(PUB) Investing 2016

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7 Morningstar FundInvestor October 2016
Data through September 30, 2016 FINRA members: For internal or institutional use only.
Vanguard Tax-Managed Capital App Adm Ticker
VTCLX
Yield
1.7%
Total Assets
$7,075 mil
Mstar Category
Large Blend
Benchmark 1: Russell 1000 TR USD
Benchmark 2: S&P 500 TR USD
Morningstar Analyst Rating 09-22-16
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
15.0
20.0
Historical Profile
Return
Risk
Rating
Above Avg
Average
QQQQ
Above Avg
4 4 4 4 4 4 4 4 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 09-16 History
67.68 70.70 43.04 54.72 62.56 62.36 71.17 93.70 103.82 103.75 110.10 NAV
14.44 6.11 -37.58 29.11 16.02 1.38 16.35 33.67 12.52 1.68 7.53 Total Return %
-1.02 0.33 0.02 0.68 -0.08 -0.12 -0.07 0.56 -0.72 0.76 -0.39 +/- Bmark 1
-1.35 0.61 -0.58 2.65 0.95 -0.73 0.35 1.28 -1.17 0.29 -0.31 +/- Bmark 2
1.65 1.65 1.48 1.97 1.69 1.71 2.21 2.00 1.72 1.69 1.35 Income Return %
12.79 4.45 -39.06 27.14 14.33 -0.33 14.14 31.67 10.79 -0.02 6.18 Capital Return %
49 43 51 37 19 27 28 29 37 18 28 Total Rtn % Rank Cat
0.99 1.12 1.04 0.85 0.92 1.07 1.38 1.42 1.62 1.75 1.39 Income $
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Capital Gains $
0.10 0.09 0.10 0.15 0.12 0.12 0.12 0.12 0.12 0.11 0.11 Expense Ratio %
1.56 1.57 1.72 1.80 1.59 1.65 1.96 1.71 1.66 1.69 1.86 Income Ratio %
5 5 8 26 7 2 3 4 6 10 . Turnover Rate %
2,941 3,283 2,045 2,526 2,860 3,305 3,702 5,040 5,760 5,982 6,478 Net Assets $mil
Performance 09-30-16
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total
2012 12.96 -3.28 6.28 0.20 16.35
2013 10.84 2.73 6.22 10.51 33.67
2014 2.13 5.02 0.35 4.54 12.52
2015 1.92 0.44 -6.84 6.61 1.68
2016 0.88 2.47 4.03 — —
Trailing Total
Return%
+/- Bmark
1
+/- Bmark
2
%Rank
Cat
Growth of
$10,000
3 Mo 4.03 0.00 0.17 42 10,403
6 Mo 6.59 -0.08 0.19 28 10,659
1 Yr 14.63 -0.30 -0.80 27 11,463
3 Yr Avg 10.78 0.00 -0.38 12 13,595
5 Yr Avg 16.47 0.06 0.10 9 21,436
10 Yr Avg 7.47 0.07 0.23 14 20,547
15 Yr Avg — — — — —
Tax Analysis Tax Adj Rtn% %Rank Cat Tax-Cost Rat %Rank Cat
3 Yr (estimated) 10.00 7 0.70 25
5 Yr (estimated) 15.86 5 0.53 22
10 Yr (estimated) 7.05 6 0.39 11
Potential Capital Gain Exposure: 50% of assets
Rating and Risk
Time
Period
Load-Adj
Return %
Morningstar
Rtn vs Cat
Morningstar
Risk vs Cat
Morningstar
Risk-Adj Rating
1 Yr 14.63
3 Yr 10.78 +Avg Avg QQQQ
5 Yr 16.47 High Avg QQQQQ
10 Yr 7.47 +Avg Avg QQQQ
Incept 7.13
Other Measures Standard Index Best Fit Index
Alpha -0.5 -0.1
Beta 1.01 1.01
R-Squared 99 100
Standard Deviation 11.01
Mean 10.78
Sharpe Ratio 0.98
Portfolio Analysis 08-31-16
Total Stocks: 954
Share change since 07-31-16 Sector YTD Ret % % Assets
Apple Inc Technology 8.98 2.76
Microsoft Corp Technology 5.77 2.02
Exxon Mobil Corp Energy 14.83 1.69
Johnson & Johnson Hlth Care 17.29 1.51
Amazon.com Inc Cnsmr Cyc 23.88 1.42
Berkshire Hathaway Inc B Finan Svcs 9.41 1.35
Facebook Inc A Technology 22.56 1.33
General Electric Co Industrl -2.70 1.25
Alphabet Inc A Technology 3.35 1.10
Alphabet Inc C Technology — 1.10
Procter & Gamble Co Cnsmr Def 15.54 1.08
JPMorgan Chase & Co Finan Svcs 2.91 1.06
TAT&T Inc Comm Svcs 22.20 1.05
Wells Fargo & Co Finan Svcs -16.46 1.04
Chevron Corp Energy 17.97 0.92
Pfizer Inc Hlth Care 7.71 0.92
TVerizon Communications In Comm Svcs 16.13 0.87
The Home Depot Inc Cnsmr Cyc -1.13 0.84
Visa Inc Class A Finan Svcs 7.18 0.79
Walt Disney Co Cnsmr Cyc -10.95 0.78
Current Investment Style
Large Mid Small
Value Blend Growth Market Cap %
Giant 43.2
Large 32.1
Mid 22.9
Small 1.8
Micro 0.0
Avg $mil:
54,334
Value Measures Rel Category
Price/Earnings 19.48 1.07
Price/Book 2.65 1.04
Price/Sales 1.76 1.06
Price/Cash Flow 10.27 1.07
Dividend Yield % 2.02 0.88
Growth Measures % Rel Category
Long-Term Erngs 8.88 0.98
Book Value 3.36 1.06
Sales 2.20 1.03
Cash Flow 3.30 0.88
Historical Erngs 6.03 1.02
Profitability %
Return on Equity 20.34
Return on Assets 6.53
Net Margin 12.55
Sector
Weightings
% of
Stocks
Rel
Bmark 1
h Cyclical 33.18 1.03
r BasicMat 3.04 1.02
t CnsmrCyc 12.29 1.05
y FinanSvcs 14.35 1.03
u Real Est 3.50 0.96
j Sensitive 39.94 0.97
i CommSrvs 4.04 0.95
o Energy 6.80 0.97
p Industrl 11.20 1.00
a Technlgy 17.90 0.97
k Defensive 26.88 1.00
s CnsmrDef 9.19 0.98
d Hlthcare 14.49 1.02
f Utilities 3.20 0.99
Composition - Net
Cash 0.1
Stocks 99.9
Bonds 0.0
Other 0.0
Foreign 0.3
(% of Stock)
Morningstar's Take by Adam McCullough 09-22-16
Vanguard Tax-Managed Capital Appreciation offers tax-
efficient exposure to large- and mid-cap U.S. stocks. The
combination of low fees, broad diversification, and
effective tax management underpin its Morningstar
Analyst Rating of Gold.
The fund has two competing mandates: to efficiently
track the Russell 1000 Index and minimize the tax
consequences. To manage taxes, managers Donald
Butler and William Coleman underweight higher-
dividend-paying stocks and harvest capital losses to
offset realized capital gains. As dividend payments are
taxed when they are distributed, a lower dividend yield
reduces investors’ tax bills. But this lower-yield tilt could
modestly hinder performance when dividend stocks are
in favor.
Although the managers have discretion around their
use of tax management strategies, they are constrained
by strict tracking-error limits to the Russell 1000 Index.
Consequently, the fund looks a lot like this benchmark,
though it does carry a lower dividend yield. This is as far
as the fund strays from the index. The fund’s sector
allocations have been consistently within plus or minus
1% of the benchmark’s. Individual stock weightings do
not tend to deviate significantly from the benchmark.
So far, the fund has delivered on both mandates. It
has not distributed a capital gain since its inception. Its
post-tax returns rank in the top decile of the large-blend
Morningstar Category during three-, five-, and 10-year
trailing periods through August 2016. At the same time,
it has kept tracking error very low.
The fund’s tax-loss harvesting strategy may not be
able to completely offset capital gains if it experiences
large net outflows after a market runup, as managers
must sell positions to meet redemptions. That said, the
fund experienced rolling 12-month net outflows from
March 2009 to May 2013 but avoided distributing capital
gains.
Address: Vanguard Tax-managed Funds Minimum Purchase: $10000 Add: $1 IRA: —
Valley Forge, PA 19482 Min Auto Inv Plan: — Add: —
800-662-7447 Sales Fees: No-load
Web Address: Management Fee: 0.10%
Inception: 11-12-01 Actual Fees: Mgt:0.10% Dist:—
Advisor: Vanguard Group Inc Expense Projections: 3Yr:$35 5Yr:$62 10Yr:$141
Subadvisor: None Income Distribution: None
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