(PUB) Investing 2016
7
February 2016
Morningstar FundInvestor
Data through January 31, 2016 FINRA members: For internal or institutional use only. Vanguard Wellesley® Income Inv
Ticker VWINX
Yield 3.0%
Total Assets $40,928 mil
Mstar Category Conservative Allocation
Benchmark 1: Morningstar Mod Con Tgt Risk TR USD Benchmark 2: Morningstar Mod Tgt Risk TR USD Morningstar Analyst Rating 01-06-16 Œ
Investment Style Equity
Historical Profile Return Risk Rating High Below Avg QQQQQ Highest
1 1 1 1 1 1 1 1
14.0 16.0 18.0 20.0
Growth of $10,000
Investment Values of Fund Investment Values of Benchmark 1
Morningstar Pillars Process
∞ Positive ∞ Positive ∞ Positive ∞ Positive ∞ Positive
12.0
Performance
10.0
People Parent
Performance Quartile (within Category)
& * & ) * & * * & & & 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 01-16 21.81 21.82 18.40 20.37 21.70 22.93 24.11 24.85 25.57 24.52 24.47 11.28 5.61 -9.84 16.02 10.65 9.63 10.06 9.19 8.07 1.28 -0.20 1.56 -2.40 3.21 0.71 0.99 7.03 0.39 0.36 3.77 2.31 1.49 -1.67 -3.03 12.35 -5.75 -1.69 9.04 -1.99 -5.12 3.18 3.07 2.97 4.42 4.38 4.60 4.93 4.00 3.84 3.39 3.18 3.29 3.02 0.00 6.86 1.23 -14.44 11.10 6.65 5.79 6.67 6.00 4.78 -1.74 -0.20 0.92 0.94 0.99 0.89 0.80 0.82 0.77 0.76 0.81 0.76 0.00 0.67 0.26 0.32 0.00 0.00 0.00 0.34 0.68 0.45 0.61 0.00 0.25 0.25 0.25 0.31 0.28 0.25 0.25 0.25 0.25 0.23 . 4.21 4.21 4.60 5.00 3.99 3.76 3.39 3.03 3.19 2.96 . 10 34 10 79 40 2 44 32 6 2 2
Price
History
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
NAV
Total Return % +/- Bmark 1 +/- Bmark 2 Income Return % Capital Return % Capital Gains $ Expense Ratio % Income Ratio % Turnover Rate % Net Assets $mil Total Rtn % Rank Cat Income $
Pillar Spectrum ∞ Positive
§ Negative
¶ Neutral
Performance 01-31-16 1st Qtr 2nd Qtr
3rd Qtr
4th Qtr
Total
2011 2012 2013 2014 2015
2.68 2.34 -1.68 6.11 9.63 3.66 1.48 3.88 0.72 10.06 3.99 -0.53 1.76 3.73 9.19 2.63 3.21 -0.30 2.33 8.07 1.27 -1.68 -0.84 2.58 1.28
.
19
21
27
53
30
48
33
36
109
59
7,743 7,941 6,876 8,478 8,323 10,279 11,647 11,363 12,324 11,941 12,004
Rating and Risk Time Period Load-Adj Return %
Portfolio Analysis 09-30-15 Total Stocks: 58 Share change since 06-30-15
Morningstar Rtn vs Cat
Morningstar Risk vs Cat
Morningstar Risk-Adj Rating
Sector
YTD Ret % % Assets
Trailing
Total Return%
+/- Bmark 1
+/- Bmark 2
%Rank Cat
Growth of $10,000
T Microsoft Corp T Wells Fargo & Co
Technology Finan Svcs Finan Svcs
-0.70 1.64 -7.60 1.61 -9.22 1.36 -4.07 1.31 1.67 1.27 -0.13 1.19 -6.58 1.13 9.34 1.13
1 Yr 3 Yr 5 Yr
0.52 5.54 7.41 6.85 9.83
3 Mo 6 Mo
-0.99 2.06 3.92 0.27 3.93 6.50 0.52 3.09 4.71 5.54 2.80 2.07 7.41 3.15 2.50 6.85 2.11 1.85 6.79 1.70 1.52
2 9,901 1 10,027 1 10,052 2 11,755 2 14,296 1 19,405 2 26,779
Avg QQQQQ -Avg QQQQQ -Avg QQQQQ
High High High
T JPMorgan Chase & Co T Merck & Co Inc T Johnson & Johnson T Exxon Mobil Corporation
1 Yr
Hlth Care Hlth Care
10 Yr Incept
3 Yr Avg 5 Yr Avg 10 Yr Avg 15 Yr Avg
Energy Industrl
T General Electric Co
Other Measures
Standard Index
Best Fit Index
Y Verizon Communications In
Comm Svcs
Alpha
3.3
3.0
T Cisco Systems Inc
Technology -11.62 1.07
Beta
0.60
0.90
Tax Analysis
Tax Adj Rtn% %Rank Cat Tax-Cost Rat %Rank Cat
R-Squared
76
83
3 Yr (estimated) 5 Yr (estimated) 10 Yr (estimated)
3.62 5.79 5.29
4 2 1
1.81 1.51 1.46
79 78 79
Date of Maturity
Value $000
% Assets
Total Fixed Income: 1285
Amount 000
Standard Deviation
4.58 5.54 1.19
US Treasury Note 1.75% 09-30-19 US Treasury Note 1.375% 09-30-18
665,000 679,131 1.72 616,100 624,183 1.59 553,000 556,976 1.41 450,700 449,082 1.14 416,960 415,851 1.06 376,000 412,893 1.05 282,950 -306,735 0.78 298,000 298,140 0.76
Mean
Sharpe Ratio
Potential Capital Gain Exposure: 10% of assets
US Treasury Note 1% US Treasury Note 2%
09-15-17 02-15-25
Morningstar's Take by Alec Lucas 01-06-16 Vanguard Wellesley’s outperformance in 2015 epitomizes why it receives a Morningstar Analyst Rating of Gold. In a rough market, the fund's 1.3% gain doubled the return of its customized benchmark (weighted 65% in the Barclays U.S. Credit A or Better Index, 35% in the FTSE High Dividend Yield Index) and placed in the conservative-allocation Morningstar Category's top percentile. The fund's longer-term record is also superior. Since the shared tenure of fixed-income manager John Keogh and equity manager Michael Reckmeyer began in July 2008, the fund’s 7% annualized gain through December 2015 places second out of about 140 peers, while its Morningstar Risk-Adjusted Return places first. A conservative process has helped here. Reckmeyer invests the roughly 35% equity sleeve in above-average dividend-payers, likeCaterpillarCAT,whichhetriestobuy whenthey’reoutof favor.Meanwhile,Keoghtiltsthe65% bond portion toward corporates rated in the A range, which offer a better payout than more highly rated securities but still have little default risk. He eschews big interest-rate bets, but the fund usually sports a longer- than-average duration because he keeps interest-rate
US Treasury Bond 2.875% 05-15-43 US Treasury Bond 3.375% 05-15-44 Fed Natl Mort Assc 4.5% 10-15-43 US Treasury Note 0.625% 07-31-17
sensitivity close to the index's. In late 2015, that index had a 6.6-year duration versus 6.3 years for the fund. In contrast, the category median was 4.4 years. The Fed's late 2015 interest-rate increase of 25 basis points, even if the first of many, shouldn't impair the fund. Granted, it's not immune to interest-rate spikes. When the 10-year Treasury yield shot up about 130 basis points from mid- to late 2013, the fund's 2.7% loss modestly trailed the category norm. Over multiyear periods, however, the fund can still come out ahead. Between June 2004 and May 2007, the Fed raised rates by 25 basis points on 17 separate occasions, hiking the overnight lending rate from 1.00% to 5.25%. During that three-year stretch, the fund's 9% annualized gain beat the category norm by nearly 2 percentage points. Although it is more rate-sensitive than most peers, the fund's management and proven strategy inspire confidence for the long term.
Equity Style Style:
Fixed-Income Style Duration: Moderate Quality: Medium Avg Eff Duration 1 Avg Eff Maturity Avg Credit Quality Avg Wtd Coupon Sector Weightings h Cyclical r BasicMat t CnsmrCyc y FinanSvcs u Real Est j Sensitive i CommSrvs
Value
Size:
Large-Cap
6.4 Yrs 9.3 Yrs
Value Measures
Rel Category
Price/Earnings 16.89
0.98 1.05 1.15 1.03 1.23 0.86 1.54 -0.96 -1.16 -0.42
Price/Book Price/Sales
2.09 1.67
A
3.61% 1 figure provided by fund as of 09-30-15
Price/Cash Flow 8.57 Dividend Yield % 3.74
% of Stocks
Rel Bmark 1
Growth Measures
% Rel Category
Long-Term Erngs 8.19
21.12 0.56 2.78 0.64 3.22 0.28 15.12 0.88 0.00 0.00 41.52 1.13 4.32 1.10 11.26 1.75 11.35 0.95 14.59 1.01 37.35 1.44 13.54 1.38 14.48 1.22 9.33 2.24
Book Value
5.14 1.88 0.65
Sales
Cash Flow
Historical Erngs 1.54
Market Cap % Giant
69.0 Small
0.0 0.0
Large 28.8 Micro
o Energy p Industrl a Technlgy k Defensive s CnsmrDef d Hlthcare f Utilities
Mid
2.2 Avg $mil:
89,561
Composition - Net
Address:
Vanguard Wellesley Income Fund
Minimum Purchase: Min Auto Inv Plan:
$3000 $3000
Add: $1 IRA: —
Cash 2.0 Stocks 36.1 Bonds 61.4 Other 0.5 Foreign 16.5 (% of Stock)
Valley Forge PA 19482
Add: —
800-662-7447
Sales Fees:
No-load
Web Address:
www.vanguard.com
Management Fee:
0.21%
Inception:
07-01-70
Actual Fees:
Mgt:0.21% Dist:—
Advisor:
Wellington Management Company LLP
Expense Projections: Income Distribution:
3Yr:$74 5Yr:$130 10Yr:$293
Subadvisor:
None
Quarterly
A
ß ® Mutual Funds
©2016Morningstar, Inc.All rights reserved. The information herein is not represented orwarranted to be accurate, complete or timely. Past performance is no guarantee of future results.Access updated reports at www.morningstar.com . To order reprints, email reprints@morningstar.com
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