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2017 4th Quarter Report
Performance Review Metropolitan St. Louis Sewer District Deferred Compensation Plan 4th Quarter 2017 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 Capital Markets Review 1 2 Executive Summary 12 3 Performance Summary 15 4 Plan Assets 22 5 Manager Evaluation 25 6 Appendix 57 Table Of Contents Capital Markets Review 1 Capital Markets Review Summary As of December 31, 2017 5.7 6.6 3.3 4.2 6.2 7.4 3.2 1.1 0.4 1.1 0.4 0.3 2.5 4.7 0.3 0.9 -0.1 23.9 21.8 14.6 25.0 31.9 37.3 13.2 7.4 3.5 2.1 7.5 0.8 8.7 1.7 12.7 3.8 2.1 -5 0 5 10 15 20 25 30 35 40 MSCI Global ACWI IMI S&P 500 Russell 2000 MSCI EAFE S&P Dev ex U.S. SC MSCI EMF HFRI Equity Hedged* BBG Barclays Global Agg. BBG Barclays U.S. Agg. WGBI ex-U.S. Hedged BofAML High Yield Cons. 91-Day T-Bills NAREIT Bloomberg Commodity DJ Brookfield Global Infra. HFRI FoF:Cons.* CPI Performance: Past Quarter and Year (%) Past Quarter Past 12 Months HFRI data are subject to revision. Source: FactSet & BloombergFixed Income (Bonds)Equities (Stocks)AlternativesCapping off a strong year for risk assets In the fourth quarter,implied and realized volatility declined to near historic lows and risk assets flourished,supported by limited headline risks and advancements in economic data. While short on political events relative to the first nine months of the year,uncertainty still arose from Germany’s failure to form a political coalition before year-end,Brexit negotiation stumbles,China’s 19th party conference,and the U.S.tax bill formed through reconciliation. Consumer strength and economic data bode well for continued global growth prospects. After a sluggish start in the first half of 2017,U.S.private investment accelerated in the second half of the year,likely providing additional momentum to the economic expansion. Core inflation remains below target in most developed markets,but economic growth and advancing labor market conditions encouraged central bank policy makers to slow or reduce accommodation.In October,the U.S.began reducing its balance sheet while the European Central Bank (“ECB”)announced a scaling back of its bond purchases to €30 billion per month starting in January.Additionally,December saw the Federal Open Market Committee’s (“FOMC”)third rate increase of 2017,applying upward pressure to short-and intermediate-term rates. The U.S.yield curve flattened further dampening intermediate duration bond performance. Within credit,economic conditions drove spread compression for most sectors,driving outperformance relative to similar duration Treasuries.Outside the U.S.,emerging debt concluded the year with twelve consecutive months of excess returns. Emerging market equity performance dominated once again in the fourth quarter and for the year (+37.3%).Developed equity markets also surged during the quarter and year,as widespread economic growth supported company fundamentals and expectations. Outperformance of the developed international equity markets relative to the U.S., however,was driven by currency movements.Performance of these markets lagged when measured in local currencies or on a hedged basis. After two down quarters,commodity prices turned up second half of the year,led by industrial metals (+21.7%)and energy sub-indices (+19.6%).Income-oriented strategies, like infrastructure,continued to generate positive performance;although,a flattening yield curve likely held back performance. 2 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 1.4%Dec-16Jan-17Feb-17Mar-17Apr-17May-17Jun-17Jul-17Aug-17Sep-17Oct-17Nov-17Dec-1710 Year –2 Year U.S. Yield Curve 87 74 62 87 99 105 111 119 119 120 132 150 166 40 60 80 100 120 140 160 180 CY2007CY2008CY2009CY2010CY2011CY2012CY2013CY2014CY2015CY2016CY2017CY2018CY2019Actual Estimates Capital Markets Review Asset Class Outlook As of December 31, 2017 Source: FactSet as of January 12, 2018 Equities Equity markets provided strong performance in the fourth quarter with the dominant force being ongoing synchronized global growth.For the first time in over a decade,the OECD reported positive growth in all of the 45 countries it monitors.This strong growth powered a recovery in corporate earnings around the world,driving global indices to double digit returns for the year. S&P 500 Index earnings appear to have grown by a little over 11%for the year,a feat that could be repeated in 2018 if consensus estimates for the year hold (currently 11%).Low inflation,low and steady interest rates,as well as lower taxes provide conditions that should be supportive for continued,though more muted,positive market returns.Market volatility was near record lows for the year,with the S&P 500 notching 14 straight months of positive returns –a first in the history of the index.Additionally,the largest peak to trough drawdown over the course of the year was only 3%.This is in stark contrast to the more typical annual drawdown of almost 10%.At some point market volatility will normalize,but it may require a more significant tightening in financial conditions,something we do not anticipate in the first few quarters of 2018. Fixed Income With few exceptions,fixed income markets posted positive returns for the quarter.This performance came despite the fact that policy makers across developed markets have either begun or have signaled the beginning of policy normalization.Additionally,this policy normalization is taking place despite the fact that in most markets,core inflation remains stubbornly below the common 2%target.Policy makers have argued that the early start will allow for an extended period of policy normalization and extremely gradual rate increases.They further argue that the early start will allow them to target a lower terminal policy rate.In the U.S.,the FOMC anticipates the terminal funds rate being only 3%,a rate they could achieve in late 2019 if the current pace of increases is maintained (three rate increases are anticipated for 2018).For this reason,we do not anticipate U.S.Treasury rates spiking materially beyond that level.This view is supported by the degree of flattening in the Treasury curve despite the relatively low yield levels.Corporate credit may suffer a different fate.Spreads are trading at the lower bound of the historical range with high yield trading almost 200 basis points below its long-run average.As a result,we continue to view high quality duration as source of diversification and protection against unanticipated market sell offs,while lower quality credit provides little protection against late cycle risks. Real Assets As noted,core inflation remains constrained in most developed markets,circumstances that likely will persist for some time.One example holding back inflation is the decline in long-run inflation expectations,as reflected by Michigan consumer inflation expectation and five-year forward inflation swaps.Declining expectations put downward pressure on wages and longer-term contracts for goods and services.While we think inflation will rise modestly over the year,we believe factors such as declining expectations will continue to constrain it.In the current low yield environment,we maintain our view that global listed infrastructure likely provides a diversifying income stream with a slightly lower volatility profile than commodities.We maintain a cautious view on REITs,due to historical correlations with long duration fixed income. S&P 500 Calendar Year Bottom-Up EPS Actuals & Estimates 1.0% 1.5% 2.0% 2.5% 3.0% 3.5%Dec-12Mar-13Jun-13Sep-13Dec-13Mar-14Jun-14Sep-14Dec-14Mar-15Jun-15Sep-15Dec-15Mar-16Jun-16Sep-16Dec-16Mar-17Jun-17Sep-17Dec-17Inflation Expectations Michigan: Inflation expectations 5 year fwd 5 year Source: Federal Reserve FRED Data Source: Federal Reserve FRED Data 3 Capital Markets Review Key Market Risks As of December 31, 2017 Source: Bloomberg, FactSet, Recession Alert, & Pavilion Analysis Cyclical risks remain low while policy and geopolitical risks persist E.C.B.Policy Shift:At some point,the E.C.B.will need to begin the process of policy normalization.This process is expected to begin with a change in forward guidance and the path of policy normalization.While we do not anticipate a policy shift prior to mid-year and expect policy makers seek a smooth transition,we view this transition as one of the most significant risks in the market.Currently,long rates have been held down in part because of the significant level of global accommodation with a significant amount being provided by the E.C.B.The transition sets the stage for a possible spike in the Euro,as well as a rise in longer dated rates across developed markets.Such a spike would likely cause a tightening in financial conditions and a downturn in risk assets,as market participants repriced the prospects for a future slowdown. Transition to Higher Volatility Regime:Over the past 18 months,implied and realized volatilities have been in steady decline.The decline has largely been the result of the improved fundamentals,but as volatility declines a number of quantitative strategies can develop outsized risk positions.In the event of a shift to a higher volatility regime,these risk assets are sold,catalyzing a potential market decline (e.g.August 2007).Normally, volatility regimes shift in response to a turn in the economic cycle;however,policy missteps or geopolitical risks may also serve as catalysts. Path of Rate Normalization:One seemingly anomalous feature of the current recovery has been the stubborn nature of inflation relative to the level of accommodation and recovery in growth.Across developed markets,core inflation has largely remained subdued and below the common 2%target of most central banks.Despite this fact,policy makers have seen fit to begin the process of normalizing policy,appearing to treat the 2%level as a ceiling rather than a target.Such a policy runs the risk of removing accommodation more quickly than justified by fundamentals,creating a premature slowdown and return of deflation risks. Fixed Income Equities FinancialStressesValuationsCyclicalCurrent Risk Levels 0.95 1.00 1.05 1.10 1.15 1.20 1.25 Jan-16Apr-16Jul-16Oct-16Jan-17Apr-17Jul-17Oct-17Jan-18EUR/USD Exchange Rate Source:Federal Reserve FRED Data 10 15 20 25 30 35 Jan-15Mar-15May-15Jul-15Sep-15Nov-15Jan-16Mar-16May-16Jul-16Sep-16Nov-16Jan-17Mar-17May-17Jul-17Sep-17Nov-17Jan-18Implied VolatilityCBOE S&P 500 3-Month Volatility Index Source:Federal Reserve FRED Data 4 Capital Markets Review Economy As of December 31, 2017 Growth forecasts trend higher,along with caution A major reduction in tax rates for corporations was passed in the closing days of December,bringing the statutory U.S.corporate tax rate down from 35%to 21%.Tax rates on repatriated earnings were lowered to 8%and 15.5%on hard assets and cash, respectively.Individuals’tax bracket rates were lowered,while allowable deductions were substantially altered.The eased tax burdens are expected to contribute to expanded economic activity and lay the groundwork for higher equity prices,based upon post-tax profits and capital returns to shareholders.GDP is expected to be around 3%in the fourth quarter,the first time since 2005 that three consecutive quarters topped 3%growth. As the economy’s expansion reaches more broadly,personal earnings (wages)are heading upward.Earnings have long held the key to the missing inflation during the current recovery.With growth strengthening around the globe,investors have a key thought in mind:nearly all of the past century’s recessions have coincided rising interest rates.With the Federal Reserve on a tightening trajectory and other central banks approaching the same course,many investors are wary of a Fed overshoot on rates snuffing out a strengthening recovery.The average growth during the current recovery remains the weakest of all post-WWII cycles. Manufacturing and construction contributed significantly to fourth quarter growth.Global GDP growth forecasts reached their highest levels,post-recession.Commodity prices rose amidst expected demand growth in 2018,with oil breaching $60/barrel. Source: Bloomberg 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 3/20089/20083/20099/20093/20109/20103/20119/20113/20129/20123/20139/20133/20149/20143/20159/20153/20169/20163/20179/2017PercentAverage Private Sector Pay Growth Source: Bureau of Labor Statistics -1 0 1 2 3 4 5 6 7 8 Sep-01Sep-02Sep-03Sep-04Sep-05Sep-06Sep-07Sep-08Sep-09Sep-10Sep-11Sep-12Sep-13Sep-14Sep-15Sep-16Sep-17PercentEurope U.S.Japan U.K. Switz.Australia Canada China Central Bank Interest Rates 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0%9/19629/19679/19729/19779/19829/19879/19929/19979/20029/20079/20129/2017AnnualizedRolling 10 Year GDP Growth Source: Bureau of Economic Analysis 5 0.2% 1.5% 3.2% 3.6% 6.0% 6.1% 6.5% 6.6% 6.9% 8.6% 9.0% 9.9% 12.1% 22.1% 10.9% -1.3% -1.0% 21.0% 13.5% 21.8% 23.8% 22.2% 38.8% 23.0% -10.0%0.0%10.0%20.0%30.0%40.0%50.0% Utilities Healthcare Real Estate Telecom Energy Industrials Cons Staples S&P 500 Materials Financials Info Tech Cons Disc 4Q FY 5.7%6.6%5.5%5.0%4.2%7.4%7.6% 11.4% 4.0% 11.8% 21.4% -2.0% 24.0%21.8%22.4% 27.2% 25.0% 37.3% 54.1% 47.3% 27.5% 38.8% 36.1% 24.1% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% MSCI ACWI S&P 500 MSCI World MSCI ACWI x US MSCI EAFE MSCI EM China South Korea Taiwan India South Africa Brazil 4Q FY Capital Markets Review Equities As of December 31, 2017 Fourth Quarter and Full Year S&P 500 Sector Returns Growth Significantly Outperformed Value During the Year Source: FactSet, S&P Fourth Quarter and Full Year World and Emerging Market Equity Returns Source: FactSet, MSCI Growth and emerging markets continue to outperform The S&P 500 Index returned +6.6%during the fourth quarter,bringing the full year return to +21.8%.Consumer Discretionary was the strongest performing sector for the fourth quarter but Information Technology stands out as having the strongest performance for the year.Energy and Telecom were the only sectors to end the year with negative returns. Developed market equity indices provided returns in the +4%to +7%range during the fourth quarter,with the S&P 500 among the strongest at +6.6%.Emerging Market equity returns were slightly higher,at +7.4%,led by South Africa,India,and South Korea. For the full year,the key regional indices all provided 20%plus returns,with the foreign markets benefitting from strong local market returns as well as currency appreciation vs. the U.S.dollar. Growth continued to outperform Value in the fourth quarter,capping a very strong year for Growth.Within the U.S.and Emerging Markets were driven by the technology sector and in particular the FAANG and BAT stocks.Emerging Markets experienced the highest absolute return for both Growth and Value stocks during the year.Size was in favor for the fourth quarter and full year,with U.S.Large Cap out earning U.S.Small and Mid Cap stocks. 13.7%13.3% 7.8% 21.4% 28.1% 30.2% 25.3% 22.2% 28.9% 46.8% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% U.S. Large Cap U.S. Mid Cap U.S. Small Cap Int'l Developed Emerging Mkts Value Growth Source: FactSet, MSCI, Russell 6 Capital Markets Review Fixed Income As of December 31, 2017 Credit risk rewarded as global growth surprises The Federal Reserve (“Fed”)raised rates 0.25%in December,setting the Federal Funds Rate target at 1.25%to 1.50%.In spite of a modest rise in interest rates,all spread sectors posted positive returns for the quarter and exceeded Treasuries on a duration-adjusted basis.The FOMC’s median policymaker “dot”suggests three rate increases are in store for 2018. For the fourth consecutive quarter,U.S.Treasuries generated positive absolute returns (+0.05%).The yield curve flattened during the quarter with interest rates rising more for shorter maturities and actually falling 12 bps for 30-year maturities.TIPS improved, returning +1.3%on rising inflation expectations led by recent global growth data. A backdrop of improving growth in the U.S.and abroad helped investment grade credit spreads to tighten 8 bps and return +1.17%on the quarter,outperforming other higher quality sectors.Within investment grade,lower credit quality outperformed higher credit quality for the ninth consecutive quarter.High Yield corporate returns were modestly positive (+0.47%)during the quarter as uncertainty around tax reform offset momentum from rising equity markets and oil prices. ABS and Non-Agency CMBS tightened by 8 bps and 9 bps,respectively,thanks to solid fundamentals for consumers and commercial real estate.Agency MBS was one of the few sectors that saw spread widening during the quarter (+3 bps)as strong issuance combined with the Fed’s gradual wind-down of its balance sheet led to an increase in net supply. Emerging Markets (“EM”)continued to benefit from the global economy’s improving fundamentals such as narrower current account deficits,falling inflation and growing central bank reserves.EM Hard Currency generated a +1.2%return on the quarter. 0 500 1000 1500 2000 2500 3000 Dec-07Dec-08Dec-09Dec-10Dec-11Dec-12Dec-13Dec-14Dec-15Dec-16Dec-17Option-Adjusted Spread (OAS)Date U.S. High Yield 10-Year Median - OAS U.S. High Yield BB Index - OAS U.S. High Yield B Index - OAS U.S. High Yield CCC Index - OAS 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 0 5 10 15 20 25 30Yield to MaturityMaturity (Years) 12/30/2016 9/30/2017 12/31/2017 2011 2012 2013 2014 2015 2016 2017 1Q17 2Q17 3Q17 4Q17 Aggregate -114 226 93 10 -53 138 121 11 30 41 36 Agency -25 166 1 10 -133 121 148 60 20 45 21 MBS -106 91 98 40 -5 -11 52 -17 -4 47 24 ABS 52 246 24 53 44 95 92 22 32 14 24 CMBS 47 841 97 108 -28 236 158 8 34 34 78 Credit -322 693 226 -18 -169 442 335 47 99 89 89 High Yield -240 1394 923 -112 -577 1573 610 214 146 160 72 EMD (USD)-537 1503 -32 -120 3 880 627 259 72 186 77 Source: Bloomberg Barclays U.S. Treasury Yield Curve Change Duration –Adjusted Excess Returns to Treasuries (bps) Best Period Second Best Period Worst Period Second Worst Period Source: U.S. Dept. of The Treasury Source: Bloomberg Barclays U.S. High Yield Credit Valuations by Rating 7 Capital Markets Review Alternative Investments As of December 31, 2017 Goldman Sachs High/Low Tax Baskets vs. S&P 500L 2017 Q4) Sources: Bloomberg, Goldman Sachs 6.6%5.7% 2.0%0.4%1.1%0.5%1.3%1.8%2.3%3.9%2.0%2.8% 21.8% 24.0% 11.7% 3.5% 7.4%7.5%7.7%6.5%7.6% 17.1% 6.5%3.9% 0% 5% 10% 15% 20% 25% 30% QTD YTD Despite generating good alpha YTD, L/S equity managers struggled in generating alpha during the quarter given the end-of November rotation. Relative value fixed income and distressed managers outpaced domestic bonds and high yield. Due in part to a weakening dollar, global stocks and bonds outpaced broad hedge funds and macro funds. *Asset-weighted is used instead of fund-weighted, as it is available and more indicative of the universe.Sources: Hedge Fund Research, FactSet Hedge Funds vs Long-Only: Total Returns 2017 Q4 and YTD Global alternatives rise with risk assets Hedge Funds:Hedge funds generated gains across strategy types during the quarter and year benefitting from the rally in risk assets.For the quarter,changes to tax legislation created winners and losers across hedge funds.Long/short funds with longs in technology-and healthcare-focused stocks were hurt,while those with long exposures to energy,industrial,and financial stocks performed best.A DOJ lawsuit against the proposed AT&T/Time Warner merger caused widening of arbitrage spreads during the quarter,dampening manager returns, while distressed-oriented event-driven strategies were buoyed by continued investor optimism in credit assets (particularly in energy).A weakening dollar and very low volatility levels were headwinds for discretionary macro-oriented strategies,but other diversified relative-value strategies posted positive returns. Real Assets:Global infrastructure posted modest gains of +0.3%for the fourth quarter,which brings performance for the year to +12.7%.Infrastructure had a healthy 2017,but the asset class exhibited wide dispersion across sub-sectors and geographic regions.The resurgence of economic growth in the European,and Asia Pacific regions directly benefited publicly listed toll roads and the airport sector,which reported strong passenger traffic growth throughout much of the year.In North America,oil &gas pipelines,specifically,MLPs,were a significant drag on infrastructure performance.Technical factors,balance sheet restructuring,and negative sentiment hurt MLPs,despite the broader energy industry and equity markets registering healthy gains. Private Capital Markets:Fundraising remained strong through the third quarter of 2017,as 267 funds closed with commitments totaling $150 billion.Aggregate private equity capital raised year-to-date 2017 has increased to $338 billion compared to $286 billion raised in same period of 2016.If fundraising momentum continues,2017 may well be within reach of the all- time annual private equity fundraising record of $415 billion set in 2007.In terms of multiples, the median EV/EBITDA multiple jumped from 9.7x in the first quarter to 10.4x in the second quarter,but has stayed at more-or-less 10x earnings for the past 18 months. -20% -10% 0% 10% 20% 30% 40% 50% Toll Roads Airports Europe Asia Pacific Global North America MLPs 2017 Infrastructure Performance Source: Bloomberg Barclays -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 29-Sep-17 29-Oct-17 29-Nov-17 29-Dec-17Cumulative ReturnGS High Tax - S&P GS High Tax - GS Low Tax GS Low Tax - S&P 8 Quarter Calendar YTD 1 Year 2 Years 3 Years 5 Years 10 Years Equity Markets Broad Global Equity MSCI All Country World IMI 5.7 23.9 23.9 15.9 9.5 11.0 5.0 Broad U.S. Equity Dow Jones Industrial Average 11.0 28.1 28.1 22.2 14.4 16.4 9.2 Broad U.S. Equity Russell 3000 Index 6.3 21.1 21.1 16.9 11.1 15.6 8.6 Technology Equity NASDAQ Index 6.5 29.6 29.6 18.8 14.7 19.4 11.3 U.S. Large Cap Equity S&P 500 Index 6.6 21.8 21.8 16.8 11.4 15.8 8.5 U.S. Large Cap Equity Russell 1000 Index 6.6 21.7 21.7 16.8 11.2 15.7 8.6 U.S. Large Value Equity Russell 1000 Value Index 5.3 13.7 13.7 15.5 8.7 14.0 7.1 U.S. Large Growth Equity Russell 1000 Growth Index 7.9 30.2 30.2 18.1 13.8 17.3 10.0 U.S. Mid Cap Equity Russell Mid Cap Index 6.1 18.5 18.5 16.1 9.6 15.0 9.1 U.S. Mid Cap Value Equity Russell Mid Cap Value Index 5.5 13.3 13.3 16.6 9.0 14.7 9.1 U.S. Mid Cap Growth Equity Russell Mid Cap Growth Index 6.8 25.3 25.3 16.0 10.3 15.3 9.1 U.S. Small Cap Equity Russell 2000 Index 3.3 14.6 14.6 17.9 10.0 14.1 8.7 U.S. Small Cap Value Equity Russell 2000 Value Index 2.0 7.8 7.8 19.2 9.5 13.0 8.2 U.S. Small Cap Growth Equity Russell 2000 Growth Index 4.6 22.2 22.2 16.6 10.3 15.2 9.2 International Equity MSCI EAFE Index 4.2 25.0 25.0 12.4 7.8 7.9 1.9 International Equity MSCI EAFE Index (Hedged)3.7 13.8 13.8 8.3 6.3 8.8 0.8 International Equity MSCI ACWI ex-U.S. Index (inc. Emerging Mkts)5.0 27.2 27.2 15.3 7.8 6.8 1.8 International Value Equity MSCI ACWI ex-U.S. Value Index 4.2 22.7 22.7 15.6 6.3 5.6 1.2 International Growth Equity MSCI ACWI ex-U.S. Growth Index 5.8 32.0 32.0 15.0 9.3 8.0 2.4 International Small Cap S&P Developed ex-U.S. Small Cap Index 6.2 31.9 31.9 16.7 12.9 11.7 4.8 Emerging Markets MSCI Emerging Markets Index 7.4 37.3 37.3 23.5 9.1 4.3 1.7 Bond Markets Core Plus Bond Bloomberg Barclays Aggregate Bond Index 0.4 3.5 3.5 3.1 2.2 2.1 4.0 Global Bonds Bloomberg Barclays Global Aggregate Index 1.1 7.4 7.4 4.7 2.0 0.8 3.1 Total Bond Market Bloomberg Barclays Universal Bond Index 0.4 4.1 4.1 4.0 2.8 2.5 4.3 Long Duration Bonds Bloomberg Barclays Long Credit Index 3.2 12.2 12.2 11.2 5.7 5.1 7.7 Short-Duration Bonds BofA Merrill Lynch U.S. Treasury (1-3 Year)-0.3 0.4 0.4 0.7 0.6 0.6 1.4 Global Bonds Citigroup-WGBI ex-U.S. Index (Unhedged)1.6 10.3 10.3 6.0 2.0 -0.3 2.4 Global Bonds Citigroup-WGBI ex-U.S. Index (Hedged)1.1 2.1 2.1 3.6 2.9 3.9 4.2 Treasury Inflation Protection Bloomberg Barclays 1-10 Year TIPS Index 0.5 1.9 1.9 2.9 1.8 0.1 2.8 Municipal Bonds Bloomberg Barclays Municipal Bond Index 0.7 5.4 5.4 2.8 3.0 3.0 4.5 Cash 91-Day T-Bills Index 0.3 0.8 0.8 0.6 0.4 0.2 0.3 Alternatives Commodities Bloomberg Commodity Index 4.7 1.7 1.7 6.6 -5.0 -8.5 -6.8 U.S. Public Real Estate FTSE NAREIT All Equity REIT Index 2.5 8.7 8.7 8.7 6.7 9.8 7.8 Global Listed Infrastructure DJ Brookfield Global Infrastructure Comp. Index 0.3 12.7 12.7 12.2 2.5 8.1 7.0 Diversified Hedge Funds HFRI FoF Conservative Index 1.1 4.1 4.1 3.0 2.1 3.4 0.9 Long/Short Equity HFRI Equity Hedge Index 3.5 13.5 13.5 9.4 5.8 6.6 3.2 Inflation Inflation CPI -0.1 2.1 2.1 2.1 1.6 1.4 1.6 Returns for periods greater than one year are annualized. Capital Markets Review Index Returns As of December 31, 2017 9 ��S & P 5 0 0 I n d e x i s a c a p i t a l i z a t i o n - w e i g h t e d i n d e x o f 5 0 0 U . S . s t o c k s p u b l i s h e d b y S t a n d a r d a n d P o o r s . T h e i n d e x , w h i c h i s h e a v i l y d o m i n a t e d b y t h e l a r g e s t s t o c k s i n t h e U . S . m a r k e t , c o n t a i n s a b o u t 8 0 % o f t h e t o t a l s t o c k m a r k e t c a p i t a l i z a t i o n a n d i s w i d e l y u s e d a s a b e n c h m a r k o f t h e l a r g e s t U . S . s t o c k s . ��M S C I A C W I I n v e s t a b l e M a r k e t I n d e x ( I M I ) c a p t u r e s l a r g e , m i d a n d s m a l l c a p r e p r e s e n t a t i o n a c r o s s 2 4 D e v e l o p e d M a r k e t s ( D M ) a n d 2 1 E m e r g i n g M a r k e t s ( E M ) c o u n t r i e s i d e n t i f i e d b e l o w . W i t h 8 , 4 2 5 c o n s t i t u e n t s , t h e i n d e x i s c o m p r e h e n s i v e , c o v e r i n g a p p r o x i m a t e l y 9 9 % o f t h e g l o b a l e q u i t y i n v e s t m e n t o p p o r t u n i t y s e t . ��B l o o m b e r g B a r c l a y s U . S . A g g r e g a t e I n d e x r e p r e s e n t s s e c u r i t i e s t h a t a r e S E C - r e g i s t e r e d , t a x a b l e , a n d d o l l a r d e n o m i n a t e d . T h e i n d e x c o v e r s t h e U . S . i n v e s t m e n t g r a d e f i x e d r a t e b o n d m a r k e t , w i t h i n d e x c o m p o n e n t s f o r T r e a s u r y , g o v e r n m e n t a g e n c i e s , c o r p o r a t e s e c u r i t i e s , m o r t g a g e p a s s - t h r o u g h s e c u r i t i e s , c o m m e r c i a l m o r t g a g e - b a c k e d s e c u r i t i e s a n d a s s e t - b a c k e d s e c u r i t i e s . T h e s e m a j o r s e c t o r s a r e s u b d i v i d e d i n t o m o r e s p e c i f i c i n d i c e s t h a t a r e c a l c u l a t e d a n d r e p o r t e d o n a r e g u l a r b a s i s . T h e U . S . A g g r e g a t e I n d e x w a s c r e a t e d i n 1 9 8 6 w i t h h i s t o r y b a c k f i l l e d t o J a n u a r y 1 , 1 9 7 6 . ��M e r r i l l L y n c h U . S . H i g h Y i e l d I n d e x i s a c o m m o n l y u s e d b e n c h m a r k i n d e x f o r h i g h y i e l d c o r p o r a t e b o n d s . I t i s a d m i n i s t e r e d b y M e r r i l l L y n c h . T h e e x i s t i n g H i g h Y i e l d M a s t e r I n d e x e x c l u d e d t w o t y p e s o f i s s u e s t h a t w e r e b e c o m i n g p o p u l a r b e c a u s e o f t h e b o o m i n l e v e r a g e d b u y o u t f i n a n c i n g , z e r o - c o u p o n b o n d s a n d p a y m e n t - i n - k i n d ( P I K ) b o n d s . ��C i t i g r o u p W o r l d G o v e r n m e n t B o n d I n d e x ( W G B I ) i s a m a r k e t c a p i t a l i z a t i o n w e i g h t e d i n d e x c o n s i s t i n g o f t h e g o v e r n m e n t b o n d m a r k e t s . C o u n t r y e l i g i b i l i t y i s d e t e r m i n e d b a s e d o n m a r k e t c a p i t a l i z a t i o n a n d i n v e s t a b i l i t y c r i t e r i a . A l l i s s u e s h a v e a r e m a i n i n g m a t u r i t y o f a t l e a s t o n e y e a r . ��J . P . M o r g a n E m e r g i n g M a r k e t s B o n d I n d e x ( E M B I ) G l o b a l D i v e r s i f i e d t r a c k s t o t a l r e t u r n s f o r t r a d e d e x t e r n a l d e b t i n s t r u m e n t s i n t h e e m e r g i n g m a r k e t s , a n d i s a n e x p a n d e d v e r s i o n o f t h e J P M o r g a n E M B I + . A s w i t h t h e E M B I + , t h e E M B I G l o b a l D i v e r s i f i e d i n c l u d e s U . S . d o l l a r - d e n o m i n a t e d B r a d y b o n d s , t r a d e d l o a n s i s s u e d b y s o v e r e i g n e n t i t i e s , a n d E u r o b o n d s w i t h a n o u t s t a n d i n g f a c e v a l u e o f a t l e a s t $ 5 0 0 m i l l i o n . T h e E M B I G l o b a l D i v e r s i f i e d l i m i t s w e i g h t s o f c o u n t r i e s w i t h h i g h e r a m o u n t s o f o u t s t a n d i n g d e b t , i n o r d e r t o r e p r e s e n t a m o r e d i v e r s i f i e d o p p o r t u n i t y s e t t h a n a s i m p l e c a p i t a l i z a t i o n - w e i g h t e d i n d e x . ��R u s s e l l 1 0 0 0 I n d e x i s a c a p i t a l i z a t i o n - w e i g h t e d i n d e x t h a t m e a s u r e s t h e p e r f o r m a n c e o f t h e l a r g e - c a p s e g m e n t o f t h e U . S . e q u i t y u n i v e r s e , c r e a t e d b y R u s s e l l I n v e s t m e n t s . I t i n c l u d e s a p p r o x i m a t e l y 1 , 0 0 0 o f t h e l a r g e s t s e c u r i t i e s i n t h e U . S . e q u i t y u n i v e r s e . T h e G r o w t h o r V a l u e i n d e x e s a r e a n o n - e x c l u s i v e s u b s e t o f t h e b r o a d e r i n d e x , w h e r e g r o w t h o r v a l u e i s d e t e r m i n e d b y v a l u a t i o n a n d g r o w t h c h a r a c t e r i s t i c s , a s d e f i n e d b y R u s s e l l I n v e s t m e n t s . ��R u s s e l l 2 0 0 0 I n d e x i s a c a p i t a l i z a t i o n - w e i g h t e d i n d e x t h a t m e a s u r e s t h e p e r f o r m a n c e o f t h e s m a l l - c a p s e g m e n t o f t h e U . S . e q u i t y u n i v e r s e , c r e a t e d b y R u s s e l l I n v e s t m e n t s . I t i n c l u d e s a p p r o x i m a t e l y 2 , 0 0 0 o f t h e s m a l l e s t s e c u r i t i e s w i t h i n t h e 3 , 0 0 0 l a r g e s t s e c u r i t i e s i n t h e U . S . e q u i t y u n i v e r s e . T h e G r o w t h o r V a l u e s t y l e i n d e x e s a r e a n o n - e x c l u s i v e s u b s e t o f t h e b r o a d e r i n d e x , w h e r e g r o w t h o r v a l u e i s d e t e r m i n e d b y v a l u a t i o n a n d g r o w t h c h a r a c t e r i s t i c s , a s d e t e r m i n e d b y R u s s e l l I n v e s t m e n t s . ��M S C I W o r l d I n d e x r e p r e s e n t s l a r g e a n d m i d - c a p e q u i t y p e r f o r m a n c e a c r o s s d e v e l o p e d m a r k e t s c o u n t r i e s , c o v e r i n g a p p r o x i m a t e l y 8 5 % o f t h e f r e e f l o a t - a d j u s t e d m a r k e t c a p i t a l i z a t i o n i n e a c h . T h i s i n d e x o f f e r s a b r o a d g l o b a l e q u i t y b e n c h m a r k , w i t h o u t e m e r g i n g m a r k e t s e x p o s u r e . A s o f D e c e m b e r 2 0 1 5 t h e M S C I W o r l d I n d e x c o n s i s t e d o f t h e f o l l o w i n g 2 3 d e v e l o p e d c o u n t r i e s : A u s t r a l i a , A u s t r i a , B e l g i u m , C a n a d a , D e n m a r k , F i n l a n d , F r a n c e , G e r m a n y , H o n g K o n g , I r e l a n d , I s r a e l , I t a l y , J a p a n , N e t h e r l a n d s , N e w Z e a l a n d , N o r w a y , P o r t u g a l , S i n g a p o r e , S p a i n , S w e d e n , S w i t z e r l a n d , U n i t e d K i n g d o m , a n d t h e U n i t e d S t a t e s . T h e i n d e x i n c l u d e s M S C I s a s s e s s m e n t o f t h e m o s t i n v e s t a b l e s t o c k s , d e t e r m i n e d b y s i z e , t r a d i n g v o l u m e , a n d f r e e f l o a t . P e r f o r m a n c e i s s h o w n n e t o f f o r e i g n w i t h h o l d i n g t a x o n t h e d i v i d e n d s p a i d . T h e G r o w t h o r V a l u e s t y l e i n d e x e s a r e a n o n - e x c l u s i v e s u b s e t o f t h e b r o a d e r i n d e x , w h e r e g r o w t h o r v a l u e i s d e t e r m i n e d b y v a l u a t i o n a n d g r o w t h c h a r a c t e r i s t i c s , a s d e f i n e d b y M S C I . C a p i t a l M a r k e t s R e v i e w D e f i n i t i o n s A s o f D e c e m b e r 3 1 , 2 0 1 7 1 0 ��M S C I E A F E ( E u r o p e , A u s t r a l a s i a a n d F a r E a s t ) I n d e x i s a s t a n d a r d , c a p i t a l i z a t i o n - w e i g h t e d r e p r e s e n t a t i o n o f d e v e l o p e d e q u i t y m a r k e t s e x c l u d i n g t h e U . S . a n d C a n a d a . A s o f D e c e m b e r 2 0 1 5 t h e M S C I E A F E I n d e x c o n s i s t e d o f t h e f o l l o w i n g 2 1 d e v e l o p e d c o u n t r i e s : A u s t r a l i a , A u s t r i a , B e l g i u m , D e n m a r k , F i n l a n d , F r a n c e , G e r m a n y , H o n g K o n g , I r e l a n d , I s r a e l , I t a l y , J a p a n , N e t h e r l a n d s , N e w Z e a l a n d , N o r w a y , P o r t u g a l , S i n g a p o r e , S p a i n , S w e d e n , S w i t z e r l a n d , a n d t h e U n i t e d K i n g d o m . T h e i n d e x i n c l u d e s M S C I s a s s e s s m e n t o f t h e m o s t i n v e s t a b l e s t o c k s , d e t e r m i n e d b y s i z e , t r a d i n g v o l u m e , a n d f r e e f l o a t . P e r f o r m a n c e i s s h o w n n e t o f f o r e i g n w i t h h o l d i n g t a x o n t h e d i v i d e n d s p a i d . T h e G r o w t h o r V a l u e s t y l e i n d e x e s a r e a n o n - e x c l u s i v e s u b s e t o f t h e b r o a d e r i n d e x , w h e r e g r o w t h o r v a l u e i s d e t e r m i n e d b y v a l u a t i o n a n d g r o w t h c h a r a c t e r i s t i c s , a s d e f i n e d b y M S C I . ��M S C I E A F E ( E u r o p e , A u s t r a l a s i a a n d F a r E a s t ) S m a l l C a p I n d e x i s a s t a n d a r d , c a p i t a l i z a t i o n - w e i g h t e d r e p r e s e n t a t i o n o f s m a l l c a p c o m p a n i e s i n t h e d e v e l o p e d e q u i t y m a r k e t s e x c l u d i n g t h e U . S . a n d C a n a d a . A s o f D e c e m b e r 2 0 1 5 t h e M S C I E A F E I n d e x c o n s i s t e d o f t h e f o l l o w i n g 2 1 d e v e l o p e d c o u n t r i e s : A u s t r a l i a , A u s t r i a , B e l g i u m , D e n m a r k , F i n l a n d , F r a n c e , G e r m a n y , H o n g K o n g , I r e l a n d , I s r a e l , I t a l y , J a p a n , N e t h e r l a n d s , N e w Z e a l a n d , N o r w a y , P o r t u g a l , S i n g a p o r e , S p a i n , S w e d e n , S w i t z e r l a n d , a n d t h e U n i t e d K i n g d o m . T h e i n d e x i n c l u d e s M S C I s a s s e s s m e n t o f t h e m o s t i n v e s t a b l e s t o c k s , d e t e r m i n e d b y s i z e , t r a d i n g v o l u m e , a n d f r e e f l o a t . P e r f o r m a n c e i s s h o w n n e t o f f o r e i g n w i t h h o l d i n g t a x o n t h e d i v i d e n d s p a i d . ��M S C I E m e r g i n g M a r k e t s I n d e x i s a f r e e f l o a t - a d j u s t e d , m a r k e t c a p i t a l i z a t i o n - w e i g h t e d i n d e x t h a t i s d e s i g n e d t o m e a s u r e e q u i t y m a r k e t p e r f o r m a n c e w i t h i n e m e r g i n g m a r k e t s . A s o f D e c e m b e r 2 0 1 5 t h e M S C I E m e r g i n g M a r k e t s I n d e x c o n s i s t e d o f t h e f o l l o w i n g 2 3 e m e r g i n g m a r k e t c o u n t r i e s : B r a z i l , C h i l e , C h i n a , C o l o m b i a , C z e c h R e p u b l i c , E g y p t , G r e e c e , H u n g a r y , I n d i a , I n d o n e s i a , K o r e a , M a l a y s i a , M e x i c o , P e r u , P h i l i p p i n e s , P o l a n d , Q a t a r , R u s s i a , S o u t h A f r i c a , T a i w a n , T h a i l a n d , T u r k e y , a n d t h e U n i t e d A r a b E m i r a t e s . T h e i n d e x i n c l u d e s M S C I s a s s e s s m e n t o f t h e m o s t i n v e s t a b l e s t o c k s , d e t e r m i n e d b y s i z e , t r a d i n g v o l u m e , a n d f r e e f l o a t . P e r f o r m a n c e i s s h o w n n e t o f f o r e i g n w i t h h o l d i n g t a x o n t h e d i v i d e n d s p a i d . ��H F R I M o n t h l y I n d i c e s ( H F R I ) : T h i s i s a n e q u a l l y w e i g h t e d s e t o f p e r f o r m a n c e i n d e x e s , u s e d b y n u m e r o u s h e d g e f u n d m a n a g e r s a s b e n c h m a r k s f o r t h e i r o w n h e d g e f u n d s . T h e H F R I a r e b r o k e n d o w n i n t o f o u r m a i n s t r a t e g i e s , e a c h w i t h m u l t i p l e s u b s t r a t e g i e s . A l l s i n g l e - m a n a g e r H F R I I n d e x c o n s t i t u e n t s a r e i n c l u d e d i n t h e H F R I F u n d W e i g h t e d C o m p o s i t e , w h i c h a c c o u n t s f o r o v e r 2 , 2 0 0 f u n d s l i s t e d o n t h e i n t e r n a l H F R D a t a b a s e . D u e t o m u t u a l a g r e e m e n t s w i t h t h e h e d g e f u n d m a n a g e r s l i s t e d i n t h e H F R D a t a b a s e , w e a r e n o t a t l i b e r t y t o d i s c l o s e t h e p a r t i c u l a r f u n d s b e h i n d a n y i n d e x t o n o n - d a t a b a s e s u b s c r i b e r s . F u n d s i n c l u d e d i n t h e H F R I I n d i c e s m u s t r e p o r t m o n t h l y r e t u r n s , r e p o r t n e t o f a l l f e e s r e t u r n s , r e p o r t a s s e t s i n U . S . D o l l a r s , a n d h a v e a t l e a s t $ 5 0 M i l l i o n u n d e r m a n a g e m e n t o r h a v e b e e n a c t i v e l y t r a d i n g f o r a t l e a s t t w e l v e ( 1 2 ) m o n t h s . ��B l o o m b e r g C o m m o d i t y I n d e x : F o r m e r l y k n o w n a s t h e D o w J o n e s - U B S C o m m o d i t y I n d e x . T h i s i s d e s i g n e d t o b e a l i q u i d a n d d i v e r s i f i e d b e n c h m a r k f o r t h e c o m m o d i t i e s f u t u r e s m a r k e t . T h e I n d e x i s c o m p o s e d o f f u t u r e s c o n t r a c t s o n 2 2 p h y s i c a l c o m m o d i t i e s , a n d w a s l a u n c h e d o n J u l y 1 4 , 1 9 9 8 . ��F T S E N A R E I T A l l E q u i t y R E I T s I n d e x : T h i s i s d e s i g n e d t o b e a l i q u i d a n d d i v e r s i f i e d b e n c h m a r k f o r t h e p u b l i c r e a l e s t a t e m a r k e t . T h e I n d e x i s c o m p o s e d o f o v e r 1 5 0 r e a l e s t a t e i n v e s t m e n t t r u s t s ( R E I T s ) a c r o s s 1 4 s e c t o r s , a n d w a s l a u n c h e d i n M a r c h 2 0 0 6 . L o n d o n s F i n a n c i a l T i m e s a n d S t o c k E x c h a n g e ( F T S E ) a n d t h e N a t i o n a l A s s o c i a t i o n o f R e a l E s t a t e I n v e s t m e n t T r u s t s ( N A R E I T ) p u b l i s h t h e d a t a . C a p i t a l M a r k e t s R e v i e w D e f i n i t i o n s A s o f D e c e m b e r 3 1 , 2 0 1 7 1 1 Executive Summary 12 Performance Summary - December 2017 During the fourth quarter, all fixed income and equity options produced positive returns. Active domestic equity funds produced mixed results. Within the target date retirement funds, most options ranked near the median or better than their target date manager universe during the all periods, with the exception of the two earliest dated funds. 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 2015 through 2065 in five year increments. Manager Evaluation Vanguard is a market leader and well known for its low cost market index and institutional investment funds. Fourth quarter performance for active managers in the investment menu produced mixed results. Vanguard Windsor II outperformed its benchmark by 60 basis points, while Vanguard US Growth and Vanguard International Growth trailed their benchmarks by 190 and 90 basis points, respectively. Over the past year, all three actively managed funds outperformed their benchmarks and ranked above median in their peer universes. Target retirement date funds approximated their respective benchmarks over longer-term periods. Ranks were well above median in their target date fund universes. Deferred Compensation Plan Executive Summary 13 Deferred Compensation Plan Executive Summary Capital Markets Review The S&P 500 Index returned 6.6% during the fourth quarter. Growth-oriented sectors continued to lead returns with information technology by far the strongest performing sector during the year, particularly FAANG and BAT stocks. During the fourth quarter, consumer discretionary stocks fared the best, and Energy and telecommunications were the only two sectors to register a loss. Most developed market equity indices provided returns in the +4% to +7% range during the quarter. Emerging Markets were slightly higher, returning +7.4%, led by South Africa, India, and South Korea. Growth continued to outperform value in the fourth quarter. Emerging Markets experienced the most pronounced performance differential by style, as well as the highest absolute return of the growth stocks. The Fed raised rates by 25 basis points in December. Despite the rise in interest rates, all spread sectors posted positive returns for the quarter. Treasuries returned 0.05% for the quarter, the fourth consecutive quarter of generating positive absolute returns. The yield curve flattened during the quarter with interest rates rising more than shorter maturities. Recommendations or Action Items No recommendations at this time. 14 Performance Summary 15 Quarter Year To Date 1 Year 3 Years 5 Years 10 Years Domestic Equity Options Vanguard 500 Index (VFINX)6.6 (47)21.7 (48)21.7 (48)11.3 (29)15.6 (35)8.4 (46) S&P 500 6.6 (46)21.8 (46)21.8 (46)11.4 (27)15.8 (32)8.5 (42) eV Large Cap All Median 6.5 21.3 21.3 10.1 14.9 8.2 Vanguard US Growth (VWUSX)6.0 (69)31.6 (34)31.6 (34)12.3 (40)16.8 (29)9.1 (45) Russell 1000 Growth Index 7.9 (14)30.2 (41)30.2 (41)13.8 (16)17.3 (19)10.0 (24) eV Large Cap Growth Median 6.7 29.0 29.0 11.7 16.0 8.9 Vanguard Windsor II (VWNFX)5.9 (54)16.8 (48)16.8 (48)8.6 (56)13.2 (69)7.1 (59) Russell 1000 Value Index 5.3 (71)13.7 (84)13.7 (84)8.7 (55)14.0 (49)7.1 (59) eV Large Cap Value Median 6.0 16.5 16.5 9.0 14.0 7.4 Vanguard Mid-Cap Index (VIMSX)5.6 (55)19.1 (53)19.1 (53)9.2 (55)14.9 (42)8.8 (52) Vanguard Mid-Cap Index Fund Blended Benchmark 5.6 (54)19.3 (52)19.3 (52)9.4 (52)15.1 (38)9.0 (47) eV Mid Cap All Median 5.8 19.6 19.6 9.6 14.4 8.8 Vanguard Small-Cap Index (NAESX)5.1 (27)16.1 (41)16.1 (41)9.7 (54)14.3 (50)9.5 (35) Vanguard Small-Cap Index Fund Blended Benchmark 5.1 (27)16.2 (40)16.2 (40)9.8 (53)14.4 (48)9.6 (34) eV Small Cap All Median 3.8 14.2 14.2 9.9 14.2 9.0 International Equity Option Vanguard International Growth (VWIGX)4.1 (61)43.0 (2)43.0 (2)13.0 (15)10.9 (22)4.6 (26) MSCI AC World ex USA (Net)5.0 (37)27.2 (55)27.2 (55)7.8 (71)6.8 (87)1.8 (85) eV Non US Diversified All Median 4.4 27.8 27.8 9.0 8.6 3.1 Fixed Income Options Vanguard Total Bond Market Index (VBMFX)0.4 (71)3.5 (96)3.5 (96)2.1 (90)1.9 (95)3.8 (97) Vanguard Total Bond Market Index Fund Benchmark 0.4 (66)3.6 (91)3.6 (91)2.3 (85)2.1 (91)4.0 (94) eV Core Plus Fixed Income Median 0.5 4.7 4.7 3.0 2.8 4.9 Vanguard Retirement Savings Trust 0.5 1.8 1.8 1.8 1.8 2.5 Ryan 3 Yr GIC Master 0.4 1.6 1.6 1.4 1.2 2.3 Performance Summary Investment Options As of December 31, 2017 _________________________ Returns are expressed as percentages. Returns for periods greater than one year are annualized. Peer group percentile ranks are shown in parenthesis. 16 Performance Summary Investment Options As of December 31, 2017 Quarter Year To Date 1 Year 3 Years 5 Years 10 Years Equity/Fixed Income Blend Options Vanguard Balanced Index (VBINX)3.9 (40)13.8 (51)13.8 (51)7.4 (38)9.9 (35)7.0 (19) Vanguard Balanced Index Fund Benchmark 3.9 (38)13.9 (49)13.9 (49)7.6 (33)10.1 (33)7.1 (17) eV US Balanced Median 3.6 13.8 13.8 6.9 9.3 6.2 Vanguard Target Retirement Income (VTINX)2.0 (57)8.5 (67)8.5 (67)4.5 (57)5.0 (47)4.9 (43) Vanguard Target Income Composite Index (Net)2.1 (52)8.7 (64)8.7 (64)4.7 (51)5.2 (45)5.0 (38) TD Income Universe Median 2.2 9.6 9.6 4.7 4.7 4.7 Vanguard Target Retirement 2015 (VTXVX)2.7 (28)11.5 (33)11.5 (33)5.6 (36)7.2 (23)5.2 (38) Vanguard Target 2015 Composite Index (Net)2.8 (18)11.6 (30)11.6 (30)5.8 (23)7.5 (14)5.3 (23) TD 2015 Universe Median 2.5 10.8 10.8 5.2 6.2 5.1 Vanguard Target Retirement 2020 (VTWNX)3.4 (15)14.1 (17)14.1 (17)6.6 (17)8.5 (8)5.6 (16) Vanguard Target 2020 Composite Index (Net)3.5 (3)14.2 (12)14.2 (12)6.8 (10)8.8 (4)5.8 (12) TD 2020 Universe Median 3.0 13.1 13.1 6.1 7.5 5.0 Vanguard Target Retirement 2025 (VTTVX)3.9 (6)15.9 (24)15.9 (24)7.3 (22)9.4 (12)5.8 (16) Vanguard Target 2025 Composite Index (Net)4.0 (3)16.1 (20)16.1 (20)7.5 (10)9.6 (6)5.9 (13) TD 2025 Universe Median 3.5 15.3 15.3 6.8 8.6 5.4 Vanguard Target Retirement 2030 (VTHRX)4.2 (27)17.5 (39)17.5 (39)7.8 (34)10.1 (18)5.9 (22) Vanguard Target 2030 Composite Index (Net)4.4 (17)17.7 (33)17.7 (33)8.1 (22)10.4 (10)6.1 (19) TD 2030 Universe Median 4.1 17.1 17.1 7.5 9.4 5.6 Vanguard Target Retirement 2035 (VTTHX)4.6 (32)19.1 (37)19.1 (37)8.4 (38)10.9 (23)6.2 (24) Vanguard Target 2035 Composite Index (Net)4.8 (18)19.2 (36)19.2 (36)8.6 (27)11.2 (8)6.3 (21) TD 2035 Universe Median 4.5 18.8 18.8 8.1 10.3 5.9 Vanguard Target Retirement 2040 (VFORX)5.0 (27)20.7 (29)20.7 (29)8.9 (34)11.5 (13)6.5 (22) Vanguard Target 2040 Composite Index (Net)5.2 (8)20.9 (25)20.9 (25)9.2 (19)11.8 (7)6.6 (18) TD 2040 Universe Median 4.8 19.9 19.9 8.6 10.7 6.0 Vanguard Target Retirement 2045 (VTIVX)5.2 (29)21.4 (24)21.4 (24)9.2 (36)11.6 (18)6.6 (24) Vanguard Target 2045 Composite Index (Net)5.4 (3)21.5 (21)21.5 (21)9.4 (16)12.0 (9)6.7 (17) TD 2045 Universe Median 4.9 20.6 20.6 9.0 10.9 6.2 _________________________ Returns are expressed as percentages. Returns for periods greater than one year are annualized. Peer group percentile ranks are shown in parenthesis. 17 Performance Summary Investment Options As of December 31, 2017 Quarter Year To Date 1 Year 3 Years 5 Years 10 Years Equity/Fixed Income Blend Options (cont.) Vanguard Target Retirement 2050 (VFIFX)5.2 (35)21.4 (40)21.4 (40)9.2 (42)11.6 (22)6.6 (20) Vanguard Target 2050 Composite Index (Net)5.4 (9)21.5 (30)21.5 (30)9.4 (17)12.0 (13)6.7 (15) TD 2050 Universe Median 5.1 20.9 20.9 9.0 11.1 6.1 Vanguard Target Retirement 2055 (VFFVX)5.2 (32)21.4 (40)21.4 (40)9.1 (52)11.6 (27)-- Vanguard Target 2055 Composite Index (Net)5.4 (12)21.5 (32)21.5 (32)9.4 (22)12.0 (24)-- TD 2055 Universe Median 5.1 21.1 21.1 9.1 11.2 -- Vanguard Target Retirement 2060 (VTTSX)5.2 (38)21.4 (41)21.4 (41)9.1 (55)11.6 (--)-- Vanguard Target 2060 Composite Index (Net)5.4 (10)21.5 (34)21.5 (34)9.4 (42)12.0 (--)-- TD 2060 Universe Median 5.1 20.9 20.9 9.1 ---- Vanguard Target Retirement 2065 (VLXVX)5.2 (40)---------- Vanguard Target 2065 Composite Index (Net)5.4 (10)---------- TD 2065 Universe Median 5.1 20.9 20.9 9.2 ---- Money Market Option Vanguard Prime Money Market (VMMXX)0.3 1.0 1.0 0.5 0.3 0.5 BofA Merrill Lynch 3 Month U.S. T-Bill 0.3 0.9 0.9 0.4 0.3 0.4 _________________________ Returns are expressed as percentages. Returns for periods greater than one year are annualized. Peer group percentile ranks are shown in parenthesis. 18 Pe rformance Summary Manager Compliance Checklist As of December 31, 2017 1 Manager performance is evaluated net of investment management fees. Mana gers Va ngua rd S&P 500 Inde x (V FI NX ) Vangua rd US Grow th (V WUSX) Vangua rd Windsor I I (V WNFX) Vangua rd Mid-Ca p Inde x (V IMSX) Vangua rd Small-Ca p Inde x (NAES X) Vangua rd Interna ti ona l Grow th (V WIGX) Vangua rd Total Bond Ma rke t I nde x (V BM FX ) Vangua rd Re ti re ment Trust Org ani zati onal /Produ ct Is sues No ma teria l c hanges to inves tment 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 Perfor mance 1 Three-year return better than benchmark N/A -In Lin e N/A N/A +N/A + Three-year rankin g better than peer group median ++---+-N/A Five year re turn better than benchmark N/A --N/A N/A +N/A + Five year ra nkin g better than peer group median ++-+++-N/A Perfor mance s tatus ++++++++ Summary status ++++++++ 19 Pe rformance Summary Manager Compliance Checklist (Continued) As of December 31, 2017 1 Manager performance is evaluated net of investment management fees. Ma nage rs Va ngua rd Ba la nce d Inde x (V BI NX ) Va ngua rd Ta rge t Re ti re me nt Incom e Fund (V TINX) Va ngua rd Ta rge t Re ti re ment 2015 (V TXVX) Vangua rd Ta rge t Re ti re me nt 2020 (V TW NX ) Vangua rd Ta rge t Re ti re ment 2025 (V TTVX) Vangua rd Ta rge t Re ti re me nt 2030 (V THRX ) Vangua rd Ta rge t Re ti re ment 2035 (V TTHX) 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 re gulatory concerns +++++++ Cu rrently in adherence to guidelin es +++++++ Po rt fo lio characteris tics me et s tylis tic expectations +++++++ Re lati ve Perfor ma nc e 1 Three-year re turn better than benchmark N/A N/A N/A N/A N/A N/A N/A Three-year ra nkin 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 Five year rankin g better than peer group median +++++++ Perfor man ce s tatus +++++++ Summar y s tatus +++++++ 20 Pe rformance Summary Manager Compliance Checklist (Continued) As of December 31, 2017 1 Manager performance is evaluated net of investment management fees. Ma na ge rs Va ngua rd Ta rge t Re ti re ment 2040 (V FORX) Vangua rd Ta rge t Re ti re me nt 2045 (V TI VX) Vangua rd Ta rge t Re ti re ment 2050 (V FIFX) Vangua rd Ta rge t Re ti re me nt 2055 (V FFVX) Va ngua rd Ta rge t Re ti re ment 2060 (V TTSX) Vangua rd Ta rge t Re ti re me nt 2065 (V LX VX) 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 re gulatory concerns ++++++ Cu rrently in adherence to guidelin es ++++++ Po rt fo lio characteris tics me et s tylis tic expectations ++++++ Re lati ve Perfor ma nc e 1 Three-year re turn better than benchmark N/A N/A N/A N/A N/A N/A Three-year ra nkin g better than peer group median +++++N/A Five year return better than benchmark N/A N/A N/A N/A N/A N/A Five year rankin g better than peer group median +++++N/A Perfor man ce s tatus ++++++ Summar y s tatus ++++++ 21 Plan Assets 22 Plan Summary Deferred Compensation Plan Assets As of December 31, 2017 Investm ent Opti ons Investm ent S tyl e Al loca ti on Perce ntage Dome stic Eq uity Funds Van gu ard 500 Index I nv US Large C ap Equit y -Core $ 8,995,067 14.2%$ 599,600 + 7.1% Van gu ard Windsor II Inv US Large C ap Equit y -Valu e $ 9,382,333 14.8%$ 427,749 + 4.8% Van gu ard US Growth Inv US Large C ap Equit y -Growth $ 5,399,403 8.5%$ 236,315 + 4.6% Van gu ard M id Cap Index Inv US Mid Cap Equit y -Core $ 3,461,785 5.4%$ 143,531 + 4.3% Van gu ard Small C ap Index Inv US Small C ap Equit y -Core $ 2,814,235 4.4%$ 133,385 + 5.0% $ 30,052,824 47.3%$ 1,540,581 + 5.4% Internat ional Equ ity Funds Van gu ard Int ernational G rowth Int er nat ional Equit y $ 3,341,152 5.3%$ 182,805 + 5.8% $ 3,341,152 5.3%$ 182,805 + 5.8% Fi xe d I ncome/Alte rnative Fu nds Van gu ard T ot al Bond M arket Index I nv Market Duration $ 2,742,294 4.3%$ 163,540 + 6.3% Van gu ard Retirement Sav ings Trust Sh ort Duration $ 2,941,454 4.6%$ (270,923)- 8.4% Van gu ard Balanced Index Inv Balanced $ 5,485,682 8.6%$ 236,308 + 4.5% $ 11,169,431 17.6%$ 128,925 + 1.2% Cas h Van gu ard Prime M oney Mar ket Cash $ 1,384,365 2.2%$ 116,149 + 9.2% $ 1,384,365 2.2%$ 116,149 + 9.2% Ta rge t Date Fu nds Van gu ard T arge t Ret ir emen t Income Inv Blend $ 824,242 1.3%$ (36,173)- 4.2% Van gu ard T arge t Ret ir emen t 2015 Inv Blend $ 975,588 1.5%$ 29,338 + 3.1% Van gu ard T arge t Ret ir emen t 2020 Inv Blend $ 2,812,842 4.4%$ 266,579 + 10.5% Van gu ard T arge t Ret ir emen t 2025 Inv Blend $ 4,506,811 7.1%$ 158,914 + 3.7% Van gu ard T arge t Ret ir emen t 2030 Inv Blend $ 1,855,802 2.9%$ 186,576 + 11.2% Van gu ard T arge t Ret ir emen t 2035 Inv Blend $ 1,856,963 2.9%$ 145,714 + 8.5% Van gu ard T arge t Ret ir emen t 2040 Inv Blend $ 1,101,522 1.7%$ 101,123 + 10.1% Van gu ard T arge t Ret ir emen t 2045 Inv Blend $ 1,190,114 1.9%$ 72,583 + 6.5% Van gu ard T arge t Ret ir emen t 2050 Inv Blend $ 767,662 1.2%$ 120,940 + 18.7% Van gu ard T arge t Ret ir emen t 2055 Inv Blend $ 245,553 0.4%$ 24,371 + 11.0% Van gu ard T arge t Ret ir emen t 2060 Inv Blend $ 82,303 0.1%$ 8,311 + 11.2% Van gu ard T arge t Ret ir emen t 2065 Inv Blend $ 81 0.0%$ 81 - 16,219,482$ 25.5%1,078,357$ + 7.1% Lo an Fund Loan F und Loan Fund $ 1,378,189 2.2%$ (83,175)- 5.7% TO TA L $ 63,545,442 100.0%$ 2,963,641 + 4.9% $ Ch ange From Previous Qtr % C ha nge From Previous Qtr 23 Plan Summary Fee Comparison Summary As of December 31, 2017 1 Effective 1/27/17, Vanguard has reduced fees by 1 bps . Fees are updated to reflect this change. Inv estment Option Expe nse Ratio Morningstar Cate gory Av erage Fe e Level Comparison Group Median eVestment Al liance Univ erse Median Cate gory Fe e Level Comp ar ison Group eVestment Alliance Univ erse Va nguard 500 In dex 0.14 1.04 0.75 0.15 La rg e Ble nd La rg e Cap No Load US Pa ssive Large Cap Equity Va nguard US Gro wth 0.43 1.13 0.89 0.78 La rg e Gro wt h La rg e Cap No Load US Large Cap Gro wt h Va nguard Windsor 0.33 1.05 0.89 0.75 La rg e Value La rg e Cap No Load US Large Cap Value Va nguard Mid-Ca p Index 0.18 1.08 1.03 0.18 Mid Ble nd Mid Cap No Load US Pa ssive Mid Cap Equity Va nguard Sma ll-Ca p Index 0.18 1.20 1.18 0.19 Small Ble nd Small Ca p No Load US Pa ssive Sma ll Ca p Equity Va nguard International Gr owth 0.45 1.2 1.01 1.00 Fo re ig n Large Gro wt h Fo reig n Large Cap No Load ACWI ex-US Gro wt h Equity Va nguard Total Bo nd Marke t Index 0.15 0.79 0.64 0.45 In terme diate-Term Bo nd Interme diate-Term Bo nd No Load US Core Fixe d Income Va nguard Retire me nt Saving Trust 0.53 N/A N/A 0.78 N/A N/A US St able Value Fixed Income Va nguard Balanced Index 0.19 0.88 0.90 0.76 Moderate Allo cation Moderate Allo cation No Load US Balanced Va nguard Target Retire me nt Income1 0.13 0.39 0.50 0.37 Re tire me nt Income Re tireme nt Income No Load Lifecycle/Target Date Income Va nguard Target Retire me nt 2015 0.14 0.35 0.64 0.36 Target Date 2011-2015 Target Retire me nt 2011-2015 No Lo ad Lifecycle/Target Date 2015 Va nguard Target Retire me nt 2020 0.14 0.39 0.64 0.40 Target Date 2016-2020 Target Retire me nt 2016-2020 No Lo ad Lifecycle/Target Date 2020 Va nguard Target Retire me nt 20251 0.14 0.37 0.66 0.40 Target Date 2021-2025 Target Retire me nt 2021-2025 No Lo ad Lifecycle/Target Date 2025 Va nguard Target Retire me nt 2030 0.15 0.39 0.68 0.41 Target Date 2026-2030 Target Retire me nt 2026-2030 No Lo ad Lifecycle/Target Date 2030 Va nguard Target Retire me nt 2035 0.15 0.38 0.72 0.42 Target Date 2031-2035 Target Retire me nt 3031-2035 No Lo ad Lifecycle/Target Date 2035 Va nguard Target Retire me nt 2040 0.16 0.39 0.72 0.43 Target Date 2036-2040 Target Retire me nt 2036-2040 No Lo ad Lifecycle/Target Date 2040 Va nguard Target Retire me nt 2045 0.16 0.38 0.74 0.43 Target Date 2041-2045 Target Retire me nt 2041-2045 No Lo ad Lifecycle/Target Date 2045 Va nguard Target Retire me nt 2050 0.16 0.40 0.72 0.43 Target Date 2046-2050 Target Retire me nt 2046-2050 No Lo ad Lifecycle/Target Date 2050 Va nguard Target Retire me nt 2055 0.16 0.38 0.75 0.45 Target Date 2051+Target Retire me nt 2051+ No Lo ad Lifecycle/Target Date 2055 Va nguard Target Retire me nt 2060 0.16 0.36 0.77 0.42 Target Date 2051+Target Retire me nt 2051+ No Lo ad Lifecycle/Target Date 2060 Va nguard Target Retirment 2065 0.16 0.36 0.64 0.42 Target Date 2051+Target Retire me nt 2051+ No Lo ad Lifecycle/Target Date 2060 Va nguard Prime Money Marke t 0.16 0.42 N/A 0.20 Money Marke t Taxable N/A US Cas h Management Pavilio n Consulting Fee ($10,404 p er year) 24 Manager Evaluation 25 Historical Performance (%) Risk and Return (Jan - 2013 - Dec - 2017)Three Year Rolling Percentile Ranking (10 Years) Historical Statistics - monthly periodicity (Sep-1976 - Dec-2017) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Vanguard 500 Index Inv 6.6 21.7 21.7 11.3 15.6 8.4 11.8 1.2 13.5 32.2 15.8 2.0 14.9 26.5 -37.0 5.4 S&P 500 6.6 21.8 21.8 11.4 15.8 8.5 12.0 1.4 13.7 32.4 16.0 2.1 15.1 26.5 -37.0 5.5 eV Large Cap All Median 6.5 21.3 21.3 10.1 14.9 8.2 9.5 0.0 11.5 33.1 15.0 0.0 14.5 28.4 -37.0 7.7 Vanguard 500 Index Inv Rank 47 48 48 29 35 46 35 41 26 59 41 32 45 58 50 64 Vanguard 500 Index Inv S&P 500 0 25 50 75 100Return Percentile Rank3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 3/17 12/17 15.4 15.6 15.8 16.0 16.2 Return (%)7.2 7.3 7.4 Risk (Standard Deviation %) S&P 500 Vanguard 500 Index Inv Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard 500 Index Inv 11.1 14.7 6.9 -0.2 1.0 0.5 0.5 -0.5 9.4 20.6 41y 4m S&P 500 11.4 14.7 7.1 0.0 1.0 0.5 0.0 --9.4 0.0 41y 4m 90 Day U.S. Treasury Bill 4.9 1.1 0.0 4.9 0.0 --14.7 -0.5 0.0 39.1 41y 4m Manager Evaluation Vanguard 500 Index Inv vs. S&P 500 As of December 31, 2017 Holdings Data as of Dec-2017. 26 Portfolio Characteristics Portfolio Benchmark Wtd. Avg. Mkt. Cap ($M)193,937 194,088 Median Mkt. Cap ($M)22,067 22,214 Price/Earnings ratio 23.3 23.3 Price/Book ratio 3.4 3.4 5 Yr. EPS Growth Rate (%)13.5 13.5 Current Yield (%)1.9 1.9 Debt to Equity 1.1 1.1 # of Securities 506 505 Beta (5 Years, Monthly)1.00 1.00 Consistency (5 Years, Monthly)1.67 1.00 Sharpe Ratio (5 Years, Monthly)1.57 1.59 Information Ratio (5 Years, Monthly)-10.15 - Up Market Capture (5 Years, Monthly)99.50 - Down Market Capture (5 Years, Monthly)100.50 - Active Share 0.2 -- Top Ten Equity Holdings Portfolio Weight (%) Bmk Weight (%) Qtr Return (%) Contribution to Return (%) Apple Inc 3.8 3.8 10.2 0.4 Microsoft Corp 2.9 2.9 15.4 0.4 Amazon.com Inc 2.1 2.0 21.6 0.4 Facebook Inc 1.8 1.8 3.3 0.1 Johnson & Johnson 1.6 1.6 8.1 0.1 JPMorgan Chase & Co 1.6 1.6 12.6 0.2 Berkshire Hathaway Inc 1.6 1.7 8.1 0.1 Exxon Mobil Corp 1.6 1.6 3.0 0.0 Google Inc (Class C)1.4 1.4 9.1 0.1 Alphabet Inc 1.4 1.4 8.2 0.1 % of Portfolio 19.8 19.8 2.1 Market Cap Breakout (%) Vanguard 500 Index Inv S&P 500 0.0 20.0 40.0 60.0 80.0 >$75 Bil $20 Bil - $75 Bil $5 Bil - $20 Bil $0 - $5 Bil 58.2 30.5 11.2 0.1 58.2 30.5 11.2 0.1 Sector Weights (%) Vanguard 500 Index Inv S&P 500 0.0 5.0 10.0 15.0 20.0 25.0 30.0 Utilities Telecommunication Services Real Estate Materials Information Technology Industrials Health Care Financials Energy Consumer Staples Consumer Discretionary 2.9 2.1 2.9 3.0 23.8 10.2 13.8 14.9 6.1 8.2 12.2 2.9 2.1 2.9 3.0 23.8 10.2 13.8 14.8 6.1 8.2 12.2 Manager Evaluation Vanguard 500 Index Inv vs. S&P 500 As of December 31, 2017 Holdings Data as of Dec-2017. 27 Historical Performance (%) Buy and Hold Attribution (%) Risk and Return (Jan - 2013 - Dec - 2017)Three Year Rolling Percentile Ranking (10 Years) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Vanguard Windsor II Inv 5.9 16.8 16.8 8.6 13.2 7.1 13.4 -3.2 11.2 30.7 16.7 2.7 10.6 27.1 -36.7 2.2 Russell 1000 Value Index 5.3 13.7 13.7 8.7 14.0 7.1 17.3 -3.8 13.5 32.5 17.5 0.4 15.5 19.7 -36.8 -0.2 eV Large Cap Value Median 6.0 16.5 16.5 9.0 14.0 7.4 14.0 -3.2 11.3 33.0 15.2 0.0 14.1 24.9 -36.0 3.6 Vanguard Windsor II Inv Rank 54 48 48 56 69 59 57 51 56 74 32 28 89 39 57 63 Vanguard Windsor II Inv Russell 1000 Value Index 0 25 50 75 100Return Percentile Rank3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 3/17 12/17 11.9 12.6 13.3 14.0 14.7 15.4 Return (%)6.9 7.2 7.5 7.8 8.1 8.4 8.7 Risk (Standard Deviation %) Russell 1000 Value Index Vanguard Windsor II Inv Average Active Weight 0.0 10.0 20.0-10.0-20.0 Utilities Telecommunication Services Real Estate Other Materials Information Technology Industrials Health Care Financials Energy Consumer Staples Consumer Discretionary Cash -6.0 -0.3 -4.5 0.5 0.9 9.3 1.5 2.6 -7.4 -1.6 0.1 2.8 2.1 Allocation (Total: 0.5) 0.0 0.4 0.8-0.4-0.8 0.3 0.0 0.2 0.0 0.0 0.4 -0.1 -0.1 -0.2 0.0 0.0 0.0 -0.1 Stock (Total: 0.1) 0.0 0.6 1.2-0.6-1.2 0.0 0.1 0.0 0.0 -0.1 -0.2 -0.3 -0.1 -0.1 0.3 -0.2 0.8 0.0 Vanguard Windsor II Inv 0.0 0.5 1.0 1.5-0.5-1.0 0.3 0.1 0.2 0.0 -0.1 0.2 -0.4 -0.1 -0.4 0.3 -0.2 0.8 -0.1 Manager Evaluation Vanguard Windsor II Inv vs. Russell 1000 Value Index As of December 31, 2017 Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading. Holdings Data as of Sep-2017. 28 Portfolio Characteristics Portfolio Benchmark Wtd. Avg. Mkt. Cap ($M)157,480 127,504 Median Mkt. Cap ($M)25,031 9,573 Price/Earnings ratio 19.2 20.3 Price/Book ratio 2.7 2.2 5 Yr. EPS Growth Rate (%)7.4 5.7 Current Yield (%)2.2 2.4 Debt to Equity 1.3 0.8 # of Securities 280 713 Beta (5 Years, Monthly)0.97 1.00 Consistency (5 Years, Monthly)50.00 1.00 Sharpe Ratio (5 Years, Monthly)1.30 1.37 Information Ratio (5 Years, Monthly)-0.34 - Up Market Capture (5 Years, Monthly)96.12 - Down Market Capture (5 Years, Monthly)98.41 - Active Share 62.6 -- Top Ten Equity Holdings Portfolio Weight (%) Bmk Weight (%) Qtr Return (%) Contribution to Return (%) Microsoft Corp 3.6 0.0 15.4 0.6 Citigroup Inc 2.9 1.6 2.7 0.1 Bank of America Corp 2.7 2.3 17.0 0.5 Pfizer Inc 2.7 1.7 2.4 0.1 Medtronic PLC 2.6 0.8 4.4 0.1 JPMorgan Chase & Co 2.5 2.9 12.6 0.3 Wells Fargo & Co 2.4 2.1 10.8 0.3 United Technologies Corp 2.1 0.8 10.6 0.2 Oracle Corp 2.1 1.0 -1.8 0.0 Johnson & Johnson 1.9 2.5 8.1 0.2 % of Portfolio 25.5 15.7 2.2 Market Cap Breakout (%) Vanguard Windsor II Inv Russell 1000 Value Index 0.0 20.0 40.0 60.0 80.0 >$75 Bil $20 Bil - $75 Bil $5 Bil - $20 Bil $0 - $5 Bil Cash 46.5 30.6 19.3 3.5 0.0 55.3 30.9 10.1 1.7 2.1 Sector Weights (%) Vanguard Windsor II Inv Russell 1000 Value Index 0.0 6.0 12.0 18.0 24.0 30.0 36.0 Other Cash Utilities Telecommunication Services Real Estate Materials Information Technology Industrials Health Care Financials Energy Consumer Staples Consumer Discretionary 0.5 2.1 0.3 2.8 0.3 3.7 17.8 9.4 16.0 19.2 9.5 8.6 10.0 0.0 0.0 5.9 3.0 4.7 3.0 8.6 8.3 13.5 26.6 11.0 8.6 6.8 Manager Evaluation Vanguard Windsor II Inv vs. Russell 1000 Value Index As of December 31, 2017 Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading. Holdings Data as of Sep-2017. 29 Historical Performance (%) Buy and Hold Attribution (%) Risk and Return (Jan - 2013 - Dec - 2017)Three Year Rolling Percentile Ranking (10 Years) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Vanguard U.S. Growth Inv 6.0 31.6 31.6 12.3 16.8 9.1 -0.7 8.5 13.1 35.5 18.4 -0.7 11.5 35.0 -37.8 10.1 Russell 1000 Growth Index 7.9 30.2 30.2 13.8 17.3 10.0 7.1 5.7 13.1 33.5 15.3 2.6 16.7 37.2 -38.4 11.8 eV Large Cap Growth Median 6.7 29.0 29.0 11.7 16.0 8.9 3.4 4.5 11.0 34.3 15.4 -0.9 16.2 34.6 -39.8 14.9 Vanguard U.S. Growth Inv Rank 69 34 34 40 29 45 84 15 29 40 19 48 87 48 37 74 Vanguard U.S. Growth Inv Russell 1000 Growth Index 0 25 50 75 100Return Percentile Rank3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 3/17 12/17 16.0 16.5 17.0 17.5 18.0 Return (%)6.5 7.0 7.5 8.0 8.5 9.0 9.5 10.0 10.5 Risk (Standard Deviation %) Russell 1000 Growth Index Vanguard U.S. Growth Inv Average Active Weight 0.0 8.0 16.0-8.0-16.0 Utilities Telecommunication Services Real Estate Other Materials Information Technology Industrials Health Care Financials Energy Consumer Staples Consumer Discretionary Cash 0.0 -1.0 1.0 0.0 -3.1 9.2 -3.2 0.2 4.4 -0.8 -3.6 -3.0 0.0 Allocation (Total: -0.1) 0.0 0.2-0.2-0.4 0.0 0.0 0.0 0.0 0.1 0.1 -0.1 0.0 0.0 0.0 0.0 -0.1 0.0 Stock (Total: -1.4) 0.0 0.5 1.0-0.5-1.0-1.5 0.0 0.0 0.1 0.0 0.0 -0.5 -0.2 -0.7 0.1 0.0 0.2 -0.3 0.0 Vanguard U.S. Growth Inv 0.0 0.4 0.8-0.4-0.8-1.2 0.0 0.0 0.1 0.0 0.1 -0.5 -0.2 -0.7 0.0 0.0 0.1 -0.4 0.0 Manager Evaluation Vanguard U.S. Growth Inv vs. Russell 1000 Growth Index As of December 31, 2017 Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading. Holdings Data as of Sep-2017. 30 Portfolio Characteristics Portfolio Benchmark Wtd. Avg. Mkt. Cap ($M)186,394 221,429 Median Mkt. Cap ($M)30,198 11,718 Price/Earnings ratio 30.5 27.2 Price/Book ratio 5.9 6.4 5 Yr. EPS Growth Rate (%)27.0 20.8 Current Yield (%)0.7 1.3 Debt to Equity 1.5 1.4 # of Securities 148 551 Beta (5 Years, Monthly)1.03 1.00 Consistency (5 Years, Monthly)58.33 1.00 Sharpe Ratio (5 Years, Monthly)1.50 1.65 Information Ratio (5 Years, Monthly)-0.13 - Up Market Capture (5 Years, Monthly)101.04 - Down Market Capture (5 Years, Monthly)109.19 - Active Share 55.4 -- Top Ten Equity Holdings Portfolio Weight (%) Bmk Weight (%) Qtr Return (%) Contribution to Return (%) Microsoft Corp 4.6 5.0 15.4 0.7 Facebook Inc 4.5 3.2 3.3 0.1 Google Inc (Class C)4.2 2.5 9.1 0.4 Mastercard Inc 3.9 1.1 7.4 0.3 PayPal Holdings Inc 3.8 0.7 15.0 0.6 Visa Inc 3.4 1.6 8.5 0.3 Amazon.com Inc 2.9 3.6 21.6 0.6 Alphabet Inc 2.4 2.5 8.2 0.2 eBay Inc.2.3 0.0 -1.9 0.0 Apple Inc 2.2 6.8 10.2 0.2 % of Portfolio 34.2 27.0 3.4 Market Cap Breakout (%) Vanguard U.S. Growth Inv Russell 1000 Growth Index 0.0 20.0 40.0 60.0 80.0 >$75 Bil $20 Bil - $75 Bil $5 Bil - $20 Bil $0 - $5 Bil Cash 57.7 25.0 16.1 1.2 0.0 48.3 31.5 18.5 1.7 0.0 Sector Weights (%) Vanguard U.S. Growth Inv Russell 1000 Growth Index 0.0 15.0 30.0 45.0 60.0 Other Cash Utilities Telecommunication Services Real Estate Materials Information Technology Industrials Health Care Financials Energy Consumer Staples Consumer Discretionary 0.0 0.0 0.0 0.0 3.5 0.7 47.6 9.6 12.2 8.0 0.1 3.2 15.2 0.0 0.0 0.0 1.0 2.5 3.7 38.0 12.7 12.8 3.4 0.9 6.8 18.1 Manager Evaluation Vanguard U.S. Growth Inv vs. Russell 1000 Growth Index As of December 31, 2017 Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading. Holdings Data as of Sep-2017. 31 Historical Performance (%) Risk and Return (Jan - 2013 - Dec - 2017)Three Year Rolling Percentile Ranking (10 Years) Historical Statistics - monthly periodicity (Aug-2001 - Dec-2017) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Vanguard Mid-Cap Index Inv 5.6 19.1 19.1 9.2 14.9 8.8 11.1 -1.5 13.6 35.0 15.8 -2.1 25.5 40.2 -41.8 6.0 CRSP U.S. Mid Cap TR Index 5.6 19.3 19.3 9.4 15.1 8.8 11.2 -1.3 13.8 35.3 16.7 -1.8 26.2 36.9 -41.8 7.0 eV Mid Cap All Median 5.8 19.6 19.6 9.6 14.4 8.8 10.8 -2.0 8.9 35.6 15.4 -2.0 23.4 37.2 -39.5 9.6 Vanguard Mid-Cap Index Inv Rank 55 53 53 55 42 52 49 45 16 56 47 52 35 37 64 63 Vanguard Mid-Cap Index Inv CRSP U.S. Mid Cap TR Index 0 25 50 75 100Return Percentile Rank3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 3/17 12/17 14.6 14.8 15.0 15.2 15.4 Return (%)8.1 8.2 Risk (Standard Deviation %) CRSP U.S. Mid Cap TR Index Vanguard Mid-Cap Index Inv Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Mid-Cap Index Inv 9.4 16.3 9.1 0.1 1.0 0.6 1.4 0.1 11.2 40.1 16y 5m CRSP U.S. Mid Cap TR Index 9.3 16.1 8.9 0.0 1.0 0.6 0.0 --11.1 0.0 16y 5m 90 Day U.S. Treasury Bill 1.3 0.5 0.0 1.4 0.0 --16.2 -0.6 0.0 37.6 16y 5m Manager Evaluation Vanguard Mid-Cap Index Inv vs. CRSP U.S. Mid Cap TR Index As of December 31, 2017 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. 32 Portfolio Characteristics Portfolio Benchmark Wtd. Avg. Mkt. Cap ($M)14,958 14,949 Median Mkt. Cap ($M)12,329 12,493 Price/Earnings ratio 23.9 23.9 Price/Book ratio 2.9 2.9 5 Yr. EPS Growth Rate (%)10.5 10.5 Current Yield (%)1.6 1.5 Debt to Equity 0.4 0.5 # of Securities 346 339 Beta (5 Years, Monthly)1.00 1.00 Consistency (5 Years, Monthly)15.00 1.00 Sharpe Ratio (5 Years, Monthly)1.38 1.40 Information Ratio (5 Years, Monthly)-4.02 - Up Market Capture (5 Years, Monthly)99.49 - Down Market Capture (5 Years, Monthly)100.77 - Active Share 0.4 -- Top Ten Equity Holdings Portfolio Weight (%) Bmk Weight (%) Qtr Return (%) Contribution to Return (%) Fiserv Inc.0.7 0.7 1.7 0.0 Amphenol Corp 0.7 0.7 4.0 0.0 Roper Technologies Inc 0.7 0.7 6.6 0.0 Freeport-McMoRan Inc 0.7 0.7 35.0 0.2 Dollar Tree Inc 0.6 0.6 23.6 0.1 Moody's Corp.0.6 0.6 6.3 0.0 Edwards Lifesciences Corp 0.6 0.6 3.1 0.0 Western Digital Corp 0.6 0.6 -7.4 0.0 Digital Realty Trust Inc 0.6 0.6 -3.0 0.0 M&T Bank Corp 0.6 0.6 6.6 0.0 % of Portfolio 6.4 6.4 0.5 Market Cap Breakout (%) Vanguard Mid-Cap Index Inv CRSP U.S. Mid Cap TR Index 0.0 25.0 50.0 75.0 100.0 $20 Bil - $75 Bil $5 Bil - $20 Bil $0 - $5 Bil 19.7 80.1 0.2 19.8 80.0 0.2 Sector Weights (%) Vanguard Mid-Cap Index Inv CRSP U.S. Mid Cap TR Index 0.0 5.0 10.0 15.0 20.0 25.0 Utilities Telecommunication Services Real Estate Materials Information Technology Industrials Health Care Financials Energy Consumer Staples Consumer Discretionary 4.9 0.6 7.5 6.4 18.0 12.8 8.8 15.0 5.5 4.3 16.3 4.9 0.6 7.4 6.3 18.2 12.8 8.8 14.9 5.5 4.3 16.2 Manager Evaluation Vanguard Mid-Cap Index Inv vs. CRSP U.S. Mid Cap TR Index As of December 31, 2017 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. 33 Historical Performance (%) Risk and Return (Jan - 2013 - Dec - 2017)Three Year Rolling Percentile Ranking (10 Years) Historical Statistics - monthly periodicity (Aug-2001 - Dec-2017) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Vanguard Small-Cap Index Inv 5.1 16.1 16.1 9.7 14.3 9.5 18.2 -3.8 7.4 37.6 18.0 -2.8 27.7 36.1 -36.1 1.2 CRSP U.S. Small Cap TR Index 5.1 16.2 16.2 9.8 14.5 10.0 18.3 -3.7 7.5 38.5 18.6 -1.9 28.0 40.1 -36.8 2.0 eV Small Cap All Median 3.8 14.2 14.2 9.9 14.2 9.0 19.6 -3.7 4.2 40.0 15.4 -2.7 26.9 34.0 -37.0 2.2 Vanguard Small-Cap Index Inv Rank 27 41 41 54 50 35 58 52 21 63 31 51 43 43 45 56 Vanguard Small-Cap Index Inv CRSP U.S. Small Cap TR Index 0 25 50 75 100Return Percentile Rank3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 3/17 12/17 13.8 14.0 14.2 14.4 14.6 14.8 15.0 Return (%)9.7 9.8 9.9 10.0 Risk (Standard Deviation %) CRSP U.S. Small Cap TR Index Vanguard Small-Cap Index Inv Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Small-Cap Index Inv 9.5 18.4 9.5 -0.8 1.0 0.5 1.5 -0.3 12.5 35.5 16y 5m CRSP U.S. Small Cap TR Index 10.1 17.9 10.0 0.0 1.0 0.6 0.0 --12.0 0.0 16y 5m 90 Day U.S. Treasury Bill 1.3 0.5 0.0 1.4 0.0 --18.0 -0.6 0.0 37.6 16y 5m Manager Evaluation Vanguard Small-Cap Index Inv vs. CRSP U.S. Small Cap TR Index As of December 31, 2017 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. 34 Portfolio Characteristics Portfolio Benchmark Wtd. Avg. Mkt. Cap ($M)4,714 4,607 Median Mkt. Cap ($M)2,346 2,353 Price/Earnings ratio 23.5 23.4 Price/Book ratio 2.7 2.7 5 Yr. EPS Growth Rate (%)12.5 12.4 Current Yield (%)1.5 1.5 Debt to Equity 1.7 1.7 # of Securities 1,423 1,403 Beta (5 Years, Monthly)1.00 1.00 Consistency (5 Years, Monthly)16.67 1.00 Sharpe Ratio (5 Years, Monthly)1.15 1.17 Information Ratio (5 Years, Monthly)-1.11 - Up Market Capture (5 Years, Monthly)99.26 - Down Market Capture (5 Years, Monthly)100.36 - Active Share 1.1 -- Top Ten Equity Holdings Portfolio Weight (%) Bmk Weight (%) Qtr Return (%) Contribution to Return (%) Diamondback Energy Inc 0.3 0.3 28.9 0.1 XPO Logistics Inc 0.3 0.3 35.1 0.1 Broadridge Financial Solutions Inc 0.3 0.3 12.5 0.0 CDW Corp 0.3 0.3 5.6 0.0 IDEX Corporation 0.3 0.3 9.0 0.0 Spirit Aerosystems Holdings Inc 0.3 0.3 12.4 0.0 Leidos Holdings Inc 0.3 0.3 9.6 0.0 Atmos Energy Corp 0.3 0.3 3.0 0.0 Steel Dynamics Inc 0.3 0.3 25.6 0.1 Nektar Therapeutics 0.3 0.3 148.8 0.4 % of Portfolio 3.0 3.0 0.8 Market Cap Breakout (%) Vanguard Small-Cap Index Inv CRSP U.S. Small Cap TR Index 0.0 20.0 40.0 60.0 80.0 $5 Bil - $20 Bil $0 - $5 Bil 38.9 61.1 38.9 61.1 Sector Weights (%) Vanguard Small-Cap Index Inv CRSP U.S. Small Cap TR Index 0.0 4.0 8.0 12.0 16.0 20.0 24.0 Utilities Telecommunication Services Real Estate Materials Information Technology Industrials Health Care Financials Energy Consumer Staples Consumer Discretionary 4.0 0.4 10.0 5.9 17.2 16.3 11.4 14.4 4.9 3.3 12.3 4.0 0.4 10.0 5.9 16.6 16.6 11.4 14.2 5.0 3.2 12.6 Manager Evaluation Vanguard Small-Cap Index Inv vs. CRSP U.S. Small Cap TR Index As of December 31, 2017 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. 35 Historical Performance (%) Buy and Hold Attribution (%) Risk and Return (Jan - 2013 - Dec - 2017)Three Year Rolling Percentile Ranking (10 Years) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Vanguard International Growth Inv 4.1 43.0 43.0 13.0 10.9 4.6 1.7 -0.7 -5.6 22.9 20.0 -13.7 15.7 41.6 -44.9 16.0 MSCI AC World ex USA (Net)5.0 27.2 27.2 7.8 6.8 1.8 4.5 -5.7 -3.9 15.3 16.8 -13.7 11.2 41.4 -45.5 16.7 eV Non US Diversified All Median 4.4 27.8 27.8 9.0 8.6 3.1 1.0 0.4 -4.2 22.3 19.0 -12.7 12.8 35.7 -43.8 13.3 Vanguard International Growth Inv Rank 61 2 2 15 22 26 43 59 69 46 40 62 30 30 59 34 Vanguard International Growth Inv MSCI AC World ex USA (Net) 0 25 50 75 100Return Percentile Rank3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 3/17 12/17 0.0 4.0 8.0 12.0 16.0 Return (%)8.0 9.0 10.0 11.0 12.0 13.0 14.0 15.0 16.0 Risk (Standard Deviation %) MSCI AC World ex USA (Net) Vanguard International Growth Inv Average Active Weight 0.0 15.0 30.0-15.0 Utilities Telecommunication Services Real Estate Other Materials Information Technology Industrials Health Care Financials Energy Consumer Staples Consumer Discretionary Cash -3.1 -0.8 -3.2 0.2 -2.5 13.7 -1.5 1.3 -6.1 -5.6 -3.5 11.0 0.0 Allocation (Total: 0.2) 0.0 0.2 0.4-0.2-0.4 0.2 0.0 0.0 0.0 -0.1 0.2 0.0 0.0 0.0 -0.1 0.0 0.1 0.0 Stock (Total: -0.7) 0.0 0.8 1.6-0.8-1.6-2.4 0.0 -0.1 0.0 0.0 0.0 -0.1 0.0 0.5 -0.1 0.0 0.1 -1.0 0.0 Vanguard International Growth Inv 0.0 0.5 1.0-0.5-1.0-1.5 0.2 -0.1 0.0 0.0 -0.1 0.1 0.0 0.5 -0.1 -0.1 0.1 -0.9 0.0 Manager Evaluation Vanguard International Growth (VWIGX) vs. MSCI AC World ex USA (Net) As of December 31, 2017 Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading. Holdings Data as of Sep-2017. 36 Total Attribution (%) 0.0 0.3 0.6 0.9 1.2 1.5 1.8-0.3-0.6-0.9-1.2-1.5 United Kingdom Pacific ex Japan Other North America Middle East Japan Frontier Markets Europe ex UK EM Mid East+Africa EM Latin America EM Europe EM Asia Cash -0.1 0.9 0.0 0.2 -0.2 -0.1 0.2 -0.6 -0.2 0.1 0.0 -0.8 0.0 Performance Attribution (%) Average Active Weight 0.0 8.0 16.0-8.0-16.0 United Kingdom Pacific ex Japan Other North America Middle East Japan Frontier Markets Europe ex UK EM Mid East+Africa EM Latin America EM Europe EM Asia Cash -5.8 -0.8 -0.3 2.6 0.8 -4.9 1.3 8.9 -1.9 -2.0 -1.6 3.6 0.0 Allocation (Total: -0.8) 0.0 0.2 0.4-0.2-0.4-0.6-0.8 0.0 0.0 0.0 0.0 0.0 -0.2 -0.1 -0.4 -0.2 0.2 0.0 0.1 0.0 Stock (Total: 0.3) 0.0 0.7 1.4 2.1-0.7-1.4-2.1 -0.1 0.9 0.0 0.3 -0.2 0.0 0.4 -0.2 0.0 0.0 0.0 -0.9 0.0 Manager Evaluation Vanguard International Growth (VWIGX) vs. MSCI AC World ex USA (Net) As of December 31, 2017 Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading. Holdings Data as of Sep-2017. 37 Portfolio Characteristics Portfolio Benchmark Wtd. Avg. Mkt. Cap ($M)116,319 68,861 Median Mkt. Cap ($M)27,570 8,754 Price/Earnings ratio 24.2 16.3 Price/Book ratio 4.1 2.3 5 Yr. EPS Growth Rate (%)19.6 8.7 Current Yield (%)1.4 2.9 Debt to Equity 1.0 1.0 # of Securities 118 1,866 Beta (5 Years, Monthly)1.09 1.00 Consistency (5 Years, Monthly)53.33 1.00 Sharpe Ratio (5 Years, Monthly)0.84 0.62 Information Ratio (5 Years, Monthly)0.95 - Up Market Capture (5 Years, Monthly)119.60 - Down Market Capture (5 Years, Monthly)98.91 - Active Share 82.6 -- Top Ten Equity Holdings Portfolio Weight (%) Bmk Weight (%) Qtr Return (%) Contribution to Return (%) Tencent Holdings LTD 6.5 1.3 20.7 1.3 Alibaba Group Holding Ltd 5.1 0.9 -0.2 0.0 ASML Holding NV 3.5 0.3 2.3 0.1 Baidu Inc 3.4 0.3 -5.4 -0.2 AIA Group Ltd 3.2 0.5 15.6 0.5 Amazon.com Inc 2.9 0.0 21.6 0.6 Industria De Diseno Textil Inditex SA 2.2 0.2 -6.5 -0.1 Smc Corp 1.9 0.1 16.8 0.3 Illumina Inc 1.9 0.0 9.7 0.2 Banco Bilbao Vizcaya Argentaria 1.8 0.3 -3.3 -0.1 % of Portfolio 32.4 3.9 2.7 Market Cap Breakout (%) Vanguard International Growth Inv 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 27.2 39.1 29.1 4.7 0.0 38.2 38.4 21.6 1.8 0.0 Sector Weights (%) Vanguard International Growth Inv MSCI AC World ex USA (Net) 0.0 6.0 12.0 18.0 24.0 30.0 Other Cash Utilities Telecommunication Services Real Estate Materials Information Technology Industrials Health Care Financials Energy Consumer Staples Consumer Discretionary 0.2 0.0 0.0 3.1 0.0 5.5 25.2 10.3 9.2 17.2 1.1 6.3 22.0 0.0 0.0 2.9 4.0 3.2 8.1 11.5 11.8 7.6 23.1 6.7 9.6 11.3 Manager Evaluation Vanguard International Growth (VWIGX) vs. MSCI AC World ex USA (Net) As of December 31, 2017 Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading. Holdings Data as of Sep-2017. 38 Vanguard International Growth Inv MSCI AC World ex USA (Net) Canada 1.8 6.6 United States 7.6 0.2 Australia 0.4 4.8 Hong Kong 10.1 5.4 New Zealand 0.0 0.1 Singapore 0.4 0.9 Pacific ex Japan 10.9 11.2 Japan 11.6 16.5 Austria 0.0 0.2 Belgium 0.2 0.8 Bermuda 0.0 0.0 Denmark 2.4 1.3 Finland 0.0 0.6 France 5.3 6.9 Germany 9.8 6.7 Ireland 0.4 0.4 Italy 2.8 1.4 Netherlands 4.6 2.7 Norway 0.8 0.5 Portugal 0.2 0.1 Spain 4.2 2.2 Sweden 5.4 1.8 Switzerland 3.4 5.6 Europe ex UK 39.6 31.0 United Kingdom 6.7 12.4 Israel 1.0 0.3 Middle East 1.0 0.3 Developed Markets 79.3 78.2 Vanguard International Growth Inv MSCI AC World ex USA (Net) China 12.3 4.2 India 2.0 2.2 Indonesia 0.3 0.6 Korea 1.7 3.8 Malaysia 0.0 0.6 Philippines 0.0 0.3 Taiwan 1.2 2.8 Thailand 0.6 0.6 EM Asia 18.2 14.9 Czech Republic 0.0 0.0 Greece 0.0 0.1 Hungary 0.0 0.1 Poland 0.0 0.3 Russia 0.0 0.8 Turkey 0.0 0.3 EM Europe 0.0 1.6 Brazil 0.6 1.7 Cayman Islands 0.0 0.0 Chile 0.0 0.3 Colombia 0.0 0.1 Mexico 0.3 0.7 Peru 0.0 0.0 Virgin Islands 0.0 0.0 EM Latin America 0.9 2.8 Egypt 0.0 0.0 Qatar 0.0 0.1 South Africa 0.0 1.8 United Arab Emirates 0.0 0.2 EM Mid East+Africa 0.0 2.1 Emerging Markets 19.1 21.5 Frontier Markets 1.5 0.0 Cash 0.0 0.0 Other 0.0 0.3 Total 100.0 100.0 Manager Evaluation Vanguard International Growth (VWIGX) vs. MSCI AC World ex USA (Net) As of December 31, 2017 Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading. Holdings Data as of Sep-2017. 39 Historical Performance (%) Three Year Rolling Percentile Ranking (10 Years)Relative Performance (Jan-2008 - Dec-2017) Historical Statistics - Monthly Periodicity (Jan-2013 - Dec-2017) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Vanguard Total Bond Market Index Inv 0.4 3.5 3.5 2.1 1.9 3.8 2.5 0.3 5.8 -2.3 4.0 7.6 6.4 5.9 5.1 6.9 Vanguard Total Bond Market Index Fund Benchmark 0.4 3.6 3.6 2.3 2.1 4.0 2.8 0.4 5.9 -2.0 4.3 7.9 6.6 5.9 5.2 7.0 eV Core Plus Fixed Income Median 0.5 4.7 4.7 3.0 2.8 4.9 4.5 -0.2 5.7 -0.5 8.8 6.8 8.8 16.1 -4.7 5.6 Vanguard Total Bond Market Index Inv Rank 71 96 96 90 95 97 96 34 47 97 100 29 97 100 6 22 Vanguard Total Bond Market Index Inv Vanguard Total Bond Market Index Fund Benchmark 0 25 50 75 100Return Percentile Rank3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 3/17 12/17 Cumulative Annualized Over/Under Relative Performance Over/Under Performance 0.0 0.3 0.6 -0.3 -0.6Return (%)3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 3/17 12/17 Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Total Bond Market Index Inv 1.9 3.0 1.7 -0.2 1.0 0.6 0.3 -0.7 1.9 40.0 31y Vanguard Total Bond Market Index Fund Benchmark 2.1 2.9 1.9 0.0 1.0 0.7 0.0 --1.8 0.0 31y 90 Day U.S. Treasury Bill 0.2 0.1 0.0 0.2 0.0 --2.9 -0.7 0.0 41.7 31y Manager Evaluation Vanguard Total Bond Market Index Inv vs. Vanguard Total Bond Market Index Fund Benchmark As of December 31, 2017 40 Historical Performance Comparative Performance and Rolling Return Risk and Return (Jan-2013 - Dec-2017) Historical Statistics - Quarterly Periodicity (Jan-2013 - Dec-2017) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Vanguard Retirement Savings Trust 0.5 1.8 1.8 1.8 1.8 2.5 1.9 1.9 1.8 1.7 2.4 2.9 2.9 3.0 4.3 4.5 Ryan 3 Yr GIC Master 0.4 1.6 1.6 1.4 1.2 2.3 1.4 1.2 1.0 1.1 1.5 2.4 3.5 4.5 4.8 4.5 IM U.S. Short Duration Fixed Income (MF) Median 0.0 1.3 1.3 1.0 0.8 1.8 1.4 0.3 0.6 0.2 2.3 1.2 3.2 6.0 -1.1 4.9 Vanguard Retirement Savings Trust Rank 6 25 25 14 5 18 30 1 6 4 49 9 55 77 22 61 Rolling 3 Years Active Return Quarterly Active Return 0.0 0.7 1.4 -0.7 -1.4Active Return (%)3/03 6/04 9/05 12/06 3/08 6/09 9/10 12/11 3/13 6/14 9/15 12/1612/17 0.5 1.0 1.5 2.0 2.5 Return (%)0.0 0.1 0.2 Risk (Standard Deviation %) Ryan 3 Yr GIC Master Vanguard Retirement Savings Trust Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Retirement Savings Trust 1.8 0.1 1.6 1.8 0.0 8.6 0.1 4.7 0.0 100.0 15y Ryan 3 Yr GIC Master 1.2 0.1 1.0 0.0 1.0 11.3 0.0 --0.0 0.0 15y 90 Day U.S. Treasury Bill 0.2 0.2 0.0 -1.5 1.4 --0.1 -11.3 0.0 0.0 15y Manager Evaluation Vanguard Retirement Savings Trust vs. Ryan 3 Yr GIC Master As of December 31, 2017 41 Historical Performance Three Year Rolling Percentile Ranking Relative Performance Historical Statistics - Monthly Periodicity (Jan-2013 - Dec-2017) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Vanguard Balanced Index Inv 3.9 13.8 13.8 7.4 9.9 7.0 8.6 0.4 9.8 17.9 11.3 4.1 13.1 20.1 -22.2 6.2 Vanguard Balanced Index Fund Benchmark 3.9 13.9 13.9 7.6 10.1 7.1 8.8 0.6 9.9 18.2 11.6 4.1 13.5 19.7 -22.0 6.3 eV US Balanced Median 3.6 13.8 13.8 6.9 9.3 6.2 7.8 -0.4 7.2 17.8 10.7 1.9 12.0 22.2 -24.9 7.1 Vanguard Balanced Index Inv Rank 40 51 51 38 35 19 41 28 20 49 44 21 36 61 39 60 Vanguard Balanced Index Inv Vanguard Balanced Index Fund Benchmark 0 25 50 75 100Return Percentile Rank3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 3/17 12/17 Cumulative Annualized Over/Under Relative Performance Over/Under Performance 0.0 0.4 0.8 -0.4 -0.8Return (%)3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 3/17 12/17 Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Balanced Index Inv 9.9 5.8 9.4 -0.1 1.0 1.6 0.1 -1.3 2.9 33.3 25y 1m Vanguard Balanced Index Fund Benchmark 10.1 5.8 9.6 0.0 1.0 1.7 0.0 --2.9 0.0 25y 1m 90 Day U.S. Treasury Bill 0.2 0.1 0.0 0.2 0.0 --5.8 -1.7 0.0 21.7 25y 1m Manager Evaluation Vanguard Balanced Index Inv vs. Vanguard Balanced Index Fund Benchmark As of December 31, 2017 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. 42 Portfolio Characteristics Portfolio Benchmark Wtd. Avg. Mkt. Cap ($M)160,323 159,801 Median Mkt. Cap ($M)1,329 1,107 Price/Earnings ratio 23.3 23.3 Price/Book ratio 3.3 3.3 5 Yr. EPS Growth Rate (%)13.3 13.3 Current Yield (%)1.8 1.8 Debt to Equity 1.1 1.1 Number of Stocks 3,352 3,585 Beta (5 Years, Monthly)0.59 1.00 Consistency (5 Years, Monthly)28.33 1.00 Sharpe Ratio (5 Years, Monthly)1.63 1.53 Information Ratio (5 Years, Monthly)-1.29 - Up Market Capture (5 Years, Monthly)62.59 - Down Market Capture (5 Years, Monthly)58.70 - Top Ten Equity Holdings Portfolio Weight (%) Benchmark Weight (%) Active Weight (%) Quarterly Return (%) Apple Inc 2.9 2.8 0.1 10.2 Microsoft Corp 2.4 2.4 0.0 15.4 Amazon.com Inc 1.7 1.7 0.0 21.6 Facebook Inc 1.5 1.5 0.0 3.3 JPMorgan Chase & Co 1.4 1.4 0.0 12.6 Johnson & Johnson 1.4 1.4 0.0 8.1 Berkshire Hathaway Inc 1.3 0.9 0.4 8.1 Exxon Mobil Corp 1.3 1.3 0.0 3.0 Google Inc (Class C)1.2 1.1 0.1 9.1 Alphabet Inc 1.1 1.1 0.0 8.2 % of Portfolio 16.2 15.6 0.6 Distribution of Market Capitalization (%) Vanguard Balanced Index Inv 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 48.0 25.6 16.8 9.6 0.0 48.2 25.6 16.6 9.5 0.0 Sector Weights (%) Vanguard Balanced Index Inv CRSP U.S. Total Market TR Index 0.0 5.0 10.0 15.0 20.0 25.0 30.0 Cash Utilities Telecommunication Services Real Estate Materials Information Technology Industrials Health Care Financials Energy Consumer Staples Consumer Discretionary 0.0 3.0 1.9 3.9 3.4 22.7 11.0 13.3 15.3 5.8 7.4 12.5 0.0 3.0 1.9 3.9 3.4 22.7 11.0 13.4 15.2 5.8 7.3 12.4 Manager Evaluation Vanguard Balanced Index Inv vs. CRSP U.S. Total Market TR Index As of December 31, 2017 43 Portfolio Characteristics Portfolio Benchmark Effective Duration 6.1 6.1 Avg. Maturity 8.4 8.4 Avg. Quality AA AA+ Yield To Maturity (%)2.5 2.5 Credit Quality Distribution (%) Vanguard Balanced Index Fund (VBINX) - Fixed Income Holdings Blmbg. Barc. U.S. Aggregate Float Adjusted 0.0 25.0 50.0 75.0 100.0 AAAAAABBB68.4 4.2 12.6 14.8 68.4 4.2 12.6 14.8 Maturity Distribution (%) Vanguard Balanced Index Fund (VBINX) - Fixed Income Holdings Blmbg. Barc. 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 Yrs1.2 22.0 19.6 39.8 3.9 13.5 1.2 22.0 19.6 39.8 3.9 13.5 Sector Distribution (%) Vanguard Balanced Index Fund (VBINX) - Fixed Income Holdings Blmbg. Barc. U.S. Aggregate Float Adjusted 0.0 15.0 30.0 45.0 60.0 CashEnergyHealth CareIndustrialsInformation TechnologyTelecommunication Services43.0 27.8 21.2 2.4 4.9 0.7 43.0 27.8 21.2 2.4 4.9 0.7 Manager Evaluation Vanguard Balanced Index Fund (VBINX) - Fixed Income Holdings vs. Blmbg. Barc. U.S. Aggregate Float Adjusted As of December 31, 2017 44 Historical Performance Three Year Rolling Percentile Ranking Risk and Return (Jan-2013 - Dec-2017) Historical Statistics - Monthly Periodicity (Jan-2013 - Dec-2017) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Vanguard Target Retirement Income Inv 2.0 8.5 8.5 4.5 5.0 4.9 5.3 -0.2 5.5 5.9 8.2 5.2 9.4 14.3 -10.9 8.2 Vanguard Target Income Composite Index (Net)2.1 8.7 8.7 4.7 5.2 5.0 5.4 0.1 5.8 6.0 8.4 5.3 9.4 14.3 -11.3 8.1 IM Mixed-Asset Target Today 2.2 9.1 9.1 4.2 4.3 4.3 5.2 -1.4 3.9 5.4 8.9 2.8 9.5 18.1 -16.0 4.9 Vanguard Target Retirement Income Inv Rank 58 63 63 41 32 22 46 10 10 37 67 9 53 82 10 1 Vanguard Target Retirement Income Inv Vanguard Target Income Composite Index (Net) 0 25 50 75 100Return Percentile Rank3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 3/17 12/17 4.6 4.8 5.0 5.2 5.4 Return (%)2.9 3.0 3.1 Risk (Standard Deviation %) Vanguard Target Income Composite Index (Net) Vanguard Target Retirement Income Inv Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Target Retirement Income Inv 5.0 3.4 4.7 -0.2 1.0 1.4 0.3 -0.7 1.9 40.0 14y 2m Vanguard Target Income Composite Index (Net)5.2 3.5 4.8 0.0 1.0 1.4 0.0 --1.9 0.0 14y 2m 90 Day U.S. Treasury Bill 0.2 0.1 0.0 0.2 0.0 --3.4 -1.4 0.0 30.0 14y 2m Manager Evaluation Vanguard Target Retirement Income Inv vs. Vanguard Target Income Composite Index (Net) As of December 31, 2017 45 Historical Performance Three Year Rolling Percentile Ranking Risk and Return (Jan-2013 - Dec-2017) Historical Statistics - Monthly Periodicity (Jan-2013 - Dec-2017) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Vanguard Target Retirement 2015 Inv 2.7 11.5 11.5 5.6 7.2 5.2 6.2 -0.5 6.6 13.0 11.4 1.7 12.5 21.3 -24.1 7.5 Vanguard Target 2015 Composite Index (Net)2.8 11.6 11.6 5.8 7.5 5.3 6.4 -0.2 6.8 13.3 11.5 1.6 12.5 21.2 -24.4 7.6 TD 2015 Universe Median 2.5 10.8 10.8 5.2 6.2 5.1 5.9 -0.7 4.9 10.0 11.0 1.9 11.1 21.7 -24.1 6.6 Vanguard Target Retirement 2015 Inv Rank 28 33 33 36 23 38 41 33 3 20 34 56 22 61 50 12 Vanguard Target Retirement 2015 Inv Vanguard Target 2015 Composite Index (Net) 0 25 50 75 100Return Percentile Rank3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 3/17 12/17 7.2 7.5 7.8 Return (%)4.1 4.2 Risk (Standard Deviation %) Vanguard Target 2015 Composite Index (Net) Vanguard Target Retirement 2015 Inv Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Target Retirement 2015 Inv 7.2 5.0 6.9 -0.1 1.0 1.4 0.3 -0.6 2.6 41.7 14y 2m Vanguard Target 2015 Composite Index (Net)7.5 5.0 7.1 0.0 1.0 1.4 0.0 --2.6 0.0 14y 2m 90 Day U.S. Treasury Bill 0.2 0.1 0.0 0.2 0.0 --5.0 -1.4 0.0 28.3 14y 2m Manager Evaluation Vanguard Target Retirement 2015 Inv vs. Vanguard Target 2015 Composite Index (Net) As of December 31, 2017 46 Historical Performance Three Year Rolling Percentile Ranking Risk and Return (Jan-2013 - Dec-2017) Historical Statistics - Monthly Periodicity (Jan-2013 - Dec-2017) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Vanguard Target Retirement 2020 Inv 3.4 14.1 14.1 6.6 8.5 5.6 6.9 -0.7 7.1 15.8 12.3 0.6 13.1 23.1 -27.0 7.5 Vanguard Target 2020 Composite Index (Net)3.5 14.2 14.2 6.8 8.8 5.8 7.2 -0.4 7.4 16.2 12.5 1.0 13.3 23.3 -27.4 7.6 TD 2020 Universe Median 3.0 13.1 13.1 6.1 7.5 5.0 6.6 -0.8 5.6 13.3 12.4 0.5 12.9 25.2 -29.0 6.2 Vanguard Target Retirement 2020 Inv Rank 15 17 17 17 8 16 39 43 1 23 52 48 43 74 27 24 Vanguard Target Retirement 2020 Inv Vanguard Target 2020 Composite Index (Net) 0 25 50 75 100Return Percentile Rank3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 3/17 12/17 8.1 8.4 8.7 9.0 9.3 Return (%)4.7 4.8 4.9 Risk (Standard Deviation %) Vanguard Target 2020 Composite Index (Net) Vanguard Target Retirement 2020 Inv Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Target Retirement 2020 Inv 8.5 5.8 8.1 -0.1 1.0 1.4 0.4 -0.6 3.1 35.0 11y 6m Vanguard Target 2020 Composite Index (Net)8.8 5.9 8.3 0.0 1.0 1.4 0.0 --3.1 0.0 11y 6m 90 Day U.S. Treasury Bill 0.2 0.1 0.0 0.2 0.0 --5.9 -1.4 0.0 26.7 11y 6m Manager Evaluation Vanguard Target Retirement 2020 Inv vs. Vanguard Target 2020 Composite Index (Net) As of December 31, 2017 47 Historical Performance Three Year Rolling Percentile Ranking Risk and Return (Jan-2013 - Dec-2017) Historical Statistics - Monthly Periodicity (Jan-2013 - Dec-2017) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Vanguard Target Retirement 2025 Inv 3.9 15.9 15.9 7.3 9.4 5.8 7.5 -0.8 7.2 18.1 13.3 -0.4 13.8 24.8 -30.1 7.6 Vanguard Target 2025 Composite Index (Net)4.0 16.1 16.1 7.5 9.6 5.9 7.7 -0.6 7.4 18.5 13.4 0.1 13.9 25.2 -30.4 7.6 TD 2025 Universe Median 3.5 15.3 15.3 6.8 8.6 5.4 7.2 -0.9 5.8 16.5 13.6 -1.0 13.8 26.8 -31.0 6.9 Vanguard Target Retirement 2025 Inv Rank 6 24 24 22 12 16 30 46 9 23 57 33 48 77 31 34 Vanguard Target Retirement 2025 Inv Vanguard Target 2025 Composite Index (Net) 0 25 50 75 100Return Percentile Rank3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 3/17 12/17 9.0 9.3 9.6 9.9 10.2 Return (%)5.3 5.4 5.5 Risk (Standard Deviation %) Vanguard Target 2025 Composite Index (Net) Vanguard Target Retirement 2025 Inv Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Target Retirement 2025 Inv 9.4 6.5 9.0 -0.1 1.0 1.4 0.4 -0.6 3.5 43.3 14y 2m Vanguard Target 2025 Composite Index (Net)9.6 6.6 9.2 0.0 1.0 1.4 0.0 --3.5 0.0 14y 2m 90 Day U.S. Treasury Bill 0.2 0.1 0.0 0.2 0.0 --6.6 -1.4 0.0 25.0 14y 2m Manager Evaluation Vanguard Target Retirement 2025 Inv vs. Vanguard Target 2025 Composite Index (Net) As of December 31, 2017 48 Historical Performance Three Year Rolling Percentile Ranking Risk and Return (Jan-2013 - Dec-2017) Historical Statistics - Monthly Periodicity (Jan-2013 - Dec-2017) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Vanguard Target Retirement 2030 Inv 4.2 17.5 17.5 7.8 10.1 5.9 7.9 -1.0 7.2 20.5 14.2 -1.3 14.4 26.7 -32.9 7.5 Vanguard Target 2030 Composite Index (Net)4.4 17.7 17.7 8.1 10.4 6.1 8.1 -0.8 7.5 20.9 14.3 -0.9 14.6 27.0 -33.3 7.6 TD 2030 Universe Median 4.1 17.1 17.1 7.5 9.4 5.6 7.7 -1.2 5.9 18.5 14.3 -1.8 14.4 28.3 -34.3 6.5 Vanguard Target Retirement 2030 Inv Rank 27 39 39 34 18 22 41 46 13 30 55 36 49 77 27 24 Vanguard Target Retirement 2030 Inv Vanguard Target 2030 Composite Index (Net) 0 25 50 75 100Return Percentile Rank3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 3/17 12/17 9.6 9.9 10.2 10.5 10.8 Return (%)5.8 5.9 6.0 Risk (Standard Deviation %) Vanguard Target 2030 Composite Index (Net) Vanguard Target Retirement 2030 Inv Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Target Retirement 2030 Inv 10.1 7.2 9.7 -0.1 1.0 1.3 0.4 -0.6 3.9 38.3 11y 6m Vanguard Target 2030 Composite Index (Net)10.4 7.3 10.0 0.0 1.0 1.4 0.0 --3.9 0.0 11y 6m 90 Day U.S. Treasury Bill 0.2 0.1 0.0 0.2 0.0 --7.3 -1.4 0.0 26.7 11y 6m Manager Evaluation Vanguard Target Retirement 2030 Inv vs. Vanguard Target 2030 Composite Index (Net) As of December 31, 2017 49 Historical Performance Three Year Rolling Percentile Ranking Risk and Return (Jan-2013 - Dec-2017) Historical Statistics - Monthly Periodicity (Jan-2013 - Dec-2017) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Vanguard Target Retirement 2035 Inv 4.6 19.1 19.1 8.4 10.9 6.2 8.3 -1.3 7.2 22.8 15.2 -2.2 15.1 28.2 -34.7 7.5 Vanguard Target 2035 Composite Index (Net)4.8 19.2 19.2 8.6 11.2 6.3 8.6 -1.0 7.6 23.3 15.2 -1.9 15.2 28.7 -35.1 7.6 TD 2035 Universe Median 4.5 18.8 18.8 8.1 10.3 5.9 8.3 -1.3 6.1 21.3 15.3 -2.9 15.0 28.7 -35.1 7.1 Vanguard Target Retirement 2035 Inv Rank 32 37 37 38 23 24 49 52 17 31 57 33 48 71 47 34 Vanguard Target Retirement 2035 Inv Vanguard Target 2035 Composite Index (Net) 0 25 50 75 100Return Percentile Rank3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 3/17 12/17 10.5 10.8 11.1 11.4 11.7 Return (%)6.4 6.5 6.6 Risk (Standard Deviation %) Vanguard Target 2035 Composite Index (Net) Vanguard Target Retirement 2035 Inv Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Target Retirement 2035 Inv 10.9 7.9 10.5 -0.1 1.0 1.3 0.5 -0.6 4.3 43.3 14y 2m Vanguard Target 2035 Composite Index (Net)11.2 8.0 10.7 0.0 1.0 1.3 0.0 --4.4 0.0 14y 2m 90 Day U.S. Treasury Bill 0.2 0.1 0.0 0.2 0.0 --8.0 -1.3 0.0 28.3 14y 2m Manager Evaluation Vanguard Target Retirement 2035 Inv vs. Vanguard Target 2035 Composite Index (Net) As of December 31, 2017 50 Historical Performance Three Year Rolling Percentile Ranking Risk and Return (Jan-2013 - Dec-2017) Historical Statistics - Monthly Periodicity (Jan-2013 - Dec-2017) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Vanguard Target Retirement 2040 Inv 5.0 20.7 20.7 8.9 11.5 6.5 8.7 -1.6 7.1 24.4 15.6 -2.5 15.2 28.3 -34.5 7.5 Vanguard Target 2040 Composite Index (Net)5.2 20.9 20.9 9.2 11.8 6.6 9.0 -1.2 7.6 24.8 15.6 -2.1 15.3 28.7 -35.1 7.6 TD 2040 Universe Median 4.8 19.9 19.9 8.6 10.7 6.0 8.6 -1.2 6.2 22.1 15.6 -3.4 15.3 29.9 -36.9 6.7 Vanguard Target Retirement 2040 Inv Rank 27 29 29 34 13 22 46 60 18 25 52 33 52 89 11 31 Vanguard Target Retirement 2040 Inv Vanguard Target 2040 Composite Index (Net) 0 25 50 75 100Return Percentile Rank3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 3/17 12/17 10.8 11.1 11.4 11.7 12.0 12.3 Return (%)6.9 7.0 7.1 Risk (Standard Deviation %) Vanguard Target 2040 Composite Index (Net) Vanguard Target Retirement 2040 Inv Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Target Retirement 2040 Inv 11.5 8.5 11.0 -0.2 1.0 1.3 0.5 -0.6 4.7 40.0 11y 6m Vanguard Target 2040 Composite Index (Net)11.8 8.6 11.3 0.0 1.0 1.3 0.0 --4.8 0.0 11y 6m 90 Day U.S. Treasury Bill 0.2 0.1 0.0 0.2 0.0 --8.6 -1.3 0.0 28.3 11y 6m Manager Evaluation Vanguard Target Retirement 2040 Inv vs. Vanguard Target 2040 Composite Index (Net) As of December 31, 2017 51 Historical Performance Three Year Rolling Percentile Ranking Risk and Return (Jan-2013 - Dec-2017) Historical Statistics - Monthly Periodicity (Jan-2013 - Dec-2017) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Vanguard Target Retirement 2045 Inv 5.2 21.4 21.4 9.2 11.6 6.6 8.9 -1.6 7.2 24.4 15.6 -2.5 15.2 28.2 -34.6 7.5 Vanguard Target 2045 Composite Index (Net)5.4 21.5 21.5 9.4 12.0 6.7 9.1 -1.3 7.6 24.8 15.6 -2.1 15.3 28.7 -35.1 7.6 TD 2045 Universe Median 4.9 20.6 20.6 9.0 10.9 6.2 8.8 -1.2 6.2 23.1 15.8 -3.6 15.4 30.4 -37.0 6.8 Vanguard Target Retirement 2045 Inv Rank 29 24 24 36 18 24 46 63 20 32 74 30 55 88 16 34 Vanguard Target Retirement 2045 Inv Vanguard Target 2045 Composite Index (Net) 0 25 50 75 100Return Percentile Rank3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 3/17 12/17 11.1 11.4 11.7 12.0 12.3 12.6 Return (%)7.0 7.1 7.2 Risk (Standard Deviation %) Vanguard Target 2045 Composite Index (Net) Vanguard Target Retirement 2045 Inv Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Target Retirement 2045 Inv 11.6 8.6 11.2 -0.1 1.0 1.3 0.5 -0.6 4.7 41.7 14y 2m Vanguard Target 2045 Composite Index (Net)12.0 8.7 11.5 0.0 1.0 1.3 0.0 --4.8 0.0 14y 2m 90 Day U.S. Treasury Bill 0.2 0.1 0.0 0.2 0.0 --8.7 -1.3 0.0 28.3 14y 2m Manager Evaluation Vanguard Target Retirement 2045 Inv vs. Vanguard Target 2045 Composite Index (Net) As of December 31, 2017 52 Historical Performance Three Year Rolling Percentile Ranking Risk and Return (Jan-2013 - Dec-2017) Historical Statistics - Monthly Periodicity (Jan-2013 - Dec-2017) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Vanguard Target Retirement 2050 Inv 5.2 21.4 21.4 9.2 11.6 6.6 8.9 -1.6 7.2 24.3 15.6 -2.5 15.2 28.3 -34.6 7.5 Vanguard Target 2050 Composite Index (Net)5.4 21.5 21.5 9.4 12.0 6.7 9.1 -1.3 7.6 24.8 15.6 -2.1 15.3 28.7 -35.1 7.6 TD 2050 Universe Median 5.1 20.9 20.9 9.0 11.1 6.1 8.8 -1.3 6.2 23.4 16.0 -3.6 15.3 30.9 -37.9 7.1 Vanguard Target Retirement 2050 Inv Rank 35 40 40 42 22 20 49 59 22 33 73 20 56 91 14 25 Vanguard Target Retirement 2050 Inv Vanguard Target 2050 Composite Index (Net) 0 25 50 75 100Return Percentile Rank3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 3/17 12/17 10.8 11.2 11.6 12.0 12.4 Return (%)7.0 7.1 7.2 Risk (Standard Deviation %) Vanguard Target 2050 Composite Index (Net) Vanguard Target Retirement 2050 Inv Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Target Retirement 2050 Inv 11.6 8.6 11.2 -0.1 1.0 1.3 0.5 -0.6 4.7 43.3 11y 6m Vanguard Target 2050 Composite Index (Net)12.0 8.7 11.5 0.0 1.0 1.3 0.0 --4.8 0.0 11y 6m 90 Day U.S. Treasury Bill 0.2 0.1 0.0 0.2 0.0 --8.7 -1.3 0.0 28.3 11y 6m Manager Evaluation Vanguard Target Retirement 2050 Inv vs. Vanguard Target 2050 Composite Index (Net) As of December 31, 2017 53 Historical Performance Three Year Rolling Percentile Ranking Risk and Return (Jan-2013 - Dec-2017) Historical Statistics - Monthly Periodicity (Jan-2013 - Dec-2017) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Vanguard Target Retirement 2055 Inv 5.2 21.4 21.4 9.1 11.6 --8.9 -1.7 7.2 24.3 15.6 -2.3 -------- Vanguard Target 2055 Composite Index (Net)5.4 21.5 21.5 9.4 12.0 --9.1 -1.3 7.6 24.8 15.6 -2.1 -------- TD 2055 Universe Median 5.1 21.1 21.1 9.1 11.2 --8.7 -1.4 6.3 23.2 15.9 -3.7 16.1 ------ Vanguard Target Retirement 2055 Inv Rank 32 40 40 52 27 --41 63 22 35 77 10 -------- Vanguard Target Retirement 2055 Inv Vanguard Target 2055 Composite Index (Net) 0 25 50 75 100Return Percentile Rank3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 3/17 12/17 10.8 11.2 11.6 12.0 12.4 Return (%)7.0 7.1 7.2 Risk (Standard Deviation %) Vanguard Target 2055 Composite Index (Net) Vanguard Target Retirement 2055 Inv Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Target Retirement 2055 Inv 11.6 8.6 11.1 -0.2 1.0 1.3 0.5 -0.6 4.7 40.0 7y 4m Vanguard Target 2055 Composite Index (Net)12.0 8.7 11.5 0.0 1.0 1.3 0.0 --4.8 0.0 7y 4m 90 Day U.S. Treasury Bill 0.2 0.1 0.0 0.2 0.0 --8.7 -1.3 0.0 28.3 7y 4m Manager Evaluation Vanguard Target Retirement 2055 Inv vs. Vanguard Target 2055 Composite Index (Net) As of December 31, 2017 54 Historical Performance Three Year Rolling Percentile Ranking Risk and Return (Jan-2013 - Dec-2017) Historical Statistics - Monthly Periodicity (Jan-2013 - Dec-2017) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Vanguard Target Retirement 2060 Inv 5.2 21.4 21.4 9.1 11.6 --8.8 -1.7 7.2 24.3 ------------ Vanguard Target 2060 Composite Index (Net)5.4 21.5 21.5 9.4 12.0 --9.1 -1.3 7.6 24.8 15.6 ---------- TD 2060 Universe Median 5.1 20.9 20.9 9.1 ----8.8 -1.1 6.2 -------------- Vanguard Target Retirement 2060 Inv Rank 38 41 41 55 ----51 82 1 -------------- Vanguard Target Retirement 2060 Inv Vanguard Target 2060 Composite Index (Net) 0 25 50 75 100Return Percentile Rank3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 3/17 12/17 10.8 11.2 11.6 12.0 12.4 Return (%)7.0 7.1 7.2 Risk (Standard Deviation %) Vanguard Target 2060 Composite Index (Net) Vanguard Target Retirement 2060 Inv Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Target Retirement 2060 Inv 11.6 8.6 11.1 -0.2 1.0 1.3 0.5 -0.7 4.7 43.3 5y 11m Vanguard Target 2060 Composite Index (Net)12.0 8.7 11.5 0.0 1.0 1.3 0.0 --4.8 0.0 5y 11m 90 Day U.S. Treasury Bill 0.2 0.1 0.0 0.2 0.0 --8.7 -1.3 0.0 28.3 5y 11m Manager Evaluation Vanguard Target Retirement 2060 Inv vs. Vanguard Target 2060 Composite Index (Net) As of December 31, 2017 55 Manager Evaluation Ta rget-Date Funds Asset Allocation As of December 31, 2017 U.S.Equ ity 17.9%25.2%32.6%37.8%42.3%46.9%51.3%53.9%53.7%54.3%53.9%53.9% Va nguard Total St ock Marke t Index F und 17.9%25.2%32.6%37.8%42.3%46.9%51.3%53.9%53.7%54.3%53.9%53.9% Non-U.S . Equ ity 12.2%17.1%22.0%25.5%28.5%31.5%34.5%36.1%36.2%35.8%36.1%36.1% Va nguard Total In ternational St ock In dex Fu nd 12.2%17.1%22.0%25.5%28.5%31.5%34.5%36.1%36.2%35.8%36.1%36.1% Fi xe d In come 69.9%57.7%45.4%36.7%29.2%21.6%14.2%10.0%10.1%9.9%10.0%10.0% Va nguard Total Bo nd Market II In dex Fu nd 37.3%32.4%28.9%25.8%20.5%15.1%10.0%7.0%7.1%7.0%7.0%7.0% Va nguard Total In ternational Bo nd Stock In dex Fu nd 15.9%14.0%12.3%10.9%8.7%6.5%4.2%3.0%3.0%2.9%3.0%3.0% Va nguard Infla tion-Pro tected Securit ie s Fund 16.7%11.3%4.2%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 2040 Tar get Date 2055 Tar get Date 2060 Tar get Date 2065VanguardComponentFunds 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 2030 Tar get Date 2035 56 Appendix 57 This report contains confidential and proprietary information and is intended for the exclusive use of the parties to whom it is provided. Facts and information provided in this report are believed to be accurate at the time of preparation. However, certain information in this report has been provided to Pavilion Advisory Group Inc. (“Pavilion”) by third parties. Although we believe the third-party sources used to prepare this information are reliable, Pavilion shall not be liable for any errors or as to the accuracy of the information and takes no responsibility to update this information. This performance report is not a custodial statement or statement of record. You should receive custodial statements or other statement(s) of record directly from your custodian or applicable managers. Performance returns for period longer than one year are annualized. Returns are shown net of investment manager fees assessed by third party managers or funds, as applicable, unless otherwise denoted and generally include the effect of all cash flows (e.g., earnings, distributions). In addition, accounts may incur other transactions costs such as brokerage commissions, custodial costs and other expenses which are not denoted in this report and may not be reflected in the performance returns. Mutual fund returns assume reinvestment of all distributions at net asset value (NAV) and deduction of fund expenses. Report totals may not sum due to rounding. It is important to note that performance results do not reflect the deduction of any investment advisory fees you pay to Pavilion, therefore, performance results would be reduced by these investment advisory fees. Note, however, certain client reports may reflect the deduction of Pavilion’s investment advisory fee. Information about Pavilion’s investment advisory fees is available in the firm’s Form ADV Part 2A, available upon request. Generally, the client inception period represents the first full month of performance of the account. Any returns shown prior to the client inception period are obtained directly from the manager or based upon the performance of the investment product. Performance data prior to the consulting relationship with Pavilion may be sourced from prior consultant(s), if applicable. When administrator valuations for the last month of the reported period are not available prior to report production, Pavilion may derive market values and performance based on manager provided estimates for that investment product. Alternatively, Pavilion may use carry forward market values from the prior month. Performance and market values are updated if/when the statement is received from the manager/administrator and may be different than the values in the initial report. Performance and market value estimates are denoted with [CE] (current estimate). Private equity holding results typically lag by 45 to 180 days after the report period end due to statement availability, therefore may not be included in the report. Disclosures 58 In the course of Pavilion’s performance reconciliation process, Pavilion may uncover significant pricing differences between you r investment managers and the values of the custodian on a security by security basis and may adjust the custodian valuation, if the manager's price is closer to a third party pricing source (FactSet, Bloomberg, Bondedge). If a third party price is unavailable, Pavilion uses the more conservative price. For other identified valuation errors, Pavilion alerts the custodian about any issues and will report as representative a market value for the portfolio as possible. You should carefully review your custodial statements or other statement(s) of record from the manager and report any discrepancies to your qualified custodian or applicable manager. This disclosure is intended to capture and explain Pavilion’s process for performance reporting. Due to specific client requests,accommodations or other circumstances, the actual process may vary from this description. Past performance is no indication of future results. This document may include certain forward-looking statement or opinions that are based on current estimates and forecasts. Actual results could differ materially. Investing in securities products involves risk, including possible loss of principal. You should carefully review and consider the applicable prospectus or other offering documents prior to making any i nvestment. Pavilion Advisory Group Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission. This report is not to be reproduced, redistributed or retransmitted in any form without prior expressed written consent from Pavilion. ©2018 Pavilion Advisory Group Inc. All rights reserved. www.pavilioncorp.com Disclosures 59