OREGON SAVINGS GROWTH ADVISORY COMMITTEE 1ST 8 · 2018-03-07 · OREGON SAVINGS GROWTH PLAN...
Transcript of OREGON SAVINGS GROWTH ADVISORY COMMITTEE 1ST 8 · 2018-03-07 · OREGON SAVINGS GROWTH PLAN...
OREGON SAVINGS GROWTH PLAN ADVISORY COMMITTEE
1ST QUARTER 2018
February 20, 2018 9:30 A.M.
Keizer Community Center 930 Chemawa Rd NE Keizer, Oregon 97303
February 20, 2018 – 9:30 a.m. Keizer Community Center – Keizer, Oregon
ITEM # ITEM PRESENTER
I.
Meet and Greet
Introduction
8:30 a.m.
Mark Carlton 9:30 a.m.
II. Approval of Minutes Mark Carlton
III. Old Business Mark Carlton
IV. Information Items
A. Q4 2017 Service Review
B. Q4 2017 Performance Report
C. Treasury Update
D. OSGP Update
E. Outreach Team Update
9:45 a.m.
Brian Merrick, Carol Cann, VOYA
Anne Heaphy, Ben Taylor, Jim Callahan, Callan
Wil Hiles, Treasury
Roger Smith, OSGP
Jack Schafroth, Wes Handley, Charles Yu, Phillip Carbajal, OSGP
V. New Business Mark Carlton 11:00 a.m.
VI. Public Comment Mark Carlton 11:15 a.m.
VII. Adjournment
Next meeting: May 22, 2018
Mark Carlton 11:30 a.m.
Hard copies of the materials are made available to the Committee and to the public at the meetings. If you have a disability that requires any special material, services or assistance please call
1-888-320-7377 at least 48 hours before the meeting
OSGP ADVISORY COMMITTEE MEMBERS • Mark Carlton, Chair • Kevin Nordhill
• Thomas Poon • Celeste VanCleave • Richard Bailey • Brady Boothe
ADVISORY COMMITTEE MEETING MINUTES November 8, 2017
Keizer Community Center KEIZER, OREGON
COMMITTEE MEMBERS PRESENT STAFF MEMBERS PRESENT Mark Carlton, Committee Chair Roger Smith, Program Manager Kevin Nordhill, Committee Member Kathy Gannon, Program Coordinator Celeste Van Cleave, Committee Member Vitaly Putintsev, Enrollment Specialist Brady Boothe, Committee Member Dee Monday, Program Analyst Richard Bailey, Committee Member Karen Blanton, Educational Representative
Jack Schafroth, Local Gov’t Representative Wes Handley, OSGP Representative Justin Naegle, OSGP Representative
I. INTRODUCTION:Meeting called to order at 9:30 a.m. Chair Carlton requested introductions from all thosein attendance.
II. APPROVAL OF MINUTES:Chair Carlton asked if there were any changes or corrections to the minutes from August9, 2017. There were no changes or corrections. Committee Member Nordhill moved toapprove the minutes. Committee Member Van Cleave seconded the motion. The motioncarried unanimously.
III. OLD BUSINESS:No old business
IV. ADMINISTRATIVE REPORT:
A. Q3 2017 Service Review: Brian Merrick reported that CEO of Retirement at VOYAFinancial, Charlie Nelson, sat down with PLANSPONSOR magazine for adiscussion on trending industry topics such as re-enrollment and financial wellness,collective investment trusts and white label funds, and plan costs and missingparticipants. Merrick also highlighted the VOYA Unsung Heroes award and askedthe Committee and those in attendance to reach out to VOYA with any potentialnominees.
Merrick reported that one of the web enhancements that VOYA is working on is the new personalized participant videos. These videos are designed to provide individualized guidance based on each participant’s unique retirement journey. The videos which are meant to better engage participants are currently in the pilot stage and will be launched for the OSGP in January. Another web enhancement that Merrick reported on is the updates to the myOrangeMoney loan screens. There are additional graphics and content that allows participants to better gauge the impact of taking out a loan against their OSGP account. Merrick reported that plan assets are now at $2.0 billion. Net cash flow was a positive $12.6 million for the quarter. Rollover in contributions were at $16.3 million. Roth contributions continue to grow with a total of 3,393 people taking advantage of the Roth contribution. The quarterly total for Roth contributions was $1.8 million. Merrick underscored that the LifePath Options hold 30% of plan assets and that the Small Company Stock Option is second with 13% of plan assets. Merrick stated that the Socially Responsible Investment Option has seen a doubling in participation compared to last year. It is still a fairly new investment addition to the plan. Merrick reported that online activity was over 19,000 hits per month on average. He told the Committee that it will be interesting to gauge the activity during the Retirement Expo ’17 which occurred on October 12, 2017. Merrick also shared the Digital Engagement Report for the OSGP. This report showed that 17% of participant(s) took action after using myOrangeMoney.
B. Q3 2017 Performance Report: Anne Heaphy, Ben Taylor, and Uvan Tseng from
Callan presented the Q3 performance review. They reported that the first estimate of the third quarter GDP came in at an unexpectedly solid 3.0%. Growth was supported by a rise in inventory investment and a decrease in imports, offsetting the setback in consumer spending and construction related to hurricanes Harvey & Irma. The rebuilding efforts are likely to boost GDP in the 4th quarter and into 2018. Second quarter GDP was revised up to 3.1%, the fastest pace since the first quarter of 2015. In the first two months of the quarter, job growth was weaker than expected, though still within consensus range (July: +138,000; August: +169,000). In September, 33,000 jobs were shed from the payroll, reflecting effects of hurricanes that blew through the Southeastern U.S. Nonetheless, unemployment rate fell 0.2% to 4.2%, the lowest reading since January 2001. Labor market participation broke through its resistance level and climbed 0.3% to 63.1%. Average hourly earnings grew 2.9% year-over-year.
Hurricane Harvey gave a boost to energy prices, inflating the headline figure above core. For the trailing 12 months ended September, Headline CPI was +2.2%, and Core CPI (excluding food and energy) was +1.7%. The Callan Team also reported that Growth outperformed Value across the market cap spectrum due largely to strong results from Tech (+8%). Bolstered by biotech (+15%) and small banks, Small Cap outperformed Large Cap this quarter. Active management continued to perform well across most asset classes in the third quarter, with small cap equity being the one area where the median manager trailed the benchmark return. Momentum (+28% YTD) remained the top performer while Defensive (+9% YTD) lagged for the 6th consecutive year. Since the Great Financial Crisis low, the S&P 500 has surged 372% through Q3 2017; the corresponding bull market is now the second longest on record.
C. Treasury Update: Will Hiles reported that the new recordkeeping contract between OSGP and VOYA resulted in an unbundling of the custody bank service. The custodial bank contract will now be managed by the Oregon State Treasury. The new structure is expected to begin in Q1 2018.
Hiles also reported that during Q3 2017 Treasury staff engaged BlackRock in renegotiating lower fees for the target date funds on behalf of the OSGP.
D. OSGP Update: OSGP Manager Roger Smith welcomed Callan and recognized guests from PERS Member Services.
Smith reported that the third-party record-keeper contract with VOYA is being finalized. The OSGP is utilizing Cammack Retirement Group as a consultant in the transition phase between the old contract and implementation of the new contract. Smith talked about some of the highlights of the Retirement Expo ’17 and recognized the staff that played a key role in making the Expo a resounding success. Smith also spoke about the statewide events that took place throughout Oregon the week following Retirement Expo ’17. Three teams visited 14 cities and engaged with over 1,000 people regarding retirement. Smith spoke about an OSGP Advisory Committee email box. The email box would be monitored by staff and would allow the public to email the Committee directly. Smith proposed that the Committee determine whether the email box is something they would like to proceed with.
Smith engaged the Committee in a discussion on the merits of moving upcoming OSGP Advisory Committee Meetings to later in the month. Relocating the meetings to a different venue was also discussed. The Committee did not view moving the meeting venue from the Salem-Keizer area favorably. Further information regarding future meeting dates and location(s) will be provided in advance of the Q1 2018 meeting.
E. Presentation Team Report: Jack Schafroth reported that four new employers
adopted the OSGP in Q3 2017. He noted that community college outreach has been very successful with only 2-3 community colleges yet to adopt the plan. Schafroth highlighted the “savings culture” theme that he has been promoting at workshops and employer benefit fairs. This message is aided by such events as the Retirement Expo ’17 and the co-branding of PERS and OSGP according to Schafroth. Karen Blanton reported on the benefit fairs at various corrections facilities. She also underscored the work she did at the Oregon State Hospital benefit fairs. Blanton also spoke about how ODOT and DHS have stepped up to the plate in welcoming and promoting the OSGP. Wes Handley highlighted the work he did in September across Southern Oregon. Justin Naegle spoke about the positive feedback he has received regarding the Retirement Expo ’17.
V. NEW BUSINESS: None
VI. AUDIENCE PARTICIPATION: None
VII. ADJOURNMENT: The next meeting is scheduled for February 20, 2018.
There being no further business, the meeting was adjourned.
Respectfully submitted,
Vitaly Putintsev Oregon Savings Growth Plan
Oregon Savings Growth Plan Service Review
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For Plan Sponsor use only
Table of contents
1. Voya New Contract Updates2. Voya Update3. Executive Summary4. Outreach Team Update5. Communications Update6. Fourth Quarter 2017
February 20, 2018
Voya New Contract Updates
New Contract Overview
Term: – Effective January 1, 2018 – Initial three years, with option for four 2-year extensions (11-year max) – Core recordkeepeing fee: 0.049% (4.9 basis points) – Addition of Voya Retirement Advisors – Expansion of direct participant communications – Streamlining and automation of operational processes – Variable cost structure for additional services:
Local education
Local communications consultant
Social media support
– Additional services to PERS (billable separate from OSGP)
Add Advice
Q1 ‘18 Q2 ‘18 Q3 ‘18 Q4 ‘18
Integrate IAP Integrate Pension (tbd)
RE Campaign
Advi
ce
Ope
ratio
ns
Com
m &
Ed
ucat
ion
Payroll Automation
Online Transactions
% Deferrals
Hire Comm Consultant
Hire KAM and Reps
Branding Project
Initiate Social Media Project
DB
DC Data Mining
Update group presentations
Establish Goals Develop Campaigns / Measure Results
Team Transition
Update Forms
Enhance Demographic Information
Project Timeline
Expanded Local Service Team
Steve Platt Regional Vice President
Establish service goals based on program objectives
Work with Key Account Manager on education strategy
Supervise compliance requirements
Gladys Salguero Key Account Manager
Manage team logistics and provide education Work with the plan sponsor and directly with
employers and agencies to determine what materials are most appropriate and useful
Wes Handley Local Education Representative
Phillip Carbajal Local Education Representative
Charles Yu Local Education Representative
TBD Local Education Representative
Expertise in PERS and Social Security
FINRA Series 6, 63, 65 or 66 and state insurance licensed
New online scheduling tool Assign regionally:
• Willamette Valley • Central/Eastern
Oregon • Southern Oregon
In-Plan Financial Wellness Services from Voya Retirement Advisors, LLC
Voya Retirement Advisors (VRA): Design
Fiduciary: Voya Retirement Advisors, LLC
Integrated Participant Experience*
VRA Advisors
Participant Actions & Outcomes
* Powered by Financial Engines
Engage – Personalized Retirement Evaluations
Part of an engagement program that delivers a comprehensive Retirement Evaluations to all participants A personalized evaluation providing
assessment of investments, savings, and retirement income.
Connect - Access to advisors for all
A one-on-one experience available to everyone in plan helps address financial concerns and needs of all participants using existing toll-free information line. Licensed Representatives provide plan
participants with personal, unbiased help.
Promote financial wellness through communication, education, and advice
Build participant confidence through collaborative planning
Connect – Voya website integration
• Access services directly • Alerts & messages • Easy implementation of Advice
Easy-to-use tool provides personalized retirement plan and income forecast, with specific savings and fund-level recommendations Consistent methodology
enables personalized advice on total retirement picture
Helps participants manage their own retirement accounts
Participants stay informed with quarterly updates on progress
Provides access to Social Security guidance
Online Advice
Social Security Guidance Personalized for all near-retirees
• Opportunity to generate more wealth
• Shows initial vs. recommended approach
• Clear steps to put guidance into action
• Approach shown in context of Income Plan
• Completed online or with advisor rep
For illustrative purposes only.
Ongoing monitoring and management featuring investment advice for all retirement resources
High-touch welcome experience helps set expectations and promotes personalization
Ongoing monitoring and management, updating members when changes are made
To and through retirement with Income+
Fees no more than 0.60%*annually with discounts for higher balances
Professional Management
Income+ for Professional Management Members Provides
• Help from VRA Advisor Representatives ─ Personalized conversation about retirement
goals, and resources ─ Personalized Income+ Welcome Kit ─ Withdrawals for unexpected expenses ─ Review payouts and “pay increases” ─ Discuss changes to personal situation
• Balance safety and growth leading to/in
retirement with Income portfolio
• Maintain savings, bridge Social
Security gap • Manage payouts to age 85
• Potential for lifetime payouts* with “annuity reserve”
*Lifetime income guarantee requires out-of-plan annuity purchase. Issuer minimum requirements may apply. Voya does not guarantee payout amounts or payouts for life.
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Executive Summary
Executive Summary
Assets and Cash Flow – Total plan assets = $2.1 billion as of December 31, 2017 – Net cash flow was a positive $7 million
Rollover in contributions were $16.8 million Participants with Roth elections 3,604 Roth contributions were $2.0 million for the quarter
Investment Composition – The LifePath Options hold 29% of plan assets – The Small Company Stock Option is second with 13% of plan assets, average balance of $23,528 – The Socially Responsible Option had 1,097 participants with a balance, average balance of $9,540 – The SCHWAB Brokerage account had 170 participants with a balance, average balance of $62,697
Participant Activity – Web sustained over 25,000 hits per month on average – Web visitors averaged 1,441 web-based transactions each month – PSR transactions averaged 314 per month – Mobile transactions averaged 68 per month
State of Oregon Digital Engagement Report1/1/2017 to 12/31/2017
myOrangeMoney Engagement
31% of participant(s) took action after using myOrangeMoney
1,063 participant(s) changed fund allocation
2,205 participant(s) changed deferral amt: on average from $498 to $565
Personal Financial Dashboard EngagementUsed the Personal Financial Dashboard (PFD) 696
Activity # of Participants
31% of participant(s) took action after using the PFD
Created an acon plan 289 (42%)
Took acon aer using PFD 214 (31%)
172 participant(s) changed deferral amt: on average from $452 to $473
102 participant(s) changed fund allocation
Viewed myOrangeMoney 10,922 (71%)
Logged in with access to myOrangeMoney 15,337
Activity # of Participants
Engaged and interacted with myOrangeMoney 8,713 (80%)
Took Acon aer using myOrangeMoney 2,726 (31%)
For plan sponsor use onlyData above is based on parcipant acvity for the me period specified in above tle ..
Rollover Summary Q4 2017
Institution # of Rollovers % of Total $ Rolled
PERS Purchase of Service 112 42% $1,060,755
Vanguard 18 7% $3,939,076
Edward Jones 17 6% $1,419,341
Pershing 9 4% $1,844,669
Fidelity 8 3% $1,243,168
All Others 100 38% $10,253,035
Institution # of Rollovers % of Total $ Rolled
IAP 248 54% $17,918,801
All Others 76 46% $4,525,719
OSGP Rollovers Out
OSGP Rollovers In
Institution # of Rollovers % of Total $ Rolled
OSGP 248 8% $17,918,801
All Others 2,694 92% $171,653,565
IAP Rollovers Out
Participant Status Summary
As of December 31, 2017
60%
14%
0%4%
22%Active, Contributing
Active, NotContributing
Suspended
Terminated,ReceivingInstallments
Participant Status Number of Participants
Active, Contributing 17,509
Active, Not Contributing 4,035
Suspended 53
Terminated, Receiving Installments 1,286
Terminated with a Balance 6,420
Total: 29,303
As of September 30, 2017
60%
14%
0%4%
22%Active, Contributing
Active, NotContributing
Suspended
Terminated,ReceivingInstallments
Participant Status Number of Participants
Active, Contributing 16,753
Active, Not Contributing 4,572
Suspended 62
Terminated, Receiving Installments 1,249
Terminated with a Balance 6,222
Total: 28,858
For Plan Sponsor use only
Net Cash Flow and Earnings by Quarter
1Q 2017 2Q 2017 3Q 2017 4Q 2017 Last 12 monthsBeginning Balance 1,851,507,870$ 1,922,038,933$ 1,974,168,850$ 2,058,121,477$ 1,851,507,870$ Net Cash Flow 1,814,314$ 6,793,925$ 12,897,834$ 6,869,703$ 28,375,776$ Investment Earnings 68,716,749$ 45,335,992$ 71,054,793$ 82,716,909$ 267,824,443$ Ending Balance 1,922,038,933$ 1,974,168,850$ 2,058,121,477$ 2,147,708,089$ 2,147,708,089$
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Outreach Team Update
For Plan Sponsor use only
Outreach activities
Employer Contact Visits Presentations Presentation
Attendance Group
Meetings
Group meeting
Attendance
Benefit Fairs 1-on-1s Phone Meetings
102 118 1,365 46 670 15 425 48
Individual Updates • Wes• Karen• Justin• Jack
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Communications Update
Retirement Expo ’17 – October 12, 2017
Post-Event: 67% increase of deferral changes in Q4 compared to average of Q1 – Q3 1,846 deferral increases compared to 465 deferral decreases in Q4 614 participants started contributing compared to 136 participants who stopped
contributing in Q4
Expo
Retirement Expo ’17 – October 12, 2017
Modest increase in web and mobile traffic the week following the Expo
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Marketing and Communications
COMPLETED Retirement Expo ‘17
Event materials Promotional items “Picture Yourself in Retirement” Post-Expo survey
IN PROCESS Growyourtomorrow.com
eBook layout/design completed eBook content in final review
2018 OSGP communication strategy Managed accounts launch strategy
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Fourth Quarter 2017
Cash Flow Summary Period Ending December 31, 2017
OREGON SAVINGS GROWTH PLAN
Cash In 22,446,982.35Employee Before-tax Contributions
Employee After-tax Contributions 0.00
1,997,510.29Roth 457 Contributions
Roth 457 Conversion 26,883.88
Roth Qual Plan Conversion 2,790.72
16,861,317.80Rollover Contributions
0.00Employer Contributions
Loan Repayments 1,356,671.35
Conversions In 0.00
Transfers In 47,298,686.53
1,248,741.20Other
Total Cash In $91,239,584.12
Cash Out 5,937,063.41Withdrawals
4,186,826.87Installment Payments
23,844,120.81Terminations
1,356,799.44Loans Issued
Conversions Out 1,448,382.89
13,042.41Fees
Transfers Out 46,209,656.99
1,248,741.20Other
($84,244,634.02)Total Cash Out
$6,994,950.10 Net Cash Flow
0M
5M
10M
15M
20M
25M
30M
35M
40M
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Cash In Cash Out Net Cash
$33,042,615.50 $33,862,436.83 -$819,821.33Jan 2017
$32,871,566.71 $30,679,280.89 $2,192,285.82Feb 2017
$38,159,774.41 $37,608,975.90 $550,798.51Mar 2017
$27,339,098.93 $29,630,639.36 -$2,291,540.43Apr 2017
$26,521,271.96 $22,403,865.71 $4,117,406.25May 2017
$27,496,254.93 $22,381,679.75 $5,114,575.18Jun 2017
$28,883,854.36 $24,816,733.15 $4,067,121.21Jul 2017
$30,097,566.85 $31,294,761.45 -$1,197,194.60Aug 2017
$37,998,103.20 $28,230,156.79 $9,767,946.41Sep 2017
$32,141,875.33 $24,360,788.58 $7,781,086.75Oct 2017
$29,455,663.38 $26,816,355.64 $2,639,307.74Nov 2017
$29,642,045.41 $33,067,489.80 -$3,425,444.39Dec 2017
$373,649,690.97 $345,153,163.85 $28,496,527.12
Investment Balances by QuarterPeriod Ending December 31, 2017
OREGON SAVINGS GROWTH PLAN
Q1 2017 Q2 2017 Q3 2017 Q4 2017
SHORT TERM FIXED OPTION $45,805,749.20 $45,226,393.41 $46,045,575.21 $45,501,334.78
STABLE VALUE OPTION $210,707,495.90 $210,961,093.72 $212,697,810.19 $209,016,762.63
LIFEPATH RETIREMENT FUND $186,592,341.17 $188,420,115.68 $192,641,957.77 $197,348,614.30
LIFEPATH 2020 FUND $130,108,712.12 $132,725,637.12 $136,875,843.42 $142,576,805.15
LIFEPATH 2025 FUND $85,001,725.13 $90,128,969.15 $96,974,484.12 $104,146,041.93
LIFEPATH 2030 FUND $59,803,540.11 $64,390,838.17 $69,194,122.56 $74,832,482.05
LIFEPATH 2035 FUND $43,718,840.35 $47,235,275.51 $50,554,253.36 $55,227,937.91
LIFEPATH 2040 FUND $28,070,203.87 $30,438,488.56 $33,310,766.64 $36,574,887.96
LIFEPATH 2045 FUND $17,977,011.81 $20,459,040.39 $22,473,107.32 $24,492,817.46
LIFEPATH 2050 FUND $16,843,706.34 $18,160,028.49 $19,842,524.45 $21,778,472.31
LIFEPATH 2055 FUND $6,098,902.41 $6,691,552.99 $7,257,877.95 $8,050,315.65
LIFE PATH 2060 $2,227,212.86 $2,749,824.62 $3,646,516.24 $4,265,482.77
ACTIVE FIXED INCOME OPTION $112,038,826.86 $113,554,823.44 $115,693,372.86 $115,491,315.58
REAL RETURN OPTION $2,842,594.24 $2,999,729.22 $3,181,490.88 $3,486,781.41
SOCIALLY RESPONSIBLE INV OPT $6,369,838.96 $7,696,890.28 $8,527,613.73 $10,465,548.66
LARGE COMP VALUE STOCK OPTION $190,609,078.50 $188,540,970.26 $192,009,518.66 $199,538,949.61
STOCK INDEX OPTION $220,356,454.76 $226,959,618.57 $235,837,261.37 $249,498,130.43
LARGE COMP GROWTH STOCK OPTION $186,238,646.80 $198,670,880.01 $214,196,608.42 $233,014,949.22
INTERNATIONAL STK OPTION $97,156,731.86 $105,532,633.02 $115,469,056.59 $121,714,238.90
Investment Name
Q1 2017 Q2 2017 Q3 2017 Q4 2017
SMALL COMPANY STOCK OPTION $253,245,213.67 $251,824,604.58 $259,635,118.34 $267,212,691.50
SCHWAB PCRA $7,764,210.09 $8,353,727.51 $9,205,159.89 $10,658,491.84
Asset Class by QuarterPeriod Ending December 31, 2017
OREGON SAVINGS GROWTH PLAN
Q1 2017 Q2 2017 Q3 2017 Q4 2017
International Equity $97,156,731.86 $105,532,633.02 $115,469,056.59 $121,714,238.90
Lifestyle/Balanced $576,442,196.17 $601,399,770.68 $632,771,453.83 $669,293,857.49
Stable Value/Money Market $256,513,245.10 $256,187,487.13 $258,743,385.40 $254,518,097.41
Stock Index $409,437,695.80 $428,630,227.80 $453,215,360.67 $485,999,861.06
US Fixed Income $112,038,826.86 $113,554,823.44 $115,693,372.86 $115,491,315.58
US Large Cap Equity $196,978,917.46 $196,237,860.54 $200,537,132.39 $210,004,498.27
US Small Cap Equity $253,245,213.67 $251,824,604.58 $259,635,118.34 $267,212,691.50
Asset Class
Contributions by FundPeriod Ending December 31, 2017
OREGON SAVINGS GROWTH PLAN
Q1 2017 Q2 2017 Q3 2017 Q4 2017
ACTIVE FIXED INCOME OPTION $1,829,179.53 $1,997,722.48 $1,720,499.21 $1,792,670.35
INTERNATIONAL STK OPTION $1,706,567.55 $1,693,832.01 $1,829,129.12 $2,199,478.44
LARGE COMP GROWTH STOCK OPTION $2,954,401.64 $2,949,499.29 $3,023,141.98 $3,434,815.90
LARGE COMP VALUE STOCK OPTION $2,999,618.18 $3,003,429.94 $3,132,384.84 $3,223,551.96
LIFE PATH 2060 $175,922.87 $219,934.26 $268,258.07 $245,248.85
LIFEPATH 2020 FUND $3,141,977.16 $2,619,458.55 $3,864,873.73 $3,666,549.59
LIFEPATH 2025 FUND $2,755,066.61 $2,368,615.99 $2,943,986.20 $3,557,380.86
LIFEPATH 2030 FUND $2,009,754.47 $2,153,955.94 $2,294,267.22 $3,052,632.69
LIFEPATH 2035 FUND $1,604,053.01 $2,023,295.18 $2,362,524.85 $2,282,318.24
LIFEPATH 2040 FUND $1,697,326.51 $1,574,759.13 $1,497,001.47 $1,596,200.38
LIFEPATH 2045 FUND $1,155,808.59 $1,303,919.66 $1,269,220.98 $1,204,011.79
LIFEPATH 2050 FUND $662,575.71 $702,344.44 $891,382.97 $928,477.01
LIFEPATH 2055 FUND $341,134.95 $385,855.85 $367,220.81 $417,560.21
LIFEPATH RETIREMENT FUND $2,334,436.63 $2,733,780.50 $2,614,667.67 $2,833,753.15
REAL RETURN OPTION $114,702.95 $78,549.38 $99,648.00 $182,850.68
SHORT TERM FIXED OPTION $902,637.05 $1,199,424.10 $1,010,997.15 $890,219.48
SMALL COMPANY STOCK OPTION $3,196,086.01 $3,141,914.93 $3,178,812.48 $3,292,128.31
SOCIALLY RESPONSIBLE INV OPT $226,428.90 $499,106.18 $265,030.95 $460,551.62
STABLE VALUE OPTION $2,869,390.21 $3,247,372.24 $3,554,967.79 $2,490,751.55
Investment Name
Q1 2017 Q2 2017 Q3 2017 Q4 2017
STOCK INDEX OPTION $3,864,220.62 $3,687,669.52 $3,242,356.16 $3,584,333.98
Total 36,541,289.15 37,584,439.57 39,430,371.65 41,335,485.04
Contributions by SourcePeriod Ending December 31, 2017
OREGON SAVINGS GROWTH PLAN
October 2017 November 2017 December 2017 Total
Employee Before-tax Contributions $7,192,857.94 $7,343,959.48 $7,893,849.45 $22,430,666.87
Rollover Contributions $8,489,214.33 $4,603,400.10 $3,768,703.37 $16,861,317.80
Roth 457 Contributions $657,797.84 $661,003.20 $678,709.25 $1,997,510.29
Roth 457 Conversion $7,341.94 $7,341.94 $12,200.00 $26,883.88
Roth Qual Plan Conversion $0.00 $0.00 $2,790.72 $2,790.72
Total $16,347,212.05 $12,632,020.20 $12,356,252.79 $41,335,485.04
Source Name
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Total
Employee Before-tax Contributions $21,235,681.11 $21,666,064.91 $21,174,267.30 $22,430,666.87 $86,506,680.19
Rollover Contributions $13,564,951.88 $14,109,121.78 $16,337,871.92 $16,861,317.80 $60,873,263.38
Roth 457 Contributions $1,643,666.90 $1,808,386.38 $1,850,523.06 $1,997,510.29 $7,300,086.63
Roth 457 Conversion $59,071.59 -$1,500.00 $63,759.37 $26,883.88 $148,214.84
Roth Qual Plan Conversion $0.00 $0.00 $0.00 $2,790.72 $2,790.72
Total $36,541,289.15 $37,584,439.57 $39,430,371.65 $41,335,485.04 $154,891,585.41
Source Name
Total DistributionsPeriod Ending December 31, 2017
0M
4M
8M
12M
16M
20M
24M
28M
32M
Q1 2017 Q2 2017 Q3 2017 Q4 2017
$1,926,002.68 $2,063,220.89$1,009,869.32
$5,937,063.41
$30,047,750.96$29,048,676.74
$25,636,960.11
$28,030,947.68
Active Terminated
$10,936,156.30
$112,764,335.49
Active
Terminated
Total Distributions
Before-Tax Contribution Amount Summary Period Ending December 31, 2017
OREGON SAVINGS GROWTH PLAN
0
2,000
4,000
6,000
8,000
10,000
12,000<
10
10-1
9
20-2
9
30-3
9
40-4
9
50-5
9
60-6
9
70-7
9
80-8
9
90-9
9
100-
999
1000
-199
9
2000
-299
9
3000
-399
9
4000
-499
9
5000
-599
9
6000
-699
9
8000
-899
9
9000
-999
9
<=
100
00
1 10
1,15
0
155
82
1,65
7
84
499
48 27
10,8
65
1,81
4
615
92 20 11 3 1 3 5
Contribution Dollars
Nu
mb
er o
f P
arti
cip
ants
Total Number of Participants: 17,142
Roth Contribution Amount Summary As of December 31, 2017
OREGON SAVINGS GROWTH PLAN
0
400
800
1,200
1,600
2,000
2,40010
-19
20-2
9
30-3
9
40-4
9
50-5
9
60-6
9
70-7
9
80-8
9
90-9
9
100-
999
1000
-199
9
2000
-299
9
3000
-399
9
4000
-499
9
6
463
50 29
631
24
142
14 7
2,10
0
97
37 3 1
Contribution Amount
Nu
mb
er o
f P
arti
cip
ants
Total Number of Participants: 3,604
Average Contribution AmountPeriod Ending December 31, 2017
OREGON SAVINGS GROWTH PLAN
0
100
200
300
400
500
600
700
800
< 21 21-30 31-40 41-50 51-60 61 +
$50.
00
$163
.98
$246
.87 $3
67.5
8
$535
.76
$709
.52
Before-tax $
Age Group
Ave
rage
Am
ount
$50.00< 21$163.9821-30$246.8731-40$367.5841-50$535.7651-60$709.5261 +
$435.74Average
Participants with Balances by Number of InvestmentsPeriod Ending December 31, 2017
OREGON SAVINGS GROWTH PLAN
14.07%11.41%
10.90%9.40%
6.99%4.71%3.04%2.04%1.76%
35.69%
1 104582 41223 33444 31945 27556 20477 13798 8919 59710 or More 516
Total: 29303
Number ofInvestments
Number ofParticipants
Average Number of Funds: 3
Participants with a Balance in a Single InvestmentPeriod Ending December 31, 2017
OREGON SAVINGS GROWTH PLAN
0
200
400
600
800
1,000
1,200
1,400
SH
OR
T T
ER
M F
IXE
D O
PT
ION
ST
AB
LE V
ALU
E O
PT
ION
LIF
EP
AT
H R
ET
IRE
ME
NT
FU
ND
LIF
EP
AT
H 2
020
FU
ND
LIF
EP
AT
H 2
025
FU
ND
LIF
EP
AT
H 2
030
FU
ND
LIF
EP
AT
H 2
035
FU
ND
LIF
EP
AT
H 2
040
FU
ND
LIF
EP
AT
H 2
045
FU
ND
LIF
EP
AT
H 2
050
FU
ND
LIF
EP
AT
H 2
055
FU
ND
LIF
E P
AT
H 2
060
AC
TIV
E F
IXE
D IN
CO
ME
OP
TIO
N
RE
AL
RE
TU
RN
OP
TIO
N
SO
CIA
LLY
RE
SP
ON
SIB
LE IN
V O
PT
LAR
GE
CO
MP
VA
LUE
ST
OC
K O
PT
ION
ST
OC
K IN
DE
X O
PT
ION
LAR
GE
CO
MP
GR
OW
TH
ST
OC
K O
PT
ION
INT
ER
NA
TIO
NA
L S
TK
OP
TIO
N
SM
ALL
CO
MP
AN
Y S
TO
CK
OP
TIO
N
SC
HW
AB
PC
RA
184
686
815746
967
1,101
1,222 1,2541,180
771
400
227109
9 3283
273169
37
190
3
Num
ber
of P
artic
ipan
ts
Loan Summary
OREGON SAVINGS GROWTH PLAN
Period Ending December 31, 2017
Total Participants with Loans: 1,645
Total Number of Outstanding Loans: 1,645
Number of General Loans: 1,570
Number of Residential Loans: 75
Total Outstanding Loan Balance: $12,443,719.75
General Loan Balance: $11,304,341.74
Residential Loan Balance: $1,139,378.01
Number of Re-amortized Loans during the period: 6
Number of Loan Defaults during the period: 0
Balances by Investment
OREGON SAVINGS GROWTH PLAN
As of December 31, 2017
Average Participant
Percentage of Plan AssetsInvestment BalanceInvestment
Number of Participants
SHORT TERM FIXED OPTION $45,501,334.78 $14,421.98 2.13%3,155STABLE VALUE OPTION $209,016,762.63 $28,437.65 9.79%7,350LIFEPATH RETIREMENT FUND $197,348,614.30 $52,528.24 9.24%3,757LIFEPATH 2020 FUND $142,576,805.15 $43,270.65 6.68%3,295LIFEPATH 2025 FUND $104,146,041.93 $30,363.28 4.88%3,430LIFEPATH 2030 FUND $74,832,482.05 $22,465.47 3.51%3,331LIFEPATH 2035 FUND $55,227,937.91 $17,061.46 2.59%3,237LIFEPATH 2040 FUND $36,574,887.96 $12,690.80 1.71%2,882LIFEPATH 2045 FUND $24,492,817.46 $10,205.34 1.15%2,400LIFEPATH 2050 FUND $21,778,472.31 $11,939.95 1.02%1,824LIFEPATH 2055 FUND $8,050,315.65 $8,456.21 0.38%952LIFE PATH 2060 $4,265,482.77 $8,429.81 0.20%506ACTIVE FIXED INCOME OPTION $115,491,315.58 $17,886.22 5.41%6,457REAL RETURN OPTION $3,486,781.41 $7,058.26 0.16%494SOCIALLY RESPONSIBLE INV OPT $10,465,548.66 $9,540.15 0.49%1,097LARGE COMP VALUE STOCK OPTION $199,538,949.61 $19,801.42 9.35%10,077STOCK INDEX OPTION $249,498,130.43 $26,466.33 11.69%9,427LARGE COMP GROWTH STOCK OPTION $233,014,949.22 $21,138.98 10.91%11,023INTERNATIONAL STK OPTION $121,714,238.90 $13,025.92 5.70%9,344SMALL COMPANY STOCK OPTION $267,212,691.50 $23,528.46 12.52%11,357SCHWAB PCRA $10,658,491.84 $62,697.01 0.50%170
Total Investment Balance: $2,134,893,052.05
$12,358,515.15Total Loan Fund:
Balance by Participant StatusPeriod Ending December 31, 2017
OREGON SAVINGS GROWTH PLAN
Participant Status Participant Balance
51%7%0%0%8%
33%
Active Contributing
Active, Not Contributing
Eligible, Not Participating
Suspended
Terminated, ReceivingInstallmentsTerminated with aBalance
$1,099,160,570.81Active Contributing
Active, Not Contributing
Suspended
Terminated, Receiving Installments
Terminated with a Balance
$3,043,488.75
$180,421,850.87
$717,675,585.05
Total: $2,147,692,304.00
147,390,808.52
Asset Class SummaryPeriod Ending December 31, 2017
OREGON SAVINGS GROWTH PLAN
0M
100M
200M
300M
400M
500M
600M
700M
StableValue/Money
Market
US FixedIncome
LifestyleBalanced
US Large CapEquity
US Small CapEquity
InternationalEquity
Stock Index
$254
,518
,098
$115
,491
,316
$669
,293
,857
$210
,004
,498
$267
,212
,691
$121
,714
,239
$485
,999
,860
To
tal B
alan
ce
OREGON SAVINGS GROWTH PLAN
Period Ending December 31, 2017
Asset Class Summary
Asset Class Balance Percentage of Total AssetsStable Value/Money Market $254,518,098 11.85%
US Fixed Income $115,491,316 5.38%
Lifestyle/Balanced $669,293,857 31.16%
US Large Cap Equity $210,004,498 9.78%
US Small Cap Equity $267,212,691 12.44%
International Equity $121,714,239 5.67%
Stock Index $485,999,860 22.63%
Asset Class Balances by Age GroupPeriod Ending December 31, 2017
OREGON SAVINGS GROWTH PLAN
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
< 21 21-30 31-40 41-50 51-60 > 61
31%
6% 10%16% 14% 10%
6%8%
11% 11%10%
1%
2%
3% 5%6%
30%
16%
20%
26% 25%22%
2%
3%
4% 8%14%
38%
65%50%
32% 30% 32%
4% 6% 8% 6% 5%
International Equity
Lifestyle/Balanced
Stable Value/MoneyMarket
Stock Index
US Fixed Income
US Large Cap Equity
US Small Cap Equity
Age Group
21 - 30< 21 31 - 40 41 - 50 51 - 60 > 61
$757 $6,514,025 $74,401,632 $269,495,158 $503,998,062 $371,524,125
4 1,273 4,357 6,021 6,577 3,349
Age Range
Total Balance
Total Participants
Transfer Activity by InvestmentPeriod Ending December 31, 2017
OREGON SAVINGS GROWTH PLAN
Investment Name Transfers In Transfers Out Net
SHORT TERM FIXED OPTION $2,412,508.12 -$2,530,263.78 -$117,755.66
STABLE VALUE OPTION $5,580,695.33 -$5,976,478.03 -$395,782.70
LIFEPATH RETIREMENT FUND $3,218,061.55 -$1,599,335.97 $1,618,725.58
LIFEPATH 2020 FUND $2,502,864.21 -$2,427,143.32 $75,720.89
LIFEPATH 2025 FUND $2,557,114.26 -$1,914,130.69 $642,983.57
LIFEPATH 2030 FUND $1,280,948.53 -$1,099,820.75 $181,127.78
LIFEPATH 2035 FUND $961,151.38 -$612,224.56 $348,926.82
LIFEPATH 2040 FUND $532,741.55 -$333,712.57 $199,028.98
LIFEPATH 2045 FUND $536,265.92 -$420,090.53 $116,175.39
LIFEPATH 2050 FUND $308,590.78 -$188,140.71 $120,450.07
LIFEPATH 2055 FUND $240,264.52 -$145,208.76 $95,055.76
LIFE PATH 2060 $411,513.34 -$159,564.55 $251,948.79
ACTIVE FIXED INCOME OPTION $3,328,428.69 -$3,802,048.13 -$473,619.44
REAL RETURN OPTION $356,449.09 -$211,874.41 $144,574.68
SOCIALLY RESPONSIBLE INV OPT $1,418,042.11 -$385,011.51 $1,033,030.60
LARGE COMP VALUE STOCK OPTION $2,471,722.05 -$5,605,635.17 -$3,133,913.12
STOCK INDEX OPTION $3,357,480.21 -$3,634,751.51 -$277,271.30
LARGE COMP GROWTH STOCK OPTION $7,970,827.51 -$5,438,212.17 $2,532,615.34
INTERNATIONAL STK OPTION $2,680,836.13 -$2,866,800.29 -$185,964.16
SMALL COMPANY STOCK OPTION $3,748,514.00 -$6,531,208.13 -$2,782,694.13
SCHWAB PCRA $1,423,667.25 -$328,001.45 $1,095,665.80
Participant Contact SummaryPeriod Ending December 31, 2017
OREGON SAVINGS
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
Jan-2017 Feb-2017 Mar-2017 Apr-2017 May-2017 Jun-2017 Jul-2017 Aug-2017 Sep-2017 Oct-2017 Nov-2017 Dec-2017
1,71
6
1,48
5
1,71
6
1,52
4
1,30
4
1,03
8
1,22
5
1,06
5
978
1,22
9
1,14
1
1,42
54,11
3
4,17
9
4,23
6
3,74
9
3,46
3
3,07
3
3,25
1
2,77
4
2,72
0
3,23
9
2,95
8
3,40
3
42,3
44
39,1
12
21,8
05
18,3
07
18,7
40
18,1
13 20,4
35
18,8
01
20,4
21
25,5
14
24,2
25
27,9
80
7,80
8
6,13
3
1,09
1
556
4,33
1
4,25
0
5,40
6
4,28
9
4,39
5
5,05
5
4,75
0
5,23
8
Total PSR Calls Total IVR Calls Total Web Visits Unique Visitors
Num
ber
of C
onta
cts
Paperless Transaction SummaryPeriod Ending December 31, 2017
OREGON SAVINGS
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
1/31/17 2/28/17 3/31/17 4/30/17 5/31/17 6/30/17 7/31/17 8/31/17 9/30/17 10/31/17 11/30/17 12/31/17
408
304
264
209
210 24
4 327
278
227
254 32
6 363
64 38 25 17 26 19 40 24 13 15 12 12
66 70 44 53 52 48 48 75
43 69 62 73
1,77
9
1,29
6
1,48
2
1,08
9 1,16
7
1,17
3
1,42
5
1,25
8
1,18
4
1,45
9
1,31
3
1,55
2
PSR Transactions IVR Transactions MOB Transactions Web Transactions
Num
ber
of T
rans
actio
ns
IVR ActivityPeriod Ending December 31, 2017
OREGON SAVINGS
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
0%
10%
20%
30%
40%
50%
60%
Jan-2017 Feb-2017 Mar-2017 Apr-2017 May-2017 Jun-2017 Jul-2017 Aug-2017 Sep-2017 Oct-2017 Nov-2017 Dec-2017
Percent of IVR CallsTransferred to PSR
IVR Calls Outside ofPSR Hours
IVR Calls During PSRHours
Num
ber
of IV
R C
alls
Percentage of C
alls Dropped to P
SR
Percent of IVR Calls Transferred to PSR IVR Calls Transferred to PSRIVR Calls Outside of PSR HoursIVR Calls During PSR HoursTotal IVR CallsDate
Jan-2017 4,113 3,075 1,038 1,786 58.08
Feb-2017 4,179 2,959 1,220 1,536 51.91
Mar-2017 4,236 3,141 1,095 1,774 56.48
Apr-2017 3,749 2,704 1,045 1,564 57.84
May-2017 3,463 2,475 988 1,321 53.37
Jun-2017 3,073 2,133 940 1,055 0.00
Jul-2017 3,251 2,217 1,034 1,278 0.00
Aug-2017 2,774 2,005 769 1,082 0.00
Sep-2017 2,720 1,803 917 1,010 0.00
Oct-2017 3,239 2,224 1,015 1,318 0.00
Nov-2017 2,958 1,996 962 1,165 0.00
Dec-2017 3,403 2,321 1,082 1,431 0.00
PSR ActivityPeriod Ending December 31, 2017
OREGON SAVINGS
Reporting Period Average Speed of Answer (Seconds)PSR Call Volume Average Call Length (Minutes)
1,716Jan-2017 4.97 55
1,485Feb-2017 4.62 38
1,716Mar-2017 5.27 39
1,524Apr-2017 5.02 38
1,304May-2017 5.48 14
1,038Jun-2017 5.55 20
1,225Jul-2017 5.52 56
1,065Aug-2017 5.37 23
978Sep-2017 5.27 51
1,229Oct-2017 5.67 102
1,141Nov-2017 5.67 34
1,425Dec-2017 5.87 7
PSR Activity Period Ending December 31, 2017
OREGON SAVINGS
Percent of Abandoned Calls Reporting Period
Number of Abandoned Calls
PSR Call Volumes
Jan-2017 1,716 3.08% 55
Feb-2017 1,485 2.73% 42
Mar-2017 1,716 2.65% 47
Apr-2017 1,524 2.17% 34
May-2017 1,304 1.14% 15
Jun-2017 1,038 0.01% 17
Jul-2017 1,225 0.04% 53
Aug-2017 1,065 0.01% 17
Sep-2017 978 0.03% 32
Oct-2017 1,229 0.06% 89
Nov-2017 1,141 0.02% 24
Dec-2017 1,425 0.00% 6
Paperless Transactions by ChannelPeriod Ending December 31, 2017
OREGON SAVINGS GROWTH PLAN
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Add
ress
Cha
nge
Ban
king
Info
rmat
ion
Ben
efic
iary
Ele
ctio
n
Bon
us C
ontr
ibut
ion
Cat
ch-U
p C
ontr
ibut
ion
Con
trib
utio
n R
ate
Cha
nge
Con
trib
utio
n R
ate
Esc
alat
or
Div
iden
d E
lect
ion
Doc
umen
ts/P
acka
ge R
eque
st
Fun
d to
Fun
d T
rans
fer
In-S
ervi
ce W
ithdr
awal
Inve
stm
ent E
lect
ion
Cha
nge
Inve
stm
ent R
eallo
catio
n
Reb
alan
ce E
lect
ion
Sum
of L
oan
Rep
aym
ent A
CH
New
Loa
n Is
sued
Onl
ine
Loan
Pay
off v
ia A
CH
Ter
min
atio
n D
istr
ibut
ion
0 0 0 0 0234
0 0
190
118
203
580 1 0
15
24 98
0 0 0 0 0
12
0 0
4
0
0
20 0 0
21
0 0
0 0 0 0 0
99
0 0
0
80
0
25
0 0 0
0
0 0
0 0 0 0 0
1,935
0 0
0
1,191
0
998
0
93
0
107
0 0
WEB MOB IVR PSR
Paperless Transactions by Channel (IVR/PSR/WEB/MOB Combined)Period Ending December 31, 2017
OREGON SAVINGS GROWTH PLAN
Paperless Transaction Description Transaction Volume
0Address Change
Banking Information 0
Beneficiary Election 0
Bonus Contribution 0
Catch-up Contribution 0
Contribution Rate Change 2,280
Contribution Rate Escalator 0
Dividend Election 0
Document/Package Request 194
Fund to Fund Transfer 1,389
In-service Withdrawal 203
Investment Election Change 1,083
Investment Reallocation 0
Rebalance Election 94
Loan Repayment ACH Election 0
New Loans Issued 143
Online Loan Payoff via ACH 24
Termination Distribution 98
Enrollments for the Period: 2
Balances by Age and StatusPeriod Ending December 31, 2017
OREGON SAVINGS GROWTH PLAN
0
100,000,000
200,000,000
300,000,000
400,000,000
500,000,000
< 21 21-29 30-39 40-49 50-59 60-69 >= 70
Active Suspended Terminated
< 21 21-29 30-39 40-49 50-59 60-69 >= 70
Active $757 $4,326,515 $64,023,547 $249,046,260 $484,418,800 $395,521,833 $36,902,899
Suspended $0 $4,816 $24,470 $72,907 $846,657 $2,046,893 $0
Terminated $106 $288,203 $5,051,991 $23,562,447 $151,951,099 $482,435,742 $234,367,109
Status
Average Balances by Age and StatusPeriod Ending December 31, 2017
OREGON SAVINGS GROWTH PLAN
0K
20K
40K
60K
80K
100K
120K
140K
160K
< 21 21-29 30-39 40-49 50-59 60-69 >= 70
Active Suspended Terminated
< 21 21-29 30-39 40-49 50-59 60-69 >= 70
Active $189 $4,340 $15,472 $42,499 $73,043 $106,956 $145,861
Suspended $0 $2,408 $4,078 $5,608 $60,475 $120,405 $0
Terminated $106 $3,695 $11,972 $36,139 $110,671 $146,237 $127,097
Status
Median Balance by Age and StatusPeriod Ending December 31, 2017
OREGON SAVINGS GROWTH PLAN
0K
20K
40K
60K
80K
100K
< 21 21-29 30-39 40-49 50-59 60-69 >= 70
Active Suspended Terminated
< 21 21-29 30-39 40-49 50-59 60-69 >= 70
Active $158 $1,875 $6,015 $17,366 $30,407 $53,777 $62,693
Suspended $0 $2,408 $424 $4,228 $7,942 $30,214 $0
Terminated $106 $2,059 $5,552 $14,701 $57,817 $87,867 $75,322
Status
Fourth Quarter 2017 Performance Review
February 20, 2018
James Callahan, CFA Head of Fund Sponsor Consulting
Anne Heaphy Fund Sponsor Consulting
Ben Taylor Defined Contribution Research
2 Knowledge. Experience. Integrity.
What Worked in 2017?
● Risk assets led the markets in 2017 with strong results coming from Emerging Markets, the Tech sector and High Yield bonds.
● Industrial production strengthened across the globe, broadening global growth. Earnings benefited from this synchronized global growth and were the main driver of strong returns.
● Emerging Markets were fueled by a weakening US Dollar, synchronized global growth, and strong oil and commodity prices. China was the country leader.
● The Technology sector dominated globally throughout 2017. Within the U.S., “FAAMG” stocks drove the outperformance due to exceptional cash flow generation in global markets. The sector represented 24% of the S&P 500 and 38% of the Russell 1000 Growth at year-end.
Source: Bloomberg, MSCI, William Blair; returns as of 11/29/17. FAAMG: Facebook, Apple, Amazon, Microsoft, Google/Alphabet
3 Knowledge. Experience. Integrity.
Large Cap Equity QuarterLast
Last Year YearsLast 3
YearsLast 5
YearsLast 10
YearsLast 15
Russell 1000 Index 6.59 21.69 11.23 15.71 8.59 10.18Russell 1000 Growth 7.86 30.21 13.79 17.33 10.00 10.70Russell 1000 Value 5.33 13.66 8.65 14.04 7.10 9.55Mid Cap EquityRussell Midcap Index 6.07 18.52 9.58 14.96 9.11 12.07Russell Midcap Growth 6.81 25.27 10.30 15.30 9.10 11.96Russell Midcap Value 5.50 13.34 9.00 14.68 9.10 11.96Small Cap EquityRussell 2000 Index 3.34 14.65 9.96 14.12 8.71 11.17Russell 2000 Growth 4.59 22.17 10.28 15.21 9.19 11.57Russell 2000 Value 2.05 7.84 9.55 13.01 8.17 10.66
For Periods ended December 31, 2017
U.S. Equity Market
● US equity market continued upward trajectory with exceptionally low volatility.
● Investors embraced accelerating global economic growth and largely ignored turbulent political landscape and record number of global catastrophes.
● Corporate earnings registered double-digit growth, receiving boost from US tax reform.
● Growth outperformed Value across market cap range. Momentum stocks (+38%) posted biggest gain since 1999.
● Risk assets continued to lead: Tech (+9%) driven by Apple, Amazon and Microsoft, all up 10-20% for quarter and 36%-56% for year due to exceptional cash flow generation in global markets. Tech represents 24% of S&P 500 and 38% of Russell 1000 Growth.
● Discretionary (+10%) benefited from strong year-end sales and positive tax reform impact (carries highest industry tax rate). “Amazon Effect” remains a threat.
● Managers selling winners and reallocating to existing holdings; bench of ideas is slim due to stretched valuations.
Source: Callan, Russell Investment Group
Economic Sector Quarter Performance
4 Knowledge. Experience. Integrity.
Non-U.S. Equity QuarterLast
Last Year YearsLast 3
YearsLast 5
YearsLast 10
YearsLast 15
MSCI ACWI ex USA 5.00 27.19 7.83 6.80 1.84 8.75MSCI ACWI ex USA Growth 5.77 32.01 9.29 7.97 2.40 8.66MSCI ACWI ex USA Value 4.23 22.66 6.31 5.58 1.23 8.78MSCI EAFE 4.23 25.03 7.80 7.90 1.94 8.11MSCI EAFE (local) 3.66 15.23 8.54 11.44 3.30 7.39Regional EquityMSCI Europe 2.21 25.51 6.69 7.37 1.34 8.04MSCI Europe (local) 1.27 13.06 8.34 10.10 3.52 7.59MSCI Japan 8.49 23.99 11.62 11.16 3.17 6.97MSCI Japan (local) 8.57 19.75 9.33 17.20 3.25 6.60MSCI Pacific ex Japan 7.01 25.88 7.51 5.46 3.55 11.64MSCI Pacific ex Japan (local) 7.09 19.43 8.61 9.53 4.14 9.68
For Periods ended December 31, 2017
Non-U.S. Equity Market ● Strong quarter for Non-US, particularly
Emerging Markets (EM), led by Cyclicals. Inflection point in quarter as investors more willing to capitalize on synchronized global growth; began to rotate out of momentum winners into Financials, Energy and Materials. Non-US (+4.2%) trailed US (+6.4%).
● Tax reform, improving commodity prices and growth projections overcame Brexit fears and election uncertainty in Germany in a risk-on quarter.
● EM (+7.4%) outpaced developed markets (+4.2) for fourth consecutive quarter, fueled by soft US Dollar, synchronized global growth, strong oil and commodity prices, and renewed investor interest.
● Markets favored economically sensitive sectors: IT (+8.3%), Materials (+7.8%) and Discretionary (7.6%). Energy (+6.8%) up as commodity prices supported by distribution disruptions.
● U.S. Dollar fell against the EUR and GBP, boosting USD returns, but was flat to JPY.
● International Small Cap (+5.8%) modestly outperformed large/mid led by Asia. EM Small Cap (+9.2%) was best performer; EM SC Healthcare + 28% as changing demographics in China & S. Korea drove demand.
Emerging/Frontier Markets QuarterLast
Last Year YearsLast 3
YearsLast 5
YearsLast 10
YearsLast 15
MSCI Emerging Markets 7.44 37.28 9.10 4.35 1.68 12.31MSCI Emerging Markets (local) 5.68 30.55 10.51 7.98 4.14 12.56MSCI Frontier Markets 5.61 31.86 5.01 9.27 -1.35 8.56Non-U.S. Small Cap EquityMSCI EAFE Small Cap 6.05 33.01 14.20 12.85 5.77 12.24MSCI Em Mkts Small Cap 9.23 33.84 8.44 5.41 2.78 13.32
Sources: Callan, MSCI
5 Knowledge. Experience. Integrity.
Non-U.S. Equity Market
● Europe (+0.9%) reverted on Brexit negotiation concerns and political uncertainty following German elections. ECB also announced plans to curb quantitative easing in January 2018.
● Japan (+8.5%) was the best performer on elections and improved inflation expectations.
World ex USA
ACWI ex USA
China
Europe ex UK
Japan
Pacific
Pacific ex Japan
United Kingdom
Emerging Markets
as of December 31, 2017Non-U.S. Quarterly Performance (U.S. Dollar)
4.23%
5.00%
7.62%
0.90%
8.49%
7.99%
7.01%
5.72%
7.44%
Sources: Callan, MSCI
AustraliaAustria
BelgiumCanada
DenmarkFinlandFrance
GermanyHong Kong
IrelandIsrael
ItalyJapan
NetherlandsNew Zealand
NorwayPortugal
SingaporeSpain
SwedenSwitzerland
United Kingdom
Quarter ended 12/31/17
6.8
5.8
-1.5
4.3
2.2
-2.6
1.5
2.8
6.6
3.5
1.8
-2.3
-0.1
0.8
1.5
1.9
-2.0
10.1
-1.6
-3.8
1.8
0.8
1 Year ended 12/31/17
19.9
58.3
18.6
16.1
34.7
22.5
28.7
27.7
36.2
18.1
10.9
28.4
3.5
32.2
11.7
28.3
23.8
35.6
27.0
20.6
22.5
9.5
Developed Country Returns
6 Knowledge. Experience. Integrity.
Fixed Income Market ● US yield curve continued its flattening trend
reflecting benign inflation in face of strong labor market and Fed's bias toward less accommodative monetary policy. Market pricing in three rate hikes for 2018.
● The 2-year Treasury yield climbed 42 bps to close at 1.89%; 30-year Treasury yield fell 12 bps to end year at 2.74%.
● Fixed income volatility sits near historical lows. Strong global growth and loose monetary policy, as well as business and consumer confidence driving risk appetite.
● Spread sectors again outperformed Treasuries. Increasing comfort with credit fundamentals across corporates, consumers, and commercial real estate drove spreads tighter.
● Corporates outperformed for quarter & year; spreads reached post-crisis tight of 93 bps over Treasuries. – IG Credit strongest sector; tax reform may improve
profitability and negatively impact issuance.
– High yield aided by rising equity markets, but lagged IG. Tax reform to have potential negative impact on sector (limit on interest deductions) and issuance.
● EM Debt (+0.8%) supported by higher commodity prices and global growth.
Source: Callan, Bloomberg
Broad Fixed Income QuarterLast
Last Year YearsLast 3
YearsLast 5
YearsLast 10
YearsLast 15
Core Bond Style 0.49 3.96 2.65 2.48 4.63 4.67Core Bond Plus Style 0.59 4.90 3.26 3.03 5.30 5.51Bloomberg Aggregate 0.39 3.54 2.24 2.10 4.01 4.15Bloomberg Gov/Credit 0.49 4.00 2.38 2.13 4.08 4.20Bloomberg Government 0.05 2.30 1.40 1.28 3.23 3.52Bloomberg Credit 1.05 6.18 3.63 3.24 5.42 5.22Bloomberg Corp High Yield 0.47 7.50 6.35 5.78 8.03 8.98Long-TermBloomberg Long Gov/Credit 2.84 10.71 4.52 4.43 7.26 6.77Bloomberg Long Government 2.34 8.53 2.85 3.49 6.49 6.24Bloomberg Long Credit 3.18 12.21 5.68 5.11 7.72 7.17Intermediate-TermBloomberg Interm Aggregate -0.07 2.27 1.82 1.70 3.53 3.76Bloomberg Interm Gov/Credit -0.20 2.14 1.76 1.50 3.32 3.57Short-TermMoney Market Funds (net) 0.20 0.59 0.24 0.14 0.31 1.10
For Periods Ended December 31, 2017
7 Knowledge. Experience. Integrity.
Periodic Table of Investment Returns 1998-2017
S&P 500
28.58%
S&P 500
21.04%
S&P 500
-9.11%
S&P 500
-11.89%
S&P 500
-22.10%
S&P 500
28.68%
S&P 500
10.88%
S&P 500
4.91%
S&P 500
15.79%
S&P 500
5.49%
S&P 500
-37.00%S&P 500
26.47%
S&P 500
15.06%
S&P 500
2.11%
S&P 500
16.00%
S&P 500
32.39%
S&P 500
13.69%
S&P 500
1.38%
S&P 500
11.96%
S&P 500
21.83%
GrowthS&P 500
42.16%
GrowthS&P 500
28.24%
GrowthS&P 500
-22.08%
GrowthS&P 500
-12.73%
GrowthS&P 500
-23.59%
GrowthS&P 500
25.66%
GrowthS&P 500
6.13%
GrowthS&P 500
4.00%
GrowthS&P 500
11.01%
GrowthS&P 500
9.13%
GrowthS&P 500
-34.92%
GrowthS&P 500
31.57%
GrowthS&P 500
15.05%
GrowthS&P 500
4.65%
GrowthS&P 500
14.61%
GrowthS&P 500
32.75%
GrowthS&P 500
14.89%
GrowthS&P 500
5.52%
GrowthS&P 500
6.89%
GrowthS&P 500
27.44%
ValueS&P 500
14.68%
ValueS&P 500
12.73%
ValueS&P 500
6.08%
ValueS&P 500
-11.71%
ValueS&P 500
-20.85%
ValueS&P 500
31.79%
ValueS&P 500
15.71%
ValueS&P 500
5.82%
ValueS&P 500
20.81%
ValueS&P 500
1.99%
ValueS&P 500
-39.22%
ValueS&P 500
21.17%
ValueS&P 500
15.10%
ValueS&P 500
-0.48%
ValueS&P 500
17.68%
ValueS&P 500
31.99%
ValueS&P 500
12.36%
ValueS&P 500
-3.13%
ValueS&P 500
17.40%
ValueS&P 500
15.36%
2000Russell
-2.55%
2000Russell
21.26%
2000Russell
-3.02%
2000Russell
2.49%
2000Russell
-20.48%
2000Russell
47.25%
2000Russell
18.33%
2000Russell
4.55%
2000Russell
18.37%
2000Russell
-1.57%
2000Russell
-33.79%
2000Russell
27.17%
2000Russell
26.85%
2000Russell
-4.18%
2000Russell
16.35%
2000Russell
38.82%
2000Russell
4.89%
2000Russell
-4.41%
2000Russell
21.31%
2000Russell
14.65%Growth2000
Russell
1.23%
Growth2000
Russell
43.09%
Growth2000
Russell
-22.43%
Growth2000
Russell
-9.23%
Growth2000
Russell
-30.26%
Growth2000
Russell
48.54%
Growth2000
Russell
14.31%
Growth2000
Russell
4.15%Growth2000
Russell
13.35%
Growth2000
Russell
7.05%
Growth2000
Russell
-38.54%
Growth2000
Russell
34.47%
Growth2000
Russell
29.09%
Growth2000
Russell
-2.91%
Growth2000
Russell
14.59%
Growth2000
Russell
43.30%
Growth2000
Russell
5.60%
Growth2000
Russell
-1.38%
Growth2000
Russell
11.32%
Growth2000
Russell
22.17%
2000 ValueRussell
-6.45%
2000 ValueRussell
-1.49%
2000 ValueRussell
22.83%
2000 ValueRussell
14.02%
2000 ValueRussell
-11.43%
2000 ValueRussell
46.03%
2000 ValueRussell
22.25%
2000 ValueRussell
4.71%
2000 ValueRussell
23.48%
2000 ValueRussell
-9.78%
2000 ValueRussell
-28.92%
2000 ValueRussell
20.58%
2000 ValueRussell
24.50%
2000 ValueRussell
-5.50%
2000 ValueRussell
18.05%
2000 ValueRussell
34.52%
2000 ValueRussell
4.22%
2000 ValueRussell
-7.47%
2000 ValueRussell
31.74%
2000 ValueRussell
7.84%
USAWorld ex
MSCI
18.77%
USAWorld ex
MSCI
27.92%
USAWorld ex
MSCI
-13.37%
USAWorld ex
MSCI
-21.40%
USAWorld ex
MSCI
-15.80%USA
World exMSCI
39.42%
USAWorld ex
MSCI
20.38%
USAWorld ex
MSCI
14.47%USA
World exMSCI
25.71%USA
World exMSCI
12.44%
USAWorld ex
MSCI
-43.56%
USAWorld ex
MSCI
33.67%
USAWorld ex
MSCI
8.95%USA
World exMSCI
-12.21%
USAWorld ex
MSCI
16.41%
USAWorld ex
MSCI
21.02%
USAWorld ex
MSCI
-4.32%
USAWorld ex
MSCI
-3.04%
USAWorld ex
MSCI
2.75%
USAWorld ex
MSCI
24.21%
AggBarclays
Bloomberg
8.67%
AggBarclays
Bloomberg
-0.83%
AggBarclays
Bloomberg
11.63%Agg
BarclaysBloomberg
8.43%
AggBarclays
Bloomberg
10.26%
AggBarclays
Bloomberg
4.10%Agg
BarclaysBloomberg
4.34%Agg
BarclaysBloomberg
2.43%Agg
BarclaysBloomberg
4.33%
AggBarclays
Bloomberg
6.97%
AggBarclays
Bloomberg
5.24%
AggBarclays
Bloomberg
5.93%Agg
BarclaysBloomberg
6.54%
AggBarclays
Bloomberg
7.84%
AggBarclays
Bloomberg
4.21%
AggBarclays
Bloomberg
-2.02%
AggBarclays
Bloomberg
5.97%
AggBarclays
Bloomberg
0.55%
AggBarclays
Bloomberg
2.65%Agg
BarclaysBloomberg
3.54%Markets
EmergingMSCI
-25.34%
MarketsEmerging
MSCI
66.84%
MarketsEmerging
MSCI
-30.71%
MarketsEmerging
MSCI
-2.61%
MarketsEmerging
MSCI
-6.16%
MarketsEmerging
MSCI
55.82%Markets
EmergingMSCI
25.55%Markets
EmergingMSCI
34.00%Markets
EmergingMSCI
32.17%Markets
EmergingMSCI
39.38%
MarketsEmerging
MSCI
-53.33%
MarketsEmerging
MSCI
78.51%
MarketsEmerging
MSCI
18.88%
MarketsEmerging
MSCI
-18.42%
MarketsEmerging
MSCI
18.23%
MarketsEmerging
MSCI
-2.60%
MarketsEmerging
MSCI
-2.19%
MarketsEmerging
MSCI
-14.92%
MarketsEmerging
MSCI
11.19%
MarketsEmerging
MSCI
37.28%
High YieldBarclays
Bloomberg
1.87%
High YieldBarclays
Bloomberg
2.39%
High YieldBarclays
Bloomberg
-5.86%
High YieldBarclays
Bloomberg
5.28%
High YieldBarclays
Bloomberg
-1.37%
High YieldBarclays
Bloomberg
28.97%High YieldBarclays
Bloomberg
11.13%
High YieldBarclays
Bloomberg
2.74%
High YieldBarclays
Bloomberg
11.85%High YieldBarclays
Bloomberg
1.87%
High YieldBarclays
Bloomberg
-26.16%High YieldBarclays
Bloomberg
58.21%
High YieldBarclays
Bloomberg
15.12%
High YieldBarclays
Bloomberg
4.98%
High YieldBarclays
Bloomberg
15.81%
High YieldBarclays
Bloomberg
7.44%High YieldBarclays
Bloomberg
2.45%High YieldBarclays
Bloomberg
-4.47%
High YieldBarclays
Bloomberg
17.13%
High YieldBarclays
Bloomberg
7.50%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
8 Knowledge. Experience. Integrity.
Callan’s 2018 Defined Contribution Trends Survey
Callan released its 11th annual Defined Contribution (DC) Trends Survey. The survey, conducted in the fall of 2017, incorporates responses from 152 plan sponsors, including both Callan clients and other organizations. Key findings are:
● Plan sponsors cited the most important step in improving fiduciary position for 2017 was reviewing plan fees—by a wide margin.
● Four out of five plan sponsors say they engage an investment consultant, but a third are unsure whether their consultant has discretion over the plan.
● The three most important factors cited by plan sponsors in measuring plan success are: participation, investment performance, and contribution rates.
● Nearly three quarters of plans use auto enrollment; four out of five plans with auto enrollment also offer automatic contribution escalation; and plan sponsors report the highest average auto enroll default contribution rate in the survey’s history (4.6%).
● Plan sponsors report a decrease in use of revenue sharing to pay fees, with the most common fee payment approach reported as explicit per participant fees (54.7%).
● For 2018, plan sponsors most commonly report that their area of communication focus will be financial wellness.
● Almost half (43%) of plan sponsors say their recordkeeper would provide advice under the DOL’s Fiduciary Rule; however, that same amount don’t know what they will require their recordkeeper to provide in 2018 in order to monitor advice given.
● More than half (55%) of plan sponsors took action with regard to their target date funds in 2017; 52% of those taking action evaluated their target date glide’s path suitability for their plan.
● In general, there is a lot of activity around U.S. small/mid cap equity funds: they were the top fund to be added in 2017, and among the most likely to be eliminated in 2018.
● 60% of plan sponsors say they are somewhat or very likely to conduct a fee study in 2018.
● One in six plan sponsors intend to conduct a recordkeeper search in 2018.
Key Takeaways
OSGP Investment Structure
10 Knowledge. Experience. Integrity.
Lessons from Behavioral Finance
● Inertia: – Research by John Beshears et al of the National Bureau of Economic Research shows that when in place, default options not
only tend to attract assets, but often participants remain wholly invested in the default investment option. – Research by David Laibson et al. of Harvard University found that it takes an average of 371 days for the average participant who
is already investing in a DC plan to allocate to newly introduced investments in the plan (barring a reenrollment). – Since 2006, Real Return/TIPS fund prevalence in DC plans has increased from 5% to 33%. However, over the same time period,
utilization of such funds has decreased and stands at just 1%.
● Momentum Market Timing: – Those who invest in emerging market equities frequently over-allocate to them. Morningstar found that over the ten-year period
ending December 31, 2014, adverse timing decisions have cost diversified emerging markets investors 1.7% percentage points annually.
● Framing Effects: – DC participants are prone to use mental shortcuts and naive diversification strategies, often based on the design of the
investment menu. For example, if the plan offered more stock funds than bond funds, participants would allocate more heavily to stocks than bonds (and vice versa).
– Such research suggests that plan sponsors would do well to consider choice architecture, or the influence of menu design on participant investment behavior.
● Overwhelming Choice: – Individuals often desire a wide array of choices, yet are easily overwhelmed by them. With 401(k) plans, choice overload results,
according to one study, in decreased plan participation.
How Behavioral Finance Can Inform Plan Design
11 Knowledge. Experience. Integrity.
Investment Structure Design
Building upon these behavioral finance lessons, Callan believes:
● Investment structures should be built for the long term – An investment structure should be built within the context of legal and regulatory trends, product development and innovation,
and in adherence to a three-tier framework that facilitates plan usage by everyone from do-it-for-me to do-it-yourself types of participants.
● Simpler can be better – The number of choices affects participants’ allocation decisions. – The optimal number of investments for a plan will offer sufficient diversification opportunity while minimizing participant confusion.
● Plan circumstances matter – Evaluation of an investment line up must acknowledge a plan’s unique and specific circumstances.
● Cost is important – Investment structures should seek to minimize cost. This may be through effective use of investment vehicles or share classes.
Callan’s Philosophical Tenets:
12 Knowledge. Experience. Integrity.
Three-Tier Framework
● Callan employs a three-tiered framework to depict a defined contribution plan’s fund choices and to evaluate the overall plan investment structure. This approach addresses the varied needs of each different constituency in a population of employees.
● The chart illustrates a basic or “clean sheet” investment structure. Few plan structures resemble Callan’s “clean sheet” due to individual investment preferences as well as a history of offering a larger number of investment options.
Clean Sheet Investment Structure
– Simple choice for participants who do not wish to take the time, or have the knowledge to manage their assets
– Serves as the Qualified Default Investment Alternative (QDIA)
– Consists of non-core asset classes and geared toward more sophisticated participants
– Provide primary building blocks to create a diversified portfolio
– For participants that wish to build and manage their own portfolio
Risk Spectrum Tier I - Asset Allocation Tier II - Core Options Tier III - Specialty Options
Conservative
Target Date Funds(5 Year Increments)
Aggressive
International Equity
Small/Mid Cap Equity
Callan Clean Sheet Investment Structure
Capital Preservation
Fixed Income
Large Cap Equity
13 Knowledge. Experience. Integrity.
OSGP Investment Plan Structure
Risk Spectrum Tier I. Asset Allocation Options Tier II. Core Options Tier III. Specialty Options
Conservative Asset Allocation Capital PreservationLifePath Portfolios (31.4%) Short-Term Fixed Income Option (2.1%)
Stable Value Option (9.8%)
Fixed Income
Active Fixed Income Option (5.4%)
Broad U.S. Equity Specialty Equity
Stock Index Option - Russell 3000 (11.7%) Socially Responsible Investment Option (0.5%)
Large Cap U.S. Equity
Large Company Value Stock Option (9.4%)
Large Company Growth Stock Option (10.9%)
International Equity
International Stock Option (5.7%)Small Cap U.S. Equity
Small Company Stock Option (12.5%)Inflation Sensitive
Real Return Option (0.2%)Brokerage Window
Aggressive Schwab PCRA (0.5%)
OSGP Investment Structure
Percent of Plan Assets in parenthesis as of 12/31/17
14 Knowledge. Experience. Integrity.
Callan 2018 DC Trends Survey
Roughly two thirds of DC plans surveyed have a mix of active and passive investment funds (65.5%). Although purely passive lineups remain rare (8.4%), this represents an increase over the previous year (5.8% in 2016).
Most plan sponsors (76.6%) did not change the proportion of active versus passive funds in their plan in 2017. For those making changes, far more increased the proportion of passive funds than active funds: 17.0% increased the number of passive funds, the highest proportion we’ve observed since 2014.
The use of a tiered investment structure reached a high in 2017 at 60.5%, a marked increase from 48.3% in 2016. Most describe their tiered structure as being comprised of some form of asset allocation fund tier, core fund tier, and specialty fund tier.
What best describes your plan’s investment menu approach?
How have/will the mix of active and passive funds change?
Does your plan use a tiered investment structure?
65.5%
23.5%
2.5% 8.4%
0%
25%
50%
75%
100%
2012 2013 2014 2015 2016 2017
Don't know
All passive funds
All active funds
Active/passive mirror
Mix of active and passive funds
76.6% 83.3%
17.0% 14.3%
6.4% 2.4%
2017 Expected in 2018
Increased proportionof active funds
Increased proportionof passive funds
Mix of active andpassive remainedsame
48.3%
60.5%
46.6% 33.3%
5.1% 6.1%
2016 2017
Don't know
No
Yes
Tiered investment structure: Allows plan sponsors to build fund lineups for a heterogeneous participant base that includes “do-it-for-me” (tier 1), “do-it-myself” (tier 2), and “investment savvy” participants (tier 3).
Investment Menu
15 Knowledge. Experience. Integrity.
1.8% 7.0% 8.8% 7.0%
3.5%
3.5%
7.0% 1.8% 1.8%
3.5%
0% 22%
In 2017
1.5% 2.9%
2.9% 1.5%
8.8%
4.4% 1.5% 1.5% 1.5%
2.9% 1.5%
2.9% 1.5% 1.5%
2.9% 4.4%
1.5% 4.4%
0% 22%
AlternativesBrokerage window
Company stockU.S. fixed income
U.S. large cap equityU.S. sm/mid cap equity
U.S./global balancedEmerging mkts equity
Global equityHigh yield fixedNon-U.S. equity
Non-U.S./global fixedMoney market
Real returnREITsESG*
Specialty/sectorStable valueTarget date
TIPSOther
In 2017
2.6% 5.1% 5.1%
5.1%
2.6% 2.6%
0% 23%
In 2018
1.9%
3.8% 1.9%
7.7%
3.8%
1.9%
1.9%
3.8%
7.7% 1.9% 1.9%
0% 22%
In 2018
Callan 2018 DC Trends Survey
Although the majority of plan sponsors did not change the number of funds in their DC plan in 2017, the proportion that did so was the highest since 2012. Those making a change more often decreased the number of funds. This pattern looks set to change in 2018 as more intend to increase versus decrease the number of funds in the lineup.
In general, there is a lot of activity around U.S. small/mid cap equity funds: they were the top fund to be added in 2017 and the most likely to be eliminated in 2018 (along with balanced and global equity). According to the Callan DC IndexTM, the average number of U.S. small/mid cap funds in a DC plan is three. A number of respondents indicated that they added (4.4%) or intend to add (7.7%) target date funds. This is likely referring to the addition of a new vintage (e.g., 2060).
Have/will the number of funds available change?
*Environmental, social, and governance.
65.2% 14.6% 20.2% 2017
# of funds remained the same Increased # of funds Decreased # of funds
80.0% 12.5% 7.5% Expectedin 2018
Which funds were/will be added or eliminated?
76.1% of plans mapped eliminated funds to similar funds 15.2% mapped to the default fund 8.7% mapped to both
Added/will add Eliminated/will eliminate
Investment Menu (continued)
16 Knowledge. Experience. Integrity.
84.3%
65.2%
40.0%
47.0%
16.5%
79.5%
65.0%
49.6%
49.6%
24.8%
Mutual funds
Collective trusts
Separate accounts
Brokerage
Unitized or private label funds
2016 2017
Callan 2018 DC Trends Survey
Does your plan offer the following investment types within the fund lineup?*
*Multiple responses were allowed. Some respondents offer multiple asset classes in each vehicle type, e.g., both stable value and another asset class are offered as a collective trust and/or separate account.
Additional categories (2017 data): Fixed annuities (8.5%); Pooled insurance accounts (7.7%); Registered variable annuities (4.3%); ETFs (2.6%); Other (1.9%).
Fewer plans now offer mutual funds (79.5%) than in previous years. This continues a trend where mutual fund prevalence has decreased 15.5 percentage points since 2011 when it was 95.0%. Over this period, use of collective trusts increased from 43.8% in 2011 to 65.0% in 2017.
More than one quarter of plan sponsors reported that they offered a stable value collective trust (27.4%) while over half (56.4%) offered a collective trust that was not a stable value fund.* This coincides with more managers launching collective trusts.
Use of separate accounts increased and coincided with an increase in the use of unitized or private label funds. Most plans with unitized funds have assets in excess of $1 billion (92%); more than half have assets greater than $5 billion (52%).
Of those offering a brokerage window, 62.1% offer a full window (vs. a more limited mutual fund window).
Investment Vehicles
17 Knowledge. Experience. Integrity.
65.2% 60.3% 58.2%
23.5% 31.4% 27.9%
3.5% 4.1% 4.1%
3.5% 4.1% 4.3% 4.1% 5.7%
2015 2016 2017
Don’t know or don’t recall
More than 5 years ago
3-5 years ago
1-3 years ago
Within last year
Callan 2018 DC Trends Survey
When was the last time your organization conducted an investment structure evaluation to determine gaps/overlaps in the investment offerings?
What motivated the most recent investment structure evaluation?*
86.0%
34.2% 29.8%
14.9% 6.1% 10.5% 5.3%
73.6%
39.1% 27.3%
18.2% 10.9% 6.4% 4.5%
Regular due diligence
Identify overlaps and gaps in the fund lineup
Streamline the fund lineup
Add additional diversification opportunities
New consultant Switching to different vehicle structures^
New recordkeeper
2016 2017
*Multiple responses were allowed.
Additional categories (2017 data): Participant demand for additional funds (4.5%); Other (1.8%). ^e.g., unitization, separate accounts, collective trusts
As in recent years, the majority of plan sponsors (58.2%) conducted an investment structure evaluation within the past year. However, the survey also found that nearly one in ten (9.8%) plans conducted a structure review more than five years ago or do not recall their last review. This is an increase from prior years.
Although regular due diligence slipped from 2016, it still maintained its position as the most common motivation for undergoing an investment structure evaluation. Beyond regular due diligence, the two most common reasons given for the recent investment structure evaluation were to identify overlaps and gaps in the fund lineup (39.1%) and to streamline the fund lineup (27.3%).
Investment Structure Evaluation
OSGP Plan Review
19 Knowledge. Experience. Integrity.
Asset Distribution December 31, 2017 September 30, 2017
Market Value Weight Net New Inv. Inv. Return Market Value WeightTier I - Asset Allocation Options
Target Date Funds $669,239,566 31.35% $14,014,176 $21,702,502 $633,522,888 30.87%LifePath Index Retirement Fund Q 197,388,722 9.25% (248,704) 4,798,414 192,839,012 9.40%LifePath Index 2020 Fund Q 142,575,407 6.68% 1,680,733 3,868,568 137,026,107 6.68%LifePath Index 2025 Fund Q 104,027,778 4.87% 3,660,920 3,274,811 97,092,048 4.73%LifePath Index 2030 Fund Q 74,839,364 3.51% 2,744,368 2,810,701 69,284,295 3.38%LifePath Index 2035 Fund Q 55,250,043 2.59% 2,276,436 2,349,485 50,624,121 2.47%LifePath Index 2040 Fund Q 36,577,767 1.71% 1,527,307 1,691,597 33,358,862 1.63%LifePath Index 2045 Fund Q 24,502,386 1.15% 774,802 1,221,354 22,506,231 1.10%LifePath Index 2050 Fund Q 21,766,124 1.02% 813,866 1,080,462 19,871,796 0.97%LifePath Index 2055 Fund Q 8,048,747 0.38% 375,961 404,248 7,268,538 0.35%LifePath Index 2060 Fund Q 4,263,227 0.20% 408,487 202,862 3,651,879 0.18%
Tier II - Core Inv estment Options
Short-Term Fixed Income Option State Street 45,456,350 2.13% (649,414) 53,787 46,051,977 2.24%
Stable Value Option Galliard 209,023,877 9.79% (4,480,277) 1,055,138 212,449,017 10.35%
Activ e Fixed Income Option BlackRock / DoubleLine / Wellington 115,352,312 5.40% (741,138) 303,742 115,789,709 5.64%
Stock Index Option BlackRock 249,672,007 11.70% (1,204,800) 13,804,812 237,071,995 11.55%
Large Company Value Stock Option BlackRock 199,685,801 9.35% (2,605,188) 9,076,630 193,214,359 9.42%
Large Company Growth Stock Option BlackRock 232,952,282 10.91% 2,030,877 16,163,180 214,758,225 10.47%
International Stock Option AQR / BlackRock / DFA* / Lazard 121,506,904 5.69% 721,230 5,120,572 115,665,102 5.64%
Small Company Stock Option BlackRock / Callan / DFA 267,336,750 12.52% (2,834,955) 7,500,550 262,671,155 12.80%
Tier III - Specialty Options
Socially Responsible Inv estment Option TIAA-CREF 10,418,379 0.49% 1,367,046 481,673 8,569,660 0.42%
Real Return Option GMO / State Street / Wellington 3,456,250 0.16% 228,772 43,203 3,184,275 0.16%
Brokerage Window 10,620,801 0.50% 1,095,666 319,975 9,205,160 0.45%
Total Fund $2,134,721,277 100.0% $14,014,176 $68,553,580 $2,052,153,522 100.0%
20 Knowledge. Experience. Integrity.
Net of Fee Returns Periods Ended December 31, 2017
LastQuarter
LastYear
Last 3Years
Last 5Years
Last 10Years
Tier I - Asset Allocation Options
LifePath Index Retirement Fund Q 2.55% 10.16% 4.92% 5.34% 5.02% LifePath Index Retirement Benchmark 2.56% 10.10% 4.91% 5.34% 4.91%
LifePath Index 2020 Fund Q 2.95% 11.75% 5.55% 6.48% 5.04% LifePath Index 2020 Benchmark 2.96% 11.67% 5.50% 6.45% 4.68%
LifePath Index 2025 Fund Q 3.57% 13.88% 6.38% 7.41% 5.37% LifePath Index 2025 Benchmark 3.58% 13.75% 6.29% 7.38% 4.91%
LifePath Index 2030 Fund Q 4.12% 15.80% 7.10% 8.20% 5.63% LifePath Index 2030 Benchmark 4.14% 15.64% 6.96% 8.18% 5.10%
LifePath Index 2035 Fund Q 4.64% 17.67% 7.79% 8.98% 5.88% LifePath Index 2035 Benchmark 4.65% 17.48% 7.61% 8.92% 5.26%
LifePath Index 2040 Fund Q 5.11% 19.35% 8.37% 9.65% 6.07% LifePath Index 2040 Benchmark 5.11% 19.09% 8.16% 9.57% 5.37%
LifePath Index 2045 Fund Q 5.42% 20.43% 8.75% 10.18% 6.20% LifePath Index 2045 Benchmark 5.43% 20.15% 8.52% 10.10% 5.43%
LifePath Index 2050 Fund Q 5.54% 20.81% 8.87% 10.50% 6.39% LifePath Index 2050 Benchmark 5.55% 20.55% 8.64% 10.44% 5.59%
LifePath Index 2055 Fund Q 5.53% 20.79% 8.86% 10.71% - LifePath Index 2055 Benchmark 5.55% 20.55% 8.64% 10.65% -
LifePath Index 2060 Fund Q 5.52% 20.74% 8.85% - - LifePath Index 2060 Benchmark 5.55% 20.55% 8.68% - -
21 Knowledge. Experience. Integrity.
Net of Fee Returns Periods Ended December 31, 2017
LastQuarter
LastYear
Last 3 Years
Last 5Years
Last 10Years
Tier II - Core Investment Options
Short-Term Fixed Income Option 0.27% 0.84% 0.39% 0.25% 0.39% 3-month Treasury Bill 0.28% 0.86% 0.41% 0.27% 0.39%
Stable Value Option 0.50% 1.89% 1.77% 1.68% 2.11% 3-month Treasury Bill 0.28% 0.86% 0.41% 0.27% 0.39%
Active Fixed Income Option 0.52% 4.47% 2.91% 2.63% 4.78% Bloomberg Aggregate Index 0.39% 3.54% 2.24% 2.10% 4.01%
Stock Index Option 6.35% 21.23% 11.23% 15.66% 8.66% Russell 3000 Index 6.34% 21.13% 11.12% 15.58% 8.60%
Large Company Value Stock Option 5.36% 13.81% 8.68% 14.53% 7.23% Russell 1000 Value Index 5.33% 13.66% 8.65% 14.04% 7.10%
Large Company Growth Stock Option 7.85% 30.21% 13.65% 17.12% 9.55% Russell 1000 Growth Index 7.86% 30.21% 13.79% 17.33% 10.00%
International Stock Option 4.86% 27.70% 8.77% 7.85% 2.24% MSCI ACWI ex US Index 5.00% 27.19% 7.83% 6.80% 1.84%
Small Company Stock Option 4.06% 14.74% 10.12% 14.06% 9.14% Russell 2000 Index 3.34% 14.65% 9.96% 14.12% 8.71%
Tier III - Specialty Options
Socially Responsible Option 6.13% 20.71% - - - Russell 3000 Index 6.34% 21.13% 11.12% 15.58% 8.60%
Real Return Option 2.35% 7.49% - - - Consumer Price Index + 3% 0.57% 5.18% 4.52% 4.27% 4.58%
22 Knowledge. Experience. Integrity.
Investment Options Fee Summary
Asset Class and Strategy
Total Annual Operating Expense
Ratio*
Institutional Peer Group
Median
Asset Allocation Options LifePath Index Retirement, 2020 – 2060 Funds; Q 0.09% 0.59 – 0.65% Capital Preservation Short-Term Fixed Income Option 0.11% 0.51% Stable Value Option 0.41% 0.72% Fixed Income Active Fixed Income Option 0.18% 0.59% U.S. Large Cap Equity Stock Index Option 0.042% 0.04% Large Company Value Stock Option 0.032% 0.04% Large Company Growth Stock Option 0.032% 0.04% U.S. Small Cap Equity Small Company Stock Option 0.40% 1.17% International Equity International Stock Option 0.40% 1.06% Specialty Options Socially Responsible Investment Option 0.18% 0.86% Real Return Option 0.56% 1.38%
*Investment option fee data provided by Voya (dated 01/22/18)
OSGP Investment Option Performance
24 Knowledge. Experience. Integrity.
BlackRock LifePath Index Target Date Funds GlidePath Analysis as of December 31, 2017
Equity Rolldown Analysis
Macro-Level Asset Allocation Glide Path
% P
ure
Equ
ity
0%
25%
50%
75%
100%
40 30 20 10 0Retirement
-10 -20Years Until Retirement
Callan Glide Path Universe (ALL)
CAI Consensus ALL Glidepath LifePath Index Fund
0% 0%
25% 25%
50% 50%
75% 75%
100% 100%
Years Until Retirement40 30 20 10 0
Retirement-10 -20
% W
eigh
t
Real AssetsDomestic FixedReal EstateIntl EquityDomestic Broad Eq
25 Knowledge. Experience. Integrity.
Most DC plans offer target date funds (90.8%)—and those that do not are generally government plans. Continuing a long-observed trend, those offering their recordkeeper’s target date option continued to drop—from more than 50% in 2012 to 23% in 2017. There is more uncertainty over what approaches will be used going forward, as evidenced by the 6.3% that do not know which target date fund approach they will use in 2018.
The prevalence of custom solutions has leveled off, and in recent years has hovered in the low 20% range. Those offering custom solutions cited a better cost structure as well as access to best-in-class underlying funds as the top motivations.
The majority (52.6%) of those using a custom solution reported that the plan sponsor acts as a fiduciary. This marks a steep decrease from 2016 and 2015 when the figure stood at 77% and 84%, respectively.
23.4% 21.4%
25.2% 25.9%
27.0% 25.0%
20.7% 19.6%
2.7% 6.3% 0.9% 1.8%
0%
25%
50%
75%
100%
2012 2013 2014 2015 2016 2017 Will usein 2018
Other
Don't know
Custom target strategies
Collective trust that isn’t recordkeeper’s
Mutual fund that isn’t recordkeeper’s
Mutual fund or collective trust ofrecordkeeper
Callan 2018 DC Trends Survey
If you offer target date funds, which approach do you use?
Why have you elected (are you electing) to use custom target date funds?*
Who is the fiduciary with respect to the custom target date fund?*
75.0%
75.0%
70.0%
65.0%
30.0%
10.0%
5.0%
0.0% 92.0%
Better cost structure
Seek to have best-in-classunderlying funds
Prefer to control the glidepath
Ability to hire/terminate underlyingmanagers
Leverage funds in DB plan
Branding
Other
52.6%
42.1%
36.8%
5.3%
5.3%
Plan sponsor
Investment manager
Consultant
Recordkeeper
Other
*Multiple responses were allowed.
90.8% of plans have a target date fund in their lineup
Target Date Fund Landscape
26 Knowledge. Experience. Integrity.
Among those that offer target date funds, over 70% offer one that is at least partially indexed. Indexed solutions gained traction over the year, increasing in prevalence from 36.6% to 43.8%. This increase came at the expense of active strategies, which decreased from 36.6% to 29.5%.
The majority of plan sponsors (55.2%) took some sort of action with regard to their target date funds in 2017. Of those taking action, evaluating glide path suitability maintained its place as the most prevalent course of action (51.7%). Changing the share class of the target date fund (22.4%) and moving to a collective trust (8.6%) rounded out the top three.
29.5%
43.8%
26.7%
0%
25%
50%
75%
100%
2010 2011 2012 2013 2014 2015 2016 2017
Mix of index and activemanagement
Indexed
Actively managed
Callan 2018 DC Trends Survey
What investment approach does your target date fund use?
What action was/is expected to be taken with your target date fund?*
51.7%
22.4%
8.6% 6.9% 3.4% 1.7%
43.6%
1.8% 0.0%
9.1% 7.3% 3.6%
Evaluate suitability of glide path
Change share class of target date fund
Move to a target date collective trust
Change communication approach to target date fund
Replace target date fund/ manager
Other
2017 In 2018
*Percentages out of those taking/expecting to take action with their target date fund. Multiple responses were allowed.
Additional categories (2017/expected 2018 data): Eliminate target date fund (1.7%/0.0%); Shift to all-passive target date fund (1.7%/1.8%); Shift to a mix of active and passive target date fund (1.7%/1.8%); Move to a dynamic/smart QDIA (1.7%/1.8%); Move to custom target date funds (0.0%/1.8%); Shift to all-active target date fund (0.0%/0.0%); Change from target date fund to a different default fund (0.0%/0.0%).
70.5% at least partially indexed
55.2% took action 44.8% took no action with respect to their target date fund
Target Date Fund Landscape
27 Knowledge. Experience. Integrity.
67.3%
36.3% 40.7%
23.9%
6.2%
58.6%
38.8% 38.8%
28.4%
6.0%
58.0%
39.3% 34.8%
24.1%
8.9%
Benchmark provided by investment manager
Peer benchmarking Industry benchmark Custom benchmark Retirement income adequacy analysis
2015 2016 2017
Callan 2018 DC Trends Survey
How do you monitor your target date funds?*
*Multiple responses were allowed. Additional categories (2017 data): Don’t know (1.8%); Do not benchmark (0.0%).
Nearly half of plan sponsors (47%) report using multiple benchmarks to monitor their target date funds. No respondents indicated they do not benchmark their target date funds. Among those using multiple benchmarks, the median number of benchmarks is two, with several reporting four benchmarks.
Manager benchmarks maintained their place as the most common means of measurement. Industry benchmarks continued their decrease, weighing in at 34.8%, down from 40.7% in 2015. Retirement income adequacy analysis witnessed a slight uptick relative to its standing the previous two years.
Target Date Fund Monitoring and Benchmarking
28 Knowledge. Experience. Integrity.
BlackRock LifePath Index Target Date Funds Fund Family Performance as of December 31, 2017
0%
5%
10%
15%
20%
25%
Last Last Last 3 Last 5 Last 7 Last 10Quarter Year Years Years Years Years
(22)(39)
(75)(75)
(68)(52) (82)(60) (82)(54) (76)(53)
10th Percentile 4.56 19.05 8.57 10.78 9.63 11.7525th Percentile 4.47 18.54 8.33 10.12 9.11 11.11
Median 4.25 17.79 7.90 9.56 8.58 10.6075th Percentile 3.97 17.12 7.47 9.11 8.10 10.0090th Percentile 3.49 15.98 6.90 8.36 7.49 9.40
BlackRockLifePath Index 4.50 17.09 7.55 8.65 7.87 9.93
Callan ConsensusALL Glidepath 4.39 17.18 7.88 9.39 8.50 10.49
29 Knowledge. Experience. Integrity.
LifePath Index Retirement Income Fund Periods Ended December 31, 2017
Performance vs Callan Target Date Retirement Income (Institutional Net)
0%
2%
4%
6%
8%
10%
12%
14%
Last Quarter Last Last 3 Years Last 5 Years Last 7 Years Last 10 YearsYear
(13)(13)
(27)(27)
(27)(27)(29)(29) (22)(22)
(25)(32)
10th Percentile 2.68 11.08 5.34 6.10 6.27 5.3125th Percentile 2.47 10.40 4.94 5.53 5.53 5.02
Median 2.03 8.83 4.34 4.51 4.93 4.5075th Percentile 1.72 7.97 3.84 4.08 4.41 3.8990th Percentile 1.46 6.89 3.26 3.38 3.72 3.14
LifePath IndexRetirement Fund Q 2.55 10.16 4.92 5.34 5.59 5.02
LifePath IdxRetiremnt CB 2.56 10.10 4.91 5.34 5.59 4.91
30 Knowledge. Experience. Integrity.
LifePath Index Retirement Income Fund Asset Allocation as of December 31, 2017
0%
10%
20%
30%
40%
50%
60%
70%
80%
LifePath Index Retirement Fund Q - Target
25.1
10.7
0.5
60.0
3.7
Callan Tgt Dt Idx 2010
23.7
10.3
1.7
53.5
3.2 4.0 2.5 1.1
Domestic Broad Eq Intl Equity Real Estate Domestic Fixed Intl Fixed-Inc Stable Value/Cash Hedge Funds Real Assets
0%
10%
20%
30%
40%
50%
60%
70%
LifePath Index Retirement Fund Q - Target
19.5
5.78.7
1.9 0.5
51.2
8.83.7
Callan Tgt Dt Idx 2010
19.2
4.48.4
1.9 1.1 0.6
34.7
8.73.8 1.1 0.1
5.810.2
Large Cap Broad Eq Small/Mid Cap Broad Non-US Developed Emerging Markets Other-Real Estate Global REITS Core Bond TIPS Cash Equiv
Commodities Intl Equity Domestic Broad Eq Other Other-Dom Fixed
Macro-Level Asset Allocation
Micro-Level Asset Allocation
31 Knowledge. Experience. Integrity.
LifePath Index 2030 Fund Periods Ended December 31, 2017
Performance vs Callan Target Date 2030 (Institutional Net)
0%
5%
10%
15%
20%
25%
Last Quarter Last Last 3 Years Last 5 Years Last 7 Years Last 10 YearsYear
(45)(42)
(72)(76)
(70)(74)(74)(75) (75)(75)
(43)(70)
10th Percentile 4.50 18.86 8.54 10.74 9.47 6.4925th Percentile 4.42 17.95 8.05 10.10 8.98 6.08
Median 4.08 16.93 7.52 9.42 8.41 5.4975th Percentile 3.82 15.70 6.93 8.16 7.48 5.0290th Percentile 3.19 13.91 6.28 7.68 7.04 4.41
LifePath Index2030 Fund Q 4.12 15.80 7.10 8.20 7.56 5.63
LifePathIndex 2030 CB 4.14 15.64 6.96 8.18 7.52 5.10
32 Knowledge. Experience. Integrity.
LifePath Index 2030 Fund Asset Allocation as of December 31, 2017
0%
10%
20%
30%
40%
50%
60%
LifePath Index 2030 Fund Q - Target
37.8
20.9
7.0
30.4
3.9
Callan Tgt Dt Idx 2030
44.6
21.9
2.5
25.2
1.8 1.0 2.0 1.2
Domestic Broad Eq Intl Equity Real Estate Domestic Fixed Intl Fixed-Inc Stable Value/Cash Hedge Funds Real Assets
0%
10%
20%
30%
40%
50%
LifePath Index 2030 Fund Q - Target
31.0
6.8
17.2
3.87.0
26.2
4.1 3.9
Callan Tgt Dt Idx 2030
35.4
9.1
17.3
4.31.3 1.2
18.3
2.5 1.0 1.2 0.2 0.13.7 4.3
Large Cap Broad Eq Small/Mid Cap Broad Non-US Developed Emerging Markets Other-Real Estate Global REITS Core Bond TIPS Cash Equiv
Commodities Intl Equity Domestic Broad Eq Other Other-Dom Fixed
Macro-Level Asset Allocation
Micro-Level Asset Allocation
33 Knowledge. Experience. Integrity.
LifePath Index 2050 Fund Periods Ended December 31, 2017
Performance vs Callan Target Date 2050 (Institutional Net)
0%
5%
10%
15%
20%
25%
Last Quarter Last Last 3 Years Last 5 Years Last 7 Years Last 10 YearsYear
(10)(9)
(52)(59)
(58)(66)
(73)(75)(67)(69)
(35)(73)
10th Percentile 5.52 22.62 9.72 12.15 10.47 7.0925th Percentile 5.32 21.71 9.30 11.55 9.97 6.59
Median 5.07 20.88 9.00 11.09 9.59 6.1675th Percentile 4.81 20.06 8.39 10.45 8.93 5.5090th Percentile 4.50 18.89 8.04 9.58 7.99 5.21
LifePath Index2050 Fund Q 5.54 20.81 8.87 10.50 9.13 6.39
LifePathIndex 2050 CB 5.55 20.55 8.64 10.44 9.02 5.59
34 Knowledge. Experience. Integrity.
LifePath Index 2050 Fund Asset Allocation as of December 31, 2017
0%
10%
20%
30%
40%
50%
60%
70%
80%
LifePath Index 2050 Fund Q - Target
49.0
30.8
14.6
1.4 4.3
Callan Tgt Dt Idx 2050
55.9
29.5
3.18.1
0.6 0.5 1.2 1.2
Domestic Broad Eq Intl Equity Real Estate Domestic Fixed Intl Fixed-Inc Stable Value/Cash Hedge Funds Real Assets
0%
10%
20%
30%
40%
50%
60%
LifePath Index 2050 Fund Q - Target
40.4
8.6
25.3
5.5
14.6
1.3 0.14.3
Callan Tgt Dt Idx 2050
43.9
11.9
22.8
6.31.4 1.7
6.00.3 0.5 1.2 0.3 0.1 1.8 1.7
Large Cap Broad Eq Small/Mid Cap Broad Non-US Developed Emerging Markets Other-Real Estate Global REITS Core Bond TIPS Cash Equiv
Commodities Intl Equity Domestic Broad Eq Other Other-Dom Fixed
Macro-Level Asset Allocation
Micro-Level Asset Allocation
35 Knowledge. Experience. Integrity.
Short Term Fixed Income Option Periods Ended December 31, 2017
Performance vs Callan Money Market Instrument Funds (Institutional Net)
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
Last Quarter Last Last 3 Years Last 5 Years Last 7 Years Last 10 YearsYear
(35)(29)
(37)(36)
(31)(27)
(33)(25)
(30)(24)
(44)(44)
10th Percentile 0.31 1.06 0.53 0.33 0.26 0.5625th Percentile 0.29 0.96 0.42 0.27 0.22 0.48
Median 0.23 0.70 0.27 0.18 0.13 0.3875th Percentile 0.19 0.56 0.20 0.12 0.09 0.3290th Percentile 0.14 0.41 0.14 0.09 0.07 0.27
Short-Term FixedIncome Option 0.27 0.84 0.39 0.25 0.19 0.39
3-monthTreasury Bill 0.28 0.86 0.41 0.27 0.22 0.39
36 Knowledge. Experience. Integrity.
Stable Value Option Periods Ended December 31, 2017
Performance vs Callan Stable Value CT (Institutional Net)
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
Last Quarter Last Last 3 Years Last 5 Years Last 7 Years Last 10 YearsYear
(10)
(93)
(12)
(99)
(22)
(100)
(28)
(100)
(41)
(100)
(49)
(100)
10th Percentile 0.51 1.91 1.90 1.96 2.23 2.8225th Percentile 0.46 1.80 1.65 1.77 2.01 2.52
Median 0.40 1.54 1.43 1.37 1.49 2.1075th Percentile 0.35 1.37 1.21 1.14 1.28 1.7890th Percentile 0.32 1.15 1.00 0.86 1.13 1.59
StableValue Option 0.50 1.89 1.77 1.68 1.71 2.11
3-monthTreasury Bill 0.28 0.86 0.41 0.27 0.22 0.39
37 Knowledge. Experience. Integrity.
Stable Value Option Portfolio Characteristics as of December 31, 2017
Market-to-Book Ratio
Per
cent
98%99%
100%101%102%103%104%105%106%
2013 2014 2015 2016 2017
100.41%100.05%
Stable Value Option
Crediting Rate
Per
cent
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
2013 2014 2015 2016 2017
2.17%2.15%
Stable Value Option
38 Knowledge. Experience. Integrity.
Active Fixed Income Option Periods Ended December 31, 2017
Performance vs Callan Core Bond Mutual Funds (Institutional Net)
0%
1%
2%
3%
4%
5%
6%
Last Quarter Last Last 3 Years Last 5 Years Last 7 Years Last 10 YearsYear
(19)(51)
(16)
(60)
(11)
(66)
(16)
(55)
(13)
(78)
(17)
(82)
10th Percentile 0.68 4.52 2.96 2.91 4.10 5.1225th Percentile 0.47 4.28 2.52 2.34 3.62 4.68
Median 0.39 3.69 2.34 2.11 3.40 4.4175th Percentile 0.29 3.40 2.08 2.00 3.28 4.1490th Percentile 0.26 3.25 1.94 1.63 2.78 3.47
Active FixedIncome Option 0.52 4.47 2.91 2.63 3.91 4.78
BloombergAggregate Index 0.39 3.54 2.24 2.10 3.20 4.01
39 Knowledge. Experience. Integrity.
Active Fixed Income Option Portfolio Characteristics as of December 31, 2017
Sector AllocationDecember 31, 2017
0% 10% 20% 30% 40% 50%
RMBS38.0
21.428.1
Non-Agency RMBS18.6
50%
Mgr
MV
50%
Mgr
MV
0.1
Corp (incl 144A)12.2
33.625.7
ABS9.8
6.20.5
CMBS7.5
0.41.9
US Trsy4.9
29.337.0
CMOs3.4
0.8
Cash2.0
4.6
Bk Ln1.0
Gov Related1.0
2.56.8
Tax-Exempt US Muni1.0
Prfd0.5
Other 1.10.1
Cnvt
Active Fixed Income Option Callan Core Bond Mutual Funds
Bloomberg Aggregate Index
Quality Ratingsvs Callan Core Bond Mutual Funds
BBB+
A-
A
A+
AA-
AA
AA+
AAA
Trsy
Weighted Av erageQuality Rating
(65)
(9)
10th Percentile AA25th Percentile AA
Median AA-75th Percentile A90th Percentile A-
Activ e FixedIncome Option A+
BloombergAggregate Index AA+
40 Knowledge. Experience. Integrity.
Stock Index Option Periods Ended December 31, 2017
Performance vs Callan All Cap Core Mutual Funds (Institutional Net)
0%
5%
10%
15%
20%
25%
30%
Last Quarter Last Last 3 Years Last 5 Years Last 7 Years Last 10 YearsYear
(45)(45)
(36)(37)
(13)(15)
(19)(20)
(13)(14)
(23)(23)
10th Percentile 7.81 24.85 11.51 16.29 13.86 9.6125th Percentile 6.99 22.25 10.45 15.27 12.96 8.54
Median 6.07 19.53 9.32 14.07 12.04 7.5275th Percentile 4.82 16.03 7.35 12.49 10.49 6.4490th Percentile 3.27 12.97 4.77 10.23 8.49 5.46
StockIndex Option 6.35 21.23 11.23 15.66 13.55 8.66
Russell3000 Index 6.34 21.13 11.12 15.58 13.50 8.60
41 Knowledge. Experience. Integrity.
Large Company Value Stock Option Periods Ended December 31, 2017
Performance vs Callan Large Cap Value Mutual Funds (Institutional Net)
0%
5%
10%
15%
20%
25%
Last Quarter Last Last 3 Years Last 5 Years Last 7 Years Last 10 YearsYear
(78)(78)
(87)(88)
(51)(51)
(34)(42)
(30)(32)
(40)(50)
10th Percentile 7.74 21.85 11.12 16.06 13.78 8.5225th Percentile 6.92 20.36 10.22 14.80 13.30 8.02
Median 6.30 16.78 8.77 13.78 12.15 7.1175th Percentile 5.49 14.57 7.50 13.06 11.35 5.9690th Percentile 3.77 13.50 7.21 12.11 10.12 5.26
Large CompanyValue Stock Option 5.36 13.81 8.68 14.53 12.77 7.23
Russell 1000Value Index 5.33 13.66 8.65 14.04 12.46 7.10
42 Knowledge. Experience. Integrity.
Large Company Growth Stock Option Periods Ended December 31, 2017
Performance vs Callan Large Cap Growth Mutual Funds (Institutional Net)
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Last Quarter Last Last 3 Years Last 5 Years Last 7 Years Last 10 YearsYear
(9)(9)
(57)(57)
(24)(24)
(30)(28)
(26)(25)
(35)(28)
10th Percentile 7.72 36.65 14.65 18.45 15.59 10.5425th Percentile 7.24 34.47 13.52 17.66 14.84 10.14
Median 6.72 31.46 12.00 15.96 13.49 8.8675th Percentile 5.64 27.98 10.59 14.96 12.64 7.8490th Percentile 4.29 24.73 8.58 13.51 11.71 6.90
Large CompanyGrowth Stock Option 7.85 30.21 13.65 17.12 14.67 9.55
Russell 1000Growth Index 7.86 30.21 13.79 17.33 14.81 10.00
43 Knowledge. Experience. Integrity.
International Stock Option Periods Ended December 31, 2017
Performance vs Callan Non US Equity Mutual Funds (Institutional Net)
0%
5%
10%
15%
20%
25%
30%
35%
40%
Last Quarter Last Last 3 Years Last 5 Years Last 7 Years Last 10 YearsYear
(25)(23)
(43)(47)
(33)(58) (50)
(80) (49)(85)
(63)(70)
10th Percentile 6.10 32.71 10.62 10.65 8.36 5.0225th Percentile 4.86 30.00 9.26 8.51 7.01 3.51
Median 4.16 26.84 8.21 7.86 6.16 2.6475th Percentile 3.37 23.95 7.13 6.99 5.33 1.6190th Percentile 2.38 22.13 6.18 6.12 4.78 0.30
InternationalStock Option 4.86 27.70 8.77 7.85 6.22 2.24
MSCI ACWIex US Index 5.00 27.19 7.83 6.80 4.93 1.84
44 Knowledge. Experience. Integrity.
International Stock Option Portfolio Characteristics as of December 31, 2017
Style Map vs Callan Non US Equity MFsHoldings as of December 31, 2017
Value Core Growth
Mega
Large
Mid
Small
Micro
*International Stock Option
MSCI ACWI ex US Index
Style Exposure MatrixHoldings as of September 30, 2017
12.8% (581) 15.8% (662) 17.8% (581) 46.4% (1824)
2.4% (105) 2.3% (154) 2.1% (96) 6.8% (355)
8.2% (1071) 8.3% (934) 7.6% (836) 24.2% (2841)
7.8% (1654) 7.1% (1399) 7.6% (939) 22.5% (3992)
31.3% (3411) 33.6% (3149) 35.2% (2452) 100.0% (9012)
13.8% (130) 14.0% (127) 15.9% (198) 43.7% (455)
1.9% (29) 3.2% (31) 1.8% (34) 6.9% (94)
9.7% (149) 6.6% (147) 8.7% (175) 25.0% (471)
7.9% (307) 6.9% (265) 9.6% (261) 24.4% (833)
33.4% (615) 30.6% (570) 36.0% (668) 100.0% (1853)
Europe/Mid East
N. America
Pacific
Emerging/FM
Total
Value Core Growth Total
45 Knowledge. Experience. Integrity.
Small Company Stock Option Periods Ended December 31, 2017
Performance vs Callan Small Cap Mutual Funds (Institutional Net)
0%
5%
10%
15%
20%
25%
30%
35%
Last Quarter Last Last 3 Years Last 5 Years Last 7 Years Last 10 YearsYear
(52)(68)
(57)(57)
(36)(40)
(45)(44)
(44)(45)
(37)(52)
10th Percentile 7.08 28.61 12.72 15.93 13.51 10.1525th Percentile 5.87 24.10 11.19 15.01 12.33 9.48
Median 4.25 16.39 9.56 13.95 11.29 8.7975th Percentile 2.88 10.84 7.49 12.60 10.22 7.4690th Percentile 1.78 7.64 5.66 10.07 9.09 6.47
Small CompanyStock Option 4.06 14.74 10.12 14.06 11.73 9.14
Russell2000 Index 3.34 14.65 9.96 14.12 11.62 8.71
46 Knowledge. Experience. Integrity.
Small Company Stock Option Portfolio Characteristics as of December 31, 2017
Sector AllocationDecember 31, 2017
0% 5% 10% 15% 20% 25% 30%
Industrials18.1
15.421.0
Financials18.117.8
14.2
Information Technology16.7
50%
Mgr
MV
50%
Mgr
MV
16.621.5
Consumer Discretionary14.9
12.614.0
Health Care12.8
15.314.7
Materials5.3
4.65.1
Energy4.3
4.03.6
Real Estate3.4
6.73.4
Consumer Staples3.1
2.72.6
Utilities2.7
3.5
Telecommunications0.70.8
*Small Company Stock Option Russell 2000 Index
Callan Small Cap MFs
Style Exposure MatrixHoldings as of December 31, 2017
Large
Mid
Small
Micro
Total
Value Core Growth Total
0.0% (2) 0.2% (3) 0.2% (4) 0.4% (9)
2.2% (43) 4.3% (89) 6.6% (104) 13.2% (236)
16.3% (312) 30.7% (492) 21.3% (355) 68.2% (1159)
4.8% (411) 8.8% (564) 4.5% (261) 18.2% (1236)
23.3% (768) 44.0% (1148) 32.6% (724) 100.0% (2640)
0.0% (0) 0.0% (0) 0.0% (0) 0.0% (0)
1.7% (8) 4.1% (20) 5.4% (26) 11.1% (54)
19.2% (258) 32.4% (443) 24.9% (329) 76.5% (1030)
4.2% (297) 4.8% (359) 3.3% (226) 12.3% (882)
25.0% (563) 41.3% (822) 33.7% (581) 100.0% (1966)
47 Knowledge. Experience. Integrity.
Socially Responsible Investment Option Periods Ended December 31, 2017
Performance vs Callan All Cap Core Mutual Funds (Institutional Net)
0%
5%
10%
15%
20%
25%
30%
Last Quarter Last Year Last 2-3/4 Years
(48)(45)
(41)(37)
(21)(11)
10th Percentile 7.81 24.85 11.5325th Percentile 6.99 22.25 10.52
Median 6.07 19.53 9.2475th Percentile 4.82 16.03 7.4790th Percentile 3.27 12.97 4.74
SociallyResponsible Option 6.13 20.71 10.82
Russell3000 Index 6.34 21.13 11.47
48 Knowledge. Experience. Integrity.
Socially Responsible Investment Option Portfolio Characteristics as of December 31, 2017
Sector AllocationDecember 31, 2017
0% 5% 10% 15% 20% 25% 30%
Information Technology22.0
22.823.7
Financials16.1
15.216.8
Health Care13.0
50%
Mgr
MV
50%
Mgr
MV
13.314.3
Consumer Discretionary12.212.5
14.0
Industrials11.5
10.912.5
Consumer Staples7.37.3
6.7
Energy5.85.8
5.5
Real Estate3.93.9
1.8
Materials3.73.53.7
Utilities2.93.0
1.1
Telecommunications1.71.9
TIAA-CREF Social Choice Equity Fund Russell 3000 Index
Callan All Cap Core MFs
Style Exposure MatrixHoldings as of December 31, 2017
Large
Mid
Small
Micro
Total
Value Core Growth Total
30.4% (64) 23.0% (49) 25.8% (55) 79.1% (168)
4.1% (57) 5.4% (86) 4.8% (60) 14.3% (203)
1.2% (89) 2.6% (130) 1.9% (75) 5.7% (294)
0.2% (28) 0.3% (31) 0.3% (35) 0.8% (94)
35.9% (238) 31.3% (296) 32.8% (225) 100.0% (759)
29.0% (114) 19.1% (80) 26.4% (100) 74.5% (294)
4.7% (159) 6.7% (231) 5.8% (198) 17.3% (588)
2.1% (320) 3.0% (495) 2.2% (361) 7.3% (1176)
0.3% (297) 0.4% (359) 0.3% (227) 0.9% (883)
36.1% (890) 29.2% (1165) 34.7% (886) 100.0% (2941)
49 Knowledge. Experience. Integrity.
Real Return Option Periods Ended December 31, 2017
0%
2%
4%
6%
8%
10%
Last Quarter
2.35
0.57
Last Year
7.49
5.18
Last 2-1/2 Years
1.48
4.14
Ret
urns
Real Return Option Consumer Price Index + 3%
Defined Contribution Trends
51 Knowledge. Experience. Integrity.
4Q 2017 DC Trends Legal Trends New Wells Fargo 401(k) Lawsuit Uses Prior Lawsuit as Blueprint
On November 17, 2017, Wells Fargo & Company was hit with another lawsuit alleging breaches of fiduciary duty with respect to its proprietary 401(k) plan. This suit comes on the heels of a recent dismissal with prejudice of a similar lawsuit against Wells Fargo by the U. S. District Court for the District of Minnesota. It offers important insight on how prior rulings can serve as blueprints for future lawsuits.
In the lawsuit that was dismissed by the District Court in early 2017, the focus of the allegation was on how plan fiduciaries knew or should have known that funds such as the Wells Fargo target date funds were “substantially more expensive and worse performing than comparable funds.” But in its dismissal, the District Court found that comparing the Wells Fargo funds to Vanguard and Fidelity target date funds was comparing apples to oranges. As such, it was not evidence that Wells Fargo’s decision making process was flawed.
In the new case–which was filed in the District Court by a different law firm--the allegations have a new focus. Now it is alleged that fiduciaries should have taken advantage of alternative investment vehicles, which provided the identical investment strategy and investment selection at lower costs. Namely, the lawsuit alleges that the “decision to keep the WF Target Funds, proprietary mutual funds, as investment options, instead of offering these same investments as CITs sooner than December 9, 2016, cost the Plan’s participants millions of dollars in excess fees over the course of the Class Period.” The lawsuit further notes that the Plan’s fiduciaries did not need “the benefit of hindsight to understand that if Plan participants paid lower fees for the Plan’s investment options, they would have higher returns and, therefore, more money for retirement, which is the goal of 401(k) accounts.”
52 Knowledge. Experience. Integrity.
4Q 2017 DC Trends Legal Trends Court Rules on Managed Account Lawsuit
On September 22, 2017, the U.S. District Court for the District Of Massachusetts ruled for Fidelity Management Trust Company in a case involving managed account and self-directed brokerage account services provided to Delta Family-Care Savings Plan participants. The Court’s key finding was that the manner in which Fidelity structured fees relating to both managed accounts and its brokerage window, BrokerageLink, were “product design” decisions, not fiduciary decisions.
Plaintiffs alleged that Fidelity violated its obligations under ERISA by allowing funds with higher fees and revenue-sharing to be offered to Delta plan participants through the BrokerageLink self-directed brokerage window. In its judgment, the Court disagreed that Fidelity was exercising a fiduciary function in offering certain share classes of mutual funds in BrokerageLink. Instead, the Court found that because Delta retained ultimate authority to include or reject the BrokerageLink product from the list of investment options made available to plan participants, Fidelity was not exercising a fiduciary function under ERISA when it decided which securities to make available through BrokerageLink.
The Court also held that plaintiffs failed to show that Fidelity breached its fiduciary duties by selecting and hiring Financial Engines. Plaintiffs alleged that as the Delta plan’s recordkeeper, Fidelity engaged in a prohibited transaction when it received a portion of the fees participants paid to FE for managed account services. Plaintiffs alleged that Fidelity “hired FE and controlled the negotiation of the terms and conditions under which FE would provide its services to Plaintiffs [and other] Plan participants,” including a fee-sharing arrangement amounting to at least half of FE’s fees. Given that Fidelity “only served as a conduit for FE’s services,” Plaintiffs alleged that the fee-sharing arrangement was “plainly unreasonable in relation to the service being provided.” However, the Court found that “No matter how generously one reads the allegations in the Complaint, the FE claim boils down to another version of the “product design” theory” that also caused the BrokerageLink claims to fail. Specifically, the Master Trust Agreement between Delta and Fidelity “compels the conclusion that Delta, not Defendants, exercised final authority or control over the selection or hiring of FE.”
There have been a number of lawsuits filed against DC plan participant automated investment advice providers, including one brought under the Racketeering Influenced and Corrupt Organizations Act.
53 Knowledge. Experience. Integrity.
4Q 2017 DC Trends Legal Trends
Wells Stock Drop Lawsuit Fails on “Very Tough Standard” Set by Supreme Court
On September 21, 2017, the U.S. District Court for the District of Minnesota dismissed with prejudice allegations that plan fiduciaries breached their duty of prudence by failing to act on insider knowledge pertaining to the Wells Stock Fund.
Plaintiffs argued that plan fiduciaries “‘were aware of systemic criminal and unethical conduct at the Company since as early as 2005,’ yet they failed to disclose this fraud to the public.” Further, plaintiffs alleged that if fiduciaries had disclosed this inside information earlier, the value of the Wells Fargo stock in plaintiffs’ 401(k) accounts would not have dropped as much as it did.
The Court cites the standard established under the Supreme Court’s Dudenhoeffer decision: namely, that plan fiduciaries may prudently rely on the market price of publicly available stocks unless there is a “special circumstance,” such as when a fiduciary has inside information that a publicly-traded stock is overpriced.
Even then, the Court notes, to withstand a motion to dismiss such a claim, “a plaintiff must plausibly allege [1] an alternative action that the defendant could have taken [2] that would have been consistent with the securities laws and [3] that a prudent fiduciary in the same circumstances would not have viewed as more likely to harm the fund than to help it.”
The Court allowed that there were plausible alternative actions presented by plaintiffs, such as implementing processes to stop the fraud, disclosing the fraud, freezing stock purchases, stopping matching contributions to Wells stock, or purchasing a hedge product to offset anticipated losses. It further allowed that early disclosure of Wells’ “unethical sales practices would have been consistent with both the letter and spirit of the securities laws.”
However, the Court found that the case failed on the third standard of more harm than good. Specifically, the Court noted that: “This is a very tough standard. Trying to predict the impact of anything on the price of a company’s stock—like trying to predict the impact of an athlete’s injury on an upcoming game or the impact of a politician’s gaffe on an upcoming election—is a highly speculative endeavor. An ERISA fiduciary who is trying to figure out whether earlier disclosure of negative inside information would have more or less of an impact on a stock’s price than later disclosure of that negative information is trying to predict the future on the basis of information that is incomplete, imperfect, and fluid. In light of the inherently uncertain nature of this task, plaintiffs will only rarely be able to plausibly allege that a prudent fiduciary ‘could not’ have concluded that a later disclosure of negative inside information would have less of an impact on the stock’s price than an earlier disclosure.” As such, the Court dismissed the amended complaint.
54 Knowledge. Experience. Integrity.
4Q 2017 DC Trends
Tax Reform Bill Signed into Law
On December 20, 2017, the House of Representatives and Senate voted to approve the conference report on the tax overhaul bill (H.R. 1). President Trump signed the bill into law on December 22, 2017.
H.R. 1 includes a number of significant changes to the U.S. tax code such as reductions in tax rates for most individuals, a notable increase in the standard deduction, a reduction in the top corporate tax rate and the tax rate on individual business income, among many others.
Amongst all the change, retirement plans were relatively untouched. Though there may be some indirect impact on these plans, the direct changes were minimal. One change included an extended rollover period for unpaid plan loans. For participants with an unpaid loan balance upon separation from service (or plan termination), H.R. 1 extends the deadline to avoid having their plan loan be treated as a taxable distribution. Participants can now rollover the loan balance by the due date for filing their tax return (including extensions) vs. the current 60-day time frame. This change is effective for taxable years beginning after 2017.
H.R. 1 also provides relief for victims of any 2016 federally-declared disasters, similar to the relief that was provided to those experiencing federally-declared disasters in 2017. Impacted participants will receive a waiver of the 10% pre-59 ½ penalty on distributions up to $100,000 taken from January 1, 2016 through December 31, 2017. Participants will also have an exemption from the mandatory 20% withholding and can elect to pay tax over three years and/or roll the distributed amount back into a plan (or IRA) within three years.
Notably, any provisions related to Rothification, which was under serious consideration, were excluded from the law.
Regarding 529 Plans, H.R. 1 now allows families to save for private school and college expenses in a single tax advantaged account 529 account. Historically, college expenses were the only qualified withdrawals allowed from 529 plans. Under new rules, starting in 2018, account holders can withdraw up to $10,000 per year, per student to pay for private or religious elementary or high school expenses. Qualified withdrawals for college level expenses will not be capped.
Regulatory Trends
55 Knowledge. Experience. Integrity.
4Q 2017 DC Trends
DOL Fiduciary Rule Delay Finalized
As was expected, the Department of Labor finalized an extension to the transition period for the Fiduciary Rule’s Best Interest Contract Exemption and other Prohibited Transaction Exemptions. This extension will delay the enforcement of the fiduciary rule until July 1, 2019, conditioned on continued adherence to the impartial conduct standard.
In early February, President Trump requested that the DOL modify or repeal the Fiduciary Rule if it was projected to limit investors' access to retirement savings offerings, cause an increase in litigation, or otherwise disrupt the financial or retirement services industry. After a preliminary review, the Fiduciary Rule’s impartial conduct standard came into effect in early June 2017. The BICE and PTEs, which are intended to provide an enforcement mechanism, were not scheduled to take effect until January 1, 2018.
The proposed rule describing the delay was published August 2017 and led to approximately 145 comment letters. Three-quarters of the commenters supported a delay of 18 months or longer, while the remainder opposed any delay. The additional 18-month delay approved by the DOL extends the effective date to July 1, 2019.
The delay is conditioned on the assumption that advisers are meeting the impartial conduct standard, offering prudent advice that is in retirement investors' best interest, charge no more than reasonable compensation, and avoid misleading statements. A Field Assistance Bulletin issued in May 2017 indicated that during the phased implementation period ending on January 1, 2018, the DOL will not pursue claims against fiduciaries who are working diligently and in good faith to comply with the fiduciary duty rule and its exemptions. Although not clearly stated, it is anticipated that this relief will also be extended.
Regulatory Trends
56 Knowledge. Experience. Integrity.
4Q 2017 DC Trends
Treasury Report Embraces In-Plan Annuities and Delay of Fiduciary Rule
In October 2017, the U.S. Department of the Treasury issued a report to President Trump entitled: “A Financial System That Creates Economic Opportunities” providing recommendations on how to execute the Trump Administration’s core principles for regulating the financial system.
The first core principle listed in the report is to: “Empower Americans to make independent financial decisions and informed choices in the marketplace, save for retirement, and build individual wealth.” The Treasury makes two recommendations to advance this core principle that potentially affect DC plans:
● The Treasury supports the DOL’s current efforts to re-examine the implications of the Fiduciary Rule. It agrees that full implementation should be delayed until related costs of implementation are evaluated. It notes that conflicts of interest should be addressed, “in a manner that does not disrupt the free functioning of the markets and access to financial services.” It also questions whether it is proper for the DOL to regulate financial professionals for IRAs, which could result in “marketplace imbalances and opportunities for unnecessary duplication due to different rule sets.” It urges the DOL to work with the SEC to address standards of conduct for financial professionals who provide advice to both IRA and non-IRA investors.
● The Treasury takes the position that annuities are an important contributor to the core principle of empowering Americans to save for retirement. As such, it recommends that the DOL and the Treasury work together to facilitate inclusion of annuities in retirement plans by developing safe harbor proposals to assist plan sponsors in complying with their fiduciary obligations in selecting annuity providers. The safe harbor, according to the Treasury, could come in the form of ratings or “other specific metrics.”
Regulatory Trends
57 Knowledge. Experience. Integrity.
4Q 2017 DC Trends
IRS Announces Updated Retirement Plan Limits for 2018
On October 19, 2017, the IRS announced the updated retirement plan limits for 2018. Below, we highlight the notable DC plan limits:
● The annual contribution limit will increase from $18,000 to $18,500. This marks the first increase since the limit changed to $18,000 in 2015.
● The age 50 annual catch-up contribution limit remains unchanged at $6,000.
● The annual compensation limit will increase from $270,000 to $275,000.
● The Section 415(c) limit will increase from $54,000 to $55,000.
● The highly compensated employee threshold, at $120,000, has been unchanged since 2015.
Regulatory Trends
58 Knowledge. Experience. Integrity.
4Q 2017 DC Trends
Transamerica Releases Higher Education Plan Trends Survey
On November 10, Transamerica released the survey results of the 2017 retirement plan trends for Higher Education institutions. Recent threats of litigation have encouraged higher education institutions to adopt best practice plan features typically used by corporate retirement plans.
The survey was conducted in May 2016 and features results from 249 Higher Education institutions. Key findings include:
● 401(k) plans surpass 403(b) plans: More than half (53%) of Higher Education institutions offered a 401(k) plan in 2016, up from 46% in 2015. Institutions offering 403(b) plans dropped from 64% in 2015 to 49% in 2016.
● Auto features: Two-thirds of Higher Education plans reported that they offered automatic enrollment in 2016, a marked increase from prior years. Additionally, just over a third of plans (36%) offered automatic contribution escalation, up from 24% in 2015.
● Employer contributions: In 2016, 95% of Higher Education institutions offered an employer contribution in the form of either a fixed contribution (71%) or a discretionary contribution (24%). The percentage of plans that allow immediate employer contribution eligibility dropped from 44% in 2015 to 36% in 2016.
● Loans and Hardships Withdrawals: The percent of plans allowing loans reached 71% in 2016, more than doubling the 30% of respondents that reported to offer loans in 2015. Similarly, 74% of Higher Education plans allowed hardships withdrawals in 2016, more than doubling the number of plans that allowed them in 2015 (33%).
● Use of Advisors: The number of Higher Education institutions that enlisted services of retirement plan advisors and consultants in 2016 reached 41%. 32% of institutions hire their advisor in an ERISA 3(21) capacity, while 22% hire their advisor in an ERISA 3(38) capacity.
● Retirement Readiness: Account balances and contribution rates consistently rank as the top two metrics for measuring retirement readiness. In 2016, 56% of plans cited account balances as a top measure, while 46% selected contribution rates.
Industry Trends
59 Knowledge. Experience. Integrity.
4Q 2017 DC Trends
ICI and EBRI’s Findings on 401(k) Plan Activity
The Investment Company Institute (ICI) and Employee Benefit Research Institute (EBRI) recently released their annual report on 401(k) plan activity. The research primarily explores participant account balances, asset allocation, and loan activity. Each year, ICI and EBRI collect data on 401(k) plan activity – the most recent report is through year-end 2015 and is based on over 26.1 million 401(k) participants from 101,625 employer-sponsored plans. Some of the key findings are as follows:
Heavier participant allocations to equity
● 66% of participant assets were invested in equities compared to 27% of participant assets in fixed income. For equity, this includes those directly invested in equities as well as those invested in equites through company stock, target date funds (TDFs), or balanced funds. This is closely in line with Callan’s DC Index, which reported 69.4% of participants were invested in equities at year-end 2015.
● 48% of participants had most (more than 80%) of their account invested in equities, with younger participants having a higher concentration in equities.
● More participants held equities at the end of 2015 vs. those holding equities pre-financial market crisis (year-end 2007) – about 91% of participants had at least some equity exposure at year-end 2015 vs. 87% at year-end 2007. Participants in their twenties were notably more equity heavy at year-end 2015 with about 75% (vs. less than 50% in 2007) having most of their account invested in equity.
Target date funds continue to see inflows, particularly from newly- hired and younger participants
● 20% of participant assets were invested in TDFs. This is lower than the 25% that the Callan DC Index reported at year-end 2015 (which is up to just under 30% as of June 2017).
● 60% of newly-hired participants (i.e., those with less than two years at the company) held TDFs in their account vs. only 31% of participants with more than 30 years of tenure. This likely reflects the impact of new hires being automatically enrolled in TDFs.
● Younger participants are more likely to hold TDFs – 63% of participants in their twenties held TDFs vs. 41% of those in their sixties.
Industry Trends
60 Knowledge. Experience. Integrity.
4Q 2017 DC Trends
ICI and EBRI’s Findings on 401(k) Plan Activity (continued)
Company stock allocations are dwindling
● Less than 7% of assets were invested in company stock at year-end 2015, down from 19% in 1999. Note that this is across all plans, not just those with company stock.
● In plans that offer company stock, recently hired participants are less likely to invest in this option (26%) vs. all participants (43%). Furthermore, allocations to company stock for newly-hired participants declined from 9% in 1998 to 2% at year-end 2015.
Little change in loans
● At year-end 2015, 18% of eligible participants had an outstanding loan (vs. 20% at year-end 2014).
● Over this same time period, amounts outstanding increased from 11% to 12%.
● Participants in their thirties, forties, and fifties are most likely to take loans.
● Those with lower tenure (less than five years) and those with higher tenure (over 30 years) are less likely to take loans than those participants with tenure in the five to 30 year range.
Industry Trends
1
TOBIAS READ STATE TREASURER
PHONE 503-378-4329 FAX 503-373-7051
STATE OF OREGON OREGON STATE TREASURY
159 STATE CAPITOL, 900 COURT ST NE SALEM, OREGON 97301-4043
Date: February 9, 2018 To: Oregon Investment Council From: Wil Hiles, Investment Analyst Michael Viteri, Senior Investment Officer Re: Deferred Compensation Program, 4th Quarter 2017 Report Background The Oregon Savings Growth Plan (the “Plan” or “OSGP”) is the State of Oregon’s 457 Deferred Compensation plan. OSGP is a voluntary supplemental retirement plan that provides eligible state and local government employees the opportunity to defer a portion of their current salary on a pre-tax or after-tax (Roth) basis. These deferrals are invested in various investment options until participants draw funds at retirement. The Plan offers an array of equity and fixed income investment options, a suite of target-date retirement funds (which in aggregate constitute a single investment option) and a self-directed brokerage option (the “SDBO”). The plan has over 28,000 participants and assets totaling approximately $2.13 billion as of December 31, 2017. With support and assistance from the Oregon State Treasury (OST) investment division, the Oregon Investment Council (OIC) is responsible for oversight of the Plan’s investment program. Oversight of Plan administration is the responsibility of the Oregon Public Employees Retirement System Board (“PERS Board”) with support from OSGP staff. Additional oversight is provided by a seven-member Deferred Compensation Advisory Committee (the “Advisory Committee”) established under ORS 243.505.
2
OSGP Performance
Oregon Savings Growth Plan Performance Results
As of December 31, 2017
Short Term Fixed Option 0.22 0.66 0.66 0.22 0.07 0.20
91 Day T-Bill 0.28 0.86 0.86 0.41 0.27 0.39
Stable Value Option 0.42 1.58 1.58 1.45 1.36 1.79
91 Day T-Bill 0.28 0.86 0.86 0.41 0.27 0.39
Rolling Average 5 Year CMT* 0.37 1.40 1.40 1.32 1.40 2.29
Active Fixed Income Option 0.47 4.25 4.25 2.71 2.46 4.61Barclays US Aggregate Bond Index 0.39 3.54 3.54 2.24 2.10 4.01
Large Cap Value Equity Option 5.31 13.61 13.61 8.49 14.31 7.11
Russell 1000 Value Index 5.33 13.66 13.66 8.65 14.04 7.10
Total Market Equity Index Option 6.29 21.00 21.00 11.02 15.44 8.47
Russell 3000 Index 6.34 21.13 21.13 11.12 15.58 8.60
Large Cap Growth Equity Option 7.80 29.96 29.96 13.46 16.99 9.50
Russell 1000 Growth Index 7.86 30.21 30.21 13.79 17.33 10.00
International Equity Option 4.76 27.27 27.27 8.50 7.66 2.27
MSCI ACWI ex-US (net) Index 5.00 27.19 27.19 8.06 8.06 2.02
Small Company Option 4.03 14.67 14.67 10.06 13.98 9.18
Russell 2000 Index 3.34 14.65 14.65 10.40 14.53 9.32
Environmental Social Governance Option 6.15 20.73 20.73 N/A N/A N/A
Russell 3000 Index 6.34 21.13 21.13 N/A N/A N/A
Real Return Option 2.30 7.40 7.40 N/A N/A N/A
CPI + 3% 0.68 5.23 5.23 N/A N/A N/A
BlackRock LifePath Retirement 2.51 9.96 9.96 4.74 5.16 N/A
BlackRock LifePath 2020 2.91 11.56 11.56 5.38 6.30 N/A
BlackRock LifePath 2025 3.53 13.69 13.69 6.20 7.23 N/A
BlackRock LifePath 2030 4.08 15.73 15.73 7.03 8.12 N/A
BlackRock LifePath 2035 4.60 17.47 17.47 7.60 8.79 N/A
BlackRock LifePath 2040 5.07 19.16 19.16 8.19 9.46 N/A
BlackRock LifePath 2045 5.38 20.23 20.23 8.56 9.99 N/A
BlackRock LifePath 2050 5.49 20.61 20.61 8.68 10.31 N/A
BlackRock LifePath 2055 5.49 20.59 20.59 8.67 10.52 N/A
BlackRock LifePath 2060 5.47 20.54 20.54 N/A N/A N/A
*CMT is the Constant Maturi ty Treasury Yield.
Performance shown for periods longer than one year i s annual ized.
Al l reported returns are net of fees . OSGP has two types of fees : investment management and adminis trative fees .
Adminis trative fees are comprised of State of Oregon adminis tration, recordingkeeping, custody, trust, and communications fees .
Fund Option
Benchmarks
Performance (%)
3 Months YTD 1 Year 3 Years 5 Years 10 Years
3
Additional OSGP Data
The plan’s Self-Directed Brokerage Offering (executed through Charles Schwab) finished the quarter with $10.7 million in assets, or 0.5% of total OSGP assets. BlackRock LifePath Share Class Change Effective October 26, 2017, OSGP moved participants’ target date fund holdings from the BlackRock LifePath Fund Q suite to the BlackRock LifePath Fund L suite. This share class change lowered annual investment management fees from 10 basis points (bps) to 8 bps and reduced total annual operating expenses from 11 bps to 9 bps for the entire suite of target date funds offered.
% of Plan IM Fees Admin Fees Total Fees
Total Participants (bps) (bps) (bps)
Short Term Fixed Option 45,501,335 2.1% 3,155 11 17 28
Stable Value Option 209,016,763 9.8% 7,350 40 17 57
Active Fixed Income Option 115,491,316 5.4% 6,457 18 17 35
Large Company Value Stock Option 199,538,950 9.3% 10,077 3 17 20
Total Market Stock Index Option 249,498,130 11.7% 9,427 4 17 21
Large Company Growth Stock Option 233,014,949 10.9% 11,023 3 17 20
International Stock Option 121,714,239 5.7% 9,344 38 17 55
Small Company Stock Option 267,212,692 12.5% 11,357 40 17 57
Real Return Option 3,486,781 0.2% 494 55 17 72
Socially Responsible Investment Option 10,465,549 0.5% 1,097 19 17 36
BlackRock LifePath Retirement Fund 197,348,614 9.2% 3,757 9 17 26
BlackRock LifePath 2020 Fund 142,576,805 6.7% 3,295 9 17 26
BlackRock LifePath 2025 Fund 104,146,042 4.9% 3,430 9 17 26
BlackRock LifePath 2030 Fund 74,832,482 3.5% 3,331 9 17 26
BlackRock LifePath 2035 Fund 55,227,938 2.6% 3,237 9 17 26
BlackRock LifePath 2040 Fund 36,574,888 1.7% 2,882 9 17 26
BlackRock LifePath 2045 Fund 24,492,817 1.1% 2,400 9 17 26
BlackRock LifePath 2050 Fund 21,778,472 1.0% 1,824 9 17 26
BlackRock LifePath 2055 Fund 8,050,316 0.4% 952 9 17 26
BlackRock LifePath 2060 Fund 4,265,483 0.2% 506 9 17 26
Self-Directed Brokerage Option 10,658,492 0.5% 170 0 17 17
Total 2,134,893,052 100%
Source: Market Value & Plan Participants data, OSGP recordkeeper, Voya Financial. Fee estimation, OST.
Fund Name Market Value ($)
Matt Kline
Senior Director 612.667.0856
State of Oregon Stable Value Fund Portfolio Commentary – Fourth Quarter 2017
INVESTMENT PERFORMANCE During the fourth quarter, the State of Oregon Stable Value Fund continued its positive performance with a quarterly return of 0.42% (net of all fees), which was in line with the third quarter’s return of 0.42% (net of all fees). The current net blended yield for the Fund increased during the quarter to 1.73% (net of all fees). In the coming quarter, we expect the Fund's blended yield to increase modestly. PORTFOLIO COMMENTARY The Fund had net outflows of $4.0 million during the quarter, which represented a decrease of 1.9% in total Fund assets. The overall duration of the Fund was 2.81 years at the end of the quarter, in line with the duration at the end of the previous quarter. The average credit quality at the contract level remains strong at Aa3/AA-. The Fund’s market-to-book-value ratio decreased during the quarter to 99.7%, due to higher interest rates and continued amortization of the Fund's market value premium. The credit quality of the underlying bond portfolios remains strong with 67.1% of the portfolio’s securities rated AAA on average, as rated by S&P, Moody’s, and Fitch. ECONOMIC COMMENTARY U.S. GDP growth advanced by +3.2% in 3Q17, marking the second consecutive quarter of above-3% GDP growth, and the fastest back-to-back quarters since 2014. GDP growth during the quarter was driven by solid personal consumption (+2.2% q/q ann.), growth in exports (+2.1%) and a surge in business investment (+4.7%). Employers added an average of 204,000 jobs per month over the quarter, bouncing back from hurricane-related disruptions in Q3. The unemployment rate fell to 4.1%. The Institute for Supply Management’s (ISM) survey of manufacturing activity rose to 59.7 in December. In late-December, President Trump signed the Republican tax cut legislation into law. The cuts, which feature a slashing of the corporate tax rate as well as provisions for immediate expensing of capital expenditures, boosted investor outlook for corporate earnings and improved credit fundamentals. As expected, the Fed raised its policy rate by 25 bps at the final FOMC meeting of the year in December. Emboldened by recent strong GDP growth, continued labor market gains, ebullient equity markets and the prospect for fiscal stimulus from tax cuts on the immediate horizon, the rate hike decision faced little controversy overall. U.S. and global equities both rallied strongly during the quarter, with the S&P 500 gaining 6.6% and the MSCI EAFE index of non-U.S. developed markets posting a +3.7% gain in local currency terms. In the U.S., credit risk spreads declined, boosting the relative performance of corporate bonds versus U.S. Treasuries during the quarter. Most other fixed income spread sectors followed suit in outperforming Treasuries, which experienced muted returns in response to pressure from the Fed’s December hike and faster than expected economic growth. Measures of consumer spending and business sentiment point to another strong growth quarter for the U.S. in Q4, possibly as strong as 3.0-3.25%. Additionally, tax cuts seem likely to add modestly to the already strong pace of growth in the U.S. over the next several quarters. Globally, JPMorgan/Markit’s global composite of purchasing manager indices (Global Composite PMI) rose to 54.4 in December, while International Monetary Fund (“IMF”) in October boosted its estimate of global GDP for 2018 by +0.1% to 3.7%. GUIDELINE COMPLIANCE We have not become aware of any investment guideline compliance issues occurring in the portfolio during the quarter.
STATE OF OREGON STABLE VALUE FUND
FOURTH QUARTER 2017
INVESTMENT OBJECTIVE The State of Oregon Stable Value Fund (the "Fund") is an investment option that seeks to provide safety of principal and a stable credited rate of interest, while generating competitive returns over time compared to other comparable investments.
INVESTMENT STRATEGY The State of Oregon Stable Value Fund, managed by Galliard Capital Management, is primarily comprised of investment contracts issued by financial institutions and other eligible stable value investments. All contract issuers and securities utilized in the portfolio are rated investment grade by one of the Nationally Recognized Statistical Rating Organizations at time of purchase. The types of investment contracts in which the Fund invests include Separate Account GICs and Security Backed Investment Contracts. These types of contracts seek to provide participants with safety of principal and accrued interest as well as a stable crediting rate. SEPARATE ACCOUNT GICs are GICs issued by an insurance company and are maintained within a separate account. Separate Account GICs are typically backed by segregated portfolios of fixed income securities. SECURITY BACKED INVESTMENT CONTRACTS are comprised of two components: 1) investment contracts issued by a financial institution and 2) underlying portfolios of fixed income securities (i.e. bonds) whose market prices fluctuate. The investment contract is designed to allow participants to transact at book value (principal plus accrued interest) without reference to the price fluctuations of the underlying fixed income securities. INVESTMENT RISK
The Fund's investment contracts are designed to allow for participant transactions at book value. A principal risk of the Fund is investment contract risk. This includes the risk that the issuer will default on its obligation under the contract or that another event of default may occur under the contract rendering it invalid; that the contract will lapse before a replacement contract with favorable terms can be secured; or that the occurrence of certain other events including employer-initiated events, could cause the contract to lose its book value withdrawal features. These risks may result in a loss to a contract holder. Other primary risks include default risk, which is the possibility that instruments the Fund holds will not meet scheduled interest and/or principal payments; interest rate risk, which includes the risk of reinvesting cash flows at lower interest rates; and liquidity risk, which includes the effect of very large unexpected withdrawals on the Fund's total value. The occurrence of any of these events could cause the Fund to lose value.
FUND OVERVIEW AS OF 12/31/17 ANNUALIZED PERFORMANCE1 Periods Ending 12/31/17 Fund (%) Benchmark (%)
Citigroup 3 Mo. T-Bill (%)
4Q'17 0.42 0.45 0.28 YTD 1.58 1.58 0.84 1 Year 1.58 1.58 0.84 3 Year 1.45 1.20 0.38 5 Year 1.36 1.01 0.24 10 Year 1.79 1.09 0.34 FUND FACTS Fund Category Stable Value Fund Assets $209,124,477 Fund Advisor Galliard Capital Management Expense Ratio 0.57% Participant Withdrawals/Transfers Daily FUND CHARACTERISTICS Blended Yield (after fees) 1.73% Effective Duration 2.81 Yrs Annualized Turnover2 (as of 12/31/17) 79.07% INVESTMENT CONTRACT ISSUERS
Issuer Moody's Rating
S&P Rating
Transamerica Premier Life Ins. Co. A1 AA- Voya Ret. Ins. and Annuity Co. A2 A Prudential Ins. Co. of America A1 AA- Massachusetts Mutual Life Ins. Co. Aa2 AA+ New York Life Ins. Co. Aaa AA+ FUND ALLOCATION Fund (%) Security Backed Investment Contracts 83.0 Separate Account GICs 12.2 Cash/Equivalents 4.8 SECTOR ALLOCATION OF THE UNDERLYING FIXED INCOME PORTFOLIO Fund (%) U.S. Treasury/Agency 21.6 Other U.S. Government 2.5 Corporate/Taxable Municipal Securities 33.6 Mortgage Backed Securities (MBS) 23.8 Asset Backed Securities (ABS) 12.0 International Gov't/Agency Securities 0.2 Cash/Equivalents 6.3
1: These are fees paid to create and maintain the investments used by a stable value fund. 2: These are fees borne indirectly by the Fund when it acquires an interest in another fund which pays its own separate fees. 3: Includes audit fees for the cost of producing a report by a qualified auditor. 4: Total Annual Fund Operating Expenses are reflected daily in the Fund's net asset value (NAV).
STATE OF OREGON STABLE VALUE FUND
FOURTH QUARTER 2017
FUND ADVISOR Galliard Capital Management is the Fund's Advisor. Galliard specializes in stable value management and currently manages $91.0 billion in assets for institutional investors.
FEES AND EXPENSES The following table shows Galliard's fees and expense information for this investment option. Total Annual Operating Expenses are expenses that reduce the rate of return of the investment option. The cumulative effect of fees and expenses will reduce the growth of your retirement savings. Visit the Department of Labor's website for an example showing the long-term effect of fees and expenses. Fees and expenses are only one of many factors to consider when you decide to invest in this Fund. You may also want to think about whether an investment in this Fund, along with your other investments, will help you achieve your financial goals.
TOTAL ANNUAL FUND OPERATING EXPENSES Total Annual Fund Operating Expenses are deducted directly from the Fund's net asset value and reduce the investment option's rate of return.
Expenses Expense Ratio (as of 12/31/17) Per $1,000
Investment Management Fees paid to Galliard 0.138% $1.38
Investment Management Fees paid to Non-Affiliated Investment Advisors 0.009% $0.09
Investment Contract Fees 1 0.197% $1.97
Acquired Fund Fees 2 0.060% $0.60
Investment Contract Fees None None
Other Acquired Fund Fees and Non-Affiliated Investment Management Fees paid to Non-Affiliated Investment Advisors 3 0.060% $0.60
12b-1 Distribution Fee None None
Other Expenses 0.170% $1.70
Total Annual Fund Operating Expenses 4 0.575% $5.75
Please contact your plan administrator for additional information about this investment option.
STATE OF OREGON STABLE VALUE FUND
FOURTH QUARTER 2017 PORTFOLIO REVIEW
STABLE VALUE PORTFOLIO REVIEW - STATE OF OREGON STABLE VALUE FUND
Fourth Quarter 2017
GALLIARD CONTACTS
Client Portfolio Management
Matt Kline Senior Director 612.667.0856 [email protected]
Carrie Callahan
Managing Partner 612.667.1793 [email protected]
Additional Contact(s)
Erol Sonderegger, CFA Principal 612.667.8007 [email protected]
Mike Norman
Partner 612.667.3219 [email protected]
Galliard Client Service
612.667.3220 [email protected]
TABLE OF CONTENTS
Stable Value Portfolio Review - State of Oregon Stable Value Fund ................................................................ 3
Investment Performance ............................................................................................................................ 5
Portfolio Characteristics ............................................................................................................................. 6
Holdings ..................................................................................................................................................... 12
Market Review ..................................................................................................................................................... 14
Appendix .............................................................................................................................................................. 17
Total Annual Fund Operating Expenses ................................................................................................. 18
The information contained in this report is for informational purposes only. It is intended to provide a summary of portfolio performance and characteristics, and an accounting based view of transactions and holdings. This is a standardized report and is not intended to be used for compliance purposes. Individual portfolio compliance requirements may not be captured in this report.
S T A B L E V A L U E P O R T F O L I O R E V I E W
STABLE VALUE PORTFOLIO REVIEW - STATE OF OREGON STABLE VALUE FUND
Fourth Quarter 2017
GALLIARD INCEPTION DATE September 04, 2012
INVESTMENT OBJECTIVE The primary objective of the portfolio is to provide safety of principal. Secondary objectives are consistency of returns, while maintaining a stable credited rate of interest.
BENCHMARK 3 Year Constant Maturity Treasury Yield
STABLE VALUE PORTFOLIO COMPONENTS
COMPONENTS MAX ALLOCATION
Liquidity Buffer 5-50% Investment Contracts - GICs 0-10% Insurance Separate Account Contracts 0-50% Security Backed Investment Contracts 0-95%
KEY PORTFOLIO GUIDELINES Portfolio Duration 3.50 year maximum Average Portfolio Quality Minimum of AA- or equivalent (underlying asset level) Minimum Contract Issuer Quality A- or equivalent at time of placement Minimum Portfolio Issue Quality BBB- or equivalent at the time of purchase
STABLE VALUE PORTFOLIO REVIEW - STATE OF OREGON STABLE VALUE FUND
Fourth Quarter 2017
1: Returns for periods of less than one year are not annualized. 2: Returns are net of all fees, including plan administrative reimbursement. 3: Galliard assumed management of this portfolio on Sep 01, 2012. Performance for periods referenced prior to this date include historical performance of another investment advisor.
CALENDAR YEAR PERFORMANCE 2017 2016 2015 2014 2013 Portfolio (net of all fees - NAV level)2 1.58 1.46 1.33 1.10 1.34 3 Year Constant Maturity Treasury 1.58 1.01 1.03 0.90 0.54
MARKET INDICES BofAML US 3-Mon T-Bill 0.86 0.33 0.05 0.03 0.07 Consumer Price Index 2.17 2.07 0.73 0.76 1.51
ANNUALIZED INVESTMENT PERFORMANCE1 Period Ending December 31, 2017
3 Mo
1 Yr
3 Yr
5 Yr
10 Yr Since
Inception3 Portfolio (net of all fees - NAV level)2 0.42 1.58 1.45 1.36 1.79 1.37 3 Year Constant Maturity Treasury 0.45 1.58 1.20 1.01 1.09 0.97
STABLE VALUE PORTFOLIO REVIEW - STATE OF OREGON STABLE VALUE FUND
Fourth Quarter 2017
PORTFOLIO CHARACTERISTICS
Total Assets $209,124,477 Average Holdings Quality2 Aa3/AA- Number of Contract Issuers 5
Blended Yield (before fees)1 2.04% Effective Duration 2.81 years Market/Book Value Ratio 99.74%
SECTOR DISTRIBUTION
PORTFOLIO DISTRIBUTION
CONTRACT VALUE ($) % OF PORTFOLIO
12/31/2017 % OF PORTFOLIO
09/30/2017 Cash & Equivalents1 10,053,914 4.8 6.6 Separate Account GICs 25,500,533 12.2 12.0 Short Portfolio 6,206,495 3.0 2.9 Intermediate Portfolio 19,294,039 9.2 9.0 Security Backed Investment Contracts 173,570,030 83.0 81.4 Short Portfolio 78,819,419 37.7 37.0 Short / Intermediate Portfolio 21,080,389 10.1 9.9 Intermediate Portfolio 73,670,222 35.2 34.5 Total $209,124,477 100.0%2 100.0%2
1: Blended yield is before investment management fees and after wrap fees. 2: The Weighted Average Quality of the portfolio has NOT been assessed by a nationally recognized statistical rating organization. The Weighted Average Quality shown represents an average quality of the contracts and cash held by the portfolio as rated by S&P and Moody's.
1: Includes Receivables and Payables. 2: Total % of portfolio may not add to 100% due to rounding.
STABLE VALUE PORTFOLIO REVIEW - STATE OF OREGON STABLE VALUE FUND
Fourth Quarter 2017
HISTORICAL BLENDED YIELD1
1.68 1.72 1.77 1.82 1.82 1.74 1.87 1.98 2.04
0
1
2
3
4
5
Ble
nded
Yie
ld (
%)
CONTRACT QUALITY DISTRIBUTION1
14.9
12.2
22.0
26.3 24.5
0
10
20
30
% o
f Por
tfolio
HISTORICAL MARKET VALUE TO BOOK VALUE RATIO
100.05
101.18 101.83 101.61
99.85 100.00 100.23 100.28 99.74
97
98
99
100
101
102
103
104
MV
/BV
Rat
io (
%)
UNDERLYING DURATION DISTRIBUTION2
22.3
35.4
31.2
11.1
0
10
20
30
40
% o
f Por
tfolio
1: As of quarter end. Blended yield is before investment management fees and after wrap fees.
1: Total % of portfolio may not add to 100% due to rounding. The quality distribution shown represents the distribution of the individual holdings' Composite Ratings, as rated by S&P, Moody's and Fitch. 2: Total % of portfolio may not add to 100% due to rounding. Duration distribution of the externally managed portfolios is provided by the external manager.
STABLE VALUE PORTFOLIO REVIEW - STATE OF OREGON STABLE VALUE FUND
Fourth Quarter 2017
PORTFOLIO DISTRIBUTION1
4.8%
40.7%
10.1%
44.5%
Cash & Equivalents
Short Portfolio
Short / IntermediatePortfolio
Intermediate Portfolio
2
UNDERLYING FIXED INCOME CREDIT QUALITY1
0.1
0.1
10.0
16.1
6.6
67.1
NR/NA
<BBB
BBB
A
AA
AAA
MANAGER DISTRIBUTION1
4.8%
54.2% 9.2%
10.6%
11.1%
10.1%
Cash & Equivalents
Galliard
Barings LLC
Dodge & Cox
Jennison Assoc.
NYL Investors LLC
UNDERLYING FIXED INCOME ASSET ALLOCATION2
6.3
0.2
12.0
0.1
4.3
0.6
18.9
2.3
31.3
2.5
21.6
Cash/Equivalents
Intl Government/Agency
Asset Backed
Municipal MBS
CMBS
Non-Agency MBS
Agency MBS
Taxable Municipals
Corporates
Other U.S. Government
U.S. Treasury/Agency
1: Book value. Total % of portfolio may not add to 100% due to rounding. 2: Includes Receivables and Payables.
1: Market value. Total % of portfolio may not add to 100% due to rounding. The quality distribution shown represents the distribution of the individual holdings' Composite Ratings, as rated by S&P, Moody's and Fitch. Ratings shown as NR/NA are not rated or not available security ratings. The external managers provide portfolio holdings, and the securities are classified using Galliard's analytics and methodology 2: Market value. Total % of portfolio may not add to 100% due to rounding. The external managers provide portfolio holdings, and the securities are classified using Galliard's analytics and methodology for maximum comparability across managers.
STABLE VALUE PORTFOLIO REVIEW - STATE OF OREGON STABLE VALUE FUND
Fourth Quarter 2017
2017 2016 2015 2014
Beginning Assets $212.4 $194.6 $188.7 $195.7 Net Cash Flow ($)1 -$7.1 $14.2 $2.9 -$9.8 Net Cash Flow (%) -3.35% 7.29% 1.52% -5.02% Estimated Investment Earnings $3.9 $3.6 $3.1 $2.7 Ending Assets2 $209.1 $212.4 $194.6 $188.7
1: Contributions, Withdrawals and Investment Transfers 2: Cashflows may not net to final assets due to rounding.
HISTORICAL CASHFLOWS
-$4.0
-$2.0
$0.0
$2.0
$4.0
$6.0
$8.0
STABLE VALUE PORTFOLIO REVIEW - STATE OF OREGON STABLE VALUE FUND
Fourth Quarter 2017
The information contained herein reflects the views of Galliard Capital Management, Inc. & sources believed to be reliable by Galliard as of the date of publication. The views expressed here may change at any time subsequent to the date of publication. This publication is for informational purposes only. For institutional investors only.
ISSUER RATING SUMMARY
S & P RATING MOODY'S RATING 12/31/2017 9/30/2017 12/31/2017 9/30/2017
Massachusetts Mutual Life Ins. Co. AA+ AA+ Aa2 Aa2 New York Life Ins. Co. AA+ AA+ Aaa Aaa Prudential Ins. Co. of America AA- AA- A1 A1 Transamerica Premier Life Ins. Co. AA- AA- A1 A1 Voya Ret. Ins. and Annuity Co. A A A2 A2
STABLE VALUE PORTFOLIO REVIEW - STATE OF OREGON STABLE VALUE FUND
Fourth Quarter 2017
ISSUER RATING SUMMARY
MASSACHUSETTS MUTUAL LIFE INS. CO.
• Leading position in participating whole-life
• Capital levels are above average
• Recently rebranded asset management businesses under the Barings Asset Management name and logo
NEW YORK LIFE INS. CO.
• Very strong capital levels
• A leading U.S. life insurer - largest mutual insurer in the U.S.
PRUDENTIAL INS. CO. OF AMERICA
• A leading diversified U.S. life insurer
• Continue to maintain above average capital ratios versus lower ratios following 2015 captive reinsurance transaction
• Prudential, as the last non-bank institution designated as a systemically important financial institution (SIFI), is expected to pursue relief from the U.S. Financial Stability Oversight Council following the FSOC's recent removal of AIG's SIFI-designation
TRANSAMERICA PREMIER LIFE INS. CO.
• Part of a large diverse insurance group which uses significant intercompany reinsurance, which results in the appearance of a higher operating leverage than is the case
• Fitch recently lowered Transamerica's Insurer Financial Strength ratings to A+ from AA-, citing margin compression due to the shift from capital intensive spread products to low capital intense fee-based businesses
VOYA RET. INS. AND ANNUITY CO.
• Large-scale retirement, employee benefits and universal life presence
• Operating performance solid in core businesses with an improved outlook due to the sale of Voya's closed-block of variable annuity business to Venerable Holdings, Inc., an investment vehicle owned by a consortium of investors led by affiliates of Apollo Global Management, Crestview Partners and Reverence Capital Partners.
The information contained herein reflects the views of Galliard Capital Management, Inc. & sources believed to be reliable by Galliard as of the date of publication. The views expressed here may change at any time subsequent to the date of publication. This publication is for informational purposes only. For institutional investors only.
STATE OF OREGON STABLE VALUE FUND PORTFOLIO HOLDINGS
December 31, 2017
1: N.S.M. = No Stated Maturity
Asset ID Security Description Manager Contract Value ($)
Market Value ($)
Market/Book Value Ratio (%)
% of Portfolio Yield (%) Maturity1
Effective Duration (yrs)
S&P Rating
Moody's Rating
Wrap Fees (bps)
CASH & EQUIVALENTS
FUNDAVAIL Cash Receivable / (Payable) 0 0 100.0 0.0 1.22 0.10 AAA Aaa
3839909B6 State Street Government STIF 10 10,053,914 10,053,914 100.0 4.8 1.22 0.10 AAA Aaa TOTAL CASH & EQUIVALENTS SEPARATE ACCOUNT GICS
Short Portfolio
575997ZT1 Massachusetts Mutual Life Ins. Co. Galliard 6,206,495 6,172,124 99.4 3.0 2.30 N.S.M. 1.83 AA+ Aa2 20.0
Total Short Portfolio Intermediate Portfolio
575997ZT1 Massachusetts Mutual Life Ins. Co. Barings LLC 19,294,039 19,187,192 99.4 9.2 2.30 N.S.M. 4.00 AA+ Aa2 20.0
Total Intermediate Portfolio TOTAL SEPARATE ACCOUNT GICS SECURITY BACKED INVESTMENT CONTRACTS
Short Portfolio
744999SP9 Prudential Ins. Co. of America Galliard 22,895,112 22,999,002 100.5 10.9 2.16 N.S.M. 1.86 AA- A1 20.0
600996DU3 Transamerica Premier Life Ins. Co. Galliard 32,857,429 32,678,954 99.5 15.7 1.92 N.S.M. 1.86 AA- A1 20.0 75999UTZ1 Voya Ret. Ins. and Annuity Co. Galliard 23,066,877 23,025,254 99.8 11.0 2.21 N.S.M. 1.86 A A2 22.0 Total Short Portfolio Short / Intermediate Portfolio
64999DNB2 New York Life Ins. Co. NYL Investors
LLC 21,080,389 20,851,102 98.9 10.1 1.76 N.S.M. 2.88 AA+ Aaa 22.0
Total Short / Intermediate Portfolio
STATE OF OREGON STABLE VALUE FUND PORTFOLIO HOLDINGS
December 31, 2017
1: N.S.M. = No Stated Maturity
Asset ID Security Description Manager Contract Value ($)
Market Value ($)
Market/Book Value Ratio (%)
% of Portfolio Yield (%) Maturity1
Effective Duration (yrs)
S&P Rating
Moody's Rating
Wrap Fees (bps)
Intermediate Portfolio
744999SP9 Prudential Ins. Co. of America Jennison Assoc. 23,200,257 23,305,532 100.5 11.1 2.16 N.S.M. 4.16 AA- A1 20.0
600996DU3 Transamerica Premier Life Ins. Co. Dodge & Cox 22,223,031 22,102,320 99.5 10.6 1.92 N.S.M. 3.70 AA- A1 20.0 75999UTZ1 Voya Ret. Ins. and Annuity Co. Galliard 28,246,934 28,195,964 99.8 13.5 2.21 N.S.M. 4.00 A A2 22.0 Total Intermediate Portfolio TOTAL SECURITY BACKED INVESTMENT CONTRACTS
TOTAL PORTFOLIO
M A R K E T R E V I E W
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV
GD
P G
row
th (
%)
2012 2013 2014 2015 2016 2017
MARKET REVIEWFOURTH QUARTER 2017
U.S. ECONOMY SHRUGS OFF HURRICANE DISRUPTION TO POST STRONG GDP GROWTH IN Q3
• U.S. GDP growth advanced by +3.2% in 3Q17, posting a second consecutive quarter of above 3% growth.
• Growth during the quarter was driven by solid personal consumption, business investment and exports.
• Employers added an average of 204,000 jobs per month over the quarter, bouncing back from hurricane-related disruptions in Q3. The unemployment rate fell to 4.1%
• The Institute for Supply Management’s (ISM) survey of manufacturing activity rose to 59.7 in December. Meanwhile, the ISM services index fell back to 55.9 from readings near 60 last quarter.
TAX REFORM, STRONGER GLOBAL GROWTH SPUR BUSINESS INVESTMENT
• Republicans passed significant tax cut legislation at the end of 2017. The tax cut package slashes the corporate income tax rate to 21% from 34% and provides for more modest cuts at the individual level.
• Global growth indicators point to a continuation of above-trend growth in the U.S., Europe, and developed Asia. JPMorgan/Markit’s global composite of purchasing manager indices (Global Composite PMI) rose to 54.4 in December.
• The tight labor market, strong growth outlook, and expectations for tax cuts all spurred a rebound in business investment. Business investment in equipment rose at a +10.8% annualized pace over Q3, contributing nearly +0.6 pts to overall GDP during the quarter.
Source: Bloomberg, U.S. Bureau of Economic Analysis
Source: Federal Reserve Bank of St. Louis, U.S. Census Bureau, U.S. Bureau of Economic Analysis
U.S. GDP Growth by Quarter (Annualized Rate)
Capital Goods Shipments and Business Investment
The information contained herein reflects the views of Galliard Capital Management, Inc. & sources believed to be reliable by Galliard as of the date of publication. The views expressed here may change atany time subsequent to the date of publication. This publication is for informational purposes only. For institutional investor use only.
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
Gro
wth
Rat
e (%
q/q
Ann
.)
Non-Def. Cap Goods Shipments (ex Air.) Non-Resid. Real Fixed Investment: Equip.
FED RAISES POLICY RATE IN DECEMBER, YIELD CURVE FLATTENS FURTHER
• The Fed raised its policy rate by 25 bps at its December meeting, bringing its policy rate to a range of 1.25% to 1.50%. Policymakers’ median forecasts for the policy rate calls for three more hikes in 2018.
• Fed officials’ median estimate of GDP growth in 2018 rose to 2.5% in December from 2.1% at the September meeting. Officials saw the unemployment rate declining to 3.9% over 2018, down from 4.1% in September.
• Market reaction to the rate hike was muted. Over the quarter, front-end interest rates rose to price-in the hike, while yields on intermediate maturities were less affected. At the long-end (30-year maturity) yields actually declined, resulting in a significant flattening of the yield curve.
INFLATION MAY HOLD THE KEY TO FED RATE PATH IN 2018
• Monthly readings for core consumer price inflation have rebounded from the first half of 2017, when declines in wireless phone services, used car prices and certain healthcare services contributed to a significant decline in the year-over-year figures.
• The breakeven inflation level priced into 10-year TIPS rose sharply during the quarter, reaching 2.0% at the end of December from as low as 1.7% in June.
• With the U.S. economy at full employment, we believe that inflation readings are likely to be more important than the pace of incremental job gains or rate of GDP growth rate in terms of the Fed’s rate hike decisions this year.
Source: Bloomberg
Source: U.S. Bureau of Labor Statistics, Federal Reserve Board of St. Louis
Fed Funds Futures – December 2018 Contract (%)
Core Consumer Prices
The information contained herein reflects the views of Galliard Capital Management, Inc. & sources believed to be reliable by Galliard as of the date of publication. The views expressed here may change atany time subsequent to the date of publication. This publication is for informational purposes only. For institutional investor use only.
MARKET REVIEWFOURTH QUARTER 2017
1.20
1.30
1.40
1.50
1.60
1.70
1.80
1.90
2.00
Rat
e (%
)
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Rat
e (%
)
% 3 Months Annualized % Year over Year
A P P E N D I X
APPENDIX - STATE OF OREGON STABLE VALUE FUND
Fourth Quarter 2017
TOTAL ANNUAL FUND OPERATING EXPENSES Total Annual Operating Expenses are deducted directly from the Fund’s net asset value and reduce the investment option’s rate of return.
Expense Expense Ratio 12/31/17 Per $1000
Investment Management Fees paid to Galliard 0.138% $1.38 Investment Management fees paid to Non-Affiliated Investment Advisors 0.009% $0.09 Investment Contract Fees1 0.197% $1.97 Acquired Fund Fees2 0.060% $0.60 -Investment Contract Fees None None -Other Acquired Fund Fees and Non-Affiliated Investment
Management Fees paid to Non-Affiliated Investment Advisors3 0.060% $0.60
12b-1 Distribution Fee None None Other Expenses 0.170% $1.70 Total Annual Fund Operating Expenses4 0.575% $5.75
1: These are fees paid to create and maintain the investments used by a stable value fund. 2: These are fees borne indirectly by the Fund when it acquires an interest in another fund which pays its own separate fees. 3: Includes audit fees for the cost of producing a report by a qualified auditor. 4: Total Annual Fund Operating Expenses are reflected daily in the Fund's net asset value (NAV).
Allocation of Stocks and Bonds Portfolio Analysis
045 40 35 30 25 20 15 10 5
10080
60
40
200
Years Until RetirementBlack line designates target allocation for the Fund as of the date of this report.
% AllocationBonds
U.S. Stocks
Non-U.S. Stocks
Cash
Other
Investment Objective and StrategyThe Fund seeks to provide for retirement outcomes consistent with investor preferences throughout the savings and draw down phase based on quantitatively measured risk that investors, on average, may be willing to accept.
The Fund is a collective investment trust maintained and managed by BlackRock Institutional Trust Company, N.A. ("BTC").The Fund shall be invested and reinvested in securities and other assets with the objective of providing for retirement outcomes
consistent with investor preferences throughout the savings and drawdown phase based on quantitatively measured risk that investors, on average, may be willing to accept.
In pursuit of that objective, the Fund will be broadly diversified across global asset classes, with asset allocations becoming more conservative over time if the Fund has a year in its name. The Fund’s investments may include: equity securities (including those issued by real estate companies); depositary receipts; debt securities and other fixed income obligations (including those issued or guaranteed by the U.S. government, its agencies or instrumentalities, and those issued by corporations or other entities); mortgage-backed securities; other asset-backed securities; commodities; and/or cash equivalents.
The Fund may invest in securities and other obligations of U.S. issuers or non-U.S. issuers, and those issuers may be of any market capitalization. The Fund's fixed income investments may be investment-grade or non-investment grade, and may include securities and other obligations of any maturity.
In addition to, or in lieu of, investing in the assets listed above, the Fund may engage in structured transactions in these asset classes, as well as over-the-counter forward contracts, swaps and options. When deemed appropriate by BTC, the Fund may invest in futures contracts, for the purpose of acting as a temporary substitute for investment in securities and/or to gain exposure to commodities.
The difference between the normal and current securities holdings for the Fund varies over time and is based on the factors analyzed by the asset allocation model used by BTC to manage the Fund. The normal asset allocations will gradually change over the investment horizon of the Fund to become more heavily oriented toward debt and debt-like securities. As time passes, the Fund is managed more conservatively – prior to retirement – in terms of its allocation to equity securities and markets, on the premise that individuals investing for retirement desire to reduce investment risk in their retirement accounts as their retirement date approaches.
The trajectory along which asset allocations are adjusted over time to gradually become more conservative is called the “glidepath”. The glidepath illustrates the target allocation among asset classes as the Fund approaches its target date. The target asset allocation of the Fund at its retirement date is expected to be 40% in underlying index funds that invest primarily in equity and equity-like securities and 60% in underlying index funds that invest primarily in fixed income and fixed income-like securities.
BTC employs a proprietary investment model that analyzes securities market data, including risk, correlation and expected return statistics, to recommend the portfolio allocation among the asset classes.
Rather than choosing specific securities within each asset class, BTC selects among indices representing segments of the global equity and debt markets and invests in securities that comprise the chosen index. The Fund generally invests in a chosen index through a series of collective investment trusts maintained and managed by BTC, each such fund representing one of the indices (each, an "Underlying Fund").
In the event of a conflict between this summary description of the Fund's investment objective and principal investment strategies and the Trust Document under which the Fund was established, the Trust Document will govern. For more information related to the Fund, please see the Fund's Trust Document, Profile and most recent audited financial statements.
Top 10 Holdings as of 12-31-17 % Assets
U.S. Debt Index Fund E 45.33Russell 1000 Index Fund 23.74BlackRock MSCI ACWI ex-US IMI Index Fd E 14.23U.S. TIPS Fund E 7.32Russell 2000 Index Fund 3.82.......................................................................................................Commodity Index Daily Fund E 3.74Developed Real Estate Index Fund E 1.81
Morningstar Super Sectors as of 12-31-17 % Fund
h Cyclical 41.68j Sensitive 36.53k Defensive 21.80
Morningstar F-I Sectors as of 12-31-17 % Fund % Category
⁄ Government 46.90 37.15› Corporate 20.11 26.78€ Securitized 16.24 17.88‹ Municipal 0.49 0.38fi Cash 16.11 14.99 Other 0.15 2.81
Investment InformationOperations and Management
Product Inception Date 08-26-11Strategy Inception Date 08-01-05Total Fund Assets ($mil) 2,346.60Investment Manager BlackRock Institutional Trust
Company NA
.........................................................................................................................
Annual Turnover Ratio % 12.80
Fees and Expenses as of 12-31-16
Total Annual Operating Expense % 0.09%Total Annual Operating Expense per $1000 $0.90
Additional Information for Total Annual Operating Expense
The Total Annual Operating Expense ratio noted above ("TAOE")reflects a management fee and administrative costs. Effective1/1/17, administrative costs are capped at one (1) basis point(0.01%) per year. The TAOE may also, if applicable, reflectcertain third party acquired fund fees and expenses. There maybe other fees and expenses not reflected in the TAOE that bearon the value of the investment. The Portfolio Turnover Rate isthat of the collective investment fund in which the Fund investsexclusively, either directly or indirectly.
Release Date: 12-31-2017
LifePath® Index 2020 Fund L .................................................................................................................................................................................................................................................................................................................................................................................................Primary Benchmark Custom Benchmark Morningstar Category Overall Morningstar Rating™ Morningstar Return Morningstar RiskBloomberg Barclays U.S.Aggregate Bond Index
LifePath® Index 2020 CustomBenchmark
Target-Date 2020 QQQQ Average Below AverageSee disclosure for details.
697936 ©2018 Morningstar, Inc., Morningstar Investment Profiles™ 312-696-6000. All rights reserved. The information contained herein: (1) is proprietary toMorningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. Neither Morningstarnor its content providers are responsible for any damages or losses arising from any use of information. Past performance is no guarantee of futureperformance. Visit our investment website at www.morningstar.com.
ß® Page 1 of 4
Benchmark DescriptionThe LifePath® Index 2020 Fund L's Custom Benchmark is acomparison benchmark for the performance of the Fund. TheCustom Benchmark is calculated using blended returns of thirdparty indices that proportionally reflect the respectiveweightings of the Fund's asset classes. The third party indexproportions of the Custom Benchmark are adjusted quarterly toreflect the Fund's changing asset allocations over time. As theFund's asset classes have been re-defined or added over time,the indices used to calculate the Custom Benchmark havechanged accordingly. As of March 31, 2017, the indices usedto calculate the Custom Benchmark are: Russell 1000® Index,Russell 2000® Index, MSCI ACWI ex-US IMI Net DividendReturn Index[sm], Bloomberg Barclays U.S. Aggregate BondIndex, Bloomberg Barclays U.S. Treasury Inflation ProtectedSecurities (TIPS) Index, FTSE EPRA/NAREIT Developed Index,and the Bloomberg Commodity Index Total Return.
Volatility Analysis
Low Moderate High
Investment
Category
In the past, this investment has shown a relatively small rangeof price fluctuations relative to other investments. Based on thismeasure, currently more than two-thirds of all investmentshave shown higher levels of risk. Consequently, this investmentmay appeal to investors looking for a conservative investmentstrategy.
Best 3 Month Return Worst 3 Month Return
20.37% -23.09%(Mar '09 - May '09) (Sep '08 - Nov '08)
Performance
L1 L2 L3 L4 L5 L6
-9
-6
-3
0
3
6
9
12 Total Return% as of 12-31-17
InvestmentPrimary BmarkCustom Bmark
Average annual, if greaterthan 1 year
Since Inception 10 Year 5 Year 3 Year 1 Year YTD
5.66 4.70 6.49 5.57 11.77 11.77 Investment Return %4.21 4.01 2.10 2.24 3.54 3.54 Primary Bmark Return %5.67 4.68 6.45 5.49 11.65 11.65 Custom Bmark Return %........................................................................................................................................................................................................... QQQQ QQQ QQQ . . Morningstar Rating™. 84 151 189 . . # of Funds in Category
Performance Disclosure: The Fund's returns are net of an investment management fee, currently at an annual rate of0.08%. The Fund’s performance reflects fund level administrative costs. Effective 1/1/17, the fund level administrativecosts are capped at 1 basis point (0.01%) per year. Since its inception the Fund has invested all of its assets in LifePathIndex 2020 Fund F. Returns shown for periods prior to the Fund's inception are those of the LifePath Index 2020 FundF net of the Fund's investment management fee.
Principal RisksAny of the principal risks summarized below may adversely affect the Fund's net asset value, performance, and ability to meet itsinvestment objective. An investment in the Fund is not a bank deposit, is not guaranteed by BlackRock, Inc. or any of its affiliates,and is not insured by the Federal Deposit Insurance Corporation or any other agency of the U.S. government.
Equity Investment Risk: The price of an equity security fluctuates based on changes in the issuer’s financial condition and overallmarket and economic conditions. Equity securities are subject to changes in value that may be more volatile than other asset classes.
Foreign Investment Risk 1: The Fund may suffer losses due to political, legal, economic and geographic events affecting a non-U.S. issuer or market. The prices of non-U.S. securities may be more volatile than those of securities issued by U.S. corporationsor other U.S. entities. Securities of non-U.S. issuers denominated in non-U.S. currencies will expose the Fund to fluctuations inforeign currency exchange prices.
Target Date Risk 1: A “target date” fund may incur losses close to or after the fund's target retirement date, and there is noguarantee that the Fund will provide adequate income for an investor’s retirement.
Asset Allocation Model Risk: The asset allocation model may not effectively maximize returns or minimize risk, or be appropriatefor every investor seeking a particular risk profile. The model developed by BTC could result in underperformance as compared tofunds with similar investment objectives and strategies.
Commodity-Related Investment Risk 2: The value of commodity-linked derivative investments may be significantly affected bychanges in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industryor commodity, such as drought, floods, weather, embargoes, tariffs and international economic, political and regulatorydevelopments.
Securities Lending Risk 1: The Fund may engage in securities lending, which involves borrower credit risk, settlement risk, andcash collateral-related risks, such as the risk that the return on the cash collateral is insufficient to cover the fees the Fund iscommitted to pay and the risk that cash collateral may be invested in securities or other instruments that suffer losses or becomeilliquid.
Derivatives Risk 1: Investments in derivatives (such as futures contracts, forward contracts, swaps and options) may reducethe Fund's returns and/or increase volatility. Fluctuations in the values of derivatives may not correlate perfectly with the overallsecurities markets. The other party in the transaction may not fulfill its contractual obligation. The possible lack of a liquid secondarymarket for derivatives could expose the Fund to losses.
Real Estate-Related Investment Risk 2: Real estate values can be negatively affected by many factors including both the generaland local economies, the amount of new construction in a particular area, the laws and regulations affecting real estate, the costsof owning, maintaining and improving real estate, availability of mortgages, and changes in interest rates.
Underlying Fund Risk 2: The investment objective and strategies of an Underlying Fund in which the Fund invests may differfrom the Fund, and there is no assurance that an Underlying Fund will achieve its objective.
Fixed Income Investment Risk 10: An increase in interest rates may cause the value of fixed income securities held by the Fundto decline. The Fund's income may decline when interest rates fall. Debt issuers may not honor their obligations. Securities that arerated below investment grade may be more volatile and less liquid than higher-rated securities of similar maturity.
Release Date: 12-31-2017
LifePath® Index 2020 Fund L .................................................................................................................................................................................................................................................................................................................................................................................................Primary Benchmark Custom Benchmark Morningstar Category Overall Morningstar Rating™ Morningstar Return Morningstar RiskBloomberg Barclays U.S.Aggregate Bond Index
LifePath® Index 2020 CustomBenchmark
Target-Date 2020 QQQQ Average Below AverageSee disclosure for details.
697936 ©2018 Morningstar, Inc., Morningstar Investment Profiles™ 312-696-6000. All rights reserved. The information contained herein: (1) is proprietary toMorningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. Neither Morningstarnor its content providers are responsible for any damages or losses arising from any use of information. Past performance is no guarantee of futureperformance. Visit our investment website at www.morningstar.com.
ß® Page 2 of 4
Allocation of Stocks and Bonds Portfolio Analysis
045 40 35 30 25 20 15 10 5
10080
60
40
200
Years Until RetirementBlack line designates target allocation for the Fund as of the date of this report.
% AllocationBonds
U.S. Stocks
Non-U.S. Stocks
Cash
Other
Investment Objective and StrategyThe Fund seeks to provide for retirement outcomes consistent with investor preferences throughout the savings and draw down phase based on quantitatively measured risk that investors, on average, may be willing to accept.
The Fund is a collective investment trust maintained and managed by BlackRock Institutional Trust Company, N.A. ("BTC").The Fund shall be invested and reinvested in securities and other assets with the objective of providing for retirement outcomes
consistent with investor preferences throughout the savings and drawdown phase based on quantitatively measured risk that investors, on average, may be willing to accept.
In pursuit of that objective, the Fund will be broadly diversified across global asset classes, with asset allocations becoming more conservative over time if the Fund has a year in its name. The Fund’s investments may include: equity securities (including those issued by real estate companies); depositary receipts; debt securities and other fixed income obligations (including those issued or guaranteed by the U.S. government, its agencies or instrumentalities, and those issued by corporations or other entities); mortgage-backed securities; other asset-backed securities; commodities; and/or cash equivalents.
The Fund may invest in securities and other obligations of U.S. issuers or non-U.S. issuers, and those issuers may be of any market capitalization. The Fund's fixed income investments may be investment-grade or non-investment grade, and may include securities and other obligations of any maturity.
In addition to, or in lieu of, investing in the assets listed above, the Fund may engage in structured transactions in these asset classes, as well as over-the-counter forward contracts, swaps and options. When deemed appropriate by BTC, the Fund may invest in futures contracts, for the purpose of acting as a temporary substitute for investment in securities and/or to gain exposure to commodities.
The difference between the normal and current securities holdings for the Fund varies over time and is based on the factors analyzed by the asset allocation model used by BTC to manage the Fund. The normal asset allocations will gradually change over the investment horizon of the Fund to become more heavily oriented toward debt and debt-like securities. As time passes, the Fund is managed more conservatively – prior to retirement – in terms of its allocation to equity securities and markets, on the premise that individuals investing for retirement desire to reduce investment risk in their retirement accounts as their retirement date approaches.
The trajectory along which asset allocations are adjusted over time to gradually become more conservative is called the “glidepath”. The glidepath illustrates the target allocation among asset classes as the Fund approaches its target date. The target asset allocation of the Fund at its retirement date is expected to be 40% in underlying index funds that invest primarily in equity and equity-like securities and 60% in underlying index funds that invest primarily in fixed income and fixed income-like securities.
BTC employs a proprietary investment model that analyzes securities market data, including risk, correlation and expected return statistics, to recommend the portfolio allocation among the asset classes.
Rather than choosing specific securities within each asset class, BTC selects among indices representing segments of the global equity and debt markets and invests in securities that comprise the chosen index. The Fund generally invests in a chosen index through a series of collective investment trusts maintained and managed by BTC, each such fund representing one of the indices (each, an "Underlying Fund").
In the event of a conflict between this summary description of the Fund's investment objective and principal investment strategies and the Trust Document under which the Fund was established, the Trust Document will govern. For more information related to the Fund, please see the Fund's Trust Document, Profile and most recent audited financial statements.
Top 10 Holdings as of 12-31-17 % Assets
U.S. Debt Index Fund E 34.84Russell 1000 Index Fund 29.75BlackRock MSCI ACWI ex-US IMI Index Fd E 18.10U.S. TIPS Fund E 5.55Developed Real Estate Index Fund E 4.93.......................................................................................................Commodity Index Daily Fund E 3.76Russell 2000 Index Fund 3.07
Morningstar Super Sectors as of 12-31-17 % Fund
h Cyclical 43.81j Sensitive 34.38k Defensive 21.81
Morningstar F-I Sectors as of 12-31-17 % Fund % Category
⁄ Government 43.62 36.59› Corporate 18.78 26.28€ Securitized 15.16 17.72‹ Municipal 0.46 0.40fi Cash 21.80 15.86 Other 0.19 3.15
Investment InformationOperations and Management
Product Inception Date 08-26-11Strategy Inception Date 07-05-06Total Fund Assets ($mil) 2,044.69Investment Manager BlackRock Institutional Trust
Company NA
.........................................................................................................................
Annual Turnover Ratio % 15.89
Fees and Expenses as of 12-31-16
Total Annual Operating Expense % 0.09%Total Annual Operating Expense per $1000 $0.90
Additional Information for Total Annual Operating Expense
The Total Annual Operating Expense ratio noted above ("TAOE")reflects a management fee and administrative costs. Effective1/1/17, administrative costs are capped at one (1) basis point(0.01%) per year. The TAOE may also, if applicable, reflectcertain third party acquired fund fees and expenses. There maybe other fees and expenses not reflected in the TAOE that bearon the value of the investment. The Portfolio Turnover Rate isthat of the collective investment fund in which the Fund investsexclusively, either directly or indirectly.
Release Date: 12-31-2017
LifePath® Index 2025 Fund L .................................................................................................................................................................................................................................................................................................................................................................................................Primary Benchmark Custom Benchmark Morningstar Category Overall Morningstar Rating™ Morningstar Return Morningstar RiskRussell 1000® Index LifePath® Index 2025 Custom
BenchmarkTarget-Date 2025 QQQ Average Below Average
See disclosure for details.
697945 ©2018 Morningstar, Inc., Morningstar Investment Profiles™ 312-696-6000. All rights reserved. The information contained herein: (1) is proprietary toMorningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. Neither Morningstarnor its content providers are responsible for any damages or losses arising from any use of information. Past performance is no guarantee of futureperformance. Visit our investment website at www.morningstar.com.
ß® Page 1 of 4
Benchmark DescriptionThe LifePath® Index 2025 Fund L's Custom Benchmark is acomparison benchmark for the performance of the Fund. TheCustom Benchmark is calculated using blended returns of thirdparty indices that proportionally reflect the respectiveweightings of the Fund's asset classes. The third party indexproportions of the Custom Benchmark are adjusted quarterly toreflect the Fund's changing asset allocations over time. As theFund's asset classes have been re-defined or added over time,the indices used to calculate the Custom Benchmark havechanged accordingly. As of March 31, 2017, the indices usedto calculate the Custom Benchmark are: Russell 1000® Index,Russell 2000® Index, MSCI ACWI ex-US IMI Net DividendReturn Index[sm], Bloomberg Barclays U.S. Aggregate BondIndex, Bloomberg Barclays U.S. Treasury Inflation ProtectedSecurities (TIPS) Index, FTSE EPRA/NAREIT Developed Index,and the Bloomberg Commodity Index Total Return.
Volatility Analysis
Low Moderate High
Investment
Category
In the past, this investment has shown a relatively small rangeof price fluctuations relative to other investments. Based on thismeasure, currently more than two-thirds of all investmentshave shown higher levels of risk. Consequently, this investmentmay appeal to investors looking for a conservative investmentstrategy.
Best 3 Month Return Worst 3 Month Return
22.96% -25.47%(Mar '09 - May '09) (Sep '08 - Nov '08)
Performance
L1 L2 L3 L4 L5 L6
-18
-12
-6
0
6
12
18
24 Total Return% as of 12-31-17
InvestmentPrimary BmarkCustom Bmark
Average annual, if greaterthan 1 year
Since Inception 10 Year 5 Year 3 Year 1 Year YTD
5.87 4.95 7.42 6.39 13.90 13.90 Investment Return %9.07 8.59 15.71 11.23 21.69 21.69 Primary Bmark Return %5.84 4.91 7.37 6.28 13.75 13.75 Custom Bmark Return %........................................................................................................................................................................................................... QQQ QQ QQQ . . Morningstar Rating™. 57 132 166 . . # of Funds in Category
Performance Disclosure: The Fund's returns are net of an investment management fee, currently at an annual rate of0.08%. The Fund’s performance reflects fund level administrative costs. Effective 1/1/17, the fund level administrativecosts are capped at 1 basis point (0.01%) per year. Since its inception the Fund has invested all of its assets in LifePathIndex 2025 Fund F. Returns shown for periods prior to the Fund's inception are those of the LifePath Index 2025 FundF net of the Fund's investment management fee.
Principal RisksAny of the principal risks summarized below may adversely affect the Fund's net asset value, performance, and ability to meet itsinvestment objective. An investment in the Fund is not a bank deposit, is not guaranteed by BlackRock, Inc. or any of its affiliates,and is not insured by the Federal Deposit Insurance Corporation or any other agency of the U.S. government.
Equity Investment Risk: The price of an equity security fluctuates based on changes in the issuer’s financial condition and overallmarket and economic conditions. Equity securities are subject to changes in value that may be more volatile than other asset classes.
Foreign Investment Risk 1: The Fund may suffer losses due to political, legal, economic and geographic events affecting a non-U.S. issuer or market. The prices of non-U.S. securities may be more volatile than those of securities issued by U.S. corporationsor other U.S. entities. Securities of non-U.S. issuers denominated in non-U.S. currencies will expose the Fund to fluctuations inforeign currency exchange prices.
Target Date Risk 1: A “target date” fund may incur losses close to or after the fund's target retirement date, and there is noguarantee that the Fund will provide adequate income for an investor’s retirement.
Asset Allocation Model Risk: The asset allocation model may not effectively maximize returns or minimize risk, or be appropriatefor every investor seeking a particular risk profile. The model developed by BTC could result in underperformance as compared tofunds with similar investment objectives and strategies.
Commodity-Related Investment Risk 2: The value of commodity-linked derivative investments may be significantly affected bychanges in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industryor commodity, such as drought, floods, weather, embargoes, tariffs and international economic, political and regulatorydevelopments.
Securities Lending Risk 1: The Fund may engage in securities lending, which involves borrower credit risk, settlement risk, andcash collateral-related risks, such as the risk that the return on the cash collateral is insufficient to cover the fees the Fund iscommitted to pay and the risk that cash collateral may be invested in securities or other instruments that suffer losses or becomeilliquid.
Derivatives Risk 1: Investments in derivatives (such as futures contracts, forward contracts, swaps and options) may reducethe Fund's returns and/or increase volatility. Fluctuations in the values of derivatives may not correlate perfectly with the overallsecurities markets. The other party in the transaction may not fulfill its contractual obligation. The possible lack of a liquid secondarymarket for derivatives could expose the Fund to losses.
Real Estate-Related Investment Risk 2: Real estate values can be negatively affected by many factors including both the generaland local economies, the amount of new construction in a particular area, the laws and regulations affecting real estate, the costsof owning, maintaining and improving real estate, availability of mortgages, and changes in interest rates.
Underlying Fund Risk 2: The investment objective and strategies of an Underlying Fund in which the Fund invests may differfrom the Fund, and there is no assurance that an Underlying Fund will achieve its objective.
Fixed Income Investment Risk 10: An increase in interest rates may cause the value of fixed income securities held by the Fundto decline. The Fund's income may decline when interest rates fall. Debt issuers may not honor their obligations. Securities that arerated below investment grade may be more volatile and less liquid than higher-rated securities of similar maturity.
Release Date: 12-31-2017
LifePath® Index 2025 Fund L .................................................................................................................................................................................................................................................................................................................................................................................................Primary Benchmark Custom Benchmark Morningstar Category Overall Morningstar Rating™ Morningstar Return Morningstar RiskRussell 1000® Index LifePath® Index 2025 Custom
BenchmarkTarget-Date 2025 QQQ Average Below Average
See disclosure for details.
697945 ©2018 Morningstar, Inc., Morningstar Investment Profiles™ 312-696-6000. All rights reserved. The information contained herein: (1) is proprietary toMorningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. Neither Morningstarnor its content providers are responsible for any damages or losses arising from any use of information. Past performance is no guarantee of futureperformance. Visit our investment website at www.morningstar.com.
ß® Page 2 of 4
Allocation of Stocks and Bonds Portfolio Analysis
045 40 35 30 25 20 15 10 5
10080
60
40
200
Years Until RetirementBlack line designates target allocation for the Fund as of the date of this report.
% AllocationBonds
U.S. Stocks
Non-U.S. Stocks
Cash
Other
Investment Objective and StrategyThe Fund seeks to provide for retirement outcomes consistent with investor preferences throughout the savings and draw down phase based on quantitatively measured risk that investors, on average, may be willing to accept.
The Fund is a collective investment trust maintained and managed by BlackRock Institutional Trust Company, N.A. ("BTC").The Fund shall be invested and reinvested in securities and other assets with the objective of providing for retirement outcomes
consistent with investor preferences throughout the savings and drawdown phase based on quantitatively measured risk that investors, on average, may be willing to accept.
In pursuit of that objective, the Fund will be broadly diversified across global asset classes, with asset allocations becoming more conservative over time if the Fund has a year in its name. The Fund’s investments may include: equity securities (including those issued by real estate companies); depositary receipts; debt securities and other fixed income obligations (including those issued or guaranteed by the U.S. government, its agencies or instrumentalities, and those issued by corporations or other entities); mortgage-backed securities; other asset-backed securities; commodities; and/or cash equivalents.
The Fund may invest in securities and other obligations of U.S. issuers or non-U.S. issuers, and those issuers may be of any market capitalization. The Fund's fixed income investments may be investment-grade or non-investment grade, and may include securities and other obligations of any maturity.
In addition to, or in lieu of, investing in the assets listed above, the Fund may engage in structured transactions in these asset classes, as well as over-the-counter forward contracts, swaps and options. When deemed appropriate by BTC, the Fund may invest in futures contracts, for the purpose of acting as a temporary substitute for investment in securities and/or to gain exposure to commodities.
The difference between the normal and current securities holdings for the Fund varies over time and is based on the factors analyzed by the asset allocation model used by BTC to manage the Fund. The normal asset allocations will gradually change over the investment horizon of the Fund to become more heavily oriented toward debt and debt-like securities. As time passes, the Fund is managed more conservatively – prior to retirement – in terms of its allocation to equity securities and markets, on the premise that individuals investing for retirement desire to reduce investment risk in their retirement accounts as their retirement date approaches.
The trajectory along which asset allocations are adjusted over time to gradually become more conservative is called the “glidepath”. The glidepath illustrates the target allocation among asset classes as the Fund approaches its target date. The target asset allocation of the Fund at its retirement date is expected to be 40% in underlying index funds that invest primarily in equity and equity-like securities and 60% in underlying index funds that invest primarily in fixed income and fixed income-like securities.
BTC employs a proprietary investment model that analyzes securities market data, including risk, correlation and expected return statistics, to recommend the portfolio allocation among the asset classes.
Rather than choosing specific securities within each asset class, BTC selects among indices representing segments of the global equity and debt markets and invests in securities that comprise the chosen index. The Fund generally invests in a chosen index through a series of collective investment trusts maintained and managed by BTC, each such fund representing one of the indices (each, an "Underlying Fund").
In the event of a conflict between this summary description of the Fund's investment objective and principal investment strategies and the Trust Document under which the Fund was established, the Trust Document will govern. For more information related to the Fund, please see the Fund's Trust Document, Profile and most recent audited financial statements.
Top 10 Holdings as of 12-31-17 % Assets
Russell 1000 Index Fund 34.97U.S. Debt Index Fund E 25.75BlackRock MSCI ACWI ex-US IMI Index Fd E 21.52Developed Real Estate Index Fund E 7.57U.S. TIPS Fund E 3.92.......................................................................................................Commodity Index Daily Fund E 3.87Russell 2000 Index Fund 2.41
Morningstar Super Sectors as of 12-31-17 % Fund
h Cyclical 45.36j Sensitive 33.43k Defensive 21.22
Morningstar F-I Sectors as of 12-31-17 % Fund % Category
⁄ Government 40.61 36.40› Corporate 17.70 26.01€ Securitized 14.28 16.35‹ Municipal 0.43 0.39fi Cash 26.73 17.27 Other 0.25 3.59
Investment InformationOperations and Management
Product Inception Date 08-26-11Strategy Inception Date 08-01-05Total Fund Assets ($mil) 2,509.65Investment Manager BlackRock Institutional Trust
Company NA
.........................................................................................................................
Annual Turnover Ratio % 9.55
Fees and Expenses as of 01-01-17
Total Annual Operating Expense % 0.09%Total Annual Operating Expense per $1000 $0.90
Additional Information for Total Annual Operating Expense
The Total Annual Operating Expense ratio noted above ("TAOE")reflects a management fee and administrative costs. Effective1/1/17, administrative costs are capped at one (1) basis point(0.01%) per year. The TAOE has been restated to reflect thecurrent administrative cost cap. The TAOE may also, ifapplicable, reflect certain third party acquired fund fees andexpenses. There may be other fees and expenses not reflectedin the TAOE that bear on the value of the investment. ThePortfolio Turnover Rate is that of the collective investment fundin which the Fund invests exclusively, either directly orindirectly.
Release Date: 12-31-2017
LifePath® Index 2030 Fund L .................................................................................................................................................................................................................................................................................................................................................................................................Primary Benchmark Custom Benchmark Morningstar Category Overall Morningstar Rating™ Morningstar Return Morningstar RiskRussell 1000® Index LifePath® Index 2030 Custom
BenchmarkTarget-Date 2030 QQQ Average Below Average
See disclosure for details.
697963 ©2018 Morningstar, Inc., Morningstar Investment Profiles™ 312-696-6000. All rights reserved. The information contained herein: (1) is proprietary toMorningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. Neither Morningstarnor its content providers are responsible for any damages or losses arising from any use of information. Past performance is no guarantee of futureperformance. Visit our investment website at www.morningstar.com.
ß® Page 1 of 4
Benchmark DescriptionThe LifePath® Index 2030 Fund L's Custom Benchmark is acomparison benchmark for the performance of the Fund. TheCustom Benchmark is calculated using blended returns of thirdparty indices that proportionally reflect the respectiveweightings of the Fund's asset classes. The third party indexproportions of the Custom Benchmark are adjusted quarterly toreflect the Fund's changing asset allocations over time. As theFund's asset classes have been re-defined or added over time,the indices used to calculate the Custom Benchmark havechanged accordingly. As of March 31, 2017, the indices usedto calculate the Custom Benchmark are: Russell 1000® Index,Russell 2000® Index, MSCI ACWI ex-US IMI Net DividendReturn Index[sm], Bloomberg Barclays U.S. Aggregate BondIndex, Bloomberg Barclays U.S. Treasury Inflation ProtectedSecurities (TIPS) Index, FTSE EPRA/NAREIT Developed Index,and the Bloomberg Commodity Index Total Return.
Volatility Analysis
Low Moderate High
Investment
Category
In the past, this investment has shown a relatively moderaterange of price fluctuations relative to other investments. Thisinvestment may experience larger or smaller price declines orprice increases depending on market conditions. Some of thisrisk may be offset by owning other investments with differentportfolio makeups or investment strategies.
Best 3 Month Return Worst 3 Month Return
25.04% -27.47%(Mar '09 - May '09) (Sep '08 - Nov '08)
Performance
L1 L2 L3 L4 L5 L6
-18
-12
-6
0
6
12
18
24 Total Return% as of 12-31-17
InvestmentPrimary BmarkCustom Bmark
Average annual, if greaterthan 1 year
Since Inception 10 Year 5 Year 3 Year 1 Year YTD
6.21 5.15 8.24 7.12 15.82 15.82 Investment Return %8.78 8.59 15.71 11.23 21.69 21.69 Primary Bmark Return %6.19 5.10 8.18 6.96 15.63 15.63 Custom Bmark Return %........................................................................................................................................................................................................... QQQQ QQ QQQ . . Morningstar Rating™. 84 151 189 . . # of Funds in Category
Performance Disclosure: The Fund's returns are net of an investment management fee, currently at an annual rate of0.08%. The Fund’s performance reflects fund level administrative costs. Effective 1/1/17, the fund level administrativecosts are capped at 1 basis point (0.01%) per year. Since its inception the Fund has invested all of its assets in LifePathIndex 2030 Fund F. Returns shown for periods prior to the Fund's inception are those of the LifePath Index 2030 FundF net of the Fund's investment management fee.
Principal RisksAny of the principal risks summarized below may adversely affect the Fund's net asset value, performance, and ability to meet itsinvestment objective. An investment in the Fund is not a bank deposit, is not guaranteed by BlackRock, Inc. or any of its affiliates,and is not insured by the Federal Deposit Insurance Corporation or any other agency of the U.S. government.
Equity Investment Risk: The price of an equity security fluctuates based on changes in the issuer’s financial condition and overallmarket and economic conditions. Equity securities are subject to changes in value that may be more volatile than other asset classes.
Foreign Investment Risk 1: The Fund may suffer losses due to political, legal, economic and geographic events affecting a non-U.S. issuer or market. The prices of non-U.S. securities may be more volatile than those of securities issued by U.S. corporationsor other U.S. entities. Securities of non-U.S. issuers denominated in non-U.S. currencies will expose the Fund to fluctuations inforeign currency exchange prices.
Target Date Risk 1: A “target date” fund may incur losses close to or after the fund's target retirement date, and there is noguarantee that the Fund will provide adequate income for an investor’s retirement.
Asset Allocation Model Risk: The asset allocation model may not effectively maximize returns or minimize risk, or be appropriatefor every investor seeking a particular risk profile. The model developed by BTC could result in underperformance as compared tofunds with similar investment objectives and strategies.
Commodity-Related Investment Risk 2: The value of commodity-linked derivative investments may be significantly affected bychanges in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industryor commodity, such as drought, floods, weather, embargoes, tariffs and international economic, political and regulatorydevelopments.
Securities Lending Risk 1: The Fund may engage in securities lending, which involves borrower credit risk, settlement risk, andcash collateral-related risks, such as the risk that the return on the cash collateral is insufficient to cover the fees the Fund iscommitted to pay and the risk that cash collateral may be invested in securities or other instruments that suffer losses or becomeilliquid.
Derivatives Risk 1: Investments in derivatives (such as futures contracts, forward contracts, swaps and options) may reducethe Fund's returns and/or increase volatility. Fluctuations in the values of derivatives may not correlate perfectly with the overallsecurities markets. The other party in the transaction may not fulfill its contractual obligation. The possible lack of a liquid secondarymarket for derivatives could expose the Fund to losses.
Real Estate-Related Investment Risk 2: Real estate values can be negatively affected by many factors including both the generaland local economies, the amount of new construction in a particular area, the laws and regulations affecting real estate, the costsof owning, maintaining and improving real estate, availability of mortgages, and changes in interest rates.
Underlying Fund Risk 2: The investment objective and strategies of an Underlying Fund in which the Fund invests may differfrom the Fund, and there is no assurance that an Underlying Fund will achieve its objective.
Fixed Income Investment Risk 10: An increase in interest rates may cause the value of fixed income securities held by the Fundto decline. The Fund's income may decline when interest rates fall. Debt issuers may not honor their obligations. Securities that arerated below investment grade may be more volatile and less liquid than higher-rated securities of similar maturity.
Release Date: 12-31-2017
LifePath® Index 2030 Fund L .................................................................................................................................................................................................................................................................................................................................................................................................Primary Benchmark Custom Benchmark Morningstar Category Overall Morningstar Rating™ Morningstar Return Morningstar RiskRussell 1000® Index LifePath® Index 2030 Custom
BenchmarkTarget-Date 2030 QQQ Average Below Average
See disclosure for details.
697963 ©2018 Morningstar, Inc., Morningstar Investment Profiles™ 312-696-6000. All rights reserved. The information contained herein: (1) is proprietary toMorningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. Neither Morningstarnor its content providers are responsible for any damages or losses arising from any use of information. Past performance is no guarantee of futureperformance. Visit our investment website at www.morningstar.com.
ß® Page 2 of 4
Allocation of Stocks and Bonds Portfolio Analysis
045 40 35 30 25 20 15 10 5
10080
60
40
200
Years Until RetirementBlack line designates target allocation for the Fund as of the date of this report.
% AllocationBonds
U.S. Stocks
Non-U.S. Stocks
Cash
Other
Investment Objective and StrategyThe Fund seeks to provide for retirement outcomes consistent with investor preferences throughout the savings and draw down phase based on quantitatively measured risk that investors, on average, may be willing to accept.
The Fund is a collective investment trust maintained and managed by BlackRock Institutional Trust Company, N.A. ("BTC").The Fund shall be invested and reinvested in securities and other assets with the objective of providing for retirement outcomes
consistent with investor preferences throughout the savings and drawdown phase based on quantitatively measured risk that investors, on average, may be willing to accept.
In pursuit of that objective, the Fund will be broadly diversified across global asset classes, with asset allocations becoming more conservative over time if the Fund has a year in its name. The Fund’s investments may include: equity securities (including those issued by real estate companies); depositary receipts; debt securities and other fixed income obligations (including those issued or guaranteed by the U.S. government, its agencies or instrumentalities, and those issued by corporations or other entities); mortgage-backed securities; other asset-backed securities; commodities; and/or cash equivalents.
The Fund may invest in securities and other obligations of U.S. issuers or non-U.S. issuers, and those issuers may be of any market capitalization. The Fund's fixed income investments may be investment-grade or non-investment grade, and may include securities and other obligations of any maturity.
In addition to, or in lieu of, investing in the assets listed above, the Fund may engage in structured transactions in these asset classes, as well as over-the-counter forward contracts, swaps and options. When deemed appropriate by BTC, the Fund may invest in futures contracts, for the purpose of acting as a temporary substitute for investment in securities and/or to gain exposure to commodities.
The difference between the normal and current securities holdings for the Fund varies over time and is based on the factors analyzed by the asset allocation model used by BTC to manage the Fund. The normal asset allocations will gradually change over the investment horizon of the Fund to become more heavily oriented toward debt and debt-like securities. As time passes, the Fund is managed more conservatively – prior to retirement – in terms of its allocation to equity securities and markets, on the premise that individuals investing for retirement desire to reduce investment risk in their retirement accounts as their retirement date approaches.
The trajectory along which asset allocations are adjusted over time to gradually become more conservative is called the “glidepath”. The glidepath illustrates the target allocation among asset classes as the Fund approaches its target date. The target asset allocation of the Fund at its retirement date is expected to be 40% in underlying index funds that invest primarily in equity and equity-like securities and 60% in underlying index funds that invest primarily in fixed income and fixed income-like securities.
BTC employs a proprietary investment model that analyzes securities market data, including risk, correlation and expected return statistics, to recommend the portfolio allocation among the asset classes.
Rather than choosing specific securities within each asset class, BTC selects among indices representing segments of the global equity and debt markets and invests in securities that comprise the chosen index. The Fund generally invests in a chosen index through a series of collective investment trusts maintained and managed by BTC, each such fund representing one of the indices (each, an "Underlying Fund").
In the event of a conflict between this summary description of the Fund's investment objective and principal investment strategies and the Trust Document under which the Fund was established, the Trust Document will govern. For more information related to the Fund, please see the Fund's Trust Document, Profile and most recent audited financial statements.
Top 10 Holdings as of 12-31-17 % Assets
Russell 1000 Index Fund 39.99BlackRock MSCI ACWI ex-US IMI Index Fd E 24.79U.S. Debt Index Fund E 17.04Developed Real Estate Index Fund E 10.02Commodity Index Daily Fund E 3.97.......................................................................................................U.S. TIPS Fund E 2.43Russell 2000 Index Fund 1.76
Morningstar Super Sectors as of 12-31-17 % Fund
h Cyclical 46.38j Sensitive 32.80k Defensive 20.81
Morningstar F-I Sectors as of 12-31-17 % Fund % Category
⁄ Government 35.79 32.45› Corporate 15.87 27.04€ Securitized 12.80 15.67‹ Municipal 0.39 0.38fi Cash 34.81 21.04 Other 0.34 3.43
Investment InformationOperations and Management
Product Inception Date 08-26-11Strategy Inception Date 07-05-06Total Fund Assets ($mil) 1,624.95Investment Manager BlackRock Institutional Trust
Company NA
.........................................................................................................................
Annual Turnover Ratio % 7.95
Fees and Expenses as of 01-01-17
Total Annual Operating Expense % 0.09%Total Annual Operating Expense per $1000 $0.90
Additional Information for Total Annual Operating Expense
The Total Annual Operating Expense ratio noted above ("TAOE")reflects a management fee and administrative costs. Effective1/1/17, administrative costs are capped at one (1) basis point(0.01%) per year. The TAOE has been restated to reflect thecurrent administrative cost cap. The TAOE may also, ifapplicable, reflect certain third party acquired fund fees andexpenses. There may be other fees and expenses not reflectedin the TAOE that bear on the value of the investment. ThePortfolio Turnover Rate is that of the collective investment fundin which the Fund invests exclusively, either directly orindirectly.
Release Date: 12-31-2017
LifePath® Index 2035 Fund L .................................................................................................................................................................................................................................................................................................................................................................................................Primary Benchmark Custom Benchmark Morningstar Category Overall Morningstar Rating™ Morningstar Return Morningstar RiskRussell 1000® Index LifePath® Index 2035 Custom
BenchmarkTarget-Date 2035 QQQ Average Below Average
See disclosure for details.
697972 ©2018 Morningstar, Inc., Morningstar Investment Profiles™ 312-696-6000. All rights reserved. The information contained herein: (1) is proprietary toMorningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. Neither Morningstarnor its content providers are responsible for any damages or losses arising from any use of information. Past performance is no guarantee of futureperformance. Visit our investment website at www.morningstar.com.
ß® Page 1 of 4
Benchmark DescriptionThe LifePath® Index 2035 Fund L's Custom Benchmark is acomparison benchmark for the performance of the Fund. TheCustom Benchmark is calculated using blended returns of thirdparty indices that proportionally reflect the respectiveweightings of the Fund's asset classes. The third party indexproportions of the Custom Benchmark are adjusted quarterly toreflect the Fund's changing asset allocations over time. As theFund's asset classes have been re-defined or added over time,the indices used to calculate the Custom Benchmark havechanged accordingly. As of March 31, 2017, the indices usedto calculate the Custom Benchmark are: Russell 1000® Index,Russell 2000® Index, MSCI ACWI ex-US IMI Net DividendReturn Index[sm], Bloomberg Barclays U.S. Aggregate BondIndex, Bloomberg Barclays U.S. Treasury Inflation ProtectedSecurities (TIPS) Index, FTSE EPRA/NAREIT Developed Index,and the Bloomberg Commodity Index Total Return.
Volatility Analysis
Low Moderate High
Investment
Category
In the past, this investment has shown a relatively moderaterange of price fluctuations relative to other investments. Thisinvestment may experience larger or smaller price declines orprice increases depending on market conditions. Some of thisrisk may be offset by owning other investments with differentportfolio makeups or investment strategies.
Best 3 Month Return Worst 3 Month Return
27.24% -29.38%(Mar '09 - May '09) (Sep '08 - Nov '08)
Performance
L1 L2 L3 L4 L5 L6
-18
-12
-6
0
6
12
18
24 Total Return% as of 12-31-17
InvestmentPrimary BmarkCustom Bmark
Average annual, if greaterthan 1 year
Since Inception 10 Year 5 Year 3 Year 1 Year YTD
6.28 5.34 9.01 7.80 17.69 17.69 Investment Return %9.07 8.59 15.71 11.23 21.69 21.69 Primary Bmark Return %6.21 5.26 8.92 7.61 17.46 17.46 Custom Bmark Return %........................................................................................................................................................................................................... QQQ QQ QQQ . . Morningstar Rating™. 57 132 166 . . # of Funds in Category
Performance Disclosure: The Fund's returns are net of an investment management fee, currently at an annual rate of0.08%. The Fund’s performance reflects fund level administrative costs. Effective 1/1/17, the fund level administrativecosts are capped at 1 basis point (0.01%) per year. Since its inception the Fund has invested all of its assets in LifePathIndex 2035 Fund F. Returns shown for periods prior to the Fund's inception are those of the LifePath Index 2035 FundF net of the Fund's investment management fee.
Principal RisksAny of the principal risks summarized below may adversely affect the Fund's net asset value, performance, and ability to meet itsinvestment objective. An investment in the Fund is not a bank deposit, is not guaranteed by BlackRock, Inc. or any of its affiliates,and is not insured by the Federal Deposit Insurance Corporation or any other agency of the U.S. government.
Equity Investment Risk: The price of an equity security fluctuates based on changes in the issuer’s financial condition and overallmarket and economic conditions. Equity securities are subject to changes in value that may be more volatile than other asset classes.
Foreign Investment Risk 1: The Fund may suffer losses due to political, legal, economic and geographic events affecting a non-U.S. issuer or market. The prices of non-U.S. securities may be more volatile than those of securities issued by U.S. corporationsor other U.S. entities. Securities of non-U.S. issuers denominated in non-U.S. currencies will expose the Fund to fluctuations inforeign currency exchange prices.
Target Date Risk 1: A “target date” fund may incur losses close to or after the fund's target retirement date, and there is noguarantee that the Fund will provide adequate income for an investor’s retirement.
Asset Allocation Model Risk: The asset allocation model may not effectively maximize returns or minimize risk, or be appropriatefor every investor seeking a particular risk profile. The model developed by BTC could result in underperformance as compared tofunds with similar investment objectives and strategies.
Commodity-Related Investment Risk 2: The value of commodity-linked derivative investments may be significantly affected bychanges in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industryor commodity, such as drought, floods, weather, embargoes, tariffs and international economic, political and regulatorydevelopments.
Securities Lending Risk 1: The Fund may engage in securities lending, which involves borrower credit risk, settlement risk, andcash collateral-related risks, such as the risk that the return on the cash collateral is insufficient to cover the fees the Fund iscommitted to pay and the risk that cash collateral may be invested in securities or other instruments that suffer losses or becomeilliquid.
Derivatives Risk 1: Investments in derivatives (such as futures contracts, forward contracts, swaps and options) may reducethe Fund's returns and/or increase volatility. Fluctuations in the values of derivatives may not correlate perfectly with the overallsecurities markets. The other party in the transaction may not fulfill its contractual obligation. The possible lack of a liquid secondarymarket for derivatives could expose the Fund to losses.
Real Estate-Related Investment Risk 2: Real estate values can be negatively affected by many factors including both the generaland local economies, the amount of new construction in a particular area, the laws and regulations affecting real estate, the costsof owning, maintaining and improving real estate, availability of mortgages, and changes in interest rates.
Underlying Fund Risk 2: The investment objective and strategies of an Underlying Fund in which the Fund invests may differfrom the Fund, and there is no assurance that an Underlying Fund will achieve its objective.
Fixed Income Investment Risk 10: An increase in interest rates may cause the value of fixed income securities held by the Fundto decline. The Fund's income may decline when interest rates fall. Debt issuers may not honor their obligations. Securities that arerated below investment grade may be more volatile and less liquid than higher-rated securities of similar maturity.
Release Date: 12-31-2017
LifePath® Index 2035 Fund L .................................................................................................................................................................................................................................................................................................................................................................................................Primary Benchmark Custom Benchmark Morningstar Category Overall Morningstar Rating™ Morningstar Return Morningstar RiskRussell 1000® Index LifePath® Index 2035 Custom
BenchmarkTarget-Date 2035 QQQ Average Below Average
See disclosure for details.
697972 ©2018 Morningstar, Inc., Morningstar Investment Profiles™ 312-696-6000. All rights reserved. The information contained herein: (1) is proprietary toMorningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. Neither Morningstarnor its content providers are responsible for any damages or losses arising from any use of information. Past performance is no guarantee of futureperformance. Visit our investment website at www.morningstar.com.
ß® Page 2 of 4
Allocation of Stocks and Bonds Portfolio Analysis
045 40 35 30 25 20 15 10 5
10080
60
40
200
Years Until RetirementBlack line designates target allocation for the Fund as of the date of this report.
% AllocationBonds
U.S. Stocks
Non-U.S. Stocks
Cash
Other
Investment Objective and StrategyThe Fund seeks to provide for retirement outcomes consistent with investor preferences throughout the savings and draw down phase based on quantitatively measured risk that investors, on average, may be willing to accept.
The Fund is a collective investment trust maintained and managed by BlackRock Institutional Trust Company, N.A. ("BTC").The Fund shall be invested and reinvested in securities and other assets with the objective of providing for retirement outcomes
consistent with investor preferences throughout the savings and drawdown phase based on quantitatively measured risk that investors, on average, may be willing to accept.
In pursuit of that objective, the Fund will be broadly diversified across global asset classes, with asset allocations becoming more conservative over time if the Fund has a year in its name. The Fund’s investments may include: equity securities (including those issued by real estate companies); depositary receipts; debt securities and other fixed income obligations (including those issued or guaranteed by the U.S. government, its agencies or instrumentalities, and those issued by corporations or other entities); mortgage-backed securities; other asset-backed securities; commodities; and/or cash equivalents.
The Fund may invest in securities and other obligations of U.S. issuers or non-U.S. issuers, and those issuers may be of any market capitalization. The Fund's fixed income investments may be investment-grade or non-investment grade, and may include securities and other obligations of any maturity.
In addition to, or in lieu of, investing in the assets listed above, the Fund may engage in structured transactions in these asset classes, as well as over-the-counter forward contracts, swaps and options. When deemed appropriate by BTC, the Fund may invest in futures contracts, for the purpose of acting as a temporary substitute for investment in securities and/or to gain exposure to commodities.
The difference between the normal and current securities holdings for the Fund varies over time and is based on the factors analyzed by the asset allocation model used by BTC to manage the Fund. The normal asset allocations will gradually change over the investment horizon of the Fund to become more heavily oriented toward debt and debt-like securities. As time passes, the Fund is managed more conservatively – prior to retirement – in terms of its allocation to equity securities and markets, on the premise that individuals investing for retirement desire to reduce investment risk in their retirement accounts as their retirement date approaches.
The trajectory along which asset allocations are adjusted over time to gradually become more conservative is called the “glidepath”. The glidepath illustrates the target allocation among asset classes as the Fund approaches its target date. The target asset allocation of the Fund at its retirement date is expected to be 40% in underlying index funds that invest primarily in equity and equity-like securities and 60% in underlying index funds that invest primarily in fixed income and fixed income-like securities.
BTC employs a proprietary investment model that analyzes securities market data, including risk, correlation and expected return statistics, to recommend the portfolio allocation among the asset classes.
Rather than choosing specific securities within each asset class, BTC selects among indices representing segments of the global equity and debt markets and invests in securities that comprise the chosen index. The Fund generally invests in a chosen index through a series of collective investment trusts maintained and managed by BTC, each such fund representing one of the indices (each, an "Underlying Fund").
In the event of a conflict between this summary description of the Fund's investment objective and principal investment strategies and the Trust Document under which the Fund was established, the Trust Document will govern. For more information related to the Fund, please see the Fund's Trust Document, Profile and most recent audited financial statements.
Top 10 Holdings as of 12-31-17 % Assets
Russell 1000 Index Fund 44.37BlackRock MSCI ACWI ex-US IMI Index Fd E 27.74Developed Real Estate Index Fund E 12.37U.S. Debt Index Fund E 9.11Commodity Index Daily Fund E 4.07.......................................................................................................Russell 2000 Index Fund 1.21U.S. TIPS Fund E 1.13
Morningstar Super Sectors as of 12-31-17 % Fund
h Cyclical 47.22j Sensitive 32.29k Defensive 20.50
Morningstar F-I Sectors as of 12-31-17 % Fund % Category
⁄ Government 27.26 32.90› Corporate 12.52 25.13€ Securitized 10.08 13.00‹ Municipal 0.30 0.30fi Cash 49.32 24.02 Other 0.52 4.66
Investment InformationOperations and Management
Product Inception Date 08-26-11Strategy Inception Date 08-01-05Total Fund Assets ($mil) 1,909.69Investment Manager BlackRock Institutional Trust
Company NA
.........................................................................................................................
Annual Turnover Ratio % 9.19
Fees and Expenses as of 01-01-17
Total Annual Operating Expense % 0.09%Total Annual Operating Expense per $1000 $0.90
Additional Information for Total Annual Operating Expense
The Total Annual Operating Expense ratio noted above ("TAOE")reflects a management fee and administrative costs. Effective1/1/17, administrative costs are capped at one (1) basis point(0.01%) per year. The TAOE has been restated to reflect thecurrent administrative cost cap. The TAOE may also, ifapplicable, reflect certain third party acquired fund fees andexpenses. There may be other fees and expenses not reflectedin the TAOE that bear on the value of the investment. ThePortfolio Turnover Rate is that of the collective investment fundin which the Fund invests exclusively, either directly orindirectly.
Release Date: 12-31-2017
LifePath® Index 2040 Fund L .................................................................................................................................................................................................................................................................................................................................................................................................Primary Benchmark Custom Benchmark Morningstar Category Overall Morningstar Rating™ Morningstar Return Morningstar RiskRussell 1000® Index LifePath® Index 2040 Custom
BenchmarkTarget-Date 2040 QQQ Average Average
See disclosure for details.
697981 ©2018 Morningstar, Inc., Morningstar Investment Profiles™ 312-696-6000. All rights reserved. The information contained herein: (1) is proprietary toMorningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. Neither Morningstarnor its content providers are responsible for any damages or losses arising from any use of information. Past performance is no guarantee of futureperformance. Visit our investment website at www.morningstar.com.
ß® Page 1 of 4
Benchmark DescriptionThe LifePath® Index 2040 Fund L's Custom Benchmark is acomparison benchmark for the performance of the Fund. TheCustom Benchmark is calculated using blended returns of thirdparty indices that proportionally reflect the respectiveweightings of the Fund's asset classes. The third party indexproportions of the Custom Benchmark are adjusted quarterly toreflect the Fund's changing asset allocations over time. As theFund's asset classes have been re-defined or added over time,the indices used to calculate the Custom Benchmark havechanged accordingly. As of March 31, 2017, the indices usedto calculate the Custom Benchmark are: Russell 1000® Index,Russell 2000® Index, MSCI ACWI ex-US IMI Net DividendReturn Index[sm], Bloomberg Barclays U.S. Aggregate BondIndex, Bloomberg Barclays U.S. Treasury Inflation ProtectedSecurities (TIPS) Index, FTSE EPRA/NAREIT Developed Index,and the Bloomberg Commodity Index Total Return.
Volatility Analysis
Low Moderate High
Investment
Category
In the past, this investment has shown a relatively moderaterange of price fluctuations relative to other investments. Thisinvestment may experience larger or smaller price declines orprice increases depending on market conditions. Some of thisrisk may be offset by owning other investments with differentportfolio makeups or investment strategies.
Best 3 Month Return Worst 3 Month Return
29.23% -31.01%(Mar '09 - May '09) (Sep '08 - Nov '08)
Performance
L1 L2 L3 L4 L5 L6
-18
-12
-6
0
6
12
18
24 Total Return% as of 12-31-17
InvestmentPrimary BmarkCustom Bmark
Average annual, if greaterthan 1 year
Since Inception 10 Year 5 Year 3 Year 1 Year YTD
6.59 5.47 9.66 8.39 19.37 19.37 Investment Return %8.78 8.59 15.71 11.23 21.69 21.69 Primary Bmark Return %6.54 5.37 9.58 8.17 19.10 19.10 Custom Bmark Return %........................................................................................................................................................................................................... QQQ QQ QQQ . . Morningstar Rating™. 84 151 189 . . # of Funds in Category
Performance Disclosure: The Fund's returns are net of an investment management fee, currently at an annual rate of0.08%. The Fund’s performance reflects fund level administrative costs. Effective 1/1/17, the fund level administrativecosts are capped at 1 basis point (0.01%) per year. Since its inception the Fund has invested all of its assets in LifePathIndex 2040 Fund F. Returns shown for periods prior to the Fund's inception are those of the LifePath Index 2040 FundF net of the Fund's investment management fee.
Principal RisksAny of the principal risks summarized below may adversely affect the Fund's net asset value, performance, and ability to meet itsinvestment objective. An investment in the Fund is not a bank deposit, is not guaranteed by BlackRock, Inc. or any of its affiliates,and is not insured by the Federal Deposit Insurance Corporation or any other agency of the U.S. government.
Equity Investment Risk: The price of an equity security fluctuates based on changes in the issuer’s financial condition and overallmarket and economic conditions. Equity securities are subject to changes in value that may be more volatile than other asset classes.
Foreign Investment Risk 1: The Fund may suffer losses due to political, legal, economic and geographic events affecting a non-U.S. issuer or market. The prices of non-U.S. securities may be more volatile than those of securities issued by U.S. corporationsor other U.S. entities. Securities of non-U.S. issuers denominated in non-U.S. currencies will expose the Fund to fluctuations inforeign currency exchange prices.
Target Date Risk 1: A “target date” fund may incur losses close to or after the fund's target retirement date, and there is noguarantee that the Fund will provide adequate income for an investor’s retirement.
Asset Allocation Model Risk: The asset allocation model may not effectively maximize returns or minimize risk, or be appropriatefor every investor seeking a particular risk profile. The model developed by BTC could result in underperformance as compared tofunds with similar investment objectives and strategies.
Commodity-Related Investment Risk 2: The value of commodity-linked derivative investments may be significantly affected bychanges in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industryor commodity, such as drought, floods, weather, embargoes, tariffs and international economic, political and regulatorydevelopments.
Securities Lending Risk 1: The Fund may engage in securities lending, which involves borrower credit risk, settlement risk, andcash collateral-related risks, such as the risk that the return on the cash collateral is insufficient to cover the fees the Fund iscommitted to pay and the risk that cash collateral may be invested in securities or other instruments that suffer losses or becomeilliquid.
Derivatives Risk 1: Investments in derivatives (such as futures contracts, forward contracts, swaps and options) may reducethe Fund's returns and/or increase volatility. Fluctuations in the values of derivatives may not correlate perfectly with the overallsecurities markets. The other party in the transaction may not fulfill its contractual obligation. The possible lack of a liquid secondarymarket for derivatives could expose the Fund to losses.
Real Estate-Related Investment Risk 2: Real estate values can be negatively affected by many factors including both the generaland local economies, the amount of new construction in a particular area, the laws and regulations affecting real estate, the costsof owning, maintaining and improving real estate, availability of mortgages, and changes in interest rates.
Underlying Fund Risk 2: The investment objective and strategies of an Underlying Fund in which the Fund invests may differfrom the Fund, and there is no assurance that an Underlying Fund will achieve its objective.
Fixed Income Investment Risk 10: An increase in interest rates may cause the value of fixed income securities held by the Fundto decline. The Fund's income may decline when interest rates fall. Debt issuers may not honor their obligations. Securities that arerated below investment grade may be more volatile and less liquid than higher-rated securities of similar maturity.
Release Date: 12-31-2017
LifePath® Index 2040 Fund L .................................................................................................................................................................................................................................................................................................................................................................................................Primary Benchmark Custom Benchmark Morningstar Category Overall Morningstar Rating™ Morningstar Return Morningstar RiskRussell 1000® Index LifePath® Index 2040 Custom
BenchmarkTarget-Date 2040 QQQ Average Average
See disclosure for details.
697981 ©2018 Morningstar, Inc., Morningstar Investment Profiles™ 312-696-6000. All rights reserved. The information contained herein: (1) is proprietary toMorningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. Neither Morningstarnor its content providers are responsible for any damages or losses arising from any use of information. Past performance is no guarantee of futureperformance. Visit our investment website at www.morningstar.com.
ß® Page 2 of 4
Allocation of Stocks and Bonds Portfolio Analysis
045 40 35 30 25 20 15 10 5
10080
60
40
200
Years Until RetirementBlack line designates target allocation for the Fund as of the date of this report.
% AllocationBonds
U.S. Stocks
Non-U.S. Stocks
Cash
Other
Investment Objective and StrategyThe Fund seeks to provide for retirement outcomes consistent with investor preferences throughout the savings and draw down phase based on quantitatively measured risk that investors, on average, may be willing to accept.
The Fund is a collective investment trust maintained and managed by BlackRock Institutional Trust Company, N.A. ("BTC").The Fund shall be invested and reinvested in securities and other assets with the objective of providing for retirement outcomes
consistent with investor preferences throughout the savings and drawdown phase based on quantitatively measured risk that investors, on average, may be willing to accept.
In pursuit of that objective, the Fund will be broadly diversified across global asset classes, with asset allocations becoming more conservative over time if the Fund has a year in its name. The Fund’s investments may include: equity securities (including those issued by real estate companies); depositary receipts; debt securities and other fixed income obligations (including those issued or guaranteed by the U.S. government, its agencies or instrumentalities, and those issued by corporations or other entities); mortgage-backed securities; other asset-backed securities; commodities; and/or cash equivalents.
The Fund may invest in securities and other obligations of U.S. issuers or non-U.S. issuers, and those issuers may be of any market capitalization. The Fund's fixed income investments may be investment-grade or non-investment grade, and may include securities and other obligations of any maturity.
In addition to, or in lieu of, investing in the assets listed above, the Fund may engage in structured transactions in these asset classes, as well as over-the-counter forward contracts, swaps and options. When deemed appropriate by BTC, the Fund may invest in futures contracts, for the purpose of acting as a temporary substitute for investment in securities and/or to gain exposure to commodities.
The difference between the normal and current securities holdings for the Fund varies over time and is based on the factors analyzed by the asset allocation model used by BTC to manage the Fund. The normal asset allocations will gradually change over the investment horizon of the Fund to become more heavily oriented toward debt and debt-like securities. As time passes, the Fund is managed more conservatively – prior to retirement – in terms of its allocation to equity securities and markets, on the premise that individuals investing for retirement desire to reduce investment risk in their retirement accounts as their retirement date approaches.
The trajectory along which asset allocations are adjusted over time to gradually become more conservative is called the “glidepath”. The glidepath illustrates the target allocation among asset classes as the Fund approaches its target date. The target asset allocation of the Fund at its retirement date is expected to be 40% in underlying index funds that invest primarily in equity and equity-like securities and 60% in underlying index funds that invest primarily in fixed income and fixed income-like securities.
BTC employs a proprietary investment model that analyzes securities market data, including risk, correlation and expected return statistics, to recommend the portfolio allocation among the asset classes.
Rather than choosing specific securities within each asset class, BTC selects among indices representing segments of the global equity and debt markets and invests in securities that comprise the chosen index. The Fund generally invests in a chosen index through a series of collective investment trusts maintained and managed by BTC, each such fund representing one of the indices (each, an "Underlying Fund").
In the event of a conflict between this summary description of the Fund's investment objective and principal investment strategies and the Trust Document under which the Fund was established, the Trust Document will govern. For more information related to the Fund, please see the Fund's Trust Document, Profile and most recent audited financial statements.
Top 10 Holdings as of 12-31-17 % Assets
Russell 1000 Index Fund 46.40BlackRock MSCI ACWI ex-US IMI Index Fd E 30.15Developed Real Estate Index Fund E 14.48Commodity Index Daily Fund E 4.32U.S. Debt Index Fund E 3.31.......................................................................................................Russell 2000 Index Fund 1.06U.S. TIPS Fund E 0.28
Morningstar Super Sectors as of 12-31-17 % Fund
h Cyclical 48.11j Sensitive 31.76k Defensive 20.14
Morningstar F-I Sectors as of 12-31-17 % Fund % Category
⁄ Government 13.82 29.06› Corporate 6.90 24.26€ Securitized 5.51 13.60‹ Municipal 0.17 0.31fi Cash 72.78 28.77 Other 0.83 4.00
Investment InformationOperations and Management
Product Inception Date 08-26-11Strategy Inception Date 07-05-06Total Fund Assets ($mil) 1,210.46Investment Manager BlackRock Institutional Trust
Company NA
.........................................................................................................................
Annual Turnover Ratio % 8.57
Fees and Expenses as of 01-01-17
Total Annual Operating Expense % 0.09%Total Annual Operating Expense per $1000 $0.90
Additional Information for Total Annual Operating Expense
The Total Annual Operating Expense ratio noted above ("TAOE")reflects a management fee and administrative costs. Effective1/1/17, administrative costs are capped at one (1) basis point(0.01%) per year. The TAOE has been restated to reflect thecurrent administrative cost cap. The TAOE may also, ifapplicable, reflect certain third party acquired fund fees andexpenses. There may be other fees and expenses not reflectedin the TAOE that bear on the value of the investment. ThePortfolio Turnover Rate is that of the collective investment fundin which the Fund invests exclusively, either directly orindirectly.
Release Date: 12-31-2017
LifePath® Index 2045 Fund L .................................................................................................................................................................................................................................................................................................................................................................................................Primary Benchmark Custom Benchmark Morningstar Category Overall Morningstar Rating™ Morningstar Return Morningstar RiskRussell 1000® Index LifePath® Index 2045 Custom
BenchmarkTarget-Date 2045 QQQ Average Average
See disclosure for details.
697990 ©2018 Morningstar, Inc., Morningstar Investment Profiles™ 312-696-6000. All rights reserved. The information contained herein: (1) is proprietary toMorningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. Neither Morningstarnor its content providers are responsible for any damages or losses arising from any use of information. Past performance is no guarantee of futureperformance. Visit our investment website at www.morningstar.com.
ß® Page 1 of 4
Benchmark DescriptionThe LifePath® Index 2045 Fund L's Custom Benchmark is acomparison benchmark for the performance of the Fund. TheCustom Benchmark is calculated using blended returns of thirdparty indices that proportionally reflect the respectiveweightings of the Fund's asset classes. The third party indexproportions of the Custom Benchmark are adjusted quarterly toreflect the Fund's changing asset allocations over time. As theFund's asset classes have been re-defined or added over time,the indices used to calculate the Custom Benchmark havechanged accordingly. As of March 31, 2017, the indices usedto calculate the Custom Benchmark are: Russell 1000® Index,Russell 2000® Index, MSCI ACWI ex-US IMI Net DividendReturn Index[sm], Bloomberg Barclays U.S. Aggregate BondIndex, Bloomberg Barclays U.S. Treasury Inflation ProtectedSecurities (TIPS) Index, FTSE EPRA/NAREIT Developed Index,and the Bloomberg Commodity Index Total Return.
Volatility Analysis
Low Moderate High
Investment
Category
In the past, this investment has shown a relatively moderaterange of price fluctuations relative to other investments. Thisinvestment may experience larger or smaller price declines orprice increases depending on market conditions. Some of thisrisk may be offset by owning other investments with differentportfolio makeups or investment strategies.
Best 3 Month Return Worst 3 Month Return
31.01% -32.50%(Mar '09 - May '09) (Sep '08 - Nov '08)
Performance
L1 L2 L3 L4 L5 L6
-18
-12
-6
0
6
12
18
24 Total Return% as of 12-31-17
InvestmentPrimary BmarkCustom Bmark
Average annual, if greaterthan 1 year
Since Inception 10 Year 5 Year 3 Year 1 Year YTD
6.48 5.53 10.19 8.76 20.45 20.45 Investment Return %9.07 8.59 15.71 11.23 21.69 21.69 Primary Bmark Return %6.42 5.43 10.09 8.51 20.14 20.14 Custom Bmark Return %........................................................................................................................................................................................................... QQQ QQQ QQQ . . Morningstar Rating™. 57 131 166 . . # of Funds in Category
Performance Disclosure: The Fund's returns are net of an investment management fee, currently at an annual rate of0.08%. The Fund’s performance reflects fund level administrative costs. Effective 1/1/17, the fund level administrativecosts are capped at 1 basis point (0.01%) per year. Since its inception the Fund has invested all of its assets in LifePathIndex 2045 Fund F. Returns shown for periods prior to the Fund's inception are those of the LifePath Index 2045 FundF net of the Fund's investment management fee.
Principal RisksAny of the principal risks summarized below may adversely affect the Fund's net asset value, performance, and ability to meet itsinvestment objective. An investment in the Fund is not a bank deposit, is not guaranteed by BlackRock, Inc. or any of its affiliates,and is not insured by the Federal Deposit Insurance Corporation or any other agency of the U.S. government.
Equity Investment Risk: The price of an equity security fluctuates based on changes in the issuer’s financial condition and overallmarket and economic conditions. Equity securities are subject to changes in value that may be more volatile than other asset classes.
Foreign Investment Risk 1: The Fund may suffer losses due to political, legal, economic and geographic events affecting a non-U.S. issuer or market. The prices of non-U.S. securities may be more volatile than those of securities issued by U.S. corporationsor other U.S. entities. Securities of non-U.S. issuers denominated in non-U.S. currencies will expose the Fund to fluctuations inforeign currency exchange prices.
Target Date Risk 1: A “target date” fund may incur losses close to or after the fund's target retirement date, and there is noguarantee that the Fund will provide adequate income for an investor’s retirement.
Asset Allocation Model Risk: The asset allocation model may not effectively maximize returns or minimize risk, or be appropriatefor every investor seeking a particular risk profile. The model developed by BTC could result in underperformance as compared tofunds with similar investment objectives and strategies.
Commodity-Related Investment Risk 2: The value of commodity-linked derivative investments may be significantly affected bychanges in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industryor commodity, such as drought, floods, weather, embargoes, tariffs and international economic, political and regulatorydevelopments.
Securities Lending Risk 1: The Fund may engage in securities lending, which involves borrower credit risk, settlement risk, andcash collateral-related risks, such as the risk that the return on the cash collateral is insufficient to cover the fees the Fund iscommitted to pay and the risk that cash collateral may be invested in securities or other instruments that suffer losses or becomeilliquid.
Derivatives Risk 1: Investments in derivatives (such as futures contracts, forward contracts, swaps and options) may reducethe Fund's returns and/or increase volatility. Fluctuations in the values of derivatives may not correlate perfectly with the overallsecurities markets. The other party in the transaction may not fulfill its contractual obligation. The possible lack of a liquid secondarymarket for derivatives could expose the Fund to losses.
Real Estate-Related Investment Risk 2: Real estate values can be negatively affected by many factors including both the generaland local economies, the amount of new construction in a particular area, the laws and regulations affecting real estate, the costsof owning, maintaining and improving real estate, availability of mortgages, and changes in interest rates.
Underlying Fund Risk 2: The investment objective and strategies of an Underlying Fund in which the Fund invests may differfrom the Fund, and there is no assurance that an Underlying Fund will achieve its objective.
Fixed Income Investment Risk 10: An increase in interest rates may cause the value of fixed income securities held by the Fundto decline. The Fund's income may decline when interest rates fall. Debt issuers may not honor their obligations. Securities that arerated below investment grade may be more volatile and less liquid than higher-rated securities of similar maturity.
Release Date: 12-31-2017
LifePath® Index 2045 Fund L .................................................................................................................................................................................................................................................................................................................................................................................................Primary Benchmark Custom Benchmark Morningstar Category Overall Morningstar Rating™ Morningstar Return Morningstar RiskRussell 1000® Index LifePath® Index 2045 Custom
BenchmarkTarget-Date 2045 QQQ Average Average
See disclosure for details.
697990 ©2018 Morningstar, Inc., Morningstar Investment Profiles™ 312-696-6000. All rights reserved. The information contained herein: (1) is proprietary toMorningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. Neither Morningstarnor its content providers are responsible for any damages or losses arising from any use of information. Past performance is no guarantee of futureperformance. Visit our investment website at www.morningstar.com.
ß® Page 2 of 4
Allocation of Stocks and Bonds Portfolio Analysis
045 40 35 30 25 20 15 10 5
10080
60
40
200
Years Until RetirementBlack line designates target allocation for the Fund as of the date of this report.
% AllocationBonds
U.S. Stocks
Non-U.S. Stocks
Cash
Other
Investment Objective and StrategyThe Fund seeks to provide for retirement outcomes consistent with investor preferences throughout the savings and draw down phase based on quantitatively measured risk that investors, on average, may be willing to accept.
The Fund is a collective investment trust maintained and managed by BlackRock Institutional Trust Company, N.A. ("BTC").The Fund shall be invested and reinvested in securities and other assets with the objective of providing for retirement outcomes
consistent with investor preferences throughout the savings and drawdown phase based on quantitatively measured risk that investors, on average, may be willing to accept.
In pursuit of that objective, the Fund will be broadly diversified across global asset classes, with asset allocations becoming more conservative over time if the Fund has a year in its name. The Fund’s investments may include: equity securities (including those issued by real estate companies); depositary receipts; debt securities and other fixed income obligations (including those issued or guaranteed by the U.S. government, its agencies or instrumentalities, and those issued by corporations or other entities); mortgage-backed securities; other asset-backed securities; commodities; and/or cash equivalents.
The Fund may invest in securities and other obligations of U.S. issuers or non-U.S. issuers, and those issuers may be of any market capitalization. The Fund's fixed income investments may be investment-grade or non-investment grade, and may include securities and other obligations of any maturity.
In addition to, or in lieu of, investing in the assets listed above, the Fund may engage in structured transactions in these asset classes, as well as over-the-counter forward contracts, swaps and options. When deemed appropriate by BTC, the Fund may invest in futures contracts, for the purpose of acting as a temporary substitute for investment in securities and/or to gain exposure to commodities.
The difference between the normal and current securities holdings for the Fund varies over time and is based on the factors analyzed by the asset allocation model used by BTC to manage the Fund. The normal asset allocations will gradually change over the investment horizon of the Fund to become more heavily oriented toward debt and debt-like securities. As time passes, the Fund is managed more conservatively – prior to retirement – in terms of its allocation to equity securities and markets, on the premise that individuals investing for retirement desire to reduce investment risk in their retirement accounts as their retirement date approaches.
The trajectory along which asset allocations are adjusted over time to gradually become more conservative is called the “glidepath”. The glidepath illustrates the target allocation among asset classes as the Fund approaches its target date. The target asset allocation of the Fund at its retirement date is expected to be 40% in underlying index funds that invest primarily in equity and equity-like securities and 60% in underlying index funds that invest primarily in fixed income and fixed income-like securities.
BTC employs a proprietary investment model that analyzes securities market data, including risk, correlation and expected return statistics, to recommend the portfolio allocation among the asset classes.
Rather than choosing specific securities within each asset class, BTC selects among indices representing segments of the global equity and debt markets and invests in securities that comprise the chosen index. The Fund generally invests in a chosen index through a series of collective investment trusts maintained and managed by BTC, each such fund representing one of the indices (each, an "Underlying Fund").
In the event of a conflict between this summary description of the Fund's investment objective and principal investment strategies and the Trust Document under which the Fund was established, the Trust Document will govern. For more information related to the Fund, please see the Fund's Trust Document, Profile and most recent audited financial statements.
Top 10 Holdings as of 12-31-17 % Assets
Russell 1000 Index Fund 47.23BlackRock MSCI ACWI ex-US IMI Index Fd E 31.08Developed Real Estate Index Fund E 15.33Commodity Index Daily Fund E 4.37U.S. Debt Index Fund E 1.00.......................................................................................................Russell 2000 Index Fund 0.99
Morningstar Super Sectors as of 12-31-17 % Fund
h Cyclical 48.43j Sensitive 31.56k Defensive 20.00
Morningstar F-I Sectors as of 12-31-17 % Fund % Category
⁄ Government 4.37 31.84› Corporate 2.67 22.11€ Securitized 2.08 11.50‹ Municipal 0.06 0.26fi Cash 89.77 28.20 Other 1.05 6.09
Investment InformationOperations and Management
Product Inception Date 08-26-11Strategy Inception Date 09-30-07Total Fund Assets ($mil) 1,142.16Investment Manager BlackRock Institutional Trust
Company NA
.........................................................................................................................
Annual Turnover Ratio % 9.61
Fees and Expenses as of 01-01-17
Total Annual Operating Expense % 0.09%Total Annual Operating Expense per $1000 $0.90
Additional Information for Total Annual Operating Expense
The Total Annual Operating Expense ratio noted above ("TAOE")reflects a management fee and administrative costs. Effective1/1/17, administrative costs are capped at one (1) basis point(0.01%) per year. The TAOE has been restated to reflect thecurrent administrative cost cap. The TAOE may also, ifapplicable, reflect certain third party acquired fund fees andexpenses. There may be other fees and expenses not reflectedin the TAOE that bear on the value of the investment. ThePortfolio Turnover Rate is that of the collective investment fundin which the Fund invests exclusively, either directly orindirectly.
Release Date: 12-31-2017
LifePath® Index 2050 Fund L .................................................................................................................................................................................................................................................................................................................................................................................................Primary Benchmark Custom Benchmark Morningstar Category Overall Morningstar Rating™ Morningstar Return Morningstar RiskRussell 1000® Index LifePath® Index 2050 Custom
BenchmarkTarget-Date 2050 QQQ Average Above Average
See disclosure for details.
698007 ©2018 Morningstar, Inc., Morningstar Investment Profiles™ 312-696-6000. All rights reserved. The information contained herein: (1) is proprietary toMorningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. Neither Morningstarnor its content providers are responsible for any damages or losses arising from any use of information. Past performance is no guarantee of futureperformance. Visit our investment website at www.morningstar.com.
ß® Page 1 of 4
Benchmark DescriptionThe LifePath® Index 2050 Fund L's Custom Benchmark is acomparison benchmark for the performance of the Fund. TheCustom Benchmark is calculated using blended returns of thirdparty indices that proportionally reflect the respectiveweightings of the Fund's asset classes. The third party indexproportions of the Custom Benchmark are adjusted quarterly toreflect the Fund's changing asset allocations over time. As theFund's asset classes have been re-defined or added over time,the indices used to calculate the Custom Benchmark havechanged accordingly. As of March 31, 2017, the indices usedto calculate the Custom Benchmark are: Russell 1000® Index,Russell 2000® Index, MSCI ACWI ex-US IMI Net DividendReturn Index[sm], Bloomberg Barclays U.S. Aggregate BondIndex, Bloomberg Barclays U.S. Treasury Inflation ProtectedSecurities (TIPS) Index, FTSE EPRA/NAREIT Developed Index,and the Bloomberg Commodity Index Total Return.
Volatility Analysis
Low Moderate High
Investment
Category
In the past, this investment has shown a relatively moderaterange of price fluctuations relative to other investments. Thisinvestment may experience larger or smaller price declines orprice increases depending on market conditions. Some of thisrisk may be offset by owning other investments with differentportfolio makeups or investment strategies.
Best 3 Month Return Worst 3 Month Return
32.62% -33.43%(Mar '09 - May '09) (Sep '08 - Nov '08)
Performance
L1 L2 L3 L4 L5 L6
-18
-12
-6
0
6
12
18
24 Total Return% as of 12-31-17
InvestmentPrimary BmarkCustom Bmark
Average annual, if greaterthan 1 year
Since Inception 10 Year 5 Year 3 Year 1 Year YTD
5.27 5.68 10.52 8.88 20.83 20.83 Investment Return %8.03 8.59 15.71 11.23 21.69 21.69 Primary Bmark Return %5.16 5.59 10.43 8.63 20.53 20.53 Custom Bmark Return %........................................................................................................................................................................................................... QQQ QQQ QQQ . . Morningstar Rating™. 56 145 184 . . # of Funds in Category
Performance Disclosure: The Fund's returns are net of an investment management fee, currently at an annual rate of0.08%. The Fund’s performance reflects fund level administrative costs. Effective 1/1/17, the fund level administrativecosts are capped at 1 basis point (0.01%) per year. Since its inception the Fund has invested all of its assets in LifePathIndex 2050 Fund F. Returns shown for periods prior to the Fund's inception are those of the LifePath Index 2050 FundF net of the Fund's investment management fee.
Principal RisksAny of the principal risks summarized below may adversely affect the Fund's net asset value, performance, and ability to meet itsinvestment objective. An investment in the Fund is not a bank deposit, is not guaranteed by BlackRock, Inc. or any of its affiliates,and is not insured by the Federal Deposit Insurance Corporation or any other agency of the U.S. government.
Equity Investment Risk: The price of an equity security fluctuates based on changes in the issuer’s financial condition and overallmarket and economic conditions. Equity securities are subject to changes in value that may be more volatile than other asset classes.
Foreign Investment Risk 1: The Fund may suffer losses due to political, legal, economic and geographic events affecting a non-U.S. issuer or market. The prices of non-U.S. securities may be more volatile than those of securities issued by U.S. corporationsor other U.S. entities. Securities of non-U.S. issuers denominated in non-U.S. currencies will expose the Fund to fluctuations inforeign currency exchange prices.
Target Date Risk 1: A “target date” fund may incur losses close to or after the fund's target retirement date, and there is noguarantee that the Fund will provide adequate income for an investor’s retirement.
Asset Allocation Model Risk: The asset allocation model may not effectively maximize returns or minimize risk, or be appropriatefor every investor seeking a particular risk profile. The model developed by BTC could result in underperformance as compared tofunds with similar investment objectives and strategies.
Commodity-Related Investment Risk 2: The value of commodity-linked derivative investments may be significantly affected bychanges in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industryor commodity, such as drought, floods, weather, embargoes, tariffs and international economic, political and regulatorydevelopments.
Securities Lending Risk 1: The Fund may engage in securities lending, which involves borrower credit risk, settlement risk, andcash collateral-related risks, such as the risk that the return on the cash collateral is insufficient to cover the fees the Fund iscommitted to pay and the risk that cash collateral may be invested in securities or other instruments that suffer losses or becomeilliquid.
Derivatives Risk 1: Investments in derivatives (such as futures contracts, forward contracts, swaps and options) may reducethe Fund's returns and/or increase volatility. Fluctuations in the values of derivatives may not correlate perfectly with the overallsecurities markets. The other party in the transaction may not fulfill its contractual obligation. The possible lack of a liquid secondarymarket for derivatives could expose the Fund to losses.
Real Estate-Related Investment Risk 2: Real estate values can be negatively affected by many factors including both the generaland local economies, the amount of new construction in a particular area, the laws and regulations affecting real estate, the costsof owning, maintaining and improving real estate, availability of mortgages, and changes in interest rates.
Underlying Fund Risk 2: The investment objective and strategies of an Underlying Fund in which the Fund invests may differfrom the Fund, and there is no assurance that an Underlying Fund will achieve its objective.
Fixed Income Investment Risk 10: An increase in interest rates may cause the value of fixed income securities held by the Fundto decline. The Fund's income may decline when interest rates fall. Debt issuers may not honor their obligations. Securities that arerated below investment grade may be more volatile and less liquid than higher-rated securities of similar maturity.
Release Date: 12-31-2017
LifePath® Index 2050 Fund L .................................................................................................................................................................................................................................................................................................................................................................................................Primary Benchmark Custom Benchmark Morningstar Category Overall Morningstar Rating™ Morningstar Return Morningstar RiskRussell 1000® Index LifePath® Index 2050 Custom
BenchmarkTarget-Date 2050 QQQ Average Above Average
See disclosure for details.
698007 ©2018 Morningstar, Inc., Morningstar Investment Profiles™ 312-696-6000. All rights reserved. The information contained herein: (1) is proprietary toMorningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. Neither Morningstarnor its content providers are responsible for any damages or losses arising from any use of information. Past performance is no guarantee of futureperformance. Visit our investment website at www.morningstar.com.
ß® Page 2 of 4
Allocation of Stocks and Bonds Portfolio Analysis
045 40 35 30 25 20 15 10 5
10080
60
40
200
Years Until RetirementBlack line designates target allocation for the Fund as of the date of this report.
% AllocationBonds
U.S. Stocks
Non-U.S. Stocks
Cash
Other
Investment Objective and StrategyThe Fund seeks to provide for retirement outcomes consistent with investor preferences throughout the savings and draw down phase based on quantitatively measured risk that investors, on average, may be willing to accept.
The Fund is a collective investment trust maintained and managed by BlackRock Institutional Trust Company, N.A. ("BTC").The Fund shall be invested and reinvested in securities and other assets with the objective of providing for retirement outcomes
consistent with investor preferences throughout the savings and drawdown phase based on quantitatively measured risk that investors, on average, may be willing to accept.
In pursuit of that objective, the Fund will be broadly diversified across global asset classes, with asset allocations becoming more conservative over time if the Fund has a year in its name. The Fund’s investments may include: equity securities (including those issued by real estate companies); depositary receipts; debt securities and other fixed income obligations (including those issued or guaranteed by the U.S. government, its agencies or instrumentalities, and those issued by corporations or other entities); mortgage-backed securities; other asset-backed securities; commodities; and/or cash equivalents.
The Fund may invest in securities and other obligations of U.S. issuers or non-U.S. issuers, and those issuers may be of any market capitalization. The Fund's fixed income investments may be investment-grade or non-investment grade, and may include securities and other obligations of any maturity.
In addition to, or in lieu of, investing in the assets listed above, the Fund may engage in structured transactions in these asset classes, as well as over-the-counter forward contracts, swaps and options. When deemed appropriate by BTC, the Fund may invest in futures contracts, for the purpose of acting as a temporary substitute for investment in securities and/or to gain exposure to commodities.
The difference between the normal and current securities holdings for the Fund varies over time and is based on the factors analyzed by the asset allocation model used by BTC to manage the Fund. The normal asset allocations will gradually change over the investment horizon of the Fund to become more heavily oriented toward debt and debt-like securities. As time passes, the Fund is managed more conservatively – prior to retirement – in terms of its allocation to equity securities and markets, on the premise that individuals investing for retirement desire to reduce investment risk in their retirement accounts as their retirement date approaches.
The trajectory along which asset allocations are adjusted over time to gradually become more conservative is called the “glidepath”. The glidepath illustrates the target allocation among asset classes as the Fund approaches its target date. The target asset allocation of the Fund at its retirement date is expected to be 40% in underlying index funds that invest primarily in equity and equity-like securities and 60% in underlying index funds that invest primarily in fixed income and fixed income-like securities.
BTC employs a proprietary investment model that analyzes securities market data, including risk, correlation and expected return statistics, to recommend the portfolio allocation among the asset classes.
Rather than choosing specific securities within each asset class, BTC selects among indices representing segments of the global equity and debt markets and invests in securities that comprise the chosen index. The Fund generally invests in a chosen index through a series of collective investment trusts maintained and managed by BTC, each such fund representing one of the indices (each, an "Underlying Fund").
In the event of a conflict between this summary description of the Fund's investment objective and principal investment strategies and the Trust Document under which the Fund was established, the Trust Document will govern. For more information related to the Fund, please see the Fund's Trust Document, Profile and most recent audited financial statements.
Top 10 Holdings as of 12-31-17 % Assets
Russell 1000 Index Fund 47.23BlackRock MSCI ACWI ex-US IMI Index Fd E 31.08Developed Real Estate Index Fund E 15.34Commodity Index Daily Fund E 4.37U.S. Debt Index Fund E 1.00.......................................................................................................Russell 2000 Index Fund 0.98
Morningstar Super Sectors as of 12-31-17 % Fund
h Cyclical 48.44j Sensitive 31.55k Defensive 20.00
Morningstar F-I Sectors as of 12-31-17 % Fund % Category
⁄ Government 4.37 26.75› Corporate 2.67 22.31€ Securitized 2.08 12.67‹ Municipal 0.06 0.28fi Cash 89.77 33.59 Other 1.05 4.40
Investment InformationOperations and Management
Product Inception Date 08-26-11Strategy Inception Date 05-19-10Total Fund Assets ($mil) 649.05Investment Manager BlackRock Institutional Trust
Company NA
.........................................................................................................................
Annual Turnover Ratio % 9.25
Fees and Expenses as of 01-01-17
Total Annual Operating Expense % 0.09%Total Annual Operating Expense per $1000 $0.90
Additional Information for Total Annual Operating Expense
The Total Annual Operating Expense ratio noted above ("TAOE")reflects a management fee and administrative costs. Effective1/1/17, administrative costs are capped at one (1) basis point(0.01%) per year. The TAOE has been restated to reflect thecurrent administrative cost cap. The TAOE may also, ifapplicable, reflect certain third party acquired fund fees andexpenses. There may be other fees and expenses not reflectedin the TAOE that bear on the value of the investment. ThePortfolio Turnover Rate is that of the collective investment fundin which the Fund invests exclusively, either directly orindirectly.
Release Date: 12-31-2017
LifePath® Index 2055 Fund L .................................................................................................................................................................................................................................................................................................................................................................................................Primary Benchmark Custom Benchmark Morningstar Category Overall Morningstar Rating™ Morningstar Return Morningstar RiskRussell 1000® Index LifePath® Index 2055 Custom
BenchmarkTarget-Date 2055 QQQ Average Average
See disclosure for details.
698016 ©2018 Morningstar, Inc., Morningstar Investment Profiles™ 312-696-6000. All rights reserved. The information contained herein: (1) is proprietary toMorningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. Neither Morningstarnor its content providers are responsible for any damages or losses arising from any use of information. Past performance is no guarantee of futureperformance. Visit our investment website at www.morningstar.com.
ß® Page 1 of 4
Benchmark DescriptionThe LifePath® Index 2055 Fund L's Custom Benchmark is acomparison benchmark for the performance of the Fund. TheCustom Benchmark is calculated using blended returns of thirdparty indices that proportionally reflect the respectiveweightings of the Fund's asset classes. The third party indexproportions of the Custom Benchmark are adjusted quarterly toreflect the Fund's changing asset allocations over time. As theFund's asset classes have been re-defined or added over time,the indices used to calculate the Custom Benchmark havechanged accordingly. As of March 31, 2017, the indices usedto calculate the Custom Benchmark are: Russell 1000® Index,Russell 2000® Index, MSCI ACWI ex-US IMI Net DividendReturn Index[sm], Bloomberg Barclays U.S. Aggregate BondIndex, Bloomberg Barclays U.S. Treasury Inflation ProtectedSecurities (TIPS) Index, FTSE EPRA/NAREIT Developed Index,and the Bloomberg Commodity Index Total Return.
Volatility Analysis
Low Moderate High
Investment
Category
In the past, this investment has shown a relatively moderaterange of price fluctuations relative to other investments. Thisinvestment may experience larger or smaller price declines orprice increases depending on market conditions. Some of thisrisk may be offset by owning other investments with differentportfolio makeups or investment strategies.
Best 3 Month Return Worst 3 Month Return
13.75% -16.53%(Jul '10 - Sep '10) (Jul '11 - Sep '11)
Performance
L1 L2 L3 L4 L5 L6
-18
-12
-6
0
6
12
18
24 Total Return% as of 12-31-17
InvestmentPrimary BmarkCustom Bmark
Average annual, if greaterthan 1 year
Since Inception 10 Year 5 Year 3 Year 1 Year YTD
10.92 . 10.73 8.87 20.81 20.81 Investment Return %14.54 . 15.71 11.23 21.69 21.69 Primary Bmark Return %10.84 . 10.65 8.63 20.53 20.53 Custom Bmark Return %..........................................................................................................................................................................................................
. . QQQ QQQ . . Morningstar Rating™
. . 101 159 . . # of Funds in Category
Performance Disclosure: The Fund's returns are net of an investment management fee, currently at an annual rate of0.08%. The Fund’s performance reflects fund level administrative costs. Effective 1/1/17, the fund level administrativecosts are capped at 1 basis point (0.01%) per year. Since its inception the Fund has invested all of its assets in LifePathIndex 2055 Fund F. Returns shown for periods prior to the Fund's inception are those of the LifePath Index 2055 FundF net of the Fund's investment management fee.
Principal RisksAny of the principal risks summarized below may adversely affect the Fund's net asset value, performance, and ability to meet itsinvestment objective. An investment in the Fund is not a bank deposit, is not guaranteed by BlackRock, Inc. or any of its affiliates,and is not insured by the Federal Deposit Insurance Corporation or any other agency of the U.S. government.
Equity Investment Risk: The price of an equity security fluctuates based on changes in the issuer’s financial condition and overallmarket and economic conditions. Equity securities are subject to changes in value that may be more volatile than other asset classes.
Foreign Investment Risk 1: The Fund may suffer losses due to political, legal, economic and geographic events affecting a non-U.S. issuer or market. The prices of non-U.S. securities may be more volatile than those of securities issued by U.S. corporationsor other U.S. entities. Securities of non-U.S. issuers denominated in non-U.S. currencies will expose the Fund to fluctuations inforeign currency exchange prices.
Target Date Risk 1: A “target date” fund may incur losses close to or after the fund's target retirement date, and there is noguarantee that the Fund will provide adequate income for an investor’s retirement.
Asset Allocation Model Risk: The asset allocation model may not effectively maximize returns or minimize risk, or be appropriatefor every investor seeking a particular risk profile. The model developed by BTC could result in underperformance as compared tofunds with similar investment objectives and strategies.
Commodity-Related Investment Risk 2: The value of commodity-linked derivative investments may be significantly affected bychanges in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industryor commodity, such as drought, floods, weather, embargoes, tariffs and international economic, political and regulatorydevelopments.
Securities Lending Risk 1: The Fund may engage in securities lending, which involves borrower credit risk, settlement risk, andcash collateral-related risks, such as the risk that the return on the cash collateral is insufficient to cover the fees the Fund iscommitted to pay and the risk that cash collateral may be invested in securities or other instruments that suffer losses or becomeilliquid.
Derivatives Risk 1: Investments in derivatives (such as futures contracts, forward contracts, swaps and options) may reducethe Fund's returns and/or increase volatility. Fluctuations in the values of derivatives may not correlate perfectly with the overallsecurities markets. The other party in the transaction may not fulfill its contractual obligation. The possible lack of a liquid secondarymarket for derivatives could expose the Fund to losses.
Real Estate-Related Investment Risk 2: Real estate values can be negatively affected by many factors including both the generaland local economies, the amount of new construction in a particular area, the laws and regulations affecting real estate, the costsof owning, maintaining and improving real estate, availability of mortgages, and changes in interest rates.
Underlying Fund Risk 2: The investment objective and strategies of an Underlying Fund in which the Fund invests may differfrom the Fund, and there is no assurance that an Underlying Fund will achieve its objective.
Fixed Income Investment Risk 10: An increase in interest rates may cause the value of fixed income securities held by the Fundto decline. The Fund's income may decline when interest rates fall. Debt issuers may not honor their obligations. Securities that arerated below investment grade may be more volatile and less liquid than higher-rated securities of similar maturity.
Release Date: 12-31-2017
LifePath® Index 2055 Fund L .................................................................................................................................................................................................................................................................................................................................................................................................Primary Benchmark Custom Benchmark Morningstar Category Overall Morningstar Rating™ Morningstar Return Morningstar RiskRussell 1000® Index LifePath® Index 2055 Custom
BenchmarkTarget-Date 2055 QQQ Average Average
See disclosure for details.
698016 ©2018 Morningstar, Inc., Morningstar Investment Profiles™ 312-696-6000. All rights reserved. The information contained herein: (1) is proprietary toMorningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. Neither Morningstarnor its content providers are responsible for any damages or losses arising from any use of information. Past performance is no guarantee of futureperformance. Visit our investment website at www.morningstar.com.
ß® Page 2 of 4
Allocation of Stocks and Bonds Portfolio Analysis
045 40 35 30 25 20 15 10 5
10080
60
40
200
Years Until RetirementBlack line designates target allocation for the Fund as of the date of this report.
% AllocationBonds
U.S. Stocks
Non-U.S. Stocks
Cash
Other
Investment Objective and StrategyThe Fund seeks to provide for retirement outcomes consistent with investor preferences throughout the savings and draw down phase based on quantitatively measured risk that investors, on average, may be willing to accept.
The Fund is a collective investment trust maintained and managed by BlackRock Institutional Trust Company, N.A. ("BTC").The Fund shall be invested and reinvested in securities and other assets with the objective of providing for retirement outcomes
consistent with investor preferences throughout the savings and drawdown phase based on quantitatively measured risk that investors, on average, may be willing to accept.
In pursuit of that objective, the Fund will be broadly diversified across global asset classes, with asset allocations becoming more conservative over time if the Fund has a year in its name. The Fund’s investments may include: equity securities (including those issued by real estate companies); depositary receipts; debt securities and other fixed income obligations (including those issued or guaranteed by the U.S. government, its agencies or instrumentalities, and those issued by corporations or other entities); mortgage-backed securities; other asset-backed securities; commodities; and/or cash equivalents.
The Fund may invest in securities and other obligations of U.S. issuers or non-U.S. issuers, and those issuers may be of any market capitalization. The Fund's fixed income investments may be investment-grade or non-investment grade, and may include securities and other obligations of any maturity.
In addition to, or in lieu of, investing in the assets listed above, the Fund may engage in structured transactions in these asset classes, as well as over-the-counter forward contracts, swaps and options. When deemed appropriate by BTC, the Fund may invest in futures contracts, for the purpose of acting as a temporary substitute for investment in securities and/or to gain exposure to commodities.
The difference between the normal and current securities holdings for the Fund varies over time and is based on the factors analyzed by the asset allocation model used by BTC to manage the Fund. The normal asset allocations will gradually change over the investment horizon of the Fund to become more heavily oriented toward debt and debt-like securities. As time passes, the Fund is managed more conservatively – prior to retirement – in terms of its allocation to equity securities and markets, on the premise that individuals investing for retirement desire to reduce investment risk in their retirement accounts as their retirement date approaches.
The trajectory along which asset allocations are adjusted over time to gradually become more conservative is called the “glidepath”. The glidepath illustrates the target allocation among asset classes as the Fund approaches its target date. The target asset allocation of the Fund at its retirement date is expected to be 40% in underlying index funds that invest primarily in equity and equity-like securities and 60% in underlying index funds that invest primarily in fixed income and fixed income-like securities.
BTC employs a proprietary investment model that analyzes securities market data, including risk, correlation and expected return statistics, to recommend the portfolio allocation among the asset classes.
Rather than choosing specific securities within each asset class, BTC selects among indices representing segments of the global equity and debt markets and invests in securities that comprise the chosen index. The Fund generally invests in a chosen index through a series of collective investment trusts maintained and managed by BTC, each such fund representing one of the indices (each, an "Underlying Fund").
In the event of a conflict between this summary description of the Fund's investment objective and principal investment strategies and the Trust Document under which the Fund was established, the Trust Document will govern. For more information related to the Fund, please see the Fund's Trust Document, Profile and most recent audited financial statements.
Top 10 Holdings as of 12-31-17 % Assets
Russell 1000 Index Fund 47.24BlackRock MSCI ACWI ex-US IMI Index Fd E 31.08Developed Real Estate Index Fund E 15.34Commodity Index Daily Fund E 4.38U.S. Debt Index Fund E 1.00.......................................................................................................Russell 2000 Index Fund 0.96
Morningstar Super Sectors as of 12-31-17 % Fund
h Cyclical 48.84j Sensitive 32.07k Defensive 19.08
Morningstar F-I Sectors as of 12-31-17 % Fund % Category
⁄ Government 6.49 25.50› Corporate 3.96 25.35€ Securitized 3.09 12.49‹ Municipal 0.09 0.27fi Cash 84.82 35.17 Other 1.56 1.24
Investment InformationOperations and Management
Product Inception Date 01-05-15Strategy Inception Date 11-17-14Total Fund Assets ($mil) 89.29Investment Manager BlackRock Institutional Trust
Company NA
.........................................................................................................................
Annual Turnover Ratio % 14.83
Fees and Expenses as of 01-01-17
Total Annual Operating Expense % 0.09%Total Annual Operating Expense per $1000 $0.90
Additional Information for Total Annual Operating Expense
The Total Annual Operating Expense ratio noted above ("TAOE")reflects a management fee and administrative costs. Effective1/1/17, administrative costs are capped at one (1) basis point(0.01%) per year. The TAOE has been restated to reflect thecurrent administrative cost cap. The TAOE may also, ifapplicable, reflect certain third party acquired fund fees andexpenses. There may be other fees and expenses not reflectedin the TAOE that bear on the value of the investment. ThePortfolio Turnover Rate is that of the collective investment fundin which the Fund invests exclusively, either directly orindirectly.
Release Date: 12-31-2017
LifePath® Index 2060 Fund L .................................................................................................................................................................................................................................................................................................................................................................................................Primary Benchmark Custom Benchmark Morningstar Category Overall Morningstar Rating™ Morningstar Return Morningstar RiskRussell 1000® Index LifePath® Index 2060 Custom
BenchmarkTarget-Date 2060+ QQ Below Average Above Average
See disclosure for details.
300694 ©2018 Morningstar, Inc., Morningstar Investment Profiles™ 312-696-6000. All rights reserved. The information contained herein: (1) is proprietary toMorningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. Neither Morningstarnor its content providers are responsible for any damages or losses arising from any use of information. Past performance is no guarantee of futureperformance. Visit our investment website at www.morningstar.com.
ß® Page 1 of 4
Benchmark DescriptionThe LifePath® Index 2060 Fund L's Custom Benchmark is acomparison benchmark for the performance of the Fund. TheCustom Benchmark is calculated using blended returns of thirdparty indices that proportionally reflect the respectiveweightings of the Fund's asset classes. The third party indexproportions of the Custom Benchmark are adjusted quarterly toreflect the Fund's changing asset allocations over time. As theFund's asset classes have been re-defined or added over time,the indices used to calculate the Custom Benchmark havechanged accordingly. As of March 31, 2017, the indices usedto calculate the Custom Benchmark are: Russell 1000® Index,Russell 2000® Index, MSCI ACWI ex-US IMI Net DividendReturn Index[sm], Bloomberg Barclays U.S. Aggregate BondIndex, Bloomberg Barclays U.S. Treasury Inflation ProtectedSecurities (TIPS) Index, FTSE EPRA/NAREIT Developed Index,and the Bloomberg Commodity Index Total Return.
Volatility Analysis
Low Moderate High
Investment
Category
In the past, this investment has shown a relatively moderaterange of price fluctuations relative to other investments. Thisinvestment may experience larger or smaller price declines orprice increases depending on market conditions. Some of thisrisk may be offset by owning other investments with differentportfolio makeups or investment strategies.
Best 3 Month Return Worst 3 Month Return
9.68% -8.05%(Mar '16 - May '16) (Jul '15 - Sep '15)
Performance
L1 L2 L3 L4 L5 L6
-18
-12
-6
0
6
12
18
24 Total Return% as of 12-31-17
InvestmentPrimary BmarkCustom Bmark
Average annual, if greaterthan 1 year
Since Inception 10 Year 5 Year 3 Year 1 Year YTD
8.44 . . 8.88 20.76 20.76 Investment Return %11.18 . . 11.23 21.69 21.69 Primary Bmark Return %8.28 . . 8.63 20.53 20.53 Custom Bmark Return %........................................................................................................................................................................................................... . . QQ . . Morningstar Rating™. . . 37 . . # of Funds in Category
Performance Disclosure: The Fund's returns are net of an investment management fee, currently at an annual rate of0.08%. The Fund’s performance reflects fund level administrative costs. Effective 1/1/17, the fund level administrativecosts are capped at 1 basis point (0.01%) per year. Since its inception the Fund has invested all of its assets in LifePathIndex 2060 Fund F. Returns shown for periods prior to the Fund's inception are those of the LifePath Index 2060 FundF net of the Fund's investment management fee.
Principal RisksAny of the principal risks summarized below may adversely affect the Fund's net asset value, performance, and ability to meet itsinvestment objective. An investment in the Fund is not a bank deposit, is not guaranteed by BlackRock, Inc. or any of its affiliates,and is not insured by the Federal Deposit Insurance Corporation or any other agency of the U.S. government.
Equity Investment Risk: The price of an equity security fluctuates based on changes in the issuer’s financial condition and overallmarket and economic conditions. Equity securities are subject to changes in value that may be more volatile than other asset classes.
Foreign Investment Risk 1: The Fund may suffer losses due to political, legal, economic and geographic events affecting a non-U.S. issuer or market. The prices of non-U.S. securities may be more volatile than those of securities issued by U.S. corporationsor other U.S. entities. Securities of non-U.S. issuers denominated in non-U.S. currencies will expose the Fund to fluctuations inforeign currency exchange prices.
Target Date Risk 1: A “target date” fund may incur losses close to or after the fund's target retirement date, and there is noguarantee that the Fund will provide adequate income for an investor’s retirement.
Asset Allocation Model Risk: The asset allocation model may not effectively maximize returns or minimize risk, or be appropriatefor every investor seeking a particular risk profile. The model developed by BTC could result in underperformance as compared tofunds with similar investment objectives and strategies.
Commodity-Related Investment Risk 2: The value of commodity-linked derivative investments may be significantly affected bychanges in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industryor commodity, such as drought, floods, weather, embargoes, tariffs and international economic, political and regulatorydevelopments.
Securities Lending Risk 1: The Fund may engage in securities lending, which involves borrower credit risk, settlement risk, andcash collateral-related risks, such as the risk that the return on the cash collateral is insufficient to cover the fees the Fund iscommitted to pay and the risk that cash collateral may be invested in securities or other instruments that suffer losses or becomeilliquid.
Derivatives Risk 1: Investments in derivatives (such as futures contracts, forward contracts, swaps and options) may reducethe Fund's returns and/or increase volatility. Fluctuations in the values of derivatives may not correlate perfectly with the overallsecurities markets. The other party in the transaction may not fulfill its contractual obligation. The possible lack of a liquid secondarymarket for derivatives could expose the Fund to losses.
Real Estate-Related Investment Risk 2: Real estate values can be negatively affected by many factors including both the generaland local economies, the amount of new construction in a particular area, the laws and regulations affecting real estate, the costsof owning, maintaining and improving real estate, availability of mortgages, and changes in interest rates.
Underlying Fund Risk 2: The investment objective and strategies of an Underlying Fund in which the Fund invests may differfrom the Fund, and there is no assurance that an Underlying Fund will achieve its objective.
Fixed Income Investment Risk 10: An increase in interest rates may cause the value of fixed income securities held by the Fundto decline. The Fund's income may decline when interest rates fall. Debt issuers may not honor their obligations. Securities that arerated below investment grade may be more volatile and less liquid than higher-rated securities of similar maturity.
Release Date: 12-31-2017
LifePath® Index 2060 Fund L .................................................................................................................................................................................................................................................................................................................................................................................................Primary Benchmark Custom Benchmark Morningstar Category Overall Morningstar Rating™ Morningstar Return Morningstar RiskRussell 1000® Index LifePath® Index 2060 Custom
BenchmarkTarget-Date 2060+ QQ Below Average Above Average
See disclosure for details.
300694 ©2018 Morningstar, Inc., Morningstar Investment Profiles™ 312-696-6000. All rights reserved. The information contained herein: (1) is proprietary toMorningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. Neither Morningstarnor its content providers are responsible for any damages or losses arising from any use of information. Past performance is no guarantee of futureperformance. Visit our investment website at www.morningstar.com.
ß® Page 2 of 4
Allocation of Stocks and Bonds Portfolio Analysis
045 40 35 30 25 20 15 10 5
10080
60
40
200
Years Until Retirement
% AllocationBonds
U.S. Stocks
Non-U.S. Stocks
Cash
Other
Investment Objective and StrategyThe Fund seeks to provide for retirement outcomes consistent with investor preferences throughout the savings and draw down phase based on quantitatively measured risk that investors, on average, may be willing to accept.
The Fund is a collective investment trust maintained and managed by BlackRock Institutional Trust Company, N.A. ("BTC").The Fund shall be invested and reinvested in securities and other assets with the objective of providing for retirement outcomes
consistent with investor preferences throughout the savings and drawdown phase based on quantitatively measured risk that investors, on average, may be willing to accept.
In pursuit of that objective, the Fund will be broadly diversified across global asset classes, with asset allocations becoming more conservative over time if the Fund has a year in its name. The Fund’s investments may include: equity securities (including those issued by real estate companies); depositary receipts; debt securities and other fixed income obligations (including those issued or guaranteed by the U.S. government, its agencies or instrumentalities, and those issued by corporations or other entities); mortgage-backed securities; other asset-backed securities; commodities; and/or cash equivalents.
The Fund may invest in securities and other obligations of U.S. issuers or non-U.S. issuers, and those issuers may be of any market capitalization. The Fund's fixed income investments may be investment-grade or non-investment grade, and may include securities and other obligations of any maturity.
In addition to, or in lieu of, investing in the assets listed above, the Fund may engage in structured transactions in these asset classes, as well as over-the-counter forward contracts, swaps and options. When deemed appropriate by BTC, the Fund may invest in futures contracts, for the purpose of acting as a temporary substitute for investment in securities and/or to gain exposure to commodities.
The difference between the normal and current securities holdings for the Fund varies over time and is based on the factors analyzed by the asset allocation model used by BTC to manage the Fund. The normal asset allocations will gradually change over the investment horizon of the Fund to become more heavily oriented toward debt and debt-like securities. As time passes, the Fund is managed more conservatively – prior to retirement – in terms of its allocation to equity securities and markets, on the premise that individuals investing for retirement desire to reduce investment risk in their retirement accounts as their retirement date approaches.
The trajectory along which asset allocations are adjusted over time to gradually become more conservative is called the “glidepath”. The glidepath illustrates the target allocation among asset classes as the Fund approaches its target date. The target asset allocation of the Fund at its retirement date is expected to be 40% in underlying index funds that invest primarily in equity and equity-like securities and 60% in underlying index funds that invest primarily in fixed income and fixed income-like securities.
BTC employs a proprietary investment model that analyzes securities market data, including risk, correlation and expected return statistics, to recommend the portfolio allocation among the asset classes.
Rather than choosing specific securities within each asset class, BTC selects among indices representing segments of the global equity and debt markets and invests in securities that comprise the chosen index. The Fund generally invests in a chosen index through a series of collective investment trusts maintained and managed by BTC, each such fund representing one of the indices (each, an "Underlying Fund").
In the event of a conflict between this summary description of the Fund's investment objective and principal investment strategies and the Trust Document under which the Fund was established, the Trust Document will govern. For more information related to the Fund, please see the Fund's Trust Document, Profile and most recent audited financial statements.
Top 10 Holdings as of 12-31-17 % Assets
U.S. Debt Index Fund E 51.09Russell 1000 Index Fund 20.32BlackRock MSCI ACWI ex-US IMI Index Fd E 11.43U.S. TIPS Fund E 8.66Russell 2000 Index Fund 4.24.......................................................................................................Commodity Index Daily Fund E 3.79Developed Real Estate Index Fund E 0.49
Morningstar Super Sectors as of 12-31-17 % Fund
h Cyclical 39.94j Sensitive 37.60k Defensive 22.47
Morningstar F-I Sectors as of 12-31-17 % Fund % Category
⁄ Government 47.67 34.04› Corporate 20.17 27.86€ Securitized 16.28 19.20‹ Municipal 0.49 0.44fi Cash 15.25 15.55 Other 0.14 2.90
Investment InformationOperations and Management
Product Inception Date 08-26-11Strategy Inception Date 08-01-05Total Fund Assets ($mil) 1,426.38Investment Manager BlackRock Institutional Trust
Company NA
.........................................................................................................................
Annual Turnover Ratio % 16.61
Fees and Expenses as of 12-31-16
Total Annual Operating Expense % 0.09%Total Annual Operating Expense per $1000 $0.90
Additional Information for Total Annual Operating Expense
The Total Annual Operating Expense ratio noted above ("TAOE")reflects a management fee and administrative costs. Effective1/1/17, administrative costs are capped at one (1) basis point(0.01%) per year. The TAOE may also, if applicable, reflectcertain third party acquired fund fees and expenses. There maybe other fees and expenses not reflected in the TAOE that bearon the value of the investment. The Portfolio Turnover Rate isthat of the collective investment fund in which the Fund investsexclusively, either directly or indirectly.
Release Date: 12-31-2017
LifePath® Index Retirement Fund L .................................................................................................................................................................................................................................................................................................................................................................................................Primary Benchmark Custom Benchmark Morningstar Category Overall Morningstar Rating™ Morningstar Return Morningstar RiskBloomberg Barclays U.S.Aggregate Bond Index
LifePath® Index RetirementCustom Benchmark
Target-Date Retirement QQQQ Above Average AverageSee disclosure for details.
698025 ©2018 Morningstar, Inc., Morningstar Investment Profiles™ 312-696-6000. All rights reserved. The information contained herein: (1) is proprietary toMorningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. Neither Morningstarnor its content providers are responsible for any damages or losses arising from any use of information. Past performance is no guarantee of futureperformance. Visit our investment website at www.morningstar.com.
ß® Page 1 of 4
Benchmark DescriptionThe LifePath® Index Retirement Fund L's Custom Benchmarkis a comparison benchmark for the performance of the Fund.The Custom Benchmark is calculated using blended returns ofthird party indices that proportionally reflect the respectiveweightings of the Fund's asset classes. The third party indexproportions of the Custom Benchmark are adjusted quarterly toreflect the Fund's changing asset allocations over time. As theFund's asset classes have been re-defined or added over time,the indices used to calculate the Custom Benchmark havechanged accordingly. As of March 31, 2017, the indices usedto calculate the Custom Benchmark are: Russell 1000® Index,Russell 2000® Index, MSCI ACWI ex-US IMI Net DividendReturn Index[sm], Bloomberg Barclays U.S. Aggregate BondIndex, Bloomberg Barclays U.S. Treasury Inflation ProtectedSecurities (TIPS) Index, FTSE EPRA/NAREIT Developed Index,and the Bloomberg Commodity Index Total Return.
Volatility Analysis
Low Moderate High
Investment
Category
In the past, this investment has shown a relatively small rangeof price fluctuations relative to other investments. Based on thismeasure, currently more than two-thirds of all investmentshave shown higher levels of risk. Consequently, this investmentmay appeal to investors looking for a conservative investmentstrategy.
Best 3 Month Return Worst 3 Month Return
13.46% -15.26%(Mar '09 - May '09) (Sep '08 - Nov '08)
Performance
L1 L2 L3 L4 L5 L6
-9
-6
-3
0
3
6
9
12 Total Return% as of 12-31-17
InvestmentPrimary BmarkCustom Bmark
Average annual, if greaterthan 1 year
Since Inception 10 Year 5 Year 3 Year 1 Year YTD
5.46 4.91 5.36 4.94 10.17 10.17 Investment Return %4.21 4.01 2.10 2.24 3.54 3.54 Primary Bmark Return %5.47 4.91 5.34 4.90 10.09 10.09 Custom Bmark Return %........................................................................................................................................................................................................... QQQQ QQQQ QQQQ . . Morningstar Rating™. 73 123 147 . . # of Funds in Category
Performance Disclosure: The Fund's returns are net of an investment management fee, currently at an annual rate of0.08%. The Fund’s performance reflects fund level administrative costs. Effective 1/1/17, the fund level administrativecosts are capped at 1 basis point (0.01%) per year. Since its inception the Fund has invested all of its assets in LifePathIndex Retirement Fund F. Returns shown for periods prior to the Fund's inception are those of the LifePath IndexRetirement Fund F net of the Fund's investment management fee.
Principal RisksAny of the principal risks summarized below may adversely affect the Fund's net asset value, performance, and ability to meet itsinvestment objective. An investment in the Fund is not a bank deposit, is not guaranteed by BlackRock, Inc. or any of its affiliates,and is not insured by the Federal Deposit Insurance Corporation or any other agency of the U.S. government.
Equity Investment Risk: The price of an equity security fluctuates based on changes in the issuer’s financial condition and overallmarket and economic conditions. Equity securities are subject to changes in value that may be more volatile than other asset classes.
Foreign Investment Risk 1: The Fund may suffer losses due to political, legal, economic and geographic events affecting a non-U.S. issuer or market. The prices of non-U.S. securities may be more volatile than those of securities issued by U.S. corporationsor other U.S. entities. Securities of non-U.S. issuers denominated in non-U.S. currencies will expose the Fund to fluctuations inforeign currency exchange prices.
Target Date Risk 1: A “target date” fund may incur losses close to or after the fund's target retirement date, and there is noguarantee that the Fund will provide adequate income for an investor’s retirement.
Asset Allocation Model Risk: The asset allocation model may not effectively maximize returns or minimize risk, or be appropriatefor every investor seeking a particular risk profile. The model developed by BTC could result in underperformance as compared tofunds with similar investment objectives and strategies.
Commodity-Related Investment Risk 2: The value of commodity-linked derivative investments may be significantly affected bychanges in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industryor commodity, such as drought, floods, weather, embargoes, tariffs and international economic, political and regulatorydevelopments.
Securities Lending Risk 1: The Fund may engage in securities lending, which involves borrower credit risk, settlement risk, andcash collateral-related risks, such as the risk that the return on the cash collateral is insufficient to cover the fees the Fund iscommitted to pay and the risk that cash collateral may be invested in securities or other instruments that suffer losses or becomeilliquid.
Derivatives Risk 1: Investments in derivatives (such as futures contracts, forward contracts, swaps and options) may reducethe Fund's returns and/or increase volatility. Fluctuations in the values of derivatives may not correlate perfectly with the overallsecurities markets. The other party in the transaction may not fulfill its contractual obligation. The possible lack of a liquid secondarymarket for derivatives could expose the Fund to losses.
Real Estate-Related Investment Risk 2: Real estate values can be negatively affected by many factors including both the generaland local economies, the amount of new construction in a particular area, the laws and regulations affecting real estate, the costsof owning, maintaining and improving real estate, availability of mortgages, and changes in interest rates.
Underlying Fund Risk 2: The investment objective and strategies of an Underlying Fund in which the Fund invests may differfrom the Fund, and there is no assurance that an Underlying Fund will achieve its objective.
Fixed Income Investment Risk 10: An increase in interest rates may cause the value of fixed income securities held by the Fundto decline. The Fund's income may decline when interest rates fall. Debt issuers may not honor their obligations. Securities that arerated below investment grade may be more volatile and less liquid than higher-rated securities of similar maturity.
Release Date: 12-31-2017
LifePath® Index Retirement Fund L .................................................................................................................................................................................................................................................................................................................................................................................................Primary Benchmark Custom Benchmark Morningstar Category Overall Morningstar Rating™ Morningstar Return Morningstar RiskBloomberg Barclays U.S.Aggregate Bond Index
LifePath® Index RetirementCustom Benchmark
Target-Date Retirement QQQQ Above Average AverageSee disclosure for details.
698025 ©2018 Morningstar, Inc., Morningstar Investment Profiles™ 312-696-6000. All rights reserved. The information contained herein: (1) is proprietary toMorningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. Neither Morningstarnor its content providers are responsible for any damages or losses arising from any use of information. Past performance is no guarantee of futureperformance. Visit our investment website at www.morningstar.com.
ß® Page 2 of 4
When used as supplemental sales literature, the InvestmentProfile must be preceded or accompanied by this disclosurestatement. The performance data given represents pastperformance and should not be considered indicative of futureresults. Principal value and investment return will fluctuate, sothat an investor's shares when redeemed may be worth moreor less than the original investment. Fund portfolio statisticschange over time. The fund is not insured by the Federal DepositInsurance Corporation ("FDIC"), may lose value and is notguaranteed by a bank or other financial institution.
Fund StructureThe fund described herein is a bank-maintained collectiveinvestment fund maintained and managed by BlackRockInstitutional Trust Company, N.A. ("BTC"). BTC is a nationalbanking association organized under the laws of the UnitedStates and operates as a limited purpose trust company. In reliance upon an exemption from the registrationrequirements of the federal securities laws, investments in thefund are not registered with the Securities and ExchangeCommission (“SEC”) or any state securities commission.Likewise, in reliance upon an exclusion from the definition of aninvestment company in the Investment Company Act of 1940,as amended (the “Company Act”); the fund is not registeredwith the SEC as an investment company under the CompanyAct. The Office of the Comptroller of the Currency is responsiblefor ensuring that fiduciary powers are exercised in a mannerconsistent with the best interests of BTC’s clients and soundfiduciary principles. The fund is offered to defined contribution plans ("Plans")that are qualified under Section 401(a) of the Internal RevenueCode of 1986, as amended ("IRC"), and governmental Plans,such as state and municipal government Plans that aredescribed in IRC Section 818(a)(6), such as governmental IRCSection 457(b) Plans. The fund is established and governed bya trust instrument, the Plan of BlackRock Institutional TrustCompany, N.A. Investment Funds for Employee Benefit Trusts(the "Plan Document"), which sets forth BTC's powers, authorityand responsibilities regarding the administration, investmentand operation of the fund. Plans investing in the fund becomesubject to the terms and conditions of the Plan Document.
Best and Worst 3 Month PerformanceMorningstar calculates best and worst 3-month period (inpercentage) in-house on a monthly basis. Best 3-month Period: The highest total return the stock hasposted in a consecutive three-month period over the trailing 15years, or if a fund does not have 15 years of history, it will goback as far as the inception date. Worst 3-month Period: The lowest total return the stock hasposted in a consecutive three-month period over the trailing 15years, or if a fund does not have 15 years of history, it will goback as far as the inception date.
Morningstar Rating™The Morningstar Rating™ for funds, or "star rating", iscalculated for managed products (including mutual funds,variable annuity and variable life subaccounts, exchange-tradedfunds, closed-end funds, and separate accounts) with at leasta three-year history. Exchange-traded funds and open-endedmutual funds are considered a single population for comparativepurposes. It is calculated based on a Morningstar Risk-Adjusted
Return measure that accounts for variation in a managedproduct's monthly excess performance, placing more emphasison downward variations and rewarding consistentperformance. The top 10% of products in each product categoryreceive 5 stars, the next 22.5% receive 4 stars, the next 35%receive 3 stars, the next 22.5% receive 2 stars, and the bottom10% receive 1 star. The Overall Morningstar Rating for amanaged product is derived from a weighted average of theperformance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weightsare: 100% three-year rating for 36-59 months of total returns,60% five-year rating/40% three-year rating for 60-119 monthsof total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns.While the 10-year overall star rating formula seems to give themost weight to the 10-year period, the most recent three-yearperiod actually has the greatest impact because it is includedin all three rating periods. For private funds, the MorningstarRating presented is hypothetical, because Morningstar doesnot independently analyze private funds. Rather, the rating isassigned as a means to compare these funds with the universeof mutual funds that Morningstar rates. The evaluation of thisinvestment does not affect the retail mutual fund data publishedby Morningstar.
Morningstar ReturnThe Morningstar Return rates a fund’s performance relative toother managed products in its Morningstar Category. It is anassessment of a product's excess return over a risk-free rate(the return of the 90-day Treasury Bill) in comparison with theproducts in its Morningstar category. In each Morningstarcategory, the top 10% of products earn a High MorningstarReturn (High), the next 22.5% Above Average (+Avg), themiddle 35% Average (Avg), the next 22.5% Below Average (-Avg), and the bottom 10% Low (Low). Morningstar Return ismeasured for up to three time periods (three, five, and 10 years).These separate measures are then weighted and averaged toproduce an overall measure for the product. Products with lessthan three years of performance history are not rated.
Morningstar RiskMorningstar Risk evaluates a fund’s downside volatility relativeto that of other products in its Morningstar Category. It is anassessment of the variations in monthly returns, with anemphasis on downside variations, in comparison with theproducts in its Morningstar category. In each Morningstarcategory, the 10% of products with the lowest measured riskare described as Low Risk (Low), the next 22.5% BelowAverage (-Avg), the middle 35% Average (Avg), the next 22.5%Above Average (+Avg), and the top 10% High (High).Morningstar Risk is measured for up to three time periods(three, five, and 10 years). These separate measures are thenweighted and averaged to produce an overall measure for theproduct. Products with less than three years of performancehistory are not rated
Morningstar Style Box™The Morningstar Style Box reveals a fund's investment strategyas of the date noted on this report. For equity funds the vertical axis shows the marketcapitalization of the long stocks owned and the horizontal axisshows investment style (value, blend, or growth).
For fixed-income funds, the vertical axis shows the creditquality of the long bonds owned and the horizontal axis showsinterest rate sensitivity as measured by a bond's effectiveduration. For corporate and municipal bonds, Morningstar surveyscredit rating information from fund companies on a periodicbasis (e.g., quarterly). In compiling credit rating information,Morningstar instructs fund companies to only use ratings thathave been assigned by a Nationally Recognized StatisticalRating Organization (NRSRO). If two NRSROs have rated asecurity, fund companies are to report the lowest rating toMorningstar. If a rating is unavailable or unpublished, then thesecurity or issuer is categorized as Not Rated/Not Available. USGovernment Securities issued by the US Treasury or USGovernment Agencies are included in the US Governmentcategory. PLEASE NOTE: Morningstar, Inc. is not itself anNRSRO nor does it issue a credit rating on the fund. An NRSROrating on a fixed-income security can change from time-to-time.
Index Provider InformationFunds with S&P® Benchmark: "Standard & Poor's®", "S&P®","S&P 500®", "Standard & Poor's 500®", "500", "Standard &Poor's MidCap 400®", "S&P MidCap", "Standard & Poor's 500®Growth Index", and "Standard & Poor's 500® Value Index" aretrademarks of The McGraw-Hill Companies, Inc. These markshave been licensed for use by BlackRock Institutional TrustCompany, N.A. The fund is not sponsored, endorsed, sold orpromoted by Standard & Poor's, and Standard & Poor's makesno representation regarding the advisability of investing in thefund. Funds with Dow Jones Benchmark: "Dow Jones", the "DowJones U.S. Total Stock Market Index SM" and "Dow Jones U.S.Completion Total Stock Market IndexSM" are service marks ofDow Jones & Company, Inc., and the "Dow Jones-UBSCommodity Index" is a service mark or trademark of Dow Jones& Company, Inc. and UBS AG, and have been licensed for usefor certain purposes by BlackRock Institutional Trust Company,N.A. ("BTC"). BTC’s Extended Equity Market Index Funds, USEquity Market Index Funds and BlackRock Dow Jones-UBSCommodity Index Funds, based on the Dow Jones U.S. TotalStock Market IndexSM ,the Dow Jones U.S. Completion TotalStock Market IndexSM and the Dow Jones-UBS CommodityIndex respectively, are not sponsored, endorsed, sold orpromoted by Dow Jones and Dow Jones does not make anyrepresentation regarding the advisability of investing in suchproducts. Funds with a Citigroup Benchmark: “Citigroup 3 MonthTreasury Bill Index, Citigroup 1 Month Treasury Bill Index ©2012Citigroup Index LLC. All rights reserved.” Funds with an MSCI Benchmark: The MSCI World ex-U.S.Index Funds, MSCI ACWI ex-US Index Funds, Emerging MarketsIndex Funds, Active International Equity Index Funds, EAFEEquity Index Funds, and US Real Estate Index Funds describedherein are indexed to an MSCI index. The MSCI Indexes arethe exclusive property of Morgan Stanley Capital InternationalInc. ("MSCI"). MSCI, the MSCI Index Names and EAFE® aretrade or service marks of MSCI or its affiliates and have beenlicensed for use for certain purposes by BlackRock InstitutionalTrust Company, N.A. Neither MSCI nor any other party involvedin or related to compiling, computing or creating the MSCI datamakes any express or implied warranties or representations
Disclosure
697990 ©2018 Morningstar, Inc., Morningstar Investment Profiles™ 312-696-6000. All rights reserved. The information contained herein: (1) is proprietary toMorningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. Neither Morningstarnor its content providers are responsible for any damages or losses arising from any use of information. Past performance is no guarantee of futureperformance. Visit our investment website at www.morningstar.com.
ß® Page 3 of 4
with respect to such data (or the results to be obtained by theuse thereof), and all such parties hereby expressly disclaim allwarranties of originality, accuracy, completeness,merchantability or fitness for a particular purpose with respectto any of such data. Without limiting any of the foregoing, inno event shall MSCI, any of its affiliates or any third partyinvolved in or related to compiling, computing or creating thedata have any liability for any direct, indirect, special, punitive,consequential or any other damages (including lost profits) evenif notified of the possibility of such damages. NO furtherdistribution or dissemination of the MSCI data is permittedwithout MSCI’s express written consent. Funds with a Russell Benchmark: The Russell 1000 IndexFunds, Russell 1000 Growth Funds, Russell 1000 Value Funds,Russell 2000 Index Funds, Russell 2000 Growth Funds, Russell2000 Value Funds and Russell 3000 Index Funds are notpromoted, sponsored or endorsed by, nor in any way affiliatedwith Frank Russell Company. Frank Russell Company is notresponsible for and has not reviewed the Russell 1000 IndexFunds, Russell 1000 Growth Funds, Russell 1000 Value Funds,Russell 2000 Index Funds, Russell 2000 Growth Funds, Russell2000 Value Funds and Russell 3000 Index Funds nor anyassociated literature or publications and Frank Russell Companymakes no representation or warranty, express or implied, as totheir accuracy, or completeness, or otherwise. Frank RussellCompany reserves the right, at any time and without notice, toalter, amend, terminate or in any way change the RussellIndexes. Frank Russell Company has no obligation to take theneeds of any particular fund or its participants or any otherproduct or person into consideration in determining, composingor calculating any of the Russell Indexes. Frank RussellCompany's publication of the Russell Indexes in no waysuggests or implies an opinion by Frank Russell Company as tothe attractiveness or appropriateness of investment in any orall securities upon which the Russell Indexes are based. RussellInvestment Group is the source and owner of the trademarks,service marks and copyrights related to the Russell Indexes,including the Russell 1000®, Russell 1000® Growth, Russell1000® Value, Russell 2000®, Russell 2000® Growth, Russell2000® Value, Russell 2500® and Russell 3000® IndexesRussell is a trademark of Russell Investment Group®. Funds with a FTSE EPRA/NAREIT Benchmark: The fund is notin any way sponsored, endorsed, sold or promoted by FTSEInternational Limited (FTSE), by the London Stock Exchange Plc(the "Exchange"), Euronext N.V. (Euronext), The Financial TimesLimited (FT), European Public Real Estate Association (EPRA)or the National Association of Real Estate Investment Trusts(NAREIT) (together the "Licensor Parties") and none of theLicensor Parties make any warranty or representationwhatsoever, expressly or impliedly, either as to the results tobe obtained from the use of the FTSE EPRA/NAREIT DevelopedIndex, FTSE EPRA/NAREIT Developed ex U.S. Index or the FTSEEPRA/NAREIT United States Index (each, an "Index") and/or thefigure at which the said Index stands at any particular time onany particular day or otherwise. Each Index is compiled andcalculated by FTSE. However, none of the Licensor Parties shallbe liable (whether in negligence or otherwise) to any person forany error in each Index and none of the Licensor Parties shallbe under any obligation to advise any person of any error therein. FTSE® is a trademark of the Exchange and the FT, NAREIT®is a trademark of the National Association of Real EstateInvestment Trusts and EPRA® is a trademark of EPRA and all
are used by FTSE under license. Funds with a Barclays Benchmark: The index is maintainedby Barclays Inc. ("Barclays"). The fund is not sponsored,endorsed, sold or promoted by Barclays. Barclays makes norepresentation or warranty, express or implied, to the ownersof the fund or any member of the public regarding theadvisability of investing in securities generally or in the fundparticularly or the ability of the Barclays index to track generalbond market performance. Barclays is not responsible for andhas not participated in the determination of the timing of, pricesat, or quantities of the fund to be issued. Barclays has noobligation or liability in connection with the administration,marketing or trading of the fund. Barclays does not guaranteethe accuracy and/or the completeness of the Barclays index orany data included therein. Barclays shall have no liability for anyerrors, omissions or interruptions therein. Barclays makes nowarranty, express or implied, as to the results to be obtainedby BTC and the fund or owners of the fund, or any other personor entity, from the use of the Barclays index or any data includedtherein. Barclays makes no express or implied warranties, andexpressly disclaims all warranties of merchantability or fitnessfor a particular purpose or use with respect to the Barclays indexor any data included therein. Without limiting any of theforegoing, in no event shall Barclays have any liability for anylost profits or special, punitive, direct, indirect, or consequentialdamages even if notified thereof.
Additional InformationBlackRock is a premier provider of asset management, riskmanagement, and advisory services to institutional,intermediary, and individual clients worldwide. The firm offersa wide range of investment strategies across asset classes inseparate accounts, mutual funds, other pooled investmentvehicles, and the industry-leading iShares® exchange-tradedfunds. Through BlackRock Solutions®, the firm offers riskmanagement and advisory services that combine capitalmarkets expertise with proprietarily-developed analytics,systems, and technology. BlackRock serves clients in Northand South America, Europe, Asia, Australia, Africa, and theMiddle East. Headquartered in New York, the firm maintainsoffices in 24 countries around the world. For more informationon BlackRock, please visit www.blackrock.com. The information provided in the Investment Profile and thisdisclosure statement should not be considered arecommendation to purchase or sell a particular security. Thefund is a collective investment fund and is privately offered. Prospectuses are not required and prices are not available inlocal publications. To obtain pricing information, please contactyour service representative. This Investment Profile includes investment option-relatedinformation prepared in accordance with the requirements ofDepartment of Labor ("DOL") Rule 404a-5 under ERISA ("Rule404a-5"), but please note that this Investment Profile may notmeet all of the disclosure requirements for an ERISA "Section404(c) plan", as described in the DOL regulations under Section404(c). Please also note that there may be additionalinformation required to be disclosed under Rule 404a-5 that isnot included in this Investment Profile because BlackRock is notthe appropriate source for that information (e.g., plan-relatedinformation or information related to fees and expenses thatare charged to participant accounts rather than to the
BlackRock investment option). In addition, please note thatBlackRock investment option-related information received fromsources other than BlackRock may not be consistent with theBlackRock investment option-related information prepared byBlackRock. The information provided herein does not constituteindividual investment advice for a Plan participant or investor,is only informational in nature and should not be used by a Planparticipant or investor as a primary basis for making aninvestment decision. Please note that many collective investment funds maintainedby BTC, including certain underlying funds in which suchcollective investment funds invest, engage in securitieslending. The American Banking Association's "Sample Glossary ofCollective Investment Fund Terms for Disclosure to RetirementPlan Participants" is available from BlackRock upon request. Accordingly, the "Sample Glossary of Investment-RelatedTerms for Disclosures to Retirement Plan Participants" preparedby the Investment Company Institute and The SPARK Instituteis also available from BlackRock upon request. For additional terms to assist participants and beneficiariesin understanding BlackRock collective trust funds or BlackRockseparate accounts, BlackRock has prepared a glossary thatincludes certain investment strategy-specific concepts. ThisBlackRock-specific glossary is available upon request.
Disclosure
697990 ©2018 Morningstar, Inc., Morningstar Investment Profiles™ 312-696-6000. All rights reserved. The information contained herein: (1) is proprietary toMorningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. Neither Morningstarnor its content providers are responsible for any damages or losses arising from any use of information. Past performance is no guarantee of futureperformance. Visit our investment website at www.morningstar.com.
ß® Page 4 of 4
OREGON SAVINGS GROWTH PLAN
Schwab Personal ChoiceRetirement Account (PCRA)Quarterly Report
As of 12/31/2017
©2017 Charles Schwab & Co., Inc. (“Schwab”). Member SIPC. All rights reserved.
For Institutional Use OnlyCompliance number: 0517-ZGX6
The Schwab Personal Choice Retirement Account (PCRA) Quarterly Report
OREGON SAVINGS GROWTH PLAN as of 12/31/2017
7
Plan Profile Information
Total Advisor Managed PCRA Assets
Total Funded Roth Accounts
Total Funded PCRA Accounts
Total PCRA Assets
Total Advisor Managed Funded PCRA Accounts
PCRA Participant Profile Information
Average PCRA Account Balance
PCRA Assets In and Out This Quarter*
PCRA Accounts Opened This Quarter
$10,615,049
176
Plan Type 457B
Total Roth Assets
$2,127,073
31
15
$1,089,463
Average Positions Per Account
Average Trades Per Account
Cash Investments
Equities
ETFs
Fixed Income
Mutual Funds
Other
Total
1.0
1.5
1.5
0.0
2.1
0.0
6.0
$60,313
Total
Other
Mutual Funds
Fixed Income
ETFs
Equities 1.8
1.1
0.0
3.7
0.0
6.6
$1,377,545Cash Investments
Average Participant Age
Percent Male Participants
Percent Female Participants
54
77%
23%
* Assets In and Out includes contributions and distributions.
Equities
ETFs
Fixed Income
Mutual Funds
Other
Total Assets by Category
$1,737,274
$2,688,793
$63,518
$4,747,919
$0
$41,089
Assets and Accounts (Trailing 4 Quarters)
0M
2M
4M
6M
8M
10M
12M
12/31/
2017
9/30
/201
7
6/30
/201
7
3/31
/201
7
Total Assets
Total Advisor Managed
Assets
0.00K
0.02K
0.04K
0.06K
0.08K
0.10K
0.12K
0.14K
0.16K
0.18K
12/31/
2017
9/30
/201
7
6/30
/201
7
3/31
/201
7
Total Funded Accounts
Total Advisor Managed
Funded Accounts
©2017 Charles Schwab & Co., Inc. (“Schwab”). Member SIPC. All rights reserved.
For Institutional Use OnlyCompliance number: 0517-ZGX6
The Schwab Personal Choice Retirement Account (PCRA) Quarterly Report
OREGON SAVINGS GROWTH PLAN as of 12/31/2017
Top 10 Mutual Fund Holdings**
Name Symbol OS* $MF Assets %MF AssetsCategory
RISKPRO PFG EQUITY 30 PLUS FD CL R PFDEX Y $310,752 6.55%Large Capitalization Stock Funds
RISKPRO PFG AGGRESSIVE 30 PLUS FD CL R PFSUX Y $279,767 5.90%Hybrid Funds
RISKPRO PFG BALANCED 20 TO 30 FD CL R PFDBX Y $218,904 4.61%Hybrid Funds
RISKPRO PFG GLOBAL 30 PLUS FD CL R PFDGX Y $214,462 4.52%Taxable Bond Funds
RISKPRO AGGRESSIVE 30 PLUS FD CL R PFLWX Y $205,956 4.34%Hybrid Funds
RISKPRO DYNAMIC 15 TO 25 FD CL R PFDPX Y $202,698 4.27%Hybrid Funds
PRIMECAP ODYSSEY AGGR GROWTH FD POAGX N $175,661 3.70%Small Capitalization Stock Funds
COLUMBIA DIVIDEND INCOME FD CL A LBSAX Y $171,641 3.62%Large Capitalization Stock Funds
VANGUARD WELLESLEY INCOME FD INVESTOR SHARE VWINX N $156,783 3.30%Hybrid Funds
T ROWE PRICE CAP APPR FD INV PRWCX Y $145,606 3.07%Hybrid Funds
Top 10 Fund Families
$MF Assets %MF AssetsName
VANGUARD $661,091 13.94%
COLUMBIA $267,036 5.63%
T ROWE PRICE $184,939 3.90%
PRIMECAP $182,299 3.84%
SCHWAB $147,866 3.12%
FIDELITY $126,783 2.67%
DFA $89,610 1.89%
PIMCO FUNDS $81,773 1.72%
PRUDENTIAL $79,530 1.68%
MATTHEWS $73,951 1.56%
**Top 10 Mutual Funds does not include Money Market Funds.
*OS = OneSource, no-load, no transaction fee.
©2017 Charles Schwab & Co., Inc. (“Schwab”). Member SIPC. All rights reserved.
For Institutional Use OnlyCompliance number: 0517-ZGX6
The Schwab Personal Choice Retirement Account (PCRA) Quarterly Report
OREGON SAVINGS GROWTH PLAN as of 12/31/2017
Top 10 ETF Holdings
Name Symbol $ETF Assets %ETF AssetsOS*Category
SCHWAB US DIVIDEND EQUITY ETF SCHD $188,348 7.00%YUS Equity
POWERSHARES EMRG MKTS SOVRGN DBT ETF PCY $179,224 6.67%YInternational FI
VANGUARD FTSE PACIFIC ETF VPL $125,203 4.66%NInternational Equity
SCHWAB US LARGE CAP VALUE ETF SCHV $123,831 4.61%YUS Equity
VANGUARD FTSE EUROPE ETF VGK $115,007 4.28%NInternational Equity
VANGUARD TOTAL INTERNATIONAL BND ETF BNDX $98,876 3.68%NInternational FI
SPDR GOLD SHARES ETF GLD $95,581 3.55%NCommodity
ISHARES MSCI EUROZONE ETF EZU $90,014 3.35%NInternational Equity
SCHWAB INTERNATIONAL EQUITY ETF SCHF $80,175 2.98%YInternational Equity
VANGUARD SMALL CAP VALUEETF VBR $69,865 2.60%NUS Equity
Top 10 Equity Holdings
Name Symbol $EQ Assets %EQ AssetsCategory
MICRON TECHNOLOGY MU $195,937 11.28%Information Technology
AMAZON COM INC AMZN $126,303 7.27%Consumer Discretionary
APPLE INC AAPL $121,760 7.01%Information Technology
BANK OF AMERICA CORP BAC $79,704 4.59%Financials
NVIDIA CORP NVDA $72,380 4.17%Information Technology
CALAMOS CONVERTIBLE OPPO CHI $63,715 3.67%Other
HSBC HLDGS PLC FSPONSORED ADR HSBC $51,640 2.97%Financials
REALTY INCM CORP REIT O $43,038 2.48%Real Estate
FACEBOOK INC CLASS A FB $41,997 2.42%Information Technology
ALIBABA GROUP HLDG FSPONSORED ADR BABA $41,728 2.40%Information Technology
*OS = OneSource, no transaction fee.
©2017 Charles Schwab & Co., Inc. (“Schwab”). Member SIPC. All rights reserved.
For Institutional Use OnlyCompliance number: 0517-ZGX6
The Schwab Personal Choice Retirement Account (PCRA) Quarterly Report
OREGON SAVINGS GROWTH PLAN as of 12/31/2017
Market Value Allocation - All Assets (Quarter over Quarter)
9/30/2017
8.54%
Mutual Funds
(Transaction Fee)
12.73%
Mutual Funds
(Other)
14.64%
Cash
16.55%
Equities
28.17%
ETFs
0.27%
Fixed Income
19.09%
Mutual Funds
(OneSource)
12/31/2017
9.27%
Mutual Funds
(Transaction Fee)
0.97%
Mutual Funds
(Other)
12.98%
Cash
16.37%
Equities
25.33%
ETFs
0.60%
Fixed Income
34.49%
Mutual Funds
(OneSource)
The above charts illustrate the percent of PCRA participant assets in each noted asset class as percentage of total PCRA assets. Percentages are calculated as of quarter-end. Money Market Funds are classified under Mutual Funds.
Net Flow - All Non-Cash Assets (3-Month Period Ending 12/31/2017)
-1.2M
-0.8M
-0.4M
0.0M
0.4M
0.8M
1.2M
1.6M
2.0M
Equities ETFs Fixed IncomeMutual Funds
(OneSource)
Mutual Funds
(Transaction Fee)Mutual Funds (Other)
Net Flow is the net of all cash inflows and outflows in and out of financial assets; the performance of an asset or fund is not taken into account, only share redemptions, or outflows, and share purchases, or inflows.
©2017 Charles Schwab & Co., Inc. (“Schwab”). Member SIPC. All rights reserved.
For Institutional Use OnlyCompliance number: 0517-ZGX6
The Schwab Personal Choice Retirement Account (PCRA) Quarterly Report
OREGON SAVINGS GROWTH PLAN as of 12/31/2017
Market Value Allocation - Mutual Funds (Quarter over Quarter)
12/31/2017
8.08%
Specialized Funds
16.82%
Taxable Bond
Funds
35.48%
Hybrid Funds
9.44%
International
20.16%
Large
Capitalization
Stock Funds
0.08%
Money Market
Fund
9.95%
Small
Capitalization
Stock Funds
9/30/2017
10.29%
Specialized Funds
15.96%
Taxable Bond
Funds
20.14%
Hybrid Funds
13.77%
International
30.56%
Large
Capitalization
Stock Funds
9.27%
Small
Capitalization
Stock Funds
The above charts illustrate the percent of PCRA participant assets in each noted asset class as percentage of total PCRA assets. Percentages are calculated as of quarter-end. Money Market Funds are classified under Mutual Funds.
Net Flow by Sector - Mutual Funds (3-Month Period Ending 12/31/2017)
-0.4M
-0.2M
0.0M
0.2M
0.4M
0.6M
0.8M
1.0M
Hybrid Funds InternationalLarge Capital ization
Stock FundsMoney Market Fund
Smal l Capi tal ization
Stock FundsSpecial ized Funds
Taxable Bond Funds
Net Flow is the net of all cash inflows and outflows in and out of financial assets; the performance of an asset or fund is not taken into account, only share redemptions, or outflows, and share purchases, or inflows.
©2017 Charles Schwab & Co., Inc. (“Schwab”). Member SIPC. All rights reserved.
For Institutional Use OnlyCompliance number: 0517-ZGX6
The Schwab Personal Choice Retirement Account (PCRA) Quarterly Report
OREGON SAVINGS GROWTH PLAN as of 12/31/2017
12/31/2017
1.92%
Materials
5.98%
Other
3.98%
Real Estate
2.45%
Telecommunication
Serv ices
0.44%
Utilities
13.75%
Consumer
Discretionary
2.49%
Consumer Staples
6.25%
Energy
9.86%
Financials
5.92%
Health Care
8.32%
Industrials
38.64%
Information
Technology
Market Value Allocation - Equities (Quarter over Quarter)
9/30/2017
6.39%
Other
16.96%
Real Estate
1.21%
Telecommunication
Serv ices
12.78%
Consumer
Discretionary
2.08%
Consumer Staples
8.93%
Energy
11.43%
Financials
6.73%
Health Care
4.99%
Industrials
26.32%
Information
Technology
2.17%
Materials
The above charts illustrate the percent of PCRA participant assets in each noted asset class as percentage of total PCRA assets. Percentages are calculated as of quarter-end. Money Market Funds are classified under Mutual Funds.
Net Flow by Sector - Equities (3-Month Period Ending 12/31/2017)
-0.25M
-0.20M
-0.15M
-0.10M
-0.05M
0.00M
0.05M
0.10M
0.15M
0.20M
0.25M
Consumer Discretionary Consumer Staples Energy Financials Health Care Industrials
Information Technology Materials Other Real EstateTelecommunication
ServicesUti l i ties
Net Flow is the net of all cash inflows and outflows in and out of financial assets; the performance of an asset or fund is not taken into account, only share redemptions, or outflows, and share purchases, or inflows.
©2017 Charles Schwab & Co., Inc. (“Schwab”). Member SIPC. All rights reserved.
For Institutional Use OnlyCompliance number: 0517-ZGX6
The Schwab Personal Choice Retirement Account (PCRA) Quarterly Report
OREGON SAVINGS GROWTH PLAN as of 12/31/2017
12/31/2017
30.87%
US Equity
2.27%
US FI
5.89%
Commodity
26.61%
International
Equity
10.34%
International FI
3.82%
Leveraged/Inverse
1.06%
Other
19.14%
Sector
Market Value Allocation - ETF (Quarter over Quarter)
9/30/2017
30.98%
US Equity
2.58%
US FI
4.57%
Commodity
21.93%
International
Equity
11.88%
International FI
5.73%
Leveraged/Inverse
1.30%
Other
21.03%
Sector
The above charts illustrate the percent of PCRA participant assets in each noted asset class as percentage of total PCRA assets. Percentages are calculated as of quarter-end. Money Market Funds are classified under Mutual Funds.
Net Flow by Sector - ETF (3-Month Period Ending 12/31/2017)
-0.06M
-0.04M
-0.02M
0.00M
0.02M
0.04M
0.06M
0.08M
0.10M
0.12M
0.14M
Commodity International Equi ty International FI Leveraged/Inverse Other Sector US Equity
US FI
Net Flow is the net of all cash inflows and outflows in and out of financial assets; the performance of an asset or fund is not taken into account, only share redemptions, or outflows, and share purchases, or inflows.
©2017 Charles Schwab & Co., Inc. (“Schwab”). Member SIPC. All rights reserved.
For Institutional Use OnlyCompliance number: 0517-ZGX6
The Schwab Personal Choice Retirement Account (PCRA) Quarterly Report
OREGON SAVINGS GROWTH PLAN as of 12/31/2017
Average Monthly Trades Per Account (3-Month Period Ending 12/31/2017)
0.00
0.40
0.80
1.20
1.60
2.00
2.40
10/1/2017 11/1/2017 12/1/2017
Equities ETFs Fixed Income Mutual Funds
Trading Channel Mix (Month over Month)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
10/1/2017 11/1/2017 12/1/2017
40% 36%26%
20%38%
9%
0%
0%
0%
39%26%
65%
Investment Manager Live Representative Mobile Web
©2017 Charles Schwab & Co., Inc. (“Schwab”). Member SIPC. All rights reserved.
For Institutional Use OnlyCompliance number: 0517-ZGX6
The Schwab Personal Choice Retirement Account (PCRA) Quarterly Report
OREGON SAVINGS GROWTH PLAN as of 12/31/2017
Important Disclosures
Schwab Personal Choice Retirement Account (PCRA) is offered through Charles Schwab & Co., Inc. (Member SIPC), the registered broker/dealer, which also provides other brokerage and custody services to its customers.
For participants who utilize the Personal Choice Retirement Account (PCRA), the following fees and conditions may apply: Schwab's shortterm redemption fee of $49.95 will be charged on redemption of funds purchased through Schwab's Mutual Fund OneSource® service (and certain other funds with no transaction fee) and held for 90 days or less. Schwab reserves the right to exempt certain funds from this fee, including Schwab Funds®, which may charge a separate redemption fee, and funds that accommodate short-term trading.
Trades in no-load mutual funds available through Mutual Funds OneSource service (including Schwab Funds) as well as certain other funds, are available without transaction fees when placed through schwab.com or our automated phone channels. Schwab reserves the right to change the funds we make available without transaction fees and to reinstate fees on any funds. Funds are also subject to management fees and expenses.
Charles Schwab & Co., Inc., member SIPC, receives remuneration from fund companies for record keeping, shareholder services and other administrative services for shares purchased through its Mutual Fund OneSource service. Schwab also may receive remuneration from transaction fee fund companies for certain administrative services.
This material is for institutional use only.
The information contained herein is obtained from third-party sources and believed to be reliable, but its accuracy or completeness is not guaranteed. This report is for informational purposes only and is not a solicitation, or a recommendation that any particular investor should purchase or sell any particular security.
©2017 Charles Schwab & Co., Inc. (“Schwab”). Member SIPC. All rights reserved.
For Institutional Use OnlyCompliance number: 0517-ZGX6
INVESTMENT OPTION PERFORMANCE RESULTS
Investment Option Returnsfor the Period Ending
CORE INVESTMENT OPTIONS
OPTION 1 Month 3 Months Year to Date From Inception Since 1 Year 2 Years 3 Years 5 Years 10 YearsBENCHMARKS (for comparison) 10/31/96 10/31/01Short-Term Fixed Option 0.07% 0.21% 0.51% 2.01% 1.12% 0.54% 0.31% 0.16% 0.04% 0.26%91-Day T-Bill 0.09% 0.27% 0.66% 2.26% 1.33% 0.72% 0.51% 0.35% 0.24% 0.45%Stable Value Option 0.14% 0.42% 1.29% 3.39% 2.72% 1.54% 1.49% 1.42% 1.35% 1.83%91-Day T-Bill 0.09% 0.27% 0.66% 2.26% 1.33% 0.72% 0.51% 0.35% 0.24% 0.45%Rolling Average 5 Year CMT** 0.12% 0.36% 1.15% 3.81% 3.10% 1.36% 1.30% 1.31% 1.41% 2.33%Active Fixed Income Option 0.09% 0.68% 3.86% 5.18% 4.72% 2.05% 3.22% 2.84% 2.44% 4.72%BC Aggregate 0.06% 0.47% 3.20% 5.22% 4.36% 0.90% 2.62% 2.40% 2.04% 4.19%Large Company Value Stock Option 0.74% 2.48% 8.68% 8.18% 8.06% 17.65% 11.78% 7.79% 13.87% 6.05%Russell 1000 Value 0.73% 2.50% 8.70% 8.64% 8.03% 17.78% 11.93% 7.99% 13.48% 5.99%Stock Index Option 2.17% 4.83% 16.31% 8.32% 8.07% 23.84% 13.58% 10.43% 14.98% 7.48%Russell 3000 2.18% 4.88% 16.40% 8.54% 8.26% 23.98% 13.68% 10.53% 15.12% 7.61%Large Company Growth Stock Option 3.84% 7.07% 25.20% 7.54% 7.93% 29.49% 15.01% 12.83% 16.65% 8.71%Russell 1000 Growth 3.87% 7.15% 25.40% 7.97% 8.12% 29.71% 15.18% 13.15% 16.83% 9.13%International Stock Option 1.83% 4.12% 23.71% 6.26% 7.24% 22.92% 11.26% 6.55% 8.56% 1.37%MSCI ACWI EX-US BLENDED 1.88% 4.32% 23.41% 5.10% 6.55% 23.64% 11.32% 6.21% 8.60% 1.14%Small Company Stock Option 1.04% 6.23% 11.38% 10.66% 10.53% 26.96% 14.89% 9.82% 14.31% 8.13%RUSSELL SMALL CAP BLENDED 0.85% 5.78% 11.89% 10.03% 10.43% 27.85% 15.37% 10.31% 14.91% 8.30%Real Return Option 0.99% 1.92% 6.02% 6.99% 3.92%CPI + 3% 0.78% 2.11% 5.33% 5.72% 5.20%Environmental Social Governance Option 2.11% 4.48% 16.14% 23.59% 13.56%Russell 3000 2.18% 4.88% 16.40% 23.98% 13.68%
OPTION 1 Month 3 Months Year to Date 1 Year 2 Years 3 Years 5 Years 10 YearsBENCHMARKS (for comparison)
LifePath® Retirement 0.82% 2.06% 8.15% 8.54% 6.17% 4.20% 5.01%
LifePath® 2020 0.96% 2.31% 9.44% 10.40% 6.98% 4.71% 6.20%
LifePath® 2025 1.14% 2.66% 11.06% 12.70% 8.01% 5.35% 7.12%
LifePath® 2030 1.30% 2.96% 12.65% 14.93% 9.04% 6.03% 8.02%
LifePath® 2035 1.46% 3.25% 13.94% 16.85% 9.80% 6.45% 8.64%
LifePath® 2040 1.60% 3.50% 15.23% 18.71% 10.56% 6.90% 9.27%
LifePath® 2045 1.68% 3.67% 16.01% 19.83% 11.05% 7.17% 9.80%
LifePath® 2050 1.71% 3.72% 16.29% 20.21% 11.20% 7.26% 10.15%
LifePath® 2055 1.71% 3.71% 16.28% 20.20% 11.18% 7.25% 10.41%
LifePath® 2060 1.71% 3.70% 16.24% 20.16% 11.16%**5 Year Rolling Average of the 5 Year Constant Maturing Treasury Yield.
Performance figures are net all fees including management, recordkeeping and other administrative fees. The results shown represent past performance and should not be considered a representation ofperformance of the options in the future. Investment returns and principal are not guaranteed.
To access current account information 24 hours a day call our customer service center at 1-800-365-8494 or visit our web site at osgp.voya.com
October 31, 2017
Annualized
TARGET DATE FUNDS ( LIFEPATH PORTFOLIOS)Annualized
Updated on 11/6/2017
Monthly performance results are published on the PERS web page at www.pers.state.or.us
INVESTMENT OPTION PERFORMANCE RESULTS
Investment Option Returnsfor the Period Ending
CORE INVESTMENT OPTIONS
OPTION 1 Month 3 Months Year to Date From Inception Since 1 Year 2 Years 3 Years 5 Years 10 YearsBENCHMARKS (for comparison) 10/31/96 10/31/01Short-Term Fixed Option 0.07% 0.21% 0.58% 2.00% 1.12% 0.60% 0.35% 0.19% 0.05% 0.23%91-Day T-Bill 0.08% 0.26% 0.74% 2.25% 1.32% 0.79% 0.55% 0.37% 0.25% 0.41%Stable Value Option 0.14% 0.42% 1.43% 3.38% 2.72% 1.56% 1.50% 1.44% 1.36% 1.81%91-Day T-Bill 0.08% 0.26% 0.74% 2.25% 1.32% 0.79% 0.55% 0.37% 0.25% 0.41%Rolling Average 5 Year CMT** 0.12% 0.36% 1.27% 3.80% 3.09% 1.38% 1.30% 1.31% 1.40% 2.31%Active Fixed Income Option -0.05% -0.34% 3.81% 5.15% 4.70% 4.14% 3.34% 2.56% 2.38% 4.57%BC Aggregate -0.13% -0.55% 3.07% 5.20% 4.33% 3.21% 2.69% 2.11% 1.98% 3.99%Large Company Value Stock Option 3.05% 6.86% 12.00% 8.30% 8.22% 14.75% 13.27% 8.12% 14.48% 6.83%Russell 1000 Value 3.06% 6.89% 12.03% 8.76% 8.19% 14.83% 13.41% 8.35% 14.17% 6.84%Stock Index Option 3.02% 7.81% 19.82% 8.43% 8.23% 22.13% 14.96% 10.65% 15.49% 8.30%Russell 3000 3.04% 7.85% 19.93% 8.66% 8.42% 22.27% 15.08% 10.75% 15.63% 8.43%Large Company Growth Stock Option 3.01% 8.35% 28.97% 7.66% 8.08% 30.56% 16.56% 12.83% 16.88% 9.42%Russell 1000 Growth 3.04% 8.42% 29.21% 8.09% 8.28% 30.81% 16.76% 13.10% 17.14% 9.87%International Stock Option 0.78% 4.29% 24.67% 6.27% 7.25% 27.27% 12.43% 6.42% 8.18% 1.87%MSCI ACWI EX-US BLENDED 0.81% 4.62% 24.41% 5.12% 6.57% 27.59% 12.94% 6.01% 8.26% 1.56%Small Company Stock Option 3.14% 11.06% 14.87% 10.77% 10.69% 17.78% 15.09% 10.73% 14.70% 9.13%RUSSELL SMALL CAP BLENDED 2.88% 10.23% 15.11% 10.14% 10.57% 18.34% 15.16% 11.04% 15.22% 9.29%Real Return Option 0.13% 0.89% 6.16% 7.41% 4.51%CPI + 3% 0.18% 1.15% 4.90% 5.19% 4.97%Environmental Social Governance Option 2.80% 7.83% 19.39% 21.56% 14.94%Russell 3000 3.04% 7.85% 19.93% 22.27% 15.08%
OPTION 1 Month 3 Months Year to Date 1 Year 2 Years 3 Years 5 Years 10 YearsBENCHMARKS (for comparison)
LifePath® Retirement 0.78% 2.21% 9.00% 9.95% 6.82% 4.18% 5.09%
LifePath® 2020 0.95% 2.68% 10.49% 11.70% 7.75% 4.72% 6.27%
LifePath® 2025 1.25% 3.38% 12.45% 13.98% 8.97% 5.44% 7.23%
LifePath® 2030 1.50% 3.99% 14.33% 16.16% 10.18% 6.18% 8.17%
LifePath® 2035 1.73% 4.57% 15.92% 18.03% 11.11% 6.66% 8.83%
LifePath® 2040 1.95% 5.09% 17.47% 19.86% 12.02% 7.18% 9.51%
LifePath® 2045 2.09% 5.43% 18.43% 20.99% 12.61% 7.49% 10.07%
LifePath® 2050 2.14% 5.54% 18.77% 21.38% 12.80% 7.60% 10.40%
LifePath® 2055 2.13% 5.54% 18.76% 21.37% 12.78% 7.59% 10.66%
LifePath® 2060 2.13% 5.52% 18.71% 21.31% 12.76%**5 Year Rolling Average of the 5 Year Constant Maturing Treasury Yield.
Performance figures are net all fees including management, recordkeeping and other administrative fees. The results shown represent past performance and should not be considered a representation ofperformance of the options in the future. Investment returns and principal are not guaranteed.
To access current account information 24 hours a day call our customer service center at 1-800-365-8494 or visit our web site at osgp.voya.com
November 30, 2017
Annualized
TARGET DATE FUNDS ( LIFEPATH PORTFOLIOS)Annualized
Updated on 12/6/2017
Monthly performance results are published on the PERS web page at www.pers.state.or.us
INVESTMENT OPTION PERFORMANCE RESULTS
Investment Option Returnsfor the Period Ending
CORE INVESTMENT OPTIONS
OPTION 1 Month 3 Months Year to Date From Inception Since 1 Year 2 Years 3 Years 5 Years 10 YearsBENCHMARKS (for comparison) 10/31/96 10/31/01Short-Term Fixed Option 0.08% 0.22% 0.66% 2.00% 1.12% 0.66% 0.40% 0.22% 0.07% 0.20%91-Day T-Bill 0.11% 0.28% 0.86% 2.25% 1.32% 0.86% 0.59% 0.41% 0.27% 0.39%Stable Value Option 0.14% 0.42% 1.58% 3.38% 2.71% 1.58% 1.52% 1.45% 1.36% 1.79%91-Day T-Bill 0.11% 0.28% 0.86% 2.25% 1.32% 0.86% 0.59% 0.41% 0.27% 0.39%Rolling Average 5 Year CMT** 0.13% 0.37% 1.40% 3.79% 3.09% 1.40% 1.31% 1.32% 1.40% 2.29%Active Fixed Income Option 0.43% 0.47% 4.25% 5.15% 4.70% 4.25% 3.76% 2.71% 2.46% 4.61%BC Aggregate 0.46% 0.39% 3.54% 5.20% 4.34% 3.54% 3.09% 2.24% 2.10% 4.01%Large Company Value Stock Option 1.44% 5.31% 13.61% 8.34% 8.27% 13.61% 15.33% 8.49% 14.31% 7.11%Russell 1000 Value 1.46% 5.33% 13.66% 8.80% 8.24% 13.66% 15.49% 8.65% 14.04% 7.10%Stock Index Option 0.99% 6.29% 21.00% 8.45% 8.25% 21.00% 16.74% 11.02% 15.44% 8.47%Russell 3000 1.00% 6.34% 21.13% 8.67% 8.44% 21.13% 16.86% 11.12% 15.58% 8.60%Large Company Growth Stock Option 0.77% 7.80% 29.96% 7.67% 8.09% 29.96% 17.89% 13.46% 16.99% 9.50%Russell 1000 Growth 0.78% 7.86% 30.21% 8.09% 8.29% 30.21% 18.08% 13.79% 17.33% 10.00%International Stock Option 2.09% 4.76% 27.27% 6.35% 7.35% 27.27% 14.61% 8.50% 7.66% 2.27%MSCI ACWI EX-US BLENDED 2.24% 5.00% 27.19% 5.20% 6.68% 27.19% 15.29% 8.06% 8.06% 2.02%Small Company Stock Option -0.18% 4.03% 14.67% 10.72% 10.62% 14.67% 17.97% 10.06% 13.98% 9.18%RUSSELL SMALL CAP BLENDED -0.40% 3.34% 14.65% 10.08% 10.48% 14.65% 17.93% 10.40% 14.53% 9.32%Real Return Option 1.16% 2.30% 7.40% 7.40% 6.37%CPI + 3% 0.25% 0.68% 5.23% 5.23% 5.18%Environmental Social Governance Option 1.12% 6.15% 20.73% 20.73% 16.96%Russell 3000 1.00% 6.34% 21.13% 21.13% 16.86%
OPTION 1 Month 3 Months Year to Date 1 Year 2 Years 3 Years 5 Years 10 YearsBENCHMARKS (for comparison)
LifePath® Retirement 0.89% 2.51% 9.96% 9.96% 7.91% 4.74% 5.16%
LifePath® 2020 0.97% 2.91% 11.56% 11.56% 8.97% 5.38% 6.30%
LifePath® 2025 1.11% 3.53% 13.69% 13.69% 10.34% 6.20% 7.23%
LifePath® 2030 1.23% 4.08% 15.73% 15.73% 11.68% 7.03% 8.12%
LifePath® 2035 1.34% 4.60% 17.47% 17.47% 12.74% 7.60% 8.79%
LifePath® 2040 1.44% 5.07% 19.16% 19.16% 13.79% 8.19% 9.46%
LifePath® 2045 1.52% 5.38% 20.23% 20.23% 14.46% 8.56% 9.99%
LifePath® 2050 1.55% 5.49% 20.61% 20.61% 14.67% 8.68% 10.31%
LifePath® 2055 1.55% 5.49% 20.59% 20.59% 14.65% 8.67% 10.52%
LifePath® 2060 1.54% 5.47% 20.54% 20.54% 14.64%**5 Year Rolling Average of the 5 Year Constant Maturing Treasury Yield.
Performance figures are net all fees including management, recordkeeping and other administrative fees. The results shown represent past performance and should not be considered a representation ofperformance of the options in the future. Investment returns and principal are not guaranteed.
To access current account information 24 hours a day call our customer service center at 1-800-365-8494 or visit our web site at osgp.voya.com
December 31, 2017
Annualized
TARGET DATE FUNDS ( LIFEPATH PORTFOLIOS)Annualized
Updated on 1/8/2018
Monthly performance results are published on the PERS web page at www.pers.state.or.us