(PUB) Investing 2016

21

April 2016

Morningstar FundInvestor

Bond-Market Snapshot

Treasury Yield Curve ( % )

Yield to maturity of current bills, notes, and bonds

p Current (0 3-31-16 )

p One Year Ago (0 3-31-15 )

Interest-Rate Review The Barclays U.S. Aggregate Index provided a 0.9% return for March, primarily buoyed by investment-grade corporates, which gained 2.8%, but weighed down by far more-modest performance in other sectors, including 0.2% from U.S. Treasuries and agencies. The yield curve remained relatively unchanged over the course of the month, with the exception of the three-month Treasury, which shifted lower by 12 basis points. Riskier sectors rebounded from a tough previous quarter, with the Barclays U.S. Corporate High Yield Index generating 3.4% and local-currency emerging-markets debt, as measured by the JPM GBI-EM Global Composite, up 11.1%, both for the year to date.

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

Unattractive 1.73

-0.20

March 31, 2016

6.50

High

1.73

5.00

Low

-1.83

4.50

Average

0.09

03-31-16

3.00

Last Month (02-29-16)

-0.20

1.50

A Year Ago (03-31-15)

-0.25

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

4.29

Attractive 10.71

March 31, 2016

12.00

High

10.71

9.00

Low

2.01

Average

4.01

6.00

Last Month (02-29-16)

5.42

3.00

03-31-16

A Year Ago (03-31-15)

3.60

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 March 31 , 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.