(PUB) Investing 2015

S P E C I A L E X P A N D E D 1 6 - P A G E I S S U E

Model Portfolios................................................................ 2 Ultra-Short Is Live............................................................. 4 Interview: Charles Plowden.............................................. 4 Stick With the Basics........................................................ 5 When Vanguard Fudges on Performance.......................... 6 Performance Review.................................................... 8-11 Distributions to Come..................................................... 15 Dan’s Do-It-Now Action Recommendations.................... 16 MARCH 2015

Greece Is the Word Jan: You mean you’re dropping out? Frenchy: I don’t look at it as dropping out! I look at it as a very strategic career move. —Grease (1978) INVESTORS AROUND THE GLOBE were seemingly on tenterhooks in late February, waiting to see how the battle between the EU and its wayward member, Greece, would pan out. In the end, Greece reached a deal to kick the can down the road, and markets roared ahead. Any way you slice it, Greece’s newly elected government danced and danced and made it look like dropping out of the EU was going to be a “strategic career move,” but they’ve basically got nothing more than they started with, no matter how they spin it. Greece and the EU have only agreed to a four-month extension, so there will be more scenes in this drama. As Scorpions member Leo put it in the movie Grease , “The rules are…there ain’t no rules.” Stocks ruled, though. The Dow, the S&P 500 and myriad other domestic equity indexes all hit records in February. The NASDAQ Composite came close, but at 4963.53, it’s still 1.7% below the all-time closing high of Mar. 10, 2000. Throw in a bit of infla- tion, and the NASDAQ has a long way to go to recover all of its prior “value,” however inflated and ephemeral it may have been. For the month, Total Stock Market rose 5.8%, while Total International Stock

AVERAGEVANGUARD INVESTOR* February: 3.4% YTD: 2.6%

-3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0%

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*See the footnotes on page 2.

DOW JONES INDUSTRIALS February Close: 18132.70

15600 16275 16950 17625 18300

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STANDARD & POOR’S 500 February Close: 2104.50

1750 1850 1950 2050 2150

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NASDAQ COMPOSITE February Close: 4963.53

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FUNDS FOCUS > MODEL PORTFOLIO FUNDS Sitting My Way to Gains

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“It was never my thinking that made the big money for me, it always was my sitting.” FAMED TRADER JESSE LIVERMORE is said to have based his success on holding rather than trading, though you wouldn’t know that from Edwin Lefevre’s fictionalized biogra- phy of Livermore, Reminiscences of a Stock Operator . The book, first published in 1923, has inspired many traders over the decades. And yet, while it is the story of a trader, to the surprise of many, it is chock full of quotes about patience, extending investment time- frames and keeping turnover low. That pretty much sums up my thinking when it comes to the Model Portfolios I’ve built, managed and tracked in this newsletter over the past 24 years. The proof is in the pudding: In the table on page 12, you can get a nice summary of the performance of the Models , and see last month’s issue for a more complete review of their performance

3-MO.TREASURY BILLYIELD February Close: 0.01%

0.00% 0.01% 0.02% 0.03% 0.04%

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10-YR.TREASURY NOTE YIELD February Close: 2.00%

1.6% 2.0% 2.4% 2.8% 3.2%

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A PUBLICATION OF FUND FAMILY SHAREHOLDER ASSOCIATION • VOL. 25, NO. 3 The Independent Adviser for Vanguard Investors and FFSA are completely independent of The Vanguard Group, Inc.