<PAGE> 1
[VANGUARD WELLINGTON FUND LOGO]
ANNUAL REPORT 1995
<PAGE> 2
In this Annual Report, I am delighted to formally introduce you to John J.
Brennan, who, on January 31, 1996, will assume my responsibilities as Chief
Executive Officer of Vanguard/Wellington Fund and the other Funds in The
Vanguard Group. Mr. Brennan will continue to serve as President of the Funds,
and I will continue to serve as Chairman of the Board.
[FIGURE 1]
As a shareholder of the Fund for more than a quarter century and as
Chairman of all the Vanguard Funds, I want to tell you that I am enthusiastic
and confident that Jack Brennan is exactly the right person to succeed me as
Chief Executive Officer. To use yet another Vanguard nautical metaphor, he will
be the new captain. He has the qualities of leadership, integrity,
intelligence, and vision that must continue to be Vanguard's hallmark as we
move toward, and then into, the 21st century.
I know that he has these qualities, because Jack Brennan and I have been
working closely together since he joined Vanguard in 1982. He is a graduate of
Dartmouth College and Harvard Business School. He started as Assistant to the
Chairman and, rising like a rocket, became President in 1989. While, at age 41,
he may seem young, he is in fact older than I was when I became Chief Executive
Officer of Vanguard's predecessor organization in 1967, at the age of 38. Most
important of all, Jack is completely dedicated to the Vanguard character, and
believes in our basic mission: serving solely the shareholder, free of any
conflict of interest. He believes in holding our costs of operation to a
minimum, and in retaining our position as the lowest-cost provider of financial
services in the world. He is a true competitor, who shares Vanguard's
dedication to providing highly competitive returns to our investors relative to
the returns provided by other mutual funds with comparable objectives. He also
believes in reporting our results to shareholders with complete candor. He has
the full support of the Board of Directors and our crew, and is committed to
staying the course we have set for Vanguard. You need have no doubt that the
essential elements that drew you to Vanguard in the first place will remain
intact.
As for me, I expect to fill a useful, if less demanding, role as Chairman
of the Board. I shall keep a watchful eye over the interests of our
shareholders, our crew, and our investment policies. I shall also speak out on
industry affairs, reminding all who will listen of the primacy of the interests
of mutual fund shareholders. I will be readily available to provide Jack
Brennan with whatever wisdom I may have acquired during my lifetime of
experience in this wonderful industry and in my service as captain of Vanguard
since I founded this unique organization more than two decades ago.
In short, I'll still be around. Thank you for all your confidence in me in
the past and, in advance, for your continued confidence in Vanguard under Jack
Brennan's leadership.
/s/ JOHN C. BOGLE
VANGUARD/WELLINGTON FUND SEEKS CONSERVATION OF PRINCIPAL, REASONABLE CURRENT
INCOME, AND PROFITS WITHOUT UNDUE RISK. THE FUND FOLLOWS A "BALANCED"
INVESTMENT STRATEGY, WITH ABOUT 65% OF ITS NET ASSETS NORMALLY INVESTED IN
COMMON STOCKS AND 35% IN FIXED-INCOME SECURITIES, INCLUDING HIGH-GRADE BONDS
AND MONEY MARKET INSTRUMENTS.
<PAGE> 3
CHAIRMAN'S LETTER
FELLOW SHAREHOLDER:
Wellington Fund provided shareholders with a total return of +32.7% during
the twelve months ended November 30, 1995, our best year in the past
half-century. Both stocks and bonds enjoyed stupendous bull markets, and our
traditional balanced strategy placed the Fund in an enviable position to
participate in both explosive rallies.
During Wellington Fund's modern history, we have traditionally maintained
a relatively steady asset mix comprising about 65% stocks and 35% bonds. This
conservative approach enabled Wellington Fund to provide a total return
(capital change plus income) in fiscal 1995 that approximately matched the
+33.0% theoretical return of our unmanaged composite index. This index is
weighted 65% in the Standard & Poor's 500 Stock Index and 35% in the Lehman
Long-Term Corporate AA or Better Bond Index (Lehman Bond Index). The bond
component of the composite index reflects a change from our customary standard,
the Salomon Brothers High-Grade Bond Index. In our view, the Lehman Bond Index
is substantially similar to the Salomon High-Grade Index and accurately
reflects the long-term, high-quality fixed-income securities held in Wellington
Fund.
Additionally, we thrashed (there is really no other word for it) our peer
group of balanced mutual funds, which earned an average return of +24.6% during
fiscal 1995. This table compares our results with these two measurement
standards during this once-in-a-lifetime year both on an absolute and relative
basis for the Fund:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
TOTAL RETURN
-----------------
FISCAL YEAR ENDED
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<S> <C>
VANGUARD/WELLINGTON FUND +32.7%
- --------------------------------------------------------------------------------
AVERAGE BALANCED MUTUAL FUND +24.6%
COMPOSITE STOCK/BOND INDEX* +33.0
- --------------------------------------------------------------------------------
</TABLE>
* Weighted 65% in the Standard & Poor's 500 Stock Index and 35% in the Lehman
Long-Term Corporate AA or Better Bond Index.
The Fund's return is based on an increase in our net asset value from $19.33
per share on November 30, 1994, to $24.57 on November 30, 1995, with the latter
figure adjusted to take into account the reinvestment of four quarterly
dividends totaling $.88 per share from net investment income and our December
1994 distribution of $.03 per share from net realized capital gains. Net
realized capital gains totaling $.28 per share during 1995 were distributed in
December, along with our fourth quarter income dividend.
THE FISCAL YEAR IN REVIEW
The great bull market in stocks and bonds we enjoyed during the year was
continuous and virtually uninterrupted. The dimension of the increase was close
to record-breaking in both markets, delighting the bulls even as it astonished
the bears. In the stock market, after all was said and done, the unmanaged
Standard & Poor's 500 Composite Stock Price Index had generated a total return
of +36.9%.
There were, as always, many opinions as to the source of the surprising
strength in the stock market. In my view, it resulted from a combination of:
(1) a sharp decline in long-term interest rates; (2) record-breaking corporate
profits; and (3) a growing speculative fever in the marketplace, especially
during the final weeks of the fiscal year.
The rise in corporate profits was particularly striking. Operating
earnings for the companies in the Standard & Poor's 500 Index are presently
estimated to increase about +15% in 1995, after already rising +16% in 1994.
(Since 1926, earnings growth has averaged less than +7% per year.) If there is
a cautionary signal in this boom in profits, it is that the two-year cumulative
earnings growth of +33% has been accompanied by dividend growth of only +11%.
This subdued dividend growth in the face of sharply higher stock prices
resulted in a decline in the yield on the Index to 2.3%, the lowest level on
record. Nonetheless, the Wall Street chorus sings "this time it's different."
Dividend yield and earnings growth the two fundamentals of stock returns are
clearly taking a back seat to the market's high valuation of the long-term
fundamentals. This is
1
<PAGE> 4
PERFORMANCE DURING THE 1990s
[FIGURE 2]
called "speculation," and it is hardly an inconsequential component of 1995's
high returns on stocks. So, as we enter our 1996 fiscal year, such a low yield
is surely a sobering statistic.
A huge decline in interest rates not only stimulated the stock market, but
set bond prices afire. The yield of the Lehman Bond Index declined from 8.5% to
6.8% during our 1995 fiscal year, about the same as its level of 6.7% at the
start of fiscal 1994. The 1995 decline in interest rates drove long-term bond
prices up by fully +20% for the twelve months, providing (along with the
interest coupon) a total return of +26% for this sector of the bond market not
far short of the return on stocks.
The decline in long-term interest rates was engendered largely by the
diminishing threat of additional increases in short-term interest rates by the
Federal Reserve Board. (Indeed, by fiscal year end, the market seemed to be
anticipating a cut in short-term rates.) A record-breaking series of seven
consecutive increases in the Federal funds rate (the rate at which banks borrow
from one another) doubled short-term interest rates from 3.0% in late 1992 to
6.0% in early 1995. Since then, short-term rates had held fairly steady until
the Fed funds rate was reduced by 1/4% in July 1995, to 5 3/4% * During this
same period, the yield on U.S. Treasury bills declined from 6.0% to 5.5%.
This improvement in the actual (and expected) interest rate environment
was caused largely by a measurable softening in the growth of the U.S. economy,
perhaps with further weakness to come. A sluggish economy, in turn, engendered
continued optimism about the benign outlook for inflation. The Consumer Price
Index (CPI) was quite well behaved, rising by but +2.6% during the year. This
increase in the CPI was its lowest since 1986.
THE 1990S SO FAR
During the first five years of the 1990s, as I noted in my letter to you a year
ago, stocks provided an average annual return of +8.9%; long-term bonds +8.0%.
Both figures seemed consistent with long-term fundamentals. But the remarkable
returns of 1995 have raised the decade's performance substantially. With six
years of the 1990s now history, the average annual returns for stocks and bonds
have grown to +13.1% and +10.8%, respectively. Make no mistake about it such
returns are unlikely to recur during the remainder of the decade.
In any event, the chart to the left shows the fine environment for both
stocks and bonds during this exciting period. Under these circumstances, it is
hardly surprising that balanced funds have fared so well. Bonds have held their
own with stocks, rather than muting their fluctuations, as had been customary
in an earlier era. Indeed, as the chart clearly depicts, there has been tight
correlation of stock and bond returns so far during the 1990s.
With the obvious diminution of the tendency of the two markets to
fluctuate independently, a new element of relative volatility has been added to
the traditional balanced portfolio. During the past year, and over the five
preceding years, this volatility has provided substantial additional returns
for the
- ------------------
* After the conclusion of the period covered by this Annual Report, the Fed
actually reduced the short-term interest rate by 1/4 of 1%, bringing this key
rate to 5 1/2%.
2
<PAGE> 5
balanced fund investor. Inevitably, this tighter correlation is apt to result
in higher risks in the future. Nonetheless, we remain confident that balanced
portfolios will continue to provide an optimal combination of current income,
growth of capital, and reasonable risk.
THE FUND IN FISCAL 1995
Our ability to essentially track our composite index during the year was
accomplished despite two meaningful headwinds. First, in the ebullient bond
market, the average maturity of the Wellington bond portfolio, while long
enough (16 years) to provide solid participation, was well below that of the
Lehman Bond Index (25 years). In an environment of falling interest rates,
"longer is stronger."
Second, blue-chip stocks with large market capitalizations led the
market, with the Standard & Poor's 500 Index outpacing fully 81% of all common
stock funds during the period. In the face of these challenges, we're proud of
what Wellington Fund accomplished in fiscal 1995. Indeed, with a return of
+37.6%, our equity holdings actually exceeded the +36.9% return on the Standard
& Poor's 500 Index.
This favorable outcome came despite our nominal holdings in technology
stocks, one of the year's best performing sectors, with a return of +47.7%.
Happily, our shortfall in this sector was offset by the positive contribution
that we earned from our major overweighting (22% of assets versus 12% for the
Index) in financial stocks, the market's top-performing sector with a return of
+53.8%. Our exposure here was further enhanced by outstanding selection of
individual stocks by the Fund's investment adviser.
As noted at the outset, the Fund's return of +32.7% dwarfed the +24.6%
return of the average balanced fund. This eight percentage point margin is by
far the largest annual advantage in our modern history, against industry records
going back to 1955. (Hint: this margin is so extraordinary that it will be
virtually impossible to repeat.)
Three primary factors contributed to our favorable margin: (1) we held
a higher percentage of our portfolio in equities (63% of net assets for the
Fund versus 53% for the average competitor) and a lower percentage in cash
reserves (2% versus 8%); (2) our Fund's market capitalization was much larger
86% of our equities were invested in stocks in the Standard & Poor's 500 Index
versus 71% for our average competitor during a period in which "bigger was
better"; and (3) our Fund was more heavily weighted in the market-leading
financial sector (22% of assets versus 15%). The one drag on our relative
return was that the average balanced fund held a market-like weighting in
technology stocks, which abetted our peer funds' performance relative to
Wellington Fund.
A final note about fiscal 1995: Wellington not only outpaced the
average balanced mutual fund, it also outpaced the gain of +31.1% for the
average common stock mutual fund. This surprising juxtaposition rarely happens
during a strong stock market year. It is unlikely to recur with much frequency.
A LONGER-TERM PERSPECTIVE
The Fund's record over the past ten years is illustrated in the customary chart
on page 5, both in percentage terms and in dollar terms (based on an initial
investment of $10,000). The results may be summarized as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
TOTAL RETURN*
-------------------------------
NOVEMBER 30, 1985, TO
NOVEMBER 30, 1995
-------------------------------
FINAL VALUE
AVERAGE OF INITIAL
ANNUAL INVESTMENT
RATE OF $10,000
- --------------------------------------------------------------------------------
<S> <C> <C>
VANGUARD/WELLINGTON FUND +13.0% $33,800
- --------------------------------------------------------------------------------
AVERAGE BALANCED FUND +11.6% $29,830
COMPOSITE INDEX +14.1 37,430
- --------------------------------------------------------------------------------
</TABLE>
* Assumes the reinvestment of all dividends and capital gains distributions.
The chart reflects both ups and downs in the financial markets, and there is no
assurance that the ever-unpredictable markets of the future will
3
<PAGE> 6
provide either better returns or worse returns than those presented. However,
during the decade, the total return on the composite index was well above its
long-term norm of +9.3% going all the way back to 1926.
The solid margin we enjoyed over our peers (+1.4 percentage points) is
extremely meaningful when achieved over a full decade. Indeed, the final value
of an initial $10,000 investment in Wellington Fund $33,800 exceeded the
comparable figure for the balanced fund group by roughly $4,000, equivalent to
40% of the initial investment. This large difference shows the substantial
asset accumulation that can result from a combination of excellent portfolio
management and compound returns.
For an even longer, and perhaps more relevant perspective, I'd like now to
take you back to 1978, when an important change took place in the Fund's
investment strategy. On December 28, 1978 Wellington Fund's 50th Anniversary I
announced to shareholders that the Directors of the Fund had directed the
Fund's investment adviser (Wellington Management Company) to implement a
fundamental modification in the Fund's investment strategy. While deciding that
Wellington Fund's traditional conservative policies would remain intact, we
determined that the Fund's income return should be substantially enhanced. We
believed that "higher dividends could be achieved . . . without material
sacrifice to the total rate of return (income plus capital growth) that
Wellington Fund should achieve over the long term."
This strategic decision has proved correct. Our portfolio manager, Vincent
Bajakian, who died tragically this past fall while still "at the helm,"
implemented the Fund's new strategy with excellence, all the while maintaining
our customary policy aimed at a 65% / 35% stock/bond balance. The subsequent
dividend increase was a result of a substantial increase in the Fund's emphasis
on value stocks (usually those with above-average yields and below-average
market price-to-book values), with a commensurate reduction of our position in
growth stocks.
These modifications, as it turns out, were enormously beneficial to our
shareholders in two ways. First, our income dividend on a calendar year basis
quickly increased, from $.41 per share in 1978 to $.66 per share in 1981, a
rise of +61% in just three years. (These dividends have been adjusted to take
into account the reinvestment of all subsequent capital gains distributions in
additional shares of the Fund.) Our dividend income for 1995 totaled $.97 per
share, representing a further increase of nearly +50%. For the full period, we
generated dividend growth of +5.2% per year. Thus, Wellington Fund's dividend
income has provided an excellent "inflation hedge," during a period in which
the CPI rose at an annual rate of +5.0% annually.
Second, our change in strategy not only did not involve "material
sacrifice" in our total return, but enhanced it. Since 1978, value stocks
actually provided significantly higher total returns than growth stocks, and we
outpaced both our balanced fund peers and our composite index. This table
presents the comparison:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
TOTAL RETURN
-------------------------------
NOVEMBER 30, 1978, TO
NOVEMBER 30, 1995
-------------------------------
FINAL VALUE
AVERAGE OF INITIAL
ANNUAL INVESTMENT
RATE OF $10,000
- --------------------------------------------------------------------------------
<S> <C> <C>
VANGUARD/WELLINGTON FUND +14.7% $103,000
- --------------------------------------------------------------------------------
AVERAGE BALANCED FUND +13.3% $ 83,050
COMPOSITE INDEX +14.5 99,720
- --------------------------------------------------------------------------------
</TABLE>
Our annualized return during this period was above that which we earned during
the past decade, as shown in the previous summary table. Accordingly, I would
reemphasize my earlier comments that these returns are above historical norms.
While it is hazardous to predict future returns, the risks of the financial
markets today are, in my judgment, rather high. We should never make the
mistake of projecting the past into the future.
During this long period, we achieved virtually the same margin of
advantage over the average balanced fund. However, given the longer time
4
<PAGE> 7
CUMULATIVE PERFORMANCE NOVEMBER 30, 1985, TO NOVEMBER 30, 1995
<TABLE>
<CAPTION>
Average Annual Total Returns Periods Ended November 30, 1995
- --------------------------------------------------------------------------------
1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
WELLINGTON FUND 32.70% 14.97% 12.95%
AVERAGE BALANCED FUND 24.60 12.91 11.55
COMPOSITE INDEX* 33.03 15.12 14.11
</TABLE>
FISCAL PERIODS
[FIGURE 3]
* Composite Index is 65% Standard & Poor's 500 Index and 35% Lehman Long-Term
Corporate AA or Better Bond Index. Note: Past performance is not
predictive of future performance.
period involved (seven extra years), this superiority translated into an even
larger cumulative dollar advantage. The value of an initial investment of
$10,000 in Wellington Fund grew to $103,000 compared to $83,050 for the average
balanced fund. Our advantage of $19,950 is roughly two times the initial
$10,000 investment. The modifications of our strategy in 1978, along with good
implementation and extra years of compounding, brought about this remarkable
outcome.
It should hardly go without saying that the composite index represents
tough competition both for Wellington Fund and for its peer group of mutual
funds. First, it is a theoretical construct, incurring none of the advisory
fees, operating expenses, and portfolio transaction costs that must be borne to
one extent or another in the real world in which mutual funds operate. Second,
while it is a fair standard, it does not provide a precise guideline to the
policies followed by actively managed balanced mutual funds. In any event, we
are pleased to have outpaced our composite index standard during this
challenging period.
IN SUMMARY
Fiscal 1995 was an extraordinarily bountiful year for Wellington Fund
shareholders. We should all take (only) a moment to bask in the light of the
Fund's generous rewards. But we should also recognize that the financial
markets are never a "one-way street," and the risks that exist today in both
the stock and bond markets may well erode our 1995 bounty. Put even more
bluntly, shareholders enjoyed an enhancement of nearly +33% in value during
fiscal 1995. With this gain now behind us, even significant market declines
seem unlikely to take shareholders back to where we were presumably with
satisfaction just one year ago.
Under these circumstances, what course of action should the Wellington
Fund shareholder follow? In my Annual Report a year ago, under very different
circumstances, I urged you to "stay the course." You should recognize that,
despite today's short-term risks, the biggest long-term risks are: (1) failing
to invest in stocks and bonds at all; and (2) following an erratic and
ever-changing course. For our part, we intend to manage Wellington Fund
5
<PAGE> 8
under the same time-tested and conservative principles we've followed since
Walter L. Morgan who continues to encourage me today, as he has done since I
joined this enterprise in 1951 founded Wellington Fund 67 years ago. "Stay the
course" proved wise counsel last year; I reiterate it today.
Sincerely,
/s/ JOHN C. BOGLE
- -----------------
John C. Bogle
Chairman of the Board
December 11, 1995
Note: Mutual fund data from Lipper Analytical Services, Inc.
IN MEMORY
As Wellington Fund's shareholders have been advised, Vincent Bajakian,
long-time portfolio manager of Vanguard/Wellington Fund, died on September 24,
1995. Those of us who were fortunate enough to work with Vin knew him as a
shrewd analyst, a careful and competent investor, and a consummate
professional, who dedicated himself for over two decades to serving
shareholders of Wellington Fund. We are gratified that Vin's approach to
managing the Fund's equities will be carried on by Ernst von Metzsch, who has
been Vin's close colleague for many years. Thus, Vin's investment style will
carry on, but his presence and counsel will be missed by all of us. Paul Kaplan
will continue to manage the Fund's bond portfolio.
AVERAGE ANNUAL TOTAL RETURNS - THE AVERAGE ANNUAL TOTAL RETURNS FOR THE FUND
(PERIODS ENDED SEPTEMBER 30, 1995) ARE AS FOLLOWS:
<TABLE>
<CAPTION>
10 YEARS
--------------------------
INCEPTION TOTAL CAPITAL INCOME
DATE 1 YEAR 5 YEARS RETURN RETURN RETURN
--------- ------ ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
VANGUARD/WELLINGTON FUND 7/1/29 +23.85% +15.35% +13.54% +7.51% +6.03%
</TABLE>
ALL OF THESE DATA REPRESENT PAST PERFORMANCE. THE INVESTMENT RETURN AND
PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT INVESTORS' SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
6
<PAGE> 9
TOTAL INVESTMENT RETURN TABLE
The following table illustrates the results of a single-share investment in
Vanguard/Wellington Fund for the 25-year period ended November 30, 1995. During
the period illustrated, stock and bond prices fluctuated widely; these results
should not be considered a representation of the dividend income or capital
gain or loss that may be realized from an investment made in the Fund today.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
PERIOD PER SHARE DATA TOTAL INVESTMENT RETURN*
- ------------------------------------------------------------------------------------------------------------------------
Composite
Stock/Bond
Wellington Fund Index**
Value with Income ---------------------------- ----------
Year Ended Net Asset Capital Gains Income Dividends & Capital Capital Income Total Total
December 31 Value Distributions Dividends Gains Reinvested Return Return Return Return
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1971 $11.84 -- $ .44 $ 12.30 + 4.8% + 4.1% + 8.9% +13.1%
- ------------------------------------------------------------------------------------------------------------------------
1972 12.42 $.25 .44 13.66 + 7.1 + 3.9 +11.0 +14.9
- ------------------------------------------------------------------------------------------------------------------------
1973 10.26 .25 .47 12.07 -15.5 + 3.7 -11.8 - 9.1
- ------------------------------------------------------------------------------------------------------------------------
1974 7.73 .25 .50 9.91 -22.3 + 4.6 -17.7 -19.1
- ------------------------------------------------------------------------------------------------------------------------
1975 8.91 .25 .48 12.40 +18.6 + 6.6 +25.2 +29.5
- ------------------------------------------------------------------------------------------------------------------------
1976 10.19 .25 .49 15.30 +17.4 + 6.0 +23.4 +22.4
- ------------------------------------------------------------------------------------------------------------------------
1977 8.98 .25 .50 14.63 - 9.3 + 4.9 - 4.4 - 4.1
- ------------------------------------------------------------------------------------------------------------------------
1978 8.65 .25 .54 15.40 - 0.8 + 6.1 + 5.3 + 4.4
- ------------------------------------------------------------------------------------------------------------------------
1979 9.13 -- .66 17.49 + 5.5 + 8.0 +13.5 +10.3
- ------------------------------------------------------------------------------------------------------------------------
1980 10.38 -- .75 21.44 +13.7 + 8.9 +22.6 +19.8
- ------------------------------------------------------------------------------------------------------------------------
1981 9.80 -- .84 22.06 - 5.6 + 8.5 + 2.9 - 3.4
- ------------------------------------------------------------------------------------------------------------------------
1982 11.21 -- .87 27.48 +14.4 +10.1 +24.5 +29.4
- ------------------------------------------------------------------------------------------------------------------------
1983 12.46 .44 .91 33.95 +15.1 + 8.5 +23.6 +16.6
- ------------------------------------------------------------------------------------------------------------------------
1984 12.32 .48 .92 37.59 + 2.8 + 7.9 +10.7 +10.1
- ------------------------------------------------------------------------------------------------------------------------
1985 14.50 .30 .92 48.31 +20.3 + 8.2 +28.5 +30.7
- ------------------------------------------------------------------------------------------------------------------------
1986 15.85 .34 .94 57.20 +11.7 + 6.7 +18.4 +19.1
- ------------------------------------------------------------------------------------------------------------------------
1987 15.15 .14 .98 58.50 - 3.5 + 5.8 + 2.3 + 5.0
- ------------------------------------------------------------------------------------------------------------------------
1988 16.01 .58 .96 67.93 + 9.5 + 6.6 +16.1 +14.2
- ------------------------------------------------------------------------------------------------------------------------
1989 17.78 .60 1.02 82.60 +14.9 + 6.7 +21.6 +26.0
- ------------------------------------------------------------------------------------------------------------------------
1990 16.26 -- 1.01 80.28 - 8.5 + 5.7 - 2.8 + 0.5
- ------------------------------------------------------------------------------------------------------------------------
1991 18.81 .23 .96 99.26 +17.2 + 6.4 +23.6 +27.0
- ------------------------------------------------------------------------------------------------------------------------
1992 19.16 .16 .94 107.13 + 2.7 + 5.2 + 7.9 + 8.0
- ------------------------------------------------------------------------------------------------------------------------
1993 20.40 .38 .92 121.62 + 8.5 + 5.0 +13.5 +11.1
- ------------------------------------------------------------------------------------------------------------------------
1994 19.39 .03 .88 121.02 - 4.8 + 4.3 - 0.5 - 1.1
- ------------------------------------------------------------------------------------------------------------------------
1995 (11/30) 24.57 -- .60 157.57 +26.7 + 3.5 +30.2 +31.1
- ------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN +4.9% + 6.3% +11.2% +11.5%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Includes reinvestment of income dividends and any capital gains
distributions for both the Fund and the Index.
** Composite index shown for comparative purposes is composed of the
Standard & Poor's 500 Stock Index (65%) and the Salomon Brothers
High-Grade Bond Index (35%) through 1973; thereafter, the fixed-income
component is represented by the Lehman Long-Term Corporate AA or Better
Bond Index (35%).
Note: The initial net asset value was $11.30 on December 31, 1970, the
beginning of the period illustrated. No adjustment has been made for income
taxes payable by shareholders on reinvested income dividends and capital gains
distributions.
7
<PAGE> 10
REPORT FROM
THE INVESTMENT ADVISER
Vincent Bajakian had a substantial impact on me as mentor, partner, and
friend during the more than 20 years we worked together, and I am honored to
follow him as portfolio manager of your Fund. In reviewing fiscal 1995, it is
fitting to quote Vin's observation in the 1994 Annual Report: "Conceivably,
rates could stabilize and start down as the economy slows next year. If that
proves to be the case, a major impediment to improved financial markets and
continued progress for your Fund will have been removed."
Wellington Fund was well positioned to benefit from the trends Vin
anticipated, which came to pass early in the fiscal year. As 1995 unfolded, the
economy slowed after showing some signs of overheating late in 1994. Long-term
interest rates, after rising about two percentage points in 1994, declined a
similar amount in 1995. Declining interest rates and easing fears of inflation
had a positive impact on the stock market.
The rise in the market this past year was not only fueled by lower
interest rates, but also by excellent earnings increases, continued efforts by
corporate America to reduce costs, a boom in the technology sector, and the
positive impact of a lower dollar on the earnings of U.S.-based corporations.
The returns on the Fund's fixed-income holdings were also substantial, as
further detailed in the Chairman's letter.
We are pleased that our conservative approach kept up with a market which
had quite a speculative flavor to it in 1995. The performance of the Fund's
common stocks and convertibles was positively affected by a strong
representation in the financial and health-care industries. This was offset by
lagging performance in the basic industry and energy sectors.
The Fund does not invest in the more speculative and non-income-producing
stocks in the high-tech area, which led the market during most of 1995.
Rather, the Fund has over time had an orientation towards companies with
low price/earnings ratios, conservative balance sheets, and good dividend
yields. In our view, this approach, coupled with our aversion to rapid
rotation between sectors, reduces risk.
There are four major sectors that we currently emphasize:
1) Companies in the basic industry sector producers of basic industrial
materials and goods improved their earnings sharply in 1995, but the
market became quite concerned with the effect that a slowdown in the
economy might have on their profits. As a result, returns from this sector
lagged the market. We are impressed, however, by the continuing financial
and operational restructuring that U.S. companies have undertaken. In our
view, the economy is currently going through a temporary slowdown, and
1996 should be a reasonable year in the basic industry sector. Many of the
portfolio's companies have room for further balance sheet strengthening
and dividend increases.
2) Attractive valuations at the beginning of the year, strong earnings
momentum, dividend increases, and share repurchases combined to make the
finance sector one of the leading sectors in the market. Our large
holdings in the finance area, mostly banks, served us well in 1995. While
the large declines in interest rates may not be repeated in 1996, ongoing
industry consolidation makes this group attractively positioned for
further gains in share values.
3) Investments in the applied science sector are mostly in the health-care
area. Our largest holdings continued to benefit from reasonable
valuations, good earnings growth, and excellent new product flow that will
provide for future profits. We have started to reduce some of our
positions as price/earnings ratios in this area are getting quite full by
our standards.
4) The energy sector continued to be plagued by fears of oversupply of crude
oil, while an unusually mild winter in 1994-1995 created a big overhang of
natural gas in the U.S. This group of companies is generally doing quite
well in reducing costs and, in many cases, showing good dividend growth in
a stagnating price environment. Demand growth for
8
<PAGE> 11
both oil and gas is high by historical standards, as is capacity
utilization, especially in North American operations. We look to these
companies to continue to be solid providers of income and/or income growth
for the portfolio.
Outside of these four areas, we hold a 2% position in the utility sector and a
6% position in the consumer sector, including large holdings in automobile
producers.
The past year has produced a remarkable turnaround in the bond market,
where the Fund retained a 35% weighting as of the end of the fiscal year.
Following the inflation scare of 1994, this year was marked by moderating
economic growth and consistent progress on controlling inflation. The resulting
enthusiasm among investors caused long-term Treasury bond yields to fall nearly
two percentage points, from 8.0% to 6.1%. Two characteristics which your Fund's
fixed-income portfolio emphasizes were the keys to good performance during the
year: long-term maturity structure and call or refinancing protection.
Looking forward, we do not have strong views about the direction of the
market. Our expectation is that earnings will improve in 1996, but at a slower
rate than the past two years. We have taken a somewhat more defensive attitude
towards the banking and health-care sectors which served us so well in 1995. We
are pursuing investment ideas in some of the sectors that lagged last year,
which should benefit once the economy comes out of what we believe will be a
temporary and shallow slowdown.
As in the past, we will apply a value- and yield-oriented, stock-by-stock
approach to our investment process, and do not expect to make major changes to
the sector allocation which follows from this effort.
Respectfully,
Ernst H. von Metzsch, Senior Vice President
Portfolio Manager
Wellington Management Company
December 12, 1995
9
<PAGE> 12
STATEMENT OF NET ASSETS
FINANCIAL STATEMENTS
November 30, 1995
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- --------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (61.9%)
- --------------------------------------------------------------------------------------------
BASIC MATERIALS (12.4%)
Aluminum Co. of America 2,700,000 $ 157,950
British Steel PLC ADR 3,000,000 78,000
Cabot Corp. 1,000,000 47,000
Dow Chemical Co. 2,254,300 159,773
(2)E.I. du Pont de Nemours & Co. 2,854,200 189,804
Georgia-Pacific Corp. 1,004,000 78,061
International Paper Co. 2,000,000 76,250
(1)J & L Specialty Steel Inc. 2,100,000 34,650
(2)Kimberly-Clark Corp. 2,257,000 173,507
Norsk Hydro AS ADR 1,000,000 40,625
PPG Industries, Inc. 1,900,000 86,212
Phelps Dodge Corp. 703,000 47,716
Reynolds Metals Co. 1,075,000 62,081
Temple-Inland Inc. 1,984,600 90,051
USX-U.S. Steel Group 1,000,000 32,625
Westvaco Corp. 2,636,100 72,163
Willamette Industries, Inc. 900,000 54,450
Witco Chemical Corp. 1,614,200 49,637
-------------
GROUP TOTAL 1,530,555
-------------
- --------------------------------------------------------------------------------------------
CAPITAL GOODS & CONSTRUCTION (5.8%)
Browning-Ferris Industries, Inc. 2,700,000 81,337
(2)General Electric Co. 3,600,300 242,120
Honeywell, Inc. 3,091,500 147,233
(1)Northrop Grumman Corp. 2,636,800 162,163
United Technologies Corp. 850,000 79,687
-------------
GROUP TOTAL 712,540
-------------
- --------------------------------------------------------------------------------------------
CONSUMER CYCLICAL (5.3%)
Brunswick Corp. 2,500,000 53,437
Eastman Kodak Co. 804,600 54,713
Ford Motor Co. 5,404,515 152,677
(2)General Motors Corp. 3,800,000 184,300
May Department Stores Co. 1,508,000 65,787
J.C. Penney Co., Inc. 1,600,000 75,000
Sears, Roebuck & Co. 1,807,017 71,151
-------------
GROUP TOTAL 657,065
-------------
- --------------------------------------------------------------------------------------------
CONSUMER STAPLES (.6%)
SuperValu Inc. 2,270,000 73,207
-------------
- --------------------------------------------------------------------------------------------
ENERGY (7.9%)
Amerada Hess Corp. 1,506,000 71,535
Amoco Corp. 400,000 27,100
Ashland Inc. 650,000 22,669
Atlantic Richfield Co. 650,000 70,444
Chevron Corp. 805,000 39,747
Exxon Corp. 2,006,000 155,214
Kerr-McGee Corp. 803,000 46,474
Mobil Corp. 1,150,000 120,031
Pennzoil Co. 433,400 17,173
Phillips Petroleum Co. 1,248,800 41,523
Repsol SA ADR 2,622,700 82,943
Royal Dutch Petroleum Co. ADR 535,512 68,746
Texaco Inc. 1,015,000 75,110
Total SA ADR 2,000,000 61,750
USX-Marathon Group 900,000 16,538
Unocal Corp. 2,012,000 54,073
-------------
GROUP TOTAL 971,070
-------------
- --------------------------------------------------------------------------------------------
FINANCIAL (13.8%)
(2)Allstate Corp. 5,687,168 233,174
Banc One Corp. 4,000,000 152,500
(2)The Bank of New York Co., Inc. 3,500,000 164,938
BankAmerica Corp. 1,400,000 89,075
(2)Citicorp 3,177,000 224,773
CoreStates Financial Corp. 3,381,900 131,049
(2)First Bank System, Inc. 4,249,800 219,396
First Union Corp. 1,707,200 93,256
General Re Corp. 1,000,000 149,625
Jefferson-Pilot Corp. 240,500 17,106
KeyCorp 1,462,000 53,911
Norwest Corp. 2,000,307 66,010
Wachovia Corp. 2,477,400 111,483
-------------
GROUP TOTAL 1,706,296
-------------
- --------------------------------------------------------------------------------------------
HEALTH CARE (8.6%)
Abbott Laboratories, Inc. 2,750,000 111,719
American Home Products Corp. 1,625,000 148,281
C.R. Bard, Inc. 1,663,600 48,036
Baxter International, Inc. 2,954,700 124,097
Bristol-Myers Squibb Co. 1,470,000 117,968
(2)Johnson & Johnson 2,000,000 173,250
(2)Pfizer, Inc. 3,288,600 190,739
U.S. Healthcare, Inc. 2,250,000 102,375
Zeneca Group ADR 650,000 39,731
-------------
GROUP TOTAL 1,056,196
-------------
- --------------------------------------------------------------------------------------------
TECHNOLOGY (1.3%)
Xerox Corp. 1,193,100 163,604
-------------
- --------------------------------------------------------------------------------------------
TRANSPORT & SERVICES (2.5%)
British Airways PLC 901,475 63,441
* Canadian National Railway Co. 449,600 6,744
Canadian Pacific Ltd. 5,116,000 94,193
Norfolk Southern Corp. 616,700 48,565
Union Pacific Corp. 1,454,000 98,509
-------------
GROUP TOTAL 311,452
-------------
- --------------------------------------------------------------------------------------------
UTILITIES (2.3%)
AT&T Corp. 1,000,000 66,000
Bell Atlantic Corp. 400,000 25,200
Equitable Resources, Inc. 151,000 4,643
NYNEX Corp. 700,000 34,738
PECO Energy Corp. 1,000,800 29,023
</TABLE>
10
<PAGE> 13
<TABLE>
<CAPTION>
Market
Value
Shares (000)+
- --------------------------------------------------------------------------------------------
<S> <C> <C>
SBC Communications Inc. 1,150,000 $ 62,100
Sonat, Inc. 294,000 9,482
Texas Utilities Co. 558,200 21,491
U S WEST
Communications Group 964,856 30,152
-------------
GROUP TOTAL 282,829
-------------
- --------------------------------------------------------------------------------------------
MISCELLANEOUS (1.4%)
Hanson PLC ADR 5,000,000 76,250
Minnesota Mining &
Manufacturing Co. 1,500,000 98,250
-------------
GROUP TOTAL 174,500
-------------
- --------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $5,020,538) 7,639,314
- --------------------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS (1.0%)
- --------------------------------------------------------------------------------------------
Alumax, Inc. $4.00 240,000 33,120
Bethlehem Steel Corp. $3.50 500,000 22,375
Cyprus Amax $4.00 480,000 29,520
Reynolds Metals Co. $3.31 634,000 33,127
- --------------------------------------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $91,003) 118,142
- --------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- --------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS (18.1%)
- --------------------------------------------------------------------------------------------
ASSET BACKED (.4%)
American Express Credit Europe
5.375%, 9/15/00 $ 22,000 $ 21,464
MBNA Master Credit Card
5.40%, 3/15/99 25,000 24,742
-------------
GROUP TOTAL 46,206
-------------
- --------------------------------------------------------------------------------------------
FINANCIAL (5.9%)
Abbey National First Capital
8.20%, 10/15/04 15,000 16,771
H.F. Ahmanson & Co.
8.25%, 10/1/02 10,000 10,966
Allstate Corp.
7.50%, 6/15/13 15,000 15,777
AMBAC, Inc.
7.50%, 5/1/23 14,000 14,861
Associates Corp. NA
8.625%, 11/15/04 15,000 17,333
Banc One Corp.
7.75%, 7/15/25 30,000 32,330
9.875%, 3/1/09 20,000 25,505
Bank of Boston Corp.
6.625%, 12/1/05 27,000 27,029
BankAmerica Corp.
7.20%, 4/15/06 20,000 21,026
The Chase Manhattan Corp.
6.50%, 1/15/09 10,000 9,792
Chemical Banking Corp.
6.50%, 1/15/09 20,000 19,619
Citicorp
6.75%, 8/15/05 30,000 30,551
Comerica, Inc.
7.125%, 12/1/13 7,000 6,924
8.375%, 7/15/24 20,500 22,694
Continental Bank Corp.
12.50%, 4/1/01 15,000 19,210
Dean Witter Discover & Co.
6.75%, 10/15/13 19,275 18,740
Exxon Capital Corp.
6.00%, 7/1/05 13,500 13,345
First Bank NA
7.55%, 6/15/04 16,000 17,141
First Bank System
7.625%, 5/1/05 4,000 4,321
First Chicago Corp.
6.375%, 1/30/09 15,000 14,628
First Union Corp.
7.50%, 4/15/35 30,000 32,536
General Electric Capital Corp.
8.125%, 5/15/12 30,000 34,340
General Electric Capital Services
7.50%, 8/21/35 11,000 12,103
</TABLE>
11
<PAGE> 14
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- --------------------------------------------------------------------------------------------
<S> <C> <C>
General Motors Acceptance Corp.
6.00%, 4/1/11 $ 10,000 $ 8,953
General Motors Acceptance
Corp. MTN
7.50%, 6/9/00 24,500 25,831
General Re Corp.
9.00%, 9/12/09 15,000 18,286
Great Western Financial Corp.
6.125%, 6/15/98 20,000 20,041
John Hancock
7.375%, 2/15/24 29,000 28,225
Metropolitan Life Insurance Co.
7.70%, 11/1/15 30,000 30,358
National City Bank Northeast
7.25%, 7/15/10 10,000 10,541
National City Columbus
7.25%, 7/15/10 25,000 26,353
National Westminster Bank
9.45%, 5/1/01 10,000 11,539
Nationsbank Corp.
7.25%, 10/15/25 25,000 25,153
Norwest Corp.
7.65%, 3/15/05 25,000 27,377
Republic New York Corp.
9.50%, 4/15/14 5,000 6,349
9.70%, 2/1/09 5,000 6,339
Transamerica Finance
6.50%, 3/15/11 29,265 27,679
Wells Fargo & Co.
6.125%, 11/1/03 22,000 21,548
-------------
GROUP TOTAL 732,114
-------------
- --------------------------------------------------------------------------------------------
INDUSTRIAL (7.9%)
ARCO Chemical Co.
9.80%, 2/1/20 15,000 19,883
Air Products & Chemicals, Inc.
8.75%, 4/15/21 20,000 24,514
Amoco Canada Petroleum Co.
6.75%, 2/15/05 10,000 10,387
7.95%, 10/1/22 20,000 22,439
Anheuser-Busch Co.
7.00%, 12/1/25 30,000 30,038
British Petroleum Co.
7.875%, 5/15/02 20,000 21,967
10.00%, 7/1/18 10,000 11,306
Becton Dickinson
8.70%, 1/15/25 20,000 22,869
Boeing Co.
8.75%, 8/15/21 25,000 30,599
Chevron Corp.
9.375%, 6/1/16 15,000 15,749
Coca-Cola Enterprises, Inc.
8.50%, 2/1/22 30,000 35,860
E.I. du Pont de Nemours & Co.
8.25%, 1/15/22 25,000 27,092
Eaton Corp.
7.00%, 4/1/11 10,600 10,561
7.625%, 4/1/24 15,000 16,254
Ford Motor Co.
8.875%, 1/15/22 25,000 30,191
Gannett Co., Inc.
5.25%, 3/1/98 25,000 24,758
Georgia Pacific Corp.
9.625%, 3/15/22 22,000 25,321
International Business
Machines Corp.
8.375%, 11/1/19 25,000 29,182
Johnson & Johnson
6.73%, 11/15/23 20,000 20,089
Eli Lilly & Co.
7.125%, 6/1/25 29,000 30,184
McDonald's Corp.
7.375%, 7/15/33 15,000 15,411
Mobil Corp.
8.625%, 8/15/21 20,000 24,427
Morton International, Inc.
9.25%, 6/1/20 10,000 12,772
Motorola Inc.
7.50%, 5/15/25 30,000 32,864
Norfolk Southern Corp.
9.00%, 3/1/21 15,000 18,821
Norsk Hydro AS
7.75%, 6/15/23 9,000 9,804
9.00%, 4/15/12 20,000 24,192
PPG Industries, Inc.
9.00%, 5/1/21 19,750 24,739
J.C. Penney & Co. MTN
6.875%, 10/15/15 10,400 10,353
Philips Electronics
7.75%, 4/15/04 15,000 16,253
Phillips Petroleum Co.
9.375%, 2/15/11 20,000 24,394
Procter & Gamble Co.
9.36%, 1/1/21 20,000 25,488
Raytheon Co.
7.375%, 7/15/25 18,000 18,534
Rockwell International Corp.
7.875%, 2/15/05 17,000 18,958
Rohm & Haas Co.
9.80%, 4/15/20 15,000 19,378
Sears, Roebuck & Co.
9.375%, 11/1/11 14,000 17,261
SmithKline Beecham MTN
7.375%, 4/15/05 15,000 16,165
Standard Oil of Ohio
9.00%, 6/1/19 18,000 19,765
</TABLE>
12
<PAGE> 15
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Talisman Energy
7.125%, 6/1/07 $ 20,000 $ 20,690
Texaco Capital Inc.
9.75%, 3/15/20 15,000 20,054
Times Mirror
7.50%, 7/1/23 13,000 13,768
United Parcel Service
8.375%, 4/1/20 30,070 36,049
Wal-Mart Stores Inc.
7.25%, 6/1/13 24,000 25,065
Waste Management
7.65%, 3/15/11 20,150 21,432
Whirlpool Corp.
9.10%, 2/1/08 6,715 8,090
Zeneca Group ADR
7.00%, 11/15/23 20,000 19,844
-------------
GROUP TOTAL 973,814
-------------
- --------------------------------------------------------------------------------------------
UTILITIES (3.9%)
AT&T Corp.
7.75%, 3/1/07 30,000 33,126
Arizona Public Service Co.
9.50%, 4/15/21 5,000 5,677
BellSouth Telecommunications
7.50%, 6/15/33 30,000 30,814
Chesapeake & Potomac
Telephone MD
7.15%, 5/1/23 10,000 10,308
Chesapeake & Potomac
Telephone VA
7.625%, 12/1/12 8,000 8,776
Consolidated Edison of
New York, Inc.
7.50%, 6/15/23 25,000 25,136
Duke Power Co.
7.00%, 7/1/33 10,000 10,048
8.625%, 3/1/22 8,000 8,594
Illinois Bell Telephone Co.
6.625%, 2/1/25 22,000 21,204
New Jersey Bell Telephone Co.
8.00%, 6/1/22 19,000 21,853
New York Telephone Co.
7.25%, 2/15/24 20,000 20,101
Northern States Power Corp.
7.125%, 7/1/25 30,000 31,078
Ohio Bell Telephone Co.
7.85%, 12/15/22 20,000 21,680
Pacific Bell Telephone Co.
7.125%, 3/15/26 40,000 41,127
Pacific Gas & Electric Co.
7.05%, 3/1/24 25,000 25,094
8.375%, 5/1/25 10,000 10,711
PacifiCorp
6.625%, 6/1/07 19,000 19,359
Southern Bell Telephone Co.
6.00%, 10/1/04 5,500 5,386
Southern California Edison Co.
6.90%, 10/1/18 20,750 19,911
Southern Indiana Gas & Electric Co.
8.875%, 6/1/16 5,000 6,089
Southwestern Bell Telephone Co.
7.25%, 7/15/25 25,000 25,487
Texas Utilities Electric Co.
7.875%, 4/1/24 14,000 14,214
U S WEST Communications Group
6.875%, 9/15/33 30,000 28,608
Wisconsin Electric Power
7.70%, 12/15/27 29,100 30,007
Wisconsin Gas Co.
6.60%, 9/15/13 13,100 13,006
-------------
GROUP TOTAL 487,394
-------------
- --------------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS
(Cost $2,056,784) 2,239,528
- --------------------------------------------------------------------------------------------
FOREIGN BONDS (3.3%)
- --------------------------------------------------------------------------------------------
ABN AMRO Holding NV
7.25%, 5/31/05 30,000 31,691
Asian Development Bank
9.125%, 6/1/00 10,000 11,248
European Investment Bank
9.125%, 6/1/02 10,000 11,653
Republic of Ireland MTN
7.64%, 1/2/02 30,000 32,295
Italy Global Bond
6.875%, 9/27/23 30,000 28,477
Japanese Financial Corp.
7.375%, 4/27/05 28,500 30,944
KFW International Finance
7.00%, 3/1/13 10,000 10,414
7.20%, 3/15/14 25,000 26,534
Landesbank Baden
7.625%, 2/1/23 30,000 33,272
Manitoba Province
9.25%, 4/1/20 20,000 25,515
New Brunswick Province
6.75%, 8/15/13 10,000 9,965
Ontario Hydro
5.80%, 3/31/98 25,000 25,077
Ontario Province
7.00%, 8/4/05 20,000 20,863
Scotland International Finance
8.85%, 11/1/06 24,000 27,840
Kingdom of Sweden
8.625%, 3/25/16 7,595 8,011
</TABLE>
13
<PAGE> 16
STATEMENT OF NET ASSETS (continued)
<TABLE>
<CAPTION>
Face Market
Amount Value
(000) (000)+
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Swedish Export Credit
8.625%, 4/15/26 $ 14,600 $ 15,399
Toronto-Dominion Bank
6.45%, 1/15/09 14,000 13,768
6.50%, 8/15/08 10,000 9,905
Westdeutsche Landesbank
6.75%, 6/15/05 30,000 30,977
- --------------------------------------------------------------------------------------------
TOTAL FOREIGN BONDS
(Cost $374,910) 403,848
- --------------------------------------------------------------------------------------------
MUNICIPAL BOND (.2%)
- --------------------------------------------------------------------------------------------
Los Angeles County Tax
8.57%, 6/30/05
(Cost $20,284) 19,600 22,610
- --------------------------------------------------------------------------------------------
U.S. GOVERNMENT AND
AGENCY OBLIGATIONS (13.4%)
- --------------------------------------------------------------------------------------------
Federal Home Loan Bank
7.66%, 7/20/04 10,000 11,045
Federal Home Loan
Mortgage Corp.
6.19%, 1/21/04 15,000 14,700
Federal National
Mortgage Association
6.28%, 2/3/04 25,000 24,950
National Archive
8.50%, 9/1/19 23,839 28,784
Tennessee Valley Authority
6.875%, 12/15/43 25,000 24,354
U.S. Treasury Bonds
7.50%, 11/15/16 150,000 172,079
U.S. Treasury Notes
6.125%, 9/30/00 150,000 153,516
6.25%, 2/15/03 200,000 206,594
6.375%, 8/15/02 200,000 207,844
6.50%, 8/15/05 100,000 105,234
7.25%, 8/15/04 200,000 219,812
7.75%, 12/31/99 205,000 221,400
7.875%, 11/15/04 229,000 261,919
- --------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AND
AGENCY OBLIGATIONS
(Cost $1,530,809) 1,652,231
- --------------------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENT (1.4%)
- --------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT
Collateralized by U.S. Government
Obligations in a Pooled
Cash Account 5.90%, 12/1/95
(Cost $169,940) 169,940 169,940
- --------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (99.3%)
(Cost $9,264,268) 12,245,613
- --------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (.7%)
- --------------------------------------------------------------------------------------------
Other Assets Note C and E 343,114
Liabilities Note E (256,113)
-------------
87,001
- --------------------------------------------------------------------------------------------
NET ASSETS (100%)
- --------------------------------------------------------------------------------------------
Applicable to 501,932,758 outstanding
$1.00 par value shares
(authorized 600,000,000 shares) $12,332,614
- --------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $24.57
============================================================================================
</TABLE>
+ See Note A to Financial Statements.
* Non-Income Producing Security.
(1) Considered an affiliated company as the Fund owns more than 5% of the
outstanding voting securities of the company.
(2) Ten largest common stock investments representing 16.2% of net assets.
ADR--American Depository Receipt.
MTN--Medium-Term Note.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
AT NOVEMBER 30, 1995,
NET ASSETS CONSISTED OF:
- --------------------------------------------------------------------------------------------
Amount Per
(000) Share
----------- -----------
<S> <C> <C>
Paid in Capital $ 9,037,162 $18.00
Undistributed Net
Investment Income 174,074 0.35
Accumulated Net
Realized Gains 140,033 0.28
Unrealized Appreciation
of Investments Note D 2,981,345 5.94
- --------------------------------------------------------------------------------------------
NET ASSETS $12,332,614 $24.57
- --------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 17
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended
November 30, 1995
(000)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
INCOME
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 216,903
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268,279
- -------------------------------------------------------------------------------------------------------------
Total Income . . . . . . . . . . . . . . . . . . . . . . . 485,182
- -------------------------------------------------------------------------------------------------------------
EXPENSES
Investment Advisory Fee Note B
Basic Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,261
Performance Adjustment . . . . . . . . . . . . . . . . . . . . -- 5,261
----------
The Vanguard Group Note C
Management and Administrative . . . . . . . . . . . . . . . . . 25,327
Marketing and Distribution . . . . . . . . . . . . . . . . . . 1,999 27,326
----------
Taxes (other than income taxes) . . . . . . . . . . . . . . . . . 811
Custodians' Fees . . . . . . . . . . . . . . . . . . . . . . . . . 271
Legal Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Auditing Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Shareholders' Reports . . . . . . . . . . . . . . . . . . . . . . 434
Annual Meeting and Proxy Costs . . . . . . . . . . . . . . . . . . 138
Directors' Fees and Expenses . . . . . . . . . . . . . . . . . . . 41
- -------------------------------------------------------------------------------------------------------------
Total Expenses . . . . . . . . . . . . . . . . . . . . . . . 34,314
- -------------------------------------------------------------------------------------------------------------
Net Investment Income . . . . . . . . . . . . . . . . . . 450,868
- -------------------------------------------------------------------------------------------------------------
REALIZED NET GAIN ON INVESTMENT
SECURITIES SOLD . . . . . . . . . . . . . . . . . . . . . . . . . . . 140,850
- -------------------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) OF INVESTMENT SECURITIES . . . . . . . . . . . . . . . 2,303,426
- -------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations . . $2,895,144
=============================================================================================================
</TABLE>
15
<PAGE> 18
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED Year Ended
NOVEMBER 30, 1995 November 30, 1994
(000) (000)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS
Net Investment Income . . . . . . . . . . . . . . . . . . . . . . . . $ 450,868 $ 367,255
Realized Net Gain . . . . . . . . . . . . . . . . . . . . . . . . . . 140,850 14,803
Change in Unrealized Appreciation (Depreciation) . . . . . . . . . . 2,303,426 (469,401)
- -----------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Resulting from Operations . 2,895,144 (87,343)
- -----------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS (1)
Net Investment Income . . . . . . . . . . . . . . . . . . . . . . . . (407,411) (376,406)
Realized Net Gain . . . . . . . . . . . . . . . . . . . . . . . . . . (13,409) (145,379)
- -----------------------------------------------------------------------------------------------------------------
Total Distributions . . . . . . . . . . . . . . . . . . . . . . . (420,820) (521,785)
- -----------------------------------------------------------------------------------------------------------------
NET EQUALIZATION CREDITS--Note A . . . . . . . . . . . . . . . . . . . . 8,922 8,194
- -----------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (2)
Issued --Regular . . . . . . . . . . . . . . . . . . . . . . . . 1,753,610 1,718,981
--In Lieu of Cash Distributions . . . . . . . . . . . . . 386,562 479,469
--Exchange . . . . . . . . . . . . . . . . . . . . . . . 429,926 473,982
Redeemed --Regular . . . . . . . . . . . . . . . . . . . . . . . . (933,474) (861,047)
--Exchange . . . . . . . . . . . . . . . . . . . . . . . (425,529) (488,846)
- -----------------------------------------------------------------------------------------------------------------
Net Increase from Capital Share Transactions . . . . . . . . . . . 1,211,095 1,322,539
- -----------------------------------------------------------------------------------------------------------------
Total Increase . . . . . . . . . . . . . . . . . . . . . . . . . . 3,694,341 721,605
- -----------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Year . . . . . . . . . . . . . . . . . . . . . . . . . . 8,638,273 7,916,668
- -----------------------------------------------------------------------------------------------------------------
End of Year(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . $12,332,614 $8,638,273
=================================================================================================================
(1) Distributions Per Share
Net Investment Income . . . . . . . . . . . . . . . . . . . . . $.88 $.92
Realized Net Gain . . . . . . . . . . . . . . . . . . . . . . . $.03 $.38
- -----------------------------------------------------------------------------------------------------------------
(2) Shares Issued and Redeemed
Issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,558 109,655
Issued in Lieu of Cash Distributions . . . . . . . . . . . . . 18,428 23,956
Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . (63,856) (67,803)
- -----------------------------------------------------------------------------------------------------------------
55,130 65,808
- -----------------------------------------------------------------------------------------------------------------
(3) Undistributed Net Investment Income . . . . . . . . . . . . . . $ 174,074 $ 121,695
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE> 19
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Year Ended November 30,
--------------------------------------------------
For a Share Outstanding Throughout Each Year 1995 1994 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR . . . . . . . . . . . $19.33 $20.78 $19.34 $17.95 $16.29
------- ------- ------- ------- -------
INVESTMENT OPERATIONS
Net Investment Income . . . . . . . . . . . . . . . . .96 .88 .92 .93 .96
Net Realized and Unrealized Gain
(Loss) on Investments . . . . . . . . . . . . . . 5.19 (1.03) 1.62 1.65 1.71
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS . . . . . . . 6.15 (.15) 2.54 2.58 2.67
- ----------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income . . . . . . . . (.88) (.92) (.94) (.96) (1.01)
Distributions from Realized Capital Gains . . . . . . (.03) (.38) (.16) (.23) --
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS . . . . . . . . . . . . . . (.91) (1.30) (1.10) (1.19) (1.01)
- ----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR . . . . . . . . . . . . . . $24.57 $19.33 $20.78 $19.34 $17.95
======================================================================================================================
TOTAL RETURN +32.70% -0.82% +13.62% +14.99% +16.81%
- ----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Year (Millions) . . . . . . . . . . . $12,333 $8,638 $7,917 $5,359 $3,473
Ratio of Expenses to Average Net Assets . . . . . . . . . .33% .35% .34% .33% .35%
Ratio of Net Investment Income to
Average Net Assets . . . . . . . . . . . . . . . . . 4.37% 4.35% 4.55% 4.98% 5.39%
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . 24% 32% 34% 24% 35%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTES TO FINANCIAL STATEMENTS
Vanguard/Wellington Fund is registered under the Investment Company Act of 1940
as a diversified open-end investment company. Certain of the Fund's
investments are in long-term corporate debt instruments; the issuers' abilities
to meet these obligations may be affected by economic developments in their
respective industries.
A. The following significant accounting policies are in conformity with
generally accepted accounting principles for investment companies. Such
policies are consistently followed by the Fund in the preparation of financial
statements.
1. SECURITY VALUATION: Common stocks listed on an exchange are valued at the
latest quoted sales prices as of the close of the New York Stock Exchange
(generally 4:00 PM) on the valuation date; such securities not traded are
valued at the mean of the latest quoted bid and asked prices; those
securities not listed are valued at the latest quoted bid prices. Bonds are
valued utilizing the latest bid prices and on the basis of a matrix system
(which considers such factors as security prices, yields, maturities, and
ratings), both as furnished by independent pricing services. Temporary cash
investments are valued at cost which approximates market value.
2. FEDERAL INCOME TAXES: The Fund intends to continue to qualify as a regulated
investment company and distribute all of its taxable income.
17
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS
(continued)
Accordingly, no provision for Federal income taxes is required in the
financial statements.
3. EQUALIZATION: The Fund follows the accounting practice known as
"equalization," under which a portion of the price of capital shares issued
and redeemed, equivalent to undistributed net investment income per share on
the date of the transaction, is credited or charged to undistributed income.
As a result, undistributed income per share is unaffected by Fund share
sales or redemptions.
4. REPURCHASE AGREEMENTS: The Fund, along with other members of The Vanguard
Group of Investment Companies, transfers uninvested cash balances into a
Pooled Cash Account, the daily aggregate of which is invested in repurchase
agreements secured by U.S. Government obligations. Securities pledged as
collateral for repurchase agreements are held by a custodian bank until
maturity of each repurchase agreement. Provisions of the agreement require
that the market value of the collateral is sufficient in the event of
default; however, in the event of default or bankruptcy by the other party
to the agreement, realization and/or retention of the collateral may be
subject to legal proceedings.
5. OTHER: Security transactions are accounted for on the date the securities
are purchased or sold. Costs used in determining realized gains and losses
on the sale of investment securities are those of specific securities sold.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Discounts and premiums on debt securities purchased are
amortized to interest income over the lives of the respective securities.
B. Under the terms of a contract which expires March 31, 1996, the Fund pays
Wellington Management Company a basic investment advisory fee calculated at an
annual percentage rate of the average net assets of the Fund. The basic fee
thus computed is subject to quarterly adjustments based on performance relative
to a combined index comprised of the Standard & Poor's 500 Stock Index and the
Salomon Brothers High-Grade Corporate Bond Index. For the year ended November
30, 1995, the investment advisory fee represented an effective annual base rate
of .05 of 1% of average net assets. No performance adjustments were required
during the period.
C. The Vanguard Group, Inc. 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
Directors. At November 30, 1995, the Fund had contributed capital of $1,421,000
to Vanguard (included in Other Assets), representing 7.1% of Vanguard's
capitalization. The Fund's directors and officers are also directors and
officers of Vanguard.
D. During the year ended November 30, 1995, the Fund made purchases of
$2,133,688,000 and sales of $1,192,032,000 of investment securities other than
U.S. Government securities and temporary cash investments. Purchases and sales
of U.S. Government securities were $1,445,790,000 and $1,244,890,000,
respectively.
At November 30, 1995, unrealized appreciation for financial reporting and
Federal income tax purposes aggregated $2,981,345,000 of which $3,019,422,000
related to appreciated securities and $38,077,000 related to depreciated
securities.
E. The market value of securities on loan to broker/dealers at November 30,
1995, was $186,724,000 for which the Fund had received as collateral cash of
$133,695,000 and U.S. Treasury securities with a market value of $55,633,000.
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, realization and/or
retention of the collateral may be subject to legal proceedings.
18
<PAGE> 21
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
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, 1995, and the results of
its operations, the changes in its net assets and the financial highlights for
each of the respective periods presented, in conformity with generally accepted
accounting principles. 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 generally accepted auditing standards
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 by correspondence with the custodian and brokers and
the application of alternative auditing procedures where confirmations from
brokers were not received, provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
Thirty South Seventeenth Street
Philadelphia, Pennsylvania 19103
December 29, 1995
SPECIAL 1995 TAX INFORMATION (UNAUDITED)
FOR VANGUARD/WELLINGTON FUND
Corporate shareholders should note that for the fiscal year ended November 30,
1995, 40.2% of the Fund's investment income (i.e., dividend income plus
short-term capital gains) qualifies for the intercorporate dividends received
deduction.
19
<PAGE> 22
DIRECTORS AND OFFICERS
JOHN C. BOGLE, Chairman and Chief Executive Officer
Chairman and Director of The Vanguard Group, Inc., and of each of the
investment companies in The Vanguard Group.
JOHN J. BRENNAN, President
President and Director of The Vanguard Group, Inc., and of each of the
investment companies in The Vanguard Group.
ROBERT E. CAWTHORN, Chairman of Rhone-Poulenc Rorer Inc.; Director of Sun
Company, Inc.
BARBARA BARNES HAUPTFUHRER, Director of The Great Atlantic and Pacific Tea Co.,
Alco Standard Corp., Raytheon Co., Knight-Ridder, Inc., and Massachusetts
Mutual Life Insurance Co.
BRUCE K. MACLAURY, President of The Brookings Institution; Director of American
Express Bank Ltd. and The St. Paul Companies, Inc.
BURTON G. MALKIEL, Chemical Bank Chairman's Professor of Economics, Princeton
University; Director of Prudential Insurance Co. of America, Amdahl Corp.,
Baker Fentress & Co., The Jeffrey Co., and Southern New England Communications
Co.
ALFRED M. RANKIN, JR., Chairman, President, and Chief Executive Officer of
NACCO Industries, Inc.; Director of NACCO Industries, The BFGoodrich Co., and
The Standard Products Co.
JOHN C. SAWHILL, President and Chief Executive Officer of The Nature
Conservancy; formerly, Director and Senior Partner of McKinsey & Co. and
President of New York University; Director of Pacific Gas and Electric Co. and
NACCO Industries.
JAMES O. WELCH, JR., Retired Chairman of Nabisco Brands, Inc.; retired Vice
Chairman and Director of RJR Nabisco; Director of TECO Energy, Inc. and Kmart
Corp.
J. LAWRENCE WILSON, Chairman and Chief Executive Officer of Rohm & Haas Co.;
Director of Cummins Engine Co.; Trustee of Vanderbilt University.
HONORARY CHAIRMAN
WALTER L. MORGAN, Founder
OTHER FUND OFFICERS
RAYMOND J. KLAPINSKY, Secretary; Senior Vice President and Secretary of The
Vanguard Group, Inc.; Secretary of each of the investment companies in The
Vanguard Group.
RICHARD F. HYLAND, Treasurer; Treasurer of The Vanguard Group, Inc., and of
each of the investment companies in The Vanguard Group.
KAREN E. WEST, Controller; Vice President of The Vanguard Group, Inc.;
Controller of each of the investment companies in The Vanguard Group.
OTHER VANGUARD GROUP OFFICERS
ROBERT A. DISTEFANO IAN A. MACKINNON
Senior Vice President Senior Vice President
Information Technology Fixed Income Group
JEREMY G. DUFFIELD F. WILLIAM MCNABB III
Senior Vice President Senior Vice President
Planning & Development Institutional
JAMES H. GATELY RALPH K. PACKARD
Senior Vice President Senior Vice President
Individual Investor Group Chief Financial Officer
20
<PAGE> 23
THE VANGUARD FAMILY OF FUNDS
EQUITY AND BALANCED FUNDS
GROWTH AND INCOME FUNDS
Vanguard/Windsor Fund
Vanguard/Windsor II
Vanguard Equity Income Fund
Vanguard Quantitative Portfolios
Vanguard/Trustees' Equity Fund
U.S. Portfolio
Vanguard Convertible
Securities Fund
BALANCED FUNDS
Vanguard/Wellington Fund
Vanguard/Wellesley Income Fund
Vanguard STAR Portfolio
Vanguard Asset Allocation Fund
Vanguard LifeStrategy Funds
GROWTH FUNDS
Vanguard/Morgan Growth Fund
Vanguard/PRIMECAP Fund
Vanguard U.S. Growth Portfolio
AGGRESSIVE GROWTH FUNDS
Vanguard Explorer Fund
Vanguard Specialized Portfolios
Vanguard Horizon Fund
Global Equity Portfolio
Global Asset Allocation Portfolio
Capital Opportunity Portfolio
Aggressive Growth Portfolio
INTERNATIONAL FUNDS
Vanguard International Growth Portfolio
Vanguard/Trustees' Equity Fund
International Portfolio
INDEX FUNDS
Vanguard Index Trust
500 Portfolio
Total Stock Market Portfolio
Extended Market Portfolio
Growth Portfolio
Value Portfolio
Small Capitalization Stock Portfolio
Vanguard Tax-Managed Fund Vanguard
Balanced Index Fund
Vanguard Bond Index Fund
Total Bond Market Portfolio
Short-Term Bond Portfolio
Intermediate-Term Bond Portfolio
Long-Term Bond Portfolio
Vanguard International Equity
Index Fund
European Portfolio
Pacific Portfolio
Emerging Markets Portfolio
FIXED INCOME FUNDS
MONEY MARKET FUNDS
Vanguard Money Market Reserves
Vanguard Admiral Fund
U.S. Treasury Money Market Portfolio
TAX-EXEMPT MONEY MARKET FUNDS
Vanguard Municipal Bond Fund
Money Market Portfolio
Vanguard State Tax-Free Funds
Money Market Portfolios
(CA, NJ, OH, PA)
TAX-EXEMPT INCOME FUNDS
Vanguard Municipal Bond Fund
Vanguard State Tax-Free Funds
Insured Longer-Term Portfolios
(CA, FL, NJ, NY, OH, PA)
INCOME FUNDS
Vanguard Fixed Income Securities Fund
Vanguard Admiral Fund
Vanguard Preferred Stock Fund
[THE VANGUARD GROUP LOGO]
This Report has been prepared for shareholders and may be distributed to others
only if preceded or accompanied by a current prospectus. All Funds in the
Vanguard Family are offered by prospectus only.
Vanguard Financial Center
Valley Forge, Pennsylvania 19482
New Account Information: 1 (800) 662-7447
Shareholder Account Services: 1 (800) 662-2739
Q210-11/95
ON OUR COVER: On the evening of August 1, 1798, Lord Horatio Nelson sailed his
flagship, HMS Vanguard, into Egypt's Aboukir Bay. In a night encounter, the
British fleet annihilated Napoleon Bonaparte's ships of the line in what is
still considered to be the most complete victory ever recorded in naval
history. Our Report's cover illustration is Thomas Luny's 1830 painting, The
Battle Of The Nile, in which the French flagship, L'Orient, is shown as it
exploded at 10:00 p.m. under a gibbous moon.
<PAGE> 24
VANGUARD/WELLINGTON FUND
EDGAR APPENDIX
This appendix describes the components of the printed version of this report
that do not translate into a format acceptable to the EDGAR system.
The cover of the printed version of this report features Thomas Luny's 1830
painting "The Battle Of The Nile".
A photograph of John C. Brennan and John C. Bogle appears on the inside cover
top-center.
A running head featuring a sword, helmet, gloves and battleships in the
background appears at the top of pages one through six.
A line chart of the Indexed Value (Standard & Poor's 500 Index, and Lehman
Long-Term Corporate AA or Better Bond Index) of Vanguard/Wellington Fund for
the fiscal years 1990 through 1995 appears at the upper left of page two.
Line charts illustrating cumulative performance between Vanguard/Wellington
Fund, Composite Index and Average Balanced Fund, average Annual Total Returns
for the period November 30, 1985, to November 30, 1995 appear at the top of
page five.
A running head featuring a cannon and battleships in the background appears at
the top of page seven.
A running head featuring ships wheel, rope and battleships in the background
appears at the top of pages eight & nine.
A running head featuring open log book, pen and battleships in the background
appears at the top of pages ten through nineteen.
A running head featuring a sextant, a map, and battleships in the background
appears at the top of page twenty.
A running head featuring birds flying and ship in the background appears at the
top of the inside back cover.
