Real value. Real diversification. Vanguard ETFs.

Transcription

1 Real value. Real diversification. Vanguard s. Achieve broad diversification across multiple asset classes with Vanguard s low cost exchange traded funds.

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3 Contents Introducing Vanguard s exchange traded funds 2 Exchange traded fund profiles 4 Investing with Vanguard 16 1

4 Vanguard s range of exchange traded funds Introducing Vanguard s exchange traded funds Achieve broad diversification across multiple asset classes with Vanguard s low cost exchange traded funds. VAF VAP VHY Vanguard Australian Fixed Interest Index Vanguard Australian Property Securities Index Vanguard Australian Shares High Yield IRESS code: VAF.AXW VAP.AXW VHY.AXW Management cost: (% p.a.) size: $31.3 million $166.9 million $376.1 million Benchmark: UBS Composite Bond Index S&P/ASX 300 A-REIT Index FTSE ASFA Australia High Dividend Yield Index Summary: Exposure to around 360 bonds issued by the Australian Government, government related and investment-grade corporate issuers Capital stability alongside a regular income stream Largest issuers are Commonwealth of Australia, State of Queensland, State of New South Wales and State of Victoria Exposure to retail, office, industrial, and multi-sector property securities listed on the ASX Potential for taxdeferred income Largest holdings are Westfield, Westfield Retail Trust, Stockland, Goodman Group and Mirvac Exposure to around 50 ASX listed companies expected to pay above average dividends The forecast yield and forecast grossed-up yield are 5.53% and 7.58% respectively Largest holdings are Telstra, Wesfarmers, Westpac, Woodside Petroleum and Commonwealth Bank of Australia 2 Data as at 31March 2014

5 Vanguard s range of exchange traded funds VSO VEU VTS VGE Vanguard MSCI Australian Small Companies Index Vanguard Australian Fixed Interest Index Vanguard Australian Fixed Interest Index Vanguard Australian Fixed Interest Index VSO.AXW VEU.AXW VTS.AXW VGE.AXW $40.9 million $12.8 billion $44.7 billion $5.9 million MSCI Australian Shares Small Cap Index FTSE All World ex US Index (in AUD) CRSP US Total Market Index (in AUD) FTSE Emerging Index (in AUD) Exposure to the smallest 14% of ASX listed companies Diversified across growth and value styles Largest holdings are Challenger, Bluescope Steel, Ansell, Commonwealth Property Office and Duet Group Exposure to 46 countries, holding around 2,250 securities Includes both developed and emerging markets Largest holdings are Nestle SA, Royal Dutch Shell plc, HSBC Holdings plc, Roche Holding AG and Novartis AG Highly diversified exposure to 99% of the US share market Holding over 3,500 securities Largest holdings are Apple, Exxon Mobil, Google, Microsoft, General Electric and Johnson & Johnson. Opportunity to participate in the growth potential of some of the world s fastest growing economies Exposure to around 900 securities from 22 emerging market countries Largest country exposures are China, Taiwan, South Africa, Brazil and India 3

6 Vanguard s range of exchange traded funds Fund profile 31 March 2014 Vanguard Australian Fixed Interest Index Summary As at 31 March 2014 name ASX code ISIN Benchmark Management costs Distribution frequency Distribution reinvestment plan Vanguard Australian Fixed Interest Index VAF AU000000VAF8 UBS Composite Bond Index 0.20% p.a. Quarterly Yes listed on ASX 31 October 2012 Underlying fund Vanguard Australian Fixed Interest Index Fund Underlying fund 6 June 1997 commencement date Vanguard exchange traded funds (s) are diversified portfolios of securities constructed using an indexing approach that can be readily traded on the ASX. As an index manager, Vanguard Investments Australia Ltd (Vanguard) aims to deliver the index return, before fees, by building investment portfolios using similar assets and weightings to the benchmark index. This means Vanguard returns, before costs, should closely match the indices they track. The Vanguard Australian Fixed Interest Index (ASX code: VAF) invests in Australian Government, Government related and corporate fixed income securities and seeks to track the return (income and capital appreciation) of the UBS Composite Bond Index before fund fees and expenses. The fund offers a true to label fixed interest strategy that preserves the diversification and risk characteristics of the asset class by investing in a broad range of high grade securities. About the Index The UBS Composite Bond Index is designed to measure the performance of the investment grade Australian bond market. The securities in the index are determined by reference to credit rating levels published by independent bond rating firms, issued with a minimum size of AUD 100 million and have a final maturity of less than 50 years. The index includes fixed income securities (bonds) issued by the Commonwealth Government of Australia, Australian semi-government entities, supranational and sovereign entities and corporate entities. Summary risk level Low- relatively stable returns, with a low potential for loss of capital. Please see Product Disclosure Statement for further details. Vanguard, the Indexing Specialist The Vanguard Group, Inc. is one of the world s largest investment groups. In Australia, Vanguard has established a reputation as an indexing specialist, using our low cost and diversified approach to investment management. Vanguard Product Profile Vanguard launched its first s in the Australian marketplace in May In the US, Vanguard is one of the largest providers in the well established market, since launching s in

7 Vanguard s range of exchange traded funds Overview Holdings 6 Underlying fund Top 10 issuers Size (AUD) $31.3 million $3,686.3 million 1 Australia (Commonwealth Of) Inception date 29 October June Queensland (State Of) Management costs 0.20% p.a 3 New South Wales (State Of) Yield to maturity 3.61% 4 Victoria (State Of) No. of issuers KFW International Finance No. of securities Western Australia (State Of) Effective duration (yrs) European Investment Bank Benchmark UBS Composite Bond Index 8 Landwirtschaftliche Rentenbank Underlying fund Vanguard Australian Fixed Interest Index Fund 9 South Australia (State Of) 10 Westpac Banking Corporation Performance return 1,2,3 (%) The Top 10 holdings represent 77.7% of the total underlying fund Gross Bmk Total Dist Growth Sector allocation 6 (%) 1 month months Treasury 6 months year Government Related 3 years (pa) n/a n/a n/a n/a n/a 5 years (pa) n/a n/a n/a n/a n/a Corporate 10 years (pa) n/a n/a n/a n/a n/a Inception (pa) Securitised Year to year gross return 1,2,3 (%) Dec - Dec June - June Bmk Bmk YTD Credit allocation 6 (%) n/a n/a 2012 n/a n/a n/a n/a 2011 n/a n/a n/a n/a AAA 2010 n/a n/a n/a n/a Prices 4 Month ended Net asset value 31 March 2014 $ Income distribution 5 Quarter ended Amount (CPU) Reinvestment price 31 March $ AA A BBB Notes 1. Past performance is not an indication of future performance 2. Returns assume reinvestment of all distributions. Returns for periods longer than 1 year are annualised. gross returns are before management costs and taxes, but after transaction and operational costs. total return is the gross return less management costs. Index returns do not allow for taxes, management, transaction and operational costs. 3. Returns assume that an investor purchased shares at Net Asset Value (NAV) and does not reflect the transaction costs imposed on the creation and redemptions of Units, brokerage or the bid ask spread that investors pay to buy and sell securities on the Australian Securities Exchange. 4. Month end cumulative-distribution 5. Past distributions are not an indication of future distributions 6. Figures as per underlying fund 5

8 Exchange traded fund profiles Fund profile 31 March 2014 Vanguard Australian Property Securities Index Summary As at 31 March 2014 name ASX code ISIN Benchmark Management costs Distribution frequency Distribution reinvestment plan Vanguard Australian Property Securities Index VAP AU000000VAP7 S&P/ASX 300 A-REIT Index 0.25% p.a. Quarterly Yes listed on ASX 15 October 2010 Underlying fund Vanguard Australian Property Securities Index Fund Underlying fund 27 March 1998 commencement date Vanguard exchange traded funds (s) are diversified portfolios of securities constructed using an indexing approach that can be readily traded on the ASX. As an index manager, Vanguard Investments Australia Ltd (Vanguard) aims to deliver the index return, before fees, by building investment portfolios using similar assets and weightings to the benchmark index. This means Vanguard returns, before costs, should closely match the indices they track. The Vanguard Australian Property Securities Index (ASX code: VAP) provides a low cost way to invest in a portfolio of Australian real estate investment trusts (A-REITs) listed on the ASX across the retail, office, industrial, tourism, and infrastructure sectors. The investment objective is to match the return (income and capital appreciation) of the S&P/ASX 300 A-REIT Index before taking into account fund fees and expenses. About the Index The S&P/ASX Australian Indices are real-time, market capitalisation-weighted indices that include the largest and most liquid stocks in the Australian equity market listed on the ASX. The S&P/ASX 300 A-REIT Index is a sector-level index comprising of real estate investment trusts included in the S&P/ASX 300 Index. Summary risk level High- the potential for higher returns than lower risk investments, however there is potential for below average returns and/or some loss of capital. Please see Product Disclosure Statement for further details. Vanguard, the Indexing Specialist The Vanguard Group, Inc. is one of the world s largest investment groups. In Australia, Vanguard has established a reputation as an indexing specialist, using our low cost and diversified approach to investment management. Vanguard launched its first s in the Australian marketplace in May In the US, Vanguard is one of the largest providers in the well established market, since launching s in

9 Exchange traded fund profiles Overview Holdings 6 Underlying fund Top 10 holdings Size (AUD) $166.9 million $2,892.9 million 1 Westfield Inception date 11 October March Westfield Retail Trust Management costs 0.25% p.a 3 Stockland No. of securities 28 4 Goodman Group Benchmark S&P/ASX 300 A-REIT Index 5 Mirvac Underlying fund Vanguard Australian Property Securities Index Fund 6 Dexus Property Group 7 GPT Performance return 1,2,3 (%) 8 CFS Retail Property Trust Group 9 Federation Centres Gross Bmk Total Dist Growth 10 Investa Office Fund 1 month The Top 10 holdings represent 86.8% of the total underlying fund 3 months months Sector allocation 6 (%) 1 year years (pa) Retail years (pa) n/a n/a n/a n/a n/a 10 years (pa) n/a n/a n/a n/a n/a Diversified Inception (pa) Year to year gross return 1,2,3 (%) Dec - Dec June - June Bmk Bmk YTD n/a n/a 2010 n/a n/a n/a n/a Office Industrial Specialized Residential Prices 4 Month ended 31 March 2014 Net asset value $ Income distribution 5 Quarter ended Amount (CPU) Reinvestment price 31 March $ Notes 1. Past performance is not an indication of future performance 2. Returns assume reinvestment of all distributions. Returns for periods longer than 1 year are annualised. gross returns are before management costs and taxes, but after transaction and operational costs. total return is the gross return less management costs. Index returns do not allow for taxes, management, transaction and operational costs. 3. Returns assume that an investor purchased shares at Net Asset Value (NAV) and does not reflect the transaction costs imposed on the creation and redemptions of Units, brokerage or the bid ask spread that investors pay to buy and sell securities on the Australian Securities Exchange. 4. Month end cumulative-distribution 5. Past distributions are not an indication of future distributions 6. Figures as per underlying fund 7

10 Exchange traded fund profiles Fund profile 31 March 2014 Vanguard Australian Shares High Yield At a glance As at 31 March 2014 name ASX code Vanguard Australian Shares High Yield VHY ISIN AU000000VHY4 Benchmark FTSE ASFA Australia High Dividend Yield Index Management costs 0.25% p.a. Distribution frequency Quarterly Distribution reinvestment plan Yes listed on ASX 26 May 2011 Underlying fund Vanguard Australian Shares High Yield Fund Underlying fund 14 June 2000 commencement date Objective The fund seeks to track the return (income and capital appreciation) of the FTSE ASFA Australia High Dividend Yield Index before taking into account fees, expenses and tax. Features and benefits Diversification To preserve diversification characteristics, no more than 40% of the index can be invested in any one industry and no more that 10% invested in any one company. Potential A buy and hold approach takes tax-effective advantage of capital gains discounts returns and the deferral of capital gains liabilities, which may result in effective after-tax returns. Capital growth potential and taxeffective income Risks Includes exposure to companies offering franking benefits that can offset income tax quarterly distributions and offers long-term capital growth potential through its diversified portfolio of Australian shares. High. The potential for higher returns than lower risk investments, however there is the higher potential for belowaverage returns and/or some loss of capital. Please see Product Disclosure Statement for further details. Strategy The fund will hold most of the securities in the FTSE ASFA Australia High Dividend Yield Index, allowing for individual security weightings to vary marginally from the Index from time to time. Securities are ranked according to their median 12 month forecast dividend yield (sourced from I/B/E/S) A, with companies not forecast to pay dividend yields in the proceeding 12 months excluded. The fund may invest in securities that have been removed from or are expected to be included in the index. A I/B/E/S: The Institutional Broker's Estimate System; a data service that collates detailed and consensus estimates of forecasts measures of company earnings and performance. 8

11 Exchange traded fund profiles Overview Holdings 6 Underlying fund Top 10 holdings Size (AUD) $376.1 million $821.8 million 1 Westpac Inception date 23 May June Telstra Management costs 0.25% p.a 3 Woodside Petroleum No. of securities 51 4 Wesfarmers Forecast yield % 5 CBA Forecast grossed-up yield % 6 ANZ Benchmark FTSE ASFA Australia High Dividend Yield Index 7 NAB Underlying fund Vanguard Australian Shares High Yield Fund 8 Transurban Group 9 Sydney Airport Performance return 1,2,3 (%) Bmk Total Dist Growth 1 month Sector allocation 6 (%) 3 months months Oil & Gas 1 year years (pa) n/a n/a n/a n/a n/a 1.5 Basic Materials years (pa) n/a n/a n/a n/a n/a 10 years (pa) n/a n/a n/a n/a n/a Industrials Inception (pa) Year to year franking levels and gross return 1,2,3 (%) Dec - Dec June - June Bmk Bmk Franking YTD n/a n/a n/a n/a n/a 2010 n/a n/a n/a n/a n/a Prices 4 Month ended 31 March 2014 Gross Net asset value $ CC Amatil The Top 10 holdings represent 74.3% of the total underlying fund Consumer Goods Health Care Consumer Services Telecommunications Utilities Financials Technology Income distribution 5 Quarter ended Amount (CPU) Reinvestment price 31 March $ Other Notes 1. Past performance is not an indication of future performance 2. Returns assume reinvestment of all distributions. Returns for periods longer than 1 year are annualised. gross returns are before management costs and taxes, but after transaction and operational costs. total return is the gross return less management costs. Index returns do not allow for taxes, management, transaction and operational costs. 3. Returns assume that an investor purchased shares at Net Asset Value (NAV) and does not reflect the transaction costs imposed on the creation and redemptions of Units, brokerage or the bid ask spread that investors pay to buy and sell securities on the Australian Securities Exchange. 4. Month end cumulative-distribution 5. Past distributions are not an indication of future distributions 6. Figures as per underlying fund 7. Forecast yields are sourced from I/B/E/S 8. Grossed-up to reflect the average franking level of each security over the previous 12 months 9

12 Exchange traded fund profiles Fund profile 31 March 2014 Vanguard MSCI Australian Small Companies Index Summary As at 31 March 2014 name ASX code Vanguard MSCI Australian Small Companies Index VSO ISIN AU000000VSO2 Benchmark MSCI Australian Shares Small Cap Index Management costs 0.30% p.a. Distribution frequency Semi-annually (Jun, Dec) Distribution reinvestment plan Yes listed on ASX 26 May 2011 Underlying fund Vanguard Australian Small Companies Index Fund Underlying fund 23 May 2011 commencement date Vanguard exchange traded funds (s) are diversified portfolios of securities constructed using an indexing approach that can be readily traded on the ASX. As an index manager, Vanguard Investments Australia Ltd (Vanguard) aims to deliver the index return, before fees, by building investment portfolios using similar assets and weightings to the benchmark index. This means Vanguard returns, before costs, should closely match the indices they track. The Vanguard MSCI Australian Small Companies Index (ASX code: VSO) provides a low cost way to invest in a portfolio of the smallest Australian companies (by market capitalisation) listed on the ASX. The investment objective is to seek to track the return (income and capital appreciation) of the MSCI Australian Shares Small Cap Index before taking into account fund fees and expenses. About the Index The MSCI Australian Shares Small Cap Index includes the smaller Australian companies (by market capitalisation) targeting coverage of around 14% of free float-adjusted market capitalisation of the Australian share market. The number of securities in the Index may vary over time. Summary Risk Level High- the potential for higher returns than lower risk investments, however there is potential for below average returns and/or some loss of capital. Please see Product Disclosure Statement for further details. Vanguard, the Indexing Specialist The Vanguard Group, Inc. is one of the world s largest investment groups. In Australia, Vanguard has established a reputation as an indexing specialist, using our low cost and diversified approach to investment management. Vanguard launched its first s in the Australian marketplace in May In the US, Vanguard is one of the largest providers in the well established market, since launching s in

13 Exchange traded fund profiles Overview Holdings 6 Underlying fund Top 10 holdings Size (AUD) $40.9 million $40.9 million 1 Bluescope Steel Inception date 23 May May Challenger Management costs 0.30% p.a 3 Ansell No. of securities Duet Group Benchmark MSCI Australian Shares Small Cap Index 5 Aristocrat Leisure Ltd Vanguard Australian Shares Small Companies Index Fund 6 Primary Health Care Underlying fund 7 Dulux Group Ltd 8 Beach Energy Ltd Performance return 1,2,3 (%) 9 Downer EDI Limited 10 Perpetual Ltd Gross Bmk Total Dist Growth The Top 10 holdings represent 18.7% of the total underlying fund 1 month months months Sector allocation 6 (%) 1 year years (pa) n/a n/a n/a n/a n/a Energy 5 years (pa) n/a n/a n/a n/a n/a 10 years (pa) n/a n/a n/a n/a n/a Materials Inception (pa) Year to year franking levels and gross return 1,2,3 (%) Dec - Dec June - June Bmk Bmk Franking YTD n/a n/a n/a n/a n/a 2010 n/a n/a n/a n/a n/a Industrials Consumer Discretionary Consumer Staples Health Care Financials ex Property Prices 4 Month ended 31 March 2014 Net asset value $ Property Trusts Information Technology Income distribution 5 Half year ended Amount (CPU) Reinvestment price 31 December $ Notes 1. Past performance is not an indication of future performance 2. Returns assume reinvestment of all distributions. Returns for periods longer than 1 year are annualised. gross returns are before management costs and taxes, but after transaction and operational costs. total return is the gross return less management costs. Index returns do not allow for taxes, management, transaction and operational costs. 3. Returns assume that an investor purchased shares at Net Asset Value (NAV) and does not reflect the transaction costs imposed on the creation and redemptions of Units, brokerage or the bid ask spread that investors pay to buy and sell securities on the Australian Securities Exchange. 4. Month end cumulative-distribution 5. Past distributions are not an indication of future distributions 6. Figures as per underlying fund Telecom. Services Utilities

14 Exchange traded fund profiles Fund profile 31 March 2014 Vanguard All-World ex-us Shares Index Summary As at 31 March 2014 name Vanguard All-World ex-us Shares Index ASX code VEU ISIN AU000000VEU9 Benchmark FTSE All-World ex-us Index Management costs 0.15% p.a. Distribution frequency Quarterly Distribution reinvestment plan No listed on ASX 12 May 2009 Underlying fund Vanguard FTSE All-World ex-us Index Fund Underlying fund 2 March 2007 commencement date Vanguard exchange traded funds (s) are diversified portfolios of securities constructed using an indexing approach that can be readily traded on the ASX. As an index manager, Vanguard Investments Australia Ltd (Vanguard) aims to deliver the index return, before fees, by building investment portfolios using similar assets and weightings to the benchmark index. This means Vanguard returns, before costs, should closely match the indices they track. The Vanguard All-World ex-us Shares Index (ASX code: VEU) seeks to track the performance of the benchmark FTSE All-World ex-us Index, a free-float-adjusted market capitalisation-weighted index, designed to measure the investment return of international markets. About the Index The FTSE All-World ex-us Index includes approximately 2,300 stocks providing coverage of developed and emerging markets but excluding the US. Summary risk level High- the potential for higher returns than lower risk investments, however there is potential for below average returns and/or some loss of capital. Please see Product Disclosure Statement for further details. Vanguard, the Indexing Specialist The Vanguard Group, Inc. is one of the world s largest investment groups. In Australia, Vanguard has established a reputation as an indexing specialist, using our low cost and diversified approach to investment management. Vanguard launched its first s in the Australian marketplace in May In the US, Vanguard is one of the largest providers in the well established market, since launching s in

15 Exchange traded fund profiles Overview Holdings 5 Underlying fund Top 10 holdings Size (AUD) $12.8 billion $23.0 billion 1 Nestle SA Inception date 12 May March Royal Dutch Shell plc Management costs % p.a 3 Roche Holding AG No. of securities 2,419 4 Novartis AG Benchmark FTSE All World ex US Index 5 HSBC Holdings plc Underlying fund Vanguard FTSE All-World ex-us Index Fund 6 BHP Billiton Ltd. 7 Toyota Motor Corp. Performance return 1,2,3,4 (%) 8 BP plc 9 Samsung Electronics Co. Ltd. Gross Bmk Total Dist Growth 10 Total SA 1 month The Top 10 holdings represent 9.5% of the total underlying fund 3 months months Regional allocation 5 (%) 1 year years (pa) North America years (pa) n/a n/a n/a n/a n/a Europe ex UK years (pa) n/a n/a n/a n/a n/a 32.7 Inception (pa) Japan Year to year gross return 1,2,3,4 (%) Dec - Dec June - June Bmk Bmk YTD UK Asia Pacific (ex AUS ex JPN) Australia Middle East Emerging Markets Other Notes Sector allocation 5 (%) 1. Past performance is not an indication of future performance 2. Returns assume reinvestment of all distributions. Returns for periods longer than 1 year are annualised. gross returns are before management costs and taxes, but after transaction and operational costs. total return is the gross return less management costs. Index returns do not allow for taxes, management, transaction and operational costs. 3. Returns assume that an investor purchased shares at Net Asset Value (NAV) and does not reflect the transaction costs imposed on the creation and redemptions of Units, brokerage or the bid ask spread that investors pay to buy and sell securities on the Australian Securities Exchange. 4. Figures are expressed in AUD and are converted using WM/Reuters Closing Spot Rates taken at 4pm London time 5. Figures as per underlying fund 6. This figure represents the total annual fund operating expenses for the underlying fund. This amount consists of 0.10% management costs and 5% of other expenses. See the prospectus for more information. Basic Materials Consumer Goods Consumer Services Financials Health Care Industrials Oil & Gas Technology Telecommunications Utilities Other Further information 13

16 Exchange traded fund profiles Fund profile 31 March 2014 Vanguard US Total Market Shares Index At a glance As at 31 March 2014 name ASX code ISIN Benchmark Management costs Distribution frequency Distribution reinvestment plan VTS AU000000VTS1 CRSP US Total Market Index 5% p.a. Quarterly listed on ASX 12 May 2009 Underlying fund Vanguard US Total Market Shares Index No Vanguard Total Stock Market Index Fund Features, benefits and risks Diversification International exposure Low cost investing Risks Exposure to approximately 3,500 securities listed on the NYSE and NASDAQ. Access to international investment opportunities. Low management costs* High the potential for higher returns than lower risk investments, however there is the higher potential for belowaverage returns and/or some loss of capital. Please see Prospectus for further details. Underlying fund commencement date 27 April 1992 *Investors may incur customary brokerage fees and commissions (includin any bid ask spreads) when buying and selling units on the ASX Objectives The Vanguard US Total Market Shares Index seeks to track the performance of the CRSP US Total Market Index which represents approximately 100% of the investable US share market and includes large, mid, small and micro cap shares regularly traded on the New York Stock Exchange (NYSE) and NASDAQ. Strategy The underlying fund invests by sampling the index, meaning that it holds a broadly diversified collection of securities that, in the aggregate, approximates the full index in terms of key characteristics. The will be fully exposed to fluctuating values of foreign currencies, as there will not be any hedging of foreign currencies to the Australian dollar. 14

17 Exchange traded fund profiles Overview Holdings 5 Underlying fund Top 10 holdings Size (AUD) $44.7 billion $349.3 billion 1 Apple Inc. Inception date 12 May April Exxon Mobil Corp. Management costs 5% 3 Google Inc. No. of securities 3,698 4 Microsoft Corp. Benchmark CRSP US Total Market Index 5 Johnson & Johnson Underlying fund Vanguard Total Stock Market Index Fund 6 Wells Fargo & Co. 7 General Electric Co. Performance return 1,2,3,4,6 (%) 8 JPMorgan Chase & Co. 9 Berkshire Hathaway Inc. Gross Bmk Total Dist Growth 10 Chevron Corp. 1 month The Top 10 holdings represent 14.4% of the total underlying fund 3 months months Sector allocation 5 (%) 1 year years (pa) Basic Materials years (pa) n/a n/a n/a n/a n/a 10 years (pa) n/a n/a n/a n/a n/a 9.9 Consumer Goods 9.9 Inception (pa) Year to year gross return 1,2,3,4,6 (%) Dec - Dec June - June Bmk Bmk YTD Notes 1. Past performance is not an indication of future performance 2. Returns assume reinvestment of all distributions. Returns for periods longer than 1 year are annualised. gross returns are before management costs and taxes, but after transaction and operational costs. total return is the gross return less management costs. Index returns do not allow for taxes, management, transaction and operational costs. 3. Returns assume that an investor purchased shares at Net Asset Value (NAV) and does not reflect the transaction costs imposed on the creation and redemptions of Units, brokerage or the bid ask spread that investors pay to buy and sell securities on the Australian Securities Exchange. 4. Figures are expressed in AUD and are converted using WM/Reuters Closing Spot Rates taken at 4pm London time 5. Figures as per underlying fund 6. Prior to 3 June 2013, the 's benchmark was the MSCI US Broad Market Index Consumer Services Financials Health Care Industrials Oil & Gas Technology Telecommunications Utilities Other

18 Exchange traded fund profiles Fund profile 31 March 2014 Vanguard Emerging Markets Shares At a glance As at 31 March 2014 name ASX code ISIN Benchmark Management costs Distribution frequency Distribution reinvestment plan Vanguard FTSE Emerging Markets Shares VGE AU000000VGE8 FTSE Emerging Index (in AUD) 0.48% p.a. Quarterly Yes listed on ASX 21 November 2013 Underlying security Underlying security commencement date Vanguard FTSE Emerging Markets (NYSE code: VWO) 4 March 2005 Features, benefits and risks Diversification International exposure Low cost investing Risks Exposure to around 900 listed stocks from 22 emerging countries. Access to international investment opportunities. Low management costs* High the potential for higher returns than lower risk investments, however there is the higher potential for belowaverage returns and/or some loss of capital. Please see Prospectus for further details. *Investors may incur customary brokerage fees and commissions (includin any bid ask spreads) when buying and selling units on the ASX. Objectives The Vanguard FTSE Emerging Markets Shares provides exposure to 22 emerging market countries across Asia, Latin America, Europe, Africa and the Middle East using the benchmark FTSE Emerging Index, in Australian dollars. Strategy VGE invests in The Vanguard Group's US listed Vanguard FTSE Emerging Markets (NYSE code: VWO), which directly invests in securities included in the FTSE Emerging Index. VGE is an Australian managed investment scheme. As a result, investors will benefit from the advantages of investing in local s such as simplified administration and Australian tax reporting while gaining exposure to emerging markets. Investors will be able to trade VGE during Australian market hours as well as settle payments and receive distributions in Australian dollars. VGE will be fully exposed to fluctuating values of foreign currencies, as there will not be any hedging of foreign currencies to the Australian dollar. 16

19 Exchange traded fund profiles Overview Holdings Underlying fund Top 10 holdings Fund size (AUD) $5.9 million 1 Taiwan Semiconductor Manufacturing Co. Ltd. Inception date 18 November Tencent Holdings Ltd. No. of securities Petroleo Brasileiro SA Benchmark FTSE Emerging Markets Index (AUD) 4 China Construction Bank Corp. Underlying security Vanguard FTSE Emerging Markets 5 China Mobile Ltd. (NYSE code VWO) 6 Industrial & Commercial Bank of China Ltd. 7 Vale SA Performance return 1,2 (%) 8 Naspers Ltd. 9 Gazprom OAO Gross Bmk Total Dist Growth 10 Itau Unibanco Holding SA 1 month The Top 10 holdings represent 15.7% of the total underlying 3 months security 6 months n/a n/a n/a n/a n/a Country allocation 6 (%) 1 year n/a n/a n/a n/a n/a Fund Fund 3 years (pa) n/a n/a n/a n/a n/a China 21.2 Turkey years (pa) n/a n/a n/a n/a n/a Taiwan 13.6 Chile years (pa) n/a n/a n/a n/a n/a Brazil 13.2 Philippines 1.6 Inception India 10.1 Colombia 1.1 South Africa 9.7 United Arab Emi 0.8 Year to year gross return 1,2 (%) Russia 5.8 Peru 0.3 Dec - Dec June - June Mexico 5.8 Czech Republic 0.3 Bmk Bmk Malaysia 4.9 Hungary 0.3 YTD n/a n/a Indonesia 2.9 Egypt n/a n/a n/a n/a Thailand 2.8 Morocco 2012 n/a n/a n/a n/a Poland 1.9 Pakistan 2011 n/a n/a n/a n/a 2010 n/a n/a n/a n/a Sector allocation 6 (%) Prices 3 Month ended Net asset value 31 March 2014 $ Income distribution 4 Quarter ended Amount (CPU) Reinvestment price 31 March $ Notes 1. Past performance is not an indication of future performance 2. Returns assume reinvestment of all distributions. Returns for periods longer than 1 year are annualised. gross returns are before management costs and taxes, but after transaction and operational costs. total return is the gross return less management costs. Index returns do not allow for taxes, management, transaction and operational costs. 3. Returns assume that an investor purchased shares at Net Asset Value (NAV) and does not reflect the transaction costs imposed on the creation and redemptions of Units, brokerage or the bid ask spread that investors pay to buy and sell securities on the Australian Securities Exchange. 4. Month end cumulative-distribution 5. Past distributions are not an indication of future distributions 6. The exposures reflect the investment into the underlying security holding (Vanguard FTSE Emerging Markets (NYSE code:vwo)) Further information Basic Materials Consumer Goods Consumer Services Financials Health Care Industrials Oil & Gas Other Technology Telecommunications Utilities

20 Investing with Vanguard Investing with Vanguard 18

21 Investing with Vanguard Vanguard was founded in the United States in 1975 on a simple but revolutionary idea that an investment company should manage the funds it offers in the sole interest of its clients. In 1976, Vanguard pioneered the concept of indexing, introducing the first index fund for individual investors. Over the decades, Vanguard has grown to become one of the world s largest investment management companies with a presence in Australia, Europe, Asia, and the Americas. In Australia, Vanguard has been helping investors meet their long-term financial goals with low cost indexing solutions for more than 15 years. What makes us different? What sets Vanguard apart and lets Vanguard put investors first around the world is the ownership structure of The Vanguard Group, Inc., in the United States. Rather than being publicly traded or owned by a small group of individuals, The Vanguard Group is owned by Vanguard s US-domiciled funds and s. Those funds, in turn, are owned by their investors. This unique mutual structure aligns our interests with those of our investors and drives the culture, philosophy and policies throughout the Vanguard organisation worldwide. As a result, Australian investors benefit from Vanguard s stability and experience, low costs and client focus. US Domiciled Vanguard Mutual Fund Investors Vanguard Group Vanguard Australia The Vanguard Group Inc. cost advantage Average expense ratios A 1.50% % All funds 1.08% B % Vanguard 0.19% A Represented as a percentage of net assets. B Sources: Weisenberger Panorama; and Lipper Inc. thereafter. Expense ratios as at 31 December Vanguard expense ratios range from 2 to 1.71%. Note: Information displayed is in reference to US-domiciled Vanguard funds 19

22 Investing with Vanguard Core-satellite approach The core-satellite approach uses index funds as the core or foundation of a portfolio and lowly correlated active funds or direct shares as satellites to deliver risk and return benefits to client portfolios. The low cost, tax efficient and broad diversification characteristics of index funds provide a foundation for client portfolios that will deliver market returns. Once the core allocation is in place, active satellites can be chosen that tilt a portfolio towards a particular sector or style with the objective of achieving outperformance. Core-satellite brings greater discipline and stability to an investment portfolio by: Reducing reliance on picking winners or chasing fund manager returns Providing greater portfolio diversification Potentially improving after-tax returns by taking maximum advantage of capital gains discounts International fixed income Australian fixed income Emerging markets Cash Listed property International shares Australian shares Active managers/direct investment (satellite) Index investment (core) Note: Asset allocations in this diagram are intended to be an example only and not a recommendation Reducing overall fund management and transaction costs 20

23 Investing with Vanguard Vanguard s adviser resources Vanguard s Trading & Support Team Helping you achieve the best possible trading outcomes. Led by dedicated specialists located in our head office in Melbourne, Australia, the Vanguard Trading & Support Team provides the following services: Immediate responses to trade and execution queries Access to market makers to add depth to the market and to keep buy/sell spreads tight Guidance on trading strategies education, tools and thought leadership You can contact the Vanguard Trading & Support Team anytime between 9am 5pm (Melbourne time), Monday to Friday on

24 Vanguard s adviser resources Our leading research, investment knowledge centres, tools and calculators can help you support your clients and build your business. vanguard.com.au/adviser_resources 22

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26 Connect with Vanguard vanguard.com.au This brochure contains general information and is intended to assist you. In preparing the above information, individual circumstances, for example tax implications, have not been taken into account and it may, therefore, not be applicable to an individual s situation. Before making an investment decision, you should consider your circumstances and whether the above information is applicable to your situation. Investors should consider the Prospectus and Product Disclosure Statement in deciding whether to acquire Vanguard s. Retail investors can only use the Prospectus and Product Disclosure Statement for informational purposes. You can access the Product Disclosure Statement and Prospectuses at vanguard.com.au. Past performance is not an indication of future performance. Vanguard Investments Australia Ltd (ABN / AFS Licence ) ( Vanguard ) is the issuer of the Vanguard Australian s. Vanguard is the issuer of the Prospectus on behalf of the US listed s described in the Prospectus. Vanguard has arranged for interests in the US s to be made available to Australian investors via CHESS Depositary Interests that are quoted on the AQUA market of the Australian Securities Exchange ( ASX ). Vanguard s will only be issued to Authorised Participants, that is persons who have entered into an Authorised Participant Agreement with Vanguard. Retail investors can transact in Vanguard s through a stockbroker or financial adviser on the secondary market. Investors should consider the relevant Prospectus and/or Product Disclosure Statement ( PDS ) in deciding whether to acquire Vanguard s. Retail investors can only use the Prospectus and PDS for informational purposes. You can access the PDS and/or Prospectus at vanguard.com.au Vanguard is not offering the Vanguard FTSE Emerging Markets Shares in the United States and this presentation does not constitute an offer or an invitation to apply for or acquire any interests in the International s in the United States. The information contained in this brochure is not intended for US persons as defined in Regulation S under the US Securities Act. Standard & Poor s and S&P are registered trademarks of Standard & Poor s Financial Services LLC ( S&P ) and ASX is a registered trademark of the Australian Securities Exchange Limited ( ASX ). These trademarks have been licensed for use by The Vanguard Group, Inc. Vanguard s s are not sponsored, endorsed, sold or promoted by S&P or ASX, and S&P and ASX make no representation, warranty or condition regarding the advisability of buying, selling or holding units/shares in the Vanguard s. 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 contains a more detailed description of the limited relationship MSCI has with Vanguard and any related funds. FTSE is a trademark of the London Stock Exchange Group companies (LSEG) and is used by FTSE International Limited under license. All-World is a trade mark of FTSE International Limited. The FTSE All-World ex US Index and the FTSE Emerging Index are calculated by FTSE. FTSE does not sponsor, endorse or promote this product and is not in any way connected to it; and does not accept any liability in relation to its issue, operation and trading. All rights in the FTSE ASFA Australia High Dividend Yield Index (the Index ) vest in FTSE International Limited ( FTSE ) and The Association of Superannuation Funds of Australia ( ASFA ). ASFA is a trade mark of ASFA. The Vanguard Australian Shares High Yield, the Vanguard All-World ex-us Shares Index and the Vanguard FTSE Emerging Markets Shares (the Products ) have been developed solely by Vanguard. The Indices are calculated by FTSE or its agent. Neither FTSE nor its licensors are connected to and do not sponsor, advise, recommend, endorse or promote the 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. Neither FTSE nor ASFA make any claim, prediction, warranty or representation either as to the results to be obtained from the or the suitability of the Index for the purpose to which it is being put by Vanguard. The marks and names UBS Government Bond Index, UBS Composite Bond Index are proprietary to UBS AG ( UBS ). Any use of these indices or the index names must be with the express written consent of UBS AG acting through its Australia Branch. UBS has agreed to the use of, and reference to the UBS Government Bond Index, UBS Composite Bond Index ( Indices ) by us in connection with the Vanguard funds and s and the website material but no Vanguard fund or is in any way sponsored, endorsed or promoted by UBS. UBS assumes no responsibility for this website material or the s. Vanguard assumes sole responsibility for producing this website material, which has not been reviewed by UBS AG Vanguard Investments Australia. All rights reserved The Vanguard Group, Inc. All rights reserved. MSFL_052014