Strategy and policy
The portfolio invests in one Vanguard bond index fund and two Vanguard stock index funds according to a formula that results in an allocation of 75% of assets to investment-grade U.S. bonds and 25% of assets to stocks. The percentages of the portfolio’s assets allocated to each underlying fund are: 75% Vanguard Total Bond Market II Index Fund, 17.5% Vanguard Institutional Total Stock Market Index Fund, and 7.5% Vanguard Total International Stock Index Fund.
Through its ownership of the bond fund, the portfolio indirectly holds a mix of bonds—including government, corporate, and international dollar-denominated bonds, as well as mortgage-backed and asset-backed securities—that represents a wide spectrum of public, investment-grade, taxable fixed income securities in the United States with maturities of more than 1 year. Through its ownership of the two stock funds, the portfolio also indirectly owns large-capitalization U.S. stocks, some mid- and small-capitalization U.S. stocks, and a small amount of international stocks.
The portfolio invests in three Vanguard funds. Each underlying fund follows its own investment policies.