[Vanguard Ship Logo]
P.O. Box 2600
Valley Forge, PA 19482-2600
610-503-5854
Sarah_A_Buescher@vanguard.com
May 9, 2007
via electronic filing
Christian Sandoe, Esq.
Division of Investment Management
U.S. Securities and Exchange Commission
100 F Street NE
Washington, D.C. 20549
RE: Vanguard Specialized Funds
File No. 2-88116
Dear Mr. Sandoe,
This letter responds to your telephone comments of May 8, 2007 on
Post-Effective Amendment No. 64 to the registration statement of the
above-referenced registrant, which was filed on March 23, 2007.
Comment 1: Energy Fund Prospectus - Primary Investment Strategies
- --------------------------------------------------------------------------------
Comment: The first sentence of the primary investment strategies
section states that the fund "invests at least 80% of its
assets in the common stocks of companies principally engaged
in energy-related activities, such as production and
transmission of energy or energy fuels; the making of
component products for such activities, energy research; and
energy conservation or pollution control." Explain whether the
use of "such as" means that non-energy-related activities are
included in the 80% figure.
Response: The 80% figure includes common stocks of companies principally
engaged in energy-related activities. "Such as" is used to
describe examples of such activities.
Comment 2: Energy Fund Prospectus - Capitalization
- --------------------------------------------------------------------------------
Comment: Item 4 of the prospectus states that most stocks held by the fund
are mid- and large-capitalization stocks. Discuss the risks of
mid- and large-cap stocks in the primary risks section.
Response: The fund's strategy is focused on stocks in a particular industry
and is not centered on a particular market capitalization.
Accordingly, we have not added market cap disclosure to the
fund's primary investment strategies. In a broadly diversified
stock fund, a bias toward small- and/or mid-cap stocks is a risk
factor worth noting. However, in funds that are focused on a
single
#92357, 1 5/8/2007
Christian Sandoe, Esq.
May 9, 2007
Page 2
industry or sector, there is a relatively low correlation
between fund performance and style benchmark performance. The
risk attributable to the fund's focus dwarfs the risk
attributable to the capitalization of the stocks owned.
Comment 3: Energy Fund Prospectus - Plain Talk about the Fund's Portfolio
Managers
- --------------------------------------------------------------------------------
Comment: Please clarify the role played by the various portfolio managers.
Response: Vanguard uses the term "co-manage" to describe relationships
where portfolio managers are truly equals with respect to
managing portfolio assets. We will provide additional
clarification as necessary when there are distinctions to be
made between the roles and responsibilities of a fund's
portfolio managers. However, since there are no such
distinctions in the case of this fund, we prefer to leave the
descriptions unchanged.
Comment 4: Investment in Other Investment Companies
- --------------------------------------------------------------------------------
Comment: The Statement of Additional Information states that each fund
may invest in other investment companies to the extent
permitted by the Investment Company Act of 1940. For each fund
that invests in other investment companies, do the indirect
expenses incurred by the investing fund exceed 0.01%?
Response: Certain funds invest in other investment companies, but in all
cases the indirect expenses incurred by the investing fund are
less than 0.01%.
* * * * * * * * * *
As required by the SEC, each fund acknowledges that:
o The fund is responsible for the adequacy and accuracy of the
disclosure in the filing.
o Staff comments or changes in response to staff comments in the
filings reviewed by the staff do not foreclose the Commission
from taking any action with respect to the filing.
o The fund may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
Sincerely,
/s/Sarah A. Buescher
Sarah A. Buescher
Senior Counsel
The Vanguard Group, Inc.
#92357, 1 5/8/2007