Investment Objective

The Portfolio seeks to provide current income and low to moderate capital appreciation.

Investment Strategy

The Portfolio invests in two Vanguard bond index funds and two Vanguard stock index funds according to a formula that results in an allocation of 52.5% of assets to investment-grade U.S. bonds, 22.5% of assets to investment-grade non-U.S. bonds, 15% of assets to U.S. stocks, and 10% of assets to non-U.S. stocks. The percentages of the Portfolio's assets allocated to each Underlying Investment are:

Vanguard Total Bond Market II Index Fund 52.5%
Vanguard Total International Bond Index Fund 22.5%
Vanguard Total Stock Market Index Fund 15%
Vanguard Total International Stock Index Fund 10%

Through its ownership of Vanguard Total Bond Market II Index Fund, the Portfolio indirectly holds a mix of bonds - including government, corporate, and international dollar-denominated bonds, as well as mortgage-backed and asset-backed securities - that represent a wide spectrum of public, investment-grade, taxable fixed income securities in the United States, all with maturities of more than 1 year. Through its ownership of Vanguard Total International Bond Index Fund, the Portfolio indirectly holds 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 1 year. Through its ownership of the stock funds, the Portfolio also indirectly owns large-capitalization U.S. stocks, and to a lesser extent, mid-, small-, and micro-capitalization U.S. stocks and international stocks.

Investment Risks

Because it invests mainly in bond funds, the Portfolio primarily is subject to low to moderate levels of interest rate risk, credit risk, income risk, and call/prepayment risk. Through its stock holdings, the Portfolio primarily is subject to stock market risk. The Portfolio has low levels of foreign securities risk, emerging markets risk, index sampling risk, investment style risk, currency hedging risk, nondiversification risk, and derivatives risk.

**Consists of the Spliced Bloomberg Barclays U.S. Aggregate Float Adjusted Index (52.5%), the Bloomberg Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index (USD Hedged) (22.5%), the Spliced Total Stock Market Index (15%), and the Spliced Total International Stock Index (10%). The Spliced Total Stock Market consists of the Dow Jones Wilshire 5000 Index through April 22, 2005; MSCI US Broad Market Index through June 2, 2013; and the CRSP US Total Market Index thereafter. 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. The Spliced Total International Stock Index consists of the MSCI EAFE + Emerging Markets Index through December 15, 2010; and the FTSE Global All Cap ex US Index thereafter.