Vanguard® Vanguard® Health Care Fund Product Summary Health care sector fund. Seeks long-term capital appreciation. Invests across industry subsectors and market capitalizations. Invests in health care companies based in the United States and abroad. Fundamental approach. More geographically diversified than most competitors. Quarterly Commentary Note: Company returns may differ if a security was held in the portfolio for less than the full period. The human toll of COVID-19 further mounted during the second quarter of 2021 amid fresh outbreaks of the virus and new variants. The global economy nevertheless continued to rebound sharply if unevenly. Countries that have better succeeded in containing the virus—whether through vaccinations, lockdowns, or People and Process both—tended to fare the best. With the reopening of economies and pent-up demand boosting corporate profits, global stocks Vanguard Health Care Fund seeks long-term capital appreciation finished the quarter significantly higher. U.S. stocks outperformed by investing in stocks broadly representing the health care other developed markets as a whole as well as emerging markets. industry. The advisor seeks to maintain exposure across five primary subsectors: health services, medical products, specialty For the quarter, U.S. stocks returned 8.24%, as measured by the pharmaceuticals, major pharmaceuticals, and international Russell 3000 Index. With large-capitalization stocks leading the markets. Fundamental research focuses on companies with way, the Russell 1000 Index (+8.54%) outpaced the Russell 2000 high-quality balance sheets, strong management, and the potential Index (+4.29%). Although value stocks outperformed growth for new products that will lead to above-average growth in revenue stocks over the first quarter of 2021, that pattern reversed over and earnings. Reflecting the advisor’s contrarian style, stocks may the second quarter, with the Russell 3000 Growth Index be purchased after negative events have caused a decline in share (+11.38%) more than doubling the return of the Russell 3000 Value price. Assets are usually concentrated in the top ten holdings, but Index (+5.16%). the fund remains invested across both subsectors and market Vanguard Health Care Fund outperformed its benchmark, the capitalizations. Because of the industry’s long MSCI All Country World Health Care Index (+9.38%), for the product-development cycle, the advisor pursues a long-term quarter. The fund seeks long-term capital appreciation, focusing on investment approach that has resulted in below-average turnover. domestic and foreign companies engaged in a variety of areas The fund historically has been more geographically diversified than within the health care industry, including pharmaceuticals, medical other health care sector funds. supply, and research. The fund’s investment process uses bottom-up security selection coupled with ongoing evaluation of Wellington Management Company LLP management teams. The fund’s outperformance for the quarter was driven by stock Founded in 1928, Wellington Management Company LLP, Boston, selection in pharmaceuticals. In that industry, a notable Massachusetts, is among the nation’s oldest and most respected overweighting of Eisai (+47%) and lack of exposure to Johnson & institutional investment managers. The firm has advised Vanguard Johnson (+1%) contributed most. A lack of exposure to Moderna Health Care Fund since 1984. (+79%) and an overweight position in Daiichi Sankyo (–23%) Investment Manager Biographies detracted most. For the 12 months ended June 30, the fund lagged its benchmark Jean M. Hynes, CFA, CEO of Wellington Management Company, (+23.48%). Stock selection in biotechnology drove the Managing Partner and Equity Portfolio Manager. Portfolio manager. underperformance, as did selection in North America and the Advised the fund since 2008. Worked in investment management Pacific region. Among the largest detractors were pharmaceutical since 1991. B.A., Wellesley College. company UCB (–9%) and biotech companies Incyte (–19%) and Regeneron (–10%). Strong selection in health care facilities and an overweight allocation to managed health care helped to offset overall underperformance. As of June 30, 2021 Vanguard Health Care Fund Total Returns Expense Year Ratio Quarter to Date 1 Year 3 Years 5 Years 10 Years Health Care Fund Investor Shares (5/23/1984) 0.32% 10.70% 10.38% 20.21% 15.34% 11.85% 14.54% Admiral Shares (11/12/2001) 0.27 10.71 10.40 20.27 15.40 11.91 14.59 Spliced Health Care Index — 9.38 9.86 23.48 15.76 12.36 13.08 Global Health/Biotechnology Funds Average — 8.99 8.20 26.17 17.61 13.95 14.52 The performance data shown represent past performance, which is not a guarantee of future results. Investment returns and principal value will fluctuate, so investors’ shares, when sold, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data cited. For performance data current to the most recent month-end, visit our website at vanguard.com/performance. Figures for periods of less than one year are cumulative returns. All other figures represent average annual returns. Performance figures include the reinvestment of all dividends and any capital gains distributions. All returns are net of expenses. Note: Spliced Health Care Index: S&P 500 Index through December 31, 2001; S&P Health Care Index through May 31, 2010; MSCI All Country World Health Care Index thereafter. Average fund returns are derived from data provided by Lipper, a Thomson Reuters Company. Admiral class shareholders are required to maintain specific minimum balances and meet other special criteria. As of June 30, 2021 Vanguard Health Care Fund Quarterly Returns: Investor Shares Year-End Spliced Health Care Assets Year 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Health Care Index (Millions) 2021 -0.29% 10.70% — — — — $8,720 2020 -10.98 16.16 4.11% 4.61% 12.62% 14.87% 8,327 2019 7.91 -0.98 -1.53 16.84 22.93 22.67 8,977 2018 0.21 0.52 13.07 -11.18 1.15 1.71 8,315 2017 10.58 6.54 0.97 0.55 19.61 20.14 9,487 2016 -8.84 5.42 0.71 -5.97 -8.99 -6.83 9,550 2015 9.64 3.80 -8.90 8.65 12.65 6.33 12,018 2014 8.84 5.17 3.90 8.06 28.52 18.13 11,252 2013 14.43 5.00 7.56 10.80 43.19 35.76 9,636 2012 7.93 1.38 5.27 -0.07 15.11 17.77 8,143 2011 6.64 8.01 -9.28 6.66 11.45 8.89 8,223 Quarterly Returns: Admiral Shares Year-End Spliced Health Care Assets Year 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Health Care Index (Millions) 2021 -0.27% 10.71% — — — — $43,001 2020 -10.97 16.18 4.12% 4.62% 12.67% 14.87% 40,704 2019 7.92 -0.96 -1.52 16.85 22.98 22.67 39,149 2018 0.22 0.53 13.08 -11.17 1.21 1.71 35,608 2017 10.59 6.55 0.99 0.56 19.66 20.14 37,667 2016 -8.83 5.43 0.72 -5.95 -8.94 -6.83 33,299 2015 9.66 3.81 -8.89 8.67 12.71 6.33 40,299 2014 8.85 5.18 3.91 8.07 28.57 18.13 33,375 2013 14.44 5.01 7.58 10.81 43.27 35.76 24,142 2012 7.95 1.38 5.29 -0.05 15.17 17.77 14,958 2011 6.65 8.03 -9.28 6.68 11.51 8.89 12,646 As of June 30, 2021 Vanguard Health Care Fund Fund Facts Volatility Measures Investor Admiral R-Squared Beta Shares Shares Spliced Health Care Index 0.95 1.05 Fund Number 0052 0552 DJ US Total Stock Mkt Float Adj Idx 0.65 0.67 Ticker VGHCX VGHAX R-squared and beta are calculated from trailing 36-month fund returns Newspaper Listing HlthCare HlthCareAdml relative to the associated benchmark. CUSIP Number 921908307 921908885 Assets (millions) $8,720 $43,001 (Total $51,721) Top 10 Largest Holdings Inception 5/23/1984 11/12/2001 Expense Ratio (as of 5/2021) 0.32% 0.27% % of Total Net Assets UnitedHealth Group Inc. 5.6% AstraZeneca plc 5.4 Equity Characteristics Pfizer Inc. 5.3 MSCI Eli Lilly & Co. 4.7 ACWI Health Novartis AG 3.7 Health Care Care Bristol-Myers Squibb Co. 3.6 Number of stocks 102 283 Eisai Co. Ltd. 3.4 Median market cap $59.6 Billion $98.1 Billion Boston Scientific Corp. 3.2 Average market cap $102.8 Billion $141.5 Billion Biogen Inc. 3.0 Price/earnings ratio 27.6x 27.9x Anthem Inc. 2.9 Price/book ratio 4.4x 4.9x Total 40.8% Return on equity 13.8% 17.8% The holdings listed exclude any temporary cash investments and equity Earnings growth rate 14.4% 13.4% index products. Equity yield (dividend) 1.1% 1.6% Foreign holdings 27.3% 0.0% Short-term reserves 1.6% — Turnover rate (fiscal year end) 10.9% — As of June 30, 2021 Vanguard Health Care Fund Sector Diversification (% of Stocks) MSCI ACWI Health Overweight/ Health Care Care Underweight Biotechnology 22.1% 14.1% 8.0 Consumer Staples 0.1 0.0 0.1 Financials 0.1 0.0 0.1 Health Care Distributors 0.0 1.3 -1.3 Health Care Equipment 15.3 20.1 -4.8 Health Care Facilities 3.2 1.5 1.7 Health Care Services 1.2 4.0 -2.8 Health Care Supplies 0.6 3.0 -2.4 Health Care Technology 1.4 1.8 -0.4 Life Sciences Tools & Services 6.1 9.3 -3.2 Managed Health Care 11.9 7.8 4.1 Pharmaceuticals 38.0 37.1 0.9 Total 100.0% 100.0% Sector categories are based on the Global Industry Classification Standard (GICS), except for the Other category (if applicable), which includes securities that have not been provided a GICS classification as of the effective reporting period.