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: 811-01530
| Name of Registrant: | Vanguard Explorer Fund |
| Address of Registrant: | P.O. Box 2600 |
| Valley Forge, PA 19482 |
| Name and address of agent for service: | Anne E. Robinson, 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, 2021—April 30, 2022
Item 1: Reports to Shareholders
Semiannual Report | April 30, 2022
Vanguard Explorer™ Fund
Contents
About Your Fund’s Expenses | 1 |
Financial Statements | 4 |
Trustees Approve Advisory Arrangements | 24 |
Liquidity Risk Management | 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 any purchase, redemption, or account service fees described in the fund prospectus. If such fees were applied to your account, your costs would be higher. Your fund does not carry a “sales load.”
The calculations assume no shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.
You can find more information about the fund’s expenses, including annual expense ratios, in the Financial Statements section of this report. For additional information on operating expenses and other shareholder costs, please refer to your fund’s current prospectus.
1
| Six Months Ended April 30, 2022 | |||
| Beginning Account Value 10/31/2021 | Ending Account Value 4/30/2022 | Expenses Paid During Period | |
| Based on Actual Fund Return | |||
| Explorer Fund | |||
| Investor Shares | $1,000.00 | $810.30 | $2.02 |
| Admiral™ Shares | 1,000.00 | 810.80 | 1.53 |
| Based on Hypothetical 5% Yearly Return | |||
| Explorer Fund | |||
| Investor Shares | $1,000.00 | $1,022.56 | $2.26 |
| Admiral Shares | 1,000.00 | 1,023.11 | 1.71 |
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 0.45% for Investor Shares and 0.34% 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 (181/365).
2
Explorer Fund
Fund Allocation
As of April 30, 2022
| Communication Services | 3.1% |
| Consumer Discretionary | 11.5 |
| Consumer Staples | 3.4 |
| Energy | 2.3 |
| Financials | 9.0 |
| Health Care | 20.0 |
| Industrials | 20.4 |
| Information Technology | 21.5 |
| Materials | 2.9 |
| Real Estate | 3.8 |
| Utilities | 0.8 |
| Other | 1.3 |
The table reflects the fund’s investments, except for short-term investments and derivatives. Sector categories are based on the Global Industry Classification Standard (“GICS”), except for the “Other” category (if applicable), which includes securities that have not been provided a GICS classification as of the effective reporting period.
Global Industry Classification Standard (“GICS”) was developed by and is the exclusive property and a service mark of MSCI Inc. (“MSCI”) and Standard and Poor’s, a division of McGraw-Hill Companies, Inc. (“S&P”), and is licensed for use by Vanguard. Neither MSCI, S&P nor any third party involved in making or compiling the GICS or any GICS classification makes any express or implied warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any such standard or classification. Without limiting any of the foregoing, in no event shall MSCI, S&P, any of its affiliates or any third party involved in making or compiling the GICS or any GICS classification have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.
3
Explorer Fund
Financial Statements (unaudited)
Schedule of Investments
As of April 30, 2022
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at www.sec.gov.
| Shares | Market Value• ($000) | ||
| Common Stocks (95.5%) | |||
| Communication Services (3.0%) | |||
| * | Live Nation Entertainment Inc. | 994,380 | 104,291 |
| New York Times Co. Class A | 2,191,142 | 83,964 | |
| * | Ziff Davis Inc. | 934,316 | 82,556 |
| * | Cinemark Holdings Inc. | 4,231,782 | 67,116 |
| * | ZipRecruiter Inc. Class A | 1,700,573 | 38,280 |
| * | Take-Two Interactive Software Inc. | 317,144 | 37,902 |
| Warner Music Group Corp. Class A | 1,010,748 | 30,090 | |
| Electronic Arts Inc. | 236,116 | 27,873 | |
| * | Cargurus Inc. | 768,129 | 25,102 |
| * | Match Group Inc. | 262,641 | 20,788 |
| * | Cardlytics Inc. | 594,524 | 20,291 |
| * | Yelp Inc. Class A | 549,953 | 17,890 |
| * | Iridium Communications Inc. | 333,589 | 11,912 |
| *,1 | Starry Group Holdings Inc. | 963,916 | 8,184 |
| * | Playtika Holding Corp. | 444,723 | 7,818 |
| * | TechTarget Inc. | 64,673 | 4,353 |
| * | Clear Channel Outdoor Holdings Inc. | 1,573,511 | 3,871 |
| Nexstar Media Group Inc. Class A | 22,914 | 3,630 | |
| Sinclair Broadcast Group Inc. Class A | 137,403 | 3,056 | |
| * | Vimeo Inc. | 241,964 | 2,466 |
| *,1 | Skillz Inc. Class A | 1,119,801 | 2,296 |
| Cogent Communications Holdings Inc. | 35,207 | 2,060 | |
| * | Globalstar Inc. | 581,659 | 675 |
| * | EverQuote Inc. Class A | 47,437 | 658 |
| * | IDT Corp. Class B | 19,546 | 518 |
| * | Integral Ad Science Holding Corp. | 35,375 | 418 |
| 608,058 | |||
| Consumer Discretionary (11.0%) | |||
| * | Burlington Stores Inc. | 669,839 | 136,352 |
| * | Under Armour Inc. Class C | 7,151,853 | 101,485 |
| Steven Madden Ltd. | 2,430,672 | 99,803 | |
| * | frontdoor Inc. | 3,175,037 | 98,140 |
| * | Skechers USA Inc. Class A | 2,289,110 | 87,673 |
| * | Skyline Champion Corp. | 1,687,143 | 86,112 |
| Shares | Market Value• ($000) | ||
| * | Sally Beauty Holdings Inc. | 4,979,371 | 75,288 |
| * | Five Below Inc. | 465,912 | 73,195 |
| Levi Strauss & Co. Class A | 3,878,914 | 70,247 | |
| * | Leslie's Inc. | 3,098,616 | 60,733 |
| Wingstop Inc. | 642,773 | 58,981 | |
| Hanesbrands Inc. | 4,380,530 | 58,086 | |
| Carter's Inc. | 667,042 | 56,192 | |
| * | Grand Canyon Education Inc. | 480,852 | 46,147 |
| Acushnet Holdings Corp. | 1,118,639 | 45,573 | |
| * | Dollar Tree Inc. | 271,749 | 44,146 |
| * | Ulta Beauty Inc. | 109,644 | 43,507 |
| * | Farfetch Ltd. Class A | 3,634,853 | 40,710 |
| *,1 | Petco Health & Wellness Co. Inc. Class A | 2,082,802 | 40,115 |
| * | Floor & Decor Holdings Inc. Class A | 486,711 | 38,801 |
| * | Revolve Group Inc. | 844,646 | 35,695 |
| * | Callaway Golf Co. | 1,626,472 | 35,685 |
| * | Etsy Inc. | 352,305 | 32,831 |
| Papa John's International Inc. | 358,454 | 32,637 | |
| * | National Vision Holdings Inc. | 855,968 | 32,227 |
| Pool Corp. | 77,668 | 31,473 | |
| * | Deckers Outdoor Corp. | 109,762 | 29,169 |
| Shutterstock Inc. | 355,580 | 26,925 | |
| Domino's Pizza Inc. | 69,582 | 23,519 | |
| Churchill Downs Inc. | 114,034 | 23,142 | |
| * | Bright Horizons Family Solutions Inc. | 191,490 | 21,876 |
| * | Fox Factory Holding Corp. | 236,229 | 19,342 |
| Boyd Gaming Corp. | 319,271 | 19,341 | |
| *,1 | Sportradar Holding AG Class A | 1,302,587 | 16,334 |
| Williams-Sonoma Inc. | 123,852 | 16,160 | |
| * | 2U Inc. | 1,613,064 | 16,098 |
| * | Canada Goose Holdings Inc. | 739,138 | 16,091 |
| Tapestry Inc. | 483,074 | 15,903 | |
| Texas Roadhouse Inc. Class A | 193,016 | 15,891 | |
| Garmin Ltd. | 143,448 | 15,742 | |
| * | Six Flags Entertainment Corp. | 410,692 | 15,717 |
| * | Chegg Inc. | 622,939 | 15,412 |
| Polaris Inc. | 152,984 | 14,524 |
4
Explorer Fund
| Shares | Market Value• ($000) | ||
| * | SeaWorld Entertainment Inc. | 212,479 | 14,330 |
| *,1 | Chewy Inc. Class A | 455,129 | 13,226 |
| Signet Jewelers Ltd. | 186,120 | 13,066 | |
| * | Dave & Buster's Entertainment Inc. | 261,536 | 11,900 |
| * | Tri Pointe Homes Inc. | 562,345 | 11,624 |
| * | Coursera Inc. | 617,730 | 11,620 |
| Toll Brothers Inc. | 247,074 | 11,457 | |
| Tractor Supply Co. | 51,908 | 10,457 | |
| * | Crocs Inc. | 150,674 | 10,009 |
| *,1 | Arrival SA | 4,385,123 | 8,463 |
| * | Boot Barn Holdings Inc. | 92,452 | 8,326 |
| Tempur Sealy International Inc. | 302,723 | 8,207 | |
| Buckle Inc. | 257,982 | 8,013 | |
| * | Cavco Industries Inc. | 32,667 | 7,718 |
| * | Scientific Games Corp. Class A | 128,761 | 7,218 |
| Columbia Sportswear Co. | 87,639 | 7,200 | |
| Caleres Inc. | 311,437 | 7,141 | |
| PulteGroup Inc. | 169,565 | 7,081 | |
| *,1 | GameStop Corp. Class A | 54,406 | 6,805 |
| Dine Brands Global Inc. | 92,115 | 6,604 | |
| * | Brinker International Inc. | 179,270 | 6,513 |
| * | Everi Holdings Inc. | 362,188 | 6,288 |
| * | Overstock.com Inc. | 171,157 | 5,744 |
| * | Stride Inc. | 131,964 | 5,186 |
| Winnebago Industries Inc. | 96,554 | 5,135 | |
| * | WW International Inc. | 523,431 | 5,124 |
| Patrick Industries Inc. | 80,525 | 5,013 | |
| Oxford Industries Inc. | 55,871 | 5,006 | |
| * | Master Craft Boat Holdings Inc. | 194,458 | 4,681 |
| Shoe Carnival Inc. | 151,190 | 4,564 | |
| * | Abercrombie & Fitch Co. Class A | 127,582 | 4,412 |
| * | MarineMax Inc. | 106,970 | 4,377 |
| * | Asbury Automotive Group Inc. | 23,437 | 4,306 |
| Wendy's Co. | 206,442 | 4,079 | |
| * | Perdoceo Education Corp. | 354,118 | 3,959 |
| Red Rock Resorts Inc. Class A | 87,408 | 3,843 | |
| * | Children's Place Inc. | 82,603 | 3,827 |
| Hibbett Inc. | 88,082 | 3,803 | |
| * | American Axle & Manufacturing Holdings Inc. | 570,001 | 3,773 |
| Ruth's Hospitality Group Inc. | 172,021 | 3,607 | |
| Brunswick Corp. | 47,007 | 3,554 | |
| * | XPEL Inc. | 78,695 | 3,405 |
| * | Citi Trends Inc. | 111,654 | 3,123 |
| * | Dorman Products Inc. | 30,604 | 3,021 |
| * | Gentherm Inc. | 44,069 | 2,971 |
| Carriage Services Inc. Class A | 66,995 | 2,873 | |
| * | RH | 7,099 | 2,386 |
| Standard Motor Products Inc. | 49,905 | 2,130 | |
| Century Communities Inc. | 40,327 | 2,126 | |
| * | YETI Holdings Inc. | 41,881 | 2,047 |
| Shares | Market Value• ($000) | ||
| Academy Sports & Outdoors Inc. | 54,150 | 2,023 | |
| * | Quotient Technology Inc. | 367,054 | 1,949 |
| * | Golden Entertainment Inc. | 39,284 | 1,884 |
| * | Stitch Fix Inc. Class A | 181,378 | 1,723 |
| * | Funko Inc. Class A | 99,480 | 1,621 |
| * | Party City Holdco Inc. | 513,716 | 1,587 |
| Travel + Leisure Co. | 28,411 | 1,576 | |
| * | Visteon Corp. | 13,323 | 1,395 |
| * | CarParts.com Inc. | 214,783 | 1,287 |
| Murphy USA Inc. | 5,332 | 1,246 | |
| * | Chico's FAS Inc. | 227,000 | 1,203 |
| *,1 | Workhorse Group Inc. | 378,489 | 1,139 |
| * | Mister Car Wash Inc. | 78,834 | 1,135 |
| * | LL Flooring Holdings Inc. | 77,571 | 1,071 |
| Vail Resorts Inc. | 3,554 | 903 | |
| *,1 | Torrid Holdings Inc. | 151,156 | 886 |
| * | Vivint Smart Home Inc. | 152,159 | 797 |
| * | Neogames SA | 59,624 | 779 |
| Aaron's Co. Inc. | 37,036 | 760 | |
| * | Red Robin Gourmet Burgers Inc. | 39,006 | 515 |
| * | Malibu Boats Inc. Class A | 9,402 | 473 |
| * | Kirkland's Inc. | 62,036 | 449 |
| 2,220,762 | |||
| Consumer Staples (3.2%) | |||
| * | Performance Food Group Co. | 3,495,105 | 172,134 |
| * | BJ's Wholesale Club Holdings Inc. | 1,654,886 | 106,492 |
| Nu Skin Enterprises Inc. Class A | 1,845,776 | 78,704 | |
| * | Nomad Foods Ltd. | 3,632,511 | 67,056 |
| MGP Ingredients Inc. | 604,651 | 55,223 | |
| Casey's General Stores Inc. | 266,643 | 53,675 | |
| * | BellRing Brands Inc. | 827,775 | 17,739 |
| * | Celsius Holdings Inc. | 338,250 | 17,589 |
| Coca-Cola Consolidated Inc. | 38,427 | 16,966 | |
| * | Darling Ingredients Inc. | 181,689 | 13,334 |
| Medifast Inc. | 50,241 | 8,961 | |
| * | Herbalife Nutrition Ltd. | 307,058 | 8,162 |
| Vector Group Ltd. | 565,968 | 7,199 | |
| * | Pilgrim's Pride Corp. | 237,776 | 6,741 |
| * | United Natural Foods Inc. | 151,717 | 6,513 |
| John B Sanfilippo & Son Inc. | 67,616 | 5,250 | |
| * | USANA Health Sciences Inc. | 43,288 | 3,318 |
| Lamb Weston Holdings Inc. | 26,121 | 1,727 | |
| Albertsons Cos. Inc. Class A | 48,316 | 1,511 | |
| * | elf Beauty Inc. | 60,110 | 1,462 |
| Turning Point Brands Inc. | 42,881 | 1,346 | |
| 651,102 | |||
| Energy (2.3%) | |||
| * | Whiting Petroleum Corp. | 1,288,725 | 94,141 |
| Magnolia Oil & Gas Corp. Class A | 3,676,651 | 85,445 | |
| Viper Energy Partners LP | 2,138,415 | 61,437 | |
| ChampionX Corp. | 1,872,698 | 39,514 | |
5
Explorer Fund
| Shares | Market Value• ($000) | ||
| * | Southwestern Energy Co. | 3,970,615 | 29,780 |
| Coterra Energy Inc. | 884,713 | 25,471 | |
| Cactus Inc. Class A | 397,250 | 19,835 | |
| Pioneer Natural Resources Co. | 67,346 | 15,656 | |
| Diamondback Energy Inc. | 114,620 | 14,468 | |
| Texas Pacific Land Corp. | 10,302 | 14,079 | |
| * | Kosmos Energy Ltd. | 1,451,245 | 9,810 |
| Ovintiv Inc. (XNYS) | 175,630 | 8,991 | |
| * | Talos Energy Inc. | 470,093 | 8,542 |
| Matador Resources Co. | 101,347 | 4,948 | |
| * | Denbury Inc. | 74,711 | 4,780 |
| * | Callon Petroleum Co. | 91,266 | 4,679 |
| * | Laredo Petroleum Inc. | 61,065 | 4,348 |
| * | Antero Resources Corp. | 68,616 | 2,415 |
| Kinetik Holdings Inc. Class A | 27,667 | 1,969 | |
| * | NexTier Oilfield Solutions Inc. | 152,546 | 1,683 |
| * | Earthstone Energy Inc. Class A | 111,894 | 1,509 |
| * | Par Pacific Holdings Inc. | 41,339 | 606 |
| 454,106 | |||
| Financials (8.6%) | |||
| LPL Financial Holdings Inc. | 767,784 | 144,244 | |
| Synovus Financial Corp. | 2,810,385 | 116,743 | |
| Assurant Inc. | 609,293 | 110,818 | |
| Assured Guaranty Ltd. | 1,979,361 | 109,162 | |
| Western Alliance Bancorp | 1,432,153 | 109,001 | |
| American Financial Group Inc. | 718,731 | 99,530 | |
| Webster Financial Corp. | 1,961,800 | 98,070 | |
| Voya Financial Inc. | 1,487,747 | 93,936 | |
| Prosperity Bancshares Inc. | 1,247,226 | 81,544 | |
| Hannon Armstrong Sustainable Infrastructure Capital Inc. | 1,964,532 | 78,562 | |
| Valley National Bancorp | 6,164,226 | 73,847 | |
| Tradeweb Markets Inc. Class A | 1,015,257 | 72,276 | |
| Houlihan Lokey Inc. Class A | 666,420 | 55,506 | |
| * | SVB Financial Group | 110,265 | 53,770 |
| MGIC Investment Corp. | 3,158,834 | 41,254 | |
| * | Silvergate Capital Corp. Class A | 343,808 | 40,212 |
| * | PRA Group Inc. | 927,833 | 38,997 |
| FirstCash Holdings Inc. | 427,560 | 34,111 | |
| MarketAxess Holdings Inc. | 122,223 | 32,219 | |
| 1 | WisdomTree Investments Inc. | 5,107,013 | 29,774 |
| * | Palomar Holdings Inc. | 460,229 | 25,059 |
| * | Ryan Specialty Group Holdings Inc. Class A | 606,654 | 22,440 |
| * | PROG Holdings Inc. | 699,097 | 18,505 |
| Kinsale Capital Group Inc. | 81,196 | 18,000 | |
| Everest Re Group Ltd. | 64,317 | 17,668 | |
| Bank OZK | 454,598 | 17,466 | |
| FactSet Research Systems Inc. | 41,845 | 16,884 | |
| Shares | Market Value• ($000) | ||
| SLM Corp. | 987,740 | 16,525 | |
| Piper Sandler Cos. | 108,608 | 12,488 | |
| Moelis & Co. Class A | 255,253 | 11,297 | |
| Virtus Investment Partners Inc. | 60,974 | 10,802 | |
| Walker & Dunlop Inc. | 80,780 | 9,674 | |
| *,1 | Upstart Holdings Inc. | 90,055 | 6,756 |
| Cowen Inc. Class A | 210,668 | 4,814 | |
| * | Donnelley Financial Solutions Inc. | 154,499 | 4,522 |
| * | Focus Financial Partners Inc. Class A | 92,342 | 3,643 |
| StepStone Group Inc. Class A | 113,449 | 2,907 | |
| Pacific Premier Bancorp Inc. | 79,395 | 2,490 | |
| * | Open Lending Corp. Class A | 164,967 | 2,250 |
| Ares Management Corp. Class A | 33,558 | 2,222 | |
| Hamilton Lane Inc. Class A | 23,878 | 1,638 | |
| RLI Corp. | 11,414 | 1,310 | |
| * | LendingTree Inc. | 16,036 | 1,274 |
| PJT Partners Inc. Class A | 14,603 | 964 | |
| Universal Insurance Holdings Inc. | 69,985 | 879 | |
| Cohen & Steers Inc. | 11,210 | 871 | |
| * | Texas Capital Bancshares Inc. | 11,520 | 592 |
| * | Credit Acceptance Corp. | 1,091 | 559 |
| * | Atlanticus Holdings Corp. | 12,544 | 540 |
| 1,748,615 | |||
| Health Care (19.1%) | |||
| * | ICON plc | 841,885 | 190,443 |
| * | Acadia Healthcare Co. Inc. | 2,141,965 | 145,397 |
| * | Molina Healthcare Inc. | 388,714 | 121,842 |
| * | LHC Group Inc. | 634,765 | 105,276 |
| * | Omnicell Inc. | 894,630 | 97,667 |
| * | Insulet Corp. | 402,427 | 96,176 |
| * | ABIOMED Inc. | 327,845 | 93,954 |
| * | Charles River Laboratories International Inc. | 373,861 | 90,291 |
| * | Ultragenyx Pharmaceutical Inc. | 1,259,828 | 89,057 |
| STERIS plc | 394,101 | 88,298 | |
| Bio-Techne Corp. | 228,193 | 86,643 | |
| * | ICU Medical Inc. | 397,508 | 85,063 |
| * | Hologic Inc. | 1,105,995 | 79,621 |
| * | Haemonetics Corp. | 1,517,666 | 76,900 |
| * | Globus Medical Inc. Class A | 1,149,508 | 76,120 |
| * | Catalent Inc. | 826,523 | 74,850 |
| * | Avantor Inc. | 2,334,768 | 74,432 |
| * | HealthEquity Inc. | 1,188,927 | 74,094 |
| * | Glaukos Corp. | 1,558,177 | 73,686 |
| * | Amedisys Inc. | 557,769 | 71,199 |
| * | Merit Medical Systems Inc. | 1,084,169 | 67,229 |
| * | Horizon Therapeutics plc | 669,904 | 66,026 |
| * | Repligen Corp. | 371,568 | 58,425 |
| * | Myriad Genetics Inc. | 2,735,640 | 56,081 |
| * | Penumbra Inc. | 321,791 | 55,528 |
| * | Exelixis Inc. | 2,471,158 | 55,206 |
| * | Quidel Corp. | 499,030 | 50,212 |
6
Explorer Fund
| Shares | Market Value• ($000) | ||
| * | Tandem Diabetes Care Inc. | 495,001 | 47,758 |
| * | Veracyte Inc. | 2,247,143 | 45,999 |
| * | Maravai LifeSciences Holdings Inc. Class A | 1,454,924 | 44,710 |
| * | Integra LifeSciences Holdings Corp. | 690,369 | 42,223 |
| * | Pacira BioSciences Inc. | 557,637 | 41,583 |
| * | Ascendis Pharma A/S ADR | 449,286 | 41,006 |
| * | IDEXX Laboratories Inc. | 93,215 | 40,127 |
| * | Syneos Health Inc. | 544,833 | 39,822 |
| * | Henry Schein Inc. | 486,489 | 39,454 |
| * | DexCom Inc. | 94,898 | 38,773 |
| * | Apellis Pharmaceuticals Inc. | 857,555 | 37,329 |
| ResMed Inc. | 171,664 | 34,328 | |
| * | Mettler-Toledo International Inc. | 25,875 | 33,056 |
| * | Sotera Health Co. | 1,390,224 | 28,333 |
| * | Biohaven Pharmaceutical Holding Co. Ltd. | 317,501 | 28,312 |
| * | iRhythm Technologies Inc. | 218,034 | 26,899 |
| * | Halozyme Therapeutics Inc. | 666,081 | 26,577 |
| * | CareDx Inc. | 830,604 | 25,284 |
| * | AMN Healthcare Services Inc. | 250,338 | 24,471 |
| * | Nevro Corp. | 390,700 | 24,102 |
| * | Turning Point Therapeutics Inc. | 792,341 | 23,327 |
| Bruker Corp. | 394,652 | 22,689 | |
| * | Supernus Pharmaceuticals Inc. | 810,645 | 22,617 |
| * | Neurocrine Biosciences Inc. | 250,740 | 22,574 |
| * | NuVasive Inc. | 432,899 | 22,268 |
| Chemed Corp. | 45,149 | 22,186 | |
| * | Stevanato Group SPA | 1,316,623 | 21,066 |
| * | Sarepta Therapeutics Inc. | 285,018 | 20,612 |
| Azenta Inc. | 271,565 | 20,357 | |
| * | MEDNAX Inc. | 1,077,547 | 19,956 |
| * | Kymera Therapeutics Inc. | 634,402 | 19,888 |
| * | Neogen Corp. | 729,304 | 19,254 |
| * | Certara Inc. | 1,046,896 | 19,211 |
| * | Ligand Pharmaceuticals Inc. | 203,738 | 18,919 |
| * | REVOLUTION Medicines Inc. | 927,115 | 18,514 |
| * | Inspire Medical Systems Inc. | 81,567 | 16,783 |
| * | Definitive Healthcare Corp. Class A | 699,500 | 16,543 |
| * | Ionis Pharmaceuticals Inc. | 446,428 | 16,411 |
| Cooper Cos. Inc. | 43,209 | 15,600 | |
| * | Medpace Holdings Inc. | 116,311 | 15,536 |
| * | Doximity Inc. Class A | 388,760 | 15,500 |
| * | Sage Therapeutics Inc. | 478,803 | 15,092 |
| * | C4 Therapeutics Inc. | 1,720,462 | 14,744 |
| * | Mirati Therapeutics Inc. | 238,314 | 14,725 |
| * | SpringWorks Therapeutics Inc. | 322,271 | 13,829 |
| * | Relay Therapeutics Inc. | 576,091 | 13,728 |
| * | Arvinas Inc. | 237,219 | 13,040 |
| Shares | Market Value• ($000) | ||
| * | Masimo Corp. | 111,783 | 12,628 |
| * | STAAR Surgical Co. | 211,256 | 12,061 |
| * | Agios Pharmaceuticals Inc. | 537,641 | 11,812 |
| * | Axogen Inc. | 1,577,807 | 11,423 |
| * | Alkermes plc | 394,825 | 11,391 |
| * | Illumina Inc. | 38,391 | 11,389 |
| * | Y-mAbs Therapeutics Inc. | 1,267,284 | 10,645 |
| * | Shockwave Medical Inc. | 68,922 | 10,416 |
| * | Heron Therapeutics Inc. | 2,110,036 | 9,537 |
| * | Veeva Systems Inc. Class A | 48,445 | 8,815 |
| * | Tenet Healthcare Corp. | 115,643 | 8,385 |
| Select Medical Holdings Corp. | 339,796 | 7,683 | |
| * | Schrodinger Inc. | 300,396 | 7,426 |
| * | ACADIA Pharmaceuticals Inc. | 401,686 | 7,407 |
| * | FibroGen Inc. | 711,913 | 6,621 |
| * | Novavax Inc. | 143,800 | 6,481 |
| Ensign Group Inc. | 80,101 | 6,435 | |
| * | Privia Health Group Inc. | 286,135 | 6,292 |
| * | Travere Thrapeutics Inc. | 248,714 | 6,250 |
| *,1 | Clovis Oncology Inc. | 3,017,158 | 6,034 |
| *,1 | Esperion Therapeutics Inc. | 1,056,361 | 6,000 |
| Encompass Health Corp. | 86,469 | 5,952 | |
| * | ImmunoGen Inc. | 1,135,017 | 5,482 |
| * | Theravance Biopharma Inc. | 553,403 | 5,340 |
| * | Community Health Systems Inc. | 695,939 | 5,338 |
| *,1 | Intercept Pharmaceuticals Inc. | 331,587 | 5,209 |
| * | 10X Genomics Inc. Class A | 108,896 | 5,201 |
| * | AtriCure Inc. | 97,699 | 5,073 |
| * | Agenus Inc. | 2,487,206 | 4,601 |
| * | PTC Therapeutics Inc. | 117,544 | 4,153 |
| * | Deciphera Pharmaceuticals Inc. | 387,242 | 3,919 |
| * | Option Care Health Inc. | 129,218 | 3,861 |
| * | Editas Medicine Inc. Class A | 288,730 | 3,823 |
| * | Enanta Pharmaceuticals Inc. | 56,521 | 3,640 |
| * | Seres Therapeutics Inc. | 752,376 | 3,559 |
| * | Vir Biotechnology Inc. | 169,765 | 3,455 |
| * | Karyopharm Therapeutics Inc. | 565,925 | 3,452 |
| * | Inogen Inc. | 132,913 | 3,360 |
| * | Voyager Therapeutics Inc. | 457,063 | 3,350 |
| US Physical Therapy Inc. | 31,914 | 3,312 | |
| * | MacroGenics Inc. | 431,583 | 3,086 |
| * | Figs Inc. Class A | 189,063 | 2,961 |
| * | Codexis Inc. | 242,769 | 2,920 |
| * | Multiplan Corp. | 643,994 | 2,853 |
| * | Atara Biotherapeutics Inc. | 433,448 | 2,757 |
| * | CorVel Corp. | 16,998 | 2,636 |
| * | Sangamo Therapeutics Inc. | 627,684 | 2,605 |
| * | Ovid therapeutics Inc. | 940,320 | 2,586 |
| * | Joint Corp. | 81,335 | 2,482 |
| * | ModivCare Inc. | 23,484 | 2,442 |
| * | Allscripts Healthcare Solutions Inc. | 115,239 | 2,381 |
7
Explorer Fund
| Shares | Market Value• ($000) | ||
| * | Affimed NV | 592,606 | 2,228 |
| * | Alector Inc. | 225,106 | 2,161 |
| * | LivaNova plc | 27,593 | 2,115 |
| * | Fortress Biotech Inc. | 1,732,308 | 1,906 |
| *,1 | Akebia Therapeutics Inc. | 4,574,391 | 1,899 |
| * | Reata Pharmaceuticals Inc. Class A | 73,952 | 1,877 |
| * | Meridian Bioscience Inc. | 73,082 | 1,870 |
| * | Puma Biotechnology Inc. | 777,390 | 1,835 |
| * | CytomX Therapeutics Inc. | 1,067,482 | 1,825 |
| *,1 | Senseonics Holdings Inc. | 1,194,292 | 1,672 |
| * | Cross Country Healthcare Inc. | 88,960 | 1,667 |
| * | Beam Therapeutics Inc. | 37,652 | 1,413 |
| * | Pennant Group Inc. | 85,464 | 1,401 |
| * | REGENXBIO Inc. | 50,429 | 1,400 |
| * | Natera Inc. | 37,823 | 1,328 |
| * | Organogenesis Holdings Inc. Class A | 184,461 | 1,188 |
| * | Aerie Pharmaceuticals Inc. | 160,967 | 1,144 |
| * | Prothena Corp. plc | 37,827 | 1,103 |
| * | Intellia Therapeutics Inc. | 22,290 | 1,093 |
| * | RadNet Inc. | 54,879 | 1,070 |
| * | Vanda Pharmaceuticals Inc. | 100,970 | 1,002 |
| West Pharmaceutical Services Inc. | 3,141 | 990 | |
| * | Radius Health Inc. | 143,225 | 980 |
| * | Amneal Pharmaceuticals Inc. | 244,539 | 944 |
| *,1 | Omeros Corp. | 266,232 | 924 |
| * | Kiniksa Pharmaceuticals Ltd. Class A | 97,334 | 908 |
| * | Infinity Pharmaceuticals Inc. | 1,121,598 | 885 |
| * | ViewRay Inc. | 302,621 | 808 |
| *,1 | Sesen Bio Inc. | 2,002,873 | 761 |
| Addus HomeCare Corp. | 8,612 | 726 | |
| * | Molecular Templates Inc. | 424,818 | 722 |
| * | NextCure Inc. | 171,519 | 714 |
| * | Allakos Inc. | 187,807 | 708 |
| * | Atossa Therapeutics Inc. | 698,520 | 705 |
| * | Lexicon Pharmaceuticals Inc. | 382,691 | 693 |
| * | Precision BioSciences Inc. | 342,301 | 681 |
| * | Endo International plc | 337,491 | 675 |
| * | Mustang Bio Inc. | 864,161 | 644 |
| * | Minerva Neurosciences Inc. | 1,241,858 | 633 |
| * | Bridgebio Pharma Inc. | 78,800 | 632 |
| * | Co-Diagnostics Inc. | 143,082 | 630 |
| * | Bluebird Bio Inc. | 173,134 | 628 |
| * | MEI Pharma Inc. | 1,232,433 | 606 |
| *,1 | Alaunos Therapeutics Inc. | 1,105,848 | 588 |
| * | Evolent Health Inc. Class A | 21,347 | 587 |
| * | Atea Pharmaceuticals Inc. | 98,556 | 579 |
| *,1 | vTv Therapeutics Inc. Class A | 820,390 | 566 |
| *,1 | Talis Biomedical Corp. | 536,576 | 563 |
| * | Personalis Inc. | 96,118 | 538 |
| * | Sutro Biopharma Inc. | 84,721 | 509 |
| Shares | Market Value• ($000) | ||
| * | Rapt Therapeutics Inc. | 33,154 | 502 |
| * | Cortexyme Inc. | 131,504 | 481 |
| * | Tabula Rasa HealthCare Inc. | 127,712 | 430 |
| * | ChemoCentryx Inc. | 22,450 | 414 |
| * | Retractable Technologies Inc. | 107,784 | 413 |
| * | Selecta Biosciences Inc. | 528,838 | 405 |
| * | Tactile Systems Technology Inc. | 22,060 | 372 |
| *,1 | PAVmed Inc. | 241,990 | 307 |
| * | Mersana Therapeutics Inc. | 84,339 | 293 |
| * | Athenex Inc. | 602,458 | 289 |
| * | Precigen Inc. | 216,409 | 288 |
| * | Aldeyra Therapeutics Inc. | 86,259 | 265 |
| * | Spero Therapeutics Inc. | 54,307 | 264 |
| * | Syros Pharmaceuticals Inc. | 236,590 | 199 |
| * | Cue Biopharma Inc. | 46,345 | 184 |
| 3,860,581 | |||
| Industrials (19.5%) | |||
| * | Middleby Corp. | 863,524 | 132,888 |
| * | Clean Harbors Inc. | 1,252,049 | 131,377 |
| * | TriNet Group Inc. | 1,399,532 | 124,138 |
| *,1 | Sterling Check Corp. | 4,537,281 | 117,879 |
| * | Builders FirstSource Inc. | 1,830,011 | 112,674 |
| * | Kirby Corp. | 1,717,482 | 111,980 |
| * | Mercury Systems Inc. | 1,879,996 | 104,885 |
| * | Fluor Corp. | 4,138,458 | 102,427 |
| * | Chart Industries Inc. | 605,772 | 102,266 |
| Spirit AeroSystems Holdings Inc. Class A | 2,400,634 | 100,923 | |
| Zurn Water Solutions Corp. | 3,140,046 | 98,032 | |
| * | AerCap Holdings NV | 2,016,302 | 94,181 |
| * | RBC Bearings Inc. | 519,572 | 87,470 |
| Science Applications International Corp. | 1,030,225 | 85,746 | |
| GATX Corp. | 826,822 | 85,485 | |
| Acuity Brands Inc. | 489,890 | 84,496 | |
| John Bean Technologies Corp. | 685,000 | 80,755 | |
| Flowserve Corp. | 2,467,747 | 80,720 | |
| Rush Enterprises Inc. Class A | 1,555,869 | 79,163 | |
| * | Sensata Technologies Holding plc | 1,741,483 | 79,081 |
| * | Trex Co. Inc. | 1,316,631 | 76,615 |
| Fortune Brands Home & Security Inc. | 1,002,432 | 71,423 | |
| Ritchie Bros Auctioneers Inc. | 1,270,832 | 70,010 | |
| Matson Inc. | 798,432 | 68,681 | |
| 2 | Enerpac Tool Group Corp. Class A | 3,166,958 | 63,592 |
| Kennametal Inc. | 2,363,286 | 60,807 | |
| IDEX Corp. | 308,180 | 58,499 | |
| Regal Rexnord Corp. | 459,346 | 58,447 | |
| CH Robinson Worldwide Inc. | 526,272 | 55,864 | |
| * | WillScot Mobile Mini Holdings Corp. | 1,565,700 | 54,956 |
| * | Generac Holdings Inc. | 241,483 | 52,977 |
| * | Masonite International Corp. | 645,721 | 50,056 |
| Forward Air Corp. | 500,501 | 48,534 | |
| * | API Group Corp. | 2,579,955 | 47,884 |
8
Explorer Fund
| Shares | Market Value• ($000) | ||
| * | ACV Auctions Inc. Class A | 3,296,959 | 44,014 |
| Tennant Co. | 654,223 | 42,250 | |
| * | Gibraltar Industries Inc. | 1,102,820 | 41,731 |
| Verisk Analytics Inc. Class A | 197,505 | 40,301 | |
| * | XPO Logistics Inc. | 671,745 | 36,133 |
| * | Axon Enterprise Inc. | 303,715 | 34,077 |
| * | GXO Logistics Inc. | 571,087 | 33,803 |
| * | SiteOne Landscape Supply Inc. | 232,356 | 32,769 |
| HEICO Corp. Class A | 275,721 | 32,160 | |
| * | Kornit Digital Ltd. | 457,222 | 30,405 |
| Robert Half International Inc. | 300,294 | 29,522 | |
| * | United Rentals Inc. | 88,430 | 27,990 |
| * | Alight Inc. Class A | 3,177,710 | 27,297 |
| Vertiv Holdings Co. Class A | 2,039,279 | 25,552 | |
| * | Saia Inc. | 118,958 | 24,501 |
| * | Atkore Inc. | 254,618 | 24,469 |
| UFP Industries Inc. | 311,760 | 24,121 | |
| Allison Transmission Holdings Inc. | 604,542 | 22,634 | |
| Rockwell Automation Inc. | 87,469 | 22,101 | |
| ABM Industries Inc. | 450,620 | 21,751 | |
| * | AZEK Co. Inc. Class A | 1,000,959 | 21,260 |
| * | Cimpress plc | 415,225 | 20,973 |
| Boise Cascade Co. | 266,484 | 20,141 | |
| * | CoStar Group Inc. | 299,781 | 19,072 |
| * | Kratos Defense & Security Solutions Inc. | 1,246,201 | 18,905 |
| AGCO Corp. | 145,360 | 18,519 | |
| * | Ameresco Inc. Class A | 360,609 | 18,189 |
| * | GMS Inc. | 373,764 | 17,922 |
| Terex Corp. | 510,296 | 17,350 | |
| JB Hunt Transport Services Inc. | 97,176 | 16,602 | |
| GrafTech International Ltd. | 1,799,460 | 16,339 | |
| Tetra Tech Inc. | 115,531 | 16,091 | |
| Applied Industrial Technologies Inc. | 151,903 | 15,903 | |
| Toro Co. | 195,285 | 15,648 | |
| * | Rocket Lab USA Inc. | 2,096,359 | 15,471 |
| AeroVironment Inc. | 177,096 | 14,224 | |
| Woodward Inc. | 126,128 | 13,935 | |
| * | Shoals Technologies Group Inc. Class A | 1,341,023 | 13,383 |
| * | ASGN Inc. | 116,568 | 13,225 |
| EMCOR Group Inc. | 123,360 | 13,135 | |
| Booz Allen Hamilton Holding Corp. Class A | 154,976 | 12,651 | |
| Lincoln Electric Holdings Inc. | 79,116 | 10,659 | |
| Simpson Manufacturing Co. Inc. | 100,208 | 10,389 | |
| Heartland Express Inc. | 705,913 | 9,742 | |
| Mueller Industries Inc. | 165,351 | 8,954 | |
| Watts Water Technologies Inc. Class A | 68,011 | 8,669 | |
| Landstar System Inc. | 51,972 | 8,050 | |
| Kforce Inc. | 99,998 | 7,005 | |
| Exponent Inc. | 71,892 | 6,888 | |
| Nordson Corp. | 31,874 | 6,875 | |
| Franklin Electric Co. Inc. | 82,258 | 5,753 |
| Shares | Market Value• ($000) | ||
| * | TrueBlue Inc. | 216,816 | 5,544 |
| Herc Holdings Inc. | 43,354 | 5,541 | |
| Allegion plc | 46,987 | 5,368 | |
| Donaldson Co. Inc. | 109,048 | 5,348 | |
| * | BlueLinx Holdings Inc. | 59,929 | 3,995 |
| Hillenbrand Inc. | 80,898 | 3,302 | |
| * | Huron Consulting Group Inc. | 59,206 | 3,066 |
| Textainer Group Holdings Ltd. | 89,050 | 2,987 | |
| * | Vicor Corp. | 43,383 | 2,626 |
| Graco Inc. | 37,609 | 2,332 | |
| * | MYR Group Inc. | 26,066 | 2,062 |
| * | Titan International Inc. | 132,766 | 1,840 |
| *,1 | Virgin Galactic Holdings Inc. | 212,086 | 1,588 |
| Pitney Bowes Inc. | 257,266 | 1,356 | |
| REV Group Inc. | 99,502 | 1,186 | |
| * | Yellow Corp. | 247,355 | 1,108 |
| * | First Advantage Corp. | 63,383 | 1,100 |
| H&E Equipment Services Inc. | 21,911 | 777 | |
| Helios Technologies Inc. | 10,079 | 677 | |
| BWX Technologies Inc. | 12,634 | 656 | |
| * | SPX Corp. | 14,331 | 600 |
| Brady Corp. Class A | 12,906 | 578 | |
| Argan Inc. | 15,021 | 552 | |
| *,1 | Eos Energy Enterprises Inc. | 168,225 | 357 |
| 3,938,960 | |||
| Information Technology (20.5%) | |||
| * | Five9 Inc. | 1,611,165 | 177,389 |
| * | New Relic Inc. | 2,162,239 | 136,805 |
| Power Integrations Inc. | 1,355,359 | 108,429 | |
| * | Varonis Systems Inc. Class B | 2,398,282 | 103,606 |
| * | Guidewire Software Inc. | 1,164,142 | 101,211 |
| * | GoDaddy Inc. Class A | 1,193,927 | 96,481 |
| * | ON Semiconductor Corp. | 1,834,486 | 95,595 |
| Concentrix Corp. | 606,866 | 95,569 | |
| * | Tower Semiconductor Ltd. | 1,959,616 | 94,649 |
| Monolithic Power Systems Inc. | 221,142 | 86,741 | |
| * | Zendesk Inc. | 689,921 | 84,198 |
| * | Momentive Global Inc. | 5,162,996 | 81,679 |
| * | Jamf Holding Corp. | 2,603,271 | 80,181 |
| * | Viavi Solutions Inc. | 5,550,949 | 79,601 |
| * | First Solar Inc. | 1,083,422 | 79,122 |
| * | Silicon Laboratories Inc. | 580,245 | 78,281 |
| * | Cadence Design Systems Inc. | 484,723 | 73,120 |
| * | Manhattan Associates Inc. | 554,805 | 72,430 |
| * | Smartsheet Inc. Class A | 1,377,949 | 66,596 |
| * | Cirrus Logic Inc. | 845,695 | 64,104 |
| Maximus Inc. | 863,330 | 62,919 | |
| *,1 | Informatica Inc. Class A | 2,986,777 | 58,123 |
| * | Teledyne Technologies Inc. | 132,410 | 57,142 |
| * | Enphase Energy Inc. | 325,614 | 52,554 |
| * | Trimble Inc. | 763,206 | 50,906 |
| * | Palo Alto Networks Inc. | 81,654 | 45,831 |
| *,1 | GLOBALFOUNDRIES Inc. | 875,064 | 45,757 |
| * | Envestnet Inc. | 564,755 | 44,977 |
9
Explorer Fund
| Shares | Market Value• ($000) | ||
| * | Semtech Corp. | 709,796 | 42,304 |
| * | Aspen Technology Inc. | 252,919 | 40,098 |
| * | Everbridge Inc. | 902,383 | 38,893 |
| * | PTC Inc. | 340,366 | 38,873 |
| * | Onto Innovation Inc. | 539,899 | 38,408 |
| * | 8x8 Inc. | 4,155,547 | 38,106 |
| * | Avalara Inc. | 496,910 | 37,800 |
| * | Fortinet Inc. | 130,156 | 37,616 |
| * | Mimecast Ltd. | 470,138 | 37,461 |
| * | Euronet Worldwide Inc. | 300,613 | 36,570 |
| * | HubSpot Inc. | 93,269 | 35,389 |
| * | CyberArk Software Ltd. | 224,703 | 35,310 |
| * | Dynatrace Inc. | 898,065 | 34,450 |
| * | Globant SA | 159,244 | 34,395 |
| * | WEX Inc. | 202,922 | 33,734 |
| * | MongoDB Inc. Class A | 94,047 | 33,380 |
| * | Tyler Technologies Inc. | 81,643 | 32,225 |
| * | Black Knight Inc. | 475,572 | 31,288 |
| * | N-Able Inc. | 3,121,497 | 31,215 |
| *,1 | Paycor HCM Inc. | 1,253,757 | 30,880 |
| Microchip Technology Inc. | 468,210 | 30,527 | |
| * | Rapid7 Inc. | 314,117 | 30,004 |
| Cognex Corp. | 440,031 | 29,759 | |
| * | Box Inc. Class A | 891,970 | 27,312 |
| * | Tenable Holdings Inc. | 493,766 | 27,271 |
| Jabil Inc. | 462,951 | 26,726 | |
| * | Fair Isaac Corp. | 69,796 | 26,070 |
| * | Wix.com Ltd. | 343,313 | 25,906 |
| * | Dropbox Inc. Class A | 1,182,939 | 25,729 |
| * | Ciena Corp. | 458,743 | 25,309 |
| *,1 | Monday.com Ltd. | 192,860 | 24,956 |
| * | Procore Technologies Inc. | 441,147 | 24,470 |
| * | Qualys Inc. | 174,109 | 23,728 |
| * | Nutanix Inc. Class A | 943,860 | 23,625 |
| National Instruments Corp. | 652,976 | 23,599 | |
| * | KnowBe4 Inc. Class A | 989,238 | 23,544 |
| * | Pure Storage Inc. Class A | 758,619 | 22,228 |
| * | Q2 Holdings Inc. | 410,449 | 21,233 |
| * | SentinelOne Inc. Class A | 635,300 | 21,136 |
| * | Anaplan Inc. | 314,402 | 20,433 |
| *,1 | Freshworks Inc. Class A | 1,106,800 | 20,111 |
| * | ANSYS Inc. | 69,172 | 19,070 |
| * | Allegro MicroSystems Inc. | 783,984 | 19,059 |
| * | Teradata Corp. | 454,925 | 18,811 |
| * | Sumo Logic Inc. | 1,985,179 | 18,621 |
| * | Mandiant Inc. | 834,271 | 18,337 |
| * | Lattice Semiconductor Corp. | 370,947 | 17,820 |
| A10 Networks Inc. | 1,241,398 | 17,727 | |
| * | Elastic NV | 230,902 | 17,581 |
| * | CommScope Holding Co. Inc. | 2,885,995 | 17,403 |
| * | Ambarella Inc. | 199,526 | 16,377 |
| * | Consensus Cloud Solutions Inc. | 297,889 | 15,705 |
| *,1 | Clear Secure Inc. Class A | 516,100 | 15,700 |
| TTEC Holdings Inc. | 202,881 | 14,975 | |
| * | MaxLinear Inc. | 299,859 | 14,354 |
| * | PROS Holdings Inc. | 509,666 | 14,235 |
| * | CommVault Systems Inc. | 233,057 | 14,216 |
| Shares | Market Value• ($000) | ||
| Belden Inc. | 272,868 | 14,088 | |
| * | Extreme Networks Inc. | 1,344,068 | 12,903 |
| * | Paylocity Holding Corp. | 65,901 | 12,497 |
| * | DocuSign Inc. Class A | 152,806 | 12,377 |
| * | Axcelis Technologies Inc. | 221,954 | 12,085 |
| * | Toast Inc. Class A | 616,373 | 11,483 |
| * | Coupa Software Inc. | 126,409 | 10,909 |
| * | Alarm.com Holdings Inc. | 176,547 | 10,783 |
| * | Atlassian Corp. plc Class A | 47,201 | 10,612 |
| * | Diodes Inc. | 142,496 | 10,406 |
| CDW Corp. | 63,762 | 10,405 | |
| CSG Systems International Inc. | 164,794 | 10,130 | |
| * | Domo Inc. Class B | 242,849 | 10,059 |
| * | RingCentral Inc. Class A | 113,841 | 9,659 |
| Kulicke & Soffa Industries Inc. | 206,097 | 9,565 | |
| * | Unity Software Inc. | 133,516 | 8,867 |
| * | Ultra Clean Holdings Inc. | 276,065 | 8,605 |
| * | EPAM Systems Inc. | 32,097 | 8,505 |
| * | Alpha & Omega Semiconductor Ltd. | 195,699 | 8,395 |
| * | Bill.Com Holdings Inc. | 47,566 | 8,120 |
| * | SMART Global Holdings Inc. | 350,636 | 7,945 |
| Amkor Technology Inc. | 409,906 | 7,710 | |
| * | Workiva Inc. Class A | 70,140 | 6,769 |
| * | Sprout Social Inc. Class A | 108,992 | 6,679 |
| * | Perficient Inc. | 60,211 | 5,986 |
| * | ChannelAdvisor Corp. | 382,754 | 5,554 |
| * | Sitime Corp. | 31,417 | 5,296 |
| * | Fabrinet | 52,652 | 5,170 |
| * | Agilysys Inc. | 137,951 | 5,078 |
| Entegris Inc. | 42,735 | 4,760 | |
| Hackett Group Inc. | 198,772 | 4,669 | |
| * | Yext Inc. | 792,404 | 4,588 |
| * | eGain Corp. | 440,680 | 4,561 |
| * | Ichor Holdings Ltd. | 148,537 | 4,324 |
| * | ePlus Inc. | 73,114 | 4,129 |
| * | Unisys Corp. | 289,663 | 4,116 |
| * | Eastman Kodak Co. | 772,655 | 3,995 |
| * | MACOM Technology Solutions Holdings Inc. Class H | 75,523 | 3,848 |
| * | Brightcove Inc. | 524,919 | 3,701 |
| * | ExlService Holdings Inc. | 26,665 | 3,630 |
| Bentley Systems Inc. Class B | 83,253 | 3,529 | |
| * | Upland Software Inc. | 233,415 | 3,483 |
| * | Cohu Inc. | 128,232 | 3,406 |
| * | Avaya Holdings Corp. | 365,179 | 3,378 |
| * | Zuora Inc. Class A | 260,253 | 3,167 |
| * | Super Micro Computer Inc. | 65,149 | 2,743 |
| * | International Money Express Inc. | 134,153 | 2,666 |
| * | Digital Turbine Inc. | 70,633 | 2,236 |
| * | Diebold Nixdorf Inc. | 519,313 | 2,129 |
| ACI Worldwide Inc. | 71,312 | 1,970 | |
| * | LivePerson Inc. | 82,359 | 1,863 |
| * | DigitalOcean Holdings Inc. | 43,587 | 1,719 |
| * | Avid Technology Inc. | 54,061 | 1,714 |
| * | Duck Creek Technologies Inc. | 90,771 | 1,446 |
| * | LiveRamp Holdings Inc. | 44,254 | 1,386 |
10
Explorer Fund
| Shares | Market Value• ($000) | ||
| * | Cambium Networks Corp. | 89,119 | 1,361 |
| * | FormFactor Inc. | 31,333 | 1,194 |
| * | Arlo Technologies Inc. | 127,938 | 990 |
| * | ON24 Inc. | 76,124 | 964 |
| * | Couchbase Inc. | 55,396 | 942 |
| *,1 | Veritone Inc. | 83,752 | 907 |
| *,1 | MicroVision Inc. | 252,145 | 814 |
| *,1 | MicroStrategy Inc. Class A | 2,155 | 763 |
| * | C3.ai Inc. Class A | 31,316 | 532 |
| * | Mitek Systems Inc. | 37,186 | 415 |
| 4,144,736 | |||
| Materials (2.7%) | |||
| Graphic Packaging Holding Co. | 5,512,709 | 120,177 | |
| Louisiana-Pacific Corp. | 1,477,256 | 95,312 | |
| Methanex Corp. | 1,897,077 | 95,157 | |
| * | Summit Materials Inc. Class A | 1,830,961 | 50,901 |
| Cabot Corp. | 665,628 | 43,832 | |
| Ashland Global Holdings Inc. | 360,700 | 37,863 | |
| Westlake Corp. | 162,373 | 20,548 | |
| Balchem Corp. | 165,590 | 20,401 | |
| Olin Corp. | 331,300 | 19,017 | |
| Steel Dynamics Inc. | 163,836 | 14,049 | |
| Warrior Met Coal Inc. | 293,137 | 9,987 | |
| * | O-I Glass Inc. | 520,515 | 7,016 |
| Chemours Co. | 130,286 | 4,308 | |
| Sensient Technologies Corp. | 49,030 | 4,148 | |
| * | Livent Corp. | 193,790 | 4,139 |
| Schnitzer Steel Industries Inc. Class A | 61,147 | 2,790 | |
| Avery Dennison Corp. | 15,281 | 2,760 | |
| Innospec Inc. | 8,642 | 824 | |
| * | PureCycle Technologies Inc. | 81,539 | 636 |
| Orion Engineered Carbons SA | 41,985 | 634 | |
| * | Allegheny Technologies Inc. | 21,949 | 597 |
| 555,096 | |||
| Other (1.2%) | |||
| 3 | Vanguard Small-Cap ETF | 1,248,435 | 243,507 |
| Real Estate (3.6%) | |||
| Phillips Edison & Co. Inc. | 2,887,428 | 97,768 | |
| PS Business Parks Inc. | 503,048 | 94,171 | |
| Rexford Industrial Realty Inc. | 1,096,726 | 85,589 | |
| Douglas Emmett Inc. | 2,788,751 | 82,157 | |
| Life Storage Inc. | 602,311 | 79,800 | |
| Essential Properties Realty Trust Inc. | 3,119,165 | 74,860 | |
| Pebblebrook Hotel Trust | 2,748,545 | 67,120 | |
| * | Xenia Hotels & Resorts Inc. | 2,601,688 | 50,187 |
| Americold Realty Trust | 1,070,900 | 28,250 | |
| National Storage Affiliates Trust | 305,438 | 17,288 | |
| Lamar Advertising Co. Class A | 143,120 | 15,802 | |
| EastGroup Properties Inc. | 78,125 | 14,648 | |
| Iron Mountain Inc. | 105,010 | 5,642 | |
| Shares | Market Value• ($000) | ||
| Outfront Media Inc. | 170,085 | 4,354 | |
| Necessity Retail REIT Inc. | 551,884 | 4,123 | |
| Alexander's Inc. | 9,841 | 2,442 | |
| RMR Group Inc. Class A | 75,418 | 2,057 | |
| UMH Properties Inc. | 80,599 | 1,896 | |
| NexPoint Residential Trust Inc. | 21,049 | 1,877 | |
| Douglas Elliman Inc. | 306,322 | 1,856 | |
| * | Redfin Corp. | 97,708 | 1,089 |
| Gladstone Commercial Corp. | 47,494 | 999 | |
| St. Joe Co. | 11,103 | 591 | |
| 734,566 | |||
| Utilities (0.8%) | |||
| Atlantica Sustainable Infrastructure plc | 2,459,043 | 75,984 | |
| Portland General Electric Co. | 1,562,858 | 73,970 | |
| NRG Energy Inc. | 132,151 | 4,744 | |
| Brookfield Infrastructure Corp. Class A (XTSE) | 54,357 | 3,855 | |
| American States Water Co. | 16,305 | 1,283 | |
| 159,836 | |||
| Total Common Stocks (Cost $16,743,300) | 19,319,925 | ||
| Preferred Stock (0.0%) | |||
| *,1,4 | Meta Material Inc. Preference Shares (Cost $267) | 181,756 | 229 |
| Temporary Cash Investments (5.1%) | |||
| Money Market Fund (3.9%) | |||
| 5,6 | Vanguard Market Liquidity Fund, 0.409% | 7,880,665 | 787,988 |
11
Explorer Fund
| Face Amount ($000) | Market Value• ($000) | ||
| Repurchase Agreement (1.2%) | |||
| Deutsche Bank Securities, Inc. 0.300%, 5/2/22 (Dated 4/29/22, Repurchase Value $248,606,000, collateralized by U.S. Treasury Note/Bond 2.375%–4.625%, 2/15/40–11/15/49, with a value of $253,572,000) | 248,600 | 248,600 | |
| Total Temporary Cash Investments (Cost $1,036,518) | 1,036,588 | ||
| Total Investments (100.6%) (Cost $17,780,085) | 20,356,742 | ||
| Other Assets and Liabilities—Net (-0.6%) | (113,516) | ||
| Net Assets (100%) | 20,243,226 | ||
| Cost is in $000. | |||
| • | See Note A in Notes to Financial Statements. |
| * | Non-income-producing security. |
| 1 | Includes partial security positions on loan to broker-dealers. The total value of securities on loan is $110,436,000. |
| 2 | Considered an affiliated company of the fund as the fund owns more than 5% of the outstanding voting securities of such company. |
| 3 | Considered an affiliated company of the fund as the issuer is another member of The Vanguard Group. |
| 4 | Perpetual security with no stated maturity date. |
| 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 | Collateral of $126,671,000 was received for securities on loan, of which $126,409,000 is held in Vanguard Market Liquidity Fund and $262,000 is held in cash. |
| ADR—American Depositary Receipt. | |
| REIT—Real Estate Investment Trust. |
Derivative Financial Instruments Outstanding as of Period End
| Futures Contracts | ||||
| ($000) | ||||
| Expiration | Number of Long (Short) Contracts | Notional Amount | Value and Unrealized Appreciation (Depreciation) | |
| Long Futures Contracts | ||||
| E-mini Russell 2000 Index | June 2022 | 5,758 | 535,868 | (26,471) |
See accompanying Notes, which are an integral part of the Financial Statements.
12
Explorer Fund
Statement of Assets and Liabilities
As of April 30, 2022
| ($000s, except shares and per-share amounts) | Amount |
| Assets | |
| Investments in Securities, at Value1 | |
| Unaffiliated Issuers (Cost $16,703,005) | 19,261,655 |
| Affiliated Issuers (Cost $1,077,080) | 1,095,087 |
| Total Investments in Securities | 20,356,742 |
| Investment in Vanguard | 740 |
| Cash | 640 |
| Cash Collateral Pledged—Futures Contracts | 31,278 |
| Receivables for Investment Securities Sold | 37,089 |
| Receivables for Accrued Income | 1,560 |
| Receivables for Capital Shares Issued | 58,393 |
| Total Assets | 20,486,442 |
| Liabilities | |
| Payables for Investment Securities Purchased | 74,862 |
| Collateral for Securities on Loan | 126,671 |
| Payables to Investment Advisor | 10,939 |
| Payables for Capital Shares Redeemed | 15,407 |
| Payables to Vanguard | 1,360 |
| Variation Margin Payable—Futures Contracts | 13,977 |
| Total Liabilities | 243,216 |
| Net Assets | 20,243,226 |
| 1 Includes $110,436 of securities on loan. | |
| At April 30, 2022, net assets consisted of: | |
| Paid-in Capital | 16,834,314 |
| Total Distributable Earnings (Loss) | 3,408,912 |
| Net Assets | 20,243,226 |
| Investor Shares—Net Assets | |
| Applicable to 30,064,953 outstanding $.001 par value shares of beneficial interest (unlimited authorization) | 3,158,466 |
| Net Asset Value Per Share—Investor Shares | $105.05 |
| Admiral Shares—Net Assets | |
| Applicable to 174,847,988 outstanding $.001 par value shares of beneficial interest (unlimited authorization) | 17,084,760 |
| Net Asset Value Per Share—Admiral Shares | $97.71 |
See accompanying Notes, which are an integral part of the Financial Statements.
13
Explorer Fund
Statement of Operations
| Six Months Ended April 30, 2022 | |
| ($000) | |
| Investment Income | |
| Income | |
| Dividends—Unaffiliated Issuers1 | 64,191 |
| Dividends—Affiliated Issuers | 1,974 |
| Interest—Unaffiliated Issuers | 81 |
| Interest—Affiliated Issuers | 478 |
| Securities Lending—Net | 661 |
| Total Income | 67,385 |
| Expenses | |
| Investment Advisory Fees—Note B | |
| Basic Fee | 18,549 |
| Performance Adjustment | 3,898 |
| The Vanguard Group—Note C | |
| Management and Administrative—Investor Shares | 4,258 |
| Management and Administrative—Admiral Shares | 12,298 |
| Marketing and Distribution—Investor Shares | 152 |
| Marketing and Distribution—Admiral Shares | 467 |
| Custodian Fees | 63 |
| Shareholders’ Reports—Investor Shares | 25 |
| Shareholders’ Reports—Admiral Shares | 95 |
| Trustees’ Fees and Expenses | 6 |
| Other Expenses | 9 |
| Total Expenses | 39,820 |
| Net Investment Income | 27,565 |
| Realized Net Gain (Loss) | |
| Capital Gains Distributions Received – Affiliated Issuers | 15 |
| Investment Securities Sold—Unaffiliated Issuers | 925,676 |
| Investment Securities Sold—Affiliated Issuers | 64,486 |
| Futures Contracts | (67,574) |
| Foreign Currencies | (48) |
| Realized Net Gain (Loss) | 922,555 |
| Change in Unrealized Appreciation (Depreciation) | |
| Investment Securities—Unaffiliated Issuers | (5,481,472) |
| Investment Securities—Affiliated Issuers | (135,172) |
| Futures Contracts | (35,743) |
| Foreign Currencies | 1 |
| Change in Unrealized Appreciation (Depreciation) | (5,652,386) |
| Net Increase (Decrease) in Net Assets Resulting from Operations | (4,702,266) |
| 1 | Dividends are net of foreign withholding taxes of $185,000. |
See accompanying Notes, which are an integral part of the Financial Statements.
14
Explorer Fund
Statement of Changes in Net Assets
| Six Months Ended April 30, 2022 | Year Ended October 31, 2021 | ||
| ($000) | ($000) | ||
| Increase (Decrease) in Net Assets | |||
| Operations | |||
| Net Investment Income | 27,565 | 52,288 | |
| Realized Net Gain (Loss) | 922,555 | 3,516,351 | |
| Change in Unrealized Appreciation (Depreciation) | (5,652,386) | 4,291,092 | |
| Net Increase (Decrease) in Net Assets Resulting from Operations | (4,702,266) | 7,859,731 | |
| Distributions | |||
| Investor Shares | (542,949) | (250,706) | |
| Admiral Shares | (2,859,142) | (1,099,471) | |
| Total Distributions | (3,402,091) | (1,350,177) | |
| Capital Share Transactions | |||
| Investor Shares | 376,265 | (480,536) | |
| Admiral Shares | 3,303,455 | 2,034,131 | |
| Net Increase (Decrease) from Capital Share Transactions | 3,679,720 | 1,553,595 | |
| Total Increase (Decrease) | (4,424,637) | 8,063,149 | |
| Net Assets | |||
| Beginning of Period | 24,667,863 | 16,604,714 | |
| End of Period | 20,243,226 | 24,667,863 | |
See accompanying Notes, which are an integral part of the Financial Statements.
15
Explorer Fund
Financial Highlights
| Investor Shares | ||||||
| For a Share Outstanding Throughout Each Period | Six Months Ended April 30, 2022 | Year Ended October 31, | ||||
| 2021 | 2020 | 2019 | 2018 | 2017 | ||
| Net Asset Value, Beginning of Period | $151.47 | $110.44 | $101.66 | $102.25 | $102.10 | $83.91 |
| Investment Operations | ||||||
| Net Investment Income1 | .098 | .206 | .284 | .333 | .325 | .421 |
| Net Realized and Unrealized Gain (Loss) on Investments | (26.034) | 49.372 | 13.688 | 8.234 | 11.192 | 21.657 |
| Total from Investment Operations | (25.936) | 49.578 | 13.972 | 8.567 | 11.517 | 22.078 |
| Distributions | ||||||
| Dividends from Net Investment Income | (.278) | (.158) | (.295) | (.286) | (.475) | (.318) |
| Distributions from Realized Capital Gains | (20.206) | (8.390) | (4.897) | (8.871) | (10.892) | (3.570) |
| Total Distributions | (20.484) | (8.548) | (5.192) | (9.157) | (11.367) | (3.888) |
| Net Asset Value, End of Period | $105.05 | $151.47 | $110.44 | $101.66 | $102.25 | $102.10 |
| Total Return2 | -18.97% | 46.27% | 14.08% | 10.15% | 12.12% | 27.10% |
| Ratios/Supplemental Data | ||||||
| Net Assets, End of Period (Millions) | $3,158 | $4,074 | $3,325 | $3,520 | $3,420 | $3,520 |
| Ratio of Total Expenses to Average Net Assets3 | 0.45% | 0.40% | 0.41% | 0.45% | 0.44% | 0.43% |
| Ratio of Net Investment Income to Average Net Assets | 0.14% | 0.15% | 0.28% | 0.33% | 0.31% | 0.45% |
| Portfolio Turnover Rate | 24% | 45% | 43% | 41% | 50% | 76% |
| The expense ratio and net investment income ratio for the current period have been annualized. | ||||||
| 1 | Calculated based on average shares outstanding. |
| 2 | Total returns do not include account service fees that may have applied in the periods shown. Fund prospectuses provide information about any applicable account service fees. |
| 3 | Includes performance-based investment advisory fee increases (decreases) of 0.03%, (0.01%), (0.01%), 0.03%, 0.02%, and (0.01%). |
See accompanying Notes, which are an integral part of the Financial Statements.
16
Explorer Fund
Financial Highlights
| Admiral Shares | ||||||
| For a Share Outstanding Throughout Each Period | Six Months Ended April 30, 2022 | Year Ended October 31, | ||||
| 2021 | 2020 | 2019 | 2018 | 2017 | ||
| Net Asset Value, Beginning of Period | $141.02 | $102.82 | $94.64 | $95.24 | $94.99 | $78.07 |
| Investment Operations | ||||||
| Net Investment Income1 | .149 | .321 | .365 | .409 | .418 | .495 |
| Net Realized and Unrealized Gain (Loss) on Investments | (24.209) | 45.967 | 12.752 | 7.648 | 10.405 | 20.145 |
| Total from Investment Operations | (24.060) | 46.288 | 13.117 | 8.057 | 10.823 | 20.640 |
| Distributions | ||||||
| Dividends from Net Investment Income | (.434) | (.275) | (.378) | (.393) | (.438) | (.403) |
| Distributions from Realized Capital Gains | (18.816) | (7.813) | (4.559) | (8.264) | (10.135) | (3.317) |
| Total Distributions | (19.250) | (8.088) | (4.937) | (8.657) | (10.573) | (3.720) |
| Net Asset Value, End of Period | $97.71 | $141.02 | $102.82 | $94.64 | $95.24 | $94.99 |
| Total Return2 | -18.92% | 46.42% | 14.21% | 10.27% | 12.24% | 27.25% |
| Ratios/Supplemental Data | ||||||
| Net Assets, End of Period (Millions) | $17,085 | $20,594 | $13,279 | $12,569 | $11,616 | $9,514 |
| Ratio of Total Expenses to Average Net Assets3 | 0.34% | 0.29% | 0.30% | 0.34% | 0.32% | 0.31% |
| Ratio of Net Investment Income to Average Net Assets | 0.24% | 0.25% | 0.39% | 0.44% | 0.43% | 0.57% |
| Portfolio Turnover Rate | 24% | 45% | 43% | 41% | 50% | 76% |
| The expense ratio and net investment income ratio for the current period have been annualized. | ||||||
| 1 | Calculated based on average shares outstanding. |
| 2 | Total returns do not include account service fees that may have applied in the periods shown. Fund prospectuses provide information about any applicable account service fees. |
| 3 | Includes performance-based investment advisory fee increases (decreases) of 0.03%, (0.01%), (0.01%), 0.03%, 0.02%, and (0.01%). |
See accompanying Notes, which are an integral part of the Financial Statements.
17
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. Each of the share classes has different eligibility and minimum purchase requirements, and is designed for different types of investors.
Significant market disruptions, such as those caused by pandemics (e.g., COVID-19 pandemic), natural or environmental disasters, war (e.g., Russia’s invasion of Ukraine), acts of terrorism, or other events, can adversely affect local and global markets and normal market operations. Any such disruptions could have an adverse impact on the value of the fund’s investments and fund performance.
| A. | The following significant accounting policies conform to generally accepted accounting principles for U.S. investment companies. 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 adopted 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 from 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 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.
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 time 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 exposure to the stock market while maintaining liquidity. The fund may purchase or sell futures contracts to achieve a desired level of investment, whether to accommodate portfolio turnover or cash flows from capital share transactions. The primary risks associated with the use of futures contracts are imperfect correlation between changes in market values of stocks held by the fund and the prices of futures contracts, and the possibility of an illiquid market. Counterparty risk involving futures is mitigated because a regulated clearinghouse is the
18
Explorer Fund
counterparty instead of the clearing broker. To further mitigate counterparty risk, the fund trades futures contracts on an exchange, monitors the financial strength of its clearing brokers and clearinghouse, and has entered into clearing agreements with its clearing brokers. The clearinghouse imposes initial margin requirements to secure the fund’s performance and requires daily settlement of variation margin representing changes in the market value of each contract. Any securities pledged as initial margin for open contracts are noted in the Schedule of Investments.
Futures contracts are valued at their quoted daily settlement prices. The notional amounts of the contracts are not recorded in the Statement of Assets and Liabilities. Fluctuations in the value of the contracts are recorded in the Statement of Assets and Liabilities 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 gains (losses) on futures contracts.
During the six months ended April 30, 2022, the fund’s average investments in long and short futures contracts represented 2% and 0% of net assets, respectively, based on the average of the notional amounts at each quarter-end during the period.
4. Repurchase Agreements: The fund enters into repurchase agreements with institutional counterparties. Securities pledged as collateral to the fund under repurchase agreements are held by a custodian bank until the agreements mature, and in the absence of a default, such collateral cannot be repledged, resold, or rehypothecated. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal. The fund further mitigates its counterparty risk by entering into repurchase agreements only with a diverse group of prequalified counterparties, monitoring their financial strength, and entering into master repurchase agreements with its counterparties. The master repurchase agreements provide that, in the event of a counterparty's default (including bankruptcy), the fund may terminate any repurchase agreements with that counterparty, determine the net amount owed, and sell or retain the collateral up to the net amount owed to the fund. Such action may be subject to legal proceedings, which may delay or limit the disposition of collateral.
5. Federal Income Taxes: The fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income. The fund’s tax returns are open to examination by the relevant tax authorities until expiration of the applicable statute of limitations, which is generally three years after the filing of the tax return. Management has analyzed the fund’s tax positions taken for all open federal and state income tax years, and has concluded that no provision for income tax is required in the fund’s financial statements.
6. Distributions: Distributions to shareholders are recorded on the ex-dividend date. Distributions are determined on a tax basis at the fiscal year-end and may differ from net investment income and realized capital gains for financial reporting purposes.
7. Securities Lending: To earn additional income, the fund lends its securities to qualified institutional borrowers. Security loans are subject to termination by the fund at any time, and are required to be secured at all times by collateral in an amount at least equal to the market value of securities loaned. Daily market fluctuations could cause the value of loaned securities to be more or less than the value of the collateral received. When this occurs, the collateral is adjusted and settled before the opening of the market on the next business day. The fund further mitigates its counterparty risk by entering into securities lending transactions only with a diverse group of prequalified counterparties, monitoring their financial strength, and entering into master securities lending agreements with its counterparties. The master securities lending agreements provide
19
Explorer Fund
that, in the event of a counterparty’s default (including bankruptcy), the fund may terminate any loans with that borrower, determine the net amount owed, and sell or retain the collateral up to the net amount owed to the fund; however, such actions may be subject to legal proceedings. While collateral mitigates counterparty risk, in the event of a default, the fund may experience delays and costs in recovering the securities loaned. The fund invests cash collateral received in Vanguard Market Liquidity Fund, and records a liability in the Statement of Assets and Liabilities for the return of the collateral, during the period the securities are on loan. Collateral investments in Vanguard Market Liquidity Fund are subject to market appreciation or depreciation. Securities lending income represents fees charged to borrowers plus income earned on invested cash collateral, less expenses associated with the loan. During the term of the loan, the fund is entitled to all distributions made on or in respect of the loaned securities.
8. Credit Facilities and Interfund Lending Program: The fund and certain other funds managed by The Vanguard Group ("Vanguard") participate in a $4.4 billion committed credit facility provided by a syndicate of lenders pursuant to a credit agreement and an uncommitted credit facility provided by Vanguard. Both facilities may be renewed annually. Each fund is individually liable for its borrowings, if any, under the credit facilities. Borrowings may be utilized for temporary or emergency purposes and are subject to the fund’s regulatory and contractual borrowing restrictions. With respect to the committed credit facility, the participating funds are charged administrative fees and an annual commitment fee of 0.10% of the undrawn committed amount of the facility, which are allocated to the funds based on a method approved by the fund’s board of trustees and included in Management and Administrative expenses on the fund’s Statement of Operations. Any borrowings under either facility bear interest at an agreed-upon spread plus the higher of the federal funds effective rate, the overnight bank funding rate, or the Daily Simple Secured Overnight Financing Rate inclusive of an additional agreed-upon spread. However, borrowings under the uncommitted credit facility may bear interest based upon an alternate rate agreed to by the fund and Vanguard.
In accordance with an exemptive order (the “Order”) from the SEC, the fund may participate in a joint lending and borrowing program that allows registered open-end Vanguard funds to borrow money from and lend money to each other for temporary or emergency purposes (the “Interfund Lending Program”), subject to compliance with the terms and conditions of the Order, and to the extent permitted by the fund’s investment objective and investment policies. Interfund loans and borrowings normally extend overnight but can have a maximum duration of seven days. Loans may be called on one business day’s notice. The interest rate to be charged is governed by the conditions of the Order and internal procedures adopted by the board of trustees. The board of trustees is responsible for overseeing the Interfund Lending Program.
For the six months ended April 30, 2022, the fund did not utilize the credit facilities or the Interfund Lending Program.
9. Other: Dividend income is recorded on the ex-dividend date. Non-cash dividends included in income, if any, are recorded at the fair value of the securities received. Interest income includes income distributions received from Vanguard Market Liquidity Fund and is accrued daily. Premiums and discounts on debt securities are amortized and accreted, respectively, to interest income over the lives of the respective securities, except for premiums on certain callable debt securities that are amortized to the earliest call date. 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.
20
Explorer Fund
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. | The investment advisory firms Wellington Management Company llp, ClearBridge Investments, LLC, Stephens Investment Management Group, LLC, and ArrowMark Colorado Holdings, 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 Wellington Management Company llp and ClearBridge Investments, LLC, are subject to quarterly adjustments based on performance relative to the Russell 2500 Growth Index for the preceding three years. The basic fees of Stephens Investment Management Group, LLC, and ArrowMark Colorado Holdings, LLC, are subject to quarterly adjustments based on performance relative to the Russell 2500 Growth Index for the preceding five years. |
Vanguard provides investment advisory services to a portion of the fund as described below; the fund paid Vanguard advisory fees of $454,000 for the six months ended April 30, 2022.
For the six months ended April 30, 2022, the aggregate investment advisory fee paid to all advisors represented an effective annual basic rate of 0.16% of the fund’s average net assets, before an increase of of $3,898,000 (0.03%) based on performance.
| C. | In accordance with the terms of a Funds' Service Agreement (the “FSA”) between Vanguard and the fund, Vanguard furnishes to the fund corporate management, administrative, marketing, distribution and cash management services at Vanguard’s cost of operations (as defined by the FSA). These costs of operations are allocated to the fund based on methods and guidelines approved by the board of trustees and are generally settled twice a month. |
Upon the request of Vanguard, the fund may invest up to 0.40% of its net assets as capital in Vanguard. At April 30, 2022, the fund had contributed to Vanguard capital in the amount of $740,000, representing less than 0.01% of the fund’s net assets and 0.30% of Vanguard’s capital received pursuant to the FSA. The fund’s trustees and officers are also directors and employees, respectively, of Vanguard.
| D. | Various inputs may be used to determine the value of the fund’s investments and derivatives. 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 quoted 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). Any investments and derivatives valued with significant unobservable inputs are noted on the Schedule of Investments.
21
Explorer Fund
The following table summarizes the market value of the fund’s investments and derivatives as of April 30, 2022, based on the inputs used to value them:
| Level 1 ($000) | Level 2 ($000) | Level 3 ($000) | Total ($000) | |
| Investments | ||||
| Assets | ||||
| Common Stocks | 19,319,925 | — | — | 19,319,925 |
| Preferred Stock | 229 | — | — | 229 |
| Temporary Cash Investments | 787,988 | 248,600 | — | 1,036,588 |
| Total | 20,108,142 | 248,600 | — | 20,356,742 |
| Derivative Financial Instruments | ||||
| Liabilities | ||||
| Futures Contracts1 | 26,471 | — | — | 26,471 |
| 1 | Includes cumulative appreciation (depreciation) on futures contracts and centrally cleared swaps, if any, as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities. |
| E. | As of April 30, 2022, gross unrealized appreciation and depreciation for investments and derivatives based on cost for U.S. federal income tax purposes were as follows: |
| Amount ($000) | |
| Tax Cost | 17,873,192 |
| Gross Unrealized Appreciation | 4,512,752 |
| Gross Unrealized Depreciation | (2,055,673) |
| Net Unrealized Appreciation (Depreciation) | 2,457,079 |
| F. | During the six months ended April 30, 2022, the fund purchased $5,195,601,000 of investment securities and sold $5,187,322,000 of investment securities, other than temporary cash investments. |
The fund purchased securities from and sold securities to other funds or accounts managed by its investment advisors or their affiliates, in accordance with procedures adopted by the board of trustees in compliance with Rule 17a-7 of the Investment Company Act of 1940. For the six months ended April 30, 2022, such purchases were $9,319,000 and sales were $1,685,000, resulting in net realized gain of $172,000; these amounts, other than temporary cash investments, are included in the purchases and sales of investment securities noted above.
22
Explorer Fund
| G. | Capital share transactions for each class of shares were: |
| Six Months Ended April 30, 2022 | Year Ended October 31, 2021 | ||||
| Amount ($000) | Shares (000) | Amount ($000) | Shares (000) | ||
| Investor Shares | |||||
| Issued | 156,571 | 1,243 | 493,604 | 3,566 | |
| Issued in Lieu of Cash Distributions | 526,661 | 4,330 | 244,060 | 1,898 | |
| Redeemed | (306,967) | (2,404) | (1,218,200) | (8,679) | |
| Net Increase (Decrease)—Investor Shares | 376,265 | 3,169 | (480,536) | (3,215) | |
| Admiral Shares | |||||
| Issued | 1,853,082 | 16,001 | 3,692,806 | 28,851 | |
| Issued in Lieu of Cash Distributions | 2,659,575 | 23,515 | 1,024,110 | 8,560 | |
| Redeemed | (1,209,202) | (10,705) | (2,682,785) | (20,527) | |
| Net Increase (Decrease)—Admiral Shares | 3,303,455 | 28,811 | 2,034,131 | 16,884 | |
| H. | 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 or the issuer is another member of The Vanguard Group. Transactions during the period in securities of these companies were as follows: |
| Current Period Transactions | ||||||||
| Oct. 31, 2021 Market Value ($000) | Purchases at Cost ($000) | Proceeds from Securities Sold ($000) | Realized Net Gain (Loss) ($000) | Change in Unrealized App. (Dep.) ($000) | Income ($000) | Capital Gain Distributions Received ($000) | Apr. 30, 2022 Market Value ($000) | |
| Enerpac Tool Group Corp. Class A | 65,557 | 532 | — | — | (2,497) | — | — | 63,592 |
| Houghton Mifflin Harcourt Co. | 90,571 | 681 | 134,702 | 78,350 | (34,900) | — | — | — |
| Momentive Global Inc. | 210,733 | 6,189 | 69,398 | (6,429) | (59,416) | — | — | NA1 |
| Vanguard Market Liquidity Fund | 627,469 | NA2 | NA2 | (28) | (26) | 478 | 15 | 787,988 |
| Vanguard Small-Cap ETF | 315,115 | 160,778 | 186,646 | (7,407) | (38,333) | 1,974 | — | 243,507 |
| Total | 1,309,445 | 168,180 | 390,746 | 64,486 | (135,172) | 2,452 | 15 | 1,095,087 |
| 1 | Not applicable—at April 30, 2022, the security was still held, but the issuer was no longer an affiliated company of the fund. |
| 2 | Not applicable—purchases and sales are for temporary cash investment purposes. |
| I. | Management has determined that no events or transactions occurred subsequent to April 30, 2022, that would require recognition or disclosure in these financial statements. |
23
Trustees Approve Advisory Arrangements
The board of trustees of Vanguard Explorer Fund has renewed the fund’s investment advisory arrangements with Wellington Management Company LLP (Wellington Management); Stephens Investment Management Group, LLC (SIMG); ArrowMark Colorado Holdings, LLC (ArrowMark Partners); ClearBridge Investments, LLC (ClearBridge); and The Vanguard Group, Inc. (Vanguard), through its Quantitative Equity Group. The board determined that renewing the fund’s advisory arrangements was in the best interests of the fund and its shareholders.
The board based its decisions upon an evaluation of each advisor’s investment staff, portfolio management process, and performance. This evaluation included information provided to the board by Vanguard’s Portfolio Review Department, which is responsible for fund and advisor oversight and product management. The Portfolio Review Department met regularly with the advisors and made monthly presentations to the board during the fiscal year that directed the board’s focus to relevant information and topics.
The board, or an investment committee made up of board members, also received information throughout the year during advisor presentations. For each advisor presentation, the board was provided with letters and reports that included information about, among other things, the advisory firm and the advisor’s assessment of the investment environment, portfolio performance, and portfolio characteristics.
In addition, the board received periodic reports throughout the year, which included information about the fund’s performance relative to its peers and benchmark, as applicable, and updates, as needed, on the Portfolio Review Department’s ongoing assessment of the advisors.
Prior to their meeting, the trustees were provided with a memo and materials that summarized the information they received over the course of the year. They also 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 decisions.
Nature, extent, and quality of services
The board reviewed the quality of the fund’s investment management services over both the short and long term and took into account the organizational depth and stability of each advisor. The board considered the following:
Wellington Management. Founded in 1928, Wellington Management is among the nation’s oldest and most respected institutional investment managers. 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 with key success factors such as top market share, substantial insider ownership, and fully funded business plans. The investment team has the support of Wellington Management’s global industry analysts in conducting its research-intensive approach. Wellington Management has advised a portion of the fund since its inception in 1967.
SIMG. Founded in 2005, SIMG is a subsidiary of Stephens Investments Holdings LLC, a privately held and family-owned company. SIMG specializes in equity investment management focused on
24
small- and mid-cap growth companies. The team employs a disciplined, bottom-up investment selection process that combines rigorous fundamental analysis with quantitative screening, seeking to identify companies that will exhibit potential for superior earnings growth. There are two different types of stocks in which the team invests: core growth and earnings catalyst. The characteristic SIMG seeks for core growth stocks is consistent and predictable earnings growth that is generated by unique, defensible business models. For earnings catalyst stocks, SIMG looks for inflection points such as large earnings surprises or positive revisions to earnings estimates or guidance. The team generally requires all stocks to be profitable or on the cusp of profitability and exhibiting at least 12% earnings growth. SIMG has managed a portion of the fund since 2013.
ArrowMark Partners. Founded in 2007, ArrowMark Partners offers a wide range of strategies, including equities, fixed income, and structured products, to institutional, high-net-worth, and retail investors. Using in-depth, fundamental research, the investment team seeks to identify companies that it believes can control their own economic destiny. These are companies with strong competitive advantages, high barriers to entry, large potential markets for their products, and high-quality businesses focused on future growth. In evaluating companies and constructing the portfolio, ArrowMark Partners places significant emphasis on understanding risk in the belief that avoiding large mistakes is the key to success in small-capitalization investing. ArrowMark Partners has managed a portion of the fund since 2014.
ClearBridge. With a legacy dating back to 1962, ClearBridge, a wholly owned subsidiary of Franklin Resources, Inc., is a global investment manager that offers a wide range of strategies, including domestic, international, global, and special equity and fixed income strategies. The ClearBridge SMID Cap Growth strategy employed in the Explorer Fund takes a disciplined, consistent, patient, and risk-aware approach. ClearBridge works to identify and own quality growth companies with large exploitable opportunities. The team’s patient approach to security selection and position management is designed to invest in multi-year opportunities that allow for the compounding effect of earnings. At the security level, the team seeks to “de-risk” an idea through fundamental analysis, understanding downside scenarios, and entering a position with sensitivity to valuation. ClearBridge has managed a portion of the fund since 2017.
Vanguard. Vanguard has been managing investments for more than four 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.
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 each advisor’s subportfolio, including any periods of outperformance or underperformance compared with a relevant benchmark index and peer group. The board concluded that the performance was such that each advisory arrangement should continue.
25
Cost
The board concluded that the fund’s expense ratio was below the average expense ratio charged by funds in its peer group and that the fund’s advisory expense rates were also below the peer-group average.
The board did not consider the profitability of Wellington Management, SIMG, ArrowMark Partners, or ClearBridge 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 structure. Unlike most other mutual fund management companies, Vanguard is owned by the funds it oversees.
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 Wellington Management, SIMG, ArrowMark Partners, and ClearBridge. The breakpoints reduce the effective rate of the fees as the fund’s assets managed by each advisor increase.
The board also concluded that the fund’s 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.
26
Liquidity Risk Management
Vanguard funds (except for the money market funds) have adopted and implemented a written liquidity risk management program (the “Program”) as required by Rule 22e-4 under the Investment Company Act of 1940. Rule 22e-4 requires that each fund adopt a program that is reasonably designed to assess and manage the fund’s liquidity risk, which is the risk that the fund could not meet redemption requests without significant dilution of remaining investors’ interests in the fund.
Assessment and management of a fund’s liquidity risk under the Program take into consideration certain factors, such as the fund’s investment strategy and the liquidity of its portfolio investments during normal and reasonably foreseeable stressed conditions, its short- and long-term cash-flow projections during both normal and reasonably foreseeable stressed conditions, and its cash and cash-equivalent holdings and access to other funding sources. As required by the rule, the Program includes policies and procedures for classification of fund portfolio holdings in four liquidity categories, maintaining certain levels of highly liquid investments, and limiting holdings of illiquid investments.
The board of trustees of Vanguard Explorer Fund approved the appointment of liquidity risk management program administrators responsible for administering Vanguard Explorer Fund's Program and for carrying out the specific responsibilities set forth in the Program, including reporting to the board on at least an annual basis regarding the Program’s operation, its adequacy, and the effectiveness of its implementation for the past year (the “Program Administrator Report”). The board has reviewed the Program Administrator Report covering the period from January 1, 2021, through December 31, 2021 (the “Review Period”). The Program Administrator Report stated that during the Review Period the Program operated and was implemented effectively to manage the fund’s liquidity risk.
27
This page intentionally left blank.
Connect with Vanguard®>vanguard.com
Fund Information > 800-662-7447
Direct Investor Account Services > 800-662-2739
Institutional Investor Services > 800-523-1036
Text Telephone for People Who Are Deaf or Hard of Hearing > 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.
You can obtain a free copy of Vanguard’s proxy voting guidelines by visiting vanguard.com/proxyreporting 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 vanguard.com/proxyreporting or www.sec.gov.
You can review information about your fund on the SEC’s website, and you can receive copies of this information, for a fee, by sending a request via email addressed to publicinfo@sec.gov.
© 2022 The Vanguard Group, Inc.
All rights reserved.
Vanguard Marketing Corporation, Distributor.
All rights reserved.
Vanguard Marketing Corporation, Distributor.
Q242 062022
Item 2: Code of Ethics.
Not applicable.
Item 3: Audit Committee Financial Expert.
Not applicable.
Item 4: Principal Accountant Fees and Services.
Not applicable.
Item 5: Audit Committee of Listed Registrants.
Not applicable.
Item 6: Investments.
Not applicable. The complete schedule of investments is included as part of the report to shareholders filed under Item 1 of this Form.
Item 7: Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8: Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9: Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10: Submission of Matters to a Vote of Security Holders.
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 the 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: Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable.
Item 13: Exhibits.
| (a)(1) | Not applicable. |
| (a)(2) | Certifications filed herewith. |
| (b) | Certifications filed herewith. |
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/ MORTIMER J. BUCKLEY* | |
| MORTIMER J. BUCKLEY | ||
| CHIEF EXECUTIVE OFFICER | ||
Date: June 17, 2022
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/ MORTIMER J. BUCKLEY* | |
| MORTIMER J. BUCKLEY | ||
| CHIEF EXECUTIVE OFFICER | ||
Date: June 17, 2022
| VANGUARD EXPLORER FUND | ||
| BY: | /s/ CHRISTINE BUCHANAN* | |
| CHRISTINE BUCHANAN | ||
| CHIEF FINANCIAL OFFICER | ||
Date: June 17, 2022
| * By: | /s/ Anne E. Robinson |
Anne E. Robinson, pursuant to a Power of Attorney filed on November 29, 2021 (see File Number 33-64845), a Power of Attorney filed on October 12, 2021 (see File Number 33-23444), and a Power of Attorney filed on August 26, 2021 (see file Number 811-02652), Incorporated by Reference.