UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT
OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
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:
Heidi Stam, 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, 2009 – April 30, 2010
Item 1: Reports to Shareholders
 |
| Vanguard Explorer™ Fund |
| Semiannual Report |
| April 30, 2010 |
 |
> Vanguard Explorer Fund returned about 25% for the six months ended April 30, 2010, slightly behind the return of its benchmark and slightly ahead of its peer-group average.
> Each sector in the fund returned between 15% and 35%.
> Technology stocks provided the biggest boost to the fund’s return, while consumer discretionary stocks fared best compared with their counterparts in the benchmark.
| Contents | |
| Your Fund’s Total Returns. | 1 |
| Chairman’s Letter. | 2 |
| Advisors’ Report. | 7 |
| Fund Profile. | 13 |
| Performance Summary. | 14 |
| Financial Statements. | 15 |
| About Your Fund’s Expenses. | 28 |
| Trustees Approve Advisory Arrangements. | 30 |
| Glossary. | 33 |
Please note: The opinions expressed in this report are just that—informed opinions. They should not be considered promises or advice. Also, please keep in mind that the information and opinions cover the period through the date on the front of this report. Of course, the risks of investing in your fund are spelled out in the prospectus.
See the Glossary for definitions of investment terms used in this report.
Cover photograph: Veronica Coia.
| Your Fund’s Total Returns | |
| Six Months Ended April 30, 2010 | |
| Total | |
| Returns | |
| Vanguard Explorer Fund | |
| Investor Shares | 25.01% |
| Admiral™ Shares | 25.17 |
| Russell 2500 Growth Index | 25.81 |
| Small-Cap Growth Funds Average | 24.95 |
| Small-Cap Growth Funds Average: Derived from data provided by Lipper Inc. | |
Admiral Shares are a lower-cost class of shares available to many longtime shareholders and to those with significant investments in the fund.
| Your Fund’s Performance at a Glance | ||||
| October 31, 2009 , Through April 30, 2010 | ||||
| Distributions Per Share | ||||
| Starting | Ending | Income | Capital | |
| Share Price | Share Price | Dividends | Gains | |
| Vanguard Explorer Fund | ||||
| Investor Shares | $51.77 | $64.61 | $0.098 | $0.000 |
| Admiral Shares | 48.21 | 60.15 | 0.175 | 0.000 |
1
Chairman’s Letter
Dear Shareholder,
Vanguard Explorer Fund returned about 25% for the fiscal half-year ended April 30, 2010. With stocks—particularly those of smaller companies—rallying through most of the period, the fund continued to regain much of the ground lost during the severe downturn of 2008–09. The stocks selected by the fund’s investment advisors slightly underperformed those in its benchmark, but the fund’s result was slightly ahead of the average return of competing small-cap growth funds.
U.S. stocks extended their post-crisis rally
Despite a few minor setbacks, stocks continued to climb during much of the six months ended April 30. The broad U.S. stock market ended the period up about 18%. Since scraping bottom in March 2009, U.S. equities have rebounded dramatically, returning more than 80%.
For the half-year, stocks of small-capitalization companies significantly outperformed both the broad market and larger-cap issues, returning about 28%. Large-cap stocks returned about 17%, slightly behind the broad market gain. Value stocks generally trumped their growth counterparts for the period, though the differences weren’t all that noteworthy.
International stocks considerably lagged U.S. stocks, but still ended the half-year in positive territory. In Europe,
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Greece’s financial woes continued to make headlines, precipitating unusual market volatility that continued after the close of the fiscal period. In Asia, the larger developed markets returned about 8%. Most emerging market stocks, which made a quick and substantial recovery from the global economic slowdown, continued to outperform those in developed markets. China, however, was held back by the possibility of monetary policy changes.
Corporate bonds remained attractive to investors
The broad U.S. taxable bond market returned about 3% for the period as investors continued to favor higher-risk corporate bonds over U.S. government issues. The broad municipal bond market posted strong results, returning almost 4%. The yields of longer-term Treasury bonds rose during the six months, while those of the shortest-term securities remained around 0%.
The Federal Reserve Board has kept its target for short-term interest rates unchanged at 0% to 0.25% since December 2008. The Fed’s April statement noted economic improvements, but said officials still thought that “economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.” The Fed has, however, begun to wind down credit programs established during the financial crisis.
| Market Barometer | |||
| Total Returns | |||
| Periods Ended April 30, 2010 | |||
| Six | One | Five Years | |
| Months | Year | (Annualized) | |
| Stocks | |||
| Russell 1000 Index (Large-caps) | 16.77% | 40.21% | 3.07% |
| Russell 2000 Index (Small-caps) | 28.17 | 48.95 | 5.74 |
| Dow Jones U.S. Total Stock Market Index | 17.91 | 41.12 | 3.73 |
| MSCI All Country World Index ex USA (International) | 5.95 | 40.97 | 6.94 |
| Bonds | |||
| Barclays Capital U.S. Aggregate Bond Index | |||
| (Broad taxable market) | 2.54% | 8.30% | 5.38% |
| Barclays Capital Municipal Bond Index | 3.68 | 8.85 | 4.51 |
| Citigroup Three-Month U.S. Treasury Bill Index | 0.04 | 0.12 | 2.72 |
| CPI | |||
| Consumer Price Index | 0.85% | 2.24% | 2.30% |
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Consumer and tech stocks provided the biggest gains
As the U.S. stock market rally continued, the Explorer Fund’s holdings in every sector of the economy gained between 15% and 35% during the six-month period. Compared with the benchmark, the fund’s best relative performance came from its consumer discretionary holdings, which benefited from an uptick in consumer spending. The fund profited from holdings in the resurgent auto industry in particular. In fact, auto parts and equipment companies were the fund’s best relative performers. Within this group, TRW, ArvinMeritor, and Tenneco were among the biggest advancers, with gains approaching or exceeding 100%.
The most sizable contribution to the fund’s advance came from the fund’s largest sector, information technology, as corporate America ramped up its investment in IT infrastructure. The advisors were especially successful in the communications equipment arena; Acme Packet, for example, returned more than 160% after announcing record revenue. And TiVo (+61%), the TV software firm and one of the fund’s largest holdings, proved to be an outstanding performer during the period.
The health care sector also posted generous returns, although superior selections among health care technology companies were offset by biotechnology,
| Expense Ratios | |||
| Your Fund Compared With Its Peer Group | |||
| Investor | Admiral | Peer Group | |
| Shares | Shares | Average | |
| Explorer Fund | 0.54% | 0.34% | 1.64% |
The fund expense ratios shown are from the prospectus dated February 24, 2010, and represent estimated costs for the current fiscal year based on the fund’s net assets as of the prospectus date. For the six months ended April 30, 2010, the fund’s annualized expense ratios were 0.51% for Investor Shares and 0.31% for Admiral Shares. The peer-group expense ratio is derived from data provided by Lipper Inc. and captures information through year-end 2009.
Peer group: Small-Cap Growth Funds.
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where the fund had a lower allocation than the benchmark weighting and its stocks underperformed. The fund’s holdings in the energy and industrial sectors also failed to keep pace with their counterparts in the benchmark. In industrials, a rapid ascent by US Airways was more than offset by the fund’s underweighting of UAL, the parent of United Airlines. Both airlines benefited from an increase in worldwide travel, but UAL skyrocketed as it conducted merger talks with US Airways and Continental. Just after the close of the period, UAL and Continental announced plans to merge.
A variety of growth strategies for a long-term approach
The Explorer Fund’s search for smaller, faster-growing companies doesn’t guarantee success, of course. The exploration for superior performance can lead to periods when returns trail those for the small-cap growth segment of the market, or for the overall market. But as the fund has demonstrated, the use of multiple advisors and a diversity of strategies can reduce risk while offering the prospect of above-average growth in this often volatile segment of the market.
While the market’s climb back from its low last year has been welcome, the crosscurrents in the global economy may bring continued volatility. The historic economic developments of the past several years underscore the wisdom of sticking with a long-term plan, one that includes a broad mix of stock, bond, and money market funds tailored to your goals and risk tolerance. The Explorer Fund can be a good fit for this kind of prudent approach to investing, an approach that has served investors well time and again, through bull and bear markets alike.
Over the past few months, AXA Rosenberg Investment Management, one of the fund's seven advisors, has notified Vanguard of: 1) the discovery of a coding error that may have affected its risk model; and 2) certain management and ownership changes. We have been told by AXA that the error has been fixed, but we are obviously concerned about its existence and about the impact of the organizational changes on the firm. At this point, AXA is conducting a review of the situation, and we are waiting for its report, including an assessment of what impact, if any, the coding error may have had on the fund. We continue to diligently monitor and assess the situation and determine the right course of action for the fund and its shareholders.
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On another matter, I would like to inform you that as of January 1, 2010, we completed a leadership transition that began in March 2008. I succeeded Jack Brennan as chairman of Vanguard and each of the funds. Jack has agreed to serve as chairman emeritus and senior advisor. Under Jack’s leadership, Vanguard has grown to become a preeminent firm in the mutual fund industry. Jack’s energy, his relentless pursuit of perfection, and his unwavering focus on always doing the right thing for our clients are evident in every facet of Vanguard policy today.
Thank you for entrusting your assets to Vanguard.
Sincerely,
F. William McNabb III
Chairman and Chief Executive Officer
May 17, 2010
6
Advisors’ Report
For the fiscal half-year ended April 30, 2010, Vanguard Explorer Fund returned 25.01% for Investor Shares and 25.17% for the lower-cost Admiral Shares.
Your fund is managed by seven advisors, a strategy that enhances the fund’s diversification by providing exposure to distinct, yet complementary, investment approaches. It’s not uncommon for different advisors to have different views about individual securities or the broader investment environment.
The table following this report lists the advisors, the amount and percentage of fund assets each manages, and brief descriptions of their investment strategies. The advisors have provided the following assessment of the investment environment during the past six months and the notable successes and shortfalls in their portfolios. These comments were prepared on May 18, 2010.
Granahan Investment
Management, Inc.
Portfolio Manager: Jack Granahan, CFA, Managing Partner
Investment environment: Activity levels in the economy began to rise in the form of higher revenues, and since costs generally remained subdued, the result has been much better earnings comparisons. Stocks continued their comeback until the European monetary uncertainties began to weigh on the market in April. In the United States, the industrial sector has strengthened, with technology leading the way. High unemployment and housing difficulties remain a challenge in the consumer sector.
Successes: Technology, consumer staples, and materials were our best-performing sectors. This coincided with better sales and earnings comparisons in those sectors recently, although most of our sectors are showing better earnings as well. Individual stocks of note included Acme Packet in technology, which appreciated more than 150% as the emergence of packet networks based on Internet Protocol replaces legacy circuit switched networks. This conversion benefits the company’s session border control product line, which improves network security and quality of service. Nektar Therapeutics also was a contributor, as its drug delivery platform continued to gain validation.
Shortfalls: Our financial stocks hurt performance. Euronet Worldwide, a provider of ATM and other electronic payment services, took a hit in its important Polish operation, where Visa Europe lowered interchange fees.
Our underweighting in the strong consumer discretionary sector also penalized performance. These stocks have been helped by managements’ aggressive cost reductions.
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Wellington Management Company, LLP
Portfolio Manager: Kenneth L. Abrams, Senior Vice President and Equity Portfolio Manager
Investment environment: Global equities continued their rally, ending the period with a modest gain in April. Investor concerns about widening credit problems in the Eurozone weighed on markets, offsetting strong corporate earnings news and a strengthening global economic recovery.
Successes: Our portion of the fund benefited from favorable security selection in the consumer discretionary sector, with solid performance from TRW Automotive, ArvinMeritor, and MGM Mirage. TRW shares rallied as the company’s fiscal-year results, announced in February, topped expectations. Cost-cutting overcame output declines, and management raised its full-year revenue guidance. ArvinMeritor shares rose after the company successfully raised capital, which it intends to use to improve its balance sheet. MGM Mirage shares gained on solid first-quarter earnings and a successful debt offering.
Shortfalls: Several of our information technology holdings were detractors over the trailing six months, including Take-Two Interactive and Tellabs. Take-Two Interactive shares fell after the firm warned that earnings would miss expectations, citing poor results for its baseball games and a weak retail environment. We eliminated the position. Tellabs shares lagged after rallying during the third quarter, as earnings were hurt by lower equipment sales to Verizon during Verizon’s FiOS build-out.
Kalmar Investment Advisers
Portfolio Manager: Ford B. Draper, Jr., President and Chief Investment Officer
Investment environment: Both U.S. and foreign economies have strengthened, notably more than anticipated a year ago. The U.S. recovery is broadening into a sustainable expansion. Stock markets anticipated this and moved higher.
We have increased the portfolio’s economic sensitivity, staying focused on high-quality businesses with special growth drivers and internal improvements not discounted in their stocks. Examples include Gentex, Darden Restaurants, and Acxiom.
Since the market recovery began, low-quality, very small stocks have outperformed—producing a headwind to relative returns of quality-oriented managers. However, this creates opportunity, so we raised our exposure to classy businesses with true secular growth prospects, such as Herbalife, Cooper Companies, and ICON.
8
Successes: Befitting our bottom-up style, our successes came from varied industries. They included Cooper Companies, Life Time Fitness, ResMed, F5 Networks, and CyberSource, which was the subject of a takeover.
Shortfalls: In addition to the impact of the low-quality headwind on the portfolio more broadly, our exploration and production holdings suffered because of the decline of natural gas prices, even though reserves grew robustly. Also, Corrections Corporation of America suffered as state budgetary problems worsened.
AXA Rosenberg Investment Management LLC
Portfolio manager: William E. Ricks, Ph.D., Americas Chief Executive and Chief Investment Officer
Investment environment: Corporate earnings continue to surprise on the upside, although the rate of earnings improvement has begun to moderate. Equity price returns are increasingly being underpinned by earnings after an extended period of divergence between prices and earnings. The wide range of analysts’ estimates has also begun to narrow to more normal levels. We continue to remain focused on fundamental stock selection, driven by earnings and valuation.
Successes: The portfolio benefited from being overweighted in stocks in the consumer discretionary and materials sectors, which led the strong rally. Underweightings in the financial and industrial sectors also helped, as the services and miscellaneous finance industries posted poor relative returns. Stock selection within consumer discretionary and IT was successful, including holdings in Netflix, Cirrus Logic, Phillips-Van Heusen, and Interpublic Group. An underweighting in 3Com also helped our relative performance.
Shortfalls: Stock selection was the key detractor for relative returns during the period, particularly among health care and industrial holdings. Overweighted holdings in Beckman Coulter, King Pharmaceuticals, and Energizer Holdings were the top detractors from performance as these companies posted weak relative returns for the period. An underweighting in Dendreon also hurt performance as the stock posted returns of more than 100%.
Vanguard Quantitative Equity Group
Portfolio Manager: James D. Troyer, CFA, Principal
Investment environment: For the six-month period, our portion of Explorer enjoyed the continuation of a more favorable investment climate. Signs that the recession might be ending raised stock prices and lowered expectations
9
about volatility. As investors have become less concerned about systemic risk, it has become easier to discriminate among stocks. Our process assesses five characteristics: valuation, growth, management decisions, market sentiment, and earnings quality. During the past six months, our management, growth, valuation, and quality models all enjoyed positive performance. Our sentiment indicator was negative.
Successes: Our best-performing securities over the last six months were Revlon (108%), HSN (102%) and Valassis Communications (79%).
Shortfalls: Our underweightings in UAL and Dendreon hurt performance.
Chartwell Investment Partners, L.P.
Portfolio Managers: Edward N. Antoian, CFA, CPA, Managing Partner
John A. Heffern, Managing Partner and Senior Portfolio Manager
Investment environment: As valuations climb for weaker companies, we believe that investors will begin to shift toward higher-quality companies in a more meaningful way because these companies have far better prospects for sustained growth. In a gradual and unsteady recovery, we expect investors to continue to favor companies with strong fundamentals and above-average growth potential, two key characteristics we apply with our time-tested, bottom-up approach to small- and mid-cap investing.
Successes: Basic industry and business services were our top-performing groups over the period. Atlas Air Worldwide Holdings provides operating services to the air freight industry. The company has benefited from customers flying beyond their minimum requirements, pricing power resulting from the elevated demand, and an increase in military flights resulting from operations in Afghanistan. Ashland and Solutia are two specialty chemicals companies that also performed well. VanceInfo Technologies, a Chinese IT services vendor, has been gaining market share with its highly educated, low-cost workforce in the Chinese domestic market and with multinational clients moving into China. Lastly, biotechnology company Dendreon won U.S. approval in late April to sell a vaccine to treat advanced prostate cancer.
Shortfalls: Stock selection detracted in both the consumer and financial service areas. Coldwater Creek is a women’s apparel retailer selling through stores, the Internet, and catalogs. Soft margins were an issue as the company reduced prices to move inventory before the holiday season. Broadpoint Gleacher Securities Group is an expanding full-service investment bank serving middle-market clients. A seasonal slowdown in fixed income trading weighed
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on fourth-quarter results, and the stock sold off as a result. That said, we still feel the firm can take advantage of dislocation among some of the larger investment banks with business and compensation models potentially being altered by government action and reregulation.
Century Capital Management, LLC
Portfolio Manager: Alexander L. Thorndike, Chief Investment Officer and Managing Partner
Investment environment: The remarkable stock market rally in 2009 carried through into the early months of 2010 as earnings came in better than expected and the U.S. economy continued to show signs of improvement. We believe there is ample evidence that the economic recovery is gaining momentum, supporting a new sense of optimism. With leaner companies, revenue increases should drive meaningful improvements in profit margins. The profitability of competitively advantaged businesses should begin to rise as a result.
The best-performing stocks since the March 2009 lows have tended to be volatile and generally lower-quality companies, while fundamentally strong companies have taken a back seat. We anticipate that future performance will depend more on individual company results and less on overall macro factors as the recovery continues and investors realign their expectations. We expect that companies with sturdy fundamentals, more innovative technologies, and adaptive strategies will capitalize on the changed economic landscape. Diligent research and a patient approach will be essential to successfully identifying these businesses within this new environment.
Successes: Financials was our best-performing sector during the period. Och-Ziff Capital Management and Wintrust Financial were top performers. Energy also contributed to performance, notably Core Laboratories NV.
Shortfalls: Health care and telecommunication services were our weakest sectors during the period. Masimo and Neutral Tandem detracted from performance.
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| Vanguard Explorer Fund Investment Advisors | |||
| Fund Assets Managed | |||
| Investment Advisor | % | $ Million | Investment Strategy |
| Granahan Investment | 26 | 2,447 | Bases its investment process on the beliefs that |
| Management, Inc. | earnings drive stock prices and that small, dynamic | ||
| companies with exceptional growth prospects have the | |||
| greatest long-term potential. A bottom-up, fundamental | |||
| approach places companies in one of three life-cycle | |||
| categories: pioneer, core growth, and special situation. | |||
| In each, the process looks for companies with strong | |||
| earnings growth and leadership in their markets. | |||
| Wellington Management | 19 | 1,891 | Conducts research and analysis of individual |
| Company, LLP | companies to select stocks believed to have | ||
| exceptional growth potential relative to their market | |||
| valuations. Each stock is considered individually before | |||
| purchase, and company developments are continually | |||
| monitored for comparison with expectations for | |||
| growth. | |||
| Kalmar Investment Advisers | 14 | 1,388 | Employs a “growth with value” strategy using creative, |
| bottom-up research to uncover vigorously growing, | |||
| high-quality businesses. The process also seeks out | |||
| stocks that are inefficiently valued or that offer value | |||
| through longer-term company ownership. The strategy | |||
| has a dual objective of strong returns with lower risk. | |||
| AXA Rosenberg Investment | 12 | 1,159 | Employs an investment philosophy grounded in |
| Management LLC | fundamental analysis using a two-part quantitative | ||
| model: a valuation model and an earnings forecast | |||
| model, which are combined to develop an individual | |||
| predicted return for each company and optimized | |||
| against the Russell 2500 Growth Index. | |||
| Vanguard Quantitative Equity | 11 | 1,043 | Employs a quantitative fundamental management |
| Group | approach, using models that assess valuation, growth | ||
| prospects, management decisions, market sentiment, | |||
| and earnings quality of companies as compared with | |||
| their peers. | |||
| Chartwell Investment Partners, | 8 | 805 | Uses a bottom-up, fundamental, research-driven |
| L.P. | stock-selection strategy focusing on companies with | ||
| sustainable growth, strong management teams, | |||
| competitive positions, and outstanding product and | |||
| service offerings. These companies should continually | |||
| demonstrate growth in earnings per share. | |||
| Century Capital Management, | 7 | 645 | Employs a fundamental, bottom-up approach that |
| LLC | attempts to identify reasonably priced companies that | ||
| will grow faster than the overall market. Companies | |||
| also must have a superior return on equity, high | |||
| recurring revenues, and improving margins. | |||
| Cash Investments | 3 | 327 | These short-term reserves are invested by Vanguard in |
| equity index products to simulate investment in stocks. | |||
| Each advisor also may maintain a modest cash | |||
| position. | |||
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| Explorer Fund | ||
| Fund Profile | ||
| As of April 30, 2010 | ||
| Share-Class Characteristics | ||
| Investor | Admiral | |
| Shares | Shares | |
| Ticker Symbol | VEXPX | VEXRX |
| Expense Ratio1 | 0.54% | 0.34% |
| 30-Day SEC Yield | 0.01% | 0.21% |
| Portfolio Characteristics | |||
| Russell | DJ | ||
| 2500 | U.S. Total | ||
| Growth | Market | ||
| Fund | Index | Index | |
| Number of Stocks | 966 | 1,577 | 4,143 |
| Median Market Cap | $2.1B | $2.4B | $28.4B |
| Price/Earnings Ratio | 33.9x | 35.0x | 21.5x |
| Price/Book Ratio | 2.6x | 3.1x | 2.2x |
| Return on Equity | 13.1% | 14.4% | 19.2% |
| Earnings Growth Rate | 11.7% | 11.0% | 6.6% |
| Dividend Yield | 0.5% | 0.6% | 1.7% |
| Foreign Holdings | 3.5% | 0.0% | 0.0% |
| Turnover Rate | |||
| (Annualized) | 79% | — | — |
| Short-Term Reserves | 2.2% | — | — |
| Sector Diversification (% of equity exposure) | |||
| Russell | DJ | ||
| 2500 | U.S. Total | ||
| Growth | Market | ||
| Fund | Index | Index | |
| Consumer | |||
| Discretionary | 16.7% | 17.5% | 11.5% |
| Consumer Staples | 3.2 | 4.3 | 9.5 |
| Energy | 4.9 | 4.6 | 10.3 |
| Financials | 7.4 | 8.3 | 17.3 |
| Health Care | 18.8 | 20.1 | 11.8 |
| Industrials | 16.1 | 14.8 | 11.2 |
| Information | |||
| Technology | 25.6 | 23.5 | 18.4 |
| Materials | 5.5 | 4.5 | 3.9 |
| Telecommunication | |||
| Services | 1.0 | 1.4 | 2.6 |
| Utilities | 0.8 | 1.0 | 3.5 |
| Volatility Measures | ||
| DJ | ||
| U.S. Total | ||
| Russell 2500 | Market | |
| Growth Index | Index | |
| R-Squared | 0.99 | 0.94 |
| Beta | 0.94 | 1.12 |
These measures show the degree and timing of the fund’s fluctuations compared with the indexes over 36 months.
Ten Largest Holdings (% of total net assets)
| TiVo Inc. | Application | |
| Software | 0.8% | |
| DeVry Inc. | Education Services | 0.7 |
| MSC Industrial Direct | Trading Companies | |
| Co. Class A | & Distributors | 0.7 |
| Alliance Data Systems | Data Processing & | |
| Corp. | Outsourced | |
| Services | 0.7 | |
| ON Semiconductor Corp. | Semiconductors | 0.7 |
| Beacon Roofing Supply | Trading Companies | |
| Inc. | & Distributors | 0.6 |
| Teradyne Inc. | Semiconductor | |
| Equipment | 0.6 | |
| Sensient Technologies | Specialty Chemicals | |
| Corp. | 0.6 | |
| Bruker Corp. | Life Sciences Tools | |
| & Services | 0.5 | |
| Kennametal Inc. | Industrial | |
| Machinery | 0.5 | |
| Top Ten | 6.4% |
The holdings listed exclude any temporary cash investments and equity index products.
Investment Focus
1 The expense ratios shown are from the prospectus dated February 24, 2010, and represent estimated costs for the current fiscal year based on the fund’s net assets as of the prospectus date. For the six months ended April 30, 2010, the annualized expense ratios were 0.51% for Investor Shares and 0.31% for Admiral Shares.
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Explorer Fund
Performance Summary
All of the returns in this report represent past performance, which is not a guarantee of future results that may be achieved by the fund. (Current performance may be lower or higher than the performance data cited. For performance data current to the most recent month-end, visit our website at www.vanguard.com/performance.) Note, too, that both investment returns and principal value can fluctuate widely, so an investor’s shares, when sold, could be worth more or less than their original cost. The returns shown do not reflect taxes that a shareholder would pay on fund distributions or on the sale of fund shares.
Fiscal-Year Total Returns (%): October 31, 1999, Through April 30, 2010
Average Annual Total Returns: Periods Ended March 31, 2010
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.
| Inception | One | Five | Ten | |
| Date | Year | Years | Years | |
| Investor Shares | 12/11/1967 | 59.91% | 2.76% | 2.66% |
| Admiral Shares | 11/12/2001 | 60.25 | 2.94 | 5.461 |
| 1 Return since inception. |
See Financial Highlights for dividend and capital gains information.
14
Explorer Fund
Financial Statements (unaudited)
Statement of Net Assets—Investments Summary
As of April 30, 2010
This Statement summarizes the fund’s holdings by asset type. Details are reported for each of the fund’s 50 largest individual holdings and for investments that, in total for any issuer, represent more than 1% of the fund’s net assets. The total value of smaller holdings is reported as a single amount within each category.
The fund reports a complete list of its holdings in regulatory filings four times in each fiscal year, at the quarter-ends. For the second and fourth fiscal quarters, the complete listing of the fund’s holdings is available electronically on Vanguard.com and on the Securities and Exchange Commission’s website (www.sec.gov), or you can have it mailed to you without charge by calling 800-662-7447. For the first and third fiscal quarters, the fund files the lists with the SEC on Form N-Q. Shareholders can look up the fund’s Forms N-Q on the SEC’s website. 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).
| Market | Percentage | |||
| Value• | of Net | |||
| Shares | ($000) | Assets | ||
| Common Stocks | ||||
| Consumer Discretionary | ||||
| DeVry Inc. | 1,072,656 | 66,923 | 0.7% | |
| * | GameStop Corp. Class A | 1,776,915 | 43,197 | 0.4% |
| * | O’Reilly Automotive Inc. | 836,507 | 40,897 | 0.4% |
| *,^ | MGM Mirage | 2,514,800 | 39,960 | 0.4% |
| * | WMS Industries Inc. | 782,819 | 39,157 | 0.4% |
| * | LKQ Corp. | 1,781,610 | 37,521 | 0.4% |
| * | DreamWorks Animation SKG Inc. Class A | 918,600 | 36,459 | 0.4% |
| * | Warnaco Group Inc. | 753,186 | 36,032 | 0.4% |
| Cinemark Holdings Inc. | 1,928,154 | 35,208 | 0.4% | |
| Tractor Supply Co. | 498,385 | 33,477 | 0.3% | |
| Consumer Discretionary—Other † | 1,127,586 | 11.6% | ||
| 1,536,417 | 15.8% | |||
| Consumer Staples | ||||
| Ruddick Corp. | 1,307,460 | 46,206 | 0.5% | |
| Herbalife Ltd. | 860,440 | 41,516 | 0.4% | |
| Nu Skin Enterprises Inc. Class A | 1,187,750 | 35,704 | 0.4% | |
| Consumer Staples—Other † | 170,020 | 1.7% | ||
| 293,446 | 3.0% | |||
| Energy | ||||
| Core Laboratories NV | 248,140 | 37,194 | 0.4% | |
| Energy—Other † | 407,739 | 4.2% | ||
| 444,933 | 4.6% | |||
| Exchange-Traded Funds | ||||
| ^,1 | Vanguard Small-Cap ETF | 1,165,083 | 77,490 | 0.8% |
| ^ | iShares Russell 2000 Index Fund | 686,900 | 49,168 | 0.5% |
| ^,1 | Vanguard Small-Cap Growth ETF | 713,200 | 48,876 | 0.5% |
| 175,534 | 1.8% | |||
15
| Explorer Fund | ||||
| Market | Percentage | |||
| Value• | of Net | |||
| Shares | ($000) | Assets | ||
| Financials | ||||
| Discover Financial Services | 2,669,412 | 41,269 | 0.4% | |
| Jefferies Group Inc. | 1,269,063 | 34,544 | 0.4% | |
| 7 | Financials—Other † | 558,548 | 5.7% | |
| 634,361 | 6.5% | |||
| Health Care | ||||
| * | Bruker Corp. | 3,407,253 | 52,097 | 0.5% |
| * | Health Management Associates Inc. Class A | 5,262,080 | 49,043 | 0.5% |
| * | Community Health Systems Inc. | 1,088,820 | 44,489 | 0.5% |
| * | Mettler-Toledo International Inc. | 347,109 | 43,555 | 0.4% |
| Cooper Cos. Inc. | 1,106,730 | 43,041 | 0.4% | |
| * | ResMed Inc. | 623,635 | 42,675 | 0.4% |
| * | ICON PLC ADR | 1,371,445 | 40,005 | 0.4% |
| * | Bio-Rad Laboratories Inc. Class A | 351,519 | 39,261 | 0.4% |
| * | Edwards Lifesciences Corp. | 376,400 | 38,799 | 0.4% |
| * | Regeneron Pharmaceuticals Inc. | 1,512,360 | 38,611 | 0.4% |
| * | Nektar Therapeutics | 2,743,400 | 38,298 | 0.4% |
| * | Seattle Genetics Inc. | 2,803,504 | 35,324 | 0.4% |
| * | Henry Schein Inc. | 569,800 | 34,456 | 0.4% |
| * | QIAGEN NV | 1,492,500 | 34,104 | 0.4% |
| Health Care—Other † | 1,169,398 | 12.1% | ||
| 1,743,156 | 18.0% | |||
| Industrials | ||||
| MSC Industrial Direct Co. Class A | 1,197,140 | 65,232 | 0.7% | |
| *,2 | Beacon Roofing Supply Inc. | 2,483,403 | 55,132 | 0.6% |
| Kennametal Inc. | 1,523,535 | 50,063 | 0.5% | |
| * | Genesee & Wyoming Inc. Class A | 980,330 | 38,331 | 0.4% |
| Equifax Inc. | 1,044,484 | 35,095 | 0.4% | |
| * | Continental Airlines Inc. Class B | 1,495,600 | 33,427 | 0.3% |
| Industrials—Other † | 1,202,461 | 12.4% | ||
| 1,479,741 | 15.3% | |||
| Information Technology | ||||
| * | TiVo Inc. | 4,664,060 | 81,714 | 0.8% |
| * | Alliance Data Systems Corp. | 863,256 | 64,796 | 0.7% |
| * | ON Semiconductor Corp. | 7,962,410 | 63,222 | 0.6% |
| * | Teradyne Inc. | 4,487,688 | 54,884 | 0.6% |
| * | Netlogic Microsystems Inc. | 1,451,643 | 45,248 | 0.5% |
| * | Informatica Corp. | 1,633,807 | 40,862 | 0.4% |
| Factset Research Systems Inc. | 535,500 | 40,280 | 0.4% | |
| * | MICROS Systems Inc. | 1,070,705 | 39,787 | 0.4% |
| *,2 | Verigy Ltd. | 3,106,620 | 37,093 | 0.4% |
| * | Concur Technologies Inc. | 866,181 | 36,302 | 0.4% |
| *,2 | Sourcefire Inc. | 1,603,162 | 35,863 | 0.4% |
| * | F5 Networks Inc. | 514,989 | 35,241 | 0.4% |
| * | Acme Packet Inc. | 1,328,528 | 34,728 | 0.3% |
| * | Hewitt Associates Inc. Class A | 811,290 | 33,255 | 0.3% |
| Information Technology—Other † | 1,733,182 | 17.9% | ||
| 2,376,457 | 24.5% | |||
16
| Explorer Fund | ||||
| Market | Percentage | |||
| Value• | of Net | |||
| Shares | ($000) | Assets | ||
| Materials | ||||
| Sensient Technologies Corp. | 1,696,700 | 53,497 | 0.5% | |
| Lubrizol Corp. | 398,813 | 36,029 | 0.4% | |
| Materials—Other † | 417,072 | 4.3% | ||
| 506,598 | 5.2% | |||
| Telecommunication Services † | 91,387 | 0.9% | ||
| Utilities † | 67,989 | 0.7% | ||
| Total Common Stocks (Cost $7,407,741) | 9,350,019 | 96.3%3 | ||
| Coupon | ||||
| Temporary Cash Investments | ||||
| Money Market Fund | ||||
| 4,5 Vanguard Market Liquidity Fund | 0.210% | 441,791,827 | 441,792 | 4.6% |
| Repurchase Agreement † | 33,100 | 0.3% | ||
| 6U.S. Government and Agency Obligations † | 15,282 | 0.2% | ||
| Total Temporary Cash Investments (Cost $490,177) | 490,174 | 5.1%3 | ||
| Total Investments (Cost $7,897,918) | 9,840,193 | 101.4% | ||
| Other Assets and Liabilities | ||||
| Other Assets | 84,180 | 0.9% | ||
| Liabilities5 | (219,881) | (2.3%) | ||
| (135,701) | (1.4%) | |||
| Net Assets | 9,704,492 | 100.0% | ||
17
| Explorer Fund | |
| At April 30, 2010, net assets consisted of: | |
| Amount | |
| ($000) | |
| Paid-in Capital | 9,703,944 |
| Overdistributed Net Investment Income | (15,990) |
| Accumulated Net Realized Losses | (1,932,481) |
| Unrealized Appreciation (Depreciation) | |
| Investment Securities | 1,942,275 |
| Futures Contracts | 6,745 |
| Foreign Currencies | (1) |
| Net Assets | 9,704,492 |
| Investor Shares—Net Assets | |
| Applicable to 107,931,103 outstanding $.001 par value shares of | |
| beneficial interest (unlimited authorization) | 6,973,738 |
| Net Asset Value Per Share—Investor Shares | $64.61 |
| Admiral Shares—Net Assets | |
| Applicable to 45,402,331 outstanding $.001 par value shares of | |
| beneficial interest (unlimited authorization) | 2,730,754 |
| Net Asset Value Per Share—Admiral Shares | $60.15 |
• See Note A in Notes to Financial Statements.
* Non-income-producing security.
^ Part of security position is on loan to broker-dealers. The total value of securities on loan is $72,958,000.
† Represents the aggregate value, by category, of securities that are not among the 50 largest holdings and, in total for any issuer, represent 1% or less of net assets.
1 Considered an affiliated company of the fund as the issuer is another member of The Vanguard Group.
2 Considered an affiliated company of the fund as the fund owns more than 5% of the outstanding voting securities of such company.
3 The fund invests a portion of its cash reserves in equity markets through the use of index futures contracts. After giving effect to futures investments, the fund’s effective common stock and temporary cash investment positions represent 98.4% and 3.0%, respectively, of ne t assets.
4 Affiliated money market fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard. Rate shown is the 7-day yield.
5 Includes $78,694,000 of collateral received for securities on loan.
6 Securities with a value of $15,282,000 have been segregated as initial margin for open futures contracts.
7 Includes a restricted security that represents 0.0% of net assets.
ADR—American Depositary Receipt.
See accompanying Notes, which are an integral part of the Financial Statements.
18
| Explorer Fund | |
| Statement of Operations | |
| Six Months Ended | |
| April 30, 2010 | |
| ($000) | |
| Investment Income | |
| Income | |
| Dividends1,2 | 24,305 |
| Interest2 | 291 |
| Security Lending | 2,214 |
| Total Income | 26,810 |
| Expenses | |
| Investment Advisory Fees—Note B | |
| Basic Fee | 8,943 |
| Performance Adjustment | (733) |
| The Vanguard Group—Note C | |
| Management and Administrati ve—Investor Shares | 9,387 |
| Management and Administrati ve—Admiral Shares | 1,175 |
| Marketing and Distribution& #151;Investor Shares | 598 |
| Marketing and Distribution& #151;Admiral Shares | 260 |
| Custodian Fees | 114 |
| Shareholders’ Reports—Investor Shares | 33 |
| Shareholders’ Reports—Admiral Shares | 27 |
| Trustees’ Fees and Expenses | 9 |
| Total Expenses | 19,813 |
| Expenses Paid Indirectly | (203) |
| Net Expenses | 19,610 |
| Net Investment Income | 7,200 |
| Realized Net Gain (Loss) | |
| Investment Securities Sold2 | 283,219 |
| Futures Contracts | 22,536 |
| Foreign Currencies | (192) |
| Realized Net Gain (Loss) | 305,563 |
| Change in Unrealized Appreciation (Depreciation) | |
| Investment Securities | 1,628,560 |
| Futures Contracts | 9,031 |
| Foreign Currencies | (6) |
| Change in Unrealized Appreciation (Depreciation) | 1,637,585 |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 1,950,348 |
1 Dividends are net of foreign withholding taxes of $42,000.
2 Dividend income, interest income, and realized net gain (loss) from affiliated companies of the fund were $916,000, $258,000, and ($1,004,000), respectively.
See accompanying Notes, which are an integral part of the Financial Statements.
19
| Explorer Fund | ||
| Statement of Changes in Net Assets | ||
| Six Months Ended | Year Ended | |
| April 30, | October 31, | |
| 2010 | 2009 | |
| ($000) | ($000) | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net Investment Income | 7,200 | 30,983 |
| Realized Net Gain (Loss) | 305,563 | (1,403,808) |
| Change in Unrealized Appreciation (Depreciation) | 1,637,585 | 2,384,574 |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 1,950,348 | 1,011,749 |
| Distributions | ||
| Net Investment Income | ||
| Investor Shares | (10,678) | (31,118) |
| Admiral Shares | (7,955) | (17,117) |
| Realized Capital Gain | ||
| Investor Shares | — | — |
| Admiral Shares | — | — |
| Total Distributions | (18,633) | (48,235) |
| Capital Share Transactions | ||
| Investor Shares | (94,302) | (49,810) |
| Admiral Shares | (62,358) | (33,340) |
| Net Increase (Decrease) from Capital Share Transactions | (156,660) | (83,150) |
| Total Increase (Decrease) | 1,775,055 | 880,364 |
| Net Assets | ||
| Beginning of Period | 7,929,437 | 7,049,073 |
| End of Period1 | 9,704,492 | 7,929,437 |
1 Net Assets—End of Period includes undistributed (overdistributed) net investment income of ($15,990,000) and ($4,365,000).
See accompanying Notes, which are an integral part of the Financial Statements.
20
| Explorer Fund | ||||||
| Financial Highlights | ||||||
| Investor Shares | ||||||
| Six Months | ||||||
| Ended | ||||||
| For a Share Outstanding | April 30, | Year Ended October 31, | ||||
| Throughout Each Period | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 |
| Net Asset Value, Beginning of Period | $51.77 | $45.54 | $83.93 | $80.26 | $76.67 | $67.01 |
| Investment Operations | ||||||
| Net Investment Income | .030 | .178 | .295 | .362 | .302 | .111 |
| Net Realized and Unrealized Gain (Loss) | ||||||
| on Investments | 12.908 | 6.334 | (31.589) | 11.052 | 9.724 | 9.622 |
| Total from Investment Operations | 12.938 | 6.512 | (31.294) | 11.414 | 10.026 | 9.733 |
| Distributions | ||||||
| Dividends from Net Investment Income | (.098) | (.282) | (.310) | (.320) | (.230) | — |
| Distributions from Realized Capital Gains | — | — | (6.786) | (7.424) | (6.206) | (.073) |
| Total Distributions | (.098) | (.282) | (7.096) | (7.744) | (6.436) | (.073) |
| Net Asset Value, End of Period | $64.61 | $51.77 | $45.54 | $83.93 | $80.26 | $76.67 |
| Total Return1 | 25.01% | 14.46% | -40.17% | 15.31% | 13.59% | 14.53% |
| Ratios/Supplemental Data | ||||||
| Net Assets, End of Period (Millions) | $6,974 | $5,677 | $5,026 | $8,937 | $8,517 | $7,836 |
| Ratio of Total Expenses to | ||||||
| Average Net Assets2 | 0.51%3 | 0.54% | 0.44% | 0.41% | 0.46% | 0.51% |
| Ratio of Net Investment Income to | ||||||
| Average Net Assets | 0.10%3 | 0.38% | 0.40% | 0.44% | 0.36% | 0.16% |
| Portfolio Turnover Rate | 79%3 | 95% | 112% | 90% | 96% | 80% |
1 Total returns do not include the account service fee that may be applicable to certain accounts with balances below $10,000.
2 Includes performance-based investment advisory fee increases (decreases) of (0.02%), (0.01%), (0.02%), (0.04%), (0.03%), and (0.01%).
3 Annualized.
See accompanying Notes, which are an integral part of the Financial Statements.
21
| Explorer Fund | ||||||
| Financial Highlights | ||||||
| Admiral Shares | ||||||
| Six Months | ||||||
| Ended | ||||||
| For a Share Outstanding | April 30, | Year Ended October 31, | ||||
| Throughout Each Period | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 |
| Net Asset Value, Beginning of Period | $48.21 | $42.45 | $78.25 | $74.82 | $71.47 | $62.37 |
| Investment Operations | ||||||
| Net Investment Income | .080 | .246 | .385 | .478 | .422 | .215 |
| Net Realized and Unrealized Gain (Loss) | ||||||
| on Investments | 12.035 | 5.881 | (29.442) | 10.299 | 9.050 | 8.953 |
| Total from Investment Operations | 12.115 | 6.127 | (29.057) | 10.777 | 9.472 | 9.168 |
| Distributions | ||||||
| Dividends from Net Investment Income | (.175) | (.367) | (.427) | (.437) | (.346) | — |
| Distributions from Realized Capital Gains | — | — | (6.316) | (6.910) | (5.776) | (.068) |
| Total Distributions | (.175) | (.367) | (6.743) | (7.347) | (6.122) | (.068) |
| Net Asset Value, End of Period | $60.15 | $48.21 | $42.45 | $78.25 | $74.82 | $71.47 |
| Total Return | 25.17% | 14.66% | -40.07% | 15.53% | 13.79% | 14.70% |
| Ratios/Supplemental Data | ||||||
| Net Assets, End of Period (Millions) | $2,731 | $2,252 | $2,023 | $3,652 | $3,264 | $2,402 |
| Ratio of Total Expenses to | ||||||
| Average Net Assets1 | 0.31%2 | 0.34% | 0.26% | 0.23% | 0.28% | 0.34% |
| Ratio of Net Investment Income to | ||||||
| Average Net Assets | 0.30%2 | 0.58% | 0.58% | 0.62% | 0.54% | 0.33% |
| Portfolio Turnover Rate | 79%2 | 95% | 112% | 90% | 96% | 80% |
1 Includes performance-based investment advisory fee increases (decreases) of (0.02%), (0.01%), (0.02%), (0.04%), (0.03%), and (0.01%).
2 Annualized.
See accompanying Notes, which are an integral part of the Financial Statements.
22
Explorer Fund
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, service, 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 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 affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued at their fair values calculated according to procedures adop ted by the board of trustees. These procedures include obtaining quotations from an independent pricing service, monitoring news to identify significant market- or security-specific events, and evaluating changes in the values of foreign market proxies (for example, ADRs, futures contracts, or exchange-traded funds), between the time the foreign markets close and the fund’s pricing time. When fair-value pricing is employed, the prices of securities used by a fund to calculate its net asset value may differ f rom quoted or published prices for the same securities. 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. Foreign Currency: Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates obtained from an independent third party as of the fund’s pricing time on the valuation date. Realized gains (losses) and unrealized appreciation (depreciation) on investment securities include the effects of changes in exchange rates since the securities were purchased, combined with the effects of changes in security prices. Fluctuations in the value of other assets and liabilities resulting from changes in exchange rates are recorded as unrealized foreign currency gains (losses) until the assets or liabilities are settled in cash, at which tim e they are recorded as realized foreign currency gains (losses).
3. Futures Contracts: The fund uses index futures contracts to a limited extent, with the objective of maintaining full ex posure 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 Statement of Net Assets. 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).
23
Explorer Fund
4. Repurchase Agreements: The fund may invest in repurchase agreements. Securities pledged as collateral for repurchase agreements are held by a custodian bank until the agreements mature. Eac h 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.
5. Federal Income Taxes: The fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income. Management has analyzed the fund’s tax positions taken for all open federal income tax years (October 31, 2006–2009), and for the period ended April 30, 2010, and has concluded that no provision for federal income tax is required in the fund’s financial statements.
6. Distributions: Distributions to shareholders are recorded on the ex-dividend date.
7. 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 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 c ash collateral, less expenses associated with the loan.
8. 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. Granahan Investment Management, Inc., Wellington Management Company, LLP, Kalmar
Investment Advisers, AXA Rosenberg Investment Management LLC, Chartwell Investment Partners, L.P., and Century Capital Management, LLC, 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 Chartwell Investment Partners, L.P., Granahan Investment Management, Inc., Kalmar Investment Advisers, and Wellington Management Company, LLP, are subject to quarterly adjustments based on performance for the preceding three years relative to the Russell 2500 Growth Index. The basic fee for AXA Rosenberg Investment Management LLC is subject to quarterly adjustments based on performance since July 31, 2007, relative to the Russell 2500 Growth Index. The basic fee for Century Capital Management, LLC, is subject to quarterly adjustments based on performance since October 31, 2008, relative to a 50/50 blend of the Russell 2500 Index and Russell 2500 Growth Index.
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 $365,000 for the six months ended April 30, 2010.
For the six months ended April 30, 2010, the aggregate investment advisory fee represented an effective annual basic rate of 0.20% of the fund’s average net assets, before a decrease of $733,000 (0.02%) based on performance.
24
Explorer Fund
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 April 30, 2010, the fund had contributed capital of $1,743,000 to Vanguard (included in Other Assets), representing 0.02% of the fund’s net assets and 0.70% 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 six months ended April 30, 2010, these arrangements reduced the fund’s expenses by $203,000 (an annual rate of 0.00% of average net assets).
E. Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.
Level 1—Quoted prices in active markets for identical securities.
Level 2—Other significant observable inputs (including quo ted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).
Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments).
The following table summarizes the fund’s investments as of April 30, 2010, based on the inputs used to value them:
| Level 1 | Level 2 | Level 3 | |
| Investments | ($000) | ($000) | ($000) |
| Common Stocks | 9,321,019 | 27,147 | 1,853 |
| Temporary Cash Investments | 441,792 | 48,382 | — |
| Futures Contracts—Assets1 | 120 | — | — |
| Futures Contracts—Liabilities1 | (5,805) | — | — |
| Total | 9,757,126 | 75,529 | 1,853 |
| 1 Represents variation margin on the last day of the reporting period. |
The following table summarizes changes in investments valued based on Level 3 inputs during the six months ended April 30, 2010:
| Investments in | |
| Common Stocks | |
| Amount Valued Based on Level 3 Inputs | ($000) |
| Balance as of October 31, 2009 | — |
| Net Purchases | 1,814 |
| Change in Unrealized Appreciation (Depreciation) | 39 |
| Balance as of April 30, 2010 | 1,853 |
25
Explorer Fund
F. At April 30, 2010, the aggregate settlement value of open futures contracts and the related unrealized appreciation (depreciation) were:
| ($000) | ||||
| Aggregate | ||||
| Number of | Settlement | Unrealized | ||
| Long (Short) | Value | Appreciation | ||
| Futures Contracts | Expiration | Contracts | Long (Short) | (Depreciation) |
| E-mini Russell 2000 Index | June 2010 | 2,208 | 157,982 | 5,063 |
| S&P MidCap 400 Index | June 2010 | 62 | 25,470 | 1,041 |
| E-mini S&P MidCap 400 Index | June 2010 | 165 | 13,556 | 641 |
Unrealized appreciation (depreciation) on open futures contracts is required t o be treated as realized gain (loss) for tax purposes.
G. Distributions are determined on a tax basis and may differ from net investment in come and realized capital gains f or financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital acc ounts 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 shor t-term gains as ordinary income for tax purposes.
During the six months ended April 30, 2010, the fund realized net foreign currency losses of $192,000, which decreased distributable net income for tax purposes; accordingly, such losses have been reclassified from accumulated net realized losses to overdistributed net investment income.
The fund’s tax-basis capital gains and losses are determined only at the end of each fiscal year. For tax purposes, at October 31, 2009, the fund had available capital loss carryforwards totaling $2,229,101,000 to offset future net capital gains of $784,127,000 through October 31, 2016, and $1,444,974,000 through October 31, 2017. The fund will use these capital losses to offset net taxable capital gains, if any, realized during the year ending October 31, 2010; should the fund realize net capital losses for the year, the losses will be added to the loss carryforward balance above.
At April 30, 2010, the cost of investment securities for tax purposes was $7,897,918,000. Net unrealized appreciation of investment securities for tax purposes was $1,942,275,000, consisting of unrealized gains of $2,186,116,000 on securities that had risen in value since their purchase and $243,841,000 in unrealized losses on securities that had fallen in value since their purchase.
H. During the six months ended April 30, 2010, the fund purchased $3,290,972,000 of investment securities and sold $3,488,820,000 of investment securities, other than temporary cash investments.
26
Explorer Fund
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 in securities of these companies were as follows:
| Current Period Transactions | ||||||
| Oct. 31, 2009 | Proceeds from | April 30, 2010 | ||||
| Market | Purchases | Securities | Dividend | Market | ||
| Value | at Cost | Sold | Income | Value | ||
| ($000) | ($000) | ($000) | ($000) | ($000) | ||
| Beacon Roofing Supply Inc. | NA1 | 27,829 | 3,238 | — | 55,132 | |
| Sourcefire Inc. | NA1 | 43,209 | 6,651 | — | 35,863 | |
| Verigy Ltd. | NA1 | 9,300 | 5,021 | — | 37,093 | |
| — | — | 128,088 | ||||
| 1 Not applicable—At October 31, 2009, the issuer was not an affiliated company of the fund. | ||||||
| J. Capital share transactions for each class of shares were: | ||||||
| Six Months Ended | Year Ended | |||||
| April 30, 2010 | October 31, 2009 | |||||
| Amount | Shares | Amount | Shares | |||
| ($000) | (000) | ($000) | (000) | |||
| Investor Shares | ||||||
| Issued | 466,138 | 7,826 | 834,745 | 18,954 | ||
| Issued in Lieu of Cash Distributions | 10,536 | 182 | 30,644 | 746 | ||
| Redeemed | (570,976) | (9,753) | (915,199) | (20,390) | ||
| Net Increase (Decrease)—Investor Shares | (94,302) | (1,745) | (49,810) | (690) | ||
| Admiral Shares | ||||||
| Issued | 257,392 | 4,660 | 411,846 | 10,050 | ||
| Issued in Lieu of Cash Distributions | 7,302 | 135 | 15,592 | 408 | ||
| Redeemed | (327,052) | (6,102) | (460,778) | (11,416) | ||
| Net Increase (Decrease)—Admiral Shares | (62,358) | (1,307) | (33,340) | (958) | ||
K. In preparing the financial statements as of April 30, 2010, management considered the impact of subsequent events for potential recognition or disclosure in these financial statements.
27
About Your Fund’s Expenses
As a shareholder of the fund, you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross income, directly reduce the investment return of the fund.
A fund’s expenses are expressed as a percentage of its average net assets. This figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.
The accompanying table illustrates your fund’s costs in two ways:
• Based on actual fund return. This section helps you to estimate the actual expenses that you paid over the period. The ”Ending Account Value“ shown is derived from the fund‘s actual return, and the third column shows the dollar amount that would have been paid by an investor who started with $1,000 in the fund. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period.
To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your fund under the heading ”Expenses Paid During Period.“
• Based on hypothetical 5% yearly return. This section is intended to help you compare your fund‘s costs with those of other mutual funds. It assumes that the fund had a yearly return of 5% before expenses, but that the expense ratio is unchanged. In this case—because the return used is not the fund’s actual return—the results do not apply to your investment. The example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to calculate expenses based on a 5% return. You can assess your fund’s costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds.
Note that the expenses shown in the table are meant to highlight and help you compare ongoing costs only and do not reflect transaction costs incurred by the fund for buying and selling securities. Further, the expenses do not include the account service fee described in the prospectus. If such a 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 your fund’s current prospectus.
28
| Six Months Ended April 30, 2010 | |||
| Beginning | Ending | Expenses | |
| Account Value | Account Value | Paid During | |
| Explorer Fund | 10/31/2009 | 4/30/2010 | Period |
| Based on Actual Fund Return | |||
| Investor Shares | $1,000.00 | $1,250.13 | $2.85 |
| Admiral Shares | 1,000.00 | 1,251.72 | 1.73 |
| Based on Hypothetical 5% Yearly Return | |||
| Investor Shares | $1,000.00 | $1,022.27 | $2.56 |
| Admiral Shares | 1,000.00 | 1,023.26 | 1.56 |
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 0.51% for Investor Shares and 0.31% 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.
29
Trustees Approve Advisory Arrangements
In November 2009, the board of trustees of Vanguard Explorer Fund renewed the fund’s investment advisory arrangements with Granahan Investment Management, Inc.; Wellington Management Company, LLP; Kalmar Investment Advisers; AXA Rosenberg Investment Management LLC; The Vanguard Group, Inc. (through its Quantitative Equity Group); Chartwell Investment Partners, L.P.; and Century Capital Management, LLC. The board determined at that time that the retention of the advisors was in the best interests of the fund and its shareholders.
The board based its decision upon an evaluation of each advisor’s investment staff, portfolio management process, and performance. The trustees considered the factors discussed below, among others. However, no single factor determined whether the board approved the arrangements. Rather, it was the totality of the circumstances that drove the board’s decision.
Nature, extent, and quality of services
The board considered the quality of the fund’s investment management over both the short and l ong term, and took into account the organizational depth and stability of each advisor. The board noted th e following:
Granahan Investment Management, Inc. Founded in 1985, Granahan specializes in small-cap growth equity investing. The firm has managed a portion of the fund since 1990. The firm uses fundamental research to select a portfolio of 125–175 stocks with sustainable growth characteristics. The advisor achieves portfolio diversification through dedicated allocations to three categories of growth companies: core growth (40%–70% of subportfolio assets), represented by companies with strong market position, based on proprietary products or services; pioneers (15%–30%), companies with unique technology or innovations; and special value (15%–30%), companies with growth potential overlooked by the market.
Wellington Management Company, LLP. Founded in 1928, Wellington Management is among the nation’s oldest and most respected institutional investment managers. The firm has advised the fund since 1967. Using a bottom-up, fundamentally driven approach, Wellington Management invests opportunistically in a diversified portfolio of high-quality stocks. The advisor attempts to identify companies that are early in their growth cycle. The research-intensive approach is supported by the team’s deep and tenured analytical staff, which may also make use of Wellington Management 46;s extensive industry research capabilities.
Kalmar Investment Advisers. Kalmar, together wi th its parent company, Kalmar Investments Inc., founded in 1982, specializes in small- and mid-cap growth equity. The firm has managed a portion of the fund since 2005. Kalmar is a research-driven investment firm that is entirely focused on the management of “growth with value” small- and mid-cap equity portfolios. Kalmar believes that there is a high-reward and low-risk anomaly offered by the equity market in the stocks of solid, well-managed, rap idly growing smaller companies. Through independent fundamental research, Kalmar attempts to discover such companies, buy them at undervalu ed levels, and own them for the longer term.
AXA Rosenberg Investment Management LLC. AXA Rosenberg is an independently operated subsidiary of the AXA Group that was founded in 1985. The firm has advised a portion of the fund since 2007. AXA Rosenberg employs an investment philosophy grounded in fundamental analysis using a two-part quantitative model: a valuation model and earnings forecast model, which are combined to develop an individual predicted return for each company and optimized against the Russell 2500 Growth Index.
30
The Vanguard Group, Inc. Vanguard has been managing investments for more than three decades. The Quantitative Equity Group adheres to a sound, disciplined investment management process; the team has considerable experience, stability, and depth. Vanguard has managed a portion of the fund since 1997.
Chartwell Investment Partners, L.P. Chartwell is an independent, employee-owned firm, founded in 1997. The firm has managed a portion of the fund since 1997. The firm has expertise in small- and mid-cap equity management and employs a fundamental bottom-up strategy, seeking companies with superior growth potential trading at reasonable valuations.
Century Capital Management, LLC. Century Capital is a Boston-based investment management boutique, owned by the investment professionals within the firm. The firm has managed a portion of the fund since 2008. The public equity team, led by chief investment officer Alexander L. Thorndike, oversees two proprietary mutual funds: small-cap and small/mid-cap growth portfolios for institutional investors. Century Capital employs a fundamental, bottom-up investment approach that seeks to identify reasonably priced companies that will grow faster than the overall market. Independent research is a core tenet. The ideal investment is a well-managed company that is reasonably valued, in a non-capital-intensive business, with established products or services, a high return on equity, high recurring revenues, and improving margins.
The board concluded that each advisor’s experience, stability, depth, and performance, among other factors, warranted continuation of the advisory arrangements.
Investment performance
The board considered the short- and long-term performance of the fund, including any periods of outperformance or underperformance of a rel evant benchmark and peer group. The board concluded that each advi sor has carried out the fund’s investment strategy in disciplined fashion, and that performance results have allowed the fund t o remain competitive versus its benchmark and its peer group. Information about the fund’s most recent performance can be found in the Performance Summary section of this report.
Cost
The board concluded that the fund’s expense ratio was far below the average expense ratio charged by funds in its peer group. The board noted that the fund’s advisory fee rate was also well below the peer-group average. Informat ion about the fund’s expense ratio appears in the About Your Fund’s Expenses section of this report as well as in the Financial Statements section, which also includes information about the advisory fee rate.
The board did not consider profitability of Granahan, Wellington Management, Kalmar, AXA Rosenberg, Chartwell, and Century Capital in determining whether to approve the advisory fees, because the firms are independent of Vanguard and the advisory fees are the result of arm’s-length negotiations. The board does not conduct a profitability analysis of Vanguard because of Vanguard’s unique “at-cost” structure. Unlike most other mutual fund management companies, Vanguard is owned by the funds it oversees, and produces “profits” only in the form of reduced expenses for fund shareholders.
31
The benefit of economies of scale
The board concluded that the fund’s shareholders benefit from economies of scale because of breakpoints in the advisory fee schedules for Granahan, Wellington Management, Kalmar, AXA Rosenberg, Chartwell, and Century Capital. The breakpoints reduce the effective rate of the fees as the fund’s assets managed by each firm increase.
The board also concluded that the fund’s low-cost arrangement with Vanguard ensures that the fund will realize economies of scale as it grows, with the cost to shareholders declining as the fund’s assets managed by Vanguard increase.
The board will consider whether to renew the advisory arrangements again after a one-year period.
32
Glossary
30-Day SEC Yield. A fund’s 30-day SEC yield is derived using a formula specified by the U.S. Securities and Exchange Commission. Under the formula, data related to the fund’s security holdings in the previous 30 days are used to calculate the fund’s hypothetical net income for that period, which is then annualized and divided by the fund’s estimated average net assets over the calculation period. For the purposes of this calculation, a security’s income is based on its current market yield to maturity (in the case of bonds) or its projected dividend yield (for stocks). Because the SEC yield represents hypothetical annualized income, it will differ—at times significantly—from the fund’s actual experience. As a result, the fund’s income distributions may be higher or lower than implied by the SEC yield.
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%. For this report, beta is based on returns over the past 36 months for both the fund and the index. Note that a fund’s beta should be reviewed in conjunction with its R-squared (see definition). 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.
Dividend Yield. Dividend income earned by stocks, expressed as a percentage of the aggregate market value (or of net asset value, for a fund). The yield is determined by dividing the amount of the annual dividends by the aggregate value (or net asset value) at the end of the period. For a fund, the dividend yield is based solely on stock holdings and does not include any income produced by other investments.
Earnings Growth Rate. The average annual rate of growth in earnings over the past five years for the stocks now in a fund.
Equity Exposure. A measure that reflects a fund’s investments in stocks and stock futures. Any holdings in short-term reserves are excluded.
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 represented by stocks or depositary receipts of companies based outside the United States.
Inception Date. The date on which the assets of a fund (or one of its share classes) are first invested in accordance with the fund’s investment objective. For funds with a subscription period, the inception date is the day after that period ends. Investment performance is measured from the inception date.
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.
33
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. For this report, R-squared is based on returns over the past 36 months for both the fund and the index.
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). The turnover rate excludes in-kind transactions, which have minimal impact on costs.
34
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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’s 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. The independent board members have distinguished backgrounds in business, academia, and public service. Each of the trustees and executive officers oversees 162 Vanguard funds.
The following table provides information for each trustee and executive officer of the fund. More information about the trustees is in the Statement of Additional Informatio n, which can be obtained, wit hout charge, by contacting Vanguard at 800-662-7447, or online at www.vanguard.com.
| Interested Trustee1 | Rajiv L. Gupta |
| Born 1945. Trustee Since December 2001.2 | |
| F. William McNabb III | Principal Occupation (s) During the Past Five Years: |
| Born 1957. Trustee Since July 2009. Chairman of the | Chairman and Chief Executive Officer (retired 2009) |
| Board. Principal Occupation(s) During the Past Five | and President (2006–2008) of Rohm and Haas Co. |
| Years: Chairman of the Board of The Vanguard Group, | (chemicals); Director of Tyco International, Ltd. |
| Inc., and of each of the investment companies served | (diversified manufacturing and services) and Hewlett- |
| by The Vanguard Group, since January 2010; Director | Packard Co. (electronic computer manufacturing); |
| of The Vanguard Group since 2008; Chief Executive | Trustee of The Conference Board; Member of the |
| Officer and President of The Vanguard Group and of | Board of Managers of Delphi Automotive LLP |
| each of the investment companies served by The | (automotive components). |
| Vanguard Group since 2008; Director of Vanguard | |
| Marketing Corporation; Managing Director of The | Amy Gutmann |
| Vanguard Group (1995–2008). | Born 1949. Trustee Since June 2006. Principal |
| Occupation(s) During the Past Five Years: President | |
| of the University of Pennsylvania; Christopher H. | |
| Independent Trustees | Browne Distinguished Professor of Political Science |
| in the School of Arts and Sciences with secondary | |
| Emerson U. Fullwood | appointments at the Annenberg School for Commu- |
| Born 1948. Trustee Since January 2008. Principal | nication and the Graduate School of Education of |
| Occupation(s) During the Past Five Years: Executive | the University of Pennsylvania; Director of Carnegie |
| Chief Staff and Marketing Officer for North America | Corporation of New York, Schuylkill River Development |
| and Corporate Vice President (retired 2008) of Xerox | Corporation, and Greater Philadelphia Chamber of |
| Corporation (documen t management products and | Commerce; Trustee of the National Constitution Center; |
| services); Director of SPX Corporation (multi-industry | Chair of the Presidential Commission for the Study of |
| manufacturing), the United Way of Rochester, | Bioethical Issues. |
| Amerigroup Corporation (managed health care), | |
| the University of Rochester Medical Center, and | |
| Monroe Community College Foundation. |
| JoAnn Heffernan Heisen | Executive Officers | |
| Born 1950. Trustee Since July 1998. Principal | ||
| Occupation(s) During the Past Five Years: Corporate | Thomas J. Higgins | |
| Vice President and Chief Global Diversity Officer since | Born 1957. Chief Financial Officer Since September | |
| 2006 (retired 2008) and Member of the Executive | 2008. Principal Occupation(s) During the Past Five | |
| Committee (retired 2008) of Johnson & Johnson | Years: Principal of The Vanguard Group, Inc.; Chief | |
| (pharmaceuticals/consumer products); Vice President | Financial Officer of each of the investment companies | |
| and Chief Information Officer of Johnson & Johnson | served by The Vanguard Group since 2008; Treasurer | |
| (1997–2005); Director of the University Medical Center | of each of the investment companies served by The | |
| at Princeton and Women’s Research and Education | Vanguard Group (1998–2008). | |
| Institute; Member of the Advisory Board of the | ||
| Maxwell School of Citizenship and Public Affairs | Kathryn J. Hyatt | |
| at Syracuse University. | Born 1955. Treasurer Since November 2008. Principal | |
| Occupation(s) During the Past Five Years: Principal | ||
| F. Joseph Loughrey | of The Vanguard Group, Inc.; Treasurer of each of | |
| Born 1949. Trustee Since October 2009. Principal | the investment companies served by The Vanguard | |
| Occupation(s) During the Past Five Years: President | Group since 2008; Assistant Treasurer of each of the | |
| and Chief Operating Officer since 2005 (retired 2009) | investment companies served by The Vanguard Group | |
| and Vice Chairman of the Board (2008–2009) of | (1988–2008). | |
| Cummins Inc. (industrial machinery); Director of | ||
| SKF AB (industrial machinery), Hillenbrand, Inc. | Heidi Stam | |
| (specialized consumer services), Sauer-Danfoss Inc. | Born 1956. Secretary Since July 2005. Principal | |
| (machinery), the Lumina Foundation for Education, | Occupation(s) During the Past Five Years: Managing | |
| and Oxfam America; Chairman of the Advisory Council | Director of The Vanguard Group, Inc., since 2006; | |
| for the College of Arts and Letters at the University of | General Counsel of The Vanguard Group since 2005; | |
| Notre Dame. | Secretary of The Vanguard Group and of each of the | |
| investment companies served by The Vanguard Group | ||
| André F. Perold | since 2005; Director and Senior Vice President of | |
| Born 1952. Trustee Since December 2004. Principal | Vanguard Marketing Corporation since 2005; | |
| Occupation(s) During the Past Five Years: George | Principal of The Vanguard Group (1997–2006). | |
| Gund Professor of Finance and Banking at the Harvard | ||
| Business School; Chair of the Investment Committee | ||
| of HighVista Strategies LLC (private investment firm). | Vanguard Senior Management Team | |
| Alfred M. Rankin, Jr. | R. Gregory Barton | Michael S. Miller |
| Born 1941. Trustee Since January 1993. Principal | Mortimer J. Buckley | James M. Norris |
| Occupation(s) During the Past Five Years: Chairman, | Kathleen C. Gubanich | Glenn W. Reed |
| President, and Chief Executive Officer of NACCO | Paul A. Heller | George U. Sauter |
| Industries, Inc. (forklift trucks/housewares/lignite); | ||
| Director of Goodrich Corporation (industrial products/ | ||
| aircraft systems and services); Chairman of the Federal | Chairman Emeritus and Senior Advisor | |
| Reserve Bank of Cleveland; Trustee of The Cleveland | ||
| Museum of Art. | John J. Brennan | |
| Chairman, 1996–2009 | ||
| Peter F. Volanakis | Chief Executive Officer and President, 1996–2008 | |
| Born 1955. Trustee Since July 2009. Principal | ||
| Occupation(s) During the Past Five Years: President | ||
| since 2007 and Chief Operating Officer since 2005 | Founder | |
| of Corning Incorporated (communications equipment); | ||
| President of Corning Technologies (2001–2005); | John C. Bogle | |
| Director of Corning Incorporated and Dow Corning; | Chairman and Chief Executive Officer, 1974–1996 | |
| Trustee of the Corning Incorporated Foundation and | ||
| the Corning Museum of Glass; Overseer of the | ||
| Amos Tuck School of Business Administration at | ||
| Dartmouth College. | ||
1 Mr. McNabb is considered an “interested person,” as defined in the Investment Company Act of 1940, because he is an officer of the Vanguard funds.
2 December 2002 for Vanguard Equity Income Fund, Vanguard Growth Equity Fund, the Vanguard Municipal Bond Funds, and the Vanguard State Tax-Exempt Funds.
 | |
| P.O. Box 2600 | |
| Valley Forge, PA 19482-2600 | |
| Connect with Vanguard® >www.vanguard.com | |
| Fund Information > 800-662-7447 | CFA® is a trademark owned by CFA Institute. |
| Direct Investor Account Services > 800-662-2739 | |
| Institutional Investor Services > 800-523-1036 | |
| Text Telephone for People With Hearing Impairment > 800-749-7273 | |
| This material may be used in conjunction with the offering of shares of any Vanguard | |
| fund only if preceded or accompanied by the fund’s current prospectus. | |
| All comparative mutual fund data are from Lipper Inc. or Morningstar, Inc., unless otherwise noted. | |
| 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 800-662-2739. The guidelines are also | |
| available from the SEC’s website, www.sec.gov. In addition, you may obtain a free report on how your 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 202-551-8090. 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 20549-1520. | |
| © 2010 The Vanguard Group, Inc. | |
| All rights reserved. | |
| Vanguard Marketing Corporation, Distributor. | |
| Q242 062010 | |
| Vanguard® Explorer Fund | |||
| Schedule of Investments | |||
| April 30, 2010 | |||
| Market | |||
| Value | |||
| Shares | ($000) | ||
| Common Stocks (96.3%)1 | |||
| Consumer Discretionary (15.8%) | |||
| DeVry Inc. | 1,072,656 | 66,923 | |
| * | GameStop Corp. Class A | 1,776,915 | 43,197 |
| * | O'Reilly Automotive Inc. | 836,507 | 40,897 |
| *,^ | MGM Mirage | 2,514,800 | 39,960 |
| * | WMS Industries Inc. | 782,819 | 39,157 |
| * | LKQ Corp. | 1,781,610 | 37,521 |
| * | DreamWorks Animation SKG Inc. Class A | 918,600 | 36,459 |
| * | Warnaco Group Inc. | 753,186 | 36,032 |
| Cinemark Holdings Inc. | 1,928,154 | 35,208 | |
| Tractor Supply Co. | 498,385 | 33,477 | |
| * | Penske Auto Group Inc. | 2,177,020 | 32,612 |
| Jarden Corp. | 995,423 | 31,973 | |
| * | Life Time Fitness Inc. | 839,210 | 30,849 |
| * | ArvinMeritor Inc. | 1,993,150 | 30,535 |
| * | TRW Automotive Holdings Corp. | 826,889 | 26,634 |
| * | Panera Bread Co. Class A | 335,290 | 26,132 |
| Service Corp. International | 2,819,700 | 25,321 | |
| * | Interpublic Group of Cos. Inc. | 2,825,010 | 25,171 |
| * | Tenneco Inc. | 940,827 | 24,245 |
| * | Aeropostale Inc. | 827,643 | 24,035 |
| * | Childrens Place Retail Stores Inc. | 509,024 | 23,323 |
| Aaron's Inc. | 1,021,320 | 23,051 | |
| * | NVR Inc. | 31,044 | 22,291 |
| * | Talbots Inc. | 1,321,790 | 21,743 |
| Williams-Sonoma Inc. | 749,476 | 21,585 | |
| Phillips-Van Heusen Corp. | 304,893 | 19,211 | |
| * | Jack in the Box Inc. | 756,200 | 17,786 |
| * | Capella Education Co. | 192,186 | 17,416 |
| * | Gymboree Corp. | 354,380 | 17,411 |
| Guess? Inc. | 376,610 | 17,275 | |
| * | Fossil Inc. | 441,345 | 17,168 |
| * | priceline.com Inc. | 63,550 | 16,653 |
| * | Lumber Liquidators Holdings Inc. | 528,350 | 16,094 |
| Hasbro Inc. | 407,400 | 15,628 | |
| *,^ | Liz Claiborne Inc. | 1,713,600 | 14,977 |
| * | CarMax Inc. | 596,520 | 14,656 |
| Polaris Industries Inc. | 234,100 | 13,852 | |
| Gentex Corp. | 637,340 | 13,696 | |
| Nordstrom Inc. | 326,800 | 13,507 | |
| Leggett & Platt Inc. | 531,430 | 13,036 | |
| Tiffany & Co. | 265,437 | 12,868 | |
| * | Pier 1 Imports Inc. | 1,543,850 | 12,783 |
| * | JOS A Bank Clothiers Inc. | 208,540 | 12,692 |
| Cracker Barrel Old Country Store Inc. | 251,939 | 12,438 | |
| Monro Muffler Brake Inc. | 342,778 | 12,292 | |
| * | Tempur-Pedic International Inc. | 359,622 | 12,119 |
| Darden Restaurants Inc. | 261,630 | 11,708 | |
| American Eagle Outfitters Inc. | 689,900 | 11,597 | |
| * | Bally Technologies Inc. | 250,763 | 11,565 |
| * | ITT Educational Services Inc. | 112,100 | 11,337 |
| * | CEC Entertainment Inc. | 280,103 | 10,938 |
| * | Urban Outfitters Inc. | 283,863 | 10,648 |
| * | Coinstar Inc. | 239,500 | 10,624 |
| * | Select Comfort Corp. | 870,156 | 9,850 |
| Wyndham Worldwide Corp. | 367,180 | 9,844 | |
| * | Career Education Corp. | 331,730 | 9,710 |
| * | Cheesecake Factory Inc. | 336,793 | 9,151 |
| * | DSW Inc. Class A | 297,439 | 8,983 |
| ^ | Strayer Education Inc. | 36,750 | 8,935 |
| * | Big Lots Inc. | 231,201 | 8,832 |
| Regis Corp. | 460,170 | 8,798 | |
1
| Vanguard® Explorer Fund | |||
| Schedule of Investments | |||
| April 30, 2010 | |||
| Market | |||
| Value | |||
| Shares | ($000) | ||
| * | Penn National Gaming Inc. | 266,920 | 8,264 |
| * | K12 Inc. | 340,351 | 8,056 |
| * | Goodyear Tire & Rubber Co. | 553,663 | 7,436 |
| Jones Apparel Group Inc. | 337,370 | 7,341 | |
| * | J Crew Group Inc. | 157,738 | 7,330 |
| * | Kohl's Corp. | 124,163 | 6,828 |
| * | Royal Caribbean Cruises Ltd. | 190,071 | 6,812 |
| * | Valassis Communications Inc. | 206,914 | 6,764 |
| Finish Line Inc. Class A | 419,573 | 6,759 | |
| * | HSN Inc. | 218,300 | 6,577 |
| Genuine Parts Co. | 151,300 | 6,476 | |
| * | Jo-Ann Stores Inc. | 145,743 | 6,430 |
| Cablevision Systems Corp. Class A | 233,450 | 6,406 | |
| Cato Corp. Class A | 267,536 | 6,354 | |
| Matthews International Corp. Class A | 177,500 | 6,212 | |
| * | Texas Roadhouse Inc. Class A | 417,004 | 6,163 |
| * | Wet Seal Inc. Class A | 1,292,000 | 6,111 |
| Tupperware Brands Corp. | 116,393 | 5,944 | |
| * | Carter's Inc. | 184,010 | 5,929 |
| Ross Stores Inc. | 103,398 | 5,790 | |
| * | Dollar Tree Inc. | 93,781 | 5,694 |
| * | Collective Brands Inc. | 237,000 | 5,558 |
| * | Steven Madden Ltd. | 90,025 | 5,218 |
| Cooper Tire & Rubber Co. | 231,443 | 4,911 | |
| * | Dress Barn Inc. | 175,600 | 4,861 |
| * | Genesco Inc. | 141,600 | 4,714 |
| Foot Locker Inc. | 299,320 | 4,595 | |
| * | Timberland Co. Class A | 208,992 | 4,493 |
| * | True Religion Apparel Inc. | 143,710 | 4,491 |
| * | G-III Apparel Group Ltd. | 153,780 | 4,398 |
| * | Helen of Troy Ltd. | 152,099 | 4,108 |
| * | Corinthian Colleges Inc. | 245,180 | 3,830 |
| * | Kirkland's Inc. | 160,035 | 3,564 |
| * | Lincoln Educational Services Corp. | 135,700 | 3,387 |
| * | BJ's Restaurants Inc. | 136,200 | 3,287 |
| RadioShack Corp. | 150,400 | 3,241 | |
| Big 5 Sporting Goods Corp. | 189,975 | 3,220 | |
| * | PF Chang's China Bistro Inc. | 72,648 | 3,170 |
| * | Deckers Outdoor Corp. | 22,402 | 3,149 |
| * | Denny's Corp. | 944,150 | 3,144 |
| Coach Inc. | 70,000 | 2,922 | |
| * | Group 1 Automotive Inc. | 84,184 | 2,614 |
| * | Skechers U.S.A. Inc. Class A | 67,890 | 2,604 |
| CKE Restaurants Inc. | 173,000 | 2,135 | |
| * | Buffalo Wild Wings Inc. | 50,000 | 2,067 |
| * | Stein Mart Inc. | 216,918 | 2,056 |
| * | Retail Ventures Inc. | 189,756 | 2,053 |
| * | Harman International Industries Inc. | 50,500 | 1,994 |
| * | Exide Technologies | 326,300 | 1,938 |
| * | Sally Beauty Holdings Inc. | 201,958 | 1,929 |
| Standard Motor Products Inc. | 179,296 | 1,911 | |
| Harte-Hanks Inc. | 118,200 | 1,702 | |
| * | Brink's Home Security Holdings Inc. | 39,800 | 1,669 |
| Unifirst Corp. | 34,144 | 1,669 | |
| * | Carrols Restaurant Group Inc. | 222,368 | 1,666 |
| * | Media General Inc. Class A | 124,192 | 1,571 |
| American Greetings Corp. Class A | 57,602 | 1,415 | |
| * | LodgeNet Interactive Corp. | 208,762 | 1,378 |
| CPI Corp. | 45,273 | 1,201 | |
| Thor Industries Inc. | 33,300 | 1,189 | |
| John Wiley & Sons Inc. Class A | 25,488 | 1,077 | |
| Stage Stores Inc. | 56,696 | 865 | |
| Brinker International Inc. | 46,157 | 855 | |
| *,^ | China Automotive Systems Inc. | 35,100 | 781 |
2
| Vanguard® Explorer Fund | |||
| Schedule of Investments | |||
| April 30, 2010 | |||
| Market | |||
| Value | |||
| Shares | ($000) | ||
| Meredith Corp. | 20,745 | 745 | |
| * | AutoNation Inc. | 36,800 | 743 |
| Books-A-Million Inc. | 99,249 | 734 | |
| * | Core-Mark Holding Co. Inc. | 23,400 | 714 |
| * | Caribou Coffee Co. Inc. | 75,378 | 667 |
| * | New York Times Co. Class A | 62,700 | 622 |
| *,^ | Overstock.com Inc. | 32,213 | 596 |
| * | Universal Electronics Inc. | 27,906 | 592 |
| * | Fisher Communications Inc. | 37,758 | 568 |
| * | AH Belo Corp. Class A | 65,189 | 554 |
| * | Dorman Products Inc. | 20,940 | 531 |
| * | RC2 Corp. | 27,957 | 514 |
| * | Unifi Inc. | 128,084 | 491 |
| National CineMedia Inc. | 24,991 | 476 | |
| * | Papa John's International Inc. | 17,100 | 469 |
| PetSmart Inc. | 13,900 | 460 | |
| * | Libbey Inc. | 26,689 | 398 |
| * | Destination Maternity Corp. | 10,678 | 337 |
| * | Domino's Pizza Inc. | 20,917 | 322 |
| * | Ascent Media Corp. Class A | 10,151 | 300 |
| * | AFC Enterprises Inc. | 27,062 | 295 |
| * | Multimedia Games Inc. | 58,212 | 266 |
| * | Knology Inc. | 20,071 | 264 |
| * | CROCS Inc. | 22,300 | 215 |
| * | Sonic Automotive Inc. Class A | 18,400 | 197 |
| Buckle Inc. | 5,102 | 185 | |
| National Presto Industries Inc. | 1,625 | 182 | |
| Chico's FAS Inc. | 11,700 | 174 | |
| * | Hawk Corp. Class A | 7,470 | 173 |
| * | DineEquity Inc. | 3,900 | 160 |
| * | Ulta Salon Cosmetics & Fragrance Inc. | 6,700 | 155 |
| * | Daily Journal Corp. | 1,960 | 140 |
| * | Outdoor Channel Holdings Inc. | 16,200 | 112 |
| * | Salem Communications Corp. Class A | 23,866 | 109 |
| * | 99 Cents Only Stores | 5,700 | 88 |
| World Wrestling Entertainment Inc. Class A | 3,794 | 69 | |
| * | Great Wolf Resorts Inc. | 17,671 | 57 |
| * | EW Scripps Co. Class A | 4,100 | 45 |
| Haverty Furniture Cos. Inc. | 383 | 6 | |
| * | Kenneth Cole Productions Inc. Class A | 444 | 6 |
| * | Krispy Kreme Doughnuts Inc. Warrants Exp. 03/02/2012 | 8,183 | 1 |
| 1,536,417 | |||
| Consumer Staples (3.0%) | |||
| Ruddick Corp. | 1,307,460 | 46,206 | |
| Herbalife Ltd. | 860,440 | 41,516 | |
| �� | Nu Skin Enterprises Inc. Class A | 1,187,750 | 35,704 |
| Pricesmart Inc. | 1,035,550 | 25,764 | |
| * | NBTY Inc. | 549,600 | 22,358 |
| * | United Natural Foods Inc. | 705,159 | 21,641 |
| * | Energizer Holdings Inc. | 209,116 | 12,777 |
| * | BJ's Wholesale Club Inc. | 326,300 | 12,491 |
| * | Constellation Brands Inc. Class A | 614,400 | 11,225 |
| Lancaster Colony Corp. | 198,697 | 10,922 | |
| Diamond Foods Inc. | 187,101 | 7,991 | |
| * | Revlon Inc. Class A | 319,696 | 5,601 |
| * | American Italian Pasta Co. | 122,267 | 4,796 |
| Spartan Stores Inc. | 235,920 | 3,560 | |
| * | Whole Foods Market Inc. | 87,600 | 3,418 |
| Sanderson Farms Inc. | 59,700 | 3,383 | |
| * | Boston Beer Co. Inc. Class A | 59,228 | 3,377 |
| * | Darling International Inc. | 293,700 | 2,787 |
| Casey's General Stores Inc. | 71,300 | 2,754 | |
| Coca-Cola Bottling Co. Consolidated | 48,449 | 2,669 | |
| * | Medifast Inc. | 63,107 | 2,014 |
3
| Vanguard® Explorer Fund | |||
| Schedule of Investments | |||
| April 30, 2010 | |||
| Market | |||
| Value | |||
| Shares | ($000) | ||
| * | Elizabeth Arden Inc. | 85,061 | 1,549 |
| * | Prestige Brands Holdings Inc. | 131,701 | 1,283 |
| Weis Markets Inc. | 33,177 | 1,237 | |
| * | Nature's Sunshine Products Inc. | 90,930 | 1,227 |
| *,^ | American Oriental Bioengineering Inc. | 295,330 | 1,196 |
| *,^ | Diedrich Coffee Inc. | 27,573 | 958 |
| * | Overhill Farms Inc. | 140,243 | 850 |
| * | Orchids Paper Products Co. | 45,824 | 679 |
| Church & Dwight Co. Inc. | 9,600 | 665 | |
| Schiff Nutrition International Inc. | 48,381 | 343 | |
| * | TreeHouse Foods Inc. | 7,543 | 319 |
| J&J Snack Foods Corp. | 2,000 | 93 | |
| * | Nutraceutical International Corp. | 5,982 | 93 |
| 293,446 | |||
| Energy (4.6%) | |||
| Core Laboratories NV | 248,140 | 37,194 | |
| * | Alpha Natural Resources Inc. | 684,305 | 32,217 |
| * | Ultra Petroleum Corp. | 530,460 | 25,340 |
| Frontier Oil Corp. | 1,548,700 | 23,540 | |
| * | Atwood Oceanics Inc. | 630,260 | 22,948 |
| * | Comstock Resources Inc. | 635,500 | 20,374 |
| * | Petrohawk Energy Corp. | 827,620 | 17,868 |
| Niko Resources Ltd. | 161,880 | 17,745 | |
| * | Oceaneering International Inc. | 263,659 | 17,270 |
| * | Brigham Exploration Co. | 830,575 | 16,205 |
| *,^ | Clean Energy Fuels Corp. | 883,618 | 15,569 |
| * | Tesco Corp. | 1,236,897 | 15,474 |
| Holly Corp. | 484,200 | 13,073 | |
| * | Whiting Petroleum Corp. | 139,473 | 12,599 |
| St. Mary Land & Exploration Co. | 310,195 | 12,482 | |
| CARBO Ceramics Inc. | 166,419 | 12,190 | |
| Sunoco Inc. | 370,200 | 12,135 | |
| * | Southwestern Energy Co. | 298,080 | 11,828 |
| EXCO Resources Inc. | 602,050 | 11,168 | |
| * | Global Industries Ltd. | 1,551,500 | 10,395 |
| * | Oil States International Inc. | 191,170 | 9,235 |
| * | Venoco Inc. | 602,153 | 8,972 |
| * | Rex Energy Corp. | 673,162 | 8,953 |
| * | Dril-Quip Inc. | 150,150 | 8,698 |
| Massey Energy Co. | 210,214 | 7,700 | |
| Helmerich & Payne Inc. | 176,760 | 7,180 | |
| * | Forest Oil Corp. | 208,000 | 6,094 |
| World Fuel Services Corp. | 159,246 | 4,527 | |
| * | Arena Resources Inc. | 93,500 | 3,453 |
| * | James River Coal Co. | 175,900 | 3,311 |
| * | Rowan Cos. Inc. | 110,800 | 3,302 |
| * | International Coal Group Inc. | 581,150 | 3,063 |
| * | Unit Corp. | 52,700 | 2,518 |
| * | McMoRan Exploration Co. | 198,000 | 2,364 |
| * | Gulfport Energy Corp. | 163,101 | 2,039 |
| Ship Finance International Ltd. | 59,700 | 1,182 | |
| * | Cal Dive International Inc. | 174,200 | 1,143 |
| * | Tetra Technologies Inc. | 79,100 | 972 |
| * | Green Plains Renewable Energy Inc. | 64,260 | 882 |
| * | Westmoreland Coal Co. | 41,219 | 580 |
| * | PHI Inc. | 23,715 | 493 |
| * | ATP Oil & Gas Corp. | 23,300 | 426 |
| * | Cloud Peak Energy Inc. | 12,400 | 198 |
| * | Verenium Corp. | 8,325 | 34 |
| 444,933 | |||
| Exchange-Traded Funds (1.8%) | |||
| ^,2 | Vanguard Small-Cap ETF | 1,165,083 | 77,490 |
| ^ | iShares Russell 2000 Index Fund | 686,900 | 49,168 |
4
| Vanguard® Explorer Fund | |||
| Schedule of Investments | |||
| April 30, 2010 | |||
| Market | |||
| Value | |||
| Shares | ($000) | ||
| ^,2 | Vanguard Small-Cap Growth ETF | 713,200 | 48,876 |
| 175,534 | |||
| Financials (6.5%) | |||
| Discover Financial Services | 2,669,412 | 41,269 | |
| Jefferies Group Inc. | 1,269,063 | 34,544 | |
| Comerica Inc. | 671,600 | 28,207 | |
| ^ | Synovus Financial Corp. | 9,092,400 | 27,368 |
| * | Signature Bank | 643,220 | 25,973 |
| Cash America International Inc. | 695,198 | 25,764 | |
| Assured Guaranty Ltd. | 1,120,902 | 24,155 | |
| Och-Ziff Capital Management Group LLC Class A | 1,378,600 | 24,153 | |
| * | Stifel Financial Corp. | 406,775 | 23,320 |
| Huntington Bancshares Inc. | 3,216,212 | 21,774 | |
| Redwood Trust Inc. | 1,277,300 | 21,305 | |
| MB Financial Inc. | 833,575 | 20,423 | |
| * | BR Malls Participacoes SA | 1,599,300 | 20,278 |
| * | NASDAQ OMX Group Inc. | 954,200 | 20,038 |
| * | Affiliated Managers Group Inc. | 232,740 | 19,592 |
| Umpqua Holdings Corp. | 1,273,000 | 19,019 | |
| U-Store-It Trust | 1,671,053 | 14,405 | |
| LaSalle Hotel Properties | 541,500 | 14,269 | |
| SEI Investments Co. | 596,300 | 13,393 | |
| Lazard Ltd. Class A | 342,700 | 13,249 | |
| Waddell & Reed Financial Inc. | 344,300 | 12,780 | |
| MFA Financial Inc. | 1,524,200 | 10,837 | |
| Wintrust Financial Corp. | 285,300 | 10,642 | |
| Cullen/Frost Bankers Inc. | 159,400 | 9,462 | |
| Invesco Ltd. | 389,154 | 8,947 | |
| Duff & Phelps Corp. Class A | 540,000 | 8,478 | |
| * | CB Richard Ellis Group Inc. Class A | 431,549 | 7,474 |
| Greenhill & Co. Inc. | 83,575 | 7,345 | |
| Reinsurance Group of America Inc. Class A | 127,193 | 6,567 | |
| Federated Investors Inc. Class B | 255,500 | 6,163 | |
| BOK Financial Corp. | 111,627 | 6,076 | |
| Endurance Specialty Holdings Ltd. | 157,120 | 5,790 | |
| Moody's Corp. | 218,730 | 5,407 | |
| * | Broadpoint Gleacher Securities Inc. | 1,221,326 | 5,227 |
| * | AmeriCredit Corp. | 216,600 | 5,185 |
| Prosperity Bancshares Inc. | 126,449 | 4,959 | |
| * | Dollar Financial Corp. | 170,835 | 3,999 |
| QC Holdings Inc. | 768,071 | 3,986 | |
| Advance America Cash Advance Centers Inc. | 675,314 | 3,863 | |
| Nelnet Inc. Class A | 161,649 | 3,227 | |
| Digital Realty Trust Inc. | 53,478 | 3,139 | |
| Westamerica Bancorporation | 53,105 | 3,121 | |
| Amtrust Financial Services Inc. | 227,693 | 3,103 | |
| * | Credit Acceptance Corp. | 65,983 | 2,976 |
| * | Genworth Financial Inc. Class A | 162,017 | 2,677 |
| Mid-America Apartment Communities Inc. | 43,300 | 2,393 | |
| * | Encore Capital Group Inc. | 94,019 | 2,163 |
| *,3 | Doral Financial Convertible Pfd. | 1,814 | 1,853 |
| Associated Estates Realty Corp. | 127,636 | 1,791 | |
| * | Cardtronics Inc. | 116,030 | 1,617 |
| * | Ezcorp Inc. Class A | 75,172 | 1,557 |
| Equity Lifestyle Properties Inc. | 27,900 | 1,549 | |
| PS Business Parks Inc. | 24,268 | 1,456 | |
| Calamos Asset Management Inc. Class A | 112,969 | 1,407 | |
| City Holding Co. | 39,401 | 1,381 | |
| Rayonier Inc. | 27,500 | 1,347 | |
| Highwoods Properties Inc. | 41,500 | 1,327 | |
| * | First Cash Financial Services Inc. | 58,300 | 1,286 |
| FBL Financial Group Inc. Class A | 49,000 | 1,266 | |
| * | Penson Worldwide Inc. | 124,900 | 1,174 |
| * | Conseco Inc. | 175,625 | 1,036 |
5
| Vanguard® Explorer Fund | |||
| Schedule of Investments | |||
| April 30, 2010 | |||
| Market | |||
| Value | |||
| Shares | ($000) | ||
| GAMCO Investors Inc. | 13,933 | 641 | |
| Potlatch Corp. | 15,200 | 569 | |
| Southside Bancshares Inc. | 23,670 | 511 | |
| LTC Properties Inc. | 15,000 | 419 | |
| First Financial Bankshares Inc. | 7,300 | 390 | |
| * | Safeguard Scientifics Inc. | 27,932 | 384 |
| ^ | Life Partners Holdings Inc. | 15,495 | 358 |
| Student Loan Corp. | 11,094 | 313 | |
| * | Tree.com Inc. | 32,904 | 299 |
| Getty Realty Corp. | 11,177 | 277 | |
| Suffolk Bancorp | 8,652 | 269 | |
| Trustco Bank Corp. NY | 36,200 | 241 | |
| Princeton National Bancorp Inc. | 24,600 | 221 | |
| * | American Safety Insurance Holdings Ltd. | 10,900 | 176 |
| Rewards Network Inc. | 10,983 | 143 | |
| * | World Acceptance Corp. | 2,900 | 102 |
| Capitol Federal Financial | 2,401 | 91 | |
| * | Transcontinental Realty Investors Inc. | 7,660 | 79 |
| Park National Corp. | 1,000 | 69 | |
| Kearny Financial Corp. | 6,404 | 66 | |
| First Community Corp. | 8,876 | 60 | |
| * | Central Jersey Bancorp | 11,890 | 44 |
| Arrow Financial Corp. | 1,182 | 33 | |
| MarketAxess Holdings Inc. | 1,600 | 25 | |
| First Federal Bancshares of Arkansas Inc. | 4,000 | 14 | |
| JMP Group Inc. | 1,696 | 13 | |
| Enterprise Bancorp Inc. | 1,000 | 12 | |
| Yadkin Valley Financial Corp. | 1,300 | 6 | |
| Centrue Financial Corp. | 1,402 | 5 | |
| 634,361 | |||
| Health Care (18.0%) | |||
| * | Bruker Corp. | 3,407,253 | 52,097 |
| * | Health Management Associates Inc. Class A | 5,262,080 | 49,043 |
| * | Community Health Systems Inc. | 1,088,820 | 44,489 |
| * | Mettler-Toledo International Inc. | 347,109 | 43,555 |
| Cooper Cos. Inc. | 1,106,730 | 43,041 | |
| * | ResMed Inc. | 623,635 | 42,675 |
| * | ICON PLC ADR | 1,371,445 | 40,005 |
| * | Bio-Rad Laboratories Inc. Class A | 351,519 | 39,261 |
| * | Edwards Lifesciences Corp. | 376,400 | 38,799 |
| * | Regeneron Pharmaceuticals Inc. | 1,512,360 | 38,611 |
| * | Nektar Therapeutics | 2,743,400 | 38,298 |
| * | Seattle Genetics Inc. | 2,803,504 | 35,324 |
| * | Henry Schein Inc. | 569,800 | 34,456 |
| * | QIAGEN NV | 1,492,500 | 34,104 |
| DENTSPLY International Inc. | 860,100 | 31,514 | |
| * | Varian Medical Systems Inc. | 524,282 | 29,559 |
| * | BioMarin Pharmaceutical Inc. | 1,228,012 | 28,699 |
| Omnicare Inc. | 1,009,900 | 28,065 | |
| * | Alkermes Inc. | 2,054,300 | 26,911 |
| * | Alexion Pharmaceuticals Inc. | 457,397 | 25,102 |
| * | Parexel International Corp. | 1,053,950 | 24,852 |
| Beckman Coulter Inc. | 341,580 | 21,315 | |
| * | Coventry Health Care Inc. | 889,100 | 21,107 |
| * | Cephalon Inc. | 325,300 | 20,884 |
| * | Impax Laboratories Inc. | 1,152,751 | 20,865 |
| * | Salix Pharmaceuticals Ltd. | 517,283 | 20,795 |
| * | Haemonetics Corp. | 357,232 | 20,669 |
| * | Volcano Corp. | 850,665 | 20,433 |
| * | Kindred Healthcare Inc. | 1,072,044 | 19,125 |
| * | Lincare Holdings Inc. | 402,250 | 18,781 |
| * | Par Pharmaceutical Cos. Inc. | 691,050 | 18,755 |
6
| Vanguard® Explorer Fund | |||
| Schedule of Investments | |||
| April 30, 2010 | |||
| Market | |||
| Value | |||
| Shares | ($000) | ||
| Pharmaceutical Product Development Inc. | 679,050 | 18,674 | |
| * | Watson Pharmaceuticals Inc. | 420,300 | 17,997 |
| *,^ | Amedisys Inc. | 309,221 | 17,805 |
| * | Sun Healthcare Group Inc. | 1,948,900 | 17,423 |
| * | Sirona Dental Systems Inc. | 402,275 | 16,771 |
| * | Amylin Pharmaceuticals Inc. | 808,500 | 16,687 |
| * | SXC Health Solutions Corp. | 234,894 | 16,372 |
| * | Isis Pharmaceuticals Inc. | 1,511,549 | 16,249 |
| * | Brookdale Senior Living Inc. | 730,950 | 15,715 |
| * | PSS World Medical Inc. | 639,945 | 14,994 |
| * | Ardea Biosciences Inc. | 589,700 | 14,978 |
| Quality Systems Inc. | 229,900 | 14,716 | |
| * | Martek Biosciences Corp. | 644,713 | 14,203 |
| * | Covance Inc. | 242,307 | 13,845 |
| * | Orthovita Inc. | 3,430,703 | 13,723 |
| * | Onyx Pharmaceuticals Inc. | 466,850 | 13,478 |
| * | ABIOMED Inc. | 1,363,000 | 13,139 |
| Patterson Cos. Inc. | 410,500 | 13,132 | |
| * | Align Technology Inc. | 750,900 | 12,750 |
| *,^ | Cadence Pharmaceuticals Inc. | 1,291,700 | 12,659 |
| * | Targacept Inc. | 518,058 | 12,330 |
| * | IPC The Hospitalist Co. Inc. | 394,700 | 12,251 |
| * | VCA Antech Inc. | 426,330 | 12,133 |
| * | Cubist Pharmaceuticals Inc. | 529,790 | 11,878 |
| * | Luminex Corp. | 700,400 | 11,389 |
| * | MWI Veterinary Supply Inc. | 264,143 | 11,081 |
| * | Warner Chilcott PLC Class A | 367,600 | 10,425 |
| * | King Pharmaceuticals Inc. | 1,063,200 | 10,419 |
| West Pharmaceutical Services Inc. | 245,700 | 10,283 | |
| Perrigo Co. | 166,800 | 10,180 | |
| * | Catalyst Health Solutions Inc. | 238,171 | 10,077 |
| * | Exelixis Inc. | 1,728,354 | 9,990 |
| * | Elan Corp. PLC ADR | 1,463,400 | 9,834 |
| * | IDEXX Laboratories Inc. | 143,550 | 9,494 |
| * | Endo Pharmaceuticals Holdings Inc. | 431,452 | 9,449 |
| Hikma Pharmaceuticals PLC | 983,635 | 9,402 | |
| * | Cepheid Inc. | 465,200 | 9,299 |
| Universal Health Services Inc. Class B | 249,204 | 9,250 | |
| * | Human Genome Sciences Inc. | 331,322 | 9,174 |
| * | Express Scripts Inc. | 91,474 | 9,159 |
| * | Health Net Inc. | 404,793 | 8,914 |
| * | United Therapeutics Corp. | 154,662 | 8,799 |
| * | Valeant Pharmaceuticals International | 188,700 | 8,491 |
| STERIS Corp. | 251,621 | 8,374 | |
| Medicis Pharmaceutical Corp. Class A | 327,700 | 8,317 | |
| Invacare Corp. | 303,278 | 8,016 | |
| * | Inverness Medical Innovations Inc. | 198,611 | 7,901 |
| * | Immunogen Inc. | 790,300 | 7,832 |
| * | Life Technologies Corp. | 129,780 | 7,100 |
| PerkinElmer Inc. | 280,548 | 7,028 | |
| * | Zimmer Holdings Inc. | 110,987 | 6,760 |
| * | Kinetic Concepts Inc. | 154,700 | 6,699 |
| * | Emergency Medical Services Corp. Class A | 124,218 | 6,569 |
| * | Hologic Inc. | 358,506 | 6,407 |
| * | American Medical Systems Holdings Inc. | 352,566 | 6,318 |
| Masimo Corp. | 262,850 | 6,153 | |
| * | Dionex Corp. | 73,200 | 5,971 |
| * | Millipore Corp. | 51,100 | 5,424 |
| Hill-Rom Holdings Inc. | 169,656 | 5,380 | |
| * | Healthsouth Corp. | 251,865 | 5,153 |
| * | Wright Medical Group Inc. | 260,478 | 4,892 |
| * | HMS Holdings Corp. | 90,885 | 4,862 |
| * | Odyssey HealthCare Inc. | 229,741 | 4,786 |
| * | Durect Corp. | 1,545,600 | 4,405 |
7
| Vanguard® Explorer Fund | |||
| Schedule of Investments | |||
| April 30, 2010 | |||
| Market | |||
| Value | |||
| Shares | ($000) | ||
| Chemed Corp. | 77,300 | 4,252 | |
| * | Orthofix International NV | 121,600 | 4,158 |
| * | BioScrip Inc. | 450,500 | 4,027 |
| * | Savient Pharmaceuticals Inc. | 261,974 | 3,799 |
| * | Magellan Health Services Inc. | 84,384 | 3,562 |
| * | Hi-Tech Pharmacal Co. Inc. | 141,400 | 3,440 |
| PDL BioPharma Inc. | 587,200 | 3,418 | |
| * | Corvel Corp. | 99,359 | 3,309 |
| * | Gentiva Health Services Inc. | 115,360 | 3,309 |
| * | Centene Corp. | 141,000 | 3,229 |
| * | Eurand NV | 309,307 | 3,186 |
| * | Cyberonics Inc. | 162,500 | 3,174 |
| * | Tenet Healthcare Corp. | 497,100 | 3,107 |
| * | Accelrys Inc. | 431,209 | 3,014 |
| * | Dendreon Corp. | 45,275 | 2,455 |
| America Service Group Inc. | 141,112 | 2,393 | |
| * | InterMune Inc. | 55,050 | 2,343 |
| Techne Corp. | 35,300 | 2,339 | |
| Cantel Medical Corp. | 114,626 | 2,288 | |
| * | MedAssets Inc. | 95,000 | 2,169 |
| * | inVentiv Health Inc. | 89,354 | 2,058 |
| Atrion Corp. | 13,955 | 1,979 | |
| * | ev3 Inc. | 99,690 | 1,907 |
| * | Sciclone Pharmaceuticals Inc. | 449,436 | 1,879 |
| * | Incyte Corp. Ltd. | 135,000 | 1,812 |
| * | Providence Service Corp. | 100,399 | 1,668 |
| * | Mednax Inc. | 28,895 | 1,587 |
| * | Affymetrix Inc. | 227,584 | 1,579 |
| * | Micromet Inc. | 201,583 | 1,536 |
| * | athenahealth Inc. | 50,306 | 1,460 |
| * | Zymogenetics Inc. | 216,441 | 1,286 |
| * | PharMerica Corp. | 58,823 | 1,135 |
| * | Questcor Pharmaceuticals Inc. | 115,609 | 1,126 |
| * | Cambrex Corp. | 254,045 | 1,115 |
| * | Harvard Bioscience Inc. | 263,361 | 1,101 |
| * | Celera Corp. | 141,580 | 1,058 |
| *,^ | Cell Therapeutics Inc. | 1,400,900 | 865 |
| * | Conmed Corp. | 36,353 | 808 |
| * | Hanger Orthopedic Group Inc. | 41,100 | 766 |
| * | NxStage Medical Inc. | 55,950 | 712 |
| * | Continucare Corp. | 204,564 | 685 |
| * | Auxilium Pharmaceuticals Inc. | 17,500 | 623 |
| * | Bio-Reference Labs Inc. | 23,460 | 549 |
| * | LHC Group Inc. | 15,237 | 520 |
| * | Depomed Inc. | 111,583 | 450 |
| * | Genomic Health Inc. | 27,900 | 447 |
| * | Medical Action Industries Inc. | 36,480 | 433 |
| * | Santarus Inc. | 123,217 | 404 |
| *,^ | NovaMed Inc. | 114,978 | 377 |
| * | AMN Healthcare Services Inc. | 39,986 | 365 |
| * | ISTA Pharmaceuticals Inc. | 81,688 | 319 |
| * | Varian Inc. | 6,100 | 316 |
| * | Immunomedics Inc. | 88,500 | 310 |
| Ensign Group Inc. | 15,575 | 270 | |
| * | Allied Healthcare International Inc. | 94,059 | 264 |
| * | Kendle International Inc. | 15,800 | 261 |
| * | Lannett Co. Inc. | 55,727 | 261 |
| * | BioDelivery Sciences International Inc. | 73,779 | 256 |
| * | Quidel Corp. | 12,400 | 183 |
| * | Neurocrine Biosciences Inc. | 51,253 | 165 |
| * | ADAM Inc. | 39,956 | 150 |
| * | Inspire Pharmaceuticals Inc. | 15,700 | 108 |
| *,^ | Virtual Radiologic Corp. | 8,150 | 102 |
| Advocat Inc. | 13,431 | 92 | |
8
| Vanguard® Explorer Fund | |||
| Schedule of Investments | |||
| April 30, 2010 | |||
| Market | |||
| Value | |||
| Shares | ($000) | ||
| * | Healthways Inc. | 4,869 | 79 |
| * | RadNet Inc. | 17,600 | 65 |
| * | Cardiovascular Systems Inc. | 4,802 | 24 |
| *,^ | Cardium Therapeutics Inc. | 37,906 | 22 |
| * | GTx Inc. | 6,500 | 21 |
| * | Triple-S Management Corp. Class B | 820 | 15 |
| * | OTIX Global Inc. | 2,837 | 14 |
| * | Dynacq Healthcare Inc. | 4,900 | 13 |
| * | Mediware Information Systems | 1,320 | 12 |
| * | Matrixx Initiatives Inc. | 2,040 | 10 |
| * | SuperGen Inc. | 3,100 | 9 |
| * | PhotoMedex Inc. | 900 | 7 |
| 1,743,156 | |||
| Industrials (15.3%) | |||
| MSC Industrial Direct Co. Class A | 1,197,140 | 65,232 | |
| *,4 | Beacon Roofing Supply Inc. | 2,483,403 | 55,132 |
| Kennametal Inc. | 1,523,535 | 50,063 | |
| * | Genesee & Wyoming Inc. Class A | 980,330 | 38,331 |
| Equifax Inc. | 1,044,484 | 35,095 | |
| * | Continental Airlines Inc. Class B | 1,495,600 | 33,427 |
| Gardner Denver Inc. | 598,173 | 30,082 | |
| * | EnerSys | 1,132,960 | 29,321 |
| * | HUB Group Inc. Class A | 861,200 | 27,567 |
| * | Stericycle Inc. | 441,200 | 25,987 |
| Watsco Inc. | 436,110 | 25,826 | |
| * | DigitalGlobe Inc. | 954,030 | 25,339 |
| Knight Transportation Inc. | 1,177,690 | 25,073 | |
| * | AerCap Holdings NV | 1,798,651 | 24,821 |
| Con-way Inc. | 622,700 | 24,186 | |
| * | Atlas Air Worldwide Holdings Inc. | 431,255 | 23,835 |
| Flowserve Corp. | 206,300 | 23,638 | |
| * | RBC Bearings Inc. | 680,494 | 21,476 |
| * | US Airways Group Inc. | 2,979,200 | 21,063 |
| * | GeoEye Inc. | 731,720 | 20,854 |
| * | JetBlue Airways Corp. | 3,702,330 | 20,696 |
| Trinity Industries Inc. | 823,800 | 20,504 | |
| UTi Worldwide Inc. | 1,287,575 | 20,408 | |
| * | Advisory Board Co. | 617,280 | 20,327 |
| * | Chicago Bridge & Iron Co. NV | 866,175 | 20,303 |
| * | Kansas City Southern | 496,500 | 20,133 |
| Triumph Group Inc. | 257,800 | 19,995 | |
| * | Clean Harbors Inc. | 312,265 | 19,807 |
| * | SunPower Corp. Class B | 1,306,836 | 19,655 |
| Belden Inc. | 702,430 | 19,289 | |
| Lennox International Inc. | 425,600 | 19,263 | |
| AMETEK Inc. | 443,270 | 19,171 | |
| * | United Stationers Inc. | 299,665 | 18,345 |
| Steelcase Inc. Class A | 2,097,783 | 17,223 | |
| Robert Half International Inc. | 624,089 | 17,088 | |
| * | EnerNOC Inc. | 531,120 | 15,445 |
| Applied Industrial Technologies Inc. | 471,550 | 14,514 | |
| Healthcare Services Group Inc. | 661,920 | 14,225 | |
| * | II-VI Inc. | 391,550 | 14,041 |
| Woodward Governor Co. | 428,550 | 13,735 | |
| Landstar System Inc. | 307,865 | 13,614 | |
| * | Huron Consulting Group Inc. | 576,754 | 13,508 |
| WW Grainger Inc. | 120,450 | 13,315 | |
| Bucyrus International Inc. Class A | 207,247 | 13,059 | |
| McGrath Rentcorp | 457,238 | 11,884 | |
| * | EMCOR Group Inc. | 407,200 | 11,630 |
| * | IHS Inc. Class A | 228,050 | 11,555 |
| * | Resources Connection Inc. | 654,730 | 11,484 |
| Ritchie Bros Auctioneers Inc. | 489,810 | 11,462 | |
| Dun & Bradstreet Corp. | 143,870 | 11,074 | |
9
| Vanguard® Explorer Fund | �� | ||
| Schedule of Investments | |||
| April 30, 2010 | |||
| Market | |||
| Value | |||
| Shares | ($000) | ||
| * | TrueBlue Inc. | 700,030 | 11,053 |
| * | Corrections Corp. of America | 526,794 | 10,915 |
| * | Kirby Corp. | 259,200 | 10,907 |
| * | RailAmerica Inc. | 807,920 | 10,414 |
| Deluxe Corp. | 484,700 | 10,164 | |
| * | Owens Corning | 290,892 | 10,117 |
| Copa Holdings SA Class A | 176,897 | 10,026 | |
| Roper Industries Inc. | 156,800 | 9,568 | |
| * | Teledyne Technologies Inc. | 216,700 | 9,448 |
| * | American Superconductor Corp. | 302,250 | 8,820 |
| * | Avis Budget Group Inc. | 569,903 | 8,617 |
| * | Allegiant Travel Co. Class A | 164,432 | 8,457 |
| * | Oshkosh Corp. | 214,000 | 8,265 |
| *,^ | A123 Systems Inc. | 624,700 | 7,784 |
| Ingersoll-Rand PLC | 205,000 | 7,581 | |
| Crane Co. | 209,890 | 7,543 | |
| * | Alliant Techsystems Inc. | 92,716 | 7,502 |
| Goodrich Corp. | 98,746 | 7,325 | |
| Towers Watson & Co. Class A | 149,000 | 7,152 | |
| * | Exponent Inc. | 229,572 | 6,844 |
| * | Thomas & Betts Corp. | 162,517 | 6,816 |
| * | Sensata Technologies Holding NV | 320,050 | 6,401 |
| * | Polypore International Inc. | 359,150 | 6,361 |
| CH Robinson Worldwide Inc. | 105,000 | 6,331 | |
| * | LaBarge Inc. | 498,622 | 6,163 |
| Carlisle Cos. Inc. | 149,720 | 5,649 | |
| * | Navistar International Corp. | 113,500 | 5,487 |
| Heartland Express Inc. | 329,670 | 5,453 | |
| Hubbell Inc. Class B | 116,500 | 5,414 | |
| * | Kforce Inc. | 385,075 | 5,349 |
| * | McDermott International Inc. | 189,718 | 5,200 |
| Mine Safety Appliances Co. | 174,570 | 5,131 | |
| * | Hawaiian Holdings Inc. | 711,308 | 5,050 |
| * | Flow International Corp. | 1,589,318 | 5,022 |
| * | SYKES Enterprises Inc. | 200,123 | 4,549 |
| * | ICF International Inc. | 189,600 | 4,391 |
| Curtiss-Wright Corp. | 121,561 | 4,336 | |
| * | Esterline Technologies Corp. | 77,600 | 4,328 |
| * | BE Aerospace Inc. | 141,200 | 4,195 |
| Avery Dennison Corp. | 95,200 | 3,716 | |
| Toro Co. | 62,200 | 3,542 | |
| * | ATC Technology Corp. | 145,870 | 2,982 |
| * | Chart Industries Inc. | 127,500 | 2,931 |
| *,^ | Trex Co. Inc. | 116,300 | 2,848 |
| Albany International Corp. | 109,861 | 2,798 | |
| Pall Corp. | 70,800 | 2,760 | |
| Heidrick & Struggles International Inc. | 101,600 | 2,683 | |
| * | Korn/Ferry International | 165,000 | 2,675 |
| Apogee Enterprises Inc. | 191,946 | 2,637 | |
| AZZ Inc. | 62,327 | 2,532 | |
| Brink's Co. | 90,000 | 2,397 | |
| * | AirTran Holdings Inc. | 449,483 | 2,373 |
| * | UAL Corp. | 107,800 | 2,326 |
| * | Michael Baker Corp. | 64,183 | 2,268 |
| * | Harbin Electric Inc. | 93,062 | 2,039 |
| Cubic Corp. | 54,630 | 2,038 | |
| * | EnPro Industries Inc. | 58,660 | 1,852 |
| * | CRA International Inc. | 78,991 | 1,835 |
| * | WESCO International Inc. | 45,000 | 1,828 |
| * | Air Transport Services Group Inc. | 325,367 | 1,789 |
| * | Orion Marine Group Inc. | 90,000 | 1,706 |
| * | GenCorp Inc. | 262,345 | 1,632 |
| AAON Inc. | 64,940 | 1,568 | |
| Ampco-Pittsburgh Corp. | 54,686 | 1,406 | |
10
| Vanguard® Explorer Fund | |||
| Schedule of Investments | |||
| April 30, 2010 | |||
| Market | |||
| Value | |||
| Shares | ($000) | ||
| Standard Register Co. | 268,564 | 1,383 | |
| * | Dollar Thrifty Automotive Group Inc. | 31,300 | 1,377 |
| ABM Industries Inc. | 63,761 | 1,370 | |
| * | Armstrong World Industries Inc. | 31,400 | 1,367 |
| * | Powell Industries Inc. | 40,668 | 1,366 |
| * | Tetra Tech Inc. | 55,700 | 1,356 |
| * | Force Protection Inc. | 242,037 | 1,295 |
| * | APAC Customer Services Inc. | 216,520 | 1,245 |
| HNI Corp. | 38,200 | 1,186 | |
| * | Alaska Air Group Inc. | 27,300 | 1,130 |
| * | KAR Auction Services Inc. | 62,000 | 965 |
| G&K Services Inc. Class A | 32,406 | 891 | |
| * | GP Strategies Corp. | 110,312 | 890 |
| Nordson Corp. | 11,970 | 860 | |
| * | GrafTech International Ltd. | 42,940 | 724 |
| * | Intersections Inc. | 129,100 | 688 |
| Primoris Services Corp. | 77,200 | 610 | |
| US Ecology Inc. | 36,800 | 574 | |
| Tennant Co. | 16,245 | 560 | |
| Pentair Inc. | 15,470 | 559 | |
| Diamond Management & Technology Consultants Inc. Class A | 53,353 | 433 | |
| * | Amerco Inc. | 6,827 | 426 |
| * | Sparton Corp. | 72,130 | 421 |
| * | LMI Aerospace Inc. | 22,560 | 389 |
| * | Trimas Corp. | 37,901 | 385 |
| Schawk Inc. Class A | 19,683 | 373 | |
| VSE Corp. | 8,978 | 361 | |
| Rollins Inc. | 16,200 | 352 | |
| Insteel Industries Inc. | 28,632 | 351 | |
| * | MasTec Inc. | 26,600 | 333 |
| Graham Corp. | 18,468 | 330 | |
| Raven Industries Inc. | 10,430 | 317 | |
| NACCO Industries Inc. Class A | 3,636 | 316 | |
| Preformed Line Products Co. | 10,390 | 312 | |
| Timken Co. | 8,010 | 282 | |
| SIFCO Industries Inc. | 19,298 | 267 | |
| * | On Assignment Inc. | 34,600 | 243 |
| Valmont Industries Inc. | 2,300 | 192 | |
| * | WABCO Holdings Inc. | 5,300 | 176 |
| * | Herley Industries Inc. | 12,000 | 176 |
| * | Colfax Corp. | 9,900 | 129 |
| Quanex Building Products Corp. | 6,600 | 125 | |
| * | Ultralife Corp. | 29,426 | 123 |
| Interface Inc. Class A | 5,017 | 66 | |
| * | DynCorp International Inc. Class A | 3,200 | 55 |
| Lindsay Corp. | 600 | 23 | |
| 1,479,741 | |||
| Information Technology (24.5%) | |||
| * | TiVo Inc. | 4,664,060 | 81,714 |
| * | Alliance Data Systems Corp. | 863,256 | 64,796 |
| * | ON Semiconductor Corp. | 7,962,410 | 63,222 |
| * | Teradyne Inc. | 4,487,688 | 54,884 |
| * | Netlogic Microsystems Inc. | 1,451,643 | 45,248 |
| * | Informatica Corp. | 1,633,807 | 40,862 |
| Factset Research Systems Inc. | 535,500 | 40,280 | |
| * | MICROS Systems Inc. | 1,070,705 | 39,787 |
| *,4 | Verigy Ltd. | 3,106,620 | 37,093 |
| * | Concur Technologies Inc. | 866,181 | 36,302 |
| *,4 | Sourcefire Inc. | 1,603,162 | 35,863 |
| * | F5 Networks Inc. | 514,989 | 35,241 |
| * | Acme Packet Inc. | 1,328,528 | 34,728 |
| * | Hewitt Associates Inc. Class A | 811,290 | 33,255 |
| * | NICE Systems Ltd. ADR | 1,043,486 | 33,193 |
| * | Parametric Technology Corp. | 1,730,563 | 32,171 |
11
| Vanguard® Explorer Fund | |||
| Schedule of Investments | |||
| April 30, 2010 | |||
| Market | |||
| Value | |||
| Shares | ($000) | ||
| * | Polycom Inc. | 973,835 | 31,698 |
| * | Ingram Micro Inc. | 1,700,463 | 30,880 |
| * | Rovi Corp. | 792,135 | 30,877 |
| * | Euronet Worldwide Inc. | 1,797,579 | 28,635 |
| * | PMC - Sierra Inc. | 3,164,660 | 28,007 |
| * | Atheros Communications Inc. | 711,921 | 27,651 |
| * | FEI Co. | 1,213,995 | 27,315 |
| Maxim Integrated Products Inc. | 1,287,400 | 25,001 | |
| * | WebMD Health Corp. | 512,991 | 24,849 |
| * | Littelfuse Inc. | 583,350 | 24,635 |
| * | MKS Instruments Inc. | 1,051,460 | 23,847 |
| * | Ariba Inc. | 1,663,085 | 23,732 |
| * | VeriFone Holdings Inc. | 1,228,940 | 23,387 |
| * | Blue Coat Systems Inc. | 717,284 | 23,333 |
| Sapient Corp. | 2,253,262 | 23,051 | |
| Solera Holdings Inc. | 583,737 | 22,690 | |
| Power Integrations Inc. | 578,760 | 22,271 | |
| * | Progress Software Corp. | 678,573 | 21,884 |
| ADTRAN Inc. | 789,060 | 21,123 | |
| * | Sybase Inc. | 486,386 | 21,099 |
| * | Salesforce.com Inc. | 244,440 | 20,924 |
| * | QLogic Corp. | 1,065,785 | 20,644 |
| * | j2 Global Communications Inc. | 843,200 | 20,304 |
| * | Websense Inc. | 885,000 | 20,151 |
| * | Mantech International Corp. Class A | 445,934 | 20,080 |
| * | Netezza Corp. | 1,450,670 | 19,860 |
| * | Atmel Corp. | 3,529,330 | 19,200 |
| * | Silicon Laboratories Inc. | 390,945 | 18,902 |
| * | Cypress Semiconductor Corp. | 1,439,806 | 18,559 |
| * | Gartner Inc. | 768,344 | 18,502 |
| * | Acxiom Corp. | 966,403 | 18,439 |
| * | Celestica Inc. | 1,811,000 | 17,748 |
| * | Microsemi Corp. | 1,058,270 | 17,525 |
| Intersil Corp. Class A | 1,147,884 | 17,081 | |
| * | SuccessFactors Inc. | 800,330 | 16,751 |
| * | Cymer Inc. | 488,440 | 16,680 |
| * | Nuance Communications Inc. | 909,650 | 16,619 |
| Plantronics Inc. | 491,877 | 16,330 | |
| * | Riverbed Technology Inc. | 525,010 | 16,270 |
| Syntel Inc. | 441,657 | 15,953 | |
| * | Hittite Microwave Corp. | 305,750 | 15,679 |
| * | Avnet Inc. | 463,813 | 14,828 |
| * | Trimble Navigation Ltd. | 452,460 | 14,800 |
| * | Ciena Corp. | 789,900 | 14,605 |
| * | S1 Corp. | 2,353,880 | 14,523 |
| * | Convergys Corp. | 1,139,000 | 14,397 |
| * | Avago Technologies Ltd. | 688,275 | 14,123 |
| * | Finisar Corp. | 929,700 | 13,908 |
| * | Cognizant Technology Solutions Corp. Class A | 268,314 | 13,732 |
| * | Mellanox Technologies Ltd. | 538,500 | 13,355 |
| Pegasystems Inc. | 408,949 | 12,951 | |
| * | LSI Corp. | 2,124,410 | 12,789 |
| * | Varian Semiconductor Equipment Associates Inc. | 385,930 | 12,713 |
| Amphenol Corp. Class A | 271,250 | 12,534 | |
| * | Lexmark International Inc. Class A | 334,596 | 12,397 |
| * | Synopsys Inc. | 520,197 | 11,814 |
| Tellabs Inc. | 1,288,025 | 11,695 | |
| * | Cogent Inc. | 1,086,772 | 11,248 |
| * | Fairchild Semiconductor International Inc. Class A | 983,051 | 11,030 |
| * | Art Technology Group Inc. | 2,531,461 | 10,835 |
| * | CommVault Systems Inc. | 499,950 | 10,474 |
| * | Arris Group Inc. | 843,231 | 10,363 |
| * | Aruba Networks Inc. | 791,889 | 9,946 |
| * | Arrow Electronics Inc. | 322,200 | 9,827 |
12
| Vanguard® Explorer Fund | |||
| Schedule of Investments | |||
| April 30, 2010 | |||
| Market | |||
| Value | |||
| Shares | ($000) | ||
| * | NetApp Inc. | 277,789 | 9,631 |
| * | Cirrus Logic Inc. | 744,501 | 9,463 |
| * | Marvell Technology Group Ltd. | 458,046 | 9,459 |
| National Semiconductor Corp. | 631,730 | 9,337 | |
| * | Equinix Inc. | 91,345 | 9,194 |
| * | Aviat Networks Inc. | 1,406,531 | 9,142 |
| * | Hollysys Automation Technologies Ltd. | 876,400 | 9,088 |
| * | Oclaro Inc. | 580,178 | 8,894 |
| iGate Corp. | 707,532 | 8,759 | |
| * | Digital River Inc. | 304,170 | 8,499 |
| * | RF Micro Devices Inc. | 1,511,090 | 8,492 |
| Jabil Circuit Inc. | 544,180 | 8,337 | |
| * | Tekelec | 452,204 | 8,198 |
| * | PROS Holdings Inc. | 881,900 | 8,025 |
| Global Payments Inc. | 187,200 | 8,014 | |
| * | GSI Commerce Inc. | 286,093 | 7,796 |
| * | Compellent Technologies Inc. | 618,020 | 7,769 |
| * | TIBCO Software Inc. | 681,018 | 7,764 |
| * | InterDigital Inc. | 268,650 | 7,434 |
| * | Diodes Inc. | 343,875 | 7,383 |
| * | Cybersource Corp. | 278,260 | 7,146 |
| * | ATMI Inc. | 387,145 | 7,019 |
| * | VanceInfo Technologies Inc. ADR | 293,846 | 7,008 |
| * | Advent Software Inc. | 144,754 | 6,540 |
| * | Emulex Corp. | 556,249 | 6,536 |
| * | DG FastChannel Inc. | 182,100 | 6,406 |
| * | Constant Contact Inc. | 244,000 | 6,234 |
| * | JDA Software Group Inc. | 213,676 | 6,175 |
| * | TriQuint Semiconductor Inc. | 796,150 | 6,003 |
| * | Brightpoint Inc. | 741,269 | 5,997 |
| * | Lawson Software Inc. | 751,400 | 5,831 |
| * | Veeco Instruments Inc. | 131,500 | 5,785 |
| * | AsiaInfo Holdings Inc. | 199,100 | 5,656 |
| * | Brocade Communications Systems Inc. | 862,917 | 5,600 |
| * | Blackboard Inc. | 129,919 | 5,528 |
| Fair Isaac Corp. | 259,000 | 5,455 | |
| Earthlink Inc. | 599,000 | 5,403 | |
| Black Box Corp. | 172,700 | 5,387 | |
| * | Comtech Telecommunications Corp. | 169,340 | 5,290 |
| * | Red Hat Inc. | 176,013 | 5,258 |
| * | Amkor Technology Inc. | 687,872 | 5,187 |
| * | Applied Micro Circuits Corp. | 438,345 | 4,945 |
| * | Ceva Inc. | 396,534 | 4,854 |
| Altera Corp. | 180,550 | 4,579 | |
| * | ACI Worldwide Inc. | 240,250 | 4,514 |
| * | CSG Systems International Inc. | 195,580 | 4,444 |
| * | Vishay Intertechnology Inc. | 421,100 | 4,384 |
| * | Electronic Arts Inc. | 224,900 | 4,356 |
| * | Multi-Fineline Electronix Inc. | 162,491 | 4,212 |
| * | VistaPrint NV | 80,508 | 4,153 |
| * | Cree Inc. | 56,463 | 4,134 |
| * | McAfee Inc. | 117,360 | 4,078 |
| * | Ancestry.com Inc. | 203,974 | 4,004 |
| * | Advanced Energy Industries Inc. | 266,400 | 3,921 |
| * | Quest Software Inc. | 221,527 | 3,883 |
| * | Netgear Inc. | 139,500 | 3,775 |
| * | Net 1 UEPS Technologies Inc. | 229,600 | 3,765 |
| * | OSI Systems Inc. | 143,900 | 3,747 |
| * | IAC/InterActiveCorp | 163,820 | 3,673 |
| * | L-1 Identity Solutions Inc. | 397,900 | 3,450 |
| * | TeleTech Holdings Inc. | 206,826 | 3,423 |
| * | BMC Software Inc. | 71,556 | 2,816 |
| * | Novellus Systems Inc. | 102,800 | 2,693 |
| * | Shanda Interactive Entertainment Ltd. ADR | 59,000 | 2,675 |
13
| Vanguard® Explorer Fund | |||
| Schedule of Investments | |||
| April 30, 2010 | |||
| Market | |||
| Value | |||
| Shares | ($000) | ||
| * | CACI International Inc. Class A | 55,679 | 2,641 |
| MAXIMUS Inc. | 42,600 | 2,637 | |
| * | DealerTrack Holdings Inc. | 172,000 | 2,623 |
| * | Advanced Micro Devices Inc. | 282,370 | 2,558 |
| * | Quantum Corp. | 876,600 | 2,542 |
| DST Systems Inc. | 59,766 | 2,537 | |
| * | Anixter International Inc. | 48,300 | 2,531 |
| * | Insight Enterprises Inc. | 167,249 | 2,514 |
| Jack Henry & Associates Inc. | 98,300 | 2,509 | |
| * | Oplink Communications Inc. | 165,339 | 2,498 |
| * | SAIC Inc. | 143,300 | 2,495 |
| * | Silicon Motion Technology Corp. ADR | 454,800 | 2,474 |
| * | SYNNEX Corp. | 89,514 | 2,455 |
| * | Dolby Laboratories Inc. Class A | 34,042 | 2,339 |
| * | DemandTec Inc. | 309,440 | 2,092 |
| * | Kulicke & Soffa Industries Inc. | 252,212 | 2,068 |
| *,^ | STEC Inc. | 147,221 | 2,045 |
| * | Integrated Device Technology Inc. | 306,600 | 2,027 |
| * | MIPS Technologies Inc. Class A | 404,100 | 2,016 |
| * | LivePerson Inc. | 234,713 | 1,939 |
| * | Integrated Silicon Solution Inc. | 157,199 | 1,938 |
| * | RightNow Technologies Inc. | 115,000 | 1,886 |
| * | Mindspeed Technologies Inc. | 184,127 | 1,847 |
| * | Actuate Corp. | 294,441 | 1,667 |
| * | Ulticom Inc. | 166,780 | 1,639 |
| * | China Security & Surveillance Technology Inc. | 272,170 | 1,619 |
| * | Zoran Corp. | 164,160 | 1,597 |
| * | Global Cash Access Holdings Inc. | 176,738 | 1,534 |
| Richardson Electronics Ltd. | 124,046 | 1,425 | |
| * | Cray Inc. | 206,947 | 1,399 |
| * | Nova Measuring Instruments Ltd. | 250,000 | 1,385 |
| * | Kopin Corp. | 327,742 | 1,380 |
| * | Netscout Systems Inc. | 92,755 | 1,347 |
| * | Manhattan Associates Inc. | 45,600 | 1,307 |
| * | Radisys Corp. | 131,691 | 1,289 |
| * | SonicWALL Inc. | 127,087 | 1,287 |
| Molex Inc. | 56,750 | 1,272 | |
| * | Hypercom Corp. | 305,524 | 1,268 |
| * | Loral Space & Communications Inc. | 29,122 | 1,254 |
| * | Mercury Computer Systems Inc. | 91,647 | 1,179 |
| * | Unisys Corp. | 40,730 | 1,141 |
| * | Volterra Semiconductor Corp. | 44,100 | 1,057 |
| * | Novell Inc. | 182,734 | 1,025 |
| * | Stamps.com Inc. | 94,176 | 998 |
| * | Zygo Corp. | 105,600 | 998 |
| * | Dynamics Research Corp. | 69,597 | 995 |
| * | Checkpoint Systems Inc. | 44,016 | 994 |
| * | Stratasys Inc. | 41,000 | 977 |
| * | Digi International Inc. | 89,900 | 963 |
| * | Synaptics Inc. | 30,471 | 933 |
| * | Internap Network Services Corp. | 156,530 | 905 |
| * | EMS Technologies Inc. | 56,719 | 901 |
| * | Interactive Intelligence Inc. | 45,116 | 892 |
| * | Symmetricom Inc. | 120,842 | 801 |
| * | Computer Task Group Inc. | 85,106 | 799 |
| Keithley Instruments Inc. | 93,870 | 799 | |
| QAD Inc. | 136,865 | 756 | |
| * | Mentor Graphics Corp. | 82,300 | 740 |
| Keynote Systems Inc. | 67,100 | 737 | |
| * | ValueClick Inc. | 67,600 | 695 |
| * | CPI International Inc. | 48,633 | 653 |
| * | Saba Software Inc. | 126,676 | 646 |
| * | Avid Technology Inc. | 42,914 | 627 |
| * | Skyworks Solutions Inc. | 31,786 | 535 |
14
| Vanguard® Explorer Fund | |||
| Schedule of Investments | |||
| April 30, 2010 | |||
| Market | |||
| Value | |||
| Shares | ($000) | ||
| *,^ | Internet Gold-Golden Lines Ltd. | 17,461 | 495 |
| * | Reis Inc. | 79,600 | 476 |
| * | Adaptec Inc. | 149,982 | 463 |
| * | Image Sensing Systems Inc. | 33,652 | 462 |
| * | Electronics for Imaging Inc. | 28,986 | 373 |
| * | MercadoLibre Inc. | 7,100 | 358 |
| Blackbaud Inc. | 15,300 | 353 | |
| * | INX Inc. | 66,912 | 324 |
| * | SolarWinds Inc. | 16,742 | 311 |
| * | Pervasive Software Inc. | 61,092 | 304 |
| * | Seachange International Inc. | 33,949 | 283 |
| * | Bottomline Technologies Inc. | 15,300 | 266 |
| * | Actel Corp. | 15,394 | 239 |
| * | DSP Group Inc. | 28,483 | 233 |
| * | PC Mall Inc. | 43,650 | 227 |
| * | GTSI Corp. | 30,626 | 196 |
| * | Intermec Inc. | 15,115 | 173 |
| * | Evolving Systems Inc. | 21,522 | 156 |
| * | IntriCon Corp. | 42,647 | 154 |
| * | Power-One Inc. | 18,600 | 146 |
| CTS Corp. | 12,080 | 127 | |
| Marchex Inc. Class B | 15,017 | 79 | |
| * | LaserCard Corp. | 13,619 | 78 |
| * | Tech Data Corp. | 1,500 | 64 |
| * | Telular Corp. | 15,200 | 47 |
| * | SRA International Inc. Class A | 1,530 | 35 |
| * | Exar Corp. | 4,100 | 30 |
| * | ModusLink Global Solutions Inc. | 3,314 | 30 |
| * | ePlus Inc. | 1,140 | 21 |
| * | Selectica Inc. | 3,400 | 19 |
| * | CSP Inc. | 3,300 | 11 |
| * | Interphase Corp. | 1,900 | 5 |
| * | PC-Tel Inc. | 162 | 1 |
| 2,376,457 | |||
| Materials (5.2%) | |||
| Sensient Technologies Corp. | 1,696,700 | 53,497 | |
| Lubrizol Corp. | 398,813 | 36,029 | |
| Silgan Holdings Inc. | 506,900 | 30,581 | |
| Albemarle Corp. | 666,155 | 30,417 | |
| * | Pactiv Corp. | 1,114,870 | 28,329 |
| Steel Dynamics Inc. | 1,614,069 | 25,357 | |
| Aptargroup Inc. | 554,020 | 23,845 | |
| Olin Corp. | 1,105,694 | 23,220 | |
| * | Solutia Inc. | 1,176,755 | 20,711 |
| Eagle Materials Inc. | 608,670 | 19,398 | |
| Ball Corp. | 327,623 | 17,433 | |
| Arch Chemicals Inc. | 508,459 | 17,293 | |
| * | Titanium Metals Corp. | 1,098,923 | 16,945 |
| * | Fronteer Development Group Inc. | 2,561,795 | 15,704 |
| Cytec Industries Inc. | 304,500 | 14,634 | |
| Schnitzer Steel Industries Inc. | 267,400 | 14,440 | |
| International Flavors & Fragrances Inc. | 274,878 | 13,769 | |
| * | OM Group Inc. | 348,610 | 13,160 |
| NewMarket Corp. | 98,292 | 10,812 | |
| * | Domtar Corp. | 148,769 | 10,539 |
| RPM International Inc. | 392,373 | 8,664 | |
| Greif Inc. Class A | 136,929 | 8,103 | |
| Stepan Co. | 102,142 | 7,737 | |
| Nalco Holding Co. | 285,588 | 7,063 | |
| Ashland Inc. | 109,041 | 6,494 | |
| Walter Energy Inc. | 77,766 | 6,284 | |
| Rock-Tenn Co. Class A | 76,537 | 3,949 | |
| * | Clearwater Paper Corp. | 55,929 | 3,561 |
15
| Vanguard® Explorer Fund | |||||
| Schedule of Investments | |||||
| April 30, 2010 | |||||
| Market | |||||
| Value | |||||
| Shares | ($000) | ||||
| * | Buckeye Technologies Inc. | 241,200 | 3,406 | ||
| Schweitzer-Mauduit International Inc. | 50,175 | 2,856 | |||
| Minerals Technologies Inc. | 48,770 | 2,814 | |||
| * | Crown Holdings Inc. | 102,633 | 2,668 | ||
| * | PolyOne Corp. | 229,250 | 2,593 | ||
| * | Boise Inc. | 219,323 | 1,511 | ||
| * | WR Grace & Co. | 41,300 | 1,193 | ||
| * | BWAY Holding Co. | 35,277 | 698 | ||
| * | Omnova Solutions Inc. | 79,340 | 607 | ||
| *,^ | General Steel Holdings Inc. | 75,100 | 280 | ||
| * | American Pacific Corp. | 610 | 4 | ||
| 506,598 | |||||
| Telecommunication Services (0.9%) | |||||
| * | tw telecom inc Class A | 1,467,400 | 26,120 | ||
| * | NeuStar Inc. Class A | 844,333 | 20,661 | ||
| * | SBA Communications Corp. Class A | 445,117 | 15,744 | ||
| * | Clearwire Corp. Class A | 1,957,810 | 15,114 | ||
| NTELOS Holdings Corp. | 196,800 | 3,863 | |||
| * | Premiere Global Services Inc. | 383,498 | 3,593 | ||
| USA Mobility Inc. | 140,666 | 1,961 | |||
| Consolidated Communications Holdings Inc. | 94,900 | 1,760 | |||
| Frontier Communications Corp. | 170,200 | 1,355 | |||
| * | PAETEC Holding Corp. | 111,200 | 554 | ||
| HickoryTech Corp. | 40,365 | 342 | |||
| * | Cincinnati Bell Inc. | 95,000 | 320 | ||
| 91,387 | |||||
| Utilities (0.7%) | |||||
| ITC Holdings Corp. | 389,500 | 21,746 | |||
| UGI Corp. | 731,600 | 20,112 | |||
| CenterPoint Energy Inc. | 929,332 | 13,345 | |||
| DPL Inc. | 196,000 | 5,523 | |||
| Ormat Technologies Inc. | 124,680 | 3,972 | |||
| New Jersey Resources Corp. | 50,019 | 1,887 | |||
| Integrys Energy Group Inc. | 28,300 | 1,404 | |||
| 67,989 | |||||
| Total Common Stocks (Cost $7,407,741) | 9,350,019 | ||||
| Coupon | |||||
| Temporary Cash Investments (5.1%)1 | |||||
| Money Market Fund (4.6%) | |||||
| 5,6 | Vanguard Market Liquidity Fund | 0.210% | 441,791,827 | 441,792 | |
| Face | |||||
| Maturity | Amount | ||||
| Date | ($000) | ||||
| U.S. Government and Agency Obligations (0.2%) | |||||
| 7,8 | Freddie Mac Discount Notes | 0.245% | 9/21/10 | 15,300 | 15,282 |
| Repurchase Agreement (0.3%) | |||||
| Deutsche Bank Securities, Inc. | |||||
| (Dated 4/30/10, Repurchase Value $33,101,000, | |||||
| collateralized by Federal National Mortgage Assn., | |||||
| 4.000%-7.000%, 8/1/37-5/1/40) | |||||
| 0.200% | 5/3/10 | 33,100 | 33,100 | ||
| Total Temporary Cash Investments (Cost $490,177) | 490,174 | ||||
16
| Vanguard® Explorer Fund | |
| Schedule of Investments | |
| April 30, 2010 | |
| Total Investments (101.4%) (Cost $7,897,918) | 9,840,193 |
| Other Assets and Liabilities (-1.4%) | |
| Other Assets | 84,180 |
| Liabilities6 | (219,881) |
| (135,701) | |
| Net Assets (100%) | 9,704,492 |
* Non-income-producing security.
^ Part of security position is on loan to broker-dealers. The total value of securities on loan is $72,958,000.
1 The fund invests a portion of its cash reserves in equity markets through the use of index futures contracts. After giving effect to futures investments, the fund's effective common stock and temporary cash investment positions represent 98.4% and 3.0%, respectively, of net assets.
2 Considered an affiliated company of the fund as the issuer is another member of The Vanguard Group.
3 Restricted security represents 0.0% of net assets.
4 Considered an affiliated company of the fund as the fund owns more than 5% of the outstanding voting securities of such company.
5 Affiliated money market fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard. Rate shown is the 7-day yield.
6 Includes $78,694,000 of collateral received for securities on loan.
7 The issuer operates under a congressional charter; its securities are not backed by the full faith and credit of the U.S. government.
8 Securities with a value of $15,282,000 have been segregated as initial margin for open futures contracts.
ADR—American Depositary Receipt.
17
@2010TheVanguardGroup,Inc,
All rightsreserved.
VanguardMarketingCorporation,Distributor.
SNA242 062010
Item 2: Not Applicable.
Item 3: Not Applicable.
Item 4: Not Applicable.
Item 5: Not Applicable.
Item 6: Not Applicable.
Item 7: Not Applicable.
Item 8: Not Applicable.
Item 9: Not Applicable.
Item 10: Not Applicable.
Item 11: 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 12: 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: | /s/ F. WILLIAM MCNABB III* |
| F. WILLIAM MCNABB III | |
| CHIEF EXECUTIVE OFFICER | |
| Date: June 21, 2010 | |
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: | /s/ F. WILLIAM MCNABB III* |
| F. WILLIAM MCNABB III | |
| CHIEF EXECUTIVE OFFICER | |
| Date: June 21, 2010 | |
| VANGUARD EXPLORER FUND | |
| By: | /s/ THOMAS J. HIGGINS* |
| THOMAS J. HIGGINS | |
| CHIEF FINANCIAL OFFICER | |
| Date: June 21, 2010 | |
*By: /s/ Heidi Stam
Heidi Stam, pursuant to a Power of Attorney filed on April 26, 2010, see file Number 33-53683,
is Incorporated by Reference.