As discussed in my last post, the portfolio included $739.97 in CASH (from dividends and capital gains distributions). Accordingly, a total of $25,739.97 is being re-invested at this time. I am not reinvesting the $566.33 in pending distributions for the Templeton Russia Fund (symbol: TRF) because it had not yet been distributed as of the start of 2007. The purchases of the securities in the portfolio were made as of their respective closing prices on December 29, 2006, the last trading day of 2006.
The portfolio includes a total of ten securities and I have purchased shares of nine of the securities in this rebalancing. TRF is the only security for which I did not add additional shares. TRF substantially outperformed the portfolio last year and is actually still overweighted in the portfolio despite the additional of new money.
The following purchases are made with the $25,739,97 I had to invest:
- Vanguard Index 500 mutual fund (symbol: VFINX): 48.151 shares at $130.59/share, a total investment of $6288.04
- Vanguard Midcap Index mutual fund (symbol: VIMSX): 242.719 shares at $19.78/share, a total investment of $4800.99
- Vanguard Developed Markets Index mutual fund (symbol: VDMIX): 188.190 shares at $12.58/share, a total investment of $2367.43
- Vanguard Small Cap Index mutual fund (symbol: NAESX): 105.816 shares at $32.62/share, a total investment of $3451.71
- Vanguard Small Cap Value Index mutual fund (symbol: VISVX): 177.484 shares at $17.05/share, a total investment of $3026.11
- iShares Emerging Market Index ETF (symbol: EEM): 11 shares at $114.17/share + $5 commission (through Ameritrade Izone), a total investment of $1260.87
- Nasdaq 100 ETF (symbol: QQQQ): 56 shares at $43.16/share + $5 commission, a total investment of $2421.96
- iShares Dow Jones U.S. Select Dividend Index ETF (symbol: DVY): 20 shares at $70.74/share + $5 commission, a total investment of $1419.80
- SPDR Financial components ETF (symbol: XLF): 19 shares at $36.74/share + $5 commission, a total investment of $703.06
The model portfolio after rebalancing is shown in the chart below (click on the image for a larger view)**:
* I have decided that because I am going to add an additional $25,000 at the end of each year to this portfolio, I will reinvest the dividends and distributions from the ETFs and the closed end fund immediately after they are distributed. I will only reinvest this money into the Vanguard index-tracking mutual funds because Vanguard does not charge commissions. The minimum investment for the Vanguard mutual funds is $100, so I will wait until at least $100 has accumulated before reinvesting the dividends and capital gains distributions.
**The total cost of all of the securities in the model portfolio is greater than the total of $125,000 that I initially added (i.e., $100,000 in 2006 and $25,000 in 2007) because $2,168.33 in dividends and capital gains distributions were reinvested. When purchasing new shares with such dividends and capital gains distributions, I added the amount purchased into the "cost" column of the chart shown above. The reason why I did this is because this is how one would need to account for such purchases on a taxable basis, so it makes sense to account for them the same way in this model portfolio.
***The Model Portfolio returned 20.50% in 2006. The way I calculated this was by dividing the $20,476 portfolio gain by $100,000, the total amount initially invested. However, because I added $25,000 in new money to the portfolio, the overall return decreased to 16.38% ($20,476 divided by $125,000) in the chart shown above.