(PUB) Investing 2015

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7 Morningstar FundInvestor January 2015
Morningstar Analyst Rating 12-19-14
Œ
Morningstar Pillars
Process
Performance
People
Parent
Price
Positive
Positive
Positive
Positive
Positive
Morningstar Analyst Rating
Morningstar evaluates mutual funds based on five key pillars, which
its analysts believe lead to funds that are more likely to outperform
over the long term on a risk-adjusted basis.
Analyst Rating Spectrum
Œ „ ´ˇ ¨
Pillar Spectrum
Positive § Negative ¶ Neutral
NAV 39.15 33.84 31.34 31.10 28.85 24.43 32.62 32.44 30.35 30.19 28.81 24.56
Total Return % 9.82 19.66 12.57 3.85 10.94 22.20 -22.30 8.34 14.97 6.82 11.17 20.75
+/-M* MdTgRk 4.93 7.62 11.98 -8.48 -10.83 44.39 -30.93 -4.61 7.93 -4.66 -11.31 27.44
+/-Mstr Md Ag Rk 4.85 5.33 14.50 -11.07 -16.61 52.85 -31.24 -7.65 6.12 -7.25 -17.97 33.05
Income Return % 2.66 2.83 3.11 3.07 2.98 3.73 3.22 3.37 3.27 3.01 3.07 3.15
Capital Return % 7.16 16.83 9.46 0.78 7.96 18.47 -25.52 4.97 11.70 3.81 8.10 17.60
Total Rtn % Rank Cat 11 22 38 7 69 62 13 22 8 20 17 43
Income $ 1.00 0.96 0.94 0.85 0.90 1.04 1.08 0.98 0.90 0.88 0.77 0.84
Capital Gains $ 1.50 0.44 0.00 0.00 0.00 0.00 1.42 1.40 0.97 0.91 0.00 0.00
Expense Ratio % . 0.26 0.25 0.27 0.30 0.34 0.29 0.27 0.30 0.29 0.31 0.36
Income Ratio % . 2.61 2.91 2.95 2.97 3.59 3.44 3.14 3.10 2.93 2.99 3.00
Turnover Rate %
. 35 31 38 35 28 30 23 25 24 24
.
Net Assets $mil 23,377 26,920 26,746 25,506 26,691 28,290 23,233 30,979 29,675 26,251 28,328 24,326
Performance 12-31-14
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total
2010
2011
2012
2013
2014
3.68 -6.75 8.51 5.74 3.85
4.16 0.92 -8.70 8.22 12.57
7.55 -0.97 4.69 0.96 19.66
7.05 1.55 3.55 6.30 9.82
2.36 4.00 0.02 . .
Trailing Total +/- M* +/- Mstr %Rank Growth of
Return% MdTgRk Md Ag Rk Cat $10,000
3 Mo
6 Mo
1 Yr
3 Yr Avg
5 Yr Avg
10 Yr Avg
15 Yr Avg
3.14 1.97 1.92 19 10,314
3.17 4.02 4.45 17 10,317
9.82 4.93 4.85 11 10,982
13.94 3.60 0.95 15 14,792
11.25 2.54 1.04 12 17,041
7.97 1.40 0.91 6 21,529
7.82 1.85 1.93 3 30,938
Tax Analysis Tax-Adj Rtn% %Rank Cat Tax-Cost Rat %Rank Cat
3 Yr (estimated)
5 Yr (estimated)
10 Yr (estimated)
12.08 18 1.63 67
9.85 15 1.27 70
6.63 6 1.25 67
Potential Capital Gain Exposure: 30% of assets
Rating and Risk
Time Load-Adj Morningstar Morningstar Morningstar
Period Return % Rtn vs Cat Risk vs Cat Risk-Adj Rating
1 Yr 9.82
3 Yr 13.94 +Avg -Avg
5 Yr 11.25 +Avg -Avg
10 Yr 7.97 High -Avg
Incept 8.28
Other Measures Standard Index Best Fit Index
M* MdTgRk S&P 500
Alpha 4.5 1.5
Beta 0.89 0.64
R-Squared 92 93
Standard Deviation 6.00
Mean 13.94
Sharpe Ratio 2.21
Morningstar’s Take by Alec Lucas 12-19-14
Vanguard Wellington charts a steady course.
Stability, long a hallmark of this predepression era
fund, has been the key to its recent success as well.
That starts with veteran managers Edward Bousa and
John Keogh. In July, they passed the eight-year mark in
their shared tenure as leads of the equity and
fixed-income portfolios, respectively. At this point,
each one knows well how the other works. Bousa
keeps equity exposure centered at 65% of the fund’s
assets. He invests about half of that stake in stocks
with above-average yields relative to the S&P 500
Index and whose firms are competitively positioned.
Top-five holding Merck MRK, for example, has a stout
dividend and revenue base, and Bousa believes the
market is underestimating its current and future drug
lineup’s growth potential. The equity portfolio’s other
half is split between stocks poised to benefit from
supply-and-demand dynamics, like the rising oil prices,
and growth names bought on dips. For example, Bousa
initiated a small position in Google GOOG during its
brief share-price lull in the second quarter. The mix
results in a fairly all-weather equity portfolio.
Keogh, meanwhile, invests his roughly 35%
fixed-income stake in higher-quality issues, keeping
duration within a year of the Barclays U.S. Credit A or
Better benchmark. As of November 2014, duration
stood at 6.5 years, a bit shorter than the index’s 6.7
but still above the typical moderate-allocation rival’s
4.4 years. While that leaves the fund potentially more
vulnerable to rising interest rates than most peers, it’s
been a boon lately, as, contrary to market sentiment,
rates have fallen in 2014.
Whether interest rates fall or rise management’s
consistent process should lead to competitive
long-term results. But that does not preclude a strong
short-term showing either. Thus far in 2014, the fund
has also benefited from its heavy equity stake in
health care, one of the better performing sectors, and
its tilt toward larger-cap stocks. Through November,
both have helped the fund to a 10% top-decile
year-to-date return.
The fund’s investors should stay put.
Address: Vanguard Wellington Fund
Valley Forge, PA 19482
800-662-7447
Web Address:
Inception: 07-01-29
Advisor: Wellington Management Company, LLP
Subadvisor: None
NTF Plans: Vanguard NTF
Minimum Purchase: Closed Add: . IRA: .
Min Auto Inv Plan: Closed Add: .
Sales Fees: No-load
Management Fee: 0.24%
Actual Fees: Mgt:0.24% Dist: .
Expense Projections: 3Yr:$84 5Yr:$146 10Yr:$331
Income Distribution: Quarterly
Data through December 31, 2014
Ticker Status Yield Total Assets Mstar Category
VWELX Closed 2.5% $89,540 mil Moderate Allocation
66% 65% 62% 65% 66% 65% 65% 65% 64%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 12-14
Historical Profile
Return
Risk
Rating
High
Below Avg
Highest
Investment Style
Equity
Stock %
Manager Change
Partial Manager Change
Growth of $10,000
Investment Values of
Fund
Investment Values of
M* MdTgRk
Performance Quartile
(within Category)
History
10.0
14.0
18.0
22.0
26.0
Portfolio Analysis 09-30-14
Total Stocks:99 P/E YTD % Net
Share change since 06-30-14 Sectors Ratio Return % Assets
Wells Fargo & Co Finan Svs 13.4 -2.96 2.34
Merck & Co Inc Hlth care 31.1 2.20 1.90
Microsoft Corp Technology 18.2 -0.27 1.81
Comcast Corp Class A Comm Svs 18.3 -3.15 1.70
Verizon Communications In Comm Svs 10.1 -0.45 1.69
JPMorgan Chase & Co Finan Svs 11.6 -2.60 1.64
Exxon Mobil Corporation Energy 11.6 -2.34 1.63
Chevron Corp Energy 10.3 -3.65 1.55
Johnson & Johnson Hlth care 17.3 -0.75 1.32
Date of Amount Value % Net
Total Fixed-Income:1871 Maturity $000 $000 Assets
US Treasury Note 1.375% 09-30-18 953,900 948,091 1.10
US Treasury Bond 2.875% 05-15-43 784,297 734,792 0.85
US Treasury Note 0.5% 07-31-16 664,000 664,000 0.77
US Treasury Note 1.5% 06-30-16 506,905 515,857 0.60
FNMA 4.5% 04-01-41 289,799 313,246 0.36
US Treasury Note 0.25% 11-30-15 301,000 301,187 0.35
Freddie Mac Gold Single F 02-01-44 246,500 265,835 0.31
FNMA 4.5% 03-01-41 234,535 253,511 0.29
FNMA 4.5% 08-01-40 212,135 229,299 0.27
Equity Style Fixed-Income Style
Style: Value
Size: Large-Cap
Duration: Moderate
Quality: Medium
Avg Eff Duration 6.3 Yrs
Avg Eff Maturity 9.2 Yrs
Avg Credit Quality A
Avg Wtd Coupon 3.97%
figure provided by fund as of 09-30-14 1
1
Value Measures Rel Category
Price/Earnings
Price/Book
Price/Sales
Price/Cash Flow
Dividend Yield %
15.28
2.10
1.50
6.12
2.76
1.06
1.10
1.23
0.89
1.16
Growth Measures % Rel Category
Long-Term Erngs
Book Value
Sales
Cash Flow
Historical Erngs
9.05
7.33
1.48
6.12
8.25
0.85
6.32
0.43
4.57
0.19
Market Cap %
Giant 65.8
Large 33.7
Mid 0.5
Small 0.0
Micro 0.0
Avg $mil: 98,628
Composition - Net
(% of Stock)
Cash 0.9
Stocks 64.0
Bonds 34.6
Other 0.5
Foreign 13.5
Sector
Weightings
% of
Stocks
Rel M*
MdTgRk High
3 Year
Low
Cyclical 28.72 0.74
BasicMat 1.52 0.28 3 1
CnsmrCyc 5.99 0.53 7 6
FinanSvs 20.98 1.18 21 16
Real Est 0.23 0.05 0 0
Sensitive 41.53 1.11
CommSrvs 5.30 1.40 6 4
Energy 10.85 1.34 13 11
Industrl 12.62 1.06 15 12
Technlgy 12.76 0.95 14 11
Defensive29.75 1.24
CnsmrDef 5.98 0.71 10 6
Hlthcare 20.87 1.90 21 15
Utilities 2.90 0.64 5 3
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© 2015Morningstar, Inc.All rights reserved. The information herein isnot representedorwarranted to be accurate, correct, complete or
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