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 Vanguard LifeStrategy Conservative Growth Fund (VSCGX) continued 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 (VSMGX) Investment Objective The Fund seeks to provide capital appreciation and 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 60% of the Fund’s assets to common stocks and 40% to bonds. The targeted percentage of the Fund’s assets allocated to each of the underlying funds is: • Vanguard Total Stock Market Index Fund – 36% • Vanguard Total Bond Market II Index Fund – 28% • Vanguard Total International Stock Index Fund – 24% • Vanguard Total International Bond Index Fund – 12% 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 Vanguard LifeStrategy Conservative Growth Fund (VSCGX) continued 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. Currency/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. Risks Associated with Investment in the Stock Market Stock Market Risk With a target allocation of approximately 4020% 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 Conservative Growth Fund (VSMGX) VSCGX)‌ Investment Objective The Fund seeks to provide capital appreciation current income and a low to moderate level of current incomecapital appreciation. Principal Investment Strategies 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 common stocks bonds and 40% to bondscommon stocks. The targeted percentage of the Fund’s assets allocated to each of the underlying funds is: • Vanguard Total Stock Market Index Fund – 36% • Vanguard Total Bond Market II Index Fund – 2842% • Vanguard Total International Stock Market Index Fund – 24% • Vanguard Total International Bond Index Fund – 1218% The Fund’s indirect stock holdings are a diversified mix of U.S. and foreign large-, mid-, and small-capitalization stocks. • Vanguard Total International Stock Index Fund – 16% The Fund’s indirect bond holdings are a diversified mix of short-,intermediate-short-, intermediate-, and long-term U.S. government, U.S. agency, and investment-grade U.S. corporate bonds; mortgage-backed and asset-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. 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. 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: 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. 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 Vanguard LifeStrategy Conservative Growth Fund (VSCGX) continued 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. 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. Risks Associated with Investment in the Stock Market Stock Market Risk 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. Risks Associated with Investment in Foreign Stocks 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 (VSMGX) VSMGX)‌ Investment Objective The Fund seeks to provide capital appreciation and 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 60% of the Fund’s assets to common stocks and 40% to bonds. The targeted percentage of the Fund’s assets allocated to each of the underlying funds is: • Vanguard Total Stock Market Index Fund – 36% • Vanguard Total Bond Market II Index Fund – 28% • Vanguard Total International Stock Index Fund – 24% • Vanguard Total International Bond Index Fund – 12% 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-short-, intermediate-, and long-term U.S. government, U.S. agency, and investment-grade U.S. corporate bonds; mortgage-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).