(PUB) Morningstar FundInvestor
September 2 014
Morningstar FundInvestor
7
Data through August 31, 2014 Vanguard Windsor II Inv
Ticker
Status Yield Total Assets
Mstar Category
VWNFX Open
2.1% $50,755 mil
Large Value
Morningstar Analyst Rating 08-12-14
Investment Style Equity Stock %
Historical Profile Return Risk Rating Average Average Neutral
97% 97% 96% 95% 98% 98% 97% 97% 98%
„
Manager Change Partial Manager Change
14.0 18.0 22.0 26.8
Morningstar Pillars Process Performance
Growth of $10,000
¶ ∞ ∞ ∞
Positive Neutral Positive Positive Positive
Investment Values of Fund Investment Values of S&P 500
People Parent Price
10.0
∞
Performance Quartile (within Category) History
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 08-14
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 ¨
26.49 30.08
30.73 18.31
31.33 7.01 2.10 -0.04 2.19 4.82
34.75 18.25 2.46 -4.00 2.57 15.68
31.26
19.11
23.68 27.05
25.67 10.62 -4.44 -4.89
25.78
29.38 16.72 0.72 -0.79 2.65 14.07
36.77 30.69 -1.70 -1.84
39.68 9.15 -0.74 -1.20 1.23 7.92
NAV
-36.70 2.23
2.70 0.59 2.31 2.33 0.37 0.59 0.00 0.35 2.11 24
Total Return %
1.40 0.05 2.56
7.43 1.82 2.20
-3.26 2.40 2.34
0.30 0.15 2.45
0.59 7.36 2.81
+/-S&P 500
+/-Russ 1000 Vl Income Return % Capital Return %
2.06 8.56 0.49 0.00 0.35 2.08 88
2.51
27.52
16.11
-39.15 -0.11
24.24
28.18
33
7
34
50
47
53
28
25
59
44
Total Rtn % Rank Cat
Pillar Spectrum Positive ∞
0.53 0.00 0.43 2.31
0.58 0.00 0.37 2.07
0.67 0.88 0.35 2.14
0.80 1.44 0.33 2.28
0.81 3.45 0.32 2.19
0.76 0.00 0.32 2.66
0.53 0.00 0.38 2.96
0.68 0.00 0.35 2.30
0.73 0.80 0.36 2.25
0.45 0.00
Income $
§ Negative
¶ Neutral
Capital Gains $ Expense Ratio % Income Ratio % Turnover Rate % Net Assets $mil
. . .
Performance 08-31-14 1st Qtr 2nd Qtr
3rd Qtr
4th Qtr
Total
28 . .
34
51
37
41
29
23
22
27
2010 2011 2012 2013 2014
5.91 -13.79 10.33 9.80 10.62 6.51 0.37 -14.84 12.81 2.70 12.37 -2.89 5.68 1.21 16.72 10.31 4.03 3.99 9.51 30.69 2.88 4.57 . . .
17,939 18,061 17,893 18,387 20,504 22,005 18,229 30,925 31,569 29,064 29,016 22,766
Portfolio Analysis 06-30-14 Share change since 03-14 Total Stocks:254 Sector
Rating and Risk Time Load-Adj
PE Tot Ret% % Assets
Morningstar
Morningstar Risk vs Cat
Morningstar Risk-Adj Rating
Period Return % Rtn vs Cat
Microsoft Corp
Technology 17.3 16.87 2.71 Hlth care 18.5 -3.75 2.60 Finan Svs 15.3 0.60 2.60 Finan Svs 12.7 13.55 2.49 Hlth care 21.1 8.60 2.31 Technology 17.3 32.31 2.30 . . . Hlth care 19.2 10.77 2.23 Finan Svs 17.0 -2.22 2.18 2.25
1 Yr 3 Yr 5 Yr
22.47 20.50 15.76
Trailing
Total
+/-
+/- Russ %Rank Growth of
Pfizer Inc
Return% S&P 500 1000 Vl
Cat
$10,000
+Avg
Avg Avg Avg
JPMorgan Chase & Co Wells Fargo & Co
3 Mo 6 Mo 1 Yr
3.34 -1.35 8.21 -0.63 22.47 -2.78 20.50 -0.11 15.76 -1.12 8.21 -0.17 6.62 1.84
-1.23 -1.46 -1.96 -1.07 -0.86 -0.02 0.07
73 10,334 52 10,821 47 12,247 32 17,497 31 20,787 32 22,013 41 26,157
Avg Avg
10 Yr Incept
8.21
Medtronic Inc
11.14
Intel Corp
3 Yr Avg 5 Yr Avg 10 Yr Avg 15 Yr Avg
CMT Market Liquidity Rat Johnson & Johnson American Express Co Philip Morris Internatio
Other Measures
Standard Index
Best Fit Index Russ 1000 Vl
S&P 500
Alpha
0.3
0.2
Cnsmr Def 16.9
2.16
.
Beta
0.98
0.94
Citigroup Inc ConocoPhillips Sanofi ADR WellPoint Inc
Finan Svs 16.8 -6.08 2.03
R-Squared
97
98
Tax Analysis Tax-Adj Rtn% %Rank Cat Tax-Cost Rat %Rank Cat 3 Yr (estimated) 5 Yr (estimated) 10 Yr (estimated) 19.60 27 0.75 51 15.10 24 0.57 46 7.39 26 0.76 38 Potential Capital Gain Exposure: 37% of assets Morningstar’s Take by Alec Lucas 08-12-14 Vanguard Windsor II is hoping less is more. The March 2014 dismissal of Armstrong Shaw for poor performance arguably makes this fund more aggressive. That’s because Hotchkis & Wiley absorbed Armstrong’s 4% sleeve, allotting it 11% of assets, roughly double the percentage Hotchkis managed from 2004-12. By buying shares of troubled firms when their earnings look anemic and valuations low relative to their potential, the firm takes a deep-value approach to investing. Since its late August 2004 inception, Hotchkis & Wiley Diversified Value HWCAX, which is a clone of the firm’s strategy here, has often finished in the large-value category’s top or bottom decile. That’s made it one of the category’s most volatile offerings, and one-fourth more volatile than this fund based on 10-year standard deviation. Its 6.5% annualized gain since inception through Aug. 8, 2014, lags the Russell 1000 Value Index by 1.4 percentage points. That underperformance must be put in context, however. It includes a disastrous credit-crisis showing, thanks to stocks like Freddie Mac FMCC, and 0.85
Energy
12.5 19.76 2.02
Standard Deviation
11.51 20.50
Hlth care 26.7 1.02 1.99 Hlth care 14.5 19.80 1.98
Mean
PNC Financial Services G Wal-Mart Stores Inc General Dynamics Corp Oracle Corporation Bank of America Corporat Occidental Petroleum Cor
Finan Svs 11.4
1.96
.
Sharpe Ratio
1.68
Cnsmr Def 15.7 -5.27 1.77
Industrl
17.1 24.09 1.75
Technology 17.4 6.51 1.71 Finan Svs 25.6 -1.93 1.71
percentage points of annualized underperformance would be erased if the offering had sported this fund’s rock-bottom expense ratio. Plus, Hotchkis’ five-year return ranks ahead of the index’s and lands in the category’s top quartile. The increased allotment to Hotchkis may lead to an uptick in volatility, but it does not change the case for this fund. That rests on veteran manager James Barrow, aided by the tailwind of low fees. Barrow has capably overseen his firm’s portion, now roughly 60% of assets, since the fund’s mid-1985 inception. The problem has been finding the right mix to complement Barrow. With the latest change, Vanguard has now added two subadvisors and removed three in the past 10 years, leaving the fund with five subadvisors currently. Nevertheless, the fund has succeeded despite these disruptions with an 8% annualized gain during that time, which ranks near the category’s top third, although it modestly lags the index. Time will tell whether the fund’s more-aggressive profile will help its long-term record versus its bogy.
Energy
13.6 4.26 1.67
Current Investment Style
Sector Weightings
% of Stocks
Rel S&P 500 High
3 Year Low
Market Cap % Giant 54.1 Large 33.2 Mid 12.0 Small 0.7 Micro 0.0 Avg $mil: 64,593
Value Blnd Growth
Large Mid Small
Cyclical 30.62 1.06 BasicMat 1.19 0.39 2 1 CnsmrCyc 7.58 0.88 8 5 FinanSvs 21.55 1.37 22 19 Real Est 0.30 0.21 1 0 Sensitive 36.81 0.84 CommSrvs 3.32 0.83 5 3 Energy 12.17 1.14 14 12 Industrl 8.71 0.77 13 9 Technlgy 12.61 0.72 13 8 Defensive32.56 1.18 CnsmrDef11.24 0.92 13 11 Hlthcare 17.16 1.45 18 14 Utilities 4.16 1.15 5 4
h r t y u j i o p a k s d f
Value Measures Price/Earnings Price/Book Price/Sales Price/Cash Flow Dividend Yield % Long-Term Erngs Book Value Sales Cash Flow Historical Erngs Growth Measures
Rel Category
14.23 1.80 1.25 5.32 2.85
1.08 1.06 1.08 0.88 1.04 0.96 1.25 1.32 1.08 2.13
% Rel Category
8.43 6.46 1.97 5.96 7.42
Composition - Net
Cash 2.3 Stocks 97.7 Bonds 0.0 Other 0.1 Foreign 11.5
Address:
Po Box 2600 Valley Forge, PA 19482 800-662-7447 www.vanguard.com
Minimum Purchase: Min Auto Inv Plan:
$3000
Add: $100 IRA: $3000
$0
Add: .
Profitability
% Rel Category
Sales Fees:
No-load 0.34%
Return on Equity Return on Assets Net Margin
19.05 6.81 15.07
1.17 1.13 1.26
Web Address: Inception: Advisor: Subadvisor: NTF Plans:
Management Fee:
(% of Stock)
06-24-85
Actual Fees:
Mgt:0.34% Dist: .
Sanders Capital, LLC
Expense Projections: Income Distribution:
3Yr:$116
5Yr:$202 10Yr:$456
None
Semi-Annually
Vanguard NTF
Mutual Funds ß ®
© 2014Morningstar, Inc.All rights reserved. The information herein isnot representedorwarranted tobe accurate, correct, completeor timely.Pastperformance isnoguaranteeof future results.Accessupdated reports at To order reprints, call 312-696-6100. mfb.morningstar.com.
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