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: 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. Currency/Hedging 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. 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. Vanguard LifeStrategy Growth Fund (VASGX) Investment Objective The Fund seeks to provide capital appreciation and some current income. Principal Investment Strategies The Fund invests in other Vanguard mutual funds according to a fixed formula that reflects an allocation of approximately 80% of the Fund’s assets to common stocks and 20% to bonds. 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 – 14% • Vanguard Total International Bond Index Fund – 6% 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).

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: 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. Currency/Hedging 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. 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. Appendix I - Summaries of the Underlying Mutual Funds Risk Category - Vanguard LifeStrategy Income Fund Vanguard LifeStrategy Conservative Growth Fund Vanguard LifeStrategy Moderate Growth Fund Vanguard LifeStrategy Growth Fund (VASGX) Investment Objective The Fund seeks to provide capital appreciation and some current income. Principal Investment Strategies The Fund invests in other Vanguard mutual funds according to a fixed formula that reflects an allocation of approximately 80% of the Fund’s assets to common stocks and 20% to bonds. The targeted percentage of the Fund’s assets allocated to each of the underlying funds is: • Vanguard Total Call Risk Country/Regional Risk Credit Risk Currency Hedging Risk Currency Risk Income Risk Interest Rate Risk Stock Market Index Fund – 48% • Vanguard Total International Stock Index Fund – 32% • Vanguard Total Bond Market Risk Participation Agreement APPENDIX II Index Fund – 14% • Vanguard Total International Bond Index Fund – 6% The Fund’s indirect stock holdings are I am entering into this legally binding Participation Agreement (“Agreement”) with the Treasurer in order to establish a diversified mix of U.S. STABLE Account in the Plan. I am legally competent 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 over the U.S. dollar (but hedged by Vanguard to minimize foreign currency exposure).age of

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: 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. Currency/companies.‌ Currency Hedging 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: 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. Vanguard LifeStrategy Conservative Growth Fund (VASGX) VSCGX)‌‌‌‌‌‌‌‌‌‌‌ Investment Objective The Fund seeks to provide current income and low to moderate capital appreciation and some current incomeappreciation. Principal Investment Strategies The Fund invests in other Vanguard mutual funds according to a fixed formula that reflects an allocation of approximately 8060% of the Fund’s assets to common stocks bonds and 2040% to bondscommon 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 – 4824% • Vanguard Total International Bond Index Fund – 18% • Vanguard Total International Stock Index Fund – 3216% • Vanguard Total Bond Market II Index Fund – 14% • Vanguard Total International Bond Index Fund – 6% 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. Principal Risks 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. Vanguard LifeStrategy Conservative Growth Fund Underlying Investment Risks 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: Interest Rate Risk 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: 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. Currency/Hedging 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 40% of its assets in stocks, the Fund is proportionately subject to stock market risk:‌‌ 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. The Fund is also subject to the following risks associated with investments in foreign stocks: Country/Regional Risk This is the chance that world events—such as political upheaval, financial troubles, or natural disasters—will adversely affect the value of securities issued by companies in foreign countries or regions. Currency Risk This is the chance that the value of a foreign investment, measured in U.S. dollars, will decrease because of unfavorable changes in currency exchange rates. Country/regional risk and currency risk are especially high in emerging markets. 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. Vanguard LifeStrategy Moderate Growth Fund (VASGX) VSMGX)‌‌‌‌‌‌‌‌ Investment Objective The Fund seeks to provide capital appreciation and some a low to moderate level of current income. Principal Investment Strategies The Fund invests in other Vanguard mutual funds according to a fixed formula that reflects an allocation of approximately 8060% of the Fund’s assets to common stocks and 2040% to bonds. 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 – 3236% • Vanguard Total Bond Market II Index Fund – 1428% • Vanguard Total International Stock Index Fund – 24% • Vanguard Total International Bond Index Fund – 612% 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).

Income Risk. This is the chance that an underlying fund’s income will decline because of falling interest rates. Call Risk If an underlying fund holds securities that are callable, the underlying fund’s income may decline because of call risk: 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—events — such as political upheaval, financial troubles, or natural disasters—disasters — will adversely affect the value and/or liquidity of securities issued by foreign governments, government agencies, or companies. Currency/Hedging 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. 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. Vanguard LifeStrategy Growth Fund (VASGX) VASGX)‌ Investment Objective The Fund seeks to provide capital appreciation and some current income. Principal Investment Strategies The Fund invests in other Vanguard mutual funds according to a fixed formula that reflects an allocation of approximately 80% of the Fund’s assets to common stocks and 20% to bonds. 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 – 14% • Vanguard Total International Bond Index Fund – 6% The Fund’s indirect stock holdings are a diversified mix of U.S. and foreign large-, mid-, and small-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).

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: 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. Currency/Hedging 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. 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. Vanguard LifeStrategy Growth Fund (VASGX) VASGX)‌‌‌‌‌‌‌‌‌‌‌ Investment Objective The Fund seeks to provide capital appreciation and some current income. Principal Investment Strategies The Fund invests in other Vanguard mutual funds according to a fixed formula that reflects an allocation of approximately 80% of the Fund’s assets to common stocks and 20% to bonds. 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 – 14% • Vanguard Total International Bond Index Fund – 6% 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).