Vanguard Strategic Equity Option (U.S. Small- and Mid-Cap Stocks) – Investment Strategy

The Vanguard Strategic Equity Option invests 100% of its assets in Vanguard Strategic Equity Fund. The fund invests in small- and mid-capitalization domestic equity securities based on the advisor's assessment of the relative return potential of the securities. The advisor selects securities that he or she believes offer an appropriate balance between strong growth prospects and reasonable valuations relative to their industry peers. The advisor does this by using a quantitative process to evaluate all of the securities in the fund’s benchmark while seeking to maintain a risk profile similar to that of the benchmark.

Vanguard Extended Market Index Option (U.S. Small- and Mid-Cap Stocks) – Investment Strategy

The Vanguard Extended Market Index Option invests 100% of its assets in Vanguard Extended Market Index Fund, which employs an indexing investment approach designed to track the performance of the Standard & Poor's Completion Index. The index is a broadly diversified index of stocks of small- and midsize U.S. companies. The S&P Completion Index contains all of the U.S. common stocks regularly traded on the New York Stock Exchange and the NASDAQ over-the-counter market, except those stocks included in the S&P 500 Index.

The fund invests by sampling the index, meaning that it holds a broadly diversified collection of securities that, in the aggregate, approximates the full index in terms of key characteristics. These characteristics include industry weightings and market capitalization, as well as certain financial measures, such as price to earnings ratio and dividend yield.

When the Vanguard Extended Market Index Option is combined with the Vanguard 500 Index Option, investors may obtain exposure to the entire U.S. stock market.

Vanguard Morgan Growth Option (U.S. Mid-Cap and Large-Cap Stocks: Growth) –Investment Strategy

The Vanguard Morgan Growth Option invests 100% of assets in Vanguard Morgan Growth Fund, which uses an active management, multi-manager approach. The fund invests mainly in the stocks of mid- and large-capitalization U.S. companies whose revenues and/or earnings are expected to grow faster than those of the average company in the market. The fund's investment advisors use distinct approaches ​– fundamental and qualitative – to actively manage independent sub-portfolios that provide broad diversification. Vanguard may invest a small portion of the fund's assets in stock index futures and/or shares of exchange-traded funds when doing so will reduce the fund's transaction costs or add value because the instruments are favorably priced.

Vanguard Windsor II Option (U.S. Large-Cap Stocks: Value) - Investment Strategy

The Vanguard Windsor II Option invests 100% of its assets in Vanguard Windsor II Fund. The fund invests mainly in large- and mid-capitalization companies whose stocks are considered by an advisor to be undervalued. Undervalued stocks are generally those that are out of favor with investors and that the advisor feels are trading at prices that are below average in relation to such measures as earnings and book value. These stocks often have above-average dividend yields.

The fund achieves diversification through a multi-manager structure, including both fundamental and qualitative styles. The fund's advisors work independently, each employing their own process and strategy through active management. Vanguard may invest a small portion of the fund's assets in stock index futures and/or shares of exchange-traded funds when doing so will reduce the fund's transaction costs or add value because the instruments are favorably priced.

Vanguard 500 Index Option (U.S. Large-Cap Stocks) – Investment Strategy

The Vanguard 500 Index Option invests 100% of its assets in Vanguard Institutional Index Fund, which employs an indexing investment approach designed to track the performance of the Standard & Poor's 500 Index. The index is a widely recognized benchmark of U.S. stock market performance that is dominated by the stocks of large U.S. companies. The fund attempts to replicate the target index by investing all, or substantially all, of its assets in the stocks that make up the index, holding each stock in approximately the same proportion as its weighting in the index.