Historic Volatility Measures as of 03/31/2014
|Spliced Health Care Index||0.91||0.89|
|Dow Jones U.S. Total Stock Market Index||—||—|
*R-squared and beta are calculated from trailing 36-month fund returns relative to the associated benchmark.
|Risks Associated with Aggressive Funds
Vanguard funds classified as aggressive are subject to extremely wide fluctuations in share prices. The unusually high volatility associated with these funds may stem from one or more of the following strategies: a concentration of fund holdings in a relatively low number of individual stocks, or in a particular sector of the stock market, or in a particular geographical region of the world; a heavy emphasis on small-capitalization stocks or growth stocks with relatively high market valuations; holdings of international stocks or bonds, which are subject to price declines caused by changes in the value of the U.S. dollar against foreign currencies; or investments in bonds that have exceptionally long average durations, whose prices are highly sensitive to changes in interest rates.
|Plain Talk About Risk
An investment in the fund could lose money over short or even long periods. You should expect the fund’s share price and total return to fluctuate within a wide range, like the fluctuations of the overall stock market. The fund’s performance could be hurt by:
- Industry concentration risk, which is the chance that there will be overall problems affecting a particular industry. Because the fund normally invests at least 80% of its assets in the health care industry, the fund’s performance largely depends—for better or for worse—on the overall condition of this industry.
- Stock market risk, which is the chance that stock prices overall will decline. Stock markets tend to move in cycles, with periods of rising prices and periods of falling prices.
- Manager risk, which is the chance that poor security selection will cause the fund to underperform other funds with a similar investment objective.
- Country risk, which is the chance that domestic events—such as political upheaval, financial troubles, or natural disasters—will weaken a country’s securities markets.
- Currency risk, which is the chance that the value of a foreign investment, measured in U.S. dollars, will decrease because of unfavorable changes in currency exchange rates.