmaceuticals, Inc. | 475,000 | 13,314 |
*Pharmion Corp. | 287,695 | 13,220 |
*Zymogenetics, Inc. | 658,200 | 12,433 |
*Renal Care Group, Inc. | 390,875 | 12,336 |
*Cytyc Corp. | 471,903 | 12,312 |
*Sybron Dental Specialties, Inc. | 367,775 | 11,978 |
*Coventry Health Care Inc. | 285,600 | 11,681 |
PolyMedica Corp. | 332,400 | 11,634 |
*Pharmaceutical Product | ||
Development, Inc. | 267,796 | 11,309 |
*Telik, Inc. | 603,886 | 11,142 |
*Martek Biosciences Corp. | 235,900 | 11,101 |
*Chattem, Inc. | 327,390 | 10,954 |
*Stericycle, Inc. | 240,199 | 10,888 |
*Cephalon, Inc. | 225,200 | 10,735 |
*Respironics, Inc. | 209,653 | 10,711 |
*First Horizon | ||
Pharmaceutical Corp. | 434,788 | 10,687 |
*Chiron Corp. | 320,000 | 10,374 |
*United Surgical Partners | ||
International, Inc. | 289,500 | 10,135 |
Invacare Corp. | 215,901 | 9,970 |
IMS Health, Inc. | 457,200 | 9,684 |
*Bruker BioSciences Corp. | 2,776,200 | 9,578 |
Beckman Coulter, Inc. | 158,335 | 9,421 |
*DaVita, Inc. | 305,174 | 9,039 |
19
Explorer Fund | Shares | Market Value^ (000) |
---|---|---|
*Pediatrix Medical Group, Inc. | 156,100 | $8,781 |
*CV Therapeutics, Inc. | 491,300 | 8,219 |
*Impax Laboratories, Inc. | 554,965 | 8,191 |
*Serologicals Corp. | 342,275 | 8,095 |
*NeighborCare Inc. | 314,600 | 8,063 |
*AMERIGROUP Corp. | 133,200 | 7,992 |
*Gen-Probe Inc. | 223,400 | 7,828 |
*ResMed Inc. | 158,500 | 7,450 |
*Lincare Holdings, Inc. | 200,700 | 7,378 |
*Immucor Inc. | 238,150 | 7,347 |
*Sepracor Inc. | 159,700 | 7,335 |
*VCA Antech, Inc. | 322,600 | 7,233 |
*Intuitive Surgical, Inc. | 246,404 | 7,190 |
*Connetics Corp. | 265,683 | 7,142 |
Hogy Medical Co., Ltd. | 173,900 | 7,107 |
*Nektar Therapeutics | 492,700 | 7,100 |
*American Medical | ||
Systems Holdings, Inc. | 190,700 | 7,075 |
*Alkermes, Inc. | 563,800 | 6,974 |
*Kinetic Concepts, Inc. | 137,775 | 6,865 |
*Abgenix, Inc. | 750,400 | 6,836 |
Perrigo Co. | 366,600 | 6,665 |
*Transkaryotic Therapies, Inc. | 378,000 | 6,543 |
*ICOS Corp. | 288,200 | 6,490 |
*STERIS Corp. | 312,400 | 6,476 |
Universal Health Services | ||
Class B | 153,700 | 6,388 |
*eResearch Technology, Inc. | 539,150 | 6,303 |
*United Therapeutics Corp. | 198,403 | 6,202 |
*The Medicines Co. | 232,600 | 6,196 |
*Vertex Pharmaceuticals, Inc. | 564,400 | 6,141 |
*Kensey Nash Corp. | 213,547 | 6,107 |
*First Health Group Corp. | 381,200 | 6,069 |
*Apria Healthcare Group Inc. | 217,300 | 5,945 |
*Endo Pharmaceuticals | ||
Holdings, Inc. | 269,200 | 5,869 |
*Medarex, Inc. | 744,000 | 5,662 |
*Wellcare Group Inc. | 242,625 | 5,556 |
*Kos Pharmaceuticals, Inc. | 154,101 | 5,501 |
*NPS Pharmaceuticals Inc. | 314,500 | 5,372 |
*PSS World Medical, Inc. | 475,978 | 5,362 |
*Neurocrine Biosciences, Inc. | 110,356 | 5,137 |
*Shire Pharmaceuticals | ||
Group PLC ADR | 180,300 | 5,121 |
*Enzon Pharmaceuticals, Inc. | 312,400 | 5,052 |
Select Medical Corp. | 282,400 | 4,854 |
*Biosite Inc. | 95,400 | 4,657 |
*Sierra Health Services, Inc. | 96,100 | 4,586 |
*Cell Genesys, Inc. | 683,600 | 4,484 |
*PAR Pharmaceutical Cos. Inc. | 112,400 | 4,434 |
*Patterson Cos | 115,600 | 4,335 |
*Tanox, Inc. | 273,608 | 4,296 |
*OSI Pharmaceuticals, Inc. | 65,076 | 4,229 |
*American Healthways Inc. | 137,400 | 4,147 |
*Edwards Lifesciences Corp. | 120,800 | 4,129 |
*Invitrogen Corp. | 68,500 | 3,966 |
*Per-Se Technologies, Inc. | 269,456 | 3,931 |
*VISX Inc. | 235,500 | 3,928 |
*Digene Corp. | 152,137 | 3,826 |
*Kyphon Inc. | 149,080 | 3,745 |
Diagnostic Products Corp. | 83,500 | 3,687 |
*Align Technology, Inc. | 341,884 | 3,547 |
*King Pharmaceuticals, Inc. | 322,300 | 3,516 |
*HealthSouth Corp. | 612,800 | 3,374 |
*AmSurg Corp. | 143,563 | 3,358 |
*DJ Orthopedics Inc. | 194,848 | 3,322 |
*LabOne, Inc. | 110,499 | 3,315 |
*ArthroCare Corp. | 104,100 | 3,207 |
*Centene Corp. | 67,500 | 3,202 |
*Merit Medical Systems, Inc. | 306,190 | 3,169 |
*Accredo Health, Inc. | 137,500 | 3,167 |
*ImmunoGen, Inc. | 592,000 | 3,144 |
*Possis Medical Inc. | 274,600 | 3,043 |
*Ligand Pharmaceuticals Inc. | ||
Class B | 323,898 | 2,888 |
*Priority Healthcare Corp. | ||
Class B | 157,100 | 2,837 |
*Noven Pharmaceuticals, Inc. | 121,500 | 2,740 |
*Bio-Rad Laboratories, Inc. | ||
Class A | 52,600 | 2,736 |
*Laserscope | 94,300 | 2,552 |
*Onyx Pharmaceuticals, Inc. | 84,500 | 2,371 |
*Amedisys Inc. | 76,200 | 2,304 |
*ILEX Oncology, Inc. | 90,742 | 2,291 |
*Haemonetics Corp. | 64,900 | 2,132 |
*Advanced Neuromodulation | ||
Systems, Inc. | 63,400 | 2,018 |
*Province Healthcare Co. | 90,600 | 1,942 |
*Atrix Laboratories, Inc. | 61,693 | 1,911 |
*Regeneron Pharmaceuticals, Inc. | 261,900 | 1,904 |
*Bradley Pharmaceuticals, Inc. | 113,100 | 1,873 |
*SciClone Pharmaceuticals, Inc. | 371,300 | 1,689 |
*Applera Corp.-Celera | ||
Genomics Group | 123,600 | 1,585 |
*WebMD Corp. | 200,000 | 1,512 |
*K-V Pharmaceutical Co. Class A | 73,850 | 1,471 |
*Molina Healthcare Inc. | 38,800 | 1,429 |
Vital Signs, Inc. | 38,186 | 1,322 |
*INAMED Corp. | 24,300 | 1,292 |
*Gentiva Health Services, Inc. | 67,253 | 1,141 |
*Genesis Healthcare Corp. | 37,164 | 1,140 |
*RehabCare Group, Inc. | 46,200 | 1,061 |
*Hanger Orthopedic Group, Inc. | 164,300 | 1,060 |
*Molecular Devices Corp. | 43,194 | 865 |
20
Shares | Market Value^ (000) | |
---|---|---|
*Immunomedics Inc. | 296,400 | $845 |
*Odyssey Healthcare, Inc. | 104,550 | 807 |
*Hologic, Inc. | 36,600 | 735 |
*Dendreon Corp. | 69,662 | 720 |
Valeant Pharmaceuticals | ||
International | 29,800 | 715 |
*OraSure Technologies, Inc. | 93,200 | 629 |
*Sunrise Senior Living, Inc. | 16,300 | 621 |
*CorVel Corp. | 19,000 | 497 |
*Conceptus, Inc. | 51,500 | 441 |
*Albany Molecular Research, Inc. | 40,746 | 351 |
*Alliance Imaging, Inc. | 43,700 | 325 |
1,463,710 | ||
Integrated Oils (0.1%) | ||
*KCS Energy, Inc. | 415,700 | 5,658 |
Other Energy (5.6%) | ||
*Cal Dive International, Inc. | 935,100 | 33,112 |
St. Mary Land & Exploration Co. | 610,599 | 24,076 |
CARBO Ceramics Inc. | 325,800 | 23,539 |
*Denbury Resources, Inc. | 820,200 | 20,341 |
*Grey Wolf, Inc. | 3,865,600 | 20,024 |
*Newfield Exploration Co. | 338,000 | 19,672 |
*National-Oilwell, Inc. | 562,455 | 18,960 |
IHC Caland NV | 326,747 | 18,658 |
Patterson-UTI Energy, Inc. | 934,600 | 17,972 |
*TETRA Technologies, Inc. | 542,800 | 16,251 |
Sunoco, Inc. | 207,600 | 15,437 |
Peabody Energy Corp. | 221,600 | 14,134 |
*Unit Corp. | 370,200 | 13,731 |
*Spinnaker Exploration Co. | 371,000 | 11,842 |
*Ultra Petroleum Corp. | 240,200 | 11,674 |
*Premcor, Inc. | 296,400 | 11,571 |
Pioneer Natural Resources Co. | 316,160 | 10,244 |
CONSOL Energy, Inc. | 278,900 | 9,873 |
*Magnum Hunter Resources Inc. | 803,900 | 9,727 |
*Comstock Resources, Inc. | 436,200 | 9,596 |
Arch Coal, Inc. | 283,300 | 9,213 |
*FMC Technologies Inc. | 302,100 | 9,132 |
*Core Laboratories NV | 327,200 | 8,115 |
Patina Oil & Gas Corp. | 278,224 | 7,957 |
Chesapeake Energy Corp. | 489,800 | 7,876 |
*Superior Energy Services, Inc. | 546,900 | 7,050 |
*Key Energy Services, Inc. | 602,200 | 6,925 |
Noble Energy, Inc. | 119,300 | 6,919 |
*Newpark Resources, Inc. | 1,224,200 | 6,647 |
Vintage Petroleum, Inc. | 288,500 | 6,059 |
*Energy Partners, Ltd. | 325,958 | 5,724 |
*Encore Acquisition Co. | 151,889 | 4,959 |
Cabot Oil & Gas Corp. | 115,600 | 4,891 |
*Harvest Natural Resources, Inc. | 317,400 | 4,799 |
*Cooper Cameron Corp. | 87,000 | 4,206 |
*Swift Energy Co. | 170,700 | $4,139 |
ENSCO International, Inc. | 131,700 | 4,023 |
Pogo Producing Co. | 87,700 | 4,021 |
*Stone Energy Corp. | 90,200 | 3,714 |
*Grant Prideco, Inc. | 178,800 | 3,676 |
*Plains Exploration | ||
& Production Co. | 142,300 | 3,558 |
*Capstone Turbine Corp. | 1,849,176 | 3,273 |
*Varco International, Inc. | 111,600 | 3,089 |
Frontier Oil Corp. | 122,913 | 3,021 |
*Hydrill Co. | 50,300 | 2,213 |
Penn Virginia Corp. | 51,700 | 1,861 |
*FuelCell Energy, Inc. | 141,500 | 1,745 |
*Tesoro Petroleum Corp. | 53,500 | 1,620 |
*Remington Oil & Gas Corp. | 61,900 | 1,575 |
*Atwood Oceanics, Inc. | 30,200 | 1,448 |
Equitable Resources, Inc. | 17,500 | 968 |
*Cimarex Energy Co. | 19,900 | 714 |
Helmerich & Payne, Inc. | 15,500 | 443 |
476,007 | ||
Materials & Processing (5.1%) | ||
*Maverick Tube Corp. | 907,900 | 23,941 |
Hughes Supply, Inc. | 704,600 | 20,018 |
Steel Dynamics, Inc. | 592,100 | 19,658 |
*Pactiv Corp. | 823,100 | 19,499 |
Watsco, Inc. | 605,600 | 17,235 |
*Dycom Industries, Inc. | 449,800 | 14,686 |
*Ceradyne, Inc. | 318,899 | 13,678 |
The St. Joe Co. | 262,200 | 13,346 |
Minerals Technologies, Inc. | 220,600 | 13,258 |
Cytec Industries, Inc. | 280,800 | 13,060 |
Fluor Corp. | 279,600 | 12,985 |
*Central Glass Co., Ltd. | 1,883,000 | 12,661 |
Temple-Inland Inc. | 195,000 | 11,528 |
Louisiana-Pacific Corp. | 467,100 | 11,449 |
Precision Castparts Corp. | 184,900 | 11,094 |
*AK Steel Corp. | 1,064,200 | 10,142 |
Cameco Corp. | 122,900 | 9,953 |
*Armor Holdings, Inc. | 261,900 | 9,696 |
Chicago Bridge & Iron Co. N.V | 306,000 | 9,471 |
*Rogers Corp. | 195,453 | 8,389 |
Georgia Gulf Corp. | 167,300 | 7,574 |
*Owens-Illinois, Inc. | 408,500 | 7,570 |
*URS Corp. | 271,000 | 7,480 |
Corn Products International, Inc. | 148,400 | 7,301 |
*Crown Holdings, Inc. | 619,900 | 7,036 |
Ball Corp. | 163,600 | 6,519 |
Reliance Steel & Aluminum Co. | 187,130 | 6,422 |
Commercial Metals Co. | 165,000 | 5,965 |
*Cleveland-Cliffs Inc. | 79,800 | 5,817 |
*Jacobs Engineering Group Inc. | 141,600 | 5,767 |
*Mobile Mini, Inc. | 187,206 | 5,309 |
21
Explorer Fund | Shares | Market Value^ (000) |
---|---|---|
Allegheny Technologies Inc. | 288,700 | $4,853 |
*NCI Building Systems, Inc. | 148,400 | 4,771 |
Brookfield Homes Corp. | 179,800 | 4,657 |
*Century Aluminum Co. | 198,335 | 4,590 |
*OM Group, Inc. | 133,400 | 4,401 |
Carpenter Technology Corp. | 88,600 | 4,205 |
*GrafTech International Ltd. | 449,550 | 4,163 |
*Scotts Co. | 64,700 | 4,155 |
*Lone Star Technologies, Inc. | 143,800 | 3,796 |
*Stillwater Mining Co. | 290,800 | 3,594 |
MacDermid, Inc. | 109,200 | 3,446 |
*DHB Industries, Inc. | 223,900 | 3,094 |
York International Corp. | 79,900 | 2,544 |
Southern Peru Copper Corp. | 56,100 | 2,422 |
*FMC Corp. | 53,300 | 2,337 |
Worthington Industries, Inc. | 112,700 | 2,237 |
*Encore Wire Corp. | 177,657 | 2,187 |
Texas Industries, Inc. | 42,900 | 2,185 |
Florida Rock Industries, Inc. | 41,876 | 2,163 |
Silgan Holdings, Inc. | 43,775 | 2,077 |
Forest City Enterprise Class A | 32,900 | 1,808 |
Mueller Industries Inc. | 67,000 | 1,786 |
Potlatch Corp. | 37,100 | 1,747 |
*Cabot Microelectronics Corp. | 42,900 | 1,546 |
Simpson Manufacturing Co. | 23,300 | 1,498 |
*Graphic Packaging Corp. | 165,600 | 1,136 |
*Tejon Ranch Co. | 28,800 | 1,034 |
*Avatar Holding, Inc. | 8,116 | 355 |
Apogee Enterprises, Inc. | 26,484 | 339 |
Penn Engineering & | ||
Manufacturing Corp. | 13,500 | 242 |
Bemis Co., Inc. | 3,900 | 103 |
427,978 | ||
Producer Durables (7.7%) | ||
Garmin Ltd. | 673,300 | 33,665 |
Plantronics, Inc. | 624,000 | 27,144 |
Donaldson Co., Inc. | 830,800 | 24,675 |
*United Defense Industries Inc. | 442,300 | 17,754 |
*Mettler-Toledo International Inc. | 366,899 | 17,574 |
*LAM Research Corp. | 632,450 | 16,463 |
*MKS Instruments, Inc. | 982,000 | 15,535 |
*Moog Inc. | 405,750 | 15,228 |
*AGCO Corp. | 761,100 | 14,781 |
Kennametal, Inc. | 309,900 | 14,420 |
Joy Global Inc. | 425,800 | 14,388 |
*Hovnanian Enterprises Inc. | ||
Class A | 375,200 | 14,085 |
*Meritage Corp. | 157,300 | 13,953 |
Ryland Group, Inc. | 137,000 | 13,068 |
*NVR, Inc. | 20,800 | 13,042 |
MDC Holdings, Inc. | 167,530 | 12,858 |
*Headwaters Inc. | 405,000 | 12,758 |
*Esterline Technologies Corp. | 397,300 | 12,555 |
Engineered Support | ||
Systems, Inc. | 261,200 | 12,548 |
*Photronics Inc. | 683,969 | 12,004 |
Pentair, Inc. | 318,400 | 11,902 |
*Varian Semiconductor | ||
Equipment Associates, Inc. | 335,450 | 11,610 |
*Toll Brothers, Inc. | 247,500 | 11,472 |
*Rayovac Corp. | 456,700 | 11,376 |
*Polycom, Inc. | 470,800 | 9,722 |
Lindsay Manufacturing Co. | 402,150 | 9,483 |
*Applied Films Corp. | 406,600 | 9,429 |
Cummins Inc. | 131,700 | 9,230 |
*DuPont Photomasks, Inc. | 346,600 | 9,088 |
Tektronix, Inc. | 278,300 | 8,441 |
*Arris Group Inc. | 1,718,875 | 7,993 |
*American Tower Corp. Class A | 434,000 | 7,460 |
*Dionex Corp. | 124,700 | 6,983 |
*Axcelis Technologies, Inc. | 795,885 | 6,845 |
*Metrologic Instruments, Inc. | 363,200 | 6,774 |
Graco, Inc. | 195,785 | 6,735 |
Briggs & Stratton Corp. | 93,700 | 6,729 |
Helix Technology Corp. | 402,057 | 5,645 |
*Zygo Corp. | 540,200 | 5,497 |
*Imagistics International Inc. | 159,299 | 5,483 |
Lincoln Electric Holdings, Inc. | 162,500 | 5,424 |
*Crown Castle International Corp. | 343,600 | 5,261 |
*Orbital Sciences Corp. | 506,600 | 5,243 |
*Palm Harbor Homes, Inc. | 335,100 | 5,023 |
*BE Aerospace, Inc. | 575,220 | 4,935 |
*Andrew Corp. | 352,900 | 4,934 |
Beazer Homes USA, Inc. | 44,300 | 4,863 |
United Industrial Corp. | 150,200 | 4,806 |
*LTX Corp. | 701,000 | 4,557 |
CTS Corp. | 342,500 | 4,524 |
Standard Pacific Corp. | 78,800 | 4,425 |
*Paxar Corp. | 199,200 | 4,392 |
Molex, Inc. | 142,600 | 4,217 |
*Alliant Techsystems, Inc. | 69,700 | 4,007 |
Herman Miller, Inc. | 173,300 | 4,003 |
*Ultratech, Inc. | 231,499 | 3,940 |
*Brooks Automation, Inc. | 253,500 | 3,772 |
*Actuant Corp. | 94,700 | 3,757 |
*Electro Scientific Industries, Inc. | 216,932 | 3,679 |
*Photon Dynamics, Inc. | 188,826 | 3,456 |
*Littelfuse, Inc. | 104,400 | 3,406 |
*Mattson Technology, Inc. | 390,600 | 3,277 |
Ametek, Inc. | 93,400 | 3,075 |
Roper Industries Inc. | 46,700 | 2,880 |
*William Lyon Homes, Inc. | 40,900 | 2,820 |
*Champion Enterprises, Inc. | 256,150 | 2,790 |
*Mykrolis Corp. | 261,900 | 2,753 |
22
Shares | Market Value^ (000) | |
---|---|---|
*Rudolph Technologies, Inc. | 180,000 | $2,714 |
Applied Signal Technology, Inc. | 89,100 | 2,699 |
HNI Corp. | 66,800 | 2,699 |
Mine Safety Appliances Co. | 66,700 | 2,516 |
Cohu, Inc. | 150,086 | 2,353 |
Curtiss-Wright Corp. | 41,000 | 2,288 |
*Teradyne, Inc. | 137,500 | 2,277 |
*General Cable Corp. | 178,200 | 2,192 |
Keithley Instruments Inc. | 123,400 | 2,158 |
*Kulicke & Soffa Industries, Inc. | 302,100 | 2,157 |
*Novellus Systems, Inc. | 79,000 | 2,047 |
The Manitowoc Co., Inc. | 57,200 | 2,019 |
Cognex Corp. | 73,600 | 1,884 |
*Taser International Inc. | 44,300 | 1,812 |
The Middleby Corp. | 35,100 | 1,721 |
*Astec Industries, Inc. | 111,649 | 1,618 |
*C-COR Inc. | 213,200 | 1,603 |
*Veeco Instruments, Inc. | 76,100 | 1,487 |
C & D Technologies, Inc. | 80,900 | 1,448 |
*Cymer, Inc. | 48,700 | 1,389 |
*Semitool, Inc. | 161,000 | 1,245 |
Levitt Corp. Class A | 50,800 | 1,212 |
*ESCO Technologies Inc. | 13,700 | 956 |
*Technitrol, Inc. | 53,000 | 865 |
*Entegris Inc. | 64,700 | 599 |
652,572 | ||
Technology (16.7%) | ||
Acxiom Corp. | 1,669,500 | 41,738 |
*CACI International, Inc. | 500,100 | 30,491 |
*Cognizant Technology | ||
Solutions Corp. | 889,807 | 30,253 |
Autodesk, Inc. | 533,100 | 28,121 |
*Hyperion Solutions Corp. | 696,561 | 27,953 |
*Red Hat, Inc. | 2,113,700 | 27,140 |
*Sapient Corp. | 3,337,325 | 26,865 |
*TIBCO Software Inc. | 2,693,225 | 26,178 |
*Brocade Communications | ||
Systems, Inc. | 3,463,100 | 23,514 |
*Hutchinson Technology, Inc. | 667,800 | 22,445 |
*Ingram Micro, Inc. Class A | 1,203,690 | 20,764 |
*Digitas Inc. | 2,281,575 | 20,534 |
*Foundry Networks, Inc. | 1,678,100 | 20,355 |
*Cree, Inc. | 584,200 | 20,161 |
*Openwave Systems Inc. | 1,669,667 | 19,652 |
Symbol Technologies, Inc. | 1,321,700 | 19,416 |
*Akamai Technologies, Inc. | 1,383,638 | 19,163 |
*WebEx Communications, Inc. | 854,200 | 18,792 |
*NCR Corp. | 309,400 | 17,435 |
PerkinElmer, Inc. | 830,500 | 17,058 |
*Avid Technology, Inc. | 316,093 | 16,747 |
*FormFactor Inc. | 711,300 | 16,680 |
*Western Digital Corp. | 1,981,000 | 16,502 |
*ON Semiconductor Corp. | 4,442,897 | 15,994 |
*OmniVision Technologies, Inc. | 978,900 | 15,565 |
*Comverse Technology, Inc. | 747,560 | 15,430 |
*Avnet, Inc. | 856,299 | 14,523 |
*SeaChange International, Inc. | 825,897 | 14,073 |
*Tessera Technologies, Inc. | 502,945 | 14,047 |
*Amphenol Corp. | 407,340 | 13,984 |
*Digital River, Inc. | 416,800 | 13,879 |
Harris Corp. | 224,900 | 13,838 |
*Solectron Corp. | 2,633,285 | 13,746 |
*Skyworks Solutions, Inc. | 1,487,195 | 13,221 |
*F5 Networks, Inc. | 330,772 | 13,214 |
*RSA Security Inc. | 616,900 | 12,622 |
*Ditech Communications Corp. | 547,381 | 12,557 |
*Trimble Navigation Ltd. | 436,800 | 12,532 |
*FLIR Systems, Inc. | 233,200 | 12,409 |
*Websense, Inc. | 302,425 | 12,269 |
*PalmOne, Inc. | 423,200 | 12,260 |
*Microsemi Corp. | 784,837 | 12,196 |
ADTRAN Inc. | 534,300 | 11,541 |
*Extreme Networks, Inc. | 1,953,900 | 11,430 |
*MICROS Systems, Inc. | 192,900 | 11,404 |
*Agere Systems Inc. Class A | 9,147,600 | 11,069 |
*Cadence Design Systems, Inc. | 770,000 | 9,579 |
*Silicon Storage Technology, Inc. | 1,275,109 | 9,500 |
*Epicor Software Corp. | 617,176 | 9,486 |
*Integrated Device | ||
Technology Inc. | 795,524 | 9,403 |
Intersil Corp. | 573,500 | 9,360 |
SS&C Technologies, Inc. | 395,000 | 9,338 |
*International Rectifier Corp. | 232,900 | 9,258 |
*Wind River Systems Inc. | 689,100 | 9,227 |
*Anteon International Corp. | 233,900 | 9,192 |
*SpectraSite, Inc. | 178,800 | 9,172 |
*Maxtor Corp. | 3,091,000 | 9,149 |
*ScanSource, Inc. | 147,100 | 9,110 |
*Agile Software Corp. | 979,100 | 8,362 |
*j2 Global Communications, Inc. | 275,100 | 8,294 |
*Ulticom, Inc. | 481,300 | 8,274 |
*Novatel Wireless, Inc. | 381,050 | 7,907 |
*Benchmark Electronics, Inc. | 231,400 | 7,861 |
*Open Text Corp. | 465,000 | 7,812 |
*Power Integrations, Inc. | 365,000 | 7,811 |
*Parametric Technology Corp. | 1,484,668 | 7,705 |
Reynolds & Reynolds Class A | 311,000 | 7,654 |
*Silicon Laboratories Inc. | 255,000 | 7,642 |
Applera Corp.-Applied | ||
Biosystems Group | 400,000 | 7,632 |
*Semtech Corp. | 365,000 | 7,621 |
*Cray Inc. | 2,238,900 | 7,489 |
*The TriZetto Group, Inc. | 1,090,400 | 7,415 |
*Atheros Communications | 600,000 | 7,200 |
23
Explorer Fund | Shares | Market Value^ (000) |
---|---|---|
*Aeroflex, Inc. | 646,463 | $7,176 |
*PMC Sierra Inc. | 678,200 | 6,958 |
*ANSYS, Inc. | 251,632 | 6,945 |
*Cypress Semiconductor Corp. | 656,625 | 6,914 |
*Avocent Corp. | 193,667 | 6,895 |
*Transaction Systems | ||
Architects, Inc. | 415,200 | 6,807 |
*Perot Systems Corp. | 400,366 | 6,418 |
*Ariba, Inc. | 409,925 | 6,292 |
*Macromedia, Inc. | 226,700 | 6,153 |
*Kanbay International Inc. | 257,300 | 6,147 |
*Tellabs, Inc. | 759,800 | 6,078 |
*Concur Technologies, Inc. | 575,000 | 5,983 |
*Exar Corp. | 386,600 | 5,807 |
*McDATA Corp. Class A | 923,500 | 5,800 |
*InterVoice, Inc. | 460,300 | 5,699 |
*Keane, Inc. | 350,500 | 5,541 |
*SafeNet, Inc. | 178,795 | 5,476 |
*Universal Display Corp. | 551,300 | 5,419 |
*Macrovision Corp. | 200,100 | 5,411 |
*Komag, Inc. | 317,728 | 5,393 |
*MEMC Electronic Materials, Inc. | 565,926 | 5,320 |
Black Box Corp. | 134,948 | 5,301 |
*Manhattan Associates, Inc. | 257,400 | 5,295 |
*Arrow Electronics, Inc. | 218,100 | 5,226 |
*SigmaTel Inc. | 172,850 | 5,099 |
*Quest Software, Inc. | 342,975 | 5,031 |
*Silicon Image, Inc. | 367,190 | 5,031 |
*Ascential Software Corp. | 352,727 | 4,970 |
*RF Micro Devices, Inc. | 757,600 | 4,932 |
*@ Road, Inc. | 771,500 | 4,860 |
*Atmel Corp. | 1,482,000 | 4,713 |
*National Semiconductor Corp. | 280,000 | 4,676 |
*UNOVA, Inc. | 303,600 | 4,660 |
*Cirrus Logic, Inc. | 910,285 | 4,597 |
*TTM Technologies, Inc. | 487,700 | 4,567 |
*Synaptics Inc. | 138,000 | 4,366 |
*MicroStrategy Inc. | 72,168 | 4,329 |
*Aspect Communications Corp. | 449,600 | 4,278 |
*Pixelworks, Inc. | 375,209 | 4,236 |
*Sycamore Networks, Inc. | 1,099,300 | 4,034 |
*Progress Software Corp. | 198,370 | 3,940 |
*McAfee Inc. | 155,870 | 3,772 |
*DSP Group Inc. | 189,600 | 3,760 |
*Dot Hill Systems Corp. | 599,169 | 3,745 |
*Gartner, Inc. Class A | 303,500 | 3,612 |
*Tyler Technologies, Inc. | 395,400 | 3,448 |
*Standard Microsystem Corp. | 155,700 | 3,429 |
*Stratex Networks, Inc. | 1,850,600 | 3,359 |
*Coherent, Inc. | 138,200 | 3,335 |
*ManTech International Corp. | 150,900 | 3,262 |
*ESS Technology, Inc. | 479,778 | 3,138 |
*Westell Technologies, Inc. | 547,099 | 3,069 |
*SERENA Software, Inc. | 169,100 | 3,000 |
*Net2Phone, Inc. | 851,000 | 2,953 |
*CommScope, Inc. | 163,500 | 2,945 |
*Dendrite International, Inc. | 199,500 | 2,923 |
Scientific-Atlanta, Inc. | 105,730 | 2,896 |
*Anaren, Inc. | 230,700 | 2,825 |
Microchip Technology, Inc. | 91,205 | 2,759 |
*The Titan Corp. | 174,000 | 2,582 |
*Cognos Inc. | 63,400 | 2,505 |
*Electronics for Imaging, Inc. | 136,300 | 2,459 |
*MSC Software Corp. | 281,600 | 2,447 |
*Micrel, Inc. | 216,000 | 2,426 |
*Intergraph Corp. | 96,016 | 2,394 |
*ViaSat, Inc. | 123,700 | 2,337 |
*Zebra Technologies Corp. | ||
Class A | 43,872 | 2,325 |
*BMC Software, Inc. | 122,050 | 2,309 |
*QLogic Corp. | 69,235 | 2,250 |
*Sanmina-SCI Corp. | 281,310 | 2,250 |
*Marvell Technology Group Ltd. | 75,940 | 2,170 |
*Mobility Electronics, Inc. | 306,300 | 2,150 |
*Interwoven Inc. | 230,000 | 2,086 |
*Jabil Circuit, Inc. | 85,480 | 2,078 |
*Catapult Communications Corp. | 82,200 | 2,019 |
*Daktronics, Inc. | 80,948 | 1,998 |
*Varian, Inc. | 53,700 | 1,959 |
*Lawson Software Inc. | 324,400 | 1,856 |
BEI Technologies, Inc. | 60,272 | 1,802 |
*Internet Security Systems, Inc. | 78,100 | 1,699 |
Park Electrochemical Corp. | 80,700 | 1,696 |
*Applied Micro Circuits Corp. | 440,000 | 1,602 |
*SPSS, Inc. | 117,200 | 1,583 |
*Herley Industries Inc. | 81,700 | 1,436 |
*Verity, Inc. | 108,100 | 1,397 |
Inter-Tel, Inc. | 51,100 | 1,380 |
*Emulex Corp. | 120,433 | 1,266 |
*eCollege.com Inc. | 131,700 | 1,208 |
*Pegasystems Inc. | 161,399 | 1,197 |
*Fairchild Semiconductor | ||
International, Inc. | 74,185 | 1,066 |
*MRO Software Inc. | 94,800 | 1,033 |
*Excel Technology, Inc. | 40,400 | 1,019 |
QAD Inc. | 133,417 | 1,019 |
*Integrated Circuit Systems, Inc. | 44,200 | 997 |
*Siliconix, Inc. | 23,107 | 957 |
*Rambus Inc. | 52,800 | 907 |
Bel Fuse, Inc. Class B | 23,200 | 778 |
*Mentor Graphics Corp. | 64,400 | 750 |
*Blue Coat Systems, Inc. | 23,900 | 416 |
Anixter International Inc. | 8,600 | 332 |
1,409,356 | ||
24
Shares | Market Value^ (000) | |
---|---|---|
Utilities (2.1%) | ||
*Nextel Partners, Inc. | 3,464,800 | $58,347 |
*Western Wireless Corp. | ||
Class A | 618,400 | 18,020 |
*Philippine Long Distance | ||
Telephone Co. ADR | 578,800 | 14,528 |
*General Communication, Inc. | 1,311,100 | 12,010 |
Western Gas Resources, Inc. | 402,600 | 11,792 |
*Southwestern Energy Co. | 186,101 | 8,549 |
*NII Holdings Inc. | 190,600 | 8,438 |
Energen Corp. | 143,400 | 7,712 |
*PTEK Holdings, Inc. | 630,941 | 6,284 |
*Commonwealth Telephone | ||
Enterprises, Inc. | 119,639 | 5,459 |
*Mediacom Communications | ||
Corp | 736,344 | 4,823 |
*Arch Wireless, Inc. | 107,200 | 3,065 |
DPL Inc. | 138,800 | 2,998 |
*Intrado Inc. | 170,536 | 2,309 |
*Boston Communications | ||
Group, Inc. | 216,181 | 1,967 |
*Primus Telecommunications | ||
Group, Inc. | 963,600 | 1,840 |
*IDT Corp. Class B | 119,300 | 1,649 |
*Alamosa Holdings, Inc. | 160,700 | 1,613 |
*UnitedGlobalCom Inc. Class A | 190,000 | 1,421 |
*IDT Corp. | 55,200 | 725 |
173,549 | ||
Other (0.6%) | ||
Brunswick Corp. | 801,000 | 37,583 |
SPX Corp. | 176,400 | 6,765 |
Lancaster Colony Corp. | 92,900 | 3,993 |
*McDermott International, Inc. | 214,400 | 2,927 |
Walter Industries, Inc. | 157,053 | 2,671 |
53,939 | ||
TOTAL COMMON STOCKS | ||
(Cost $6,758,014) | 7,829,006 | |
TEMPORARY INVESTMENTS (10.3%)(1) | ||
Exchange-Traded Funds (1.7%) | ||
Vanguard Index Participation | ||
Equity Receipts-- | ||
* Small-Cap | 2,209,700 | 112,142 |
* Small-Cap Growth | 645,800 | 31,231 |
143,373 | ||
Money Market Fund (7.8%) | ||
Vanguard Market Liquidity | ||
Fund, 1.77%** | 425,877,771 | 425,878 |
Vanguard Market Liquidity | ||
Fund, 1.77%**--Note G | 230,442,450 | 230,442 |
656,320 | ||
U.S. Government Obligations (0.3%) | ||
U.S. Treasury Bill | ||
(3)1.72%-1.74%, 1/27/2005 | $21,000 | $20,905 |
(3)1.89%, 3/24/2005 | 3,250 | 3,224 |
24,129 | ||
Repurchase Agreement (0.5%) | ||
Deutsche Bank Securities Inc. | ||
1.86%, 11/1/2004 | ||
(Dated 10/29/2004, | ||
Repurchase Value $46,807,000, | ||
collateralized by Federal Home | ||
Loan Mortgage Corp. Discount Note, | ||
4/12/2005, Federal National | ||
Mortgage Assn., 6.375%, | ||
6/15/2009) | 46,800 | 46,800 |
TOTAL TEMPORARY INVESTMENTS | ||
(Cost $866,591) | 870,622 | |
TOTAL INVESTMENTS (102.8%) | ||
(Cost $7,624,605) | 8,699,628 | |
OTHER ASSETS AND LIABILITIES (-2.8%) | ||
Other Assets--Note C | 151,146 | |
Security Lending Collateral | ||
Payable to Brokers--Note G | (230,442) | |
Other Liabilities | (157,781) | |
(237,077) | ||
NET ASSETS (100%) | $8,462,551 | |
oSee Note A in Notes to Financial Statements.
*Non-income-producing security.
**Money market fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard. Rate shown is the 7-day yield.
(1)The fund invests a portion of its cash reserves in equity markets through the use of index futures contracts and exchange-traded funds. After giving effect to these investments, the fund's effective common stock and temporary cash investment positions represent 96.6% and 6.2%, respectively, of net assets. See Note E in Notes to Financial Statements.
(2)Considered an affiliated company of the fund, as the fund owns more than 5% of the outstanding voting securities of such company. The total market value of investments in affiliated companies was $6,570,000. See Note I in Notes to Financial Statements.
(3)Securities with an aggregate value of $24,129,000 and cash of $2,134,000 have been segregated as initial margin for open futures contracts.
ADR--American Depositary Receipt.
REIT--Real Estate Investment Trust.
25
Explorer Fund | Amount (000) |
---|---|
AT OCTOBER 31, 2004, NET ASSETS CONSISTED OF: | |
Paid-in Capital | $7,389,326 |
Accumulated Net Investment Losses | (9,013) |
Accumulated Net Realized Gains | 5,294 |
Unrealized Appreciation | |
Investment Securities | 1,075,023 |
Futures Contracts | 1,921 |
NET ASSETS | $8,462,551 |
Investor Shares--Net Assets | |
Applicable to 108,960,934 outstanding $.001 | |
par value shares of beneficial interest | |
(unlimited authorization) | $7,301,556 |
NET ASSET VALUE PER SHARE-- | |
INVESTOR SHARES | $67.01 |
Admiral Shares--Net Assets | |
Applicable to 18,614,700 outstanding $.001 | |
par value shares of beneficial interest | |
(unlimited authorization) | $1,160,995 |
NET ASSET VALUE PER SHARE-- | |
ADMIRAL SHARES | $62.37 |
See Note E in Notes to Financial Statements for the tax-basis components of net assets. | |
26
STATEMENT OF OPERATIONS
This Statement shows the types of income earned by the fund during the reporting period, and details the operating expenses charged to each class of its shares. These expenses directly reduce the amount of investment income available to pay to shareholders as income dividends. This Statement also shows any Net Gain (Loss) realized on the sale of investments, and the increase or decrease in the Unrealized Appreciation (Depreciation) of investments during the period.
Explorer Fund Year Ended October 31, 2004 (000) | |
---|---|
INVESTMENT INCOME | |
Income | |
Dividends* | $25,830 |
Interest | 6,573 |
Security Lending | 1,541 |
Total Income | 33,944 |
Expenses | |
Investment Advisory Fees--Note B | |
Basic Fee | 12,632 |
Performance Adjustment | 1,225 |
The Vanguard Group--Note C | |
Management and Administrative | |
Investor Shares | 24,339 |
Admiral Shares | 2,185 |
Marketing and Distribution | |
Investor Shares | 929 |
Admiral Shares | 164 |
Custodian Fees | 131 |
Auditing Fees | 19 |
Shareholders' Reports | |
Investor Shares | 164 |
Admiral Shares | -- |
Trustees' Fees and Expenses | 9 |
Total Expenses | 41,797 |
Expenses Paid Indirectly--Note D | (1,065) |
Net Expenses | 40,732 |
NET INVESTMENT INCOME (LOSS) | (6,788) |
REALIZED NET GAIN (LOSS) | |
Investment Securities Sold* | 574,980 |
Futures Contracts | 32,919 |
REALIZED NET GAIN (LOSS) | 607,899 |
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) | |
Investment Securities | (201,625) |
Futures Contracts | (7,760) |
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) | (209,385) |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $391,726 |
*Dividend income and realized net gain (loss) from affiliated companies of the fund were $0 and $11,772,000, respectively. See Note I in Notes to Financial Statements
27
STATEMENT OF CHANGES IN NET ASSETS
This Statement shows how the fund’s total net assets changed during the two most recent reporting periods. The Operations section summarizes information detailed in the Statement of Operations. The amounts shown as Distributions to shareholders from the fund’s net income and capital gains may not match the amounts shown in the Operations section, because distributions are determined on a tax basis and may be made in a period different from the one in which the income was earned or the gains were realized on the financial statements. The Capital Share Transactions section shows the net amount shareholders invested in or redeemed from the fund. Distributions and Capital Share Transactions are shown separately for each class of shares.
Explorer Fund | ||
---|---|---|
Year Ended October 31, | ||
2004 (000) | 2003 (000) | |
INCREASE (DECREASE) IN NET ASSETS | ||
Operations | ||
Net Investment Income (Loss) | $(6,788) | $(2,980) |
Realized Net Gain (Loss) | 607,899 | (24,048) |
Change in Unrealized Appreciation (Depreciation) | (209,385) | 1,711,432 |
Net Increase (Decrease) in Net Assets Resulting from Operations | 391,726 | 1,684,404 |
Distributions | ||
Net Investment Income | ||
Investor Shares | -- | (389) |
Admiral Shares | -- | (309) |
Realized Capital Gain | ||
Investor Shares | -- | -- |
Admiral Shares | -- | -- |
Total Distributions | -- | (698) |
Capital Share Transactions--Note H | ||
Investor Shares | 1,288,479 | 717,013 |
Admiral Shares | 399,501 | 257,582 |
Net Increase (Decrease) from Capital Share Transactions | 1,687,980 | 974,595 |
Total Increase (Decrease) | 2,079,706 | 2,658,301 |
Net Assets | ||
Beginning of Period | 6,382,845 | 3,724,544 |
End of Period | $8,462,551 | $6,382,845 |
28
FINANCIAL HIGHLIGHTS
This table summarizes the fund’s investment results and distributions to shareholders on a per-share basis for each class of shares. It also presents the Total Return and shows net investment income and expenses as percentages of average net assets. These data will help you assess: the variability of the fund’s net income and total returns from year to year; the relative contributions of net income and capital gains to the fund’s total return; how much it costs to operate the fund; and the extent to which the fund tends to distribute capital gains. The table also shows the Portfolio Turnover Rate, a measure of trading activity. A turnover rate of 100% means that the average security is held in the fund for one year.
Explorer Fund Investor Shares
Year Ended October 31, | |||||
---|---|---|---|---|---|
For a Share Outstanding Throughout Each Period | 2004 | 2003 | 2002 | 2001 | 2000 |
Net Asset Value, Beginning of Period | $63.17 | $44.60 | $51.91 | $77.28 | $61.49 |
Investment Operations | |||||
Net Investment Income (Loss) | (.05) | (.012) | (.005) | .15 | .25 |
Net Realized and Unrealized Gain (Loss) on Investments | 3.89 | 18.587 | (7.200) | (11.36) | 23.80 |
Total from Investment Operations | 3.84 | 18.575 | (7.205) | (11.21) | 24.05 |
Distributions | |||||
Dividends from Net Investment Income | -- | (.005) | (.105) | (.25) | (.23) |
Distributions from Realized Capital Gains | -- | -- | -- | (13.91) | (8.03) |
Total Distributions | -- | (.005) | (.105) | (14.16) | (8.26) |
Net Asset Value, End of Period | $67.01 | $63.17 | $44.60 | $51.91 | $77.28 |
Total Return | 6.08% | 41.65% | -13.93% | -16.22% | 42.56% |
Ratios/Supplemental Data | |||||
Net Assets, End of Period (Millions) | $7,302 | $5,662 | $3,432 | $3,996 | $4,566 |
Ratio of Total Expenses to Average Net Assets* | 0.57% | 0.72% | 0.70% | 0.72% | 0.71% |
Ratio of Net Investment Income (Loss) to Average Net Assets | (0.11%) | (0.08%) | (0.01%) | 0.24% | 0.36% |
Portfolio Turnover Rate | 82% | 77% | 69% | 77% | 123% |
*Includes performance-based investment advisory fee increases (decreases) of 0.02%, 0.07%, 0.07%, 0.06%, and 0.05%.
29
FINANCIAL HIGHLIGHTS (CONTINUED)
Explorer Fund Admiral Shares
Year Ended October 31, | Nov.12, 2001* to Oct. 31, | ||
---|---|---|---|
For a Share Outstanding Throughout Each Period | 2004 | 2003 | 2002 |
Net Asset Value, Beginning of Period | $58.71 | $41.43 | $50.00 |
Investment Operations | |||
Net Investment Income (Loss) | .04 | .064 | .035 |
Net Realized and Unrealized Gain (Loss) on Investments | 3.62 | 17.259 | (8.498) |
Total from Investment Operations | 3.66 | 17.323 | (8.463) |
Distributions | |||
Dividends from Net Investment Income | -- | (.043) | (.107) |
Distributions from Realized Capital Gains | -- | -- | -- |
Total Distributions | -- | (.043) | (.107) |
Net Asset Value, End of Period | $62.37 | $58.71 | $41.43 |
Total Return | 6.23% | 41.85% | -16.98% |
Ratios/Supplemental Data | |||
Net Assets, End of Period (Millions) | $1,161 | $721 | $293 |
Ratio of Total Expenses to Average Net Assets** | 0.43% | 0.57% | 0.61%+ |
Ratio of Net Investment Income (Loss) to Average Net Assets | 0.04% | 0.05% | 0.13%+ |
Portfolio Turnover Rate | 82% | 77% | 69% |
*Inception.
**Includes performance-based investment advisory fee increases (decreases) of 0.02%, 0.07%, and 0.07%.
†Annualized.
SEE ACCOMPANYING NOTES, WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
30
NOTES TO FINANCIAL STATEMENTS
Vanguard Explorer Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund offers two classes of shares, Investor Shares and Admiral Shares. Investor Shares are available to any investor who meets the fund’s minimum purchase requirements. Admiral Shares are designed for investors who meet certain administrative, servicing, tenure, and account-size criteria.
A. The following significant accounting policies conform to generally accepted accounting principles for U.S. mutual funds. The fund consistently follows such policies in preparing its financial statements.
1. Security Valuation: Securities are valued as of the close of trading on the New York Stock Exchange (generally 4:00 p.m. Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which market quotations are not readily available, or whose values have been materially affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued by methods deemed by the board of trustees to represent fair value. Investments in Vanguard® Market Liquidity Fund are valued at that fund’s net asset value. Temporary cash investments acquired over 60 days to maturity are valued using the latest bid prices or using valuations based on a matrix system (which considers such factors as security prices, yields, maturities, and ratings), both as furnished by independent pricing services. Other temporary cash investments are valued at amortized cost, which approximates market value.
2. Futures Contracts: The fund uses S&P MidCap 400 and Russell 2000 Index futures contracts to a limited extent, with the objective of maintaining full exposure to the stock market while maintaining liquidity. The fund may purchase or sell futures contracts to achieve a desired level of investment, whether to accommodate portfolio turnover or cash flows from capital share transactions. The primary risks associated with the use of futures contracts are imperfect correlation between changes in market values of stocks held by the fund and the prices of futures contracts, and the possibility of an illiquid market.
Futures contracts are valued at their quoted daily settlement prices. The aggregate principal amounts of the contracts are not recorded in the financial statements. Fluctuations in the value of the contracts are recorded in the Statement of Net Assets as an asset (liability) and in the Statement of Operations as unrealized appreciation (depreciation) until the contracts are closed, when they are recorded as realized futures gains (losses).
3. Repurchase Agreements: The fund, along with other members of The Vanguard Group, may transfer uninvested cash balances into a pooled cash account, which is invested in repurchase agreements secured by U.S. government and agency securities. The fund may also invest directly in repurchase agreements. Securities pledged as collateral for repurchase agreements are held by a custodian bank until the agreements mature. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal; however, in the event of default or bankruptcy by the other party to the agreement, retention of the collateral may be subject to legal proceedings.
4. Federal Income Taxes: The fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income. Accordingly, no provision for federal income taxes is required in the financial statements.
5. Distributions: Distributions to shareholders are recorded on the ex-dividend date.
6. Security Lending: The fund may lend its securities to qualified institutional borrowers to earn additional income. Security loans are required to be secured at all times by collateral at least equal
31
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
to the market value of securities loaned. The fund invests cash collateral received in Vanguard Market Liquidity Fund, and records a liability for the return of the collateral, during the period the securities are on loan. Security lending income represents the income earned on investing cash collateral, less expenses associated with the loan.
7. Other: Dividend income is recorded on the ex-dividend date. Interest income includes income distributions received from Vanguard Market Liquidity Fund and is accrued daily. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment securities are those of the specific securities sold.
Each class of shares has equal rights as to assets and earnings, except that each class separately bears certain class-specific expenses related to maintenance of shareholder accounts (included in Management and Administrative expenses) and shareholder reporting. Marketing and distribution expenses are allocated to each class of shares based on a method approved by the board of trustees. Income, other non-class-specific expenses, and gains and losses on investments are allocated to each class of shares based on its relative net assets.
B. Grantham, Mayo, Van Otterloo & Co. LLC (“GMO”), Granahan Investment Management, Inc., Wellington Management Company, LLP, and Chartwell Investment Partners each provide investment advisory services to a portion of the fund for a fee calculated at an annual percentage rate of average net assets managed by the advisor. The basic fees of each advisor are subject to quarterly adjustments based on performance for the preceding three years relative to the Russell 2000 Growth Index for periods prior to January 31, 2003, and their new benchmark, the Russell 2500 Growth Index, beginning January 31, 2003. The benchmark change will be fully phased in by January 2006.
The Vanguard Group provides investment advisory services to a portion of the fund on an at-cost basis; the fund paid Vanguard advisory fees of $537,000 for the year ended October 31, 2004.
For the year ended October 31, 2004, the aggregate investment advisory fee represented an effective annual basic rate of 0.17% of the fund’s average net assets before an increase of $1,225,000 (0.02%) based on performance.
C. The Vanguard Group furnishes at cost corporate management, administrative, marketing, and distribution services. The costs of such services are allocated to the fund under methods approved by the board of trustees. The fund has committed to provide up to 0.40% of its net assets in capital contributions to Vanguard. At October 31, 2004, the fund had contributed capital of $1,152,000 to Vanguard (included in Other Assets), representing 0.01% of the fund’s net assets and 1.15% of Vanguard’s capitalization. The fund’s trustees and officers are also directors and officers of Vanguard.
D. The fund has asked its investment advisors to direct certain security trades, subject to obtaining the best price and execution, to brokers who have agreed to rebate to the fund part of the commissions generated. Such rebates are used solely to reduce the fund’s management and administrative expenses. For the year ended October 31, 2004, these arrangements reduced the fund’s expenses by $1,065,000 (an annual rate of 0.01% of average net assets).
E. Distributions are determined on a tax basis and may differ from net investment income and realized capital gains for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the financial statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain, or loss are recognized in different periods for financial statement and tax purposes; these differences will reverse at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.
32
For tax purposes, the fund had a net operating loss of $3,694,000 for the year ended October 31, 2004; this amount has been reclassified from accumulated net investment losses to paid-in capital.
The fund used a capital loss carryforward of $591,350,000 to offset taxable capital gains realized during the year ended October 31, 2004, reducing the amount of capital gains that would otherwise be available to distribute to shareholders. For tax purposes, at October 31, 2004, the fund had $8,680,000 of long-term capital gains available for distribution.
At October 31, 2004, net unrealized appreciation of investment securities for tax purposes was $1,075,023,000, consisting of unrealized gains of $1,549,384,000 on securities that had risen in value since their purchase and $474,361,000 in unrealized losses on securities that had fallen in value since their purchase.
At October 31, 2004, the aggregate settlement value of open futures contracts expiring in December 2004 and the related unrealized appreciation (depreciation) were:
(000) | |||
---|---|---|---|
Futures Contracts | Number of Long Contracts | Aggregate Settlement Value | Unrealized Appreciation (Depreciation) |
Russell 2000 Index | 419 | $122,453 | $1,263 |
S&P MidCap 400 Index | 138 | 41,593 | 688 |
E-mini Russell 2000 Index | 361 | 21,100 | 3 |
E-mini S&P MidCap 400 Index | 306 | 18,446 | (33) |
Unrealized appreciation (depreciation) on open futures contracts is required to be treated as realized gain (loss) for tax purposes.
F. During the year ended October 31, 2004, the fund purchased $7,526,309,000 of investment securities and sold $5,777,288,000 of investment securities, other than temporary cash investments.
G. The market value of securities on loan to broker/dealers at October 31, 2004, was $219,697,000, for which the fund held cash collateral of $230,442,000.
H. Capital share transactions for each class of shares were:
Year Ended October 31, | ||||
---|---|---|---|---|
2004 | 2003 | |||
Amount (000) | Shares (000) | Amount (000) | Shares (000) | |
Investor Shares | ||||
Issued | $2,451,079 | 36,994 | $1,492,083 | 28,092 |
Issued in Lieu of Cash Distributions | -- | -- | 380 | 8 |
Redeemed | (1,162,600) | (17,671) | (775,450) | (15,403) |
Net Increase (Decrease)--Investor Shares | 1,288,479 | 19,323 | 717,013 | 12,697 |
Admiral Shares | ||||
Issued | 760,028 | 12,207 | 374,098 | 7,567 |
Issued in Lieu of Cash Distributions | -- | -- | 287 | 7 |
Redeemed | (360,527) | (5,868) | (116,803) | (2,363) |
Net Increase (Decrease)--Admiral Shares | 399,501 | 6,339 | 257,582 | 5,211 |
33
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
I. Certain of the fund’s investments are in companies that are considered to be affiliated companies of the fund because the fund owns more than 5% of the outstanding voting securities of the company. Transactions during the period ended October 31, 2004, in securities of affiliated companies were as follows:
(000) | |||||
---|---|---|---|---|---|
Current Period Transactions | |||||
Oct. 31, 2003 Market Value | Purchases at Cost | Proceeds from Securities Sold | Dividend Income | Oct. 31, 2004 Market Value | |
Hollywood Media Corp. | $2,784 | $2,280 | $609 | -- | $6,570 |
LodgeNet Entertainment Corp. | 16,175 | 1,435 | 3,166 | -- | n/a* |
Matria Healthcare, Inc. | 11,997 | 1,210 | 7,356 | -- | n/a* |
Vans, Inc. | 11,615 | 2,846 | 23,283 | -- | -- |
$42,571 | -- | $6,570 | |||
*At October 31, 2004, the security is still held but the issuer is no longer an affiliated company of the fund.
34
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Trustees of Vanguard Explorer Fund:
In our opinion, the accompanying statement of net assets and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Vanguard Explorer Fund (the “Fund”) at October 31, 2004, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2004 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
December 8, 2004
35
THE PEOPLE WHO GOVERN YOUR FUND
The trustees of your mutual fund are there to see that the fund is operated and managed in your best interests since, as a shareholder, you are a part owner of the fund. Your fund trustees also serve on the board of directors of The Vanguard Group, Inc., which is owned by the Vanguard® funds and provides services to them on an at-cost basis.
A majority of Vanguard's board members are independent, meaning that they have no affiliation with Vanguard or the funds they oversee, apart from the sizable personal investments they have made as private individuals.
Our independent board members bring distinguished backgrounds in business, academia, and public service to their task of working with Vanguard officers to establish the policies and oversee the activities of
Name (Year of Birth) Trustee/Officer Since | Position(s) Held with Fund (Number of Vanguard Funds Overseen by Trustee/Officer) | Principal Occupation(s) During the Past Five Years |
---|---|---|
John J. Brennan* (1954) May 1987 | Chairman of the Board, Chief Executive Officer, and Trustee (131) | Chairman of the Board,Chief Executive Officer, and Director/Trustee of The Vanguard Group, Inc., and of each of the investment companies served by The Vanguard Group. |
INDEPENDENT TRUSTEES | ||
Charles D. Ellis (1937) January 2001 | Trustee (131) | The Partners of `63 (pro bono ventures in education); Senior Advisor to Greenwich Associates (international business strategy consulting); Successor Trustee of Yale University; Overseer of the Stern School of Business at New York University; Trustee of the Whitehead Institute for Biomedical Research. |
Rajiv L. Gupta (1945) December 2001† | Trustee (131) | Chairman and Chief Executive Officer (since October 1999), Vice Chairman (January-September 1999), and Vice President (prior to September 1999) of Rohm and Haas Co. (chemicals); Director of Technitrol, Inc. (electronic components), and Agere Systems (commu- nications components); Board Member of the American Chemistry Council; Trustee of Drexel University. |
JoAnn Heffernan Heisen (1950) July 1998 | Trustee (131) | Vice President, Chief Information Officer, and Member of the Executive Committee of Johnson & Johnson (pharmaceuticals/ consumer products); Director of the University Medical Center at Princeton and Women's Research and Education Institute. |
Burton G. Malkiel (1932) May 1977 | Trustee (129) | Chemical Bank Chairman's Professor of Economics, Princeton University; Director of Vanguard Investment Series plc (Irish invest- ment fund) (since November 2001), Vanguard Group (Ireland) Limited (investment management) (since November 2001), Prudential Insurance Co. of America, BKF Capital (investment management), The Jeffrey Co. (holding company), and NeuVis, Inc. (software company). |
† | December 2002 for Vanguard® Equity Income Fund, Vanguard® Growth Equity Fund, the Vanguard® Municipal Bond Funds, and the Vanguard® State Tax-Exempt Funds. |
the funds. Among board members’ responsibilities are selecting investment advisors for the funds; monitoring fund operations, performance, and costs; reviewing contracts; nominating and selecting new trustees/directors; and electing Vanguard officers.
Each trustee serves a fund until its termination; or until the trustee’s retirement, resignation, or death; or otherwise as specified in the fund’s organizational documents. Any trustee may be removed at a shareholders’ meeting by a vote representing two-thirds of the net asset value of all shares of the fund together with shares of other Vanguard funds organized within the same trust. The table on these two pages shows information for each trustee and executive officer of the fund. The mailing address of the trustees and officers is P.O. Box 876, Valley Forge, PA 19482.
Name (Year of Birth) Trustee/Officer Since | Position(s) Held with Fund (Number of Vanguard Funds Overseen by Trustee/Officer) | Principal Occupation(s) During the Past Five Years |
---|---|---|
Alfred M. Rankin, Jr. (1941) January 1993 | Trustee (131) | Chairman, President, Chief Executive Officer, and Director of NACCO Industries, Inc. (forklift trucks/housewares/lignite); Director of Goodrich Corporation (industrial products/aircraft systems and services); Director of Standard Products Company (supplier for the automotive industry) until 1998. |
J. Lawrence Wilson (1936) April 1985 | Trustee (131) | Retired Chairman and Chief Executive Officer of Rohm and Haas Co. (chemicals); Director of Cummins Inc. (diesel engines), MeadWestvaco Corp. (paper products), and AmerisourceBergen Corp. (pharmaceutical distribution); Trustee of Vanderbilt University. |
EXECUTIVE OFFICERS* | ||
R. Gregory Barton (1951) June 2001 | Secretary (131) | Managing Director and General Counsel of The Vanguard Group, Inc.; Secretary of The Vanguard Group and of each of the investment companies served by The Vanguard Group. |
Thomas J. Higgins (1957) July 1998 | Treasurer (131) | Principal of The Vanguard Group, Inc.; Treasurer of each of the investment companies served by The Vanguard Group. |
*Officers of the funds are “interested persons” as defined in the Investment Company Act of 1940.
More information about the trustees is in the Statement of Additional Information, available from The Vanguard Group.
VANGUARD SENIOR MANAGEMENT TEAM | |
Mortimer J. Buckley, Information Technology. James H. Gately, Investment Programs and Services. Kathleen C. Gubanich, Human Resources. F. William McNabb, III, Client Relationship Group. | Michael S. Miller, Planning and Development. Ralph K. Packard, Finance. George U. Sauter, Chief Investment Officer. |
John C. Bogle, Founder; Chairman and Chief Executive Officer, 1974-1996. | |
Post Office Box 2600
Valley Forge, PA 19482-2600
Vanguard, The Vanguard Group, Vanguard.com, Admiral, Explorer, and the ship logo are trademarks of The Vanguard Group, Inc.
All other marks are the exclusive property of their respective owners.
All comparative mutual fund data are from Lipper Inc. or Morningstar, Inc., unless otherwise noted.
For More Information
This report is intended for the fund's shareholders. It may not be distributed to prospective investors unless it is preceded or accompanied by the current fund prospectus. To receive a free copy of the prospectus or the Statement of Additional Information, or to request additional information about the fund or other Vanguard funds, please contact us at one of the adjacent telephone numbers or by e-mail through Vanguard.com. Prospectuses may also be viewed online.
You can obtain a free copy of Vanguard's proxy voting guidelines by visiting our website, www.vanguard.com, and searching for "proxy voting guidelines," or by calling Vanguard at 1- 800- 662-2739. They are also available from the SEC's website, www.sec.gov. In addition, you may obtain a free report on how the fund voted the proxies for securities it owned during the 12 months ended June 30. To get the report, visit either www.vanguard.com or www.sec.gov.
You can review and copy information about your fund at the SEC's Public Reference Room in Washington, D.C. To find out more about this public service, call the SEC at 1-202-942- 8090. Information about your fund is also available on the SEC's website, and you can receive copies of this information, for a fee, by sending a request in either of two ways: via e-mail addressed to publicinfo@sec.gov or via regular mail addressed to the Public Reference Section, Securities and Exchange Commission, Washington, DC 20549-0102.
World Wide Web
www.vanguard.com
Fund Information
1-800-662-7447
Direct Investor
Account Services
1-800-662-2739
Institutional Investor
Services
1-800-523-1036
Text Telephone
1-800-952-3335
(C)2004 The Vanguard Group, Inc.
All rights reserved.
Vanguard Marketing
Corporation, Distributor.
Q240 122004
Item 2: Code of Ethics. The Board of Trustees has adopted a code of ethics that applies to the principal executive officer, principal financial officer, principal accounting officer or controller of the Registrant and The Vanguard Group, Inc., and to persons performing similar functions.
Item 3: Audit Committee Financial Expert. All of the members of the Audit Committee have been determined by the Registrant’s Board of Trustees to be Audit Committee Financial Experts. The members of the Audit Committee are: Charles D. Ellis, Rajiv L. Gupta, JoAnn Heffernan Heisen, Burton G. Malkiel, Alfred M. Rankin, Jr., and J. Lawrence Wilson. All Audit Committee members are independent under applicable rules.
Item 4: Principal Accountant Fees and Services.
(a) Audit Fees.
Audit Fees of the Registrant
Fiscal Year Ended October 31, 2004: $18,600
Fiscal Year Ended October 31, 2003: $16,000
Aggregate Audit Fees of Registered Investment Companies in the Vanguard Group
Fiscal Year Ended October 31, 2004: $1,685,500
Fiscal Year Ended October 31, 2003: $1,620,200
(b) Audit-Related Fees.
Fiscal Year Ended October 31, 2004: $257,800
Fiscal Year Ended October 31, 2003: $324,460
Includes fees billed in connection with assurance and related services provided to the Registrant, The Vanguard Group, Inc., Vanguard Marketing Corporation, and other registered investment companies in the Vanguard Group.
(c) Tax Fees.
Fiscal Year Ended October 31, 2004: $76,400
Fiscal Year Ended October 31, 2003: $409,900
Includes fees billed in connection with tax compliance, planning and advice services provided to the Registrant, The Vanguard Group, Inc., Vanguard Marketing Corporation, and other registered investment companies in the Vanguard Group and related to income and excise taxes.
(d) All Other Fees.
Fiscal Year Ended October 31, 2004: $0
Fiscal Year Ended October 31, 2003: $31,000
Includes fees billed for services related to risk management and privacy matters. Services were provided to the Registrant, The Vanguard Group, Inc., Vanguard Marketing Corporation, and other registered investment companies in the Vanguard Group.
(e) (1) Pre-Approval Policies. The policy of the Registrant’s Audit Committee is to consider and, if appropriate, approve before the principal accountant is engaged for such services, all specific audit and non-audit services provided to: (1) the Registrant; (2) The Vanguard Group, Inc.; (3) other entities controlled by The Vanguard Group, Inc. that provide ongoing services to the Registrant; and (4) other registered investment companies in the Vanguard Group. In making a determination, the Audit Committee considers whether the services are consistent with maintaining the principal accountant’s independence.
In the event of a contingency situation in which the principal accountant is needed to provide services in between scheduled Audit Committee meetings, members of the Audit Committee would be called on to consider and, if appropriate, pre-approve audit or permitted non-audit services in an amount sufficient to complete services through the next Audit Committee meeting, and to determine if such services would be consistent with maintaining the accountant’s independence. At the next scheduled Audit Committee meeting, services and fees would be presented to the Audit Committee for formal consideration, and, if appropriate, approval by the entire Audit Committee. The Audit Committee would again consider whether such services and fees are consistent with maintaining the principal accountant’s independence.
The Registrant’s Audit Committee is informed at least annually of all audit and non-audit services provided by the principal accountant to the Vanguard complex, whether such services are provided to: (1) the Registrant; (2) The Vanguard Group, Inc.; (3) other entities controlled by The Vanguard Group, Inc. that provide ongoing services to the Registrant; or other registered investment companies in the Vanguard Group.
(2) No percentage of the principal accountant’s fees or services were approved pursuant to the waiver provision of paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) For the most recent fiscal year, over 50% of the hours worked under the principal accountant’s engagement were not performed by persons other than full-time, permanent employees of the principal accountant.
(g) Aggregate Non-Audit Fees.
Fiscal Year Ended October 31, 2004: $76,400
Fiscal Year Ended October 31, 2003: $440,900
Includes fees billed for non-audit services provided to the Registrant, The Vanguard Group, Inc., Vanguard Marketing Corporation, and other registered investment companies in the Vanguard Group.
(h) For the most recent fiscal year, the Audit Committee has determined that the provision of all non-audit services was consistent with maintaining the principal accountant’s independence.
Item 5: Not applicable.
Item 6: Not applicable.
Item 7: Not applicable.
Item 8: Not applicable.
Item 9: Not applicable.
Item 10: Controls and Procedures.
(a) Disclosure Controls and Procedures. The Principal Executive and Financial Officers concluded that the Registrant’s Disclosure Controls and Procedures are effective based on their evaluation of the Disclosure Controls and Procedures as of a date within 90 days of the filing date of this report.
(b) Internal Control Over Financial Reporting. There were no significant changes in Registrant’s internal control over financial reporting or in other factors that could significantly affect this control subsequent to the date of the evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Item 11: Exhibits.
(a) Code of Ethics.
(b) Certifications.
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
VANGUARD EXPLORER FUND | |
BY: | (signature) |
(HEIDI STAM) JOHN J. BRENNAN* CHIEF EXECUTIVE OFFICER |
Date: | December 14, 2004 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
VANGUARD EXPLORER FUND | |
BY: | (signature) |
(HEIDI STAM) JOHN J. BRENNAN* CHIEF EXECUTIVE OFFICER |
Date: | December 14, 2004 |
VANGUARD EXPLORER FUND | |
BY: | (signature) |
(HEIDI STAM) THOMAS J. HIGGINS* TREASURER |
Date: | December 14, 2004 |
*By Power of Attorney. Filed on December 20, 2004, see File Number 002-14336. Incorporated by Reference.