(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

Keep Calm and Carry On.................................................. 1 June Special Distributions. ............................................... 3 Model Portfolios................................................................ 2 Nibbling at Their Cooking.................................................. 3 Steady As She Goes on Partnership Dividends................ 7 Performance Review.................................................... 8-11 Another Team Bites the Dust.......................................... 15 Dan’s Do-It-Now Action Recommendations.................... 16 JULY 2016

U.K. to E.U.: Pee-Yew! “The pessimist sees difficulty in every opportunity. The optimist sees opportunity in every difficulty.”

AVERAGEVANGUARD INVESTOR* June: 0.6% YTD: 3.3%

-6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0%

—Winston Churchill INVEST FOR TOMORROW, invest for the next year, or invest for the next decade? I think a lot of investors were pondering those questions during the final week of June as stock markets first crumbled under the weight of the result of the Brexit vote on June 23 and then staged rebounds. Ultimately, as negative as the initial reporting was, by the end of June, London’s FTSE 100 index was up 4.4% for the month and actually 2.6% higher than where it stood prior to the Brexit vote. Jeff talks quite a lot about the foreign markets in the first of our two-part focus on Vanguard’s global offerings, beginning just below, but suffice to say that the result of the Brexit vote was that one very specific unknown has been replaced by a host of unknowns. And while the former had an end date of June 23, the latter are going to be spread across the next couple of years at a minimum, which will certainly keep investors on their toes and markets volatile. Competing with the Brexit story and its global implications for stocks was what might be an even larger story around the bond market. Specifically, the continuing low, low level of interest rates. The yield on the 10-year Treasury bond fell to 1.49% at month’s end from an already low 1.83% at the end of May, and was not far from the 1.42% low the day after the U.K. vote. Bonds may have value as a comfort when you are anxious about markets, but at today’s rates, their long-term financial payoff is low,

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*See the footnotes on page 2.

DOW JONES INDUSTRIALS June Close: 17929.99

15900 16400 16900 17400 17900 18400

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STANDARD & POOR’S 500 June Close: 2098.86

1850 1900 1950 2000 2050 2100 2150

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NASDAQ COMPOSITE June Close: 4842.67

4300 4550 4800 5050 5300

SEE U.K. PAGE 3 >

OVERSEAS Keep Calm and Carry On

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3-MO.TREASURY BILLYIELD June Close: 0.25%

THE UNITED KINGDOM’S JUNE 23 DECISION to leave the European Union—the Brexit—sent shockwaves through financial markets around the globe. The U.K.’s bench- mark FTSE index fell 5.6%, and the British pound fell 11.1% against the dollar over two days, while Europe’s STOXX 600 dropped 10.9% over the same period. In the U.S., the S&P 500 index fell a relatively lighter 5.3%. The declines had many investors questioning whether they should even bother investing overseas at all. Dan and I sympathize with their anxiety on this issue, but I am going to make the case that investing as least a portion of your money outside of the U.S. is smart portfolio management. Depending on what lens you peer through, the Brexit is a great example of why investors should diversify their holdings beyond their home country.

0.00% 0.08% 0.16% 0.24% 0.32%

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10-YR.TREASURY NOTE YIELD June Close: 1.49%

1.4% 1.6% 1.8% 2.0% 2.2% 2.4%

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SEE OVERSEAS PAGE 12

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A PUBLICATION OF FUND FAMILY SHAREHOLDER ASSOCIATION • VOL. 26, NO. 7 The Independent Adviser for Vanguard Investors and FFSA are completely independent of The Vanguard Group, Inc.