(PUB) Morningstar FundInvestor

September 2013

Morningstar FundInvestor

7

Data through August 31, 2013 Vanguard Health Care Inv

Ticker

Status Yield Total Assets

Mstar Category

VGHCX Open

1.5% $29,305 mil

Health

Morningstar Analyst Rating 08-26-13

Investment Style Equity Stock %

Historical Profile Return Risk Rating Average Low Above Avg

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

Œ

Manager Change Partial Manager Change

14.0 18.0 22.8

Morningstar Pillars Process Performance

Growth of $10,000

Positive Positive Positive Positive Positive

Investment Values of Fund Investment Values of MSCI World

10.0

People Parent Price

7.0

Performance Quartile (within Category) History

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 08-13

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 173.71 143.27 128.73 122.40 120.22 101.44 138.63 145.60 139.45 126.79 120.57 96.16 Total Return % 24.28 15.11 11.45 6.16 20.96 -18.45 4.43 10.87 15.41 9.51 26.58 -11.36 +/-MSCI World 12.57 -0.72 16.99 -5.60 -9.03 22.26 -4.61 -9.20 5.92 -5.21 -6.53 8.53 +/-DJ Health -1.36 -4.15 -0.30 1.64 -0.75 4.35 -3.93 3.99 7.09 4.96 7.15 9.45 Income Return % 0.03 2.14 1.84 1.69 1.74 1.40 1.91 1.54 1.23 0.93 1.04 0.82 Capital Return % 24.25 12.97 9.61 4.47 19.22 -19.85 2.52 9.33 14.18 8.58 25.54 -12.18 Total Rtn % Rank Cat 67 86 17 67 58 20 82 13 17 45 70 3 Income $ 0.04 2.76 2.24 2.01 1.76 1.92 2.75 2.10 1.54 1.11 1.00 0.96 Capital Gains $ 3.85 2.19 5.18 3.20 0.73 9.52 10.59 6.66 5.08 4.00 0.10 6.53 Expense Ratio % 0.35 0.35 0.35 0.36 0.29 0.26 0.25 0.25 0.21 0.28 0.29 0.31 Income Ratio % 1.94 1.72 1.67 1.73 1.64 1.78 1.33 1.29 1.02 0.91 0.86 0.84 Turnover Rate % 8 8 9 6 12 9 8 14 13 13 25 13 Net Assets $mil 8,850 8,143 8,223 8,426 11,755 10,753 14,965 16,329 16,787 19,606 17,645 13,752

Pillar Spectrum Positive

§ Negative

¶ Neutral

Performance 08-31-13 1st Qtr 2nd Qtr

3rd Qtr

4th Qtr

Total

2009 2010 2011 2012 2013

-7.98 10.59 11.29 6.81 20.96 2.94 -9.04 8.78 4.23 6.16 6.64 8.01 -9.28 6.66 11.45 7.93 1.38 5.27 -0.07 15.11 14.46 4.98 . . .

Portfolio Analysis 06-30-13 Share change since 03-13 Total Stocks:91 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

Merck & Co Inc

Hlth care 28.1 17.61 5.90 Hlth care 13.6 33.17 4.62 Hlth care 18.4 28.02 3.75 Hlth care 17.8 27.53 3.65 Hlth care 20.9 25.88 3.46 Hlth care 51.0 31.14 3.22 Hlth care 11.5 7.20 2.77 Hlth care 18.6 15.35 2.37 Hlth care 9.3 40.99 2.23 Hlth care 9.8 34.94 2.12 Cnsmr Def 21.1 32.22 1.95 Hlth care 15.4 27.47 1.92 Technology 37.5 18.85 1.83 Hlth care 15.6 47.27 1.79 Hlth care . 20.41 3.87 Hlth care Hlth care . . . . 2.76 2.67

1 Yr 3 Yr 5 Yr

28.76 21.59 11.63 10.80 16.72

Trailing

Total +/- MSCI

+/- DJ %Rank Growth of

UnitedHealth Group Inc Forest Laboratories, Inc

Return% World 3.88 3.39 15.22 9.10 28.76 11.13 21.59 8.26 11.63 7.51 10.80 3.68 12.33 7.42

Health 0.75 -0.12 -1.23 -2.36 0.04 1.86 4.70

Cat

$10,000

Avg Avg Avg

Low Low Low

3 Mo 6 Mo 1 Yr

64 10,388 70 11,522 73 12,876 61 17,976 42 17,334 39 27,887 29 57,205

Amgen Inc

10 Yr Incept

Roche Holding AG McKesson, Inc.

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

Bristol-Myers Squibb Com Eli Lilly and Company Astellas Pharma, Inc.

Other Measures

Standard Index Best Fit Index MSCI World M* SEC/Healthcare

Alpha

12.1 0.59

0.8

AstraZeneca PLC

Beta

0.85

Pfizer Inc

R-Squared

71

97

Tax Analysis Tax-Adj Rtn% %Rank Cat Tax-Cost Rat %Rank Cat 3 Yr (estimated) 5 Yr (estimated) 10 Yr (estimated) 20.56 62 0.84 50 10.63 45 0.89 74 9.82 39 0.88 70 Potential Capital Gain Exposure: 55% of assets Morningstar’s Take by Flynn Murphy 08-26-13 New management is settling in here. Although Vanguard Health Care’s long-tenured skipper, Ed Owens, retired in 2012, much remains the same. The fund’s new lead manager, Jean Hynes, worked alongside Owens since 1992 and has comanaged this fund since 2008. Hynes will continue to ply this fund’s patient, value-minded approach, buying out-of-favor health-care stocks and holding on to them for the long haul. Hynes has the support of an experienced Wellington team, including Ann Gallo, Kirk Mayer, and Robert Deresiewicz, who have comanaged Hartford Healthcare HGHAX with Hynes since 2000, tallying a solid long-term record. Since Owens’ departure, subadvisor Wellington has made changes, adding three analysts to its health-care team in early 2013, promoting an associate to take part of Hynes’ biotech and pharmaceutical coverage list, and hiring two experienced analysts specializing in pharmaceuticals and health-care services. Hynes has also made some portfolio changes. She’s less concerned about broad macroeconomic headwinds

WellPoint Inc

Standard Deviation

10.54 21.59

Humana

Walgreen Company Medtronic, Inc. Cerner Corporation

Mean

Sharpe Ratio

1.91

Cigna Corp

UCB SA

Hlth care Hlth care

1.77

. .

Vertex Pharmaceuticals Teva Pharmaceutical Indu

79.36 1.69

.

than was Owens. As a result, cash dropped from an average of 7% during Owens’ final decade as manager to less than 2% by mid-2013. Hynes is also expanding the number of holdings from 70-80 under Owens to 90-100 in an attempt to add more value and further mute volatility. Accordingly, the typically low-turnover fund added several new stocks in 2013’s first quarter, including DNA-sequencing firm Illumina ILMN and drug manufacturer Mylan MYL. While the fund has smoothly transitioned managers, its girth may challenge Hynes. The fund’s $30 billion asset base towers over health-care peers and contributes to the fund’s relatively low active share--a measure of the portfolio’s divergence from its MSCI ACWI Health Care Index benchmark. But the team backing this fund has succeeded thus far: Since Hynes joined the fund as a comanager in 2008, it has handily outpaced the benchmark through Aug. 20, 2013. The fund has the resources in place to continue its success, and a bargain expense ratio adds to its appeal.

Hlth care 78.7 4.53 1.58

Current Investment Style

Industry Weightings

% of Stocks

Rel Cat 0.4 1.4 2.0 1.1 0.0 0.5 1.5 0.8 1.1

Market Cap % Giant 38.3 Large 37.9 Mid 21.1 Small 2.6 Micro 0.0 Avg $mil: 29,792

Value Blnd Growth

Large Mid Small

Biotech

15.4 36.9 17.4

Drugs

Mgd Care Hospitals

3.1 0.0 3.0

Other HC Srv Diagnostics

Equipment Good/Srv

17.2

4.2 2.8

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

17.06 2.43 1.05 11.69 1.95

0.89 0.78 0.48 0.91 1.59 0.75 0.91 0.72 0.24 0.08

Composition - Net

Cash 0.0 Stocks 96.3 Bonds 0.0 Other 3.7 Foreign 22.9

% Rel Category

9.38 7.91 6.91 1.68 3.76

(% of Stock)

Address:

Po Box 2600 Valley Forge, PA 19482 800-662-7447 www.vanguard.com

Minimum Purchase: Min Auto Inv Plan:

$3000

Add: $100 IRA: $0

$0

Add: $100

Profitability

% Rel Category

Sales Fees:

No-load 0.33%

Return on Equity Return on Assets Net Margin

16.16 6.44 9.73

1.46 2.86 1.06

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

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 ®

© 2013Morningstar, Inc.All rights reserved. The information herein isnot represented orwarranted to be accurate, correct, complete or timely. Pastperformance isnoguarantee of future results.Access updated reports at To order reprints, call 312-696-6100. mfb.morningstar.com.

EQ