Tracking Investment Performance of Model B

The approximate "target" composition of this model portfolio is currently as follows:

Fixed Income	Target % of Total Portfolio
Vanguard Prime Money Market Fund	<1%
Bank Certificates of Deposit	50-100%
Vanguard Total Bond Market Admiral Index (VBTLX)	0-25%
40%

Equity
Vanguard 500 Index Admiral Fund (VFIAX)	20-40%
Vanguard Mid-Cap Admiral Index (VIMAX)	15-30%
Vanguard Small-Cap Admiral Index (VSMAX)	0-20%
Vanguard Total International Index Admiral (VTIAX)(VTRIX)	0-20%
Vanguard Wellington (VWELX)	0-20%
Pearl Total Return (PFTRX)	20-30%
Pearl Aggressive Growth (PFAGX)	10-20%
60%

While the approximate 40%-60% allocation between fixed and equity investments is a fundamental policy allocation, the particular investment instruments and the target allocation made to each is at the discretion of the Investment Committee. So, both the investment instruments and target allocations are subject to change from time to time. But, these target percentage allocations are needed to calculate an approximate “composite rate of return”.

The investment return on laddered longer-term bank certificates of deposit, of course, varies over time with changing interest rates and the length of the maturity period. Typically the maturity periods range from 18 months to 5 years. The interest rates earned are typically in the range of 2.0-5.0%. The investment return earned on the bond mutual fund is a more complex factor so its historical returns are reported below.

Each mutual fund in Model B has one or more financial performance benchmarks (i.e., S&P 500 Index) that the fund manager has chosen as the most relevant reference point(s) in gauging actual fund performance over time. It is important to consider both measures in evaluating each mutual fund performance. In addition, it is recommended that each fund’s performance be gauged over a period of years and not just for one month, one quarter, or even one year. It is also important that normal market cycles get factored in when evaluating the performance history of each mutual fund.

Last Updated Wednesday, May 18 2011 @ 07:02 AM GMT+5; 1,420 Hits