Vanguard Variable Insurance Fund. Annual Report December 31, Conservative Allocation Portfolio. Equity Index Portfolio. Mid-Cap Index Portfolio

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1 Annual Report December 31, 2014 Vanguard Variable Insurance Fund Conservative Allocation Portfolio Equity Index Portfolio Mid-Cap Index Portfolio Moderate Allocation Portfolio REIT Index Portfolio Total Stock Market Index Portfolio (with underlying Equity Index Portfolio)

2 The mission continues On May 1, 1975, Vanguard began operations, a fledgling company based on the simple but revolutionary idea that a mutual fund company should be managed solely in the interest of its investors. Four decades later, that revolutionary spirit continues to animate the enterprise. Vanguard remains on a mission to give investors the best chance of investment success. As we mark our 40th anniversary, we thank you for entrusting your assets to Vanguard and giving us the opportunity to help you reach your financial goals in the decades to come. Contents Market Perspective 1 Conservative Allocation Portfolio 2 Equity Index Portfolio 12 Mid-Cap Index Portfolio 26 Moderate Allocation Portfolio 39 REIT Index Portfolio 49 Total Stock Market Index Portfolio (with underlying Equity Index Portfolio) 60 Please note: The opinions expressed in this report are just that informed opinions. They should not be considered promises or advice. Also, please keep in mind that the information and opinions cover the period through the date on the front of this report. Of course, the risks of investing in your fund are spelled out in the prospectus. See the Glossary for definitions of investment terms used in this report. About the cover: Since our founding, Vanguard has drawn inspiration from the enterprise and valor demonstrated by British naval hero Horatio Nelson and his command at the Battle of the Nile in The photograph displays a replica of a merchant ship from the same era as Nelson s flagship, the HMS Vanguard.

3 Market Perspective Dear Planholder, When 2014 began, some investors and experts feared a worst-case scenario in the financial markets. After five straight years of gains, stocks were considered pricey in some quarters. And the anticipated end of the Federal Reserve s bond-buying program and economic concerns at home and abroad made for a forecast that included more frost than froth. Last January s decline further underlined the anxiety. Bond prices, which fell in 2013, were widely expected to continue to struggle as yields were already at relative low levels. Lo and behold, 12 months later, we re looking back at another year of double-digit returns for U.S. stocks and a significant rebound in bonds. This performance offers a lesson in how difficult it is to predict the markets, especially in the short term, and why market timing so often leads to disappointment. Overseas, various troubles and the weakening of many foreign currencies against the U.S. dollar spelled negative returns for global stocks and bonds. These events serve as a reminder that balance, diversification, and a long-term perspective are paramount for long-term investors. This report starts with a brief overview of the financial markets during the past year. In the pages that follow, you ll find a review of the performance of your portfolio. Each portfolio in Vanguard Variable Insurance Fund can serve as part of an investment program that includes a combination of stock, bond, and money market funds appropriate for your own long-term goals, risk tolerance, and time horizon. Thank you for entrusting your assets to Vanguard. Sincerely, F. William McNabb III Chairman and Chief Executive Officer January 16, 2015 U.S. stocks finished strongly for the sixth straight year U.S. stocks returned nearly 13% for the 12 months ended December 31, 2014, posting gains for the sixth consecutive calendar year. Rising corporate earnings, the growing U.S. economy, and generally accommodative global monetary policies lifted domestic markets. Elsewhere, Europe and China faced economic challenges, tensions flared in the Middle East and Ukraine, and concerns arose over stocks high valuations. Defying analysts expectations, bond prices rose during the period Bond prices received a boost from many of the world s central banks along with various global economic, market, and geopolitical challenges that drew investors to perceived safe havens. In an unexpected rebound from the previous year, the broad U.S. bond market returned 5.97% for the period. Even as the Fed pared back its bond purchases, prices climbed and yields fell. (Bond prices and yields move in opposite directions.) The yield of the 10-year Treasury note ended December at 2.19%, down from 2.97% at the close of December Returns for money market funds and savings accounts were minuscule as the Fed s target for short-term interest rates remained between 0% and 0.25%. Although the Federal Reserve ended its bond-buying program in October, investors seemed reassured by its stance that it would be patient in deciding when to increase short-term interest rates. Other central banks including the Bank of Japan, the European Central Bank, and the People s Bank of China announced significant stimulus measures. International stocks didn t fare as well as their U.S. counterparts, returning about 3% in dollar terms. Their performance was hurt as many foreign currencies weakened against the U.S. dollar. Emergingmarket stocks rose slightly, but stocks from the developed markets of Europe and the Pacific region retreated. Market Barometer Average Annual Total Returns Periods Ended December 31, 2014 One Year Three Years Five Years Stocks Russell 1000 Index (Large-caps) 13.24% 20.62% 15.64% Russell 2000 Index (Small-caps) Russell 3000 Index (Broad U.S. Market) FTSE All-World ex US Index (International) Bonds Barclays U.S. Aggregate Bond Index (Broad taxable market) 5.97% 2.66% 4.45% Barclays Municipal Bond Index (Broad tax-exempt market) Citigroup Three-Month U.S. Treasury Bill Index CPI Consumer Price Index 0.76% 1.33% 1.69% 1

4 Vanguard Conservative Allocation Portfolio Despite periods of volatility, U.S. stocks and bonds finished 2014 with healthy returns. International stocks didn t fare as well. For the fiscal year ended December 31, 2014, Vanguard Conservative Allocation Portfolio returned 6.91%, in line with its composite benchmark index and well ahead of the average return of its peers. The table below shows the returns of your portfolio and its comparative standards for the past year. For additional perspective, we also present their annualized returns since the portfolio s inception. Please note that the portfolio returns in Vanguard Variable Insurance Fund are different from those in Vanguard Variable Annuity (and other plans that invest in the fund), which take into account insurance-related expenses. Total Returns U.S. markets had a good year; international stocks struggled The Conservative Allocation Portfolio, as a fund of funds, seeks to capture the returns of its benchmark by investing in a combination of Vanguard Variable Insurance Fund (VVIF) portfolios and Vanguard index funds. Although the exact percentages may vary, the portfolio targets an asset allocation of approximately 60% bonds and 40% stocks. Its holdings consist of VVIF Total Bond Market Index Portfolio (48%), VVIF Equity Index Portfolio (22%), Vanguard Total International Bond Index Fund (12%), Vanguard Total International Stock Index Fund (12%), and Vanguard Extended Market Index Fund (6%). The Total Bond Market Index Portfolio, which encompasses most of the U.S. bond market, returned 5.89%. Intermediate- and long-term yields drifted lower over the October 19, through December 31, 2014 Year Ended Average December 31, 2014 Annual Return Vanguard Conservative Allocation Portfolio 6.91% 8.60% Conservative Allocation Composite Index Variable Insurance Mixed-Asset Target Allocation Conservative Funds Average The figures shown represent past performance, which is not a guarantee of future results. (Current performance may be lower or higher than the performance data cited. For performance data current to the most recent monthend, visit our website at vanguard.com/performance.) Note, too, that both investment returns and principal value can fluctuate widely, so an investor s shares, when sold, could be worth more or less than their original cost. Expense Ratios Your Portfolio Compared With Its Peer Group Variable Insurance Mixed-Asset Target Allocation Acquired Fund Fees Conservative and Expenses 4 Funds Average 5 Conservative Allocation Portfolio 0.19% 0.89% period, which boosted bond prices. Prospects for global growth grew more clouded, geopolitical tensions simmered, and any acceleration in inflation appeared more distant. Vanguard Total International Bond Index Fund returned 8.83% as investors veered away from foreign stocks into the less volatile sanctuary of fixed income investments. In equity markets, U.S. large-capitalization stocks handsomely outpaced their small-cap brethren during the 12 months. Accordingly, VVIF Equity Index Portfolio, which holds larger-company stocks, returned about 13.5%. Vanguard Extended Market Index Fund, which focuses on small- and mid-cap stocks, returned about 7.5%. Two U.S. stock sectors had an outsized impact. Technology firms were powered by increased corporate spending and a surge in mobile device sales. And health care companies benefited from new product development and mergers and acquisitions. Not surprisingly, the energy sector was hurt by tumbling oil prices, which made it the only industry to record a negative return. International stocks returned about 3% in dollar terms. Their performance was hurt as many foreign currencies weakened against the U.S. dollar. The portfolio s long-term record shows the benefit of low costs For the period since its inception on October 19, 2011, the Conservative Allocation Portfolio returned 8.60% on an average annual basis very close to the result of its target benchmark. It exceeded the average return of its peers by more than a full percentage point. 1 Portfolio inception. 2 Weighted 48% Barclays U.S. Aggregate Float Adjusted Index, 28% S&P Total Market Index, 12% Barclays Global Aggregate ex-usd Float Adjusted RIC Capped Index (USD Hedged), and 12% FTSE Global All Cap ex US Index as of June 3, Previously, the composite was weighted 60% Barclays U.S. Aggregate Float Adjusted Index, 28% S&P Total Market Index, and 12% MSCI ACWI ex USA IMI Index. 3 Derived from data provided by Lipper, a Thomson Reuters Company. 4 This figure drawn from the prospectus dated April 30, 2014 represents an estimate of the weighted average of the expense ratios and any transaction fees charged by the underlying mutual funds (the acquired funds) in which the Conservative Allocation Portfolio invests. The Conservative Allocation Portfolio does not charge any expenses or fees of its own. For the fiscal year ended December 31, 2014, the annualized acquired fund fees and expenses were 0.19%. 5 The peer-group expense ratio is derived from data provided by Lipper, a Thomson Reuters Company, and captures information through year-end

5 Vanguard Conservative Allocation Portfolio Portfolio Profile As of December 31, 2014 Total Portfolio Characteristics Allocation to Underlying Funds Portfolio Asset Allocation Yield 1 2.3% Acquired Fund Fees and Expenses % Vanguard Variable Insurance Fund Total Bond Market Index Portfolio 48.5% Vanguard Variable Insurance Fund Equity Index Portfolio 22.4 Vanguard Total International Stock Index Fund Investor Shares 11.9 Vanguard Total International Bond Index Fund Investor Shares 11.7 Vanguard Extended Market Index Fund Investor Shares % Bonds 39.8% Stocks 30-Day SEC Yield. A portfolio s 30-day SEC yield is derived using a formula specified by the U.S. Securities and Exchange Commission. Under the formula, data related to the portfolio s security holdings in the previous 30 days are used to calculate the portfolio s hypothetical net income for that period, which is then annualized and divided by the portfolio s estimated average net assets over the calculation period. For the purposes of this calculation, a security s income is based on its current market yield to maturity (for bonds), its actual income (for asset-backed securities), or its projected dividend yield (for stocks). Because the SEC yield represents hypothetical annualized income, it will differ at times significantly from the portfolio s actual experience. As a result, the portfolio s income distributions may be higher or lower than implied by the SEC yield. Acquired Fund Fees and Expenses. Portfolios that invest in other Vanguard funds incur no direct expenses, but they do bear proportionate shares of the operating, administrative, and advisory expenses of the underlying funds, and they must pay any fees charged by those funds. The figure for acquired fund fees and expenses represents a weighted average of these underlying costs. Acquired is a term that the Securities and Exchange Commission applies to any mutual fund whose shares are owned by another fund day SEC yield. 2 This figure drawn from the prospectus dated April 30, 2014 represents an estimate of the weighted average of the expense ratios and any transaction fees charged by the underlying mutual funds (the acquired funds) in which the Conservative Allocation Portfolio invests. The Conservative Allocation Portfolio does not charge any expenses or fees of its own. For the fiscal year ended December 31, 2014, the annualized acquired fund fees and expenses were 0.19%. 3

6 Vanguard Conservative Allocation Portfolio Performance Summary All of the returns in this report represent past performance, which is not a guarantee of future results that may be achieved by the portfolio. (Current performance may be lower or higher than the performance data cited. For performance data current to the most recent month-end, visit our website at vanguard.com/performance.) Note, too, that both investment returns and principal value can fluctuate widely, so an investor s shares, when sold, could be worth more or less than their original cost. The returns shown do not reflect taxes that a shareholder would pay on portfolio distributions or on the sale of portfolio shares. Nor do the returns reflect fees and expenses associated with the annuity or life insurance program through which a shareholder invests. If these fees and expenses were included, the portfolio s returns would be lower. Cumulative Performance: October 19, 2011 December 31, 2014 Initial Investment of $10,000 $21,000 13, ,000 Average Annual Total Returns Final Value Periods Ended December 31, 2014 of a $10,000 One Year Since Inception 1 Investment Conservative Allocation Portfolio 6.91% 8.60% $13,020 Conservative Allocation Composite Index ,087 Variable Insurance Mixed-Asset Target Conservative Funds Average ,455 Dow Jones U.S. Total Stock Market Float Adjusted Index ,278 Fiscal-Year Total Returns (%): October 19, 2011 December 31, Conservative Allocation Portfolio Conservative Allocation Composite Index 2 1 October 19, Weighted 48% Barclays U.S. Aggregate Float Adjusted Index, 28% S&P Total Market Index, 12% Barclays Global Aggregate ex-usd Float Adjusted RIC Capped Index (USD Hedged), and 12% FTSE Global All Cap ex US Index as of June 3, Previously, the composite was weighted 60% Barclays U.S. Aggregate Float Adjusted Index, 28% S&P Total Market Index, and 12% MSCI ACWI ex USA IMI Index through June 2, Derived from data provided by Lipper, a Thomson Reuters Company. See Financial Highlights for dividend and capital gains information. 4

7 Vanguard Conservative Allocation Portfolio Financial Statements Statement of Net Assets As of December 31, 2014 The portfolio reports a complete list of its holdings in regulatory filings four times in each fiscal year, at the quarter-ends. For the second and fourth fiscal quarters, the lists appear in the portfolio s semiannual and annual reports to shareholders. For the first and third fiscal quarters, the portfolio files the lists with the Securities and Exchange Commission on Form N-Q. Shareholders can look up the portfolio s Forms N-Q on the SEC s website at sec.gov. Forms N-Q may also be reviewed and copied at the SEC s Public Reference Room (see the back cover of this report for further information). Market Value Shares ($000) Investment Companies (100.0%) U.S. Stock Funds (27.9%) Vanguard Variable Insurance Fund Equity Index Portfolio 1,037,004 35,715 Vanguard Extended Market Index Fund Investor Shares 131,612 8,769 44,484 International Stock Fund (11.9%) Vanguard Total International Stock Index Fund Investor Shares 1,221,866 19,000 U.S. Bond Fund (48.6%) Vanguard Variable Insurance Fund Total Bond Market Index Portfolio 6,424,258 77,541 International Bond Fund (11.6%) Vanguard Total International Bond Index Fund Investor Shares 1,752,806 18,597 Total Investment Companies (Cost $152,765) 159,622 Temporary Cash Investment (0.1%) Money Market Fund (0.1%) 1 Vanguard Market Liquidity Fund, 0.126% (Cost $126) 126, Total Investments (100.1%) (Cost $152,891) 159,748 Other Assets and Liabilities ( 0.1%) Other Assets 8 Liabilities (102) (94) Net Assets (100%) Applicable to 6,532,292 outstanding $.001 par value shares of beneficial interest (unlimited authorization) 159,654 Net Asset Value Per Share $24.44 At December 31, 2014, net assets consisted of: Amount ($000) Paid-in Capital 147,357 Undistributed Net Investment Income 2,683 Accumulated Net Realized Gains 2,757 Unrealized Appreciation (Depreciation) 6,857 Net Assets 159,654 See Note A in Notes to Financial Statements. 1 Affiliated money market fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard. Rate shown is the 7-day yield. See accompanying Notes, which are an integral part of the Financial Statements. 5

8 Vanguard Conservative Allocation Portfolio Statement of Operations Statement of Changes in Net Assets Year Ended December 31, 2014 ($000) Investment Income Income Income Distributions Received 2,697 Net Investment Income Note B 2,697 Realized Net Gain (Loss) Capital Gain Distributions Received 706 Affiliated Investment Securities Sold 2,078 Realized Net Gain (Loss) 2,784 Change in Unrealized Appreciation (Depreciation) of Investment Securities 3,200 Net Increase (Decrease) in Net Assets Resulting from Operations 8,681 Year Ended December 31, ($000) ($000) Increase (Decrease) in Net Assets Operations Net Investment Income 2,697 1,851 Realized Net Gain (Loss) 2,784 3,036 Change in Unrealized Appreciation (Depreciation) 3,200 2,241 Net Increase (Decrease) in Net Assets Resulting from Operations 8,681 7,128 Distributions Net Investment Income (1,866) (677) Realized Capital Gain 1 (3,046) (598) Total Distributions (4,912) (1,275) Capital Share Transactions Issued 67,986 59,378 Issued in Lieu of Cash Distributions 4,912 1,275 Redeemed (18,517) (26,127) Net Increase (Decrease) from Capital Share Transactions 54,381 34,526 Total Increase (Decrease) 58,150 40,379 Net Assets Beginning of Period 101,504 61,125 End of Period 2 159, ,504 1 Includes fiscal 2014 and 2013 short-term gain distributions totaling $822,000 and $331,000, respectively. Short-term gain distributions are treated as ordinary income dividends for tax purposes. 2 Net Assets End of Period includes undistributed (overdistributed) net investment income of $2,683,000 and $1,852,000. See accompanying Notes, which are an integral part of the Financial Statements. 6

9 Vanguard Conservative Allocation Portfolio Financial Highlights Oct. 19, to Year Ended December 31, Dec. 31, For a Share Outstanding Throughout Each Period Net Asset Value, Beginning of Period $23.86 $22.27 $20.44 $20.00 Investment Operations Net Investment Income Capital Gain Distributions Received Net Realized and Unrealized Gain (Loss) on Investments Total from Investment Operations Distributions Dividends from Net Investment Income (.386) (.215) (.041) Distributions from Realized Capital Gains (.630) (.190) (.018) Total Distributions (1.016) (.405) (.059) Net Asset Value, End of Period $24.44 $23.86 $22.27 $20.44 Total Return 6.91% 9.06% 9.25% 2.20% Ratios/Supplemental Data Net Assets, End of Period (Millions) $160 $102 $61 $11 Ratio of Total Expenses to Average Net Assets Acquired Fund Fees and Expenses 0.19% 0.19% 0.20% 0.25% 3 Ratio of Net Investment Income to Average Net Assets 2.07% 2.23% 1.97% 0.75% 3 Portfolio Turnover Rate 13% 37% 17% 20% 1 Inception. 2 Calculated based on average shares outstanding. 3 Annualized. See accompanying Notes, which are an integral part of the Financial Statements. 7

10 Vanguard Conservative Allocation Portfolio Notes to Financial Statements Vanguard Conservative Allocation Portfolio, a portfolio of Vanguard Variable Insurance Fund, is registered under the Investment Company Act of 1940 as an open-end investment company. The portfolio follows a balanced investment strategy by investing in selected Vanguard funds and portfolios to achieve its targeted allocation of assets to U.S. and international stocks, and U.S. and international bonds. Financial statements and other information about each underlying fund and portfolio are available on vanguard.com. The portfolio s shares are only available for purchase by separate accounts of insurance companies as investments for variable annuity plans, variable life insurance contracts, or other variable benefit insurance contracts. A. The following significant accounting policies conform to generally accepted accounting principles for U.S. investment companies. The portfolio consistently follows such policies in preparing its financial statements. 1. Security Valuation: Investments are valued at the net asset value of each underlying Vanguard fund determined as of the close of the New York Stock Exchange (generally 4 p.m., Eastern time) on the valuation date. 2. Federal Income Taxes: The portfolio intends to continue to qualify as a regulated investment company and distribute all of its taxable income. Management has analyzed the portfolio s tax positions taken for all open federal income tax years (December 31, ), and has concluded that no provision for federal income tax is required in the portfolio s financial statements. 3. Distributions: Distributions to shareholders are recorded on the ex-dividend date. 4. Credit Facility: The portfolio and certain other funds managed by The Vanguard Group participate in a $2.89 billion committed credit facility provided by a syndicate of lenders pursuant to a credit agreement that may be renewed annually; each portfolio is individually liable for its borrowings, if any, under the credit facility. Borrowings may be utilized for temporary and emergency purposes, and are subject to the portfolio s regulatory and contractual borrowing restrictions. The participating funds are charged administrative fees and an annual commitment fee of 0.06% of the undrawn amount of the facility; these fees are allocated to the funds based on a method approved by the fund s board of trustees and borne by the funds in which the portfolio invests (see Note B). Any borrowings under this facility bear interest at a rate equal to the higher of the federal funds rate or LIBOR reference rate plus an agreed-upon spread. The portfolio had no borrowings outstanding at December 31, 2014, or at any time during the period then ended. 5. Other: Income and capital gain distributions received are recorded on the ex-dividend date. Security transactions are accounted for on the date securities are bought or sold. Costs used to determine realized gains (losses) on the sale of investment securities are those of the specific securities sold. B. Under a service agreement, The Vanguard Group furnishes investment advisory, corporate management, administrative, marketing, and distribution services to the portfolio. The service agreement provides that the portfolio s expenses may be reduced or eliminated to the extent of savings realized by the Vanguard funds by the operation of the portfolio. Accordingly, all incremental expenses for services provided by Vanguard and all other expenses incurred by the portfolio during the year ended December 31, 2014, were borne by the funds in which the portfolio invests. The portfolio s trustees and officers are also directors and officers of Vanguard and the funds in which the portfolio invests. C. Various inputs may be used to determine the value of the portfolio s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities. Level 1 Quoted prices in active markets for identical securities. Level 2 Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.). Level 3 Significant unobservable inputs (including the portfolio s own assumptions used to determine the fair value of investments). At December 31, 2014, 100% of the market value of the portfolio s investments was determined based on Level 1 inputs. 8

11 Vanguard Conservative Allocation Portfolio D. Distributions are determined on a tax basis and may differ from net investment income and realized capital gains for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the financial statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain, or loss are recognized in different periods for financial statement and tax purposes. These differences will reverse at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes. For tax purposes, at December 31, 2014, the portfolio had $2,791,000 of ordinary income and $2,648,000 of long-term captal gains available for distribution. At December 31, 2014, the cost of investment securities for tax purposes was $152,891,000. Net unrealized appreciation of investment securities for tax purposes was $6,857,000, consisting of unrealized gains of $7,650,000 on securities that had risen in value since their purchase and $793,000 in unrealized losses on securities that had fallen in value since their purchase. E. Capital shares issued and redeemed were: Year Ended December 31, Shares Shares (000) (000) Issued 2,840 2,591 Issued in Lieu of Cash Distributions Redeemed (774) (1,139) Net Increase (Decrease) in Shares Outstanding 2,278 1,509 F. Transactions during the year in affiliated underlying Vanguard funds were as follows: Current Period Transactions Dec. 31, Proceeds Dec. 31, 2013 from Capital Gain 2014 Market Purchases Securities Dividend Distributions Market Value at Cost Sold Income Received Value ($000) ($000) ($000) ($000) ($000) ($000) Vanguard Extended Market Index Fund 5,815 5,333 2, ,769 Vanguard Market Liquidity Fund 247 NA 1 NA Vanguard Total International Bond Index Fund 11,815 5, ,597 Vanguard Total International Stock Index Fund 12,118 9,267 1, ,000 Vanguard Variable Insurance Fund Equity Index Portfolio 22,796 13,505 3, ,715 Vanguard Variable Insurance Fund Total Bond Market Index Portfolio 48,965 35,389 8,659 1, ,541 Total 101,756 69,365 16,529 2, ,748 1 Not applicable purchases and sales are for temporary cash investment purposes. G. Management has determined that no material events or transactions occurred subsequent to December 31, 2014, that would require recognition or disclosure in these financial statements. 9

12 Vanguard Conservative Allocation Portfolio Report of Independent Registered Public Accounting Firm To the Board of Trustees of Vanguard Variable Insurance Funds and the Shareholders of Conservative Allocation Portfolio: In our opinion, the accompanying statement of net assets and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Conservative Allocation Portfolio (constituting a separate portfolio of Vanguard Variable Insurance Funds, hereafter referred to as the Portfolio ) at December 31, 2014, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as financial statements ) are the responsibility of the Portfolio s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2014 by agreement to the underlying ownership records of the transfer agent, provide a reasonable basis for our opinion. /s/pricewaterhousecoopers LLP Philadelphia, Pennsylvania February 10, 2015 Special 2014 tax information (unaudited) for corporate shareholders only for Vanguard Conservative Allocation Portfolio, a portfolio of Vanguard Variable Insurance Fund This information for the fiscal year ended December 31, 2014, is included pursuant to provisions of the Internal Revenue Code for corporate shareholders only. The portfolio distributed $2,224,000 as capital gain dividends (from net long-term capital gains) to shareholders during the fiscal year. For corporate shareholders, 18.7% of investment income (dividend income plus short-term gains, if any) qualifies for the dividends-received deduction. 10

13 Vanguard Conservative Allocation Portfolio About Your Portfolio s Expenses As a shareholder of the portfolio, you incur ongoing costs, which include costs for portfolio management, administrative services, and shareholder reports (like this one), among others. Operating expenses, which are deducted from a portfolio s gross income, directly reduce the investment return of the portfolio. A typical portfolio s expenses are expressed as a percentage of its average net assets. The Conservative Allocation Portfolio has no direct expenses, but bears its proportionate share of the expenses of the underlying funds in which it invests. These indirect expenses make up the acquired fund fees and expenses, also expressed as a percentage of average net assets. The following examples are intended to help you understand the ongoing costs (in dollars) of investing in your portfolio and to compare these costs with those of other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period. The costs were calculated using the acquired fund fees and expenses for the Conservative Allocation Portfolio. The accompanying table illustrates your portfolio s costs in two ways: Based on actual portfolio return. This section helps you to estimate the actual expenses that you paid over the period. The Ending Account Value shown is derived from the portfolio s actual return, and the third column shows the dollar amount that would have been paid by an investor who started with $1,000 in the portfolio. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for your portfolio under the heading Expenses Paid During Period. Based on hypothetical 5% yearly return. This section is intended to help you compare your portfolio s costs with those of other mutual funds. It assumes that the portfolio had a yearly return of 5% before expenses, but that the expense ratio is unchanged. In this case because the return used is not the portfolio s actual return the results do not apply to your investment. The example is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to calculate expenses based on a 5% return. You can assess your portfolio s costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds. Note that the expenses shown in the table are meant to highlight and help you compare ongoing costs only. The portfolio s expense figure does not reflect additional fees and expenses associated with the annuity or life insurance program through which you invest. The calculations assume no shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions. You can find more information about the portfolio s expenses in the Financial Statements section. For additional information on operating expenses and other shareholder costs, please refer to the prospectus. Six Months Ended December 31, 2014 Beginning Ending Expenses Account Value Account Value Paid During Conservative Allocation Portfolio 6/30/ /31/2014 Period 1 Based on Actual Portfolio Return $1, $1, $0.97 Based on Hypothetical 5% Yearly Return 1, , The calculations are based on the Conservative Allocation Portfolio s acquired fund fees and expenses for the most recent six-month period. The Conservative Allocation Portfolio s annualized expense figure for that period is 0.19%. The dollar amounts shown as Expenses Paid are equal to the annualized average weighted expense ratio for the underlying funds, multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by the number of days in the most recent 12-month period. 11

14 Vanguard Equity Index Portfolio U.S. stocks continued to advance smartly in 2014 thanks to better-than-expected domestic economic growth, low interest rates and inflation, and strong corporate profits. For the fiscal year ended December 31, 2014, Vanguard Equity Index Portfolio returned 13.51%. The portfolio s performance was in line with that of its benchmark index and exceeded the average return of peer funds. The table below shows the returns of your portfolio and its comparative standards for the year. For additional perspective, we also present their annualized returns for the past ten years. Please note that the portfolio returns in Vanguard Variable Insurance Fund are different from those in Vanguard Variable Annuity (and other plans that invest in the fund), which take into account insurancerelated expenses. Nearly every sector did well as the U.S. economy expanded In contrast to a year ago, large-capitalization stocks handsomely outpaced their small-cap brethren during the 12 months. Concerned about high valuations, investors were less willing to invest in smaller companies, which can offer higher growth potential but can also be riskier and more volatile. In such an environment, the S&P 500 Index returned more than 13%. This index, the Equity Index Portfolio s benchmark, consists of 500 of the largest U.S. companies and accounts for more than three-quarters of the U.S. stock market s value. Like its benchmark index, Vanguard Equity Index Portfolio posted gains in nine of the market s ten industry sectors. Two had an outsized impact. Technology firms were powered by increased corporate spending and a surge in mobile device sales. And health care companies benefited from new product development, mergers and acquisitions, and strategic alliances among pharmaceutical and biotechnology companies. Improvement in the employment situation, falling gas prices, and increased consumer confidence boosted the economy as well, helping the consumer discretionary and consumer staples sectors. Utilities a small, often unheralded sector posted the highest return (+28%) as the severe winter led to increased earnings and lower interest rates sent investors searching for higher yields. Not surprisingly, energy-related stocks were hurt by tumbling oil prices, recording the only negative return among industry groups. The portfolio s long-term record shows the benefit of low costs For the decade through December 2014, the Equity Index Portfolio recorded an average annual return of 7.57%. This result was quite close to that of the fund s target, the S&P 500 Index, which has no transaction costs or operating expenses. Vanguard Equity Investment Group, the portfolio s advisor, deserves credit for its successful tracking of the index, particularly considering the extreme market volatility that accompanied the financial crisis of The advisor was helped by the portfolio s low expenses, which are far below the average for its peer group. Over the decade, the portfolio outdistanced the 6.67% average annual result of its peers. Total Returns Ten Years Ended December 31, 2014 Year Ended Average December 31, 2014 Annual Return Vanguard Equity Index Portfolio 13.51% 7.57% S&P 500 Index Variable Insurance Large-Cap Core Funds Average The figures shown represent past performance, which is not a guarantee of future results. (Current performance may be lower or higher than the performance data cited. For performance data current to the most recent monthend, visit our website at vanguard.com/performance.) Note, too, that both investment returns and principal value can fluctuate widely, so an investor s shares, when sold, could be worth more or less than their original cost. Expense Ratios 2 Your Portfolio Compared With Its Peer Group Variable Insurance Large-Cap Core Portfolio Funds Average Equity Index Portfolio 0.16% 0.41% Whether gains continue or not, focus on timeless principles Whether the market continues to perform well or turns downward, we believe that following four timeless, straightforward principles can help put you on the right track toward investment success: setting goals, staying diversified, holding down costs, and sticking to a long-term plan. All four principles are essential, and the order in which they re listed is intentional. You can read more about our principles in Vanguard s Principles for Investment Success, available at vanguard.com/ research. 1 Derived from data provided by Lipper, a Thomson Reuters Company. 2 The portfolio expense ratio shown is from the prospectus dated April 30, 2014, and represents estimated costs for the current fiscal year. For the fiscal year ended December 31, 2014, the portfolio s expense ratio was 0.16%. The peer-group expense ratio is derived from data provided by Lipper, a Thomson Reuters Company, and captures information through year-end

15 Vanguard Equity Index Portfolio Portfolio Profile As of December 31, 2014 Portfolio Characteristics Target Broad Portfolio Index 1 Index 2 Number of Stocks ,776 Median Market Cap $77.2B $77.2B $48.1B Price/Earnings Ratio 19.3x 19.3x 20.6x Price/Book Ratio 2.8x 2.8x 2.7x Yield 3 1.8% 2.0% 1.9% Return on Equity 19.2% 19.0% 17.8% Earnings Growth Rate 15.4% 15.4% 15.4% Foreign Holdings 0.0% 0.0% 0.0% Turnover Rate 7% Expense Ratio % Short-Term Reserves 0.2% Volatility Measures Portfolio Versus Portfolio Versus Target Index 1 Broad Index 2 R-Squared Beta Sector Diversification (% of equity exposure) Target Broad Portfolio Index 1 Index 2 Consumer Discretionary 12.1% 12.1% 12.9% Consumer Staples Energy Financials Health Care Industrials Information Technology Materials Telecommunication Services Utilities Ten Largest Holdings 5 (% of total net assets) Apple Inc. Technology Hardware, Storage & Peripherals 3.5% Exxon Mobil Corp. Integrated Oil & Gas 2.1 Microsoft Corp. Systems Software 2.1 Google Inc. Internet Software & Services 1.7 Johnson & Johnson Pharmaceuticals 1.6 Berkshire Hathaway Inc. Multi-Sector Holdings 1.5 Wells Fargo & Co. Diversified Banks 1.4 General Electric Co. Industrial Conglomerates 1.4 Procter & Gamble Co. Household Products 1.3 JPMorgan Chase & Co. Diversified Banks 1.3 Top Ten 17.9% Investment Focus Style Value Blend Growth Market Cap Large Medium Small 30-Day SEC Yield. A portfolio s 30-day SEC yield is derived using a formula specified by the U.S. Securities and Exchange Commission. Under the formula, data related to the portfolio s security holdings in the previous 30 days are used to calculate the portfolio s hypothetical net income for that period, which is then annualized and divided by the portfolio s estimated average net assets over the calculation period. For the purposes of this calculation, a security s income is based on its current market yield to maturity (for bonds) its actual income (for asset-backed securities), or its projected dividend yield (for stocks). Because the SEC yield represents hypothetical annualized income, it will differ at times significantly from the portfolio s actual experience. As a result, the portfolio s income distributions may be higher or lower than implied by the SEC yield. Beta. A measure of the magnitude of a portfolio s past share-price fluctuations in relation to the ups and downs of a given market index. The index is assigned a beta of Compared with a given index, a portfolio with a beta of 1.20 typically would have seen its share price rise or fall by 12% when the index rose or fell by 10%. For this report, beta is based on returns over the past 36 months for both the portfolio and the index. Equity Exposure. A measure that reflects a portfolio s investments in stocks and stock futures. Any holdings in short-term reserves are excluded. R-Squared. A measure of how much of a portfolio s past returns can be explained by the returns from the market in general, as measured by a given index. If a portfolio s total returns were precisely synchronized with an index s returns, its R-squared would be If the portfolio s returns bore no relationship to the index s returns, its R-squared would be 0. For this report, R-squared is based on returns over the past 36 months for both the portfolio and the index. 1 S&P 500 Index. 2 Dow Jones U.S. Total Stock Market Float Adjusted Index day SEC yield for the portfolio; annualized dividend yield for the indexes. 4 The expense ratio shown is from the prospectus dated April 30, 2014, and represents estimated costs for the current fiscal year. For the fiscal year ended December 31, 2014, the expense ratio was 0.16%. 5 The holdings listed exclude any temporary cash investments and equity index products. 13

16 Vanguard Equity Index Portfolio Performance Summary All of the returns in this report represent past performance, which is not a guarantee of future results that may be achieved by the portfolio. (Current performance may be lower or higher than the performance data cited. For performance data current to the most recent month-end, visit our website at vanguard.com/performance.) Note, too, that both investment returns and principal value can fluctuate widely, so an investor s shares, when sold, could be worth more or less than their original cost. The returns shown do not reflect taxes that a shareholder would pay on portfolio distributions or on the sale of portfolio shares. Nor do the returns reflect fees and expenses associated with the annuity or life insurance program through which a shareholder invests. If these fees and expenses were included, the portfolio s returns would be lower. Cumulative Performance: December 31, 2004 December 31, 2014 Initial Investment of $10,000 $25,000 20, ,000 Average Annual Total Returns Final Value Periods Ended December 31, 2014 of a $10,000 One Year Five Years Ten Years Investment Equity Index Portfolio 13.51% 15.28% 7.57% $20,747 S&P 500 Index ,947 Variable Insurance Large-Cap Core Funds Average ,073 Dow Jones U.S. Total Stock Market Float Adjusted Index ,779 Fiscal Year Total Returns (%): December 31, 2004 December 31, Equity Index Portfolio S&P 500 Index 1 Derived from data provided by Lipper, a Thomson Reuters Company. See Financial Highlights for dividend and capital gains information. 14

17 Vanguard Equity Index Portfolio Financial Statements Statement of Net Assets As of December 31, 2014 The portfolio reports a complete list of its holdings in regulatory filings four times in each fiscal year, at the quarter-ends. For the second and fourth fiscal quarters, the lists appear in the portfolio s semiannual and annual reports to shareholders. For the first and third fiscal quarters, the portfolio files the lists with the Securities and Exchange Commission on Form N-Q. Shareholders can look up the portfolio s Forms N-Q on the SEC s website at sec.gov. Forms N-Q may also be reviewed and copied at the SEC s Public Reference Room (see the back cover of this report for further information). Market Value Shares ($000) Common Stocks (99.5%) 1 Consumer Discretionary (12.1%) Walt Disney Co. 322,135 30,342 Comcast Corp. Class A 505,445 29,321 Home Depot Inc. 271,911 28,543 * Amazon.com Inc. 78,332 24,310 McDonald s Corp. 200,891 18,824 Time Warner Inc. 173,151 14,791 Twenty-First Century Fox Inc. Class A 383,030 14,710 NIKE Inc. Class B 144,139 13,859 Lowe s Cos. Inc. 200,601 13,801 Starbucks Corp. 154,501 12,677 * Priceline Group Inc. 10,809 12,325 Ford Motor Co. 793,581 12,301 Target Corp. 131,604 9,990 TJX Cos. Inc. 142,225 9,754 General Motors Co. 278,627 9,727 * DIRECTV 103,702 8,991 Time Warner Cable Inc. 57,993 8,818 Johnson Controls Inc. 137,725 6,658 Yum! Brands Inc. 90,445 6,589 Viacom Inc. Class B 76,426 5,751 CBS Corp. Class B 98,581 5,456 VF Corp. 71,140 5,328 Macy s Inc. 71,423 4,696 Delphi Automotive plc 60,919 4,430 * Dollar General Corp. 62,488 4,418 L Brands Inc. 50,689 4,387 * Chipotle Mexican Grill Inc. Class A 6,396 4,378 * Netflix Inc. 12,403 4,237 Carnival Corp. 92,825 4,208 * AutoZone Inc. 6,593 4,082 Ross Stores Inc. 43,276 4,079 * O Reilly Automotive Inc. 21,027 4,050 Omnicom Group Inc. 51,415 3,983 Marriott International Inc. Class A 43,704 3,410 Genuine Parts Co. 31,418 3,348 * Michael Kors Holdings Ltd. 42,459 3,189 Whirlpool Corp. 16,025 3,105 Starwood Hotels & Resorts Worldwide Inc. 36,947 2,995 * Dollar Tree Inc. 42,528 2,993 * CarMax Inc. 44,287 2,949 * Bed Bath & Beyond Inc. 38,308 2,918 Harley-Davidson Inc. 44,036 2,902 Royal Caribbean Cruises Ltd. 34,492 2,843 BorgWarner Inc. 46,750 2,569 Kohl s Corp. 41,971 2,562 Wynn Resorts Ltd. 16,655 2,478 Tiffany & Co. 23,107 2,469 Staples Inc. 131,851 2,389 Best Buy Co. Inc. 60,091 2,342 * Under Armour Inc. Class A 34,467 2,340 Nordstrom Inc. 29,246 2,322 Gap Inc. 54,909 2,312 Ralph Lauren Corp. Class A 12,432 2,302 Market Value Shares ($000) Tractor Supply Co. 28,246 2,226 Wyndham Worldwide Corp. 25,576 2,193 Mattel Inc. 70,058 2,168 PVH Corp. 16,905 2,167 Coach Inc. 56,961 2,139 Newell Rubbermaid Inc. 56,035 2,134 * Mohawk Industries Inc. 12,758 1,982 H&R Block Inc. 57,118 1,924 * Discovery Communications Inc. 56,718 1,913 Interpublic Group of Cos. Inc. 86,267 1,792 Expedia Inc. 20,317 1,734 * TripAdvisor Inc. 23,217 1,733 DR Horton Inc. 67,927 1,718 Lennar Corp. Class A 37,045 1,660 PetSmart Inc. 20,387 1,657 * News Corp. Class A 103,623 1,626 Goodyear Tire & Rubber Co. 56,384 1,611 Darden Restaurants Inc. 27,149 1,592 Scripps Networks Interactive Inc. Class A 20,871 1,571 Family Dollar Stores Inc. 19,672 1,558 Comcast Corp. 26,563 1,529 Harman International Industries Inc. 14,252 1,521 PulteGroup Inc. 69,325 1,488 Gannett Co. Inc. 46,232 1,476 Garmin Ltd. 24,915 1,316 Hasbro Inc. 23,490 1,292 Leggett & Platt Inc. 28,144 1,199 * Discovery Communications Inc. Class A 30,318 1,044 * Fossil Group Inc. 9,159 1,014 Cablevision Systems Corp. Class A 45, * AutoNation Inc. 15, GameStop Corp. Class A 22, * Urban Outfitters Inc. 21, ,894 Consumer Staples (9.7%) Procter & Gamble Co. 557,824 50,812 Coca-Cola Co. 813,887 34,362 PepsiCo Inc. 308,800 29,200 Wal-Mart Stores Inc. 325,829 27,982 Philip Morris International Inc. 320,600 26,113 CVS Health Corp. 236,561 22,783 Altria Group Inc. 407,775 20,091 * Walgreens Boots Alliance Inc. 179,435 13,673 Costco Wholesale Corp. 90,372 12,810 Mondelez International Inc. Class A 346,655 12,592 Colgate-Palmolive Co. 176,772 12,231 Kimberly-Clark Corp. 76,812 8,875 Kraft Foods Group Inc. 121,520 7,615 Archer-Daniels-Midland Co. 132,712 6,901 General Mills Inc. 124,714 6,651 Market Value Shares ($000) Kroger Co. 101,519 6,519 Sysco Corp. 121,008 4,803 Lorillard Inc. 74,249 4,673 Mead Johnson Nutrition Co. 41,681 4,191 Reynolds American Inc. 63,503 4,081 Whole Foods Market Inc. 74,540 3,758 Estee Lauder Cos. Inc. Class A 46,068 3,510 * Constellation Brands Inc. Class A 34,605 3,397 Kellogg Co. 51,818 3,391 Keurig Green Mountain Inc. 24,978 3,307 * Monster Beverage Corp. 29,722 3,220 Hershey Co. 30,590 3,179 ConAgra Foods Inc. 87,471 3,174 Dr Pepper Snapple Group Inc. 39,942 2,863 Brown-Forman Corp. Class B 32,375 2,844 Clorox Co. 26,687 2,781 Molson Coors Brewing Co. Class B 33,060 2,464 Tyson Foods Inc. Class A 60,632 2,431 JM Smucker Co. 20,895 2,110 Coca-Cola Enterprises Inc. 46,265 2,046 McCormick & Co. Inc. 26,565 1,974 Safeway Inc. 47,192 1,657 Campbell Soup Co. 37,216 1,638 Hormel Foods Corp. 27,560 1,436 Avon Products Inc. 89, ,974 Energy (8.4%) Exxon Mobil Corp. 874,027 80,804 Chevron Corp. 390,361 43,791 Schlumberger Ltd. 265,505 22,677 ConocoPhillips 254,187 17,554 Kinder Morgan Inc. 350,584 14,833 Occidental Petroleum Corp. 159,945 12,893 EOG Resources Inc. 113,182 10,421 Anadarko Petroleum Corp. 104,609 8,630 Phillips ,240 8,191 Halliburton Co. 174,770 6,874 Williams Cos. Inc. 139,131 6,253 National Oilwell Varco Inc. 88,722 5,814 Valero Energy Corp. 107,835 5,338 Marathon Petroleum Corp. 57,952 5,231 Spectra Energy Corp. 138,133 5,014 Baker Hughes Inc. 89,085 4,995 Apache Corp. 77,489 4,856 Devon Energy Corp. 79,223 4,849 Pioneer Natural Resources Co. 30,747 4,577 Marathon Oil Corp. 139,083 3,935 Hess Corp. 52,286 3,860 Noble Energy Inc. 74,286 3,523 Cabot Oil & Gas Corp. 85,424 2,529 EQT Corp. 31,457 2,381 * FMC Technologies Inc. 48,110 2,253 ONEOK Inc. 43,212 2,151 15

18 Vanguard Equity Index Portfolio Market Value Shares ($000) Chesapeake Energy Corp. 107,643 2,107 * Cameron International Corp. 40,557 2,026 * Southwestern Energy Co. 73,175 1,997 Tesoro Corp. 26,263 1,953 Cimarex Energy Co. 18,106 1,919 Range Resources Corp. 34,581 1,848 Murphy Oil Corp. 34,237 1,730 CONSOL Energy Inc. 47,106 1,593 Helmerich & Payne Inc. 22,228 1,499 Ensco plc Class A 48,629 1,456 ^ Transocean Ltd. 69,758 1,279 Noble Corp. plc 52, Nabors Industries Ltd. 59, * Newfield Exploration Co. 28, QEP Resources Inc. 34, Denbury Resources Inc. 72, Diamond Offshore Drilling Inc. 14, ,842 Financials (16.6%) Wells Fargo & Co. 974,460 53,420 * Berkshire Hathaway Inc. Class B 344,963 51,796 JPMorgan Chase & Co. 771,632 48,289 Bank of America Corp. 2,170,946 38,838 Citigroup Inc. 625,527 33,847 American Express Co. 183,690 17,090 US Bancorp 369,382 16,604 Goldman Sachs Group Inc. 83,556 16,196 American International Group Inc. 289,060 16,190 MetLife Inc. 234,368 12,677 Morgan Stanley 315,016 12,223 Simon Property Group Inc. 64,218 11,695 PNC Financial Services Group Inc. 108,596 9,907 Capital One Financial Corp. 114,828 9,479 Bank of New York Mellon Corp. 232,268 9,423 BlackRock Inc. 26,298 9,403 Prudential Financial Inc. 94,465 8,545 American Tower Corporation 81,940 8,100 ACE Ltd. 68,493 7,868 Travelers Cos. Inc. 68,451 7,246 Charles Schwab Corp. 237,461 7,169 State Street Corp. 86,300 6,775 Marsh & McLennan Cos. Inc. 111,871 6,403 Discover Financial Services 93,643 6,133 Allstate Corp. 86,684 6,090 BB&T Corp. 148,995 5,794 CME Group Inc. 65,235 5,783 Aflac Inc. 93,264 5,697 Aon plc 58,986 5,594 Public Storage 29,899 5,527 Crown Castle International Corp. 68,829 5,417 Equity Residential 74,604 5,360 Health Care REIT Inc. 67,531 5,110 Intercontinental Exchange Inc. 23,215 5,091 Chubb Corp. 48,773 5,047 Ameriprise Financial Inc. 38,127 5,042 McGraw Hill Financial Inc. 55,945 4,978 * Berkshire Hathaway Inc. Class A 21 4,746 T. Rowe Price Group Inc. 53,639 4,605 Market Value Shares ($000) SunTrust Banks Inc. 107,331 4,497 Franklin Resources Inc. 81,124 4,492 AvalonBay Communities Inc. 27,220 4,447 Prologis Inc. 103,121 4,437 Ventas Inc. 60,697 4,352 Vornado Realty Trust 36,094 4,249 HCP Inc. 94,631 4,167 Boston Properties Inc. 31,587 4,065 Weyerhaeuser Co. 108,155 3,882 Host Hotels & Resorts Inc. 156,118 3,711 Hartford Financial Services Group Inc. 88,764 3,701 Moody s Corp. 38,040 3,645 General Growth Properties Inc. 129,382 3,639 Invesco Ltd. 89,254 3,527 Fifth Third Bancorp 170,714 3,478 M&T Bank Corp. 27,301 3,430 Northern Trust Corp. 45,747 3,083 Lincoln National Corp. 53,450 3,082 Regions Financial Corp. 284,453 3,004 Progressive Corp. 110,179 2,974 Principal Financial Group Inc. 56,464 2,933 Essex Property Trust Inc. 13,167 2,720 Loews Corp. 61,527 2,585 KeyCorp 179,482 2,495 * Affiliated Managers Group Inc. 11,488 2,438 Macerich Co. 28,877 2,409 Kimco Realty Corp. 85,122 2,140 * CBRE Group Inc. Class A 57,916 1,984 Navient Corp. 84,435 1,825 XL Group plc Class A 53,043 1,823 Unum Group 52,223 1,821 Huntington Bancshares Inc. 167,245 1,759 Comerica Inc. 37,028 1,734 Cincinnati Financial Corp. 30,215 1,566 Plum Creek Timber Co. Inc. 36,269 1,552 Iron Mountain Inc. 38,769 1,499 Leucadia National Corp. 64,914 1,455 Torchmark Corp. 26,734 1,448 * E*TRADE Financial Corp. 59,151 1,435 Zions Bancorporation 41,595 1,186 NASDAQ OMX Group Inc. 24,217 1,161 Legg Mason Inc. 20,924 1,117 Apartment Investment & Management Co. Class A 29,033 1,079 Assurant Inc. 14,687 1,005 Hudson City Bancorp Inc. 98, People s United Financial Inc. 63, * Genworth Financial Inc. Class A 101, ,053 Health Care (14.1%) Johnson & Johnson 577,750 60,415 Pfizer Inc. 1,300,670 40,516 Merck & Co. Inc. 588,661 33,430 * Gilead Sciences Inc. 311,538 29,366 Amgen Inc. 157,046 25,016 AbbVie Inc. 328,830 21,519 Bristol-Myers Squibb Co. 342,496 20,218 UnitedHealth Group Inc. 198,100 20,026 * Celgene Corp. 164,780 18,432 * Biogen Idec Inc. 48,768 16,554 Medtronic Inc. 203,092 14,663 * Actavis plc 54,664 14,071 Abbott Laboratories 310,730 13,989 Market Value Shares ($000) Eli Lilly & Co. 202,209 13,950 Allergan Inc. 61,465 13,067 * Express Scripts Holding Co. 151,410 12,820 Thermo Fisher Scientific Inc. 82,539 10,341 McKesson Corp. 47,854 9,933 Covidien plc 93,586 9,572 Baxter International Inc. 111,993 8,208 * Alexion Pharmaceuticals Inc. 41,043 7,594 * Anthem Inc. 55,758 7,007 Aetna Inc. 72,586 6,448 * Regeneron Pharmaceuticals Inc. 15,353 6,299 * Vertex Pharmaceuticals Inc. 49,585 5,891 Stryker Corp. 61,588 5,810 Cigna Corp. 54,009 5,558 Cardinal Health Inc. 68,469 5,527 Becton Dickinson and Co. 39,539 5,502 Perrigo Co. plc 29,054 4,857 Humana Inc. 31,614 4,541 Zoetis Inc. 103,271 4,444 * Mylan Inc. 77,132 4,348 * Cerner Corp. 62,676 4,053 Zimmer Holdings Inc. 34,908 3,959 * Intuitive Surgical Inc. 7,462 3,947 AmerisourceBergen Corp. Class A 43,006 3,877 St. Jude Medical Inc. 58,879 3,829 * Boston Scientific Corp. 273,362 3,622 Agilent Technologies Inc. 69,031 2,826 * Edwards Lifesciences Corp. 22,061 2,810 * DaVita HealthCare Partners Inc. 35,604 2,697 CR Bard Inc. 15,564 2,593 * CareFusion Corp. 42,075 2,497 * Mallinckrodt plc 23,961 2,373 * Hospira Inc. 35,017 2,145 Universal Health Services Inc. Class B 18,752 2,086 Quest Diagnostics Inc. 29,980 2,010 * Waters Corp. 17,207 1,940 * Laboratory Corp. of America Holdings 17,432 1,881 * Varian Medical Systems Inc. 20,572 1,780 DENTSPLY International Inc. 29,104 1,550 * Tenet Healthcare Corp. 20,094 1,018 PerkinElmer Inc. 23,156 1,013 Patterson Cos. Inc. 17, ,294 Industrials (10.4%) General Electric Co. 2,072,816 52,380 Union Pacific Corp. 183,566 21,868 3M Co. 132,337 21,746 United Technologies Corp. 175,138 20,141 Boeing Co. 136,856 17,789 Honeywell International Inc. 161,523 16,139 United Parcel Service Inc. Class B 143,995 16,008 Caterpillar Inc. 124,833 11,426 Danaher Corp. 126,192 10,816 Lockheed Martin Corp. 55,446 10,677 FedEx Corp. 54,355 9,439 General Dynamics Corp. 64,932 8,936 Emerson Electric Co. 143,210 8,840 Delta Air Lines Inc. 172,532 8,487 CSX Corp. 205,249 7,436 Precision Castparts Corp. 29,360 7,072 Illinois Tool Works Inc. 74,310 7,037 Norfolk Southern Corp. 63,761 6,989 16

19 Vanguard Equity Index Portfolio Market Value Shares ($000) Raytheon Co. 63,610 6,881 Eaton Corp. plc 97,777 6,645 Deere & Co. 74,091 6,555 Northrop Grumman Corp. 41,747 6,153 Southwest Airlines Co. 140,189 5,933 Cummins Inc. 35,084 5,058 PACCAR Inc. 73,030 4,967 Waste Management Inc. 87,635 4,497 Parker-Hannifin Corp. 30,712 3,960 * Tyco International plc 86,235 3,782 Ingersoll-Rand plc 54,779 3,472 Roper Industries Inc. 20,757 3,245 WW Grainger Inc. 12,560 3,201 Rockwell Automation Inc. 28,156 3,131 Stanley Black & Decker Inc. 32,327 3,106 Nielsen NV 66,745 2,985 Kansas City Southern 22,957 2,801 Fastenal Co. 56,468 2,686 AMETEK Inc. 50,804 2,674 Pentair plc 38,374 2,549 Dover Corp. 34,154 2,450 Textron Inc. 57,190 2,408 Rockwell Collins Inc. 27,661 2,337 * Stericycle Inc. 17,612 2,309 CH Robinson Worldwide Inc. 30,182 2,260 L-3 Communications Holdings Inc. 17,681 2,232 Pall Corp. 21,912 2,218 Republic Services Inc. Class A 52,402 2,109 * United Rentals Inc. 20,558 2,097 Equifax Inc. 24,920 2,015 Fluor Corp. 32,276 1,957 Masco Corp. 73,955 1,864 Expeditors International of Washington Inc. 39,958 1,783 Flowserve Corp. 28,044 1,678 Robert Half International Inc. 28,139 1,643 Snap-on Inc. 11,936 1,632 Cintas Corp. 20,250 1,588 Xylem Inc. 37,448 1,426 ADT Corp. 35,678 1,293 * Quanta Services Inc. 45,294 1,286 * Jacobs Engineering Group Inc. 27,272 1,219 Allegion plc 19,693 1,092 Pitney Bowes Inc. 41,558 1,013 Ryder System Inc. 10,883 1,010 Joy Global Inc. 20, Dun & Bradstreet Corp. 7, ,266 Information Technology (19.6%) Apple Inc. 1,210, ,622 Microsoft Corp. 1,701,444 79,032 Intel Corp. 998,189 36,224 * Facebook Inc. Class A 431,788 33,688 * Google Inc. Class A 58,812 31,209 * Google Inc. Class C 58,802 30,953 International Business Machines Corp. 189,952 30,476 Oracle Corp. 667,377 30,012 Cisco Systems Inc. 1,055,843 29,368 Visa Inc. Class A 100,762 26,420 QUALCOMM Inc. 343,063 25,500 MasterCard Inc. Class A 202,350 17,435 Hewlett-Packard Co. 385,040 15,452 * ebay Inc. 233,274 13,091 EMC Corp. 419,854 12,487 Texas Instruments Inc. 217,869 11,648 Market Value Shares ($000) Accenture plc Class A 129,465 11,563 * Yahoo! Inc. 181,779 9,182 Automatic Data Processing Inc. 99,533 8,298 * Micron Technology Inc. 221,799 7,765 * salesforce.com inc 121,320 7,196 * Adobe Systems Inc. 97,979 7,123 * Cognizant Technology Solutions Corp. Class A 125,844 6,627 Applied Materials Inc. 251,804 6,275 Corning Inc. 264,188 6,058 Intuit Inc. 58,859 5,426 TE Connectivity Ltd. 83,779 5,299 Avago Technologies Ltd. Class A 52,102 5,241 Western Digital Corp. 45,095 4,992 Broadcom Corp. Class A 110,968 4,808 Seagate Technology plc 67,450 4,485 SanDisk Corp. 45,641 4,472 * Alliance Data Systems Corp. 13,179 3,770 Symantec Corp. 142,352 3,652 Fidelity National Information Services Inc. 58,474 3,637 * Fiserv Inc. 50,530 3,586 Analog Devices Inc. 64,303 3,570 Amphenol Corp. Class A 64,100 3,449 Paychex Inc. 67,499 3,116 Xerox Corp. 221,817 3,074 * Electronic Arts Inc. 64,060 3,012 Motorola Solutions Inc. 43,539 2,921 * Autodesk Inc. 47,071 2,827 * Red Hat Inc. 38,768 2,680 NetApp Inc. 64,073 2,656 Lam Research Corp. 33,025 2,620 KLA-Tencor Corp. 33,893 2,383 Xilinx Inc. 54,376 2,354 Altera Corp. 63,279 2,338 * Akamai Technologies Inc. 36,552 2,301 Linear Technology Corp. 49,497 2,257 NVIDIA Corp. 106,706 2,140 * Citrix Systems Inc. 33,096 2,112 CA Inc. 66,547 2,026 * F5 Networks Inc. 15,206 1,984 Western Union Co. 108,399 1,941 Microchip Technology Inc. 41,607 1,877 Computer Sciences Corp. 28,914 1,823 Juniper Networks Inc. 79,171 1,767 Harris Corp. 21,459 1,541 * Teradata Corp. 31,808 1,389 * VeriSign Inc. 22,350 1,274 Total System Services Inc. 33,848 1,150 FLIR Systems Inc. 29, * First Solar Inc. 15, ,281 Materials (3.1%) EI du Pont de Nemours & Co. 186,812 13,813 Monsanto Co. 99,980 11,945 Dow Chemical Co. 228,548 10,424 Praxair Inc. 60,134 7,791 LyondellBasell Industries NV Class A 85,896 6,819 PPG Industries Inc. 28,313 6,545 Ecolab Inc. 55,675 5,819 Air Products & Chemicals Inc. 39,635 5,717 Freeport-McMoRan Inc. 213,890 4,996 International Paper Co. 87,406 4,683 Sherwin-Williams Co. 16,793 4,417 Market Value Shares ($000) Alcoa Inc. 242,679 3,832 Sigma-Aldrich Corp. 24,615 3,379 Nucor Corp. 65,760 3,225 Mosaic Co. 65,243 2,978 CF Industries Holdings Inc. 10,273 2,800 Eastman Chemical Co. 30,606 2,322 Newmont Mining Corp. 103,481 1,956 Ball Corp. 28,372 1,934 Sealed Air Corp. 43,396 1,841 Vulcan Materials Co. 27,277 1,793 International Flavors & Fragrances Inc. 16,642 1,687 Airgas Inc. 13,779 1,587 FMC Corp. 27,294 1,557 MeadWestvaco Corp. 34,478 1,530 Martin Marietta Materials Inc. 12,924 1,426 Avery Dennison Corp. 18, * Owens-Illinois Inc. 33, Allegheny Technologies Inc. 22, ,484 Telecommunication Services (2.3%) Verizon Communications Inc. 856,708 40,077 AT&T Inc. 1,070,881 35,971 CenturyLink Inc. 117,474 4,650 * Level 3 Communications Inc. 57,565 2,842 Frontier Communications Corp. 205,102 1,368 Windstream Holdings Inc. 123,358 1,016 85,924 Utilities (3.2%) Duke Energy Corp. 145,912 12,190 NextEra Energy Inc. 90,189 9,586 Dominion Resources Inc. 120,668 9,279 Southern Co. 185,892 9,129 Exelon Corp. 177,623 6,586 American Electric Power Co. Inc. 100,763 6,118 Sempra Energy 47,611 5,302 PG&E Corp. 97,825 5,208 PPL Corp. 136,969 4,976 Edison International 67,113 4,395 Public Service Enterprise Group Inc. 104,287 4,319 Consolidated Edison Inc. 60,367 3,985 Xcel Energy Inc. 104,240 3,744 Northeast Utilities 65,234 3,491 FirstEnergy Corp. 86,802 3,384 Entergy Corp. 37,193 3,254 DTE Energy Co. 36,548 3,157 NiSource Inc. 65,151 2,764 Wisconsin Energy Corp. 46,676 2,462 Ameren Corp. 50,311 2,321 CenterPoint Energy Inc. 89,089 2,087 CMS Energy Corp. 57,060 1,983 NRG Energy Inc. 70,174 1,891 AES Corp. 136,170 1,875 SCANA Corp. 29,651 1,791 Pinnacle West Capital Corp. 22,657 1,548 Pepco Holdings Inc. 52,376 1,411 AGL Resources Inc. 24,504 1,336 Integrys Energy Group Inc. 16,422 1,278 TECO Energy Inc. 47, ,830 Total Common Stocks (Cost $2,746,464) 3,765,842 17

20 Vanguard Equity Index Portfolio Market Value Shares ($000) Temporary Cash Investments (0.8%) 1 Money Market Fund (0.7%) 2,3 Vanguard Market Liquidity Fund, 0.126% 25,352,179 25,352 Face Amount ($000) U.S. Government and Agency Obligations (0.1%) 4,5 Federal Home Loan Bank Discount Notes, 0.095%, 2/20/ ,6 Freddie Mac Discount Notes, 0.050%, 1/14/15 2,000 2,000 2,200 Total Temporary Cash Investments (Cost $27,552) 27,552 Total Investments (100.3%) (Cost $2,774,016) 3,793,394 Other Assets and Liabilities ( 0.3%) Other Assets 7,479 Liabilities 3 (17,003) (9,524) Net Assets (100%) Applicable to 109,863,391 outstanding $.001 par value shares of beneficial interest (unlimited authorization) 3,783,870 Net Asset Value Per Share $34.44 At December 31, 2014, net assets consisted of: Amount ($000) Paid-in Capital 2,589,523 Undistributed Net Investment Income 59,268 Accumulated Net Realized Gains 115,231 Unrealized Appreciation (Depreciation) Investment Securities 1,019,378 Futures Contracts 470 Net Assets 3,783,870 See Note A in Notes to Financial Statements. * Non-income-producing security. ^ Includes partial security positions on loan to broker-dealers. The total value of securities on loan is $233, The portfolio invests a portion of its cash reserves in equity markets through the use of index futures contracts. After giving effect to futures investments, the portfolio s effective common stock and temporary cash investment positions represent 100.0% and 0.3%, respectively, of net assets. 2 Affiliated money market fund available only to Vanguard funds and certain trusts and accounts managed by Vanguard. Rate shown is the 7-day yield. 3 Includes $254,000 of collateral received for securities on loan. 4 The issuer operates under a congressional charter; its securities are generally neither guaranteed by the U.S. Treasury nor backed by the full faith and credit of the U.S. government. 5 Securities with a value of $1,400,000 have been segregated as initial margin for open futures contracts. 6 The issuer was placed under federal conservatorship in September 2008; since that time, its daily operations have been managed by the Federal Housing Finance Agency and it receives capital from the U.S. Treasury, as needed to maintain a positive net worth, in exchange for senior preferred stock. REIT Real Estate Investment Trust. See accompanying Notes, which are an integral part of the Financial Statements. 18