Bill-

"YTD there is 2.27% difference in TR.  Wellesley has 1.97% realized capital gains and 4.59 unrealized capital gains.  VTINX has -.27% realized capital loss, and 3.05 unrealized gain.  Total gain: Wellesley +6.56 and VTINX +2.78."

Unrealized CGs are accumulated throughout the fund's history. Wellesley was started in 1970, Retirement Income in 2003. It looks to me, with a continuing down market, VWINX could run out of CGs to distribute pretty quickly. I agree I used an apples to oranges comparison, but VTINX is the closest Vanguard fund I could find with a similar asset allocation.

Sorry Bill, but I disagree with your basic concept on this. CGs can only increase your payout growth if the fund manager invests the proceeds from the stock sold into companies with a yield equal to what was sold, and that are increasing their payouts. Other than that, it is a neutral event for the fund investor, except for the possible tax liability. You acknowledged that yourself in your previous post when you mentioned the corresponding drop in NAV when CGs are distributed.

And I still don't really understand why you think balanced funds don't suffer like every other fund when there are redemptions. Managers may be forced to sell stocks and bonds, and may be forced to realize CGs in a down market. I can't see how a balanced fund gives them any more flexibility. Down markets are a bummer.

-dale