(PUB) Investing 2016

21

March 2016

Morningstar FundInvestor

Bond-Market Snapshot

Treasury Yield Curve ( % )

Yield to maturity of current bills, notes, and bonds

p Current (0 2-29-16 )

p One Year Ago (0 2-28-15 )

Interest-Rate Review The Treasury yield curve flattened over February, with the Barclays US Treasury Long Index gaining 2.98% for the month and 8.15% for the year to date. The Barclays US Aggregate posted a return of 0.71%, buoyed by modest monthly gains across all of its subsec- tors. Municipal markets provided muted though positive returns, and the Bank of America US HY Master II added 0.47% after three previous months of losses. Particularly noteworthy, the Barclays Global Aggregate benefited from loosening monetary policies across regions and delivered 2.23% – its highest monthly return in the past three years.

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

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

Municipal-Bond Spread Snapshot

7.00

-0.20

Unattractive 1.73

Feb. 29, 2016

6.50

High

1.73

5.00

Low

-1.83

4.50

Average

0.09

02-29-16

3.00

Last Month (01-31-16)

-0.05

1.50

A Year Ago (02-28-15)

-0.15

0.00

Attractive -1.83

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

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

5.42

Attractive 10.71

Feb. 29, 2016

12.00

High

10.71

9.00

Low

2.01

Average

4.01

6.00

02-29-16

Last Month (01-31-16)

5.08

3.00

A Year Ago (02-28-15)

3.34

0.00

Unattractive 2.01

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Data as of Feb. 29 , 2016 . 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.