<PAGE> 1
CHAIRMAN'S LETTER
FELLOW SHAREHOLDER:
During the first half of Vanguard Explorer Fund's 1995 fiscal year, which
ended on April 30, the stock market surged. Stocks of big blue-chip companies
led the surge, while stocks of smaller companies--our stock in trade--earned
lower, albeit still nicely positive, returns.
The net result was a total return of +10.5% for the Standard & Poor's 500
Composite Stock Price Index (large capitalization stocks). Explorer's total
return (capital change plus income) was +4.9% for the period, very close to
that of the Russell 2000 Index (small capitalization stocks), as shown in the
table below:
<TABLE>
<CAPTION>
- -------------------------------------------------
Total Return
----------------
Six Months Ended
April 30, 1995
- -------------------------------------------------
<S> <C>
EXPLORER FUND +4.9%
- -------------------------------------------------
RUSSELL 2000 INDEX +5.4%
- -------------------------------------------------
</TABLE>
The Fund's return is based on net asset values of $45.99 per share on October
31, 1994, and $45.57 on April 30, 1995, with the latter figure adjusted to take
into account the reinvestment of an annual dividend totaling $.17 per share from
net investment income and a distribution of $2.26 per share from net realized
capital gains. These payments were the result of our operations during 1994 and
were made at the end of December.
THE PERIOD IN REVIEW
During the first three months of the semi-annual period, the stock market, on
balance, went nowhere. It then sprung to life during the second quarter,
engendering a solid gain for the full period, as reflected in the table above.
As usual, there were many opinions as to the source of the market's
strength. From my view, it resulted from a combination of: (1) the sharp decline
in interest rates (the yield on the long-term U.S. Treasury bond fell from 8.1%
to 7.3%, or 80 basis points); (2) the apparently diminishing threat of
additional increases in short-term interest rates by the Federal Reserve Board;
(3) a slight softening in U.S. economic growth, resulting in continued optimism
about the outlook for inflation; (4) record-breaking corporate profits; and (5)
a hint of speculative fever in the equity market. Whatever the case, the strong
equity market resulted in a solid gain of +5.4% for the Russell 2000 Index.
The reasons for the tiny difference between Explorer's return and that of
the Russell 2000 Index include several small, and often countervailing, factors.
For example, Explorer held more of its assets (31% versus 16% for the Index) in
technology stocks, by far the strongest sector of the smallcap market, but
returns on our individual stock selections lagged those of the technology stocks
in the Index. Additionally, Explorer held a lower weight in the financial group
(8% versus 21% for the Index). While this sector provided above-average returns,
Explorer's specific stock selections were outstanding; indeed, financial stocks
were the Fund's best performing group, providing a total return of +16.6%. Small
differences such as these also pervaded our results relative to our peer
group--small company growth funds--which on average turned in a total return of
+5.3% for the six months, virtually the same as both Explorer and our target
index.
As we noted in our 1994 Annual Report, shareholders should expect
"significant variations in the returns of large and small stocks from one
interim period to the next." Although smallcap stocks have lagged their larger
cousins during fiscal 1994, and now during the first half of fiscal 1995, their
performance should be evaluated in the light of the remarkable returns they
achieved during the prior three years (1991-1993 inclusive). During that period,
the Russell 2000 Index rose at an astonishing annual rate of +27%, while the
annual rate of return on the Standard & Poor's 500 Index was +16%. Over an
extended period of time, after adjustment for the higher risk small stocks
entail, the positive and negative cycles are apt to pretty much even out.
(continued)
1
<PAGE> 2
So, our motto continues to be "stay the course." The Fund has followed
that maxim during its 28-year history, with a policy of investing in small
growth companies with above-average opportunities for long-term capital
appreciation. We hope that you, too, will follow that maxim, staying through
thick and thin with your commitment to capital growth, while recognizing the
risks involved. I look forward to reporting to you in our Annual Report six
months hence.
Sincerely,
/s/ JOHN C. BOGLE
- ---------------------
John C. Bogle
Chairman of the Board
May 15, 1995
Note: Mutual fund data from Lipper Analytical Services, Inc.
AVERAGE ANNUAL TOTAL RETURNS--THE AVERAGE ANNUAL TOTAL RETURNS FOR THE FUND
(PERIODS ENDED MARCH 31, 1995) ARE AS FOLLOWS:
<TABLE>
<CAPTION>
10 YEARS
----------------------------
INCEPTION TOTAL CAPITAL INCOME
DATE 1 YEAR 5 YEARS RETURN RETURN RETURN
--------- ------ ------- ------ ------- ------
<S> <C> <C> <C> <C> <C> <C>
VANGUARD EXPLORER FUND 12/11/67 +9.43% +14.87% +9.07% +8.33% +0.74%
</TABLE>
ALL OF THESE DATA REPRESENT PAST PERFORMANCE. THE INVESTMENT RETURN AND
PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT INVESTORS' SHARES,
WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
2
<PAGE> 3
REPORT FROM WELLINGTON MANAGEMENT COMPANY
The first half of fiscal 1995 has been a strong year for stock markets. The
economy has boomed along, inflation has been subdued, and interest rates remain
under control. The best of all possible economic worlds has resulted in U.S.
companies posting record earnings levels and gains for the first half of the
year. As a result, the past six months have been characterized by strong stock
market performance across the board.
Additionally, global economies, particularly in Europe, have been
rebounding, and the U.S. dollar is at an all-time trade weighted low. These two
economic benefits have disproportionately aided large U.S. multinational
companies' earnings. Indeed, during the past six months, both the financial
results and the stock performance of the larger companies have set a
challenging standard for smaller companies, commonly held in the Explorer Fund,
to keep up with. For the period, large capitalization stocks, as represented by
the S&P 500 Index, performed considerably better than small capitalization
stocks, as represented by the Russell 2000 Index. For the six months, the S&P
500 returned +10.5% versus +5.4% for the Russell 2000.
The market expects continued good news. We have noticed that good
earnings reports lately have been met with little additional upside movement in
stock prices, while the occasional earnings disappointment has been dealt with
ruthlessly by the marketplace. While we continue to find good values, we have
to search harder and harder to find them. As a result, we have become more
eclectic in our security selection as many of our favorite sectors have grown
increasingly expensive.
While virtually all sectors experienced positive returns during the
period, technology stocks have led the rally. Continued positive earnings
surprises led to strong performance in this sector. Shareholders have benefited
from the portfolio's considerable overweighting in technology stocks (nearly
double the Russell 2000 Index), but we believe that the news may not get any
better for these companies.
As a result, we have begun to scale back our positions and expect this
trend to accelerate. Large sales have included FTP Software, Computer Sciences,
and Electronic Arts. We are taking a more contrarian stance on the new
technology names we are buying. Soaring performance in this sector has led us to
seek out companies overlooked by the market that we believe have considerable
undiscovered growth potential, such as Cheyenne Software and Bachman Information
Systems.
An area that we believe continues to be undervalued is smaller
capitalization consumer non-durables. We are selectively adding to our positions
in restaurants and retail, a segment where a few poor performers have dragged
down the group. New names in this area include Celestial Seasonings, Whole Food
Markets, and Maybelline. We have considerably reduced our overweighting in the
health care sector, where we had held nearly three times the Index weighting.
Having said that, we continue to find some good names in biotechnology and have
added selectively with companies such as Liposome Company and Immunex.
We continue to find no shortage of interesting opportunities for Explorer
shareholders, and our short-term caution is balanced by our long-term optimistic
viewpoint on our market sector and specifically our portfolio. We remain
unwavering in our commitment to deliver favorable long-term returns for the
Fund's shareholders.
Respectfully,
Kenneth L. Abrams, Senior Vice President
Portfolio Manager
Wellington Management Company
May 15, 1995
3
<PAGE> 4
REPORT FROM GRANAHAN INVESTMENT MANAGEMENT, INC.
REVIEW
The first half of our 1995 fiscal year that ended April 30 was
characterized by strong corporate earnings, significant fluctuations in
currency exchange rates, and declines in domestic interest rates. This period
was generally favorable for U.S. stocks, although it should be noted that small
stocks in aggregate were up less than their larger brethren.
A number of explanations have been given as to why larger stocks did
better including greater foreign exposure to currency benefits, more immediate
beneficiaries of asset allocation decisions favoring U.S. equities, etc. What
we do know is that our holdings continued to show strong earnings trends,
albeit at more historical rates of 25% to 30% as opposed to the 40% gains last
year.
The best individual contributors included Input/Output (3-D seismic
gathering equipment company making a significant acquisition), Quick & Reilly
(valuation upgraded on good relative earnings performance), and Atria Software
(rapidly growing supplier of software development tools). The most spectacular
percentage appreciation was in CNS, up over 200% in the period as its Breathe
Right nasal dilators have received much favorable publicity. We have just
recently eliminated this position due to its high valuation.
Other strong performers included Dallas Semiconductor, Synopsys, Dionex,
and Encad in the technology sector on the strength of good to accelerating
earnings trends. In the medical area Cordis and Mitek were strong contributors
with the latter benefiting from an acquisition offer from Johnson & Johnson
which has been completed. Among our companies that operate in more cyclical
areas, the best performers included Zoltek (carbon fibers), JPE (specialized
automotive parts), and Valmont (agricultural commercial equipment) due to each
management's success in their niche markets rather than macro-economic factors.
The poorest performers included Cosmetic Center (cosmetic retailer), Rival
Manufacturing Company (small appliances and pumps), and Ellett Brothers
(distributor of outdoor equipment), all of which were related to earnings
disappointments.
Most of our purchase activity, as usual, was in existing names in the
portfolio, although we did add a large number of new holdings this past period;
we had 28 new stocks and 18 eliminations. Four of the eliminations were in
companies that were acquired or merged into other companies e.g., Medstat,
Mitek, Digidesign and Biosurface (the latter into Genzyme Tissue Repair, a
Genzyme subsidiary). The new names continued our strategy of emphasizing less
recognized companies with good earnings prospects such as American Homestar
(manufactured homes), Sylvan (mushroom spawn supplier), NFO Research (leader in
direct market research), RailTex (operator of short lines), and Xpedite Systems
(rapidly growing fax broadcasting service).
In addition, we added more visible companies such as SunGard Data Systems
(computer disaster recovery and investment support systems), SystemSoft (PCMCIA
system software), Applied Voice Technology (computer telephony), and MapInfo
(leader in desktop mapping software).
OUTLOOK
Last October we mentioned that while our companies' earnings were growing faster
than their traditional rates, their stock price appreciation was being limited
by the generally lower stock valuations occasioned by the rise in interest rates
in 1994. Since last October, interest rates have reversed course and our
companies' earnings have decelerated some, but earnings are still growing at
healthy rates. While some sectors such as retailing, trucking, and autos look
flat, we see an economy that will continue to reward the cost-conscious
innovator, and we have endeavored to position the portfolio accordingly.
Respectfully,
John J. Granahan, President
Granahan Investment Management, Inc.
May 19, 1995
4
<PAGE> 5
TOTAL INVESTMENT RETURN TABLE
The following table illustrates the results of a single-share investment in
Vanguard Explorer Fund for the 25-year period ended April 30, 1995. During the
period illustrated, stock prices fluctuated widely; these results should not be
considered a representation of the dividend income or capital gain or loss that
may be realized from an investment made in the Fund today.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
PERIOD PER SHARE DATA* TOTAL INVESTMENT RETURN**
- ------------------------------------------------------------------------------------------------------------------------
Explorer Fund
Value with Income ---------------------------- Russell
October 31 Net Asset Capital Gains Income Dividends & Capital Capital Income Total 2000+
Fiscal Year Value Distributions Dividends Gains Reinvested Return Return Return Total Return
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1971 $ 9.98 -- $.23 $10.25 +10.8% +3.0% +13.8% +16.8%
- ------------------------------------------------------------------------------------------------------------------------
1972 13.46 -- .09 13.96 +34.9 +1.3 +36.2 +21.9
- ------------------------------------------------------------------------------------------------------------------------
1973 11.91 -- -- 12.35 -11.5 0.0 -11.5 0.0
- ------------------------------------------------------------------------------------------------------------------------
1974 7.19 -- .14 7.57 -39.6 +0.9 -38.7 -28.7
- ------------------------------------------------------------------------------------------------------------------------
1975 8.13 -- .12 8.72 +13.1 +2.1 +15.2 +25.9
- ------------------------------------------------------------------------------------------------------------------------
1976 8.35 -- .05 9.02 + 2.8 +0.7 + 3.5 +20.1
- ------------------------------------------------------------------------------------------------------------------------
1977 9.77 -- .06 10.63 +17.0 +0.8 +17.8 - 6.1
- ------------------------------------------------------------------------------------------------------------------------
1978 12.32 -- .01 13.41 +26.0 +0.1 +26.1 + 6.3
- ------------------------------------------------------------------------------------------------------------------------
1979 16.09 -- .20 17.77 +30.6 +1.9 +32.5 +15.3
- ------------------------------------------------------------------------------------------------------------------------
1980 25.86 -- .24 28.96 +60.7 +2.3 +63.0 +55.3
- ------------------------------------------------------------------------------------------------------------------------
1981 28.05 -- .30 31.75 + 8.5 +1.1 + 9.6 + 4.1
- ------------------------------------------------------------------------------------------------------------------------
1982 28.91 $4.01 .50 38.95 +20.5 +2.2 +22.7 +14.8
- ------------------------------------------------------------------------------------------------------------------------
1983 38.35 .58 .24 53.05 +35.2 +1.0 +36.2 +38.3
- ------------------------------------------------------------------------------------------------------------------------
1984 31.10 1.66 .64 45.70 -15.3 +1.4 -13.9 - 3.2
- ------------------------------------------------------------------------------------------------------------------------
1985 32.56 .20 .38 48.79 + 5.4 +1.4 + 6.8 +15.8
- ------------------------------------------------------------------------------------------------------------------------
1986 31.59 1.29 .33 49.76 + 1.0 +1.0 + 2.0 +22.2
- ------------------------------------------------------------------------------------------------------------------------
1987 25.06 3.27 .02 44.08 -11.5 +0.1 -11.4 -13.6
- ------------------------------------------------------------------------------------------------------------------------
1988 29.64 1.96 .11 56.74 +28.2 +0.5 +28.7 +27.1
- ------------------------------------------------------------------------------------------------------------------------
1989 30.76 1.59 .32 62.95 + 9.8 +1.2 +11.0 +15.6
- ------------------------------------------------------------------------------------------------------------------------
1990 22.62 1.01 .37 48.52 -23.9 +1.0 -22.9 -27.3
- ------------------------------------------------------------------------------------------------------------------------
1991 36.75 -- .34 79.89 +62.5 +2.1 +64.6 +58.6
- ------------------------------------------------------------------------------------------------------------------------
1992 41.23 -- .26 90.24 +12.2 +0.8 +13.0 + 9.5
- ------------------------------------------------------------------------------------------------------------------------
1993 49.37 .78 .13 110.34 +21.9 +0.4 +22.3 +32.4
- ------------------------------------------------------------------------------------------------------------------------
1994 45.99 5.17 .14 115.29 + 4.2 +0.3 + 4.5 - 0.3
- ------------------------------------------------------------------------------------------------------------------------
1995 (4/30) 45.57 2.26 .17 120.90 + 4.4 +0.5 + 4.9 + 5.4
- ------------------------------------------------------------------------------------------------------------------------
CUMULATIVE TOTAL +1,241.9% +1,284.1%
- ------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN +11.2% +11.3%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Adjusted for 2-for-1 stock split, December 2, 1978.
** Includes reinvestment of income dividends and any capital gains distributions
for both the Fund and the Index.
+ Standard & Poor's 500 Index through 1979; Russell 2000 Index thereafter.
Note: The initial net asset value was $9.01 on October 31, 1970, the beginning
of the period illustrated. No adjustment has been made for income taxes payable
by shareholders on reinvested income dividends and capital gains distributions.
5
<PAGE> 6
FINANCIAL STATEMENTS
(unaudited)
April 30, 1995
STATEMENT OF NET ASSETS
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES (000)+
- -----------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (88.6%)
- -----------------------------------------------------------------
BASIC MATERIALS (1.8%)
Commonwealth Aluminum Corp. 209,900 $ 3,385
* Liposome Co., Inc. 300,000 2,700
* Lydall, Inc. 256,350 9,485
Quaker Chemical Corp. 50,000 812
Schnitzer Steel Industries, Inc.
Class A 200,000 4,350
* Zoltek Cos., Inc. 125,000 2,219
------------
GROUP TOTAL 22,951
------------
- ------------------------------------------------------------------
CAPITAL GOODS & CONSTRUCTION (3.5%)
* Acmat Corp. Class A 143,000 1,680
* American Buildings Co. 274,000 5,035
* American Homestar Corp. 140,000 1,487
* Brooks Automation, Inc. 247,000 3,458
* The Cherry Corp. Class A 369,500 5,358
* Envirosource, Inc. 834,700 3,443
* Newpark Resources, Inc. 220,000 4,840
Raychem Corp. 20,000 712
* Southdown, Inc. 170,000 3,230
* Southern Energy Homes, Inc. 348,000 4,002
* Tetra Technologies Inc. 149,400 1,961
Valmont Industries, Inc. 408,000 8,568
------------
GROUP TOTAL 43,774
------------
- ------------------------------------------------------------------
CONSUMER CYCLICAL (17.4%)
*(1) Airsensors Inc. 286,000 2,431
* Airsensors Inc. Warrants
Exp. 1/1/96 90,000 101
* Anchor Gaming 172,000 2,731
* Autocam Corp. 196,635 2,507
*(1) Back Bay Restaurant Group, Inc. 200,000 900
* Bolle America, Inc. 200,000 1,500
* Bollinger Industries, Inc. 176,300 1,278
* Borg-Warner Security Corp. 800,000 6,200
* Catalina Marketing Corp. 177,500 8,342
* The Cheesecake Factory 100,000 1,950
Coachmen Industries, Inc. 274,600 4,600
* Comcast UK Cable Partners Ltd. 250,000 3,437
* Custom Chrome 110,000 2,118
* Day Runner, Inc. 288,500 4,183
*(1) Dorsey Trailers, Inc. 285,000 3,313
* Egghead, Inc. 627,700 5,963
Ellett Brothers, Inc. 235,000 1,880
* Featherlite Manufacturing, Inc. 150,000 1,369
* First Team Sports, Inc. 200,000 4,000
* General Nutrition Cos., Inc. 200,000 4,900
* Geerlings & Wade Inc. 175,000 2,756
* Good Guys, Inc. 470,000 4,524
* Harvey Entertainment Co. 127,000 1,841
Intelligent Electronics Inc. 1,054,300 10,148
* International Family
Entertainment 151,800 2,296
* Iwerks Entertainment, Inc. 346,000 1,254
* JPE, Inc. 179,000 2,819
* Lifetime Hoan Corp. 200,000 2,425
Marcus Corp. 270,000 7,189
McClatchy Newspapers, Inc. 200,000 4,425
McGrath Rent Corp. 387,400 6,005
* Merisel, Inc. 1,131,200 6,787
* Mikohn Gaming Corp. 36,500 287
* Musicland Stores Corp. 1,100,000 10,725
* National Auto Credit Co. 525,000 5,578
* People's Choice TV Corp. 300,000 8,400
* Playboy Enterprises Inc. Class B 560,000 4,550
* Prime Hospitality Corp. 600,000 6,000
* Renters Choice, Inc. 150,000 3,187
* Rex Stores Corp. 200,000 2,725
Rival Manufacturing Co. 220,400 3,526
S-K-I, Ltd. 102,550 1,564
E.W. Scripps Co. 170,000 4,866
Sturm, Ruger & Co., Inc. 275,000 8,250
* Spartan Motors, Inc. 305,000 3,088
* Spectrum Holobyte 105,500 1,609
* Sports & Recreation 600,000 7,050
* Truck Components, Inc. 137,000 1,473
* Urban Outfitters, Inc. 286,500 5,873
VWR Corp. 329,900 3,175
* Variflex, Inc. 190,000 2,993
Wabash National Corp. 175,000 5,447
* Westcott Communications 500,000 6,938
Winnebago Industries, Inc. 337,000 3,412
------------
GROUP TOTAL 216,888
------------
- ------------------------------------------------------------------
CONSUMER STAPLES (2.0%)
Bridgford Foods Corp. 163,400 1,961
* Canandaigua Wine Co., Inc.
Class A 130,000 5,590
* Celestial Seasonings, Inc. 67,300 1,262
* Cosmetic Center, Inc. Class A 86,000 666
Flowers Industries, Inc. 200,000 3,475
Maybelline, Inc. 135,000 2,970
* National Dentex Corp. 150,000 2,025
* Pollo Tropical, Inc. 375,000 3,094
* Stokely USA, Inc. 274,800 1,546
* Sylvan, Inc. 200,000 2,250
* Whole Food Markets, Inc. 25,000 294
------------
GROUP TOTAL 25,133
------------
- ------------------------------------------------------------------
</TABLE>
6
<PAGE> 7
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES (000)+
- -------------------------------------------------------------------
<S> <C> <C>
Energy (.8%)
* Kirby Corp. 725,000 $ 9,969
-------------
- -------------------------------------------------------------------
Financial (7.7%)
* American Re Corp. 150,000 5,700
* Astoria Financial Corp. 150,000 5,081
Charter One Financial 130,000 2,958
* Dime Bankcorp Inc. 200,718 1,932
Fidelity National Financial, Inc. 473,315 5,088
* First Federal Financial 50,200 847
Frontier Insurance Group, Inc. 147,100 3,696
GP Financial Corp. 300,000 7,162
* Imperial Credit 95,000 902
(1)Inter-Regional Financial
Group, Inc. 415,600 10,494
Long Island Bancorp, Inc. 252,600 4,642
Mark Centers Trust 101,700 1,284
Mercury Finance Co. 479,144 7,247
North American Mortgage 350,000 6,300
* Olympic Financial Ltd. 394,000 4,728
* Physicians Health Services, Inc. 250,000 6,406
The Quick & Reilly Group, Inc. 271,500 11,030
Standard Federal Bank 150,000 4,219
United Cos. Finance Corp. 157,130 5,932
-------------
GROUP TOTAL 95,648
-------------
- -------------------------------------------------------------------
HEALTH CARE (16.7%)
* Abbey Healthcare Group, Inc. 60,000 2,370
* Advanced Magnetics, Inc. 193,900 3,684
* Alliance Pharmaceutical Corp. 600,000 2,925
* American Medical Response, Inc. 150,000 3,844
* Amylin Pharmaceuticals, Inc. 432,800 1,731
* Applied Immune Sciences 150,000 694
Arrow International, Inc. 100,000 3,275
* Athena Neurosciences, Inc. 466,000 3,204
* Autoimmune, Inc. 84,200 558
Ballard Medical Products 125,000 1,500
* Biomet, Inc. 200,000 3,450
* Bio-Rad Labs, Inc. Class A 216,000 6,237
* Cell Genesys, Inc. 450,000 1,687
* Cordis Corp. 175,000 12,556
* Cytotherapeutics, Inc. 173,000 1,103
* Datascope Corp. 100,000 1,800
* FHP International Corp. 400,000 9,500
* FPA Medical Management, Inc. 120,000 1,080
* Gelman Sciences, Inc. 294,025 5,292
* Genetics Institute Inc.
Depository Shares 236,142 8,855
* Genzyme Corp. 107,800 4,582
* Genzyme Corp. Tissue Repair 118,296 769
* Gilead Sciences, Inc. 120,000 1,740
* Grancare Inc. 600,000 9,825
* Haemonetics Corp. 700,000 10,850
* Healthdyne Inc. 122,000 1,296
* Healthdyne Technologies, Inc. 208,900 2,481
* Hillhaven Corp. 350,000 9,625
* Idec Pharmaceuticals Corp. 231,800 927
* Immulogic Pharmaceutical Corp. 200,000 1,506
* Immunex Corp. 250,000 2,938
* Isomedix, Inc. 140,200 2,085
Kinetic Concepts, Inc. 688,700 5,165
Life Technologies, Inc. 300,000 6,450
* Marsam Pharmaceuticals, Inc. 510,800 7,087
Minntech Corp. 279,077 4,116
* Multicare Cos., Inc. 287,000 5,884
* Patterson Dental Co. 258,500 6,010
* Physician Corp. of America 350,000 6,212
* Protein Design Labs 150,000 3,694
* Regency Health Services, Inc. 300,000 3,675
* Rural/Metro Corp. 50,200 916
* Sofamor/Danek Group Inc. 100,000 2,425
* Sullivan Dental Products, Inc. 344,500 4,651
Surgical Care Affiliates, Inc. 190,000 4,418
* Sybron Corp. 160,000 5,940
* Systemed Inc. 400,000 2,750
* Target Therapeutics, Inc. 100,000 3,625
* Theratech, Inc. 325,000 4,022
* Univax Biologics, Inc. 377,500 2,501
* Value Health, Inc. 105,800 3,650
* Vertex Pharmaceuticals, Inc. 70,000 998
-------------
GROUP TOTAL 208,158
-------------
- -------------------------------------------------------------------
TECHNOLOGY (30.8%)
* A+ Communications, Inc. 141,200 2,012
Active Voice Corp. 209,000 5,382
* American Power Conversion Corp. 75,000 1,256
* American Telecasting, Inc. 260,000 3,705
* Anacomp, Inc. 634,400 595
* Applied Voice Technology, Inc. 212,000 3,233
* Atria Software, Inc. 144,000 6,192
Automatic Data Processing, Inc. 24,000 1,542
* Avid Technology, Inc. 167,700 6,750
(1) BGS Systems, Inc. 155,000 4,417
* BISYS Group, Inc. 432,400 8,972
BMC Industries, Inc. 398,700 7,177
* BMC Software, Inc. 161,200 9,994
*(1) Bachman Information Systems, Inc. 854,400 5,233
*(1) Boole & Babbage Inc. 412,650 11,657
* Broadband Technologies, Inc. 125,000 3,125
* CNS, Inc. 90,000 1,935
* California Microwave, Inc. 125,000 3,875
* Centigram Communications 260,000 3,835
Charter Power Systems, Inc. 228,000 4,617
* Cheyenne Software, Inc. 500,000 7,250
</TABLE>
7
<PAGE> 8
STATEMENT OF NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES (000)+
- -------------------------------------------------------------------
<S> <C> <C>
* Cognos Inc. 540,000 $ 13,095
*(1) Conductus, Inc. 292,300 2,119
*(1) CyCare Systems, Inc. 250,000 6,250
* Cyrix Corp. 300,000 7,125
Dallas Semiconductor Corp. 1,107,100 22,142
* Dialogic Corp. 150,000 3,413
* Digital Biometrics, Inc. 213,500 1,975
* Dionex Corp. 359,500 14,919
* Encad, Inc. 265,000 6,161
* Executone Information Systems 1,500,000 4,687
* Expert Software Inc. 200,000 2,950
* FLIR Systems, Inc. 230,000 3,105
* FTP Software, Inc. 100,000 2,600
* GTI Corp. 94,400 1,251
* Gilat Satellite Networks Ltd. 229,000 3,607
* General Datacomm
Industries, Inc. 200,000 1,925
* Heartland Wireless
Communications, Inc. 25,000 456
Hewlett-Packard Co. 70,000 4,629
* IFR Systems, Inc. 237,225 2,847
* Information Resources, Inc. 340,000 4,718
* Input/Output, Inc. 577,000 19,546
* Integrated Silicon Systems 140,000 3,780
* International Cabletel, Inc. 192,500 5,534
* International Imaging
Materials Inc. 236,100 6,198
* Itron, Inc. 394,000 9,949
* Kenetech Corp. 61,000 641
* Madge NV 44,900 1,229
* MapInfo Corp. 182,000 5,415
* Marquette Electronics Class A 150,000 2,738
* Micrografx, Inc. 314,000 1,923
* Microtouch Systems, Inc. 155,000 5,657
* Natural Microsystems Corp. 55,000 852
* Parametric Technology Corp. 80,000 3,780
*(1) Peoples Telephone Co., Inc. 1,100,000 4,675
* Policy Management
Systems Corp. 200,000 10,075
* Recoton Corp. 295,150 4,501
*(1) Ross Systems, Inc. 1,042,500 4,170
* SHL Systemhouse, Inc. 553,800 3,600
* Saber Software Corp. 205,000 1,384
* Sequent Computer Systems, Inc. 200,000 3,300
* Stac Electronics 250,000 1,562
* Sterling Electronics Corp. 315,800 4,382
* Sterling Software, Inc. 200,000 6,800
* Stratus Computer, Inc. 130,000 3,868
* Summagraphics Corp. 200,000 950
* SunGard Data Systems 290,000 13,340
* Symbol Technologies, Inc. 160,000 5,300
* Synopsys, Inc. 223,000 12,098
* Systems & Computer
Technology Corp. 425,000 8,394
*(1) SystemSoft Corp. 230,000 2,932
TSI, Inc. 138,750 1,179
* 3D Systems Corp. 600,000 3,225
* Tylan General, Inc. 15,000 180
* Walker Interactive Systems, Inc. 360,000 2,340
* Wall Data Inc. 110,000 2,035
* Xpedite Systems, Inc. 155,000 3,526
------------
GROUP TOTAL 383,786
------------
- -------------------------------------------------------------------
TRANSPORT & SERVICES (5.0%)
Air Express International Corp. 572,450 13,453
* Boyd Brothers Transportation, Inc. 180,000 1,980
Expeditors International of
Washington, Inc. 327,000 7,357
Frozen Food Express
Industries, Inc. 568,082 6,249
* Heartland Express, Inc. 376,550 9,696
* M.S. Carriers Inc. 319,999 7,600
* RailTex, Inc. 299,000 8,223
* Swift Transportation Co., Inc. 529,000 8,133
------------
GROUP TOTAL 62,691
------------
- -------------------------------------------------------------------
MISCELLANEOUS (2.9%)
ADVO, Inc. 400,000 8,050
* Asyst Technologies, Inc. 97,000 3,759
* Careerstaff Unlimited, Inc. 243,100 4,406
* Digitran Systems, Inc. 185,700 93
* Education Alternatives, Inc. 10,000 167
* NFO Research Inc. 126,000 2,300
* On Assignment, Inc. 197,000 3,743
* Pharmacy Management
Services, Inc. 350,000 5,513
*(1) Prepaid Legal Services, Inc. 876,900 4,384
* Prepaid Legal Services, Inc.
Warrants Exp. 6/8/99 200,000 475
Wackenhut Corp. Class B 258,625 3,815
------------
GROUP TOTAL 36,705
------------
- -------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $962,855) 1,105,703
- -------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS (.1%)
- -------------------------------------------------------------------
AMC Entertainment, Inc. $1.75 47,100 1,148
* Telios Pharmaceuticals 425,000 27
- -------------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $2,913) 1,175
- -------------------------------------------------------------------
</TABLE>
8
<PAGE> 9
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT VALUE
(000) (000)+
- -----------------------------------------------------------------
<S> <C> <C>
TEMPORARY CASH INVESTMENT (13.1%)
- -----------------------------------------------------------------
REPURCHASE AGREEMENT
Collateralized by U.S. Government
Obligations in a Pooled
Cash Account
5/1/95
(Cost $163,268) $ 163,268 $ 163,268
- ------------------------------------------------------------------
TOTAL INVESTMENTS (101.8%)
(Cost $1,129,036) 1,270,146
- ------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-1.8%)
- ------------------------------------------------------------------
Other Assets--Note C 14,176
Liabilities (36,301)
-------------
(22,125)
- ------------------------------------------------------------------
NET ASSETS (100%)
- ------------------------------------------------------------------
Applicable to 27,386,893 outstanding
$.001 par value shares
(authorized 100,000,000 shares) $1,248,021
- ------------------------------------------------------------------
NET ASSET VALUE PER SHARE $45.57
==================================================================
</TABLE>
+ See Note A to Financial Statements.
* Non-Income Producing Security.
(1) Considered an affiliated company as the Fund owns more than
5% of the outstanding voting securities of such company.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
AT APRIL 30, 1995, NET ASSETS CONSISTED OF:
- ------------------------------------------------------------------
Amount Per
(000) Share
---------- ------
<S> <C> <C>
Paid in Capital $1,067,090 $38.96
Undistributed Net
Investment Income 2,073 .08
Accumulated Net
Realized Gains 37,748 1.38
Unrealized Appreciation
of Investments--Note D 141,110 5.15
- ------------------------------------------------------------------
NET ASSETS $1,248,021 $45.57
- ------------------------------------------------------------------
</TABLE>
9
<PAGE> 10
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Six Months Ended
April 30, 1995
(000)
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
INCOME
Dividends. . . . . . . . . . . . . . . . . . . . . . . $ 2,495
Interest . . . . . . . . . . . . . . . . . . . . . . . 4,858
- --------------------------------------------------------------------------------------------------
Total Income . . . . . . . . . . . . . . . . . 7,353
- --------------------------------------------------------------------------------------------------
EXPENSES
Investment Advisory Fees--Note B
Basic Fees. . . . . . . . . . . . . . . . . . . . . $1,627
Performance Adjustments . . . . . . . . . . . . . . 66 1,693
------
The Vanguard Group--Note C
Management and Administrative . . . . . . . . . . . 1,989
Marketing and Distribution . . . . . . . . . . . . 104 2,093
------
Taxes (other than income taxes). . . . . . . . . . . . 53
Custodian's Fees . . . . . . . . . . . . . . . . . . . 29
Auditing Fees. . . . . . . . . . . . . . . . . . . . . 4
Shareholders' Reports. . . . . . . . . . . . . . . . . 41
Annual Meeting and Proxy Costs . . . . . . . . . . . . 11
Directors' Fees and Expenses . . . . . . . . . . . . . 3
- --------------------------------------------------------------------------------------------------
Total Expenses. . . . . . . . . . . . . . . . . 3,927
- --------------------------------------------------------------------------------------------------
Net Investment Income. . . . . . . . . . . . 3,426
- --------------------------------------------------------------------------------------------------
REALIZED NET GAIN ON
INVESTMENT SECURITIES SOLD . . . . . . . . . . . . . . . 37,833
- --------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION)
OF INVESTMENT SECURITIES . . . . . . . . . . . . . . . . 16,391
- --------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting
from Operations. . . . . . . . . . . . . . $57,650
==================================================================================================
</TABLE>
10
<PAGE> 11
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED Year Ended
APRIL 30, 1995 October 31, 1994
(000) (000)
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS
Net Investment Income. . . . . . . . . . . . . . . . . . . . $ 3,426 $ 3,670
Realized Net Gain. . . . . . . . . . . . . . . . . . . . . . 37,833 55,617
Change in Unrealized Appreciation (Depreciation) . . . . . . 16,391 (15,205)
- --------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations. . 57,650 44,082
- --------------------------------------------------------------------------------------------------
DISTRIBUTIONS (1)
Net Investment Income . . . . . . . . . . . . . . . . . . . (4,173) (2,310)
Realized Net Gain. . . . . . . . . . . . . . . . . . . . . . (55,486) (85,303)
- --------------------------------------------------------------------------------------------------
Total Distributions . . . . . . . . . . . . . . . . . . (59,659) (87,613)
- --------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (2)
Issued --Regular . . . . . . . . . . . . . . . . . . . . . 102,248 123,565
--In Lieu of Cash Distributions . . . . . . . . . . 58,531 85,931
--Exchange. . . . . . . . . . . . . . . . . . . . . 90,484 183,170
--Exchange for Net Assets of Vanguard Specialized
Portfolios-Technology Portfolio--Note E . . . . -- 75,241
Redeemed --Regular . . . . . . . . . . . . . . . . . . . . . (40,511) (82,956)
--Exchange. . . . . . . . . . . . . . . . . . . . . (73,049) (31,432)
- --------------------------------------------------------------------------------------------------
Net Increase from
Capital Share Transactions. . . . . . . . . . . . . . 137,703 353,519
- --------------------------------------------------------------------------------------------------
Total Increase. . . . . . . . . . . . . . . . . . . . . 135,694 309,988
- --------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Period. . . . . . . . . . . . . . . . . . . . . 1,112,327 802,339
- --------------------------------------------------------------------------------------------------
End of Period (3). . . . . . . . . . . . . . . . . . . . . . $1,248,021 $1,112,327
==================================================================================================
(1) Distributions Per Share
Net Investment Income . . . . . . . . . . . . . . . . . $ .17 $ .14
Realized Net Gain. . . . . . . . . . . . . . . . . . . . $2.26 $5.17
- --------------------------------------------------------------------------------------------------
(2) Shares Issued and Redeemed
Issued . . . . . . . . . . . . . . . . . . . . . . . . . 4,378 6,824
Issued in Lieu of Cash Distributions . . . . . . . . . . 1,402 1,969
Issued in Exchange for Net Assets of Vanguard Specialized
Portfolios-Technology Portfolio--Note E. . . . . . . -- 1,697
Redeemed . . . . . . . . . . . . . . . . . . . . . . . . (2,578) (2,557)
- --------------------------------------------------------------------------------------------------
3,202 7,933
- --------------------------------------------------------------------------------------------------
(3) Undistributed Net Investment Income. . . . . . . . . . . $ 2,073 $ 2,820
- --------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 12
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Year Ended October 31,
SIX MONTHS ENDED --------------------------------------------------------
For a Share Outstanding Throughout Each Period APRIL 30, 1995 1994 1993 1992 1991 1990
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . . . . $45.99 $49.37 $41.23 $36.75 $22.62 $30.76
------ ------ ------ ------ ------ ------
INVESTMENT OPERATIONS
Net Investment Income . . . . . . . . . . . . . . . .13 .16 .14 .15 .26 .31
Net Realized and Unrealized Gain
(Loss) on Investments . . . . . . . . . . . . . . 1.88 1.77 8.91 4.59 14.21 (7.07)
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS . . . . . . . 2.01 1.93 9.05 4.74 14.47 (6.76)
- ------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income. . . . . . . . (.17) (.14) (.13) (.26) (.34) (.37)
Distributions from Realized Capital Gains . . . . . (2.26) (5.17) (.78) -- -- (1.01)
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS . . . . . . . . . . . . . (2.43) (5.31) (.91) (.26) (.34) (1.38)
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . . . $45.57 $45.99 $49.37 $41.23 $36.75 $22.62
==============================================================================================================================
TOTAL RETURN . . . . . . . . . . . . . . . . . . . . . +4.85% +4.49% +22.28% +12.95% +64.64% -22.92%
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Period (Millions) . . . . . . . . . $1,248 $1,112 $802 $519 $381 $207
Ratio of Expenses to Average Net Assets. . . . . . . . .68%* .70% .73% .69% .56% .67%
Ratio of Net Investment Income to
Average Net Assets . . . . . . . . . . . . . . . . .59%* .39% .32% .38% .85% 1.11%
Portfolio Turnover Rate. . . . . . . . . . . . . . . . 60%* 82% 51% 43% 49% 46%
- ------------------------------------------------------------------------------------------------------------------------------
*Annualized.
</TABLE>
12
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS
Vanguard Explorer Fund is registered under the Investment Company Act of 1940 as
a diversified open-end investment company.
A. The following significant accounting policies are in conformity with
generally accepted accounting principles for investment companies. Such policies
are consistently followed by the Fund in the preparation of financial
statements.
1. SECURITY VALUATION: Securities listed on an exchange are valued at the latest
quoted sales prices as of the close of the New York Stock Exchange (generally
4:00 PM) on the valuation date; securities not traded are valued at the mean
of the latest quoted bid and asked prices. Securities not listed are valued
at the latest quoted bid prices. Temporary cash investments are valued at
cost which approximates market value.
2. FEDERAL INCOME TAXES: The Fund intends to continue to qualify as a regulated
investment company and distribute all of its taxable income. Accordingly, no
provision for Federal income taxes is required in the financial statements.
3. REPURCHASE AGREEMENTS: The Fund, along with other members of The Vanguard
Group of Investment Companies, transfers uninvested cash balances into a
Pooled Cash Account, the daily aggregate of which is invested in repurchase
agreements secured by U.S. Government obligations. Securities pledged as
collateral for repurchase agreements are held by the Fund's custodian bank
until maturity of each repurchase agreement. Provisions of each agreement
ensure that the market value of the collateral is sufficient in the event of
default; however, in the event of default or bankruptcy by the other party to
the agreement, realization and/or retention of the collateral may be subject
to legal proceedings.
4. OTHER: Security transactions are accounted for on the date the securities are
purchased or sold. Costs used in determining realized gains and losses on the
sale of investment securities are those of specific securities sold. Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
B. Under the terms of contracts which expire February 27, 1996, the Fund pays
Wellington Management Company and Granahan Investment Management, Inc. a basic
investment advisory fee calculated at an annual percentage rate of the average
net assets of the Fund. The basic fee thus computed is subject to quarterly
adjustments based on performance relative to the Russell 2000 Index. For the six
months ended April 30, 1995, the aggregate investment advisory fee represented
an effective annual base rate of .28 of 1% of Fund average net assets before an
increase of $66,000 (.01 of 1%) based on performance.
C. The Vanguard Group, Inc. furnishes at cost corporate management,
administrative, marketing, and distribution services. The costs of such services
are allocated to the Fund under methods approved by the Board of Directors. At
April 30, 1995, the Fund had contributed capital of $178,000 to Vanguard
(included in Other Assets), representing .9% of Vanguard's capitalization. The
Fund's directors and officers are also directors and officers of Vanguard.
Vanguard has requested the Fund's investment advisers to direct certain
portfolio trades, subject to obtaining the best price and execution, to brokers
who have agreed to rebate or credit to the Fund a portion of the commissions
generated. Such rebates or credits are used solely to reduce the Fund's
administrative expenses. For the six months ended April 30, 1995, directed
brokerage arrangements reduced the Fund's expenses by $42,000 (an annual rate of
.01 of 1% of average net assets).
13
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS (continued)
D. During the six months ended April 30, 1995, the Fund made purchases of
$398,513,000 and sales of $302,702,000 of investment securities other than U.S.
Government securities and temporary cash investments.
At April 30, 1995, unrealized appreciation for financial reporting and Federal
income tax purposes aggregated $141,110,000, of which $213,268,000 related to
appreciated securities and $72,158,000 related to depreciated securities.
E. In accordance with the terms of an agreement approved by Vanguard Specialized
Portfolios-Technology Portfolio shareholders, on June 2, 1994, Vanguard Explorer
Fund issued 1,697,000 of its capital shares in exchange for the net assets of
Vanguard Specialized Portfolios-Technology Portfolio of $75,241,000, including
$1,491,000 of unrealized depreciation; combined net assets were $1,038,199,000
as of the merger date. Shareholders of Vanguard Specialized
Portfolios-Technology Portfolio received .390 shares of Vanguard Explorer Fund
for each share of Vanguard Specialized Portfolios-Technology Portfolio. The
transaction, which was a tax-free exchange, has been accounted for by combining
the assets and liabilities of each Fund at their value on the date of the
merger. The identified cost of investments were similarly combined.
14
<PAGE> 15
DIRECTORS AND OFFICERS
JOHN C. BOGLE, Chairman and Chief Executive Officer
Chairman and Director of The Vanguard Group, Inc., and of each of the
investment companies in The Vanguard Group.
JOHN J. BRENNAN, President
President and Director of The Vanguard Group, Inc., and of each of the
investment companies in The Vanguard Group.
ROBERT E. CAWTHORN, Chairman of Rhone-Poulenc Rorer, Inc.; Director of Sun
Company, Inc.
BARBARA BARNES HAUPTFUHRER, Director of The Great Atlantic and Pacific Tea
Company, Alco Standard Corp., Raytheon Company, Knight-Ridder, Inc., and
Massachusetts Mutual Life Insurance Co.
BRUCE K. MACLAURY, President of The Brookings Institution; Director of American
Express Bank Ltd., The St. Paul Companies, Inc., and Scott Paper Company.
BURTON G. MALKIEL, Chemical Bank Chairman's Professor of Economics, Princeton
University; Director of Prudential Insurance Co. of America, Amdahl Corporation,
Baker Fentress & Co., The Jeffrey Co., and Southern New England Communications
Company.
ALFRED M. RANKIN, JR., Chairman, President, and
Chief Executive Officer of NACCO Industries, Inc.; Director of NACCO Industries,
The BFGoodrich Company, Reliance Electric Company, and The Standard Products
Company.
JOHN C. SAWHILL, President and Chief Executive Officer of The Nature
Conservancy; formerly, Director and Senior Partner of McKinsey & Co. and
President of New York University; Director of Pacific Gas and Electric Company
and NACCO Industries.
JAMES O. WELCH, JR., Retired Chairman of Nabisco Brands, Inc.; retired Vice
Chairman and Director of RJR Nabisco; Director of TECO Energy, Inc.
J. LAWRENCE WILSON, Chairman and Chief Executive Officer of Rohm & Haas Company;
Director of Cummins Engine Company; Trustee of Vanderbilt University and the
Culver Educational Foundation.
OTHER FUND OFFICERS
RICHARD F. HYLAND, Treasurer; Treasurer of The Vanguard Group, Inc., and of each
of the investment companies in The Vanguard Group.
RAYMOND J. KLAPINSKY, Secretary; Senior Vice President and Secretary of The
Vanguard Group, Inc.; Secretary of each of the investment companies in The
Vanguard Group.
KAREN E. WEST, Controller; Vice President of The Vanguard Group, Inc.;
Controller of each of the investment companies in The Vanguard Group.
OTHER VANGUARD GROUP OFFICERS
ROBERT A. DISTEFANO IAN A. MACKINNON
Senior Vice President Senior Vice President
Information Technology Fixed Income Group
JEREMY G. DUFFIELD F. WILLIAM MCNABB III
Senior Vice President Senior Vice President
Planning & Development Institutional
JAMES H. GATELY RALPH K. PACKARD
Senior Vice President Senior Vice President
Individual Investor Group Chief Financial Officer
15
<PAGE> 16
THE VANGUARD FAMILY OF FUNDS
FIXED INCOME FUNDS
MONEY MARKET FUNDS
Vanguard Admiral Funds
U.S. Treasury Money
Market Portfolio
Vanguard Money Market Reserves
TAX-EXEMPT MONEY MARKET FUNDS
Vanguard Municipal Bond Fund
Money Market Portfolio
Vanguard State Tax-Free Funds
Money Market Portfolios
(CA, NJ, OH, PA)
TAX-EXEMPT INCOME FUNDS
Vanguard Municipal Bond Fund
Vanguard State Tax-Free Funds
Insured Longer-Term Portfolios
(CA, FL, NJ, NY, OH, PA)
INCOME FUNDS
Vanguard Admiral Funds
Vanguard Fixed Income Securities Fund
Vanguard Preferred Stock Fund
EQUITY AND BALANCED FUNDS
GROWTH AND INCOME FUNDS
Vanguard Convertible
Securities Fund
Vanguard Equity Income Fund
Vanguard Quantitative Portfolios
Vanguard/Trustees' Equity Fund
U.S. Portfolio
Vanguard/Windsor Fund
Vanguard/Windsor II
BALANCED FUNDS
Vanguard Asset Allocation Fund
Vanguard LifeStrategy Funds
Income Portfolio
Conservative Growth Portfolio
Moderate Growth Portfolio
Growth Portfolio
Vanguard STAR Fund
Vanguard/Wellesley Income Fund
Vanguard/Wellington Fund
GROWTH FUNDS
Vanguard/Morgan Growth Fund
Vanguard/PRIMECAP Fund
Vanguard U.S. Growth Portfolio
AGGRESSIVE GROWTH FUNDS
Vanguard Explorer Fund
Vanguard Specialized Portfolios
INTERNATIONAL FUNDS
Vanguard International
Growth Portfolio
Vanguard/Trustees' Equity Fund
International Portfolio
INDEX FUNDS
Vanguard Index Trust
Total Stock Market Portfolio
500 Portfolio
Extended Market Portfolio
Growth Portfolio
Value Portfolio
Small Capitalization Stock Portfolio
Vanguard International Equity Index Fund
European Portfolio
Pacific Portfolio
Emerging Markets Portfolio
Vanguard Bond Index Fund
Vanguard Tax-Managed Fund
Vanguard Balanced Index Fund
[THE VANGUARD GROUP LOGO]
<TABLE>
<S> <C>
Vanguard Financial Center Valley Forge, Pennsylvania 19482
New Account Information: Shareholder Account Services:
1-(800) 662-7447 1-(800) 662-2739
</TABLE>
This Report has been prepared for shareholders and may be distributed to
others only if preceded or accompanied by a current prospectus. All Funds in
the Vanguard Family are offered by prospectus only.
Q242-4/95
[VANGUARD EXPLORER FUND LOGO]
Semi-Annual Report
April 30, 1995
