Overview |
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Investment Objective
The Portfolio seeks to provide a high level of current income and low capital appreciation.
Investment Strategy
The Portfolio invests in two Vanguard bond index funds and two Vanguard stock index funds, resulting in an allocation of its assets to investment-grade U.S. bonds, investment-grade non-U.S. bonds, U.S. stocks, and non-U.S. stocks. The percentages of the Portfolio’s assets allocated to each Underlying Fund are:
The underlying fund allocations as of 11/22/2024:
Vanguard Total Bond Market II Index Fund 42%
Vanguard Total International Bond Index Fund 18%
Vanguard Total Stock Market Index Fund 24%
Vanguard Total International Stock Index Fund 16%
Through their investment in Vanguard Total Bond Market II Index Fund, the Portfolios also indirectly invest in U.S. bonds. The Fund employs an indexing investment approach designed to track the performance of the Bloomberg U.S. Aggregate Float Adjusted Index. This index represents a wide spectrum of public, investment-grade, taxable, fixed income securities in the United States— including government, corporate, and international dollar- denominated bonds, as well as mortgage-backed and asset-backed securities—all with maturities of more than one year. The Fund invests by sampling the index, meaning that it holds a broadly diversified collection of securities that, in the aggregate, approximates the full index in terms of key risk factors and characteristics. All of the Fund’s investments will be selected through the sampling process, and at least 80% of the Fund’s assets will be invested in bonds held in the index. The Fund maintains a dollar-weighted average maturity and an average duration consistent with that of the index.
Through their investment in Vanguard Total International Bond Index Fund, the Portfolios also indirectly invest in international bonds. The Fund employs an indexing investment approach designed to track the performance of the Bloomberg Global Aggregate ex-USD Float Adjusted RIC Capped Index (USD Hedged), which provides a broad-based measure of the global, investment-grade, fixed-rate debt markets. The index includes government, government agency, corporate, and securitized non-U.S. investment-grade fixed income investments, all issued in currencies other than the U.S. dollar and with maturities of more than one year. The index is market value-weighted and capped to comply with investment company diversification standards of the Internal Revenue Code. The index methodology is not designed to satisfy the diversification requirements of the Investment Company Act of 1940. The Fund will attempt to hedge its foreign currency exposure, primarily through the use of foreign currency exchange forward contracts, in order to correlate to the returns of the index, which is U.S. dollar hedged. Such hedging is intended to minimize the currency risk associated with investment in bonds denominated in currencies other than the U.S. dollar. The Fund invests by sampling the index, meaning that it holds a range of securities that, in the aggregate, approximates the full index in terms of key risk factors and other characteristics. All of the Fund’s investments will be selected through the sampling process and, under normal circumstances, at least 80% of the Fund’s assets will be invested in bonds included in the index. The Fund maintains a dollar-weighted average maturity consistent with that of the index, which generally ranges between five and ten years.
Through their investment in Vanguard Total Stock Market Index Fund, the Portfolios indirectly invest in U.S. stocks. The Fund employs an indexing investment approach designed to track the performance of the CRSP US Total Market Index, which represents approximately 100% of the investable U.S. stock market and includes large-, mid-, small-, and micro-cap stocks regularly traded on the NYSE and Nasdaq. The Fund invests by sampling the index, meaning it holds a broadly diversified collection of securities that, in the aggregate, approximates the full index in terms of key characteristics. These key characteristics include industry weightings and market capitalization, as well as certain financial measures, such as price/earnings ratio and dividend yield.
Through their investment in Vanguard Total International Stock Index Fund, the Portfolios indirectly invest in international stocks. The Fund employs an indexing investment approach designed to track the performance of the FTSE Global All Cap ex US Index, a float-adjusted, market-capitalization-weighted index designed to measure equity market performance of companies located in developed and emerging markets, excluding the United States. The Fund invests all, or substantially all, of its assets in the common stocks included in its target index.
Investment Risks
The Portfolio is subject to the risks of the underlying bond Funds, including interest rate risk, income risk, prepayment risk, extension risk, call risk, credit risk, country/regional risk, liquidity risk, currency and currency hedging risk, derivatives risk, stock market risk, currency risk, emerging markets risk, investment style risk, index sampling risk, index replicating risk, and nondiversification risk.
Average Annual Returns - Updated Monthly as of
| Name | 1 year | 3 year | 5 year | 10 year | Since Inception |
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**Consists of Spliced Bloomberg Barclays U.S. Aggregate Float Adjusted Index (42%), the CRSP U.S. Total Stock Market Index (24%), Bloomberg Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index Hedged (18%), and FTSE Global All Cap ex US Index (16%). The Spliced Bloomberg Barclays U.S. Aggregate Float Adjusted Index consists of the Barclays U.S. Aggregate Bond Index through December 31, 2009; and the Bloomberg Barclays U.S. Aggregate Float Adjusted Index thereafter.
Annual Investment Returns
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Index performance is provided as a benchmark but is not illustrative of any particular investment. An investment cannot be made in an index.
The performance data shown represents past performance. Past performance - especially short-term past performance - is not a guarantee of future results. Investment returns and principal value will fluctuate, so that investors' units, when sold, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data cited.
