Long-Time Manager of Vanguard Health Care Fund to Retire at Year End

VALLEY FORGE, Pa.--(BUSINESS WIRE)--Vanguard announced today that Edward P. Owens, CFA, portfolio manager of Vanguard Health Care Fund, plans to retire on December 31, 2012.

“Ed’s long-time colleague, Jean Hynes, is a well-qualified successor and speaks to the deep and talented team of investment professionals at the Wellington organization.”

Mr. Owens, a senior vice president and partner of Wellington Management Company LLP, has managed the Health Care Fund since its inception in 1984 and is Vanguard’s longest-tenured external portfolio manager. The fund is the largest fund in the global health/biotech category with $22.4 billion in assets and the second largest sector fund in the mutual fund industry behind the $27.3 billion Vanguard REIT Index Fund (source: Lipper Inc.).

Associate portfolio manager Jean M. Hynes, CFA, will assume managerial responsibility of the fund upon Mr. Owens’ retirement. Ms. Hynes, senior vice president and partner at Wellington Management, joined the firm in 1991 and has served on the Health Care Fund management team for nearly 20 years. She was named associate portfolio manager in 2008.

“Ed’s long-term track record of excellent returns puts him in very select company in the investment management business. We are indebted to him for his decades of distinguished service to our clients,” said Vanguard CEO Bill McNabb. “Ed’s long-time colleague, Jean Hynes, is a well-qualified successor and speaks to the deep and talented team of investment professionals at the Wellington organization.”

The performance of the fund’s Investor Shares is compared with its peer group average, benchmark, and the U.S. stock market in the accompanying table (Source: Vanguard and Lipper Inc.).

Average Annual Total Returns
(As of June 30, 2012)
Time Period	Vanguard Health Care Fund*	Lipper Global Health/Biotech Funds Avg.	Spliced Health Care Index**	S&P 500 Index
1 Year	5.88%	3.82%	5.17%	5.45%
5 Year	4.77	3.02	3.13	0.22
10 Year	8.41	6.30	4.91	5.33
20 Year	14.18	10.18	7.90	8.34
25 Year	14.46	11.30	8.26	8.62
Since inception (5/23/1984)	16.36	13.42	10.37	10.7

* The Investor Shares of Vanguard Health Care Fund feature an expense ratio of 0.35%.
**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 (Sources: Vanguard and Lipper Inc.).
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 www.vanguard.com/performance. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index.

Mr. Owens, 65, joined Wellington Management in 1974 and shortly thereafter became the firm’s pharmaceutical analyst. He was named the portfolio manager of Vanguard Health Care Fund upon its introduction in May 1984 and has served in that capacity for the past 28 years.

At the time, Vanguard introduced five market sector portfolios with the aim of broadening its commission-free mutual fund family: Gold and Precious Metals, Technology, Energy, Service Economy, and Health Care. By 1991, the Health Care Fund had attracted some $500 million in net assets and was the most popular of the five offerings. The fund continued to grow, reaching the $1 billion milestone in mid-1995 and, bolstered by strong cash inflows of $2.6 billion in 1998 resulting from a 41% annual return, reached $10 billion in assets in early 1999.

For the most part, Mr. Owens was reticent to speak to the news media during his career, but was nonetheless frequently recognized by the press for his exceptional record. An October 2001 Money magazine article spotlighted Mr. Owens as among the best fund managers in America, noting the Health Care Fund’s stellar 15-year record. “I am fearful of too much publicity. For me, it’s a distraction,” said Mr. Owens in the article, which lauded his work ethic, experience, and accumulated knowledge of the health care sector.

In 2002, Mr. Owens was a finalist for Morningstar’s Fund Manager of the Year. Morningstar singled out Mr. Owens for his diversified approach and stock-picking acumen. In 2004, he was first runner-up for the award.

Fortune magazine named Mr. Owens among its “mutual fund dream team” in a 2003 article, which selected portfolio managers based on performance over varying market conditions, consistency of returns, disciplined approach, and low costs. The article cited the Health Care Fund’s record over the long haul, and Mr. Owens’ adherence to a long-term value approach and willingness to be a contrarian. “By acting contrary to the way most investors act in my space, I think that I have an inherent advantage. It’s not anything that shows up in a month or a quarter, but it’s a built-in advantage that shows up over time,” he stated in the article.

Commenting on his impending retirement, Mr. Owens said: “While I still have great passion for research and investing, I believe it is time to pass the reins to the next generation of management. I am very confident in Jean and the Health Care Fund team, and wish them much continued success.”

In the management of the fund, Wellington Management employs a diversified approach and seeks to maintain exposure across five primary subsectors: health services, medical products, specialty pharmaceuticals, major pharmaceuticals, and international markets. The team uses fundamental research to focus on companies with high-quality balance sheets, strong management, and the potential for new products that will lead to above-average growth in revenue and earnings. Assets are usually concentrated in the top ten holdings, but the fund remains well diversified across both subsectors and market capitalizations.

“Our fundamental approach to managing the fund will not change, as we will continue to adhere to our disciplined valuation process to build a diversified portfolio on a company by company basis,” said Ms. Hynes. “And we will continue to be contrarian and maintain a high-conviction portfolio.”

Ms. Hynes, 43, specializes in the pharmaceutical and biotechnology industries. In her role as Wellington’s lead pharmaceutical analyst, she conducts fundamental analysis on the companies within her industries and makes buy/sell recommendations to portfolio managers based on her findings and market conditions. She earned a BA in economics from Wellesley College. A holder of the Chartered Financial Analyst certification, she is a member of the CFA Institute and the Boston Security Analysts Society.

“While Ed’s track record as a fund manager is easily quantifiable, he has had an immeasurable impact on our firm and our people – as a leader, as a mentor, and as a colleague,” said Perry Traquina, CEO of Boston-based Wellington Management. “His legacy is not only replete with outstanding performance, longevity, and loyalty, but of developing a successor and a strong team to carry on a tradition of excellence.”

Wellington Management traces its roots back to 1928 when Walter L. Morgan established one of the first balanced mutual funds, which today is the $62.2 billion Vanguard Wellington™ Fund. Wellington Management serves as an investment advisor to 2,000 institutions and employs more than 400 investment professionals around the world. Wellington Management now advises approximately $234 billion across 20 Vanguard mutual funds among its $730 billion in assets under management.

Vanguard, headquartered in Valley Forge, Pennsylvania, is one of the world’s largest investment management companies. Vanguard manages 170 U.S.-based mutual funds with more than $1.85 trillion in assets and has more than $2.1 trillion in global assets.

All asset figures are as of July 31, 2012 (unless otherwise noted).

Source for asset, cash flow, and performance data is Vanguard (unless otherwise noted).

For more information about Vanguard funds, visit vanguard.com or call 800-662-7447 to obtain a prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.

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