UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT
OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-00834
Name of Registrant: | Vanguard Windsor Funds |
Address of Registrant: | P.O. Box 2600 |
Valley Forge, PA 19482 |
Name and address of agent for service: | Anne E. Robinson, Esquire |
P.O. Box 876 | |
Valley Forge, PA 19482 |
Registrant’s telephone number, including area code: (610) 669-1000
Date of fiscal year end: October 31
Date of reporting period: November 1, 2021—October 31, 2022
Item 1: Reports to Shareholders
Your Fund’s Performance at a Glance | 1 |
Advisors' Report | 2 |
About Your Fund’s Expenses | 6 |
Performance Summary | 8 |
Financial Statements | 10 |
• | The 12 months ended October 31, 2022, were a volatile, challenging period for financial markets. Vanguard Windsor Fund returned –2.97% for Investor Shares and –2.89% for Admiral Shares, outpacing the –7.00% return of its benchmark, the Russell 1000 Value Index. |
• | The global economic backdrop deteriorated as inflation reached multidecade highs, notably in energy and food prices after Russia invaded Ukraine in February. Price increases then broadened to other goods and services, adding to concerns that inflation would remain stubbornly high. Many central banks tightened aggressively to try to rein in inflation, which increased fears of a recession. |
• | The broad U.S. stock market, as measured by the Russell 3000 Index, returned –16.52%. Value stocks held up significantly better than growth. By market capitalization, there was much less divergence in performance. |
• | Returns were positive in four industry sectors. The advisors’ selections in financials contributed most to outperformance relative to the benchmark. An underweight to communication services also helped. Health care, consumer staples, and consumer discretionary were net detractors. |
Average Annual Total Returns Periods Ended October 31, 2022 | |||
One Year | Three Years | Five Years | |
Stocks | |||
Russell 1000 Index (Large-caps) | -16.38% | 9.99% | 10.19% |
Russell 2000 Index (Small-caps) | -18.54 | 7.05 | 5.56 |
Russell 3000 Index (Broad U.S. market) | -16.52 | 9.79 | 9.87 |
FTSE All-World ex US Index (International) | -24.20 | -1.16 | -0.18 |
Bonds | |||
Bloomberg U.S. Aggregate Float Adjusted Index (Broad taxable market) | -15.69% | -3.73% | -0.50% |
Bloomberg Municipal Bond Index (Broad tax-exempt market) | -11.98 | -2.18 | 0.37 |
FTSE Three-Month U.S. Treasury Bill Index | 0.88 | 0.59 | 1.15 |
CPI | |||
Consumer Price Index | 7.75% | 5.01% | 3.85% |
Fund Assets Managed | |||
Investment Advisor | % | $ Million | Investment Strategy |
Wellington Management Company LLP | 69 | 15,236 | Seeks to provide long-term total returns above both the S&P 500 and value-oriented indexes over a complete market cycle through bottom-up, fundamentally driven stock selection focused on undervalued securities. |
Pzena Investment Management, LLC | 30 | 6,574 | Uses a fundamental, bottom-up, deep-value-oriented investment strategy. Seeks to buy good businesses at low prices, focusing exclusively on companies that are underperforming their historically demonstrated earnings power. |
Cash Investments | 1 | 286 | These short-term reserves are invested by Vanguard in equity index products to simulate investment in stocks. Each advisor may also maintain a modest cash position. |
• | Based on actual fund return. This section helps you to estimate the actual expenses that you paid over the period. The ”Ending Account Value“ shown is derived from the fund‘s actual return, and the third column shows the dollar amount that would have been paid by an investor who started with $1,000 in the fund. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period. |
• | Based on hypothetical 5% yearly return. This section is intended to help you compare your fund‘s costs with those of other mutual funds. It assumes that the fund had a yearly return of 5% before expenses, but that the expense ratio is unchanged. In this case—because the return used is not the fund’s actual return—the results do not apply to your investment. The example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to calculate expenses based on a 5% return. You can assess your fund’s costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds. |
Six Months Ended October 31, 2022 | |||
Beginning Account Value 4/30/2022 | Ending Account Value 10/31/2022 | Expenses Paid During Period | |
Based on Actual Fund Return | |||
Windsor Fund | |||
Investor Shares | $1,000.00 | $984.60 | $2.05 |
Admiral™ Shares | 1,000.00 | 985.10 | 1.55 |
Based on Hypothetical 5% Yearly Return | |||
Windsor Fund | |||
Investor Shares | $1,000.00 | $1,023.14 | $2.09 |
Admiral Shares | 1,000.00 | 1,023.64 | 1.58 |
Average Annual Total Returns Periods Ended October 31, 2022 | |||||
One Year | Five Years | Ten Years | Final Value of a $10,000 Investment | ||
Windsor Fund Investor Shares | -2.97% | 9.04% | 11.81% | $30,524 | |
Russell 1000 Value Index | -7.00 | 7.21 | 10.30 | 26,647 | |
Dow Jones U.S. Total Stock Market Float Adjusted Index | -16.94 | 9.72 | 12.36 | 32,058 |
One Year | Five Years | Ten Years | Final Value of a $50,000 Investment | ||
Windsor Fund Admiral Shares | -2.89% | 9.15% | 11.92% | $154,124 | |
Russell 1000 Value Index | -7.00 | 7.21 | 10.30 | 133,235 | |
Dow Jones U.S. Total Stock Market Float Adjusted Index | -16.94 | 9.72 | 12.36 | 160,289 |
Communication Services | 5.0% |
Consumer Discretionary | 10.3 |
Consumer Staples | 3.3 |
Energy | 9.2 |
Financials | 22.6 |
Health Care | 12.9 |
Industrials | 8.5 |
Information Technology | 13.5 |
Materials | 5.1 |
Real Estate | 3.3 |
Utilities | 6.3 |
Shares | Market Value• ($000) | ||
Common Stocks (97.3%) | |||
Communication Services (4.9%) | |||
* | T-Mobile US Inc. | 2,098,042 | 317,979 |
* | Meta Platforms Inc. Class A | 2,598,994 | 242,122 |
Electronic Arts Inc. | 1,222,185 | 153,946 | |
Cable One Inc. | 139,595 | 119,972 | |
* | Match Group Inc. | 2,727,309 | 117,820 |
* | Charter Communications Inc. Class A | 314,609 | 115,657 |
Verizon Communications Inc. | 220,056 | 8,224 | |
1,075,720 | |||
Consumer Discretionary (10.0%) | |||
* | Dollar Tree Inc. | 1,681,808 | 266,567 |
* | Las Vegas Sands Corp. | 5,932,991 | 225,513 |
TJX Cos. Inc. | 2,856,070 | 205,923 | |
Lennar Corp. Class A | 2,438,535 | 196,790 | |
Gildan Activewear Inc. | 6,139,590 | 193,704 | |
Lear Corp. | 1,381,940 | 191,689 | |
Newell Brands Inc. | 11,866,202 | 163,872 | |
* | Booking Holdings Inc. | 69,452 | 129,839 |
* | Skechers USA Inc. Class A | 3,634,099 | 125,122 |
Ross Stores Inc. | 1,234,219 | 118,102 | |
* | CarMax Inc. | 1,840,346 | 115,960 |
* | Mohawk Industries Inc. | 1,060,308 | 100,464 |
* | Airbnb Inc. Class A | 919,844 | 98,341 |
PVH Corp. | 1,588,525 | 81,523 | |
2,213,409 | |||
Consumer Staples (3.2%) | |||
Keurig Dr Pepper Inc. | 6,623,378 | 257,252 | |
Philip Morris International Inc. | 2,508,541 | 230,410 | |
Unilever plc (XLON) | 4,827,712 | 219,440 | |
707,102 | |||
Energy (8.9%) | |||
Halliburton Co. | 13,977,692 | 509,068 | |
Schlumberger NV | 8,405,726 | 437,350 | |
Canadian Natural Resources Ltd. | 4,811,052 | 288,374 | |
ConocoPhillips | 1,423,868 | 179,536 | |
NOV Inc. | 7,869,660 | 176,280 | |
Diamondback Energy Inc. | 1,092,174 | 171,591 | |
Shell plc ADR | 2,086,504 | 116,072 |
Shares | Market Value• ($000) | ||
Exxon Mobil Corp. | 878,247 | 97,319 | |
1,975,590 | |||
Financials (22.0%) | |||
MetLife Inc. | 6,466,895 | 473,441 | |
Charles Schwab Corp. | 4,953,743 | 394,665 | |
Chubb Ltd. | 1,621,384 | 348,419 | |
1 | Voya Financial Inc. | 4,921,319 | 336,421 |
Equitable Holdings Inc. | 10,958,065 | 335,536 | |
American International Group Inc. | 5,723,346 | 326,231 | |
Allstate Corp. | 2,255,632 | 284,773 | |
Globe Life Inc. | 2,059,337 | 237,895 | |
Wells Fargo & Co. | 4,933,654 | 226,899 | |
Raymond James Financial Inc. | 1,667,843 | 197,039 | |
Royal Bank of Canada | 2,107,258 | 194,972 | |
S&P Global Inc. | 586,299 | 188,349 | |
Capital One Financial Corp. | 1,761,259 | 186,729 | |
Citigroup Inc. | 4,035,906 | 185,087 | |
Bank of America Corp. | 4,514,065 | 162,687 | |
JPMorgan Chase & Co. | 1,265,602 | 159,314 | |
Apollo Global Management Inc. | 2,693,140 | 149,092 | |
M&T Bank Corp. | 742,432 | 125,003 | |
Goldman Sachs Group Inc. | 353,777 | 121,880 | |
Axis Capital Holdings Ltd. | 1,829,345 | 100,010 | |
Morgan Stanley | 720,717 | 59,221 | |
UBS Group AG (Registered) | 2,753,680 | 43,673 | |
Invesco Ltd. | 852,369 | 13,058 | |
4,850,394 | |||
Health Care (12.5%) | |||
* | Centene Corp. | 2,901,207 | 246,980 |
AstraZeneca plc ADR | 3,588,214 | 211,023 | |
* | Seagen Inc. | 1,623,245 | 206,412 |
* | Boston Scientific Corp. | 4,116,591 | 177,466 |
Humana Inc. | 300,442 | 167,671 | |
Novartis AG (Registered) | 1,904,854 | 154,085 | |
McKesson Corp. | 384,436 | 149,688 | |
Bristol-Myers Squibb Co. | 1,853,066 | 143,557 | |
* | Avantor Inc. | 6,723,057 | 135,604 |
DENTSPLY SIRONA Inc. | 4,180,346 | 128,838 | |
2 | Fresenius Medical Care AG & Co. KGaA ADR | 9,191,973 | 127,493 |
Shares | Market Value• ($000) | ||
* | Regeneron Pharmaceuticals Inc. | 165,847 | 124,178 |
Johnson & Johnson | 616,171 | 107,195 | |
Becton Dickinson and Co. | 433,761 | 102,354 | |
Elevance Health Inc. | 186,825 | 102,150 | |
Encompass Health Corp. | 1,858,759 | 101,191 | |
Pfizer Inc. | 2,110,186 | 98,229 | |
Cigna Corp. | 298,096 | 96,303 | |
Cardinal Health Inc. | 1,164,253 | 88,367 | |
Amgen Inc. | 269,795 | 72,939 | |
CVS Health Corp. | 325,808 | 30,854 | |
2,772,577 | |||
Industrials (8.3%) | |||
Westinghouse Air Brake Technologies Corp. | 5,094,306 | 475,197 | |
Leidos Holdings Inc. | 2,041,836 | 207,430 | |
General Electric Co. | 2,643,985 | 205,728 | |
Knight-Swift Transportation Holdings Inc. | 4,231,641 | 203,246 | |
Johnson Controls International plc | 3,203,599 | 185,296 | |
PACCAR Inc. | 1,653,887 | 160,146 | |
Airbus SE | 1,366,915 | 147,905 | |
Techtronic Industries Co. Ltd. | 12,874,500 | 121,906 | |
General Dynamics Corp. | 339,199 | 84,732 | |
Textron Inc. | 527,173 | 36,080 | |
1,827,666 | |||
Information Technology (13.1%) | |||
Cognizant Technology Solutions Corp. Class A | 4,515,727 | 281,104 | |
* | Salesforce Inc. | 1,515,542 | 246,412 |
Micron Technology Inc. | 3,906,948 | 211,366 | |
Fidelity National Information Services Inc. | 2,436,868 | 202,236 | |
Amdocs Ltd. | 2,333,964 | 201,444 | |
* | F5 Inc. | 1,309,839 | 187,189 |
QUALCOMM Inc. | 1,554,295 | 182,878 | |
SS&C Technologies Holdings Inc. | 3,391,196 | 174,375 | |
VMware Inc. Class A | 1,506,375 | 169,512 | |
* | GoDaddy Inc. Class A | 2,071,005 | 166,509 |
NXP Semiconductors NV | 1,065,505 | 155,649 | |
* | FleetCor Technologies Inc. | 819,234 | 152,476 |
Hewlett Packard Enterprise Co. | 10,531,614 | 150,286 | |
Genpact Ltd. | 3,065,254 | 148,665 | |
Oracle Corp. | 1,125,306 | 87,853 | |
* | Lumentum Holdings Inc. | 1,036,336 | 77,155 |
Samsung Electronics Co. Ltd. | 938,035 | 39,041 | |
Juniper Networks Inc. | 1,231,241 | 37,676 | |
Cisco Systems Inc. | 556,397 | 25,277 | |
2,897,103 | |||
Materials (5.0%) | |||
Reliance Steel & Aluminum Co. | 1,079,673 | 217,533 | |
Dow Inc. | 3,814,708 | 178,299 |
Shares | Market Value• ($000) | ||
PPG Industries Inc. | 1,355,946 | 154,822 | |
Rio Tinto plc ADR | 2,882,604 | 153,787 | |
CRH plc (XDUB) | 4,224,820 | 151,767 | |
FMC Corp. | 1,240,660 | 147,514 | |
LG Chem Ltd. | 233,995 | 102,686 | |
1,106,408 | |||
Real Estate (3.2%) | |||
VICI Properties Inc. | 7,312,689 | 234,152 | |
American Tower Corp. | 906,325 | 187,782 | |
Equinix Inc. | 245,020 | 138,789 | |
Americold Realty Trust Inc. | 5,128,341 | 124,362 | |
* | CBRE Group Inc. Class A | 384,588 | 27,283 |
712,368 | |||
Utilities (6.2%) | |||
Exelon Corp. | 6,204,264 | 239,423 | |
NRG Energy Inc. | 5,182,794 | 230,116 | |
Edison International | 3,310,563 | 198,766 | |
Duke Energy Corp. | 2,009,333 | 187,230 | |
AES Corp. | 6,836,399 | 178,840 | |
Iberdrola SA (XMAD) | 15,941,649 | 162,115 | |
Pinnacle West Capital Corp. | 1,538,877 | 103,428 | |
Avangrid Inc. | 1,514,392 | 61,605 | |
1,361,523 | |||
Total Common Stocks (Cost $18,757,764) | 21,499,860 | ||
Temporary Cash Investments (2.7%) | |||
Money Market Fund (1.7%) | |||
3,4 | Vanguard Market Liquidity Fund, 3.117% | 3,666,803 | 366,607 |
Face Amount ($000) | Market Value• ($000) | ||
Repurchase Agreement (1.0%) | |||
Bank of America Securities, LLC 3.050%, 11/1/22 (Dated 10/31/22, Repurchase Value $222,519,000, collateralized by Ginnie Mae 2.000%–3.000%, 1/20/52–3/20/52, with a value of $226,950,000) | 222,500 | 222,500 | |
Total Temporary Cash Investments (Cost $589,058) | 589,107 | ||
Total Investments (100.0%) (Cost $19,346,822) | 22,088,967 | ||
Other Assets and Liabilities—Net (0.0%) | 6,957 | ||
Net Assets (100%) | 22,095,924 | ||
Cost is in $000. |
• | See Note A in Notes to Financial Statements. |
* | Non-income-producing security. |
1 | Considered an affiliated company of the fund as the fund owns more than 5% of the outstanding voting securities of such company. |
2 | Includes partial security positions on loan to broker-dealers. The total value of securities on loan is $3,583,000. |
3 | Affiliated money market fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard. Rate shown is the 7-day yield. |
4 | Collateral of $3,616,000 was received for securities on loan. |
ADR—American Depositary Receipt. |
Futures Contracts | ||||
($000) | ||||
Expiration | Number of Long (Short) Contracts | Notional Amount | Value and Unrealized Appreciation (Depreciation) | |
Long Futures Contracts | ||||
E-mini S&P 500 Index | December 2022 | 1,495 | 290,254 | (1,144) |
($000s, except shares and per-share amounts) | Amount |
Assets | |
Investments in Securities, at Value1 | |
Unaffiliated Issuers (Cost $18,751,203) | 21,385,939 |
Affiliated Issuers (Cost $595,619) | 703,028 |
Total Investments in Securities | 22,088,967 |
Investment in Vanguard | 803 |
Cash Collateral Pledged—Futures Contracts | 14,953 |
Receivables for Investment Securities Sold | 45,923 |
Receivables for Accrued Income | 12,289 |
Receivables for Capital Shares Issued | 9,032 |
Total Assets | 22,171,967 |
Liabilities | |
Foreign Currency Due to Custodian, at Value (Proceeds $5) | 5 |
Due to Custodian | 7,361 |
Payables for Investment Securities Purchased | 38,109 |
Collateral for Securities on Loan | 3,616 |
Payables to Investment Advisor | 10,116 |
Payables for Capital Shares Redeemed | 13,258 |
Payables to Vanguard | 1,466 |
Variation Margin Payable—Futures Contracts | 2,112 |
Total Liabilities | 76,043 |
Net Assets | 22,095,924 |
1 Includes $3,583 of securities on loan. | |
At October 31, 2022, net assets consisted of: | |
Paid-in Capital | 16,575,727 |
Total Distributable Earnings (Loss) | 5,520,197 |
Net Assets | 22,095,924 |
Investor Shares—Net Assets | |
Applicable to 210,922,420 outstanding $.001 par value shares of beneficial interest (unlimited authorization) | 4,795,564 |
Net Asset Value Per Share—Investor Shares | $22.74 |
Admiral Shares—Net Assets | |
Applicable to 225,652,783 outstanding $.001 par value shares of beneficial interest (unlimited authorization) | 17,300,360 |
Net Asset Value Per Share—Admiral Shares | $76.67 |
Year Ended October 31, 2022 | |
($000) | |
Investment Income | |
Income | |
Dividends—Unaffiliated Issuers1 | 392,516 |
Dividends—Affiliated Issuers | 39,709 |
Interest—Unaffiliated Issuers | 1,842 |
Interest—Affiliated Issuers | 2,985 |
Securities Lending—Net | 1,714 |
Total Income | 438,766 |
Expenses | |
Investment Advisory Fees—Note B | |
Basic Fee | 29,207 |
Performance Adjustment | 6,404 |
The Vanguard Group—Note C | |
Management and Administrative—Investor Shares | 11,292 |
Management and Administrative—Admiral Shares | 22,252 |
Marketing and Distribution—Investor Shares | 311 |
Marketing and Distribution—Admiral Shares | 554 |
Custodian Fees | 660 |
Auditing Fees | 40 |
Shareholders’ Reports—Investor Shares | 105 |
Shareholders’ Reports—Admiral Shares | 67 |
Trustees’ Fees and Expenses | 9 |
Other Expenses | 72 |
Total Expenses | 70,973 |
Expenses Paid Indirectly | (112) |
Net Expenses | 70,861 |
Net Investment Income | 367,905 |
Realized Net Gain (Loss) | |
Capital Gains Distributions Received – Affiliated Issuers | 10 |
Investment Securities Sold—Unaffiliated Issuers | 2,875,802 |
Investment Securities Sold—Affiliated Issuers | (630) |
Futures Contracts | (32,819) |
Forward Currency Contracts | 16 |
Foreign Currencies | (720) |
Realized Net Gain (Loss) | 2,841,659 |
Statement of Operations (continued) | |
Year Ended October 31, 2022 | |
($000) | |
Change in Unrealized Appreciation (Depreciation) | |
Investment Securities—Unaffiliated Issuers | (3,881,763) |
Investment Securities—Affiliated Issuers | (5,688) |
Futures Contracts | (11,143) |
Foreign Currencies | (76) |
Change in Unrealized Appreciation (Depreciation) | (3,898,670) |
Net Increase (Decrease) in Net Assets Resulting from Operations | (689,106) |
1 | Dividends are net of foreign withholding taxes of $7,011,000. |
Year Ended October 31, | ||
2022 ($000) | 2021 ($000) | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net Investment Income | 367,905 | 351,555 |
Realized Net Gain (Loss) | 2,841,659 | 2,264,486 |
Change in Unrealized Appreciation (Depreciation) | (3,898,670) | 6,317,297 |
Net Increase (Decrease) in Net Assets Resulting from Operations | (689,106) | 8,933,338 |
Distributions | ||
Investor Shares | (588,332) | (424,284) |
Admiral Shares | (1,942,815) | (1,221,462) |
Total Distributions | (2,531,147) | (1,645,746) |
Capital Share Transactions | ||
Investor Shares | (200,936) | (723,894) |
Admiral Shares | 1,248,509 | 439,865 |
Net Increase (Decrease) from Capital Share Transactions | 1,047,573 | (284,029) |
Total Increase (Decrease) | (2,172,680) | 7,003,563 |
Net Assets | ||
Beginning of Period | 24,268,604 | 17,265,041 |
End of Period | 22,095,924 | 24,268,604 |
Investor Shares | |||||
For a Share Outstanding Throughout Each Period | Year Ended October 31, | ||||
2022 | 2021 | 2020 | 2019 | 2018 | |
Net Asset Value, Beginning of Period | $26.24 | $18.55 | $21.76 | $22.02 | $23.38 |
Investment Operations | |||||
Net Investment Income1 | .359 | .356 | .408 | .419 | .417 |
Net Realized and Unrealized Gain (Loss) on Investments | (1.131) | 9.122 | (1.412) | 1.700 | (.753) |
Total from Investment Operations | (.772) | 9.478 | (1.004) | 2.119 | (.336) |
Distributions | |||||
Dividends from Net Investment Income | (.330) | (.411) | (.420) | (.426) | (.378) |
Distributions from Realized Capital Gains | (2.398) | (1.377) | (1.786) | (1.953) | (.646) |
Total Distributions | (2.728) | (1.788) | (2.206) | (2.379) | (1.024) |
Net Asset Value, End of Period | $22.74 | $26.24 | $18.55 | $21.76 | $22.02 |
Total Return2 | -2.97% | 53.49% | -5.64% | 11.59% | -1.69% |
Ratios/Supplemental Data | |||||
Net Assets, End of Period (Millions) | $4,796 | $5,728 | $4,570 | $4,549 | $4,468 |
Ratio of Total Expenses to Average Net Assets3 | 0.38%4 | 0.30% | 0.29% | 0.30% | 0.31% |
Ratio of Net Investment Income to Average Net Assets | 1.51% | 1.49% | 2.14% | 2.04% | 1.76% |
Portfolio Turnover Rate | 43% | 33% | 51% | 39% | 33% |
1 | Calculated based on average shares outstanding. |
2 | Total returns do not include account service fees that may have applied in the periods shown. Fund prospectuses provide information about any applicable account service fees. |
3 | Includes performance-based investment advisory fee increases (decreases) of 0.03%, (0.05%), (0.07%), (0.05%), and (0.05%). |
4 | The ratio of expenses to average net assets for the period net of reduction from broker commission abatement arrangements was 0.38%. |
Admiral Shares | |||||
For a Share Outstanding Throughout Each Period | Year Ended October 31, | ||||
2022 | 2021 | 2020 | 2019 | 2018 | |
Net Asset Value, Beginning of Period | $88.50 | $62.58 | $73.41 | $74.29 | $78.88 |
Investment Operations | |||||
Net Investment Income1 | 1.281 | 1.278 | 1.448 | 1.484 | 1.484 |
Net Realized and Unrealized Gain (Loss) on Investments | (3.820) | 30.747 | (4.770) | 5.735 | (2.538) |
Total from Investment Operations | (2.539) | 32.025 | (3.322) | 7.219 | (1.054) |
Distributions | |||||
Dividends from Net Investment Income | (1.203) | (1.460) | (1.485) | (1.509) | (1.358) |
Distributions from Realized Capital Gains | (8.088) | (4.645) | (6.023) | (6.590) | (2.178) |
Total Distributions | (9.291) | (6.105) | (7.508) | (8.099) | (3.536) |
Net Asset Value, End of Period | $76.67 | $88.50 | $62.58 | $73.41 | $74.29 |
Total Return2 | -2.89% | 53.60% | -5.55% | 11.71% | -1.59% |
Ratios/Supplemental Data | |||||
Net Assets, End of Period (Millions) | $17,300 | $18,541 | $12,695 | $14,647 | $13,948 |
Ratio of Total Expenses to Average Net Assets3 | 0.28%4 | 0.20% | 0.19% | 0.20% | 0.21% |
Ratio of Net Investment Income to Average Net Assets | 1.61% | 1.58% | 2.24% | 2.14% | 1.86% |
Portfolio Turnover Rate | 43% | 33% | 51% | 39% | 33% |
1 | Calculated based on average shares outstanding. |
2 | Total returns do not include account service fees that may have applied in the periods shown. Fund prospectuses provide information about any applicable account service fees. |
3 | Includes performance-based investment advisory fee increases (decreases) of 0.03%, (0.05%), (0.07%), (0.05%), and (0.05%). |
4 | The ratio of expenses to average net assets for the period net of reduction from broker commission abatement arrangements was 0.28%. |
A. | The following significant accounting policies conform to generally accepted accounting principles for U.S. investment companies. The fund consistently follows such policies in preparing its financial statements. |
B. | The investment advisory firms Wellington Management Company llp and Pzena Investment Management, LLC, each provide investment advisory services to a portion of the fund for a fee calculated at an annual percentage rate of average net assets managed by the advisor. The basic |
C. | In accordance with the terms of a Funds' Service Agreement (the “FSA”) between Vanguard and the fund, Vanguard furnishes to the fund corporate management, administrative, marketing, distribution and cash management services at Vanguard’s cost of operations (as defined by the FSA). These costs of operations are allocated to the fund based on methods and guidelines approved by the board of trustees and are generally settled twice a month. |
D. | The fund has asked its investment advisors to direct certain security trades, subject to obtaining the best price and execution, to brokers who have agreed to rebate to the fund part of the commissions generated. Such rebates are used solely to reduce the fund’s management and administrative expenses. For the year ended October 31, 2022, these arrangements reduced the fund’s expenses by $112,000 (an annual rate of less than 0.01% of average net assets). |
E. | Various inputs may be used to determine the value of the fund’s investments and derivatives. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities. |
Level 1 ($000) | Level 2 ($000) | Level 3 ($000) | Total ($000) | |
Investments | ||||
Assets | ||||
Common Stocks | 20,400,915 | 1,098,945 | — | 21,499,860 |
Temporary Cash Investments | 366,607 | 222,500 | — | 589,107 |
Total | 20,767,522 | 1,321,445 | — | 22,088,967 |
Derivative Financial Instruments | ||||
Liabilities | ||||
Futures Contracts1 | 1,144 | — | — | 1,144 |
1 | Includes cumulative appreciation (depreciation) on futures contracts and centrally cleared swaps, if any, as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities. |
F. | Permanent differences between book-basis and tax-basis components of net assets are reclassified among capital accounts in the financial statements to reflect their tax character. These reclassifications have no effect on net assets or net asset value per share. As of period end, permanent differences primarily attributable to the accounting for applicable foreign currency transactions and distributions in connection with fund share redemptions were reclassified between the following accounts: |
Amount ($000) | |
Paid-in Capital | 166,308 |
Total Distributable Earnings (Loss) | (166,308) |
Amount ($000) | |
Undistributed Ordinary Income | 135,186 |
Undistributed Long-Term Gains | 2,655,859 |
Capital Loss Carryforwards | — |
Qualified Late-Year Losses | — |
Net Unrealized Gains (Losses) | 2,729,152 |
Year Ended October 31, | ||
2022 Amount ($000) | 2021 Amount ($000) | |
Ordinary Income* | 1,036,600 | 794,066 |
Long-Term Capital Gains | 1,494,547 | 851,680 |
Total | 2,531,147 | 1,645,746 |
* | Includes short-term capital gains, if any. |
Amount ($000) | |
Tax Cost | 19,359,724 |
Gross Unrealized Appreciation | 4,686,528 |
Gross Unrealized Depreciation | (1,957,285) |
Net Unrealized Appreciation (Depreciation) | 2,729,243 |
G. | During the year ended October 31, 2022, the fund purchased $9,734,282,000 of investment securities and sold $10,828,224,000 of investment securities, other than temporary cash investments. |
H. | Capital share transactions for each class of shares were: |
Year Ended October 31, | |||||
2022 | 2021 | ||||
Amount ($000) | Shares (000) | Amount ($000) | Shares (000) | ||
Investor Shares | |||||
Issued | 368,905 | 15,354 | 422,386 | 17,602 | |
Issued in Lieu of Cash Distributions | 568,128 | 24,748 | 412,533 | 19,492 | |
Redeemed | (1,137,969) | (47,478) | (1,558,813) | (65,085) | |
Net Increase (Decrease)—Investor Shares | (200,936) | (7,376) | (723,894) | (27,991) |
Year Ended October 31, | |||||
2022 | 2021 | ||||
Amount ($000) | Shares (000) | Amount ($000) | Shares (000) | ||
Admiral Shares | |||||
Issued | 1,376,749 | 17,029 | 1,733,594 | 21,194 | |
Issued in Lieu of Cash Distributions | 1,801,699 | 23,298 | 1,138,412 | 15,936 | |
Redeemed | (1,929,939) | (24,172) | (2,432,141) | (30,502) | |
Net Increase (Decrease)—Admiral Shares | 1,248,509 | 16,155 | 439,865 | 6,628 |
I. | Certain of the fund’s investments are in companies that are considered to be affiliated companies of the fund because the fund owns more than 5% of the outstanding voting securities of the company or the issuer is another member of The Vanguard Group. Transactions during the period in securities of these companies were as follows: |
Current Period Transactions | ||||||||
Oct. 31, 2021 Market Value ($000) | Purchases at Cost ($000) | Proceeds from Securities Sold ($000) | Realized Net Gain (Loss) ($000) | Change in Unrealized App. (Dep.) ($000) | Income ($000) | Capital Gain Distributions Received ($000) | Oct. 31, 2022 Market Value ($000) | |
Vanguard Market Liquidity Fund | 533,688 | NA1 | NA1 | (103) | 12 | 2,985 | 10 | 366,607 |
Voya Financial Inc. | NA2 | 16,599 | 11,882 | (527) | (5,700) | 39,709 | — | 336,421 |
Total | 533,688 | 16,599 | 11,882 | (630) | (5,688) | 42,694 | 10 | 703,028 |
1 | Not applicable—purchases and sales are for temporary cash investment purposes. |
2 | Not applicable—at October 31, 2021, the issuer was not an affiliated company of the fund. |
J. | Management has determined that no other events or transactions occurred subsequent to October 31, 2022, that would require recognition or disclosure in these financial statements. |
Philadelphia, Pennsylvania
December 16, 2022
Matthew Benchener | Thomas M. Rampulla |
Joseph Brennan | Karin A. Risi |
Mortimer J. Buckley | Anne E. Robinson |
Gregory Davis | Michael Rollings |
John James | Nitin Tandon |
Chris D. Mclsaac | Lauren Valente |
All rights reserved.
Vanguard Marketing Corporation, Distributor.
Your Fund’s Performance at a Glance | 1 |
Advisors' Report | 2 |
About Your Fund’s Expenses | 6 |
Performance Summary | 8 |
Financial Statements | 10 |
• | The 12 months ended October 31, 2022, were a volatile, challenging period for financial markets. Vanguard Windsor II Fund returned -11.93% for Investor Shares and -11.86% for Admiral Shares, lagging the -7.00% return of its benchmark, the Russell 1000 Value Index. |
• | The global economic backdrop deteriorated as inflation reached multidecade highs, notably in energy and food prices after Russia invaded Ukraine in February. Price increases then broadened to other goods and services, adding to concerns that inflation would remain stubbornly high. Many central banks tightened monetary policy aggressively to try to rein in inflation, which increased fears of a recession. |
• | The broad U.S. stock market, as measured by the Russell 3000 Index, returned -16.52%. Value stocks outperformed growth, and large-capitalization stocks lost less ground than mid- and small-caps. |
• | Returns were negative in seven sectors. Strong selection in industrials and an underweight to real estate contributed most to performance relative to the benchmark. Information technology, the fund’s largest sector, was the biggest net detractor. |
• | For the decade ended October 31, the fund’s average annual returns were 10.96% for Investor Shares, 11.05% for Admiral Shares, and 10.30% for the benchmark. |
Average Annual Total Returns Periods Ended October 31, 2022 | |||
One Year | Three Years | Five Years | |
Stocks | |||
Russell 1000 Index (Large-caps) | -16.38% | 9.99% | 10.19% |
Russell 2000 Index (Small-caps) | -18.54 | 7.05 | 5.56 |
Russell 3000 Index (Broad U.S. market) | -16.52 | 9.79 | 9.87 |
FTSE All-World ex US Index (International) | -24.20 | -1.16 | -0.18 |
Bonds | |||
Bloomberg U.S. Aggregate Float Adjusted Index (Broad taxable market) | -15.69% | -3.73% | -0.50% |
Bloomberg Municipal Bond Index (Broad tax-exempt market) | -11.98 | -2.18 | 0.37 |
FTSE Three-Month U.S. Treasury Bill Index | 0.88 | 0.59 | 1.15 |
CPI | |||
Consumer Price Index | 7.75% | 5.01% | 3.85% |
• | Compounders: These are companies our analysis indicates can sustain very high levels of financial productivity for longer than the market expects and for which the share price does not reflect the sustainability of these returns. We typically invest 60% to 80% of our capital in compounders. |
• | Improvers: We believe that companies can improve returns, but investors often are too optimistic about the probability of success. Our research indicates that companies that improve their returns on capital materially outperform the broad market. We typically invest 20% to 40% of our capital in such improvers. |
Management, LLC
Executive Chairman
Chief Executive Officer
Chief Executive Officer and
Co-Chief Investment Officer
Director of Research and
Co-Chief Investment Officer
Chief Executive Officer and
Chief Investment Officer
Principal, Senior Global Research Analyst
Fund Assets Managed | |||
Investment Advisor | % | $ Million | Investment Strategy |
Lazard Asset Management LLC | 35 | 18,231 | Employs a relative-value approach that seeks a combination of attractive valuation and high financial productivity. The process is research-driven, relying upon bottom-up stock analysis performed by the firm’s global sector analysts. |
Hotchkis & Wiley Capital Management, LLC | 23 | 11,429 | Uses a disciplined investment approach, focusing on such investment parameters as a company’s tangible assets, sustainable cash flow, and potential for improving business performance. |
Sanders Capital, LLC | 21 | 10,365 | Employs a traditional, bottom-up, fundamental research approach to identifying securities that are undervalued relative to their expected total return. |
Aristotle Capital Management, LLC | 20 | 9,988 | Employs a fundamental, bottom-up security selection process focused on quality companies with attractive valuations and compelling catalysts. |
Cash Investments | 1 | 411 | These short-term reserves are invested by Vanguard in equity index products to simulate investment in stocks. Each advisor may also maintain a modest cash position. |
• | Based on actual fund return. This section helps you to estimate the actual expenses that you paid over the period. The ”Ending Account Value“ shown is derived from the fund‘s actual return, and the third column shows the dollar amount that would have been paid by an investor who started with $1,000 in the fund. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period. |
• | Based on hypothetical 5% yearly return. This section is intended to help you compare your fund‘s costs with those of other mutual funds. It assumes that the fund had a yearly return of 5% before expenses, but that the expense ratio is unchanged. In this case—because the return used is not the fund’s actual return—the results do not apply to your investment. The example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to calculate expenses based on a 5% return. You can assess your fund’s costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds. |
Six Months Ended October 31, 2022 | |||
Beginning Account Value 4/30/2022 | Ending Account Value 10/31/2022 | Expenses Paid During Period | |
Based on Actual Fund Return | |||
Windsor II Fund | |||
Investor Shares | $1,000.00 | $960.20 | $1.68 |
Admiral™ Shares | 1,000.00 | 960.70 | 1.28 |
Based on Hypothetical 5% Yearly Return | |||
Windsor II Fund | |||
Investor Shares | $1,000.00 | $1,023.49 | $1.73 |
Admiral Shares | 1,000.00 | 1,023.90 | 1.33 |
Average Annual Total Returns Periods Ended October 31, 2022 | |||||
One Year | Five Years | Ten Years | Final Value of a $10,000 Investment | ||
Windsor II Fund Investor Shares | -11.93% | 9.41% | 10.96% | $28,284 | |
Russell 1000 Value Index | -7.00 | 7.21 | 10.30 | 26,647 | |
Dow Jones U.S. Total Stock Market Float Adjusted Index | -16.94 | 9.72 | 12.36 | 32,058 |
One Year | Five Years | Ten Years | Final Value of a $50,000 Investment | ||
Windsor II Fund Admiral Shares | -11.86% | 9.50% | 11.05% | $142,568 | |
Russell 1000 Value Index | -7.00 | 7.21 | 10.30 | 133,235 | |
Dow Jones U.S. Total Stock Market Float Adjusted Index | -16.94 | 9.72 | 12.36 | 160,289 |
Communication Services | 6.1% |
Consumer Discretionary | 8.6 |
Consumer Staples | 6.8 |
Energy | 6.7 |
Financials | 17.2 |
Health Care | 17.5 |
Industrials | 10.3 |
Information Technology | 19.8 |
Materials | 3.0 |
Real Estate | 1.5 |
Utilities | 1.5 |
Other | 1.0 |
Shares | Market Value• ($000) | ||
Common Stocks (96.3%) | |||
Communication Services (5.9%) | |||
* | Alphabet Inc. Class A | 12,510,416 | 1,182,359 |
* | Alphabet Inc. Class C | 5,847,300 | 553,505 |
* | Meta Platforms Inc. Class A | 3,262,230 | 303,909 |
* | Walt Disney Co. | 1,904,063 | 202,859 |
Comcast Corp. Class A | 6,368,613 | 202,140 | |
* | Warner Bros Discovery Inc. | 15,346,448 | 199,504 |
News Corp. Class A | 7,222,210 | 121,839 | |
Vodafone Group plc ADR | 9,071,932 | 107,140 | |
Omnicom Group Inc. | 805,979 | 58,635 | |
1 | Paramount Global Inc. Class B | 2,830,100 | 51,847 |
2,983,737 | |||
Consumer Discretionary (8.2%) | |||
* | Amazon.com Inc. | 6,905,590 | 707,409 |
McDonald's Corp. | 1,644,609 | 448,419 | |
General Motors Co. | 9,474,101 | 371,858 | |
Lennar Corp. Class A | 4,030,222 | 325,239 | |
* | Aptiv plc | 3,159,485 | 287,734 |
Home Depot Inc. | 831,083 | 246,109 | |
Dollar General Corp. | 882,774 | 225,151 | |
Magna International Inc. | 3,725,732 | 207,635 | |
Sony Group Corp. ADR | 3,031,300 | 204,522 | |
NIKE Inc. Class B | 1,928,931 | 178,773 | |
Cie Generale des Etablissements Michelin SCA ADR | 13,712,000 | 174,142 | |
* | Booking Holdings Inc. | 86,500 | 161,710 |
Bayerische Motoren Werke AG | 2,025,426 | 158,980 | |
Mercedes-Benz Group AG | 2,159,229 | 124,980 | |
DR Horton Inc. | 1,162,980 | 89,410 | |
Starbucks Corp. | 1,005,144 | 87,035 | |
Lear Corp. | 548,900 | 76,138 | |
* | Adient plc | 1,311,943 | 45,892 |
* | Goodyear Tire & Rubber Co. | 2,833,996 | 35,992 |
4,157,128 | |||
Consumer Staples (6.5%) | |||
Procter & Gamble Co. | 6,040,204 | 813,434 | |
Coca-Cola Co. | 10,685,095 | 639,503 | |
Sysco Corp. | 4,769,343 | 412,834 |
Shares | Market Value• ($000) | ||
PepsiCo Inc. | 1,676,845 | 304,482 | |
Mondelez International Inc. Class A | 3,706,337 | 227,866 | |
Constellation Brands Inc. Class A | 846,000 | 209,030 | |
Estee Lauder Cos. Inc. Class A | 883,782 | 177,189 | |
Unilever plc ADR | 3,884,298 | 176,774 | |
Unilever plc (XLON) | 3,390,000 | 154,090 | |
Nestle SA (Registered) | 1,212,973 | 132,043 | |
Tyson Foods Inc. Class A | 468,413 | 32,016 | |
3,279,261 | |||
Energy (6.5%) | |||
ConocoPhillips | 5,742,032 | 724,013 | |
Halliburton Co. | 9,017,335 | 328,411 | |
Coterra Energy Inc. | 9,614,000 | 299,284 | |
APA Corp. | 5,984,377 | 272,050 | |
Suncor Energy Inc. | 7,518,132 | 258,549 | |
NOV Inc. | 10,181,888 | 228,074 | |
Phillips 66 | 1,990,000 | 207,537 | |
Shell plc ADR | 3,650,412 | 203,072 | |
Marathon Oil Corp. | 6,226,087 | 189,584 | |
Hess Corp. | 981,067 | 138,409 | |
Murphy Oil Corp. | 2,797,252 | 135,695 | |
* | Ovintiv Inc. (XNYS) | 1,677,610 | 84,971 |
Cenovus Energy Inc. | 3,695,600 | 74,651 | |
Schlumberger NV | 1,129,000 | 58,742 | |
Baker Hughes Co. Class A | 1,863,000 | 51,531 | |
3,254,573 | |||
Financials (16.6%) | |||
Wells Fargo & Co. | 19,760,367 | 908,779 | |
Bank of America Corp. | 22,116,816 | 797,090 | |
Citigroup Inc. | 13,926,803 | 638,683 | |
PNC Financial Services Group Inc. | 3,579,402 | 579,255 | |
Intercontinental Exchange Inc. | 5,585,077 | 533,766 | |
American Express Co. | 3,432,583 | 509,567 | |
American International Group Inc. | 7,743,156 | 441,360 | |
Marsh & McLennan Cos. Inc. | 2,264,390 | 365,676 | |
Capital One Financial Corp. | 2,991,300 | 317,138 | |
Commerce Bancshares Inc. | 4,326,366 | 306,480 |
Shares | Market Value• ($000) | ||
Goldman Sachs Group Inc. | 853,549 | 294,056 | |
Ameriprise Financial Inc. | 938,800 | 290,202 | |
JPMorgan Chase & Co. | 2,295,001 | 288,895 | |
Cullen/Frost Bankers Inc. | 1,577,000 | 244,514 | |
Bank of New York Mellon Corp. | 5,516,134 | 232,284 | |
Cincinnati Financial Corp. | 2,192,000 | 226,477 | |
Blackstone Inc. | 2,402,563 | 218,970 | |
Hartford Financial Services Group Inc. | 2,768,600 | 200,474 | |
Citizens Financial Group Inc. | 4,538,951 | 185,643 | |
BNP Paribas SA | 3,526,900 | 165,390 | |
Truist Financial Corp. | 2,831,319 | 126,815 | |
1 | Mitsubishi UFJ Financial Group Inc. ADR | 19,937,000 | 93,903 |
First Citizens BancShares Inc. Class A | 101,058 | 83,082 | |
1 | Corebridge Financial Inc. | 2,694,200 | 61,077 |
Equitable Holdings Inc. | 1,842,040 | 56,403 | |
NatWest Group plc | 19,290,743 | 51,956 | |
State Street Corp. | 665,188 | 49,224 | |
* | ING Groep NV | 4,579,533 | 45,061 |
China Construction Bank Corp. Class H | 51,864,000 | 27,524 | |
Sumitomo Mitsui Financial Group Inc. | 963,900 | 27,068 | |
8,366,812 | |||
Health Care (16.8%) | |||
Medtronic plc | 11,626,297 | 1,015,441 | |
Johnson & Johnson | 5,154,289 | 896,692 | |
UnitedHealth Group Inc. | 1,371,817 | 761,564 | |
Elevance Health Inc. | 1,364,638 | 746,143 | |
Danaher Corp. | 2,658,310 | 669,017 | |
HCA Healthcare Inc. | 2,728,700 | 593,410 | |
Cigna Corp. | 1,796,273 | 580,304 | |
Thermo Fisher Scientific Inc. | 804,094 | 413,280 | |
Humana Inc. | 709,041 | 395,702 | |
* | Boston Scientific Corp. | 6,849,195 | 295,269 |
Amgen Inc. | 1,075,000 | 290,626 | |
Merck & Co. Inc. | 2,560,600 | 259,133 | |
Roche Holding AG | 776,049 | 257,492 | |
* | IQVIA Holdings Inc. | 976,253 | 204,691 |
Zoetis Inc. | 1,252,953 | 188,920 | |
1 | Alcon Inc. | 2,970,800 | 180,268 |
CVS Health Corp. | 1,686,300 | 159,693 | |
* | Centene Corp. | 1,671,888 | 142,328 |
* | Vertex Pharmaceuticals Inc. | 293,475 | 91,564 |
Novartis AG ADR | 1,059,800 | 85,981 | |
AbbVie Inc. | 544,967 | 79,783 | |
Zimmer Biomet Holdings Inc. | 676,708 | 76,705 | |
Sanofi ADR | 1,371,691 | 59,298 | |
Gsk plc Spon ADR | 1,567,915 | 52,008 | |
8,495,312 |
Shares | Market Value• ($000) | ||
Industrials (9.9%) | |||
Honeywell International Inc. | 4,087,166 | 833,864 | |
General Electric Co. | 8,369,545 | 651,234 | |
Northrop Grumman Corp. | 990,800 | 543,959 | |
Norfolk Southern Corp. | 1,356,930 | 309,475 | |
Parker-Hannifin Corp. | 979,000 | 284,517 | |
Waste Management Inc. | 1,740,801 | 275,691 | |
FedEx Corp. | 1,719,390 | 275,584 | |
Xylem Inc. | 2,400,000 | 245,832 | |
General Dynamics Corp. | 902,000 | 225,320 | |
Cummins Inc. | 648,372 | 158,533 | |
CNH Industrial NV | 12,026,699 | 155,626 | |
Caterpillar Inc. | 709,795 | 153,642 | |
Oshkosh Corp. | 1,690,000 | 148,720 | |
HEICO Corp. | 900,618 | 146,477 | |
* | Boeing Co. | 895,000 | 127,546 |
Raytheon Technologies Corp. | 1,291,800 | 122,489 | |
PACCAR Inc. | 1,127,320 | 109,158 | |
* | Southwest Airlines Co. | 2,264,289 | 82,307 |
* | Daimler Truck Holding AG | 2,948,514 | 78,644 |
* | Fluor Corp. | 1,403,385 | 42,466 |
* | Siemens AG (Registered) | 193,374 | 21,118 |
4,992,202 | |||
Information Technology (19.1%) | |||
Microsoft Corp. | 10,646,349 | 2,471,337 | |
Apple Inc. | 3,764,348 | 577,225 | |
Visa Inc. Class A | 2,753,270 | 570,367 | |
* | Adobe Inc. | 1,419,958 | 452,257 |
Micron Technology Inc. | 8,303,923 | 449,242 | |
Taiwan Semiconductor Manufacturing Co. Ltd. ADR | 6,298,485 | 387,672 | |
Analog Devices Inc. | 2,497,904 | 356,251 | |
Samsung Electronics Co. Ltd. | 8,514,100 | 354,356 | |
Oracle Corp. | 4,459,525 | 348,155 | |
* | Salesforce Inc. | 1,760,918 | 286,308 |
Cisco Systems Inc. | 6,169,732 | 280,291 | |
* | F5 Inc. | 1,868,200 | 266,984 |
* | Workday Inc. Class A | 1,673,500 | 260,765 |
Amphenol Corp. Class A | 3,379,368 | 256,257 | |
* | Autodesk Inc. | 1,170,000 | 250,731 |
Microchip Technology Inc. | 4,061,000 | 250,726 | |
QUALCOMM Inc. | 2,036,500 | 239,615 | |
* | ANSYS Inc. | 1,025,000 | 226,689 |
Applied Materials Inc. | 2,490,549 | 219,891 | |
Accenture plc Class A | 768,526 | 218,184 | |
* | PayPal Holdings Inc. | 2,181,523 | 182,332 |
TE Connectivity Ltd. | 961,966 | 117,581 | |
Telefonaktiebolaget LM Ericsson ADR | 19,799,680 | 110,284 | |
Corning Inc. | 3,410,551 | 109,717 | |
Cognex Corp. | 1,632,092 | 75,452 | |
* | Fiserv Inc. | 648,800 | 66,658 |
* | Western Digital Corp. | 1,765,936 | 60,695 |
Cognizant Technology Solutions Corp. Class A | 937,900 | 58,384 |
Shares | Market Value• ($000) | ||
Seagate Technology Holdings plc | 1,149,198 | 57,069 | |
* | Lam Research Corp. | 123,521 | 49,999 |
9,611,474 | |||
Materials (2.9%) | |||
Corteva Inc. | 6,529,000 | 426,605 | |
Martin Marietta Materials Inc. | 731,000 | 245,601 | |
RPM International Inc. | 2,399,000 | 226,873 | |
Ecolab Inc. | 1,293,000 | 203,092 | |
Avery Dennison Corp. | 1,052,268 | 178,412 | |
Olin Corp. | 2,815,600 | 149,086 | |
International Paper Co. | 1,016,629 | 34,169 | |
1,463,838 | |||
Other (0.9%) | |||
SPDR S&P 500 ETF Trust | 1,236,073 | 477,384 | |
Real Estate (1.5%) | |||
Prologis Inc. | 3,627,981 | 401,799 | |
Crown Castle Inc. | 1,560,000 | 207,886 | |
Equity LifeStyle Properties Inc. | 2,142,000 | 137,002 | |
746,687 | |||
Utilities (1.5%) | |||
PPL Corp. | 9,803,515 | 259,695 | |
Atmos Energy Corp. | 2,332,700 | 248,549 | |
Xcel Energy Inc. | 3,713,100 | 241,760 | |
750,004 | |||
Total Common Stocks (Cost $36,044,116) | 48,578,412 |
Shares | Market Value• ($000) | ||
Temporary Cash Investments (3.5%) | |||
Money Market Fund (3.5%) | |||
2,3 | Vanguard Market Liquidity Fund, 3.117% (Cost $1,750,028) | 17,506,403 | 1,750,290 |
Total Investments (99.8%) (Cost $37,794,144) | 50,328,702 | ||
Other Assets and Liabilities—Net (0.2%) | 94,969 | ||
Net Assets (100%) | 50,423,671 | ||
Cost is in $000. |
• | See Note A in Notes to Financial Statements. |
* | Non-income-producing security. |
1 | Includes partial security positions on loan to broker-dealers. The total value of securities on loan is $10,496,000. |
2 | Affiliated money market fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard. Rate shown is the 7-day yield. |
3 | Collateral of $11,123,000 was received for securities on loan. |
ADR—American Depositary Receipt. |
Futures Contracts | ||||
($000) | ||||
Expiration | Number of Long (Short) Contracts | Notional Amount | Value and Unrealized Appreciation (Depreciation) | |
Long Futures Contracts | ||||
E-mini S&P 500 Index | December 2022 | 2,125 | 412,569 | 25,875 |
($000s, except shares and per-share amounts) | Amount |
Assets | |
Investments in Securities, at Value1 | |
Unaffiliated Issuers (Cost $36,044,116) | 48,578,412 |
Affiliated Issuers (Cost $1,750,028) | 1,750,290 |
Total Investments in Securities | 50,328,702 |
Investment in Vanguard | 1,854 |
Cash Collateral Pledged—Futures Contracts | 22,100 |
Receivables for Investment Securities Sold | 90,302 |
Receivables for Accrued Income | 47,278 |
Receivables for Capital Shares Issued | 8,646 |
Total Assets | 50,498,882 |
Liabilities | |
Due to Custodian | 5,907 |
Payables for Investment Securities Purchased | 15,234 |
Collateral for Securities on Loan | 11,123 |
Payables to Investment Advisor | 14,823 |
Payables for Capital Shares Redeemed | 21,565 |
Payables to Vanguard | 3,434 |
Variation Margin Payable—Futures Contracts | 3,125 |
Total Liabilities | 75,211 |
Net Assets | 50,423,671 |
1 Includes $10,496 of securities on loan. | |
At October 31, 2022, net assets consisted of: | |
Paid-in Capital | 34,991,703 |
Total Distributable Earnings (Loss) | 15,431,968 |
Net Assets | 50,423,671 |
Investor Shares—Net Assets | |
Applicable to 272,827,126 outstanding $.001 par value shares of beneficial interest (unlimited authorization) | 10,747,063 |
Net Asset Value Per Share—Investor Shares | $39.39 |
Admiral Shares—Net Assets | |
Applicable to 567,700,096 outstanding $.001 par value shares of beneficial interest (unlimited authorization) | 39,676,608 |
Net Asset Value Per Share—Admiral Shares | $69.89 |
Year Ended October 31, 2022 | |
($000) | |
Investment Income | |
Income | |
Dividends1 | 925,596 |
Interest2 | 20,018 |
Securities Lending—Net | 1,351 |
Total Income | 946,965 |
Expenses | |
Investment Advisory Fees—Note B | |
Basic Fee | 68,897 |
Performance Adjustment | (4,131) |
The Vanguard Group—Note C | |
Management and Administrative—Investor Shares | 25,163 |
Management and Administrative—Admiral Shares | 58,329 |
Marketing and Distribution—Investor Shares | 709 |
Marketing and Distribution—Admiral Shares | 1,451 |
Custodian Fees | 561 |
Auditing Fees | 42 |
Shareholders’ Reports—Investor Shares | 462 |
Shareholders’ Reports—Admiral Shares | 182 |
Trustees’ Fees and Expenses | 21 |
Other Expenses | 80 |
Total Expenses | 151,766 |
Expenses Paid Indirectly | (49) |
Net Expenses | 151,717 |
Net Investment Income | 795,248 |
Realized Net Gain (Loss) | |
Investment Securities Sold2 | 2,926,827 |
Futures Contracts | (129,080) |
Foreign Currencies | (999) |
Realized Net Gain (Loss) | 2,796,748 |
Change in Unrealized Appreciation (Depreciation) | |
Investment Securities—Unaffiliated Issuers2 | (10,648,310) |
Futures Contracts | 4,468 |
Foreign Currencies | (714) |
Change in Unrealized Appreciation (Depreciation) | (10,644,556) |
Net Increase (Decrease) in Net Assets Resulting from Operations | (7,052,560) |
1 | Dividends are net of foreign withholding taxes of $17,265,000. |
2 | Interest income, realized net gain (loss), capital gain distributions received, and change in unrealized appreciation (depreciation) from an affiliated company of the fund were $19,903,000, ($550,000), $47,000, and $109,000, respectively. Purchases and sales are for temporary cash investment purposes. |
Year Ended October 31, | ||
2022 ($000) | 2021 ($000) | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net Investment Income | 795,248 | 657,953 |
Realized Net Gain (Loss) | 2,796,748 | 4,007,994 |
Change in Unrealized Appreciation (Depreciation) | (10,644,556) | 15,751,779 |
Net Increase (Decrease) in Net Assets Resulting from Operations | (7,052,560) | 20,417,726 |
Distributions | ||
Investor Shares | (1,012,782) | (877,466) |
Admiral Shares | (3,567,050) | (2,558,212) |
Total Distributions | (4,579,832) | (3,435,678) |
Capital Share Transactions | ||
Investor Shares | (437,223) | (1,563,435) |
Admiral Shares | 1,926,529 | 3,159,805 |
Net Increase (Decrease) from Capital Share Transactions | 1,489,306 | 1,596,370 |
Total Increase (Decrease) | (10,143,086) | 18,578,418 |
Net Assets | ||
Beginning of Period | 60,566,757 | 41,988,339 |
End of Period | 50,423,671 | 60,566,757 |
Investor Shares | |||||
For a Share Outstanding Throughout Each Period | Year Ended October 31, | ||||
2022 | 2021 | 2020 | 2019 | 2018 | |
Net Asset Value, Beginning of Period | $48.48 | $34.85 | $37.22 | $37.39 | $38.81 |
Investment Operations | |||||
Net Investment Income1 | .585 | .502 | .551 | .775 | .783 |
Net Realized and Unrealized Gain (Loss) on Investments | (6.039) | 15.971 | .607 | 2.628 | .950 |
Total from Investment Operations | (5.454) | 16.473 | 1.158 | 3.403 | 1.733 |
Distributions | |||||
Dividends from Net Investment Income | (.566) | (.516) | (.635) | (.844) | (.740) |
Distributions from Realized Capital Gains | (3.070) | (2.327) | (2.893) | (2.729) | (2.413) |
Total Distributions | (3.636) | (2.843) | (3.528) | (3.573) | (3.153) |
Net Asset Value, End of Period | $39.39 | $48.48 | $34.85 | $37.22 | $37.39 |
Total Return2 | -11.93% | 49.42% | 2.93% | 10.82% | 4.44% |
Ratios/Supplemental Data | |||||
Net Assets, End of Period (Millions) | $10,747 | $13,734 | $10,997 | $12,119 | $12,061 |
Ratio of Total Expenses to Average Net Assets3 | 0.34%4 | 0.34% | 0.34% | 0.33% | 0.33% |
Ratio of Net Investment Income to Average Net Assets | 1.38% | 1.15% | 1.61% | 2.20% | 2.04% |
Portfolio Turnover Rate | 18% | 20% | 61% | 32% | 29% |
1 | Calculated based on average shares outstanding. |
2 | Total returns do not include account service fees that may have applied in the periods shown. Fund prospectuses provide information about any applicable account service fees. |
3 | Includes performance-based investment advisory fee increases (decreases) of (0.01%), (0.00%), (0.01%), (0.03%), and (0.03%). |
4 | The ratio of expenses to average net assets for the period net of reduction from broker commission abatement arrangements was 0.34%. |
Admiral Shares | |||||
For a Share Outstanding Throughout Each Period | Year Ended October 31, | ||||
2022 | 2021 | 2020 | 2019 | 2018 | |
Net Asset Value, Beginning of Period | $86.03 | $61.84 | $66.06 | $66.35 | $68.88 |
Investment Operations | |||||
Net Investment Income1 | 1.098 | .950 | 1.027 | 1.426 | 1.443 |
Net Realized and Unrealized Gain (Loss) on Investments | (10.716) | 28.341 | 1.065 | 4.675 | 1.682 |
Total from Investment Operations | (9.618) | 29.291 | 2.092 | 6.101 | 3.125 |
Distributions | |||||
Dividends from Net Investment Income | (1.074) | (.972) | (1.178) | (1.547) | (1.371) |
Distributions from Realized Capital Gains | (5.448) | (4.129) | (5.134) | (4.844) | (4.284) |
Total Distributions | (6.522) | (5.101) | (6.312) | (6.391) | (5.655) |
Net Asset Value, End of Period | $69.89 | $86.03 | $61.84 | $66.06 | $66.35 |
Total Return2 | -11.86% | 49.55% | 3.00% | 10.93% | 4.52% |
Ratios/Supplemental Data | |||||
Net Assets, End of Period (Millions) | $39,677 | $46,833 | $30,992 | $34,022 | $34,126 |
Ratio of Total Expenses to Average Net Assets3 | 0.26%4 | 0.26% | 0.26% | 0.25% | 0.25% |
Ratio of Net Investment Income to Average Net Assets | 1.46% | 1.22% | 1.69% | 2.28% | 2.12% |
Portfolio Turnover Rate | 18% | 20% | 61% | 32% | 29% |
1 | Calculated based on average shares outstanding. |
2 | Total returns do not include account service fees that may have applied in the periods shown. Fund prospectuses provide information about any applicable account service fees. |
3 | Includes performance-based investment advisory fee increases (decreases) of (0.01%), (0.00%), (0.01%), (0.03%), and (0.03%). |
4 | The ratio of expenses to average net assets for the period net of reduction from broker commission abatement arrangements was 0.26%. |
A. | The following significant accounting policies conform to generally accepted accounting principles for U.S. investment companies. The fund consistently follows such policies in preparing its financial statements. |
B. | The investment advisory firms Lazard Asset Management LLC, Hotchkis & Wiley Capital Management, LLC, Sanders Capital, LLC, and Aristotle Capital Management, LLC, each provide |
C. | In accordance with the terms of a Funds' Service Agreement (the “FSA”) between Vanguard and the fund, Vanguard furnishes to the fund corporate management, administrative, marketing, distribution and cash management services at Vanguard’s cost of operations (as defined by the FSA). These costs of operations are allocated to the fund based on methods and guidelines approved by the board of trustees and are generally settled twice a month. |
D. | The fund has asked its investment advisors to direct certain security trades, subject to obtaining the best price and execution, to brokers who have agreed to rebate to the fund part of the commissions generated. Such rebates are used solely to reduce the fund’s management and administrative expenses. For the year ended October 31, 2022, these arrangements reduced the fund’s expenses by $49,000 (an annual rate of less than 0.01% of average net assets). |
E. | Various inputs may be used to determine the value of the fund’s investments and derivatives. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities. |
Level 1 ($000) | Level 2 ($000) | Level 3 ($000) | Total ($000) | |
Investments | ||||
Assets | ||||
Common Stocks | 46,979,710 | 1,598,702 | — | 48,578,412 |
Temporary Cash Investments | 1,750,290 | — | — | 1,750,290 |
Total | 48,730,000 | 1,598,702 | — | 50,328,702 |
Derivative Financial Instruments | ||||
Assets | ||||
Futures Contracts1 | 25,875 | — | — | 25,875 |
1 | Includes cumulative appreciation (depreciation) on futures contracts and centrally cleared swaps, if any, as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities. |
F. | Permanent differences between book-basis and tax-basis components of net assets are reclassified among capital accounts in the financial statements to reflect their tax character. These reclassifications have no effect on net assets or net asset value per share. As of period end, permanent differences primarily attributable to the accounting for applicable foreign currency transactions and distributions in connection with fund share redemptions were reclassified between the following accounts: |
Amount ($000) | |
Paid-in Capital | 150,407 |
Total Distributable Earnings (Loss) | (150,407) |
Amount ($000) | |
Undistributed Ordinary Income | 263,505 |
Undistributed Long-Term Gains | 2,674,577 |
Capital Loss Carryforwards | — |
Qualified Late-Year Losses | — |
Net Unrealized Gains (Losses) | 12,493,886 |
Year Ended October 31, | ||
2022 Amount ($000) | 2021 Amount ($000) | |
Ordinary Income* | 1,414,463 | 781,945 |
Long-Term Capital Gains | 3,165,369 | 2,653,733 |
Total | 4,579,832 | 3,435,678 |
* | Includes short-term capital gains, if any. |
Amount ($000) | |
Tax Cost | 37,834,352 |
Gross Unrealized Appreciation | 15,329,566 |
Gross Unrealized Depreciation | (2,835,216) |
Net Unrealized Appreciation (Depreciation) | 12,494,350 |
G. | During the year ended October 31, 2022, the fund purchased $9,760,828,000 of investment securities and sold $11,387,249,000 of investment securities, other than temporary cash investments. |
H. | Capital share transactions for each class of shares were: |
Year Ended October 31, | |||||
2022 | 2021 | ||||
Amount ($000) | Shares (000) | Amount ($000) | Shares (000) | ||
Investor Shares | |||||
Issued | 594,292 | 13,465 | 823,222 | 18,805 | |
Issued in Lieu of Cash Distributions | 986,376 | 22,623 | 856,941 | 22,227 | |
Redeemed | (2,017,891) | (46,545) | (3,243,598) | (73,302) | |
Net Increase (Decrease)—Investor Shares | (437,223) | (10,457) | (1,563,435) | (32,270) | |
Admiral Shares | |||||
Issued | 2,903,794 | 37,328 | 4,997,051 | 63,663 | |
Issued in Lieu of Cash Distributions | 3,344,538 | 43,301 | 2,400,086 | 35,053 | |
Redeemed | (4,321,803) | (57,306) | (4,237,332) | (55,504) | |
Net Increase (Decrease)—Admiral Shares | 1,926,529 | 23,323 | 3,159,805 | 43,212 |
I. | Management has determined that no events or transactions occurred subsequent to October 31, 2022, that would require recognition or disclosure in these financial statements. |
Philadelphia, Pennsylvania
December 16, 2022
Matthew Benchener | Thomas M. Rampulla |
Joseph Brennan | Karin A. Risi |
Mortimer J. Buckley | Anne E. Robinson |
Gregory Davis | Michael Rollings |
John James | Nitin Tandon |
Chris D. Mclsaac | Lauren Valente |
All rights reserved.
Vanguard Marketing Corporation, Distributor.
Item 2: Code of Ethics.
The Registrant has adopted a code of ethics that applies to the Registrant’s principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. The Code of Ethics was amended during the reporting period covered by this report to make certain technical, non-material changes.
Item 3: Audit Committee Financial Expert.
All members of the Audit Committee have been determined by the Registrant’s Board of Trustees to be Audit Committee Financial Experts and to be independent: F. Joseph Loughrey, Mark Loughridge, Sarah Bloom Raskin, and Peter F. Volanakis.
Item 4: Principal Accountant Fees and Services.
(a) Audit Fees.
Audit Fees of the Registrant.
Fiscal Year Ended October 31, 2022: $82,000
Fiscal Year Ended October 31, 2021: $92,000
Aggregate Audit Fees of Registered Investment Companies in the Vanguard Group.
Fiscal Year Ended October 31, 2022: $10,494,508
Fiscal Year Ended October 31, 2021: $11,244,694
Includes fees billed in connection with audits of the Registrant, other registered investment companies in the Vanguard complex, The Vanguard Group, Inc., and Vanguard Marketing Corporation.
(b) Audit-Related Fees.
Fiscal Year Ended October 31, 2022: $2,757,764
Fiscal Year Ended October 31, 2021: $2,955,181
Includes fees billed in connection with assurance and related services provided to the Registrant, other registered investment companies in the Vanguard complex, The Vanguard Group, Inc., and Vanguard Marketing Corporation.
(c) Tax Fees.
Fiscal Year Ended October 31, 2022: $5,202,689
Fiscal Year Ended October 31, 2021: $2,047,574
Includes fees billed in connection with tax compliance, planning, and advice services provided to the Registrant, other registered investment companies in the Vanguard complex, The Vanguard Group, Inc., and Vanguard Marketing Corporation.
(d) All Other Fees.
Fiscal Year Ended October 31, 2022: $298,000
Fiscal Year Ended October 31, 2021: $280,000
Includes fees billed for services related to tax reported information provided to the Registrant, other registered investment companies in the Vanguard complex, The Vanguard Group, Inc., and Vanguard Marketing Corporation.
(e) (1) Pre-Approval Policies. The policy of the Registrant’s Audit Committee is to consider, and, if appropriate, approve before the principal accountant is engaged for such services, all specific audit and non-audit services provided to: the Registrant, other registered investment companies in the Vanguard complex, The Vanguard Group, Inc., and entities controlled by The Vanguard Group, Inc. that provide ongoing services to the Registrant. In making a determination, the Audit Committee considers whether the services are consistent with maintaining the principal accountant’s independence.
In the event of a contingency situation in which the principal accountant is needed to provide services in between scheduled Audit Committee meetings, the Chairman of the Audit Committee would be called on to consider and, if appropriate, pre-approve audit or permitted non-audit services in an amount sufficient to complete services through the next Audit Committee meeting, and to determine if such services would be consistent with maintaining the accountant’s independence. At the next scheduled Audit Committee meeting, services and fees would be presented to the Audit Committee for formal consideration, and, if appropriate, approval by the entire Audit Committee. The Audit Committee would again consider whether such services and fees are consistent with maintaining the principal accountant’s independence.
The Registrant’s Audit Committee is informed at least annually of all audit and non-audit services provided by the principal accountant to the Vanguard complex, whether such services are provided to: the Registrant, other registered investment companies in the Vanguard complex, The Vanguard Group, Inc., or other entities controlled by The Vanguard Group, Inc. that provide ongoing services to the Registrant.
(2) No percentage of the principal accountant’s fees or services were approved pursuant to the waiver provision of paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) For the most recent fiscal year, over 50% of the hours worked under the principal accountant’s engagement were not performed by persons other than full-time, permanent employees of the principal accountant.
(g) Aggregate Non-Audit Fees.
Fiscal Year Ended October 31, 2022: $5,500,689
Fiscal Year Ended October 31, 2021: $2,327,574
Includes fees billed for non-audit services provided to the Registrant, other registered investment companies in the Vanguard complex, The Vanguard Group, Inc., and Vanguard Marketing Corporation.
(h) For the most recent fiscal year, the Audit Committee has determined that the provision of all non-audit services was consistent with maintaining the principal accountant’s independence.
Item 5: Audit Committee of Listed Registrants.
The Registrant is a listed issuer as defined in rule 10A-3 under the Securities Exchange Act of 1934 (“Exchange Act”). The Registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Registrant’s audit committee members are: F. Joseph Loughrey, Mark Loughridge, Sarah Bloom Raskin, and Peter F. Volanakis.
Item 6: Investments.
Not applicable. The complete schedule of investments is included as part of the report to shareholders filed under Item 1 of this Form.
Item 7: Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8: Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9: Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10: Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11: Controls and Procedures.
(a) Disclosure Controls and Procedures. The Principal Executive and Financial Officers concluded that the Registrant’s Disclosure Controls and Procedures are effective based on their evaluation of the Disclosure Controls and Procedures as of a date within 90 days of the filing date of this report.
(b) Internal Control Over Financial Reporting. There were no significant changes in the Registrant’s Internal Control Over Financial Reporting or in other factors that could significantly affect this control subsequent to the date of the evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Item 12: Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable.
Item 13: Exhibits.
(a)(1) | Code of Ethics filed herewith. |
(a)(2) | Certifications filed herewith. |
(b) | Certifications filed herewith. |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
VANGUARD WINDSOR FUNDS | ||
BY: | /s/ MORTIMER J. BUCKLEY* | |
MORTIMER J. BUCKLEY | ||
CHIEF EXECUTIVE OFFICER |
Date: December 19, 2022
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
VANGUARD WINDSOR FUNDS | ||
BY: | /s/ MORTIMER J. BUCKLEY* | |
MORTIMER J. BUCKLEY | ||
CHIEF EXECUTIVE OFFICER |
Date: December 19, 2022
VANGUARD WINDSOR FUNDS | ||
BY: | /s/ CHRISTINE BUCHANAN* | |
CHRISTINE BUCHANAN | ||
CHIEF FINANCIAL OFFICER |
Date: December 19, 2022
* By: | /s/ Anne E. Robinson |
Anne E. Robinson, pursuant to a Power of Attorney filed on October 11, 2022 (see File Number 333-11763), Incorporated by Reference.