Interim Short Report For the six months ended 30 September 2016 Vanguard LifeStrategy Funds ICVC (An open-ended investment company incorporated with limited liability and registered in England and Wales under registered number IC000904.)
Vanguard s Principles for Investing Success We want to give you the best chance of investment success. These principles, grounded in Vanguard s research and experience, can put you on the right path. Goals. Create clear, appropriate investment goals. Balance. Develop a suitable asset allocation using broadly diversified funds. Cost. Minimise cost. Discipline. Maintain perspective and long-term discipline. A single theme unites these principles: Focus on the things you can control. We believe there is no wiser course for any investor. Contents Chairman s Letter 1 Vanguard LifeStrategy 20% Equity Fund 2 Vanguard LifeStrategy 40% Equity Fund 6 Vanguard LifeStrategy 60% Equity Fund 10 Vanguard LifeStrategy 80% Equity Fund 14 Vanguard LifeStrategy 100% Equity Fund 18 Vanguard Target Retirement 2015 Fund 22 Vanguard Target Retirement 2020 Fund 26 Vanguard Target Retirement 2025 Fund 30 Vanguard Target Retirement 2030 Fund 34 Vanguard Target Retirement 2035 Fund 38 Vanguard Target Retirement 2040 Fund 42 Vanguard Target Retirement 2045 Fund 46 Vanguard Target Retirement 2050 Fund 50 Vanguard Target Retirement 2055 Fund 54 Directory Inside Back Cover About the cover: Pictured is a sailing block on the Brilliant, a 1932 schooner docked in Mystic, Connecticut. A type of pulley, the sailing block helps coordinate the setting of the sails. At Vanguard, the intricate coordination of technology and people allows us to help millions of clients around the world reach their financial goals.
Chairman s Perspective Dear Shareholder, Global financial markets plowed through growth worries and the surprise Brexit vote during the six months ended 30 September 2016. In the end, stocks provided generous results, and bonds continued to stay in favor. This report covers the five Vanguard LifeStrategy Funds, which maintain a fixed asset allocation, and nine Vanguard Target Retirement Funds, which we launched in December 2015. These funds gradually shift to a more conservative mix of stocks and bonds as the target retirement date is approached and passed. Returns from all the funds were in step with their allocations. Results for the five LifeStrategy Funds ranged from about 8% (LifeStrategy 20% Equity Fund) to more than 16% (LifeStrategy 100% Equity Fund). Target Retirement Fund returns ranged from nearly 10% for the 2015 Fund to more than 14% for the four longestdated funds. The six-month period was highlighted by the United Kingdom s vote in June to leave the European Union. The Brexit verdict sent stock markets lower for a few days. But they rebounded sharply, proving once again that predicting short-term market performance is a perilous task. Investors seemed to look past the global economy s challenges, including sluggish growth and, in some developed nations, rising political opposition to globalization. One trend the market approved: a turnaround in commodity prices, which benefited energy-related businesses and economies relying on commodity exports. The broad US stock market (as measured by the S&P Total Market Index) returned more than 7% in US dollars but more than 18% for British investors because the US dollar rose 11% against the pound. The dramatic currency effect was reflected in many markets as the Brexit vote triggered a plunge in the pound. When currencies rise in value against the pound, so do the returns from the corresponding markets when calculated for UK investors. In the United Kingdom itself, the markets proved to be more resilient than many expected. The falling pound sparked optimism that UK firms with a multinational presence would benefit from higher earnings when converted to sterling. The FTSE All-Share Index returned nearly 13%, with oil and gas, basic materials, and technology stocks providing a major boost. In Europe, the euro s rise of nearly 9% against the pound helped returns from developed European markets surpass 13% for UK investors. The Japanese yen rose more than 23% against the pound, giving UK investors a return of nearly 22% from Japan. Emerging markets also returned more than 20%. Meanwhile, the broad global bond market returned more than 3% when currency-hedged back to the pound. UK bonds rose sharply as yields retreated, reflecting expectations of a more accommodative Bank of England monetary policy to offset a potential Brexit-related slowdown. Since raising interest rates in December, the US Federal Reserve has held off on any further increases. That and stubbornly low yields across other developed bond markets pushed bond prices higher. The yield of the benchmark 10-year US Treasury bond fell from 1.77% at the end of March to about 1.60% on September 30. The European Central Bank and the Bank of Japan maintained their highly accommodative policies. Government bond yields in some markets, including Japan, Germany, and Switzerland, were negative. The Brexit vote and resulting market gyrations reminded investors of the value of holding to a long-term plan through ups and downs. The LifeStrategy and Target Retirement Funds offer highly diversified portfolios with predictable asset mixes that meet the needs of investors committed to this approach. Thank you for entrusting your assets to Vanguard Investments UK, Limited. Yours faithfully, F. William McNabb III Chairman The Vanguard Group, Inc. 30 November 2016 1
LifeStrategy 20% Equity Fund Fund Profile As at 30 September 2016 Investment Objective The Fund seeks to gain exposure to a diversified notional portfolio composed approximately 20% by value of equity securities and 80% by value of fixed income securities. Investment Strategy The Fund will seek to achieve its investment objective predominantly through investment in passive, index-tracking collective investment schemes. Risk Profile The value of investments, and the income from them, may fall or rise and investors may get back less than they invested. The value of this investment may fall or rise as a result of changes in exchange rates. This Fund invests in emerging markets, which can be more volatile than more established markets. As a result, the value of your investment may rise or fall. Funds investing in fixed interest securities carry the risk of default on repayment and erosion of the capital value of your investment, and the level of income may fluctuate. Movements in interest rates are likely to affect the capital value of fixed interest securities. Allocation to Underlying Vanguard Funds (% of Underlying Vanguard Funds) Vanguard Global Bond Index Fund 19.3% Vanguard FTSE Developed World ex-u.k. Equity Index Fund 13.6 Vanguard U.K. Government Bond Index Fund 12.6 Vanguard U.S. Investment Grade Credit Index Fund 8.2 Vanguard Euro Government Bond Index Fund 8.1 Vanguard U.S. Government Bond Index Fund 7.7 Vanguard U.K. Investment Grade Bond Index Fund 7.2 Vanguard U.K. Inflation-Linked Gilt Index Fund 7.1 Vanguard Japan Government Bond Index Fund 5.9 Vanguard FTSE U.K. All Share Index Unit Trust 5.1 Vanguard Euro Investment Grade Bond Index Fund 3.8 Vanguard Emerging Markets Stock Index Fund 1.4 Fund Market Diversification (% of Underlying Vanguard Funds) Portfolio Characteristics Ongoing Charges Figure 1 30 September 2016 31 March 2016 A Accumulation Shares Expenses 0.05% 0.05% Synthetic Element 0.19% 0.19% Total Synthetic Ongoing Charge 1 0.24% 0.24% A Income Shares Expenses 0.05% 0.05% Synthetic Element 0.19% 0.19% Total Synthetic Ongoing Charge 1 0.24% 0.24% Ex-Dividend Date 1 April 2017 1 April 2016 Distribution Date 31 May 2017 31 May 2016 Fund Asset Allocation (% of Net Asset Value) n n 20% Equity-Based Collective Investment Schemes 80% Fixed Income-Based Collective Investment Schemes Global Bonds 19.3% UK Gilts 12.6 North American Equities 8.8 European Government Bonds 8.1 US Investment-Grade Bonds 8.2 US Government Bonds 7.7 UK Investment-Grade Bonds 7.2 UK Inflation-Linked Gilts 7.1 Japan Government Bonds 5.9 UK Equities 5.1 European Investment-Grade Bonds 3.8 European ex-uk Equities 2.4 Emerging Markets Equities 1.4 Japan Equities 1.4 Asia ex-japan Equities 1.0 Synthetic Risk and Reward Indicator 2 Lower risk Higher risk Typically lower rewards Typically higher rewards 1 2 3 4 5 6 7 1 The Ongoing Charges Figure (OCF) is the ratio of the Fund s total disclosable costs (excluding overdraft interest) to the average net assets of the Fund. Because the Fund invests a substantial proportion of its assets in other UCITS or Collective Investment Undertakings (CIU), it is required to disclose a synthetic OCF that accounts for the ongoing charges incurred in the underlying CIUs. 2 The Synthetic Risk and Reward Indicator (SRRI) measures the volatility of the Fund. The risk and reward category (which may range from 1 to 7) is calculated using historical data and may not be a reliable indicator of the Fund s future risk profile. The risk and reward category may shift over time and is not a target or guarantee. The lowest category (i.e. category 1) does not mean risk free. The Fund appears in the lower range of the risk and reward indicator. This is because the values of the Fund s investments have experienced a lower rate of change in the past. 2
LifeStrategy 20% Equity Fund Commentary On behalf of Vanguard Asset Management, Limited 1 For the six months ended 30 September 2016, Vanguard LifeStrategy 20% Equity Fund returned 8.05%. The Fund s heavy allocation to bonds weighed on its performance. Investors increased risk appetite during the period boosted the results of more equity-oriented funds. Global fixed income markets returned about 3%. In the United Kingdom, the yield of the benchmark 10-year gilt fell from 1.42% to 0.75%. (Bond yields and prices move in opposite directions.) UK government bonds returned about 9%, trailing their investment-grade counterparts, which returned 10%. Inflation-linked gilts jumped to about 21%, as a steep decline in the British pound after the country s vote to leave the European Union contributed to higher inflation expectations. Among non-uk bonds, European government bonds outpaced those of the United States and Japan. US investment-grade bonds surpassed those of Europe. Virtually all the major stock markets posted double-digit returns. Emerging-market stocks outpaced those of developed markets. UK stocks returned nearly 13%, slightly less than those of developed markets in Europe. Developed markets outside of the United Kingdom returned about 18%. Total Returns Total Returns Periods Ended 30 September 2016 Annualised Annualised Since Inception Six Months Five Years (23 June 2011) A Accumulation Shares 8.05% 7.45% 7.31% A Income Shares 8.05 7.44 7.30 Past performance is not a reliable indicator of future results. Basis of performance: NAV to NAV with net income reinvested. Composite index benchmarks that appeared in previous reports have not been included. 1 The Vanguard Group, Inc., as investment manager for Vanguard LifeStrategy Funds ICVC, sub-delegates the management of this sub-fund to Vanguard Asset Management, Limited. 3
LifeStrategy 20% Equity Fund Performance Information A Accumulation Shares 30 September 2016 31 March 2016 31 March 2015 31 March 2014 Change in Net Assets Per Share Opening Net Asset Value Per Share 1 134.23 132.35 119.26 119.50 Return Before Operating Charges 2 11.16 2.19 13.39 ( 0.09) Operating Charges ( 0.34) ( 0.31) ( 0.30) ( 0.15) Return After Operating Charges 2 10.82 1.88 13.09 ( 0.24) Closing Net Asset Value Per Share 1 145.05 134.23 132.35 119.26 Retained Distributions on Accumulation Shares 3 1.51 1.74 1.52 After Direct Transaction Costs 4 0.05 0.11 0.11 0.14 Performance Return After Operating Charges 5 8.06% 1.42% 10.98% (0.20%) Other Information Closing Net Asset Value 1 405,261,619 271,603,752 145,287,427 77,176,794 Closing Number of Shares 2,794,002 2,023,351 1,097,723 647,155 Operating Charges 0.24% 0.24% 0.24% 0.29% Direct Transaction Costs 4 0.04% 0.08% 0.09% 0.28% Prices Highest Share Price 6 145.99 134.24 133.11 121.80 Lowest Share Price 6 128.90 127.40 119.33 113.70 A Income Shares Change in Net Assets Per Share Opening Net Asset Value Per Share 1 125.13 124.78 113.92 115.64 Return Before Operating Charges 2 10.39 2.06 12.80 ( 0.10) Operating Charges ( 0.31) ( 0.29) ( 0.29) ( 0.16) Return After Operating Charges 2 10.08 1.77 12.51 ( 0.26) Distributions on Income Shares 3 ( 1.42) ( 1.65) ( 1.46) Closing Net Asset Value Per Share 1 135.21 125.13 124.78 113.92 After Direct Transaction Costs 4 0.05 0.10 0.11 0.15 Performance Return After Operating Charges 5 8.05% 1.42% 10.98% (0.22%) Other Information Closing Net Asset Value 1 49,392,379 38,822,520 31,804,778 15,406,138 Closing Number of Shares 365,303 310,251 254,897 135,231 Operating Charges 0.24% 0.24% 0.24% 0.29% Direct Transaction Costs 4 0.04% 0.08% 0.09% 0.28% Prices Highest Share Price 6 136.06 126.54 127.11 117.86 Lowest Share Price 6 121.52 120.11 113.99 110.03 1 Valued at bid-market prices. 2 Operating charges include indirect costs incurred in the maintenance and running of the Fund, as disclosed in (but not limited to) the detailed expenses within the Statement of Total Return. The figures used within this table have been calculated against the average Shares in issue for the accounting period/year. 3 The distribution on Income and Accumulation Shares includes distribution paid and payable in the financial year. 4 Direct transaction costs within this table have been calculated against the average Net Asset Value for the accounting period/year. 5 Returns in the performance table are calculated using methods prescribed in revised SORP regulations. They may differ slightly from returns shown in the Fund commentary. 6 Valued at mid-market prices. 4
LifeStrategy 20% Equity Fund Summary of Significant Changes For the period ended 30 September 2016 Largest Purchases Cost ( ) Vanguard Global Bond Index Fund 27,075,000 Vanguard FTSE Developed World ex-u.k. Equity Index Fund 14,507,000 Vanguard U.K. Government Bond Index Fund 13,200,077 Vanguard U.S. Investment Grade Credit Index Fund 11,275,000 Vanguard Euro Government Bond Index Fund 10,471,000 Total 76,528,077 Total Purchases for the Period 122,535,641 Largest Sales Proceeds ( ) Vanguard FTSE Developed World ex-u.k. Equity Index Fund 3,625,000 Vanguard Global Bond Index Fund 1,100,000 Vanguard U.K. Government Bond Index Fund 800,000 Vanguard FTSE U.K. All Share Index Unit Trust 500,000 Vanguard U.S. Government Bond Index Fund 500,000 Total 6,525,000 Total Sales for the Period 7,423,000 5
LifeStrategy 40% Equity Fund Fund Profile As at 30 September 2016 Investment Objective The Fund seeks to gain exposure to a diversified notional portfolio composed approximately 40% by value of equity securities and 60% by value of fixed income securities. Investment Strategy The Fund will seek to achieve its investment objective predominantly through investment in passive, index-tracking collective investment schemes. Risk Profile Portfolio Characteristics Ongoing Charges Figure 1 The value of investments, and the income from them, may fall or rise and investors may get back less than they invested. The value of this investment may fall or rise as a result of changes in exchange rates. This Fund invests in emerging markets, which can be more volatile than more established markets. As a result, the value of your investment may rise or fall. Funds investing in fixed interest securities carry the risk of default on repayment and erosion of the capital value of your investment, and the level of income may fluctuate. Movements in interest rates are likely to affect the capital value of fixed interest securities. 30 September 2016 31 March 2016 A Accumulation Shares Expenses 0.07% 0.07% Synthetic Element 0.17% 0.17% Total Synthetic Ongoing Charge 1 0.24% 0.24% A Income Shares Expenses 0.07% 0.07% Synthetic Element 0.17% 0.17% Total Synthetic Ongoing Charge 1 0.24% 0.24% Ex-Dividend Date 1 April 2017 1 April 2016 Distribution Date 31 May 2017 31 May 2016 Fund Asset Allocation (% of Net Asset Value) n n 40% Equity-Based Collective Investment Schemes 60% Fixed Income-Based Collective Investment Schemes Allocation to Underlying Vanguard Funds (% of Underlying Vanguard Funds) Vanguard FTSE Developed World ex-u.k. Equity Index Fund 19.3% Vanguard Global Bond Index Fund 19.3 Vanguard FTSE U.K. All Share Index Unit Trust 10.1 Vanguard U.K. Government Bond Index Fund 9.1 Vanguard U.K. Investment Grade Bond Index Fund 5.3 Vanguard U.K. Inflation-Linked Gilt Index Fund 5.3 Vanguard U.S. Equity Index Fund 5.1 Vanguard U.S. Investment Grade Credit Index Fund 5.0 Vanguard Euro Government Bond Index Fund 5.0 Vanguard U.S. Government Bond Index Fund 4.8 Vanguard Japan Government Bond Index Fund 3.6 Vanguard Emerging Markets Stock Index Fund 3.0 Vanguard Euro Investment Grade Bond Index Fund 2.3 Vanguard FTSE Developed Europe ex-u.k. Equity Index Fund 1.4 Vanguard Japan Stock Index Fund 0.8 Vanguard Pacific ex-japan Stock Index Fund 0.4 Vanguard U.K. Government Bond UCITS ETF 0.2 Fund Market Diversification (% of Underlying Vanguard Funds) Global Bonds 19.3% North American Equities 17.7 UK Equities 10.1 UK Gilts 9.3 UK Investment-Grade Bonds 5.3 UK Inflation-Linked Gilts 5.3 US Investment-Grade Bonds 5.0 European Government Bonds 5.0 European ex-uk Equities 4.8 US Government Bonds 4.8 Japan Government Bonds 3.6 Emerging Markets Equities 3.0 Japan Equities 2.7 European Investment-Grade Bonds 2.3 Asia ex-japan Equities 1.8 Synthetic Risk and Reward Indicator 2 Lower risk Typically lower rewards Higher risk Typically higher rewards 1 2 3 4 5 6 7 1 The Ongoing Charges Figure (OCF) is the ratio of the Fund s total disclosable costs (excluding overdraft interest) to the average net assets of the Fund. Because the Fund invests a substantial proportion of its assets in other UCITS or Collective Investment Undertakings (CIU), it is required to disclose a synthetic OCF that accounts for the ongoing charges incurred in the underlying CIUs. 2 The Synthetic Risk and Reward Indicator (SRRI) measures the volatility of the Fund. The risk and reward category (which may range from 1 to 7) is calculated using historical data and may not be a reliable indicator of the Fund s future risk profile. The risk and reward category may shift over time and is not a target or guarantee. The lowest category (i.e. category 1) does not mean risk free. The Fund appears in the moderate range of the risk and reward indicator. This is because the values of the Fund s investments have experienced a moderate rate of change in the past. 6
LifeStrategy 40% Equity Fund Commentary On behalf of Vanguard Asset Management, Limited 1 For the six months ended 30 September 2016, Vanguard LifeStrategy 40% Equity Fund returned 10.19%. Global fixed income markets returned about 3%. In the United Kingdom, the yield of the benchmark 10-year gilt fell from 1.42% to 0.75%. (Bond yields and prices move in opposite directions.) UK government bonds returned about 9%, trailing their investment-grade counterparts, which returned 10%. Inflation-linked gilts jumped to about 21%, as a steep decline in the British pound after the country s vote to leave the European Union contributed to higher inflation expectations. Among non-uk bonds, European government bonds outpaced those of the United States and Japan. US investment-grade bonds surpassed those of Europe. Virtually all the major stock markets posted double-digit returns. Emerging-market stocks outpaced those of developed markets, with a return of about 21%. UK stocks returned nearly 13%, slightly less than those of developed markets in Europe. Outside of the United Kingdom, developed stock markets returned about 18%. Total Returns Total Returns Periods Ended 30 September 2016 Annualised Annualised Since Inception Six Months Five Years (23 June 2011) A Accumulation Shares 10.19% 9.23% 8.37% A Income Shares 10.19 9.23 8.36 Past performance is not a reliable indicator of future results. Basis of performance: NAV to NAV with net income reinvested. Composite index benchmarks that appeared in previous reports have not been included. 1 The Vanguard Group, Inc., as investment manager for Vanguard LifeStrategy Funds ICVC, sub-delegates the management of this sub-fund to Vanguard Asset Management, Limited. 7
LifeStrategy 40% Equity Fund Performance Information A Accumulation Shares 30 September 2016 31 March 2016 31 March 2015 31 March 2014 Change in Net Assets Per Share Opening Net Asset Value Per Share 1 138.63 137.41 122.25 120.16 Return Before Operating Charges 2 14.47 1.54 15.47 2.43 Operating Charges ( 0.35) ( 0.32) ( 0.31) ( 0.34) Return After Operating Charges 2 14.12 1.22 15.16 2.09 Closing Net Asset Value Per Share 1 152.75 138.63 137.41 122.25 Retained Distributions on Accumulation Shares 3 1.76 1.87 1.67 After Direct Transaction Costs 4 0.05 0.11 0.11 0.18 Performance Return After Operating Charges 5 10.19% 0.89% 12.40% 1.74% Other Information Closing Net Asset Value 1 1,062,648,212 710,020,511 408,779,038 208,680,121 Closing Number of Shares 6,956,598 5,121,657 2,974,919 1,706,962 Operating Charges 0.24% 0.24% 0.24% 0.29% Direct Transaction Costs 4 0.03% 0.08% 0.09% 0.15% Prices Highest Share Price 6 153.87 139.78 138.60 123.27 Lowest Share Price 6 137.40 129.19 121.93 114.48 A Income Shares Change in Net Assets Per Share Opening Net Asset Value Per Share 1 128.55 129.07 116.41 116.00 Return Before Operating Charges 2 13.43 1.44 14.74 2.36 Operating Charges ( 0.32) ( 0.30) ( 0.30) ( 0.34) Return After Operating Charges 2 13.11 1.14 14.44 2.02 Distributions on Income Shares 3 ( 1.66) ( 1.78) ( 1.61) Closing Net Asset Value Per Share 1 141.66 128.55 129.07 116.41 After Direct Transaction Costs 4 0.05 0.11 0.11 0.17 Performance Return After Operating Charges 5 10.19% 0.88% 12.40% 1.74% Other Information Closing Net Asset Value 1 143,830,356 102,342,259 61,219,443 33,463,988 Closing Number of Shares 1,015,354 796,097 474,330 287,466 Operating Charges 0.24% 0.24% 0.24% 0.29% Direct Transaction Costs 4 0.03% 0.08% 0.09% 0.15% Prices Highest Share Price 6 142.69 131.28 131.98 119.00 Lowest Share Price 6 127.41 121.35 116.10 110.51 1 Valued at bid-market prices. 2 Operating charges include indirect costs incurred in the maintenance and running of the Fund, as disclosed in (but not limited to) the detailed expenses within the Statement of Total Return. The figures used within this table have been calculated against the average Shares in issue for the accounting period/year. 3 The distribution on Income and Accumulation Shares includes distribution paid and payable in the financial year. 4 Direct transaction costs within this table have been calculated against the average Net Asset Value for the accounting period/year. 5 Returns in the performance table are calculated using methods prescribed in the revised SORP regulations. They may differ slightly from returns shown in the Fund commentary. 6 Valued at mid-market prices. 8
LifeStrategy 40% Equity Fund Summary of Significant Changes For the period ended 30 September 2016 Largest Purchases Cost ( ) Vanguard Global Bond Index Fund 70,226,000 Vanguard FTSE Developed World ex-u.k. Equity Index Fund 52,695,000 Vanguard FTSE U.K. All Share Index Unit Trust 27,941,000 Vanguard U.K. Government Bond Index Fund 25,727,020 Vanguard U.S. Investment Grade Credit Index Fund 18,898,000 Total 195,487,020 Total Purchases for the Period 305,316,896 Largest Sales Proceeds ( ) Vanguard FTSE Developed World ex-u.k. Equity Index Fund 7,970,000 Vanguard FTSE U.K. All Share Index Unit Trust 575,000 Total 8,545,000 Total Sales for the Period 8,545,000 9
LifeStrategy 60% Equity Fund Fund Profile As at 30 September 2016 Investment Objective The Fund seeks to gain exposure to a diversified notional portfolio composed approximately 60% by value of equity securities and 40% by value of fixed income securities. Investment Strategy The Fund will seek to achieve its investment objective predominantly through investment in passive, index-tracking collective investment schemes. Risk Profile Portfolio Characteristics Ongoing Charges Figure 1 The value of investments, and the income from them, may fall or rise and investors may get back less than they invested. The value of this investment may fall or rise as a result of changes in exchange rates. This Fund invests in emerging markets, which can be more volatile than more established markets. As a result, the value of your investment may rise or fall. Funds investing in fixed interest securities carry the risk of default on repayment and erosion of the capital value of your investment, and the level of income may fluctuate. Movements in interest rates are likely to affect the capital value of fixed interest securities. 30 September 2016 31 March 2016 A Accumulation Shares Expenses 0.09% 0.09% Synthetic Element 0.15% 0.15% Total Synthetic Ongoing Charge 1 0.24% 0.24% A Income Shares Expenses 0.09% 0.09% Synthetic Element 0.15% 0.15% Total Synthetic Ongoing Charge 1 0.24% 0.24% Ex-Dividend Date 1 April 2017 1 April 2016 Distribution Date 31 May 2017 31 May 2016 Fund Asset Allocation (% of Net Asset Value) n n 60% Equity-Based Collective Investment Schemes 40% Fixed Income-Based Collective Investment Schemes Allocation to Underlying Vanguard Funds (% of Underlying Vanguard Funds) Vanguard FTSE Developed World ex-u.k. Equity Index Fund 19.3% Vanguard Global Bond Index Fund 19.2 Vanguard FTSE U.K. All Share Index Unit Trust 15.1 Vanguard U.S. Equity Index Fund 14.0 Vanguard U.K. Government Bond Index Fund 6.0 Vanguard Emerging Markets Stock Index Fund 4.4 Vanguard FTSE Developed Europe ex-u.k. Equity Index Fund 3.9 Vanguard U.K. Inflation-Linked Gilt Index Fund 3.5 Vanguard U.K. Investment Grade Bond Index Fund 3.4 Vanguard Japan Stock Index Fund 2.3 Vanguard U.S. Investment Grade Credit Index Fund 1.9 Vanguard Euro Government Bond Index Fund 1.8 Vanguard U.S. Government Bond Index Fund 1.7 Vanguard Japan Government Bond Index Fund 1.3 Vanguard Pacific ex-japan Stock Index Fund 1.2 Vanguard Euro Investment Grade Bond Index Fund 0.9 Vanguard U.K. Government Bond UCITS ETF 0.1 Fund Market Diversification (% of Underlying Vanguard Funds) North American Equities 26.6% Global Bonds 19.2 UK Equities 15.1 European ex-uk Equities 7.3 UK Gilts 6.1 Emerging Markets Equities 4.4 Japan Equities 4.2 UK Inflation-Linked Gilts 3.5 UK Investment-Grade Bonds 3.4 Asia ex-japan Equities 2.6 US Investment-Grade Bonds 1.9 European Government Bonds 1.8 US Government Bonds 1.7 Japan Government Bonds 1.3 European Investment-Grade Bonds 0.9 Synthetic Risk and Reward Indicator 2 Lower risk Typically lower rewards Higher risk Typically higher rewards 1 2 3 4 5 6 7 1 The Ongoing Charges Figure (OCF) is the ratio of the Fund s total disclosable costs (excluding overdraft interest) to the average net assets of the Fund. Because the Fund invests a substantial proportion of its assets in other UCITS or Collective Investment Undertakings (CIU), it is required to disclose a synthetic OCF that accounts for the ongoing charges incurred in the underlying CIUs. 2 The Synthetic Risk and Reward Indicator (SRRI) measures the volatility of the Fund. The risk and reward category (which may range from 1 to 7) is calculated using historical data and may not be a reliable indicator of the Fund s future risk profile. The risk and reward category may shift over time and is not a target or guarantee. The lowest category (i.e. category 1) does not mean risk free. The Fund appears in the moderate range of the risk and reward indicator. This is because the values of the Fund s investments have experienced a moderate rate of change in the past. 10
LifeStrategy 60% Equity Fund Commentary On behalf of Vanguard Asset Management, Limited 1 For the six months ended 30 September 2016, Vanguard LifeStrategy 60% Equity Fund returned 12.37%. Expectations that key central banks would continue their accommodative monetary policies boosted investors risk appetite. UK stocks returned about 13%. The Bank of England s stimulus efforts helped lift UK stocks and eased fears of a recession following the country s vote to leave the European Union. Developed stock markets outside the United Kingdom rose about 18%. Stocks in the United States and Japan contributed most to returns. In Europe, Switzerland and France boosted performance. Emerging-market stocks outpaced those of developed markets, with a return of about 21%. Global fixed income markets returned about 3% for the six months. In the United Kingdom, the yield of the benchmark 10-year gilt fell from 1.42% to 0.75%. (Bond yields and prices move in opposite directions.) UK government bonds returned about 9%, trailing the 10% result of their investment-grade counterparts. Inflation-linked gilts jumped to about 21%, as a steep decline in the British pound after the Brexit vote contributed to higher inflation expectations. Among non-uk bonds, European government bonds outpaced those of the United States and Japan. US investment-grade bonds surpassed those of Europe. Total Returns Total Returns Periods Ended 30 September 2016 Annualised Annualised Since Inception Six Months Five Years (23 June 2011) A Accumulation Shares 12.37% 10.95% 9.28% A Income Shares 12.37 10.95 9.27 Past performance is not a reliable indicator of future results. Basis of performance: NAV to NAV with net income reinvested. Composite index benchmarks that appeared in previous reports have not been included. 1 The Vanguard Group, Inc., as investment manager for Vanguard LifeStrategy Funds ICVC, sub-delegates the management of this sub-fund to Vanguard Asset Management, Limited. 11
LifeStrategy 60% Equity Fund Performance Information A Accumulation Shares 30 September 2016 31 March 2016 31 March 2015 31 March 2014 Change in Net Assets Per Share Opening Net Asset Value Per Share 1 142.07 141.92 124.74 120.44 Return Before Operating Charges 2 17.94 0.48 17.50 4.65 Operating Charges ( 0.36) ( 0.33) ( 0.32) ( 0.35) Return After Operating Charges 2 17.58 0.15 17.18 4.30 Closing Net Asset Value Per Share 1 159.65 142.07 141.92 124.74 Retained Distributions on Accumulation Shares 3 2.00 1.83 1.71 After Direct Transaction Costs 4 0.04 0.10 0.12 0.24 Performance Return After Operating Charges 5 12.38% 0.11% 13.77% 3.57% Other Information Closing Net Asset Value 1 1,616,395,308 1,146,757,807 653,064,962 289,005,921 Closing Number of Shares 10,124,368 8,071,554 4,601,781 2,316,885 Operating Charges 0.24% 0.24% 0.24% 0.29% Direct Transaction Costs 4 0.02% 0.07% 0.09% 0.20% Prices Highest Share Price 6 163.21 145.41 143.53 125.23 Lowest Share Price 6 131.38 130.10 123.74 114.83 A Income Shares Change in Net Assets Per Share Opening Net Asset Value Per Share 1 131.75 133.47 118.85 116.35 Return Before Operating Charges 2 16.64 0.47 16.66 4.49 Operating Charges ( 0.33) ( 0.31) ( 0.30) ( 0.34) Return After Operating Charges 2 16.31 0.16 16.36 4.15 Distributions on Income Shares 3 ( 1.88) ( 1.74) ( 1.65) Closing Net Asset Value Per Share 1 148.06 131.75 133.47 118.85 After Direct Transaction Costs 4 0.03 0.09 0.11 0.23 Performance Return After Operating Charges 5 12.38% 0.12% 13.77% 3.57% Other Information Closing Net Asset Value 1 207,184,084 156,465,315 104,466,219 59,796,696 Closing Number of Shares 1,399,345 1,187,607 782,688 503,128 Operating Charges 0.24% 0.24% 0.24% 0.29% Direct Transaction Costs 4 0.02% 0.07% 0.09% 0.20% Prices Highest Share Price 6 151.36 136.74 136.77 120.97 Lowest Share Price 6 123.58 122.36 117.91 110.93 1 Valued at bid-market prices. 2 Operating charges include indirect costs incurred in the maintenance and running of the Fund, as disclosed in (but not limited to) the detailed expenses within the Statement of Total Return. The figures used within this table have been calculated against the average Shares in issue for the accounting period/year. 3 The distribution on Income and Accumulation Shares includes distribution paid and payable in the financial year. 4 Direct transaction costs within this table have been calculated against the average Net Asset Value for the accounting period/year. 5 Returns in the performance table are calculated using methods prescribed in the revised SORP regulations. They may differ slightly from returns shown in the Fund commentary. 6 Valued at mid-market prices. 12
LifeStrategy 60% Equity Fund Summary of Significant Changes For the period ended 30 September 2016 Largest Purchases Cost ( ) Vanguard Global Bond Index Fund 93,718,000 Vanguard FTSE Developed World ex-u.k. Equity Index Fund 60,501,000 Vanguard FTSE U.K. All Share Index Unit Trust 57,552,000 Vanguard U.S. Equity Index Fund 39,385,000 Vanguard U.K. Government Bond Index Fund 21,280,299 Total 272,436,299 Total Purchases for the Period 363,765,120 Largest Sales Proceeds ( ) Vanguard FTSE Developed World ex-u.k. Equity Index Fund 8,487,000 Vanguard FTSE U.K. All Share Index Unit Trust 8,000,000 Vanguard U.S. Equity Index Fund 6,965,000 Vanguard Global Bond Index Fund 2,675,000 Vanguard U.K. Investment Grade Bond Index Fund 1,089,000 Total 27,216,000 Total Sales for the Period 27,878,000 13
LifeStrategy 80% Equity Fund Fund Profile As at 30 September 2016 Investment Objective The Fund seeks to gain exposure to a diversified notional portfolio composed approximately 80% by value of equity securities and 20% by value of fixed income securities. Investment Strategy The Fund will seek to achieve its investment objective predominantly through investment in passive, index-tracking collective investment schemes. Risk Profile The value of investments, and the income from them, may fall or rise and investors may get back less than they invested. The value of this investment may fall or rise as a result of changes in exchange rates. This Fund invests in emerging markets, which can be more volatile than more established markets. As a result, the value of your investment may rise or fall. Funds investing in fixed interest securities carry the risk of default on repayment and erosion of the capital value of your investment, and the level of income may fluctuate. Movements in interest rates are likely to affect the capital value of fixed interest securities. Allocation to Underlying Vanguard Funds (% of Underlying Vanguard Funds) Vanguard FTSE Developed World ex-u.k. Equity Index Fund 19.3% Vanguard U.S. Equity Index Fund 19.1 Vanguard FTSE U.K. All Share Index Unit Trust 18.2 Vanguard Global Bond Index Fund 14.0 Vanguard FTSE Developed Europe ex-u.k. Equity Index Fund 6.4 Vanguard Emerging Markets Stock Index Fund 5.9 Vanguard S&P 500 UCITS ETF 3.7 Vanguard Japan Stock Index Fund 3.7 Vanguard U.K. Government Bond Index Fund 2.6 Vanguard FTSE 100 UCITS ETF 1.9 Vanguard Pacific ex-japan Stock Index Fund 1.9 Vanguard U.K. Inflation-Linked Gilt Index Fund 1.7 Vanguard U.K. Investment Grade Bond Index Fund 1.5 Vanguard U.K. Government Bond UCITS ETF 0.1 Portfolio Characteristics 30 September 2016 31 March 2016 Ongoing Charges Figure 1 A Accumulation Shares Expenses 0.11% 0.11% Synthetic Element 0.13% 0.13% Total Synthetic Ongoing Charge 1 0.24% 0.24% A Income Shares Expenses 0.11% 0.11% Synthetic Element 0.13% 0.13% Total Synthetic Ongoing Charge 1 0.24% 0.24% Ex-Dividend Date 1 April 2017 1 April 2016 Distribution Date 31 May 2017 31 May 2016 Fund Market Diversification (% of Underlying Vanguard Funds) North American Equities 35.4% UK Equities 20.1 Global Bonds 14.0 European ex-uk Equities 9.8 Emerging Markets Equities 5.9 Japan Equities 5.6 Asia ex-japan Equities 3.3 UK Gilts 2.7 UK Inflation-Linked Gilts 1.7 UK Investment-Grade Bonds 1.5 Fund Asset Allocation (% of Net Asset Value) n n 80% Equity-Based Collective Investment Schemes 20% Fixed Income-Based Collective Investment Schemes Synthetic Risk and Reward Indicator 2 Lower risk Typically lower rewards Higher risk Typically higher rewards 1 2 3 4 5 6 7 1 The Ongoing Charges Figure (OCF) is the ratio of the Fund s total disclosable costs (excluding overdraft interest) to the average net assets of the Fund. Because the Fund invests a substantial proportion of its assets in other UCITS or Collective Investment Undertakings (CIU), it is required to disclose a synthetic OCF that accounts for the ongoing charges incurred in the underlying CIUs. 2 The Synthetic Risk and Reward Indicator (SRRI) measures the volatility of the Fund. The risk and reward category (which may range from 1 to 7) is calculated using historical data and may not be a reliable indicator of the Fund s future risk profile. The risk and reward category may shift over time and is not a target or guarantee. The lowest category (i.e. category 1) does not mean risk free. The Fund appears in the higher range of the risk and reward indicator. This is because the values of the Fund s investments have experienced a higher rate of change in the past. 14
LifeStrategy 80% Equity Fund Commentary On behalf of Vanguard Asset Management, Limited 1 For the six months ended 30 September 2016, Vanguard LifeStrategy 80% Equity Fund returned 14.55%. Expectations that key central banks would continue their accommodative monetary policies boosted investors risk appetite. UK stocks returned about 13%, slightly less than developed markets in Europe. The Bank of England s stimulus efforts helped lift UK stocks and eased fears of a recession following the country s vote to leave the European Union. Developed stock markets outside the United Kingdom rose by 18%, with the United States and Japan contributing most to returns. US stocks benefited from strong corporate earnings. Japanese stocks surged, aided in part by the Bank of Japan s continued monetary easing. Emerging-market stocks outpaced those of developed markets, with a return of about 21%. China, Brazil and India were among the strongest contributors to performance. Global bonds returned about 3% for the six months. In the United Kingdom, the yield of the benchmark 10-year gilt fell from 1.42% to 0.75%. (Bond yields and prices move in opposite directions.) UK government bonds returned about 9%, slightly less than their investment-grade counterparts. Inflation-linked gilts jumped to about 21%, as a steep decline in the British pound after the Brexit vote contributed to higher inflation expectations. Among non-uk bonds, European government bonds outpaced those of the United States and Japan. US investment-grade bonds surpassed those of Europe. Total Returns Total Returns Periods Ended 30 September 2016 Annualised Annualised Since Inception Six Months Five Years (23 June 2011) A Accumulation Shares 14.55% 12.65% 10.10% A Income Shares 14.55 12.65 10.10 Past performance is not a reliable indicator of future results. Basis of performance: NAV to NAV with net income reinvested. Composite index benchmarks that appeared in previous reports have not been included. 1 The Vanguard Group, Inc., as investment manager for Vanguard LifeStrategy Funds ICVC, sub-delegates the management of this sub-fund to Vanguard Asset Management, Limited. 15
LifeStrategy 80% Equity Fund Performance Information A Accumulation Shares 30 September 2016 31 March 2016 31 March 2015 31 March 2014 Change in Net Assets Per Share Opening Net Asset Value Per Share 1 145.00 146.08 127.00 120.43 Return Before Operating Charges 2 21.48 ( 0.74) 19.40 6.93 Operating Charges ( 0.37) ( 0.34) ( 0.32) ( 0.36) Return After Operating Charges 2 21.11 ( 1.08) 19.08 6.57 Closing Net Asset Value Per Share 1 166.11 145.00 146.08 127.00 Retained Distributions on Accumulation Shares 3 2.39 1.90 1.66 After Direct Transaction Costs 4 0.03 0.06 0.10 0.30 Performance Return After Operating Charges 5 14.56% (0.74%) 15.02% 5.46% Other Information Closing Net Asset Value 1 783,992,424 575,179,715 383,395,712 186,230,728 Closing Number of Shares 4,719,856 3,966,741 2,624,648 1,466,428 Operating Charges 0.24% 0.24% 0.24% 0.29% Direct Transaction Costs 4 0.02% 0.05% 0.07% 0.24% Prices Highest Share Price 6 167.78 150.80 148.18 127.47 Lowest Share Price 6 142.24 130.35 125.32 114.92 A Income Shares Change in Net Assets Per Share Opening Net Asset Value Per Share 1 134.42 137.68 121.27 116.51 Return Before Operating Charges 2 19.91 ( 0.69) 18.54 6.72 Operating Charges ( 0.34) ( 0.32) ( 0.31) ( 0.35) Return After Operating Charges 2 19.57 ( 1.01) 18.23 6.37 Distributions on Income Shares 3 ( 2.25) ( 1.82) ( 1.61) Closing Net Asset Value Per Share 1 153.99 134.42 137.68 121.27 After Direct Transaction Costs 4 0.02 0.06 0.09 0.29 Performance Return After Operating Charges 5 14.56% (0.73%) 15.03% 5.47% Other Information Closing Net Asset Value 1 60,437,971 42,763,345 28,447,383 15,208,403 Closing Number of Shares 392,480 318,136 206,619 125,411 Operating Charges 0.24% 0.24% 0.24% 0.29% Direct Transaction Costs 4 0.02% 0.05% 0.07% 0.24% Prices Highest Share Price 6 155.55 142.12 141.51 123.33 Lowest Share Price 6 131.87 122.85 119.68 111.19 1 Valued at bid-market prices. 2 Operating charges include indirect costs incurred in the maintenance and running of the Fund, as disclosed in (but not limited to) the detailed expenses within the Statement of Total Return. The figures used within this table have been calculated against the average Shares in issue for the accounting period/year. 3 The distribution on Income and Accumulation Shares includes distribution paid and payable in the financial year. 4 Direct transaction costs within this table have been calculated against the average Net Asset Value for the accounting period/year. 5 Returns in the performance table are calculated using methods prescribed in the revised SORP regulations. They may differ slightly from returns shown in the Fund commentary. 6 Valued at mid-market prices. 16
LifeStrategy 80% Equity Fund Summary of Significant Changes For the period ended 30 September 2016 Largest Purchases Cost ( ) Vanguard Global Bond Index Fund 31,909,000 Vanguard FTSE U.K. All Share Index Unit Trust 27,416,000 Vanguard U.S. Equity Index Fund 25,856,000 Vanguard FTSE Developed World ex-u.k. Equity Index Fund 24,489,000 Vanguard FTSE Developed Europe ex-u.k. Equity Index Fund 6,503,000 Total 116,173,000 Total Purchases for the Period 144,410,699 Largest Sales Proceeds ( ) Vanguard U.S. Equity Index Fund 5,173,000 Vanguard FTSE Developed World ex-u.k. Equity Index Fund 3,536,000 Vanguard Global Bond Index Fund 3,296,000 Vanguard FTSE U.K. All Share Index Unit Trust 3,104,000 Vanguard U.K. Government Bond Index Fund 539,000 Total 15,648,000 Total Sales for the Period 16,117,000 17
LifeStrategy 100% Equity Fund Fund Profile As at 30 September 2016 Investment Objective The Fund seeks to gain exposure to a diversified notional portfolio composed approximately 100% by value of equity securities. Investment Strategy The Fund will seek to achieve its investment objective predominantly through investment in passive, index-tracking collective investment schemes. Risk Profile The value of investments, and the income from them, may fall or rise and investors may get back less than they invested. The value of this investment may fall or rise as a result of changes in exchange rates. This Fund invests in emerging markets, which can be more volatile than more established markets. As a result the value of your investment may rise or fall. Allocation to Underlying Vanguard Funds (% of Underlying Vanguard Funds) Vanguard FTSE Developed World ex-u.k. Equity Index Fund 19.3% Vanguard U.S. Equity Index Fund 19.2 Vanguard FTSE U.K. All Share Index Unit Trust 18.4 Vanguard S&P 500 UCITS ETF 12.4 Vanguard FTSE Developed Europe ex-u.k. Equity Index Fund 8.9 Vanguard Emerging Markets Stock Index Fund 7.3 Vanguard FTSE 100 UCITS ETF 5.6 Vanguard Japan Stock Index Fund 5.2 Vanguard Pacific ex-japan Stock Index Fund 2.7 Vanguard FTSE 250 UCITS ETF 1.0 Portfolio Characteristics 30 September 2016 31 March 2016 Ongoing Charges Figure 1 A Accumulation Shares Expenses 0.11% 0.11% Synthetic Element 0.13% 0.13% Total Synthetic Ongoing Charge 1 0.24% 0.24% A Income Shares Expenses 0.11% 0.11% Synthetic Element 0.13% 0.13% Total Synthetic Ongoing Charge 1 0.24% 0.24% Ex-Dividend Date 1 April 2017 1 April 2016 Distribution Date 31 May 2017 31 May 2016 Fund Market Diversification (% of Underlying Vanguard Funds) North American Equities 44.2% UK Equities 25.0 European ex-uk Equities 12.3 Emerging Markets Equities 7.3 Japan Equities 7.1 Asia ex-japan Equities 4.1 Synthetic Risk and Reward Indicator 2 Fund Asset Allocation (% of Net Asset Value) Lower risk Typically lower rewards Higher risk Typically higher rewards n 100% Equity-Based Collective Investment Schemes 1 2 3 4 5 6 7 1 The Ongoing Charges Figure (OCF) is the ratio of the Fund s total disclosable costs (excluding overdraft interest) to the average net assets of the Fund. Because the Fund invests a substantial proportion of its assets in other UCITS or Collective Investment Undertakings (CIU), it is required to disclose a synthetic OCF that accounts for the ongoing charges incurred in the underlying CIUs. 2 The Synthetic Risk and Reward Indicator (SRRI) measures the volatility of the Fund. The risk and reward category (which may range from 1 to 7) is calculated using historical data and may not be a reliable indicator of the Fund s future risk profile. The risk and reward category may shift over time and is not a target or guarantee. The lowest category (i.e. category 1) does not mean risk free. The Fund appears in the higher range of the risk and reward indicator. This is because the values of the Fund s investments have experienced a higher rate of change in the past. 18
LifeStrategy 100% Equity Fund Commentary On behalf of Vanguard Asset Management, Limited 1 For the six months ended 30 September 2016, Vanguard LifeStrategy 100% Equity Fund returned 16.74%. Expectations that key central banks would continue their accommodative monetary policies boosted investors risk appetite. Virtually all major stock markets posted double-digit gains. UK stocks returned about 13%, slightly less than those of developed markets in Europe. The Bank of England s stimulus efforts helped lift UK stocks and eased fears of a recession following the country s vote to leave the European Union. Developed stock markets outside the United Kingdom returned about 18%, with the United States and Japan contributing most to returns. US stocks benefited from strong corporate earnings. Japanese stocks surged, aided in part by the Bank of Japan s continued monetary easing. Emerging-market stocks outpaced those of developed markets, with a return of about 21%. China, Brazil and India were among the strongest contributors to performance. Total Returns Total Returns Periods Ended 30 September 2016 Annualised Annualised Since Inception Six Months Five Years (23 June 2011) A Accumulation Shares 16.74% 14.28% 10.82% A Income Shares 16.74 14.28 10.82 Past performance is not a reliable indicator of future results. Basis of performance: NAV to NAV with net income reinvested. Composite index benchmarks that appeared in previous reports have not been included. 1 The Vanguard Group, Inc., as investment manager for Vanguard LifeStrategy Funds ICVC, sub-delegates the management of this sub-fund to Vanguard Asset Management, Limited. 19
LifeStrategy 100% Equity Fund Performance Information A Accumulation Shares 30 September 2016 31 March 2016 31 March 2015 31 March 2014 Change in Net Assets Per Share Opening Net Asset Value Per Share 1 147.22 149.62 128.56 119.85 Return Before Operating Charges 2 25.03 ( 2.06) 21.39 9.07 Operating Charges ( 0.38) ( 0.34) ( 0.33) ( 0.36) Return After Operating Charges 2 24.65 ( 2.40) 21.06 8.71 Closing Net Asset Value Per Share 1 171.87 147.22 149.62 128.56 Retained Distributions on Accumulation Shares 3 2.75 1.94 1.96 After Direct Transaction Costs 4 0.01 0.03 0.07 0.20 Performance Return After Operating Charges 5 16.74% (1.60%) 16.38% 7.27% Other Information Closing Net Asset Value 1 331,359,593 252,619,647 160,371,748 74,324,151 Closing Number of Shares 1,928,001 1,715,892 1,071,833 578,127 Operating Charges 0.24% 0.24% 0.24% 0.29% Direct Transaction Costs 4 0.01% 0.02% 0.05% 0.16% Prices Highest Share Price 6 173.89 155.60 152.24 129.63 Lowest Share Price 6 143.66 129.91 126.22 114.44 A Income Shares Change in Net Assets Per Share Opening Net Asset Value Per Share 1 136.47 141.33 123.01 116.45 Return Before Operating Charges 2 23.21 ( 1.94) 20.49 8.81 Operating Charges ( 0.35) ( 0.32) ( 0.31) ( 0.35) Return After Operating Charges 2 22.86 ( 2.26) 20.18 8.46 Distributions on Income Shares 3 ( 2.60) ( 1.86) ( 1.90) Closing Net Asset Value Per Share 1 159.33 136.47 141.33 123.01 After Direct Transaction Costs 4 0.01 0.03 0.07 0.20 Performance Return After Operating Charges 5 16.75% (1.60%) 16.40% 7.27% Other Information Closing Net Asset Value 1 72,667,512 59,627,320 49,664,852 33,311,471 Closing Number of Shares 456,088 436,927 351,403 270,792 Operating Charges 0.24% 0.24% 0.24% 0.29% Direct Transaction Costs 4 0.01% 0.02% 0.05% 0.16% Prices Highest Share Price 6 166.26 146.98 145.69 125.96 Lowest Share Price 6 122.71 122.71 120.79 111.20 1 Valued at bid-market prices. 2 Operating charges include indirect costs incurred in the maintenance and running of the Fund, as disclosed in (but not limited to) the detailed expenses within the Statement of Total Return. The figures used within this table have been calculated against the average Shares in issue for the accounting period/year. 3 The distribution on Income and Accumulation Shares includes distribution paid and payable in the financial year. 4 Direct transaction costs within this table have been calculated against the average Net Asset Value for the accounting period/year. 5 Returns in the performance table are calculated using methods prescribed in the revised SORP regulations. They may differ slightly from returns shown in the Fund commentary. 6 Valued at mid-market prices. 20