Vanguard Wholesale Funds

Transcription

1 Reference Guide 20 June 2016 Vanguard Wholesale Funds This Reference Guide is issued by Vanguard Investments Australia Ltd ABN , AFSL (Vanguard). The information in this document forms part of the Product Disclosure Statement (PDS) of the Funds listed in this Reference Guide, including any Supplementary PDS that applies. Contents Applications... 3 New investors... 3 Existing Investors... 4 Cut-off times... 4 Withdrawals... 5 Withdrawal requests... 5 Cut-off times... 5 Switches... 6 Transfers... 6 Unit pricing... 6 New Zealand investors... 7 How to transact with us... 9 Investor communication Fees and costs How Vanguard invests Taxation Important information Information in this Reference Guide is current as at its issue date and may change from time to time. Where the changes are not materially adverse to investors, the information may be updated on the Vanguard website at A paper copy of any updated information is available free of charge on request. The information provided in this Reference Guide is general only and does not take into account your objectives, financial situation or needs. Before acting on this information, you should therefore consider whether the information is appropriate for your own objectives, financial situation and needs. You may also wish to consider obtaining financial advice that is tailored to your personal circumstances from a licensed financial adviser. None of The Vanguard Group, Inc. (including Vanguard Investments Australia Ltd) or any of their related entities, directors or officers guarantees the repayment of capital or the performance of the Funds. Vanguard or any of its related entities or associates may invest in, lend to or provide services to the Funds. Vanguard may also invest in, lend to, or provide services to funds or accounts owned or managed by its related entities or perform services to clients who have appointed Vanguard as investment manager. The allocation of aggregated investments amongst various funds and accounts will be conducted by Vanguard and its related entities in accordance with appropriate policies and procedures to manage any conflicts of interest. If you would like to request a printed copy of this Reference Guide, please contact us. Registered office Level 34, Freshwater Place 2 Southbank Boulevard Southbank Victoria 3006 Postal address GPO Box 3006 Melbourne Victoria 3001 Telephone Facsimile clientservices@vanguard.com.au Website Vanguard Investments Australia Ltd. All rights reserved. BPAY is registered to BPAY Pty Ltd ABN

2 Vanguard Wholesale Funds Vanguard is the responsible entity of the following Vanguard Wholesale Funds (collectively the 'Funds' and individually 'Fund') for which this Reference Guide applies: Cash Funds ARSN ABN APIR Code Vanguard Cash Reserve Fund VAN0020AU Vanguard Cash Plus Fund VAN0102AU Fixed Interest Funds Vanguard Australian Government Bond Index Fund VAN0025AU Vanguard Australian Corporate Fixed Interest Index Fund VAN0065AU Vanguard Australian Fixed Interest Index Fund VAN0001AU Vanguard Australian Inflation-Linked Bond Index Fund VAN0064AU Vanguard International Fixed Interest Index Fund (Hedged) VAN0103AU Vanguard International Credit Securities Index Fund (Hedged) VAN0106AU Vanguard Diversified Bond Index Fund VAN0042AU Property Funds Vanguard Australian Property Securities Index Fund VAN0004AU Vanguard International Property Securities Index Fund VAN0018AU Vanguard International Property Securities Index Fund (Hedged) VAN0019AU Australian Shares Funds Vanguard Australian Shares Index Fund VAN0002AU Vanguard Australian Shares High Yield Fund VAN0104AU International Shares Funds Vanguard International Shares Index Fund VAN0003AU Vanguard International Shares Index Fund (Hedged) - AUD Class VAN0105AU Vanguard International Shares Index Fund (Hedged) - NZD Class VAN0066AU Vanguard International Small Companies Index Fund VAN0021AU Vanguard International Small Companies Index Fund (Hedged) VAN0022AU Vanguard Emerging Markets Shares Index Fund VAN0005AU Infrastructure Funds Vanguard Global Infrastructure Index Fund VAN0023AU Vanguard Global Infrastructure Index Fund (Hedged) VAN0024AU Diversified Funds Vanguard Conservative Index Fund VAN0109AU Vanguard Balanced Index Fund VAN0108AU Vanguard Growth Index Fund VAN0110AU Vanguard High Growth Index Fund VAN0111AU 2 Connect with Vanguard > vanguard.com.au >

3 Applications New investors Initial application for investment An initial application for investment must be made on a Vanguard Wholesale Funds Application Form. The original Application Form and relevant supporting documentation must be sent to Vanguard via post or delivery to our office. Facsimile or copies will not be accepted. Vanguard will not process initial applications until all required information and/or supporting documentation is received. Vanguard may, in its absolute discretion, accept or refuse to accept, in whole or in part, any application or subscription for units. Vanguard need not give any reason for refusal. If for any reason Vanguard refuses or is unable to process your application to invest in the Funds, Vanguard will, subject to any legal or regulatory requirements, return your application money to you. You will not be entitled to interest on your application money in this circumstance. Any interest accrued on application amounts pending the issue of units or the return of application money will be retained for the benefit of investors. Investments made in-specie (that is, where the payment is in assets in kind instead of cash) may be accepted at Vanguard s discretion. Initial investment The minimum initial investment amount for the Vanguard Wholesale Funds is $500,000 per fund. Vanguard, at its discretion, may accept lower investment amounts. Your initial investment may be funded via one of the following methods: BPAY Cheque; or Direct credit You can select your preferred payment method under the section titled Initial investment funding in the Vanguard Wholesale Funds Application Form. Payment methods BPAY Once your investment account has been established, Vanguard will forward an to you with details on how to use the BPAY facility to make your initial investment via your financial institution s telephone or internet banking service. Please note that although your BPAY transactions may be processed from your bank account immediately, your funds and payment instructions may take some time to be transferred to Vanguard from your financial institution. Provided that your BPAY request is made before your financial institution s cut-off time, Vanguard will typically receive your funds before 2:00pm Melbourne, Australia time on the following business day. Units will only be issued once we receive your funds, and at the unit price applicable to the day payment is received. BPAY transactions cannot generally be reversed. Payments using credit card accounts cannot be made via BPAY. Any query on a BPAY transaction should be directed to your financial institution. Direct credit Once your investment account has been established, Vanguard will forward an to you with details on how to complete your initial investment by direct credit. If you wish to receive the unit price for the day that you make your direct credit payment, you will need to fax us a copy of the bank receipt to confirm the funds transfer by 2:00pm Melbourne, Australia time on a business day, except where otherwise determined by Vanguard. If you do not provide a copy of the bank receipt, the effective date of your investment will correspond to the date that the funds are visible in our bank account. If five business days has lapsed since we received your original Vanguard Wholesale Funds Application Form, you will be required to submit an Additional Investment Form to accompany your funds transfer. Cheque To make your initial investment by cheque, attach the cheque to your completed Application Form prior to returning it to Vanguard. Cheques are to be made payable to Vanguard Wholesale Funds. Vanguard will accept and process cheques received as cleared funds if received by 2:00pm Melbourne, Australia time on a business day, except where otherwise determined by Vanguard. If a cheque cannot be honoured (e.g. due to insufficient funds or validation issues), Vanguard reserves the right to cancel the transaction. Vanguard Wholesale Funds Reference Guide 3

4 Existing investors Additional investments You may choose to make an additional investment into your existing Vanguard Wholesale Fund(s) or into a new fund. Please note that you may be required to meet the applicable minimum investment amount. An additional investment may be funded via one of the following methods: BPAY Cheque; or Direct credit Please note that additional investments made by cheque or direct credit must be accompanied by an Additional Investment Form. You can access an Additional Investment Form by visiting our website or contacting Client Services on It is a condition of using the BPAY facility and making additional investments that you obtain and read the current Product Disclosure Statement (PDS) together with the other important information taken to form part of the PDS, prior to making each and every investment in a fund. From time to time, Vanguard updates its PDS and Reference Guide. The latest versions of these documents can be found on the Vanguard website at the following location vanguard.com.au/offerdocuments or you can request a copy from Client Services on Payment methods BPAY When making an additional investment to an existing fund or a new fund via BPAY, there is no requirement to complete any additional Vanguard forms. For details on how to use the BPAY facility via your financial institutions telephone or internet banking service, please contact Client Services on Please note that although your BPAY transaction may be processed from your bank account immediately, your funds and payment instructions may take some time to be transferred to Vanguard from your financial institution. Provided that your BPAY request is made before your financial institution s cut-off time, Vanguard will typically receive your funds before 2:00pm Melbourne, Australia time on the following business day. Units will only be issued once we receive your funds, and at the unit price applicable to the day payment is received. BPAY transactions cannot generally be reversed. Payments using credit card accounts cannot be made via BPAY. Any query on a BPAY transaction should be directed to your financial institution. Direct credit To make an additional investment via direct credit, you must complete an Additional Investment Form and forward your payment to the Vanguard Wholesale Application bank account. To obtain the relevant bank account details, you can contact Client Services on If you wish to receive the unit price for the day that you make your direct credit transfer, you will need to fax a copy of the Additional Investment Form to Vanguard, along with a bank receipt to confirm the transfer, by 2:00pm Melbourne, Australia time on a business day, except where otherwise determined by Vanguard. If you do not provide a copy of the bank receipt, the effective date of your investment will correspond to the date that the funds are visible in our bank account, provided that the Additional Investment Form has been received. Cheque To make an additional investment by cheque, attach the cheque to a completed Additional Investment Form and return it to Vanguard via post. Cheques are to be made payable to Vanguard Wholesale Funds. Vanguard will accept and process cheques received as cleared funds if received by 2:00pm Melbourne, Australia time on a business day, except where otherwise determined by Vanguard. If a cheque cannot be honoured (e.g. due to insufficient funds or validation issues), Vanguard reserves the right to cancel the transaction. Cut-off times The cut-off time for processing application instructions, is normally 2:00pm Melbourne, Australia time on a business day. An earlier cut-off time may be adopted on business days when financial markets have shortened trading hours (for example, the last business day before Christmas day). Application instructions received by the cut-off time, will be processed at the applicable purchase price to be applied for that business day. The purchase price applicable for that day will not be known until the next business day. Units are issued at the purchase price calculated at the next valuation point after acceptance of your application. Where an application instruction is received after the cut-off time, the application will be processed at the next applicable purchase price, as if it had been received on the following business day. 4 Connect with Vanguard > vanguard.com.au >

5 Changes to the cut-off times will be published on our website. You should check the website if you are contemplating a transaction. Withdrawals Withdrawal requests To make a withdrawal from your existing Vanguard account, you must complete a Withdrawal Form and return it by fax or post. In order to access a Withdrawal Form, please visit the Vanguard website or contact Client Services on The minimum withdrawal amount is $1,000 per Fund. Withdrawal proceeds will be paid by Electronic Funds Transfer (EFT) into your nominated Australian bank account or by cheque. Vanguard will not process payments to third party bank accounts. If we are unable to verify your nominated bank account from the details you previously provided or by contacting you, your withdrawal proceeds may be paid by cheque. Subject to the constitutions of the Funds, Vanguard may decide to process withdrawal requests progressively over a period of up to 20 business days at the withdrawal price applicable for each day on which a withdrawal is processed, if withdrawal requests exceed a certain percentage of the Fund s value over a one or two day period. Subject to constitutions of the Funds, there may be circumstances where Vanguard suspends withdrawals or delays the payment of withdrawal proceeds. For example, where there is a closure of an international market or exchange or during the first ten business days of July each year due to end of financial year activities for the Funds. Your withdrawal proceeds may include an entitlement to distributable income. We may agree to meet the value of a withdrawal by transferring authorised investments from the relevant Fund. Investors should note that withdrawal proceeds will normally be funded out of the assets of the Funds and not from Vanguard s own resources. While a Fund is liquid for the purposes of the Corporations Act 2001 (Cth), Vanguard must redeem your units in accordance with the relevant Fund s constitution on request. A Fund is liquid if 80 percent of the value of the Fund s assets are held in liquid assets as defined in the Corporations Act 2001 (Cth). If a Fund is illiquid, a withdrawal request must be dealt with in accordance with the Fund s constitution and the Corporations Act 2001 (Cth). You may not be able to withdraw your investment in a timely manner if a Fund is illiquid. It is not expected that any of the Funds will be illiquid. On withdrawal of units Vanguard may deduct from any amount to be paid to an investor, any amount due by the investor to Vanguard. Withdrawing units may give rise to tax consequences and it is recommended that you check the tax implications with your tax adviser before withdrawing. Amounts made available to satisfy a withdrawal request may accrue interest pending payment to you. Any such interest will be retained for the benefit of existing investors. The constitutions of the Funds allow Vanguard to set minimum unit holding limits. Apart from the minimum initial investment amount, Vanguard does not intend to enforce a minimum unit holding at the present time, except in the case of transfers. Vanguard may enforce a minimum unit holding in the future such that Vanguard may treat a request by investors to withdraw some of their units in a Fund as a full withdrawal if the total value of the investors units in that Fund is below the minimum holding. We will give you appropriate notice before enforcing a minimum holding limit in relation to your fund holding. Cut-off times The cut-off time for processing withdrawal instructions is normally 2:00pm Melbourne, Australia time on a business day. An earlier cut-off time may be adopted on business days when financial markets have shortened trading hours (for example, the last business day before Christmas day). Withdrawal instructions must be received by the cut-off time in order to be processed at the applicable withdrawal price to be applied for that business day. The withdrawal price applicable for that day will not be known until the next business day. Units are withdrawn at the withdrawal price calculated at the next valuation point after receipt of your withdrawal request. Where a withdrawal request is received after the cut-off time, the withdrawal request will be processed at the next applicable withdrawal price, as if it had been received on the following business day. Changes to the cut-off times will be published on our website. You should check the website if you are contemplating a transaction. Vanguard Wholesale Funds Reference Guide 5

6 Switches You may request that Vanguard switch all or part of your investment from one Wholesale Fund to another Wholesale Fund. To initiate a switch, you must complete a Switching Form and return it to Vanguard by fax or post. In order to access a Switching Form, please visit the Vanguard website or contact Client Services on A switch will be processed as a withdrawal of units from the existing Fund (or the Fund being switched out of) and an application for units in the new Fund (or the Fund being switched in to). Units in the existing Fund will be withdrawn at the next available withdrawal price and the proceeds will then be used to purchase units in the new Fund at the applicable purchase price. The normal buy/sell spread costs will apply to switch transactions. The minimum switch is $1,000 into an existing fund. If the switch is into a new fund, Vanguard may require you to meet the applicable minimum investment amount. Switching requests must be received by the cut-off time - 2:00pm Melbourne, Australia time on a business day, except where otherwise determined by Vanguard - to be processed at the applicable withdrawal and purchase prices to be applied for that business day. Switching requests received after the cut-off time will be processed at the applicable withdrawal and purchase prices as if they had been received on the following business day. The withdrawal and purchase prices applicable for that day will not be known until the next business day. A switch may give rise to an entitlement to distributable income (see Withdrawals section for further information). A switch may give rise to tax consequences and it is recommended that you check the tax implications with your tax adviser before switching. It is a condition of using the switch facility that you obtain and read the current Product Disclosure Statement (PDS) together with the other important information taken to form part of the PDS, prior to making each and every investment in a fund. From time to time Vanguard updates its PDS and Reference Guide. The latest versions of these documents can be found on the Vanguard website at the following location vanguard.com.au/offerdocuments or you can request a copy from Client Services on Transfers You may request Vanguard to transfer units of a Fund to another person or entity in Australia. If you do not transfer your entire investment in a Fund, Vanguard may require that the value of the units transferred meets the applicable minimum investment amount. You (the transferor) and the recipient of the transferred units (the transferee) will need to complete a Transfer Form. The transferee will also be required to obtain the latest PDS for the relevant Fund(s) and complete a Vanguard Wholesale Funds Application Form before units can be transferred, unless the transferee is already an existing investor in the Fund that units are being transferred to. Transfers must be received by the cut-off time - 2:00pm Melbourne, Australia time on a business day except where otherwise determined by Vanguard - to be processed effective that day. Transfers received after the cut-off time will be processed as if they had been received on the next business day. Transferring units may give rise to tax consequences. We recommend that you consult your tax adviser before submitting a transfer request. Vanguard reserves the right to decline to register a transfer of units. Unit pricing Policy on unit pricing Vanguard has documented its policy in relation to various discretions that affect unit pricing within the Funds. The policy has been designed to meet the ASIC requirements and is available on request to all investors and prospective investors at no charge. The policy explains Vanguard s approach in relation to buy/sell spreads, valuation methodology, rounding of decimal places, cutoff times for receiving instructions, the frequency of income distributions and unit pricing discretions generally. A copy of the policy on unit pricing discretions can be obtained by contacting Client Services on Impact of significant market events Vanguard may determine to close a fund to applications, withdrawals, switches and transfers where there are factors that Vanguard believes may prevent the accurate calculation of unit prices. This may include where markets are closed due to public holidays or when markets are closed in relevant countries. Generally, applications, withdrawals, switches, and transfers for the affected Fund(s), which are received on these days or after the cut-off time on the previous day, will be processed as if they had been received on the next business day following the affected dates. Fund closures determined in advance as a result of a known public holiday and market closures are published on our website. 6 Connect with Vanguard > vanguard.com.au >

7 In some circumstances, Vanguard may determine to close a fund to cash transactions but may remain open to accept in-specie transactions (where the payment is made in assets in kind instead of cash). This may include where a particular security or combination of securities in a fund is subject to a trading halt or suspension announcement. Impact of income distributions Investors should be aware that the price may include income accumulated in the Fund that is yet to be distributed. This income will subsequently be distributed and will form part of an investor s taxable income. After a distribution the Fund s unit price will reduce to reflect the distribution paid. This would similarly affect investors who sell units in a Fund. That is, the withdrawal price may include income accumulated in the Fund that is yet to be distributed, and will affect any gains realised by investors on the sale of units in a Fund. Note that Vanguard may determine to distribute income at times other than at the end of the normal distribution periods. Impact of end of financial year Unit prices, transaction confirmations, and the payment of withdrawal and distribution proceeds may be delayed in the first ten business days of July each year due to end of financial year activities for the Funds. New Zealand investors Applications New Zealand investors are offered units in the following Funds: Vanguard International Shares Index Fund; Vanguard International Shares Index Fund (Hedged) - AUD Class; and Vanguard International Shares Index Fund (Hedged) - NZD Class. WARNING TO NEW ZEALAND INVESTORS This offer to New Zealand investors is a regulated offer made under Australian and New Zealand law. In Australia, this is Chapter 8 of the Corporations Act 2001 (Cth) and regulations made under that Act. In New Zealand, this is subpart 6 or Part 9 of the Financial Markets Conduct Act 2013 and Part 9 of the Financial Markets Conduct Regulations This offer and the content of the PDS are principally governed by Australian rather than New Zealand law. In the main, the Corporations Act 2001 (Aust) and the regulations made under that Act set out how the offer must be made. There are differences in how financial products are regulated under Australian law. For example, the disclosure of fees for managed investment schemes is different under the Australian regime. The rights, remedies, and compensation arrangements available to New Zealand investors in Australian financial products may differ from the rights, remedies, and compensation arrangements for New Zealand financial products. Both the Australian and New Zealand financial markets regulators have enforcement responsibilities in relation to this offer. If you need to make a complaint about this offer, please contact the Financial Markets Authority, New Zealand ( The Australian and New Zealand regulators will work together to settle your complaint. The taxation treatment of Australian financial products is not the same as for New Zealand financial products. If you are uncertain about whether this investment is appropriate for you, you should seek the advice of an appropriately qualified financial adviser. Initial application for investment An initial application for investment must be made on a Vanguard Wholesale Funds Application Form. The original Application Form and relevant supporting documentation must be sent to Vanguard via post or delivery to our office. Facsimile or copies will not be accepted. Vanguard will not process initial applications until all required information and/or supporting documentation is received. Vanguard may, in its absolute discretion, accept or refuse to accept, in whole or in part, any application or subscription for units. Vanguard need not give any reason for refusal. If for any reason Vanguard refuses or is unable to process your application to invest in the Funds, Vanguard will, subject to any legal or regulatory requirements, return your application money to you. You will not be entitled to interest on your application money in this circumstance. Any interest accrued on application amounts pending the issue of units or the return of application money will be retained for the benefit of investors. Investments made in-specie (that is, where the payment is in assets in kind instead of cash) may be accepted at Vanguard s discretion. Vanguard Wholesale Funds Reference Guide 7

8 Initial investment The minimum initial investment amount for the Vanguard International Shares Index Fund and Vanguard International Shares Index Fund (Hedged) AUD Class, is $500,000 Australian dollars per fund. The minimum initial investment amount for the Vanguard International Shares Index Fund (Hedged) - NZD Class is $500,000 New Zealand dollars. Vanguard, at its discretion, may accept lower investment amounts. Investment amounts may be remitted either by cheque or Electronic Funds Transfer (EFT) in the currency specified. Please contact Client Services for banking details. Currency risks As the offer of units in the Vanguard International Shares Index Fund and the Vanguard International Shares Index Fund (Hedged) - AUD Class is in Australian dollars, New Zealand investors should consider the following before applying for units: WARNING TO NEW ZEALAND INVESTORS The offer may involve a currency exchange risk. The currency for the financial products is not New Zealand dollars. The value of the financial products will go up or down according to changes in the exchange rate between that currency and New Zealand dollars. These changes may be significant. If you expect the financial products to pay any amounts in a currency that is not New Zealand dollars, you may incur significant fees in having the funds credited to a bank account in New Zealand in New Zealand dollars. Withdrawals To make a withdrawal from your Vanguard account, you must complete a Withdrawal Form and return it by fax or post. In order to access a Withdrawal Form, please visit the Vanguard website or contact Client Services on Please refer to the sections Withdrawals withdrawal requests and How to transact with us for more information. Cut-off times Applications The cut-off time for processing application instructions from New Zealand investors for units in the Vanguard International Shares Index Fund (Hedged) NZD Class, is normally 11:00am Melbourne, Australia time on a business day, except where otherwise determined by Vanguard. The cut-off time for processing application instructions from New Zealand investors for units in the Vanguard International Shares Index Fund and Vanguard International Shares Index Fund (Hedged) AUD Class, is normally 2:00pm Melbourne, Australia time on a business day, except where otherwise determined by Vanguard. An earlier cut-off time may be adopted on business days when financial markets have shortened trading hours (for example, the last business day before Christmas day). Application instructions received by the cut-off time, will be processed at the applicable purchase price to be applied for that business day. The purchase price applicable for that day will not be known until the next business day. Units are issued at the purchase price calculated at the next valuation point after acceptance of your application. Where an application instruction is received after the cut-off time, the application will be processed at the next applicable purchase price, as if it had been received on the following business day. Withdrawals The cut-off time for processing withdrawal instructions for all funds offered to New Zealand investors is normally 2:00pm Melbourne, Australia time on a business day. An earlier cut-off time may be adopted on business days when financial markets have shortened trading hours (for example, the last business day before Christmas day). Withdrawal instructions must be received by the cut-off time in order to be processed at the applicable withdrawal price to be applied for that business day. The withdrawal price applicable for that day will not be known until the next business day. Units are withdrawn at the withdrawal price calculated at the next valuation point after receipt of your withdrawal request. Where a withdrawal request is received after the cut-off time, the withdrawal request will be processed at the next applicable withdrawal price, as if it had been received on the following business day. Switching New Zealand investors may only switch between Vanguard International Shares Index Fund (Hedged) - NZD Class, Vanguard International Shares Index Fund (Hedged) - AUD Class and Vanguard International Shares Index Fund. Please refer to the sections Switches and How to transact with us for more information. Transferring New Zealand investors may transfer units in the Vanguard International Shares Index Fund (Hedged) - NZD Class, Vanguard International Shares Index Fund (Hedged) - AUD Class and Vanguard International Shares Index Fund, to another person or entity in Australia or New Zealand. Please refer to the sections Transfers and How to transact with us for more information. 8 Connect with Vanguard > vanguard.com.au >

9 Dispute resolution process WARNING TO NEW ZEALAND INVESTORS The dispute resolution process described in this offer document is available only in Australia and is not available in New Zealand. Should you wish to make a complaint about this offer, please contact the Financial Markets Authority, Wellington, New Zealand. How to transact with us Standard forms Vanguard has standard forms that are to be used for transactions, including: additional investments, withdrawals, switches, transfers or change of account details. Investors (other than indirect investors) must use Vanguard standard forms when issuing Vanguard with transaction instructions - otherwise we may not process your instructions. You can download Vanguard s standard forms from our website or contact Client Services on to find out more about how to transact with Vanguard. Facsimile instructions When advising Vanguard via facsimile in respect of instructions (including additional investments, withdrawals, switches, change of details and transfer requests) it is important to be aware that Vanguard: will only process your facsimile instruction if it is received in full and has been signed by all authorised signatories; is not responsible for any loss or delay that results from a facsimile transmission not being received by Vanguard; will not accept a facsimile receipt confirmation from the sender s facsimile machine as evidence of receipt of the facsimile; does not take responsibility for any fraudulently or incorrectly completed facsimile instructions; and will not compensate you for any losses relating to facsimiles, unless required by law. For example, you bear the risk that a facsimile may be sent by someone who knows your account details. Please note that initial applications for investment must be sent via post or delivered to the Vanguard office, as facsimile copies will not be processed. In the event of fraud you agree to release, discharge and indemnify Vanguard from and against all actions, claims, demands, expenses and liabilities (however they arise) suffered by you or suffered by or brought against Vanguard, concerning the facsimile instructions, to the extent permitted by law. Vanguard Wholesale Funds Reference Guide 9

10 Investor communication The type of information that is available and you will receive as a direct investor in the Fund is described below. Communication Frequency Delivery Fund information and investment forms Product Disclosure Statement(s) A summary of significant information that you need to make a decision about investing in the Fund. Ad Hoc Website* Reference Guide Contains other important information that is taken to form part of the PDS. Ad Hoc Website* Application Forms Contains information that Vanguard requires in order to establish your investment account. Ad Hoc Website* Standard Forms Forms used to instruct Vanguard in relation to your investment in a Fund. Ad Hoc Website* Material information Information that has not already been disclosed in the PDS and may otherwise have an impact on a Fund. Ad Hoc Website & Unit prices and performance Unit prices The purchase price and withdrawal price for each Fund. Daily Website Fund performance Calculated and reported on a gross of fees, net of fees and after tax basis. Monthly Website Fund fact sheets Outlines the latest fund performance, portfolio composition and asset allocation of each Fund. Monthly Website Account statements Transaction confirmations Details the number of units purchased or withdrawn, applicable unit price, effective date of transaction and the new balance of units after the transaction. After each transaction Transaction statements Details each transaction that occurred during the reporting month, the number of units held and the current value at month end for your investment/s. Monthly Income distribution statements Details the income, relevant taxation information and payment details setting out the number of units held and the value of the distribution following each income distribution. Monthly or quarterly, as described in the PDS for the relevant Fund Tax statements Provides a summary of the distributions made to you during the financial year, as well as the relevant taxation information required to complete your Australian tax return. After 30 June Annual report Fund financial reports Details the financial performance and operation of the Funds, and the annual audited accounts for the financial year. September Website* *You may also request an or hard copy of the above communications by contacting Client Services on *Changes to the information in the PDS and/or Reference Guide that is not materially adverse to investors, may be updated on the Vanguard website only at A paper copy of any updated information is available free of charge on request. 10 Connect with Vanguard > vanguard.com.au >

11 Fees and costs The following table shows the fees and costs you may be charged for investing in the Fund. These fees and costs may be deducted from your account balance, from the returns on your investment or from the Fund assets as a whole. Type of fee or cost Amount How and when paid Fees when your money moves in or out of a Fund Establishment fee The fee to open your investment Nil Not applicable Contribution fee The fee on each amount contributed to your investment Nil A Not applicable Withdrawal fee The fee on each amount you take out of your investment Termination fee Nil A Not applicable The fee to close your investment Management costs The cost associated with managing your investment The amount you pay for specific Funds is shown in each Fund s PDS. Nil 0.15% p.a. to 0.56% p.a. B Based on a constant account balance of $500,000, the amount in dollars is $750 p.a. to $2,800 p.a. Not applicable The management cost for each Fund is calculated as a percentage of the Fund s net asset value (or the relevant class of units where the Fund has multiple classes). The fee is accrued daily in the unit price and paid monthly. The fee for a month is paid on or after the first day of the following month. This fee is taken from the assets of the relevant Fund and/or the underlying fund. The amount of this fee can be negotiated. Service fees Switching fee The fee for changing your investment in a Fund Nil A Not applicable Transfer fee The fee for transferring units to another account holder Nil Not applicable A You may incur a buy/sell spread when your money moves in or out of the Funds. B The management costs incorporate GST after taking into account any expected input tax credits. They also incorporate management costs for any underlying Funds. Additional explanation of fees and costs Management costs The management costs for the Funds include a management fee component which is Vanguard s remuneration for managing the Funds; an expense reimbursement component; and Goods and Services Tax (GST) after taking into account any expected input tax credits, and incorporate all relevant fees and costs involved in managing the Funds and deriving investment returns, other than transaction and operational costs. They include: responsible entity/manager s fees; custodian fees (excluding transaction-based fees); accounting and audit fees; the management cost for any underlying Funds; and any other recoverable expenses permitted under the constitutions of the Funds such as the cost of preparing and amending the constitutions, the cost of producing the PDS, the cost of investor meetings, postage and other Fund administration expenses. In calculating taxable income for the Funds, all available tax deductions are taken into account. This means that the effective after-tax cost to investors of investing in a Fund may be lower than the amounts specified in the PDS for the Fund, to the extent that management costs are a tax deductible expense and reduce the taxable income of that Fund. The management costs of investing in the Funds are capped until further notice. Vanguard Wholesale Funds Reference Guide 11

12 Management fee maximums The constitutions governing each Fund limit the amount of the management fee component, excluding GST, as shown in the table below. Any increase above these maximums will require unitholder approval. Fund Vanguard Cash Plus Fund Vanguard Australian Fixed Interest Index Fund Vanguard Australian Property Securities Index Fund Vanguard Australian Shares Index Fund Vanguard International Shares Index Fund Vanguard Emerging Markets Shares Index Fund Vanguard International Fixed Interest Index Fund (Hedged) Vanguard International Credit Securities Index Fund (Hedged) Vanguard Australian Shares High Yield Fund Vanguard International Shares Index Fund (Hedged) - AUD Class Vanguard International Shares Index Fund (Hedged) - NZD Class Vanguard Cash Reserve Fund Vanguard Australian Government Bond Index Fund Vanguard Australian Corporate Fixed Interest Index Fund Vanguard Australian Inflation-Linked Bond Index Fund Vanguard Diversified Bond Index Fund Vanguard Global Infrastructure Index Fund Vanguard Global Infrastructure Index Fund (Hedged) Vanguard International Property Securities Index Fund Vanguard International Property Securities Index Fund (Hedged) Vanguard International Small Companies Index Fund Vanguard International Small Companies Index Fund (Hedged) Vanguard Conservative Index Fund Vanguard Balanced Index Fund Vanguard Growth Index Fund Vanguard High Growth Index Fund Maximum Management Fee (% of net asset value) 0.20% p.a. 0.25% p.a. 0.30% p.a. 0.50% p.a. 1.50% p.a. Withdrawal Fee A withdrawal fee or an early withdrawal fee could be introduced for several of the Funds, as permitted under the applicable constitution, although there is no current intention to do so. Generally, the withdrawal fee could be up to the greater of $50 or 0.50 percent of the amount withdrawn. The early withdrawal fee could be up to 0.50 percent of the amount withdrawn if units are withdrawn within a certain number of days after purchase. Transaction and operational costs In addition to the management costs, there are other costs incurred by the Funds that are an additional cost to investors. These include government taxes and charges, regulatory fees and charges, bank charges and transaction costs. Most of these costs would also be incurred by investing directly in the underlying securities. The most significant of these costs are transaction costs - brokerage commission, buy/sell spread costs in underlying securities and, in some markets, stamp duty. Such costs arise whenever the Funds buy or sell assets to invest contributions, fund withdrawals or from maintenance trading activity, which maintain the Funds portfolios in line with their investment objectives. Accordingly, it is difficult to estimate such costs as they will depend on the actual turnover of assets. The costs are deducted from the assets of the relevant Fund (or underlying Fund/s) when they are incurred and are reflected in unit prices. There may occasionally be trading activity other than normal 'maintenance' activity, such as to implement a change of index. In this case, there may be a higher than usual turnover of assets and consequently a temporary increase in transaction costs and the possibility of realising taxable capital gains. Buy/sell spread costs The buy/sell spread cost for each fund is Vanguard s reasonable estimate of the transaction costs that the fund may incur to buy and sell assets when investing contributions and funding withdrawals. The buy/sell spread costs are paid to the Funds to meet these expenses and are not received by Vanguard. The purpose of the buy/sell spread is to protect investors from the costs generated by the transaction activity of other investors. Investors who invest into a Fund will pay the purchase price calculated by adding the buy spread to the Fund s net asset value per unit (or the net asset value of the relevant class of units where the Fund has multiple classes). Investors who withdraw from a Fund will receive the withdrawal price calculated by deducting the sell spread from the Fund s net asset value per unit (or the net asset value of the relevant class of units where the Fund has multiple classes). 12 Connect with Vanguard > vanguard.com.au >

13 If a Fund receives applications and withdrawals on the same day there may be a reduction in either or both the buy and sell spread costs, as Vanguard may not need to buy or sell as many assets as would otherwise be the case. As a result, the Fund s transaction costs may be lower than normal. Vanguard passes its reasonable estimate of the reduction in transaction costs to investors in the form of a reduced buy or sell spread cost. Investors should note that this reduction in the buy/sell spread cost depends on investors application and withdrawal activity on a particular day and cannot be predetermined. For further details of how buy/sell spreads and reductions are recalculated, you can request a copy of Vanguard s policy on unit pricing discretion. There may be circumstances where the sell spreads will be lower or higher - for example, they may be higher when there are large or prolonged withdrawals from the Fund. For further details on how buy/sell spreads are calculated, you can request a copy of Vanguard s policy on unit pricing discretion. Payments to financial advisers and management cost rebates No adviser will receive any commission from Vanguard relating to your investment in the Fund. Vanguard may from time to time enter into arrangements to provide management cost rebates to certain wholesale investors who invest sizeable amounts in the Fund. Vanguard makes these payments from its own resources. How Vanguard invests While maintaining the objective of a fund, Vanguard tries to minimise the transaction costs associated with managing cash flows and making adjustments for index or benchmark changes. Cash and liquidity management To manage day-to-day transaction requirements such as investor withdrawals and collateral requirements, the Fund may maintain a variable balance of cash. To effectively manage this cash, the Fund may transact in cash equivalent instruments that aim to preserve capital and provide liquidity to the Fund. Cash equivalent instruments include, but are not limited to, high quality short-term money market instruments and short dated debt securities such as government issued securities, government-related (semi-government) issued securities and repurchase agreements, where a high quality government or government related security is received or provided as collateral for the term of the agreement. Derivative financial instruments A fund may utilise over-the-counter and exchange traded derivatives such as futures, forwards and swaps, to help achieve its investment objective. Derivative financial instruments may be used for the purposes of maintaining fund liquidity and managing market exposure. Derivative financial instruments will not be used to leverage the assets of the Funds. Borrowings While the Funds constitutions permit borrowing, Vanguard does not currently intend to borrow for the purposes of gearing. A Fund will only borrow where Vanguard believes it is in the best interests of investors to do so. Taxation The tax information in this Reference Guide is provided for general information only and is not intended to provide an exhaustive or definitive statement as to all the possible tax outcomes for investors. Vanguard does not provide tax advice. As each investor s circumstance is different, you should obtain professional tax advice concerning the particular tax implications of investing in the Funds for you. Discussion of tax in this Reference Guide at the time of publication refers to the Income Tax Assessment Act 1936 (Cth), the Income Tax Assessment Act 1997 (Cth) as enacted, applicable case law and published Australian Taxation Office rulings, determinations and administrative practice at the date of this Reference Guide. Any changes in the tax law or interpretation of the tax law subsequent to this date may alter the tax information provided in this Reference Guide. Legislation to introduce a new regime for the taxation of managed investment trusts (MITs) and a number of related amendments has been passed by Parliament. At the date of this Reference Guide the new regime is expected to apply from 1 July 2016 with an option to elect to apply the new regime from 1 July Based on the information that is currently available, it is anticipated that the regime should provide greater certainty regarding the tax treatment of managed investment trusts, including the Funds, and the tax treatment of distributions that are made on Fund units. Vanguard will monitor these amendments and their impact on the tax treatment of the Funds. Vanguard Wholesale Funds Reference Guide 13

14 Taxation of Australian resident investors The tax information provided in this Reference Guide relates to Australian tax residents who hold their units on capital account for income tax purposes, and does not consider any non-australian tax consequences. Investors who are foreign residents should seek independent professional advice in relation to their specific circumstances. Further, the comments in this Reference Guide do not apply to Australian tax residents who may hold their units on revenue account, with a profit making intention or as trading stock, or where the units might be subject to the fair value or financial reports election under the rules affecting the taxation of financial arrangements. The tax information in this Reference Guide does not apply to investors who are exempt from Australian income tax. Distributions from the Funds The distributable income of the Funds for each financial year is allocated to investors. The distributable income may include both net taxable income and other non-assessable amounts. For example, the distribution may comprise interest, dividends, net capital gains, other income, franking credits, foreign income, foreign income tax offsets and tax-deferred amounts. Investors will be assessed on their share of the net taxable income of the Fund, in the financial year to which their entitlement relates, even though the distribution payment may not occur until the next financial year and irrespective of whether the income is reinvested into additional units. In addition to the distributions from the Funds, you may also receive management fee rebates during the year (if you have entered into a negotiated fee arrangement with Vanguard). Please seek professional tax advice to determine whether this is taxable income to you. Subject to the Fund constitution, Vanguard may determine and distribute income (including realised gains) at times other than those specified without notice to investors. Dividends For each of the Funds that invest in Australian equities, you may receive as part of your distribution franking credits attached to franked dividends (subject to the 45 day holding period and related payments rule) derived by the Fund in respect of Australian equities. These franking credits do not form part of your cash receipts but will need to be included in your taxable income as part of your tax return and, depending on your particular circumstances, may be available to offset your tax liability, or be paid as a refund if the franking credits exceed your total income tax liability. Foreign income Income received by a Fund from sources outside Australia may be subject to tax in the country of source. Australian tax resident investors may be entitled to claim a foreign income tax offset against their Australian tax liability in respect of their share of the foreign tax paid. Foreign Accruals Regime Under the previous Foreign Investment Fund (FIF) regime (which has been repealed effective from 1 July 2010) a Fund may be assessed on a portion of the gain in the value of interests in certain foreign companies and foreign trusts at the end of the tax year, even though those gains are unrealised. To replace the repealed FIF rules, the former Government released an Exposure Draft in relation to the new Foreign Accumulation Fund (FAF) rule. The FAF or anti-roll-up rule is intended as an integrity measure and if enacted, will target investments in certain foreign accumulation funds that provide low risk returns and re-invest these returns. It is proposed that the FAF or anti-roll-up rule will apply for the income years starting on or after the date the FAF rule becomes law. At time of publication, the FAF or anti-roll- up rule is still in draft form and the final form is unknown. Investors should monitor developments. Capital gains Where the Fund makes a distribution which includes a net capital gain, to the extent the net capital gain includes a discounted gain, you may be required to gross up the net capital gain by doubling the discounted gain component. You may then apply any of your current or prior year capital losses to reduce the grossed up capital gain. Where applicable, you may be able to apply the capital gains tax (CGT) discount (50 percent for individuals and certain trusts and percent for complying superannuation funds) to arrive at your net capital gain. This amount should be included in the calculation of your taxable income. A Fund may make distributions of amounts which are non-assessable to the investor. Receipt of certain non-assessable amounts may have CGT consequences. 14 Connect with Vanguard > vanguard.com.au >