P.O. Box 2600
Valley Forge, PA 19482-2600
610-503-0211
paul_scott@vanguard.com
| September 26, 2018 | ||
| Lisa N. Larkin, Esq. | ||
| U.S. Securities and Exchange Commission | via electronic filing | |
| 100 F Street, N.E. | ||
| Washington, DC 20549 | ||
| RE: Vanguard Specialized Funds (the “Trust”) | ||
| File No. 2-88116 | ||
| Post-Effective Amendment No. 99 – Vanguard Precious Metals and Mining Fund (the | ||
| “Fund”) | ||
| Dear Ms. Larkin, | ||
| This letter responds to your comments provided on September 12, 2018, to the above referenced post-effective | ||
| amendment. | ||
| Comment 1: | Fees and Expenses | |
| Comment: | Footnote 1 to the Annual Fund Operating Expenses Table states that the expense | |
| information in the table reflects estimated amounts for the current fiscal year. Please | ||
| explain supplementally the basis for estimating these amounts. | ||
| Response: | We have revised Footnote 1 to the Annual Fund Operating Expenses to remove language | |
| relating to estimating the amounts for the current fiscal year and to reflect that the | ||
| expense information shown in the Table has been restated to reflect current fees, in | ||
| accordance with Instruction 3(d)(ii) of Item 3 of Form N-1A. | ||
| Comment 2: | Principal Investment Strategies | |
| Comment: | The Staff notes that the Fund’s name contains the word “global.” Please expressly | |
| describe how the Fund will invest its assets in investments that are tied economically to a | ||
| number of countries throughout the world. For example, the Fund could include a policy | ||
| that under normal circumstances, the Fund will invest at least 40% of its assets outside | ||
| the United States, unless market conditions are not deemed favorable, in which case the | ||
| Fund would invest at least 30% of its assets outside the United States. | ||
| Response: | The Adopting Release for Rule 35d-1 under the 1940 Act (“Adopting Release”) states | |
| that, although “global” and “international” funds, which are similar to “world” funds, are | ||
| not subject to Rule 35d-1 under the 1940 Act, the terms “global” and “international” | ||
| connote diversification among investments in a number of different countries throughout | ||
| the world. Footnote 42 of the Adopting Release explains that the SEC expects that funds | ||
| using these terms in their names will invest their assets in investments that are tied | ||
Lisa N. Larkin, Esq.
September 26, 2018
Page 2
| economically to a number of countries throughout the world. The SEC Staff, in 2012, | ||
| clarified that one way to satisfy this requirement would be for a fund to invest, under | ||
| normal market conditions, in at least three different countries, and invest at least 40 | ||
| percent of its assets outside the United States or, if conditions are not favorable, invest at | ||
| least 30 percent of its assets outside the United States. We believe that the Fund’s | ||
| investment strategy conforms to the guidance found in the above footnote and other Staff | ||
| guidance. As disclosed in the Fund’s “Principal Investment Strategies,” the Fund invests | ||
| in U.S. and foreign equity securities and typically invests across “a mix of developed and | ||
| emerging market stocks.” The Market Exposure section of the Fund’s prospectus further | ||
| discloses that the Fund “invests in a broad range of companies, industry sectors, and | ||
| countries” (emphasis added). Because we believe that the Fund’s investment strategy | ||
| conforms to the guidance found in the above footnote and other SEC staff guidance, we | ||
| respectfully decline to make the requested change. | ||
| Comment 3: | Principal Investment Strategies | |
| Comment: | The principal strategies section on page 2 states that the Fund “seeks to avoid companies, | |
| assets and business models that can be easily replicated.” Please briefly explain the | ||
| meaning of this language or add an example that clarifies the meaning of this language. | ||
| Response: | We have added disclosure that clarifies the meaning of this language. | |
| Comment 4: | Annual Total Returns – Fund Performance Information | |
| Comment: | Please confirm if you will include the performance of the Fund’s former advisor. | |
| Response: | We confirm that the Performance Information section will include the performance of the | |
| Fund’s former advisor. | ||
| Comment 5: | More on the Fund – Market Exposure | |
| Comment: | The second paragraph of the disclosure on page 7 in the “Market Exposure” section is | |
| repetitive of the first paragraph in that section. Please consider revising the paragraphs to | ||
| reduce repetition of the disclosure. | ||
| Response: | We have revised the disclosure in the manner suggested. | |
| Comment 6: | More on the Fund – Market Exposure | |
| Comment: | In the “Market Exposure” section on page 7, the first sentence of the second paragraph | |
| states: “The Fund selects securities when they are at a discount to intrinsic value.” The | ||
| last sentence of that paragraph states: “The Fund may have an orientation towards value | ||
| stocks | ” This disclosure appears to be inconsistent. Please revise or clarify the | |
| disclosure in this paragraph for consistency. | ||
| Response: | We have revised the first sentence of the second paragraph on page 7 to state: “The Fund | |
| typically selects securities when they are at a discount to intrinsic value.” | ||
| Comment 7: | More on the Fund – Market Exposure | |
| Lisa N. Larkin, Esq. |
| September 26, 2018 |
| Page 3 |
| Comment: | In the “Market Exposure” section, on page 7, please add disclosure explaining how the |
| Fund’s advisor decides to sell a security. If this disclosure is already included, please | |
| explain supplementally where it appears. | |
| Response: | We have added the requested disclosure. |
| Comment 8: | More on the Fund – Security Selection |
| Comment: | The “Security Selection” section on page 12 includes disclosure that states that the Fund |
| “typically combines exposure to cyclical natural resource sectors.” For purposes of plain | |
| English disclosure, please revise this language or provide an example of cyclical natural | |
| resource sectors. | |
| Response: | We have removed the sentence on page 12 that stated that the Fund’s portfolio “typically |
| combines exposure to cyclical natural resource sectors” and have replaced it with new | |
| disclosure that provides additional information on the portfolio’s expected exposure. | |
| Comment 9: | Part C |
| Comment: | Please include a reference in Part C of the Fund’s registration statement to the advisory |
| agreement and code of ethics for the Fund’s new advisor. | |
| Response: | We confirm that Part C of the Fund’s registration statement will include references to the |
| advisory agreement and code of ethics for the Fund’s new advisor. | |
| Please contact me at (610) 503-0211 with any questions or comments regarding the above response. | |
| Thank you. | |
| Sincerely, | |
| Paul W. Scott | |
| Senior Counsel | |
| The Vanguard Group, Inc. | |