(PUB) Investing 2016

21

May 2016

Morningstar FundInvestor

Bond-Market Snapshot

Treasury Yield Curve ( % )

Yield to maturity of current bills, notes, and bonds

p Current (0 4-30-16 )

p One Year Ago (0 4-30-15 )

Interest-Rate Review Bonds continued their slow-paced rally in April. The Barclays U.S. Aggregate Index has gone up each month in 2016 including a 0.4% gain in April. High-yield and corporate bonds had a great month. The Barclays Investment Grade Corporates Index surged 1.4%, while the Barclays U.S. Corporate High Yield Index gained 3.9%. It was a strong month for munis, too, as the Barclays Municipal Index is up 2.4%. Loose monetary policies from Central Banks in Europe and Asia propelled the Barclays Global Aggregate Index to a 7.3% year-to-date return.

6.00

5.00

4.00

3.00

2.00

1.00

Maturity

1 mo 3

6

1 yr

2

3

5

7

10

20

30

Treasury and Municipal-Bond Yields

p Vanguard Interm-Term Tax-Exempt p Vanguard Interm-Term U.S. Treasury

Municipal-Bond Spread Snapshot

7.00

Unattractive 1.73

-0.22

April 30, 2016

6.50

High

1.73

5.00

Low

-1.83

4.50

Average

0.08

3.00

04-30-16

Last Month (03-31-16)

-0.20

1.50

A Year Ago (04-30-15)

-0.36

0.00

Attractive -1.83

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

High-Yield and Treasury-Bond Yields

p Vanguard High-Yield Corporate p Vanguard Interm-Term U.S. Treasury

High-Yield Bond Spread Snapshot

15.00

4.28

Attractive 10.71

April 30, 2016

12.00

High

10.71

9.00

Low

2.01

Average

4.02

6.00

Last Month (03-31-16)

4.29

3.00

04-30-16

A Year Ago (04-30-15)

3.46

0.00

Unattractive 2.01

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Data as of April 30 , 2016 . Yield Spread: The difference between yields on differing debt instruments, calculated by deducting the yield of one instrument from another. The higher the yield spread, the greater the difference between the yields offered by each instrument. For municipal bonds, a smaller spread is attractive because munis typically pay smaller yields than Treasuries. For high-yield bonds, a wider spread is more attractive because junk bonds typically pay higher yields than Treasuries.