#1Utah Higher Education Assistance Authority my529 Vanguard Presentation January 7, 2021 Vanguard® For institutional use only. Not for distribution to retail investors.#2Agenda I. Vanguard overview II. my529 growth and industry trends III. Vanguard target enrollment portfolios IV. Vanguard's economic and market outlook V. my529 investment performance Presented by: Amanda Muir Principal Education Savings Stewart Duffield Relationship Manager Education Savings Scott Donaldson Senior Investment Analyst Investment Strategy Group Victor Zhu Investment Analyst Investment Strategy Group For institutional use only. Not for distribution to retail investors. 2#3Vanguard overview For institutional use only. Not for distribution to retail investors. 3#4Prepared for: Utah Higher Education Assistance Authority "To take a stand for all investors, treat them fairly, and give them the best chance for investment success." Vanguard's core purpose 23% Cash 2% Bond funds 6% Traditional band 13% Life-cycle 45% Life 8% D 3% Cape Percentage of participants entage of participants ing age of participants he Percentage of single Cash For institutional use only. Not for distribution to retail investors. 4 Bond funde Traditiona Tag Tape#5Prepared for: Utah Higher Education Assistance Authority Vanguard is different from the rest-and here's how you benefit Typical fund Client invests in a mutual fund, which generates a return to the client after fees Managed by a typical fund company Charges fees to Cover its costs. Generate a profit for outside owners of fund management company. Vanguard fund Managed by Vanguard Charges fees to O Cover its costs. No outside owners = clients keep more of any returns a fund earns. The typical fund management company is owned by third parties, either public or private stockholders, not by the funds it serves. The fund management companies have to charge fund investors fees that are high enough to generate profits of the companies' owners. In contrast, the Vanguard funds own the management company known as Vanguard-a unique arrangement that eliminates conflicting loyalties. No wonder Vanguard's average fund expense ratio in December 31, 2019 was 0.10%, less than one-fifth that of the 0.57% industry average*. All averages are asset-weighted. Industry averages exclude Vanguard. That means Vanguard fund investors keep more of any return their funds earn. * Sources: Vanguard, Morningstar, as of December 31, 2019. For institutional use only. Not for distribution to retail investors. LO 5#6Prepared for: Utah Higher Education Assistance Authority Our pledge to you When you invest with Vanguard, we promise to: . Align our interests with our clients' interests and invest the majority of our personal assets alongside yours Manage your investments with prudence, a long-term perspective, and the goal of providing returns that are consistently better than those of competitors Adhere to the highest standards of ethical behavior and fiduciary responsibility Strive to be the highest value provider of investment services by offering outstanding performance and service, while keeping costs as low as possible • Communicate candidly with you about investment risks and costs, as well as potential rewards, in keeping with our "plain talk" philosophy Maintain highly effective controls to protect your assets and confidential information Employ a talented, diligent, and diverse crew to ensure your money and your needs are well cared for Adapt, evolve, and continuously improve, because you should expect excellence in all that we do For institutional use only. Not for distribution to retail investors. 6#7Prepared for: Utah Higher Education Assistance Authority Education Savings Service Models Tiered offering to suit the needs of plan sponsors As of September 30, 2020: $121B AUM Full Service - 4 Plans • 38 states • 41 college savings plans • 6 prepaid tuition plans • 9 ABLE plans Contact Center • Marketing Support • Investment Management - Investment policy consulting - Asset allocation advice - Portfolio construction - Asset rebalancing - Portfolio oversight - Research and analysis - Reporting - Conversion management • Investment Methodology and Portfolio Accounting - 8 Plans Investment Management - Investment policy consulting Asset allocation advice - Portfolio construction Asset rebalancing - Portfolio oversight Research and analysis - Reporting - Conversion management Investment Only - 41 Plans • Index • Active • Equity • Fixed income • Cash Reserves For institutional use only. Not for distribution to retail investors. 7#8my529 growth and industry trends For institutional use only. Not for distribution to retail investors. 8#9Prepared for: Utah Higher Education Assistance Authority my529 achievements $16.2 billion Plan assets as of September 30, 2020 • $12.8 billion or 80% in Vanguard funds • Average account size is $38,780, which is the fourth largest in the industry $5B Total Stock Market Index Fund transfer in November • The 529 plan and the Endowment account . Underlying expense ratio drops from 2bps to 1bp • $485,000 collectively saved per year • 77% of account owners impacted March project to reallocate and realign many of the individual options • The result will be a streamlined individual line-up, with broadened exposure, and lowered expense ratios Retained Gold Morningstar rating for 2020 for the 10th year in a row* Only 3 of 61 total plans earned a Gold rating Sources: my 529 and Morningstar. For institutional use only. Not for distribution to retail investors. 9#10Prepared for: Utah Higher Education Assistance Authority my529 growth Top 10 direct plans by assets: third quarter 2015 (in millions) $35,000.00 $30,000.00 $25,000.00 $20,000.00 $15,000.00 $10,000.00 $5,000.00 $0.00 NY NV NH UT CA MA OH MI MD IA Top 10 direct plans by assets: third quarter 2020 $35,000.00 $30,000.00 $25,000.00 $20,000.00 $15,000.00 $10,000.00 $5,000.00 $0.00 NY NV Source: Strategic Insight, September 2015 and September 2020. UT NH CA HO OH IL MA MD MI For institutional use only. Not for distribution to retail investors. 10#11Source: Strategic Insight, September 2020. 0% 90 CollegeAmerica (VA) 5% Vanguard 529 Savings Plan (NV) 10% Unique College Investing Plan (NH) Utah Educational Savings Plan (UT) 15% NextGen College - Advisor (ME) Prepared for: Utah Higher Education Assistance Authority my529 5-year annual growth rate versus peers Asset growth rate 20% NY College Savings Program - Direct (NY) ויווו John Hancock Freedom (AK) ScholarShare (CA) 529 Industry (Direct & Advisor) For institutional use only. Not for distribution to retail investors. 11 529 Direct Plan#12-5% Source: Strategic Insight, September 2020. CollegeAmerica (VA) Vanguard 529 Savings Plan (NV) 10% Unique College Investing Plan (NH) Utah Educational Savings Plan (UT) 15% Account growth rate NextGen College - Advisor (ME) Prepared for: Utah Higher Education Assistance Authority my529 5-year annual growth rate versus peers NY College Savings Program - Direct (NY) John Hancock Freedom (AK) ScholarShare (CA) 529 Industry (Direct & Advisor) For institutional use only. Not for distribution to retail investors. 12 529 Direct Plan#13Prepared for: Utah Higher Education Assistance Authority Industry trends Morningstar adjustments to ratings Progressive glide paths • • Vanguard investment management clients are now considering the target enrollment option TIAA converts all clients from steps to target enrollment Plans in transition • Michigan lowers fees and extends contract • Connecticut converting to Fidelity . Georgia decision pending • Nebraska converting five plans to Union Bank and Trust • Oklahoma converts Advisor plan to Fidelity Overall trend: lower fees and progressive glide paths For institutional use only. Not for distribution to retail investors. 13#14Vanguard target enrollment portfolios For institutional use only. Not for distribution to retail investors. 14#15Prepared for: Utah Higher Education Assistance Authority Background and methodology Background • • The Investment Strategy Group (ISG) and the Education Savings (ES) have developed an alternative Target Enrollment Portfolio glide path for education savings goals (college, trade school, and K-12) This Target Enrollment Portfolio glide path would be an optional replacement to the three currently recommended risk tracks for the age-based portfolio Vanguard is a nondiscretionary advisor to the 529 state sponsors; as such, we have guardrails for sponsors choosing variation from our recommended portfolio(s) Methodology • • • • Target Enrollment Portfolio glide path is derived from the Vanguard Life-Cycle Investing Model (VLCM) VLCM considers aggregate investor risk tolerance, investor utility, and loss aversion Portfolios are developed for two-year cohorts (Target Enrollment 2022/2023 Portfolio, Target Enrollment 2024/2025 Portfolio, etc.) Sub-asset allocation changes incrementally on a quarterly basis For institutional use only. Not for distribution to retail investors. 15#16Prepared for: Utah Higher Education Assistance Authority Current, industry average, and proposed Target Enrollment Portfolio glide paths Equity Weight (%) 100.0% 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% Total Equity: 19% 0.0% 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 -1 -2 -3 -4 Years to Enrollment Aggressive Aged-Based Average Equity Allocation -Moderate Age-Based Industry Average Aged-Based Target Enrollment •Conservative Age-Based % of Participants Aggressive Moderate Conservative 60.90% 51% 41.80% 43% 24.50% 6% 52.90% Target Enrollment Portfolio *Reflects data across Vanguard's full service 529 plans. Sources: Vanguard and Morningstar. Total Equity: 11.6% For institutional use only. Not for distribution to retail investors. 16#17Prepared for: Utah Higher Education Assistance Authority Benefits and considerations Benefits . Single portfolio glide path viewed as simpler because of fewer decisions and inputs for the investor (e.g., target-date funds) • Target Enrollment Portfolio glide path results in improved objective-based metrics relative to existing glide paths • Target Enrollment Portfolios' progressive, smoother structure increasingly favored by the industry and Morningstar Can be a potential option for K-12 investors Considerations • • • Step-down from 100% equity begins in year 3 (all current portfolios begin step-down at year 5) Target Enrollment Portfolio glide path has equity allocation at the end of the investment horizon (age 18) in line with industry average and the current aggressive portfolio glide path* Short-term TIPS (Treasury Inflation-Protected Securities) allocation is 0% throughout the entire portfolio glide path; current moderate and conservative portfolios have short-term TIPS in the final years of the portfolio glide path* *Age-based assets across all plans are invested in aggressive (51%), moderate (43%), and conservative (6%) portfolios. Sources: Vanguard and ISG. For institutional use only. Not for distribution to retail investors. 17#18Asset Allocation 100% Prepared for: Utah Higher Education Assistance Authority Proposed Target Enrollment Portfolio glide-path base case Year US Equity 90% 80% 70% 60% 1 2 3 Intl Intl Equity Bonds 57.00% 38.00% 3.50% 1.50% 57.00% 38.00% 3.50% 57.00% 38.00% 3.50% US Bonds Cash 0.00% 1.50% 0.00% 1.50% 0.00% 4 54.60% 36.40% 6.30% 2.70% 0.00% 5 52.20% 34.80% 9.10% 3.90% 0.00% 6 49.80% 33.20% 11.90% 5.10% 0.00% 7 46.20% 30.80% 16.10% 6.90% 0.00% 50% 40% 8 42.60% 28.40% 20.30% 8.70% 0.00% 9 39.00% 10 35.40% Total Equity Age 18: 19% 11 33.00% 30% 26.00% 24.50% 10.50% 0.00% 23.60% 28.70% 12.30% 0.00% 22.00% 31.50% 13.50% 0.00% 12 13 20% 14 10% 15 16 09 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Enrollment Years 18 19 20 21 US Equity Intl Equity US Bonds Intl Bonds Cash 22 52.90% 30.60% 20.40% 34.30% 14.70% 0.00% 28.20% 18.80% 37.10% 15.90% 0.00% 23.00% 15.30% 38.50% 16.50% 6.70% 18.20% 12.10% 39.40% 16.90% 13.30% 15.40% 10.20% 38.10% 16.30% 20.00% 12.80% 8.50% 36.40% 15.60% 26.70% 11.60% 7.70% 33.10% 14.20% 33.30% 10.40% 7.00% 29.80% 12.80% 40.00% 9.30% 6.20% 26.50% 11.40% 46.70% 8.10% 5.40% 23.20% 9.90% 53.30% 7.00% 4.60% 19.90% 8.50% 60.00% Average 31.75% 21.15% 23.42% 10.04% 13.64% Equity/FI 33.45% For institutional use only. Not for distribution to retail investors. 18#19Probability of each outcome 30% 25% 20% 15% 10% 5% do go 0% Wealth accumulation at age 18 40 35 45 NNA & O G 55 50 Less than $6 30.79 30 27.53 28.62 25 20 Moderate Target Enrollment Portfolio Aggressive $6-10 $10-14 $14-18 $18-22 Prepared for: Utah Higher Education Assistance Authority Evaluating proposed Target Enrollment Portfolio relative to current moderate and aggressive portfolios: Wealth accumulation and downside risk 35% Simulation results: Wealth accumulation at age 18 $22-26 $26-30 $30-34 Real wealth accumulated at age 18 Probability of 5% decline in any year 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 the VCMM are derived from 10,000 simulations for each modeled asset class. Simulations are as of June 30, 2020. Results from the model may vary with each use and over time. For more information, see the "Important information" slides. Notes: These probabilities were calculated by the Vanguard Capital Markets Model (VCMM) and applying projected asset class returns. Annual contributions are made at the beginning of each year, for a total of 18 contributions. All figures are adjusted for inflation. For details on simulation methodology assumptions used here, see the Appendix in Vanguard's 529 methodology white paper When Age Meets Risk Tolerance: Best Practices for 529 Investing. Source: Vanguard, based on VCMM simulations as of March 31, 2019. For institutional use only. Not for distribution to retail investors. 19 $34-38 $38-42 $42-46 $46-50 $50-54 18.0% 16.0% 14.0% 12.9% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% ||| 16.7% 13.8% 0.0% Moderate Target Enrollment Portfolio Aggressive $54-58 $58-62 ■Moderate More than $62 Target Enrollment Portfolio Aggressive#20Prepared for: Utah Higher Education Assistance Authority Evaluating proposed Target Enrollment Portfolio relative to current moderate and aggressive paths: Probability of meeting college costs 100% Public, in-state ($85,480) 92%95%95% Public, out-of-state ($149,720) 100% 100% 100% 99%99% 100% 92% 80% 80% 60% 60% 40% 40% 21% 20% 20% 0% 0% 0% 6% 9% 0% 0% 0% 0% 0% $1,000 $4,000 $8,000 $1,000 Private, average school ($194,040) $4,000 Private, expensive school ($256,720) $8,000 100% 86% 82% 76% 80% 60% 43% 40% 28% 20% 20% 0% 0% 0% 0% $1,000 0% 0% 0% $4,000 $8,000 Annual contribution 100% 80% 60% 40% 20% 0% 0% 0% 0% 1% 4% 0% $1,000 $4,000 $8,000 Annual contribution ■Moderate ■Target Enrollment Aggressive Portfolio 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 the VCMM are derived from 10,000 simulations for each modeled asset class. Simulations are as of June 30, 2020. Results from the model may vary with each use and over time. For more information, see the "Important information" slides. Notes: College prices aren't adjusted for inflation. Expensive private school tuition assumption is $51,650. According to CollegeBoard, the average annual 2018-2019 private, nonprofit, four-year college room/board and tuition were $12,680 and $35,830, respectively. Calculations assume that contributions begin at birth and continue to age 18. Source: Vanguard, based on VCMM simulations as of March 31, 2019. Source of college costs is CollegeBoard's Trends in College Pricing 2018. For institutional use only. Not for distribution to retail investors. 20#21Prepared for: Utah Higher Education Assistance Authority Plans can prudently manage this change by mapping existing beneficiaries to the new portfolio glide path based on their age and thoroughly communicating implications Operational feasibility • At implementation, account owners currently invested in age-based options will be mapped to a new Target Enrollment Portfolio; clearly communicating this change to account owners is recommended Example of possible mapping Bene age Portfolios Age <1 . Baseline to the right uses the age of the beneficiary, assumed enrollment age of 18, and the portfolio closest to year of enrollment Age 1-2 Target Enrollment 2038/2039 Target Enrollment 2036/2037 Age 3-4 Age 5-6 Target Enrollment 2034/2035 Target Enrollment 2032/2033 • Plan Sponsors have flexibility to tailor the mapping to the new portfolios, based on beneficiary age Age 7-8 Target Enrollment 2030/2031 Age 9-10 • All account owners can opt-out prior to mapping by processing an exchange before black out dates occur Age 11-12 Age 13-14 Target Enrollment 2028/2029 Target Enrollment 2026/2027 Target Enrollment 2024/2025 Age 15-16 Target Enrollment 2022/2023 Age 17-18 Age 19+ Target Enrollment 2020/2021 Commencement Portfolio Considerations for mapping decision • • Aggressive and Moderate account owners are invested with attributes similar to the new portfolio: the new portfolio's wealth accumulation is between aggressive and moderate, while the portfolio's volatility is similar to moderate Conservative account owners are currently invested differently: they hold fewer equities, have lower wealth accumulation and lower volatility Email outreach Example of possible account owner communications journey 30-day notice 勗 Supplement Social media promotion Email reminder Launch day! Public site pages Public site banner For institutional use only. Not for distribution to retail investors. 21#22Prepared for: Utah Higher Education Assistance Authority References 1 MSCI EAFE Index through May 31, 2010; MSCI All Country World Index ex USA thereafter. 2 Calvert Social Index through December 16, 2005; FTSE4Good US Select Index thereafter. 3 Bloomberg Barclays U.S. 1-5 Year Government/Credit Bond Index through Dec 31, 2009; Bloomberg Barclays U.S. 1-5 Year Gov't/Credit Float Adjusted Index thereafter. 4 Bloomberg Barclays U.S. Aggregate Bond Index through December 31, 2009; Bloomberg Barclays U.S. Aggregate Float Adjusted Index thereafter. 5 S&P SmallCap 600/Barra Value Index through May 16, 2003; MSCI US Small Cap Value Index through April 16, 2013; CRSP US Small Cap Value Index thereafter. 6 S&P SmallCap 600 Growth Index (formerly known as the S&P SmallCap 600/Barra Growth Index) through May 16, 2003; MSCI US Small Cap Growth Index through April 16, 2013; CRSP US Small Cap Growth Index thereafter. 7 S&P 500/Barra Value Index through May 16, 2003; MSCI US Prime Market Value Index through April 16, 2013; CRSP US Large Cap Value Index thereafter. 8 S&P 500 Growth Index (formerly known as the S&P 500/Barra Growth Index) through May 16, 2003; MSCI US Prime Market Growth Index through April 16, 2013; CRSP US Large Cap Growth Index thereafter. 9 Dow Jones Wilshire 5000 Index through April 8, 2005; MSCI US Broad Market Index through 1/14/2013; CRSP US Total Market Index thereafter. 10 100% MSCI EAFE Index through May 28, 2013; 100% FTSE Developed ex North America Idx through December 20, 2015; 100% FTSE Developed ACap ex US Trans Idx through May 31, 2016; 100% FTSE Developed All Cap ex US Index thereafter. 11 S&P MidCap 400 Index through May 16, 2003; MSCI US Mid Cap 450 Index through January 30, 2013; CRSP US Mid Cap Index thereafter. 12 Russell 2000 Index through May 16, 2003; MSCI US Small Cap 1750 Index through January 30, 2013; CRSP US Small Cap Index thereafter. 13 100% Select Emerging Markets Index through August 31, 2006; 100% MSCI Emerging Markets Index Net USD through January 9, 2013; 100% FTSE Emerging Transition Index through June 27, 2013; 100% FTSE Emering Index through November 11, 2015; 100% FTSE EM All Cap CN ATrans Idx through September 18, 2016; 100% FTSE Emerging ACap CN A Inclus Idx thereafter. 14 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. Benchmark returns are adjusted for withholding taxes. For institutional use only. Not for distribution to retail investors. 85#23Prepared for: Utah Higher Education Assistance Authority Important information The asset-return distributions shown here represent Vanguard's view on the potential range of risk premiums that may occur over the next ten years; such long-term projections are not intended to be extrapolated into a short-term view. These potential outcomes for long-term investment returns are generated by the Vanguard Capital Markets ModelⓇ (VCMM) and reflect the collective perspective of our Investment Strategy Group. The expected risk premiums-and the uncertainty surrounding those expectations-are among a number of qualitative and quantitative inputs used in Vanguard's investment methodology and portfolio construction process. All investing is subject to risk, including the possible loss of the money you invest. Past performance is no guarantee of future returns. Diversification does not ensure a profit or protect against a loss in a declining market. 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. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index. Stocks of companies in emerging markets are generally more risky than stocks of companies in developed countries. U.S. government backing of Treasury or agency securities applies only to the underlying securities and does not prevent price fluctuations. Investments that concentrate on a relatively narrow market sector face the risk of higher price volatility. Investments in stocks issued by non-U.S. companies are subject to risks including country/regional risk and currency risk. 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. 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 U.S. Treasury obligations held in the fund is subject to federal income tax, some or all of that income may be exempt from state and local taxes. Slide ID # S051827 For institutional use only. Not for distribution to retail investors. 86#24Prepared for: Utah Higher Education Assistance Authority Important information For more information about any fund, visit institutional.vanguard.com or call 866-499-8473 to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing. Vanguard ETFⓇ Shares are not redeemable with the issuing fund other than in very large aggregations worth millions of dollars. Instead, investors must buy or sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling. Mutual funds and all investments are subject to risk, including the possible loss of the money you invest. Prices of mid- and small-cap stocks often fluctuate more than those of large-company stocks. 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 sector face the risk of higher share-price volatility. 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 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. 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. Diversification does not ensure a profit or protect against a loss. 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. Investments in Target Retirement Funds or Trusts are subject to the risks of their underlying funds. The year in the fund name refers to the approximate year (the target date) when an investor in the fund or trust would retire and leave the workforce. The fund or trust will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. An investment in the Target Retirement Fund or Trust is not guaranteed at any time, including on or after the target date. Vanguard collective trusts are not mutual funds. They are collective trusts available only to tax-qualified plans and their eligible participants. Investment objectives, risks, charges, expenses, and other important information should be considered carefully before investing. The collective trust mandates are managed by Vanguard Fiduciary Trust Company, a wholly owned subsidiary of The Vanguard Group, Inc. A stable value investment is neither insured nor guaranteed by the U.S. government. There is no assurance that the investment will be able to maintain a stable net asset value, and it is possible to lose money in such an investment. Factor funds are subject to investment style risk, which is the chance that returns from the types of stocks in which the fund invests will trail returns from U.S. stock markets. Factor funds are subject to manager risk, which is the chance that poor security selection will cause the fund to underperform relevant benchmarks or other funds with a similar investment objective. The information contained herein does not constitute tax advice and cannot be used by any person to avoid tax penalties that may be imposed under the Internal Revenue Code. We recommend that you consult a tax or financial advisor about your individual situation. Advice services are provided by Vanguard Advisers, Inc., a registered investment advisor. Brokerage services are plan-specific and may be provided by TD Ameritrade, Inc., member FINRA/SIPC or Vanguard Brokerage Services®, a division of Vanguard Marketing Corporation, member FINRA/SIPC. Refer to Vanguard's plan documents for information on the applicable brokerage services provider. TD Ameritrade and Vanguard are separate and unaffiliated firms, and are not responsible for each other's services or policies. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc., and the Toronto-Dominion Bank. Used with permission. CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute. Financial Engines is a trademark of Financial Engines, Inc. All rights reserved. Used with permission. The Vanguard Group has partnered with Financial Engines Advisors, L.L.C., to provide subadvisory services to the Vanguard Managed Account Program and Personal Online Advisor. Financial Engines Advisors, L.L.C., is an independent, federally registered investment advisor that does not sell investments or receive commission for the investments it recommends. Advice is provided by Vanguard Advisers, Inc. (VAI), a federally registered investment advisor and an affiliate of The Vanguard Group, Inc. (Vanguard). Eligibility restrictions may apply. Vanguard is owned by the Vanguard funds, which are distributed by Vanguard Marketing Corporation, a registered broker- dealer affiliated with VAI and Vanguard. Neither Vanguard, Financial Engines, nor their respective affiliates guarantee future results. Vanguard Marketing Corporation, Distributor of the Vanguard Funds. U.S. Patent Nos. 6,879,964; 7,337,138; 7,720,749; 7,925,573; 8,090,646; 8,417,623; and 8,626,636. For institutional use only. Not for distribution to retail investors. 87#25Prepared for: Utah Higher Education Assistance Authority Vanguard® Important information CGS identifiers have been provided by CUSIP Global Services, managed on behalf of the American Bankers Association by Standard & Poor's Financial Services, LLC, and are not for use or dissemination in a manner that would serve as a substitute for any CUSIP service. The CUSIP Database, 2020 American Bankers Association. "CUSIP" is a registered trademark of the American Bankers Association. 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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. 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Android ™ is a trademark of Google Inc. © 2020 The Vanguard Group, Inc. All rights reserved. Rev 082020 For institutional use only. Not for distribution to retail investors. 88#26Prepared for: Utah Higher Education Assistance Authority Important 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 or 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. 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, 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. For institutional use only. Not for distribution to retail investors.#27Prepared for: Utah Higher Education Assistance Authority Important information The 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 set 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.#28Prepared for: Utah Higher Education Assistance Authority Important information All investing is subject to risk, including the possible loss of the money you invest. 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. 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. 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. 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. 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. Russell is a trademark of The Frank Russell Company. Standard & Poor's®, S&P®, S&P 500®, Standard & Poor's 500, 500, S&P MidCap 400, and S&P SmallCap 600 are trademarks of The McGraw-Hill Companies, Inc., and have been licensed for use by The Vanguard Group. Vanguard mutual funds are not sponsored, endorsed, sold, or promoted by Standard & Poor's, and Standard & Poor's makes no representation regarding the advisability of investing in the funds. Advice services are provided by Vanguard Advisers, Inc., a registered investment advisor, or by Vanguard National Trust Company, a federally chartered, limited- purpose trust company. 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. Investments in target-date funds are subject to the risks of their underlying funds. The year in the fund name refers to the approximate year (the target date) when an investor in the fund would retire and leave the workforce. The fund will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. An investment in target-date funds is not guaranteed at any time, including on or after the target date. Notes on asset-return distributions The asset-return distributions shown here represent Vanguard's view on the potential range of risk premiums that may occur over the next ten years; such long- term projections are not intended to be extrapolated into a short-term view. These potential outcomes for long-term investment returns are generated by the Vanguard Capital Markets Model® (VCMM) and reflect the collective perspective of our Investment Strategy Group. The expected risk premiums—and the uncertainty surrounding those expectations-are among a number of qualitative and quantitative inputs used in Vanguard's investment methodology and portfolio construction process. © 2021 The Vanguard Group, Inc. All rights reserved. Vanguard Marketing Corporation, Distributor of the Vanguard Funds. DOLU: 04/01/2021 RPRESGUT_093 012021 For institutional use only. Not for distribution to retail investors.