The portfolio employs an indexing investment approach designed to track the performance of the FTSE Global All Cap ex US Index, a float-adjusted market-capitalization-weighted index designed to measure equity market performance of companies located in developed and emerging markets, excluding the United States. The index includes approximately 5,800 stocks of companies located in over 45 countries. The portfolio intends to obtain its exposure to the stocks in the index by investing all, or substantially all, of its assets in a mix of Vanguard equity index funds (underlying funds). The portfolio’s allocations to the underlying funds will change over time as the composition of the index changes.
- Each underlying fund may invest, to a limited extent, in derivatives. Generally speaking, a derivative is a financial contract whose value is based on the value of a financial asset (such as a stock, a bond, or a currency), a physical asset (such as gold, oil, or wheat), a market index (such as the S&P 500 Index), or a reference rate (such as LIBOR). Investments in derivatives may subject the underlying funds to risks different from, and possibly greater than, those of investments directly in the underlying securities or assets. The underlying funds will not use derivatives for speculation or for the purpose of leveraging (magnifying) investment returns.
- The portfolio‘s daily cash balance may be invested in one or more Vanguard CMT Funds, which are very low-cost money market funds. When investing in a Vanguard CMT Fund, the portfolio bears its proportionate share of the expenses of the CMT Fund in which it invests. Vanguard receives no additional revenue from portfolio assets invested in a Vanguard CMT Fund.
- The portfolio may temporarily depart from its normal investment policies and strategies when the advisor believes that doing so is in the portfolio‘s best interest, so long as the alternative is consistent with the portfolio‘s investment objective. For instance, the portfolio may invest beyond its normal limits in derivatives or exchange traded funds that are consistent with the portfolio‘s objective when those instruments are more favorably priced or provide needed liquidity, as might be the case when the portfolio receives large cash flows that it cannot prudently invest immediately.