Common use of Income Risk Clause in Contracts

Income Risk. This is the chance that an underlying fund’s income will decline because of falling interest rates. If an underlying fund holds securities that are callable, the underlying fund’s income may decline because of call risk: This is the chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupon rates or interest rates before their maturity dates. An underlying fund would then lose any price appreciation above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the underlying fund’s income. The Fund is also subject to the following risks associated with investments in currency-hedged foreign bonds: Country/Regional Risk This is the chance that the currency hedging transactions entered into by the underlying international bond fund may not perfectly offset the fund’s foreign currency exposure. With a target allocation of approximately 20% of its assets in stocks, the Fund is proportionately subject to stock market risk: This is the chance that stock prices overall will decline. Stock markets tend to move in cycles, with periods of rising prices and periods of falling prices. An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund seeks to provide current income and low to moderate capital appreciation. The Fund invests in other Vanguard mutual funds according to a fixed formula that reflects an allocation of approximately 60% of the Fund’s assets to bonds and 40% to common stocks. The targeted percentage of the Fund’s assets allocated to each of the underlying funds is: • Vanguard Total Bond Market II Index Fund – 42% • Vanguard Total Stock Market Index Fund – 24% • Vanguard Total International Bond Index Fund – 18% • Vanguard Total International Stock Index Fund – 16% The Fund’s indirect bond holdings are a diversified mix of short-, intermediate-, and long-term U.S. government, U.S. agency, and investment- grade U.S. corporate bonds; mortgage-backed and asset-backed securities; and government, agency, corporate, and securitized investment- grade foreign bonds issued in currencies other than the U.S. dollar (but hedged by Vanguard to minimize foreign currency exposure). The Fund’s indirect stock holdings are a diversified mix of U.S. and foreign large-, mid-, and small-capitalization stocks. The Fund is subject to the risks associated with the stock and bond markets, any of which could cause an investor to lose money. However, because fixed income securities such as bonds usually are less volatile than stocks and because the Fund invests more than half of its assets in fixed income securities, the Fund’s overall level of risk should be low to moderate. The principal risks of investing in this fund are: Interest Rate Risk, Credit Risk, Income Risk, Call Risk, Country/Regional Risk, Currency Risk, Currency Hedging Risk, and Stock Market Risk. With a target allocation of approximately 60% of its assets in bonds, the Fund is proportionately subject to bond risks, including the following: This is the chance that bond prices will decline because of rising interest rates.

Income Risk. This is the chance that an underlying fund’s income will decline because of falling interest rates. If an underlying fund holds securities that are callable, the underlying fund’s income may decline because of call risk: This is the chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupon rates or interest rates before their maturity dates. An underlying fund would then lose any price appreciation above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the underlying fund’s income. Risks associated with investment in Currency-Hedged Foreign Bonds The Fund is also subject to the following risks associated with investments in currency-hedged foreign bonds: Country/Regional Risk This is the chance that world events—such as political upheaval, financial troubles, or natural disasters— will adversely affect the value and/or liquidity of securities issued by foreign governments, government agencies, or companies. This is the chance that the currency hedging transactions entered into by the underlying international bond fund may not perfectly offset the fund’s foreign currency exposure. Risks Associated with Investment in the Stock Market With a target allocation of approximately 20% of its assets in stocks, the Fund is proportionately subject to stock market risk: This is the chance that stock prices overall will decline. Stock markets tend to move in cycles, with periods of rising prices and periods of falling prices. An investment in the Vanguard LifeStrategy Conservative Growth Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. (VSCGX)‌ The Fund seeks to provide current income and low to moderate capital appreciation. The Fund invests in other Vanguard mutual funds according to a fixed formula that reflects an allocation of approximately 60% of the Fund’s assets to bonds and 40% to common stocks. The targeted percentage of the Fund’s assets allocated to each of the underlying funds is: • Vanguard Total Bond Market II Index Fund – 42% • Vanguard Total Stock Market Index Fund – 24% • Vanguard Total International Bond Index Fund – 18% • Vanguard Total International Stock Index Fund – 16% The Fund’s indirect bond holdings are a diversified mix of short-, intermediate-, and long-term U.S. government, U.S. agency, and investment- investment-grade U.S. corporate bonds; mortgage-backed and asset-asset- backed securities; and government, agency, corporate, and securitized investment- investment-grade foreign bonds issued in currencies other than the U.S. dollar (but hedged by Vanguard to minimize foreign currency exposure). The Fund’s indirect stock holdings are a diversified mix of U.S. and foreign large-, mid-, and small-capitalization stocks. The Fund is subject to the risks associated with the stock and bond markets, any of which could cause an investor to lose money. However, because fixed income securities such as bonds usually are less volatile than stocks and because the Fund invests more than half of its assets in fixed income securities, the Fund’s overall level of risk should be low to moderate. The principal risks of investing in this fund are: Interest Rate Risk, Credit Risk, Income Risk, Call Risk, Country/Regional Risk, Currency Risk, Currency Hedging Risk, and Stock Market Risk. Risks Associated with Investment in Bonds With a target allocation of approximately 60% of its assets in bonds, the Fund is proportionately subject to bond risks, including the following: This is the chance that bond prices will decline because of rising interest rates.

Income Risk. This is the chance that an underlying fund’s income will decline because of falling interest rates. If an underlying fund holds securities that are callable, the underlying fund’s income may decline because of call risk: This is the chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupon rates or interest rates before their maturity dates. An underlying fund would then lose any price appreciation above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the underlying fund’s income. Risks Associate with Investment in Currency-Hedged Foreign Bonds The Fund is also subject to the following risks associated with investments in currency-hedged foreign bonds: Country/Regional Risk This is the chance that world events — such as political upheaval, financial troubles, or natural disasters — will adversely affect the value and/or liquidity of securities issued by foreign governments, government agencies, or companies. This is the chance that the currency hedging transactions entered into by the underlying international bond fund may not perfectly offset the fund’s foreign currency exposure. With a target allocation of approximately 20% of its assets in stocks, the Vanguard LifeStrategy Growth Fund is proportionately subject to stock market risk: This is the chance that stock prices overall will decline. Stock markets tend to move in cycles, with periods of rising prices and periods of falling prices. An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. (VASGX)‌ The Fund seeks to provide capital appreciation and some current income and low to moderate capital appreciationincome. The Fund invests in other Vanguard mutual funds according to a fixed formula that reflects an allocation of approximately 6080% of the Fund’s assets to bonds common stocks and 4020% to common stocksbonds. The targeted percentage of the Fund’s assets allocated to each of the underlying funds is: • Vanguard Total Stock Market Index Fund – 48% • Vanguard Total International Stock Index Fund – 32% • Vanguard Total Bond Market II Index Fund – 42% • Vanguard Total Stock Market Index Fund – 2414% • Vanguard Total International Bond Index Fund – 186% • Vanguard Total International Stock Index Fund – 16% The Fund’s indirect stock holdings are a diversified mix of U.S. and foreign large-, mid-, and small- capitalization stocks. The Fund’s indirect bond holdings are a diversified mix of short-, intermediate-, and long-term U.S. government, U.S. agency, and investment- investment-grade U.S. corporate bonds; mortgage-backed and asset-backed securities; and government, agency, corporate, and securitized investment- investment-grade foreign bonds issued in currencies other than the U.S. dollar (but hedged by Vanguard to minimize foreign currency exposure). The Fund’s indirect stock holdings are a diversified mix of U.S. and foreign large-, mid-, and small-capitalization stocks. The Fund is subject to the risks associated with the stock and bond markets, any of which could cause an investor to lose money. However, because fixed income securities such as bonds usually are less volatile than stocks and because the Fund invests more than half of its assets in fixed income securities, the Fund’s overall level of risk should be low to moderate. The principal risks of investing in this fund are: Interest Rate Risk, Credit Risk, Income Risk, Call Risk, Country/Regional Risk, Currency Risk, Currency Hedging Risk, and Stock Market Risk. With a target allocation of approximately 60% of its assets in bonds, the Fund is proportionately subject to bond risks, including the following: This is the chance that bond prices will decline because of rising interest rates.

Income Risk. This is the chance that an underlying fund’s income will decline because of falling interest rates. If an underlying fund holds securities that are callable, the underlying fund’s income may decline because of call risk: This is the chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupon rates or interest rates before their maturity dates. An underlying fund would then lose any price appreciation above the bond’s call price and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the underlying fund’s income. The Fund is also subject to the following risks associated with investments in currency-hedged foreign bonds: Country/Regional Risk This is the chance that world events—such as political upheaval, financial troubles, or natural disasters—will adversely affect the value and/or liquidity of securities issued by foreign governments, government agencies, or companies. This is the chance that the currency hedging transactions entered into by the underlying international bond fund may not perfectly offset the fund’s foreign currency exposure. With a target allocation of approximately 20% of its assets in stocks, the Fund is proportionately subject to stock market risk: This is the chance that stock prices overall will decline. Stock markets tend to move in cycles, with periods of rising prices and periods of falling prices. An investment in the Fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund seeks to provide capital appreciation and some current income and low to moderate capital appreciationincome. The Fund invests in other Vanguard mutual funds according to a fixed formula that reflects an allocation of approximately 6080% of the Fund’s assets to bonds common stocks and 4020% to common stocksbonds. The targeted percentage of the Fund’s assets allocated to each of the underlying funds is: • Vanguard Total Stock Market Index Fund – 48% • Vanguard Total International Stock Index Fund – 32% • Vanguard Total Bond Market II Index Fund – 42% • Vanguard Total Stock Market Index Fund – 2414% • Vanguard Total International Bond Index Fund – 186% • Vanguard Total International Stock Index Fund – 16% The Fund’s indirect stock holdings are a diversified mix of U.S. and foreign large-, mid-, and small-capitalization stocks. The Fund’s indirect bond holdings are a diversified mix of short-, intermediate-, and long-term U.S. government, U.S. agency, and investment- grade U.S. corporate bonds; mortgage-backed and asset-backed securities; and government, agency, corporate, and securitized investment- grade foreign bonds issued in currencies other than the U.S. dollar (but hedged by Vanguard to minimize foreign currency exposure). The Fund’s indirect stock holdings are a diversified mix of U.S. and foreign large-, mid-, and small-capitalization stocks. The Fund is subject to the risks associated with the stock and bond markets, any of which could cause an investor to lose money. However, because fixed income securities such as bonds usually are less volatile than stocks and because the Fund invests more than half of its assets in fixed income securities, the Fund’s overall level of risk should be low to moderate. The principal risks of investing in this fund are: Interest Rate Risk, Credit Risk, Income Risk, Call Risk, Country/Regional Risk, Currency Risk, Currency Hedging Risk, and Stock Market Risk. With a target allocation of approximately 60% of its assets in bonds, the Fund is proportionately subject to bond risks, including the following: This is the chance that bond prices will decline because of rising interest rates.