#1Utah Higher Education Assistance Authority my529 Vanguard Presentation December 8, 2022 For institutional use only. Not for distribution to retail investors. Vanguard#2What we'll cover today Agenda: I. my529 growth and industry trends. II. Vanguard's economic and market overview III. The inflation fight steps forward: A midyear update to the Vanguard Economic and Market Outlook for 2022 IV. Disclosures Presented by: Smitha Walling Department Head Education Savings Christy Miller Head of State Relations Education Savings Stewart Duffield Senior Relationship Manager Education Savings Adam Schickling Senior Economist Investment Strategy For institutional use only. Not for distribution to retail investors. V2#3my529 growth and industry trends For institutional use only. Not for distribution to retail investors. V 3 |#4my529 growth Top 10 direct plans by assets: third quarter 2017 (in millions) $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0.00 NY NV NH UT CA MA OH MD MI IL Top 10 direct plans by assets: third quarter 2022 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0.00 NY NV UT ΝΗ CA IL OH MD MA VA Source: Strategic Insight, September 2017 and September 2022. For institutional use only. Not for distribution to retail investors. V 4#50% 5% CollegeAmerica (VA) 10% 15% Vanguard 529 Savings Plan (NV) Source: Strategic Insight, September 2022. For institutional use only. Not for distribution to retail investors. 20% Asset growth rate Unique College Investing Plan (NH) my529 5-year annual growth rate versus peers Utah Educational Savings Plan (UT) BrightStart (IL) NY College Savings Program - Direct (NY) MI Saves (MI) ScholarShare (CA) 529 Industry (Direct & Advisor) V5 529 Direct Plan#60% 5% CollegeAmerica (VA) 10% 15% Vanguard 529 Savings Plan (NV) Source: Strategic Insight, September 2022. For institutional use only. Not for distribution to retail investors. 20% Account growth rate Unique College Investing Plan (NH) my529 5-year annual growth rate versus peers Utah Educational Savings Plan (UT) BrightStart (IL) NY College Savings Program - Direct (NY) MI Saves (MI) ScholarShare (CA) 529 Industry (Direct & Advisor) V6 529 Direct Plan#7529 Industry trends Conversions to Target Enrollment are slowing Markets Source: Vanguard. For institutional use only. Not for distribution to retail investors. ESG discussions continue California almost passes a 529 state tax deduction K 529 plan operations back to "normal" Morningstar V│7#8Vanguard's economic and market overview For institutional use only. Not for distribution to retail investors. V. 8 |#9• Market volatility continues, with inflation and interest rates top concern for investors Global performance was marked with volatility in September. Central banks across the globe balance hiking interest rates to tame inflation with the possibility of triggering a recession. • In the US, the Fed raised interest rates by 75bps in September. Powell affirms he will do "whatever it takes" to decrease inflation. • • Mortgage rates topped 7% in September, more than doubling since the start of the year. The British pound hit the lowest level ever after proposed tax cuts and increased borrowing by the government were announced. Global market returns as of September 30, 2022 (%) -4.4 Equities -9.7 11 -18.0 -26.5 -24.9 -25.2 U.S. stocks Non-U.S. stocks 3 months YTD 1-year -4.7 Fixed income -3.1 -8.8 -12.8-12.9 -14.7 -14.6 -23.9 -24.8 U.S. bonds Non-U.S. bonds (hedged) Non-U.S. bonds (unhedged) Balanced -5.6 -5.8 -18.2 -18.8 -20.9 -22.1 60/40 balanced portfolio* 70/30 balanced portfolio** Past performance is no guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index. Sources: Bloomberg, CRSP, and FTSE. U.S. stocks (CRSP U.S. Total Market Index), non-U.S. stocks (FTSE Global All-Cap ex-U.S. Index), U.S. bonds (Bloomberg U.S. Aggregate Float Adjusted Index), non-U.S. bonds hedged (Bloomberg Global Aggregate ex-USD Float Adjusted RIC Capped Index hedged), non-U.S. bonds unhedged (Bloomberg Global Aggregate Index ex USD). * 60/40 balanced portfolio Static Composite (36% U.S. stocks, 24% international stocks, and 28% investment-grade U.S. bonds, 12% investment-grade international bonds). ** 70/30 balanced portfolio Static Composite (42% U.S. stocks, 28% international stocks, and 21% investment-grade U.S. bonds, 9% investment-grade international bonds). For institutional use only. Not for distribution to retail investors. V | 9#10Equity markets hit new lows over inflation concerns • Equities continued to hit new lows after the CPI announcement of 8.3% and following Fed rate hike. • Growth domestic stocks remain the largest detractor YTD in the US, down -30.6%, followed by Developed markets down -27.4%. • The S&P 500 and Dow Jones were in Bear Market territory with the close of September, recording the worst September market returns since 2008. Global equity market returns as of September 30, 2022 (%) U.S. Equities -4.9 -24.9 -16.9 -2.6 -4.1 -5.6 -11.8 -18.0 -19.5 -20.8 -23.7 -25.4 -3.4 -23.0 -30.6 Large-cap Mid-cap Small-cap Value Growth 3 months YTD 1-year Non-U.S. equities -9.6 -9.9 -23.8 -24.2 -25.5 -27.4 Developed markets Emerging markets Past performance is no guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index. Sources: CRSP, FTSE, and Russell. Large-cap (CRSP U.S. Mega Cap Index), mid-cap (CRSP U.S. Mid Cap Index), small-cap (CRSP U.S. Small Cap Index); value (Russell 3000 Value Index), growth (Russell 3000 Growth Index); developed markets (FTSE Developed All Cap ex-U.S. Index), emerging markets (FTSE Emerging Markets All Cap China A Inclusion Index). For institutional use only. Not for distribution to retail investors. V. |10#11The struggle for all sectors continues • Consumer Discretionary continues its 3-month positive performance, but returns are still down -31% YTD on recession expectations and a decline in public markets. • Energy continues to remain the highest performing sector YTD due to surging oil prices and supply shocks stemming from the Russian-Ukraine conflict. . Utilities continue to fair better than most sectors, although rising interest rates weigh on this highly leveraged industry. U.S. equity sector returns as of September 30, 2022 (%) 3.3 43.1 34.5 5.6 3.4 -5.7 -6.8 -6.6 -1.2 -3.2 -6.6 -4.5 -2.9 -12.3 -12.5 -9.4 -11.0 -5.9 -15.5 -15.6 -18.7 -23.4 -21.9 -21.7-17.9 -29.2 -12.0 -23.2 -24.6 -32.7 -31.4 -39.8 -40.5 Energy Utilities Consumer Staples Materials Industrials Health Care Real Estate Financials Information Consumer Communication Technology Discretionary Services 3 months YTD 1-year Past performance is no guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index. Source: FactSet. U.S. markets measured by CRSP U.S. Total Market Index. For institutional use only. Not for distribution to retail investors. V 11#12Fixed income continues to face headwinds going forward • • • Bond prices continue to fall in the month of September. Inflation pressures and higher yields, triggered by higher rates on government bonds globally, have contributed to lower prices overall. We continue to see longer-term bonds being hit the hardest both in the three-month and the YTD. While lower prices may signal an alert to investors, the higher yields per dollar invested may result in higher income returns through interests' payments in the longer run. TIPS returns remain negative even though inflation continues to remain high. Expected inflation is now lower than current inflation and the rise in interested rates have contributed to current performance. Domestic fixed income market returns as of September 30, 2022 (%) Credit quality U.S. fixed income -0.6 -4.3 -4.3 -4.9 -13.1-12.9 -12.9 -12.8 Treasuries 3 months YTD Government 1-year -14.7 -14.1 -18.1-17.9 Maturity -2.3 -4.9 -6.4 -7.0 -9.6 -13.6 -13.8 -26.6 Investment-grade Credit High yield Corporate Short-term Treasuries Intermediate-term Treasuries -28.8 Long-term Treasuries Inflation-sensitive fixed income -2.6 -4.0 -2.9 -5.1 -11.6 -13.6 Short-Term TIPS Intermediate-Term TIPS Past performance is no guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index. Source: Bloomberg. Treasuries, government, investment-grade credit; high-yield (Bloomberg U.S. Treasury/Government/Credit/Corporate High-Yield Indices); short-inter-long-term Treasuries (Bloomberg U.S. 1-5/5-10/Long Treasury Indices); short-term TIPS (Bloomberg U.S. Treasury 0-5 Year Inflation-Protected Index); intermediate-term TIPS (Bloomberg U.S. Treasury Inflation-Protected Index). For institutional use only. Not for distribution to retail investors. V 12 |#13U.S. Treasury yield curve-yields rise for the short term 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 Yield (%) and change (bps) 1-month 3-month 6-month 1-year 2-year 3-year 5-year 7-year 10-year Current yield (%) 2.61 3.33 3.92 4.05 4.22 4.25 4.06 3.97 3.83 20-year 4.08 30-year 3.79 3-month change 12-month change 152 161 141 125 130 126 105 93 85 70 65 256 329 387 396 394 372 308 265 231 206 171 0.0 1-Month 3-Month 6-Month 1-Year 2-Year 3-Year 5-Year 7-Year 10-Year 20-Year 30-Year 09/30/2022 06/30/2022 Source: Morningstar. For institutional use only. Not for distribution to retail investors. 09/30/2021 V 13 |#14Market leadership changes 10-year Emerging markets equities appears at both the top and bottom multiple times, illustrating the relatively high volatility of single asset classes The balanced composite generally falls near the middle, demonstrating the volatility dampening effect of high-grade fixed income and the consistency resulting from holding a broadly diversified portfolio Lrg REIT Val 13.2 2.5 18.4 2012 2013 2014 2015 2016 2017 2018 Emg Sml REIT Grw Sml Emg IB 18.1 38.8 30.4 5.1 21.3 31.1 3.2 REIT Grw Grw T-Bill Lrg 17.8 34.2 29.6 1.9 31.4 2019 2020 2021 Average Grw Grw REIT 35.8 38.3 43.1 Lrg Cmd Lrg 21.0 27.1 16.5 Grw 19.4 Value oriented U.S. based stocks Val (Russell 3000 Value Index) Growth oriented U.S. based stocks Grw (Russell 3000 Growth Index) Val Lrg 17.5 33.1 Val 12.7 IB 1.4 HY 17.1 26.3 Dev Bnd Val Sml Lrg 0.0 26.3 20.0 26.5 Sml Lrg Large U.S. based stocks 13.2 (Russell 1000 Index) Dev Val Grw Lrg 17.4 32.7 12.4 0.9 Lrg Lrg HY 12.1 21.7 -2.1 REIT Emg Grw 25.8 15.5 25.8 Val 12.9 Small U.S. based stocks Sml Lrg Dev 16.4 20.5 IB 8.8 Bnd 0.5 Sml Bal Bal 16.4 16.8 6.4 Cmd Bal Grw 11.4 16.5 -2.1 T-Bill Emg Sml REIT Dev 0.0 10.3 14.6 -4.6 22.3 Sml 25.5 Bal 13.4 25.4 Val REIT Dev 11.3 (Russell 2000 Index) International stocks from developed countries (FTSE Developed All Cap ex US Index) Dev Sml 10.0 14.8 Bal International stocks from emerging countries Emg 9.7 (FTSE Emerging ACap CN A Includes Index) U.S. stock returns exceeded non-U.S. stock returns by a significant amount over HY HY Bnd Bal REIT Val Lrg Bal Bnd Bal Dev Bnd 15.8 7.4 6.0 -0.6 8.6 13.2 -4.8 20.7 7.5 12.0 8.3 the past ten years, yet it's important to remember that recent outperformance by a sub-asset class or market segment does not imply future outperformance Grw HF Sml Dev Grw HY Bal Emg HY Dev HY HY High-yield U.S. bonds 15.2 6.7 4.9 -1.8 7.4 7.5 -5.5 20.4 7.1 11.6 6.8 Bal REIT Emg HF Bal HF HF HY HF HY Emg Investment-grade U.S. bonds (Bloomberg US Aggregate Bond Index) (Bloomberg US Corp High Yield Index) Investment-grade international bonds IB 12.7 2.5 2.6 -3.6 7.3 6.0 -6.7 14.3 6.8 5.3 (Bloomberg GA ex-USD Index Hedged) 5.8 IB IB HY Val IB REIT Val Bnd IB HF IB T-Bill Short-term Treasury rates (Citigroup 3-Month US T-Bill Index) 6.5 1.2 2.5 -4.1 4.9 5.1 -8.6 8.7 3.9 3.7 3.8 Bnd T-Bill T-Bill Sml Dev Bnd Sml HF Val Emg Bnd REIT U.S. public equity real estate (REIT) (MSCI US REIT Index) 4.2 0.1 0.0 -4.4 3.1 3.5 -11.0 8.6 2.9 1.5 2.9 Commodities HF Bnd HF HY Bnd 3.5 -2.0 -0.6 -4.5 2.6 Cmd IB -13.0 7.6 Source: Vanguard. Last observation: December 31, 2021; 10-year average performance from December 31, 2011 through December 31, 2021. Source: Hedge Fund Research, Inc. T-Bill 0.1 Cmd -1.1 Emg Dev -3.2 -4.4 Emg HF -13.5 2.5 Cmd Cmd Cmd T-Bill Cmd -9.6 -17.0 -24.7 0.3 0.7 -14.8 2.3 IB 2.5 T-Bill Emg Cmd Cmd 0.8 -14.8 5.4 -3.5 Dev T-Bill REIT Bnd -7.6 -1.5 T-Bill T-Bill HF Cmd (Bloomberg Commodity Index) 0.6 0.0 2.6 Hedge funds IB -1.4 T-Bill HF 0.6 Cmd -3.4 Bal (HFRX Global Hedge Fund Index*) Balanced Static Composite (39% U.S. stocks**, 26% Int'l stocks+, 24.5% Invest-grade U.S. bonds++, 10.5% Invest-grade Int'l bonds++) ** U.S. stocks: MSCI U.S. Broad Market Index. † International Stocks: FTSE Global All Cap ex-US Index. tt Bonds: Bloomberg US Aggregate Bond Index and Bloomberg Global Aggregate ex-USD Index Hedged. Past performance is no guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index. For institutional use only. Not for distribution to retail investors. V 14 |#15The inflation fight steps forward A midyear update to the Vanguard Economic and Market Outlook for 2022 For institutional use only. Not for distribution to retail investors. V | 15#16Probability of recession for select regions United States Euro area United Kingdom China Source: Vanguard, as of June 30, 2022. Next 12 months Next 24 months For institutional use only. Not for distribution to retail investors. 25% 30% 35% 65% DRIVERS / KEY RISKS • Federal Reserve tightening path . Inflation eroding consumer purchasing power Ukraine war impact 50% • European Central Bank tightening path 60% • Tighter global financial conditions. • Bank of England tightening path 50% . Squeeze on real incomes 60% Further COVID-19 outbreaks resulting in renewed lockdowns V 16 |#17Vanguard's forecasts for year-end 2022 Economic growth Headline inflation Monetary policy Unemployment rate United States ~1.5% 7%-7.5% Canada Mexico ~4% ~6.5% 3.25%-3.75% ~3% 3%-3.5% ~5.5% -2% -5% 8%-9% ~3.5% Euro area 2%-3% ~8%-8.5% 0.5%-0.75% ~7% United Kingdom 3.5%-4% -10% 2.25%-2.5% ~4% China ~3% <2.5% 2.75% ~5.5% Australia 3%-3.5% ~7% ~2.5% ~4% Notes: Figures related to economic growth, inflation, monetary policy, and unemployment rate are Vanguard forecasts for the end of 2022. Growth and inflation are comparisons with year-end 2021; monetary policy and unemployment rate are absolute levels. Source: Vanguard, as of June 30, 2022. V 17 | For institutional use only. Not for distribution to retail investors.#18United States -1.5% Economic growth We downgraded our forecast by 2 percentage points since the start of the year because of factors that we expect will continue throughout 2022—namely, tightening financial conditions, wages not keeping up with inflation, and the lack of demand for U.S. exports. The probability of a recession is 25% over the next 12 months and 65% over 24 months. 7% to 7.5% Headline inflation Surging energy and food prices keep our projections for headline CPI around 7% to 7.5% by year-end 2022 before it moderates in 2023. In the current environment, headline inflation will matter more for monetary policy than it typically does. WHAT TO WATCH Rising inflation expectations In raising its policy interest rate target by 75 basis points on June 15, a greater increase than it had signaled at its previous meeting, the Fed cited worrisome signs that longer-term inflation expectations were rising. Vanguard's index of common inflation expectations, calculated across a range of survey measures, has moved higher than traditional longer- term measures over the last two years. 2.5 2.4 2.3 3.25% to 3.75% Monetary policy The Fed turned hawkish in recent weeks, further emphasizing inflation as a clear priority over potential implications for economic growth. We expect the target federal funds rate to end the year in a range of 3.25% to 3.75% and expect a terminal rate of at least 4% in 2023- much higher than what we consider to be the neutral rate (2.5%) and what's currently priced into the market.* 3% to 3.5% Unemployment rate Labor market trends are likely to keep downward pressure on the unemployment rate through year-end, though increases in 2023 are likely as the impacts of Fed policy and slowing demand take hold. Year-on-year percentage change 2.2 2.1 2 19 1.9 1.8 2008 2021 * The neutral rate is the theoretical interest rate at which monetary policy neither stimulates nor restricts an economy. Notes: Figures related to economic growth, inflation, monetary policy, and unemployment rate are Vanguard forecasts for the end of 2022. Growth and inflation are comparisons with year-end 2021; monetary policy and unemployment rate are absolute levels. For institutional use only. Not for distribution to retail investors. - Vanguard index of common inflation expectations Survey of Professional Forecasters 10-year-ahead personal consumption expenditures inflation expectations Sources: Vanguard model estimates and Federal Reserve Bank of Philadelphia data, as of June 29, 2022. V. 18 |#19Euro area 2% to 3% Economic growth We've twice downgraded our outlook this year because of higher energy prices—once before and once after Russia's invasion of Ukraine. Risks are growing, though recession in the next 12 months isn't a foregone conclusion. But a complete cutoff from Russian natural gas would almost certainly lead to rationing and recession. ~8% to 8.5% Headline inflation We expect headline inflation to peak close to 10% in the third quarter, higher than current record levels. But by the end of 2023, we foresee inflation falling back toward the European Central Bank's 2% target. For now, European consumers grapple with rapid price rises that extend to an array of goods and services. WHAT TO WATCH Many nations, one policy rate The European Central Bank has accelerated the development of a tool to fight "fragmentation risk," a widening of sovereign debt spreads because of nonfundamental factors. The tool's creation supports our base case that the ECB will be able to raise interest rates more aggressively while avoiding a scenario of sovereign stress. Yield spread, in percentage points 7.0 6.0 Draghi: "Whatever it takes" Draghi speech in Jackson Hole ECB pivot PEPP 5.0 APP 4.0 3.0 Danger zone 20 2.0 0.5% to 0.75% Monetary policy The European Central Bank has signaled a July interest rate hike. We expect the deposit rate to move into positive territory in the third quarter for the first time since 2012. The ECB has turned hawkish recently given broadening inflation pressures. "Fragmentation risk" complicates matters: The ECB manages policy for 19 nations. ~7% Unemployment rate We foresee the labor market remaining historically strong with a comparatively low unemployment rate by year-end. Wage pressures continue to build as job vacancy rates have risen to new records. Notes: Figures related to economic growth, inflation, monetary policy, and unemployment rate are Vanguard forecasts for the end of 2022. Growth and inflation are comparisons with year-end 2021; monetary policy and unemployment rate are absolute levels. For institutional use only. Not for distribution to retail investors. 1.0 0.0 2008 2015 2022 Notes: Yield spread represents the interest rate premium to 10-year German bunds of a market-capitalization-weighted composite of 10-year yields in Spain, Italy, Greece, Portugal, and Ireland. Key events affecting spreads include then-ECB President Mario Draghi's July 2012 pledge to do "whatever it takes" to preserve the euro; Draghi's August 2014 Jackson Hole, Wyo., speech heralding monetary stimulus; the January 2015 introduction of the non-standard Asset Purchase Programme (APP) monetary policy vehicle; the March 2020 introduction of the non-standard Pandemic Emergency Purchase Programme (PEPP) monetary policy vehicle; and a June 2022 ECB news conference heralding aggressive monetary policy tightening. Spreads above 2.5% are typically said to have entered a "danger zone" likely to spur policy action. Sources: Vanguard calculations, based on data from Bloomberg through June 20, 2022. V 19 |#20United Kingdom 3.5% to 4% Economic growth Our 2022 growth forecast is down sharply from 5.5% at the start of the year. Higher commodities prices, tighter financial conditions, and diminished consumer and business confidence mean that risks are pointedly to the downside. Fiscal policy measures and anticipated wage increases are unlikely to prevent a drop in real incomes. -10% Headline inflation Energy prices are likely to drive year-on-year inflation briefly past 10% in the fourth quarter as a higher price cap lets suppliers charge more. We foresee year-end headline inflation about three times what we had expected at the start of the year, before the war in Ukraine sent energy and commodities prices soaring. Real wage growth 0% WHAT TO WATCH Real incomes under pressure A sharp decline in real (after-inflation) earnings in 2022 is likely to weigh on economic growth. We foresee the trend moderating alongside headline inflation in 2023 en route to a return to equilibrium over the longer term. 3% 1% ... 2% 2.25% to 2.5% Monetary policy We believe the Bank of England will raise the bank rate by an additional 1.25 percentage points, toward our estimate of a 2.5% neutral rate, over the next 12 months.* The bank has signaled rate hikes potentially larger than 25 basis points depending on the economic and inflationary outlook. ~4% Unemployment rate Unemployment near a 50-year low amid record job vacancies suggests that the labor market will remain strong the rest of the year even as the economy slows. The push-pull of wage growth, inflation, and economic activity will be important as the Bank of England considers appropriate monetary policy levels. *The neutral rate is the theoretical interest rate at which monetary policy neither stimulates nor restricts an economy. Notes: Figures related to economic growth, inflation, monetary policy, and unemployment rate are Vanguard forecasts for the end of 2022. Growth and inflation are comparisons with year-end 2021; monetary policy and unemployment rate are absolute levels. For institutional use only. Not for distribution to retail investors. -1% -2% -3% 2021 2022 2023 2030 Notes: Real wage growth is calculated as the year-on-year percentage change in average nominal weekly earnings minus the year-on-year percentage change in the headline inflation rate. The figure for 2022 reflects actual data and forecasts using proprietary indicators. The figures for 2023 and 2030 are Vanguard forecasts. Sources: Vanguard calculations, based on data from Bloomberg and Macrobond, as of June 27, 2022. V 20#21China -3% Economic growth We foresee China's 2022 growth falling short of our 5% forecast at the start of the year as three priorities clash. A commitment to financial stability and a zero-COVID policy leave policymakers' target for growth "around 5.5%" vulnerable amid a weak domestic labor market and slowing global growth. <2.5% Headline inflation Inflation has increased toward midyear but remains unlikely to reach policymakers' 3% target. Spillover from building global inflation pressures is likely to be offset by the weakening domestic growth picture. Producer price inflation remains elevated but in recent years has had little pass- through to consumer prices. WHAT TO WATCH China's "policy trilemma" China isn't in position to achieve all three of its 2022 goals. We believe that policymakers will remain committed to a zero-COVID policy and maintaining price and financial stability, leaving the growth target vulnerable. Achieve GDP growth "around 5.5%" 2.75% Monetary policy We expect only one further 10-basis-point cut in the one-year medium-term lending facility rate, in line with consensus. We expect intensified policy efforts this year to focus on fiscal policy. Monetary policy is constrained by external and domestic forces: global central banks' tightening paths and a desire not to overstimulate China's property sector. ~5.5% Unemployment rate Our year-end forecast for the unemployment rate is higher than consensus and 100 basis points above the level that would be expected to promote inflation. China's below-trend growth translates to slack in the labor market, with recent university graduates faring worst. Maintain price and financial stability Maintain zero-COVID policy Notes: Figures related to economic growth, inflation, monetary policy, and unemployment rate are Vanguard forecasts for the end of 2022. Growth and inflation are comparisons with year-end 2021; monetary policy and unemployment rate are absolute levels. For institutional use only. Not for distribution to retail investors. Source: Vanguard. V 21 |#22Australia 3% to 3.5% Economic growth Global factors including effects of the war in Ukraine and tightening financial conditions as inflation soars have pushed our 2022 growth forecast down by a percentage point since the start of the year. Its status as a commodities exporter may not be enough to save Australia from recession in 2023 if large developed markets take that path. ~7% Headline inflation Even as their impact may subside over the next 12 months, high energy prices will likely push up prices for an array of goods and services. A tight labor market and wage growth are likely to keep core inflation above 3% through 2023. Inflation is above the Reserve Bank of Australia's target and hasn't peaked yet. ~2.5% Monetary policy Broad-based and persistent inflation has the Reserve Bank of Australia on course to raise its rate target by more than two percentage points in 2022, from a starting point near zero. We expect the cash rate to eventually exceed a neutral rate that we estimate at 3%, though a slowing economy may mean a pause at some point.* ~4% Unemployment rate Unemployment at a historical low just below 4% will likely stabilize as growth momentum slows. Labor shortages will take time to resolve, however, and we anticipate upward pressure on wages to persist. Thwarting a wage-price spiral will be a goal as the Reserve Bank of Australia seeks to re-anchor inflation expectations. *The neutral rate is the theoretical interest rate at which monetary policy neither stimulates nor restricts an economy. Notes: Figures related to economic growth, inflation, monetary policy, and unemployment rate are Vanguard forecasts for the end of 2022. Growth and inflation are comparisons with year-end 2021; monetary policy and unemployment rate are absolute levels. For institutional use only. Not for distribution to retail investors. WHAT TO WATCH A new inflation psychology Inflation is suddenly top of mind for Australians, to the point that they're factoring it into their decisions and adapting their lives to it. Such an un-anchoring of inflation expectations can spiral out of control—and we expect the Reserve Bank of Australia to act decisively to prevent that. 100 Google Australia inflation searches (weekly) 75 50 25 0 2018 2020 2022 Notes: A value of 100 represents peak popularity of a search term. A value of 50 means the term is half as popular. Source: Google Trends, as of June 20, 2022. V. 22 |#23Canada -4% Economic growth Our 2022 GDP growth forecast is lower than our 5% view at the start of the year. Still, we expect a resilient economy. Canada, as a net energy exporter, gets a GDP boost from higher oil and gas prices, even as they undermine consumers' purchasing power. Population growth supports a real estate sector under pressure from rising interest rates. -6.5% Headline inflation Economic and labor market strength will likely keep headline inflation elevated through 2022, with energy, food, and shelter prices remaining high. Anticipated Bank of Canada rate hikes should help temper core inflation to about 4.5% to 5% by year-end before further normalization toward a 2% target in 2023 and 2024. ~3% Monetary policy The Bank of Canada's Governing Council says it is "prepared to act more forcefully" to prevent high prices from becoming entrenched and to bring inflation back to the bank's 2% target. That is likely to mean front-loading increases to the overnight rate so that it is near or above the neutral rate, around 3%, by the end of 2022.* ~5.5% Unemployment rate Near record lows at midyear 2022, the unemployment rate may rise in the second half of the year as financial conditions tighten domestically and globally. Currently elevated job vacancies and accelerating wage growth suggest a labor market in position to remain healthy even as the Bank of Canada moves to rein in inflation. Notes: Figures related to economic growth, inflation, monetary policy, and unemployment rate are Vanguard forecasts for the end of 2022. Growth and inflation are comparisons with year-end 2021; monetary policy and unemployment rate are absolute levels. *The neutral rate is the theoretical interest rate at which monetary policy neither stimulates nor restricts an economy. For institutional use only. Not for distribution to retail investors. Price-to-income ratio WHAT TO WATCH The vulnerable housing sector Higher interest rates threaten a housing sector that's vastly more expensive than in other developed markets. Even with population trends that support demand, a moderation in prices could be at hand. 2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 1990 1995 2000 2005 2010 2015 2020 Canada United States 25-country average Notes: The price-to-income ratio is the ratio of real housing prices to real disposable incomes. Sources: Vanguard calculations, based on data from the Federal Reserve Bank of Dallas, Refinitiv Datastream, and Moody's Data Buffet, as of December 31, 2021. V. 23 |#24Mexico ~2% Economic growth Tightening financial conditions and inflation have proved to be headwinds, as we expected at the start of the year. Thus our full-year 2022 growth forecast is little changed. High commodities prices benefit Mexico as both an energy and agriculture exporter, but they also spur inflation that can weigh on domestic spending and growth. ~5% Headline inflation Slowing global growth could eventually pull headline inflation down from its May levels of above 7%, though higher commodity prices remain a risk. Headline inflation has shown signs of moderating, but more persistent core inflation has risen for seven consecutive months, suggesting a broadening of price pressures throughout the economy. Change in basis points WHAT TO WATCH Central banks' inflation fights Realized and expected increases in real policy interest rates reveal Latin American central banks' efforts to rein in inflation. 1200 900 600 300 8% to 9% Monetary policy Four rate increases this year have taken the policy rate to 7.75%, and we believe that the Bank of Mexico will need to take it higher still to rein in inflation. While some emerging- market central banks may be poised to cut rates in 2023 as the global economy slows, we believe that Mexico may be 12 months away from joining them. ~3.5% Unemployment rate Unemployment has fallen to 3%, below already low pre-pandemic levels. We anticipate that it could rise by half a percentage point in the coming six months, which would put it at about the level it was several years before the pandemic. Notes: Figures related to economic growth, inflation, monetary policy, and unemployment rate are Vanguard forecasts for the end of 2022. Growth and inflation are comparisons with year-end 2021; monetary policy and unemployment rate are absolute levels. For institutional use only. Not for distribution to retail investors. 0 Brazil Colombia Mexico Chile Notes: The change in real interest rates is calculated over the period of June 2021 through June 2023. The one-year backward- looking change is calculated as the change in realized policy rates minus the change in the realized year-on-year inflation rate. The one-year expected change is calculated as the market-implied year-forward policy rate minus the consensus inflation forecast of economists surveyed by Bloomberg. A basis point is one-hundredth of a percentage point. Sources: Vanguard calculations, based on data from Bloomberg, as of June 27, 2022. V. | 24#25Global equity and fixed income outlook Falling equity valuations and rising interest rates have largely increased our 10-year annualized developed market return forecasts in the first five months of 2022 by about 1 percentage point for stocks and 1.5 percentage points for bonds. Forecasts are from the perspective of local investors in local currencies. U.S. dollar U.S. equities 2.0% 4.0% 3.4% 5.4% Global equities ex-U.S. (unhedged) 5.1% 7.1% 6.1% 8.1% U.S. aggregate bonds 1.5% 2.5% 3.0% 4.0% Global bonds 1.3% 2.3% ex-U.S. (hedged) 2.9% 3.9% Forecast 2021 year-end 2022 midyear Canadian dollar Canada equities Global equities ex-Canada (unhedged) 2.9% 4.9% 3.5% 5.5% 3.0% 5.0% 4.4% 6.4% Canada 1.4% aggregate bonds 2.4% 3.0% 4.0% Global bonds ex-Canada (hedged) 1.1% 2.1% 2.7% 3.7% IMPORTANT: The projections and other information generated by the Vanguard Capital Markets Model regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. Distribution of return outcomes from the VCMM are derived from 10,000 simulations for each modeled asset class. Simulations are as of December 31, 2021, and May 31, 2022. Results from the model may vary with each use and over time. For more information, please see the important information slide. Note: Figures are based on a 1-point range around the 50th percentile of the distribution of return outcomes for equities and a 0.5-point range around the 50th percentile for fixed income. Source: Vanguard. For institutional use only. Not for distribution to retail investors. V. | 25#26Global equity and fixed income outlook Falling equity valuations and rising interest rates have largely increased our 10-year annualized developed market return forecasts in the first five months of 2022 by about 1 percentage point for stocks and 1.5 percentage points for bonds. Forecasts are from the perspective of local investors in local currencies. Euro Euro area equities Global equities ex-euro area (unhedged) 2.4% 4.4% 3.5% 5.5% 1.2% 3.2% 2.4% 4.4% Euro area aggregate bonds -0.5% 0.5% 1.0% 2.0% Global bonds ex-euro area -0.5% (hedged) 0.5% 1.0% 2.0% Forecast 2021 year-end 2022 midyear British pound U.K. equities Global equities ex-U.K. (unhedged) 4.2% 3.8% 6.2% 5.8% 2.5% 4.5% 3.6% 5.6% U.K. aggregate bonds 0.8% 1.8% 2.1% 3.1% Global bonds 0.8% 1.8% ex-U.K. (hedged) 2.1% 3.1% IMPORTANT: The projections and other information generated by the Vanguard Capital Markets Model regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. Distribution of return outcomes from the VCMM are derived from 10,000 simulations for each modeled asset class. Simulations are as of December 31, 2021, and May 31, 2022. Results from the model may vary with each use and over time. For more information, please see the important information slide. Note: Figures are based on a 1-point range around the 50th percentile of the distribution of return outcomes for equities and a 0.5-point range around the 50th percentile for fixed income. Source: Vanguard. For institutional use only. Not for distribution to retail investors. V. 26 |#27Global equity and fixed income outlook Falling equity valuations and rising interest rates have largely increased our 10-year annualized developed market return forecasts in the first five months of 2022 by about 1 percentage point for stocks and 1.5 percentage points for bonds. Forecasts are from the perspective of local investors in local currencies. Chinese yuan China equities 5.4% 7.4% 6.9% 8.9% Global equities ex-China (unhedged) 3.2% 5.2% 4.4% 6.4% China aggregate bonds 2.5% 3.5% 2.4% 3.4% Forecast 2021 year-end 2022 midyear Australian dollar Australia equities 3.3% 5.3% 3.5% 5.5% Global equities ex-Australia (unhedged) 3.3% 5.3% 4.8% 6.8% Australia 1.3% aggregate bonds 2.3% 3.1% 4.1% Global bonds ex-Australia (hedged) 1.6% 2.6% 3.3% 4.3% IMPORTANT: The projections and other information generated by the Vanguard Capital Markets Model regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. Distribution of return outcomes from the VCMM are derived from 10,000 simulations for each modeled asset class. Simulations are as of December 31, 2021, and May 31, 2022. Results from the model may vary with each use and over time. For more information, please see the important information slide. Note: Figures are based on a 1-point range around the 50th percentile of the distribution of return outcomes for equities and a 0.5-point range around the 50th percentile for fixed income. Source: Vanguard. For institutional use only. Not for distribution to retail investors. V. 27#28Global equity and fixed income outlook Falling equity valuations and rising interest rates have largely increased our 10-year annualized developed market return forecasts in the first five months of 2022 by about 1 percentage point for stocks and 1.5 percentage points for bonds. Forecasts are from the perspective of local investors in local currencies. Mexican peso Mexico equities 5.5% 7.5% 6.0% 8.0% U.S. equities (unhedged) Global ex-U.S. developed market equities (unhedged) Mexico sovereign bonds Global bonds ex-Mexico (hedged) 6.7% 8.7% 7.5% 9.5% Forecast 2021 year-end 2022 midyear 10.1% 10.3% 12.1% 12.3% 8.1% 9.1% 10.0% 11.0% 7.4% 8.4% 8.9% 9.9% IMPORTANT: The projections and other information generated by the Vanguard Capital Markets Model regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. Distribution of return outcomes from the VCMM are derived from 10,000 simulations for each modeled asset class. Simulations are as of December 31, 2021, and May 31, 2022. Results from the model may vary with each use and over time. For more information, please see the important information slide. Note: Figures are based on a 1-point range around the 50th percentile of the distribution of return outcomes for equities and a 0.5-point range around the 50th percentile for fixed income. Source: Vanguard. For institutional use only. Not for distribution to retail investors. V. 28 |#29Our 60/40 time-varying portfolio allocation remains cautious on risk assets despite first quarter sell-off Steady state 0 36% U.S. equities 24% International equities 28% U.S. bonds 12% International bonds 5.2% Annualized returns 9.8% Annualized volatility 0.26 Annualized Sharpe ratio May 2020 30% U.S. equities 45% International equities 15% U.S. bonds 10% International bonds 5.8% Annualized returns 12.5% Annualized volatility 0.27 Annualized Sharpe ratio May 2021 0 22% U.S. equities 33% International equities 27% U.S. bonds 18% International bonds Projected portfolio statistics 5.4% Annualized returns 9.1% Annualized volatility 0.29 Annualized Sharpe ratio May 2022 C 19% U.S. equities 28% International equities 32% U.S. bonds 21% International bonds 5.2% Annualized returns 7.8% Annualized volatility 0.30 Annualized Sharpe ratio IMPORTANT: The projections and other information generated by the VCMM regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. Distribution of return outcomes from VCMM are derived from 10,000 simulations for each modeled asset class. Simulations as of May 31, 2020; May 31, 2021; and May 31, 2022. Results from the model may vary with each use and over time. For more information, please see the "Important information" section. Notes: The charts show the optimal allocation to U.S. and international stocks and bonds for a hypothetical investor looking to maximize risk-adjusted returns. Allocations are based on the VCMM forecast at the end of that month, which takes into consideration initial market and economic conditions at that point in time and produces a forecast for the subsequent 10 years. Optimization is done using the Vanguard Asset Allocation Model (VAAM), which aims to capture the traditional risk/return trade-offs for beta, factors, and alpha with investors' attitudes toward those risks. The Sharpe ratio is a measure of return above the risk-free rate that adjusts for volatility. A higher Sharpe ratio indicates a higher expected risk-adjusted return. The "benchmark" portfolio is a standard 60/40 stock/bond portfolio with equity home country bias of 60% and bond home country bias of 70%. Home country bias is the percentage of assets in the portfolio that are from a given investor's region (in this case, U.S. securities for a U.S. investor). U.S. equities are represented by the Dow Jones U.S. Total Stock Market Index (formerly known as the Dow Jones Wilshire 5000) through April 22, 2005; the MSCI US Broad Market Index through June 2, 2013; and the CRSP US Total Market Index thereafter. International equities are represented by the Total International Composite Index through August 31, 2006; the MSCI EAFE + Emerging Markets Index through December 15, 2010; the MSCI ACWI ex USA IMI Index through June 2, 2013; and the FTSE Global All Cap ex US Index thereafter. International bonds are represented by the Bloomberg Global Aggregate Index ex USD, and U.S. bonds are represented by the Bloomberg U.S. Aggregate Bond Index. Portfolio weights may not total 100% because of rounding. Source: Vanguard calculations, based on data as of May 31, 2020; May 31, 2021; and May 31, 2022. For institutional use only. Not for distribution to retail investors. V. 29#30Vanguard Investment Strategy Group's Global Economics Team Asawari Sathe, M.Sc. Joseph Davis, Ph.D. Global Chief Economist Roger A. Aliaga-Díaz, Ph.D. Americas Chief Economist Joshua M. Hirt, CFA Andrew J. Patterson, CFA Adam J. Schickling, CFA Julia Jiang As of April 13, 2022. For institutional use only. Not for distribution to retail investors. Jumana Saleheen, Ph.D. Europe Chief Economist Shaan Raithatha, CFA Roxane Spitznagel, M.Sc. Lulu Al Ghussein, M.Sc. Qian Wang, Ph.D. Asia-Pacific Chief Economist Alexis Gray, M.Sc. Maximilian Wieland V 30 |#31Vanguard Investment Strategy Group's Vanguard Capital Markets Model Research Team Qian Wang, Ph.D. Global Head of VCMM Asia-Pacific Chief Economist Kevin DiCiurcio, CFA Team Leader Ben Vavreck, CFA Americas As of April 13, 2022. lan Kresnak, CFA Americas Daniel Wu, Ph.D. Americas Lukas Brandl-Cheng, M.Sc. Europe Alex Qu Asia-Pacific Vytautas Maciulis, CFA Americas Olga Lepigina, MBA Americas For institutional use only. Not for distribution to retail investors. de V | 31#32Disclosures For institutional use only. Not for distribution to retail investors. V | 3 32#33Important information For more information about Vanguard funds, visit vanguard.com to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing. IMPORTANT: The projections and other information generated by the Vanguard Capital Markets ModelⓇ (VCMM) regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. VCMM results will vary with each use and over time. The VCMM projections are based on a statistical analysis of historical data. Future returns may behave differently from the historical patterns captured in the VCMM. More importantly, the VCMM may be underestimating extreme negative scenarios unobserved in the historical period on which the model estimation is based. The VCMM is a proprietary financial simulation tool developed and maintained by Vanguard's primary investment research and advice teams. The model forecasts distributions of future returns for a wide array of broad asset classes. Those asset classes include U.S. and international equity markets, several maturities of the U.S. Treasury and corporate fixed income markets, international fixed income markets, U.S. money markets, commodities, and certain alternative investment strategies. The theoretical and empirical foundation for the VCMM is that the returns of various asset classes reflect the compensation investors require for bearing different types of systematic risk (beta). At the core of the model are estimates of the dynamic statistical relationship between risk factors and asset returns, obtained from statistical analysis based on available monthly financial and economic data from as early as 1960. Using a system of estimated equations, the model then applies a Monte Carlo simulation method to project the estimated interrelationships among risk factors and asset classes as well as uncertainty and randomness over time. The model generates a large set of simulated outcomes for each asset class over several time horizons. Forecasts are obtained by computing measures of central tendency in these simulations. Results produced by the tool will vary with each use and over time. The primary value of the VCMM is in its application to analyzing potential client portfolios. VCMM asset-class forecasts-comprising distributions of expected returns, volatilities, and correlations-are key to the evaluation of potential downside risks, various risk-return trade-offs, and the diversification benefits of various asset classes. Although central tendencies are generated in any return distribution, Vanguard stresses that focusing on the full range of potential outcomes for the assets considered, such as the data presented in this paper, is the most effective way to use VCMM output. The VCMM seeks to represent the uncertainty in the forecast by generating a wide range of potential outcomes. It is important to recognize that the VCMM does not impose "normality" on the return distributions, but rather is influenced by the so-called fat tails and skewness in the empirical distribution of modeled asset-class returns. Within the range of outcomes, individual experiences can be quite different, underscoring the varied nature of potential future paths. Indeed, this is a key reason why we approach asset-return outlooks in a distributional framework. The Vanguard Life-Cycle Model (VLCM) is designed to identify the product design that represents the best investment solution for a theoretical, representative investor who uses the target-date funds to accumulate wealth for retirement. The VLCM generates an optimal custom glide path for a participant population by assessing the trade-offs between the expected (median) wealth accumulation and the uncertainty about that wealth outcome, for thousands of potential glide paths. The VLCM does this by combining two sets of inputs: the asset class return projections from the VCMM and the average characteristics of the participant population. Along with the optimal custom glide path, the VLCM generates a wide range of portfolio metrics such as a distribution of potential wealth accumulation outcomes, risk and return distributions for the asset allocation, and probability of ruin, such as the odds of participants depleting their wealth by age 95. The VLCM inherits the distributional forecasting framework of the VCMM and applies to it the calculation of wealth outcomes from any given portfolio. The most impactful drivers of glide path changes within the VLCM tend to be risk aversion, the presence of a defined benefit plan, retirement age, savings rate, and starting compensation. The VLCM chooses among glide paths by scoring them according to the utility function described and choosing the one with the highest score. The VLCM does not optimize the levels of spending and contribution rates. Rather, the VLCM optimizes the glide path for a given customizable level of spending, growth rate of contributions, and other plan sponsor characteristics. A full dynamic stochastic life-cycle model, including optimization of a savings strategy and dynamic spending in retirement, is beyond the scope of this framework. For institutional use only. Not for distribution to retail investors. V. 33 |#34Important information All investing is subject to risk, including the possible loss of the money you invest. Be aware that fluctuations in the financial markets and other factors may cause declines in the value of your account. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income. Diversification does not ensure a profit or protect against a loss. Investments in stocks or bonds issued by non-U.S. companies are subject to risks including country/regional risk and currency risk. These risks are especially high in emerging markets. Funds that concentrate on a relatively narrow market sector face the risk of higher share-price volatility. Prices of mid- and small-cap stocks often fluctuate more than those of large-company stocks. It is possible that tax-managed funds will not meet their objective of being tax-efficient. Because company stock funds concentrate on a single stock, they are considered riskier than diversified stock funds. Investments in bonds are subject to interest rate, credit, and inflation risk. High-yield bonds generally have medium- and lower-range credit quality ratings and are therefore subject to a higher level of credit risk than bonds with higher credit quality ratings. Although the income from a municipal bond fund is exempt from federal tax, you may owe taxes on any capital gains realized through the fund's trading or through your own redemption of shares. For some investors, a portion of the fund's income may be subject to state and local taxes, as well as to the federal alternative minimum tax. While U.S. Treasury or government agency securities provide substantial protection against credit risk, they do not protect investors against price changes due to changing interest rates. Unlike stocks and bonds, U.S. Treasury bills are guaranteed as to the timely payment of principal and interest. Foreign investing involves additional risks including currency fluctuations and political uncertainty. Stocks of companies based in emerging markets are subject to national and regional political and economic risks and to the risk of currency fluctuations. These risks are especially high in emerging markets. Bond funds are subject to the risk that an issuer will fail to make payments on time and that bond prices will decline because of rising interest rates or negative perceptions of an issuer's ability to make payments. The Short-Term Inflation-Protected Securities Index Fund invests in bonds that are backed by the full faith and credit of the federal government and whose principal is adjusted periodically based on inflation. The fund is subject to interest rate risk because although inflation-indexed bonds seek to provide inflation protection, their prices may decline when interest rates rise and vice versa. The fund's quarterly income distributions are likely to fluctuate considerably more than the income distributions of a typical bond fund. Income fluctuations associated with changes in interest rates are expected to be low; however, income fluctuations associated with changes in inflation are expected to be high. Overall, investors can expect income fluctuations to be high for the fund. For institutional use only. Not for distribution to retail investors. V 34 |#35Indexes for VCMM simulations The long-term returns of our hypothetical portfolios are based on data for the appropriate market indexes through June 30, 2022. We chose these benchmarks to provide the most complete history possible, and we apportioned the global allocations to align with Vanguard's guidance in constructing diversified portfolios. Asset classes and their representative forecast indexes are as follows: U.S. equities: MSCI US Broad Market Index. Global ex-U.S. equities: MSCI All Country World ex USA Index. U.S. REITs: FTSE/NAREIT US Real Estate Index. U.S. cash: U.S. 3-Month Treasury-constant maturity. U.S. Treasury bonds: Bloomberg U.S. Treasury Index. U.S. short-term Treasury bonds: Bloomberg U.S. 1–5 Year Treasury Bond Index. U.S. long-term Treasury bonds: Bloomberg U.S. Long Treasury Bond Index. U.S. credit bonds: Bloomberg U.S. Credit Bond Index. U.S. short-term credit bonds: Bloomberg U.S. 1-3 Year Credit Bond Index. U.S. high-yield corporate bonds: Bloomberg U.S. High Yield Corporate Bond Index. U.S. bonds: Bloomberg U.S. Aggregate Bond Index. Global ex-U.S. bonds: Bloomberg Global Aggregate ex-USD Index. U.S. TIPS: Bloomberg U.S. Treasury Inflation Protected Securities Index. U.S. short-term TIPS: Bloomberg U.S. 1-5 Year Treasury Inflation Protected Securities Index. Emerging-market sovereign bonds: Bloomberg Emerging Markets USD Aggregate Bond Index. Commodities: Bloomberg Commodity Index. Mortgage-backed securities (MBS): Bloomberg U.S. Mortgage Backed Securities Index. Euro area aggregate bonds: Bloomberg Euro-Aggregate Index. U.K. aggregate bonds: Bloomberg Sterling Aggregate Index. Global aggregate bonds: Bloomberg Global Aggregate Index. U.S. aggregate bonds: Bloomberg U.S. Aggregate Index. Japan aggregate bonds: Bloomberg Japanese Aggregate Index. Australia aggregate bonds: Bloomberg Australia Aggregate Index. Canada aggregate bonds: Bloomberg Canada Aggregate Index. Emerging markets: MSCI Emerging Market Index. Developed markets ex-U.S.: MSCI World ex-US Index. All equity indexes below are weighted by market capitalization: Small-cap equities: Stocks with a market cap in the lowest two-thirds of the Russell 3000 Index. Large-cap equities: Stocks with a market cap in the highest two-thirds of the Russell 1000 Index. Growth equities: Stocks with a price/book ratio in the highest one-third of the Russell 1000 Index. Value equities: Stocks with a price/book ratio in the lowest one-third of the Russell 1000 Index. For institutional use only. Not for distribution to retail investors. V 35 |#36Important information "BloombergⓇ" is a service mark of Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited ("BISL"), the administrator of the index (collectively, "Bloomberg") and have been licensed for use for certain purposes by Vanguard. Bloomberg is not affiliated with Vanguard, and Bloomberg does not approve, endorse, review, or recommend the Vanguard funds. Bloomberg does not guarantee the timeliness, accurateness, or completeness of any data or information relating to the Vanguard funds. Morningstar data 2022 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. Apple®, iPhone®, and iPad® are trademarks of Apple Inc., registered in the United States and other countries. App Store is a service mark of Apple Inc. Android ™ is a trademark of Google Inc. CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute. V. 36 For institutional use only. Not for distribution to retail investors. |#37Important information 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 index is a product of S&P Dow Jones Indices LLC ("SPDJI") and has been licensed for use by Vanguard. 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 Vanguard. Vanguard product(s) are 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(s) nor do they have any liability for any errors, omissions, or interruptions of the index. Center for Research in Security Prices, LLC (CRSPⓇ) and its third-party suppliers have exclusive proprietary rights in the CRSP® Index Data, which has been licensed for use by Vanguard but is and shall remain valuable intellectual property owned by, and/or licensed to, CRSPⓇ. The Vanguard Funds are not sponsored, endorsed, sold or promoted by CRSP®, The University of Chicago, or The University of Chicago Booth School of Business and neither CRSP®, The University of Chicago, or The University of Chicago Booth School of Business, make any representation regarding the advisability of investing in the Vanguard Funds. The Russell Indexes and Russell® are registered trademarks of Russell Investments and have been licensed for use by The Vanguard Group. The products are not sponsored, endorsed, sold, or promoted by Russell Investments, and Russell Investments makes no representation regarding the advisability of investing in the products. "Dividend Achievers" is a trademark of The NASDAQ OMX Group, Inc. (collectively, with its affiliates, "NASDAQ OMX") and has been licensed for use by The Vanguard Group, Inc. Vanguard mutual funds are not sponsored, endorsed, sold, or promoted by NASDAQ OMX, and NASDAQ OMX makes no representation regarding the advisability of investing in the funds. NASDAQ OMX MAKES NO WARRANTIES AND BEARS NO LIABILITY WITH RESPECT TO THE VANGUARD MUTUAL FUNDS. The funds or securities referred to herein are not sponsored, endorsed, or promoted by MSCI, and MSCI bears no liability with respect to any such funds or securities. The prospectus or the Statement of Additional Information contains a more detailed description of the limited relationship MSCI has with Vanguard and any related funds. The Global Industry Classification Standard ("GICS") was developed by and is the exclusive property and a service mark of MSCI Inc. ("MSCI") and Standard and Poor's, a division of McGraw-Hill Companies, Inc. ("S&P") and is licensed for use by Vanguard. Neither MSCI, S&P, nor any third party involved in making or compiling the GICS or any GICS classification makes any express or implied warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability, or fitness for a particular purpose with respect to any such standard or classification. Without limiting any of the foregoing, in no event shall MSCI, S&P, any of its affiliates, or any third party involved in making or compiling the GICS or any GICS classification have any liability for any direct, indirect, special, punitive, consequential, or any other damages (including lost profits) even if notified of the possibility of such damages. DOLU: 02/16/2023 © 2022 The Vanguard Group, Inc. All rights reserved. Vanguard Marketing Corporation, Distributor of the Vanguard Funds. For institutional use only. Not for distribution to retail investors. RPRESGUT 160 112022 V. 37#38Vanguard