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. 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. 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. 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 Call Risk Country/Regional Risk Credit Risk Currency Hedging Risk Currency Risk Income Risk Interest Rate Risk Stock Market Risk I am entering into this legally binding Participation Agreement (“Agreement”) with the Treasurer in order to establish a STABLE Account in the Plan. I am legally competent and over the age of