Vanguard Investments Funds ICVC

Transcription

1 Interim Report and Financial Statements For the six months ended 30 April 2015 Vanguard Investments Funds ICVC (An open-ended investment company incorporated with limited liability and registered in England and Wales under registered number IC000758)

2 The mission continues On 1 May 1975, Vanguard began operations, a fledgling company based on the simple but revolutionary idea that a mutual fund company should be managed solely in the interest of its investors. Four decades later, that revolutionary spirit continues to animate the enterprise. Vanguard remains on a mission to give investors the best chance of investment success. As we mark our 40th anniversary, we thank you for entrusting your assets to Vanguard and giving us the opportunity to help you reach your financial goals in the decades to come. Contents Chairman s Letter 1 Report of the Authorised Corporate Director 2 Aggregated Financial Statements for Vanguard Investments Funds ICVC 3 Vanguard FTSE Developed Europe ex-u.k. Equity Index Fund 4 Vanguard FTSE Developed World ex-u.k. Equity Index Fund 13 Vanguard FTSE U.K. Equity Income Index Fund 36 Vanguard U.S. Equity Index Fund 43 Vanguard U.K. Inflation-Linked Gilt Index Fund 78 Vanguard U.K. Long Duration Gilt Index Fund 84 Further Information 90 Directory 91 About the cover: Since our founding, Vanguard has drawn inspiration from the enterprise and valour demonstrated by British naval hero Horatio Nelson and his command at the Battle of the Nile in The photograph displays a replica of a merchant ship from the same era as Nelson s flagship, the HMS Vanguard.

3 Chairman s Letter Dear Shareholder, Despite worries both new and familiar, global stocks produced solid results for the six months ended 30 April The world s equity markets grew volatile at times amid concerns about low inflation, the Greek debt crisis and its effect on the euro zone, the potential impact of falling oil prices on exporting nations, slower growth in China, and the prospect of the first US central bank rate increase in almost a decade. In a departure from recent years, stocks outside the United States, including UK equities, outpaced the US market. Despite the concerns, further monetary easing by many central banks and patience from the Bank of England and the US Federal Reserve helped bolster capital markets and push stock indices in a number of countries to all-time highs. UK stocks performed well. Consumer spending benefited from the economy s expansion, falling unemployment and rising home prices. European stocks also rose as the prospects for that region brightened, although bailout negotiations with Greece added some uncertainty. The European Central Bank s rate cuts and its new quantitative-easing program, the fall in the value of the euro, and cheaper oil all helped make the region more competitive, ease unemployment and lift consumer sentiment. US stocks continued to gain ground. They rallied amid strong corporate earnings, an improving jobs picture, and lively merger and acquisition activity. Here, too, however, the market retrenched at times as worries surfaced about lofty stock valuations and how soon the Federal Reserve might begin to raise interest rates. Japan was another notable performer. Stubbornly low inflation prompted the Bank of Japan to ramp up its bondbuying program. The economy pulled out of recession in the fourth quarter of 2014, thanks in part to the depreciation of the yen, which was a boon to Japanese exporters. Other developed markets in the Pacific region delivered mixed results. Australia lost ground, as a slump in the country s financial and oil and gas sectors hurt performance. Hong Kong and Singapore, among other markets, produced solid returns. Gains for emerging markets were modest overall, but with sharp differences from country to country. Despite China s economic slowdown, its stock market surged as the government worked aggressively to stabilise growth. Brazil, on the other hand, was a prominent detractor as falling commodities prices and scandal involving the country s largest oil producer dragged down returns. Consumer-related companies, especially retailers and media enterprises, were prominent gainers worldwide. Health care and technology stocks also did well. But energy-related stocks slumped amid the sharp drop in the price of oil. The environment remained positive for the fixed income markets, given the tepid growth, low inflation and accommodative monetary policy across much of the globe. While the Federal Reserve brought its quantitative-easing program to a close in October 2014, aggressive monetary stimulus by a number of other major central banks supported bond prices. In the United Kingdom, gilt yields fell and prices rose; inflation seemed dormant and demand was strong from income-hungry investors as yields plunged in the euro zone. In currency markets, the British pound rose more than 9% versus the euro and about 5% against the Japanese yen. This crimped euro zone and Japanese returns for UK investors. However, the pound fell nearly 4% against the US dollar during the period, boosting returns for UK investors. It s difficult to predict what will happen in the markets, of course, but investors can choose how to respond to whatever changes they encounter. At Vanguard, we continue to emphasise four timeless principles that we believe help give clients the best chance for investment success: Create clear, appropriate investment goals; develop a suitable asset allocation using broadly diversified funds; minimise costs; and maintain long-term discipline. For further information on our investment approach, please visit our website, vanguard.co.uk. As always, thank you for your confidence in Vanguard Investments UK, Limited. Yours faithfully, F. William McNabb III Chairman The Vanguard Group, Inc. 30 June

4 Vanguard Investments Funds ICVC Report of the Authorised Corporate Director The six-month period ended 30 April 2015 The Authorised Corporate Director ( ACD ) of Vanguard Investments Funds ICVC (the Company ) is Vanguard Investments UK, Limited. The ACD is the sole director of the Company. The Depositary is State Street Trustees Limited and the Independent Auditors are PricewaterhouseCoopers LLP. The Company is an authorised open-ended investment company with variable capital under Regulation 12 (Authorisation) of the OEIC regulations and the shareholders are not liable for the debts of the Company. The Company is structured as an umbrella company with each underlying sub-fund ( Fund ) having the investment powers equivalent to those of a securities company. In the future, there may be other Funds within the Company. The investment objective of each Fund, the Company s policy for pursuing that objective and a review of each Fund s investment activities for the relevant period are set out in the individual fund reviews contained in this Interim Report and Financial Statements. Statement of Authorised Corporate Director s Responsibilities These financial statements have been prepared by the ACD in accordance with the Statement of Recommended Practice for Authorised Funds issued by the IMA in October 2010 and the rules contained in the Financial Conduct Authority s Collective Investment Schemes Sourcebook (together the Regulations ) and give a true and fair view of the net revenue/expenses and gains/losses of the scheme property of the Company and the Funds and the financial position of the Company and the Fund at the end of the interim accounting period. The ACD is responsible for keeping proper accounting records, which disclose with reasonable accuracy at any time the financial position of the Company and enable the ACD to ensure that the financial statements comply with the Regulations. In preparing this report, the ACD has: prepared the financial statements on a going-concern basis; selected suitable accounting policies and applied them consistently; made judgements and estimates that are reasonable and prudent; followed applicable accounting standards; and prepared financial statements in accordance with the Standard of Recommended Practice for Authorised Funds issued by the IMA in October The ACD confirms that it has complied with the above requirements in preparing the financial statements. The ACD is responsible for the management of the Company in accordance with the Company s Instrument of Incorporation and Prospectus and the Regulations. The ACD is responsible for taking reasonable steps for the prevention and detection of fraud and other irregularities. Kenneth E. Volpert, Director Vanguard Investments UK, Limited as Authorised Corporate Director of Vanguard Investments Funds ICVC 30 June

5 Aggregated Financial Statements for Vanguard Investments Funds ICVC Aggregated Balance Sheet As at As at 30 April April October October 2014 ( ) ( ) ( ) ( ) Assets Investment Assets 6,192,024,959 6,589,072,866 Debtors 44,014, ,234,872 Cash and Bank Balances 16,750,589 14,596,382 Total Other Assets 60,765, ,831,254 Total Assets 6,252,789,964 6,718,904,120 Liabilities Investment Liabilities 422,114 Creditors 16,753,366 97,701,019 Bank Overdrafts 504,169 5,703,569 Distribution Payable on Income Shares 9,867,354 30,672,679 Total Other Liabilities 27,124, ,077,267 Total Liabilities 27,547, ,077,267 Net Assets Attributable to Shareholders 6,225,242,961 6,584,826,853 Aggregated Statement of Total Return Period Ended Period Ended 30 April April April April 2014 ( ) ( ) ( ) ( ) Income Net Capital Gains/(Losses) 447,241,017 50,754,619 Revenue 68,034,541 64,473,678 Expenses (3,875,156) (5,245,027) Finance Costs: Interest (24,522) (24,013) Net Revenue Before Taxation 64,134,863 59,204,638 Taxation (5,640,083) (3,698,790) Net Revenue After Taxation 58,494,780 55,505,848 Total Return Before Distributions 505,735, ,260,467 Finance Costs: Distributions (16,101,368) (6,893,227) Change in Net Assets Attributable to Shareholders From Investment Activities 489,634,429 99,367,240 Aggregated Statement of Change in Net Assets Attributable to Shareholders Period Ended Period Ended 30 April April April April 2014 ( ) ( ) ( ) ( ) Opening Net Assets Attributable to Shareholders 5,031,279,237 4,421,627,021 Amounts Received on Issue of Shares 944,209,339 1,226,364,540 Amounts Paid on Cancellation of Shares (249,242,752) (308,003,617) 694,966, ,360,923 Dilution Levy 851,685 2,182,472 Change in Net Assets Attributable to Shareholders From Investment Activities 489,634,429 99,367,240 Retained Distribution on Accumulation Shares 8,511,023 5,177,421 Closing Net Assets Attributable to Shareholders 6,225,242,961 5,446,715,077 The aggregate comparative financial statements include Vanguard FTSE U.K. Equity Index Fund, which was terminated on 31 January The assets merged into Vanguard FTSE U.K. All Share Index Unit Trust on 1 November Hence the aggregate prior year financial statements disclosures do not equal the sum of the underlying Funds owing to exclusion of the terminated Fund. The aggregated financial statements represent the sum of the assets and liabilities of the Funds that constitute Vanguard Investments Funds ICVC. We hereby certify the Final Report and Accounts on behalf of the Directors of Vanguard Investments UK, Limited. 3

6 FTSE Developed Europe ex-u.k. Equity Index Fund Fund Profile As at 30 April 2015 Investment Objective Vanguard FTSE Developed Europe ex-u.k. Equity Index Fund (the Fund ) seeks to track the performance of the FTSE Developed Europe ex-u.k. Index (the Index ). Investment Strategy The Fund employs an indexing investment strategy designed to achieve a result consistent with the replication of the Index by investing in all of the component securities that make up the Index, holding each stock in approximate proportion to its weighting in the Index. Risk Profile The value of investments, and the income from them, may fall or rise and investors may get back less than they invested. This Fund invests in overseas markets and the value of this investment may fall or rise as a result of changes in exchange rates. Portfolio Characteristics FTSE Developed Europe ex-u.k. Fund Index Number of Stocks Fund Fund 30 April October 2014 Ongoing Charges Figure 1 A Accumulation Shares 0.12% 0.12% A Income Shares 0.12% 0.12% Institutional Plus Accumulation Shares 0.09% 0.09% Institutional Plus Income Shares 0.09% 0.09% Synthetic Risk and Reward Indicator Ex-Dividend Date 1 November November 2014 Distribution Date 31 December December 2014 Market Diversification (% of portfolio) FTSE Developed Europe ex-u.k. Fund Index France 21.2% 21.2% Switzerland Germany Spain Sweden Netherlands Italy Denmark Belgium Finland Norway Other European Markets Ten Largest Holdings 3 (% of total net assets) Nestle SA Food Products 4.1% Novartis AG Pharmaceuticals 3.9 Roche Holding AG Pharmaceuticals 3.3 Bayer AG Specialty Chemicals 2.0 Sanofi Pharmaceuticals 1.9 Novo Nordisk A/S Pharmaceuticals 1.8 Total SA Integrated Oil & Gas 1.8 Banco Santander SA Banks 1.7 Anheuser-Busch InBev NV Brewers 1.6 BASF SE Commodity Chemicals 1.5 Top Ten 23.6% Sector Diversification (% of portfolio) FTSE Developed Europe ex-u.k. Fund Index Basic Materials 8.8% 8.8% Consumer Goods Consumer Services Financials Health Care Industrials Oil & Gas Technology Telecommunications Utilities The Ongoing Charges Figure (OCF) is the ratio of the Fund s total discloseable costs (excluding overdraft interest) to the average net assets of the Fund. 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 risk category on the risk and reward indicator. This is because the Fund invests primarily in shares whose values tend to have higher price fluctuations. 3 The holdings listed exclude any temporary cash investments and equity index products. 4

7 FTSE Developed Europe ex-u.k. Equity Index Fund Commentary On behalf of Vanguard Asset Management, Limited 1 For the six months ended 30 April 2015, Vanguard FTSE Developed Europe ex-u.k. Equity Index Fund s A share class returned 11.72% for both Accumulation and Income Shares. The Institutional Plus share class returned 11.74% for both Accumulation and Income Shares. The Fund s target Index returned 11.71%. The tracking difference was 0.01 percentage point for the A Shares and 0.03 percentage point for the Institutional Plus Shares. The tracking error at the end of the period was 0.049%. 2 European stocks regained momentum over the six months despite lingering concerns about the region s economy. Among the three countries with the largest weightings in the Index, Germany (+14%) outperformed France (+13%) and Switzerland (+12%). Ireland (+20%) had the highest return, followed by Denmark (+19%), Belgium (+15%) and the Netherlands (+15%). Greece declined the most ( 38%). Norway s return was slightly negative. Eight of ten industry sectors generated gains. The best returns came from consumer goods (+19%), consumer services (+16%) and health care (+14%). Financials, the largest sector represented, returned about 7%. Utilities ( 4%) and oil & gas ( 3%) posted the poorest results. Total Returns Total Returns Periods Ended 30 April 2015 Five Years Vanguard FTSE Developed Europe ex-u.k. Equity Index Fund Six Months One Year (Annualised) A Accumulation Shares 11.72% 6.84% 7.69% A Income Shares FTSE Developed Europe ex-u.k. Index Since Inception Vanguard FTSE Developed Europe ex-u.k. Equity Index Fund Six Months (2 September 2014) Institutional Plus Accumulation Shares 11.74% 8.70% Institutional Plus Income Shares FTSE Developed Europe ex-u.k. Index Past performance is not a reliable indicator of future results. Sources: The Vanguard Group, Inc., and FTSE. Basis of performance: NAV to NAV with net income reinvested. The Fund s Institutional Plus Accumulation and Income Shares launched 2 September 2014; therefore, one-year performance data are not available. 1 The Vanguard Group, Inc., as investment manager for Vanguard Investments Funds ICVC, sub-delegates the management of this sub-fund to Vanguard Asset Management, Limited. 2 Tracking error is calculated as the standard deviation of active returns gross of fees for the trailing 36-month period (or since the Fund s inception if it does not have 36 months of performance history). 5

8 FTSE Developed Europe ex-u.k. Equity Index Fund Price History Vanguard FTSE Developed Europe 1 January 2015 to 1 January 2014 to 1 January 2013 to 1 January 2012 to 1 January 2011 to ex-u.k. Equity Index Fund 30 April December December December December 2011 A Accumulation Shares (10 Apr. 2015) (10 Jun. 2014) (29 Oct. 2013) (27 Dec. 2012) (3 May 2011) Highest Share Price (7 Jan. 2015) (16 Oct. 2014) (2 Jan. 2013) (1 Jun. 2012) (12 Sep. 2011) Lowest Share Price Income Dividends Pence Per Share A Income Shares (10 Apr. 2015) (10 Jun. 2014) (29 Oct. 2013) (27 Dec. 2012) (3 May 2011) Highest Share Price (7 Jan. 2015) (16 Oct. 2014) (2 Jan. 2013) (1 Jun. 2012) (24 Nov. 2011) Lowest Share Price Income Dividends Pence Per Share (10 Apr. 2015) (5 Dec. 2014) Highest Share Price (7 Jan. 2015) (16 Oct. 2014) Lowest Share Price Income Dividends Pence Per Share (10 Apr. 2015) (5 Dec. 2014) Highest Share Price (7 Jan. 2015) (16 Oct. 2014) Lowest Share Price Income Dividends Pence Per Share NAV History 30 April October October 2013 A Accumulation Shares Total Net Asset Value 752,922, ,185, ,439,870 Net Asset Value Per Share Number of Shares in Issue 3,964,889 3,339,411 1,905,311 A Income Shares Total Net Asset Value 67,904,326 53,176,097 34,957,848 Net Asset Value Per Share Number of Shares in Issue 411, , ,926 Institutional Plus Accumulation Shares¹ Total Net Asset Value 5,434 4,863 Net Asset Value Per Share Number of Shares in Issue Institutional Plus Income Shares¹ Total Net Asset Value 24,940,018 15,106,584 Net Asset Value Per Share Number of Shares in Issue 229, ,568 1 Launched 2 September

9 FTSE Developed Europe ex-u.k. Equity Index Fund Summary of Significant Changes For the period ended 30 April 2015 Cost ( ) Largest Purchases Nestle SA 6,931,747 Novartis AG 6,602,464 Roche Holding AG 5,761,968 Banco Santander SA 4,823,389 Bayer AG 3,489,771 Total 27,609,339 Total Purchases for the Period 178,796,651 Proceeds ( ) Largest Sales Nestle SA 1,450,025 Novartis AG 1,400,645 Roche Holding AG 1,241,874 Ziggo NV 835,434 Bayer AG 738,119 Total 5,666,097 Total Sales for the Period 42,427,927 7

10 FTSE Developed Europe ex-u.k. Equity Index Fund Portfolio Statement As at 30 April 2015 Austria 0.49% ( : 0.51%) Erste Group Bank AG 61,528 1,142, OMV AG 30, , Voestalpine AG 23, , Andritz AG 15, , Immofinanz AG 194, , Raiffeisen Bank International AG 24, , Vienna Insurance Group AG Wiener Versicherung Gruppe 8, , Verbund AG 13, , Telekom Austria AG 14,776 71, Immoeast Anspr Nachb 1 4, Immofinanz Anspr Nachb 1 1, Belgium 2.92% ( : 2.73%) 4,128, Anheuser-Busch InBev NV 169,430 13,447, KBC Groep NV 58,638 2,516, UCB SA 25,888 1,211, Solvay SA 12,024 1,153, Delhaize Group SA 21,491 1,128, Ageas 45,316 1,107, Groupe Bruxelles Lambert SA 16, , Umicore SA 22, , Belgacom SA 29, , RTL Group SA 8, , Colruyt SA 13, , Telenet Group Holding NV 10, , bpost SA 21, , Denmark 3.87% ( : 3.67%) 24,696, Novo Nordisk A/S 413,862 15,305, Danske Bank A/S 167,275 3,088, AP Moeller - Maersk A/S - B Shares 1,416 1,827, Pandora A/S 25,091 1,690, Novozymes A/S 48,711 1,464, Vestas Wind Systems A/S 47,161 1,395, Carlsberg A/S 22,493 1,332, AP Moeller - Maersk A/S - A Shares 968 1,214, Coloplast A/S 21,429 1,137, TDC A/S 168, , DSV A/S 35, , ISS A/S 33, , Chr Hansen Holding A/S 18, , Jyske Bank A/S 14, , Tryg A/S 5, , William Demant Holding A/S 5, , H Lundbeck A/S 12, , Finland 1.86% ( : 2.05%) 32,693, Nokia OYJ 796,265 3,509, Sampo Oyj 99,920 3,157, Kone OYJ 80,926 2,269, UPM-Kymmene OYJ 112,640 1,330, Fortum OYJ 94,700 1,221, Wartsila OYJ Abp 32, , Stora Enso OYJ 121, , Nokian Renkaat OYJ 27, , Metso OYJ 28, , Neste Oil OYJ 27, , Orion Oyj 20, , Kesko OYJ 14, , France 20.84% ( : 20.27%) 15,729, Sanofi 243,113 16,167, Total SA 431,153 15,236, BNP Paribas SA 207,416 8,534, AXA SA 409,045 6,745, LVMH Moet Hennessy Louis Vuitton SA 53,201 6,072, Schneider Electric SE 117,361 5,719, Danone SA 118,415 5,570, Societe Generale SA 153,389 4,999, Vivendi SA 272,839 4,459, Orange SA 382,565 4,111, GDF Suez 302,129 4,009, Vinci SA 98,977 3,955, Unibail-Rodamco SE 20,667 3,713, L Oreal SA 29,242 3,634, Air Liquide SA 42,138 3,588, Pernod Ricard SA 41,712 3,376, Essilor International SA 41,789 3,313, Cie Generale des Establissements Michelin 39,775 2,888, Cie de St-Gobain 95,990 2,848, Safran SA 59,322 2,822, Carrefour SA 125,587 2,819, Renault SA 39,611 2,715, Publicis Groupe SA 42,633 2,326, Legrand SA 56,361 2,120, Kering 15,750 1,895, Cap Gemini SA 32,039 1,857, Valeo SA 16,407 1,714, Accor SA 43,076 1,538, SES SA 62,842 1,430, Christian Dior SA 10,994 1,402, Veolia Environnement SA 99,303 1,369, Dassault Systemes 27,030 1,355, Alcatel-Lucent/France 585,902 1,345, Credit Agricole SA 126,645 1,284, Sodexo SA 19,241 1,267, Hermes International 5,099 1,253, Air Liquide Registered 14,065 1,197, Klepierre 36,980 1,167, L Oreal SA 8,992 1,117, L Oreal Prime de Fidelite 8,952 1,112, Bouygues SA 40,308 1,085, Lafarge SA 22,609 1,077, Natixis SA 196,815 1,059,

11 FTSE Developed Europe ex-u.k. Equity Index Fund Air Liquide 12,037 1,025, Technip SA 22,989 1,020, Groupe Eurotunnel SA 97,152 1,012, Peugeot SA 80, , Zodiac Aerospace 40, , Ingenico Group 11, , AtoS 18, , Alstom SA 45, , Suez Environnement Co 68, , Thales SA 21, , Bureau Veritas SA 54, , Eutelsat Communications SA 34, , Numericable Group 21, , Bollore SA 207, , Arkema SA 14, , Rexel SA 62, , Iliad SA 4, , Edenred 43, , Casino Guichard Perrachon SA 12, , SCOR SE 29, , STMicroelectronics NV 133, , Gecina SA 7, , Societe BIC SA 5, , Wendel SA 6, , Lagardere SCA 24, , Electricite de France SA 30, , Aeroports de Paris 6, , Fonciere Des Regions 7, , JCDecaux SA 17, , Credit Agricole SA Prime de Fidelite 41, , ICADE 7, , Credit Agricole SA Prime Fidelite , , L Oreal Prime de Fidelite Registered 3, , CNP Assurances 34, , Vallourec SA 25, , Eurazeo SA 8, , Air Liquide Prime de Fidelite 4, , Imerys SA 7, , Eiffage SA 8, , Lafarge SA Prime de Fidelite 7, , Lafarge Interim Primes 6, , Ipsen SA 7, , Remy Cointreau SA 5, , Societe Television Francaise 1 21, , Seb SA 3, , BioMerieux 2, , Euler Hermes Group 2, , Electricite de France SA 11, , Air France-KLM 32, , Electricite de France Prime de Fidelite 10, , Lafarge Prime Fid 2, , Credit Agricole SA Prime Fidelite Registered 9,580 97, Seb Prime de Fidelite 1,112 67, Seb SA Prime de Fidelite ,001 60, EDF ACT. Prime de Fidelite 2,509 41, Seb SA Registered , ,299, Germany 19.99% ( : 19.49%) Bayer AG 175,671 16,671, Daimler AG 202,930 12,789, BASF SE 196,028 12,757, Siemens AG 175,873 12,547, Allianz SE 96,718 10,772, SAP SE 189,915 9,431, Deutsche Telekom AG 662,231 7,969, Deutsche Bank AG 292,897 6,146, Volkswagen AG Preferred 32,630 5,516, Bayerische Motoren Werke AG 69,057 5,352, Linde AG 39,310 5,013, Deutsche Post AG 201,933 4,353, Muenchener Rueckversicherungs- Gesellschaft AG in Muenchen 32,188 4,108, E.ON SE 393,915 4,014, Continental AG 22,957 3,517, Fresenius SE & Co KGaA 83,337 3,238, Henkel AG & Co KGaA Vorzug 36,947 2,809, Fresenius Medical Care AG & Co KGaA 44,907 2,464, Adidas AG 44,365 2,372, Deutsche Boerse AG 39,055 2,110, Porsche Automobil Holding SE 32,510 2,018, Merck KGaA 27,419 1,934, Infineon Technologies AG 238,723 1,839, Commerzbank AG 201,485 1,782, RWE AG 103,113 1,675, Henkel AG & Co KGaA 24,760 1,639, ThyssenKrupp AG 89,738 1,560, ProSiebenSat.1 Media AG 45,082 1,508, HeidelbergCement AG 29,781 1,494, Brenntag AG 32,850 1,292, Beiersdorf AG 21,260 1,209, GEA Group AG 37,766 1,188, Hugo Boss AG 13,688 1,096, Deutsche Wohnen AG 62,661 1,070, Symrise AG 26,021 1,033, Volkswagen AG 6,227 1,032, K+S AG 40, , Hannover Rueck SE 12, , QIAGEN NV 49, , United Internet AG 25, , Wirecard AG 24, , MTU Aero Engines AG 10, , Lanxess AG 19, , Metro AG 27, , OSRAM Licht AG 17, , MAN SE 7, , Evonik Industries AG 18, , Telefonica Deutschland Holding AG 114, , Deutsche Lufthansa AG 48, , Kabel Deutschland Holding AG 4, , Fuchs Petrolub SE Preferred 14, , Zalando SE 17, , Fraport AG Frankfurt Airport Services Worldwide 7, , Axel Springer SE 8, , Hochtief AG 5, , Wacker Chemie AG 3, , Fielmann AG 5, , Celesio AG 9, ,

12 FTSE Developed Europe ex-u.k. Equity Index Fund Suedzucker AG 17, , Talanx AG 7, , Fuchs Petrolub SE 6, , Puma SE , Greece 0.14% ( : 0.25%) 169,119, National Bank of Greece SA 330, , Hellenic Telecommunications Organization SA 50, , OPAP SA 46, , Alpha Bank AE 793, , Piraeus Bank SA 434, , Ireland 0.58% ( : 0.56%) 1,194, Kerry Group plc 30,857 1,467, Bank of Ireland 5,817,613 1,455, Ryanair Holdings plc 128, , Smurfit Kappa Group plc 48, , Italy 5.34% ( : 5.22%) 4,869, Eni SpA 522,783 6,548, Intesa Sanpaolo SpA 2,558,804 5,627, UniCredit SpA 1,021,615 4,804, Enel SpA 1,459,172 4,504, Assicurazioni Generali SpA 267,935 3,415, Fiat Chrysler Automobiles NV 185,239 1,801, Telecom Italia SpA 2,234,048 1,723, Luxottica Group SpA 37,116 1,595, Snam SpA 460,570 1,562, Atlantia SpA 84,150 1,540, CNH Industrial NV 196,363 1,126, Tenaris SA 99, , Unione di Banche Italiane SCpA 182, , Terna Rete Elettrica Nazionale SpA 301, , Pirelli & C. SpA 70, , Banco Popolare SC 76, , Telecom Italia SpA RSP 1,253, , Mediobanca SpA 116, , Finmeccanica SpA 81, , Exor SpA 20, , Prysmian SpA 42, , Mediaset SpA 160, , Saipem SpA 53, , Enel Green Power SpA 336, , Banca Monte dei Paschi di Siena SpA 943, , UnipolSai SpA 172, , Davide Campari-Milano SpA 60, , Mediolanum SpA 52, , Salvatore Ferragamo SpA 9, , UnipolSai SpA RSP 84, , Parmalat SpA 72, , UnipolSai SpA-A-RTS 257, UnipolSai SpA-B-RTS 257, Netherlands 6.55% ( : 6.92%) 45,307, Unilever NV 330,669 9,417, ING Groep NV 820,431 8,249, Airbus Group NV Registered 117,140 5,294, ASML Holding NV 69,017 4,866, Koninklijke Philips NV 193,222 3,614, Akzo Nobel NV 51,568 2,571, Koninklijke Ahold NV 190,613 2,403, Heineken NV 46,668 2,393, Aegon NV 403,186 2,075, Reed Elsevier NV 124,064 1,947, Koninklijke KPN NV 658,810 1,589, ArcelorMittal 211,812 1,469, Koninklijke DSM NV 37,078 1,376, Wolters Kluwer NV 62,569 1,318, Altice SA 17,907 1,232, Gemalto NV 17,031 1,031, Heineken Holding NV 20, , Randstad Holding NV 22, , NN Group NV 34, , Boskalis Westminster NV 16, , TNT Express NV 100, , Koninklijke Vopak NV 14, , OCI NV 17, , Airbus Group NV , Norway 1.55% ( : 1.79%) 55,290, Statoil ASA 202,536 2,779, DNB ASA 227,211 2,623, Telenor ASA 147,486 2,168, Yara International ASA 37,346 1,246, Norsk Hydro ASA 286, , Orkla ASA 164, , Schibsted ASA 16, , Seadrill Ltd. 75, , Marine Harvest ASA 62, , Subsea 7 SA 57, , Gjensidige Forsikring ASA 35, , Portugal 0.35% ( : 0.51%) 13,149, EDP - Energias de Portugal SA 409,013 1,064, Galp Energia SGPS SA 80, , Banco Comercial Portugues SA 8,045, , Jeronimo Martins SGPS SA 51, , EDP Renovaveis SA 40, , Banco Espirito Santo SA 529,326 2, Spain 7.55% ( : 7.91%) 2,981, Banco Santander SA 2,974,464 14,652, Telefonica SA 918,958 9,139, Banco Bilbao Vizcaya Argentaria SA 1,304,571 8,560, Iberdrola SA 1,100,811 4,796, Inditex SA 225,335 4,711, Repsol SA 221,306 2,971, Amadeus IT Holding SA 90,451 2,692, Banco de Sabadell SA 957,010 1,671, CaixaBank SA 425,258 1,390, Ferrovial SA 85,427 1,263, Red Electrica Corp SA 23,025 1,259, Banco Popular Espanol SA 332,692 1,132, Gas Natural SDG SA 64,876 1,038, Abertis Infraestructuras SA 82, , Grifols SA 34, , Bankia SA 969, , Enagas SA 43, , Endesa SA 66, ,

13 FTSE Developed Europe ex-u.k. Equity Index Fund ACS Actividades de Construccion y Servicios SA 35, , Bankinter SA 146, , Distribuidora Internacional de Alimentacion SA 124, , Mapfre SA 220, , Mediaset Espana Comunicacion SA 45, , Zardoya Otis SA 36, , Acerinox SA 28, , Acciona SA 5, , Corp Financiera Alba SA 3, , Sweden 6.68% ( : 6.88%) 63,972, Nordea Bank AB 674,682 5,578, Hennes & Mauritz AB 201,715 5,223, Telefonaktiebolaget LM Ericsson 633,170 4,512, Swedbank AB 221,787 3,358, Svenska Handelsbanken AB 101,928 3,059, Volvo AB - B Shares 323,923 2,895, Atlas Copco AB - A Shares 131,865 2,675, Skandinaviska Enskilda Banken AB 308,947 2,547, Investor AB 96,357 2,545, Assa Abloy AB 66,569 2,514, TeliaSonera AB 550,558 2,230, Svenska Cellulosa AB SCA 123,209 2,028, Sandvik AB 227,869 1,862, Atlas Copco AB - B Shares 82,591 1,495, SKF AB 88,050 1,399, Hexagon AB 54,810 1,319, Skanska AB 76,866 1,114, Investment AB Kinnevik 43, , Electrolux AB 46, , Swedish Match AB 42, , Boliden AB 57, , Alfa Laval AB 66, , Trelleborg AB 51, , Securitas AB 65, , Meda AB 57, , Getinge AB 38, , Tele2 AB 66, , Industrivarden AB - A Shares 41, , Industrivarden AB - C Shares 35, , Lundin Petroleum AB 44, , Elekta AB 76, , Husqvarna AB 75, , Holmen AB 10, , Melker Schorling AB 2,214 85, Switzerland 20.62% ( : 20.83%) 56,484, Nestle SA 677,302 34,270, Novartis AG 494,663 33,188, Roche Holding AG 149,237 27,913, UBS AG 726,341 9,509, ABB Ltd. 479,816 6,855, Cie Financiere Richemont SA 108,478 6,302, Zurich Insurance Group AG 31,331 6,299, Credit Suisse Group AG 338,958 5,838, Syngenta AG 19,480 4,252, Swiss Re AG 72,704 4,193, Holcim Ltd. 48,518 2,547, Givaudan SA 1,964 2,402, Actelion Ltd. 22,254 1,915, Swisscom AG 4,858 1,879, Adecco SA 35,286 1,878, Swatch Group AG 6,430 1,877, Geberit AG 8,009 1,853, Julius Baer Group Ltd. 46,172 1,582, SGS SA 1,081 1,366, Swiss Life Holding AG 6,847 1,058, Kuehne + Nagel International AG 10,795 1,054, Schindler Holding AG 9,286 1,026, Lonza Group AG 10,927 1,010, Sonova Holding AG 11,126 1,002, Sika AG , Chocoladefabriken Lindt & Sprungli AG Registered , Baloise Holding AG 10, , Transocean Ltd. 72, , Clariant AG 57, , Partners Group Holding AG 3, , Aryzta AG 17, , Chocoladefabriken Lindt & Sprungli AG , Swiss Prime Site AG 12, , Dufry AG 6, , Galenica AG 1, , Swatch Group AG Registered 10, , GAM Holding AG 34, , PSP Swiss Property AG 8, , Schindler Holding Registered AG 4, , Helvetia Holdings AG 1, , EMS-Chemie Holding AG 1, , Sulzer AG 5, , Barry Callebaut AG , Pargesa Holding SA 6, , DKSH Holding AG 5, , Banque Cantonale Vaudoise , ,230, Euro-Denominated Derivatives (0.01%) ( : 0.01%) Euro Stoxx 50 Index Futures June (100,476) (0.01) Portfolio of Investments 840,048, Net Other Assets 5,723, Net Assets Attributable to Shareholders 845,772, All holdings are ordinary shares or stock units unless otherwise stated. 1 Delisted. Financial Derivative Instrument Risk Exposure The exposure obtained through financial derivative instruments and the identity of counterparties as at 30 April 2015 were as follows: Notional Value of Value of Exposure Exposure Counterparty ( ) ( ) Morgan Stanley 5,593,598 (100,476) Total 5,593,598 (100,476) 11

14 FTSE Developed Europe ex-u.k. Equity Index Fund Balance Sheet As at As at 30 April April October October 2014 ( ) ( ) ( ) ( ) Assets Investment Assets 840,149, ,900,989 Debtors 4,592,271 3,167,623 Cash and Bank Balances 1,351,010 1,306,167 Total Other Assets 5,943,281 4,473,790 Total Assets 846,092, ,374,779 Liabilities Investment Liabilities 100,476 Creditors 86, ,602 Bank Overdrafts 133, Distribution Payable on Income Shares 1,378,472 Total Other Liabilities 219,755 1,902,089 Total Liabilities 320,231 1,902,089 Net Assets Attributable to Shareholders 845,772, ,472,690 Statement of Total Return Period Ended Period Ended 30 April April April April 2014 ( ) ( ) ( ) ( ) Income Net Capital Gains/(Losses) 71,967,204 11,006,104 Revenue 10,947,857 6,588,334 Expenses (442,817) (519,587) Finance Costs: Interest (7,311) (1,865) Net Revenue Before Taxation 10,497,729 6,066,882 Taxation (801,391) (637,667) Net Revenue After Taxation 9,696,338 5,429,215 Total Return Before Distributions 81,663,542 16,435,319 Finance Costs: Distributions 216, ,988 Change in Net Assets Attributable to Shareholders From Investment Activities 81,879,859 16,790,307 Statement of Change in Net Assets Attributable to Shareholders Period Ended Period Ended 30 April April April April 2014 ( ) ( ) ( ) ( ) Opening Net Assets Attributable to Shareholders 635,472, ,397,718 Amounts Received on Issue of Shares 190,581, ,681,776 Amounts Paid on Cancellation of Shares (62,178,365) (4,496,463) 128,402, ,185,313 Dilution Levy 17,194 23,067 Change in Net Assets Attributable to Shareholders From Investment Activities 81,879,859 16,790,307 Closing Net Assets Attributable to Shareholders 845,772, ,396,405 12

15 FTSE Developed World ex-u.k. Equity Index Fund Fund Profile As at 30 April 2015 Investment Objective Vanguard FTSE Developed World ex-u.k. Equity Index Fund (the Fund ) seeks to track the performance of the FTSE Developed ex-u.k. Index (the Index ). Investment Strategy The Fund employs an indexing investment strategy designed to achieve a result consistent with the replication of the Index by investing in all of the component securities that make up the Index, holding each stock in approximate proportion to its weighting in the Index. Risk Profile The value of investments, and the income from them, may fall or rise and investors may get back less than they invested. This Fund invests in overseas markets and the value of this investment may fall or rise as a result of changes in exchange rates. Market Diversification (% of portfolio) FTSE Developed Fund ex-u.k. Index Europe France 3.9% 3.9% Switzerland Germany Spain Sweden Netherlands Italy Other European Markets Subtotal 18.6% 18.6% Portfolio Characteristics FTSE Developed Fund ex-u.k. Index Number of Stocks 1,997 1,957 Fund Fund 30 April October 2014 Ongoing Charges Figure 1 A Accumulation Shares 0.15% 0.15% A Income Shares 0.15% 0.15% Institutional Plus Accumulation Shares 0.10% 0.10% Institutional Plus Income Shares 0.10% 0.10% Synthetic Risk and Reward Indicator Ex-Dividend Date 1 November November 2014 Distribution Date 31 December December 2014 Sector Diversification (% of portfolio) FTSE Developed Fund ex-u.k. Index Basic Materials 4.8% 4.8% Consumer Goods Consumer Services Financials Health Care Industrials Oil & Gas Technology Telecommunications Utilities Pacific Japan 10.1% 10.2% Australia South Korea Hong Kong Other Pacific Markets Subtotal 17.5% 17.6% North America United States 59.9% 59.8% Canada Subtotal 63.6% 63.5% Middle East 0.3% 0.3% Ten Largest Holdings 3 (% of total net assets) Apple Inc. Computer Hardware 2.2% Exxon Mobil Corp. Integrated Oil & Gas 1.1 Microsoft Corp. Software 1.1 Google Inc. Internet 0.9 Wells Fargo & Co. Banks 0.9 Johnson & Johnson Pharmaceuticals 0.8 General Electric Co. Diversified Industrials 0.8 Berkshire Hathaway Inc. Reinsurance 0.8 Nestle SA Food Products 0.8 Novartis AG Pharmaceuticals 0.7 Top Ten 10.1% 1 The Ongoing Charges Figure (OCF) is the ratio of the Fund s total discloseable costs (excluding overdraft interest) to the average net assets of the Fund. 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 risk category on the risk and reward indicator. This is because the Fund invests primarily in shares whose values tend to have higher price fluctuations. 3 The holdings listed exclude any temporary cash investments and equity index products. 13

16 FTSE Developed World ex-u.k. Equity Index Fund Commentary On behalf of Vanguard Asset Management, Limited 1 For the six months ended 30 April 2015, Vanguard FTSE Developed World ex-u.k. Equity Index Fund s A share class returned 9.65% for both Accumulation and Income Shares. The Institutional Plus share class returned 9.68% for both Accumulation and Income Shares. The Fund s target Index returned 9.71%. The tracking difference was 0.06 percentage point for the A Shares and 0.03 percentage point for the Institutional Plus Shares. The tracking error at the end of the period was 0.052%.² Monetary easing by many central banks bolstered investors confidence in developed stock markets outside of the United Kingdom. The United States (+9%), the largest developed market, trailed several of the largest economies in Europe and the Pacific region. Among the countries with the largest weightings in the Index, Japan (+18%) stood out most, followed by Germany (+15%), France (+13%) and Switzerland (+13%). Nine of ten industry sectors posted gains. Consumer services (+16%), consumer goods (+14%) and health care (+14%) were the strongest performers. Oil & gas ( 2%) detracted. Total Returns Total Returns Periods Ended 30 April 2015 Five Years Vanguard FTSE Developed World ex-u.k. Equity Index Fund Six Months One Year (Annualised) A Accumulation Shares 9.65% 19.15% 10.45% A Income Shares FTSE Developed ex-u.k. Index Since Inception Vanguard FTSE Developed World ex-u.k. Equity Index Fund Six Months (2 September 2014) Institutional Plus Accumulation Shares 9.68% 11.24% Institutional Plus Income Shares FTSE Developed ex-u.k. Index Past performance is not a reliable indicator of future results. Sources: The Vanguard Group, Inc., and FTSE. Basis of performance: NAV to NAV with net income reinvested. The Fund s Institutional Plus Accumulation and Income Shares launched 2 September 2014; therefore, one-year performance data are not available. 1 The Vanguard Group, Inc., as investment manager for Vanguard Investments Funds ICVC, sub-delegates the management of this sub-fund to Vanguard Asset Management, Limited. 2 Tracking error is calculated as the standard deviation of active returns gross of fees for the trailing 36-month period (or since the Fund s inception if it does not have 36 months of performance history). 14

17 FTSE Developed World ex-u.k. Equity Index Fund Price History Vanguard FTSE Developed World 1 January 2015 to 1 January 2014 to 1 January 2013 to 1 January 2012 to 1 January 2011 to ex-u.k. Equity Index Fund 30 April December December December December 2011 A Accumulation Shares (10 Apr. 2015) (29 Dec. 2014) (15 Nov. 2013) (20 Dec. 2012) (7 Jul. 2011) Highest Share Price (6 Jan. 2015) (3 Feb. 2014) (2 Jan. 2013) (18 May 2012) (19 Aug. 2011) Lowest Share Price Income Dividends Pence Per Share A Income Shares (10 Apr. 2015) (29 Dec. 2014) (29 Oct. 2013) (18 Oct. 2012) (7 Jul. 2011) Highest Share Price (6 Jan. 2015) (3 Feb. 2014) (2 Jan. 2013) (18 May 2012) (19 Aug. 2011) Lowest Share Price Income Dividends Pence Per Share (10 Apr. 2015) (29 Dec. 2014) Highest Share Price (6 Jan. 2015) (16 Oct. 2014) Lowest Share Price Income Dividends Pence Per Share (10 Apr. 2015) (29 Dec. 2014) Highest Share Price (6 Jan. 2015) (16 Oct. 2014) Lowest Share Price Income Dividends Pence Per Share NAV History 30 April October October 2013 A Accumulation Shares Total Net Asset Value 1,588,965,428 1,265,218, ,042,147 Net Asset Value Per Share Number of Shares in Issue 6,986,063 6,102,176 4,942,346 A Income Shares Total Net Asset Value 335,327, ,025, ,131,588 Net Asset Value Per Share Number of Shares in Issue 1,625,068 1,462,024 1,287,068 Institutional Plus Accumulation Shares 1 Total Net Asset Value 5,560 5,067 Net Asset Value Per Share Number of Shares in Issue Institutional Plus Income Shares 1 Total Net Asset Value 10,573,001 10,147,681 Net Asset Value Per Share Number of Shares in Issue 95, ,379 1 Launched 2 September

18 FTSE Developed World ex-u.k. Equity Index Fund Summary of Significant Changes For the period ended 30 April 2015 Cost ( ) Largest Purchases Apple Inc. 4,943,392 Exxon Mobil Corp. 2,851,658 Kinder Morgan Inc. 2,850,627 Microsoft Corp. 2,344,131 Johnson & Johnson 2,144,398 Total 15,134,206 Total Purchases for the Period 253,131,528 Proceeds ( ) Largest Sales Covidien plc 2,693,144 Tim Hortons Inc. 743,263 Apple Inc. 650,624 Petsmart Inc. 464,289 United Technologies Corp. 458,748 Total 5,010,068 Total Sales for the Period 23,782,022 16

19 FTSE Developed World ex-u.k. Equity Index Fund Portfolio Statement As at 30 April 2015 Australia 3.05% ( : 3.37%) Commonwealth Bank of Australia 145,084 6,617, Westpac Banking Corp. 277,854 5,199, BHP Billiton Ltd. 290,473 4,763, Australia & New Zealand Banking Group Ltd. 249,523 4,353, National Australia Bank Ltd. 210,209 3,966, Wesfarmers Ltd. 102,392 2,296, CSL Ltd. 42,855 2,000, Woolworths Ltd. 109,311 1,650, Telstra Corp Ltd. 389,542 1,243, Woodside Petroleum Ltd. 65,285 1,173, Rio Tinto Ltd 38,698 1,135, Macquarie Group Ltd. 25,775 1,031, Scentre Group 462, , Transurban Group 170, , QBE Insurance Group Ltd. 122, , AMP Ltd. 259, , Westfield Group 173, , Suncorp Group Ltd. 116, , Brambles Ltd. 136, , Amcor Ltd. 106, , Origin Energy Ltd. 99, , Insurance Australia Group Ltd. 205, , Goodman Group 158, , Newcrest Mining Ltd. 68, , APA Group 99, , Aurizon Holdings Ltd. 190, , AGL Energy Ltd. 59, , Stockland 199, , ASX Ltd. 20, , Oil Search Ltd. 106, , Caltex Australia Ltd. 24, , Lend Lease Group 50, , Orica Ltd. 37, , Santos Ltd. 87, , Ramsay Health Care Ltd. 11, , GPT Group 161, , Sonic Healthcare Ltd. 35, , Mirvac Group 339, , Dexus Property Group 85, , Toll Holdings Ltd. 61, , Medibank Private Ltd. 250, , Incitec Pivot Ltd. 135, , Asciano Ltd. 79, , Bendigo and Adelaide Bank Ltd. 43, , James Hardie Industries plc 35, , Coca-Cola Amatil Ltd. 50, , Seek Ltd. 31, , Computershare Ltd. 40, , Novian Property Group 194, , Tatts Group Ltd. 114, , Sydney Airport 84, , Bank of Queensland Ltd. 34, , Federation Centres Ltd. 147, , Aristocrat Leisure Ltd. 51, , Boral Ltd. 67, , Ansell Ltd. 16, , Crown Resorts Ltd. 31, , Tabcorp Holdings Ltd. 82, , Cochlear Ltd. 4, , Qantas Airways Ltd. 104, , Alumina Ltd. 226, , Fortescue Metals Group Ltd. 158, , Challenger Ltd. 47, , Healthscope Ltd. 115, , Echo Entertainment Group Ltd. 66, , Treasury Wine Estates Ltd. 52, , REA Group Ltd. 6, , Iluka Resources Ltd. 33, , Orora Ltd. 118, , Fairfax Media Ltd. 242, , Harvey Norman Holdings Ltd. 54, , Flight Centre Travel Group Ltd. 5, , IOOF Holdings Ltd. 22, , Recall Holdings Ltd 29, , TPG Telecom Ltd. 23, , WorleyParsons Ltd. 16, , AusNet Services Ltd. 133, , ALS Ltd. 35,726 96, Platinum Asset Management Ltd. 23,624 91, DuluxGroup Ltd. 26,864 87, Sims Metal Management Ltd 14,637 80, Perpetual Ltd. 2,892 80, CSR Ltd. 41,485 77, Cimic Group Ltd. 6,941 75, BlueScope Steel Ltd. 38,935 69, Downer EDI Ltd. 29,503 67, Adelaide Brighton Ltd. 28,251 65, OZ Minerals Ltd. 26,728 64, Metcash Ltd. 63,545 43, Macquarie Atlas Roads Group 25,243 42, Shopping Centres Australasia Property Group 38,483 42, Nufarm Ltd. 9,152 34, Whitehaven Coal Ltd. 34,781 29, GWA Group Ltd. 19,656 25, Seven West Media Ltd. 32,633 21, New Hope Corp. Ltd. 12,023 13, AZ BG Holdings 1 6, Austria 0.09% ( : 0.09%) 58,978, Erste Group Bank AG 25, , Voestalpine AG 11, , Andritz AG 7, , OMV AG 11, , IMMOFINANZ AG 82, , Raiffeisen Bank International AG 10, , Vienna Insurance Group AG Wiener Versicherung Gruppe 3,048 79, Verbund AG 5,163 57, Telekom Austria AG 6,270 30,