Important information about shareholder reports

Beginning in July 2024, amendments adopted by the Securities and Exchange Commission will substantially impact the design, content, and transmission of shareholder reports. Shareholder reports will provide key fund information in a clear and concise format and must be mailed to each shareholder that has not elected to receive the reports electronically. Financial statements will no longer be included in the shareholder report but will be available at vanguard.com, can be mailed upon request, or can be accessed on the SEC’s website at www.sec.gov.

You may elect to receive shareholder reports and other communications from the fund electronically by contacting your financial intermediary (such as a broker-dealer or bank) or, if you invest directly with the fund, by calling Vanguard at one of the phone numbers on the back cover of this report or by logging on to vanguard.com.

Contents

Your Fund’s Performance at a Glance	1
Advisor's Report	2
About Your Fund’s Expenses	4
Performance Summary	6
Financial Statements	8

Please note: The opinions expressed in this report are just that—informed opinions. They should not be considered promises or advice. Also, please keep in mind that the information and opinions cover the period through the date on the front of this report. Of course, the risks of investing in your fund are spelled out in the prospectus.

Your Fund’s Performance at a Glance

•	For the 12 months ended January 31, 2024, Vanguard Energy Fund returned 4.00% for Investor Shares and 4.09% for Admiral Shares. Both share classes outpaced the 0.11% return of the fund’s benchmark index.
•	With inflation easing, major central banks stopped hiking interest rates. Labor markets and consumer spending proved resilient, but the prospect of rates remaining high for an extended period spurred volatility. Stocks worldwide rallied toward the end of 2023, however, amid market expectations for rate cuts in 2024.
•	At the subindustry level, the fund outpaced its benchmark thanks to the returns on its investments in integrated oil and gas companies, diversified utilities, and oil and gas refiners and marketers. On the downside, the fund suffered a bit due to poor performance of its holdings among independent power producers and energy traders.
•	From a geographic perspective, the fund outperformed its benchmark thanks to the resilience of its holdings in North American companies. Their absolute returns were slightly negative, but the performance of that segment of the benchmark was worse. The fund also benefited from a larger-than-benchmark stake in European energy companies, which delivered single-digit gains. An underweight stake in strongly performing emerging markets companies crimped the fund’s relative result.

Market Barometer

	Average Annual Total Returns Periods Ended January 31, 2024
	One Year	Three Years	Five Years
Stocks
Russell 1000 Index (Large-caps)	20.23%	9.78%	13.99%
Russell 2000 Index (Small-caps)	2.40	-0.76	6.80
Russell 3000 Index (Broad U.S. market)	19.15	9.10	13.53
FTSE All-World ex US Index (International)	6.29	1.57	5.77
Bonds
Bloomberg U.S. Aggregate Float Adjusted Index (Broad taxable market)	2.23%	-3.15%	0.90%
Bloomberg Municipal Bond Index (Broad tax-exempt market)	2.90	-0.78	2.00
FTSE Three-Month U.S. Treasury Bill Index	5.36	2.40	1.96
CPI
Consumer Price Index	3.09%	5.64%	4.15%

1

Advisor’s Report

after the multinational oil and gas company reported third-quarter earnings below expectations, driven partly by significant non-cash charges and inventory costs.

Shares of Indian multinational conglomerate, Reliance Industries, ended the period higher after it was reported that Qatar’s sovereign wealth fund was in talks to buy a $1 billion stake in Reliance Retail Ventures, giving it a roughly 1% stake in the business. Shares of Cenovus Energy, a Canadian integrated energy company, ended the period lower as oil prices came under pressure due to mixed Chinese economic data and rising OPEC+ exports.

The fund’s positioning

We believe that oil supply-and-demand balances will remain moderately tight in the near term, offering a relatively supportive backdrop for energy equities. Because the supply-and-demand balance for oil is increasingly supported by large OPEC+ supply cuts, we are particularly focused on non-OPEC supply growth and demand drivers to assess longer-term balances. Emphasis on the energy transition, environmental regulations, decarbonization legislation, and investor pressure continue to disincentivize new oil production, but a renewed focus on the availability, security, and affordability of energy supply has become a noticeable counterweight to previously uncontested environmental pressure.

Following Russia’s invasion of Ukraine, European governments continue to seek alternative energy sources to Russian natural gas, supporting what will be a large expansion in global liquefied natural gas over the coming years. In addition, as

the cleanest and most flexible fossil fuel used for power generation, natural gas should benefit from the increased electrification of global energy. We expect electricity and natural gas to grow significantly faster than oil over the coming years, enabling attractive returns from natural gas and electricity infrastructure.

Broadly, we continue to favor European oil majors over U.S. oil majors, as the former offer more attractive valuations, lower dividend payout ratios, and more explicit ways to participate in the energy transition. We eliminated our position in U.S.-based refiner Marathon Petroleum on the back of strong outperformance and reallocated to competitor Phillips 66. Marathon Petroleum was a strong performer due to an aggressive reorganization and capital-return strategy, and Phillips 66 seems likely to pursue a similar path.

Portfolio Manager:

G. Thomas Levering,

Senior Managing Director,

Global Industry Analyst

Wellington Management Company llp

February 12, 2024

About Your Fund’s Expenses

As a shareholder of the fund, you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross income, directly reduce the investment return of the fund.

A fund’s expenses are expressed as a percentage of its average net assets. This figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.

The accompanying table illustrates your fund’s costs in two ways:

•

Based on actual fund return. This section helps you to estimate the actual expenses that you paid over the period. The ”Ending Account Value“ shown is derived from the fund‘s actual return, and the third column shows the dollar amount that would have been paid by an investor who started with $1,000 in the fund. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period.

To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your fund under the heading ”Expenses Paid During Period.“

•

Based on hypothetical 5% yearly return. This section is intended to help you compare your fund‘s costs with those of other mutual funds. It assumes that the fund had a yearly return of 5% before expenses, but that the expense ratio is unchanged. In this case—because the return used is not the fund’s actual return—the results do not apply to your investment. The example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to calculate expenses based on a 5% return. You can assess your fund’s costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds.

Note that the expenses shown in the table are meant to highlight and help you compare ongoing costs only and do not reflect transaction costs incurred by the fund for buying and selling securities. Further, the expenses do not include any purchase, redemption, or account service fees described in the fund prospectus. If such fees were applied to your account, your costs would be higher. Your fund does not carry a “sales load.”

The calculations assume no shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.

You can find more information about the fund’s expenses, including annual expense ratios, in the Financial Statements section of this report. For additional information on operating expenses and other shareholder costs, please refer to your fund’s current prospectus.

4

Six Months Ended January 31, 2024
	Beginning Account Value 7/31/2023	Ending Account Value 1/31/2024	Expenses Paid During Period
Based on Actual Fund Return
Energy Fund
Investor Shares	$1,000.00	$996.50	$2.26
Admiral™ Shares	1,000.00	997.10	1.86
Based on Hypothetical 5% Yearly Return
Energy Fund
Investor Shares	$1,000.00	$1,022.94	$2.29
Admiral Shares	1,000.00	1,023.34	1.89

The calculations are based on expenses incurred in the most recent six-month period. The fund’s annualized six-month expense ratios for that period are 0.45% for Investor Shares and 0.37% for Admiral Shares. The dollar amounts shown as “Expenses Paid” are equal to the annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by the number of days in the most recent 12-month period (184/365).

5

Energy Fund

Performance Summary

All of the returns in this report represent past performance, which is not a guarantee of future results that may be achieved by the fund. (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.) Note, too, that both investment returns and principal value can fluctuate widely, so an investor’s shares, when sold, could be worth more or less than their original cost. The returns shown do not reflect taxes that a shareholder would pay on fund distributions or on the sale of fund shares.

Cumulative Performance: January 31, 2014, Through January 31, 2024

Initial Investment of $10,000

		Average Annual Total Returns Periods Ended January 31, 2024
		One Year	Five Years	Ten Years	Final Value of a $10,000 Investment
	Energy Fund Investor Shares	4.00%	3.41%	0.54%	$10,557
	Spliced Energy Index	0.11	-0.56	-0.90	9,137
	Dow Jones U.S. Total Stock Market Float Adjusted Index	19.14	13.41	11.87	30,709

Spliced Energy Index: MSCI All Country World Energy Index through October 20, 2020; MSCI All Country World Energy + Utilities Index thereafter.

		One Year	Five Years	Ten Years	Final Value of a $50,000 Investment
Energy Fund Admiral Shares		4.09%	3.49%	0.62%	$53,189
Spliced Energy Index		0.11	-0.56	-0.90	45,685
Dow Jones U.S. Total Stock Market Float Adjusted Index		19.14	13.41	11.87	153,543

See Financial Highlights for dividend and capital gains information.

6

Energy Fund

Fund Allocation

As of January 31, 2024

United States	56.4%
United Kingdom	18.7
France	11.1
Spain	2.6
Italy	2.6
Canada	2.5
India	2.3
Brazil	1.5
Germany	1.5
Other	0.8

The table reflects the fund’s investments, except for short-term investments.

7

Energy Fund

Financial Statements

Schedule of Investments

As of January 31, 2024

The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at www.sec.gov.

		Shares	Market Value• ($000)
Common Stocks (99.1%)
Brazil (1.5%)
	Petroleo Brasileiro SA	9,726,325	82,767
Canada (2.5%)
	Cenovus Energy Inc.	5,707,776	92,352
	ARC Resources Ltd.	1,583,246	24,588
	Enbridge Inc.	515,671	18,311
			135,251
China (0.3%)
	China Longyuan Power Group Corp. Ltd. Class H	22,771,000	13,736
France (11.1%)
	TotalEnergies SE	3,382,185	219,421
	Engie SA (XPAR)	13,403,847	214,093
	TotalEnergies SE ADR	2,502,804	163,133
			596,647
Germany (1.5%)
	RWE AG	2,200,427	81,252
India (2.3%)
	Power Grid Corp. of India Ltd.	38,962,560	121,694
Italy (2.5%)
	Enel SpA	17,554,500	119,781
	Tenaris SA	1,076,045	16,995
			136,776
Norway (0.5%)
	Equinor ASA	956,507	27,372
Russia (0.0%)
*,1	LUKOIL PJSC ADR	1,423,477	—
Spain (2.6%)
	Iberdrola SA (XMAD)	11,387,651	137,118
*	Iberdrola SA	197,484	2,385
			139,503
United Kingdom (18.5%)
	Shell plc (XETR)	9,545,994	295,948
	BP plc	38,213,047	223,180
	Shell plc ADR	3,198,326	201,207
	National Grid plc	9,809,971	130,660
	BP plc ADR	3,198,243	112,259
	Glencore plc	6,648,567	35,177
			998,431

		Shares	Market Value• ($000)
United States (55.8%)
	Exxon Mobil Corp.	3,597,763	369,886
	Phillips 66	1,846,897	266,526
	ConocoPhillips	2,165,084	242,208
	Southern Co.	2,855,731	198,530
	Duke Energy Corp.	2,012,840	192,891
	Targa Resources Corp.	2,062,265	175,210
	Sempra	2,431,776	174,018
	American Electric Power Co. Inc.	2,025,193	158,249
	NextEra Energy Inc.	2,463,405	144,429
	Edison International	2,113,369	142,610
	Exelon Corp.	3,847,581	133,934
	Diamondback Energy Inc.	743,304	114,276
	Williams Cos. Inc.	3,033,438	105,139
	Schlumberger NV	2,106,776	102,600
	Chesapeake Energy Corp.	1,171,724	90,352
	EOG Resources Inc.	765,455	87,101
	CenterPoint Energy Inc.	2,869,262	80,167
	EQT Corp.	2,197,526	77,792
	ONEOK Inc.	705,596	48,157
*	First Solar Inc.	257,507	37,673
	Pioneer Natural Resources Co.	122,938	28,255
*	Valaris Ltd.	423,514	26,203
*	Antero Resources Corp.	421,934	9,426
	Albemarle Corp.	80,070	9,187
			3,014,819
Total Common Stocks (Cost $4,476,635)			5,348,248
Temporary Cash Investments (0.4%)
Money Market Fund (0.0%)
2	Vanguard Market Liquidity Fund, 5.410%	1,379	138

8

Energy Fund

		Face Amount ($000)	Market Value• ($000)
Repurchase Agreement (0.4%)
	NatWest Markets plc, 5.300%, 2/1/24 (Dated 1/31/24, Repurchase Value $23,103,000, collateralized by U.S. Treasury Note/Bond 1.875%–6.875%, 8/15/25–5/15/49, with a value of $23,562,000)	23,100	23,100
Total Temporary Cash Investments (Cost $23,238)			23,238
Total Investments (99.5%) (Cost $4,499,873)			5,371,486
Other Assets and Liabilities—Net (0.5%)			28,111
Net Assets (100%)			5,399,597
Cost is in $000.

•	See Note A in Notes to Financial Statements.
*	Non-income-producing security.
1	Security value determined using significant unobservable inputs.
2	Affiliated money market fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard. Rate shown is the 7-day yield.
	ADR—American Depositary Receipt.

See accompanying Notes, which are an integral part of the Financial Statements.

9

Energy Fund

Statement of Assets and Liabilities

As of January 31, 2024

($000s, except shares, footnotes, and per-share amounts)	Amount
Assets
Investments in Securities, at Value
Unaffiliated Issuers (Cost $4,499,735)	5,371,348
Affiliated Issuers (Cost $138)	138
Total Investments in Securities	5,371,486
Investment in Vanguard	178
Foreign Currency, at Value (Cost $2,658)	2,687
Receivables for Investment Securities Sold	36,292
Receivables for Accrued Income	11,195
Receivables for Capital Shares Issued	1,401
Total Assets	5,423,239
Liabilities
Due to Custodian	1
Payables for Investment Securities Purchased	5,376
Payables to Investment Advisor	2,810
Payables for Capital Shares Redeemed	5,041
Payables to Vanguard	880
Deferred Foreign Capital Gains Taxes	9,534
Total Liabilities	23,642
Net Assets	5,399,597
At January 31, 2024, net assets consisted of:
Paid-in Capital	4,332,431
Total Distributable Earnings (Loss)	1,067,166
Net Assets	5,399,597
Investor Shares—Net Assets
Applicable to 39,259,343 outstanding $.001 par value shares of beneficial interest (unlimited authorization)	1,774,931
Net Asset Value Per Share—Investor Shares	$45.21
Admiral Shares—Net Assets
Applicable to 42,730,232 outstanding $.001 par value shares of beneficial interest (unlimited authorization)	3,624,666
Net Asset Value Per Share—Admiral Shares	$84.83

  

See accompanying Notes, which are an integral part of the Financial Statements.

10

Energy Fund

Statement of Operations

	Year Ended January 31, 2024
	($000)
Investment Income
Income
Dividends1	253,071
Interest2	1,966
Securities Lending—Net	348
Total Income	255,385
Expenses
Investment Advisory Fees—Note B
Basic Fee	8,672
Performance Adjustment	2,630
The Vanguard Group—Note C
Management and Administrative—Investor Shares	4,168
Management and Administrative—Admiral Shares	5,874
Marketing and Distribution—Investor Shares	101
Marketing and Distribution—Admiral Shares	176
Custodian Fees	95
Auditing Fees	34
Shareholders’ Reports—Investor Shares	80
Shareholders’ Reports—Admiral Shares	39
Trustees’ Fees and Expenses	4
Other Expenses	373
Total Expenses	22,246
Expenses Paid Indirectly	(11)
Net Expenses	22,235
Net Investment Income	233,150
Realized Net Gain (Loss)
Investment Securities Sold2	782,928
Foreign Currencies	217
Realized Net Gain (Loss)	783,145
Change in Unrealized Appreciation (Depreciation)
Investment Securities2,3	(798,299)
Foreign Currencies	(107)
Change in Unrealized Appreciation (Depreciation)	(798,406)
Net Increase (Decrease) in Net Assets Resulting from Operations	217,889

1	Dividends are net of foreign withholding taxes of $10,282,000.
2	Interest income, realized net gain (loss), and change in unrealized appreciation (depreciation) from an affiliated company of the fund were $0, $1,000, and ($1,000), respectively. Purchases and sales are for temporary cash investment purposes.
3	The change in unrealized appreciation (depreciation) is net of the change in deferred foreign capital gains taxes of $5,635,000.

  

See accompanying Notes, which are an integral part of the Financial Statements.

11

Energy Fund

Statement of Changes in Net Assets

	Year Ended January 31,
	2024 ($000)	2023 ($000)
Increase (Decrease) in Net Assets
Operations
Net Investment Income	233,150	277,927
Realized Net Gain (Loss)	783,145	262,262
Change in Unrealized Appreciation (Depreciation)	(798,406)	339,639
Net Increase (Decrease) in Net Assets Resulting from Operations	217,889	879,828
Distributions
Investor Shares	(119,899)	(85,883)
Admiral Shares	(249,592)	(187,798)
Total Distributions	(369,491)	(273,681)
Capital Share Transactions
Investor Shares	(122,683)	(18,400)
Admiral Shares	(452,087)	159,170
Net Increase (Decrease) from Capital Share Transactions	(574,770)	140,770
Total Increase (Decrease)	(726,372)	746,917
Net Assets
Beginning of Period	6,125,969	5,379,052
End of Period	5,399,597	6,125,969

  

See accompanying Notes, which are an integral part of the Financial Statements.

12

Energy Fund

Financial Highlights

Investor Shares
For a Share Outstanding Throughout Each Period	Year Ended January 31,
	2024	2023	2022	2021	2020
Net Asset Value, Beginning of Period	$46.43	$41.64	$31.66	$43.28	$47.85
Investment Operations
Net Investment Income1	1.878	2.099	1.364	1.449	1.519
Net Realized and Unrealized Gain (Loss) on Investments	.080	4.807	10.019	(11.669)	(4.524)
Total from Investment Operations	1.958	6.906	11.383	(10.220)	(3.005)
Distributions
Dividends from Net Investment Income	(1.952)	(2.116)	(1.403)	(1.400)	(1.565)
Distributions from Realized Capital Gains	(1.226)	—	—	—	—
Total Distributions	(3.178)	(2.116)	(1.403)	(1.400)	(1.565)
Net Asset Value, End of Period	$45.21	$46.43	$41.64	$31.66	$43.28
Total Return2	4.00%	16.72%	36.33%	-23.55%	-6.55%
Ratios/Supplemental Data
Net Assets, End of Period (Millions)	$1,775	$1,950	$1,771	$1,363	$1,793
Ratio of Total Expenses to Average Net Assets3	0.44%4	0.46%4	0.41%	0.37%	0.32%
Ratio of Net Investment Income to Average Net Assets	4.02%	4.70%	3.68%	4.49%	3.20%
Portfolio Turnover Rate	29%	16%	14%	55%	48%

1	Calculated based on average shares outstanding.
2	Total returns do not include account service fees that may have applied in the periods shown. Fund prospectuses provide information about any applicable account service fees.
3	Includes performance-based investment advisory fee increases (decreases) of 0.05%, 0.06%, 0.02%, (0.02%), and (0.06%).
4	The ratio of expenses to average net assets for the period net of reduction from broker commission abatement arrangements was 0.44% and 0.46%, respectively.

  

See accompanying Notes, which are an integral part of the Financial Statements.

13

Energy Fund

Financial Highlights

Admiral Shares
For a Share Outstanding Throughout Each Period	Year Ended January 31,
	2024	2023	2022	2021	2020
Net Asset Value, Beginning of Period	$87.12	$78.12	$59.39	$81.18	$89.77
Investment Operations
Net Investment Income1	3.599	4.014	2.615	2.787	2.926
Net Realized and Unrealized Gain (Loss) on Investments	.145	9.026	18.794	(21.903)	(8.512)
Total from Investment Operations	3.744	13.040	21.409	(19.116)	(5.586)
Distributions
Dividends from Net Investment Income	(3.733)	(4.040)	(2.679)	(2.674)	(3.004)
Distributions from Realized Capital Gains	(2.301)	—	—	—	—
Total Distributions	(6.034)	(4.040)	(2.679)	(2.674)	(3.004)
Net Asset Value, End of Period	$84.83	$87.12	$78.12	$59.39	$81.18
Total Return2	4.09%	16.83%	36.43%	-23.47%	-6.50%
Ratios/Supplemental Data
Net Assets, End of Period (Millions)	$3,625	$4,176	$3,608	$2,751	$4,388
Ratio of Total Expenses to Average Net Assets3	0.36%4	0.38%4	0.33%	0.29%	0.24%
Ratio of Net Investment Income to Average Net Assets	4.11%	4.78%	3.76%	4.60%	3.28%
Portfolio Turnover Rate	29%	16%	14%	55%	48%

1	Calculated based on average shares outstanding.
2	Total returns do not include account service fees that may have applied in the periods shown. Fund prospectuses provide information about any applicable account service fees.
3	Includes performance-based investment advisory fee increases (decreases) of 0.05%, 0.06%, 0.02%, (0.02%), and (0.06%).
4	The ratio of expenses to average net assets for the period net of reduction from broker commission abatement arrangements was 0.36% and 0.38%, respectively.

  

See accompanying Notes, which are an integral part of the Financial Statements.

14

Energy Fund

Notes to Financial Statements

Vanguard Energy Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund offers two classes of shares: Investor Shares and Admiral Shares. Each of the share classes has different eligibility and minimum purchase requirements, and is designed for different types of investors.

A.	The following significant accounting policies conform to generally accepted accounting principles for U.S. investment companies. The fund consistently follows such policies in preparing its financial statements.

1. Security Valuation: Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which market quotations are not readily available, or whose values have been affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued by methods deemed by the valuation designee to represent fair value and subject to oversight by the board of trustees. These procedures include obtaining quotations from an independent pricing service, monitoring news to identify significant market- or security-specific events, and evaluating changes in the values of foreign market proxies (for example, ADRs, futures contracts, or exchange-traded funds), between the time the foreign markets close and the fund’s pricing time. When fair-value pricing is employed, the prices of securities used by a fund to calculate its net asset value may differ from quoted or published prices for the same securities. Investments in Vanguard Market Liquidity Fund are valued at that fund's net asset value.  Other temporary cash investments are valued using the latest bid prices or using valuations based on a matrix system (which considers such factors as security prices, yields, maturities, and ratings), both as furnished by independent pricing services.

2. Foreign Currency: Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates obtained from an independent third party as of the fund’s pricing time on the valuation date. Realized gains (losses) and unrealized appreciation (depreciation) on investment securities include the effects of changes in exchange rates since the securities were purchased, combined with the effects of changes in security prices. Fluctuations in the value of other assets and liabilities resulting from changes in exchange rates are recorded as unrealized foreign currency gains (losses) until the assets or liabilities are settled in cash, at which time they are recorded as realized foreign currency gains (losses).

3. Repurchase Agreements: The fund enters into repurchase agreements with institutional counterparties. Securities pledged as collateral to the fund under repurchase agreements are held by a custodian bank until the agreements mature, and in the absence of a default, such collateral cannot be repledged, resold, or rehypothecated. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal. The fund further mitigates its counterparty risk by entering into repurchase agreements only with a diverse group of prequalified counterparties, monitoring their financial strength, and entering into master repurchase agreements with its counterparties. The master repurchase agreements provide that, in the event of a counterparty's default (including bankruptcy), the fund may terminate any repurchase agreements with that counterparty, determine the net amount owed, and sell or retain the collateral up to the net amount owed to the fund. Such action may be subject to legal proceedings, which may delay or limit the disposition of collateral.

15

Energy Fund

4. Federal Income Taxes: The fund intends to continue to qualify as a regulated investment company and distribute virtually all of its taxable income. The fund’s tax returns are open to examination by the relevant tax authorities until expiration of the applicable statute of limitations, which is generally three years after the filing of the tax return. Management has analyzed the fund’s tax positions taken for all open federal and state income tax years, and has concluded that no provision for income tax is required in the fund’s financial statements.

5. Distributions: Distributions to shareholders are recorded on the ex-dividend date. Distributions are determined on a tax basis at the fiscal year-end and may differ from net investment income and realized capital gains for financial reporting purposes.

6. Securities Lending: To earn additional income, the fund lends its securities to qualified institutional borrowers. Security loans are subject to termination by the fund at any time, and are required to be secured at all times by collateral in an amount at least equal to the market value of securities loaned. Daily market fluctuations could cause the value of loaned securities to be more or less than the value of the collateral received. When this occurs, the collateral is adjusted and settled before the opening of the market on the next business day. The fund further mitigates its counterparty risk by entering into securities lending transactions only with a diverse group of prequalified counterparties, monitoring their financial strength, and entering into master securities lending agreements with its counterparties. The master securities lending agreements provide that, in the event of a counterparty’s default (including bankruptcy), the fund may terminate any loans with that borrower, determine the net amount owed, and sell or retain the collateral up to the net amount owed to the fund; however, such actions may be subject to legal proceedings. While collateral mitigates counterparty risk, in the event of a default, the fund may experience delays and costs in recovering the securities loaned. The fund invests cash collateral received in Vanguard Market Liquidity Fund, and records a liability in the Statement of Assets and Liabilities for the return of the collateral, during the period the securities are on loan. Collateral investments in Vanguard Market Liquidity Fund are subject to market appreciation or depreciation. Securities lending income represents fees charged to borrowers plus income earned on invested cash collateral, less expenses associated with the loan. During the term of the loan, the fund is entitled to all distributions made on or in respect of the loaned securities.

7. Credit Facilities and Interfund Lending Program: The fund and certain other funds managed by The Vanguard Group ("Vanguard") participate in a $4.3 billion committed credit facility provided by a syndicate of lenders pursuant to a credit agreement and an uncommitted credit facility provided by Vanguard. Both facilities may be renewed annually. Each fund is individually liable for its borrowings, if any, under the credit facilities. Borrowings may be utilized for temporary or emergency purposes and are subject to the fund’s regulatory and contractual borrowing restrictions. With respect to the committed credit facility, the participating funds are charged administrative fees and an annual commitment fee of 0.10% of the undrawn committed amount of the facility, which are allocated to the funds based on a method approved by the fund’s board of trustees and included in Management and Administrative expenses on the fund’s Statement of Operations. Any borrowings under either facility bear interest at an agreed-upon spread plus the higher of the federal funds effective rate, the overnight bank funding rate, or the Daily Simple Secured Overnight Financing Rate inclusive of an additional agreed-upon spread. However, borrowings under the uncommitted credit facility may bear interest based upon an alternate rate agreed to by the fund and Vanguard.

In accordance with an exemptive order (the “Order”) from the SEC, the fund may participate in a joint lending and borrowing program that allows registered open-end Vanguard funds to borrow

16

Energy Fund

money from and lend money to each other for temporary or emergency purposes (the “Interfund Lending Program”), subject to compliance with the terms and conditions of the Order, and to the extent permitted by the fund’s investment objective and investment policies. Interfund loans and borrowings normally extend overnight but can have a maximum duration of seven days. Loans may be called on one business day’s notice. The interest rate to be charged is governed by the conditions of the Order and internal procedures adopted by the board of trustees. The board of trustees is responsible for overseeing the Interfund Lending Program. 

For the year ended January 31, 2024, the fund did not utilize the credit facilities or the Interfund Lending Program.

8. Other: Dividend income is recorded on the ex-dividend date. Non-cash dividends included in income, if any, are recorded at the fair value of the securities received. Interest income includes income distributions received from Vanguard Market Liquidity Fund and is accrued daily. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment securities are those of the specific securities sold.

Taxes on foreign dividends and capital gains have been provided for in accordance with the applicable countries' tax rules and rates. Deferred foreign capital gains tax, if any, is accrued daily based upon net unrealized gains. The fund has filed tax reclaims for previously withheld taxes on dividends earned in certain European Union countries. These filings are subject to various administrative and judicial proceedings within these countries. Amounts related to these reclaims are recorded when there are no significant uncertainties as to the ultimate resolution of proceedings, the likelihood of receipt of these reclaims, and the potential timing of payment. Such tax reclaims and related professional fees, if any, are included in dividend income and other expenses, respectively.

Each class of shares has equal rights as to assets and earnings, except that each class separately bears certain class-specific expenses related to maintenance of shareholder accounts (included in Management and Administrative expenses) and shareholder reporting. Marketing and distribution expenses are allocated to each class of shares based on a method approved by the board of trustees. Income, other non-class-specific expenses, and gains and losses on investments are allocated to each class of shares based on its relative net assets.

B.

Wellington Management Company llp provides investment advisory services to the fund for a fee calculated at an annual percentage rate of average net assets. The basic fee is subject to quarterly adjustments based on the fund's performance relative to the MSCI ACWI Energy + Utilities Index for the preceding three years. For the year ended January 31, 2024, the investment advisory fee paid represented an effective annual rate of 0.15% of the fund’s average net assets, before a net increase of $2,630,000 (0.05%) based on performance.

C.

In accordance with the terms of a Funds' Service Agreement (the “FSA”) between Vanguard and the fund, Vanguard furnishes to the fund corporate management, administrative, marketing, and distribution services at Vanguard’s cost of operations (as defined by the FSA). These costs of operations are allocated to the fund based on methods and guidelines approved by the board of trustees and are generally settled twice a month.

Upon the request of Vanguard, the fund may invest up to 0.40% of its net assets as capital in Vanguard. At January 31, 2024, the fund had contributed to Vanguard capital in the amount of $178,000, representing less than 0.01% of the fund’s net assets and 0.07% of Vanguard’s capital

17

Energy Fund

received pursuant to the FSA. The fund’s trustees and officers are also directors and employees, respectively, of Vanguard.

D.

The fund has asked its investment advisors to direct certain security trades, subject to obtaining the best price and execution, to brokers who have agreed to rebate to the fund part of the commissions generated. Such rebates are used solely to reduce the fund’s management and administrative expenses. For the year ended January 31, 2024, these arrangements reduced the fund’s expenses by $11,000 (an annual rate of less than 0.01% of average net assets).

E.

Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Level 1—Quoted prices in active markets for identical securities.

Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).

Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments). Any investments valued with significant unobservable inputs are noted on the Schedule of Investments.

The following table summarizes the market value of the fund’s investments as of January 31, 2024, based on the inputs used to value them:

	Level 1 ($000)	Level 2 ($000)	Level 3 ($000)	Total ($000)
Investments
Assets
Common Stocks—North and South America	3,232,837	—	—	3,232,837
Common Stocks—Other	476,599	1,638,812	—	2,115,411
Temporary Cash Investments	138	23,100	—	23,238
Total	3,709,574	1,661,912	—	5,371,486

F.

Permanent differences between book-basis and tax-basis components of net assets are reclassified among capital accounts in the financial statements to reflect their tax character. These reclassifications have no effect on net assets or net asset value per share. As of period end, permanent differences primarily attributable to the accounting for applicable foreign currency transactions and distributions in connection with fund share redemptions were reclassified between the following accounts:

	Amount ($000)
Paid-in Capital	24,979
Total Distributable Earnings (Loss)	(24,979)

Temporary differences between book-basis and tax-basis components of total distributable earnings (loss) arise when certain items of income, gain, or loss are recognized in different periods for financial statement and tax purposes; these differences will reverse at some time in the future.

18

Energy Fund

The differences are primarily related to the deferral of losses from wash sales. As of period end, the tax-basis components of total distributable earnings (loss) are detailed in the table as follows:

	Amount ($000)
Undistributed Ordinary Income	6,463
Undistributed Long-Term Gains	202,149
Net Unrealized Gains (Losses)	858,554
Capital Loss Carryforwards	—
Qualified Late-Year Losses	—
Other Temporary Differences	—
Total	1,067,166

The tax character of distributions paid was as follows:

	Year Ended January 31,
	2024 Amount ($000)	2023 Amount ($000)
Ordinary Income*	228,565	273,681
Long-Term Capital Gains	140,926	—
Total	369,491	273,681

*	Includes short-term capital gains, if any.

As of January 31, 2024, gross unrealized appreciation and depreciation for investments based on cost for U.S. federal income tax purposes were as follows:

	Amount ($000)
Tax Cost	4,503,562
Gross Unrealized Appreciation	1,059,226
Gross Unrealized Depreciation	(191,301)
Net Unrealized Appreciation (Depreciation)	867,925

G.	During the year ended January 31, 2024, the fund purchased $1,667,033,000 of investment securities and sold $2,384,011,000 of investment securities, other than temporary cash investments.

19

Energy Fund

H.	Capital share transactions for each class of shares were:

    

	Year Ended January 31,
	2024			2023
	Amount ($000)	Shares (000)		Amount ($000)	Shares (000)
Investor Shares
Issued	233,455	4,941		545,067	12,243
Issued in Lieu of Cash Distributions	110,854	2,372		79,747	1,759
Redeemed	(466,992)	(10,049)		(643,214)	(14,541)
Net Increase (Decrease)—Investor Shares	(122,683)	(2,736)		(18,400)	(539)
Admiral Shares
Issued	360,636	4,121		1,135,398	13,603
Issued in Lieu of Cash Distributions	221,642	2,528		166,639	1,960
Redeemed	(1,034,365)	(11,853)		(1,142,867)	(13,815)
Net Increase (Decrease)—Admiral Shares	(452,087)	(5,204)		159,170	1,748

I.

Significant market disruptions, such as those caused by pandemics (e.g., COVID-19 pandemic), natural or environmental disasters, war (e.g., Russia’s invasion of Ukraine), acts of terrorism, or other events, can adversely affect local and global markets and normal market operations. Any such disruptions could have an adverse impact on the value of the fund’s investments and fund performance.

To the extent the fund’s investment portfolio reflects concentration in a particular market, industry, sector, country or asset class, the fund may be adversely affected by the performance of these concentrations and may be subject to increased price volatility and other risks.

J.	Management has determined that no events or transactions occurred subsequent to January 31, 2024, that would require recognition or disclosure in these financial statements.

20

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of Vanguard Specialized Funds and Shareholders of Vanguard Energy Fund

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Vanguard Energy Fund (one of the funds constituting Vanguard Specialized Funds, referred to hereafter as the "Fund") as of January 31, 2024, the related statement of operations for the year ended January 31, 2024, the statement of changes in net assets for each of the two years in the period ended January 31, 2024, including the related notes, and the financial highlights for each of the five years in the period ended January 31, 2024 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of January 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended January 31, 2024 and the financial highlights for each of the five years in the period ended January 31, 2024 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of January 31, 2024 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

/s/PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
March 20, 2024

We have served as the auditor of one or more investment companies in The Vanguard Group of Funds since 1975.

21

Tax information (unaudited)

For corporate shareholders, 46.5%, or if subsequently determined to be different, the maximum percentage allowable by law, of ordinary income (dividend income plus short-term gains, if any) for the fiscal year qualified for the dividends-received deduction.

The fund hereby designates $228,565,000, or if subsequently determined to be different, the maximum amount allowable by law, as qualified dividend income for individual shareholders for the fiscal year.

The fund distributed $156,050,000 as capital gain dividends (20% rate gain distributions) to shareholders during the fiscal year.

22

This page intentionally left blank.

The People Who Govern Your Fund

The trustees of your mutual fund are there to see that the fund is operated and managed in your best interests since, as a shareholder, you are a part owner of the fund. Your fund’s trustees also serve on the board of directors of The Vanguard Group, Inc., which is owned by the Vanguard funds and provides services to them.

A majority of Vanguard’s board members are independent, meaning that they have no affiliation with Vanguard or the funds they oversee, apart from the sizable personal investments they have made as private individuals. The independent board members have distinguished backgrounds in business, academia, and public service. Each of the trustees and executive officers oversees 210 Vanguard funds.

Information for each trustee and executive officer of the fund appears below. That information, as well as the Vanguard fund count, is as of the date on the cover of this fund report. The mailing address of the trustees and officers is P.O. Box 876, Valley Forge, PA 19482. More information about the trustees is in the Statement of Additional Information, which can be obtained, without charge, by contacting Vanguard at 800-662-7447, or online at vanguard.com.

officer (retired 2013) of IBM (information technology services). Fiduciary member of IBM’s Retirement Plan Committee (2004–2013), senior vice president and general manager (2002–2004) of IBM Global Financing, vice president and controller (1998–2002) of IBM, and a variety of other prior management roles at IBM. Member of the Council on Chicago Booth.

Scott C. Malpass

Born in 1962. Trustee since March 2012. Principal occupation(s) during the past five years and other experience: co-founder and managing partner (2022–present) of Grafton Street Partners (investment advisory firm). Chief investment officer (retired 2020) and vice president (retired 2020) of the University of Notre Dame. Chair of the board of Catholic Investment Services, Inc. (investment advisors). Member of the board of superintendence of the Institute for the Works of Religion, the Notre Dame 403(b) Investment Committee, and the board of directors of Paxos Trust Company (finance).

Deanna Mulligan

Born in 1963. Trustee since January 2018. Principal occupation(s) during the past five years and other experience: chief executive officer of Purposeful (advisory firm for CEOs and C-level executives; 2021–present). Board chair (2020), chief executive officer (2011–2020), and president (2010–2019) of The Guardian Life Insurance Company of America. Chief operating officer (2010–2011) and executive vice president (2008–2010) of Individual Life and Disability of the Guardian Life Insurance Company of America. Director of DuPont. Member of the board of the Economic Club of New York. Trustee of the Partnership for New York City (business leadership), Chief Executives for Corporate Purpose, and the NewYork-Presbyterian Hospital.

Lubos Pastor

Born in 1974. Trustee since January 2024. Principal occupation(s) during the past five years and other experience: Charles P. McQuaid Distinguished Service Professor of Finance (2023–present) at the University of Chicago Booth School of Business; Charles P. McQuaid Professor of Finance (2009–2023) at the University of Chicago Booth School of Business. Vice president (2024–present) and director (2021–2023) of the Executive Committee of the European Finance Association. Member of the board of the Fama-Miller Center for Research in Finance. Member of the Academic Advisory Board of the Center for Research in Security Prices (CRSP) and of the CRSP Index Advisory Council. Research associate at the National Bureau of Economic Research. Research fellow at the Centre for Economic Policy Research.

André F. Perold

Born in 1952. Trustee since December 2004. Principal occupation(s) during the past five years and other

experience: George Gund Professor of Finance and Banking, Emeritus at the Harvard Business School (retired 2011). Chief investment officer and partner of HighVista Strategies (private investment firm). Member of the board of RIT Capital Partners (investment firm).

Sarah Bloom Raskin

Born in 1961. Trustee since January 2018. Principal occupation(s) during the past five years and other experience: deputy secretary (2014–2017) of the United States Department of the Treasury. Governor (2010–2014) of the Federal Reserve Board. Commissioner (2007–2010) of financial regulation for the State of Maryland. Colin W. Brown Distinguished Professor of the Practice of Law, Duke Law School (2021–present); Rubenstein Fellow, Duke University (2017–2020); Distinguished Fellow of the Global Financial Markets Center, Duke Law School (2020–2022); and Senior Fellow, Duke Center on Risk (2020–present). Partner of Kaya Partners (climate policy advisory services). Member of the board of directors of Arcadia (energy solution technology).

Grant Reid

Born in 1959. Trustee since July 2023. Principal occupation(s) during the past five years and other experience: senior operating partner (2023–present) of CVC Capital (alternative investment manager). Chief executive officer and president (2014–2022) and member of the board of directors (2015–2022) of Mars, Incorporated (multinational manufacturer). Member of the board of directors of Marriott International, Inc. Member of the board of the Sustainable Markets Initiative (environmental services). Chair of the Sustainable Markets Initiative’s Agribusiness Task Force.

David Thomas

Born in 1956. Trustee since July 2021. Principal occupation(s) during the past five years and other experience: president of Morehouse College (2018–present). Professor of business administration, emeritus at Harvard University (2017–2018). Dean (2011–2016) and professor of management (2016–2017) at the Georgetown University McDonough School of Business. Director of DTE Energy Company. Trustee of Common Fund.

Peter F. Volanakis

Born in 1955. Trustee since July 2009. Principal occupation(s) during the past five years and other experience: president and chief operating officer (retired 2010) of Corning Incorporated (communications equipment) and director of Corning Incorporated (2000–2010) and Dow Corning (2001–2010). Director (2012) of SPX Corporation (multi-industry manufacturing). Overseer of the Amos Tuck School of Business Administration, Dartmouth

College (2001–2013). Member of the BMW Group Mobility Council.

Executive Officers

Jacqueline Angell

Born in 1974. Principal occupation(s) during the past five years and other experience: principal of Vanguard. Chief compliance officer (November 2022–present) of Vanguard and of each of the investment companies served by Vanguard. Chief compliance officer (2018–2022) and deputy chief compliance officer (2017–2019) of State Street.

Christine M. Buchanan

Born in 1970. Principal occupation(s) during the past five years and other experience: principal of Vanguard. Chief financial officer (2021–present) and treasurer (2017–2022) of each of the investment companies served by Vanguard. Partner (2005–2017) at KPMG (audit, tax, and advisory services).

John Galloway

Born in 1973. Principal occupation(s) during the past five years and other experience: principal of Vanguard. Investment stewardship officer (September 2020–present) of each of the investment companies served by Vanguard. Head of Investor Advocacy (February 2020–present) and head of Marketing Strategy and Planning (2017–2020) at Vanguard. Special assistant to the President of the United States (2015).

Ashley Grim

Born in 1984. Principal occupation(s) during the past five years and other experience: treasurer (February 2022–present) of each of the investment companies served by Vanguard. Fund transfer agent controller (2019–2022) and director of Audit Services (2017–2019) at Vanguard. Senior manager (2015–2017) at PriceWaterhouseCoopers (audit and assurance, consulting, and tax services).

Jodi Miller

Born in 1980. Principal occupation(s) during the past five years and other experience: principal of Vanguard. Finance director (2022–present) of each of the investment companies served by Vanguard. Head of Enterprise Investment Services (2020–present), head of Retail Client Services and Operations (2020–2022), and head of Retail Strategic Support (2018–2020) at Vanguard.

Anne E. Robinson

Born in 1970. Principal occupation(s) during the past five years and other experience: general counsel (2016–present) of Vanguard. Secretary (2016–present) of Vanguard and of each of the investment companies served by Vanguard. Managing director (2016–present) of Vanguard. Managing director and general counsel of Global Cards and Consumer Services (2014–2016) at Citigroup. Counsel (2003–2014) at American Express. Nonexecutive director (2022–present) of the board of National Grid (energy).

Michael Rollings

Born in 1963. Principal occupation(s) during the past five years and other experience: finance director (2017–present) and treasurer (2017) of each of the investment companies served by Vanguard. Managing director (2016–present) of Vanguard. Chief financial officer (2016–present) of Vanguard. Director (2016–present) of Vanguard Marketing Corporation. Executive vice president and chief financial officer (2006–2016) of MassMutual Financial Group.

Vanguard Senior Management Team

Matthew Benchener	Thomas M. Rampulla
Amma Boateng	Karin A. Risi
Joseph Brennan	Anne E. Robinson
Mortimer J. Buckley	Michael Rollings
Gregory Davis	Nitin Tandon
John James	Lauren Valente
Chris D. Mclsaac

Fund Information > 800-662-7447

Direct Investor Account Services > 800-662-2739

Institutional Investor Services > 800-523-1036

Text Telephone for People Who Are Deaf or Hard of Hearing > 800-749-7273

This material may be used in conjunction with the offering of shares of any Vanguard fund only if preceded or accompanied by the fund’s current prospectus.

All comparative mutual fund data are from Morningstar, Inc., unless otherwise noted.

You can obtain a free copy of Vanguard’s proxy voting guidelines by visiting vanguard.com/proxyreporting or by calling Vanguard at 800-662-2739. The guidelines are also available from the SEC’s website, www.sec.gov. In addition, you may obtain a free report on how your fund voted the proxies for securities it owned during the 12 months ended June 30. To get the report, visit either vanguard.com/proxyreporting or www.sec.gov.

You can review information about your fund on the SEC’s website, and you can receive copies of this information, for a fee, by sending a request via email addressed to publicinfo@sec.gov.

Source for Bloomberg indexes: Bloomberg Index Services Limited. Copyright 2024, Bloomberg. All rights reserved.

© 2024 The Vanguard Group, Inc.
All rights reserved.
Vanguard Marketing Corporation, Distributor.

Q510 032024

Important information about shareholder reports

Beginning in July 2024, amendments adopted by the Securities and Exchange Commission will substantially impact the design, content, and transmission of shareholder reports. Shareholder reports will provide key fund information in a clear and concise format and must be mailed to each shareholder that has not elected to receive the reports electronically. Financial statements will no longer be included in the shareholder report but will be available at vanguard.com, can be mailed upon request, or can be accessed on the SEC’s website at www.sec.gov.

You may elect to receive shareholder reports and other communications from the fund electronically by contacting your financial intermediary (such as a broker-dealer or bank) or, if you invest directly with the fund, by calling Vanguard at one of the phone numbers on the back cover of this report or by logging on to vanguard.com.

Contents

Your Fund’s Performance at a Glance	1
Advisor’s Report	2
AboutYour Fund's Expenses	6
Performance Summary	8
Financial Statements	10

Please note: The opinions expressed in this report are just that—informed opinions. They should not be considered promises or advice. Also, please keep in mind that the information and opinions cover the period through the date on the front of this report. Of course, the risks of investing in your fund are spelled out in the prospectus.

Your Fund’s Performance at a Glance

•	For the 12 months ended January 31, 2024, Vanguard Global Capital Cycles Fund returned –2.52%, lagging its performance benchmark, the S&P Global BMI Metals & Mining 25% Weighted Index, which returned 5.78%.
•	With inflation continuing to ease, major central banks slowed and eventually stopped hiking interest rates. Labor markets and consumer spending proved resilient, but the prospect of rates remaining high for an extended period spurred volatility at times. Stocks worldwide rallied toward the end of 2023, however, as sentiment improved amid market expectations for rate cuts in 2024.
•	In this environment, returns were mixed by sector. The fund’s materials holdings, overweighted in metals and mining, detracted most. The biggest contribution came from industrial stocks, buoyed by the advisor’s outsized aerospace and defense positions.
•	By region, the advisor’s U.S. stock selections were positive but lagged the benchmark, impairing overall returns. An underweight allocation to Australian companies was a net plus.

Market Barometer

	Average Annual Total Returns Periods Ended January 31, 2024
	One Year	Three Years	Five Years
Stocks
Russell 1000 Index (Large-caps)	20.23%	9.78%	13.99%
Russell 2000 Index (Small-caps)	2.40	-0.76	6.80
Russell 3000 Index (Broad U.S. market)	19.15	9.10	13.53
FTSE All-World ex US Index (International)	6.29	1.57	5.77
Bonds
Bloomberg U.S. Aggregate Float Adjusted Index (Broad taxable market)	2.23%	-3.15%	0.90%
Bloomberg Municipal Bond Index (Broad tax-exempt market)	2.90	-0.78	2.00
FTSE Three-Month U.S. Treasury Bill Index	5.36	2.40	1.96
CPI
Consumer Price Index	3.09%	5.64%	4.15%

1

Advisor’s Report

driven by a recovery in PC demand. Intel’s management team also raised guidance above expectations for fourth-quarter adjusted earnings per share (EPS) and revenue. We continue to hold our position in Intel as we believe the company’s semiconductor business is well-positioned to benefit from the energy transition and the growth of electric vehicles (EVs).

Shares of BWX Technologies increased over the period following reports of positive results. In June, it was added to the S&P MidCap 400 Index as a part of the index’s quarterly rebalancing, which helped propel the stock price to an all-time high. Also, it was announced that NASA had selected BWX to build a prototype nuclear rocket engine for space propulsion. We continue to hold our position in the stock as we think there will be a long upcycle of global defense spending because of changing mentalities regarding national security, spurred by global conflicts and geopolitical tensions.

The fund’s shortfalls

Both security selection and sector allocation detracted from relative outperformance in aggregate over the period. Security selection within materials and consumer discretionary were the largest detractors, while the fund’s underweight to information technology and communication services also detracted.

The fund’s largest relative detractors included overweight positions in Barrick Gold (materials) and Alibaba Group (consumer discretionary).

Shares of Barrick Gold declined over the period due to disappointing first- and second-quarter results, driven primarily by revenues being lower than expected. Across the year, the company was weighed down by the weaker production rates as gold and copper production fell to multiyear lows. The stock did rebound briefly during the fourth quarter after reporting positive third-quarter results in November, when its EPS and sales revenues topped consensus estimates, benefiting from the rise in gold production at reduced costs. We continue to hold Barrick Gold; on top of strong company fundamentals such as a healthy balance sheet, we believe the company is well-positioned to benefit from the energy transition as we shift from an energy-intensive economy to a metal-intensive one.

Shares of Alibaba decreased over the period due to disappointing financial results, worsened by the weaker macro picture in China. This was coupled with Japanese tech investor SoftBank selling almost all of its remaining stake in the company. Alibaba also called off the spinoff of its large cloud business as a result of tightened U.S. curbs on advanced chips for China. We have trimmed our position but continue to hold Alibaba as, over the medium to long term, we see the company as a key beneficiary of increased consumer growth in China. Alibaba also has a strong net cash balance sheet and is well-placed to buy back stock in the future.

The fund’s positioning and investment strategy

Despite the soft-landing rhetoric with which global governments ended 2023, we continue to believe that several of the market dynamics that drove economies to high levels of inflation will persist, rather than abate, and that these dynamics are in fact structural rather than transitory. This should lead to an environment of increasing dispersion and volatility. Structural changes in the economy, such as falling labor supply, underinvestment in commodity production, spending to combat climate change, rising defense spending, and recent efforts of reshoring as opposed to offshoring, all point to structurally higher inflation going forward. Importantly, we do not expect inflation to move higher in a linear manner. Rather, we expect a more volatile inflationary environment, with a higher trend over time—and this transition is already underway. We think the energy transition will be the largest capital cycle in our lifetime, spanning many industries and countries.

Our framework continues to identify several compelling dislocations in sectors impacted by higher levels of inflation and interest rates in traditional energy and metal segments, and we continue to find attractive opportunities in energy-transition actors, including electric utilities, industrials, natural gas producers, and energy services.

Utilities, while they underperformed broad equity markets as expected during the hiking cycle (from 2022 to mid-2023), also

haven’t benefited from the sharp market rally of the fourth quarter of 2023 on the back of an expected Goldilocks environment in 2024. However, we believe their relative valuation to be very attractive, and their fundamentals remain solid, with what we see as sustainable low double-digit total returns for years to come, thanks to pass-through costs to consumers. Longer-term, we believe regulators and governments will continue to allow those companies to have similar return structures, as massive investment will be needed, including to modernize the grid.

In energy, we continue to find attractive opportunities in U.S. natural gas producers. While the warm winter so far has lowered natural gas prices in the short term, we expect higher U.S. natural gas prices over the medium term, as strong demand in the form of liquefied natural gas (LNG) comes online from the end of 2024 through 2026. Longer-term, we believe natural gas is a much-needed tool to help decarbonization efforts globally. As growth in power generation continues to increase, exacerbated by the broad deployment of EVs, artificial intelligence (AI), and data centers, we believe natural gas, further improved by carbon capture, can be used as a dispatchable baseload power source that can help solve intermittency issues.

In metal producers, we continue to believe the much-needed global energy transition will require substantial capital spending and infrastructure development through mid-century, dwarfing past

landmark economic stimulus plans. We think the combination of outsized spending, policy tailwinds, and shifting consumer and investor attitudes will continue to fuel this new capital cycle. In precious metals, valuations are especially attractive, despite gold making new highs over the quarter, and the equities of gold miners lagged broad equity markets in December and over the full year.

Memory is one theme we expect to grow in 2024. These companies have broadly been in a down cycle for at least five quarters. However, we feel that in a positive market environment where AI and cloud computing continue to grow, memory companies can benefit from these tailwinds substantially. Our positions in Samsung and Marvell Technology, the latter of which we have reintroduced to the portfolio after owning it previously, should both benefit from this theme.

From a country perspective, we believe Brazil is attractive given the macroeconomic setup. Brazil has among the highest real interest rates in the world, attractive valuations, and strong earnings growth in emerging markets, and the country should further benefit from the end of the U.S. hiking cycle. We find financials particularly attractive and hold Banco Bradesco.

Keith E. White,

Senior Managing Director
and Equity Portfolio Manager

Wellington Management Company llp

February 14, 2024

About Your Fund’s Expenses

As a shareholder of the fund, you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross income, directly reduce the investment return of the fund.

A fund‘s expenses are expressed as a percentage of its average net assets. This figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.

The accompanying table illustrates your fund’s costs in two ways:

•

Based on actual fund return. This section helps you to estimate the actual expenses that you paid over the period. The ”Ending Account Value“ shown is derived from the fund’s actual return, and the third column shows the dollar amount that would have been paid by an investor who started with $1,000 in the fund. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period.

To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your fund under the heading ”Expenses Paid During Period.“

•

Based on hypothetical 5% yearly return. This section is intended to help you compare your fund‘s costs with those of other mutual funds. It assumes that the fund had a yearly return of 5% before expenses, but that the expense ratio is unchanged. In this case—because the return used is not the fund’s actual return—the results do not apply to your investment. The example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to calculate expenses based on a 5% return. You can assess your fund’s costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds.

Note that the expenses shown in the table are meant to highlight and help you compare ongoing costs only and do not reflect transaction costs incurred by the fund for buying and selling securities. Further, the expenses do not include any purchase, redemption, or account service fees described in the fund prospectus. If such fees were applied to your account, your costs would be higher. Your fund does not carry a “sales load.”

The calculations assume no shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.

You can find more information about the fund’s expenses, including annual expense ratios, in the Financial Statements section of this report. For additional information on operating expenses and other shareholder costs, please refer to your fund’s current prospectus.

6

Six Months Ended January 31, 2024
Global Capital Cycles Fund	Beginning Account Value 7/31/2023	Ending Account Value 1/31/2024	Expenses Paid During Period
Based on Actual Fund Return	$1,000.00	$968.00	$2.18
Based on Hypothetical 5% Yearly Return	1,000.00	1,022.99	2.24

The calculations are based on expenses incurred in the most recent six-month period. The fund's annualized six-month expense ratio for that period is 0.44%. The dollar amounts shown as ”Expenses Paid” are equal to the annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by the number of days in the most recent 12-month period (184/365).

7

Global Capital Cycles Fund

Performance Summary

All of the returns in this report represent past performance, which is not a guarantee of future results that may be achieved by the fund. (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.) Note, too, that both investment returns and principal value can fluctuate widely, so an investor’s shares, when sold, could be worth more or less than their original cost. The returns shown do not reflect taxes that a shareholder would pay on fund distributions or on the sale of fund shares.

Cumulative Performance: January 31, 2014, Through January 31, 2024

Initial Investment of $10,000

		Average Annual Total Returns Periods Ended January 31, 2024
		One Year	Five Years	Ten Years	Final Value of a $10,000 Investment
	Global Capital Cycles Fund	-2.52%	12.15%	3.29%	$13,821
	Spliced Global Capital Cycles Index	5.78	9.49	4.08	14,910
	MSCI All Country World Index	14.70	10.16	8.43	22,464

Spliced Global Capital Cycles Index: S&P Global Custom Metals and Mining Index through September 25, 2018; S&P Global BMI Metals & Mining 25% Weighted Index thereafter.

See Financial Highlights for dividend and capital gains information.

8

Global Capital Cycles Fund

Fund Allocation

As of January 31, 2024

United States	25.1%
United Kingdom	24.0
Canada	15.2
South Korea	5.0
China	5.0
India	3.7
Brazil	3.6
Germany	3.6
Australia	3.1
Switzerland	3.0
Taiwan	2.9
Japan	2.4
France	2.1
Other	1.3

The table reflects the fund's investments, except for short-term investments.

9

Global Capital Cycles Fund

Financial Statements

Schedule of Investments

As of January 31, 2024

The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at www.sec.gov.

					Shares	Market Value• ($000)
Common Stocks (95.6%)
Australia (2.9%)
	BHP Group Ltd.				677,588	20,730
1	BHP Group Ltd. ADR				293,870	17,991
						38,721
Brazil (3.5%)
	Banco Bradesco SA ADR				12,405,840	38,458
	Vale SA Class B ADR				577,448	7,905
						46,363
Canada (14.6%)
	Barrick Gold Corp.				8,085,317	126,131
	Intact Financial Corp.				135,097	21,127
	Agnico Eagle Mines Ltd.				286,965	14,107
*,2	Foran Mining Corp. PP (Acquired 11/29/23, Cost $13,271)				4,400,000	12,047
*	Foran Mining Corp. (XTSE)				3,274,073	9,960
*	Abaxx Technologies Inc.				900,900	9,381
						192,753
China (4.8%)
	Alibaba Group Holding Ltd.				5,471,902	49,078
	Contemporary Amperex Technology Co. Ltd. Class A				667,150	14,099
						63,177
France (2.0%)
	Engie SA				1,657,051	26,467
Germany (3.4%)
	Rheinmetall AG				106,050	37,136
	Hensoldt AG				269,986	8,105
						45,241
India (3.5%)
	Reliance Industries Ltd.				1,352,900	46,481
Japan (2.3%)
	Ebara Corp.				289,700	18,143
	Panasonic Holdings Corp.				1,311,920	12,357
						30,500

					Shares	Market Value• ($000)
Norway (0.5%)
*	Seadrill Ltd.				147,139	6,359
South Korea (4.8%)
	Samsung Electronics Co. Ltd.				1,175,204	63,857
Sweden (0.7%)
	Boliden AB				363,059	9,637
Switzerland (2.9%)
	Novartis AG (Registered)				373,666	38,642
Taiwan (2.8%)
	Taiwan Semiconductor Manufacturing Co. Ltd. ADR				331,866	37,488
United Kingdom (22.9%)
	Glencore plc				13,182,846	69,750
	Anglo American plc				2,271,225	54,141
	Unilever plc				811,595	39,492
	Rio Tinto plc ADR				567,573	39,316
	Babcock International Group plc				5,469,895	31,262
	Haleon plc				6,026,994	24,480
	Shell plc				520,603	16,140
	Fresnillo plc				2,359,695	15,783
	Hammerson plc				40,258,460	13,738
						304,102
United States (24.0%)
	BWX Technologies Inc.				561,052	45,715
	Viper Energy Inc. Class A				1,424,950	44,487
	Intel Corp.				882,312	38,010
	Wells Fargo & Co.				700,663	35,159
	Pfizer Inc.				1,183,962	32,062
	American Electric Power Co. Inc.				401,089	31,341
	Marvell Technology Inc.				312,596	21,163
	Chesapeake Energy Corp.				259,332	19,997
*	Fluor Corp.				515,046	19,422

10

Global Capital Cycles Fund

					Shares	Market Value• ($000)
	Texas Instruments Inc.				120,785	19,340
*	Antero Resources Corp.				511,377	11,424
						318,120
Total Common Stocks (Cost $1,184,931)						1,267,908
Warrants (0.0%)
*	Metals Acquisition Ltd. Exp. 6/16/28 (Cost $246)				330,300	753
Temporary Cash Investments (5.5%)
Money Market Fund (5.5%)
3,4	Vanguard Market Liquidity Fund, 5.410% (Cost $73,073)				730,850	73,078
Total Investments (101.1%) (Cost $1,258,250)						1,341,739
Other Assets and Liabilities—Net (-1.1%)						(14,963)
Net Assets (100%)						1,326,776

Cost is in $000.

•	See Note A in Notes to Financial Statements.

*	Non-income-producing security.
1	Includes partial security positions on loan to broker-dealers. The total value of securities on loan is $17,809,000.
2	Restricted securities totaling $12,047,000, representing 0.9% of net assets.
3	Affiliated money market fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard. Rate shown is the 7-day yield.
4	Collateral of $18,618,000 was received for securities on loan.

	ADR—American Depositary Receipt.
	PP—Private Placement.

See accompanying Notes, which are an integral part of the Financial Statements.

11

Global Capital Cycles Fund

Statement of Assets and Liabilities

As of January 31, 2024

($000s, except shares, footnotes, and per-share amounts)	Amount
Assets
Investments in Securities, at Value1
Unaffiliated Issuers (Cost $1,185,177)	1,268,661
Affiliated Issuers (Cost $73,073)	73,078
Total Investments in Securities	1,341,739
Investment in Vanguard	45
Cash	48
Foreign Currency, at Value (Cost $394)	394
Receivables for Investment Securities Sold	1,676
Receivables for Accrued Income	3,990
Receivables for Capital Shares Issued	221
Total Assets	1,348,113
Liabilities
Payables for Investment Securities Purchased	167
Collateral for Securities on Loan	18,618
Payables for Capital Shares Redeemed	1,085
Payables to Investment Advisor	731
Payables to Vanguard	183
Deferred Foreign Capital Gains Taxes	553
Total Liabilities	21,337
Net Assets	1,326,776
1 Includes $17,809,000 of securities on loan.
At January 31, 2024, net assets consisted of:
Paid-in Capital	3,253,379
Total Distributable Earnings (Loss)	(1,926,603)
Net Assets	1,326,776
Net Assets
Applicable to 112,978,120 outstanding $.001 par value shares of beneficial interest (unlimited authorization)	1,326,776
Net Asset Value Per Share	$11.74

See accompanying Notes, which are an integral part of the Financial Statements.

12

Global Capital Cycles Fund

Statement of Operations

	Year Ended January 31, 2024
	($000)
Investment Income
Income
Dividends1	48,235
Interest2	2,326
Securities Lending—Net	91
Total Income	50,652
Expenses
Investment Advisory Fees—Note B
Basic Fee	2,053
Performance Adjustment	867
The Vanguard Group—Note C
Management and Administrative	3,012
Marketing and Distribution	72
Custodian Fees	58
Auditing Fees	30
Shareholders’ Reports	50
Trustees’ Fees and Expenses	1
Other Expenses	55
Total Expenses	6,198
Net Investment Income	44,454
Realized Net Gain (Loss)
Investment Securities Sold2	73,899
Foreign Currencies	435
Realized Net Gain (Loss)	74,334
Change in Unrealized Appreciation (Depreciation)
Investment Securities2,3	(157,379)
Foreign Currencies	(9)
Change in Unrealized Appreciation (Depreciation)	(157,388)
Net Increase (Decrease) in Net Assets Resulting from Operations	(38,600)

1	Dividends are net of foreign withholding taxes of $2,454,000.
2	Interest income, realized net gain (loss), capital gain distributions received, and change in unrealized appreciation (depreciation) from an affiliated company of the fund were $2,326,000, ($2,000), less than $1,000, and $4,000, respectively. Purchases and sales are for temporary cash investment purposes.
3	The change in unrealized appreciation (depreciation) is net of the change in deferred foreign capital gains taxes of $553,000.

See accompanying Notes, which are an integral part of the Financial Statements.

13

Global Capital Cycles Fund

Statement of Changes in Net Assets

	Year Ended January 31,
	2024 ($000)	2023 ($000)
Increase (Decrease) in Net Assets
Operations
Net Investment Income	44,454	48,509
Realized Net Gain (Loss)	74,334	103,976
Change in Unrealized Appreciation (Depreciation)	(157,388)	17,828
Net Increase (Decrease) in Net Assets Resulting from Operations	(38,600)	170,313
Distributions
Total Distributions	(44,372)	(44,720)
Capital Share Transactions
Issued	135,868	320,924
Issued in Lieu of Cash Distributions	37,890	38,683
Redeemed	(284,023)	(324,685)
Net Increase (Decrease) from Capital Share Transactions	(110,265)	34,922
Total Increase (Decrease)	(193,237)	160,515
Net Assets
Beginning of Period	1,520,013	1,359,498
End of Period	1,326,776	1,520,013

See accompanying Notes, which are an integral part of the Financial Statements.

14

Global Capital Cycles Fund

Financial Highlights

For a Share Outstanding Throughout Each Period	Year Ended January 31,
	2024	2023	2022	2021	2020
Net Asset Value, Beginning of Period	$12.43	$11.28	$9.57	$7.97	$7.62
Investment Operations
Net Investment Income1	.377	.392	.356	.197	.212
Net Realized and Unrealized Gain (Loss) on Investments	(.672)	1.134	1.715	1.597	.337
Total from Investment Operations	(.295)	1.526	2.071	1.794	.549
Distributions
Dividends from Net Investment Income	(.395)	(.376)	(.361)	(.194)	(.199)
Distributions from Realized Capital Gains	—	—	—	—	—
Total Distributions	(.395)	(.376)	(.361)	(.194)	(.199)
Net Asset Value, End of Period	$11.74	$12.43	$11.28	$9.57	$7.97
Total Return2	-2.52%	13.81%	21.74%	22.63%	7.11%
Ratios/Supplemental Data
Net Assets, End of Period (Millions)	$1,327	$1,520	$1,359	$1,182	$1,212
Ratio of Total Expenses to Average Net Assets3	0.44%	0.43%4	0.36%	0.35%	0.38%
Ratio of Net Investment Income to Average Net Assets	3.14%	3.45%	3.28%	2.43%	2.68%
Portfolio Turnover Rate	67%	63%	57%	70%	56%

1	Calculated based on average shares outstanding.
2	Total returns do not include account service fees that may have applied in the periods shown. Fund prospectuses provide information about any applicable account service fees.
3	Includes performance-based investment advisory fee increases (decreases) of 0.06%, 0.05%, (0.01%), (0.03%), and 0.00%.
4	The ratio of expenses to average net assets for the period net of reduction from custody fee offset arrangements was 0.43%.

See accompanying Notes, which are an integral part of the Financial Statements.

15

Global Capital Cycles Fund

Notes to Financial Statements

Vanguard Global Capital Cycles Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund.

A.  The following significant accounting policies conform to generally accepted accounting principles for U.S. investment companies. The fund consistently follows such policies in preparing its financial statements.

1. Security Valuation: Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which market quotations are not readily available, or whose values have been affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued by methods deemed by the valuation designee to represent fair value and subject to oversight by the board of trustees. These procedures include obtaining quotations from an independent pricing service, monitoring news to identify significant market- or security-specific events, and evaluating changes in the values of foreign market proxies (for example, ADRs, futures contracts, or exchange-traded funds), between the time the foreign markets close and the fund’s pricing time. When fair-value pricing is employed, the prices of securities used by a fund to calculate its net asset value may differ from quoted or published prices for the same securities. Investments in Vanguard Market Liquidity Fund are valued at that fund's net asset value.

2. Foreign Currency: Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates obtained from an independent third party as of the fund’s pricing time on the valuation date. Realized gains (losses) and unrealized appreciation (depreciation) on investment securities include the effects of changes in exchange rates since the securities were purchased, combined with the effects of changes in security prices. Fluctuations in the value of other assets and liabilities resulting from changes in exchange rates are recorded as unrealized foreign currency gains (losses) until the assets or liabilities are settled in cash, at which time they are recorded as realized foreign currency gains (losses).

3. Federal Income Taxes: The fund intends to continue to qualify as a regulated investment company and distribute virtually all of its taxable income. The fund’s tax returns are open to examination by the relevant tax authorities until expiration of the applicable statute of limitations, which is generally three years after the filing of the tax return. Management has analyzed the fund’s tax positions taken for all open federal and state income tax years, and has concluded that no provision for income tax is required in the fund’s financial statements.

4. Distributions: Distributions to shareholders are recorded on the ex-dividend date. Distributions are determined on a tax basis at the fiscal year-end and may differ from net investment income and realized capital gains for financial reporting purposes.

5. Securities Lending: To earn additional income, the fund lends its securities to qualified institutional borrowers. Security loans are subject to termination by the fund at any time, and are required to be secured at all times by collateral in an amount at least equal to the market value of securities loaned. Daily market fluctuations could cause the value of loaned securities to be more or less than the value of the collateral received. When this occurs, the collateral is adjusted and settled before the opening of the market on the next business day. The fund further mitigates its counterparty risk by entering into securities lending transactions only with a diverse group of

16

Global Capital Cycles Fund

prequalified counterparties, monitoring their financial strength, and entering into master securities lending agreements with its counterparties. The master securities lending agreements provide that, in the event of a counterparty’s default (including bankruptcy), the fund may terminate any loans with that borrower, determine the net amount owed, and sell or retain the collateral up to the net amount owed to the fund; however, such actions may be subject to legal proceedings. While collateral mitigates counterparty risk, in the event of a default, the fund may experience delays and costs in recovering the securities loaned. The fund invests cash collateral received in Vanguard Market Liquidity Fund, and records a liability in the Statement of Assets and Liabilities for the return of the collateral, during the period the securities are on loan. Collateral investments in Vanguard Market Liquidity Fund are subject to market appreciation or depreciation. Securities lending income represents fees charged to borrowers plus income earned on invested cash collateral, less expenses associated with the loan. During the term of the loan, the fund is entitled to all distributions made on or in respect of the loaned securities.

6. Credit Facilities and Interfund Lending Program: The fund and certain other funds managed by The Vanguard Group ("Vanguard") participate in a $4.3 billion committed credit facility provided by a syndicate of lenders pursuant to a credit agreement and an uncommitted credit facility provided by Vanguard. Both facilities may be renewed annually. Each fund is individually liable for its borrowings, if any, under the credit facilities. Borrowings may be utilized for temporary or emergency purposes and are subject to the fund’s regulatory and contractual borrowing restrictions. With respect to the committed credit facility, the participating funds are charged administrative fees and an annual commitment fee of 0.10% of the undrawn committed amount of the facility, which are allocated to the funds based on a method approved by the fund’s board of trustees and included in Management and Administrative expenses on the fund’s Statement of Operations. Any borrowings under either facility bear interest at an agreed-upon spread plus the higher of the federal funds effective rate, the overnight bank funding rate, or the Daily Simple Secured Overnight Financing Rate inclusive of an additional agreed-upon spread. However, borrowings under the uncommitted credit facility may bear interest based upon an alternate rate agreed to by the fund and Vanguard.

In accordance with an exemptive order (the “Order”) from the SEC, the fund may participate in a joint lending and borrowing program that allows registered open-end Vanguard funds to borrow money from and lend money to each other for temporary or emergency purposes (the “Interfund Lending Program”), subject to compliance with the terms and conditions of the Order, and to the extent permitted by the fund’s investment objective and investment policies. Interfund loans and borrowings normally extend overnight but can have a maximum duration of seven days. Loans may be called on one business day’s notice. The interest rate to be charged is governed by the conditions of the Order and internal procedures adopted by the board of trustees. The board of trustees is responsible for overseeing the Interfund Lending Program.

For the year ended January 31, 2024, the fund did not utilize the credit facilities or the Interfund Lending Program.

7. Other: Dividend income is recorded on the ex-dividend date. Non-cash dividends included in income, if any, are recorded at the fair value of the securities received. Interest income includes income distributions received from Vanguard Market Liquidity Fund and is accrued daily. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment securities are those of the specific securities sold.

17

Global Capital Cycles Fund

Taxes on foreign dividends and capital gains have been provided for in accordance with the applicable countries’ tax rules and rates. Deferred foreign capital gains tax, if any, is accrued daily based upon net unrealized gains. The fund has filed tax reclaims for previously withheld taxes on dividends earned in certain European Union countries. These filings are subject to various administrative and judicial proceedings within these countries. Amounts related to these reclaims are recorded when there are no significant uncertainties as to the ‎ultimate resolution of proceedings, the likelihood of receipt of these reclaims, and the potential timing of ‎payment. Such tax reclaims and related professional fees, if any, are included in dividend income and other expenses, respectively.

B.  Wellington Management Company llp provides investment advisory services to the fund for a fee calculated at an annual percentage rate of average net assets. The basic fee is subject to quarterly adjustments based on the fund's performance relative to the Custom Global Capital Cycles Index since January 31, 2019. For the year ended January 31, 2024, the investment advisory fee represented an effective annual basic rate of 0.15% of the fund’s average net assets, before a net increase of $867,000 (0.06%) based on performance.

C.  In accordance with the terms of a Funds’ Service Agreement (the “FSA”) between Vanguard and the fund, Vanguard furnishes to the fund corporate management, administrative, marketing, and distribution services at Vanguard’s cost of operations (as defined by the FSA). These costs of operations are allocated to the fund based on methods and guidelines approved by the board of trustees and are generally settled twice a month.

Upon the request of Vanguard, the fund may invest up to 0.40% of its net assets as capital in Vanguard. At January 31, 2024, the fund had contributed to Vanguard capital in the amount of $45,000, representing less than 0.01% of the fund’s net assets and 0.02% of Vanguard’s capital received pursuant to the FSA. The fund’s trustees and officers are also directors and employees, respectively, of Vanguard.

D.  Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Level 1—Quoted prices in active markets for identical securities.

Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).

Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments). Any investments valued with significant unobservable inputs are noted on the Schedule of Investments.

18

Global Capital Cycles Fund

The following table summarizes the market value of the fund's investments as of January 31, 2024, based on the inputs used to value them:

	Level 1 ($000)	Level 2 ($000)	Level 3 ($000)	Total ($000)
Investments
Assets
Common Stocks—North and South America	545,189	12,047	—	557,236
Common Stocks—Other	101,154	609,518	—	710,672
Warrants	753	—	—	753
Temporary Cash Investments	73,078	—	—	73,078
Total	720,174	621,565	—	1,341,739

E.  Permanent differences between book-basis and tax-basis components of net assets are reclassified among capital accounts in the financial statements to reflect their tax character. These reclassifications have no effect on net assets or net asset value per share. As of period end, permanent differences primarily attributable to the accounting for applicable foreign currency transactions and passive foreign investment companies were reclassified between the individual components of total distributable earnings (loss).

Temporary differences between book-basis and tax-basis components of total distributable earnings (loss) arise when certain items of income, gain, or loss are recognized in different periods for financial statement and tax purposes; these differences will reverse at some time in the future. The differences are primarily related to capital loss carryforwards; the deferral of losses from wash sales; and the recognition of unrealized gains from passive foreign investment companies. As of period end, the tax-basis components of total distributable earnings (loss) are detailed in the table as follows:

	Amount ($000)
Undistributed Ordinary Income	3,124
Undistributed Long-Term Gains	—
Net Unrealized Gains (Losses)	81,060
Capital Loss Carryforwards	(2,010,957)
Qualified Late-Year Losses	—
Other Temporary Differences	170
Total	(1,926,603)

19

Global Capital Cycles Fund

The tax character of distributions paid was as follows:

	Year Ended January 31,
	2024 Amount ($000)	2023 Amount ($000)
Ordinary Income*	44,372	44,720
Long-Term Capital Gains	—	—
Total	44,372	44,720

*	Includes short-term capital gains, if any.

As of January 31, 2024, gross unrealized appreciation and depreciation for investments based on cost for U.S. federal income tax purposes were as follows:

	Amount ($000)
Tax Cost	1,260,145
Gross Unrealized Appreciation	172,323
Gross Unrealized Depreciation	(90,729)
Net Unrealized Appreciation (Depreciation)	81,594

F.  During the year ended January 31, 2024, the fund purchased $918,297,000 of investment securities and sold $963,675,000 of investment securities, other than temporary cash investments.

The fund purchased securities from and sold securities to other funds or accounts managed by its investment advisor or their affiliates, in accordance with procedures adopted by the board of trustees in compliance with Rule 17a-7 of the Investment Company Act of 1940. For the year ended January 31, 2024, such purchases were $105,000 and sales were $0; these amounts, other than temporary cash investments, are included in the purchases and sales of investment securities noted above.

G.  Capital shares issued and redeemed were:

	Year Ended January 31,
	2024 Shares (000)	2023 Shares (000)
Issued	11,289	27,145
Issued in Lieu of Cash Distributions	3,076	3,366
Redeemed	(23,661)	(28,764)
Net Increase (Decrease) in Shares Outstanding	(9,296)	1,747

H.  Significant market disruptions, such as those caused by pandemics (e.g., COVID-19 pandemic), natural or environmental ‎disasters, war (e.g., Russia’s invasion of Ukraine), acts of terrorism, or other events, can adversely affect local and global ‎markets and normal market operations. Any such disruptions could have an adverse impact on the value of the fund’s investments and fund performance.

20

Global Capital Cycles Fund

To the extent the fund’s investment portfolio reflects concentration in a particular market, industry, sector, country or asset class, the fund may be adversely affected by the performance of these concentrations and may be subject to increased price volatility and other risks.

I.  Management has determined that no events or transactions occurred subsequent to January 31, 2024, that would require recognition or disclosure in these financial statements.

21

Report of Independent Registered

Public Accounting Firm

To the Board of Trustees of Vanguard Specialized Funds and Shareholders of Vanguard Global Capital Cycles Fund

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Vanguard Global Capital Cycles Fund (one of the funds constituting Vanguard Specialized Funds, referred to hereafter as the "Fund") as of January 31, 2024, the related statement of operations for the year ended January 31, 2024, the statement of changes in net assets for each of the two years in the period ended January 31, 2024, including the related notes, and the financial highlights for each of the five years in the period ended January 31, 2024 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of January 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended January 31, 2024 and the financial highlights for each of the five years in the period ended January 31, 2024 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of January 31, 2024 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

/s/PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
March 20, 2024

We have served as the auditor of one or more investment companies in The Vanguard Group of Funds since 1975.

22

Tax information (unaudited)

For corporate shareholders, 22.5%, or if subsequently determined to be different, the maximum percentage allowable by law, of ordinary income (dividend income plus short-term gains, if any) for the fiscal year qualified for the dividends-received deduction.

The fund hereby designates $40,784,000, or if subsequently determined to be different, the maximum amount allowable by law, as qualified dividend income for individual shareholders for the fiscal year.

The fund hereby designates $829,000, or if subsequently determined to be different, the maximum amount allowable by law, of interest earned from obligations of the U.S. government which is generally exempt from state income tax.

The fund hereby designates $771,000, or if subsequently determined to be different, the maximum amount allowable by law, of qualified business income for individual shareholders for the fiscal year.

The fund designates to shareholders foreign source income of $41,177,000 and foreign taxes paid of $1,237,000, or if subsequently determined to be different, the maximum amounts allowable by law. Form 1099-DIV reports calendar-year amounts that can be included on the income tax return of shareholders.

23

This page intentionally left blank.

The People Who Govern Your Fund

The trustees of your mutual fund are there to see that the fund is operated and managed in your best interests since, as a shareholder, you are a part owner of the fund. Your fund’s trustees also serve on the board of directors of The Vanguard Group, Inc., which is owned by the Vanguard funds and provides services to them.

A majority of Vanguard’s board members are independent, meaning that they have no affiliation with Vanguard or the funds they oversee, apart from the sizable personal investments they have made as private individuals. The independent board members have distinguished backgrounds in business, academia, and public service. Each of the trustees and executive officers oversees 210 Vanguard funds.

Information for each trustee and executive officer of the fund appears below. That information, as well as the Vanguard fund count, is as of the date on the cover of this fund report. The mailing address of the trustees and officers is P.O. Box 876, Valley Forge, PA 19482. More information about the trustees is in the Statement of Additional Information, which can be obtained, without charge, by contacting Vanguard at 800-662-7447, or online at vanguard.com.

Mark Loughridge

Born in 1953. Trustee since March 2012. Principal occupation(s) during the past five years and other experience: senior vice president and chief financial officer (retired 2013) of IBM (information technology services). Fiduciary member of IBM’s Retirement Plan Committee (2004–2013), senior vice president and general manager (2002–2004) of IBM Global Financing, vice president and controller (1998–2002) of IBM, and a variety of other prior management roles at IBM. Member of the Council on Chicago Booth.

Scott C. Malpass

Born in 1962. Trustee since March 2012. Principal occupation(s) during the past five years and other experience: co-founder and managing partner (2022–present) of Grafton Street Partners (investment advisory firm). Chief investment officer (retired 2020) and vice president (retired 2020) of the University of Notre Dame. Chair of the board of Catholic Investment Services, Inc. (investment advisors). Member of the board of superintendence of the Institute for the Works of Religion, the Notre Dame 403(b) Investment Committee, and the board of directors of Paxos Trust Company (finance).

Deanna Mulligan

Born in 1963. Trustee since January 2018. Principal occupation(s) during the past five years and other experience: chief executive officer of Purposeful (advisory firm for CEOs and C-level executives; 2021–present). Board chair (2020), chief executive officer (2011–2020), and president (2010–2019) of The Guardian Life Insurance Company of America. Chief operating officer (2010–2011) and executive vice president (2008–2010) of Individual Life and Disability of the Guardian Life Insurance Company of America. Director of DuPont. Member of the board of the Economic Club of New York. Trustee of the Partnership for New York City (business leadership), Chief Executives for Corporate Purpose, and the NewYork-Presbyterian Hospital.

Lubos Pastor

Born in 1974. Trustee since January 2024. Principal occupation(s) during the past five years and other experience: Charles P. McQuaid Distinguished Service Professor of Finance (2023–present) at the University of Chicago Booth School of Business; Charles P. McQuaid Professor of Finance (2009–2023) at the University of Chicago Booth School of Business. Vice president (2024–present) and director (2021–2023) of the Executive Committee of the European Finance Association. Member of the board of the Fama-Miller Center for Research in Finance. Member of the Academic Advisory Board of the Center for Research in Security Prices (CRSP) and of the CRSP Index Advisory Council. Research associate at the National Bureau of Economic Research. Research fellow at the Centre for Economic Policy Research.

André F. Perold

Born in 1952. Trustee since December 2004. Principal occupation(s) during the past five years and other experience: George Gund Professor of Finance and Banking, Emeritus at the Harvard Business School (retired 2011). Chief investment officer and partner of HighVista Strategies (private investment firm). Member of the board of RIT Capital Partners (investment firm).

Sarah Bloom Raskin

Born in 1961. Trustee since January 2018. Principal occupation(s) during the past five years and other experience: deputy secretary (2014–2017) of the United States Department of the Treasury. Governor (2010–2014) of the Federal Reserve Board. Commissioner (2007–2010) of financial regulation for the State of Maryland. Colin W. Brown Distinguished Professor of the Practice of Law, Duke Law School (2021–present); Rubenstein Fellow, Duke University (2017–2020); Distinguished Fellow of the Global Financial Markets Center, Duke Law School (2020–2022); and Senior Fellow, Duke Center on Risk (2020–present). Partner of Kaya Partners (climate policy advisory services). Member of the board of directors of Arcadia (energy solution technology).

Grant Reid

Born in 1959. Trustee since July 2023. Principal occupation(s) during the past five years and other experience: senior operating partner (2023–present) of CVC Capital (alternative investment manager). Chief executive officer and president (2014–2022) and member of the board of directors (2015–2022) of Mars, Incorporated (multinational manufacturer). Member of the board of directors of Marriott International, Inc. Member of the board of the Sustainable Markets Initiative (environmental services). Chair of the Sustainable Markets Initiative’s Agribusiness Task Force.

David Thomas

Born in 1956. Trustee since July 2021. Principal occupation(s) during the past five years and other experience: president of Morehouse College (2018–present). Professor of business administration, emeritus at Harvard University (2017–2018). Dean (2011–2016) and professor of management (2016–2017) at the Georgetown University McDonough School of Business. Director of DTE Energy Company. Trustee of Common Fund.

Peter F. Volanakis

Born in 1955. Trustee since July 2009. Principal occupation(s) during the past five years and other experience: president and chief operating officer (retired 2010) of Corning Incorporated (communications equipment) and director of Corning Incorporated (2000–2010) and Dow Corning (2001–2010). Director (2012) of SPX Corporation (multi-industry manufacturing). Overseer of the Amos Tuck School of Business Administration, Dartmouth College (2001–2013). Member of the BMW Group Mobility Council.

Executive Officers

Jacqueline Angell

Born in 1974. Principal occupation(s) during the past five years and other experience: principal of Vanguard. Chief compliance officer (November 2022–present) of Vanguard and of each of the investment companies served by Vanguard. Chief compliance officer (2018–2022) and deputy chief compliance officer (2017–2019) of State Street.

Christine M. Buchanan

Born in 1970. Principal occupation(s) during the past five years and other experience: principal of Vanguard. Chief financial officer (2021–present) and treasurer (2017–2022) of each of the investment companies served by Vanguard. Partner (2005–2017) at KPMG (audit, tax, and advisory services).

John Galloway

Born in 1973. Principal occupation(s) during the past five years and other experience: principal of Vanguard. Investment stewardship officer (September 2020–present) of each of the investment companies served by Vanguard. Head of Investor Advocacy (February 2020–present) and head of Marketing Strategy and Planning (2017–2020) at Vanguard. Special assistant to the President of the United States (2015).

Ashley Grim

Born in 1984. Principal occupation(s) during the past five years and other experience: treasurer (February 2022–present) of each of the investment companies served by Vanguard. Fund transfer agent controller (2019–2022) and director of Audit Services (2017–2019) at Vanguard. Senior manager (2015–2017) at PriceWaterhouseCoopers (audit and assurance, consulting, and tax services).

Jodi Miller

Born in 1980. Principal occupation(s) during the past five years and other experience: principal of Vanguard. Finance director (2022–present) of each of the investment companies served by Vanguard. Head of Enterprise Investment Services (2020–present), head of Retail Client Services and Operations (2020–2022), and head of Retail Strategic Support (2018–2020) at Vanguard.

Anne E. Robinson

Born in 1970. Principal occupation(s) during the past five years and other experience: general counsel (2016–present) of Vanguard. Secretary (2016–present) of Vanguard and of each of the investment companies served by Vanguard. Managing director (2016–present) of Vanguard. Managing director and general counsel of Global Cards and Consumer Services (2014–2016) at Citigroup. Counsel (2003–2014) at American Express. Nonexecutive director (2022–present) of the board of National Grid (energy).

Michael Rollings

Born in 1963. Principal occupation(s) during the past five years and other experience: finance director (2017–present) and treasurer (2017) of each of the investment companies served by Vanguard. Managing director (2016–present) of Vanguard. Chief financial officer (2016–present) of Vanguard. Director (2016–present) of Vanguard Marketing Corporation. Executive vice president and chief financial officer (2006–2016) of MassMutual Financial Group.

Vanguard Senior Management Team

Matthew Benchener	Thomas M. Rampulla
Amma Boateng	Karin A. Risi
Joseph Brennan	Anne E. Robinson
Mortimer J. Buckley	Michael Rollings
Gregory Davis	Nitin Tandon
John James	Lauren Valente
Chris D. McIsaac

Important information about shareholder reports

Beginning in July 2024, amendments adopted by the Securities and Exchange Commission will substantially impact the design, content, and transmission of shareholder reports. Shareholder reports will provide key fund information in a clear and concise format and must be mailed to each shareholder that has not elected to receive the reports electronically. Financial statements will no longer be included in the shareholder report but will be available at vanguard.com, can be mailed upon request, or can be accessed on the SEC’s website at www.sec.gov.

You may elect to receive shareholder reports and other communications from the fund electronically by contacting your financial intermediary (such as a broker-dealer or bank) or, if you invest directly with the fund, by calling Vanguard at one of the phone numbers on the back cover of this report or by logging on to vanguard.com.

Contents

Your Fund’s Performance at a Glance	1
Advisor's Report	2
About Your Fund’s Expenses	5
Performance Summary	7
Financial Statements	9

Please note: The opinions expressed in this report are just that—informed opinions. They should not be considered promises or advice. Also, please keep in mind that the information and opinions cover the period through the date on the front of this report. Of course, the risks of investing in your fund are spelled out in the prospectus.

Your Fund’s Performance at a Glance

•	For the 12 months ended January 31, 2024, Vanguard Health Care Fund returned 6.43% for Investor Shares and 6.48% for Admiral Shares. This was in line with the 6.43% return of the fund’s benchmark index.
•	With inflation continuing to ease, major central banks slowed and eventually stopped hiking interest rates. Labor markets and consumer spending proved resilient, but the prospect of rates remaining high for an extended period spurred volatility at times. Stocks worldwide rallied toward the end of 2023, however, as sentiment improved amid market expectations for rate cuts in 2024.
•	For the 12-month period, performance of the overall health care sector was mixed. Some subsectors—most notably health care distributors—posted double-digit gains, while others (health care services and life sciences tools and services) had negative returns.
•	The fund’s stock selection within pharmaceuticals—the largest subsector for both the fund and the benchmark—was the largest contributor to relative performance. However, this was largely offset by the fund’s holdings in biotechnology, health care services, managed health care, and a few other subsectors that lagged those in the index.

Market Barometer

	Average Annual Total Returns Periods Ended January 31, 2024
	One Year	Three Years	Five Years
Stocks
Russell 1000 Index (Large-caps)	20.23%	9.78%	13.99%
Russell 2000 Index (Small-caps)	2.40	-0.76	6.80
Russell 3000 Index (Broad U.S. market)	19.15	9.10	13.53
FTSE All-World ex US Index (International)	6.29	1.57	5.77
Bonds
Bloomberg U.S. Aggregate Float Adjusted Index (Broad taxable market)	2.23%	-3.15%	0.90%
Bloomberg Municipal Bond Index (Broad tax-exempt market)	2.90	-0.78	2.00
FTSE Three-Month U.S. Treasury Bill Index	5.36	2.40	1.96
CPI
Consumer Price Index	3.09%	5.64%	4.15%

1

Advisor’s Report

largest detractor. Shares rose after the company reported positive headline results from the SELECT trial, which indicated that its GLP-1, semaglutide, may reduce the risk of heart attack and stroke in obese but nondiabetic patients. Additionally, the company announced that a trial evaluating semaglutide for chronic kidney disease in patients with type 2 diabetes would end early thanks to strong efficacy results. These results supported indications for semaglutide beyond treatment of type 2 diabetes and obesity.

A position in Agilon Health, a leading physician-enablement company in the health care services subsector, was another top detractor. Shares traded lower following disappointing third-quarter earnings results. Increased usage by patients in Medicare Advantage plans led the company to lower its medical margin guidance in November and January. However, we believe that the young company is learning to better measure changes in outpatient utilization, which should make similar surprises unlikely in the future.

Pfizer, a biopharma large-cap company, also detracted. Shares fell amid declining demand for COVID-related products and unfortunate setbacks in the development of its oral GLP-1 candidates. Pfizer also announced a restructuring and lowered its financial guidance.

Our additions and eliminations

We initiated a position in Novo Nordisk, a biopharma large-cap company, to complement our holdings in the

subsector. The report of semaglutide’s better-than-expected cardiovascular benefits, increased manufacturing capacity, and overwhelming demand for the GLP-1 class of drugs support a very bright future for the category. We believe that Novo Nordisk is a highly innovative biopharmaceutical company, and we have strong conviction that it and Eli Lilly will dominate the GLP-1 market for the next several years because of their formidable first-mover advantages, decades of protein-engineering experience, and deep pipelines of next-generation agents. We greatly favor Eli Lilly but believe Novo Nordisk will also perform well.

We also initiated a position in Otsuka Holdings, another biopharma large-cap company. Although Otsuka faces near-term patent expirations for a few of its global products, we believe that investors have underappreciated how the company stands to benefit from significant royalties from two Novartis oncology drugs, Kisqali (for breast cancer) and Pluvicto (for prostate cancer). The company has stable profits from its renowned nutraceuticals business and a promising internal pipeline.

We eliminated a position in Seagen in order to take profits following the announcement that Pfizer would acquire the company. We also eliminated a position in Ono Pharmaceutical, because growth of the company’s flagship immuno-oncology product, Opdivo, is slowing in Japan. Additionally, the royalties Ono receives from competitor Merck on global Keytruda sales are

scheduled to decline next year; the more meaningful royalties on Bristol-Myers Squibb’s global sales of Opdivo may have peaked.

The fund’s characteristics

At the fiscal year’s end, about 27% of the fund’s assets were in non-U.S. investments, a level that has remained fairly stable in recent years. Our non-U.S. holdings were primarily companies domiciled in Japan, the U.K., Switzerland, Belgium, and Denmark, many of which operate globally. We believe this strategy provides diversification for shareholders over the long term.

The fund held 89 companies across all subsectors of health care as of the end of the period, reflecting a decrease from the 105 equity names we held a year ago. The fund’s 10 largest holdings represented a significant 44% of total assets.

The fund’s positioning and outlook

We have a positive outlook across the health care opportunity set. Groundbreaking innovation, supportive valuations, and business models that are positioned to show resilience through the cycle should benefit long-term investors. Within biopharma, we are excited about developments in GLP-1 and next-generation metabolic medicines, antibody-drug conjugates for cancer treatment, and various forms of genetic medicine.

Innovation is also accelerating in many areas of medical technology, including electrophysiology, structural heart disease,

and surgical robotics. Lastly, health care services companies remain well-positioned to help solve the societal challenge of rising health care costs. Some will benefit from the ongoing transition from a fee-for-service to a fee-for-value care system. Broadly, we favor companies focused on improving patient outcomes while reining in costs.

The 2024 U.S. presidential and congressional elections could lead to additional volatility this year. Drug pricing, the regulatory environment for mergers and acquisitions, and the profitability of Medicare Advantage could be affected over the medium term by the outcome of the elections. Regardless, we are encouraged by recent progress in biomedical research and an acceleration in U.S. approvals of novel drugs and medical devices. There is tremendous potential for health care companies in the fund to address complex health care needs around the world.

Jean M. Hynes, CFA,
Senior Managing Director and
Equity Portfolio Manager

Rebecca Sykes, CFA,
Senior Managing Director and
Equity Portfolio Manager

Wellington Management Company llp

February 12, 2024

About Your Fund’s Expenses

As a shareholder of the fund, you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross income, directly reduce the investment return of the fund.

A fund’s expenses are expressed as a percentage of its average net assets. This figure is known as the expense ratio. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.

The accompanying table illustrates your fund’s costs in two ways:

•

Based on actual fund return. This section helps you to estimate the actual expenses that you paid over the period. The ”Ending Account Value“ shown is derived from the fund‘s actual return, and the third column shows the dollar amount that would have been paid by an investor who started with $1,000 in the fund. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period.

To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your fund under the heading ”Expenses Paid During Period.“

•

Based on hypothetical 5% yearly return. This section is intended to help you compare your fund‘s costs with those of other mutual funds. It assumes that the fund had a yearly return of 5% before expenses, but that the expense ratio is unchanged. In this case—because the return used is not the fund’s actual return—the results do not apply to your investment. The example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to calculate expenses based on a 5% return. You can assess your fund’s costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds.

Note that the expenses shown in the table are meant to highlight and help you compare ongoing costs only and do not reflect transaction costs incurred by the fund for buying and selling securities. Further, the expenses do not include any purchase, redemption, or account service fees described in the fund prospectus. If such fees were applied to your account, your costs would be higher. Your fund does not carry a “sales load.”

The calculations assume no shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.

You can find more information about the fund’s expenses, including annual expense ratios, in the Financial Statements section of this report. For additional information on operating expenses and other shareholder costs, please refer to your fund’s current prospectus.

5

Six Months Ended January 31, 2024
	Beginning Account Value 7/31/2023	Ending Account Value 1/31/2024	Expenses Paid During Period
Based on Actual Fund Return
Health Care Fund
Investor Shares	$1,000.00	$1,025.00	$1.79
Admiral™ Shares	1,000.00	1,025.30	1.53
Based on Hypothetical 5% Yearly Return
Health Care Fund
Investor Shares	$1,000.00	$1,023.44	$1.79
Admiral Shares	1,000.00	1,023.69	1.53

The calculations are based on expenses incurred in the most recent six-month period. The fund’s annualized six-month expense ratios for that period are 0.35% for Investor Shares and 0.30% for Admiral Shares. The dollar amounts shown as “Expenses Paid” are equal to the annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by the number of days in the most recent 12-month period (184/365).

6

Health Care Fund

Performance Summary

All of the returns in this report represent past performance, which is not a guarantee of future results that may be achieved by the fund. (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.) Note, too, that both investment returns and principal value can fluctuate widely, so an investor’s shares, when sold, could be worth more or less than their original cost. The returns shown do not reflect taxes that a shareholder would pay on fund distributions or on the sale of fund shares.

Cumulative Performance: January 31, 2014, Through January 31, 2024

Initial Investment of $10,000

		Average Annual Total Returns Periods Ended January 31, 2024
		One Year	Five Years	Ten Years	Final Value of a $10,000 Investment
	Health Care Fund Investor Shares	6.43%	9.27%	9.98%	$25,886
	MSCI All Country World Index Health Care Index	6.43	9.39	8.88	23,420
	Dow Jones U.S. Total Stock Market Float Adjusted Index	19.14	13.41	11.87	30,709

		One Year	Five Years	Ten Years	Final Value of a $50,000 Investment
Health Care Fund Admiral Shares		6.48%	9.32%	10.03%	$130,075
MSCI All Country World Index Health Care Index		6.43	9.39	8.88	117,102
Dow Jones U.S. Total Stock Market Float Adjusted Index		19.14	13.41	11.87	153,543

See Financial Highlights for dividend and capital gains information.

7

Health Care Fund

Fund Allocation

As of January 31, 2024

United States	72.8%
Japan	7.7
United Kingdom	7.2
Switzerland	5.4
Belgium	3.2
Denmark	2.9
Other	0.8

The table reflects the fund’s investments, except for short-term investments.

8

Health Care Fund

Financial Statements

Schedule of Investments

As of January 31, 2024

The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at www.sec.gov.

		Shares	Market Value• ($000)
Common Stocks (98.2%)
Belgium (3.1%)
	UCB SA	9,582,600	901,394
*	Argenx SE	1,303,655	492,302
*	Galapagos NV	1,175,458	44,095
			1,437,791
Brazil (0.0%)
*,1	Hapvida Participacoes e Investimentos SA	8,909,471	6,977
China (0.7%)
*	Legend Biotech Corp. ADR	1,900,644	104,649
*,2	Zai Lab Ltd. ADR	2,814,054	60,699
	Shandong Weigao Group Medical Polymer Co. Ltd. Class H	77,092,000	49,247
	WuXi AppTec Co. Ltd. Class A	5,979,100	45,371
*	Zai Lab Ltd.	16,916,600	35,944
*,1	Wuxi Biologics Cayman Inc.	6,641,200	17,477
1	WuXi AppTec Co. Ltd. Class H	19	—
			313,387
Denmark (2.8%)
*	Genmab A/S	2,088,852	577,614
	Novo Nordisk A/S Class B	3,386,878	387,135
*,2	Ascendis Pharma A/S ADR	2,136,431	277,587
*	Genmab A/S ADR	2,285,855	63,112
			1,305,448
Italy (0.1%)
	DiaSorin SpA	552,359	50,794
Japan (7.6%)
	Daiichi Sankyo Co. Ltd.	43,163,390	1,292,270
3	Eisai Co. Ltd.	19,123,817	900,515
	Chugai Pharmaceutical Co. Ltd.	21,054,100	757,321
	Otsuka Holdings Co. Ltd.	7,660,100	301,106
	Terumo Corp.	6,976,400	236,165
	Asahi Intecc Co. Ltd.	2,023,500	38,448
			3,525,825

		Shares	Market Value• ($000)
Switzerland (5.4%)
	Novartis AG (Registered)	20,565,879	2,126,796
	Alcon Inc.	3,393,208	255,424
	Tecan Group AG (Registered)	236,453	90,257
			2,472,477
United Kingdom (7.1%)
	AstraZeneca plc	19,268,765	2,554,593
	GSK plc	21,728,230	429,735
*,3	Immunocore Holdings plc ADR	2,897,598	209,467
	Genus plc	1,791,160	52,025
*,2	Verona Pharma plc ADR	1,160,032	21,287
			3,267,107
United States (71.4%)
	Eli Lilly & Co.	5,452,381	3,520,112
	UnitedHealth Group Inc.	6,227,369	3,186,794
	Merck & Co. Inc.	20,479,587	2,473,525
	Pfizer Inc.	57,903,399	1,568,024
	Abbott Laboratories	11,460,218	1,296,724
	Danaher Corp.	5,113,563	1,226,795
	Elevance Health Inc.	2,463,440	1,215,560
	Thermo Fisher Scientific Inc.	2,108,134	1,136,242
*	Biogen Inc.	4,558,453	1,124,388
*	Boston Scientific Corp.	16,512,509	1,044,581
*	Alnylam Pharmaceuticals Inc.	5,524,903	955,311
	Humana Inc.	2,411,897	911,842
	HCA Healthcare Inc.	2,719,849	829,282
	Stryker Corp.	2,442,788	819,507
*	Vertex Pharmaceuticals Inc.	1,858,518	805,445
*	Edwards Lifesciences Corp.	9,386,095	736,527
*	Centene Corp.	9,215,817	694,043
	Zoetis Inc.	3,646,600	684,868
*	Regeneron Pharmaceuticals Inc.	699,733	659,694
*	Moderna Inc.	6,521,472	658,995
*,3	Apellis Pharmaceuticals Inc.	9,503,375	601,469
	Agilent Technologies Inc.	3,576,445	465,296
*	IQVIA Holdings Inc.	1,696,452	353,252
	Laboratory Corp. of America Holdings	1,381,908	307,198
*	Molina Healthcare Inc.	849,274	302,715

9

Health Care Fund

10

Health Care Fund

11

Health Care Fund

Statement of Assets and Liabilities

As of January 31, 2024

($000s, except shares, footnotes, and per-share amounts)	Amount
Assets
Investments in Securities, at Value1
Unaffiliated Issuers (Cost $26,050,296)	43,659,390
Affiliated Issuers (Cost $2,527,764)	2,441,322
Total Investments in Securities	46,100,712
Investment in Vanguard	1,469
Cash	20,899
Foreign Currency, at Value (Cost $2,373)	2,299
Receivables for Investment Securities Sold	229,128
Receivables for Accrued Income	90,014
Receivables for Capital Shares Issued	3,283
Total Assets	46,447,804
Liabilities
Payables for Investment Securities Purchased	92,681
Collateral for Securities on Loan	14,781
Payables to Investment Advisor	19,194
Payables for Capital Shares Redeemed	24,524
Payables to Vanguard	3,101
Total Liabilities	154,281
Net Assets	46,293,523
1 Includes $13,984,000 of securities on loan.
At January 31, 2024, net assets consisted of:
Paid-in Capital	27,444,029
Total Distributable Earnings (Loss)	18,849,494
Net Assets	46,293,523
Investor Shares—Net Assets
Applicable to 34,645,211 outstanding $.001 par value shares of beneficial interest (unlimited authorization)	7,296,756
Net Asset Value Per Share—Investor Shares	$210.61
Admiral Shares—Net Assets
Applicable to 439,116,767 outstanding $.001 par value shares of beneficial interest (unlimited authorization)	38,996,767
Net Asset Value Per Share—Admiral Shares	$88.81

  

See accompanying Notes, which are an integral part of the Financial Statements.

12

Health Care Fund

Statement of Operations

	Year Ended January 31, 2024
	($000)
Investment Income
Income
Dividends—Unaffiliated Issuers1	491,594
Dividends—Affiliated Issuers2	31,017
Interest—Unaffiliated Issuers	37,691
Securities Lending—Net	228
Total Income	560,530
Expenses
Investment Advisory Fees—Note B
Basic Fee	67,006
Performance Adjustment	8,470
The Vanguard Group—Note C
Management and Administrative—Investor Shares	13,167
Management and Administrative—Admiral Shares	52,830
Marketing and Distribution—Investor Shares	320
Marketing and Distribution—Admiral Shares	1,136
Custodian Fees	866
Auditing Fees	33
Shareholders’ Reports—Investor Shares	168
Shareholders’ Reports—Admiral Shares	162
Trustees’ Fees and Expenses	31
Other Expenses	17
Total Expenses	144,206
Expenses Paid Indirectly	(81)
Net Expenses	144,125
Net Investment Income	416,405
Realized Net Gain (Loss)
Investment Securities Sold—Unaffiliated Issuers	3,235,388
Investment Securities Sold—Affiliated Issuers	(335,178)
Foreign Currencies	159
Realized Net Gain (Loss)	2,900,369
Change in Unrealized Appreciation (Depreciation)
Investment Securities—Unaffiliated Issuers	(348,358)
Investment Securities—Affiliated Issuers	(86,657)
Foreign Currencies	2,513
Change in Unrealized Appreciation (Depreciation)	(432,502)
Net Increase (Decrease) in Net Assets Resulting from Operations	2,884,272

1	Dividends are net of foreign withholding taxes of $12,991,000.
2	Dividends are net of foreign withholding taxes of $7,010,000.

  

See accompanying Notes, which are an integral part of the Financial Statements.

13

Health Care Fund

Statement of Changes in Net Assets

	Year Ended January 31,
	2024 ($000)	2023 ($000)
Increase (Decrease) in Net Assets
Operations
Net Investment Income	416,405	391,728
Realized Net Gain (Loss)	2,900,369	2,054,086
Change in Unrealized Appreciation (Depreciation)	(432,502)	549,022
Net Increase (Decrease) in Net Assets Resulting from Operations	2,884,272	2,994,836
Distributions
Investor Shares	(515,126)	(407,436)
Admiral Shares	(2,769,814)	(2,190,665)
Total Distributions	(3,284,940)	(2,598,101)
Capital Share Transactions
Investor Shares	(145,328)	(56,992)
Admiral Shares	(637,906)	(289,544)
Net Increase (Decrease) from Capital Share Transactions	(783,234)	(346,536)
Total Increase (Decrease)	(1,183,902)	50,199
Net Assets
Beginning of Period	47,477,425	47,427,226
End of Period	46,293,523	47,477,425

  

See accompanying Notes, which are an integral part of the Financial Statements.

14

Health Care Fund

Financial Highlights

Investor Shares
For a Share Outstanding Throughout Each Period	Year Ended January 31,
	2024	2023	2022	2021	2020
Net Asset Value, Beginning of Period	$212.59	$210.54	$218.60	$204.57	$203.34
Investment Operations
Net Investment Income1	1.789	1.654	1.869	2.005	2.506
Net Realized and Unrealized Gain (Loss) on Investments	11.217	11.988	8.949	29.203	23.326
Total from Investment Operations	13.006	13.642	10.818	31.208	25.832
Distributions
Dividends from Net Investment Income	(1.751)	(1.659)	(1.951)	(1.886)	(2.428)
Distributions from Realized Capital Gains	(13.235)	(9.933)	(16.927)	(15.292)	(22.174)
Total Distributions	(14.986)	(11.592)	(18.878)	(17.178)	(24.602)
Net Asset Value, End of Period	$210.61	$212.59	$210.54	$218.60	$204.57
Total Return2	6.43%	6.57%	4.48%	16.16%	13.16%
Ratios/Supplemental Data
Net Assets, End of Period (Millions)	$7,297	$7,496	$7,493	$8,342	$8,729
Ratio of Total Expenses to Average Net Assets3	0.35%4	0.34%4	0.30%	0.32%	0.32%
Ratio of Net Investment Income to Average Net Assets	0.86%	0.80%	0.82%	0.95%	1.25%
Portfolio Turnover Rate	16%	19%	15%	18%	18%

1	Calculated based on average shares outstanding.
2	Total returns do not include account service fees that may have applied in the periods shown. Fund prospectuses provide information about any applicable account service fees.
3	Includes performance-based investment advisory fee increases (decreases) of 0.02%, 0.00%, (0.04%), (0.01%), and (0.02%).
4	The ratio of expenses to average net assets for the period net of reduction from custody fee offset and broker commission abatement arrangements was 0.35% and 0.34%, respectively.

  

See accompanying Notes, which are an integral part of the Financial Statements.

15

Health Care Fund

Financial Highlights

Admiral Shares
For a Share Outstanding Throughout Each Period	Year Ended January 31,
	2024	2023	2022	2021	2020
Net Asset Value, Beginning of Period	$89.64	$88.77	$92.17	$86.27	$85.75
Investment Operations
Net Investment Income1	.796	.750	.830	.883	1.097
Net Realized and Unrealized Gain (Loss) on Investments	4.738	5.052	3.780	12.316	9.844
Total from Investment Operations	5.534	5.802	4.610	13.199	10.941
Distributions
Dividends from Net Investment Income	(.782)	(.743)	(.870)	(.849)	(1.068)
Distributions from Realized Capital Gains	(5.582)	(4.189)	(7.140)	(6.450)	(9.353)
Total Distributions	(6.364)	(4.932)	(8.010)	(7.299)	(10.421)
Net Asset Value, End of Period	$88.81	$89.64	$88.77	$92.17	$86.27
Total Return2	6.48%	6.63%	4.53%	16.21%	13.22%
Ratios/Supplemental Data
Net Assets, End of Period (Millions)	$38,997	$39,981	$39,934	$40,769	$38,126
Ratio of Total Expenses to Average Net Assets3	0.30%4	0.29%4	0.25%	0.27%	0.27%
Ratio of Net Investment Income to Average Net Assets	0.90%	0.86%	0.86%	0.99%	1.30%
Portfolio Turnover Rate	16%	19%	15%	18%	18%

1	Calculated based on average shares outstanding.
2	Total returns do not include account service fees that may have applied in the periods shown. Fund prospectuses provide information about any applicable account service fees.
3	Includes performance-based investment advisory fee increases (decreases) of 0.02%, 0.00%, (0.04%), (0.01%), and (0.02%).
4	The ratio of expenses to average net assets for the period net of reduction from custody fee offset and broker commission abatement arrangements was 0.30% and 0.29%, respectively.

  

See accompanying Notes, which are an integral part of the Financial Statements.

16

Health Care Fund

Notes to Financial Statements

Vanguard Health Care Fund is registered under the Investment Company Act of 1940 as an open-end investment company, or mutual fund. The fund offers two classes of shares: Investor Shares and Admiral Shares. Each of the share classes has different eligibility and minimum purchase requirements, and is designed for different types of investors.

A.	The following significant accounting policies conform to generally accepted accounting principles for U.S. investment companies. The fund consistently follows such policies in preparing its financial statements.

1. Security Valuation: Securities are valued as of the close of trading on the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. Equity securities are valued at the latest quoted sales prices or official closing prices taken from the primary market in which each security trades; such securities not traded on the valuation date are valued at the mean of the latest quoted bid and asked prices. Securities for which market quotations are not readily available, or whose values have been affected by events occurring before the fund’s pricing time but after the close of the securities’ primary markets, are valued by methods deemed by the valuation designee to represent fair value and subject to oversight by the board of trustees. These procedures include obtaining quotations from an independent pricing service, monitoring news to identify significant market- or security-specific events, and evaluating changes in the values of foreign market proxies (for example, ADRs, futures contracts, or exchange-traded funds), between the time the foreign markets close and the fund’s pricing time. When fair-value pricing is employed, the prices of securities used by a fund to calculate its net asset value may differ from quoted or published prices for the same securities. Investments in Vanguard Market Liquidity Fund are valued at that fund's net asset value.  Other temporary cash investments are valued using the latest bid prices or using valuations based on a matrix system (which considers such factors as security prices, yields, maturities, and ratings), both as furnished by independent pricing services.

2. Foreign Currency: Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates obtained from an independent third party as of the fund’s pricing time on the valuation date. Realized gains (losses) and unrealized appreciation (depreciation) on investment securities include the effects of changes in exchange rates since the securities were purchased, combined with the effects of changes in security prices. Fluctuations in the value of other assets and liabilities resulting from changes in exchange rates are recorded as unrealized foreign currency gains (losses) until the assets or liabilities are settled in cash, at which time they are recorded as realized foreign currency gains (losses).

3. Repurchase Agreements: The fund enters into repurchase agreements with institutional counterparties. Securities pledged as collateral to the fund under repurchase agreements are held by a custodian bank until the agreements mature, and in the absence of a default, such collateral cannot be repledged, resold, or rehypothecated. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal. The fund further mitigates its counterparty risk by entering into repurchase agreements only with a diverse group of prequalified counterparties, monitoring their financial strength, and entering into master repurchase agreements with its counterparties. The master repurchase agreements provide that, in the event of a counterparty's default (including bankruptcy), the fund may terminate any repurchase agreements with that counterparty, determine the net amount owed, and sell or retain the collateral up to the net amount owed to the fund. Such action may be subject to legal proceedings, which may delay or limit the disposition of collateral.

17

Health Care Fund

4. Federal Income Taxes: The fund intends to continue to qualify as a regulated investment company and distribute virtually all of its taxable income. The fund’s tax returns are open to examination by the relevant tax authorities until expiration of the applicable statute of limitations, which is generally three years after the filing of the tax return. Management has analyzed the fund’s tax positions taken for all open federal and state income tax years, and has concluded that no provision for income tax is required in the fund’s financial statements.

5. Distributions: Distributions to shareholders are recorded on the ex-dividend date. Distributions are determined on a tax basis at the fiscal year-end and may differ from net investment income and realized capital gains for financial reporting purposes.

6. Securities Lending: To earn additional income, the fund lends its securities to qualified institutional borrowers. Security loans are subject to termination by the fund at any time, and are required to be secured at all times by collateral in an amount at least equal to the market value of securities loaned. Daily market fluctuations could cause the value of loaned securities to be more or less than the value of the collateral received. When this occurs, the collateral is adjusted and settled before the opening of the market on the next business day. The fund further mitigates its counterparty risk by entering into securities lending transactions only with a diverse group of prequalified counterparties, monitoring their financial strength, and entering into master securities lending agreements with its counterparties. The master securities lending agreements provide that, in the event of a counterparty’s default (including bankruptcy), the fund may terminate any loans with that borrower, determine the net amount owed, and sell or retain the collateral up to the net amount owed to the fund; however, such actions may be subject to legal proceedings. While collateral mitigates counterparty risk, in the event of a default, the fund may experience delays and costs in recovering the securities loaned. The fund invests cash collateral received in Vanguard Market Liquidity Fund, and records a liability in the Statement of Assets and Liabilities for the return of the collateral, during the period the securities are on loan. Collateral investments in Vanguard Market Liquidity Fund are subject to market appreciation or depreciation. Securities lending income represents fees charged to borrowers plus income earned on invested cash collateral, less expenses associated with the loan. During the term of the loan, the fund is entitled to all distributions made on or in respect of the loaned securities.

7. Credit Facilities and Interfund Lending Program: The fund and certain other funds managed by The Vanguard Group ("Vanguard") participate in a $4.3 billion committed credit facility provided by a syndicate of lenders pursuant to a credit agreement and an uncommitted credit facility provided by Vanguard. Both facilities may be renewed annually. Each fund is individually liable for its borrowings, if any, under the credit facilities. Borrowings may be utilized for temporary or emergency purposes and are subject to the fund’s regulatory and contractual borrowing restrictions. With respect to the committed credit facility, the participating funds are charged administrative fees and an annual commitment fee of 0.10% of the undrawn committed amount of the facility, which are allocated to the funds based on a method approved by the fund’s board of trustees and included in Management and Administrative expenses on the fund’s Statement of Operations. Any borrowings under either facility bear interest at an agreed-upon spread plus the higher of the federal funds effective rate, the overnight bank funding rate, or the Daily Simple Secured Overnight Financing Rate inclusive of an additional agreed-upon spread. However, borrowings under the uncommitted credit facility may bear interest based upon an alternate rate agreed to by the fund and Vanguard.

In accordance with an exemptive order (the “Order”) from the SEC, the fund may participate in a joint lending and borrowing program that allows registered open-end Vanguard funds to borrow

18

Health Care Fund

money from and lend money to each other for temporary or emergency purposes (the “Interfund Lending Program”), subject to compliance with the terms and conditions of the Order, and to the extent permitted by the fund’s investment objective and investment policies. Interfund loans and borrowings normally extend overnight but can have a maximum duration of seven days. Loans may be called on one business day’s notice. The interest rate to be charged is governed by the conditions of the Order and internal procedures adopted by the board of trustees. The board of trustees is responsible for overseeing the Interfund Lending Program. 

For the year ended January 31, 2024, the fund did not utilize the credit facilities or the Interfund Lending Program.

8. Other: Dividend income is recorded on the ex-dividend date. Non-cash dividends included in income, if any, are recorded at the fair value of the securities received. Interest income includes income distributions received from Vanguard Market Liquidity Fund and is accrued daily. Premiums and discounts on debt securities are amortized and accreted, respectively, to interest income over the lives of the respective securities, except for premiums on certain callable debt securities that are amortized to the earliest call date. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment securities are those of the specific securities sold.

Taxes on foreign dividends and capital gains have been provided for in accordance with the applicable countries' tax rules and rates. Deferred foreign capital gains tax, if any, is accrued daily based upon net unrealized gains. The fund has filed tax reclaims for previously withheld taxes on dividends earned in certain European Union countries. These filings are subject to various administrative and judicial proceedings within these countries. Amounts related to these reclaims are recorded when there are no significant uncertainties as to the ultimate resolution of proceedings, the likelihood of receipt of these reclaims, and the potential timing of payment. Such tax reclaims and related professional fees, if any, are included in dividend income and other expenses, respectively.

Each class of shares has equal rights as to assets and earnings, except that each class separately bears certain class-specific expenses related to maintenance of shareholder accounts (included in Management and Administrative expenses) and shareholder reporting. Marketing and distribution expenses are allocated to each class of shares based on a method approved by the board of trustees. Income, other non-class-specific expenses, and gains and losses on investments are allocated to each class of shares based on its relative net assets.

B.

Wellington Management Company llp provides investment advisory services to the fund for a fee calculated at an annual percentage rate of average net assets. The basic fee is subject to quarterly adjustments based on the fund’s performance relative to the MSCI All Country World Health Care Index for the preceding three years. For the year ended January 31, 2024, the investment advisory fee represented an effective annual basic rate of 0.14% of the fund’s average net assets, before a net increase of $8,470,000 (0.02%) based on performance.

C.

In accordance with the terms of a Funds' Service Agreement (the “FSA”) between Vanguard and the fund, Vanguard furnishes to the fund corporate management, administrative, marketing, and distribution services at Vanguard’s cost of operations (as defined by the FSA). These costs of operations are allocated to the fund based on methods and guidelines approved by the board of trustees and are generally settled twice a month.

19

Health Care Fund

Upon the request of Vanguard, the fund may invest up to 0.40% of its net assets as capital in Vanguard. At January 31, 2024, the fund had contributed to Vanguard capital in the amount of $1,469,000, representing less than 0.01% of the fund’s net assets and 0.59% of Vanguard’s capital received pursuant to the FSA. The fund’s trustees and officers are also directors and employees, respectively, of Vanguard.

D.

The fund has asked its investment advisor to direct certain security trades, subject to obtaining the best price and execution, to brokers who have agreed to rebate to the fund part of the commissions generated. Such rebates are used solely to reduce the fund’s management and administrative expenses. The fund’s custodian bank has also agreed to reduce its fees when the fund maintains cash on deposit in the non-interest-bearing custody account. For the year ended January 31, 2024, these arrangements reduced the fund’s management and administrative expenses by $62,000 and custodian fees by $19,000. The total expense reduction represented an effective annual rate of less than 0.01% of the fund’s average net assets.

E.

Various inputs may be used to determine the value of the fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Level 1—Quoted prices in active markets for identical securities.

Level 2—Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).

Level 3—Significant unobservable inputs (including the fund’s own assumptions used to determine the fair value of investments). Any investments valued with significant unobservable inputs are noted on the Schedule of Investments.

The following table summarizes the market value of the fund’s investments as of January 31, 2024, based on the inputs used to value them:

	Level 1 ($000)	Level 2 ($000)	Level 3 ($000)	Total ($000)
Investments
Assets
Common Stocks—North and South America	33,078,410	—	—	33,078,410
Common Stocks—Other	736,801	11,636,028	—	12,372,829
Temporary Cash Investments	14,873	634,600	—	649,473
Total	33,830,084	12,270,628	—	46,100,712

F.	Permanent differences between book-basis and tax-basis components of net assets are reclassified among capital accounts in the financial statements to reflect their tax character. These reclassifications have no effect on net assets or net asset value per share. As of period end,

20

Health Care Fund

permanent differences primarily attributable to the accounting for applicable foreign currency transactions, passive foreign investment companies, and distributions in connection with fund share redemptions were reclassified between the following accounts:

	Amount ($000)
Paid-in Capital	101,786
Total Distributable Earnings (Loss)	(101,786)

Temporary differences between book-basis and tax-basis components of total distributable earnings (loss) arise when certain items of income, gain, or loss are recognized in different periods for financial statement and tax purposes; these differences will reverse at some time in the future. The differences are primarily related to the deferral of losses from wash sales. As of period end, the tax-basis components of total distributable earnings (loss) are detailed in the table as follows:

	Amount ($000)
Undistributed Ordinary Income	269,970
Undistributed Long-Term Gains	1,069,655
Net Unrealized Gains (Losses)	17,509,869
Capital Loss Carryforwards	—
Qualified Late-Year Losses	—
Other Temporary Differences	—
Total	18,849,494

The tax character of distributions paid was as follows:

	Year Ended January 31,
	2024 Amount ($000)	2023 Amount ($000)
Ordinary Income*	469,569	386,442
Long-Term Capital Gains	2,815,371	2,211,659
Total	3,284,940	2,598,101

*	Includes short-term capital gains, if any.

As of January 31, 2024, gross unrealized appreciation and depreciation for investments based on cost for U.S. federal income tax purposes were as follows:

	Amount ($000)
Tax Cost	28,593,760
Gross Unrealized Appreciation	20,288,735
Gross Unrealized Depreciation	(2,781,783)
Net Unrealized Appreciation (Depreciation)	17,506,952

G.	During the year ended January 31, 2024, the fund purchased $7,422,384,000 of investment securities and sold $11,108,994,000 of investment securities, other than temporary cash investments.

21

Health Care Fund

The fund purchased securities from and sold securities to other funds or accounts managed by its investment advisor or their affiliates, in accordance with procedures adopted by the board of trustees in compliance with Rule 17a-7 of the Investment Company Act of 1940. For the year ended January 31, 2024, such purchases were $10,050,000 and sales were $0; these amounts, other than temporary cash investments, are included in the purchases and sales of investment securities noted above.

H.	Capital share transactions for each class of shares were:

    

	Year Ended January 31,
	2024			2023
	Amount ($000)	Shares (000)		Amount ($000)	Shares (000)
Investor Shares
Issued	533,020	2,583		421,032	2,016
Issued in Lieu of Cash Distributions	485,637	2,364		383,037	1,809
Redeemed	(1,163,985)	(5,561)		(861,061)	(4,158)
Net Increase (Decrease)—Investor Shares	(145,328)	(614)		(56,992)	(333)
Admiral Shares
Issued	829,622	9,373		917,744	10,465
Issued in Lieu of Cash Distributions	2,430,038	28,058		1,929,691	21,616
Redeemed	(3,897,566)	(44,323)		(3,136,979)	(35,909)
Net Increase (Decrease)—Admiral Shares	(637,906)	(6,892)		(289,544)	(3,828)

22

Health Care Fund

I.

Certain of the fund’s investments were in companies that were considered to be affiliated companies of the fund because the fund owned more than 5% of the outstanding voting securities of the company or the issuer was another member of The Vanguard Group. Transactions during the period in securities of these companies were as follows:

		Current Period Transactions
	Jan. 31, 2023 Market Value ($000)	Purchases at Cost ($000)	Proceeds from Securities Sold ($000)	Realized Net Gain (Loss) ($000)	Change in Unrealized App. (Dep.) ($000)	Income ($000)	Capital Gain Distributions Received ($000)	Jan. 31, 2024 Market Value ($000)
2seventy bio Inc.	27,835	—	8,156	(166,975)	147,296	—	—	—
agilon health Inc.	NA1	208,776	—	—	(339,486)	—	—	179,707
Agios Pharmaceuticals Inc.	151,775	—	115,644	(161,847)	125,716	—	—	—
Alkermes plc	NA1	104,209	3,365	(10,907)	10,428	—	—	232,681
Apellis Pharmaceuticals Inc.	NA1	280,269	23,539	6,741	168,054	—	—	601,469
Eisai Co. Ltd.	1,152,216	47,189	23,330	310	(275,870)	19,790	—	900,515
Immunocore Holdings plc ADR	NA1	98,058	—	—	39,451	—	—	209,467
Ironwood Pharmaceuticals Inc. Class A	125,592	—	113,327	(6,333)	(5,932)	—	—	—
Sage Therapeutics Inc.	NA1	95,967	—	—	(47,959)	—	—	110,372
Structure Therapeutics Inc. ADR	—	100,099	—	—	5,070	—	—	105,169
Syndax Pharmaceuticals Inc.	NA1	21,409	—	—	(23,083)	—	—	87,069
UCB SA	896,839	—	108,935	3,834	109,657	11,227	—	NA2
Vanguard Market Liquidity Fund	669	NA3	NA3	(1)	1	—	—	14,873
Total	2,354,926	955,976	396,296	(335,178)	(86,657)	31,017	—	2,441,322

1	Not applicable—at January 31, 2023, the issuer was not an affiliated company of the fund.
2	Not applicable—at January 31, 2024, the security was still held, but the issuer was no longer an affiliated company of the fund.
3	Not applicable—purchases and sales are for temporary cash investment purposes.

J.

Significant market disruptions, such as those caused by pandemics (e.g., COVID-19 pandemic), natural or environmental disasters, war (e.g., Russia’s invasion of Ukraine), acts of terrorism, or other events, can adversely affect local and global markets and normal market operations. Any such disruptions could have an adverse impact on the value of the fund’s investments and fund performance.

To the extent the fund’s investment portfolio reflects concentration in a particular market, industry, sector, country or asset class, the fund may be adversely affected by the performance of these concentrations and may be subject to increased price volatility and other risks.

K.	Management has determined that no events or transactions occurred subsequent to January 31, 2024, that would require recognition or disclosure in these financial statements.

23

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of Vanguard Specialized Funds and Shareholders of Vanguard Health Care Fund

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Vanguard Health Care Fund (one of the funds constituting Vanguard Specialized Funds, referred to hereafter as the "Fund") as of January 31, 2024, the related statement of operations for the year ended January 31, 2024, the statement of changes in net assets for each of the two years in the period ended January 31, 2024, including the related notes, and the financial highlights for each of the five years in the period ended January 31, 2024 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of January 31, 2024, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended January 31, 2024 and the financial highlights for each of the five years in the period ended January 31, 2024 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of January 31, 2024 by correspondence with the custodian, transfer agent and brokers; when replies were not received from the brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

/s/PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
March 20, 2024

We have served as the auditor of one or more investment companies in The Vanguard Group of Funds since 1975.

24

Tax information (unaudited)

For corporate shareholders, 43.1%, or if subsequently determined to be different, the maximum percentage allowable by law, of ordinary income (dividend income plus short-term gains, if any) for the fiscal year qualified for the dividends-received deduction.

The fund hereby designates $469,569,000, or if subsequently determined to be different, the maximum amount allowable by law, as qualified dividend income for individual shareholders for the fiscal year.

The fund hereby designates $273,000, or if subsequently determined to be different, the maximum amount allowable by law, of interest earned from obligations of the U.S. government which is generally exempt from state income tax.

For nonresident alien shareholders, 100% of short-term capital gain dividends distributed by the fund for the fiscal year are qualified short-term capital gains.

The fund distributed $2,893,573,000 as capital gain dividends (20% rate gain distributions) to shareholders during the fiscal year.

25

This page intentionally left blank.

The People Who Govern Your Fund

The trustees of your mutual fund are there to see that the fund is operated and managed in your best interests since, as a shareholder, you are a part owner of the fund. Your fund’s trustees also serve on the board of directors of The Vanguard Group, Inc., which is owned by the Vanguard funds and provides services to them.

A majority of Vanguard’s board members are independent, meaning that they have no affiliation with Vanguard or the funds they oversee, apart from the sizable personal investments they have made as private individuals. The independent board members have distinguished backgrounds in business, academia, and public service. Each of the trustees and executive officers oversees 210 Vanguard funds.

Information for each trustee and executive officer of the fund appears below. That information, as well as the Vanguard fund count, is as of the date on the cover of this fund report. The mailing address of the trustees and officers is P.O. Box 876, Valley Forge, PA 19482. More information about the trustees is in the Statement of Additional Information, which can be obtained, without charge, by contacting Vanguard at 800-662-7447, or online at vanguard.com.

officer (retired 2013) of IBM (information technology services). Fiduciary member of IBM’s Retirement Plan Committee (2004–2013), senior vice president and general manager (2002–2004) of IBM Global Financing, vice president and controller (1998–2002) of IBM, and a variety of other prior management roles at IBM. Member of the Council on Chicago Booth.

Scott C. Malpass

Born in 1962. Trustee since March 2012. Principal occupation(s) during the past five years and other experience: co-founder and managing partner (2022–present) of Grafton Street Partners (investment advisory firm). Chief investment officer (retired 2020) and vice president (retired 2020) of the University of Notre Dame. Chair of the board of Catholic Investment Services, Inc. (investment advisors). Member of the board of superintendence of the Institute for the Works of Religion, the Notre Dame 403(b) Investment Committee, and the board of directors of Paxos Trust Company (finance).

Deanna Mulligan

Born in 1963. Trustee since January 2018. Principal occupation(s) during the past five years and other experience: chief executive officer of Purposeful (advisory firm for CEOs and C-level executives; 2021–present). Board chair (2020), chief executive officer (2011–2020), and president (2010–2019) of The Guardian Life Insurance Company of America. Chief operating officer (2010–2011) and executive vice president (2008–2010) of Individual Life and Disability of the Guardian Life Insurance Company of America. Director of DuPont. Member of the board of the Economic Club of New York. Trustee of the Partnership for New York City (business leadership), Chief Executives for Corporate Purpose, and the NewYork-Presbyterian Hospital.

Lubos Pastor

Born in 1974. Trustee since January 2024. Principal occupation(s) during the past five years and other experience: Charles P. McQuaid Distinguished Service Professor of Finance (2023–present) at the University of Chicago Booth School of Business; Charles P. McQuaid Professor of Finance (2009–2023) at the University of Chicago Booth School of Business. Vice president (2024–present) and director (2021–2023) of the Executive Committee of the European Finance Association. Member of the board of the Fama-Miller Center for Research in Finance. Member of the Academic Advisory Board of the Center for Research in Security Prices (CRSP) and of the CRSP Index Advisory Council. Research associate at the National Bureau of Economic Research. Research fellow at the Centre for Economic Policy Research.

André F. Perold

Born in 1952. Trustee since December 2004. Principal occupation(s) during the past five years and other

experience: George Gund Professor of Finance and Banking, Emeritus at the Harvard Business School (retired 2011). Chief investment officer and partner of HighVista Strategies (private investment firm). Member of the board of RIT Capital Partners (investment firm).

Sarah Bloom Raskin

Born in 1961. Trustee since January 2018. Principal occupation(s) during the past five years and other experience: deputy secretary (2014–2017) of the United States Department of the Treasury. Governor (2010–2014) of the Federal Reserve Board. Commissioner (2007–2010) of financial regulation for the State of Maryland. Colin W. Brown Distinguished Professor of the Practice of Law, Duke Law School (2021–present); Rubenstein Fellow, Duke University (2017–2020); Distinguished Fellow of the Global Financial Markets Center, Duke Law School (2020–2022); and Senior Fellow, Duke Center on Risk (2020–present). Partner of Kaya Partners (climate policy advisory services). Member of the board of directors of Arcadia (energy solution technology).

Grant Reid

Born in 1959. Trustee since July 2023. Principal occupation(s) during the past five years and other experience: senior operating partner (2023–present) of CVC Capital (alternative investment manager). Chief executive officer and president (2014–2022) and member of the board of directors (2015–2022) of Mars, Incorporated (multinational manufacturer). Member of the board of directors of Marriott International, Inc. Member of the board of the Sustainable Markets Initiative (environmental services). Chair of the Sustainable Markets Initiative’s Agribusiness Task Force.

David Thomas

Born in 1956. Trustee since July 2021. Principal occupation(s) during the past five years and other experience: president of Morehouse College (2018–present). Professor of business administration, emeritus at Harvard University (2017–2018). Dean (2011–2016) and professor of management (2016–2017) at the Georgetown University McDonough School of Business. Director of DTE Energy Company. Trustee of Common Fund.

Peter F. Volanakis

Born in 1955. Trustee since July 2009. Principal occupation(s) during the past five years and other experience: president and chief operating officer (retired 2010) of Corning Incorporated (communications equipment) and director of Corning Incorporated (2000–2010) and Dow Corning (2001–2010). Director (2012) of SPX Corporation (multi-industry manufacturing). Overseer of the Amos Tuck School of Business Administration, Dartmouth

College (2001–2013). Member of the BMW Group Mobility Council.

Executive Officers

Jacqueline Angell

Born in 1974. Principal occupation(s) during the past five years and other experience: principal of Vanguard. Chief compliance officer (November 2022–present) of Vanguard and of each of the investment companies served by Vanguard. Chief compliance officer (2018–2022) and deputy chief compliance officer (2017–2019) of State Street.

Christine M. Buchanan

Born in 1970. Principal occupation(s) during the past five years and other experience: principal of Vanguard. Chief financial officer (2021–present) and treasurer (2017–2022) of each of the investment companies served by Vanguard. Partner (2005–2017) at KPMG (audit, tax, and advisory services).

John Galloway

Born in 1973. Principal occupation(s) during the past five years and other experience: principal of Vanguard. Investment stewardship officer (September 2020–present) of each of the investment companies served by Vanguard. Head of Investor Advocacy (February 2020–present) and head of Marketing Strategy and Planning (2017–2020) at Vanguard. Special assistant to the President of the United States (2015).

Ashley Grim

Born in 1984. Principal occupation(s) during the past five years and other experience: treasurer (February 2022–present) of each of the investment companies served by Vanguard. Fund transfer agent controller (2019–2022) and director of Audit Services (2017–2019) at Vanguard. Senior manager (2015–2017) at PriceWaterhouseCoopers (audit and assurance, consulting, and tax services).

Jodi Miller

Born in 1980. Principal occupation(s) during the past five years and other experience: principal of Vanguard. Finance director (2022–present) of each of the investment companies served by Vanguard. Head of Enterprise Investment Services (2020–present), head of Retail Client Services and Operations (2020–2022), and head of Retail Strategic Support (2018–2020) at Vanguard.

Anne E. Robinson

Born in 1970. Principal occupation(s) during the past five years and other experience: general counsel (2016–present) of Vanguard. Secretary (2016–present) of Vanguard and of each of the investment companies served by Vanguard. Managing director (2016–present) of Vanguard. Managing director and general counsel of Global Cards and Consumer Services (2014–2016) at Citigroup. Counsel (2003–2014) at American Express. Nonexecutive director (2022–present) of the board of National Grid (energy).

Michael Rollings

Born in 1963. Principal occupation(s) during the past five years and other experience: finance director (2017–present) and treasurer (2017) of each of the investment companies served by Vanguard. Managing director (2016–present) of Vanguard. Chief financial officer (2016–present) of Vanguard. Director (2016–present) of Vanguard Marketing Corporation. Executive vice president and chief financial officer (2006–2016) of MassMutual Financial Group.

Vanguard Senior Management Team

Matthew Benchener	Thomas M. Rampulla
Amma Boateng	Karin A. Risi
Joseph Brennan	Anne E. Robinson
Mortimer J. Buckley	Michael Rollings
Gregory Davis	Nitin Tandon
John James	Lauren Valente
Chris D. Mclsaac

Fund Information > 800-662-7447

Direct Investor Account Services > 800-662-2739

Institutional Investor Services > 800-523-1036

Text Telephone for People Who Are Deaf or Hard of Hearing > 800-749-7273

This material may be used in conjunction with the offering of shares of any Vanguard fund only if preceded or accompanied by the fund’s current prospectus.

All comparative mutual fund data are from Morningstar, Inc., unless otherwise noted.

You can obtain a free copy of Vanguard’s proxy voting guidelines by visiting vanguard.com/proxyreporting or by calling Vanguard at 800-662-2739. The guidelines are also available from the SEC’s website, www.sec.gov. In addition, you may obtain a free report on how your fund voted the proxies for securities it owned during the 12 months ended June 30. To get the report, visit either vanguard.com/proxyreporting or www.sec.gov.

You can review information about your fund on the SEC’s website, and you can receive copies of this information, for a fee, by sending a request via email addressed to publicinfo@sec.gov.

Source for Bloomberg indexes: Bloomberg Index Services Limited. Copyright 2024, Bloomberg. All rights reserved.

CFA^® is a registered trademark owned by CFA Institute.

© 2024 The Vanguard Group, Inc.
All rights reserved.
Vanguard Marketing Corporation, Distributor.

Q520 032024

Important information about shareholder reports

Beginning in July 2024, amendments adopted by the Securities and Exchange Commission will substantially impact the design, content, and transmission of shareholder reports. Shareholder reports will provide key fund information in a clear and concise format and must be mailed to each shareholder that has not elected to receive the reports electronically. Financial statements will no longer be included in the shareholder report but will be available at vanguard.com, can be mailed upon request, or can be accessed on the SEC’s website at www.sec.gov.

You may elect to receive shareholder reports and other communications from the fund electronically by contacting your financial intermediary (such as a broker-dealer or bank) or, if you invest directly with the fund, by calling Vanguard at one of the phone numbers on the back cover of this report or by logging on to vanguard.com.

Contents

Your Fund’s Performance at a Glance	1
AboutYour Fund's Expenses	2
Real Estate Index Fund	4
Real Estate II Index Fund	28

Please note: The opinions expressed in this report are just that—informed opinions. They should not be considered promises or advice. Also, please keep in mind that the information and opinions cover the period through the date on the front of this report. Of course, the risks of investing in your fund are spelled out in the prospectus.

Your Fund’s Performance at a Glance

•	For the 12 months ended January 31, 2024, returns for Vanguard Real Estate Index Fund ranged from –3.91% for Investor Shares to –3.81% for ETF Shares (based on net asset value), –3.75% for Admiral Shares, and –3.73% for Institutional Shares. Vanguard Real Estate II Index Fund returned –3.68%. The funds’ benchmark index returned –3.62%.
•	With inflation continuing to ease, the Federal Reserve slowed and eventually stopped hiking interest rates. Economic growth, the labor market, and consumer spending proved resilient, but the prospect of rates remaining high for an extended period spurred volatility at times. U.S. stocks rallied toward the end of 2023, however, as sentiment improved amid market expectations for rate cuts in 2024.
•	Many of the sectors recorded negative returns for the 12 months. Telecom tower REITs, office REITs, and multifamily residential REITs contributed most to the negative performance.
•	For the 10 years ended January 31, 2024, average annual returns for the Real Estate Index Fund ranged from 6.23% for Investor Shares to 6.36% for the Real Estate ETF, 6.38% for Admiral Shares, and 6.39% for Institutional Shares. The benchmark returned 6.48% for the period. The Real Estate II Index Fund launched in 2017 and doesn’t have a 10-year record.

Market Barometer

	Average Annual Total Returns Periods Ended January 31, 2024
	One Year	Three Years	Five Years
Stocks
Russell 1000 Index (Large-caps)	20.23%	9.78%	13.99%
Russell 2000 Index (Small-caps)	2.40	-0.76	6.80
Russell 3000 Index (Broad U.S. market)	19.15	9.10	13.53
FTSE All-World ex US Index (International)	6.29	1.57	5.77
Bonds
Bloomberg U.S. Aggregate Float Adjusted Index (Broad taxable market)	2.23%	-3.15%	0.90%
Bloomberg Municipal Bond Index (Broad tax-exempt market)	2.90	-0.78	2.00
FTSE Three-Month U.S. Treasury Bill Index	5.36	2.40	1.96
CPI
Consumer Price Index	3.09%	5.64%	4.15%

1

About Your Fund’s Expenses

As a shareholder of the fund, you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a fund’s gross income, directly reduce the investment return of the fund.

A fund‘s expenses are expressed as a percentage of its average net assets. This figure is known as the expense ratio. The Real Estate Index Fund, in addition to its own expenses, bears its proportionate share of the costs for the Subsidiary. These indirect expenses make up the acquired fund fees and expenses, also expressed as a percentage of average net assets. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your fund and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period. For the Real Estate Index Fund, the costs were calculated using the expense ratio and the acquired fund fees and expenses.

The accompanying table illustrates your fund’s costs in two ways:

•

Based on actual fund return. This section helps you to estimate the actual expenses that you paid over the period. The ”Ending Account Value“ shown is derived from the fund’s actual return, and the third column shows the dollar amount that would have been paid by an investor who started with $1,000 in the fund. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period.

To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your fund under the heading ”Expenses Paid During Period.“

•

Based on hypothetical 5% yearly return. This section is intended to help you compare your fund‘s costs with those of other mutual funds. It assumes that the fund had a yearly return of 5% before expenses, but that the expense ratio is unchanged. In this case—because the return used is not the fund’s actual return—the results do not apply to your investment. The example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to calculate expenses based on a 5% return. You can assess your fund’s costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds.

Note that the expenses shown in the table are meant to highlight and help you compare ongoing costs only and do not reflect transaction costs incurred by the fund for buying and selling securities. Further, the expenses do not include any purchase, redemption, or account service fees described in the fund prospectus. If such fees were applied to your account, your costs would be higher. Your fund does not carry a “sales load.”

The calculations assume no shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.

2

You can find more information about the fund’s expenses, including annual expense ratios, in the Financial Statements section of this report. For additional information on operating expenses and other shareholder costs, please refer to your fund’s current prospectus.

Six Months Ended January 31, 2024
	Beginning Account Value 7/31/2023	Ending Account Value 1/31/2024	Expenses Paid During Period
Based on Actual Fund Return
Real Estate Index Fund
Investor Shares	$1,000.00	$1,005.30	$1.31
ETF Shares	1,000.00	1,006.20	0.66
Admiral™ Shares	1,000.00	1,006.30	0.66
Institutional Shares	1,000.00	1,006.40	0.51
Real Estate II Index Fund	$1,000.00	$1,006.60	$0.40
Based on Hypothetical 5% Yearly Return
Real Estate Index Fund
Investor Shares	$1,000.00	$1,023.89	$1.33
ETF Shares	1,000.00	1,024.55	0.66
Admiral Shares	1,000.00	1,024.55	0.66
Institutional Shares	1,000.00	1,024.70	0.51
Real Estate II Index Fund	$1,000.00	$1,024.80	$0.41

The calculations for the Real Estate Index Fund are based on expenses incurred combined with acquired fund fees and expenses for the most recent six-month period. The fund’s combined, annualized six-month expense figures for that period are: 0.26% for Investor Shares, 0.13% for ETF Shares, 0.13% for Admiral Shares, and 0.10% for Institutional Shares. The dollar amounts shown as “Expenses Paid” are equal to the annualized expense figure multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by the number of days in the most recent 12-month period (184/365). The calculations for the Real Estate II Index Fund are based on expenses incurred in the most recent six-month period. The fund’s annualized six-month expense ratio for that period is 0.08%. The dollar amounts shown as “Expenses Paid” are equal to the annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by the number of days in the most recent 12-month period (184/365).

3

Real Estate Index Fund

Performance Summary

All of the returns in this report represent past performance, which is not a guarantee of future results that may be achieved by the fund. (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.) Note, too, that both investment returns and principal value can fluctuate widely, so an investor’s shares, when sold, could be worth more or less than their original cost. The returns shown do not reflect taxes that a shareholder would pay on fund distributions or on the sale of fund shares.

Cumulative Performance: January 31, 2014, Through January 31, 2024

Initial Investment of $10,000

		Average Annual Total Returns Periods Ended January 31, 2024
		One Year	Five Years	Ten Years	Final Value of a $10,000 Investment
	Real Estate Index Fund Investor Shares	-3.91%	3.76%	6.23%	$18,297
	Real Estate Spliced Index	-3.62	4.02	6.48	18,744
	Dow Jones U.S. Total Stock Market Float Adjusted Index	19.14	13.41	11.87	30,709

Real Estate Spliced Index: MSCI US REIT Index through February 1, 2018; MSCI US Investable Market Real Estate 25/50 Transition Index through July 24, 2018; MSCI US Investable Market Real Estate 25/50 Index thereafter.

		One Year	Five Years	Ten Years	Final Value of a $10,000 Investment
Real Estate Index Fund ETF Shares Net Asset Value		-3.81%	3.88%	6.36%	$18,526
Real Estate Index Fund ETF Shares Market Price		-3.83	3.86	6.37	18,535
Real Estate Spliced Index		-3.62	4.02	6.48	18,744
Dow Jones U.S. Total Stock Market Float Adjusted Index		19.14	13.41	11.87	30,709

    

See Financial Highlights for dividend and capital gains information.

4

Real Estate Index Fund

		Average Annual Total Returns Periods Ended January 31, 2024
		One Year	Five Years	Ten Years	Final Value of a $10,000 Investment
Real Estate Index Fund Admiral Shares		-3.75%	3.91%	6.38%	$18,556
Real Estate Spliced Index		-3.62	4.02	6.48	18,744
Dow Jones U.S. Total Stock Market Float Adjusted Index		19.14	13.41	11.87	30,709

		One Year	Five Years	Ten Years	Final Value of a $5,000,000 Investment
Real Estate Index Fund Institutional Shares		-3.73%	3.93%	6.39%	$9,292,836
Real Estate Spliced Index		-3.62	4.02	6.48	9,372,140
Dow Jones U.S. Total Stock Market Float Adjusted Index		19.14	13.41	11.87	15,354,326

Cumulative Returns of ETF Shares: January 31, 2014, Through January 31, 2024
	One Year	Five Years	Ten Years
Real Estate Index Fund ETF Shares Market Price	-3.83%	20.83%	85.35%
Real Estate Index Fund ETF Shares Net Asset Value	-3.81	20.95	85.26
Real Estate Spliced Index	-3.62	21.80	87.44

For the ETF Shares, the market price is determined by the midpoint of the bid-offer spread as of the closing time of the New York Stock Exchange (generally 4 p.m., Eastern time). The net asset value is also determined as of the NYSE closing time. For more information about how the ETF Shares’ market prices have compared with their net asset value, visit vanguard.com, select your ETF, click on Price, and then scroll down to the Premium/Discount chart. The ETF premium/discount chart there shows the percentage and days on which the ETF Shares’ market price was above or below the NAV.

5

Real Estate Index Fund

Fund Allocation

As of January 31, 2024

Data Center REITs	9.0%
Diversified Real Estate Activities	0.2
Diversified REITs	2.1
Health Care REITs	7.7
Hotel & Resort REITs	2.9
Industrial REITs	12.7
Multi-Family Residential REITs	8.4
Office REITs	4.7
Other Specialized REITs	6.0
Real Estate Development	0.3
Real Estate Operating Companies	0.3
Real Estate Services	6.9
Retail REITs	12.9
Self-Storage REITs	6.7
Single-Family Residential REITs	4.5
Telecom Tower REITs	12.3
Timber REITs	2.4

The table reflects the fund’s investments, except for short-term investments and derivatives. 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.

The fund may invest in derivatives (such as futures and swap contracts) for various reasons, including, but not limited to, attempting to remain fully invested and tracking its target index as closely as possible.

The Global Industry Classification Standard (“GICS”) was developed by and is the exclusive property and a service mark of MSCI Inc. (“MSCI”) and Standard and Poor’s, a division of McGraw-Hill Companies, Inc. (“S&P”), and is licensed for use by Vanguard. Neither MSCI, S&P nor any third party involved in making or compiling the GICS or any GICS classification makes any express or implied warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any such standard or classification. Without limiting any of the foregoing, in no event shall MSCI, S&P, any of its affiliates or any third party involved in making or compiling the GICS or any GICS classification have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.

6

Real Estate Index Fund

Financial Statements

Schedule of Investments

As of January 31, 2024

The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at www.sec.gov.

					Shares	Market Value• ($000)
Equity Real Estate Investment Trusts (REITs) (93.0%)
Data Center REITs (7.8%)
	Equinix Inc.				3,811,615	3,162,764
	Digital Realty Trust Inc.				11,956,364	1,679,391
						4,842,155
Diversified REITs (1.8%)
	WP Carey Inc.				8,716,202	540,056
	Essential Properties Realty Trust Inc.				6,357,432	158,364
	Broadstone Net Lease Inc.				7,636,108	122,712
	Global Net Lease Inc.				7,964,708	67,302
	Empire State Realty Trust Inc. Class A				5,543,705	52,776
	Alexander & Baldwin Inc.				2,963,220	51,323
	American Assets Trust Inc.				1,977,034	44,345
	Armada Hoffler Properties Inc.				2,763,638	33,053
	Gladstone Commercial Corp.				1,626,224	20,848
	One Liberty Properties Inc.				702,181	14,212
1	NexPoint Diversified Real Estate Trust				1,313,538	9,063
						1,114,054
Health Care REITs (6.6%)
	Welltower Inc.				20,383,501	1,763,377
	Ventas Inc.				16,394,697	760,550
	Healthpeak Properties Inc.				22,281,028	412,199
	Omega Healthcare Investors Inc.				9,981,231	289,456
	Healthcare Realty Trust Inc. Class A				15,520,118	250,029
	Sabra Health Care REIT Inc.				9,423,531	125,710
	Physicians Realty Trust				9,717,091	118,937

					Shares	Market Value• ($000)
	National Health Investors Inc.				1,771,764	94,222
	CareTrust REIT Inc.				4,059,530	84,925
1	Medical Properties Trust Inc.				24,355,296	75,501
	LTC Properties Inc.				1,693,035	52,772
	Community Healthcare Trust Inc.				1,030,782	26,378
	Global Medical REIT Inc.				2,534,288	25,622
	Universal Health Realty Income Trust				536,266	21,349
	Diversified Healthcare Trust				6,832,781	19,610
						4,120,637
Hotel & Resort REITs (2.5%)
	Host Hotels & Resorts Inc.				28,985,560	557,102
	Ryman Hospitality Properties Inc.				2,309,753	253,842
	Apple Hospitality REIT Inc.				8,856,884	142,241
	Park Hotels & Resorts Inc.				8,781,555	132,426
	Sunstone Hotel Investors Inc.				8,018,986	85,563
	DiamondRock Hospitality Co.				8,530,293	77,967
	Pebblebrook Hotel Trust				4,900,568	74,587
	RLJ Lodging Trust				6,412,540	74,257
	Xenia Hotels & Resorts Inc.				4,356,483	58,072
	Service Properties Trust				6,733,788	52,052
	Summit Hotel Properties Inc.				4,374,069	28,344
	Chatham Lodging Trust				1,990,829	20,904
						1,557,357
Industrial REITs (11.0%)
	Prologis Inc.				37,634,936	4,767,970
	Rexford Industrial Realty Inc.				8,395,321	441,510
	EastGroup Properties Inc.				1,849,315	328,124
	Americold Realty Trust Inc.				11,006,959	302,691