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Vanguard - Risk Attributes

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Vanguard Moderate Growth Portfolio
Risk Attributes

Historic Volatility Measures as of 03/31/2014

BenchmarkR-squared* Beta*
Vanguard 529 Moderate Growth Composite1.001.00
Dow Jones U.S. Total Stock Market Index

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

Risks Associated with Moderate Funds

Vanguard funds classified as moderate are subject to a moderate degree of fluctuations in share prices. This price volatility may be due to one of several factors: 1) a fund may hold longer-term bonds, which are subject to wide swings in value as interest rates rise and fall; 2) a fund may hold income-oriented common stocks; and 3) a fund may hold a balance of both stocks and bonds. In general, such funds are appropriate for investors who have a relatively long investment horizon (more than five years), are able to tolerate moderate-to-high short-term fluctuations in price, and wish to achieve some combination of current income and modest growth potential.


Plain Talk About Risk

The portfolio’s total return, like the prices of stocks and bonds generally, will fluctuate within a wide range, so an investor could lose money over short or even long periods. The portfolio is also subject to:

  • Stock market risk. This is the risk that an underlying fund may experience sudden, unpredictable declines in value, as well as periods of poor performance, because of a general decline in the stock market. Because stock prices go up and down, the value of the fund’s shares may go up and down.
  • Interest rate risk. This is the risk that the value of bonds held by an underlying fund will decline because of rising interest rates. Interest rate risk is higher for long-term bond funds and lower for short-term bond funds.
  • Credit risk. This is the risk that an issuer of a bond owned by an underlying fund will default by failing to make timely payments of principal and interest.
  • Income risk. This is the risk that falling interest rates will cause an underlying fund’s income to decline. Income risk is generally higher for short-term bond funds and lower for long-term bond funds.
  • Call/prepayment risk. This is the risk that during periods of falling interest rates, issuers will call—or repay—higher-yielding bonds that are callable before their maturity dates. The underlying fund would lose potential price appreciation and would be forced to reinvest the unanticipated proceeds at lower interest rates, resulting in a decline in the underlying fund’s income. For mortgage-backed securities, this risk is known as prepayment risk.
  • Foreign securities risk. Underlying funds that invest in foreign securities are subject to country risk, which is the chance that domestic events, such as political upheaval, financial troubles, or a natural disaster, will weaken a country’s securities markets. They are also subject to currency risk, which is the chance that investments in a particular country will decrease in value if the U.S. dollar rises in value against that country’s currency. Finally, there exists investment style risk, which is the chance that returns from foreign stocks will trail returns from U.S. stocks.
  • Derivatives risk. Each of the underlying funds in which the portfolio invest, may, to a limited extent, invest in derivatives, which may involve risks different from, and possibly greater than, those of traditional investments. To help stay fully invested, and to reduce transaction costs, the funds may invest in stock futures and options contracts, warrants, convertible securities, and swap agreements, which are types of derivatives. The underlying funds will not use derivatives for speculative purposes or as leveraged investments that magnify gains or losses.
  • Index sampling risk. This is the risk that the securities owned by an underlying fund that uses the sampling method of indexing will not provide investment performance matching that of the Fund’s target index.

    Glossary

    For more information about The Vanguard 529 College Savings Plan, download a Program Description or request one by calling 866-734-4530. The Program Description includes investment objectives, risks, charges, expenses, and other information; read and consider it carefully before investing. Vanguard Marketing Corporation, Distributor and Underwriter. Please note: Before investing in any 529 plan, you should consider whether your or the beneficiary's home state offers a 529 plan that provides its taxpayers with favorable state tax and other benefits that are only available through investment in the home state's 529 plan. You also should consult your financial, tax, or other adviser to learn more about how state-based benefits (or any limitations) would apply to your specific circumstances. You also may wish to contact directly your home state's 529 plan[s], or any other 529 plan, to learn more about those plans' features, benefits, and limitations. Keep in mind that state-based benefits should be one of many appropriately weighted factors to be considered when making an investment decision.

    The Vanguard 529 College Savings Plan is a Nevada Trust administered by the Board of Trustees of the College Savings Plans of Nevada, chaired by State Treasurer Kate Marshall. 

    The Vanguard Group, Inc., serves as the Investment Manager and through its affiliate, Vanguard Marketing Corporation, markets and distributes the Plan. Upromise Investments, Inc., serves as Program Manager and has overall responsibility for the day-to-day operations, including effecting transactions. The Plan’s portfolios, although they invest in Vanguard mutual funds, are not mutual funds. Investment returns are not guaranteed and you could lose money by investing in the Plan.

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