Loading...
HomeMy Public PortalAbout2016 4th Quarter ReportPerformance Review Metropolitan St. Louis Sewer District Defined Contribution Plan 4th Quarter 2016 Pavilion Advisory Group Inc. 227 W. Monroe Street, Suite 2020 Chicago, IL 60606 Phone: 312-798-3200 Fax: 312-902-1984 www.pavilioncorp.com 1 Capital Markets Review 1 2 Executive Summary 10 3 Performance Summary 13 4 Plan Assets 21 5 Manager Evaluation 24 6 Appendix 58 Table Of Contents Capital Markets Review 1 Capital Markets Review Summary 1.3 3.8 8.8 -0.7 -3.2 -4.2 1.3 -7.1 8.4 12.0 21.3 1.0 3.4 11.2 5.5 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. Performance: Past Quarter and Year (%) Past Quarter Past 12 Months Equities (Stocks)Global Growth Picks Up Steam §The positive economic momentum of the third quarter carried into the fourth. Improving expectations were supported by resolution of several uncertainties including the U.S.election,OPEC’s oil production,and Italy’s referendum. Shifting global fiscal policies reducing austerity drags or adding stimulus,as emphasized by the incoming U.S.administration added to investor optimism. §With the stabilization of commodity prices and the slowing of U.S.dollar appreciation,inflation has trended back toward more “normal”ranges.Advanced economies are beginning to reinflate while heightened inflation dissipates in emerging markets.Normalizing inflation coupled with accelerating global growth has provided reinforcement for rising interest rates. §Global monetary policy remained accommodative,providing few surprises as the-7.1 -3.0 -2.2 1.9 0.1 -3.3 2.7 2.0 2.0 0.0 2.1 2.6 5.1 17.5 0.3 8.6 11.8 18.3 2.3 2.1 -10 -5 0 5 10 15 20 25 BBG Barclays Global Agg. BBG Barclays Agg. WGBI ex-U.S. Hedged BofAML High Yield Cons. 91-Day T-Bills NAREIT Bloomberg Commodity Alerian MLP HFRI FoF:Cons.* CPI * HFRI data are subject to revision. Source: FactSet & BloombergFixed Income (Bonds)Alternatives§Global monetary policy remained accommodative,providing few surprises as the U.S.Federal Open Market Committee (“FOMC”)raised rates 25 basis points and the European Central Bank (“ECB”)extended its purchase program.Less anticipated,however,were changes to the FOMC’s projections indicating three rate increases in 2017,and the ECB’s reduction of purchases while expanding eligible securities for purchase. §While economic growth is picking up globally,the recent spike in the U.S.dollar eroded much of the performance from international investments for U.S.dollar denominated investors,and somewhat curtailed emerging market optimism. §Domestic equities outpaced international equities during the quarter.Value stocks performed best globally,aided by overweights in financials deemed to benefit from the rising yield curve. §The global increase in interest rates held back fixed income performance with most spread sectors outpacing duration adjusted Treasury equivalents. §Oil prices were buoyed by OPEC’s commitment to cut production and improving global growth.For the year,commodity price performance was strong (+11.8%), as many of 2015’s headwinds disappeared throughout the year. 2 Capital Markets Review Asset Class Outlook 4.0 U.S. Treasury Yields and Forward Expectations 40 60 80 100 120 140 160 180 200 Returning Earnings Growth U.S.EAFE Emerging Markets Source: FactSet NTM EPS Expectations (Jan. 2009 = 100), S&P 500, MSCI EAFE, & MSCI EM Equities §Despite strong fourth quarter performance,equity markets still appear to have room to run.Fundamentals have improved in almost every market,allowing earnings growth to turn positive,which is a reversal of almost five quarters of negative to flat earnings growth.The improvement in earnings combined with the anticipated business friendly policies of the new Trump administration likely will lend further support to U.S. equities,particularly those with more concentrated domestic exposure most likely to benefit from policy changes.Improving growth is not uniform across geographies.The U.S.and emerging markets are showing the strongest improvements.Equities with greater exposure to more rapidly growing geographies should outperform. Fixed Income §The fourth quarter saw a fairly tumultuous rise in yields.The 10-year Treasury rate rose more than 80 basis points,bringing up yields across developed sovereign markets.The rate increases reflected the Federal Reserve’s return to normalizing monetary policy, Source: Bloomberg,Sovereign Inflation Swaps 0.0 1.0 2.0 3.0 1M 3M 6M 1Y 2Y 3Y 5Y 7Y 10Y 30YYield (%)Tenor 12/30/2016 5-Year Forwards Source: Bloomberg as of 12/30/16 -3.0 -2.0 -1.0 0.0 1.0 2.0 3.0 4.0 5.0 Annual PercentGlobal Inflation Expectations U.S.U.K.E.U.Japan rate increases reflected the Federal Reserve’s return to normalizing monetary policy, with December rate hike of 25 basis points.While yields in some credit sectors rose as well,spread tightening,likely reflecting improving economic fundamentals, significantly dampened the move.A positive result of the move higher in yields is the fact that duration positions now offer more protection in the event of an economic downturn or flight to quality.Since a significant component of the diversification benefit is derived from income,portfolio diversification benefits appear to be particularly pronounced in high quality investment-grade credits including Agency and Non-Agency MBS as well as CMBS.For long-term investors with an ability to sacrifice liquidity for yield pick-up,private credit remains an attractive opportunity.ABS also remains an attractive cash surrogate. Real Assets (Inflation Protection Assets) §Fears of deflation appear to have abated as inflation expectations increased across developed markets,reverting to levels closer to long-term averages.While inflation expectations have risen,we do not anticipate actual levels rising much above the Federal Reserves 2%target near term.As a result,equity positions should provide some protection against near term inflation.In the current low yield environment,global listed infrastructure may provide a diversifying income stream with a slightly lower volatility profile than commodities.Within commodities and infrastructure,we continue to favor the energy complex.While U.S.REITs have outperformed broader equity markets,we maintain a cautious view due to its correlation to long duration instruments. 3 Capital Markets Review Key Market Risks 50 150 250 350 450 550 650 750 Basis PointsBanca Monte dei Paschi CDS The amount, in annual basis points, market participants are willing to pay in order to obtain insurance against Monte dei Paschi defaulting on a bond payment. Fixed Income Equities Financial StressesValuationsCyclicalCurrent Risk Levels LowHighCyclical Risks Remain Low with Regional Disturbances Present §Italian Bank Crisis:It alian banks and policy makers have struggled since the financial crisis to formulate a recapitalization plan for bank balance sheets.While banks throughout Europe had similar challenges,Italy’s governance structure,weak fiscal position and the particular weakness of several high profile Italian banks has made them the poster child of the E.U.banking crisis.The concern is that loss of confidence in one or more Italian banks touches of a new round of E.U.financial sector fears or discussions of an Italian exit from the E.U.,“Quitaly.” §Resurgence in Dollar Appreciation:The global economy only now is recovering from the tightening of global financial conditions caused by the 2014-2015 appreciation of the U.S.dollar.The resumption of rate hikes by the FOMC has reignited fears of a continuation of this phenomenon.We think it unlikely that the pace of appreciation of the past two years will be revisited,but acknowledge that appreciation beyond a 5%year-over-year pace likely will create a drag and stymie or reverse this recovery. §Policy Shortfall:While anticipated policy changes are not the only factor providing a lift to equity markets,they have served as an accelerant.As a result,any material shortfall in actual proposals relative to expectations could trigger a material adjustment downward to the equity markets. -20 -15 -10 -5 0 5 10 15 20 25 Dec-96Dec-97Dec-98Dec-99Dec-00Dec-01Dec-02Dec-03Dec-04Dec-05Dec-06Dec-07Dec-08Dec-09Dec-10Dec-11Dec-12Dec-13Dec-14Dec-15Dec-16Percentage ChangeY-O-Y Percentage Change in Dollar Valuation U.S. Recession U.S. Dollar Index: Broad Rapid dollar appreciation would likely squeeze global growth, including earnings.Financial StressesSource: Bloomberg Source: Federal Reserve FRED Data Source: Bloomberg, FactSet, Recession Alert, & Pavilion Analysis 4 Capital Markets Review Economy -1 5 -1 0 -5 0 5 10 PercentPeso Yuan Pound Yen Euro Currencies Weaken vs. USD 0 2 4 6 8 10 12 12/0012/0112/0212/0312/0412/0512/0612/0712/0812/0912/1012/1112/1212/1312/1412/1512/16PercentUnemployment Quits Employment Market Shows Strength U.S. Election Jolts Markets and Currencies §The election of Donald Trump as President surprised investors and provided impetus for a rally in the equity markets.The economic outlook changed sharply as the increased likelihood of regulatory repeals and tax reform set the stage for a resurgence in business and consumer optimism. §The FOMC raised interest rates in December,a largely anticipated move.Currency markets moved slightly after the rate increase which were sharply jolted following the election. Uncertainties over trade restrictions and tariffs hurt the peso and yuan,and an improved outlook for the U.S.economy boosted the dollar.Mortgage rates rose ¾%during the quarter,though the home sales forecast did not diminish,given that average rents are high and demographics are expected to boost home demand in the coming years. §The labor market continued to show strength,with the unemployment ending December at 4.7%,and the quit rate up to 2.1%.Wage growth accelerated toward year-end,which was mirrored by the inflation rate,which approached 2%.With potential tax cuts and stronger wage growth,the FOMC will be closely watching for jumps in the inflation rate,which likely would prompt additional interest rate increases in 2017,though the FOMC already expects to implement up to 75 bps of increases,given current data trends.12/0012/0112/0212/0312/0412/0512/0612/0712/0812/0912/1012/1112/1212/1312/1412/1512/162.50 2.75 3.00 3.25 3.50 3.75 4.00 4.25 4.50 Percent30-Ye ar 15-Ye ar Mortgage Rates Rise Source: Bloomberg Source: Federal Reserve, BOL Source: Federal Reserve 5 1.2%3.8%1.9% -1.3%-0.7% -4.2% -7.4%-5.6% -2.2% -8.0% -4.0% 2.1% 7.9% 12.0% 7.5%4.5% 1.0% 11.2% 3.2% 8.7% 18.5% -1.4% 17.8% 66.3% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% MSCI S&P MSCI MSCI MSCI MSCI China South Taiwan India South Brazil 4Q 2016 Capital Markets Review Equities 4th Quarter and 2016 World and Emerging Market Equity Returns4thQuarter and 2016 S&P 500 Sector Returns -4.8% -4.1% -2.2% -0.1% 1.1% 2.2% 3.8% 4.4% 4.8% 7.1% 7.1% 1.7% -2.9% 4.6% 15.2% 13.2% 5.7% 11.9% 21.8% 16.5% 17.7% 26.4% Real Estate Healthcare Cons Staples Utilities Info Tech Cons Disc S&P 500 Telecom Materials Industrials Energy 4Q 2016 MSCI ACWI S&P 500 MSCI World MSCI ACWI x US MSCI EAFE MSCI EM China South Korea Taiwan India South Africa Brazil Value Drastically Outperformed Growth in 2016 Value,Cyclicals,and Small Caps Propel Equity Markets Higher §The S&P 500 Index returned 3.8%during the fourth quarter,bringing the year-to-date return to 11.9%.Financials was by far the strongest performing sector during the quarter.Bank stocks drove much of this performance,rallying on rising interest rates and the prospects for a continuation of this trend under a Trump administration. §The MSCI ACWI returned a modest 1.2%during the quarter.U.S.equities were largely responsible for the Index’s positive absolute return as stocks outside of the U.S.posted flat to negative returns.During the quarter,Emerging Market equities came under pressure on concerns surrounding the incoming U.S.administration’s views on potential import taxes. China,the largest country by weight in the MSCI Emerging Markets Index traded down on the news.Despite the weak quarter,the MSCI Emerging Markets Index posted an annual return of 11.2%. §Value significantly outperformed Growth during the fourth quarter and in 2016 as a whole. This was a dramatic reversal from 2015 when Growth significantly outperformed Value, though not to the same magnitude as Value outperformed this year.The Russell 1000 Value Index outperformed the Russell 1000 Growth Index by the largest margin in a decade.Moving down the market cap spectrum,the outperformance was even more pronounced. 20.9% 26.4% 21.0% -10.0%-5.0%0.0%5.0%10.0%15.0%20.0%25.0%30.0% Energy Financials 17.3% 20.0% 31.7% 5.0% 14.9% 7.1%7.3% 11.3% -3.0% 7.6% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% U.S. Large Cap U.S. Mid Cap U.S. Small Cap Int'l Developed Emerging Mkts Value Growth Source: Factset, MSCI, Russell Source: Factset, MSCI Source: Factset, S&P 6 Source: Bloomberg Barclays Capital Markets Review Fixed Income Best Period Second Best Period Worst Period Second W ors t Period 0 250 500 750 1000 1250 1500 1750 2000 Option-Adjusted Spread (OAS)U.S.Corpor at e High Y ie ld - OAS U.S.HY 10 -Year Median U.S.IG Credit - OA S U.S.IG Credit 10-Year Media n Trailing Ten-Year Credit Spreads Source: Bloomberg Barclays 2010 2011 2012 2013 2014 2015 2016 1Q16 2Q16 3Q16 4Q16 Aggregate 171 -114 226 93 10 -53 138 -4 31 68 39 Agenc y 77 -25 166 1 10 -133 121 23 36 44 17 MBS 225 -106 91 98 40 -5 -11 -38 3 64 -39 ABS 169 52 246 24 53 44 95 16 50 26 3 CMBS 1501 47 841 97 108 -28 236 58 37 91 46 Credit 192 -322 693 226 -18 -169 442 18 97 155 156 High Y ield 974 -240 1394 923 -112 -577 1573 77 411 576 407 EMD (USD)508 -537 1503 -32 -120 3 880 123 266 354 106 Duration –Ad justed Excess Returns to Treasuries (bps) Credit Trumps Rates in Q4 §Yields rose sharply on the election results pushing total returns negative across all bond sectors,sans high yield,for the quarter.Anticipated higher economic growth and inflation associated with President-elect Trump’s promises of fiscal stimulus via tax cuts and infrastructure spending drove yields higher.Additionally,in a well-telegraphed move in December,the FOMC voted unanimously to raise rates by 25 bps,setting the new Fed Funds rate target to 0.50%-0.75%.Despite the negative absolute returns,most fixed income spread sectors outpaced Treasuries on an excess return basis for the quarter and year. §Treasuries returned -3.8%as yi elds moved sharply higher across the curve.The ten-year yield increased over 80 basis points,while one and thirty-year yi elds increased 26 basis points and 74 basis points,respectively.In spite of significant rate movements during the quarter,year-end yields ended just modestly higher than the start of 2016. §Investment grade credit returned -3.0%for the quarter,but outpaced Treasuries by 156 bps on a duration-adjusted basis.Investment grade credit spreads ended the quarter 13 bps tighter at 118 bps as the post-election equity rally,a slowdown in primary issuance and light dealer inventories provided favorable technicals.Corporate high yield held up well (+1.8%)due to continued strong demand and delivered equity-like returns (+17.1%)for the year. §Agency MBS lagged other spread sectors as sharply higher rates reduced prepayment activity leading to significant duration extension.The MBS Index duration drifted two years higher on the quarter,driving the Bloomberg Barclays Aggregate Index duration up from 5.5 years to 5.9 years. 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 (Ye ars) 12/31/2015 9/30/2016 12/30/2016 U.S. Treasury Yield Curve Change Source: US Dept. of The Treasury 7 Capital Markets Review Alternative Investments Volatility Gives Hedge Funds a Boost §Hedge Funds generally rallied alongside risk assets during the quarter as domestic and global -20% -15% -10% -5% 0% 5% 10% 15%Cumulative ReturnHF Longs HF Shorts S&P Long -Shorts Commonly-held hedge fund long positions underperformed short positions in the first half of the year, followed by a Q3 rebound. In Q4, these positions performed in line with general equity markets. Top Hedge Fund Equity Longs vs Shorts (Goldman VIP) 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 0 50 100 150 200 250 300 350 Dec-2011 Dec-2012 Dec-2013 Dec-2014 Dec-2015 Dec-2016 5 Yr. Inflation Break EvenBloomberg Commodity IndexCommodities vs. Inflation Bloomberg Commodity Index 5 Yr. Inflation Break Even In the fourth quarter, market indicators of inflation expectations have increased. Commodities could experience upward pressure if inflation expectations remain elevated. Source: Bloomberg §Hedge Funds generally rallied alongside risk assets during the quarter as domestic and global growth indicators improved.Long/short equity funds generally kept pace with global stocks despite their hedged nature.Stock selection,which floundered in the first half of the year due to technical headwinds,was relatively steady in the fourth quarter after a third-quarter rebound. Hedge funds with a long exposures in domestic stocks,value-oriented names,small cap stocks, and winning sectors such as financials generally performed better than those with global, emerging market,and healthcare exposures. §A selloff in rates and volatility following the U.S.election drove a strong outperformance of fixed income hedge funds and relative value strategies,including discretionary macro.Positive sentiment for lower-quality credit and low-to-hedged duration positioning drove outperformance of distressed and RV corporate strategies versus fixed income indices.That said,volatility hurt systematic macro strategies,which posted losses during the quarter. §Commodities were mixed during the quarter:strong gains in energy commodities and base metals were offset by losses in precious metals following a strengthening U.S.dollar. §U.S.REITs ended the fourth quarter in negative territory (-3.3%).REITs experienced poor earnings results in October,with weak earnings growth across various segments of the REIT market.Rising interest rates put additional downward pressure on REIT prices. §Private Capital Markets.Private equity fundraising remains robust,and capital continues to pour into the asset class as LPs seek out returns.Funds focused on software have raised assets and conducted deals in record numbers,given software’s prominence in companies across industries and as sector-focused funds have become more common since their arrival two decades ago.The M&A landscape remains robust,with the continued announcement of large deals through the end of the year.Median EV/EBITDA for buyout deals remained elevated at 8.4x,and competition remains high for the relatively few quality targets in the market.The lower middle market continues to be a target for firms seeking value,but competition could drive up multiples in this segment as well. 3.8% 1.3%1.1% -3.0% -7.1% 1.8%2.7% 4.0% -2.1% 2.2%2.4% -10% -5% 0% 5% 10%Long/short equity managers, which generally have global exposure, underperformed domestic stocks but nearly kept pace with global stocks despite their hedged nature. Fixed income hedge funds outperformed long-only indices, helped by low duration and rate-hedging as well as strong performance of low-quality credits. Multi-strategy and macro funds trounced a global 60/40 portfolio *Asset-weighted is used instead of fund-weighted, as it is available and more indicative of the universe. Sources: Bloomberg, Goldman Sachs Hedge Funds vs Long-Only: Total Returns 2016 Q4 Sources: Hedge Fund Research, Factset 8 Quarter Year To Date 1 Year 2 Years 3 Years 5 Years 7 Years 10 Years Domestic Equity Indices Dow Jones Wilshire 5000 4.5 13.4 13.4 6.8 8.8 14.7 13.0 7.2 S&P 500 3.8 12.0 12.0 6.5 8.9 14.7 12.8 6.9 Russell 1000 Index 3.8 12.1 12.1 6.3 8.6 14.7 12.9 7.1 Russell 1000 Growth Index 1.0 7.1 7.1 6.4 8.6 14.5 13.0 8.3 Russell 1000 Value Index 6.7 17.3 17.3 6.2 8.6 14.8 12.7 5.7 Russell Midcap Index 3.2 13.8 13.8 5.4 7.9 14.7 13.7 7.9 Russell Midcap Growth Index 0.5 7.3 7.3 3.5 6.2 13.5 12.9 7.8 Russell Midcap Value Index 5.5 20.0 20.0 6.9 9.5 15.7 14.3 7.6 Russell 2000 Index 8.8 21.3 21.3 7.7 6.7 14.5 13.2 7.1 Russell 2000 Growth Index 3.6 11.3 11.3 4.8 5.1 13.7 13.2 7.8 Russell 2000 Value Index 14.1 31.7 31.7 10.4 8.3 15.1 13.1 6.3 International Equity Indices MSCI EAFE -0.7 1.0 1.0 0.1 -1.6 6.5 3.8 0.7 MSCI EAFE Growth Index -5.5 -3.0 -3.0 0.5 -1.2 6.7 4.5 1.6 MSCI EAFE Value Index 4.2 5.0 5.0 -0.5 -2.1 6.3 3.0 -0.2 MSCI EAFE Small Cap -2.9 2.2 2.2 5.8 2.1 10.6 7.8 2.9 MSCI AC World Index 1.2 7.9 7.9 2.6 3.1 9.4 7.3 3.6 MSCI AC World ex US -1.3 4.5 4.5 -0.7 -1.8 5.0 2.9 1.0 MSCI Emerging Markets Index -4.2 11.2 11.2 -2.7 -2.6 1.3 0.5 1.8 Fixed Income Indices Blmbg. Barc. U.S. Aggregate -3.0 2.6 2.6 1.6 3.0 2.2 3.6 4.3 Blmbg. Barc. Intermed. U.S. Government/Credit -2.1 2.1 2.1 1.6 2.1 1.8 3.0 3.8 Blmbg. Barc. U.S. Long Government/Credit -7.8 6.7 6.7 1.6 7.2 4.1 7.4 6.9 Blmbg. Barc. U.S. Corp: High Yield 1.8 17.1 17.1 5.8 4.7 7.4 8.1 7.5 BofA Merrill Lynch 3 Month U.S. T-Bill 0.1 0.3 0.3 0.2 0.1 0.1 0.1 0.8 Blmbg. Barc. U.S. TIPS -2.4 4.7 4.7 1.6 2.3 0.9 3.4 4.4 Citigroup Non-U.S. World Government Bond -10.8 1.8 1.8 -1.9 -2.2 -1.9 0.0 2.5 JPM EMBI Global Diversified (external currency)-4.0 10.2 10.2 5.6 6.2 5.9 7.0 6.9 JPM GBI-EM Global Diversified (local currency)-6.1 9.9 9.9 -3.3 -4.1 -1.3 0.9 3.8 Real Asset Indices Bloomberg Commodity Index Total Return 2.7 11.7 11.7 -8.2 -11.3 -9.0 -6.3 -5.6 Dow Jones Wilshire REIT -2.3 7.2 7.2 5.7 13.8 12.0 13.8 4.8 Capital Markets Review Index Returns As of December 31, 2016 (Percentage Return) _________________________ Returns for periods greater than one year are annualized. 9 Executive Summary 10 Performance Summary - December 2016 Fourth quarter domestic equity index returns were positive while international equity and fixed income indexes were negative. Active domestic equity, international equity, and fixed income index funds all lagged their respective benchmarks during the quarter. Within the target date retirement funds, most options ranked near the median of their target date manager universe during the fourth quarter. Plan Assets The investment menu provides a combination of single strategy funds and diversified portfolios including a balanced fund and target retirement date funds. The retirement dates range from 2010 through 2060 in five year increments. Manager Evaluation Vanguard is a market leader and well known for its low cost market index and institutional investment funds. In mid-July, Vanguard announced that M&G Investment Management will no longer serve as an advisor to the Vanguard International Growth Fund. The assets formerly managed by M&G are being reallocated to the two remaining sub-advisors: Baillie Gifford (60%) and Schroder (40%). Fourth quarter performance for active managers in the investment menu were below-benchmarks. Vanguard International Growth, Vanguard Windsor II and Vanguard US Growth all lagged their benchmarks. Respectively, they underperformed by 540 basis points, 100 basis points and 430 basis points. Target retirement date funds approximated their respective benchmarks over longer-term periods. Ranks are well above median in their target date fund universes. Defined Contribution Plan Executive Summary 11 Defined Contribution Plan Executive Summary Capital Markets Review The S&P 500 Index returned 3.8% during the fourth quarter, bringing the year-to-date return to 11.9%. Financials was by far the strongest performing sector during the quarter. Bank stocks drove much of this performance, rallying on rising interest rates and the prospects for a continuation of this trend under a Trump administration. Yields rose sharply on the election results pushing total returns negative across all bond sectors, sans high yield, for the quarter. Anticipated higher economic growth and inflation associated with President-elect Trump’s promises of fiscal stimulus via tax cuts and infrastructure spending drove yields higher. Additionally, in a well-telegraphed move in December, the FOMC voted unanimously to raise rates by 25 bps, setting the new Fed Funds rate target to 0.50% - 0.75%. Despite the negative absolute returns, most fixed income spread sectors outpaced Treasuries on an excess return basis for the quarter and year. Treasuries returned -3.8% as yields moved sharply higher across the curve. The ten-year yield increased over 80 basis points, while one and thirty-year yields increased 26 basis points and 74 basis points, respectively. In spite of significant rate movements during the quarter, year-end yields ended just modestly higher than the start of 2016. The MSCI ACWI returned a modest 1.2% during the quarter. U.S. equities were largely responsible for the Index’s positive absolute return as stocks outside of the U.S. posted flat to negative returns. During the quarter, Emerging Market equities came under pressure on concerns surrounding the incoming U.S. administration’s views on potential import taxes. China, the largest country by weight in the MSCI Emerging Markets Index traded down on the news. Despite the weak quarter, the MSCI Emerging Markets Index posted an annual return of 11.2%. Value significantly outperformed Growth during the fourth quarter and in 2016 as a whole. This was a dramatic reversal from 2015 when Growth significantly outperformed Value, though not to the same magnitude as Value outperformed this year. The Russell 1000 Value Index outperformed the Russel 1000 Growth Index by the largest margin in a decade. Moving down the market cap spectrum, the outperformance was even more pronounced. Recommendations or Action Items No recommendations at this time. 12 Performance Summary 13 Quarter Year To Date 1 Year 3 Years 5 Years 10 Years Domestic Equity Options Vanguard 500 Index (VFINX)3.8 (43)11.8 (32)11.8 (32)8.7 (8)14.5 (20)6.8 (33) S&P 500 3.8 (43)12.0 (31)12.0 (31)8.9 (7)14.7 (17)6.9 (31) IM U.S. Large Cap Equity 3.2 9.2 9.2 6.8 13.3 6.2 Vanguard US Growth (VWUSX)-3.3 (84)-0.7 (76)-0.7 (76)6.8 (36)14.3 (24)7.2 (51) Russell 1000 Growth Index 1.0 (16)7.1 (8)7.1 (8)8.6 (8)14.5 (21)8.3 (15) IM U.S. Large Cap Growth Equity -1.2 2.0 2.0 6.1 12.9 7.2 Vanguard Windsor II (VWNFX)5.7 (82)13.4 (61)13.4 (61)6.9 (49)13.2 (60)5.7 (35) Russell 1000 Value Index 6.7 (57)17.3 (22)17.3 (22)8.6 (7)14.8 (14)5.7 (35) IM U.S. Large Cap Value Equity 6.8 14.0 14.0 6.8 13.5 5.1 Vanguard Mid-Cap Index (VIMSX)2.1 (65)11.1 (55)11.1 (55)7.5 (24)14.2 (27)7.5 (28) Vanguard Mid-Cap Index Fund Blended Benchmark 2.1 (65)11.2 (53)11.2 (53)7.7 (20)14.5 (22)7.7 (23) IM U.S. Mid Cap Equity 3.8 11.7 11.7 5.5 13.0 6.7 Vanguard Small-Cap Index (NAESX)6.1 (85)18.2 (77)18.2 (77)6.9 (45)14.7 (37)8.0 (17) Vanguard Small-Cap Index Fund Blended Benchmark 6.1 (85)18.3 (76)18.3 (76)7.0 (44)14.8 (36)8.1 (17) IM U.S. Small Cap Equity 10.2 21.9 21.9 6.6 14.1 6.4 International Equity Option Vanguard International Growth (VWIGX)-6.7 (81)1.7 (51)1.7 (51)-1.6 (41)7.1 (24)2.4 (25) MSCI AC World ex USA (Net)-1.3 (23)4.5 (35)4.5 (35)-1.8 (45)5.0 (58)1.0 (51) IM International Equity -3.8 1.8 1.8 -2.1 5.5 1.0 Fixed Income Options Vanguard Total Bond Market Index (VBMFX)-3.2 (100)2.5 (88)2.5 (88)2.8 (54)2.0 (93)4.2 (78) Vanguard Total Bond Market Index Fund Benchmark -3.1 (98)2.8 (79)2.8 (79)3.0 (47)2.2 (89)4.4 (74) IM U.S. Broad Market Core+ Fixed Income -2.4 4.2 4.2 2.9 3.1 4.9 Vanguard Retirement Savings Trust 0.5 1.9 1.9 1.9 1.9 2.7 Ryan 3 Yr GIC Master 0.4 1.4 1.4 1.2 1.2 2.6 Performance Summary Investment Options As of December 31, 2016 _________________________ Returns are expressed as percentages. Returns for periods greater than one year are annualized. Peer group percentile ranks are shown in parenthesis. 14 Performance Summary Investment Options As of December 31, 2016 Quarter Year To Date 1 Year 3 Years 5 Years 10 Years Equity/Fixed Income Blend Options Vanguard Balanced Index (VBINX)1.1 (48)8.6 (22)8.6 (22)6.2 (8)9.5 (30)6.3 (11) Vanguard Balanced Index Fund Benchmark 1.2 (45)8.8 (21)8.8 (21)6.4 (6)9.7 (25)6.4 (9) IM Mixed-Asset Target Alloc Growth 0.9 6.7 6.7 3.9 8.8 4.7 Vanguard Target Retirement Income (VTINX)-1.0 (65)5.3 (46)5.3 (46)3.5 (8)4.9 (28)4.9 (10) Vanguard Target Income Composite Index (Net)-0.9 (57)5.4 (40)5.4 (40)3.7 (2)5.1 (25)4.9 (8) IM Mixed-Asset Target Today -0.9 5.2 5.2 2.6 4.4 3.8 Vanguard Target Retirement 2010 (VTENX)-1.0 (94)5.2 (79)5.2 (79)3.6 (17)6.0 (53)4.6 (6) Vanguard Target 2010 Composite Index (Net)-0.9 (86)5.4 (70)5.4 (70)3.8 (8)6.2 (42)4.7 (4) IM Mixed-Asset Target 2010 (MF) Median -0.4 6.0 6.0 3.1 6.0 3.6 Vanguard Target Retirement 2015 (VTXVX)-0.6 (74)6.2 (58)6.2 (58)4.0 (13)7.2 (33)4.9 (6) Vanguard Target 2015 Composite Index (Net)-0.3 (64)6.4 (48)6.4 (48)4.3 (2)7.4 (21)4.9 (5) IM Mixed-Asset Target 2015 (MF) Median -0.2 6.4 6.4 3.3 6.7 4.2 Vanguard Target Retirement 2020 (VTWNX)-0.2 (46)6.9 (30)6.9 (30)4.4 (2)8.2 (11)5.0 (2) Vanguard Target 2020 Composite Index (Net)0.0 (36)7.2 (24)7.2 (24)4.7 (1)8.4 (6)5.1 (1) IM Mixed-Asset Target 2020 (MF) Median -0.2 6.3 6.3 3.1 6.5 3.7 Vanguard Target Retirement 2025 (VTTVX)0.1 (44)7.5 (26)7.5 (26)4.5 (3)8.9 (21)5.0 (8) Vanguard Target 2025 Composite Index (Net)0.3 (34)7.7 (19)7.7 (19)4.8 (1)9.1 (15)5.1 (5) IM Mixed-Asset Target 2025 (MF) Median 0.0 6.9 6.9 3.5 7.7 4.1 Vanguard Target Retirement 2030 (VTHRX)0.4 (46)7.9 (34)7.9 (34)4.6 (5)9.5 (19)5.0 (11) Vanguard Target 2030 Composite Index (Net)0.7 (33)8.1 (27)8.1 (27)4.9 (2)9.8 (10)5.1 (6) IM Mixed-Asset Target 2030 (MF) Median 0.3 7.3 7.3 3.6 8.3 3.9 Vanguard Target Retirement 2035 (VTTHX)0.8 (51)8.3 (36)8.3 (36)4.7 (9)10.2 (18)5.1 (11) Vanguard Target 2035 Composite Index (Net)1.0 (39)8.6 (26)8.6 (26)4.9 (2)10.4 (10)5.2 (6) IM Mixed-Asset Target 2035 (MF) Median 0.8 7.8 7.8 3.8 9.0 4.3 Vanguard Target Retirement 2040 (VFORX)1.1 (47)8.7 (29)8.7 (29)4.7 (16)10.5 (16)5.3 (8) Vanguard Target 2040 Composite Index (Net)1.4 (31)9.0 (23)9.0 (23)5.0 (5)10.8 (7)5.4 (5) IM Mixed-Asset Target 2040 (MF) Median 1.0 8.0 8.0 3.9 9.3 4.0 _________________________ Returns are expressed as percentages. Returns for periods greater than one year are annualized. Peer group percentile ranks are shown in parenthesis. 15 Performance Summary Investment Options As of December 31, 2016 Quarter Year To Date 1 Year 3 Years 5 Years 10 Years Equity/Fixed Income Blend Options (cont.) Vanguard Target Retirement 2045 (VTIVX)1.2 (49)8.9 (30)8.9 (30)4.7 (15)10.5 (20)5.3 (12) Vanguard Target 2045 Composite Index (Net)1.5 (33)9.1 (23)9.1 (23)5.1 (3)10.8 (10)5.4 (8) IM Mixed-Asset Target 2045 (MF) Median 1.2 8.2 8.2 4.1 9.8 4.3 Vanguard Target Retirement 2050 (VFIFX)1.2 (47)8.9 (32)8.9 (32)4.7 (20)10.5 (19)5.3 (10) Vanguard Target 2050 Composite Index (Net)1.5 (36)9.1 (27)9.1 (27)5.1 (8)10.8 (10)5.4 (4) IM Mixed-Asset Target 2050 (MF) Median 1.1 8.2 8.2 4.1 9.7 3.9 Vanguard Target Retirement 2055 (VFFVX)1.3 (52)8.9 (28)8.9 (28)4.7 (17)10.5 (31)N/A Vanguard Target 2055 Composite Index (Net)1.5 (42)9.1 (25)9.1 (25)5.1 (5)10.8 (17)N/A IM Mixed-Asset Target 2055+ (MF) Median 1.3 8.2 8.2 4.0 10.1 N/A Vanguard Target Retirement 2060 (VTTSX)1.3 (53)8.8 (28)8.8 (28)4.7 (18)N/A N/A Vanguard Target 2060 Composite Index (Net)1.5 (42)9.1 (25)9.1 (25)5.1 (5)10.8 (17)N/A IM Mixed-Asset Target 2055+ (MF) Median 1.3 8.2 8.2 4.0 10.1 N/A Money Market Option Vanguard Prime Money Market (VMMXX)0.2 0.5 0.5 0.2 0.1 0.9 BofA Merrill Lynch 3 Month U.S. T-Bill 0.1 0.3 0.3 0.1 0.1 0.8 _________________________ Returns are expressed as percentages. Returns for periods greater than one year are annualized. Peer group percentile ranks are shown in parenthesis. 16 Pe rformance Summary Manager Compliance Checklist As of December 31, 2016 Ma na gers Vanguard S&P 500 Inde x (V FINX) Va nguard US Grow th (VWUSX) Va nguard Windsor II (V WNFX) Vangua rd Mid-Ca p Index (V IMSX) Va nguard Small-Ca p Inde x (NAES X) Vangua rd Interna tiona l Grow th (V WIGX) Vangua rd Total Bond Marke t Inde x (VBMFX) Vangua rd Re ti re ment Trust Organi zati onal /Produ ct Is sues No ma teria l c hanges to investment team +++++-++ No ma teria l o rg aniza tional changes ++++++++ Accounting or regulatory concerns ++++++++ Cu rrently in adherence to guidelin es ++++++++ Po rt fo lio characteris tics me et stylis tic expectations ++++++++ Re lati ve Perfor mance 1 Three-year return better than benchmark N/A --N/A N/A +N/A + Three-year rankin g better than peer group median ++++++-N/A Fiv e year re turn better than benchmark N/A --N/A N/A +N/A +Fiv e year re turn better than benchmark N/A --N/A N/A +N/A + Fiv e year ra nkin g better than peer group median ++-+++-N/A Perfor manc e s tatus ++++++++ Summar y s tatus ++++++++ 1 Manager performance is evaluated net of investment management fees. 17 Pe rformance Summary Manager Compliance Checklist (Continued) As of December 31, 2016 Mana ge rs Vangua rd Ba lance d Index (VBI NX ) Vangua rd Ta rge t Re tire ment Incom e Fund (V TINX) Vangua rd Ta rge t Re ti re ment 2010 (VTENX ) Vangua rd Target Re ti rement 2015 (V TXVX) Vangua rd Targe t Re tire ment 2020 (V TWNX) Vanguard Ta rge t Re tire me nt 2025 (V TTVX) Vanguard Ta rge t Re ti re ment 2030 (VTHRX) Vangua rd Targe t Re tire ment 2035 (VTTHX) Organizati onal /Produ ct Is sues No ma teria l c hanges to investment team ++++++++ No ma teria l o rg aniza tional changes ++++++++ Accounting or regulatory concerns ++++++++ Cu rrently in adherence to guidelin es ++++++++ Portfo lio characteris tics me et stylis tic expectations ++++++++ Relati ve Perfor mance 1 Thre e-year return better than benchmark N/A N/A N/A N/A N/A N/A N/A N/A Thre e-year rankin g better than peer group median ++++++++ Five year re turn better than benchmark N/A N/A N/A N/A N/A N/A N/A N/A Five year ra nkin g better than peer group median ++In-Line +++++ 1 Manager performance is evaluated net of investment management fees. Five year ra nkin g better than peer group median ++In-Line +++++ Performance s tatus ++++++++ Summar y s tatus ++++++++ 18 Pe rformance Summary Manager Compliance Checklist (Continued) As of December 31, 2016 Mana gers Vanguard Ta rge t Re ti re ment 2040 (V FORX) Vangua rd Ta rget Re ti re ment 2045 (V TIVX) Va ngua rd Targe t Re ti re ment 2050 (V FIFX) Vangua rd Targe t Re ti re ment 2055 (V FFVX) Vangua rd Ta rget Re ti re ment 2060 (V TTSX) Vangua rd Prime Mone y Marke t Fund (V MMXX) Organizational /Produ ct Is sues No ma teria l c hanges to investment team ++++++ No ma teria l o rg aniza tional changes ++++++ Accounting or regulatory concerns ++++++ Cu rre ntly in adherence to guidelin es ++++++ Po rt fo lio characteris tics me et stylis tic expectations ++++++ Re lati ve Performanc e 1 Thre e-year re turn better than benchmark N/A N/A N/A N/A N/A N/A Thre e-year ra nkin g better than peer group median +++++N/A Fiv e year return better than benchmark N/A N/A N/A N/A N/A N/A 1 Manager performance is evaluated net of investment management fees. Fiv e year return better than benchmark N/A N/A N/A N/A N/A N/A Fiv e year rankin g better than peer group median ++++N/A N/A Performance status ++++++ Summary status ++++++ 19 Manager Compliance Checklist Fourth Quarter 2016 Manager Compliance Issue Explanation Recommended Ac tion Comments Vanguard International Growth Investment Team Changes On July 15, 2016, Vanguard announced that M&G Investment Management will no longer serve as an advisor to the Vanguard International Growth Fund. Hold The assets formerly managed by M&G were reallocated to the two remaining sub-advisors: Baillie Gifford (60%) and Schroder (40%).In June 2016, Charles Anniss, who was the appointed fund manager of the International Growth mandate managed on behalf of Vanguard, decided to leave M&G after 16 years to pursue another career opportunity.Vanguard funds’ boards of trustees determined that it was in their clients’ best interest to remove M&G as an advisor for the Vanguard International Growth Fund. Pavilion believes that the removal of M&G as a subadvisor was a good decision and recommends clients maintain their allocations to the Fund. 20 Plan Assets 21 Plan Summary Defined Contribution Plan Assets As of December 31, 2016 Investm ent Opti ons Investm ent Styl e Al loca ti on Pe rce nta ge Domestic Equity Funds Vangu ard 500 Index Inv US Large Cap Equit y -Core $ 230,755 4.7%$ 20,994 + 10.0% Vangu ard Windsor II Inv US Large Cap Equit y -Value $ 82,833 1.7%$ (3,244)- 3.8% Vangu ard US G rowth Inv US Large Cap Equit y -Growth $ 91,471 1.9%$ (6,099)- 6.3% Vangu ard M id Cap Index Inv US Mid Cap Equit y -Core $ 144,374 2.9%$ (18,736)- 11.5% Vangu ard Small Cap Index I nv US Small Cap Equit y -Core $ 127,011 2.6%$ (35,398)- 21.8% $ 676,444 13.7%$ (42,483)- 5.9% International Equ ity Funds Vangu ard Int ernat ional Growt h Int ernat ional Equit y $ 86,267 1.7%$ (4,420)- 4.9% $ 86,267 1.7%$ (4,420)- 4.9% Fixe d I ncome/Alternative Fu nds Vangu ard T ot al Bond M arket Index I nv Market Duration $ 122,752 2.5%$ 61,879 +101.7% Vangu ard Retirement Savings Trust Sh ort Durat ion $ 118,733 2.4%$ 32,509 + 37.7% Vangu ard Balanced Index Inv Balanced $ 107,415 2.2%$ 5,937 + 5.9% $ Ch ange From Previous Qtr % C hange From Previous Qtr $ 348,900 7.1%$ 100,326 + 40.4% Cash Vangu ard Prime M oney Market Cash $ 29,542 0.6%$ (45,932)- 60.9% $ 29,542 0.6%$ (45,932)- 60.9% Ta rge t Date Funds Vangu ard T arget Ret irement Income Inv Blend $ 24,406 0.5%$ (22,655)- 48.1% Vangu ard T arget Ret irement 2010 Inv Blend $ 2,214 0.0%$ 156 + 7.6% Vangu ard T arget Ret irement 2015 Inv Blend $ 5,078 0.1%$ 249 + 5.2% Vangu ard T arget Ret irement 2020 Inv Blend $ 69,586 1.4%$ 6,179 + 9.7% Vangu ard T arget Ret irement 2025 Inv Blend $ 355,033 7.2%$ 24,621 + 7.5% Vangu ard T arget Ret irement 2030 Inv Blend $ 205,940 4.2%$ 21,576 + 11.7% Vangu ard T arget Ret irement 2035 Inv Blend $ 517,876 10.5%$ 44,396 + 9.4% Vangu ard T arget Ret irement 2040 Inv Blend $ 589,016 11.9%$ 52,037 + 9.7% Vangu ard T arget Ret irement 2045 Inv Blend $ 1,042,505 21.1%$ 82,586 + 8.6% Vangu ard T arget Ret irement 2050 Inv Blend $ 577,742 11.7%$ 80,191 + 16.1% Vangu ard T arget Ret irement 2055 Inv Blend $ 327,043 6.6%$ 35,041 + 12.0% Vangu ard T arget Ret irement 2060 Inv Blend $ 81,298 1.6%$ 16,222 + 24.9% 3,797,735$ 76.9%340,600$ + 9.9% TO TA L $ 4,938,888 100.0%$ 348,090 + 7.6% 22 Plan Summary Fee Comparison Summary As of December 31, 2016 Inv estment Option Expense Ratio Morningstar Category Av erage Fee Level Comparison Group Median eVestment Al liance Universe Median Category Fee Level Comp arison Group eVestment Alliance Univ erse Va nguard 500 In dex 0.16 1.05 0.90 0.16 La rg e Ble nd La rg e Cap No Lo ad US Pas sive La rg e Cap Eq uity Va nguard US Gro wt h 0.46 1.18 0.90 0.81 La rg e Gro wt h La rg e Cap No Lo ad US Large Cap Gr owth Va nguard Windsor 0.33 1.10 0.90 0.77 La rg e Value La rg e Cap No Lo ad US Large Cap Value Va nguard Mid-Ca p Index 0.20 1.14 1.06 0.20 Mid Ble nd Mid Cap No Lo ad US Pa ssive Mid Cap Eq uity Va nguard Small-Ca p Index 0.20 1.24 1.19 0.20 Small Ble nd Small Ca p No Load US Pa ssive Small Ca p Equity Va nguard In ternational Gr owth 0.46 1.24 1.04 1.06 Fo re ig n Large Gro wth Foreig n Large Ca p No Load ACWI ex-US Gro wt h Equity Va nguard Total Bo nd Marke t Index 0.16 0.82 0.66 0.49 In terme diate-Term B ond In terme diate-Term B ond No Load US Core Fixed In come Va nguard Re tiremen t Saving Tru st 0.53 N/A N/A 0.32 N/A N/A US St able Va lu e Fixed In come Va nguard Ba la nced Index 0.22 0.92 0.89 0.77 Moderate Allo cation Moderate Allo cation No Load US Ba la nced Va nguard Target Retireme nt Income1 0.13 0.38 0.65 0.38 Re tiremen t Income Re tiremen t Income No Load Life cycle/Target Date Income Va nguard Target Retireme nt 20101 0.13 0.34 0.59 0.44 Target Date 2000-2010 Target Retirement 2000-2010 No Lo ad Lif ecycle/Target Date 2010 Va nguard Target Retireme nt 2015 0.14 0.36 0.75 0.53 Target Date 2011-2015 Target Retirement 2011-2015 No Lo ad Lif ecycle/Target Date 2015 Va nguard Target Retireme nt 2020 0.14 0.39 0.75 0.55 Target Date 2016-2020 Target Retirement 2016-2020 No Lo ad Lif ecycle/Target Date 2020 Va nguard Target Retireme nt 20251 0.14 0.38 0.75 0.57 Target Date 2021-2025 Target Retirement 2021-2025 No Lo ad Lif ecycle/Target Date 2025VanguardTarget Retireme nt 20251 0.14 0.38 0.75 0.57 Target Date 2021-2025 Target Retirement 2021-2025 No Lo ad Lif ecycle/Target Date 2025 Va nguard Target Retireme nt 2030 0.15 0.39 0.77 0.58 Target Date 2026-2030 Target Retirement 2026-2030 No Lo ad Lif ecycle/Target Date 2030 Va nguard Target Retireme nt 2035 0.15 0.39 0.80 0.59 Target Date 2031-2035 Target Retirement 3031-2035 No Lo ad Lif ecycle/Target Date 2035 Va nguard Target Retireme nt 2040 0.16 0.39 0.79 0.59 Target Date 2036-2040 Target Retirement 2036-2040 No Lo ad Lif ecycle/Target Date 2040 Va nguard Target Retireme nt 2045 0.16 0.40 0.79 0.59 Target Date 2041-2045 Target Retirement 2041-2045 No Lo ad Lif ecycle/Target Date 2045 Va nguard Target Retireme nt 2050 0.16 0.40 0.80 0.60 Target Date 2046-2050 Target Retirement 2046-2050 No Lo ad Lif ecycle/Target Date 2050 Va nguard Target Retireme nt 2055 0.16 0.38 0.77 0.53 Target Date 2051+Target Retireme nt 2051+ No Lo ad Lif ecycle/Target Date 2055 Va nguard Target Retireme nt 2060 0.16 0.37 0.77 0.39 Target Date 2051+Target Retireme nt 2051+ No Lo ad Lif ecycle/Target Date 2060 Va nguard Prime Money Marke t 0.10 0.31 N/A 0.20 Money Marke t Taxable N/A US Cash Management Pa vilio n Consulting Fee ($24,727 p er year) 1 Effective 1/27/17, Vanguard has reduced fees by 1 bps . Fees are updated to reflect this change. 23 Manager Evaluation 24 Historical Performance Three Year Rolling Percentile Ranking Relative Performance Historical Statistics - Monthly Periodicity (Jan-2012 - Dec-2016) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Vanguard 500 Index Fund (VFINX)3.8 11.8 11.8 8.7 14.5 6.8 1.2 13.5 32.2 15.8 2.0 14.9 26.5 -37.0 5.4 15.6 S&P 500 3.8 12.0 12.0 8.9 14.7 6.9 1.4 13.7 32.4 16.0 2.1 15.1 26.5 -37.0 5.5 15.8 IM U.S. Large Cap Equity 3.2 9.2 9.2 6.8 13.3 6.2 0.3 10.9 32.5 15.3 -1.4 13.4 28.2 -37.9 7.0 13.0 Vanguard 500 Index Fund (VFINX) Rank 43 32 32 8 20 33 43 14 55 43 19 35 59 41 60 30 Vanguard 500 Index Fund (VFINX)S&P 500 0 25 50 75 100Return Percentile Rank3/07 3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 12/16 Cumulative Annualized Over/Under Relative Performance Over/Under Performance 0.0 0.1 0.2 -0.1 -0.2 -0.3Return (%)3/07 3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 12/16 Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard 500 Index Fund (VFINX)14.5 10.3 14.0 -0.1 1.0 1.4 0.0 -10.2 5.6 1.7 40y 4m S&P 500 14.7 10.3 14.2 0.0 1.0 1.4 0.0 N/A 5.6 0.0 40y 4m 90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 10.3 -1.4 0.0 31.7 40y 4m Manager Evaluation Vanguard 500 Index Fund (VFINX) vs. S&P 500 As of December 31, 2016 25 Portfolio Characteristics Portfolio Benchmark Wtd. Avg. Mkt. Cap ($M)148,478 199,126 Median Mkt. Cap ($M)18,956 25,423 Price/Earnings ratio 20.5 20.5 Price/Book ratio 3.1 3.1 5 Yr. EPS Growth Rate (%)10.1 9.7 Current Yield (%)2.1 2.1 Debt to Equity 1.0 1.0 Number of Stocks 508 505 Beta (5 Years, Monthly)1.00 1.00 Consistency (5 Years, Monthly)1.67 1.00 Sharpe Ratio (5 Years, Monthly)1.37 1.38 Information Ratio (5 Years, Monthly)-10.19 - Up Market Capture (5 Years, Monthly)99.53 - Down Market Capture (5 Years, Monthly)100.47 - Top Ten Equity Holdings Portfolio Weight (%) Benchmark Weight (%) Active Weight (%) Quarterly Return (%) Apple Inc 3.2 3.2 0.0 3.0 Microsoft Corp 2.5 2.5 0.0 8.6 Exxon Mobil Corp 1.9 1.9 0.0 4.3 Johnson & Johnson 1.6 1.6 0.0 -1.8 JPMorgan Chase & Co 1.6 1.6 0.0 30.5 Amazon.com Inc 1.5 1.5 0.0 -10.4 Berkshire Hathaway Inc 1.5 1.6 -0.1 12.8 General Electric Co 1.5 1.5 0.0 7.5 Facebook Inc 1.4 1.4 0.0 -10.3 AT&T Inc 1.4 1.4 0.0 6.0 % of Portfolio 18.1 18.2 Distribution of Market Capitalization (%) Vanguard 500 Index Fund (VFINX)S&P 500 0.0 15.0 30.0 45.0 60.0 >$75 Bil $20 Bil - $75 Bil $5 Bil - $20 Bil $0 - $5 Bil 51.9 33.6 14.2 0.2 51.9 33.6 14.2 0.2 Sector Weights (%) Vanguard 500 Index Fund (VFINX)S&P 500 0.0 5.0 10.0 15.0 20.0 25.0 Other Utilities Telecommunication Services Real Estate Materials Information Technology Industrials Health Care Financials Energy Consumer Staples Consumer Discretionary 0.0 3.2 2.7 2.9 2.8 20.8 10.3 13.6 14.8 7.6 9.4 12.0 0.0 3.2 2.7 2.9 2.8 20.8 10.3 13.6 14.8 7.6 9.4 12.0 Manager Evaluation Vanguard 500 Index Fund (VFINX) vs. S&P 500 As of December 31, 2016 26 Historical Performance Buy and Hold Attribution Risk and Return (Jan - 2012 - Dec - 2016)Three Year Rolling Percentile Ranking Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Vanguard Windsor II (VWNFX)5.7 13.4 13.4 6.9 13.2 5.7 -3.2 11.2 30.7 16.7 2.7 10.6 27.1 -36.7 2.2 18.2 Russell 1000 Value Index 6.7 17.3 17.3 8.6 14.8 5.7 -3.8 13.5 32.5 17.5 0.4 15.5 19.7 -36.8 -0.2 22.2 IM U.S. Large Cap Value Equity 6.8 14.0 14.0 6.8 13.5 5.1 -3.8 10.8 32.5 15.5 -2.5 12.7 24.0 -36.9 1.7 18.0 Vanguard Windsor II (VWNFX) Rank 82 61 61 49 60 35 37 40 79 33 11 82 28 48 45 48 Vanguard Windsor II (VWNFX)Russell 1000 Value Index 0 25 50 75 100Return Percentile Rank3/07 3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 12/16 10.0 12.0 14.0 16.0 18.0 Return (%)8.7 8.8 8.9 9.0 9.1 9.2 9.3 9.4 9.5 Risk (Standard Deviation %) Russell 1000 Value Index Vanguard Windsor II (VWNFX) 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 -5.4 -1.0 -5.0 0.7 -0.8 3.9 -1.3 9.2 -2.2 -2.8 -0.1 5.0 Allocation (Total: -1.0) 0.0 0.9 1.8-0.9-1.8 0.3 0.0 0.5 0.0 0.0 -0.2 0.0 -1.1 -0.3 0.0 0.0 -0.2 Stock (Total: 0.6) 0.0 0.8 1.6-0.8-1.6 0.0 -0.1 0.0 0.0 -0.1 0.0 -0.1 0.4 0.9 0.2 -0.2 -0.4 Vanguard Windsor II (VWNFX) 0.0 0.5 1.0 1.5-0.5-1.0-1.5 0.4 -0.1 0.5 0.0 -0.1 -0.2 -0.1 -0.7 0.6 0.2 -0.2 -0.6 Manager Evaluation Vanguard Windsor II (VWNFX) vs. Russell 1000 Value Index As of December 31, 2016 Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading. 27 Portfolio Characteristics Portfolio Benchmark Wtd. Avg. Mkt. Cap ($M)121,430 120,671 Median Mkt. Cap ($M)20,869 8,372 Price/Earnings ratio 17.9 18.4 Price/Book ratio 2.4 2.1 5 Yr. EPS Growth Rate (%)8.7 6.3 Current Yield (%)2.4 2.5 Debt to Equity 1.6 0.8 Number of Stocks 278 696 Beta (5 Years, Monthly)0.99 1.00 Consistency (5 Years, Monthly)41.67 1.00 Sharpe Ratio (5 Years, Monthly)1.23 1.36 Information Ratio (5 Years, Monthly)-0.71 - Up Market Capture (5 Years, Monthly)95.79 - Down Market Capture (5 Years, Monthly)104.50 - Top Ten Equity Holdings Portfolio Weight (%) Benchmark Weight (%) Active Weight (%) Quarterly Return (%) Bank of America Corp 3.6 2.1 1.5 41.7 Microsoft Corp 3.4 0.0 3.4 8.6 JPMorgan Chase & Co 2.9 2.9 0.0 30.5 Pfizer Inc 2.5 1.6 0.9 -3.1 PNC Financial Services Group Inc.2.5 0.5 2.0 30.6 Wells Fargo & Co 2.3 2.3 0.0 25.5 Citigroup Inc 2.3 1.6 0.7 26.2 United Technologies Corp 2.2 0.8 1.4 8.6 Sanofi 2.0 0.0 2.0 5.9 Philip Morris International Inc 2.0 1.1 0.9 -4.8 % of Portfolio 25.7 12.9 Distribution of Market Capitalization (%) Vanguard Windsor II (VWNFX)Russell 1000 Value Index 0.0 15.0 30.0 45.0 60.0 >$75 Bil $20 Bil - $75 Bil $5 Bil - $20 Bil $0 - $5 Bil Cash 45.0 30.8 19.9 4.3 0.0 48.9 37.9 9.8 1.4 2.0 Sector Weights (%) Vanguard Windsor II (VWNFX)Russell 1000 Value Index 0.0 6.0 12.0 18.0 24.0 30.0 36.0 Other Cash Utilities Telecommunication Services Real Estate Materials Information Technology Industrials Health Care Financials Energy Consumer Staples Consumer Discretionary 0.6 2.0 1.0 2.8 0.2 1.9 13.0 10.0 18.5 24.4 10.8 7.6 7.2 0.0 0.0 6.0 3.9 4.6 2.8 9.4 10.0 10.2 26.8 13.6 8.0 4.5 Manager Evaluation Vanguard Windsor II (VWNFX) vs. Russell 1000 Value Index As of December 31, 2016 28 Historical Performance Buy and Hold Attribution Risk and Return (Jan - 2012 - Dec - 2016)Three Year Rolling Percentile Ranking Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Vanguard US Growth (VWUSX)-3.3 -0.7 -0.7 6.8 14.3 7.2 8.5 13.1 35.5 18.4 -0.7 11.5 35.0 -37.8 10.1 1.8 Russell 1000 Growth Index 1.0 7.1 7.1 8.6 14.5 8.3 5.7 13.1 33.5 15.3 2.6 16.7 37.2 -38.4 11.8 9.1 IM U.S. Large Cap Growth Equity -1.2 2.0 2.0 6.1 12.9 7.2 5.6 10.5 33.9 14.9 -1.8 15.1 35.1 -39.9 13.8 6.6 Vanguard US Growth (VWUSX) Rank 84 76 76 36 24 51 20 22 35 18 36 80 52 30 77 85 Vanguard US Growth (VWUSX)Russell 1000 Growth Index 0 25 50 75 100Return Percentile Rank3/07 3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 12/16 14.0 14.2 14.4 14.6 14.8 Return (%)7.7 8.4 9.1 9.8 10.5 11.2 11.9 12.6 13.3 Risk (Standard Deviation %) Russell 1000 Growth Index Vanguard US Growth (VWUSX) 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 -0.1 -0.9 0.7 0.0 -2.2 7.1 -3.3 0.9 2.8 -0.3 -4.3 -0.4 Allocation (Total: -0.1) 0.0 0.2 0.4-0.2-0.4-0.6 0.0 0.0 0.0 0.0 0.0 0.0 -0.2 0.0 0.2 0.0 0.1 0.0 Stock (Total: -4.4) 0.0 1.0-1.0-2.0-3.0 0.0 0.0 0.0 0.0 0.0 -1.8 -0.8 -0.4 -0.2 0.0 -0.1 -1.1 Vanguard US Growth (VWUSX) 0.0 0.8-0.8-1.6-2.4-3.2 0.0 -0.1 0.0 0.0 0.0 -1.8 -1.0 -0.4 -0.1 0.0 -0.1 -1.1 Manager Evaluation Vanguard US Growth (VWUSX) vs. Russell 1000 Growth Index As of December 31, 2016 Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading. 29 Portfolio Characteristics Portfolio Benchmark Wtd. Avg. Mkt. Cap ($M)124,763 148,016 Median Mkt. Cap ($M)22,966 8,951 Price/Earnings ratio 28.7 23.2 Price/Book ratio 5.0 5.4 5 Yr. EPS Growth Rate (%)14.1 13.4 Current Yield (%)1.0 1.6 Debt to Equity 0.7 1.1 Number of Stocks 152 606 Beta (5 Years, Monthly)1.07 1.00 Consistency (5 Years, Monthly)56.67 1.00 Sharpe Ratio (5 Years, Monthly)1.17 1.31 Information Ratio (5 Years, Monthly)0.00 - Up Market Capture (5 Years, Monthly)104.66 - Down Market Capture (5 Years, Monthly)112.07 - Top Ten Equity Holdings Portfolio Weight (%) Benchmark Weight (%) Active Weight (%) Quarterly Return (%) Microsoft Corp 4.0 4.5 -0.5 8.6 Google Inc (Class C)4.0 2.2 1.8 -0.7 Facebook Inc 3.9 2.5 1.4 -10.3 Mastercard Inc 3.5 0.9 2.6 1.6 Visa Inc 3.2 1.4 1.8 -5.5 Amazon.com Inc 3.2 2.8 0.4 -10.4 PayPal Holdings Inc 2.6 0.4 2.2 -3.7 Celgene Corp 2.6 0.8 1.8 10.7 Alphabet Inc 2.4 2.2 0.2 -1.4 Allergan PLC 2.3 0.4 1.9 -8.8 % of Portfolio 31.7 18.1 Distribution of Market Capitalization (%) Vanguard US Growth (VWUSX)Russell 1000 Growth Index 0.0 15.0 30.0 45.0 60.0 >$75 Bil $20 Bil - $75 Bil $5 Bil - $20 Bil $0 - $5 Bil Cash 48.3 29.9 19.0 2.8 0.0 41.3 32.0 25.5 1.1 0.0 Sector Weights (%) Vanguard US Growth (VWUSX)Russell 1000 Growth Index 0.0 10.0 20.0 30.0 40.0 50.0 Other Cash Utilities Telecommunication Services Real Estate Materials Information Technology Industrials Health Care Financials Energy Consumer Staples Consumer Discretionary 0.0 0.0 0.0 0.3 3.6 0.9 40.1 8.4 16.3 6.5 0.4 4.7 18.8 0.0 0.0 0.0 1.3 2.7 3.6 31.4 11.1 16.1 2.9 0.6 9.5 20.8 Manager Evaluation Vanguard US Growth (VWUSX) vs. Russell 1000 Growth Index As of December 31, 2016 30 Historical Performance Three Year Rolling Percentile Ranking Relative Performance Historical Statistics - Monthly Periodicity (Jan-2012 - Dec-2016) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Vanguard Mid-Cap Index Fund (VIMSX)2.1 11.1 11.1 7.5 14.2 7.5 -1.5 13.6 35.0 15.8 -2.1 25.5 40.2 -41.8 6.0 13.6 Vanguard Mid-Cap Index Fund Blended Benchmark 2.1 11.2 11.2 7.7 14.5 7.7 -1.3 13.8 35.4 16.0 -1.9 25.7 40.5 -41.8 6.2 13.7 IM U.S. Mid Cap Equity 3.8 11.7 11.7 5.5 13.0 6.7 -2.7 8.3 35.1 15.1 -3.9 23.6 36.3 -41.7 10.0 11.0 Vanguard Mid-Cap Index Fund (VIMSX) Rank 65 55 55 24 27 28 37 9 52 42 34 34 34 53 67 32 Vanguard Mid-Cap Index Fund (VIMSX) Vanguard Mid-Cap Index Fund Blended Benchmark 0 25 50 75 100Return Percentile Rank3/07 3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 12/16 Cumulative Annualized Over/Under Relative Performance Over/Under Performance 0.0 0.2 -0.2 -0.4Return (%)3/07 3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 12/16 Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Mid-Cap Index Fund (VIMSX)14.2 11.4 13.9 -0.2 1.0 1.2 0.1 -3.4 6.4 13.3 18y 7m Vanguard Mid-Cap Index Fund Blended Benchmark 14.5 11.4 14.1 0.0 1.0 1.2 0.0 N/A 6.4 0.0 18y 7m 90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 11.4 -1.2 0.0 31.7 18y 7m Manager Evaluation Vanguard Mid-Cap Index Fund (VIMSX) vs. Vanguard Mid-Cap Index Fund Blended Benchmark As of December 31, 2016 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. 31 Portfolio Characteristics Portfolio Benchmark Wtd. Avg. Mkt. Cap ($M)12,582 12,584 Median Mkt. Cap ($M)9,854 9,896 Price/Earnings ratio 22.4 22.4 Price/Book ratio 2.8 2.8 5 Yr. EPS Growth Rate (%)10.6 10.6 Current Yield (%)1.6 1.6 Debt to Equity 0.8 0.8 Number of Stocks 343 340 Beta (5 Years, Monthly)1.00 1.00 Consistency (5 Years, Monthly)21.67 1.00 Sharpe Ratio (5 Years, Monthly)1.23 1.26 Information Ratio (5 Years, Monthly)-1.05 - Up Market Capture (5 Years, Monthly)99.10 - Down Market Capture (5 Years, Monthly)100.89 - Top Ten Equity Holdings Portfolio Weight (%) Benchmark Weight (%) Active Weight (%) Quarterly Return (%) Equinix Inc 0.8 0.8 0.0 -0.3 Fiserv Inc.0.7 0.7 0.0 6.8 Electronic Arts Inc.0.7 0.7 0.0 -7.8 M&T Bank Corp 0.7 0.7 0.0 35.4 Newell Brands Inc 0.7 0.7 0.0 -14.9 Amphenol Corp 0.6 0.6 0.0 3.8 Edwards Lifesciences Corp 0.6 0.6 0.0 -22.3 KeyCorp 0.6 0.6 0.0 50.9 Western Digital Corp 0.6 0.6 0.0 17.1 Concho Resources Inc 0.6 0.6 0.0 -3.5 % of Portfolio 6.6 6.6 Distribution of Market Capitalization (%) Vanguard Mid-Cap Index Fund (VIMSX) CRSP U.S. Mid Cap TR Index 0.0 50.0 100.0 150.0 $20 Bil - $75 Bil $5 Bil - $20 Bil $0 - $5 Bil 7.6 91.0 1.37.6 91.0 1.3 Sector Weights (%) Vanguard Mid-Cap Index Fund (VIMSX) CRSP U.S. Mid 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 5.1 1.1 7.1 6.3 16.8 12.6 8.9 14.0 5.4 5.5 17.3 5.1 1.1 7.1 6.3 16.8 12.6 8.9 14.0 5.4 5.5 17.3 Manager Evaluation Vanguard Mid-Cap Index Fund (VIMSX) vs. CRSP U.S. Mid Cap TR Index As of December 31, 2016 32 Historical Performance Three Year Rolling Percentile Ranking Relative Performance Historical Statistics - Monthly Periodicity (Jan-2012 - Dec-2016) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Vanguard Small-Cap Index Fund (NAESX)6.1 18.2 18.2 6.9 14.7 8.0 -3.8 7.4 37.6 18.0 -2.8 27.7 36.1 -36.1 1.2 15.6 Vanguard Small-Cap Index Fund Blended Benchmark 6.1 18.3 18.3 7.0 14.8 8.1 -3.7 7.5 37.8 18.2 -2.8 27.8 36.1 -36.2 1.2 15.8 IM U.S. Small Cap Equity 10.2 21.9 21.9 6.6 14.1 6.4 -5.3 3.7 38.1 14.4 -4.0 25.7 29.1 -38.5 -1.3 13.0 Vanguard Small-Cap Index Fund (NAESX) Rank 85 77 77 45 37 17 33 9 54 17 39 30 29 40 40 35 Vanguard Small-Cap Index Fund (NAESX) Vanguard Small-Cap Index Fund Blended Benchmark 0 25 50 75 100Return Percentile Rank3/07 3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 12/16 Cumulative Annualized Over/Under Relative Performance Over/Under Performance 0.0 0.1 0.2 -0.1 -0.2 -0.3Return (%)3/07 3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 12/16 Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Small-Cap Index Fund (NAESX)14.7 12.9 14.5 -0.1 1.0 1.1 0.1 -2.3 7.5 20.0 48y 11m Vanguard Small-Cap Index Fund Blended Benchmark 14.8 12.9 14.6 0.0 1.0 1.1 0.0 N/A 7.5 0.0 48y 11m 90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 12.9 -1.1 0.0 33.3 48y 11m Manager Evaluation Vanguard Small-Cap Index Fund (NAESX) vs. Vanguard Small-Cap Index Fund Blended Benchmark As of December 31, 2016 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. 33 Portfolio Characteristics Portfolio Benchmark Wtd. Avg. Mkt. Cap ($M)3,850 3,852 Median Mkt. Cap ($M)2,057 2,057 Price/Earnings ratio 21.9 21.9 Price/Book ratio 2.5 2.5 5 Yr. EPS Growth Rate (%)11.3 11.4 Current Yield (%)1.5 1.5 Debt to Equity 1.0 1.0 Number of Stocks 1,436 1,430 Beta (5 Years, Monthly)1.00 1.00 Consistency (5 Years, Monthly)23.33 1.00 Sharpe Ratio (5 Years, Monthly)1.12 1.15 Information Ratio (5 Years, Monthly)-0.56 - Up Market Capture (5 Years, Monthly)99.50 - Down Market Capture (5 Years, Monthly)101.26 - Top Ten Equity Holdings Portfolio Weight (%) Benchmark Weight (%) Active Weight (%) Quarterly Return (%) Advanced Micro Devices Inc 0.3 0.3 0.0 64.1 SVB Financial Group 0.3 0.3 0.0 55.3 HD Supply Holdings Inc 0.3 0.3 0.0 32.9 CDW Corp 0.3 0.3 0.0 14.3 Newfield Exploration Co 0.3 0.3 0.0 -6.8 Steel Dynamics Inc 0.3 0.3 0.0 42.9 Packaging Corp Of America 0.3 0.3 0.0 5.1 Diamondback Energy Inc 0.3 0.3 0.0 4.7 Targa Resources Corp 0.3 0.3 0.0 16.5 Huntington Ingalls Industries Inc 0.3 0.3 0.0 20.5 % of Portfolio 3.0 3.0 Distribution of Market Capitalization (%) Vanguard Small-Cap Index (NAESX) CRSP U.S. Small Cap TR Index 0.0 25.0 50.0 75.0 100.0 $20 Bil - $75 Bil $5 Bil - $20 Bil $0 - $5 Bil Cash 0.0 28.3 71.7 0.00.0 28.2 71.7 0.0 Sector Weights (%) Vanguard Small-Cap Index (NAESX) CRSP U.S. Small Cap TR Index 0.0 4.0 8.0 12.0 16.0 20.0 Cash Utilities Telecommunication Services Real Estate Materials Information Technology Industrials Health Care Financials Energy Consumer Staples Consumer Discretionary 0.0 3.9 0.5 11.1 5.9 16.5 15.7 9.9 15.7 5.5 3.3 12.1 0.0 3.9 0.5 11.1 5.9 16.5 15.7 9.9 15.7 5.5 3.3 12.1 Manager Evaluation Vanguard Small-Cap Index (NAESX) vs. CRSP U.S. Small Cap TR Index As of December 31, 2016 34 Historical Performance Buy and Hold Attribution Risk and Return (Jan - 2012 - Dec - 2016)Three Year Rolling Percentile Ranking Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Vanguard Int. Growth (VWIGX)-6.7 1.7 1.7 -1.6 7.1 2.4 -0.7 -5.6 22.9 20.0 -13.7 15.7 41.6 -44.9 16.0 26.0 MSCI AC World ex USA (Net)-1.3 4.5 4.5 -1.8 5.0 1.0 -5.7 -3.9 15.3 16.8 -13.7 11.2 41.4 -45.5 16.7 26.7 IM International Equity -3.8 1.8 1.8 -2.1 5.5 1.0 -2.8 -4.5 17.3 18.6 -14.9 12.9 36.4 -46.0 13.2 26.2 Vanguard Int. Growth (VWIGX) Rank 81 51 51 41 24 25 37 62 23 36 39 36 39 44 39 52 Vanguard Int. Growth (VWIGX)MSCI AC World ex USA (Net) 0 25 50 75 100Return Percentile Rank3/07 3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 12/16 2.0 4.0 6.0 8.0 10.0 Return (%)10.4 11.2 12.0 12.8 13.6 14.4 15.2 16.0 Risk (Standard Deviation %) MSCI AC World ex USA (Net) Vanguard Int. Growth (VWIGX) Average Active Weight 0.0 15.0 30.0-15.0 Utilities Telecommunication Services Real Estate Other Materials Information Technology Industrials Health Care Financials Energy Consumer Staples Consumer Discretionary -3.4 -1.2 -3.5 0.2 -3.5 13.5 -0.9 1.6 -4.4 -5.3 -4.8 11.5 Allocation (Total: -0.7) 0.0 0.6 1.2-0.6-1.2 0.2 0.1 0.2 0.0 -0.1 -0.5 0.0 -0.1 -0.4 -0.5 0.4 0.0 Stock (Total: -4.6) 0.0 1.0-1.0-2.0-3.0 0.0 0.1 0.0 0.0 -0.3 -1.1 -0.6 -0.7 -1.5 0.0 0.0 -0.7 Vanguard Int. Growth (VWIGX) 0.0 0.9 1.8-0.9-1.8-2.7-3.6 0.2 0.2 0.2 0.0 -0.4 -1.6 -0.6 -0.8 -1.8 -0.5 0.4 -0.6 Manager Evaluation Vanguard International Growth (VWIGX) vs. MSCI AC World ex USA (Net) As of December 31, 2016 Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading. 35 Total Attribution 0.0 0.3 0.6 0.9-0.3-0.6-0.9-1.2-1.5-1.8-2.1-2.4 Pacific Other North America Middle East Europe ex EMU EMU EM Latin America EM Europe + Middle East + Africa EM Asia -1.5 0.0 -1.2 0.0 -0.4 -0.5 0.0 -0.1 -1.5 Performance Attribution Average Active Weight 0.0 6.0 12.0 18.0-6.0-12.0-18.0 Pacific Other North America Middle East Europe ex EMU EMU EM Latin America EM Europe + Middle East + Africa EM Asia -7.5 0.0 3.7 1.6 -3.2 4.4 -1.5 -3.6 6.1 Allocation (Total: -0.3) 0.0 0.2 0.4-0.2-0.4-0.6 0.0 0.0 0.2 -0.2 0.0 0.1 0.0 -0.1 -0.3 Stock (Total: -5.0) 0.0 0.6 1.2-0.6-1.2-1.8-2.4 -1.5 0.0 -1.4 0.1 -0.4 -0.6 0.0 0.0 -1.2 Manager Evaluation Vanguard International Growth (VWIGX) vs. MSCI AC World ex USA (Net) 1 Quarter Ending December 31, 2016 36 Portfolio Characteristics Portfolio Benchmark Wtd. Avg. Mkt. Cap ($M)68,340 51,613 Median Mkt. Cap ($M)20,046 6,856 Price/Earnings ratio 23.3 16.7 Price/Book ratio 3.6 2.2 5 Yr. EPS Growth Rate (%)13.2 5.3 Current Yield (%)1.6 3.0 Debt to Equity 1.1 1.9 Number of Stocks 116 1,856 Beta (5 Years, Monthly)1.04 1.00 Consistency (5 Years, Monthly)50.00 1.00 Sharpe Ratio (5 Years, Monthly)0.55 0.43 Information Ratio (5 Years, Monthly)0.58 - Up Market Capture (5 Years, Monthly)107.41 - Down Market Capture (5 Years, Monthly)96.52 - Top Ten Equity Holdings Portfolio Weight (%) Benchmark Weight (%) Active Weight (%) Quarterly Return (%) Tencent Holdings LTD 4.9 0.8 4.1 -10.9 Alibaba Group Holding Ltd 4.0 0.6 3.4 -17.0 AIA Group Ltd 3.5 0.4 3.1 -15.1 Industria De Diseno Textil Inditex SA 3.3 0.2 3.1 -6.9 Baidu Inc 3.3 0.3 3.0 -9.7 Amazon.com Inc 3.3 0.0 3.3 -10.4 ASML Holding NV 3.2 0.2 3.0 2.5 Softbank Group Corp 2.0 0.4 1.6 3.4 Svenska Handelsbanken 2.0 0.1 1.9 1.2 Zalando SE 1.9 0.0 1.9 -8.3 % of Portfolio 31.4 3.0 Distribution of Market Capitalization (%) Vanguard International Growth (VWIGX) MSCI AC World ex USA (Net) 0.0 15.0 30.0 45.0 60.0 >$75 Bil $20 Bil - $75 Bil $5 Bil - $20 Bil $0 - $5 Bil Cash 21.7 38.7 31.6 8.0 0.0 25.6 40.0 30.9 3.5 0.0 Sector Weights (%) Vanguard International Growth (VWIGX) MSCI AC World ex USA (Net) 0.0 5.0 10.0 15.0 20.0 25.0 30.0 Other Cash Utilities Telecommunication Services Real Estate Materials Information Technology Industrials Health Care Financials Energy Consumer Staples Consumer Discretionary 0.2 0.0 0.0 3.9 0.0 4.6 22.6 10.2 9.3 18.0 1.5 6.8 22.8 0.0 0.0 3.2 4.7 3.3 8.0 9.3 11.7 8.1 23.4 7.3 9.8 11.5 Manager Evaluation Vanguard International Growth (VWIGX) vs. MSCI AC World ex USA (Net) As of December 31, 2016 37 Vanguard International Growth (VWIGX) MSCI AC World ex USA (Net) Australia 0.4 5.2 Hong Kong 4.1 2.2 Japan 12.6 17.0 New Zealand 0.0 0.1 Singapore 0.0 0.9 Pacific 17.1 25.4 Austria 0.0 0.1 Belgium 0.2 0.8 Finland 0.0 0.7 France 4.8 7.2 Germany 9.9 6.5 Ireland 0.4 0.4 Italy 3.4 1.5 Netherlands 4.1 2.3 Portugal 0.3 0.1 Spain 5.2 2.2 EMU 28.4 21.7 Denmark 3.2 1.2 Norway 1.5 0.5 Sweden 5.7 2.0 Switzerland 3.1 6.1 United Kingdom 6.4 12.9 Europe ex EMU 19.9 22.6 Canada 2.1 7.1 United States 8.2 0.1 Israel 1.7 0.5 Middle East 1.7 0.5 Developed Markets 77.3 77.4 Vanguard International Growth (VWIGX) MSCI AC World ex USA (Net) Brazil 1.1 1.7 Cayman Islands 0.0 0.0 Chile 0.0 0.3 Colombia 0.0 0.1 Mexico 0.3 0.8 Peru 0.1 0.1 Virgin Islands 0.0 0.0 EM Latin America 1.5 3.0 China 14.9 5.9 India 2.0 1.9 Indonesia 0.4 0.6 Korea 2.2 3.3 Malaysia 0.0 0.6 Philippines 0.0 0.3 Taiwan 1.1 2.8 Thailand 0.5 0.5 EM Asia 21.2 15.8 Czech Republic 0.0 0.0 Egypt 0.0 0.0 Greece 0.0 0.1 Hungary 0.0 0.1 Poland 0.0 0.3 Qatar 0.0 0.2 Russia 0.0 1.0 South Africa 0.0 1.6 Turkey 0.0 0.2 United Arab Emirates 0.0 0.2 EM Europe + Middle East + Africa 0.0 3.8 Emerging Markets 22.7 22.6 Frontier Markets 0.0 0.0 Cash 0.0 0.0 Other 0.0 0.0 Total 100.0 100.0 Manager Evaluation Vanguard International Growth (VWIGX) vs. MSCI AC World ex USA (Net) As of December 31, 2016 38 Historical Performance Three Year Rolling Percentile Ranking Relative Performance Historical Statistics - Monthly Periodicity (Jan-2012 - Dec-2016) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Vanguard Total Bond Market Index Fund (VBMFX)-3.2 2.5 2.5 2.8 2.0 4.2 0.3 5.8 -2.3 4.0 7.6 6.4 5.9 5.1 6.9 4.3 Vanguard Total Bond Market Index Fund Benchmark -3.1 2.8 2.8 3.0 2.2 4.4 0.4 5.9 -2.0 4.3 7.9 6.6 5.9 5.2 7.0 4.3 IM U.S. Broad Market Core+ Fixed Income -2.4 4.2 4.2 2.9 3.1 4.9 -0.3 5.4 -1.1 8.2 6.0 8.3 14.5 -2.4 5.4 4.1 Vanguard Total Bond Market Index Fund (VBMFX) Rank 100 88 88 54 93 78 21 40 84 98 20 88 100 11 25 46 Vanguard Total Bond Market Index Fund (VBMFX) Vanguard Total Bond Market Index Fund Benchmark 0 25 50 75 100Return Percentile Rank3/07 3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 12/16 Cumulative Annualized Over/Under Relative Performance Over/Under Performance 0.0 0.3 0.6 -0.3 -0.6Return (%)3/07 3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 12/16 Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Total Bond Market Index Fund (VBMFX)2.0 3.0 2.0 -0.3 1.0 0.7 0.2 -0.8 1.9 41.7 30y Vanguard Total Bond Market Index Fund Benchmark 2.2 2.9 2.2 0.0 1.0 0.7 0.0 N/A 1.8 0.0 30y 90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 2.9 -0.7 0.0 38.3 30y Manager Evaluation Vanguard Total Bond Market Index Fund (VBMFX) vs. Vanguard Total Bond Market Index Fund Benchmark As of December 31, 2016 Note: Prior to January 1, 2010, the Vanguard Total Bond Market Index was benchmarked to the Barclays Aggregate Index. Starting on January 1, 2010, the benchmark was transitioned to the Barclays Aggregate Float Adjusted Index. 39 Portfolio Characteristics Portfolio Benchmark Effective Duration 6.0 6.0 Avg. Maturity 8.3 8.3 Avg. Quality AA AA+ Yield To Maturity (%)2.6 2.6 Credit Quality Distribution (%) Vanguard Total Bond Market Index (VBMFX) Blmbg. Barc. U.S. Aggregate Float Adjusted 0.0 25.0 50.0 75.0 100.0 AAAAAABBB67.9 5.2 12.0 14.9 68.7 4.5 11.9 14.9 Maturity Distribution (%) Vanguard Total Bond Market Index (VBMFX) Blmbg. Barc. U.S. Aggregate Float Adjusted 0.0 15.0 30.0 45.0 60.0 < 1 Yr1 < 3 Yrs3 < 5 Yrs5 < 10 Yrs10 < 20 Yrs> 20 Yrs0.0 22.8 21.1 39.2 3.9 13.0 0.8 22.4 21.2 38.8 4.0 12.8 Sector Distribution (%) Vanguard Total Bond Market Index (VBMFX) Blmbg. Barc. U.S. Aggregate Float Adjusted 0.0 15.0 30.0 45.0 60.0 TreasuriesAgenciesCreditMBSABSNon-USEmergingOtherCMBS39.8 3.4 23.8 20.9 0.5 7.7 2.0 0.0 1.9 42.2 0.0 28.6 21.0 0.4 5.8 0.0 0.3 1.7 Manager Evaluation Vanguard Total Bond Market Index (VBMFX) vs. Blmbg. Barc. U.S. Aggregate Float Adjusted As of December 31, 2016 40 Historical Performance Comparative Performance and Rolling Return Risk and Return (Jan-2012 - Dec-2016) Historical Statistics - Quarterly Periodicity (Jan-2012 - Dec-2016) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Vanguard Retirement Savings Trust 0.5 1.9 1.9 1.9 1.9 2.7 1.9 1.8 1.7 2.4 2.9 2.9 3.0 4.3 4.5 4.3 Ryan 3 Yr GIC Master 0.4 1.4 1.4 1.2 1.2 2.6 1.2 1.0 1.1 1.5 2.4 3.5 4.5 4.8 4.5 3.8 IM U.S. Short Duration Fixed Income (MF) Median -0.2 1.4 1.4 0.8 1.0 2.2 0.3 0.6 0.2 2.3 1.2 3.2 6.0 -1.0 5.0 4.1 Vanguard Retirement Savings Trust Rank 9 30 30 4 14 22 1 6 4 49 9 55 77 22 61 34 Rolling 3 Years Active Return Quarterly Active Return 0.0 0.7 1.4 -0.7 -1.4Active Return (%)3/03 6/04 9/05 12/06 3/08 6/09 9/10 12/11 3/13 6/14 9/15 12/16 0.0 0.8 1.6 2.4 3.2 Return (%)0.0 0.1 0.2 Risk (Standard Deviation %) Ryan 3 Yr GIC Master Vanguard Retirement Savings Trust Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Retirement Savings Trust 1.9 0.1 1.8 0.6 1.1 12.5 0.1 8.5 0.0 100.0 14y Ryan 3 Yr GIC Master 1.2 0.1 1.1 0.0 1.0 12.3 0.0 N/A 0.0 0.0 14y 90 Day U.S. Treasury Bill 0.1 0.0 0.0 -0.1 0.2 N/A 0.1 -12.3 0.0 0.0 14y Manager Evaluation Vanguard Retirement Savings Trust vs. Ryan 3 Yr GIC Master As of December 31, 2016 41 Historical Performance Three Year Rolling Percentile Ranking Relative Performance Historical Statistics - Monthly Periodicity (Jan-2012 - Dec-2016) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Vanguard Balanced Index Fund (VBINX)1.1 8.6 8.6 6.2 9.5 6.3 0.4 9.8 17.9 11.3 4.1 13.1 20.1 -22.2 6.2 11.0 Vanguard Balanced Index Fund Benchmark 1.2 8.8 8.8 6.4 9.7 6.4 0.6 9.9 18.2 11.6 4.1 13.5 19.7 -22.0 6.3 11.1 IM Mixed-Asset Target Alloc Growth 0.9 6.7 6.7 3.9 8.8 4.7 -1.2 6.3 19.8 13.0 -1.9 12.7 24.9 -30.7 6.4 11.7 Vanguard Balanced Index Fund (VBINX) Rank 48 22 22 8 30 11 18 12 71 80 3 43 84 7 55 62 Vanguard Balanced Index Fund (VBINX) Vanguard Balanced Index Fund Benchmark 0 25 50 75 100Return Percentile Rank3/07 3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 12/16 Cumulative Annualized Over/Under Relative Performance Over/Under Performance 0.0 0.4 0.8 -0.4 -0.8Return (%)3/07 3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 12/16 Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Balanced Index Fund (VBINX)9.5 6.3 9.2 -0.2 1.0 1.5 0.1 -1.5 3.3 33.3 24y 1m Vanguard Balanced Index Fund Benchmark 9.7 6.3 9.4 0.0 1.0 1.5 0.0 N/A 3.3 0.0 24y 1m 90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 6.3 -1.5 0.0 25.0 24y 1m Manager Evaluation Vanguard Balanced Index Fund (VBINX) vs. Vanguard Balanced Index Fund Benchmark As of December 31, 2016 Note: Prior to June 1, 2005, the Vanguard Balanced Index was benchmarked to 60% DJ U.S. Total Stock Market Index/40% LB Aggregate Bond Index. From June 1, 2005 to December 31, 2009, the Index fund was benchmarked to 60% MSCI US Broad Market Index/40% BC Aggregate Index. From January 1, 2010 to January 14, 2013, the Index fund was benchmarked to 60% MSCI US Broad Market Index/40% BC Aggregate Float Adjusted Index. Starting January 15, 2013, the benchmark transitioned to 60% CRSP US Total Market Index/40% BC Aggregate Float Adjusted Index. 42 Portfolio Characteristics Portfolio Benchmark Wtd. Avg. Mkt. Cap ($M)122,106 121,829 Median Mkt. Cap ($M)1,199 1,019 Price/Earnings ratio 20.8 20.8 Price/Book ratio 3.0 3.0 5 Yr. EPS Growth Rate (%)10.4 12.2 Current Yield (%)2.0 2.0 Debt to Equity 0.9 0.9 Number of Stocks 3,327 3,589 Beta (5 Years, Monthly)0.58 1.00 Consistency (5 Years, Monthly)33.33 1.00 Sharpe Ratio (5 Years, Monthly)1.46 1.34 Information Ratio (5 Years, Monthly)-1.10 - Up Market Capture (5 Years, Monthly)61.90 - Down Market Capture (5 Years, Monthly)56.89 - Top Ten Equity Holdings Portfolio Weight (%) Benchmark Weight (%) Active Weight (%) Quarterly Return (%) Apple Inc 2.5 2.5 0.0 3.0 Microsoft Corp 2.0 2.0 0.0 8.6 Exxon Mobil Corp 1.6 1.6 0.0 4.3 Johnson & Johnson 1.4 1.3 0.1 -1.8 Amazon.com Inc 1.3 1.3 0.0 -10.4 JPMorgan Chase & Co 1.3 1.3 0.0 30.5 General Electric Co 1.2 1.2 0.0 7.5 Berkshire Hathaway Inc 1.2 0.9 0.3 12.8 Facebook Inc 1.1 1.2 -0.1 -10.3 AT&T Inc 1.1 1.1 0.0 6.0 % of Portfolio 14.7 14.4 Distribution of Market Capitalization (%) Vanguard Balanced Index Fund (VBINX) - Equity Holdings CRSP U.S. Total Market TR Index 0.0 15.0 30.0 45.0 60.0 >$75 Bil $20 Bil - $75 Bil $5 Bil - $20 Bil $0 - $5 Bil 42.5 27.8 18.3 11.3 42.6 27.7 18.4 11.3 Sector Weights (%) Vanguard Balanced Index Fund (VBINX) - Equity Holdings CRSP U.S. Total Market TR Index 0.0 5.0 10.0 15.0 20.0 25.0 Utilities Telecommunication Services Real Estate Materials Information Technology Industrials Health Care Financials Energy Consumer Staples Consumer Discretionary 3.2 2.4 4.0 3.3 19.9 11.0 13.1 15.4 7.0 8.3 12.3 3.2 2.4 4.1 3.3 19.9 10.9 13.1 15.3 7.1 8.4 12.3 Manager Evaluation Vanguard Balanced Index Fund (VBINX) - Equity Holdings vs. CRSP U.S. Total Market TR Index As of December 31, 2016 43 Portfolio Characteristics Portfolio Benchmark Effective Duration 6.0 6.0 Avg. Maturity 8.3 8.3 Avg. Quality AA AA+ Yield To Maturity (%)2.6 2.6 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 AAAAAABBB67.9 5.2 12.0 14.9 69.0 4.4 11.8 14.8 Maturity Distribution (%) Vanguard Balanced Index Fund (VBINX) - Fixed Income Holdings Blmbg. Barc. U.S. Aggregate Float Adjusted 0.0 15.0 30.0 45.0 60.0 < 1 Yr1 < 3 Yrs3 < 5 Yrs5 < 10 Yrs10 < 20 Yrs> 20 Yrs0.0 22.8 21.1 39.2 3.9 13.0 0.6 23.6 20.7 37.9 4.4 12.8 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 TreasuriesAgenciesCreditMBSABSNon-USEmergingOtherCMBS39.8 3.4 23.8 20.9 0.5 7.7 2.0 0.0 1.9 40.8 2.3 27.8 20.8 2.5 4.9 0.0 0.9 0.0 Manager Evaluation Vanguard Balanced Index Fund (VBINX) - Fixed Income Holdings vs. Blmbg. Barc. U.S. Aggregate Float Adjusted As of December 31, 2016 44 Historical Performance Three Year Rolling Percentile Ranking Risk and Return (Jan-2012 - Dec-2016) Historical Statistics - Monthly Periodicity (Jan-2012 - Dec-2016) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Vanguard Target Retirement Income (VTINX)-1.0 5.3 5.3 3.5 4.9 4.9 -0.2 5.5 5.9 8.2 5.2 9.4 14.3 -10.9 8.2 6.4 Vanguard Target Income Composite Index (Net)-0.9 5.4 5.4 3.7 5.1 4.9 0.1 5.8 6.0 8.4 5.3 9.4 14.3 -11.3 8.1 6.5 IM Mixed-Asset Target Today -0.9 5.2 5.2 2.6 4.4 3.8 -1.4 3.9 5.4 8.9 2.8 9.5 18.1 -16.0 4.9 7.3 Vanguard Target Retirement Income (VTINX) Rank 65 46 46 8 28 10 7 10 38 67 8 53 82 10 1 60 Vanguard Target Retirement Income (VTINX) Vanguard Target Income Composite Index (Net) 0 25 50 75 100Return Percentile Rank3/07 3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 12/16 4.6 4.8 5.0 5.2 5.4 Return (%)3.1 3.2 3.3 Risk (Standard Deviation %) Vanguard Target Income Composite Index (Net) Vanguard Target Retirement Income (VTINX) Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Target Retirement Income (VTINX)4.9 3.7 4.8 -0.1 1.0 1.3 0.3 -0.7 2.0 41.7 13y 2m Vanguard Target Income Composite Index (Net)5.1 3.7 5.0 0.0 1.0 1.3 0.0 N/A 2.0 0.0 13y 2m 90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 3.7 -1.3 0.0 31.7 13y 2m Manager Evaluation Vanguard Target Retirement Income (VTINX) vs. Vanguard Target Income Composite Index (Net) As of December 31, 2016 45 Historical Performance Three Year Rolling Percentile Ranking Risk and Return (Jan-2012 - Dec-2016) Historical Statistics - Monthly Periodicity (Jan-2012 - Dec-2016) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Vanguard Target Retirement 2010 (VTENX)-1.0 5.2 5.2 3.6 6.0 4.6 -0.2 5.9 9.1 10.1 3.4 11.4 19.3 -20.7 7.7 N/A Vanguard Target 2010 Composite Index (Net)-0.9 5.4 5.4 3.8 6.2 4.7 0.0 6.1 9.3 10.2 3.3 11.5 19.3 -20.9 7.7 N/A IM Mixed-Asset Target 2010 -0.4 6.0 6.0 3.1 6.0 3.6 -1.2 4.1 8.7 9.8 0.8 10.8 23.3 -26.0 5.9 9.4 Vanguard Target Retirement 2010 (VTENX) Rank 94 79 79 17 53 6 8 7 50 46 6 35 81 21 8 N/A Vanguard Target Retirement 2010 (VTENX) Vanguard Target 2010 Composite Index (Net) 0 25 50 75 100Return Percentile Rank3/07 3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 12/16 5.6 5.8 6.0 6.2 6.4 Return (%)4.0 4.1 Risk (Standard Deviation %) Vanguard Target 2010 Composite Index (Net) Vanguard Target Retirement 2010 (VTENX) Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Target Retirement 2010 (VTENX)6.0 4.5 5.8 -0.2 1.0 1.3 0.3 -0.7 2.4 45.0 10y 6m Vanguard Target 2010 Composite Index (Net)6.2 4.5 6.0 0.0 1.0 1.3 0.0 N/A 2.4 0.0 10y 6m 90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 4.5 -1.3 0.0 30.0 10y 6m Manager Evaluation Vanguard Target Retirement 2010 (VTENX) vs. Vanguard Target 2010 Composite Index (Net) As of December 31, 2016 46 Historical Performance Three Year Rolling Percentile Ranking Risk and Return (Jan-2012 - Dec-2016) Historical Statistics - Monthly Periodicity (Jan-2012 - Dec-2016) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Vanguard Target Retirement 2015 (VTXVX)-0.6 6.2 6.2 4.0 7.2 4.9 -0.5 6.6 13.0 11.4 1.7 12.5 21.3 -24.1 7.5 11.4 Vanguard Target 2015 Composite Index (Net)-0.3 6.4 6.4 4.3 7.4 4.9 -0.2 6.8 13.3 11.5 1.6 12.5 21.2 -24.4 7.6 11.5 IM Mixed-Asset Target 2015 -0.2 6.4 6.4 3.3 6.7 4.2 -1.3 4.4 10.3 10.8 -0.1 11.5 25.3 -29.3 6.1 10.3 Vanguard Target Retirement 2015 (VTXVX) Rank 74 58 58 13 33 6 13 4 23 36 24 33 76 18 22 32 Vanguard Target Retirement 2015 (VTXVX) Vanguard Target 2015 Composite Index (Net) 0 25 50 75 100Return Percentile Rank3/07 3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 12/16 7.2 7.5 7.8 Return (%)5.0 5.1 Risk (Standard Deviation %) Vanguard Target 2015 Composite Index (Net) Vanguard Target Retirement 2015 (VTXVX) Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Target Retirement 2015 (VTXVX)7.2 5.7 7.1 -0.1 1.0 1.2 0.3 -0.6 3.2 46.7 13y 2m Vanguard Target 2015 Composite Index (Net)7.4 5.7 7.3 0.0 1.0 1.3 0.0 N/A 3.2 0.0 13y 2m 90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 5.7 -1.3 0.0 31.7 13y 2m Manager Evaluation Vanguard Target Retirement 2015 (VTXVX) vs. Vanguard Target 2015 Composite Index (Net) As of December 31, 2016 47 Historical Performance Three Year Rolling Percentile Ranking Risk and Return (Jan-2012 - Dec-2016) Historical Statistics - Monthly Periodicity (Jan-2012 - Dec-2016) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Vanguard Target Retirement 2020 (VTWNX)-0.2 6.9 6.9 4.4 8.2 5.0 -0.7 7.1 15.8 12.3 0.6 13.1 23.1 -27.0 7.5 N/A Vanguard Target 2020 Composite Index (Net)0.0 7.2 7.2 4.7 8.4 5.1 -0.4 7.4 16.2 12.5 1.0 13.3 23.3 -27.4 7.6 N/A IM Mixed-Asset Target 2020 -0.2 6.3 6.3 3.1 6.5 3.7 -1.4 4.7 11.8 11.5 -0.4 12.3 26.0 -31.8 6.3 12.0 Vanguard Target Retirement 2020 (VTWNX) Rank 46 30 30 2 11 2 24 1 19 37 33 37 71 23 34 N/A Vanguard Target Retirement 2020 (VTWNX) Vanguard Target 2020 Composite Index (Net) 0 25 50 75 100Return Percentile Rank3/07 3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 12/16 7.8 8.1 8.4 8.7 9.0 Return (%)5.7 5.8 5.9 Risk (Standard Deviation %) Vanguard Target 2020 Composite Index (Net) Vanguard Target Retirement 2020 (VTWNX) Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Target Retirement 2020 (VTWNX)8.2 6.7 8.0 -0.1 1.0 1.2 0.4 -0.6 3.7 38.3 10y 6m Vanguard Target 2020 Composite Index (Net)8.4 6.7 8.2 0.0 1.0 1.2 0.0 N/A 3.8 0.0 10y 6m 90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 6.7 -1.2 0.0 31.7 10y 6m Manager Evaluation Vanguard Target Retirement 2020 (VTWNX) vs. Vanguard Target 2020 Composite Index (Net) As of December 31, 2016 48 Historical Performance Three Year Rolling Percentile Ranking Risk and Return (Jan-2012 - Dec-2016) Historical Statistics - Monthly Periodicity (Jan-2012 - Dec-2016) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Vanguard Target Retirement 2025 (VTTVX)0.1 7.5 7.5 4.5 8.9 5.0 -0.8 7.2 18.1 13.3 -0.4 13.8 24.8 -30.1 7.6 13.2 Vanguard Target 2025 Composite Index (Net)0.3 7.7 7.7 4.8 9.1 5.1 -0.6 7.4 18.5 13.4 0.1 13.9 25.2 -30.4 7.6 13.4 IM Mixed-Asset Target 2025 0.0 6.9 6.9 3.5 7.7 4.1 -1.4 5.2 15.9 13.0 -2.0 13.4 28.9 -35.0 7.2 13.1 Vanguard Target Retirement 2025 (VTTVX) Rank 44 26 26 3 21 8 24 4 24 45 18 39 80 16 45 49 Vanguard Target Retirement 2025 (VTTVX) Vanguard Target 2025 Composite Index (Net) 0 25 50 75 100Return Percentile Rank3/07 3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 12/16 8.7 9.0 9.3 9.6 Return (%)6.4 6.5 6.6 Risk (Standard Deviation %) Vanguard Target 2025 Composite Index (Net) Vanguard Target Retirement 2025 (VTTVX) Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Target Retirement 2025 (VTTVX)8.9 7.4 8.7 -0.1 1.0 1.2 0.4 -0.5 4.2 45.0 13y 2m Vanguard Target 2025 Composite Index (Net)9.1 7.5 8.9 0.0 1.0 1.2 0.0 N/A 4.3 0.0 13y 2m 90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 7.5 -1.2 0.0 30.0 13y 2m Manager Evaluation Vanguard Target Retirement 2025 (VTTVX) vs. Vanguard Target 2025 Composite Index (Net) As of December 31, 2016 49 Historical Performance Three Year Rolling Percentile Ranking Risk and Return (Jan-2012 - Dec-2016) Historical Statistics - Monthly Periodicity (Jan-2012 - Dec-2016) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Vanguard Target Retirement 2030 (VTHRX)0.4 7.9 7.9 4.6 9.5 5.0 -1.0 7.2 20.5 14.2 -1.3 14.4 26.7 -32.9 7.5 N/A Vanguard Target 2030 Composite Index (Net)0.7 8.1 8.1 4.9 9.8 5.1 -0.8 7.5 20.9 14.3 -0.9 14.6 27.0 -33.3 7.6 N/A IM Mixed-Asset Target 2030 0.3 7.3 7.3 3.6 8.3 3.9 -1.6 5.2 17.9 13.7 -2.6 13.6 28.8 -36.4 6.5 13.6 Vanguard Target Retirement 2030 (VTHRX) Rank 46 34 34 5 19 11 30 6 28 40 23 34 73 17 40 N/A Vanguard Target Retirement 2030 (VTHRX) Vanguard Target 2030 Composite Index (Net) 0 25 50 75 100Return Percentile Rank3/07 3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 12/16 9.0 9.3 9.6 9.9 10.2 Return (%)7.1 7.2 7.3 7.4 Risk (Standard Deviation %) Vanguard Target 2030 Composite Index (Net) Vanguard Target Retirement 2030 (VTHRX) Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Target Retirement 2030 (VTHRX)9.5 8.2 9.4 -0.1 1.0 1.1 0.5 -0.5 4.7 45.0 10y 6m Vanguard Target 2030 Composite Index (Net)9.8 8.3 9.6 0.0 1.0 1.2 0.0 N/A 4.8 0.0 10y 6m 90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 8.3 -1.2 0.0 31.7 10y 6m Manager Evaluation Vanguard Target Retirement 2030 (VTHRX) vs. Vanguard Target 2030 Composite Index (Net) As of December 31, 2016 50 Historical Performance Three Year Rolling Percentile Ranking Risk and Return (Jan-2012 - Dec-2016) Historical Statistics - Monthly Periodicity (Jan-2012 - Dec-2016) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Vanguard Target Retirement 2035 (VTTHX)0.8 8.3 8.3 4.7 10.2 5.1 -1.3 7.2 22.8 15.2 -2.2 15.1 28.2 -34.7 7.5 15.2 Vanguard Target 2035 Composite Index (Net)1.0 8.6 8.6 4.9 10.4 5.2 -1.0 7.6 23.3 15.2 -1.9 15.2 28.7 -35.1 7.6 15.4 IM Mixed-Asset Target 2035 0.8 7.8 7.8 3.8 9.0 4.3 -1.7 5.4 20.8 14.7 -3.3 14.6 31.0 -36.1 7.5 14.0 Vanguard Target Retirement 2035 (VTTHX) Rank 51 36 36 9 18 11 38 9 25 42 21 29 66 13 50 28 Vanguard Target Retirement 2035 (VTTHX) Vanguard Target 2035 Composite Index (Net) 0 25 50 75 100Return Percentile Rank3/07 3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 12/16 9.6 9.9 10.2 10.5 10.8 Return (%)7.8 7.9 8.0 8.1 Risk (Standard Deviation %) Vanguard Target 2035 Composite Index (Net) Vanguard Target Retirement 2035 (VTTHX) Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Target Retirement 2035 (VTTHX)10.2 9.0 10.0 -0.1 1.0 1.1 0.5 -0.5 5.3 43.3 13y 2m Vanguard Target 2035 Composite Index (Net)10.4 9.1 10.3 0.0 1.0 1.1 0.0 N/A 5.3 0.0 13y 2m 90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 9.1 -1.1 0.0 33.3 13y 2m Manager Evaluation Vanguard Target Retirement 2035 (VTTHX) vs. Vanguard Target 2035 Composite Index (Net) As of December 31, 2016 51 Historical Performance Three Year Rolling Percentile Ranking Risk and Return (Jan-2012 - Dec-2016) Historical Statistics - Monthly Periodicity (Jan-2012 - Dec-2016) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Vanguard Target Retirement 2040 (VFORX)1.1 8.7 8.7 4.7 10.5 5.3 -1.6 7.1 24.4 15.6 -2.5 15.2 28.3 -34.5 7.5 N/A Vanguard Target 2040 Composite Index (Net)1.4 9.0 9.0 5.0 10.8 5.4 -1.2 7.6 24.8 15.6 -2.1 15.3 28.7 -35.1 7.6 N/A IM Mixed-Asset Target 2040 1.0 8.0 8.0 3.9 9.3 4.0 -1.7 5.4 21.7 14.9 -3.9 14.6 30.7 -38.1 6.5 14.9 Vanguard Target Retirement 2040 (VFORX) Rank 47 29 29 16 16 8 44 12 17 33 21 37 76 4 33 N/A Vanguard Target Retirement 2040 (VFORX) Vanguard Target 2040 Composite Index (Net) 0 25 50 75 100Return Percentile Rank3/07 3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 12/16 9.9 10.2 10.5 10.8 11.1 11.4 Return (%)8.3 8.4 8.5 8.6 Risk (Standard Deviation %) Vanguard Target 2040 Composite Index (Net) Vanguard Target Retirement 2040 (VFORX) Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Target Retirement 2040 (VFORX)10.5 9.6 10.4 -0.2 1.0 1.1 0.5 -0.5 5.6 43.3 10y 6m Vanguard Target 2040 Composite Index (Net)10.8 9.7 10.7 0.0 1.0 1.1 0.0 N/A 5.7 0.0 10y 6m 90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 9.7 -1.1 0.0 33.3 10y 6m Manager Evaluation Vanguard Target Retirement 2040 (VFORX) vs. Vanguard Target 2040 Composite Index (Net) As of December 31, 2016 52 Historical Performance Three Year Rolling Percentile Ranking Risk and Return (Jan-2012 - Dec-2016) Historical Statistics - Monthly Periodicity (Jan-2012 - Dec-2016) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Vanguard Target Retirement 2045 (VTIVX)1.2 8.9 8.9 4.7 10.5 5.3 -1.6 7.2 24.4 15.6 -2.5 15.2 28.2 -34.6 7.5 16.0 Vanguard Target 2045 Composite Index (Net)1.5 9.1 9.1 5.1 10.8 5.4 -1.3 7.6 24.8 15.6 -2.1 15.3 28.7 -35.1 7.6 16.2 IM Mixed-Asset Target 2045 1.2 8.2 8.2 4.1 9.8 4.3 -1.8 5.5 23.1 15.5 -4.0 15.0 31.1 -38.5 6.8 16.0 Vanguard Target Retirement 2045 (VTIVX) Rank 49 30 30 15 20 12 44 13 27 44 15 43 87 11 49 56 Vanguard Target Retirement 2045 (VTIVX) Vanguard Target 2045 Composite Index (Net) 0 25 50 75 100Return Percentile Rank3/07 3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 12/16 9.9 10.2 10.5 10.8 11.1 11.4 Return (%)8.3 8.4 8.5 8.6 Risk (Standard Deviation %) Vanguard Target 2045 Composite Index (Net) Vanguard Target Retirement 2045 (VTIVX) Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Target Retirement 2045 (VTIVX)10.5 9.7 10.4 -0.2 1.0 1.1 0.5 -0.5 5.7 48.3 13y 2m Vanguard Target 2045 Composite Index (Net)10.8 9.8 10.7 0.0 1.0 1.1 0.0 N/A 5.7 0.0 13y 2m 90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 9.8 -1.1 0.0 33.3 13y 2m Manager Evaluation Vanguard Target Retirement 2045 (VTIVX) vs. Vanguard Target 2045 Composite Index (Net) As of December 31, 2016 53 Historical Performance Three Year Rolling Percentile Ranking Risk and Return (Jan-2012 - Dec-2016) Historical Statistics - Monthly Periodicity (Jan-2012 - Dec-2016) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Vanguard Target Retirement 2050 (VFIFX)1.2 8.9 8.9 4.7 10.5 5.3 -1.6 7.2 24.3 15.6 -2.5 15.2 28.3 -34.6 7.5 N/A Vanguard Target 2050 Composite Index (Net)1.5 9.1 9.1 5.1 10.8 5.4 -1.3 7.6 24.8 15.6 -2.1 15.3 28.7 -35.1 7.6 N/A IM Mixed-Asset Target 2050 1.1 8.2 8.2 4.1 9.7 3.9 -1.8 5.6 23.1 15.5 -4.4 14.8 31.4 -39.1 6.6 15.5 Vanguard Target Retirement 2050 (VFIFX) Rank 47 32 32 20 19 10 46 17 31 47 14 37 92 6 26 N/A Vanguard Target Retirement 2050 (VFIFX) Vanguard Target 2050 Composite Index (Net) 0 25 50 75 100Return Percentile Rank3/07 3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 12/16 9.9 10.2 10.5 10.8 11.1 11.4 Return (%)8.3 8.4 8.5 8.6 Risk (Standard Deviation %) Vanguard Target 2050 Composite Index (Net) Vanguard Target Retirement 2050 (VFIFX) Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Target Retirement 2050 (VFIFX)10.5 9.7 10.4 -0.2 1.0 1.1 0.5 -0.5 5.7 45.0 10y 6m Vanguard Target 2050 Composite Index (Net)10.8 9.8 10.7 0.0 1.0 1.1 0.0 N/A 5.7 0.0 10y 6m 90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 9.8 -1.1 0.0 33.3 10y 6m Manager Evaluation Vanguard Target Retirement 2050 (VFIFX) vs. Vanguard Target 2050 Composite Index (Net) As of December 31, 2016 54 Historical Performance Three Year Rolling Percentile Ranking Risk and Return (Jan-2012 - Dec-2016) Historical Statistics - Monthly Periodicity (Jan-2012 - Dec-2016) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Vanguard Target Retirement 2055 (VFFVX)1.3 8.9 8.9 4.7 10.5 N/A -1.7 7.2 24.3 15.6 -2.3 N/A N/A N/A N/A N/A Vanguard Target 2055 Composite Index (Net)1.5 9.1 9.1 5.1 10.8 N/A -1.3 7.6 24.8 15.6 -2.1 N/A N/A N/A N/A N/A IM Mixed-Asset Target 2055+1.3 8.2 8.2 4.0 10.1 N/A -1.6 5.4 23.3 15.6 -4.7 14.8 30.8 -40.7 N/A N/A Vanguard Target Retirement 2055 (VFFVX) Rank 52 28 28 17 31 N/A 55 17 38 51 1 N/A N/A N/A N/A N/A Vanguard Target Retirement 2055 (VFFVX) Vanguard Target 2055 Composite Index (Net) 0 25 50 75 100Return Percentile Rank3/07 3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 12/16 9.9 10.2 10.5 10.8 11.1 11.4 Return (%)8.3 8.4 8.5 8.6 Risk (Standard Deviation %) Vanguard Target 2055 Composite Index (Net) Vanguard Target Retirement 2055 (VFFVX) Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Target Retirement 2055 (VFFVX)10.5 9.7 10.4 -0.2 1.0 1.1 0.5 -0.6 5.7 45.0 6y 3m Vanguard Target 2055 Composite Index (Net)10.8 9.8 10.7 0.0 1.0 1.1 0.0 N/A 5.7 0.0 6y 3m 90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 9.8 -1.1 0.0 33.3 6y 3m Manager Evaluation Vanguard Target Retirement 2055 (VFFVX) vs. Vanguard Target 2055 Composite Index (Net) As of December 31, 2016 55 Historical Performance Three Year Rolling Percentile Ranking Risk and Return (Apr-2012 - Dec-2016) Historical Statistics - Monthly Periodicity (Feb-2012 - Dec-2016) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Vanguard Target Retirement 2060 (VTTSX)1.3 8.8 8.8 4.7 N/A N/A -1.7 7.2 24.3 N/A N/A N/A N/A N/A N/A N/A Vanguard Target 2060 Composite Index (Net)1.5 9.1 9.1 5.1 10.8 N/A -1.3 7.6 24.8 15.6 N/A N/A N/A N/A N/A N/A IM Mixed-Asset Target 2055+1.3 8.2 8.2 4.0 10.1 N/A -1.6 5.4 23.3 15.6 -4.7 14.8 30.8 -40.7 N/A N/A Vanguard Target Retirement 2060 (VTTSX) Rank 53 28 28 18 N/A N/A 52 17 37 N/A N/A N/A N/A N/A N/A N/A Vanguard Target Retirement 2060 (VTTSX) Vanguard Target 2060 Composite Index (Net) 0 25 50 75 100Return Percentile Rank3/07 3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 12/16 8.1 8.4 8.7 9.0 9.3 9.6 Return (%)7.5 7.6 7.7 7.8 Risk (Standard Deviation %) Vanguard Target 2060 Composite Index (Net) Vanguard Target Retirement 2060 (VTTSX) Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Date Vanguard Target Retirement 2060 (VTTSX)9.6 9.5 9.6 -0.1 1.0 1.0 0.5 -0.5 5.7 45.8 4y 11m Vanguard Target 2060 Composite Index (Net)9.9 9.7 9.8 0.0 1.0 1.0 0.0 N/A 5.8 0.0 4y 11m 90 Day U.S. Treasury Bill 0.1 0.0 0.0 0.1 0.0 N/A 9.7 -1.0 0.0 33.9 4y 11m Manager Evaluation Vanguard Target Retirement 2060 (VTTSX) vs. Vanguard Target 2060 Composite Index (Net) As of December 31, 2016 56 Manager Evaluation Ta rget-Date Funds Asset Allocation As of December 31, 2016 U.S.Equi ty 18.1%31.4%33.7%38.9%43.4%47.8%52.1%53.8%53.9%53.9%54.0% Va nguard Total St ock M arke t Index Fu nd 18.1%31.4%33.7%38.9%43.4%47.8%52.1%53.8%53.9%53.9%54.0% Non-U.S . Equ ity 12.1%18.1%22.9%25.9%28.9%32.0%35.1%36.1%36.0%36.0%36.0% Va nguard Total In ternational St ock In dex F und 12.1%18.1%22.9%25.9%28.9%32.0%35.1%36.1%36.0%36.0%36.0% Fi xe d In come 69.8%50.5%43.4%35.2%27.7%20.2%12.8%10.1%10.1%10.1%10.0% Va nguard Total Bo nd Marke t II In dex F und 37.1%27.0%28.6%24.7%19.4%14.2%9.0%7.1%7.1%7.1%7.0% Va nguard Total In ternational Bo nd Stock In dex F und 15.9%13.4%12.0%10.5%8.3%6.0%3.8%3.0%3.0%3.0%3.0% Va nguard In fla tion-Pro tected Securit ie s Fund 16.8%10.1%2.8%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0% TO TA L 100.0%100.0%100.0%100.0%100.0%100.0%100.0%100.0%100.0%100.0%100.0% Tar get Date 2030 Tar get Date 2035 Tar get Date 2040 Tar get Date 2055 Tar get Date 2060Vanguard C ompone nt Funds Re ti rement In come Tar get Date 2045 Tar get Date 2050 Tar get Date 2015 Tar get Date 2020 Tar get Date 2025 0% 10% 20% 30% 40% 50% 60% 70% 80% U.S.Equity Non-U.S.Equity Fi xed In come Re ti rem ent I nc om e Targ et Date 2015 Targ et Date 2020 Targ et Date 2025 Targ et Date 2030 Targ et Date 2035 Targ et Date 2040 Targ et Date 2045 Targ et Date 2050 Targ et Date 2055 Targ et Date 2060 TO TA L 100.0%100.0%100.0%100.0%100.0%100.0%100.0%100.0%100.0%100.0%100.0% 57 Appendix 58 Disclosures This report contains confidential and proprietary information and is intended for the exclusive use of the parties to whom it was provided. Facts and information provided in this report are believed to be accurate at the time of preparation. However, certain information in this document has been provided to Pavilion Advisory Group Inc. (Pavilion) by third parties and subject to change at any time and based on market conditions. Although we believe this information is reliable, we have not independently verified the information. Returns are net of investment fees unless otherwise denoted. Returns for periods greater than one year are annualized. Mutual fund returns assume reinvestment of all distributions at net asset value (NAV) and deduction of fund expenses. Reported fee data is comprised of recordkeeping and administrative expenses only as reported by your recordkeeper ’s most recent 408(b)(2) disclosure. Past performance does not guarantee future results. This document may include certain forward-looking statements that are based on current estimates and forecasts. Actual results could differ materially. Investing in securities products involves risk, including possible loss of principal as the value of investments fluctuates. This report is not to be reproduced, redistributed or retransmitted in any form without prior expressed written consent from Pavilion. ©2016 Pavilion Advisory Group Inc. All rights reserved. www.pavilioncorp.comPavilion Advisory Group Inc. All rights reserved. www.pavilioncorp.com 59