Vanguard
Explorer Fund

Fund Profile
October 28, 1997

A member of
The Vanguard Group



1        OBJECTIVE


Vanguard Explorer Fund seeks to provide  long-term capital growth.  The Fund may
not meet this objective.

2        INVESTMENT STRATEGY

The Fund  invests in stocks of small  companies  (that is, those with an average
market value of less than $1 billion). These companies tend to be unseasoned but
are considered to have favorable  prospects for growth. In addition to investing
in common stocks,  the Fund may also invest,  to a limited degree, in short-term
fixed-income securities, and futures and options contracts.

3        RISKS

The Fund's total  return will  fluctuate,  so an investor  could lose money over
short or extended periods. More specifically,  investors in the Fund are exposed
to:

- - A HIGH  degree of STOCK  MARKET  RISK (the  possibility  that stock  prices in
general will decline over short or extended periods).

Historical  returns for the U.S.  stock  market (as  measured by the  Standard &
Poor's 500  Composite  Stock Price  Index) show some of this market  volatility.
From 1926 to 1996,  the S&P 500 Index  provided an  annualized  total  return of
10.7%,  but  provided a  negative  return--averaging  -12.3%--in  20 of these 71
years.  Annual  returns for the period  ranged from a low of -43.3% to a high of
53.9%.

Because it  emphasizes  the stocks of smaller  companies,  the Fund is likely to
perform differently than broader market benchmarks like the S&P 500 Index.

4        APPROPRIATENESS

This Fund may be suitable for investors who:
- -        Are seeking long-term capital growth.
- -        Are willing to assume above-average investment risk.
- -        Want an aggressive growth fund as part of a balanced investment 
         program.
- -        Plan to invest for at least five years.

The Fund is not suitable for investors who:
- -        Are seeking current income.
- -        Cannot tolerate fluctuating share prices.



5        FEES AND EXPENSES

Vanguard  Explorer  Fund--like all Vanguard  funds--is offered on a pure no-load
basis (that is, the Fund has no 12b-1 fees or charges to buy or sell shares).

The Fund's  operating  expenses are deducted  from its total assets before daily
share prices and income  distributions are calculated.  The Fund's expense ratio
for fiscal year 1996 was 0.63% of assets.

ANNUAL FUND OPERATING EXPENSES
- ------------------------------

Investment Advisory Fees..............  0.35%
Distribution Costs....................  0.02
Other Expenses........................  0.26
                                        ----
TOTAL OPERATING EXPENSES..............  0.63%
                                        ----

The following example  illustrates the expenses that you would incur on a $1,000
investment over various periods, assuming (1) a 5% annual rate of return and (2)
redemption at the end of each period.

1 YEAR          3 YEARS          5 YEARS          10 YEARS
- ----------------------------------------------------------
  $6             $20               $35               $79

This example  should not be considered to represent  past or future  expenses or
performance. Actual expenses may be higher or lower than those shown.



6        PAST PERFORMANCE

                                   PERFORMANCE
                          ANNUAL RETURNS (%) 1987-1996

                    VANGUARD                 RUSSELL
                 EXPLORER FUND             2000 INDEX*

1987                 -6.9                      -8.8
1988                 25.8                      24.9
1989                  9.4                      16.2
1990                -10.8                     -19.5
1991                 55.9                      46.1
1992                 13.0                      18.4
1993                 15.4                      18.9
1994                  0.5                      -1.8
1995                 26.6                      28.4
1996                 14.0                      16.5


                               PERFORMANCE SUMMARY
                       (PERIODS ENDED SEPTEMBER 30, 1997)

                           AVERAGE ANNUAL TOTAL RETURN
                           EXPLORER FUND          RUSSELL 2000*
1 Year                       22.0%                     33.2%
5 Years                      18.6%                     20.5%
10 Years                     12.5%                     12.2%

Note: In evaluating past  performance,  it is important to consider that returns
from stocks were close to their  highest  levels in history  during the past ten
years. Past performance is not indicative of future performance.

Performance  figures  include the  reinvestment of all dividends and any capital
gains  distributions.  All returns are net of  expenses.  The  performance  data
quoted 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.

*The Russell 2000 Index is a diversified  group of some 2,000 securities used to
measure the  performance of  small-company  stocks.  An index is unmanaged;  you
cannot invest in an index.  Frank Russell Company is the owner of trademarks and
copyrights relating to the Russell Indexes.

"Standard & Poor's 500," "S&P  500(R),"  "Standard &  Poor's(R),"  "S&P(R)," and
"500" are trademarks of The McGraw-Hill Companies, Inc.



7        INVESTMENT ADVISER

The Fund employs four advisers; each runs its portion of the Fund independently.
The  principals  are (1) John J.  Granahan,  President  of  Granahan  Investment
Management,  Inc., which managed 51.1% of the Fund's assets invested in equities
as of September  30, 1997;  (2)Kenneth L. Abrams,  Vice  President of Wellington
Management Company, LLP (31.5% of equities);  (3) Edward N. Antoian,  Partner of
Chartwell  Investment  Partners  (8.7% of  equities);  and (4) George U. Sauter,
Managing  Director-Vanguard  Core  Management  Group  (8.7%  of  equities).  Mr.
Granahan  has advised  Explorer  Fund since 1990.  Mr.  Abrams has  overseen his
firm's  portion since 1994. Mr.  Antoian and Mr. Sauter began  overseeing  their
portions of the Fund's assets on August 1, 1997.

8        PURCHASES

You may purchase shares by mail,  wire, or exchange from another  Vanguard fund.
The minimum initial investment is $3,000 ($1,000 for IRAs and custodial accounts
for minors).

9        REDEMPTIONS AND EXCHANGES

You may redeem or  exchange  shares by sending a letter to or calling  Vanguard.
You may exchange  shares  through our website at  http://www.vanguard.com.*  The
Fund's share price is expected to fluctuate and, at redemption, may be higher or
lower than when purchased, resulting in a taxable gain or a loss.

10       DISTRIBUTIONS

The Fund expects to pay dividend and capital gains distributions annually. These
can be  automatically  reinvested  or received in cash.  All  distributions  are
taxable to you whether reinvested or received in cash.

11       OTHER SERVICES

- -        Vanguard Fund Express(R)--electronic transfers between your bank
         account and the Fund.
- -        Vanguard  Tele-Account(R)--around-the-clock  access  to  Vanguard  fund
         information,   account  balances,  and  some  transactions  by  calling
         1-800-662-6273 (ON-BOARD).
- -        Investor Information--toll-free access to Vanguard Associates by
         calling 1-800-662-7447 (SHIP).

*Before using this service,  you must register  through our website and obtain a
confidential password.



                     [THE VANGUARD GROUP LOGO]

Post Office Box 2600
Valley Forge, PA 19482

Toll-Free Investor
Information
1-800-662-7447

World Wide Web
http://www.vanguard.com

E-mail
online@vanguard.com

This Fund Profile  contains key  information  about the Fund.  If you would like
more  information  before you invest,  please  consult  the Fund's  accompanying
prospectus.   For  details  about  the  Fund's  holdings  or  recent  investment
strategies,  please review the Fund's most recent  annual or semiannual  report.
The prospectus and reports can be obtained at no cost by calling Vanguard.

(C) 1997 Vanguard Marketing
Corporation, Distributor

FP24 o  1097-5.5A