Overview

Investment Objective

The Portfolio seeks to provide current income.

Investment Strategy

The Portfolio invests in three Vanguard® bond funds and one Vanguard® short-term reserves fund according to a formula that results in an allocation of 75% of assets to investment-grade bonds and 25% of assets to short-term investments. The percentages of the Portfolio's assets allocated to each Underlying Fund are:

Vanguard® Total Bond Market II Index Fund 34.50%
Vanguard® Total International Bond Index Fund 22.50%
Vanguard® Short-Term Inflation-Protected Securities Index Fund 18%
Colorado Short-Term Reserves Account 25%

Through its investment in Vanguard Total Bond Market II Index Fund, the Portfolio also indirectly invests in a broadly diversified collection of securities that, in the aggregate, approximates the Bloomberg U.S. Aggregate Float Adjusted Index in terms of key risk factors and other characteristics. The Fund employs an indexing investment approach designed to track the performance of the Index. The Index represents a wide spectrum of public, investment-grade, taxable, fixed income securities in the United States—including government, corporate, and international dollar-denominated bonds, as well as mortgage-backed and asset-backed securities—all with maturities of more than 1 year. The Fund invests by sampling the Index. The Fund seeks to maintain a dollar-weighted average maturity and an average duration consistent with that of the Index, which generally ranges between 5 and 10 years.

Through its investment in Vanguard Total International Bond Index Fund, the Portfolio also indirectly invests in government, government agency, corporate, and securitized non-U.S. investment-grade fixed income investments, all issued in currencies other than the U.S. dollar and with maturities of more than 1 year. The Fund employs an indexing investment approach designed to track the performance of the Bloomberg Global Aggregate ex-USD Float Adjusted RIC Capped Index (USD Hedged), which provides a broad-based measure of the global, investment-grade, fixed-rate debt markets. The Fund will attempt to hedge its foreign currency exposure, primarily through the use of foreign currency exchange forward contracts, in order to correlate to the returns of the Index, which is U.S. dollar hedged. Such hedging is intended to minimize the currency risk associated with investment in bonds denominated in currencies other than the U.S. dollar. The Fund maintains a dollar-weighted average maturity consistent with that of the Index, which generally ranges between 5 and 10 years. The Fund may become nondiversified, as defined under the Investment Company Act of 1940, solely as a result of an index rebalance or market movement. The Fund invests by sampling the Index, meaning that it holds a range of securities that, in the aggregate, approximates the full Index in terms of key risk factors and other characteristics.

Through its investment in Vanguard Short-Term Inflation-Protected Securities Index Fund, the Portfolio indirectly invests in inflation-protected public obligations issued by the U.S. Treasury with remaining maturities of less than 5 years. The Fund employs an indexing investment approach designed to track the performance of the Bloomberg U.S. 0-5 Year Treasury Inflation-Protected Securities (TIPS) Index, which is market-capitalization weighted. The Fund attempts to replicate the Index by investing all, or substantially all, of its assets in the securities that make up the Index, holding each security in approximately the same proportion as its weighting in the Index. The Fund maintains a dollar-weighted average maturity consistent with that of the target index, which generally does not exceed 3 years.

Through its investment in Colorado Short-Term Reserves Account, the Portfolio indirectly invests in funding agreements issued by one or more insurance companies, synthetic investment contracts (SICs), and shares of Vanguard Federal Money Market Fund. Funding agreements and SICs are interest-bearing contracts that are structured to preserve principal and accumulate interest earnings over the life of the investment. Funding agreements generally pay interest at a fixed rate and have fixed maturity dates that normally range from 2 to 5 years. SICs pay a variable interest rate and have an average duration range between 2 and 5 years. Vanguard Federal Money Market Fund invests primarily in high-quality, short-term money market instruments issued by the U.S. government and its agencies and instrumentalities. For more information about Colorado Short-Term Reserves Account, please see the Interest Accumulation Portfolio profile.

Note: Colorado Short-Term Reserves Account’s investments in Vanguard Federal Money Market Fund are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although Vanguard Federal Money Market Fund seeks to preserve the value of the investment at $1 per share, it is possible that Colorado Short-Term Reserves Account may lose money by investing in the Fund. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time, including during periods of market stress.

Investment Risks

Because it invests mainly in bond funds, the Portfolio is proportionately subject to interest rate risk, credit risk, income risk, call risk, prepayment risk, extension risk, liquidity risk, real interest rate risk and income fluctuations. The Portfolio is also subject to country/regional risk, currency and currency hedging risk, index-related risks, index replicating risk, index sampling risk, derivatives risk, nondiversification risk, market risk, and event risk.

Average Annual Returns

**Consists of three unmanaged benchmarks, weighted 34.50% Spliced Bloomberg Barclays U.S. Aggregate Float Adjusted Index, 18% Bloomberg Barclays U.S. 0-5 Year Treasury Inflation Protected Securities Index, 2.5% FTSE Three-Month U.S. Treasury Bill Index, 22.5% Ryan Labs 3 Year GIC Index, and 22.50% Bloomberg Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index Hedged. The Spliced Bloomberg Barclays U.S. Aggregate Float Adjusted Index consists of the Barclays U.S. Aggregate Bond Index through December 31, 2009; and the Bloomberg Barclays U.S. Aggregate Float Adjusted Index thereafter. Effective September 29, 2016, Barclays indexes were rebranded to Bloomberg Barclays indexes.

Annual Investment Returns

Historical Prices

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Fund ID: 1006018

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