(PUB) Morningstar FundInvestor
7
Morningstar FundInvestor
July 2 013
Data through June 30, 2013 Vanguard Wellesley Income Inv
Ticker
Status Yield Total Assets
Mstar Category
VWINX Open
3.0% $35,058 mil
Conservative Allocation
Morningstar Analyst Rating 06-06-13
Investment Style Equity Stock %
Historical Profile Return Risk Rating High Below Avg Highest
37% 39% 36% 36% 39% 37% 37% 38% 39%
Œ
Manager Change Partial Manager Change
10.0 12.5 15.0 18.0 20.5
Morningstar Pillars Process Performance
Growth of $10,000
Positive Positive Positive Positive Positive
Investment Values of Fund Investment Values of M* MdTgRk
People Parent Price
NAV Total Return % +/-M* MdTgRk +/-Mstr Md Cn Rk Income Return % Capital Return % Total Rtn % Rank Cat Performance Quartile (within Category) History
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 06-13
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 ¨
19.90
20.91
21.58 7.57 -3.91 -1.38 4.08 3.49
21.07 3.48 -3.56 -1.45 4.08 -0.60
21.81 11.28 -1.67
21.82 5.61 -3.02 -2.40 4.38
18.40 -9.84 12.35
20.37 16.02 -5.75
21.70 10.65 -1.68
22.93
24.11 10.06 -1.98
24.57 3.44 -1.12 1.05 1.54 1.90
4.64
9.66
9.63 9.04 7.03 3.84 5.79 0.82 0.00 0.25 3.76 2
-12.82 11.33
5.83 4.65 -0.01 0.91 0.00 0.30 4.72 9
-6.33 4.44 5.22 0.87 0.00 0.31 4.33 72
1.56 4.42 6.86 0.92 0.67 0.25 4.21 10
3.22 4.60
0.71 4.93
1.00 4.00 6.65 0.80 0.00 0.28 3.99 40
0.40 3.39 6.67 0.77 0.34 0.25 3.39 44
-14.44 1.23
11.09
20
46
34
10
79
18
Pillar Spectrum Positive
0.84 0.04 0.26 4.06
0.87 0.38 0.24 3.98
0.94 0.26 0.25 4.21
0.99 0.32 0.25 4.60
0.89 0.00 0.31 5.00
0.37 0.00
Income $
§ Negative
¶ Neutral
Capital Gains $ Expense Ratio % Income Ratio % Turnover Rate % Net Assets $mil
. . .
Performance 06-30-13 1st Qtr 2nd Qtr
3rd Qtr
4th Qtr
Total
43
28
23
18
19
21
27
53
30
48
33
2009 2010 2011 2012 2013
-6.69 9.44 10.15 3.14 16.02 2.79 -1.06 7.20 1.49 10.65 2.68 2.34 -1.68 6.11 9.63 3.66 1.48 3.88 0.72 10.06 3.99 -0.53 . . .
7,484
8,439
9,268
7,614
7,743
7,941
6,876
8,478
12,178 11,647 10,279 8,323
Rating and Risk Time Load-Adj
Portfolio Analysis 03-31-13 Total Stocks:64
Morningstar
Morningstar Risk vs Cat
Morningstar Risk-Adj Rating
P/E
YTD % Net
Period Return % Rtn vs Cat
Share change since 12-31-12
Sectors
Ratio Return % Assets 18.1 25.31 1.89 8.1 11.94 1.73 20.4 15.80 1.44 16.2 18.25 1.41 19.9 12.36 1.20 8.4 22.31 1.16 15.1 10.00 1.10 . . 1.27
1 Yr 3 Yr 5 Yr
8.23
Trailing
Total
+/- M* +/- Mstr
%Rank Growth of
Johnson & Johnson
Hlth care
Return% MdTgRk Md Cn Rk
Cat
$10,000
10.74
High High High
-Avg -Avg -Avg
Chevron Corp Merck & Co Inc
Energy
3 Mo 6 Mo 1 Yr
-0.53 0.01 3.44 -1.12 8.23 -2.87 10.74 -0.08 8.63 2.99 6.90 -0.59
0.41 1.05 1.00 2.33 3.32 0.52
15 9,947 18 10,344 29 10,823 12 13,580 3 15,127 8 19,488 7 27,206
8.63 6.90
Hlth care
10 Yr Incept
Marsh & McLennan Companie Finan Svs
10.09
Royal Dutch Shell PLC Cla
Energy
3 Yr Avg 5 Yr Avg 10 Yr Avg 15 Yr Avg
Pfizer Inc
Hlth care Finan Svs
Other Measures
Standard Index Best Fit Index M* MdTgRk Mstr Lft Mod 2010
JPMorgan Chase & Co General Electric Co Eaton Corporation PLC Total Fixed-Income:1434 US Treasury Note 0.25% US Treasury Bond 2.75% US Treasury Note 1.5% US Treasury Note 0.25% US Treasury Note 0.125% US Treasury Note 0.75% General Elec Cap Corp Mtn Ally Mstr Ownr Tr 2012-5 General Elec Cap Corp Mtn
Industrl
Alpha
5.7
4.7
6.90
. .
Technology 15.7 23.44 1.06 Date of Amount Value % Net
Beta
0.43
0.58
R-Squared
68
75
Tax Analysis Tax-Adj Rtn% %Rank Cat Tax-Cost Rat %Rank Cat 3 Yr (estimated) 5 Yr (estimated) 10 Yr (estimated) 9.57 6 1.05 65 7.33 3 1.20 68 5.52 7 1.30 78 Potential Capital Gain Exposure: 14% of assets Morningstar’s Take by Kevin McDevitt, CFA 06-06-13 There’s only so much Vanguard Wellesley Income can do to protect its Achilles heel. This fund held up a bit better than expected during the latest stress test. Interest rates shot up in May 2013, hitting the fund where its defenses are lowest. The 10-year Treasury’s yield spiked 52 basis points for the month to 2.16%. Given that the fund’s 6.4-year duration is among the longest in the conservative-allocation category, one might have expected it to get hit the hardest. But the fund’s 0.9% loss for the month was slightly better than the category average’s 1% drop. But investors shouldn’t take too much comfort in these results. That’s because as rate spikes go, this one was mild. The fund’s results during the more severe yield hike in 2010-11 are more instructive. From October 2010 through January 2011, the 10-year Treasury yield rose nearly 1.3 percentage points to 3.65%. The fund lagged its average rival by nearly 2.4 percentage points during that stretch. Then as now, the fund’s returns were bolstered somewhat by its
Maturity
$000
$000 Assets
Standard Deviation
4.79
616,025 616,315 1.80 596,100 553,723 1.62 278,000 278,131 0.81 268,500 268,038 0.78 120,000 120,376 0.35
Mean
10.74
Sharpe Ratio
2.14
06-30-16 341,500 353,507 1.03
01-14-38 85,695 99,375 0.29 09-15-19 95,780 96,186 0.28 03-15-32 75,000 95,252 0.28
overweighting in equities. The fund’s equity weighting typically stays close to its current 39% versus 33% for the category average. Fixed-income manager John Keogh is trying to reduce the fund’s rate risk, but there’s only so much he can do. That’s because he keeps duration within a year of the Barclays U.S. Credit A Index. That index has a long average duration of 7.1 years. The Barclays U.S. Aggregate Index, by comparison, has a duration of just 5.3 years. That longer duration owes to high-quality companies refinancing debt in recent years and pushing out their maturities. This, in turn, has extended the duration of the Barclays U.S. Credit A Index. As a result, even though the fund’s current duration is nearly a year shorter than the index, its duration has lengthened along with the index from 5.2 years in early 2010. This doesn’t diminish the fund’s appeal as an excellent core holding, but investors shouldn’t necessarily expect it to repeat its superb past performance in all bear markets.
Equity Style
Fixed-Income Style Duration: Extensive Quality: Medium Avg Eff Duration Avg Eff Maturity Avg Credit Quality Avg Wtd Coupon 1
Style: Value Size: Large-Cap Value Measures Price/Earnings Price/Book Price/Sales Price/Cash Flow Dividend Yield % Growth Measures Long-Term Erngs Book Value Sales Cash Flow Historical Erngs
6.4 Yrs 9.4 Yrs
Rel Category
13.62 2.17 1.44 8.24 3.45
0.93 1.17 1.04 1.19 1.24 0.77 3.11 0.38 1.35 1.89
A
4.18%
figure provided by fund as of 03-31-13 1
Sector Weightings
% of Stocks
Rel M* MdTgRk High
3 Year Low
% Rel Category
7.24 5.78 1.43 3.46 4.98
Cyclical 22.65 0.58 BasicMat 3.26 0.57 4 3 CnsmrCyc 5.31 0.45 8 2 FinanSvs 14.08 0.81 14 9 Real Est 0.00 0.00 0 0 Sensitive 42.48 1.12 CommSrvs 4.27 1.07 5 4 Energy 12.29 1.34 14 12 Industrl 12.78 1.08 17 13 Technlgy 13.14 1.01 13 6 Defensive34.86 1.52 CnsmrDef14.59 1.67 21 15 Hlthcare 14.38 1.41 15 12 Utilities 5.89 1.48 7 5
h r t y u j i o p a k s d f
Market Cap % Giant 60.3 Large 36.9 Mid 2.8
Small Micro
0.0 0.0
Avg $mil:
71,171
Address:
Po Box 2600 Valley Forge, PA 19482 800-662-7447 www.vanguard.com
Minimum Purchase: Min Auto Inv Plan:
$3000
Add: $100 IRA: $0
Composition - Net
$0
Add: .
Cash 1.2 Stocks 39.0 Bonds 58.6 Other 1.2 Foreign 19.4
Sales Fees:
No-load 0.22% 3Yr:$80 Quarterly
Web Address: Inception: Advisor: Subadvisor: NTF Plans:
Management Fee:
07-01-70
Actual Fees:
Mgt:0.22% Dist: .
Wellington Management Company, LLP
Expense Projections: Income Distribution:
5Yr:$141 10Yr:$318
None
(% of Stock)
Vanguard NTF
Mutual Funds ß ®
© 2013Morningstar, Inc.All rights reserved. The information herein isnot represented orwarranted to be accurate, correct, complete or timely. Pastperformance isnoguarantee of future results.Access updated reports at To order reprints, call 312-696-6100. mfb.morningstar.com.
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