(PUB) Investing 2015

ANNIVERSARIES Horizon Job

somewhat, and Capital Opportunity’s original manager, Frank Husic, was so bad he was fired after just a couple of years and replaced with the venerable PRIMECAP Management team. In the chart on page 16, I’ve graphed the performance of each of the surviv- ing funds against Total Stock Market Index . Now, I know that Global Equity has a 40% allocation to foreign shares

I USED TO BE a competitive sailor, rac- ing my one-man Laser in regattas up and down the East coast from Miami to Maine as well as competing on the college circuit for a couple of years. In sailing, there’s a term that I’ve never heard in any other sport: When some- one gets so far ahead of the rest of the fleet of competitors, and there’s almost no chance of catching them, we call that “pulling a horizon job.” I think the term speaks for itself. Twenty years ago, on Aug. 14, 1995, Vanguard launched the Horizon funds with the expectation that they, too, would pull horizon jobs on the mutual fund competition. Vanguard was so excited by this quartet of new options that it took out full-page advertisements in papers like The New York Times proclaim- ing “Something New And Different From Vanguard.” The funds—Horizon Global Equity, Horizon Global Asset Allocation, Horizon Capital Opportunity and Horizon Aggressive Growth—had been “Developed Exclusively For Long- Term Investors” and would be “Actively Managed To PursueMaximumReturns.” Then-Chairman Jack Bogle said the funds were being introduced in direct response to the strong performance of Fidelity’s active funds. Since you probably aren’t familiar with the Horizon name, you may be wondering what happened to some of these funds. Well, Global Asset Allocation never gained traction with investors, and performance was punk, so it never got close to pulling a horizon job. It was closed down shy of its sixth birthday. Aggressive Growth still exists, but it’s now called Strategic Equity , since it wasn’t really all that aggressive. The other two funds dropped the word “Horizon” from their names and are now simply called Global Equity and Capital Opportunity . However, there’ve been changes among these last two as well. Global Equity has become a multimanaged fund, toning down its performance

and Strategic Equity is a more mid- cap oriented fund. In fact, Capital Opportunity used to be more small- and mid-cap oriented as well. But I wanted to use one consistent bogey to make the point that two of the funds (active funds, mind you) have substantially outperformed the broad U.S. market index fund. Global Equity has actually about matched the U.S. market, and >

DISTRIBUTIONS TO COME More Funds Go Quarterly

THE LIST OF FUNDS PAYING INCOME DISTRIBUTIONS quarterly just got a lot larger. As announced many months ago, two dozen funds, including Consumer Discretionary Index and its sector ilk, will now start paying every three months. So will most of Vanguard’s mid-cap and small-cap index funds. (This goes for all share classes of each fund, including ETFs.) With so many funds distributing, you’ll need to watch the calendar and listen to our Hotlines as Vanguard begins releasing actual distribution dates. Remember that for tax reasons, you don’t want to “buy a distribution,” so if you’re planning an investment in a taxable account, please hold off until after the “record date,” which is the date ownership is determined for distribution purposes. (If you’re investing in a tax-deferred account, you don’t need to worry about this.) The funds and ETFs that are scheduled to distribute are listed below. Remember that all share classes distribute, so whether you own Investor, Admiral or ETF shares, you’ll still get a distribution. Note that there is a strong likelihood Short-Term Inflation-Protected Securities Index will not make a quarterly distribution. It hasn’t done so since inception, only eking out tiny year-end payouts, and with inflation subdued, short-term Treasury yields in the basement, and the fund’s yield hovering around zero, there’s probably not much for the fund to actually pass on to shareholders. In fact, it could be that Inflation-Protected Securities also misses a payment this quarter. We’ll see. THE LIST: 500 Index, Balanced Index, Consumer Discretionary Index, Consumer Staples Index, Convertible Securities, Developed Markets Index, Dividend Appreciation Index, Emerging Markets Stock Index, Energy Index, Equity Income, European Stock Index, Extended Duration ETF, Extended Market Index, Financials Index, Global ex-U.S. Real Estate Index, Growth Index, Health Care Index, High Dividend Yield Index, Industrials Index, Inflation-Protected Securities, Information Technology Index, Large-Cap Index, LifeStrategy Conservative Growth, LifeStrategy Income, Materials Index, MegaCap ETF, MegaCap Growth ETF, MegaCap Value ETF, MidCap Growth Index, MidCap Index, MidCap Value Index, Pacific Stock Index, REIT Index, Russell 1000 ETF, Russell 1000 Growth ETF, Russell 1000 Value ETF, Russell 2000 ETF, Russell 2000 Growth ETF, Russell 2000 Value ETF, Russell 3000 ETF, S&P 500 Growth ETF, S&P 500 Value ETF, S&P Mid-Cap 400 ETF, S&P Small-Cap 600 Growth ETF, S&P Small-Cap 600 Value ETF, Short-Term Inflation-Prot. Sec. Index, SmallCap Growth Index, SmallCap Index, SmallCap Value Index, Social Index, Target Retirement Income, Tax-Managed Balanced, Tax-Managed Capital Appreciation, Tax-Managed SmallCap, Telecommunication Services Index, Total International Stock Index, Total Stock Market Index, Total World Stock Index, Utilities Index, Value Index, Wellesley Income, Wellington, World ex-U.S. Index, World ex-U.S. SmallCap Index.

The Independent Adviser for Vanguard Investors • September 2015 • 15

FOR CUSTOMER SERVICE, PLEASE CALL 800-211-7641