our distinguished guest of honor is the founder of the Vanguard Group and president of Vanguard's Bogle Financial Markets Research Center. He created Vanguard in 1974 and served as chairman until 2000. He entered the investment field immediately following his graduation from Princeton University Magna Cum Laude with a degree in economics in 1951.

If I listed all of his honors and achievements, which most of you already know, we wouldn't have any time left. So I'll dispense with that and ask you to please welcome our very special guest of honor, Mr. Jack Bogle. Is it ever enough? I wrote a book about that.

Thank you all so very much. It's great to see some very familiar faces here that I've been seeing for years and years and years. I appreciate that, even as I wonder why you keep coming back. But it's nice. And I hope you, those of you, about half of you, I think, who are joining us for the first time, will get the same kind of enjoyment that your fellow Bogleheads have gotten.

I've already spoiled my opening, which is to say, the first thing I want to say is Taylor Laramore. He's our founder of the Bogleheads, a wonderful human being. He can't be with us this year. He was with us last year. But he is the creator of this crazy idea and even the namer of it, which is a little odd.

What does a Boglehead, people say to me? I'm not sure yet. But they're nice people, that's for sure. The second word was going to be, divided by two, a tie, was going to be Emily Snyder, my wonderful assistant of 26 years, been at Vanguard for 32. I know she did not join us when she was one, but you'll see her over there.

She still has all the energy of a schoolgirl and couldn't do my job without her. And a close tie, we have Michael Nolan, who's kind of a short-termer at Vanguard, only 10 1/2 years, 16 1/2 years, excuse me, and he's been with me a little over six. If you think there are too many slides, blame him, although I'm the one that deserves the blame.

Is that fair, Mike? Fair enough. And Mike has been a wonderful asset to me. And the three of us constitute the powerful Bogle Financial Markets Research Center. And my God, we crank out a lot of stuff. So we'll go to the first slide. It's going to set the stage for this.

A couple of comments about my year, I guess, and my career. Larry Siegel is the CFA's Director of Research, Chartered Financial Analyst. And he wrote quite an article. We're going to send it out one of these days. And he calls me, which is a nice reward for what I've done, the most visible advocate of indexing investing as a winning strategy.

And I think that's accurate. I'm not sure this one is accurate, but I sure loved it. Henry Ford of the automobile, Shakespeare of the English language, Bogle of finance. Well, that's all right. Bill, step it up a little bit for your next blurb, will you? You can do better.

And I wouldn't have the temerity, I guess is the word, to give you the other blurbs in the back of the book. But they're not quite that great. I keep wondering who they're talking about. In any event, once in a while, I think about my legacy. I do, with apologies.

And my place in history, such as it may be. And on these two scores, this has been a really remarkable year. I just have two slides that will give you the remarkability when you get into history and impact. First is this cartoon in the Wall Street Journal. And if you can't read the caption, it's Jason Zweig in the front left.

You know who-- well, let's go around the other way. Benjamin Franklin, Benjamin Graham, Sir Isaac Newton-- I mean, really-- Danny Kahneman, Princeton guy, Aristotle-- we could do better than that-- Charlie Munger and Warren Buffet, and then yours truly. And so it's a matter of, to me-- I'll get to a business thing in a minute.

But I really like the intellectual side of what I do every day, at least as much and maybe even more than the business side. I don't consider myself much of a businessman. But I do try and keep it. I'm not as smart as him. I'm the dumbest guy at that table, I'm sure.

But I still value a place that puts me in the context of thought and wisdom. And I also value-- if you want to flip that to the next one-- the only other slide I have for background-- who was the father of passive investing? Well, it turns out the answer to that-- I'm glad you're all sitting down-- is me.

So that was a nice thing to read in the Wall Street Journal. And that is a role that I would like to be known for in life. I think it's true. There are a lot of claimants to that, particularly to Throne. But it's a nice compliment. And it made me feel very good when I saw that there.

So we'll now go to getting the boost. How did we get here? How did we get to that name and reputation? And the first one can be pretty obvious. The second possible highest source for getting a boost for me is-- I want to be clear-- it is someone who is up there who ranks far above me.

But other than that, the second possible source is our friend Warren Buffett. And I'm going to give you a few quotes from him. He's been champion index fund for a long time. "Indexers are sure to beat the net results after fees delivered by the great majority of investment professionals." And that goes all the way back to 1996.

That's 20 years ago, 21 years ago. Somewhere along the way-- or actually, in 1991, I met Warren Buffett for the first time. We were sitting in the lobby of a hotel in San Diego, California, where I was there to lecture the state securities commissions. And he was there to persuade California to let Salomon Brothers, which was about to go bankrupt, still do business out there.

And we were both up early. We were both in the lobby there, knowing nobody else. So I made so bold as to go and pay my respects to him and said I didn't want to bother him, just wanted to meet him. And we talked for about an hour, mostly about the letters we get about how we aren't good dressers.

He got one that said, you look like Joes ready to wear. So we had that in common. And I guess we went from there. Warren again, 2013. You know about this, his bequest to his wife and the trustees for his wife's bequest, 10% of the cash in short-term governments, 90% in the very low cost 500 index fund.

I recommend Vanguard's. And it goes on. The hedge fund bet-- a lot more text there than you need. But we're going to have these slides available, so I put it all up. And he offered to bet in a group he could beat with the S&P 500, a group of five hedge funds.

And he challenged people to give him the bet. Well, these hedge fund guys who have billions and billions and billions, well, it's a good business to be in if you're not a client, actually. And nobody but Ted Sides answered the call, the sound of silence, as Warren says here.

And so the bet is just about over. The funds have delivered a 2.2% return compounded. That's a million dollars. Would have gained $220,000. And the index fund was returned with 7.1%. And that investment would have gained $854,000. That is 4 to 1, roughly. So the bottom line, as he said in his annual report, when trillions of dollars are managed by Wall Street charging high fees, it will usually be-- usually be, always almost-- the managers who reap upside profits and not the clients.

Both large investors and small, again, should stick to low-cost index fund. So he then goes beyond being the index champion to being the Bogle champion. And I obviously enjoy this. He had the famous one last year, famous to Vanguard people, and put up a statue for me. By the way, just for the record, there is a statue of me in our courtyard out there.

But he had not seen it. But it was a nice thought. And it's fine to say he had managed-- I'm certainly a wealthy person by any standard. But he's, in fact, right by the fact that it's only a tiny percentage of wealth that typically goes to managers who have promised their investors large rewards while delivering them nothing.

So he talks about the fact I was mocked by the investment industry. It's very satisfying. He does have-- in fact, he does have the satisfaction of knowing that he's helped millions of investors to realize better returns on their savings than they otherwise would have earned. He is a hero to them and to me.

Can't do any better than that from that high source. And then a friend of mine took me out to his annual meeting in Omaha this year. And I'm sitting there with Eve, my wife, Steve Galbraith, who took me out, and his wife, my daughter, and my son-in-law came out, and my youngest son, his young lady, also came out.

So we were sitting there. And I guess I should have figured something funny was going to go on. But all of a sudden, Warren looks up and says, I want to say something about Jack Boat. Are you here in the audience? Yes, I am. And so I stood up and everybody applauded.

And they took, in the course of those couple of days-- I didn't keep exact count, but I think 725 photographs, including 190 selfies. And to the point it got Eve a little bothered. But she was fine. They were a little aggressive, some of them. So you see all in here, not in the interest.

Truth is, it was not in the interest of the investment industry of Wall Street to actually have the development of the index fund, because it brought down fees dramatically. Index funds have delivered for shareholders a result that has been better than Wall Street professionals. And part of the reason for that is down with the cost.

When Jack started, very few people applauded him. He was subject of derision, Vogel's folly being one, that's me. A lot of attacks, and it saved investors hundreds and hundreds of billions of dollars over time. So it's Jack's 88th birthday. I like this one, on Monday. So I just say, looking at me, happy birthday, Jack, and thank you on behalf of American investors.

And then after a nice roll of applause, he said, Jack, I've got some great news for you. You're going to be 88 on Monday in only two years. You will be 90, and you'll be ready for an eligible, for an executive position at Berkshire. So he closes his remarks.

Hang in there, buddy. And finally, for Warren, the Vogel champion, is the new book. And the cover says from Warren, that's where you put them, rather than, I knew that Chinese red was difficult to read with white on it. And you reduce this in size, Mike, you're making it impossible for me.

Rather than listen to the siren song from investment managers, investors, large and small, should instead read Jack Vogel's little book of common sense investing. And that's what's on the cover of the little book that's going to be available today, I think. So it's a pretty priceless endorsement. And modesty precludes, I'm very well known for modesty and humility, precludes showing the three other blurbs in the back cover, in addition to Bill Bernstein's, which you saw on the cover.

But I now want to turn, while I'm bragging, forgive me, to one of my main missions today, which is spreading the word. But before, I do want to add that when I say one of my main missions, my other main mission, and I have a lot if I thought about it, is to work directly with our crew, the 16,000 people at Vanguard, honest to God, human beings, down to earth human beings, all with their own hopes and fears and career goals.

And it's hard to do this. It's so easy to do when you have 27 associates, crew members, which is where we started, and so difficult to do it when you get to 16,000. So I've just tried to carve out that role. Everybody else is too busy to do it.

And spent a lot of time, spent an hour for each award for excellence winner. I do probably pretty close to one a week celebrations of 25, 30 years of service at Vanguard. We've got quite a few of them now. And retirements, which leave us poorer than we were before the person retired.

So we have, I think it's 3,500 crew members who have run my veterans list to get my mailings. And to be on that list, you've got to be with Vanguard for 15 years. So that's a big part of what I do, and it really doesn't serve well. It's not easily illustrated.

So I'm now going to go to spreading the word and begin with awards. Lots of them in 2017. Number one, I guess most recent is the Forbes tabulation of the world's 100 greatest living business minds. And unfortunately for Forbes, I should have told them that before. I don't really have a business mind.

I have a mind that is designed to be a missionary, to serve, to understand simple math, and if it works out to be good business, that's a nice byproduct. So who are these winning business minds? Well, you'll notice them all on the cover. I like the Bs, Buffett, Bezos, Bloomberg, and Bogle.

Murderers Row, and the other group in those two columns, Mark Zuckerberg, Meg Whitman, Rupert Murdoch, Ted Turner, and me are all, I think, in some ways legitimate candidates for that. I think that Forbes kind of let us down by leaving out as one of their criteria, creating durable value for society.

That doesn't seem to be in there, and I've listed some people, not to get too personal, who I'm not sure have created enduring value for society. Sheldon Adelson and Steve Wynn made all their money in casinos, a socially negative thing involving payoffs to regulatory authorities, and that's what gets them there, more power to them, I guess.

And Donald Trump, I'm not in politics here, but his record as a businessman was cutting off and paying all his suppliers that are putting up the buildings, and stopped paying them, and they have to sue them, and they have what they're entitled to. What a great case for a businessman.

So I wonder about them. They were all selected. And I will tell you this story about a certain person there, because when they were taking the photograph, and I think maybe 45 or 50 of the 100 actually showed up at this big party. I was going to have Mike Nolan stand in for somebody for the photo, but I said to this young woman, I've always had this attractive young woman at these things, I know, and I said, "You know, I feel like I'm a little boy with a bunch of giants." And she said, "Oh, Mr.

Vogel, I'm sure everybody in the room feels that way." And I said, "I'll bet Jack Welch doesn't." His claim to fame is he's created the biggest loss of shareholder capital market cap of any businessman in history, $400 billion. Gee, he's gone down. But he's irrepressible, I'll tell you that.

He has a girlfriend, his young wife, whatever. So that's another award. Then we get to the icons from Philadelphia Inquirer, or from Investment News, I should say, first. And the other winner was Charles Schwab, who I think probably deserves it. And there were just the two of us, and he didn't show up, so I got an extra five minutes to talk, which was nice.

And then we had icons again here in Philadelphia. Philadelphia Business Hall of Fame, five leaders of impact has stretched beyond the city. And there they are. You'll see the fellow over on the left. So that was very nice. Well, I keep thinking, "Icon, isn't that one of those things on your computer that you go click?" So maybe that's what it's about.

And that resulted in a nice article, which you can see quickly here, a nice picture from the Inquirer. And then that was the third award. And the fourth one is coming up. And this award, I like the Forbes award, which I thought was interesting. And not only the creative idea, but the impact that practical application of the idea has made in improving the economic well-being of individuals and industry or a nation.

And that's the kind of award I would like to win. My wife said I couldn't go to Florida to get it, and I shouldn't have done it anyway. But then they said they'd send a plane. We'll just send a plane, that's all. And so we're still negotiating. So whether I will have to do it by video, and I kind of like to do it there, because I'm receiving it with Matt McQuown, who was big in the thinking of this product out of Wells Fargo.

And so I'd like to do it, and I guess that we probably will do it. But I don't travel alone. I don't mean to talk about my weaknesses, but I have trouble getting around a lot. And so if Eve doesn't do it, and we have a good time together, don't we, Mike?

Absolutely, of course. I like that. Okay, that's enough awards, I think, for the moment, for a year. I don't know. For someone who wrote the book called Enough. And so the big part of spreading the word is what I do myself, not what others do for me. And so I include articles, editorials, speeches, and books that I've done, and we'll just review them very quickly.

The articles is the cover story. You've probably seen it in Bloomberg Markets. And you'll see over on the right that I'm praying for somebody. I don't know who that is. You, you. And so it was nice to see the cover story. It was a decent interview. I probably said a few things I shouldn't have, which is what makes it decent.

And then, I mean, there are so many of these articles, I mean, you can't even keep up with them. But another one that was particularly nice was from BBC Britain, about 50 Inventions that Shaped the Modern Economy. And this is a, it's obviously an index fund. And obviously, I did it.

But what happened, this is the text of the article, I'm just going to go through a little bit. A practical businessman paid attention to an academic economist's suggestion. He then tells the story. What could be simpler and cheaper than an index fund recommended by the world's most expensive, most respected economist?

And that would be Paul Samuelson, Nobel Laureate. And he says, you've heard this quote, ranks this Bogle invention along with the invention of the wheel. You're right, this is right up here with you, Bill Bernstein. The alphabet, Gutenberg printing and wine and cheese. And so that may even be better, Bill, I don't know.

But truly something new under the sun. And Paul Samuelson was a truly great man. It's really odd, weird to have him thinking, you know, be in the same room with him, because he says intelligence overwhelms you. But he just liked what I was doing, wrote columns about it in Newsweek.

We got to know each other. He did the introduction to my first book, which I don't think I've told you this story before, but I sent Dr. Samuelson to me the manuscript for my first book, Bogle and Mutual Funds. And I said, it'd really be nice if you could do an endorsement for it.

And I get this phone call about two days later. John, this is Paul Samuelson. I don't do blurbs anymore. The blurb has been devalued, a coin that has been devalued. However, I would like to do the introduction. And when I was picked up off the floor, I said, well, can I have a day to think about that?

Not quite true. So that's, I think, pretty good. Some are around the world now. Millionaire, German. Bonka, John. That's me. Plugging the books. Is Bill Faloon here? Are we doing business in Germany? I hope so. And then here's the article. Nice article, nice pictures. Meister Bogle. I guess that means Mr.

Bogle. I don't know. And Article 4 over there is from Japan. And then Article 5 is American, U.S. Investment Advisors. Is your firm one that Jack Bogle would respect? I mean, that's implicitly a high praise, I think. And then ARP. You probably have seen this or heard about it.

An extensive article with Jack Otter. And ARP, you hear a lot about ARP when something like that comes out. You realize how small most publications are in circulation. ARP has 23 million readers. And I've only heard from 22 million of them. And then there was that great article in the Sunday Times of London.

And in case you can't recognize me, I'm the one with the dog. Right there. Seems like a long time ago. And there's my beautiful mother, who I think about just about every day. And then The Economist of London, a great place to be. Actually, not so much from a business standpoint.

A nice article about index funds. And let's see what comes next here. Oh, this is the fun one. This is the last article. Somebody sent me Fidelity's Daily Bullet, and they send that to investors. And the first thing they say is highlighting an article that's attached. The reason Jack Bogle doesn't apply first class says everything you need to know about his investing legacy.

Well, that's not bad. They're telling their own customers this. Are they mad? Did Abby know about it? What did she say? I don't know. But our former rival is struggling a bit. They had a very good year this year, by the way, to give them their credit. They'll go back and forth.

I just love helping out anybody who needs help like Fidelity. And then we had another editorial in the New York Times. This is about the fiduciary duty rule and, quote, putting clients second. And that ran early last year, February 9th. You've probably seen that. I won't attempt to even-- I mean, they say, why let Wall Street profit at the expense of retirement investors?

And that was good. I worked in close coordination because it's a little bit contentious at Vanguard what kind of a position we should take on fiduciary duty. I'm strongly in favor. And everybody's in favor of it, intellectually in favor of it. But sometimes the rules-- people think the rules are too tough for things of that nature.

So that's number one editorial. And number two is Investment News, an article by me on fiduciary rule, ready or not, an expanded fiduciary rule is coming. And I like the line they put in there that I put in there from a press report that I received. Finally, John Bogle goes, the dream of fiduciary standard will come true.

And I hope that will be. It's good for everybody except people who have taken too much money out of the system. And then two more editorials in the Financial Analyst Journal, Balancing Business and Professional Values. They asked for 4,000 words. And I gave them 8,000 words and told them they couldn't cut it.

But I thought it was unusual they would pile on with me to ask me of all people to write an article about the industry, and broader than just the mutual fund industry. But I had fun doing it, a lot of work. And the result was, I think, good. And that was my 11th FAJ article.

And my 16th Journal of Portfolio Management article was called The Road Not Taken. That's the speech I gave at Morningstar. And I should tell you, the reason I gave it at Morningstar was that a story in the London Times recommended that the ICI, Investment Company Institute, our trade association, that they have just kind of ignored me for all these years.

And they said, why don't you tell them you should speak at this year's ICI annual meeting? So I wrote in to the head of the ICI. And he didn't write back. You don't want anything on the record here. And he said, no. He did say it. He said it in a nice way, Paul Stevens, in a sort of nice way.

So I immediately picked up the phone and called Morningstar and said, I'd like to give you a speech at your regular industry meeting two weeks from now. And they said, that would be great. Plenty of room in the schedule for you, even with two weeks. And they gave me a nice slot.

And then I told them that I couldn't deliver it in person because I'm just not about to fly to Chicago to do it. So we did it by video. And it was OK. And then we had a live Q&A after. And that became The Road Not Taken. It turned into an article for Journal of Portfolio Management.

This is called multi-tasking. So writing a lot. I really love this article. I wrote it myself. But it was one of my particular favorites. David and Goliath for the FHA. That was in a previous edition. I'm sorry for the JPM. And one award for outstanding article on JPM. There's the award.

It's huge. I wish they'd make it a little smaller because I don't have that much room in my walls anymore. But I was really proud of that article. And the nice thing about it is you've got a chance when you're-- this is my-- what did we say? Was that my third or fourth outstanding?

Third outstanding article. And that's judged by the readers. And so you get to write a retrospective of it five years later. And that's really fun. I'm writing it right now. It's only been out there for two years. And I've got two of them in my-- it's fun to look at what you did earlier and critique it, say where you were right, where you were wrong, what you left out, what you might have overemphasized, and so on.

So the writing is a big-- I mean, I write and write and write. And I'm not so sure I'm any good, which will bring me to-- whether I'm any good or not-- to the books that I've written. And the publication date is right upon us for a 10th anniversary edition of Little Book of Common Sense Investing.

And its predecessor-- this is the one with the Buffett blurb-- its predecessor, been the number one bestseller on Amazon almost every day since the publication 10 years ago. I mean, you get little-- every once in a while, a daily thing kind of flashes up. And I got a call from Joe DiStefano, the chief financial guy at the Philadelphia Inquirer.

And he said, you're not number one anymore. So I looked myself up. And there, this book has leaped into the number one position. And it was called Jackass Investing. So a little flash in the pan there. And so I said, Joe, check it out tomorrow, would you? And it was gone.

So the book is short and simple and obviously persuasive. 565 Amazon reviews. That's huge. And with an average rating of 4.6. I said it was 4.7. But Mike rounded off 4 point something-- 4.55 and 4.65, just 4.6. And I rounded it up. And this is the new edition. It's really quite different.

And I should tell you this story about whether I'm a good writer. And I went over the book, the original edition, preparatory to bring out the new edition, which has quite a bit changed. And I thought, what idiot wrote this book? And where was his editor? And I was both the idiot and the editor.

And it really was not very good. So I tried to make it a little better written, even the stuff that was there. And then I added these chapters on asset allocation and on retirement plan investing and on dividends. But that little book only begins with the impact. I mean, I couldn't believe this when we started to count them all up.

848,000 books, beginning with Bogle on mutual funds, 250,000. That's the one that had a new perspective called indexing. And Common Sense on Mutual Funds, later edition by David Swenson there, forwarded by David Swenson in 2010. And so it sold 102,000 copies. And it's quite amazing, the book enough. I'm pretty sure that when I cork, there'll be a lot of demand for it.

And I hope to be over 100,000. And Mike, could you cable me up there when we get there? And so I really feel good about the acceptance of these books in the marketplace. And so good that the little book updated with book 11. And now we're going to book 12.

Is the man mad? Yes. And it's going to be kind of a history of Vanguard with some things that I've written and haven't been published. And I didn't want a financial kind of title because it goes beyond finance. So I took a line, a little couplet by Johnny Cash.

The trees I planted still are young. The songs I sang will still be sung. Now, I would sing that to you, but I only have one note. But I think that my tentative title is going to be the songs I sang will still be sung. And they will be, no question about that.

Now, big year for speeches. It's ridiculous. I mean, look at that list. April 26th, April 27th, May 23rd, September 24th, October 24th, November 9th, I still got to do that one, Puritan Boston, Quaker Philadelphia to the Society of Friends here. Then the Council for Foreign Relations, which is the Q&A.

That's no work. And then something for the Public Accounting Company Oversight Board in Washington. And that's about it. But the biggest one was, I think the biggest one, not necessarily the best, was when I got the gold medal of Pennsylvania Society, which meets every year in New York. Don't ask me to explain that.

They can't even explain it. And they got about 1,500 black tie politicians and their brides, and they have a big celebration, and they have to give somebody a gold medal. And so I have it. By the way, it must weigh about five ounces. Five ounces of what gold? 1,200, 1,300?

I got it under lock and key. So to give a little break in the proceedings, we're now going to, I hope, try this. The gold medal of the Pennsylvania Society was first presented in 1909 on the occasion of the Society's 10th anniversary. Since then, the medal has been presented to leaders in art, education, entertainment, sports, politics, science, and business.

In addition to the medal itself, the Society presents $50,000 to the Pennsylvania Society Scholarship Program with the McGuire Foundation in honor of our gold medalist. This year, the Society is honored to present the gold medal to an innovative leader in finance and investment, a man who is widely admired and respected for his courage, his dedication, and his commitment to the rights of investors, the founder of the Vanguard Group, Mr.

John C. Bogle. I invite you to turn your attention to the large screens positioned around the room in order to view a biographical video presentation saluting the life and achievements of Jack Bogle. He was born less than six months before the stock market crash of 1929 forever altered the financial and social landscape of America.

He grew up during the Great Depression when the aftermath of an economic collapse erased the fortunes and clouded the futures of millions. He overcame obstacles and succeeded against odds and under circumstances that might have defeated a less determined and dedicated man. John Clifton Bogle came into the world on May 8th, 1929.

Jack, as he was commonly called, and his twin brother, David, were the second and third sons of William Yates Bogle Jr. and Josephine Lorraine Hipkins. Their father flew with the British Royal Flying Corps in World War I and worked for the American Brick Corporation, a company founded by his own father.

Along with their older brother, Bill, the twins grew up in Montclair, New Jersey, a suburb just 20 or so miles to the west of New York City. If not for the market crash, theirs would have been a comfortable and affluent existence, but the fortunes of the Bogle family were not immune to the economic fallout that spread over America and the entire globe.

To help support the family, all three boys took on multiple jobs while attending school. By the age of 10, Jack was delivering newspapers and magazines and working in an ice cream parlor. The lessons learned in those years made a lasting impression upon him. They shaped his character, his personal beliefs, and the professional code he would carry throughout his life.

Josephine Bogle wanted a first-class education for her sons. She managed to get them enrolled in Blair Academy, a nearby private boarding school for their junior and senior years. Although the tuition was beyond the family's means, Josephine's investment banker brother was able to help, and Blair offered them scholarships and campus jobs.

Gifted from the start, with an aptitude for math, Jack thrived at Blair. His classmates voted him most likely to succeed and best student, and he graduated second in his class. He was disappointed that he failed to be the valedictorian, having set that as his goal, but his gratitude and support for Blair would continue throughout his life.

At Princeton, as at Blair, his education was funded with university scholarships and he worked a host of different student jobs. He majored in economics, and for his required senior thesis, he chose to research and report on the fledgling mutual fund industry, a relatively new and unexplored field, but one that Jack Bogle recognized as having great potential.

This thesis was titled "The Economic Role of the Investment Company." It was 123 pages long, and he earned an A+ for his work, graduating magna cum laude. That distinction, and the in-depth work he had done to earn it, would lead indirectly to his first job after graduating from Princeton in 1951.

The document was so highly regarded that it found its way to the eyes of Walter Morgan, Princeton class of 1920, the founder and CEO of the fourth largest mutual fund in the country, the Wellington Fund. Morgan was so impressed by Jack's thesis that he wanted all of his employees to read it, too, and he printed copies for all 50 of them.

"He knows more about the fund business than we do," Morgan was quoted as saying. Although Jack had other career options, he was excited by the possibilities inherent in the emerging mutual fund industry. He joined Wellington, and over the next few years made it his mission to learn as much as he could about all aspects of the business.

By 1955, he had officially been named Walter Morgan's assistant, and by 1958, he probably knew as much about the mutual fund business as anybody in his field. By the summer of 1956, Jack Bogle had developed an interest in something besides mutual funds. Her name was Eve Sherrod. She was the younger sister of Bogle's Princeton friend, Jay Sherrod.

Eve was a 1955 Smith College graduate and lived in Marion, Pennsylvania. The two were married in September 1956. Their union has lasted 60 years and counting. Parents of six children and 12 grandchildren, they have lived in the greater Philadelphia area ever since. As Bogle's confidence and understanding of the industry grew, he assumed a more active role in the company's strategy.

He advocated adding growth, income, and bond funds under the Wellington ambit. By the end of the decade, with Bogle's encouragement, a second fund was created at Wellington, this one devoted specifically to stocks. In 1958, the Wellington Equity Fund was introduced, changing its name in 1963 to the Windsor Fund.

In the midst of these developments, Jack's unsuspected health problems began to reveal themselves. Until the age of 31, he had enjoyed good health. But while playing tennis with his brother-in-law one afternoon in the late summer of 1960, he suffered the first of six heart attacks. The attack led to a six-week stay in the hospital, where Bogle was diagnosed with a condition known as ventricular arrhythmia.

The outlook was bleak. The cardiologists gave him little chance of living past the age of 40. None of them thought he should or could return to work. But his personal drive, his commitment to excel, and his will to survive, the "Bogle factor" as one of his cardiologists would call it, proved them all wrong.

Bogle was not about to give up. In 1965, the mutual fund business began to change. Conservative investing, Wellington Fund's métier, went out of style. And aggressive, high-risk investing took center stage. To add an aggressive fund to Wellington's line, and to bring in new managers, Bogle negotiated a merger with Thorndike, Doran, Payne, and Lewis, an investment counseling firm based in Boston.

The merger became official in 1966, and things went well at the outset. Jack was named president and CEO of the newly created firm, but disagreements between the partners about the firm's investment strategies led to a parting of the ways during the 1973-1974 stock market crash. The new merger failed, and they decided to fire Bogle from the firm.

On September 24, 1974, John Bogle formed a new corporation. He named it the Vanguard Group, after Admiral Nelson's flagship HMS Vanguard at the Battle of the Nile during the Napoleonic Wars. Vanguard would give Bogle the opportunity to put his own beliefs and an innovative investment strategy into practice. Vanguard's first index investment trust was created in 1976 with a mere $11.3 million in assets.

But his work was met with scorn and ridicule. Some called the index fund "Bogle's Folly," and relentlessly criticized it, labeling it "un-American." It took two decades until the mid-1990s for index funds to catch on with the public, but their growth now dominates the industry. In 1989, Mr. Morgan, then 91 years of age, he would live to be 100, looked back with delight on Bogle's successful leadership of the firm.

He stated, "The best thing I ever did was to persuade Jack to join our organization." Despite continued heart problems, John Bogle remained at Vanguard's helm as chairman and CEO. Finally, in 1996, he received a successful heart transplant, a procedure that in large part restored his physical vigor. He stepped down as CEO that same year, but continued as chairman of Wellington Fund and the other Vanguard funds until 1998.

After leaving the Vanguard Board of Directors in 2000, he concentrated on writing and advocating on behalf of the rights of investors and fund shareholders and the benefits of long-term investment strategies. He authored numerous articles and 10 books, including the 2007 bestseller, "The Little Book of Common Sense Investing," along with "The Clash of the Cultures," "Enough," and "The Battle for the Soul of Capitalism." In 1999, Fortune magazine named John Bogle one of the "Four Investment Giants of the 20th Century." Today, at the age of 87, John Bogle is president of Vanguard's Bogle Financial Markets Research Center in Malvern, Pennsylvania.

He continues to promote the investment principles he had laid out 65 years earlier in his senior thesis at Princeton. The Pennsylvania Society is proud to present its 2016 Gold Medal for Distinguished Achievement to John C. Bogle. I can't tell you how many people have complimented the Society on selecting Jack Bogle for this award.

There isn't a person that I haven't talked to on any given day since we announced it that don't tell me that you are their hero. All right. I'm so pleased on behalf of the Society to present you with our Gold Medal Award. Well deserved. Thank you. Thank you. It's mine, Nick.

Where are you? Thank you so much, Roger. I'm deeply honored. And thank you, Carol Fitzgerald, for all your work in organizing this evening. What a big job. And it's great to be here with all of you, and I particularly am honored to be with this wonderful head table. So many people.

Those are the people we call the big shots back in my corner of the world. And to all of you, thank you for being here tonight, and particularly those of you who are here who are Vanguard shareholders. I want to thank you for paying my salary for all these years.

Most of you, I imagine, know the story of Acres of Diamonds, a lecture first given 132 years ago by Pennsylvanian Russell Conwell, founder of Temple University. It's the story of a wealthy lord in ancient Persia who leaves his estate to seek even greater wealth, spending the rest of his life in a fruitless search for a perhaps mythical diamond mine.

Years later, far from home, frustrated, unhappy, a pauper, he throws himself into the sea and dies. And at almost the same moment, the very same moment, the fabulous Golconda mine is found back in Persia in a stream on his very own property. Think about that. Dr. Conwell thought the moral of the story was obvious.

Quote, "Your diamonds are not in far distant mountains or in yonder seas. They are in your own backyard if you but dig for them." His insight is my story. I first set foot in our great commonwealth of Pennsylvania just before Christmas of 1945. My twin brother David, bless his soul, was with me, two 16-year-old boys from Blair Academy arriving in Pennsylvania to celebrate the holiday with our parents.

They had just moved here from New Jersey and we lived on the third floor of a home in Ardmore. The space was enough for all of us, at least during the holidays. It was in the city of brotherly love that I began to find my own acres of diamonds.

That first diamond was Walter L. Morgan. You saw him up there in a number of places, wonderful man, my great mentor, founder of Wellington Fund. Immediately after my graduation from Princeton University, by the way, thank you Nasoons, he hired me. Five years later I found another diamond. She's with us tonight, a diamond right on Pennsylvania's green acres, my beloved Eve, wife of 60 years.

Some 21 diamonds followed. Six wonderful children, 12 grandchildren, and now three great-grandchildren. All of those diamonds alone would make a grand crown, wouldn't they? But there were many more diamonds to come, yes, all in my own backyard. During those early years at Wellington, however, the diamonds lying before me were deeply hidden.

The company fell into trouble at times. In 1965, when I was about 35 years old, self-confident and more than a little arrogant, Mr. Morgan told me to run his firm and do whatever it takes, that's a quote, "whatever it takes" to solve our investment management and marketing challenges. As that lovely video tribute suggests, my effort to save the firm resulted in my getting fired as Wellington's CEO in January 1974, and my adversaries intended to move all of Wellington to Boston.

I was not about to let that happen. I love Philadelphia, my adopted city, the home of my family, the home of my firm. I intended to keep those diamonds right here. After a tough struggle, that determination paid off. I created a new company that would do just that, inspired by HMS Vanguard, Lord Nelson's flagship.

Check your medallion, everybody, it's a very nice representation of it there. I named the firm the Vanguard Group with Wellington Fund as our largest fund. Look, guys, Benjamin Franklin got it right. The diamonds aren't going to Boston, Boston is going to Philadelphia. To be here for good, right where they belong, in the birthplace of Wellington Fund in 1928 and of Vanguard in 1974.

I described our new firm as the Vanguard experiment in corporate governance designed to serve our mutual fund shareholders. A faint echo, at least, of William Penn's description of the Pennsylvania colony as his holy experiment in freedom for its citizens. A nice parallel. The new firm was founded on two innovations that you've just heard about and described, both without precedent in the mutual fund field.

Two more diamonds. One diamond was our mutual structure, designed to serve its own shareholders. The other, our strategy. The world's first index fund, a simple, economical way to give investors their fair share of market returns. Together, these two diamonds would become far more valuable even than that fabulous Golconda that I mentioned at the beginning.

Fabulous values for investors. These ideas are changing the world of finance in favor of investors, of Main Street rather than Wall Street. That trend is just beginning, and I'm sorry in a certain way about this Wall Street, but it's going to get even worse for you and better for investors.

It's all about who gets those returns. So Vanguard has become the largest mutual fund management in the world as a result of those ideas, starting from a career of tragedy, followed by triumph, to which I would add, "Oh, ye of little faith." I continued to dig in my own backyard and discovered still more diamonds.

In 1996, I found another diamond that was a new heart, a diamond that was a heart, transplanted at Philadelphia's Hahnemann University. For the past two-plus decades, I've been treated at Pennsylvania Hospital, Hospital of University of Pennsylvania, HUP, by another diamond, my cardiologist for all that time, Dr. Susan Barzina.

The transplant was a success, yes, from another diamond, and this one was in Pittsburgh. Hello, Allegheny County. Dr. Thomas Starzl of the University of Pittsburgh led the development of anti-rejection drugs that were essential to survival for patients who were lucky enough to have successful transplants. Not a moment too soon, only in the late '80s, did that discover, and I got my transplant in '96.

That heart that I got now, 46 years of age, keeps on ticking. It just keeps on ticking. And that's all right, that's all right. A second chance at life is a miracle, and don't think I don't know it, pal. Lucky enough to find all those diamonds in Pennsylvania, I was determined to give some diamonds back to Pennsylvania.

One of my favorite causes has been supporting and helping lead the National Constitution Center that caps off Philadelphia's Independence Mall. For the three decades since its inception, I've served as a trustee, and in 1988, I was asked to serve as chairman by its then chairman and former governor, Ed Rendell, and its then president, and now treasurer-elect of our commonwealth, Joe Torricella.

I warned them that I wouldn't be too good at it and would only serve for a short time until they found a real chairman. But working with Joe was a thrill, and the challenge of turning an idea into a reality, you could even say again, I served for chairman for nine more years.

That was my short time. The National Constitution Center continues to serve its noble mission, bringing the Constitution of the United States of America into the mainstream of our citizens' lives. Let me wrap this up, probably a little bit long already, but in retrospect, it occurs to me that my design for Vanguard reflects many of the basic Quaker values that William Penn fostered, simplicity, economy, efficiency, service to others, and the conviction that the truth is the way.

Now, I'm not so strong on other values of the Quakers, like consensus, patience, and of course, silence. William Penn has been a constant inspiration for me, and I close tonight with delight to be with all of you with the 1620 quotation attributed to Pennsylvania's founder, a goal that I strive to honor, but as a flawed human being will never fully measure.

You know this quote, many of you. I expect to pass through this world, but once, any good, therefore, that I can do, or any kindness that I can show to any fellow creature, let me do it now. Let me do it now, for I shall not pass this way again.

Thank you for the honor you've bestowed on me. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. You are truly a treasure of the Commonwealth of Pennsylvania, and I'm so proud to have you with us tonight. Let's see, a couple of chores here.

Apparently, in the introductions earlier this evening, we failed to advise that Auditor General Eugene D. Pasquale is here this evening. I'm sorry. Sorry about that. And because our honored guest is so impressive, we're honoring a request that you just made to have the Soons come back and sing "Old Nassau," one verse.

So, thank you, Jack. Thank you. Are they getting it? They're getting it. I know it. Every boy and every boy, in every care withdraw, let all in one accord rejoice in praise of old Nassau. In praise of old Nassau, my boy, hurrah, hurrah, hurrah. Her sons will give, while they shall live three cheers for old Nassau.

Thank you, Jack. Ladies and gentlemen, I invite you to rise and join the Princeton Nassoons and Trooper Kevin Pierce in singing a traditional Pennsylvania society favorite, "God Bless America." God bless America, land that I love. Stand beside her and guide her, through the night with the light from above.

From the mountains to the prairies, to the oceans, where it flows. God bless America, my home sweet home. God bless America, my home sweet home. God bless America, land that I love. Stand beside her and guide her, through the night with the light from above. From the mountains to the prairies, to the oceans, where it flows.

God bless America, my home sweet home. God bless America, my home sweet home. Thanks, Mike. That was a great job. So, okay, it was an enchanted evening, and to hell with it. It was really, really nice, and we had a great time. A lot of my family came, and so that was really a highlight of the year, and if you've got to get an award, that's probably as good a response as you can make.

I'm not quite at my top speaking style there, but I was okay, I think. Now we're going to go back to work, and I have, how much time? Half an hour? And we're going to do a little data thing, and we're going to start with an industry in transition, how this industry has changed.

We're going to rip through these fairly quickly, and again, the slides will be available to anybody that wants them. So I was there, and I am here, thank goodness, as a tiny industry grew into a behemoth. A lot of bumps along the way, but an industry that grows since I joined it in 1951 at 14% a year is a pretty good industry to pick as a choice from your ancient senior thesis at Princeton University.

And you'll see we're an equity industry when I came in, 78% stock funds, still a stronger equity industry at 1972, 87% stock funds. Then we had the market crash of '73, '74, and by 1981, money market and bond funds were 83% of this business. And now we're back to a more normal equity funds, 52%, balance funds 8%, and bond funds 22%, and money market funds about 17% way down, that combination being 39% compared to 83%.

But we've had a firm that could ride with those punches because I've always been interested in all those areas. But the biggest change of all was the obvious one, the indexing revolution. And you can see indexing share of mutual fund assets has gone to 41% now. It's amazing of equity fund assets and to 23% of bond fund assets, and it keeps on growing.

Yes, it is the index revolution, and you can see that chart there. I'll go quickly through it. I don't want to waste a lot of time on it, but there's nothing quite like in all financial history the way the index fund has changed an entire industry and even an entire financial industry.

You'll see there that when the index 2017 is $7 trillion has gone up, regular funds have gone up, I'm sorry, index funds have gone up 1.7 times, and the index funds have gone up 6 times from the beginning. Compound growth rate, the industry, non-equity industry, 14%, 37% a year for index funds.

So it's quite a remarkable thing, that little idea of 1974. There are big changes in mutual fund industry leadership. I'm not sure this chart is very easy to read, but I took a look at the big funds back in 1980 when the industry had reached sort of a mature stage after the '74 crash, and you can see the leaders there.

We ranked number seven in 1980, advanced the clock to 2017, Vanguard ranks number one with a 2,005-fold increase in assets. Vanilla didn't do badly, 588-fold increase in assets, but only about a fourth of what Vanguard did. And then we have new entrants, BlackRock, State Street, both indexers, J.P. Morgan, Franklin Templeton, Dimensional Fund, they were these firms, and PIMCO, where they were not in business in 1980, were very, very small.

And so now those 10 firms are 62% of industry assets as compared to 55%, so a little more concentration. You also see the ones that have dropped out of the top 10, are they in blue? No. Well, the funds that have dropped out of the top 10 in 1980 are IDS now, Columbia or whatever it's called, the largest firm in the business then, Mass Financial, Putnam, a tragic story, Fort Abbott Affiliated Fund, and Union Service, which is the, I'm not even sure what the name of it is anymore, but they all dropped.

That's a lot of change in industry leadership. Expense ratios, very interesting thing that's going on here. I may have shown you this chart last year or two, but if you look at the traditional industry and go back to when I came into this business in 1951, the average fund in this group of actively managed funds had a 0.62 expense ratio, and by 2016, that had risen to 1.06% or up 72%, and this upstart called Vanguard dropped from 55, a little below average, to 0.15, you'll see that in the red line a little bit up from the bottom, or down 73%.

I can't imagine how this can persist in a competitive framework when one group of funds goes up 72% in cost ratios and the other one goes down 73%. Well, I don't think I did a very good job on explaining it all. What I'm trying to say here is that if we were run, we run the firm for around $4 billion a year, and if we were running at that conventional mode above, the cost would be $25 billion a year, $21 billion of savings every year for shareholders, and happily, lower cost means stronger returns, and we'll, I guess, get that a little bit later.

So, I've seen all this happen firsthand. An industry that sells what it makes, it's the old industry, became an industry that made what would sell. We've gone through public ownership, a really catastrophic thing in the industry, it still persists, public ownership of advisors, where the idea is to make as much money for the owners as you possibly can at the expense of the fund shareholders.

We've gone through the go-go era, a whole lot of junk, false accounting, story stocks, and that came and went. We had the rise and fall of the so-called nifty-fifty, 25 stocks or 50 stocks, I guess, you could buy and hold forever, and they were all pretty good stocks, Xerox, IBM, except the prices that were paid have never been seen again.

So, it's not just the value of the company, it's the price you pay for it. Then we went through a whole new industry created, money market funds, saw back there, I think it was 80%, 83% maybe of industry assets, and then we get to the information age, the rise and fall of technology funds, catastrophic to investors in them.

We had done away with ours years before, one of the smarter moves, sometimes doing nothing or reversing a decision is better than making the decision itself. Then we get to the age of the traditional index fund, TIF. I'm trying to get that damn thing accepted as a way of art, speaking like we talk about ETFs as if there's nothing else, but the TIF is a traditional index fund, and the one that kind of started a broad market, S&P 500, for example, low cost, and designed to be held forever.

I'll talk a little bit about that in a few minutes. Then we come to where we are right now, and it's an interesting thing, which I'll talk about in a few minutes, the exchange-traded fund era, which we have today. Now, in the next decade, the return to what I will call a new normalcy, which is the triumph of traditional index investing, not ETF investing.

I was accused in the press, I guess I said this, of saying I think BlackRock, which is entirely ETFs, is betting on the wrong horse, and we betting on TIFs are betting on the right horse, but we will see. But in each era, I tried to deal with it when I ran the company, and even after I ran the company, and for each error for that matter, I did my best to build a better industry and preach about my convictions.

So how's it doing? Well, in 2017, Vanguard is shooting the lights out, giving new meaning to - I worry about it, and I worry about what is enough for a $4.5 trillion company on its way to $5 trillion. Think of that. I mean, I don't even like it. I'm sorry about that, but I'm a small company guy.

So there are the industry cash flows Mike has up there, and you'll see that in the last - what is that - five years, roughly, Vanguard has taken in $793 billion of cash - think of that - from new investors, and the total industry has taken in $815 billion.

That means the other firms, compared to one firm, $793 billion of additional capital. Everybody else put together has taken in $22 billion. It's 97% of the industry's cash flow for five years. And it's good, I guess. It's a tribute to the good idea, but it also somehow leaves me wondering what's the end game or something, and I don't have to worry about that now.

But guess what? I still worry about it. And you'll see the cash flows here, growing and growing and growing. Indexing totally driving it. That's the blue line. And so I ask again, what is enough? And I don't know the answer to that, but don't think I don't think about it, and don't think about the challenges that indexing faces in the years ahead.

Now how are we doing with the competition? Well, here we are with the large managers, and you can see we're all clustered pretty closely, all except that State Street was very small then, from around $300 billion to around $700 billion. And the turning point came in 2006, when Vanguard's assets topped Fidelity's.

Vanguard assets $1.123 billion. Fidelity's assets $1.111 billion. That was a very close race. But you can see it wasn't close. That was in 2006. And look at the lines go from there, just totally separate. And I'm not sure very many businesses have ever experienced a period of leadership like that.

And again, I'm not sure what I think about them. I'm glad to have the ideas, my ideas, given such acceptance by the public, but I still worry about, I won't say it again, worry about size and what it does to a company, and what it does to challenges like regulatory authorities and things of that nature.

So our market share is at a new high again of 24.2, up from a low of 4.1, and we lost, was at a third of our market share in our first, that's 1986. In our first 12 years, we lost a third of our market share. There's a tribute to a great company.

And then I actually, this may not surprise you, I loved those days. I loved the days of struggle. I loved the days where you were the first one in the office every day, and everybody's trying to do their best and trying to find a piece of good news. We had 83 months of net redemptions, and people say, "How'd you deal with that?" To which I would say, "Well, look, we lost $22 million of redemptions last month, but the previous month we lost $24 million.

So think of that improvement. Keep a stiff upper lip." But when you get big, I gave a speech on this subject, "Uneasy lies the head that wears the crown," and this chart just shows the changing leadership in the company. First MFS, Mass Investors Trust, is the firm written up in my senior thesis at college, and they got to about a 15% market share, the lowest cost provider in the industry at that time.

And then IDS, which is a big, it's called Columbia I think now or something, but big direct distributor, direct distribution, overwhelmed broker distribution for a short period of time, well, for about 20 some years. And they got to about 15% and then fell back. Then along comes Fidelity with their hot performance, and they got to almost 14% back in 1999, fell back.

And that putative natural high, which you can see there, it's like 15% is the limit. History has established that. And here we are at 24.2, and it's not going to be lower than that next year or the year after that. The reason for all that, of course, is the index funds.

And you will see right in this chart that if you are one of these leaders, Vanguard, BlackRock, and State Street, really an oligopoly, which is worrisome in some ways. Nobody wants to compete in that area. And so I think we are going to, indexing is going to continue to take over.

We are going to continue to hold our market share leadership. But if we broaden the term index funds, this is an interesting byplay, if we broaden the term index funds to talk about indexed assets, we get an even stronger picture for Vanguard's 73% in index funds. In the very beginning of Vanguard, even before the index fund, they used to talk about relative predictability.

We wanted relative predictability from our funds, because if you get very good, you know you are going to get bad if you got any brains at all. And then the money comes in when you are good, and the money goes out when you are bad. And the shareholders do much worse than the fund.

That's a characteristic of this business. It costs investors about 1.5% in return every year, a huge deficit over time. And so relative predictability dominates Vanguard funds. For an astonishing way, if you put virtual index funds that are driven by indexes, track indexes, with our index funds, pure index funds, you are talking 99% of Vanguard's assets.

I don't know why that 88 is there. I might strike that. So here is how we examine that on the next page, and you will see exactly what I mean. And that is when you get to relative predictability of 1974, with all the changes in academic kind of stuff, it is now high R-squared.

And R-squared is the amount of your fund's return is determined by the returns of the index or indexes that the fund uses as its objective. The best example I have for that is Wellington Fund. Our baseline is 65% S&P 500, 35% long term corporate bond index, and if you put those two together, those two indexes explain 98% of Wellington's performance.

So if you want to look at it this way, and maybe people do not want to look at it this way, on a $100 billion fund, which Wellington is again after all these years, no, its previous high was $2 billion, sorry, you are going to say that 2% of that is from activity, active management, so that would be $2 billion, and $98 billion would be tied to the index.

So that is the 98 R-squared, and you look at these others, high R-squared business, and you put it all together and just multiply through these R-squares on the index to the fund's assets, and that is where the 23% comes from. So that is just what I want to happen, just the way I designed when I redid Wellington Fund in 1980, and it has worked very well.

There is a fund that went from $2 billion to $450 million, then I tried to fix it, did my best to fix it in 1980, and now it is $102 billion. It is amazing what you can do if you just put a little thought into something. So put it all together, Vanguard's dominance is no mystery.

Why are we a leader? I will tell you why. One is our structure, low cost. Two is our strategy, virtual index funds and indexing. They turn out to have consistent, solid returns for the owners, and that turns out to be outstanding performance, and it is quite remarkable. I probably showed you this chart.

I whittled it down a little bit. I probably should have done it a little bit more. Just let me take you through a little bit of it, and that is when you rank on August 17, rank the various fund leaders by the number of funds they have, how many are 1 and 2 star, low rated funds, and how many are 4 or 5 star, high rated funds, and what the net difference between the low rated is.

Vanguard has, as far as I can remember, been at the top of this list forever. For a few years we were tied with T. Rowe Price, but what this says is 2% of our funds were low rated, 73% were high rated, and 71% net. One thing that causes that, which is why it is right in the next column, is the lowest expense ratio by far on that whole page, .17.

It is going to go down. It can't go down a lot further, so we are still going to be tough. T. Rowe Price is often a very tough competitor. I haven't tracked it enough to figure out why they have dropped down on this. They are 10%, 66%, and net 56%, so they are 15 points behind us.

Look at how those net returns, let's concentrate on that column saying net, getting 71.50, and look at how it goes down. You should be, the average is probably 28, something like that. I guess it is 19 when you take all of the firms. Look at the firms that are even in negative territory when you get down to the bottom.

Look at Goldman Sachs. The one thing you want to know is that Goldman Sachs faithfully and eternally puts the client first. That is what they say. They have 36% compared to our two low rated funds, even less, 28% in high rated funds for a negative of 7%. They are the champion, as it were.

They have a very high expense ratio. I will just make one more observation. You can look at this when you see the charts if you want to. It is amazing. I went back 10 years, we have been doing this for about 10 years, to August of 2007, and it is amazing how the top funds with the lowest cost by and large maintain their position, Vanguard 1, T.

Rowe Price 4, TIAA 6, Dimensional 3, Janus 2, American Funds 5, and JP Morgan, I guess it is 7. No, it is American 7. Schwab didn't mention Schwab. At the bottom, 10 years ago, Legg Mason ranked 40, now they rank 42. Putnam ranked 50, and they have leaped up to 45.

Goldman Sachs had a really solid improvement there. They went up from rank 45, did not have an improvement, but a deterioration. Not easy to get worse when you are at 45 out of 50, but they slipped back to 46. So you can measure what we are doing pretty well.

Next slide. You win the way we did, and then the question is, how do funds generally do, beating the market and beating the competition? I am going to try and wrap this up without being too long. So the first slide is for the first time this spring, SPIVA, Standard & Poor's Investment Performance something valuation, for the first time they did 15 years, and here are the results.

In large growth, the index was outperformed by 5%. I will do it the other way around. The index outperformed 95% of all large growth funds, the proper growth index. Large core, the index outperformed, looks like 96%, 7%. In large value, the index only outperformed about 17%. In mid-cap growth, the index outperformed about 3%.

Mid-core the same. Mid-value, 14%. Only 14% do better, and so on down the line. So the average of all of those is 7.8%. I am sorry, 78%. And so the index outperformed 7.8%, right. I got you, thank you. 7.8% outperformed the universe. So it just isn't a good bet to go with an actively managed fund.

So what do you do? You pick winning funds, right? Let me tell you a little bit about that. Reversion to the mean, you have heard that before. What happens to the winning funds after you buy them? We did this test, we have done it for a lot of different periods, and this is pretty representational of the total, but we took the highest returns, the highest quintile of returns in the period 2006-2011, and then compared that fund's rank in 2011-2016.

The highest quintile had 14% in the recurred and in the highest return group, highest quintile, and 14% in the high quintile group, and twice as many, twice as many funds, more than twice as many actually, no, just about twice as many, in the low and lowest categories, 27% in 30 years.

So we had 28% in the first two categories that repeated, and 57 funds that went to the bottom of the deck. And it is a strange parallel, if you go down to the bottom, lowest return, you have 49% of the winners in the two top quintiles, 24 and 25, and they drop all the way down, rise all the way down, I'm sorry, drop down to the 30th percentile as losers.

So the winners don't repeat, they revert to the mean and beyond, and the losers do the same thing, they revert to the mean and do better. So they only have 49% in the top quintile, the top two quintiles, and 30% in the bottom two. So when you think about the parallelism, for the highest returns, 28% good, 57% bad, and lowest quintiles, 49% good and only 30% bad, just the reverse.

And if you look at the middle ones, they are pretty much concentrated around 20, you'll see that number appear a lot. So it's just the way it is. And this is a little complicated chart, but it bears the same message it's always been. Now, I'm just going to, I forgot this, we have to do this.

Traditional index funds, TIFs again, and ETFs and their intramural competition. The rise of the index fund, particularly in more recent years, last 20 years, has been driven by the rise in ETFs. You can see that right here. ETFs have grown at 35% growth rate, and traditional index funds at only, maybe the right word, a 16% growth rate, and active funds at an 8% growth rate.

So when you look at TIFs and ETFs together, I don't want to take too much time, but here's the difference. First index mutual fund, TIF, principles, own the stock market, diversify to the nth degree, minimize transaction costs, tiny expense ratio, bought to be held forever. Exchange traded funds, principles, pick your own index, there are only 1,900 now available.

Diversify in any sector you choose, lower your expenses, lower expenses generally, but not very low, like 50 basis points. They operate at fringe ETFs, very narrowly determined. I think we will skip this next chart, Mike, in the interest of time, and we will just check this next one and get to really what I thought was one of the more interesting research events.

I was fooling around with some numbers one day, and I took the growth of the ETF business, and since 2004 to 2016, you can see a very interesting thing goes on. They have both grown very rapidly, the TIF and the ETF. But in the ETF, three quarters of it was in cash flow.

I'm sorry, I'm going to correct myself. $800 billion was about half of the cash flow growth, was half of the increase in assets, and $500 billion from market appreciation, that is performance. While the numbers were very different for traditional index funds, $800 billion compared to $500 billion from performance, and $400 billion from net cash flow only half as much.

So what we see there, and we tried this experiment, I will show you a little tiny bit more. What we see there is the investor return on TIFs in this period was 7.4% a year, and the investor return, this is ex-dividends, the investor return on ETFs was 4.6%, only a little, a third less, roughly, and active, it is even better than ETFs.

So it all depends on what you are comparing it with. So we took this further, and did it for each year in the period, make sure we were doing okay, and just a kind of a test. There is the 7.4 for TIFs, there is the 4.6 for ETFs. And they correlate very, very highly with the returns you get from Morningstar, which would be the correlation of 96, the R squared, and 99 is for the TIF.

In other words, that seems to verify that TIFs are not doing nearly as well for their investors, that ETFs are not doing nearly as well for their investors. I am going to skip the next couple of charts on future returns, I think you know what I said about them, they are going to be lower than the past, and so investors are going to, I am using 4% for stocks, you will see it all in there, 4% for stocks and 3% for bonds, and so it is not going to be what we have had in the past, I don't think, and investors will have to save more, you will have to save more to get to your objective, to keep the objective the same, or reduce your objective, and find that low costs are more important than ever.

Now, I am going to close with words to live by, Matthew, 21 AD, no man can serve two masters, for either he will hate the one and love the other, or hold to the one and despise the other. That is the problem that Vanguard tried to solve by only having one master, the bond shareholder and not the investment advisor, and it has worked out pretty well.

Adam Smith, the fundamental principle of economics, the interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer. That maxim is so perfectly self-evident that it would be absurd to attempt to prove it, the interest of the consumer must be the ultimate end and object of all industry and commerce.

Paraphrasing it in my own words, the interest of bond shareholders, that is, consumers, must finally triumph over the interest of fund managers, that is to say the producers. And then a final quote, which is a little philosophical, and before we get to that, I want to say I have gotten a little philosophical in my age, and I think a lot about a place in history, which is where we started today, and what I really want to accomplish, what all this noise about my accomplishments that I have given you this morning means, and it probably doesn't mean very much, to be honest with you, and nice but not necessary, but I think, curiously enough, I summed all this up in 1973 A.D.

Notice the similarity in years as we go through these. And this was the dedication of what was then the Wellington Management Building in Valley Forge, first move out of the city, and I am going to read you this in its entirety. Today, America is again being tested, and it is hardly an exaggeration to say that every institution in our society, from the White House on down the line, is being challenged, challenged to reassess its goals, its values, its contributions to our society.

The White House was an issue even then, and here we are today. All those years later, 45 years later, whatever, 40 years later, despite the billions of dollars entrusted to us, our company is small and fragile and perhaps even unimportant in the vast context of space and time. Nonetheless, by doing our work as best we can, we can be better and stronger as individuals and make this ambitious and interesting organization, which was about to get more ambitious and more interesting, better and stronger too.

Each of us can, in a small way, be a positive force in helping, typo, to make this land just a little bit better. In short, I believe even one person can make a difference. So what caught my mind, this came to my mind when we were talking about, when I was thinking about what I want to leave behind, and I looked at, I mean, I certainly profoundly believe in the importance of the individual, but I also looked at the fact that we are all important in the vast context of space and time.

Eve and I were watching 60 Minutes on CBS about a month ago, and they had a program part, section, on the universe. Here is our part in the universe. One, we are part of the Milky Way galaxy. It is 13.6 billion years old. Its diameter is 150,000 light years.

It has 200 billion stars and 100 billion planets. How important are we in all that? And then the punchline, our galaxy is but one of two trillion galaxies out there. That is how important I feel at this moment. Thank you all very much. Thank you, Jack. Thank you. Thank you.

Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.