Annual Report June 30, 2017 The 529 College Savings Plan Sponsored by the State of Nevada
> For the 12 months ended June 30, 2017, returns for the 529 College Savings Plan ranged from about 1% for the Inflation-Protected Securities Portfolio to nearly 23% for the Windsor Portfolio. > The broad U.S. stock market advanced nearly 18%; international stocks returned about 20%. > The broad U.S. taxable bond market returned 0.3%. Contents Your Portfolio s Total Returns 1 Chairman s Letter 2 Performance Summaries and Profiles 12 Selected Financial Data 13 About Your Portfolio s Expenses 55 Ways to Make the Most of Your Plan 57 Glossary 60 A few notes about the report on plan performance that follows: The opinions expressed here are just that informed opinions. They should not be construed as promises or advice. The opinions, like the statistics, cover the period through the date on the cover of this report. For more information about the risks of investing in the portfolios of The 529 College Savings Plan, please refer to the Program Description. For the latest data on your portfolio s performance, visit vanguard.com. Want less clutter in your mailbox? Just register with vanguard.com and opt to get reports online.
Your Portfolio s Total Returns Fiscal Year Ended June 30, 2017 Portfolio Index 1 Stock Portfolios 500 Index 17.70% 17.90% Aggressive Growth 19.10 19.40 Growth Index 19.90 20.19 Mid-Cap Index 17.06 17.31 Morgan Growth 20.56 20.72 Small-Cap Index 18.90 19.09 Total International Stock Index 19.84 20.41 Total Stock Market Index 18.31 18.49 Value Index 16.22 16.53 Windsor 22.89 15.53 Balanced Portfolios 10% Stock/90% Bond (Returns since inception: 3/17/2017) 2.00% 2.09% 20% Stock/80% Bond (Returns since inception: 3/17/2017) 2.20 2.28 25% Bond/75% Short-Term Reserves (Returns since inception: 3/17/2017) 0.60 0.54 30% Stock/70% Bond (Returns since inception: 3/17/2017) 2.40 2.46 40% Stock/60% Bond (Returns since inception: 3/17/2017) 2.60 2.65 50% Bond/50% Short-Term Reserves (Returns since inception: 3/17/2017) 0.80 0.78 60% Stock/40% Bond (Returns since inception: 3/17/2017) 3.00 3.01 70% Stock/30% Bond (Returns since inception: 3/17/2017) 3.20 3.19 80% Stock/20% Bond (Returns since inception: 3/17/2017) 3.40 3.36 90% Stock/10% Bond (Returns since inception: 3/17/2017) 3.60 3.54 Conservative Growth 3.98 4.12 Growth 13.87 14.12 Moderate Growth 8.76 9.02 STAR 13.84 11.83 Bond Portfolios High-Yield Bond 10.13% 10.32% Income 0.00 0.03 Inflation-Protected Securities -0.94-0.63 Total Bond Market Index -0.63-0.33 Total International Bond Index (Returns since inception: 3/17/2017) 1.20 1.28 Short-Term Investments Portfolio Interest Accumulation 1.08% 0.55% 1 See each portfolio s Performance Summary and Profile page for details on its respective benchmark index. Note: The portfolios performance includes operating expenses ranging from 0.17% to 0.45%, whereas the indexes performance does not include any expenses. 1
Dear College Saver: Chairman s Letter Global stocks climbed throughout much of the 12 months ended June 30, 2017, as investors accepted risk, corporate earnings exceeded expectations, and stock valuations increased. Volatility was generally muted. Central banks in Europe and Japan maintained their accommodative monetary policies. The Federal Reserve s gradual shortterm interest rate increases and its plans to reduce its balance sheet didn t disrupt markets. Returns were negative for the period for most sectors of the bond market, but demand for bonds picked up and helped boost global fixed income returns late in the 12-month period even as investors flocked to equities. After a short-term rebound in inflation, expectations declined, contributing to lower yields for U.S. Treasuries and higher bond prices. (Bond prices and yields move in opposite directions.) Accommodative monetary policies outside the United States also supported bond prices, although indications that the European Central Bank (ECB) may reduce its bond-buying stimulus sooner than expected led to a sharp price decline over the period s final week. In this environment, 28 of the 30 portfolios in The 529 College Savings Plan posted positive results. 2
Mirroring broader market trends, returns for the plan s single-fund portfolios ranged from about 1% for the Inflation-Protected Securities Portfolio to about 23% for the Windsor Portfolio. Among the plan s multifund portfolios, the Growth Portfolio which is invested 80% in stocks and 20% in bonds was the top performer with a return of almost 14%. The Income Portfolio was the weakest performer with a return of 0%. The Interest Accumulation Portfolio returned slightly more than 1% as short-term interest rates remained muted. The past year brought changes to The 529 College Savings Plan. In March, the plan redesigned its age-based options, which allow you to select the multifund portfolio that is appropriate for your time horizon and risk tolerance. Over time, the plan automatically shifts your balance toward more conservative bondor cash-oriented allocations, making your hard-earned assets less susceptible to market volatility as your beneficiary nears college age. In addition to offering the lowest costs within the plan, the agebased portfolios transfer some of the complexities of portfolio management to the plan s investment managers. Our age-based options, which invest in a broadly diversified combination of low-cost index portfolios, will now more gradually reduce an account owner s equity exposure as the beneficiary nears Market Barometer Average Annual Total Returns Periods Ended June 30, 2017 One Year Three Years Five Years Stocks Russell 1000 Index (Large-caps) 18.03% 9.26% 14.67% Russell 2000 Index (Small-caps) 24.60 7.36 13.70 Russell 3000 Index (Broad U.S. market) 18.51 9.10 14.58 FTSE All-World ex US Index (International) 20.53 1.33 7.68 Bonds Bloomberg Barclays U.S. Aggregate Bond Index (Broad taxable market) -0.31% 2.48% 2.21% Bloomberg Barclays Municipal Bond Index (Broad tax-exempt market) -0.49 3.33 3.26 Citigroup Three-Month U.S. Treasury Bill Index 0.46 0.19 0.13 CPI Consumer Price Index 1.63% 0.92% 1.31% 3
college age. The redesign allows for a smoother transition from aggressive (riskier) to conservative (less risky) assets over time. The tapered reduction in equities also may enable the account owner to benefit over time from growth associated with a longer exposure to equities, as well as less volatility. We also added exposure to international fixed income through the Total International Bond Index. Adding this portfolio as both a new allocation within aged-based options and as a stand-alone investment option increases investment diversification. Through this investment, the portfolio: Adds breadth and diversity to your asset mix through the exposure to international bonds. Provides exposure to the largest segment of the securities market. Contributes to lower average portfolio volatility. Stocks did well, while bonds mostly retreated amid economic optimism At the start of the 12-month period in July 2016, capital markets continued to digest the implications of Brexit, the United Kingdom s vote to exit the European Union. Another significant event followed in November with the election of Donald Trump as U.S. president. As in the days after the Brexit vote, there was short-term volatility after the U.S. election. By the end of 2016, however, the markets performance proved to be less dramatic. Developed-market stocks, including those in the United States, posted healthy returns. Emerging-market stock returns were more modest but still positive. U.S. and European bonds posted negative total returns during the last six months of 2016 as bond prices dropped and yields rose. After the U.S. election, bond markets anticipated faster economic growth and higher inflation. Meanwhile, the Fed, also expecting that the U.S. economy would continue to perform well, raised short-term rates in December for only the second time in a decade. The ECB and the Bank of Japan continued their historically accommodative stances. Bolstering the case for optimism, there were signs in the United States that economic momentum was building. Job creation remained solid, wages trended higher, and the housing market seemed to be on its surest footing in a decade. During the first half of 2017, global growth turned more balanced. Momentum picked up in some of the slower-growing regions including Europe and Japan, while expansion in the United States was a little more muted than some were projecting after November s presidential election. Emerging economies, with the brighter global economic picture and a weaker U.S. dollar, also did well overall. Developed economies experienced inflation that came in lower than forecast, leading many central banks to keep monetary policy accommodative. 4
This benign macroeconomic backdrop, along with solid corporate earnings and a reduction in risks that had been linked to European elections and trade protectionism, helped global stocks rally more than 11% during the first six months of 2017. (Except where stated otherwise, the returns cited in this letter are in U.S. dollars, stock returns are based on MSCI indexes, and bond returns on Bloomberg Barclays indexes.) Emerging markets as a whole performed best, rising well over 18%. Among the developed markets, Europe returned more than 15% and the Pacific region about 11%. U.S. stocks, which constitute roughly half the global stock market s value, posted a subpar but still robust return of about 9%. With more synchronized global growth, weak inflation in many parts of the world, and continuing central bank support in much of Europe and in Japan, the performance of global bonds improved during the first half of 2017. U.S. bonds returned a little more than 2% for the first half of the year even as the Fed continued gradually raising short-term rates. Some of the world s other large bond markets, including Japan, France, Germany, and Italy, produced returns that ranged from 0% to 1% in local currencies, but that were much higher when expressed in U.S. dollars given the dollar s weakness over the six months. Those countries gains in U.S. dollars contributed to the Citigroup World Government Bond Index s rise of 4.49%. For the 12-month period, U.S. stocks returned nearly 18%. Stocks outside the United States returned about 20%, with emerging markets outperforming their developed-market peers. Bond returns were mostly in negative territory, with U.S. bonds ( 0.3%) outperforming non-u.s. bonds ( 2.3%) and emerging-market bonds outperforming their developedmarket counterparts. The equity index portfolios outpaced their fixed income counterparts Results varied for the plan s index portfolios, which are designed to keep pace with an entire market or a specific segment of it, regardless of the direction the market takes. (The plan s actively managed portfolios, discussed later in this report, seek to outperform the market by relying on security selection.) The Total Stock Market Index Portfolio, which offers investors broad exposure to all segments of the U.S. stock market, reflected the market s strength with a return of about 18% for the 12 months. The Total International Stock Index Portfolio, which provides broad exposure to stocks in both developed countries outside the United States and emerging markets, fared even better, returning almost 20%. The plan also offers several marketsegment stock index portfolios. These may appeal to investors who wish to focus on a specific segment of the U.S. 5
stock market, such as value or growth stocks, or stocks of companies within a particular market-capitalization range. The Growth Index Portfolio and the Value Index Portfolio are two of the plan s stylebased options. These two portfolios are considered complementary investments when growth stocks perform well, value stocks typically do not, and vice versa. Very generally speaking, growth stocks represent companies that are expected to expand their businesses at a rapid pace and value stocks represent more established, slower-growing companies. During the period, growth stocks outperformed their value counterparts. In keeping with this trend, the Growth Total Returns Ten Years Ended June 30, 2017 Average Annual Returns Portfolio Index 1 Stock Portfolios 500 Index 6.90% 7.18% Aggressive Growth 5.37 5.66 Growth Index 8.51 8.87 Mid-Cap Index 7.22 7.52 Morgan Growth 7.36 8.82 Small-Cap Index 7.55 7.76 Total International Stock Index 0.84 1.18 Total Stock Market Index 7.14 7.38 Value Index 5.54 5.84 Windsor 5.40 5.57 Balanced Portfolios 10% Stock/90% Bond (Returns since inception: 3/17/2017) 2.00% 2.09% 20% Stock/80% Bond (Returns since inception: 3/17/2017) 2.20 2.28 25% Bond/75% Short-Term Reserves (Returns since inception: 3/17/2017) 0.60 0.54 30% Stock/70% Bond (Returns since inception: 3/17/2017) 2.40 2.46 40% Stock/60% Bond (Returns since inception: 3/17/2017) 2.60 2.65 50% Bond/50% Short-Term Reserves (Returns since inception: 3/17/2017) 0.80 0.78 60% Stock/40% Bond (Returns since inception: 3/17/2017) 3.00 3.01 70% Stock/30% Bond (Returns since inception: 3/17/2017) 3.20 3.19 80% Stock/20% Bond (Returns since inception: 3/17/2017) 3.40 3.36 90% Stock/10% Bond (Returns since inception: 3/17/2017) 3.60 3.54 6
Index Portfolio s 12-month return (almost 20%) bested that of the Value Index Portfolio (more than 16%). The plan s other style-based portfolios focus on market capitalization and include the 500 Index Portfolio, which invests in large-cap companies that are included in the Standard & Poor s 500 Index; the Mid-Cap Index Portfolio, which invests in midsized companies; and the Small-Cap Index Portfolio, which invests in the market s smallest companies. In general, small-cap stocks performed slightly better than their large- and mid-cap counterparts. The Small-Cap Index Portfolio returned nearly 19% for the 12 months. The Mid-Cap Index Portfolio was the trio s Average Annual Returns Portfolio Index 1 Conservative Growth 4.78% 5.07% Growth 5.43 5.67 Moderate Growth 5.24 5.47 STAR 5.67 5.65 Bond Portfolios High-Yield Bond 6.43% 7.05% Income 3.27 3.48 Inflation-Protected Securities 3.86 4.27 Total Bond Market Index 4.15 4.50 Total International Bond Index (Returns since inception: 3/17/2017) 1.20 1.28 Short-Term Investments Portfolio Interest Accumulation 0.99% 0.86% All of the returns in this report represent past performance, which is not a guarantee of future results that may be achieved by the portfolios. (Current performance may be lower or higher than the performance data cited. For performance data current to the most recent month-end, visit our website at vanguard.com/performance.) Note, too, that both investment returns and principal value can fluctuate widely, so an investor s portfolio units, when sold, could be worth more or less than their original cost. The returns shown do not reflect taxes that a shareholder would pay on nonqualified distributions. 1 See each portfolio s Performance Summary and Profile page for details on its respective benchmark indexes. Note: The portfolios performance includes operating expenses ranging from 0.17% to 0.45%, whereas the indexes performance does not include any expenses. 7
worst performer, returning about 17%, and the 500 Index Portfolio returned almost 18%. Although it is not an index portfolio, the Inflation-Protected Securities Portfolio seeks to capture the returns of its market. The portfolio is designed to protect investors purchasing power by investing in securities, mostly U.S. Treasury bonds, that can provide a real return that accounts for inflation. It returned about 1% as the Treasury Inflation-Protected Securities market lagged the broad U.S. bond market for the period. Results for the plan s bond index portfolios were mixed. With a return of 0.63% for the 12 months, the Total Bond Market Index Portfolio was in negative territory. The Total International Bond Index Portfolio returned 1.20% since it was added to the plan in March. A big reason why international bonds in general have performed better than U.S. bonds recently is because of central bank policies. In the United States, the Fed is in the midst of a modest monetary policy tightening, while central banks outside the United States are generally undertaking more accommodative policies. Stock exposure boosted results for multifund and age-based portfolios The plan also offers five multifund index portfolios, ranging from the Aggressive Growth Portfolio, which invests 100% in stocks, to the Income Portfolio, which invests 100% in bonds and short-term reserves. The other portfolios the Growth Portfolio, the Moderate Growth Portfolio, and the Conservative Growth Portfolio invest in a mix of stocks and bonds. Returns for the multifund portfolios varied. Generally speaking, however, the more exposure to stocks a portfolio had, the higher its return. Not surprisingly, the all-stock Aggressive Growth Portfolio was the top performer, returning more than 19%. The Growth Portfolio composed of 75% stocks and 25% bonds returned about 14% and the Moderate Growth Portfolio which invests 50% in stocks and 50% in bonds returned about 9%. The Conservative Growth Portfolio, composed of 75% bonds and only 25% equities, returned nearly 4%. The performance of the Income Portfolio, which consists of 75% bonds as well as a 25% allocation to short-term reserves, was flat with a return of 0% for the year, as returns for short-term investments were minimal. The plan s age-based options showed a similar pattern the more exposure to equities a portfolio had, the stronger its performance. Results since March 17, 2017, when these redesigned portfolios were launched, ranged from nearly 4% for the 90% Stock/10% Bond Portfolio to less than 1% for the 25% Bond/75% Short- Term Reserves Portfolio. 8
Although it s not an index fund, the Interest Accumulation Portfolio, which invests in short-term securities, seeks to capture the returns of its market. The portfolio returned slightly more than 1% for the period. As with the Income Portfolio, its returns were held back by below-average short-term interest rates. Stocks also outpaced bonds in actively managed options In addition to the many index portfolios, the plan also offers four actively managed options: the Morgan Growth and Windsor Portfolios, which invest 100% in stocks; the High-Yield Bond Portfolio, which holds non-investment-grade corporate bonds; and the STAR Portfolio, which invests in a mix of actively managed stock, bond, and short-term reserve funds. Unlike their index-based counterparts, which measure success by how closely they track an index, these actively managed portfolios seek to outperform their benchmark indexes. While the Morgan Growth Portfolio and the Windsor Portfolio are both invested solely in U.S. stocks, they differ in the type of stocks they hold. The Morgan Growth Portfolio invests in stocks of large- and mid-cap companies that the fund s advisors believe are poised for faster-than-average growth. The Windsor Portfolio focuses on stocks of large-cap companies that the advisor believes are currently undervalued by the market. Both portfolios recorded strong results for the period. The Morgan Growth Portfolio returned about 21%, in line with its benchmark index, the Russell 3000 Growth Index. The Windsor Portfolio returned about 23%, significantly outperforming its benchmark, the Russell 1000 Value Index, which gained about 16%. The STAR Portfolio which invests in six domestic stock portfolios (including growth and value funds), two international stock portfolios (value and growth), and three fixed income portfolios (including long-term and short-term bond funds) returned nearly 14%. The portfolio s equity holdings contributed to returns, while several of its bond components detracted from performance. The High-Yield Bond Portfolio returned about 10% for the period. Unlike other sectors of the fixed income market, the high-yield bond market posted strong gains during the year, though it failed to keep pace with stocks. Why bonds still belong in your portfolio Despite the current rising interest rate environment in the United States, it still makes sense over the long term to include bonds in your portfolio. Fixed income investments may not provide the same yields and returns as they have in the past. But they continue to play a crucial role in helping offset potential downturns in equities. This can be especially important 9
when the savings period is compressed, as it is when building a fund for a child s education expenses. Many people look at bonds independently of their stocks, but it s more beneficial to think about how bonds complement stocks in your portfolio. You really want to put the two types of investments together and see how they work as a whole. Ask yourself: What s my risk level for all my holdings? Does it align with my risk comfort if there s a downturn? If you answer no, you should make the appropriate adjustments. Taking a holistic view of your asset allocation how you divide your investments among stocks, bonds, and cash equivalents and diversifying your investments broadly can help reduce risk, although you can never completely eliminate it from any type of investing. The importance of allowing each type of investment in your portfolio to play its role cannot be overstated. For bonds, it s to provide downside protection when stock prices drop. It would be naïve to assume stocks won t go through a bear market at some point, so it s wise to understand the risks you re taking and be prepared for them. It s always important to keep sight of one of s key principles: Maintain perspective and long-term discipline. Whether you re investing for yourself or for your child s future, your success is affected greatly by how you respond or don t respond during uncertain markets. (You can read s Principles for Investing Success at vanguard.com/research.) Tim Buckley chosen as s next CEO In closing, I ll note senior leadership changes that we announced in July. Our board of directors has elected Chief Investment Officer Tim Buckley as president and director of. Under the planned transition, Tim will succeed me as s chief executive officer on January 1, 2018. I m delighted with our board s unanimous decision to elect Tim. We first met in 1991 when Tim was interviewing for a job at. In the decades since, we ve worked closely together, and he s always impressed me as a man of tremendous character and an outstanding leader with a passion for serving our clients. During the transition period, I will work closely with Tim in managing the firm and overseeing its operations. Replacing Tim as chief investment officer is Greg Davis, who had been global head of Fixed Income Group. And succeeding Greg as our fixed income leader is John Hollyer, who most recently served as our global head of investment risk management. I know Greg and John will both do a superb job in their new roles. 10
As my predecessors have done in past successions, I will remain as chairman for a period of time determined by the board. Tim and the rest of the team will serve you and our other clients extremely well as prepares for its next chapter. As always, thank you for investing with. Sincerely, F. William McNabb III Chairman and Chief Executive Officer August 17, 2017 11
Performance Summaries and Profiles Figures as of June 30, 2017 All of the returns in this report represent past performance, which is not a guarantee of future results that may be achieved by the portfolios. (Current performance may be lower or higher than the performance data cited. The portfolios performance includes expense ratios during the fiscal year ranging from 0.17% to 0.45%, whereas the indexes performance does not include any expenses. For performance data and operating expenses current to the most recent month-end, visit our website at vanguard.com/performance.) Note, too, that both investment returns and principal value can fluctuate widely, so an investor s portfolio units, when sold, could be worth more or less than their original cost. The returns shown do not reflect taxes that a shareholder would pay on nonqualified distributions. The portfolios are available as individual portfolios and, in addition, several are available within the plan s three age-based options, which become more conservative over time. The portfolios in the age-based options are the: Aggressive Growth Portfolio Growth Portfolio Moderate Growth Portfolio Conservative Growth Portfolio Income Portfolio Interest Accumulation Portfolio The age-based options are described in more detail on pages 57 59. 12
500 Index Portfolio Available as an individual portfolio. Cumulative Performance: June 30, 2007 June 30, 2017 Initial investment of $10,000 $25,000 19,486 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2,000 Average Annual Total Returns Final Value Periods Ended June 30, 2017 of a $10,000 One Year Five Years Ten Years Investment 500 Index Portfolio 17.70% 14.39% 6.90% $19,486 S&P 500 Index 17.90 14.63 7.18 20,008 Large-Cap Core Funds Average 1 16.83 13.07 5.80 17,572 Fiscal-Year Total Returns (%) 500 S&P 500 Index Portfolio Index Fiscal Year Total Return Total Return 2008-13.5% -13.1% 2009-26.4-26.2 2010 14.0 14.4 2011 30.3 30.7 2012 5.2 5.4 2013 20.3 20.6 2014 24.3 24.6 2015 7.3 7.4 2016 3.8 4.0 2017 17.7 17.9 Allocation to Underlying Funds Institutional 100.0% Expense Ratio (as of June 30, 2017) 500 Index Portfolio 0.19% Equity Investment Focus Style Value Blend Growth Market Cap Large Medium Small 1 Derived from data provided by Lipper, a Thomson Reuters Company. 13
Aggressive Growth Portfolio Available within the age-based options or as an individual portfolio. Cumulative Performance: June 30, 2007 June 30, 2017 Initial investment of $10,000 $20,000 16,867 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 3,000 Average Annual Total Returns Final Value Periods Ended June 30, 2017 of a $10,000 One Year Five Years Ten Years Investment Aggressive Growth Portfolio 19.10% 12.22% 5.37% $16,867 529 Aggressive Growth Composite 1 19.40 12.52 5.66 17,337 529 Aggressive Growth Composite Average 2 17.97 11.25 4.30 15,228 Fiscal-Year Total Returns (%) Aggressive Growth Portfolio Composite 1 Fiscal Year Total Return Total Return 2008-11.9% -11.5% 2009-27.1-27.0 2010 14.1 14.8 2011 32.0 32.0 2012-2.1-1.7 2013 19.0 19.4 2014 24.2 24.5 2015 3.4 3.7 2016-2.1-2.0 2017 19.1 19.4 Allocation to Underlying Funds n 59.9% n 40.1% Equity Investment Focus Style Market Cap Large Medium Institutional Total Stock Market Total International Stock Value Blend Growth Expense Ratio (as of June 30, 2017) Small Aggressive Growth Portfolio 0.17% 1 529 Aggressive Growth Composite: Weighted 60% CRSP US Total Market Index and 40% FTSE Global All Cap ex US Index. The CRSP index replaced the MSCI US Broad Market Index on January 15, 2013. The FTSE Global All Cap ex US Index replaced the MSCI ACWI ex USA IMI Index on June 3, 2013, which had replaced the MSCI EAFE + Emerging Markets Index on December 16, 2010. 2 529 Aggressive Growth Composite Average: Weighted 70% multi-cap core funds average and 30% international funds average; derived from data provided by Lipper, a Thomson Reuters Company. 14
Growth Index Portfolio Available as an individual portfolio. Cumulative Performance: June 30, 2007 June 30, 2017 Initial investment of $10,000 $30,000 22,636 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 3,000 Average Annual Total Returns Final Value Periods Ended June 30, 2017 of a $10,000 One Year Five Years Ten Years Investment Growth Index Portfolio 19.90% 14.61% 8.51% $22,636 Spliced Growth Index 1 20.19 14.93 8.87 23,385 Large-Cap Growth Funds Average 2 20.31 13.85 7.31 20,253 Fiscal-Year Total Returns (%) Growth Spliced Index Portfolio Growth Index 1 Fiscal Year Total Return Total Return 2008-4.2% -3.8% 2009-26.1-25.8 2010 13.2 13.7 2011 34.3 34.8 2012 6.3 6.6 2013 16.5 16.9 2014 27.8 28.2 2015 9.4 9.7 2016 1.2 1.5 2017 19.9 20.2 Allocation to Underlying Funds Growth 100.0% Expense Ratio (as of June 30, 2017) Growth Index Portfolio 0.25% Equity Investment Focus Style Value Blend Growth Market Cap Large Medium Small 1 Spliced Growth Index: MSCI US Prime Market Growth Index through April 16, 2013; CRSP US Large Cap Growth Index thereafter. 2 Derived from data provided by Lipper, a Thomson Reuters Company. 15
Mid-Cap Index Portfolio Available as an individual portfolio. Cumulative Performance: June 30, 2007 June 30, 2017 Initial investment of $10,000 $25,000 20,071 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2,000 Average Annual Total Returns Final Value Periods Ended June 30, 2017 of a $10,000 One Year Five Years Ten Years Investment Mid-Cap Index Portfolio 17.06% 14.57% 7.22% $20,071 Spliced Mid Cap Index 1 17.31 14.83 7.52 20,655 Mid-Cap Core Funds Average 2 17.41 12.96 6.34 18,489 Fiscal-Year Total Returns (%) Mid-Cap Spliced Index Portfolio Mid Cap Index 1 Fiscal Year Total Return Total Return 2008-12.2% -11.8% 2009-31.8-31.6 2010 26.5 27.0 2011 38.3 38.7 2012-3.0-2.7 2013 24.8 25.1 2014 26.0 26.3 2015 8.4 8.7 2016-1.1-0.9 2017 17.1 17.3 Allocation to Underlying Funds Mid-Cap 100.0% Expense Ratio (as of June 30, 2017) Mid-Cap Index Portfolio 0.23% Equity Investment Focus Style Value Blend Growth Market Cap Large Medium Small 1 Spliced Mid Cap Index: MSCI US Mid Cap 450 Index through January 30, 2013; CRSP US Mid Cap Index thereafter. 2 Derived from data provided by Lipper, a Thomson Reuters Company. 16
Morgan Growth Portfolio Available as an individual portfolio. Cumulative Performance: June 30, 2007 June 30, 2017 Initial investment of $10,000 $28,000 20,343 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2,000 Average Annual Total Returns Final Value Periods Ended June 30, 2017 of a $10,000 One Year Five Years Ten Years Investment Morgan Growth Portfolio 20.56% 14.55% 7.36% $20,343 Russell 3000 Growth Index 20.72 15.20 8.82 23,282 Multi-Cap Growth Funds Average 1 19.88 13.32 6.57 18,890 Fiscal-Year Total Returns (%) Morgan Russell 3000 Growth Portfolio Growth Index Fiscal Year Total Return Total Return 2008-6.5% -6.4% 2009-29.5-24.5 2010 14.9 14.0 2011 35.3 35.7 2012 0.6 5.0 2013 17.2 17.6 2014 25.3 26.8 2015 12.6 10.7 2016-1.0 1.9 2017 20.6 20.7 Allocation to Underlying Funds Morgan Growth Fund 100.0% Expense Ratio (as of June 30, 2017) Morgan Growth Portfolio 0.45% Equity Investment Focus Style Value Blend Growth Market Cap Large Medium Small 1 Derived from data provided by Lipper, a Thomson Reuters Company. 17
Small-Cap Index Portfolio Available as an individual portfolio. Cumulative Performance: June 30, 2007 June 30, 2017 Initial investment of $10,000 $25,000 20,699 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2,000 Average Annual Total Returns Final Value Periods Ended June 30, 2017 of a $10,000 One Year Five Years Ten Years Investment Small-Cap Index Portfolio 18.90% 13.90% 7.55% $20,699 Spliced Small Cap Index 1 19.09 14.10 7.76 21,105 Small-Cap Core Funds Average 2 21.07 12.62 5.84 17,646 Fiscal-Year Total Returns (%) Spliced Small-Cap Small Cap Index Portfolio Index 1 Fiscal Year Total Return Total Return 2008-15.3% -15.0% 2009-25.4-25.4 2010 24.8 25.2 2011 39.1 39.4 2012-1.6-1.4 2013 25.4 25.7 2014 26.3 26.5 2015 5.0 5.2 2016-3.1-2.9 2017 18.9 19.1 Allocation to Underlying Funds Small-Cap 100.0% Expense Ratio (as of June 30, 2017) Small-Cap Index Portfolio 0.23% Equity Investment Focus Style Value Blend Growth Market Cap Large Medium Small 1 Spliced Small Cap Index: MSCI US Small Cap 1750 Index through January 30, 2013; CRSP US Small Cap Index thereafter. 2 Derived from data provided by Lipper, a Thomson Reuters Company. 18
Total International Stock Index Portfolio Available as an individual portfolio. Cumulative Performance: June 30, 2007 June 30, 2017 Initial investment of $10,000 $14,000 10,876 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2,000 Average Annual Total Returns Final Value Periods Ended June 30, 2017 of a $10,000 One Year Five Years Ten Years Investment Total International Stock Index Portfolio 19.84% 7.37% 0.84% $10,876 Spliced Total International Stock Index 1 20.41 7.77 1.18 11,246 International Funds Average 2 18.87 7.96 0.91 10,947 Fiscal-Year Total Returns (%) Total Spliced Total International Stock International Index Portfolio Stock Index 1 Fiscal Year Total Return Total Return 2008-8.4% -8.0% 2009-30.7-30.7 2010 8.2 9.8 2011 30.6 29.5 2012-15.0-14.8 2013 13.1 13.9 2014 22.0 22.5 2015-4.8-4.5 2016-9.3-9.4 2017 19.8 20.4 Allocation to Underlying Funds Total International Stock 100.0% Expense Ratio (as of June 30, 2017) Total International Stock Index Portfolio 0.24% 1 Spliced Total International Stock Index: Total International Composite Index through August 31, 2006; MSCI EAFE + Emerging Markets Index through December 15, 2010; MSCI ACWI ex USA IMI Index through June 2, 2013; and FTSE Global All Cap ex US Index thereafter. 2 Derived from data provided by Lipper, a Thomson Reuters Company. 19
Total Stock Market Index Portfolio Available as an individual portfolio. Cumulative Performance: June 30, 2007 June 30, 2017 Initial investment of $10,000 $25,000 19,923 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2,000 Average Annual Total Returns Final Value Periods Ended June 30, 2017 of a $10,000 One Year Five Years Ten Years Investment Total Stock Market Index Portfolio 18.31% 14.38% 7.14% $19,923 Spliced Institutional Total Stock Market Index 1 18.49 14.58 7.38 20,379 Multi-Cap Core Funds Average 2 17.46 12.62 5.56 17,180 Fiscal-Year Total Returns (%) Spliced Total Institutional Stock Market Total Stock Index Portfolio Market Index 1 Fiscal Year Total Return Total Return 2008-12.8% -12.5% 2009-26.5-26.2 2010 15.7 16.0 2011 32.2 32.6 2012 3.7 4.0 2013 21.3 21.5 2014 25.0 25.2 2015 7.0 7.2 2016 2.0 2.1 2017 18.3 18.5 Allocation to Underlying Funds Institutional Total Stock Market 100.0% Expense Ratio (as of June 30, 2017) Total Stock Market Index Portfolio 0.19% Investment Equity Investment Focus Focus Style Market Cap Large Medium Value Blend Growth Small 1 Spliced Institutional Total Stock Market Index: Dow Jones Wilshire 5000 Index through April 8, 2005; the MSCI US Broad Market Index through January 14, 2013; CRSP US Total Market Index thereafter. 2 Derived from data provided by Lipper, a Thomson Reuters Company. 20
Value Index Portfolio Available as an individual portfolio. Cumulative Performance: June 30, 2007 June 30, 2017 Initial investment of $10,000 $22,000 17,143 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2,000 Average Annual Total Returns Final Value Periods Ended June 30, 2017 of a $10,000 One Year Five Years Ten Years Investment Value Index Portfolio 16.22% 14.14% 5.54% $17,143 Spliced Value Index 1 16.53 14.45 5.84 17,648 Large-Cap Value Funds Average 2 17.71 12.84 4.81 15,996 Fiscal-Year Total Returns (%) Value Spliced Index Portfolio Value Index 1 Fiscal Year Total Return Total Return 2008-20.2% -19.8% 2009-27.0-26.9 2010 15.7 16.1 2011 28.3 28.8 2012 2.3 2.6 2013 24.1 24.5 2014 22.1 22.5 2015 5.3 5.5 2016 4.4 4.7 2017 16.2 16.5 Allocation to Underlying Funds Value 100.0% Expense Ratio (as of June 30, 2017) Value Index Portfolio 0.25% Equity Investment Focus Style Value Blend Growth Market Cap Large Medium Small 1 Spliced Value Index: MSCI US Prime Market Value Index through April 16, 2013; CRSP US Large Cap Value Index thereafter. 2 Derived from data provided by Lipper, a Thomson Reuters Company. 21
Windsor Portfolio Available as an individual portfolio. Cumulative Performance: June 30, 2007 June 30, 2017 Initial investment of $10,000 $20,000 16,914 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2,000 Average Annual Total Returns Final Value Periods Ended June 30, 2017 of a $10,000 One Year Five Years Ten Years Investment Windsor Portfolio 22.89% 14.67% 5.40% $16,914 Russell 1000 Value Index 15.53 13.94 5.57 17,187 Multi-Cap Value Funds Average 1 17.72 12.82 4.84 16,038 Fiscal-Year Total Returns (%) Russell 1000 Windsor Portfolio Value Index Fiscal Year Total Return Total Return 2008-24.9% -18.8% 2009-24.5-29.0 2010 15.2 16.9 2011 29.9 28.9 2012 0.5 3.0 2013 29.8 25.3 2014 26.1 23.8 2015 5.3 4.1 2016-6.4 2.9 2017 22.9 15.5 Allocation to Underlying Funds Windsor Fund 100.0% Expense Ratio (as of June 30, 2017) Windsor Portfolio 0.44% Equity Investment Focus Style Value Blend Growth Market Cap Large Medium Small 1 Derived from data provided by Lipper, a Thomson Reuters Company. 22
10% Stock/90% Bond Portfolio Available within the age-based options. Cumulative Performance: March 17, 2017 June 30, 2017 Initial investment of $10,000 Average Annual Total Returns Final Value Periods Ended June 30, 2017 of a $10,000 Since Inception 1 Investment 10% Stock/90% Bond Portfolio 2.00% $10,200 529 10/90 Composite 2 2.09 10,209 Fiscal-Year Total Returns (%) Composite 2 Fiscal Year Portfolio Total Return 2017 1 2.0% 2.1% Expense Ratio (as of June 30, 2017) 10% Stock/90% Bond Portfolio 0.17% Equity Investment Focus Allocation to Underlying Funds Style Value Blend Growth n 63.0% Total Bond Market II n 27.0% Total International Bond n 6.0% Institutional Total Stock Market Market Cap Large Medium Small Fixed Income Investment Focus n 4.0% Total International Stock Average Maturity Credit Quality Treasury/ Agency Short Med. Long Corporate Below 1 Performance for the portfolio and its comparative standards is calculated since the portfolio s inception: March 17, 2017. 2 529 10/90 Composite Index: Weighted 63% Bloomberg Barclays U.S. Aggregate Float Adjusted Index, 27% Bloomberg Barclays Global Aggregate ex-usd Float Adjusted RIC Capped Index Hedged, 6% CRSP US Total Market Index, and 4% FTSE Global All Cap ex US Index. 23
20% Stock/80% Bond Portfolio Available within the age-based options. Cumulative Performance: March 17, 2017 June 30, 2017 Initial investment of $10,000 Average Annual Total Returns Final Value Periods Ended June 30, 2017 of a $10,000 Since Inception 1 Investment 20% Stock/80% Bond Portfolio 2.20% $10,220 529 20/80 Composite 2 2.28 10,228 Fiscal-Year Total Returns (%) Composite 2 Fiscal Year Portfolio Total Return 2017 1 2.2% 2.3% Expense Ratio (as of June 30, 2017) 20% Stock/80% Bond Portfolio 0.17% Equity Investment Focus Allocation to Underlying Funds Style Value Blend Growth n 56.0% Total Bond Market II n 23.9% Total International Bond n 12.0% Institutional Total Stock Market Market Cap Large Medium Small Fixed Income Investment Focus n 8.1% Total International Stock Average Maturity Credit Quality Treasury/ Agency Short Med. Long Corporate Below 1 Performance for the portfolio and its comparative standards is calculated since the portfolio s inception: March 17, 2017. 2 529 20/80 Composite Index: Weighted 56% Bloomberg Barclays U.S. Aggregate Float Adjusted Index, 24% Bloomberg Barclays Global Aggregate ex-usd Float Adjusted RIC Capped Index Hedged, 12% CRSP US Total Market Index, and 8% FTSE Global All Cap ex US Index. 24
25% Bond/75% Short-Term Reserves Portfolio Available within the age-based options. Cumulative Performance: March 17, 2017 June 30, 2017 Initial investment of $10,000 Average Annual Total Returns Final Value Periods Ended June 30, 2017 of a $10,000 Since Inception 1 Investment 25% Bond/75% Short-Term Reserves Portfolio 0.60% $10,060 529 25 Bond/75 Short-Term Reserves Composite 2 0.54 10,054 Fiscal-Year Total Returns (%) Composite 2 Fiscal Year Portfolio Total Return 2017 1 0.6% 0.5% Expense Ratio (as of June 30, 2017) 25% Bond/75% Short-Term Reserves Portfolio 0.17% Allocation to Underlying Funds Fixed Income Investment Focus Average Maturity Short Med. Long n 75.1% Short-Term Reserves Credit Quality Treasury/ Agency n 11.4% Total Bond Market II n 7.5% Total International Bond Corporate Below n 6.0% Short-Term Inflation-Protected Securities 1 Performance for the portfolio and its comparative standards is calculated since the portfolio s inception: March 17, 2017. 2 529 25 Bond/75 Short-Term Reserves Composite Index: Weighted 67.5% Citigroup 3-Month U.S. Treasury Bill Index, 11.5% Bloomberg Barclays U.S. Aggregate Float Adjusted Index, 7.5% Bloomberg Barclays Global Aggregate ex-usd Float Adjusted RIC Capped Index Hedged, 7.5% Ryan Labs 3 Year GIC Index, and 6% Bloomberg Barclays U.S. 0 5 Year Treasury Inflation Protected Securities Index. 25
30% Stock/70% Bond Portfolio Available within the age-based options. Cumulative Performance: March 17, 2017 June 30, 2017 Initial investment of $10,000 Average Annual Total Returns Final Value Periods Ended June 30, 2017 of a $10,000 Since Inception 1 Investment 30% Stock/70% Bond Portfolio 2.40% $10,240 529 30/70 Composite 2 2.46 10,246 Fiscal-Year Total Returns (%) Composite 2 Fiscal Year Portfolio Total Return 2017 1 2.4% 2.5% Expense Ratio (as of June 30, 2017) 30% Stock/70% Bond Portfolio 0.17% Equity Investment Focus Allocation to Underlying Funds Style Value Blend Growth n 48.9% Total Bond Market II n 20.9% Total International Bond n 18.1% Institutional Total Stock Market Market Cap Large Medium Small Fixed Income Investment Focus n 12.1% Total International Stock Average Maturity Credit Quality Treasury/ Agency Short Med. Long Corporate Below 1 Performance for the portfolio and its comparative standards is calculated since the portfolio s inception: March 17, 2017. 2 529 30/70 Composite Index: Weighted 49% Bloomberg Barclays U.S. Aggregate Float Adjusted Index, 21% Bloomberg Barclays Global Aggregate ex-usd Float Adjusted RIC Capped Index Hedged, 18% CRSP US Total Market Index, and 12% FTSE Global All Cap ex US Index. 26
40% Stock/60% Bond Portfolio Available within the age-based options. Cumulative Performance: March 17, 2017 June 30, 2017 Initial investment of $10,000 Average Annual Total Returns Final Value Periods Ended June 30, 2017 of a $10,000 Since Inception 1 Investment 40% Stock/60% Bond Portfolio 2.60% $10,260 529 40/60 Composite 2 2.65 10,265 Fiscal-Year Total Returns (%) Composite 2 Fiscal Year Portfolio Total Return 2017 1 2.6% 2.6% Expense Ratio (as of June 30, 2017) 40% Stock/60% Bond Portfolio 0.17% Equity Investment Focus Allocation to Underlying Funds Style Value Blend Growth n 41.9% Total Bond Market II n 24.1% Institutional Total Stock Market Market Cap Large Medium Small n 17.9% Total International Bond Fixed Income Investment Focus n 16.1% Total International Stock Average Maturity Credit Quality Treasury/ Agency Short Med. Long Corporate Below 1 Performance for the portfolio and its comparative standards is calculated since the portfolio s inception: March 17, 2017. 2 529 40/60 Composite Index: Weighted 42% Bloomberg Barclays U.S. Aggregate Float Adjusted Index, 24% CRSP US Total Market Index, 18% Bloomberg Barclays Global Aggregate ex-usd Float Adjusted RIC Capped Index Hedged, and 16% FTSE Global All Cap ex US Index. 27
50% Bond/50% Short-Term Reserves Portfolio Available within the age-based options. Cumulative Performance: March 17, 2017 June 30, 2017 Initial investment of $10,000 Average Annual Total Returns Final Value Periods Ended June 30, 2017 of a $10,000 Since Inception 1 Investment 50% Bond/50% Short-Term Reserves Portfolio 0.80% $10,080 529 50 Bond/50 Short-Term Reserves Composite 2 0.78 10,078 Fiscal-Year Total Returns (%) Composite 2 Fiscal Year Portfolio Total Return 2017 1 0.8% 0.8% Expense Ratio (as of June 30, 2017) 50% Bond/50% Short-Term Reserves Portfolio 0.17% Allocation to Underlying Funds Fixed Income Investment Focus Average Maturity Short Med. Long n 50.1% Short-Term Reserves Credit Quality Treasury/ Agency n 22.9% Total Bond Market II n 14.9% Total International Bond Corporate Below n 12.1% Short-Term Inflation-Protected Securities 1 Performance for the portfolio and its comparative standards is calculated since the portfolio s inception: March 17, 2017. 2 529 50 Bond/50 Short-Term Reserves Composite Index: Weighted 45% Citigroup 3-Month U.S. Treasury Bill Index, 23% Bloomberg Barclays U.S. Aggregate Float Adjusted Index, 15% Bloomberg Barclays Global Aggregate ex-usd Float Adjusted RIC Capped Index Hedged, 12% Bloomberg Barclays U.S. 0 5 Year Treasury Inflation Protected Securities Index, and 5% Ryan Labs 3 year GIC Index. 28
60% Stock/40% Bond Portfolio Available within the age-based options. Cumulative Performance: March 17, 2017 June 30, 2017 Initial investment of $10,000 Average Annual Total Returns Final Value Periods Ended June 30, 2017 of a $10,000 Since Inception 1 Investment 60% Stock/40% Bond Portfolio 3.00% $10,300 529 60/40 Composite 2 3.01 10,301 Fiscal-Year Total Returns (%) Composite 2 Fiscal Year Portfolio Total Return 2017 1 3.0% 3.0% Expense Ratio (as of June 30, 2017) 60% Stock/40% Bond Portfolio 0.17% Equity Investment Focus Allocation to Underlying Funds Style Value Blend Growth n 36.0% Institutional Total Stock Market Market Cap Large Medium n 28.0% Total Bond Market II Small n 24.1% Total International Stock Fixed Income Investment Focus n 11.9% Total International Bond Average Maturity Credit Quality Treasury/ Agency Short Med. Long Corporate Below 1 Performance for the portfolio and its comparative standards is calculated since the portfolio s inception: March 17, 2017. 2 529 60/40 Composite Index: Weighted 36% CRSP US Total Market Index, 28% Bloomberg Barclays U.S. Aggregate Float Adjusted Index, 24% FTSE Global All Cap ex US Index, and 12% Bloomberg Barclays Global Aggregate ex-usd Float Adjusted RIC Capped Index Hedged. 29
70% Stock/30% Bond Portfolio Available within the age-based options. Cumulative Performance: March 17, 2017 June 30, 2017 Initial investment of $10,000 Average Annual Total Returns Final Value Periods Ended June 30, 2017 of a $10,000 Since Inception 1 Investment 70% Stock/30% Bond Portfolio 3.20% $10,320 529 70/30 Composite 2 3.19 10,319 Fiscal-Year Total Returns (%) Composite 2 Fiscal Year Portfolio Total Return 2017 1 3.2% 3.2% Expense Ratio (as of June 30, 2017) 70% Stock/30% Bond Portfolio 0.17% Equity Investment Focus Allocation to Underlying Funds Style Value Blend Growth n 42.0% Institutional Total Stock Market Market Cap Large Medium n 28.1% Total International Stock Small n 20.9% Total Bond Market II Fixed Income Investment Focus n 9.0% Total International Bond Average Maturity Credit Quality Treasury/ Agency Short Med. Long Corporate Below 1 Performance for the portfolio and its comparative standards is calculated since the portfolio s inception: March 17, 2017. 2 529 70/30 Composite Index: Weighted 42% CRSP US Total Market Index, 28% FTSE Global All Cap ex US Index, 21% Bloomberg Barclays U.S. Aggregate Float Adjusted Index, and 9% Bloomberg Barclays Global Aggregate ex-usd Float Adjusted RIC Capped Index Hedged. 30
80% Stock/20% Bond Portfolio Available within the age-based options. Cumulative Performance: March 17, 2017 June 30, 2017 Initial investment of $10,000 Average Annual Total Returns Final Value Periods Ended June 30, 2017 of a $10,000 Since Inception 1 Investment 80% Stock/20% Bond Portfolio 3.40% $10,340 529 80/20 Composite 2 3.36 10,336 Fiscal-Year Total Returns (%) Composite 2 Fiscal Year Portfolio Total Return 2017 1 3.4% 3.4% Expense Ratio (as of June 30, 2017) 80% Stock/20% Bond Portfolio 0.17% Equity Investment Focus Allocation to Underlying Funds Style Value Blend Growth n 48.0% Institutional Total Stock Market Market Cap Large Medium n 32.1% Total International Stock Small n 13.9% Total Bond Market II Fixed Income Investment Focus n 6.0% Total International Bond Average Maturity Credit Quality Treasury/ Agency Short Med. Long Corporate Below 1 Performance for the portfolio and its comparative standards is calculated since the portfolio s inception: March 17, 2017. 2 529 80/20 Composite Index: Weighted 48% CRSP US Total Market Index, 32% FTSE Global All Cap ex US Index, 14% Bloomberg Barclays U.S. Aggregate Float Adjusted Index, and 6% Bloomberg Barclays Global Aggregate ex-usd Float Adjusted RIC Capped Index Hedged. 31
90% Stock/10% Bond Portfolio Available within the age-based options. Cumulative Performance: March 17, 2017 June 30, 2017 Initial investment of $10,000 Average Annual Total Returns Final Value Periods Ended June 30, 2017 of a $10,000 Since Inception 1 Investment 90% Stock/10% Bond Portfolio 3.60% $10,360 529 90/10 Composite 2 3.54 10,354 Fiscal-Year Total Returns (%) Composite 2 Fiscal Year Portfolio Total Return 2017 1 3.6% 3.5% Expense Ratio (as of June 30, 2017) 90% Stock/10% Bond Portfolio 0.17% Equity Investment Focus Allocation to Underlying Funds Style Value Blend Growth n 53.9% Institutional Total Stock Market Market Cap Large Medium n 36.1% Total International Stock Small n 7.0% Total Bond Market II Fixed Income Investment Focus n 3.0% Total International Bond Average Maturity Credit Quality Treasury/ Agency Short Med. Long Corporate Below 1 Performance for the portfolio and its comparative standards is calculated since the portfolio s inception: March 17, 2017. 2 529 90/10 Composite Index: Weighted 54% CRSP US Total Market Index, 36% FTSE Global All Cap ex US Index, 7% Bloomberg Barclays U.S. Aggregate Float Adjusted Index, and 3% Bloomberg Barclays Global Aggregate ex-usd Float Adjusted RIC Capped Index Hedged. 32
Conservative Growth Portfolio Available as an individual portfolio. Cumulative Performance: June 30, 2007 June 30, 2017 Initial investment of $10,000 $20,000 15,956 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 5,000 Average Annual Total Returns Final Value Periods Ended June 30, 2017 of a $10,000 One Year Five Years Ten Years Investment Conservative Growth Portfolio 3.98% 4.57% 4.78% $15,956 529 Conservative Growth Composite 1 4.12 4.81 5.07 16,401 529 Conservative Growth Composite Average 2 4.60 4.62 4.30 15,242 Fiscal-Year Total Returns (%) Conservative Growth Portfolio Composite 1 Fiscal Year Total Return Total Return 2008 2.1% 2.4% 2009-2.8-2.6 2010 10.8 11.1 2011 10.1 10.6 2012 5.4 5.8 2013 3.8 4.2 2014 8.8 9.2 2015 2.3 2.4 2016 4.1 4.3 2017 4.0 4.1 Allocation to Underlying Funds n 52.5% Total Bond Market II n 22.5% Total International Bond n 15.0% Institutional Total Stock Market n 10.0% Total International Stock 1 529 Conservative Growth Composite: Weighted 52.5% Bloomberg Barclays U.S. Aggregate Float Adjusted Index, 22.5% Bloomberg Barclays Global Aggregate ex-usd Float Adjusted RIC Capped Index Hedged, 15% CRSP US Total Market Index, and 10% FTSE Global All Cap ex US Index. The CRSP index replaced the MSCI US Broad Market Index on January 15, 2013, which had replaced the Dow Jones Wilshire 5000 Index on April 22, 2005. The Bloomberg Barclays U.S. Aggregate Float Adjusted Index replaced the Bloomberg Barclays U.S. Aggregate Bond Index on December 31, 2009. The FTSE Global All Cap ex US Index replaced the MSCI ACWI ex USA IMI Index on June 3, 2013, which had replaced the MSCI EAFE + Emerging Markets Index on December 16, 2010. 2 529 Conservative Growth Composite Average: Weighted 75% core bond funds average, 17.5% multi-cap core funds average, and 7.5% international funds average; derived from data provided by Lipper, a Thomson Reuters Company. 33
Conservative Growth Portfolio Expense Ratio (as of June 30, 2017) Fixed Income Investment Focus Conservative Growth Portfolio 0.17% Equity Investment Focus Style Value Blend Growth Average Maturity Credit Quality Treasury/ Agency Corporate Short Med. Long Market Cap Large Below Medium Small 34
Growth Portfolio Available as an individual portfolio. Cumulative Performance: June 30, 2007 June 30, 2017 Initial investment of $10,000 $20,000 16,974 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 3,000 Average Annual Total Returns Final Value Periods Ended June 30, 2017 of a $10,000 One Year Five Years Ten Years Investment Growth Portfolio 13.87% 9.74% 5.43% $16,974 529 Growth Composite 1 14.12 10.00 5.67 17,358 529 Growth Composite Average 2 13.37 9.06 4.45 15,456 Fiscal-Year Total Returns (%) Growth Portfolio Composite 1 Fiscal Year Total Return Total Return 2008-7.2% -7.0% 2009-19.1-19.2 2010 13.2 13.8 2011 24.5 24.6 2012 0.8 1.1 2013 13.8 14.2 2014 19.0 19.3 2015 3.1 3.3 2016 0.2 0.3 2017 13.9 14.1 Allocation to Underlying Funds n 45.0% Institutional Total Stock Market n 30.0% Total International Stock n 17.5% Total Bond Market II n 7.5% Total International Bond 1 529 Growth Composite: Weighted 45% CRSP US Total Market Index, 30% FTSE Global All Cap ex US Index, 17.5% Bloomberg Barclays U.S. Aggregate Float Adjusted Index, and 7.5% Bloomberg Barclays Global Aggregate ex-usd Float Adjusted RIC Capped Index Hedged. The CRSP index replaced the MSCI US Broad Market Index on January 15, 2013, which had replaced the Dow Jones Wilshire 5000 Index on April 22, 2005. The Bloomberg Barclays U.S. Aggregate Float Adjusted Index replaced the Bloomberg Barclays U.S. Aggregate Bond Index on December 31, 2009. The FTSE Global All Cap ex US Index replaced the MSCI ACWI ex USA IMI Index on June 3, 2013, which had replaced the MSCI EAFE + Emerging Markets Index on December 16, 2010. 2 529 Growth Composite Average: Weighted 52.5% multi-cap core funds average, 25% core bond funds average, and 22.5% international funds average; derived from data provided by Lipper, a Thomson Reuters Company. 35
Growth Portfolio Expense Ratio (as of June 30, 2017) Fixed Income Investment Focus Growth Portfolio 0.17% Equity Investment Focus Style Value Blend Growth Market Cap Large Average Maturity Credit Quality Treasury/ Agency Corporate Below Short Med. Long Medium Small 36
Moderate Growth Portfolio Available within the age-based options or as an individual portfolio. Cumulative Performance: June 30, 2007 June 30, 2017 Initial investment of $10,000 $20,000 16,664 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 3,000 Average Annual Total Returns Final Value Periods Ended June 30, 2017 of a $10,000 One Year Five Years Ten Years Investment Moderate Growth Portfolio 8.76% 7.19% 5.24% $16,664 529 Moderate Growth Composite 1 9.02 7.43 5.47 17,038 529 Moderate Growth Composite Average 2 8.91 6.85 4.45 15,459 Fiscal-Year Total Returns (%) Moderate Growth Portfolio Composite 1 Fiscal Year Total Return Total Return 2008-2.7% -2.3% 2009-11.0-11.0 2010 12.3 12.5 2011 17.1 17.5 2012 3.3 3.6 2013 8.7 9.1 2014 13.9 14.1 2015 2.7 2.9 2016 2.3 2.4 2017 8.8 9.0 Allocation to Underlying Funds n 34.9% Total Bond Market II n 30.0% Institutional Total Stock Market n 20.2% Total International Stock n 14.9% Total International Bond 1 529 Moderate Growth Composite: Weighted 35% Bloomberg Barclays U.S. Aggregate Float Adjusted Index, 30% CRSP US Total Market Index, 20% FTSE Global All Cap ex US Index, and 15% Bloomberg Barclays Global Aggregate ex-usd Float Adjusted RIC Capped Index Hedged. The CRSP index replaced the MSCI US Broad Market Index on January 15, 2013, which had replaced the Dow Jones Wilshire 5000 Index on April 22, 2005. The Bloomberg Barclays U.S. Aggregate Float Adjusted Index replaced the Bloomberg Barclays U.S. Aggregate Bond Index on December 31, 2009. The FTSE Global All Cap ex US Index replaced the MSCI ACWI ex USA IMI Index on June 3, 2013, which had replaced the MSCI EAFE + Emerging Markets Index on December 16, 2010. 2 529 Moderate Growth Composite Average: Weighted 50% core bond funds average, 35% multi-cap core funds average, and 15% international funds average; derived from data provided by Lipper, a Thomson Reuters Company. 37
Moderate Growth Portfolio Expense Ratio (as of June 30, 2017) Fixed Income Investment Focus Moderate Growth Portfolio 0.17% Average Maturity Credit Quality Treasury/ Agency Short Med. Long Equity Investment Focus Style Market Cap Large Value Blend Growth Corporate Below Medium Small 38
STAR Portfolio Available as an individual portfolio. Cumulative Performance: June 30, 2007 June 30, 2017 Initial investment of $10,000 $22,000 17,351 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 3,000 Average Annual Total Returns Final Value Periods Ended June 30, 2017 of a $10,000 One Year Five Years Ten Years Investment STAR Portfolio 13.84% 9.39% 5.67% $17,351 STAR Composite Index 1 11.83 8.73 5.65 17,325 STAR Composite Average 2 12.39 7.97 4.42 15,411 Fiscal-Year Total Returns (%) STAR Composite STAR Portfolio Index 1 Fiscal Year Total Return Total Return 2008-6.5% -4.9% 2009-14.6-13.7 2010 12.7 12.9 2011 20.7 20.8 2012 2.0 1.9 2013 12.7 11.9 2014 18.2 16.5 2015 3.3 3.0 2016 0.0 1.2 2017 13.8 11.8 Allocation to Underlying Funds STAR Fund 100.0% Expense Ratio (as of June 30, 2017) STAR Portfolio 0.45% 1 STAR Composite Index: Weighted 50% MSCI US Broad Market Index, 25% Bloomberg Barclays U.S. Aggregate Bond Index, 12.5% Bloomberg Barclays U.S. 1 5 Year Credit Bond Index, and 12.5% MSCI EAFE Index through September 30, 2010; and 43.75% MSCI US Broad Market Index, 25% Bloomberg Barclays U.S. Aggregate Bond Index, 18.75% MSCI All Country World Index ex USA, and 12.5% Bloomberg Barclays U.S. 1 5 Year Credit Bond Index thereafter. MSCI international benchmark returns are adjusted for withholding taxes. 2 The STAR Composite Average: Weighted 43.75% general equity funds average, 25% fixed income funds average, 18.75% international funds average, and 12.5% 1 5 year investment-grade debt funds average; derived from data provided by Lipper, a Thomson Reuters Company. 39
STAR Portfolio Equity Investment Focus Fixed Income Investment Focus Style Value Blend Growth Average Maturity Short Med. Long Market Cap Large Credit Quality Treasury/ Agency Medium Small Corporate Below 40
High-Yield Bond Portfolio Available as an individual portfolio. Cumulative Performance: June 30, 2007 June 30, 2017 Initial investment of $10,000 $22,000 18,640 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 5,000 Average Annual Total Returns Final Value Periods Ended June 30, 2017 of a $10,000 One Year Five Years Ten Years Investment High-Yield Bond Portfolio 10.13% 6.03% 6.43% $18,640 High-Yield Corporate Composite Index 1 10.32 6.26 7.05 19,769 High Yield Funds Average 2 10.67 5.52 5.56 17,179 Fiscal-Year Total Returns (%) High-Yield Corporate High-Yield Composite Bond Portfolio Index 1 Fiscal Year Total Return Total Return 2008-2.1% 0.5% 2009-4.1-1.4 2010 20.0 20.0 2011 13.6 13.9 2012 8.7 7.7 2013 6.7 8.0 2014 10.1 10.7 2015 1.3 0.8 2016 2.3 1.9 2017 10.1 10.3 Allocation to Underlying Funds High-Yield Corporate Fund 100.0% Expense Ratio (as of June 30, 2017) High-Yield Bond Portfolio 0.32% Fixed Income Investment Focus Average Maturity Credit Quality Treasury/ Agency Corporate Below Short Med. Long 1 High-Yield Corporate Composite Index: Weighted 95% Bloomberg Barclays U.S. High Yield Ba/B 2% Issuer Cap Index, and 5% Bloomberg Barclays U.S. 1 5 Year Treasury Bond Index. 2 Derived from data provided by Lipper, a Thomson Reuters Company. 41
Income Portfolio Available within the age-based options or as an individual portfolio. Cumulative Performance: June 30, 2007 June 30, 2017 Initial investment of $10,000 $17,000 13,793 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 7,000 Average Annual Total Returns Final Value Periods Ended June 30, 2017 of a $10,000 One Year Five Years Ten Years Investment Income Portfolio 0.00% 1.00% 3.27% $13,793 529 Income Composite 1 0.03 1.16 3.48 14,073 529 Income Composite Average 2 0.35 1.17 2.97 13,406 Fiscal-Year Total Returns (%) Income Portfolio Composite 1 Fiscal Year Total Return Total Return 2008 8.2% 8.1% 2009 2.6 3.0 2010 7.0 7.4 2011 3.6 4.1 2012 6.6 6.7 2013-1.8-1.4 2014 3.1 3.3 2015 0.4 0.5 2016 3.4 3.5 2017 0.0 0.0 Expense Ratio (as of June 30, 2017) Income Portfolio 0.17% Allocation to Underlying Funds Fixed Income Investment Focus Average Maturity Credit Quality n 34.4% Total Bond Market II n 25.1% Short-Term Reserves n 22.4% Total International Bond n 18.1% Short-Term Inflation-Protected Securities Treasury/ Agency Corporate Below Short Med. Long 1 529 Income Composite: Consists of five unmanaged benchmarks, weighted 34.5% Spliced Total Bond Market Index, 22.5% Bloomberg Barclays Global Aggregate ex-usd Float Adjusted RIC Capped Index Hedged, 21.25% Citigroup 3-Month Treasury Bill Index, 18% Bloomberg Barclays U.S. 0 5 Year Treasury Inflation Protected Securities Index, and 3.75% Ryan Labs 3 year GIC Index. The Spliced Total Bond Market Index consists of the Bloomberg Barclays U.S. Aggregate Bond Index through December 31, 2009; Bloomberg Barclays U.S. Aggregate Float Adjusted Index thereafter. 2 529 Income Composite Average: Weighted 50% core bond funds average, 25% inflation-protected bond funds average, and 25% money market funds average; derived from data provided by Lipper, a Thomson Reuters Company. 42
Inflation-Protected Securities Portfolio Available as an individual portfolio. Cumulative Performance: June 30, 2007 June 30, 2017 Initial investment of $10,000 $18,000 14,603 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 7,000 Average Annual Total Returns Final Value Periods Ended June 30, 2017 of a $10,000 One Year Five Years Ten Years Investment Inflation-Protected Securities Portfolio -0.94% 0.03% 3.86% $14,603 Bloomberg Barclays U.S. Treasury Inflation Protected Securities Index -0.63 0.27 4.27 15,196 Inflation-Protected Bond Funds Average 1 0.19-0.17 3.33 13,872 Fiscal-Year Total Returns (%) Bloomberg Barclays U.S. Treasury Inflation Inflation-Protected Protected Securities Portfolio Securities Index Fiscal Year Total Return Total Return 2008 14.9% 15.1% 2009-2.7-1.1 2010 9.2 9.5 2011 6.9 7.7 2012 11.7 11.7 2013-5.3-4.8 2014 4.3 4.4 2015-2.1-1.7 2016 4.5 4.4 2017-0.9-0.6 Allocation to Underlying Funds Inflation-Protected Securities Fund 100.0% Expense Ratio (as of June 30, 2017) Inflation-Protected Securities Portfolio 0.25% Investment Fixed Income Focus Investment Focus Average Maturity Credit Quality Treasury/ Agency Corporate Below Short Med. Long 1 Derived from data provided by Lipper, a Thomson Reuters Company. 43
Total Bond Market Index Portfolio Available as an individual portfolio. Cumulative Performance: June 30, 2007 June 30, 2017 Initial investment of $10,000 $20,000 15,017 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 5,000 Average Annual Total Returns Final Value Periods Ended June 30, 2017 of a $10,000 One Year Five Years Ten Years Investment Total Bond Market Index Portfolio -0.30% 1.95% 4.15% $15,017 Spliced Bloomberg Barclays U.S. Aggregate Float Adjusted Bond Index 1-0.33 2.23 4.50 15,532 Spliced Intermediate-Term Debt Funds Average 2 0.43 2.38 4.01 14,816 Fiscal-Year Total Returns (%) Spliced Bloomberg Barclays Total U.S. Aggregate Bond Market Float Adjusted Index Portfolio Index 1 Fiscal Year Total Return Total Return 2008 6.9% 7.1% 2009 5.4 6.0 2010 9.0 9.5 2011 3.4 3.9 2012 7.4 7.6 2013-1.0-0.6 2014 4.1 4.3 2015 1.5 1.8 2016 6.0 6.1 2017-0.6-0.3 Allocation to Underlying Funds Total Bond Market 100.0% Expense Ratio (as of June 30, 2017) Total Bond Market Index Portfolio 0.22% Fixed Income Investment Focus Average Maturity Credit Quality Treasury/ Agency Corporate Below Short Med. Long 1 Spliced Bloomberg Barclays U.S. Aggregate Float Adjusted Bond Index: Bloomberg Barclays U.S. Aggregate Bond Index through December 31, 2009; Bloomberg Barclays U.S. Aggregate Float Adjusted Index thereafter. 2 Spliced Intermediate Debt Funds Average: Intermediate U.S. Government Funds Average through December 31, 2001; Intermediate Debt Funds Average through August 31, 2013; Core Bond Funds Average thereafter; derived from data provided by Lipper, a Thomson Reuters Company. 44
Total International Bond Index Portfolio Available within the age-based options or as an individual portfolio. Cumulative Performance: March 17, 2017 June 30, 2017 Initial investment of $10,000 Average Annual Total Returns Final Value Periods Ended June 30, 2017 of a $10,000 Since Inception 1 Investment Total International Bond Index Portfolio 1.20% $10,120 Bloomberg Barclays Global Aggregate ex-usd Float Adjusted RIC Capped Index Hedged 1.28 10,128 International Income Funds Average 2 2.89 10,289 Fiscal-Year Total Returns (%) Bloomberg Barclays Global Aggregate ex-usd Float Adjusted RIC Capped Index Fiscal Year Portfolio Hedged 2017 1 1.2% 1.3% Allocation to Underlying Funds Total International Bond 100.0% Expense Ratio Total International Bond Index Portfolio 0.26% Fixed Income Investment Focus Average Maturity Credit Quality Treasury/ Agency Corporate Below Short Med. Long 1 Performance for the portfolio and its comparative standards is calculated since the portfolio s inception: March 17, 2017. 2 Derived from data provided by Lipper, a Thomson Reuters Company. 45
Interest Accumulation Portfolio Available within the age-based options or as an individual portfolio. Cumulative Performance: June 30, 2007 June 30, 2017 Initial investment of $10,000 $14,000 11,038 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 7,000 Average Annual Total Returns Final Value Periods Ended June 30, 2017 of a $10,000 One Year Five Years Ten Years Investment Interest Accumulation Portfolio 1.08% 0.42% 0.99% $11,038 Interest Accumulation Composite 1 0.55 0.24 0.86 10,899 Money Market Funds Average 2 0.33 0.07 0.47 10,484 Fiscal-Year Total Returns (%) Interest Interest Accumulation Accumulation Portfolio Composite 1 Fiscal Year Total Return Total Return 2008 4.0% 3.7% 2009 2.4 1.8 2010 0.8 1.1 2011 0.6 0.7 2012 0.2 0.3 2013 0.2 0.2 2014 0.1 0.1 2015 0.2 0.1 2016 0.6 0.2 2017 1.1 0.6 Yield: 1.38% Allocation to Underlying Funds Federal Money Market Fund 10.3% Funding Agreements 89.7% The Income Portfolio, Interest Accumulation Portfolio, 25% Bond/75% Short-Term Reserves Portfolio and 50% Bond/50% Short-Term Reserves Portfolio all invest in the Short-Term Reserves Account, which, in turn, invests in the Federal Money Market Fund. You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time. Expense Ratio (as of June 30, 2017) Interest Accumulation Portfolio 0.17% 1 Interest Accumulation Composite: Weighted 90% Citigroup 3-Month U.S. Treasury Bill Index and 10% Ryan Labs 3 Year GIC Index. 2 Derived from data provided by Lipper, a Thomson Reuters Company. 46
Selected Financial Data The 529 College Savings Plan Increase (Decrease) in Net Position Investment Operations For the Period June 30, 2016, Through June 30, 2017 500 Aggressive Growth Mid-Cap Index Growth Index Index Portfolio Portfolio Portfolio Portfolio ($000) ($000) ($000) ($000) Income Dividends Received 19,940 31,288 3,825 6,904 Capital Gain Distributions Received 2,654 6,527 Realized Net Gain (Loss) on Investment Securities Sold 3,527 75,786 4,207 6,072 Change in Net Unrealized Appreciation (Depreciation) in Value of Investments 128,382 126,826 42,072 56,438 Administrative Expenses (1,603) (1,757) (585) (884) Net Increase (Decrease) Resulting from Investment Operations 152,900 238,670 49,519 68,530 Unit Transactions Contributions 133,240 282,945 35,339 40,988 Exchanges In 100,676 56,323 30,861 29,213 Transfers In 1 2 Withdrawals (36,772) (29,982) (11,246) (16,533) Exchanges Out (100,647) (300,045) (39,957) (50,842) Transfers Out 1 (201,704) Net Increase (Decrease) from Unit Transactions 96,497 (192,461) 14,997 2,826 Total Increase (Decrease) 249,397 46,209 64,516 71,356 Net Position Beginning of Period 827,993 1,304,918 248,950 404,196 End of Period 1,077,390 1,351,127 313,466 475,552 Net Position Value Per Unit, End of Period $34.12 $33.43 $36.33 $45.28 Total Return 17.70% 19.10% 19.90% 17.06% Ratios/Supplemental Data Expense Ratio 0.19% 0.17% 0.25% 0.23% (Continued on next page) 47
Increase (Decrease) in Net Position Investment Operations For the Period June 30, 2016, Through June 30, 2017 Total Total Stock Morgan Small-Cap International Market Growth Index Stock Index Index Portfolio Portfolio Portfolio Portfolio ($000) ($000) ($000) ($000) Income Dividends Received 612 7,053 15,269 17,463 Capital Gain Distributions Received 3,052 6,843 Realized Net Gain (Loss) on Investment Securities Sold 1,188 4,532 (888) 7,540 Change in Net Unrealized Appreciation (Depreciation) in Value of Investments 8,472 64,419 81,779 112,637 Administrative Expenses (105) (896) (1,284) (1,457) Net Increase (Decrease) Resulting from Investment Operations 13,219 75,108 94,876 143,026 Unit Transactions Contributions 6,940 43,819 49,906 93,320 Exchanges In 7,942 45,638 44,996 80,233 Transfers In 1 Withdrawals (2,861) (15,989) (18,760) (31,414) Exchanges Out (16,809) (49,925) (62,583) (96,761) Transfers Out 1 Net Increase (Decrease) from Unit Transactions (4,788) 23,543 13,559 45,378 Total Increase (Decrease) 8,431 98,651 108,435 188,404 Net Position Beginning of Period 68,365 392,440 481,313 769,644 End of Period 76,796 491,091 589,748 958,048 Net Position Value Per Unit, End of Period $21.93 $46.80 $29.54 $36.44 Total Return 20.56% 18.90% 19.84% 18.31% Ratios/Supplemental Data Expense Ratio 0.45% 0.23% 0.24% 0.19% (Continued on next page) 48
Increase (Decrease) in Net Position Investment Operations For the Period June 30, 2016, Through June 30, 2017 Value 10% Stock/ 20% Stock/ Index Windsor 90% Bond 80% Bond Portfolio Portfolio Portfolio 2 Portfolio 2 ($000) ($000) ($000) ($000) Income Dividends Received 6,803 2,226 4,122 2,867 Capital Gain Distributions Received 2,840 21 28 Realized Net Gain (Loss) on Investment Securities Sold 3,331 1,579 118 40 Change in Net Unrealized Appreciation (Depreciation) in Value of Investments 29,302 14,587 8,450 6,175 Administrative Expenses (562) (252) (241) (155) Net Increase (Decrease) Resulting from Investment Operations 38,874 20,980 12,470 8,955 Unit Transactions Contributions 24,845 9,865 11,698 9,867 Exchanges In 32,705 9,154 88,557 91,545 Transfers In 1 609,673 399,834 Withdrawals (10,831) (4,525) (11,895) (1,500) Exchanges Out (34,525) (16,982) (54,605) (87,679) Transfers Out 1 Net Increase (Decrease) from Unit Transactions 12,194 (2,488) 643,428 412,067 Total Increase (Decrease) 51,068 18,492 655,898 421,022 Net Position Beginning of Period 232,805 93,929 End of Period 283,873 112,421 655,898 421,022 Net Position Value Per Unit, End of Period $35.04 $18.20 $10.20 $10.22 Total Return 16.22% 22.89% 2.00% 2.20% Ratios/Supplemental Data Expense Ratio 0.25% 0.44% 0.17% 0.17% (Continued on next page) 49
Increase (Decrease) in Net Position Investment Operations For the Period June 30, 2016, Through June 30, 2017 25% Bond/ 50% Bond/ 75% Short-Term 30% Stock/ 40% Stock/ 50% Short-Term Reserves 70% Bond 60% Bond Reserves Portfolio 2 Portfolio 2 Portfolio 2 Portfolio 2 ($000) ($000) ($000) ($000) Income Dividends Received 296 4,843 5,195 235 Capital Gain Distributions Received 66 89 Realized Net Gain (Loss) on Investment Securities Sold 4 69 61 4 Change in Net Unrealized Appreciation (Depreciation) in Value of Investments 147 10,707 11,745 229 Administrative Expenses (26) (245) (246) (21) Net Increase (Decrease) Resulting from Investment Operations 421 15,440 16,844 447 Unit Transactions Contributions 2,009 17,404 18,253 1,513 Exchanges In 10,381 109,205 111,177 10,229 Transfers In 1 68,415 627,343 636,823 53,025 Withdrawals (928) (1,785) (1,581) (109) Exchanges Out (7,611) (97,875) (107,945) (6,518) Transfers Out 1 Net Increase (Decrease) from Unit Transactions 72,266 654,292 656,727 58,140 Total Increase (Decrease) 72,687 669,732 673,571 58,587 Net Position Beginning of Period End of Period 72,687 669,732 673,571 58,587 Net Position Value Per Unit, End of Period $10.06 $10.24 $10.26 $10.08 Total Return 0.60% 2.40% 2.60% 0.80% Ratios/Supplemental Data Expense Ratio 0.17% 0.17% 0.17% 0.17% (Continued on next page) 50
Increase (Decrease) in Net Position Investment Operations For the Period June 30, 2016, Through June 30, 2017 60% Stock/ 70% Stock/ 80% Stock/ 90% Stock/ 40% Bond 30% Bond 20% Bond 10% Bond Portfolio 2 Portfolio 2 Portfolio 2 Portfolio 2 ($000) ($000) ($000) ($000) Income Dividends Received 8,772 8,055 6,826 5,945 Capital Gain Distributions Received 203 206 189 177 Realized Net Gain (Loss) on Investment Securities Sold 437 357 262 513 Change in Net Unrealized Appreciation (Depreciation) in Value of Investments 20,373 18,936 16,247 14,166 Administrative Expenses (370) (321) (257) (214) Net Increase (Decrease) Resulting from Investment Operations 29,415 27,233 23,267 20,587 Unit Transactions Contributions 31,307 29,736 30,025 40,677 Exchanges In 108,687 89,013 76,045 49,335 Transfers In 1 971,006 843,910 677,148 562,398 Withdrawals (2,365) (1,947) (2,197) (1,735) Exchanges Out (127,573) (103,677) (88,448) (74,758) Transfers Out 1 Net Increase (Decrease) from Unit Transactions 981,062 857,035 692,573 575,917 Total Increase (Decrease) 1,010,477 884,268 715,840 596,504 Net Position Beginning of Period End of Period 1,010,477 884,268 715,840 596,504 Net Position Value Per Unit, End of Period $10.30 $10.32 $10.34 $10.36 Total Return 3.00% 3.20% 3.40% 3.60% Ratios/Supplemental Data Expense Ratio 0.17% 0.17% 0.17% 0.17% (Continued on next page) 51
Increase (Decrease) in Net Position Investment Operations For the Period June 30, 2016, Through June 30, 2017 Conservative Moderate Growth Growth Growth STAR Portfolio Portfolio Portfolio Portfolio ($000) ($000) ($000) ($000) Income Dividends Received 26,556 30,629 46,391 2,176 Capital Gain Distributions Received 3,079 7,247 6,900 2,701 Realized Net Gain (Loss) on Investment Securities Sold 85,510 347,000 173,105 1,407 Change in Net Unrealized Appreciation (Depreciation) in Value of Investments (85,322) (176,143) (51,031) 8,119 Administrative Expenses (1,727) (2,059) (2,907) (133) Net Increase (Decrease) Resulting from Investment Operations 28,096 206,674 172,458 14,270 Unit Transactions Contributions 123,131 264,639 234,885 9,920 Exchanges In 381,249 218,027 532,631 12,723 Transfers In 1 Withdrawals (59,005) (26,807) (32,278) (5,169) Exchanges Out (306,827) (394,710) (515,676) (18,463) Transfers Out 1 (1,547,561) (1,775,727) (1,366,167) Net Increase (Decrease) from Unit Transactions (1,409,013) (1,714,578) (1,146,605) (989) Total Increase (Decrease) (1,380,917) (1,507,904) (974,147) 13,281 Net Position Beginning of Period 1,533,912 1,891,397 2,279,359 104,924 End of Period 152,995 383,493 1,305,212 118,205 Net Position Value Per Unit, End of Period $21.94 $28.33 $25.08 $18.34 Total Return 3.98% 13.87% 8.76% 13.84% Ratios/Supplemental Data Expense Ratio 0.17% 0.17% 0.17% 0.45% (Continued on next page) 52
Increase (Decrease) in Net Position Investment Operations For the Period June 30, 2016, Through June 30, 2017 Inflation- Total Bond High-Yield Protected Market Bond Income Securities Index Portfolio Portfolio Portfolio Portfolio ($000) ($000) ($000) ($000) Income Dividends Received 8,377 16,622 4,384 6,684 Capital Gain Distributions Received 51 579 117 Realized Net Gain (Loss) on Investment Securities Sold 134 (281) 180 19 Change in Net Unrealized Appreciation (Depreciation) in Value of Investments 6,217 (21,276) (5,491) (7,896) Administrative Expenses (286) (1,331) (227) (514) Net Increase (Decrease) Resulting from Investment Operations 14,493 (5,687) (1,154) (1,590) Unit Transactions Contributions 15,820 92,233 10,157 29,322 Exchanges In 23,693 357,542 27,439 61,515 Transfers In 1 Withdrawals (9,061) (186,447) (6,675) (18,993) Exchanges Out (28,039) (122,363) (18,775) (50,183) Transfers Out 1 (559,570) Net Increase (Decrease) from Unit Transactions 2,413 (418,605) 12,146 21,661 Total Increase (Decrease) 16,906 (424,292) 10,992 20,071 Net Position Beginning of Period 143,410 1,072,590 121,319 265,079 End of Period 160,316 648,298 132,311 285,150 Net Position Value Per Unit, End of Period $26.32 $16.00 $17.83 $17.30 Total Return 10.13% 0.00% -0.94% -0.63% Ratios/Supplemental Data Expense Ratio 0.32% 0.17% 0.25% 0.22% (Continued on next page) 53
Increase (Decrease) in Net Position Investment Operations For the Period June 30, 2016, Through June 30, 2017 Total International Interest Bond Index Accumulation Portfolio 2 Portfolio ($000) ($000) Income Dividends Received 8 8,512 Capital Gain Distributions Received Realized Net Gain (Loss) on Investment Securities Sold Change in Net Unrealized Appreciation (Depreciation) in Value of Investments (2) Administrative Expenses (1) (846) Net Increase (Decrease) Resulting from Investment Operations 5 7,666 Unit Transactions Contributions 210 74,056 Exchanges In 3,328 294,066 Transfers In 1 1,152 Withdrawals (32) (122,602) Exchanges Out (145) (113,182) Transfers Out 1 Net Increase (Decrease) from Unit Transactions 3,361 133,490 Total Increase (Decrease) 3,366 141,156 Net Position Beginning of Period 613,884 End of Period 3,366 755,040 Net Position Value Per Unit, End of Period $10.12 $12.12 Total Return 1.20% 1.08% Ratios/Supplemental Data Expense Ratio 0.26% 0.17% 1 Transfers In and Transfers Out represent assets transferred as the result of the age-based option redesign effective March 17, 2017. 2 Portfolio activity for the period March 17, 2017, through June 30, 2017. 54
About Your Portfolio s Expenses Each investment option in The 529 College Savings Plan assesses a fee that is expressed as a percentage of portfolio assets. During the fiscal year, this fee (or expense ratio) ranged from 0.17% to 0.45%. The following examples in the table are intended to illustrate the ongoing costs of investing in the portfolios. The examples assume a $10,000 initial investment and a hypothetical 5% annual return for each portfolio, and show the cumulative cost in dollars over a one-year period ended June 30, 2017. The fee represents the only ongoing cost that you incur as an account owner. It is important to understand that the portfolios much like the mutual funds in which they invest do not assess the fee at one time. Rather, this cost is factored into each day s closing unit price, and thus directly reduces the return of each portfolio. More information about the costs of investing in The 529 College Savings Plan can be found in the Program Description. 55
Cost of a Hypothetical $10,000 Investment Expenses Paid Over 529 Portfolio Expense Ratio 1 One Year 2 Stock Portfolios 500 Index 0.19% $19.46 Aggressive Growth 0.17 17.41 Growth Index 0.25 25.59 Mid-Cap Index 0.23 23.55 Morgan Growth 0.45 46.02 Small-Cap Index 0.23 23.55 Total International Stock Index 0.24 24.57 Total Stock Market Index 0.19 19.46 Value Index 0.25 25.59 Windsor 0.44 45.00 Balanced Portfolios 10% Stock/90% Bond (since inception: 3/17/2017) 0.17% $17.41 20% Stock/80% Bond (since inception: 3/17/2017) 0.17 17.41 25% Bond/75% Short-Term Reserves (since inception: 3/17/2017) 0.17 17.41 30% Stock/70% Bond (since inception: 3/17/2017) 0.17 17.41 40% Stock/60% Bond (since inception: 3/17/2017) 0.17 17.41 50% Bond/50% Short-Term Reserves (since inception: 3/17/2017) 0.17 17.41 60% Stock/40% Bond (since inception: 3/17/2017) 0.17 17.41 70% Stock/30% Bond (since inception: 3/17/2017) 0.17 17.41 80% Stock/20% Bond (since inception: 3/17/2017) 0.17 17.41 90% Stock/10% Bond (since inception: 3/17/2017) 0.17 17.41 Conservative Growth 0.17 17.41 Growth 0.17 17.41 Moderate Growth 0.17 17.41 STAR 0.45 46.02 Bond Portfolios High-Yield Bond 0.32% $32.75 Income 0.17 17.41 Inflation-Protected Securities 0.25 25.59 Total Bond Market Index 0.22 22.53 Total International Bond Index (since inception: 3/17/2017) 0.26 26.62 Short-Term Investments Portfolio Interest Accumulation 0.17% $17.41 1 Expense ratios are as of June 30, 2017. 2 Expenses are equal to the portfolio s expense ratio multiplied by the average account value over the period. Note: The examples assume the fee remains the same for each portfolio over the investment period and no portfolio units are bought or sold. These examples should not be considered to represent actual expenses or performance from the past or for the future. Actual future expenses may be higher or lower than those shown. 56
Ways to Make the Most of Your Plan Low costs and a variety of investment choices are just a few of the benefits you get when you use The 529 College Savings Plan. Here are some other advantages: Autopilot savings that can help you save more conveniently You probably know that the sooner you get started investing, the better off you ll likely be. But contributing regularly can also greatly accelerate your savings. With our Automatic Investment Plan, you can link your bank account to your 529 account and invest as little as $50 each month or quarter. You can choose the specific day you want your bank account to be debited electronically, and you won t have to remember to write and mail a check. You can set up this convenient way to save either online or by mailing a form. The service charges no fees and it s just one less thing to worry about. Age-based options that simplify investing Take the guesswork out of saving for college by choosing one of our three age-based options. Simply select the one that s most consistent with your desired level of risk conservative, moderate, or aggressive. Then sit back while implements your investment strategy by automatically adjusting your asset allocation to become more conservative over time. This gradual change helps make your savings less vulnerable to market volatility as your beneficiary gets older. Online resources to plan and refine your strategy s College Savings Center (https://investor.vanguard.com/college-savings-plans/saving-forcollege) is a valuable resource for planning your future educational needs. And it s available around the clock. Visit the center not only to learn about savings options, future college costs, and much more, but also to take advantage of our powerful yet easy-to-use planning tools. For example, our College Savings Planner will create a comprehensive report summarizing how much you ll need to save to meet your goals. You can estimate costs for a specific school more than 3,500 colleges and universities are in our database or use national averages. Other tools can calculate what your savings may be worth when it s time for college and help determine how you should allocate them among stocks, bonds, and short-term reserves. Easy contributions from a mutual fund You may be able to move assets from a mutual fund to your 529 Plan account. The fund must be an individual account owned by the owner of the 529 Plan account or an UGMA account moving to a 529 Plan UGMA account for the same minor and custodian. This is a two-day process. The mutual fund redemption occurs first, and the purchase into the 529 Plan account takes place on the following business day. Assets can be moved at enrollment or during subsequent purchases but only online. Please be aware that this may result in a taxable event. Online exchanges and qualified withdrawals You can make an exchange move money from one of your investment options to another twice a year and request withdrawals online at vanguard.com. Simplify management of your account and initiate these and other common requests from our secure, easy-to-use website. 57
Age-Based Options (The expense ratio for all the portfolios in the three age-based options is 0.17% as of June 30, 2017.) Age of Beneficiary 0 2 years 3 4 years 5 6 years 7 8 years 9 10 years 11 12 years Conservative Option 60% Stock/ 40% Bond Portfolio* Moderate Growth Portfolio 50% Stock/ 50% Bond 40% Stock/ 60% Bond Portfolio* 30% Stock/ 70% Bond Portfolio* 20% Stock/ 80% Bond Portfolio* 10% Stock/ 90% Bond Portfolio* Moderate Option 90% Stock/ 10% Bond Portfolio* 80% Stock/ 20% Bond Portfolio* 70% Stock/ 30% Bond Portfolio* 60% Stock/ 40% Bond Portfolio* Moderate Growth Portfolio 50% Stock/ 50% Bond 40% Stock/ 60% Bond Portfolio* Aggressive Option Aggressive Growth Portfolio 100% Stock Aggressive Growth Portfolio 100% Stock 90% Stock/ 10% Bond Portfolio* 80% Stock/ 20% Bond Portfolio* 70% Stock/ 30% Bond Portfolio* 60% Stock/ 40% Bond Portfolio* Stocks Bonds Short-Term Investments * New portfolio 58
13 14 years 15 years 16 years 17 years 18 years 19 years or older Income Portfolio 75% Bond/ 25% Short-Term Reserves 50% Bond/ 50% Short-Term Reserves Portfolio* 50% Bond/ 50% Short-Term Reserves Portfolio* 25% Bond/ 75% Short-Term Reserves Portfolio* 25% Bond/ 75% Short-Term Reserves Portfolio* Interest Accumulation Portfolio 100% Short-Term Reserves 30% Stock/ 70% Bond Portfolio* 20% Stock/ 80% Bond Portfolio* 10% Stock/ 90% Bond Portfolio* Income Portfolio 75% Bond/ 25% Short-Term Reserves Income Portfolio 75% Bond/ 25% Short-Term Reserves Income Portfolio 75% Bond/ 25% Short-Term Reserves Moderate Growth Portfolio 50% Stock/ 50% Bond 40% Stock/ 60% Bond Portfolio* 30% Stock/ 70% Bond Portfolio* 20% Stock/ 80% Bond Portfolio* 10% Stock/ 90% Bond Portfolio* 10% Stock/ 90% Bond Portfolio* Note: The new portfolios are only available for purchase as part of an age-based portfolio and can t be purchased individually. 59
Glossary Age-Based Option. Designed to take into account a beneficiary s age and your investing time horizon. As the beneficiary nears college age, account assets are automatically moved to more conservative portfolios. Expense Ratio. The percentage of a portfolio s average net assets used to pay its annual administrative and advisory expenses. These expenses directly reduce returns to investors. The expense ratio includes a portfolio s proportionate share of operating, administrative, and advisory expenses of the underlying funds. Individual Portfolio. Asset allocation remains fixed over time and does not change as the beneficiary nears college age. For the 2017 fiscal year, The 529 Plan offered 15 multifund portfolios and 15 single-fund portfolios. Multifund Portfolio. A portfolio that invests in two or more underlying funds. Net Position. Total assets minus total liabilities. Return. A percentage change, over a specified time period, in unit price. Single-Fund Portfolio. A portfolio that invests in a single underlying fund. Unit Price. Calculated by dividing the dollar value of the portfolio s net position by the number of units outstanding. Yield. A portfolio s yield is derived using a formula specified by the U.S. Securities and Exchange Commission. Under the formula, data related to the portfolio s security holdings in the previous 30 days are used to calculate the portfolio s actual net income for that period, which is then annualized and divided by the portfolio s average net assets over the calculation period. For the purposes of this calculation, a security s net income is based on the actual income earned in the prior 30 days. 60
The S&P 500 Index is a product of S&P Dow Jones Indices LLC ( SPDJI ), and has been licensed for use by. Standard & Poor s and S&P are registered trademarks of Standard & Poor s Financial Services LLC ( S&P ); Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC ( Dow Jones ); S&P and S&P 500 are trademarks of S&P; and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by. s Product is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, or their respective affiliates and none of such parties make any representation regarding the advisability of investing in such product nor do they have any liability for any errors, omissions, or interruptions of the S&P 500 Index. London Stock Exchange Group companies include FTSE International Limited ( FTSE ), Frank Russell Company ( Russell ), MTS Next Limited ( MTS ), and FTSE TMX Global Debt Capital Markets Inc. ( FTSE TMX ). All rights reserved. FTSE, Russell, MTS, FTSE TMX and FTSE Russell and other service marks and trademarks related to the FTSE or Russell indexes are trademarks of the London Stock Exchange Group companies and are used by FTSE, MTS, FTSE TMX and Russell under license. All information is provided for information purposes only. No responsibility or liability can be accepted by the London Stock Exchange Group companies nor its licensors for any errors or for any loss from use of this publication. Neither the London Stock Exchange Group companies nor any of its licensors make any claim, prediction, warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the FTSE Indexes or the fitness or suitability of the Indexes for any particular purpose to which they might be put.
The 529 College Savings Plan Processing Center P.O. Box 55111 Boston, MA 02205-5111 Connect with > vanguard.com > 866-734-4530 Administered by Nevada State Treasurer Dan Schwartz The Income Portfolio, Interest Accumulation Portfolio, 25% Bond/75% Short-Term Reserves Portfolio and 50% Bond/50% Short-Term Reserves Portfolio, all invest in the Short-Term Reserves Account, which, in turn, invests in the Federal Money Market Fund. You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time. The 529 College Savings Plan is a Nevada Trust administered by the Board of Trustees of the College Savings Plans of Nevada, chaired by the Nevada State Treasurer. This material may be used in conjunction with the offering of shares of The 529 College Savings Plan portfolios only if preceded or accompanied by the current Program Description. Before investing, consider whether any state tax or other benefits are available for investments in the qualified tuition program offered by the investor s or beneficiary s home state. 2017 The Group, Inc. All rights reserved. Marketing Corporation, Distributor and Underwriter. Q5290 102017