HomeMy Public PortalAbout2013 4th Quarter ReportMetropolitan St. Louis Sewer District
Deferred Compensation Plan
4th Quarter 2013 Performance Review
1 Executive Summary 1
2 Performance Summary 3
3 Plan Assets 10
4 Manager Evaluation 13
5 Capital Markets Review 47
Table Of Contents
Executive Summary
1
Performance Summary - December 2013
Fourth quarter fund performance was due to strong global equity market appreciations and muted global fixed income market results.
Plan Assets
The investment menu provides a combination of single strategy funds and diversified portfolios including a balanced fund and target retirement date funds. The
retirement dates range from 2010 through 2060 in five year increments.
Manager Evaluation
Vanguard is a market leader and well known for its low cost market index and institutional investment funds. On October 16, 2013, Vanguard announced that the
Vanguard Growth Equity Fund will merge with the Vanguard U.S. Growth Fund. The merged fund will keep Vanguard U.S. Growth Fund's current subadvisors,
Delaware, Wellington, and William Blair, while adding Vanguard Growth Equity Fund's subadvisors, Bailie Gifford Overseas and Jennison, effectively
increasing the number of advisors from 3 to 5. Pavilion will continue to monitor the manager for further developments. There no were major changes to the other
investment options. More detailed analysis of the managers' performance can be found in the Manager Evaluation section.
Of the three active managers available in the investment menu, Vanguard U.S. Growth and Vanguard International growth were the best relative performers. The
managers outperformed their benchmarks by 0.6% and 2.5%, respectively. Domestic equity managers experienced the greatest absolute returns. Target retirement
date funds performed relatively in-line with their respective benchmarks.
Capital Markets Review
On December 18th, the Fed announced the tapering of asset purchases by $10 billion per month beginning in January, citing an improving economy as a main
reason for this decision. Interest rates are expected to remain at very low levels for an extended period of time, as the Fed seeks to lessen the reliance on targets
for rising rates. Market speculation leading up to the Fed's plans resulted in considerable interest rate volatility during the quarter as the 10-year U.S. Treasury
yield fell to 2.5% in October before surpassing 3.0% in late December. The yield curve flattened during the quarter as intermediate rates rose more than long
rates. During the fourth quarter, global equity markets again experienced strong gains, due to central bank policy changes and encouraging economic data. Within
the domestic equity market, lage-cap growth companies outpaced their value counterparts, while value stocks outpaced growth stock among small- and mid-cap
indices. Among non-U.S. indices, developed market value companies outpaced their growth counterparts, while emerging market growth stocks outperformed
value stocks. While corporate earnings increased somewhat during the quarter, equity market gains were primarily a result of multiples expansion and higher
interest rates, which has increased the valuations of equities, particularly U.S. equities.
Recommendations or Action Items
No recommendations at this time. Pavilion is preparing an investment structure review to be presented at the May 2014 Finance Committee Meeting.
Deferred Compensation Plan Executive Summary
2
Performance Summary
3
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years
Domestic Equity Options
Vanguard 500 Index (VFINX)10.5 (38)32.2 (52)32.2 (52)16.0 (31)17.8 (44)7.3 (51)
S&P 500 10.5 (37)32.4 (50)32.4 (50)16.2 (28)17.9 (42)7.4 (48)
Large-Cap Equity Peer Group Median 9.9 32.4 32.4 14.8 17.4 7.3
Vanguard US Growth (VWUSX)11.0 (37)35.5 (41)35.5 (41)16.8 (29)19.1 (53)7.1 (66)
Russell 1000 Growth Index 10.4 (53)33.5 (58)33.5 (58)16.5 (34)20.4 (35)7.8 (47)
Large-Cap Growth Equity Peer Group Median 10.6 34.6 34.6 15.3 19.3 7.7
Vanguard Windsor II (VWNFX)9.5 (53)30.7 (62)30.7 (62)16.1 (28)17.1 (43)7.9 (32)
Russell 1000 Value Index 10.0 (44)32.5 (44)32.5 (44)16.1 (29)16.7 (51)7.6 (40)
Large-Cap Value Equity Peer Group Median 9.6 31.7 31.7 14.7 16.7 7.3
Vanguard Mid-Cap Index (VIMSX)8.6 (43)35.0 (48)35.0 (48)15.2 (40)21.9 (30)10.0 (37)
Vanguard Mid-Cap Index Fund Blended Benchmark 8.6 (42)35.4 (45)35.4 (45)15.5 (37)22.2 (27)10.1 (34)
Mid-Cap Equity Peer Group Median 8.3 34.6 34.6 14.5 20.4 9.4
Vanguard Small-Cap Index (NAESX)8.8 (58)37.6 (59)37.6 (59)16.4 (39)22.4 (34)10.2 (19)
Vanguard Small-Cap Index Fund Blended Benchmark 8.8 (56)37.8 (57)37.8 (57)16.6 (38)22.5 (33)10.3 (18)
Small-Cap Equity Peer Group Median 9.0 39.0 39.0 15.7 20.8 9.0
International Equity Option
Vanguard International Growth (VWIGX)7.3 (21)22.9 (31)22.9 (31)8.4 (36)15.8 (19)8.7 (25)
MSCI AC World ex USA (Net)4.8 (79)15.3 (84)15.3 (84)5.1 (84)12.8 (52)7.6 (46)
International Equity Peer Group Median 6.0 20.8 20.8 7.4 12.9 7.3
Fixed Income Options
Vanguard Total Bond Market Index (VBMFX)-0.2 (88)-2.3 (74)-2.3 (74)3.0 (81)4.3 (92)4.4 (55)
Vanguard Total Bond Market Index Fund Benchmark -0.1 (70)-2.0 (60)-2.0 (60)3.3 (68)4.5 (88)4.6 (50)
Market Duration Fixed Income Peer Group Median 0.2 -1.8 -1.8 3.8 6.2 4.6
Vanguard Retirement Savings Trust 0.4 1.7 1.7 2.4 2.6 3.4
Ryan 3 Yr GIC Master 0.3 1.1 1.1 1.7 2.6 3.3
Performance Summary
Investment Options
As of December 31, 2013
_________________________
Returns are expressed as percentages. Returns for periods greater than one year are annualized.
Peer group percentile ranks are shown in parenthesis.
4
Performance Summary
Investment Options
As of December 31, 2013
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years
Equity/Fixed Income Blend Options
Vanguard Balanced Index (VBINX)5.9 (43)18.0 (69)18.0 (69)11.0 (20)13.2 (43)6.9 (23)
Vanguard Balanced Index Fund Benchmark 5.9 (38)18.2 (65)18.2 (65)11.4 (14)13.5 (37)7.1 (18)
60% Equity / 40% Fixed Peer Group Median 5.7 19.2 19.2 9.9 12.9 6.3
Vanguard Target Retirement Income (VTINX)2.4 (91)5.9 (93)5.9 (93)6.4 (68)8.6 (67)5.5 (43)
Vanguard Target Income Composite Index 2.5 (89)6.0 (92)6.0 (92)6.6 (64)8.7 (65)5.5 (43)
35% Equity / 65% Fixed Peer Group Median 3.4 10.7 10.7 7.1 9.5 5.3
Vanguard Target Retirement 2010 (VTENX)3.2 (81)9.1 (90)9.1 (90)7.5 (51)10.6 (44)N/A
Vanguard Target 2010 Composite Index 3.4 (75)9.5 (88)9.5 (88)7.6 (47)10.7 (42)N/A
40% Equity / 60% Fixed Peer Group Median 3.9 12.5 12.5 7.5 10.2 5.5
Vanguard Target Retirement 2015 (VTXVX)4.3 (86)13.0 (91)13.0 (91)8.6 (74)11.8 (60)6.2 (49)
Vanguard Target 2015 Composite Index 4.5 (83)13.5 (90)13.5 (90)8.7 (71)11.9 (58)6.2 (49)
55% Equity / 45% Fixed Peer Group Median 5.3 17.5 17.5 9.4 12.2 6.1
Vanguard Target Retirement 2020 (VTWNX)5.1 (86)15.8 (91)15.8 (91)9.4 (76)12.8 (70)N/A
Vanguard Target 2020 Composite Index 5.3 (83)16.3 (90)16.3 (90)9.7 (70)13.1 (64)N/A
65% Equity / 35% Fixed Peer Group Median 6.1 20.9 20.9 10.5 13.7 6.5
Vanguard Target Retirement 2025 (VTTVX)5.8 (81)18.1 (89)18.1 (89)10.1 (74)13.6 (64)6.5 (60)
Vanguard Target 2025 Composite Index 5.9 (77)18.6 (88)18.6 (88)10.4 (67)14.0 (55)6.6 (55)
70% Equity / 30% Fixed Peer Group Median 6.6 22.5 22.5 11.0 14.2 6.7
Vanguard Target Retirement 2030 (VTHRX)6.5 (84)20.5 (89)20.5 (89)10.8 (81)14.5 (72)N/A
Vanguard Target 2030 Composite Index 6.6 (82)21.0 (88)21.0 (88)11.1 (77)14.8 (65)N/A
80% Equity / 20% Fixed Peer Group Median 7.6 25.8 25.8 12.3 15.4 7.0
Vanguard Target Retirement 2035 (VTTHX)7.1 (80)22.8 (87)22.8 (87)11.4 (78)15.3 (67)7.0 (58)
Vanguard Target 2035 Composite Index 7.2 (77)23.4 (86)23.4 (86)11.7 (73)15.7 (60)7.1 (53)
85% Equity / 15% Fixed Peer Group Median 8.0 27.3 27.3 12.7 16.1 7.2
Vanguard Target Retirement 2040 (VFORX)7.6 (77)24.4 (87)24.4 (87)11.9 (81)15.7 (72)N/A
Vanguard Target 2040 Composite Index 7.6 (76)24.8 (86)24.8 (86)12.2 (75)15.9 (67)N/A
90% Equity / 10% Fixed Peer Group Median 8.4 29.4 29.4 13.4 16.8 7.4
_________________________
Returns are expressed as percentages. Returns for periods greater than one year are annualized.
Peer group percentile ranks are shown in parenthesis.
5
Performance Summary
Investment Options
As of December 31, 2013
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years
Equity/Fixed Income Blend Options (cont.)
Vanguard Target Retirement 2045 (VTIVX)7.6 (77)24.4 (87)24.4 (87)11.9 (80)15.6 (73)7.4 (50)
Vanguard Target 2045 Composite Index 7.6 (76)24.8 (86)24.8 (86)12.2 (75)15.9 (67)7.5 (48)
90% Equity / 10% Fixed Peer Group Median 8.4 29.4 29.4 13.4 16.8 7.4
Vanguard Target Retirement 2050 (VFIFX)7.6 (77)24.3 (87)24.3 (87)11.9 (81)15.7 (72)N/A
Vanguard Target 2050 Composite Index 7.6 (76)24.8 (86)24.8 (86)12.2 (75)15.9 (67)N/A
90% Equity / 10% Fixed Peer Group Median 8.4 29.4 29.4 13.4 16.8 7.4
Vanguard Target Retirement 2055 (VFFVX)7.5 (77)24.3 (87)24.3 (87)12.0 (79)N/A N/A
Vanguard Target 2055 Composite Index 7.6 (76)24.8 (86)24.8 (86)12.2 (75)N/A N/A
90% Equity / 10% Fixed Peer Group Median 8.4 29.4 29.4 13.4 16.8 7.4
Vanguard Target Retirement 2060 (VTTSX)7.6 (77)24.3 (87)24.3 (87)N/A N/A N/A
Vanguard Target 2060 Composite Index 7.6 (76)24.8 (86)24.8 (86)N/A N/A N/A
90% Equity / 10% Fixed Peer Group Median 8.4 29.4 29.4 13.4 16.8 7.4
Money Market Option
Vanguard Prime Money Market (VMMXX)0.0 0.0 0.0 0.0 0.1 1.7
BofA Merrill Lynch 3 Month US T-Bill 0.0 0.1 0.1 0.1 0.1 1.7
_________________________
Returns are expressed as percentages. Returns for periods greater than one year are annualized.
Peer group percentile ranks are shown in parenthesis.
6
Pe rformance Summary
Manager Compliance Checklist
As of December 31, 2013
Ma na gers
Vanguard
S&P 500
Inde x
(V FINX)
Va nguard US
Grow th
(VWUSX)
Va nguard
Windsor II
(V WNFX)
Vangua rd
Mid-Ca p
Index
(V IMSX)
Va nguard
Small-Ca p
Inde x
(NAES X)
Vangua rd
Interna ti ona l
Grow th
(V WIGX)
Vangua rd
Total Bond
Ma rke t Inde x
(VBMFX)
Vangua rd
Re ti re ment
Trust
Organi zati onal /Produ ct Is sues
No ma teria l c hanges to inves tment team ü Ye s ü ü ü ü ü ü
No ma teria l o rg aniza tional changes ü ü ü ü ü ü ü ü
Accounting or regulatory concerns ü ü ü ü ü ü ü ü
Cu rrently in adherence to guidelin es ü ü ü ü ü ü ü ü
Po rt fo lio characteris tics me et stylis tic expectations ü ü ü ü ü ü ü ü
Re lati ve Perfor mance 1
Three-year return better than benchmark N/A ü In Li ne N/A N/A ü N/A N/A
Three-year rankin g better than peer group median ü ü ü ü ü ü No (8 1)N/A
Fiv e year re turn better than benchmark N/A No (-1 30 bps )ü N/A N/A ü N/A N/A
Fiv e year ra nkin g better than peer group median ü No (5 3)ü ü ü ü No (9 2)N/AFive year ra nkin g better than peer group median ü No (5 3)ü ü ü ü No (9 2)N/A
Perfor manc e s tatus Gr een Gr een Gr een Gr een Gr een Gr een Gr een Gr een
Summar y s tatus Gr een Ye llow Gr een Gr een Gr een Gr een Gr een Gr een
1 Manager performance is evaluated net of investment management fees.
7
Pe rformance Summary
Manager Compliance Checklist (Continued)
As of December 31, 2013
Ma na ge rs
Vanguard
Ba lance d
Inde x
(V BI NX)
Vangua rd
Targe t
Re ti re ment
Income Fund
(V TINX)
Va ngua rd
Targe t
Re ti re ment
2010
(VTENX )
Va nguard
Ta rge t
Re ti re ment
2015
(V TXVX)
Vangua rd
Ta rge t
Re ti re ment
2020
(V TW NX )
Vanguard
Ta rge t
Re ti re ment
2025
(V TTVX)
Vangua rd
Targe t
Re ti re ment
2030
(V THRX )
Vangua rd
Ta rget
Re tire ment
2035
(V TTHX)
Or ganizati onal /Produ ct Is sues
No ma teria l c hanges to inves tment team ü ü ü ü ü ü ü ü
No ma teria l o rg aniza tional changes ü ü ü ü ü ü ü ü
Accounting or regulatory concerns ü ü ü ü ü ü ü ü
Cu rrently in adherence to guidelin es ü ü ü ü ü ü ü ü
Po rt fo lio characteris tics me et stylis tic expectations ü ü ü ü ü ü ü ü
Re lati ve Perfor ma nce 1
Th re e-year return better than benchmark N/A N/A N/A N/A N/A N/A N/A N/A
Th re e-year rankin g better than peer group median ü No (6 8)No (5 1)No (7 4)No (7 6)No (7 4)No (8 1)No (7 8)
Five year re turn better than benchmark N/A N/A N/A N/A N/A N/A N/A N/A
Five year ra nkin g better than peer group median ü No (6 8)ü No (6 0)No (6 0)No (6 4)No (7 2)No (6 7)Five year ra nkin g better than peer group median ü No (6 8)ü No (6 0)No (6 0)No (6 4)No (7 2)No (6 7)
Performan ce status Gr een Gr een Gr een Gr een Gr een Gr een Gr een Gr een
Summar y s tatus Gr een Gr een Gr een Gr een Gr een Gr een Gr een Gr een
1 Manager performance is evaluated net of investment management fees.
8
Pe rformance Summary
Manager Compliance Checklist (Continued)
As of December 31, 2013
Mana gers
Vanguard
Ta rget
Re ti re ment
2040
(V FORX)
Vangua rd
Targe t
Re ti re ment
2045
(V TIVX)
Va ngua rd
Ta rge t
Re ti re me nt
2050
(V FIFX)
Vangua rd
Ta rge t
Re ti re ment
2055
(V FFVX)
Vangua rd
Ta rget
Re ti re ment
2060
(VTTSX)
Vangua rd
Prime Mone y
Marke t F und
(V MMXX)
Organizational /Produ ct Is sues
No ma teria l c hanges to investment team ü ü ü ü ü ü
No ma teria l o rg aniza tional changes ü ü ü ü ü ü
Accounting or regulatory concerns ü ü ü ü ü ü
Cu rre ntly in adherence to guidelin es ü ü ü ü ü ü
Po rt fo lio characteris tics me et stylis tic expectations ü ü ü ü ü ü
Re lati ve Performanc e 1
Thre e-year re turn better than benchmark N/A N/A N/A N/A N/A N/A
Thre e-year ra nkin g better than peer group median No (8 1)No (8 0)No (8 1)No (7 9)N/A N/A
Fiv e year return better than benchmark N/A N/A N/A N/A N/A N/A
Fiv e year rankin g better than peer group median No (7 2)No (7 3)No (7 2)N/A N/A N/A
1 Manager performance is evaluated net of investment management fees.
Fiv e year rankin g better than peer group median No (7 2)No (7 3)No (7 2)N/A N/A N/A
Performance s tatus Gr een Gr een Gr een Gr een Gr een Gr een
Summary status Gr een Gr een Gr een Gr een Gr een Gr een
9
Plan Assets
10
Plan Summary
Deferred Compensation Plan Assets
As of December 31, 2013
Invest ment Options Investm ent Style Al location Percentage
Domestic Eq uity Funds
Vanguard 500 Index I nv US Large Cap Equit y -Core $ 5,883,522 12.9%$ 735,800 + 14.3%
Vanguard Windsor II Inv US Large Cap Equit y -Value $ 8,395,556 18.5%$ 693,272 + 9.0%
Vanguard US Growth Inv US Large Cap Equit y -Growth $ 3,696,473 8.1%$ 410,825 + 12.5%
Vanguard M id Cap Index I nv US Mid Cap Equit y -Core $ 2,321,702 5.1%$ 141,880 + 6.5%
Vanguard Small Cap Index Inv US Small Cap Equit y -Core $ 2,626,751 5.8%$ 182,339 + 7.5%
$ 22,924,004 50.4%$ 2,164,116 + 10.4%
International Equ ity Funds
Vanguard Internat ional Growth Internat ional Equit y $ 2,457,918 5.4%$ 190,280 + 8.4%
$ 2,457,918 5.4%$ 190,280 + 8.4%
Fi xed I ncome/Alte rnative Fu nds
Vanguard T otal Bond M arket Index Inv Market Duration $ 2,663,490 5.9%$ (131,204)- 4.7%
Vanguard Ret irement Savings Trust Short Durat ion $ 3,381,600 7.4%$ 103,374 + 3.2%
Vanguard Balanced Index Inv Balanced $ 3,764,718 8.3%$ 142,057 + 3.9%
$ 9,809,808 21.6%$ 114,227 + 1.2%
$ Change
From
Previous Qtr
% C hange
From
Pre vi ous Qtr
$ 9,809,808 21.6%$ 114,227 + 1.2%
Cash
Vanguard Prime M oney Market Cash $ 1,067,287 2.3%$ (1,758)- 0.2%
$ 1,067,287 2.3%$ (1,758)- 0.2%
Ta rge t Date Funds
Vanguard T arget Ret irement Income Inv Blend $ 302,397 0.7%$ (94,545)- 23.8%
Vanguard T arget Ret irement 2010 Inv Blend $ 624,381 1.4%$ (44,946)- 6.7%
Vanguard T arget Ret irement 2015 Inv Blend $ 1,106,997 2.4%$ 19,508 + 1.8%
Vanguard T arget Ret irement 2020 Inv Blend $ 1,553,634 3.4%$ 136,668 + 9.6%
Vanguard T arget Ret irement 2025 Inv Blend $ 1,962,582 4.3%$ 119,581 + 6.5%
Vanguard T arget Ret irement 2030 Inv Blend $ 796,514 1.8%$ 78,751 + 11.0%
Vanguard T arget Ret irement 2035 Inv Blend $ 670,195 1.5%$ 51,389 + 8.3%
Vanguard T arget Ret irement 2040 Inv Blend $ 454,754 1.0%$ 45,668 + 11.2%
Vanguard T arget Ret irement 2045 Inv Blend $ 383,392 0.8%$ 48,559 + 14.5%
Vanguard T arget Ret irement 2050 Inv Blend $ 98,831 0.2%$ 10,215 + 11.5%
Vanguard T arget Ret irement 2055 Inv Blend $ 6,913 0.0%$ 1,722 + 33.2%
Vanguard T arget Ret irement 2060 Inv Blend $ 14,242 0.0%$ 770 + 5.7%
7,974,832$ 17.5%373,340$ + 4.9%
Loan Fund
Loan Fund Loan Fund $ 1,222,979 2.7%$ 64,830 + 5.6%
TO TA L $ 45,456,828 100.0%$ 2,905,035 + 6.8%
11
Plan Summary
Fee Comparison Summary
Inv estment Option
Expense
Ratio
Morningstar
Cate gory
Av erage
Fe e Level
Comparison
Group M edian
eVestment
Al liance
Univ erse
Median Category
Fe e Level Comparison
Group
eVestment Alliance
Univ erse
Va nguard 500 In dex 0.17 1.13 0.97 0.16 La rg e Ble nd La rg e Cap No Load US Passive La rg e Cap Equity
Va nguard US Gro wt h 0.45 1.25 0.97 0.85 La rg e Growt h La rg e Cap No Load US Large Cap Gr owth
Va nguard Windsor 0.35 1.18 0.97 0.84 La rg e Value La rg e Cap No Load US Large Cap Va lu e
Va nguard Mid-Ca p Index 0.24 1.24 1.11 0.27 Mid Blend Mid Cap No Load US Pa ssive Mid Cap Equity
Va nguard Sma ll-Ca p Index 0.24 1.31 1.21 0.27 Small Ble nd Small Ca p No Load US Passive Small Ca p Equity
Va nguard International Gr owth 0.48 1.42 1.11 1.10 Foreign Large Gro wt h Fo re ig n Large Ca p No Load ACWI ex-US Gro wt h Equity
Va nguard Total Bo nd Market Index 0.20 0.92 0.67 0.53 In terme diate-Term Bo nd In terme diate-Term Bond No Load US Co re Fixe d Income
Va nguard Retire me nt Saving Trust 0.53 N/A N/A 0.68 N/A N/A US Stable Value Fixed In come
Va nguard Balanced Index 0.24 1.04 0.93 0.70 Moderate Allo cation Moderate Allo cation No Load US Ba la nced
Va nguard Target Retirement Income 0.16 0.51 0.65 0.52 Re tirement Income Re tire me nt Income No Load Life cycle/Target Date Income
Va nguard Target Retirement 2010 0.16 0.54 0.69 0.60 Targ et Date 2000-2010 Target Retirement 2000-2010 No Lo ad Life cycle/Targ et Date 2010Vanguard Target Retirement 2010 0.16 0.54 0.69 0.60 Targ et Date 2000-2010 Target Retirement 2000-2010 No Lo ad Life cycle/Targ et Date 2010
Va nguard Target Retirement 2015 0.16 0.52 0.86 0.62 Targ et Date 2011-2015 Target Retirement 2011-2015 No Lo ad Life cycle/Targ et Date 2015
Va nguard Target Retirement 2020 0.16 0.53 0.82 0.65 Targ et Date 2016-2020 Target Retirement 2016-2020 No Lo ad Life cycle/Targ et Date 2020
Va nguard Target Retirement 2025 0.17 0.5 0.89 0.66 Targ et Date 2021-2025 Target Retirement 2021-2025 No Lo ad Life cycle/Targ et Date 2025
Va nguard Target Retirement 2030 0.17 0.53 0.86 0.66 Targ et Date 2026-2030 Target Retirement 2026-2030 No Lo ad Life cycle/Targ et Date 2030
Va nguard Target Retirement 2035 0.18 0.51 0.93 0.71 Targ et Date 2031-2035 Target Retirement 3031-2035 No Lo ad Life cycle/Targ et Date 2035
Va nguard Target Retirement 2040 0.18 0.52 0.88 0.72 Targ et Date 2036-2040 Target Retirement 2036-2040 No Lo ad Life cycle/Targ et Date 2040
Va nguard Target Retirement 2045 0.18 0.5 0.96 0.76 Targ et Date 2041-2045 Target Retirement 2041-2045 No Lo ad Life cycle/Targ et Date 2045
Va nguard Target Retirement 2050 0.18 0.52 0.84 0.70 Targ et Date 2046-2050 Target Retirement 2046-2050 No Lo ad Life cycle/Targ et Date 2050
Va nguard Target Retirement 2055 0.18 0.50 0.94 0.76 Targ et Date 2051+Target Retirement 2051+ No Lo ad Life cycle/Targ et Date 2055
Va nguard Target Retirement 2060 0.18 0.50 0.94 N/A Targ et Date 2051+Target Retirement 2051+ No Lo ad N/A
Va nguard Prime Money Marke t 0.17 0.17 N/A 0.20 Money Marke t Taxable N/A US Cash Management
12
Manager Evaluation
13
Historical Performance
Three Year Rolling Percentile Ranking Relative Performance
Historical Statistics (Jan-2009 - Dec-2013)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
Vanguard 500 Index Fund (VFINX)10.5 32.2 32.2 16.0 17.8 7.3 15.8 2.0 14.9 26.5 -37.0 5.4 15.6 4.8 10.7 28.5
S&P 500 10.5 32.4 32.4 16.2 17.9 7.4 16.0 2.1 15.1 26.5 -37.0 5.5 15.8 4.9 10.9 28.7
Large-Cap Equity Peer Group Median 9.9 32.4 32.4 14.8 17.4 7.3 14.6 -1.0 14.0 27.8 -37.5 6.2 13.3 5.9 10.2 27.1
Vanguard 500 Index Fund (VFINX) Rank 38 52 52 31 44 51 38 23 40 57 46 56 33 63 45 39
Cumulative Annualized Over/Under Relative Performance
Over/Under Performance
0.00
0.05
0.10
-0.05
-0.10
-0.15
-0.20Return (%)3/04 3/05 3/06 3/07 3/08 3/09 3/10 3/11 3/12 3/13 12/13
Vanguard 500 Index Fund (VFINX)S&P 500
0
25
50
75
100Return Percentile Rank3/04 3/05 3/06 3/07 3/08 3/09 3/10 3/11 3/12 3/13 12/13
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard 500 Index Fund (VFINX)17.8 17.1 18.1 -0.1 1.0 1.1 0.0 -2.9 9.5 10.0 37y 4m
S&P 500 17.9 17.1 18.2 0.0 1.0 1.1 0.0 N/A 9.5 0.0 37y 4m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 17.1 -1.1 0.0 25.0 37y 4m
Manager Evaluation
Vanguard 500 Index Fund (VFINX) vs. S&P 500
As of December 31, 2013
14
Portfolio Characteristics
Portfolio Benchmark
Wtd. Avg. Mkt. Cap ($M)118,003 118,708
Median Mkt. Cap ($M)16,455 16,430
Price/Earnings ratio 18.9 18.9
Price/Book ratio 2.9 2.9
5 Yr. EPS Growth Rate (%)6.5 6.4
Current Yield (%)2.0 2.0
Debt to Equity 5.7 5.7
Number of Stocks 503 500
Beta (5 Years, Monthly)1.00 1.00
Consistency (5 Years, Monthly)10.00 1.00
Sharpe Ratio (5 Years, Monthly)1.12 1.13
Information Ratio (5 Years, Monthly)-3.47 -
Up Market Capture (5 Years, Monthly)99.75 -
Down Market Capture (5 Years, Monthly)100.24 -
Top Ten Equity Holdings
Portfolio
Weight
(%)
Benchmark
Weight
(%)
Active
Weight
(%)
Quarterly
Return
(%)
Apple Inc 3.0 3.1 0.0 18.4
Exxon Mobil Corp 2.7 2.7 0.0 18.4
Google Inc 1.9 1.9 0.0 27.9
Microsoft Corp 1.7 1.7 0.0 13.3
General Electric Co 1.7 1.7 0.0 18.3
Johnson & Johnson 1.6 1.6 0.0 6.4
Chevron Corp 1.5 1.5 0.0 3.7
Procter & Gamble Co (The)1.3 1.3 0.0 8.5
JPMorgan Chase & Co 1.3 1.3 0.0 14.0
Wells Fargo & Co 1.3 1.3 0.0 10.7
% of Portfolio 18.0 18.1
Sector Weights (%)
Vanguard 500 Index Fund (VFINX)S&P 500
0.0 3.0 6.0 9.0 12.0 15.0 18.0 21.0 23.0
Cash
Utilities
Telecommunication Services
Materials
Information Technology
Industrials
Health Care
Financials
Energy
Consumer Staples
Consumer Discretionary
0.6
2.9
2.3
3.5
18.5
10.9
12.9
16.1
10.2
9.7
12.5
0.0
2.9
2.3
3.5
18.6
10.9
13.0
16.2
10.3
9.8
12.5
Distribution of Market Capitalization (%)
Vanguard 500 Index Fund (VFINX)S&P 500
0.0
10.0
20.0
30.0
40.0
50.0
60.0
>$59 Bil $15 Bil -
$59 Bil
$2 Bil -
$15 Bil
Cash
54.4
34.3
11.3
0.0
54.1
34.1
11.2
0.6
Manager Evaluation
Vanguard 500 Index Fund (VFINX) vs. S&P 500
As of December 31, 2013
15
Historical Performance
Buy and Hold Attribution
Risk and Return (Jan - 2009 - Dec - 2013)Three Year Rolling Percentile Ranking
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
Vanguard Windsor II (VWNFX)9.5 30.7 30.7 16.1 17.1 7.9 16.7 2.7 10.6 27.1 -36.7 2.2 18.2 7.0 18.3 30.1
Russell 1000 Value Index 10.0 32.5 32.5 16.1 16.7 7.6 17.5 0.4 15.5 19.7 -36.8 -0.2 22.2 7.1 16.5 30.0
Large-Cap Value Equity Peer Group Median 9.6 31.7 31.7 14.7 16.7 7.3 15.0 -1.5 13.5 25.4 -37.3 2.9 16.6 6.1 12.5 28.4
Vanguard Windsor II (VWNFX) Rank 53 62 62 28 43 32 29 17 86 42 45 56 36 38 7 35
16.2
16.5
16.8
17.1
17.4
17.6
Return (%)18.0 18.2 18.4 18.6 18.8 19.0 19.2 19.4 19.6
Risk (Standard Deviation %)
Russell 1000 Value Index
Vanguard Windsor II (VWNFX)
Vanguard Windsor II (VWNFX)Russell 1000 Value Index
0
25
50
75
100Return Percentile Rank3/04 3/05 3/06 3/07 3/08 3/09 3/10 3/11 3/12 3/13 12/13
Average Active Weight
0.0 6.0 9.6-6.0-12.0
Utilities
Telecommunication Services
Other
Materials
Information Technology
Industrials
Health Care
Financials
Energy
Consumer Staples
Consumer Discretionary
Cash
-2.2
0.2
1.2
-1.5
-1.0
1.5
4.4
-8.0
-2.0
3.1
0.9
3.6
Allocation
(Total: -0.1)
0.0 0.3-0.3-0.6
0.2
0.0
0.0
0.0
0.0
0.1
0.0
0.1
0.0
0.1
0.0
-0.4
Stock
(Total: -0.4)
0.0 0.4 0.8-0.4-0.7
-0.2
0.0
0.0
0.0
0.0
-0.2
-0.1
0.5
0.0
-0.4
0.0
0.0
Vanguard Windsor II (VWNFX)
0.0 0.3 0.6 0.9-0.3-0.6
0.0
0.0
0.0
0.0
0.0
-0.1
-0.1
0.5
0.0
-0.4
0.0
-0.4
Manager Evaluation
Vanguard Windsor II (VWNFX) vs. Russell 1000 Value Index
As of December 31, 2013
Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading.
16
Portfolio Characteristics
Portfolio Benchmark
Wtd. Avg. Mkt. Cap ($M)92,740 114,371
Median Mkt. Cap ($M)21,592 6,562
Price/Earnings ratio 15.6 16.6
Price/Book ratio 2.2 2.0
5 Yr. EPS Growth Rate (%)3.3 1.8
Current Yield (%)2.5 2.2
Debt to Equity 1.2 1.2
Number of Stocks 282 662
Beta (5 Years, Monthly)0.93 1.00
Consistency (5 Years, Monthly)45.00 1.00
Sharpe Ratio (5 Years, Monthly)1.05 0.98
Information Ratio (5 Years, Monthly)0.08 -
Up Market Capture (5 Years, Monthly)95.79 -
Down Market Capture (5 Years, Monthly)90.18 -
Top Ten Equity Holdings
Portfolio
Weight
(%)
Benchmark
Weight
(%)
Active
Weight
(%)
Quarterly
Return
(%)
Pfizer Inc 2.7 2.2 0.5 7.5
JPMorgan Chase & Co 2.6 2.4 0.3 14.0
Raytheon Co.2.5 0.3 2.2 18.4
American Express Co 2.5 0.0 2.5 20.5
WellPoint Inc 2.5 0.3 2.2 11.0
Microsoft Corp 2.5 0.0 2.5 13.3
Wells Fargo & Co 2.3 2.4 0.0 10.7
Philip Morris International Inc 2.3 0.0 2.3 1.7
Medtronic Inc 2.2 0.6 1.5 8.9
Johnson & Johnson 2.1 2.4 -0.3 6.4
% of Portfolio 24.3 10.6
Sector Weights (%)
Vanguard Windsor II (VWNFX)Russell 1000 Value Index
0.0 5.0 10.0 15.0 20.0 25.0 30.0 34.5
Other
Cash
Utilities
Telecommunication Services
Materials
Information Technology
Industrials
Health Care
Financials
Energy
Consumer Staples
Consumer Discretionary
1.2
3.4
3.6
2.7
1.4
8.2
11.9
17.3
21.4
13.0
8.7
7.5
0.0
0.0
5.7
2.5
2.9
8.9
10.5
12.9
29.0
15.0
5.9
6.6
Distribution of Market Capitalization (%)
Vanguard Windsor II (VWNFX)Russell 1000 Value Index
0.0
10.0
20.0
30.0
40.0
50.0
57.5
>$59 Bil $15 Bil -
$59 Bil
$2 Bil -
$15 Bil
$0 -
$2 Bil
Cash
47.4
31.6
20.8
0.3 0.0
48.4
36.3
11.9
0.0
3.4
Manager Evaluation
Vanguard Windsor II (VWNFX) vs. Russell 1000 Value Index
As of December 31, 2013
17
Historical Performance
Buy and Hold Attribution
Risk and Return (Jan - 2009 - Dec - 2013)Three Year Rolling Percentile Ranking
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
Vanguard US Growth (VWUSX)11.0 35.5 35.5 16.8 19.1 7.1 18.4 -0.7 11.5 35.0 -37.8 10.1 1.8 11.2 7.0 26.1
Russell 1000 Growth Index 10.4 33.5 33.5 16.5 20.4 7.8 15.3 2.6 16.7 37.2 -38.4 11.8 9.1 5.3 6.3 29.7
Large-Cap Growth Equity Peer Group Median 10.6 34.6 34.6 15.3 19.3 7.7 14.6 -0.8 15.3 33.4 -38.3 13.8 7.1 6.2 7.7 25.8
Vanguard US Growth (VWUSX) Rank 37 41 41 29 53 66 16 48 83 40 46 75 90 17 59 48
18.0
19.0
20.0
21.0
21.8
Return (%)15.9 16.2 16.5 16.8 17.1 17.4 17.7 18.0 18.3 18.6
Risk (Standard Deviation %)
Russell 1000 Growth Index
Vanguard US Growth (VWUSX)
Vanguard US Growth (VWUSX)Russell 1000 Growth Index
0
25
50
75
100Return Percentile Rank3/04 3/05 3/06 3/07 3/08 3/09 3/10 3/11 3/12 3/13 12/13
Average Active Weight
0.0 6.0 11.6-6.0-10.8
Utilities
Telecommunication Services
Other
Materials
Information Technology
Industrials
Health Care
Financials
Energy
Consumer Staples
Consumer Discretionary
Cash
-0.2
0.1
0.0
-1.6
6.8
-5.8
-0.3
1.5
1.0
-6.2
2.6
2.2
Allocation
(Total: 0.0)
0.0 0.2 0.4-0.2-0.4
0.0
0.0
0.0
0.0
0.2
-0.1
0.0
0.0
-0.1
0.2
0.0
-0.2
Stock
(Total: 0.6)
0.0 0.3 0.6-0.3-0.5
0.0
-0.1
0.0
-0.1
0.3
0.1
0.4
0.2
-0.2
0.2
-0.1
0.0
Vanguard US Growth (VWUSX)
0.0 0.3 0.6 0.8-0.3-0.6
0.0
-0.1
0.0
-0.1
0.5
0.0
0.4
0.2
-0.3
0.3
-0.1
-0.2
Manager Evaluation
Vanguard US Growth (VWUSX) vs. Russell 1000 Growth Index
As of December 31, 2013
Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading.
18
Portfolio Characteristics
Portfolio Benchmark
Wtd. Avg. Mkt. Cap ($M)77,553 97,884
Median Mkt. Cap ($M)23,269 8,042
Price/Earnings ratio 26.4 22.2
Price/Book ratio 4.4 4.8
5 Yr. EPS Growth Rate (%)17.1 12.4
Current Yield (%)0.9 1.6
Debt to Equity 29.6 9.1
Number of Stocks 119 625
Beta (5 Years, Monthly)1.07 1.00
Consistency (5 Years, Monthly)48.33 1.00
Sharpe Ratio (5 Years, Monthly)1.16 1.31
Information Ratio (5 Years, Monthly)-0.30 -
Up Market Capture (5 Years, Monthly)102.55 -
Down Market Capture (5 Years, Monthly)113.07 -
Top Ten Equity Holdings
Portfolio
Weight
(%)
Benchmark
Weight
(%)
Active
Weight
(%)
Quarterly
Return
(%)
Google Inc 4.5 3.1 1.4 27.9
MasterCard Inc 4.0 1.0 3.0 24.3
Visa Inc 3.1 1.2 1.9 16.8
Priceline.Com Inc 2.8 0.6 2.2 15.0
Allergan Inc.2.5 0.3 2.1 22.9
Apple Inc 2.3 4.1 -1.8 18.4
Qualcomm Inc.2.3 1.3 1.0 10.8
Microsoft Corp 2.3 3.2 -1.0 13.3
Celgene Corp 2.1 0.7 1.4 9.6
Liberty Interactive Corp 2.0 0.0 2.0 25.1
% of Portfolio 27.9 15.7
Sector Weights (%)
Vanguard US Growth (VWUSX)Russell 1000 Growth Index
0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 39.1
Other
Cash
Utilities
Telecommunication Services
Materials
Information Technology
Industrials
Health Care
Financials
Energy
Consumer Staples
Consumer Discretionary
0.0
2.5
0.0
2.0
2.7
33.1
6.8
12.1
6.3
4.7
6.5
23.3
0.0
0.0
0.2
2.0
4.5
27.1
12.4
12.2
5.4
4.4
11.9
19.9
Distribution of Market Capitalization (%)
Vanguard US Growth (VWUSX)Russell 1000 Growth Index
0.0
10.0
20.0
30.0
40.0
50.0
57.5
>$59 Bil $15 Bil -
$59 Bil
$2 Bil -
$15 Bil
$0 -
$2 Bil
Cash
49.2
29.5
21.1
0.1 0.0
41.6
36.6
19.3
0.0
2.5
Manager Evaluation
Vanguard US Growth (VWUSX) vs. Russell 1000 Growth Index
As of December 31, 2013
19
Historical Performance
Three Year Rolling Percentile Ranking Relative Performance
Historical Statistics (Jan-2009 - Dec-2013)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
Vanguard Mid-Cap Index Fund (VIMSX)8.6 35.0 35.0 15.2 21.9 10.0 15.8 -2.1 25.5 40.2 -41.8 6.0 13.6 13.9 20.4 34.1
Vanguard Mid-Cap Index Fund Blended Benchmark 8.6 35.4 35.4 15.5 22.2 10.1 16.0 -1.9 25.7 40.5 -41.8 6.2 13.7 13.9 20.5 35.0
Mid-Cap Equity Equity Peer Group Median 8.3 34.6 34.6 14.5 20.4 9.4 14.6 -2.7 21.8 34.2 -40.2 8.1 11.9 9.4 15.3 34.8
Vanguard Mid-Cap Index Fund (VIMSX) Rank 43 48 48 40 30 37 40 45 26 32 61 59 38 17 18 55
Cumulative Annualized Over/Under Relative Performance
Over/Under Performance
0.0
0.1
0.2
0.3
-0.1
-0.2
-0.3Return (%)3/04 3/05 3/06 3/07 3/08 3/09 3/10 3/11 3/12 3/13 12/13
Vanguard Mid-Cap Index Fund (VIMSX)
Vanguard Mid-Cap Index Fund Blended Benchmark
0
25
50
75
100Return Percentile Rank3/04 3/05 3/06 3/07 3/08 3/09 3/10 3/11 3/12 3/13 12/13
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard Mid-Cap Index Fund (VIMSX)21.9 19.7 22.2 -0.2 1.0 1.1 0.1 -2.7 10.6 5.0 15y 7m
Vanguard Mid-Cap Index Fund Blended Benchmark 22.2 19.7 22.4 0.0 1.0 1.1 0.0 N/A 10.6 0.0 15y 7m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 19.7 -1.1 0.0 25.0 15y 7m
Manager Evaluation
Vanguard Mid-Cap Index Fund (VIMSX) vs. Vanguard Mid-Cap Index Fund Blended Benchmark
As of December 31, 2013
Note: Prior to May 16, 2003, the Vanguard Mid-Cap Index was benchmarked to the S&P MidCap 400 Index. From May 16, 2003 to January 30, 2013, the Index
fund was benchmarked to the MSCI US Mid Cap 450 Index. Starting on January 31, 2013, the benchmark transitioned to the CRSP US Mid Cap Index.
20
Portfolio Characteristics
Portfolio Benchmark
Wtd. Avg. Mkt. Cap ($M)10,730 10,786
Median Mkt. Cap ($M)8,228 8,230
Price/Earnings ratio 21.0 20.9
Price/Book ratio 2.9 2.9
5 Yr. EPS Growth Rate (%)10.0 10.0
Current Yield (%)1.3 1.3
Debt to Equity 2.2 2.2
Number of Stocks 372 370
Beta (5 Years, Monthly)1.01 1.00
Consistency (5 Years, Monthly)43.33 1.00
Sharpe Ratio (5 Years, Monthly)1.20 1.22
Information Ratio (5 Years, Monthly)0.15 -
Up Market Capture (5 Years, Monthly)100.92 -
Down Market Capture (5 Years, Monthly)101.17 -
Top Ten Equity Holdings
Portfolio
Weight
(%)
Benchmark
Weight
(%)
Active
Weight
(%)
Quarterly
Return
(%)
Macy's Inc 0.7 0.7 0.0 24.0
Western Digital Corp 0.6 0.6 0.0 32.8
Delphi Automotive PLC 0.6 0.6 0.0 3.2
Seagate Technology Plc 0.6 0.6 0.0 29.5
Vertex Pharmaceuticals Inc 0.6 0.6 0.0 -2.0
Cerner Corp 0.6 0.6 0.0 6.1
Moody's Corp.0.6 0.6 0.0 11.9
Mylan Inc 0.6 0.6 0.0 13.7
Chipotle Mexican Grill Inc 0.6 0.6 0.0 24.2
Cabot Oil & Gas Corp 0.5 0.6 0.0 3.9
% of Portfolio 5.8 5.9
Sector Weights (%)
Vanguard Mid-Cap Index Fund (VIMSX)
CRSP U.S. Mid Cap TR Index
0.0 3.0 6.0 9.0 12.0 15.0 18.0 21.0 23.0
Cash
Utilities
Telecommunication Services
Materials
Information Technology
Industrials
Health Care
Financials
Energy
Consumer Staples
Consumer Discretionary
0.4
5.5
0.7
6.2
14.4
13.7
10.4
16.2
7.0
6.2
19.4
0.0
5.5
0.7
6.2
14.4
13.8
10.4
16.4
7.0
6.2
19.3
Distribution of Market Capitalization (%)
Vanguard Mid-Cap Index Fund (VIMSX)
CRSP U.S. Mid Cap TR Index
0.0
20.0
40.0
60.0
80.0
94.3
$15 Bil -
$59 Bil
$2 Bil -
$15 Bil
$0 -
$2 Bil
Cash
18.3
81.6
0.1 0.0
18.2
81.3
0.1 0.4
Manager Evaluation
Vanguard Mid-Cap Index Fund (VIMSX) vs. CRSP U.S. Mid Cap TR Index
As of December 31, 2013
21
Historical Performance
Three Year Rolling Percentile Ranking Relative Performance
Historical Statistics (Jan-2009 - Dec-2013)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
Vanguard Small-Cap Index Fund (NAESX)8.8 37.6 37.6 16.4 22.4 10.2 18.0 -2.8 27.7 36.1 -36.1 1.2 15.6 7.4 19.9 45.6
Vanguard Small-Cap Index Fund Blended Benchmark 8.8 37.8 37.8 16.6 22.5 10.3 18.2 -2.8 27.8 36.1 -36.2 1.2 15.8 7.5 20.0 47.5
Small-Cap Equity Peer Group Median 9.0 39.0 39.0 15.7 20.8 9.0 14.6 -3.4 26.4 31.8 -38.2 0.3 13.5 6.3 16.3 43.1
Vanguard Small-Cap Index Fund (NAESX) Rank 58 59 59 39 34 19 24 46 39 34 41 47 37 40 32 39
Cumulative Annualized Over/Under Relative Performance
Over/Under Performance
0.0
0.1
0.2
-0.1
-0.2Return (%)3/04 3/05 3/06 3/07 3/08 3/09 3/10 3/11 3/12 3/13 12/13
Vanguard Small-Cap Index Fund (NAESX)
Vanguard Small-Cap Index Fund Blended Benchmark
0
25
50
75
100Return Percentile Rank3/04 3/05 3/06 3/07 3/08 3/09 3/10 3/11 3/12 3/13 12/13
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard Small-Cap Index Fund (NAESX)22.4 22.3 23.1 -0.1 1.0 1.0 0.0 -2.2 12.3 15.0 45y 11m
Vanguard Small-Cap Index Fund Blended Benchmark 22.5 22.3 23.2 0.0 1.0 1.0 0.0 N/A 12.3 0.0 45y 11m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 22.3 -1.0 0.0 25.0 45y 11m
Manager Evaluation
Vanguard Small-Cap Index Fund (NAESX) vs. Vanguard Small-Cap Index Fund Blended Benchmark
As of December 31, 2013
Note: Prior to May 16, 2003, the Vanguard Small-Cap Index was benchmarked to the Russell 2000 Index. From May 16, 2003 to January 30, 2013, the Index
fund was benchmarked to the MSCI US Small Cap 1750 Index. Starting on January 31, 2013, the benchmark transitioned to the CRSP US Small Cap Index.
22
Portfolio Characteristics
Portfolio Benchmark
Wtd. Avg. Mkt. Cap ($M)3,140 3,182
Median Mkt. Cap ($M)1,771 1,771
Price/Earnings ratio 21.5 21.5
Price/Book ratio 2.6 2.6
5 Yr. EPS Growth Rate (%)8.5 8.5
Current Yield (%)1.3 1.3
Debt to Equity 1.8 1.8
Number of Stocks 1,438 1,432
Beta (5 Years, Monthly)1.03 1.00
Consistency (5 Years, Monthly)36.67 1.00
Sharpe Ratio (5 Years, Monthly)1.08 1.15
Information Ratio (5 Years, Monthly)-0.76 -
Up Market Capture (5 Years, Monthly)100.12 -
Down Market Capture (5 Years, Monthly)105.40 -
Top Ten Equity Holdings
Portfolio
Weight
(%)
Benchmark
Weight
(%)
Active
Weight
(%)
Quarterly
Return
(%)
Fortune Brands Home & Security Inc 0.3 0.3 0.0 10.0
United Rentals Inc.0.3 0.3 0.0 33.7
Hanesbrands Inc 0.3 0.3 0.0 13.1
Wabtec Corp 0.3 0.3 0.0 18.2
Gannett Co Inc.0.3 0.3 0.0 11.3
Snap-On Inc 0.2 0.2 0.0 10.5
Jazz Pharmaceuticals Plc 0.2 0.2 0.0 37.6
Omnicare Inc.0.2 0.2 0.0 9.1
Arthur J. Gallagher & Co.0.2 0.2 0.0 8.3
Packaging Corp Of America 0.2 0.2 0.0 11.6
% of Portfolio 2.5 2.5
Sector Weights (%)
Vanguard Small-Cap Index (NAESX)
CRSP U.S. Small Cap TR Index
0.0 4.0 8.0 12.0 16.0 20.0 24.0 26.5
Cash
Utilities
Telecommunication Services
Materials
Information Technology
Industrials
Health Care
Financials
Energy
Consumer Staples
Consumer Discretionary
1.3
3.3
0.7
6.1
16.0
16.6
10.8
22.4
5.0
3.1
14.7
0.0
3.3
0.7
6.1
16.2
16.8
11.0
22.7
5.0
3.1
14.9
Distribution of Market Capitalization (%)
Vanguard Small-Cap Index (NAESX)
CRSP U.S. Small Cap TR Index
0.0
12.0
24.0
36.0
48.0
60.0
72.0
81.7
$2 Bil -
$15 Bil
$0 -
$2 Bil
Cash
70.6
29.4
0.0
69.7
29.0
1.3
Manager Evaluation
Vanguard Small-Cap Index (NAESX) vs. CRSP U.S. Small Cap TR Index
As of December 31, 2013
23
Historical Performance
Buy and Hold Attribution
Risk and Return (Jan - 2009 - Dec - 2013)Three Year Rolling Percentile Ranking
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
Vanguard International Growth (VWIGX)7.3 22.9 22.9 8.4 15.8 8.7 20.0 -13.7 15.7 41.6 -44.9 16.0 25.9 15.0 19.0 34.4
MSCI AC World ex USA (Net)4.8 15.3 15.3 5.1 12.8 7.6 16.8 -13.7 11.2 41.4 -45.5 16.7 26.7 16.6 20.9 40.8
International Equity Peer Group Median 6.0 20.8 20.8 7.4 12.9 7.3 18.4 -13.7 11.6 33.5 -44.4 11.9 25.2 15.0 18.5 36.1
Vanguard International Growth (VWIGX) Rank 21 31 31 36 19 25 32 51 25 23 54 28 43 50 45 57
10.0
12.0
14.0
16.0
18.0
19.3
Return (%)21.3 21.6 21.9 22.2 22.5 22.8 23.1 23.3
Risk (Standard Deviation %)
MSCI AC World ex USA (Net)
Vanguard International Growth (VWIGX)
Vanguard International Growth (VWIGX)MSCI AC World ex USA (Net)
0
25
50
75
100Return Percentile Rank3/04 3/05 3/06 3/07 3/08 3/09 3/10 3/11 3/12 3/13 12/13
Average Active Weight
0.0 6.0 12.0-6.0-9.9
Utilities
Telecommunication Services
Materials
Information Technology
Industrials
Health Care
Financials
Energy
Consumer Staples
Consumer Discretionary
Cash
-3.0
-2.2
-2.4
7.7
3.8
0.0
-3.9
-5.3
-3.6
5.2
3.7
Allocation
(Total: 0.3)
0.0 0.2 0.4-0.2-0.3
0.1
-0.1
0.1
0.2
0.0
0.0
0.0
0.1
0.1
0.0
-0.2
Stock
(Total: 2.0)
0.0 0.4 0.8 1.0-0.4
0.0
0.4
0.1
0.6
0.2
-0.1
0.3
0.0
-0.1
0.7
0.0
0.0 0.4 0.8 1.2-0.4
0.1
0.3
0.2
0.8
0.2
-0.1
0.3
0.1
0.0
0.7
-0.2
Manager Evaluation
Vanguard International Growth (VWIGX) vs. MSCI AC World ex USA (Net)
As of December 31, 2013
Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading.
24
Total Attribution
0.0 0.5 1.0 1.5 2.0 2.2-0.5-1.0-1.2
Pacific
North America
Middle East
Frontier Markets
Europe ex EMU
EMU
EM Latin America
EM Europe + Middle East + Africa
EM Asia
Cash
1.4
0.4
0.1
-0.1
0.3
-0.5
0.0
0.0
0.9
-0.2
Performance Attribution
Average Active Weight
0.0 4.0 8.0-4.0-8.0-10.9
Pacific
North America
Middle East
Frontier Markets
Europe ex EMU
EMU
EM Latin America
EM Europe + Middle East + Africa
EM Asia
Cash
-6.8
-2.8
0.7
0.4
4.9
0.5
-0.2
-1.9
1.4
3.7
Allocation
(Total: 0.2)
0.0 0.1 0.2 0.3 0.4-0.1-0.2-0.3
0.2
0.0
0.0
-0.1
0.1
0.0
0.0
0.1
0.0
-0.2
Stock
(Total: 2.2)
0.0 0.5 1.0 1.5 1.8-0.5-1.0
1.2
0.4
0.1
0.0
0.2
-0.5
0.0
-0.1
0.9
0.0
Manager Evaluation
Vanguard International Growth (VWIGX) vs. MSCI AC World ex USA (Net)
1 Quarter Ending December 31, 2013
25
Portfolio Characteristics
Portfolio Benchmark
Wtd. Avg. Mkt. Cap ($M)56,405 58,573
Median Mkt. Cap ($M)22,979 6,924
Price/Earnings ratio 18.0 14.5
Price/Book ratio 2.8 2.1
5 Yr. EPS Growth Rate (%)8.8 3.8
Current Yield (%)1.9 2.9
Debt to Equity 1.3 1.2
Number of Stocks 177 1,831
Beta (5 Years, Monthly)1.05 1.00
Consistency (5 Years, Monthly)55.00 1.00
Sharpe Ratio (5 Years, Monthly)0.81 0.71
Information Ratio (5 Years, Monthly)0.81 -
Up Market Capture (5 Years, Monthly)107.96 -
Down Market Capture (5 Years, Monthly)98.94 -
Top Ten Equity Holdings
Portfolio
Weight
(%)
Benchmark
Weight
(%)
Active
Weight
(%)
Quarterly
Return
(%)
Tencent Holdings LTD 2.7 0.4 2.3 21.6
Baidu Inc 2.6 0.0 2.6 14.6
Softbank Corp 2.6 0.5 2.1 26.5
AIA Group Ltd 2.4 0.3 2.1 6.7
Industria De Diseno Textil Inditex SA 1.9 0.2 1.7 8.1
Amazon.com Inc 1.7 0.0 1.7 27.6
Prudential PLC 1.7 0.3 1.4 19.1
Atlas Copco AB 1.7 0.1 1.6 -5.2
Smc Corp 1.6 0.1 1.6 6.0
L'Oreal S.A., Paris 1.5 0.2 1.3 2.4
% of Portfolio 20.5 2.1
Sector Weights (%)
Vanguard International Growth (VWIGX)
MSCI AC World ex USA (Net)
0.0 4.0 8.0 12.0 16.0 20.0 24.0 28.0 31.1
Cash
Utilities
Telecommunication Services
Materials
Information Technology
Industrials
Health Care
Financials
Energy
Consumer Staples
Consumer Discretionary
2.4
0.4
4.1
6.3
14.5
14.8
7.9
23.3
4.1
6.1
16.1
0.0
3.3
5.8
8.3
6.7
11.2
7.8
26.8
9.4
9.9
10.8
Distribution of Market Capitalization (%)
Vanguard International Growth (VWIGX)
MSCI AC World ex USA (Net)
0.0
10.0
20.0
30.0
40.0
46.0
>$59 Bil $15 Bil -
$59 Bil
$2 Bil -
$15 Bil
$0 -
$2 Bil
Cash
34.6
36.9
27.7
0.8 0.0
34.5
39.5
22.8
0.8 2.4
Manager Evaluation
Vanguard International Growth (VWIGX) vs. MSCI AC World ex USA (Net)
As of December 31, 2013
26
Vanguard
International Growth
(VWIGX)
MSCI AC World ex
USA (Net)
Australia 2.0 5.4
Hong Kong 5.3 3.4
Japan 11.2 15.1
New Zealand 0.0 0.1
Singapore 0.4 1.1
Pacific 18.8 25.0
Austria 0.0 0.2
Belgium 0.0 0.9
Finland 0.5 0.7
France 7.8 6.8
Germany 5.2 6.8
Greece 0.0 0.1
Ireland 0.3 0.2
Italy 2.1 1.6
Luxembourg 0.2 0.2
Netherlands 1.1 2.2
Portugal 0.3 0.1
Spain 5.1 2.4
EMU 22.6 22.2
Denmark 1.9 0.8
Norway 1.7 0.6
Sweden 5.3 2.3
Switzerland 6.7 6.5
United Kingdom 16.3 15.9
Europe ex EMU 32.0 26.1
Canada 2.5 7.1
United States 2.0 0.0
Israel 1.1 0.3
Middle East 1.1 0.3
Developed Markets 79.0 80.8
Vanguard
International Growth
(VWIGX)
MSCI AC World ex
USA (Net)
Brazil 2.2 2.2
Cayman Islands 0.0 0.0
Chile 0.3 0.3
Colombia 0.0 0.2
Mexico 0.6 1.1
Peru 0.7 0.1
Virgin Islands 0.0 0.0
EM Latin America 3.7 3.9
China 6.6 2.7
India 1.7 1.3
Indonesia 0.2 0.5
Korea 3.1 3.3
Malaysia 0.0 0.8
Philippines 0.0 0.2
Taiwan 0.9 2.4
Thailand 0.4 0.4
EM Asia 12.9 11.6
Czech Republic 0.0 0.1
Egypt 0.0 0.0
Hungary 0.0 0.1
Morocco 0.0 0.0
Poland 0.0 0.4
Russia 0.6 1.3
South Africa 0.3 1.5
Turkey 0.7 0.3
EM Europe + Middle East + Africa 1.6 3.6
Emerging Markets 18.2 19.2
Frontier Markets 0.4 0.0
Cash 2.4 0.0
Other 0.0 0.0
Total 100.0 100.0
Manager Evaluation
Vanguard International Growth (VWIGX) vs. MSCI AC World ex USA (Net)
As of December 31, 2013
27
Historical Performance
Three Year Rolling Percentile Ranking Relative Performance
Historical Statistics (Jan-2009 - Dec-2013)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
Vanguard Total Bond Market Index Fund (VBMFX)-0.2 -2.3 -2.3 3.0 4.3 4.4 4.0 7.6 6.4 5.9 5.1 6.9 4.3 2.4 4.2 4.0
Vanguard Total Bond Market Index Fund Benchmark -0.1 -2.0 -2.0 3.3 4.5 4.6 4.3 7.9 6.6 5.9 5.2 7.0 4.3 2.4 4.3 4.1
Market Duration Fixed Income Peer Group Median 0.2 -1.8 -1.8 3.8 6.2 4.6 7.0 6.7 7.5 12.5 -1.7 5.7 4.2 2.1 4.3 4.1
Vanguard Total Bond Market Index Fund (VBMFX) Rank 88 74 74 81 92 55 91 18 82 93 13 18 45 32 57 53
Cumulative Annualized Over/Under Relative Performance
Over/Under Performance
0.0
0.2
0.4
-0.2
-0.4Return (%)3/04 3/05 3/06 3/07 3/08 3/09 3/10 3/11 3/12 3/13 12/13
Vanguard Total Bond Market Index Fund (VBMFX)
Vanguard Total Bond Market Index Fund Benchmark
0
25
50
75
100Return Percentile Rank3/04 3/05 3/06 3/07 3/08 3/09 3/10 3/11 3/12 3/13 12/13
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard Total Bond Market Index Fund (VBMFX)4.3 3.2 4.2 -0.3 1.0 1.3 0.2 -0.9 1.3 30.0 27y
Vanguard Total Bond Market Index Fund Benchmark 4.5 3.2 4.4 0.0 1.0 1.4 0.0 N/A 1.2 0.0 27y
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 3.2 -1.4 0.0 20.0 27y
Manager Evaluation
Vanguard Total Bond Market Index Fund (VBMFX) vs. Vanguard Total Bond Market Index Fund Benchmark
As of December 31, 2013
Note: Prior to January 1, 2010, the Vanguard Total Bond Market Index was benchmarked to the Barclays Aggregate Index. Starting on January 1, 2010, the
benchmark was transitioned to the Barclays Aggregate Float Adjusted Index.
28
Credit Quality Distribution (%)
Vanguard Total Bond Market Index (VBMFX)
Barclays U.S. Aggregate Float Adjusted
0.0
20.0
40.0
60.0
80.0
88.8
AAAAAABBB69.7
5.3
12.2 12.7
70.4
4.2
12.5 12.9
Portfolio Characteristics
Portfolio Benchmark
Effective Duration 5.5 5.5
Avg. Maturity 7.5 7.5
Avg. Quality AA+AA+
Yield To Maturity (%)2.4 2.4
Sector Distribution (%)
Vanguard Total Bond Market Index (VBMFX)
Barclays U.S. Aggregate Float Adjusted
0.0
10.0
20.0
30.0
40.0
50.0
55.4
TreasuriesAgenciesCreditMBSABSNon-USEmergingOtherCMBS39.2
5.1
20.4 23.2
0.5
7.4
2.4 0.0 1.9
40.1
4.0
25.1
21.3
0.4
6.5
0.0 0.5 2.1
Maturity Distribution (%)
Vanguard Total Bond Market Index (VBMFX)
Barclays U.S. Aggregate Float Adjusted
0.0
10.0
20.0
30.0
40.0
48.6
< 1 Yr1 < 3 Yrs3 < 5 Yrs5 < 10 Yrs10 < 20 Yrs> 20 Yrs0.0
27.8
20.0
35.6
6.8
9.8
1.7
26.5
20.0
35.0
6.8
10.0
Manager Evaluation
Vanguard Total Bond Market Index (VBMFX) vs. Barclays U.S. Aggregate Float Adjusted
As of December 31, 2013
29
Historical Performance
Three Year Rolling Percentile Ranking Relative Performance
Historical Statistics (Jan-2009 - Dec-2013)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
Vanguard Retirement Savings Trust 0.4 1.7 1.7 2.4 2.6 3.4 2.4 2.9 2.9 3.0 4.3 4.5 4.3 4.1 3.9 4.2
Ryan 3 Yr GIC Master 0.3 1.1 1.1 1.7 2.6 3.3 1.5 2.4 3.5 4.5 4.8 4.5 3.8 3.2 3.4 4.6
Short Duration Fixed Income Peer Group 0.3 0.3 0.3 1.5 3.2 2.9 2.7 1.4 3.4 6.7 -0.1 5.4 4.2 1.6 1.8 2.2
Vanguard Retirement Savings Trust Rank 34 5 5 2 68 6 55 8 68 79 28 70 38 1 1 1
Cumulative Annualized Over/Under Relative Performance
Over/Under Performance
0.0
0.3
0.6
0.9
1.1
-0.3
-0.6
-0.9Return (%)3/04 3/05 3/06 3/07 3/08 3/09 3/10 3/11 3/12 3/13 12/13
Vanguard Retirement Savings Trust Ryan 3 Yr GIC Master
0
25
50
75
100Return Percentile Rank3/04 3/05 3/06 3/07 3/08 3/09 3/10 3/11 3/12 3/13 12/13
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard Retirement Savings Trust 2.6 0.3 2.5 1.8 0.3 10.4 0.5 0.0 0.0 60.0 11y
Ryan 3 Yr GIC Master 2.6 0.6 2.5 0.0 1.0 4.0 0.0 N/A 0.0 0.0 11y
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.0 0.0 N/A 0.6 -4.0 0.0 0.0 11y
Manager Evaluation
Vanguard Retirement Savings Trust vs. Ryan 3 Yr GIC Master
As of December 31, 2013
30
Historical Performance
Three Year Rolling Percentile Ranking Relative Performance
Historical Statistics (Jan-2009 - Dec-2013)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
Vanguard Balanced Index Fund (VBINX)5.9 18.0 18.0 11.0 13.2 6.9 11.3 4.1 13.1 20.1 -22.2 6.2 11.0 4.7 9.3 19.9
Vanguard Balanced Index Fund Benchmark 5.9 18.2 18.2 11.4 13.5 7.1 11.7 4.7 13.5 19.8 -22.0 6.3 11.1 4.8 9.3 20.1
60% Equity / 40% Fixed Peer Group Median 5.7 19.2 19.2 9.9 12.9 6.3 10.7 0.8 12.3 21.6 -23.1 6.0 9.7 5.0 8.5 19.7
Vanguard Balanced Index Fund (VBINX) Rank 43 69 69 20 43 23 39 10 34 63 41 49 30 58 36 48
Cumulative Annualized Over/Under Relative Performance
Over/Under Performance
0.0
0.2
0.4
0.6
-0.2
-0.4
-0.5Return (%)3/04 3/05 3/06 3/07 3/08 3/09 3/10 3/11 3/12 3/13 12/13
Vanguard Balanced Index Fund (VBINX)
Vanguard Balanced Index Fund Benchmark
0
25
50
75
100Return Percentile Rank3/04 3/05 3/06 3/07 3/08 3/09 3/10 3/11 3/12 3/13 12/13
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard Balanced Index Fund (VBINX)13.2 10.3 13.0 -0.1 1.0 1.3 0.2 -1.0 5.0 15.0 21y 1m
Vanguard Balanced Index Fund Benchmark 13.5 10.4 13.3 0.0 1.0 1.3 0.0 N/A 5.1 0.0 21y 1m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 10.4 -1.3 0.0 20.0 21y 1m
Manager Evaluation
Vanguard Balanced Index Fund (VBINX) vs. Vanguard Balanced Index Fund Benchmark
As of December 31, 2013
Note: Prior to June 1, 2005, the Vanguard Balanced Index was benchmarked to 60% DJ U.S. Total Stock Market Index/40% LB Aggregate Bond Index. From
June 1, 2005 to December 31, 2009, the Index fund was benchmarked to 60% MSCI US Broad Market Index/40% BC Aggregate Index. From January 1, 2010
to January 14, 2013, the Index fund was benchmarked to 60% MSCI US Broad Market Index/40% BC Aggregate Float Adjusted Index. Starting January 15,
2013, the benchmark transitioned to 60% CRSP US Total Market Index/40% BC Aggregate Float Adjusted Index.
31
Portfolio Characteristics
Portfolio Benchmark
Wtd. Avg. Mkt. Cap ($M)93,417 96,818
Median Mkt. Cap ($M)1,312 932
Price/Earnings ratio 19.3 19.3
Price/Book ratio 2.8 2.8
5 Yr. EPS Growth Rate (%)7.3 7.5
Current Yield (%)1.8 1.8
Debt to Equity 5.0 5.0
Number of Stocks 3,130 3,626
Beta (5 Years, Monthly)0.60 1.00
Consistency (5 Years, Monthly)33.33 1.00
Sharpe Ratio (5 Years, Monthly)1.32 1.16
Information Ratio (5 Years, Monthly)-0.88 -
Up Market Capture (5 Years, Monthly)62.97 -
Down Market Capture (5 Years, Monthly)55.45 -
Top Ten Equity Holdings
Portfolio
Weight
(%)
Benchmark
Weight
(%)
Active
Weight
(%)
Quarterly
Return
(%)
Apple Inc 2.4 2.5 -0.1 18.4
Exxon Mobil Corp 2.1 2.2 -0.1 18.4
Google Inc 1.5 1.5 -0.1 27.9
General Electric Co 1.3 1.4 0.0 18.3
Microsoft Corp 1.3 1.4 -0.1 13.3
Johnson & Johnson 1.2 1.3 0.0 6.4
Chevron Corp 1.1 1.2 0.0 3.7
Wells Fargo & Co 1.1 1.2 0.0 10.7
Procter & Gamble Co (The)1.0 1.1 0.0 8.5
JPMorgan Chase & Co 1.0 1.1 0.0 14.0
% of Portfolio 14.1 14.6
Sector Weights (%)
Vanguard Balanced Index Fund (VBINX) - Equity Holdings
CRSP U.S. Total Market TR Index
0.0 3.0 6.0 9.0 12.0 15.0 18.0 21.0 23.0
Cash
Utilities
Telecommunication Services
Materials
Information Technology
Industrials
Health Care
Financials
Energy
Consumer Staples
Consumer Discretionary
3.8
2.9
2.0
3.7
17.5
11.4
12.1
16.7
9.0
8.2
12.5
0.0
3.0
2.1
3.8
18.2
11.9
12.6
17.4
9.4
8.5
13.0
Distribution of Market Capitalization (%)
Vanguard Balanced Index Fund (VBINX) - Equity Holdings
CRSP U.S. Total Market TR Index
0.0
10.0
20.0
30.0
40.0
50.0
>$59 Bil $15 Bil -
$59 Bil
$2 Bil -
$15 Bil
$0 -
$2 Bil
Cash
44.1
28.0
22.5
5.4
0.0
42.6
27.0
21.7
4.9 3.8
Manager Evaluation
Vanguard Balanced Index Fund (VBINX) - Equity Holdings vs. CRSP U.S. Total Market TR Index
As of December 31, 2013
32
Credit Quality Distribution (%)
Vanguard Balanced Index Fund (VBINX) - Fixed Income Holdings
Barclays U.S. Aggregate Float Adjusted
0.0
20.0
40.0
60.0
80.0
88.8
AAAAAABBB69.7
5.3
12.2 12.7
71.0
3.9
12.5 12.6
Portfolio Characteristics
Portfolio Benchmark
Effective Duration 5.5 5.5
Avg. Maturity 7.5 7.5
Avg. Quality AA+AA+
Yield To Maturity (%)2.4 2.4
Sector Distribution (%)
Vanguard Balanced Index Fund (VBINX) - Fixed Income Holdings
Barclays U.S. Aggregate Float Adjusted
0.0
10.0
20.0
30.0
40.0
50.0
56.7
TreasuriesAgenciesCreditMBSABSNon-USEmergingOtherCMBS39.2
5.1
20.4 23.2
0.5
7.4
2.4 0.0 1.9
41.4
3.8
24.1 22.2
2.3 5.3
0.0 0.9 0.0
Maturity Distribution (%)
Vanguard Balanced Index Fund (VBINX) - Fixed Income Holdings
Barclays U.S. Aggregate Float Adjusted
0.0
10.0
20.0
30.0
40.0
48.6
1 < 3 Yrs3 < 5 Yrs5 < 10 Yrs10 < 20 Yrs> 20 Yrs27.8
20.0
35.6
6.8
9.8
25.8
17.6 20.1
8.4
28.2
Manager Evaluation
Vanguard Balanced Index Fund (VBINX) - Fixed Income Holdings vs. Barclays U.S. Aggregate Float Adjusted
As of December 31, 2013
33
Historical Performance
Three Year Rolling Percentile Ranking Risk and Return (Jan-2009 - Dec-2013)
Historical Statistics (Jan-2009 - Dec-2013)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
Vanguard Target Retirement Income (VTINX)2.4 5.9 5.9 6.4 8.6 5.5 8.2 5.2 9.4 14.3 -10.9 8.2 6.4 3.3 6.8 N/A
Vanguard Target Income Composite Index 2.5 6.0 6.0 6.6 8.7 5.5 8.4 5.3 9.4 14.3 -11.4 8.1 6.5 3.4 6.9 N/A
35% Equity / 65% Fixed Peer Group Median 3.4 10.7 10.7 7.1 9.5 5.3 8.2 2.8 9.8 16.8 -13.2 6.0 7.5 3.7 6.2 12.8
Vanguard Target Retirement Income (VTINX) Rank 91 93 93 68 67 43 50 12 58 68 34 15 73 63 37 N/A
8.48
8.52
8.56
8.60
8.64
8.68
8.72
8.76
Return (%)5.19 5.20 5.21 5.22 5.23 5.24 5.25 5.26 5.27
Risk (Standard Deviation %)
Vanguard Target Income Composite Index
Vanguard Target Retirement Income (VTINX)
Vanguard Target Retirement Income (VTINX)
Vanguard Target Income Composite Index
0
25
50
75
100Return Percentile Rank3/04 3/05 3/06 3/07 3/08 3/09 3/10 3/11 3/12 3/13 12/13
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard Target Retirement Income (VTINX)8.6 5.2 8.3 0.0 1.0 1.6 0.2 -0.5 1.7 45.0 10y 2m
Vanguard Target Income Composite Index 8.7 5.2 8.4 0.0 1.0 1.6 0.0 N/A 1.8 0.0 10y 2m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 5.2 -1.6 0.0 20.0 10y 2m
Manager Evaluation
Vanguard Target Retirement Income (VTINX) vs. Vanguard Target Income Composite Index
As of December 31, 2013
34
Historical Performance
Three Year Rolling Percentile Ranking Risk and Return (Jan-2009 - Dec-2013)
Historical Statistics (Jan-2009 - Dec-2013)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
Vanguard Target Retirement 2010 (VTENX)3.2 9.1 9.1 7.5 10.6 N/A 10.1 3.4 11.4 19.3 -20.7 7.7 N/A N/A N/A N/A
Vanguard Target 2010 Composite Index 3.4 9.5 9.5 7.6 10.7 N/A 10.3 3.2 11.6 19.4 -21.0 7.8 N/A N/A N/A N/A
40% Equity / 60% Fixed Peer Group Median 3.9 12.5 12.5 7.5 10.2 5.5 8.7 2.4 10.4 17.4 -15.5 5.8 7.9 4.0 6.7 14.3
Vanguard Target Retirement 2010 (VTENX) Rank 81 90 90 51 44 N/A 32 32 31 36 80 24 N/A N/A N/A N/A
10.4
10.5
10.6
10.7
10.8
10.9
Return (%)8.72 8.74 8.76 8.78 8.80 8.82 8.84 8.86 8.88 8.90 8.92
Risk (Standard Deviation %)
Vanguard Target 2010 Composite Index
Vanguard Target Retirement 2010 (VTENX)
Vanguard Target Retirement 2010 (VTENX)
Vanguard Target 2010 Composite Index
0
25
50
75
100Return Percentile Rank3/04 3/05 3/06 3/07 3/08 3/09 3/10 3/11 3/12 3/13 12/13
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard Target Retirement 2010 (VTENX)10.6 8.8 10.4 0.0 1.0 1.2 0.2 -0.8 4.0 40.0 7y 6m
Vanguard Target 2010 Composite Index 10.7 8.9 10.6 0.0 1.0 1.2 0.0 N/A 4.1 0.0 7y 6m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 8.9 -1.2 0.0 25.0 7y 6m
Manager Evaluation
Vanguard Target Retirement 2010 (VTENX) vs. Vanguard Target 2010 Composite Index
As of December 31, 2013
35
Historical Performance
Three Year Rolling Percentile Ranking Risk and Return (Jan-2009 - Dec-2013)
Historical Statistics (Jan-2009 - Dec-2013)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
Vanguard Target Retirement 2015 (VTXVX)4.3 13.0 13.0 8.6 11.8 6.2 11.4 1.7 12.5 21.3 -24.1 7.5 11.4 4.9 9.0 N/A
Vanguard Target 2015 Composite Index 4.5 13.5 13.5 8.7 11.9 6.2 11.5 1.5 12.6 21.4 -24.4 7.5 11.5 5.0 9.0 N/A
55% Equity / 45% Fixed Peer Group Median 5.3 17.5 17.5 9.4 12.2 6.1 10.2 1.3 11.7 20.9 -21.2 6.1 9.4 4.7 8.0 18.4
Vanguard Target Retirement 2015 (VTXVX) Rank 86 91 91 74 60 49 30 42 35 48 72 32 17 44 31 N/A
11.70
11.75
11.80
11.85
11.90
11.95
12.00
Return (%)10.62 10.65 10.68 10.71 10.74 10.77 10.80 10.83
Risk (Standard Deviation %)
Vanguard Target 2015 Composite Index
Vanguard Target Retirement 2015 (VTXVX)
Vanguard Target Retirement 2015 (VTXVX)
Vanguard Target 2015 Composite Index
0
25
50
75
100Return Percentile Rank3/04 3/05 3/06 3/07 3/08 3/09 3/10 3/11 3/12 3/13 12/13
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard Target Retirement 2015 (VTXVX)11.8 10.7 11.8 0.0 1.0 1.1 0.2 -0.6 5.4 40.0 10y 2m
Vanguard Target 2015 Composite Index 11.9 10.8 11.9 0.0 1.0 1.1 0.0 N/A 5.5 0.0 10y 2m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 10.8 -1.1 0.0 25.0 10y 2m
Manager Evaluation
Vanguard Target Retirement 2015 (VTXVX) vs. Vanguard Target 2015 Composite Index
As of December 31, 2013
36
Historical Performance
Three Year Rolling Percentile Ranking Risk and Return (Jan-2009 - Dec-2013)
Historical Statistics (Jan-2009 - Dec-2013)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
Vanguard Target Retirement 2020 (VTWNX)5.1 15.8 15.8 9.4 12.8 N/A 12.3 0.6 13.1 23.1 -27.0 7.5 N/A N/A N/A N/A
Vanguard Target 2020 Composite Index 5.3 16.3 16.3 9.7 13.1 N/A 12.5 0.9 13.3 23.4 -27.5 7.6 N/A N/A N/A N/A
65% Equity / 35% Fixed Peer Group Median 6.1 20.9 20.9 10.5 13.7 6.5 11.3 0.3 12.9 22.7 -25.1 6.2 10.3 5.3 8.9 21.1
Vanguard Target Retirement 2020 (VTWNX) Rank 86 91 91 76 70 N/A 32 46 46 48 69 39 N/A N/A N/A N/A
12.6
12.8
13.0
13.2
13.4
Return (%)12.144 12.146 12.148 12.150 12.152 12.154 12.156
Risk (Standard Deviation %)
Vanguard Target 2020 Composite Index
Vanguard Target Retirement 2020 (VTWNX)
Vanguard Target Retirement 2020 (VTWNX)
Vanguard Target 2020 Composite Index
0
25
50
75
100Return Percentile Rank3/04 3/05 3/06 3/07 3/08 3/09 3/10 3/11 3/12 3/13 12/13
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard Target Retirement 2020 (VTWNX)12.8 12.1 12.8 -0.3 1.0 1.1 0.1 -1.8 6.4 25.0 7y 6m
Vanguard Target 2020 Composite Index 13.1 12.2 13.1 0.0 1.0 1.1 0.0 N/A 6.3 0.0 7y 6m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 12.1 -1.1 0.0 25.0 7y 6m
Manager Evaluation
Vanguard Target Retirement 2020 (VTWNX) vs. Vanguard Target 2020 Composite Index
As of December 31, 2013
37
Historical Performance
Three Year Rolling Percentile Ranking Risk and Return (Jan-2009 - Dec-2013)
Historical Statistics (Jan-2009 - Dec-2013)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
Vanguard Target Retirement 2025 (VTTVX)5.8 18.1 18.1 10.1 13.6 6.5 13.3 -0.4 13.8 24.8 -30.1 7.6 13.2 5.4 10.1 N/A
Vanguard Target 2025 Composite Index 5.9 18.6 18.6 10.4 14.0 6.6 13.4 0.0 14.0 25.3 -30.5 7.6 13.4 5.5 10.1 N/A
70% Equity / 30% Fixed Peer Group Median 6.6 22.5 22.5 11.0 14.2 6.7 11.8 -0.1 13.1 23.5 -27.1 6.2 10.8 5.5 9.3 22.4
Vanguard Target Retirement 2025 (VTTVX) Rank 81 89 89 74 64 60 24 57 38 41 80 35 20 52 36 N/A
13.4
13.6
13.8
14.0
14.2
14.3
Return (%)13.52 13.54 13.56 13.58 13.60 13.62
Risk (Standard Deviation %)
Vanguard Target 2025 Composite Index
Vanguard Target Retirement 2025 (VTTVX)
Vanguard Target Retirement 2025 (VTTVX)
Vanguard Target 2025 Composite Index
0
25
50
75
100Return Percentile Rank3/04 3/05 3/06 3/07 3/08 3/09 3/10 3/11 3/12 3/13 12/13
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard Target Retirement 2025 (VTTVX)13.6 13.6 13.8 -0.3 1.0 1.0 0.2 -1.7 7.4 25.0 10y 2m
Vanguard Target 2025 Composite Index 14.0 13.5 14.1 0.0 1.0 1.0 0.0 N/A 7.3 0.0 10y 2m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 13.5 -1.0 0.0 20.0 10y 2m
Manager Evaluation
Vanguard Target Retirement 2025 (VTTVX) vs. Vanguard Target 2025 Composite Index
As of December 31, 2013
38
Historical Performance
Three Year Rolling Percentile Ranking Risk and Return (Jan-2009 - Dec-2013)
Historical Statistics (Jan-2009 - Dec-2013)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
Vanguard Target Retirement 2030 (VTHRX)6.5 20.5 20.5 10.8 14.5 N/A 14.2 -1.3 14.4 26.7 -32.9 7.5 N/A N/A N/A N/A
Vanguard Target 2030 Composite Index 6.6 21.0 21.0 11.1 14.8 N/A 14.4 -0.9 14.6 27.1 -33.4 7.6 N/A N/A N/A N/A
80% Equity / 20% Fixed Peer Group Median 7.6 25.8 25.8 12.3 15.4 7.0 12.9 -0.8 14.2 25.7 -30.9 6.3 11.7 5.9 10.1 25.0
Vanguard Target Retirement 2030 (VTHRX) Rank 84 89 89 81 72 N/A 27 59 45 43 76 38 N/A N/A N/A N/A
14.2
14.4
14.6
14.8
15.0
15.2
Return (%)14.92 14.94 14.96 14.98 15.00 15.02 15.04
Risk (Standard Deviation %)
Vanguard Target 2030 Composite Index
Vanguard Target Retirement 2030 (VTHRX)
Vanguard Target Retirement 2030 (VTHRX)
Vanguard Target 2030 Composite Index
0
25
50
75
100Return Percentile Rank3/04 3/05 3/06 3/07 3/08 3/09 3/10 3/11 3/12 3/13 12/13
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard Target Retirement 2030 (VTHRX)14.5 15.0 14.8 -0.3 1.0 1.0 0.2 -1.4 8.3 30.0 7y 6m
Vanguard Target 2030 Composite Index 14.8 14.9 15.1 0.0 1.0 1.0 0.0 N/A 8.2 0.0 7y 6m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 14.9 -1.0 0.0 20.0 7y 6m
Manager Evaluation
Vanguard Target Retirement 2030 (VTHRX) vs. Vanguard Target 2030 Composite Index
As of December 31, 2013
39
Historical Performance
Three Year Rolling Percentile Ranking Risk and Return (Jan-2009 - Dec-2013)
Historical Statistics (Jan-2009 - Dec-2013)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
Vanguard Target Retirement 2035 (VTTHX)7.1 22.8 22.8 11.4 15.3 7.0 15.2 -2.2 15.1 28.2 -34.7 7.5 15.2 6.3 12.0 N/A
Vanguard Target 2035 Composite Index 7.2 23.4 23.4 11.7 15.7 7.1 15.3 -1.9 15.3 28.6 -35.1 7.5 15.4 6.5 11.9 N/A
85% Equity / 15% Fixed Peer Group Median 8.0 27.3 27.3 12.7 16.1 7.2 13.3 -1.0 14.6 26.8 -32.7 6.5 12.2 6.3 10.6 26.2
Vanguard Target Retirement 2035 (VTTHX) Rank 80 87 87 78 67 58 21 68 41 40 75 41 19 51 31 N/A
15.0
15.2
15.4
15.6
15.8
16.0
Return (%)16.17 16.20 16.23 16.26 16.29 16.32 16.35
Risk (Standard Deviation %)
Vanguard Target 2035 Composite Index
Vanguard Target Retirement 2035 (VTTHX)
Vanguard Target Retirement 2035 (VTTHX)
Vanguard Target 2035 Composite Index
0
25
50
75
100Return Percentile Rank3/04 3/05 3/06 3/07 3/08 3/09 3/10 3/11 3/12 3/13 12/13
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard Target Retirement 2035 (VTTHX)15.3 16.3 15.8 -0.4 1.0 1.0 0.3 -1.1 9.2 40.0 10y 2m
Vanguard Target 2035 Composite Index 15.7 16.2 16.0 0.0 1.0 1.0 0.0 N/A 9.1 0.0 10y 2m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 16.2 -1.0 0.0 20.0 10y 2m
Manager Evaluation
Vanguard Target Retirement 2035 (VTTHX) vs. Vanguard Target 2035 Composite Index
As of December 31, 2013
40
Historical Performance
Three Year Rolling Percentile Ranking Risk and Return (Jan-2009 - Dec-2013)
Historical Statistics (Jan-2009 - Dec-2013)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
Vanguard Target Retirement 2040 (VFORX)7.6 24.4 24.4 11.9 15.7 N/A 15.6 -2.5 15.2 28.3 -34.5 7.5 N/A N/A N/A N/A
Vanguard Target 2040 Composite Index 7.6 24.8 24.8 12.2 15.9 N/A 15.5 -2.1 15.3 28.6 -35.1 7.5 N/A N/A N/A N/A
90% Equity / 10% Fixed Peer Group Median 8.4 29.4 29.4 13.4 16.8 7.4 13.7 -1.4 15.2 27.5 -34.5 6.5 12.6 6.5 11.0 27.7
Vanguard Target Retirement 2040 (VFORX) Rank 77 87 87 81 72 N/A 24 68 51 46 51 42 N/A N/A N/A N/A
15.4
15.5
15.6
15.7
15.8
15.9
16.0
16.1
16.2
Return (%)16.34 16.36 16.38 16.40 16.42 16.44 16.46 16.48 16.50
Risk (Standard Deviation %)
Vanguard Target 2040 Composite Index
Vanguard Target Retirement 2040 (VFORX)
Vanguard Target Retirement 2040 (VFORX)
Vanguard Target 2040 Composite Index
0
25
50
75
100Return Percentile Rank3/04 3/05 3/06 3/07 3/08 3/09 3/10 3/11 3/12 3/13 12/13
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard Target Retirement 2040 (VFORX)15.7 16.5 16.1 -0.3 1.0 1.0 0.2 -1.0 9.3 35.0 7y 6m
Vanguard Target 2040 Composite Index 15.9 16.4 16.3 0.0 1.0 1.0 0.0 N/A 9.2 0.0 7y 6m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 16.4 -1.0 0.0 20.0 7y 6m
Manager Evaluation
Vanguard Target Retirement 2040 (VFORX) vs. Vanguard Target 2040 Composite Index
As of December 31, 2013
41
Historical Performance
Three Year Rolling Percentile Ranking Risk and Return (Jan-2009 - Dec-2013)
Historical Statistics (Jan-2009 - Dec-2013)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
Vanguard Target Retirement 2045 (VTIVX)7.6 24.4 24.4 11.9 15.6 7.4 15.6 -2.5 15.2 28.2 -34.6 7.5 16.0 6.9 12.9 N/A
Vanguard Target 2045 Composite Index 7.6 24.8 24.8 12.2 15.9 7.5 15.5 -2.1 15.3 28.6 -35.1 7.5 16.2 7.0 13.0 N/A
90% Equity / 10% Fixed Peer Group Median 8.4 29.4 29.4 13.4 16.8 7.4 13.7 -1.4 15.2 27.5 -34.5 6.5 12.6 6.5 11.0 27.7
Vanguard Target Retirement 2045 (VTIVX) Rank 77 87 87 80 73 50 23 67 51 47 51 42 17 43 27 N/A
15.4
15.6
15.8
16.0
16.2
Return (%)16.32 16.35 16.38 16.41 16.44 16.47 16.50 16.53
Risk (Standard Deviation %)
Vanguard Target 2045 Composite Index
Vanguard Target Retirement 2045 (VTIVX)
Vanguard Target Retirement 2045 (VTIVX)
Vanguard Target 2045 Composite Index
0
25
50
75
100Return Percentile Rank3/04 3/05 3/06 3/07 3/08 3/09 3/10 3/11 3/12 3/13 12/13
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard Target Retirement 2045 (VTIVX)15.6 16.5 16.1 -0.3 1.0 1.0 0.2 -1.0 9.4 40.0 10y 2m
Vanguard Target 2045 Composite Index 15.9 16.4 16.3 0.0 1.0 1.0 0.0 N/A 9.2 0.0 10y 2m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 16.4 -1.0 0.0 20.0 10y 2m
Manager Evaluation
Vanguard Target Retirement 2045 (VTIVX) vs. Vanguard Target 2045 Composite Index
As of December 31, 2013
42
Historical Performance
Three Year Rolling Percentile Ranking Risk and Return (Jan-2009 - Dec-2013)
Historical Statistics (Jan-2009 - Dec-2013)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
Vanguard Target Retirement 2050 (VFIFX)7.6 24.3 24.3 11.9 15.7 N/A 15.6 -2.5 15.2 28.3 -34.6 7.5 N/A N/A N/A N/A
Vanguard Target 2050 Composite Index 7.6 24.8 24.8 12.2 15.9 N/A 15.5 -2.1 15.3 28.6 -35.1 7.5 N/A N/A N/A N/A
90% Equity / 10% Fixed Peer Group Median 8.4 29.4 29.4 13.4 16.8 7.4 13.7 -1.4 15.2 27.5 -34.5 6.5 12.6 6.5 11.0 27.7
Vanguard Target Retirement 2050 (VFIFX) Rank 77 87 87 81 72 N/A 23 68 51 46 52 42 N/A N/A N/A N/A
15.4
15.5
15.6
15.7
15.8
15.9
16.0
16.1
16.2
Return (%)16.35 16.38 16.41 16.44 16.47 16.50 16.52
Risk (Standard Deviation %)
Vanguard Target 2050 Composite Index
Vanguard Target Retirement 2050 (VFIFX)
Vanguard Target Retirement 2050 (VFIFX)
Vanguard Target 2050 Composite Index
0
25
50
75
100Return Percentile Rank3/04 3/05 3/06 3/07 3/08 3/09 3/10 3/11 3/12 3/13 12/13
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard Target Retirement 2050 (VFIFX)15.7 16.5 16.1 -0.3 1.0 1.0 0.2 -0.9 9.3 40.0 7y 6m
Vanguard Target 2050 Composite Index 15.9 16.4 16.3 0.0 1.0 1.0 0.0 N/A 9.2 0.0 7y 6m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 16.4 -1.0 0.0 20.0 7y 6m
Manager Evaluation
Vanguard Target Retirement 2050 (VFIFX) vs. Vanguard Target 2050 Composite Index
As of December 31, 2013
43
Historical Performance
Three Year Rolling Percentile Ranking Risk and Return (Oct-2010 - Dec-2013)
Historical Statistics (Oct-2010 - Dec-2013)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
Vanguard Target Retirement 2055 (VFFVX)7.5 24.3 24.3 12.0 N/A N/A 15.6 -2.3 N/A N/A N/A N/A N/A N/A N/A N/A
Vanguard Target 2055 Composite Index 7.6 24.8 24.8 12.2 N/A N/A 15.5 -2.1 N/A N/A N/A N/A N/A N/A N/A N/A
90% Equity / 10% Fixed Peer Group Median 8.4 29.4 29.4 13.4 16.8 7.4 13.7 -1.4 15.2 27.5 -34.5 6.5 12.6 6.5 11.0 27.7
Vanguard Target Retirement 2055 (VFFVX) Rank 77 87 87 79 N/A N/A 23 63 N/A N/A N/A N/A N/A N/A N/A N/A
14.1
14.2
14.3
14.4
14.5
Return (%)13.34 13.36 13.38 13.40 13.42 13.44 13.46 13.48
Risk (Standard Deviation %)
Vanguard Target 2055 Composite Index
Vanguard Target Retirement 2055 (VFFVX)
Vanguard Target Retirement 2055 (VFFVX)
Vanguard Target 2055 Composite Index
0
25
50
75
100Return Percentile Rank3/04 3/05 3/06 3/07 3/08 3/09 3/10 3/11 3/12 3/13 12/13
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard Target Retirement 2055 (VFFVX)14.2 13.4 14.4 -0.2 1.0 1.1 0.2 -0.4 8.5 46.2 3y 3m
Vanguard Target 2055 Composite Index 14.3 13.4 14.5 0.0 1.0 1.1 0.0 N/A 8.4 0.0 3y 3m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 13.4 -1.1 0.0 15.4 3y 3m
Manager Evaluation
Vanguard Target Retirement 2055 (VFFVX) vs. Vanguard Target 2055 Composite Index
As of December 31, 2013
44
Historical Performance
Three Year Rolling Percentile Ranking Risk and Return (Apr-2012 - Dec-2013)
Historical Statistics (Feb-2012 - Dec-2013)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
Vanguard Target Retirement 2060 (VTTSX)7.6 24.3 24.3 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Vanguard Target 2060 Composite Index 7.6 24.8 24.8 N/A N/A N/A 15.5 N/A N/A N/A N/A N/A N/A N/A N/A N/A
90% Equity / 10% Fixed Peer Group Median 8.4 29.4 29.4 13.4 16.8 7.4 13.7 -1.4 15.2 27.5 -34.5 6.5 12.6 6.5 11.0 27.7
Vanguard Target Retirement 2060 (VTTSX) Rank 77 87 87 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
15.86
15.88
15.90
15.92
15.94
15.96
15.98
16.00
16.02
Return (%)7.9 8.0 8.1 8.2 8.3 8.3
Risk (Standard Deviation %)
Vanguard Target 2060 Composite Index
Vanguard Target Retirement 2060 (VTTSX)
Vanguard Target Retirement 2060 (VTTSX)
Vanguard Target 2060 Composite Index
0
25
50
75
100Return Percentile Rank3/04 3/05 3/06 3/07 3/08 3/09 3/10 3/11 3/12 3/13 12/13
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard Target Retirement 2060 (VTTSX)N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 1y 11m
Vanguard Target 2060 Composite Index 20.1 9.1 19.1 0.0 1.0 2.1 0.0 N/A 2.7 0.0 1y 11m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 9.1 -2.1 0.0 12.5 1y 11m
Manager Evaluation
Vanguard Target Retirement 2060 (VTTSX) vs. Vanguard Target 2060 Composite Index
As of December 31, 2013
45
Manager Evaluation
Ta rget-Date Funds Asset Allocation
As of December 31, 2013
U.S.Equi ty 21.4%27.7%37.2%43.8%49.0%54.1%59.3%63.0%63.2%63.1%63.2%63.0%
Va nguard Total Stock Marke t Index Fu nd 21.4%27.7%37.2%43.8%49.0%54.1%59.3%63.0%63.2%63.1%63.2%63.0%
Non-U.S . Equ ity 9.0%12.0%16.0%18.8%21.0%23.3%25.4%27.0%26.9%26.9%26.9%27.0%
Va nguard Total In ternational St ock In dex Fu nd 9.0%12.0%16.0%18.8%21.0%23.3%25.4%27.0%26.9%26.9%26.9%27.0%
Fi xe d In come 69.6%60.3%46.8%37.4%30.0%22.6%15.3%10.0%9.9%10.0%9.9%10.0%
Va nguard Total Bo nd Marke t II In dex Fu nd 39.2%35.8%31.8%30.1%24.2%18.3%12.4%8.1%8.0%8.1%8.1%8.2%
Va nguard Total In ternational Bo nd Stock In dex Fu nd 13.7%11.8%9.2%7.3%5.8%4.3%2.9%1.9%1.9%1.9%1.8%1.8%
Va nguard Infla tion-Pro tected Securit ie s Fund 16.7%12.7%5.8%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%
TO TA L 100.0%100.0%100.0%100.0%100.0%100.0%100.0%100.0%100.0%100.0%100.0%100.0%
Vanguard Compo ne nt Funds
Reti rement
In come
Tar get
Date
2045
Tar get
Date
2050
Tar get
Date
2015
Tar get
Date
2020
Tar get
Date
2025
Tar get
Date
2010
Tar get
Date
2060
Tar get
Date
2030
Tar get
Date
2035
Tar get
Date
2040
Tar get
Date
2055
0%
10%
20%
30%
40%
50%
60%
70%
80%
U.S. Equity No n-U.S. Equity Fixed Income
Ret iremen t Income
Ta rget Date 2010
Ta rget Date 2015
Ta rget Date 2020
Ta rget Date 2025
Ta rget Date 2030
Ta rget Date 2035
Ta rget Date 2040
Ta rget Date 2045
Ta rget Date 2050
Ta rget Date 2055
Ta rget Date 2060
46
Capital Markets Review
47
Reasonable Growth Allows Fed to Begin Taper
•Third quarter U.S.GDP grew at a 4.1%rate,only the second quarter since 2006 to top
4%.Large inventory changes led the ascent,while rising exports bode well for
manufacturing,tech,and energy development.Fourth quarter growth is expected to
be around 3%.Consumer spending over the holiday season was reasonably strong,
though brick and mortar stores lost further ground to online stores.Less foot traffic
reflected the growing preference to shop on smartphones and computers.The late
surge in consumer orders overwhelmed shippers FedEx and UPS,forcing some
deliveries to be made after Christmas.Online shopping led more stores to match
prices,which tended to hurt profits at stores with lower volume or higher overhead.
•Janet Yellen was chosen to succeed Ben Bernanke as chairperson of the Federal
Reserve.In a move that eases the transition,the Fed chose to scale back its bond
purchases by $10 billion per mo nth.The Fed cited an improving economy as a main
reason to start withdrawing financial support.Interest rates are expected to remain at
very low levels for an extended time,as the Fed sought to lessen the reliance on
targets for raising rates.While the unemployment rate fell to 6.7%in December,
close to the Fed’s initial 6.5%target,and inflation was well below 2%,Bernanke
believed that it was premature to disrupt the economy through higher interest rates.
Bernanke likely believes that the falling labor participation rate is restricting growth,
Capital Markets Rev iew
Economy
-10
-8
-6
-4
-2
0
2
4
6
8
10
1980q31983q21986q11988q41991q31994q21997q11999q42002q32005q22008q12010q42013q3Ann. Rate of Return (%)GDP Growth
40-Year Averag e=2.8%
8.0
10.0
12.0
14.0
16.0
PercentInflat ion and Unempl oyme nt
Unemployment
*Dashed lines represent Federal Reserve targets
Source: Bureau of Economic Analysis
Bernanke likely believes that the falling labor participation rate is restricting growth,
and its continued descent will coincide with interest rates remaining low.
•Enrollment problems plagued the rollout of Obamacare,prompting multiple website
shutdowns and deadline extensions.The government hired new companies to oversee
technological reworks and begin wo rk on the systems to connect providers,insurers
and patients.Insurance cost appreciation had slowed in the past decade,reflecting
higher deductibles and increased patient scrutiny of costs.
•The federal government partially shutdown in the first half of October over budget
disagreements.A temporary spending bill passed to end the deadlock,while a
spending bill passed in December provided longer-term certainties.The new budget
trimmed sequester cuts,raised taxes and fees,and slowed the growth of some federal
pensions.Detroit and Illinois pension reforms led the charge to balance revenues with
contributions and future expenditures.Court challenges to these changes will
determine the future of municipal pension reforms across the country.
•The Volcker Rule,which regulates banks’investment activities,passed in December.
The rule extensively regulates banks’proprietary trading and limits their hedging
activities to reducing risk on bank-owned assets.The rule aims to reduce risk in the
financial system by limiting banks’exposure to negative market conditions and lower
the likelihood of financial bailouts.
62
63
64
65
66
67
144
146
148
150
152
154
156
158
PercentMillionsLabor Force
Size (Employed +
Unemployed)
Participation Rat e (%)
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
1/19801/19821/19841/19861/19881/19901/19921/19941/19961/19981/20001/20021/20041/20061/20081/20101/2012PercentUnemployment
Inf latio n
Source: Bureau of Labor Statistics
48
4th Quarter 2013 Sector Returns
Risk Meter: S&P 500 Index minus Barclays U.S. Treasury Index
Calendar Year Return, 1994-2013
Capital Markets Rev iew
Equities
Equities Escalate to End 2013;S&P 500 Rises to Record Levels
•Equity markets soared in the fourth quarter,capping off strong gains during the first three
quarters of the year for both the U.S.and developed market countries.Domestically,positive
economic data,reduced political uncertainties,and the Federal Reserve’s announcement that it
would begin tapering asset purchases helped propel the S&P 500 to record levels.The Index
returned 10.5%during the quarter,outpacing foreign indices and boosting the year’s return to
32.4%,the best since 1997.During the quarter,foreign equity markets also experienced
positive returns with developed markets significantly outperforming their emerging counterparts
as the MSCI EAFE and MSCI Emerging Market indices returned 5.7%and 1.8%,respectively.
•In the fourth quarter,style performance was mixed across the capitalization spectrum.Within
domestic indices,large-cap growth companies outpaced their value counterparts,while value
stocks outpaced growth stocks among small-and mid-cap indices.Among non-U.S.indices,
developed market value companies outpaced growth companies,while emerging market growth
stocks outperformed value stocks.From a capitalization perspective,large-cap indices
outperformed small-caps for the quarter,however,small-cap indices performed better for the
year.Within the Russell 3000,all 10 sectors experienced positive returns with economically
sensitive and domestic-oriented sectors leading the way,while defensive,dividend-focused
sectors lagged due to rising bond yields and an improving economic outlook.
3.2%
6.8%
7.8%
8.6%
9.5%
9.8%
10.1%
10.4%
10.5%
12.2%
13.1%
0.0%3.0%6.0%9.0%12.0%15.0%
Utilities
Te lecom
Energy
Cons. Staples
Financials
Health Care
Ru ssell 3000
Materials
Cons.Disc.
Info Tech
In dustrials
20
40
Difference (%)Risk On
sectors lagged due to rising bond yields and an improving economic outlook.
•The MSCI EAFE Index advanced 5.7%during the fourth quarter.The European region
(+7.9%)led returns across developed markets with European Economic and Monetary Union
members (+9.6%)performing especially well.An unexpected rate cut by the ECB in
November,reduced emphasis on austerity measures,and data confirming that the European
region’s longest recession ever ended during the third quarter helped boost equity markets.
Peripheral countries Spain (+11.4%),Ireland (+11.3%),and Italy (+10.7%)performed
particularly well due to increasingly positive investor sentiment generated from progress on
structural reforms.The Pacific region (+1.6%),however,lagged the Index as Australia (-0.9%)
and New Zealand (-4.1%)were the only two developed markets to experience negative returns.
•Emerging market equities rose 1.8%in the final quarter of the year.An October rally generated
by the Fed’s decision to not begin tapering its asset purchases in September drove quarterly
performance;however,markets retreated during November and December as economic data out
of the U.S.strengthened,leading to the Fed’s eventual decision to begin tapering its asset
purchases come January.Additionally,disappointing economic data throughout the developing
world took its toll on equity markets.Performance among EM countries was mixed,with Asian
EM countries (+3.7%),most notably India (+10.3%),experiencing the strongest gains.
•Despite earnings increasing somewhat for the year,strong equity market gains came primarily
as a result of multiples expansion,which,in combination with higher interest rates has
increased the valuations of equities,particularly U.S.equities.U.S.equities are now trading
above historical averages relative to their own history and non-U.S.indices.
-40%
-30%
-20%
-10%
0%
10%
20%
30%Relative PerformanceDeveloped vs. Emerging Markets: 3 Year Relative Performance
Rolling 3 Year Annualized Relative Returns
Developed Markets Outperformed
Emerging Markets Outperformed
-60
-40
-20
0
Difference (%)Risk Off
Source: Fidelity Investments
Source: Pyramis Global Advisors
49
Fed Begins to Drain the Punch Bowl
•After much debate and anticipation,the Federal Reserve announced on December 18,that
it would start tapering its $85 billion in monthly asset purchases by $10 billion each month
beginning in January 2014.Market speculation regarding the Fed’s plans resulted in
considerable interest rate volatility during the quarter as the 10-year U.S.Treasury yield
fell to 2.5%in October before surpassing 3.0%in late December.The yield curve flattened
during the quarter as intermediate rates rose more than long rates.For the year,ten-and-
thirty year yields increased 126 and 101 basis points (bps),respectively,while short rates
remained anchored.Rising rates,coupled with low yields,contributed to negative
absolute returns for the Barclays Aggregate Index (-2.0%)in 2013,resulting in the lowest
annual return since 1994 (-2.9%),and the second-lowest annual return since index
inception in 1976.Spread sectors outperformed Treasuries during the year,with lower
quality and lower duration assets generally posting the best results.High yield credit
(+7.4%),bank loans (+5.5%),and CMBS (+0.2%)were the only fixed income sectors to
generate positive absolute returns during the year.
•Investment grade credit spreads narrowed 25 bps for the quarter and the duration-adjusted
excess return to Treasuries was 208 bps.Likewise,high yield credit generated 422 bps of
excess return as spreads tightened from 461 bps to 382 bps during the quarter.Lower-rated
issues outperformed handily in 2013,driven by higher yi elds and lower duration.The
Source: Barclays
U.S. Treasury Yield Curve Change by Maturity
Duration-adjusted Excess Returns to Treasuries (bps)
Capital Markets Rev iew
Fixed Income
Best Period Second Best Period Worst Period Second W orst Period
2007 2008 2009 2010 2011 2012 2013 4Q13
Aggre ga te -206 -710 746 171 -114 226 93 78
Agency -56 -110 288 77 -25 166 1 44
MBS -177 -232 495 225 -106 91 98 57
ABS -634 -2223 2496 169 52 246 24 46
CM BS -435 -3274 2960 1501 47 841 97 85
Credit -464 -1786 1990 192 -322 693 226 208
Hi gh Yie ld -777 -3832 5955 974 -240 1394 923 422
Em erging -457 -2842 3797 508 -537 1503 -32 226
0.7%
0.9%
1.1%
1.3%Change in Yield4Q YTD 201 3
-100,000
-80,000
-60,000
-40,000
-20,000
0
20,000
40,000
60,000
80,000
$ MillionsBank Loan
No ntraditi onal Bond
Sh ort-Term Bond
Hig h Yield Bo nd
In termed iate-Term Bond
issues outperformed handily in 2013,driven by higher yi elds and lower duration.The
credit sector benefited from healthy corporate fundamentals,low default rates,positive
technicals,and accommodative global central bank policies.Supply was plentiful
throughout the ye ar as companies were eager to issue debt at low rates,which was easily
absorbed by a yield-hungry investor base.Both investment grade and high yield credit
spreads are trading well inside historical averages.Bank loans led all fixed income
categories with $67 billion in inflows during 2013 and investors were rewarded with a total
return of +5.5%.
•Despite the Fed’s taper announcement in December,Agency MBS spreads tightened 8
basis points during the quarter and generated 57 basis points of excess returns over
Treasuries.Low coupon mortgages,which are most affected by Fed purchases,lagged
higher coupon mortgages during the quarter.Rising rates dampened mortgage origination
and refinancing trends during the year.CMBS spreads tightened 15 bps during the quarter
and the sector ended the year with positive absolute returns (+0.2%),benefiting from
rebounding real estate valuations and improved lending.According to Prudential,
seasoned,top-of-the capital structure non-agency RMBS averaged 6%to 8%returns in
2013 driven by positive carry,strong demand,and limited outstanding supply.
•Non-U.S.developed government bonds returned +0.5%in local currency terms and -1.2%
in US dollar terms during the quarter.Recovering Eurozone countries such as Ireland and
Italy fared best,outperforming safe havens such as the UK and Germany.Capping off a
volatile year,local currency and USD-denominated emerging market government debt
returned -1.5%and +1.5%for the quarter,respectively,while emerging market corporate
bonds returned +1.9%.
Source: Morningstar
Cumulative Fixed Income Asset Flows (Mutual Funds + ETFs)
Source: US Dept of The Treasury
-0 .1%
0.1%
0.3%
0.5%Change in YieldMa turity (Ye ars)
50
Directional Strategies Prevail in 2013
•Most hedge fund strategies delivered another positive quarter of performance,bringing the
annual HFR Hedge Fund Composite Index return to 9.3%.As expected in a stellar year for
equities,higher beta strategies performed best.Strategies that are less dependent on market
direction faced a challenging environment,as short positions typically detracted value.As
compared to the BC Aggregate Bond Index,hedge funds shined.
•For the second consecutive quarter,long/short equity was the best performing hedge fund
strategy,with the HFR Equity Hedge Index returning 5.0%.The HFR Equity Hedge Index
displayed a beta of 0.3 to the S&P 500 during the quarter,suggesting that approximately 3.2%
of the Index’s return was due to the equity market’s run-up and 1.8%was attributable to
managers’alpha generation.Many of the best performing long/short equity managers were
those solely focused on fundamental stock picking rather than quantitative strategies.
•Activist hedge funds were particularly strong performers in 2013.Managers commonly cited
two drivers of favorable returns.Against a backdrop of an improving economy,corporate
management teams have been paying back shareholders through stock buybacks,higher
dividends or mergers and acquisitions.In addition,there have been more corporate events that
serve as catalysts to drive value creation and profitable investment opportunities.
•Many short positions widely-held by hedge fund managers continued to climb in price through
Returns as of December 31, 2013
Source: Hedge Fund Research, Inc.
Capital Markets Review
Hedge Funds
St yle
Fo urth
Qu ar te r 2013 2012
Co nv er tible A rbitrage 1.3%7.8%8.6%
Distressed Sec ur ities 3.9%13.6%10.1%
Eq uity He dge 5.0%14.6%7.4%
Eq uity Ma rket Neutr al 3.2%7.1%3.0%
Shor t Bias ed -2.8%-16.4%-17.2%
Global Ma cro 2.0%-0.3%-0.1%
Me rger Arbitrage 1.5%4.8%2.8%
He dge Fund Compos ite 3.7%9.3%6.4%
Fu nd of Fu nds 3.5%8.7%4.8%
S&P 500 10.5%32.4%16.0%
BC Aggr egate Bond Index -0.1%-2.0%4.2%
•Many short positions widely-held by hedge fund managers continued to climb in price through
the end of the year,offsetting the strong performance of popular long positions and dampening
overall hedge fund returns.Goldman Sachs reported that more than half of the 50 most
commonly held short positions were outperforming the S&P 500 Index as of September 30,
2013,and a few returned more than 100%.
•After experiencing two consecutive quarters of negative returns,global macro managers
advanced 2.0%during the fourth quarter,although the strategy still finished the ye ar in the red.
Diversified macro strategies struggled the most during the year while trend following strategies
with meaningful equity market exposure were more successful.
•Research by Goldman Sachs indicates that hedge fund managers are turning over their
portfolios less frequently.Turnover of all hedge fund positions fell to a record low of 28%
compared with the long-term average of 35%.In addition,hedge funds are operating 51%net
long in aggregate,which is slightly below levels earlier in the year,despite the continued
market rally.This indicates managers are being mindful of exposure levels and maintaining
hedges.
•A recent Preqin survey indicates investors were satisfied with their hedge funds’returns in
2013.Preqin interviewed 148 institutional investors with more than $60 billion invested in
hedge funds.21%of those surveyed said their hedge fund returns had exceeded expectations
and 63%said their hedge fund returns had met expectations.Only 16%felt return expectations
had not been met,a sizable decrease from 2012 when 41%of those surveyed said they were
disappointed.
700
800
900
1000
1100
1200
1300
1400
1500
1600
1700
1800
10%
20%
30%
40%
50%
60%
70%Dec-04Dec-05Dec-06Dec-07Dec-08Dec-09Dec-10Dec-11Dec-12Dec-13S&P 500 LevelHedge Fund Net Long ExposureHedge Fund Exposure vs.S&P 500 Index Level
Hedge Fund Net Long Exposure S&P 500 Level
Source: Goldman Sachs
51
Returns as of September 30, 2013
Private Real Estate Returns Hold For Now; Dismal Ye ar For
Commodities
•Despite upward pressure on interest rates,which is likely to continue into 2014 as the
Fed tapers its monthly bond purchases,private real estate delivered steady income
(+1.2%)and appreciation (+1.4%)during the quarter.The NCREIF Property Index
(“NPI”)returned 2.6%resulting in a year-to-date return ended September 30,2013 of
8.2%.Industrial properties outperformed other property types for the second
consecutive quarter due to net operating income (NOI)growth and cap rate
compression.Overall real estate fundamentals have continued to strengthen.The NPI
occupancy rate increased to 90.7%,a level last touched in the third quarter of 2008.
•According to Real Capital Analytics,transaction volume accelerated during the
quarter.Over the trailing four quarters ended September 30,2013,transaction volume
totaled $351 billion,a 37%increase from the same period one year prior.
•Domestic and international REITs returned -0.1%and -0.3%,respectively,in the
fourth quarter,and finished the year in positive territory with returns of 2.3%and
6.1%,which significantly lagged the broader equity markets and broke a four-year
winning streak for REITs versus the S&P 500.Principal concerns among investors
Capital Markets Review
Real Assets
NCREIF 3 Mon.YT D 1 Yr.3 Yrs.5 Yrs.10 Yrs.
NCREIF 2.6%8.2%11.0%12.7%3.4%8.7%
Ap artments 2.5%7.7%10.8%13.7%4.3%8.4%
In dus trials 3.1%9.1%11.7%12.7%2.7%8.1%
Offi ce 2.4%7.4%9.7%11.6%1.9%8.1%
Retail 2.7%9.9%13.2%13.5%5.6%10.5%
Hotel 2.1%5.3%7.7%9.6%-0.3%6.7%
Eas t 2.1%6.9%9.2%11.9%2.7%8.8%
Mi dwes t 2.7%8.4%10.9%11.4%3.5%7.1%
South 3.0%9.4%12.6%12.7%4.2%8.5%
West 2.8%8.9%11.8%13.9%3.5%9.2%
$1 ,400
$1 ,600
$1 ,800
$2 ,000
50
60
70
80
90
$ US/Troy OZ.Gold Holdings (Millions of Troy Ounces)SPDR Gold Holdings vs. Gold Price
winning streak for REITs versus the S&P 500.Principal concerns among investors
are the impact of rising rates on property values and the ability of REIT companies to
continue accessing the equity and debt markets.
•Soaring U.S.equity markets,rising interest rates,a strengthening US dollar,and little
sign of inflation combined to produce a slump in commodities prices.Gold’s
precipitous fall from grace continued with a 9.5%decline during the fourth quarter
bringing the calendar year decline to 28.7%.Silver prices took a hit as well,sliding
11.0%and 36.6%during the quarter and year,respectively.Of the six sectors in the
Index,only energy and industrial metals experienced positive returns.Energy sector
gains were driven by natural gas,which rallied during the quarter producing a return
of 11.0%as a brutal cold snap covered much of the nation.
•A dramatic shift in gold demand negatively impacted its price during 2013.At the end
of 2013,GLD’s (the largest gold bullion ETF)bullion holdings declined to less than
25.7 million ounces or a loss of 36%from its peak.Additionally,India’s demand for
gold deteriorated dramatically due to a government imposed import restriction enacted
to support the Rupee and ease trade imbalances.India has amassed the largest private
gold holdings in the world so any sustained restrictions on bullion holdings will likely
weigh on gold prices.
Source: Ibbotson
DJ-UBS Commodity Index Components
Total Return Ending December 31, 2013
Segment 3 Months 1 Year 3 Years 5 Years
38.9%Energy 4.4%5.2%-7.1%-7.5%
16.8%Petroleum 0.9%5.1%2.4%6.3%
16.7%Indus trial Metals 0.3%-13.6%-13.0%6.6%
11.3%Precious Metals -9.8%-30.8%-8.4%7.2%
19.6%Grains -5.4%-16.9%-5.6%1.5%
5.7%Live stock -1.7%-3.5%-3.1%-3.3%
7.8%Soft s -7.1%-16.9%-17.8%5.1%
100.0%To tal Market -1.1%-9.5%-8.1%1.5%
Al loca ti on
$4 00
$6 00
$8 00
$1 ,000
$1 ,200
0
10
20
30
40
50
$ US/Troy OZ.Gold Holdings (Millions of Troy Ounces)To tal Known ETF Gold Ho ldings (Left)
SPDR Gold Trust Gold Ho ldings (Left)
Gold Price (Right)
Source: Van Eck and Bloomberg
52
$400
$500
$600
•Private equity performance data in the ThomsonOne database has yet to be updated for the third
quarter of 2013.During the second quarter,private equity funds outperformed their public market
counterparts,with a pooled IRR of 3.4%versus 2.9%for the S&P 500.For the trailing one-year
period,buyout funds modestly trailed the S&P 500 while venture capital funds lagged by a
significant margin.Mega buyout funds were the best performers over the trailing one-year
period,with a pooled IRR of 22.7%compared to 20.6%for the S&P 500.The valuations for
mega buyout funds tend to be more closely aligned with public market comparables than their
smaller counterparts.Balanced stage venture capital funds were the worst performers for the one-
year period,with a pooled IRR of 2.1%.
•Private equity funds raised approximately $360 billion in 2013,up from $305 billion and $315
billion in 2011 and 2012,respectively.The amount raised in 2013 was the highest annual amount
on record outside of the buyout boom years of 2006 to 2008.That amount also represents nearly
twice the capital raised in 2009 during the depths of the financial crisis.The marked
improvement in 2013 was driven by a 39%year-over-year increase in buyout fundraising.The
fundraising environment was much bleaker for venture capital funds,which raised $27 billion in
2013,the lowest total since the years following the dot com bubble.Venture funds saw
fundraising declines of 35%and 27%in 2012 and 2013,respectively.
•Mega buyout funds –those raising at least $5 billion-have experienced renewed interest over the
Source: Thomson Reuters ThomsonOne database, January 2014.
Note: Data is continuously updated and is therefore subject to change.
Buyout Appetite Grew, Ve nture Interest Waned in 2013
Global Fundraising
Investment Horizon Pooled IRR as of 6/30/13
Fund Type 3 Months 1 Year 3 Years 5 Years 10 Years 20 Years
Early Stage Venture 2.0%5.7%4.3%-1.0%1.8%23.3%
Balanced Venture 2.0%2.1%5.4%0.8%5.9%10.1%
Later Stage Venture 5.4%9.7%9.7%4.7%8.2%13.7%
All Venture 2.7%5.0%5.7%0.8%4.6%14.3%
Small Buyouts 4.0%14.8%7.7%1.4%11.0%12.9%
Med Buyouts 4.9%15.4%10.2%4.2%10.3%12.4%
Large Buyouts 4.2%14.5%11.6%3.9%12.9%10.3%
Mega Buyouts 3.8%22.7%14.4%6.0%8.8%9.0%
All Buyouts 4.1%18.8%12.4%4.7%10.9%10.7%
Mezzanine 1.9%10.5%7.4%3.1%6.7%7.6%
Distressed/Turnaround 2.8%14.7%11.3%8.4%10.3%10.2%
All Private Equity 3.4%15.7%11.0%4.3%9.5%11.2%
S&P 500 2.9%20.6%18.5%7.8%7.7%8.0%
Capital Markets Rev iew
Pr ivate Equity
0
50
100
150
200
250
300
350
0
200
400
600
800
1000
1200
1400
1600
Agg. Value ($,Billions)# of DealsBuy out -Bac ked Exits #Buyout-Backed Exit s $Value
$0
$100
$200
$300
$400
$,BillionsVC Buyout Real Assets Secondary Funds Distressed/SS Fund of Funds Total Raised
•Mega buyout funds –those raising at least $5 billion-have experienced renewed interest over the
last couple of years.Those funds raised $50 billion in 2012 and $76 billion in 2013,representing
38%and 41%,respectively,of total buyout fundraising.The last time mega buyout funds
represented more than 40%of capital raised was during the buyout boom.Investor interest in the
largest end of the buyout market plummeted following the financial crisis and mega buyout funds
represented just 10%and 16%of buyout fundraising in 2010 and 2011,respectively.
•By dollar volume,annual private equity-backed buyout deal activity has remained relatively
steady since 2011.According to Preqin,$274 billion in private equity-backed buyout deals were
announced in 2013 compared to $265 billion and $264 billion in 2011 and 2012,respectively.
However,fewer deals were completed in 2013,increasing the average deal size to $97 million per
deal from around $83 million in both 2011 and 2012 .
•Extraordinary performance in public equity markets and widely accessible debt markets drove
another excellent year for buyout-backed exits.According to Preqin,there were 1,348 buyout-
backed exits in 2013 with an aggregate exit value of $303 billion,up from 1,299 exits worth $285
billion in 2012.The uptick was due to a significant increase in buyout-backed IPO activity.
•Venture-backed exit activity was a mixed bag in 2013 as it was the strongest year for venture-
backed IPOs since 2007 but the slowest year for venture-backed M&As since 2009.According to
Thomson Reuters and the National Venture Capital Association,82 venture-backed IPOs raised
an aggregate $11.2 billion in 2013,compared to the prior year when 48 IPOs raised $5.5 billion
excluding the $16 billion Facebook IP O.There were 377 venture-backed M&A exits in 2013,
down from 488 in 2012 and the lowest total since 2009 when 360 venture-backed M&A exits
were completed.
Source: Thomson Reuters ThomsonOne database, January 2014.
Source: Preqin
Buyout-Backed Exit Ac tivity
53
Quarter
Year
To
Date
1
Year
2
Years
3
Years
5
Years
7
Years
10
Years
Domestic Equity Indices
Dow Jones Wilshire 5000 10.1 34.0 34.0 24.7 16.1 19.0 6.8 8.2
S&P 500 10.5 32.4 32.4 23.9 16.2 17.9 6.1 7.4
Russell 1000 Index 10.2 33.1 33.1 24.5 16.3 18.6 6.4 7.8
Russell 1000 Growth Index 10.4 33.5 33.5 24.0 16.5 20.4 8.2 7.8
Russell 1000 Value Index 10.0 32.5 32.5 24.8 16.1 16.7 4.5 7.6
Russell Midcap Index 8.4 34.8 34.8 25.7 15.9 22.4 7.8 10.2
Russell Midcap Growth Index 8.2 35.7 35.7 25.4 15.6 23.4 8.5 9.8
Russell Midcap Value Index 8.6 33.5 33.5 25.8 16.0 21.2 6.8 10.3
Russell 2000 Index 8.7 38.8 38.8 27.1 15.7 20.1 7.2 9.1
Russell 2000 Growth Index 8.2 43.3 43.3 28.1 16.8 22.6 8.9 9.4
Russell 2000 Value Index 9.3 34.5 34.5 26.0 14.5 17.6 5.4 8.6
International Equity Indices
MSCI EAFE 5.7 22.8 22.8 20.0 8.2 12.4 1.8 6.9
MSCI EAFE Growth Index 5.2 22.5 22.5 19.7 8.0 12.8 2.9 7.0
MSCI EAFE Value Index 6.3 23.0 23.0 20.3 8.3 12.0 0.6 6.8
MSCI EAFE Small Cap 5.9 29.3 29.3 24.6 9.3 18.5 3.3 9.5
MSCI AC World Index 7.3 22.8 22.8 19.4 9.7 14.9 3.7 7.2
MSCI AC World ex US 4.8 15.3 15.3 16.1 5.1 12.8 2.2 7.6
MSCI Emerging Markets Index 1.9 -2.3 -2.3 7.7 -1.7 15.2 4.1 11.5
Fixed Income Indices
Barclays Aggregate -0.1 -2.0 -2.0 1.0 3.3 4.4 4.9 4.5
Barcap Intermediate U.S. Government/Credit 0.0 -0.9 -0.9 1.5 2.9 4.0 4.6 4.1
Barclays U.S. Long Government/Credit -0.1 -8.8 -8.8 -0.4 6.7 6.4 6.7 6.4
Barclays US Corp: High Yield 3.6 7.4 7.4 11.6 9.3 18.9 8.7 8.6
BofA Merrill Lynch 3 Month US T-Bill 0.0 0.1 0.1 0.1 0.1 0.1 1.1 1.7
Barclays U.S. Treasury: U.S. TIPS -2.0 -8.6 -8.6 -1.1 3.5 5.6 5.3 4.9
Citigroup Non-U.S. World Government Bond -1.2 -4.6 -4.6 -1.6 0.6 2.3 4.6 4.1
JPM EMBI Global Diversified (external currency)1.5 -5.2 -5.2 5.5 6.1 11.7 7.2 8.2
JPM GBI-EM Global Diversified (local currency)-1.5 -9.0 -9.0 3.1 1.5 8.1 7.4 9.5
Real Asset Indices
Dow Jones - UBS Commodity -1.1 -9.5 -9.5 -5.4 -8.1 1.5 -3.0 0.9
Dow Jones Wilshire REIT -0.8 1.9 1.9 9.4 9.4 16.7 1.2 8.4
Capital Markets Review
Index Returns
As of December 31, 2013
(Percentage Return)
_________________________
Returns for periods greater than one year are annualized.
54