Overview

Investment Objective

The Portfolio seeks to provide current income.

Investment Strategy

The Portfolio invests in two Vanguard bond funds, resulting in an allocation of 100% bonds. The percentages of the portfolio’s assets allocated to each Underlying Investment are:

Vanguard Total Bond Market II Index Fund - 57%
Vanguard Short-Term Inflation-Protected Securities Index Fund - 18%
Vanguard Short-Term Reserves Account - 25%

Through its ownership of Vanguard Total Bond Market II Index Fund, the Portfolio indirectly invests in a broadly diversified collection of securities that, in the aggregate, approximates the Bloomberg U.S. Aggregate Float Adjusted Index. The index measures 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 1 year. The Fund maintains a dollar-weighted average maturity consistent with that of the Index, which generally ranges between 5 and 10 years.

Through its investment in Vanguard Short-Term Inflation-Protected Securities Index Fund, the Portfolio indirectly invests in inflation-protected public obligations issued by the U.S. Treasury with remaining maturities of less than five years. The Fund employs an investment approach designed to track the performance of the Bloomberg U.S. 0-5 Year Treasury Inflation Protected Securities Index.

Through its investment in Vanguard Short-Term Reserves Account, the Portfolio indirectly invests in funding agreements issued by one or more insurance companies, synthetic investment contracts (“SICs”), and shares of Vanguard Federal Money Market Fund. Funding agreements and SICs are interest-bearing contracts that are structured to preserve principal and accumulate interest earnings over the life of the investment. Funding agreements generally pay interest at a fixed interest rate and have fixed maturity dates that normally range from 2 to 5 years. SICs pay a variable interest rate and have an average duration range between 2 and 5 years. Vanguard Federal Money Market Fund invests primarily in high-quality, short- term money market instruments issued by the U.S. government and its agencies and instrumentalities, including repurchase agreements that are collateralized solely by U.S. government securities or cash. For more information about Vanguard Short-Term Reserves Account, please see the Interest Accumulation Portfolio profile below.

Note: Vanguard Short-Term Reserves Account’s investments in Vanguard Federal Money Market Fund are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of the investment at $1 per share, it is possible that Vanguard Short-Term Reserves Account may lose money by investing in the Fund. The Vanguard Group, Inc. has no legal obligation to provide financial support to the Fund, and there should be no expectation that the sponsor will provide financial support to the Fund at any time, including during periods of market stress.

Investment Risks

The Portfolio is subject to interest rate risk, income risk, prepayment risk, extension risk, call risk, credit risk, event risk, index-related risks, index sampling risk, index replicating risk, liquidity risk, income fluctuations, market risk, and real interest rate risk.

Average Annual Returns

**Consists of the Spliced Bloomberg Barclays U.S. Aggregate Float Adjusted Index (34.5%), the Bloomberg Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index (USD Hedged) (22.5%), the Bloomberg Barclays U.S. 0-5 Year TIPS Index (18%), FTSE 3-Month T-Bill Index (2.5%), and Ryan Labs 3 year GIC Index (22.5%). 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. Effective September 29, 2016, Barclays indexes were rebranded to Bloomberg Barclays indexes.

Annual Investment Returns

Historical Prices

Brand: arkansas

Fund ID: 1007004

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