(PUB) Investing 2016

Looking ahead, with the conventions behind us, the real heat in the presiden- tial contest will begin as Donald Trump and Hillary Clinton slug it out on the campaign trail. This will be a very hard-fought contest, and while history says that the outcome should have little impact on investment markets long- term, the uncertainty around escalating rhetoric could cause volatility, which has come down lately, to spike again. Stay tuned—but also, stay calm. Taking Money to the Bank Closer to home and our pocket- books, those fee waivers Vanguard has been applying to its tax-exempt money market funds have been cut way back. Based on the recent crop of semiannual reports, expenses for five tax-exempt money funds have risen anywhere from 50% to 83%. Yes, I know the expenses remain low, but on a percentage basis (the way Vanguard likes to present changes), the differences are huge. I still don’t understand why, if Vanguard could run the funds for as little as 0.05% to 0.08%, they couldn’t keep doing so. They clearly had enough other cash flow to make up for the waivers, and still do. I’m pretty sure Vanguard continues to shave costs in the technology area. It appears their computers are still mak- ing hash of many people’s consolidated brokerage and fund accounts. Besides the complications arising from holding two money market funds, like bounced checks, apparently Vanguard isn’t reporting correct prices on reinvested distributions. And so far, according to those of you who’ve written me, they have no explanation for the problems. Many of you have said you’re tired

DIVIDEND FROM PAGE 1 >

Money Market Expense Ratios

And it wasn’t just stock indexes hitting new records; the yield on the 10-year Treasury bond hit a 240-year low of 1.321% in July, putting prices sky-high (remember, when yields go down, bond prices go up). As I’ve said time and again, when markets (and portfolios) hit highs, there are really only two future outcomes— you either go on to another all-time high, or you drop below it. Don’t let a short-term decline, which we could easily see in the coming months, fill you with regret that you somehow didn’t sell at the top and lock in those highs. That’s a foolish way to invest, since it’s simply an attempt at short- term market-timing that just won’t work. Over the more than 25 years that I’ve been writing to you, we’ve had countless opportunities to sell “at the top.” But had we done so, where would we be now? Personally, my holdings in funds like Dividend Growth and sev- eral of the PRIMECAP-run funds like Capital Opportunity have never been larger. I love compounding even small gains on top of ever-larger amounts of money. If you want another example of the futility of trying to time the market, consider the last trading day of July. The morning’s initial report (there’ll be two revisions in the weeks ahead) on second- quarter GDP indicated the U.S. econ- omy grew at a 1.2% annualized pace, which was well short of expectations. How do you think traders responded to this disappointing read on our economy? Well, after initial selling, buyers stepped in, and the S&P 500 index finished the day with gains. Go figure.

of the snafus and the lousy customer service and are moving your money to Fidelity. I won’t try to dissuade you. I have accounts at Fidelity, and their technology is lightyears ahead of Vanguard’s. It’s said that you get what you pay for, but it’s also true that you don’t get what you don’t pay for. Vanguard isn’t the “low-cost provider” for nothing. And on a final note, The New York Times reported that several senior busi- ness leaders, including Vanguard chair- man Bill McNabb, have been meeting to try and put together what would essentially be a set of governance rules (recommendations, really) for pub- lic companies that include things like executive compensation and earnings guidance. But one issue stuck out to me: The group apparently thinks that companies should compensate board members in stock, not cash, something I’ve said Vanguard should be doing with its own fund board for years, and which I repeated recently in last month’s issue. It’s called eating your own cooking, and the fact that McNabb is part of a group recommending it to companies, but isn’t doing so at his own company, Vanguard, is just disingenuous. I own more Vanguard funds than McNabb does, and you’ll never be able to accuse me of “Do as I say, not as I do.” I defi- nitely eat my own cooking. n Prior Current Change %-age California 0.06% 0.10% 4 bps 67% New Jersey 0.08% 0.12% 4 bps 50% New York 0.06% 0.11% 5 bps 83% Ohio 0.08% 0.12% 4 bps 50% Pennsylvania 0.05% 0.09% 4 bps 80%

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 - 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)

The Independent Adviser for Vanguard Investors (ISSN 1093-4200) is published monthly for members of the Fund Family Shareholder Association by InvestorPlace Media, LLC, 9201 Corporate Blvd., Suite 200 Rockville MD 20850. A one-year membership is $229 (foreign, add $18). POSTMASTER: Send address changes to The Independent Adviser for Vanguard Investors /Fund Family Shareholder Association, c/o InvestorPlace Media, LLC, 9201 Corporate Blvd., Suite 200 Rockville MD 20850. The FFSA is an independent organization dedicated to providing investors with intelligent and objective advice about the Vanguard family of mutual funds and services. If you have questions regarding your membership, call 800/211-7641 (service@adviseronline.com). While the information provided is obtained from sources believed to be reliable, its accuracy or completeness cannot be guaranteed, nor can the publication be considered liable for the future investment performance of any securities or strategies discussed. The newsletter, hotline and associated publications provide information of general interest and are not intended to provide individualized investment advice for any subscriber or specific portfolio. Subscribers are urged to review the full disclaimer and securities holdings disclosure policy associated with this publication at www.adviseronline.com/disclosure-disclaimer. html or call 800-219-8592 to receive a copy via mail. Vanguard and The Vanguard Group are service marks of The Vanguard Group, Inc. FFSA and InvestorPlace Media, LLC are not affiliated in any way with The Vanguard Group and receive no compensation from The Vanguard Group, Inc. Copyright 2016 by Fund Family Shareholder Association. Reproduction in whole or in part is prohibited except by written permission of FFSA.

The Independent Adviser for Vanguard Investors • August 2016 • 3

FOR CUSTOMER SERVICE, PLEASE CALL 800-211-7641