(PUB) Investing 2016

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 Ear-Plug Approved............................................................. 4 2015 Year in Review.......................................................... 6 Performance Review.................................................... 8-11 2015 Scorecard............................................................... 12 Contribute the Max for Retirement................................ 13 Morgan’s Multiple Manager Mess.................................. 15 Active Wins!.................................................................... 16 JANUARY 2016

Meandering Markets DECEMBER TURNED OUT TO BE SOMETHING OF A MICROCOSM of the year with its swoops and swoons. Total Stock Market Index was down 3.9% midway through December but ended the month with a 2.0% loss, and finished the year with a fractional 0.3% gain. Total Bond Market Index was up almost a half percent at one point but ended the month down 0.4%. It also finished 2015 with a 0.3% gain. Though I know the turn of the calendar is meaningless in the investment context within which you and I work together, I’m glad we made it out of 2015 bowed but not broken. It wasn’t only the financial markets that made stomachs churn as 2015 came to a close. Many of you reported that dividend distributions were messed up when Vanguard began consolidating fund and brokerage accounts, sometimes reinvesting when you wanted cash instead, for instance. Vanguard says it’s fixed the problem, investors will be made whole and that the prob- lems were limited to a “modest” number of accounts. My advice: Make darned sure that your money is where you expect it to be, and that it’s going where you want it to go. Please keep me apprised of any further travails by emailing at service@adviseronline.com. Oh, and that wasn’t the only service glitch I heard about as the year was coming to a close. Apparently, if Vanguard tells you they’ll be able to handle the required minimum distributions from Vanguard-offered 401(k) or 403(b) plans, you’d better check and double-check. One Flagship member (that’s someone with at least a million bucks at Vanguard and who is supposedly working with Vanguard’s best client reps) told me that OUTLOOK 2016 Pause, Regroup, Continue RETURNS DROPPED, AND VOLATILITY ROSE. And in the end, 2015 left most investors with little to show for their efforts. That’s about as succinct a description of the past year as I can come up with. How that translates into what we can all expect in the coming year is the million-dollar question, of course. Here’s what I’m thinking. First, I think the story in 2016 is going to be the strength of the U.S. consumer and the willingness, or lack thereof, to spend. With the political silly season giving way to prima- ries and then a full-on campaign, it wouldn’t surprise me one bit if consumers keep a tight grip on their wallets. Why? Call it uncertainty, of which there’ll be plenty to go around. That very uncertainty could breed opportunity. Like stocks, earnings didn’t really go anywhere in 2015, and I truly believe that the stock market’s biggest drivers are SEE MEANDERING PAGE 3 >

AVERAGEVANGUARD INVESTOR* December: -1.4% YTD: -0.4%

-5.0% -4.0% -3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0%

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*See the footnotes on page 2.

DOW JONES INDUSTRIALS December Close: 17425.03

16000 16600 17200 17800 18400

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STANDARD & POOR’S 500 December Close: 2043.94

1900 1950 2000 2050 2100 2150 2200

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NASDAQ COMPOSITE December Close: 5007.41

4400 4650 4900 5150 5400

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3-MO.TREASURY BILLYIELD December Close: 0.17%

0.00% 0.04% 0.08% 0.12% 0.16% 0.20% 0.24%

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10-YR.TREASURY NOTE YIELD December Close: 2.27%

1.6% 1.9% 2.2% 2.5% 2.8%

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SEE OUTLOOK PAGE 4

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A PUBLICATION OF FUND FAMILY SHAREHOLDER ASSOCIATION • VOL. 26, NO. 1 The Independent Adviser for Vanguard Investors and FFSA are completely independent of The Vanguard Group, Inc.