(PUB) Investing 2016

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7 Morningstar FundInvestor June 2016
Data through May 31, 2016 FINRA members: For internal or institutional use only.
Vanguard Wellington™ Inv Ticker
VWELX
Yield
2.5%
Total Assets
$89,892 mil
Mstar Category
Allocation--50% to 70%
Equity
Benchmark 1: Morningstar Mod Tgt Risk TR USD
Benchmark 2: Morningstar Mod Tgt Risk TR USD
Morningstar Analyst Rating 05-13-16
Œ
Morningstar Pillars
Process ∞ Positive
Performance ∞ Positive
People ∞ Positive
Parent ∞ Positive
Price ∞ 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 „ ´ ‰ Á
Pillar Spectrum
∞ Positive § Negative ¶ Neutral
10.0
12.5
15.0
17.5
20.0
Historical Profile
Return
Risk
Rating
High
Average
QQQQQ
Highest
1 1 1 1 4 1 1 1 Investment Style
Equity
Growth of $10,000
Investment Values of
Fund
Investment Values of
Benchmark 1
& & & ( ( & * & & & & Performance Quartile
(within Category)
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 05-16 History
32.44 32.62 24.43 28.85 31.10 31.34 33.84 37.94 39.15 36.79 38.10 NAV
14.97 8.34 -22.30 22.20 10.94 3.85 12.57 19.66 9.82 0.06 4.20 Total Return %
2.02 -0.30 -0.10 0.42 -1.40 3.26 0.53 5.36 4.93 1.85 0.47 +/- Bmark 1
2.02 -0.30 -0.10 0.42 -1.40 3.26 0.53 5.36 4.93 1.85 0.47 +/- Bmark 2
3.27 3.37 3.22 3.73 2.98 3.07 3.11 2.83 2.66 2.59 0.62 Income Return %
11.70 4.97 -25.52 18.47 7.95 0.78 9.47 16.84 7.17 -2.53 3.58 Capital Return %
8 22 13 62 69 7 38 22 11 17 15 Total Rtn % Rank Cat
0.98 1.08 1.04 0.90 0.85 0.94 0.96 0.95 1.00 1.00 0.23 Income $
1.40 1.42 0.00 0.00 0.00 0.00 0.44 1.54 1.50 1.39 0.00 Capital Gains $
0.30 0.27 0.29 0.34 0.30 0.27 0.25 0.26 0.26 0.26 . Expense Ratio %
3.10 3.14 3.44 3.59 2.97 2.95 2.91 2.61 2.54 2.55 . Income Ratio %
25 23 30 28 35 38 31 35 71 39 . Turnover Rate %
29,675 30,979 23,233 28,290 26,691 25,506 26,746 26,920 23,377 19,330 19,504 Net Assets $mil
Performance 05-31-16
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total
2012 7.55 -0.97 4.69 0.96 12.57
2013 7.05 1.55 3.55 6.30 19.66
2014 2.36 4.00 0.02 3.14 9.82
2015 0.85 -0.54 -4.12 4.04 0.06
2016 1.91 — — — —
Trailing Total
Return%
+/- Bmark
1
+/- Bmark
2
%Rank
Cat
Growth of
$10,000
3 Mo 7.44 0.82 0.82 13 10,744
6 Mo 2.74 0.44 0.45 13 10,274
1 Yr 1.93 2.69 2.69 6 10,193
3 Yr Avg 7.53 2.82 2.82 6 12,434
5 Yr Avg 8.50 3.12 3.12 5 15,038
10 Yr Avg 7.33 1.65 1.65 4 20,294
15 Yr Avg 7.06 1.02 1.30 4 27,834
Tax Analysis Tax Adj Rtn% %Rank Cat Tax-Cost Rat %Rank Cat
3 Yr (estimated) 5.49 12 1.90 73
5 Yr (estimated) 6.91 9 1.47 73
10 Yr (estimated) 5.96 5 1.28 68
Potential Capital Gain Exposure: 22% of assets
Rating and Risk
Time
Period
Load-Adj
Return %
Morningstar
Rtn vs Cat
Morningstar
Risk vs Cat
Morningstar
Risk-Adj Rating
1 Yr 1.93
3 Yr 7.53 High Avg QQQQQ
5 Yr 8.50 High Avg QQQQQ
10 Yr 7.33 High -Avg QQQQQ
Incept 8.19
Other Measures Standard Index Best Fit Index
Alpha 2.6 0.2
Beta 1.03 0.66
R-Squared 93 96
Standard Deviation 7.58
Mean 7.53
Sharpe Ratio 0.99
Portfolio Analysis 03-31-16
Total Stocks: 93
Share change since 12-31-15 Sector YTD Ret % % Assets
TWells Fargo & Co Finan Svcs -5.31 2.31
YMicrosoft Corp Technology -3.17 2.19
TMerck & Co Inc Hlth Care 7.38 1.96
YVerizon Communications In Comm Svcs 12.57 1.86
TComcast Corp Class A Comm Svcs 13.10 1.85
YAlphabet Inc A Technology -3.75 1.60
TChevron Corp Energy 14.65 1.60
TJPMorgan Chase & Co Finan Svcs 0.18 1.52
YChubb Ltd Finan Svcs — 1.44
Total Fixed Income: 1164
Date of
Maturity Amount 000
Value
$000
%
Assets
US Treasury Note 1.75% 09-30-19 950,000 974,786 1.11
US Treasury Note 1.375% 09-30-18 874,350 886,923 1.01
Equity Style
Style: Value
Size: Large-Cap
Fixed-Income Style
Duration: Extensive
Quality: Medium
Value Measures Rel Category
Price/Earnings 16.07 0.94
Price/Book 2.10 0.98
Price/Sales 1.60 1.06
Price/Cash Flow 8.71 1.06
Dividend Yield % 2.91 1.08
Growth Measures % Rel Category
Long-Term Erngs 8.89 0.94
Book Value 3.39 1.32
Sales -0.79 0.65
Cash Flow -2.51 -10.84
Historical Erngs 2.69 -1.21
Market Cap %
Giant 65.3 Small 0.0
Large 32.5 Micro 0.0
Mid 2.2 Avg $mil: 98,481
Composition - Net
Cash 1.0
Stocks 65.5
Bonds 33.0
Other 0.5
Foreign 11.9
(% of Stock)
Avg Eff Duration1 6.6 Yrs
Avg Eff Maturity 9.8 Yrs
Avg Credit Quality A
Avg Wtd Coupon 3.67%
1 figure provided by fund as of 03-31-16
Sector
Weightings
% of
Stocks
Rel
Bmark 1
h Cyclical 27.97 0.72
r BasicMat 0.70 0.14
t CnsmrCyc 5.39 0.46
y FinanSvcs 21.58 1.28
u Real Est 0.30 0.06
j Sensitive 40.40 1.12
i CommSrvs 6.44 1.75
o Energy 9.03 1.36
p Industrl 11.72 0.96
a Technlgy 13.21 0.97
k Defensive 31.62 1.27
s CnsmrDef 7.98 0.84
d Hlthcare 19.55 1.77
f Utilities 4.09 0.94
Morningstar's Take by Alec Lucas 05-13-16
Vanguard Wellington’s resilience supports its
Morningstar Analyst Rating of Gold.
The fund often proves its mettle in equity market
downturns, as it did in early 2016. It started the year near
its base 65% stock weighting, which then ranked in the
allocation--50% to 70% equity Morningstar Category’s
top decile. It also had a tiny cash cushion. Nonetheless,
the fund’s 5.2% year-to-date loss through Feb. 11 was 3
percentage points less than the category norm.
The equity portfolio’s tilt toward competitively
advantageddividend-payerspreservescapitalbetterthan
most. Buying the companies when they’re out of favor
helps, too. Equity manager Edward Bousa built most of
the fund’s position in current top-holding Wells Fargo
WFC after the firm slashed its quarterly dividend in the
depths of the 2007-09 financial crisis. The firm has grown
its payout nearly eightfold since and has a wide
Morningstar Economic Moat Rating because of its large
depositor base and diverse range of fee-generating
businesses. In late 2015, that stock was part of the fund’s
58.8% combined stake in wide or narrow moat
companies, which was among the category’s highest.
The fund’s opportunism extends to its mix between
stocks and bonds. While Bousa and fixed-income
manager John Keogh eschew big tactical shifts, they try
to take advantage of the market’s fluctuations. Keogh
routinely keeps a mid- to upper-teens stake of the fixed-
income portfolio in liquid securities, like Treasuries, to
provide funds for Bousa to buy stocks when they drop, as
happened in early 2016.
Management’s coordinated approach has produced
strong performance in varied market conditions. The fund
had a top-quartile 19.7% gain in 2013’s rally and stayed
flat amid considerable turbulence in 2015, which placed
in the topquintile.That's led to the fund'sstellar long-term
record versus its peers.
The bond portfolio’s above-average duration could
dull short-term results if interest rates surge. The fund’s
massive asset base also poses a challenge. But its
strengths make it one of the category’s best options.
Address: Vanguard Wellington Fund Minimum Purchase: $3000 Add: $1 IRA: —
Valley Forge PA 19482 Min Auto Inv Plan: — Add: —
800-662-7447 Sales Fees: No-load
Web Address: Management Fee: 0.24%
Inception: 07-01-29 Actual Fees: Mgt:0.24% Dist:—
Advisor: Wellington Management Company LLP Expense Projections: 3Yr:$84 5Yr:$146 10Yr:$331
Subadvisor: None Income Distribution: Quarterly
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