Company Press Release

VALLEY FORGE, Pa.--(EON: Enhanced Online News)--Vanguard is adding to its family of 30 actively managed stock funds with Vanguard Explorer Value™ Fund, which focuses primarily on stocks of small and medium-size U.S. companies. The fund is now accepting investments during a two-week subscription period that is expected to conclude on March 30, 2010.

Complementing the existing $8.6 billion growth-oriented Vanguard Explorer™ Fund, the new fund is Vanguard’s only actively managed value fund that covers the small- to mid-capitalization segment of the market. The fund is expected to hold a portfolio of fewer than 200 securities, and to maintain valuation measures and an average market capitalization comparable to its benchmark index, the Russell 2500 Value Index.

Following the subscription period, fund assets will be divided equally among three advisory firms, each of which will employ a unique, bottom-up, fundamental approach to stock selection:

* Cardinal Capital Management, L.L.C. is a Connecticut-based investment advisor that manages small- and mid-cap value portfolios. Cardinal Capital believes that a company’s stock price is ultimately determined by its ability to generate excess cash flow and reinvest the cash to increase shareholder value. The firm, founded in 1995, has $1.1 billion in assets under management.

* Sterling Capital Management LLC, based in North Carolina, uses a value-oriented strategy that finds stocks of quality companies selling at large discounts compared to the underlying value of the business. Sterling defines quality companies as those that generate considerable cash flow, offer reinvestment opportunities with attractive returns, and enjoy competitive advantages in their business sector. Founded in 1970, Sterling manages $12 billion in assets.

* Frontier Capital Management Co., LLC is a Boston-based investment manager with a long history of investing in small- and mid-cap stocks. Frontier selects stocks by identifying companies they believe are underpriced relative to their long-term value. These companies generally are inexpensive in many ways, including price-to-book and price-to-earnings ratios. Founded in 1980, the firm is owned jointly by its management team and Affiliated Managers Group, Inc., and manages more than $6 billion in assets. Frontier Capital has served as co-advisor to Vanguard Morgan™ Growth Fund since 2008.

With the addition of Sterling and Cardinal, Vanguard’s network of external advisory firms now includes 29 distinguished investment management organizations located around the world. Vanguard has successfully employed the multimanager approach since 1987, with 15 of the company’s 30 actively managed stock funds employing two or more advisors today.

Vanguard’s expertise in offering actively managed mutual funds dates back to 1929 with the launch of Vanguard Wellington™ Fund, the nation’s oldest balanced mutual fund. Today, the firm is a leading provider of actively managed funds, with 86% of Vanguard’s actively managed equity portfolios outperforming their peer group averages over ten years.* Roughly half of Vanguard’s assets under management are invested in low-cost, actively managed stock, bond, balanced, and money market portfolios.

Vanguard Explorer Value Fund requires a minimum initial investment of $10,000. The fund is expected to have an expense ratio of 0.59%, which is far below the 1.56% average expense ratio of small-capitalization funds, according to Lipper (2009).


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