Overview |
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Investment Objective
The Portfolio seeks to provide current income.
Investment Strategy
The Income Portfolio invests in three Vanguard® bond index funds and one Vanguard short-term reserves account in approximately the following proportions:
Vanguard Total Bond Market II Index Fund 34.5%
Vanguard Total International Bond Index Fund 22.5%
Vanguard Short-Term Inflation-Protected Securities Index Fund 18%
Vanguard Short-Term Reserves Account 25%
Through its investment in 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 Barclays U.S. Aggregate Float Adjusted Index in terms of key risk factors and other characteristics. The 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 maintains a dollar-weighted average maturity consistent with that of the index, which generally ranges between five and ten years.
Through its investment in Vanguard Total International Bond Index Fund, the Portfolio indirectly invests in 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. To minimize the currency risk associated with investment in bonds denominated in currencies other than the U.S. dollar, the Fund attempts to hedge its currency exposures.
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 maintains a dollar-weighted average maturity consistent with that of the target index, which generally does not exceed three years.
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, as well as shares of Vanguard Federal Money Market Fund. Funding agreements are interest-bearing contracts that are structured to preserve principal and accumulate interest earnings over the life of the investment. The agreements pay interest at a fixed minimum rate and have fixed maturity dates that normally range from 2 to 5 years. Vanguard Federal Money Market Fund invests in high-quality, short-term money market instruments issued by the U.S. government and its agencies and instrumentalities. For more information about the Vanguard Short-Term Reserves Account, please see the Vanguard Interest Accumulation Portfolio profile.
Investment Risks
Because it invests mainly in bond funds, the Portfolio primarily is subject to low to moderate levels of interest rate risk, income risk, income fluctuation risk, call risk, prepayment risk, and extension risk. The Portfolio also has low levels of credit risk, manager risk, index sampling risk, currency hedging risk, nondiversification risk, and derivatives 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 four unmanaged benchmarks, weighted Spliced Bloomberg Barclays U.S. Aggregate Float Adjusted Index (34.5%), Bloomberg Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index (USD Hedged) (22.5%), Bloomberg Barclays U.S. 0-5 Year TIPS Index (18%), and the Average Institutional Money Market Fund (25%). 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
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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.
Income Portfolio invests in Vanguard Short-Term Reserves Account, which, in turn, invests in Vanguard Federal Money Market Fund. Vanguard Short-Term Reserves Account could lose money by investing in Vanguard Federal Money Market Fund. Although the fund seeks to preserve the value of your investment at $1 per share, it cannot guarantee it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any government agency. The fund's sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time.
