Vanguard Conservative Growth Index Portfolio
The Vanguard Conservative Growth Index Portfolio invests in one Vanguard bond index fund and two Vanguard stock index funds resulting in an allocation of 75% of assets to investment-grade U.S. bonds and 25% of assets to stocks. Through its ownership of the bond fund, the option indirectly holds a mix of securities that approximates the Barclays Capital U.S. Aggregate Float Adjusted Index. The Index represents a wide spectrum of public, investment-grade, taxable fixed-income securities in the United States. These include government, corporate, and international dollar-denominated bonds, as well as mortgage-backed and asset-backed securities, all with maturities of more than one year. The bond fund maintains a dollar-weighted average maturity consistent with that of the Index, which ranges between 5 and 10 years.

Through its ownership of the two stock funds, the option indirectly owns large-capitalization U.S. stocks and, to a lesser extent, international stocks and mid- and small-capitalization U.S. stocks. Vanguard Conservative Growth Index Portfolio invests in one Vanguard bond index fund and two Vanguard stock index funds resulting in an allocation of 75% of assets to investment-grade U.S. bonds and 25% of assets to stocks.

 Vanguard Moderate Growth Index Portfolio
The Vanguard Moderate Growth Index Portfolio invests in two Vanguard stock index funds and one Vanguard bond index fund resulting in an allocation of 50% of assets to stocks and 50% of assets to investment-grade U.S. bonds. Through its ownership of the two stock funds, the option invests in two Vanguard stock index funds which own large-capitalization U.S. stocks and, to a lesser extent, international stocks and mid- and small-capitalization U.S. stocks.

Through its ownership of the bond fund, the option also indirectly holds a mix of securities that approximates the Barclays Capital U.S. Aggregate Float Adjusted Index. The Index represents a wide spectrum of public, investment-grade, taxable  fixed-income securities in the United States. The bond fund maintains an average maturity which ranges between 5 and 10 years.

Vanguard Wellington Option
The Vanguard Wellington Option invests in the Vanguard Wellington Fund, which invests 60-70% of its assets in dividend-paying and, to a lesser extent, non-dividend-paying common stocks of established, medium-size and large companies. In choosing these companies, the advisor seeks those that appear to be undervalued but have prospects for improvement. These stocks are commonly referred to as value stocks.

The remaining 30-40% of the Fund’s assets are invested mainly in fixed-income securities that the advisor believes will generate a reasonable level of income. These securities include investment-grade corporate bonds, with some exposure to U.S. Treasury and government agency bonds, and mortgage-backed securities. The Vanguard Wellington Option is actively managed.

Vanguard Growth Index Portfolio
The Vanguard Growth Index Portfolio invests in two Vanguard stock index funds and one Vanguard bond index fund resulting in an allocation of 75% of assets to stocks and 25% of assets to investment-grade U.S. bonds. The percentages of the option’s assets allocated to each Vanguard underlying mutual fund are shown below.

Through its ownership of the two stock funds, the option indirectly owns primarily large-capitalization U.S. stocks and, to a lesser extent, international stocks and mid- and small-capitalization U.S. stocks.

Through its ownership of the bond fund, the option also indirectly holds a mix of securities that approximates the Barclays Capital U.S. Aggregate Float Adjusted Index. The Index represents a wide spectrum of public, investment-grade, taxable  fixed-income securities in the United States. The bond fund maintains a dollar-weighted average maturity consistent with that of the Index, which ranges between 5 and 10 years.