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Vanguard Lifetime Income Program - Short-Term Investment-Grade Portfolio
Risk Attributes

Historic Volatility Measures as of 07/31/2015

BenchmarkR-squared* Beta*
Barclays U.S. 1-5 Year Credit Bond Index0.960.86
Barclays U.S. Aggregate Bond Index

*R-squared and beta are calculated from trailing 36-month fund returns relative to the associated benchmark.

Risks Associated with Conservative Funds

Vanguard funds are classified as conservative if their share prices are expected to remain stable or to fluctuate only slightly. Keep in mind that investments that offer stability of principal typically are the most vulnerable to income risk—the possibility that the income from the investment will fluctuate over brief periods—and tend to produce lower long-term returns than riskier assets. Such funds are appropriate for the short-term reserves portion of a long-term investment portfolio, for investors with short-term investment horizons (no longer than three years), and for investors whose tolerance for share-price fluctuations is very low or whose employment or financial situation is precarious.

Plain Talk About Risk

The portfolio is designed as a low-risk investment, but you could still lose money by investing in it. The portfolio’s performance could be hurt by:

  • Income risk: The chance that the fund’s income will decline because of falling interest rates.
  • Interest rate risk: The chance that bond prices overall will decline because of rising interest rates.
  • Credit risk: The chance that a bond issuer will fail to pay interest and principal in a timely manner, or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline.
  • Call risk: The chance that during periods of falling interest rates, issuers of callable bonds may call (redeem) securities with higher coupons or interest rates before their maturity dates. The 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 fund’s income.
  • Manager risk: The chance that poor security selection or focus on securities in a particular sector, category, or group of companies will cause the fund to underperform relevant benchmarks or other funds with a similar investment objective.