HomeMy Public PortalAbout2014 3rd Quarter ReportPerformance
Review
Metropolitan St. Louis Sewer
District Deferred Compensation
Plan
3rd Quarter 2014
Pavilion Advisory Group Inc.
227 W. Monroe Street, Suite 2020
Chicago, IL 60606
Phone: 312-798-3200
Fax: 312-902-1984
www.pavilioncorp.com
1 Executive Summary 1
2 Performance Summary 3
3 Plan Assets 10
4 Manager Evaluation 12
5 Capital Markets Review 46
Table Of Contents
Executive Summary
1
Performance Summary - September 2014
Amidst volatile markets, due partly to continued geopolitical concerns, third quarter fund returns were mixed.
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. In October 2014, Vanguard announced that Charles Anniss, CFA, replaced
Greg Aldridge as portfolio manager for the portion of the International Growth Fund managed by M&G Investment Management Limited (M&G). The funds' multimanager approach and
other portfolio managers are unchanged. Pavilion will continue to monitor the manager for further developments. There were no major changes to the other investment options.
Third quarter performance for the available active managers in the investment menu was mixed. Vanguard U.S. Growth trailed the Russell 1000 Growth Index by 70 basis points due
primarily to an overweight allocation to the information technology sector. Vanguard Windsor II matched the Russell 1000 Value Index, while Vanguard International Growth
outperformed the MSCI AC World ex USA Index by 40 basis points as a result of strong stock selection in emerging markets and the Pacific regions.
The domestic large-cap core and growth segments were the best absolute performers for the quarter. Target retirement date funds modestly trailed their respective benchmarks over longer-
termed periods.
Capital Markets Review
It was a difficult quarter in the capital markets. U.S. large-cap equities posted modest gains while small-cap equities severely underperformed. International equity declined across foreign
markets, with developed markets underperforming emerging markets. Fixed income volatility returned to the market highlighted by a flight to quality in long term rates. Local currency
international debt performed poorly due to a strengthening U. S. Dollar. An expansion of Russia’s invasion of Ukraine, Israel’s military actions to clear Gaza of missiles and tunnels used
by attackers, and ISIS conquering territory across Iraq caused investors to pull monies out of Europe and Asia for the perceived safety of the U.S. dollar and Treasury bonds. The rapid
ascent of the U.S. dollar sent foreign investment values sharply lower versus their local-currency returns.
A wave of economic weakness enveloped Europe, Japan, Brazil, China and many smaller countries. The European Central Bank (ECB) inched closer toward purchasing asset-backed
bonds, while further lowering its deposit rate to -0.2%. With the German economy near a zero-growth rate and countries such as Greece and Spain pleading for an end to austerity, the
Eurozone economy offered little near-term outlook for growth. Hopes turned to the ECB to offer a Federal Reserve style bailout and inflate the flagging economy, though the bank has
been reluctant to put plans into action based on German leaders’ protests. The impending culmination of the Federal Reserve’s asset purchases was a late-quarter headwind for stocks.
The U.S. economy faced a perplexing mix of economic readings. The unemployment rate fell to 5.9%, though the number of workers leaving the workforce remained dauntingly high.
Retail sales were choppy, yet on an upward trend. A steep drop in oil prices, brought on by increased U.S. production, will be a negative for upcoming energy spending, due to falling
gasoline prices, but will be a broader benefit for the economy.
Recommendations or Action Items
No recommendations at this time.
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)1.1 (26)8.2 (16)19.5 (18)22.8 (32)15.5 (26)8.0 (46)
S&P 500 1.1 (25)8.3 (15)19.7 (16)23.0 (29)15.7 (24)8.1 (42)
Large-Cap Equity Peer Group Median 0.1 6.0 16.4 21.5 14.3 7.8
Vanguard US Growth (VWUSX)0.8 (55)6.5 (35)18.2 (32)23.3 (24)15.0 (52)8.1 (61)
Russell 1000 Growth Index 1.5 (38)7.9 (21)19.1 (24)22.4 (36)16.5 (24)8.9 (42)
Large-Cap Growth Equity Peer Group Median 1.1 5.5 16.7 21.5 15.1 8.5
Vanguard Windsor II (VWNFX)-0.2 (47)7.4 (27)17.6 (35)22.7 (38)14.7 (35)7.9 (41)
Russell 1000 Value Index -0.2 (47)8.1 (17)18.9 (22)23.9 (22)15.3 (24)7.8 (42)
Large-Cap Value Equity Peer Group Median -0.3 6.1 16.2 21.8 14.0 7.5
Vanguard Mid-Cap Index (VIMSX)-1.2 (19)6.5 (10)15.7 (13)23.1 (23)16.9 (16)10.2 (24)
Vanguard Mid-Cap Index Fund Blended Benchmark -1.1 (18)6.7 (10)15.9 (12)23.4 (20)17.1 (14)10.3 (19)
Mid-Cap Equity Peer Group Median -3.3 1.4 9.4 20.8 14.8 9.1
Vanguard Small-Cap Index (NAESX)-5.5 (26)0.5 (8)9.3 (11)23.4 (22)16.1 (20)9.7 (11)
Vanguard Small-Cap Index Fund Blended Benchmark -5.5 (25)0.7 (8)9.6 (10)23.6 (20)16.2 (18)9.8 (10)
Small-Cap Equity Peer Group Median -6.6 -4.4 4.2 20.8 14.3 8.0
International Equity Option
Vanguard International Growth (VWIGX)-4.9 (24)-2.7 (67)4.4 (50)15.0 (24)8.3 (25)7.9 (25)
MSCI AC World ex USA (Net)-5.3 (35)0.0 (24)4.8 (42)11.8 (79)6.0 (68)7.1 (40)
International Equity Peer Group Median -5.8 -1.7 4.3 13.6 6.8 6.6
Fixed Income Options
Vanguard Total Bond Market Index (VBMFX)0.1 (34)4.0 (68)3.8 (76)2.2 (90)3.9 (85)4.5 (66)
Vanguard Total Bond Market Index Fund Benchmark 0.2 (31)4.0 (66)4.0 (70)2.5 (83)4.2 (79)4.6 (59)
Market Duration Fixed Income Peer Group Median 0.0 4.2 4.6 3.6 4.9 4.8
Vanguard Retirement Savings Trust 0.5 1.3 1.7 2.1 2.4 3.2
Ryan 3 Yr GIC Master 0.3 0.8 1.0 1.3 2.1 3.1
Performance Summary
Investment Options
As of September 30, 2014
_________________________
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 September 30, 2014
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years
Equity/Fixed Income Blend Options
Vanguard Balanced Index (VBINX)0.0 (10)5.7 (10)11.9 (13)14.3 (33)11.1 (19)7.2 (19)
Vanguard Balanced Index Fund Benchmark 0.1 (10)5.9 (10)12.2 (11)14.6 (28)11.3 (15)7.3 (15)
60% Equity / 40% Fixed Peer Group Median -0.8 3.6 9.6 13.7 10.0 6.5
Vanguard Target Retirement Income (VTINX)-0.4 (7)4.0 (26)6.5 (49)7.4 (64)7.0 (46)5.5 (27)
Vanguard Target Income Composite Index -0.4 (7)4.1 (22)6.7 (43)7.5 (61)7.1 (42)5.5 (27)
IM Mixed-Asset Target Alloc Consv (MF) Median -1.1 3.2 6.3 8.1 6.8 4.9
Vanguard Target Retirement 2010 (VTENX)-0.5 (6)4.2 (7)7.5 (24)9.6 (46)8.2 (30)N/A
Vanguard Target 2010 Composite Index -0.5 (5)4.3 (4)7.8 (18)9.7 (44)8.3 (26)N/A
IM Mixed-Asset Target 2010 (MF) Median -1.3 3.1 6.9 9.5 7.6 4.9
Vanguard Target Retirement 2015 (VTXVX)-0.7 (14)4.5 (5)9.1 (6)11.7 (22)9.2 (12)6.3 (19)
Vanguard Target 2015 Composite Index -0.7 (13)4.6 (4)9.3 (4)11.9 (20)9.3 (10)6.3 (18)
IM Mixed-Asset Target 2015 (MF) Median -1.3 3.2 7.0 10.3 8.0 5.6
Vanguard Target Retirement 2020 (VTWNX)-0.8 (13)4.8 (1)10.1 (3)13.3 (19)10.0 (9)N/A
Vanguard Target 2020 Composite Index -0.8 (13)4.9 (1)10.4 (2)13.6 (15)10.3 (4)N/A
IM Mixed-Asset Target 2020 (MF) Median -1.5 3.3 7.7 11.0 8.4 5.4
Vanguard Target Retirement 2025 (VTTVX)-1.0 (14)4.8 (5)10.8 (6)14.6 (27)10.6 (20)6.7 (28)
Vanguard Target 2025 Composite Index -0.9 (11)5.0 (4)11.2 (4)14.9 (24)10.9 (9)6.8 (22)
IM Mixed-Asset Target 2025 (MF) Median -1.6 3.6 8.9 13.2 9.6 6.4
Vanguard Target Retirement 2030 (VTHRX)-1.2 (17)4.7 (3)11.5 (7)15.9 (20)11.2 (13)N/A
Vanguard Target 2030 Composite Index -1.1 (13)5.0 (1)11.9 (5)16.1 (16)11.5 (8)N/A
IM Mixed-Asset Target 2030 (MF) Median -1.8 3.5 9.5 14.3 9.9 5.9
Vanguard Target Retirement 2035 (VTTHX)-1.4 (16)4.8 (4)12.2 (6)17.2 (20)11.8 (11)7.2 (28)
Vanguard Target 2035 Composite Index -1.3 (10)5.0 (1)12.6 (4)17.4 (16)12.1 (5)7.3 (20)
IM Mixed-Asset Target 2035 (MF) Median -1.9 3.5 10.1 15.7 10.8 6.7
Vanguard Target Retirement 2040 (VFORX)-1.5 (20)4.7 (6)12.7 (6)17.9 (16)12.1 (8)N/A
Vanguard Target 2040 Composite Index -1.4 (16)5.0 (2)13.0 (3)18.1 (10)12.4 (3)N/A
IM Mixed-Asset Target 2040 (MF) Median -2.0 3.5 10.3 16.0 10.7 6.1
_________________________
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 September 30, 2014
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years
Equity/Fixed Income Blend Options (cont.)
Vanguard Target Retirement 2045 (VTIVX)-1.5 (14)4.8 (9)12.7 (7)17.9 (21)12.1 (9)7.6 (N/A)
Vanguard Target 2045 Composite Index -1.4 (13)5.0 (4)13.0 (6)18.1 (15)12.4 (4)7.7 (N/A)
IM Mixed-Asset Target 2045 (MF) Median -2.0 3.5 10.7 16.9 11.1 N/A
Vanguard Target Retirement 2050 (VFIFX)-1.5 (19)4.8 (12)12.7 (7)17.9 (27)12.1 (9)N/A
Vanguard Target 2050 Composite Index -1.4 (16)5.0 (6)13.0 (5)18.1 (16)12.4 (4)N/A
IM Mixed-Asset Target 2050 (MF) Median -2.0 3.5 10.7 16.8 11.1 N/A
Vanguard Target Retirement 2055 (VFFVX)-1.5 (18)4.8 (14)12.7 (10)17.9 (31)N/A N/A
Vanguard Target 2055 Composite Index -1.4 (13)5.0 (6)13.0 (6)18.1 (26)N/A N/A
IM Mixed-Asset Target 2055+ Funds (MF) Median -1.9 3.4 11.1 17.1 10.9 N/A
Vanguard Target Retirement 2060 (VTTSX)-1.5 (17)4.8 (13)12.7 (9)N/A N/A N/A
Vanguard Target 2060 Composite Index -1.4 (13)5.0 (6)13.0 (6)N/A N/A N/A
IM Mixed-Asset Target 2055+ Funds (MF) Median -1.9 3.4 11.1 17.1 10.9 N/A
Money Market Option
Vanguard Prime Money Market (VMMXX)0.0 0.0 0.0 0.0 0.0 1.7
BofA Merrill Lynch 3 Month U.S. T-Bill 0.0 0.0 0.0 0.1 0.1 1.6
_________________________
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 September 30, 2014
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 tiona l
Grow th
(V WIGX)
Vangua rd
Total Bond
Marke 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 investment team +-+++-++
No ma teria l o rg aniza tional changes ++++++++
Accounting or regulatory concerns ++++++++
Cu rrently in adherence to guidelin es ++++++++
Po rt fo lio characteris tics me et stylis tic expectations ++++++++
Re lati ve Perfor mance 1
Three-year return better than benchmark N/A +-N/A N/A +N/A N/A
Three-year rankin g better than peer group median ++++++-N/A
Fiv e year re turn better than benchmark N/A --N/A N/A +N/A N/AFive year re turn better than benchmark N/A --N/A N/A +N/A N/A
Fiv e year ra nkin g better than peer group median ++++++-N/A
Perfor manc e s tatus ++++++++
Summar y s tatus +-++++++
1 Manager performance is evaluated net of investment management fees.
7
Pe rformance Summary
Manager Compliance Checklist (Continued)
As of September 30, 2014
Manage rs
Vanguard
Ba lance d
Index
(V BI NX )
Vanguard
Target
Re ti re ment
Income Fund
(VTINX)
Vangua rd
Target
Re tirement
2010
(VTENX)
Vangua rd
Ta rget
Re tire ment
2015
(V TXVX)
Vangua rd
Ta rge t
Re ti re ment
2020
(V TWNX )
Vangua rd
Ta rge t
Re ti re ment
2025
(V TTVX)
Vanguard
Targe t
Re ti re ment
2030
(V THRX)
Vangua rd
Targe t
Re tire ment
2035
(VTTHX)
Organizati onal /Produ ct Is sues
No ma terial c hanges to investment team ++++++++
No ma terial o rganiza tional changes ++++++++
Accounting or regulatory concerns ++++++++
Cu rrently in adherence to guidelin es ++++++++
Po rt fo lio characteris tics me et stylis tic expectations ++++++++
Relative Perfor mance 1
Three-year return better than benchmark N/A N/A N/A N/A N/A N/A N/A N/A
Three-year rankin g better than peer group median +-++++++
Five year return better than benchmark N/A N/A N/A N/A N/A N/A N/A N/AFive year return better than benchmark N/A N/A N/A N/A N/A N/A N/A N/A
Five year rankin g better than peer group median ++++++++
Performance status ++++++++
Summar y s tatus ++++++++
1 Manager performance is evaluated net of investment management fees.
8
Pe rformance Summary
Manager Compliance Checklist (Continued)
As of September 30, 2014
Mana gers
Vanguard
Ta rge t
Re ti re ment
2040
(V FORX)
Vangua rd
Ta rget
Re ti re ment
2045
(V TIVX)
Va ngua rd
Targe t
Re ti re ment
2050
(V FIFX)
Vangua rd
Targe t
Re ti re ment
2055
(V FFVX)
Vangua rd
Ta rge t
Re ti re ment
2060
(V TTSX)
Vangua rd
Prime Mone y
Marke t Fund
(V MMXX)
Organizational /Produ ct Is sues
No ma teria l c hanges to investment team ++++++
No ma teria l o rg aniza tional changes ++++++
Accounting or regulatory concerns ++++++
Cu rre ntly in adherence to guidelin es ++++++
Po rt fo lio characteris tics me et stylis tic expectations ++++++
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 ++++N/A N/A
Fiv e year return better than benchmark N/A N/A N/A N/A N/A N/A
1 Manager performance is evaluated net of investment management fees.
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 +++N/A N/A N/A
Performance status ++++++
Summary status ++++++
9
Plan Assets
10
Plan Summary
Fee Comparison Summary
As of September 30, 2014
Inv estment Option
Expe nse
Ratio
Morningstar
Cate gory
Av erage
Fe e Level
Comp arison
Group Median
eVestment
Al liance
Univ erse
Median Cate gory
Fe e Level Comp arison
Group
eVestment Alliance
Univ erse
Va nguard 500 In dex 0.17 1.10 0.96 0.17 La rg e Blend La rg e Cap No Lo ad US Pa ssive La rg e Cap Equity
Va nguard US Gro wt h 0.45 1.23 0.96 0.85 La rge Gro wth La rg e Cap No Lo ad US Large Cap Gr owth
Va nguard Windsor 0.36 1.15 0.84 0.84 La rg e Value La rg e Cap No Lo ad US Large Cap Va lu e
Va nguard Mid-Ca p Index 0.24 1.23 1.11 0.27 Mid Ble nd Mid Cap No Lo ad US Passive Mid Cap Equity
Va nguard Sma ll-Ca p Index 0.24 1.16 1.20 0.24 Small Ble nd Small Ca p No Load US Pa ssive Small Ca p Equity
Va nguard International Gr owth 0.48 1.37 1.11 1.09 Foreig n Large Gro wt h Foreign Large Cap No Lo ad ACWI ex-US Gro wt h Equity
Va nguard Total Bo nd Marke t Index 0.20 0.84 0.65 0.52 Interme diate-Term Bond Interme diate-Term Bond No Load US Co re Fixe d Income
Va nguard Retire me nt Saving Trust 0.52 N/A N/A 0.70 N/A N/A US St able Value Fixed Income
Va nguard Balanced Index 0.24 0.87 0.92 0.73 Moderate Allo cation Moderate Allo cation No Load US Ba la nced
Va nguard Target Retirement Income 0.16 0.68 0.65 0.46 Re tire me nt Income Retire me nt Income No Load Li fecycle/Target Date Income
Va nguard Target Retirement 2010 0.16 0.48 0.64 0.55 Target Date 2000-2010 Target Retireme nt 2000-2010 No Lo ad Life cycle/Target Date 2010Vanguard Target Retirement 2010 0.16 0.48 0.64 0.55 Target Date 2000-2010 Target Retireme nt 2000-2010 No Lo ad Life cycle/Target Date 2010
Va nguard Target Retirement 2015 0.16 0.53 0.85 0.61 Target Date 2011-2015 Target Retireme nt 2011-2015 No Lo ad Life cycle/Target Date 2015
Va nguard Target Retirement 2020 0.16 0.59 0.82 0.62 Target Date 2016-2020 Target Retireme nt 2016-2020 No Lo ad Life cycle/Target Date 2020
Va nguard Target Retirement 2025 0.17 0.53 0.88 0.64 Target Date 2021-2025 Target Retireme nt 2021-2025 No Lo ad Life cycle/Target Date 2025
Va nguard Target Retirement 2030 0.17 0.59 0.82 0.65 Target Date 2026-2030 Target Retireme nt 2026-2030 No Lo ad Life cycle/Target Date 2030
Va nguard Target Retirement 2035 0.18 0.54 0.91 0.70 Target Date 2031-2035 Target Retireme nt 3031-2035 No Lo ad Life cycle/Target Date 2035
Va nguard Target Retirement 2040 0.18 0.60 0.86 0.69 Target Date 2036-2040 Target Retireme nt 2036-2040 No Lo ad Life cycle/Target Date 2040
Va nguard Target Retirement 2045 0.18 0.55 0.96 0.72 Target Date 2041-2045 Target Retireme nt 2041-2045 No Lo ad Life cycle/Target Date 2045
Va nguard Target Retirement 2050 0.18 0.57 0.84 0.68 Target Date 2046-2050 Target Retireme nt 2046-2050 No Lo ad Life cycle/Target Date 2050
Va nguard Target Retirement 2055 0.18 0.46 0.93 0.47 Target Date 2051+Target Retireme nt 2051+ No Lo ad Life cycle/Target Date 2055
Va nguard Target Retirement 2060 0.18 0.46 0.93 N/A Target Date 2051+Target Retireme nt 2051+ No Lo ad N/A
Va nguard Prime Money Marke t 0.16 0.13 N/A 0.20 Money Marke t Taxable N/A US Cash Management
11
Manager Evaluation
12
Historical Performance
Three Year Rolling Percentile Ranking Relative Performance
Historical Statistics (Oct-2009 - Sep-2014)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004
Vanguard 500 Index Fund (VFINX)1.1 8.2 19.5 22.8 15.5 8.0 32.2 15.8 2.0 14.9 26.5 -37.0 5.4 15.6 4.8 10.7
S&P 500 1.1 8.3 19.7 23.0 15.7 8.1 32.4 16.0 2.1 15.1 26.5 -37.0 5.5 15.8 4.9 10.9
Large-Cap Equity Peer Group Median 0.1 6.0 16.4 21.5 14.3 7.8 32.4 14.6 -1.0 14.0 27.8 -37.5 6.2 13.3 5.9 10.2
Vanguard 500 Index Fund (VFINX) Rank 26 16 18 32 26 46 52 38 23 40 57 46 56 33 63 45
Cumulative Annualized Over/Under Relative Performance
Over/Under Performance
0.0
0.2
-0.2
-0.4Return (%)12/04 12/05 12/06 12/07 12/08 12/09 12/10 12/11 12/12 9/14
Vanguard 500 Index Fund (VFINX)S&P 500
0
25
50
75
100Return Percentile Rank12/04 12/05 12/06 12/07 12/08 12/09 12/10 12/11 12/12 9/14
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard 500 Index Fund (VFINX)15.5 14.1 15.6 -0.1 1.0 1.1 0.0 -9.0 8.2 0.0 38y 1m
S&P 500 15.7 14.1 15.8 0.0 1.0 1.1 0.0 N/A 8.1 0.0 38y 1m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 14.1 -1.1 0.0 20.0 38y 1m
Manager Evaluation
Vanguard 500 Index Fund (VFINX) vs. S&P 500
As of September 30, 2014
13
Top Ten Equity Holdings
Portfolio
Weight
(%)
Benchmark
Weight
(%)
Active
Weight
(%)
Quarterly
Return
(%)
Apple Inc 3.4 3.4 0.0 9.0
Exxon Mobil Corp 2.3 2.3 0.0 -5.9
Microsoft Corp 2.2 2.2 0.0 11.9
Johnson & Johnson 1.7 1.7 0.0 2.6
General Electric Co 1.5 1.5 0.0 -1.7
Wells Fargo & Co 1.4 1.4 0.0 -0.6
Berkshire Hathaway Inc 1.3 1.4 -0.1 9.1
Procter & Gamble Co (The)1.3 1.3 0.0 7.4
JPMorgan Chase & Co 1.3 1.3 0.0 5.3
Chevron Corp 1.3 1.3 0.0 -7.8
% of Portfolio 17.6 17.8
Portfolio Characteristics
Portfolio Benchmark
Wtd. Avg. Mkt. Cap ($M)128,982 129,536
Median Mkt. Cap ($M)17,195 17,148
Price/Earnings ratio 18.6 18.6
Price/Book ratio 2.9 2.9
5 Yr. EPS Growth Rate (%)14.6 14.5
Current Yield (%)2.0 2.0
Debt to Equity 1.2 1.2
Number of Stocks 505 502
Beta (5 Years, Monthly)1.00 1.00
Consistency (5 Years, Monthly)1.67 1.00
Sharpe Ratio (5 Years, Monthly)1.17 1.18
Information Ratio (5 Years, Monthly)-7.52 -
Up Market Capture (5 Years, Monthly)99.63 -
Down Market Capture (5 Years, Monthly)100.37 -
Sector Weights (%)
Vanguard 500 Index Fund (VFINX)S&P 500
0.0 5.0 10.0 15.0 20.0 25.0
Cash
Utilities
Telecommunication Services
Materials
Information Technology
Industrials
Health Care
Financials
Energy
Consumer Staples
Consumer Discretionary
0.4
3.0
2.4
3.4
19.6
10.2
13.8
16.3
9.7
9.5
11.6
0.0
3.0
2.4
3.5
19.7
10.3
13.9
16.3
9.7
9.5
11.7
Distribution of Market Capitalization (%)
Vanguard 500 Index Fund (VFINX)S&P 500
0.0
15.0
30.0
45.0
60.0
>$75 Bil $20 Bil -
$75 Bil
$5 Bil -
$20 Bil
$0 -
$5 Bil
Cash
48.7
34.7
16.1
0.5 0.0
48.5
34.5
16.0
0.5 0.4
Manager Evaluation
Vanguard 500 Index Fund (VFINX) vs. S&P 500
As of September 30, 2014
14
Historical Performance
Buy and Hold Attribution
Risk and Return (Oct - 2009 - Sep - 2014)Three Year Rolling Percentile Ranking
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004
Vanguard Windsor II (VWNFX)-0.2 7.4 17.6 22.7 14.7 7.9 30.7 16.7 2.7 10.6 27.1 -36.7 2.2 18.2 7.0 18.3
Russell 1000 Value Index -0.2 8.1 18.9 23.9 15.3 7.8 32.5 17.5 0.4 15.5 19.7 -36.8 -0.2 22.2 7.1 16.5
Large-Cap Value Equity Peer Group Median -0.3 6.1 16.2 21.8 14.0 7.5 31.7 15.0 -1.5 13.5 25.4 -37.3 2.9 16.6 6.1 12.5
Vanguard Windsor II (VWNFX) Rank 47 27 35 38 35 41 62 29 17 86 42 45 56 36 38 7
13.8
14.4
15.0
15.6
16.2
Return (%)14.5 14.6 14.7
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 Rank12/04 12/05 12/06 12/07 12/08 12/09 12/10 12/11 12/12 9/14
Average Active Weight
0.0 6.0 12.0-6.0-12.0
Utilities
Telecommunication Services
Other
Materials
Information Technology
Industrials
Health Care
Financials
Energy
Consumer Staples
Consumer Discretionary
Cash
-2.3
0.4
0.3
-1.8
3.8
-2.2
3.6
-7.5
-2.1
2.5
3.0
2.2
Allocation
(Total: 0.5)
0.0 0.3 0.6-0.3-0.6
0.1
0.0
0.0
0.0
0.2
0.1
0.1
-0.2
0.2
0.1
0.0
0.0
Stock
(Total: -0.3)
0.0 0.4 0.8-0.4-0.8
-0.1
0.0
0.0
0.0
0.0
0.4
0.1
0.0
-0.3
-0.3
-0.2
0.0
Vanguard Windsor II (VWNFX)
0.0 0.3 0.6 0.9-0.3-0.6-0.9
0.0
0.0
0.0
0.1
0.2
0.5
0.2
-0.2
-0.1
-0.2
-0.3
0.0
Manager Evaluation
Vanguard Windsor II (VWNFX) vs. Russell 1000 Value Index
As of September 30, 2014
Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading.
15
Top Ten Equity Holdings
Portfolio
Weight
(%)
Benchmark
Weight
(%)
Active
Weight
(%)
Quarterly
Return
(%)
Microsoft Corp 3.0 1.4 1.7 11.9
JPMorgan Chase & Co 2.7 2.3 0.4 5.3
Pfizer Inc 2.6 1.9 0.7 0.5
Intel Corp 2.6 1.6 1.0 13.5
Wells Fargo & Co 2.5 2.5 0.0 -0.6
Johnson & Johnson 2.3 2.6 -0.3 2.6
Medtronic Inc 2.3 0.6 1.6 -2.4
Citigroup Inc 2.3 1.6 0.7 10.0
WellPoint Inc 2.2 0.3 1.9 11.6
Philip Morris International Inc 2.2 0.6 1.6 0.1
% of Portfolio 24.6 15.3
Portfolio Characteristics
Portfolio Benchmark
Wtd. Avg. Mkt. Cap ($M)109,816 112,109
Median Mkt. Cap ($M)22,184 6,878
Price/Earnings ratio 15.7 16.5
Price/Book ratio 2.2 2.0
5 Yr. EPS Growth Rate (%)16.0 11.2
Current Yield (%)2.7 2.4
Debt to Equity 1.2 0.9
Number of Stocks 258 690
Beta (5 Years, Monthly)0.97 1.00
Consistency (5 Years, Monthly)43.33 1.00
Sharpe Ratio (5 Years, Monthly)1.09 1.11
Information Ratio (5 Years, Monthly)-0.24 -
Up Market Capture (5 Years, Monthly)96.21 -
Down Market Capture (5 Years, Monthly)95.96 -
Sector Weights (%)
Vanguard Windsor II (VWNFX)Russell 1000 Value Index
0.0 8.0 16.0 24.0 32.0 40.0
Other
Cash
Utilities
Telecommunication Services
Materials
Information Technology
Industrials
Health Care
Financials
Energy
Consumer Staples
Consumer Discretionary
0.3
2.3
3.8
2.7
1.6
13.3
8.5
17.3
21.4
10.6
9.4
8.9
0.0
0.0
6.0
2.3
3.3
9.4
10.2
13.5
29.2
12.9
7.1
6.2
Distribution of Market Capitalization (%)
Vanguard Windsor II (VWNFX)Russell 1000 Value Index
0.0
15.0
30.0
45.0
60.0
>$75 Bil $20 Bil -
$75 Bil
$5 Bil -
$20 Bil
$0 -
$5 Bil
Cash
42.4
31.3
20.1
6.2
0.0
45.4
35.1
15.6
1.7 2.3
Manager Evaluation
Vanguard Windsor II (VWNFX) vs. Russell 1000 Value Index
As of September 30, 2014
16
Historical Performance
Buy and Hold Attribution
Risk and Return (Oct - 2009 - Sep - 2014)Three Year Rolling Percentile Ranking
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004
Vanguard US Growth (VWUSX)0.8 6.5 18.2 23.3 15.0 8.1 35.5 18.4 -0.7 11.5 35.0 -37.8 10.1 1.8 11.2 7.0
Russell 1000 Growth Index 1.5 7.9 19.1 22.4 16.5 8.9 33.5 15.3 2.6 16.7 37.2 -38.4 11.8 9.1 5.3 6.3
Large-Cap Growth Equity Peer Group Median 1.1 5.5 16.7 21.5 15.1 8.5 34.6 14.6 -0.8 15.3 33.4 -38.3 13.8 7.1 6.2 7.7
Vanguard US Growth (VWUSX) Rank 55 35 32 24 52 61 41 16 48 83 40 46 75 90 17 59
12.0
14.0
16.0
18.0
20.0
Return (%)13.2 13.8 14.4 15.0 15.6 16.2 16.8 17.4
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 Rank12/04 12/05 12/06 12/07 12/08 12/09 12/10 12/11 12/12 9/14
Average Active Weight
0.0 5.0 10.0-5.0-10.0
Utilities
Telecommunication Services
Other
Materials
Information Technology
Industrials
Health Care
Financials
Energy
Consumer Staples
Consumer Discretionary
Cash
-0.1
-1.9
0.0
-1.1
3.4
-5.9
1.5
3.4
-0.9
-3.4
2.7
2.4
Allocation
(Total: 0.3)
0.0 0.2 0.4-0.2-0.4
0.0
0.0
0.0
0.0
0.1
0.2
0.1
-0.1
0.1
0.0
0.0
0.0
Stock
(Total: -0.8)
0.0 0.6 1.2-0.6-1.2
0.0
0.0
0.0
-0.2
-0.6
0.0
0.2
0.4
-0.1
-0.3
-0.2
0.0
Vanguard US Growth (VWUSX)
0.0 0.4 0.8-0.4-0.8-1.2
0.0
0.0
0.0
-0.1
-0.5
0.2
0.3
0.3
0.0
-0.3
-0.3
0.0
Manager Evaluation
Vanguard US Growth (VWUSX) vs. Russell 1000 Growth Index
As of September 30, 2014
Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading.
17
Top Ten Equity Holdings
Portfolio
Weight
(%)
Benchmark
Weight
(%)
Active
Weight
(%)
Quarterly
Return
(%)
MasterCard Inc 3.1 0.7 2.3 0.8
Celgene Corp 2.7 0.7 2.0 10.4
Google Inc (Class C)2.5 1.6 0.9 0.4
Visa Inc 2.4 1.1 1.4 1.5
Priceline.Com Inc 2.4 0.6 1.8 -3.7
Gilead Sciences Inc 2.3 1.6 0.7 28.4
Apple Inc 2.3 5.9 -3.7 9.0
Google Inc 2.2 1.6 0.6 0.6
Adobe Systems Inc 2.2 0.3 1.8 -4.4
Qualcomm Inc.2.1 1.2 0.9 -5.1
% of Portfolio 24.1 15.4
Portfolio Characteristics
Portfolio Benchmark
Wtd. Avg. Mkt. Cap ($M)88,048 116,514
Median Mkt. Cap ($M)22,127 8,528
Price/Earnings ratio 27.1 21.9
Price/Book ratio 4.4 4.9
5 Yr. EPS Growth Rate (%)19.8 17.8
Current Yield (%)1.0 1.5
Debt to Equity 2.3 1.4
Number of Stocks 176 674
Beta (5 Years, Monthly)1.10 1.00
Consistency (5 Years, Monthly)46.67 1.00
Sharpe Ratio (5 Years, Monthly)1.00 1.20
Information Ratio (5 Years, Monthly)-0.34 -
Up Market Capture (5 Years, Monthly)104.08 -
Down Market Capture (5 Years, Monthly)118.44 -
Sector Weights (%)
Vanguard US Growth (VWUSX)Russell 1000 Growth Index
0.0 8.0 16.0 24.0 32.0 40.0
Other
Cash
Utilities
Telecommunication Services
Materials
Information Technology
Industrials
Health Care
Financials
Energy
Consumer Staples
Consumer Discretionary
0.0
3.0
0.0
0.5
2.9
31.3
6.1
15.4
8.8
4.6
6.7
20.6
0.0
0.0
0.1
2.4
4.2
28.4
11.9
13.6
5.1
5.7
10.3
18.2
Distribution of Market Capitalization (%)
Vanguard US Growth (VWUSX)Russell 1000 Growth Index
0.0
15.0
30.0
45.0
60.0
>$75 Bil $20 Bil -
$75 Bil
$5 Bil -
$20 Bil
$0 -
$5 Bil
Cash
43.0
31.4
21.3
4.2
0.0
34.3 36.0
24.2
2.5 3.0
Manager Evaluation
Vanguard US Growth (VWUSX) vs. Russell 1000 Growth Index
As of September 30, 2014
18
Historical Performance
Three Year Rolling Percentile Ranking Relative Performance
Historical Statistics (Oct-2009 - Sep-2014)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004
Vanguard Mid-Cap Index Fund (VIMSX)-1.2 6.5 15.7 23.1 16.9 10.2 35.0 15.8 -2.1 25.5 40.2 -41.8 6.0 13.6 13.9 20.4
Vanguard Mid-Cap Index Fund Blended Benchmark -1.1 6.7 15.9 23.4 17.1 10.3 35.4 16.0 -1.9 25.7 40.5 -41.8 6.2 13.7 13.9 20.5
Mid-Cap Equity Equity Peer Group Median -3.3 1.4 9.4 20.8 14.8 9.1 34.6 14.6 -2.7 21.8 34.2 -40.2 8.1 11.9 9.4 15.3
Vanguard Mid-Cap Index Fund (VIMSX) Rank 19 10 13 23 16 24 48 40 45 26 32 61 59 38 17 18
Cumulative Annualized Over/Under Relative Performance
Over/Under Performance
0.0
0.2
0.4
-0.2
-0.4Return (%)12/04 12/05 12/06 12/07 12/08 12/09 12/10 12/11 12/12 9/14
Vanguard Mid-Cap Index Fund (VIMSX)
Vanguard Mid-Cap Index Fund Blended Benchmark
0
25
50
75
100Return Percentile Rank12/04 12/05 12/06 12/07 12/08 12/09 12/10 12/11 12/12 9/14
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard Mid-Cap Index Fund (VIMSX)16.9 16.4 17.2 -0.2 1.0 1.0 0.1 -3.5 9.9 0.0 16y 4m
Vanguard Mid-Cap Index Fund Blended Benchmark 17.1 16.4 17.5 0.0 1.0 1.1 0.0 N/A 9.9 0.0 16y 4m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 16.4 -1.1 0.0 25.0 16y 4m
Manager Evaluation
Vanguard Mid-Cap Index Fund (VIMSX) vs. Vanguard Mid-Cap Index Fund Blended Benchmark
As of September 30, 2014
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.
19
Top Ten Equity Holdings
Portfolio
Weight
(%)
Benchmark
Weight
(%)
Active
Weight
(%)
Quarterly
Return
(%)
Vertex Pharmaceuticals Inc 0.9 0.9 0.0 18.6
Avago Technologies Ltd 0.7 0.7 0.0 21.2
Chipotle Mexican Grill Inc 0.7 0.7 0.0 12.5
Health Care REIT Inc.0.7 0.7 0.0 0.8
Moody's Corp.0.6 0.6 0.0 8.1
Alcoa Inc 0.6 0.6 0.0 8.3
AvalonBay Communities Inc.0.6 0.6 0.0 0.0
Delphi Automotive PLC 0.6 0.6 0.0 -10.4
Cerner Corp 0.6 0.6 0.0 15.5
Sherwin-Williams Co (The)0.6 0.6 0.0 6.1
% of Portfolio 6.5 6.5
Portfolio Characteristics
Portfolio Benchmark
Wtd. Avg. Mkt. Cap ($M)11,209 11,277
Median Mkt. Cap ($M)8,696 8,696
Price/Earnings ratio 21.0 21.0
Price/Book ratio 2.9 2.9
5 Yr. EPS Growth Rate (%)16.8 16.8
Current Yield (%)1.4 1.4
Debt to Equity 1.0 1.0
Number of Stocks 368 367
Beta (5 Years, Monthly)1.02 1.00
Consistency (5 Years, Monthly)35.00 1.00
Sharpe Ratio (5 Years, Monthly)1.09 1.14
Information Ratio (5 Years, Monthly)-0.25 -
Up Market Capture (5 Years, Monthly)100.74 -
Down Market Capture (5 Years, Monthly)103.21 -
Sector Weights (%)
Vanguard Mid-Cap Index Fund (VIMSX)
CRSP U.S. Mid Cap TR Index
0.0 5.0 10.0 15.0 20.0 25.0
Cash
Utilities
Telecommunication Services
Materials
Information Technology
Industrials
Health Care
Financials
Energy
Consumer Staples
Consumer Discretionary
0.6
5.2
1.1
6.4
14.4
13.0
10.6
16.9
7.1
6.0
18.5
0.0
5.3
1.1
6.5
14.5
13.1
10.6
17.0
7.2
6.0
18.6
Distribution of Market Capitalization (%)
Vanguard Mid-Cap Index Fund (VIMSX)
CRSP U.S. Mid Cap TR Index
0.0
50.0
100.0
150.0
$20 Bil -
$75 Bil
$5 Bil -
$20 Bil
$0 -
$5 Bil
Cash
7.0
89.8
3.2 0.07.0
89.2
3.2 0.6
Manager Evaluation
Vanguard Mid-Cap Index Fund (VIMSX) vs. CRSP U.S. Mid Cap TR Index
As of September 30, 2014
20
Historical Performance
Three Year Rolling Percentile Ranking Relative Performance
Historical Statistics (Oct-2009 - Sep-2014)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004
Vanguard Small-Cap Index Fund (NAESX)-5.5 0.5 9.3 23.4 16.1 9.7 37.6 18.0 -2.8 27.7 36.1 -36.1 1.2 15.6 7.4 19.9
Vanguard Small-Cap Index Fund Blended Benchmark -5.5 0.7 9.6 23.6 16.2 9.8 37.8 18.2 -2.8 27.8 36.1 -36.2 1.2 15.8 7.5 20.0
Small-Cap Equity Peer Group Median -6.6 -4.4 4.2 20.8 14.3 8.0 39.0 14.6 -3.4 26.4 31.8 -38.2 0.3 13.5 6.3 16.3
Vanguard Small-Cap Index Fund (NAESX) Rank 26 8 11 22 20 11 59 24 46 39 34 41 47 37 40 32
Cumulative Annualized Over/Under Relative Performance
Over/Under Performance
0.0
0.2
0.4
-0.2
-0.4Return (%)12/04 12/05 12/06 12/07 12/08 12/09 12/10 12/11 12/12 9/14
Vanguard Small-Cap Index Fund (NAESX)
Vanguard Small-Cap Index Fund Blended Benchmark
0
25
50
75
100Return Percentile Rank12/04 12/05 12/06 12/07 12/08 12/09 12/10 12/11 12/12 9/14
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard Small-Cap Index Fund (NAESX)16.1 17.9 16.8 -0.1 1.0 0.9 0.0 -3.2 11.0 10.0 46y 8m
Vanguard Small-Cap Index Fund Blended Benchmark 16.2 17.9 16.9 0.0 1.0 0.9 0.0 N/A 11.0 0.0 46y 8m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 17.9 -0.9 0.0 25.0 46y 8m
Manager Evaluation
Vanguard Small-Cap Index Fund (NAESX) vs. Vanguard Small-Cap Index Fund Blended Benchmark
As of September 30, 2014
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.
21
Top Ten Equity Holdings
Portfolio
Weight
(%)
Benchmark
Weight
(%)
Active
Weight
(%)
Quarterly
Return
(%)
Cooper Companies Inc. (The)0.3 0.3 0.0 14.9
Trinity Industries Inc.0.3 0.3 0.0 7.1
Medivation Inc 0.3 0.3 0.0 28.3
Arthur J. Gallagher & Co.0.3 0.3 0.0 -1.9
Snap-On Inc 0.3 0.3 0.0 2.5
Gannett Co Inc.0.3 0.3 0.0 -4.7
Harman International Industries Inc.0.3 0.3 0.0 -8.5
E*TRADE Financial Corporation 0.2 0.2 0.0 6.3
WhiteWave Foods Co (The)0.2 0.2 0.0 12.2
Packaging Corp Of America 0.2 0.2 0.0 -10.2
% of Portfolio 2.6 2.6
Portfolio Characteristics
Portfolio Benchmark
Wtd. Avg. Mkt. Cap ($M)3,217 3,228
Median Mkt. Cap ($M)1,691 1,704
Price/Earnings ratio 20.4 20.4
Price/Book ratio 2.4 2.4
5 Yr. EPS Growth Rate (%)13.0 13.0
Current Yield (%)1.5 1.5
Debt to Equity 1.0 1.0
Number of Stocks 1,483 1,463
Beta (5 Years, Monthly)1.02 1.00
Consistency (5 Years, Monthly)31.67 1.00
Sharpe Ratio (5 Years, Monthly)0.93 0.99
Information Ratio (5 Years, Monthly)-0.70 -
Up Market Capture (5 Years, Monthly)99.90 -
Down Market Capture (5 Years, Monthly)103.81 -
Sector Weights (%)
Vanguard Small-Cap Index (NAESX)
CRSP U.S. Small Cap TR Index
0.0 5.0 10.0 15.0 20.0 25.0 30.0
Cash
Utilities
Telecommunication Services
Materials
Information Technology
Industrials
Health Care
Financials
Energy
Consumer Staples
Consumer Discretionary
0.3
3.7
0.6
6.2
16.7
15.9
10.8
23.7
5.4
2.9
13.7
0.0
3.7
0.6
6.2
16.8
15.9
10.9
23.9
5.4
2.9
13.8
Distribution of Market Capitalization (%)
Vanguard Small-Cap Index (NAESX)
CRSP U.S. Small Cap TR Index
0.0
50.0
100.0
150.0
$5 Bil -
$20 Bil
$0 -
$5 Bil
Cash
16.4
83.6
0.0
16.4
83.3
0.3
Manager Evaluation
Vanguard Small-Cap Index (NAESX) vs. CRSP U.S. Small Cap TR Index
As of September 30, 2014
22
Historical Performance
Buy and Hold Attribution
Risk and Return (Oct - 2009 - Sep - 2014)Three Year Rolling Percentile Ranking
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004
Vanguard International Growth (VWIGX)-4.9 -2.7 4.4 15.0 8.3 7.9 22.9 20.0 -13.7 15.7 41.6 -44.9 16.0 25.9 15.0 19.0
MSCI AC World ex USA (Net)-5.3 0.0 4.8 11.8 6.0 7.1 15.3 16.8 -13.7 11.2 41.4 -45.5 16.7 26.7 16.6 20.9
International Equity Peer Group Median -5.8 -1.7 4.3 13.6 6.8 6.6 20.8 18.4 -13.7 11.6 33.5 -44.4 11.9 25.2 15.0 18.5
Vanguard International Growth (VWIGX) Rank 24 67 50 24 25 25 31 32 51 25 23 54 28 43 50 45
2.0
4.0
6.0
8.0
10.0
12.0
Return (%)14.7 15.4 16.1 16.8 17.5 18.2 18.9 19.6 20.3
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 Rank12/04 12/05 12/06 12/07 12/08 12/09 12/10 12/11 12/12 9/14
Average Active Weight
0.0 10.0 20.0-10.0-20.0
Utilities
Telecommunication Services
Materials
Information Technology
Industrials
Health Care
Financials
Energy
Consumer Staples
Consumer Discretionary
Cash
-3.5
-1.2
-2.0
8.2
2.5
-1.1
-2.2
-5.7
-4.4
6.9
2.5
Allocation
(Total: 0.3)
0.0 0.3 0.6-0.3-0.6
0.0
0.0
0.1
0.1
0.0
-0.1
0.0
0.3
0.0
-0.2
0.1
Stock
(Total: 0.3)
0.0 0.7 1.4-0.7-1.4
0.0
0.1
-0.5
0.8
-0.2
0.2
0.1
0.0
-0.1
-0.1
0.0
0.0 0.5 1.0 1.5-0.5-1.0
0.0
0.0
-0.4
0.9
-0.2
0.1
0.1
0.3
-0.1
-0.3
0.1
Manager Evaluation
Vanguard International Growth (VWIGX) vs. MSCI AC World ex USA (Net)
As of September 30, 2014
Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading.
23
Total Attribution
0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4-0.2-0.4-0.6-0.8-1.0-1.2
Pacific
Other
North America
Middle East
Frontier Markets
Europe ex EMU
EMU
EM Latin America
EM Europe + Middle East + Africa
EM Asia
Cash
0.3
0.0
-0.1
0.1
0.1
-0.6
-0.1
-0.1
0.1
0.8
0.1
Performance Attribution
Average Active Weight
0.0 5.0 10.0 15.0-5.0-10.0
Pacific
Other
North America
Middle East
Frontier Markets
Europe ex EMU
EMU
EM Latin America
EM Europe + Middle East + Africa
EM Asia
Cash
-5.6
0.0
-3.9
0.7
0.5
5.6
0.6
-0.1
-2.2
2.1
2.5
Allocation
(Total: 0.2)
0.0 0.2 0.4-0.2-0.4
-0.1
0.0
0.0
0.0
0.1
0.0
0.0
0.0
0.1
0.1
0.1
Stock
(Total: 0.4)
0.0 0.5 1.0 1.5-0.5-1.0-1.5
0.4
0.0
0.0
0.0
0.0
-0.5
-0.1
-0.1
0.0
0.7
0.0
Manager Evaluation
Vanguard International Growth (VWIGX) vs. MSCI AC World ex USA (Net)
1 Quarter Ending September 30, 2014
24
Top Ten Equity Holdings
Portfolio
Weight
(%)
Benchmark
Weight
(%)
Active
Weight
(%)
Quarterly
Return
(%)
Baidu Inc 3.9 0.0 3.9 16.8
Tencent Holdings LTD 2.9 0.4 2.5 -2.5
AIA Group Ltd 2.6 0.3 2.2 3.3
Softbank Corp 2.2 0.4 1.8 -5.6
Smc Corp 1.9 0.1 1.8 3.3
Amazon.com Inc 1.6 0.0 1.6 -0.7
Roche Holding AG 1.6 1.1 0.4 -0.7
Atlas Copco AB 1.5 0.1 1.4 -0.6
Banco Popular Espanol SA, Madrid 1.5 0.1 1.4 -8.0
Unicredit SPA 1.5 0.2 1.3 -5.5
% of Portfolio 21.0 2.7
Portfolio Characteristics
Portfolio Benchmark
Wtd. Avg. Mkt. Cap ($M)51,462 57,117
Median Mkt. Cap ($M)22,534 7,225
Price/Earnings ratio 17.0 14.7
Price/Book ratio 2.8 2.1
5 Yr. EPS Growth Rate (%)20.5 13.8
Current Yield (%)2.2 3.1
Debt to Equity 1.2 1.2
Number of Stocks 181 1,829
Beta (5 Years, Monthly)1.07 1.00
Consistency (5 Years, Monthly)51.67 1.00
Sharpe Ratio (5 Years, Monthly)0.54 0.44
Information Ratio (5 Years, Monthly)0.70 -
Up Market Capture (5 Years, Monthly)109.59 -
Down Market Capture (5 Years, Monthly)100.09 -
Sector Weights (%)
Vanguard International Growth (VWIGX)
MSCI AC World ex USA (Net)
0.0 6.0 12.0 18.0 24.0 30.0 36.0
Cash
Utilities
Telecommunication Services
Materials
Information Technology
Industrials
Health Care
Financials
Energy
Consumer Staples
Consumer Discretionary
2.7
0.1
4.2
5.7
16.4
13.4
7.7
24.9
3.7
5.3
15.9
0.0
3.6
5.3
8.0
7.0
10.9
8.7
27.0
9.0
9.8
10.6
Distribution of Market Capitalization (%)
Vanguard International Growth (VWIGX)
MSCI AC World ex USA (Net)
0.0
15.0
30.0
45.0
60.0
>$75 Bil $20 Bil -
$75 Bil
$5 Bil -
$20 Bil
$0 -
$5 Bil
Cash
25.5
38.4
29.3
6.8
0.0
23.0
41.9
25.4
7.0
2.7
Manager Evaluation
Vanguard International Growth (VWIGX) vs. MSCI AC World ex USA (Net)
As of September 30, 2014
25
Vanguard
International Growth
(VWIGX)
MSCI AC World ex
USA (Net)
Australia 1.2 5.3
Hong Kong 5.3 3.5
Japan 12.7 14.8
New Zealand 0.0 0.1
Singapore 0.4 1.1
Pacific 19.6 24.8
Austria 0.0 0.2
Belgium 0.0 0.9
Finland 0.8 0.6
France 6.9 6.6
Germany 5.2 6.2
Ireland 0.3 0.2
Italy 2.7 1.7
Netherlands 1.0 2.1
Portugal 0.2 0.1
Spain 3.4 2.5
EMU 20.5 21.2
Denmark 1.8 1.1
Norway 1.8 0.6
Sweden 5.9 2.2
Switzerland 6.9 6.5
United Kingdom 14.3 15.1
Europe ex EMU 30.7 25.5
Canada 1.9 7.6
United States 1.7 0.0
Israel 1.1 0.4
Middle East 1.1 0.4
Developed Markets 75.6 79.5
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 0.5 1.2
Peru 0.8 0.1
Virgin Islands 0.0 0.0
EM Latin America 3.9 4.0
China 8.2 2.8
India 2.6 1.5
Indonesia 0.3 0.6
Korea 2.2 3.3
Malaysia 0.0 0.9
Philippines 0.0 0.3
Taiwan 1.1 2.6
Thailand 0.9 0.5
EM Asia 15.3 12.3
Czech Republic 0.0 0.1
Egypt 0.0 0.1
Greece 0.0 0.1
Hungary 0.0 0.0
Poland 0.0 0.4
Qatar 0.0 0.1
Russia 0.5 1.0
South Africa 0.4 1.6
Turkey 0.9 0.3
United Arab Emirates 0.0 0.1
EM Europe + Middle East + Africa 1.7 3.9
Emerging Markets 20.9 20.2
Frontier Markets 0.6 0.0
Cash 2.7 0.0
Other 0.2 0.2
Total 100.0 100.0
Manager Evaluation
Vanguard International Growth (VWIGX) vs. MSCI AC World ex USA (Net)
As of September 30, 2014
26
Historical Performance
Three Year Rolling Percentile Ranking Relative Performance
Historical Statistics (Oct-2009 - Sep-2014)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004
Vanguard Total Bond Market Index Fund (VBMFX)0.1 4.0 3.8 2.2 3.9 4.5 -2.3 4.0 7.6 6.4 5.9 5.1 6.9 4.3 2.4 4.2
Vanguard Total Bond Market Index Fund Benchmark 0.2 4.0 4.0 2.5 4.2 4.6 -2.0 4.3 7.9 6.6 5.9 5.2 7.0 4.3 2.4 4.3
Market Duration Fixed Income Peer Group Median 0.0 4.2 4.6 3.6 4.9 4.8 -1.8 7.0 6.7 7.5 12.5 -1.7 5.7 4.2 2.1 4.3
Vanguard Total Bond Market Index Fund (VBMFX) Rank 34 68 76 90 85 66 74 91 18 82 93 13 18 45 32 57
Cumulative Annualized Over/Under Relative Performance
Over/Under Performance
0.0
0.3
0.6
-0.3
-0.6Return (%)12/04 12/05 12/06 12/07 12/08 12/09 12/10 12/11 12/12 9/14
Vanguard Total Bond Market Index Fund (VBMFX)
Vanguard Total Bond Market Index Fund Benchmark
0
25
50
75
100Return Percentile Rank12/04 12/05 12/06 12/07 12/08 12/09 12/10 12/11 12/12 9/14
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)3.9 3.1 3.8 -0.3 1.0 1.2 0.2 -1.3 1.3 30.0 27y 9m
Vanguard Total Bond Market Index Fund Benchmark 4.2 3.0 4.1 0.0 1.0 1.4 0.0 N/A 1.2 0.0 27y 9m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 3.0 -1.4 0.0 20.0 27y 9m
Manager Evaluation
Vanguard Total Bond Market Index Fund (VBMFX) vs. Vanguard Total Bond Market Index Fund Benchmark
As of September 30, 2014
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.
27
Credit Quality Distribution (%)
Vanguard Total Bond Market Index (VBMFX)
Barclays U.S. Aggregate Float Adjusted
0.0
25.0
50.0
75.0
100.0
AAAAAABBBBBBBelow BNot Rated68.5
5.4
12.8 13.3
0.0 0.0 0.0 0.0
68.9
4.3
13.1 13.7
0.0 0.0 0.0 0.0
Portfolio Characteristics
Portfolio Benchmark
Effective Duration 5.6 5.6
Avg. Maturity 7.7 7.7
Avg. Quality AA+AA+
Yield To Maturity (%)2.2 2.3
Sector Distribution (%)
Vanguard Total Bond Market Index (VBMFX)
Barclays U.S. Aggregate Float Adjusted
0.0
15.0
30.0
45.0
60.0
TreasuriesTIPSAgenciesCreditHigh YieldMBSABSNon-USEmergingMunicipalsCashOtherCMBS39.6
0.0
4.8
21.6
0.0
21.0
0.6
7.6
2.6 0.0 0.0 0.0 2.2
41.9
0.0
3.7
26.5
0.0
17.0
0.6
6.9
0.0 0.0 0.0 1.1 2.3
Maturity Distribution (%)
Vanguard Total Bond Market Index (VBMFX)
Barclays U.S. Aggregate Float Adjusted
0.0
15.0
30.0
45.0
60.0
< 1 Yr1 < 3 Yrs3 < 5 Yrs5 < 10 Yrs10 < 20 Yrs> 20 Yrs0.0
27.5
21.2
36.4
3.5
11.4
1.8
28.2
20.4
34.3
3.5
11.8
Manager Evaluation
Vanguard Total Bond Market Index (VBMFX) vs. Barclays U.S. Aggregate Float Adjusted
As of September 30, 2014
28
Historical Performance
Three Year Rolling Percentile Ranking Relative Performance
Historical Statistics (Oct-2009 - Sep-2014)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004
Vanguard Retirement Savings Trust 0.5 1.3 1.7 2.1 2.4 3.2 1.7 2.4 2.9 2.9 3.0 4.3 4.5 4.3 4.1 3.9
Ryan 3 Yr GIC Master 0.3 0.8 1.0 1.3 2.1 3.1 1.1 1.5 2.4 3.5 4.5 4.8 4.5 3.8 3.2 3.4
Short Duration Fixed Income Peer Group -0.1 0.8 1.2 1.6 2.1 2.9 0.3 2.7 1.4 3.4 6.7 -0.1 5.4 4.2 1.6 1.8
Vanguard Retirement Savings Trust Rank 1 21 22 34 41 28 5 55 8 68 79 28 70 38 1 1
Cumulative Annualized Over/Under Relative Performance
Over/Under Performance
0.0
0.7
1.4
2.1
-0.7
-1.4Return (%)12/04 12/05 12/06 12/07 12/08 12/09 12/10 12/11 12/12 9/14
Vanguard Retirement Savings Trust Ryan 3 Yr GIC Master
0
25
50
75
100Return Percentile Rank12/04 12/05 12/06 12/07 12/08 12/09 12/10 12/11 12/12 9/14
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard Retirement Savings Trust 2.4 0.3 2.3 1.5 0.4 9.0 0.3 1.0 0.0 75.0 11y 9m
Ryan 3 Yr GIC Master 2.1 0.5 2.0 0.0 1.0 3.8 0.0 N/A 0.0 0.0 11y 9m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.0 0.0 N/A 0.5 -3.8 0.0 0.0 11y 9m
Manager Evaluation
Vanguard Retirement Savings Trust vs. Ryan 3 Yr GIC Master
As of September 30, 2014
29
Historical Performance
Three Year Rolling Percentile Ranking Relative Performance
Historical Statistics (Oct-2009 - Sep-2014)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004
Vanguard Balanced Index Fund (VBINX)0.0 5.7 11.9 14.3 11.1 7.2 17.9 11.3 4.1 13.1 20.1 -22.2 6.2 11.0 4.7 9.3
Vanguard Balanced Index Fund Benchmark 0.1 5.9 12.2 14.6 11.3 7.3 18.2 11.6 4.1 13.5 19.7 -22.0 6.3 11.1 4.9 9.2
60% Equity / 40% Fixed Peer Group Median -0.8 3.6 9.6 13.7 10.0 6.5 19.2 10.7 0.8 12.3 21.6 -23.1 6.0 9.7 5.0 8.5
Vanguard Balanced Index Fund (VBINX) Rank 10 10 13 33 19 19 70 39 10 34 63 41 49 30 58 36
Cumulative Annualized Over/Under Relative Performance
Over/Under Performance
0.0
0.4
0.8
-0.4
-0.8Return (%)12/04 12/05 12/06 12/07 12/08 12/09 12/10 12/11 12/12 9/14
Vanguard Balanced Index Fund (VBINX)
Vanguard Balanced Index Fund Benchmark
0
25
50
75
100Return Percentile Rank12/04 12/05 12/06 12/07 12/08 12/09 12/10 12/11 12/12 9/14
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard Balanced Index Fund (VBINX)11.1 8.2 10.9 -0.1 1.0 1.3 0.2 -1.1 4.3 25.0 21y 10m
Vanguard Balanced Index Fund Benchmark 11.3 8.3 11.1 0.0 1.0 1.3 0.0 N/A 4.3 0.0 21y 10m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 8.3 -1.3 0.0 15.0 21y 10m
Manager Evaluation
Vanguard Balanced Index Fund (VBINX) vs. Vanguard Balanced Index Fund Benchmark
As of September 30, 2014
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.
30
Top Ten Equity Holdings
Portfolio
Weight
(%)
Benchmark
Weight
(%)
Active
Weight
(%)
Quarterly
Return
(%)
Apple Inc 2.7 2.8 -0.1 9.0
Exxon Mobil Corp 1.8 1.9 -0.1 -5.9
Microsoft Corp 1.5 1.6 -0.1 11.9
Johnson & Johnson 1.3 1.4 -0.1 2.6
Wells Fargo & Co 1.2 1.3 -0.1 -0.6
General Electric Co 1.1 1.2 -0.1 -1.7
Berkshire Hathaway Inc 1.0 0.7 0.3 9.1
Procter & Gamble Co (The)1.0 1.1 -0.1 7.4
JPMorgan Chase & Co 1.0 1.1 -0.1 5.3
Chevron Corp 1.0 1.1 -0.1 -7.8
% of Portfolio 13.6 14.0
Portfolio Characteristics
Portfolio Benchmark
Wtd. Avg. Mkt. Cap ($M)100,939 105,860
Median Mkt. Cap ($M)1,159 828
Price/Earnings ratio 18.9 18.9
Price/Book ratio 2.8 2.8
5 Yr. EPS Growth Rate (%)14.8 15.1
Current Yield (%)1.9 1.9
Debt to Equity 0.9 0.8
Number of Stocks 3,286 3,792
Beta (5 Years, Monthly)0.58 1.00
Consistency (5 Years, Monthly)35.00 1.00
Sharpe Ratio (5 Years, Monthly)1.36 1.15
Information Ratio (5 Years, Monthly)-0.82 -
Up Market Capture (5 Years, Monthly)62.11 -
Down Market Capture (5 Years, Monthly)53.28 -
Sector Weights (%)
Vanguard Balanced Index Fund (VBINX) - Equity Holdings
CRSP U.S. Total Market TR Index
0.0 5.0 10.0 15.0 20.0 25.0
Cash
Utilities
Telecommunication Services
Materials
Information Technology
Industrials
Health Care
Financials
Energy
Consumer Staples
Consumer Discretionary
4.9
2.9
2.1
3.6
18.0
10.6
12.9
16.8
8.6
7.9
11.6
0.0
3.0
2.2
3.8
19.0
11.1
13.6
17.7
9.0
8.3
12.2
Distribution of Market Capitalization (%)
Vanguard Balanced Index Fund (VBINX) - Equity Holdings
CRSP U.S. Total Market TR Index
0.0
15.0
30.0
45.0
60.0
>$75 Bil $20 Bil -
$75 Bil
$5 Bil -
$20 Bil
$0 -
$5 Bil
Cash
39.6
28.8
19.4
12.3
0.0
37.7
27.4
18.5
11.5
4.9
Manager Evaluation
Vanguard Balanced Index Fund (VBINX) - Equity Holdings vs. CRSP U.S. Total Market TR Index
As of September 30, 2014
31
Credit Quality Distribution (%)
Vanguard Balanced Index Fund (VBINX) - Fixed Income Holdings
Barclays U.S. Aggregate Float Adjusted
0.0
25.0
50.0
75.0
100.0
AAAAAABBBBBBBelow BNot Rated68.5
5.4
12.8 13.3
0.0 0.0 0.0 0.0
69.5
4.2
12.9 13.4
0.0 0.0 0.0 0.0
Portfolio Characteristics
Portfolio Benchmark
Effective Duration 5.6 5.6
Avg. Maturity 7.7 7.7
Avg. Quality AA+AA+
Yield To Maturity (%)2.3 2.3
Sector Distribution (%)
Vanguard Balanced Index Fund (VBINX) - Fixed Income Holdings
Barclays U.S. Aggregate Float Adjusted
0.0
15.0
30.0
45.0
60.0
TreasuriesTIPSAgenciesCreditHigh YieldMBSABSNon-USEmergingMunicipalsCashOtherCMBS39.6
0.0
4.8
21.6
0.0
21.0
0.6
7.6
2.6 0.0 0.0 0.0 2.2
40.0
0.0
3.6
25.7
0.0
20.9
3.1 5.7
0.0 0.0 0.0 1.0 0.0
Maturity Distribution (%)
Vanguard Balanced Index Fund (VBINX) - Fixed Income Holdings
Barclays U.S. Aggregate Float Adjusted
0.0
15.0
30.0
45.0
60.0
< 1 Yr1 < 3 Yrs3 < 5 Yrs5 < 10 Yrs10 < 20 Yrs> 20 Yrs0.0
27.5
21.2
36.4
3.5
11.4
24.1
18.7 19.7
8.8
28.7
0.0
Manager Evaluation
Vanguard Balanced Index Fund (VBINX) - Fixed Income Holdings vs. Barclays U.S. Aggregate Float Adjusted
As of September 30, 2014
32
Historical Performance
Three Year Rolling Percentile Ranking Risk and Return (Oct-2009 - Sep-2014)
Historical Statistics (Oct-2009 - Sep-2014)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004
Vanguard Target Retirement Income (VTINX)-0.4 4.0 6.5 7.4 7.0 5.5 5.9 8.2 5.2 9.4 14.3 -10.9 8.2 6.4 3.3 6.8
Vanguard Target Income Composite Index -0.4 4.1 6.7 7.5 7.1 5.5 6.0 8.4 5.3 9.4 14.3 -11.3 8.1 6.5 3.4 6.9
35% Equity / 65% Fixed Peer Group Median -0.5 3.6 7.1 9.2 7.8 5.7 10.7 8.2 2.8 9.8 16.8 -13.2 6.0 7.5 3.7 6.2
Vanguard Target Retirement Income (VTINX) Rank 43 40 64 91 72 57 93 50 12 58 68 34 15 73 63 37
6.8
7.0
7.2
7.4
Return (%)3.9 4.0
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 Rank12/04 12/05 12/06 12/07 12/08 12/09 12/10 12/11 12/12 9/14
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard Target Retirement Income (VTINX)7.0 3.9 6.8 -0.1 1.0 1.7 0.1 -1.0 1.5 35.0 10y 11m
Vanguard Target Income Composite Index 7.1 4.0 6.9 0.0 1.0 1.7 0.0 N/A 1.5 0.0 10y 11m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 4.0 -1.7 0.0 20.0 10y 11m
Manager Evaluation
Vanguard Target Retirement Income (VTINX) vs. Vanguard Target Income Composite Index
As of September 30, 2014
33
Historical Performance
Three Year Rolling Percentile Ranking Risk and Return (Oct-2009 - Sep-2014)
Historical Statistics (Oct-2009 - Sep-2014)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004
Vanguard Target Retirement 2010 (VTENX)-0.5 4.2 7.5 9.6 8.2 N/A 9.1 10.1 3.4 11.4 19.3 -20.7 7.7 N/A N/A N/A
Vanguard Target 2010 Composite Index -0.5 4.3 7.8 9.7 8.3 N/A 9.3 10.2 3.3 11.5 19.3 -20.9 7.7 N/A N/A N/A
40% Equity / 60% Fixed Peer Group Median -0.6 3.6 7.6 10.1 8.3 5.9 12.5 8.7 2.4 10.4 17.4 -15.5 5.8 7.9 4.0 6.7
Vanguard Target Retirement 2010 (VTENX) Rank 47 36 52 66 53 N/A 90 32 32 31 36 80 24 N/A N/A N/A
8.1
8.2
8.3
8.4
8.5
Return (%)6.3 6.4
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 Rank12/04 12/05 12/06 12/07 12/08 12/09 12/10 12/11 12/12 9/14
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard Target Retirement 2010 (VTENX)8.2 6.3 8.1 0.0 1.0 1.3 0.1 -0.8 3.3 35.0 8y 3m
Vanguard Target 2010 Composite Index 8.3 6.4 8.2 0.0 1.0 1.3 0.0 N/A 3.3 0.0 8y 3m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 6.4 -1.3 0.0 25.0 8y 3m
Manager Evaluation
Vanguard Target Retirement 2010 (VTENX) vs. Vanguard Target 2010 Composite Index
As of September 30, 2014
34
Historical Performance
Three Year Rolling Percentile Ranking Risk and Return (Oct-2009 - Sep-2014)
Historical Statistics (Oct-2009 - Sep-2014)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004
Vanguard Target Retirement 2015 (VTXVX)-0.7 4.5 9.1 11.7 9.2 6.3 13.0 11.4 1.7 12.5 21.3 -24.1 7.5 11.4 4.9 9.0
Vanguard Target 2015 Composite Index -0.7 4.6 9.3 11.9 9.3 6.3 13.3 11.5 1.6 12.5 21.2 -24.4 7.6 11.5 5.0 9.1
55% Equity / 45% Fixed Peer Group Median -0.8 3.6 9.1 12.8 9.6 6.4 17.5 10.2 1.3 11.7 20.9 -21.2 6.1 9.4 4.7 8.0
Vanguard Target Retirement 2015 (VTXVX) Rank 48 24 52 74 65 52 91 30 42 35 48 72 32 17 44 31
9.1
9.2
9.3
9.4
9.5
Return (%)8.0 8.1
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 Rank12/04 12/05 12/06 12/07 12/08 12/09 12/10 12/11 12/12 9/14
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard Target Retirement 2015 (VTXVX)9.2 8.0 9.2 -0.1 1.0 1.1 0.1 -0.7 4.5 30.0 10y 11m
Vanguard Target 2015 Composite Index 9.3 8.0 9.3 0.0 1.0 1.2 0.0 N/A 4.5 0.0 10y 11m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 8.0 -1.2 0.0 25.0 10y 11m
Manager Evaluation
Vanguard Target Retirement 2015 (VTXVX) vs. Vanguard Target 2015 Composite Index
As of September 30, 2014
35
Historical Performance
Three Year Rolling Percentile Ranking Risk and Return (Oct-2009 - Sep-2014)
Historical Statistics (Oct-2009 - Sep-2014)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004
Vanguard Target Retirement 2020 (VTWNX)-0.8 4.8 10.1 13.3 10.0 N/A 15.8 12.3 0.6 13.1 23.1 -27.0 7.5 N/A N/A N/A
Vanguard Target 2020 Composite Index -0.8 4.9 10.4 13.6 10.3 N/A 16.2 12.5 1.0 13.3 23.3 -27.4 7.6 N/A N/A N/A
65% Equity / 35% Fixed Peer Group Median -0.9 3.7 10.2 14.5 10.6 6.7 20.9 11.3 0.3 12.9 22.7 -25.1 6.2 10.3 5.3 8.9
Vanguard Target Retirement 2020 (VTWNX) Rank 45 23 52 76 70 N/A 91 32 46 46 48 69 39 N/A N/A N/A
9.6
9.9
10.2
10.5
10.8
Return (%)9.2 9.3 9.4
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 Rank12/04 12/05 12/06 12/07 12/08 12/09 12/10 12/11 12/12 9/14
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard Target Retirement 2020 (VTWNX)10.0 9.3 10.0 -0.3 1.0 1.1 0.2 -1.5 5.5 25.0 8y 3m
Vanguard Target 2020 Composite Index 10.3 9.2 10.2 0.0 1.0 1.1 0.0 N/A 5.4 0.0 8y 3m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 9.2 -1.1 0.0 25.0 8y 3m
Manager Evaluation
Vanguard Target Retirement 2020 (VTWNX) vs. Vanguard Target 2020 Composite Index
As of September 30, 2014
36
Historical Performance
Three Year Rolling Percentile Ranking Risk and Return (Oct-2009 - Sep-2014)
Historical Statistics (Oct-2009 - Sep-2014)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004
Vanguard Target Retirement 2025 (VTTVX)-1.0 4.8 10.8 14.6 10.6 6.7 18.1 13.3 -0.4 13.8 24.8 -30.1 7.6 13.2 5.4 10.1
Vanguard Target 2025 Composite Index -0.9 5.0 11.2 14.9 10.9 6.8 18.5 13.4 0.1 13.9 25.2 -30.4 7.6 13.4 5.6 10.1
70% Equity / 30% Fixed Peer Group Median -1.0 3.7 10.6 15.5 11.1 6.9 22.5 11.8 -0.1 13.1 23.5 -27.1 6.2 10.8 5.5 9.3
Vanguard Target Retirement 2025 (VTTVX) Rank 54 24 46 69 64 61 89 24 57 38 41 80 35 20 52 36
10.2
10.5
10.8
11.1
11.4
Return (%)10.3 10.4 10.5 10.6
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 Rank12/04 12/05 12/06 12/07 12/08 12/09 12/10 12/11 12/12 9/14
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard Target Retirement 2025 (VTTVX)10.6 10.5 10.7 -0.3 1.0 1.0 0.2 -1.3 6.4 30.0 10y 11m
Vanguard Target 2025 Composite Index 10.9 10.4 10.9 0.0 1.0 1.0 0.0 N/A 6.2 0.0 10y 11m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 10.4 -1.0 0.0 20.0 10y 11m
Manager Evaluation
Vanguard Target Retirement 2025 (VTTVX) vs. Vanguard Target 2025 Composite Index
As of September 30, 2014
37
Historical Performance
Three Year Rolling Percentile Ranking Risk and Return (Oct-2009 - Sep-2014)
Historical Statistics (Oct-2009 - Sep-2014)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004
Vanguard Target Retirement 2030 (VTHRX)-1.2 4.7 11.5 15.9 11.2 N/A 20.5 14.2 -1.3 14.4 26.7 -32.9 7.5 N/A N/A N/A
Vanguard Target 2030 Composite Index -1.1 5.0 11.9 16.1 11.5 N/A 20.9 14.3 -0.9 14.6 27.0 -33.3 7.6 N/A N/A N/A
80% Equity / 20% Fixed Peer Group Median -1.1 3.8 11.6 17.4 12.1 7.2 25.8 12.9 -0.8 14.2 25.7 -30.9 6.3 11.7 5.9 10.1
Vanguard Target Retirement 2030 (VTHRX) Rank 56 26 53 76 72 N/A 89 27 59 45 43 76 38 N/A N/A N/A
10.8
11.1
11.4
11.7
12.0
Return (%)11.5 11.6 11.7 11.8 11.9
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 Rank12/04 12/05 12/06 12/07 12/08 12/09 12/10 12/11 12/12 9/14
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard Target Retirement 2030 (VTHRX)11.2 11.8 11.4 -0.4 1.0 1.0 0.2 -1.1 7.3 35.0 8y 3m
Vanguard Target 2030 Composite Index 11.5 11.6 11.6 0.0 1.0 1.0 0.0 N/A 7.1 0.0 8y 3m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 11.6 -1.0 0.0 20.0 8y 3m
Manager Evaluation
Vanguard Target Retirement 2030 (VTHRX) vs. Vanguard Target 2030 Composite Index
As of September 30, 2014
38
Historical Performance
Three Year Rolling Percentile Ranking Risk and Return (Oct-2009 - Sep-2014)
Historical Statistics (Oct-2009 - Sep-2014)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004
Vanguard Target Retirement 2035 (VTTHX)-1.4 4.8 12.2 17.2 11.8 7.2 22.8 15.2 -2.2 15.1 28.2 -34.7 7.5 15.2 6.3 12.0
Vanguard Target 2035 Composite Index -1.3 5.0 12.6 17.4 12.1 7.3 23.3 15.2 -1.9 15.2 28.7 -35.1 7.6 15.4 6.5 11.9
85% Equity / 15% Fixed Peer Group Median -1.1 3.8 12.1 18.1 12.5 7.4 27.3 13.3 -1.0 14.6 26.8 -32.7 6.5 12.2 6.3 10.6
Vanguard Target Retirement 2035 (VTTHX) Rank 60 28 48 67 68 60 87 21 68 41 40 75 41 19 51 31
11.4
11.7
12.0
12.3
12.6
Return (%)12.7 12.8 12.9 13.0 13.1
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 Rank12/04 12/05 12/06 12/07 12/08 12/09 12/10 12/11 12/12 9/14
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard Target Retirement 2035 (VTTHX)11.8 13.0 12.1 -0.4 1.0 0.9 0.3 -0.9 8.1 40.0 10y 11m
Vanguard Target 2035 Composite Index 12.1 12.8 12.3 0.0 1.0 1.0 0.0 N/A 8.0 0.0 10y 11m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 12.8 -1.0 0.0 20.0 10y 11m
Manager Evaluation
Vanguard Target Retirement 2035 (VTTHX) vs. Vanguard Target 2035 Composite Index
As of September 30, 2014
39
Historical Performance
Three Year Rolling Percentile Ranking Risk and Return (Oct-2009 - Sep-2014)
Historical Statistics (Oct-2009 - Sep-2014)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004
Vanguard Target Retirement 2040 (VFORX)-1.5 4.7 12.7 17.9 12.1 N/A 24.4 15.6 -2.5 15.2 28.3 -34.5 7.5 N/A N/A N/A
Vanguard Target 2040 Composite Index -1.4 5.0 13.0 18.1 12.4 N/A 24.8 15.6 -2.1 15.3 28.7 -35.1 7.6 N/A N/A N/A
90% Equity / 10% Fixed Peer Group Median -1.2 3.9 12.6 19.1 13.0 7.5 29.4 13.7 -1.4 15.2 27.5 -34.5 6.5 12.6 6.5 11.0
Vanguard Target Retirement 2040 (VFORX) Rank 62 30 50 70 77 N/A 87 24 68 51 46 51 42 N/A N/A N/A
11.7
12.0
12.3
12.6
12.9
Return (%)13.0 13.1 13.2 13.3 13.4
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 Rank12/04 12/05 12/06 12/07 12/08 12/09 12/10 12/11 12/12 9/14
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard Target Retirement 2040 (VFORX)12.1 13.2 12.4 -0.4 1.0 0.9 0.2 -1.1 8.3 35.0 8y 3m
Vanguard Target 2040 Composite Index 12.4 13.1 12.7 0.0 1.0 1.0 0.0 N/A 8.1 0.0 8y 3m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 13.1 -1.0 0.0 20.0 8y 3m
Manager Evaluation
Vanguard Target Retirement 2040 (VFORX) vs. Vanguard Target 2040 Composite Index
As of September 30, 2014
40
Historical Performance
Three Year Rolling Percentile Ranking Risk and Return (Oct-2009 - Sep-2014)
Historical Statistics (Oct-2009 - Sep-2014)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004
Vanguard Target Retirement 2045 (VTIVX)-1.5 4.8 12.7 17.9 12.1 7.6 24.4 15.6 -2.5 15.2 28.2 -34.6 7.5 16.0 6.9 12.9
Vanguard Target 2045 Composite Index -1.4 5.0 13.0 18.1 12.4 7.7 24.8 15.6 -2.1 15.3 28.7 -35.1 7.6 16.2 7.1 13.0
90% Equity / 10% Fixed Peer Group Median -1.2 3.9 12.6 19.1 13.0 7.5 29.4 13.7 -1.4 15.2 27.5 -34.5 6.5 12.6 6.5 11.0
Vanguard Target Retirement 2045 (VTIVX) Rank 60 28 48 70 77 48 87 23 67 51 47 51 42 17 43 27
11.7
12.0
12.3
12.6
12.9
Return (%)13.0 13.1 13.2 13.3 13.4
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 Rank12/04 12/05 12/06 12/07 12/08 12/09 12/10 12/11 12/12 9/14
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard Target Retirement 2045 (VTIVX)12.1 13.2 12.4 -0.3 1.0 0.9 0.2 -1.0 8.3 40.0 10y 11m
Vanguard Target 2045 Composite Index 12.4 13.1 12.7 0.0 1.0 1.0 0.0 N/A 8.1 0.0 10y 11m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 13.1 -1.0 0.0 20.0 10y 11m
Manager Evaluation
Vanguard Target Retirement 2045 (VTIVX) vs. Vanguard Target 2045 Composite Index
As of September 30, 2014
41
Historical Performance
Three Year Rolling Percentile Ranking Risk and Return (Oct-2009 - Sep-2014)
Historical Statistics (Oct-2009 - Sep-2014)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004
Vanguard Target Retirement 2050 (VFIFX)-1.5 4.8 12.7 17.9 12.1 N/A 24.3 15.6 -2.5 15.2 28.3 -34.6 7.5 N/A N/A N/A
Vanguard Target 2050 Composite Index -1.4 5.0 13.0 18.1 12.4 N/A 24.8 15.6 -2.1 15.3 28.7 -35.1 7.6 N/A N/A N/A
90% Equity / 10% Fixed Peer Group Median -1.2 3.9 12.6 19.1 13.0 7.5 29.4 13.7 -1.4 15.2 27.5 -34.5 6.5 12.6 6.5 11.0
Vanguard Target Retirement 2050 (VFIFX) Rank 61 29 49 70 77 N/A 87 23 68 51 46 52 42 N/A N/A N/A
11.7
12.0
12.3
12.6
12.9
Return (%)13.0 13.1 13.2 13.3
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 Rank12/04 12/05 12/06 12/07 12/08 12/09 12/10 12/11 12/12 9/14
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard Target Retirement 2050 (VFIFX)12.1 13.2 12.4 -0.4 1.0 0.9 0.2 -1.1 8.3 35.0 8y 3m
Vanguard Target 2050 Composite Index 12.4 13.1 12.7 0.0 1.0 1.0 0.0 N/A 8.1 0.0 8y 3m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 13.1 -1.0 0.0 20.0 8y 3m
Manager Evaluation
Vanguard Target Retirement 2050 (VFIFX) vs. Vanguard Target 2050 Composite Index
As of September 30, 2014
42
Historical Performance
Three Year Rolling Percentile Ranking Risk and Return (Oct-2010 - Sep-2014)
Historical Statistics (Oct-2010 - Sep-2014)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004
Vanguard Target Retirement 2055 (VFFVX)-1.5 4.8 12.7 17.9 N/A N/A 24.3 15.6 -2.3 N/A N/A N/A N/A N/A N/A N/A
Vanguard Target 2055 Composite Index -1.4 5.0 13.0 18.1 N/A N/A 24.8 15.6 -2.1 N/A N/A N/A N/A N/A N/A N/A
90% Equity / 10% Fixed Peer Group Median -1.2 3.9 12.6 19.1 13.0 7.5 29.4 13.7 -1.4 15.2 27.5 -34.5 6.5 12.6 6.5 11.0
Vanguard Target Retirement 2055 (VFFVX) Rank 62 28 49 70 N/A N/A 87 23 63 N/A N/A N/A N/A N/A N/A N/A
12.4
12.6
12.8
13.0
13.2
Return (%)12.3 12.4 12.5
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 Rank12/04 12/05 12/06 12/07 12/08 12/09 12/10 12/11 12/12 9/14
Return
Standard
Deviation
Excess
Return Alpha Beta
Sharpe
Ratio
Tracking
Error
Information
Ratio
Downside
Risk Consistency
Inception
Date
Vanguard Target Retirement 2055 (VFFVX)12.7 12.4 12.9 -0.2 1.0 1.0 0.2 -0.7 7.7 31.3 4y
Vanguard Target 2055 Composite Index 12.9 12.3 13.0 0.0 1.0 1.1 0.0 N/A 7.6 0.0 4y
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 12.3 -1.1 0.0 18.8 4y
Manager Evaluation
Vanguard Target Retirement 2055 (VFFVX) vs. Vanguard Target 2055 Composite Index
As of September 30, 2014
43
Historical Performance
Three Year Rolling Percentile Ranking Risk and Return (Apr-2012 - Sep-2014)
Historical Statistics (Feb-2012 - Sep-2014)
Quarter
Year
To
Date
1
Year
3
Years
5
Years
10
Years 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004
Vanguard Target Retirement 2060 (VTTSX)-1.5 4.8 12.7 N/A N/A N/A 24.3 N/A N/A N/A N/A N/A N/A N/A N/A N/A
Vanguard Target 2060 Composite Index -1.4 5.0 13.0 N/A N/A N/A 24.8 15.6 N/A N/A N/A N/A N/A N/A N/A N/A
90% Equity / 10% Fixed Peer Group Median -1.2 3.9 12.6 19.1 13.0 7.5 29.4 13.7 -1.4 15.2 27.5 -34.5 6.5 12.6 6.5 11.0
Vanguard Target Retirement 2060 (VTTSX) Rank 61 28 48 N/A N/A N/A 87 N/A N/A N/A N/A N/A N/A N/A N/A N/A
12.6
12.8
13.0
13.2
13.4
Return (%)7.4 7.5 7.6 7.7 7.8
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 Rank12/04 12/05 12/06 12/07 12/08 12/09 12/10 12/11 12/12 9/14
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 2y 8m
Vanguard Target 2060 Composite Index 16.3 8.7 15.7 0.0 1.0 1.8 0.0 N/A 2.5 0.0 2y 8m
90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 8.7 -1.8 0.0 18.2 2y 8m
Manager Evaluation
Vanguard Target Retirement 2060 (VTTSX) vs. Vanguard Target 2060 Composite Index
As of September 30, 2014
44
Manager Evaluation
Ta rget-Date Funds Asset Allocation
As of September 30, 2014
U.S.Equi ty 21.3%26.5%36.3%43.0%48.0%53.5%58.5%63.2%63.2%63.0%63.0%63.0%
Va nguard Total St ock M arke t Index Fu nd 21.3%26.5%36.3%43.0%48.0%53.5%58.5%63.2%63.2%63.0%63.0%63.0%
Non-U.S . Equ ity 9.0%10.8%14.7%17.7%25.6%22.9%24.7%26.8%26.8%27.0%27.0%27.0%
Va nguard Total In ternational Stock In dex F und 9.0%10.8%14.7%17.7%25.6%22.9%24.7%26.8%26.8%27.0%27.0%27.0%
Fi xe d In come 69.7%62.7%49.0%39.3%26.4%23.6%16.8%10.0%10.0%10.0%10.0%10.0%
Va nguard Total Bo nd Marke t II In dex F und 39.1%36.5%32.0%31.4%20.0%18.9%13.4%8.0%8.0%8.0%8.0%8.0%
Va nguard Total In ternational Bo nd Stock In dex F und 13.9%12.6%9.8%7.9%6.4%4.7%3.4%2.0%2.0%2.0%2.0%2.0%
Va nguard Infla tion-Pro tected Securit ie s Fund 16.7%13.6%7.2%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%
Tar get
Date
2060
Tar get
Date
2030
Tar get
Date
2035
Tar get
Date
2040
Tar get
Date
2055VanguardComponent Funds
Re ti 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
0%
10%
20%
30%
40%
50%
60%
70%
80%
U.S.Equity Non-U.S.Equity Fixed In come
Re ti rem ent Inc om e
Target Date 2010
Target Date 2015
Target Date 2020
Target Date 2025
Target Date 2030
Target Date 2035
Target Date 2040
Target Date 2045
Target Date 2050
Target Date 2055
Target Date 2060
45
Capital Markets Review
46
-16
-14
-12
-10
-8
-6
-4
-2
0
2
4
PercentYen Yuan Real Rub le Euro
Capital Markets Rev iew
Economy
Currencies Fall vs. U.S. Dollar Retail Sales and Unemployment
Source: Bloomberg
Source: Trading Economics
-10
-5
0
5
10
15
PercentRet ail Sales, Quart erly
Rat e o f Chang e
Unemployment Rat e
Source: Economy.com
Foreign Growth Weakens, U.S. Dollar Becomes Safe Haven
•An expansion of Russia’s invasion of Ukraine,Israel’s military actions to clear
Gaza of missiles and tunnels used by attackers,and ISIS conquering territory
across Iraq caused investors to pull monies out of Europe and Asia for the
perceived safety of the U.S.dollar and Treasury bonds.The rapid ascent of the
U.S.dollar sent foreign investment values sharply lower versus their local-currency
returns.
•A wave of economic weakness enveloped Europe,Japan,Brazil,China and many
smaller countries.The European Central Bank (ECB)inched closer toward
purchasing asset-backed bonds,while further lowering its deposit rate to -0.2%.
With the German economy near a zero-growth rate and countries such as Greece
and Spain pleading for an end to austerity,the Eurozone economy offered little
near-term outlook for growth.Hopes turned to the ECB to offer a Federal Reserve-
style bailout and inflate the flagging economy,though the bank has been reluctant
to put plans into action based on German leaders’protests.The impending
culmination of the Federal Reserve’s asset purchases was a late-quarter headwind
for stocks.
•The U.S.economy faced a perplexing mix of economic readings.The
unemployment rate fell to 5.9%,though the number of workers leaving the
workforce remained dauntingly high.Retail sales were choppy,yet on an upward
trend.A steep drop in oil prices,brought on by increased U.S.production,will be a
negative for upcoming energy spending,due to falling gasoline prices,but will be a
broader benefit for the economy.
Central Bank Interest Rates
Source: Bloomberg
-1
0
1
2
3
4
5
6
PercentCent ral Bank I nt er est Rat es
ECB Deposit Rate
Fed eral Res erv e Targ et Rat e
China 1-Year D ep osit Rate
47
Third Quarter and YTD 2014 Sector Returns
Capital Markets Rev iew
Equities
Third Quarter 2014 World Equity Returns (USD)
3.6%
12.3%
1.0%
6.6%
0.3%
7.0%
6.1%
6.9%
6.6%
11.8%
15.2%
-9.1%
-4.9%
-2.9%
-1.6%
-0.7%
0.0%
0.8%
1.5%
2.2%
3.6%
4.5%
-12.0%-7.0%-2.0%3.0%8.0%13.0%18.0%
Energy
Utilities
Indust rials
Materials
Cons. Disc.
Russell 30 00
Financials
Cons.Stapl es
Te lecom
In fo Tech
Health Care 3Q1 4
YTD
-16.0%
-12.0%
-8.0%
-4.0%
0.0%
4.0%
8.0%
12.0%
-5.3%
1.1%
-3.6%-4.5%-5.9%-7.0%-8.7%
-1.6%
-3.5%
-5.5%
-8.0%
-12.4%
Developed Markets Emerging Markets
Russell 1000 Index vs. Russell 2000 Index Equity Markets Cool Off as Strengthening USD Impact Felt
•The Russell 3000 Index advanced for a seventh consecutive quarter,albeit a
very modest gain in comparison to recent quarters.After setting a number of
new all-time highs during the quarter,major domestic equity indices retreated in
the latter half of September as a result of heightened geopolitical worries and
disappointing economic data internationally.Sector performance varied widely
during the quarter.Health care and information technology were the best
performing sectors,boosted by M&A activity,while the energy and utilities
sectors struggled as the price of oil and other commodities plummeted.
•Small-cap stocks severely underperformed their large-cap counterparts and
experienced their worst quarterly decline since September 2011.The quarterly
underperformance versus large-caps was the largest since March 1999.
Increased geopolitical tensions and concerns over future interest rate hikes
decreased investor risk appetite for small-cap companies.
•Emerging markets,though outperforming developed international markets,
declined 3.5%due to falling commodity prices,currency weakness,and poor
Chinese economic data.Developed international markets fell 5.9%.Economic
data out of Europe was particularly poor,calling into question the region’s future
growth prospects.Additionally,the strengthening U.S.dollar negatively impacted
developed markets as the dollar appreciated versus all major currencies.
0.7%
-7.4%
-0.2%
-8.6%
1.5%
-6.1%
8.0%
-4.4%
8.1%
-4.7%
7.9%
-4.0%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
Russell
1000
Index
Russell
2000
In dex
Russell
1000
Value
Russell
2000
Value
Russell
1000
Growth
Russell
2000
Growth
3Q 14
YTD
Broad Va lue Growth
48
-1 .0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10 .0%YTD Total ReturnDa te
US Agg US Credit High Yield
Global Agg EMD MBS
Source: Barclays
Source: Barclays
Duration-adjusted Excess Returns to Treasuries (bps) Cumulative Year-to-Date Total Returns
Capital Markets Rev iew
Fixed Income
Best Period Second Best Period Wors t Period Second W orst Period
2007 2008 2009 2010 2011 2012 2013 1Q14 2Q14 3Q14
Aggre ga te -206 -710 746 171 -114 226 93 16 52 -28
Agency -56 -110 288 77 -25 166 1 30 50 -11
MBS -177 -232 495 225 -106 91 98 -24 90 -27
ABS -634 -2223 2496 169 52 246 24 19 30 -5
CMBS -435 -3274 2960 1501 47 841 97 65 55 -36
Cr edit -464 -1786 1990 192 -322 693 226 75 81 -67
Hi gh Yield -777 -3832 5955 974 -240 1394 923 199 137 -205
Em erging -457 -2842 3797 508 -537 1503 -32 127 282 -112
Source: Barclays
US Treasury Yield Curve Change by Maturity
Source: US Dept of The Treasury
Spreads Reverse Course in Q3
•Bond market volatility picked up during the third quarter,highlighted by a flight-
to-quality in long term rates and wider spreads across corporate and
securitized credit markets.TIPS produced negative total returns as inflationary
pressures eased amid plunging commodity prices and a strengthening dollar.
•The yield curve flattened during the quarter.Ongoing geopolitical tensions and
a rally in European government rates contributed to strong demand for longer
term U.S.Treasuries,while continued tapering and a more hawkish tone from
the Fed caused shorter maturity yields to rise.The spreads between five-and
30-year Treasuries continued to decrease and reached the lowest level since
January 2009.
•Corporate credit returns suffered during the quarter as safe-haven demand
increased and supportive technical factors faded.High yield credit was
particularly vulnerable during the quarter due to heavy new issuance coupled
with asset outflows.Despite selling pressure in the third quarter,spread sector
total returns remain positive year-to-date.
-1.0%
-0.8%
-0.6%
-0.4%
-0.2%
0.0%
0.2%
0.4%Change in YieldMa turity (Years)
3Q 14
YTD Ending 3Q1 4
49
Capital Markets Review
Hedge Funds
HFRI Index Performance –Third Quarter and YTD 2014
Growth of As sets in Hedge Funds
Hedge Fund Return Capture Ratio
All Funds Median Net Return/MSCI AC World, %
4.1%
3.7%
2.4%
3.1%
1.7%
3.8%
2.8%
2.1%
1.9%
2.4%
2.2%
0.2%
-2.3%
0.3%
-0.1%
-0.2%
2.7%
-1.5%
0.4%
-1.3%
-2.9%
-1.2%
-4%-2%0%2%4%6%
BC Aggregate Bond Index
MSCI All-Country World Index
Fu nd of Fu nds
Hedge Fund Com posite
Merger Arbitrage
Global Macro
Event Driven
Equity Market Neutral
Equity Hedge
Distressed Securiti es
Convertible Arbitra ge
Q3
YT D
27%
46%
62%
33%
44%45%
31%
52%
0%
10%
20%
30%
40%
50%
60%
70%
80%
2008 2009 2010 2011 2012 2013 Aug '14
YTD
Sep '14
YTD% Downside in Down Years % Upside in Up Ye ars Source: Morgan Stanley Prime Brokerage
-$500,000
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
199019911992199319941995199619971998199920002001200220032004200520062007200820092010201120122013Q12014Q2014Q32014Assets ($MM)Net Asset Flow Estimated Assets
Source: HFR Inc.
Largest U.S. Public Pension Plan Exits Hedge Funds
•Hedge fund manager performance was generally negative across strategies during the
third quarter.With the exception of distressed securities managers,however,hedge funds
generally outpaced the MSCI All-Country World Index during the quarter.Global macro
was the top performing strategy for the quarter (+2.7%)and consequently one of the best
performing strategies year-to-date.
•The median hedge fund manager tends to lag global equities during strong up markets,
but fares better during down months such as September.The median hedge fund trailed
equities significantly year-to-date through August.Following September's decline,the
median hedge fund manager has captured just over half of this year’s equity market
return,according to Morgan Stanley Prime Brokerage.
•California Public Employees’Retirement System (CalPERS),the largest public pension
plan in the U.S.,announced that it will exit its $4 billion hedge fund program over the next
year,in an effort simplify its strategy and reduce costs.The Plan’s large asset size ($298
billion in total assets)and desire to hire managers willing to provide fee concessions
limited the universe of managers from which it could select,and likely inhibited the
performance of its hedge fund allocation.
•The hedge-fund industry saw inflows of $15.8 billion during the third quarter according to
Hedge Fund Research.Event driven and relative value managers attracted $11.4 and
$11.1 billion,respectively,while macro hedge funds saw a withdrawal of $11.1 billion
during the quarter.
Hedge Fund Assets and Flows
50
-11.8%
-5.6%
-6.6%
-5.3%
-1.4%-1.0%
14%
12%
10%
-8%
-6%
-4%
-2%
0%
QTD YTD 1 Year 3 Years 5 Years 10 Y ears
Capital Markets Review
Real Assets
Returns as of September 30, 2014
Source: Bloomberg
Bloomberg Commodity Index Returns for Periods Ended
September 30, 2014
NCREIF 3 M on.YT D 1 Yr.3 Yrs.5 Y rs.10 Yrs.
NCREIF 2.9%5.7%11.2%11.3%9.7%8.6%
Apartm ents 2.4%4.7%9.9%11.3%10.8%8.3%
In dus trials 3.3%6.1%12.6%11.9%9.1%8.2%
Offic e 2.9%5.2%10.3%10.1%8.6%8.3%
Retail 3.2%7.7%13.5%13.2%10.8%10.0%
Ho tel 2.6%3.4%8.0%7.9%6.2%6.8%
Eas t 2.3%4.4%9.0%9.7%9.3%8.5%
Mi dwes t 2.8%5.4%10.5%10.7%8.7%7.2%
South 3.2%6.7%13.1%12.4%10.0%8.7%
West 3.4%6.5%12.5%12.5%10.2%9.3%
Source: NACREIF
Equity REIT Yields Are Low, Although They Provide A
Premium to Treasuries; Mortgage REIT Yields Remain Elevated
Real Estate Fundamentals Remain Strong; Commodities Tank
•Equity REITs declined 2.5%during the third quarter,bringing the year-to-date return
to 13.4%.Strong property fundamentals and a continued search for yield were offset
by the possibility of rising U.S.interest rates.Since quarter end,concerns have
shifted to slower economic growth and interest rates have fallen,making the 3.8%
yield on U.S.equity REITs look fairly attractive.Foreign REITs have underperformed
the U.S.market with Asia Pacific and Europe returning 0.0%and 5.6%,year to date.
•Private real estate continued to perform well,returning 2.9%during the second
quarter and 5.7%for the first half of 2014.Strong fundamentals (net operating
income growth and transaction volume),along with low interest rates,contributed to a
further decline in capitalization rates,now at 6.8%according to Real Capital
Analytics.The cap rate remains well below the long term trend rate,but relative to
Treasuries,cap rates remain around average levels since the 1990s.Income returns
are averaging around 5.0%,also below historical levels but favorable relative to
Treasury yields.
•Commodity prices declined dramatically during the third quarter,bringing year-to-date
and returns out to ten years into negative territory.The IEA’s forecast of weaker
demand growth for oil,along with favorable supply dynamics,and a strengthening
U.S.dollar,drove oil prices lower.An abundant harvest led to lower grain prices,
while industrial metals prices suffered from weaker global demand,especially out of
China.A strong U.S.dollar with little sign of inflation led to weaker gold demand and
prices.
Source: NAREIT
0
5
10
15
20
25
30
Sep-1974Sep-1976Sep-1978Sep-1980Sep-1982Sep-1984Sep-1986Sep-1988Sep-1990Sep-1992Sep-1994Sep-1996Sep-1998Sep-2000Sep-2002Sep-2004Sep-2006Sep-2008Sep-2010Sep-2012Sep-2014PercentEquit y REITs
Mortgage REITs
10-Year Treasury
51
0
2
4
6
8
10
12
14
16
18
20
0
5
10
15
20
25
30
35
40
Agg. Value ($,Billions)# of DealsVen ture-Bac ked IPOs #Ven ture-Backed IPOs $Value
Venture-Backed IPO ActivityInvestment Horizon Pooled IRR as of 03/31/14
Fund Type 3 Months 1 Year 3 Years 5 Years 10 Years 20 Years
Early Stage VC 5.3%31.5%15.7%14.6%9.2%44.1%
Late/Expansion Stage VC 3.5%32.6%14.4%18.6%12.3%11.0%
Multi-Stage VC 5.3%28.3%13.4%12.2%10.2%12.3%
All Venture Capital 5.1%30.5%14.8%14.2%9.8%26.1%
Small Buyouts 1.8%12.3%11.6%16.8%19.6%14.5%
Medium Buyouts 1.9%15.3%10.2%14.3%17.1%15.8%
Large Buyouts 3.2%18.8%11.9%16.7%15.5%16.1%
Mega Buyouts 3.4%22.2%13.9%18.8%12.3%10.9%
All Buyouts 3.1%19.9%12.7%17.4%14.3%13.4%
Mezzanine/Sub Debt 2.6%11.8%11.4%12.9%9.8%9.7%
Distressed 2.8%16.2%10.9%20.0%11.6%11.9%
All Private Equity 3.3%19.9%12.4%16.8%13.1%14.6%
S&P 500 1.8%21.8%14.4%20.6%8.5%8.7%
Capital Markets Rev iew
Pr ivate Equity
Ven ture-Bac ked IPOs #Ven ture-Backed IPOs $Value
$0
$20
$40
$60
$80
$100
$120
$,BillionsVC Buy out Real As sets Sec ondary Funds Di stressed/SS
Fundraising,IPO Activity Remain Strong Despite Modest Declines
•Private equity market performance data through June 30,2014 was not yet
available at the time of report production.During 1Q14,private equity funds
outperformed their public market counterparts with venture capital and buyout
funds producing pooled quarterly IRRs of 5.1%and 3.1%,respectively,
compared to a 1.8%return for the S&P 500.Early stage venture funds were the
strongest performers while small-and mid-cap buyout funds lagged.
•During 3Q14,private equity fundraising saw a modest decline from the post-
crisis high seen in 2Q14.However,the $97 billion raised by private equity funds
in 3Q14 was in line with the quarterly average seen since early 2013 when the
pace of fundraising picked up considerably.Venture capital and secondary
funds saw the biggest percentage declines during the third quarter while
distressed/special situations funds saw an increase in commitments.
•Venture-backed IPO activity slowed during 3Q14 as 23 venture-backed IPOs
raised an aggregate $2.6 billion compared to 2Q14 when 28 IPOs raised $4.9
billion.However,it was the sixth consecutive quarter with more than 20
venture-backed IPOs after that mark was exceeded in only one other quarter
since the beginning of 2008.Biotechnology companies dominated IPO activity
during 3Q14,representing 18 of the 23 IPOs that occurred during the quarter.
Source: ThomsonOne/Cambridge Associates database, October 2014.
Note: Data is continuously updated and is therefore subject to change.
S&P 500 1.8%21.8%14.4%20.6%8.5%8.7%
Source: Thomson Reuters, ThomsonOne database, October 2014.
Source: Thomson Reuters, ThomsonOne database, October 2014.
Global Fundraising
52
Quarter
Year
To
Date
1
Year
2
Years
3
Years
5
Years
7
Years
10
Years
Domestic Equity Indices
Dow Jones Wilshire 5000 0.0 6.9 17.7 19.8 23.0 15.9 6.5 8.7
S&P 500 1.1 8.3 19.7 19.5 23.0 15.7 6.0 8.1
Russell 1000 Index 0.7 8.0 19.0 20.0 23.2 15.9 6.3 8.5
Russell 1000 Growth Index 1.5 7.9 19.1 19.2 22.4 16.5 7.6 8.9
Russell 1000 Value Index -0.2 8.1 18.9 20.6 23.9 15.3 4.8 7.8
Russell Midcap Index -1.7 6.9 15.8 21.7 23.8 17.2 7.5 10.3
Russell Midcap Growth Index -0.7 5.7 14.4 20.8 22.7 17.1 7.5 10.2
Russell Midcap Value Index -2.6 8.2 17.5 22.5 24.7 17.2 7.3 10.2
Russell 2000 Index -7.4 -4.4 3.9 16.3 21.3 14.3 6.0 8.2
Russell 2000 Growth Index -6.1 -4.0 3.8 17.5 21.9 15.5 6.9 9.0
Russell 2000 Value Index -8.6 -4.7 4.1 15.0 20.6 13.0 5.1 7.3
International Equity Indices
MSCI EAFE -5.9 -1.4 4.3 13.6 13.6 6.6 -0.2 6.3
MSCI EAFE Growth Index -5.5 -2.2 2.9 12.6 13.3 7.6 0.3 6.6
MSCI EAFE Value Index -6.2 -0.6 5.7 14.6 13.9 5.5 -0.8 5.9
MSCI EAFE Small Cap -7.8 -2.7 3.0 15.5 14.5 8.9 2.0 8.1
MSCI AC World Index -2.3 3.7 11.3 14.5 16.6 10.1 2.4 7.3
MSCI AC World ex US -5.3 0.0 4.8 10.5 11.8 6.0 -0.2 7.1
MSCI Emerging Markets Index -3.4 2.7 4.7 3.0 7.6 4.8 0.1 11.0
Fixed Income Indices
Barclays U.S. Aggregate 0.2 4.1 4.0 1.1 2.4 4.1 4.9 4.6
Barcap Intermediate U.S. Government/Credit 0.0 2.2 2.2 0.8 2.0 3.4 4.3 4.0
Barclays U.S. Long Government/Credit 1.0 13.0 12.9 1.7 4.7 8.0 8.2 7.0
Barclays US Corp: High Yield -1.9 3.5 7.2 7.2 11.1 10.6 8.7 8.3
BofA Merrill Lynch 3 Month U.S. T-Bill 0.0 0.0 0.0 0.1 0.1 0.1 0.5 1.6
Barclays U.S. Treasury: U.S. TIPS -2.0 3.7 1.6 -2.3 1.3 4.5 4.9 4.6
Citigroup Non-U.S. World Government Bond -5.4 0.2 -1.0 -3.3 -1.1 1.0 3.6 4.0
JPM EMBI Global Diversified (external currency)-0.6 8.0 9.7 2.6 8.0 8.0 7.9 8.3
JPM GBI-EM Global Diversified (local currency)-5.7 0.0 -1.5 -2.6 2.2 4.4 5.4 8.8
Real Asset Indices
Dow Jones - UBS Commodity -11.8 -5.6 -6.6 -10.5 -5.3 -1.4 -5.2 -1.0
Dow Jones Wilshire REIT -3.1 14.5 13.5 9.3 16.5 16.0 3.8 8.3
Capital Markets Review
Index Returns
As of September 30, 2014
(Percentage Return)
_________________________
Returns for periods greater than one year are annualized.
53