(PUB) Morningstar FundInvestor

November 2013

Morningstar FundInvestor

21

Bond-Market Snapshot

Treasury Yield Curve ( % )

Yield to maturity of current bills, notes, and bonds

p Current ( 10 - 31 - 13 )

p One Year Ago ( 10 - 31 - 12 )

Interest-Rate Review Almost all segments of the fixed-income market posted positive gains for the second month in a row during October. It was a period of time that rewarded risk, with high-yield and emerging-markets notching the biggest gains. Emerging-markets local-currency sover- eign debt led the way with a 2.7% return, rebounding from steep losses earlier this year. The U.S. corporate high-yield market gained 2.5%, while the investment-grade corporate segment fared well with a 1.5% gain. U.S Treasury rates trended slightly lower during the month, giving a boost to long duration U.S. Treasury securities. Municipal bonds also continued to rebound after a rough summer on the heels of Detroit’s bankruptcy filing and concerns about Puerto Rico, with all segments of the market notching modest gains.

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

Municipal-Bond Spread Snapshot Unattractive 1.73

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

7.00

-1.04

Oct. 31, 2013

6.50

High

1.73

5.00

Low

-1.83

4.50

Average

0.15

3.00

Last Month (09-30-13)

-1.05

1.50

10-31-13

A Year Ago (10-31-12)

-0.93

0.00

Attractive -1.83

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

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

3.18

Attractive 10.71

Oct. 31, 2013

12.00

High

10.71

9.00

Low

2.01

Average

4.09

6.00

Last Month (09-30-13)

3.35

3.00

A Year Ago (10-31-12)

4.11

0

Unattractive 2.01

10-31-13

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

Data as of Oct. 3 1, 2 013. 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.