(PUB) Morningstar FundInvestor

6

Data through March 31, 2014 Vanguard Health Care Inv

Ticker

Status Yield Total Assets

Mstar Category

VGHCX Open

1.2% $37,083 mil

Health

Morningstar Analyst Rating 03-27-14

Investment Style Equity Stock %

Historical Profile Return Risk Rating Average Low Above Avg

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

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 03-14

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 195.23 187.16 143.27 128.73 122.40 120.22 101.44 138.63 145.60 139.45 126.79 120.57 Total Return % 8.84 43.19 15.11 11.45 6.16 20.96 -18.45 4.43 10.87 15.41 9.51 26.58 +/-MSCI Ac Wrld ND 7.76 20.39 -1.02 18.80 -6.51 -13.67 23.74 -7.23 -10.08 4.57 -5.72 -7.41 +/-S&P 1500 Hlth Care TR 3.45 1.00 -3.24 -0.43 0.96 0.20 5.31 -3.59 3.90 7.92 6.17 8.95 Income Return % 0.09 1.69 2.14 1.84 1.69 1.74 1.40 1.91 1.54 1.23 0.93 1.04 Capital Return % 8.75 41.50 12.97 9.61 4.47 19.22 -19.85 2.52 9.33 14.18 8.58 25.54 Total Rtn % Rank Cat 10 69 86 17 67 58 20 82 13 17 45 70 Income $ 0.17 2.36 2.76 2.24 2.01 1.76 1.92 2.75 2.10 1.54 1.11 1.00 Capital Gains $ 8.28 14.00 2.19 5.18 3.20 0.73 9.52 10.59 6.66 5.08 4.00 0.10 Expense Ratio % 0.35 0.35 0.35 0.35 0.36 0.29 0.26 0.25 0.25 0.21 0.28 0.29 Income Ratio % 1.33 1.94 1.72 1.67 1.73 1.64 1.78 1.33 1.29 1.02 0.91 0.86 Turnover Rate % 21 8 8 9 6 12 9 8 14 13 . 25 Net Assets $mil 10,515 9,636 8,143 8,223 8,426 11,755 10,753 14,965 16,329 16,787 19,606 17,645

Pillar Spectrum Positive ∞

§ Negative

¶ Neutral

Performance 03-31-14 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 7.56 10.80 43.19

Portfolio Analysis 12-31-13 Share change since 09-13 Total Stocks:93 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 38.6 13.87 5.41

1 Yr 3 Yr 5 Yr

36.16 23.31 22.78 11.64 17.26

Trailing

Total +/- MSCI

+/- S&P %Rank Growth of

Forest Laboratories, Inc UnitedHealth Group Inc Bristol-Myers Squibb Com Eli Lilly and Company Roche Holding AG AstraZeneca PLC Astellas Pharma, Inc. Vertex Pharmaceuticals I Amgen Inc McKesson Corp

Hlth care

62.54 4.73

.

Return%Ac Wrld ND 1500 Hlth Care TR

Cat

$10,000

Avg Avg Avg

Low Low Low

Hlth care 14.9 9.26 4.45 Hlth care 33.7 -2.26 3.84 Hlth care 33.2 9.85 3.56 Hlth care 13.8 17.84 3.45 Hlth care 21.1 8.82 3.45 Hlth care 18.5 18.95 3.34 Hlth care 18.7 9.25 2.96 Hlth care 6.8 3.05 2.41 Hlth care 14.5 8.95 2.03 Cnsmr Def 23.2 15.50 1.85 Hlth care 15.9 3.26 1.79 Technology 54.4 10.10 1.77 Hlth care 11.5 8.22 1.73 Hlth care 15.4 -9.02 1.57 Hlth care 33.4 25.21 1.56 Hlth care 61.7 7.22 1.40 Hlth care Hlth care . 8.83 2.41 . . 2.06

3 Mo 6 Mo 1 Yr

8.84 7.76 20.59 12.11 36.16 19.61 23.31 14.76 22.78 4.98 11.64 4.67 11.89 7.48

3.45 4.51 6.71 0.25 0.42 2.23 5.33

10 10,884 7 12,059 47 13,616 39 18,750 52 27,902 42 30,074 21 53,935

10 Yr Incept

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

Other Measures

Standard Index

Best Fit Index

MSCI Ac Wrld ND

DJ Health

Alpha

16.6 0.55

2.3

Beta

0.88

R-Squared

56

93

Tax Analysis Tax-Adj Rtn% %Rank Cat Tax-Cost Rat %Rank Cat 3 Yr (estimated) 5 Yr (estimated) 10 Yr (estimated) 21.32 41 1.61 58 21.33 51 1.18 64 10.36 43 1.14 68 Potential Capital Gain Exposure: 48% of assets Morningstar’s Take by Flynn Murphy 03-27-14 Vanguard Health Care’s steady approach holds up over the long haul. There’s a capable team behind this fund. Although its longtime leader, Ed Owens, retired in 2012, the fund’s new lead manager, Jean Hynes, worked with Owens since 1992 and has comanaged this offering since 2008. Hynes is part of a team of four managers that has run Hartford Healthcare HGHAX with peer-beating results since 2000. Hynes is well-positioned to employ the same value-focused approach that Owens plied here for two decades. Hynes has made some tweaks to Owens’ process. At times, Owens raised cash to 15%-25% of assets when he believed macroeconomic headwinds were rising. Hynes is less inclined to make those macro calls. She dropped the fund’s cash stake to less than 1% in 2013 and intends to run the fund close to fully invested. Hynes also expanded the number of holdings to 90 from roughly 70 during 2013, adding some growth stocks such as biotech firm Incyte INCY. However, the fund still retains its value bias: its trailing 12-month

UCB SA Humana

Standard Deviation

10.66 23.31

Walgreen Company Medtronic, Inc. Cerner Corporation

Mean

Sharpe Ratio

2.03

WellPoint Inc Cigna Corp

Teva Pharmaceutical Indu Perrigo Company PLC

price/earnings and price/book ratios fell well below the benchmark MSCI ACWI Health Care Index’s and the typical health-care category peer’s at the end of 2013. The fund favors large drug companies such as Merck MRK, which has a strong pipeline and room for global growth, according to Hynes. Relative to peers, the fund has been light on biotechnology stocks, based partly on concerns about the industry’s many speculative and pricey names. The fund’s biotech underweighting dampened returns on a relative basis in 2012 and 2013 as the Nasdaq Biotechnology Index trounced most broad-based health-care funds, including this offering. Still, this fund has delivered attractive risk-adjusted returns over time. Since Hynes became a comanager in 2008, the fund has rarely led peers during market rallies, but it has suffered just 81% of its typical peer’s losses during declines. Under Hynes, the fund also beat its benchmark through March 21, 2014, with less volatility. This remains a solid health-care offering.

Current Investment Style

Industry Weightings

% of Stocks

Rel Cat 0.4 1.3 2.1 0.7 0.0 0.8 1.5 0.9 1.5

Market Cap % Giant 35.0 Large 49.4 Mid 12.5 Small 3.0 Micro 0.0 Avg $mil: 31,288

Value Blnd Growth

Large Mid Small

Biotech

14.8 38.8 15.9

Drugs

Mgd Care Hospitals

1.8 0.0 3.3

Other HC Srv Diagnostics

Equipment Good/Srv

17.6

4.5 3.3

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

19.03 2.97 1.33 13.20 1.67

0.99 0.95 0.60 1.03 1.36 0.75 0.77 0.73 0.15 0.04

Composition - Net

Cash 0.3 Stocks 95.7 Bonds 0.0 Other 4.0 Foreign 24.9

% Rel Category

9.29 6.69 7.00 1.01 2.09

(% 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

Return on Equity Return on Assets Net Margin

14.94 6.11 9.48

1.35 2.72 1.03

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

Management Fee:

0.16% mx./0.14% mn. Mgt:0.33% Dist: .

05-23-84

Actual Fees:

Wellington Management Company, LLP

Expense Projections: Income Distribution:

3Yr:$113

5Yr:$197 10Yr:$443

None

None

Vanguard NTF

Mutual Funds ß ®

© 2014Morningstar, Inc.All rights reserved.The informationherein is not represented orwarranted tobeaccurate, correct, completeor timely. Pastperformance is no guarantee of future results.Access updated reportsat Toorder reprints, call312-696-6100. mfb.morningstar.com.

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