(PUB) Investing 2015

PARIS FROM PAGE 1 >

Dow Performance After Major Events Event

Date 6 months later 1 year later

uncle seems particularly optimistic that the country will heal, and heal stron- ger as a result of this most recent tragedy. As he wrote me the day after, quoting columnist Samuel Grafton, “Democracy can be defined as ‘the rule of the majority which protects the rights of the minority.’ What’s wrong with that?” We can only hope that the “point of life” will triumph over those who seek some kind of satisfaction in death. Stock markets in the U.S. were up a bit more in November after a bullish October, while Europe’s markets actu- ally did better. Total Stock Market Index gained 0.5%, while Europe’s markets were up in November, with the Stoxx 600 index gaining 2.7%. However, the dollar’s strength turned those gains into losses for U.S. inves- tors, and European Index dropped 1.3%. Emerging markets lost more ground, with EmergingMarkets Stock Index down 3.2% for the month and 13.3% for the year. Bond yields moved up a bit, and the 10-year Treasury lost 0.5%. Total Bond Market fell 0.3% and is up just 0.7% for the year. Money market yields continue to stir. Admiral Treasury Money Market picked itself up off the mat to score a 0.02% SEC yield on November 9—the first time it’s been over 0.01% since January 11, 2013. It ended the month at 0.05%. But Vanguard’s tax-exempt money funds all remain anchored just above zero, and Money Market Annuity , which is priced daily includ- ing dividends, continues its free-fall, down an annualized 0.16% over the past five years.

Attack on U.S.S. Cole in Yemen

October 12, 2000 September 11, 2001 October 7, 2001 August 29, 2005 March 21, 2010 April 20, 2010 March 11, 2011 August 5, 2011 October 29, 2012 April 15, 2013 October 1, 2013 February 27, 2014 January 7, 2015 November 13, 2015 July 7, 2005

-2.8% -10.3% 10.5% -10.7% 12.6% -18.6% 7.2% 8.0% 6.3% 9.4% 0.2% 12.1% 0.1% 12.3% -8.3% 8.1% 12.8% 15.0% 13.1% 19.6% 2.0% 9.4% 9.3% 12.6% 5.7% 11.9%

9/11 Terrorist Attack America Strikes Back London Bombings Hurricane Katrina

Iceland's Eyjafjallajokull Volcano

Deepwater Horizon Explosion in Gulf of Mexico

Japan Earthquake and Tsunami S&P Downgrades U.S. Debt to AA+

Hurricane Sandy

Boston Marathon Bombing U.S. Government Shutdown Russia Invades Crimea Charlie Hebdo Shooting

2.3%

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Paris Terrorist Attack

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7 of two new foreign stock funds, International Dividend Appreciation Index and International High Dividend Yield Index , which Jeff and I profiled in the October issue. Finally, while we may see a rally into the end of the year, it’s important to recognize that 2015 could go down in the books as a year that saw rather meager returns in all the major market segments, whether domestic or foreign stocks, bonds or, as we are more than used to by now, cash. That doesn’t mean the bull market that began in 2009 has lost its oomph. It simply confirms that bull markets don’t go straight up. As long-term investors, we can deal with the year-to-year fluctuations, because we know that, over the long haul, we are going to make good money on our investments with top-notch managers running low-cost funds. Our Model Portfolios continue to outperform, and that’s great. If we have a year or two of slow-to-no returns, so be it. The long record that dates back almost 25 years to when this newsletter first got started shows we are doing just fine. n

As had been expected, the IMF conferred reserve currency status on China’s yuan, though this actu- ally won’t take effect until sometime in 2016. The world didn’t fall apart on the announcement, as some pundits sug- gested it would. This greater status also confers greater scrutiny on the currency and those who try to manipulate it, and should be a net positive for the world’s economy going forward. On another note, Vanguard has now begun what it says will be a lengthy transition to the new China A-shares- inclusive benchmark for Emerging Markets Stock Index. Apparently, Vanguard doesn’t yet have permission to buy all the A-shares they need to make up the fund’s full 5.6% allo- cation—the Chinese have only given them a $1.6 billion allocation so far. Vanguard says it expects to obtain the necessary quota (about $2.8 billion) “in due course.” And, while you’re keeping an eye on the distributions calendar (see page 6 for the details), also keep watch for the slated introduction around December

Daniel P. Wiener - Senior Editor Jeffrey D. DeMaso - Editor/Research Director Seth H. Kennedy - Assistant Editor Amy Long - Vice President and Publisher Billy Currano - Senior Managing Editor David Clarfield - Assistant Managing Editor Rachel Johnsen - Editorial Assistant Louisa Dorado - Marketing Director Mary Southard - Marketing Director John Hall Design Group - Design and Production Fund Family Shareholder Association Member, Newsletter Publishers Association Daniel P. Wiener - Chairman James H. Lowell - President (www.FidelityInvestor.com)

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The Independent Adviser for Vanguard Investors • December 2015 • 3

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