Strategy and policy
The portfolio invests in three Vanguard bond funds and one Vanguard short-term reserves account, resulting in an allocation of 75% of assets to investment-grade bonds and 25% of assets to short-term investments. The percentages of the portfolio’s assets allocated to each underlying fund are: 34.5% Vanguard Total Bond Market II Index Fund, 22.5% Vanguard Total International Bond Index Fund, 18% Vanguard Short-Term Inflation-Protected Securities Index Fund, and 25% Vanguard Short-Term Reserves Account.
Through its ownership of two of the bond funds, the portfolio indirectly holds a mix of bonds—including government, government agency, corporate, securitized non-U.S. investment-grade fixed income investments and international dollar-denominated bonds, as well as mortgage-based and asset-backed securities—that represents a wide spectrum of public, investment-grade, taxable fixed income securities in the United States and abroad, all with maturities of more than 1 year. The remainder of the portfolio invests in inflation-protected public obligations of the U.S. Treasury with remaining maturities of less than 5 years, funding agreements issued by insurance companies, and high-quality, short-term money market instruments having a dollar-weighted average maturity of 60 days or less and a dollar-weighted average life of 120 days or less.
The portfolio invests in four Vanguard funds. Each underlying fund follows its own investment policies.