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2018 1st Quarter Report
Performance Review Metropolitan St. Louis Sewer District Deferred Compensation Plan 1st Quarter 2018 Pavilion Advisory Group Inc. 227 W. Monroe Street, Suite 2020 Chicago, IL 60606 Phone: 312-798-3200 Fax: 312-902-1984 www.pavilioncorp.com 1 Executive Summary 1 2 Plan Assets 4 3 Performance Summary 8 4 Manager Evaluation 13 5 DC Regulatory Spotlight 40 6 Capital Markets Review 46 7 Appendix 57 Table Of Contents Executive Summary 1 " I n c r e a s e d u n c e r t a i n t y p r o p e l l e d e q u i t y m a r k e t v o l a t i l i t y h i g h e r l a t e i n J a n u a r y a n d m a r k e t s r e m a i n e d c h o p p y t h r o u g h q u a r t e r e n d . T h e j u m p f e l t p a r t i c u l a r l y p r o n o u n c e d a s t h e S & P 5 0 0 I n d e x e x p e r i e n c e d 2 3 t r a d i n g d a y s w i t h a g r e a t e r t h a n 1 % m o v e i n t h e f i r s t q u a r t e r c o m p a r e d t o 2 0 1 7 s 8 t r a d i n g d a y s d u r i n g t h e e n t i r e y e a r . T h e e q u i t y m a r k e t s v o l a t i l i t y s p i k e , h o w e v e r , h a d l i m i t e d s p i l l o v e r i n t o o t h e r a s s e t c l a s s e s , s u g g e s t i n g i s s u e s a r e n o t s y s t e m i c . " C o r e i n f l a t i o n i s a p p r o a c h i n g t a r g e t s i n m o s t d e v e l o p e d m a r k e t s , a l l o w i n g m o n e t a r y p o l i c y m a k e r s t o g r a d u a l l y r e d u c e a c c o m m o d a t i o n . C e n t r a l b a n k g u i d a n c e d i d n o t c h a n g e m a t e r i a l l y i n t h e q u a r t e r , a n d J a n u a r y s s p i k e i n r a t e s r e f l e c t e d a n a l i g n m e n t o f m a r k e t s a n d p o l i c y m a k e r s , r a t h e r t h a n a s i g n i f i c a n t c h a n g e i n p o l i c y . " E m e r g i n g m a r k e t s p e r f o r m a n c e a g a i n r e p r e s e n t e d a b r i g h t s p o t f o r e q u i t i e s . A l s o m a i n t a i n i n g 2 0 1 7 s t r e n d , t h e G r o w t h s t y l e s o u t p e r f o r m e d t h e V a l u e s t y l e e v e n w i t h t e c h n o l o g y s t o c k s p e r f o r m i n g p o o r l y i n M a r c h , a m i d h e a d l i n e s h o c k s . W h i l e n o t i m m u n e t o t h e w h i p s a w m a r k e t o f t h e f i r s t q u a r t e r , s m a l l c a p i t a l i z a t i o n s t o c k s p e r f o r m e d b e t t e r a s t r a d e p o l i c y w a s a n t i c i p a t e d t o h a v e a l e s s e r e f f e c t d u e t o l o w e r f o r e i g n r e v e n u e s . " F o r t h e f i f t h c o n s e c u t i v e q u a r t e r , t h e U . S . y i e l d c u r v e f l a t t e n e d , a n d r i s i n g r a t e s i n J a n u a r y w e i g h t e d h e a v i l y o n q u a r t e r l y r e t u r n s w i t h i n f i x e d i n c o m e . A d d i t i o n a l l y , c r e d i t s p r e a d s g e n e r a l l y w i d e n e d , r e f l e c t i n g t h e i n c r e a s e d u n c e r t a i n t y i n t h e e c o n o m i c l a n d s c a p e a n d w e i g h i n g o n p e r f o r m a n c e r e l a t i v e t o s i m i l a r d u r a t i o n T r e a s u r i e s . " T h e D O L F i d u c i a r y R u l e h a s b e e n v a c a t e d b y t h e 5 t h C i r c u i t U . S . C o u r t o f A p p e a l s . U n l e s s t h e D O L a p p e a l s b y M a y 7 , 2 0 1 8 , t h e f i d u c i a r y s t a n d a r d w i l l r e v e r t b a c k t o t h e c u r r e n t 5 - p a r t t e s t . T h e S E C r e c e n t l y a n n o u n c e d i t s o w n , l e s s s t r i n g e n t p r o p o s e d f i d u c i a r y r u l e o n a d v i c e , w h i c h i s c u r r e n t l y o u t f o r p u b l i c c o m m e n t . " T h e B i p a r t i s a n B u d g e t A c t i n c l u d e d p r o v i s i o n s e x p a n d i n g h a r d s h i p w i t h d r a w a l s . " S e v e r a l r e c u r r i n g l a w s u i t t r e n d s c o n t i n u e d d u r i n g 2 0 1 7 , w i t h 3 0 n e w E R I S A e x c e s s i v e f e e c a s e s f i l e d . F o c u s a r e a s i n c l u d e : t h i r d p a r t y m a n a g e d a c c o u n t s e r v i c e s ( p a r t i c u l a r l y F i n a n c i a l E n g i n e s ) , c o m p a n y s t o c k , r e t a i l v s . i n s t i t u t i o n a l i n v e s t m e n t o p t i o n s , u n i v e r s i t y 4 0 3 ( b ) p l a n s a n d p r o p r i e t a r y f u n d s . S e v e r a l b e s t p r a c t i c e s a r e r e i n f o r c e d b y t h e s e c a s e s , e n c o u r a g i n g m o r e a w a r e n e s s a n d d r a w i n g a t t e n t i o n t o d u e d i l i g e n c e p r o c e s s e s a n d d e c i s i o n d o c u m e n t a t i o n b y p l a n s p o n s o r s . E x e c u t i v e S u m m a r y M a r c h 3 1 , 2 0 1 8 C a p i t a l M a r k e t s R e v i e w M a r k e t R e t u r n s D C R e g u l a t o r y S p o t l i g h t Q u a r t e r Y e a r O n e T h r e e F i v e t o D a t e t o D a t e Y e a r Y e a r s Y e a r s D o m e s t i c E q u i t y I n d i c e s D o w J o n e s W i l s h i r e 5 0 0 0 - 0 . 8 - 0 . 8 1 3 . 7 1 0 . 5 1 3 . 1 S & P 5 0 0 - 0 . 8 - 0 . 8 1 4 . 0 1 0 . 8 1 3 . 3 R u s s e l l 1 0 0 0 I n d e x - 0 . 7 - 0 . 7 1 4 . 0 1 0 . 4 1 3 . 2 R u s s e l l 1 0 0 0 G r o w t h I n d e x 1 . 4 1 . 4 2 1 . 3 1 2 . 9 1 5 . 5 R u s s e l l 1 0 0 0 V a l u e I n d e x - 2 . 8 - 2 . 8 6 . 9 7 . 9 1 0 . 8 R u s s e l l M i d c a p I n d e x - 0 . 5 - 0 . 5 1 2 . 2 8 . 0 1 2 . 1 R u s s e l l M i d c a p G r o w t h I n d e x 2 . 2 2 . 2 1 9 . 7 9 . 2 1 3 . 3 R u s s e l l M i d c a p V a l u e I n d e x - 2 . 5 - 2 . 5 6 . 5 7 . 2 1 1 . 1 R u s s e l l 2 0 0 0 I n d e x - 0 . 1 - 0 . 1 1 1 . 8 8 . 4 1 1 . 5 R u s s e l l 2 0 0 0 G r o w t h I n d e x 2 . 3 2 . 3 1 8 . 6 8 . 8 1 2 . 9 R u s s e l l 2 0 0 0 V a l u e I n d e x - 2 . 6 - 2 . 6 5 . 1 7 . 9 1 0 . 0 I n t e r n a t i o n a l E q u i t y I n d i c e s M S C I E A F E I n d e x - 1 . 5 - 1 . 5 1 4 . 8 5 . 6 6 . 5 M S C I E A F E G r o w t h I n d e x - 1 . 0 - 1 . 0 1 7 . 5 6 . 7 7 . 1 M S C I E A F E V a l u e I n d e x - 2 . 0 - 2 . 0 1 2 . 2 4 . 3 5 . 8 M S C I E A F E S m a l l C a p I n d e x 0 . 2 0 . 2 2 3 . 5 1 2 . 3 1 1 . 1 M S C I A C W o r l d I n d e x - 1 . 0 - 1 . 0 1 4 . 8 8 . 1 9 . 2 M S C I A C W o r l d I n d e x e x U S - 1 . 2 - 1 . 2 1 6 . 5 6 . 2 5 . 9 M S C I E m e r g i n g M a r k e t s I n d e x 1 . 4 1 . 4 2 4 . 9 8 . 8 5 . 0 F i x e d I n c o m e I n d i c e s B l o o m b e r g B a r c l a y s A g g r e g a t e - 1 . 5 - 1 . 5 1 . 2 1 . 2 1 . 8 B l o o m b e r g B a r c l a y s U . S . I n t . G o v t / C r e d i t - 1 . 0 - 1 . 0 0 . 4 0 . 9 1 . 2 B l o o m b e r g B a r c l a y s U . S . L o n g G o v t / C r e d i t - 3 . 6 - 3 . 6 5 . 1 2 . 1 4 . 1 B l o o m b e r g B a r c l a y s U . S . C o r p : H i g h Y i e l d - 0 . 9 - 0 . 9 3 . 8 5 . 2 5 . 0 B l o o m b e r g B a r c l a y s U . S . T r e a s u r y : U . S . T I P S - 0 . 8 - 0 . 8 0 . 9 1 . 3 0 . 0 C i t i g r o u p N o n - U . S . W o r l d G o v e r n m e n t 4 . 4 4 . 4 1 2 . 9 5 . 0 1 . 4 J P M E M B I G l o b a l D i v ( e x t e r n a l c u r r e n c y ) - 1 . 7 - 1 . 7 4 . 3 5 . 8 4 . 7 J P M G B I - E M G l o b a l D i v ( l o c a l c u r r e n c y ) 4 . 4 4 . 4 1 3 . 0 5 . 4 - 0 . 7 R e a l A s s e t I n d i c e s B l o o m b e r g C o m m o d i t y I n d e x - 0 . 4 - 0 . 4 3 . 7 - 3 . 2 - 8 . 3 D o w J o n e s W i l s h i r e R E I T - 7 . 5 - 7 . 5 - 3 . 6 1 . 0 6 . 1 2 40 45 50 55 60 65 Market Value ($, mil)•During the quarter,all of the Vanguard Target Date Retirement Funds modestly outperformed their respective S&P Target Date Indices.Vanguard’s underweight to REITs,slight overweight to small cap stocks,and higher strategic allocation to international bonds versus the S&P Target Date Index benefited results. •Domestic equity fund Vanguard U.S.Growth and international equity fund Vanguard International Growth were the top relative performers over the trailing one-year period,outpacing their respective benchmarks by 470 and 1,470 basis points,respectively. Executive Summary Metropolitan St. Louis Sewer District Deferred Compensation Plan As of March 31, 2018 Total Asset Growth Plan Update Asset Allocation Breakdown by Asset Class Key Plan Design Features Investment Highlights and Recommendations Managers for Discussion* •All managers in the investment menu are compliant as of 3/31/2018. * Full compliance report on page 7. $63.24 Million •Pavilion recommends no changes to the investment lineup at this time. 3 Plan Summary 4 March 2018 December 2017 Change $%$%$% Target Date Vanguard Target Retirement Income Inv 951,825 1.5 824,242 1.3 127,584 15.5 Vanguard Target Retirement 2015 Inv 966,278 1.5 975,588 1.5 -9,310 -1.0 Vanguard Target Retirement 2020 Inv 2,604,549 4.1 2,812,842 4.4 -208,294 -7.4 Vanguard Target Retirement 2025 Inv 4,572,455 7.2 4,506,811 7.1 65,643 1.5 Vanguard Target Retirement 2030 Inv 1,879,431 3.0 1,855,802 2.9 23,629 1.3 Vanguard Target Retirement 2035 Inv 1,887,618 3.0 1,856,963 2.9 30,655 1.7 Vanguard Target Retirement 2040 Inv 1,135,024 1.8 1,101,522 1.7 33,502 3.0 Vanguard Target Retirement 2045 Inv 1,246,564 2.0 1,190,114 1.9 56,450 4.7 Vanguard Target Retirement 2050 Inv 806,792 1.3 767,662 1.2 39,130 5.1 Vanguard Target Retirement 2055 Inv 256,881 0.4 245,553 0.4 11,328 4.6 Vanguard Target Retirement 2060 Inv 100,277 0.2 82,303 0.1 17,974 21.8 Vanguard Target Retirement 2065 Inv 549 0.0 81 0.0 468 577.8 Total Target Date 16,408,242 25.9 16,219,482 25.5 188,759 1.2 Domestic Equity Vanguard 500 Index Inv 8,847,936 14.0 8,995,067 14.2 -147,131 -1.6 Vanguard Windsor II Inv 8,843,336 14.0 9,382,333 14.8 -538,997 -5.7 Vanguard U.S. Growth Inv 5,837,764 9.2 5,399,403 8.5 438,361 8.1 Vanguard Mid-Cap Index Inv 3,464,698 5.5 3,461,785 5.4 2,912 0.1 Vanguard Small-Cap Index Inv 2,813,705 4.4 2,814,235 4.4 -530 0.0 Total Domestic Equity 29,807,439 47.1 30,052,824 47.3 -245,385 -0.8 International Equity Vanguard International Growth Inv 3,223,651 5.1 3,341,152 5.3 -117,501 -3.5 Total International Equity 3,223,651 5.1 3,341,152 5.3 -117,501 -3.5 Fixed Income Vanguard Total Bond Market Index Inv 2,773,287 4.4 2,742,294 4.3 30,992 1.1 Vanguard Retirement Savings Trust 2,807,806 4.4 2,941,454 4.6 -133,649 -4.5 Vanguard Balanced Index Inv 5,405,768 8.5 5,485,682 8.6 -79,914 -1.5 Total Fixed Income 10,986,860 17.4 11,169,431 17.6 -182,570 -1.6 Capital Preservation Vanguard Prime Money Market Inv 1,429,988 2.3 1,384,365 2.2 45,622 3.3 Total Capital Preservation 1,429,988 2.3 1,384,365 2.2 45,622 3.3 Plan Summary Asset Allocation - Metropolitan St. Louis Sewer District Deferred Compensation Plan As of March 31, 2018 Percentage change includes all cash flows and market movements. 5 Plan Summary Asset Allocation - Metropolitan St. Louis Sewer District Deferred Compensation Plan As of March 31, 2018 March 2018 December 2017 Change $%$%$% Loan Funds Loan Fund 1,386,309 2.2 1,378,189 2.2 8,120 0.6 Total Loan Fund 1,386,309 2.2 1,378,189 2.2 8,120 0.6 Total Plan Deferred Compensation Plan Total Composite 63,242,488 100.0 63,545,442 100.0 -302,954 -0.5 Percentage change includes all cash flows and market movements. 6 Fund Name Qualitative Compliance Performance Compliance 3 Year Return Short-Term 3 Year Rank 3 Year Sharpe 5 Year Return Longer-Term 5 Year Rank 5 Year Sharpe Vanguard Windsor II Inv ✔✔✖✖✖✖✖✔ Vanguard U.S. Growth Inv ✔✔✖✔✖✔✔✖ Vanguard International Growth Inv ✔✔✔✔✔✔✔✔ Legend 3 Year Return ✔Goals met or no material change ✖Goals not met or material changes Performance Summary Compliance Checklist As of March 31, 2018 Performance compliance represents Pavilion’s view on manager performance relative to Pavilion’s expectations for performance, based primarily on manager investment philosophy and process. The three and five year return, rank and Sharpe ratio goals are as follows: the annualized return exceeds the benchmark’s return, the manager’s peer group rank is better than the 50th percentile, and the manager’s Sharpe ratio exceeds the benchmark’s.7 Performance Summary 8 Allocation Market Value $% Performance (%) Quarter YTD 1 Year 3 Years 5 Years 7 Years 10 Years Target Date Vanguard Target Retirement Income Inv 951,825 1.5 -0.5 (8)-0.5 (8)5.4 (54)3.7 (52)4.3 (47)5.1 (41)4.9 (41) Vanguard Target Income Composite Index (Net)-0.5 (12)-0.5 (12)5.6 (51)3.9 (50)4.5 (44)5.2 (37)5.0 (36) S&P Target Date Retirement Income Index -0.8 (48)-0.8 (48)5.4 (54)3.5 (58)4.1 (50)4.7 (49)4.3 (75) TD Income Universe Median -0.9 -0.9 5.6 3.8 4.0 4.7 4.8 Vanguard Target Retirement 2015 Inv 966,278 1.5 -0.5 (18)-0.5 (18)7.3 (33)4.7 (26)6.2 (21)6.4 (18)5.7 (15) Vanguard Target 2015 Composite Index (Net)-0.6 (24)-0.6 (24)7.4 (24)4.9 (21)6.4 (15)6.6 (13)5.8 (13) S&P Target Date 2015 Index -0.9 (69)-0.9 (69)6.9 (37)4.8 (24)5.9 (26)6.0 (34)5.4 (46) TD 2015 Universe Median -0.8 -0.8 6.6 4.3 5.3 5.6 5.3 Vanguard Target Retirement 2020 Inv 2,604,549 4.1 -0.6 (27)-0.6 (27)9.0 (12)5.6 (15)7.3 (8)7.2 (18)6.2 (15) Vanguard Target 2020 Composite Index (Net)-0.6 (31)-0.6 (31)9.1 (11)5.8 (11)7.5 (6)7.5 (6)6.4 (9) S&P Target Date 2020 Index -0.9 (67)-0.9 (67)7.8 (60)5.3 (29)6.6 (36)6.6 (41)5.8 (44) TD 2020 Universe Median -0.8 -0.8 8.0 5.0 6.3 6.5 5.7 Vanguard Target Retirement 2025 Inv 4,572,455 7.2 -0.6 (35)-0.6 (35)10.2 (19)6.3 (17)8.0 (12)7.8 (18)6.5 (19) Vanguard Target 2025 Composite Index (Net)-0.7 (40)-0.7 (40)10.3 (17)6.5 (13)8.2 (7)8.0 (12)6.6 (16) S&P Target Date 2025 Index -0.9 (73)-0.9 (73)9.0 (58)6.0 (38)7.3 (45)7.2 (50)6.1 (43) TD 2025 Universe Median -0.8 -0.8 9.6 5.8 7.1 7.2 6.0 Vanguard Target Retirement 2030 Inv 1,879,431 3.0 -0.6 (31)-0.6 (31)11.2 (36)6.8 (27)8.6 (18)8.2 (23)6.7 (24) Vanguard Target 2030 Composite Index (Net)-0.7 (37)-0.7 (37)11.3 (27)7.0 (19)8.8 (13)8.5 (13)6.9 (17) S&P Target Date 2030 Index -0.9 (73)-0.9 (73)10.2 (60)6.6 (39)8.0 (48)7.7 (49)6.4 (44) TD 2030 Universe Median -0.8 -0.8 10.8 6.3 8.0 7.6 6.2 Vanguard Target Retirement 2035 Inv 1,887,618 3.0 -0.6 (37)-0.6 (37)12.2 (40)7.3 (30)9.2 (23)8.7 (26)7.0 (38) Vanguard Target 2035 Composite Index (Net)-0.7 (42)-0.7 (42)12.3 (33)7.5 (22)9.4 (17)8.9 (11)7.2 (23) S&P Target Date 2035 Index -0.9 (83)-0.9 (83)11.3 (65)7.2 (40)8.6 (49)8.1 (53)6.6 (50) TD 2035 Universe Median -0.7 -0.7 12.1 7.0 8.5 8.3 6.6 Vanguard Target Retirement 2040 Inv 1,135,024 1.8 -0.5 (34)-0.5 (34)13.2 (27)7.9 (24)9.7 (18)9.1 (21)7.3 (24) Vanguard Target 2040 Composite Index (Net)-0.7 (51)-0.7 (51)13.4 (24)8.1 (19)10.0 (8)9.4 (10)7.5 (15) S&P Target Date 2040 Index -0.9 (80)-0.9 (80)12.1 (67)7.6 (39)9.1 (47)8.5 (47)6.8 (46) TD 2040 Universe Median -0.7 -0.7 12.7 7.3 9.0 8.4 6.7 Performance Summary Annualized Performance (Net) As of March 31, 2018 _____________________________ Returns are expressed as percentages and net of fees. Returns for periods greater than one year are annualized. Peer group percentile ranks are shown in parenthesis. Rankings in the top quartile of peers are shown as green, while rankings in the bottom quartile of peers are shown as red. 9 Performance Summary Annualized Performance (Net) As of March 31, 2018 Allocation Market Value $% Performance (%) Quarter YTD 1 Year 3 Years 5 Years 7 Years 10 Years Vanguard Target Retirement 2045 Inv 1,246,564 2.0 -0.6 (43)-0.6 (43)13.7 (37)8.1 (19)9.9 (20)9.2 (19)7.4 (21) Vanguard Target 2045 Composite Index (Net)-0.7 (51)-0.7 (51)13.8 (31)8.3 (17)10.1 (9)9.5 (14)7.6 (14) S&P Target Date 2045 Index -0.9 (84)-0.9 (84)12.5 (77)7.9 (42)9.4 (47)8.7 (51)6.9 (63) TD 2045 Universe Median -0.7 -0.7 13.1 7.8 9.3 8.7 7.1 Vanguard Target Retirement 2050 Inv 806,792 1.3 -0.6 (40)-0.6 (40)13.7 (40)8.1 (22)9.9 (24)9.2 (26)7.4 (24) Vanguard Target 2050 Composite Index (Net)-0.7 (49)-0.7 (49)13.8 (36)8.3 (18)10.1 (15)9.5 (14)7.6 (12) S&P Target Date 2050 Index -0.9 (81)-0.9 (81)12.8 (71)8.1 (22)9.7 (37)8.9 (42)7.1 (50) TD 2050 Universe Median -0.7 -0.7 13.5 7.8 9.4 8.7 7.0 Vanguard Target Retirement 2055 Inv 256,881 0.4 -0.6 (43)-0.6 (43)13.7 (45)8.1 (33)9.8 (34)9.2 (46)-- Vanguard Target 2055 Composite Index (Net)-0.7 (54)-0.7 (54)13.8 (37)8.3 (20)10.1 (23)9.5 (23)-- S&P Target Date 2055 Index -0.9 (76)-0.9 (76)13.0 (65)8.2 (24)9.9 (33)9.1 (47)7.2 (--) TD 2055 Universe Median -0.7 -0.7 13.6 7.9 9.6 9.0 -- Vanguard Target Retirement 2060 Inv 100,277 0.2 -0.6 (44)-0.6 (44)13.7 (44)8.1 (47)9.8 (--)---- Vanguard Target 2060 Composite Index (Net)-0.7 (60)-0.7 (60)13.8 (42)8.3 (43)10.1 (--)---- S&P Target Date 2060+ Index -0.9 (85)-0.9 (85)13.2 (61)8.3 (43)9.9 (--)9.2 (--)-- TD 2060 Universe Median -0.7 -0.7 13.6 8.0 ------ Vanguard Target Retirement 2065 Inv 549 0.0 -0.6 (47)-0.6 (47)---------- Vanguard Target 2065 Composite Index (Net)-0.7 (63)-0.7 (63)---------- S&P Target Date 2060+ Index -0.9 (85)-0.9 (85)13.2 (57)8.3 (45)9.9 (--)9.2 (--)-- TD 2065 Universe Median -0.7 -0.7 13.2 8.0 ------ Domestic Equity Vanguard 500 Index Inv 8,847,936 14.0 -0.8 (51)-0.8 (51)13.8 (49)10.6 (19)13.1 (28)12.5 (27)9.4 (42) S&P 500 -0.8 (49)-0.8 (49)14.0 (48)10.8 (17)13.3 (25)12.7 (21)9.5 (39) eV Large Cap Core Median -0.8 -0.8 13.8 9.2 12.3 11.9 9.1 Vanguard U.S. Growth Inv 5,837,764 9.2 4.3 (25)4.3 (25)26.0 (21)12.3 (32)15.6 (30)14.1 (24)11.0 (32) Russell 1000 Growth Index 1.4 (69)1.4 (69)21.3 (54)12.9 (25)15.5 (31)14.1 (24)11.3 (26) eV Large Cap Growth Median 2.7 2.7 21.7 11.2 14.6 12.8 10.4 _____________________________ Returns are expressed as percentages and net of fees. Returns for periods greater than one year are annualized. Peer group percentile ranks are shown in parenthesis. Rankings in the top quartile of peers are shown as green, while rankings in the bottom quartile of peers are shown as red. 10 Performance Summary Annualized Performance (Net) As of March 31, 2018 Allocation Market Value $% Performance (%) Quarter YTD 1 Year 3 Years 5 Years 7 Years 10 Years Vanguard Windsor II Inv 8,843,336 14.0 -2.9 (72)-2.9 (72)8.2 (70)7.6 (58)10.4 (67)10.7 (54)8.1 (54) Russell 1000 Value Index -2.8 (67)-2.8 (67)6.9 (80)7.9 (52)10.8 (57)11.0 (45)7.8 (64) eV Large Cap Value Median -2.4 -2.4 9.8 7.9 11.2 10.8 8.2 Vanguard Mid-Cap Index Inv 3,464,698 5.5 0.0 (46)0.0 (46)12.2 (52)7.7 (52)12.1 (38)11.1 (43)10.0 (52) Vanguard Mid-Cap Index Fund Blended Benchmark 0.0 (45)0.0 (45)12.4 (51)7.9 (50)12.3 (35)11.4 (37)10.2 (48) eV Mid Cap All Median -0.4 -0.4 12.4 7.9 11.7 10.8 10.1 Vanguard Small-Cap Index Inv 2,813,705 4.4 -0.2 (47)-0.2 (47)11.7 (47)7.9 (56)11.5 (48)10.8 (45)10.6 (42) Vanguard Small-Cap Index Fund Blended Benchmark -0.2 (47)-0.2 (47)11.8 (46)8.0 (55)11.7 (46)10.9 (43)10.7 (41) eV Small Cap All Median -0.5 -0.5 11.1 8.4 11.4 10.5 10.2 International Equity Vanguard International Growth Inv 3,223,651 5.1 3.4 (9)3.4 (9)31.2 (11)12.3 (5)11.0 (10)8.2 (16)5.9 (22) MSCI AC World ex USA (Net)-1.2 (89)-1.2 (89)16.5 (89)6.2 (83)5.9 (94)4.3 (100)2.7 (90) Custom Non US Diversified Growth Median 0.4 0.4 21.6 8.0 8.2 6.9 4.8 Fixed Income Vanguard Total Bond Market Index Inv 2,773,287 4.4 -1.5 (63)-1.5 (63)1.0 (75)1.0 (85)1.6 (80)2.7 (87)3.5 (87) Vanguard Total Bond Market Index Fund Benchmark -1.5 (59)-1.5 (59)1.2 (62)1.2 (72)1.8 (62)2.9 (70)3.7 (78) eV Core Fixed Income Median -1.4 -1.4 1.3 1.4 1.9 3.2 4.1 Vanguard Retirement Savings Trust 2,807,806 4.4 0.5 0.5 1.8 1.8 1.8 2.0 2.4 Ryan 3 Yr GIC Master 0.4 0.4 1.7 1.4 1.3 1.4 2.2 Vanguard Balanced Index Inv 5,405,768 8.5 -0.9 (56)-0.9 (56)8.6 (47)6.5 (36)8.4 (36)8.6 (30)7.4 (23) Vanguard Balanced Index Fund Benchmark -0.9 (51)-0.9 (51)8.7 (42)6.7 (30)8.6 (30)8.7 (24)7.6 (19) eV US Balanced Median -0.9 -0.9 8.2 6.1 7.8 8.0 6.9 Capital Preservation Vanguard Prime Money Market Inv 1,429,988 2.3 0.4 (15)0.4 (15)1.2 (32)0.6 (51)0.4 (50)0.3 (51)0.4 (54) BofA Merrill Lynch 3 Month U.S. T-Bill 0.4 (32)0.4 (32)1.1 (43)0.5 (65)0.3 (60)0.3 (58)0.3 (64) eV US Cash Management Median 0.3 0.3 1.0 0.6 0.4 0.3 0.5 Total Composite 63,242,488 100.0 0.0 0.0 ---------- _____________________________ Returns are expressed as percentages and net of fees. Returns for periods greater than one year are annualized. Peer group percentile ranks are shown in parenthesis. Rankings in the top quartile of peers are shown as green, while rankings in the bottom quartile of peers are shown as red. 11 Domestic Equity International Equity Fixed Income Capital Preservation -2.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 Return (%)-2.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 Risk (Standard Deviation %) Vanguard Total Bond Market Index Inv Vanguard Prime Money Market Inv Vanguard Balanced Index Inv Vanguard International Growth Inv Vanguard Small-Cap Index Inv Vanguard Mid-Cap Index Inv Vanguard U.S. Growth Inv Vanguard Windsor II Inv Vanguard 500 Index Inv Performance Summary Investment Options - Risk and Return Five Years Ending March 31, 2018 ______________________ Calculations based on monthly periodicity. 12 Manager Evaluation 13 Risk/Return vs. Peers - 5 YearsRisk/Return vs. Peers - 1 Year Historical Performance (%)* Quarter YTD 1 Year 3 Years 5 Years 10 Years 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Vanguard Target Retirement 2020 Inv -0.6 -0.6 9.0 5.6 7.3 6.2 14.1 6.9 -0.7 7.1 15.8 12.3 0.6 13.1 23.1 -27.0 Vanguard Target 2020 Composite Index (Net)-0.6 -0.6 9.1 5.8 7.5 6.4 14.2 7.2 -0.4 7.4 16.2 12.5 1.0 13.3 23.3 -27.4 S&P Target Date 2020 Index -0.9 -0.9 7.8 5.3 6.6 5.8 12.8 7.2 -0.2 5.7 14.8 11.5 0.6 12.9 19.9 -24.8 Vanguard Target Retirement 2030 Inv -0.6 -0.6 11.2 6.8 8.6 6.7 17.5 7.9 -1.0 7.2 20.5 14.2 -1.3 14.4 26.7 -32.9 Vanguard Target 2030 Composite Index (Net)-0.7 -0.7 11.3 7.0 8.8 6.9 17.7 8.1 -0.8 7.5 20.9 14.3 -0.9 14.6 27.0 -33.3 S&P Target Date 2030 Index -0.9 -0.9 10.2 6.6 8.0 6.4 16.2 8.3 -0.3 5.6 19.1 13.4 -1.2 14.5 23.7 -30.5 Vanguard Target Retirement 2045 Inv -0.6 -0.6 13.7 8.1 9.9 7.4 21.4 8.9 -1.6 7.2 24.4 15.6 -2.5 15.2 28.2 -34.6 Vanguard Target 2045 Composite Index (Net)-0.7 -0.7 13.8 8.3 10.1 7.6 21.5 9.1 -1.3 7.6 24.8 15.6 -2.1 15.3 28.7 -35.1 S&P Target Date 2045 Index -0.9 -0.9 12.5 7.9 9.4 6.9 19.6 9.5 -0.5 5.7 23.1 15.1 -2.6 15.6 26.4 -35.2 Target Date Peergroup Universe Vanguard Target Retirement Funds 0.0 3.0 6.0 9.0 12.0 15.0 Return (%)0.0 2.0 4.0 6.0 8.0 10.0 12.0 Risk (Standard Deviation %) Target Date Peergroup Universe Vanguard Target Retirement Funds 0.0 5.0 10.0 15.0 20.0 Return (%)0.8 1.6 2.4 3.2 4.0 4.8 5.6 6.4 7.2 8.0 Risk (Standard Deviation %) Manager Evaluation Vanguard Target Date Funds - QDIA As of March 31, 2018 * Performance shown is for three of the Target Date Fund vintages. The three capture the different phases of the lifecycle: short-, intermediate-, and long-dated. 14 Manager Evaluation Vanguard Target Retirement Funds As of March 31, 2018 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Vanguard Target Retirement Funds Glide Path Cash TIPS Developed Int'l / EM FI High Yield FI U.S. Investment Grade FI EM Equity Int'l Dev. Equity REITs US Mid/SC Equity U.S. LC Equity 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% S&P Target Index Glide Path Cash TIPS Developed Int'l / EM FI High Yield FI U.S. Investment Grade FI EM Equity Int'l Dev. Equity REITs US Mid/SC Equity U.S. LC Equity -20% -15% -10% -5% 0% 5% 10% 15% 20% 2060 2055 2050 2045 2040 2035 2030 2025 2020 2015 Income Over/Underweight Relative to the S&P Target Date Indices U.S. LC Equity US Mid/SC Equity REITs Int'l Dev. Equity EM Equity U.S. Investment Grade FI High Yield FI Developed Int'l / EM FI TIPS Cash 15 Manager Evaluation Vanguard Target Retirement Funds As of March 31, 2018 Actual allocations as of March 31, 2018 Underlying Vanguard Funds 2065 2060 2055 2050 2045 2040 2035 2030 2025 2020 2015 Income Total Stock Market Index Fund 54.1 53.8 53.8 53.6 53.5 51.0 46.6 42.1 37.5 32.2 24.9 17.8 Large-Cap 38.6 38.3 38.3 38.2 38.1 36.3 33.2 30.0 26.7 22.9 17.7 12.7 Mid-Cap 11.2 11.1 11.1 11.1 11.1 10.6 9.7 8.7 7.8 6.7 5.2 3.7 Small-Cap 4.3 4.3 4.3 4.3 4.3 4.1 3.7 3.4 3.0 2.6 2.0 1.4 Total International Stock Index Fund 35.9 36.0 36.1 36.2 36.2 34.4 31.3 28.2 25.4 21.8 16.7 11.9 Europe 14.7 14.8 14.8 14.9 14.9 14.1 12.8 11.6 10.4 8.9 6.9 4.9 Pacific 10.3 10.4 10.4 10.4 10.4 9.9 9.0 8.1 7.3 6.3 4.8 3.4 Emerging 7.5 7.5 7.5 7.5 7.5 7.2 6.5 5.9 5.3 4.5 3.5 2.5 Other 3.4 3.4 3.4 3.4 3.4 3.2 2.9 2.7 2.4 2.1 1.6 1.1 Total Equity 90.0 90.0 89.9 90.0 90.0 85.8 78.3 70.8 63.3 54.6 42.2 30.1 Total Bond Market II Index Fund 7.0 7.2 7.1 7.2 7.3 10.2 15.5 20.8 26.0 29.1 32.7 37.4 Treasury/Agency 3.0 3.1 3.1 3.1 3.1 4.4 6.7 8.9 11.2 12.5 14.0 16.1 Govt. Mortgage-Backed 1.5 1.5 1.5 1.5 1.5 2.2 3.3 4.4 5.5 6.2 6.9 7.9 Corporate 1.9 2.0 2.0 2.0 2.0 2.8 4.3 5.8 7.2 8.1 9.1 10.4 Foreign 0.4 0.4 0.4 0.4 0.4 0.6 0.9 1.2 1.5 1.6 1.8 2.1 Commercial Mortgage/Asset-Backed 0.1 0.1 0.1 0.1 0.2 0.2 0.3 0.4 0.5 0.6 0.7 0.8 Other 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.2 0.2 Total Int'l Bond Index Fund 3.0 3.0 3.0 3.0 3.0 4.4 6.6 8.9 11.1 12.5 14.2 16.1 Short-Term TIPS Fund 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.4 11.5 16.8 Total Bonds 10.0 10.0 10.1 10.0 10.0 14.2 21.7 29.2 36.7 45.4 57.8 69.9 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 16 (0.07) (0.02) 0.20 0.50 0.66 0.57 0.58 0.62 0.62 0.30 0.19 (0.07) (0.02) 0.20 0.50 0.66 0.57 0.58 0.62 0.62 0.30 0.19 (0.20) (0.10) 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 2060 2055 2050 2045 2040 2035 2030 2025 2020 2015 Income Performance Attribution: 5-Year Sources of Value Add (%) Total Value Added Strategic Allocation Difference Effect Relative To S&P TD Indices Manager Evaluation Vanguard Target Retirement Funds As of March 31, 2018 Notes: The summary shown is for the Investor Share Class and is net of fees. Your plan may not hold the same share class, and / or all of the funds shown above . For each Vanguard fund, the value added due to a strategic allocation difference from its respective S&P target date index fund is approximated by subtracting index's return from the fund’s return. Value added approximation is preliminary and unaudited. 17 Manager Evaluation Vanguard Target Retirement Funds As of March 31, 2018 Q1 2018 Performance Attribution: During the quarter, the Vanguard Target Retirement Funds modestly outperformed their respective S&P Target Date Indices. Additional comments relative to the S&P Target Date TR Indices: Manager Selection Effects: None. All of Vanguard’s underlying funds are indexed. Tactical Asset Allocation Effects: Vanguard does not use tactical asset allocation. Long-dated: 2065 –2050 Funds Mid-dated: 2045 –2030 Funds Short-dated: 2025 and Income Funds Equity & Alternatives –From a geographic perspective, Vanguard’s overweight to non-U.S. developed markets hurt relative returns across all sections of the glide path. +Within its U.S. equity allocation, an underweight to large cap, and slight overweight to small cap stocks helped returns, ver sus the S&P Target Date Index. +Finally, Vanguard’s modest underweight to REITS boosted relative returns, with real estate being one of the worst performing asset classes during the quarter. Fixed Income +Vanguard’s higher strategic allocation to international bonds helped performance. +Vanguard’s higher strategic allocation to international bonds helped performance. –Lower strategic allocation to cash detracted from performance marginally. +Vanguard’s higher strategic allocation to international bonds helped performance. +Vanguard’s higher strategic allocation to short-term TIPs helped performance. –Lower strategic allocation to cash detracted from performance. 18 Manager Evaluation Vanguard Target Retirement Funds As of March 31, 2018 Additional comments relative to the S&P Target Date TR Indices: Vanguard’s glide path is similar to the S&P Index series with the exception of the landing point/retirement fund, where Vangu ard allocates towards a slightly more conservative position. The major differences between the Vanguard Target Date Funds and the S&P Target Date Ind ex series are found at the sub-asset class level. –The S&P Indices carry a larger home country bias (65-68% of equities in the US vs. 60% for Vanguard). –The US S&P equity indices cover the top 1,500 market cap companies, resulting in an underweight in small and micro-cap US companies (when compared to the Vanguard’s US CRSP Total Stock Market Index and its exposure to roughly 3,500 US companies). –The S&P indices carry a modest overweight in the US REIT sector throughout most of the glide path. Vanguard only holds REITs at the market cap weighting, resulting in an average allocation of 1.6%. –On the fixed income side, the S&P indices only allocate to domestic fixed income. Vanguard allocates to both domestic fixed income and to currency hedged non-US investment grade bonds. In addition, S&P incorporates a very modest allocation to high yield later in the glide path, while Vanguard does not allocate to this area of the market. –For inflation sensitive assets, S&P lands at a TIPS allocation that is roughly half the size of Vanguard’s terminal allocation (9% vs. 17%). S&P’s TIPS allocation is to the full TIPS universe vs. Vanguard’s 0-5 year allocation. 19 Historical Performance (%) Risk and Return - monthly periodicity (Apr - 2013 - Mar - 2018)Three Year Rolling Percentile Ranking (10 Years) Historical Statistics - monthly periodicity (Apr-2013 - Mar-2018) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Vanguard 500 Index Inv -0.8 -0.8 13.8 10.6 13.1 9.4 21.7 11.8 1.2 13.5 32.2 15.8 2.0 14.9 26.5 -37.0 S&P 500 -0.8 -0.8 14.0 10.8 13.3 9.5 21.8 12.0 1.4 13.7 32.4 16.0 2.1 15.1 26.5 -37.0 eV Large Cap Core Median -0.8 -0.8 13.8 9.2 12.3 9.1 21.5 9.5 0.6 12.1 32.3 14.4 1.3 13.8 26.3 -35.6 Vanguard 500 Index Inv Rank 51 51 49 19 28 42 48 24 41 33 51 35 42 35 49 62 Vanguard 500 Index Inv S&P 500 0 25 50 75 100Return Percentile Rank6/08 6/09 6/10 6/11 6/12 6/13 6/14 6/15 6/16 6/17 3/18 13.0 13.1 13.2 13.3 13.4 Return (%)0.0 2.0 4.0 6.0 8.0 10.0 12.0 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 Period Vanguard 500 Index Inv 13.1 9.8 12.6 -0.1 1.0 1.3 0.0 -10.8 5.2 1.7 41y 7m S&P 500 13.3 9.8 12.7 0.0 1.0 1.3 0.0 --5.2 0.0 41y 7m 90 Day U.S. Treasury Bill 0.3 0.1 0.0 0.3 0.0 --9.8 -1.3 0.0 30.0 41y 7m Manager Evaluation Vanguard 500 Index Inv vs. S&P 500 As of March 31, 2018 Holdings Data as of Mar-2018. 20 Portfolio Characteristics Portfolio Benchmark Wtd. Avg. Mkt. Cap ($M)196,620 196,619 Median Mkt. Cap ($M)21,046 21,046 Price/Earnings ratio 21.4 21.4 Price/Book ratio 3.3 3.3 5 Yr. EPS Growth Rate (%)14.4 14.4 Current Yield (%)2.0 2.0 Debt to Equity 1.0 1.0 # of Securities 507 505 Beta (5 Years, Monthly)1.00 1.00 Consistency (5 Years, Monthly)1.67 0.00 Sharpe Ratio (5 Years, Monthly)1.29 1.30 Information Ratio (5 Years, Monthly)-10.81 - Up Market Capture (5 Years, Monthly)99.50 100.00 Down Market Capture (5 Years, Monthly)100.48 100.00 Active Share 0.1 -- Top Ten Equity Holdings Portfolio Weight (%) Bmk Weight (%) Qtr Return (%) Contribution to Return (%) Apple Inc 3.8 3.8 -0.5 0.0 Microsoft Corp 3.1 3.1 7.2 0.2 Amazon.com Inc 2.6 2.6 23.8 0.6 Facebook Inc 1.7 1.7 -9.4 -0.2 JPMorgan Chase & Co 1.7 1.7 3.4 0.1 Berkshire Hathaway Inc 1.6 1.7 0.6 0.0 Johnson & Johnson 1.5 1.5 -7.7 -0.1 Exxon Mobil Corp 1.4 1.4 -9.9 -0.1 Google Inc (Class C)1.4 1.4 -1.4 0.0 Alphabet Inc 1.4 1.4 -1.5 0.0 % of Portfolio 20.2 20.3 0.4 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 57.2 30.4 12.3 0.1 57.2 30.4 12.3 0.1 Sector Weights (%) Vanguard 500 Index Inv S&P 500 0.0 6.0 12.0 18.0 24.0 30.0 Utilities Telecommunication Services Real Estate Materials Information Technology Industrials Health Care Financials Energy Consumer Staples Consumer Discretionary 2.9 1.9 2.8 2.9 24.9 10.2 13.7 14.7 5.7 7.7 12.7 2.9 1.9 2.8 2.9 24.9 10.2 13.7 14.7 5.7 7.7 12.7 Manager Evaluation Vanguard 500 Index Inv vs. S&P 500 As of March 31, 2018 Holdings Data as of Mar-2018. 21 Historical Performance (%) Buy and Hold Attribution (%) Risk and Return - monthly periodicity (Apr - 2013 - Mar - 2018)Three Year Rolling Percentile Ranking (10 Years) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Vanguard Windsor II Inv -2.9 -2.9 8.2 7.6 10.4 8.1 16.8 13.4 -3.2 11.2 30.7 16.7 2.7 10.6 27.1 -36.7 Russell 1000 Value Index -2.8 -2.8 6.9 7.9 10.8 7.8 13.7 17.3 -3.8 13.5 32.5 17.5 0.4 15.5 19.7 -36.8 eV Large Cap Value Median -2.4 -2.4 9.8 7.9 11.2 8.2 16.5 14.0 -3.2 11.3 33.0 15.2 0.0 14.1 24.9 -36.0 Vanguard Windsor II Inv Rank 72 72 70 58 67 54 48 57 51 56 74 32 28 89 39 57 Vanguard Windsor II Inv Russell 1000 Value Index 0 25 50 75 100Return Percentile Rank6/08 6/09 6/10 6/11 6/12 6/13 6/14 6/15 6/16 6/17 3/18 10.0 10.4 10.8 11.2 11.6 Return (%)9.8 9.9 10.0 10.1 10.2 10.3 10.4 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 -5.4 -0.2 -4.2 0.5 0.6 9.5 1.1 2.5 -7.6 -1.1 0.1 3.5 0.7 Allocation (Total: 0.9) 0.0 0.6 1.2 1.8-0.6 0.0 0.0 0.2 0.0 0.0 0.8 0.0 0.0 -0.1 0.0 0.0 0.0 -0.1 Stock (Total: -1.1) 0.0 0.4 0.8-0.4-0.8 0.0 0.0 0.0 0.0 0.0 -0.5 0.0 -0.1 -0.4 0.2 -0.1 -0.2 0.0 Total 0.0 0.4 0.8-0.4-0.8-1.2 0.0 0.0 0.2 0.0 0.0 0.4 0.0 -0.1 -0.5 0.3 -0.1 -0.2 -0.1 Manager Evaluation Vanguard Windsor II Inv vs. Russell 1000 Value Index As of March 31, 2018 Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading. Holdings Data as of Dec-2017. 22 Portfolio Characteristics Portfolio Benchmark Wtd. Avg. Mkt. Cap ($M)158,137 122,119 Median Mkt. Cap ($M)23,454 9,447 Price/Earnings ratio 18.9 17.0 Price/Book ratio 2.6 2.1 5 Yr. EPS Growth Rate (%)7.4 8.4 Current Yield (%)2.4 2.5 Debt to Equity 0.6 0.5 # of Securities 294 711 Beta (5 Years, Monthly)1.00 1.00 Consistency (5 Years, Monthly)50.00 0.00 Sharpe Ratio (5 Years, Monthly)0.99 1.05 Information Ratio (5 Years, Monthly)-0.16 - Up Market Capture (5 Years, Monthly)98.99 100.00 Down Market Capture (5 Years, Monthly)101.49 100.00 Active Share 62.6 -- Top Ten Equity Holdings Portfolio Weight (%) Bmk Weight (%) Qtr Return (%) Contribution to Return (%) Microsoft Corp 4.0 0.0 7.2 0.3 Pfizer Inc 2.8 1.7 -1.1 0.0 Bank of America Corp 2.7 2.4 2.0 0.1 Medtronic PLC 2.7 0.8 -0.1 0.0 Citigroup Inc 2.7 1.4 -8.9 -0.2 JPMorgan Chase & Co 2.7 3.1 3.4 0.1 Conocophillips 2.2 0.6 8.6 0.2 United Technologies Corp 2.1 0.8 -0.8 0.0 Wells Fargo & Co 2.1 1.9 -13.1 -0.3 Oracle Corp 2.1 1.0 -2.9 -0.1 % of Portfolio 26.1 13.7 0.0 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 46.0 29.5 20.8 3.7 53.1 34.7 10.7 1.5 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 Utilities Telecommunication Services Real Estate Materials Information Technology Industrials Health Care Financials Energy Consumer Staples Consumer Discretionary 0.6 0.1 2.6 0.3 3.4 19.0 9.4 16.2 19.6 10.2 8.1 10.4 0.0 5.9 2.9 4.6 2.9 9.3 8.2 13.6 27.1 10.7 8.1 6.8 Manager Evaluation Vanguard Windsor II Inv vs. Russell 1000 Value Index As of March 31, 2018 Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading. Holdings Data as of Dec-2017. 23 Historical Performance (%) Buy and Hold Attribution (%) Risk and Return - monthly periodicity (Apr - 2013 - Mar - 2018)Three Year Rolling Percentile Ranking (10 Years) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Vanguard U.S. Growth Inv 4.3 4.3 26.0 12.3 15.6 11.0 31.6 -0.7 8.5 13.1 35.5 18.4 -0.7 11.5 35.0 -37.8 Russell 1000 Growth Index 1.4 1.4 21.3 12.9 15.5 11.3 30.2 7.1 5.7 13.1 33.5 15.3 2.6 16.7 37.2 -38.4 eV Large Cap Growth Median 2.7 2.7 21.7 11.2 14.6 10.4 29.0 3.4 4.5 11.0 34.3 15.4 -0.9 16.2 34.6 -39.8 Vanguard U.S. Growth Inv Rank 25 25 21 32 30 32 34 84 15 29 40 19 48 87 48 37 Vanguard U.S. Growth Inv Russell 1000 Growth Index 0 25 50 75 100Return Percentile Rank6/08 6/09 6/10 6/11 6/12 6/13 6/14 6/15 6/16 6/17 3/18 15.4 15.5 15.6 15.7 15.8 Return (%)9.9 10.2 10.5 10.8 11.1 11.4 11.7 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 -0.9 0.8 0.0 -2.9 9.6 -3.6 -0.6 5.0 -0.7 -3.3 -3.4 0.0 Allocation (Total: 0.9) 0.0 0.2 0.4-0.2-0.4 0.0 0.1 -0.1 0.0 0.2 0.2 0.1 0.0 0.2 0.1 0.2 -0.1 0.0 Stock (Total: 2.2) 0.0 0.6 1.2 1.8-0.6 0.0 0.0 0.1 0.0 0.0 1.0 0.3 -0.1 0.1 0.0 0.3 0.7 0.0 Total 0.0 0.5 1.0 1.5 2.0-0.5-1.0 0.0 0.1 0.0 0.0 0.2 1.2 0.3 -0.1 0.3 0.1 0.5 0.6 0.0 Manager Evaluation Vanguard U.S. Growth Inv vs. Russell 1000 Growth Index As of March 31, 2018 Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading. Holdings Data as of Dec-2017. 24 Portfolio Characteristics Portfolio Benchmark Wtd. Avg. Mkt. Cap ($M)190,723 228,882 Median Mkt. Cap ($M)32,252 11,782 Price/Earnings ratio 32.8 27.0 Price/Book ratio 5.9 6.3 5 Yr. EPS Growth Rate (%)26.9 19.6 Current Yield (%)0.7 1.4 Debt to Equity 1.1 1.8 # of Securities 154 553 Beta (5 Years, Monthly)1.02 1.00 Consistency (5 Years, Monthly)61.67 0.00 Sharpe Ratio (5 Years, Monthly)1.35 1.42 Information Ratio (5 Years, Monthly)0.04 - Up Market Capture (5 Years, Monthly)102.07 100.00 Down Market Capture (5 Years, Monthly)104.15 100.00 Active Share 53.8 -- Top Ten Equity Holdings Portfolio Weight (%) Bmk Weight (%) Qtr Return (%) Contribution to Return (%) Microsoft Corp 5.3 5.3 7.2 0.4 Mastercard Inc 4.2 1.3 15.9 0.7 Facebook Inc 3.7 2.9 -9.4 -0.3 Google Inc (Class C)3.7 2.4 -1.4 -0.1 PayPal Holdings Inc 3.5 0.7 3.1 0.1 Amazon.com Inc 3.4 4.5 23.8 0.8 Visa Inc 3.3 1.7 5.1 0.2 Alphabet Inc 2.2 2.4 -1.5 0.0 eBay Inc.2.1 0.0 6.6 0.1 Intercontinental Exchange Inc 2.1 0.2 3.1 0.1 % of Portfolio 33.5 21.4 1.9 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 56.2 26.5 16.0 1.2 46.1 33.6 19.4 0.9 Sector Weights (%) Vanguard U.S. Growth Inv Russell 1000 Growth Index 0.0 15.0 30.0 45.0 60.0 Other Utilities Telecommunication Services Real Estate Materials Information Technology Industrials Health Care Financials Energy Consumer Staples Consumer Discretionary 0.0 0.0 0.0 3.1 0.8 47.7 9.0 12.1 8.9 0.1 3.4 15.0 0.0 0.0 0.9 2.4 3.5 38.7 12.7 12.5 3.5 0.8 6.4 18.6 Manager Evaluation Vanguard U.S. Growth Inv vs. Russell 1000 Growth Index As of March 31, 2018 Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading. Holdings Data as of Dec-2017. 25 Historical Performance (%) Risk and Return - monthly periodicity (Apr - 2013 - Mar - 2018)Three Year Rolling Percentile Ranking (10 Years) Historical Statistics - monthly periodicity (Apr-2013 - Mar-2018) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Vanguard Mid-Cap Index Inv 0.0 0.0 12.2 7.7 12.1 10.0 19.1 11.1 -1.5 13.6 35.0 15.8 -2.1 25.5 40.2 -41.8 CRSP U.S. Mid Cap TR Index 0.0 0.0 12.4 7.9 12.3 10.0 19.3 11.2 -1.3 13.8 35.3 16.7 -1.8 26.2 36.9 -41.8 eV Mid Cap All Median -0.4 -0.4 12.4 7.9 11.7 10.1 19.6 10.8 -2.0 8.9 35.6 15.4 -2.0 23.4 37.2 -39.5 Vanguard Mid-Cap Index Inv Rank 46 46 52 52 38 52 53 49 45 16 56 47 52 35 37 64 Vanguard Mid-Cap Index Inv CRSP U.S. Mid Cap TR Index 0 25 50 75 100Return Percentile Rank6/08 6/09 6/10 6/11 6/12 6/13 6/14 6/15 6/16 6/17 3/18 12.0 12.1 12.2 12.3 12.4 Return (%)0.0 2.0 4.0 6.0 8.0 10.0 12.0 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 Period Vanguard Mid-Cap Index Inv 12.1 10.3 11.7 -0.2 1.0 1.1 0.0 -4.4 5.8 13.3 16y 8m CRSP U.S. Mid Cap TR Index 12.3 10.3 11.9 0.0 1.0 1.2 0.0 --5.8 0.0 16y 8m 90 Day U.S. Treasury Bill 0.3 0.1 0.0 0.3 0.0 --10.3 -1.2 0.0 31.7 16y 8m Manager Evaluation Vanguard Mid-Cap Index Inv vs. CRSP U.S. Mid Cap TR Index As of March 31, 2018 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. Holdings Data as of Mar-2018. 26 Portfolio Characteristics Portfolio Benchmark Wtd. Avg. Mkt. Cap ($M)15,327 15,313 Median Mkt. Cap ($M)12,210 12,363 Price/Earnings ratio 20.9 21.0 Price/Book ratio 2.9 2.9 5 Yr. EPS Growth Rate (%)11.1 11.2 Current Yield (%)1.6 1.6 Debt to Equity 0.6 0.6 # of Securities 347 343 Beta (5 Years, Monthly)1.00 1.00 Consistency (5 Years, Monthly)13.33 0.00 Sharpe Ratio (5 Years, Monthly)1.14 1.15 Information Ratio (5 Years, Monthly)-4.35 - Up Market Capture (5 Years, Monthly)99.44 100.00 Down Market Capture (5 Years, Monthly)100.72 100.00 Active Share 0.3 -- Top Ten Equity Holdings Portfolio Weight (%) Bmk Weight (%) Qtr Return (%) Contribution to Return (%) Fiserv Inc.0.8 0.8 8.8 0.1 Edwards Lifesciences Corp 0.7 0.7 23.8 0.2 Roper Technologies Inc 0.7 0.7 8.5 0.1 ServiceNow Inc 0.7 0.7 26.9 0.2 Autodesk Inc.0.7 0.7 19.8 0.1 Western Digital Corp 0.7 0.7 16.7 0.1 Red Hat Inc 0.7 0.7 24.5 0.2 Amphenol Corp 0.7 0.7 -1.7 0.0 Moody's Corp.0.7 0.7 9.6 0.1 M&T Bank Corp 0.6 0.6 8.2 0.1 % of Portfolio 7.0 7.0 1.0 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 18.8 80.9 0.3 18.9 80.8 0.3 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 4.8 0.6 6.8 5.8 19.4 13.3 9.2 14.9 5.7 4.2 15.3 4.8 0.6 6.8 5.8 19.3 13.5 9.2 14.8 5.7 4.2 15.2 Manager Evaluation Vanguard Mid-Cap Index Inv vs. CRSP U.S. Mid Cap TR Index As of March 31, 2018 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. Holdings Data as of Mar-2018. 27 Historical Performance (%) Risk and Return - monthly periodicity (Apr - 2013 - Mar - 2018)Three Year Rolling Percentile Ranking (10 Years) Historical Statistics - monthly periodicity (Apr-2013 - Mar-2018) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Vanguard Small-Cap Index Inv -0.2 -0.2 11.7 7.9 11.5 10.6 16.1 18.2 -3.8 7.4 37.6 18.0 -2.8 27.7 36.1 -36.1 CRSP U.S. Small Cap TR Index -0.2 -0.2 11.8 8.0 11.7 11.1 16.2 18.3 -3.7 7.5 38.5 18.6 -1.9 28.0 40.1 -36.8 eV Small Cap All Median -0.5 -0.5 11.1 8.4 11.4 10.2 14.2 19.6 -3.7 4.2 40.0 15.4 -2.7 26.9 34.0 -37.0 Vanguard Small-Cap Index Inv Rank 47 47 47 56 48 42 41 58 52 21 63 31 51 43 43 45 Vanguard Small-Cap Index Inv CRSP U.S. Small Cap TR Index 0 25 50 75 100Return Percentile Rank6/08 6/09 6/10 6/11 6/12 6/13 6/14 6/15 6/16 6/17 3/18 11.4 11.5 11.6 11.7 Return (%)0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 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 Period Vanguard Small-Cap Index Inv 11.5 12.0 11.4 -0.1 1.0 0.9 0.0 -3.7 7.0 15.0 16y 8m CRSP U.S. Small Cap TR Index 11.7 12.0 11.5 0.0 1.0 1.0 0.0 --7.0 0.0 16y 8m 90 Day U.S. Treasury Bill 0.3 0.1 0.0 0.3 0.0 --12.0 -1.0 0.0 33.3 16y 8m Manager Evaluation Vanguard Small-Cap Index Inv vs. CRSP U.S. Small Cap TR Index As of March 31, 2018 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. Holdings Data as of Mar-2018. 28 Portfolio Characteristics Portfolio Benchmark Wtd. Avg. Mkt. Cap ($M)4,607 4,608 Median Mkt. Cap ($M)2,268 2,290 Price/Earnings ratio 20.1 20.1 Price/Book ratio 2.7 2.7 5 Yr. EPS Growth Rate (%)13.6 13.6 Current Yield (%)1.5 1.5 Debt to Equity 1.9 1.9 # of Securities 1,426 1,402 Beta (5 Years, Monthly)1.00 1.00 Consistency (5 Years, Monthly)15.00 0.00 Sharpe Ratio (5 Years, Monthly)0.95 0.96 Information Ratio (5 Years, Monthly)-3.71 - Up Market Capture (5 Years, Monthly)99.65 100.00 Down Market Capture (5 Years, Monthly)100.35 100.00 Active Share 0.2 -- Top Ten Equity Holdings Portfolio Weight (%) Bmk Weight (%) Qtr Return (%) Contribution to Return (%) IDEX Corporation 0.3 0.3 8.3 0.0 CDW Corp 0.3 0.3 1.5 0.0 Copart Inc 0.3 0.3 17.9 0.1 TransUnion 0.3 0.3 3.3 0.0 ON Semiconductor Corp 0.3 0.3 16.8 0.0 Old Dominion Freight Line Inc 0.3 0.3 11.8 0.0 Steel Dynamics Inc 0.3 0.3 3.0 0.0 Leidos Holdings Inc 0.3 0.3 1.8 0.0 Keysight Technologies Inc 0.3 0.3 25.9 0.1 Spirit Aerosystems Holdings Inc 0.3 0.3 -4.0 0.0 % of Portfolio 3.0 3.0 0.3 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 38.4 61.6 38.3 61.7 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 3.8 0.4 9.5 5.7 17.6 16.5 11.7 14.9 4.6 3.0 12.3 3.8 0.4 9.5 5.7 17.6 16.5 11.6 15.0 4.6 3.0 12.3 Manager Evaluation Vanguard Small-Cap Index Inv vs. CRSP U.S. Small Cap TR Index As of March 31, 2018 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. Holdings Data as of Mar-2018. 29 Historical Performance (%) Buy and Hold Attribution (%) Risk and Return - monthly periodicity (Apr - 2013 - Mar - 2018)Three Year Rolling Percentile Ranking (10 Years) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Vanguard International Growth Inv 3.4 3.4 31.2 12.3 11.0 5.9 43.0 1.7 -0.7 -5.6 22.9 20.0 -13.7 15.7 41.6 -44.9 MSCI AC World ex USA (Net)-1.2 -1.2 16.5 6.2 5.9 2.7 27.2 4.5 -5.7 -3.9 15.3 16.8 -13.7 11.2 41.4 -45.5 Custom Non US Diversified Growth Median 0.4 0.4 21.6 8.0 8.2 4.8 32.6 -1.0 1.7 -3.6 20.5 19.0 -12.1 14.4 39.1 -45.6 Vanguard International Growth Inv Rank 9 9 11 5 10 22 11 22 76 75 30 35 68 35 39 45 Vanguard International Growth Inv MSCI AC World ex USA (Net) 0 25 50 75 100Return Percentile Rank6/08 6/09 6/10 6/11 6/12 6/13 6/14 6/15 6/16 6/17 3/18 -5.0 0.0 5.0 10.0 15.0 20.0 Return (%)11.2 11.9 12.6 13.3 14.0 14.7 15.4 Risk (Standard Deviation %) MSCI AC World ex USA (Net) Vanguard International Growth Inv Average Active Weight 0.0 15.0 30.0-15.0-30.0 Utilities Telecommunication Services Real Estate Other Materials Information Technology Industrials Health Care Financials Energy Consumer Staples Consumer Discretionary -2.8 -0.1 -3.1 0.2 -2.9 13.0 -1.9 1.7 -7.6 -5.5 -3.4 12.5 Allocation (Total: 0.5) 0.0 0.3 0.6-0.3-0.6 -0.1 0.0 0.0 0.0 0.1 0.3 0.0 0.0 0.0 0.0 0.0 0.0 Stock (Total: 3.6) 0.0 0.8 1.6 2.4-0.8 0.0 -0.1 0.0 0.0 -0.1 0.8 0.2 1.4 0.2 0.0 0.0 1.3 Total 0.0 0.6 1.2 1.8 2.4-0.6-1.2 -0.1 -0.1 0.0 0.0 -0.1 1.1 0.2 1.4 0.2 0.0 0.1 1.3 Manager Evaluation Vanguard International Growth (VWIGX) vs. MSCI AC World ex USA (Net) As of March 31, 2018 Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading. Holdings Data as of Dec-2017. 30 Total Attribution (%) 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8-0.2-0.4-0.6-0.8-1.0 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 0.3 0.3 0.0 1.1 0.0 0.4 0.2 1.1 0.0 -0.3 -0.1 0.9 Performance Attribution (%) Average Active Weight 0.0 5.0 10.0 15.0-5.0-10.0 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 -2.8 -1.2 -0.4 1.8 0.4 -4.2 1.6 7.4 -2.1 -2.1 -1.7 3.3 Allocation (Total: 0.0) 0.0 0.2 0.4-0.2-0.4-0.6 0.1 0.0 0.0 -0.1 0.0 -0.1 0.2 0.0 0.0 -0.2 -0.1 0.1 Stock (Total: 4.1) 0.0 0.5 1.0 1.5 2.0-0.5-1.0 0.3 0.3 0.0 1.2 0.0 0.5 0.0 1.1 0.0 -0.1 0.0 0.8 Manager Evaluation Vanguard International Growth (VWIGX) vs. MSCI AC World ex USA (Net) As of March 31, 2018 Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading. Holdings Data as of Dec-2017. 31 Portfolio Characteristics Portfolio Benchmark Wtd. Avg. Mkt. Cap ($M)121,402 67,470 Median Mkt. Cap ($M)31,315 8,755 Price/Earnings ratio 23.4 14.4 Price/Book ratio 3.9 2.1 5 Yr. EPS Growth Rate (%)16.0 10.2 Current Yield (%)1.4 3.0 Debt to Equity 0.8 -0.2 # of Securities 114 1,864 Beta (5 Years, Monthly)1.10 1.00 Consistency (5 Years, Monthly)56.67 0.00 Sharpe Ratio (5 Years, Monthly)0.81 0.52 Information Ratio (5 Years, Monthly)1.13 - Up Market Capture (5 Years, Monthly)122.59 100.00 Down Market Capture (5 Years, Monthly)96.62 100.00 Active Share 83.9 -- Top Ten Equity Holdings Portfolio Weight (%) Bmk Weight (%) Qtr Return (%) Contribution to Return (%) Tencent Holdings LTD 5.3 1.4 0.5 0.0 Alibaba Group Holding Ltd 5.1 1.0 6.4 0.3 ASML Holding NV 3.7 0.4 13.2 0.5 Amazon.com Inc 3.4 0.0 23.8 0.8 Baidu Inc 3.2 0.3 -4.7 -0.1 AIA Group Ltd 3.0 0.5 -0.8 0.0 Industria De Diseno Textil Inditex SA 2.3 0.2 -10.2 -0.2 Illumina Inc 1.9 0.0 8.2 0.2 Celltrion Inc 1.8 0.1 40.9 0.7 M3 Inc 1.8 0.0 28.2 0.5 % of Portfolio 31.5 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 26.4 39.8 28.8 4.9 38.4 38.9 21.3 1.4 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 Utilities Telecommunication Services Real Estate Materials Information Technology Industrials Health Care Financials Energy Consumer Staples Consumer Discretionary 0.2 0.0 3.6 0.0 5.5 24.5 9.8 9.9 15.4 1.1 5.9 24.0 0.0 3.0 3.9 3.2 8.0 11.8 11.8 7.7 23.1 6.7 9.5 11.4 Manager Evaluation Vanguard International Growth (VWIGX) vs. MSCI AC World ex USA (Net) As of March 31, 2018 Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading. Holdings Data as of Dec-2017. 32 Vanguard International Growth Inv MSCI AC World ex USA (Net) Canada 0.9 6.1 United States 7.3 0.0 Australia 0.4 4.4 Hong Kong 8.8 5.5 New Zealand 0.0 0.1 Singapore 0.4 0.9 Pacific ex Japan 9.6 10.9 Japan 12.6 16.8 Austria 0.0 0.2 Belgium 1.2 0.8 Bermuda 0.5 0.2 Denmark 2.8 1.2 Finland 0.0 0.7 France 5.6 7.0 Germany 10.3 6.6 Ireland 0.0 0.7 Italy 2.3 1.5 Netherlands 4.9 4.0 Norway 0.8 0.5 Portugal 0.2 0.1 Spain 4.1 2.2 Sweden 5.2 1.8 Switzerland 3.1 5.8 Europe ex UK 40.9 33.3 United Kingdom 7.2 10.0 Israel 0.7 0.3 Middle East 0.7 0.3 Developed Markets 79.2 77.5 Vanguard International Growth Inv MSCI AC World ex USA (Net) China 12.4 4.4 India 1.9 2.1 Indonesia 0.3 0.5 Korea 2.0 3.9 Malaysia 0.0 0.6 Philippines 0.0 0.3 Taiwan 1.2 3.0 Thailand 0.5 0.6 EM Asia 18.4 15.3 Czech Republic 0.0 0.0 Greece 0.0 0.1 Hungary 0.0 0.1 Poland 0.0 0.3 Russia 0.0 0.9 Turkey 0.0 0.3 EM Europe 0.0 1.7 Brazil 0.5 1.9 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 0.8 3.1 Egypt 0.0 0.0 Qatar 0.0 0.1 South Africa 0.0 1.7 United Arab Emirates 0.0 0.2 EM Mid East+Africa 0.0 2.0 Emerging Markets 19.2 22.1 Frontier Markets 1.7 0.0 Cash 0.0 0.0 Other 0.0 0.4 Total 100.0 100.0 Manager Evaluation Vanguard International Growth (VWIGX) vs. MSCI AC World ex USA (Net) As of March 31, 2018 Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading. Holdings Data as of Dec-2017. 33 Historical Performance (%) Three Year Rolling Percentile Ranking (10 Years)Risk and Return - monthly periodicity (Apr-2013 - Mar-2018) Historical Statistics - monthly periodicity (Apr-2013 - Mar-2018) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Vanguard Total Bond Market Index Inv -1.5 -1.5 1.0 1.0 1.6 3.5 3.5 2.5 0.3 5.8 -2.3 4.0 7.6 6.4 5.9 5.1 Vanguard Total Bond Market Index Fund Benchmark -1.5 -1.5 1.2 1.2 1.8 3.7 3.6 2.8 0.4 5.9 -2.0 4.3 7.9 6.6 5.9 5.2 eV Core Plus Fixed Income Median -1.3 -1.3 2.0 1.9 2.4 4.7 4.7 4.5 -0.2 5.7 -0.5 8.8 6.8 8.8 16.1 -4.7 Vanguard Total Bond Market Index Inv Rank 81 81 100 94 94 100 94 96 34 47 97 100 29 97 100 6 Vanguard Total Bond Market Index Inv Vanguard Total Bond Market Index Fund Benchmark 0 25 50 75 100Return Percentile Rank6/08 6/09 6/10 6/11 6/12 6/13 6/14 6/15 6/16 6/17 3/18 1.2 1.5 1.8 2.1 Return (%)2.9 3.0 3.1 Risk (Standard Deviation %) Vanguard Total Bond Market Index Fund Benchmark Vanguard Total Bond Market Index Inv Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Period Vanguard Total Bond Market Index Inv 1.6 3.0 1.3 -0.2 1.0 0.4 0.3 -0.8 2.0 38.3 18y 3m Vanguard Total Bond Market Index Fund Benchmark 1.8 3.0 1.5 0.0 1.0 0.5 0.0 --1.9 0.0 18y 3m 90 Day U.S. Treasury Bill 0.3 0.1 0.0 0.3 0.0 --3.0 -0.5 0.0 43.3 18y 3m Manager Evaluation Vanguard Total Bond Market Index Inv vs. Vanguard Total Bond Market Index Fund Benchmark As of March 31, 2018 34 Portfolio Characteristics Portfolio Benchmark Effective Duration 6.2 6.3 Avg. Maturity 8.5 8.4 Avg. Quality AA AA Yield To Maturity (%)3.1 3.1 Credit Quality Distribution (%) Vanguard Total Bond Market Index Inv Vanguard Total Bond Market Index Fund Benchmark 0.0 25.0 50.0 75.0 100.0 AAAAAABBBBBNot Rated68.2 5.5 11.4 14.8 0.1 0.1 69.9 3.4 12.1 14.6 0.0 0.0 Historical Statistics - 5 Years Up Market Capture Down Market Capture Maximum Drawdown Vanguard Total Bond Market Index Inv 99.9 106.0 -3.8 Vanguard Total Bond Market Index Fund Benchmark 100.0 100.0 -3.6 Maturity Distribution (%) Vanguard Total Bond Market Index Inv Vanguard Total Bond Market Index Fund Benchmark 0.0 10.0 20.0 30.0 40.0 Less than 1 Yr1 to 3 Yrs3 to 5 Yrs5 to 7 Yrs7 to 10 YrsGreater than 10 Yrs1.1 22.8 19.2 16.5 22.8 17.6 0.5 23.5 19.1 16.6 23.0 17.3 Sector Distribution (%) Vanguard Total Bond Market Index Inv Vanguard Total Bond Market Index Fund Benchmark 0.0 15.0 30.0 45.0 60.0 U.S. TreasuryU.S. AgencyIG CreditAgency RMBSCMBSABSOther40.8 3.6 31.7 21.3 2.0 0.6 0.0 42.7 5.6 27.7 21.3 1.8 0.4 0.5 Manager Evaluation Vanguard Total Bond Market Index Inv vs. Vanguard Total Bond Market Index Fund Benchmark As of March 31, 2018 35 Historical Performance Comparative Performance and Rolling Return Risk and Return (Apr-2013 - Mar-2018) Historical Statistics - Quarterly Periodicity (Apr-2013 - Mar-2018) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Vanguard Retirement Savings Trust 0.5 0.5 1.8 1.8 1.8 2.4 1.8 1.9 1.9 1.8 1.7 2.4 2.9 2.9 3.0 4.3 Ryan 3 Yr GIC Master 0.4 0.4 1.7 1.4 1.3 2.2 1.6 1.4 1.2 1.0 1.1 1.5 2.4 3.5 4.5 4.8 IM U.S. Short Duration Fixed Income (MF) Median -0.2 -0.2 0.8 0.8 0.7 1.6 1.3 1.4 0.3 0.6 0.2 2.3 1.2 3.2 6.0 -1.1 Vanguard Retirement Savings Trust Rank 3 3 8 7 4 15 25 30 1 6 4 49 9 55 77 22 Rolling 3 Years Active Return Quarterly Active Return 0.0 0.7 1.4 -0.7 -1.4Active Return (%)3/03 9/04 3/06 9/07 3/09 9/10 3/12 9/13 3/15 9/16 3/18 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 Period Vanguard Retirement Savings Trust 1.8 0.1 1.5 1.7 0.1 7.0 0.1 4.2 0.0 100.0 15y 3m Ryan 3 Yr GIC Master 1.3 0.1 1.0 0.0 1.0 8.5 0.0 --0.0 0.0 15y 3m 90 Day U.S. Treasury Bill 0.3 0.2 0.0 -1.7 1.6 --0.1 -8.5 0.0 0.0 15y 3m Manager Evaluation Vanguard Retirement Savings Trust vs. Ryan 3 Yr GIC Master As of March 31, 2018 36 Historical Performance Three Year Rolling Percentile Ranking Relative Performance Historical Statistics - Monthly Periodicity (Apr-2013 - Mar-2018) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Vanguard Balanced Index Inv -0.9 -0.9 8.6 6.5 8.4 7.4 13.8 8.6 0.4 9.8 17.9 11.3 4.1 13.1 20.1 -22.2 Vanguard Balanced Index Fund Benchmark -0.9 -0.9 8.7 6.7 8.6 7.6 13.9 8.8 0.6 9.9 18.2 11.6 4.1 13.5 19.7 -22.0 eV US Balanced Median -0.9 -0.9 8.2 6.1 7.8 6.9 13.8 7.8 -0.4 7.2 17.8 10.7 1.9 12.0 22.2 -24.9 Vanguard Balanced Index Inv Rank 56 56 47 36 36 23 51 41 28 20 49 44 21 36 61 39 Vanguard Balanced Index Inv Vanguard Balanced Index Fund Benchmark 0 25 50 75 100Return Percentile Rank6/08 6/09 6/10 6/11 6/12 6/13 6/14 6/15 6/16 6/17 3/18 Cumulative Annualized Over/Under Relative Performance Over/Under Performance 0.0 0.4 0.8 -0.4 -0.8Return (%)6/08 6/09 6/10 6/11 6/12 6/13 6/14 6/15 6/16 6/17 3/18 Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Period Vanguard Balanced Index Inv 8.4 6.0 7.9 -0.1 1.0 1.3 0.1 -1.4 3.2 33.3 25y 4m Vanguard Balanced Index Fund Benchmark 8.6 6.0 8.1 0.0 1.0 1.4 0.0 --3.2 0.0 25y 4m 90 Day U.S. Treasury Bill 0.3 0.1 0.0 0.3 0.0 --6.0 -1.4 0.0 25.0 25y 4m Manager Evaluation Vanguard Balanced Index Inv vs. Vanguard Balanced Index Fund Benchmark As of March 31, 2018 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. 37 Portfolio Characteristics Portfolio Benchmark Wtd. Avg. Mkt. Cap ($M)161,767 161,770 Median Mkt. Cap ($M)1,183 1,084 Price/Earnings ratio 21.2 21.2 Price/Book ratio 3.2 3.2 5 Yr. EPS Growth Rate (%)14.3 14.3 Current Yield (%)1.9 1.9 Debt to Equity 1.2 1.2 Number of Stocks 3,471 3,592 Beta (5 Years, Monthly)0.59 1.00 Consistency (5 Years, Monthly)31.67 0.00 Sharpe Ratio (5 Years, Monthly)1.33 1.26 Information Ratio (5 Years, Monthly)-1.08 - Up Market Capture (5 Years, Monthly)62.33 100.00 Down Market Capture (5 Years, Monthly)59.25 100.00 Top Ten Equity Holdings Portfolio Weight (%) Benchmark Weight (%) Active Weight (%) Quarterly Return (%) Apple Inc 2.8 2.8 0.0 -0.5 Microsoft Corp 2.6 2.6 0.0 7.2 Amazon.com Inc 2.2 2.2 0.0 23.8 Facebook Inc 1.4 1.4 0.0 -9.4 JPMorgan Chase & Co 1.4 1.4 0.0 3.4 Berkshire Hathaway Inc 1.3 0.9 0.4 0.6 Johnson & Johnson 1.3 1.3 0.0 -7.7 Exxon Mobil Corp 1.2 1.2 0.0 -9.9 Google Inc (Class C)1.2 1.1 0.1 -1.4 Alphabet Inc 1.1 1.1 0.0 -1.5 % of Portfolio 16.5 16.0 0.5 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 47.1 25.6 17.6 9.7 0.0 47.1 25.6 17.5 9.7 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 2.9 1.8 3.7 3.3 23.7 11.0 13.4 15.2 5.5 6.8 12.7 0.0 2.9 1.8 3.7 3.3 23.7 11.0 13.4 15.2 5.5 6.9 12.7 Manager Evaluation Vanguard Balanced Index Inv vs. CRSP U.S. Total Market TR Index As of March 31, 2018 38 Portfolio Characteristics Portfolio Benchmark Effective Duration 6.1 6.3 Avg. Maturity 8.4 8.4 Avg. Quality AA AA Yield To Maturity (%)3.3 3.1 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 AAAAAABBBBBNR68.2 5.5 11.4 14.8 0.1 0.1 69.2 3.5 12.5 14.8 0.0 0.0 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 Less than 1 Yr1 to 3 Yrs3 to 5 Yrs5 to 7 Yrs7 to 10 YrsGreater than 10 Yrs1.1 22.8 19.2 16.5 22.8 17.6 0.0 22.2 16.3 11.5 10.4 39.6 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 U.S. TreasuryU.S. AgencyIG CreditAgency RMBSCMBSABSNon-US SovereignOther40.8 3.6 31.7 21.3 2.0 0.6 0.0 0.0 40.5 1.8 27.8 21.6 0.0 2.6 5.0 0.7 Manager Evaluation Vanguard Balanced Index Fund (VBINX) - Fixed Income Holdings vs. Blmbg. Barc. U.S. Aggregate Float Adjusted As of March 31, 2018 39 DC Regulatory Spotlight 40 Department of Labor (DOL) Fiduciary Rule The new DOL Fiduciary Rule was partially implemented on June 9, 2017, thus expanding fiduciary status to include more retirement industry professionals and their practices. On March 15, 2018, the 5th Circuit U.S. Court of Appeals vacated the rule in its entirety for Louisiana, Mississippi and Texas, arguing the DOL had overstepped its regulatory authority and waded into the Security Exchange Commission’s (SEC’s) regulatory domain. The 5th Circuit ruling came out days after the 10th Circuit had issued essentially an opposite ruling in support of the Rule. The DOL has until May 7, 2018, (45 days) to appeal the ruling; however, the DOL announced on March 16, 2018, “pending further review, the Department will not be enforcing the fiduciary rule.” Without an appeal from the DOL, the fiduciary standard reverts to the current 5-part test (originally implemented in 1975) of what constitutes a fiduciary, although the SEC recently announced its proposed fiduciary rule on advice which is less stringent than the DOL rule, but does include enhanced disclosures on conflicts of interest. Several states, such as Connecticut, Nevada, New Jersey, New York and Maryland, are exploring and in some cases are independently establishing fiduciary and investor best interest standards. Bipartisan Budget Act The Bipartisan Budget Act of 2018 includes two provisions that did not make the final cut in the Tax Cut and Jobs Act of 2017: 1.Adding additional disaster relief for the California wildfires 2.Expanding hardship withdrawals permissible in 401(k) and potentially 403(b) plans as well: –Removal of the requirement to first request all available plan loans –Removal of the 6-month suspension from making contributions following hardship withdrawal –Sources that can be distributed now include QNECs, QMACs, 401(k) safe harbor plan contributions and earnings –Additional guidance needed on whether these are mandated or optional changes, and applicability for 403(b) plans Please seek ERISA legal counsel guidance on applicability and plan amendment requirements. Policymaking Update 41 2017 Litigation Highlights and Themes Year in Review According to Groom Law, more than 30 ERISA excessive fee lawsuits were filed during 2017, compared to only 80 lawsuits filed over the past 10 years1. The results have contributed to almost $1 billion in ERISA class action settlements2. Key themes include: Lawsuits filed and dismissed and denied involving third party managed accounts provider Financial Engines Company stock within plans continues to be scrutinized Utilization of retail class mutual funds when institutional class options were available University 403(b) fee cases continue from 2016 and gain momentum –challenging the use of multiple record keepers which lead to higher fees, using an asset-based vs. fixed per participant fee model, offering too many investment options, and using retail vs. institutional share class mutual funds Fee cases challenging the inclusion of proprietary funds in a 401(k) plan progressed –Allianz, Edward Jones, Franklin Templeton, American Century, Putnam, Wells Fargo Supreme Court addressed the interpretation of church plan exemption –if a plan otherwise met the requirements of the ERISA church plan definition, it could qualify for the exemption without being established by a church Resulting Best Practices Be mindful of which parties are fiduciaries under the plan, particularly when there are third party contracted providers (e.g. managed account programs), and how they are compensated based on their arrangements Evaluate the appropriateness of the investment options offered Seek competitive bids from providers that service plans of similar size and complexity, every three to five years or as circumstances warrant Document decision-making processes, inclusive of the rationale for decisions impacting the plan 1 https://www.groom.com/resources/plan-sponsor-fee-litigation-cases-rise/ 2 http://www.seyfarth.com/dir_docs/publications/2018_Workplace_Class_Action_Report.pdf 42 Morningstar and Prudential RICO lawsuit dismissed (March 2018) Claims against providers: –Morningstar and Prudential conspired to increase revenue and profits “from their self-interested administration” of GoalMaker, an automatic investment advice program from Morningstar and Prudential –Violated a federal racketeering law in offering an investment service to participants, as GoalMaker was a “predatory racketeering enterprise” that enticed participants to turn over investment management to Prudential, leading to high fees Dismissal rationale: Plaintiff did not adequately identify how long the alleged enterprise lasted or that they were organized for any other reason than being part of a normal business relationship. Aon Hewitt lawsuit dismissed (March 2018) Claim against provider: Aon Hewitt violated fiduciary duties when they subcontracted financial advice services to Financial Engines, causing participants to pay excessive fees via improper kickbacks Dismissal rationale: Plaintiff failed to provide facts sufficient to support the claim that Aon Hewitt is a fiduciary. “Caterpillar had sole authority to select and hire Financial Engines, and it is not plausible on this record that Hewitt had any final authority or control over the selection and hiring of Financial Engines”. Voya lawsuit denied again (March 2018) Claim against provider: Voya violated ERISA by engaging in a prohibited transaction through an arrangement with Financial Engines, the advice and managed account provider for the Nestle 401(k) Plan, whereby Voya received fees despite providing “no material services” in relation to Financial Engines Dismissal rationale: First amended complaint still does not adequately allege that the defendants were plan fiduciaries with respect to the alleged conduct in the complaint. Nestle, not Voya, retained ultimate authority for the agreement. Home Depot lawsuit filed (April 2018) Claims against plan sponsor: –Financial Engines earned $22 million from the plan during 2012 –2016, doing almost nothing to earn the money, and then provided Aon Hewitt (record keeper) 25-35% of the fees in kickbacks, which unreasonably increased plan participants’ fees –11 of the 20 investment options underperformed and were part of “cookie-cutter” managed account portfolios via an algorithm based on age, investment strategy and risk tolerance –Mismanagement of the plan was so severe that employees would need to work 18 years past retirement age to recoup all the money lost to fees and poor investments Litigation and Enforcement Update 1 Information sourced through multiple publicly available periodicals. Investment Models and Managed Account Programs1 43 Litigation and Enforcement Update (cont’d) TIAA-CREF lawsuit on loans partially dismissed (March 2018) Claim against provider: Violated fiduciary duties with respect to loans by improperly retaining interest, which was defined as the spread or difference between the interest rate paid by those who take out the loans and the investment income that participants receive while the collateral sits in an annuity (TIAA Traditional) Dismissal rationale: TIAA-CREF never exercised discretion by changing the interest rate, meaning it was not a fiduciary Gannett company stock case filed (March 2018) Claims against plan sponsor: –Violated their fiduciary duties by holding too much stock in Gannett's former parent company TEGNA in the Gannett Co. Inc. 401(k) Savings Plan –Fiduciaries waited too long, until 2017, to eliminate the TEGNA stock after the spinoff of Gannett in 2015 SunTrust company stock case ends with $4.75 settlement (March 2018) Claims against plan sponsor (suit filed in 2008): –Maintained company stock as an investment option in its 401(k) plan after it was no longer prudent –Company publicized tightening underwriting standards for certain types of mortgages but actually had substandard procedures in place that allowed it to grant loans to riskier borrowers Settlement terms: 100% vesting in company matching contributions for specified periods and provide fiduciary training to the committee annually for at least 5 years Providence Health & Services fee lawsuit partially moves forward (March 2018) Claims against plan sponsor: –Failure to support fiduciary duties of loyalty and prudence due to high record keeping fees paid to Fidelity, whose services were not put out for competitive bid during class period even though market was competitive at the time –Offering investment options with higher fees despite the availability of lower-cost options Rationale: Judge dismissed claim of excessive record keeping fees due to the fact that defendants repeatedly renegotiated fees for the benefit of the plan participants Loans, Company Stock and Fees1 1 Information sourced through multiple publicly available periodicals. 44 Litigation and Enforcement Update (cont’d) Yale fees and investment lawsuit partially dismissed, but most claims move forward (April 2018) Claims against plan sponsor: –“Bundled” services arrangement tied TIAA’s record keeping services to its investment products (TIAA Traditional Annuity) –Arrangement led the plan to take on higher cost or poor performing investments –Failing to monitor the investments and record keeping fees –Failing to adhere to duty of loyalty, putting the committee members and third party interests ahead of participants Update: The judge dismissed claims that defendants acted disloyally in managing its retirement plan and that participants were harmed by offering too many investment options. Claims moving forward include that Yale was “locked-in” with record keeping services that kept the university from adequately monitoring the plan’s investments and fees, that the offering of retail class shares was an issue, and that there was a breach of fiduciary duty in failing to monitor the plan committee. Duke lawsuit gains class action status (April 2018) Claims against plan sponsor: –Failing to take advantage of large group’s bargaining power to demand lower administrative fees among four record keepers: TIAA-CREF, Fidelity, Vanguard and VALIC –Failing to offer low-cost investments The George Washington University lawsuit filed (April 2018) Claims against plan sponsor: –Granting total control of the plan to TIAA-CREF, Fidelity and AXA Equitable, with lack of plan sponsor involvement –Offering too many investment options –45 TIAA-CREF options, more than 20 Vanguard options, nearly 50 Fidelity options –Unreasonable fees and poor investment performance Higher Education1 1 Information sourced through multiple publicly available periodicals. 45 Capital Markets Review 46 Capital Markets Review Summary As of March 31, 2018 -0.9 -0.8 -0.1 -1.5 -0.9 1.4 0.7 1.4 -1.5 1.5 -0.9 0.3 -6.7 -0.4 -6.2 0.7 0.6 15.0 14.0 11.8 14.8 21.3 24.9 9.8 7.0 1.2 4.0 3.7 1.1 -1.1 3.7 -1.4 3.6 2.4 -10 -5 0 5 10 15 20 25 30 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 Fixed Income (Bonds)Equities (Stocks)AlternativesExpanding uncertainty Increased uncertainty propelled equity market volatility higher late in January and markets remained choppy through quarter end.The jump felt particularly pronounced as the S&P 500 Index experienced 23 trading days with a greater than 1%move in the first quarter compared to 2017’s 8 trading days during the entire year.The equity market’s volatility spike,however, had limited spill over into other asset classes,suggesting issues are not systemic. At the center of the uncertainty was political rhetoric, particularly trade policy.The tariffs proposed initially were unlikely to derail economic growth, but investors reacted to fears of a potential trade war and significant global supply chain disruptions.Technology companies were in the spotlight late in the quarter, as Facebook, Amazon, and Tesla,to name a few,faced challenges that could lead to regulation. Economic growth is intact,supported by the global recovery and fiscal stimulus domestically.Economic success is powering equity earnings with the S&P 500 Index posting double digit earnings growth in 2017,and the trend is expected to continue in the first quarter and 2018 per FactSet.One driver of this growth is healthy consumer balance sheets and sentiment,as debt to income levels remain low. Core inflation is approaching targets in most developed markets,allowing monetary policy makers to gradually reduce accommodation.Central bank guidance did not change materially in the quarter,and January’s spike in rates reflected an alignment of markets and policymakers,rather than a significant change in policy.Consistent with these expectations,the Federal Open Market Committee (“FOMC”) raised rates 25 basis points in March with little market disruption. For the fifth consecutive quarter,the U.S.yield curve flattened, and rising rates in January weighted heavily on quarterly returns within fixed income.Additionally,credit spreads generally widened,reflecting the increased uncertainty in the economic landscape and weighing on performance relative to similar duration Treasuries.Outside the U.S.,local emerging debt benefitted from a weakening U.S.dollar. Emerging markets performance again represented a bright spot for equities.Also maintaining 2017’s trend,the Growth styles outperformed the Value style even with technology stocks performing poorly in March,amid headline shocks.While not immune to the whipsaw market of the first quarter,small capitalization stocks performed better as trade policy was anticipated to have a lesser effect due to lower foreign revenues. The announcement of steel and aluminum tariffs in February hit commodity prices. Tariff escalations drew more sub-groups into the fray,particularly U.S.agriculture and livestock. Income-oriented strategies,like infrastructure,were hurt by a rising, flattening yield curve. *HFRI data are subject to revision. It is not possible to invest directly in an index. Source: FactSet & Bloomberg 47 0 5 10 15 20 25 0 20 40 60 80 100 Apr-98Apr-99Apr-00Apr-01Apr-02Apr-03Apr-04Apr-05Apr-06Apr-07Apr-08Apr-09Apr-10Apr-11Apr-12Apr-13Apr-14Apr-15Apr-16Apr-17HY spreadVIX levelCredit spreads lag volatility spike VIX BofA HY OA Spread 87 74 62 87 99 105 111 119 119 119 133 158 174 40 60 80 100 120 140 160 180 200 CY2007CY2008CY2009CY2010CY2011CY2012CY2013CY2014CY2015CY2016CY2017CY2018CY2019Actual Estimates Capital Markets Review Asset Class Outlook As of March 31, 2018 Source: FactSet as of April 10, 2018 Equities Equity markets experienced their first negative quarter since 2015.Although returns were only slightly negative,there was a dramatic rise in volatility.The increase,while stark,moved volatility closer to long-run average levels from near record low levels during 2017.The shift in volatility reflects the increasing uncertainty surrounding Federal Reserve policy (will they move faster or slower?),the prospects for rising inflation,as well as evolving trade conflicts.Despite these challenges,tailwinds remain.Above trend growth,easy financial conditions,strong earnings growth, record levels of stock buy-backs (over $800 billion estimated)and fiscal stimulus in the form of tax cuts should provide an environment in which equity markets can provide positive though more volatile performance.And while emerging markets continue to enjoy strong growth,environments are a bit more challenging in ex-U.S.developed markets.The U.K.faces weaker growth and increasing Brexit uncertainty while the E.U.deals with the consequences of significant currency appreciation. And,while various valuation metrics may make U.S.equities appear expensive to foreign equities,a large portion of this differential can be explained by differences in earnings growth and sector weights (lower exposure to financials and industrials in the U.S.and higher technology exposure). Adjusting for these differences,valuations appear more symmetric. Fixed Income With the exception of short-term assets such as Treasury Bills,fixed income markets posted negative returns for the quarter,partly reflecting policy makers continued moves to normalizing interest rates. Leading this process has been the Federal Reserve,which nudged rates up another 25 basis points during the quarter,maintaining the commitment to a gradual process.Quarterly projections that Federal Reserve officials provided suggest that as few as two more rate hikes may be necessary this year,with the process ending late in 2019 at a fed funds rate of 3%.Based upon forward markets, market participants anticipate a slightly more gradual pace of rate increases,anticipating a terminal 10-year Treasury rate of about 3%.With 10-year yields currently at about 2.8%,most of the pain from rate increases may be behind us.Credit markets,however,may have room to weaken.Credit spreads typically mimic moves in implied volatility in the equity markets as both reflect the level of uncertainty of future cash-flows.While credit spreads widened during the quarter,the move was significantly less than implied by recent equity market moves.Credit markets may struggle as spreads play catch-up to the increase in equity market volatility Real Assets Core inflation remains subdued;however,it is gradually increasing towards the Federal Reserve’s 2% target.While inflation is likely to rise over the course of the next few quarters,it continues to face headwinds in the form of demographics,technological innovation,as well as globalization.While any material deterioration in trade arrangements would put upward pressure on inflation,those risks remain a considerable distance in the future.Although these conditions have created a difficult environment for real assets,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 Source: Federal Reserve FRED Data Source: Federal Reserve FRED Data 0.0 0.5 1.0 1.5 2.0 2.5 Apr-16Jul-16Oct-16Jan-17Apr-17Jul-17Oct-17Jan-18Percent Change YOY (SA)Inflation Core PCE Core CPI FOMC Target 48 50 100 150 200 250 300 350 400 450 2-Oct-1716-Oct-1730-Oct-1713-Nov-1727-Nov-1711-Dec-1725-Dec-178-Jan-1822-Jan-185-Feb-1819-Feb-185-Mar-1819-Mar-182-Apr-18Index ValueEquity volatility the outlier Equities Treasury rates Oil Currencies Capital Markets Review Key Market Risks As of March 31, 2018 Source: Bloomberg, FactSet, Recession Alert, & Pavilion Analysis Cyclical risks appear benign while policy and trade tensions grow Can the Fed thread the needle?Despite below target inflation and subdued wage growth, the Federal Reserve (“Fed”)has been raising rates steadily for over a year.With inflation still low but rising and wage growth subdued,the question is whether the Fed is moving too quickly or too slowly?Will the Fed allow inflation to run a bit above target to spur wage growth or will they treat the target as a ceiling?Signs of rising wage growth contributed to the initial uptick in volatility during the quarter as investors anticipated a more aggressive Fed policy response.While those fears appear to have dissipated,financial conditions have begun to tighten in the last quarter and may cease being a tailwind by year end. Will higher equity volatility infect other asset classes?While equity market volatility spiked during the month,this spike was not reflected in other asset classes.While equity volatility is more of a coincident indicator than a leading indicator,synchronized increases in volatility have been better indicators of evolving stresses.All indications currently suggest that increased volatility is being driven largely by technical factors within equity markets.Careful monitoring of cross-asset volatilities will be important over the coming months. Prospective tariffs and trade conflicts:Recent trade tensions are reminiscent of the 2016 Brexit vote.While markets priced in immediate dire consequences,the impact on fundamentals remains further down the road.Similarly,the impact on near term growth from the trade conflicts appears to be modest.The real threat from an escalation in these conflicts is future inflationary pressures and reduced corporate margins as complex value chains are disrupted.The challenge for markets,and investors,will be differentiating between the real and apparent consequences of any conflict. Fixed Income Equities FinancialStressesValuationsCyclicalCurrent Risk Levels Source:Federal Reserve FRED Data Source: Bloomberg Values indexed to 10/2/2017 Equities: VIX Index; Treasury Rates: Move Index; Oil: OVX Index; and Currencies: FXVIX Index -1.50 -1.00 -0.50 0.00 0.50 1.00 1.50 2.00 2.50 3.00 Mar-88Mar-90Mar-92Mar-94Mar-96Mar-98Mar-00Mar-02Mar-04Mar-06Mar-08Mar-10Mar-12Mar-14Mar-16Mar-18Tightening financial conditions U.S. Recession Financial Conditions Easy Tight 49 -4.0 -2.0 0.0 2.0 4.0 6.0 8.0 10.0 Q1 1990Q3 1991Q1 1993Q3 1994Q1 1996Q3 1997Q1 1999Q3 2000Q1 2002Q3 2003Q1 2005Q3 2006Q1 2008Q3 2009Q1 2011Q3 2012Q1 2014Q3 2015Q1 2017Percent (Annual Rate)Average Capital Markets Review Economy As of March 31, 2018 Trade tiff adds to volatility Turbulence entered the markets during the first quarter as the reorganization of trade priorities and agreements under the Trump administration came to the forefront.The initial salvo was a tariff on steel and aluminum imports,which was then amended to exclude many countries not named China.The underlying focus of the trade disputes is China’s trade barriers and bias toward its domestic producers in sectors that are susceptible to foreign competition.NAFTA renegotiations also have been ongoing,though in a tamer manner.These policy uncertainties have led to increased volatility,especially across equity markets. The Federal Reserve ushered in Jerome Powell as its new chairman.His manner is expected to be more direct than past leaders,although policy direction is not expected to vary significantly from expectations.The Fed Funds rate was raised by 25bps in March,with two more increases of 25bps forecast through 2018.The economy continued to add jobs at a strong pace and wages grew at the fastest pace since Q1 2011.If policy uncertainties remain escalated,job growth could slow as businesses await stability to implement expansion plans,which can lead to a weakening of economic factors. Canadian and Mexican currencies moved in relation to potential tariff/trade realignments,while others rose as investors moved out of the U.S.dollar and into other perceived to be undervalued. Earnings forecasts have become more muddled,given the recent policy uncertainties,though global growth is expected to remain strong. Source: Bureau of Labor Statistics -15.0 -10.0 -5.0 0.0 5.0 10.0 15.0 9/1/201710/1/201711/1/201712/1/20171/1/20182/1/20183/1/2018PercentPeso Yuan Pound Yen Euro Canada Currencies vs USD Productivity Gains 0 20 40 60 80 100 120 140 160 0 10 20 30 40 50 60 70 80 Imports ($ Billions)Exports ($ Billions)Q4 2017 Exports Q4 2017 Imports Top Five U.S. Trading Partners Source: Census Bureau Source: Bloomberg 50 Capital Markets Review Equities As of March 31, 2018 Source: FactSet, S&P Source: FactSet, MSCI Growth and emerging markets continue to outperform The S&P 500 Index returned -0.8%during the first quarter.Information Technology and Consumer Discretionary were the only sectors with positive returns while Telecom and Consumer Staples were the weakest sectors for the quarter,both down more than -7%. Developed market equity indices were down between -0.8%and -1.5%during the first quarter,with the S&P 500 Index down the least at -0.8%.Emerging Market equities were able to produce positive results,returning +1.4%,led by Brazil and Taiwan. The Growth style continued to outperform the Value style during the first quarter, with the exception of Emerging Markets.Within the U.S.,Growth exhibited positive returns while Value was negative.In International Developed markets,Growth was negative but to a lesser extent than Value.Emerging Markets was the only segment to experience positive results within Value,which slightly edged out Growth.U.S. Large Cap Growth did not fare quite as well as U.S.Mid or Small Cap Growth. Within the Value style,size was fairly inconsequential. First Quarter S&P 500 Sector Returns -7.5% -7.1% -5.9% -5.5% -5.0% -3.3% -1.6% -1.2% -1.0% -0.8% 3.1% 3.5% -10.0%-8.0%-6.0%-4.0%-2.0%0.0%2.0%4.0%6.0% Telecom Cons Staples Energy Materials Real Estate Utilities Industrials Healthcare Financials S&P 500 Cons Disc Info Tech -1.0%-0.8%-1.3%-1.2%-1.5% 1.4%1.8% -0.5% 5.7% -7.0% -4.2% 12.4% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% MSCI ACWI S&P 500 MSCI World MSCI ACWI x US MSCI EAFE MSCI EM China South Korea Taiwan India South Africa Brazil First Quarter World and Emerging Market Equity Returns Growth Generally Outperformed Value During the First Quarter -2.8%-2.5%-2.6% -2.0% 1.6%1.4% 2.2%2.3% -1.0% 1.2% -4.0% -2.0% 0.0% 2.0% 4.0% U.S. Large Cap U.S. Mid Cap U.S. Small Cap Int'l Developed Emerging Mkts Value Growth Source: FactSet, MSCI, Russell 51 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) 3/31/2017 12/31/2017 3/29/2018 Source: Bloomberg Source: Federal Reserve Bank of St. LouisU.S. Treasury Yield Curve Change Source: US Dept. of The Treasury Duration –Adjusted Excess Returns to Treasuries (bps) Curve Flattening Continues Decade-Long Trend The Federal Reserve (“Fed”)raised rates 0.25%at the March FOMC meeting,setting the Federal Funds Rate target at 1.50%to 1.75%.The bellwether 10-year U.S.Treasury nearly reached 3.00%in mid-February as growth and inflation expectations increased,but retraced back to 2.74%by quarter-end amid a flight-to-quality.Yields moved higher across the entire maturity spectrum and the curve continued its flattening trend.Most spread sectors lagged Treasuries and generated negative total returns as rates rose and spreads widened. TIPS (-0.79%)outperformed nominal Treasuries (-1.19%)as breakeven inflation levels increased. Investment-grade corporate spreads widened 16 basis points,underperforming other spread sectors during the quarter.Technical pressure was a headwind due to waning demand amid increased currency hedging costs for foreign investors.High yield (-0.86%)outpaced investment-grade (-2.32%)corporates,benefitting from the higher carry and lower duration sensitivity.Bank loans provided attractive absolute returns (+1.44%),driven by rising LIBOR rates and strong investor demand. Structured products generally outpaced investment-grade credit due to lower spread volatility and insulation from the political trade rhetoric.Agency MBS (-1.19%)spreads widened a modest four basis points as the sector faces demand concerns given the pace of the Fed’s balance sheet wind-down.ABS (-0.39%)provided some stability versus longer duration sectors,yet still trailed Treasuries on a duration-adjusted basis. Local currency emerging market debt (+4.44%)outpaced all fixed income segments during the quarter,driven by strong growth prospects,stable commodity prices,and a weaker U.S. Dollar. -1.00 -0.50 0.00 0.50 1.00 1.50 2.00 2.50 3.00 Mar-90Mar-92Mar-94Mar-96Mar-98Mar-00Mar-02Mar-04Mar-06Mar-08Mar-10Mar-12Mar-14Mar-16Mar-18PercentDashes represent the end of prior hiking cycles Best Period Second Best Period Worst Period Second Worst Period 2011 2012 2013 2014 2015 2016 2017 1Q18 Aggregate -114 226 93 10 -53 138 121 -31 Agency -25 166 1 10 -133 121 148 6 MBS -106 91 98 40 -5 -11 52 -39 ABS 52 246 24 53 44 95 92 -19 CMBS 47 841 97 108 -28 236 158 -7 Credit -322 693 226 -18 -169 442 335 -68 High Yield -240 1394 923 -112 -577 1573 610 -17 EMD (USD)-537 1503 -32 -120 3 880 627 -26 Fixed Income As of March 31, 2018 Capital Markets Review 2 vs. 10 Year Treasury Curve Slope 52 -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 12/31/2017 1/31/2018 2/28/2018 Longs - S&P 500 (Long Alpha)S&P 500 - Shorts (Short Alpha) Longs - Shorts Capital Markets Review Alternative Investments As of March 31, 2018 Goldman Sachs Hedge Fund VIP Stocks –Longs/Shorts vs. S&P 500 (2018 Q1) Sources: Bloomberg, Goldman Sachs -0.8%-0.9% -2.6% 0.6% -1.5%-0.9% 2.3% 1.1%0.5% -1.1% 0.1% -0.7% -5% 0% 5% Domestic/global stocks sold off, but long/short equity hedge funds gained. Put- write strategies sold off significantly. Relative value fixed income and distressed managers posted modest gains, while duration hurt traditional global/domestic bond performance. A 60/40 portfolio posted losses, while the hedge fund composite gained modestly. Macro strategies declined less than stocks/bonds. *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 2018 Q1 Global alternatives rise with risk assets Hedge Funds:Hedge funds generated strong alpha during the quarter across nearly all strategies, illustrating the less-correlated nature of the return sources for these strategies.Equity long-short funds generated alpha both from long positions and short positions.Funds with long-biased exposures to growth equities,emerging markets, and the technology and healthcare sectors outperformed those without these exposures. Credit-oriented funds significantly outperformed IG and HY bonds due to a lack of duration,tactical hedging,and process-driven alpha.Structured product hedge funds were some of the strongest performers during the quarter. A robust financing environment and record amount of large announced acquisitions drove gains in merger arbitrage. Other diversified relative value strategies such as volatility arbitrage benefited from broad market dispersion.While volatility is generally good for macro strategies, performance was mixed across sub-strategies.Many discretionary macro managers profited from short interest rate and USD positions while CTAs suffered from the sharp trend reversal in equity markets. Real Assets:Higher-yielding liquid real assets struggled during the first quarter,with listed infrastructure down –5.5%and REITs down -6.7%.For listed infrastructure,the expectation of rising interest rates weighed on some subsectors such as water,which has longer-term fixed contractual agreements.Other listed infrastructure subsectors are expected to perform well in a rising interest rate environment as long as economic growth also improves.These subsectors,like toll roads,airports,and communication,often have explicit revenue escalators that benefit from cyclical upswings. Private Capital Markets: In 2017,921 private equity funds reached a final close ,securing over $453 billion in committed capital,which represents the largest amount of capital ever raised in any single year.2017 was the second consecutive year in which annual fundraising surpassed $400 billion,an event that has only occurred once before (2007/2008).The private equity asset class accounted for 60%of all private capital raised in 2017,representing an increase from 57% in 2016.While H2 2017 distribution numbers are yet to be finalized,$233 billion was distributed to LPs in H1 2017,leaving reason to believe that 2017 will fall short of the $520 billion distributed to LPs in 2016. 2.4 2.6 2.8 3 3.2 3.4 3.6 3.8 4 85 90 95 100 105 110 12/31/2017 1/21/2018 2/11/2018 3/4/2018 3/25/2018 U.S. 10 Year Treasury YieldCumulative QuarterlyPerformance %Infrastructure Sector Performance and Rates U.S. 10 Year Treasury Airports Communications Toll Roads Water The yield on the 10-year Treasury began the year at 2.41% and rose to almost 3.00% in mid- February before ending the quarter at 2.74%, which weighed on utilities. Source: Bloomberg Barclays 53 Quarter Calendar YTD 1 Year 2 Years 3 Years 5 Years 10 Years Equity Markets Broad Global Equity MSCI All Country World IMI -0.9 -0.9 15.0 15.2 8.3 9.3 5.9 Broad U.S. Equity Dow Jones Industrial Average -2.0 -2.0 19.4 19.6 13.5 13.3 9.8 Broad U.S. Equity Russell 3000 Index -0.6 -0.6 13.8 15.9 10.2 13.0 9.6 Technology Equity NASDAQ Index 2.6 2.6 20.8 21.8 14.3 18.1 13.2 U.S. Large Cap Equity S&P 500 Index -0.8 -0.8 14.0 15.6 10.8 13.3 9.5 U.S. Large Cap Equity Russell 1000 Index -0.7 -0.7 14.0 15.7 10.4 13.2 9.6 U.S. Large Value Equity Russell 1000 Value Index -2.8 -2.8 6.9 12.9 7.9 10.8 7.8 U.S. Large Growth Equity Russell 1000 Growth Index 1.4 1.4 21.3 18.5 12.9 15.5 11.3 U.S. Mid Cap Equity Russell Mid Cap Index -0.5 -0.5 12.2 14.6 8.0 12.1 10.2 U.S. Mid Cap Value Equity Russell Mid Cap Value Index -2.5 -2.5 6.5 13.0 7.2 11.1 9.8 U.S. Mid Cap Growth Equity Russell Mid Cap Growth Index 2.2 2.2 19.7 16.9 9.2 13.3 10.6 U.S. Small Cap Equity Russell 2000 Index -0.1 -0.1 11.8 18.8 8.4 11.5 9.8 U.S. Small Cap Value Equity Russell 2000 Value Index -2.6 -2.6 5.1 16.6 7.9 10.0 8.6 U.S. Small Cap Growth Equity Russell 2000 Growth Index 2.3 2.3 18.6 20.8 8.8 12.9 11.0 International Equity MSCI EAFE Index -1.5 -1.5 14.8 13.2 5.6 6.5 2.7 International Equity MSCI EAFE Index (Hedged)-4.4 -4.4 4.3 9.8 1.5 6.0 2.1 International Equity MSCI ACWI ex-U.S. Index (inc. Emerging Mkts)-1.2 -1.2 16.5 14.8 6.2 5.9 2.7 International Value Equity MSCI ACWI ex-U.S. Value Index -1.5 -1.5 13.3 15.0 5.0 4.9 2.1 International Growth Equity MSCI ACWI ex-U.S. Growth Index -0.9 -0.9 19.9 14.7 7.3 6.8 3.3 International Small Cap S&P Developed ex-U.S. Small Cap Index -1.2 -1.2 21.0 15.8 10.8 10.0 5.4 Emerging Markets MSCI Emerging Markets Index 1.4 1.4 24.9 21.0 8.8 5.0 3.0 Bond Markets Core Plus Bond Bloomberg Barclays Aggregate Bond Index -1.5 -1.5 1.2 0.8 1.2 1.8 3.6 Global Bonds Bloomberg Barclays Global Aggregate Index 1.4 1.4 7.0 2.4 3.1 1.5 2.6 Total Bond Market Bloomberg Barclays Universal Bond Index -1.4 -1.4 1.5 1.7 1.7 2.2 4.0 Long Duration Bonds Bloomberg Barclays Long Credit Index -3.8 -3.8 6.2 5.5 3.3 4.7 7.5 Short-Duration Bonds BofA Merrill Lynch U.S. Treasury (1-3 Year)-0.1 -0.1 0.0 0.1 0.4 0.5 1.1 Global Bonds Citigroup-WGBI ex-U.S. Index (Unhedged)4.4 4.4 12.9 3.7 5.0 1.4 1.8 Global Bonds Citigroup-WGBI ex-U.S. Index (Hedged)1.5 1.5 4.0 2.3 2.6 4.0 4.1 Treasury Inflation Protection Bloomberg Barclays 1-10 Year TIPS Index -0.4 -0.4 0.4 0.9 1.2 -0.1 2.2 Municipal Bonds Bloomberg Barclays Municipal Bond Index -1.1 -1.1 2.7 1.4 2.3 2.7 4.4 Cash 91-Day T-Bills Index 0.3 0.3 1.1 0.7 0.5 0.3 0.3 Alternatives Commodities Bloomberg Commodity Index -0.4 -0.4 3.7 6.2 -3.2 -8.3 -7.7 U.S. Public Real Estate FTSE NAREIT All Equity REIT Index -6.7 -6.7 -1.1 2.0 2.9 6.7 6.9 Global Listed Infrastructure DJ Brookfield Global Infrastructure Comp. Index -6.2 -6.2 -1.4 5.8 0.9 4.7 7.3 Diversified Hedge Funds HFRI FoF Conservative Index 0.6 0.6 3.4 4.4 1.7 3.0 1.3 Long/Short Equity HFRI Equity Hedge Index 0.4 0.4 9.5 10.5 5.2 5.7 3.9 Inflation Inflation CPI 1.2 1.2 2.4 2.4 1.9 1.4 1.6 Returns for periods greater than one year are annualized. Capital Markets Review Index Returns As of March 31, 2018 54 ��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 . ��B a n k o f A m e r i c a 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 . ��C o n s u m e r P r i c e I n d e x ( C P I ) i s a m o n t h l y i n f l a t i o n i n d i c a t o r t h a t m e a s u r e s t h e c h a n g e i n t h e c o s t o f a f i x e d b a s k e t o f p r o d u c t s a n d s e r v i c e s , i n c l u d i n g h o u s i n g , e l e c t r i c i t y , f o o d a n d t r a n s p o r t a t i o n . ��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 . ��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 . ��H F R I E q u i t y H e d g e ( T o t a l ) I n d e x i s c o m p r i s e d o f i n v e s t m e n t m a n a g e r s w h o m a i n t a i n p o s i t i o n s b o t h l o n g a n d s h o r t i n p r i m a r i l y e q u i t y a n d e q u i t y d e r i v a t i v e s e c u r i t i e s . A w i d e v a r i e t y o f i n v e s t m e n t p r o c e s s e s c a n b e e m p l o y e d t o a r r i v e a t a n i n v e s t m e n t d e c i s i o n , i n c l u d i n g b o t h q u a n t i t a t i v e a n d f u n d a m e n t a l t e c h n i q u e s ; s t r a t e g i e s c a n b e b r o a d l y d i v e r s i f i e d o r n a r r o w l y f o c u s e d o n s p e c i f i c s e c t o r s a n d c a n r a n g e b r o a d l y i n t e r m s o f l e v e l s o f n e t e x p o s u r e , l e v e r a g e e m p l o y e d , h o l d i n g p e r i o d , c o n c e n t r a t i o n s o f m a r k e t c a p i t a l i z a t i o n s a n d v a l u a t i o n r a n g e s o f t y p i c a l p o r t f o l i o s . E H m a n a g e r s w o u l d t y p i c a l l y m a i n t a i n a t l e a s t 5 0 % e x p o s u r e t o , a n d m a y i n s o m e c a s e s b e e n t i r e l y i n v e s t e d i n , e q u i t i e s , b o t h l o n g a n d s h o r t . 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 M a r c h 3 1 , 2 0 1 8 5 5 ��H F R I F O F C o n s : C o n s e r v a t i v e I n d e x i s c o m p r i s e d o f F O F s c l a s s i f i e d a s ' C o n s e r v a t i v e ' e x h i b i t o n e o r m o r e o f t h e f o l l o w i n g c h a r a c t e r i s t i c s : s e e k s c o n s i s t e n t r e t u r n s b y p r i m a r i l y i n v e s t i n g i n f u n d s t h a t g e n e r a l l y e n g a g e i n m o r e ' c o n s e r v a t i v e ' s t r a t e g i e s s u c h a s E q u i t y M a r k e t N e u t r a l , F i x e d I n c o m e A r b i t r a g e , a n d C o n v e r t i b l e A r b i t r a g e ; e x h i b i t s a l o w e r h i s t o r i c a l a n n u a l s t a n d a r d d e v i a t i o n t h a n t h e H F R I F u n d o f F u n d s C o m p o s i t e I n d e x . A f u n d i n t h e H F R I F O F C o n s e r v a t i v e I n d e x s h o w s g e n e r a l l y c o n s i s t e n t p e r f o r m a n c e r e g a r d l e s s o f m a r k e t c o n d i t i o n s . ��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 m e r g i n g M a r k e t s F r e e I n d e x i s A M o r g a n S t a n l e y C a p i t a l I n t e r n a t i o n a l i n d e x c r e a t e d t o t r a c k s t o c k m a r k e t s i n s e l e c t e d e m e r g i n g m a r k e t s t h a t a r e o p e n t o f o r e i g n i n v e s t m e n t l i k e A r g e n t i n a , C h i l e , J o r d a n , M a l a y s i a , M e x i c o , P h i l i p p i n e s , a n d T h a i l a n d . ��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 ��S & P D e v e l o p e d E x U . S . S m a l l C a p I n d e x : A s u b s e t o f t h e S & P G l o b a l B M I , t h e S & P D e v e l o p e d E x - U . S . S m a l l C a p s e e k s t o m e a s u r e t h e s t o c k s r e p r e s e n t i n g t h e l o w e s t 1 5 % o f f l o a t - a d j u s t e d m a r k e t c a p i n e a c h d e v e l o p e d c o u n t r y , e x c l u d i n g t h e U . S . ��B l o o m b e r g B a r c l a y s G l o b a l A g g r e g a t e I n d e x : A n u n m a n a g e d i n d e x t h a t i s c o m p r i s e d o f s e v e r a l o t h e r B a r c l a y s i n d e x e s t h a t m e a s u r e f i x e d i n c o m e p e r f o r m a n c e o f r e g i o n s a r o u n d t h e w o r l d . ��9 1 - D a y T - B i l l s : T h e U . S . g o v e r n m e n t i s s u e s s h o r t - t e r m d e b t a t a d i s c o u n t a t a c o m p e t i t i v e a u c t i o n , u s u a l l y o n a w e e k l y b a s i s . A t a d i s c o u n t m e a n s t h e n o t e i s s o l d a t a d i s c o u n t f r o m f a c e v a l u e a n d t h e n r e d e e m e d a t m a t u r i t y a t t h e f u l l f a c e v a l u e . T h e d i f f e r e n c e b e t w e e n t h e d i s c o u n t e d p r i c e a n d t h e f a c e v a l u e d e t e r m i n e s t h e y i e l d . T h e y i e l d o n 9 1 - d a y T r e a s u r y b i l l s i s t h e a v e r a g e d i s c o u n t r a t e . ��T h e D o w J o n e s B r o o k f i e l d G l o b a l I n f r a s t r u c t u r e I n d e x i s d e s i g n e d t o m e a s u r e t h e p e r f o r m a n c e o f p u r e - p l a y i n f r a s t r u c t u r e c o m p a n i e s d o m i c i l e d g l o b a l l y . T h e i n d e x c o v e r s a l l s e c t o r s o f t h e i n f r a s t r u c t u r e m a r k e t . T o b e i n c l u d e d i n t h e i n d e x , a c o m p a n y m u s t d e r i v e a t l e a s t 7 0 % o f c a s h f l o w s f r o m i n f r a s t r u c t u r e l i n e s o f b u s i n e s s . 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 M a r c h 3 1 , 2 0 1 8 5 6 Appendix 57 Allocation Market Value $% Performance (%) YTD 2017 2016 2015 2014 2013 2012 2011 2010 2009 Target Date Vanguard Target Retirement Income Inv 951,825 1.5 -0.5 (8)8.5 (67)5.3 (59)-0.2 (18)5.5 (18)5.9 (54)8.2 (84)5.2 (3)9.4 (77)14.3 (93) Vanguard Target Income Composite Index (Net)-0.5 (12)8.7 (64)5.4 (55)0.1 (12)5.8 (16)6.0 (53)8.4 (82)5.3 (1)9.4 (76)14.3 (93) S&P Target Date Retirement Income Index -0.8 (48)8.5 (66)5.0 (74)-0.2 (19)4.9 (41)6.3 (51)7.5 (89)4.0 (20)9.1 (82)11.4 (96) TD Income Universe Median -0.9 9.6 5.5 -0.7 4.7 6.3 9.6 3.1 10.0 18.5 Vanguard Target Retirement 2015 Inv 966,278 1.5 -0.5 (18)11.5 (33)6.2 (41)-0.5 (33)6.6 (3)13.0 (20)11.4 (34)1.7 (56)12.5 (22)21.3 (61) Vanguard Target 2015 Composite Index (Net)-0.6 (24)11.6 (30)6.4 (31)-0.2 (19)6.8 (1)13.3 (19)11.5 (33)1.6 (58)12.5 (21)21.2 (62) S&P Target Date 2015 Index -0.9 (69)11.4 (38)6.6 (29)-0.2 (17)5.5 (28)12.2 (33)10.3 (66)1.5 (58)11.8 (28)17.5 (85) TD 2015 Universe Median -0.8 10.8 5.9 -0.7 4.9 10.0 11.0 1.9 11.1 21.7 Vanguard Target Retirement 2020 Inv 2,604,549 4.1 -0.6 (27)14.1 (17)6.9 (39)-0.7 (43)7.1 (1)15.8 (23)12.3 (52)0.6 (48)13.1 (43)23.1 (74) Vanguard Target 2020 Composite Index (Net)-0.6 (31)14.2 (12)7.2 (30)-0.4 (28)7.4 (1)16.2 (15)12.5 (50)1.0 (38)13.3 (40)23.3 (67) S&P Target Date 2020 Index -0.9 (67)12.8 (59)7.2 (29)-0.2 (18)5.7 (47)14.8 (31)11.5 (69)0.6 (49)12.9 (46)19.9 (98) TD 2020 Universe Median -0.8 13.1 6.6 -0.8 5.6 13.3 12.4 0.5 12.9 25.2 Vanguard Target Retirement 2025 Inv 4,572,455 7.2 -0.6 (35)15.9 (24)7.5 (30)-0.8 (46)7.2 (9)18.1 (23)13.3 (57)-0.4 (33)13.8 (48)24.8 (77) Vanguard Target 2025 Composite Index (Net)-0.7 (40)16.1 (21)7.7 (22)-0.6 (35)7.4 (1)18.5 (16)13.4 (53)0.1 (28)13.9 (42)25.2 (68) S&P Target Date 2025 Index -0.9 (73)14.6 (60)7.8 (17)-0.3 (28)5.6 (61)17.0 (48)12.5 (72)-0.3 (32)13.8 (53)22.0 (99) TD 2025 Universe Median -0.8 15.3 7.2 -0.9 5.8 16.5 13.6 -1.0 13.8 26.8 Vanguard Target Retirement 2030 Inv 1,879,431 3.0 -0.6 (31)17.5 (39)7.9 (41)-1.0 (46)7.2 (13)20.5 (30)14.2 (55)-1.3 (36)14.4 (49)26.7 (77) Vanguard Target 2030 Composite Index (Net)-0.7 (37)17.7 (33)8.1 (36)-0.8 (38)7.5 (7)20.9 (26)14.3 (49)-0.9 (27)14.6 (47)27.0 (70) S&P Target Date 2030 Index -0.9 (73)16.2 (66)8.3 (25)-0.3 (19)5.6 (64)19.1 (47)13.4 (76)-1.2 (33)14.5 (48)23.7 (100) TD 2030 Universe Median -0.8 17.1 7.7 -1.2 5.9 18.5 14.3 -1.8 14.4 28.3 Vanguard Target Retirement 2035 Inv 1,887,618 3.0 -0.6 (37)19.1 (37)8.3 (49)-1.3 (52)7.2 (17)22.8 (31)15.2 (57)-2.2 (33)15.1 (48)28.2 (71) Vanguard Target 2035 Composite Index (Net)-0.7 (42)19.2 (36)8.6 (39)-1.0 (46)7.6 (9)23.3 (21)15.2 (52)-1.9 (26)15.2 (47)28.7 (52) S&P Target Date 2035 Index -0.9 (83)17.8 (71)8.9 (16)-0.3 (22)5.7 (63)20.8 (55)14.1 (81)-1.7 (25)15.0 (50)25.0 (100) TD 2035 Universe Median -0.7 18.8 8.3 -1.3 6.1 21.3 15.3 -2.9 15.0 28.7 Vanguard Target Retirement 2040 Inv 1,135,024 1.8 -0.5 (34)20.7 (29)8.7 (46)-1.6 (60)7.1 (18)24.4 (25)15.6 (52)-2.5 (33)15.2 (52)28.3 (89) Vanguard Target 2040 Composite Index (Net)-0.7 (51)20.9 (25)9.0 (31)-1.2 (51)7.6 (10)24.8 (15)15.6 (51)-2.1 (22)15.3 (49)28.7 (73) S&P Target Date 2040 Index -0.9 (80)18.9 (75)9.2 (16)-0.4 (19)5.7 (61)22.1 (50)14.7 (82)-2.2 (23)15.4 (48)26.0 (100) TD 2040 Universe Median -0.7 19.9 8.6 -1.2 6.2 22.1 15.6 -3.4 15.3 29.9 Performance Summary Calendar Year Performance (Net) As of March 31, 2018 _____________________________ Returns are expressed as percentages and net of fees. Returns for periods greater than one year are annualized. Peer group percentile ranks are shown in parenthesis. Rankings in the top quartile of peers are shown as green, while rankings in the bottom quartile of peers are shown as red. 58 Performance Summary Calendar Year Performance (Net) As of March 31, 2018 Allocation Market Value $% Performance (%) YTD 2017 2016 2015 2014 2013 2012 2011 2010 2009 Vanguard Target Retirement 2045 Inv 1,246,564 2.0 -0.6 (43)21.4 (24)8.9 (46)-1.6 (63)7.2 (20)24.4 (32)15.6 (74)-2.5 (30)15.2 (55)28.2 (88) Vanguard Target 2045 Composite Index (Net)-0.7 (51)21.5 (21)9.1 (36)-1.3 (52)7.6 (8)24.8 (25)15.6 (77)-2.1 (20)15.3 (52)28.7 (72) S&P Target Date 2045 Index -0.9 (84)19.6 (76)9.5 (15)-0.5 (22)5.7 (67)23.1 (46)15.1 (83)-2.6 (31)15.6 (46)26.4 (100) TD 2045 Universe Median -0.7 20.6 8.8 -1.2 6.2 23.1 15.8 -3.6 15.4 30.4 Vanguard Target Retirement 2050 Inv 806,792 1.3 -0.6 (40)21.4 (40)8.9 (49)-1.6 (59)7.2 (22)24.3 (33)15.6 (73)-2.5 (20)15.2 (56)28.3 (91) Vanguard Target 2050 Composite Index (Net)-0.7 (49)21.5 (30)9.1 (40)-1.3 (50)7.6 (11)24.8 (29)15.6 (73)-2.1 (13)15.3 (49)28.7 (82) TD 2050 Universe Median -0.7 20.9 8.8 -1.3 6.2 23.4 16.0 -3.6 15.3 30.9 S&P Target Date 2050 Index -0.9 20.2 9.7 -0.5 5.7 24.1 15.5 -2.9 15.6 26.4 Vanguard Target Retirement 2055 Inv 256,881 0.4 -0.6 (43)21.4 (40)8.9 (41)-1.7 (63)7.2 (22)24.3 (35)15.6 (77)-2.3 (10)---- Vanguard Target 2055 Composite Index (Net)-0.7 (54)21.5 (32)9.1 (33)-1.3 (47)7.6 (11)24.8 (31)15.6 (77)-2.1 (8)---- S&P Target Date 2055 Index -0.9 (76)20.5 (69)9.9 (8)-0.5 (27)5.6 (70)25.0 (30)15.8 (52)-2.9 (30)15.6 (68)26.4 (--) TD 2055 Universe Median -0.7 21.1 8.7 -1.4 6.3 23.2 15.9 -3.7 16.1 -- Vanguard Target Retirement 2060 Inv 100,277 0.2 -0.6 (44)21.4 (41)8.8 (51)-1.7 (82)7.2 (1)24.3 (--)-------- Vanguard Target 2060 Composite Index (Net)-0.7 (60)21.5 (34)9.1 (38)-1.3 (52)7.6 (1)24.8 (--)15.6 (--)------ S&P Target Date 2060+ Index -0.9 (85)20.7 (60)10.1 (8)-0.7 (38)5.6 (58)25.0 (--)15.8 (--)-2.9 (--)---- TD 2060 Universe Median -0.7 20.9 8.8 -1.1 6.2 ---------- Vanguard Target Retirement 2065 Inv 549 0.0 -0.6 (47)------------------ Vanguard Target 2065 Composite Index (Net)-0.7 (63)------------------ S&P Target Date 2060+ Index -0.9 (85)20.7 (55)10.1 (10)-0.7 (38)5.6 (--)25.0 (--)15.8 (--)-2.9 (--)---- TD 2065 Universe Median -0.7 20.9 8.8 -1.5 ------------ Domestic Equity Vanguard 500 Index Inv 8,847,936 14.0 -0.8 (51)21.7 (48)11.8 (24)1.2 (41)13.5 (33)32.2 (51)15.8 (35)2.0 (42)14.9 (35)26.5 (49) S&P 500 -0.8 (49)21.8 (46)12.0 (22)1.4 (39)13.7 (31)32.4 (49)16.0 (32)2.1 (40)15.1 (33)26.5 (49) eV Large Cap Core Median -0.8 21.5 9.5 0.6 12.1 32.3 14.4 1.3 13.8 26.3 Vanguard U.S. Growth Inv 5,837,764 9.2 4.3 (25)31.6 (34)-0.7 (84)8.5 (15)13.1 (29)35.5 (40)18.4 (19)-0.7 (48)11.5 (87)35.0 (48) Russell 1000 Growth Index 1.4 (69)30.2 (41)7.1 (20)5.7 (39)13.1 (29)33.5 (57)15.3 (52)2.6 (19)16.7 (46)37.2 (36) eV Large Cap Growth Median 2.7 29.0 3.4 4.5 11.0 34.3 15.4 -0.9 16.2 34.6 _____________________________ Returns are expressed as percentages and net of fees. Returns for periods greater than one year are annualized. Peer group percentile ranks are shown in parenthesis. Rankings in the top quartile of peers are shown as green, while rankings in the bottom quartile of peers are shown as red. 59 Performance Summary Calendar Year Performance (Net) As of March 31, 2018 Allocation Market Value $% Performance (%) YTD 2017 2016 2015 2014 2013 2012 2011 2010 2009 Vanguard Windsor II Inv 8,843,336 14.0 -2.9 (72)16.8 (48)13.4 (57)-3.2 (51)11.2 (56)30.7 (74)16.7 (32)2.7 (28)10.6 (89)27.1 (39) Russell 1000 Value Index -2.8 (67)13.7 (84)17.3 (19)-3.8 (61)13.5 (23)32.5 (54)17.5 (23)0.4 (47)15.5 (29)19.7 (79) eV Large Cap Value Median -2.4 16.5 14.0 -3.2 11.3 33.0 15.2 0.0 14.1 24.9 Vanguard Mid-Cap Index Inv 3,464,698 5.5 0.0 (46)19.1 (53)11.1 (49)-1.5 (45)13.6 (16)35.0 (56)15.8 (47)-2.1 (52)25.5 (35)40.2 (37) Vanguard Mid-Cap Index Fund Blended Benchmark 0.0 (45)19.3 (52)11.2 (49)-1.3 (44)13.8 (15)35.4 (52)16.0 (44)-1.9 (50)25.7 (34)40.5 (36) eV Mid Cap All Median -0.4 19.6 10.8 -2.0 8.9 35.6 15.4 -2.0 23.4 37.2 Vanguard Small-Cap Index Inv 2,813,705 4.4 -0.2 (47)16.1 (41)18.2 (58)-3.8 (52)7.4 (21)37.6 (63)18.0 (31)-2.8 (51)27.7 (43)36.1 (43) Vanguard Small-Cap Index Fund Blended Benchmark -0.2 (47)16.2 (40)18.3 (57)-3.7 (51)7.5 (19)37.8 (62)18.2 (29)-2.8 (51)27.8 (41)36.1 (43) eV Small Cap All Median -0.5 14.2 19.6 -3.7 4.2 40.0 15.4 -2.7 26.9 34.0 International Equity Vanguard International Growth Inv 3,223,651 5.1 3.4 (9)43.0 (11)1.7 (22)-0.7 (76)-5.6 (75)22.9 (30)20.0 (35)-13.7 (68)15.7 (35)41.6 (39) MSCI AC World ex USA (Net)-1.2 (89)27.2 (90)4.5 (7)-5.7 (100)-3.9 (54)15.3 (83)16.8 (77)-13.7 (68)11.2 (76)41.4 (40) Custom Non US Diversified Growth Median 0.4 32.6 -1.0 1.7 -3.6 20.5 19.0 -12.1 14.4 39.1 Fixed Income Vanguard Total Bond Market Index Inv 2,773,287 4.4 -1.5 (63)3.5 (73)2.5 (78)0.3 (69)5.8 (56)-2.3 (82)4.0 (90)7.6 (47)6.4 (79)5.9 (84) Vanguard Total Bond Market Index Fund Benchmark -1.5 (59)3.6 (62)2.8 (66)0.4 (61)5.9 (51)-2.0 (66)4.3 (87)7.9 (30)6.6 (74)5.9 (84) eV Core Fixed Income Median -1.4 3.8 3.0 0.5 5.9 -1.7 5.9 7.5 7.2 9.7 Vanguard Retirement Savings Trust 2,807,806 4.4 0.5 1.8 1.9 1.9 1.8 1.7 2.4 2.9 2.9 3.0 Ryan 3 Yr GIC Master 0.4 1.6 1.4 1.2 1.0 1.1 1.5 2.4 3.5 4.5 Vanguard Balanced Index Inv 5,405,768 8.5 -0.9 (56)13.8 (51)8.6 (41)0.4 (28)9.8 (20)17.9 (49)11.3 (44)4.1 (21)13.1 (36)20.1 (61) Vanguard Balanced Index Fund Benchmark -0.9 (51)13.9 (49)8.8 (39)0.6 (26)9.9 (18)18.2 (45)11.6 (40)4.1 (21)13.5 (29)19.7 (63) eV US Balanced Median -0.9 13.8 7.8 -0.4 7.2 17.8 10.7 1.9 12.0 22.2 Capital Preservation Vanguard Prime Money Market Inv 1,429,988 2.3 0.4 (15)1.0 (52)0.5 (67)0.0 (70)0.0 (80)0.0 (86)0.0 (81)0.0 (70)0.1 (71)0.5 (35) BofA Merrill Lynch 3 Month U.S. T-Bill 0.4 (32)0.9 (71)0.3 (80)0.1 (69)0.0 (71)0.1 (65)0.1 (66)0.1 (61)0.1 (57)0.2 (78) eV US Cash Management Median 0.3 1.0 0.6 0.1 0.1 0.1 0.2 0.1 0.2 0.4 Total Composite 63,242,488 100.0 0.0 ------------------ _____________________________ Returns are expressed as percentages and net of fees. Returns for periods greater than one year are annualized. Peer group percentile ranks are shown in parenthesis. Rankings in the top quartile of peers are shown as green, while rankings in the bottom quartile of peers are shown as red. 60 Plan Summary Fee Comparison Summary As of March 31, 2018 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 Le vel Comparison Group e Ve st me nt Alliance Univ erse Va nguard 500 In dex 0.14 0.98 0.89 0.15 La rg e Ble nd La rg e Ca p No Load US Pa ssive La rge Ca p Eq uity Va nguard US Gro wth 0.43 1.10 0.89 0.78 La rg e Gr owth La rg e Ca p No Load US Large Ca p Gr owth Va nguard Windsor 0.34 1.02 0.89 0.75 La rg e Va lu e La rg e Ca p No Load US Large Ca p Va lu e Va nguard Mid-Ca p In dex 0.17 1.06 1.03 0.18 Mid Ble nd Mid Ca p No Load US Pa ssive Mid Ca p Eq uity Va nguard Small-Ca p In dex 0.17 1.17 1.18 0.19 Small Ble nd Small Ca p No Load US Pa ssive Small Cap Eq uity Va nguard In ternational Gro wt h 0.45 1.17 1.01 1.00 Fo re ig n La rg e Gr owth Fo reig n La rg e Ca p No Load ACWI e x-US Gro wt h Eq uity Va nguard Total Bond Marke t In dex 0.15 0.79 0.64 0.46 In terme diate-Term Bond Interme diate-Term Bo nd No Load US Core Fixe d In come Va nguard Re tire me nt Savin g Trust 0.53 N/A N/A 0.79 N/A N/A US St able Va lu e Fixe d In come Va nguard Ba lanced Index 0.19 0.84 0.90 0.76 Moderate Allo cation Moderate Allo cation No Load US Balanced Va nguard Targ et Re tire me nt In come 0.13 0.43 0.50 0.37 Re tire me nt In come Re tireme nt In come No Load Lifecycle/Target Da te In come Va nguard Targ et Re tire me nt 2015 0.13 0.36 0.64 0.40 Target Date 2011-2015 Target Re tire me nt 2011-2015 No Load Lifecycle/Target Da te 2015 Va nguard Targ et Re tire me nt 2020 0.13 0.41 0.64 0.40 Target Date 2016-2020 Target Re tire me nt 2016-2020 No Load Lifecycle/Target Da te 2020 Va nguard Targ et Re tire me nt 2025 0.14 0.39 0.66 0.43 Target Date 2021-2025 Target Re tire me nt 2021-2025 No Load Lifecycle/Target Da te 2025 Va nguard Targ et Re tire me nt 2030 0.14 0.41 0.68 0.42 Target Date 2026-2030 Target Re tire me nt 2026-2030 No Load Lifecycle/Target Da te 2030 Va nguard Targ et Re tire me nt 2035 0.14 0.40 0.72 0.43 Target Date 2031-2035 Target Re tire me nt 3031-2035 No Load Lifecycle/Target Da te 2035 Va nguard Targ et Re tire me nt 2040 0.15 0.42 0.72 0.44 Target Date 2036-2040 Target Re tire me nt 2036-2040 No Load Lifecycle/Target Da te 2040 Va nguard Targ et Re tire me nt 2045 0.15 0.42 0.74 0.45 Target Date 2041-2045 Target Re tire me nt 2041-2045 No Load Lifecycle/Target Da te 2045 Va nguard Targ et Re tire me nt 2050 0.15 0.41 0.72 0.45 Target Date 2046-2050 Target Re tire me nt 2046-2050 No Load Lifecycle/Target Da te 2050 Va nguard Targ et Re tire me nt 2055 0.15 0.41 0.75 0.45 Target Da te 2051+Target Re tire me nt 2051+ No Load Lifecycle/Target Da te 2055 Va nguard Targ et Re tire me nt 2060 0.15 0.43 0.77 0.46 Target Da te 2051+Target Re tire me nt 2051+ No Load Lifecycle/Target Da te 2060 Va nguard Targ et Re tirment 2065 0.15 0.43 0.64 0.46 Target Da te 2051+Target Re tire me nt 2051+ No Load Lifecycle/Target Da te 2060 Va nguard Prime Money Marke t 0.16 0.42 N/A 0.19 Money Marke t Taxable N/A US Cas h Management Pavilio n Co nsulting Fee ($10,612 p er y ear) 61 Important Information –Peer Universe Change Over the past year, Pavilion Advisory Group Inc. conducted a study to determine the most appropriate investment manager peer universes to use for the preparation of performance and manager search reports for clients. We analyzed a variety of options focusing on the following qualities: Robustness of Market Segment Universes –The universe provider must offer an ample number of universe categories to select from, and universes must be large enough to constitute a proper sample size. Institutional Quality Mandates –Ensure that universes are a proper representation of our clients’ opportunity set. Alignment –Universes should be accessible for timely manager evaluation, screening and performance evaluation. Net of Investment Manager Fee Universe Availability –Peer ranks should reflect the impact of management fees. Solution: eVestment Net of Fee Universes Robust third-party database, widely used by investment industry for manager research and well-populated by managers High membership counts versus other net-only universe options such as Investment Metrics or Lipper Institutionally focused universes consist of separate account composites, institutional pooled fund vehicles and mutual funds –universes do not include listings for multiple share classes Relative to mutual fund-only universes, eVestment peer groups may lead to less favorable rankings for client managers due to lower average fees of the underlying universe constituents We believe eVestment is the right solution for our clients at this time, however, it is not perfect. As with any peer group universe, there are some strategies that will not fit exactly into any one category. In these cases, Pavilion has closely examined portfolio characteristics, and selected the group we believe represents the right fit. In the preparation of performance and manager search reports for clients, Pavilion relies on the use of third parties. While we believe our sources to be reliable, we cannot be liable for third-party errors or omissions. 62 ��C u s t o m N o n U S D i v e r s i f i e d A l l : T h e C u s t o m N o n U S D i v e r s i f i e d A l l u n i v e r s e i s a c u s t o m u n i v e r s e t h a t i n c l u d e s t h e e V e s t m e n t A l l i a n c e N o n - U S D i v e r s i f i e d E q u i t y u n i v e r s e e x c l u d i n g a l l s t r a t e g i e s i n c l u d e d i n t h e e V e s t m e n t A l l i a n c e N o n - U S D i v e r s i f i e d S m a l l C a p E q u i t y u n i v e r s e . T h e e V e s t m e n t A l l i a n c e N o n - U S D i v e r s i f i e d E q u i t y u n i v e r s e i s m a d e u p o f a l l N o n - U S D i v e r s i f i e d ( E A F E a n d A C W I e x - U S ) E q u i t y p r o d u c t s i n c l u s i v e o f a l l s t y l e , c a p i t a l i z a t i o n , a n d s t r a t e g y a p p r o a c h e s . T h e e V e s t m e n t A l l i a n c e N o n - U S D i v e r s i f i e d S m a l l C a p E q u i t y u n i v e r s e c o n s i s t s o f a c t i v e l y - m a n a g e d N o n - U S D i v e r s i f i e d ( E A F E a n d A C W I e x - U S ) E q u i t y p r o d u c t s t h a t p r i m a r i l y i n v e s t i n s m a l l c a p i t a l i z a t i o n s t o c k s r e g a r d l e s s o f t h e s t y l e ( g r o w t h , v a l u e o r c o r e ) f o c u s . ��C u s t o m N o n U S D i v e r s i f i e d C o r e : T h e C u s t o m N o n U S D i v e r s i f i e d C o r e u n i v e r s e i s a c u s t o m u n i v e r s e t h a t i n c l u d e s t h e e V e s t m e n t A l l i a n c e N o n - U S D i v e r s i f i e d C o r e E q u i t y u n i v e r s e e x c l u d i n g a l l s t r a t e g i e s i n c l u d e d i n t h e e V e s t m e n t A l l i a n c e N o n - U S D i v e r s i f i e d S m a l l C a p E q u i t y u n i v e r s e . T h e e V e s t m e n t A l l i a n c e N o n - U S D i v e r s i f i e d C o r e E q u i t y u n i v e r s e i s m a d e u p o f a l l a c t i v e l y - m a n a g e d N o n - U S D i v e r s i f i e d ( E A F E a n d A C W I e x - U S ) E q u i t y p r o d u c t s t h a t p r i m a r i l y i n v e s t i n a m i x t u r e o f g r o w t h a n d v a l u e s t o c k s . T h i s u n i v e r s e i s i n c l u s i v e o f N o n - U S D i v e r s i f i e d E q u i t y s t r a t e g i e s r e g a r d l e s s o f m a r k e t c a p i t a l i z a t i o n . T h e e V e s t m e n t A l l i a n c e N o n - U S D i v e r s i f i e d S m a l l C a p E q u i t y u n i v e r s e c o n s i s t s o f a c t i v e l y - m a n a g e d N o n - U S D i v e r s i f i e d ( E A F E a n d A C W I e x - U S ) E q u i t y p r o d u c t s t h a t p r i m a r i l y i n v e s t i n s m a l l c a p i t a l i z a t i o n s t o c k s r e g a r d l e s s o f t h e s t y l e ( g r o w t h , v a l u e o r c o r e ) f o c u s . ��C u s t o m N o n U S D i v e r s i f i e d G r o w t h : T h e C u s t o m N o n U S D i v e r s i f i e d G r o w t h u n i v e r s e i s a c u s t o m u n i v e r s e t h a t i n c l u d e s t h e e V e s t m e n t A l l i a n c e N o n - U S D i v e r s i f i e d G r o w t h E q u i t y u n i v e r s e e x c l u d i n g a l l s t r a t e g i e s i n c l u d e d i n t h e e V e s t m e n t A l l i a n c e N o n - U S D i v e r s i f i e d S m a l l C a p E q u i t y u n i v e r s e . T h e e V e s t m e n t A l l i a n c e N o n - U S D i v e r s i f i e d G r o w t h E q u i t y u n i v e r s e i s m a d e u p o f a l l a c t i v e l y - m a n a g e d N o n - U S D i v e r s i f i e d ( E A F E a n d A C W I e x - U S ) E q u i t y p r o d u c t s t h a t p r i m a r i l y i n v e s t i n s t o c k s t h a t a r e e x p e c t e d t o h a v e a n a b o v e - a v e r a g e c a p i t a l a p p r e c i a t i o n r a t e r e l a t i v e t o t h e m a r k e t . T h i s u n i v e r s e i s i n c l u s i v e o f N o n - U S D i v e r s i f i e d E q u i t y s t r a t e g i e s r e g a r d l e s s o f m a r k e t c a p i t a l i z a t i o n . T h e e V e s t m e n t A l l i a n c e N o n - U S D i v e r s i f i e d S m a l l C a p E q u i t y u n i v e r s e c o n s i s t s o f a c t i v e l y - m a n a g e d N o n - U S D i v e r s i f i e d ( E A F E a n d A C W I e x - U S ) E q u i t y p r o d u c t s t h a t p r i m a r i l y i n v e s t i n s m a l l c a p i t a l i z a t i o n s t o c k s r e g a r d l e s s o f t h e s t y l e ( g r o w t h , v a l u e o r c o r e ) f o c u s . ��C u s t o m N o n U S D i v e r s i f i e d V a l u e : T h e C u s t o m N o n U S D i v e r s i f i e d V a l u e u n i v e r s e i s a c u s t o m u n i v e r s e t h a t i n c l u d e s t h e e V e s t m e n t A l l i a n c e N o n - U S D i v e r s i f i e d V a l u e E q u i t y u n i v e r s e e x c l u d i n g a l l s t r a t e g i e s i n c l u d e d i n t h e e V e s t m e n t A l l i a n c e N o n - U S D i v e r s i f i e d S m a l l C a p E q u i t y u n i v e r s e . T h e e V e s t m e n t A l l i a n c e N o n - U S D i v e r s i f i e d V a l u e E q u i t y u n i v e r s e i s m a d e u p o f a l l a c t i v e l y - m a n a g e d N o n - U S D i v e r s i f i e d ( E A F E a n d A C W I e x - U S ) E q u i t y p r o d u c t s t h a t p r i m a r i l y i n v e s t i n s t o c k s t h a t m a y b e t r a d i n g a t l o w e r p r i c e s l o w e r t h a n t h e i r f u n d a m e n t a l o r i n t r i n s i c v a l u e . T h i s u n i v e r s e i s i n c l u s i v e o f N o n - U S D i v e r s i f i e d E q u i t y s t r a t e g i e s r e g a r d l e s s o f m a r k e t c a p i t a l i z a t i o n . T h e e V e s t m e n t A l l i a n c e N o n - U S D i v e r s i f i e d S m a l l C a p E q u i t y u n i v e r s e c o n s i s t s o f a c t i v e l y - m a n a g e d N o n - U S D i v e r s i f i e d ( E A F E a n d A C W I e x - U S ) E q u i t y p r o d u c t s t h a t p r i m a r i l y i n v e s t i n s m a l l c a p i t a l i z a t i o n s t o c k s r e g a r d l e s s o f t h e s t y l e ( g r o w t h , v a l u e o r c o r e ) f o c u s . C u s t o m P e e r G r o u p U n i v e r s e D e s c r i p t i o n A s o f M a r c h 3 1 , 2 0 1 8 6 3 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 64 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 65