P.O. Box 2600
Valley Forge, PA 19482-2600
610-669-8439
Michael_Drayo@vanguard.com
May 18, 2017
via electronic filing
Ms. Lisa Larkin
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
| RE: | Vanguard Explorer Fund (the “Trust”) |
| File No. 2-27203 | |
| Post-Effective Amendment Number 112 |
Dear Ms. Larkin:
This letter responds to comments that you provided to us by telephone on May 4, 2017, regarding the above referenced post-effective amendment pertaining to Vanguard Explorer Fund (the “Fund”).
| Comment 1: | Prospectus – Fees and Expenses |
| Comment: | Pursuant to Item 3 Instruction 3(d)(ii) of Form N-1A, please revise footnote 2 |
| to the Fee Table to reflect that expense information has beenrestatedand not | |
| estimated, and identify restated expense information by appropriate cross | |
| reference in the footnote to the Table. | |
| Response: | The Fund has determined that expense information will not be restated and |
| will, therefore, delete footnote 2 to the Fee Table. | |
| Comment 2: | Prospectus – Principal Investment Strategies |
| Comment: | Please confirm whether the Fund intends to invest in foreign securities as a |
| principal investment strategy and whether corresponding principal risk | |
| disclosure should be set out in the prospectus. | |
| Response: | The Fund does not intend to invest in foreign securities as a principal |
| investment strategy and, therefore, no corresponding principal risk disclosure | |
| will be set out in the prospectus. | |
| Comment 3: | Prospectus – Principal Investment Strategies |
| Comment: | Please confirm whether the terms “mid-cap”and “mid-size” as used in the |
| prospectus have similar or different meanings from one another in each case. | |
| Response: | We have revised our disclosures to say “mid-size” when referring to companies |
| and to say “mid-cap” when referring to the stocks of such companies. | |
| Comment 4: | Prospectus – Annual Total Returns |
| Comment: | If applicable, in connection with the addition of mid-cap investing to the |
| fund’s disclosure regarding principal investment strategies, please state in a | |
| footnote to the annual returns bar chart that implementation of new investment | |
| strategies may affect performance. | |
| Response: | We do not intend to include additional disclosures in this regard. As discussed |
| in the “More on the Fund” section of the prospectus, capitalization ranges | |
| change over time and interpretations of size vary, with no universally accepted | |
| definitions of the terms small-, mid-, and large-cap. Since ranges change over | |
| time as a result of fluctuations in stock market valuations, the definitions of | |
| small-cap and mid-cap frequently change from one period to another. The | |
| addition of references to mid-cap investing to the prospectus is intended | |
| merely to reflect that, with such valuation fluctuations in mind, the Fund | |
| invests in a range of capitalizations at any given time, some of which, for | |
| example, may be deemed small-cap in one period but deemed mid-cap in | |
| another. | |
| Comment 5: | Prospectus – Plain Talk About Fund Expenses |
| Comment: | In connection with the addition of mid-cap investing to the fund’s disclosure |
| regarding principal investment strategies, please consider including | |
| information regarding a comparable Lipper fund group that pertains to small- | |
| and mid-cap growth stocks in this part of the prospectus. | |
| Response: | The Fund intends to include information regarding a comparable Lipper fund |
| group that pertains to small- and mid-cap growth stocks in a post-effective | |
| amendment that reflects financial data as of the October 31, 2017, fiscal year- | |
| end. | |
| Comment 6: | Prospectus – Security Selection |
| Comment: | Please consider revising disclosures that describe the security selection |
| process utilized by ClearBridge Investments, LLC, to pair each research | |
| component with its corresponding example. | |
| Response: | The Fund has revised the disclosure in the manner suggested. |
| Comment 7: | Prospectus – Investment Advisors |
| Comment: | Please confirm whether “Management Fees” set out in the Annual Fund |
| Operating Expenses table reflect the highest percentage that can be paid to | |
| the Fund’s advisors regardless of any potential performance adjustment. | |
| Response: | Pursuant to Form N-1A Item 3 Instruction 3(d)(i), “Annual Fund Operating |
| Expenses” reflect amounts incurred during the Fund’s most recent fiscal year. | |
| We confirm that “Management Fees” reflect aggregate advisory fees and | |
| expenses, which represented an effective annual rate of 0.22% of the Fund’s | |
| average net assets before a performance-based decrease of 0.02% for the fiscal | |
| year ended October 31, 2016. | |
| Comment 8: | SAI – Investment Advisory Services |
| Comment: | Item 19(a)(3) of Form N-1A requires the Fund to set out the method of |
| calculating the advisory fee payable by the Fund including the total dollars | |
| paid to the adviser and to any advisers who are not affiliated with the adviser | |
| for the last three fiscal years. Please consider whether the disclosure meets | |
| these requirements. | |
| Response: | The Fund discloses its method of calculating advisory fees including any fulcrum |
| fees: | |
| “The Fund pays each of its investment advisors (other than Vanguard) a base fee | |
| plus or minus a performance adjustment. Each base fee, which is paid quarterly, is a | |
| percentage of average daily net assets managed by the advisor during the most recent | |
| fiscal quarter. The base fee has breakpoints, which means that the percentage | |
| declines as assets go up. The performance adjustment, also paid quarterly, is based | |
| on the cumulative total return of each advisor’s portion of the Fund relative to that of | |
| the Russell 2500 Growth Index over the preceding 36-month period (60-month | |
| period for ArrowMark Partners and SIMG). When the performance adjustment is | |
| positive, the Fund’s expenses increase; when it is negative, expenses decrease. | |
| Vanguard provides investment advisory services for a portion of the Fund on an at- | |
| cost basis, subject to the supervision and oversight of the trustees and officers of the | |
| Fund.” | |
| As required by Item 19(a)(3), the disclosure also sets out the amount of advisory fees | |
| paid by the Fund (including separate disclosure of fulcrum fee amounts) during its | |
| last three (3) fiscal years. In accordance with our multi-manager exemptive relief (see | |
| Vanguard Convertible Securities Fund, et al. May 29, 2003), we are not required to | |
| separately disclose the fees paid to external advisors on an advisor by advisor basis. | |
| We believe that the disclosure is consistent with applicable requirements. | |
Please contact me at (610) 669-4294 with any questions or comments regarding the above response. Thank you.
Sincerely,
Michael J. Drayo
Senior Counsel
The Vanguard Group, Inc.