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By size, using mega-cap By size, using mega-cap Vanguard ETF ® portfolio strategies Options for implementing equity and bond exposure in your clients’ portfolios FOR FINANCIAL ADVISORS AND INSTITUTIONS ONLY. NOT FOR PUBLIC DISTRIBUTION.

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By size, using mega-cap

By size, using mega-capVanguard ETF® portfolio strategiesOptions for implementing equity and bond exposure in your clients’ portfolios

FOR FINANCIAL ADVISORS AND INSTITUTIONS ONLY. NOT FOR PUbLIC DISTRIbUTION.

FFfFOR FINANCIAL ADVISORS AND INSTITUTIONS ONLY. NOT FOR PUbLIC DISTRIbUTION.

Core Core portfolio example 1

Domestic equityDomestic equity strategies 3 By size 3 By size, using mega-cap 3 By size, using large-cap 3 By sector 4 By size and style 4

S&P domestic equity strategies 5 By size 5 By size and style 5

Russell domestic equity strategies 6 By size 6 By size and style 6

International equity International equity strategies 7 By size 7 By size and region 7

Global equity Global equity strategies 9 By size 9 By size and region 9

Vanguard is not responsible for determining the suitability for any underlying client on whose behalf you use this information. As a financial advisor, it remains your responsibility to make a suitability determination for your clients, so you should review carefully the information presented and make your own determination as to its appropriateness before you rely on it.

Contents

FOR FINANCIAL ADVISORS AND INSTITUTIONS ONLY. NOT FOR PUbLIC DISTRIbUTION.

Domestic fixed incomeTargeted duration strategy 11 Broad bond market strategy 11

Corporate/government strategy Excludes mortgage-backed securities 12

Government overweight strategy Using 100% governments 13

Using governments and corporates 14

Using governments, corporates, and mortgage-backed securities 15

Corporate overweight strategy Using 100% corporates 16

Using corporates and governments 17

Using corporates, governments, and mortgage-backed securities 18

Inflation-protection strategy 19

Liability-driven investing strategy 20 Portfolio with a 40% fixed income weighting 20 Portfolio with a 60% fixed income weighting 21

Global fixed incomeGlobal fixed income strategy 23

AppendixSector weightings and portfolio characteristics 24

FFfFOR FINANCIAL ADVISORS AND INSTITUTIONS ONLY. NOT FOR PUbLIC DISTRIbUTION.

When it comes to constructing and maintaining your clients’ investment portfolios, having flexibility and choice is key.This guide contains sample strategies that show you potential options for fine-tuning your clients’ portfolio allocations to achieve their investment objectives.

Vanguard ETFs® offer you a wide range of investment choices for your clients, all backed by the Vanguard name and standards of scrutiny.

All data shown are as of December 31, 2014, unless otherwise noted. Strategy totals may not equal 100% due to rounding.

FOR FINANCIAL ADVISORS AND INSTITUTIONS ONLY. NOT FOR PUbLIC DISTRIbUTION. 1

By size

Core

Core portfolio example

25% Total International Stock VXUS 28% Total Stock Market VTI 19% Total Bond Market BND 28% Total International Bond BNDX

Portfolio weighted expense ratio: 0.12%1

1 All portfolio weighted expense ratios referenced throughout this brochure were calculated using the expense ratios stated in each product’s most recent prospectus as of December 31, 2014. The products’ current expense ratios may be higher or lower than the figures used in the calculation.

By size, using mega-cap

By size

By size, using large-cap

FOR FINANCIAL ADVISORS AND INSTITUTIONS ONLY. NOT FOR PUbLIC DISTRIbUTION. 3

Achieving domestic equity exposure

72% Mega Cap MGC 14% Mid-Cap VO 13% Small-Cap VB 1% Micro-Cap (no Vanguard ETF)

Portfolio weighted expense ratio: 0.10%

100% Total Stock Market VTI

Portfolio weighted expense ratio: 0.05%

86% Large-Cap VV 13% Small-Cap VB 1% Micro-Cap (no Vanguard ETF)

Portfolio weighted expense ratio: 0.09%

Dom

estic equity

MSCI size MSCI using mega cap

MSCI using large cap MSCI by sector MSCI by size & styleMSCI size MSCI using mega cap

MSCI using large cap MSCI by sector MSCI by size & style

MSCI size MSCI using mega cap

MSCI using large cap MSCI by sector MSCI by size & style

By size and style

By sector

4 FFfFOR FINANCIAL ADVISORS AND INSTITUTIONS ONLY. NOT FOR PUbLIC DISTRIbUTION.

Achieving domestic equity exposure

40% Mega Cap Value MGV 32% Mega Cap Growth MGK 7% Mid-Cap Value VOE 7% Mid-Cap Growth VOT 7% Small-Cap Value VBR 6% Small-Cap Growth VBK 1% Micro-Cap (no Vanguard ETF)

Portfolio weighted expense ratio: 0.10%

19% Information Technology VGT 18% Financials VFH 14% Health Care VHT 13% Consumer Discretionary VCR 11% Industrials VIS

9% Consumer Staples VDC 8% Energy VDE 4% Materials VAW 3% Utilities VPU 2% Telecommunication Services VOX

Portfolio weighted expense ratio: 0.12%

MSCI size MSCI using mega cap

MSCI using large cap MSCI by sector MSCI by size & style

MSCI size MSCI using mega cap

MSCI using large cap MSCI by sector MSCI by size & style

By size and style

By size

FOR FINANCIAL ADVISORS AND INSTITUTIONS ONLY. NOT FOR PUbLIC DISTRIbUTION. 5

Achieving domestic equity exposure using S&P

80% S&P 500 VOO 20% Extended Market VXF

Portfolio weighted expense ratio: 0.06%

89% S&P 500 VOO 8% S&P Mid-Cap 400 IVOO 3% S&P Small-Cap 600 VIOO

Portfolio weighted expense ratio: 0.06%

45% S&P 500 Value VOOV 44% S&P 500 Growth VOOG 4% S&P Mid-Cap 400 Growth IVOG 4% S&P Mid-Cap 400 Value IVOV 2% S&P Small-Cap 600 Growth VIOG 2% S&P Small-Cap 600 Value VIOV

Portfolio weighted expense ratio: 0.16%

S&P by size 1 S&P by size 2 S&P by size & style

S&P by size 1 S&P by size 2 S&P by size & style

S&P by size 1 S&P by size 2 S&P by size & style

100% Russell 3000 VTHR

Portfolio weighted expense ratio: 0.15%

By size

By size and style

6 FFfFOR FINANCIAL ADVISORS AND INSTITUTIONS ONLY. NOT FOR PUbLIC DISTRIbUTION.

Achieving domestic equity exposure using Russell

92% Russell 1000 VONE 8% Russell 2000 VTWO

Portfolio weighted expense ratio: 0.12%

49% Russell 1000 Growth VONG 43% Russell 1000 Value VONV 4% Russell 2000 Growth VTWG 4% Russell 2000 Value VTWV

Portfolio weighted expense ratio: 0.13%

Russell by size 2 Russell by size & styleRussell

Russell by size 2 Russell by size & styleRussell

Russell by size 2 Russell by size & styleRussell

By size

FOR FINANCIAL ADVISORS AND INSTITUTIONS ONLY. NOT FOR PUbLIC DISTRIbUTION. 7

Achieving international equity exposure

90% FTSE All-World ex-US VEU

10% FTSE All-World ex-US Small-Cap VSS

Portfolio weighted expense ratio: 0.16%

100% Total International Stock VXUS

Portfolio weighted expense ratio: 0.14%

67% FTSE Developed Markets VEA 17% FTSE Emerging Markets VWO

10% FTSE All-World ex-US Small-Cap VSS

7% Canada (no Vanguard ETF)

Portfolio weighted expense ratio 0.11%

41% FTSE Europe VGK 26% FTSE Pacific VPL 17% FTSE Emerging Markets VWO

10% FTSE All-World ex-US Small-Cap VSS

7% Canada (no Vanguard ETF) 0% Israel (no Vanguard ETF)

Portfolio weighted expense ratio 0.13%

International equity

By size and region

MSCI Inter by size 2 MSCI Inter by size & region 1 MSCI Inter by size & region 2InternationalMSCI

MSCI Inter by size 2 MSCI Inter by size & region 1 MSCI Inter by size & region 2InternationalMSCI

MSCI Inter by size 2 MSCI Inter by size & region 1 MSCI Inter by size & region 2InternationalMSCI

MSCI Inter by size 2 MSCI Inter by size & region 1 MSCI Inter by size & region 2InternationalMSCI

By size

FOR FINANCIAL ADVISORS AND INSTITUTIONS ONLY. NOT FOR PUbLIC DISTRIbUTION. 9

Achieving global equity exposure

52% Total International Stock VXUS 48% Total Stock Market VTI

Portfolio weighted expense ratio: 0.09%

Global equity

52% Total Stock Market VTI 32% FTSE Developed Markets VEA 8% FTSE Emerging Markets VWO

5% FTSE All-World ex-US Small-Cap VSS

4% Canada (no Vanguard ETF)

Portfolio weighted expense ratio: 0.08%

46% Large-Cap VV 20% FTSE Europe VGK 12% FTSE Pacific VPL 8% FTSE Emerging Markets VWO 6% Small-Cap VB

5% FTSE All-World ex-US Small-Cap VSS

5% Canada and Israel (no Vanguard ETF)

Portfolio weighted expense ratio: 0.11%

By size and region

100% Total World Stock VT

Portfolio weighted expense ratio: 0.18%

MSCI Global by size 2 MSCI Global by size & region 1 MSCI Global by size & region 2

MSCI Global by size 2 MSCI Global by size & region 1 MSCI Global by size & region 2

MSCI Global by size 2 MSCI Global by size & region 1 MSCI Global by size & region 2

MSCI Global by size 2 MSCI Global by size & region 1 MSCI Global by size & region 2

FOR FINANCIAL ADVISORS AND INSTITUTIONS ONLY. NOT FOR PUbLIC DISTRIbUTION. 11

Broad bond market strategy

1 Duration is the measure of the sensitivity of bond and bond fund prices to interest rate movements. Vanguard is using option-adjusted duration, which incorporates the expected duration-shortening effect of an issuer’s embedded call provision.

2 Target duration can be subject to rounding.3 Average market duration as represented by that of the Barclays U.S. Aggregate Float Adjusted Index.

1 Expense Ticker Fund name Benchmark ratio Duration

BND Total Bond Market ETF Barclays U.S. Aggregate 0.08% 5.7 yrs. Float Adjusted Index

BSV Short-Term Bond ETF Barclays U.S. 1–5 Year 0.10 2.7 Government/Credit Float Adjusted Index

BLV Long-Term Bond ETF Barclays U.S. Long 0.10 14.7 Government/Credit Float Adjusted Index

Dom

estic fixed income

Target duration Avg. spread (years)2 BND BSV BLV above Treasury

2.70 0% 100% 0% 0.26% 3.00 12 88 0 0.29 3.50 29 71 0 0.33 4.00 46 54 0 0.37 4.50 63 37 0 0.41 5.00 79 21 0 0.45 5.70 100 0 0 0.50 6.00 96 0 4 0.53 6.50 91 0 9 0.57 7.00 85 0 15 0.61 7.50 80 0 20 0.64 8.00 74 0 26 0.68 8.50 69 0 31 0.72 9.50 63 0 37 0.76 10.00 50 0 50 0.85 11.00 37 0 63 0.93 14.70 0 0 100 1.19

3

1

12 FFfFOR FINANCIAL ADVISORS AND INSTITUTIONS ONLY. NOT FOR PUbLIC DISTRIbUTION.

Corporate/government strategyExcludes mortgage-backed securities

Expense Ticker Fund name Benchmark ratio Duration

BIV Intermediate-Term Barclays U.S. 5–10 Year 0.10% 6.4 yrs. Bond ETF Government/Credit Float Adjusted Index

BSV Short-Term Bond ETF Barclays U.S. 1–5 Year 0.10 2.7 Government/Credit Float Adjusted Index

BLV Long-Term Bond ETF Barclays U.S. Long 0.10 14.7 Government/Credit Float Adjusted Index

Target duration Avg. spread (years) BIV BSV BLV above Treasury

2.70 0% 100% 0% 0.26% 2.76 3 97 0 0.27 3.00 10 90 0 0.29 3.50 24 76 0 0.34 4.00 37 63 0 0.39 4.50 50 50 0 0.44 5.70 — — — 0.50 5.50 77 23 0 0.54 6.00 90 10 0 0.58 6.40 100 0 0 0.63 7.00 93 0 7 0.66 7.50 87 0 13 0.70 8.00 81 0 19 0.73 8.50 75 0 25 0.77 9.50 63 0 37 0.83 14.70 0 0 100 1.19

1 Average market duration as represented by that of the Barclays U.S. Aggregate Float Adjusted Index.

FOR FINANCIAL ADVISORS AND INSTITUTIONS ONLY. NOT FOR PUbLIC DISTRIbUTION. 13

Government overweight strategyUsing 100% governments

Target duration Avg. spread (years) VGSH VGIT VGLT above Treasury

1.90 100% 0% 0% 0.01% 2.50 82 18 0 0.01 3.00 67 33 0 0.01 3.50 52 48 0 0.01 4.00 37 63 0 0.01 4.50 22 78 0 0.01 5.30 0 100 0 0.01 5.50 0 98 2 0.01 6.00 0 94 6 0.01 6.50 0 89 11 0.01 7.00 0 85 15 0.02 7.50 0 81 19 0.02 8.00 0 76 24 0.02 8.50 0 72 28 0.02 9.00 0 68 32 0.02 9.50 0 63 37 0.02 10.00 0 59 41 0.02 11.00 0 51 50 0.02 12.00 0 42 58 0.03 13.00 0 33 67 0.03 14.00 0 25 75 0.03 16.90 0 0 100 0.04

Expense Ticker Fund name Benchmark ratio Duration

VGSH Short-Term Barclays U.S. 1–3 Year 0.12% 1.9 yrs. Government Bond ETF Government Float Adjusted Index

VGIT Intermediate-Term Barclays U.S. 3–10 Year 0.12 5.3 Government Bond ETF Government Float Adjusted Index

VGLT Long-Term Barclays U.S. Long 0.12 16.9 Government Bond ETF Government Float Adjusted Index

14 FFfFOR FINANCIAL ADVISORS AND INSTITUTIONS ONLY. NOT FOR PUbLIC DISTRIbUTION.

Government overweight strategyUsing governments and corporates (excludes mortgage-backed securities)

Expense Ticker Fund name Benchmark ratio Duration

BIV Intermediate-Term Barclays U.S. 5–10 Year 0.10% 6.4 yrs. Bond ETF Government/Credit Float Adjusted Index

VGSH Short-Term Barclays U.S. 1–3 Year 0.12 1.9 Government Bond ETF Government Float Adjusted Index

VGIT Intermediate-Term Barclays U.S. 3–10 Year 0.12 5.3 Government Bond ETF Government Float Adjusted Index

VGLT Long-Term Barclays U.S. Long 0.12 16.9 Government Bond ETF Government Float Adjusted Index

Target duration Avg. spread (years) BIV VGSH VGIT VGLT above Treasury

3.50 35% 65% 0% 0% 0.23% 3.77 41 59 0 0 0.26 4.00 46 54 0 0 0.30 4.25 52 48 0 0 0.33 4.60 60 40 0 0 0.38 4.75 60 37 3 0 0.38 5.00 60 29 11 0 0.38 5.25 60 21 19 0 0.38 5.50 60 14 26 0 0.38 5.75 60 7 33 0 0.38 6.00 60 0 40 0 0.38 6.50 60 0 35 5 0.38 7.00 60 0 31 9 0.38 7.50 60 0 27 13 0.38 8.00 60 0 22 18 0.38 8.50 60 0 18 22 0.39 9.00 60 0 14 26 0.39 10.60 60 0 0 40 0.39

1

FOR FINANCIAL ADVISORS AND INSTITUTIONS ONLY. NOT FOR PUbLIC DISTRIbUTION. 15

Government overweight strategyUsing governments, corporates, and mortgage-backed securities

Target duration Avg. spread (years) BND VGSH VGIT VGLT above Treasury

4.20 60% 40% 0% 0% 0.31% 4.25 60 37 3 0 0.31 4.50 60 30 10 0 0.31 4.75 60 23 17 0 0.31 5.00 60 15 25 0 0.31 5.50 60 0 40 0 0.31 5.70 100 0 0 0 0.50 5.75 60 0 38 2 0.31 6.00 60 0 36 4 0.31 6.25 60 0 34 6 0.31 6.50 60 0 31 9 0.31 6.75 60 0 29 11 0.31 7.00 60 0 27 13 0.31 7.50 60 0 23 17 0.31 8.00 60 0 18 22 0.31 8.50 60 0 14 26 0.31 9.00 60 0 10 30 0.31 9.50 60 0 6 34 0.32 10.14 60 0 0 40 0.32

Expense Ticker Fund name Benchmark ratio Duration

BND Total Bond Market ETF Barclays U.S. Aggregate 0.08% 5.7 yrs. Float Adjusted Index

VGSH Short-Term Barclays U.S. 1–3 Year 0.12 1.9 Government Bond ETF Government Float Adjusted Index

VGIT Intermediate-Term Barclays U.S. 3–10 Year 0.12 5.3 Government Bond ETF Government Float Adjusted Index

VGLT Long-Term Barclays U.S. Long 0.12 16.9 Government Bond ETF Government Float Adjusted Index

1 Average market duration as represented by that of the Barclays U.S. Aggregate Float Adjusted Index.

16 FFfFOR FINANCIAL ADVISORS AND INSTITUTIONS ONLY. NOT FOR PUbLIC DISTRIbUTION.

Corporate overweight strategyUsing 100% corporates

Expense Ticker Fund name Benchmark ratio Duration

VCSH Short-Term Barclays U.S. 1–5 Year 0.12% 2.8 yrs. Corporate Bond ETF Corporate Bond Index

VCIT Intermediate-Term Barclays U.S. 5–10 Year 0.12 6.4 Corporate Bond ETF Corporate Bond Index

VCLT Long-Term Barclays U.S. 10+ Year 0.12 13.8 Corporate Bond ETF Corporate Bond Index

Target duration Avg. spread (years) VCSH VCIT VCLT above Treasury

2.80 100% 0% 0% 0.86% 3.50 80 20 0 0.95 4.00 67 33 0 1.01 4.50 53 47 0 1.08 5.00 40 60 0 1.14 5.50 25 75 0 1.21 6.00 11 89 0 1.27 6.40 0 100 0 1.32 7.00 0 92 8 1.36 7.50 0 85 15 1.40 8.00 0 78 22 1.44 8.50 0 71 29 1.48 9.00 0 65 35 1.51 9.50 0 58 42 1.55 10.00 0 51 49 1.58 11.00 0 37 63 1.66 12.00 0 24 76 1.73 13.80 0 0 100 1.86

FOR FINANCIAL ADVISORS AND INSTITUTIONS ONLY. NOT FOR PUbLIC DISTRIbUTION. 17

Corporate overweight strategyUsing corporates and governments (excludes mortgage-backed securities)

Target duration Avg. spread (years) BIV VCSH VCIT VCLT above Treasury

3.23 12% 88% 0% 0% 0.83% 3.50 19 81 0 0 0.82 4.00 32 68 0 0 0.79 4.24 40 60 0 0 0.77 4.75 54 46 0 0 0.74 5.00 60 40 0 0 0.72 5.25 60 33 7 0 0.75 5.50 60 26 14 0 0.79 5.75 60 19 21 0 0.82 6.00 60 12 28 0 0.85 6.25 60 5 35 0 0.88 6.40 60 0 40 0 0.90 6.75 60 0 36 4 0.93 7.00 60 0 32 8 0.95 8.00 60 0 19 21 1.02 9.00 60 0 5 35 1.09

Expense Ticker Fund name Benchmark ratio Duration

BIV Intermediate-Term Barclays U.S. 5–10 Year 0.10% 6.4 yrs. Bond ETF Government/Credit Float Adjusted Index

VCSH Short-Term Barclays U.S. 1–5 Year 0.12 2.8 Corporate Bond ETF Corporate Bond Index

VCIT Intermediate-Term Barclays U.S. 5–10 Year 0.12 6.4 Corporate Bond ETF Corporate Bond Index

VCLT Long-Term Barclays U.S. 10+ Year 0.12 13.8 Corporate Bond ETF Corporate Bond Index

1

18 FFfFOR FINANCIAL ADVISORS AND INSTITUTIONS ONLY. NOT FOR PUbLIC DISTRIbUTION.

Corporate overweight strategyUsing corporates, governments, and mortgage-backed securities

Expense Ticker Fund name Benchmark ratio Duration

BND Total Bond Market ETF Barclays U.S. Aggregate 0.08% 5.7 yrs. Float Adjusted Index

VCSH Short-Term Barclays U.S. 1–5 Year 0.12 2.8 Corporate Bond ETF Corporate Bond Index

VCIT Intermediate-Term Barclays U.S. 5–10 Year 0.12 6.4 Corporate Bond ETF Corporate Bond Index

VCLT Long-Term Barclays U.S. 10+ Year 0.12 13.8 Corporate Bond ETF Corporate Bond Index

Target duration Avg. spread (years) BND VCSH VCIT VCLT above Treasury

4.51 60% 40% 0% 0% 0.65% 4.75 60 33 7 0 0.68 5.00 60 26 14 0 0.71 5.25 60 20 20 0 0.74 5.50 60 13 27 0 0.77 5.70 100 0 0 0 0.50 6.00 60 0 40 0 0.83 6.25 60 0 36 4 0.85 6.50 60 0 33 7 0.87 6.75 60 0 29 11 0.89 7.00 60 0 26 14 0.91 7.25 60 0 22 18 0.93 7.50 60 0 19 21 0.94 7.75 60 0 16 24 0.96 8.00 60 0 12 28 0.98 8.25 60 0 9 31 1.00 8.50 60 0 5 35 1.02 8.90 60 0 0 40 1.05

1 Average market duration as represented by that of the Barclays U.S. Aggregate Float Adjusted Index.

FOR FINANCIAL ADVISORS AND INSTITUTIONS ONLY. NOT FOR PUbLIC DISTRIbUTION. 19

Inflation-protection strategyUsing U.S. broad-market and short-term inflation-protected securities

Target duration Avg. spread (years) BND VTIP above Treasury

4.70 70% 30% 0.38% 4.80 75 25 0.40 5.00 80 20 0.42 5.20 85 15 0.44 5.30 90 10 0.46 5.50 95 5 0.48 5.70 100 0 0.50

Expense Ticker Fund name Benchmark ratio Duration

BND Total Bond Market ETF Barclays U.S. Aggregate 0.08% 5.7 yrs. Float Adjusted Index

VTIP Short-Term Barclays U.S. Treasury 0.10 2.3 Inflation-Protected Inflation-Protected Securities ETF Securities (TIPS) 0–5 Year Index

20 FFfFOR FINANCIAL ADVISORS AND INSTITUTIONS ONLY. NOT FOR PUbLIC DISTRIbUTION.

Liability-driven investing strategyPortfolio with a 40% fixed income weighting

Expense Ticker Fund name Benchmark ratio Duration

BND Total Bond Market ETF Barclays U.S. Aggregate 0.08% 5.7 yrs. Float Adjusted Index

BIV Intermediate-Term Barclays U.S. 5–10 Year 0.10 6.4 Bond ETF Government/Credit Float Adjusted Index

BLV Long-Term Bond ETF Barclays U.S. Long 0.10 14.7 Government/Credit Float Adjusted Index

EDV Extended Duration Barclays U.S. Treasury 0.12 25.5 Treasury ETF STRIPS 20–30 Year Equal Par Bond Index

Total Bond Total liability portfolio portfolio Liability Blended duration Fixed duration duration risk- spread to (years) income BND BIV BLV EDV (years) (years) hedged Treasury

10 40% 100% 0% 0% 0% 5.7 2.3 23% 0.20% 10 40 0 57 43 0 10.0 4.0 40 0.35 10 40 0 0 97 3 15.0 6.0 60 0.46 10 40 0 0 51 49 20.0 8.0 80 0.24 10 40 0 0 0 100 25.5 10.2 96 0.00 12 40 100 0 0 0 5.7 2.3 19 0.20 12 40 0 0 97 3 15.0 6.0 50 0.46 12 40 0 0 51 49 20.0 8.0 67 0.24 12 40 0 0 0 100 25.5 10.2 85 0.00 16 40 100 0 0 0 5.7 2.3 14 0.20 16 40 0 0 51 49 20.0 8.0 50 0.24 16 40 0 0 0 100 25.5 10.2 64 0.00 18 40 100 0 0 0 5.7 2.3 13 0.20 18 40 0 0 0 100 25.5 10.2 57 0.00

FOR FINANCIAL ADVISORS AND INSTITUTIONS ONLY. NOT FOR PUbLIC DISTRIbUTION. 21

Liability-driven investing strategyPortfolio with a 60% fixed income weighting

Expense Ticker Fund name Benchmark ratio Duration

BND Total Bond Market ETF Barclays U.S. Aggregate 0.08% 5.7 yrs. Float Adjusted Index

BIV Intermediate-Term Barclays U.S. 5–10 Year 0.10 6.4 Bond ETF Government/Credit Float Adjusted Index

BLV Long-Term Bond ETF Barclays U.S. Long 0.10 14.7 Government/Credit Float Adjusted Index

EDV Extended Duration Barclays U.S. Treasury 0.12 25.5 Treasury ETF STRIPS 20–30 Year Equal Par Bond Index

Total Bond Total liability portfolio portfolio Liability Blended duration Fixed duration duration risk- spread to (years) income BND BIV BLV EDV (years) (years) hedged Treasury

10 60% 100% 0% 0% 0% 5.7 3.4 34% 0.30% 10 60 0 93 7 0 7.0 4.2 42 0.40 10 60 0 0 97 3 15.0 9.0 90 0.69 10 60 0 0 51 49 20.0 12.0 100 0.36 10 60 0 0 0 100 25.5 15.3 100 0.00 12 60 100 0 0 0 5.7 3.4 28 0.30 12 60 0 0 97 3 15.0 9.0 75 0.69 12 60 0 0 0 100 25.5 15.3 100 0.00 16 60 100 0 0 0 5.7 3.4 21 0.30 16 60 0 0 51 49 20.0 12.0 75 0.36 16 60 0 0 0 100 25.5 15.3 96 0.00 18 60 100 0 0 0 5.7 3.4 19 0.30 18 60 0 0 0 100 25.5 15.3 85 0.00

FOR FINANCIAL ADVISORS AND INSTITUTIONS ONLY. NOT FOR PUbLIC DISTRIbUTION. 23

Global fixed incom

e

Expense Ticker Fund name Benchmark ratio Duration

BND Total Bond Market ETF Barclays U.S. Aggregate 0.08% 5.7 yrs. Float Adjusted Index

BNDX Total International Barclays Global Aggregate 0.20% 5.2 Bond ETF ex-USD Float Adjusted RIC Capped Index (USD Hedged)

VWOB Emerging Markets Barclays USD Emerging 0.35% 6.6 Government Bond ETF Markets Government RIC Capped Index

Average Target duration spread above %Noninvestment (years) BND BNDX VWOB Treasury grade

5.60 80% 20% 0% 0.46% 0.1% 5.60 80 15 5 0.64 1.2 5.70 80 10 10 0.82 2.3 5.80 80 5 15 1.00 3.4 5.90 80 0 20 1.18 4.5 5.50 60 40 0 0.42 0.1 5.60 60 35 5 0.60 1.2 5.60 60 30 10 0.78 2.3 5.70 60 25 15 0.96 3.5 5.80 60 20 20 1.14 4.6 5.80 60 15 25 1.32 5.7 5.90 60 10 30 1.50 6.8 5.40 40 60 0 0.39 0.2 5.50 40 55 5 0.56 1.3 5.50 40 50 10 0.74 2.4 5.60 40 45 15 0.92 3.5 5.70 40 40 20 1.10 4.6 5.70 40 35 25 1.28 5.7 5.80 40 30 30 1.46 6.8

Global fixed income strategyUsing U.S. and international broad-market and emerging markets government securities

24 FFfFOR FINANCIAL ADVISORS AND INSTITUTIONS ONLY. NOT FOR PUbLIC DISTRIbUTION.

Source: FactSet.

1 These portfolio characteristics and sector weightings were derived from the indexes referenced above as of December 31, 2014.

AppendixSector weightings and portfolio characteristics1

Sector weightings CRSP MSCI S&P FTSE FTSE US Total US Broad Composite Russell All-World Global Market Market 1500 3000® ex US All Cap Index Index Index Index Index IndexConsumer Discretionary 13% 13% 12% 13% 11% 12%Consumer Staples 9 9 9 9 10 9Energy 8 8 8 7 7 7Financials 18 18 17 18 27 22Health Care 14 14 14 14 9 11Industrials 11 11 11 11 12 12Information Technology 19 19 19 19 7 14Materials 4 4 4 4 8 6Telecommunication Services 2 2 2 2 5 3Utilities 3 3 3 3 4 3 Price/earnings ratio 18.60 2.71 18.96 2.40 15.35 17.04Dividend yield 1.79% 1.79% 1.85% 1.78% 2.86% 2.29%Median market capitalization $48.1B $47.2B $61.0B $49.4B $29.7B $34.2B

The Emerging Markets Government Bond ETF is subject to the risk that an issuer will fail to make payments on time, and that bond prices will decline because of rising interest rates or negative perceptions of an issuer’s ability to make payments. The ETF seeks to track the performance of an index that measures the investment return of dollar-denominated bonds issued by governments of emerging market countries (including government agencies and government-owned corporations). Because the ETF invests only in U.S. dollar-denominated bonds, U.S.-based shareholders are not subject to currency risk, although if an issuer’s home currency declines relative to the U.S. dollar, it could negatively affect perceptions of the issuer’s ability to make pay-ments, which could cause the issuer’s bonds to decline in value.

The Emerging Markets Government Bond ETF is subject to risks including country/regional risk, which is the chance that political upheaval, financial troubles, or natural disasters will adversely affect the value of securities issued by foreign governments, and emerging market risk, which is the chance that bonds of governments located in emerging markets will be substantially more volatile and substantially less liquid that the bonds of governments located in more developed foreign markets.

The Vanguard ETFs are not sponsored, endorsed, sold, or promoted by Barclays Capital Inc. or its affili-ates (“Barclays”). Barclays does not make any representation regarding the advisability of investing in Vanguard ETFs or the advisability of investing in securities generally. Barclays’ only relationship with Vanguard is the licensing of the Index, which is determined, composed, and calculated by Barclays with-out regard to Vanguard or the Vanguard ETFs. Barclays has no obligation to take the needs of Vanguard or the owners of the Vanguard ETFs into consideration in determining, composing, or calculating the Index. Barclays has no obligation or liability in connection with administration, marketing, or trading of the Vanguard ETFs.

S&P® and S&P 500® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and have been licensed for use by S&P Dow Jones Indices LLC and its affiliates and sublicensed for certain purposes by Vanguard. The S&P 500 Index, S&P 500 Growth Index, S&P 500 Value Index, S&P MidCap 400 Index, S&P MidCap 400 Growth Index, S&P MidCap 400 Value Index, S&P Completion Index, S&P SmallCap 600 Index, S&P SmallCap 600 Growth Index, and the S&P SmallCap 600 Value Index are products of S&P Dow Jones Indices LLC and have been licensed for use by Vanguard. The Vanguard S&P 500 ETF, Vanguard S&P 500 Growth ETF, Vanguard S&P 500 Value ETF, Vanguard S&P Mid-Cap 400 ETF, Vanguard S&P Mid-Cap 400 Growth ETF, Vanguard S&P Mid-Cap 400 Value ETF, Vanguard Extended Market ETF, Vanguard Small-Cap 600 ETF, Vanguard Small-Cap 600 Growth ETF, and the Vanguard Small-Cap 600 Value ETF are not sponsored, endorsed, sold, or promoted by S&P Dow Jones Indices LLC, Dow Jones, S&P, or their respective affiliates, and none of S&P Dow Jones Indices LLC, Dow Jones, S&P, nor their respective affiliates, makes any representation regarding the advisability of investing in such product(s).

Russell 1000®, Russell 1000® Value, Russell 1000® Growth, Russell 2000®, Russell 2000® Value, Russell 2000® Growth, Russell 3000®, and Russell® are registered trademarks of Russell Investments and have been licensed for use by The Vanguard Group, Inc. The Products are not sponsored, endorsed, sold, or promoted by Russell Investments and Russell Investments makes no representation regarding the advisability of investing in the Products.

The funds or securities referred to herein are not sponsored, endorsed, or promoted by MSCI, and MSCI bears no liability with respect to any such funds or securities. For any such funds or securities, the prospectus or the Statement of Additional Information contains a more detailed description of the limited relationship MSCI has with The Vanguard Group and any related funds.

All rights in the FTSE All-World ex US Index, FTSE Global All Cap Index, FTSE Global All Cap ex US Index, FTSE Global Small Cap ex US Index, FTSE Developed Europe Index, FTSE Developed Asia Pacific Index, FTSE Emerging Index, and FTSE Developed ex North America Index (the “Index”) vest in FTSE International Limited (“FTSE”). “FTSE®” is a trademark of London Stock Exchange Group companies and is used by FTSE under licence. The Total World Stock, Total International Stock, FTSE All-World ex-US, FTSE All-World ex-US Small-Cap, FTSE Developed Markets, FTSE Europe, FTSE Pacific, and FTSE Emerging Markets ETFs (the “Product”) have been developed solely by Vanguard. The Index is calculated by FTSE or its agent. FTSE and its licensors are not connected to and do not sponsor, advise, recommend, endorse, or promote the Product and do not accept any liability whatsoever to any person arising out of (a) the use of, reliance on, or any error in the Index or (b) investment in or operation of the Product. FTSE makes no claim, prediction, warranty, or representation either as to the results to be obtained from the Product or the suitability of the Index for the purpose to which it is being put by Vanguard.

For more information on Vanguard funds and ETFs, visit our website or call us to obtain a prospectus. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing.

Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy or sell Vanguard ETF Shares in the secondary market with the assistance of a stockbroker. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.

Investors cannot invest directly in an index.

All Vanguard ETFs are subject to risk, including the possible loss of the money you invest.

Connect with Vanguard® > advisors.vanguard.com > 800-997-2798

© 2015 The Vanguard Group, Inc. All rights reserved. U.S. Patent Nos. 6,879,964; 7,337,138; 7,720,749; 7,925,573; 8,090,646; and 8,417,623. Vanguard Marketing Corporation, Distributor.

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