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: 2-11444
Name of Registrant: VANGUARD WELLINGTON FUND
Address of Registrant: P.O. BOX 2600, VALLEY FORGE, PA 19482
Name and address of agent for service: R. GREGORY BARTON
P.O. BOX 876
VALLEY FORGE, PA 19482
Registrant's telephone number, including area code: (610) 669-1000
Date of fiscal year end: November 30
Date of reporting period: December 1, 2002 - November 30, 2003
ITEM 1: Reports to Shareholders
VANGUARD(R) WELLINGTON(TM) FUND
NOVEMBER 30, 2003
ANNUAL REPORT
THE VANGUARD GROUP(R) LOGO
HOW TO READ YOUR FUND REPORT
This report contains information that can help you evaluate your investment. It
includes details about your fund's return and presents data and analysis that
provide insight into the fund's performance and investment approach.
By reading the letter from Vanguard's chairman, John J. Brennan, together with
the letter from the managers who select securities for your fund, you'll get an
understanding of how the fund invests and how the market environment affected
its performance. The statistical information that follows can help you
understand how the fund's performance and characteristics stack up against those
of similar funds and market benchmarks.
It's important to keep in mind that the opinions expressed by Vanguard's
investment managers are just that: informed opinions. They should not be
considered promises or advice. The opinions, like the statistics, cover the
period through the date on the cover of this report. As things change--and in
the financial markets you can be certain only of change--an investment manager's
job is to evaluate new information and make adjustments, if necessary. Of
course, the risks of investing in the fund are spelled out in the prospectus.
Frequent updates on the fund's performance and information about some of its
holdings are available on Vanguard.com(R).
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CONTENTS
1 letter from the chairman
7 report from the advisor
10 fund profile
12 glossary of investment terms
14 performance summary
16 your fund's after-tax returns
17 about your fund's expenses
18 financial statements
34 advantages of vanguard.com
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SUMMARY
* The Investor Shares of Vanguard Wellington Fund returned 12.9% in the 2003
fiscal year, driven by strong gains from the fund's value-oriented stock
portfolio and a solid performance from its bond holdings.
* The bounce in the stock market that began with the onset of the Iraqi
conflict boosted the fund's stock portfolio. All 12 of the fund's stock
sectors saw positive returns.
* The fund's long-term performance record is excellent, surpassing not only
those of Wellington's comparative benchmarks but also that of the all-stock
Standard & Poor's 500 Index.
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get fund reports online.
LETTER FROM THE CHAIRMAN
Fellow Shareholder,
Fueled by a widespread rally in the stock market, Vanguard Wellington Fund's
Investor Shares returned 12.9% during the 12 months ended November 30, 2003. The
fund's Admiral Shares gained 13.1%. A welcome turnabout from 2002's results, the
fund's gains also outperformed those of its main comparative measures.
[PICTURES OF JOHN J. BRENNAN]
- --------------------------------------------------
2003 TOTAL RETURNS FISCAL YEAR ENDED
NOVEMBER 30
- --------------------------------------------------
VANGUARD WELLINGTON FUND
Investor Shares 12.9%
Admiral Shares 13.1
Wellington Composite Index* 12.7
Average Balanced Fund** 12.2
- --------------------------------------------------
*Weighted 65% S&P 500 Index and 35% Lehman Credit A or Better Index.
**Derived from data provided by Lipper Inc.
As stocks emerged from a three-year slump in the second half of the period, the
fund's advisor stuck to its time-tested emphasis on reasonably valued
dividend-paying stocks and investment-grade corporate and government bonds-- an
approach that yielded solid returns in a volatile environment. Your fund's
income orientation was reflected in its yield at the close of the fiscal year:
2.4% for the Investor Shares.
The table above shows total returns (capital change plus reinvested income
dividends) for your fund and its main comparative measures.
Details about the fund's changes in net asset value and per-share distributions
during the period appear on page 6. If you hold Wellington in a taxable account,
you may wish to review the fund's after-tax returns on page 16.
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ADMIRAL(TM) SHARES
A lower-cost class of shares available to many longtime shareholders and to
those with significant investments in the fund
- --------------------------------------------------------------------------------
1
STOCKS SURGED ON POSITIVE ECONOMIC AND FINANCIAL REPORTS
The prospect of war with Iraq and a spate of weak economic reports depressed
U.S. stock prices in the opening months of the fiscal year. Once the start of
combat eliminated some uncertainties, however, investors' mood turned upbeat,
igniting a robust stock market rally. In the fiscal year's final weeks, stocks
were propelled by reports that productivity and manufacturing activity were
growing rapidly, while profits at U.S. corporations rose nearly 30% in the third
calendar quarter from their year-earlier levels.
For the 12 months, the broad U.S. stock market, as measured by the Wilshire 5000
Total Market Index, returned 19.0%. Within market-capitalization ranges, gains
were substantially similar for growth and value stocks (i.e., stocks that sport
premium prices for their earnings growth potential versus those having
bargain-basement price tags relative to earnings, book value, or other
measures). A large divergence between small- and large-company stock returns,
however, suggested that investors had a renewed interest in riskier stocks. The
36.3% return of the small-cap Russell 2000 Index was more than double the result
of the large- and mid-cap Russell 1000 Index.
- ------------------------------------------------------------------------------
MARKET BAROMETER AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 2003
--------------------------------
ONE THREE FIVE
YEAR YEARS YEARS
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STOCKS
Russell 1000 Index (Large-caps) 16.9% -4.9% 0.2%
Russell 2000 Index (Small-caps) 36.3 8.5 8.0
Wilshire 5000 Index (Entire market) 19.0 -3.3 0.8
MSCI All Country World Index Free
ex USA (International) 27.1 -2.3 0.7
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BONDS
Lehman Aggregate Bond Index 5.2% 7.9% 6.5%
(Broad taxable market)
Lehman Municipal Bond Index 6.7 7.2 5.7
Citigroup 3-Month Treasury Bill Index 1.1 2.4 3.6
==============================================================================
CPI
Consumer Price Index 1.8% 2.0% 2.4%
- ------------------------------------------------------------------------------
Stock gains were equally impressive in many international markets, particularly
those in the Pacific Rim nations and emerging-markets countries. For U.S.-based
investors, the weakening of the dollar relative to most major currencies boosted
returns from abroad.
BOND INVESTORS WERE REWARDED FOR TAKING GREATER RISKS
As in the stock market, the best returns in the bond market came from the
riskiest securities. Returns of corporate bonds exceeded those of U.S. Treasury
securities with comparable maturities, while below-investment-grade bonds posted
spectacular results, even topping the
2
gain of the broad stock market. The Lehman Brothers High Yield Bond Index, which
tracks the performance of bonds issued by companies with "junk" credit ratings,
surged 27.9%. The yield of the benchmark 10-year Treasury note rose 12 basis
points (0.12 percentage point) during the period to 4.33%. For the 12 months,
the Lehman Aggregate Bond Index, a measure of the taxable investment-grade bond
market, returned 5.2%, as rising interest income offset falling bond prices.
The story was different among the shortest-maturity debt securities, whose
yields are influenced more strongly by the Federal Reserve Board's actions than
by open-market forces. In June, the Fed reduced its target federal-funds rate by
25 basis points to 1.00%, the lowest level since 1958. The yield of the 3-month
Treasury bill, a fair proxy for money market interest rates, fell to 0.81% in
mid-June, then rose modestly to end the fiscal year at 0.93%, 28 basis points
lower than its year-ago level.
THE RESURGENCE OF STOCKS DROVE THE FUND'S SUCCESS
The widespread gains in the stock market that began in the first quarter of
calendar year 2003 were, of course, a boon to Wellington Fund's stock portfolio.
For the full fiscal year, the fund's stock holdings returned 16.7%, better than
the 15.1% result for the Standard & Poor's 500 Index, Wellington's stock
benchmark. Of the 12 economic sectors in which the fund was invested, all
advanced during the fiscal year, with ten posting double-digit gains.
The fund's three largest sectors at the close of the fiscal year (representing
more than 40% of stock assets) were financial services, utilities, and materials
& processing, all traditional havens for the reasonably priced, income-producing
stocks that are consistent with the advisor's investment focus. At 19% of stock
assets on November 30, the fund's financial services holdings contributed more
than one-fifth of the stock portfolio's gain. The advisor, Wellington Management
Company, also enjoyed good performance from the utilities sector and other
cyclical industrial groups, such as integrated oils, producer durables, and auto
& transportation.
On the negative side, the poor performance of several of our large holdings
dampened performance, as did our underweighting in tech stocks. Also, the fund's
weighting in suppliers of basic manufacturing inputs such as aluminum,
chemicals, paper, and the like was more than three times that of the S&P 500,
but the fund's performance in the sector fell nearly 5 percentage points short
of the benchmark's return.
3
The fund's fixed income portfolio, which represented about 35 cents of every
dollar invested on November 30, returned a strong 7.1%. However, this was
slightly short of the 7.4% return of the fund's bond benchmark, the Lehman
Credit A or Better Index.
For more details about the fund's positioning and performance during the fiscal
year, read the Report from the Advisor, which begins on page 7.
THE FUND'S LONG-TERM RECORD IS STELLAR
Although the stock market has finally emerged from the three-year bear market,
many funds' long-term records have been ravaged by the downturn. Vanguard
Wellington Fund certainly did not emerge unscathed from those bear-market years,
but the fund's long-term record has remained impressive relative to its
benchmarks. As the table below shows, a hypothetical initial investment of
$10,000 on November 30, 1993, would have grown over ten years to $27,766,
substantially higher than the $20,503 result of the same investment in the
average peer fund and better than the $25,428 result of the unmanaged Wellington
Composite Index.
- ----------------------------------------------------------------
TOTAL RETURNS TEN YEARS ENDED
NOVEMBER 30, 2003
- ----------------------------------------------------------------
AVERAGE FINAL VALUE OF
ANNUAL A $10,000
RETURN INITIAL INVESTMENT
- ----------------------------------------------------------------
Wellington Fund
Investor Shares 10.8% $27,766
Wellington Composite
Index 9.8 25,428
Average Balanced Fund 7.4 20,503
- ----------------------------------------------------------------
I am also pleased to note, as I did last year, that Wellington Fund's average
annual return beats the return of the all-stock S&P 500 Index, which, for the
ten years ended November 30, averaged 10.6%. This noteworthy accomplishment for
a fund with a target asset mix of 65% stocks/35% bonds is an affirmation of the
skill with which Wellington Management has navigated the changing seas of the
financial markets over the past decade.
Along with the advisor's skills, another key contributor to your fund's
long-term success is its significant cost advantage over similar mutual funds.
(For a comparison of the costs of your fund with the average cost of its
competitors, see page 17.)
4
INVEST FOR YOUR FUTURE WITH CONFIDENCE
As the recent years of tumult in the stock market have shown, the greatest
certainty in investing is uncertainty. That's why Vanguard continues to
emphasize maintaining a balanced investment program of stocks, bonds, and
short-term reserves that is consistent with your goals and circumstances.
Wellington Fund, the nation's oldest balanced mutual fund, epitomizes the
long-term virtues of such an approach, offering the benefits of both the growth
potential of stocks and the current income of bonds. Founded a few months before
the stock market's 1929 crash, the fund will celebrate its 75th anniversary in
July 2004. Its survival, not to mention its success through almost the entire
history of our modern financial markets, is a testament to the value of balance
and diversification as governing principles.
In light of the shocking allegations about market-timing and late trading at
some investment management firms, I feel compelled to close this letter with an
assurance that Vanguard has policies and procedures in place to identify and
deter such behavior. In addition, I have great confidence in the ethics,
integrity, and character of the Vanguard crew--values that receive strong
institutional support from our client-owned corporate structure, which channels
all our efforts into the creation of wealth for our shareholders.
Sincerely,
/S/JOHN J. BRENNAN
John J. Brennan
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
DECEMBER 9, 2003
5
- --------------------------------------------------------------------------------
YOUR FUND'S PERFORMANCE AT A GLANCE NOVEMBER 30, 2002-NOVEMBER 30, 2003
DISTRIBUTIONS PER SHARE
--------------------------
STARTING ENDING INCOME CAPITAL
SHARE PRICE SHARE PRICE DIVIDENDS GAINS
- --------------------------------------------------------------------------------
Wellington Fund
Investor Shares $25.27 $27.69 $0.770 $0.00
Admiral Shares 43.66 47.84 1.386 0.00
- --------------------------------------------------------------------------------
6
REPORT FROM THE ADVISOR
The Investor Shares of Vanguard Wellington Fund returned 12.9% in the fiscal
year ended November 30, 2003, compared with gains of 12.2% for the average
balanced fund and 12.7% for our benchmark composite index, weighted 65% in
large-cap stocks and 35% in high-quality corporate bonds.
THE INVESTMENT ENVIRONMENT
There has been little doubt in 2003 that the lengthy bear market is truly over.
The stock market rallied in anticipation of stronger corporate earnings growth,
which we are beginning to see in quarterly reports. With economic stimulus
coming from lower tax rates, low interest rates, a weak dollar, and deficit
spending, we are confident that the economy has in fact finally responded.
This confidence was reinforced by the strong 8.2% annualized growth in gross
domestic product in the third calendar quarter. The weak dollar has made U.S.
manufacturers more competitive and helped other multinational companies by
boosting earnings translated from abroad. Economic expansion in the States has
been influenced by a burgeoning recovery in Asia; although it was led by China,
Japan has also participated. Stocks of smaller, more speculative companies have
benefited disproportionately from investors' newfound confidence in the economic
recovery. Economic sectors that suffered the most during the downturn, most
notably technology, have led the rebound.
Although the Federal Reserve again lowered short-term interest rates during the
fiscal year to spur a return to healthy economic growth, the general level of
interest rates was virtually unchanged. What did change during these 12 months
was the huge recovery in the corporate bond market relative to Treasury issues.
Bond investors became much more comfortable with corporate bonds as the
"post-bubble" shakeout
7
ground to a halt. Once the fear of negative credit events receded, investors
rushed to purchase these higher-yielding issues. Looking ahead, we do not expect
the Fed to raise short-term interest rates soon; however, it will ultimately do
so as the economy continues to strengthen.
OUR SUCCESSES
The fund's stock holdings outperformed the S&P 500 Index largely because of our
positioning and stock selection within the industrial and energy sectors. Stocks
that performed well included McDonald's, Caterpillar, Canadian National Railway,
and EnCana, the large Canadian energy provider. McDonald's rebounded from its
March lows as a result of the successful launch of its premium salad line, which
helped to increase same-store sales and earnings. Caterpillar announced
stronger-than-expected earnings due to a nice pickup in its business and a more
effective cost structure. Canadian National Railway had solid execution amid
better grain markets, while EnCana had good exploration success. Within the
fund's fixed income holdings, perfor-mance was strongest among the
lowest-quality securities, and we took the opportunity to lessen our exposure in
this area.
OUR SHORTFALLS
Our biggest shortfall in the stock portfolio was in the telecommunications
sector, as Verizon Communications faced competitive pressures that affected its
earnings growth. Our underweighting in technology stocks also modestly detracted
from relative results, though EMC and Texas Instruments performed well. Finally,
Schering-Plough was a major disappointment, as earnings fell sharply after
patents for two of its important drugs expired. However, the new CEO has
announced a dividend cut and a series of cost-cutting measures intended to
improve the company's operating performance. In addition, we feel the potential
for the company's new high-cholesterol drug, Zetia, is greater than the market
has factored into the stock's valuation.
THE FUND'S POSITIONING
Sector weightings in the stock portfolio did not change much during the year,
though we did increase our exposure to the financial and telecommunications
sectors and trim our stakes in the utilities and consumer discretionary groups.
While we remain concerned about valuations in the financial sector, we are
finding some attractive stocks
8
in the insurance industry. We also added to positions in several telecom stocks
on weakness, as we are attracted to their ability to generate strong cash flows
for shareholders. Several of our utilities stocks began to reach fair value, so
we opportunistically reduced our holdings. Within the consumer discretionary
group, many retailers appreciated beyond fair value and we took profits.
We believe that the fund is well positioned for an economic recovery. Our
largest overweightings are in the most attractively priced cyclical sectors:
industrials, basic materials, and energy. We remain significantly underweighted
in technology and consumer staples, as much of the recovery is already reflected
in these stocks' valuations.
I am now completing my first year as manager of the fund's stock portion,
working with Paul Kaplan on the fixed income side. We have remained true to
Vanguard Wellington Fund's traditional approach, which is to invest with a
long-term view in attractively priced value stocks and, to a lesser extent,
growth stocks that are out of favor, as well as in investment-grade corporate
bonds. We are pleased to have outperformed our 65% stock/35% bond benchmark in
the 2003 fiscal year, as our bias toward companies with strong balance sheets
and established business models is generally a hindrance in more-speculative
markets.
Edward P. Bousa, VICE PRESIDENT AND PORTFOLIO MANAGER
WELLINGTON MANAGEMENT COMPANY, LLP
DECEMBER 15, 2003
NEW HOLDLINGS
- --------------------------------------------------------------------------------
EQUITY PORTFOLIO CHANGES FISCAL YEAR ENDED NOVEMBER 30, 2003
COMMENTS
- --------------------------------------------------------------------------------
UBS Leading global investment bank and wealth
manager has an attractive valuation with
improving returns.
- --------------------------------------------------------------------------------
Nokia Major global wireless handset manufacturer
has significant exposure to China and new
wireless technologies.
- --------------------------------------------------------------------------------
Coca-Cola Enterprises Major soft-drink bottler is producing better
margins.
- --------------------------------------------------------------------------------
ELIMINATED
- --------------------------------------------------------------------------------
PNC Financial Services Group Large bank has limited prospects to benefit
from an improving economy.
- --------------------------------------------------------------------------------
DaimlerChrysler Major automaker is seeing increased
competition across its product line.
- --------------------------------------------------------------------------------
SEE PAGE 18 FOR A COMPLETE
LISTING OF THE FUND'S HOLDINGS.
9
FUND PROFILE
This Profile provides a snapshot of the fund's characteristics, compared where
indicated with both an appropriate market index and a broad market index. Key
terms are defined on pages 12 and 13.
WELLINGTON FUND
- -----------------------------------------
TOTAL FUND CHARACTERISTICS
Yield
Investor Shares 2.4%
Admiral Shares 2.5%
Turnover Rate 28%
Expense Ratio
Investor Shares 0.36%
Admiral Shares 0.23%
Short-Term Reserves 3%
- -----------------------------------------
- ---------------------------------------------------
TEN LARGEST STOCKS (% OF STOCK PORTFOLIO)
Citigroup, Inc. 3.3%
(banking)
International Business Machines Corp. 2.2
(computer hardware)
Alcoa Inc. 2.0
(metals and mining)
Abbott Laboratories 1.9
(pharmaceuticals)
Bank One Corp. 1.9
(banking)
Union Pacific Corp. 1.8
(railroad)
EnCana Corp. 1.8
(energy)
Verizon Communications 1.8
(telecommunications)
Wachovia Corp. 1.6
(banking)
Exelon Corp. 1.6
(electric utilities)
- ---------------------------------------------------
Top Ten 19.9%
- ---------------------------------------------------
Top Ten as % of Total Net Assets 12.9%
- ---------------------------------------------------
The "Ten Largest Stocks" excludes any equity index products.
- ----------------------------------------------------------------
TOTAL FUND VOLATILITY MEASURES
COMPOSITE BROAD
FUND INDEX* FUND INDEX**
- ----------------------------------------------------------------
R-Squared 0.83 1.00 0.80 1.00
Beta 0.83 1.00 0.50 1.00
- ----------------------------------------------------------------
- --------------------------------------------------------------------------------
SECTOR DIVERSIFICATION (% OF STOCK PORTFOLIO)
COMPARATIVE BROAD
FUND INDEX** INDEX+
- --------------------------------------------------------------------------------
Auto & Transportation 8% 3% 3%
Consumer Discretionary 9 14 16
Consumer Staples 5 8 7
Financial Services 19 22 22
Health Care 10 13 13
Integrated Oils 7 4 3
Other Energy 3 1 2
Materials & Processing 11 3 4
Producer Durables 6 4 5
Technology 9 16 15
Utilities 12 7 6
Other 1 5 4
- --------------------------------------------------------------------------------
- -----------------------------------------
FUND ASSET ALLOCATION
BONDS 32%
STOCKS 65%
SHORT-TERM RESERVES 3%
- -----------------------------------------
* Wellington Composite Index, weighted 65% S&P 500 Index and 35% Lehman Credit A
or Better Index.
**S&P 500 Index.
+Wilshire 5000 Index.
10
- ------------------------------------------------------------------------
STOCK CHARACTERISTICS
COMPARATIVE BROAD
FUND INDEX* INDEX**
- ------------------------------------------------------------------------
Number of Stocks 106 500 5,237
Median Market Cap $27.6B $49.5B $27.5B
Price/Earnings Ratio 20.6x 21.7x 22.7x
Price/Book Ratio 2.4x 3.0x 2.9x
Dividend Yield 2.1% 1.7% 1.5%
Return on Equity 19.0% 21.2% 19.4%
Earnings Growth Rate 2.9% 7.6% 8.1%
Foreign Holdings 9.7% 0.0% 0.8%
- ------------------------------------------------------------------------
- ----------------------------------------
STOCK INVESTMENT FOCUS
STYLE VALUE
MARKET CAP LARGE
- ----------------------------------------
- --------------------------------------------------------------------------
FIXED INCOME CHARACTERISTICS
COMPARATIVE BROAD
FUND INDEXY INDEX++
- --------------------------------------------------------------------------
Number of Bonds 214 1,888 6,703
Yield to Maturity 4.2%+ 4.0% 4.4%
Average Coupon 6.0% 5.9% 5.7%
Average Effective Maturity 7.7 years 8.4 years 7.7 years
Average Quality Aa2 Aa3 Aaa
Average Duration 5.2 years 5.4 years 4.6 years
- --------------------------------------------------------------------------
- ----------------------------------------------------------------
FIXED INCOME INVESTMENT FOCUS
CREDIT QUALITY INVESTMENT-GRADE CORPORATE
AVERAGE MATURITY MEDIUM
- ----------------------------------------------------------------
- ------------------------------------------------------
SECTOR DIVERSIFICATION (% OF FIXED INCOME PORTFOLIO)
Asset-Backed 2%
Commercial Mortgage-Backed 1
Finance 30
Foreign 3
Government Mortgage-Backed 10
Industrial 32
Treasury/Agency 13
Utilities 8
Other 1
- ------------------------------------------------------
Total 100%
- ------------------------------------------------------
- ------------------------------------------------------------
DISTRIBUTION BY CREDIT QUALITY (% OF FIXED INCOME PORTFOLIO)
Treasury/Agency/GSEsyy 23%
Aaa 11
Aa 17
A 38
Baa 9
Ba 0
B 0
Not Rated 2
- ------------------------------------------------------------
Total 100%
- ------------------------------------------------------------
*S&P 500 Index.
**Wilshire 5000 Index.
+Lehman Credit A or Better Index.
++Lehman Aggregate Bond Index.
+Before expenses.
++Includes government mortgage-backed bonds along with debt issued by
government-sponsored enterprises.
VISIT OUR WEBSITE AT VANGUARD.COM
FOR REGULARLY UPDATED FUND INFORMATION.
11
GLOSSARY OF INVESTMENT TERMS
AVERAGE COUPON. The average interest rate paid on the fixed income securities
held by a fund. It is expressed as a percentage of face value.
- --------------------------------------------------------------------------------
AVERAGE DURATION. An estimate of how much the value of the bonds held by a fund
will fluctuate in response to a change in interest rates. To see how the value
could change, multiply the average duration by the change in rates. If interest
rates rise by 1 percentage point, the value of the bonds in a fund with an
average duration of five years would decline by about 5%. If rates decrease by a
percentage point, the value would rise by 5%.
- --------------------------------------------------------------------------------
AVERAGE EFFECTIVE MATURITY. The average length of time until fixed income
securities held by a fund reach maturity and are repaid, taking into
consideration the possibility that the issuer may call the bond before its
maturity date. The figure reflects the proportion of fund assets represented by
each security; it also reflects any futures contracts held. In general, the
longer the average effective maturity, the more a fund's share price will
fluctuate in response to changes in market interest rates.
- --------------------------------------------------------------------------------
AVERAGE QUALITY. An indicator of credit risk, this figure is the average of the
ratings assigned to a fund's fixed income holdings by credit-rating agencies.
The agencies make their judgment after appraising an issuer's ability to meet
its obligations. Quality is graded on a scale, with Aaa or AAA indicating the
most creditworthy bond issuers. U.S. Treasury securities are considered to have
the highest credit quality.
- --------------------------------------------------------------------------------
BETA. A measure of the magnitude of a fund's past share-price fluctuations in
relation to the ups and downs of a given market index. The index is assigned a
beta of 1.00. Compared with a given index, a fund with a beta of 1.20 typically
would have seen its share price rise or fall by 12% when the index rose or fell
by 10%. A fund's beta should be reviewed in conjunction with its R-squared (see
definition on the next page). The lower the R-squared, the less correlation
there is between the fund and the index, and the less reliable beta is as an
indicator of volatility.
- --------------------------------------------------------------------------------
DIVIDEND YIELD. The current, annualized rate of dividends paid on a share of
stock, divided by its current share price. For a fund, the weighted average
yield for stocks it holds. The index yield is based on the current annualized
rate of dividends paid on stocks in the index.
- --------------------------------------------------------------------------------
EARNINGS GROWTH RATE. The average annual rate of growth in earnings over the
past five years for the stocks now in a fund.
- --------------------------------------------------------------------------------
EXPENSE RATIO. The percentage of a fund's average net assets used to pay its
annual administrative and advisory expenses. These expenses directly reduce
returns to investors.
- --------------------------------------------------------------------------------
FOREIGN HOLDINGS. The percentage of a fund's equity assets represented by stocks
or depositary receipts of companies based outside the United States.
- --------------------------------------------------------------------------------
MEDIAN MARKET CAP. An indicator of the size of companies in which a fund
invests; the midpoint of market capitalization (market price x shares
outstanding) of a fund's stocks, weighted by the proportion of the fund's assets
invested in each stock. Stocks representing half of the fund's assets have
market capitalizations above the median, and the rest are below it.
- --------------------------------------------------------------------------------
12
PRICE/BOOK RATIO. The share price of a stock divided by its net worth, or book
value, per share. For a fund, the weighted average price/book ratio of the
stocks it holds.
- --------------------------------------------------------------------------------
PRICE/EARNINGS RATIO. The ratio of a stock's current price to its per-share
earnings over the past year. For a fund, the weighted average P/E of the stocks
it holds. P/E is an indicator of market expectations about corporate prospects;
the higher the P/E, the greater the expectations for a company's future growth.
- --------------------------------------------------------------------------------
R-SQUARED. A measure of how much of a fund's past returns can be explained by
the returns from the market in general, as measured by a given index. If a
fund's total returns were precisely synchronized with an index's returns, its
R-squared would be 1.00. If the fund's returns bore no relationship to the
index's returns, its R-squared would be 0.
- --------------------------------------------------------------------------------
RETURN ON EQUITY. The annual average rate of return generated by a company
during the past five years for each dollar of shareholder's equity (net income
divided by shareholder's equity). For a fund, the weighted average return on
equity for the companies whose stocks it holds.
- --------------------------------------------------------------------------------
SHORT-TERM RESERVES. The percentage of a fund invested in highly liquid,
short-term securities that can be readily converted to cash.
- --------------------------------------------------------------------------------
TURNOVER RATE. An indication of the fund's trading activity. Funds with high
turnover rates incur higher transaction costs and may be more likely to
distribute capital gains (which may be taxable to investors).
- --------------------------------------------------------------------------------
YIELD. A snapshot of a fund's income from interest and dividends. The yield,
expressed as a percentage of the fund's net asset value, is based on income
earned over the past 30 days and is annualized, or projected forward for the
coming year.
- --------------------------------------------------------------------------------
YIELD TO MATURITY. The rate of return an investor would receive if the fixed
income securities held by a fund were held to their maturity dates.
- --------------------------------------------------------------------------------
13
PERFORMANCE SUMMARY
All of the returns in this report represent past performance, which cannot be
used to predict future returns that may be achieved by the fund. (For current
performance, which may be higher or lower than that cited, visit our website at
www.vanguard.com.) Note, too, that both investment returns and principal value
can fluctuate widely, so that an investor's shares, when sold, could be worth
more or less than their original cost. The returns shown do not reflect taxes
that a shareholder would pay on fund distributions or on the sale of fund
shares.
WELLINGTON FUND
- --------------------------------------------------------------------------------------------------
CUMULATIVE PERFORMANCE NOVEMBER 30, 1993-NOVEMBER 30, 2003
WILSHIRE S&P WELLINGTON AVERAGE
WELLINGTON FUND 5000 500 COMPOSITE BALANCED
INVESTOR SHARES INDEX INDEX INDEX* FUND**
199311 10000 10000 10000 10000 10000
199402 10173 10265 10181 10107 10224
199405 10053 9991 10024 9814 9913
199408 10500 10455 10513 10191 10205
199411 9918 10038 10105 9840 9826
199502 10724 10807 10930 10609 10337
199505 11761 11753 12047 11645 11071
199508 12312 12750 12768 12183 11652
199511 13161 13658 13841 13087 12243
199602 13630 14503 14723 13558 12685
199605 13954 15434 15473 13866 13030
199608 14110 14945 15159 13736 12912
199611 15959 17018 17698 15682 14256
199702 16251 17719 18575 16074 14513
199705 17003 18926 20025 16934 15135
199708 17968 20516 21321 17931 16002
199711 18927 21690 22744 19076 16551
199802 20083 23828 25078 20523 17587
199805 20848 24644 26170 21322 18048
199808 19032 21064 23047 19790 16447
199811 21546 25627 28126 22920 18423
199902 21046 27245 30027 23688 18811
199905 22745 29003 31672 24373 19620
199908 22537 29252 32226 24420 19511
199911 22316 31314 34003 25442 20068
200002 20666 33016 33549 25205 20171
200005 22662 31997 34990 25844 20677
200008 23354 35102 37484 27651 21902
200011 23862 29495 32568 25419 20542
200102 25257 28214 30799 25144 20633
200105 26101 28764 31298 25470 20868
200108 25557 26132 28342 24414 19926
200111 25679 26255 28587 24688 20028
200202 26196 25852 27869 24420 19783
200205 26374 25364 26964 23873 19645
200208 24327 21805 23242 22155 18069
200211 24584 22391 23866 22768 18272
200302 23311 20269 21548 21864 17444
200305 26058 23534 24790 24515 19197
200308 26512 25045 26047 24608 19699
200311 27766 26648 27468 25428 20503
- --------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 2003
------------------------------------- FINAL VALUE
ONE FIVE TEN OF A $10,000
YEAR YEARS YEARS INVESTMENT
- --------------------------------------------------------------------------------
Wellington Fund Investor Shares 12.94% 5.20% 10.75% $27,766
Wilshire 5000 Index 19.01 0.78 10.30 26,648
S&P 500 Index 15.09 -0.47 10.63 27,468
Wellington Composite Index* 12.67 2.10 9.78 25,428
Average Balanced Fund** 12.21 2.16 7.44 20,503
- --------------------------------------------------------------------------------
FINAL VALUE
ONE SINCE OF A $250,000
YEAR INCEPTION+ INVESTMENT
- --------------------------------------------------------------------------------
Wellington Fund Admiral Shares 13.09% 3.16% $270,655
Wilshire 5000 Index 19.01 -2.58 233,864
S&P 500 Index 15.09 -4.76 220,799
Wellington Composite Index* 12.67 0.60 253,843
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FISCAL-YEAR TOTAL RETURNS (%) NOVEMBER 30, 1993-NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
WELLINGTON FUND COMPOSITE
INVESTOR SHARES INDEX*
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
- -----------------------------------------------------------
1994 -5.2% 4.4% -0.8% -1.6%
1995 27.3 5.4 32.7 33.0
1996 16.7 4.6 21.3 19.8
1997 14.2 4.4 18.6 21.6
1998 9.6 4.2 13.8 20.1
- -----------------------------------------------------------
WELLINGTON FUND COMPOSITE
INVESTOR SHARES INDEX*
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
- -----------------------------------------------------------
1999 -0.5% 4.1% 3.6% 11.0%
2000 2.6 4.3 6.9 -0.1
2001 3.8 3.8 7.6 -3.4
2002 -7.4 3.1 -4.3 -8.1
2003 9.6 3.3 12.9 12.7
- --------------------------------------------------------------------------------
* Weighted 65% S&P 500 Index and 35% Lehman Long Credit AA or Better Index
through February 29, 2000; and 65% S&P 500 Index and 35% Lehman Credit A or
Better Index thereafter.
**Derived from data provided by Lipper Inc.
+May 14, 2001.
Note: See Financial Highlights tables on pages 28 and 29 for dividend and
capital gains information.
14
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED SEPTEMBER 30, 2003
This table presents average annual total returns through the latest calendar
quarter--rather than through the end of the fiscal period. Securities and
Exchange Commission rules require that we provide this information.
TEN YEARS
ONE FIVE -----------------------
INCEPTION DATE YEAR YEARS CAPITAL INCOME TOTAL
- --------------------------------------------------------------------------------
Wellington Fund
Investor Shares 7/1/1929 17.07% 5.79% 6.19% 4.13% 10.32%
Admiral Shares 5/14/2001 17.21 1.51* -- -- --
- --------------------------------------------------------------------------------
*Return since inception.
15
YOUR FUND'S AFTER-TAX RETURNS
This table presents returns for your fund both before and after taxes. The
after-tax returns are shown in two ways: (1) assuming that an investor owned the
fund during the entire period and paid taxes on the fund's distributions, and
(2) assuming that an investor paid taxes on the fund's distributions and sold
all shares at the end of each period.
Calculations are based on the highest individual federal income tax and capital
gains tax rates in effect at the times of the distributions and the hypothetical
sales. State and local taxes were not considered. After-tax returns reflect the
reduced tax rates on ordinary income (including qualified dividend income) and
short-term capital gains that became effective as of January 1, 2003, and on
long-term capital gains realized on or after May 6, 2003. Qualified dividend
income is based on estimates for calendar year 2003. (In the example, returns
after the sale of fund shares may be higher than those assuming no sale. This
occurs when the sale would have produced a capital loss. The calculation assumes
that the investor received a tax deduction for the loss.)
The table shows returns for Investor Shares only; returns for other share
classes will differ. Please note that your actual after-tax returns will depend
on your tax situation and may differ from those shown. Also note that if you own
the fund in a tax-deferred account, such as an individual retirement account or
a 401(k) plan, this information does not apply to you. Such accounts are not
subject to current taxes.
Finally, keep in mind that a fund's performance--whether before or after
taxes--does not indicate how it will perform in the future.
- ------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED NOVEMBER 30, 2003
ONE YEAR FIVE YEARS TEN YEARS
--------------------------------------
WELLINGTON FUND INVESTOR SHARES
Returns Before Taxes 12.94% 5.20% 10.75%
Returns After Taxes on Distributions 11.94 2.87 8.28
Returns After Taxes on Distributions
and Sale of Fund Shares 8.52 3.24 8.01
- ------------------------------------------------------------------------------
16
ABOUT YOUR FUND'S EXPENSES
All mutual funds have operating expenses. These expenses include costs for
portfolio management, administrative services, and shareholder reports (like
this one), among others. Operating expenses, which are deducted from a fund's
gross income, directly reduce the investment return of the fund. A fund's
expenses are expressed as a percentage of its net assets. This figure is known
as the expense ratio.
a hypothetical example
We believe it is important for you to understand the impact of costs on your
investment. The following example illustrates the costs that you would incur
over a 12-month period if you invested $10,000 in the fund, using the fund's
actual return and operating expenses for the fiscal year ended November 30,
2003. The cost in dollars is calculated by applying the expense ratio to the
average balance in the hypothetical account. For comparative purposes, we also
list the average expense ratio for the fund's peer group, which is derived from
data provided by Lipper Inc.
- --------------------------------------------------------------------------------
COST OF $10,000 FUND PEER GROUP*
INVESTMENT IN FUND EXPENSE RATIO EXPENSE RATIO
- --------------------------------------------------------------------------------
Wellington Fund
Investor Shares $38 0.36% 1.31%
Admiral Shares 25 0.23 --
- --------------------------------------------------------------------------------
*Average Balanced Fund.
The calculation assumes no shares were sold. Your actual costs may have been
higher or lower, depending on the amount of your investment and your holding
period. Peer-group ratio captures data through year-end 2002.
You can find more information about the fund's expenses, including annual
expense ratios for the past five years, in the Financial Statements section of
this report. For additional information on operating expenses and other
shareholder costs, please refer to the fund's prospectus. The prospectus
presents hypothetical shareholder costs over various time periods based upon a
$10,000 investment and a return of 5% a year. This standardized example, which
appears in all mutual fund prospectuses, may be useful to you in comparing the
costs of investing in different funds.
17
FINANCIAL STATEMENTS
STATEMENT OF NET ASSETS
This Statement provides a detailed list of the fund's holdings, including each
security's market value on the last day of the reporting period. Securities are
grouped and subtotaled by asset type (common stocks, bonds, etc.) and by
industry sector. Other assets are added to, and liabilities are subtracted from,
the value of Total Investments to calculate the fund's Net Assets. Finally, Net
Assets are divided by the outstanding shares of the fund to arrive at its share
price, or Net Asset Value (NAV) Per Share.
At the end of the Statement of Net Assets, you will find a table displaying the
composition of the fund's net assets. Because all income and any realized gains
must be distributed to shareholders each year, the bulk of net assets consists
of Paid-in Capital (money invested by shareholders). The amounts shown for
Undistributed Net Investment Income and Accumulated Net Realized Gains usually
approximate the sums the fund had available to distribute to shareholders as
income dividends or capital gains as of the statement date, but may differ
because certain investments or transactions may be treated differently for
financial statement and tax purposes. Any Accumulated Net Realized Losses, and
any cumulative excess of distributions over net income or net realized gains,
will appear as negative balances. Unrealized Appreciation (Depreciation) is the
difference between the market value of the fund's investments and their cost,
and reflects the gains (losses) that would be realized if the fund were to sell
all of its investments at their statement-date values.
- -------------------------------------------------------------------------
MARKET
VALUE*
WELLINGTON FUND SHARES (000)
- -------------------------------------------------------------------------
COMMON STOCKS (65.0%)
- -------------------------------------------------------------------------
AUTO & Transportation (5.1%)
Union Pacific Corp. 5,000,000 $ 318,400
Canadian National Railway Co. 4,000,000 237,400
CSX Corp. 6,532,800 221,396
FedEx Corp. 2,168,500 157,650
* British Airways PLC ADR 3,000,000 117,900
General Motors Corp. 2,715,800 116,182
Norfolk Southern Corp. 4,709,000 100,820
Canadian Pacific Railway Ltd. 2,755,700 75,065
Delta Air Lines, Inc. 2,500,000 31,350
--------
$ 1,376,163
--------
CONSUMER DISCRETIONARY (6.0%)
Waste Management, Inc. 8,623,500 $ 253,617
McDonald's Corp. 8,503,500 217,945
Kimberly-Clark Corp. 3,590,300 194,666
* Accenture Ltd. 7,000,000 174,300
Gillette Co. 4,943,600 166,748
* Time Warner, Inc. 10,231,000 166,561
Omnicom Group Inc. 1,606,000 127,934
Dollar General Corp. 4,302,400 90,867
Gannett Co., Inc. 1,000,000 86,600
* Staples, Inc. 2,817,600 76,498
Target Corp. 1,612,700 62,444
-------------
$ 1,618,180
-------------
CONSUMER STAPLES (3.2%)
Altria Group, Inc. 4,955,300 257,676
PepsiCo, Inc. 3,484,900 167,693
Sara Lee Corp. 5,172,900 106,303
Kraft Foods Inc. 3,237,500 102,532
Kellogg Co. 2,836,000 101,444
General Mills, Inc. 2,000,000 90,020
Coca-Cola Enterprises, Inc. 1,939,800 40,057
-------------
$ 865,725
-------------
FINANCIAL SERVICES (12.2%)
Citigroup, Inc. 12,174,300 572,679
Bank One Corp. 7,488,700 324,710
Wachovia Corp. 6,270,300 286,866
ACE Ltd. 7,270,200 264,999
MBIA, Inc. 3,729,700 216,770
Merrill Lynch & Co., Inc. 3,709,000 210,486
Freddie Mac 3,605,500 196,211
American International Group, Inc. 3,219,800 186,587
The Hartford Financial
Services Group Inc. 3,274,000 180,070
KeyCorp 5,866,100 163,019
Marsh & McLennan Cos., Inc. 3,515,000 156,207
UBS AG 2,340,000 150,181
U.S. Bancorp 4,464,200 123,703
Ambac Financial Group, Inc. 1,482,900 101,949
18
- -------------------------------------------------------------------------
MARKET
VALUE*
WELLINGTON FUND SHARES (000)
- -------------------------------------------------------------------------
Morgan Stanley 1,794,500 $ 99,200
Archstone-Smith Trust REIT 2,480,900 68,175
-------------
$ 3,301,812
-------------
HEALTH CARE (6.6%)
Abbott Laboratories 7,485,000 330,837
Eli Lilly & Co. 3,120,400 213,935
Pfizer Inc. 6,321,000 212,069
Cardinal Health, Inc. 3,327,900 203,468
Schering-Plough Corp. 12,504,700 200,700
Baxter International, Inc. 5,717,800 159,069
Aventis SA ADR 2,671,800 154,029
AstraZeneca Group PLC ADR 3,204,600 147,251
Becton, Dickinson & Co. 2,266,200 90,716
Wyeth 1,883,200 74,198
-------------
$ 1,786,272
-------------
INTEGRATED OILS (4.6%)
BP PLC ADR 6,023,600 257,147
Total SA ADR 2,958,300 238,942
Royal Dutch Petroleum
Co. ADR 5,090,910 228,582
ExxonMobil Corp. 4,000,000 144,680
ChevronTexaco Corp. 1,897,000 142,465
ConocoPhillips Co. 1,619,900 91,913
Petrol Brasil ADR 3,000,000 72,210
Repsol YPF, SA ADR 3,206,900 56,089
-------------
$ 1,232,028
-------------
OTHER ENERGY (2.2%)
EnCana Corp. 8,567,708 314,692
Schlumberger Ltd. 3,500,000 164,220
Burlington Resources, Inc. 2,164,500 108,658
Anadarko Petroleum Corp. 66,600 2,992
---------
$ 590,562
-------------
MATERIALS & PROCESSING (6.9%)
Alcoa Inc. 10,838,700 355,618
Alcan Inc. 6,515,000 276,822
E.I. du Pont de Nemours & Co. 5,754,700 238,590
Weyerhaeuser Co. 3,921,500 223,525
Dow Chemical Co. 4,222,100 158,540
Rohm & Haas Co. 3,895,000 156,384
Avery Dennison Corp. 2,376,500 130,898
International Paper Co. 3,448,400 128,315
PPG Industries, Inc. 2,006,000 117,291
Temple-Inland Inc. 1,416,600 80,080
-------------
$ 1,866,063
-------------
PRODUCER DURABLES (3.9%)
Caterpillar, Inc. 2,998,300 228,021
Parker Hannifin Corp. 3,844,000 211,381
Pitney Bowes, Inc. 4,833,300 192,124
Emerson Electric Co. 2,283,500 139,385
Nokia Corp. ADR 5,334,600 95,916
The Boeing Co. 2,371,100 91,026
Pall Corp. 3,224,000 82,599
-------------
$ 1,040,452
-------------
TECHNOLOGY (5.9%)
International Business Machines Corp. 4,345,800 393,469
General Dynamics Corp. 2,821,900 228,207
Microsoft Corp. 7,652,400 196,667
Hewlett-Packard Co. 8,967,500 194,505
Texas Instruments, Inc. 5,588,100 166,302
Motorola, Inc. 11,660,900 163,719
* Apple Computer, Inc. 5,758,100 120,459
Sony Corp. ADR 2,917,000 100,199
* Corning, Inc. 2,658,500 30,466
-------------
$ 1,593,993
-------------
UTILITIES (7.7%)
Verizon Communications 9,411,500 308,415
Exelon Corp. 4,572,000 282,641
* Comcast Corp. Class A 6,481,800 203,399
FPL Group, Inc. 3,181,000 202,152
Cinergy Corp. 4,509,000 164,804
Pinnacle West Capital Corp. 4,048,600 159,393
Progress Energy, Inc. 3,000,000 131,460
BellSouth Corp. 4,789,100 124,660
AT&T Corp. 5,470,300 108,476
* Deutsche Telekom AG ADR 6,471,800 106,655
SBC Communications Inc. 4,563,400 106,236
TXU Corp. 3,970,000 87,896
ALLTEL Corp. 1,844,400 83,754
-------------
$ 2,069,941
-------------
OTHER (0.7%)
Honeywell International Inc. 4,397,500 130,562
Tyco International Ltd. 2,587,000 59,372
-------------
$ 189,934
-------------
- -------------------------------------------------------------------------
TOTAL COMMON STOCKS (Cost $13,545,912) $ 17,531,125
- -------------------------------------------------------------------------
FACE
AMOUNT
(000)
- -------------------------------------------------------------------------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS (7.6%)
- -------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES (4.3%)
Private Export Funding Corp.
(U.S. Government Guaranteed)
5.75%, 1/15/2008 $ 40,385 44,005
U.S. Treasury Bond
6.25%, 8/15/2023 100,000 112,875
U.S. Treasury Notes
1.50%, 7/31/2005 400,000 398,000
2.00%, 8/31/2005 200,000 200,468
4.00%, 11/15/2012 400,000 393,752
-------------
$ 1,149,100
-------------
MORTGAGE-BACKED SECURITIES (3.3%)
Federal National Mortgage Assn.**
(3) 4.51%, 5/1/2013 20,972 20,690
19
GOVERNMENT NATIONAL MORTGAGE ASSN.
(3) 5.00%, 5/15/2033-7/15/2033 195,538 192,644
(3) 5.50%, 2/15/2029-10/15/2033 368,514 373,353
(3) 6.00%, 3/15/2028-1/22/2033 131,834 136,823
(3) 6.50%, 1/15/2031-1/15/2032 74,363 78,333
(3) 7.00%, 4/15/2023-8/15/2032 85,724 91,323
(3) 8.00%, 6/15/2017 58 64
-------------
$ 893,230
-------------
- -------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS
(Cost $2,054,761) $ 2,042,330
- -------------------------------------------------------------------------
CORPORATE BONDS (22.4%)
- -------------------------------------------------------------------------
ASSET-BACKED SECURITIES (0.5%)
Bank One Issuance Trust
(3) 3.86%, 6/15/2011 40,000 40,140
Bear Stearns Commercial Mortgage Securities Inc.
(3) 4.74%, 3/15/2040 25,000 24,781
(3) 5.61%, 11/15/2033 17,250 18,203
California Infrastructure Econ. Dev.
Bank Special Purpose Trust SDG&E
(3) 6.31%, 9/25/2008 11,180 11,849
California Infrastructure Southern
California Edison SCU
(3) 6.42%, 12/26/2009 16,110 17,754
Morgan Stanley Dean Witter Capital I
(3) 4.74%, 11/13/2036 26,000 25,831
-------------
$ 138,558
-------------
FINANCE (9.5%)
BANKING (3.3%)
Abbey National First Capital
8.20%, 10/15/2004 20,000 21,140
Abbey National PLC
6.69%, 10/17/2005 25,000 26,996
BB&T Corp.
7.25%, 6/15/2007 36,900 41,674
Bank of America Corp.
7.80%, 2/15/2010 30,000 35,362
BankBoston Corp.
6.625%, 12/1/2005 27,000 29,250
Bank of Montreal
7.80%, 4/1/2007 21,000 23,701
Bank One Corp.
7.875%, 8/1/2010 15,000 17,898
Banque Nationale de Paris-NY
7.20%, 1/15/2007 40,000 44,508
Banque Paribas NY
6.95%, 7/22/2013 40,000 45,524
Citicorp
6.75%, 8/15/2005 25,000 26,815
Credit Suisse First Boston USA Inc.
5.875%, 8/1/2006 40,000 43,002
Inter-American Development Bank
4.375%, 9/20/2012 40,000 40,141
NBD Bancorp, Inc.
7.125%, 5/15/2007 35,000 38,936
National City Bank Pennsylvania
7.25%, 10/21/2011 20,000 23,203
Northern Trust Corp.
4.60%, 2/1/2013 5,925 5,801
6.65%, 11/9/2004 25,000 26,147
Royal Bank of Scotland
6.375%, 2/1/2011 40,775 45,354
Scotland International Finance
(4)8.85%, 11/1/2006 28,000 31,892
Societe Generale - NY
7.40%, 6/1/2006 40,000 44,398
SunTrust Bank
7.25%, 9/15/2006 54,000 59,835
US Bank NA Minnesota
5.625%, 11/30/2005 50,000 53,364
Wachovia Corp.
5.625%, 12/15/2008 55,000 59,149
Washington Mutual, Inc.
7.50%, 8/15/2006 40,000 44,764
Wells Fargo & Co.
6.375%, 8/1/2011 15,000 16,645
Wells Fargo Bank NA
6.45%, 2/1/2011 35,000 39,100
BROKERAGE (0.2%)
Dean Witter, Discover & Co.
6.75%, 10/15/2013 25,775 28,562
Dean Witter, Discover & Co. MTN
7.07%, 2/10/2014 17,500 19,949
FINANCE COMPANIES (2.3%)
American Express Credit Corp.
3.00%, 5/16/2008 30,000 29,148
American General Financial
7.45%, 1/15/2005 55,000 58,188
20
- -------------------------------------------------------------------------
FACE MARKET
AMOUNT VALUE*
WELLINGTON FUND (000) (000)
- -------------------------------------------------------------------------
Boeing Capital Corp.
6.50%, 2/15/2012 30,000 32,771
Caterpillar Financial Services Corp.
7.59%, 12/10/2003 40,000 40,050
Countrywide Home Loan
5.50%, 8/1/2006 30,000 31,918
John Deere Capital Corp.
5.10%, 1/15/2013 20,000 20,311
General Electric Capital Corp.
8.125%, 5/15/2012 30,000 35,902
General Motors Acceptance Corp.
6.00%, 4/1/2011 27,370 27,278
Heller Financial Inc.
8.00%, 6/15/2005 40,000 43,475
Household Finance Corp.
6.375%, 10/15/2011 50,000 54,811
LB-UBS Commerical Mortgage Trust
6.462%, 3/15/2031 16,325 18,189
Mercury General Corp.
7.25%, 8/15/2011 20,000 22,124
Norwest Financial, Inc.
6.25%, 12/15/2007 35,000 39,125
Pitney Bowes Credit Corp.
8.55%, 9/15/2009 41,890 51,155
Frank Russell Co.
(4)5.625%, 1/15/2009 30,000 32,005
SLM Corp. MTN
5.375%, 1/15/2013 30,000 30,603
Toyota Motor Credit Corp.
5.50%, 12/15/2008 50,000 54,224
INSURANCE (3.3%)
ACE Capital Trust II
9.70%, 4/1/2030 20,000 25,913
ACE INA Holdings, Inc.
8.20%, 8/15/2004 39,000 40,715
Allstate Corp.
7.20%, 12/1/2009 40,000 46,071
Ambac, Inc.
7.50%, 5/1/2023 25,000 27,904
American International Group, Inc.
(4)6.30%, 5/10/2011 60,000 65,981
Aon Corp.
6.90%, 7/1/2004 48,000 49,303
Cincinnati Financial Corp.
6.90%, 5/15/2028 40,500 42,457
Farmers Exchange Capital
(4) 7.05%, 7/15/2028 25,000 22,750
Florida Windstorm Underwriters
(4) 7.125%, 2/25/2019 55,000 63,415
General Re Corp.
9.00%, 9/12/2009 32,000 39,967
John Hancock Financial Services
5.625%, 12/1/2008 16,080 17,195
Hartford Financial Services Group Inc.
7.90%, 6/15/2010 35,000 41,192
Jackson National Life Insurance Co.
(4) 8.15%, 3/15/2027 39,480 44,990
Liberty Mutual Insurance Co.
(4)7.875%, 10/15/2026 56,210 53,962
Marsh & McLennan Cos. Inc.
6.25%, 3/15/2012 50,000 54,136
Metropolitan Life Insurance Co.
(4)7.70%, 11/1/2015 51,000 60,629
Protective Life Secured Trust
3.70%, 11/24/2008 35,000 34,597
Prudential Insurance Co.
(4)7.65%, 7/1/2007 20,000 22,567
St. Paul Cos. Inc.
5.75%, 3/15/2007 20,000 21,435
Torchmark Corp.
7.875%, 5/15/2023 45,000 51,762
XL Capital Ltd.
6.50%, 1/15/2012 50,000 54,236
FINANCIAL OTHER (0.4%)
Mellon Funding Corp.
5.00%, 12/1/2014 30,000 29,935
National City Bank Columbus
7.25%, 7/15/2010 25,000 28,463
Spieker Properties LP Corp.
7.65%, 12/15/2010 25,000 28,560
Transamerica Financial Corp.
6.40%, 9/15/2008 29,265 31,260
-------------
$ 2,553,782
-------------
INDUSTRIAL (9.8%)
BASIC INDUSTY (1.5%)
Alcan Inc.
4.50%, 5/15/2013 20,000 19,274
7.25%, 3/15/2031 14,425 16,933
Alcoa Inc.
7.375%, 8/1/2010 40,000 46,500
Archer-Daniels-Midland
7.00%, 2/1/2031 29,700 33,862
Avon Products Inc.
4.20%, 7/15/2018 30,000 26,795
21
- -------------------------------------------------------------------------
FACE MARKET
AMOUNT VALUE*
WELLINGTON FUND (000) (000)
- -------------------------------------------------------------------------
BHP Finance USA Ltd.
7.25%, 3/1/2016 $15,000 $17,717
Cardinal Health Inc.
4.00%, 6/15/2015 30,000 27,208
Coca-Cola HBC Finance BV
(4)5.50%, 9/17/2015 17,440 17,731
E.I. du Pont de Nemours & Co.
6.75%, 10/15/2004 40,000 41,796
First Data Corp.
4.70%, 8/1/2013 40,000 39,220
Gannett Co. Inc.
5.50%, 4/1/2007 19,250 20,622
Keyspan Corp.
4.65%, 4/1/2013 9,000 8,730
PPG Industries, Inc.
6.875%, 2/15/2012 13,600 15,399
Rohm & Haas Co.
(3) 9.80%, 4/15/2020 12,375 15,965
U.S. Trading Corp.
(4)4.26%, 11/15/2014 28,023 28,019
Weyerhaeuser Co.
6.00%, 8/1/2006 30,000 31,982
CAPITAL GOODS (1.1%)
Deere & Co.
6.55%, 7/15/2004 16,005 16,494
Emerson Electric Co.
6.30%, 11/1/2005 13,875 14,913
General Dynamics
4.25%, 5/15/2013 40,000 38,122
Honeywell International Inc.
7.50%, 3/1/2010 41,000 47,762
Masco Corp.
6.75%, 3/15/2006 40,000 43,462
Minnesota Mining & Manufacturing Corp.
6.375%, 2/15/2028 30,000 32,422
Rockwell International Corp.
7.875%, 2/15/2005 17,000 18,110
Snap-On Inc.
6.25%, 8/15/2011 34,990 38,562
United Technologies Corp.
6.625%, 11/15/2004 36,500 38,164
COMMUNICATION (0.8%)
AT&T Corp.
7.00%, 11/15/2006 40,000 44,161
BellSouth Corp.
6.00%, 10/15/2011 25,000 26,952
BellSouth Telecommunications
5.875%, 1/15/2009 15,000 16,255
Chesapeake & Potomac Telephone Co. (MD)
7.15%, 5/1/2023 10,000 10,789
Comcast Cable Communications, Inc.
6.875%, 6/15/2009 20,000 22,148
Cox Communications, Inc.
7.75%, 8/15/2006 30,000 33,642
Illinois Bell Telephone Co.
6.625%, 2/1/2025 27,725 28,015
New York Telephone Co.
7.25%, 2/15/2024 20,000 20,463
Southwestern Bell Telephone Co. MTN
7.60%, 4/26/2007 7,000 7,945
Telecomunicaciones de Puerto Rico
6.65%, 5/15/2006 13,000 14,101
CONSUMER CYCLICAL (1.2%)
DaimlerChrysler North America Holding Corp.
7.40%, 1/20/2005 30,000 31,663
Walt Disney Co.
6.375%, 3/1/2012 20,000 21,815
7.30%, 2/8/2005 30,000 31,793
Harley Davidson Funding
(4) 3.625%, 12/15/2008 33,450 33,142
Lowe's Co. Inc.
8.25%, 6/1/2010 10,195 12,407
Target Corp.
7.50%, 2/15/2005 45,000 47,989
Time Warner Inc.
6.95%, 1/15/2028 15,000 15,754
7.57%, 2/1/2024 20,000 22,329
Viacom Inc.
7.70%, 7/30/2010 40,000 47,339
Wal-Mart Stores, Inc.
4.55%, 5/1/2013 23,000 22,558
6.875%, 8/10/2009 12,000 13,725
Wendy's International, Inc.
6.35%, 12/15/2005 25,500 27,266
CONSUMER NONCYCLICAL (2.6%)
Abbott Laboratories
5.625%, 7/1/2006 20,000 21,410
Anheuser-Busch Cos., Inc.
7.00%, 12/1/2025 30,000 32,323
Becton, Dickinson & Co.
8.70%, 1/15/2025 20,000 22,310
22
- -------------------------------------------------------------------------
FACE MARKET
AMOUNT VALUE*
WELLINGTON FUND (000) (000)
- -------------------------------------------------------------------------
Bristol-Myers Squibb
5.75%, 10/1/2011 $ 51,000 $ 54,726
CPC International, Inc.
6.15%, 1/15/2006 6,790 7,299
The Coca-Cola Co.
4.00%, 6/1/2005 40,000 41,197
Coca-Cola Enterprises, Inc.
6.125%, 8/15/2011 30,000 32,924
Conagra Foods Inc.
6.75%, 9/15/2011 30,000 33,789
Diageo PLC
3.50%, 11/19/2007 30,000 30,064
Fortune Brands Inc.
6.25%, 4/1/2008 40,000 43,862
Kimberly-Clark Corp.
6.375%, 1/1/2028 30,000 31,690
Kraft Foods Inc.
4.625%, 11/1/2006 50,000 51,850
Pepsi Bottling Holdings Inc.
(4) 5.625%, 2/17/2009 40,000 43,122
Pharmacia Corp.
6.60%, 12/1/2028 12,000 13,426
Procter & Gamble Co. ESOP
9.36%, 1/1/2021 60,945 82,143
SmithKline Beecham MTN
7.375%, 4/15/2005 15,000 15,877
Uniliver Capital Corp.
7.125%, 11/1/2010 33,000 38,210
UnitedHealth Group Inc.
4.875%, 4/1/2013 30,000 29,929
Warner Lambert
6.00%, 1/15/2008 20,000 21,767
Wyeth
6.70%, 3/15/2011 30,000 33,260
Zeneca Wilmington Inc.
7.00%, 11/15/2023 26,000 30,125
ENERGY (0.7%)
Amoco Corp.
6.50%, 8/1/2007 25,000 27,863
Anadarko Petroleum Corp.
3.25%, 5/1/2008 30,000 29,338
ChevronTexaco Capital Co.
3.50%, 9/17/2007 12,566 12,671
Conoco Inc.
6.35%, 4/15/2009 40,000 44,558
Norsk Hydro A/S
9.00%, 4/15/2012 20,000 25,121
Phillips Petroleum Co.
8.50%, 5/25/2005 15,000 16,464
9.375%, 2/15/2011 20,000 25,351
Talisman Energy, Inc.
7.125%, 6/1/2007 10,000 10,813
TECHNOLOGY (0.4%)
Hewlett-Packard Co.
7.15%, 6/15/2005 50,000 53,799
International Business Machines Corp.
5.875%, 11/29/2032 15,000 14,964
8.375%, 11/1/2019
25,000 32,473
TELECOMMUNICATIONS (0.1%)
Vodafone Group PLC 5.375%, 1/30/2015 35,000 35,053
TRANSPORTATION (0.8%)
CSX Corp. 7.45%, 5/1/2007 29,460 33,198
ERAC USA Finance Co.
(4) 7.35%, 6/15/2008 21,805 24,563
Federal Express Corp.
6.72%, 1/15/2022 44,260 49,958
Norfolk Southern Corp.
8.375%, 5/15/2005 25,000 27,128
PSA Corp. Ltd.
(4) 7.125%, 8/1/2005 50,000 54,014
Southwest Airlines Co.
7.54%, 6/29/2015 30,772 34,770
INDUSTRIAL OTHER (0.6%)
Fortune Brands Inc.
4.875%, 12/1/2013 35,000 34,942
Johnson Controls, Inc.
7.125%, 7/15/2017 36,300 41,688
Stanford University
6.875%, 2/1/2024 34,745 39,785
7.65%, 6/15/2026 29,000 34,860
-------------
$ 2,662,692
-------------
UTILITIES (2.6%)
ELECTRIC UTILITIES (1.8%)
Alabama Power Co.
2.80%, 12/1/2006 23,090 22,971
Carolina Power & Light Co.
5.95%, 3/1/2009 20,000 21,758
Central Illinois Public Service
6.125%, 12/15/2028 54,000 53,269
Consolidated Edison Co. of New York, Inc.
6.45%, 12/1/2007 20,000 22,019
Exelon Generation Co. LLC
6.95%, 6/15/2011 45,000 50,374
23
- -------------------------------------------------------------------------
FACE MARKET
AMOUNT VALUE*
WELLINGTON FUND (000) (000)
- -------------------------------------------------------------------------
Indiana Michigan Power Co.
6.875%, 7/1/2004 $ 30,000 $ 30,782
Kansas City Power & Light
7.125%, 12/15/2005 40,000 43,610
National Rural Utilities Cooperative
Finance Corp.
5.75%, 12/1/2008 50,000 53,910
PacifiCorp
6.625%, 6/1/2007 20,500 22,289
Public Service Electric & Gas
4.00%, 11/1/2008 40,500 40,720
Southern Investments UK PLC
6.80%, 12/1/2006 35,000 36,833
Virginia Electric & Power Co.
5.75%, 3/31/2006 25,000 26,668
7.625%, 7/1/2007 16,200 18,476
Wisconsin Electric
4.50%, 5/15/2013 21,565 20,909
Wisconsin Power & Light Co.
7.625%, 3/1/2010 20,000 23,280
Natural Gas (0.4%)
British Transco Finance
6.625%, 6/1/2018 50,000 53,971
PanEnergy Corp.
7.00%, 10/15/2006 25,000 27,087
Wisconsin Gas Co.
6.60%, 9/15/2013 13,100 14,380
UTILITY OTHER (0.4%)
Atlantic City Electric Co.
(1) 7.00%, 9/1/2023 18,000 18,147
Washington Gas Light Co.
6.15%, 1/26/2026 43,500 45,213
Wisconsin Public Service
6.08%, 12/1/2028 45,000 45,861
-------------
$ 692,527
-------------
- -------------------------------------------------------------------------
TOTAL CORPORATE BONDS (Cost $5,648,202) $ 6,047,559
- -------------------------------------------------------------------------
SOVEREIGN BONDS (U.S. Dollar-Denominated) (1.1%)
- -------------------------------------------------------------------------
Bayerische Landesbank - NY
6.375%, 10/15/2005 25,000 26,838
British Columbia
4.30%, 5/30/2013 40,000 39,158
Deutsche Ausgleichbank
7.00%, 6/23/2005 50,000 53,832
KFW International Finance
7.00%, 3/1/2013 10,000 11,549
Kredit Fuer Wiederaufbau
3.375%, 1/23/2008 30,000 30,135
Province of Ontario
4.375%, 2/15/2013 40,000 39,400
Quebec Hydro Electric
6.30%, 5/11/2011 40,000 44,711
Westdeutsche Landesbank - NY
6.75%, 6/15/2005 50,000 53,430
- -------------------------------------------------------------------------
TOTAL SOVEREIGN BONDS (Cost $292,604) $ 299,053
- -------------------------------------------------------------------------
COMMERCIAL MORTGAGE-BACKED SECURITIES (0.4%)
- -------------------------------------------------------------------------
Asset Securitization Corp.
(3) 7.49%, 4/14/2029 20,000 22,334
Bank of America Mortgage
Securities Mortgage Certificates
(3) 4.875%, 1/25/2033 20,000 19,853
DLJ Mortgage Acceptance Corp.
(3)(4) 6.82%, 10/15/2030 23,849 25,835
(3)(4) 7.60%, 5/15/2030 31,660 34,678
Nomura Asset Securities Corp.
(3) 6.69%, 3/15/2030 13,000 14,651
- -------------------------------------------------------------------------
TOTAL COMMERCIAL MORTGAGE-BACKED SECURITIES
(Cost $110,946) $ 117,351
- -------------------------------------------------------------------------
TAXABLE MUNICIPAL BONDS (0.3%)
- -------------------------------------------------------------------------
Chelan County Washington
Public Utility District
(1) 7.07%, 6/1/2007 10,000 11,265
(1) 7.10%, 6/1/2008 12,000 13,686
Oakland CA Pension Obligation
(1) 6.98%, 12/15/2009 7,801 8,944
Southern California Public Power Auth.
(2) 6.93%, 5/15/2017 30,000 34,632
- -------------------------------------------------------------------------
TOTAL TAXABLE MUNICIPAL BONDS (Cost $59,801) $ 68,527
- -------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS (5.2%)
- -------------------------------------------------------------------------
REPURCHASE AGREEMENTS
Collateralized by U.S.Government
Obligations in a Pooled Cash Account
1.05%, 12/1/2003 746,697 746,697
1.05%, 12/1/2003--Note G 660,218 660,218
- -------------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $1,406,915) $ 1,406,915
- -------------------------------------------------------------------------
TOTAL INVESTMENTS (102.0%) (Cost $23,119,141) $ 27,512,860
- -------------------------------------------------------------------------
24
- -------------------------------------------------------------------------
MARKET
VALUE*
(000)
- -------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-2.0%)
- -------------------------------------------------------------------------
Other Assets--Note C 592,301
Security Lending Collateral Payable to Brokers--Note G (660,218)
Other Liabilities (459,687)
-------------
(527,604)
-------------
- -------------------------------------------------------------------------
NET ASSETS (100%) $ 26,985,256
=========================================================================
*See Note A in Notes to Financial Statements.
*Non-income-producing security.
** The issuer is a publicly-traded company that operates under a congressional
charter; its securities are neither issued nor guaranteed by the U.S.
government.
(1) Scheduled principal and interest payments are guaranteed by MBIA (Municipal
Bond Insurance Association).
(2) Scheduled principal and interest payments are guaranteed by FSA (Financial
Security Assurance).
(3) The average maturity is shorter than the final maturity shown due to
scheduled interim principal payments and prepayments.
(4) Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be sold in transactions exempt from
registration, normally to qualified institutional buyers. At November 30,
2003, the aggregate value of these securities was $659,295,000,
representing 2.4% of net assets.
ADR--American Depositary Receipt.
MTN--Medium-Term Note.
REIT--Real Estate Investment Trust.
- -----------------------------------------------------------------------------
AMOUNT
(000)
- -----------------------------------------------------------------------------
AT NOVEMBER 30, 2003, NET ASSETS CONSISTED OF:
- -----------------------------------------------------------------------------
Paid-in Capital $22,602,535
Undistributed Net Investment Income 123,064
Accumulated Net Realized Losses (134,062)
Unrealized Appreciation 4,393,719
- -----------------------------------------------------------------------------
NET ASSETS $26,985,256
=============================================================================
Investor Shares--Net Assets
Applicable to 834,508,171 outstanding $.001
par value shares of beneficial interest
(unlimited authorization) $23,107,727
- -----------------------------------------------------------------------------
NET ASSET VALUE PER SHARE-- INVESTOR SHARES $27.69
=============================================================================
Admiral Shares--Net Assets
Applicable to 81,053,194 outstanding $.001
par value shares of beneficial interest
(unlimited authorization) $3,877,529
- -----------------------------------------------------------------------------
NET ASSET VALUE PER SHARE-- ADMIRAL SHARES $47.84
=============================================================================
See Note E in Notes to Financial Statements for the tax-basis components of
net assets.
25
STATEMENT OF OPERATIONS
This Statement shows the types of income earned by the fund during the reporting
period, and details the operating expenses charged to each class of its shares.
These expenses directly reduce the amount of investment income available to pay
to shareholders as income dividends. This Statement also shows any Net Gain
(Loss) realized on the sale of investments, and the increase or decrease in the
Unrealized Appreciation (Depreciation) of investments during the period.
- --------------------------------------------------------------------------------
WELLINGTON FUND
YEAR ENDED NOVEMBER 30, 2003
(000)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
INCOME
Dividends $ 359,175
Interest 439,197
Security Lending 1,902
- --------------------------------------------------------------------------------
Total Income 800,274
- --------------------------------------------------------------------------------
EXPENSES
Investment Advisory Fees--Note B Basic Fee 9,006
Performance Adjustment 2,651
The Vanguard Group--Note C
Management and Administrative
Investor Shares 60,282
Admiral Shares 5,574
Marketing and Distribution
Investor Shares 2,484
Admiral Shares 348
Custodian Fees 185
Auditing Fees 14
Shareholders' Reports and Proxies
Investor Shares 913
Admiral Shares 13
Trustees' Fees and Expenses 31
- --------------------------------------------------------------------------------
Total Expenses 81,501
Expenses Paid Indirectly--Note D (4,176)
- --------------------------------------------------------------------------------
Net Expenses 77,325
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 722,949
- --------------------------------------------------------------------------------
REALIZED NET GAIN (LOSS) ON INVESTMENT SECURITIES SOLD (99,852)
- --------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENT SECURITIES 2,382,197
- --------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 3,005,294
================================================================================
26
STATEMENT OF CHANGES IN NET ASSETS
This Statement shows how the fund's total net assets changed during the two most
recent reporting periods. The Operations section summarizes information detailed
in the Statement of Operations. The amounts shown as Distributions to
shareholders from the fund's net income and capital gains may not match the
amounts shown in the Operations section, because distributions are determined on
a tax basis and may be made in a period different from the one in which the
income was earned or the gains were realized on the financial statements. The
Capital Share Transactions section shows the net amount shareholders invested in
or redeemed from the fund. Distributions and Capital Share Transactions are
shown separately for each class of shares.
- --------------------------------------------------------------------------------
WELLINGTON FUND
--------------------------------
YEAR ENDED NOVEMBER 30,
--------------------------------
2003 2002
(000) (000)
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net Investment Income $ 722,949 $ 760,194
Realized Net Gain (Loss) (99,852) (32,965)
Change in Unrealized Appreciation
(Depreciation) 2,382,197 (1,822,934)
- --------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 3,005,294 (1,095,705)
- --------------------------------------------------------------------------------
DISTRIBUTIONS
Net Investment Income
Investor Shares (616,943) (688,391)
Admiral Shares (98,947) (92,614)
Realized Capital Gain*
Investor Shares -- (857,749)
Admiral Shares -- (98,110)
- --------------------------------------------------------------------------------
Total Distributions (715,890) (1,736,864)
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS--NOTE H
Investor Shares 1,129,921 638,277
Admiral Shares 636,806 973,488
- --------------------------------------------------------------------------------
Net Increase (Decrease) from Capital
Share Transactions 1,766,727 1,611,765
- --------------------------------------------------------------------------------
Total Increase (Decrease) 4,056,131 (1,220,804)
- --------------------------------------------------------------------------------
NET ASSETS
Beginning of Period 22,929,125 24,149,929
- --------------------------------------------------------------------------------
End of Period $26,985,256 $22,929,125
================================================================================
* Includes fiscal 2003 and 2002 short-term gain distributions totaling $0 and
$138,987,000, respectively. Short-term gain distributions are treated as
ordinary income dividends for tax purposes.
27
financial highlights
This table summarizes the fund's investment results and distributions to
shareholders on a per-share basis for each class of shares. It also presents the
Total Return and shows net investment income and expenses as percentages of
average net assets. These data will help you assess: the variability of the
fund's net income and total returns from year to year; the relative
contributions of net income and capital gains to the fund's total return; how
much it costs to operate the fund; and the extent to which the fund tends to
distribute capital gains. The table also shows the Portfolio Turnover Rate, a
measure of trading activity. A turnover rate of 100% means that the average
security is held in the fund for one year.
WELLINGTON FUND INVESTOR SHARES
- ---------------------------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $25.27 $28.41 $28.83 $29.62 $32.29
- ---------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income .77 .837 .97 1.07 1.13
Net Realized and Unrealized Gain (Loss)
on Investments 2.42 (1.986) 1.10 .79 (.14)
- ---------------------------------------------------------------------------------------------------
Total from Investment Operations 3.19 (1.149) 2.07 1.86 .99
- ---------------------------------------------------------------------------------------------------
Distribution
Dividends from Net Investment Income (.77) (.870) (1.01) (1.15) (1.22)
Distributions from Realized Capital Gains -- (1.121) (1.48) (1.50) (2.44)
- ---------------------------------------------------------------------------------------------------
Total Distributions (.77) (1.991) (2.49) (2.65) (3.66)
- ---------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $27.69 $25.27 $28.41 $28.83 $29.62
===================================================================================================
Total Return 12.94% -4.27% 7.62% 6.93% 3.58%
===================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $23,108 $20,007 $21,864 $22,524 $25,846
Ratio of Total Expenses to Average Net Assets* 0.36% 0.36% 0.36% 0.31% 0.30%
Ratio of Net Investment Income to
Average Net Assets 3.00% 3.18% 3.42% 3.77% 3.74%
Portfolio Turnover Rate 28% 25% 33% 33% 22%
===================================================================================================
* Includes performance-based investment advisory fee increases (decreases) of
0.01%, 0.01%, 0.01%, (0.01%), and (0.01%).
28
WELLINGTON FUND ADMIRAL SHARES
- --------------------------------------------------------------------------------
YEAR ENDED
NOVEMBER 30, MAY 14* TO
---------------------- NOV. 30,
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2003 2002 2001
- --------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $43.66 $49.08 $50.00
- --------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net Investment Income 1.383 1.494 .940
Net Realized and Unrealized Gain (Loss)
on Investments 4.183 (3.425) (1.045)
- --------------------------------------------------------------------------------
Total from Investment Operations 5.566 (1.931) (.105)
- --------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (1.386) (1.552) (.815)
Distributions from Realized Capital Gains -- (1.937) --
- --------------------------------------------------------------------------------
Total Distributions (1.386) (3.489) (.815)
- --------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $47.84 $43.66 $49.08
================================================================================
TOTAL RETURN 13.09% -4.15% -0.12%
================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (Millions) $3.878 $2,922 $2,286
Ratio of Total Expenses to
Average Net Assets+ 0.23% 0.26% 0.28%**
Ratio of Net Investment Income to
Average Net Assets 3.12% 3.30% 3.44%**
Portfolio Turnover Rate 28% 25% 33%
================================================================================
*Inception.
**Annualized.
+Includes performance-based investment advisory fee increases (decreases) of
0.01%, 0.01%, and 0.01%.
SEE ACCOMPANYING NOTES, WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
29
NOTES TO FINANCIAL STATEMENTS
Vanguard Wellington Fund is registered under the Investment Company Act of 1940
as an open-end investment company, or mutual fund. The fund offers two classes
of shares, Investor Shares and Admiral Shares. Investor Shares are available to
any investor who meets the fund's minimum purchase requirements. Admiral Shares
are designed for investors who meet certain administrative, servicing, tenure,
and account-size criteria. Certain of the portfolio's investments are in
corporate debt instruments; the issuers' abilities to meet their obligations may
be affected by economic developments in their respective industries. A. The
following significant accounting policies conform to generally accepted
accounting principles for U.S. mutual funds. The fund consistently follows such
policies in preparing its financial statements.
1. SECURITY VALUATION: Securities are valued as of the close of trading on
the New York Stock Exchange (generally 4:00 p.m. Eastern time) on the valuation
date. Equity securities are valued at the latest quoted sales prices or official
closing prices taken from the primary market in which each security trades; such
securities not traded on the valuation date are valued at the mean of the latest
quoted bid and asked prices. Bonds, and temporary cash investments acquired over
60 days to maturity, are valued using the latest bid prices or using valuations
based on a matrix system (which considers such factors as security prices,
yields, maturities, and ratings), both as furnished by independent pricing
services. Other temporary cash investments are valued at amortized cost, which
approximates market value. Securities for which market quotations are not
readily available, or whose values have been materially affected by events
occurring before the fund's pricing time but after the close of the securities'
primary markets, are valued by methods deemed by the board of trustees to
represent fair value.
2. REPURCHASE AGREEMENTS: The fund, along with other members of The
Vanguard Group, transfers uninvested cash balances to a pooled cash account,
which is invested in repurchase agreements secured by U.S. government
securities. Securities pledged as collateral for repurchase agreements are held
by a custodian bank until the agreements mature. Each agreement requires that
the market value of the collateral be sufficient to cover payments of interest
and principal; however, in the event of default or bankruptcy by the other party
to the agreement, retention of the collateral may be subject to legal
proceedings.
3. FEDERAL INCOME TAXES: The fund intends to continue to qualify as a
regulated investment company and distribute all of its taxable income.
Accordingly, no provision for federal income taxes is required in the financial
statements.
4. DISTRIBUTIONS: Distributions to shareholders are recorded on the
ex-dividend date.
5. OTHER: Dividend income is recorded on the ex-dividend date. Security
transactions are accounted for on the date securities are bought or sold. Costs
used to determine realized gains (losses) on the sale of investment securities
are those of the specific securities sold. Premiums and discounts on debt
securities purchased are amortized and accreted, respectively, to interest
income over the lives of the respective securities.
Each class of shares has equal rights as to assets and earnings, except that
each class separately bears certain class-specific expenses related to
maintenance of shareholder accounts (included in Management and Administrative
expenses), shareholder reporting, and proxies. Marketing and distribution
expenses are allocated to each class of shares based on a method approved by the
board of trustees. Income, other non-class-specific expenses, and gains and
losses on investments are allocated to each class of shares based on its
relative net assets.
30
B. Wellington Management Company, llp, provides investment advisory services to
the fund for a fee calculated at an annual percentage rate of average net
assets. The basic fee is subject to quarterly adjustments based on the fund's
performance for the preceding three years relative to a combined index
comprising the S&P 500 Index and the Lehman Brothers Credit A or Better Bond
Index. For the year ended November 30, 2003, the investment advisory fee
represented an effective annual basic rate of 0.04% of the fund's average net
assets before an increase of $2,651,000 (0.01%) based on performance.
C. The Vanguard Group furnishes at cost corporate management, administrative,
marketing, and distribution services. The costs of such services are allocated
to the fund under methods approved by the board of trustees. The fund has
committed to provide up to 0.40% of its net assets in capital contributions to
Vanguard. At November 30, 2003, the fund had contributed capital of $4,301,000
to Vanguard (included in Other Assets), representing 0.02% of the fund's net
assets and 4.30% of Vanguard's capitalization. The fund's trustees and officers
are also directors and officers of Vanguard.
D. The fund has asked its investment advisor 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. The fund's
custodian bank has also agreed to reduce its fees when the fund maintains cash
on deposit in the non-interest-bearing custody account. For the year ended
November 30, 2003, directed brokerage and custodian fee offset arrangements
reduced expenses by $4,120,000 and $56,000, respectively. The total expense
reduction represented an effective annual rate of 0.02% of the fund's average
net assets.
E. Distributions are determined on a tax basis and may differ from net
investment income and realized capital gains for financial reporting purposes.
Differences may be permanent or temporary. Permanent differences are
reclassified among capital accounts in the financial statements to reflect their
tax character. Temporary differences arise when certain items of income,
expense, gain, or loss are recognized in different periods for financial
statement and tax purposes; these differences will reverse at some time in the
future. Differences in classification may also result from the treatment of
short-term gains as ordinary income for tax purposes.
For tax purposes, at November 30, 2003, the fund had $155,570,000 of ordinary
income available for distribution. The fund had available realized losses of
$132,817,000 to offset future net capital gains of $32,965,000 through November
30, 2010, and $99,852,000 through November 30, 2011.
At November 30, 2003, net unrealized appreciation of investment securities for
tax purposes was $4,393,719,000, consisting of unrealized gains of
$4,959,240,000 on securities that had risen in value since their purchase and
$565,521,000 in unrealized losses on securities that had fallen in value since
their purchase.
F. During the year ended November 30, 2003, the fund purchased $6,984,308,000 of
investment securities and sold $5,925,545,000 of investment securities, other
than U.S. government securities and temporary cash investments. Purchases and
sales of U.S. government securities were $1,356,320,000 and $447,694,000,
respectively.
G. The market value of securities on loan to broker/dealers at November 30,
2003, was $985,898,000, for which the fund held as collateral cash of
$660,218,000 and U.S. government and agency securities with a market value of
$351,503,000. The fund invests cash collateral received in repurchase
agreements, and records a liability for the return of the collateral, during the
period the securities are on loan. Security loans are required to be secured at
all times by collateral at least equal to the market value of securities loaned;
however, in the event of default or bankruptcy by the other party to the
agreement, retention of the collateral may be subject to legal proceedings.
31
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
H. Capital share transactions for each class of shares were:
- --------------------------------------------------------------------------------
YEAR ENDED NOVEMBER 30,
----------------------------------------
2003 2002
-----------------------------------------
AMOUNT SHARES AMOUNT SHARES
(000) (000) (000) (000)
- --------------------------------------------------------------------------------
INVESTOR SHARES
Issued $ 3,292,641 127,791 $ 3,461,399 130,767
Issued in Lieu of Cash
Distributions 583,124 23,002 1,474,734 55,452
Redeemed (2,745,844) (108,093) (4,297,856) (164,084)
Net Increase (Decrease)-- ----------------------------------------------
Investor Shares 1,129,921 42,700 638,277 22,135
----------------------------------------------
ADMIRAL SHARES
Issued 962,241 21,589 1,207,851 25,812
Issued in Lieu of Cash
Distributions 88,510 2,019 173,723 3,792
Redeemed (413,945) (9,482) (408,086) (9,254)
Net Increase (Decrease)-- ----------------------------------------------
Admiral Shares 636,806 14,126 973,488 20,350
- --------------------------------------------------------------------------------
32
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Trustees of Vanguard Wellington Fund:
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Vanguard Wellington Fund (the "Fund") at November 30, 2003, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with auditing
standards generally accepted in the United States of America, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at November 30, 2003 by correspondence with the custodian, provide
a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
January 6, 2004
- --------------------------------------------------------------------------------
SPECIAL 2003 TAX INFORMATION
(UNAUDITED) FOR VANGUARD WELLINGTON FUND
This information for the fiscal year ended November 30, 2003, is included
pursuant to provisions of the Internal Revenue Code.
For corporate shareholders, 42.4% of investment income (dividend income plus
short-term gains, if any) qualifies for the dividends-received deduction.
The fund intends to distribute the maximum amount of qualified dividend income
allowable. The amount of qualified dividend income distributed by the fund will
be provided to individual shareholders on their 2003 Form 1099-DIV.
- --------------------------------------------------------------------------------
33
INVESTING IS FAST, EASY, AND SECURE ON VANGUARD.COM
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34
CAPITALIZE ON YOUR IRA
Are you taking full advantage of your individual retirement account? You really
should be. The contribution limits on IRAs were recently raised, making these
tax-deferred accounts more powerful options for retirement savers.
Here's how you can exploit your IRA--and improve your chances of having the
retirement of your dreams.
CONTRIBUTE THE MAXIMUM AMOUNT EACH YEAR
It may be an obvious point, but if you invest as much in your IRA as the law
allows--currently $3,000 per tax year if you are under age 50 and $3,500 if you
are age 50 or over--you will increase the odds of meeting your retirement goals.
"Max out" every year you can.
MAKE IT AUTOMATIC
Put your IRA on autopilot by taking advantage of Vanguard's Automatic Investment
Plan. Your IRA contributions will be deducted from your bank account on a
schedule of your choosing, making retirement investing a healthy habit.
CONSIDER COST
The owners of low-cost investments keep a larger portion of their gross returns
than the owners of high-cost investments. Over the long term, avoiding costlier
mutual funds and brokerage commissions could significantly boost your retirement
savings. Our low costs are one reason a Vanguard IRA(R) is such a smart choice.
REQUEST A DIRECT ROLLOVER WHEN YOU CHANGE JOBS
Don't spend your retirement assets before you've retired. When you change jobs,
roll your 401(k) or other employer-sponsored retirement plan assets directly
into your IRA.
If you have questions about your IRA, want to transfer an IRA from another
institution to Vanguard, or need help with any other IRA transaction, call our
Retirement Resource Center at 1-800-205-6189 or visit VANGUARD.COM. You can open
or fund your IRA on our website and have a confirmation in your hand within
minutes.
35
THE PEOPLE WHO GOVERN YOUR FUND
The trustees of your mutual fund are there to see that the fund is operated and
managed in your best interests since, as a shareholder, you are a part owner of
the fund. Your fund trustees also serve on the board of directors of The
Vanguard Group, Inc., which is owned by the Vanguard(R) funds and provides
services to them on an at-cost basis.
A majority of Vanguard's board members are independent, meaning that they have
no affiliation with Vanguard or the funds they oversee, apart from the sizable
personal investments they have made as private individuals.
Our independent board members bring distinguished backgrounds in business,
academia, and public service to their task of working with Vanguard officers to
establish the policies and oversee the activities of
- ------------------------------------------------------------------------------------------------------------
POSITION(S) HELD WITH
NAME FUND (NUMBER OF
(YEAR OF BIRTH) VANGUARD FUNDS
TRUSTEE/OFFICER OVERSEEN BY
SINCE TRUSTEE/OFFICER) PRINCIPAL OCCUPATION(S) DURING THE PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------
JOHN J. BRENNAN* Chairman of the Chairman of the Board, Chief Executive Officer, and Director/Trustee
(1954) Board, Chief of The Vanguard Group, Inc., and of each of the investment companies
May 1987 Executive Officer, served by The Vanguard Group.
and Trustee
(112)
- ------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
CHARLES D. ELLIS Trustee The Partners of '63 (pro bono ventures in education); Senior Advisor
(1937) (112) to Greenwich Associates (international business strategy consulting);
January 2001 Successor Trustee of Yale University; Overseer of the Stern School of
Business at New York University; Trustee of the Whitehead Institute
for Biomedical Research.
- ------------------------------------------------------------------------------------------------------------
RAJIV L. GUPTA Trustee Chairman and Chief Executive Officer (since October 1999), Vice
(1945) (112) Chairman (JanuarySeptember 1999), and Vice President (prior to
December 2001 September 1999) of Rohm and Haas Co. (chemicals); Director of
Technitrol, Inc. (electronic components), and Agere Systems
(communications components); Board Member of the American Chemistry
Council; and Trustee of Drexel University.
- ------------------------------------------------------------------------------------------------------------
JOANN HEFFERNAN Trustee Vice President, Chief Information Officer, and Member of the
HEISEN (112) Executive Committee of Johnson & Johnson (pharmaceuticals/consumer
(1950) products); Director of the Medical Center at Princeton and Women's
July 1998 Research and Education Institute.
- ------------------------------------------------------------------------------------------------------------
BURTON G. MALKIEL TRUSTEE Chemical Bank Chairman's Professor of Economics,Princeton University;
(1932) (110) Director of Vanguard Investment Series plc (Irish invest-ment fund)
May 1977 (since November 2001), Vanguard Group (Ireland)Limited (Irish
investment management firm)(since November 2001),Prudential Insurance
Co. of America, BKF Capital (investment management), The Jeffrey Co.
(holding company), and NeuVis, Inc.(software company).
- ------------------------------------------------------------------------------------------------------------
the funds. Among board members' responsibilities are selecting investment
advisors for the funds; monitoring fund operations, performance, and costs;
reviewing contracts; nominating and selecting new trustees/directors; and
electing Vanguard officers.
Each trustee serves a fund until its termination; or until the trustee's
retirement, resignation, or death; or otherwise as specified in the fund's
organizational documents. Any trustee may be removed at a shareholders' meeting
by a vote representing two-thirds of the net asset value of all shares of the
fund together with shares of other Vanguard funds organized within the same
trust. The table on these two pages shows information for each trustee and
executive officer of the fund. The mailing address of the trustees and officers
is P.O. Box 876, Valley Forge, PA 19482.
POSITION(S) HELD WITH
NAME FUND (NUMBER OF
(YEAR OF BIRTH) VANGUARD FUNDS
TRUSTEE/OFFICER OVERSEEN BY
SINCE TRUSTEE/OFFICER) PRINCIPAL OCCUPATION(S) DURING THE PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------
Alfred M. Rankin, Jr. Trustee Chairman, President, Chief Executive Officer, and Director of NACCO
(1941) (112) Industries, Inc. (forklift trucks/housewares/lignite); Director of
January 1993 Goodrich Corporation (industrial products/aircraft systems and
services); Director of Standard Products Company (supplier for
the automotive industry) until 1998.
- ------------------------------------------------------------------------------------------------------------
J. Lawrence Wilson Trustee Retired Chairman and Chief Executive Officer of Rohm and Haas Co.
(1936) (112) (chemicals); Director of Cummins Inc. (diesel engines), The Mead
April 1985 Corp. (paper products), and AmerisourceBergen Corp. (pharmaceuti-cal
distribution); Trustee of Vanderbilt University.
- ------------------------------------------------------------------------------------------------------------
EXECUTIVE OFFICERS*
R. Gregory Barton Secretary Managing Director and General Counsel of The Vanguard Group, Inc.;
(1951) (112) Secretary of The Vanguard Group and of each of the investment
June 2001 companies served by The Vanguard Group.
- ------------------------------------------------------------------------------------------------------------
Thomas J. Higgins Treasurer Principal of The Vanguard Group, Inc.; Treasurer of each of the
(1957) (112) investment companies served by The Vanguard Group.
July 1998
- ------------------------------------------------------------------------------------------------------------
*Officers of the funds are "interested persons" as defined in the Investment
Company Act of 1940.
More information about the trustees is in the Statement of Additional
Information, available from The Vanguard Group.
- ------------------------------------------------------------------------------------------------------------
VANGUARD SENIOR MANAGEMENT TEAM
MORTIMER J. BUCKLEY, Information Technology. MICHAEL S. MILLER, Planning and Development.
JAMES H. GATELY, Investment Programs and Services. RALPH K. PACKARD, Finance.
KATHLEEN C. GUBANICH, Human Resources. GEORGE U. SAUTER, Chief Investment Officer.
F. WILLIAM MCNABB, III, Client Relationship Group.
- ------------------------------------------------------------------------------------------------------------
JOHN C. BOGLE, Founder; Chairman and Chief Executive Officer, 1974-1996.
- ------------------------------------------------------------------------------------------------------------
[SHIP]
[THE VANGUARD GROUP(R) LOGO]
Post Office Box 2600
Valley Forge, PA 19482-2600
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and the ship logo are trademarks of The Vanguard Group, Inc.
All other marks are the exclusive property of their respective owners.
ABOUT OUR COVER
The photographs that appear on the cover of this report are copyrighted by
Michael Kahn.
FOR MORE INFORMATION
This report is intended for the fund's shareholders. It may not be distributed
to prospective investors unless it is preceded or accompanied by the current
fund prospectus.
To receive a free copy of the prospectus or the Statement of Additional
Information, or to request additional information about the fund or other
Vanguard funds, please contact us at one of the adjacent telephone numbers or by
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Prospectuses may also be viewed online.
All comparative mutual fund data are from Lipper Inc. or Morningstar, Inc.,
unless otherwise noted.
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www.vanguard.com
FUND INFORMATION
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(C) 2004 THE VANGUARD GROUP, INC.
ALL RIGHTS RESERVED.
VANGUARD MARKETING
CORPORATION, DISTRIBUTOR.
Q210 012004
ITEM 2: Code of Ethics. The Board of Trustees has adopted a code of ethics that
applies to the principal executive officer, principal financial officer,
principal accounting officer or controller of the Registrant and The Vanguard
Group, Inc., and to persons performing similar functions.
ITEM 3: Audit Committee Financial Expert. All of the members of the Audit
Committee have been determined by the Registrant's Board of Trustees to be Audit
Committee Financial Experts. The members of the Audit Committee are: Charles D.
Ellis, Rajiv L. Gupta, JoAnn Heffernan Heisen, Burton G. Malkiel, Alfred M.
Rankin, Jr., and J. Lawrence Wilson. All Audit Committee members are independent
under applicable rules.
ITEM 4: Not applicable.
ITEM 5: Not applicable.
ITEM 6: Reserved.
ITEM 7: Not applicable.
ITEM 8: Reserved.
ITEM 9: 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 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 10: EXHIBITS. The following exhibits are attached hereto:
(a) code of ethics
(b) certifications
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 WELLINGTON FUND
BY:_____________(signature)________________
(HEIDI STAM)
JOHN J. BRENNAN*
CHIEF EXECUTIVE OFFICER
Date: January 22, 2004
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 WELLINGTON FUND
BY:_____________(signature)________________
(HEIDI STAM)
JOHN J. BRENNAN*
CHIEF EXECUTIVE OFFICER
Date: January 22, 2004
VANGUARD WELLINGTON FUND
BY:_____________(signature)________________
(HEIDI STAM)
THOMAS J. HIGGINS*
TREASURER
Date: January 22, 2004
*By Power of Attorney. See File Number 2-57689, filed on December 26, 2002.
Incorporated by Reference.