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2018 2nd Quarter Report
Performance Review Metropolitan St. Louis Sewer District Defined Contribution Plan 2nd Quarter 2018 Pavilion Advisory Group Inc. 227 W. Monroe Street, Suite 2020 Chicago, IL 60606 Phone: 312-798-3200 Fax: 312-902-1984 www.pavilioncorp.com 1 Executive Summary 1 2 Plan Assets 4 3 Performance Summary 8 4 Manager Evaluation 13 5 DC Regulatory Spotlight 40 6 Capital Markets Review 47 7 Appendix 58 Table Of Contents Executive Summary 1 " T h e k e y t h e m e s d u r i n g t h e q u a r t e r w e r e e c o n o m i c g r o w t h d i v e r g e n c e s a n d a s y m m e t r i c a l e x p o s u r e t o t r a d e c o n f l i c t s . G l o b a l g r o w t h r e m a i n s r o b u s t , b u t r e g i o n a l d i v e r g e n c e s h a v e w i d e n e d a n d w e i g h e d o n e q u i t y m a r k e t p e r f o r m a n c e f o r s e v e r a l e c o n o m i e s . W i t h i n t h e U . S . , s t r o n g f u n d a m e n t a l s h e l p e d d r i v e s e c o n d q u a r t e r a n d c a l e n d a r y e a r e q u i t y e a r n i n g s e x p e c t a t i o n s h i g h e r . T h i s s t r e n g t h s h o u l d c o n t i n u e t o s u p p o r t r i s k a s s e t s n e a r - t e r m d e s p i t e r i s i n g u n c e r t a i n t y . " G l o b a l m o n e t a r y p o l i c y c o n t i n u e d a l o n g i t s g r a d u a l p a t h t o n o r m a l i z a t i o n t h r o u g h c h a n g e s t o r a t e s a n d f o r w a r d g u i d a n c e , m e a s u r e s f i n a n c i a l m a r k e t s t o o k i n s t r i d e . I n M a y , t h e F e d e r a l R e s e r v e s p r e f e r r e d m e a s u r e o f i n f l a t i o n r e a c h e d 2 . 0 % o n a y e a r - o v e r - y e a r b a s i s , b u t p o l i c y m a k e r s r e m a i n c o n f i d e n t t h a t i n f l a t i o n w i l l r e m a i n c o n t a i n e d a n d m a d e m i n o r c h a n g e s t o f o r w a r d g u i d a n c e w h i l e r a i s i n g r a t e s 2 5 b a s i s p o i n t s i n J u n e . T w o m o r e r a t e i n c r e a s e s a r e e x p e c t e d i n t h e U . S . t h i s y e a r , o n e i n S e p t e m b e r a n d o n e i n D e c e m b e r . " F o r t h e s i x t h c o n s e c u t i v e q u a r t e r , t h e U . S . y i e l d c u r v e f l a t t e n e d . W h i l e t h e 1 0 - y e a r T r e a s u r y y i e l d r o s e o n l y m o d e s t l y d u r i n g t h e q u a r t e r , t h e r a n g e e x t e n d e d f r o m a h i g h o f 3 . 1 % t o a l o w o f 2 . 7 % , i n t h e w a k e o f t h e I t a l i a n s h o c k . I n c r e a s i n g u n c e r t a i n t y a n d s u p p l y w i d e n e d s p r e a d s a c r o s s t h e s p e c t r u m o f c o r p o r a t e a n d e m e r g i n g m a r k e t b o n d s . " G r o w i n g t r a d e t e n s i o n s a l s o h i n d e r e d e m e r g i n g m a r k e t e q u i t i e s . C o n c e r n s r e g a r d i n g t h e i m p a c t t o g l o b a l s u p p l y c h a i n s p u t d o w n w a r d p r e s s u r e o n i n t e r n a t i o n a l e q u i t i e s w i t h e m e r g i n g m a r k e t s b e a r i n g t h e b r u n t o f t h e s e l l o f f . T h i s e n d e d f i v e c o n s e c u t i v e q u a r t e r s o f p o s i t i v e p e r f o r m a n c e . A n i m p r o v i n g U . S . e c o n o m i c p i c t u r e h e l p e d s m a l l c a p s c l i m b + 7 . 8 % d u r i n g t h e q u a r t e r , a l s o b e n e f i t i n g f r o m l o w e r t i e s t o g l o b a l t r a d e . " T h e D O L i s s u e d g u i d a n c e o n E n v i r o n m e n t a l , S o c i a l a n d G o v e r n a n c e ( E S G ) i n v e s t m e n t s p r o v i d i n g g u i d a n c e o n o f f e r i n g E S G f u n d s a s i n v e s t m e n t a l t e r n a t i v e s , Q D I A s a n d s h a r e h o l d e r e n g a g e m e n t a c t i v i t i e s . " T h e D O L F i d u c i a r y R u l e o f f i c i a l l y e n d e d a n d t h e F i v e P a r t T e s t f r o m 1 9 7 5 i s b a c k i n p l a c e . " T h e H o u s e S u b c o m m i t t e e o n H e a l t h , E m p l o y m e n t , L a b o r a n d P e n s i o n s h e l d a h e a r i n g w i t h r e t i r e m e n t i n d u s t r y r e p r e s e n t a t i v e s , f o c u s i n g o n s e v e r a l r e t i r e m e n t p r o p o s a l s . " L a w s u i t a c t i v i t y o v e r t h e q u a r t e r i n c l u d e d c l a i m s o v e r t h e u s e o f u n t e s t e d A o n H e w i t t i n v e s t m e n t s , m o n e y m a r k e t v s . s t a b l e v a l u e , a c o u p l e o f w i n s f o r s t o c k d r o p p l a i n t i f f s , a n d s e v e r a l h i g h e r e d u c a t i o n l a w s u i t d e v e l o p m e n t s . A d v o c a t e H e a l t h C a r e a l s o r e a c h e d a s e t t l e m e n t i n i t s c h u r c h p l a n s t a t u s c a s e . E x e c u t i v e S u m m a r y J u n e 3 0 , 2 0 1 8 C a p i t a l M a r k e t s R e v i e w M a r k e t R e t u r n s D C R e g u l a t o r y S p o t l i g h t Q u a r t e r Y e a r O n e T h r e e F i v e t o D a t e t o D a t e Y e a r Y e a r s Y e a r s D o m e s t i c E q u i t y I n d i c e s D o w J o n e s W i l s h i r e 5 0 0 0 3 . 8 3 . 0 1 4 . 7 1 1 . 9 1 3 . 4 S & P 5 0 0 3 . 4 2 . 6 1 4 . 4 1 1 . 9 1 3 . 4 R u s s e l l 1 0 0 0 I n d e x 3 . 6 2 . 9 1 4 . 5 1 1 . 6 1 3 . 4 R u s s e l l 1 0 0 0 G r o w t h I n d e x 5 . 8 7 . 3 2 2 . 5 1 5 . 0 1 6 . 4 R u s s e l l 1 0 0 0 V a l u e I n d e x 1 . 2 - 1 . 7 6 . 8 8 . 3 1 0 . 3 R u s s e l l M i d c a p I n d e x 2 . 8 2 . 3 1 2 . 3 9 . 6 1 2 . 2 R u s s e l l M i d c a p G r o w t h I n d e x 3 . 2 5 . 4 1 8 . 5 1 0 . 7 1 3 . 4 R u s s e l l M i d c a p V a l u e I n d e x 2 . 4 - 0 . 2 7 . 6 8 . 8 1 1 . 3 R u s s e l l 2 0 0 0 I n d e x 7 . 8 7 . 7 1 7 . 6 1 1 . 0 1 2 . 5 R u s s e l l 2 0 0 0 G r o w t h I n d e x 7 . 2 9 . 7 2 1 . 9 1 0 . 6 1 3 . 6 R u s s e l l 2 0 0 0 V a l u e I n d e x 8 . 3 5 . 4 1 3 . 1 1 1 . 2 1 1 . 2 I n t e r n a t i o n a l E q u i t y I n d i c e s M S C I E A F E I n d e x - 1 . 2 - 2 . 7 6 . 8 4 . 9 6 . 4 M S C I E A F E G r o w t h I n d e x 0 . 1 - 0 . 9 9 . 4 6 . 4 7 . 4 M S C I E A F E V a l u e I n d e x - 2 . 6 - 4 . 6 4 . 3 3 . 3 5 . 4 M S C I E A F E S m a l l C a p I n d e x - 1 . 6 - 1 . 3 1 2 . 4 1 0 . 1 1 1 . 3 M S C I A C W o r l d I n d e x 0 . 5 - 0 . 4 1 0 . 7 8 . 2 9 . 4 M S C I A C W o r l d I n d e x e x U S - 2 . 6 - 3 . 8 7 . 3 5 . 1 6 . 0 M S C I E m e r g i n g M a r k e t s I n d e x - 8 . 0 - 6 . 7 8 . 2 5 . 6 5 . 0 F i x e d I n c o m e I n d i c e s B l o o m b e r g B a r c l a y s A g g r e g a t e - 0 . 2 - 1 . 6 - 0 . 4 1 . 7 2 . 3 B l o o m b e r g B a r c l a y s U . S . I n t . G o v t / C r e d i t 0 . 0 - 1 . 0 - 0 . 6 1 . 2 1 . 6 B l o o m b e r g B a r c l a y s U . S . L o n g G o v t / C r e d i t - 1 . 4 - 5 . 0 - 0 . 8 4 . 3 5 . 1 B l o o m b e r g B a r c l a y s U . S . C o r p : H i g h Y i e l d 1 . 0 0 . 2 2 . 6 5 . 5 5 . 5 B l o o m b e r g B a r c l a y s U . S . T r e a s u r y : U . S . T I P S 0 . 8 - 0 . 0 2 . 1 1 . 9 1 . 7 C i t i g r o u p N o n - U . S . W o r l d G o v e r n m e n t - 5 . 1 - 0 . 9 3 . 2 3 . 7 1 . 0 J P M E M B I G l o b a l D i v ( e x t e r n a l c u r r e n c y ) - 3 . 5 - 5 . 2 - 1 . 6 4 . 6 5 . 1 J P M G B I - E M G l o b a l D i v ( l o c a l c u r r e n c y ) - 1 0 . 4 - 6 . 4 - 2 . 3 2 . 0 - 1 . 4 R e a l A s s e t I n d i c e s B l o o m b e r g C o m m o d i t y I n d e x 0 . 4 - 0 . 0 7 . 3 - 4 . 5 - 6 . 4 D o w J o n e s W i l s h i r e R E I T 7 . 3 - 0 . 7 1 . 6 7 . 0 7 . 9 2 0 2 4 6 8 10 Market Value ($, mil)•During the quarter,all of the Vanguard Target Date Retirement Funds underperformed their respective S&P Target Date Indices.Vanguard’s overweight to non-U.S.developed markets detracted from results.Vanguard’s underweight to REITs also hurt results,as real estate was the top performing asset class of the quarter. •Domestic equity fund Vanguard U.S.Growth and international equity fund Vanguard International Growth were the top relative performers over the trailing one-year period,outpacing their respective benchmarks by 330 and 1,270 basis points,respectively. Executive Summary Metropolitan St. Louis Sewer District Defined Contribution Plan As of June 30, 2018 Total Asset Growth Plan Update Asset Allocation Breakdown by Asset Class Key Plan Design Features Investment Highlights and Recommendations Managers for Discussion* •All managers in the investment menu are compliant as of 6/30/2018. * Full compliance report on page 7. $8.38 Million •During the second quarter,the majority of funds in Metropolitan St.Louis Sewer District’s Defined Contribution Plan lineup changed share classes. Domestic Equity 13.8% International Equity 2.9%Fixed Income 4.4% Target Date Funds 78.2% Capital Preservation 0.8% 3 Plan Summary 4 June 2018 March 2018 Change $%$%$% Target Date Vanguard Target Retirement Income Inv --0.0 26,660 0.3 -26,660 -100.0 Vanguard Target Retirement 2015 Inv --0.0 4,667 0.1 -4,667 -100.0 Vanguard Target Retirement 2020 Inv --0.0 111,103 1.4 -111,103 -100.0 Vanguard Target Retirement 2025 Inv --0.0 521,770 6.7 -521,770 -100.0 Vanguard Target Retirement 2030 Inv --0.0 422,339 5.4 -422,339 -100.0 Vanguard Target Retirement 2035 Inv --0.0 864,100 11.1 -864,100 -100.0 Vanguard Target Retirement 2040 Inv --0.0 932,785 12.0 -932,785 -100.0 Vanguard Target Retirement 2045 Inv --0.0 1,604,473 20.6 -1,604,473 -100.0 Vanguard Target Retirement 2050 Inv --0.0 900,979 11.6 -900,979 -100.0 Vanguard Target Retirement 2055 Inv --0.0 538,748 6.9 -538,748 -100.0 Vanguard Target Retirement 2060 Inv --0.0 145,908 1.9 -145,908 -100.0 Vanguard Target Retirement 2065 Inv --0.0 1,921 0.0 -1,921 -100.0 Vanguard Institutional Target Retirement Income Fund (VITRX)31,070 0.4 --0.0 31,070 100.0 Vanguard Institutional Target Retirement 2015 Fund (VITVX)5,006 0.1 --0.0 5,006 100.0 Vanguard Institutional Target Retirement 2020 Fund (VITWX)118,605 1.4 --0.0 118,605 100.0 Vanguard Institutional Target Retirement 2025 Fund (VRIVX)554,705 6.6 --0.0 554,705 100.0 Vanguard Institutional Target Retirement 2030 Fund (VTTWX)456,830 5.5 --0.0 456,830 100.0 Vanguard Institutional Target Retirement 2035 Fund (VITFX)922,330 11.0 --0.0 922,330 100.0 Vanguard Institutional Target Retirement 2040 Fund (VIRSX)998,853 11.9 --0.0 998,853 100.0 Vanguard Institutional Target Retirement 2045 Fund (VITLX)1,715,582 20.5 --0.0 1,715,582 100.0 Vanguard Institutional Target Retirement 2050 Fund (VTRLX)977,631 11.7 --0.0 977,631 100.0 Vanguard Institutional Target Retirement 2055 Fund (VIVLX)594,431 7.1 --0.0 594,431 100.0 Vanguard Institutional Target Retirement 2060 Fund (VILVX)168,419 2.0 --0.0 168,419 100.0 Vanguard Institutional Target Retirement 2065 Fund (VSXFX)5,017 0.1 --0.0 5,017 100.0 Total Target Date 6,548,479 78.2 6,075,452 78.0 473,028 7.8 Domestic Equity Vanguard 500 Index Inv --0.0 395,893 5.1 -395,893 -100.0 Vanguard Windsor II Inv --0.0 118,884 1.5 -118,884 -100.0 Vanguard U.S. Growth Inv --0.0 171,293 2.2 -171,293 -100.0 Vanguard Mid-Cap Index Inv --0.0 220,345 2.8 -220,345 -100.0 Vanguard Small-Cap Index Inv --0.0 147,283 1.9 -147,283 -100.0 Vanguard Institutional Index Fund (VINIX)433,269 5.2 --0.0 433,269 100.0 Vanguard Windsor II Fund (VWNAX)128,104 1.5 --0.0 128,104 100.0 Vanguard U.S. Growth Fund (VWUAX)189,875 2.3 --0.0 189,875 100.0 Vanguard Mid-Cap Index Fund (VIMAX)236,761 2.8 --0.0 236,761 100.0 Vanguard Small-Cap Index Fund (VSMAX)164,150 2.0 --0.0 164,150 100.0 Total Domestic Equity 1,152,159 13.8 1,053,699 13.5 98,460 9.3 Plan Summary Asset Allocation - Metropolitan St. Louis Sewer District Defined Contribution Plan As of June 30, 2018 Percentage change includes all cash flows and market movements. 5 Plan Summary Asset Allocation - Metropolitan St. Louis Sewer District Defined Contribution Plan As of June 30, 2018 June 2018 March 2018 Change $%$%$% International Equity Vanguard International Growth Inv --0.0 177,702 2.3 -177,702 -100.0 Vanguard International Growth Fund (VWILX)245,105 2.9 --0.0 245,105 100.0 Total International Equity 245,105 2.9 177,702 2.3 67,404 37.9 Fixed Income Vanguard Total Bond Market Index Inv --0.0 173,401 2.2 -173,401 -100.0 Vanguard Retirement Savings Trust --0.0 74,244 1.0 -74,244 -100.0 Vanguard Balanced Index Inv --0.0 148,586 1.9 -148,586 -100.0 Vanguard Total Bond Market Index Fund (VBTLX)127,561 1.5 --0.0 127,561 100.0 Vanguard Retirement Savings Trust III 78,704 0.9 --0.0 78,704 100.0 Vanguard Balanced Index Fund (VBAIX)160,094 1.9 --0.0 160,094 100.0 Total Fixed Income 366,359 4.4 396,231 5.1 -29,872 -7.5 Capital Preservation Vanguard Prime Money Market Inv (VMMXX)64,586 0.8 85,984 1.1 -21,399 -24.9 Total Capital Preservation 64,586 0.8 85,984 1.1 -21,399 -24.9 Total Plan Defined Contribution Plan Total Composite 8,376,688 100.0 7,789,068 100.0 587,620 7.5 Percentage change includes all cash flows and market movements. 6 Fund Name Qualitative Compliance Performance Compliance 3 Year Return Short-Term 3 Year Rank 3 Year Sharpe 5 Year Return Longer-Term 5 Year Rank 5 Year Sharpe Vanguard U.S. Growth Fund (VWUAX)✔✔✖✔✖✔✔✖ Vanguard Windsor II Fund (VWNAX)✔✔✖✖✔✖✖✔ Vanguard International Growth Fund (VWILX)✔✔✔✔✔✔✔✔ Legend 3 Year Return ✔Goals met or no material change ✖Goals not met or material changes Portfolio Score Factor Comments Vanguard Windsor II Fund (VWNAX)Qualitative Compliance In July, Vanguard announced a portfolio manager change at Lazard Asset Management, which manages approximately 22% of the Windsor II fund. Ronald Temple is being added as a co-portfolio manager, alongside Andrew Lacey, who has served as a co-portfolio manager since 2007. Chris Blake will be stepping down from his role as co-portfolio manager on the fund. Performance Summary Compliance Checklist As of June 30, 2018 Performance compliance represents Pavilion’s view on manager performance relative to Pavilion’s expectations for performance, based primarily on manager investment philosophy and process. The three and five year return, rank and Sharpe ratio goals are as follows: the annualized return exceeds the benchmark’s return, the manager’s peer group rank is better than the 50th percentile, and the manager’s Sharpe ratio exceeds the benchmark’s.7 Performance Summary 8 Allocation Market Value $% Performance (%) Quarter YTD 1 Year 3 Years 5 Years 7 Years 10 Years Target Date Vanguard Institutional Target Retirement Income Fund (VITRX)31,070 0.4 0.5 (50)-0.1 (25)4.0 (49)4.2 (44)------ Vanguard Target Income Composite Index (Net)0.5 (39)0.0 (19)4.2 (45)4.3 (42)5.0 (45)5.0 (39)5.2 (37) S&P Target Date Retirement Income Index 0.7 (27)-0.1 (30)4.2 (42)4.1 (55)4.6 (52)4.6 (51)4.5 (77) TD Income Universe Median 0.4 -0.3 4.0 4.1 4.7 4.6 5.0 Vanguard Institutional Target Retirement 2015 Fund (VITVX)5,006 0.1 0.5 (48)0.0 (24)5.5 (22)5.2 (24)------ Vanguard Target 2015 Composite Index (Net)0.6 (41)0.1 (23)5.6 (20)5.3 (19)6.6 (14)6.5 (12)6.0 (8) S&P Target Date 2015 Index 1.0 (6)0.1 (23)5.6 (21)5.3 (19)6.2 (28)6.0 (31)5.6 (28) TD 2015 Universe Median 0.5 -0.2 4.8 4.7 5.5 5.6 5.4 Vanguard Institutional Target Retirement 2020 Fund (VITWX)118,605 1.4 0.6 (57)0.0 (42)6.7 (15)6.1 (11)------ Vanguard Target 2020 Composite Index (Net)0.8 (39)0.1 (29)7.0 (12)6.3 (7)7.7 (4)7.4 (6)6.6 (7) S&P Target Date 2020 Index 1.1 (4)0.2 (26)6.3 (32)5.9 (25)6.9 (33)6.6 (37)6.1 (31) TD 2020 Universe Median 0.7 -0.1 5.8 5.4 6.7 6.4 5.9 Vanguard Institutional Target Retirement 2025 Fund (VRIVX)554,705 6.6 0.7 (55)0.1 (46)7.6 (25)6.7 (13)------ Vanguard Target 2025 Composite Index (Net)0.9 (39)0.2 (45)7.9 (15)6.9 (8)8.3 (7)8.0 (11)6.9 (26) S&P Target Date 2025 Index 1.2 (5)0.3 (32)7.4 (39)6.6 (22)7.6 (48)7.2 (51)6.4 (49) TD 2025 Universe Median 0.8 0.0 6.8 6.3 7.5 7.3 6.4 Vanguard Institutional Target Retirement 2030 Fund (VTTWX)456,830 5.5 0.8 (62)0.2 (41)8.5 (32)7.2 (29)------ Vanguard Target 2030 Composite Index (Net)1.0 (34)0.3 (39)8.8 (23)7.4 (17)9.0 (13)8.5 (10)7.1 (18) S&P Target Date 2030 Index 1.4 (5)0.4 (33)8.5 (37)7.2 (28)8.3 (50)7.8 (47)6.7 (37) TD 2030 Universe Median 0.9 0.1 7.9 6.8 8.2 7.7 6.5 Vanguard Institutional Target Retirement 2035 Fund (VITFX)922,330 11.0 0.9 (66)0.3 (50)9.3 (38)7.7 (33)------ Vanguard Target 2035 Composite Index (Net)1.1 (42)0.4 (47)9.7 (28)7.9 (24)9.6 (14)9.0 (10)7.5 (18) S&P Target Date 2035 Index 1.5 (8)0.6 (45)9.5 (32)7.8 (27)8.9 (49)8.3 (49)7.0 (50) TD 2035 Universe Median 1.0 0.3 9.1 7.4 8.8 8.2 7.0 Vanguard Institutional Target Retirement 2040 Fund (VIRSX)998,853 11.9 0.9 (68)0.4 (50)10.1 (29)8.2 (33)------ Vanguard Target 2040 Composite Index (Net)1.1 (49)0.4 (47)10.5 (25)8.4 (21)10.1 (8)9.5 (10)7.8 (11) S&P Target Date 2040 Index 1.6 (7)0.7 (41)10.2 (28)8.3 (24)9.3 (46)8.6 (48)7.2 (40) TD 2040 Universe Median 1.1 0.4 9.9 7.7 9.2 8.5 7.1 Performance Summary Annualized Performance (Net) As of June 30, 2018 _____________________________ Returns are expressed as percentages and net of fees. Returns for periods greater than one year are annualized. Peer group percentile ranks are shown in parenthesis. Rankings in the top quartile of peers are shown as green, while rankings in the bottom quartile of peers are shown as red. 9 Performance Summary Annualized Performance (Net) As of June 30, 2018 Allocation Market Value $% Performance (%) Quarter YTD 1 Year 3 Years 5 Years 7 Years 10 Years Vanguard Institutional Target Retirement 2045 Fund (VITLX)1,715,582 20.5 1.0 (66)0.4 (57)10.6 (33)8.4 (29)------ Vanguard Target 2045 Composite Index (Net)1.2 (48)0.5 (54)10.9 (21)8.7 (17)10.2 (9)9.6 (13)7.9 (10) S&P Target Date 2045 Index 1.7 (8)0.7 (43)10.5 (34)8.5 (28)9.6 (42)8.9 (42)7.3 (45) TD 2045 Universe Median 1.1 0.5 10.4 8.1 9.5 8.8 7.3 Vanguard Institutional Target Retirement 2050 Fund (VTRLX)977,631 11.7 1.0 (64)0.4 (56)10.6 (51)8.4 (29)------ Vanguard Target 2050 Composite Index (Net)1.2 (50)0.5 (54)10.9 (30)8.7 (20)10.2 (13)9.6 (14)7.9 (13) S&P Target Date 2050 Index 1.7 (7)0.8 (42)10.9 (34)8.8 (18)9.9 (34)9.1 (31)7.4 (38) TD 2050 Universe Median 1.1 0.5 10.6 8.2 9.6 8.9 7.3 Vanguard Institutional Target Retirement 2055 Fund (VIVLX)594,431 7.1 1.0 (63)0.4 (57)10.6 (54)8.4 (36)------ Vanguard Target 2055 Composite Index (Net)1.2 (49)0.5 (54)10.9 (33)8.7 (25)10.2 (23)9.6 (26)-- S&P Target Date 2055 Index 1.7 (8)0.8 (39)11.0 (29)8.9 (13)10.1 (33)9.3 (32)7.6 (--) TD 2055 Universe Median 1.1 0.6 10.7 8.3 9.7 9.1 -- Vanguard Institutional Target Retirement 2060 Fund (VILVX)168,419 2.0 0.9 (76)0.4 (63)10.5 (66)8.4 (46)------ Vanguard Target 2060 Composite Index (Net)1.2 (54)0.5 (60)10.9 (34)8.7 (32)10.2 (--)---- S&P Target Date 2060+ Index 1.8 (6)0.9 (37)11.2 (30)9.0 (23)10.1 (--)9.4 (--)-- TD 2060 Universe Median 1.3 0.7 10.8 8.3 ------ Vanguard Institutional Target Retirement 2065 Fund (VSXFX)5,017 0.1 1.0 (73)0.5 (60)---------- Vanguard Target 2065 Composite Index (Net)1.2 (56)0.5 (63)10.9 (30)-------- S&P Target Date 2060+ Index 1.8 (6)0.9 (37)11.2 (26)9.0 (23)10.1 (--)9.4 (--)-- TD 2065 Universe Median 1.3 0.7 10.7 8.3 ------ Domestic Equity Vanguard Institutional Index Fund (VINIX)433,269 5.2 3.4 (25)2.6 (29)14.3 (32)11.9 (14)13.4 (24)13.2 (20)10.2 (28) S&P 500 3.4 (25)2.6 (29)14.4 (32)11.9 (14)13.4 (23)13.2 (19)10.2 (28) eV Large Cap Core Median 2.4 1.4 12.8 10.0 12.3 12.2 9.5 Vanguard U.S. Growth Fund (VWUAX)189,875 2.3 6.1 (33)10.8 (28)25.8 (24)14.1 (33)16.9 (23)15.0 (21)11.6 (30) Russell 1000 Growth Index 5.8 (42)7.3 (56)22.5 (45)15.0 (23)16.4 (34)14.9 (23)11.8 (24) eV Large Cap Growth Median 5.5 8.0 21.8 13.1 15.3 13.4 10.9 _____________________________ Returns are expressed as percentages and net of fees. Returns for periods greater than one year are annualized. Peer group percentile ranks are shown in parenthesis. Rankings in the top quartile of peers are shown as green, while rankings in the bottom quartile of peers are shown as red. 10 Performance Summary Annualized Performance (Net) As of June 30, 2018 Allocation Market Value $% Performance (%) Quarter YTD 1 Year 3 Years 5 Years 7 Years 10 Years Vanguard Windsor II Fund (VWNAX)128,104 1.5 2.3 (31)-0.7 (47)7.6 (69)8.1 (60)10.1 (64)11.1 (52)8.8 (49) Russell 1000 Value Index 1.2 (63)-1.7 (65)6.8 (78)8.3 (57)10.3 (57)11.3 (45)8.5 (57) eV Large Cap Value Median 1.6 -1.0 9.3 8.5 10.7 11.1 8.7 Vanguard Mid-Cap Index Fund (VIMAX)236,761 2.8 2.6 (50)2.6 (48)12.1 (56)9.2 (50)12.3 (39)11.7 (39)10.1 (47) Vanguard Mid-Cap Index Fund Blended Benchmark 2.6 (50)2.6 (47)12.1 (56)9.2 (50)12.4 (37)11.8 (37)10.2 (46) eV Mid Cap All Median 2.5 2.0 12.9 9.2 11.7 11.3 9.9 Vanguard Small-Cap Index Fund (VSMAX)164,150 2.0 6.2 (58)6.0 (51)16.5 (48)10.5 (50)12.4 (46)12.1 (43)11.3 (39) Vanguard Small-Cap Index Fund Blended Benchmark 6.2 (58)6.0 (51)16.5 (48)10.4 (51)12.4 (47)12.1 (43)11.2 (40) eV Small Cap All Median 6.7 6.1 15.9 10.4 12.1 11.7 10.8 International Equity Vanguard International Growth Fund (VWILX)245,105 2.9 0.7 (32)4.1 (15)20.0 (15)12.3 (6)11.7 (8)8.2 (15)6.3 (19) MSCI AC World ex USA (Net)-2.6 (89)-3.8 (96)7.3 (89)5.1 (87)6.0 (97)3.8 (100)2.5 (91) Custom Non US Diversified Growth Median -0.5 -0.1 11.8 7.8 8.3 6.6 4.8 Fixed Income Vanguard Total Bond Market Index Fund (VBTLX)127,561 1.5 -0.2 (47)-1.6 (54)-0.5 (66)1.7 (70)2.2 (72)2.5 (77)3.7 (82) Vanguard Total Bond Market Index Fund Benchmark -0.2 (54)-1.7 (58)-0.4 (59)1.7 (61)2.3 (66)2.6 (70)3.7 (78) eV Core Fixed Income Median -0.2 -1.6 -0.4 1.8 2.4 2.8 4.2 Vanguard Retirement Savings Trust III 78,704 0.9 0.5 1.1 2.1 2.0 2.0 2.1 2.5 Ryan 3 Yr GIC Master 0.5 0.9 1.8 1.5 1.3 1.4 2.1 Vanguard Balanced Index Fund (VBAIX)160,094 1.9 2.3 (20)1.4 (18)8.6 (30)7.7 (26)8.9 (23)8.9 (23)8.0 (19) Vanguard Balanced Index Fund Benchmark 2.3 (21)1.3 (19)8.6 (31)7.7 (26)8.9 (22)8.9 (22)8.0 (20) eV US Balanced Median 1.3 0.3 7.2 6.6 7.9 8.0 7.1 Capital Preservation Vanguard Prime Money Market Inv (VMMXX)64,586 0.8 0.5 (45)0.8 (31)1.4 (31)0.8 (49)0.5 (54)0.4 (55)0.4 (52) ICE BofAML 3 Month U.S. T-Bill 0.5 (51)0.8 (41)1.4 (42)0.7 (64)0.4 (62)0.3 (59)0.4 (59) eV US Cash Management Median 0.5 0.8 1.3 0.8 0.5 0.4 0.4 Total Composite 8,376,688 100.0 0.0 0.0 ---------- _____________________________ Returns are expressed as percentages and net of fees. Returns for periods greater than one year are annualized. Peer group percentile ranks are shown in parenthesis. Rankings in the top quartile of peers are shown as green, while rankings in the bottom quartile of peers are shown as red. 11 Domestic Equity International Equity Fixed Income Capital Preservation 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 Return (%)0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 Risk (Standard Deviation %) Vanguard Total Bond Market Index Fund (VBTLX) Vanguard Prime Money Market Inv (VMMXX) Vanguard Balanced Index Fund (VBAIX) Vanguard International Growth Fund (VWILX) Vanguard Small-Cap Index Fund (VSMAX) Vanguard Mid-Cap Index Fund (VIMAX) Vanguard U.S. Growth Fund (VWUAX) Vanguard Windsor II Fund (VWNAX) Vanguard Institutional Index Fund (VINIX) Performance Summary Investment Options - Risk and Return Five Years Ending June 30, 2018 ______________________ Calculations based on monthly periodicity. 12 Manager Evaluation 13 Risk/Return vs. Peers - 5 Years**Risk/Return vs. Peers - 1 Year Historical Performance (%)* Quarter YTD 1 Year 3 Years 5 Years 10 Years 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Vanguard Institutional Target Retirement 2020 Fund (VITWX)0.6 0.0 6.7 6.1 ----14.1 7.0 ---------------- Vanguard Target 2020 Composite Index (Net)0.8 0.1 7.0 6.3 7.7 6.6 14.2 7.2 -0.4 7.4 16.2 12.5 1.0 13.3 23.3 -27.4 S&P Target Date 2020 Index 1.1 0.2 6.3 5.9 6.9 6.1 12.8 7.2 -0.2 5.7 14.8 11.5 0.6 12.9 19.9 -24.8 Vanguard Institutional Target Retirement 2030 Fund (VTTWX)0.8 0.2 8.5 7.2 ----17.6 8.0 ---------------- Vanguard Target 2030 Composite Index (Net)1.0 0.3 8.8 7.4 9.0 7.1 17.7 8.1 -0.8 7.5 20.9 14.3 -0.9 14.6 27.0 -33.3 S&P Target Date 2030 Index 1.4 0.4 8.5 7.2 8.3 6.7 16.2 8.3 -0.3 5.6 19.1 13.4 -1.2 14.5 23.7 -30.5 Vanguard Institutional Target Retirement 2045 Fund (VITLX)1.0 0.4 10.6 8.4 ----21.5 8.9 ---------------- Vanguard Target 2045 Composite Index (Net)1.2 0.5 10.9 8.7 10.2 7.9 21.5 9.1 -1.3 7.6 24.8 15.6 -2.1 15.3 28.7 -35.1 S&P Target Date 2045 Index 1.7 0.7 10.5 8.5 9.6 7.3 19.6 9.5 -0.5 5.7 23.1 15.1 -2.6 15.6 26.4 -35.2 Target Date Peergroup Universe Vanguard Target Retirement Funds 0.0 3.0 6.0 9.0 12.0 15.0 Return (%)1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 Risk (Standard Deviation %) Target Date Peergroup Universe Vanguard Target Retirement Funds -5.0 0.0 5.0 10.0 15.0 20.0 Return (%)0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 Risk (Standard Deviation %) Manager Evaluation Vanguard Target Date Funds - QDIA As of June 30, 2018 * Performance shown is for three of the Target Date Fund vintages. The three capture the different phases of the lifecycle: short-, intermediate-, and long-dated. **The Institutional share class of the Vanguard Target Date Series has a short track record. As such, the Investor share class of the Vanguard Target Date Series is shown to demonstrate 5 years of risk/return. 14 Manager Evaluation Vanguard Target Retirement Funds As of June 30, 2018 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Vanguard Target Retirement Funds Glide Path Cash TIPS Developed Int'l / EM FI High Yield FI U.S. Investment Grade FI EM Equity Int'l Dev. Equity REITs US Mid/SC Equity U.S. LC Equity 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% S&P Target Index Glide Path Cash TIPS Developed Int'l / EM FI High Yield FI U.S. Investment Grade FI EM Equity Int'l Dev. Equity REITs US Mid/SC Equity U.S. LC Equity -18% -13% -8% -3% 2% 7% 12% 17% 2060 2055 2050 2045 2040 2035 2030 2025 2020 2015 Income Over/Underweight Relative to the S&P Target Date Indices U.S. LC Equity US Mid/SC Equity REITs Int'l Dev. Equity EM Equity U.S. Investment Grade FI High Yield FI Developed Int'l / EM FI TIPS Cash 15 Manager Evaluation Vanguard Target Retirement Funds As of June 30, 2018 Actual allocations as of June 30, 2018 Underlying Vanguard Funds 2065 2060 2055 2050 2045 2040 2035 2030 2025 2020 2015 Income Total Stock Market Index Fund 53.8 54.2 54.3 54.3 54.3 51.5 46.9 42.5 38.0 32.6 24.7 18.0 Large-Cap 40.0 40.3 40.3 40.3 40.3 38.3 34.8 31.6 28.2 24.2 18.4 13.4 Mid-Cap 10.2 10.2 10.3 10.3 10.3 9.7 8.9 8.0 7.2 6.2 4.7 3.4 Small-Cap 3.7 3.7 3.7 3.7 3.7 3.5 3.2 2.9 2.6 2.2 1.7 1.2 Total International Stock Index Fund 36.2 35.7 35.5 35.5 35.5 33.5 30.6 27.5 24.5 21.0 16.1 11.6 Europe 14.9 14.7 14.6 14.6 14.6 13.8 12.6 11.3 10.1 8.7 6.6 4.8 Pacific 10.4 10.3 10.2 10.2 10.2 9.7 8.8 7.9 7.1 6.1 4.6 3.3 Emerging 7.3 7.2 7.2 7.2 7.2 6.8 6.2 5.5 4.9 4.2 3.2 2.3 Other 3.5 3.5 3.5 3.5 3.5 3.3 3.0 2.7 2.4 2.1 1.6 1.1 Total Equity 90.0 89.9 89.8 89.8 89.8 85.0 77.5 70.0 62.5 53.6 40.8 29.6 Total Bond Market II Index Fund 7.0 7.1 7.2 7.2 7.2 10.5 15.8 21.0 26.3 29.2 33.1 37.4 Treasury/Agency 3.0 3.1 3.1 3.1 3.1 4.6 6.9 9.1 11.4 12.7 14.4 16.2 Govt. Mortgage-Backed 1.5 1.5 1.5 1.5 1.5 2.3 3.4 4.5 5.7 6.3 7.1 8.0 Corporate 1.9 1.9 2.0 2.0 2.0 2.9 4.3 5.7 7.2 8.0 9.0 10.2 Foreign 0.4 0.4 0.4 0.4 0.4 0.6 0.9 1.1 1.4 1.6 1.8 2.0 Commercial Mortgage/Asset-Backed 0.2 0.2 0.2 0.2 0.2 0.2 0.3 0.5 0.6 0.6 0.7 0.8 Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.1 Total Int'l Bond Index Fund 3.0 3.0 3.0 3.0 3.0 4.5 6.7 9.0 11.2 12.4 14.2 16.1 Short-Term TIPS Fund 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.8 11.9 16.9 Total Bonds 10.0 10.1 10.2 10.2 10.2 15.0 22.5 30.0 37.5 46.4 59.2 70.4 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 16 Manager Evaluation Vanguard Target Retirement Funds As of June 30, 2018 Notes: The summary shown is for the Investor Share Class and is net of fees. Your plan may not hold the same share class, and / or all of the funds shown above . For each Vanguard fund, the value added due to a strategic allocation difference from its respective S&P target date index fund is approximated by subtracting index's return from the fund’s return. Value added approximation is preliminary and unaudited. (0.20) (0.14) 0.06 0.35 0.49 0.43 0.45 0.51 0.52 0.23 0.23 (0.20) (0.14) 0.06 0.35 0.49 0.43 0.45 0.51 0.52 0.23 0.23 (0.30) (0.20) (0.10) 0.00 0.10 0.20 0.30 0.40 0.50 0.60 2060 2055 2050 2045 2040 2035 2030 2025 2020 2015 Income Performance Attribution: 5-Year Sources of Value Add (%) Total Value Added Strategic Allocation Difference Effect Relative To S&P TD Indices 17 Manager Evaluation Vanguard Target Retirement Funds As of June 30, 2018 Q2 2018 Performance Attribution: During the quarter, all of the Vanguard Target Retirement Funds underperformed their respective S&P Target Date Indices. Additional comments regarding relative performance: Manager Selection Effects: None. All of Vanguard’s underlying funds are indexed. Tactical Asset Allocation Effects: Vanguard does not use tactical asset allocation. Long-dated: 2065 –2050 Funds Mid-dated: 2045 –2030 Funds Short-dated: 2025 and Income Funds Equity & Alternatives –From a geographic perspective, Vanguard’s overweight to non-U.S. developed markets hurt relative returns across all sections of the glide path. +Within its U.S. equity allocation, an underweight to large cap, and slight overweight to small cap stocks helped returns. –Vanguard’s relative underweight to REITS dampened returns, as real estate was the top performing asset class of the quarter. Fixed Income +Vanguard’s higher strategic allocation to international bonds helped performance. +Vanguard’s higher strategic allocation to international bonds helped performance. –Lower strategic allocation to high yield bonds detracted from performance. –Lower strategic allocation to cash detracted from performance marginally. +Vanguard’s higher strategic allocation to international bonds helped performance. +Vanguard’s higher strategic allocation to short-term TIPs helped performance. -Lower strategic allocation to high yield bonds detracted from performance. –Lower strategic allocation to cash detracted from performance. 18 Manager Evaluation Vanguard Target Retirement Funds As of June 30, 2018 Additional comments relative to the S&P Target Date TR Indices: Vanguard’s glide path is similar to the S&P Index series with the exception of the landing point/retirement fund, where Vangu ard maintains a slightly more conservative position. The major differences between the Vanguard Target Date Funds and the S&P Target Date Index series are found at the sub-asset class level. –The S&P Indices carry a larger home country bias (65-68% of equities in the US vs. 60% for Vanguard). –The US S&P equity indices cover the top 1,500 market cap companies, resulting in an underweight to small and micro-cap US companies (when compared to the Vanguard US CRSP Total Stock Market Index, which has exposure to roughly 3,500 US companies). –The S&P indices carry a modest overweight in the US REIT sector throughout most of the glide path. Vanguard only holds REITs at the market cap weighting, resulting in an average allocation of 1.6%. –On the fixed income side, the S&P indices only allocate to domestic fixed income. Vanguard allocates to both domestic fixed income and to currency hedged non-US investment grade bonds. In addition, S&P incorporates a very modest allocation to high yield later in the glide path, while Vanguard does not allocate to this area of the market. –For inflation sensitive assets, S&P lands at a TIPS allocation that is roughly half the size of Vanguard’s terminal allocation (9% vs. 17%). Additionally, S&P’s TIPS allocation is to the full TIPS universe vs. Vanguard’s 0-5 year allocation. 19 Historical Performance (%) Risk and Return - monthly periodicity (Jul - 2013 - Jun - 2018)Three Year Rolling Percentile Ranking (10 Years) Historical Statistics - monthly periodicity (Jul-2013 - Jun-2018) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Vanguard Institutional Index Fund (VINIX)3.4 2.6 14.3 11.9 13.4 10.2 21.8 11.9 1.4 13.7 32.3 16.0 2.1 15.0 26.6 -37.0 S&P 500 3.4 2.6 14.4 11.9 13.4 10.2 21.8 12.0 1.4 13.7 32.4 16.0 2.1 15.1 26.5 -37.0 eV Large Cap Core Median 2.4 1.4 12.8 10.0 12.3 9.5 21.5 9.5 0.6 12.1 32.3 14.4 1.3 13.8 26.3 -35.6 Vanguard Institutional Index Fund (VINIX) Rank 25 29 32 14 24 28 47 22 39 31 50 33 41 33 48 61 Vanguard Institutional Index Fund (VINIX) S&P 500 0 25 50 75 100Return Percentile Rank9/08 9/09 9/10 9/11 9/12 9/13 9/14 9/15 9/16 9/17 6/18 13.3 13.4 13.5 Return (%)0.0 2.0 4.0 6.0 8.0 10.0 12.0 Risk (Standard Deviation %) S&P 500 Vanguard Institutional Index Fund (VINIX) Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Period Vanguard Institutional Index Fund (VINIX)13.4 9.7 12.7 0.0 1.0 1.3 0.0 -2.7 5.2 20.0 18y 6m S&P 500 13.4 9.7 12.7 0.0 1.0 1.3 0.0 --5.1 0.0 18y 6m 90 Day U.S. Treasury Bill 0.4 0.2 0.0 0.4 0.0 --9.7 -1.3 0.0 28.3 18y 6m Manager Evaluation Vanguard Institutional Index Fund (VINIX) vs. S&P 500 As of June 30, 2018 Holdings Data as of Jun-2018. 20 Portfolio Characteristics Portfolio Benchmark Wtd. Avg. Mkt. Cap ($M)214,046 213,953 Median Mkt. Cap ($M)20,624 20,691 Price/Earnings ratio 20.9 20.9 Price/Book ratio 3.4 3.4 5 Yr. EPS Growth Rate (%)14.8 14.8 Current Yield (%)2.0 2.0 Debt to Equity 2.0 2.0 # of Securities 507 505 Beta (5 Years, Monthly)1.00 1.00 Consistency (5 Years, Monthly)20.00 0.00 Sharpe Ratio (5 Years, Monthly)1.31 1.31 Information Ratio (5 Years, Monthly)-2.65 - Up Market Capture (5 Years, Monthly)99.89 100.00 Down Market Capture (5 Years, Monthly)100.08 100.00 Active Share 0.2 -- Top Ten Equity Holdings Portfolio Weight (%) Bmk Weight (%) Qtr Return (%) Contribution to Return (%) Apple Inc 4.0 3.9 10.8 0.4 Microsoft Corp 3.3 3.3 8.5 0.3 Amazon.com Inc 3.0 3.0 17.4 0.5 Facebook Inc 2.0 2.0 21.6 0.4 JPMorgan Chase & Co 1.5 1.5 -4.8 -0.1 Exxon Mobil Corp 1.5 1.5 12.0 0.2 Berkshire Hathaway Inc 1.5 1.6 -6.4 -0.1 Google Inc (Class C)1.5 1.5 8.1 0.1 Alphabet Inc 1.5 1.5 8.9 0.1 Johnson & Johnson 1.4 1.4 -4.6 -0.1 % of Portfolio 21.2 21.2 1.9 Market Cap Breakout (%) Vanguard Institutional Index Fund (VINIX) S&P 500 0.0 20.0 40.0 60.0 80.0 >$75 Bil $20 Bil - $75 Bil $5 Bil - $20 Bil $0 - $5 Bil 58.4 29.3 12.2 0.1 58.5 29.2 12.3 0.1 Sector Weights (%) Vanguard Institutional Index Fund (VINIX) S&P 500 0.0 6.0 12.0 18.0 24.0 30.0 Utilities Telecommunication Services Real Estate Materials Information Technology Industrials Health Care Financials Energy Consumer Staples Consumer Discretionary 2.9 2.0 2.9 2.6 26.0 9.6 14.1 13.8 6.3 6.9 12.9 2.9 2.0 2.9 2.6 26.0 9.5 14.1 13.8 6.3 7.0 12.9 Manager Evaluation Vanguard Institutional Index Fund (VINIX) vs. S&P 500 As of June 30, 2018 Holdings Data as of Jun-2018. 21 Historical Performance (%) Buy and Hold Attribution (%) Risk and Return - monthly periodicity (Jul - 2013 - Jun - 2018)Three Year Rolling Percentile Ranking (10 Years) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Vanguard Windsor II Fund (VWNAX)2.3 -0.7 7.6 8.1 10.1 8.8 16.9 13.5 -3.1 11.3 30.8 16.8 2.8 10.7 27.2 -36.6 Russell 1000 Value Index 1.2 -1.7 6.8 8.3 10.3 8.5 13.7 17.3 -3.8 13.5 32.5 17.5 0.4 15.5 19.7 -36.8 eV Large Cap Value Median 1.6 -1.0 9.3 8.5 10.7 8.7 16.5 14.0 -3.2 11.3 33.0 15.2 0.0 14.1 24.9 -36.0 Vanguard Windsor II Fund (VWNAX) Rank 31 47 69 60 64 49 47 56 50 53 73 31 27 89 39 57 Vanguard Windsor II Fund (VWNAX)Russell 1000 Value Index 0 25 50 75 100Return Percentile Rank9/08 9/09 9/10 9/11 9/12 9/13 9/14 9/15 9/16 9/17 6/18 9.6 9.9 10.2 10.5 10.8 Return (%)9.7 9.8 9.9 10.0 10.1 10.2 Risk (Standard Deviation %) Russell 1000 Value Index Vanguard Windsor II Fund (VWNAX) 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 -5.5 -0.2 -4.3 0.6 0.4 9.4 1.0 3.0 -7.6 -0.2 -0.4 3.8 Allocation (Total: -0.2) 0.0 0.4 0.8-0.4-0.8 -0.2 0.0 -0.3 0.0 0.0 -0.2 0.0 0.0 0.4 -0.1 0.0 0.1 Stock (Total: 1.5) 0.0 0.4 0.8 1.2-0.4-0.8 0.0 0.0 0.0 0.0 -0.1 0.6 -0.1 0.0 0.3 0.4 0.1 0.1 Total (Total: 1.3) 0.0 0.4 0.8 1.2-0.4-0.8 -0.1 0.0 -0.3 0.0 -0.1 0.5 -0.1 0.0 0.7 0.4 0.1 0.2 Manager Evaluation Vanguard Windsor II Fund (VWNAX) vs. Russell 1000 Value Index As of June 30, 2018 Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading. Holdings Data as of Jun-2018. 22 Portfolio Characteristics Portfolio Benchmark Wtd. Avg. Mkt. Cap ($M)164,306 117,081 Median Mkt. Cap ($M)22,649 9,900 Price/Earnings ratio 17.5 16.1 Price/Book ratio 2.6 2.1 5 Yr. EPS Growth Rate (%)7.3 8.5 Current Yield (%)2.5 2.5 Debt to Equity 0.5 0.7 # of Securities 285 729 Beta (5 Years, Monthly)1.00 1.00 Consistency (5 Years, Monthly)51.67 0.00 Sharpe Ratio (5 Years, Monthly)0.97 1.01 Information Ratio (5 Years, Monthly)-0.11 - Up Market Capture (5 Years, Monthly)99.07 100.00 Down Market Capture (5 Years, Monthly)100.44 100.00 Active Share 62.0 -- Top Ten Equity Holdings Portfolio Weight (%) Bmk Weight (%) Qtr Return (%) Contribution to Return (%) Microsoft Corp 3.5 0.3 8.5 0.3 Wells Fargo & Co 3.2 1.9 6.6 0.2 Medtronic PLC 3.0 0.9 6.7 0.2 Pfizer Inc 2.7 1.6 3.2 0.1 JPMorgan Chase & Co 2.2 2.7 -4.8 -0.1 Johnson & Johnson 2.1 2.1 -4.6 -0.1 Lowe's Cos Inc.2.1 0.0 9.4 0.2 United Technologies Corp 2.1 0.7 -0.1 0.0 Citigroup Inc 2.0 1.3 -0.4 0.0 Oracle Corp 2.0 0.9 -3.3 -0.1 % of Portfolio 24.9 12.4 0.7 Market Cap Breakout (%) Vanguard Windsor II Fund (VWNAX)Russell 1000 Value Index 0.0 20.0 40.0 60.0 80.0 >$75 Bil $20 Bil - $75 Bil $5 Bil - $20 Bil $0 - $5 Bil 46.6 28.3 21.8 3.3 57.1 30.7 10.3 1.9 Sector Weights (%) Vanguard Windsor II Fund (VWNAX) Russell 1000 Value Index 0.0 5.0 10.0 15.0 20.0 25.0 30.0 Other Utilities Telecommunication Services Real Estate Materials Information Technology Industrials Health Care Financials Energy Consumer Staples Consumer Discretionary 0.7 0.9 2.7 0.3 3.1 17.9 8.5 17.2 18.4 12.3 6.6 11.3 0.0 5.7 3.6 4.9 4.1 9.9 7.9 13.9 23.3 11.1 7.3 8.3 Manager Evaluation Vanguard Windsor II Fund (VWNAX) vs. Russell 1000 Value Index As of June 30, 2018 Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading. Holdings Data as of Jun-2018. 23 Historical Performance (%) Buy and Hold Attribution (%) Risk and Return - monthly periodicity (Jul - 2013 - Jun - 2018)Three Year Rolling Percentile Ranking (10 Years) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Vanguard U.S. Growth Fund (VWUAX)6.1 10.8 25.8 14.1 16.9 11.6 31.8 -0.6 8.6 13.2 35.7 18.5 -0.5 11.7 35.1 -37.7 Russell 1000 Growth Index 5.8 7.3 22.5 15.0 16.4 11.8 30.2 7.1 5.7 13.1 33.5 15.3 2.6 16.7 37.2 -38.4 eV Large Cap Growth Median 5.5 8.0 21.8 13.1 15.3 10.9 29.0 3.4 4.5 11.0 34.3 15.4 -0.9 16.2 34.6 -39.8 Vanguard U.S. Growth Fund (VWUAX) Rank 33 28 24 33 23 30 33 83 14 26 37 18 45 86 47 36 Vanguard U.S. Growth Fund (VWUAX)Russell 1000 Growth Index 0 25 50 75 100Return Percentile Rank9/08 9/09 9/10 9/11 9/12 9/13 9/14 9/15 9/16 9/17 6/18 15.5 16.0 16.5 17.0 17.5 Return (%)9.9 10.2 10.5 10.8 11.1 11.4 11.7 Risk (Standard Deviation %) Russell 1000 Growth Index Vanguard U.S. Growth Fund (VWUAX) 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 0.0 -0.9 0.6 0.0 -2.7 9.1 -3.7 -0.6 5.2 -0.7 -3.0 -3.3 Allocation (Total: 0.4) 0.0 0.4 0.8-0.4-0.8 0.0 0.0 0.0 0.0 0.1 0.3 0.3 0.0 -0.3 0.0 0.2 -0.1 Stock (Total: -0.3) 0.0 0.6 1.2-0.6-1.2 0.0 0.0 -0.1 0.0 0.0 -0.5 0.3 -0.2 -0.2 0.0 0.0 0.5 Total (Total: 0.1) 0.0 0.5 1.0 1.5-0.5-1.0 0.0 0.0 -0.2 0.0 0.1 -0.3 0.6 -0.2 -0.5 0.0 0.1 0.4 Manager Evaluation Vanguard U.S. Growth Fund (VWUAX) vs. Russell 1000 Growth Index As of June 30, 2018 Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading. Holdings Data as of Jun-2018. 24 Portfolio Characteristics Portfolio Benchmark Wtd. Avg. Mkt. Cap ($M)216,617 267,911 Median Mkt. Cap ($M)31,496 12,043 Price/Earnings ratio 32.0 28.7 Price/Book ratio 6.0 7.2 5 Yr. EPS Growth Rate (%)26.3 21.3 Current Yield (%)0.7 1.2 Debt to Equity 0.7 3.4 # of Securities 153 542 Beta (5 Years, Monthly)1.03 1.00 Consistency (5 Years, Monthly)61.67 0.00 Sharpe Ratio (5 Years, Monthly)1.44 1.48 Information Ratio (5 Years, Monthly)0.17 - Up Market Capture (5 Years, Monthly)103.77 100.00 Down Market Capture (5 Years, Monthly)104.64 100.00 Active Share 51.8 -- Top Ten Equity Holdings Portfolio Weight (%) Bmk Weight (%) Qtr Return (%) Contribution to Return (%) Microsoft Corp 6.5 5.5 8.5 0.5 Mastercard Inc 4.3 1.4 12.4 0.5 Amazon.com Inc 4.2 5.4 17.4 0.7 PayPal Holdings Inc 3.6 0.8 9.8 0.4 Google Inc (Class C)3.6 2.7 8.1 0.3 Visa Inc 3.5 1.9 10.9 0.4 Facebook Inc 2.8 3.6 21.6 0.6 Unitedhealth Group Inc 2.4 1.8 15.0 0.4 Alphabet Inc 2.2 2.6 8.9 0.2 Intercontinental Exchange Inc 2.0 0.2 1.7 0.0 % of Portfolio 35.1 25.9 4.0 Market Cap Breakout (%) Vanguard U.S. Growth Fund (VWUAX)Russell 1000 Growth Index 0.0 20.0 40.0 60.0 80.0 >$75 Bil $20 Bil - $75 Bil $5 Bil - $20 Bil $0 - $5 Bil 57.7 25.2 15.9 1.3 48.3 33.3 17.1 1.3 Sector Weights (%) Vanguard U.S. Growth Fund (VWUAX) Russell 1000 Growth Index 0.0 15.0 30.0 45.0 60.0 Other Telecommunication Services Real Estate Materials Information Technology Industrials Health Care Financials Energy Consumer Staples Consumer Discretionary 0.0 0.0 2.8 0.8 48.5 7.8 12.0 8.0 0.2 2.8 17.0 0.0 0.2 2.2 1.8 41.5 11.9 13.4 4.4 1.0 5.7 17.9 Manager Evaluation Vanguard U.S. Growth Fund (VWUAX) vs. Russell 1000 Growth Index As of June 30, 2018 Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading. Holdings Data as of Jun-2018. 25 Historical Performance (%) Risk and Return - monthly periodicity (Jul - 2013 - Jun - 2018)Three Year Rolling Percentile Ranking (10 Years) Historical Statistics - monthly periodicity (Jul-2013 - Jun-2018) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Vanguard Mid-Cap Index Fund (VIMAX)2.6 2.6 12.1 9.2 12.3 10.1 19.3 11.2 -1.3 13.8 35.2 16.0 -2.0 25.6 40.5 -41.8 CRSP U.S. Mid Cap TR Index 2.6 2.6 12.1 9.2 12.4 10.0 19.3 11.2 -1.3 13.8 35.3 16.7 -1.8 26.2 36.9 -41.8 eV Mid Cap All Median 2.5 2.0 12.9 9.2 11.7 9.9 19.6 10.8 -2.0 8.9 35.6 15.4 -2.0 23.4 37.2 -39.5 Vanguard Mid-Cap Index Fund (VIMAX) Rank 50 48 56 50 39 47 52 49 45 16 55 45 50 35 36 64 Vanguard Mid-Cap Index Fund (VIMAX)CRSP U.S. Mid Cap TR Index 0 25 50 75 100Return Percentile Rank9/08 9/09 9/10 9/11 9/12 9/13 9/14 9/15 9/16 9/17 6/18 12.2 12.3 12.4 Return (%)0.0 2.0 4.0 6.0 8.0 10.0 12.0 Risk (Standard Deviation %) CRSP U.S. Mid Cap TR Index Vanguard Mid-Cap Index Fund (VIMAX) Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Period Vanguard Mid-Cap Index Fund (VIMAX)12.3 10.2 11.8 0.0 1.0 1.1 0.0 -2.1 5.7 30.0 16y 7m CRSP U.S. Mid Cap TR Index 12.4 10.3 11.8 0.0 1.0 1.2 0.0 --5.7 0.0 16y 7m 90 Day U.S. Treasury Bill 0.4 0.2 0.0 0.4 0.0 --10.3 -1.2 0.0 31.7 16y 7m Manager Evaluation Vanguard Mid-Cap Index Fund (VIMAX) vs. CRSP U.S. Mid Cap TR Index As of June 30, 2018 Note: Prior to May 16, 2003, the Vanguard Mid-Cap Index was benchmarked to the S&P MidCap 400 Index. From May 16, 2003 to January 30, 2013, the Index fund was benchmarked to the MSCI US Mid Cap 450 Index. Starting on January 31, 2013, the benchmark transitioned to the CRSP US Mid Cap Index. Holdings Data as of Jun-2018. 26 Portfolio Characteristics Portfolio Benchmark Wtd. Avg. Mkt. Cap ($M)15,754 15,656 Median Mkt. Cap ($M)12,209 12,332 Price/Earnings ratio 21.2 21.4 Price/Book ratio 2.9 3.0 5 Yr. EPS Growth Rate (%)11.4 11.1 Current Yield (%)1.6 1.5 Debt to Equity 0.7 0.7 # of Securities 362 356 Beta (5 Years, Monthly)1.00 1.00 Consistency (5 Years, Monthly)30.00 0.00 Sharpe Ratio (5 Years, Monthly)1.15 1.15 Information Ratio (5 Years, Monthly)-2.06 - Up Market Capture (5 Years, Monthly)99.82 100.00 Down Market Capture (5 Years, Monthly)100.11 100.00 Active Share 0.6 -- Top Ten Equity Holdings Portfolio Weight (%) Bmk Weight (%) Qtr Return (%) Contribution to Return (%) Edwards Lifesciences Corp 0.7 0.7 4.3 0.0 ServiceNow Inc 0.7 0.7 4.2 0.0 Fiserv Inc.0.7 0.7 3.9 0.0 Twitter Inc 0.7 0.7 50.5 0.4 Autodesk Inc.0.7 0.7 4.4 0.0 ONEOK Inc.0.7 0.7 24.3 0.2 Roper Technologies Inc 0.7 0.7 -1.6 0.0 Moody's Corp.0.7 0.7 6.0 0.0 Amphenol Corp 0.6 0.6 1.4 0.0 Align Technology Inc 0.6 0.6 36.2 0.2 % of Portfolio 6.8 6.8 0.9 Market Cap Breakout (%) Vanguard Mid-Cap Index Fund (VIMAX)CRSP U.S. Mid Cap TR Index 0.0 25.0 50.0 75.0 100.0 $20 Bil - $75 Bil $5 Bil - $20 Bil $0 - $5 Bil 20.4 79.2 0.4 20.0 79.6 0.4 Sector Weights (%) Vanguard Mid-Cap Index Fund (VIMAX) CRSP U.S. Mid Cap TR Index 0.0 5.0 10.0 15.0 20.0 25.0 Utilities Telecommunication Services Real Estate Materials Information Technology Industrials Health Care Financials Energy Consumer Staples Consumer Discretionary 4.9 0.6 7.0 5.7 19.8 12.8 9.4 13.8 6.7 4.1 15.2 5.0 0.6 6.8 5.8 19.9 13.0 9.6 13.7 6.7 4.0 14.9 Manager Evaluation Vanguard Mid-Cap Index Fund (VIMAX) vs. CRSP U.S. Mid Cap TR Index As of June 30, 2018 Note: Prior to May 16, 2003, the Vanguard Mid-Cap Index was benchmarked to the S&P MidCap 400 Index. From May 16, 2003 to January 30, 2013, the Index fund was benchmarked to the MSCI US Mid Cap 450 Index. Starting on January 31, 2013, the benchmark transitioned to the CRSP US Mid Cap Index. Holdings Data as of Jun-2018. 27 Historical Performance (%) Risk and Return - monthly periodicity (Jul - 2013 - Jun - 2018)Three Year Rolling Percentile Ranking (10 Years) Historical Statistics - monthly periodicity (Jul-2013 - Jun-2018) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Vanguard Small-Cap Index Fund (VSMAX)6.2 6.0 16.5 10.5 12.4 11.3 16.2 18.3 -3.6 7.5 37.8 18.2 -2.7 27.9 36.3 -36.0 CRSP U.S. Small Cap TR Index 6.2 6.0 16.5 10.4 12.4 11.6 16.2 18.3 -3.7 7.5 38.5 18.6 -1.9 28.0 40.1 -36.8 eV Small Cap All Median 6.7 6.1 15.9 10.4 12.1 10.8 14.2 19.6 -3.7 4.2 40.0 15.4 -2.7 26.9 34.0 -37.0 Vanguard Small-Cap Index Fund (VSMAX) Rank 58 51 48 50 46 39 40 57 50 20 63 29 50 41 43 45 Vanguard Small-Cap Index Fund (VSMAX) CRSP U.S. Small Cap TR Index 0 25 50 75 100Return Percentile Rank9/08 9/09 9/10 9/11 9/12 9/13 9/14 9/15 9/16 9/17 6/18 12.3 12.4 12.5 Return (%)0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 Risk (Standard Deviation %) CRSP U.S. Small Cap TR Index Vanguard Small-Cap Index Fund (VSMAX) Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Period Vanguard Small-Cap Index Fund (VSMAX)12.4 12.0 12.1 0.0 1.0 1.0 0.0 0.4 7.0 60.0 17y 7m CRSP U.S. Small Cap TR Index 12.4 12.0 12.1 0.0 1.0 1.0 0.0 --7.0 0.0 17y 7m 90 Day U.S. Treasury Bill 0.4 0.2 0.0 0.4 0.0 --12.0 -1.0 0.0 31.7 17y 7m Manager Evaluation Vanguard Small-Cap Index Fund (VSMAX) vs. CRSP U.S. Small Cap TR Index As of June 30, 2018 Note: Prior to May 16, 2003, the Vanguard Small-Cap Index was benchmarked to the Russell 2000 Index. From May 16, 2003 to January 30, 2013, the Index fund was benchmarked to the MSCI US Small Cap 1750 Index. Starting on January 31, 2013, the benchmark transitioned to the CRSP US Small Cap Index. Holdings Data as of Jun-2018. 28 Portfolio Characteristics Portfolio Benchmark Wtd. Avg. Mkt. Cap ($M)4,625 4,625 Median Mkt. Cap ($M)2,436 2,452 Price/Earnings ratio 19.8 19.8 Price/Book ratio 2.6 2.6 5 Yr. EPS Growth Rate (%)14.7 14.8 Current Yield (%)1.5 1.5 Debt to Equity 0.3 0.3 # of Securities 1,408 1,400 Beta (5 Years, Monthly)1.00 1.00 Consistency (5 Years, Monthly)60.00 0.00 Sharpe Ratio (5 Years, Monthly)1.00 1.00 Information Ratio (5 Years, Monthly)0.42 - Up Market Capture (5 Years, Monthly)100.10 100.00 Down Market Capture (5 Years, Monthly)100.10 100.00 Active Share 0.2 -- Top Ten Equity Holdings Portfolio Weight (%) Bmk Weight (%) Qtr Return (%) Contribution to Return (%) Vail Resorts Inc.0.3 0.3 24.3 0.1 Keysight Technologies Inc 0.3 0.3 12.7 0.0 WellCare Health Plans Inc 0.3 0.3 27.2 0.1 PTC Inc 0.3 0.3 20.3 0.1 IDEX Corporation 0.3 0.3 -3.9 0.0 Burlington Stores Inc 0.3 0.3 13.1 0.0 Atmos Energy Corp 0.3 0.3 7.6 0.0 Henry (Jack) & Associates Inc 0.3 0.3 8.1 0.0 Spirit Aerosystems Holdings Inc 0.3 0.3 2.8 0.0 ON Semiconductor Corp 0.3 0.3 -9.1 0.0 % of Portfolio 3.0 3.0 0.3 Market Cap Breakout (%) Vanguard Small-Cap Index Fund (VSMAX) CRSP U.S. Small Cap TR Index 0.0 20.0 40.0 60.0 80.0 $5 Bil - $20 Bil $0 - $5 Bil 39.0 61.0 39.0 61.0 Sector Weights (%) Vanguard Small-Cap Index Fund (VSMAX) CRSP U.S. Small Cap TR Index 0.0 4.0 8.0 12.0 16.0 20.0 Other Utilities Telecommunication Services Real Estate Materials Information Technology Industrials Health Care Financials Energy Consumer Staples Consumer Discretionary 0.0 3.7 0.4 10.4 5.3 16.9 15.4 12.1 14.7 5.1 3.0 13.0 0.0 3.7 0.4 10.4 5.3 16.9 15.4 12.1 14.7 5.0 3.0 13.0 Manager Evaluation Vanguard Small-Cap Index Fund (VSMAX) vs. CRSP U.S. Small Cap TR Index As of June 30, 2018 Note: Prior to May 16, 2003, the Vanguard Small-Cap Index was benchmarked to the Russell 2000 Index. From May 16, 2003 to January 30, 2013, the Index fund was benchmarked to the MSCI US Small Cap 1750 Index. Starting on January 31, 2013, the benchmark transitioned to the CRSP US Small Cap Index. Holdings Data as of Jun-2018. 29 Historical Performance (%) Buy and Hold Attribution (%) Risk and Return - monthly periodicity (Jul - 2013 - Jun - 2018)Three Year Rolling Percentile Ranking (10 Years) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Vanguard International Growth Fund (VWILX)0.7 4.1 20.0 12.3 11.7 6.3 43.2 1.8 -0.5 -5.5 23.1 20.2 -13.6 15.8 41.9 -44.8 MSCI AC World ex USA (Net)-2.6 -3.8 7.3 5.1 6.0 2.5 27.2 4.5 -5.7 -3.9 15.3 16.8 -13.7 11.2 41.4 -45.5 Custom Non US Diversified Growth Median -0.5 -0.1 11.8 7.8 8.3 4.8 32.6 -1.0 1.7 -3.6 20.5 19.0 -12.1 14.4 39.1 -45.6 Vanguard International Growth Fund (VWILX) Rank 32 15 15 6 8 19 10 21 75 74 30 30 66 34 38 45 Vanguard International Growth Fund (VWILX) MSCI AC World ex USA (Net) 0 25 50 75 100Return Percentile Rank9/08 9/09 9/10 9/11 9/12 9/13 9/14 9/15 9/16 9/17 6/18 -5.0 0.0 5.0 10.0 15.0 20.0 Return (%)10.2 10.8 11.4 12.0 12.6 13.2 13.8 14.4 15.0 Risk (Standard Deviation %) MSCI AC World ex USA (Net) Vanguard International Growth Fund (VWILX) Average Active Weight 0.0 15.0 30.0-15.0-30.0 Utilities Telecommunication Services Real Estate Other Materials Information Technology Industrials Health Care Financials Energy Consumer Staples Consumer Discretionary -3.0 -0.4 -3.2 0.2 -2.2 12.4 -2.1 2.0 -7.7 -5.8 -3.2 12.8 Allocation (Total: -0.4) 0.0 0.5 1.0-0.5-1.0 0.0 0.0 0.0 0.0 -0.1 0.0 0.0 0.1 0.4 -0.6 -0.1 -0.1 Stock (Total: 3.7) 0.0 2.0 4.0-2.0 0.0 0.0 0.0 0.0 0.3 0.3 -0.1 -0.4 0.6 0.1 0.2 2.6 Total (Total: 3.3) 0.0 2.0 4.0-2.0 0.0 0.0 0.0 0.0 0.3 0.3 -0.1 -0.3 1.0 -0.5 0.2 2.5 Manager Evaluation Vanguard International Growth (VWILX) vs. MSCI AC World ex USA (Net) As of June 30, 2018 Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading. Holdings Data as of Jun-2018. 30 Total Attribution (%) 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8-0.2-0.4-0.6-0.8-1.0 United Kingdom Pacific ex Japan Other North America Middle East Japan Frontier Markets Europe ex UK EM Mid East+Africa EM Latin America EM Europe EM Asia 0.2 -0.3 0.0 1.0 0.0 -0.1 -0.2 1.0 0.2 0.4 0.1 1.1 Performance Attribution (%) Average Active Weight 0.0 5.0 10.0 15.0-5.0-10.0 United Kingdom Pacific ex Japan Other North America Middle East Japan Frontier Markets Europe ex UK EM Mid East+Africa EM Latin America EM Europe EM Asia -2.4 -1.8 -0.4 2.5 0.2 -4.4 1.5 7.4 -2.1 -2.3 -1.6 3.5 Allocation (Total: 0.4) 0.0 0.3 0.6 0.9-0.3-0.6-0.9 -0.1 0.0 0.0 0.2 0.0 0.0 -0.3 0.0 0.2 0.4 0.1 -0.2 Stock (Total: 2.9) 0.0 0.6 1.2 1.8 2.4-0.6-1.2 0.3 -0.2 0.0 0.8 -0.1 -0.1 0.1 0.9 0.0 0.0 0.0 1.3 Manager Evaluation Vanguard International Growth (VWILX) vs. MSCI AC World ex USA (Net) As of June 30, 2018 Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading. Holdings Data as of Jun-2018. 31 Portfolio Characteristics Portfolio Benchmark Wtd. Avg. Mkt. Cap ($M)128,003 65,831 Median Mkt. Cap ($M)31,802 8,122 Price/Earnings ratio 22.3 14.0 Price/Book ratio 3.8 2.2 5 Yr. EPS Growth Rate (%)19.4 11.9 Current Yield (%)1.5 3.1 Debt to Equity 0.8 -0.2 # of Securities 120 2,154 Beta (5 Years, Monthly)1.09 1.00 Consistency (5 Years, Monthly)58.33 0.00 Sharpe Ratio (5 Years, Monthly)0.87 0.53 Information Ratio (5 Years, Monthly)1.20 - Up Market Capture (5 Years, Monthly)122.57 100.00 Down Market Capture (5 Years, Monthly)91.10 100.00 Active Share 82.8 -- Top Ten Equity Holdings Portfolio Weight (%) Bmk Weight (%) Qtr Return (%) Contribution to Return (%) Alibaba Group Holding Ltd 5.3 1.0 1.1 0.1 Tencent Holdings LTD 4.6 1.4 -3.6 -0.2 ASML Holding NV 3.8 0.4 1.2 0.0 Amazon.com Inc 3.5 0.0 17.4 0.6 AIA Group Ltd 3.4 0.5 4.4 0.1 Baidu Inc 3.1 0.3 8.9 0.3 Illumina Inc 2.1 0.0 18.1 0.4 Industria De Diseno Textil Inditex SA 2.0 0.2 10.6 0.2 TAL Education Group 1.9 0.1 -0.8 0.0 L'Oreal S.A., Paris 1.9 0.3 9.2 0.2 % of Portfolio 31.6 4.2 1.7 Market Cap Breakout (%) Vanguard International Growth Fund (VWILX) 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 25.1 39.9 29.3 5.7 37.1 40.0 21.5 1.5 Sector Weights (%) Vanguard International Growth Fund (VWILX) MSCI AC World ex USA (Net) 0.0 6.0 12.0 18.0 24.0 30.0 Other Utilities Telecommunication Services Real Estate Materials Information Technology Industrials Health Care Financials Energy Consumer Staples Consumer Discretionary 0.2 0.0 3.3 0.0 6.2 24.2 9.3 9.8 14.3 1.3 6.4 25.1 0.0 3.0 3.7 3.2 8.2 11.9 11.6 8.1 21.9 7.4 9.7 11.2 Manager Evaluation Vanguard International Growth (VWILX) vs. MSCI AC World ex USA (Net) As of June 30, 2018 Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading. Holdings Data as of Jun-2018. 32 Vanguard International Growth Fund (VWILX) MSCI AC World ex USA (Net) Canada 1.5 6.6 United States 8.3 0.0 Australia 0.4 4.7 Hong Kong 8.1 5.8 New Zealand 0.0 0.1 Singapore 0.3 0.9 Pacific ex Japan 8.8 11.5 Japan 12.1 16.4 Austria 0.2 0.2 Belgium 1.4 0.7 Bermuda 0.6 0.2 Denmark 2.2 1.1 Finland 0.0 0.7 France 7.1 7.0 Germany 9.4 6.5 Ireland 0.0 0.8 Italy 2.3 1.5 Netherlands 4.6 4.2 Norway 0.8 0.5 Portugal 0.1 0.1 Spain 3.9 2.1 Sweden 4.4 1.7 Switzerland 2.9 5.8 Europe ex UK 40.0 33.1 United Kingdom 8.1 10.2 Israel 0.5 0.4 Middle East 0.5 0.4 Developed Markets 79.3 78.3 Vanguard International Growth Fund (VWILX) MSCI AC World ex USA (Net) China 13.7 4.6 India 2.1 2.2 Indonesia 0.3 0.5 Korea 1.9 3.7 Malaysia 0.0 0.6 Philippines 0.0 0.2 Taiwan 1.1 2.9 Thailand 0.0 0.5 EM Asia 19.0 15.2 Czech Republic 0.0 0.0 Greece 0.0 0.1 Hungary 0.0 0.1 Poland 0.0 0.3 Russia 0.0 0.9 Turkey 0.0 0.2 EM Europe 0.0 1.5 Brazil 0.4 1.4 Cayman Islands 0.0 0.0 Chile 0.0 0.3 Colombia 0.0 0.1 Mexico 0.0 0.7 Peru 0.0 0.0 Virgin Islands 0.0 0.0 EM Latin America 0.4 2.6 Egypt 0.0 0.0 Qatar 0.0 0.2 South Africa 0.0 1.6 United Arab Emirates 0.0 0.2 EM Mid East+Africa 0.0 2.0 Emerging Markets 19.4 21.3 Frontier Markets 1.3 0.0 Cash 0.0 0.0 Other 0.0 0.4 Total 100.0 100.0 Manager Evaluation Vanguard International Growth (VWILX) vs. MSCI AC World ex USA (Net) As of June 30, 2018 Differences between the manager return and the attribution return are due primarily to the effects of fees and portfolio trading. Holdings Data as of Jun-2018. 33 Historical Performance (%) Three Year Rolling Percentile Ranking (10 Years)Risk and Return - monthly periodicity (Jul-2013 - Jun-2018) Historical Statistics - monthly periodicity (Jul-2013 - Jun-2018) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Vanguard Total Bond Market Index Fund (VBTLX)-0.2 -1.6 -0.5 1.7 2.2 3.7 3.6 2.6 0.4 5.9 -2.1 4.2 7.7 6.5 6.0 5.1 Vanguard Total Bond Market Index Fund Benchmark -0.2 -1.7 -0.4 1.7 2.3 3.7 3.6 2.8 0.4 5.9 -2.0 4.3 7.9 6.6 5.9 5.2 eV Core Fixed Income Median -0.2 -1.6 -0.4 1.8 2.4 4.2 3.8 3.0 0.5 5.9 -1.7 5.9 7.5 7.2 9.7 2.6 Vanguard Total Bond Market Index Fund (VBTLX) Rank 47 54 66 70 72 82 65 75 63 47 78 89 40 76 83 32 Vanguard Total Bond Market Index Fund (VBTLX) Vanguard Total Bond Market Index Fund Benchmark 0 25 50 75 100Return Percentile Rank9/08 9/09 9/10 9/11 9/12 9/13 9/14 9/15 9/16 9/17 6/18 2.1 2.2 2.3 2.4 Return (%)2.6 2.7 2.8 2.9 Risk (Standard Deviation %) Vanguard Total Bond Market Index Fund Benchmark Vanguard Total Bond Market Index Fund (VBTLX) Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Period Vanguard Total Bond Market Index Fund (VBTLX)2.2 2.8 1.8 -0.1 1.0 0.6 0.3 -0.2 1.7 43.3 16y 7m Vanguard Total Bond Market Index Fund Benchmark 2.3 2.7 1.9 0.0 1.0 0.7 0.0 --1.6 0.0 16y 7m 90 Day U.S. Treasury Bill 0.4 0.2 0.0 0.4 0.0 --2.7 -0.7 0.0 43.3 16y 7m Manager Evaluation Vanguard Total Bond Market Index Fund (VBTLX) vs. Vanguard Total Bond Market Index Fund Benchmark As of June 30, 2018 34 Portfolio Characteristics Portfolio Benchmark Effective Duration 6.1 6.3 Avg. Maturity 8.4 8.3 Avg. Quality AA AA- Yield To Maturity (%)3.3 3.3 Credit Quality Distribution (%) Vanguard Total Bond Market Index Fund (VBTLX) Blmbg. Barc. U.S. Aggregate 0.0 25.0 50.0 75.0 100.0 AAAAAABBBNR72.5 5.7 12.0 9.5 0.3 70.1 3.5 11.9 14.5 0.0 Historical Statistics - 5 Years Up Market Capture Down Market Capture Maximum Drawdown Vanguard Total Bond Market Index Fund (VBTLX)102.3 107.0 -3.6 Blmbg. Barc. U.S. Aggregate 100.0 100.0 -3.3 Maturity Distribution (%) Vanguard Total Bond Market Index Fund (VBTLX) Blmbg. Barc. U.S. Aggregate 0.0 15.0 30.0 45.0 Less than 1 Yr1 to 3 Yrs3 to 5 Yrs5 to 7 Yrs7 to 10 YrsGreater than 10 Yrs0.8 21.3 17.9 16.0 27.9 16.0 0.1 23.5 19.8 19.8 19.8 17.0 Sector Distribution (%) Vanguard Total Bond Market Index Fund (VBTLX) Blmbg. Barc. U.S. Aggregate 0.0 15.0 30.0 45.0 60.0 U.S. TreasuryU.S. AgencyIG CreditAgency RMBSCMBSABSOther37.8 3.2 28.5 28.2 1.8 0.6 0.0 42.7 5.4 27.5 21.8 1.9 0.5 0.2 Manager Evaluation Vanguard Total Bond Market Index Fund (VBTLX) vs. Blmbg. Barc. U.S. Aggregate As of June 30, 2018 35 Historical Performance Comparative Performance and Rolling Return Risk and Return (Jul-2013 - Jun-2018) Historical Statistics - Quarterly Periodicity (Jul-2013 - Jun-2018) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Vanguard Retirement Savings Trust III 0.5 1.1 2.1 2.0 2.0 2.5 1.9 2.0 2.0 2.0 1.9 2.5 3.1 3.1 3.1 4.4 Ryan 3 Yr GIC Master 0.5 0.9 1.8 1.5 1.3 2.1 1.6 1.4 1.2 1.0 1.1 1.5 2.4 3.5 4.5 4.8 eV US Short Fixed Income Median 0.3 0.1 0.5 1.0 1.2 2.2 1.5 1.6 0.7 1.1 0.4 2.7 2.0 3.7 6.5 4.4 Vanguard Retirement Savings Trust III Rank 8 1 1 8 9 33 24 30 1 11 7 53 20 64 80 50 Rolling 3 Years Active Return Quarterly Active Return 0.0 0.7 1.4 2.1 -0.7 -1.4Active Return (%)3/07 3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 3/17 6/18 0.0 0.6 1.2 1.8 2.4 3.0 Return (%)0.0 0.1 0.2 Risk (Standard Deviation %) Ryan 3 Yr GIC Master Vanguard Retirement Savings Trust III Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Period Vanguard Retirement Savings Trust III 2.0 0.1 1.6 1.8 0.1 6.2 0.1 5.0 0.0 100.0 11y 6m Ryan 3 Yr GIC Master 1.3 0.1 0.9 0.0 1.0 6.2 0.0 --0.0 0.0 11y 6m 90 Day U.S. Treasury Bill 0.4 0.3 0.0 -1.9 1.8 --0.1 -6.2 0.0 0.0 11y 6m Manager Evaluation Vanguard Retirement Savings Trust III vs. Ryan 3 Yr GIC Master As of June 30, 2018 36 Historical Performance Three Year Rolling Percentile Ranking Relative Performance Historical Statistics - Monthly Periodicity (Jul-2013 - Jun-2018) Quarter Year To Date 1 Year 3 Years 5 Years 10 Years 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Vanguard Balanced Index Fund (VBAIX)2.3 1.4 8.6 7.7 8.9 8.0 13.9 8.8 0.5 10.0 18.1 11.5 4.3 13.3 20.2 -22.1 Vanguard Balanced Index Fund Benchmark 2.3 1.3 8.6 7.7 8.9 8.0 13.9 8.8 0.6 9.9 18.2 11.6 4.1 13.5 19.7 -22.0 eV US Balanced Median 1.3 0.3 7.2 6.6 7.9 7.1 13.8 7.8 -0.4 7.2 17.8 10.7 1.9 12.0 22.2 -24.9 Vanguard Balanced Index Fund (VBAIX) Rank 20 18 30 26 23 19 50 39 27 17 45 41 20 31 60 38 Vanguard Balanced Index Fund (VBAIX) Vanguard Balanced Index Fund Benchmark 0 25 50 75 100Return Percentile Rank9/08 9/09 9/10 9/11 9/12 9/13 9/14 9/15 9/16 9/17 6/18 Cumulative Annualized Over/Under Relative Performance Over/Under Performance 0.0 0.4 0.8 -0.4 -0.8Return (%)9/08 9/09 9/10 9/11 9/12 9/13 9/14 9/15 9/16 9/17 6/18 Return Standard Deviation Excess Return Alpha Beta Sharpe Ratio Tracking Error Information Ratio Downside Risk Consistency Inception Period Vanguard Balanced Index Fund (VBAIX)8.9 5.9 8.3 0.0 1.0 1.4 0.1 -0.3 3.1 50.0 17y 6m Vanguard Balanced Index Fund Benchmark 8.9 6.0 8.3 0.0 1.0 1.4 0.0 --3.1 0.0 17y 6m 90 Day U.S. Treasury Bill 0.4 0.2 0.0 0.4 0.0 --6.0 -1.4 0.0 25.0 17y 6m Manager Evaluation Vanguard Balanced Index Fund (VBAIX) vs. Vanguard Balanced Index Fund Benchmark As of June 30, 2018 Note: Prior to June 1, 2005, the Vanguard Balanced Index was benchmarked to 60% DJ U.S. Total Stock Market Index/40% LB Aggregate Bond Index. From June 1, 2005 to December 31, 2009, the Index fund was benchmarked to 60% MSCI US Broad Market Index/40% BC Aggregate Index. From January 1, 2010 to January 14, 2013, the Index fund was benchmarked to 60% MSCI US Broad Market Index/40% BC Aggregate Float Adjusted Index. Starting January 15, 2013, the benchmark transitioned to 60% CRSP US Total Market Index/40% BC Aggregate Float Adjusted Index. 37 Portfolio Characteristics Portfolio Benchmark Wtd. Avg. Mkt. Cap ($M)175,021 175,167 Median Mkt. Cap ($M)1,308 1,209 Price/Earnings ratio 20.7 20.7 Price/Book ratio 3.3 3.3 5 Yr. EPS Growth Rate (%)14.7 14.7 Current Yield (%)1.9 1.9 Debt to Equity 1.8 1.8 Number of Stocks 3,487 3,594 Beta (5 Years, Monthly)0.59 1.00 Consistency (5 Years, Monthly)31.67 0.00 Sharpe Ratio (5 Years, Monthly)1.40 1.28 Information Ratio (5 Years, Monthly)-1.03 - Up Market Capture (5 Years, Monthly)62.99 100.00 Down Market Capture (5 Years, Monthly)56.91 100.00 Top Ten Equity Holdings Portfolio Weight (%) Benchmark Weight (%) Active Weight (%) Quarterly Return (%) Apple Inc 2.9 2.9 0.0 10.8 Microsoft Corp 2.7 2.7 0.0 8.5 Amazon.com Inc 2.5 2.5 0.0 17.4 Facebook Inc 1.7 1.7 0.0 21.6 JPMorgan Chase & Co 1.3 1.3 0.0 -4.8 Exxon Mobil Corp 1.3 1.3 0.0 12.0 Google Inc (Class C)1.2 1.2 0.0 8.1 Berkshire Hathaway Inc 1.2 0.9 0.3 -6.4 Alphabet Inc 1.2 1.2 0.0 8.9 Johnson & Johnson 1.2 1.2 0.0 -4.6 % of Portfolio 17.2 16.9 0.3 Distribution of Market Capitalization (%) Vanguard Balanced Index Fund (VBAIX) 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 47.9 24.6 17.7 9.8 47.9 24.7 17.7 9.7 Sector Weights (%) Vanguard Balanced Index Fund (VBAIX) CRSP U.S. Total Market TR Index 0.0 6.0 12.0 18.0 24.0 30.0 Other Utilities Telecommunication Services Real Estate Materials Information Technology Industrials Health Care Financials Energy Consumer Staples Consumer Discretionary 0.0 2.9 1.8 3.9 3.1 24.4 10.4 13.8 14.3 6.0 6.3 13.1 0.0 2.9 1.8 3.9 3.0 24.4 10.4 13.8 14.3 6.0 6.3 13.1 Manager Evaluation Vanguard Balanced Index Fund (VBAIX) vs. CRSP U.S. Total Market TR Index As of June 30, 2018 38 Portfolio Characteristics Portfolio Benchmark Effective Duration 6.1 6.3 Avg. Maturity 8.4 8.3 Avg. Quality AA AA- Yield To Maturity (%)3.3 3.3 Credit Quality Distribution (%) Vanguard Balanced Index Fund (VBAIX) Blmbg. Barc. U.S. Aggregate 0.0 25.0 50.0 75.0 100.0 AAAAAABBBNR72.5 5.7 12.0 9.5 0.3 70.0 3.6 11.9 14.5 0.0 Historical Statistics - 5 Years Up Market Capture Down Market Capture Maximum Drawdown Vanguard Balanced Index Fund (VBAIX)178.2 -0.2 -5.2 Blmbg. Barc. U.S. Aggregate 100.0 100.0 -3.3 Maturity Distribution (%) Vanguard Balanced Index Fund (VBAIX) Blmbg. Barc. U.S. Aggregate 0.0 15.0 30.0 45.0 60.0 Less than 1 Yr1 to 3 Yrs3 to 5 Yrs5 to 7 Yrs7 to 10 YrsGreater than 10 Yrs0.8 21.3 17.9 16.0 27.9 16.0 0.0 23.4 15.2 10.0 10.0 41.4 Sector Distribution (%) Vanguard Balanced Index Fund (VBAIX) Blmbg. Barc. U.S. Aggregate 0.0 15.0 30.0 45.0 60.0 U.S. TreasuryU.S. AgencyIG CreditAgency RMBSCMBSABSNon-US SovereignOther37.8 3.2 28.5 28.2 1.8 0.6 0.0 0.0 41.2 1.7 27.3 21.7 0.0 2.7 4.7 0.7 Manager Evaluation Vanguard Balanced Index Fund (VBAIX) vs. Blmbg. Barc. U.S. Aggregate As of June 30, 2018 39 DC Regulatory Spotlight 40 Policymaking Update Environmental, Social and Governance (ESG) Guidance On April 23, 2018, the DOL issued a field assistance bulletin (FAB 2018 -01) providing guidance on Environmental, Social and Governance (ESG) investments. The guidance remains generally consistent with IB 15 -01 but clarifies these areas: –Investment Alternatives in 401(k)-Type Plans: In response to participant requests for an investment alternative that reflects their personal values, the guidance provides that plan fiduciaries may add a prudently selected ESG investment and not be required to remove or forgo adding other non -ESG investments. –Qualified Default Investment Alternatives QDIA: Including a fiduciary’s own policy preferences in selecting an ESG - themed investment option for the plan’s QDIA without regard to different or competing views of plan participants and beneficiaries would raise questions about the fiduciary’s compliance with ERISA’s Duty of Loyalty. –Shareholder Engagement Activities: Proxy voting and other shareholder engagement typically does not involve significant expenditure of funds by plan participants because “the activities are generally undertaken by institutional investment managers that are appointed as the responsible plan fiduciary.” Plans may incur expenses to engage with management on environmental or social factors, either directly or through the plan’s investment manager. However, these circumstances may warrant a “documented analysis of the cost of the shareholder activity compared to the expected economic benefit (gain) over an appropriate investment horizon,” reinforcing that plan fiduciaries may not increase expenses, sacrifice investment returns, or reduce the security of plan benefits in order to promote collateral goals . Clients should seek guidance from ERISA legal counsel on interpretations of FABs and applicability to ERISA plans. Department of Labor (DOL) Fiduciary Rule Officially Ends On June 21, 2018, the 5th Circuit U.S. Court of Appeals issued a mandate that officially vacated the DOL Fiduciary Rule, including the Best Interest Contract (BIC) Exemption. The prior “Five Part Test” from 1975 is back in place, and most IRA rollover recommendations will no longer be considered investment advice, unless they are made by a person serving as a fiduciary for other purposes. The comment period on the Securities and Exchange Commission (SEC) proposal, which would subject brokers to a best interest standard that is less stringent than the DOL rule, is open for public comment until August 7, 2018. 41 Policymaking Update (cont’d) House Subcommittee Hearing on Proposed Retirement Plan Legislation On May 16, 2018, retirement industry representatives testified before the House Subcommittee on Health, Employment, Labor and Pensions, focusing on bipartisan proposals: –The Increasing Access to a Secure Retirement Act of 2017 (H.R. 4604) establishes safe harbor guidelines for plan fiduciaries to select an annuity provider to reduce compliance uncertainty. –The Retirement Plan Modernization Act (H.R. 4158) increases the automatic cash-out limit from $5,000 to $7,600 to reflect normal cost of living increases and defray some of the costs of retirement plan administration for small employers. –The Retirement Security for American Workers Act (H.R. 854) eliminates two requirements affecting multiple employer plans: (1) the “common nexus” requirement that prevents adoption of open multiple employer plans (MEPS), in which unrelated employers may collectively satisfy plan administration requirements; and (2) the “one bad apple” rule, that punishes all employers in a plan for the failure of one employer to meet the plan’s requirements. –The Receiving Electronic Statements to Improve Retiree Earnings Act (H.R. 4610) authorizes the electronic disclosure of plan information so that plan participants may access their plan information online, thereby, reducing costs. –The Retirement Enhancement and Savings Act of 2018 (H.R. 5282), which includes several provisions to make it easier for small businesses to adopt and maintain a workplace retirement plan . 42 Litigation and Enforcement Update 1 Information sourced through multiple publicly available periodicals. Aon Hewitt Investment Consulting and FirstGroup America lawsuit filed (May 2018) Claims against Aon Hewitt and plan sponsor: –Plan sponsor breached its fiduciary duties by engaging in a radical investment menu redesign with “untested” Aon Hewitt investments that consistently underperformed –Menu redesign was intended to benefit Aon Hewitt rather than participants American Airlines lawsuit files for class certification (April 2018 ) Claims against plan sponsor: –American Airlines offered the AA Credit Union Fund as its capital preservation option instead of stable value, which delivered the “returns of a poorly managed checking account” –Stable value funds are commonly used by large 401(k) plans and typically offer more in return Pioneer lawsuit partially dismissed (June 2018) Claims against plan sponsor: –Maintaining an underperforming fund, Vanguard Federal Money Market, when a stable value fund was also available in the plan, which confused and misled participants –Unreasonable record keeping fees –Improper oversight of 401(k) plan administrators Update: The judge dismissed the underperforming fund claim, citing that the plaintiff does not have standing to sue over the money market fund since he did not invest in it. The other two claims remain. Xerox lawsuit dismissed (June 2018) Claim against provider: Xerox HR Solutions (now Conduent Inc.), record keeper for the Ford Motor Co. retirement plan, violated ERISA by engaging in a “pay-to-play” arrangement with Financial Engines (FE) which wrongfully inflated the price of the investment advice services. The contract between Xerox and FE provided for FE to share fees with Xerox if FE was guaranteed as the exclusive investment adviser on Xerox’s platform. Dismissal rationale: Defendant, Xerox, did not choose Financial Engines for the Ford Plans; the Ford Plans did. Investments and Managed Account Programs1 43 Litigation and Enforcement Update (cont’d) Allergan company stock-drop case dismissed (July 2018) Claims against plan sponsor: –Violating their fiduciary duties offering company stock in the 401(k) plan –Stock was artificially inflated due to collusion and price fixing to inflate revenues Dismissal rationale:Plaintiffs failed to show that some defendants were fiduciaries; insufficient facts that defendants had engaged in collusions and violated ERISA. Chicago Bridge & Iron Co. stock lawsuit dismissed (May 2018) Claims against plan sponsor: –Violating their fiduciary duties of loyalty and prudence by offering company stock in the 401(k) plan –Stock fell when a nuclear construction project ran into delays and cost more than anticipated Dismissal rationale:Suit has no merit. Plaintiffs only assumed but could not prove that their employer knew or should have known the project’s failure would lead to stock’s plummeting . Piggly Wiggly $8.2M company stock lawsuit settlement (May 2018) Claims against plan sponsor: –Violating their fiduciary duties of loyalty and prudence by offering company stock in the 401(k) plan –Management did nothing to try and help save the retirement accounts of employees as the stock fell while paying managers “grossly exorbitant compensation” and giving them luxury company cars paid for with company money Settlement terms: $6.45 million to 5,000 current and former employees plus $1.75 million from National Union Fire Insurance Co. of Pittsburgh, Piggly Wiggly’s insurer; attorneys can collect up to one -third of total settlement amount. Company Stock1 1 Information sourced through multiple publicly available periodicals. 44 Litigation and Enforcement Update (cont’d) Brown University lawsuit trimmed (July 2018) Claims against plan sponsor: –Accepting loan program terms that benefitted TIAA more than participants –Breaching duties of loyalty and prudence through high fees among multiple vendors and underperforming investments –Offering too many investment options Update: The judge dismissed the prohibited transaction clause regarding the loan program and the claim that too many investment options were offered, calling the argument “paternalistic.” Claims moving forward include choosing two record keepers instead of one and failure to replace underperforming funds. Vanderbilt University lawsuit seeks class status (May 2018) Claims against plan sponsor: –Paying excessive fees and engaging in prohibitive transactions by locking the plan into offering the CREF Stock Account –Failing to remove underperforming funds –Allowing TIAA to use its position as record keeper to obtain access to participants using confidential information to sell TI AA products and wealth management services (amended compliant filed in June 2018) Northwestern University lawsuit dismissed (May 2018) Claims against plan sponsor: –Record keeping fees were high, paid via revenue sharing instead of on a per-capita basis –Offering too many investment options –Improperly keeping the CREF Stock Fund, which had a high expense and underperformed Dismissal rationale: Plaintiffs failed to provide sufficient facts to support many of their allegations. Regarding the CREF Stock Fund, the judge stated that no participant was required to invest in the fund or any other fund that was offered. The judge also clarified that there is nothing wrong, under ERISA, with paying record keeping expenses through revenue sharing. University of Chicago lawsuit settles for $6.5M (May 2018) Claims against plan sponsor (suit filed in 2017): –Paying excessive record keeping fees –Failing to monitor underperforming funds run by TIAA Settlement terms: $6.5 million cash payment; implement a new investment lineup for the plan and remove an allegedly underperforming fund; and agree not to increase record keeping fees for three years. Higher Education1 1 Information sourced through multiple publicly available periodicals. 45 Litigation and Enforcement Update (cont’d) Advocate church plan status lawsuit ends with settlement (June 2018) Background (suit filed in 2014): –Plaintiffs’ complaint is that participants were denied the protections of ERISA by the plan sponsor improperly claiming the pension plan is a “church plan” exempt from ERISA, which provides for minimum funding, vesting, insurance and disclosure requirements –Defendants appealed to the 7th Circuit U.S. Court of Appeals and then to the U.S. Supreme Court, which ruled that pension plans need not be established by churches in order to qualify as ERISA -exempt church plans, though they still had to satisfy other conditions –The case was returned to the District Court for further litigation, and the parties went through mediation, which ultimately resulted in a settlement Settlement terms: $1.25 million for attorney fees; $10,000 for each of the four named plaintiffs; maintain funding for next 10 years despite any merger or acquisition activity; $300 cash payment to certain terminated participants whose benefits were unvested. Church Plan Status1 1 Information sourced through multiple publicly available periodicals. 46 Capital Markets Review 47 Capital Markets ReviewSummaryAs of June 30, 2018+0.7+3.4+7.8-1.2-1.3-8.0+0.8-2.8-0.2+0.2+1.0+0.4+8.5+0.4+5.2+1.0+0.6+11.1+14.4+17.6+6.8+11.0+8.2+8.2+1.4-0.4+3.6+2.5+1.3+4.9+7.3+1.2+4.0+2.8-15 -5 5 15 25MSCI Global ACWI IMIS&P 500Russell 2000MSCI EAFES&P Dev ex U.S. SCMSCI EMFHFRI Equity Hedged*BBG Barclays Global Agg.BBG Barclays U.S. Agg.WGBI ex-U.S. HedgedBofAML High Yield Cons.91-Day T-BillsNAREITBloomberg CommodityDJ Brookfield Global Infra.HFRI FoF:Cons.*CPIPerformance: Past Quarter and Year (%)Past QuarterPast 12 MonthsFixed Income (Bonds)Equities (Stocks)AlternativesDeviating risksThe key themes during the quarter were economic growth divergences and asymmetricalexposure to trade conflicts. Global growth remains robust, but regional divergences havewidened and weighed on equity market performance for several economies. Within theU.S., strong fundamentals helped drive second quarter and calendar year equity earningsexpectations higher. This strength should continue to support risk assets near-term despiterising uncertainty.Trade tensions and political risks escalated during the second quarter, epitomizedbytheU.S. and China’s tit-for-tat retaliatory tariff proclamations, which increased the probabilityof a full blown trade war and challenges to international supply chains. OnJuly 6, the U.S.imposed a 25% tariff on $34 billion of Chinese goods and is considering the imposition oftariffs more than $200 billion of goods. Political risks intensified, as Italy’s Euroscepticleaders struggled to form a government, spurring risk aversion and flight-to-qualityglobally. Italy was not alone, as BREXIT negotiations continued to produce infighting,Germany’s governing coalition threatened to breakup, and several emerging economieswere confronted with inflationary pressures and currency devaluations.Global monetary policy continued alongits gradual path to normalizationthrough changesto rates and forward guidance, measures financial markets took in stride.While the Bank ofEngland, the European Central Bank (“ECB”), and the Bank of Japan made no immediatechanges to current policy, the ECB outlined further tapering of bond purchases andaffirmed its dedication to hold rates at current levels through summer 2019. In May, theFederal Reserve’s (“Fed”) preferredmeasure of inflation reached 2.0% ona year-over-yearbasis, but policymakers remain confident that inflation will remain contained and mademinor changes to forward guidance while raising rates 25 basis points in June. Two morerate increases are expected in the U.S. this year, one in September and one in December.For the sixth consecutive quarter, the U.S. yield curve flattened. While the 10-yearTreasury yield rose only modestly during the quarter, the range extended from a high of3.1% to a low of 2.7%, in the wake of the Italian shock. Increasing uncertainty and supplywidened spreads across the spectrum of corporate and emerging market bonds. Emergingmarket debt, in particular, was hurt by a confluence of risks: rising yields, decliningcurrencies, trade uncertainty, profit taking, and idiosyncratic risks.Growing trade tensions also hindered emerging market equities. Concernsregarding theimpact to global supply chains put downward pressure on international equities withemerging markets bearing the brunt of the selloff. This ended five consecutive quarters ofpositive performance. An improving U.S. economic picture helped U.S. small caps climb+7.8% during the quarter, also benefiting from lower ties to global trade.While energy prices have been surging (+10.7% QTD and +34.7% 1-year), commodityprices overall rose a meager 40 basis points, as trade uncertainty hurt agriculture andindustrial metals prices. Increasing energy costs also helped drive income instruments likeMLPs, which rose +11.1% during the quarter.*HFRI data are subject to revision. It is not possible to invest directly in an index. Source: FactSet & Bloomberg48 500100015002000250030003500Jun-05Jun-06Jun-07Jun-08Jun-09Jun-10Jun-11Jun-12Jun-13Jun-14Jun-15Jun-16Jun-17Jun-18Jun-19U.S. RecessionS&P 500 Price12-Month Forward Price Target (lagged)0.00.51.01.52.02.53.03.54.04.55.01-Year 2-Years 3-Years 5-Years 7-Years 10-Years 30-YearsYield (%)Almost there?Current5-Year forwards12/31/2014Historical Average Fed Funds RateSource: Bloomberg as of 6/29/201835 year historical average of Fed FundsCapital Markets ReviewAsset Class OutlookAs of June 30, 2018Source: BloombergEquitiesGlobal growth remains above trend, supported by easy financial conditions, subdued inflation andconsumer strength. The synchronized growth experienced in 2017, however, has broken down andregional risks have expanded. In 2018, bolstered by growth as well as tax cuts, S&P 500 Indexearnings are expected to climb approximately 20%. While earnings growth is expected to slow to10% in 2019, this represents a return to long-run sustainable trends, rather than a deterioratingeconomy (FactSet). In developed markets outside the U.S., fundamentals broadly remain intact, butgrowth has slowed. Emerging markets (“EM”) continue to benefit from positive secular trends, suchas a growing middle class. Current conditions are being further supportedby easing credit access offinancial institutions in the U.S. and globally. These easing standards are offsetting in part the gradualtightening of monetary accommodation. Although labor market advances have yet to translate intostrong wage gains, robust growth has enabled consumers’ balance sheets toimprove significantly,reducing delinquencies and debt to service ratios. Trade and political risks continue to threatenfundamentals, feeding uncertainty and sparking bouts of market volatility. Thus far, the risinguncertainty has not been sufficient to stifle earnings and investment. These risks, however, havedriven asymmetries of performance and expectations in select markets. Assuch, we recommendinvesting in markets with exposure to growth and avoiding uncompensated risks, such as those foundin some developed market outside the U.S.Fixed IncomeContinued normalization of monetary policy spurred headwinds for fixed income assets, mutingperformance for most sectors. In June, the Fed continued the normalization process, raising ratesanother 25 basis points. With seven increases since 2015, only four more hikes are needed before theFed achieves its neutral target of 3%, suggesting most of the pain may be behind us and affirmed inthe forward markets. As a result, we continue to view high quality durationas source ofdiversification and protection against unanticipated market sell offs,while lower quality creditprovides little protection against late cycle risks. Internationally, rising rates, currency moves, andpolitical risks have widened spreads in high risk regions, and while recent events have revived badmemories of past EM crises, circumstances have changed. EMs have grown reserves, allowedcurrencies to float, and reduced external public funding, even EM corporations are partially hedgedthrough offshore revenues. These divergences internationally should produce fertile ground fornimble active managers to source opportunities.Real AssetsCore inflation reached the Fed’s 2% target in May, and likely will rise during the course of the nextfew quarters, but it continues to face headwinds in the form of demographics, technologicalinnovation, as well as globalization. While any material deterioration in trade arrangements wouldput upward pressure on inflation, demand likely would slow with potentially adverse effects for realassets. Although these conditions have created a difficult environment for real assets, we maintainour view that global listed infrastructure likely provides a diversifying income stream with a lowervolatility profile than commodities.Absent a recession growth tracks expectationsSource: Bureau of Economic Analysis, FRED, & Pavilion Analysis-6%-4%-2%0%2%4%6%May-00May-01May-02May-03May-04May-05May-06May-07May-08May-09May-10May-11May-12May-13May-14May-15May-16May-17May-18Year-over-year ChangeInflation: Core Goods and ServicesU.S. RecessionCore ServicesCore GoodsFed Target49 Capital Markets ReviewKey Market RisksAs of June 30, 2018Source: Bloomberg, FactSet, Recession Alert, & Pavilion AnalysisCyclical risks remain benign while policy and trade tensions festerHow much further for the Fed to go?The Fed raised rates in June, with expectations for rate increasesin September and December. These increases would bring the policy rate to within 50 basis points of theFed’s 3.00% target. The question is when will the tightening end? If the Treasury yield curve is steep,the market is signaling future policy rates will go higher. If the curve is inverted, markets are signalingpolicy rates will fall. If the yield curve is flat, the market is signaling that policy rates have reached aneutral level. With the current spread between the 2-year and 10-year Treasury yields falling to almost30 basis points, the market appears to be suggesting rates are near a neutral level. Current conditionsmay warrant further rate increases,however tightening financial conditions eventually will weigh on theeconomy. While it may be several quarters before the impact of tightening financial conditions are felt,careful monitoring is warranted.European risk continues to percolate:While concerns over Greece have subsided, vulnerabilities tothe European Union’s (“EU”) stabilitypersist. This quarter saw a spike inItalian sovereign bond yields,as concerns of a potential default were elevated due to the appearance thatthe new coalition governmentmay take an anti-EU slant. While an Italian default remains extremely unlikely, the ramifications wouldbe significant with particular harm to European banks. The BREXIT vote celebrated its secondanniversary, but negotiators remainat a significant distance from any agreement with uncertaintylimiting U.K. investment. The bottom line is that European risk assets continue to deserve a higher riskpremium.Trade tensions, if they persist, will be a drag on growth:While the absolute numbers around recentlyimposed and threatened tariffs are a relatively small part of global growth, the potential disruptions toestablished value chains and increased uncertainty could cause significant damage to future investment.While trade volumes have held up, the current headwinds represent a threatto enterprises andeconomies with significant trade exposure.Fixed IncomeEquitiesFinancialStresses Valuations CyclicalCurrent Risk LevelsSource: Bloomberg, 3-Month Moving Average050100150200250300Spread in basis pointsCost of Italian credit protection spikesSource: Bloomberg-20%-15%-10%-5%0%5%10%15%20%Jan-08Jun-08Nov-08Apr-09Sep-09Feb-10Jul-10Dec-10May-11Oct-11Mar-12Aug-12Jan-13Jun-13Nov-13Apr-14Sep-14Feb-15Jul-15Dec-15May-16Oct-16Mar-17Aug-17Jan-18Year-over-year changeWorld Trade Volumes50 1.001.502.002.503.003.504.0020304050607080901/20153/20155/20157/20159/201511/20151/20163/20165/20167/20169/201611/20161/20173/20175/20177/20179/201711/20171/20183/20185/2018$/Mbtu (natural gas)$/barrel (crude oil)Brent CrudeWTI CrudeNatural Gas234567891011-1000-800-600-400-2000200400600199019921994199619982000200220042006200820102012201420162018Unemployment Rate (%)Employees (1000s)Monthly Nonfarm Employees ChangeUnemployment RateCapital Markets ReviewEconomyAs of June 30, 2018Inflation and trade disputes juxtapose with strong domestic growthThe escalation of trade disagreements contributed to increased volatility in markets due to thepotential for disruptions in globalsupply chains, as producers gauge theimpact of rising importcosts. Tariffs placed on imported goodscan trigger inflation in a way thatis not organically tiedto growth, forcing policy makers to push interest rates higher prematurely. U.S. agriculturalproducers are likely to be hard hit by falling prices, as China’s retaliatory tariff list included asignificant number of farm products. Europe, Mexico and Canada also responded to U.S. tariffsby adding tariffs on a range of U.S. goods. Inflation in June hit a 6-year high of 2.8%, with thecore index rising to 2.2%. Most estimates for second-quarter U.S. GDP growth fall in the rangeof 3% - 4%, strong by any measure.Energy prices rose significantly, reflecting global growth as well as supply challenges. Supply-side factors included OPEC oil production cuts, which could potentially be supplanted by otherproducers, a collapse in Venezuelanproduction and the imposition of sanctions against Iran.U.S. oil reserves continued to fall aseconomic growth increased demand. Natural gas priceswere pushed upward by utility demand,following increased usage during a warmer than usualspring and increasing exports.The labor force continued to see more people return to work, marking 93 consecutive months ofnonfarm employment growth. The tightness of labor supply varies by industry, with energy andconstruction exhibiting output hampered by the availability of skilled workers. In someindustries, technology has been introduced which has limited the impact from a tighter labormarket, resulting in slower wage growth in these sectors.Energy PricesU.S. Employment GainsSource: Bureau of Labor Statistics-20-10010203040509/1/201710/1/201711/1/201712/1/20171/1/20182/1/20183/1/20184/1/20185/1/20186/1/2018PercentSoybeansAluminumSteelTariffs Affect Commodity PricesSource: FactsetSource: Factset51 Capital Markets ReviewEquitiesAs of June 30, 2018Source: FactSet, S&PSource: FactSet, MSCIGrowth continues to outperform while emerging markets struggleThe S&P 500 Index returned +3.4% during the second quarter, bringing the first halfreturn to +2.6%. Energy was the strongest sector during the quarter, followed byConsumer Discretionary, Information Technology, and Real Estate. Industrials andFinancials were the weakest sectors during the quarter. For the first halfof the year,Consumer Discretionary and Information Technology have been the best performingsectors while Consumer Staples and Telecom have been the weakest sectors.Developed market equity indices returned between -2.6% and +3.4% during the secondquarter, with the S&P 500 the strongest at +3.4%. Emerging Market equitieswere morechallenged during the second quarter, returning -8.0%, with Brazil particularly weak.The Growth style continued to outperform the Value style during the secondquarter,with the exception of U.S. Small Cap. The most pronounced spread between Growthand Value was in U.S. Large Cap. In International Developed markets, Growthwasjustslightly positive while Value returns were negative. In Emerging Markets,Growthwasnegative but to a lesser extent than Value. U.S. Small Cap outperformed itsU.S. Midand Large Cap counterparts within both styles, but it was more pronounced for theValue style.Second Quarter and YTD S&P 500 Sector Returns-3.2%-3.2%-1.5%-0.9%2.6%3.1%3.4%3.7%6.1%7.1%8.2%13.5%-4.7%-4.1%-8.5%-8.4%-3.1%1.8%2.6%0.3%0.8%10.9%11.5%6.8%-10.0% -5.0% 0.0% 5.0% 10.0% 15.0%IndustrialsFinancialsCons StaplesTelecomMaterialsHealthcareS&P 500UtilitiesReal EstateInfo TechCons DiscEnergy2QYTDSecond Quarter and YTD World and Emerging Market Equity Returns0.5%3.4%1.7%-2.6%-1.2%-8.0%-3.5%-9.2%-6.3%-0.6%-11.9%-26.4%-0.4%2.6%0.4%-3.8%-2.7%-6.7%-1.7%-9.6%-1.0%-7.5%-15.5%-17.3%-30.0%-20.0%-10.0%0.0%10.0%MSCIACWIS&P500MSCIWorldMSCIACWIx USMSCIEAFEMSCIEMChina SouthKoreaTaiwan India SouthAfricaBrazil2QYTDGrowth Generally Outperformed Value During the Second Quarter1.2%2.4%8.3%-2.6%-8.9%5.8%3.2%7.2%0.1%-7.0%-10.0%-5.0%0.0%5.0%10.0%U.S. Large Cap U.S. Mid Cap U.S. Small Cap Int'l Developed Emerging MktsValueGrowthSource: FactSet52 Source: BloombergSource: Federal Reserve Bank of St. LouisU.S. Treasury Yield Curve ChangeSource: US Dept. of The TreasuryDuration – Adjusted Excess Returns to Treasuries (bps)Curve flattens as trade tensions riseThe Fed raised rates 0.25% at the June Federal Open Market Committee meeting, settingthe Federal Funds Rate target at 1.75%to 2.00%. Yields moved higher acrossthe entirematurity spectrum and the curve continued its flattening trend. The bellwether 10-year U.S.Treasury reached 3.11% in mid-May as growth and inflation expectations increased, butretraced back to 2.85% by quarter-end amid the flight-to-quality. Escalating trade tensionsput downward pressure on yields later in the quarter as the U.S. imposed 25%tariffs onimported steel and aluminum, creating concerns over future growth. The spread between 2-year and 10-year Treasuries narrowed to post crisis lows but is not yet signaling a near-termrecession.Investment-grade (“IG”) corporate spreads widened 14 basis points (“ bps”) in the quarter,to +123 bps, due primarily to supply/demand imbalances rather than deterioration in creditfundamentals. Foreign demand for IG corporates has moderated as currencyhedging costsfor overseas buyers have risen with a stronger U.S. dollar and higher short-term rates. Highyield (+1.03%) outpaced investment grade (-0.98%) corporates, benefitting from lightsupply and a shorter duration.Structured products were insulatedfrom trade tension-related weakness, and fared betterthan corporates during the quarter. Agency MBS (+0.24%) benefited from strong housingdata and demand for high-quality bonds, which outweighed heavy supply in the space.Local currency emerging market debt (-10.42%) was the worst performer on the quarter asbrewing trade conflicts erupted, and the U.S. dollar continued to soar. The WSJ DollarIndex (a basket of 16 currencies) jumped 5.1% in Q2, the first quarterly gain since 2016. Best Period Second Best Period Worst Period Second Worst PeriodFixed IncomeAs of June 30, 2018Capital Markets Review2- vs. 10-Year Treasury Curve Slope0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%0 5 10 15 20 25 30Yield to MaturityMaturity (Years)6/30/201712/31/20176/29/2018 2011 2012 2013 2014 2015 2016 2017 1Q18 2Q18Aggregate-114226 93 10 -53 138 121 -31 -23Agency-25 166 1 10-133121 148 6 -15MBS-10691 98 40 -5 -11 52 -39 15ABS52 2462453 44 95 92 -19 17CMBS47 841 97 108-28236 158 -7 0Credit-322693 226 -18 -169 442 335 -68 -91High Yield-240 1394 923 -112-5771573 610 -17 96EMD (USD)-5371503 -32 -120 3 880 627 -26 -242-1.0-0.50.00.51.01.52.02.53.03.5Jun-90Jun-92Jun-94Jun-96Jun-98Jun-00Jun-02Jun-04Jun-06Jun-08Jun-10Jun-12Jun-14Jun-16Jun-18In PercentU.S. Recession53 Capital Markets ReviewAlternative InvestmentsAs of June 30, 2018Sources: S&P Capital IQ, PitchBook3.430.720.67-0.161.031.08-0.152.390.260.750.74-2.00-1.000.001.002.003.004.005.00Long/short equity hedge funds nearly kept up with global stocks despite its lower beta, but domestic stocks trounced more geographically diversified funds.Fixed income hedge funds outperformed domestic bonds and high yield due to outperformance of lower-quality credit and duration hedging. Versus a 60/40 portfolio of global stocks and domestic bonds, hedge fund and macro strategies outperformed*Asset-weighted is used instead of fund-weighted, as it is available and more indicative of the universe.Sources: Hedge Fund Research, FactSetHedge Funds vs Long-Only: Total Returns 2018 Q2Global alternatives rise with risk assetsHedge Funds:Hedge funds generated mixed performance during the quarter. The growth bias ofthe universe was a boon, although international exposures was a strong headwind to performance.Mature quantitative funds with nuancedmodels did well during the quarter, but those withexposures to broad market “factors”, such as value and momentum, incurredlosses, while trendrebounded. Within long/short equity, crowded long positioning declinedin late-April, and areversal in momentum names hurt at the end of June. In all, alpha generationwas relatively flatduring the quarter for long-short equity funds, with funds that had long positioning in growth anddomestic names outperforming those withlong exposures to Asia, Latin America, and thetechnology sector. Fixed income fundswere boosted by an outperformance of lower-qualitycredit and duration hedging. Record-making M&A deal volumes continue to support merger-oriented event-driven strategies, which was one of the strongest strategies in the quarter.Real Assets:Higher-yielding liquid real assetsrebounded in the second quarter following achallenging start to 2018. Listed infrastructure rallied +5.2%. After the sell-off in the firstquarter, oil & gas pipelines were the most significant contributor to second quarterperformance. Broadly, we expect diversified infrastructure to perform well in a rising interestrate environment if economic growth also improves. That said, regulated utilities, such as waterutilities, can be more sensitive to changes in interest rates due to their fixed long-term contractsand have struggled in the first half of 2018.Private Capital Markets: U.S. Middle Market Valuation Update:One sustaining trend overrecent years is an increase in purchase price multiples within private equity. The price increasecould be a possible explanation for the decrease in deal flow over the past nine quarters. Severalfactors could be contributing to the rise in purchase price multiples. Oneof the most impactfulfactors that could be creating upward pressure is the rise in public marketcomparable valuations.High public company valuations could be inflating the valuations of private companycounterparts. Further, the low-cost debt environment and record fundraising levels, both of whichhave increased the competition for good deals, also could be contributingfactors.2.42.62.833.23.43.63.8485909510010512/29/2017 1/28/2018 2/27/2018 3/29/2018 4/28/2018 5/28/2018 6/27/2018U.S. 10 Year Treasury YieldCumulative YTDPerformance %Infrastructure Sector Performance and RatesU.S. 10 Year TreasuryOil & Gas StorageWaterDJ Brookfield CompositeThe yield on the 10-year Treasury began the year at 2.41% and rose to 3.10% in mid-May before ending the quarter at 2.85%, which weighed on utilities. Source: Bloomberg5.45.65.25.85.53.94.35.34.75.29.49.910.510.510.70.02.04.06.08.010.012.02014 2015 2016 2017 2018MultipleDebt/EBITDAEquity/EBITDATotalU.S. Middle Market Median EV/EBITDA Multiples11 Through May 31, 201854 Quarter Calendar YTD 1 Year 2 Years 3 Years 5 Years 10 Years Equity Markets Broad Global Equity MSCI All Country World IMI 0.7 -0.2 11.1 15.0 8.3 9.6 6.1 Broad U.S. Equity Dow Jones Industrial Average 1.3 -0.7 16.3 19.2 14.1 13.0 10.7 Broad U.S. Equity Russell 3000 Index 3.9 3.2 14.8 16.6 11.6 13.3 10.2 Technology Equity NASDAQ Index 6.6 9.4 23.6 25.9 16.0 18.5 13.9 U.S. Large Cap Equity S&P 500 Index 3.4 2.6 14.4 16.1 11.9 13.4 10.2 U.S. Large Cap Equity Russell 1000 Index 3.6 2.9 14.5 16.3 11.6 13.4 10.2 U.S. Large Value Equity Russell 1000 Value Index 1.2 -1.7 6.8 11.1 8.3 10.3 8.5 U.S. Large Growth Equity Russell 1000 Growth Index 5.8 7.3 22.5 21.5 15.0 16.4 11.8 U.S. Mid Cap Equity Russell Mid Cap Index 2.8 2.3 12.3 14.4 9.6 12.2 10.2 U.S. Mid Cap Value Equity Russell Mid Cap Value Index 2.4 -0.2 7.6 11.7 8.8 11.3 10.1 U.S. Mid Cap Growth Equity Russell Mid Cap Growth Index 3.2 5.4 18.5 17.8 10.7 13.4 10.5 U.S. Small Cap Equity Russell 2000 Index 7.8 7.7 17.6 21.0 11.0 12.5 10.6 U.S. Small Cap Value Equity Russell 2000 Value Index 8.3 5.4 13.1 18.8 11.2 11.2 9.9 U.S. Small Cap Growth Equity Russell 2000 Growth Index 7.2 9.7 21.9 23.1 10.6 13.6 11.2 International Equity MSCI EAFE Index -1.2 -2.7 6.8 13.4 4.9 6.4 2.8 International Equity MSCI EAFE Index (Hedged)2.8 -1.7 5.1 12.4 3.4 6.6 2.6 International Equity MSCI ACWI ex-U.S. Index (inc. Emerging Mkts)-2.6 -3.8 7.3 13.7 5.1 6.0 2.5 International Value Equity MSCI ACWI ex-U.S. Value Index -3.8 -5.3 4.6 13.7 3.5 4.8 2.0 International Growth Equity MSCI ACWI ex-U.S. Growth Index -1.4 -2.3 9.9 13.6 6.6 7.2 3.0 International Small Cap S&P Developed ex-U.S. Small Cap Index -1.3 -2.2 11.0 16.1 8.9 10.4 5.7 Emerging Markets MSCI Emerging Markets Index -8.0 -6.7 8.2 15.7 5.6 5.0 2.3 Bond Markets Core Plus Bond Bloomberg Barclays Aggregate Bond Index -0.2 -1.6 -0.4 -0.4 1.7 2.3 3.7 Global Bonds Bloomberg Barclays Global Aggregate Index -2.8 -1.5 1.4 -0.4 2.6 1.5 2.6 Total Bond Market Bloomberg Barclays Universal Bond Index -0.3 -1.7 -0.3 0.3 2.1 2.6 4.1 Long Duration Bonds Bloomberg Barclays Long Credit Index -2.7 -6.4 -1.3 0.8 5.0 5.5 7.3 Short-Duration Bonds BofA Merrill Lynch U.S. Treasury (1-3 Year)0.2 0.1 0.1 0.0 0.4 0.6 1.2 Global Bonds Citigroup-WGBI ex-U.S. Index (Unhedged)-5.1 -0.9 3.2 -1.0 3.7 1.0 1.8 Global Bonds Citigroup-WGBI ex-U.S. Index (Hedged)0.2 1.7 3.6 0.8 3.8 4.3 4.4 Treasury Inflation Protection Bloomberg Barclays 1-10 Year TIPS Index 0.6 0.2 1.5 0.6 1.5 1.2 2.3 Municipal Bonds Bloomberg Barclays Municipal Bond Index 0.9 -0.2 1.6 0.5 2.9 3.5 4.4 Cash 91-Day T-Bills Index 0.4 0.8 1.3 0.9 0.6 0.4 0.3 Alternatives Commodities Bloomberg Commodity Index 0.4 0.0 7.3 0.2 -4.5 -6.4 -9.0 U.S. Public Real Estate FTSE NAREIT All Equity REIT Index 8.5 1.3 4.9 2.5 9.1 8.9 8.3 Global Listed Infrastructure DJ Brookfield Global Infrastructure Comp. Index 5.2 -1.3 1.2 4.1 3.5 6.1 7.9 Diversified Hedge Funds HFRI FoF Conservative Index 1.1 1.7 4.2 4.7 1.9 3.0 1.2 Long/Short Equity HFRI Equity Hedge Index 0.9 1.2 8.3 10.2 4.9 5.9 3.7 Inflation Inflation CPI 1.0 2.2 2.9 2.3 1.8 1.5 1.4 Returns for periods greater than one year are annualized. Capital Markets Review Index Returns As of June 30, 2018 55 ��S & P 5 0 0 I n d e x i s a c a p i t a l i z a t i o n - w e i g h t e d i n d e x o f 5 0 0 U . S . s t o c k s p u b l i s h e d b y S t a n d a r d a n d P o o r s . T h e i n d e x , w h i c h i s h e a v i l y d o m i n a t e d b y t h e l a r g e s t s t o c k s i n t h e U . S . m a r k e t , c o n t a i n s a b o u t 8 0 % o f t h e t o t a l s t o c k m a r k e t c a p i t a l i z a t i o n a n d i s w i d e l y u s e d a s a b e n c h m a r k o f t h e l a r g e s t U . S . s t o c k s . ��M S C I A C W I I n v e s t a b l e M a r k e t I n d e x ( I M I ) c a p t u r e s l a r g e , m i d a n d s m a l l c a p r e p r e s e n t a t i o n a c r o s s 2 4 D e v e l o p e d M a r k e t s ( D M ) a n d 2 1 E m e r g i n g M a r k e t s ( E M ) c o u n t r i e s i d e n t i f i e d b e l o w . W i t h 8 , 4 2 5 c o n s t i t u e n t s , t h e i n d e x i s c o m p r e h e n s i v e , c o v e r i n g a p p r o x i m a t e l y 9 9 % o f t h e g l o b a l e q u i t y i n v e s t m e n t o p p o r t u n i t y s e t . ��B l o o m b e r g B a r c l a y s U . S . A g g r e g a t e I n d e x r e p r e s e n t s s e c u r i t i e s t h a t a r e S E C - r e g i s t e r e d , t a x a b l e , a n d d o l l a r d e n o m i n a t e d . T h e i n d e x c o v e r s t h e U . S . i n v e s t m e n t g r a d e f i x e d r a t e b o n d m a r k e t , w i t h i n d e x c o m p o n e n t s f o r T r e a s u r y , g o v e r n m e n t a g e n c i e s , c o r p o r a t e s e c u r i t i e s , m o r t g a g e p a s s - t h r o u g h s e c u r i t i e s , c o m m e r c i a l m o r t g a g e - b a c k e d s e c u r i t i e s a n d a s s e t - b a c k e d s e c u r i t i e s . T h e s e m a j o r s e c t o r s a r e s u b d i v i d e d i n t o m o r e s p e c i f i c i n d i c e s t h a t a r e c a l c u l a t e d a n d r e p o r t e d o n a r e g u l a r b a s i s . T h e U . S . A g g r e g a t e I n d e x w a s c r e a t e d i n 1 9 8 6 w i t h h i s t o r y b a c k f i l l e d t o J a n u a r y 1 , 1 9 7 6 . ��B a n k o f A m e r i c a M e r r i l l L y n c h U . S . H i g h Y i e l d I n d e x i s a c o m m o n l y u s e d b e n c h m a r k i n d e x f o r h i g h y i e l d c o r p o r a t e b o n d s . I t i s a d m i n i s t e r e d b y M e r r i l l L y n c h . T h e e x i s t i n g H i g h Y i e l d M a s t e r I n d e x e x c l u d e d t w o t y p e s o f i s s u e s t h a t w e r e b e c o m i n g p o p u l a r b e c a u s e o f t h e b o o m i n l e v e r a g e d b u y o u t f i n a n c i n g , z e r o - c o u p o n b o n d s a n d p a y m e n t - i n - k i n d ( P I K ) b o n d s . ��C i t i g r o u p W o r l d G o v e r n m e n t B o n d I n d e x ( W G B I ) i s a m a r k e t c a p i t a l i z a t i o n w e i g h t e d i n d e x c o n s i s t i n g o f t h e g o v e r n m e n t b o n d m a r k e t s . C o u n t r y e l i g i b i l i t y i s d e t e r m i n e d b a s e d o n m a r k e t c a p i t a l i z a t i o n a n d i n v e s t a b i l i t y c r i t e r i a . A l l i s s u e s h a v e a r e m a i n i n g m a t u r i t y o f a t l e a s t o n e y e a r . ��C o n s u m e r P r i c e I n d e x ( C P I ) i s a m o n t h l y i n f l a t i o n i n d i c a t o r t h a t m e a s u r e s t h e c h a n g e i n t h e c o s t o f a f i x e d b a s k e t o f p r o d u c t s a n d s e r v i c e s , i n c l u d i n g h o u s i n g , e l e c t r i c i t y , f o o d a n d t r a n s p o r t a t i o n . ��R u s s e l l 2 0 0 0 I n d e x i s a c a p i t a l i z a t i o n - w e i g h t e d i n d e x t h a t m e a s u r e s t h e p e r f o r m a n c e o f t h e s m a l l - c a p s e g m e n t o f t h e U . S . e q u i t y u n i v e r s e , c r e a t e d b y R u s s e l l I n v e s t m e n t s . I t i n c l u d e s a p p r o x i m a t e l y 2 , 0 0 0 o f t h e s m a l l e s t s e c u r i t i e s w i t h i n t h e 3 , 0 0 0 l a r g e s t s e c u r i t i e s i n t h e U . S . e q u i t y u n i v e r s e . T h e G r o w t h o r V a l u e s t y l e i n d e x e s a r e a n o n - e x c l u s i v e s u b s e t o f t h e b r o a d e r i n d e x , w h e r e g r o w t h o r v a l u e i s d e t e r m i n e d b y v a l u a t i o n a n d g r o w t h c h a r a c t e r i s t i c s , a s d e t e r m i n e d b y R u s s e l l I n v e s t m e n t s . ��H F R I M o n t h l y I n d i c e s ( H F R I ) : T h i s i s a n e q u a l l y w e i g h t e d s e t o f p e r f o r m a n c e i n d e x e s , u s e d b y n u m e r o u s h e d g e f u n d m a n a g e r s a s b e n c h m a r k s f o r t h e i r o w n h e d g e f u n d s . T h e H F R I a r e b r o k e n d o w n i n t o f o u r m a i n s t r a t e g i e s , e a c h w i t h m u l t i p l e s u b s t r a t e g i e s . A l l s i n g l e - m a n a g e r H F R I I n d e x c o n s t i t u e n t s a r e i n c l u d e d i n t h e H F R I F u n d W e i g h t e d C o m p o s i t e , w h i c h a c c o u n t s f o r o v e r 2 , 2 0 0 f u n d s l i s t e d o n t h e i n t e r n a l H F R D a t a b a s e . D u e t o m u t u a l a g r e e m e n t s w i t h t h e h e d g e f u n d m a n a g e r s l i s t e d i n t h e H F R D a t a b a s e , w e a r e n o t a t l i b e r t y t o d i s c l o s e t h e p a r t i c u l a r f u n d s b e h i n d a n y i n d e x t o n o n - d a t a b a s e s u b s c r i b e r s . F u n d s i n c l u d e d i n t h e H F R I I n d i c e s m u s t r e p o r t m o n t h l y r e t u r n s , r e p o r t n e t o f a l l f e e s r e t u r n s , r e p o r t a s s e t s i n U . S . D o l l a r s , a n d h a v e a t l e a s t $ 5 0 M i l l i o n u n d e r m a n a g e m e n t o r h a v e b e e n a c t i v e l y t r a d i n g f o r a t l e a s t t w e l v e ( 1 2 ) m o n t h s . ��H F R I E q u i t y H e d g e ( T o t a l ) I n d e x i s c o m p r i s e d o f i n v e s t m e n t m a n a g e r s w h o m a i n t a i n p o s i t i o n s b o t h l o n g a n d s h o r t i n p r i m a r i l y e q u i t y a n d e q u i t y d e r i v a t i v e s e c u r i t i e s . A w i d e v a r i e t y o f i n v e s t m e n t p r o c e s s e s c a n b e e m p l o y e d t o a r r i v e a t a n i n v e s t m e n t d e c i s i o n , i n c l u d i n g b o t h q u a n t i t a t i v e a n d f u n d a m e n t a l t e c h n i q u e s ; s t r a t e g i e s c a n b e b r o a d l y d i v e r s i f i e d o r n a r r o w l y f o c u s e d o n s p e c i f i c s e c t o r s a n d c a n r a n g e b r o a d l y i n t e r m s o f l e v e l s o f n e t e x p o s u r e , l e v e r a g e e m p l o y e d , h o l d i n g p e r i o d , c o n c e n t r a t i o n s o f m a r k e t c a p i t a l i z a t i o n s a n d v a l u a t i o n r a n g e s o f t y p i c a l p o r t f o l i o s . E H m a n a g e r s w o u l d t y p i c a l l y m a i n t a i n a t l e a s t 5 0 % e x p o s u r e t o , a n d m a y i n s o m e c a s e s b e e n t i r e l y i n v e s t e d i n , e q u i t i e s , b o t h l o n g a n d s h o r t . C a p i t a l M a r k e t s R e v i e w D e f i n i t i o n s A s o f J u n e 3 0 , 2 0 1 8 5 6 ��H F R I F O F C o n s : C o n s e r v a t i v e I n d e x i s c o m p r i s e d o f F O F s c l a s s i f i e d a s ' C o n s e r v a t i v e ' e x h i b i t o n e o r m o r e o f t h e f o l l o w i n g c h a r a c t e r i s t i c s : s e e k s c o n s i s t e n t r e t u r n s b y p r i m a r i l y i n v e s t i n g i n f u n d s t h a t g e n e r a l l y e n g a g e i n m o r e ' c o n s e r v a t i v e ' s t r a t e g i e s s u c h a s E q u i t y M a r k e t N e u t r a l , F i x e d I n c o m e A r b i t r a g e , a n d C o n v e r t i b l e A r b i t r a g e ; e x h i b i t s a l o w e r h i s t o r i c a l a n n u a l s t a n d a r d d e v i a t i o n t h a n t h e H F R I F u n d o f F u n d s C o m p o s i t e I n d e x . A f u n d i n t h e H F R I F O F C o n s e r v a t i v e I n d e x s h o w s g e n e r a l l y c o n s i s t e n t p e r f o r m a n c e r e g a r d l e s s o f m a r k e t c o n d i t i o n s . ��M S C I E A F E ( E u r o p e , A u s t r a l a s i a a n d F a r E a s t ) I n d e x i s a s t a n d a r d , c a p i t a l i z a t i o n - w e i g h t e d r e p r e s e n t a t i o n o f d e v e l o p e d e q u i t y m a r k e t s e x c l u d i n g t h e U . S . a n d C a n a d a . A s o f D e c e m b e r 2 0 1 5 t h e M S C I E A F E I n d e x c o n s i s t e d o f t h e f o l l o w i n g 2 1 d e v e l o p e d c o u n t r i e s : A u s t r a l i a , A u s t r i a , B e l g i u m , D e n m a r k , F i n l a n d , F r a n c e , G e r m a n y , H o n g K o n g , I r e l a n d , I s r a e l , I t a l y , J a p a n , N e t h e r l a n d s , N e w Z e a l a n d , N o r w a y , P o r t u g a l , S i n g a p o r e , S p a i n , S w e d e n , S w i t z e r l a n d , a n d t h e U n i t e d K i n g d o m . T h e i n d e x i n c l u d e s M S C I s a s s e s s m e n t o f t h e m o s t i n v e s t a b l e s t o c k s , d e t e r m i n e d b y s i z e , t r a d i n g v o l u m e , a n d f r e e f l o a t . P e r f o r m a n c e i s s h o w n n e t o f f o r e i g n w i t h h o l d i n g t a x o n t h e d i v i d e n d s p a i d . T h e G r o w t h o r V a l u e s t y l e i n d e x e s a r e a n o n - e x c l u s i v e s u b s e t o f t h e b r o a d e r i n d e x , w h e r e g r o w t h o r v a l u e i s d e t e r m i n e d b y v a l u a t i o n a n d g r o w t h c h a r a c t e r i s t i c s , a s d e f i n e d b y M S C I . ��M S C I E m e r g i n g M a r k e t s F r e e I n d e x i s A M o r g a n S t a n l e y C a p i t a l I n t e r n a t i o n a l i n d e x c r e a t e d t o t r a c k s t o c k m a r k e t s i n s e l e c t e d e m e r g i n g m a r k e t s t h a t a r e o p e n t o f o r e i g n i n v e s t m e n t l i k e A r g e n t i n a , C h i l e , J o r d a n , M a l a y s i a , M e x i c o , P h i l i p p i n e s , a n d T h a i l a n d . ��B l o o m b e r g C o m m o d i t y I n d e x : F o r m e r l y k n o w n a s t h e D o w J o n e s - U B S C o m m o d i t y I n d e x . T h i s i s d e s i g n e d t o b e a l i q u i d a n d d i v e r s i f i e d b e n c h m a r k f o r t h e c o m m o d i t i e s f u t u r e s m a r k e t . T h e I n d e x i s c o m p o s e d o f f u t u r e s c o n t r a c t s o n 2 2 p h y s i c a l c o m m o d i t i e s , a n d w a s l a u n c h e d o n J u l y 1 4 , 1 9 9 8 ��S & P D e v e l o p e d E x U . S . S m a l l C a p I n d e x : A s u b s e t o f t h e S & P G l o b a l B M I , t h e S & P D e v e l o p e d E x - U . S . S m a l l C a p s e e k s t o m e a s u r e t h e s t o c k s r e p r e s e n t i n g t h e l o w e s t 1 5 % o f f l o a t - a d j u s t e d m a r k e t c a p i n e a c h d e v e l o p e d c o u n t r y , e x c l u d i n g t h e U . S . ��B B G B a r c l a y s G l o b a l A g g r e g a t e I n d e x : T h e B l o o m b e r g B a r c l a y s U S A g g r e g a t e B o n d I n d e x i s a m a r k e t c a p i t a l i z a t i o n - w e i g h t e d i n d e x , m e a n i n g t h e s e c u r i t i e s i n t h e i n d e x a r e w e i g h t e d a c c o r d i n g t o t h e m a r k e t s i z e o f e a c h b o n d t y p e . M o s t U . S . t r a d e d i n v e s t m e n t g r a d e b o n d s a r e r e p r e s e n t e d . M u n i c i p a l b o n d s , a n d T r e a s u r y I n f l a t i o n - P r o t e c t e d S e c u r i t i e s a r e e x c l u d e d , d u e t o t a x t r e a t m e n t i s s u e s . T h e i n d e x i n c l u d e s T r e a s u r y s e c u r i t i e s , G o v e r n m e n t a g e n c y b o n d s , M o r t g a g e - b a c k e d b o n d s , C o r p o r a t e b o n d s , a n d a s m a l l a m o u n t o f f o r e i g n b o n d s t r a d e d i n U . S . ��9 1 - D a y T - B i l l s : T h e U . S . g o v e r n m e n t i s s u e s s h o r t - t e r m d e b t a t a d i s c o u n t a t a c o m p e t i t i v e a u c t i o n , u s u a l l y o n a w e e k l y b a s i s . A t a d i s c o u n t m e a n s t h e n o t e i s s o l d a t a d i s c o u n t f r o m f a c e v a l u e a n d t h e n r e d e e m e d a t m a t u r i t y a t t h e f u l l f a c e v a l u e . T h e d i f f e r e n c e b e t w e e n t h e d i s c o u n t e d p r i c e a n d t h e f a c e v a l u e d e t e r m i n e s t h e y i e l d . T h e y i e l d o n 9 1 - d a y T r e a s u r y b i l l s i s t h e a v e r a g e d i s c o u n t r a t e . ��T h e D o w J o n e s B r o o k f i e l d G l o b a l I n f r a s t r u c t u r e I n d e x i s d e s i g n e d t o m e a s u r e t h e p e r f o r m a n c e o f p u r e - p l a y i n f r a s t r u c t u r e c o m p a n i e s d o m i c i l e d g l o b a l l y . T h e i n d e x c o v e r s a l l s e c t o r s o f t h e i n f r a s t r u c t u r e m a r k e t . T o b e i n c l u d e d i n t h e i n d e x , a c o m p a n y m u s t d e r i v e a t l e a s t 7 0 % o f c a s h f l o w s f r o m i n f r a s t r u c t u r e l i n e s o f b u s i n e s s . C a p i t a l M a r k e t s R e v i e w D e f i n i t i o n s A s o f J u n e 3 0 , 2 0 1 8 5 7 Appendix 58 Allocation Market Value $% Performance (%) YTD 2017 2016 2015 2014 2013 2012 2011 2010 2009 Target Date Vanguard Institutional Target Retirement Income Fund (VITRX)31,070 -0.1 (25)8.5 (66)5.3 (58)-------------- Vanguard Target Income Composite Index (Net)0.0 (19)8.7 (64)5.4 (55)0.1 (12)5.8 (16)6.0 (53)8.4 (82)5.3 (1)9.4 (76)14.3 (93) TD Income Universe Median -0.3 9.6 5.5 -0.7 4.7 6.3 9.6 3.1 10.0 18.2 Vanguard Institutional Target Retirement 2015 Fund (VITVX)5,006 0.0 (24)11.5 (33)6.3 (36)-------------- Vanguard Target 2015 Composite Index (Net)0.1 (23)11.6 (30)6.4 (30)-0.2 (18)6.8 (1)13.3 (19)11.5 (32)1.6 (59)12.5 (21)21.2 (57) TD 2015 Universe Median -0.2 10.7 5.9 -0.7 5.0 9.5 11.0 1.9 11.1 21.6 Vanguard Institutional Target Retirement 2020 Fund (VITWX)118,605 0.0 (42)14.1 (14)7.0 (34)-------------- Vanguard Target 2020 Composite Index (Net)0.1 (29)14.2 (12)7.2 (30)-0.4 (28)7.4 (1)16.2 (15)12.5 (50)1.0 (38)13.3 (40)23.3 (65) TD 2020 Universe Median -0.1 13.1 6.6 -0.8 5.6 13.3 12.4 0.5 12.9 25.0 Vanguard Institutional Target Retirement 2025 Fund (VRIVX)554,705 0.1 (46)15.9 (24)7.6 (25)-------------- Vanguard Target 2025 Composite Index (Net)0.2 (45)16.1 (21)7.7 (22)-0.6 (35)7.4 (1)18.5 (16)13.4 (53)0.1 (28)13.9 (42)25.2 (65) TD 2025 Universe Median 0.0 15.3 7.2 -0.9 5.8 16.5 13.6 -1.0 13.8 26.8 Vanguard Institutional Target Retirement 2030 Fund (VTTWX)456,830 0.2 (41)17.6 (34)8.0 (38)-------------- Vanguard Target 2030 Composite Index (Net)0.3 (39)17.7 (33)8.1 (36)-0.8 (38)7.5 (7)20.9 (26)14.3 (49)-0.9 (27)14.6 (47)27.0 (67) TD 2030 Universe Median 0.1 17.1 7.7 -1.2 5.9 18.5 14.3 -1.8 14.4 28.1 Vanguard Institutional Target Retirement 2035 Fund (VITFX)922,330 0.3 (50)19.1 (37)8.4 (44)-------------- Vanguard Target 2035 Composite Index (Net)0.4 (47)19.2 (36)8.6 (39)-1.0 (46)7.6 (9)23.3 (21)15.2 (52)-1.9 (26)15.2 (47)28.7 (49) TD 2035 Universe Median 0.3 18.8 8.3 -1.3 6.1 21.3 15.3 -2.9 15.0 28.6 Vanguard Institutional Target Retirement 2040 Fund (VIRSX)998,853 0.4 (50)20.7 (28)8.8 (38)-------------- Vanguard Target 2040 Composite Index (Net)0.4 (47)20.9 (25)9.0 (31)-1.2 (51)7.6 (10)24.8 (15)15.6 (51)-2.1 (22)15.3 (49)28.7 (71) TD 2040 Universe Median 0.4 19.9 8.6 -1.2 6.2 22.1 15.6 -3.4 15.3 29.8 Vanguard Institutional Target Retirement 2045 Fund (VITLX)1,715,582 0.4 (57)21.5 (23)8.9 (42)-------------- Vanguard Target 2045 Composite Index (Net)0.5 (54)21.5 (21)9.1 (36)-1.3 (52)7.6 (8)24.8 (25)15.6 (77)-2.1 (20)15.3 (52)28.7 (67) TD 2045 Universe Median 0.5 20.6 8.8 -1.2 6.2 23.1 15.8 -3.6 15.4 29.9 Vanguard Institutional Target Retirement 2050 Fund (VTRLX)977,631 0.4 (56)21.5 (34)8.9 (46)-------------- Vanguard Target 2050 Composite Index (Net)0.5 (54)21.5 (30)9.1 (40)-1.3 (50)7.6 (11)24.8 (29)15.6 (73)-2.1 (13)15.3 (49)28.7 (79) TD 2050 Universe Median 0.5 20.9 8.8 -1.3 6.3 23.4 16.0 -3.6 15.3 30.6 Performance Summary Calendar Year Performance (Net) As of June 30, 2018 _____________________________ Returns are expressed as percentages and net of fees. Returns for periods greater than one year are annualized. Peer group percentile ranks are shown in parenthesis. Rankings in the top quartile of peers are shown as green, while rankings in the bottom quartile of peers are shown as red. 59 Performance Summary Calendar Year Performance (Net) As of June 30, 2018 Allocation Market Value $% Performance (%) YTD 2017 2016 2015 2014 2013 2012 2011 2010 2009 Vanguard Institutional Target Retirement 2055 Fund (VIVLX)594,431 0.4 (57)21.5 (37)8.9 (37)-------------- Vanguard Target 2055 Composite Index (Net)0.5 (54)21.5 (32)9.1 (33)-1.3 (47)7.6 (11)24.8 (31)15.6 (77)-2.1 (8)---- TD 2055 Universe Median 0.6 21.1 8.7 -1.4 6.3 23.2 15.9 -3.7 16.1 -- Vanguard Institutional Target Retirement 2060 Fund (VILVX)168,419 0.4 (63)21.4 (40)8.9 (41)-------------- Vanguard Target 2060 Composite Index (Net)0.5 (60)21.5 (34)9.1 (38)-1.3 (52)7.6 (1)24.8 (--)15.6 (--)------ TD 2060 Universe Median 0.7 20.9 8.8 -1.1 6.2 ---------- Vanguard Institutional Target Retirement 2065 Fund (VSXFX)5,017 0.5 (60)------------------ Vanguard Target 2065 Composite Index (Net)0.5 (63)------------------ TD 2065 Universe Median 0.7 20.9 8.8 -1.5 ------------ Domestic Equity Vanguard Institutional Index Fund (VINIX)433,269 2.6 (29)21.8 (47)11.9 (22)1.4 (39)13.7 (31)32.3 (50)16.0 (33)2.1 (41)15.0 (33)26.6 (48) S&P 500 2.6 (29)21.8 (46)12.0 (22)1.4 (39)13.7 (31)32.4 (49)16.0 (32)2.1 (40)15.1 (33)26.5 (49) eV Large Cap Core Median 1.4 21.5 9.5 0.6 12.1 32.3 14.4 1.3 13.8 26.3 Vanguard U.S. Growth Fund (VWUAX)189,875 10.8 (28)31.8 (33)-0.6 (83)8.6 (14)13.2 (26)35.7 (37)18.5 (18)-0.5 (45)11.7 (86)35.1 (47) Russell 1000 Growth Index 7.3 (56)30.2 (41)7.1 (20)5.7 (39)13.1 (29)33.5 (57)15.3 (52)2.6 (19)16.7 (46)37.2 (36) eV Large Cap Growth Median 8.0 29.0 3.4 4.5 11.0 34.3 15.4 -0.9 16.2 34.6 Vanguard Windsor II Fund (VWNAX)128,104 -0.7 (47)16.9 (47)13.5 (56)-3.1 (50)11.3 (53)30.8 (73)16.8 (31)2.8 (27)10.7 (89)27.2 (39) Russell 1000 Value Index -1.7 (65)13.7 (84)17.3 (19)-3.8 (61)13.5 (23)32.5 (54)17.5 (23)0.4 (47)15.5 (29)19.7 (79) eV Large Cap Value Median -1.0 16.5 14.0 -3.2 11.3 33.0 15.2 0.0 14.1 24.9 Vanguard Mid-Cap Index Fund (VIMAX)236,761 2.6 (48)19.3 (52)11.2 (49)-1.3 (45)13.8 (16)35.2 (55)16.0 (45)-2.0 (50)25.6 (35)40.5 (36) Vanguard Mid-Cap Index Fund Blended Benchmark 2.6 (47)19.3 (52)11.2 (49)-1.3 (44)13.8 (15)35.4 (52)16.0 (44)-1.9 (50)25.7 (34)40.5 (36) eV Mid Cap All Median 2.0 19.6 10.8 -2.0 8.9 35.6 15.4 -2.0 23.4 37.2 Vanguard Small-Cap Index Fund (VSMAX)164,150 6.0 (51)16.2 (40)18.3 (57)-3.6 (50)7.5 (20)37.8 (63)18.2 (29)-2.7 (50)27.9 (41)36.3 (43) Vanguard Small-Cap Index Fund Blended Benchmark 6.0 (51)16.2 (40)18.3 (57)-3.7 (51)7.5 (19)37.8 (62)18.2 (29)-2.8 (51)27.8 (41)36.1 (43) eV Small Cap All Median 6.1 14.2 19.6 -3.7 4.2 40.0 15.4 -2.7 26.9 34.0 _____________________________ Returns are expressed as percentages and net of fees. Returns for periods greater than one year are annualized. Peer group percentile ranks are shown in parenthesis. Rankings in the top quartile of peers are shown as green, while rankings in the bottom quartile of peers are shown as red. 60 Performance Summary Calendar Year Performance (Net) As of June 30, 2018 Allocation Market Value $% Performance (%) YTD 2017 2016 2015 2014 2013 2012 2011 2010 2009 International Equity Vanguard International Growth Fund (VWILX)245,105 4.1 (15)43.2 (10)1.8 (21)-0.5 (75)-5.5 (74)23.1 (30)20.2 (30)-13.6 (66)15.8 (34)41.9 (38) MSCI AC World ex USA (Net)-3.8 (96)27.2 (90)4.5 (7)-5.7 (100)-3.9 (54)15.3 (83)16.8 (77)-13.7 (68)11.2 (76)41.4 (40) Custom Non US Diversified Growth Median -0.1 32.6 -1.0 1.7 -3.6 20.5 19.0 -12.1 14.4 39.1 Fixed Income Vanguard Total Bond Market Index Fund (VBTLX)127,561 -1.6 (54)3.6 (65)2.6 (75)0.4 (63)5.9 (47)-2.1 (78)4.2 (89)7.7 (40)6.5 (76)6.0 (83) Vanguard Total Bond Market Index Fund Benchmark -1.7 (58)3.6 (62)2.8 (66)0.4 (61)5.9 (51)-2.0 (66)4.3 (87)7.9 (30)6.6 (74)5.9 (84) eV Core Fixed Income Median -1.6 3.8 3.0 0.5 5.9 -1.7 5.9 7.5 7.2 9.7 Vanguard Retirement Savings Trust III 78,704 1.1 1.9 2.0 2.0 2.0 1.9 2.5 3.1 3.1 3.1 Ryan 3 Yr GIC Master 0.9 1.6 1.4 1.2 1.0 1.1 1.5 2.4 3.5 4.5 Vanguard Balanced Index Fund (VBAIX)160,094 1.4 (18)13.9 (50)8.8 (39)0.5 (27)10.0 (17)18.1 (45)11.5 (41)4.3 (20)13.3 (31)20.2 (60) Vanguard Balanced Index Fund Benchmark 1.3 (19)13.9 (49)8.8 (39)0.6 (26)9.9 (18)18.2 (45)11.6 (40)4.1 (21)13.5 (29)19.7 (63) eV US Balanced Median 0.3 13.8 7.8 -0.4 7.2 17.8 10.7 1.9 12.0 22.2 Capital Preservation Vanguard Prime Money Market Inv (VMMXX)64,586 0.8 (31)1.0 (52)0.5 (67)0.0 (70)0.0 (80)0.0 (86)0.0 (81)0.0 (70)0.1 (71)0.5 (35) ICE BofAML 3 Month U.S. T-Bill 0.8 (41)0.9 (71)0.3 (80)0.1 (69)0.0 (71)0.1 (65)0.1 (66)0.1 (61)0.1 (57)0.2 (78) eV US Cash Management Median 0.8 1.0 0.6 0.1 0.1 0.1 0.2 0.1 0.2 0.4 _____________________________ Returns are expressed as percentages and net of fees. Returns for periods greater than one year are annualized. Peer group percentile ranks are shown in parenthesis. Rankings in the top quartile of peers are shown as green, while rankings in the bottom quartile of peers are shown as red. 61 Plan Summary Fee Comparison Summary As of June 30, 2018 Inv estment Option Expe nse Ratio Morningstar Cate gory Av erage Fe e Level Comparison Group Median eVestment Al liance Univ erse Median Cate gory Fe e Le vel Comparison Group e Ve st me nt Alliance Univ erse Va nguard 500 In dex 0.04 0.87 0.73 0.15 La rg e Ble nd La rg e Ca p Instit utional US Pa ssive La rge Ca p Eq uity Va nguard US Gro wth 0.30 1.08 0.89 0.77 La rg e Gr owth La rg e Ca p No Load US Large Ca p Gr owth Va nguard Windsor 0.26 1.01 0.89 0.75 La rg e Va lu e La rg e Ca p No Load US Large Ca p Va lu e Va nguard Mid-Ca p In dex 0.05 0.84 1.04 0.19 Mid Ble nd Mid Ca p No Load US Pa ssive Mid Ca p Eq uity Va nguard Small-Ca p In dex 0.05 1.18 1.16 0.19 Small Ble nd Small Ca p No Load US Pa ssive Small Cap Eq uity Va nguard In ternational Gro wt h 0.32 1.11 1.00 1.00 Fo re ig n La rg e Gr owth Fo reig n La rg e Ca p No Load ACWI e x-US Gro wt h Eq uity Va nguard Total Bond Marke t In dex 0.05 0.74 0.64 0.45 In terme diate-Term Bond Interme diate-Term Bo nd No Load US Core Fixe d In come Va nguard Re tire me nt Savin g Trust 0.33 N/A N/A 0.45 N/A N/A US St able Va lu e Fixe d In come Va nguard Ba lanced Index 0.06 0.91 0.78 0.76 Moderate Allo cation Moderate Allo cation No Load US Balanced Va nguard Targ et Re tire me nt In come 0.09 0.44 0.56 0.37 Re tire me nt In come Re tire me nt In come Instit utional Lifecycle/Target Da te In come Va nguard Targ et Re tire me nt 2015 0.09 0.36 0.52 0.40 Target Date 2011-2015 Targ et Re tire me nt 2011-2015 In stit utional Lifecycle/Target Da te 2015 Va nguard Targ et Re tire me nt 2020 0.09 0.40 0.56 0.40 Target Date 2016-2020 Targ et Re tire me nt 2016-2020 In stit utional Lifecycle/Target Da te 2020 Va nguard Targ et Re tire me nt 2025 0.09 0.39 0.54 0.43 Target Date 2021-2025 Targ et Re tire me nt 2021-2025 In stit utional Lifecycle/Target Da te 2025 Va nguard Targ et Re tire me nt 2030 0.09 0.42 0.56 0.42 Target Date 2026-2030 Targ et Re tire me nt 2026-2030 In stit utional Lifecycle/Target Da te 2030 Va nguard Targ et Re tire me nt 2035 0.09 0.41 0.56 0.43 Target Date 2031-2035 Targ et Re tire me nt 3031-2035 In stit utional Lifecycle/Target Da te 2035 Va nguard Targ et Re tire me nt 2040 0.09 0.43 0.58 0.44 Target Date 2036-2040 Targ et Re tire me nt 2036-2040 In stit utional Lifecycle/Target Da te 2040 Va nguard Targ et Re tire me nt 2045 0.09 0.41 0.57 0.45 Target Date 2041-2045 Targ et Re tire me nt 2041-2045 In stit utional Lifecycle/Target Da te 2045 Va nguard Targ et Re tire me nt 2050 0.09 0.43 0.58 0.45 Target Date 2046-2050 Targ et Re tire me nt 2046-2050 In stit utional Lifecycle/Target Da te 2050 Va nguard Targ et Re tire me nt 2055 0.09 0.41 0.58 0.45 Target Da te 2051+Targ et Re tire me nt 2051+ In stit utional Lifecycle/Target Da te 2055 Va nguard Targ et Re tire me nt 2060 0.09 0.42 0.53 0.46 Target Da te 2060+Targ et Re tire me nt 2060+ In stit utional Lifecycle/Target Da te 2060 Va nguard Targ et Re tirment 2065 0.09 0.42 0.53 0.56 Target Da te 2060+Targ et Re tire me nt 2060+ In stit utional Lifecycle/Target Da te 2065 Va nguard Prime Money Marke t 0.16 0.42 N/A 0.19 Money Marke t Taxable N/A US Cas h Management Pavilio n Co nsulting Fee ($10,612 p er y ear) 62 ��C u s t o m N o n U S D i v e r s i f i e d A l l : T h e C u s t o m N o n U S D i v e r s i f i e d A l l u n i v e r s e i s a c u s t o m u n i v e r s e t h a t i n c l u d e s t h e e V e s t m e n t A l l i a n c e N o n - U S D i v e r s i f i e d E q u i t y u n i v e r s e e x c l u d i n g a l l s t r a t e g i e s i n c l u d e d i n t h e e V e s t m e n t A l l i a n c e N o n - U S D i v e r s i f i e d S m a l l C a p E q u i t y u n i v e r s e . T h e e V e s t m e n t A l l i a n c e N o n - U S D i v e r s i f i e d E q u i t y u n i v e r s e i s m a d e u p o f a l l N o n - U S D i v e r s i f i e d ( E A F E a n d A C W I e x - U S ) E q u i t y p r o d u c t s i n c l u s i v e o f a l l s t y l e , c a p i t a l i z a t i o n , a n d s t r a t e g y a p p r o a c h e s . T h e e V e s t m e n t A l l i a n c e N o n - U S D i v e r s i f i e d S m a l l C a p E q u i t y u n i v e r s e c o n s i s t s o f a c t i v e l y - m a n a g e d N o n - U S D i v e r s i f i e d ( E A F E a n d A C W I e x - U S ) E q u i t y p r o d u c t s t h a t p r i m a r i l y i n v e s t i n s m a l l c a p i t a l i z a t i o n s t o c k s r e g a r d l e s s o f t h e s t y l e ( g r o w t h , v a l u e o r c o r e ) f o c u s . ��C u s t o m N o n U S D i v e r s i f i e d C o r e : T h e C u s t o m N o n U S D i v e r s i f i e d C o r e u n i v e r s e i s a c u s t o m u n i v e r s e t h a t i n c l u d e s t h e e V e s t m e n t A l l i a n c e N o n - U S D i v e r s i f i e d C o r e E q u i t y u n i v e r s e e x c l u d i n g a l l s t r a t e g i e s i n c l u d e d i n t h e e V e s t m e n t A l l i a n c e N o n - U S D i v e r s i f i e d S m a l l C a p E q u i t y u n i v e r s e . T h e e V e s t m e n t A l l i a n c e N o n - U S D i v e r s i f i e d C o r e E q u i t y u n i v e r s e i s m a d e u p o f a l l a c t i v e l y - m a n a g e d N o n - U S D i v e r s i f i e d ( E A F E a n d A C W I e x - U S ) E q u i t y p r o d u c t s t h a t p r i m a r i l y i n v e s t i n a m i x t u r e o f g r o w t h a n d v a l u e s t o c k s . T h i s u n i v e r s e i s i n c l u s i v e o f N o n - U S D i v e r s i f i e d E q u i t y s t r a t e g i e s r e g a r d l e s s o f m a r k e t c a p i t a l i z a t i o n . T h e e V e s t m e n t A l l i a n c e N o n - U S D i v e r s i f i e d S m a l l C a p E q u i t y u n i v e r s e c o n s i s t s o f a c t i v e l y - m a n a g e d N o n - U S D i v e r s i f i e d ( E A F E a n d A C W I e x - U S ) E q u i t y p r o d u c t s t h a t p r i m a r i l y i n v e s t i n s m a l l c a p i t a l i z a t i o n s t o c k s r e g a r d l e s s o f t h e s t y l e ( g r o w t h , v a l u e o r c o r e ) f o c u s . ��C u s t o m N o n U S D i v e r s i f i e d G r o w t h : T h e C u s t o m N o n U S D i v e r s i f i e d G r o w t h u n i v e r s e i s a c u s t o m u n i v e r s e t h a t i n c l u d e s t h e e V e s t m e n t A l l i a n c e N o n - U S D i v e r s i f i e d G r o w t h E q u i t y u n i v e r s e e x c l u d i n g a l l s t r a t e g i e s i n c l u d e d i n t h e e V e s t m e n t A l l i a n c e N o n - U S D i v e r s i f i e d S m a l l C a p E q u i t y u n i v e r s e . T h e e V e s t m e n t A l l i a n c e N o n - U S D i v e r s i f i e d G r o w t h E q u i t y u n i v e r s e i s m a d e u p o f a l l a c t i v e l y - m a n a g e d N o n - U S D i v e r s i f i e d ( E A F E a n d A C W I e x - U S ) E q u i t y p r o d u c t s t h a t p r i m a r i l y i n v e s t i n s t o c k s t h a t a r e e x p e c t e d t o h a v e a n a b o v e - a v e r a g e c a p i t a l a p p r e c i a t i o n r a t e r e l a t i v e t o t h e m a r k e t . T h i s u n i v e r s e i s i n c l u s i v e o f N o n - U S D i v e r s i f i e d E q u i t y s t r a t e g i e s r e g a r d l e s s o f m a r k e t c a p i t a l i z a t i o n . T h e e V e s t m e n t A l l i a n c e N o n - U S D i v e r s i f i e d S m a l l C a p E q u i t y u n i v e r s e c o n s i s t s o f a c t i v e l y - m a n a g e d N o n - U S D i v e r s i f i e d ( E A F E a n d A C W I e x - U S ) E q u i t y p r o d u c t s t h a t p r i m a r i l y i n v e s t i n s m a l l c a p i t a l i z a t i o n s t o c k s r e g a r d l e s s o f t h e s t y l e ( g r o w t h , v a l u e o r c o r e ) f o c u s . ��C u s t o m N o n U S D i v e r s i f i e d V a l u e : T h e C u s t o m N o n U S D i v e r s i f i e d V a l u e u n i v e r s e i s a c u s t o m u n i v e r s e t h a t i n c l u d e s t h e e V e s t m e n t A l l i a n c e N o n - U S D i v e r s i f i e d V a l u e E q u i t y u n i v e r s e e x c l u d i n g a l l s t r a t e g i e s i n c l u d e d i n t h e e V e s t m e n t A l l i a n c e N o n - U S D i v e r s i f i e d S m a l l C a p E q u i t y u n i v e r s e . T h e e V e s t m e n t A l l i a n c e N o n - U S D i v e r s i f i e d V a l u e E q u i t y u n i v e r s e i s m a d e u p o f a l l a c t i v e l y - m a n a g e d N o n - U S D i v e r s i f i e d ( E A F E a n d A C W I e x - U S ) E q u i t y p r o d u c t s t h a t p r i m a r i l y i n v e s t i n s t o c k s t h a t m a y b e t r a d i n g a t l o w e r p r i c e s l o w e r t h a n t h e i r f u n d a m e n t a l o r i n t r i n s i c v a l u e . T h i s u n i v e r s e i s i n c l u s i v e o f N o n - U S D i v e r s i f i e d E q u i t y s t r a t e g i e s r e g a r d l e s s o f m a r k e t c a p i t a l i z a t i o n . T h e e V e s t m e n t A l l i a n c e N o n - U S D i v e r s i f i e d S m a l l C a p E q u i t y u n i v e r s e c o n s i s t s o f a c t i v e l y - m a n a g e d N o n - U S D i v e r s i f i e d ( E A F E a n d A C W I e x - U S ) E q u i t y p r o d u c t s t h a t p r i m a r i l y i n v e s t i n s m a l l c a p i t a l i z a t i o n s t o c k s r e g a r d l e s s o f t h e s t y l e ( g r o w t h , v a l u e o r c o r e ) f o c u s . C u s t o m P e e r G r o u p U n i v e r s e D e s c r i p t i o n A s o f J u n e 3 0 , 2 0 1 8 6 3 This report contains confidential and proprietary information and is intended for the exclusive use of the parties to whom it is provided. Facts and information provided in this report are believed to be accurate at the time of preparation. However, certain information in this report has been provided to Pavilion Advisory Group Inc. (“Pavilion”) by third parties. Although we believe the third-party sources used to prepare this information are reliable, Pavilion shall not be liable for any errors or as to the accuracy of the information and takes no responsibility to update this information. This performance report is not a custodial statement or statement of record. You should receive custodial statements or other statement(s) of record directly from your custodian or applicable managers. Performance returns for period longer than one year are annualized. Returns are shown net of investment manager fees assessed by third party managers or funds, as applicable, unless otherwise denoted and generally include the effect of all cash flows (e.g., earnings, distributions). In addition, accounts may incur other transactions costs such as brokerage commissions, custodial costs and other expenses which are not denoted in this report and may not be reflected in the performance returns. Mutual fund returns assume reinvestment of all distributions at net asset value (NAV) and deduction of fund expenses. Report totals may not sum due to rounding. It is important to note that performance results do not reflect the deduction of any investment advisory fees you pay to Pavilion, therefore, performance results would be reduced by these investment advisory fees. Note, however, certain client reports may reflect the deduction of Pavilion’s investment advisory fee. Information about Pavilion’s investment advisory fees is available in the firm’s Form ADV Part 2A, available upon request. Generally, the client inception period represents the first full month of performance of the account. Any returns shown prior to the client inception period are obtained directly from the manager or based upon the performance of the investment product. Performance data prior to the consulting relationship with Pavilion may be sourced from prior consultant(s), if applicable. When administrator valuations for the last month of the reported period are not available prior to report production, Pavilion may derive market values and performance based on manager provided estimates for that investment product. Alternatively, Pavilion may use carry forward market values from the prior month. Performance and market values are updated if/when the statement is received from the manager/administrator and may be different than the values in the initial report. Performance and market value estimates are denoted with [CE] (current estimate). Private equity holding results typically lag by 45 to 180 days after the report period end due to statement availability, therefore may not be included in the report. Disclosures 64 In the course of Pavilion’s performance reconciliation process, Pavilion may uncover significant pricing differences between you r investment managers and the values of the custodian on a security by security basis and may adjust the custodian valuation, if the manager's price is closer to a third party pricing source (FactSet, Bloomberg, Bondedge). If a third party price is unavailable, Pavilion uses the more conservative price. For other identified valuation errors, Pavilion alerts the custodian about any issues and will report as representative a market value for the portfolio as possible. You should carefully review your custodial statements or other statement(s) of record from the manager and report any discrepancies to your qualified custodian or applicable manager. This disclosure is intended to capture and explain Pavilion’s process for performance reporting. Due to specific client requests,accommodations or other circumstances, the actual process may vary from this description. Past performance is no indication of future results. This document may include certain forward-looking statement or opinions that are based on current estimates and forecasts. Actual results could differ materially. Investing in securities products involves risk, including possible loss of principal. You should carefully review and consider the applicable prospectus or other offering documents prior to making any i nvestment. Pavilion Advisory Group Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission. This report is not to be reproduced, redistributed or retransmitted in any form without prior expressed written consent from Pavilion. ©2018 Pavilion Advisory Group Inc. All rights reserved. www.pavilioncorp.com Disclosures 65