(PUB) Investing 2016

PERFORMANCE REV I EW

VANGUARD INCOME FUNDS

—— Tax Equivalent Yield —— 25% 28% 36.8% * 38.8% * 43.4% *

Avg. Mat.

10/31 Price

Oct. Return

YTD Return

12-Mo. Return

3-Year Return

5-Year Return

12-Mo. Yield

SEC Yield

Fund (fund #)

Ticker Advice

Risk

TAXABLE INCOME Ultra-Short-Term Bond (1492) Short-Term Treasury (32) Short-Term Federal (49) Short-Term Inflation Index (1967) Short-Term Investment-Grade (39) Short-Term Bond Index (132) Inflation-Protected Sec. (119) Intermed. Treasury (35) Intermed. Investment-Grade (71) Intermed.-Term Bond Index (314) Long-Term Treasury (83) Long-Term Investment-Grade (28) Long-Term Bond Index (522) High-Yield Corporate (29) Emerging Markets Bond (1431) Total International Bond Index (1231) Tax-Exempt Money Market (45) CA Tax-Exempt MM (62) NJ Tax-Exempt MM (95) NY Tax-Exempt MM (163) OH Tax-Exempt MM (96) PA Tax-Exempt MM (63) TAX-FREE INCOME Short-Term Tax-Exempt (41) Limited-Term Tax-Exempt (31) Intermed.-Term Tax-Exempt (42) Tax-Exempt Bond Index (1491)*** Long-Term Tax-Exempt (43) High-Yield Tax-Exempt (44) STATETAX-FREE CA Intermed. Tax-Exempt (100) CA Long-T. Tax-Exempt (75) MA Tax-Exempt (168) NJ Long-T. Tax-Exempt (14) NY Long-T. Tax-Exempt (76) OH Long-T. Tax-Exempt (97) PA Long-T. Tax-Exempt (77) Total Bond Market (84) Core Bond (1320) GNMA (36) MONEY MARKET Treasury MM (11) Federal MM (33) Prime MM (30)

VUBFX VFISX VSGBX VTIPX VFSTX 0.1% 1.2% 1.0% — — 0.9% 1.02% — — — — — — Sell 2.4 $10.74 -0.1% 1.6% 1.1% 0.8% 0.7% 0.8% 0.68% — — — — — 0.38 Sell 3.1 $10.82 -0.1% 1.9% 1.6% 1.2% 1.0% 1.0% 0.99% — — — — — 0.36 0.0% 2.9% 2.5% 0.3% — 0.0% -0.70% — — — — — 0.62 Buy 3.2 $10.76 -0.0% 3.6% 3.2% 2.1% 2.3% 1.9% 1.57% — — — — — 0.44 VBISX Hold 2.9 $10.55 -0.3% 2.3% 1.8% 1.3% 1.3% 1.4% 1.14% — — — — — 0.49 VIPSX Hold 8.8 $13.72 -0.5% 6.9% 5.7% 2.0% 1.3% 0.7% -0.20% — — — — — 1.35 Sell 5.6 $11.55 -0.7% 4.0% 3.2% 2.7% 2.1% 1.5% 1.20% — — — — — 1.21 Buy 6.4 $10.02 -0.6% 6.4% 5.8% 4.4% 4.3% 2.8% 2.28% — — — — — 1.05 VBIIX Hold 7.3 $11.72 -0.9% 6.3% 5.3% 4.2% 3.7% 2.5% 2.04% — — — — — 1.34 VBMFX Hold 8.3 $10.96 -0.8% 5.0% 4.3% 3.3% 2.7% 2.3% 1.88% — — — — — 1.00 Buy 7.6 $10.17 -0.7% — — — — — 1.85% — — — — — — VFIIX Hold 5.5 $10.83 -0.2% 3.5% 3.6% 3.3% 2.5% 2.3% 1.97% — — — — — 0.49 Sell 24.7 $13.15 -4.2% 10.2% 9.0% 9.0% 5.1% 2.5% 2.24% — — — — — 4.01 VWESX Hold 23.7 $10.73 -2.5% 12.4% 11.5% 8.8% 6.5% 4.0% 3.54% — — — — — 2.79 Sell 24.3 $14.42 -2.9% 12.6% 10.9% 8.3% 5.6% 3.7% 3.38% — — — — — 3.01 0.3% 10.7% 7.2% 4.7% 6.5% 5.3% 4.99% — — — — — 1.72 Buy 10.0 $10.04 -1.0% 12.4% 10.7% 5.6% — 4.5% 4.09% — — — — — 1.84 — 9.4 $10.91 -0.9% — — — — — 4.35% — — — — — — VTIBX Hold 9.5 $11.02 -1.2% 5.5% 5.4% 4.8% — 1.4% 0.47% — — — — — 1.11 Hold 2.7 $24.83 VFITX VFICX VCORX VUSTX VBLTX VWEHX Buy 7.0 $5.86 VEMBX Buy 1.3 $10.01

Emerging Mkts. Gov’t Bond Idx. (1120)** VGOVX

VUSXX VMFXX VMSXX VCTXX VNJXX VYFXX VOHXX VPTXX

— 57 $1.00 — 56 $1.00 — 31 $1.00 — 18 $1.00 — 47 $1.00 — 41 $1.00 — 24 $1.00 — 24 $1.00

0.0% 0.2% 0.2% 0.1% 0.1% 0.2% 0.26% — — — — — — 0.0% 0.2% 0.3% 0.1% 0.1% 0.3% 0.30% — — — — — — 0.1% 0.4% 0.4% 0.1% 0.1% 0.4% 0.61% — — — — — — 0.1% 0.2% 0.2% 0.1% 0.1% 0.2% 0.56% 0.7% 0.8% 0.9% 0.9% 1.0% — 0.1% 0.2% 0.2% 0.1% 0.1% 0.2% 0.51% 0.8% 0.8% 0.9% 0.9% 1.0% — 0.0% 0.2% 0.2% 0.1% 0.1% 0.2% 0.46% 0.7% 0.7% 0.8% 0.8% 0.9% — 0.1% 0.2% 0.2% 0.1% 0.1% 0.2% 0.52% 0.8% 0.8% 0.9% 0.9% 1.0% — 0.1% 0.2% 0.2% 0.1% 0.1% 0.2% 0.51% 0.7% 0.8% 0.9% 0.9% 1.0% — 0.1% 0.2% 0.2% 0.1% 0.1% 0.2% 0.50% 0.7% 0.7% 0.8% 0.8% 0.9% —

VMMXX — 52 $1.00

VWSTX Buy 1.4 $15.80 0.0% 0.7% 0.6% 0.6% 0.7% 0.8% 0.88% 1.2% 1.2% 1.4% 1.4% 1.6% 0.14 Buy 2.9 $11.02 -0.1% 1.2% 1.3% 1.4% 1.6% 1.5% 1.08% 1.4% 1.5% 1.7% 1.8% 1.9% 0.37 Buy 5.4 $14.31 -0.8% 2.6% 3.6% 4.1% 3.9% 2.7% 1.50% 2.0% 2.1% 2.4% 2.5% 2.7% 0.73 Buy 5.6 $10.33 -0.9% 2.9% 4.3% — — 1.5% 1.61% 2.1% 2.2% 2.5% 2.6% 2.8% 0.81 VWLTX Hold 6.5 $11.83 -1.1% 3.6% 5.4% 6.0% 5.2% 3.5% 1.99% 2.7% 2.8% 3.1% 3.3% 3.5% 0.94 VWAHX Hold 6.8 $11.47 -1.2% 4.4% 6.2% 6.5% 5.7% 3.6% 2.49% 3.3% 3.5% 3.9% 4.1% 4.4% 0.94 VMLTX VWITX VTEBX Buy 5.6 $11.90 -0.9% 2.6% 3.7% 4.4% 4.4% 2.6% 1.42% 2.1% 2.2% 2.5% 2.6% 2.8% 0.75 Sell 6.9 $12.29 -1.2% 3.5% 5.3% 6.3% 5.6% 3.3% 1.85% 2.7% 2.9% 3.3% 3.4% 3.6% 1.00 6.7 $10.98 -1.2% 3.0% 4.6% 5.5% 4.5% 2.9% 1.81% 2.5% 2.7% 3.0% 3.1% 3.4% 0.97 Sell 6.4 $12.31 -1.0% 4.7% 6.8% 5.5% 4.9% 3.5% 2.31% 3.4% 3.5% 4.0% 4.1% 4.5% 1.04 Sell 6.2 $11.99 -1.1% 3.3% 5.0% 5.9% 4.8% 3.2% 1.74% 2.5% 2.7% 3.0% 3.1% 3.4% 0.90 Sell 6.0 $12.77 -1.1% 3.6% 5.4% 6.1% 5.1% 3.2% 1.96% 2.8% 2.9% 3.3% 3.4% 3.7% 0.96 Sell 6.2 $11.76 -1.1% 3.4% 5.0% 5.9% 4.9% 3.5% 2.10% 2.9% 3.0% 3.4% 3.5% 3.8% 0.89 VMATX Sell VNJTX VNYTX VOHIX VPAIX VCAIX VCITX

Our ratings: BUY: Best choice. Generally funds held in our Model Portfolios or funds with similar objectives. HOLD: Current prospects for the fund are not as good as those with a Buy rating. However, investors who own shares in the fund may wish to assess tax costs of trading into a Buy-rated fund. SELL: The fund’s long-term prospects are not as compelling as other funds’, or other factors may make the fund unattractive compared to alternatives. “+” is a rating upgrade over the previous month; “-” is a downgrade. Investors should weigh all tax implications of fund switches before making a sale or purchase. Some closed funds are available for purchase by high-net-worth investors. All funds charge a $20 annual account fee unless you have $10,000 in the fund, $100,000 with Vanguard or accept all paperwork through online means. Minimum refers to the dollar amount (e.g., $3K means $3,000) needed to open a new taxable account. Loads are denoted with an “f” for front-end and “r” for back-end. Holding periods are noted for loads imposed on sales of shares held less than two months (<2 mo.) or one year (<1). 3-year and 5-year returns are compound, annualized returns. Average maturity is in years for bond funds and days for money market funds. 12-month yields are based on trailing 12-month dividend/income distributions. SEC yields are reported 30-day yields. Taxable equivalent yields are based on SEC yields. For state funds, taxable equivalent yields incorporate state taxes. Risk is fund vola- tility measured over the previous 24 months. Equity fund risk is measured against the S&P 500 index. Bond fund risk is measured against the Barclays Aggregate Bond index. Annuity ratings May differ from taxable funds since choices in the annuity area are more limited. * Tax equivalent yields incorporate the 3.8% health care sur-

VANGUARD VARIABLE ANNUITIES

10/31 Price

Oct. Return

YTD Return

12-Mo. Return

3-Year Return

5-Year Return Risk

Fund (fund #)

Advice

Money Market Annuity (64) Short-Term Inv.-Grade Annuity (144) Total Bond Market Annuity (67) High-Yield Bond Annuity (146) Conservative Allocation Annuity (801) Moderate Allocation Annuity (803) Balanced Annuity (69) Capital Growth Annuity (603) Diversified Value Annuity (145) Equity Income Annuity (8) Equity Index Annuity (68)

— $1.90

0.0% 0.1% 0.1% -0.1% -0.1% — -0.1% 3.3% 2.9% 1.9% 2.1% 0.46 -0.8% 4.7% 4.0% 3.1% 2.4% 1.00 0.2% 10.5% 7.0% 4.3% 6.1% 1.68 -1.4% 5.2% 4.0% 4.3% 5.8% 0.42 -1.6% 5.4% 3.8% 4.6% 7.3% 0.61 -1.2% 6.1% 4.7% 6.2% 9.4% 0.67 -2.9% 4.7% 4.6% 10.1% 14.8% 1.06 -1.0% 5.7% 2.9% 5.6% 11.5% 0.97 -1.7% 7.5% 6.3% 7.9% 12.9% 0.92 -1.9% 5.5% 4.1% 8.4% 13.1% 1.00 -2.8% -0.7% -0.4% 9.2% 13.6% 1.09 -3.1% 5.2% 2.6% 7.1% 12.5% 1.04 -5.8% 5.0% 6.2% 9.7% 10.8% 1.35 -6.0% 4.8% 3.7% 4.2% 11.5% 1.35 -2.2% 5.5% 3.8% 7.6% 12.8% 1.01 -3.1% 5.5% 3.2% 0.5% 6.3% 1.32

Buy Hold Buy Hold Hold Buy Buy Buy Buy Buy Hold Buy Hold Hold Hold Buy

$19.13 $38.59 $31.90 $27.12 $29.28 $87.41 $41.69 $29.65 $76.05 $84.81 $42.24 $48.64 $57.24 $66.12 $30.79 $38.74

Growth Annuity (10) MidCap Index Annuity (143) REIT Index Annuity (147)

Small Company Growth Annuity (160) Total Stock Market Annuity (604)

International Annuity (86)

tax into the 33%, 35% and 39.6% tax rates. ** Fund sold with a 0.75% front-end load *** Fund sold with a 0.25% front-end load

The Independent Adviser for Vanguard Investors • November 2016 • 9

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