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Vanguard Health Care Fund Semiannual Report

September 26, 2013 | About:
Holly LaFon

Holly LaFon

For the six months ended July 31, 2013, Vanguard Health Care Fund returned about 19%, outpacing both its benchmark and the average return of peer funds.

> The fund's advance was broadly based, with groups ranging from biotechnology firms to health insurers to medical device makers notching strong results.

>Health care stocks outperformed the broader market, both domestically and internationally.

Chairman’s Letter

Dear Shareholder,

Capitalizing on a robust performance by health care stocks around the world, Vanguard Health Care Fund delivered impressive results for the six months ended July 31, 2013. The fund returned 19.18% for Investor Shares and 19.21% for Admiral Shares, outpacing its comparative standards.

Peer funds, on average, returned 18.61%, and the benchmark MSCI All Country World Health Care Index gained 15.54%. The Health Care Fund's advisor had success across the industry spectrum, with biotechnology firms, health insurers, and medical device makers recording double-digit advances.

U.S. stocks set a brisk pace; international markets struggled U.S. stocks, which returned about 14% for the half year, posted positive returns in five of the six months. The exception was June, when stocks slid after Federal Reserve Chairman Ben Bernanke said the central bank could begin unwinding its stimulative bond-buying program later this year. July saw domestic stocks rebound sharply, helped by favorable economic news and reassuring words from Fed officials.

Despite rising in July, international stocks finished the period with a return of less than 1%. Much of the weakness came from emerging markets, where the slowing rate of growth, especially in China and Brazil, has been a concern. Developed markets in the Pacific region and Europe posted modest gains.

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