Episcopal Diocese of Washington D.C. Diocesan Investment Fund Overview

For institutional use only. Not for distribution to retail investors.

“To take a stand for all investors, treat them fairly, and give them the best chance for investment success.” Vanguard’s core purpose

For institutional use only. Not for distribution to retail investors.

2

What makes Vanguard different from other fund management companies? We are client-owned.

Clients

Clients

MANAGE

OWN

Other funds

Fund management companies

OWN

Private owners/ stockholders

OWN

OWN

Vanguard funds

MANAGES

Vanguard is client-owned. As a client owner, shareholders own the funds that own Vanguard. For institutional use only. Not for distribution to retail investors.

3

A strong company—a balanced business As of fourth quarter 2014, Vanguard’s asset base was roughly split between institutional and retail client

Vanguard total assets ($ billions) Billions ($)

$1,892.7

$1,103.3

1990

2014* Retail

Institutional

Total assets $2,996.0

* As of December 31, 2014. Note: Detail may not sum to totals because of rounding. For institutional use only. Not for distribution to retail investors.

4

Vanguard, an indexing leader • Introduced first index fund for individual investors in 1976 • Manages more than $1.9 trillion in index assets • Excellent index tracking record • Strong, stable investment management team

Index assets ($ billions) 1,944 1,677 269 1,241 890

78

96

135

186

94

143

261

257

246

215

213

209

199

167

298 242

381 307

451 352

583

640

60

119 81

443

440

481 70 96 315

680 100 134 446

156 170 564

971

216

154

252

358

281

207 1,127 610

297

1,288

774

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014* Domestic index funds

Bond index funds

International index funds

Total

* As of December 31, 2014. Note: Detail may not sum to totals because of rounding. Data points totaling >40 are not labeled. For institutional use only. Not for distribution to retail investors.

5

Vanguard Institutional Advisory Services® : Business summary Vanguard Institutional Advisory Services ® profile Total number of clients/portfolios

214/392

Total assets

$24.2 billion

Average client size

$113.1 million

Average number of clients per investment consultant

21

Distribution of clients by assets ($millions)

Assets ($M)

$17,928 $12,000

200 $24 100

$3,062

$3,204

$0

0 $100

Clients Assets ($M)

$24,000

Annual growth of client base

250 200 150 100 50 0

$12

$0 2004

2014 Assets ($Bs)

Clients

Source: Vanguard, as of December 31, 2014. For institutional use only. Not for distribution to retail investors.

6

Vanguard Capital Markets Model® (VCMM) Forecasts and portfolio solutions

Users of the Model: Advisory clients ($26 billion AUM)

Important features •

• Personal and Institutional Advisory Services

Distributional (probabilistic) framework – Broad range of possible asset return, volatility, and correlation outcomes, as opposed to single point forecasts

Single fund solutions (529 portfolios, $315 billion AUM) • Target date funds, Managed payout fund

– Allows for a deeper assessment of trade-offs Main elements: Asset class forecasts • Simulates forward-looking return distributions on a wide array of broad asset classes

•

– Short-term forecasting is extremely difficult •

Portfolio allocation trade-offs

Sensitive to initial conditions – Projections change as the fundamental drivers of asset class returns evolve

• Combines asset class simulations to create a customized set of potential asset allocation solutions for clients to consider

• Resources: Empirical research

Long-term projections

Forward-looking assumptions – Certain projections may not have been observed or targeted historically

• Supported by empirical research conducted by global team of 49 global investment professionals

For institutional use only. Not for distribution to retail investors.

7

Diocesan Investment Fund Portfolio Diversification at a low cost

Vanguard funds

Portfolio weight

Investment style

Underlying manager

Expense Ratio*

Total Stock Market Index

41%

Index Broad Market

Vanguard Equity Investment Group

0.04%

Total International Stock Index

27%

Index Broad Market International

Vanguard Equity Investment Group

0.12%

Total Bond Market Index

8%

Index Broad U.S. Bond Market

Vanguard Fixed Income Group

0.08%

Intermediate-Term Investment-Grade Fund

6%

Active Intermediate–Term Bond

Vanguard Fixed Income Group

0.10%

Short-Term Investment-Grade Fund

6%

Active Short–Term Bond

Vanguard Fixed Income Group

0.10%

International Bond Index Fund

6%

Index Broad Non-U.S. Bond Market

Vanguard Fixed Income Group

0.19%

REIT Index

6%

Index Equity Real Estate

Vanguard Equity Investment Group

0.10%

Weighted annual expense ratio

0.08%

Data source: Vanguard * As of the fund’s most recent prospectus as of February 28, 2015. The current expense ratio may be higher or lower.

For institutional use only. Not for distribution to retail investors.

8

Diocesan Investment Fund Portfolio Aggregate equity portfolio diversification By regional exposure 0.2%

By country Country

7.3% 11.4%

18.1% 62.8%

North America Europe Pacific Emerging Markets Middle East

United States Japan United Kingdom Canada Germany Switzerland France Australia China Korea Taiwan Hong Kong India Sweden Spain Netherlands Italy Brazil South Africa Denmark Singapore Belgium Mexico Malaysia Finland

Weighting 60.07% 6.56% 5.94% 2.70% 2.44% 2.41% 2.40% 2.07% 1.74% 1.22% 1.22% 1.01% 0.91% 0.91% 0.90% 0.79% 0.71% 0.68% 0.65% 0.45% 0.44% 0.39% 0.38% 0.33% 0.29%

Country Russia Thailand Other Indonesia Norway Israel Philippines Poland Turkey Chile Ireland Austria New Zealand United Arab Emirates Portugal Other Colombia Greece Egypt Peru Czech Republic Hungary Argentina Morocco

Weighting 0.27% 0.24% 0.23% 0.22% 0.21% 0.18% 0.15% 0.13% 0.13% 0.11% 0.09% 0.08% 0.08% 0.06% 0.06% 0.05% 0.05% 0.03% 0.02% 0.02% 0.02% 0.02% 0.00% 0.00%

Data source: Vanguard.com . As of February 28, 2015.

For institutional use only. Not for distribution to retail investors.

9

Diocesan Investment Fund Portfolio Aggregate equity portfolio by sector weightings

25% 21.0% 20%

14.7%

15%

12.6%

12.1%

11.7%

10%

8.9% 7.2% 5.5%

5%

3.2%

3.1%

Utilities

Telecommunication Services

0% Financials

Information Technology

Consumer Discretionary

Health Care

Industrials

Consumer Staples

Energy

Materials

Data source: Vanguard.com . As of February 28, 2015.

For institutional use only. Not for distribution to retail investors.

10

Diocesan Investment Fund Portfolio Aggregate equity portfolio by market capitalization

Domestic U.S.

10.8%

31.1%

12.8%

19.1%

Large Medium/Large Medium Medium/Small Small

Billions

Percentage

$77.11 B and above $22.27 to $77.11 B $7.65 to $22.27 B $3.03 to $7.65 B $3.03 B and below

37.60% 26.90% 17.70% 10.10% 7.70%

Billions

Percentage

$76.81 B and above $27.91 to $76.81 B $11.02 to $27.91 B $4.06 to $11.02 B $4.06 B and below

21.20% 25.10% 21.30% 17.00% 15.40%

26.2%

International Large Medium/Large Medium

Large Medium/Large Medium Medium/Small Small

Medium/Small Small

Data source: Vanguard.com . As of February 28, 2015.

For institutional use only. Not for distribution to retail investors.

11

Diocesan Investment Fund Portfolio Aggregate bond portfolio by diversification By credit quality 0.3%

1.3%

By maturity U.S. Government 5.9%

Aaa

0.9%

Under 1 year

7.2%

1 – 3 years

4.9%

16.6% 25.0%

Aa

3 – 5 years

A

24.8%

Baa 12.9% 30.1%

10 – 20 years 34.2%

< Baa

20 – 30 years

Not rated

Over 30 years 22.2%

13.8%

Composite benchmark Treasury Agency and Mortgage Aaa Aa A Baa