(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

Sending Your Greenbacks Offshore.................................. 1 Model Portfolios................................................................ 2 Moving the Goal Line........................................................ 5 Jack Bogle Changes His Tune........................................... 7 Performance Review.................................................... 8-11 Bonds 101: Balancing Trade-Offs..................................... 12 Dan’s Do-It-Now Action Recommendations.................... 16 AUGUST 2015

Warming Trend? WAS GLOBAL WARMING TO BLAME for the GDP revision showing the U.S. economy growing, rather than shrinking, during the first quarter? I doubt it, but according to the Bureau of Economic Analysis, the economy continued its slow-growth, not no-growth momentum in the year’s first three months. And in Washington, D.C., where hot air is a fact of life, Janet Yellen’s Fed is warming to an interest-rate hike after all, despite the fact that inflation hasn’t met its targets, whereas job creation and employment have. U.S. investors warmed to stocks after selling in June. While July returns turned nega- tive late in the month, a rebound yielded gains, with Total Stock Market up 1.6%. The fund is up 3.5% for the year as well. For all their gyrations, though, stocks seem to be caught in something of a trading range these days, as the market’s extremely low volatil- ity and variability continues apace. So far in 2015, after a big jump in February, the S&P 500 index has traded in a fairly narrow band, between a low of 2040 and a high of 2130, or just 4.4%. Consider that in 2014 and 2013, the range between the index’s closing low and closing high was 20.0% and 26.8%, respectively. Even in 2011, when the S&P 500 index was essentially flat, dropping 0.04 points over the course of the year, the range from low to high was 24.1%. So far, this has been an abnormally calm year. Frankly, I’m disappointed that we haven’t been 10% below the market high since the end of 2012 (and that wasn’t for long). Why my bearish sentiment? Because I’d like our chosen managers to catch a break—or better yet, catch some bargains. I know that out OVERSEAS Sending Your Greenbacks Offshore YOU CAN BE EXCUSED ( temporarily, anyway) if you think investing some of your hard- earned money overseas is a really, really bad idea. Heck, between Greece and China alone, the headlines have been filled with the eco- nomic travails, poor regulatory and governmental leadership and, yes, volatile stock prices that seem to characterize overseas markets. (Of course, we never fall victim to any of those things over here, do we? Wink, wink.) Well, I’m going to make the case that you absolutely should invest some money out- side the U.S. I won’t go so far as Vanguard does, with its one-size-fits-all “40% of your equity allocation” rule on foreign investments. I will, however, tell those of you who didn’t follow my lead and add to International Growth in late March that this is as good a time as any to take some of your winnings from some domestic funds and do SEE WARMING PAGE 3 >

AVERAGEVANGUARD INVESTOR* July: 0.9% YTD: 2.5%

-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 July Close: 17689.86

16000 16600 17200 17800 18400

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STANDARD & POOR’S 500 July Close: 2103.84

1800 1900 2000 2100 2200

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NASDAQ COMPOSITE July Close: 5128.28

4200 4500 4800 5100 5400

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3-MO.TREASURY BILLYIELD July Close: 0.06%

0.06%

0.04%

0.02%

0.00%

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10-YR.TREASURY NOTE YIELD July Close: 2.20%

1.6% 2.0% 2.4% 2.8% 3.2%

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SEE OFFSHORE PAGE 4

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A PUBLICATION OF FUND FAMILY SHAREHOLDER ASSOCIATION • VOL. 25, NO. 8 The Independent Adviser for Vanguard Investors and FFSA are completely independent of The Vanguard Group, Inc.