(PUB) Investing 2015

6

Data through March 31, 2015 Vanguard Health Care Inv

Ticker

Status Yield Total Assets

Mstar Category

VGHCX Open

1.1% $48,539 mil

Health

Morningstar Analyst Rating 03-26-15

Investment Style Equity Stock %

Historical Profile Return Risk Rating Average Low Neutral

93% 94% 90% 93% 93% 92% 96% 96%

Œ

Manager Change Partial Manager Change

Morningstar Pillars Process Performance

17.0 24.0 31.0

Growth of $10,000

Positive Positive Positive Positive Positive

∞ ∞ ∞ ∞ ∞

Investment Values of Fund Investment Values of MSCI Ac Wrld ND

People Parent Price

10.0

Performance Quartile (within Category) History

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 03-15

Morningstar Analyst Rating Morningstar evaluates mutual funds based on five key pillars, which its analysts believe lead to funds that are more likely to outperform over the long term on a risk-adjusted basis. Analyst Rating Spectrum Œ „ ´ˇ ¨

NAV 225.70 211.71 187.16 143.27 128.73 122.40 120.22 101.44 138.63 145.60 139.45 126.79 Total Return % 9.64 28.52 43.19 15.11 11.45 6.16 20.96 -18.45 4.43 10.87 15.41 9.51 +/-MSCI Ac Wrld ND 7.33 24.36 20.39 -1.02 18.80 -6.51 -13.67 23.74 -7.23 -10.08 4.57 -5.72 +/-S&P 1500 Hlth Care TR 2.52 3.73 1.00 -3.24 -0.43 0.96 0.20 5.31 -3.59 3.90 7.92 6.17 Income Return % 0.39 1.18 1.69 2.14 1.84 1.69 1.74 1.40 1.91 1.54 1.23 0.93 Capital Return % 9.25 27.34 41.50 12.97 9.61 4.47 19.22 -19.85 2.52 9.33 14.18 8.58 Total Rtn % Rank Cat 56 39 69 86 17 67 58 20 82 13 17 45 Income $ 0.82 2.12 2.36 2.76 2.24 2.01 1.76 1.92 2.75 2.10 1.54 1.11 Capital Gains $ 5.60 25.44 14.00 2.19 5.18 3.20 0.73 9.52 10.59 6.66 5.08 4.00 Expense Ratio % 0.34 0.35 0.35 0.35 0.35 0.36 0.29 0.26 0.25 0.25 0.21 0.28 Income Ratio % 1.44 1.33 1.94 1.72 1.67 1.73 1.64 1.78 1.33 1.29 1.02 0.91 Turnover Rate % 20 21 8 8 9 6 12 9 8 14 13 13 Net Assets $mil 12,655 11,252 9,636 8,143 8,223 8,426 11,755 10,753 14,965 16,329 16,787 19,606

Pillar Spectrum Positive ∞

§ Negative

¶ Neutral

Performance 03-31-15 1st Qtr 2nd Qtr

3rd Qtr

4th Qtr

Total 6.16

2010 2011 2012 2013 2014

2.94 -9.04 6.64 8.01 7.93 1.38 14.43 5.00 8.84 5.17

8.78 4.23

-9.28 6.66 11.45 5.27 -0.07 15.11 7.56 10.80 43.19 3.90 8.06 28.52

Portfolio Analysis 12-31-14 Share change since 09-14 Total Stocks:89 Sector

Rating and Risk Time Load-Adj

PE Tot Ret% % Assets

Morningstar

Morningstar Risk vs Cat

Morningstar Risk-Adj Rating

Period Return % Rtn vs Cat

Bristol-Myers Squibb Com

Hlth care 53.8 9.27 5.17

1 Yr 3 Yr 5 Yr

29.47 29.10 21.70 13.75 17.63

Trailing

Total +/- MSCI

+/- S&P %Rank Growth of

Actavis PLC

Hlth care

15.62 5.07

.

Return%Ac Wrld ND 1500 HC TR

Cat

$10,000

Avg Avg Avg

Low Low Low

UnitedHealth Group Inc

Hlth care 20.8 17.39 4.65 Hlth care 14.1 2.01 4.55 Hlth care 71.4 0.21 3.79 Hlth care 32.7 6.03 3.40 Hlth care 30.9 9.09 2.95 Hlth care 147.1 10.05 2.69 Hlth care 24.6 4.46 2.22 Hlth care 25.0 8.44 2.11 Hlth care 23.9 0.85 1.99 Hlth care 25.4 5.29 1.90 Technology 48.8 13.30 1.86 Hlth care 22.8 8.17 1.76 Hlth care 116.3 -2.08 1.74 Hlth care 24.2 24.14 1.69 Hlth care . -0.70 2.61 Hlth care . 33.96 1.77

3 Mo 6 Mo 1 Yr

9.64 7.33 18.48 15.75 29.47 24.05 29.10 18.35 21.70 12.71 13.75 7.31 12.43 9.09

2.52 2.97 2.62 2.04 1.22 2.00 3.44

56 10,964 56 11,848 70 12,947 46 21,517 38 26,696 44 36,267 22 57,974

Merck & Co Inc AstraZeneca PLC Eli Lilly and Co McKesson Corp

10 Yr Incept

3 Yr Avg 5 Yr Avg 10 Yr Avg 15 Yr Avg

Other Measures

Standard Index

Best Fit Index

Regeneron Pharmaceutical Vertex Pharmaceuticals I Roche Holding AG Dividen

MSCI Ac Wrld ND

DJ Health

Alpha

19.1 0.66

3.4

Beta

0.91

Medtronic Inc Amgen Inc Mylan Inc Cerner Corp

R-Squared

51

91

Tax Analysis Tax-Adj Rtn% %Rank Cat Tax-Cost Rat %Rank Cat 3 Yr (estimated) 5 Yr (estimated) 10 Yr (estimated) 26.11 51 2.32 60 19.65 45 1.68 59 12.21 48 1.35 65 Potential Capital Gain Exposure: 47% of assets Morningstar’s Take by Laura Pavlenko Lutton 03-26-15 Vanguard Health Care is one of the industry’s best sector funds. This fund’s Morningstar Analyst Rating of Gold hinges on its experienced management team, strong track record, and low fees. Jean Hynes has capably led the team behind this fund since Ed Owens retired at the end of 2012. Hynes had worked with Owens since construction is the health-care team from subadvisor Wellington, including three named comanagers on sibling Hartford Healthcare HGHAX and three analysts. Wellington owes much of its long-term success with this strategy and others to its career sector analysts. It has not skipped a beat since Hynes took the reins. It has added small stakes in some growth-leaning smaller-cap stocks, such as medical-devices firm VWR Corp VWR, but remains focused on larger-cap companies. Top holdings, a handful of which represent more than 4% of assets, include big pharmaceutical companies that have been in the portfolio for a decade 1992 and had comanaged this fund since 2008. Assisting her with stock selection and portfolio

Standard Deviation

9.69

Mean

29.10

Boston Scientific Inc

Sharpe Ratio

2.70

Novartis AG

UCB SA

Humana Inc Incyte Corp Ltd

Hlth care

25.37 1.67

.

or more. The fund is more value-leaning than peers, maintaining a portfolio with lower price/book and price/sales ratios than the category average. It ventures abroad more often than the category norm. Taken together, these characteristics yield a portfolio that’s more defensive than its usual peer. Returns have been strong since Hynes was named to the portfolio, amid lower volatility. To be sure, the return was stronger in 2014. One could argue that this fund is too large to keep its edge over the long term. At $49 billion, it is the largest actively managed sector fund. It cannot make meaningful investments in smaller-cap stocks, though such holdings are more common at sibling Hartford Healthcare and that fund hasn’t kept up with this one over time. What’s more, Vanguard has a solid history of closing its capacity-constrained strategies. The key differentiator for this fund, though, is its low fee, which gives it a lasting advantage.

Astellas Pharma Inc

Hlth care 45.7 23.42 1.66

Current Investment Style

Industry Weightings

% of Stocks

Rel Cat 0.5 1.3 2.1 0.8 0.0 1.0 1.3 0.9 1.7

Market Cap % Giant 41.2 Large 42.8 Mid 13.4 Small 2.6 Micro 0.0 Avg $mil: 38,189

Value Blnd Growth

Large Mid Small

Biotech

16.8 38.1 14.1

Drugs

Mgd Care Hospitals

2.4 0.0 3.9

Other HC Srv Diagnostics

Equipment Good/Srv

16.5

4.5 3.8

Value Measures Price/Earnings Price/Book Price/Sales Price/Cash Flow Dividend Yield % Long-Term Erngs Book Value Sales Cash Flow Historical Erngs Growth Measures

Rel Category

Other

23.31 3.33 1.68 17.08 1.42 10.37 6.53 7.13 -1.41 -2.51

1.21 1.07 0.76 1.33 1.15 0.83 0.75 0.75 NMF NMF

Composition - Net

Cash 2.4 Stocks 95.5 Bonds 0.0 Other 2.1 Foreign 26.4

% Rel Category

(% of Stock)

Address:

Vanguard Specialized Funds Valley Forge, PA 19482 800-662-7447

Minimum Purchase: Min Auto Inv Plan:

$3000

Add: $100 IRA: $3000

$0

Add: .

Profitability

% Rel Category

Sales Fees:

No-load 0.33%

Return on Equity Return on Assets Net Margin

11.30 4.08 6.63

1.02 1.81 0.72

Web Address: Inception: Advisor: Subadvisor: NTF Plans:

www.vanguard.com

Management Fee:

05-23-84

Actual Fees:

Mgt:0.33% Dist: .

Wellington Management Company LLP

Expense Projections: Income Distribution:

3Yr:$113

5Yr:$197 10Yr:$443

None

None

Vanguard NTF

Mutual Funds ß ®

© 2015Morningstar, Inc.All rights reserved. The informationherein is not representedorwarranted to be accurate, correct, complete or timely.Pastperformance is no guarantee of future results.Access updated reportsat To order reprints, call 312-696-6100. mfb.morningstar.com.

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