Tier 1: Asset allocation funds for a ready-made portfolio

This tier includes Vanguard Target Retirement Funds and Vanguard Wellington™ Fund. Each of these balanced funds contains a diversified portfolio of investments. The funds in this tier have been specifically chosen by the IAC and will be reviewed annually to ensure that their performance and cost remain competitive.

If you choose a Vanguard Target Retirement Fund, you may want to consider investing in just one fund. A single Target Retirement Fund provides diversification and is designed to keep your assets invested appropriately for someone in your stage of life, up to and including your retirement years. Even though Target Retirement Funds may simplify the investment process, they still require monitoring to ensure that the portfolio is in line with your current objectives. Diversification does not ensure a profit or protect against a loss.

Each Target Retirement Fund invests in several broadly diversified Vanguard funds. Investments in Target Retirement Funds are subject to the risks of their underlying funds. The year in the fund name refers to the approximate year (the target date) when an investor in the fund would retire and leave the workforce. The fund will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. An investment in a Target Retirement Fund is not guaranteed at any time, including on or after the target date.

Consider choosing the fund with the date that's closest to the year when you expect to retire. If you are already retired, consider choosing Vanguard Target Retirement Income Fund. This fund seeks to provide current income and some capital appreciation to retirees.

To learn more about Target Retirement funds, visit vanguard.com/target.

Unlike Target Retirement Funds, Vanguard Wellington Fund does not gradually become more conservative as you approach retirement. The fund invests 60% to 70% of its assets in common stocks of established medium-size and large companies. The remaining 30% to 40% of fund assets are invested mainly in investment-grade corporate bonds, with some exposure to U.S. Treasury and government agency bonds, as well as mortgage-backed securities.

Keep in mind that all investing is subject to risk, including the possible loss of the money you invest. While U.S. Treasury or government agency securities provide substantial protection against credit risk, they do not protect investors against price changes due to changing interest rates. Although the market values of government securities are not guaranteed and may fluctuate, these securities are guaranteed as to the timely payment of principal and interest. Bond funds are 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. Prices of mid-cap stocks often fluctuate more than those of large-company stocks.